Fidelity D & D Bancorp, Inc. Second Quarter 2008 Financial Results

DUNMORE, Pa., July 16 /PRNewswire-FirstCall/ -- Fidelity D & D Bancorp, Inc. (OTC:FDBC) (BULLETIN BOARD: FDBC) , parent company of The Fidelity Deposit and Discount Bank, announced net income for the quarter ended June 30, 2008 of $1,204,000, a 4% increase compared to $1,159,000 for the same quarter of 2007. Earnings per share on a fully diluted basis for the quarter totaled $0.59, up $0.03 from $0.56 for the prior year period. Net income for the six months ended June 30, 2008 was $2,293,000, a 4% increase compared to net income of $2,203,000 for the same 2007 period. Earnings per share were $1.11 and $1.07 for the six months ended June 30, 2008 and 2007, respectively. Net interest income increased to $4,943,000 for the quarter ended June 30, 2008 from $4,323,000 recorded during the same quarter of 2007. Primarily, the overall lower costs on interest bearing deposits and borrowings resulted in further net interest income earned for the second quarter of 2008. This improved the net interest margin to 3.71% for the second quarter of 2008 compared to 3.34% for same 2007 period. Net interest income increased to $9,490,000 for the six months ended June 30, 2008 from $8,627,000 recorded during the same quarter of 2007. Net interest margin was 3.54% during the first half of 2008 compared to 3.35% during the same 2007 period. "We continue to be gratified with the improved results we have attained," said Steven C. Ackmann, President and CEO. "Financial markets have been especially challenging over the first half of 2008, yet we have posted strong loan growth during the second quarter and continued to make improvements in our margins and asset quality. The next quarter will be important for us as we look forward to the opening of our much-anticipated West Scranton Office in August." A provision for loan loss was required primarily due to loan growth during the second quarter of 2008. The provision for loan loss was $125,000 for the quarter and six month period of 2008 as compared to no requirement for the same 2007 quarter and six month period, respectively. The allowance for loan losses was 1.00% of total loans at June 30, 2008, down from 1.24% at June 30, 2007. Total other income recorded for the quarter ended June 30, 2008 was $1,266,000, compared with $1,329,000 for the same quarter in 2007. Excluding the $105,000 disparity from net gains recorded during the second quarter of 2007, other income for the second quarter of 2008 exceeded the 2007 level from more loan fee income activity. Total other income for the six months ended June 30, 2008 was $2,561,000, up compared to $2,543,000 for the same period in 2007. Total other operating expenses increased from $4,088,000 to $4,445,000 for the quarters ending June 30, 2007 and 2008, respectively. The operating expense increase resulted primarily from salary and benefit expenses plus more collection expenses. Much of the salary and benefit increase came from hiring, including staff for the new West Scranton Office, as well as seasonal staffing increases. Total other operating expenses increased 8% from $8,201,000 for the six months ending June 30, 2007 to $8,837,000 for 2008. The Company's assets grew $11,151,000 to total $598,564,000 at June 30, 2008 from $587,413,000 at December 31, 2007. Fidelity D & D Bancorp, Inc. serves Lackawanna and Luzerne Counties through The Fidelity Deposit and Discount Bank's 11 community banking offices and 16 automated teller machine locations. For more information please visit our investor relations web site located through http://www.bankatfidelity.com/. This press release may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results and trends could differ materially from those set forth in such statements due to various factors. These factors include the possibility that increased demand or prices for the company's financial services and products may not occur, changing economic, interest rate and competitive conditions, technological developments and other risks and uncertainties, including those detailed in the company's filings with the Securities and Exchange Commission. FIDELITY D & D BANCORP, INC. Unaudited Condensed Consolidated Balance Sheets At Period End: Jun. 30, 2008 Mar. 31, 2008 Assets Total cash and cash equivalents $16,040,466 $23,378,954 Investment securities 129,244,167 136,320,024 Federal Home Loan Bank Stock 4,358,300 3,387,800 Loans and leases 418,650,319 399,582,768 Allowance for loan losses (4,188,571) (4,378,924) Premises and equipment, net 12,912,023 12,947,438 Life insurance cash surrender value 8,645,597 8,564,950 Other assets 12,901,595 14,073,523 Total assets $598,563,896 $593,876,533 Liabilities Non-interest-bearing deposits $74,765,086 $69,486,801 Interest-bearing deposits 373,468,779 386,356,675 Total deposits 448,233,865 455,843,476 Short-term borrowings 29,674,336 9,879,537 Long-term debt 62,285,582 62,494,906 Other liabilities 5,318,030 9,465,660 Total liabilities 545,511,813 537,683,579 Shareholders' equity 53,052,083 56,192,954 Total liabilities and shareholders' equity $598,563,896 $593,876,533 Average Quarterly Balances: Jun. 30, 2008 Mar. 31, 2008 Assets Total cash and cash equivalents $12,025,621 $23,587,839 Investment securities 138,429,282 133,209,250 Loans and leases, net 402,874,033 406,336,700 Premises and equipment, net 12,951,487 12,981,354 Other assets 19,358,141 15,966,685 Total assets $585,638,564 $592,081,828 Liabilities Non-interest-bearing deposits $65,591,257 $66,504,221 Interest-bearing deposits 378,477,080 380,896,695 Total deposits 444,068,337 447,400,916 Short-term borrowings and long- term debt 81,129,443 84,068,238 Other liabilities 5,005,066 4,456,310 Total liabilities 530,202,846 535,925,464 Shareholders' equity 55,435,718 56,156,364 Total liabilities and shareholders' equity $585,638,564 $592,081,828 At Period End: Dec. 31, 2007 Sep. 30, 2007 Jun. 30, 2007 Assets Total cash and cash equivalents $10,408,816 $13,371,112 $12,220,533 Investment securities 122,984,160 121,896,653 107,964,486 Federal Home Loan Bank Stock 3,302,900 3,558,300 4,151,900 Loans and leases 427,076,030 426,163,776 425,652,831 Allowance for loan losses (4,824,401) (4,990,855) (5,294,537) Premises and equipment, net 12,964,932 13,306,479 13,331,402 Life insurance cash surrender value 8,488,663 8,408,987 8,331,225 Other assets 7,011,455 7,386,687 7,134,628 Total assets $587,412,555 $589,101,139 $573,492,468 Liabilities Non-interest-bearing deposits $64,795,621 $70,544,329 $72,067,616 Interest-bearing deposits 360,912,740 368,512,228 349,263,741 Total deposits 425,708,361 439,056,557 421,331,357 Short-term borrowings 39,656,354 28,579,498 29,601,083 Long-term debt 62,708,677 62,917,875 66,125,522 Other liabilities 4,147,869 4,658,726 4,235,491 Total liabilities 532,221,261 535,212,656 521,293,453 Shareholders' equity 55,191,294 53,888,483 52,199,015 Total liabilities and shareholders' equity $587,412,555 $589,101,139 $573,492,468 Average Quarterly Balances: Dec. 31, 2007 Sep. 30, 2007 Jun. 30, 2007 Assets Total cash and cash equivalents $10,518,246 $10,793,137 $11,362,306 Investment securities 127,523,724 118,204,518 112,993,078 Loans and leases, net 422,759,661 420,402,304 415,200,287 Premises and equipment, net 13,138,740 13,311,760 10,994,719 Other assets 15,601,033 15,406,872 16,905,957 Total assets $589,541,404 $578,118,591 $567,456,347 Liabilities Non-interest-bearing deposits $69,565,292 $72,383,671 $70,718,373 Interest-bearing deposits 364,668,618 359,341,338 344,421,824 Total deposits 434,233,910 431,725,009 415,140,197 Short-term borrowings and long-term debt 95,511,724 88,544,109 95,203,717 Other liabilities 4,710,308 4,723,440 4,208,926 Total liabilities 534,455,942 524,992,558 514,552,840 Shareholders' equity 55,085,462 53,126,033 52,903,507 Total liabilities and shareholders' equity $589,541,404 $578,118,591 $567,456,347 FIDELITY D & D BANCORP, INC. Unaudited Condensed Consolidated Statements of Income Three Months Ended Six Months Ended Jun. 30, Jun. 30, Jun. 30, Jun. 30, 2008 2007 2008 2007 Interest income Loans and leases $6,860,510 $7,260,240 $13,747,720 $14,544,786 Securities and other 1,752,556 1,424,138 3,610,178 2,771,408 Total interest income 8,613,066 8,684,378 17,357,898 17,316,194 Interest expense Deposits 2,831,400 3,222,678 6,065,136 6,556,701 Borrowings and debt 838,502 1,139,144 1,802,762 2,132,747 Total interest expense 3,669,902 4,361,822 7,867,898 8,689,448 Net interest income 4,943,164 4,322,556 9,490,000 8,626,746 Provision for loan losses 125,000 - 125,000 - Other income 1,265,669 1,329,114 2,561,211 2,542,777 Other expenses 4,444,540 4,087,553 8,837,289 8,200,596 Provision for income taxes 435,347 405,384 796,029 765,843 Net income $1,203,946 $1,158,733 $2,292,893 $2,203,084 Three Months Ended Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, 2008 2008 2007 2007 2007 Interest income Loans and leases $6,860,510 $6,887,210 $7,344,466 $7,345,777 $7,260,240 Securities and other 1,752,556 1,857,622 1,726,351 1,546,569 1,424,138 Total interest income 8,613,066 8,744,832 9,070,817 8,892,346 8,684,378 Interest expense Deposits 2,831,400 3,233,736 3,392,598 3,420,693 3,222,678 Borrowings and debt 838,502 964,260 1,108,038 1,049,298 1,139,144 Total interest expense 3,669,902 4,197,996 4,500,636 4,469,991 4,361,822 Net interest income 4,943,164 4,546,836 4,570,181 4,422,355 4,322,556 Credit for loan losses 125,000 - - (60,000) - Other income 1,265,669 1,295,542 1,353,677 1,308,761 1,329,114 Other expenses 4,444,540 4,392,749 4,246,993 4,189,171 4,087,553 Provision for income taxes 435,347 360,682 446,299 424,023 405,384 Net income $1,203,946 $1,088,947 $1,230,566 $1,177,922 $1,158,733 FIDELITY D & D BANCORP, INC. Selected Financial Ratios and Other Data Three Months Ended Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, 2008 2008 2007 2007 2007 Selected returns and financial ratios Diluted earnings per share $0.59 $0.52 $0.59 $0.57 $0.56 Dividends per share $0.25 $0.25 $0.25 $0.24 $0.22 Yield on interest-earning assets (FTE) 6.39% 6.39% 6.56% 6.56% 6.61% Cost of interest-bearing liabilities 3.21% 3.63% 3.88% 3.96% 3.98% Net interest spread 3.18% 2.76% 2.68% 2.60% 2.63% Net interest margin 3.71% 3.37% 3.35% 3.31% 3.34% Return on average assets 0.83% 0.74% 0.83% 0.81% 0.82% Return on average equity 8.73% 7.80% 8.86% 8.80% 8.79% Efficiency ratio 70.17% 73.64% 70.47% 72.05% 71.16% Expense ratio 2.19% 2.10% 1.97% 2.01% 1.98% Six Months Ended Jun. 30, 2008 Jun. 30, 2007 Diluted earnings per share $1.11 $1.07 Dividends per share $0.50 $0.44 Yield on interest-earning assets (FTE) 6.39% 6.63% Cost of interest-bearing liabilities 3.42% 3.98% Net interest spread 2.97% 2.65% Net interest margin 3.54% 3.35% Return on average assets 0.78% 0.78% Return on average equity 8.26% 8.46% Efficiency ratio 71.85% 71.99% Expense ratio 2.15% 2.04% Other data Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, 2008 2008 2007 2007 2007 Book value per share $25.63 $27.08 $26.62 $26.00 $25.25 Equity to assets 8.86% 9.46% 9.40% 9.15% 9.10% Allowance for loan losses to: Total loans 1.00% 1.10% 1.13% 1.17% 1.24% Non-accrual loans 1.14x 0.97x 1.27x 1.07x 1.21x Non-accrual loans to net loans 0.88% 1.14% 0.90% 1.10% 1.04% Non-performing assets to total assets 0.79% 0.84% 0.67% 0.81% 0.78% DATASOURCE: Fidelity D & D Bancorp, Inc. CONTACT: Steven C. Ackmann, President and Chief Executive Officer, +1-570-346-4156, or Salvatore R. DeFrancesco, Jr., Treasurer and Chief Financial Officer, +1-570-504-8000, both of Fidelity D & D Bancorp, Inc. Web site: http://www.bankatfidelity.com/