DNB Financial Corp (DNBF, Financial) filed Quarterly Report for the period ended 2007-06-30.
DNB Financial Corporation is a bank holding company of DNB Financial Corporation that offers various commercial banking products and services for individuals and corporate customers in southeastern Pennsylvania. The Bank is a full service commercial bank providing a range of services to individuals and small to medium sized businesses including accepting time demand and savings deposits and making secured and unsecured commercial real estate and consumer loans. The company is headquartered in Downingtown Pennsylvania..
Borrowings. Borrowings were $83.9 million at June 30, 2007 compared to $110.5 million at December 31, 2006. The decrease of $26.6 million or 24.1% was due to a $20.0 million decrease in FHLB borrowings coupled with a $6.6 million decline in repurchase agreements. DNB paid down short term FHLB Borrowings by $15.0 million with cash flow from the investment portfolio and had
Stockholders Equity. Stockholders' equity was $29.9 million at June 30, 2007 compared to $31.4 million at December 31, 2006. The $1.5 million decrease in stockholders equity was primarily a result of an $851,000 net-of-tax SFAS 115 adjustment due to deterioration in the AFS portfolio, the payment of $647,000 in dividends on common stock and a $583,000 net-of-tax charge on January 1, 2007 to stockholders equity in conjunction with DNB s implementation of EITF 06-4, Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insure Arrangements (See Note 6-Recent Accounting Pronouncements on Page 8). These adjustments, in addition to $470,000 of repurchases of DNB s common stock, were partially offset by $913,000 of year-to-date earnings.
Net income for the three and six-month period ended June 30, 2007 was $378,000 and $913,000 compared to $486,000 and $950,000 for the same periods in 2006. Diluted earnings per share for the three and six-month period ended June 30, 2007 were $0.15 and $0.36 compared to $0.19 and $0.38 for the same periods in 2006. Earnings per share in 2006 have been adjusted to reflect the effect of the 5% stock dividend paid in December 2006. The decrease in net income for the latest three-month period compared to the same period in 2006 was primarily attributable to a $23,000 decrease in net interest income, an $80,000 increase in non-interest expense and a $9,000 increase in income tax expense. This was offset by a $4,000 increase in non-interest income. The increases in non-interest income and non-interest expense are discussed in detail below. The decline in net interest income during the three-month period ended June 30, 2007 was a result of growth in interest-earning assets, which was more than offset by net interest margin compression. The net interest margin compression was a result of a rising interest rate environment, an inverted yield curve, and intense competition in DNB s marketplace. The decrease in net income for the latest six-month period compared to the same period in 2006 was primarily attributable to a $176,000 increase in net interest income, a $158,000 increase in non-interest income offset by a $343,000 increase in non-interest expense and a $27,000 increase in income tax expense. The increase in net interest income was a result of growth of interest-earning assets and higher yields on assets, which was more than offset by higher interest expense as both average balances and costs of deposits increased period over period. The compression in DNB s net interest margin was a result of a rising interest rate environment, which is discussed in more detail below. The increases in non-interest income and non-interest expense are discussed in detail below.
Net interest income for the three and six-month periods ended June 30, 2007 was $3.7 million and $7.5 million, compared to $3.8 million and $7.4 million for the same periods in 2006. Interest income for the three and six-month periods ended June 30, 2007 was $7.5 million and $15.0 million compared to $7.0 million and $13.5 million for the same periods in 2006. The increase in interest income was primarily attributable to an increase of interest on loans and leases, which was a result of the higher yield on the loan and lease portfolio. In addition, interest and dividends on investment securities increased due to an increase in taxable securities and a decrease in tax-exempt securities during the first six months of 2007. The yield on interest-earning assets for the second quarter in 2007 was 6.32%, compared to 6.00% for the same period in 2006. Interest expense for the three and six-month periods ended June 30, 2007 was $3.7 million and $7.4 million compared to $3.2 million and $6.1 million for the same periods in 2006. The increase in interest expense was primarily attributable to deposit account growth as well as higher rates on interest-bearing liabilities. The costs of deposits increased to 2.75% for the second quarter in 2007, compared to 2.15% for the same period in 2006. The net interest margin for the three-month period ended June 30, 2007 was 3.21%, compared to 3.29% for the same period in 2006.
Interest and dividends on investment securities was $1.5 million and $3.1 million for the three and six-month periods ended June 30, 2007, compared to $1.5 million and $3.0 million for the same periods in 2006. The average balance on investment securities was $135.7 million with an average yield of 4.85% for the six-month period ended June 30, 2007 compared to $143.7 million with an average yield of 4.62% for the same period in 2006. The decrease in the average balance was part of DNB s strategic plan to reduce the size of its investment portfolio. The increase in yield was primarily due to an increase in the amount of taxable securities in the portfolio and a decrease in the amount of tax-exempt securities.
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DNB Financial Corporation is a bank holding company of DNB Financial Corporation that offers various commercial banking products and services for individuals and corporate customers in southeastern Pennsylvania. The Bank is a full service commercial bank providing a range of services to individuals and small to medium sized businesses including accepting time demand and savings deposits and making secured and unsecured commercial real estate and consumer loans. The company is headquartered in Downingtown Pennsylvania..
Highlight of Business Operations:
Gross Loans and Leases. Loans and leases were $322.2 million at June 30, 2007 compared to $329.5 million at December 31, 2006. DNB s loans declined $7.2 million as overall loan demand declined and intense competition for potential new loans intensified as a number of new financial institutions entered an already crowded Chester County marketplace. Total Commercial loans grew $2.3 million while residential real estate loans and commercial leases declined $3.1 million and $5.5 million respectively.Borrowings. Borrowings were $83.9 million at June 30, 2007 compared to $110.5 million at December 31, 2006. The decrease of $26.6 million or 24.1% was due to a $20.0 million decrease in FHLB borrowings coupled with a $6.6 million decline in repurchase agreements. DNB paid down short term FHLB Borrowings by $15.0 million with cash flow from the investment portfolio and had
Stockholders Equity. Stockholders' equity was $29.9 million at June 30, 2007 compared to $31.4 million at December 31, 2006. The $1.5 million decrease in stockholders equity was primarily a result of an $851,000 net-of-tax SFAS 115 adjustment due to deterioration in the AFS portfolio, the payment of $647,000 in dividends on common stock and a $583,000 net-of-tax charge on January 1, 2007 to stockholders equity in conjunction with DNB s implementation of EITF 06-4, Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insure Arrangements (See Note 6-Recent Accounting Pronouncements on Page 8). These adjustments, in addition to $470,000 of repurchases of DNB s common stock, were partially offset by $913,000 of year-to-date earnings.
Net income for the three and six-month period ended June 30, 2007 was $378,000 and $913,000 compared to $486,000 and $950,000 for the same periods in 2006. Diluted earnings per share for the three and six-month period ended June 30, 2007 were $0.15 and $0.36 compared to $0.19 and $0.38 for the same periods in 2006. Earnings per share in 2006 have been adjusted to reflect the effect of the 5% stock dividend paid in December 2006. The decrease in net income for the latest three-month period compared to the same period in 2006 was primarily attributable to a $23,000 decrease in net interest income, an $80,000 increase in non-interest expense and a $9,000 increase in income tax expense. This was offset by a $4,000 increase in non-interest income. The increases in non-interest income and non-interest expense are discussed in detail below. The decline in net interest income during the three-month period ended June 30, 2007 was a result of growth in interest-earning assets, which was more than offset by net interest margin compression. The net interest margin compression was a result of a rising interest rate environment, an inverted yield curve, and intense competition in DNB s marketplace. The decrease in net income for the latest six-month period compared to the same period in 2006 was primarily attributable to a $176,000 increase in net interest income, a $158,000 increase in non-interest income offset by a $343,000 increase in non-interest expense and a $27,000 increase in income tax expense. The increase in net interest income was a result of growth of interest-earning assets and higher yields on assets, which was more than offset by higher interest expense as both average balances and costs of deposits increased period over period. The compression in DNB s net interest margin was a result of a rising interest rate environment, which is discussed in more detail below. The increases in non-interest income and non-interest expense are discussed in detail below.
Net interest income for the three and six-month periods ended June 30, 2007 was $3.7 million and $7.5 million, compared to $3.8 million and $7.4 million for the same periods in 2006. Interest income for the three and six-month periods ended June 30, 2007 was $7.5 million and $15.0 million compared to $7.0 million and $13.5 million for the same periods in 2006. The increase in interest income was primarily attributable to an increase of interest on loans and leases, which was a result of the higher yield on the loan and lease portfolio. In addition, interest and dividends on investment securities increased due to an increase in taxable securities and a decrease in tax-exempt securities during the first six months of 2007. The yield on interest-earning assets for the second quarter in 2007 was 6.32%, compared to 6.00% for the same period in 2006. Interest expense for the three and six-month periods ended June 30, 2007 was $3.7 million and $7.4 million compared to $3.2 million and $6.1 million for the same periods in 2006. The increase in interest expense was primarily attributable to deposit account growth as well as higher rates on interest-bearing liabilities. The costs of deposits increased to 2.75% for the second quarter in 2007, compared to 2.15% for the same period in 2006. The net interest margin for the three-month period ended June 30, 2007 was 3.21%, compared to 3.29% for the same period in 2006.
Interest and dividends on investment securities was $1.5 million and $3.1 million for the three and six-month periods ended June 30, 2007, compared to $1.5 million and $3.0 million for the same periods in 2006. The average balance on investment securities was $135.7 million with an average yield of 4.85% for the six-month period ended June 30, 2007 compared to $143.7 million with an average yield of 4.62% for the same period in 2006. The decrease in the average balance was part of DNB s strategic plan to reduce the size of its investment portfolio. The increase in yield was primarily due to an increase in the amount of taxable securities in the portfolio and a decrease in the amount of tax-exempt securities.
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