DNB Financial Corp (DNBF, Financial) filed Quarterly Report for the period ended 2012-06-30.
Dnb Financial Corp./pa/ has a market cap of $37.4 million; its shares were traded at around $14.02 with a P/E ratio of 8.6 and P/S ratio of 1.3. The dividend yield of Dnb Financial Corp./pa/ stocks is 1.5%.
Although DNB s earnings have been impacted by the general economic conditions, the impact has not been as severe as it has been in many parts of the nation, largely due to a relatively healthier economic climate in the Third Federal Reserve District and specifically Chester County. DNB's franchise spans both Chester and Delaware counties in southeastern Pennsylvania. The majority of loans have been made to businesses and individuals in Chester County and the majority of deposits are from businesses and individuals within the County. According to census data, Chester County's population has grown at approximately 15%, compared to 13% for the nation and 3% for the Commonwealth of Pennsylvania. The median household income in Chester County is $72,288 and the County ranks 14th nationally in disposable income. The unemployment rate for Chester County stood at 5.7% as of May 2012, compared to a Pennsylvania unemployment rate of 7.3% and a national unemployment rate of 7.9%. Traditionally, the unemployment rate has been the lowest in the surrounding five-county area and it ranks among the lowest unemployment rates in the Commonwealth. Chester County has a civilian labor force of 266,100, with manufacturing jobs representing 23.1% of the workforce and retail shopping comprising 13.8% of the total employment. During the last few years, the County has been able to keep most of its major employers, however some of them have downsized in order to remain competitive. Chester County is home to several Fortune 500 companies. Thirteen Chester County employers have 1,000 employees or more. Of these 13 companies, two companies have more than 5,000 employees.
Net income for the three and six-month periods ended June 30, 2012 was $1.4 million and $2.5 million compared to $1.3 million and $2.3 million for the same periods in 2011. Diluted earnings per share for the three and six-month periods ended June 30, 2012 were $.46 and $.82 compared to $0.42 and $0.74 for the same periods in 2011. The $112,000 in net income increase during the most recent three-month period was attributable to a $211,000 increase in non-interest income and a $159,000 increase in net interest income before provision for credit losses, offset by a $183,000 increase in non-interest expense, a $49,000 increase in provision for credit losses and a $25,000 increase in income tax expense. The $199,000 increase in net income during the six-month period ended June 30, 2012 was attributable to a $347,000 increase in net interest income before provision for credit losses and a $155,000 increase in non-interest income, offset by a $229,000 increase in non-interest expense, a $48,000 increase in the provision for credit losses and a $26,000 increase in income tax expense.
Non-interest income for the three and six-month periods ended June 30, 2012 was $1.2 million and $2.1 million, compared to $947,000 and $1.9 million for the same periods in 2011. The $211,000 increase during the three months ended June 30, 2012 was mainly attributable to an increase in gains on sales of securities and gains on sales of SBA loans of $78,000 and $65,000, respectively, an increase of $64,000 in service charges on deposits, and an increase of $13,000 in DNB Investments and Insurance revenue, offset by a decrease of $8,000 in other income. Absent the gains on sales of investment securities for the three months ended June 30, 2012, total non-interest income was up $133,000 quarter over quarter. During the six months ended June 30, 2012, non-interest income increased $155,000 over the same period in 2011. This increase was primarily due to an increase in service charges on deposits of $129,000, gains on sales of securities of $77,000 and an increase of $38,000 in DNB Investments and Insurance revenue, offset by a $67,000 decrease in gains on the sales of SBA loans and a decrease of $19,000 in other income. Absent the gains on sales of investment securities for the six month period June 30, 2012, total non-interest income would have been up $78,000 over the same period in 2011.
Non-performing assets totaled $12.8 million at June 30, 2012, compared to $11.2 million at March 31, 2012, $11.6 million at December 31, 2011 and $10.9 million at June 30, 2011. Total non-performing assets increased $1.6 million and $1.2 million during the three and six-months ended June 30, 2012. The $1.6 million increase during the most recent quarter was primarily due to the addition of one non-accrual residential property and one non-accrual commercial loan, offset by one fully charged off commercial loan. Total non-performing assets increased $1.9 million from June 30, 2011. As a result of the increase in non-performing loans, the non-performing loans to total loans ratio increased to 2.21% at June 30, 2011, up from 1.65% at June 30, 2011. The non-performing assets to total assets ratio increased to 2.02% at June 30, 2012 from 1.72% at June 30, 2011. The allowance to non-performing loans and leases ratio decreased from 93.5% at June 30, 2011 to 69.0% at June 30, 2012. DNB continues to work diligently to improve asset quality by adhering to strict underwriting standards and improving lending policies and procedures. Non-performing assets have, and will continue to have, an impact on earnings; therefore management intends to continue working aggressively to reduce the level of such assets.
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Dnb Financial Corp./pa/ has a market cap of $37.4 million; its shares were traded at around $14.02 with a P/E ratio of 8.6 and P/S ratio of 1.3. The dividend yield of Dnb Financial Corp./pa/ stocks is 1.5%.
Highlight of Business Operations:
Strategic Plan Update.During the six months ended June 30, 2012, management focused on reducing our composite cost of funds as well as strengthening DNB's net interest margin. The composite cost of funds for the six months ended June 30, 2012 was 0.71% compared to 0.86% for the same period in 2011. The net interest margin for the six-month period ended June 30, 2012 was 3.77% compared to 3.63% for the same period in 2011. Management continued to actively manage deposits during the first six months of 2012 to reduce DNB s cost of funds. Time deposits declined $1.4 million to $103.8 million at June 30, 2012 compared to $105.2 million at December 31, 2011. Transaction and savings accounts increased $30.5 million during the six months ended June 30, 2012. Positive trends were observed for the six months ended June 30, 2012, in two key business lines that make up total non-interest income. Service charges on deposits increased 23.66% or $128,000 and fees from the sale of investments and insurance products through our third-party broker-dealer, PrimeVest Financial Services, Inc. and ongoing trust administration and direct management of investment assets for clients increased 8.86% or $38,000 when compared to the same period in 2011. Overall, non-interest income increased $155,000 or 8.12% to $2.1 million, due primarily to a $128,000 increase in service charges on deposits, coupled with a $77,000 increase in gains on the sales of investments during the first six months of 2012, compared to the same period in 2011. Non-interest expense for the six months ended June 30, 2012 showed a modest increase of 2.74% or $229,000, compared to the same period in 2011. Approximately $65,000 or 32% of this increase is attributable to the purchase of assets and the assumption of deposits associated with the Boothwyn branch acquisition which was completed during the second quarter of 2012.Although DNB s earnings have been impacted by the general economic conditions, the impact has not been as severe as it has been in many parts of the nation, largely due to a relatively healthier economic climate in the Third Federal Reserve District and specifically Chester County. DNB's franchise spans both Chester and Delaware counties in southeastern Pennsylvania. The majority of loans have been made to businesses and individuals in Chester County and the majority of deposits are from businesses and individuals within the County. According to census data, Chester County's population has grown at approximately 15%, compared to 13% for the nation and 3% for the Commonwealth of Pennsylvania. The median household income in Chester County is $72,288 and the County ranks 14th nationally in disposable income. The unemployment rate for Chester County stood at 5.7% as of May 2012, compared to a Pennsylvania unemployment rate of 7.3% and a national unemployment rate of 7.9%. Traditionally, the unemployment rate has been the lowest in the surrounding five-county area and it ranks among the lowest unemployment rates in the Commonwealth. Chester County has a civilian labor force of 266,100, with manufacturing jobs representing 23.1% of the workforce and retail shopping comprising 13.8% of the total employment. During the last few years, the County has been able to keep most of its major employers, however some of them have downsized in order to remain competitive. Chester County is home to several Fortune 500 companies. Thirteen Chester County employers have 1,000 employees or more. Of these 13 companies, two companies have more than 5,000 employees.
Net income for the three and six-month periods ended June 30, 2012 was $1.4 million and $2.5 million compared to $1.3 million and $2.3 million for the same periods in 2011. Diluted earnings per share for the three and six-month periods ended June 30, 2012 were $.46 and $.82 compared to $0.42 and $0.74 for the same periods in 2011. The $112,000 in net income increase during the most recent three-month period was attributable to a $211,000 increase in non-interest income and a $159,000 increase in net interest income before provision for credit losses, offset by a $183,000 increase in non-interest expense, a $49,000 increase in provision for credit losses and a $25,000 increase in income tax expense. The $199,000 increase in net income during the six-month period ended June 30, 2012 was attributable to a $347,000 increase in net interest income before provision for credit losses and a $155,000 increase in non-interest income, offset by a $229,000 increase in non-interest expense, a $48,000 increase in the provision for credit losses and a $26,000 increase in income tax expense.
Non-interest income for the three and six-month periods ended June 30, 2012 was $1.2 million and $2.1 million, compared to $947,000 and $1.9 million for the same periods in 2011. The $211,000 increase during the three months ended June 30, 2012 was mainly attributable to an increase in gains on sales of securities and gains on sales of SBA loans of $78,000 and $65,000, respectively, an increase of $64,000 in service charges on deposits, and an increase of $13,000 in DNB Investments and Insurance revenue, offset by a decrease of $8,000 in other income. Absent the gains on sales of investment securities for the three months ended June 30, 2012, total non-interest income was up $133,000 quarter over quarter. During the six months ended June 30, 2012, non-interest income increased $155,000 over the same period in 2011. This increase was primarily due to an increase in service charges on deposits of $129,000, gains on sales of securities of $77,000 and an increase of $38,000 in DNB Investments and Insurance revenue, offset by a $67,000 decrease in gains on the sales of SBA loans and a decrease of $19,000 in other income. Absent the gains on sales of investment securities for the six month period June 30, 2012, total non-interest income would have been up $78,000 over the same period in 2011.
Non-performing assets totaled $12.8 million at June 30, 2012, compared to $11.2 million at March 31, 2012, $11.6 million at December 31, 2011 and $10.9 million at June 30, 2011. Total non-performing assets increased $1.6 million and $1.2 million during the three and six-months ended June 30, 2012. The $1.6 million increase during the most recent quarter was primarily due to the addition of one non-accrual residential property and one non-accrual commercial loan, offset by one fully charged off commercial loan. Total non-performing assets increased $1.9 million from June 30, 2011. As a result of the increase in non-performing loans, the non-performing loans to total loans ratio increased to 2.21% at June 30, 2011, up from 1.65% at June 30, 2011. The non-performing assets to total assets ratio increased to 2.02% at June 30, 2012 from 1.72% at June 30, 2011. The allowance to non-performing loans and leases ratio decreased from 93.5% at June 30, 2011 to 69.0% at June 30, 2012. DNB continues to work diligently to improve asset quality by adhering to strict underwriting standards and improving lending policies and procedures. Non-performing assets have, and will continue to have, an impact on earnings; therefore management intends to continue working aggressively to reduce the level of such assets.
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