UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________to______________________

Commission file number: 001-38229

FIDELITY D & D BANCORP, INC.

STATE OF INCORPORATION: IRS EMPLOYER IDENTIFICATION NO:

Pennsylvania 23-3017653

Address of principal executive offices:

Blakely & Drinker St.

Dunmore, Pennsylvania 18512

TELEPHONE: 570-342-8281

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of each class	Trading Symbols(s)	Name of each exchange on which registered
Common stock, without par value	FDBC	The NASDAQ Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subjected to such filing requirements for the past 90 days. [X] YES [ ] NO

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). [X] YES [ ] NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Non-accelerated filer x Accelerated filer o Smaller reporting company x Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] YES [X] NO

The number of outstanding shares of Common Stock of Fidelity D & D Bancorp, Inc. on October 31, 2021, the latest practicable date, was 5,645,687 shares.

FIDELITY D & D BANCORP, INC.

Form 10-Q September 30, 2021

Index

Part I. Financial Information		Page
Item 1.	Financial Statements (unaudited):
	Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	3
	Consolidated Statements of Income for the three and nine months ended September 30, 2021 and 2020	4
	Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2021 and 2020	5
	Consolidated Statements of Changes in Shareholders’ Equity for the three and nine months ended September 30, 2021 and 2020	6
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020	8
	Notes to Consolidated Financial Statements (Unaudited)	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
Item 3.	Quantitative and Qualitative Disclosure about Market Risk	64
Item 4.	Controls and Procedures	69
Part II. Other Information
Item 1.	Legal Proceedings	70
Item 1A.	Risk Factors	70
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	70
Item 3.	Defaults upon Senior Securities	70
Item 4.	Mine Safety Disclosures	70
Item 5.	Other Information	70
Item 6.	Exhibits	71
Signatures		73

‎

2

PART I – Financial Information

Item 1: Financial Statements

Fidelity D & D Bancorp, Inc. and Subsidiary
Consolidated Balance Sheets
(Unaudited)
(dollars in thousands)	September 30, 2021		December 31, 2020
Assets:
Cash and due from banks	$	51,466	$	19,408
Interest-bearing deposits with financial institutions		115,920		49,938
Total cash and cash equivalents		167,386		69,346
Available-for-sale securities		686,926		392,420
Restricted investments in bank stock		3,321		2,813
Loans and leases, net (allowance for loan losses of
$15,601 in 2021; $14,202 in 2020)		1,373,237		1,105,450
Loans held-for-sale (fair value $48,227 in 2021, $30,858 in 2020)		47,159		29,786
Foreclosed assets held-for-sale		803		256
Bank premises and equipment, net		29,406		27,626
Leased property under finance leases, net		1,365		283
Right-of-use assets		7,977		7,082
Cash surrender value of bank owned life insurance		52,417		44,285
Accrued interest receivable		7,178		5,712
Goodwill		19,628		7,053
Core deposit intangible, net		2,050		1,734
Other assets		12,946		5,664
Total assets	$	2,411,799	$	1,699,510
Liabilities:
Deposits:
Interest-bearing	$	1,576,498	$	1,102,009
Non-interest-bearing		586,952		407,496
Total deposits		2,163,450		1,509,505
Accrued interest payable and other liabilities		15,955		10,400
Finance lease obligation		1,375		291
Operating lease liabilities		8,565		7,644
Secured borrowings		16,885		-
FHLB advances		-		5,000
Total liabilities		2,206,230		1,532,840
Shareholders' equity:
Preferred stock authorized 5,000,000 shares with no par value; none issued		-		-
Capital stock, no par value (10,000,000 shares authorized; shares issued and outstanding; 5,645,687 at September 30, 2021; and 4,977,750 at December 31, 2020)		113,862		77,676
Retained earnings		91,533		80,042
Accumulated other comprehensive income		174		8,952
Total shareholders' equity		205,569		166,670
Total liabilities and shareholders' equity	$	2,411,799	$	1,699,510
See notes to unaudited consolidated financial statements

‎

3

Fidelity D & D Bancorp, Inc. and Subsidiary
Consolidated Statements of Income
(Unaudited)	Three months ended				Nine months ended
(dollars in thousands except per share data)	September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Interest income:
Loans and leases:
Taxable	$	14,950	$	11,655	$	38,759	$	30,212
Nontaxable		409		339		1,058		914
Interest-bearing deposits with financial institutions		54		46		114		96
Restricted investments in bank stock		28		37		96		124
Investment securities:
U.S. government agency and corporations		1,177		832		2,731		2,543
States and political subdivisions (nontaxable)		1,178		644		3,065		1,568
States and political subdivisions (taxable)		377		146		857		200
Other securities		-		-		-		3
Total interest income		18,173		13,699		46,680		35,660
Interest expense:
Deposits		878		1,070		2,583		3,781
Secured borrowings		121		-		121		-
Other short-term borrowings		-		53		-		248
FHLB advances		-		40		26		268
Total interest expense		999		1,163		2,730		4,297
Net interest income		17,174		12,536		43,950		31,363
Provision for loan losses		450		1,500		1,550		3,700
Net interest income after provision for loan losses		16,724		11,036		42,400		27,663
Other income:
Service charges on deposit accounts		705		548		1,835		1,521
Interchange fees		1,089		871		3,192		2,114
Service charges on loans		517		451		1,546		1,219
Fees from trust fiduciary activities		598		480		1,634		1,334
Fees from financial services		273		221		665		534
Fees and other revenue		239		234		592		595
Earnings on bank-owned life insurance		326		216		899		577
Gain (loss) on write-down, sale or disposal of:
Loans		188		1,346		3,671		1,998
Available-for-sale debt securities		40		-		40		-
Premises and equipment		34		3		28		(59)
Total other income		4,009		4,370		14,102		9,833
Other expenses:
Salaries and employee benefits		7,007		5,431		18,693		14,492
Premises and equipment