“Although 2009 and the latest quarter continue to be challenging times for our industry, we are very pleased that we continue to exceed the current regulatory requirements as a “well capitalized” institution,” stated Patrick J. Dempsey, Chairman of the Board. “We are committed to sound banking practices and it shows, such as the $26 million growth in deposits. During the fourth quarter, our experienced management team has focused its efforts on increased efficiencies in service to our customers and profitability for our shareholders. We pride ourselves on superior customer service with the most cost-effective delivery systems.”

The year-over-year fourth quarter decline was primarily the result, before tax benefit, from an increase of $521,000 in FDIC insurance premiums, $515,000 in the provision for loan losses as well as $510,000 additional other-than-temporary impairment charges related to the investment in pooled trust preferred securities. Compared to the third quarter 2009, credit related losses narrowed with less required provision for loan losses and fewer security impairment charges, net interest income benefited $200,000 primarily from less interest expense due to the payoff of long-term debt and furthermore, other operating expenses were reduced.

Net loss for the year ended December 31, 2009 was $1,400,000, or $0.67 per share, compared to net income of $3,636,000, or $1.76 per share, for the year ended December 31, 2008. The decline in annual earnings resulted primarily from a $4,110,000 increase in provision for loan losses, additional other-than-temporary impairment charges of $2,864,000, plus increased FDIC insurance premiums of $1,046,000 and long-term debt prepayment interest costs that reduced net interest income by $505,000.

Net interest income was $5,126,000 for the quarter ended December 31, 2009, a 4% increase compared to the $4,908,000 recorded during the same quarter of 2008. The year-over-year earning-asset yield reduction on interest-earning assets lagged the effect the current interest rate environment had from lowering rates on interest-bearing liabilities, which as a result, net interest income increased $218,000. This net increase with a $12,405,000 reduction in average earning assets improved net interest margin to 3.99% for the fourth quarter of 2009, compared to 3.72% for same 2008 period.

Net interest income contracted for the year ended December 31, 2009, totaling $19,112,000 or a $165,000 decrease from $19,277,000 for 2008. The cost reductions over the year from lowering rates on interest-bearing liabilities kept pace with the effect the current interest rate environment had on lowering earning-asset yields. However, net interest income was negatively impacted by the prepayment interest costs of $505,000 from the third quarter early pay-off of long-term debt. Net interest margin was 3.71% and 3.60% for 2009 and 2008, respectively. The net interest margin increase was attributed to maintaining a stable level of net interest income while average earning assets decreased $14,530,000.

The provision for loan losses was $1,200,000 in the fourth quarter 2009 compared to $685,000 in the same 2008 period. The Company recorded provision for loan losses of $5,050,000 for the 2009 year compared to $940,000 in 2008. An increased provision was recorded from credit quality deterioration, primarily due to internally classified credit downgrades and commercial loan charge-offs. The ratio of non-performing assets to total assets at December 31, 2009 increased 162 basis-points to 2.58% from 0.96% at December 31, 2008. The ratio of non-accrual loans to net loans at December 31, 2009 increased 211 basis-points to 2.91%. Net charge-offs were $2,222,000 in 2009 and $1,019,000 in 2008. However, the allowance for loan losses ratio to total loans was 1.75% at December 31, 2009, up 67 basis points compared to 1.08% at December 31, 2008. The increased provision was also required to reinforce and fund the allowance for loan losses for heightened credit risks from a weakened economy and declining real estate values.

Total other income recorded for the quarter ended December 31, 2009 was $682,000 compared to $1,173,000 for the same quarter in 2008. The decrease in noninterest income was primarily due to the $542,000 other-than-temporary impairment on two pooled trust preferred securities in the quarter ended December 31, 2009 compared to $32,000 in the previous year’s fourth quarter. The impairment charges recognized represent the expected credit loss on these pooled trust preferred securities. In the event further interest deferrals and defaults take place within the pooled trust preferred portfolio, additional other-than-temporary impairment credit losses could be recognized through future earnings. Excluding the impairment charges, other noninterest income was $1,224,000 for the quarter ended December 31, 2009 compared to $1,205,000 for the quarter ended December 31, 2008.

Total other income in 2009 totaled $2,161,000 as compared to $4,578,000 for 2008. Total other income decreased $2,417,000 in 2009, primarily from recognizing $2,864,000 additional other-than-temporary impairment charges, $271,000 less deposit service charge income and $178,000 in write-downs of foreclosed assets, all partially offset by $799,000 in added gains produced from mortgage banking services, compared to 2008. Excluding the impairment charges, other income would have been $5,461,000 for the year ended December 31, 2009 compared to $5,014,000 for the year ended December 31, 2008.

Total assets as of December 31, 2009 were $556,017,000, a $19,702,000, or 3%, decrease from $575,719,000 at December 31, 2008. This decline resulted from continuing a deleveraging process, by utilizing proceeds from sales of residential mortgage loans to pay down long-term debt. This allowed the Company access to higher available liquidity and to strengthen regulatory capital ratios.

At December 31, 2009, net total loans decreased overall by $13,083,000, or 3%, to $423,124,000; the investment portfolio decreased $7,657,000 to $76,530,000; total deposits increased 6%, or $25,682,000, to $458,994,000; short-term borrowings decreased $21,597,000 to $16,533,000 and long-term debt decreased $20,000,000 to $32,000,000 as of December 31, 2009. Total shareholders’ equity declined $3,286,000, to $45,675,000 at December 31, 2009, from retained earnings absorbing the net loss and $2,078,000, or $1.00 per share, of cash dividends paid.

Certain of the matters discussed in this press release may constitute forward-looking statements for purposes of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. The words “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” and similar expressions are intended to identify such forward-looking statements.

the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in Mid Penn’s market area and elsewhere, including institutions operating locally, regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the Internet;

FIDELITY D & D BANCORP, INC.
Unaudited Condensed Consolidated Balance Sheets


At Period End:		December 31, 2009			December 31, 2008
Assets
Total cash and cash equivalents	$	8,327,954		$	12,771,147
Investment securities		76,529,998			84,187,579
Federal Home Loan Bank Stock		4,781,100			4,781,100
Loans and leases		431,919,022			441,036,694
Allowance for loan losses		(7,573,603	)		(4,745,234	)
Premises and equipment, net		15,361,810			16,056,362
Life insurance cash surrender value		9,117,156			8,807,784
Other assets		17,553,834			12,823,565

Total assets	$	556,017,271		$	575,718,997

Liabilities
Non-interest-bearing deposits	$	70,890,578		$	71,442,651
Interest-bearing deposits		388,103,880			361,869,281
Total deposits		458,994,458			433,311,932
Short-term borrowings		16,533,107			38,129,704
Long-term debt		32,000,000			52,000,000
Other liabilities		2,815,159			3,316,710
Total liabilities		510,342,724			526,758,346

Shareholders' equity		45,674,547			48,960,651

Total liabilities and shareholders' equity	$	556,017,271		$	575,718,997

Average Year-to-date Balances:		December 31, 2009			December 31, 2008
Assets
Total cash and cash equivalents	$	15,812,533		$	14,604,486
Investment securities		83,633,697			119,789,209
Loans and leases, net		426,927,977			416,437,846
Premises and equipment, net		15,674,301			13,803,903
Other assets		23,227,334			19,182,727

Total assets	$	565,275,842		$	583,818,171

Liabilities
Non-interest-bearing deposits	$	70,285,476		$	67,716,670
Interest-bearing deposits		388,304,096			371,583,475
Total deposits		458,589,572			439,300,145
Short-term borrowings and long-term debt		54,721,932			86,604,300
Other liabilities		3,827,831			4,504,215
Total liabilities		517,139,335			530,408,660

Shareholders' equity		48,136,507			53,409,511

Total liabilities and shareholders' equity	$	565,275,842		$	583,818,171

FIDELITY D & D BANCORP, INC.
Unaudited Condensed Consolidated Statements of Income

	Three Months Ended					Twelve Months Ended
	Dec. 31, 2009			Dec. 31, 2008		Dec. 31, 2009			Dec. 31, 2008
Interest income
Loans and leases	$	6,277,617		$	6,911,146	$	25,969,544		$	27,564,288
Securities and other		895,244			1,272,950		3,939,729			6,397,146

Total interest income		7,172,861			8,184,096		29,909,273			33,961,434

Interest expense
Deposits		1,616,269			2,454,253		7,895,576			11,118,194
Borrowings and debt		430,394			821,689		2,901,278			3,565,939

Total interest expense		2,046,663			3,275,942		10,796,854			14,684,133

Net interest income		5,126,198			4,908,154		19,112,419			19,277,301

Provision for loan losses		1,200,000			685,000		5,050,000			940,000
Other income		682,112			1,172,647		2,161,187			4,578,301
Other expenses		4,731,054			4,700,740		19,241,125			18,210,683
(Credit) provision for income taxes		(196,008	)		93,121		(1,617,314	)		1,068,971
Net income (loss)	$	73,264		$	601,940	$	(1,400,205	)	$	3,635,948

	Three Months Ended

	Dec. 31, 2009			Sep. 30, 2009			Jun. 30, 2009		Mar. 31, 2009		Dec. 31, 2008
Interest income
Loans and leases	$	6,277,617		$	6,546,053		$	6,470,352	$	6,675,522	$	6,911,146
Securities and other		895,244			907,433			985,161		1,151,891		1,272,950

Total interest income		7,172,861			7,453,486			7,455,513		7,827,413		8,184,096

Interest expense
Deposits		1,616,269			1,949,402			2,138,133		2,191,772		2,454,253
Borrowings and debt		430,394			1,083,252			576,811		810,821		821,689

Total interest expense		2,046,663			3,032,654			2,714,944		3,002,593		3,275,942

Net interest income		5,126,198			4,420,832			4,740,569		4,824,820		4,908,154

Provision for loan losses		1,200,000			3,125,000			300,000		425,000		685,000
Other income (loss)		682,112			(1,292,556	)		1,458,269		1,313,362		1,172,647
Other expenses		4,731,054			5,109,295			4,738,834		4,661,942		4,700,740
(Credit) provision for income taxes		(196,008	)		(1,895,339	)		247,851		226,182		93,121
Net income (loss)	$	73,264		$	(3,210,680	)	$	912,153	$	825,058	$	601,940

FIDELITY D & D BANCORP, INC.
Unaudited Condensed Consolidated Balance Sheets

At Period End:	Dec. 31, 2009			Sep. 30, 2009			Jun. 30, 2009			Mar. 31, 2009			Dec. 31, 2008
Assets
Total cash and cash equivalents	$	8,327,954		$	17,632,181		$	15,569,573		$	20,800,732		$	12,771,147
Investment securities		76,529,998			83,142,117			77,319,094			78,949,503			84,187,579
Federal Home Loan Bank Stock		4,781,100			4,781,100			4,781,100			4,781,100			4,781,100
Loans and leases		431,919,022			428,439,731			427,432,128			426,269,981			441,036,694
Allowance for loan losses		(7,573,603	)		(6,724,857	)		(5,215,736	)		(5,097,641	)		(4,745,234	)
Premises and equipment, net		15,361,810			15,514,474			15,544,799			15,871,074			16,056,362
Life insurance cash surrender value		9,117,156			9,038,561			8,962,081			8,886,844			8,807,784
Other assets		17,553,834			14,176,127			16,061,169			16,323,980			12,823,565

Total assets	$	556,017,271		$	565,999,434		$	560,454,208		$	566,785,573		$	575,718,997

Average Quarterly Balances:	Dec. 31, 2009		Sep. 30, 2009		Jun. 30, 2009		Mar. 31, 2009		Dec. 31, 2008
Assets
Total cash and cash equivalents	$	11,236,021	$	16,582,979	$	22,538,111	$	12,902,871	$	11,389,500
Investment securities		83,854,397		85,599,872		78,537,567		86,550,978		90,153,057
Loans and leases, net		425,502,519		425,582,260		422,830,387		433,903,852		434,511,745
Premises and equipment, net		15,402,408		15,503,416		15,751,986		16,048,369		15,948,591
Other assets		23,514,032		22,723,241		23,783,296		22,889,530		21,628,663

Total assets	$	559,509,377	$	565,991,768	$	563,441,347	$	572,295,600	$	573,631,556

Liabilities
Non-interest-bearing deposits	$	73,674,479	$	70,412,455	$	68,908,889	$	68,083,243	$	69,665,796
Interest-bearing deposits		390,741,705		391,990,603		389,822,588		380,508,523		366,709,783
Total deposits		464,416,184		462,403,058		458,731,477		448,591,766		436,375,579
Short-term borrowings and long-term debt		44,159,415		50,011,878		52,414,957		72,666,503		83,447,025
Other liabilities		3,465,228		4,102,285		4,372,934		3,366,585		4,093,554
Total liabilities		512,040,827		516,517,221		515,519,368		524,624,854		523,916,158

Shareholders' equity		47,468,550		49,474,547		47,921,979		47,670,746		49,715,398

Total liabilities and shareholders' equity	$	559,509,377	$	565,991,768	$	563,441,347	$	572,295,600	$	573,631,556

FIDELITY D & D BANCORP, INC.
Selected Financial Ratios and Other Data

	Three Months Ended
	Dec. 31, 2009			Sep. 30, 2009			Jun. 30, 2009			Mar. 31, 2009			Dec. 31, 2008
Selected returns and financial ratios
Diluted earnings (loss) per share	$	0.04		$	(1.55	)	$	0.44		$	0.40		$	0.30
Dividends per share	$	0.25		$	0.25		$	0.25		$	0.25		$	0.25
Yield on interest-earning assets (FTE)		5.52	%		5.67	%		5.74	%		5.97	%		6.13	%
Cost of interest-bearing liabilities		1.87	%		2.72	%		2.46	%		2.69	%		2.90	%
Net interest spread		3.65	%		2.95	%		3.28	%		3.28	%		3.23	%
Net interest margin		3.99	%		3.43	%		3.70	%		3.73	%		3.72	%
Return on average assets		0.05	%		-2.25	%		0.65	%		0.58	%		0.42	%
Return on average equity		0.61	%		-25.75	%		7.63	%		7.02	%		4.82	%
Efficiency ratio		72.76	%		77.39	%		70.16	%		70.33	%		73.33	%
Expense ratio		2.50	%		2.67	%		2.16	%		2.15	%		2.35	%

	Twelve Months Ended
	Dec. 31, 2009			Dec. 31, 2008
Diluted (loss) earnings per share	$	(0.67	)	$	1.76
Dividends per share	$	1.00		$	1.00
Yield on interest-earning assets (FTE)		5.72	%		6.27	%
Cost of interest-bearing liabilities		2.44	%		3.20	%
Net interest spread		3.28	%		3.07	%
Net interest margin		3.71	%		3.60	%
Return on average assets		-0.25	%		0.62	%
Return on average equity		-2.91	%		6.81	%
Efficiency ratio		72.51	%		72.98	%
Expense ratio		2.37	%		2.25	%


Other data
	Dec. 31, 2009			Sep. 30, 2009			Jun. 30, 2009			Mar. 31, 2009			Dec. 31, 2008
Book value per share	$	21.69		$	23.01		$	23.59		$	21.94		$	23.73
Equity to assets		8.21	%		8.51	%		8.76	%		8.02	%		8.50	%
Allowance for loan losses to:
Total loans		1.75	%		1.57	%		1.22	%		1.20	%		1.08	%
Non-accrual loans		0.61	x		0.85	x		0.70	x		0.70	x		1.36	x
Non-accrual loans to net loans		2.91	%		1.87	%		1.75	%		1.72	%		0.80	%
Non-performing assets to total assets		2.58	%		1.81	%		1.57	%		1.56	%		0.96	%

Contacts:
	Patrick J. Dempsey	Salvatore R. DeFrancesco, Jr.
	Chairman of the	Treasurer and
	Board	Chief Financial Officer
	570-342-8281	570-504-8000