Filed by National City Corporation
pursuant to Rule 425 under the
Securities Act of 1933 and deemed
filed pursuant to Rule 14a-12 under
the Securities Exchange Act of 1934
pursuant to Rule 425 under the
Securities Act of 1933 and deemed
filed pursuant to Rule 14a-12 under
the Securities Exchange Act of 1934
Subject Company: Fidelity Bankshares, Inc.
Commission File Number: 000-29040
Commission File Number: 000-29040
TRANSITION NEWS
News about the Fidelity Federal/National City Merger
September 29, 2006
September 29, 2006
Time Away from Work Benefits at National City
Fidelity employees will convert to National City policies at the HR payroll and systems conversion, with the exception of vacation and absence allowance policies. The HR payroll and systems conversion is expected to occur on or around March 1, 2007. More detailed information can be obtained when you receive your National City Employee Handbook later this year. Service with Fidelity will be credited toward National City’s time away from work policies.
Because Fidelity employees receive PTO banks at the beginning of the calendar year and legal close and conversion occurs later in the year, employees will continue to utilize PTO hours for vacation and absences through December 31, 2007. All 2006 EAB hours will carry over to 2007.
Beginning January 1, 2008, vacation and absence time will be separated from a “bank” of combined hours. At that time, vacation, absence allowance and short-term disability will be determined based on status and position. However, for absences in excess of six days, full-time employees will be eligible for the National City short-term disability program after the HR conversion, as indicated below.
Full-time employees are eligible for salary continuation after completing 90 days of service. This company-provided program provides salary continuation forup to 26 weeks(after one year of service) on the sixth day of disability. The first five days will be paid from PTO hours, unless the employee is immediately confined to the hospital as either an in-patient or out-patient for surgical or life-threatening non-surgical procedures. In these cases, disability payments begin on the first day of such treatment. The following table shows the pay replacement schedule:
Credited Service | Full (100%) Pay* | Partial Pay Replacement | ||
| Replacement | ||||
| 90 days up to 1 year | 1 week (40 hours) | None | ||
| 1 year | 2 weeks (80 hours) | Remaining weeks at 70% |
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| 2 years | 4 weeks (160 hours) | Remaining weeks at 70% | ||
| 3 years | 6 weeks (240 hours) | Remaining weeks at 70% | ||
| 4 years | 8 weeks (320 hours) | Remaining weeks at 70% | ||
| 5 years | 10 weeks (400 hours) | Remaining weeks at 70% | ||
| 6 or more years | 12 weeks (480 hours) | Remaining weeks at 70% |
| * | Note: “Pay” is base pay and does not include overtime, shift differential, parking allowance or incentives. Commissioned employees receive benefits based upon the benefits base assigned to their jobs. |
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Absence Allowance
Beginning January 1, 2008, full-time employees who receive base salary are eligible to receive up to six absence days in a calendar year for use in situations such as: short-term illness, family or personal emergency, religious, ethnic and other observances, pre-arranged school activities, medical, dental or other appointments when the need is immediate or an appointment during non-working hours isn’t available, or funeral days for individuals not covered under the funeral leave policy.
Vacation
Eligible full-time and part-time employees receive paid vacation allowance based on the status at the time vacation is taken. Certain commissioned positions do not receive paid vacation allowance. The number of paid weeks available each year depends on the length of service, determined by the most recent date of hire, and position as shown below:
| If you are a non-officer | 1-4 years | 2 weeks | ||
| 5-14 years | 3 weeks | |||
| 15 or more years | 4 weeks | |||
| Officer up to Assistant Vice President | 1-14 years | 3 weeks | ||
| 15 or more years | 4 weeks | |||
| Vice President and above | All years of service | 4 weeks |
Employees hired during the first quarter of the calendar year (January 1 through March 31) are eligible for one week of vacation that year after six months of service and full vacation the following calendar year.
Employees hired after the first quarter of the calendar year (April 1 through December 31) are not eligible for any vacation that year. They become eligible for full allotment of vacation in the next calendar year after nine months of service.
Holidays
National City observes the same 10 holidays and Fidelity part-time, peak time and prime-time employees will be eligible for pay if a holiday falls on their regularly scheduled work day. Full-time employees are eligible for a floating holiday when a designated holiday falls on a day that is normally a non-working day. The National City holiday policy will be effective as of legal close.
Funeral Time
Full-time and part-time employees who receive base pay are eligible for up to three paid funeral days following the death of an immediate family member. Family members are defined as:
| Spouse | Parents/Step-parents | Brothers/Sisters | ||
| Children/Step-children | Parents-in-law | Grandparents | ||
| Others living with you | Sons-/Daughters-in-law | Grandchildren |
Upon the death of a relative not considered an immediate family member, eligible employees may receive one paid funeral day. The National City funeral policy will be effective as of legal close.
Unpaid Leaves of Absence
Family and Medical Leave
National City grants Family and Medical Leaves of Absence in accordance with applicable state law and the Family and Medical Leave Act (FMLA), which provides for up to 12 weeks of unpaid leave and job protection. Any pay an employee may receive during a leave is subject to the National City Salary Continuation for Short-Term Disability Program or Salary Continuation for Adoption (described in the Employee Handbook, which you’ll receive in the coming months). FMLA provides for “job protection,” while National City Salary Continuation provides “pay” while on leave. FMLA and Salary Continuation, if any, are administered concurrently. Any paid time off for which you otherwise qualify, such as absence time or regular vacation will be charged against the maximum FMLA leave you may be granted. The National City FMLA policy will be effective as of legal close.
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Discretionary Leave of Absence
National City may allow discretionary leaves of absence from six days up to 12 weeks for reasons that do not qualify under the other types of time off, or after the other sources of time off have been exhausted.
National City is not obligated to reinstate an employee to his or her current position or an equivalent position after a discretionary leave ends; however, it is the policy of National City to reinstate employees to their previous positions, or equivalent positions, following reasonable leave for confinement and recovery from childbirth.
During either of these unpaid leaves, an employee must arrange to make contributions on an after-tax basis to continue coverage of benefits. Employees on leave for reasons other than their own illness or injury are not covered under the Long-Term Disability Plan and are not eligible for salary continuation for short-term disability. The National City discretionary leave of absence policy will be effective as of legal close.
Military Leave
National City is proud to support its employees who must serve in the National Guard or Military Reserve. When called to active duty, employees receive continued pay and benefits (other than Short-and Long-Term Disability coverage) during that time of active duty, up to 180 days. Pay at the rate of 50%, and benefits, will continue during any further active duty up to an additional 180 days.
Employees who are required to take an annual military training leave for the National Guard or Military Reserves will receive regular base pay for that two week obligation. The National City military leave policy will be effective as of legal close.
Jury Duty
Employees who receive base pay receive time off with pay while participating as a juror. National City allows employees to keep the juror’s feein addition to normal pay. The National City jury duty policy will be effective as of legal close.
| NOTE: | Full-time employees are defined as those employees who work 40 hours per week. Part-time employees are defined as those employees who work less than 40 hours per week. |
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After Tax Benefits at National City
In addition to the many health and welfare benefits offered at National City, the following after-tax programs are also provided.
In addition to the many health and welfare benefits offered at National City, the following after-tax programs are also provided.
Transportation Management Reimbursement Account (TMRA)
This program allows you to set aside pre-tax dollars to pay for the parking expenses you incur while traveling to and from work. This program combines flexibility and valuable tax savings opportunities.
Fidelity employees will become eligible for this benefit effective with the HR payroll and system conversion, currently scheduled for on or around March 1, 2007.
Travel and Accident Insurance
Employee safety while traveling on National City business is very important. Should you sustain accidental loss of life or dismemberment, or become permanently and totally disabled while traveling on National City business, employees (or their beneficiaries) may be eligible to receive a benefit under the terms of this program.
Fidelity employees will become eligible for this program upon the close of the acquisition.
Death in Service/Salary Continuation
In the event an employee dies during active service, National City will continue the base pay through the end of the current payroll period. All vacation benefits earned but not taken will be included in this pay. Additionally, a lump sum payment will be made to the employee’s spouse, if applicable, or to the employee’s estate based on the schedule shown. If an employee is on a leave of absence of six months or less during which he or she is paid, this payment will also be made. Employees receiving benefits under the National City Long-Term Disability Plan are not eligible for this benefit.
Fidelity employees will become eligible for this program upon the close of the acquisition.
Getting to Know the Private Client Group at National City
With more than 1,200 employees across the country, the National City Private Client Group (PCG) serves the needs of the high net-worth market. They provide an experienced team of local investment, trust and banking professionals coordinated by a primary point of contact, and are comprised of five major disciplines:
With more than 1,200 employees across the country, the National City Private Client Group (PCG) serves the needs of the high net-worth market. They provide an experienced team of local investment, trust and banking professionals coordinated by a primary point of contact, and are comprised of five major disciplines:
| • | Investment management and brokerage (professional money management, diversification and hedging) | |
| • | Trust services, estate planning and estate settlement services | |
| • | Private banking (customized and tailored credit solutions) | |
| • | Financial planning | |
| • | Charitable and philanthropic services |
The Private Client Group also provides access to specialty expertise that clients may need including business succession planning, Dynasty trusts and derivatives strategies, among others.
Over the past year, the Private Client Group has rolled out a revised sales model, upgraded its technology with a new trust system, developed new products and developed all new marketing collateral to ensure the growth of the division.
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Private Client Group Sales Model:
In 2006, they have some high goals including new managed assets of $3.6 billion and new loan outstandings of $1.3 billion. They are also committed to working closer with line of business partners to better serve the needs of wholesale and small business banking clients.
To accomplish this, the Private Client Group’s vision,A Passion for Partnership, along with their values—integrity, excellence, expertise and accountability—help in their goal of creating an exceptional client experience for life. They have also rolled out a new “Values in Practice (V.I.P.) Program” to reward individuals who live the values and go over and above their roles.
In south Florida, the Private Client Group consists of 14 professionals serving high net-worth individuals throughout the market area. Two client management teams are dedicated to working with employees, clients and prospects of Fidelity Federal. PCG’s goal is to provide a very high-level of professional service delivered through local offices in the Fidelity Federal markets.
“Clients of the Private Client Group receive personalized service and tailored solutions delivered locally. The goal of PCG-Florida will be to immediately add value via new resources and wealth management advice to the existing high net-worth client base of Fidelity Federal,” said Lee Frankhouser, senior vice president and market executive for the Private Client Group in Florida. “Developing new partnerships with Fidelity’s successful banking franchise will be our driving force.”
What’s on Your Mind?
Human Resources Questions
When does National City do employee performance evaluations? On the employee’s anniversary or annually at the fiscal year end?
At National City, non-exempt employees are evaluated based on the quarter in which their hire date occurred. Exempt employees are evaluated on a January 1 through December 31 cycle. More information about the performance management process will be communicated in the next issue ofTransition News.
When does National City do employee performance evaluations? On the employee’s anniversary or annually at the fiscal year end?
At National City, non-exempt employees are evaluated based on the quarter in which their hire date occurred. Exempt employees are evaluated on a January 1 through December 31 cycle. More information about the performance management process will be communicated in the next issue ofTransition News.
I would like to know National City’s maternity leave (Family Medical Leave) policy. What is the longest time I can stay home with my baby and will I get paid for it?
See the Time Away from Work section of this issue ofTransition Newsto determine eligibility at National City for both paid and unpaid absence.
See the Time Away from Work section of this issue ofTransition Newsto determine eligibility at National City for both paid and unpaid absence.
Miscellaneous Questions
Do we know what the bank hours are going to be when the merger is complete? Will it remain the same?
There is no plan to change the existing banking hours at branch locations. National City allows local management flexibility in setting branch hours to meet the competitive market requirements.
Do we know what the bank hours are going to be when the merger is complete? Will it remain the same?
There is no plan to change the existing banking hours at branch locations. National City allows local management flexibility in setting branch hours to meet the competitive market requirements.
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Will we still be banking in real time or switch at 2 p.m.?
National City understands the customer advantage that real-time posting of transactions can provide; however, we currently memo-post transactions. We are considering the possibility of keeping the branches on the same day’s business until the branch closes rather than switching to next day business at 2 p.m. We currently have markets that remain on same day’s business till close. There are many factors and business areas to be considered in making this decision, and it will be reviewed very carefully before a final decision is reached.
National City understands the customer advantage that real-time posting of transactions can provide; however, we currently memo-post transactions. We are considering the possibility of keeping the branches on the same day’s business until the branch closes rather than switching to next day business at 2 p.m. We currently have markets that remain on same day’s business till close. There are many factors and business areas to be considered in making this decision, and it will be reviewed very carefully before a final decision is reached.
Will customers have to change account numbers or will we have to open all new accounts for existing customers?
We will make every effort to keep customer’s account numbers exactly the same after conversion; however, there are a few reasons why a change may need to occur. As an example, the current account number may have too many digits in length for the National City system to accommodate it. In that event, we will need to provide the customer with an account number containing the proper number of digits. Also, if a customer’s current account numberduplicatesan account number held by an existing National City customer, the practice has been to renumberbothcustomers so that there is no chance a future transaction will post to an incorrect account number. If we find we do need to change account numbers for any reason, the branches will not need to open new accounts for customers, the conversion programs will automatically switch the account number for the customer. The customer will be sent new account documents free of charge if an account number change is required.
We will make every effort to keep customer’s account numbers exactly the same after conversion; however, there are a few reasons why a change may need to occur. As an example, the current account number may have too many digits in length for the National City system to accommodate it. In that event, we will need to provide the customer with an account number containing the proper number of digits. Also, if a customer’s current account numberduplicatesan account number held by an existing National City customer, the practice has been to renumberbothcustomers so that there is no chance a future transaction will post to an incorrect account number. If we find we do need to change account numbers for any reason, the branches will not need to open new accounts for customers, the conversion programs will automatically switch the account number for the customer. The customer will be sent new account documents free of charge if an account number change is required.
Are you keeping the floating positions in the branches?
National City intends to retain all branch employees. At this time, National City doesn’t have branch positions called “Float” staff because we use a branch staffing model to determine the appropriate staffing levels at each branch. That staffing model takes into account vacations, illness, time out of office for training, time for meetings, etc. We are reviewing the staffing levels at all of the branches to determine whether to retain the Float staff as is or to assign them to a specific branch as of conversion date.
National City intends to retain all branch employees. At this time, National City doesn’t have branch positions called “Float” staff because we use a branch staffing model to determine the appropriate staffing levels at each branch. That staffing model takes into account vacations, illness, time out of office for training, time for meetings, etc. We are reviewing the staffing levels at all of the branches to determine whether to retain the Float staff as is or to assign them to a specific branch as of conversion date.
Do you have any branches or loan offices on the west coast of Florida? If so, where precisely? If not, will you be spreading your lending operations and services to that coast?
Currently, National City has several business units operating in Florida, including Allegiant Asset Management, National City Mortgage, Private Client Group, Wholesale Banking and First Franklin (a non-prime mortgage unit expected to be sold to Merrill Lynch later this year).
Currently, National City has several business units operating in Florida, including Allegiant Asset Management, National City Mortgage, Private Client Group, Wholesale Banking and First Franklin (a non-prime mortgage unit expected to be sold to Merrill Lynch later this year).
Allegiant Asset Management: Palm Beach Gardens
National City Mortgage: Clearwater, Cypress Creek, Doral, Fort Myers, Jacksonville,
Lakeland, Miami, Naples, Orlando, Panama City, Panama City Beach, Pensacola, Plantation,
Punta Gorda, Rockledge, Sarasota, St. Augustine, Tampa and Venice.
Lakeland, Miami, Naples, Orlando, Panama City, Panama City Beach, Pensacola, Plantation,
Punta Gorda, Rockledge, Sarasota, St. Augustine, Tampa and Venice.
Private Client Group: Naples and Palm Beach Gardens
Wholesale Banking: Jupiter, Orlando and Tampa
At this time, we do not plan to open any de novo bank branches on the west coast of Florida.
Severance Benefit Questions
In the August 17th edition of “Transition News” you mentioned that “Displaced employees with titles of vice president or higher as of February 1, 2006, receive a minimum of 26 weeks’ pay.” Since AVPs are officers, are they included in the “vice president or higher” category?
No, assistant vice presidents’ eligibility is based on years of service. The “vice president and higher” category includes vice presidents, first vice presidents, senior vice presidents and executive vice presidents.
In the August 17th edition of “Transition News” you mentioned that “Displaced employees with titles of vice president or higher as of February 1, 2006, receive a minimum of 26 weeks’ pay.” Since AVPs are officers, are they included in the “vice president or higher” category?
No, assistant vice presidents’ eligibility is based on years of service. The “vice president and higher” category includes vice presidents, first vice presidents, senior vice presidents and executive vice presidents.
I believe my position will be eliminated as a result of the merger; therefore, I am considering taking a part-time position with a competitor while I am still working in my full-time role here. If I do that, would I still be able to receive severance?
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Based on Title 18 U.S. Code, Section 215, it would be a conflict of interest to work for a competitor at the same time you are working for us. Also, you are not eligible to receive severance benefits if you go to work for a competitor. See the August 17 issue ofTransition Newsfor details related to this topic.
Have a question? You can call the toll-free “What’s on Your Mind” voicemail box at 866/405-0846 and leave a message with your question or email your question toCorpComm@NationalCity.com. We’ll respond to questions of general interest in future issues ofTransition News.
In connection with the proposed transaction, a registration statement onForm S-4 will be filed with the United States Securities and Exchange Commission (SEC). Stockholders are encouraged to read the registration statement, including the final proxy statement/prospectus that will be a part of the registration statement, because it will contain important information about the proposed transaction. Stockholders will be able to obtain a free copy of the proxy statement/prospectus, as well as other filings containing information about National City Corporation and Fidelity Bankshares, Inc., without charge, at the SEC’s Web site,http://www.sec.gov, and the companies’ respective Web sites,www.nationalcity.com andwww.fidelityfederal.com. Copies of the proxy statement/prospectus and the SEC filings that will be incorporated by reference in the proxy statement/prospectus can also be obtained, without charge, by directing a request to National City Corporation at 1900 East Ninth Street, Locator 01-2229, Cleveland, OH 44114 Attention: Investor Relations, 1-800-622-4204, or to Fidelity Bankshares at 205 Datura Street, West Palm Beach, Florida 33401, Attention: Investor Relations, 561-803-9980.
The respective directors and executive officers of National City and Fidelity Bankshares and other persons may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding National City’s directors and executive officers is available in its proxy statement filed with the SEC on March 8, 2006, and information regarding Fidelity Bankshares directors and executive officers is available in its proxy statement filed with the SEC on March 24, 2006. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available.
This document contains forward-looking statements. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements.
The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: the ability to obtain governmental approvals of the merger on the proposed terms and schedule; the failure of Fidelity Bankshares’ stockholders to approve the merger; the risk that the businesses will not be integrated successfully; the risk that the cost savings and any other synergies from the merger may not be fully realized or may take longer to realize than expected; disruption from the merger making it more difficult to maintain relationships with clients, employees or suppliers; increased competition and its effect on pricing, spending, third-party relationships and revenues; the risk of new and changing regulation in the U.S. and internationally. Additional factors that could cause National City’s and Fidelity Bankshares’ results to differ materially from those described in the forward-looking statements can be found in the 2006 Quarterly Reports onForm 10-Q, as they are filed, and the 2005 Annual Report onForm 10-K of National City and Fidelity Bankshares filed with the SEC. Copies of these filings are available at no cost on the SEC’s Web site,www.sec.gov, and on the companies’ respective Web sites,www.nationalcity.com andwww.fidelityfederal.com. Management may elect to update forward-looking statements at some future point; however, it specifically disclaims any obligation to do so.
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