[LOGO OF FIDELITY FEDERAL BANCORP]
Contacts: Donald R. Neel, President and CEO (812) 429-0550, ext. 3301
Mark A. Isaac, VP and CFO (812) 429-0550, ext. 3319
For Immediate Release: July 21, 2004
FIDELITY FEDERAL BANCORP REPORTS INCREASED EARNINGS
(Evansville, IN) Fidelity Federal Bancorp (the "Company") (NASDAQ: FFED), the
holding company of United Fidelity Bank, fsb (the "Bank"), reported net income
for the quarter ended June 30, 2004 of $110,000 or $0.01 per share on a basic
and diluted basis. The results are compared to net income of $103,000, or $0.01
per share on a basic and diluted basis for the quarter ended June 30, 2003. For
the year-to-date period ended June 30, 2004, the Company reported net income of
$175,000, or $0.02 on a basic and diluted basis compared to $158,000, or $0.02
for the same period last year.
Return on equity was 2.82% for the quarter ended June 30, 2004, compared to
3.06% for the same period ended June 30, 2003. Return on assets for the quarter
ended June 30, 2004 was 0.23% compared to 0.29% for the same period ended June
30, 2003. The Company's net interest margin for the quarter was 2.42%, compared
to 1.99% last year, due primarily to an increase in consumer and commercial
loans outstanding during the quarter, as well as a lower cost of funds. For the
year-to-date period ended June 30, 2004, the net interest margin was 2.48%
compared to 1.78% for the same period last year.
Non-interest income decreased 40.4% to $659,000 for the quarter from $1.1
million last year primarily due to non-recurring events last year such as gains
on sales of foreclosed assets, and the significant increase in mortgage loan
volume. Non-interest income for the first half of 2004 decreased 41.5% to $1.4
million compared to $2.3 million in 2003. Non-interest expense decreased 3.4% to
$1.6 million for the second quarter of 2004 compared to $1.7 million last year.
For the year-to-date period, non-interest expense decreased 6.8% to $3.2 million
in 2004 compared to $3.4 million in 2003.
Capital ratios at the Bank remain well above regulatory "well-capitalized"
minimums. Risk-based capital at June 30, 2004 was 13.85%, compared to 12.50% at
June 30, 2003. The Bank's ratio of tangible equity to assets was 7.03% at June
30, 2004 compared to 7.63% at June 30, 2003. The Bank's Tier 1 risk-based
capital to assets was 9.82% at June 30, 2004, compared to 10.17% at June 30,
2003.
Total classified assets decreased by 45% to $1.1million at June 30, 2004
compared to $2.0 million at June 30, 2003. The reduction in classified assets
was primarily due to the liquidation of two problem loans at book value. The
allowance for loan loss and valuation allowance for letters of credit to total
loans and letters of credit at June 30, 2004 and 2003 was 0.74% and 0.93%,
respectively. Non-performing assets as a percentage of total assets declined by
53.1% to 0.53% at June 30, 2004 compared to 1.13% at June 30, 2003.
-Next Page-
President and CEO Donald R. Neel noted, "Second quarter 2004 results reflect
continuing loan and asset growth, improvements in net interest margin, asset
quality and non-interest expense, which largely served to offset the reduction
in non-interest income compared to the second quarter of 2003. Neel also noted,
"While rising interest rates resulted in reduced mortgage loan originations
during the quarter, the Bank saw an increase in commercial lending activity, and
an increase in automobile lending. Neel stated finally, "The Company's asset
quality ratios improved sharply over last year due to the liquidation at book
value of approximately $1.0 million in two non-accrual loans during the first
half of 2004."
This news release contains forward-looking statements that are based upon the
Company's current expectations, but are subject to certain risks and
uncertainties that may cause actual results to differ materially. Among the
risks and uncertainties that could cause actual results to vary materially are
economic conditions generally and in the market areas of the Company, the Bank,
overall loan demand, increased competition in the financial services industry,
retention of key personnel, and the impact of the Bank's Supervisory Agreement
with the Office of Thrift Supervision. Actions by the Federal Reserve Board and
changes in interest rates, loan prepayments by, and the financial health of, the
Bank's borrowers, and other factors described in the reports filed by the
Company with the Securities and Exchange Commission could also impact current
expectations.
The Company is a unitary savings and loan holding company based in Evansville,
Indiana. Its savings bank subsidiary, United Fidelity Bank, fsb, maintains five
locations, four in Evansville and one in Warrick County. The Company's stock,
which is quoted on NASDAQ under the symbol FFED, most recently traded at $1.69.
Information on FFED is available on the Internet at
http://www.unitedfidelity.com
-- END --
[LOGO OF FIDELITY FEDERAL BANCORP]
FINANCIAL HIGHLIGHTS
(DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
(Unaudited) (Unaudited)
OPERATIONS: 2004 2003 2004 2003
- ----------------------------------------- ------------ ------------ ------------ ------------
Interest income $ 2,050 $ 1,596 $ 4,091 $ 3,199
Interest expense 977 980 1,958 2,139
------------ ------------ ------------ ------------
Net interest income 1,073 616 2,133 1,060
Provision for loan losses 39 (18) 209 (122)
Non-interest income 659 1,106 1,361 2,325
Non-interest expense 1,602 1,658 3,189 3,420
------------ ------------ ------------ ------------
Income before income tax 91 82 96 87
Income taxes (19) (21) (79) (71)
------------ ------------ ------------ ------------
Net income $ 110 $ 103 $ 175 $ 158
============ ============ ============ ============
PER SHARE:
- -----------------------------------------
Basic net income $ 0.01 $ 0.01 $ 0.02 $ 0.02
Diluted net income 0.01 0.01 0.02 0.02
Book value at period end 1.42 1.43
Market price (bid) at period end 1.47 1.30
Average common and common
equivalent shares outstanding 10,335,466 9,618,659 9,979,430 8,234,129
AVERAGE BALANCES:
- -----------------------------------------
Total assets $ 196,174 $ 143,225 $ 191,055 $ 139,363
Total earning assets 178,380 124,287 173,193 120,214
Total loans 110,328 73,816 108,292 73,047
Total deposits 130,079 107,367 127,223 108,124
Total stockholders' equity 15,744 13,554 14,562 11,659
FHLB advances 36,292 12,153 35,782 8,038
Borrowings 11,695 7,723 11,143 9,092
PERFORMANCE RATIOS:
- -----------------------------------------
Return on average assets 0.23% 0.29% 0.18% 0.23%
Return on average equity 2.82% 3.06% 2.42% 2.74%
Net interest margin 2.42% 1.99% 2.48% 1.78%
LOAN QUALITY RATIOS:
- -----------------------------------------
Net charge-offs to average loans and letters of credit 0.22% 0.11% 0.35% 0.06%
Allowance for loan and letter of credit losses to total
loans and letters of credit at end of period 0.74% 0.93%
Non-performing loans to total loans 0.84% 1.88%
Non-performing assets to total assets 0.53% 1.13%
SAVINGS BANK CAPITAL RATIOS:
- -----------------------------------------
Tangible equity to assets at end of period 7.03% 7.63%
Risk-based capital ratios:
Tier 1 capital 9.82% 10.17%
Total capital 13.85% 12.50%
AT PERIOD END:
- -----------------------------------------
Total assets $ 192,757 $ 147,928
Total earning assets 174,884 130,645
Total loans 107,803 77,294
Total deposits 120,401 110,342
Total stockholders' equity 15,578 13,747
FHLB Advances 39,900 17,000
Borrowings 15,367 4,302
Common shares outstanding 10,999,871 9,618,658