EXHIBIT 99.1
[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: October 12, 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 September 30, 2004 of $121,000 or $0.01 per share on a
basic and diluted basis. The results are compared to net income of $26,000 or
$0.00 per share on a basic and diluted basis for the quarter ended September 30,
2003. For the year-to-date period ended September 30, 2004, the Company reported
net income of $296,000, or $0.03 on a basic and diluted basis compared to net
income of $184,000 or $0.02 for the year-to-date period last year.
Net interest income for the Company increased by $408,000 or 52.1% during the
third quarter of 2004, compared to the third quarter last year. For the
year-to-date, net interest income increased by $1.5 million or 80.4% compared to
the same year-to-date period in 2003. The Company's net interest margin for the
third quarter of 2004 was 2.60%, compared to 2.31% for the third quarter of
2003. For the year-to-date period ended September 30, 2004, net interest margin
was 2.52% compared to 1.97% for the same year-to-date period last year.
Capital ratios at the Bank remain well above regulatory "well-capitalized"
minimums. Risk-based capital at September 30, 2004 was 13.22%, compared to
14.01% at September 30, 2003. The decrease was primarily due to an increase in
loans and investments. The Bank's ratio of core capital to assets was 6.86% at
September 30, 2004 compared to 7.45% at September 30, 2003. The Bank's Tier 1
risk-based capital to assets was 9.42% at September 30, 2004, compared to 9.16%
at September 30, 2003.
Non-interest expense also decreased 8.4% to $1.5 million for the third quarter
of 2004 compared to $1.7 million for the third quarter of 2003. For the
year-to-date period, non-interest expense decreased 7.3% to $4.7 million in 2004
compared to $5.1 million in 2003. The decrease from last year is primarily due
to a reduction in human resource costs and a reduction in corporate insurance
rates.
Total classified assets decreased by 45.0% to $1.1 million at September 30, 2004
compared to $2.0 million at September 30, 2003. The allowance for loan loss and
valuation allowance for letters of credit to total loans and letters of credit
at September 30, 2004 and 2003 was 0.79% and 0.87%, respectively. The decrease
was primarily due to the elimination of required reserves for problem assets
that were either paid off or sold. Non-performing assets as a percentage of
total assets was 0.52% at September 30, 2004 compared to 1.33% at September 30,
2003.
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Non-interest income decreased 36.7% to $579,000 for the third quarter of 2004
compared to $914,000 for the third quarter of 2003. This decrease was primarily
due to a decrease in gains on sales of foreclosed assets, a decrease in mortgage
loan volume, and last year's increase in the estimated value of
mortgage-servicing assets. Non-interest income for the year-to-date decreased
40.1% to $1.9 million compared to $3.2 million for the same period in 2003.
For the third quarter of 2004, return on average assets and average equity were
0.24% and 3.07%, respectively, compared to 0.07% and 0.72% for the third quarter
of 2003. Return on average equity was 2.65% for the year-to-date ended September
30, 2004, compared to 1.97% for the year-to-date period ended September 30,
2003. Return on average assets for the year-to-date period ended September 30,
2004 was 0.20% compared to 0.17% for the same year-to-date period last year.
President and CEO Donald R. Neel noted, "Third quarter 2004 results reflect
continued improvements in net interest income and asset quality. These
improvements were partially offset by a decline in non-interest income from
non-recurring events which occurred last year but did not repeat this year, such
as gains on sale of foreclosed assets." Neel further noted, "The Bank continued
to benefit from a reduced cost of funds due to the maturity of higher-rate
certificates of deposit in the third quarter, which had a positive impact on
margins." Neel also stated, "Despite recent increases in interest rates,
mortgage lending activity remained relatively stable during the third quarter,
while commercial lending activities increased."
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 and the
Bank, overall loan demand, increased competition in the financial services
industry which could negatively impact the Company's ability to increase total
earning assets, 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 $1.53.
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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
(Unaudited) (Unaudited)
OPERATIONS: 2004 2003 2004 2003
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Interest income $ 2,189 $ 1,616 $ 6,280 $ 4,814
Interest expense 998 833 2,956 2,971
------------ ------------ ------------ ------------
Net interest income 1,191 783 3,324 1,843
Provision for loan losses 134 99 343 (23)
Non-interest income 579 914 1,940 3,238
Non-interest expense 1,523 1,662 4,712 5,081
------------ ------------ ------------ ------------
Income before income tax 113 (64) 209 23
Income taxes (8) (90) (87) (161)
------------ ------------ ------------ ------------
Net income $ 121 $ 26 $ 296 $ 184
============ ============ ============ ============
PER SHARE:
- ------------------------------------
Basic net income $ 0.01 $ 0.00 $ 0.03 $ 0.02
Diluted net income 0.01 0.00 0.03 0.02
Book value at period end 1.47 1.39
Market price (bid) at period end 1.46 1.54
Average common and common
equivalent shares outstanding 11,000,089 9,618,658 10,322,140 8,700,710
AVERAGE BALANCES:
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Total assets $ 200,148 $ 152,369 $ 194,108 $ 143,746
Total earning assets 182,409 134,474 176,288 125,019
Total loans (including held for sale) 115,073 84,924 110,569 77,123
Total deposits 127,151 111,642 127,199 109,309
Total stockholders' equity 15,608 13,984 14,913 12,443
FHLB advances 39,921 19,773 37,172 11,993
Borrowings 15,868 4,911 12,729 7,683
PERFORMANCE RATIOS:
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Return on average assets 0.24% 0.07% 0.20% 0.17%
Return on average equity 3.07% 0.72% 2.65% 1.97%
Net interest margin 2.60% 2.31% 2.52% 1.97%
LOAN QUALITY RATIOS:
- ------------------------------------
Net charge-offs to average loans and letters of credit 0.13% 0.07% 0.28% 0.06%
Allowance for loan and letter of credit losses to total
loans and letters of credit at end of period 0.79% 0.87%
Non-performing loans to total loans 0.84% 2.03%
Non-performing assets to total assets 0.52% 1.33%
SAVINGS BANK CAPITAL RATIOS:
- ------------------------------------
Core capital to assets at end of period 6.86% 7.45%
Risk-based capital ratios:
Tier 1 capital 9.42% 9.16%
Total capital 13.22% 14.01%
AT PERIOD END:
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Total assets $ 201,842 $ 156,894
Total earning assets 185,486 139,614
Total loans (including held for sale) 117,885 92,840
Total deposits 131,615 116,154
Total stockholders' equity 16,171 13,405
FHLB Advances 36,000 17,000
Borrowings 16,317 8,302
Common shares outstanding 10,999,871 9,618,658