SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996].
For the fiscal year ended December 31, 2001
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED].
For the transition period from _______________ to ______________________
Commission File Number 000-29040
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
Savings Plan for Employees of Fidelity Federal Savings Bank of Florida
B: Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
Fidelity Bankshares, Inc.
205 Datura Street
West Palm Beach, Florida 33401
SAVINGS TRUST FOR EMPLOYEES OF
FIDELITY FEDERAL BANK & TRUST
Financial Statements for the Years Ended December 31, 2001
and 2000 and Supplemental Schedule for the Year Ended
December 31, 2001 and Independent Auditors' Report
SAVINGS TRUST FOR EMPLOYEES OF
FIDELITY FEDERAL bANK & TRUST
TABLE OF CONTENTS
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Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS AS OF DECEMBER 31, 2001 AND 2000
AND FOR THE YEARS THEN ENDED:
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available
for Benefits 3
Notes to Financial Statements 4
SUPPLEMENTAL SCHEDULE AS OF DECEMBER 31, 2001 AND
FOR THE YEAR THEN ENDED:
Schedule H, Part IV, Line 4i - Supplemental Schedule
of Assets Held for Investment Purposes 8
Schedules not filed herewith are omitted because of the absence of conditions
under which they are required.
INDEPENDENT AUDITORS' REPORT
To the Trustees and Participants of the Savings Trust for Employees of
Fidelity Federal Bank & Trust:
We have audited the accompanying statements of net assets available for benefits
of the Savings Trust for Employees of Fidelity Federal Bank and Trust (the
"Plan") as of December 31, 2001 and 2000, and the related statements of changes
in net assets available for benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
2001 and 2000, and the changes in net assets available for benefits for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule listed in the
Table of Contents is presented for the purpose of additional analysis and is not
a required part of the basic financial statements, but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This schedule is the responsibility of the Plan's management. Such
schedule has been subjected to the auditing procedures applied in our audit of
the basic 2001 financial statements and, in our opinion, is fairly stated in all
material respects when considered in relation to the basic financial statements
taken as a whole.
/s/ DELOITTE & TOUCHE LLP
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DELOITTE & TOUCHE LLP
Certified Public Accountants
Fort Lauderdale, Florida
June 14, 2002
SAVINGS TRUST FOR EMPLOYEES OF
FIDELITY FEDERAL BANK & TRUST
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2001 AND 2000
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2001 2000
ASSETS:
Cash $ 137,540 $ 69,275
Investments at fair value:
Fidelity Bankshares, Inc. common
stock (cost - $6,167,167 in 2001
and $4,278,367 in 2000) 12,233,547 5,334,095
Mutual funds (cost - $4,778,786 in 2001
and $4,525,458 in 2000) 4,389,873 4,288,287
Charles Schwab Money Funds
(at cost which approximates fair value) 572,588 177,436
Participants' notes receivable 657,534 431,956
Accrued income receivable 76,385 67,950
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Total assets 18,067,467 10,368,999
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LIABILITIES:
Miscellaneous liabilities 42,374 5,418
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Total liabilities 42,374 5,418
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NET ASSETS AVAILABLE FOR BENEFITS $ 18,025,093 $ 10,363,581
============= ============
See notes to financial statements.
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SAVINGS TRUST FOR EMPLOYEES OF
FIDELITY FEDERAL BANK & TRUST
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2001 AND 2000
2001 2000
ADDITIONS:
Investment income:
Dividends and interest $ 410,152 $ 663,982
Net appreciation in fair value of investments 5,601,108 702,847
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Total investment income 6,011,260 1,366,829
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Contributions:
Participants 1,567,040 1,241,721
Matching from employer 486,433 393,155
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Total contributions 2,053,473 1,634,876
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Total 8,064,733 3,001,705
DEDUCTIONS:
Benefit payments 403,221 452,703
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INCREASE IN NET ASSETS 7,661,512 2,549,002
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR 10,363,581 7,814,579
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NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR $18,025,093 $10,363,581
=========== ===========
See notes to financial statements
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SAVINGS TRUST FOR EMPLOYEES OF
FIDELITY FEDERAL SAVINGS BANK OF FLORIDA
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2001 AND 2000
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1. DESCRIPTION OF THE PLAN
The following description of the Savings Trust for Employees of Fidelity
Federal Bank & Trust (the "Plan") provides only general information.
Participants should refer to the Plan agreement for a more complete
description of the provisions.
General - The Plan was established, effective January 1, 1988, by the
Board of Directors of Fidelity Federal Bank & Trust. The purpose of the
Plan is to receive, hold and administer all monies and properties and to
implement the provisions relating to the Plan.
The Plan was formed for substantially all employees ("Participants") of
Fidelity Federal Bank & Trust and subsidiaries (the "Employer"). The Plan
was established as a defined contribution plan exempt from income taxes
under Section 401(k) of the Internal Revenue Code and has received a
favorable determination of exempt status from the U.S. Treasury
Department. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA"). Membership in the Plan
is voluntary for employees who have attained age 21 and have earned ninety
days of vesting service.
In December 2000, a Company Pension Contribution provision was added to
the Plan for eligible employees hired subsequent to December 31, 2000, as
these employees are not eligible for the Employer's defined benefit plan.
The Employer's defined benefit plan is available only to employees hired
prior to January 1, 2001.
Participant and Employer Matching Contributions - Employees may contribute
between 1% and 15% of their base compensation to the Plan ("Participants'
Contributions") during the year, subject to certain limitations. The
Participants' Contributions are not subject to state or federal income
taxes until withdrawn in the future. For all eligible Participants
actively employed at the end of each calendar quarter during the year, the
Employer provides a matching contribution equal to 50% of the
Participant's Contribution for that quarter, up to the lesser of the
Participant's Contribution, 6% of base salary, or an aggregate of $10,500
for the year. Contributions in excess of six percent of the Participant's
annual compensation are not eligible for Employer Matching Contributions.
The Employer begins providing matching contributions to a Participant's
account on the first January 1 or July 1 coinciding with or next following
the Participant's completion of 1,000 hours of service.
-4-
Company Pension Contributions - For eligible employees hired subsequent to
December 31, 2000, the Employer provides a Company Pension Contribution
equal to a percentage of the Participant's earnings based on years of
service according to the following schedule:
Years of Service Contribution Percentage
Less than 7 years 3%
7 years but less than 14 years 4%
14 or more years 5%
The contribution percentage is changed annually on January
1 of each Plan year based on the years of service earned by the
Participant as of December 31 of the immediately prior Plan year. To
receive a Company Pension Contribution for the Plan year, the Participant
must (1) be eligible to receive Company Pension Contributions, (2) be
employed on December 31 of such Plan year, and (3) have completed at least
1,000 service hours in the Plan year, terminated employment by reason of
death or long-term disability, or terminated employment with the company
after attainment of age 55 and completion of at least five years of
service.
Participant Accounts - The Plan provides for Participant directed accounts
into an employer stock fund and several mutual funds and Charles Schwab
Money Funds. Each Participant's account is credited with the Participant's
Contribution and an allocation of (a) the Employer Matching Contribution,
(b) the Company Pension Contribution, (c) Plan earnings, and (d)
forfeitures of terminated Participants' non-vested accounts. Allocations
are based on Participant earnings and account balances, as defined. The
benefit to which a Participant is entitled is the benefit that can be
provided from the Participant's vested account.
Investments - Participants may elect that their contributions be invested
in increments of one percent of the total in one of eleven funds,
including Fidelity Bankshares, Inc. common stock, Oakmark Fund, Heartland
Value Fund, Janus Worldwide Fund, Janus Flexible Income Fund, Janus Twenty
Fund, Federated Kaufmann Fund Class K, Safeco Equity Fund, Schwab Value
Advantage Money Fund, Vanguard Wellington Fund and Vanguard Index Trust
500 Portfolio. Participants may change their investment options at any
time.
Participants' Notes Receivable - Participants may borrow from their
accounts a minimum of $1,000 and a maximum equal to the lesser of $50,000
or 50 percent of their account balance. Loan transactions are treated as a
transfer to (from) the investment fund from (to) the Participants' loan
fund. Loan terms range from one to five years, unless for the purchase of
a primary residence, in which case the term may extend to 15 years. The
loans are secured by the balance in the Participant's account and bear
interest at prime rate plus one-half percent at the beginning of the
quarter the loan is made. Principal and interest are paid ratably through
payroll deductions. At December 31, 2001, 86 participants had outstanding
loans classified as notes receivable totaling $657,534 at interest rates
ranging from 5.25% - 10.00%. At December 31, 2000, 73 participants had
outstanding loans classified as notes receivable totaling $431,956 at
interest rates ranging from 8.25% - 10.00%.
Administration - The Administrative Committee, as appointed by the Board
of Directors of the Employer, is the Plan's governing body and is
responsible for administration of the Plan and all questions concerning
the interpretation and application of the Plan. The Employer pays only the
costs of operating the Plan.
-5-
Distributions - Distributions of Participant account balances are made
upon attainment of normal or early retirement age, termination of
employment, total and permanent disability, or death. Terminated
Participants with less than sixty months of service receive the value of
their contributions and their vested percentage of Employer Matching
Contributions; the balance of the account is forfeited and applied to the
Employer Matching Contribution for all other Plan Participants in that
year.
Vesting - Participants' own contributions to the Plan and their related
investment earnings are fully vested at all times. Participants become
vested in Employer Matching Contributions and Company Pension
Contributions, and their related investment earnings according to the
following schedule:
VESTED
YEARS OF SERVICE PERCENT
Employer Matching Contribution
Less than 1 year 0%
1 year 20%
2 years 40%
3 years 60%
4 years 80%
5 years or more 100%
Company Pension Contribution
Less than 5 years 0%
5 years or more 100%
Years of service for vesting are calendar years in which Participants are
credited with at least 1,000 hours of service, counted from date of
employment. Employer Matching Contributions and Company Pension
Contributions automatically become fully vested upon retirement at age 65,
death or disability prior to age 65, or termination of the Plan.
Plan Termination - The Plan may be amended or terminated at any time. In
the event of termination, all account balances become fully vested.
Reclassifications - For comparative purposes, certain amounts in the 2000
financial statements have been reclassified to conform to the presentation
for 2001.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies:
Basis of Presentation - The accompanying financial statements are
presented on the accrual basis of accounting.
Use of Estimates - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Investments - Investments are carried at fair value. Gains or losses on
sales of investments are determined by the specific identification method
and are recognized as of the trade date. The cost of the temporary
investment accounts, Schwab Value Advantage Money Fund, approximates fair
value due to its liquid nature. The fair values of the mutual funds and
common stock were determined using closing market quotations at year end.
Participant loans are recorded at the loan balance, which approximates
fair value.
Gain or loss on sales of investments is based on specific identification
and is included in the net appreciation (depreciation) of investments.
Dividend income is recorded on the ex-dividend date. Interest income is
recorded as earned on an accrual basis. Benefits are recorded when paid.
-6-
Income Taxes - The Internal Revenue Service has determined and informed
the Employer by a letter dated August 27, 1996, that the Plan and related
trust are designed in accordance with applicable sections of the Internal
Revenue Code ("IRC"). The Plan has been amended since receiving the
determination letter; however, the Plan administrator and the Plan's tax
counsel believe that the Plan is designed and is currently being operated
in compliance with the applicable requirements of the IRC.
Benefits Payable - As of December 31, 2001 and 2000, benefits of $483,734
and $448,815, respectively, were due to Participants who have withdrawn
from participation in the Plan.
Forfeitures - During the years ended December 31, 2001 and 2000,
participants who were not fully vested and incurred a break in service
forfeited non-vested benefits. Forfeited amounts totaled $7,767 and $4,719
for the years ended December 31, 2001 and 2000, respectively. These
forfeitures were used to reduce Employer Matching Contributions.
Miscellaneous Liabilities - Miscellaneous liabilities include (1)
miscellaneous liabilities of the Plan to the Participants and (2) the
Plan's obligation to purchase investments where the trade date is prior
to, and the settlement date is subsequent to, the closing of the reporting
period. Included in the balance of miscellaneous liabilities at December
31, 2001 is an obligation to purchase 2,184 shares of Fidelity Federal
Bank & Trust common stock, valued at $34,878 as of such date.
3. INVESTMENTS
Investments in excess of five percent of net assets available for benefits
at December 31, 2001 and 2000, valued at fair value, are as follows:
Description 2001 2000
Fidelity Bankshares, Inc. common stock $12,233,547 $5,334,095
Janus Worldwide fund 901,136
Vanguard Index Trust 500 Portfolio 965,201
Vanguard Wellington Fund 748,689
During 2001 and 2000, the Plan's investments (including gains and losses
on investments bought and sold, as well as held during the year)
appreciated in value by $5,601,108 and $702,847, respectively, as follows:
2001 2000
Fidelity Bankshares, Inc. common stock $ 5,885,976 $ 1,416,692
Mutual funds (284,868) (713,845)
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$ 5,601,108 $ 702,847
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4. RELATED PARTY TRANSACTIONS
At December 31, 2001, the Plan owned 766,033 shares of common stock of
Fidelity Bankshares, Inc. which had a cost and fair value of $6,167,167
and $12,233,547, respectively. During the years ended December 31, 2001
and 2000, dividend income of $296,839 and $267,047, respectively, was
earned on these investments.
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SAVINGS TRUST FOR EMPLOYEES OF
FIDELITY FEDERAL BANK & TRUST
SCHEDULE H, PART IV, LINE 4i - SUPPLEMENTAL SCHEDULE OF ASSETS HELD FOR
INVESTMENT PURPOSES DECEMBER 31, 2001
Shares Current
Identity of Issuer Description Held Cost Value
* Fidelity Bankshares, Inc. Common stock 766,033 $ 6,167,167 $12,233,547
-------- ----------- -----------
Heartland Value Fund Mutual fund 9,889 356,350 368,366
Janus Flexible Income Fund Mutual fund 22,837 214,592 210,553
Janus Twenty Fund Mutual fund 8,749 419,583 336,504
Janus Worldwide Fund Mutual fund 15,668 822,045 686,887
Federated Kaufmann Fund Class K Mutual fund 89,679 462,245 393,692
Oakmark Fund Mutual fund 11,704 401,702 412,809
Safeco Equity Fund Mutual fund 15,547 322,453 288,250
Vanguard Index Trust 500 Portfolio Mutual fund 8,388 924,165 888,186
Vanguard Wellington Fund Mutual fund 29,517 855,651 804,626
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Total mutual funds 4,778,786 4,389,873
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Schwab Value Advantage Money Fund Money funds 572,588 572,588 572,588
----------- -----------
Loan Fund Participants' Notes Receivable 657,534 657,534 657,534
----------- -----------
Total investments $12,176,075 $17,853,542
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* Party-in-interest
-8-
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustees (or other persons who administer the employee benefit
plan) have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
SAVINGS PLAN FOR EMPLOYEES OF
FIDELITY FEDERAL SAVINGS BANK OF FLORIDA
FIDELITY FEDERAL BANK & TRUST
PLAN ADMINISTRATOR
Date: June 25, 2002 By: /s/ Richard Aldred
-------------------------------------
Name: Richard Aldred
Title:Executive Vice President