UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 15, 2003
Fidelity Bankshares, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 000-29040 65-0717085
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(State or other (SEC File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
205 Datura Street, West Palm Beach, Florida, 33401
(Address of principal executive offices)
Registrant's telephone number, including area code: (561) 803-9900
Not Applicable
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(Former name or former address, if changed since last report)
CURRENT REPORT ON FORM 8-K
Item 1. Changes in Control of Registrant
Not Applicable
Item 2. Acquisition or Disposition of Assets
Not applicable.
Item 3. Bankruptcy or Receivership
Not applicable.
Item 4. Changes in Registrant's Certifying Accountant
Not applicable.
Item 5. Other Events
Not applicable.
Item 6. Resignations of Registrant's Directors
Not Applicable.
Item 7. Financial Statements and Exhibits
(a) No financial statements of businesses acquired are required.
(b) No pro forma financial information is required.
(c) Attached as an exhibit is Fidelity Bankshares, Inc.'s (the "Company") news
release announcing its June 30, 2003 earnings.
Item 8. Change in Fiscal Year
Not applicable.
Item 9. Regulation FD Disclosure - Information provided pursuant to Item 12
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The Company announced its June 30, 2003 financial results by release. The
press release is included as an exhibit.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
Fidelity Bankshares, Inc.
DATE: July 15, 2003 By: /s/ Vince A. Elhilow
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Vince A. Elhilow
Chairman of the Board
and Chief Executive Officer
EXHIBIT INDEX
99.1 News release dated July 15, 2003 announcing June 30, 2003 earnings.
EXHIBIT 99.1
PRESS RELEASE
FOR IMMEDIATE RELEASE
Fidelity Bankshares Q2 Net Income Up 20.2% To $4.9 Million Or $.34 Per Share.
Assets $2.8 Billion. Deposits $2.3 Billion.
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West Palm Beach, FL, July 15, 2003 - Fidelity Bankshares, Inc. (Nasdaq: FFFL)
the holding company for Fidelity Federal Bank & Trust, announced today the
company's net income for the second quarter ended June 30, 2003 increased 20.2%
to $4.9 million or $.34 basic and diluted earnings per share. This compared to
$4.1 million or $.27 basic and diluted earnings per share for the quarter ended
June 30, 2002. Net interest income before credit adjustments increased by 17.1%
to $21.7 million for the quarter.
Other income, derived from deposit account fees, insurance sales and other fee
income, together with income from the company's loan sales business, increased
by $1.9 million or 45% over the second quarter of 2002.
Net income for the six months ended June 30 2003 rose 23.9% to $10.0 million or
$.70 basic and $.69 diluted earnings per share over $8.1 million or $.53 basic
and diluted earnings per share in the same period in 2002. Net interest income
before credit adjustments rose 16.9% in the first six months to $42.5 million.
Other income was up 65% over the first six months of 2002. Excluding the
non-recurring gain on the sale of loans in March 2003, the increase in other
income would have been 46% for the six months of 2003, compared to the first six
months end of 2002.
During the second quarter, the company again experienced mild margin
compression. At June 30, 2003 the company's net yield on earning assets was
3.34%, compared to 3.43% at March 31, 2003. However, the company also continued
to increase deposits. While certificates of deposit declined by $29.2 million
during the second quarter, the company recorded net deposit growth of $135.9
million. These funds were invested in short-term, temporary investments and
interest earning deposits at much lower yields than retail loans, contributing
to the company's margin compression.
Chairman and CEO Vince Elhilow said, "We are pleased with our progress in
increasing other income and our continuing efforts to make our balance sheet
more bank-like. Other income, due mainly to the inception of our loan sales
business this year, increased to 18.3% of interest income compared to 11.6% a
year ago. Loan sales have exceeded our most optimistic projections so far this
year. It is unclear whether that pace can be maintained. While our total loan
portfolio was up 16.9% over a year ago, our residential loan portfolio grew only
6.6%."
-more-
Fidelity Bankshares, Inc.
Page 2
Elhilow added, "Core deposits, consisting of checking, savings and money market
accounts, now comprise 67.8% of our deposits, while certificates of deposit
represent the remaining 32.2%. At December 31, 2002 and June 30, 2002, core
deposits made up 59.6% and 53.9%, respectively, of the company's deposits." In
June, the Board of Directors approved payment of a quarterly dividend to
stockholders of $.10 per share on the company's common stock. The dividend,
payable to stockholders of record as of June 30, 2003, was distributed on July
11, 2003.
Fidelity Bankshares, Inc., through its subsidiary Fidelity Federal Bank & Trust,
has assets of $2.8 billion and deposits of $2.3 billion and operates in Florida
through 42 offices in Palm Beach, Martin and St. Lucie counties.
An investment profile on Fidelity Bankshares may be found on the website
www.hawkassociates.com/fffl/profile.htm.
For more information contact President and CEO Vince A. Elhilow or Chief
Financial Officer Richard D. Aldred at (561) 803-9900 or Frank Hawkins or Julie
Marshall, Hawk Associates, Inc. at (305) 852-2383. Email:
info@hawkassociates.com. Information about Fidelity Bankshares, Inc. can be
found on the website www.fidelityfederal.com. Copies of Fidelity Bankshares
press releases, SEC filings, current price quotes, stock charts and other
valuable information for investors may be found on the website:
http://www.hawkassociates.com.
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Fidelity Bankshares, Inc.
Financial Highlights
(Unaudited)
Three Months Three Months Six Months Six Months Year
Ended Ended Ended Ended Ended
June 30, June 30, June 30, June 30, December 31,
2003 2002 2003 2002 2002
FOR THE PERIOD (In Thousands)
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Interest income $36,336 $34,303 $71,167 $67,980 $137,867
Interest expense 14,650 15,784 28,696 31,649 61,768
Net interest income 21,686 18,519 42,471 36,331 76,099
Chargeoffs - 223 71 240 575
Recoveries - 10 1 16 60
Gain on sale of loans 1,054 21 3,613 43 74
Net income 4,931 4,101 10,048 8,109 16,798
PER COMMON SHARE
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Net income:
Basic EPS $0.34 $0.27 $0.70 $0.53 $1.12
Diluted EPS 0.34 0.27 0.69 0.53 1.11
Dividends declared 0.10 0.10 0.20 0.20 0.40
Book value 11.81 11.41 11.81 11.41 11.37
Stock price:
High 23.60 27.47 23.60 22.47 22.47
Low 18.07 17.70 17.24 15.60 15.60
Close 22.30 22.11 22.30 22.11 17.90
AVERAGE FOR THE PERIOD (In Thousands)
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Assets $2,760,628 $2,346,348 $2,660,386 $2,290,928 $2,349,524
Loans receivable, net 1,991,316 1,698,285 1,972,871 1,656,709 1,745,639
Mortgage-backed securities 419,888 205,737 316,139 216,387 193,510
Investments 159,697 272,290 181,813 259,937 229,660
Deposits 2,196,940 1,727,755 2,099,292 1,689,559 1,752,316
Borrowed funds 334,483 378,010 337,382 376,510 372,000
Stockholders' equity 175,042 181,319 173,023 180,635 177,009
SELECTED RATIOS
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Return on average assets 0.71% 0.70% 0.76% 0.71% 0.71%
Return on average equity 11.27% 9.05% 11.61% 8.98% 9.49%
Interest rate spread on average assets for the period 3.33% 3.31% 3.41% 3.32% 3.45%
Net yield on average interest earning assets for the period 3.37% 3.40% 3.44% 3.41% 3.51%
Net yield on interest earning assets at end of period 3.33% 3.48% 3.33% 3.48% 3.63%
Interest rate spread at end of period 3.30% 3.39% 3.30% 3.39% 3.60%
Ratio of interest earning assets to interest bearing
liabilities at end of period 101.20% 102.95% 101.20% 102.95% 101.01%
Ratio of non performing assets to total assets 0.18% 0.24% 0.18% 0.24% 0.27%
Ratio of valuation allowances to non performing assets 185.84% 126.86% 185.84% 126.86% 126.21%
Ratio of valuation allowances to loans receivable, net 0.48% 0.43% 0.48% 0.43% 0.43%
Stockholders' equity as a percentage of assets 6.26% 7.66% 6.26% 7.66% 6.93%
PERIOD END (In Thousands)
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Total assets $2,833,313 $2,355,600 $2,833,313 $2,355,600 $2,439,397
Interest earning cash and investment securities 136,633 249,278 136,633 249,278 166,286
Mortgage-backed and corporate debt securities 452,093 191,444 452,093 191,444 145,139
Loans receivable, net 2,037,970 1,744,594 2,037,970 1,744,594 1,935,999
Real estate owned and held for investment 232 - 232 - -
Loan loss reserve 9,730 7,441 9,730 7,441 8,318
Other assets 53,217 35,882 53,217 35,882 41,528
Borrowed funds 331,505 377,119 331,505 377,119 326,537
Common shares outstanding, net of treasury shares 15,015,197 15,802,206 15,015,197 15,802,206 14,860,327
Stockholders' equity 177,354 180,325 177,354 180,325 169,087
Certain amounts in prior year have been reclassified to conform with the
June 30, 2003 presentation.
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Fidelity Bankshares Inc.
Selected Unaudited Operating Data
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
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(In Thousands) (In Thousands)
Selected Operating Data:
Interest income $36,336 $34,303 $71,167 $67,980
Interest expense 14,650 15,784 28,696 31,649
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Net interest income before
provision for loan losses 21,686 18,519 42,471 36,331
Provision for loan losses 693 316 1,483 817
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Net interest income after
provision for loan losses 20,993 18,203 40,988 35,514
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Other income
Fees on deposit accounts 2,202 1,727 4,104 3,345
Fees for other banking services 2,563 2,149 4,857 3,980
Gain on sale of loans 1,054 21 3,613 43
All other income 201 256 457 506
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=-------------- --------------- --------------- ---------------
Total other income 6,020 4,153 13,031 7,874
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Operating expense
Compensation and benefits 11,304 9,113 22,400 17,608
Occupancy and equipment 3,415 2,840 6,831 5,546
All other operating expense 4,167 3,647 8,315 6,875
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Total operating expense 18,886 15,600 37,546 30,029
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Income before taxes 8,127 6,756 16,473 13,359
Provision for income taxes 3,196 2,655 6,425 5,250
Net income $4,931 $4,101 $10,048 $8,109
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Earnings per share:
Basic $ .34 $ .27 $ .70 $ .53
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Diluted $ .34 $ .27 $ .69 $ .53
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Certain amounts in prior year have been reclassified to conform with the
June 30, 2003 presentation.
<page>
Fidelity Bankshares Inc.
Selected Unaudited Financial Data
June 30, December 31,
2003 2002
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(In Thousands)
Assets
Cash and interest earning deposits $ 153,740 $ 129,666
Assets available for sale 487,865 235,018
Loans:
Residential mortgage 1,431,790 1,456,483
Commercial mortgage 613,178 459,054
Consumer 160,907 141,343
Commercial business 125,425 146,205
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Gross loans 2,331,300 2,203,085
Less:
Loans in process 282,970 260,380
Deferred costs (income) 630 (1,612)
Allowance for loan losses 9,730 8,318
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Loans, Net 2,037,970 1,935,999
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Office properties and equipment 69,588 67,784
FHLB stock 13,645 12,919
REO 232 -
All other assets 70,273 58,011
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Total assets $ 2,833,313 $ 2,439,397
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Liabilities and Equity
Liabilities:
Deposits:
Checking, savings and money
market accounts $ 1,535,797 $ 1,130,586
Certificates of deposit 728,168 767,755
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Total deposits 2,263,965 1,898,341
Repurchase agreements 31,557 44,416
Borrowings from FHLB 271,198 253,371
Subordinated debentures 28,750 28,750
All other liabilities 60,489 45,432
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Total liabilities 2,655,959 2,270,310
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Stockholders' equity 177,354 169,087
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Total liabilities and equity $ 2,833,313 $ 2,439,397
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Certain amounts in prior year have been reclassified to conform with the
June 30, 2003 presentation.
<page>
Gain on Sale of Loans
For the Periods Ended June 30, 2003
Quarter Ended
'ACCT NBR' 'ACCT NAME' June 30, 2003 March 31, 2003 June 30, 2003
374001010000 PROFIT ON SALE OF LOANS (3,613,828.02) (2,000.00) (3,611,828.02)
374001010210 PROFIT ON SALE OF LOANS - - -
490000010210 LOSS ON LOANS SOLD 709.83 - 709.83
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Total (3,613,118.19) (2,000.00) (3,611,118.19)