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): January 20, 2004
Fidelity Bankshares, Inc.
(Exact name of registrant as specified in its charter)
Delaware 000-29040 65-0717085
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(State or other jurisdiction (SEC File Number) (I.R.S. Employer
of incorporation) Identification No.)
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 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 December 31, 2003 earnings.
Item 12. Results of Operations and Financial Condition
The Company announced its December 31, 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: January 21, 2004 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 January 20, 2004 announcing December 31, 2003 earnings.
EXHIBIT 99.1
PRESS RELEASE
FOR IMMEDIATE RELEASE
Fidelity Bankshares 2003 Net Income $17.9 Million, EPS $1.22. Q4 Net Income
$3.5 Million, EPS $.23 Assets Reach $3.05 Billion. Deposits $2.46 Billion.
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West Palm Beach, FL, January 20, 2004 - Fidelity Bankshares, Inc. (NASDAQ: FFFL)
the holding company for Fidelity Federal Bank & Trust, announced today the
company's net income for the year ended December 31, 2003 was $17.9 million or
$1.24 basic and $1.22 diluted earnings per share of common stock. By comparison,
net income for the year ended December 31, 2002 was $16.8 million or $1.12 basic
and $1.11 diluted earnings per share of common stock.
For the fourth fiscal quarter ended December 31, 2003 net income was $3.5
million or $.24 basic and $.23 diluted earnings per share, compared to $4.5
million or $.31 basic and diluted earnings per share of common stock in the
comparable quarter last year. At year-end, assets totaled $3.05 billion while
deposits were $2.46 billion.
During the fourth quarter, the company sold $85 million of securities bearing a
weighted average interest rate of 2.26%, incurring a loss of approximately $2.4
million. The proceeds from those sales were reinvested in an equivalent amount
of securities bearing a weighted average interest rate of 3.37%. During the
quarter the company also closed a branch in Palm Beach County and consolidated
the deposits at a nearby branch. As a result, the company incurred approximately
$310,000 in lease termination costs and a write off of leasehold improvements.
In the aggregate, these transactions effectively reduced earnings per share for
the quarter and the year by $.11 per share.
The company's net interest margin, or net yield on earning assets, at December
31, 2003 was 3.30%, an improvement from 2.96% at September 30, 2003. The fourth
quarter improvement was attributable to a decline in prepayments on
mortgage-backed securities, the December sale of certain low interest yielding
investments and the reinvestment of those proceeds into higher yield
investments.
In December, the company issued $22 million in trust preferred securities in a
pooled transaction, of which $20 million of the proceeds were invested in
Fidelity Federal Bank & Trust, while the remainder was retained by the company
for general corporate purposes.
<page>
Chairman and CEO Vince Elhilow said, "We reported nearly $18 million in net
income in 2003 and continued to increase our deposits and customer base, further
strengthening our position as one of the largest Florida-based financial
institutions. Our net deposit growth for the year was $561.8 million although
certificates of deposit declined by $81.9 million. Core deposits, consisting of
checking, savings and money market accounts, now comprise 72.1% of our total
deposits with certificates of deposit accounting for the remaining 27.9%. Our
vibrant deposit growth underscores both the strength of our growing network of
branches as well as the highly professional efforts of our employees in serving
the financial needs of the growing communities we serve. The investment of $20
million into the bank in the fourth quarter enables us to continue our franchise
expansion in what is certainly one of the most dynamic banking markets in the
country."
The company's cost of deposits at December 31, 2003 was 1.49%. This compares
with 1.93% at December 31, 2002 and 2.50% at December 31, 2001.
During 2003, the company's net loans grew by $261.8 million or 13.5%, despite
unprecedented levels of loan prepayments. At December 31, 2003, 57.5% of the
company's loan portfolio was residential mortgages compared to 65.5% at December
31, 2002. The balance of the company's loan portfolio consists of commercial
mortgages, consumer and commercial business loans.
In December, the Board of Directors approved payment of a quarterly dividend to
stockholders of $.10 per share of the company's common stock. The dividend,
payable to stockholders of record as of December 31, 2003, was distributed on
January 14, 2004.
Fidelity Bankshares, Inc., through its subsidiary Fidelity Federal Bank & Trust,
has assets of $3.05 billion and deposits of $2.46 billion. The bank operates in
Florida through 41 branches and four loan deposit offices in Palm Beach, Martin,
Broward, Indian River 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 Chairman 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.
<page>
Fidelity Bankshares, Inc.
Financial Highlights
(Unaudited)
Three Months Three Months Year Year
Ended Ended Ended Ended
December 31, December 31, December 31, December 31,
2003 2002 2003 2002
FOR THE PERIOD (In Thousands)
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Interest income $37,089 $34,935 $143,683 $137,867
Interest expense 14,098 14,492 57,164 61,768
Net interest income 22,991 20,443 86,519 76,099
Chargeoffs 5 269 322 575
Recoveries 1 17 2 60
Gain on sale of loans 429 7 4,159 74
Net income 3,487 4,495 17,921 16,798
PER COMMON SHARE
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Net income:
Basic EPS $0.24 $0.31 $1.24 $1.12
Diluted EPS 0.23 0.31 1.22 1.11
Dividends declared 0.10 0.10 0.40 0.40
Book value 12.29 10.74 12.29 11.38
Stock price:
High 32.50 19.35 32.50 22.47
Low 26.32 17.20 17.24 15.60
Close 31.40 17.90 31.40 17.90
AVERAGE FOR THE PERIOD (In Thousands)
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Assets $2,980,415 $2,432,858 $2,798,378 $2,349,597
Loans receivable, net 2,129,779 1,883,945 2,037,993 1,747,646
Mortgage-backed securities 481,885 158,505 399,898 193,510
Investments 173,099 217,336 174,896 245,997
Deposits 2,410,633 1,852,372 2,235,207 1,752,321
Borrowed funds 335,177 358,215 335,832 372,000
Stockholders' equity 181,333 171,807 176,477 176,955
SELECTED RATIOS
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Return on average assets 0.47% 0.74% 0.64% 0.71%
Return on average equity 7.69% 10.47% 10.15% 9.49%
Interest rate spread on average assets for the period 3.27% 3.56% 3.28% 3.40%
Net yield on average interest earning assets for the period 3.30% 3.62% 3.31% 3.48%
Net yield on interest earning assets at end of period 3.30% 3.63% 3.30% 3.63%
Interest rate spread at end of period 3.29% 3.60% 3.29% 3.60%
Ratio of interest earning assets to interest bearing
liabilities at end of period 100.54% 101.15% 100.54% 101.01%
Ratio of non performing assets to total assets 0.32% 0.27% 0.32% 0.27%
Ratio of valuation allowances to non performing assets 114.12% 126.21% 114.12% 126.21%
Ratio of valuation allowances to loans receivable, net 0.51% 0.43% 0.51% 0.43%
Stockholders' equity as a percentage of assets 6.06% 6.93% 6.06% 6.93%
PERIOD END (In Thousands)
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Total assets $3,046,524 $2,439,397 $3,046,524 $2,439,397
Interest earning cash and investment securities 169,850 166,286 169,850 166,286
Mortgage-backed and corporate debt securities 471,228 145,139 471,228 145,139
Loans receivable, net 2,191,696 1,936,370 2,191,696 1,936,370
Real estate owned and held for investment - - - -
Loan loss reserve 11,119 8,318 11,119 8,318
All other assets 213,750 191,602 213,750 191,602
Borrowed funds 357,400 326,537 357,400 326,537
Common shares outstanding, net of treasury shares 15,024,648 14,860,327 15,024,648 14,860,327
Stockholders' equity 184,715 169,087 184,715 169,087
Certain amounts in prior year have been reclassified to conform with the
December 31, 2003 presentation.
<page>
Fidelity Bankshares Inc.
Selected Unaudited Operating Data
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
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(In Thousands) (In Thousands)
Selected Operating Data:
Interest income $37,089 $34,935 $143,683 $137,867
Interest expense 14,098 14,492 57,164 61,768
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Net interest income before
provision for loan losses 22,991 20,443 86,519 76,099
Provision for loan losses 1,081 710 3,122 1,986
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Net interest income after
provision for loan losses 21,910 19,733 83,397 74,113
--------------- --------------- ---------------- ----------------
Other income
Fees on deposit accounts 3,021 2,056 10,082 7,285
Fees for other banking services 2,375 2,312 9,788 8,487
Gain on sale of loans 429 7 4,159 74
Gain (loss) on sale of investments (2,364) - (2,364) 64
All other income 155 304 851 1,081
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--------------- --------------- ---------------- ----------------
Total other income 3,616 4,679 22,516 16,991
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Operating expense
Compensation and benefits 11,167 9,690 44,802 37,173
Occupancy and equipment 3,943 3,149 14,477 11,649
All other operating expense 4,713 4,241 17,234 14,747
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Total operating expense 19,823 17,080 76,513 63,569
--------------- --------------- ---------------- ----------------
Income before taxes 5,703 7,332 29,400 27,535
Provision for income taxes 2,216 2,837 11,479 10,737
Net income $3,487 $4,495 $17,921 $16,798
=============== =============== ================ ================
Earnings per share:
Basic $ .24 $ .31 $ 1.24 $ 1.12
=============== =============== ================ ================
=============== =============== ================ ================
Diluted $ .23 $ .31 $ 1.22 $ 1.11
=============== =============== ================ ================
Certain amounts in prior year have been reclassified to conform with the
December 31, 2003 presentation.
<page>
Fidelity Bankshares Inc.
Selected Unaudited Financial Data
December 31, December 31,
2003 2002
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(In Thousands)
Assets
Cash and interest earning deposits $ 109,887 $ 129,666
Assets available for sale 593,959 235,018
Loans:
Residential mortgage 1,509,249 1,456,483
Commercial mortgage 753,890 459,426
Consumer 185,450 141,343
Commercial business 131,292 146,205
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Gross loans 2,579,881 2,203,457
Less:
Loans in process 374,974 260,381
Deferred costs (income) 2,092 (1,612)
Allowance for loan losses 11,119 8,318
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Loans, Net 2,191,696 1,936,370
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Office properties and equipment 70,663 67,784
FHLB stock 13,322 12,919
REO - -
All other assets 66,997 57,640
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Total assets $ 3,046,524 $ 2,439,397
==================== =====================
Liabilities and Equity
Liabilities:
Deposits:
Checking, savings and money
market accounts $ 1,774,222 $ 1,130,586
Certificates of deposit 685,879 767,755
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Total deposits 2,460,101 1,898,341
Repurchase agreements 42,089 44,416
Borrowings from FHLB 264,561 253,371
Subordinated debentures 28,750 28,750
Subordinated debentures II 22,000 -
All other liabilities 44,308 45,432
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Total liabilities 2,861,809 2,270,310
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Stockholders' equity 184,715 169,087
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Total liabilities and equity $ 3,046,524 $ 2,439,397
==================== =====================
Certain amounts in prior year have been reclassified to conform with the
December 31, 2003 presentation.