EXHIBIT 99.1
205 DATURA STREET
WEST PALM BEACH, FL 33401
(561) 803-9900
PRESS RELEASE
FOR IMMEDIATE RELEASE DRAFT IV
Fidelity Bankshares Q2 Net Income $5.7 Million, EPS $0.38. Assets
Reach $3.40 Billion. Deposits $2.68 Billion.
11.8% increase in Diluted EPS from a year ago
- --------------------------------------------------------------------------------
West Palm Beach, FL, July 20, 2004 - 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, 2004, was $5.7
million or $.39 basic and $.38 diluted earnings per share. This compared with
$4.9 million or $.34 basic and diluted earnings per share for the quarter ended
June 30, 2003.
The company's other income for the second quarter was $7.2 million, an increase
of $1.1 million, compared to the same quarter in 2003. During the quarter, the
company sold $10.5 million of securities, resulting in a gain of approximately
$467,000. These securities were sold as the company continued to restructure its
investment portfolio in an effort to reduce interest rate risk as interest rates
begin to rise. By comparison, the quarter ended June 30, 2003 included no such
gains.
The company realized gains on the sale of loans of $151,000, compared to $1.1
million for the second quarter a year ago. The company began selling most of its
30-year, fixed rate, residential mortgage production in 2003 in an effort to
minimize interest rate risk in an expected increasing rate environment. Thus far
in 2004, customer demand for 30 year, fixed rate residential loans has been
limited with customers opting for three to seven year hybrid adjustable rate
loans. Consequently, loan sales have been significantly limited in 2004 compared
to 2003. Miscellaneous other income for the quarter included a gain of $500,000
resulting from the sale of surplus land adjacent to one of the bank's branches.
The company substantially completed the restructuring of its securities
portfolio during the second quarter. As a result, the company's net interest
margin at June 30, 2004 was 3.33%, compared to 3.10% at March 31, 2004 and 3.30%
at December 31, 2003.
For the six months ended June 30, 2004, the company's net income was $11.4
million, or $.78 basic and $.75 diluted earnings per share. This compares to
$10.0 million net income and $.70 basic and $.69 diluted earnings per share for
the six months ended June 30, 2003.
- more -
<page>
Fidelity Bankshares
Page 2 of 5
Chairman and CEO Vince Elhilow said, "Our core deposits, consisting of checking,
savings and money market accounts increased by $66.5 million during the quarter
and now comprise 75.9% of total deposits. Certificates of deposit represent the
remaining 24.1%. Total deposits reached $2.68 billion, an increase of $412.0
million or 18.2% during the 12 months ended June 30 2004. We expect our steadily
growing core deposit base will help minimize interest rate risk in an
environment of increasing interest rates."
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, 2004, was distributed on July
15, 2004.
Fidelity Bankshares, Inc., through its subsidiary Fidelity Federal Bank & Trust,
has assets of $3.40 billion and deposits of $2.68 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.
Financial statements for the quarter are attached.
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:
www.hawkassociates.com.
Forward-Looking Statements.
When used in this report, the words or phrases "will likely result," "are
expected to," "will continue," "is anticipated," "estimate," "project" or
similar expressions are intended to identify "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are subject to certain risks and uncertainties, including, among
other things, changes in economic conditions in the Company's market area,
changes in policies by regulatory agencies, fluctuations in interest rates,
demand for loans in the Company's market area and competition that could cause
actual results to differ materially from historical earnings and those presently
anticipated or projected. The Company wishes to caution readers not to place
undue reliance on any such forward-looking statements, which speak only as of
the date made. The Company wishes to advise readers that the factors listed
above could affect the Company's financial performance and could cause the
Company's actual results for future periods to differ materially from any
opinions or statements expressed with respect to future periods in any current
statements.
<page>
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,
2004 2003 2004 2003 2003
FOR THE PERIOD (In Thousands)
-----------------------------------------------------------------------------------------------------------------------------
Interest income $39,091 $36,336 $77,153 $71,167 $143,683
Interest expense 14,506 14,650 28,655 28,696 57,164
Net interest income 24,585 21,686 48,498 42,471 86,519
Chargeoffs 32 - 99 71 322
Recoveries 22 - 25 1 1
Gain on sale of loans 151 1,054 257 3,613 4,159
Gain (loss) on sale of mortgage-backed
and investment securities 467 - 1,053 - (2,364)
Net income 5,688 4,931 11,375 10,048 17,921
PER COMMON SHARE
-----------------------------------------------------------------------------------------------------------------------------
Net income:
Basic EPS $0.39 $0.34 $0.78 $0.70 $1.24
Diluted EPS 0.38 0.34 0.75 0.69 1.22
Dividends declared 0.10 0.10 0.20 0.20 0.40
Book value 12.50 11.81 12.50 11.81 12.28
Stock price:
High 37.10 23.60 38.45 23.60 32.47
Low 30.62 18.07 30.62 17.24 17.20
Close 35.45 22.30 35.45 22.30 31.40
AVERAGE FOR THE PERIOD (In Thousands)
-----------------------------------------------------------------------------------------------------------------------------
Assets $3,317,404 $2,760,628 $3,220,109 $2,660,386 $2,798,378
Loans receivable, net 2,365,533 1,991,316 2,296,421 1,972,871 2,037,993
Mortgage-backed securities 439,250 419,888 453,152 316,139 399,898
Investments 268,536 159,697 238,446 181,813 174,896
Deposits 2,654,778 2,196,940 2,581,122 2,099,292 2,235,207
Borrowed funds 395,366 334,483 376,242 337,382 335,832
Stockholders' equity 191,213 175,042 189,786 173,023 176,477
SELECTED RATIOS
---------------------------------------------------------------------------------------------------------------------------
Return on average assets 0.69% 0.71% 0.71% 0.76% 0.64%
Return on average equity 11.90% 11.27% 11.99% 11.61% 10.15%
Interest rate spread on average assets for the period 3.19% 3.33% 3.23% 3.41% 3.28%
Net yield on average interest earning assets for the period 3.20% 3.37% 3.25% 3.44% 3.31%
Net yield on interest earning assets at end of period 3.33% 3.33% 3.33% 3.33% 3.30%
Interest rate spread at end of period 3.32% 3.30% 3.32% 3.30% 3.29%
Ratio of interest earning assets to interest bearing
liabilities at end of period 100.41% 101.20% 100.41% 101.20% 100.49%
Ratio of non performing assets to total assets 0.31% 0.18% 0.31% 0.18% 0.37%
Ratio of valuation allowances to non performing assets 117.09% 185.84% 117.09% 185.84% 99.12%
Ratio of valuation allowances to loans receivable, net 0.51% 0.48% 0.51% 0.48% 0.51%
Stockholders' equity as a percentage of assets 5.56% 6.26% 5.56% 6.26% 6.05%
PERIOD END (In Thousands)
----------------------------------------------------------------------------------------------------------------------
Total assets $3,402,619 $2,833,313 $3,402,619 $2,833,313 $3,048,222
Interest earning cash and investment securities 192,279 136,633 192,279 136,633 156,528
Mortgage-backed and corporate debt securities 503,254 452,093 503,254 452,093 471,228
Loans receivable, net 2,448,022 2,037,970 2,448,022 2,037,970 2,191,696
Federal Home Loan Bank Stock 19,905 13,645 19,905 13,645 13,322
Real estate owned and held for investment 7 232 7 232 -
Loan loss reserve 12,436 9,730 12,436 9,730 11,119
Other assets 259,057 192,740 259,057 192,740 215,448
Borrowed funds 474,648 331,505 474,648 331,505 358,970
Common shares outstanding, net of treasury shares 15,130,026 15,015,197 15,130,026 15,015,197 15,024,648
Stockholders' equity 189,113 177,354 189,113 177,354 184,509
Certain amounts in prior year have been reclassified to conform with the June
30, 2004 presentation.
<page>
Fidelity Bankshares Inc.
Selected Unaudited Operating Data
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
------------------------------------ ------------------------------------
(In Thousands) (In Thousands)
Selected Operating Data:
Interest income $39,091 $36,336 $77,153 $71,167
Interest expense 14,506 14,650 28,655 28,696
--------------- --------------- --------------- ---------------
Net interest income before
provision for loan losses 24,585 21,686 48,498 42,471
Provision for loan losses 794 693 1,391 1,483
--------------- --------------- --------------- ---------------
Net interest income after
provision for loan losses 23,791 20,993 47,107 40,988
--------------- --------------- --------------- ---------------
Other income
Fees on deposit accounts 2,795 2,202 5,634 4,104
Fees for other banking services 2,997 2,563 5,669 4,857
All other income 1,365 1,255 2,317 4,070
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
Total other income 7,157 6,020 13,620 13,031
--------------- --------------- --------------- ---------------
Operating expense
Compensation and benefits 12,521 11,304 24,466 22,400
Occupancy and equipment 3,943 3,415 7,953 6,831
All other operating expense 5,083 4,167 9,594 8,315
--------------- --------------- --------------- ---------------
Total operating expense 21,547 18,886 42,013 37,546
--------------- --------------- --------------- ---------------
Income before taxes 9,401 8,127 18,714 16,473
Provision for income taxes 3,713 3,196 7,339 6,425
Net income $5,688 $4,931 $11,375 $10,048
=============== =============== =============== ===============
Earnings per share:
Basic $ .39 $ .34 $ .78 $ .70
=============== =============== =============== ===============
=============== =============== =============== ===============
Diluted $ .38 $ .34 $ .75 $ .69
=============== =============== =============== ===============
Certain amounts in prior year have been reclassified to conform with the June
30, 2004 presentation.
<page>
Fidelity Bankshares Inc.
Selected Unaudited Financial Data
June 30, December 31,
2004 2003
------------------------------------------------
(In Thousands)
Assets
Cash and interest earning deposits $ 117,295 $ 109,887
Assets available for sale 672,493 593,959
Loans:
Residential mortgage 1,659,920 1,509,249
Commercial mortgage 877,047 753,890
Consumer 201,270 185,450
Commercial business 128,705 131,292
----------------- -----------------
Gross loans 2,866,942 2,579,881
Less:
Loans in process 403,442 374,974
Deferred costs (income) 3,042 2,092
Allowance for loan losses 12,436 11,119
----------------- -----------------
Loans, Net 2,448,022 2,191,696
----------------- -----------------
----------------- -----------------
Office properties and equipment 76,204 70,663
FHLB stock 19,905 13,322
REO 7 -
All other assets 68,693 68,695
----------------- -----------------
Total assets $ 3,402,619 $ 3,048,222
================= =================
Liabilities and Equity
Liabilities:
Deposits:
Checking, savings and money
market accounts $ 2,030,565 $ 1,774,222
Certificates of deposit 645,439 685,879
----------------- -----------------
Total deposits 2,676,004 2,460,101
Repurchase agreements 34,651 42,089
Borrowings from FHLB 387,679 264,561
Subordinated debentures I 29,639 29,639
Subordinated debentures II 22,681 22,681
All other liabilities 62,852 44,642
----------------- -----------------
----------------- -----------------
Total liabilities 3,213,506 2,863,713
----------------- -----------------
----------------- -----------------
Stockholders' equity 189,113 184,509
----------------- -----------------
Total liabilities and equity $ 3,402,619 $ 3,048,222
================= =================
Certain amounts in prior year have been reclassified to conform with the June
30, 2004 presentation.