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, 2004
------------------------------------------
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 Bank & Trust
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
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Savings Trust for Employees of Fidelity Federal Bank & Trust
Financial Statements as of and for the Years Ended December 31, 2004 and 2003,
and Supplemental Schedule as of December 31, 2004, and Report of
Independent Registered Public Accounting Firm
SAVINGS TRUST FOR EMPLOYEES OF
FIDELITY FEDERAL BANK & TRUST
TABLE OF CONTENTS
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Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
FINANCIAL STATEMENTS
Statements of Net Assets Available for Benefits at
December 31, 2004 and 2003 2
Statements of Changes in Net Assets Available for Benefits
for the Years Ended December 31, 2004 and 2003 3
Notes to Financial Statements 4-8
SUPPLEMENTAL SCHEDULE AS OF DECEMBER 31, 2004:
Schedule H, Part IV, Line 4i--Supplemental Schedule
of Assets (Held at End of Year) 9
Schedules not filed herewith are omitted because of the absence of conditions
under which they are required.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 & Trust (the "Plan")
as of December 31, 2004 and 2003, 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 standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Plan is not required to have,
nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Plan's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, 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,
2004 and 2003, 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 of assets (held
at end of year) as of December 31, 2004 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. The 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 2004 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
Certified Public Accountants
West Palm Beach, Florida
June 27, 2005
SAVINGS TRUST FOR EMPLOYEES OF
FIDELITY FEDERAL BANK & TRUST
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2004 AND 2003
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2004 2003
ASSETS:
Cash $ 112,787 $ 171,255
Investments-at fair value:
Fidelity Bankshares, Inc. common stock
(cost-$9,658,452 in 2004 and $8,259,263 in 2003) 33,350,234 25,508,261
Mutual funds (cost-$9,543,869 in 2004
and $6,899,308 in 2003) 10,558,723 7,451,998
Charles Schwab Money Funds
(at cost which approximates fair value) 1,328,130 899,314
Participants' notes 1,036,499 986,443
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Total investments 46,273,586 34,846,016
Receivables:
Employer contribution 190,721 110,937
Accrued investment income 93,593 80,873
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Total receivables 284,314 191,810
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Total assets 46,670,687 35,209,081
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LIABILITIES:
Due to broker for securities purchased 115,047 6,489
Other liabilities 603 15,732
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Total liabilities 115,650 22,221
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NET ASSETS AVAILABLE FOR BENEFITS $ 46,555,037 $ 35,186,860
============ ============
See notes to financial statements.
2
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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, 2004 AND 2003
- --------------------------------------------------------------------------------
2004 2003
ADDITIONS:
Investment income:
Dividends and interest $ 509,101 $ 458,805
Net appreciation in fair value of investments 9,842,777 12,401,030
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Total investment income 10,351,878 12,859,835
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Contributions:
Participants 2,330,445 2,040,810
Employer 923,052 830,470
----------- -----------
Total contributions 3,253,497 2,871,280
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Total additions 13,605,375 15,731,115
DEDUCTIONS:
Benefits paid to participants 2,237,198 1,559,860
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NET INCREASE IN NET ASSETS 11,368,177 14,171,255
NET ASSETS AVAILABLE FOR BENEFITS-Beginning of year 35,186,860 21,015,605
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS-End of year $ 46,555,037 $35,186,860
============ ===========
See notes to financial statements.
3
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SAVINGS TRUST FOR EMPLOYEES OF
FIDELITY FEDERAL BANK & TRUST
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2004 AND 2003
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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 Plan's 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(a) 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 been employed
for ninety continuous days.
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 participation in the Retirement Plan
for the Employees of Fidelity Federal Bank & Trust, a defined benefit plan
which is available only to employees hired prior to January 1, 2001.
Participant and Employer Matching Contributions--All eligible employees
may contribute between 1% and 25% 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 $13,000
for the year. Contributions in excess of 6% 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 following the
Participant's completion of 1,000 hours of service.
4
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Company Pension Contributions--Since eligible employees hired subsequent
to December 31, 2000 cannot participate in the above noted defined benefit
plan, the Employer provides an additional Company Pension Contribution in
addition to the matching contribution, equal to a percentage of the
Participant's earnings based on years of service according to the
following schedule:
Contribution
Years of Service 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, several mutual funds, or 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, and (c) Plan earnings. 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 1% of the total, in 1 of 21 funds, including Fidelity
Bankshares, Inc. common stock, Artisan Midcap Fund, Blackrock Government
Income Investment A, Columbia Acorn Fund Class Z, Columbia Contrarian
Income Fund Class A, Dodge & Cox Stock Fund, Europacific Growth Fund,
Federated Kaufmann Fund Class K, First Eagle Sogen Overseas Fund, Growth
Fund of America, Heartland Value Fund, MFS Value Fund Class A, New
Perspective Fund R4, Oakmark Fund, Pimco Renaissance Fund Class B, T Rowe
Price Growth Stock Fund, Vanguard F-1 Securities Short-Term Federal Fund,
Vanguard Index Trust 500 Portfolio, Vanguard Wellington Fund, Schwab
Retirement Advantage Money Fund and Schwab Value Advantage Money Fund.
Participants may change their investment options at any time.
Stock Splits--In December 2004, the Employer announced a 3-for-2 common
stock split of Fidelity Bankshares, Inc. common stock in the form of a
stock dividend paid on January 14, 2005 to stockholders of record on
December 31, 2004. All share data for Fidelity Bankshares, Inc. common
stock have been restated to give retroactive effect to this stock split.
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% of their vested 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 the loan is 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 1/2% at the beginning of the quarter
the loan is made. Principal and interest are paid ratably through payroll
5
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deductions. At December 31, 2004, 194 participants had outstanding loans
classified as notes receivable totaling $1,036,499 at interest rates
ranging from 4.50%-10.00%. At December 31, 2003, 165 Participants had
outstanding loans classified as notes receivable totaling $986,443 at
interest rates ranging from 4.50%-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 the costs of
operating the Plan.
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 60 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.
Benefits Payable--Benefit payments to participants are recorded upon
distribution. Amounts allocated to accounts of participants who have
elected to withdraw from the Plan but have not yet been paid were $219,546
and $400 at December 31, 2004 and 2003, respectively.
Forfeitures--During the years ended December 31, 2004 and 2003,
Participants who were not fully vested and whose employment with the
Employer has been terminated for more than five consecutive years forfeit
non-vested benefits. Forfeited amounts totaled $24,132 and $12,235 for the
years ended December 31, 2004 and 2003, respectively. These forfeitures
were applied to Employer match and pension contributions.
Vesting--Participants' 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, beginning 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.
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies:
Basis of Accounting--The accompanying financial statements are presented
on the accrual basis of accounting. Employer contributions receivable are
recognized in the period in which the Company becomes obligated to make
such contributions. Benefit payments are recorded when paid.
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.
Cash--Cash includes cash awaiting investment or disbursement.
Investments--Investments are stated 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 Retirement Advantage Money Fund and Schwab
Value Advantage Money Fund, approximate fair value due to the short-term
nature of those investments. 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 outstanding 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 in fair value of investments.
Dividend income is recorded on the ex-dividend date. Interest income is
recorded as earned on an accrual basis.
Income Taxes--The Internal Revenue Service has determined and informed the
Employer by a letter dated December 17, 2002 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. Therefore, no
provision or liability for income taxes has been included in the Plan's
financial statements.
Liabilities--Liabilities include (1) 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 and (2) other
miscellaneous liabilities of the Plan to the Participants.
Reclassifications--Certain amounts in the financial statements have been
reclassified to be consistent with the current year's presentation.
3. INVESTMENTS
Investments at fair value in excess of five percent of net assets
available for benefits at December 31, 2004 and 2003 are as follows:
Description 2004 2003
Fidelity Bankshares, Inc. common stock $ 33,350,234 $ 25,508,261
7
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During 2004 and 2003, the Plan's investments (including gains and losses
on investments bought and sold, as well as held during the year)
appreciated in value by $9,842,777 and $12,401,030, respectively, as
follows:
2004 2003
Fidelity Bankshares, Inc. common stock $ 8,929,058 $ 10,874,065
Mutual funds 913,719 1,526,965
------------ ------------
$ 9,842,777 $ 12,401,030
============ ============
4. TRANSACTIONS WITH PARTIES-IN-INTEREST
At December 31, 2004, the Plan owned the following investments that are
considered party-in-interest transactions:
December 31, 2004
----------------------------------------------------
Party-In-Interest Security Number of Shares Cost Fair Value
- ------------------------------------ ---------------------------------- ------------------ --------------- ---------------
Charles Schwab Trust Company Schwab Retirement Advantage
Money Fund 59,236 $ 59,236 $ 59,236
Charles Schwab Trust Company Schwab Value Advantage
Money Fund 1,268,894 1,268,894 1,268,894
Fidelity Bankshares, Inc. Fidelity Bankshares, Inc
Common Stock 1,169,910 9,658,452 33,350,234
During the years ended December 31, 2004 and 2003, dividend income earned
on these investments was as follows:
Security 2004 2003
------------------------------------------------------------ ------------------- -----------------
Schwab Retirement Advantage Money Fund $ 179 $ 168
Schwab Value Advantage Money Fund 10,981 6,676
Fidelity Bankshares, Inc. Common Stock 330,239 324,695
------------------- -----------------
$ 341,399 $ 331,539
=================== =================
5. RISKS AND UNCERTAINTIES
The Plans assets are invested in various investment securities. Investment
securities are exposed to various risks such as interest rate, market and
credit risks. Due to the level of risk associated with certain investment
securities, it is at least reasonably possible that changes in the values
of investment securities will occur in the near term and that such changes
could materially affect participants' account balances and the amounts
reported in the statement of net assets available for benefits.
******
8
SAVINGS TRUST FOR EMPLOYEES OF
FIDELITY FEDERAL BANK & TRUST
SCHEDULE H, PART IV, LINE 4iSUPPLEMENTAL SCHEDULE OF ASSETS
(HELD AT END OF YEAR)
DECEMBER 31, 2004
- --------------------------------------------------------------------------------
Description of Investment,
Including Maturity Date, Rate
Identity of Issuer, Borrower, Lessor of Interest, Collateral, Shares Current
or Similar Party Par, or Maturity Value Held Value
* Fidelity Bankshares, Inc. Common stock 1,169,910 ** $ 33,350,234
Artisan Midcap Fund Mutual fund 3,016 89,153
Blackrock Government Income Investment A Mutual fund 23,036 255,925
Columbia Acorn Fund Class Z Mutual fund 9,910 262,124
Columbia Contrarian Income Fund Class A Mutual fund 37,117 403,837
Dodge & Cox Stock Fund Mutual fund 3,179 414,028
Europacific Growth Fund Mutual fund 4,452 156,971
Federated Kaufmann Fund Class K Mutual fund 129,771 695,574
First Eagle Sogen Overseas Fund Mutual fund 20,992 456,991
Growth Fund of America Mutual fund 16,571 451,216
Heartland Value Fund Mutual fund 25,704 1,280,294
MFS Value Fund Class A Mutual fund 4,164 96,352
New Perspective Fund R4 Mutual fund 28,685 791,143
Oakmark Fund Mutual fund 27,089 1,131,525
Pimco Renaissance Fund Class B Mutual fund 13,432 358,634
T Rowe Price Growth Stock Fund Mutual fund 7,644 203,852
Vanguard F-1 Securities Short-Term Federal Fund Mutual fund 20,365 212,003
Vanguard Index Trust 500 Portfolio Mutual fund 18,611 2,077,768
Vanguard Wellington Fund Mutual fund 40,455 1,221,333
------------
Total mutual funds 10,558,723
------------
* Schwab Retirement Advantage Money Fund Money funds 59,236 59,236
* Schwab Value Advantage Money Fund Money funds 1,268,894 1,268,894
------------
Total money funds 1,328,130
------------
Participants' notes
Loan Fund receivable interest rates
ranging from 4.5% to 10.0% 1,036,499 1,036,499
------------
Total investments $ 46,273,586
============
* Party-in-interest
** Share data is retroactively adjusted for the 2004 3 - 2 common stock split
of Fidelity Bankshares, Inc. common stock to be paid in the form of a stock
dividend on January 14, 2005 for shareholders of record on December 31,
2004.
9
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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 BANK & TRUST
FIDELITY FEDERAL BANK & TRUST
PLAN ADMINISTRATOR
Date: June 27, 2005 By: /s/ Robert L. Fugate
------------------------
Name: Robert L. Fugate
Title: Executive Vice President