-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D6FNWIMZGCllwgJNmFi2PegDSfHw4Kbihg7QsQASN25MyS2guo1oRSQgzptkOWEO TLZyVQSPI297AgtpyYCf5w== 0000912219-97-000002.txt : 19970129 0000912219-97-000002.hdr.sgml : 19970129 ACCESSION NUMBER: 0000912219-97-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970128 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIDELITY BANCORP INC /DE/ CENTRAL INDEX KEY: 0000912219 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 363915246 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-22826 FILM NUMBER: 97511866 BUSINESS ADDRESS: STREET 1: 5455 WEST BELMONT AVENUE CITY: CHICAGO STATE: IL ZIP: 60641 BUSINESS PHONE: 3127364414 MAIL ADDRESS: STREET 1: 5455 WEST BELMONT AAVENUE CITY: CHICAGO STATE: IL ZIP: 60641 10-Q 1 FIDELITY BANCORP, INC. FORM 10-Q, 12/31/96 =============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1996 Commission file number 0-22826 Fidelity Bancorp, Inc. (Exact name of registrant as specified in its charter) Delaware 36-3915246 (State of Incorporation) (I.R.S. Employer Identification No.) 5455 W. Belmont, Chicago, Illinois, 60641 (Address of principal executive offices) (773) 736-4414 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all the reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such report), and (2) has been subject to such filing requirements for the past 90 days. YES X NO The number of shares outstanding of each of the issuer's classes of common stock, was 2,786,578 shares of common stock, par value $.01, outstanding as of January 17, 1997. =============================================================================== FIDELITY BANCORP, INC. FORM 10-Q INDEX Part I. FINANCIAL INFORMATION PAGE(S) Item 1. Financial Statements Consolidated Statements of Financial Condition as of December 31, 1996 (unaudited) and September 30, 1996 1 Consolidated Statements of Earnings for the three months ended December 31, 1996 and 1995 (unaudited) 2 Consolidated Statements of Changes in Stockholders' Equity for the three months ended December 31, 1996 and 1995 (unaudited) 3 Consolidated Statements of Cash Flows for the three months Ended December 31, 1996 and 1995 (unaudited) 4 Notes to Unaudited Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6-9 Part II. OTHER INFORMATION Item 1. Legal Proceedings 10 Item 2. Changes in Securities 10 Item 3. Defaults upon Senior Securities 10 Item 4. Submission of Matters to a Vote of Security Holders 10 Item 5. Other Information 10 Item 6. Exhibits and Reports on Form 8-K 10 Signature Page 11 FIDELITY BANCORP, INC. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Dollars in thousands, except per share data)
ASSETS December 31, September 30, 1996 1996 (unaudited) Cash and due from banks $ 2,109 3,848 Interest-bearing deposits 673 225 Federal funds sold 200 200 Investment in dollar-denominated mutual funds, at fair value 3,147 3,146 FHLB of Chicago stock 5,795 5,795 Mortgage-backed securities held to maturity, at amortized cost (approximate fair value of $21,243 at December 31, 1996 and $21,766 at September 30, 1996) 20,989 21,673 Investment securities available for sale, at fair value 77,519 78,104 Loans receivable, net of allowance for loan losses of $847 at December 31, 1996 and $810 at September 30, 1996 365,509 354,255 Accrued interest receivable 3,032 3,199 Real estate in foreclosure 86 97 Premises and equipment 3,691 3,780 Deposit base intangible 144 158 Other assets 1,212 1,382 ------- ------- $ 484,106 475,862 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Deposits 327,441 302,934 Borrowed funds 97,600 115,300 Advance payments by borrowers for taxes and insurance 4,131 1,953 Other liabilities 5,698 6,847 ------- ------- Total liabilities 434,870 427,034 STOCKHOLDERS' EQUITY Preferred stock, $.01 par value; authorized 2,500,000 shares; none outstanding - - Common stock, $.01 par value; authorized 8,000,000 shares; issued 3,782,350 shares; 2,786,578 and 2,866,108 shares outstanding at December 31, 1996 and September 30, 1996 38 38 Additional paid-in capital 37,109 37,079 Retained earnings, substantially restricted 28,517 27,851 Treasury stock, at cost (995,772 and 916,242 shares at December 31, 1996 and September 30, 1996, respectively) (13,973) (12,619) Common stock acquired by Employee Stock Ownership Plan (1,662) (2,078) Common stock acquired by Bank Recognition and Retention Plans (644) (708) Unrealized loss on investment securities available for sale, less applicable deferred income tax benefit (149) (735) ------- ------- TOTAL STOCKHOLDERS' EQUITY 49,236 48,828 Commitments and contingencies $ 484,106 475,862 ======= =======
See accompanying notes to unaudited consolidated financial statements. FIDELITY BANCORP, INC. CONSOLIDATED STATEMENTS OF EARNINGS (Dollars in thousands, except per sahre data)
Three months ended December 31, 1996 and 1995 1996 1995 (unaudited) Interest Income: Loans receivable $ 6,966 5,473 Investment securities 1,505 1,429 Mortgage-backed securities 376 458 Interest earning deposits 10 22 Federal funds sold 3 22 Investment in mutual funds 42 3 ------ ------ 8,902 7,407 Interest Expense: Deposits 3,874 3,462 Borrowed funds 1,472 766 ------ ------ 5,346 4,228 Net interest income before provision for loan losses 3,556 3,179 Provision for loan losses 39 - ------ ------ Net interest income after provision for loan losses 3,517 3,179 Non-Interest Income: Fees and commissions 112 96 Insurance and annuity commissions 101 134 Other 12 7 ------ ------ 225 237 Non-Interest Expense: General and administrative expenses: Salaries and employee benefits 1,279 1,219 Office occupancy and equipment 296 299 Data processing 114 110 Advertising and promotions 165 131 Federal deposit insurance premiums 158 161 Other 364 283 ------ ------ Total general and administrative expenses 2,376 2,203 Amortization of intangible 14 16 ------ ------ 2,390 2,219 Income before income taxes 1,352 1,197 Income tax expense 518 465 ------ ------ Net income $ 834 732 ====== ====== Earnings per share $ .30 .23 ====== ======
See accompanying notes to unaudited consolidated financial statements. FIDELITY BANCORP, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Dollars in thousands)
Three months ended December 31, 1996 and 1995 Unrealized Loss on Common Common Investment Additional Stock Stock Securities Common Paid-In Retained Treasury Acquired Acquired Available Stock Capital Earnings Stock by ESOP by BRRP's For Sale Total --- ------ ------- ------- ------ ------ ---- ------- Balance at September 30, 1995 $ 38 36,795 26,449 (5,978) (2,494) (963) (55) $ 53,792 Net income - - 732 - - - - 732 Purchase of treasury stock (157 000 shares) - - - (2,448) - - - (2,448) Cash dividends ($.04 per share) - - (195) - - - - (195) Amortization of award of BRRP's stock - - - - - 64 - 64 Cost of ESOP shares released - - - - 416 - - 416 Market adjustment for committed ESOP shares - 51 - - - - - 51 Change in unrealized loss on investment securities available for sale - - - - - - 224 224 --- ------ ------- ------- ------ ------ ---- ------- Balance at December 31, 1996 $ 38 36,846 26,986 (8,426) (2,078) (899) 169 $ 52,636 === ====== ======= ====== ====== ====== ==== ======= Balance at September 30, 1996 38 37,079 27,851 (12,619) (2,078) (708) (735) 48,828 Net income - - 834 - - - - 834 Purchase of treasury stock (82,030 shares) - - - (1,389) - - - (1,389) Cash dividends ($.06 per share) - - (168) - - - - (168) Amortization of award of BRRP's stock - - - - - 64 - 64 Cost of ESOP shares released - - - - 416 - - 416 Exercise of stock options and reissuance of treasury shares (2,500 shares) - (10) - 35 - - - 25 Tax benefit related to stock options exercised - 3 - - - - - 3 Market adjustment for committed ESOP shares - 37 - - - - - 37 Change in unrealized loss on investment securities available for sale - - - - - - 586 586 --- ------ ------- ------- ------ ----- ------- ------- Balance at December 31, 1996 $ 38 37,109 28,517 (13,973) (1,662) (644) (149) $ 49,236 === ====== ======= ======= ====== ===== ======= =======
See accompanying notes to unaudited consolidated financial statements. FIDELITY BANCORP, INC. Consolidated Statements of Cash Flows (Dollars in thousands)
Three months ended December 31, 1996 and 1995 1996 1995 (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 834 732 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation 89 94 Provision for loan losses 39 - Net amortization and accretion of premiums and discounts 2 148 Amortization of cost of stock benefit plans 64 64 Principal payment on ESOP loan 416 416 Market adjustment for committed ESOP shares 37 51 Deferred loan fees, net of amortization (169) (206) Amortization of deposit base intangible 14 16 Decrease in accrued interest receivable 167 219 Decrease in other assets 169 221 Increase in current taxes and other liabilities (1,515) 9 -------- ------ Net cash provided by operating activities 147 1,764 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from maturities of investment securities - 13,000 Purchase of mutual funds (1) (2) Purchase of investment securities - (10,000) Loans originated for investment (22,939) (27,975) Purchase of premises and equipment - (49) Principal repayments collected on loans receivable 11,827 13,521 Principal repayments collected on investment securities 1,543 2,062 Principal repayments collected on mortgage-backed securities 679 930 -------- ------ Net cash used in investing activities (8,891) (8,513) CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in deposits 24,507 16,699 Increase (decrease) in FHLB advances (17,700) (4,032) Net increase (decrease) in advance payments by borrowers for taxes and insurance 2,178 (1,485) Purchase of treasury stock (1,389) (2,448) Payment of common stock dividends (168) (195) Proceeds from exercise of stock options 25 - -------- ------ Net cash provided by financing activities 7,453 8,539 -------- ------ Net change in cash and cash equivalents (1,291) 1,790 Cash and cash equivalents at beginning of period 4,273 4,115 -------- ------ Cash and cash equivalents at end of period $ 2,982 5,905 ======== ====== CASH PAID DURING THE PERIOD FOR: Interest $ 5,036 4,132 Income taxes 200 170 NON-CASH INVESTING ACTIVITIES- Loans transferred to real estate in foreclosure $ - 69 ======== ======
See accompanying notes to unaudited consolidated financial statements. FIDELITY BANCORP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring accruals) necessary for a fair presentation have been included. The results of operations and other data for the three months ended December 31, 1996 are not necessarily indicative of results that may be expected for the entire fiscal year ended September 30, 1997. The unaudited consolidated financial statements include the accounts of Fidelity Bancorp, Inc. (the "Company") and its wholly-owned subsidiary, Fidelity Federal Savings Bank and subsidiaries (the "Bank"). All material intercompany accounts and transactions have been eliminated in consolidation. (2) Earnings Per Share Earnings per share of common stock for the quarter ended December 31, 1996 has been determined by dividing net income by 2,788,414, the weighted average number of shares of common stock and common stock equivalents outstanding. Earnings per share of common stock for the quarter ended December 31, 1995 has been determined by dividing net income by 3,122,190, the weighted average number of shares of common stock and common stock equivalents outstanding. Stock options are regarded as common stock equivalents and are therefore considered in the earnings per share calculations. Common stock equivalents are computed using the treasury stock method. (3) Commitments and Contingencies At December 31, 1996, the Company had outstanding commitments to originate loans of $2.7 million, of which $188,000 were fixed rate, with rates ranging from 8.00% to 8.625%, and $2.5 million were adjustable rate commitments. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION GENERAL The Company's results of operations are dependent on net interest income which is the difference between interest earned on its loan and investment portfolios, and its cost of funds, consisting of interest paid on deposits and borrowed money. The Company also generates non-interest income such as transactional fees, loan servicing fees, and fees and commissions from the sales of insurance products and securities through its subsidiary. Operating expenses primarily consist of employee compensation, occupancy expenses, federal deposit insurance premiums and other general and administrative expenses. The results of operations are also significantly affected by general economic and competitive conditions, particularly changes in market interest rates, government policies and actions of regulatory authorities. LIQUIDITY & CAPITAL RESOURCES Liquidity management is both a daily and long-term function of management's strategy. The Company's primary sources of funds are deposits and borrowings, amortization and prepayment of loan principal and mortgage-backed securities, maturities of investment securities and operations. While maturing investments and scheduled loan repayments are relatively predictable, deposit flows and loan prepayments are greatly influenced by interest rates, floors and caps on loan rates, general economic conditions and competition. Management generally manages the pricing of its deposits to be competitive and increase core deposit relationships, but has from time to time decided not to pay deposit rates that are as high as those of its competitors and, when necessary, to supplement deposits with FHLB advances. Federal regulations require the Bank to maintain minimum levels of liquid assets. This requirement, which may be varied at the direction of the OTS depending upon economic conditions and deposit flows, is based upon a percentage of deposits and short-term borrowings. The current required ratio is 5.0%. The Bank has historically maintained its liquidity ratio for regulatory purposes at levels in excess of those required. At December 31, 1996, the Bank's liquidity ratio was 7.90%. The Company's cash flows are comprised of three classifications: cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities. Cash flows from operating activities, consisting primarily of interest and dividends received less interest paid on deposits. A one-time special assessment charge of $1.6 million was recorded on September 30, 1996 as the result of legislation passed regarding the Savings Association Insurance Fund (SAIF). During the three months ended December 31, 1996, Fidelity paid the SAIF special assessment, thereby reducing the net cash provided by operating activities to $147,000. Net cash used in investing activities consisted primarily of disbursements for loan originations and amortization payments. Net cash used was $8.9 million for the three months ended December 31, 1996. Net cash provided by financing activities, consisting of net increases in deposit activity and advance payments of taxes by borrowers, offset by the paydown of advances and purchase of treasury stock, amounted to $7.5 million for the three months ended December 31, 1996. At December 31, 1996, the Company had outstanding loan commitments of $2.7 million. Management anticipates that it will have sufficient funds available to meet its current loan commitments. Certificates of deposit scheduled to mature in one year or less from December 31, 1996 totalled $166.9 million. Management believes that a significant portion of such deposits will remain with the Bank, and that their maturity and repricing will not have a material adverse impact. The Bank's Tangible and Leverage Capital ratio at December 31, 1996 was 8.39%. This exceeded the Tangible Capital requirement of 1.5% of adjusted assets and the Core ("Leverage") Capital requirement of 3% of adjusted assets by $32.9 million and $25.7 million, respectively. The Bank's Risk-based Capital ratio was 15.2% at December 31, 1996 which exceeds the Risk-based Capital requirement of 8% of Risk-weighted assets by $22.4 million. CHANGES IN FINANCIAL CONDITION Total assets at December 31, 1996 increased $8.2 million to $484.1 million from $475.9 at September 30, 1996. Net loans receivable totalled $365.5, a 3.2% increase over the balance at September 30, 1996. Loan originations in the first quarter amounted to $22.9 million. Total deposits increased $24.5 million to $327.4 million at December 31, 1996 compared to the balance of $302.9 million at September 30, 1996 due to planned efforts to grow the Company's retail franchise. Fidelity's two newest offices, in Chicago and Schaumburg, contributed nearly 50% of the increased deposits. Book value per share on December 31, 1996 increased to $17.67, a $0.63 increase over $17.04 at September 30, 1996. ASSET QUALITY As of December 31, 1996, the Company had non-performing assets of $3.1 million. Classified loans of $1.1 million were categorized as substandard, consisting of 3 residential mortgage loans, 2 commercial loans, and 3 unsecured lines of credit. In addition to the mortgage and consumer portfolio, the Company classified its investment in commercial leases as substandard. There were no assets classified as doubtful. From October 1994 through January 1995, the Company purchased 454 full-payout commercial equipment leases located in various parts of the country with original aggregate outstanding principal balances of $3.0 million. Since that time normal lease payments had reduced the aggregate outstanding balance to $2.0 million at February 29, 1996. These leases were all originated by, serviced by, and financially guaranteed by Bennett Funding Group of Syracuse, New York ("BFG"). On March 29, 1996 it was reported that BFG was the target of a civil complaint filed by the Securities and Exchange Commission. On that same date, BFG filed a Chapter 11 bankruptcy petition in the Northern District of New York and halted payments on the lease agreements. The Bankruptcy Trustee is currently collecting the lease payments from the lessees and holding them in escrow pending the outcome of the litigation concerning BFG, its creditors, and related issues. This disruption of payment flows from the servicer, BFG, has caused the Company to classify all the leases as substandard, place them on non-accrual status and to categorize them as non- performing and impaired. The Company is vigorously pursuing available legal remedies in an attempt to protect and collect amounts due under the terms of the underlying leases. The substance of the Company's claims center on the assertion that it has a perfected security interest in the leases and the proceeds thereof. The Trustee disagrees. The opinion of the Company's bankruptcy counsel at this time is that the Company's position should ultimately prevail. There can be no assurance, however, of the actual results of this legal process or the extent of the Company's recovery, if any. Management has estimated what is believed to be the realizable value of the leases and established a valuation allowance of $406,000. In the event that the outcome of the litigation is not favorable, i.e. the Company's status is that of an unsecured creditor, the recovery may be substantially smaller. Any recovery by the Company of less than the net book value of the leases will cause additional losses to the Company. STOCK REPURCHASE On November 26, 1996, the Company completed its sixth repurchase program. As a component of its strategy to build shareholder value, the Company has repur- chased 1,002,472 shares, at an average cost of $14.03 through December 31, 1996. AVERAGE BALANCE SHEET The following table sets forth certain information relating to the Company's average balance sheet and reflects the average yield on assets and average cost of liabilities for the periods indicated. Such yields and costs are derived by dividing income or expense by the average balance of assets or labilities, respectively, for the periods shown. Average balances are derived from average daily balances. The yields and costs include fees, which are considered adjustments to yields.
Three months ended December 31, At December 31, 1996 1996 1995 Average Average Yield/ Average Int- Yield/ Average Int- Yield/ Balance Cost Balance erest Cost Balance erest Cost (dollars in thousands) Interest-earning assets: Loans, net $ 365,509 7.75% 359,777 6,966 7.74% 271,908 5,473 8.05% Mortgage-backed securities 20,989 7.18% 21,359 376 7.04% 26,115 458 7.02% Interest-bearing deposits 673 5.59% 778 10 5.14% 1,531 22 5.75% Investment securities, mutual funds, and federal funds sold 86,661 7.07% 86,860 1,549 7.13% 85,722 1,454 6.78% -------- ----- ------- ----- ---- ------- ----- ----- Total interest-earning assets 473,832 7.60% 468,774 8,901 7.60% 385,276 7,407 7.69% Non-interest earning assets 10,274 11,936 12,727 -------- ------- ------- Total assets $ 484,106 480,710 398,003 ======== ======= ======= Interest-bearing liabilities: Deposits: Savings account 88,064 3.42% 69,448 524 3.02% 79,762 596 2.99% Money market accounts 33,304 3.35% 32,631 281 3.44% 34,014 319 3.75% Certificate accounts 201,387 5.83% 211,693 3,069 5.80% 164,868 2,547 6.18% -------- ----- ------- ----- ---- ------- ----- ----- Total deposits 322,755 4.92% 313,772 3,874 4.94% 278,644 3,462 4.97% Borrowed funds 97,600 6.01% 103,645 1,472 5.68% 51,525 766 5.95% -------- ----- ------- ----- ---- ------- ----- ----- Total interest-bearing liabilities 420,355 5.17% 417,417 5,346 5.12% 330,169 4,228 5.12% Non-interest bearing deposits 4,686 4,530 4,695 Other liabilities 9,829 9,462 9,876 -------- ------- ------- Total liabilities 434,870 431,409 344,740 Stockholders' equity 49,236 49,301 53,263 -------- ------- ------- Total liabilities and stockholders' equity $ 484,106 480,710 398,003 Net interest income/interest rate spread (1) 2.43% 3,555 2.48% 3,179 2.57% Net earning assets/net interest margin (2) $ 53,477 51,357 3.03% 55,107 3.30% Ratio of interest-earning assets to interest-bearing liabilities 1.13x 1.12x 1.17x
(1) Interest rate spread represents the difference between the average rate on interest-earning assets and the average cost of interest bearing liabilities. (2) Net interest margin represents net interest income divided by average interest-earning assets. COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED DECEMBER 31, 1996 AND DECEMBER 31, 1995 GENERAL. Net income for the three months ended December 31, 1996 was $834,000, an increase of 13.9% from the net income of $732,000 for the same period last year. The increase in earnings this quarter was primarily the result of higher interest income on loans receivable, which was $7.0 million for the quarter. INTEREST INCOME. Total interest income increased 20.2% or $1.5 million to $8.9 million for the quarter ended December 31, 1996. The average balance of loans increased 32.3% to $359.8 million compared to the average for the first quarter one year ago. The yield on loans, including non-performing commercial lease of $2.0 million, decreased 31 basis points. The increase in loan interest income was primarily a result of higher loan volumes. INTEREST EXPENSE. In addition to significant increase in loans, the Bank's average interest-bearing deposits rose 12.6% to $313.8 million from $278.6 one year ago. Interest cost has remained stable at 4.9%. Interest expense on deposits increased from $3.5 million to $3.9 million for the three months ended December 31, 1996 compared to the same quarter in fiscal 1996. The Bank reduced its FHLB of Chicago advances during the quarter, however the average advances outstanding has more than doubled compared to the same quarter one year ago. The Bank's ability to borrow utilizing FHLB Community Investment Program advances helped lower the average cost of advances by 27 basis points to 5.68% in fiscal 1997. PROVISION FOR LOAN LOSSES. The Company recorded an $39,000 provision for loan losses in the first quarter of 1997, as compared to no provision in its comparable period of fiscal 1996. The provision for the loan losses reflects management's on-going evaluation of losses on loans and the adequacy of the allowance for loan losses based on all pertinent considerations, including current market conditions. NON-INTEREST INCOME. Non-interest income remained stable at approximately $230,000. The $33,000 decrease in insurance and annuity commissions is due to a general slow-down of activity transacted through INVEST financial corporation. The Bank's insurance subsidiary offers a variety investment products to our customers through INVEST. NON-INTEREST EXPENSE. Non-interest expense for the first quarter 1997 rose $171,000 to $2.4 million as a result of franchise expansion. Despite the significant growth in the Company's balance sheet, general and administrative costs have only modestly increased. Operating expenses as a percent of average assets for the quarters ended December 31, 1996 and 1995 decreased to 1.99% from 2.23%. Slight increases were noted in other general and administrative expenses. INCOME TAXES. Income taxes increased $53,000 for the three months ended December 31, 1996 to $518,000 versus $465,000 for the prior year due to a 12.9% increase in pre-tax income. PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS The Bank is involved in legal proceedings regarding the Bennett Funding Group ("BFG") bankruptcy proceedings, in which the Bank has an investment in commercial leases guaranteed by BFG. The Bankruptcy Trustee has filed an adversary complaint against the Bank for claimed violations of the automatic stay provisions of the bankruptcy code with respect to post-petition collection efforts of the Bank. The monies collected by the Bank, aggregating approximately $60,000, have since been remitted to the Trustee's escrow account after obtaining assurances from the court that the funds would be protected pending the outcome of the litigation. The Trustee's claim for $10 million for sanctions and actual damages based on the Bank's post-petition collection activity is also being vigorously contested. The Trustee has also filed an adversary proceeding against 60 banks, including the Bank, asserting various causes of action. The results of these adversary proceeding are not expected to have a material adverse impact on the Company. Item 2. CHANGES IN SECURITIES Not applicable. Item 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None Item 5. OTHER INFORMATION None. Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits None (b) Reports on Form 8-K On October 21, 1996, the Company announced under Item 5 of Form 8-K that its 1997 annual meeting of shareholders will be held on January 29, 1997. SIGNATURES 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 thereunto duly authorized. Fidelity Bancorp, Inc. Dated: January 22, 1997 /s/ RAYMOND S. STOLARCZYK ---------------- -------------------------- Raymond S. Stolarczyk Chairman and Chief Executive Officer Dated: January 22, 1997 /s/ JAMES R. KINNEY ---------------- -------------------------- James R. Kinney Sr. V. P. and Chief Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE
9 This schedule contains summary financial information extracted from the Consolidated Statement of Condition at December 31, 1996 (unaudited) and the Consolidated Statement of Earnings for the three months ended December 31, 1996 (unaudited) and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS SEP-30-1996 DEC-31-1996 2109 673 200 0 80666 26784 27038 366356 847 484106 327441 59600 9829 38000 0 0 38 49198 484106 6966 1881 55 8902 3874 1472 3556 39 0 2390 1352 0 0 0 834 .30 .30 2.47 3037 0 0 0 810 39 2 847 847 0 0
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