-----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, SIxvHjOdtWnEeD3MgPRuvrWQCG3O5gj8u1PQ0ocu544IqPx6rIgXZ7oyNMBrwNHm +HudE6SuPOc00eoU1juvow== 0000912219-98-000002.txt : 19980126 0000912219-98-000002.hdr.sgml : 19980126 ACCESSION NUMBER: 0000912219-98-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980123 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: SEC FILE NUMBER: 001-12753 FILM NUMBER: 98511968 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, 12/31/97 =============================================================================== 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, 1997 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 2,814,809 shares of common stock, par value $.01, outstanding as of January 16, 1998. =============================================================================== 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, 1997 (unaudited) and September 30, 1997 1 Consolidated Statements of Earnings for the three months ended December 31, 1997 and 1996 (unaudited) 2 Consolidated Statements of Changes in Stockholders' Equity for the three months ended December 31, 1997 and 1996 (unaudited) 3 Consolidated Statements of Cash Flows for the three months Ended December 31, 1997 and 1996 (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 1 FIDELITY BANCORP, INC. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Dollars in thousands, except per share data)
ASSETS December 31, September 30, 1997 1997 (unaudited) Cash and due from banks $ 1,985 436 Interest-bearing deposits 1,142 2,314 Federal funds sold 100 100 Investment in dollar-denominated mutual funds, at fair value - 3,154 FHLB of Chicago stock 5,700 5,700 Mortgage-backed securities held to maturity, at amortized cost (approximate fair value of $16,051 at December 31, 1997 and $17,124 at September 30, 1997) 15,814 16,875 Investment securities available for sale, at fair value 62,860 70,297 Loans receivable, net of allowance for loan losses of $503 at December 31, 1997 and $460 at September 30, 1997 392,999 388,262 Accrued interest receivable 2,976 3,445 Real estate in foreclosure 1,068 215 Premises and equipment 3,703 3,593 Deposit base intangible 96 107 Other assets 1,230 1,136 ------- ------- $ 489,673 495,634 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Deposits 329,920 323,443 Borrowed funds 97,300 113,400 Advance payments by borrowers for taxes and insurance 4,646 2,197 Other liabilities 6,538 6,977 ------- ------- Total liabilities 438,404 446,017 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; 2,813,709 and 2,794,978 shares outstanding at December 31, 1997 and September 30, 1997 38 38 Additional paid-in capital 37,590 37,494 Retained earnings, substantially restricted 28,691 27,939 Treasury stock, at cost (968,641 and 987,372 shares at December 31, 1997 and September 30, 1997, respectively) (13,592) (13,855) Common stock acquired by Employee Stock Ownership Plan (1,092) (1,662) Common stock acquired by Bank Recognition and Retention Plans (403) (471) Unrealized loss on investment securities available for sale, less applicable taxes 37 134 ------- ------- TOTAL STOCKHOLDERS' EQUITY 51,269 49,617 Commitments and contingencies $ 489,673 495,634 ======= =======
See accompanying notes to unaudited consolidated financial statements. 2 FIDELITY BANCORP, INC. CONSOLIDATED STATEMENTS OF EARNINGS (Dollars in thousands, except per share data)
Three months ended December 31, 1997 and 1996 1997 1996 (unaudited) Interest Income: Loans receivable $ 7,476 6,966 Investment securities 1,259 1,505 Mortgage-backed securities 289 376 Interest earning deposits 28 10 Federal funds sold 10 3 Investment in mutual funds 17 42 ------ ------ 9,079 8,902 Interest Expense: Deposits 4,110 3,874 Borrowed funds 1,458 1,472 ------ ------ 5,568 5,346 ------ ------ Net interest income before provision for loan losses 3,511 3,556 Provision for loan losses 46 39 ------ ------ Net interest income after provision for loan losses 3,465 3,517 Non-Interest Income: Fees and commissions 90 112 Insurance and annuity commissions 180 101 Other 14 12 ------ ------ 284 225 Non-Interest Expense: General and administrative expenses: Salaries and employee benefits 1,341 1,279 Office occupancy and equipment 291 296 Data processing 127 114 Advertising and promotions 112 165 Federal deposit insurance premiums 54 158 Other 284 364 ------ ------ Total general and administrative expenses 2,209 2,376 Amortization of intangible 11 14 Recovery of loss on impairment of investment securities available for sale (22) - ------ ------ 2,198 2,390 Income before income taxes 1,551 1,352 Income tax expense 574 518 ------ ------ Net income $ 977 834 ====== ====== Basic earnings per share $ 0.36 0.31 Diluted earnings per share $ 0.34 0.30 ====== ======
See accompanying notes to unaudited consolidated financial statements. 3 FIDELITY BANCORP, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Dollars in thousands)
Three months ended December 31, 1997 and 1996 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, 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 === ====== ======= ====== ====== ====== ==== ======= Balance at September 30, 1997 38 37,494 27,939 (13,855) (1,662) (471) 134 49,617 Net income - - 977 - - - - 977 Cash dividends ($.08 per share) - - (225) - - - - (225) Amortization of award of BRRP's stock - - - - - 68 - 68 Cost of ESOP shares released - - - - 570 - - 570 Exercise of stock options and reissuance of treasury shares (18,731 shares) - (76) - 263 - - - 187 Tax benefit related to stock options exercised - 29 - - - - - 29 Market adjustment for committed ESOP shares - 143 - - - - - 143 Change in unrealized gain (loss) on investment securities available for sale - - - - - - (97) (97) --- ------ ------- ------- ------ ----- ------- ------- Balance at December 31, 1997 $ 38 37,590 28,691 (13,592) (1,092) (403) 37 $ 51,269 === ====== ======= ======= ====== ===== ======= =======
See accompanying notes to unaudited consolidated financial statements. 4 FIDELITY BANCORP, INC. Consolidated Statements of Cash Flows (Dollars in thousands)
Three months ended December 31, 1997 1996 (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 977 834 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation 89 89 Provision for loan losses 46 39 Net amortization and accretion of premiums and discounts 1 2 Amortization of cost of stock benefit plans 68 64 Principal payment on ESOP loan 570 416 Market adjustment for committed ESOP shares 143 37 Deferred loan costs (fees), net of amortization 66 (169) Amortization of deposit base intangible 11 14 Sale of real estate owned 137 - Decrease in accrued interest receivable 469 167 Decrease (increase)in other assets (97) 169 Decrease in current taxes and other liabilities (353) (1,515) -------- ------ Net cash provided by operating activities 2,127 147 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from maturities of investment securities 16,000 - Purchase of investment securities (9,990) - Recovery of loss on impairment of investment securities available for sale (22) - Loans originated for investment (28,826) (22,939) Purchase of premises and equipment (199) - Principal repayments collected on loans receivable 22,990 11,827 Principal repayments collected on investment securities 1,297 1,543 Principal repayments collected on mortgage-backed securities 1,058 679 -------- ------ Net cash used in investing activities 2,308 (8,890) CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in deposits 6,477 24,507 Decrease in FHLB advances (16,100) (17,700) Net increase in advance payments by borrowers for taxes and insurance 2,449 2,178 Purchase of treasury stock - (1,389) Payment of common stock dividends (225) (168) Proceeds from exercise of stock options 187 25 -------- ------ Net cash provided by financing activities (7,212) 7,453 -------- ------ Net change in cash and cash equivalents (2,777) (1,290) Cash and cash equivalents at beginning of period 6,004 4,273 -------- ------ Cash and cash equivalents at end of period $ 3,227 2,983 ======== ====== CASH PAID DURING THE PERIOD FOR: Interest $ 5,580 5,036 Income taxes 320 200 NON-CASH INVESTING ACTIVITIES- Loans transferred to real estate in foreclosure $ 990 - ======== ======
See accompanying notes to unaudited consolidated financial statements. 5 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, 1997 are not necessarily indicative of results that may be expected for the entire fiscal year ended September 30, 1998. 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 intercompany accounts and transactions have been eliminated in consolidation. (2) Earnings Per Share In February 1997, the FASB issued Statement 128, "Earnings Per Share." Statement 128 supersedes APB Opinion No. 15, "Earnings Per Share," and specifies the computation, presentation, and disclosure requirements for earnings per share (EPS) for entities with publicly held common stock or potential common stock. It replaces the presentations of primary EPS with the presentation of basic EPS, and replaces fully diluted EPS with diluted EPS. It also requires dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures, and requires a reconciliation of the numerator and dominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Statement 128 is effective for financial statements for both interim and annual periods ending after December 15, 1997. Earnings per share of common stock for the quarter ended December 31, 1997 has been calculated according to the guidelines of Statement 128 and earnings per share of common stock for the quarter ended December 31, 1996 has been restated to conform with Statement 128. Basic earnings per share are computed by dividing net income for the period by the weighted average number of shares of common stock outstanding for the period which were, 2,683,282 and 2,640,513, for the quarters ended December 31, 1997 and 1996, respectively. Diluted earnings per share of common stock for the quarter ended December 31, 1997 has been determined by dividing net income by 2,884,253, the weighted average number of shares of common stock and common stock equivalents outstanding. Diluted earnings per share of common stock for the quarter ended December 31, 1996 has been determined by dividing net income by 2,807,947, the weighted average number of shares of common stock and common stock equivalents outstanding. Stock options are the only common stock equivalents and are therefore considered in the diluted earnings per share calculations. Common stock equivalents are computed using the treasury stock method. (3) Commitments and Contingencies 6 At December 31, 1997, the Company had outstanding commitments to originate loans of $3.7 million, of which $1.4 million were fixed rate, with rates ranging from 7.00% to 8.125%, and $2.4 million were adjustable rate commitments. (4) Pending Accounting Changes Statement 130, "Reporting Comprehensive Income," established standards for reporting and presentation of comprehensive income and its components in a full set of general-purpose financial statement. Statement 130 is effective for both interim and annual periods beginning after December 15, 1997, and is not expected to have a material impact on the consolidated financial statements. 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. The Company reported earnings for the first quarter ended December 31, 1997 of $977,000 compared with $834,000 for the same quarter a year ago, an increase of 17.1%. Earnings per diluted share for the quarter were $0.34 per share, up $0.04 per share, or 13.3% from the first quarter of fiscal 1997. On January 20, 1998, the Company also announced that its board of directors declared a quarterly dividend of $0.10 per share, payable on February 13, 1998 to shareholders of record as of January 30, 1998. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This report contains certain forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward- looking statements to be covered by the safe harbor provisions for forward- looking statements contained in the Private Securities Reform Act of 1995, and is including this statement for purposes of these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project" or similar expressions. The Company's ability to predict results or the actual effect of future plans or strategies is inherently 7 uncertain. Factors which could have a material adverse affect on the operations and future prospects of the Company and the subsidiaries include, but are not limited to, changes in: interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Company's market area and accounting principles, policies and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Further information concerning the Company and its business, including additional factors that could materially affect the Company's financial results, is included in the Company's filings with the Securities and Exchange Commission. YEAR 2000 COMPLIANCE The Company utilizes and is dependent upon data processing systems and software to conduct its business. The data processing systems and software include those developed and maintained by the Company's third-party data processing vendor and purchased software which is run on in-house computer networks. During fiscal 1997 the Company initiated a review and assessment of all hardware and software to confirm that it will function properly in the year 2000. To date, those vendors which have been contacted have indicated that their hardware or software is or will be Year 2000 compliant in time frames that meet regulatory requirements. The costs associated with the compliance efforts are not expected to have a significant impact on the Company's ongoing results of operations. LIQUIDITY & CAPITAL RESOURCES Liquidity management for the Bank 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. The Bank 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. During a portion of the first quarter, OTS regulations required the Bank to maintain, for each calendar month, an average daily balance of liquid assets (including cash, certain time deposits, bankers acceptances, and specified United States Government, state or federal agency obligations) equal to at least 5% of the average daily balance of its liquidity base , defined as net withdrawable accounts plus short-term borrowings (i.e., those repayable in 12 months or less) during the preceding calendar month. During a portion of the first quarter, OTS regulations also required the Bank to maintain, for each calendar month, an average daily balance of short-term liquid assets (generally liquid assets having maturities of 12 months or less) equal to at least 1% of 8 the average daily balance of its net withdrawable accounts plus short-term borrowings during the preceding calendar month. Penalties may be imposed for failure to meet liquidity ratio requirements. Pursuant to amendments adopted by the OTS effective November 24, 1997, the minimum liquidity requirement has been reduced to 4% of the liquidity base, the short-term liquidity requirement has been eliminated, liquidity requirements will be determined quarterly, rather than monthly, and savings associations have the option of calculating their liquidity requirements either on the basis of (i) their liquidity base at the end of the preceding quarter or (ii) the average daily balance of their liquidity base during the preceding quarter. The amended regulations also provide, however, that savings associations must maintain liquidity in excess of the minimum requirement if necessary to insure safe and sound operations. At December 31, 1997, the Bank was in compliance with OTS liquidity requirements, with a liquidity ratio of 5.55%. 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 provided by operating activities, consisting primarily of interest and dividends received less interest paid on deposits, were $2.0 million for the quarter ended December 31, 1997. During the quarter, investing activities provided the Bank $2.5 million. Maturing investment securities and principal repayments received from loans, investment securities and mortgage-backed securities more than covered the financing of loan originations and investment purchases. Net cash used in financing activities amounted to $7.2 million for the quarter ended December 31, 1997. Financing activities used to repay FHLB advances of $16.1 million were only partially offset by financing resources received from a net increase in deposits and advance payments for borrowers for taxes and insurance. At December 31, 1997, the Bank had outstanding loan commitments of $3.7 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, 1997 totalled $164.2 million. Management believes that a significant portion of such deposits will remain with the Bank. The Bank's Tangible and Core (leverage) Capital of $44.0 million at December 31, 1997 was 9.0% of Adjusted Tangible Assets. This exceeded the Tangible Capital and Core Capital requirements of 1.5% and 3% by $36.6 and $29.3 million respectively. The Bank's Risk-based Capital of $44.5 million was 19.1% of Total Risk-Weighted Assets at December 31, 1997 which exceeded the Risk-based Capital requirement of 8% by $25.9 million. CHANGES IN FINANCIAL CONDITION Total assets at December 31, 1997 decreased $6.0 million to $489.7 million from $495.6 at September 30, 1997. Net loans receivable totalled $393.0, an increase of $4.7 million, or an annualized growth of 4.8%, over the balance at September 30, 1997. Loan originations in the first quarter amounted to $28.8 million. Total deposits increased $6.5 million to $329.9 million at December 31, 1997 compared to $323.4 million at September 30, 1997. Growth in deposits came primarily from transaction accounts, while some higher-cost certificates of deposit were allowed to roll off. Through maturing investments and loan repayments, the Bank was able to fund current loan origination obligations in addition to repaying FHLB advances $16.1 million. FHLB advances decreased 9 14.2% from $113.4 million at September 30, 1997 to $97.3 million at December 31, 1997. Book value per share on December 31, 1997 increased to $18.22, a $0.47 increase over $17.75 at September 30, 1997. ASSET QUALITY As of December 31, 1997, the Company had non-performing assets of $1.7 million. The Bank's non-performing assets at December 31, 1997 included its investment in commercial leases of $276,000, one real estate owned property (a single- family residence), four properties in real estate in judgement as well as non- performing loans. Classified loans and real estate in judgement of $1.4 million were categorized as substandard, consisting of four residential mortgage loans, two multi-family properties, and one commercial loan. 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. Management has considered the composition of its non-performing assets in its loan allowance valuation and does not anticipate any material losses on the future sale of these properties. The decrease of $320,000 in non-performing assets from September 30, 1997 to December 31, 1997 resulted from management's ongoing monitoring and follow-up procedures of delinquent customers. Management does not expect any material losses from the non-performing loans. 10 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, 1997 1997 1996 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 $ 392,999 7.78% 388,765 7,476 7.69% 359,777 6,966 7.74% Mortgage-backed securities 15,814 7.20% 16,402 289 7.05% 21,359 376 7.04% Interest-bearing deposits 1,142 5.76% 1,860 28 6.02% 778 10 5.14% Investment securities, mutual funds, and federal funds sold 68,660 6.93% 73,989 1,286 6.95% 86,860 1,550 7.14% -------- ----- ------- ----- ---- ------- ----- ----- Total interest-earning assets 478,615 7.63% 481,016 9,079 7.55% 468,774 8,902 7.60% Non-interest earning assets 11,058 12,133 11,936 -------- ------- ------- Total assets $ 489,673 493,149 480,710 ======== ======= ======= Interest-bearing liabilities: Deposits: Passbook & NOW accounts 118,297 3.68% 115,716 1,083 3.74% 83,310 609 2.92% Money market accounts 17,983 4.22% 17,483 189 4.32% 18,769 196 4.18% Certificate accounts 187,737 5.93% 190,901 2,838 5.95% 211,693 3,069 5.80% -------- ----- ------- ----- ---- ------- ----- ----- Total deposits 324,017 5.01% 324,100 4,110 5.07% 313,772 3,874 4.94% Borrowed funds 97,300 5.62% 101,904 1,458 5.72% 103,645 1,472 5.68% -------- ----- ------- ----- ---- ------- ----- ----- Total interest-bearing liabilities 421,317 5.15% 426,004 5,568 5.23% 417,417 5,346 5.12% Non-interest bearing deposits 5,903 5,171 4,530 Other liabilities 11,184 10,869 9,462 -------- ------- ------- Total liabilities 438,404 442,044 431,409 Stockholders' equity 51,269 51,105 49,301 -------- ------- ------- Total liabilities and stockholders' equity $ 489,673 493,149 480,710 Net interest income/interest rate spread (1) 2.48% 3,511 2.32% 3,556 2.48% Net earning assets/net interest margin (2) $ 57,298 55,012 2.92% 51,357 3.03% Ratio of interest-earning assets to interest-bearing liabilities 1.14x 1.13x 1.12x
(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. 11 COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1996 GENERAL. Net income for the three months ended December 31, 1997 was $977,000, compared with $834,000 in the first quarter of last year. The increase of 17.1% is a result of higher average loans outstanding resulting in higher interest income and offset by an increase in interest expense, as well an increase in fee income and a decrease in general and administrative expenses. INTEREST INCOME. Total interest income remained fairly stable at $9.1 million for the fiscal 1998 first quarter compared to $8.9 million in fiscal 1997. Interest on loans receivable increased 7.3% to $7.5 million from $7.0 million the prior year. The average balance of loans receivable increased 8.1% to $388.8 million compared to the average $359.8 million for the first quarter one year ago. The yield on loans, including non-performing commercial leases, decreased 5 basis points. INTEREST EXPENSE. Interest expense also remained relatively flat from quarter to quarter. For the quarter ended December 3, 1997, interest expense amounted to $5.6 million, compared to $5.3 million the previous year. As the result of higher average deposits outstanding, $324.1 million in 1998 compared to $313.8 million in 1997, combined with higher average costs, 5.07% for the quarter ended December 31, 1997 versus 4.94% in fiscal 1997, interest expense for the quarter ended December 31, 1997 was $4.1 million, compared with $3.9 million the previous year. During the first quarter of fiscal 1998, the Bank reduced its FHLB of Chicago advances by a net $16.1 million, while the average advances outstanding decreased $1.7 million to $101.9 million. The average cost to the Bank of the outstanding advances increased 4 basis points. The Bank was able to maintain a steady average borrowing rate due to the utilization of FHLB Community Investment Program advances and other term advances. PROVISION FOR LOAN LOSSES. The Company recorded a $46,000 provision for loan losses in the first quarter of 1998, as compared to a $39,000 provision in its comparable period of fiscal 1997. The provision for 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. Fee income from sales of annuities and insurance grew in the first quarter, rising to $180,000 as of December 31, 1997, compared with $101,000 in 1996, a 78.2% increase. Income generated from sales of these products helped increase non-interest income 26.2% to $284,000 at December 31, 1997, compared with $225,000 in 1996. NON-INTEREST EXPENSE. Non-interest expense for the first quarter 1998 decreased $192,000 to $2.2 million from $2.4 million the decline can be attributed to decreases in advertising expenses, federal deposit insurance premiums and other expenses. As a result, the company's ratio of operating expenses to average assets reflected continued improvement in the first quarter, falling to 1.78 percent, from 1.99 percent the previous year. INCOME TAXES. Income taxes increased $56,000 for the three months ended December 31, 1997 to $574,000 versus $518,000 for the prior year due to a 14.7% increase in pre-tax income. 12 PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS The Company and the Bank are not engaged in any legal proceedings of a material nature at the present time. 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 Exhibit 27.0 Financial Data Schedule (b) Reports on Form 8-K None 13 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 23, 1998 /s/ RAYMOND S. STOLARCZYK ---------------- -------------------------- Raymond S. Stolarczyk Chairman and Chief Executive Officer Dated: January 23, 1998 /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, 1997 (unaudited) and the Consolidated Statement of Earnings for the three months ended December 31, 1997 (unaudited) and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS SEP-30-1997 DEC-31-1997 1985 1142 100 0 62860 21514 21751 393502 503 489673 329920 14300 11184 83000 0 0 38 51231 489673 7476 1548 55 9079 4110 5568 3511 46 0 2198 1551 0 0 0 977 .36 .34 2.32 1703 0 0 0 460 3 0 503 503 0 0
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