FFFL Fidelity Bankshares

WEST PALM BEACH, Fla., Oct. 18 /PRNewswire-FirstCall/ -- Fidelity Bankshares, Inc. (NASDAQ:FFFL), the holding company for Fidelity Federal Bank & Trust, announced today that net income for the third quarter ended Sept. 30, 2005 was $8.3 million or $0.34 basic and $0.33 diluted earnings per share. This compared with $6.2 million or $0.28 basic and $0.27 diluted earnings per share in the third quarter of 2004. The increase of $2.1 million represented a 34% improvement in net income compared to the same quarter in 2004. Net income for the nine months ended Sept. 30, 2005 was $23.7 million or $0.98 basic and $0.95 diluted earnings per share. This compared to $17.6 million or $0.80 basic and $0.78 diluted earnings per share for the comparable nine months in 2004. This was an increase of $6.2 million or 35% compared to the same period in 2004. The company experienced mild net interest margin compression during the quarter. The net interest margin declined five basis points, from 3.64% at June 30, 2005 to 3.59% at Sept. 30, 2005. Fidelity Bankshares Chairman and CEO Vince A. Elhilow said, "Our core deposits excluding CDs were up 17.9% on an annualized basis, or $108.4 million for the quarter and $350.1 million for the first nine months. This was consistent with our target of 15% to 20% annual expansion of deposits and loans. At the end of September, core deposits represented 76.3% of our deposits and CDs were 23.7%. Our branch expansion program is continuing. We expect to open two new branches late in the fourth quarter, and an additional branch will open early in the first quarter of 2005. "Our loan demand continues to be strong," Elhilow continued. "Through the end of September, loan production rose 18.7% for commercial loans, 18.9% for consumer loans and 13.9% for residential mortgage loans compared to the same nine-month period in 2004." The company's board of directors approved a cash dividend of $0.08 per share for stockholders of record on Sept. 30, 2005. This distribution was paid on Oct. 14, 2005. At Sept. 30, 2005, Fidelity Bankshares, Inc., through its subsidiary Fidelity Federal Bank & Trust, had assets of $3.94 billion and deposits of $3.32 billion and operates in Florida through 48 offices in Palm Beach, Martin and St. Lucie counties. An investment profile on Fidelity Bankshares may be found on http://www.hawkassociates.com/fffl/profile.htm . Financial statements for the quarter follow. 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) 451-1888, e-mail: . Information about Fidelity Bankshares, Inc. can be found on http://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 http://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. Fidelity Bankshares, Inc. Financial Highlights (Unaudited) Three Months Three Months Ended Ended Sept. 30, Sept. 30, 2005 2004 FOR THE PERIOD (In Thousands) Interest income $53,983 $42,986 Interest expense 20,311 15,246 Net interest income 33,672 27,740 Chargeoffs 168 149 Recoveries -- -- Gain on sale of loans 170 134 Gain (loss) on sale of mortgage- backed and investment securities -- 81 Net income 8,259 6,182 PER COMMON SHARE Net Income: (1) Basic EPS $0.34 $0.28 Diluted EPS 0.33 0.27 Dividends declared (1) 0.08 0.07 Book value (1) 11.14 8.91 Stock price: (1) High 33.07 25.87 Low 26.21 22.27 Close 30.55 24.79 AVERAGE FOR THE PERIOD (In Thousands) Assets $3,880,869 $3,430,108 Loans receivable, net 2,805,926 2,501,748 Mortgage-backed securities 657,055 498,839 Investments 140,148 209,950 Deposits 3,277,983 2,691,603 Borrowed funds 257,149 460,146 Stockholders' equity 277,408 197,062 SELECTED RATIOS Return on average assets 0.85% 0.72% Return on average equity 11.91% 12.55% Interest rate spread on average assets for the period 3.69% 3.42% Net yield on average interest earning assets for the period 3.74% 3.46% Net yield on interest earning assets at end of period 3.59% 3.45% Interest rate spread at end of period 3.55% 3.38% Ratio of interest earning assets to interest bearing liabilities at end of period 101.64% 103.83% Ratio of non performing assets to total assets 0.10% 0.19% Ratio of valuation allowances to non performing assets 405.94% 204.99% Ratio of valuation allowances to loans receivable, net 0.54% 0.51% Stockholders' equity as a percentage of assets 7.10% 5.87% PERIOD END (In Thousands) Total assets $3,939,945 $3,444,565 Interest earning cash and investment securities 96,697 187,538 Mortgage-backed securities 635,537 474,118 Loans receivable, net 2,896,565 2,555,173 Federal Home Loan Bank Stock 12,694 19,263 Real estate owned and held for investment 1,793 -- Loan loss reserve 15,655 13,069 All other assets 296,659 208,473 Borrowed funds 265,070 475,386 Common shares outstanding (1) 25,100,515 22,697,919 Stockholders' equity 279,617 202,239 (1) Reflects 3 for 2 stock split distributed in form of a stock dividend paid on January 14, 2005 to stockholders of record on December 31, 2004. Certain amounts in prior year have been reclassified to conform with the September 30, 2005 presentation. Fidelity Bankshares, Inc. Financial Highlights (Unaudited) Nine Months Nine Months Year Ended Ended Ended Sept. 30, Sept. 30, Dec. 31, 2005 2004 2004 FOR THE PERIOD (In Thousands) Interest income $149,384 $120,139 $164,664 Interest expense 52,906 43,901 59,864 Net interest income 96,478 76,238 104,800 Chargeoffs 266 248 252 Recoveries -- 25 25 Gain on sale of loans 643 391 619 Gain (loss) on sale of mortgage- backed and investment securities -- 1,134 407 Net income 23,722 17,557 22,897 PER COMMON SHARE Net Income: (1) Basic EPS $0.98 $0.80 $1.04 Diluted EPS 0.95 0.78 1.01 Dividends declared (1) 0.24 0.20 0.28 Book value (1) 11.14 8.91 10.29 Stock price: (1) High 33.07 25.87 28.85 Low 22.27 20.41 20.41 Close 30.55 24.79 28.51 AVERAGE FOR THE PERIOD (In Thousands) Assets $3,689,239 $3,285,858 $3,336,797 Loans receivable, net 2,642,416 2,365,363 2,424,354 Mortgage-backed securities 653,088 468,492 466,035 Investments 125,273 228,878 227,328 Deposits 3,061,221 2,618,154 2,665,929 Borrowed funds 298,935 404,414 400,498 Stockholders' equity 266,436 192,764 199,273 SELECTED RATIOS Return on average assets 0.86% 0.71% 0.69% Return on average equity 11.87% 12.14% 11.49% Interest rate spread on average assets for the period 3.72% 3.29% 3.33% Net yield on average interest earning assets for the period 3.76% 3.32% 3.36% Net yield on interest earning assets at end of period 3.59% 3.45% 3.59% Interest rate spread at end of period 3.55% 3.38% 3.53% Ratio of interest earning assets to interest bearing liabilities at end of period 101.64% 103.83% 100.12% Ratio of non performing assets to total assets 0.10% 0.19% 0.19% Ratio of valuation allowances to non performing assets 405.94% 204.99% 211.85% Ratio of valuation allowances to loans receivable, net 0.54% 0.51% 0.53% Stockholders' equity as a percentage of assets 7.10% 5.87% 7.24% PERIOD END (In Thousands) Total assets $3,939,945 $3,444,565 $3,470,539 Interest earning cash and investment securities 96,697 187,538 106,238 Mortgage-backed securities 635,537 474,118 529,640 Loans receivable, net 2,896,565 2,555,173 2,556,700 Federal Home Loan Bank Stock 12,694 19,263 17,399 Real estate owned and held for investment 1,793 -- -- Loan loss reserve 15,655 13,069 13,628 All other assets 296,659 208,473 260,562 Borrowed funds 265,070 475,386 350,560 Common shares outstanding 25,100,515 22,697,919 24,425,050 Stockholders' equity 279,617 202,239 251,283 (1) Reflects 3 for 2 stock split distributed in form of a stock dividend paid on January 14, 2005 to stockholders of record on December 31, 2004. Certain amounts in prior year have been reclassified to conform with the September 30, 2005 presentation. Fidelity Bankshares Inc. Selected Unaudited Operating Data Three Months Ended Nine Months Ended Sept. 30, Sept. 30, 2005 2004 2005 2004 (In Thousands) (In Thousands) Selected Operating Data: Interest income $53,983 $42,986 $149,384 $120,139 Interest expense 20,311 15,246 52,906 43,901 Net interest income before provision for loan losses 33,672 27,740 96,478 76,238 Provision for loan losses 304 783 1,298 2,174 Net interest income after provision for loan losses 33,368 26,957 95,180 74,064 Other income Fees on deposit accounts 2,972 2,740 8,272 8,374 Fees for other banking services 3,250 2,830 9,371 8,499 Gain on sale of loans 170 134 643 391 Gain on sale of securities -- 81 -- 1,134 All other income 540 460 1,384 1,467 Total other income 6,932 6,245 19,670 19,865 Operating expense Compensation and benefits 15,073 13,110 43,237 37,576 Occupancy and equipment 5,484 4,403 15,301 12,356 All other operating expense 6,432 5,564 18,029 15,158 Total operating expense 26,989 23,077 76,567 65,090 Income before taxes 13,311 10,125 38,283 28,839 Provision for income taxes 5,052 3,943 14,561 11,282 Net income $8,259 $6,182 $23,722 $17,557 Earnings per share: (1) Basic $.34 $.28 $.98 $.80 Diluted $.33 $.27 $.95 $.78 Shares used for EPS computations: (1) Basic 24,538,667 22,066,215 24,273,719 21,994,416 Diluted 25,257,742 22,717,519 24,910,007 22,634,965 (1) Reflects 3 for 2 stock split distributed in the form of a stock dividend paid on January 14, 2005 to stockholders of record on December 31, 2004. Certain amounts in prior year have been reclassified to conform with the September 30, 2005 presentation. Fidelity Bankshares Inc. Selected Unaudited Financial Data Sept. 30, Dec. 31, 2005 2004 (In Thousands) Assets Cash and interest earning deposits $145,866 $149,409 Assets available for sale 439,257 505,629 Assets held to maturity 255,878 89,167 Loans: Residential mortgage 1,826,197 1,715,636 Commercial mortgage 1,192,313 972,546 Consumer 285,749 231,333 Commercial business 151,857 125,791 Gross loans 3,456,116 3,045,306 Less: Loans in process 540,058 472,324 Deferred costs (income) 3,838 2,654 Allowance for loan losses 15,655 13,628 Loans, Net 2,896,565 2,556,700 Office properties and equipment 90,977 83,439 FHLB stock 12,694 17,399 REO 1,793 -- All other assets 96,915 68,796 Total assets $3,939,945 $3,470,539 Liabilities and Equity Liabilities: Deposits: Checking, savings and money market accounts $2,532,082 $2,182,020 Certificates of deposit 785,669 632,650 Total deposits 3,317,751 2,814,670 Repurchase agreements 90,693 46,097 Borrowings from FHLB 120,769 250,855 Subordinated debentures 53,608 53,608 All other liabilities 77,507 54,026 Total liabilities 3,660,328 3,219,256 Stockholders' equity 279,617 251,283 Total liabilities and equity $3,939,945 $3,470,539 Certain amounts in prior year have been reclassified to conform with the September 30, 2005 presentation. DATASOURCE: Fidelity Bankshares, Inc. CONTACT: Vince A. Elhilow, Chairman and CEO, or Richard D. Aldred, Chief Financial Officer, both of Fidelity, +1-561-803-9900; or Frank Hawkins or Julie Marshall, both of Hawk Associates, +1-305-451-1888, or , for Fidelity Web site: http://www.fidelityfederal.com/ http://www.hawkassociates.com/ http://www.hawkassociates.com/fffl/profile.htm

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