FFFL Fidelity Bankshares

Assets Reach $4.2B; Deposits $3.7B WEST PALM BEACH, Fla., April 18 /PRNewswire-FirstCall/ -- Fidelity Bankshares, Inc. (NASDAQ:FFFL) announced today net income of $7.9 million or $0.32 basic and $0.31 diluted earnings per share for the first quarter ended March 31, 2006. This was a gain of 16% over net income of $6.8 million, or $0.29 basic and $0.28 diluted earnings per share in the first quarter of 2005. Net interest margin for the quarter was 3.49%, compared to 3.71% for the first quarter of 2005. The net interest margin for the quarter ended December 31, 2005 was 3.68%. During the fourth quarter of 2005, the company encountered local governmental approval delays in opening two new offices. As a result, the company relied on short-term certificates of deposit to fund its growth. These certificates of deposit, which are scheduled to mature during the second quarter of 2006, caused eight of the 19 basis points of margin compression experienced in the first quarter compared to the quarter ended December 31, 2005. Operating expense for the quarter was $26.9 million, compared to $23.9 million for the same quarter in 2005. This increase of $3.0 million, or 12.2%, was attributable to operating 42 branches in the quarter ended March 31, 2005, compared to 51 offices in 2006. Compared to the quarter ended December 31, 2005, operating expense increased by $946,000, reflecting the operation of three additional offices opened in the first quarter. Fidelity Bankshares Chairman and CEO Vince Elhilow said, "We opened three new offices during the quarter including a major new branch in Ft. Lauderdale's financial district that includes a loan production office and a full-service banking facility. Deposits during the quarter increased by $126.6 million, or 14.3% on an annualized basis. Our core deposits, which exclude all certificates of deposit, increased to 77.6% of total deposits at the end of the first quarter from 74.5% of total deposits at December 31, 2005. By comparison, core deposits at the end of the first quarter a year ago were 79.2% of total deposits." The board of directors declared a cash dividend of $0.08 per share for stockholders of record on March 31, 2006. This distribution was paid on April 14, 2006. At March 31, 2006, Fidelity Bankshares, Inc., through its subsidiary Fidelity Federal Bank & Trust, had assets of $4.24 billion and deposits of $3.67 billion and operates in Florida through 51 offices in Palm Beach, Broward, Martin and St. Lucie counties. An investment profile on Fidelity Bankshares may be found on http://www.hawkassociates.com/fffl/profile.htm . 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/ . 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/ . Fidelity Bankshares, Inc. Financial Highlights (Unaudited) Three Months Three Months Year Ended Ended Ended March 31, March 31, December 31, 2006 2005 2005 FOR THE PERIOD (In Thousands) Interest income $61,665 $45,324 $206,551 Interest expense 27,438 15,251 76,211 Net interest income 34,227 30,073 130,340 Chargeoffs 90 2 330 Recoveries -- -- 1 Gain on sale of loans 115 352 728 Net income 7,876 6,816 32,082 PER COMMON SHARE Net Income: Basic EPS $0.32 $0.29 $1.32 Diluted EPS 0.31 0.28 1.28 Dividends declared 0.08 0.08 0.32 Book value 11.58 10.32 11.34 Stock price: High 35.05 28.85 34.20 Low 30.80 22.35 22.27 Close 33.63 22.98 32.70 AVERAGE FOR THE PERIOD (In Thousands) Total assets $4,208,435 $3,483,063 $3,762,083 Loans receivable, net 3,109,292 2,508,282 2,723,586 Securities available for sale 406,497 494,879 467,603 Securities held to maturity 239,719 180,147 242,217 Deposits 3,665,085 2,819,875 3,132,413 Borrowed funds 205,172 347,883 294,572 Stockholders' equity 289,118 252,576 270,217 SELECTED RATIOS Return on average assets 0.75% 0.78% 0.85% Return on average equity 10.90% 10.79% 11.87% Interest rate spread on average assets for the period 3.45% 3.67% 3.70% Net yield on average interest earning assets for the period 3.49% 3.71% 3.74% Ratio of interest earning assets to interest bearing liabilities at end of period 117.27% 118.88% 114.89% Ratio of non performing assets to total assets 0.16% 0.20% 0.22% Ratio of valuation allowances to non performing assets 239.01% 203.65% 176.94% Ratio of valuation allowances to loans receivable, net 0.52% 0.58% 0.53% Stockholders' equity as a percentage of assets 6.88% 7.18% 6.98% PERIOD END (In Thousands, except for share data) Total assets $4,240,091 $3,509,292 $4,082,611 Interest earning cash 104,590 35,762 39,283 Securities available for sale 380,490 480,730 410,473 Securities held to maturity 237,445 285,685 242,497 Loans receivable, net 3,202,425 2,449,695 3,036,710 Federal Home Loan Bank stock 11,959 16,968 11,398 Foreclosed assets, net -- 7 1,793 Loan loss reserve 16,521 14,198 16,171 All other assets 303,182 240,445 340,457 Deposits 3,667,496 2,867,569 3,540,874 Borrowed funds 214,580 325,886 200,085 Common shares outstanding 25,171,641 24,427,375 25,114,716 Stockholders' equity 291,549 251,982 284,768 Certain amounts in prior year have been reclassified to conform with the March 31, 2006 presentation. Fidelity Bankshares Inc. Selected Unaudited Operating Data Three Months Ended March 31, 2006 2005 (In Thousands, except for share and per share data) Selected Operating Data: Interest income $61,665 $45,324 Interest expense 27,438 15,251 Net interest income before provision for loan losses 34,227 30,073 Provision for loan losses 440 572 Net interest income after provision for loan losses 33,787 29,501 Other income Service charges on deposit accounts 3,017 2,501 Fees for other banking services 2,286 2,233 Net gain on sale of loans 115 352 Other income 414 387 Total other income 5,832 5,473 Operating expense Compensation and benefits 15,498 13,608 Occupancy and equipment 3,772 3,350 Data processing 1,839 1,438 All other operating expense 5,751 5,540 Total operating expense 26,860 23,936 Income before taxes 12,759 11,038 Provision for income taxes 4,883 4,222 Net income $7,876 $6,816 Earnings per share: Basic $.32 $.29 Diluted $.31 $.28 Shares used for EPS computations: Basic 24,617,982 23,838,307 Diluted 25,369,064 24,571,467 Certain amounts in prior year have been reclassified to conform with the March 31, 2006 presentation. Fidelity Bankshares Inc. Selected Unaudited Financial Data March 31, December 31, 2006 2005 (In Thousands) Assets Cash and interest earning deposits $206,135 $189,940 Securities available for sale 380,490 410,473 Securities held to maturity 237,445 242,497 Loans: Residential mortgage 1,616,125 1,523,740 Commercial mortgage 1,145,713 1,082,719 Consumer 306,739 295,622 Commercial business 153,908 153,916 Gross loans 3,222,485 3,055,997 Less: Deferred fees (costs), net 3,539 3,116 Allowance for loan losses 16,521 16,171 Loans, net 3,202,425 3,036,710 Office properties and equipment 92,389 91,164 FHLB stock 11,959 11,398 Foreclosed assets, net -- 1,793 Goodwill 14,256 14,256 Core deposit intangible 6,337 6,528 All other assets 88,655 77,852 Total assets $4,240,091 $4,082,611 Liabilities and Equity Liabilities: Deposits: Checking, savings and money market accounts $2,846,448 $2,638,794 Certificates of deposit 821,048 902,080 Total deposits 3,667,496 3,540,874 Repurchase agreements 77,094 54,113 Borrowings from FHLB 83,878 92,364 Subordinated debentures 53,608 53,608 All other liabilities 66,466 56,884 Total liabilities 3,948,542 3,797,843 Stockholders' equity 291,549 284,768 Total liabilities and equity $4,240,091 $4,082,611 Certain amounts in prior year have been reclassified to conform with the March 31, 2006 presentation. DATASOURCE: Fidelity Bankshares, Inc. CONTACT: Vince A. Elhilow, Chairman and CEO, or Richard D. Aldred, Chief Financial Officer, both of Fidelity Bankshares, +1-561-803-9900; or Frank Hawkins or Julie Marshall, both of Hawk Associates, Inc., +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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