FIDELITY BANCORP, INC. 
By PITTSBURGH, April 21 /PRNewswire-FirstCall/ -- Fidelity Bancorp, Inc. of Pittsburgh, Pennsylvania (Nasdaq: FSBI), the holding company for Fidelity Bank today announced second quarter earnings for the three-month period ended March 31, 2010. Fidelity recorded net income of $479,000 or $0.12 per share (diluted) for the period, compared to a net loss of $129,000 or ($0.08) per share (diluted) in the prior year quarter. The $608,000 increase in net income primarily reflects a decrease in other-than-temporary impairment ("OTTI") charges on certain investment securities of $1.3 million, an increase in other income (excluding OTTI charges) of $358,000, and a decrease in income tax provision of $280,000, partially offset by a decrease in net interest income of $1.1 million and an increase in operating expenses of $338,000. The Company's annualized return on average assets was .26% and return on average equity was 4.02% compared to -0.07% and -1.09% respectively, for the same period in the prior year. For the six-month period ended March 31, 2010, net income was $711,000, or $.17 per share (diluted), compared to $1.6 million or $.45 per share (diluted) in the prior year period. Annualized return on assets was .20% and return on equity was 2.99% for the fiscal 2010 period, compared to .42% and 6.93%, respectively, for the same period in the prior year.
Net interest income before provision for loan losses decreased $1.1 million or 23.2% to $3.5 million for the three-month period ended March 31, 2010, compared to $4.6 million in the prior year period. For the six months ended March 31, 2010, net interest income before provision for loan losses decreased $2.1 million or 22.7% to $7.2 million, compared to $9.3 million in the prior year period.
The provision for loan losses was $300,000 for the three-months ended March 31, 2010 compared to $320,000 in the prior year quarter. The provision for loan losses decreased to $600,000 for the six-months ended March 31, 2010, compared to $875,000 in the prior year period. The provision for loan losses is charged to operations to bring the total allowance for loan losses to a level that reflects management's best estimates of the losses inherent in the portfolio. An evaluation of the loan portfolio, current economic conditions and other factors is performed each month at the balance sheet date. Non-performing loans and foreclosed real estate were 2.42% of total assets at March 31, 2010, compared to .89% at March 31, 2009. The allowance for loan losses was 32.5% of non-performing loans at March 31, 2010, compared to 59.8% at March 31, 2009.
Included in non-performing loans as of March 31, 2010 were the following loans which were identified as such in prior periods but subsequent to March 31, 2009:
-- A $3.3 million commercial participation loan to a borrower in the
restaurant industry. The Company restructured the loan at its maturity
by entering into a forbearance agreement with the borrower to make
reduced payments over a six-month period. The Company has never had any
payment delinquency with this borrower before or after the forbearance
agreement was executed. In response to the Shared National Credit
Examination, this loan was transferred to non-accrual status as of
September 30, 2009.
-- Two commercial real estate loans totaling $5.0 million to the same
borrower for the acquisition of land with two commercial-zoned
buildings. The borrower filed for bankruptcy in August 2009, however the
Company is currently receiving monthly rental payments from the
corresponding tenants which exceed the current monthly debt requirement.
The Company had the properties appraised in September 2009 and the
appraised value exceeds the principal balance owed.
-- A $2.2 million commercial loan to a borrower for the acquisition of a
commercial property which is partially vacant at this time. The Company
is currently receiving monthly rental payments from the tenants,
however, there remains a cash flow shortage. Furthermore, an updated
appraisal was completed in September 2009 indicating a collateral
shortfall.
Loan loss reserves of $1.1 million have been allocated specifically for the aforementioned commercial loans.
Other income, excluding the OTTI charges, increased $358,000 or 38.0% to $1.3 million for the quarter ended March 31, 2010 compared to $943,000 for the same period last year. The increase for the current quarter primarily relates to gains on the sale of investment and mortgage-backed securities of $387,000; there were no similar gains in the prior year period. For the six months ended March 31, 2010, other income, excluding the OTTI charges, was $3.0 million compared to $1.8 million in the prior year period. The increase for the six-month period is primarily attributed to gains on the sale of investment and mortgage-backed securities of $1.0 million during the current period, while there were no similar gains in the prior year period. The increase for the six month period also includes an increase in the gain on the sale of loans of $67,000 and an increase in other operating income of $121,000.
OTTI charges were $296,000 during the three-month period ending March 31, 2010, compared to $1.6 million in the prior year period. The impairment charges for the current period relate to the Company's holdings of two pooled trust preferred securities. OTTI charges were $1.5 million during the six-month period ending March 31, 2010, compared to $1.7 million during the prior year period. The impairment charges for the current six-month period relate to the Company's holdings of six pooled trust preferred securities. The impairment charges for both periods resulted from several factors, including a downgrade in their credit ratings, failure to pass their principal coverage tests, indications of a break in yield, and the decline in the net present value of their projected cash flows. Management of the Company has deemed the impairment on the trust preferred securities to be other-than-temporary based upon these factors and the duration and extent to which the market value has been less than cost, the inability to forecast a recovery in market value, and other factors concerning the issuers in the pooled securities. The impairment charges in the prior year periods related to the Company's holding of the AMF Ultra Short Mortgage Fund, its investment in a pooled trust preferred security, and its holdings of Freddie Mac preferred stock. At March 31, 2010, the Company had holdings in 20 different trust preferred offerings, with a book value of $18.7 million. The net unrealized loss on these securities amounted to $6.1 million at March 31, 2009.
Operating expenses for the quarter ended March 31, 2010, increased $338,000 or 9.9% to $3.8 million compared to $3.4 million for the comparable prior year period. For the six-month period in this fiscal year, operating expenses increased $807,000 or 12.1% to $7.5 million, compared to $6.7 million in the prior year period. The operating expense increase for the three-month period ended March 31, 2010 is primarily attributed to an increase in federal deposit insurance premiums of $247,000 and an increase in other operating expenses of $118,000. The operating expense increase for the six-month period ended March 31, 2009 is primarily attributed to an increase in federal deposit insurance premiums of $537,000, an increase in service bureau expense of $88,000, and an increase in other operating expenses of $80,000.
For the three-months ended March 31, 2010, the provision for income taxes decreased $280,000 to a benefit of $11,000 compared to a provision of $269,000 for the same period last year. For the six months ended March 31, 2010, the provision for income taxes decreased $368,000 to a benefit of $124,000 compared to a provision of $244,000 for the same period last year. The tax benefits for the current periods were significantly impacted by the impairment charges during the respective periods. The OTTI charges recorded in the current periods caused pre-tax income to be lower than tax-exempt income; therefore a tax benefit was recorded. The tax provision for the prior year periods were significantly impacted by the impairment charges during the fiscal year ended September 30, 2008. On October 3, 2008, the Emergency Economic Stabilization Act was enacted which includes a provision permitting banks to recognize losses relating to FNMA and FHLMC preferred stock as an ordinary loss, thereby allowing the Company to recognize a tax benefit on the losses. Consequently, the Company recognized this additional tax benefit in the quarter ending December 31, 2008.
Total assets were $708.0 million at March 31, 2010, a decrease of $22.0 million or 3.0% compared to September 30, 2009, and a decrease of $12.4 million or 1.7% compared to March 31, 2009. Net loans outstanding decreased $20.0 million or 4.9% to $389.8 million at March 31, 2010 as compared to September 30, 2009, and decreased $67.1 million or 14.7% as compared to March 31, 2009. Deposits increased $2.3 million to $446.1 million at March 31, 2010 as compared to September 30, 2009, and increased $15.1 million as compared to March 31, 2009. Short-term borrowings were $131,000 at March 31, 2010, $104,000 at September 30, 2009, and $126,000 at March 31, 2009. Long-term debt decreased $25.1 million to $93.4 million at March 31, 2010 as compared to September 30, 2009, and decreased $25.2 million as compared to March 31, 2009. Stockholders' equity was $48.3 million at March 31, 2010, compared to $47.1 million at September 30, 2009 and $49.0 million at March 31, 2009.
QUARTERLY DIVIDEND
The Board of Directors of Fidelity Bancorp, Inc. yesterday declared a quarterly cash dividend of $.02 per share on the Company's common stock. The dividend is payable May 28, 2010 to stockholders of record May 14, 2010. This dividend represents the 87th uninterrupted quarterly cash dividend paid to stockholders.
The Company's filings with the Securities and Exchange Commission are available on-line through the Company's Internet website at www.fidelitybancorp-pa.com.
Fidelity Bancorp, Inc. is the holding company for Fidelity Bank, a Pennsylvania-chartered, FDIC-insured savings bank conducting business through thirteen offices in Allegheny and Butler counties.
Statements contained in this news release which are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, factors discussed in documents filed by Fidelity Bancorp, Inc. with the Securities and Exchange Commission from time to time.
Fidelity Bancorp, Inc. and Subsidiaries
Income Statement for the Three and Six Months Ended
March 31, 2010 and 2009 - Unaudited
(In thousands, except per share data)
Three Months
Ended Six Months Ended
------------ ----------------
March 31, March 31,
--------- ---------
2010 2009 2010 2009
---- ---- ---- ----
Interest income:
Loans $5,457 $6,871 $11,260 $13,945
Mortgage-backed
securities 738 1,009 1,519 2,146
Investment securities 1,195 1,474 2,420 3,041
Deposits with other
institutions 13 2 26 4
--- --- --- ---
Total interest income 7,403 9,356 15,225 19,136
----- ----- ------ ------
Interest expense:
Deposits 1,398 2,177 2,980 4,528
Borrowed funds 2,384 2,495 4,884 5,146
Subordinated debt 100 102 204 206
--- --- --- ---
Total interest expense 3,882 4,774 8,068 9,880
----- ----- ----- -----
Net interest income
before provision for
loan losses 3,521 4,582 7,157 9,256
Provision for loan losses 300 320 600 875
--- --- --- ---
Net interest income after
provision for loan
losses 3,221 4,262 6,557 8,381
----- ----- ----- -----
Other income:
Loan service charges and
fees 125 140 278 266
Gain on sale of
investment and mortgage-
backed securities 387 - 1,037 -
Impairment charge on
securities (296) (1,645) (1,530) (1,720)
Gain on sale of loans 86 124 221 154
Deposit service charges
and fees 334 342 719 730
Other operating income 369 337 764 643
--- --- --- ---
Total other income 1,005 (702) 1,489 73
----- ---- ----- ---
Operating expenses:
Compensation and benefits 2,021 2,091 4,079 4,018
Office occupancy and
equipment 274 276 528 512
Depreciation and
amortization 133 120 267 242
Federal insurance
premiums 322 75 631 94
Service bureau expense 145 113 307 219
Other operating expenses 863 745 1,647 1,567
--- --- ----- -----
Total operating expenses 3,758 3,420 7,459 6,652
----- ----- ----- -----
Income before income tax
(benefit) provision 468 140 587 1,802
Income tax (benefit)
provision (11) 269 (124) 244
--- --- ---- ---
Net income (loss) 479 (129) 711 1,558
Preferred stock dividend (88) (106) (175) (106)
Amortization of preferred
stock discount (15) (15) (30) (15)
--- --- --- ---
Net income (loss)
available to common
stockholders $376 $(250) $506 $1,437
==== ===== ==== ======
Basic earnings per common
share $0.12 $(0.08) $0.17 $0.47
===== ====== ===== =====
Diluted earnings per
common share $0.12 $(0.08) $0.17 $0.45
===== ====== ===== =====
Balance Sheets - Unaudited
(In thousands, except share data)
March 31, September 30, March 31,
2010 2009 2009
---------- -------------- ----------
Assets:
Cash and due from banks $5,496 $20,601 $6,854
Interest-earning demand
deposits 23,686 21,879 7,465
Securities available-for-
sale 161,366 166,115 144,523
Securities held-to-
maturity 85,037 72,448 66,498
Loans receivable, net 389,829 409,787 456,914
Loans held-for-sale 517 694 561
Foreclosed real estate, net 269 103 106
Federal Home Loan Bank
stock, at cost 10,034 10,034 10,034
Accrued interest receivable 2,731 2,900 3,192
Office premises and
equipment 9,117 8,470 7,553
Other assets 19,907 17,000 16,645
------ ------
Total assets $707,989 $730,031 $720,345
======== ======== ========
Liabilities and
Stockholders' Equity:
Liabilities:
Deposits $446,130 $443,880 $431,047
Short-term borrowings 131 104 126
Subordinated notes payable 7,732 7,732 7,732
Securities sold under
agreement to repurchase 105,080 106,244 105,390
Advance payments by
borrowers for taxes and
insurance 2,482 1,274 2,998
Long-term debt 93,443 118,541 118,672
Other liabilities 4,681 5,144 5,392
-----
Total liabilities 659,679 682,919 671,357
------- ------- -------
Stockholders' equity:
Preferred stock, $.01 par
value per share, 5,000,000
shares authorized, 7,000
shares issued 6,773 6,743 6,655
Common stock, $.01 par
value per share,
10,000,000 shares
authorized, 3,666,325,
3,664,947, and 3,662,488
shares issued 37 37 37
Treasury stock 619,129
shares (10,382) (10,382) (10,382)
Additional paid-in capital 46,433 46,390 46,330
Retained earnings 9,068 8,685 12,335
Accumulated other
comprehensive loss, net of
tax (3,619) (4,361) (5,987)
------ ------ ------
Total stockholders' equity 48,310 47,112 48,988
------ ------ ------
Total liabilities and
stockholders' equity $707,989 $730,031 $720,345
======== ======== ========
Other Data:
At or For the Three Month
Period Ended March 31,
--------------------------
2010 2009
---- ----
Annualized return on assets 0.26% -0.07%
Annualized return on equity 4.02% -1.09%
Equity to assets 6.82% 6.80%
Interest rate spread (tax equivalent) 1.94% 2.41%
Net interest margin (tax equivalent) 2.18% 2.71%
Non-interest expense to average assets 2.07% 1.86%
Loan loss allowance to net loans 1.41% 0.82%
Non-performing loans and foreclosed
real estate to total assets at end-
of-period 2.42% 0.89%
At or For the Six Month
Period Ended March 31,
------------------------
2010 2009
---- ----
Annualized return on assets 0.20% 0.42%
Annualized return on equity 2.99% 6.93%
Equity to assets 6.82% 6.80%
Interest rate spread (tax equivalent) 1.97% 2.47%
Net interest margin (tax equivalent) 2.20% 2.73%
Non-interest expense to average assets 2.05% 1.81%
Loan loss allowance to net loans 1.41% 0.82%
Non-performing loans and foreclosed
real estate to total assets at end-
of-period 2.42% 0.89%
CONTACT:
Mr. Richard G. Spencer
President and Chief Executive Officer
(412) 367-3300
E-mail: rspencer@fidelitybank-pa.com
SOURCE Fidelity Bancorp, Inc.
