FIDELITY BANCORP, INC. 
By PITTSBURGH, July 22 /PRNewswire-FirstCall/ -- Fidelity Bancorp, Inc. (Nasdaq: FSBI) of Pittsburgh, Pennsylvania, and the holding company for Fidelity Bank today announced third quarter earnings for the three-month period ended June 30, 2009. Fidelity recorded net income of $238,000 or $0.04 per share (diluted) for the period, compared to net income of $1.2 million or $0.40 per share (diluted) in the prior year quarter. The $989,000 decrease in net income primarily reflects charges of $1.4 million for other-than-temporary impairment ("OTTI") on certain investment securities. Excluding the impairment charges, net income would have been $1.2 million or $0.37 per share (diluted). The Company's annualized return on average assets was 0.13% (0.68% excluding the OTTI charges) and return on average equity was 1.90% (9.85% excluding the OTTI charges) compared to 0.67% and 10.50% respectively, for the same period in the prior year. For the nine-month period ended June 30, 2009, net income was $1.8 million, or $0.52 per share (diluted), compared to $3.3 million or $1.07 per share (diluted) in the prior year period. Excluding impairment charges of $3.1 million, net income would have been $4.3 million or $1.33 per share (diluted). Annualized return on assets was 0.33% (0.77% excluding the OTTI charges) and return on equity was 5.15% (12.23% excluding the OTTI charges) for the fiscal 2009 period, compared to 0.59% and 9.22%, respectively, for the same period in the prior year.
Net interest income before provision for loan losses decreased $432,000 or 10.1% to $3.8 million for the three-month period ended June 30, 2009, compared to $4.3 million in the prior year period. For the nine months ended June 30, 2009, net interest income before provision for loan losses increased $903,000 or 7.4% to $13.1 million, compared to $12.2 million in the prior year period.
The provision for loan losses was $270,000 for the three-months ended June 30, 2009 compared to $350,000 in the prior year quarter. The provision for loan losses increased to $1.1 million for the nine-months ended June 30, 2009, compared to $740,000 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 analysis 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 2.33% of total assets at June 30, 2009, compared to 0.81% at September 30, 2008. The allowance for loan losses was 21.2% of non-performing loans at June 30, 2009, compared to 59.8% at September 30, 2008.
Other income, excluding the OTTI charges, increased $629,000 or 65.9% to $1.6 million for the quarter ended June 30, 2009 compared to $954,000 for the same period last year. The increase for the current quarter primarily relates to an increase in loan service charges and fees of $47,000, an increase in the gains on the sales of loans of $176,000, and an increase in other operating income of $412,000, partially offset by a decrease in deposit service charges and fees of $6,000. The increase in other operating income primarily relates to $463,000 of bank owned life insurance earnings recorded upon the death of the Company's former Chairman of the Board. For the nine months ended June 30, 2009, other income, excluding the OTTI charges, increased $623,000 or 22.6% to $3.4 million for the nine-months ended June 30, 2009 compared to $2.8 million for the same period last year. The increase for the current nine-month period primarily relates to increases in loan service charges and fees, gains on the sales of loans, and other operating income of $86,000, $275,000, and $269,000, respectively, offset by a decrease in gains on the sales of investment and mortgage-backed securities of $7,000.
OTTI charges were $1.4 million during the three-month period ending June 30, 2009; there were no similar charges in the prior fiscal period. The impairment charges relate to the Company's holdings of two pooled trust preferred securities resulting from several factors, including downgrades on 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 their market values have been less than cost, the inability to forecast a recovery in their market values, and other factors concerning the issuers in the pooled securities. OTTI charges were $3.1 million during the nine-month period ending June 30, 2009, compared to $322,000 during the prior year period. The impairment charges in the current year period relate the AMF Ultra Short Mortgage Fund and the pooled trust preferred securities. The impairment charges in the prior year period related to the Company's holding of the AMF Ultra Short Mortgage Fund.
Operating expenses for the quarter ended June 30, 2009, increased $800,000 or 24.6% to $4.0 million compared to $3.2 million for the comparable prior year period. For the nine-month period in this fiscal year, operating expenses increased $1.1 million or 11.2% to $10.7 million, compared to $9.6 million in the prior year period. The operating expense increase for the three-month period ended June 30, 2009 is primarily attributed to an increase in compensation and benefits expense of $19,000, an increase in federal deposit insurance premiums of $733,000, and an increase in other operating expenses of $72,000. The operating expense increase for the nine-month period ended June 30, 2009 is primarily attributed to an increase in compensation and benefits expense of $125,000, an increase in federal deposit insurance premiums of $802,000, an increase in service bureau expense of $81,000, and an increase in other operating expenses of $145,000, partially offset by a decrease in office occupancy and equipment of $14,000, a decrease in depreciation and amortization of $24,000 and a decrease in foreclosed real estate expense of $25,000. On May 22, 2009 the FDIC adopted a final rule imposing a 5 basis point special assessment on each depository institution's assets minus Tier 1 capital as of June 30, 2009. The special assessment will be collected on September 30, 2009.
The Company had an income tax benefit of $542,000 for the three-months ended June 30, 2009, compared to income tax expense of $393,000 in the prior year quarter. For the nine months ended June 30, 2009, the Company had an income tax benefit of $298,000, compared to income tax expense of $1.0 million for the same period last year. The tax provision for the current fiscal year was 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. Also, the Company has a tax benefit recorded for the current fiscal year due to tax exempt income that is currently higher than pre-tax income. This was caused by the OTTI charges taken during the period as well as the $463,000 in bank owned life insurance income that was recorded during the period, which is considered to be tax-exempt for income tax purposes.
Total assets were $740.6 million at June 30, 2009, an increase of $13.4 million or 1.8% compared to September 30, 2008, and an increase of $16.8 million or 2.3% compared to June 30, 2008. Cash and cash equivalents increased $43.3 million to $54.0 million at June 30, 2009 as compared to September 30, 2008, and increased $44.7 million as compared to June 30, 2008. Net loans outstanding decreased $23.8 million or 5.2% to $437.0 million at June 30, 2009 as compared to September 30, 2008, and decreased $14.8 million or 3.3% as compared to June 30, 2008. Deposits increased $27.4 million to $443.8 million at June 30, 2009 as compared to September 30, 2008, and increased $20.3 million as compared to June 30, 2008. Short-term borrowings decreased $32.1 million to $201,000 at June 30, 2009 as compared to September 30, 2008, and decreased $3.9 million as compared to June 30, 2008. Long-term debt decreased $193,000 to $118.6 million at June 30, 2009 as compared to September 30, 2008, and decreased $10.3 million as compared to June 30, 2008. Stockholders' equity was $50.0 million at June 30, 2009, compared to $42.2 million at September 30, 2008 and $45.2 million at June 30, 2008. On December 12, 2008, the Company sold $7 million in preferred stock to the U.S. Department of Treasury as a participant in the federal government's TARP Capital Purchase Program. In connection with the investment, the Company also issued a warrant to the Treasury, which permits the Treasury to purchase up to 121,387 shares of its common stock at an exercise price of $8.65 per share. The Treasury Department's TARP Capital Purchase Program is a voluntary program for healthy U.S. financial institutions designed to encourage these institutions to build capital to increase the flow of financing to U.S. businesses and consumers and to support the U.S. economy.
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, which is a reduction from the previous quarterly cash dividend of $.07 per common share. By doing so, Fidelity joined many other financial institutions that believe the preservation of capital to be the most prudent course of action in this challenging environment. The dividend is payable August 28, 2009 to stockholders of record August 15, 2009. This represents the 84th 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 Nine Months Ended
June 30, 2009 and 2008 - Unaudited
(In thousands, except per share data)
Three Months Ended Nine Months Ended
------------------ -----------------
June 30, June 30,
-------- --------
2009 2008 2009 2008
---- ---- ---- ----
Interest income:
Loans $6,239 $6,948 $20,184 $21,432
Mortgage-backed securities 894 1,088 3,040 3,006
Investment securities 1,366 1,682 4,407 5,437
Deposits with other institutions 8 8 12 20
-- -- -- --
Total interest income 8,507 9,726 27,643 29,895
----- ----- ------ ------
Interest expense:
Deposits 2,085 2,751 6,613 9,169
Borrowed funds 2,489 2,609 7,635 8,196
Subordinated debt 102 103 308 346
--- --- --- ---
Total interest expense 4,676 5,463 14,556 17,711
----- ----- ------ ------
Net interest income before
provision for loan losses 3,831 4,263 13,087 12,184
Provision for loan losses 270 350 1,145 740
--- --- ----- ---
Net interest income after
provision for loan losses 3,561 3,913 11,942 11,444
----- ----- ------ ------
Other income:
Loan service charges and fees 208 161 475 389
Gain on sale of investment
and mortgage-backed securities - - - 7
Impairment charge on
securities (1,401) - (3,121) (322)
Gain on sale of loans 247 71 402 127
Deposit service charges and
fees 357 363 1,087 1,087
Other operating income 771 359 1,411 1,142
--- --- ----- -----
Total other income 182 954 254 2,430
--- --- --- -----
Operating expenses:
Compensation and benefits 2,061 2,042 6,078 5,953
Office occupancy and
equipment 245 250 758 772
Depreciation and amortization 118 126 360 384
Federal insurance premiums 745 12 839 37
Loss on foreclosed real estate 7 16 17 21
Foreclosed real estate expense 1 5 3 28
Intangible amortization 5 7 17 22
Service bureau expense 97 93 317 236
Other operating expenses 768 696 2,310 2,165
--- --- ----- -----
Total operating expenses 4,047 3,247 10,699 9,618
----- ----- ------ -----
Income (loss) before income tax
provision (benefit) (304) 1,620 1,497 4,256
Income tax provision (benefit) (542) 393 (298) 1,000
---- --- ---- -----
Net Income (Loss) 238 1,227 1,795 3,256
Preferred stock dividend (88) - (193) -
Amortization of preferred
stock discount (15) - (30) -
Net Income available to common ---- ------ ------ ------
stockholders $135 $1,227 $1,572 $3,256
==== ====== ====== ======
Basic earnings per common share $0.04 $0.41 $0.52 $1.08
===== ===== ===== =====
Diluted earnings per common
share $0.04 $0.40 $0.52 $1.07
===== ===== ===== =====
Balance Sheets - Unaudited
(In thousands, except share data)
June 30, September 30, June 30,
-------- ------------- --------
2009 2008 2008
---- ---- ----
Assets:
Cash and due from banks $6,077 $6,701 $7,773
Interest-earning demand deposits 47,951 4,071 1,546
Securities available-for-sale 145,713 146,680 155,971
Securities held-to-maturity 64,976 75,404 74,128
Loans receivable, net 437,012 460,786 451,804
Loans held-for-sale 2,806 225 602
Foreclosed real estate, net 80 170 107
Federal Home Loan Bank stock, at cost 10,034 7,943 7,314
Accrued interest receivable 2,932 3,512 3,536
Office premises and equipment 8,066 6,949 5,850
Other assets 14,977 14,769 15,213
------ ------ ------
Total assets $740,624 $727,210 $723,844
======== ======== ========
Liabilities and Stockholders' Equity:
Liabilities:
Deposits $443,789 $416,414 $423,475
Short-term borrowings 201 32,258 4,138
Subordinated notes payable 7,732 7,732 7,732
Securities sold under agreement to
repurchase 111,626 104,003 106,384
Advance payments by borrowers for
taxes and insurance 3,397 1,483 3,853
Long-term debt 118,607 118,800 128,863
Other liabilities 5,231 4,365 4,237
----- ----- -----
Total liabilities 690,583 685,055 678,682
------- ------- -------
Stockholders' equity:
Preferred stock, $.01 par value per share,
5,000,000 shares authorized, 7,000
shares issued 6,670 - -
Common stock, $.01 par value per
share, 10,000,000 shares authorized,
3,664,373, 3,647,854, and
3,643,934 shares issued 37 36 36
Treasury stock, 619,129 shares (10,382) (10,382) (10,382)
Additional paid-in capital 46,364 45,931 45,861
Retained earnings 12,426 12,268 15,106
Accumulated other comprehensive loss,
net of tax (5,074) (5,698) (5,459)
------ ------ ------
Total stockholders' equity 50,041 42,155 45,162
------ ------ ------
Total liabilities and stockholders'
equity $740,624 $727,210 $723,844
======== ======== ========
Other Data:
At or For the
Three Month Period Ended
June 30,
--------
2009 2008
---- ----
Annualized return on average assets 0.13% 0.67%
Annualized return on average equity 1.90% 10.50%
Equity to assets 6.76% 5.80%
Interest rate spread (tax equivalent) 2.01% 2.23%
Net interest margin (tax equivalent) 2.30% 2.52%
Non-interest expense to average assets 2.22% 1.78%
Loan loss allowance to gross loans 0.82% 0.73%
Non-performing loans and real estate
owned to total assets at end-of-period 2.33% 1.65%
At or For the
Nine Month Period Ended
June 30,
--------
2009 2008
---- ----
Annualized return on average assets 0.33% 0.59%
Annualized return on average equity 5.15% 9.22%
Equity to assets 6.76% 5.80%
Interest rate spread (tax equivalent) 2.31% 2.10%
Net interest margin (tax equivalent) 2.59% 2.42%
Non-interest expense to average assets 1.94% 1.76%
Loan loss allowance to gross loans 0.82% 0.73%
Non-performing loans and real estate
owned to total assets at end-of-period 2.33% 1.65%
Mr. Richard G. Spencer
President and Chief Executive Officer
(412) 367-3300
rspencer@fidelitybank-pa.com
SOURCE Fidelity Bancorp, Inc.
