FIDELITY BANCSHARES NC INC /DE/ - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

Commission File Number: 001-15089

Fidelity BancShares (N.C.), Inc.

(Exact name of Registrant as specified in its charter)

Delaware		56-1586543
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

100 South Main Street, Fuquay-Varina, North Carolina 27526

(Address of principal executive offices) (Zip code)

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past one hundred eighty-one days.

Common Stock, $25 Par Value—28,011 shares

(Number of shares outstanding, by class, as of August 13, 2002)

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FIDELITY BANCSHARES (N.C.), INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	June 30, 2002			December 31, 2001			June 30, 2001
	(unaudited)						(unaudited)
ASSETS
Cash and due from banks	$	38,693,697		$	46,517,398		$	39,909,797
Interest bearing deposits in other banks		24,376,494			28,462,716			57,444,366
Overnight funds sold		34,800,000			51,200,000			60,800,000

Total cash and cash equivalents		97,870,191			126,180,114			158,154,163

Investment securities:
Held to maturity (estimated fair value of $118,545,700, $126,502,713, and $110,887,388, respectively)		118,067,930			125,446,167			109,975,854
Available for sale (cost of $3,566,009, $3,633,777 and $3,644,668, respectively)		12,917,315			11,595,935			12,694,789

Total investment securities		130,985,245			137,042,102			122,670,643

Loans		707,360,831			668,984,155			631,041,705
Allowance for loan losses		(10,437,661	)		(9,312,384	)		(8,606,851	)

Loans, net		696,923,170			659,671,771			622,434,854

Federal Home Loan Bank of Atlanta stock, at cost		2,467,600			2,309,400			2,309,400
Premises and equipment, net		34,845,734			35,575,442			34,685,348
Accrued interest receivable		4,218,272			5,453,035			4,735,676
Intangible assets		16,588,454			17,311,024			18,072,079
Other assets		1,480,081			1,176,004			1,787,669

Total assets	$	985,378,747		$	984,718,892		$	964,849,832


LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand deposits	$	151,406,417		$	140,965,066		$	130,108,033
Savings and interest-bearing demand deposits		298,994,546			294,219,134			278,266,199
Time deposits		391,497,761			406,251,104			411,509,026

Total deposits		841,898,724			841,435,304			819,883,258
Short-term borrowings		24,528,546			27,072,692			28,633,244
Long-term borrowings		23,000,000			23,000,000			23,000,000
Accrued interest payable		4,573,892			6,257,923			7,652,632
Other liabilities		2,533,722			1,922,588			3,226,664

Total liabilities		896,534,884			899,688,507			882,395,798


Shareholders’ equity:
Common stock ($25 par value; 29,200 shares authorized; 28,011, 28,026, and 28,070 shares issued and outstanding, respectively)		700,275			700,650			701,750
Surplus		6,163,380			6,166,681			6,176,362
Accumulated other comprehensive income		5,657,540			4,817,106			5,475,323
Retained earnings		76,322,668			73,345,948			70,100,599

Total shareholders’ equity		88,843,863			85,030,385			82,454,034

Total liabilities and shareholders’ equity	$	985,378,747		$	984,718,892		$	964,849,832

See accompanying notes to consolidated financial statements.

FIDELITY BANCSHARES (N.C.), INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

	Three months ended June 30,					Six months ended June 30,
	2002			2001		2002			2001
	(unaudited)					(unaudited)
Interest income:
Interest and fees on loans	$	12,726,068		$	14,199,407	$	25,228,984		$	28,887,796
Interest and dividends on investment securities:
Taxable interest income		1,047,637			1,983,952		2,395,036			4,430,445
Dividend income		69,236			74,267		135,594			150,046
Interest on federal funds sold		119,406			699,375		305,483			971,944

Total interest income		13,962,347			16,957,001		28,065,097			34,440,231

Interest expense:
Deposits		4,220,215			7,139,879		8,829,725			14,631,439
Short-term borrowings		61,695			219,501		127,272			464,967
Long-term borrowings		488,750			488,750		977,500			977,500

Total interest expense		4,770,660			7,848,130		9,934,497			16,073,906

Net interest income		9,191,687			9,108,871		18,130,600			18,366,325
Provision for loan losses		700,000			750,000		1,450,000			1,500,000

Net interest income after provision for loan losses		8,491,687			8,358,871		16,680,600			16,866,325

Noninterest income:
Service charges on deposit accounts		1,637,208			1,562,994		3,202,345			2,805,064
Other service charges and fees		946,352			813,873		1,797,802			1,554,130
Other income		50,607			25,409		92,820			47,595
Gain on exchange of marketable equity securities		—			—		—			458,395
Gain (loss) on sale of marketable equity securities		(71,068	)		43,083		(71,068	)		43,083

Total noninterest income		2,563,099			2,445,359		5,021,899			4,908,267

Noninterest expense:
Salaries and employee benefits		4,575,916			4,244,581		9,089,798			8,428,941
Occupancy and equipment		1,212,521			1,195,216		2,441,087			2,396,101
Data processing		809,441			789,888		1,594,424			1,500,917
Amortization of intangibles		361,285			380,528		722,570			727,636
Other expense		1,158,124			1,303,529		2,334,018			2,564,812
Impairment loss on fixed assets		143,224			173,317		143,224			477,972

Total noninterest expense		8,260,511