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 September 30, 2002

Commission File Number: 001-15089

FIDELITY BANCSHARES (N.C.), INC.

(Exact name of Registrant as specified in its charter)

Delaware

(State or other jurisdiction

of incorporation or organization)

56-1586543

(I.R.S. Employer

Identification Number)

100 South Main Street,

Fuquay-Varina, North Carolina

(Address of principal executive offices)

27526

(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. Yes x No ¨

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

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

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,			September 30,
	2002			2001			2001
	(unaudited)						(unaudited)
ASSETS
Cash and due from banks	$	41,990,331		$	46,517,398		$	38,337,277
Interest bearing deposits in other banks		11,976,854			28,462,716			23,251,220
Overnight funds sold		38,500,000			51,200,000			55,100,000

Total cash and cash equivalents		92,467,185			126,180,114			116,688,497

Investment securities:
Held to maturity (estimated fair value of $128,542,787, $126,502,713, and $142,352,947, respectively)		128,003,982			125,446,167			140,743,082
Available for sale (cost of $3,515,623, $3,633,777 and $3,647,604, respectively)		11,947,212			11,595,935			10,139,501

Total investment securities		139,951,194			137,042,102			150,882,583

Loans		722,206,880			668,984,155			647,894,005
Allowance for loan losses		(10,778,214	)		(9,312,384	)		(9,125,322	)

Loans, net		711,428,666			659,671,771			638,768,683

Federal Home Loan Bank of Atlanta stock, at cost		2,467,600			2,309,400			2,309,400
Premises and equipment, net		34,970,604			35,575,442			35,135,314
Accrued interest receivable		3,345,586			5,453,035			5,515,275
Intangible assets		16,226,369			17,311,024			17,691,551
Other assets		1,476,898			1,176,004			1,628,161

Total assets	$	1,002,334,102		$	984,718,892		$	968,619,464

LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand deposits	$	160,471,853		$	140,965,066		$	133,096,367
Savings and interest-bearing deposits		307,628,165			294,219,134			283,675,811
Time deposits		396,858,974			406,251,104			408,671,531

Total deposits		864,958,992			841,435,304			825,443,709
Short-term borrowings		18,460,605			27,072,692			27,712,037
Long-term borrowings		23,000,000			23,000,000			23,000,000
Accrued interest payable		3,320,192			6,257,923			7,674,065
Other liabilities		2,319,740			1,922,588			2,270,800

Total liabilities		912,059,529			899,688,507			886,100,611

Shareholders’ equity:
Common stock ($25 par value; 29,200 shares authorized; 28,011,28,026, and 28,026 shares issued and outstanding, respectively)		700,275			700,650			700,650
Surplus		6,163,380			6,166,681			6,166,681
Accumulated other comprehensive income		5,101,111			4,817,106			3,927,598
Retained earnings		78,309,807			73,345,948			71,723,924

Total shareholders’ equity		90,274,573			85,030,385			82,518,853

Total liabilities and shareholders’ equity	$	1,002,334,102		$	984,718,892		$	968,619,464

See accompanying notes to consolidated financial statements.

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

CONSOLIDATED STATEMENTS OF INCOME

	Three months ended September 30,					Nine months ended September 30,
	2002			2001		2002			2001
	(unaudited)					(unaudited)
Interest income:
Interest and fees on loans	$	12,925,958		$	13,918,258	$	38,154,942		$	42,806,054
Interest and dividends on investment securities:
Taxable interest income		775,432			1,952,682		3,170,468			6,383,127
Dividend income		70,360			75,948		205,954			225,994
Interest on overnight funds sold		198,067			427,900		503,550			1,399,844

Total interest income		13,969,817			16,374,788		42,034,914			50,815,019

Interest expense:
Deposits		4,013,038			6,608,458		12,842,763			21,239,897
Short-term borrowings		60,121			167,292		187,393			632,259
Long-term borrowings		488,750			488,750		1,466,250			1,466,250

Total interest expense		4,561,909			7,264,500		14,496,406			23,338,406

Net interest income		9,407,908			9,110,288		27,538,508			27,476,613
Provision for loan losses		550,000			750,000		2,000,000			2,250,000

Net interest income after provision for loan losses		8,857,908			8,360,288		25,538,508			25,226,613

Noninterest income:
Service charges on deposit accounts		1,661,947			1,652,809		4,864,292			4,457,873
Other service charges and fees		936,329			819,084		2,734,131			2,373,214
Other income		42,814			39,204		135,634			86,799
Gain (loss) on marketable equity securities		(53,166	)		—		(124,234	)		501,478

Total noninterest income		2,587,924			2,511,097		7,609,823			7,419,364

Noninterest expense:
Salaries and employee benefits		4,364,104			4,172,300		13,453,902			12,601,241
Occupancy and equipment		1,224,407			1,166,525		3,665,494			3,562,626
Data processing		796,168			723,187		2,390,592			2,224,104
Amortization of intangibles		362,085			380,527		1,084,655			1,108,163
Other expense		1,203,196