SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the quarterly period ended June 30, 2004
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 incorporation or organization) |
(I.R.S. Employer Identification Number) |
| 100 South Main Street, Fuquay-Varina, North Carolina |
27526 | |
| (Address of principal executive offices) | (zip code) |
(919) 552-2242
(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 ninety days. Yes x No ¨
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ¨ No x
Common Stock - $25 Par Value, - 28,011 shares
(Number of shares outstanding, by class, as of August 11, 2004)
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
2
FIDELITY BANCSHARES (N.C.), INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
| June 30, |
December 31, |
June 30, |
||||||||||
| 2004 |
2003 |
2003 |
||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Assets |
||||||||||||
| Cash and due from banks |
$ | 48,358,384 | $ | 51,065,293 | $ | 47,119,163 | ||||||
| Interest bearing deposits in other banks |
36,646,453 | 38,187,190 | 48,892,845 | |||||||||
| Overnight funds sold |
18,900,000 | 64,000,000 | 79,100,000 | |||||||||
| Total cash and cash equivalents |
103,904,837 | 153,252,483 | 175,112,008 | |||||||||
| Investment securities: |
||||||||||||
| Held to maturity (estimated fair value of $193,757,524, $165,252,132, and $160,166,527, respectively) |
195,218,914 | 165,359,375 | 159,796,826 | |||||||||
| Available for sale (cost of $3,401,369, $3,390,010, and $3,407,438, respectively) |
14,230,253 | 14,165,194 | 12,305,577 | |||||||||
| Total investment securities |
209,449,167 | 179,524,569 | 172,102,403 | |||||||||
| Loans |
771,540,558 | 748,271,779 | 743,223,261 | |||||||||
| Allowance for loan losses |
(12,649,638 | ) | (12,818,463 | ) | (12,346,255 | ) | ||||||
| Loans, net |
758,890,920 | 735,453,316 | 730,877,006 | |||||||||
| Federal Home Loan Bank of Atlanta stock, at cost |
2,604,800 | 2,656,700 | 2,656,700 | |||||||||
| Premises and equipment, net |
36,670,131 | 36,990,715 | 36,600,786 | |||||||||
| Accrued interest receivable |
3,485,107 | 3,348,175 | 3,013,204 | |||||||||
| Intangible assets |
23,628,038 | 24,035,220 | 24,438,379 | |||||||||
| Other assets |
3,815,540 | 3,488,008 | 3,412,358 | |||||||||
| Total assets |
$ | 1,142,448,540 | $ | 1,138,749,186 | $ | 1,148,212,844 | ||||||
| Liabilities and Shareholders’ Equity |
||||||||||||
| Deposits: |
||||||||||||
| Noninterest-bearing demand deposits |
$ | 201,557,924 | $ | 184,655,766 | $ | 188,891,823 | ||||||
| Savings and interest-bearing deposits |
360,430,740 | 357,918,683 | 359,509,538 | |||||||||
| Time deposits |
424,733,740 | 436,913,294 | 446,140,650 | |||||||||
| Total deposits |
986,722,404 | 979,487,743 | 994,542,011 | |||||||||
| Short-term borrowings |
21,293,915 | 27,007,204 | 26,779,487 | |||||||||
| Long-term borrowings |
23,711,350 | 23,711,350 | 23,000,000 | |||||||||
| Accrued interest payable |
2,939,916 | 3,107,811 | 3,309,702 | |||||||||
| Other liabilities |
3,470,688 | 4,508,720 | 4,020,784 | |||||||||
| Total liabilities |
1,038,138,273 | 1,037,822,828 | 1,051,651,984 | |||||||||
| Shareholders’ equity: |
||||||||||||
| Common stock ($25 par value; 29,200 shares authorized; 28,011 shares issued and outstanding) |
700,275 | 700,275 | 700,275 | |||||||||
| Surplus |
6,163,380 | 6,163,380 | 6,163,380 | |||||||||
| Accumulated other comprehensive income |
6,551,474 | 6,504,176 | 5,368,563 | |||||||||
| Retained earnings |
90,895,138 | 87,558,527 | 84,328,642 | |||||||||
| Total shareholders’ equity |
104,310,267 | 100,926,358 | 96,560,860 | |||||||||
| Total liabilities and shareholders’ equity |
$ | 1,142,448,540 | $ | 1,138,749,186 | $ | 1,148,212,844 | ||||||
See accompanying notes to consolidated financial statements.
3
FIDELITY BANCSHARES (N.C.), INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
| Three months ended June 30, |
Six months ended June 30, |
||||||||||
| 2004 |
2003 |
2004 |
2003 |
||||||||
| Interest income: |
|||||||||||
| Interest and fees on loans |
$ | 11,636,570 | 11,766,367 | $ | 23,102,314 | 23,661,303 | |||||
| Interest and dividends on investment securities: |
|||||||||||
| Taxable interest income |
878,490 | 554,616 | 1,705,719 | 1,212,691 | |||||||
| Tax-exempt interest income |
1,940 | — | 2,783 | — | |||||||
| Dividend income |
63,280 | 66,579 | 129,100 | 135,022 | |||||||
| Interest on overnight funds sold |
36,157 | 163,863 | 116,263 | 270,573 | |||||||
| Total interest income |
12,616,437 | 12,551,425 | 25,056,179 | 25,279,589 | |||||||
| Interest expense: |
|||||||||||
| Deposits |
2,480,426 | 3,083,684 | 5,044,592 | 6,449,234 | |||||||
| Short-term borrowings |
43,328 | 44,798 | 90,291 | 107,511 | |||||||
| Long-term borrowings |
473,634 | 488,750 | 977,500 | 977,500 | |||||||
| Total interest expense |
2,997,388 | 3,617,232 | 6,112,383 | 7,534,245 | |||||||
| Net interest income |
9,619,049 | 8,934,193 | 18,943,796 | 17,745,344 | |||||||
| Provision for loan losses |
188,000 | 388,000 | 320,000 | 588,000 | |||||||
| Net interest income after provision for loan losses |
9,431,049 | 8,546,193 | 18,623,796 | 17,157,344 | |||||||
| Noninterest income: |
|||||||||||
| Service charges on deposit accounts |
1,615,864 | 1,620,286 | 3,170,758 | 3,209,830 | |||||||
| Other service charges and fees |
946,447 | 1,151,642 | 1,832,158 | 2,070,301 | |||||||
| Other income |
65,156 | 80,222 | 98,866 | 187,100 | |||||||
| Loss on marketable equity securities |
— | — | — | (65,488 | ) | ||||||
| Total noninterest income |
2,627,467 | 2,852,150 | 5,101,782 | 5,401,743 | |||||||
| Noninterest expense: |
|||||||||||
| Salaries and employee benefits |
5,088,794 | 4,657,023 | 10,058,605 | 9,268,024 | |||||||
| Occupancy and equipment |
1,313,802 | 1,203,020 | 2,653,979 | 2,431,998 | |||||||
| Data processing |
1,029,173 | 827,877 | 2,055,807 | 1,686,805 | |||||||
| Amortization of intangibles |
189,182 | 77,048 | 378,363 | 154,096 | |||||||
| Other expense |
1,390,245 | 1,187,841 | 2,528,568 | 2,365,276 | |||||||
| Total noninterest expense |
9,011,196 | 7,952,809 | 17,675,322 | 15,906,199 | |||||||
| Net income before income taxes |
3,047,320 | 3,445,534 | 6,050,256 | 6,652,888 | |||||||
| Income tax expense |
1,145,380 | 1,331,141 | 2,265,470 | 2,481,252 | |||||||
| Net income |
$ | 1,901,940 | 2,114,393 | $ | 3,784,786 | 4,171,636 | |||||
| Per share information: |
|||||||||||
| Net income |
$ | 67.90 | 75.48 | $ | 135.12 | 148.93 | |||||
| Cash dividends declared |
$ | 8.00 | 8.00 | $ | 16.00 | 16.00 | |||||
| Weighted average shares outstanding |
28,011 | 28,011 | 28,011 | 28,011 | |||||||
See accompanying notes to consolidated financial statements.
4
FIDELITY BANCSHARES (N.C.), INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(unaudited)
| Common Stock |
||||||||||||||||||||||||
| Shares |
Amount |
Surplus |
Accumulated other |
Retained earnings |
Comprehensive income |
Total shareholders’ equity |
||||||||||||||||||
| Balance December 31, 2002 |
28,011 | $ | 700,275 | $ | 6,163,380 | $ | 4,866,801 | $ | 80,605,182 | $ | 92,335,638 | |||||||||||||
| Net income |
— | — | — | — | 4,171,636 | $ | 4,171,636 | 4,171,636 | ||||||||||||||||
| Cash dividends ($16.00 per share) |
— | — | — | — | (448,176 | ) | (448,176 | ) | ||||||||||||||||
| Unrealized gain on securities available for sale, net of deferred taxes of $337,266 |
— | — | — | 516,573 | — | 516,573 | 516,573 | |||||||||||||||||
| Additional pension charge related to unfunded pension liability, net of deferred taxes of $9,664 |
— | — | — | (14,811 | ) | — | (14,811 | ) | (14,811 | ) | ||||||||||||||