Fidelity Bancorp Inc. has a market cap of $23.2 million; its shares were traded at around $9.5 with and P/S ratio of 0.7. The dividend yield of Fidelity Bancorp Inc. stocks is 1.1%.
Highlight of Business Operations:Total assets of the Company decreased $2.3 million, or 0.3%, to $694.3 million at December 31, 2010 from $696.7 million at September 30, 2010. Significant changes in individual categories include decreases in securities available-for-sale of $1.8 million, securities held-to-maturity of $2.2 million, loans held-for-sale of $1.0 million, and net loans of $12.0 million, partially offset by an increase in cash and cash equivalents of $14.7 million. The decrease in net loans reflects $37.4 million of prepayments, partially offset by $26.6 million in loan originations. The increase in cash and cash equivalents is a result of an increase in maturities and repayments of loans and securities.
Stockholders equity decreased to $49.0 million at December 31, 2010, compared to $49.6 million at September 30, 2010. This result reflects a net loss for the three-month period ended December 31, 2010 of $135,000; common and preferred stock cash dividends paid of $148,000; and an increase in the accumulated other comprehensive loss of $621,000, which is a result of changes in the net unrealized losses on the available-for-sale securities, changes in non-credit losses on available-for-sale and held-to-maturity securities, and by the unrealized loss recognized on the cash flow hedge as discussed in Note 8, Derivative Instruments, on pages 24 and 25 above. Offsetting these decreases were stock issued under the Dividend Reinvestment Plan of $5,000; stock-based compensation expense of $13,000; and stock contributed to the employee stock ownership plan of $250,000. On December 12, 2008, the Company sold $7.0 million in preferred stock to the U.S. Department of Treasury as a participant in the federal governments TARP Capital Purchase Program. In connection with the investment, the Company also issued a ten-year 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 Series B Preferred Stock will pay dividends at the rate of 5% per annum until the fifth anniversary of issuance and, unless redeemed earlier, at the rate of 9% thereafter. Until the third anniversary of the issuance of the Series B Preferred Stock or its earlier redemption or transfer by the Treasury Department to an unaffiliated holder, the Company may not increase the dividend on the common stock or repurchase any shares of common stock. Approximately $3.4 million of the balances in retained earnings as of December 31, 2010 and September 30, 2010 represent base year bad debt deductions for tax purposes only, as they are considered restricted accumulated earnings.
The Company recorded a net loss for the three months ended December 31, 2010 of $135,000 and a net loss available to common stockholders of $238,000 or $(0.08) per diluted common share compared to net income of $232,000 and net income available to common stockholders of $129,000 or $0.04 per diluted common share for the same period in fiscal 2010. The $367,000 decrease in earnings primarily reflects a decrease in the gains on sales of securities of $645,000. Other factors contributing to the decrease in earnings include an increase in operating expenses of $129,000, or 3.5%, partially offset by an increase in net interest income of $97,000, or 2.7%, a decrease in other-than-temporary impairment OTTI charges of $158,000, an increase in other income (excluding OTTI charges and gains on sales of securities) of $31,000, or 2.9%, and an increase in income tax benefit of $121,000. OTTI charges were $1.1 million for the three months ended December 31, 2010 compared to $1.2 million for the prior year period.
The Companys net interest income increased $97,000 or 2.7% to $3.7 million, for the three-month period ended December 31, 2010, as compared to $3.6 million in the same period in 2009. The increase in net interest income reflects interest expense decreasing more than interest income. Interest income decreased $859,000 or 11.0% to $7.0 million as compared to $7.8 million in the same period in 2009. The decrease reflects both a decrease in the average balance of interest earning assets and a decrease in the yields earned on these assets. Interest expense decreased $956,000 or 22.8% to $3.2 million, for the three-month period ended December 31, 2010, as compared to $4.2 million in the same periods in 2009. The decrease reflects both a decrease in the average balance of interest- bearing liabilities and a decrease in the interest rates paid on interest-bearing liabilities. For the three months ended December 31, 2010 and 2009 the ratio of average interest-earning assets to average interest-bearing liabilities was 112.3% and 108.6%, respectively.
Non-interest income declined $456,000, or 94.2%, to $28,000 for the three-month period ended December 31, 2010 compared to $484,000 in the same period in 2009. Excluding OTTI charges of $1.1 million and $1.2 million and gains on the sales of securities of $5,000 and $650,000 for the three months ended December 31, 2010 and 2009, respectively, total non-interest or other income increased $31,000 or 2.9% to $1.1 million for the three month period ended December 31, 2010, as compared to the same period in 2009. The increase is primarily attributed to an increase in loan service charges and fees and an increase in gains on sales of loans, partially offset by a decrease in deposit service charges and fees.
Impairment charges on securities were $1.1 million and $1.2 million for the three months ended December 31, 2010 and 2009, respectively. The impairment charges for the current period relate to the Companys investments in five pooled trust preferred securities, one private label mortgage-backed security, and common stock of a local financial institution. The trust preferred impairment charges resulted from several factors, including a downgrade in their credit ratings, their 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. At December 31, 2010, the Company had holdings in 20 different trust preferred offerings with a book value of $15.7 million. The unrealized loss on these securities amounted to $4.2 million at December 31, 2010. Included in the Companys holdings of trust preferred securities are 13 pooled trust preferred securities with a book value of $11.7 million and an unrealized loss of $3.5 million as of December 31, 2010. Of the $11.7 million in pooled trust preferred securities, five securities representing $8.3 million pass their principal coverage tests, while eight pooled securities with a book value of $3.4 million do not. Those securities that fail their coverage test have a current face amount of $11.6 million for which $8.3 million in impairment charges have previously been taken. The private label mortgage-backed security impairment charge resulted from a downgrade in its credit rating, as well as independent third-party analysis of the underlying collateral for the bond. The common stock impairment charge resulted from the duration and extent to which the market value has been less than cost and the performance of the financial institution over the past two years. The impairment charges for the prior period relate to the Companys investments in six pooled trust preferred securities.
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