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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
|X| Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended September 30, 2000
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- or -
|_| Transition Report Pursuant to Section 13 or 15(d) Of the Securities
Exchange Act of 1934
For the transition period from to
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Commission File Number: 0-22288
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FIDELITY BANCORP, INC.
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(Exact name of Registrant as specified in its Charter)
Pennsylvania 25-1705405
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(State or other jurisdiction of (I.R.S. Employer
of incorporation or organization) Identification No.)
1009 Perry Highway, Pittsburgh, Pennsylvania 15237
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (412) 367-3300
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Securities registered pursuant to Section 12(b) of the Act: None
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
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(Title of Class)
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 12 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 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates
of the Registrant, based on the closing sales price of the Registrant's Common
Stock as quoted on the Nasdaq National Market System on December 22, 2000 was
$19.6 million.
As of December 22, 2000, the Registrant had outstanding 2,110,718
shares of Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Registrant's Annual Report to Stockholders for fiscal year
ended September 30, 2000. (Parts II and IV)
2. Portions of the Registrant's Proxy Statement for the Annual Meeting of
Stockholders for the fiscal year ended September 30, 2000. (Part III)
PART I
Fidelity Bancorp, Inc. (the "Company") may from time to time make
written or oral "forward- looking statements", including statements contained in
the Company's filings with the Securities and Exchange Commission (including
this Annual Report on Form 10-K and the exhibits thereto), in its reports to
stockholders and in other communications by the Company, which are made in good
faith by the Company pursuant to the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995.
These forward-looking statements involve risks and uncertainties, such
as statements of the Company's plans, objectives, expectations, estimates and
intentions, that are subject to change based on various important factors (some
of which are beyond the Company's control). The following factors, among others,
could cause the Company's financial performance to differ materially from the
plans, objectives, expectations, estimates and intentions expressed in such
forward-looking statements: the strength of the United States economy in general
and the strength of the local economies in which the Company conducts
operations; the effects of, and changes in, trade, monetary and fiscal policies
and laws, including interest rate policies of the board of governors of the
federal reserve system, inflation, interest rates, market and monetary
fluctuations; the timely development of and acceptance of new products and
services of the Company and the perceived overall value of these products and
services by users, including the features, pricing and quality compared to
competitors' products and services; the willingness of users to substitute
competitors' products and services for the Company's products and services; the
success of the Company in gaining regulatory approval of its products and
services, when required; the impact of changes in financial services' laws and
regulations (including laws concerning taxes, banking, securities and
insurance); technological changes, acquisitions; changes in consumer spending
and saving habits; and the success of the Company at managing the risks
resulting from these factors.
The Company cautions that the listed factors are not exclusive. The
Company does not undertake to update any forward-looking statement, whether
written or oral, that may be made from time to time by or on behalf of the
Company.
Item 1. Description of Business
On August 19, 1993, Fidelity Bank, PaSB ("Fidelity" or the "Bank")
consummated its reorganization into a bank holding company form of organization
(the "Reorganization") and thereby became a wholly owned subsidiary of the
Company. The Company's other subsidiary, FB Capital Trust (the "Trust"), was
created in May 1997 solely to facilitate the issuance of preferred securities
and the sale of the Company's junior subordinated debentures. On July 14, 2000,
the Company completed its acquisition of Pennwood Bancorp, Inc. References to
the Bank used throughout this document, unless the context indicates otherwise,
generally refer to the consolidated entity, since the primary activities of the
Company are those of the Bank.
The Bank is a Pennsylvania-chartered stock savings bank which is
headquartered in Pittsburgh, Pennsylvania. Deposits in the Bank are insured by
the Savings Association Insurance Fund ("SAIF") of the Federal Deposit Insurance
Corporation ("FDIC"). The Bank, incorporated in 1927, conducts business from ten
full-service offices located in Allegheny and Butler counties, two of five
Pennsylvania counties which comprise the metropolitan and suburban areas of
greater Pittsburgh.
1
Competition
The Bank is one of many financial institutions serving its market area.
The competition for deposit products and loan originations comes from other
insured financial institutions such as commercial banks, thrift institutions and
credit unions in the Bank's market area. Competition for deposits also includes
insurance products sold by local agents and investment products such as mutual
funds and other securities sold by local and regional brokers.
2
Lending Activities
The following table sets forth the composition of the Registrant's loan
portfolio in dollar amounts and in percentages of the respective portfolios at
the dates indicated.
As of September 30,
---------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
---------------- --------------- ----------------- ---------------- ----------------
$ % $ % $ % $ % $ %
-------- ------ -------- ------ -------- ----- -------- ----- -------- -----
(Dollars in Thousands)
Real estate loans:
Residential:
Single-family
(1-4 units)......... 207,853 59.6% $156,112 53.0% $115,559 49.1% $ 97,698 51.6% $ 80,186 50.8%
Multi-family
(over 4 units)...... 5,282 1.5 4,007 1.4 4,262 1.8 4,165 2.2 4,435 2.8
Construction............ 10,900 3.1 22,689 7.7 21,212 9.0 7,614 4.0 7,645 4.8
Commercial.............. 22,706 6.5 26,513 9.0 21,881 9.3 19,976 10.5 19,112 12.1
-------- ------ -------- ------ -------- ----- -------- ----- -------- -----
Total real
estate loans..... 246,741 70.7 209,321 71.1 162,914 69.2 29,453 68.3 111,378 70.5
Installment loans......... 68,614 19.7 57,869 19.6 49,122 20.9 43,081 22.8 35,782 22.7
Commercial business
and lease loans......... 33,584 9.6 27,394 9.3 23,157 9.9 16,873 8.9 10,702 6.8
-------- ------ -------- ------ -------- ----- -------- ----- -------- -----
Total loans
receivable....... 348,939 100.00% 294,584 100.00% 235,193 100.0% 189,407 100.0% 157,862 100.0%
====== ====== ===== ===== =====
Less:
Loans in process........ (6,558) (14,696) (12,916) (3,695) (4,109)
Unamortized premiums,
discounts and
deferred loan fees.... (2,033) (1,453) ( 1,142) (912) (960)
Allowance for
possible loan losses.. (2,910) (2,477) ( 2,243) (1,931) (1,530)
-------- -------- -------- -------- --------
Net loans
receivable....... $337,438 $275,958 $218,892 $182,869 $151,263
======== ======== ======== ======== ========
3
Loan Maturity Tables
The following table sets forth the estimated maturity of the Registrant's loan
portfolio at September 30, 2000. The table does not include prepayments or
scheduled principal repayments. Prepayments and scheduled principal repayments
on loans totaled $63.3 million for the year ended September 30, 2000. All loans
are shown as maturing based on contractual maturities.
Due Due after
within 1 through Due after
1 year 5 years 5 years Total
------ ------- ------- -----
(In thousands)
Real estate loans:
Residential ........................ $ 1,109 $5,660 $206,366 $213,135
Commercial ......................... 227 4,053 18,426 22,706
Construction........................ 1,842 1,165 7,893 10,900
Installment loans...................... 576 18,126 49,912 68,614
Commercial business and lease loans.... 7,808 12,455 13,321 33,584
------- ------- -------- --------
Total........................ $11,562 $41,459 $295,918 $348,939
======= ======= ======== ========
The following table sets forth the dollar amount of all loans at
September 30, 2000, due after September 30, 2001, which have fixed interest
rates and floating or adjustable interest rates.
Floating or
Fixed Rates Adjustable Rates Total
----------- ---------------- -----
(In thousands)
Real estate loans:
Residential ........................ $174,512 37,514 $212,026
Commercial ......................... 7,656 14,823 22,479
Construction........................ 5,659 3,399 9,058
Installment loans...................... 62,491 5,547 68,038
Commercial business and lease loans.... 20,920 4,856 25,776
-------- ------- --------
Total......................... $271,238 $66,139 $337,377
======== ======= ========
Contractual principal repayments of loans do not necessarily reflect
the actual term of the Bank's loan portfolio. The average life of mortgage loans
is substantially less than their average contractual maturities because of loan
payments and prepayments and because of enforcement of due-on-sale clauses,
which generally give the Bank the right to declare a loan immediately due and
payable in the event, among other things, that the borrower sells the real
property subject to the mortgage and the loan is not repaid. The average life of
mortgage loans tends to increase, however, when current mortgage loan rates are
substantially higher than rates on existing mortgage loans and, conversely,
decrease when current mortgage loan rates are substantially lower than rates on
existing mortgage loans.
Origination, Purchase and Sale of Loans. As a Pennsylvania-chartered
savings institution, the Bank has general authority to originate and purchase
loans secured by real estate located throughout the United States.
Notwithstanding this nationwide authority, it has been the Bank's policy to
concentrate its lending activities in its immediate market area. As a result,
over 95% of the mortgage loans originated
4
by the Bank are secured by real estate located in Allegheny County and adjacent
Pennsylvania counties. The Bank departs from this policy to purchase loans only
when overall demand is low in its immediate market area or when it has needed to
supplement its adjustable-rate mortgage ("ARM") loan portfolio. The Bank reviews
all such loans to ensure each meets the same underwriting standards that the
Bank applies to loans it originates. The Bank also originates mortgage loans for
inclusion in its loan portfolio and not for sale in the secondary market.
Applications for all types of loans are taken at the Bank's home office
and branch offices by branch managers and loan originators and forwarded to the
administrative office for processing. In most cases, an interview with the
applicant is conducted at the branch office by a branch manager. Residential and
commercial real estate loan originations are primarily attributable to walk-in
and existing customers, real estate brokers and mortgage loan brokers.
Installment loans are primarily obtained through existing and walk-in customers.
The Board of Directors has delegated authority to the Loan Committee, consisting
of the President, Executive Vice President and Chief Financial Officer and
Executive Vice President and Chief Lending Officer, to approve first mortgage,
home equity, secured consumer, unsecured consumer and commercial loans up to
$500,000, $200,000, $75,000, $50,000, and $400,000, respectively. Any loan in
excess of those amounts must be approved by the Board of Directors. The Board of
Directors has further delegated authority to the Bank's President to approve
first mortgage, home equity, secured consumer, unsecured consumer and commercial
loans up to $200,000, $125,000, $75,000, $50,000, and $125,000, respectively.
The terms of the delegation also permit the President to delegate authority to
any other Bank officer under the same or more limited terms. Pursuant to this
authority, the President of the Bank has delegated to the Executive Vice
President and Chief Lending Officer, subject to certain conditions, the
authority to approve motor vehicle loans, secured personal loans and unsecured
personal loans up to $50,000, $50,000, and $15,000, respectively; to approve
first mortgage one-to-four family loans up to $175,000, with a loan-to-value of
65% or less; to approve home equity loans up to $100,000 if the amount of the
loan is not in excess of 80% of the equity; to approve commercial loans up to
$100,000; to approve education loans up to levels approved by the Pennsylvania
Higher Education Assistance Agency; and to approve checking account overdraft
protection loans that conform to the parameters of the program.
Real Estate Lending. The Bank concentrates its lending activities on
the origination of loans and to a lesser extent the purchase of loan
participations secured primarily by first mortgage liens on existing
single-family residences. At September 30, 2000, $217.1 million or 62.2% of the
Bank's total loan portfolio consisted of such loans (including $4.0 million of
residential construction loans).
In response to a concern for more effective asset and liability
management, in recent years the Bank has been emphasizing single-family
residential loans which provide for annual interest rate adjustments. The
adjustable-rate residential mortgage loans offered by the Bank in recent years
have 10, 15 or 30-year terms and interest rates which adjust every year
generally in accordance with the index of average yield on U.S. Treasury
Securities adjusted to a constant maturity of one year. There is generally a 2%
cap or limit on any increase or decrease in the interest rate per year with a 5%
or 6% limit on the amount by which the interest can increase over the life of
the loan. The Bank has not engaged in the practice of using a cap on the
payments that could allow the loan balance to increase rather than decrease,
resulting in negative amortization. At September 30, 2000, approximately $39.0
million or 15.8% of the mortgage loans in the Bank's loan portfolio consisted of
loans which provide for adjustable rates of interest.
5
The Bank continues to originate fixed-rate loans with terms of 10, 15,
20 or 30 years in order to provide a full range of products to its customers,
but generally only under terms, conditions and documentation which permit the
sale of a portion of these loans in the secondary market. The Bank also offers a
10-year balloon loan with payments based on 30-year amortization. At September
30, 2000, approximately $207.7 million or 84.2% of the mortgage loans in the
Bank's loan portfolio consisted of loans which provide for fixed rates of
interest. Although these loans provide for repayments of principal over a fixed
period of up to 30 years, it is the Bank's experience that such loans have
remained outstanding for a substantially shorter period of time. The Bank's
policy is to enforce the "due-on-sale" clauses contained in most of its
fixed-rate, conventional mortgage loans, which generally permit the Bank to
require payment of the outstanding loan balance if the mortgaged property is
sold or transferred and, thus, contributes to shortening the average life of
such loans.
The Bank will lend generally up to 80% of the appraised value of the
property securing the loan (referred to as the loan-to-value ratio) up to a
maximum amount of $252,700 but will lend up to 95% of the appraised value up to
the same amount if the borrower obtains private mortgage insurance on the
portion of the principal amount of the loan that exceeds 80% of the value of the
property securing the loan. The Bank also originates residential mortgage loans
in amounts over $252,700. The Bank will generally lend up to 80% of the
appraised value of the property securing such loans. These loans may have terms
of up to 30 years, but frequently have terms of 10 or 15 years or are 10-year
balloon loans with payments based on 15-year to 30-year amortization. Generally,
such loans will not exceed a maximum loan amount of $1.0 million, although the
Bank may consider loans above that limit on a case-by-case basis.
The Bank also, in recent years, has developed single-family residential
mortgage loan programs targeted to the economically disadvantaged and minorities
in the Bank's primary lending area. Under the programs, the Bank will lend up to
97% of the appraised value of the property securing the loan as well as reducing
the closing costs the borrower is normally required to pay. The Bank does not
believe that these loans pose a significantly greater risk of non-performance
than similar single-family residential mortgage loans underwritten using the
Bank's normal criteria.
The Bank requires the properties securing mortgage loans it originates
and purchases to be appraised by independent appraisers who are approved by or
who meet certain prescribed standards established by the Board of Directors. The
Bank also requires title, hazard and (where applicable) flood insurance in order
to protect the properties securing its residential and other mortgage loans.
Borrowers are subject to employment verification and credit evaluation reports,
and must meet established underwriting criteria with respect to their ability to
make monthly mortgage payments.
In addition to loans secured by single-family residential real estate,
the Bank also originates, to a lesser extent, loans secured by commercial real
estate and multi-family residential real estate. Over 95% of this type of
lending is done within the Bank's primary market area. At September 30, 2000,
$29.6 million or 8.5% of the Bank's total loan portfolio consisted of commercial
real estate and multi-family residential real estate loans (including $6.9
million of commercial construction loans).
Although terms vary, commercial and multi-family residential real
estate loans are generally made for terms of up to 10 years with a longer period
for amortization and in amounts of up to 80% of the lesser of appraised value or
sales price. These loans are usually made with adjustable rates of interest, but
the Bank occasionally will make fixed-rate commercial or multi-family real
estate loans on a 10 or 7 year payment basis, with the period of amortization
negotiated on a case-by-case basis.
6
The Bank also engages in loans to finance the construction of
one-to-four family dwellings. This activity is generally limited to individual
units and may, to a limited degree, include speculative construction by
developers. The inspections, for approval of payment vouchers, are performed by
third parties and are based on stages of completion. Applications for
construction loans primarily are received from former borrowers and builders who
have worked with the Bank in the past. At September 30, 2000, the Bank had 20
construction projects of this type in process. In addition, the Bank also
engages in loans to finance the construction of commercial properties. At
September 30, 2000, the Bank had 14 construction projects of this type in
process.
Loans to finance commercial and multi-family residential real estate
and for the financing of construction generally provide a greater rate of return
but are considered to have a greater risk of loss than loans to finance the
purchase of single-family, owner-occupied dwellings. However, the Bank has
adopted underwriting guidelines to ensure that the loans involve only a minimal
amount of additional risk.
Installment Lending. The Bank offers a wide variety of installment
loans, including home equity loans and consumer loans. Home equity loans
amounted to $64.2 million or 93.6% of the Bank's total installment loan
portfolio at September 30, 2000. These loans are made on the security of the
unencumbered equity in the borrower's residence. Home equity loans are made at
fixed rates for terms of up to 15 years, and home equity lines of credit are
made at variable rates. Home equity loans generally may not exceed 80% of the
value of the security property when aggregated with all other liens, although a
limited number of loans up to 100% value may be made at increased rates.
Consumer loans consist of motor vehicle loans, other types of secured
consumer loans and unsecured personal loans. At September 30, 2000, these loans
amounted to $2.3 million, which represented 3.4% of the Bank's total installment
loan portfolio. At September 30, 2000, motor vehicle loans amounted to $1.1
million and unsecured loans and loans secured by property other than real estate
amounted to $1.2 million.
The Bank also makes other types of installment loans such as savings
account loans, education loans, credit card loans, personal lines of credit and
overdraft loans. At September 30, 2000, these loans amounted to $2.1 million or
3.0% of the total installment loan portfolio. That total consisted of $418,000
of education loans, $621,000 of savings account loans, $26,000 of credit card
loans, $995,000 of personal lines of credit and $25,000 of overdraft loans.
Consumer, credit card and overdraft loans and, to a lesser extent, home
equity loans may involve a greater risk of nonpayment than traditional first
mortgage loans on single-family residential dwellings. However, such loans
generally provide a greater rate of return, and the Bank underwrites the loans
in conformity to standards adopted by its Board of Directors.
Commercial Business Loans and Leases. Commercial business loans of both
a secured and unsecured nature are made by the Bank for business purposes to
incorporated and unincorporated businesses. Typically, these are loans made for
the purchase of equipment, to finance accounts receivable and to finance
inventory, as well as other business purposes. At September 30, 2000, these
loans amounted to $27.5 million or 7.9% of the total loan portfolio. In
addition, the Bank makes commercial leases to businesses, typically for the
purchase of equipment. All leases are funded as capital leases and the Bank does
not assume any residual risk at the end of the lease term. At September 30,
2000, commercial leases amounted to $6.1 million or 1.7% of the total loan
portfolio.
7
Loans-to-One Borrower Limitations. The Federal law generally does not
permit loans-to-one borrower to exceed 15% of unimpaired capital and surplus.
Loans in an amount equal to an additional 10% of unimpaired capital and surplus
also may be made to a borrower if the loans are fully secured by readily
marketable securities. At September 30, 2000, the Bank's maximum loan-to-one
borrower was $5.7 million.
Loan Fee and Servicing Income. In addition to interest earned on loans,
the Bank receives income through the servicing of loans and loan fees charged in
connection with loan originations and modifications, late payments, changes of
property ownership and for miscellaneous services related to its loans. Income
from these activities varies from period to period with the volume and type of
loans made.
The Bank charges loan origination fees which are calculated as a
percentage of the amount loaned. The fees received in connection with the
origination of conventional, single-family, residential real estate loans have
generally amounted to two to three points (one point being equivalent to 1% of
the principal amount of the loan). In addition, the Bank typically receives fees
of one or two points in connection with the origination of conventional,
multi-family residential loans and commercial real estate loans. Loan fees and
certain direct costs are deferred, and the net fee or cost is amortized into
income using the interest method over the expected life of the loan.
The Bank also receives income from servicing loans which are owned by
others. At September 30, 2000, the amount of loans serviced by the Bank for
others totalled $441,000 at September 30, 2000.
Classified Assets. Federal regulations provide for a classification
system for problem assets of insured institutions, including assets previously
treated as "scheduled items." Under this classification system, problem assets
of insured institutions are classified as "substandard," "doubtful" or "loss."
An asset is considered "substandard" if it is inadequately protected by the
current net worth and paying capacity of the obligor or of the collateral
pledged, if any. "Substandard" assets include those characterized by the
"distinct possibility" that the insured institution will sustain "some loss" if
the deficiencies are not corrected. Assets classified as "doubtful" have all the
weaknesses inherent in those classified "substandard," with the added
characteristic that the weaknesses present make "collection of principal in
full," on the basis of currently existing facts, conditions and values, "highly
questionable and improbable." Assets classified as "loss" are those considered
"uncollectible" and of such little value that their continuance as assets
without the establishment of a specific loss reserve is not warranted. Assets
that do not expose the Registrant to risk sufficient to warrant classification
in one of the above categories, but which possess some weakness, are required to
be designated "special mention" by management.
When an insured institution classifies problem assets as either
"substandard" or "doubtful," it may establish allowances for loan losses in an
amount deemed prudent by management. When an insured institution classifies
problem assets as "loss," it is required either to establish an allowance for
losses equal to 100% of that portion of the assets so classified or to charge
off such amount. An institution's determination as to the classification of its
assets and the amount of its allowances is subject to review by the Federal
Deposit Insurance Corporation ("FDIC") which may order the establishment of
additional loss allowances.
8
The following table sets forth the Registrant's classified assets in
accordance with its classification system.
At September 30, 2000
--------------------------
(In Thousands)
Special Mention $ 872
Substandard 1,871
Doubtful 72
Loss 18
------
$2,833
======
Non-performing Loans and Real Estate Owned. When a borrower fails to
make a required payment on a loan, the Bank attempts to cause the default to be
cured by contacting the borrower. In general, contacts are made after a payment
is more than 15 days past due, and a late charge is assessed at that time. In
most cases, defaults are cured promptly. If the delinquency on a mortgage loan
exceeds 90 days and is not cured through the Bank's normal collection procedures
or an acceptable arrangement is not worked out with the borrower, the Bank will
normally institute measures to remedy the default, including commencing a
foreclosure action or, in special circumstances, accepting from the mortgagor a
voluntary deed of the secured property in lieu of foreclosure.
The remedies available to a lender in the event of a default or
delinquency with respect to residential mortgage loans, and the procedures by
which such remedies may be exercised, are subject to Pennsylvania laws and
regulations. Under Pennsylvania law, a lender is prohibited from accelerating
the maturity of a residential mortgage loan, commencing any legal action
(including foreclosure proceedings) to collect on such loan, or taking
possession of any loan collateral until the lender has first provided the
delinquent borrower with at least 30 days' prior written notice specifying the
nature of the delinquency and the borrower's right to correct such delinquency.
In addition, the Homeowner's Emergency Assistance Act of 1983 further restricts
the ability of a lender to exercise any remedies it may have with respect to
loans for one- and two-family principal residences located in Pennsylvania
(including the lender's right to foreclose on such property) until the lender
has provided the delinquent borrower with written notice detailing the
borrower's rights under such Act to seek consumer credit counseling and state
financial assistance and until the borrower has exhausted or failed to pursue
such rights.
If foreclosure is effected, the property is sold at a public auction in
which the Bank may participate as a bidder. If the Bank is the successful
bidder, the acquired real estate is then included in the Bank "real estate
owned" account until it is sold. Although the Bank is permitted to finance sales
of real estate owned by "loans to facilitate," which may involve more favorable
interest rates and terms than generally would be granted under the Bank's
underwriting guidelines, it is the policy of the Bank to provide such loans only
in rare circumstances.
Loans are placed on non-accrual status when, in the judgment of
management, the probability of collection of interest is deemed to be
insufficient to warrant further accrual, generally when a loan is ninety days or
more delinquent. When a loan is placed on non-accrual status, previously accrued
but unpaid interest is deducted from interest income.
The Bank's management believes that its allowance for losses on loans
is appropriate and that the carrying value of its real estate owned approximates
the net realizable value of the properties.
9
However, while management uses the best information available to make such
determinations, future adjustments to the allowance may become necessary, based
on changes in economic conditions, or as a result of examinations by various
regulatory agencies, who review the allowance as a part of their examination
procedures. The Chief Lending Officer, Chief Financial Officer and the
Collection Manager meet monthly to review non-performing assets and any other
assets that may require classification or special consideration. Adjustments to
the carrying values of such assets are made as needed and a detailed report is
submitted to the Board of Directors on a monthly basis.
Real estate owned consists of properties acquired through foreclosure
and are recorded at the lower of cost (principal balance of the former mortgage
loan plus costs of obtaining title and possession) or fair value less estimated
cost to sell. Costs relating to development and improvement of the property are
capitalized, whereas costs of holding such real estate are expensed as incurred.
Additional write downs are charged to income, and the carrying value of the
property reduced, when the carrying value exceeds fair value less estimated cost
to sell.
The following tables sets forth information regarding nonaccrual loans
and real estate owned by the Bank at the dates indicated. The Bank did not have
any accruing loans which were 90 days or more overdue or any loans which were
classified as troubled debt restructurings at the dates presented.
2000 1999 1998 1997 1996
------ ------ ------ ------ ------
(Dollars in thousands)
Nonaccrual residential real
estate loans (1-4 family) ....... $ 520 $ 250 $ 246 $ 94 $ 567
Nonaccrual construction, multi-
family residential and
commercial real estate .......... 624 1,362 199 751 134
Nonaccrual installment and
commercial business loans ...... 817 773 107 271 457
------ ------ ------ ------ ------
Total non-performing loans ........ $1,961 $2,385 $ 552 $1,116 $1,158
====== ====== ====== ====== ======
Total nonperforming loans as a
percent of total loans receivable .56% .81% .23% .59% .73%
====== ====== ====== ====== ======
Total real estate owned, net of
related reserves ................ $ 181 $ 107 $ 21 $ -- $ 370
====== ====== ====== ====== ======
Total nonperforming loans and real
estate owned as a percent of
total assets .................... .39% .52% .14% .29% .48%
====== ====== ====== ====== ======
At September 30, 2000, non-accrual loans consisted of ten 1-4 family
residential real estate loans totaling $520,000, seven commercial real estate
loans totaling $624,000, 60 installment loans totaling $762,000, and seven
commercial business loan totaling $55,000. The largest non-accrual loan is
$181,000. Interest income that would have been recorded and collected on loans
accounted for on a non- accrual basis under the original terms of such loans was
$67,000 for the year ended September 30, 2000.
10
The following table sets forth an analysis of the Bank's allowance for
loan losses.
Year Ended September 30,
---------------------------------------------
2000 1999 1998 1997 1996
------ ------ ------ ------ ------
(Dollars in thousands)
Balance at beginning of period $2,477 $2,243 $1,931 $1,530 $1,429
Allowance for loan losses
of Pennwood Bancorp, Inc. ... 358 -- -- -- --
Provision for loan losses...... 470 520 405 500 270
Charge-offs:
Residential real estate ..... 12 -- 3 49 136
Commercial real estate ...... 165 183 -- -- 13
Installment ................. 181 89 97 71 44
Commercial .................. 67 54 10 3 78
Recoveries:
Residential real estate ..... -- 10 -- -- 55
Commercial real estate ...... -- -- -- -- --
Installment ................. 15 10 11 8 10
Commercial .................. 15 20 6 16 37
------ ------ ------ ------ ------
Net charge-offs ............... 395 286 93 99 169
------ ------ ------ ------ ------
Balance at end of period ...... $2,910 $2,477 $2,243 $1,931 $1,530
====== ====== ====== ====== ======
Ratio of net charge-offs during
the period to average loans
outstanding during the period .13% .12% .05% .06% .12%
====== ====== ====== ====== ======
11
Analysis of the Allowance for Loan Losses
The following table sets forth the allocation of the allowance by
category, which management believes can be allocated only on an approximate
basis. The allocation of the allowance to each category is not necessarily
indicative of future loss and does not restrict the use of the allowance to
absorb losses in any category.
At September 30,
---------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
--------------- ---------------- --------------- --------------- ---------------
$ % $ % $ % $ % $ %
------ ------ ------ ------ ------ ----- ------ ----- ------ -----
(Dollars in thousands)
Residential real
estate loans........ $ 986 61.1% $ 720 48.3% $ 719 49.1% $ 707 53.8% $ 443 53.6%
Commercial real
estate loans........ 219 6.5 102 8.6 162 11.1 139 4.0 225 12.1
Construction loans.... 50 3.1 202 14.2 131 9.0 53 10.5 60 4.8
Installment loans..... 706 19.7 534 19.6 478 20.9 445 22.8 358 22.7
Commercial
business loans...... 949 9.6 919 9.3 753 9.9 587 8.9 444 6.8
------ ------ ------ ------ ------ ----- ------ ----- ------ -----
Total.......... $2,910 100.00% $2,477 100.00% $2,243 100.0% $1,931 100.0% $1,530 100.0%
====== ====== ====== ====== ====== ===== ====== ===== ====== =====
12
Investment Activities
Mortgage-Backed Securities. Mortgage-backed securities (which also are
known as mortgage participation certificates or pass-through certificates)
typically represent a participation interest in a pool of single-family or
multi-family mortgages, the principal and interest payments on which are passed
from the mortgage originators, through intermediaries (generally U.S. Government
agencies and government sponsored enterprises such as the Federal National
Mortgage Association ("FNMA"), the Federal Home Loan Mortgage Corporation
("FHLMC") and Government National Mortgage Association ("GNMA")) that pool and
repackage the participation interests in the form of securities, to investors
such as the Bank.
Mortgage-backed securities typically are issued with stated principal
amounts, and the securities are backed by pools of mortgages that have loans
with interest rates that are within a range and have varying maturities. The
underlying pool of mortgages, i.e., fixed rate or adjustable rate, as well as
the prepayment risk, are passed on to the certificate holders. Accordingly, the
life of a mortgage-backed pass-through security approximates the life of the
underlying mortgages.
The actual maturity of a mortgage-backed security may be less than its
stated maturity due to prepayments of the underlying mortgages. Prepayments that
are faster than anticipated may shorten the life of the security and adversely
affect its yield to maturity. The yield is based upon the interest income and
the amortization of any premium or discount related to the mortgage-backed
security. In accordance with generally accepted accounting principals, premiums
and discounts are amortized over the estimated lives of the loans, which
decrease and increase interest income, respectively. The prepayment assumptions
used to determine the amortization period for premiums and discounts can
significantly affect the yield of the mortgage-backed security, and these
assumptions are reviewed periodically to reflect actual prepayments. Although
prepayments of underlying mortgages depend on many factors, including the type
of mortgages, the coupon rate, the age of mortgages, the geographical location
of the underlying real estate collateralizing the mortgages and general levels
of market interest rates, the difference between the interest rates on the
underlying mortgages and the prevailing mortgage interest rates generally is the
most significant determinant of the rate of prepayments. During periods of
falling mortgage interest rates, if the coupon rate of the underlying mortgages
exceeds the prevailing market interest rates offered for mortgage loans,
refinancing generally increases and accelerates the prepayment of the underlying
mortgages and the related security. Under such circumstances, the Bank may be
subject to reinvestment risk because to the extent that the Bank's
mortgage-backed securities amortize or prepay faster than anticipated, the Bank
may not be able to reinvest the proceeds of such repayments and prepayments at a
comparable rate.
The Registrant also invests in mortgage-related securities, primarily
collateralized mortgage obligations ("CMOs"), issued or sponsored by GNMA, FNMA,
FHLMC, as well as private issuers. CMOs are a type of debt security that
aggregates pools of mortgages and mortgage-backed securities and creates
different classes of CMO securities with varying maturities and amortization
schedules as well as a residual interest with each class having different risk
characteristics. The cash flows from the underlying collateral are usually
divided into "tranches" or classes whereby tranches have descending priorities
with respect to the distribution of principal and interest repayment of the
underlying mortgages and mortgage backed securities as opposed to pass through
mortgage backed securities where cash flows are distributed pro rata to all
security holders. Unlike mortgage backed-securities from which cash flow is
received and prepayment risk is shared pro rata by all securities holders, cash
flows from the mortgages and mortgage backed securities underlying CMOs are paid
in accordance with a predetermined priority to investors holding various
tranches of such securities or obligations. A particular tranche or class may
carry
13
prepayment risk which may be different from that of the underlying collateral
and other tranches. CMOs attempt to moderate reinvestment risk associated with
conventional mortgage-backed securities resulting from unexpected prepayment
activity. Management believes these securities represent attractive alternatives
relative to other investments due to the wide variety of maturity, repayment and
interest rate options available.
The following table sets forth the composition and amortized cost of
the Bank's mortgage-backed securities at the dates indicated.
September 30,
---------------------------
2000 1999 1998
------- ------- -------
(In thousands)
Mortgage-backed securities
held-to-maturity:
GNMA ......................... $ 10 $ 19 $ 28
FNMA ......................... 4,167 5,270 7,249
FHLMC ........................ 6,571 8,104 11,099
FHLMC Remic .................. 1,701 7 82
AA Rated Mortgage Certificates -- -- 1,455
------- ------- -------
Total .................. $12,449 $13,400 $19,913
======= ======= =======
Mortgage-backed securities
available-for-sale:
GNMA ......................... $20,438 $23,016 $22,823
FNMA ......................... 13,363 15,866 8,615
FHLMC ........................ 5,813 6,601 7,101
FNMA Remic ................... 7,671 8,957 11,841
FHLMC Remic .................. 15,912 19,016 23,453
CMOs ......................... 10,441 11,840 8,895
------- ------- -------
Total .................. $73,638 $85,296 $82,728
======= ======= =======
14
Information regarding the contractual maturities and weighted average
yield of the Bank's mortgage-backed securities portfolio at September 30, 2000
is presented below.
Amounts at September 30, 2000 Which Mature In
--------------------------------------------------------------
After After
One Year One to Five Five to 10 Over 10
or Less Years Years Years Total
-------- -------------- ---------- --------- ---------
(Dollars in thousands)
Mortgage-backed securities
held-to-maturity:
GNMA.............................. $ -- 10 $ -- $ -- $ 10
FNMA.............................. -- 1,029 743 2,395 4,167
FHLMC............................. 32 66 4,505 1,968 6,571
FHLMC Remic....................... -- -- -- 1,701 1,701
----- ------- ------- ------- -------
Total........................ $ 32 $ 1,105 $ 5,248 $ 6,064 $12,449
===== ======= ======= ======= =======
Weighted average yield.............. 7.03% 5.72% 6.79% 6.73% 6.67%
===== ======= ======= ======= =======
Mortgage-backed securities
available-for-sale:
GNMA.............................. -- -- $ -- $20,438 $20,438
FNMA.............................. -- 2,185 -- 11,178 13,363
FHLMC............................. -- -- -- 5,813 5,813
FNMA Remic........................ -- -- 798 6,873 7,671
FHLMC Remic....................... -- -- -- 15,912 15,912
Collateralized mortgage
obligations.................. -- -- 1,845 8,596 10,441
----- ------- ------- ------- -------
Total........................ $ -- $ 2,185 $ 2,643 $68,810 $73,638
===== ======= ======= ======= =======
Weighted average yield.............. --% 5.46% 6.89% 6.80% 6.76%
===== ======= ======= ======= =======
As of September 30, 2000, non-U.S. Government and U.S. Government
agency mortgage-backed securities that exceeded ten percent of stockholders'
equity are as follows:
Issuer Book Value Market Value
------ ---------- ------------
(Dollars in thousands)
GE Capital Mortgage Services, Inc. $3,647 $3,523
PNC Mortgage Securities Corporation $4,294 $4,082
The above securities are fixed rate collateralized mortgage obligations that are
rated AAA by Moody's.
15
Investments
Pursuant to the Bank's investment policy, the Bank's investments
include obligations issued or fully guaranteed by the United States government,
certain federal agency obligations, FHLB stock, municipal obligations,
asset-backed securities, and corporate obligations. It is the Bank's policy that
investments are to be made with a primary consideration for safety and
liquidity. Pursuant to this policy, the Bank invests only in government and
government-guaranteed securities, federal funds, banker acceptances, A-rated
commercial paper and corporate obligations, money market accounts, mutual funds,
repurchase agreements, certain collateralized investments and FHLMC preferred
stock.
Current regulatory and accounting guidelines regarding investment
securities (including mortgage backed securities) require the Bank to categorize
securities as "held to maturity," "available for sale" or "trading." As of
September 30, 2000, the Bank had securities classified as "held to maturity" and
"available for sale," including FHLB stock, in the amount of $9.9 million and
$84.8 million, respectively and had no securities classified as "trading."
Securities classified as "available for sale" are reported for financial
reporting purposes at the fair market value with net changes in the market value
from period to period included as a separate component of stockholders' equity,
net of income taxes. At September 30, 2000, the Bank's securities available for
sale had an amortized cost of $87.9 million and market value of $84.8 million
(unrealized loss of $3.1 million). The changes in market value in the Bank's
available for sale portfolio reflect normal market conditions and vary, either
positively or negatively, based primarily on changes in general levels of market
interest rates relative to the yields of the portfolio. Additionally, changes in
the market value of securities available for sale do not affect the Company's
consolidated income nor does it affect the Bank's regulatory capital
requirements or its loan-to- one borrower limit.
16
The following tables set forth the Bank's investment portfolio at
carrying value at the dates indicated.
As of September 30,
------------------------------------
2000 1999 1998
------- ------- -------
Available-for-sale (Dollars in thousands)
Investment securities:
U.S. government and agency..... $22,469 $26,313 $23,749
Municipal obligations.......... 36,174 39,563 29,708
Corporate obligations.......... 4,436 1,469 --
Commercial paper............... -- 500 --
Asset-backed securities........ 5,478 5,371 --
Mutual funds(1)................ 2,015 1,895 1,793
FHLB stock..................... 10,764 8,795 5,050
FHLMC preferred stock.......... 901 514 531
FNMA preferred stock........... 247 -- --
Equity securities.............. 1,198 1,411 1,321
Trust preferred securities..... 1,144 701 488
------- ------- -------
Total.................... $84,826 $86,532 $62,640
======= ======= =======
Held-to-maturity
Investment securities:
U.S. government and agency..... $ 2,958 $ 2,000 $ 5,000
Municipal obligations.......... 5,347 1,625 1,625
Corporate obligations.......... 1,631 -- --
------- ------- -------
Total.................... $ 9,936 $ 3,625 $ 6,625
======= ======= =======
- -------------
(1) Consists of investment in the Federated Investors ARM Fund and Legg Mason
Value Trust Fund.
At September 30, 2000, non-U.S. Government and U.S. Government agency
securities that exceeded ten percent of stockholders' equity are as follows:
Issuer Book Value Market Value
------ ---------- ------------
(Dollars in thousands)
Student Loan Mortgage Association $5,294 $5,478
The above securities are floating rate collateralized student loan
obligations rated AAA by Moody's.
17
The following tables set forth the amount of each category of
investment securities of the Bank at September 30, 2000 which mature during each
of the periods indicated and the weighted average yield for each range at
maturities. The yields on the tax-exempt investments have been adjusted to their
pre-tax equivalents.
After One Year After Five Years
One Year or Less Through Five Years Through Ten Years After Ten Years
------------------- ------------------- --------------------- --------------------
(Dollars in thousands)
Weighted Weighted Weighted Weighted
Average Average Average Average
Amount Yield Amount Yield Amount Yield Amount Yield
------ ------ ------ ------- ------ ------- ------ ------
Available-for-sale:
U.S. government and agency..... $ -- --% $2,004 7.33% $11,600 6.78% $ 8,865 6.66%
Municipal obligations.......... -- -- -- -- 1,355 4.11 34,819 5.29
Corporate obligations.......... -- -- 4,436 7.15 -- -- -- --
Asset-backed securities........ -- -- -- -- 1,996 6.96 3,482 7.31
Mutual funds(1)................ 2,015 6.11 -- -- -- -- -- --
FHLB stock..................... 10,764 7.25 -- -- -- -- -- --
FHLMC preferred stock.......... 901 6.14 -- -- -- -- -- --
FNMA preferred stock 247 6.45 -- -- -- -- -- --
Equity securities.............. 1,198 3.04 -- -- -- -- -- --
Trust preferred securities..... -- -- -- -- -- -- 1,144 9.61
------- ------ ------ ---- ------- ---- ------- ----
Total...................... $15,125 6.69% $6,440 7.01% $14,951 6.56% $48,310 5.56%
======= ====== ====== ==== ======= ==== ======= ====
Held-to-Maturity:
U.S. government and agency..... $ -- --% $ 958 7.00% $ 2,000 6.75% -- --%
Municipal obligations.......... -- -- -- -- -- -- 5,347 5.52
Corporate obligations.......... -- -- 500 7.90 1,131 7.86 -- --
------- ------ ------ ---- ------- ---- ------- ----
Total...................... $ -- --% $1,458 7.31% $ 3,131 6.79% $ 5,347 5.52%
======= ====== ====== ==== ======= ==== ======= ====
(1) Consists of investment in the Federated Investors ARM Fund and Legg Mason
Value Trust Fund.
18
Sources of Funds
General. Savings deposits obtained through the home office and branch
offices have traditionally been the principal source of the Bank's funds for use
in lending and for other general business purposes. The Bank also derives funds
from scheduled amortizations and prepayments of outstanding loans and
mortgage-backed securities and sales of investments available-for-sale. The Bank
also may borrow funds from the FHLB of Pittsburgh and other sources. Borrowings
generally may be used on a short-term basis to compensate for seasonal or other
reductions in savings deposits or other inflows at less than projected levels,
as well as on a longer-term basis to support expanded lending activities.
Savings Deposits. The Bank's current savings deposit products include
passbook savings accounts, demand deposit accounts, NOW accounts, money market
deposit accounts and certificates of deposit ranging in terms from three months
to ten years. Included among these savings deposit products are Individual
Retirement Account ("IRA") certificates and Keogh Plan retirement certificates
(collectively "retirement accounts"). The Bank offers preferred rates for
certificates of deposit in denominations of $99,000 or more at terms ranging
from one month to five years and, at September 30, 2000, such certificates
accounted for .79% total savings deposits.
The Bank's savings deposits are obtained primarily from residents of
Allegheny and Butler Counties. The principal methods used by the Bank to attract
savings deposit accounts include the offering of a wide variety of services and
accounts, competitive interest rates and convenient office locations and service
hours. The Bank does not currently pay, nor has it in the past paid, fees to
brokers to obtain its savings deposits.
The following table shows the distribution of, and certain other
information relating to the Bank's savings deposits by type as of the dates
indicated.
September 30,
----------------------------------------------------------
2000 1999 1998
-------------------- ------------------ -----------------
Average Average Average
Balance Rate Balance Rate Balance Rate
-------- ---- -------- ---- -------- ----
(Dollars in thousands)
Passbook and club accounts.. $ 52,289 2.55% $ 48,473 2.53% $47,423 2.53%
Checking accounts........... 51,700 .94 42,901 1.03 36,846 1.09
Money market accounts....... 14,755 3.00 17,539 3.00 14,949 2.98
Certificate accounts........ 171,887 5.94 160,205 5.14 162,517 5.70
-------- ---- -------- ---- -------- ----
Total.............. $290,631 4.30% $269,118 3.88% $261,735 4.32%
======== ==== ======== ==== ======== ====
In recent years, the Bank has been required by market conditions to
rely increasingly on newly-authorized types of short-term certificate accounts
and other savings deposit alternatives that are more responsive to market
interest rates than passbook accounts and regulated fixed-rate, fixed-term
certificates that were historically the Bank's primary source of savings
deposits. As a result of deregulation and consumer preference for shorter term,
market-rate sensitive accounts, the Bank has, like most financial institutions,
experienced a significant shift in savings deposits towards relatively
short-term,
19
market-rate accounts. In recent years, the Bank has been successful in
attracting retirement accounts which have provided the Bank with a relatively
stable source of funds. As of September 30, 2000, the Bank's total retirement
funds were $37.2 million or 12.8% of its total savings deposits.
The Bank attempts to control the flow of savings deposits by pricing
its accounts to remain generally competitive with other financial institutions
in its market area, but does not necessarily seek to match the highest rates
paid by competing institutions. In this regard, the senior officers of the Bank
meet weekly to determine the interest rates which the Bank will offer to the
general public.
Rates established by the Bank are also affected by the amount of funds
needed by the Bank on both a short-term and long-term basis, alternative sources
of funds and the projected level of interest rates in the future. The ability of
the Bank to attract and maintain savings deposits and the Bank's cost of funds
have been, and will continue to be, significantly affected by economic and
competitive conditions.
Maturities of certificates of deposit of $100,000 or more that were
outstanding as of September 30, 2000 are summarized as follows:
(In thousands)
3 months or less......................... $ 447
Over 3 months through 6 months........... 777
Over 6 months through 12 months.......... 200
Over 12 months........................... 789
-------
Total........................... $ 2,213
=======
Borrowings. The Bank is eligible to obtain advances from the FHLB of
Pittsburgh upon the security of the common stock it owns in that bank,
securities owned by the Bank and held in safekeeping by the FHLB and certain of
its residential mortgages, provided certain standards related to credit
worthiness have been met. Such advances are made pursuant to several different
credit programs, each of which has its own interest rate and range of
maturities. FHLB advances are generally available to meet seasonal and other
withdrawals of deposit accounts and to expand lending, as well as to aid the
effort of members to establish better asset and liability management through the
extension of maturities of liabilities. At September 30, 2000, the Bank had
$202.9 million of advances outstanding.
The Bank also, from time to time, enters into sales of securities under
agreements to repurchase ("reverse repurchase agreements"). Such reverse
repurchase agreements are treated as financings, and the obligations to
repurchase securities sold are reflected as liabilities in the statement of
financial condition. At September 30, 2000, the Bank had $5.0 million reverse
repurchase agreements outstanding.
20
The following table sets forth certain information regarding the
short-term borrowings (due within one year or less) of the Bank at the dates or
for the periods indicated.
At or for the Year Ended September 30,
---------------------------------------
2000 1999 1998
-------- --------- ---------
(Dollars in thousands)
FHLB advances:
Average balance outstanding............... $ 154 $ -- $ 1,177
Maximum amount outstanding at any
month-end during the period............. 1,000 -- 3,300
Weighted average interest rate
during the period.................... 5.35% -- 5.09%
Balance outstanding at end of period...... -- -- --
Weighted average interest rate
at end of period..................... 5.35% -- 5.13%
Reverse repurchase agreements:
Average balance outstanding............... 3,805 2,765 1,807
Maximum amount outstanding at any
month-end during the period............. 4,980 3,792 2,370
Weighted average interest rate
during the period.................... 5.12% 4.06% 4.50%
Balance outstanding at end of period...... 4,980 3,041 1,870
Weighted average interest rate
at end of period..................... 5.85% 4.25% 4.50%
FHLB Repoplus Advances:
Average balance outstanding............... 60,863 24,674 18,058
Maximum amount outstanding at any
month-end during the period............. 82,350 48,900 34,050
Weighted average interest rate
during the period.................... 6.17% 5.14% 5.75%
Balance outstanding at end of period...... 48,770 47,600 5,200
Weighted average interest rate
at end of period..................... 6.66% 5.48% 6.50%
Total average short-term borrowings......... 64,822 34,824 21,042
Average interest rate of total
short-term borrowings..................... 6.59% 5.32% 5.42%
Employees
At September 30, 2000, the Bank had 107 full-time and 29 part-time
employees. None of these employees are represented by a collective bargaining
agent, and the Bank believes that it enjoys good relations with its personnel.
21
Average Balance Sheet and Analysis of Net Interest Earnings
The following table presents for the periods indicated the total dollar
amount of interest from average interest-earning assets and the resultant
yields, as well as the interest expense on average interest-bearing liabilities,
expressed both in dollars and rates, and the net interest margin. The average
balance of loans receivable includes non-accrual loans. Interest income on tax
free investments has been adjusted for federal income tax purposes using a rate
of 34%.
Year Ended September 30,
---------------------------------------------------------------------------------------------------
2000 1999 1998
-------------------------------- ------------------------------- ----------------------------
Average Average Average Average Average Average
Balance Interest Yield/Cost Balance Interest Yield/Cost Balance Interest Yield/Cost
------- -------- ---------- ------- -------- ---------- ------- -------- ----------
(Dollars in Thousands)
Interest-earning assets:
Loans receivable(1).......... $307,702 $24,241 7.88% $246,327 $19,410 7.88% $201,036 $16,597 8.26%
Mortgage-backed securities... 90,186 6,078 6.74 108,051 6,738 6.24 117,791 7,597 6.45
Investment securities and
FHLB stock................. 96,424 6,999 7.26 81,828 5,581 6.82 61,838 4,301 6.96
Interest-earning deposits.... 664 44 6.63 536 31 5.78 1,127 74 6.57
-------- ------- ------ -------- ------- ------ -------- ------- ------
Total interest-earning
assets.................. 494,976 37,362 7.55 436,742 31,760 7.27 381,792 28,569 7.48
-------- ------- ------ -------- ------- ------ -------- ------- ------
Non-interest-earning assets... 21,513 16,862 14,294
-------- -------- --------
Total assets................ $516,489 $453,604 $396,086
======== ======== ========
Interest-bearing
liabilities:
Deposits..................... $276,439 $10,949 3.96 $268,553 10,545 3.93 $258,013 $10,940 4.24
Borrowed funds............... 210,606 12,983 6.16 154,574 8,684 5.62 108,238 6,424 5.94
-------- ------- ------ -------- ------- ------ -------- ------- ------
Total interest-bearing
liabilities............... 487,045 23,932 4.91 423,127 19,229 4.54 366,251 17,364 4.74
-------- ------- ------ -------- ------- ------ -------- ------- ------
Non-interest bearing
liabilities................. 3,129 2,282 814
-------- -------- --------
Total liabilities............ 425,409 367,065
Stockholders' equity.......... 26,315 28,195 29,021
-------- -------- --------
Total liabilities and
stockholders' equity....... $516,489 $453,604 $396,086
======== ======== ========
Net interest income........... $13,430 $12,531 $11,205
======= ======= =======
Interest rate spread.......... 2.64% 2.73% 2.74%
====== ====== ======
Net interest margin(1)........ 2.71% 2.87% 2.93%
====== ====== ======
Ratio of average
interest-earning assets
to average interest-
bearing liabilities......... 101.63% 103.22% 104.24%
====== ====== ======
(1) Net interest margin is net interest income divided by average
interest-earning assets.
22
Rate/Volume Analysis
The following table presents certain information regarding changes in
interest income and interest expense of the Bank for the periods indicated. For
each category of interest-earning assets and interest-bearing liabilities,
information is provided with respect to changes attributable to (1) changes in
volume (change in volume multiplied by old rate), (2) changes in rate (change in
rate multiplied by old volume), and (3) changes in rate/volume (change in rate
multiplied by change in volume). Interest income on tax free investments has
been adjusted for federal income tax purposes using a rate of 34%.
Year Ended September 30,
---------------------------------------------------------------------------------
2000 vs. 1999 1999 vs. 1998
--------------------------------------- ---------------------------------------
Increase (Decrease) Increase (Decrease)
Due to Due to
--------------------------------------- ---------------------------------------
Rate/ Rate/
Volume Rate Volume Net Volume Rate Volume Net
-------- -------- -------- ------- ------- ------- ------- --------
(Dollars in Thousands)
Interest income on interest-earning assets:
Mortgage loans .................................. $ 3,714 $ (130) $ (29) $ 3,555 $ 2,654 $ (607) $ (108) $ 1,939
Mortgage-backed securities ...................... (963) 393 (90) (660) (643) (236) 20 (859)
Installment loans ............................... 658 88 12 757 638 (172) (22) 444
Commercial business and lease loans ............. 424 81 13 519 724 (240) (54) 430
Investment securities and other investments ..... 908 448 75 1,431 1,462 (183) (42) 1,237
------- ------- ------- ------- ------- ------- ------- -------
Total interest-earning assets ............... 4,741 880 (19) 5,602 4,835 (1,438) (206) 3,191
------- ------- ------- ------- ------- ------- ------- -------
Interest expense on interest-bearing liabilities:
Deposits ........................................ 308 93 3 404 410 (771) (34) (395)
Borrowed funds .................................. 2,717 1,211 371 4,299 2,660 (306) (94) 2,260
------- ------- ------- ------- ------- ------- ------- -------
Total interest-bearing liabilities .............. 3,025 1,304 374 4,703 3,070 (1,077) (128) 1,865
------- ------- ------- ------- ------- ------- ------- -------
Net change in net interest income ........... $ 1,716 $ (424) $ (393) $ 899 $ 1,765 $ (361) $ ( 78) $(1,326)
======= ======= ======= ======= ======= ======= ======= =======
23
Certain Ratios
Year Ended September 30,
------------------------------------------
2000 1999 1998
----------------- ------------ -----------
Average equity to assets ratio... 5.10% 6.22% 6.94%
Dividend payout ratio ........... 18.45% 22.09% 21.77%
Regulation of the Company
Set forth below is a brief description of certain laws which related to
the regulation of the Company and the Bank. The description does not purport to
be complete and is qualified in its entirety by reference to applicable laws and
regulations.
Recent Regulation
Effective March 11, 2000, the Gramm-Leach-Bliley Financial Services
Modernization Act of 1999 (the "GLB Act") removed Federal and state law barriers
that prevented banking organizations, such as the Company, from affiliating with
insurance organizations and securities firms. An eligible bank holding company
may elect to be treated as a financial holding company and, as such, it may
engage in financial activities (activities that are financial in nature, such as
insurance and securities underwriting and dealing activities) and activities
that the Federal Reserve Board determines to be complementary to financial
activities and not to pose a substantial risk to the safety or soundness of
depository institutions or the financial system generally. For a bank holding
company to be eligible to elect financial holding company status, all of the
company's depository institution subsidiaries must meet the requirements of
their regulators to be considered well managed and well capitalized and have a
CRA rating of at least "satisfactory." Bank holding companies that do not elect
the status of a financial holding company will continue to have the authority to
engage in nonbanking activities that had been approved by Federal Reserve Board
order or regulation prior to November 12, 1999. The Company is eligible become a
financial holding company but has not yet filed an election of financial holding
company status.
A financial holding company will not be required to obtain prior
Federal Reserve approval in order to engage in the financial activities
identified in the Act, other than in connection with an acquisition of a savings
association. However, a financial holding company will not be able to commence,
or acquire, any new financial activities if one of its depository institution
subsidiaries receives a less than satisfactory CRA rating. In addition, if any
of its depository institution subsidiaries ceases being well capitalized or well
managed, a financial holding company may be forced to cease conducting business
as a financial holding company by divesting either its nonbanking financial
activities or its banks.
Bank Holding Company Act ("BHCA") - General. The Company, as a bank
holding company, is subject to regulation and supervision by the Federal Reserve
Board. Under the BHCA, a bank holding company is required to file annually with
the Federal Reserve Board a report of its operations and, with its subsidiaries,
is subject to examination by the Federal Reserve Board.
24
BHCA - Bank Acquisitions and Activity Restrictions. Under the BHCA, the
Company must obtain the prior approval of the Federal Reserve Board before it
may acquire all or substantially all of the assets of any bank, acquire direct
or indirect ownership or control of more than 5% of the voting shares of any
bank, or merge or consolidate with any other bank holding company. Under the
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, the Company
and any other bank holding company may acquire a bank located in any state,
subject to certain deposit-percentage restrictions, age limitations, and other
restrictions.
The BHCA also prohibits a bank holding company, with certain
exceptions, from acquiring more than 5% of the voting shares of any company that
is not a bank and from engaging in any business other than banking or managing
or controlling banks. Under the BHCA, the Federal Reserve Board is authorized to
approve the ownership of shares by a bank holding company in any company, the
activities of which the Federal Reserve Board has determined to be so closely
related to banking or to managing or controlling banks as to be a proper
incident thereto. Among activities found by the Federal Reserve Board to satisfy
this test are: providing services for internal operations for itself and its
subsidiaries and operating a mortgage company, finance company, credit card
company, factoring company, trust company or savings association; performing
certain data processing operations; providing limited securities brokerage
services; acting as an investment or financial advisor; acting as an insurance
agent for certain types of credit-related insurance; leasing personal property
on a full-payout, non-operating basis; providing tax planning and preparation
services; operating a collection agency; providing certain courier services;
providing management consulting services to depository institutions; issuing and
selling money orders, travelers checks and savings bonds; performing real estate
and personal property appraisals; arranging commercial real estate equity
financing; underwriting and dealing in government obligations and money market
instruments; providing foreign exchange advisory and transactional services;
acting as a futures commission merchant; providing check guaranty services; and
operating a credit bureau. The Federal Reserve Board also has determined that
certain other activities, including real estate brokerage and syndication, land
development, property management and underwriting of life insurance not related
to credit transactions, are not closely related to banking and a proper incident
thereto.
In addition to the business activities permitted generally for bank
holding companies, a qualifying bank holding company may elect financial holding
company status and engage in the financial activities authorized for financial
holding companies pursuant to the GLB Act. See "-- Recent Developments -
Financial Modernization."
Capital Requirements (Consolidated). The Federal Reserve Board measures
capital adequacy for bank holding companies on the basis of a risk-based capital
framework and a leverage ratio. The guidelines include the concept of Tier 1
capital and total capital. Tier 1 capital is essentially common equity,
excluding net unrealized gain (loss) on equity securities available-for-sale and
goodwill, plus certain types of preferred stock, including the Preferred
Securities issued by the Trust in 1997. The Preferred Securities may comprise up
to 25% of the Company's Tier 1 capital. Total capital includes Tier 1 capital
and other forms of capital such as the allowance for loan losses, subject to
limitations, and subordinated debt. The guidelines establish a minimum standard
risk-based target ratio of 8%, of which at least 4% must be in the form of Tier
1 capital. At September 30, 2000, the company had Tier 1 capital as a percentage
of risk-weighted assets of 12.70% and total risk-based capital as a percentage
of risk-weighted assets of 13.59%.
In addition, the Federal Reserve Board has established minimum leverage
ratio guidelines for bank holding companies. These guidelines currently provide
for a minimum ratio of Tier 1 capital as a percentage of average assets (the
"Leverage Ratio") of at least 4% (3% if the bank holding company has received
the highest rating on its most recent safety and soundness examination). At
eptember 30, 2000, the Company has a Leverage Ratio of 8.00%.
25
Limitations on Acquisitions of Voting Stock. The Federal Change in Bank
Control Act prohibits a person or group of persons from acquiring "control" of a
bank or bank holding company unless the Federal Reserve Board has been given 60
days' prior written notice of such proposed acquisition and within that time
period the Federal Reserve Board has not issued a notice disapproving the
proposed acquisition or extending for up to another 30 days the period during
which such a disapproval may be issued. An acquisition may be made prior to
expiration of the disapproval period if the Federal Reserve Board issues written
notice of its intent not to disapprove the action. Under a rebuttable
presumption established by the Federal Reserve Board, the acquisition of more
than 10% of a class of voting stock of a bank holding company with a class of
securities registered under Section 12 of the Exchange Act would constitute the
acquisition of control.
In addition, any "company" would be required to obtain the approval of
the Federal Reserve Board under the BHCA before acquiring 25% (5% in the case of
an acquiror that is a bank holding company) or more of the outstanding Common
Stock of, or such lesser number of shares as constitute control over, the
Company.
Regulation of the Bank.
The Bank is subject to extensive regulation by the FDIC and the
Department. There are periodic examinations by the Department and the FDIC to
test the Bank's compliance with various regulatory requirements. The deposits of
the Bank are insured to the maximum extent permitted by the SAIF, which is
administered by the FDIC. As insurer, the FDIC is authorized to conduct
examination of, and to require reporting by, FDIC-insured institutions. It also
may prohibit any FDIC-insured institution from engaging in any activity the FDIC
determines by regulation or order to pose a serious threat to the FDIC. This
regulation and supervision establishes a comprehensive framework of activities
in which an institution can engage and is intended primarily for the protection
of the insurance fund and depositors.
Deposit Insurance Premiums.
For the deposit insurance coverage provided by the FDIC, the Bank pays
assessments to the FDIC under a risk-based assessment system that takes into
account its capital and supervisory considerations. The FDIC sets assessments
for deposits insured by the SAIF or the Bank Insurance Fund ("BIF") to maintain
the targeted designated reserve ratio in that fund. In addition, the FDIC is
authorized to levy emergency special assessments on BIF and SAIF members. The
FDIC set the annual deposit insurance assessment rates for SAIF-member
institutions for 2000 at 0% of insured deposits for well-capitalized
institutions with the highest supervisory ratings to .027% of insured deposits
for institutions in the worst risk assessment classification. The insurance
assessment rate for most SAIF-member institutions is currently 0%.
In addition, all FDIC-insured institutions are required to pay
assessments to the FDIC at an annual rate of approximately .0212% of insured
deposits to fund interest payments on bonds issued by the Financing Corporation
("FICO"), an agency of the Federal government established to recapitalize the
predecessor to the SAIF. These assessments will continue until the FICO bonds
mature in 2017.
The FDIC may terminate the deposit insurance of any insured depository
institution, including the Bank, if it determines after a hearing that the
institution has engaged or is engaging in unsafe or unsound practices, is in an
unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, order or any condition imposed by an agreement with
the FDIC. It also may suspend deposit insurance temporarily during the hearing
process for the permanent termination of insurance, if the institution has no
tangible capital. Management is aware of no existing circumstances which would
result in termination of the Bank's deposit insurance.
26
Capital Requirements. The FDIC has promulgated regulations and adopted
a statement of policy regarding the capital adequacy of state-chartered banks
that , like the Bank, are not members of the Federal Reserve System. These
requirements are substantially similar to those adopted by the Federal Reserve
Board regarding bank holding companies, as described above.
The FDIC's capital regulations establish a minimum 3.0% Tier I leverage
capital requirement for the most highly-rated state-chartered, non-member banks
that received a rating of camels composite 1 at their last safety and soundness
examination, with an additional cushion of at least 100 to 200 basis points for
all other state-chartered, non-member banks, which effectively increases the
minimum Tier I leverage ratio for such other banks to 4.0% to 5.0% or more.
Leverage or core capital is defined as the sum of common stockholders' equity
(including retained earnings), noncumulative perpetual preferred stock and
related surplus, and minority interests in consolidated subsidiaries, minus all
intangible assets other than certain qualifying supervisory goodwill, and
certain purchased mortgage servicing rights and purchased credit and
relationships.
The FDIC also requires that savings banks meet a risk-based capital
standard. The risk-based capital standard for savings banks requires the
maintenance of total capital (which is defined as Tier I capital and
supplementary (Tier 2 capital) to risk weighted assets of 8%. In determining the
amount of risk-weighted assets, all assets, plus certain off balance sheet
assets, are multiplied by a risk-weight of 0% to 100%, based on the risks the
FDIC believes are inherent in the type of asset or item.
The components of Tier I capital are equivalent to those discussed
above under the 3% leverage standard. The components of supplementary (Tier 2)
capital include certain perpetual preferred stock, certain mandatory convertible
securities, certain subordinated debt and intermediate preferred stock, general
allowances for loan and lease losses (up to a maximum of 1.25% of risk-weighed
assets) and up to 45% of unrealized gains on equity securities. Overall, the
amount of capital counted toward supplementary capital cannot exceed 100% of
core capital. At September 30, 2000, the Bank met each of its capital
requirements.
The Bank is also subject to more stringent Department capital
guidelines. Although not adopted in regulation form, the Department utilizes
capital standards requiring a minimum of 6% leverage capital and 10% risk-based
capital. The components of leverage and risk-based capital are substantially the
same as those defined by the FDIC.
Federal Home Loan Bank System. The Bank is a member of the FHLB System,
which consists of 12 regional FHLBs, with each subject to supervision and
regulation by the Federal Housing Finance Board. The FHLBs provide a central
credit facility primarily for member institutions. The Bank, as a member of the
FHLB of Pittsburgh, is required to acquire and hold shares of capital stock in
that FHLB in an amount equal to at least 1% of the aggregate principal amount of
its unpaid residential mortgage loans, home purchase contracts and similar
obligations at the beginning of each year, or 5% of its advances (borrowings)
from the FHLB of Pittsburgh, whichever is greater. The Bank had a $10.8 million
investment in stock of the FHLB of Pittsburgh at September 30, 2000, which
complied with this requirement.
Advances from the FHLB of Pittsburgh are secured by a member's shares
of stock in the FHLB of Pittsburgh, certain types of mortgages and other assets.
Interest rates charged for advances vary depending upon maturity, the cost of
funds to the FHLB of Pittsburgh and the purpose of the borrowing. At September
30, 2000, the Bank had $202.9 million of advances from the FHLB of Pittsburgh
outstanding.
27
Pennsylvania Bank Law
The Bank is incorporated under the Pennsylvania Banking Code of 1965,
which contains detailed provisions governing the organization, location of
offices, rights and responsibilities of directors, officers, employees and
members, as well as corporate powers, savings and investment operations and
other aspects of the Savings Bank and its affairs. The Banking Code delegates
extensive rulemaking power and administrative discretion to the Department so
that the supervision and regulation of state-chartered savings banks may be
flexible and readily responsive to changes in economic conditions and in savings
and lending practices.
One of the purposes of the Banking Code is to provide savings banks
with the opportunity to be competitive with each other and with other financial
institutions existing under other Pennsylvania laws and other state, federal and
foreign laws. A Pennsylvania savings bank may locate or change the location of
its principal place of business and establish an office anywhere in the
Commonwealth, with the prior approval of the Department.
The Department generally examines each savings bank not less frequently
than once every two years. Although the Department may accept the examinations
and reports of the FDIC in lieu of the Department's examination, the present
practice is for the Department to conduct a joint examination with the FDIC. The
Department may order any savings bank to discontinue any violation of law or
unsafe or unsound business practice and may direct any director, officer,
attorney or employee of a savings bank engaged in an objectionable activity,
after the Department has ordered the activity to be terminated, to show cause at
a hearing before the Department why such person should not be removed.
The foregoing references to laws and regulations which are applicable
to the Bank are brief summaries thereof which do no purport to be complete and
which are qualified in their entirety by reference to such laws and regulations.
Item 2. Properties
At September 30, 2000, the Bank conducted its business from its main
office in Pittsburgh, Pennsylvania and nine full-service branch offices located
in Allegheny and Butler counties.
28
The following table sets forth certain information with respect to the
offices of the Bank as of September 30, 2000.
Location
- -----------------------------------------------------
Net Book Value
Lease Expiration of Property and
Date (including) Leasehold Improvements
County Address Lease or Own Options at September 30, 2000
- ----------------------- ---------------------------- -------------------- --------------------------
Allegheny 3300 Brighton Road
Pittsburgh, PA 15212 Own $145,299
Allegheny 1009 Perry Highway
Pittsburgh, PA 15237 Own 194,028
Butler 251 South Main Street
Zelienople, PA 16063 Own 469,184
Allegheny 312 Beverly Road
Pittsburgh, PA 15216 Lease 7/31/08 173,742
Allegheny 6000 Babcock Blvd.
Pittsburgh, PA 15237 Lease 11/30/98 --
Allegheny 1701 Duncan Avenue
Allison Park, PA 15101 Lease 01/31/05 3,495
Allegheny 4710 Liberty Avenue
Pittsburgh, PA 15224 Own 573,890
Allegheny 728 Washington Road
Pittsburgh, PA 15228 Own 250,878
Allegheny 2034 Penn Avenue
Pittsburgh, PA 1522 Own 949,406
Allegheny 683 Lincoln Avenue
Bellevue, PA 15202(1) Own 980,185
Allegheny Loan Center
1014 Perry Highway
Pittsburgh, PA 15237 Lease 9/30/07 64,999
Allegheny Data Processing and
Checking Department
1015 Perry Highway
Pittsburgh, PA 15237 Own 247,487
----------
Total (including Loan
and Data Centers) $4,052,593
==========
(1) The Bank acquired such branch on July 14, 2000, through the merger of
Pennwood Bancorp, Inc.
Item 3. Legal Proceedings
- --------------------------
The Company is not involved in any legal proceedings other than legal
proceedings occurring in the ordinary course of business, of which none are
expected to have a material adverse effect on the Company. In the opinion of
management, the aggregate amount involved in such proceedings is not material to
the financial condition or results of operations of the Bank.
29
Items 4. Submission of Matters to a Vote of Securities Holders
- ---------------------------------------------------------------
Not applicable.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
- --------------------------------------------------------------------------------
The information contained under the section captioned "Stock Market
Information" in the Company's Annual Report to Stockholders for the fiscal year
ended September 30, 2000 (the "Annual Report") is incorporated herein by
reference.
Item 6. Selected Financial Data
- --------------------------------
The information contained in the table captioned "Financial Highlights"
in the Annual Report is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
- --------------------------------------------------------------------------------
The information contained in the section captioned "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Annual Report is incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
- --------------------------------------------------------------------
The information contained in the section captioned "Asset and Liability
Management" in the Annual Report is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
- ----------------------------------------------------
The Registrant's financial statements listed in Item 14 herein are
incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
- --------------------------------------------------------------------------------
None.
Part III
Item 10. Directors and Executive Officers of the Registrant
- ------------------------------------------------------------
The information contained under the sections captioned "Section 16(a)
Beneficial Ownership Reporting Compliance" and "I - Information with Respect to
Nominees for Director, Directors Continuing in Office, and Executive Officers -
Election of Directors" and "- Biographical Information" in the Proxy Statement
for the 2001 Annual Meeting are incorporated herein by reference.
30
Item 11. Executive Compensation
- --------------------------------
The information contained under the section captioned "Proposal I --
Election of Directors - Executive Compensation" in the Proxy Statement is
incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- ------------------------------------------------------------------------
(a) Security Ownership of Certain Beneficial Owners
Information required by this item is incorporated herein by
reference to the Section captioned "Principal Holders" of the
Proxy Statement.
(b) Security Ownership of Management
Information required by this item is incorporated herein by
reference to the section captioned "Proposal I -- Election of
Directors" of the Proxy Statement.
(c) Management of the Company knows of no arrangements, including
any pledge by any person of securities of the Company, the
operation of which may at a subsequent date result in a change
in control of the registrant.
Item 13. Certain Relationships and Related Transactions
- --------------------------------------------------------
The information required by this item is incorporated herein by
reference to the section captioned "Proposal I -- Election of Directors" and
"Principal Holders" of the Proxy Statement.
Item 14. Exhibits, List and Reports on Form 8-K
(a) Listed below are all financial statements and exhibits filed
as part of this report, and are incorporated by reference.
1. The consolidated statements of financial condition of
Fidelity Bancorp, Inc. and subsidiaries as of
September 30, 2000 and 1999, and the related
consolidated statements of income, stockholders'
equity and cash flows for each of the years in the
three-year period ended September 30, 2000, together
with the related notes and the independent auditors'
report of KPMG LLP, independent accountants.
2. Schedules omitted as they are not applicable.
3.1 Articles of Incorporation(1)
3.2 Bylaws(1)
4 Common Stock Certificate(1)
10.1 Employee Stock Ownership Plan, as amended(1)
10.2 1988 Employee Stock Compensation Program(1)
10.3 1993 Employee Stock Compensation Program(2)
10.4 1997 Employee Stock Compensation Program(3)
10.5 1993 Directors' Stock Option Plan(2)
10.6 Employment Agreement between the Company, the Bank and William L.
Windisch(1)
31
10.7 1998 Group Term Replacement Plan(5)
10.8 1998 Salary Continuation Plan Agreement by and between W.L. Windisch, the
Company and the Bank(5)
10.9 1998 Salary Continuation Plan Agreement by and between R.G. Spencer, the
Company and the Bank(5)
10.10 1998 Salary Continuation Plan Agreement by and between M.A. Mooney, the
Company and the Bank(5)
10.11 1998 Stock Compensation Plan(4)
13 Portions of the 2000 Annual Report to Stockholders
20.1 Dividend Reinvestment Plan(6)
21 Subsidiaries (see Item 1. Description of Business)
23 Consent of Accountants
27 Financial Data Schedule (electronic filing only)
- -----------------
(1) Incorporated by reference from the exhibits attached to the Prospectus and
Proxy Statement of the Company included in its Registration Statement on
Form S-4 (registration No. 33-55384) filed with the SEC on December 3, 1992
(the "Registration Statement").
(2) Incorporated by reference from an exhibit in Form S-8 filed with the SEC on
May 2, 1997.
(3) Incorporated by reference from an exhibit in Form S-8 filed with the SEC on
March 12, 1998.
(4) Incorporated by reference from an exhibit in Form S-8 filed with the SEC on
January 25, 1999.
(5) Incorporated by reference to an identically numbered exhibit on Form 10-Q
filed with the SEC on December 29, 1998.
(6) Incorporated by reference to an identically numbered exhibit on Form 10-Q
filed with the SEC on February 14, 2000.
(b) Reports on Form 8-K
Reports on Form 8-K (Items 5 and 7), dated July 12, 2000 and
July 17, 2000, respectively, were filed to announce the
closing of the merger with Pennwood Bancorp, Inc.
32
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto only authorized.
FIDELITY BANCORP, INC.
December 26, 2000 /s/William L. Windisch
-----------------------------------------------
William L. Windisch
President, Chief Executive Officer and Director
(Duly Authorized Representative)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Company and in the capacities and on December 26, 2000.
/s/William L. Windisch /s/Richard G. Spencer
- ----------------------------------------------- --------------------------------------------
William L. Windisch Richard G. Spencer
Director, President and Chief Executive Officer Executive Vice President and
(Principal Executive Officer) Chief Financial Officer
(Principal Financial and Accounting Officer)
/s/John R. Gales /s/Robert F. Kastelic
- ----------------------------------------------- --------------------------------------------
John R. Gales Robert F. Kastelic
Director Director
/s/Oliver D. Keefer /s/Charles E. Nettrour
- ----------------------------------------------- --------------------------------------------
Oliver D. Keefer Charles E. Nettrour
Director Director
/s/Joanne Ross Wilder
- -----------------------------------------------
Joanne Ross Wilder
Director