U.S. Securities and Exchange Commission
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ____________________ to ____________________
Commission file number 0-22288
-------
Fidelity Bancorp, Inc.
----------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1705405
------------ ----------
(State or other jurisdiction of incorporation (IRS Employer Identification No.)
or organization
1009 Perry Highway, Pittsburgh, Pennsylvania, 15237
---------------------------------------------------
(Address of principal executive offices)
412-367-3300
------------
(Issuer's telephone number)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 1,891,310 shares, par value
$0.01, at January 31, 2000 ---------------------------
- --------------------------
<PAGE>
FIDELITY BANCORP, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Index
<S> <C> <C>
Part I. Financial Information Page
- ------- --------------------- ----
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Financial Condition as of September 30, 1999
and December 31, 1999 1
Consolidated Statements of Income for the Three Months Ended
December 31, 1999 and 1998 2
Consolidated Statements of Cash Flows for the Three Months Ended
December 31, 1999 and 1998 3-4
Consolidated Statement of Changes in Stockholders' Equity for the Three
Months Ended December 31, 1999 and 1998 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk 17
Part II - Other Information
- ---------------------------
Item 1. Legal Proceedings 18
Item 2. Changes in Securities 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 19
</TABLE>
<PAGE>
Part I - Financial Information
Item 1 - Financial Statements
FIDELITY BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Condition (Unaudited)
----------------------------------------------------------
(in thousands)
December 31, September 30,
Assets 1999 1999
------ ---- ----
Cash and amounts due from
depository institutions $ 9,403 $ 4,304
Interest-earning demand deposits with
other institutions 644 364
Investment securities held-to-maturity 5,285 3,625
Investment securities available-for-sale 78,244 77,737
Loans receivable, net (Notes 5 and 6) 284,801 275,958
Mortgage-backed securities held-to-maturity 14,740 13,400
Mortgage-backed securities available-for-sale 78,748 82,850
Real estate owned, net 248 107
Federal Home Loan Bank stock - at cost 9,215 8,795
Accrued interest receivable, net 2,872 2,886
Office premises and equipment, net 4,696 4,700
Deferred tax asset 4,005 3,155
Prepaid expenses and other assets 4,643 4,662
--------- ---------
Total Assets $ 497,544 $ 482,543
========= =========
Liabilities and Net worth
-------------------------
Liabilities:
Savings and time deposits $ 273,027 $ 269,118
Federal Home Loan Bank advances 181,000 170,600
Reverse repurchase agreements 2,731 3,041
Advance deposits by borrowers for
taxes and insurance 2,780 1,298
Accrued interest payable 1,115 1,153
Accrued income taxes payable 476 199
Other accrued expenses and liabilities 1,491 838
Guaranteed preferred beneficial interest in
Company's debentures 10,250 10,250
--------- ---------
Total Liabilities 472,870 456,497
--------- ---------
Stockholders' equity (Notes 3 and 4):
Common stock, $0.01 par value per share,
10,000,000 shares authorized; 1,994,533
and 1,989,883 shares issued, respectively 20 20
Treasury stock, at cost - 99,175 and 55,575 shares (1,586) (953)
Additional paid-in capital 14,349 14,305
Retained earnings - substantially restricted 17,603 16,736
Accumulated other comprehensive income (loss),
net of tax (5,712) (4,062)
--------- ---------
Total Stockholders' Equity 24,674 26,046
--------- ---------
Total Liabilities and Stockholders' Equity $ 497,544 $ 482,543
========= =========
See accompanying notes to financial statements
-1-
<PAGE>
FIDELITY BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
---------------------------------------------
(in thousands, except per share data)
Three Months Ended December 31,
-------------------------------
1999 1998
---- ----
Interest income:
Loans $ 5,532 $ 4,679
Mortgage-backed securities 1,548 1,641
Investment securities:
Taxable 870 647
Tax-exempt 494 416
Deposits with other institutions 10 13
------- -------
Total interest income 8,454 7,396
------- -------
Interest expense:
Savings and time deposits 2,543 2,827
Guaranteed preferred beneficial interest
in Company's debentures 256 256
Borrowed funds 2,434 1,543
------- -------
Total interest expense 5,233 4,626
------- -------
Net interest income before provision
for loan losses 3,221 2,770
Provision for loan losses 120 105
------- -------
Net interest income after provision
for loan losses 3,101 2,665
------- -------
Other income:
Loan service charges and fees 59 45
Loss on sale of investment and
mortgage-backed securities, net (2) --
Gain on sale of loans 2 4
Deposit service charges and fees 171 126
Other operating income 202 150
------- -------
Total other income 432 325
------- -------
Operating expenses:
Compensation and employee benefits 1,231 1,192
Occupancy and equipment expense 170 210
Depreciation and amortization 141 147
Federal insurance premiums 40 38
(Gain) loss on real estate owned, net 21 (45)
Other operating expenses 446 445
------- -------
Total operating expenses 2,049 1,987
------- -------
Income before income tax provision 1,484 1,003
Income tax provision 419 301
------- -------
Net income $ 1,065 $ 702
======= =======
Basic earnings per common share (Note 3) $ 0.56 $ 0.35
======= =======
Diluted earnings per common share (Note 3) $ 0.55 $ 0.35
======= =======
Dividends per common share $ 0.10 $ 0.09
======= =======
See accompanying notes to financial statements
-2-
<PAGE>
FIDELITY BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
-------------------------------------------------
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended December 31,
-------------------------------
1999 1998
---- ----
<S> <C> <C>
Operating Activities:
- ---------------------
Net income $ 1,065 $ 702
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 120 105
(Gain) loss on real estate owned 21 (45)
Depreciation of premises and equipment 141 147
Deferred loan fee amortization (44) (91)
Amortization of investment and mortgage-backed
securities discounts/premiums, net 49 104
Net loss on sale of investment securities 2 --
Net (gain) on sale of loans (2) (4)
Origination of loans held-for-sale -- (477)
Proceeds from sale of loans held-for-sale -- 479
(Increase) decrease in interest receivable 14 (197)
Increase (decrease) in accrued income taxes 277 221
Increase (decrease) in interest payable (38) (76)
Other changes, net 67 843
------- -------
Net cash provided (used) by operating activities 1,672 1,711
------- -------
Investing Activities:
- ---------------------
Proceeds from sales of investment securities available-for-sale 1,001 --
Proceeds from maturities and principal repayments of
investment securities available-for-sale 1,003 4,508
Purchases of investment securities available-for-sale (3,943) (11,832)
Proceeds from maturities and principal repayments of mortgage-
backed securities available-for-sale 2,998 7,387
Purchases of mortgage-backed securities available-for-sale -- (19,023)
Purchases of investment securities held-to-maturity (1,660) --
Proceeds from principal repayments of mortgage-backed
securities held-to-maturity 619 2,356
Purchases of mortgage-backed securities held-to-maturity (1,974) --
Net (increase) decrease in loans (9,145) (10,991)
Proceeds from sale of other loans 228 141
Additions to office premises and equipment (137) (483)
Net purchases of FHLB Stock (420) (1,133)
------- -------
Net cash provided (used) by investing activities (11,430) (29,070)
------- -------
</TABLE>
-3-
<PAGE>
FIDELITY BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited) (Cont'd.)
-----------------------------------------------------------
(in thousands)
Three Months Ended December 31,
-------------------------------
1999 1998
---- ----
Financing Activities:
Net increase (decrease) in savings deposits 3,909 11,141
Increase (decrease) in reverse repurchase agreements (310) 488
Net increase (decrease) in FHLB advances 10,400 18,350
Increase in advance payments by borrowers for
taxes and insurance 1,482 1,221
Net increase in treasury tax and loan accounts 443 114
Cash dividends paid (198) (177)
Stock options exercised 23 6
Proceeds from sale of stock 21 25
Purchase of treasury stock (633) --
-------- --------
Net cash provided (used) by financing activities 15,137 31,168
-------- --------
Increase (decrease) in cash and cash equivalents 5,379 3,809
Cash and cash equivalents at beginning of period 4,668 3,152
-------- --------
Cash and cash equivalents at end of period $ 10,047 $ 6,961
======== ========
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:
Interest on deposits and other borrowings $ 5,271 $ 4,624
Income taxes $ 142 $ 65
-------- --------
Transfer of loans to real estate owned $ 160 $ 28
-------- --------
See accompanying notes to financial statements.
-4-
<PAGE>
FIDELITY BANCORP, INC. AND SUBSIDIARIES
Consolidated Statement of Changes in Stockholders' Equity (Unaudited)
---------------------------------------------------------------------
(in thousands)
<TABLE>
<CAPTION>
Accumulated
Other
Comprehensive
Income
Common Paid-in Treasury Retained (Loss)
Stock Capital Stock Earnings Net of Tax Total
----- ------- ----- -------- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1998 $ 20 $ 14,168 $ 0 $ 14,106 $ 727 $29,021
----- -------- ---- -------- ----- -------
Comprehensive income:
Net income 702 702
Other comprehensive loss,
net of tax of ($137) (266) (266)
----- -------- ---- -------- ----- -------
Total comprehensive income (loss) -- -- -- 702 (266) 436
Cash dividends paid (177) (177)
Sale of stock through Dividend
Reinvestment Plan 25 25
Stock options exercised 6 6
----- -------- ---- -------- ----- -------
Balance at December 31, 1998 $ 20 $ 14,199 $ 0 $ 14,631 $ 461 $ 29,311
===== ======== ==== ======== ===== ========
Balance at September 30, 1999 $ 20 $ 14,305 $(953) $ 16,736 $(4,062) $26,046
Comprehensive income:
Net income 1,065 1,065
Other comprehensive loss,
net of tax of ($850) (1,650) (1,650)
----- -------- ---- -------- ----- -------
Total comprehensive income (loss) -- -- -- 1,065 (1,650) (585)
Cash dividends paid (198) (198)
Treasury stock purchased -
43,600 shares (633) (633)
Sale of stock through Dividend
Reinvestment Plan 21 21
Stock options exercised 23 23
----- -------- ---- -------- ----- -------
Balance at December 31, 1999 $ 20 $14,349 $(1,586) $ 17,603 $(5,712) $24,674
===== ======= ======= ======== ======= =======
</TABLE>
-5-
<PAGE>
FIDELITY BANCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements - (Unaudited)
September 30, 1999 and December 31, 1999
(1) Consolidation
-------------
The consolidated financial statements contained herein for Fidelity Bancorp,
Inc. (the "Company") include the accounts of Fidelity Bancorp, Inc. and its
wholly-owned subsidiaries, Fidelity Bank, PaSB (the "Bank") and FB Capital Trust
(the "Trust"). All significant inter-company balances and transactions have been
eliminated.
(2) Basis of Presentation
---------------------
The accompanying consolidated financial statements were prepared in accordance
with instructions to Form 10-Q, and therefore, do not include information or
footnotes necessary for a complete presentation of financial position, results
of operations and cash flows in conformity with generally accepted accounting
principles. However, all normal recurring adjustments, which, in the opinion of
management, are necessary for a fair presentation of the financial statements,
have been included. These financial statements should be read in conjunction
with the audited financial statements and the accompanying notes thereto
included in the Company's Annual Report for the period ended September 30, 1999.
The results for the three month period ended December 31, 1999 are not
necessarily indicative of the results that may be expected for the fiscal year
ending September 30, 2000 or any other period.
(3) Earnings Per Share
------------------
Basic EPS excludes dilution and is computed by dividing income available to
common stockholders by the weighted average number of common shares outstanding
for the period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the Company. The following table sets forth the computation
of basic and diluted earnings per share (amounts in thousands, except per share
data):
Three Months Ended
December 31,
1999 1998
------------------------
Numerator:
Net income $1,065 $ 702
------ ------
Numerator for basic and
diluted earnings per share $1,065 $ 702
------ ------
Denominator:
Denominator for basic earnings
per share - weighted average shares 1,918 1,980
Effect of dilutive securities:
Employee stock options 25 51
------ ------
Denominator for diluted earnings
per share - weighted average
shares and assumed conversions 1,943 2,031
===== =====
Basic earnings per share $ .56 $ .35
====== ======
Diluted earnings per share $ .55 $ .35
====== ======
-6-
<PAGE>
(4) Securities
----------
The Company accounts for investments in debt and equity securities in accordance
with SFAS No. 115, which requires that investments be classified as either: (1)
Securities Held-to- Maturity - reported at amortized cost, (2) Trading
Securities - reported at fair value, or (3) Securities Available-for-Sale -
reported at fair value. Unrealized gains and losses for securities
available-for-sale are reported as other comprehensive income in stockholders'
equity. Unrealized losses of $5.7 million, net of tax, on investments classified
as available-for-sale were recorded at December 31, 1999.
(5) Loans Receivable
----------------
Loans receivable are comprised of the following (dollar amounts in
thousands):
December 31, September 30,
1999 1999
---- ----
First mortgage loans:
Conventional:
1-4 family dwellings $ 166,084 $ 156,112
Multi-family dwellings 4,180 4,007
Commercial 25,212 26,513
Construction 18,995 22,689
--------- ---------
214,471 209,321
--------- ---------
Less:
Loans in process (12,984) (14,696)
Unearned discounts and fees (1,477) (1,453)
--------- ---------
200,010 193,172
--------- ---------
Installment loans:
Home equity 51,641 51,316
Consumer loans 1,722 1,802
Credit cards 3,061 2,859
Other 1,969 1,892
--------- ---------
58,393 57,869
--------- ---------
Commercial business loans and leases:
Commercial business loans 23,053 22,072
Commercial leases 5,809 5,322
--------- ---------
28,862 27,394
--------- ---------
Less: Allowance for loan losses (2,464) (2,477)
--------- ---------
Loans receivable, net $ 284,801 $ 275,958
========= =========
(6) Allowance for Loan Losses
-------------------------
Changes in the allowance for loan losses for the three months ended December 31,
1999 and 1998 are as follows (dollar amounts in thousands):
1999 1998
---- ----
Balance at beginning of the fiscal year $ 2,477 $ 2,243
Provision for loan losses 120 105
Charge-offs (151) (59)
Recoveries 18 1
------- -------
Balance at December 31, $ 2,464 $ 2,290
======= =======
-7-
<PAGE>
The provision for loan losses charged to expense is based upon past loan loss
experience and an evaluation of probable losses in the current loan portfolio,
including the evaluation of impaired loans under SFAS Nos. 114 and 118. A loan
is considered to be impaired when, based upon current information and events, it
is probable that the Bank will be unable to collect all amounts due according to
the contractual terms of the loan. An insignificant shortfall in payments does
not necessarily result in a loan being identified as impaired. For this purpose,
delays less than 90 days are considered to be insignificant.
Impairment losses are included in the provision for loan losses. SFAS Nos. 114
and 118 do not apply to large groups of smaller balance, homogeneous loans that
are collectively evaluated for impairment, except for those loans restructured
under a troubled debt restructuring. Loans collectively evaluated for impairment
include consumer loans and residential real estate loans, and are not included
in the following data.
At December 31, 1999, the recorded investment in loans that are considered to be
impaired under SFAS No. 114 was $104,000. Included in this amount is $104,000 of
impaired loans for which the related allowance for loan losses is $10,000, and
no impaired loans that as a result of write-downs do not have an allowance for
loan losses. The average recorded investment in impaired loans during the three
months ended December 31, 1999 was $204,000. For the three months ended December
31, 1999, the Company recognized no interest income on those impaired loans
using the cash basis of income recognition.
(7) Comprehensive Income
--------------------
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income ."
SFAS No. 130 establishes standards for reporting and display of comprehensive
income and its components (revenue, expenses, gains, and losses) in a full set
of general purpose financial statements. SFAS No. 130 requires that all items
that are required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. SFAS No. 130 requires that an
enterprise (a) classify items of other comprehensive income by their nature in a
financial statement and (b) display the accumulated balance of other
comprehensive income separately from retained earnings and additional paid-in
capital in the equity section of a statement of financial position. For the
three months ended December 31, 1999 and 1998, the company's total comprehensive
income (loss) was ($585,000) and $436,000, respectively. Total comprehensive
income (loss) is comprised of net income of $1.065 million and $702,000 and
other comprehensive loss of ($1.65 million) and ($266,000). Other comprehensive
income consists of unrealized gains and losses on investment securities and
mortgage-backed securities available-for-sale.
(8) New Branch
----------
On October 1, 1998, the Bank opened its ninth full service branch office at 2034
Penn Avenue in Pittsburgh's Strip District. The building in which the branch is
located was leased from an independent third party until it was purchased by the
Bank in June 1999.
-8-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial condition and Results
of Operations
FIDELITY BANCORP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Private Securities Litigation Reform Act of 1995 contains safe harbor
provisions regarding forward-looking statements. When used in this discussion,
the words "believes," "anticipates," "contemplates," "expects," and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties which could cause actual results
to differ materially from those projected. Those risks and uncertainties include
changes in interest rates, risks associated with the effect of integrating newly
acquired businesses, the ability to control costs and expenses, and general
economic conditions. Fidelity Bancorp, Inc. undertakes no obligation to publicly
release the results of any revisions to those forward-looking statements which
may be made to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
Comparison of Financial Condition at September 30, 1999 and December 31, 1999
- --------------------------------------------------------------------------------
Total assets of the Company increased $15.0 million or 3.1% to $497.5 million at
December 31, 1999 from $482.5 million at September 30, 1999. Significant changes
in individual categories were increases in cash and amounts due from depository
institutions of $5.1 million, loans receivable of $8.8 million, investment
securities held-to-maturity of $1.7 million, and mortgage-backed securities
held-to-maturity of $1.3 million. Partially offsetting these results was a
decrease in mortgage-backed securities available-for-sale of $4.1 million. The
increase in cash primarily reflected preparations the Bank made to prepare for
possible customer needs for cash in connection with the Year 2000 situation.
Subsequent to December 31, 1999, cash levels have been returned to more normal,
lower levels.
Total liabilities of the Bank increased by $16.4 million or 3.6% to $472.9
million at December 31, 1999 from $456.5 million at September 30, 1999. The
increase primarily reflects a $10.4 million increase in Federal Home Loan Bank
advances and a $3.9 million increase in savings and time deposits. Advances were
used to fund asset growth that was not supported by deposit increases.
Stockholders' equity decreased $1.3 million or 5.3% to $24.7 million at December
31, 1999, compared to September 30, 1999. This result reflects net income for
the three month period ended December 31, 1999 of $1.06 million, stock options
exercised of $23,000 and stock issued under the Dividend Reinvestment Plan of
$21,000. Offsetting these increases were common stock cash dividends paid of
$198,000, an increase in net unrealized holding losses, net of tax, on
securities available-for-sale of $1.65 million, and the purchase of treasury
stock at cost for $633,000.
Non-Performing Assets
- ---------------------
The following table sets forth information regarding non-accrual 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
-9-
<PAGE>
any loans which were classified as troubled debt restructuring during the
periods presented. (Dollar amounts in thousands):
December 31, September 30,
1999 1999
---- ----
Non-accrual residential real
estate loans (one-to-four-family) $ 272 $ 250
Non-accrual construction, multi-family
residential and commercial real estate loans 200 1,362
Non-accrual installment and
commercial business loans 661 773
------ ------
Total non-performing loans $1,133 $2,385
====== =====
Total non-performing loans as
a percent of net loans receivable .40% .86%
====== =====
Total real estate owned $ 248 $ 107
====== =====
Total non-performing loans and real estate
owned as a percent of total assets .28% .52%
====== =====
Included in non-performing loans at December 31, 1999 are five single-family
residential real estate loans totaling $272,000, two commercial real estate
loans totaling $200,000, 15 installment loans (including home equity loans and
credit card loans) totaling $173,000, two commercial business loans totaling
$466,000 and two commercial business leases totaling $22,000.
At December 31, 1999, the Bank had an allowance for loan losses of $2.5 million
or .87% of net loans receivable, as compared to an allowance of $2.5 million or
.90% of net loans receivable at September 30, 1999. The allowance for loan
losses equals 217.4% of non-performing loans at December 31, 1999.
Management has evaluated its entire loan portfolio, these non-performing loans,
and the overall allowance for loan losses and is satisfied that the allowance
for losses on loans at December 31, 1999 is appropriate. See also "Provision for
Loan Losses."
Real estate owned at December 31, 1999, consists of one single-family
residential property located in Pittsburgh, Pennsylvania totaling $90,000 and
one commercial building located in Pittsburgh, Pennsylvania totaling $158,000.
Both properties are currently under agreement for sale and management believes
that the carrying value of the properties at December 31, 1999 approximates the
fair value less costs to sell. However, while management uses the best
information available to make such determinations, future adjustments may become
necessary.
-10-
<PAGE>
Comparison of Results of Operations
-----------------------------------
for the Three Months Ended December 31, 1999 and 1998
-----------------------------------------------------
Net Income
- ----------
Net income for the three months ended December 31, 1999 was $1.065 million
compared to $702,000 for the same period in 1998, an increase of $363,000 or
51.7%. The increase reflects an increase in net interest income before provision
for loan losses of $451,000 or 16.3%, an increase in other income of $107,000 or
32.9%, an increase in the provision for loan losses of $15,000 or 14.3%, an
increase in other operating expenses of $62,000 or 3.1% and an increase in the
provision for income taxes of $118,000 or 39.2%.
Interest Rate Spread
- --------------------
The Bank's interest rate spread, the difference between yields calculated on a
tax-equivalent basis on interest-earning assets and the cost of funds, increased
to 2.89% in the three months ended December 31, 1999 from 2.70% in the same
period in 1998. The following table shows the average yields earned on the
Bank's interest-earning assets and the average rates paid on its
interest-bearing liabilities for the periods indicated, the resulting interest
rate spreads, and the net yields on interest-earning assets.
Three Months Ended December 31,
1999 1998
---- ----
Average yield on:
Mortgage loans 7.61% 8.08%
Mortgage-backed securities 6.52 6.06
Installment loans 8.10 8.34
Commercial business loans 9.06 9.26
Interest-earning deposits with other
institutions, investment securities,
and FHLB stock (1) 6.84 6.63
---- ----
Total interest-earning assets 7.39 7.38
---- ----
Average rates paid on:
Savings and time deposits 3.76 4.19
Borrowed funds 5.28 5.74
---- ----
Total interest-bearing liabilities 4.50 4.68
---- ----
Average interest rate spread 2.89% 2.70%
==== ====
Net yield on interest-earning assets 2.93% 2.87%
==== ====
(1) Interest income on tax-free investments has been adjusted for federal income
tax purposes using a rate of 34%.
-11-
<PAGE>
Interest Income
- ---------------
Interest on loans increased $853,000 or 18.2% to $5.5 million for the three
months ended December 31, 1999, compared to the same period in 1998. The
increase reflects an increase in the average loan balance outstanding during
1999, partially offset by a decrease in the yield earned on the loan portfolio.
The increase in the average balance of the loan portfolio in the fiscal 2000
period reflects management's continued strategy of emphasizing and increasing
loans. The lower yield earned on the portfolio reflects the lower long term
interest rate environment that existed for much of fiscal 1999, as new loans
originated were at lower rates and more existing borrowers refinanced into lower
rate loans. While interest rates have risen in fiscal 2000, the effect of loans
originated at these higher rates has not been significant as yet.
Interest on mortgage-backed securities decreased $93,000 or 5.7% to $1.5 million
for the three months ended December 31, 1999, as compared to the same period in
1998. The decrease for the three month period ended December 31, 1999, reflects
a decrease in the average balance of mortgage-backed securities owned in the
fiscal 2000 period, as compared to fiscal 1999, partially offset by an increase
in the average yield earned on the portfolio.
Interest on interest-earning deposits with other institutions and investment
securities increased $298,000 or 27.7% to $1.4 million for the three month
period ended December 31, 1999, as compared to the same period in 1998. The
increase reflects both an increase in the average balance in the portfolio and
an increase in the yield earned on these investments.
Interest Expense
- ----------------
Interest on savings and time deposits decreased $284,000 or 10.0% to $2.5
million for the three month period ended December 31, 1999, respectively, as
compared to the same period in the prior year. The decrease for the three month
period in fiscal 2000 as compared to fiscal 1999 reflects a decrease in the
average cost of deposits, partially offset by a small increase in the average
balance of savings and time deposits.
Interest on borrowed funds increased $891,000 or 57.7% to $2.4 million for the
three month period ended December 31, 1999, as compared to the same period in
the prior year. The increases for the period in fiscal 2000 as compared to
fiscal 1999 reflects an increase in Federal Home Loan Bank ("FHLB") advances and
reverse repurchase agreements outstanding during the fiscal 2000 periods,
partially offset by a decrease in the cost of those borrowings. The Bank
continues to rely on these wholesale funding sources in fiscal 2000 as an
additional way to fund growth.
Interest on guaranteed preferred beneficial interest in Company's debentures was
$256,000 for the three month periods ended December 31, 1999 and 1998. The
Preferred Securities were issued in May 1997.
Net Interest Income Before Provision for Loan Losses
- ----------------------------------------------------
The Bank's net interest income before provision for loan losses increased
$451,000 or 16.3% to $3.2 million for the three month period ended December 31,
1999, as compared to the same period in the prior year. The increase is
primarily attributable to an increase in net interest-earning assets, as well as
an increased interest rate spread.
-12-
<PAGE>
Provision for Loan Losses
- -------------------------
The provision for loan losses increased $15,000 or 14.3% to $120,000 for the
three month period ended December 31, 1999, as compared to the same period in
the prior year. The provision for both years reflects management's evaluation of
the loan portfolio, current economic conditions, and other factors as described
below. Based on this evaluation, the allowance for loan losses has increased
from $2.2 million at December 31, 1998 to $2.5 million at December 31, 1999.
Loan charge-offs, net of recoveries, were $133,000 in the three month period
ended December 31, 1999, compared to $58,000 in the same period in the prior
year.
A monthly review is conducted by management to determine that the allowance for
loan losses is appropriate to absorb estimated loan losses. In determining the
level of allowances for loan losses, consideration is given to general economic
conditions, the diversification of the loan portfolio, historical loss
experience, identified credit problems, delinquency levels and the adequacy of
collateral. Although management believes that the current allowance for loan
losses is appropriate, future additions to the reserve may be necessary due to
changes in economic conditions. In addition, various regulatory agencies review
the adequacy of the allowance for loan losses as part of their examination
process and may require additions to the allowance based on their judgment.
Other Income
- ------------
Total non-interest or other income increased $107,000 or 32.9% to $432,000 for
the three month period ended December 31, 1999, as compared to the same period
in the prior year.
Loan service charges and fee income, which includes late charges on loans and
fees for loans serviced for others, increased $14,000 or 31.1% to $59,000 for
the three month period ended December 31, 1999, as compared to the same period
in the prior year. The increase is primarily attributable to the collection of
title insurance fees related to mortgages originated. The Bank became licensed
to collect such fees in late fiscal 1999.
Loss on the sale of investment and mortgage-backed securities was $2,000 for the
three month period ended December 31, 1999. There were no sales of securities in
the prior year period. All sales were made from the available-for-sale portfolio
in the periods and were done to reflect current economic conditions and
asset/liability management strategies, as well as changing market conditions.
Gain on sale of loans was $2,000 for the three month period ended December 31,
1999, as compared to a gain of $4,000 in the comparable period in the prior
year. The Bank sells education loans to the Student Loan Marketing Association
("SLMA"). Such sales generally result in some gain or loss being realized.
Results generally reflect the timing of such sales.
Deposit service charges and fees increased $45,000 or 35.7% to $171,000 for the
three month period ended December 31, 1999, as compared to the same period in
the prior year. The increase primarily reflects the revamping in calendar year
1999 of the Bank's service charge structure for deposit accounts, which resulted
in increased fees collected.
-13-
<PAGE>
Other operating income includes miscellaneous sources of income, which consist
primarily of automated teller machine fees, fees from the sale of cashiers
checks and money orders, and safe deposit box rental income. Other operating
income increased $52,000 or 34.7% to $202,000 for the three month period ended
December 31, 1999, as compared to the same period in the prior year. The
increase for the three month period is primarily due to increased automated
teller machine fees and fees earned from a program, introduced in July 1998, to
sell non-insured investment products such as mutual funds and annuities to both
Bank and nonbank customers.
Other Expenses
- --------------
Total operating expenses increased $62,000 or 3.1% to $2.0 million for the three
month period ended December 31, 1999, as compared to the same period in the
prior year.
Compensation, payroll taxes and fringe benefits, the largest component of
operating expenses, increased $39,000 or 3.3% to $1.2 million for the three
month period ended December 31, 1999, as compared to the same period in the
prior year. Factors contributing to the increase were normal salary increases,
higher bonuses awarded, and an increase in health care expenses.
Office occupancy and equipment expense decreased $40,000 or 19.0% to $170,000
for the three month period ended December 31, 1999, as compared to the same
period in the prior year. Factors contributing to the decrease are a decrease in
rent expense, resulting from the Bank purchasing the previously leased Strip
District branch, and a decrease in equipment maintenance costs.
Depreciation and amortization decreased $6,000 or 4.1% to $141,000 for the three
month period ended December 31, 1999, as compared to the same period in the
prior year. The results reflect some equipment becoming fully depreciated,
partially offset by depreciation on equipment added or updated during the past
year and depreciation on the new Strip District branch.
Federal deposit insurance premiums increased $2,000 or 5.3% to $40,000 for the
three month period ended December 31, 1999, as compared to the same period in
1998. The insurance payments reflect the increasing average level of savings and
time deposits outstanding.
Net loss on real estate owned was $21,000 for the three months ended December
31, 1999, as compared to a net gain of $45,000 in the comparable period in 1998.
Results for the periods reflect the sale or write-down to fair value less
estimated costs to sell of property held as real estate owned. At December 31,
1999, the Bank had one single family property and one commercial property
classified as real estate owned.
Other operating expenses, which consists of check processing costs, consulting
fees, legal and audit fees, advertising, bank charges and other administrative
expenses, increased $1,000 or .2% to $446,000 for the three month period ended
December 31, 1999, as compared to the same period in the prior year. Significant
variations between the three month period in fiscal 2000, as compared to fiscal
1999, include increases in bank service charges, legal fees, audit fees and
charitable contributions, partially offset by decreases in consulting fees,
stationary and supplies expense, and telephone expense.
-14-
<PAGE>
Income Taxes
- ------------
Income taxes increased $118,000 or 39.2% to $419,000 for the three month period
ended December 31, 1999, as compared to the same period in the prior year. The
increase in taxes for the three month period ended December 31, 1999, as
compared to the same period in the prior year, primarily results from an
increase in taxable income, partially offset by a decrease in the effective tax
rate. The decrease in the effective tax rate is primarily attributable to an
increase in tax-exempt investments generating non-taxable income. The effective
tax rate decreased to 28.2% for the three month period ended December 31, 1999,
from 30.0% in the comparable prior year period.
Capital Requirements
- --------------------
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
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 December 31, 1999, the
Company had Tier 1 capital as a percentage of risk-weighted assets of 13.84% and
total risk-based capital as a percentage of risk-weighted assets of 14.76%.
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 total assets (the "Leverage
Ratio") of 3% for bank holding companies that meet certain criteria, including
that they maintain the highest regulatory rating. All other bank holding
companies are required to maintain a Leverage Ratio of at least 4% or be subject
to prompt corrective action by the Federal Reserve. At December 31, 1999, the
Company had a Leverage Ratio of 8.19%.
The FDIC has issued regulations that require insured institutions, such as the
Bank, to maintain minimum levels of capital. In general, current regulations
require a leverage ratio of Tier 1 capital to average total assets of not less
than 3% for the most highly rated institutions and an additional 1% to 2% for
all other institutions. At December 31, 1999, the Bank complied with the minimum
leverage ratio having Tier 1 capital of 6.87% of average total assets, as
defined.
The Bank is also required to maintain a ratio of qualifying total capital to
risk-weighted assets and off-balance sheet items of a minimum of 8%. At December
31, 1999, the Bank's total capital to risk-weighted assets ratio calculated
under the FDIC capital requirement was 12.43%.
-15-
<PAGE>
A reconciliation of Stockholders' Equity for the Bank to Regulatory Capital is
as follows (dollar amounts in thousands):
Stockholder's equity at December 31, 1999 (1) $ 27,943
Plus: Unrealized losses on debt securities 5,400
--------
Tier 1 Capital at December 31, 1999 33,343
Plus: Qualifying loan loss allowance 2,464
--------
Total capital at December 31, 1999 $ 35,807
========
(1) Represents equity capital of the Bank as reported to the FDIC and the
Pennsylvania Department of Banking on Form 032.
Liquidity
- ---------
The Bank's primary sources of funds have historically consisted of deposits,
amortization and prepayments of outstanding loans, borrowings from the FHLB of
Pittsburgh and other sources, including sales of securities and, to a limited
extent, loans. At December 31, 1999, the total of approved loan commitments
amounted to $3.0 million. In addition, the Bank had $13.0 million of undisbursed
loan funds at that date. The amount of savings certificates which mature during
the next twelve months totals approximately $93.3 million, a substantial portion
of which management believes, on the basis of prior experience, will remain in
the Bank.
Year 2000
- ---------
Like many financial institutions, the Company relies on computers to conduct
business and information systems processing. Industry experts were concerned
that on January 1, 2000, some computers might not be able to interpret the new
year properly, causing computer malfunctions. Some banking industry experts
remain concerned that some computers may not be able to interpret additional
dates in the Year 2000 properly. We have operated and evaluated our computer
operating systems following January 1, 2000 and have not identified any errors
or experienced any computer system malfunctions. We will continue to monitor our
information systems to assess whether our systems are at risk of misinterpreting
any future dates and will develop appropriate contingency plans to prevent any
potential system malfunction or correct any system failures. The company has not
been informed of any such problem experienced by its vendors or its customers,
nor by any of the municipal agencies that provide services to the Company.
Nevertheless, it is too soon to conclude that there will not be any problems
arising from the Year 2000 problem, particularly at some of the Company's
vendors. The company will continue to monitor its significant vendors of goods
and services with respect to Year 2000 problems they may encounter as those
issues effect the Company's ability to continue operations, or might adversely
affect the Company's financial position, results of operations and cash flows.
The Company does not believe at this time that these potential problems will
materially impact the ability of the Company to continue its operations:
however, no assurance can be given that this will be the case.
The expectations of the Company contained in this section on Year 2000 are
forward looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 and involve substantial risks and uncertainties
that may cause actual results to differ materially from those indicated by the
forward-looking statements. All forward looking statements in this section are
based on information available to the Company on the date of this document, and
the Company assumes no obligation to update such forward looking statements.
-16-
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in information regarding
quantitative and qualitative disclosures about market risk from the
information presented as of September 30, 1999 (in the Company's Form
10-K) to December 31, 1999.
-17-
<PAGE>
Part II - Other Information
- ---------------------------
Item. 1 Legal Proceedings
The Bank is not involved in any pending legal proceedings other than
non-material legal proceedings undertaken in the ordinary course of
business.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
The following exhibits are filed as part of this Report.
<TABLE>
<CAPTION>
<S> <C>
2. Agreement and Plan of Reorganization (1)
3.1 Articles of Incorporation (1)
3.2 Bylaws (1)
4. Common Stock Certificate (2)
10.1 Employee Stock Ownership Plan, as amended (2)
10.2 1988 Employee Stock Compensation Program (2)
10.3 1993 Employee Stock Compensation Program (3)
10.4 1997 Employee Stock Compensation Program (4)
10.5 1993 Directors' Stock Option Plan (3)
10.6 Employment Agreement between the company, the Bank and William L. Windisch (2)
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
10.11 1998 Stock Compensation Plan (5)
20.1 Dividend Reinvestment Plan
27 Financial Data Schedule (in electronic filing only)
</TABLE>
(b) Reports on Form 8-K
---------------------------------------------------------------------------
None
---------------------------------------------------------------------------
(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 the Registration Statement
(3) Incorporated by reference from an exhibit in Form S-8 filed with the SEC on
May 2, 1997
(4) Incorporated by reference from an exhibit in Form S-8 filed with the SEC on
March 12, 1998.
(5) Incorporated by refrence from an exhibit filed in Form 10-K filed with the
SEC on December 29, 1998.
(6) Incorporated by reference from an exhibit in Form S-8 filed with the SEC on
January 25, 1999.
-18-
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FIDELITY BANCORP, INC.
Date: February 9, 2000 By: /s/ William L. Windisch
-------------------------------
William L. Windisch
President and Chief Executive
Officer
Date: February 9, 2000 By: /s/ Richard G. Spencer
-------------------------------
Richard G. Spencer
Executive Vice President and
Chief Financial Officer
-19-
EXHIBIT 20.1
<PAGE>
FIDELITY BANCORP, INC.
Dividend Reinvestment and Common Stock Purchase Plan
100,000 Shares of Common Stock
($0.01 par value)
----------------------------------------------------
This Prospectus relates to 100,000 shares of Common Stock, par value $0.01 per
share (the "Common Stock") of Fidelity Bancorp, Inc. (the "Corporation")
registered for purchase under the Fidelity Bancorp, Inc. Dividend Reinvestment
and Common Stock Purchase Plan (the "Plan"). By a Registration Statement filed
with the Securities and Exchange Commission (the "Commission") on January 11,
1994, of which this Prospectus is a part, the Corporation is registering 100,000
shares for issue pursuant to the Plan. The Plan provides each holder of Common
Stock with a simple and convenient method of purchasing additional shares
without payment of any brokerage commission, service charge or other similar
expense.
A participant in the Plan may elect either to reinvest dividends on all of his
shares of Common Stock and/or to make optional cash payments of not less than
$10 each purchase up to a maximum of $3,500 per quarter and continue to receive
regular dividend payments on his other shares. Participants who enroll to
reinvest dividends may also make optional cash payments of not less than $10
each purchase up to a maximum of $3,500 per quarter. A participant may withdraw
from the Plan at any time.
The purchase price of shares purchased by a participant in the Plan with
reinvested dividends on any investment date will be 100% of the average of the
daily high and low sales prices of the shares quoted on the NASDAQ National
Market System on the investment date. The purchase price of shares purchased
with optional cash payments will also be 100% of such average. Since such
additional shares of Common Stock will be purchased directly from the
Corporation, the Corporation will receive additional funds for general corporate
purposes.
The Plan does not represent a change in the dividend policy of the Corporation,
which will continue to depend on earnings, financial requirements and other
factors. Shareholders who do not wish to participate in the Plan will continue
to receive cash dividends as declared by check in the usual manner. It is
suggested that this Prospectus be retained for future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is July 30, 1998.
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance there
with files, reports and other information with the Commission.
Reports, proxy statements and other information filed by the Corporation with
the Commission can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of this material can also be obtained at
prescribed rates either in person at the Commission's public reference
facilities or by mail addressed to the Securities and Exchange Commission,
Public Reference Section, Washington, D.C. 20549.
This Prospectus does not contain all of the information in the Registration
Statement on Form S-3 filed with the Commission of which this Prospectus is a
part. Certain portions of the Registration Statement have been omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Corporation and the securities offered hereby,
reference is made to the Registration Statement, including the exhibits thereto.
1
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Corporation with the Commission are
incorporated by reference in this Prospectus:
1. The Corporation's Registration Statement on Form S-4 (Registration No.
33-55384) filed with the Commission on December 3, 1992.
2. The Corporation's Annual Report on Form 10-KSB and Annual Report to
Shareholders for the year ended September 30, 1993.
3. The Corporation's definitive Proxy Statement dated January 10, 1994 in
connection with the 1994 Annual Meeting of shareholders.
4. The description of the Corporation's Common Stock contained in its
registration statement on Form 8-B dated August 9, 1993 filed under Section
12 of the Exchange Act, including all amendments and reports filed for the
purpose of updating such description.
All other reports filed by the Corporation pursuant to Sections 13(a) or 15(d)
of the Exchange Act since September 30, 1993, are deemed to be incorporated by
reference.
All documents filed by the Corporation pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering made hereby shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents.
The Corporation will provide without charge to each person to whom this
Prospectus is delivered, on the oral or written request of such person, a copy
of any or all of the foregoing documents incorporated by reference other than
certain exhibits. Written requests should be directed to:
Richard G. Spencer
Vice President
Treasurer and CFO
Fidelity Bancorp, Inc.
1009 Perry Highway
Pittsburgh, Pennsylvania 15237
Telephone requests may be directed to the Corporation at (412) 367-3300.
This Prospectus does not constitute an offer to sell, or the solicitation of an
offer to buy, the securities to which this Prospectus relates in any
jurisdiction to any person to whom it is unlawful to make such an offer or
solicitation in such jurisdiction. No person has been authorized to give any
information or to make any representation other than as contained in this
Prospectus in connection with the offer contained in this Prospectus and, if
given or made, such information or representation must not be relied upon as
having been authorized. Neither the delivery of this Prospectus nor any sale
hereunder shall under any circumstances imply that there has been no change in
the affairs of the Corporation since the date hereof. In that connection,
reference is made to the section of this prospectus captioned "Incorporation of
Certain Documents by Reference
2
<PAGE>
TABLE OF CONTENTS
Page
The Corporation......................................
The Plan.............................................
Purpose..............................................
Participation Options................................
Advantages...........................................
Administration.......................................
Participation........................................
Purchases............................................
Optional Cash Purchases..............................
Expenses.............................................
Federal Income Tax Consequences to Participants......
Reports to Participants..............................
Dividends............................................
Certificates of Shares...............................
Termination of Participation in the Plan.............
Withdrawal of Shares in Plan Accounts ...............
Other Information....................................
Use of Proceeds......................................
Experts..............................................
Legal Opinions.......................................
Indemnification......................................
THE CORPORATION
The Corporation is a bank holding company. Its banking subsidiary is Fidelity
Bank, PaSB (the "Bank"). The Bank is a Pennsylvania - chartered savings bank
offering a full range of banking services permitted to savings banks through
eight (8) locations in Allegheny and Butler Counties, Pennsylvania. As of
September 30, 1993, the Corporation had total assets of $267,204,993, total
deposits of $234,090,602, net loans of $106,585,286 and shareholders equity of
$18,543,685. The Corporation's registered office is located at 1009 Perry
Highway, Pittsburgh, PA 15337, telephone 412-367-3300.
3
<PAGE>
THE PLAN
The following questions and answers explain and constitute the Corporation's
Dividend Reinvestment and Common Stock Purchase Plan (the "Plan").
Purpose
- -------
1. What is the purpose of the Plan?
The purpose of the Plan is to provide holders of record of shares of the
Corporation's Common Stock with a convenient and economical method of investing
cash dividends and optional cash payments in additional shares of Common Stock
without payment of any brokerage commission or service charge. Since such
additional shares of Common Stock will be purchased directly from the
Corporation, and not on the open market, the Corporation will receive additional
funds for general corporate purposes.
Participation Options
- ---------------------
2. What options are available to participants in the Plan?
As a participant (hereinafter "participant" or "you") in the Plan:
You may have cash dividends on all, but not less than all, of your shares of
Common Stock automatically reinvested, and also, if you wish, make optional cash
purchases of not less than $10.00 each purchase up to a total of $3,500 per
calendar quarter; or you may make optional cash purchases of not less than $10
each purchase up to a total of $3,500 per calendar quarter, even if your
dividends on Common Stock held by you are not being reinvested.
Advantages
- ----------
3. What are the advantages of the Plan?
a) The price of shares purchased with reinvested dividends will be 100% of the
market price average as defined in the response to Question 12. The price
of shares purchased with optional cash payments also will be 100% of such
market price average.
b) No brokerage commissions or service charges will be paid by you in
connection with any purchases made under the Plan.
c) Your funds will be fully invested in the Corporation's Common Stock because
the Plan permits fractional shares to be credited to your Plan account.
Dividends on such fractional shares, as well as on whole shares, will be
reinvested in additional shares and such shares credited to your Plan
account.
4
<PAGE>
d) You will avoid the need for safekeeping of stock certificates of shares
credited to your Plan account.
e) Periodic statements reflecting all current activity, including purchases
and latest balance, will simplify your record keeping.
Administration
- --------------
4. Who administers the Plan for participants?
Registrar and Transfer Company will administer the Plan, keep records, send
statements of account to each participant, and perform other duties related to
the Plan. Shares purchased for you under the Plan will be held for you in
safekeeping by or through Registrar and Transfer Company until a written request
is received from you for the issuance of certificates for all or part of your
shares as more fully explained in the response to Question 21. Registrar and
Transfer Company also acts as dividend disbursing and transfer agent for the
Corporation's Common Stock.
Shares purchased with reinvested dividends and optional cash payments will be
registered in the name of Registrar and Transfer Company as nominee. You should
continue to hold any shares presently or subsequently registered in your name
and should not undertake to transfer such shares to the Corporation or to
Registrar and Transfer Company.
Participation
- -------------
5. Who is eligible to participate?
If you are a holder of Common Stock and you have shares registered in your name,
you are eligible to participate. If your stock is registered in a name other
than your own, (e.g. in the name of a broker or nominee) and you would like to
participate, you must either make appropriate arrangements for your broker or
nominee to participate on your behalf, or you must become a shareholder of
record by having those shares with respect to which you wish to participate
transferred to your name.
You will not be eligible to participate in the Plan if you reside in a
jurisdiction in which it is unlawful for the Corporation to permit your
participation.
Your right to participate in the Plan is not transferable apart from a transfer
of your Common Stock to another person.
6. Is partial participation possible under the Plan?
5
<PAGE>
Generally, no. If you elect to have dividends on your shares of Common Stock
reinvested under the Plan, such reinvestment must be made with respect to all
the shares which are registered in your name.
In addition, a broker or nominee holding Common Stock for more than one
beneficial owner may participate in the Plan on behalf of less than all such
beneficial owners, provided that the dividends on all the shares of Common Stock
held on behalf of each beneficial owner participating in the Plan are being
reinvested.
7. How does an eligible shareholder participate or change options under the
Plan?
As a holder of record of Common Stock, you may join the Plan by completing and
signing an Enrollment Card and returning it to Registrar and Transfer Company.
Once enrolled in the Plan, you will continue to be enrolled without further
action on your part. You may change your investment options at any time by
completing and signing a new Enrollment Card and returning it to Registrar and
Transfer Company. If your shares are registered in more than one name (i.e.
joint tenants, trustees, etc.) all registered holders must sign the Enrollment
Card.
You may obtain an Enrollment Card at any time by contacting:
Registrar and Transfer Company
10 Commerce Drive
Cranford, NJ 07016
1-800-866-1340
8. When may an eligible shareholder join the Plan?
As an eligible shareholder, you may join the Plan at any time. Reinvestment of
dividends on Common Stock will start with the next Common Stock quarterly
dividend payment, provided the Enrollment Card is received on or before the
record date of such dividend. If the Enrollment Card is not received on or
before the record date of such dividend, it will be necessary to delay
reinvestment of dividends until the next quarterly payment date for such stock.
Record dates for dividends paid by the Corporation usually precede dividend
payment dates by five business days. Ordinarily dividend payment dates are
twenty business days following the quarterly declaration dates which are in
January, April, July and October each year.
See the response to Question 13 for information on making an initial optional
cash purchase.
You will remain a participant in the Plan until you elect to discontinue the
reinvestment of dividends, or sell or otherwise dispose of all the Common Stock
held in your name and withdraw all shares of Common Stock credited to your Plan
account.
6
<PAGE>
The Plan does not represent a change in the Corporation's dividend policy or a
guarantee of future dividends, which will continue to be determined by the Board
of Directors based upon the Corporation's earnings, financial condition and
other factors.
9. What does the Enrollment Card provide?
The Enrollment Card provides for the purchase of additional shares of the
Corporation's Common Stock through the following investment options;
a) "Full Common Stock Dividend Reinvestment"
This option directs the Corporation to invest in accordance with the Plan cash
dividends on all shares of Common Stock currently or subsequently registered in
your name and on all whole and fractional shares of Common Stock credited to
your Plan account. This option also permits you to make optional cash payments
for the purchase of additional shares of Common Stock in accordance with the
Plan; and
b) "Optional Cash Purchases Only"
This option permits you to make optional cash payments for the purchase of
additional shares of Common Stock in accordance with the Plan, without
reinvesting dividends on Common Stock held by you. If you desire this option, a
check payable to Fidelity Bancorp, Inc. covering your initial optional cash
purchase must accompany your Enrollment Card. Cash dividends on shares purchased
with optional cash payments will automatically be reinvested in additional
shares of Common Stock. If you wish to receive cash dividends on such shares,
you must withdraw the shares from your Plan account by written notification to
Registrar and Transfer Company at the address set forth in the response to
Question 7.
Purchases
- ---------
10. How are shares of Common Stock acquired under the Plan?
Registrar and Transfer Company will apply dividends and optional cash payments
to acquire newly issued shares of the Corporation's Common Stock for the account
of participants. Shares acquired under all options of the Plan will consist of
authorized but unissued shares and will be purchased directly from the
Corporation
11. How many shares will be purchased for participants?
The number of shares that will be purchased for a participant's account on an
Investment Date (as defined in the response to Question 12) will depend on the
amount of any dividends and any optional cash payments and the applicable
purchase price of the Common Stock. Your Plan
7
<PAGE>
account will be credited with the number of shares (including any fractional
share computed for four decimal places) that results from dividing the amount of
dividends and any optional cash payments to be invested by the applicable
purchase price. The amount of your dividends for purposes of this computation
will include cash dividends payable on all shares of Common Stock with respect
to which you are participating and shares in your Plan account, whether
purchased with reinvested dividends or optional cash payments.
12. When and at what price will shares of Common Stock be purchased under the
Plan?
Shares of Common Stock will be purchased once each quarter on the Investment
Date, which will be the dividend payment date during months in which a dividend
is paid on the Common Stock. However, if the Investment Date falls on a date
when the NASDAQ National Market System is closed, the first day immediately
succeeding such day on which that market is open will be the Investment Date.
For the purpose of making purchases, Registrar and Transfer Company will
comingle your funds with those of other holders of Common Stock who are
participants in the Plan. Registrar and Transfer Company will apply any
dividends and any optional cash payments to the purchase of Common Stock
pursuant to the Plan on the Investment Date, except when prohibited under any
applicable federal or estate securities laws. No interest will be paid on funds
held by Registrar and Transfer Company.
Shares purchased under the Plan with either reinvested dividends or optional
cash payments will be acquired by participants at 100 percent of the average of
the high and low sales prices of shares of Common Stock as reported on the
NASDAQ National Market System on the Investment Date. If there is no trading on
that date of shares of Common Stock, the purchase price per share will be
determined by the Corporation on the basis of such market quotations as shall
deem appropriate.
Optional Cash Purchases
- -----------------------
13. How are optional cash purchases made?
The option to make cash purchases is available to you at the time of joining the
Plan by properly completing and signing an Enrollment Card. If you wish to
enroll in the "Optional Cash Purchase Only" feature of the Plan, a check or
money order payable to Fidelity Bancorp, Inc. covering your first optional cash
purchase must accompany your Enrollment Card. Do not send cash. Thereafter,
additional optional cash purchases may be made through the use of the form sent
with each periodic statement.
Each optional cash payment made by you must be at least $10, and such payments
cannot, in any one calendar quarter, exceed a total of $3,500. The same amount
of money need not be sent
8
<PAGE>
each calendar quarter and there is no obligation to make any additional optional
cash purchases after enrollment in the Plan.
Optional cash payments received from foreign participants must be in U.S.
dollars.
14. When will optional cash payments received be invested?
Optional cash payments must be received from you at least five days but not more
than 30 days prior to an Investment Date and will be applied to the purchase of
shares of Common Stock for your account on such Investment Date. Cash payments
will be invested once each quarter. Listed on each Dividend Reinvestment
Statement are the dates between which the next cash payments will be accepted by
Registrar and Transfer Company. No interest will be paid on optional cash
payments pending investment. Participants cannot specify the price or timing, or
place any other limitations on the purchase of shares other than those specified
herein.
15. Under what circumstances will optional cash payments be returned?
Your uninvested optional cash payments will be returned to you upon written
request received by Registrar and Transfer Company at least two business days
prior to an Investment Date or if they are received more than 30 days before the
next scheduled dividend is to be paid.
Expenses
- --------
16. Are there any expenses to participants in connection with purchase under
the Plan?
No. There are no brokerage commissions because shares are purchased directly
from the Corporation. All expenses of administration of the Plan are paid by the
Corporation. However, if you request Registrar and Transfer Company to sell your
shares in the event of withdrawal from the Plan as explained in the response to
Question 26, you must pay any brokerage commission and any applicable transfer
tax incurred.
Federal Income Tax Consequences to Participants
- -----------------------------------------------
17. What are the Federal income tax consequences of participation in the Plan?
The following summary is based upon an interpretation by counsel to the
Corporation of present Federal tax laws, regulations and rulings, and may be
inapplicable if such laws, regulations or rulings are changed. You should
consult your own tax advisor to determine the particular tax consequences that
may result from participation in the Plan and the subsequent disposal of shares
purchased pursuant to the Plan.
9
<PAGE>
You will be treated, for Federal income tax purposes, as having received, on the
dividend date, a dividend equal to the fair market value of the shares acquired
with the reinvested dividends on such dividend payment date, and will be taxed
accordingly. The tax basis of those shares will equal the fair market value of
such shares on the dividend payment date. If you are subject to backup
withholding, 31% of the cash dividends otherwise payable will be required to be
withheld as the 69% balance will be reinvested in shares, the tax basis of which
will be the fair market value on the dividend payment date of the shares so
acquired with the 69% balance.
You will not realize any taxable income upon the purchase of shares with
optional cash payments since shares purchased with optional cash payments are
purchased at 100% of fair market value. The tax basis of shares purchased with
optional cash payments will equal your purchase price per share.
Your holding period for shares acquired pursuant to the Plan will begin on the
day following the Investment Date on which the shares were purchased.
You will not realize any taxable income when you receive certificates for whole
shares credited to your account, either upon your request for a portion of those
shares or upon withdrawal from or termination of the Plan.
You will realize gain or loss when shares are sold or exchanged, whether by the
Plan pursuant to your request upon withdrawal from the Plan or by you after
receipt of shares from the Plan. You will also realize gain or loss when you
receive a cash payment for the sale of a fraction of a share credited to your
account upon withdrawal from or termination of the Plan. The amount of such gain
or loss will be the difference between the amount that you receive for the
shares or fraction of a share and your tax basis thereof.
Under a law which became effective January 1, 1984, every shareholder receiving
payments of dividends is required to provide the pay or with his or her correct
social security or taxpayer identification number. If this number is not
furnished or if an incorrect number is furnished, then the shareholder will be
subject to backup withholding.
A shareholder will also be subject to backup withholding if the shareholder has
failed to correctly report interest and dividend payments to the Internal
Revenue Service or has failed to file a required tax return reporting interest
and dividends, in which case the Internal Revenue Service will so notify the
shareholder and the Corporation. Finally, a shareholder will be subject to
backup withholding with respect to dividends paid on shares acquired on or after
January 1, 1984 if the shareholder fails to certify that the social security or
taxpayer identification number furnished to the Corporation is correct and that
the shareholder is not otherwise subject to backup withholding. A shareholder
will be subject to backup withholding on the gross proceeds received upon a sale
of shares if the shareholder does not provide his or her taxpayer identification
or social security number to the broker through whom the transaction is effected
(or to Registrar and Transfer Company in the case of sales effected by Registrar
and Transfer Company pursuant to the Plan) in the manner required or the
Internal Revenue Service notifies the broker that the number furnished by the
shareholder is incorrect.
10
<PAGE>
For shareholders subject to backup withholding, the Corporation is required to
withhold thirty-one percent (31%) of each dividend payment as tax. Upon a sale
of shares (including any cash payment for fractional shares), the broker must
withhold 31% of the gross proceeds if the shareholder is subject to backup
withholding. The amount withheld pursuant to backup withholding is not an
additional tax. Rather, the Federal income tax liability of the shareholder will
be reduced by the amount of tax withheld. If backup withholding results in any
overpayment of taxes, a refund may be obtained by the shareholder from the
Internal Revenue Service.
The backup withholding rules described above apply whether or not a particular
shareholder elects to participate in the Plan. If you are subject to backup
withholding, the amount of tax withheld will be deducted from the total amount
of dividends paid and only the remaining balance of the dividends will be
available for reinvestment under the Plan.
18. How are income tax withholding provisions applied to foreign shareholders?
In the case of a foreign participant whose income is subject to withholding of
U.S. Federal income tax, the appropriate amount of tax will be withheld and the
balance will be reinvested.
Reports to Participants
- -----------------------
19. What reports will be sent to participants in the Plan?
As soon as practical after each purchase of Common Stock under the Plan for your
account, a statement of account will be mailed to you, normally within 15
business days following the Investment Date. These statements are your
continuing record of current activity and cost of your purchase and should be
retained for tax purposes. In addition, you will receive copies of
communications sent to all holders of the Corporation's Common Stock, including
the Corporation's Quarterly Reports and Annual Report to Shareholders, the
Notice of Annual Meeting and Proxy Statement and information you will need for
reporting your dividend income for Federal income tax purposes.
Each quarterly statement of account will show the price per share to be used in
determining the tax basis of the Common Stock purchased in that quarter with
reinvested dividends and any optional cash payments to the Plan. An Internal
Revenue Service Form (Form 1099) will be mailed to participants at year end
showing the total amount of dividend income to be reported by each participant
and the total amount of tax, if any, withheld.
Dividends
- ---------
20. Will participants be credited with dividends on shares held in their
accounts under the Plan?
11
<PAGE>
Yes. Dividends on all shares of Common Stock, including fractional shares,
credited to your Plan account, whether such shares were purchased with
reinvested dividends on Common Stock held by you or with optional cash payments,
will be automatically reinvested in additional shares of Common Stock until such
shares are withdrawn from your Plan account.
Certificates for Shares
- -----------------------
21. Will certificates be issued for shares purchased?
No. Certificates will not be issued to you for shares credited to your Plan
account unless you request in writing that Registrar and Transfer Company do so,
whether upon termination of your participating in the Plan or otherwise, or
unless the Plan is terminated. Shares purchased through the Plan will be
credited to your Plan account, but they will not be registered in your name.
Shares of Common Stock purchased under the Plan and held by Registrar and
Transfer Company will be registered in the name of Registrar and Transfer
Company nominee and credited to your Plan account. The number of shares credited
to your Plan account. The number of shares credited to your Plan account will be
shown on the periodic statement of your account. This service eliminates the
need for safekeeping by you to protect against loss, theft or destruction of
stock certificates.
At any time, you may request in writing that Registrar and Transfer Company send
you a certificate for all or part of the whole shares credited to your Plan
account. This request should be mailed to Registrar and Transfer Company at the
address set forth in the response to Question 7. Any remaining whole and
fractional shares will continue to be credited to your Plan account.
Certificates for fractional shares will not be issued under any circumstances.
Certificates for whole shares credited to your Plan account will normally be
issued within 10 business days of receipt by Registrar and Transfer Company of
your written request.
22. In whose name will certificates be registered when issued to participants?
Plan accounts are maintained in the name in which your shares are registered at
the time you enroll in the Plan. Consequently, certificates for whole shares
purchased under the Plan will be similarly registered when issued to you upon
your request.
23. May shares in a Plan account be pledged?
No. Shares credited to your Plan account may not be pledged or assigned and any
such purported pledge or assignment shall be void. If you wish to pledge or
assign such shares, you must withdraw such shares from your Plan account.
Termination of Participation in the Plan
- ----------------------------------------
24. How does a participant terminate participation in the Plan?
12
<PAGE>
You may direct Registrar and Transfer Company in writing at any time to
discontinue the reinvestment of dividends on Common Stock held of record by you.
This notice should be mailed to Registrar and Transfer Company at the address
set forth in the response to Question 7. After initial enrollment in the
Optional Cash Purchase Only option, you are never obligated to make optional
cash purchases. Optional cash purchases may be made even after you have elected
to discontinue the reinvestment of dividends on Common Stock registered in your
name.
If you elect to discontinue the reinvestment of dividends on Common Stock held
of record in your name, you may either withdraw the whole shares of Common Stock
credited to your Plan account (see the response to Question 26) or retain any or
all such shares in such account. Dividends on shares of Common Stock retained in
your Plan account will continue to be reinvested.
25. When may a participant terminate participation in the Plan?
You may terminate your participation in the "Full Common Stock Dividend
Reinvestment" option under the Plan at any time. If your notice to discontinue
reinvestment is received by Registrar and Transfer Company at least ten business
days before the record date for the cash dividend, the next dividend will be
paid to you in cash. If your notice to discontinue reinvestment is received by
Registrar and Transfer Company less than ten business days before the record
date for the cash dividend, the next dividend will be reinvested for your
account. Thereafter, all dividends on Common Stock held of record by you, as to
which you have terminated participation, will be paid to you in cash unless you
elect to enroll in the dividend reinvestment option of the Plan again, which you
may do at any time.
Any optional cash payment which has been received by Registrar and Transfer
Company prior to receipt of a notice to discontinue dividend reinvestment will
be invested in accordance with the Plan unless return of the payment is
expressly requested in a notice received at least two business days prior to an
Investment Date.
Withdrawal of Shares in Plan Accounts
- -------------------------------------
26. How does a participant withdraw shares purchased under the Plan?
You may withdraw all or a portion of the shares of Common Stock credited to your
Plan account by notifying Registrar and Transfer Company in writing, specifying
the number of shares to be withdrawn. This notice should be mailed to Registrar
and Transfer Company at the address set forth in the response to Question 7.
Certificate for whole shares of Common Stock so withdrawn will be issued to you
as soon as practicable after receipt of your written response. In no case will
certificates for fractional shares be issued.
If your notice of withdrawal is not received by Registrar and Transfer Company
at least ten business days before the record date for the dividend, the next
dividend will be reinvested for your account. After you withdraw shares of
Common Stock from your Plan account, cash
13
<PAGE>
dividends on such shares will continue to be reinvested in accordance with the
Plan if you are enrolled under the "Full Common Stock Dividend Reinvestment"
option of the Plan or, if not, will be paid to you in cash.
You may, if you wish, also request that all or a portion of the shares, both
whole and fractional, credited to your Plan account be sold. Such request must
be in writing and signed by each person in whose name the Plan account appears.
If such sale is requested, Registrar and Transfer Company will, as soon as
practicable after receiving the request, place a sale order for your account
through a broker. You will receive a check for the proceeds of the sale less any
brokerage commission and any applicable transfer tax incurred.
27. What happens to any fractional share when you direct Registrar and Transfer
Company to sell, or otherwise withdraw, all shares from your Plan account?
Any fractional share in your Plan account will be sold by Registrar and Transfer
Company and a cash payment made for the sale price thereof less any transfer tax
incurred. The net proceeds for any fractional share, together with any
certificates for whole shares, will be mailed to you.
Other Information
- -----------------
28. What happens when you sell or transfer all of the Common Stock held of
record in your name?
If you dispose of all Common Stock Securities held of record in your name, the
dividends on the shares credited to your Plan account (held of record in the
name of the agent's nominee) will continue to be reinvested until you notify
Registrar and Transfer Company that you wish to withdraw all shares of Common
Stock credited to your Plan account.
29. What happens when you sell or transfer some but not all of the Common Stock
held of record in your name?
If you are reinvesting the dividends on the shares of Common Stock registered in
your name and you dispose of a portion of such shares, the Corporation will
continue to reinvest the dividends on the remainder of the shares for which you
have elected to have dividends reinvested and which are registered in your name.
30. What happens if the Corporation declares a stock dividend or a stock split?
Shares of Common Stock distributed by the Corporation pursuant to a stock
dividend or a stock split with respect to shares of Common Stock credited to
your Plan account will be added to your account.
14
<PAGE>
Shares distributed pursuant to a stock dividend or a stock split with respect to
shares of Common Stock registered in your name will be mailed to you.
31. How will a participant's shares held by Registrar and Transfer Company be
voted at shareholders meetings?
Shares held by Registrar and Transfer Company for you will be voted as you
direct. A proxy card will be sent to you in connection with any annual or
special meeting of shareholders, as in the case of shareholders not
participating in the Plan. This proxy will apply to all shares credited to your
Plan account and, if properly signed, will be voted in accordance with the
instructions that you give on the proxy card.
As in the case of shareholders not participating in the Plan, if no instructions
are indicated on a properly signed and returned proxy card, all of the shares
credited to your Plan account will be voted in accordance with the
recommendations of the Corporation's management. If the proxy card is not
returned or is returned unsigned, your shares would be voted only if you or a
duly appointed representative vote in person at the meeting.
32. What is the responsibility of the Corporation and Registrar and Transfer
Company under the Plan?
The Corporation and Registrar and Transfer Company, in administering the Plan,
will not be liable for any act done in good faith or for any good faith omission
to act, including, without limitation, any claim of liability arising out of
failure to terminate a participant's account upon such participant's death prior
to receipt of notice in writing of such death, or any claim with respect to the
timing or the price of any purchase or sale.
Participants should recognize that neither the Corporation nor Registrar and
Transfer Company can assure them of a profit or protect them against a loss on
shares purchased or sold under the Plan.
33. May the Plan be changed or discontinued?
The Corporation reserves the right to suspend or terminate the Plan at any time,
including the period between a dividend record date and the related dividend
payment date. The Corporation also reserves the right to make modifications to
the Plan. Participant will be notified of any such suspension, termination or
modification. Upon a termination of the Plan, except in the circumstances
described below, any uninvested optional cash payments will be returned, a
certificate for whole shares credited to your Plan account will be issued, and a
cash payment will be made for any fractional share credited to your account.
15
<PAGE>
In the event the Corporation terminates the Plan for the purpose of establishing
another dividend reinvestment and Common Stock purchase plan, participants in
the Plan will be enrolled automatically in such other plan and shares credited
to their Plan account will be credited automatically to such other plan, unless
notice is received to the contrary.
The Corporation also reserves the right to terminate any shareholder's
participation in the Plan at any time.
34. How may shareholders obtain answers to other questions regarding the Plan?
Any additional questions should be addressed to:
Registrar and Transfer Company
10 Commerce Drive
Cranford, NJ 07016
800-368-5948 or 800-346-6084
35. How is the Plan to be interpreted?
The Plan, the Enrollment Card signed by participants and the participants'
accounts shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania and applicable state and federal securities laws,
and cannot be modified orally. Any question of interpretation arising under the
Plan will be determined by the Corporation and any such determination will be
final.
The Corporation may adopt rules and regulations to facilitate the administration
of the Plan.
36. What are some of the responsibilities of participants?
You will have no right to draw checks or drafts against your Plan account or to
give instructions to Registrar and Transfer Company with respect to any shares
of Common Stock or cash held therein except as expressly provided herein.
You should notify Registrar and Transfer Company promptly in writing of any
change of address. Notices to participants will be given by letter addressed to
them at their last address of record with Registrar and Transfer Company under
the Plan.
USE OF PROCEEDS
The Corporation does not know precisely the number of shares of its Common Stock
that it will ultimately sell under the Plan or the prices at which those shares
will be sold. The Corporation
16
<PAGE>
intends to apply proceeds from the sale of shares pursuant to the Plan to
general corporate purposes.
EXPERTS
The financial statements incorporated in this Prospectus by reference to the
Corporation's Annual Report on Form 10-K for the year ended September 30, 1997
have been so incorporated in reliance on the report of KPMG Peat Marwick,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
LEGAL OPINIONS
The validity of the shares of Common Stock of the Corporation offered hereby has
been passed upon for the Corporation by Letson, Jarrett & Rosenberg. Letson,
Jarrett & Rosenberg have also rendered an opinion with respect to certain tax
consequences of participation in the Plan.
INDEMNIFICATION
Under provisions of the Corporation's Articles of Incorporation, a director
shall not be personally liable for monetary damages for action taken or for
failure to act except as limited by law; and directors, officers, agents and
employees of the Corporation are entitled to be indemnified in connection with
any actual or threatened lawsuit or proceeding arising out of their service to
the Corporation or to another organization at the request of the Corporation, or
because of their positions with the Corporation. With respect to possible
indemnification of directors, officers and controlling persons of the
Corporation for liabilities arising under the Securities Act of 1933 pursuant to
such provisions, the Corporation has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable.
17
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
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SUCH FINANCIAL INFORMATION.
</LEGEND>
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