Fidelity Bancorp, Inc. Announces First Quarter Earnings for Fiscal 2006 and Quarterly Dividend

PITTSBURGH, Jan. 18 /PRNewswire-FirstCall/ -- Fidelity Bancorp, Inc. (the "Company") the holding company for Fidelity Bank, PaSB of Pittsburgh, Pennsylvania today announced first quarter earnings for the three-month period ended December 31, 2005. Net income for the period was $964,000 or $.31 per share (diluted), as compared to net income of $1.00 million or $.33 per share (diluted) in the prior year quarter. Annualized return on assets was .56% and return on equity was 9.23% for the fiscal 2006 period, compared to .63% and 9.55%, respectively, for the same period in the prior year.

The Company's net interest income before provision for loan losses decreased $145,000 or 4.2% to $3.31 million for the quarter ended December 31, 2005, compared to $3.46 million in the prior year period. The decrease primarily reflects a decrease in spread partially offset by an increase in net earning assets. The Company's tax equivalent interest rate spread declined to 2.09% for the three months ending December 31, 2005 compared to 2.34% in the prior year.

The provision for loan losses decreased to $125,000 for the quarter ended December 31, 2005, compared to $175,000 in the prior year quarter. The provision for loan losses is charged to operations to bring the total allowance for loan losses to a level that reflects management's best estimates of the losses inherent in the portfolio. An evaluation of the loan portfolio, current economic conditions and other factors is performed each month at the balance sheet date. Net charge-offs for the three-months ended December 31, 2005 were $48,000 compared to $236,000 in the prior year period. Non- performing assets and foreclosed real estate were .46% of total assets at December 31, 2005, and the allowance for loan losses was 108.9% of non- performing loans and .72% of net loans at that date.

Other income increased $100,000 or 11.9% to $941,000 for the quarter ended December 31, 2005, compared to $841,000 in the prior year. The increase primarily relates to increased gains on the sale of investment securities and an increase in other operating income of $59,000 and $48,000, respectively, partially offset by a decrease in loan origination fees and service charges of $20,000.

Operating expenses for the first quarter of fiscal 2006 were $2.91 million, an increase of $30,000 or 1.0% over the prior year period. The operating expense increase primarily relates to increased compensation and benefits expense of $62,000, partially offset by a decrease in depreciation of $10,000 and a decrease in net loss on foreclosed real estate of $14,000.

For the three-months ended December 31, 2005, the provision for income taxes increased $16,000 to $257,000 compared to $241,000 for the same period last year. The increase primarily reflects a higher effective tax rate.

Total assets were $699.3 million at December 31, 2005, an increase of $21.5 million or 3.2% compared to September 30, 2005, and an increase of $52.6 million or 8.1% compared to December 31, 2004. Net loans outstanding increased $26.7 million or 7.7% to $372.8 million at December 31, 2005 as compared to September 30, 2005, and increased $75.0 million or 25.2% as compared to December 31, 2004. Deposits increased $13.3 million to $380.1 million at December 31, 2005 as compared to September 30, 2005, and increased $21.7 million as compared to December 31, 2004. Short-term borrowings increased $9.6 million to $120.7 million at December 31, 2005 as compared to September 30, 2005, and increased $42.1 million as compared to December 31, 2004. Long-term debt decreased $1.6 million to $134.5 million at December 31, 2005 as compared to September 30, 2005, and decreased $12.7 million as compared to December 31, 2004. Stockholders' equity was $42.0 million at December 31, 2005, compared to $42.0 million at September 30, 2005 and $41.6 million at December 31, 2004.

QUARTERLY DIVIDEND

The Board of Directors of Fidelity Bancorp, Inc. yesterday declared a quarterly cash dividend of $.13 per share on the Company's common stock. The dividend is payable February 28, 2006 to stockholders of record February 15, 2006. This represents the 70th uninterrupted quarterly cash dividend paid to stockholders.

The Company's filings with the Securities and Exchange Commission are available on-line through the Company's Internet website at http://www.fidelitybancorp-pa.com/.

Fidelity Bancorp, Inc. is the holding company for Fidelity Bank, a Pennsylvania-chartered, FDIC-insured savings bank conducting business through thirteen offices in Allegheny and Butler counties.

Statements contained in this news release which are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, factors discussed in documents filed by Fidelity Bancorp, Inc. with the Securities and Exchange Commission from time to time.

Mr. Richard G. Spencer President and Chief Executive Officer [phone] E-mail: [e-mail] Bancorp, Inc. and Subsidiaries Income Statements for the Three Months Ended December 31, 2005 and 2004 - Unaudited (In thousands, except per share data) Three Months Ended December 31, 2005 2004 Interest income: Loans $5,479 $4,442 Mortgage-backed securities 1,323 1,351 Investment securities 1,857 1,814 Deposits with other institutions 6 1 Total interest income 8,665 7,608 Interest expense: Deposits 2,247 1,843 Borrowed funds 2,909 2,164 Subordinated debt 198 145 Total interest expense 5,354 4,152 Net interest income before provision for loan losses 3,311 3,456 Provision for loan losses 125 175 Net interest income after provision for loan losses 3,186 3,281 Other income: Loan service charges and fees 77 97 Gain on sale of investment and mortgage-backed securities 141 82 Gain on sale of loans 13 5 Deposit service charges and fees 361 356 Other operating income 349 301 Total other income 941 841 Operating expenses: Compensation and benefits 1,885 1,823 Office occupancy and equipment 257 257 Depreciation and amortization 176 186 Federal insurance premiums 12 13 Loss on real estate owned, net 5 19 Intangible amortization 11 13 Other operating expenses 560 565 Total operating expenses 2,906 2,876 Income before income tax provision 1,221 1,246 Income tax provision 257 241 Net income $964 $1,005 Basic earnings per share $0.33 $0.34 Diluted earnings per share $0.31 $0.33 Balance Sheets - Unaudited (In thousands, except share data) Dec. 31, Sept. 30, Dec. 31, 2005 2005 2004 Assets: Cash and due from depository institutions $10,733 $9,234 $8,125 Interest-earning demand deposits 480 636 320 Securities available-for-sale 181,604 182,157 190,152 Securities held-to-maturity 99,121 105,316 117,012 Loans receivable, net 372,777 346,076 297,766 Loans held-for-sale - 248 - Foreclosed real estate, net 789 789 1,267 Federal Home Loan Bank stock, at cost 12,111 12,215 11,942 Accrued interest receivable 3,282 3,113 3,192 Office premises and equipment 4,985 5,126 5,123 Other assets 13,397 12,869 11,785 Total assets $699,279 $677,779 $646,684 Liabilities and Stockholders' Equity: Liabilities: Deposits $380,136 $366,812 $358,474 Short-term borrowings 120,742 111,141 78,657 Subordinated debt 10,310 10,310 10,310 Securities sold under agreement to repurchase 5,988 6,674 5,569 Advance payments by borrowers for taxes and insurance 2,832 1,425 2,225 Other liabilities 2,761 3,333 2,692 Long-term debt 134,471 136,035 147,206 Total liabilities 657,240 635,730 605,133 Stockholders' equity: Common stock, $.01 par value per share, 10,000,000 shares authorized, 3,549,540, 3,533,632, and 3,177,660 shares issued 35 35 32 Treasury stock, 587,955, 587,955, and 534,505 shares (9,808) (9,808) (9,808) Additional paid-in capital 44,451 44,250 36,140 Retained earnings 9,068 8,486 14,279 Accumulated other comprehensive income, net of tax (1,707) (914) 908 Total stockholders' equity 42,039 42,049 41,551 Total liabilities and stockholders' equity $699,279 $677,779 $646,684 (1) Shares have been adjusted to reflect the 10% stock dividend paid in May 2005. Other Data: At or For the Three Month Period Ended December 31, 2005 2004 Annualized return on average assets 0.56% 0.63% Annualized return on average equity 9.23% 9.55% Equity to assets 6.01% 6.43% Interest rate spread (tax equivalent) 2.08% 2.34% Net interest margin (tax equivalent) 2.14% 2.39% Non-interest expense to average assets 1.69% 1.79% Loan loss allowance to net loans 0.72% 0.86% Non-performing loans and foreclosed real estate to total assets at end-of-period 0.46% 0.78%

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