Market Overview

Fidelity Southern Corporation Reports Earnings For Second Quarter Of $8.9 Million

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ATLANTA, July 20, 2017 /PRNewswire/ -- Fidelity Southern Corporation ("Fidelity" or the "Company") (NASDAQ: LION), holding company for Fidelity Bank (the "Bank"), today reported financial results for the quarter ended June 30, 2017.

HIGHLIGHTS:

  • Net income of $8.9 million, or $0.33 per diluted share, an increase of $2.2 million, year over year, and decreased $1.6 million, as compared to the previous quarter
  • Total revenues of $74.6 million, an increase of $7.9 million, year over year, and a decrease of $378,000 as compared to the prior quarter
  • Net interest income of $33.7 million grew by $1.9 million and $1.5 million, year over year, and compared to the prior quarter
  • Noninterest income of $35.1 million grew by $5.1 million, year over year, and decreased by $2.3 million compared to the prior quarter
  • Book value per common share of $14.21 grew by $1.04 and $0.12, year over year, and compared to the prior quarter
  • Total assets of $4.6 billion increased by $78.2 million, or 1.7%, during the quarter
  • Total loans of $3.7 billion increased by $10.8 million, or 0.3%, during the quarter
  • Total deposits of $3.9 billion increased by $144.7 million, or 3.9%, during the quarter
  • Loans serviced for others of $9.9 billion grew by $323.0 million, or 3.4%, during the quarter

Fidelity's Chairman and CEO, Jim Miller, said, "We are pleased to see continued topline revenue growth generated by our ability to grow earning assets while operating basically in a flat curve environment. In 2017, we launched a number of project initiatives. Substantial investments were made in building out our Wealth Management sales force, mortgage expansion in Florida, and putting in place the talent, back office operations, and technology infrastructure that will enable us to be a much larger bank. Consequently though, efficiencies and sales will follow. It is worth noting that the flat commercial lending market and long-term loan structures have been difficult for us as we are fundamentally conservative and steer away from speculative real estate and what we call give-away interest rates. Nevertheless, we continue to focus our full attention on lending to businesses. We want our balance sheet to be more diversified.

We plan for further interest rate increases and expect the economy to become stronger despite overbuilding in the apartment market."

Fidelity's President, Palmer Proctor, added, "The project initiatives and revenue expansion investments that we have implemented will allow us to be more nimble and efficient as we enhance our technology and operating capacity. This in turn will help us provide more organic growth in existing and new markets, provide the capability for more strategic acquisitions, and most importantly, provide long-term shareholder value."

BALANCE SHEET
Total assets of $4.6 billion at June 30, 2017, represent an increase of $78.2 million, or 1.7%, compared to March 31, 2017. The increase in total assets for the quarter was primarily driven by a net increase in cash and cash equivalents of $75.6 million, provided by the increase in total deposits of $144.7 million, or 3.9%. The excess cash from deposit marketing campaigns was used to pay off $75.0 million in FHLB advances during the quarter.

Loans
Total loans of $3.7 billion at June 30, 2017, increased by $10.8 million, or 0.3%, as compared to March 31, 2017. During the quarter, loans held for investment decreased by $22.8 million, or 0.7%, to $3.3 billion. Consistent with industry trends influenced by rising interest rates, loan production has slowed in the indirect automobile and commercial portfolios. The Bank continues to generate organic new business, evidenced by average loan balances increasing by $17.8 million, as compared to March 31, 2017, as well as leveraging its expansion into new markets, as shown through solid production in the residential mortgage and HELOC portfolios. Loans held for sale grew by $33.6 million, or 9.3%, during the quarter to $394.7 million, primarily due to seasonally higher mortgage originations for the quarter as the peak summer homebuying season started.

Asset Quality
Credit quality of the loan portfolio continued to improve during the quarter. Non-performing assets decreased by $3.5 million, or 5.8%, as compared to March 31, 2017. The ORE and repossessions balance of $11.2 million decreased by $1.8 million, or 13.7%, during the quarter and is now at the lowest level in over 10 years. Delinquent loan balances, were down from the prior linked-quarter, and are near historic lows.

On a linked-quarter basis, the provision for loan losses decreased by $1.4 million, as net charge-offs decreased by $586,000 compared to the previous quarter. Annualized net charge-offs improved to 0.09% from 0.16% of total loans as compared to the prior quarter as successful collection and recovery efforts drove net recoveries in the commercial and construction portfolios.

Year over year, the provision for loan losses of $750,000 recorded for the quarter represented a decrease of $2.4 million compared to the same quarter a year ago. The primary reason for the lower provision for loan losses was overall improved credit quality and lower net loan charge-offs for the quarter, led primarily by recoveries in the construction and commercial portfolios.

Fair Value Adjustments
Loan servicing rights increased during the quarter by $3.2 million, or 3.0%, to $108.2 million. Mortgage servicing rights (MSRs), the primary component of loan servicing rights, contributed the majority of the change, increasing by $3.4 million, slightly offset by the change in indirect and SBA loan servicing rights for the quarter.

The increase in MSRs was primarily driven by increased sales of mortgage loans with servicing retained to $573.8 million for the quarter, an increase of $76.9 million, or 15.5%, in comparison to the prior linked-quarter. This increase was partially offset by a slight increase in impairment during the quarter as a result of higher early prepayments and lower mortgage rates. Early prepayments were higher for the quarter, primarily due to sales and purchases of new homes. Slightly lower mortgage rates also contributed to payoffs for refinances during the quarter.

The current estimated fair market value of the MSR was $97.8 million at June 30, 2017, an excess of $3.0 million over the net carrying value recorded. If interest rates trend upward, the fair market value would theoretically increase with a corresponding decrease in early prepayment expectations and some portion of the cumulative impairment recorded may be recovered. However, the value of the MSR is highly dependent on current market rates so any interest rate volatility could significantly impact the value of the asset and the recorded impairment, either positively or negatively.

Fair value gains on the portfolio of mortgage loans held for sale, interest rate lock commitments (IRLCs) and hedge items was $13.9 million at June 30, 2017, an increase of $2.4 million, or 20.3%, during the quarter. The increase was primarily attributable to the increase in mortgage loans held for sale as the gross pipeline of locked loans to be sold decreased slightly by quarter end as summer home buying began to taper. Since the Bank hedges its mortgage pipeline and held for sale portfolio, the volatility of these items due to interest rate movements collectively should be minimal.

Deposits
Total deposits increased by $144.7 million, or 3.9%, during the quarter to $3.9 billion. The majority of this increase occurred in the demand and money market category which increased by $114.1 million, or 8.6%, including $55.3 million in the Florida branches. Florida deposits now comprise 20.3% of total deposits. The remainder of the increase was driven by an increase in noninterest bearing demand deposits which rose by $77.6 million, or 7.7%, to end the quarter at $1.1 billion. Core deposit balances continue to grow. The increase in core deposits was partially offset by decreases of $45.1 million and $1.9 million, in the savings and time deposit categories, respectively.

INCOME STATEMENT
Net Income
On a linked-quarter basis, net income was $1.6 million, or 15.5%, lower. Net interest income increased by $1.5 million due to an increase in total interest-earning assets, and provision for loan losses was lower by $1.4 million due to improved credit quality.  These increases were offset by a decrease of $2.3 million in noninterest income, primarily created by lower gains on loan sales and a non-recurring gain recorded in the previous quarter, and an increase of $4.0 million in noninterest expense stemming from increased salaries and benefits, commission costs due to the increase in mortgage production, and professional and other services, as further described below.

As compared to the same quarter a year ago, net income increased by $2.2 million, or 33.8%, to $8.9 million. The increased earnings was primarily the result of higher earning assets that contributed to an additional $1.9 million in net interest income, $7.7 million in noninterest income from mortgage banking activities, and $2.4 million less in provision for loan losses due to improved credit quality from a year ago. These increases in earnings were partially offset by changes in noninterest expense of $6.4 million due to increased salaries and benefits, commissions from higher production, and professional and other services.

Interest Income
On a linked-quarter basis, interest income increased by $1.9 million, or 5.1%, primarily driven by an increase of 10 basis points in the yield on loans and growth in average loans of $17.8 million. Additionally, the interest income from excess fed funds sold and interest-bearing deposits with banks increased by $497,000, or 141.6%, for the quarter. The planned change in mix of interest-earning assets occurred due to a relatively larger increase in cash held in bank deposits during the quarter as compared to other higher-yielding interest-earning assets. Excess cash from the money market deposit campaign will be used to pay off short-term borrowings in future quarters.

Interest income of $39.6 million for the quarter increased by $2.8 million, or 7.5%, as compared to the same period in the prior year. This increase was primarily driven by an increase of average loans of $145.1 million, or 4.0%. Also contributing to the year over year increase in interest income was an increase of 9 basis points in the yield on loans, primarily in the commercial and construction loan portfolios due to three increases of 25 basis points in the prime rate over the past twelve months, including an increase effective June 15, 2017 which will be fully reflected in the third quarter.

Interest Expense
On a linked-quarter basis, interest expense increased by $424,000, or 7.8%, primarily due to an increase in average interest-bearing deposits of $87.8 million, or 3.2%. The Bank continued its deposit marketing campaign, primarily in the Florida markets, which has been focused on attracting money market deposits. In addition, the rate paid increased by 4 basis points as compared to the prior linked-quarter as a result of the impact of the three 25 basis point increases in the prime rate over the past six months, including an increase effective June 15, 2017, which will be fully reflected in the third quarter.

Interest expense for the quarter of $5.8 million reflects an increase of $869,000, or 17.5%, as compared to the same quarter a year ago, primarily due to an increase in interest expense on deposits. As a result, average interest-bearing deposits for the quarter increased by $232.1 million, or 9.1%, as the Bank's deposit marketing campaign continued. Also contributing to the year over year increase in interest expense was an increase of 5 basis points in the rate paid on interest-bearing deposits. Other short-term borrowings also experienced an increase in the rate paid for the quarter, which was 32 basis points higher as a result of the impact of the three 25 basis point increases in the prime rate in the past twelve months previously mentioned.

Net Interest Margin
On a linked-quarter basis, net interest income (tax equivalent) grew by $1.5 million, or 4.6%, to $33.8 million, primarily as the result of an increase of $163.4 million, or 4.0%, in average earning assets, partially offset by an increase of $85.9 million, or 2.8%, in interest-bearing liabilities and an increase of 3 basis points in the cost of funds.

In comparison to the prior linked-quarter, the net interest margin for the quarter decreased by 1 basis point to 3.20%, primarily due to an increase of 3 basis points in the rate paid on interest-bearing liabilities, partially offset by the benefit of higher average noninterest-bearing demand deposits which grew by $66.7 million, or 6.9%.

As compared to the same period a year ago, net interest income (tax equivalent) rose by $1.9 million to $33.8 million, or an increase of 5.9%, for the quarter, primarily due to a year over year increase of $354.0 million, or 9.1%, in average earning assets. This increase was partially offset by an increase in interest expense as average interest-bearing deposits grew by $232.1 million, or 9.1%, and the rate paid increased by 5 basis points.

The net interest margin was 3.20% for the quarter, a decrease of 10 basis points, as compared to 3.30% for the same period in 2016. The growth in lower-yielding other earning assets, mainly cash held in bank deposits, contributed to the decrease in the net interest margin, partially offset by steady growth in loan yields of 9 basis points. The decrease in the net interest margin was also driven by the higher cost of funds for the quarter, primarily resulting from an increase in the rate paid on interest-bearing deposits of 5 basis points.

Noninterest Income
On a linked-quarter basis, noninterest income decreased by $2.3 million, or 6.2%, largely due to a net decrease in other noninterest income of $1.6 million, or 109.5%, as a change in insurance providers resulted in a non-recurring gain of $1.0 million recorded in the previous quarter. Decreases were also noted in indirect lending activities of $786,000, or 17.8%, and SBA lending activities of $1.1 million, or 62.5%, as lower volume of loans sold resulted in lower gains on loan sales in both portfolios. As compared to the prior linked-quarter, indirect loan sales decreased by $40.4 million, or 26.6%, and SBA loan sales decreased by $4.4 million, or 45.7%. Mortgage banking activities was positively impacted by an increase of $1.1 million, or 4.2%, in gains on sale and fees stemming from increased mortgage production of $247.4 million, or 44.7%, and consistent product margins.

Noninterest income for the quarter of $35.1 million increased by $5.1 million, or 17.0%, as compared to the same period a year ago, primarily due to a net increase in noninterest income from mortgage banking activities of $7.7 million, or 39.8%. The stability of market interest rates over the year resulted in a smaller net MSR impairment of $636,000 for the quarter as compared to net MSR impairment of $8.6 million for the same period a year ago, driving $7.9 million of the year over year change in noninterest income from mortgage banking activities.

Partially offsetting the year over year increase in noninterest income from mortgage banking activities was a decrease of $1.1 million, or 23.9%, in noninterest income from indirect lending activities and a decrease of $1.2 million, or 64.0%, in noninterest income from SBA lending activities, primarily due to a year over year decrease in gains on loan sales. As compared to the same quarter a year ago, indirect loan sales decreased by $144.2 million, or 36.6%, and SBA loan sales decreased by $7.7 million, or 44.4%, respectively.

Noninterest Expense
On a linked-quarter basis, noninterest expense increased by $4.0 million, or 7.9%. Commissions expense increased by $1.9 million, or 25.2%, primarily due to higher mortgage loan production and to a lesser degree, due to guaranteed commissions paid to new mortgage originators in expansion markets executed late in the first quarter. Salaries and employee benefits grew by $414,000, or 1.6%, for the prior linked-quarter, mainly due to new hires in the mortgage and Wealth Management divisions. Professional and other services expense was $1.0 million, or, 24.2%, higher due to higher expenses paid to outside third parties, primarily for ongoing projects to build the operating infrastructure, gather data to comply with new and existing regulations, and compliance with new accounting standards.

Noninterest expense for the quarter of $54.6 million increased by $6.4 million, or 13.4%, as compared to the same period a year ago, mostly due to increased expenses associated with organic growth, primarily in the mortgage and Wealth Management divisions. Salaries and employee benefits and commissions increased by $3.3 million, or 10.3%, mainly due to an increase in the FTE count of approximately 120, or 9.5%, year over year and 59, or 4.5%, during the quarter. Occupancy expense increased by $687,000, or 17.1%, for the quarter, mainly due to increases in rental and property tax expenses as new mortgage production offices were established in Florida.

Professional and other services expense increased by $1.5 million, or 40.3%, for the quarter, mostly due to an increase in expenses paid to outside third parties as previously mentioned in the discussion of the linked-quarter results.

Other noninterest expense increased by $1.0 million, or 11.6%, for the quarter, mainly due to increases in operating costs as a result of the year over year growth in locations, customers and transactions.

ABOUT FIDELITY SOUTHERN CORPORATION
Fidelity Southern Corporation, through its operating subsidiaries, Fidelity Bank and LionMark Insurance Company, provides banking services and Wealth Management services and credit-related insurance products through branches in Georgia and Florida, and an insurance office in Atlanta, Georgia. SBA, indirect automobile, and mortgage loans are provided throughout the South and parts of the Midwest. For additional information about Fidelity's products and services, please visit the web site at www.FidelitySouthern.com.

This news release contains forward-looking statements, as defined by Federal Securities Laws, including statements about financial outlook and business environment. These statements are provided to assist in the understanding of future financial performance and such performance involves risks and uncertainties that may cause actual results to differ materially from those in such statements. Any such statements are based on current expectations and involve a number of risks and uncertainties. For a discussion of factors that may cause such forward-looking statements to differ materially from actual results, please refer to the section entitled "Forward Looking Statements" from Fidelity Southern Corporation's 2016 Annual Report filed on Form 10-K with the Securities and Exchange Commission. Additional information and other factors that could affect future financial results are included in Fidelity's filings with the Securities and Exchange Commission.

 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

FINANCIAL HIGHLIGHTS

(UNAUDITED)







As of or for the Quarter Ended



As of or for the Six Months Ended

($ in thousands, except per share data)

June 30,
 2017


March 31,
 2017


June 30,
 2016



June 30,
 2017


June 30,
 2016

INCOME STATEMENT DATA:











Interest income

$

39,578



$

37,642



$

36,806




$

77,220



$

71,098


Interest expense

5,832



5,408



4,963




11,240



9,961


Net interest income

33,746



32,234



31,843




65,980



61,137


Provision for loan losses

750



2,100



3,128




2,850



3,628


Noninterest income

35,056



37,370



29,971




72,426



54,857


Noninterest expense

54,551



50,572



48,125




105,122



94,683


Net income

8,892



10,527



6,645




19,419



11,186


PERFORMANCE:











Earnings per common share - basic

$

0.34



$

0.40



$

0.26




$

0.74



$

0.45


Earnings per common share - diluted

0.33



0.40



0.26




0.73



0.44


Total revenues

74,634



75,012



66,777




149,646



125,955


Book value per common share

14.21



14.09



13.17




14.21



13.17


Tangible book value per common share

13.72



13.58



12.60




13.72



12.60


Cash dividends paid per common share

0.12



0.12



0.12




0.24



0.24


Dividend payout ratio

35.29

%


30.00

%


46.15

%



32.43

%


53.33

%

Return on average assets

0.78

%


0.97

%


0.64

%



0.87

%


0.55

%

Return on average shareholders' equity

10.06

%


11.78

%


8.07

%



10.87

%


7.03

%

Equity to assets ratio

8.23

%


8.19

%


7.84

%



8.23

%


7.84

%

Net interest margin

3.20

%


3.21

%


3.30

%



3.20

%


3.29

%

END OF PERIOD BALANCE SHEET SUMMARY:










Total assets

$

4,609,280



$

4,531,057



$

4,281,927




$

4,609,280



$

4,281,927


Earning assets

4,267,358



4,192,919



3,860,181




4,267,358



3,860,181


Loans, excluding Loans Held-for-Sale

3,332,132



3,354,926



3,190,707




3,332,132



3,190,707


Total loans

3,726,842



3,716,043



3,649,736




3,726,842



3,649,736


Total deposits

3,899,796



3,755,108



3,569,606




3,899,796



3,569,606


Shareholders' equity

379,399



371,302



335,870




379,399



335,870


Assets serviced for others

9,877,434



9,553,855



8,699,107




9,877,434



8,699,107


DAILY AVERAGE BALANCE SHEET SUMMARY:










Total assets

$

4,561,684



$

4,409,492



$

4,207,171




$

4,487,294



$

4,076,575


Earning assets

4,245,954



4,082,544



3,804,751




4,164,250



3,694,547


Loans, excluding Loans Held-for-Sale

3,339,694



3,320,992



3,161,676




3,330,343



3,094,142


Total loans

3,736,026



3,718,260



3,590,929




3,727,143



3,482,436


Total deposits

3,798,523



3,644,047



3,470,966




3,721,285



3,344,868


Shareholders' equity

354,475



362,321



331,056




360,103



320,004


Assets serviced for others

9,685,378



9,382,261



8,480,382




9,533,820



8,321,362


ASSET QUALITY RATIOS:











Net charge-offs to average loans

0.09

%


0.16

%


0.25

%



0.14

%


0.12

%

Allowance to period-end loans

0.91

%


0.91

%


0.88

%



0.91

%


0.88

%

Nonperforming assets to total loans, ORE and repossessions

1.50

%


1.60

%


1.55

%



1.50

%


1.55

%

Allowance to nonperforming loans, ORE and repossessions

0.54x



0.51x



0.49x




0.54x



0.49x


SELECTED RATIOS:











Loans to total deposits

85.44

%


89.34

%


89.39

%



85.44

%


89.39

%

Average total loans to average earning assets

87.99

%


91.08

%


94.38

%



89.50

%


94.26

%

Noninterest income to total revenue

46.97

%


49.82

%


44.88

%



48.40

%


43.55

%

Leverage ratio

8.36

%


8.48

%


8.46

%



8.36

%


8.46

%

Common equity tier 1 capital

8.61

%


8.37

%


8.18

%



8.61

%


8.18

%

Tier 1 risk-based capital

9.76

%


9.51

%


9.35

%



9.76

%


9.35

%

Total risk-based capital

12.47

%


12.20

%


12.06

%



12.47

%


12.06

%

 

 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)




($ in thousands)


June 30,

 2017


March 31,

 2017


June 30,

 2016

ASSETS



Cash and cash equivalents


$

430,547


$

350,502


$

148,745

Investment securities available-for-sale



130,371



139,071



168,938

Investment securities held-to-maturity



15,593



15,977



17,224

Loans held-for-sale



394,710



361,117



459,029











Loans



3,332,132



3,354,926



3,190,707

Allowance for loan losses



(30,425)



(30,455)



(28,037)

Loans, net of allowance for loan losses



3,301,707



3,324,471



3,162,670

Premises and equipment, net



87,253



87,222



86,515

Other real estate, net



9,382



11,284



18,621

Bank owned life insurance



71,027



70,587



67,025

Servicing rights, net



108,216



105,039



78,820

Other assets



60,474



65,787



74,340

Total assets


$

4,609,280


$

4,531,057


$

4,281,927











LIABILITIES










Deposits










Noninterest-bearing demand deposits


$

1,082,966


$

1,005,372


$

995,673

Interest-bearing deposits










Demand and money market



1,436,005



1,321,936



1,154,024

Savings



336,695



381,751



368,333

Time deposits



1,044,130



1,046,049



1,051,576

Total deposits



3,899,796



3,755,108



3,569,606

Short-term borrowings



164,896



239,466



215,833

Subordinated debt, net



120,521



120,488



120,388

Other liabilities



44,668



44,693



40,230

Total liabilities



4,229,881



4,159,755



3,946,057











SHAREHOLDERS' EQUITY










Preferred stock







Common stock



208,699



206,590



196,913

Accumulated other comprehensive income, net



959



699



3,364

Retained earnings



169,741



164,013



135,593

Total shareholders' equity



379,399



371,302



335,870

Total liabilities and shareholders' equity


$

4,609,280


$

4,531,057


$

4,281,927











 

 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)









For the Quarter Ended



For the Six Months Ended

($ in thousands, except per share data)


June 30,
 2017


March 31,
 2017


June 30,
 2016



June 30,
 2017


June 30,
 2016

INTEREST INCOME












Loans, including fees


$

37,560



$

36,083



$

35,244




$

73,643



$

68,189


Investment securities


1,170



1,208



1,444




2,378



2,724


Other


848



351



118




1,199



185


Total interest income


39,578



37,642



36,806




77,220



71,098


INTEREST EXPENSE












Deposits


3,891



3,449



3,211




7,340



6,476


Short term borrowings


502



392



311




894



605


Subordinated debt


1,439



1,567



1,441




3,006



2,880


Total interest expense


5,832



5,408



4,963




11,240



9,961


Net interest income


33,746



32,234



31,843




65,980



61,137


Provision for loan losses


750



2,100



3,128




2,850



3,628


Net interest income after provision for loan losses


32,996



30,134



28,715




63,130



57,509


NONINTEREST INCOME












Service charges on deposit accounts


1,481



1,455



1,433




2,936



2,803


Other fees and charges


2,021



1,871



1,858




3,892



3,524


Mortgage banking activities


26,956



25,869



19,287




52,825



34,022


Indirect lending activities


3,640



4,426



4,782




8,066



9,046


SBA lending activities


681



1,818



1,893




2,499



3,127


Bank owned life insurance


419



439



494




858



948


Securities gains






200






282


Other


(142)



1,492



24




1,350



1,105


Total noninterest income


35,056



37,370



29,971




72,426



54,857


NONINTEREST EXPENSE












Salaries and employee benefits


25,852



25,438



22,576




51,290



45,630


Commissions


9,384



7,498



9,366




16,882



15,965


Occupancy, net


4,700



4,163



4,013




8,863



8,397


Professional and other services


5,052



4,067



3,600




9,119



7,633


Other


9,563



9,406



8,570




18,969



17,058


Total noninterest expense


54,551



50,572



48,125




105,123



94,683


Income before income tax expense


13,501



16,932



10,561




30,433



17,683


Income tax expense


4,609



6,405



3,916




11,014



6,497


NET INCOME


$

8,892



$

10,527



$

6,645




$

19,419



$

11,186














EARNINGS PER COMMON SHARE:












Basic


$

0.34



$

0.40



$

0.26




$

0.74



$

0.45


Diluted


$

0.33



$

0.40



$

0.26




$

0.73



$

0.44


Weighted average common shares outstanding-basic


26,433



26,335



25,481




26,384



24,877


Weighted average common shares outstanding-diluted


26,547



26,477



25,961




26,512



25,401


 

 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

LOANS BY CATEGORY

(UNAUDITED)


($ in thousands)


June 30,
 2017


March 31,
 2017


December 31,
 2016


September 30,
 2016


June 30,
 2016

Commercial


$

796,699



$

802,905



$

784,737



$

789,674



$

797,286


SBA


145,311



149,727



149,779



145,890



144,083


Total commercial and SBA loans


942,010



952,632



934,516



935,564



941,369













Construction loans


248,926



249,465



238,910



228,887



217,568













Indirect automobile


1,531,761



1,565,298



1,575,865



1,631,903



1,512,406


Installment loans and personal lines of credit


31,225



31,647



33,225



34,181



46,532


Total consumer loans


1,562,986



1,596,945



1,609,090



1,666,084



1,558,938


Residential mortgage


433,544



418,941



386,582



370,465



336,896


Home equity lines of credit


144,666



136,943



133,166



131,311



135,936


Total mortgage loans


578,210



555,884



519,748



501,776



472,832


Loans held for investment


3,332,132



3,354,926



3,302,264



3,332,311



3,190,707













Loans held-for-sale:











Residential mortgage


279,292



201,661



252,712



291,030



299,616


SBA


15,418



9,456



12,616



10,587



9,413


Indirect automobile


100,000



150,000



200,000



150,000



150,000


Total loans held-for-sale


394,710



361,117



465,328



451,617



459,029


Total loans


$

3,726,842



$

3,716,043



$

3,767,592



$

3,783,928



$

3,649,736













Noncovered loans


$

3,324,024



$

3,345,667



$

3,286,336



$

3,315,448



$

3,171,137


Covered loans


8,108



9,259



15,928



16,863



19,570


Loans held-for-sale


394,710



361,117



465,328



451,617



459,029


Total loans


$

3,726,842



$

3,716,043



$

3,767,592



$

3,783,928



$

3,649,736


 

 

 


DEPOSITS BY CATEGORY


(UNAUDITED)




For the Quarter Ended


June 30, 2017


March 31, 2017


December 31, 2016


September 30, 2016


June 30, 2016

($ in thousands)

Average
Amount


Rate


Average
Amount


Rate


Average
Amount


Rate


Average
Amount


Rate


Average
Amount


Rate

Noninterest-bearing demand deposits

$

1,027,909



%


$

961,188



%


$

978,909



%


$

1,004,924



%


$

932,448



%

Interest-bearing demand deposits

1,363,651



0.37

%


1,244,955



0.31

%


1,179,837



0.25

%


1,151,152



0.26

%


1,129,179



0.26

%

Savings deposits

357,712



0.32

%


387,007



0.36

%


350,885



0.33

%


370,011



0.35

%


355,801



0.32

%

Time deposits

1,049,248



0.90

%


1,050,897



0.83

%


1,052,082



0.89

%


1,047,044



0.86

%


1,053,538



0.84

%

Total average deposits

$

3,798,520



0.41

%


$

3,644,047



0.38

%


$

3,561,713



0.38

%


$

3,573,131



0.37

%


$

3,470,966



0.37

%

 

 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

NONPERFORMING AND CLASSIFIED ASSETS

(UNAUDITED)


($ in thousands)

June 30,
 2017


March 31,
 2017


December 31,
 2016


September 30,
 2016


June 30,
 2016

NONPERFORMING ASSETS










Nonaccrual loans (2) (6)

$

37,894



$

38,377



$

35,358



$

32,796



$

33,435


Loans past due 90 days or more and still accruing

7,210



8,414



6,189



6,140



3,653


Repossessions

1,779



1,654



2,274



1,747



1,067


Other real estate (ORE)

9,382



11,284



14,814



16,926



18,621


Nonperforming assets

$

56,265



$

59,729



$

58,635



$

57,609



$

56,776












ASSET QUALITY RATIOS










Loans 30-89 days past due

$

7,181



$

11,735



$

7,707



$

7,304



$

6,705


Loans 30-89 days past due to loans

0.22

%


0.35

%


0.23

%


0.22

%


0.21

%

Loans past due 90 days or more and still accruing to loans

0.22

%


0.25

%


0.19

%


0.18

%


0.11

%

Nonperforming loans as a % of loans

1.35

%


1.39

%


1.26

%


1.17

%


1.16

%

Nonperforming assets to loans, ORE, and repossessions

1.51

%


1.60

%


1.55

%


1.51

%


1.55

%

Classified Asset Ratio(4)

20.14

%


20.97

%


21.22

%


21.47

%


21.79

%

ALL to nonperforming loans

67.46

%


65.09

%


71.81

%


76.38

%


75.60

%

Net charge-offs, annualized to average loans

0.09

%


0.16

%


0.28

%


%


0.25

%

ALL as a % of loans

0.91

%


0.91

%


0.90

%


0.89

%


0.88

%

ALL as a % of loans, excluding acquired loans(5)

0.98

%


0.98

%


0.99

%


0.98

%


0.97

%











CLASSIFIED ASSETS










Classified loans(1)

$

71,040



$

71,082



$

68,128



$

67,826



$

62,120


ORE and repossessions

11,162



12,938



17,088



16,792



16,396


Total classified assets(3)

$

82,202



$

84,020



$

85,216



$

84,618



$

78,516












(1) Amount of SBA guarantee included in classified loans

$

7,458



$

5,213



$

7,735



$

8,665



$

5,007


(2) Amount of repurchased government-guaranteed loans, primarily residential mortgage loans, included in nonaccrual loans

$

12,502



$

12,287



$

7,771



$

4,648



$

2,388


(3) Classified assets include loans having a risk rating of substandard or worse, both accrual and nonaccrual, repossessions and ORE, net of loss share and     purchase discounts

(4) Classified asset ratio is defined as classified assets as a percentage of the sum of Tier 1 capital plus allowance for loan losses

(5) Allowance calculation excludes the recorded investment of acquired loans, due to valuation calculated at acquisition

(6) Excludes purchased credit impaired (PCI) loans which are not removed from their accounting pool

 

 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

ANALYSIS OF INDIRECT LENDING

(UNAUDITED)


















As of or for the Quarter Ended

($ in thousands)


June 30,
 2017


March 31,
 2017


December 31,
 2016


September 30,
 2016


June 30,
 2016

Average loans outstanding(1)


$

1,675,644



$

1,756,958



$

1,702,006



$

1,726,342



$

1,642,829


Loans serviced for others


1,216,296



1,197,160



1,130,289



1,152,636



1,219,909


Past due loans:












Amount 30+ days past due


1,535



2,223



2,972



1,585



1,588



Number 30+ days past due


143



200



252



135



129


30+ day performing delinquency rate(2)


0.09

%


0.13

%


0.17

%


0.09

%


0.10

%

Nonperforming loans


$

1,363



$

1,778



$

1,278



$

1,231



$

887


Nonperforming loans as a percentage of period end loans(2)


0.08

%


0.10

%


0.07

%


0.07

%


0.05

%

Net charge-offs


$

1,332



$

1,502



$

1,306



$

895



$

751


Net charge-off rate(3)


0.35

%


0.39

%


0.32

%


0.23

%


0.20

%

Number of vehicles repossessed during the period


147



154



164



145



120


Average beacon score


758



758



758



758



756


Production by state:












Alabama


$

10,399



$

14,452



$

11,613



$

18,296



$

21,820



Arkansas


26,569



33,602



32,789



48,143



44,548



Florida


49,976



65,053



56,432



71,530



77,108



Georgia


28,091



36,178



29,150



43,948



51,253



Louisiana


45,306



56,046



49,849



57,039



60,557



Mississippi


20,136



21,370



17,784



26,260



28,414



North Carolina


14,110



15,858



13,734



21,874



25,159



Oklahoma


1,051



1,635



1,780



945



1,238



South Carolina


11,232



15,020



11,953



14,146



17,031



Tennessee


10,012



14,143



12,963



18,661



21,683



Texas


26,542



32,902



24,942



31,851



32,522



Virginia


6,292



10,282



6,063



8,937



12,546




Total production by state


$

249,716



$

316,541



$

269,052



$

361,630



$

393,879


Loan sales


$

151,996



$

192,435



$

97,916



$

64,793



$

175,991


Portfolio yield(1)


2.84

%


2.87

%


2.88

%


2.81

%


2.77

%



(1)

Includes held-for-sale

(2)

Calculated by dividing loan category as of the end of the period by period-end loans including held for sale for the specified loan portfolio

(3)

Calculated by dividing annualized net charge-offs for the period by average loans held for investment during the period for the specified loan category

 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

INCOME FROM MORTGAGE BANKING ACTIVITIES

(UNAUDITED)


















For the Quarter Ended

(in thousands)


June 30,
 2017


March 31,
 2017


December 31,
 2016


September 30,
 2016


June 30,
 2016

Marketing gain, net


$

21,355



$

18,677



$

19,364



$

25,240



$

22,734


Origination points and fees


4,189



3,021



3,786



3,911



4,101


Loan servicing revenue


5,379



5,341



5,088



4,896



4,631


Gross mortgage revenue


$

30,923



$

27,039



$

28,238



$

34,047



$

31,466


Less:











MSR amortization


(3,331)



(3,158)



(3,918)



(4,414)



(3,610)


MSR (impairment) / recovery, net


(636)



1,989



13,144



458



(8,569)


Total income from mortgage banking activities


$

26,956



$

25,870



$

37,464



$

30,091



$

19,287















FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

ANALYSIS OF MORTGAGE LENDING

(UNAUDITED)


















As of or for the Quarter Ended

($ in thousands)


June 30,
 2017


March 31,
 2017


December 31,
 2016


September 30,
 2016


June 30,
 2016

Production by region:












Georgia


$

519,497



$

395,404



$

532,177



$

580,170



$

526,446



Florida


95,983



46,365



46,140



44,849



45,339



Alabama/Tennessee(2)


7,294



3,600



5,485



7,307



8,892



Virginia/Maryland


143,885



81,901



139,283



160,959



160,644



North and South Carolina


33,767



25,727



33,783



31,332



33,497



Total retail


800,426



552,997



756,868



824,617



774,818



Wholesale








3,507



40,233



Total production by region


$

800,426



$

552,997



$

756,868



$

828,124



$

815,051













% for purchases

89.6

%


80.9

%


61.3

%


66.7

%


76.8

%

% for refinance loans

10.4

%


19.1

%


38.7

%


33.3

%


23.2

%












Portfolio Production


$

46,902



$

51,061



$

38,907



$

45,586



$

47,847













Funded loan type (UPB):













Conventional


62.5

%


63.9

%


68.9

%


68.9

%


65.9

%



FHA/VA/USDA


24.6

%


24.2

%


21.6

%


22.2

%


23.3

%



Jumbo


12.9

%


11.9

%


9.5

%


8.9

%


10.8

%














Gross pipeline of locked loans to be sold (UPB)


$

360,551



$

374,739



$

211,921



$

394,773



$

387,777


Loans held for sale (UPB)


$

271,714



$

195,772



$

250,094



$

281,418



$

288,734















Total loan sales (UPB)


$

689,073



$

566,003



$

758,775



$

796,379



$

712,712




Conventional


63.6

%


69.9

%


72.8

%


70.0

%


70.5

%



FHA/VA/USDA


26.6

%


23.0

%


22.6

%


24.0

%


23.0

%



Jumbo


9.8

%


7.1

%


4.6

%


6.0

%


6.5

%














Average loans outstanding(1)


$

664,099



$

592,537



$

634,511



$

635,529



$

598,403















(1) Includes held-for-sale



(2) Tennessee added in Q1 2017



 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

THIRD PARTY MORTGAGE LOAN SERVICING

(UNAUDITED)


















As of or for the Quarter Ended

($ in thousands)


June 30,
 2017


March 31,
 2017


December 31,
 2016


September 30,
 2016


June 30,
 2016

Loans serviced for others (UPB)


$

8,357,934



$

8,067,426



$

7,787,470



$

7,489,954



$

7,200,540


Average loans serviced for others (UPB)


$

8,304,065



$

8,013,761



$

7,625,384



$

7,337,291



$

7,022,718













MSR book value, net of amortization


$

102,549



$

98,550



$

95,282



$

90,982



$

87,652


MSR impairment


(7,799)



(7,163)



(9,152)



(22,295)



(22,753)


MSR net carrying value


$

94,750



$

91,387



$

86,130



$

68,687



$

64,899


MSR carrying value as a % of period end UPB


1.13

%


1.13

%


1.11

%


0.92

%


0.90

%














Delinquency % loans serviced for others


1.02

%


0.53

%


0.69

%


0.76

%


0.55

%














MSR revenue multiple(1)


4.38



4.25



4.14



3.44



3.42















(1) MSR carrying value (period end) to period end loans serviced for others divided by the ratio of annualized mortgage loan servicing revenue to average mortgage loans serviced for others

 

 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

NET INTEREST MARGIN

(UNAUDITED)



For the Quarter Ended


June 30, 2017


March 31, 2017


June 30, 2016


Average


Yield/


Average


Yield/


Average


Yield/

($ in thousands)

Balance


Rate


Balance


Rate


Balance


Rate

Assets












Interest-earning assets:












Loans, net of unearned income (1)

$

3,736,026



4.04

%


$

3,718,260



3.94

%


$

3,590,929



3.95

%

Investment securities (1)

164,037



2.97

%


171,853



3.02

%


202,000



2.97

%

Other earning assets

345,891



0.98

%


192,431



0.74

%


99,037



0.48

%

Total interest-earning assets

4,245,954



3.75

%


4,082,544



3.75

%


3,891,966



3.81

%

Noninterest-earning assets:












Cash and due from banks

44,132





38,578





29,956




Allowance for loan losses

(30,116)





(29,788)





(26,674)




Premises and equipment, net

87,332





87,792





88,070




Other real estate

10,907





14,147





19,481




Other assets

203,475





216,219





204,372




Total noninterest-earning assets

315,730





326,948





315,205




Total assets

$

4,561,684





$

4,409,492





$

4,207,171




Liabilities and shareholders' equity












Interest-bearing liabilities:












Demand and money market deposits

$

1,363,651



0.37

%


$

1,244,955



0.31

%


$

1,129,179



0.26

%

Savings deposits

357,712



0.32

%


387,007



0.36

%


355,801



0.32

%

Time deposits

1,049,248



0.90

%


1,050,897



0.83

%


1,053,538



0.84

%

Total interest-bearing deposits

2,770,611



0.56

%


2,682,859



0.52

%


2,538,518



0.51

%

Other short-term borrowings

243,359



0.83

%


245,262



0.65

%


244,944



0.51

%

Subordinated debt

120,505



4.79

%


120,472



5.28

%


120,372



4.81

%

Total interest-bearing liabilities

3,134,475



0.75

%


3,048,593



0.72

%


2,903,834



0.69

%

Noninterest-bearing liabilities and shareholders' equity:












Demand deposits

1,027,909





961,188





932,448




Other liabilities

44,825





37,390





39,833




Shareholders' equity

354,475





362,321





331,056




Total noninterest-bearing liabilities and
shareholders' equity

1,427,209





1,360,899





1,303,337




Total liabilities and shareholders' equity

$

4,561,684





$

4,409,492





$

4,207,171




Net interest spread



3.00

%




3.03

%




3.12

%

Net interest margin



3.20

%




3.21

%




3.30

%













(1)   Yield / Rate is calculated using interest income including the effect of taxable-equivalent adjustments utilizing a 35% tax rate.





 

 

Contacts:

Martha Fleming, Charles D. Christy


Fidelity Southern Corporation (404) 240-1504

 

View original content:http://www.prnewswire.com/news-releases/fidelity-southern-corporation-reports-earnings-for-second-quarter-of-89-million-300491642.html

SOURCE Fidelity Southern Corporation

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