Market Overview

Fidelity Southern Corporation Reports Earnings For Third Quarter Of $7.9 Million

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ATLANTA, Oct. 19, 2017 /PRNewswire/ -- Fidelity Southern Corporation ("Fidelity" or the "Company") (NASDAQ: LION), holding company for Fidelity Bank (the "Bank"), today reported net income of $7.9 million, or $0.30 per diluted share for the quarter ended September 30, 2017, compared with $8.9 million, or $0.33 per diluted share, for the quarter ended June 30, 2017. For the year to date ended September 30, 2017, the Company reported net income of $27.4 million, or $1.03 per diluted share, compared with $23.7 million, or $0.92 per diluted share, for the same period in 2016.

Fidelity's Chairman, Jim Miller, said, "The results in the third quarter reflect the many challenges we and other bankers face while operating in a flat rate environment, slowing quality loan demand, accelerated competition from other banks, and the ongoing pressure to our indirect auto loan business. Although we believe the economy is improving, earnings in mortgage and indirect were impacted. For the rest of our traditional core bank, we remain focused and committed to implement changes to our operations and technology that will enable us to be more efficient and effective in our growth strategies. We will continue to invest to become less reliant on the non-margin businesses."

President Palmer Proctor, added, "Wealth Management will be at a positive run rate by year end. SBA is doing well and now has a national reach. Retail banking is doing especially well with lending to small businesses and in providing funding for lending in all areas. Branches will be opened in Tallahassee, Florida, and Macon and Covington, Georgia, in the near future. Taking a longer view and building diverse lines of business has made our company stronger."

RECENT EVENTS
In August 2017, Hurricane Harvey struck the state of Texas causing massive flooding in certain southern counties. Fidelity's indirect auto business has a number of customers that were impacted by the storm causing an immaterial uptick in auto delinquencies. In September 2017, Hurricane Irma struck the state of Florida, causing extensive structural/windstorm damage, and flooding that extended through Florida and Georgia. Fidelity has customers, employees, and operations that were affected by Irma's path, but we believe these events will not have a material impact on the Company's banking and mortgage operations in those markets.

BALANCE SHEET
Total assets of $4.5 billion at September 30, 2017, represent a decrease of $103.9 million, or 2.3%, compared to June 30, 2017. The decrease in total assets for the quarter was primarily driven by a decrease in cash and cash equivalents of $143.6 million, which was the result of paying off FHLB and brokered CD borrowings of $180.2 million, during the quarter. The decrease in cash and cash equivalents was partially offset by an increase in total loans of $23.2 million. Deposit growth remained strong during the quarter as total core deposits rose by $93.1 million, offset by a decrease in total time deposits of $54.5 million.

Loans
Total loans of $3.8 billion at September 30, 2017, increased by $23.2 million, or 0.6%, as compared to June 30, 2017. During the quarter, loans held for investment increased by $77.6 million, or 2.3%, to $3.4 billion. Total commercial, SBA, and construction loans were down by $14.6 million, or 1.2%, primarily due to payoffs in the commercial portfolio and a slowing of quality commercial and industrial loan demand.

Loans held for sale decreased by $54.4 million, or 13.8%, as reductions were seen in the residential mortgage and indirect auto categories.

Asset Quality
Asset quality continued to improve as evidenced by the reduction in non performing assets, excluding acquired loans and the guaranteed portion of SBA and GNMA loans ("adjusted NPA's"). For the past year, adjusted NPA's have decreased by $8.2 million, or 19.7%.

On a linked-quarter basis, the provision for loan losses increased by $675,000, as net charge-offs increased by $321,000. Gross charge-offs were flat while recoveries decreased, on a linked-quarter basis. Annualized net charge-offs remained relatively low at 0.13% of average loans.

Year over year, the provision for loan losses of $1.4 million recorded for the quarter represented a decrease of $693,000 compared to the same quarter a year ago. The primary reason for the lower provision for loan losses is the continued overall improvement in the Company's credit quality.

Fair Value Adjustments
Loan servicing rights increased during the quarter by $3.7 million, or 3.4%, to $111.9 million. Mortgage servicing rights ("MSRs"), the primary component of loan servicing rights, contributed the majority of the change, increasing by $4.3 million, slightly offset by the change in indirect auto and SBA loan servicing rights for the quarter.

The net increase in MSRs was primarily driven by increased sales of mortgage loans with servicing retained to $644.6 million for the quarter, an increase of $70.8 million, or 12.3%, in comparison to the prior linked-quarter. The increase due to new loan servicing rights capitalized during the quarter was partially offset by amortization of $3.6 million and a modest amount of impairment as a result of higher estimated prepayments.

The current estimated fair market value of the MSRs was $103.1 million at September 30, 2017, an excess of $4.1 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 MSRs 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 were $11.6 million at September 30, 2017, a decrease of $2.3 million, or 16.3%, during the quarter. The decrease was primarily attributable to the decreases in loans held for sale and gross pipeline of locked loans to be sold as we enter into the fall and winter months, historically a lower buying season. 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 continue to remain a foundational strength for the Company. Demand and money market deposits increased by $48.2 million, or 3.4%, during the quarter, including a $35.8 million increase in the Florida branches. Florida deposits now comprise 18.9% of total deposits and have increased in size by $148.4 million, or 24.9%, since December 2016. Noninterest-bearing demand deposits ended the quarter at a record level of $1.1 billion, an increase of $29.7 million from the previous quarter-end.

INCOME STATEMENT
Net income was $7.9 million, or $1.0 million less than the previous quarter. The decrease in earnings was primarily driven by a decrease in net interest income of $352,000 from lower earning assets, the aforementioned increase in provision for loan losses, lower noninterest income of $1.4 million, partially offset by lower noninterest expenses of $1.7 million. As compared to the same quarter a year ago, net income decreased by $4.6 million.

The decrease in earnings, as compared to the same quarter a year ago, was primarily driven by lower net interest income of $1.4 million, lower provision for loan losses of $693,000, lower noninterest income of $5.7 million, and higher noninterest expense of $670,000.

Net Interest Income
Interest income of $39.1 million for the quarter decreased by $473,000, or 1.2%, primarily driven by a decrease of 6 basis points in the yield on loans and a decrease in average loans of $10.1 million. Additionally, the interest income from excess fed funds sold and interest-bearing deposits with banks decreased by $45,000, or 5.3%, for the quarter as excess cash from the money market deposit campaign was used to pay off higher-yielding short-term borrowings.

As compared to the same period in the prior year, interest income decreased by $793,000, or 2.0%, as the yield on loans decreased by 15 basis points, primarily in the commercial, construction and mortgage loan portfolios, offset by an increase of 11 basis points in indirect auto loan yields.

Interest expense of $5.7 million, for the quarter, decreased by $121,000, or 2.1%, primarily due to the pay down of short-term borrowings. The borrowing expense decreased by $486,000, partially offset by an increase in interest-bearing deposit expenses of $272,000 from the Florida marketing campaign. As compared to the same period in the prior year, interest expense increased by $576,000, or 11.2%, as market rates on deposits increased as a result of the increases in the target fed funds rate over the past twelve months.

Net Interest Margin
On a linked-quarter basis, the net interest margin remained flat at 3.20%. The yield on total average earning assets remained flat at 3.75%, while the yield on total interest bearing liabilities increased slightly by 2 basis points to 0.77%. Average earning assets decreased by $98.9 million, primarily driven by the use of cash to pay down the short-term borrowings, and a reciprocal lowering of FHLB stock. Average interest-bearing liabilities decreased by $182.9 million, primarily driven by the $222.5 million decrease in other short-term borrowings, partially offset by an increase of $39.5 million in total interest-bearing deposits.

As compared to the same period a year ago, the net interest margin decreased by 27 basis points, from 3.47%, primarily due to a 23 basis point decrease in the yield on earning assets, while the yield on total interest-bearing liabilities increased by 8 basis points from 0.69%. Average earning assets increased by $149.7 million, primarily due to the increase in excess cash generated over the year by the increase in deposits. Average interest-bearing liabilities increased by $4.8 million, primarily driven by an increase in average interest-bearing deposits of $241.9 million and offset by a decrease in average borrowings of $237.2 million.

Noninterest Income
On a linked-quarter basis, noninterest income decreased by $1.4 million, or 4.0%, largely due to a net decrease in mortgage banking activities income of $1.9 million, or 7.1%, and a decrease in indirect lending activities income of $1.7 million, or 47.8%. Marketing gains and origination points and fees decreased during the quarter primarily due to lower mortgage production, which decreased $47.6 million and a lower pipeline of locked loans to be sold, which decreased by $95.1 million, or 26.4%. These factors were offset by higher loan sales which increased $42.5 million, or 6.2%. Due to the industry-wide weakening of the indirect auto loan sales market, the Company's indirect loan sales decreased by $124.9 million, or 82.2%, resulting in lower gain on sale of $811,000 and a decrease in capitalization of servicing rights of $838,000. The mortgage and indirect auto decreases were offset by increases of $779,000 in SBA lending activities, $263,000 in service charges and other fees, a $403,000 increase in gain on sale of ORE, a reduction of $649,000 in the amortization of the FDIC indemnification asset as commercial loss shares expired at June 30, 2017, and an increase in trust service fees of $86,000.

Compared to the same period a year ago, noninterest income for the quarter of $33.6 million decreased by $5.7 million, or 14.5%, primarily due to a net decrease in noninterest income from mortgage banking activities of $5.1 million, or 16.8%. Marketing gains decreased by $5.5 million compared to the third quarter of 2016 due to a decrease in the pipeline of locked loans of $129.3 million or 32.8% as well as the mix of loan production with more profitable refinances making up 33.3% of loan production in the third quarter of 2016 compared to 13.7% in the third quarter of 2017.

Noninterest Expense
On a linked-quarter basis, noninterest expense decreased by $1.7 million, or 3.1%, primarily due to a decrease in other noninterest expense of $1.4 million. The decrease in other noninterest expense was primarily due to a $1.0 million decrease in loan origination and credit report expenses related to mortgage loan production. Professional and other services expense were also lower by $448,000, or 8.9%, due to a decline in expenses paid to outside third parties. These decreases were offset by an increase in salaries, commissions and employee benefits of $339,000, or 1.0%, which was mainly due to an increase in $690,000 in deferred compensation expense, offset by a decrease in commissions of $140,000.

Compared to the same period a year ago, noninterest expense for the quarter of $52.8 million increased by $670,000, or 1.3% mostly due to increased expenses associated with organic growth, especially in the mortgage and Wealth Management divisions. Salaries, employee benefits and commissions increased by $1.9 million, or 5.6%, mainly due to an increase in the FTE count of approximately 103, or 8.1%, year over year. Professional and other services also increased by $551,000, or 13.6%, primarily due to increased expenses paid to outside third parties for infrastructure improvement projects and costs associated with new and existing regulations. These increases in noninterest expense were offset by decreases in other noninterest expense of $1.7 million, or 17.2%, and a decrease in occupancy expense of $89,000 or 1.9%. Other noninterest expense was lower by $842,000 due to lower loan origination and credit reports expenses associated with lower mortgage production noted above in the linked-quarter paragraph and lower ORE expense of $547,000 as the amount of ORE properties was significantly lower in the third quarter of 2017 compared to the third quarter of 2016.

OTHER NEWS
In October 2017, Fidelity announced plans to open three de novo branches, one in Tallahassee, Florida, one in Macon, Georgia, and one in Covington, Georgia. Fidelity believes these branches will be well positioned to generate new customers and opportunities in these markets.

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 auto, 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.

NON-GAAP FINANCIAL MEASURES
This release contains certain non-GAAP financial measures. Management believes that these non-GAAP financial measures allow better comparability with prior periods, as well as with peers in the industry who provide a similar presentation and provide a greater understanding of our ongoing operations. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other Companies.

SAFE HARBOR
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 Nine Months Ended

($ in thousands, except per share data)

September 30,
 2017


June 30,
 2017


September 30,
 2016



September 30,
 2017


September 30,
 2016

INCOME STATEMENT DATA:











Interest income

$

39,105



$

39,578



$

39,898




$

116,325



$

110,996


Interest expense

5,711



5,832



5,135




16,951



15,096


Net interest income

33,394



33,746



34,763




99,374



95,900


Provision for loan losses

1,425



750



2,118




4,275



5,746


Noninterest income

33,638



35,056



39,325




106,064



94,182


Noninterest expense

52,837



54,551



52,167




157,960



146,850


Net income before income tax

12,769



13,502



19,803




43,203



37,487


Income tax expense

4,835



4,610



7,288




15,850



13,785


Net income

7,934



8,892



12,515




27,353



23,701


PERFORMANCE:











Earnings per common share - basic

$

0.30



$

0.34



$

0.48




$

1.03



$

0.94


Earnings per common share - diluted

0.30



0.33



0.48




1.03



0.92


Total revenues

72,743



74,634



79,223




222,389



205,178


Book value per common share

14.47



14.21



13.32




14.47



13.32


Tangible book value per common share

14.00



13.72



12.78




14.00



12.78


Cash dividends paid per common share

0.12



0.12



0.12




0.36



0.36


Dividend payout ratio

40.00

%


35.29

%


25.00

%



34.95

%


38.30

%

Return on average assets

0.70

%


0.78

%


1.15

%



0.81

%


0.76

%

Return on average shareholders' equity

8.28

%


9.58

%


14.58

%



9.66

%


9.68

%

Equity to assets ratio

8.61

%


8.23

%


7.91

%



8.61

%


7.91

%

Net interest margin

3.20

%


3.20

%


3.47

%



3.20

%


3.33

%

END OF PERIOD BALANCE SHEET SUMMARY:










Total assets

$

4,505,423



$

4,609,280



$

4,395,611




$

4,505,423



$

4,395,611


Earning assets

4,167,549



4,267,358



4,074,834




4,167,549



4,074,834


Loans, excluding Loans Held-for-Sale

3,409,707



3,332,132



3,332,311




3,409,707



3,332,311


Total loans

3,750,036



3,726,842



3,783,928




3,750,036



3,783,928


Total deposits

3,938,360



3,899,796



3,538,908




3,938,360



3,538,908


Shareholders' equity

388,068



379,399



347,770




388,068



347,770


Assets serviced for others

10,109,466



9,877,434



8,926,574




10,109,466



8,926,574


ASSET QUALITY RATIOS:











Net charge-offs to average loans

0.13

%


0.09

%


%



0.13

%


0.23

%

Allowance to period-end loans

0.90

%


0.91

%


0.89

%



0.90

%


0.89

%

Nonperforming assets to total loans, ORE and repossessions

1.56

%


1.50

%


1.51

%



1.56

%


1.54

%

Adjusted nonperforming assets to loans, ORE and repossessions(1)

0.95

%


1.02

%


1.19

%



0.95

%


1.19

%

Allowance to nonperforming loans, ORE and repossessions

0.52x



0.54x



0.52x




0.52x



0.58x


SELECTED INFORMATION AND RATIOS:








Loans to total deposits

86.58

%


85.44

%


94.16

%



86.58

%


94.16

%

Avg total loans to average earning assets

89.85

%


87.99

%


92.49

%



89.61

%


94.47

%

Noninterest income to total revenue

46.24

%


46.97

%


49.64

%



47.69

%


45.90

%

Leverage ratio

8.81

%


8.36

%


8.48

%



8.81

%


8.48

%

Common equity tier 1 capital

8.69

%


8.61

%


8.19

%



8.69

%


8.19

%

Tier 1 risk-based capital

9.82

%


9.76

%


9.31

%



9.82

%


9.31

%

Total risk-based capital

12.51

%


12.47

%


11.97

%



12.51

%


11.97

%

Mortgage loan production

$

752,854



$

800,426



$

828,124




$

2,106,277



$

2,213,902


Total mortgage loan sales

$

731,595



$

689,073



$

796,379




$

1,986,671



$

2,056,705


Indirect automobile production

$

256,084



$

249,716



$

361,630




$

822,341



$

1,046,617


Total indirect automobile loan sales

$

27,115



$

151,996



$

64,793




$

371,546



$

462,479


(1) Excludes acquired loans and net of SBA & GNMA guarantees. See non-GAAP reconciliation table for a reconciliation to the comparable GAAP measure


 

 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)








($ in thousands)


September 30,
 2017


June 30,
 2017


September 30,
 2016

ASSETS







Cash and cash equivalents


$

312,027



$

430,547



$

143,909


Investment securities available-for-sale


124,827



130,371



152,746


Investment securities held-to-maturity


15,072



15,593



16,792


Loans held-for-sale


340,329



394,710



451,617









Loans


3,409,707



3,332,132



3,332,311


Allowance for loan losses


(30,703)



(30,425)



(29,737)


Loans, net of allowance for loan losses


3,379,004



3,301,707



3,302,574









Premises and equipment, net


87,792



87,253



88,510


Other real estate, net


8,624



9,382



16,926


Bank owned life insurance


71,455



71,027



69,686


Servicing rights, net


111,890



108,216



82,020


Other assets


54,403



60,474



70,831


Total assets


$

4,505,423



$

4,609,280



$

4,395,611









LIABILITIES







Deposits







Noninterest-bearing demand deposits


$

1,112,714



$

1,082,966



$

976,178


Interest-bearing deposits







Demand and money market


1,484,180



1,436,005



1,175,711


Savings


351,833



336,695



341,000


Time deposits


989,633



1,044,130



1,046,019


Total deposits


3,938,360



3,899,796



3,538,908









Short-term borrowings


14,746



164,896



352,603


Subordinated debt, net


120,554



120,521



120,421


Other liabilities


43,695



44,668



35,909


Total liabilities


4,117,355



4,229,881



4,047,841









SHAREHOLDERS' EQUITY







Preferred stock







Common stock


212,633



208,699



200,129


Accumulated other comprehensive income, net


964



959



2,901


Retained earnings


174,471



169,741



144,740


Total shareholders' equity


388,068



379,399



347,770


Total liabilities and shareholders' equity


$

4,505,423



$

4,609,280



$

4,395,611



 

 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)









For the Quarter Ended



For the Nine Months Ended

($ in thousands, except per share data)


September 30,
 2017


June 30,
 2017


September 30,
 2016



September 30,
 2017


September 30,
 2016

INTEREST INCOME












Loans, including fees


$

37,290



$

37,560



$

38,481




$

110,933



$

106,670


Investment securities


1,011



1,170



1,268




3,389



3,992


Other


804



848



149




2,003



334


Total interest income


39,105



39,578



39,898




116,325



110,996


INTEREST EXPENSE












Deposits


4,163



3,891



3,336




11,503



9,812


Short term borrowings


16



502



345




910



950


Subordinated debt


1,532



1,439



1,454




4,538



4,334


Total interest expense


5,711



5,832



5,135




16,951



15,096


Net interest income


33,394



33,746



34,763




99,374



95,900


Provision for loan losses


1,425



750



2,118




4,275



5,746


Net interest income after provision for loan losses


31,969



32,996



32,645




95,099



90,154


NONINTEREST INCOME












Service charges on deposit accounts


1,553



1,481



1,530




4,489



4,333


Other fees and charges


2,197



2,006



2,288




6,060



5,775


Mortgage banking activities


25,040



26,956



30,091




77,865



64,113


Indirect lending activities


1,901



3,640



2,388




9,967



11,434


SBA lending activities


1,460



681



1,202




3,959



4,329


Bank owned life insurance


401



419



968




1,259



1,916


Securities gains






296






578


Other


1,086



(127)



562




2,465



1,704


Total noninterest income


33,638



35,056



39,325




106,064



94,182


NONINTEREST EXPENSE












Salaries and employee benefits


26,331



25,852



23,807




77,621



69,437


Commissions


9,244



9,384



9,867




26,126



25,831


Occupancy, net


4,508



4,700



4,597




13,371



12,994


Professional and other services


4,604



5,052



4,053




13,723



11,685


Other


8,150



9,563



9,843




27,119



26,902


Total noninterest expense


52,837



54,551



52,167




157,960



146,849


Income before income tax expense


12,770



13,501



19,803




43,203



37,487


Income tax expense


4,836



4,609



7,288




15,850



13,785


NET INCOME


$

7,934



$

8,892



$

12,515




$

27,353



$

23,702














EARNINGS PER COMMON SHARE:












Basic


$

0.30



$

0.34



$

0.48




$

1.03



$

0.94


Diluted


$

0.30



$

0.33



$

0.48




$

1.03



$

0.92


Weighted average common shares outstanding-basic


26,729



26,433



25,993




26,500



25,252


Weighted average common shares outstanding-diluted


26,849



26,547



26,127




26,625



25,641



 

 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

LOANS BY CATEGORY

(UNAUDITED)












($ in thousands)


September 30,
 2017


June 30,
 2017


March 31,
 2017


December 31,
 2016


September 30,
 2016

Commercial


$

789,788



$

796,699



$

802,905



$

784,737



$

789,674


SBA


142,989



145,311



149,727



149,779



145,890


Total commercial and SBA loans


932,777



942,010



952,632



934,516



935,564













Construction loans


243,600



248,926



249,465



238,910



228,887













Indirect automobile


1,609,678



1,531,761



1,565,298



1,575,865



1,631,903


Installment loans and personal lines of credit


26,189



31,225



31,647



33,225



34,181


Total consumer loans


1,635,867



1,562,986



1,596,945



1,609,090



1,666,084


Residential mortgage


452,584



433,544



418,941



386,582



370,465


Home equity lines of credit


144,879



144,666



136,943



133,166



131,311


Total mortgage loans


597,463



578,210



555,884



519,748



501,776


Loans 
held for investment


3,409,707



3,332,132



3,354,926



3,302,264



3,332,311













Loans held-for-sale:











Residential mortgage


257,326



279,292



201,661



252,712



291,030


SBA


8,003



15,418



9,456



12,616



10,587


Indirect automobile


75,000



100,000



150,000



200,000



150,000


Total loans held-for-sale


340,329



394,710



361,117



465,328



451,617


Total loans


$

3,750,036



$

3,726,842



$

3,716,043



$

3,767,592



$

3,783,928













 

 

DEPOSITS BY CATEGORY

(UNAUDITED)




For the Quarter Ended


September 30, 2017


June 30, 2017


March 31, 2017


December 31, 2016


September 30, 2016

($ in thousands)

Average
Amount


Rate


Average
Amount


Rate


Average
Amount


Rate


Average
Amount


Rate


Average
Amount


Rate

Noninterest-bearing demand deposits

$

1,103,414



%


$

1,027,909



%


$

961,188



%


$

978,909



%


$

1,004,924



%

Interest-bearing demand deposits

1,447,874



0.42

%


1,363,651



0.37

%


1,244,955



0.31

%


1,179,837



0.25

%


1,151,152



0.26

%

Savings deposits

340,663



0.31

%


357,712



0.32

%


387,007



0.36

%


350,885



0.33

%


370,011



0.35

%

Time deposits

1,021,563



0.92

%


1,049,248



0.90

%


1,050,897



0.83

%


1,052,082



0.89

%


1,047,044



0.86

%

Total average deposits

$

3,913,514



0.42

%


$

3,798,520



0.41

%


$

3,644,047



0.38

%


$

3,561,713



0.38

%


$

3,573,131



0.37

%










































 

 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

NONPERFORMING AND CLASSIFIED ASSETS

(UNAUDITED)











($ in thousands)

September 30,
 2017


June 30,
 2017


March 31,
 2017


December 31,
 2016


September 30,
 2016

NONPERFORMING ASSETS










Nonaccrual loans (2) (6)

$

41,408



$

37,894



$

38,377



$

35,358



$

32,796


Loans past due 90 days or more and still accruing

6,534



7,210



8,414



6,189



6,140


Repossessions

2,040



1,779



1,654



2,274



1,747


Other real estate (ORE)

8,624



9,382



11,284



14,814



16,926


Nonperforming assets

$

58,606



$

56,265



$

59,729



$

58,635



$

57,609












ASSET QUALITY RATIOS










Loans 30-89 days past due

$

10,193



$

7,181



$

11,735



$

7,707



$

7,304


Loans 30-89 days past due to loans

0.30

%


0.22

%


0.35

%


0.23

%


0.22

%

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

0.19

%


0.22

%


0.25

%


0.19

%


0.18

%

Nonperforming loans as a % of loans

1.41

%


1.35

%


1.39

%


1.26

%


1.17

%

Nonperforming assets to loans, ORE, and repossessions

1.56

%


1.51

%


1.60

%


1.55

%


1.51

%

Adjusted nonperforming assets to loans, ORE and repossessions(8)

0.95

%


1.02

%


1.10

%


1.15

%


1.19

%

Nonperforming assets to total assets

1.30

%


1.22

%


1.32

%


1.34

%


1.31

%

Adjusted nonperforming assets to total assets(8)

0.74

%


0.78

%


0.85

%


0.92

%


0.95

%

Classified Asset Ratio(4)

20.59

%


20.14

%


20.97

%


21.22

%


21.47

%

ALL to nonperforming loans

64.04

%


67.46

%


65.09

%


71.80

%


76.37

%

Net charge-offs, annualized to average loans

0.13

%


0.09

%


0.16

%


0.28

%


%

ALL as a % of loans

0.90

%


0.91

%


0.91

%


0.90

%


0.89

%

Adjusted ALL as a % of adjusted loans(7)

1.30

%


1.30

%


1.36

%


1.39

%


1.43

%

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

0.96

%


0.98

%


0.98

%


0.99

%


0.98

%











CLASSIFIED ASSETS










Classified loans(1)

$

75,033



$

71,040



$

71,082



$

68,128



$

67,826


ORE and repossessions

10,664



11,162



12,938



17,088



16,792


Total classified assets(3)

$

85,697



$

82,202



$

84,020



$

85,216



$

84,618












(1) Amount of SBA guarantee included in classified loans

$

2,755



$

7,458



$

5,213



$

7,735



$

8,665


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

$

15,450



$

12,502



$

12,287



$

7,771



$

4,648


(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

(7) Excludes indirect and acquired loans.  See non-GAAP reconciliation table for a reconciliation to the comparable GAAP measure

(8) Excludes acquired loans and net of SBA & GNMA guarantees. See non-GAAP reconciliation table for a reconciliation to the comparable GAAP measure

 

 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

INCOME FROM INDIRECT LENDING ACTIVITIES

(UNAUDITED)


















For the Quarter Ended

(in thousands)


September 30,
 2017


June 30,
 2017


March 31,
 2017


December 31,
 2016


September 30,
 2016

Loan servicing revenue


$

2,130



$

2,199



$

1,919



$

2,343



$

2,155


Gain on sale of loans


263



1,074



1,821



993



676


Gain on capitalization of servicing rights


182



1,020



1,403



781



523


Ancillary loan servicing revenue


172



204



153



302



101


    Gross indirect lending revenue


2,747



4,497



5,296



4,419



3,455


Less:











Amortization of servicing rights, net


(846)



(857)



(870)



(953)



(1,067)


Total income from indirect lending activities


$

1,901



$

3,640



$

4,426



$

3,466



$

2,388


 

 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

ANALYSIS OF INDIRECT LENDING

(UNAUDITED)

















As of or for the Quarter Ended

($ in thousands)

September 30,
 2017


June 30,
 2017


March 31,
 2017


December 31,
 2016


September 30,
 2016

Average loans outstanding(1)

$

1,627,946



$

1,675,644



$

1,756,958



$

1,702,006



$

1,726,342


Loans serviced for others

$

1,114,710



$

1,216,296



$

1,197,160



$

1,130,289



$

1,152,636


Past due loans:










      Amount 30+ days past due

2,965



1,535



2,223



2,972



1,585


      Number 30+ days past due

255



143



200



252



135


30+ day performing delinquency rate(2)

0.18

%


0.09

%


0.13

%


0.17

%


0.09

%

Nonperforming loans

1,405



1,363



1,778



1,278



1,231


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

0.08

%


0.08

%


0.10

%


0.07

%


0.07

%

Net charge-offs

$

1,011



$

1,332



$

1,502



$

1,306



$

895


Net charge-off rate(3)

0.26

%


0.35

%


0.39

%


0.32

%


0.23

%

Number of vehicles repossessed during the period

132



147



154



164



145


Average beacon score

776



758



758



758



758












(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

ANALYSIS OF INDIRECT LENDING PRODUCTION

(UNAUDITED)


















As of or for the Quarter Ended

($ in thousands)


September 30,
 2017


June 30,
 2017


March 31,
 2017


December 31,
 2016


September 30,
 2016

Production by state:












Alabama


$

13,587



$

10,399



$

14,452



$

11,613



$

18,296



Arkansas


26,997



26,569



33,602



32,789



48,143



Florida


51,723



49,976



65,053



56,432



71,530



Georgia


31,266



28,091



36,178



29,150



43,948



Louisiana


47,576



45,306



56,046



49,849



57,039



Mississippi


24,535



20,136



21,370



17,784



26,260



North Carolina


16,545



14,110



15,858



13,734



21,874



Oklahoma (2)


430



1,051



1,635



1,780



945



South Carolina


10,959



11,232



15,020



11,953



14,146



Tennessee


10,931



10,012



14,143



12,963



18,661



Texas (2)


13,312



26,542



32,902



24,942



31,851



Virginia


8,223



6,292



10,282



6,063



8,937




Total production by state


$

256,084



$

249,716



$

316,541



$

269,052



$

361,630















Loan sales


$

27,115



$

151,996



$

192,435



$

97,916



$

64,793


Portfolio yield(1)


2.92

%


2.84

%


2.87

%


2.88

%


2.81

%



(1)

Includes held-for-sale

(2)

Fidelity has exited the Oklahoma and Texas markets in Q3 2017

 


 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

INCOME FROM MORTGAGE BANKING ACTIVITIES

(UNAUDITED)


















For the Quarter Ended

(in thousands)


September 30,
 2017


June 30,
 2017


March 31,
 2017


December 31,
 2016


September 30,
 2016

Marketing gain, net


$

19,713



$

21,355



$

18,677



$

19,364



$

25,240


Origination points and fees


3,815



4,189



3,021



3,786



3,911


Loan servicing revenue


5,616



5,379



5,341



5,088



4,896


Gross mortgage revenue


$

29,144



$

30,923



$

27,039



$

28,238



$

34,047


Less:











MSR amortization


(3,560)



(3,331)



(3,158)



(3,918)



(4,414)


MSR (impairment)/recovery, net


(544)



(636)



1,989



13,144



458


Total income from mortgage banking activities

$

25,040



$

26,956



$

25,870



$

37,464



$

30,091















FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

ANALYSIS OF MORTGAGE LENDING

(UNAUDITED)


















As of or for the Quarter Ended

($ in thousands)


September 30,
 2017


June 30,
 2017


March 31,
 2017


December 31,
 2016


September 30,
 2016

Production by region:












Georgia


$

490,323



$

519,497



$

395,404



$

532,177



$

580,170



Florida


95,010



95,983



46,365



46,140



44,849



Alabama/Tennessee(2)


7,299



7,294



3,600



5,485



7,307



Virginia/Maryland


129,774



143,885



81,901



139,283



160,959



North and South Carolina


30,448



33,767



25,727



33,783



31,332



Total retail


752,854



800,426



552,997



756,868



824,617



Wholesale










3,507



Total production by region


$

752,854



$

800,426



$

552,997



$

756,868



$

828,124













% for purchases

86.3

%


89.6

%


80.9

%


61.3

%


66.7

%

% for refinance loans

13.7

%


10.4

%


19.1

%


38.7

%


33.3

%












Portfolio Production


$

56,072



$

46,902



$

51,061



$

38,907



$

45,586













Funded loan type (UPB):













Conventional


62.0

%


62.5

%


63.9

%


68.9

%


68.9

%



FHA/VA/USDA


23.3

%


24.6

%


24.2

%


21.6

%


22.2

%



Jumbo


14.7

%


12.9

%


11.9

%


9.5

%


8.9

%














Gross pipeline of locked loans to be sold (UPB)

$

265,444



$

360,551



$

374,739



$

211,921



$

394,773


Loans held for sale (UPB)


$

250,960



$

271,714



$

195,772



$

250,094



$

281,418















Total loan sales (UPB)


$

731,595



$

689,073



$

566,003



$

758,775



$

796,379




Conventional


63.0

%


63.6

%


69.9

%


72.8

%


70.0

%



FHA/VA/USDA


27.1

%


26.6

%


23.0

%


22.6

%


24.0

%



Jumbo


9.9

%


9.8

%


7.1

%


4.6

%


6.0

%














Average loans outstanding(1)


$

698,068



$

664,099



$

592,537



$

634,511



$

635,529















(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)


September 30,
 2017


June 30,
 2017


March 31,
 2017


December 31,
 2016


September 30,
 2016

Loans serviced for others (UPB)


$

8,715,198



$

8,357,934



$

8,067,426



$

7,787,470



$

7,489,954


Average loans serviced for others (UPB)


$

8,657,475



$

8,304,065



$

8,013,761



$

7,625,384



$

7,337,291













MSR book value, net of amortization


$

107,434



$

102,549



$

98,550



$

95,282



$

90,982


MSR impairment


(8,343)



(7,799)



(7,163)



(9,152)



(22,295)


MSR net carrying value


$

99,091



$

94,750



$

91,387



$

86,130



$

68,687

















MSR carrying value as a % of period end UPB

1.14

%


1.13

%


1.13

%


1.11

%


0.92

%














Delinquency % loans serviced for others

1.41

%


1.02

%


0.53

%


0.69

%


0.76

%














MSR revenue multiple(1)


4.38



4.38



4.25



4.14



3.44















(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


September 30, 2017


June 30, 2017


September 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)

$

3,725,976



3.98

%


$

3,736,026



4.04

%


$

3,718,341



4.13

%

Investment securities (1)

147,572



2.76

%


164,037



2.97

%


189,365



3.08

%

Other earning assets

273,505



1.16

%


345,891



0.98

%


112,757



0.53

%

Total interest-earning assets

4,147,053



3.75

%


4,245,954



3.75

%


4,020,463



3.98

%

Noninterest-earning assets:












Cash and due from banks

41,590





44,132





29,400




Allowance for loan losses

(30,518)





(30,116)





(28,108)




Premises and equipment, net

87,679





87,332





88,292




Other real estate

9,111





10,907





17,714




Other assets

224,730





221,322





202,213




Total noninterest-earning assets

332,592





333,577





309,511




Total assets

$

4,479,645





$

4,579,531





$

4,329,974




Liabilities and shareholders' equity












Interest-bearing liabilities:












Demand and money market deposits

$

1,447,874



0.42

%


$

1,363,651



0.37

%


$

1,151,152



0.26

%

Savings deposits

340,663



0.31

%


357,712



0.32

%


370,011



0.35

%

Time deposits

1,021,563



0.92

%


1,049,248



0.90

%


1,047,044



0.86

%

Total interest-bearing deposits

2,810,100



0.59

%


2,770,611



0.56

%


2,568,207



0.52

%

Other short-term borrowings

20,899



0.32

%


243,359



0.83

%


258,139



0.53

%

Subordinated debt

120,538



5.04

%


120,505



4.79

%


120,405



4.80

%

Total interest-bearing liabilities

2,951,537



0.77

%


3,134,475



0.75

%


2,946,751



0.69

%

Noninterest-bearing liabilities and shareholders' equity:








Demand deposits

1,103,414





1,027,909





1,004,924




Other liabilities

44,732





44,824





36,896




Shareholders' equity

379,962





372,323





341,403




Total noninterest-bearing liabilities and shareholders' equity

1,528,108





1,445,056





1,383,223




Total liabilities and shareholders' equity

$

4,479,645





$

4,579,531





$

4,329,974




Net interest spread



2.98

%




3.00

%




3.29

%

Net interest margin



3.20

%




3.20

%




3.47

%













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



 

 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

GAAP to non-GAAP Reconciliation

(UNAUDITED)




For the Quarter Ended

($ in thousands)

September 30,
 2017


June 30,
 2017


March 31,
 2017


December 31,
 2016


September 30,
 2016

Reconciliation of nonperforming assets to total loans, ORE, and repossessions, excluding acquired loans, SBA, and GNMA

Nonaccrual loans

$

41,408



$

37,894



$

38,377



$

35,358



$

32,796


Add: loans past due 90 days or more and still accruing

6,534



7,210



8,414



6,189



6,140


Add: repossessions

2,040



1,779



1,654



2,274



1,747


Add: other real estate

8,624



9,382



11,284



14,814



16,926


Nonperforming assets (GAAP)

$

58,606



$

56,265



$

59,729



$

58,635



$

57,609












Less: amount of GNMA repurchased government-guaranteed loans included in nonaccrual loans

$

15,450



12,502



12,287



7,771



4,648


Less: SBA guaranteed loans in non accrual

2,145



2,949



3,373



4,248



5,685


Less: Nonaccrual acquired loans

7,509



4,878



5,719



6,136



5,563


Nonperforming assets, excluding acquired loans, SBA, and GNMA (Non-GAAP)

$

33,502



$

35,936



$

38,350



$

40,480



$

41,713












Loans, excluding LHS

$

3,409,707



$

3,332,132



$

3,354,926



$

3,302,264



$

3,332,311


Add: loans held-for-sale

340,329



394,710



361,117



465,328



451,617


Add: other real estate

8,624



9,382



11,284



14,814



16,926


Add: repossessions

2,040



1,779



1,654



2,274



1,747


Total Loans, ORE, and repossessions (GAAP)

3,760,700



3,738,003



3,728,981



3,784,680



3,802,601












Less: acquired loans

216,994



230,256



258,366



275,515



290,819


Total Loans, ORE, and repossessions, less acquired loans (non-GAAP)

$

3,543,706



$

3,507,747



$

3,470,615



$

3,509,165



$

3,511,782


Adjusted nonperforming assets to loans, ORE, and repossessions (non-GAAP)

0.95

%


1.02

%


1.10

%


1.15

%


1.19

%











Reconciliation of nonperforming assets to total assets, excluding acquired loans, SBA, and GNMA

Total Assets (GAAP)

$

4,505,423



$

4,609,280



$

4,531,057



$

4,389,685



$

4,395,611


Adjusted nonperforming assets to assets(non-GAAP)

0.74

%


0.78

%


0.85

%


0.92

%


0.95

%











 

 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

Non GAAP Measures and Ratio Reconciliation

(UNAUDITED)




For the Quarter Ended

($ in thousands)

September 30,
 2017


June 30,
 2017


March 31,
 2017


December 31,
 2016


September 30,
 2016

Reconciliation of adjusted allowance to total loans

Allowance for loan losses (GAAP)

$

30,703



$

30,425



$

30,455



$

29,830



$

29,737


Less: allowance allocated to indirect auto loans

10,116



9,767



9,442



9,522



9,400


Less: allowance allocated to acquired loans

66



191



191



191



151


Adjusted allowance for loans losses (non-GAAP)

$

20,521



$

20,467



$

20,822



$

20,117



$

20,186






















Total loans, excluding LHS

$

3,409,707



$

3,332,132



$

3,354,926



$

3,302,264



$

3,332,311


Less: indirect auto loans

1,609,689



1,531,761



1,565,298



1,575,865



1,631,903


Less: acquired loans

216,994



230,256



258,366



275,515



290,819


Adjusted total loans (non-GAAP)

$

1,583,024



$

1,570,115



$

1,531,262



$

1,450,884



$

1,409,589












Adjusted allowance to adjusted total loans (non-GAAP)

1.30

%


1.30

%


1.36

%


1.39

%


1.43

%











The tables above reconcile GAAP to non-GAAP ratios. The non-GAAP ratios contain financial information determined by methods other than in accordance with GAAP. Management uses these "non-GAAP" measures in its analysis of our performance. Management believes that these non-GAAP financial measures allow better comparability with prior periods, as well as with peers in the industry who provide a similar presentation and provide a greater understanding of our ongoing operations. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other Companies.

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-third-quarter-of-79-million-300539979.html

SOURCE Fidelity Southern Corporation

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