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Fidelity Southern Corporation Reports Earnings For Second Quarter Of $9.4 Million

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Fidelity Southern Corporation Reports Earnings For Second Quarter Of $9.4 Million

PR Newswire

ATLANTA, July 19, 2018 /PRNewswire/ -- Fidelity Southern Corporation ("Fidelity" or the "Company") (NASDAQ:LION), holding company for Fidelity Bank (the "Bank"), today reported net income of $9.4 million, or $0.34 per diluted share, for the second quarter of 2018, compared with $11.8 million, or $0.43 per diluted share, for the first quarter of 2018, and with $8.9 million or $0.33 per diluted share for the second quarter of 2017. For the year to date ended June 30, 2018, the Company reported net income of $21.2 million, or $0.78 per diluted share, compared with $19.4 million, or $0.73 per diluted share, for the same period in 2017.

Fidelity's Chairman, Jim Miller, said, "Our quarterly results reflect the ongoing strategy of growing our top-line revenue, continued growth in low-cost deposits, and enhancing our core infrastructure. It also became very apparent during the quarter that the market pressures in indirect auto required us to exit all remaining states outside of our existing branch footprint in Georgia and Florida. We remain committed to the indirect auto business as we have generated significant shareholder value from this line of business over the past 25 years."

President Palmer Proctor added, "We are pleased with the continued momentum of growth from our commercial lines of business and growing higher yielding assets. This momentum has also been a key factor in adding new commercial services and deposits. Our investments in SBA and mortgage have also contributed to increased production in a rising rate environment. With the recent change in indirect auto, we anticipate a reduction of approximately 5% per quarter in indirect auto balances that will optimize liquidity and capital, decrease costs, and better position our balance sheet for future growth."

BALANCE SHEET
Total assets grew by $80.7 million, or 1.7%, during the quarter, to $4.9 billion at June 30, 2018. Loan growth totaled $98.0 million, primarily driven by commercial and mortgage loans. Investments also increased by $23.2 million and servicing rights increased by $6.2 million. The Bank has increased the investment securities available for sale portfolio as part of its strategy to carry higher yielding assets, reposition the balance sheet, and reduce its reliance on "gain on sale" income. Cash balances decreased by $42.9 million, from a decrease in fed funds sold as funds were placed into higher yielding investments. Other assets decreased by $4.2 million, of which $4.5 million was a decrease in FHLB stock, as FHLB borrowings were reduced over the quarter.

Asset growth for the quarter was funded by $101.9 million in core deposit growth and a $67.3 million increase in time deposits. Due to the strong deposit growth, short term borrowings were decreased by $99.9 million.

Loans
Total loans, including loans held for sale, increased during the quarter by $98.0 million, or 2.4%, to $4.2 billion at June 30, 2018.This increase was driven by increases of $47.4 million in commercial and SBA and $89.7 million in mortgage. The commercial loan production momentum that began in the fourth quarter of 2017 continues to be strong while we implement strategies to grow our commercial bank.  Partially offsetting these increases was a decrease of $45.8 million in indirect loans, which included $25.0 million of indirect loan portfolio held for sale that reflects lower expected sales in the third and fourth quarters to align our indirect auto operating model to current market conditions. Applications are no longer accepted in Texas, Oklahoma and Arkansas, Louisiana, Virginia, North Carolina, South Carolina, Alabama, Mississippi, and Tennessee. As a result, production of indirect auto loans decreased by $74.9 million compared to the previous quarter. Fidelity will continue to serve the needs of our existing auto loan customers in all states, and will remain active in Georgia and Florida.   

Asset Quality
Asset quality remained strong as nonperforming assets, excluding the guaranteed portion of government loans ("adjusted NPA's") and acquired loans, decreased during the quarter. Adjusted NPA's, a non-GAAP measure, decreased by $4.5 million during the quarter. The decrease was mainly due to decreases in nonaccrual loans, repossessions and real estate owned. Credit quality trend performance remains consistent and strong as net charge-offs were 0.17% of average loans for the quarter.

Fair Value Adjustments
Loan servicing rights increased by $6.2 million, or 5.1%, during the quarter, to $125.7 million at June 30, 2018, compared to $119.6 million at March 31, 2018. Mortgage servicing rights ("MSRs"), the primary component of loan servicing rights, contributed the majority of the change, increasing by 6.3%, to $114.8 million at June 30, 2018.  MSRs increased as mortgage loans sold with servicing retained increased by $250.2 million, or 58.0%, from the previous quarter, as a result of seasonally high production. The current estimated fair market value of MSRs was $121.1 million at June 30, 2018.

At June 30, 2018, fair value adjustments recorded on the balance sheet for loans held for sale, interest rate lock commitments ("IRLCs"), and hedge items were $14.8 million, a $2.1 million, or 16.6% increase, from March 31, 2018. The gross pipeline of interest rate lock commitments was slightly lower at quarter end due to inventory, interest rates, and market competition.

Deposits
Core deposit growth was strong for the quarter as demand and money market deposits grew by $101.9 million, or 3.4%, to $3.1 billion.  Money market account promotions in Georgia and Florida and new deposit accounts from commercial loan relationships contributed to the growth. Time deposits also increased by $67.3 million during the quarter, due to an increase in brokered deposits of  $69.5 million, resulting in a total increase in deposits of $169.2 million, or 4.3%.

INCOME STATEMENT
Net Income
Net income was $9.4 million, or $2.4 million less than the previous quarter, as net interest income increased by $1.7 million and noninterest income remained relatively flat as the MSRs impairment recovery was $3.9 million lower than the previous quarter. Noninterest expense increased by $4.1 million as a 48.2% increase in mortgage loan production drove higher mortgage commissions.

Net income was $498,000 higher compared to the same quarter a year ago.

Interest Income
Interest income of $44.7 million was higher by $3.2 million, compared to the previous quarter.  An increase in average loans of $245.0 million and average investment securities of $19.4 million drove higher interest income, while the yield on total average interest-bearing assets increased 2 basis points from the previous quarter.

As compared to the same period in the prior year, interest income increased by $5.2 million as average loans increased by $486.3 million and the yield on total average interest-bearing assets increased by 20 basis points, as market interest rates increased year over year.

Interest Expense
Interest expense of $8.3 million increased by $1.5 million for the quarter due to a 5 basis point increase in total interest-bearing deposits. The yield paid on short-term borrowings increased 27 basis points as average FHLB borrowings increased by $159.7 million during the quarter. FHLB borrowings were reduced by quarter end.

As compared to the same period in the prior year, interest expense increased by $2.4 million. Growth in average deposits and borrowings balances, as well as rising market rates, drove the increase.

Net Interest Margin
The net interest margin was 3.22% for the quarter compared to 3.29% in the previous quarter, a decrease of 7 basis points. Loan coupon yields, excluding fees, SBA discount accretion, and accretable yields, increased faster than deposit costs during the quarter. The increase was offset by higher usage of short term borrowings to help fund loan growth during the quarter.

The yield on total interest bearing liabilities increased by 12 basis points while the yield on average earning assets increased by 2 basis points from 3.93% to 3.95%. Average loans increased by $245.0 million while the yield remained flat at 4.07% for both periods. The loan coupon yields increased by 7 basis points which was offset by a decrease in accretable loan-related income of $878,000 during the quarter which caused the overall loan yield to remain flat.

Average interest-bearing liabilities increased by $195.4 million, as average borrowings grew by $159.7 million during the quarter to help fund loan growth. Average interest-bearing deposits also increased by $35.7 million for the quarter.

As compared to the same period a year ago, the net interest margin for the quarter increased by 2 basis points to 3.22% from 3.20%, primarily due to a 20 basis point increase in the yield on total average interest-earning assets of $4.5 billion, offset by an increase of 27 basis points in the yield on total average interest-bearing liabilities of $3.3 billion. Average earning assets increased by $299.1 million, primarily due to an increase in average loans over the year. Average interest-bearing liabilities increased by $126.0 million, primarily driven by an increase in average borrowings of $151.9 million, offset by a decrease in average interest-bearing deposits of $26.0 million.

Noninterest Income
Noninterest income remained flat on a linked-quarter basis. Gross mortgage revenue increased by $4.6 million during the quarter, offset by a decrease of $3.9 million in the MSRs impairment recovery for the quarter. While mortgage production increased by $295.4 million during the quarter, the gain on sale margins narrowed due to competitive pressures. Income from indirect lending activities decreased by $878,000, as indirect loans sales decreased by $56.7 million. Income from SBA lending activities remained flat on a linked-quarter basis due to a higher concentration of construction loan production that are sold when fully funded. The SBA loan pipeline increased by approximately 43% on a linked quarter-basis.

Compared to the same period a year ago, noninterest income for the quarter of $37.0 million increased by $1.9 million, or 5.5%, primarily due to an increase in mortgage banking income of $2.4 million, an increase in SBA lending income of $536,000, and an increase of $334,000 in trust and wealth management income, offset by a decrease in income from indirect lending activities of $2.4 million, due to a decrease in loan sales over the year as investor demand declined.

Noninterest Expense
On a linked-quarter basis, total noninterest expense increased by $4.1 million due to an increase in commissions expense of $3.7 million from higher mortgage loan originations and $654,000 in salaries and employee benefits expense, offset by decreases in all other noninterest expense categories. The increase in salaries and benefits resulted from an increase in headcount from mortgage and retail delivery and branches.

Compared to the second quarter of 2017, noninterest expense of $58.9 million increased by $4.3 million.  Salaries, commissions and employee benefits expense increased by $4.2 million due primarily to an increase in headcount of 42, primarily in the mortgage and retail delivery and branches, as well as higher cost of benefits.

Income Taxes
On a linked-quarter basis, income tax expense decreased by $341,000, primarily due to the decrease in pre-tax income for the quarter.

Compared to the second quarter of 2017, income tax expense decreased by $1.7 million as the effective tax rate decreased from 34.1% to 23.7% primarily the result of the Tax Cuts and Jobs Act enacted on December 22, 2017 which included, among other things, a reduction in the federal corporate income tax rate from 35% to 21% from the beginning of the tax year 2018 going forward.

OTHER NEWS
On June 27, 2018, the Bank entered into an agreement with the Federal Deposit Insurance Corporation (the "FDIC") to terminate the loss share agreements entered into with the FDIC. Fidelity made a payment of approximately $632,000 to the FDIC as consideration for the early termination of the agreements. The Bank entered into the loss share agreements in 2011 and 2012 in connection with the Bank's acquisition of substantially all of the assets and assumption of substantially all of the deposits and certain liabilities of two failed banks in FDIC-assisted transactions.

On June 29, 2018, Fidelity signed a letter of intent with a third party for the sale of certain residential mortgage servicing rights on a portfolio with a total principal balance of $1.18 billion, or approximately 12.5% percent of Fidelity's total residential servicing portfolio as of the end of second quarter 2018. This sale will help optimize and increase regulatory capital while reducing future amortization expense and impairment risk of the MSRs asset. The sale is anticipated to close by the end of the third quarter of 2018.

On July 9, 2018, Fidelity hired Ross Creasy as the Chief Information Officer ("CIO") to lead the Company's information technology efforts. Mr. Creasy recently spent over two years with E-Trade and the prior 15 years with Capital One. The CIO is a new position for the Company and was added to align with its strategic initiative of improving our technology and infrastructure.

On July 12, 2018, Fidelity opened a new branch in Sugar Hill, Georgia which brings the total number of retail branches to 69.

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. Indirect auto loans are provided in Georgia and Florida and mortgage loans are provided throughout the South, while SBA loans are originated nationwide. For additional information about Fidelity's products and services, please visit the website at www.FidelitySouthern.com.

NON-GAAP FINANCIAL MEASURES
This release contains certain non-GAAP financial measures. The "GAAP TO NON-GAAP RATIO RECONCILIATION" tables included below 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" financial measures in its analysis of the Company's performance. Management believes that presentation of these non-GAAP financial measures provides useful supplemental information that allows better comparability with prior periods, as well as with peers in the industry and provides a greater understanding of the asset quality of the Company's loan portfolio exclusive of the indirect auto, government-guaranteed and acquired loan portfolios. 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 2017 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,
 2018


March 31,
 2018


June 30,
 2017



June 30,
 2018


June 30,
 2017

INCOME STATEMENT DATA:











Interest income

$

44,740



$

41,562



$

39,578




$

86,302



$

77,220


Interest expense

8,268



6,794



5,832




15,062



11,240


Net interest income

36,472



34,768



33,746




71,240



65,980


Provision for loan losses

2,286



2,130



750




4,416



2,850


Noninterest income

36,977



37,133



35,056




74,110



72,426


Noninterest expense

58,852



54,742



54,551




113,594



105,122


Net income before income taxes

12,311



15,029



13,501




27,340



30,435


Income tax expense

2,921



3,262



4,609




6,183



11,015


Net income

9,390



11,767



8,892




21,157



19,419


PERFORMANCE:











Earnings per common share - basic

$

0.35



$

0.44



$

0.34




$

0.78



$

0.74


Earnings per common share - diluted

0.34



0.43



0.33




0.78



0.73


Total revenues

81,717



78,695



74,634




160,412



149,646


Book value per common share

15.48



15.19



14.21




15.48



14.21


Tangible book value per common share(1)

15.05



14.75



13.72




15.05



13.72


Cash dividends paid per common share

0.12



0.12



0.12




0.24



0.24


Dividend payout ratio

34.29

%


27.27

%


35.29

%



30.77

%


32.43

%

Return on average assets

0.77

%


1.03

%


0.78

%



0.90

%


0.87

%

Return on average shareholders' equity

9.06

%


11.83

%


9.58

%



10.42

%


10.87

%

Equity to assets ratio

8.60

%


8.54

%


8.23

%



8.60

%


8.23

%

Net interest margin

3.22

%


3.29

%


3.20

%



3.25

%


3.20

%

END OF PERIOD BALANCE SHEET SUMMARY:











Total assets

$

4,892,369



$

4,811,659



$

4,609,280




$

4,892,369



$

4,609,280


Earning assets

4,549,315



4,466,249



4,267,358




4,549,315



4,267,358


Loans, excluding loans held-for-sale

3,792,886



3,714,308



3,332,132




3,792,886



3,332,132


Total loans

4,237,572



4,139,608



3,726,842




4,237,572



3,726,842


Total deposits

4,069,630



3,900,407



3,899,796




4,069,630



3,899,796


Shareholders' equity

420,962



410,744



379,399




420,962



379,399


Assets serviced for others

10,632,607



10,367,564



9,877,434




10,632,607



9,877,434


ASSET QUALITY RATIOS:











Net charge-offs to average loans

0.17

%


0.11

%


0.09

%



0.14

%


0.13

%

Allowance to period-end loans

0.83

%


0.83

%


0.91

%



0.83

%


0.91

%

Nonperforming assets to total loans, ORE and repossessions

1.96

%


2.04

%


1.68

%



1.96

%


1.68

%

Adjusted nonperforming assets to loans, ORE and repossessions(2)

0.99

%


1.14

%


1.15

%



0.99

%


1.15

%

Allowance to nonperforming loans, ORE and repossessions

0.42x



0.41x



0.54x




0.42x



0.54x


SELECTED RATIOS:











Loans to total deposits

93.20

%


95.23

%


85.44

%



93.20

%


85.44

%

Average total loans to average earning assets

92.90

%


92.71

%


87.99

%



92.81

%


89.50

%

Noninterest income to total revenue

50.34

%


51.64

%


50.95

%



50.99

%


52.33

%

Leverage ratio

8.43

%


8.74

%


8.36

%



8.43

%


8.36

%

Common equity tier 1 capital

8.45

%


8.41

%


8.61

%



8.45

%


8.61

%

Tier 1 risk-based capital

9.50

%


9.47

%


9.76

%



9.50

%


9.76

%

Total risk-based capital

11.99

%


11.98

%


12.47

%



11.99

%


12.47

%

Mortgage loan production

$

908,754



$

613,314



$

800,426




$

1,522,068



$

1,353,423


Total mortgage loan sales

800,084



496,484



689,073




1,296,568



1,255,076


Indirect automobile production

183,675



258,560



249,716




442,235



566,257


Total indirect automobile sales

29,275



86,000



151,996




115,275



344,431


















(1)   Non-GAAP financial measure. See non-GAAP reconciliation table for the comparable GAAP.

(2)  Excludes acquired loans and net of government guarantees. See non-GAAP reconciliation table for the comparable GAAP.


 

 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


($ in thousands)


June 30,
 2018


March 31,
 2018


June 30,
 2017

ASSETS







Cash and cash equivalents


$

157,586



$

200,496



$

430,547


Investment securities available-for-sale


148,155



124,576



130,371


Investment securities held-to-maturity


20,984



21,342



15,593


Loans held-for-sale


444,686



425,300



394,710









Loans


3,792,886



3,714,308



3,332,132


Allowance for loan losses


(31,623)



(30,940)



(30,425)


Loans, net of allowance for loan losses


3,761,263



3,683,368



3,301,707









Premises and equipment, net


90,246



88,624



87,253


Other real estate, net


6,834



7,668



9,382


Bank owned life insurance


72,703



72,284



71,027


Servicing rights, net


125,704



119,553



108,216


Other assets


64,208



68,448



60,474


Total assets


$

4,892,369



$

4,811,659



$

4,609,280









LIABILITIES







Deposits







Noninterest-bearing demand deposits


$

1,225,657



$

1,152,315



$

1,082,966


Interest-bearing deposits







  Demand and money market


1,597,145



1,505,766



1,436,005


  Savings


300,315



363,099



336,695


  Time deposits


946,513



879,227



1,044,130


  Total deposits


4,069,630



3,900,407



3,899,796









Short-term borrowings


237,886



337,795



164,896


Subordinated debt, net


120,653



120,620



120,521


Other liabilities


43,238



42,093



44,668


  Total liabilities


4,471,407



4,400,915



4,229,881









SHAREHOLDERS' EQUITY







Common stock


223,771



219,234



208,699


Accumulated other comprehensive (loss) income, net


(1,096)



(631)



959


Retained earnings


198,287



192,141



169,741


  Total shareholders' equity


420,962



410,744



379,399


Total liabilities and shareholders' equity


$

4,892,369



$

4,811,659



$

4,609,280


 

 

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,
 2018


March 31,
 2018


June 30,
 2017



June 30,
 2018


June 30,
 2017

INTEREST INCOME












Loans, including fees


$

42,845



$

39,849



$

37,560




$

82,694



$

73,643


Investment securities


1,354



1,175



1,170




2,529



2,378


Other


541



538



848




1,079



1,199


Total interest income


44,740



41,562



39,578




86,302



77,220


INTEREST EXPENSE












Deposits


4,823



4,313



3,891




9,136



7,340


Other borrowings


1,812



910



502




2,722



894


Subordinated debt


1,633



1,571



1,439




3,204



3,006


Total interest expense


8,268



6,794



5,832




15,062



11,240


Net interest income


36,472



34,768



33,746




71,240



65,980


Provision for loan losses


2,286



2,130



750




4,416



2,850


Net interest income after provision for loan losses


34,186



32,638



32,996




66,824



63,130


NONINTEREST INCOME












Service charges on deposit accounts


1,468



1,472



1,481




2,940



2,936


Other fees and charges


2,449



2,235



2,006




4,684



3,863


Mortgage banking activities


29,383



28,562



26,956




57,945



52,825


Indirect lending activities


1,270



2,148



3,640




3,418



8,066


SBA lending activities


1,217



1,157



681




2,374



2,499


Trust and wealth management services


574



532



240




1,106



529


Other


616



1,027



52




1,643



1,708


Total noninterest income


36,977



37,133



35,056




74,110



72,426


NONINTEREST EXPENSE












Salaries and employee benefits


28,215



27,561



25,852




55,776



51,290


Commissions


11,242



7,506



9,384




18,748



16,882


Occupancy and equipment


4,541



4,932



4,700




9,473



8,864


Professional and other services


4,635



4,798



5,052




9,433



9,119


Other


10,219



9,945



9,563




20,164



18,967


Total noninterest expense


58,852



54,742



54,551




113,594



105,122


Income before income tax expense


12,311



15,029



13,501




27,340



30,434


Income tax expense


2,921



3,262



4,609




6,183



11,015


NET INCOME


$

9,390



$

11,767



$

8,892




$

21,157



$

19,419














EARNINGS PER COMMON SHARE:












Basic


$

0.35



$

0.44



$

0.34




$

0.78



$

0.74


Diluted


$

0.34



$

0.43



$

0.33




$

0.78



$

0.73


Weighted average common shares outstanding-basic


27,093



27,011



26,433




27,053



26,384


Weighted average common shares outstanding-diluted


27,222



27,121



26,547




27,165



26,512


 

 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

LOANS BY CATEGORY

(UNAUDITED)


($ in thousands)


June 30,
 2018


March 31,
 2018


December 31,
 2017


September 30,
 2017


June 30,
 2017

Commercial


$

938,203



$

897,297



$

811,199



$

789,788



$

796,699


SBA


146,508



140,308



141,208



142,989



145,311


Total commercial and SBA loans


1,084,711



1,037,605



952,407



932,777



942,010













Construction loans


269,330



265,780



248,317



243,600



248,926













Indirect automobile


1,698,879



1,719,670



1,716,156



1,609,678



1,531,761


Installment loans and personal lines of credit


31,807



28,716



25,995



26,189



31,225


Total consumer loans


1,730,686



1,748,386



1,742,151



1,635,867



1,562,986


Residential mortgage


555,636



512,673



489,721



452,584



433,544


Home equity lines of credit


152,523



149,864



148,370



144,879



144,666


Total mortgage loans


708,159



662,537



638,091



597,463



578,210


Loans


3,792,886



3,714,308



3,580,966



3,409,707



3,332,132













Loans held-for-sale:











Residential mortgage


399,630



355,515



269,140



257,325



279,292


SBA


20,056



19,785



13,615



8,004



15,418


Indirect automobile


25,000



50,000



75,000



75,000



100,000


Total loans held-for-sale


444,686



425,300



357,755



340,329



394,710


Total loans


$

4,237,572



$

4,139,608



$

3,938,721



$

3,750,036



$

3,726,842













 

 

DEPOSITS BY CATEGORY

(UNAUDITED)



For the Quarter Ended


June 30, 2018


March 31, 2018


December 31, 2017


September 30, 2017


June 30, 2017

($ in thousands)

Average
Amount


Rate


Average
Amount


Rate


Average
Amount


Rate


Average
Amount


Rate


Average
Amount


Rate

Noninterest-bearing
   demand deposits

$

1,172,298



%


$

1,120,562



%


$

1,124,759



%


$

1,103,414



%


$

1,027,909



%

Interest-bearing demand
   deposits

489,051



0.14

%


461,614



0.14

%


453,714



0.11

%


447,348



0.12

%


437,034



0.11

%

Money market and
   savings deposits

1,349,447



0.61

%


1,345,905



0.55

%


1,381,207



0.53

%


1,341,189



0.49

%


1,284,329



0.45

%

Time deposits

906,133



1.16

%


901,394



1.04

%


958,790



0.94

%


1,021,563



0.92

%


1,049,248



0.90

%

Total average deposits

$

3,916,929



0.49

%


$

3,829,475



0.46

%


$

3,918,470



0.43

%


$

3,913,514



0.42

%


$

3,798,520



0.41

%

 

 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

NONPERFORMING AND CLASSIFIED ASSETS

(UNAUDITED)


($ in thousands)

June 30,
 2018


March 31,
 2018


December 31,
 2017


September 30,
 2017


June 30,
 2017

NONPERFORMING ASSETS










Nonaccrual loans (2)(6)

$

58,027



$

58,706



$

47,012



$

41,408



$

37,894


Loans past due 90 days or more and still accruing

8,278



7,728



6,313



6,534



7,210


Repossessions

1,303



1,853



2,392



2,040



1,779


Other real estate (ORE)

6,834



7,668



7,621



8,624



9,382


Nonperforming assets

$

74,442



$

75,955



$

63,338



$

58,606



$

56,265












ASSET QUALITY RATIOS










Loans 30-89 days past due

$

6,514



$

15,695



$

22,079



$

10,193



$

7,181


Loans 30-89 days past due to loans

0.17

%


0.42

%


0.62

%


0.30

%


0.22

%

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

0.22

%


0.21

%


0.18

%


0.19

%


0.22

%

Nonperforming loans as a % of loans

1.75

%


1.79

%


1.49

%


1.41

%


1.35

%

Nonperforming assets to loans, ORE, and repossessions

1.96

%


2.04

%


1.76

%


1.71

%


1.68

%

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

0.99

%


1.14

%


1.06

%


1.05

%


1.17

%

Nonperforming assets to total assets

1.52

%


1.58

%


1.38

%


1.30

%


1.22

%

Adjusted nonperforming assets to total assets(8)

0.73

%


0.84

%


0.79

%


0.75

%


0.79

%

Classified Asset Ratio(4)

21.84

%


21.70

%


20.70

%


20.59

%


20.14

%

ALL to nonperforming loans

47.69

%


46.57

%


55.83

%


64.04

%


67.46

%

Net charge-offs, annualized to average loans

0.17

%


0.11

%


0.11

%


0.13

%


0.09

%

ALL as a % of loans

0.83

%


0.83

%


0.83

%


0.90

%


0.91

%

Adjusted ALL as a % of adjusted loans(7)

1.16

%


1.15

%


1.16

%


1.29

%


1.30

%

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

0.87

%


0.88

%


0.88

%


0.96

%


0.98

%











CLASSIFIED ASSETS










Classified loans(1)

$

87,688



$

83,867



$

77,679



$

75,033



$

71,040


ORE and repossessions

8,137



9,521



10,013



10,664



11,161


Total classified assets(3)

$

95,825



$

93,388



$

87,692



$

85,697



$

82,201












(1) Amount of SBA guarantee included in classified loans

$

4,870



$

2,879



$

2,930



$

2,755



$

7,458


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

$

27,220



$

26,091



$

19,478



$

15,450



$

12,502


(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 (for periods prior to 2018)

(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 government 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)


June 30,
 2018


March 31,
 2018


December 31,
 2017


September 30,
 2017


June 30,
 2017

Loan servicing revenue


$

1,690



$

1,769



$

2,158



$

2,130



$

2,199


Gain on sale of loans


22



442



532



263



1,074


Gain on capitalization of servicing rights


196



569



406



182



1,020


Ancillary loan servicing revenue


166



183



247



172



204


    Gross indirect lending revenue


2,074



2,963



3,343



2,747



4,497


Less:











Amortization of servicing rights, net


(804)



(815)



(777)



(846)



(857)


Total income from indirect lending
   activities


$

1,270



$

2,148



$

2,566



$

1,901



$

3,640


 

 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

ANALYSIS OF INDIRECT LENDING

(UNAUDITED)
















As of or for the Quarter Ended

($ in thousands)


June 30,
 2018


March 31,
 2018


December 31,
 2017


September 30,
 2017


June 30,
 2017

Average loans outstanding(1)


$

1,771,665



$

1,784,982



$

1,748,179



$

1,627,946



$

1,675,644


Loans serviced for others


$

932,915



$

1,018,743



$

1,056,509



$

1,114,710



$

1,216,296


Past due loans:












Amount 30+ days past due


2,407



2,257



3,423



2,965



1,535



Number 30+ days past due


217



197



283



255



143


30+ day performing delinquency rate(2)


0.14

%


0.13

%


0.19

%


0.18

%


0.09

%

Nonperforming loans


1,526



1,539



1,916



1,405



1,363


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


0.09

%


0.09

%


0.11

%


0.08

%


0.08

%

Net charge-offs


$

864



$

1,147



$

798



$

1,047



$

1,332


Net charge-off rate(3)


0.20

%


0.27

%


0.19

%


0.27

%


0.35

%

Number of vehicles repossessed during
   the period


132



140



107



132



147


Quarterly production weighted average
   beacon score


779



781



783



776



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

(UNAUDITED)


















As of or for the Quarter Ended

($ in thousands)


June 30,
 2018


March 31,
 2018


December 31,
 2017


September 30,
 2017


June 30,
 2017

Production by state:












Alabama (3)


$

9,920



$

12,239



$

19,216



$

13,587



$

10,399



Arkansas (3)


4,488



20,322



30,732



26,997



26,569



North Carolina (3)


15,580



23,383



28,912



16,545



14,110



South Carolina (3)


11,065



12,322



16,559



10,959



11,232



Florida


52,645



65,786



87,750



51,723



49,976



Georgia


38,322



38,288



45,571



31,266



28,091



Mississippi (3)


22,605



24,785



32,141



24,535



20,136



Tennessee (3)


11,098



13,509



17,635



10,931



10,012



Virginia (3)




3,620



6,495



8,223



6,292



Texas (2)








13,312



26,542



Louisiana (3)


17,952



44,306



60,021



47,576



45,306



Oklahoma (2)








430



1,051




Total production by state


$

183,675



$

258,560



$

345,032



$

256,084



$

249,716















Loan sales


$

29,275



$

86,000



$

59,681



$

27,115



$

151,996


Portfolio yield (1)


3.02

%


2.98

%


2.98

%


2.92

%


2.84

%



(1)

Includes held-for-sale

(2)

Fidelity exited the Oklahoma and Texas markets in Q3 2017

(3)

Fidelity exited the Alabama, Arkansas, North Carolina, South Carolina, Mississippi, Tennessee, Virginia, and Louisiana markets in 2018

 

 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

INCOME FROM MORTGAGE BANKING ACTIVITIES

(UNAUDITED)
















As of or for the Quarter Ended

(in thousands)


June 30,
 2018


March 31,
 2018


December 31,
 2017


September 30,
 2017


June 30,
 2017

Marketing gain, net


$

20,330



$

17,575



$

16,683



$

19,713



$

21,355


Origination points and fees


5,495



3,647



3,482



3,815



4,189


Loan servicing revenue


6,206



6,221



5,851



5,616



5,379


Gross mortgage revenue


$

32,031



$

27,443



$

26,016



$

29,144



$

30,923


Less:











MSR amortization


(3,331)



(3,426)



(3,609)



(3,560)



(3,331)


MSR recovery/(impairment), net


683



4,545



(1,476)



(544)



(636)


Total income from mortgage
   banking activities


$

29,383



$

28,562



$

20,931



$

25,040



$

26,956














FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

ANALYSIS OF MORTGAGE LENDING

(UNAUDITED)
















As of or for the Quarter Ended

($ in thousands)


June 30,
 2018


March 31,
 2018


December 31,
 2017


September 30,
 2017


June 30,
 2017

Production by region:












Georgia


$

545,951



$

368,739



$

423,876



$

490,323



$

519,497



Florida


136,990



109,034



103,490



95,010



95,983



Alabama/Tennessee


2,433



2,709



4,609



7,299



7,294



Virginia/Maryland


148,970



91,842



106,398



129,774



143,885



North and South Carolina


74,410



40,990



31,360



30,448



33,767



Total production by region


$

908,754



$

613,314



$

669,733



$

752,854



$

800,426














% for purchases


91.6

%


85.1

%


82.9

%


86.3

%


89.6

%


% for refinance loans


8.4

%


14.9

%


17.1

%


13.7

%


10.4

%












Portfolio Production:


$

75,990



$

44,554



$

66,236



$

56,072



$

46,902













Funded loan type (UPB):












Conventional


63.8

%


65.9

%


62.0

%


62.0

%


62.5

%


FHA/VA/USDA


20.7

%


22.1

%


21.5

%


23.3

%


24.6

%


Jumbo


15.5

%


12.0

%


16.5

%


14.7

%


12.9

%













Gross pipeline of locked loans to be
   sold (UPB)


$

354,735



$

382,386



$

203,896



$

265,444



$

360,551


Loans held for sale (UPB)


$

389,858



$

348,797



$

262,315



$

250,960



$

271,714














Total loan sales (UPB)


$

800,084



$

496,484



$

602,171



$

731,595



$

689,073



Conventional


70.7

%


69.1

%


64.3

%


63.0

%


63.6

%


FHA/VA/USDA


21.3

%


27.2

%


25.0

%


27.1

%


26.6

%


Jumbo


8.0

%


3.7

%


10.7

%


9.9

%


9.8

%













Average loans outstanding(1)


$

913,430



$

725,444



$

701,932



$

698,068



$

664,099














(1) Includes held-for-sale


















































FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

THIRD PARTY MORTGAGE LOAN SERVICING

(UNAUDITED)
















As of or for the Quarter Ended

($ in thousands)


June 30,
 2018


March 31,
 2018


December 31,
 2017


September 30,
 2017


June 30,
 2017

Loans serviced for others (UPB)


$

9,450,326



$

9,097,869



$

8,917,117



$

8,715,198



$

8,357,934


Average loans serviced for others
   (UPB)


$

9,244,175



$

9,038,568



$

8,896,305



$

8,657,475



$

8,304,065













MSR book value, net of amortization


$

119,372



$

113,217



$

110,497



$

107,434



$

102,549


MSR impairment


(4,590)



(5,274)



(9,818)



(8,343)



(7,799)


MSR net carrying value


$

114,782



$

107,943



$

100,679



$

99,091



$

94,750













MSR carrying value as a % of period
   end UPB


1.21

%


1.19

%


1.13

%


1.14

%


1.13

%













Delinquency % loans serviced for
   others


1.28

%


1.24

%


1.87

%


1.41

%


1.02

%













MSR revenue multiple(1)


4.52



4.31



4.29



4.38



4.38














(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

AVERAGE BALANCE AND YIELDS

(UNAUDITED)



For the Quarter Ended


June 30, 2018


March 31, 2018


June 30, 2017


Average


Yield/


Average


Yield/


Average


Yield/

($ in thousands)

Balance


Rate


Balance


Rate


Balance


Rate

Assets












Interest-earning assets:












  Commercial

$

920,995



4.71

%


$

864,992



4.83

%


$

818,952



5.10

%

  SBA

154,459



7.16

%


153,731



8.08

%


155,819



8.25

%

  Construction

267,125



6.51

%


258,072



6.54

%


243,067



6.00

%

  Indirect automobile

1,771,665



3.02

%


1,784,982



2.98

%


1,670,576



2.85

%

  Installment loans and personal lines of credit

44,033



2.69

%


41,468



2.95

%


44,638



3.50

%

  Residential mortgage

912,700



4.15

%


724,684



3.99

%


662,664



3.93

%

  Home equity lines of credit

151,363



4.92

%


149,399



4.92

%


140,310



4.51

%

Total loans, net of unearned income (1)

4,222,340



4.07

%


3,977,328



4.07

%


3,736,026



4.04

%

Investment securities (1)

175,314



3.14

%


155,920



3.11

%


164,037



2.97

%

Other earning assets

147,405



1.47

%


156,751



1.39

%


345,891



0.98

%

Total interest-earning assets

4,545,059



3.95

%


4,289,999



3.93

%


4,245,954



3.75

%

Noninterest-earning assets:












Cash and due from banks

36,117





36,370





44,132




Allowance for loan losses

(31,174)





(30,002)





(30,116)




Premises and equipment, net

90,030





88,732





87,332




Other real estate

7,383





7,606





10,907




Other assets

243,119





233,677





221,322




Total noninterest-earning assets

345,475





336,383





333,577




   Total assets

$

4,890,534





$

4,626,382





$

4,579,531




Liabilities and shareholders' equity












Interest-bearing liabilities:












Demand deposits

$

489,051



0.14

%


$

461,614



0.14

%


$

437,034



0.11

%

Money market and savings deposits

1,349,447



0.61

%


1,345,905



0.55

%


1,284,329



0.45

%

Time deposits

906,133



1.16

%


901,394



1.04

%


1,049,248



0.90

%

Total interest-bearing deposits

2,744,631



0.70

%


2,708,913



0.65

%


2,770,611



0.56

%

Other short-term borrowings

395,215



1.84

%


235,519



1.57

%


243,359



0.83

%

Subordinated debt

120,637



5.43

%


120,604



5.28

%


120,505



4.79

%

Total interest-bearing liabilities

3,260,483



1.02

%


3,065,036



0.90

%


3,134,475



0.75

%

Noninterest-bearing liabilities and shareholders' equity:







Demand deposits

1,172,298





1,120,562





1,027,909




Other liabilities

42,081





37,336





44,824




Shareholders' equity

415,672





403,448





372,323




Total noninterest-bearing liabilities and
   shareholders' equity

1,630,051





1,561,346





1,445,056




   Total liabilities and shareholders' equity

$

4,890,534





$

4,626,382





$

4,579,531




Net interest spread



2.93

%




3.03

%




3.00

%

Net interest margin



3.22

%




3.29

%




3.20

%













(1)   Interest income includes the effect of taxable-equivalent adjustment using a 21% tax rate for the quarters ended June 30, 2018 and March 31, 2018 and a 35% tax rate for the quarter ended June 30, 2017.

 

 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

GAAP TO NON-GAAP RATIO RECONCILIATION

(UNAUDITED)



For the Quarter Ended

($ in thousands)

June 30,
 2018


March 31,
 2018


December 31,
 2017


September 30,
 2017


June 30,
 2017


Reconciliation of nonperforming assets to adjusted nonperforming assets:

Nonperforming assets (GAAP)

$

74,442



$

75,955



$

63,338



$

58,606



$

56,265


Less: repurchased government-guaranteed mortgage
   loans included on nonaccrual

(27,220)



(26,091)



(19,478)



(15,450)



(12,502)


Less: SBA guaranteed loans included on nonaccrual

(3,639)



(1,541)



(1,652)



(2,145)



(2,949)


Less: Nonaccrual acquired loans

(7,648)



(7,890)



(6,242)



(7,366)



(4,544)


Adjusted nonperforming assets, excluding acquired
   loans and government-guaranteed loans (non-GAAP)

$

35,935



$

40,433



$

35,966



$

33,645



$

36,270






















Reconciliation of total loans, ORE and repossessions to total loans, ORE and repossessions, less acquired loans:

Loans, excluding Loans Held-for-Sale

$

3,792,886



$

3,714,308



$

3,580,966



$

3,409,707



$

3,332,132


Add: ORE

6,834



7,668



7,621



8,624



9,382


Add: repossessions

1,303



1,853



2,392



2,040



1,779


Total loans, ORE, and repossessions (GAAP)

3,801,023



3,723,829



3,590,979



3,420,371



3,343,293


Less: acquired loans

(165,303)



(178,496)



(196,567)



(216,994)



(230,256)


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

$

3,635,720



$

3,545,333



$

3,394,412



$

3,203,377



$

3,113,037


Nonperforming assets to loans, ORE, and repossessions
   (GAAP)

1.96

%


2.04

%


1.76

%


1.71

%


1.68

%

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

0.99

%


1.14

%


1.06

%


1.05

%


1.17

%

Nonperforming assets to total assets (GAAP)

1.52

%


1.58

%


1.38

%


1.30

%


1.22

%

Adjusted nonperforming assets to total assets (non-
   GAAP)

0.73

%


0.84

%


0.79

%


0.75

%


0.79

%
















Reconciliation of allowance to adjusted allowance:










Allowance for loan losses (GAAP)

$

31,623



$

30,940



$

29,772



$

30,703



$

30,425


Less: allowance allocated to indirect auto loans

(9,210)



(9,888)



(10,258)



(10,116)



(9,767)


Less: allowance allocated to acquired loans

(134)



(134)



(209)



(159)



(284)


Adjusted allowance for loan losses (non-GAAP)

$

22,279



$

20,918



$

19,305



$

20,428



$

20,374












Reconciliation of period end loans to adjusted period end loans:

Loans, excluding Loans Held-for-Sale

$

3,792,886



$

3,714,308



$

3,580,966



$

3,409,707



$

3,332,132


Less: indirect auto loans

(1,698,879)



(1,719,670)



(1,716,156)



(1,609,678)



(1,531,761)


Less: acquired loans

(165,303)



(178,496)



(196,567)



(216,994)



(230,256)


Adjusted total loans (non-GAAP)

$

1,928,704



$

1,816,142



$

1,668,243



$

1,583,035



$

1,570,115


Allowance to total loans (GAAP)

0.83

%


0.83

%


0.83

%


0.90

%


0.91

%

Adjusted allowance to adjusted total loans (non-GAAP)

1.16

%


1.15

%


1.16

%


1.29

%


1.30

%
















Reconciliation of book value per common share to tangibl