FIDELITY SOUTHERN CORPORATION 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, June 30, September 30, September 30, September 30,
2017 2017 2016 2017 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, June 30, September 30,
2017 2017 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, June 30, September 30, September 30, September 30,
2017 2017 2016 2017 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, June 30, March 31, December 31, September 30,
2017 2017 2017 2016 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 3,409,707 3,332,132 3,354,926 3,302,264 3,332,311
held for investment
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 Rate Average Rate Average Rate Average Rate Average Rate
Amount Amount Amount Amount Amount
------ ------ ------ ------ ------
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, June 30, March 31, December 31, September 30,
2017 2017 2017 2016 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, June 30, March 31, December 31, September 30,
2017 2017 2017 2016 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, June 30, March 31, December 31, September 30,
2017 2017 2017 2016 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, June 30, March 31, December 31, September 30,
2017 2017 2017 2016 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, June 30, March 31, December 31, September 30,
2017 2017 2017 2016 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, June 30, March 31, December 31, September 30,
2017 2017 2017 2016 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, June 30, March 31, December 31, September 30,
2017 2017 2017 2016 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, June 30, March 31, December 31, September 30,
2017 2017 2017 2016 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, June 30, March 31, December 31, September 30,
2017 2017 2017 2016 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
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SOURCE Fidelity Southern Corporation
