Fidelity Southern Corporation Earns Net Income of $1.8 Million for First Quarter

News provided by

Fidelity Southern Corporation

Apr 21, 2011, 03:38 ET

ATLANTA, April 21, 2011 /PRNewswire/ -- Fidelity Southern Corporation (“Fidelity” or the “Company”) (NASDAQ: LION), holding company for Fidelity Bank (the “Bank”), reported net income of $1.8 million for the first quarter of 2011 compared to net income of $195,000 for the first quarter of 2010.  After accounting for the TARP preferred dividend, basic and diluted earnings per share for the first quarter of 2011 were $.09 and $.08, respectively, compared to a basic and diluted loss per share of $.06 in the first quarter of 2010.


For the quarter ended



3/31/2011


12/31/2010


9/30/2010


6/30/2010


3/31/2010














(In Thousands)












Net Income


$  1,842


$  2,988


$  2,081


$   4,869


$     195












Income Tax Expense (Benefit)


766


932


913


2,647


(93)

Provision For Loan Losses


5,775


6,975


5,025


1,150


3,975

Write-down of ORE


1,600


573


698


1,615


1,367

Other cost of ORE Operations


858


483


713


743


802

Pre-Tax, Pre-Credit Related Earnings


10,841


11,951


9,430


11,024


6,246

Less Security Gains


–


–


–


(2,291)


–

Core Operating Earnings (1)


$  10,841


$  11,951


$  9,430


$   8,733


$  6,246













(1)  The calculation of core operating earnings is a non-GAAP measure.  We show core operating earnings which remove the effect of income taxes, provision for loan losses, cost of operation of ORE, and security gains because we believe that helps show a view of more normalized net revenues.  The measure allows better comparability with prior periods, as well as with peers in the industry who also provide a similar presentation.



For the first quarter of 2011, net income increased 845% from prior year while core operating earnings for the first quarter of 2011 increased 74%.

James B. Miller, Jr. Chairman said, “We posted another solid quarter of earnings with robust revenue growth, increasing over 18% from first quarter last year.  We believe the economy will continue to improve in our market areas of Atlanta and Jacksonville.  We are optimistic about the remainder of the year for our community banking strategy.”

ASSET QUALITY

Net charge-offs were $4.2 million in the first quarter of 2011 compared to $4.6 million in the first quarter of 2010.  The ratio of net charge-offs to average loans outstanding was 1.19% for the three months ended March 31, 2011, compared to 1.45% for the same period in 2010.  The allowance for loan losses remained stable at $29.7 million or 2.07% of total loans at March 31, 2011, compared to $29.5 million or 2.30% at March 31, 2010.

Nonperforming residential construction and development loans at March 31, 2011, included financing for 72 houses and 721 lots and land totaling $47.8 million.  During the first quarter of 2011, $1.5 million of nonperforming construction loans were paid down by our customers.

During the first quarter of 2011, $3.7 million of ORE assets were sold while $3.2 million were added to ORE.  ORE consists of 61 houses, representing 36.5% of the total ORE balance, 387 lots and seven commercial properties.  ORE decreased $6.6 million to $18.4 million at March 31, 2011, compared to $25.0 million at March 31, 2010.    

The provision for loan losses for the first quarter of 2011 was $5.8 million compared to $4.0 million for the same period in 2010 as a result of an increase in general reserves related to growth in the loan portfolio and an increase in specific reserves.  These increases were somewhat offset by a $410,000 decrease in charge-offs for the quarter ended March 31, 2011, compared to the same quarter last year.  

DEPOSITS

Total deposits of $1.678 billion at March 31, 2011, reflect the improvement in the deposit mix brought about by the Bank’s strategy to increase core deposits.  The Bank aggressively marketed its non-certificate of deposit products throughout 2010 and the first quarter of 2011.  As a result, demand, money market and savings accounts increased $166.2 million or 18.8% at March 31, 2011, compared to March 31, 2010.  In addition, as part of an ongoing strategy to position the Bank for future higher interest rates, we have increased the average maturity of certificates of deposit.  The reduction in the interest rate paid on deposit accounts over the last twelve months demonstrates the Company’s commitment to improved net interest margin.



March 31,

2011


December 31,

2010


March 31,

2010


$


%


$


%


$


%














(Dollars in Millions)













Core deposits(1)

$1,353.8


80.7%


$1,304.5


80.9%


$1,217.6


77.7%













Time Deposits > $100,000

271.8


16.2


246.3


15.2


239.3


15.3













Brokered deposits

52.5


3.1


62.5


3.9


108.9


7.0













Total deposits

$1,678.1


100.0%


$1,613.3


100.0%


$1,565.8


100.0%













Quarterly rate on deposits

1.11%


1.19%


1.78%














(1)  Core deposits are transactional, savings, and time deposits under $100,000.  



REAL ESTATE

New residential construction loan advances made during the quarter totaled $3.1 million, while the payoffs of construction loans totaled $10.1 million.  Residential construction and A&D loans totaled $107.9 million at March 31, 2011, which decreased 22% from $137.7 million at March 31, 2010.  There were 295 houses and 1,332 lots financed at March 31, 2011, compared to 321 houses and 1,495 lots at March 31, 2010.

Total residential and commercial construction and land loans decreased to $117.6 million or 8.2% of loans at March 31, 2011, from $133.6 million or 10.4% of loans at March 31, 2010, and as a percentage of capital was 58% at March 31, 2011.  The regulatory guideline is a maximum of 100%.

All real estate loans, excluding owner-occupied properties, as a percentage of capital, were 140% at March 31, 2011.  The regulatory guideline is a maximum of 300%.  

NET INTEREST MARGIN

Net interest margin increased 42 basis points to 3.82% in the first quarter of 2011 compared to 3.40% in the first quarter of 2010, and decreased six basis points from 3.88% for the fourth quarter of 2010.  Net interest income for the first quarter of 2011 increased $2.6 million or 17.9% when compared to the same period in 2010.  The increase in net interest income for the quarter is a result of a greater reduction in the cost of funds than the decrease in the yield on earning assets.  

INTEREST INCOME

Total interest income for the first quarter of 2011 increased $213,000 or 0.9% compared to the same period in 2010.  Average interest-earning assets for the first quarter 2011 increased $82.6 million or 4.7%, but was somewhat offset by the yield on average interest-earning assets which decreased 20 basis points.  The decrease in yield was primarily the result of a decrease in the yield on loans of 50 basis points as the Bank offered competitive rates in the marketplace.  In addition, investment security yields decreased 70 basis points to 3.38% due to market rate decreases.  Somewhat offsetting this decrease in yield was a $76 million decrease in the average amount of our investment in interest bearing deposits.

INTEREST EXPENSE

Interest expense for the first quarter of 2011 decreased $2.4 million or 27.6% compared to the same period in 2010.  The decrease in interest expense was attributable to a 68 basis point decrease in the cost of interest-bearing liabilities somewhat offset by an increase in average interest-bearing liabilities of $50.7 million or 3.3%.  In addition to the general decrease in deposit rates, the Bank’s shift in deposit mix toward core demand and savings accounts contributed to the reduction in the cost of funds.  Brokered deposits decreased $56.5 million compared to March 31, 2010.  At March 31, 2011, brokered deposits represented only 3.1% of total deposits.

NONINTEREST INCOME

Noninterest income increased $5.2 million or 79.6% to $11.7 million for the quarter ended March 31, 2011, compared to the same period in 2010.  The increase in noninterest income was the result of a $2.7 million or 82.0% increase in income from mortgage banking activities and a $2.1 million increase in income from SBA lending activities.  Mortgage banking income improved as a result of higher origination volume, which increased 20.0% compared to the first quarter of 2010 to $211 million due to low interest rates and an expansion in the number of loan officers.  SBA income increased because no gains on sales were recognized in the first quarter of 2010 because of new accounting guidance on asset transfers which became effective January 1, 2010, and the gains on all SBA sales were deferred for 90 days.

NONINTEREST EXPENSE

Noninterest expense for the first quarter of 2011 increased $3.5 million or 20.5% to $20.5 million compared to the same period in 2010.  The increase was due primarily to higher salaries and employee benefits which increased $1.9 million or 21.8% to $10.8 million due to higher commission expense related to the increased origination volume in the mortgage division as well as an increased number of lenders in the Mortgage, SBA, Commercial, and Indirect Auto Lending divisions.  Other operating expense increased $812,000 or 44.2% to $2.7 million due to higher mortgage related losses, insurance, underwriting and advertising expenses.  Other real estate expense increased $289,000 or 13.3% to $2.5 million due to higher write-downs of ORE and higher foreclosure expenses.    

Fidelity Southern Corporation, through its operating subsidiaries Fidelity Bank and LionMark Insurance Company, provides banking services and credit-related insurance products through 23 branches in Atlanta, Georgia, a branch in Jacksonville, Florida, and an insurance office in Atlanta, Georgia.  SBA, Indirect automobile, and mortgage loans are provided through employees located throughout the Southeast.  For additional information about Fidelity's products and services, please visit the website at www.FidelitySouthern.com.

This news release contains forward-looking statements, as defined by Federal Securities Laws, including statements about financial outlook and business environment.  These statements are provided to assist in the understanding of future financial performance and such performance involves risks and uncertainties that may cause actual results to differ materially from those in such statements.  Any such statements are based on current expectations and involve a number of risks and uncertainties.  For a discussion of some factors that may cause such forward-looking statements to differ materially from actual results, please refer to the section entitled “Forward Looking Statements” on page 3 of Fidelity Southern Corporation’s 2010 Annual Report filed on Form 10-K with the Securities and Exchange Commission.

FIDELITY SOUTHERN CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)
















YEAR TO DATE

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


MARCH 31,




2011


2010







INTEREST INCOME





  LOANS, INCLUDING FEES


$      21,891


$      21,064

  INVESTMENT SECURITIES


1,513


2,075

  FEDERAL FUNDS SOLD AND BANK DEPOSITS


41


93

     TOTAL INTEREST INCOME


23,445


23,232







INTEREST EXPENSE





 DEPOSITS


4,532


6,876

 SHORT-TERM BORROWINGS


175


332

 SUBORDINATED DEBT


1,121


1,117

 OTHER LONG-TERM DEBT


445


343

     TOTAL INTEREST EXPENSE


6,273


8,668







NET INTEREST INCOME


17,172


14,564







PROVISION FOR LOAN LOSSES


5,775


3,975







NET INTEREST INCOME AFTER





 PROVISION FOR LOAN LOSSES


11,397


10,589







NONINTEREST INCOME





 SERVICE CHARGES ON DEPOSIT ACCOUNTS


957


1,048

 OTHER FEES AND CHARGES


581


484

 MORTGAGE BANKING ACTIVITIES


5,959


3,275

 INDIRECT LENDING ACTIVITIES


1,186


1,036

 SBA LENDING ACTIVITIES


2,232


112

 SECURITIES GAINS


-


-

 BANK OWNED LIFE INSURANCE


320


326

 OTHER OPERATING INCOME


451


226

   TOTAL NONINTEREST INCOME


11,686


6,507







NONINTEREST EXPENSE





 SALARIES AND EMPLOYEE BENEFITS


10,822


8,884

 FURNITURE AND EQUIPMENT


752


644

 NET OCCUPANCY


1,135


1,090

 COMMUNICATION EXPENSES


563


444

 PROFESSIONAL AND OTHER SERVICES


1,192


1,038

 OTHER REAL ESTATE EXPENSE


2,458


2,169

 FDIC INSURANCE EXPENSE


902


886

 OTHER OPERATING EXPENSES


2,651


1,839

   TOTAL NONINTEREST EXPENSE


20,475


16,994







INCOME BEFORE INCOME TAX (BENEFIT) EXPENSE


2,608


102

INCOME TAX EXPENSE (BENEFIT)


766


(93)







NET INCOME


1,842


195

PREFERRED STOCK DIVIDENDS


(823)


(823)

NET INCOME (LOSS) AVAILABLE TO COMMON EQUITY


$        1,019


$         (628)







EARNINGS (LOSS) PER SHARE:






   BASIC EARNINGS (LOSS) PER SHARE


$          0.09


$        (0.06)


   DILUTED EARNINGS (LOSS) PER SHARE


$          0.08


$        (0.06)







WEIGHTED AVERAGE COMMON






SHARES OUTSTANDING-BASIC


10,830,066


10,459,752







WEIGHTED AVERAGE COMMON






SHARES OUTSTANDING-FULLY DILUTED


12,407,925


10,459,752



 FIDELITY SOUTHERN CORPORATION

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)















(DOLLARS IN THOUSANDS)


MARCH 31,


DECEMBER 31,


MARCH 31,

ASSETS


2011


2010


2010








CASH AND DUE FROM  BANKS


$    123,995


$         47,242


$    111,916

FEDERAL FUNDS SOLD


1,784


517


626

   CASH AND CASH EQUIVALENTS


125,779


47,759


112,542

INVESTMENTS AVAILABLE-FOR-SALE


209,833


161,478


251,698

INVESTMENTS HELD-TO-MATURITY


12,712


14,110


18,208

INVESTMENT IN FHLB STOCK


6,542


6,542


6,767

LOANS HELD-FOR-SALE


115,005


209,898


118,271

LOANS


1,431,493


1,403,372


1,281,319

ALLOWANCE FOR LOAN LOSSES


(29,694)


(28,082)


(29,474)

LOANS, NET


1,401,799


1,375,290


1,251,845

PREMISES AND EQUIPMENT, NET


19,723


19,510


18,761

OTHER REAL ESTATE, NET


18,383


20,525


25,014

ACCRUED INTEREST RECEIVABLE


8,126


7,990


8,151

BANK OWNED LIFE INSURANCE


30,570


30,275


29,358

OTHER ASSETS


50,127


51,923


43,878








         TOTAL ASSETS


$ 1,998,599


$    1,945,300


$ 1,884,493















LIABILITIES









DEPOSITS:







   NONINTEREST-BEARING DEMAND


$    200,902


$       185,614


$    163,120

   INTEREST-BEARING DEMAND/







      MONEY MARKET


430,403


427,590


270,908

   SAVINGS


418,788


398,012


449,847

   TIME DEPOSITS, $100,000 AND OVER


271,817


246,317


239,285

   OTHER TIME DEPOSITS  


356,123


355,715


442,751

        TOTAL DEPOSIT LIABILITIES


1,678,033


1,613,248


1,565,911








SHORT-TERM BORROWINGS


25,732


32,977


58,999

SUBORDINATED DEBT


67,527


67,527


67,527

OTHER LONG-TERM DEBT


70,000


75,000


50,000

ACCRUED INTEREST PAYABLE


2,284


2,973


3,200

OTHER LIABILITIES


13,468


13,064


8,082

         TOTAL LIABILITIES


1,857,044


1,804,789


1,753,719








SHAREHOLDERS' EQUITY














PREFERRED STOCK


45,799


45,578


44,916

COMMON STOCK


57,611


57,542


54,457

ACCUMULATED OTHER COMPREHENSIVE







    INCOME


195


458


318

RETAINED EARNINGS


37,950


36,933


31,083

         TOTAL SHAREHOLDERS' EQUITY


141,555


140,511


130,774








         TOTAL LIABILITIES AND SHARE-HOLDERS' EQUITY


$ 1,998,599


$    1,945,300


$ 1,884,493








BOOK VALUE PER SHARE


$          8.88


$             8.81


$          8.09

SHARES OF COMMON STOCK OUTSTANDING


10,777,306


10,775,947


10,614,307

















FIDELITY SOUTHERN CORPORATION

LOANS, BY CATEGORY

(UNAUDITED)

















(DOLLARS IN THOUSANDS)











MARCH 31,






2011


2010


PERCENT CHANGE



















COMMERCIAL, FINANCIAL AND AGRICULTURAL


$      94,483


$    103,778


(8.96)

%

TAX-EXEMPT COMMERCIAL


5,099


5,300


(3.79)

%

REAL ESTATE MORTGAGE - COMMERCIAL


358,357


312,654


14.62

%

     TOTAL COMMERCIAL


457,939


421,732


8.59

%

REAL ESTATE-CONSTRUCTION


117,550


133,584


(12.00)

%

REAL ESTATE-MORTGAGE


121,460


130,133


(6.66)

%

CONSUMER INSTALLMENT


734,544


595,870


23.27

%


LOANS


1,431,493


1,281,319


11.72

%

LOANS HELD-FOR-SALE:









ORIGINATED RESIDENTIAL MORTGAGE LOANS


50,849


72,603


(29.96)

%


SBA LOANS


34,156


15,668


118.00

%


INDIRECT AUTO LOANS


30,000


30,000


0.00

%


    TOTAL LOANS HELD-FOR-SALE


115,005


118,271


(2.76)

%


         TOTAL LOANS


$ 1,546,498


$ 1,399,590






FIDELITY SOUTHERN CORPORATION

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES

(UNAUDITED)










(DOLLARS IN THOUSANDS)




YEAR TO DATE


YEAR ENDED







MARCH 31,


DECEMBER 31,







2011


2010


2010












BALANCE AT BEGINNING OF PERIOD




$ 28,082


$ 30,072


$         30,072

CHARGE-OFFS:










COMMERCIAL, FINANCIAL AND AGRICULTURAL




93


14


883


SBA




178


79


381


REAL ESTATE-CONSTRUCTION




2,501


2,338


11,274


REAL ESTATE-MORTGAGE




105


54


656


CONSUMER INSTALLMENT




1,550


2,344


7,086



TOTAL CHARGE-OFFS




4,427


4,829


20,280

RECOVERIES:










COMMERCIAL, FINANCIAL AND AGRICULTURAL




7


1


23


SBA




14


-


5


REAL ESTATE-CONSTRUCTION




51


61


361


REAL ESTATE-MORTGAGE




-


1


8


CONSUMER INSTALLMENT




192


193


768



TOTAL RECOVERIES




264


256


1,165

NET CHARGE-OFFS




4,163


4,573


19,115

PROVISION FOR LOAN LOSSES




5,775


3,975


17,125

BALANCE AT END OF PERIOD




$ 29,694


$ 29,474


$         28,082























RATIO OF NET CHARGE-OFFS DURING PERIOD TO AVERAGE











LOANS OUTSTANDING, NET




1.19%


1.45%


1.44%

ALLOWANCE FOR LOAN LOSSES AS A PERCENTAGE OF LOANS




2.07%


2.30%


2.00%























NONPERFORMING ASSETS

(UNAUDITED)












(DOLLARS IN THOUSANDS)




MARCH 31,


DECEMBER 31,







2011


2010


2010












NONACCRUAL LOANS




$ 72,515


$ 62,403


$         76,545

REPOSSESSIONS




1,438


939


1,119

OTHER REAL ESTATE




18,383


25,014


20,525



TOTAL NONPERFORMING ASSETS




$ 92,336


$ 88,356


$         98,189

*** INCLUDES SBA GUARANTEED AMOUNTS OF APPROXIMATELY




$   4,502


$   7,004


$           7,818

LOANS PAST DUE 90 DAYS OR MORE AND STILL ACCRUING




$           -


$      563


$                   -












RATIO OF LOANS PAST DUE 90 DAYS OR MORE AND









  STILL ACCRUING TO TOTAL LOANS




-%


-%


-%












RATIO OF NONPERFORMING ASSETS TO TOTAL LOANS,











OREO AND REPOSSESSIONS




5.90%


6.20%


6.01%



DELINQUENCIES

(UNAUDITED)

(IN THOUSANDS)







Mar-11

Dec-10

Sep-10

Jun-10

Mar-10

PAST DUE (30-59)

$             6,345

$             9,227

$             4,664

$             7,618

$           19,171

PAST DUE (60-89)

2,122

1,356

9,631

1,289

658

PAST DUE (90+)

-

-

-

-

563

    TOTAL PAST DUE

$             8,467

$           10,583

$           14,295

$             8,907

$           20,392







INDIRECT

$             2,354

$             4,936

$             3,635

$             3,958

$             4,551

CONSTRUCTION

83

1,064

8,411

-

12,282

COMMERCIAL

3,958

2,075

314

-

946

SBA

764

698

-

2,911

740

OTHER

1,308

1,810

1,935

2,038

1,873

    TOTAL PAST DUE

$             8,467

$           10,583

$           14,295

$             8,907

$           20,392



FIDELITY SOUTHERN CORPORATION

AVERAGE BALANCE, INTEREST AND YIELDS

(UNAUDITED)












YEAR TO DATE



March 31, 2011


March 31, 2010



Average

Income/

Yield/


Average

Income/

Yield/

(DOLLARS IN THOUSANDS)


Balance

Expense

Rate


Balance

Expense

Rate

Assets









Interest-earning assets:









Loans, net of unearned income:









 Taxable


$ 1,571,471

$ 21,840

5.63%


$ 1,390,060

$ 21,012

6.13%

 Tax-exempt (1)


5,119

77

6.14%


5,319

80

6.14%

    Total loans


1,576,590

21,917

5.63%


1,395,379

21,092

6.13%










Investment securities:









 Taxable


175,378

1,391

3.17%


198,407

1,953

3.94%

 Tax-exempt (2)


11,705

184

6.28%


11,706

181

6.21%

    Total investment securities


187,083

1,575

3.38%


210,113

2,134

4.08%










Interest-bearing deposits


66,561

41

0.25%


142,443

93

0.26%

Federal funds sold


904

-

0.07%


603

-

0.06%

    Total interest-earning assets


1,831,138

23,533

5.21%


1,748,538

23,319

5.41%










Noninterest-earning:









Cash and due from banks


31,879




11,515



Allowance for loan losses


(28,346)




(29,347)



Premises and equipment, net


19,689




18,197



Other real estate


21,271




24,522



Other assets


84,413




79,744



    Total assets


$ 1,960,044




$ 1,853,169





















Liabilities and shareholders' equity









Interest-bearing liabilities:









Demand deposits


$    415,771

$      688

0.67%


$    259,554

$      559

0.87%

Savings deposits


407,759

1,121

1.11%


441,900

1,792

1.65%

Time deposits


615,735

2,723

1.79%


690,926

4,525

2.66%

    Total interest-bearing deposits


1,439,265

4,532

1.28%


1,392,380

6,876

2.00%










Federal funds purchased


-

-

-


-

-

-

Securities sold under agreements to









 repurchase


26,683

166

2.53%


20,382

62

1.24%

Other short-term borrowings


1,000

9

3.70%


27,500

270

3.98%

Subordinated debt


67,527

1,121

6.73%


67,527

1,117

6.71%

Long-term debt


74,000

445

2.44%


50,000

343

2.78%

    Total interest-bearing liabilities


1,608,475

6,273

1.58%


1,557,789

8,668

2.26%










Noninterest-bearing:









Demand deposits


188,386




153,430



Other liabilities


22,524




11,999



Shareholders' equity


140,659




129,951



 Total liabilities and









    shareholders' equity


$ 1,960,044




$ 1,853,169












Net interest income / spread



$ 17,260

3.63%



$ 14,651

3.15%

Net interest margin




3.82%




3.40%










(1)  Interest income includes the effect of taxable-equivalent adjustment for 2011 and 2010 of $26,000 and $28,000, respectively.

(2)  Interest income includes the effect of taxable-equivalent adjustment for 2011 and 2010 of $62,000 and $59,000, respectively.



Contacts:

Martha Fleming, Steve Brolly


Fidelity Southern Corporation (404) 240-1504



SOURCE Fidelity Southern Corporation