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| 8-K - 8-K PRESS RELEASE EARNINGS - FIDELITY SOUTHERN CORP | lionqe1231178k-earnings.htm |
FOR IMMEDIATE RELEASE
Contacts: Martha Fleming, Charles D. Christy
Fidelity Southern Corporation (404) 240-1504
FIDELITY SOUTHERN CORPORATION REPORTS EARNINGS
FOR FOURTH QUARTER OF $12.4 MILLION; $39.8 MILLION IN 2017
ATLANTA, GA (January 18, 2018) – Fidelity Southern Corporation (“Fidelity” or the “Company”) (NASDAQ: LION), holding company for Fidelity Bank (the “Bank”), today reported net income of $12.4 million, or $0.46 per diluted share for the quarter ended December 31, 2017, compared with $7.9 million, or $0.30 per diluted share, for the quarter ended September 30, 2017. For the year ended December 31, 2017, the Company reported net income of $39.8 million, or $1.49 per diluted share, compared with $38.8 million, or $1.50 per diluted share, for the same period in 2016.
Fidelity’s Chairman, Jim Miller, said, “With a little help from Washington, we made a lot of money as our “old” strategy played out in 2017. That strategy was modified beginning early in 2017. Interest rates are the reason. However, destructive interest rate competition in commercial credits has only now abated and our ability to compete is here. Our efforts did pay off in the 4th quarter. Much more is to come as the loan portfolio is rebalanced to higher income commercial credits as consumer lending is deemphasized to meet today’s reality.”
President Palmer Proctor added, “We have created good momentum this year in positioning the bank for future organic growth from our commercial bank and mortgage businesses, becoming more efficient and effective in all we do, and being ready for any strategic opportunities that may arise. We are very pleased with the 20% annual growth in our demand and money market deposits, continued improvements in our asset quality, and the 9% or $1.15 per share growth in our tangible book value. We are optimistic about 2018.”
RECENT EVENTS
As a result of the Tax Cuts and Jobs Act that was enacted into law on December 22, 2017, Fidelity revalued its net deferred tax liability position to reflect the reduction in the federal corporate income tax rate from 35% to 21%. This revaluation resulted in a one-time income tax benefit of approximately $4.9 million, or $0.18 of diluted earnings per common share, for the fourth quarter of 2017.
BALANCE SHEET
Total assets grew by $71.4 million, or 1.6%, during the quarter, to $4.6 billion at December 31, 2017, compared to $4.5 billion at September 30, 2017, primarily due to increased loan production of $188.7 million, partially offset by a decrease in cash of $125.7 million during the quarter. Demand and money market deposits grew by $27.4 million, but this increase was partially offset by a seasonal decrease in time and savings deposits of $98.6 million, for a net decrease in deposits of $71.2 million during the quarter.
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Short-term FHLB borrowings and securities sold under repurchase agreements increased by $135.8 million, due to the increased loan production and lower deposit funding. In addition, other liabilities decreased by $6.8 million, or 15.6%, due primarily to the revaluation of the deferred tax liability at December 31, 2017, as discussed in the Income Taxes section below.
Total assets grew by $187.2 million or 4.3%, to $4.6 billion at December 31, 2017, compared to $4.4 billion at December 31, 2016. Primary drivers of the year over year change were loan growth of $171.1 million, or 4.5%, funded by total deposit increases of $236.6 million, or 6.5%, which allowed the Company to eliminate $92.8 million, or 38.1%, of short-term borrowings, as compared to December 31, 2016.
Loans
Total loans of $3.9 billion at December 31, 2017, increased by $188.7 million, or 5.0%, as compared to September 30, 2017. Increases of $106.5 million in indirect loans, $19.6 million in commercial/SBA loans, and $40.6 million in mortgage loans were noted in the quarter. Indirect loan production increased by $88.9 million, or 34.7%, in anticipation of indirect loan sales in the first half of 2018. Loans held-for-sale increased by $17.4 million, as the pipeline for expected loan sales was raised for the quarter.
Total loans increased by $171.1 million, or 4.5%, compared to December 31, 2016. An increase in mortgage loans of $134.7 million accounted for most of the increase, primarily due to lower sales of mortgage loans of $226.6 million in 2017. Commercial and construction portfolios also experienced growth year over year.
Asset Quality
Asset quality remained strong as evidenced by the reduction in non performing assets, excluding the guaranteed portion of SBA and GNMA loans (“adjusted NPA’s”) and acquired loans. Adjusted NPA’s, a non-GAAP measure, decreased by $4.6 million, or 11.5%, during 2017. The reconciliation to the comparable GAAP measure is included in the schedules accompanying this release.
On a linked-quarter basis, the provision for loan losses decreased by $1.4 million, while net charge-offs were flat. Gross charge-offs increased by $1.6 million, offset by an increase in gross recoveries of $1.8 million, on a linked-quarter basis, mainly due to charge-offs of specific reserves established in prior quarters on several C&I loans to operating companies. Annualized net charge-offs remained relatively flat at an increase of 0.1% of average loans. No provision for loan losses was recorded in the fourth quarter due to elevated loan recoveries.
Compared to 2016, the provision for loan losses for the year decreased by $4.0 million, reflecting strong asset quality.
Fair Value Adjustments
Loan servicing rights increased by $725,000, or 0.6%, to $112.6 million at December 31, 2017, compared to $111.9 million at September 30, 2017, and by $13.3 million, or 13.4%, compared to December 31, 2016. Mortgage servicing rights (“MSRs”), the primary component of loan servicing rights, contributed the majority of the change, increasing by $1.6 million and $14.5 million during the quarter and year, respectively.
New loan servicing rights capitalized on sales of mortgage loans with servicing retained decreased by $1.7 million, or 19.8%, for the quarter but increased $766,000, or 2.7%, for the year. Capitalized servicing decreased on a linked-quarter basis due to the seasonality of mortgage production. Historically, production begins to decrease after the strong summer buying season. Capitalized servicing increased for the year even though sales of loans with servicing retained decreased by $305.2 million, or 12.1%, for the year because, as a result of rising interest rates, servicing rights are expected to remain in the portfolio longer, leading to higher projected expected lives. The decrease in sales of loans sold servicing retained was primarily due to fewer originated mortgages from refinance transactions, as year over year, we originated $513.3 million, or 55.7%, fewer refinance loans. This was partially offset by increased volume of purchase money mortgages and new market expansion.
Amortization of MSRs was flat for the linked-quarter, increasing by $48,000, or 1.4%, but was $1.6 million, or 10.2%, lower in 2017 compared to the prior year. The annual decrease is primarily the result of lower
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actual and predicted early prepayments in 2017, compared to 2016, as a result of the relatively more stable interest rate environment in 2017.
MSRs impairment of $1.5 million was recorded during the quarter, an increase of $932,000, or 171.2%, compared to the prior quarter. The increase in impairment was primarily related to higher actual early prepayments, and higher expected future delinquent servicing costs. Higher future servicing costs are expected as the Company continues to adapt to and implement increased regulatory requirements and as the average age of the serviced portfolio grows.
The current estimated fair market value of the MSRs was $103.7 million at December 31, 2017, an excess of $3.0 million over the net carrying value recorded. If interest rates trend upward, the fair market value would theoretically increase with a corresponding decrease in early prepayment expectations and some portion of the cumulative impairment recorded may be recovered. However, the value of the 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 $10.3 million at December 31, 2017, a decrease of $1.3 million, or 11.5%, for the quarter. The decrease was primarily attributable to a decrease in the gross pipeline of locked loans to be sold during the winter months, historically a lower buying season and one of the lowest production periods of the year. In the future, slower winter seasonality should be partially offset by continued expansion into Florida markets, where winter home buying is stronger than in other markets. 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
Fidelity continued to focus on core deposit growth as demand and money market deposits grew by $27.4 million, or 1.1%, to $2.6 billion, during the quarter, and by $445.0 million, or 20.4%, in 2017. Florida total deposits increased by $10.8 million, during the quarter, and $241.7 million in 2017. Noninterest-bearing demand deposits ended 2017 at a record level of $1.1 billion, an increase of $12.9 million, or 1.2%, for the quarter and $160.7 million, or 16.7%% in 2017.
Increases in demand and money market deposits were partially offset by decreases in savings deposits of $33.1 million and $81.0 million and time deposits of $65.5 million and $127.4 million, for the quarter and year over year, respectively. The enhanced core deposit base allowed the Bank to be more relationship-oriented in its approach to time deposits and non core brokered CD’s which decreased by $30.6 million and $64.5 million, for the quarter and year over year, respectively.
INCOME STATEMENT
Net Income
Net income was $12.4 million, or $4.5 million more than the previous quarter. The increase in earnings was driven by an increase in net interest income of $2.5 million, primarily due to an increase in loan yield and average loans, the aforementioned decrease in provision for loan losses, and a $5.4 million decrease in income tax expense, including a one-time tax benefit of $4.9 million as a result of the revaluation of the net deferred tax liability, as discussed in the Income Taxes section below. The increases in net income driven by these items were partially offset by lower noninterest income of $4.8 million, primarily led by mortgage lending activities as a result of lower originations and loan sales due to seasonality.
Net income was $39.8 million for the year, an increase of $1.0 million, or 2.7%, as compared to the same period in the prior year, primarily driven by higher net interest income of $6.4 million, lower provision for loan losses of $4.0 million, offset by lower noninterest income of $6.4 million, and higher noninterest expense of $9.9 million. In addition, income tax expense was $6.9 million lower in 2017, including the one-time benefit discussed above.
Interest Income
Interest income of $41.7 million for the quarter increased by $2.5 million, or 6.7%, compared to the prior quarter, primarily driven by an increase of 17 basis points in the yield on loans and an increase in average loans of $106.5 million. Interest income on loans for the quarter included $1.2 million in accretable yield earned on the purchased credit impaired (“PCI”) loan portfolio, which accounted for 7 basis points of the increase.
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Management does not believe that the increase in the accretable yield recognized during the quarter is reflective of a trend that will continue in future quarters.
This increase was partially offset by a decrease in interest income from excess fed funds sold and interest-bearing deposits with banks of $230,000, or 2 basis points for the quarter as excess funds were used to pay down short-term borrowings.
As compared to the same period in the prior year, interest income increased by $3.4 million, or 8.8%, as the yield on loans increased by 25 basis points, primarily in the commercial, construction, and mortgage loan portfolios, including an increase of 7 basis points attributable to accretable yield.
Interest income was $158.0 million for the year, an increase of $8.7 million or 5.8%, compared to the same period in the prior year, primarily due to an increase of 5 basis points in the yield on loans and an increase in $139.1 million in average loans.
Interest Expense
Interest expense of $5.8 million, increased slightly by $68,000, or 1.3%, for the quarter, primarily due to a 1 basis point increase in deposit expense for the quarter. As compared to the same periods in the prior year, interest expense increased by $427,000, or 8.0%, for the quarter, and by $2.3 million, or 11.2%, year over year, as market rates and balances on deposits increased over the past twelve months.
Net Interest Margin
The net interest margin was 3.42% for the quarter compared to 3.20% in the previous quarter, an increase of 22 basis points. The yield on total average earning assets increased from 3.75% to 3.97%, offset by a slight increase in the yield on total interest bearing liabilities of 1 basis point to 0.78%. Average loans increased by $106.5 million with a 17 basis point increase in yield, due to higher yields on indirect lending, mortgage and commercial/SBA loans, including an increase of 7 basis points in accretable yield on PCI loans. Management does not believe that the increase in the accretable yield recognized during the quarter is reflective of a trend that will continue in future quarters.
Average interest-bearing liabilities decreased by $6.0 million, primarily driven by a decrease in average time deposits, partially offset by increases in average demand and savings deposits, as the Bank focused on core deposit growth, and the previously discussed increase in borrowings for the quarter to fund loan growth.
As compared to the same period a year ago, the net interest margin for the quarter, increased by 17 basis points to 3.42% from 3.25%, primarily due to a 25 basis point increase in the yield on earning assets, offset by an increase in the yield on total interest-bearing liabilities of 7 basis points from 0.71%. Higher yields on earning assets included an increase of 7 basis points in accretable yield on PCI loans. Average earning assets increased by $117.0 million, primarily due to an increase in average loans over the year and and the excess cash generated over the year by the increase in deposits. Average interest-bearing liabilities decreased by $53.1 million, primarily driven by an decrease in average borrowings of $264.1 million, offset by an increase in average interest-bearing deposits of $210.9 million.
Noninterest Income
On a linked-quarter basis, noninterest income decreased by $4.8 million, or 10.1%, largely due to a net decrease in income from mortgage banking activities of $4.1 million, or 11.0%, including a $1.5 million MSRs
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impairment. Marketing gains and origination points and fees decreased primarily due to lower mortgage production, which decreased $83.1 million, due to seasonality of mortgage production, and a lower pipeline of locked loans to be sold, which decreased by $61.5 million, or 23.2%, during the quarter. In addition, mortgage loan sales decreased $129.4 million, or 17.7%, during the quarter. SBA lending activities income decreased by $879,000, due to lower gain on loan sales and increased held for sale balances, and other income decreased by $560,000, a direct result of lower gains on OREO sales. Offsetting these decreases, indirect lending activities income increased by $665,000, led by an increase in indirect loan sales of $32.6 million, resulting in higher gain on sale of $269,000 and an increase in capitalization of servicing rights of $224,000 as the Company retained the servicing on those sales.
Compared to the same period a year ago, noninterest income for the quarter of $28.9 million decreased by $18.3 million, or 38.7%, primarily due to a net decrease in income from mortgage banking activities of $16.5 million, or 44.1%, stemming from a change in MSRs impairment/recovery of $14.6 million.
Noninterest income was $135.0 million in 2017, a decrease of $6.4 million, or 4.5%, compared to the prior year, primarily due to decreases in income from mortgage banking activities of $2.8 million, indirect lending activities of $2.4 million, and SBA lending activities of $1.1 million. Year over year changes are primarily the result of lower MSRs recovery and gain on asset sales.
Noninterest Expense
On a linked-quarter basis, total noninterest expense increased by $73,000, or 0.1%, for the quarter, primarily due to an increase in fraud and other losses of $587,000, loan origination expenses of $383,000 and $284,000 in OREO property tax expense. These increases were offset by a decrease in salaries and employee benefits, and commissions of $1.4 million, or 4.0%, due to a decrease in commissions of $797,000 relating to lower mortgage loan production for the quarter. Salaries decreased by $586,000, primarily due to decreases in temporary help, overtime, 401K expense, and supplemental retirement expense.
Compared to the prior year quarter, noninterest expense of $52.9 million decreased by $1.3 million, or 2.3%. Salaries and employee benefits, and commissions decreased by $1.1 million, or 3.2%, compared to the same quarter in 2016, due primarily to a decrease in commissions as mortgage loan production was lower in 2017 than 2016.
Noninterest expense of $210.9 million increased by $9.9 million, or 4.9%, year over year. The increase in noninterest expense was related to organic growth in the mortgage and Wealth Management divisions, and expense related to our operational excellence initiative launched earlier in the year. Salaries and employee benefits, and commissions increased by $7.3 million, or 5.6%, for the year, mainly due to an increase in the FTE count of 109, or 8.5%, primarily due to growth in our mortgage and Wealth Management businesses. Professional and other services also increased by $3.1 million, or 20.5%, primarily due to increased expenses paid to outside third parties for infrastructure improvement projects and costs associated with new and existing regulations. Fidelity remains committed to implementing changes to operations and technology that will enable the Bank to be more efficient and effective in its growth strategies.
Income Taxes
The Tax Cuts and Jobs Act enacted on December 22, 2017 included, among other things, a reduction in the federal corporate income tax rate from 35 percent to 21 percent from the beginning of the tax year 2018. The income tax rate change will favorably impact Fidelity’s effective tax rate going forward.
As a result of the rate change, Fidelity revalued its net deferred tax liability at December 31, 2017 which reduced income tax expense by $4.9 million for the quarter. The main component of Fidelity’s net deferred tax liability position is the timing of MSRs income recognition which resulted in an $11.2 million tax benefit, partially offset by tax expense of $5.9 million to revalue future deductions related to the loan loss allowance and employee compensation programs at the lower corporate income tax rate going forward.
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Excluding the effects of the one-time tax benefit recorded to revalue the net deferred tax liability and the benefit of discrete items recorded during the quarter for employee stock option exercises, the effective tax rate was constant compared to the prior quarter at 38.3%.
The one-time tax benefit recorded during the quarter to revalue the net deferred tax liability represents a reasonable estimate determined by management. Any adjustments to provisional amounts determined during the measurement period will be reported as an adjustment to income tax expense or benefit in future periods.
The revaluation of the net deferred tax liability as a result of the rate change does not have any cash flow effect. Additionally, the change in the tax rate does not impact the time frame when the net deferred tax liability is expected to be settled.
OTHER NEWS
Fidelity continued its retail branch expansion during the quarter with the opening of the Capital Circle branch in Tallahassee, Florida on December 29, 2017. Fidelity has received regulatory approval to open two additional branches in Georgia which it expects to open in Macon and Covington in Q1 2018, which will bring the total number of retail branches to 68.
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 and mortgage loans are provided throughout the South and parts of the Midwest 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 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.
-end-
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FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(UNAUDITED)
As of or for the Quarter Ended | As of or for the twelve months ended | |||||||||||||||||||
($ in thousands, except per share data) | December 31, 2017 | September 30, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||||
INCOME STATEMENT DATA: | ||||||||||||||||||||
Interest income | $ | 41,653 | $ | 39,105 | $ | 38,287 | $ | 157,978 | $ | 149,283 | ||||||||||
Interest expense | 5,779 | 5,711 | 5,352 | 22,730 | 20,448 | |||||||||||||||
Net interest income | 35,874 | 33,394 | 32,935 | 135,248 | 128,835 | |||||||||||||||
Provision for loan losses | — | 1,425 | 2,485 | 4,275 | 8,231 | |||||||||||||||
Noninterest income | 28,888 | 33,638 | 47,143 | 134,952 | 141,325 | |||||||||||||||
Noninterest expense | 52,910 | 52,837 | 54,170 | 210,870 | 201,020 | |||||||||||||||
Net income before income taxes | 11,852 | 12,770 | 23,423 | 55,055 | 60,909 | |||||||||||||||
Income tax (benefit) expense | (591 | ) | 4,836 | 8,358 | 15,259 | 22,143 | ||||||||||||||
Net income | 12,443 | 7,934 | 15,065 | 39,796 | 38,766 | |||||||||||||||
PERFORMANCE: | ||||||||||||||||||||
Earnings per common share - basic | $ | 0.46 | $ | 0.30 | $ | 0.57 | $ | 1.50 | $ | 1.52 | ||||||||||
Earnings per common share - diluted | 0.46 | 0.30 | 0.57 | 1.49 | 1.50 | |||||||||||||||
Total revenues | 70,541 | 72,743 | 85,430 | 292,930 | 290,608 | |||||||||||||||
Book value per common share | 14.86 | 14.47 | 13.78 | 14.86 | 13.78 | |||||||||||||||
Tangible book value per common share | 14.41 | 14.00 | 13.26 | 14.41 | 13.26 | |||||||||||||||
Cash dividends paid per common share | 0.12 | 0.12 | 0.12 | 0.48 | 0.48 | |||||||||||||||
Dividend payout ratio | 26.09 | % | 40.00 | % | 21.05 | % | 32.00 | % | 31.58 | % | ||||||||||
Return on average assets | 1.10 | % | 0.70 | % | 1.37 | % | 0.89 | % | 0.92 | % | ||||||||||
Return on average shareholders’ equity, annualized | 12.57 | % | 8.28 | % | 16.90 | % | 10.68 | % | 11.61 | % | ||||||||||
Equity to assets ratio | 8.78 | % | 8.61 | % | 8.26 | % | 8.78 | % | 8.26 | % | ||||||||||
Net interest margin | 3.42 | % | 3.20 | % | 3.25 | % | 3.26 | % | 3.32 | % | ||||||||||
END OF PERIOD BALANCE SHEET SUMMARY: | ||||||||||||||||||||
Total assets | $ | 4,576,858 | $ | 4,505,423 | $ | 4,389,685 | $ | 4,576,858 | $ | 4,389,685 | ||||||||||
Earning assets | 4,242,218 | 4,167,549 | 4,059,414 | 4,242,218 | 4,059,414 | |||||||||||||||
Loans, excluding Loans Held-for-Sale | 3,580,966 | 3,409,707 | 3,302,264 | 3,580,966 | 3,302,264 | |||||||||||||||
Total loans | 3,938,721 | 3,750,036 | 3,767,592 | 3,938,721 | 3,767,592 | |||||||||||||||
Total deposits | 3,867,200 | 3,938,360 | 3,630,594 | 3,867,200 | 3,630,594 | |||||||||||||||
Shareholders’ equity | 401,632 | 388,068 | 362,647 | 401,632 | 362,647 | |||||||||||||||
Assets serviced for others | 10,242,742 | 10,109,466 | 9,207,070 | 10,242,742 | 9,207,070 | |||||||||||||||
ASSET QUALITY RATIOS: | ||||||||||||||||||||
Net charge-offs to average loans | 0.11 | % | 0.13 | % | 0.29 | % | 0.12 | % | 0.13 | % | ||||||||||
Allowance to period-end loans | 0.83 | % | 0.90 | % | 0.90 | % | 0.83 | % | 0.90 | % | ||||||||||
Nonperforming assets to total loans, ORE and repossessions | 1.60 | % | 1.56 | % | 1.37 | % | 1.60 | % | 1.37 | % | ||||||||||
Adjusted nonperforming assets to loans, ORE and repossessions(1) | 1.06 | % | 0.95 | % | 1.15 | % | 1.06 | % | 1.15 | % | ||||||||||
Allowance to nonperforming loans, ORE and repossessions | 0.47x | 0.52x | 0.57x | 0.47x | 0.57x | |||||||||||||||
SELECTED RATIOS: | ||||||||||||||||||||
Loans to total deposits | 92.60 | % | 86.58 | % | 90.96 | % | 92.60 | % | 90.96 | % | ||||||||||
Average total loans to average earning assets | 91.95 | % | 89.85 | % | 93.18 | % | 90.20 | % | 92.64 | % | ||||||||||
Noninterest income to total revenue | 40.95 | % | 46.24 | % | 55.18 | % | 46.07 | % | 48.63 | % | ||||||||||
Leverage ratio | 8.87 | % | 8.81 | % | 8.58 | % | 8.87 | % | 8.58 | % | ||||||||||
Common equity tier 1 capital | 8.62 | % | 8.81 | % | 8.35 | % | 8.62 | % | 8.35 | % | ||||||||||
Tier 1 risk-based capital | 9.72 | % | 9.96 | % | 9.46 | % | 9.72 | % | 9.46 | % | ||||||||||
Total risk-based capital | 12.30 | % | 12.68 | % | 12.11 | % | 12.30 | % | 12.11 | % | ||||||||||
Mortgage loan production | $ | 669,733 | $ | 752,854 | $ | 756,868 | $ | 2,776,010 | $ | 2,970,770 | ||||||||||
Total mortgage loan sales | 602,171 | 731,595 | 758,775 | 2,588,842 | 2,815,480 | |||||||||||||||
Indirect automobile production | 345,032 | 256,084 | 269,052 | 1,167,373 | 1,255,591 | |||||||||||||||
Total indirect automobile production | 59,681 | 27,115 | 97,916 | 431,227 | 437,812 | |||||||||||||||
(1) Excludes acquired loans and net of SBA & GNMA guarantees. See non-GAAP reconciliation table for the comparable GAAP. | ||||||||||||||||||||
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FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
($ in thousands) | December 31, 2017 | September 30, 2017 | December 31, 2016 | |||||||||
ASSETS | ||||||||||||
Cash and cash equivalents | $ | 186,302 | $ | 312,027 | $ | 149,711 | ||||||
Investment securities available-for-sale | 120,121 | 124,827 | 144,310 | |||||||||
Investment securities held-to-maturity | 21,689 | 15,072 | 16,583 | |||||||||
Loans held-for-sale | 357,755 | 340,329 | 465,328 | |||||||||
Loans | 3,580,966 | 3,409,707 | 3,302,264 | |||||||||
Allowance for loan losses | (29,772 | ) | (30,703 | ) | (29,831 | ) | ||||||
Loans, net of allowance for loan losses | 3,551,194 | 3,379,004 | 2,870,484 | |||||||||
Premises and equipment, net | 88,463 | 87,792 | 87,915 | |||||||||
Other real estate, net | 7,621 | 8,624 | 14,814 | |||||||||
Bank owned life insurance | 71,883 | 71,455 | 70,151 | |||||||||
Servicing rights, net | 112,615 | 111,890 | 99,295 | |||||||||
Other assets | 59,215 | 54,403 | 69,145 | |||||||||
Total assets | $ | 4,576,858 | $ | 4,505,423 | $ | 4,389,685 | ||||||
LIABILITIES | ||||||||||||
Deposits | ||||||||||||
Noninterest-bearing demand deposits | $ | 1,125,598 | $ | 1,112,714 | $ | 964,900 | ||||||
Interest-bearing deposits | ||||||||||||
Demand and money market | 1,498,707 | 1,484,180 | 1,214,382 | |||||||||
Savings | 318,749 | 351,833 | 399,754 | |||||||||
Time deposits | 924,146 | 989,633 | 1,051,558 | |||||||||
Total deposits | 3,867,200 | 3,938,360 | 3,630,594 | |||||||||
Short-term borrowings | 150,580 | 14,746 | 243,351 | |||||||||
Subordinated debt, net | 120,587 | 120,554 | 120,454 | |||||||||
Other liabilities | 36,859 | 43,695 | 32,639 | |||||||||
Total liabilities | 4,175,226 | 4,117,355 | 4,027,038 | |||||||||
SHAREHOLDERS' EQUITY | ||||||||||||
Preferred stock | — | — | — | |||||||||
Common stock | 217,555 | 212,633 | 205,309 | |||||||||
Accumulated other comprehensive income, net | 383 | 964 | 692 | |||||||||
Retained earnings | 183,694 | 174,471 | 156,646 | |||||||||
Total shareholders’ equity | 401,632 | 388,068 | 362,647 | |||||||||
Total liabilities and shareholders’ equity | $ | 4,576,858 | $ | 4,505,423 | $ | 4,389,685 | ||||||
8
FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
For the Quarter Ended | For the Year Ended | ||||||||||||||||||||
($ in thousands, except per share data) | December 31, 2017 | September 30, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | ||||||||||||||||
INTEREST INCOME | |||||||||||||||||||||
Loans, including fees | $ | 40,065 | $ | 37,290 | $ | 36,935 | $ | 150,998 | $ | 143,605 | |||||||||||
Investment securities | 1,015 | 1,011 | 1,241 | 4,404 | 5,233 | ||||||||||||||||
Other | 573 | 804 | 111 | 2,576 | 445 | ||||||||||||||||
Total interest income | 41,653 | 39,105 | 38,287 | 157,978 | 149,283 | ||||||||||||||||
INTEREST EXPENSE | |||||||||||||||||||||
Deposits | 4,219 | 4,163 | 3,382 | 15,722 | 13,194 | ||||||||||||||||
Other borrowings | 18 | 16 | 474 | 928 | 1,424 | ||||||||||||||||
Subordinated debt | 1,542 | 1,532 | 1,496 | 6,080 | 5,830 | ||||||||||||||||
Total interest expense | 5,779 | 5,711 | 5,352 | 22,730 | 20,448 | ||||||||||||||||
Net interest income | 35,874 | 33,394 | 32,935 | 135,248 | 128,835 | ||||||||||||||||
Provision for loan losses | — | 1,425 | 2,485 | 4,275 | 8,231 | ||||||||||||||||
Net interest income after provision for loan losses | 35,874 | 31,969 | 30,450 | 130,973 | 120,604 | ||||||||||||||||
NONINTEREST INCOME | |||||||||||||||||||||
Service charges on deposit accounts | 1,530 | 1,553 | 1,608 | 6,019 | 5,941 | ||||||||||||||||
Other fees and charges | 2,342 | 2,197 | 1,902 | 8,402 | 7,664 | ||||||||||||||||
Mortgage banking activities | 20,932 | 25,040 | 37,464 | 98,797 | 101,577 | ||||||||||||||||
Indirect lending activities | 2,566 | 1,901 | 3,466 | 12,533 | 14,900 | ||||||||||||||||
SBA lending activities | 581 | 1,460 | 1,330 | 4,540 | 5,659 | ||||||||||||||||
Bank owned life insurance | 411 | 401 | 458 | 1,670 | 2,374 | ||||||||||||||||
Securities gains | — | — | — | — | 578 | ||||||||||||||||
Other | 526 | 1,086 | 915 | 2,991 | 2,632 | ||||||||||||||||
Total noninterest income | 28,888 | 33,638 | 47,143 | 134,952 | 141,325 | ||||||||||||||||
NONINTEREST EXPENSE | |||||||||||||||||||||
Salaries and employee benefits | 25,745 | 26,331 | 25,808 | 103,366 | 96,684 | ||||||||||||||||
Commissions | 8,447 | 9,244 | 9,514 | 34,573 | 33,907 | ||||||||||||||||
Occupancy, net | 4,793 | 4,508 | 4,896 | 18,164 | 17,890 | ||||||||||||||||
Professional and other services | 4,620 | 4,604 | 3,539 | 18,343 | 15,224 | ||||||||||||||||
Other | 9,305 | 8,150 | 10,413 | 36,424 | 37,315 | ||||||||||||||||
Total noninterest expense | 52,910 | 52,837 | 54,170 | 210,870 | 201,020 | ||||||||||||||||
Income before income tax (benefit)/expense | 11,852 | 12,770 | 23,423 | 55,055 | 60,909 | ||||||||||||||||
Income tax (benefit)/expense | (591 | ) | 4,836 | 8,358 | 15,259 | 22,143 | |||||||||||||||
NET INCOME | $ | 12,443 | $ | 7,934 | $ | 15,065 | $ | 39,796 | $ | 38,766 | |||||||||||
EARNINGS PER COMMON SHARE: | |||||||||||||||||||||
Basic | $ | 0.46 | $ | 0.30 | $ | 0.57 | $ | 1.50 | $ | 1.52 | |||||||||||
Diluted | $ | 0.46 | $ | 0.30 | $ | 0.57 | $ | 1.49 | $ | 1.50 | |||||||||||
Weighted average common shares outstanding-basic | 26,904 | 26,729 | 26,230 | 26,602 | 25,497 | ||||||||||||||||
Weighted average common shares outstanding-diluted | 27,011 | 26,849 | 26,342 | 26,722 | 25,813 | ||||||||||||||||
9
FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES
LOANS BY CATEGORY
(UNAUDITED)
($ in thousands) | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | |||||||||||||||
Commercial | $ | 811,199 | $ | 789,788 | $ | 796,699 | $ | 802,905 | $ | 784,737 | ||||||||||
SBA | 141,208 | 142,989 | 145,311 | 149,727 | 149,779 | |||||||||||||||
Total commercial and SBA loans | 952,407 | 932,777 | 942,010 | 952,632 | 934,516 | |||||||||||||||
Construction loans | 248,317 | 243,600 | 248,926 | 249,465 | 238,910 | |||||||||||||||
Indirect automobile | 1,716,156 | 1,609,678 | 1,531,761 | 1,565,298 | 1,575,865 | |||||||||||||||
Installment loans and personal lines of credit | 25,995 | 26,189 | 31,225 | 31,647 | 33,225 | |||||||||||||||
Total consumer loans | 1,742,151 | 1,635,867 | 1,562,986 | 1,596,945 | 1,609,090 | |||||||||||||||
Residential mortgage | 489,721 | 452,584 | 433,544 | 418,941 | 386,582 | |||||||||||||||
Home equity lines of credit | 148,370 | 144,879 | 144,666 | 136,943 | 133,166 | |||||||||||||||
Total mortgage loans | 638,091 | 597,463 | 578,210 | 555,884 | 519,748 | |||||||||||||||
Loans | 3,580,966 | 3,409,707 | 3,332,132 | 3,354,926 | 3,302,264 | |||||||||||||||
Loans held-for-sale: | ||||||||||||||||||||
Residential mortgage | 269,140 | 257,326 | 279,292 | 201,661 | 252,712 | |||||||||||||||
SBA | 13,615 | 8,003 | 15,418 | 9,456 | 12,616 | |||||||||||||||
Indirect automobile | 75,000 | 75,000 | 100,000 | 150,000 | 200,000 | |||||||||||||||
Total loans held-for-sale | 357,755 | 340,329 | 394,710 | 361,117 | 465,328 | |||||||||||||||
Total loans | $ | 3,938,721 | $ | 3,750,036 | $ | 3,726,842 | $ | 3,716,043 | $ | 3,767,592 | ||||||||||
DEPOSITS BY CATEGORY
(UNAUDITED)
For the Quarter Ended | ||||||||||||||||||||||||||||||||||
December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | ||||||||||||||||||||||||||||||
($ in thousands) | Average Amount | Rate | Average Amount | Rate | Average Amount | Rate | Average Amount | Rate | Average Amount | Rate | ||||||||||||||||||||||||
Noninterest-bearing demand deposits | $ | 1,124,759 | — | % | $ | 1,103,414 | — | % | $ | 1,027,909 | — | % | $ | 961,188 | — | % | $ | 978,909 | — | % | ||||||||||||||
Interest-bearing demand deposits | 1,482,686 | 0.44 | % | 1,447,874 | 0.42 | % | 1,363,651 | 0.37 | % | 1,244,955 | 0.31 | % | 1,179,837 | 0.25 | % | |||||||||||||||||||
Savings deposits | 352,235 | 0.33 | % | 340,663 | 0.31 | % | 357,712 | 0.32 | % | 387,007 | 0.36 | % | 350,885 | 0.33 | % | |||||||||||||||||||
Time deposits | 958,790 | 0.94 | % | 1,021,563 | 0.92 | % | 1,049,248 | 0.90 | % | 1,050,897 | 0.83 | % | 1,052,082 | 0.89 | % | |||||||||||||||||||
Total average deposits | $ | 3,918,470 | 0.43 | % | $ | 3,913,514 | 0.42 | % | $ | 3,798,520 | 0.41 | % | $ | 3,644,047 | 0.38 | % | $ | 3,561,713 | 0.38 | % | ||||||||||||||
10
FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES
NONPERFORMING AND CLASSIFIED ASSETS
(UNAUDITED)
($ in thousands) | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | ||||||||||||||
NONPERFORMING ASSETS | |||||||||||||||||||
Nonaccrual loans (2)(6) | $ | 47,012 | $ | 41,408 | $ | 37,894 | $ | 38,377 | $ | 35,358 | |||||||||
Loans past due 90 days or more and still accruing | 6,313 | 6,534 | 7,210 | 8,414 | 6,189 | ||||||||||||||
Repossessions | 2,392 | 2,040 | 1,779 | 1,654 | 2,274 | ||||||||||||||
Other real estate (ORE) | 7,621 | 8,624 | 9,382 | 11,284 | 14,814 | ||||||||||||||
Nonperforming assets | $ | 63,338 | $ | 58,606 | $ | 56,265 | $ | 59,729 | $ | 58,635 | |||||||||
ASSET QUALITY RATIOS | |||||||||||||||||||
Loans 30-89 days past due | $ | 10,560 | $ | 10,193 | $ | 7,181 | $ | 11,735 | $ | 7,707 | |||||||||
Loans 30-89 days past due to loans | 0.29 | % | 0.30 | % | 0.22 | % | 0.35 | % | 0.23 | % | |||||||||
Loans past due 90 days or more and still accruing to loans | 0.18 | % | 0.19 | % | 0.22 | % | 0.25 | % | 0.19 | % | |||||||||
Nonperforming loans as a % of loans | 1.49 | % | 1.41 | % | 1.35 | % | 1.39 | % | 1.26 | % | |||||||||
Nonperforming assets to loans, ORE, and repossessions | 1.76 | % | 1.56 | % | 1.51 | % | 1.60 | % | 1.55 | % | |||||||||
Adjusted nonperforming assets to loans, ORE and repossessions(8) | 1.06 | % | 0.95 | % | 1.02 | % | 1.10 | % | 1.15 | % | |||||||||
Nonperforming assets to total assets | 1.38 | % | 1.30 | % | 1.22 | % | 1.32 | % | 1.34 | % | |||||||||
Adjusted nonperforming assets to total assets(8) | 0.78 | % | 0.74 | % | 0.78 | % | 0.85 | % | 0.92 | % | |||||||||
Classified Asset Ratio(4) | 20.70 | % | 20.59 | % | 20.14 | % | 20.97 | % | 21.22 | % | |||||||||
ALL to nonperforming loans | 55.83 | % | 64.04 | % | 67.46 | % | 65.09 | % | 71.80 | % | |||||||||
Net charge-offs, annualized to average loans | 0.11 | % | 0.13 | % | 0.09 | % | 0.16 | % | 0.28 | % | |||||||||
ALL as a % of loans | 0.83 | % | 0.90 | % | 0.91 | % | 0.91 | % | 0.90 | % | |||||||||
Adjusted ALL as a % of adjusted loans(7) | 1.16 | % | 1.29 | % | 1.30 | % | 1.35 | % | 1.38 | % | |||||||||
ALL as a % of loans, excluding acquired loans(5) | 0.88 | % | 0.96 | % | 0.98 | % | 0.98 | % | 0.99 | % | |||||||||
CLASSIFIED ASSETS | |||||||||||||||||||
Classified loans(1) | $ | 77,679 | $ | 75,033 | $ | 71,040 | $ | 71,082 | $ | 68,128 | |||||||||
ORE and repossessions | 10,013 | 10,664 | 11,161 | 12,938 | 17,088 | ||||||||||||||
Total classified assets(3) | $ | 87,692 | $ | 85,697 | $ | 82,201 | $ | 84,020 | $ | 85,216 | |||||||||
(1) Amount of SBA guarantee included in classified loans | $ | 2,930 | $ | 2,755 | $ | 7,458 | $ | 5,213 | $ | 7,735 | |||||||||
(2) Amount of repurchased government-guaranteed loans, primarily residential mortgage loans, included in nonaccrual loans | $ | 19,478 | $ | 15,450 | $ | 12,502 | $ | 12,287 | $ | 7,771 | |||||||||
(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 | |||||||||||||||||||
11
FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||
INCOME FROM INDIRECT LENDING ACTIVITIES | ||||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||||
For the Quarter Ended | ||||||||||||||||||||
(in thousands) | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | |||||||||||||||
Loan servicing revenue | $ | 2,158 | $ | 2,130 | $ | 2,199 | $ | 1,919 | $ | 2,343 | ||||||||||
Gain on sale of loans | 532 | 263 | 1,074 | 1,821 | 993 | |||||||||||||||
Gain on capitalization of servicing rights | 406 | 182 | 1,020 | 1,403 | 781 | |||||||||||||||
Ancillary loan servicing revenue | 247 | 172 | 204 | 153 | 302 | |||||||||||||||
Gross indirect lending revenue | 3,343 | 2,747 | 4,497 | 5,296 | 4,419 | |||||||||||||||
Less: | ||||||||||||||||||||
Amortization of servicing rights, net | (777 | ) | (846 | ) | (857 | ) | (870 | ) | (953 | ) | ||||||||||
Total income from indirect lending activities | $ | 2,566 | $ | 1,901 | $ | 3,640 | $ | 4,426 | $ | 3,466 | ||||||||||
FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||||
ANALYSIS OF INDIRECT LENDING | ||||||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||||||
As of or for the Quarter Ended | ||||||||||||||||||||||
($ in thousands) | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | |||||||||||||||||
Average loans outstanding(1) | $ | 1,748,179 | $ | 1,627,946 | $ | 1,675,644 | $ | 1,756,958 | $ | 1,702,006 | ||||||||||||
Loans serviced for others | $ | 1,056,509 | $ | 1,114,710 | $ | 1,216,296 | $ | 1,197,160 | $ | 1,130,289 | ||||||||||||
Past due loans: | ||||||||||||||||||||||
Amount 30+ days past due | 3,423 | 2,965 | 1,535 | 2,223 | 2,972 | |||||||||||||||||
Number 30+ days past due | 283 | 255 | 143 | 200 | 252 | |||||||||||||||||
30+ day performing delinquency rate(2) | 0.19 | % | 0.18 | % | 0.09 | % | 0.13 | % | 0.17 | % | ||||||||||||
Nonperforming loans | 1,916 | 1,405 | 1,363 | 1,778 | 1,278 | |||||||||||||||||
Nonperforming loans as a percentage of period end loans(2) | 0.11 | % | 0.08 | % | 0.08 | % | 0.10 | % | 0.07 | % | ||||||||||||
Net charge-offs | $ | 798 | $ | 1,047 | $ | 1,332 | $ | 1,502 | $ | 1,306 | ||||||||||||
Net charge-off rate(3) | 0.19 | % | 0.27 | % | 0.35 | % | 0.38 | % | 0.32 | % | ||||||||||||
Number of vehicles repossessed during the period | 107 | 132 | 147 | 154 | 164 | |||||||||||||||||
Quarterly production weighted average beacon score | 783 | 776 | 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 | |||||||||||||||||||||
12
FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||||
ANALYSIS OF INDIRECT LENDING | ||||||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||||||
As of or for the Quarter Ended | ||||||||||||||||||||||
($ in thousands) | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | |||||||||||||||||
Production by state: | ||||||||||||||||||||||
Alabama | $ | 19,216 | $ | 13,587 | $ | 10,399 | $ | 14,452 | $ | 11,613 | ||||||||||||
Arkansas | 30,732 | 26,997 | 26,569 | 33,602 | 32,789 | |||||||||||||||||
North Carolina | 28,912 | 16,545 | 14,110 | 15,858 | 13,734 | |||||||||||||||||
South Carolina | 16,559 | 10,959 | 11,232 | 15,020 | 11,953 | |||||||||||||||||
Florida | 87,750 | 51,723 | 49,976 | 65,053 | 56,432 | |||||||||||||||||
Georgia | 45,571 | 31,266 | 28,091 | 36,178 | 29,150 | |||||||||||||||||
Mississippi | 32,141 | 24,535 | 20,136 | 21,370 | 17,784 | |||||||||||||||||
Tennessee | 17,635 | 10,931 | 10,012 | 14,143 | 12,963 | |||||||||||||||||
Virginia | 6,495 | 8,223 | 6,292 | 10,282 | 6,063 | |||||||||||||||||
Texas (2) | — | 13,312 | 26,542 | 32,902 | 24,942 | |||||||||||||||||
Louisiana | 60,021 | 47,576 | 45,306 | 56,046 | 49,849 | |||||||||||||||||
Oklahoma (2) | — | 430 | 1,051 | 1,635 | 1,780 | |||||||||||||||||
Total production by state | $ | 345,032 | $ | 256,084 | $ | 249,716 | $ | 316,541 | $ | 269,052 | ||||||||||||
Loan sales | $ | 59,681 | $ | 27,115 | $ | 151,996 | $ | 192,435 | $ | 97,916 | ||||||||||||
Portfolio yield (1) | 2.98 | % | 2.92 | % | 2.84 | % | 2.87 | % | 2.88 | % | ||||||||||||
(1) | Includes held-for-sale | |||||||||||||||||||||
(2) | Fidelity exited the Oklahoma and Texas markets in Q3 2017 | |||||||||||||||||||||
13
FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||||
INCOME FROM MORTGAGE BANKING ACTIVITIES | ||||||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||||||
As of or for the Quarter Ended | ||||||||||||||||||||||
(in thousands) | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | |||||||||||||||||
Marketing gain, net | $ | 16,683 | $ | 19,713 | $ | 21,355 | $ | 18,677 | $ | 19,364 | ||||||||||||
Origination points and fees | 3,482 | 3,815 | 4,189 | 3,021 | 3,786 | |||||||||||||||||
Loan servicing revenue | 5,851 | 5,616 | 5,379 | 5,341 | 5,088 | |||||||||||||||||
Gross mortgage revenue | $ | 26,016 | $ | 29,144 | $ | 30,923 | $ | 27,039 | $ | 28,238 | ||||||||||||
Less: | ||||||||||||||||||||||
MSR amortization | (3,609 | ) | (3,560 | ) | (3,331 | ) | (3,158 | ) | (3,918 | ) | ||||||||||||
MSR (impairment)/recovery, net | (1,476 | ) | (544 | ) | (636 | ) | 1,989 | 13,144 | ||||||||||||||
Total income from mortgage banking activities | $ | 20,931 | $ | 25,040 | $ | 26,956 | $ | 25,870 | $ | 37,464 | ||||||||||||
FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||||
ANALYSIS OF MORTGAGE LENDING | ||||||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||||||
As of or for the Quarter Ended | ||||||||||||||||||||||
($ in thousands) | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | |||||||||||||||||
Production by region: | ||||||||||||||||||||||
Georgia | $ | 423,876 | $ | 490,323 | $ | 519,497 | $ | 395,404 | $ | 532,177 | ||||||||||||
Florida | 103,490 | 95,010 | 95,983 | 46,365 | 46,140 | |||||||||||||||||
Alabama/Tennessee(2) | 4,609 | 7,299 | 7,294 | 3,600 | 5,485 | |||||||||||||||||
Virginia/Maryland | 106,398 | 129,774 | 143,885 | 81,901 | 139,283 | |||||||||||||||||
North and South Carolina | 31,360 | 30,448 | 33,767 | 25,727 | 33,783 | |||||||||||||||||
Total production by region | $ | 669,733 | $ | 752,854 | $ | 800,426 | $ | 552,997 | $ | 756,868 | ||||||||||||
% for purchases | 82.9 | % | 86.3 | % | 89.6 | % | 80.9 | % | 61.3 | % | ||||||||||||
% for refinance loans | 17.1 | % | 13.7 | % | 10.4 | % | 19.1 | % | 38.7 | % | ||||||||||||
Portfolio Production: | $ | 66,236 | $ | 56,072 | $ | 46,902 | $ | 51,061 | $ | 38,907 | ||||||||||||
Funded loan type (UPB): | ||||||||||||||||||||||
Conventional | 62.0 | % | 62.0 | % | 62.5 | % | 63.9 | % | 68.9 | % | ||||||||||||
FHA/VA/USDA | 21.5 | % | 23.3 | % | 24.6 | % | 24.2 | % | 21.6 | % | ||||||||||||
Jumbo | 16.5 | % | 14.7 | % | 12.9 | % | 11.9 | % | 9.5 | % | ||||||||||||
Gross pipeline of locked loans to be sold (UPB) | $ | 203,896 | $ | 265,444 | $ | 360,551 | $ | 374,739 | $ | 211,921 | ||||||||||||
Loans held for sale (UPB) | $ | 262,315 | $ | 250,960 | $ | 271,714 | $ | 195,772 | $ | 250,094 | ||||||||||||
Total loan sales (UPB) | $ | 602,171 | $ | 731,595 | $ | 689,073 | $ | 566,003 | $ | 758,775 | ||||||||||||
Conventional | 64.3 | % | 63.0 | % | 63.6 | % | 69.9 | % | 72.8 | % | ||||||||||||
FHA/VA/USDA | 25.0 | % | 27.1 | % | 26.6 | % | 23.0 | % | 22.6 | % | ||||||||||||
Jumbo | 10.7 | % | 9.9 | % | 9.8 | % | 7.1 | % | 4.6 | % | ||||||||||||
Average loans outstanding(1) | $ | 701,932 | $ | 698,068 | $ | 664,099 | $ | 592,537 | $ | 634,511 | ||||||||||||
(1) Includes held-for-sale | ||||||||||||||||||||||
(2) Tennessee added in Q1 2017 | ||||||||||||||||||||||
14
FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||||
THIRD PARTY MORTGAGE LOAN SERVICING | ||||||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||||||
As of or for the Quarter Ended | ||||||||||||||||||||||
($ in thousands) | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | |||||||||||||||||
Loans serviced for others (UPB) | $ | 8,917,117 | $ | 8,715,198 | $ | 8,357,934 | $ | 8,067,426 | $ | 7,787,470 | ||||||||||||
Average loans serviced for others (UPB) | $ | 8,896,305 | $ | 8,657,475 | $ | 8,304,065 | $ | 8,013,761 | $ | 7,625,384 | ||||||||||||
MSR book value, net of amortization | $ | 110,497 | $ | 107,434 | $ | 102,549 | $ | 98,550 | $ | 95,282 | ||||||||||||
MSR impairment | (9,818 | ) | (8,343 | ) | (7,799 | ) | (7,163 | ) | (9,152 | ) | ||||||||||||
MSR net carrying value | $ | 100,679 | $ | 99,091 | $ | 94,750 | $ | 91,387 | $ | 86,130 | ||||||||||||
MSR carrying value as a % of period end UPB | 1.13 | % | 1.14 | % | 1.13 | % | 1.13 | % | 1.11 | % | ||||||||||||
Delinquency % loans serviced for others | 1.87 | % | 1.41 | % | 1.02 | % | 0.53 | % | 0.69 | % | ||||||||||||
MSR revenue multiple(1) | 4.29 | 4.38 | 4.38 | 4.25 | 4.14 | |||||||||||||||||
(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 | ||||||||||||||||||||||
15
FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES
AVERAGE BALANCE, INTEREST AND YIELDS
(UNAUDITED)
For the Quarter Ended | ||||||||||||||||||||
December 31, 2017 | September 30, 2017 | December 31, 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) | $ | 3,832,444 | 4.15 | % | $ | 3,725,976 | 3.98 | % | $ | 3,774,939 | 3.90 | % | ||||||||
Investment securities (1) | 142,494 | 2.86 | % | 147,572 | 2.76 | % | 179,802 | 2.92 | % | |||||||||||
Other earning assets | 193,186 | 1.18 | % | 273,505 | 1.16 | % | 96,423 | 0.46 | % | |||||||||||
Total interest-earning assets | 4,168,124 | 3.97 | % | 4,147,053 | 3.75 | % | 4,051,164 | 3.77 | % | |||||||||||
Noninterest-earning assets: | ||||||||||||||||||||
Cash and due from banks | 39,173 | 41,590 | 32,390 | |||||||||||||||||
Allowance for loan losses | (30,579 | ) | (30,518 | ) | (29,335 | ) | ||||||||||||||
Premises and equipment, net | 88,124 | 87,679 | 88,361 | |||||||||||||||||
Other real estate | 8,631 | 9,111 | 16,023 | |||||||||||||||||
Other assets | 232,055 | 224,730 | 209,976 | |||||||||||||||||
Total noninterest-earning assets | 337,404 | 332,592 | 317,415 | |||||||||||||||||
Total assets | $ | 4,505,528 | $ | 4,479,645 | $ | 4,368,579 | ||||||||||||||
Liabilities and shareholders’ equity | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||
Demand and money market deposits | $ | 1,482,686 | 0.44 | % | $ | 1,447,874 | 0.42 | % | $ | 1,179,837 | 0.25 | % | ||||||||
Savings deposits | 352,235 | 0.33 | % | 340,663 | 0.31 | % | 350,885 | 0.33 | % | |||||||||||
Time deposits | 958,790 | 0.94 | % | 1,021,563 | 0.92 | % | 1,052,082 | 0.89 | % | |||||||||||
Total interest-bearing deposits | 2,793,711 | 0.60 | % | 2,810,100 | 0.59 | % | 2,582,804 | 0.52 | % | |||||||||||
Other short-term borrowings | 31,253 | 0.22 | % | 20,899 | 0.32 | % | 295,369 | 0.64 | % | |||||||||||
Subordinated debt | 120,571 | 5.07 | % | 120,538 | 5.04 | % | 120,439 | 4.94 | % | |||||||||||
Total interest-bearing liabilities | 2,945,535 | 0.78 | % | 2,951,537 | 0.77 | % | 2,998,612 | 0.71 | % | |||||||||||
Noninterest-bearing liabilities and shareholders’ equity: | ||||||||||||||||||||
Demand deposits | 1,124,759 | 1,103,414 | 978,909 | |||||||||||||||||
Other liabilities | 42,486 | 44,732 | 36,516 | |||||||||||||||||
Shareholders’ equity | 392,748 | 379,962 | 354,542 | |||||||||||||||||
Total noninterest-bearing liabilities and shareholders’ equity | 1,559,993 | 1,528,108 | 1,369,967 | |||||||||||||||||
Total liabilities and shareholders’ equity | $ | 4,505,528 | $ | 4,479,645 | $ | 4,368,579 | ||||||||||||||
Net interest spread | 3.19 | % | 2.98 | % | 3.06 | % | ||||||||||||||
Net interest margin | 3.42 | % | 3.20 | % | 3.25 | % | ||||||||||||||
16
FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES
GAAP TO NON-GAAP RATIO RECONCILIATION
(UNAUDITED)
For the Quarter Ended | |||||||||||||||||||
($ in thousands) | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | ||||||||||||||
Reconciliation of nonperforming assets to adjusted nonperforming assets: | |||||||||||||||||||
Nonaccrual loans | $ | 47,012 | $ | 41,408 | $ | 37,894 | $ | 38,377 | $ | 35,358 | |||||||||
Add: loans past due 90 days or more and still accruing | 6,313 | 6,534 | 7,210 | 8,414 | 6,189 | ||||||||||||||
Add: repossessions | 2,392 | 2,040 | 1,779 | 1,654 | 2,274 | ||||||||||||||
Add: Other Real Estate (ORE) | 7,621 | 8,624 | 9,382 | 11,284 | 14,814 | ||||||||||||||
Nonperforming assets (GAAP) | 63,338 | 58,606 | 56,265 | 59,729 | 58,635 | ||||||||||||||
Less: amount of GNMA repurchased government-guaranteed loans included in nonaccrual loans | (19,478 | ) | (15,450 | ) | (12,502 | ) | (12,287 | ) | (7,771 | ) | |||||||||
Less: SBA guaranteed loans included in nonaccrual | (1,652 | ) | (2,145 | ) | (2,949 | ) | (3,373 | ) | (4,248 | ) | |||||||||
Less: Nonaccrual acquired loans | (6,370 | ) | (7,509 | ) | (4,878 | ) | (5,719 | ) | (6,136 | ) | |||||||||
Adjusted nonperforming assets, excluding acquired loans, SBA, and GNMA (Non-GAAP) | $ | 35,838 | $ | 33,502 | $ | 35,936 | $ | 38,350 | $ | 40,480 | |||||||||
Reconciliation of total loans, ORE and repossessions to total loans, ORE and repossessions, less acquired loans | |||||||||||||||||||
Loans, excluding Loans Held-for-Sale | $ | 3,580,966 | $ | 3,409,707 | $ | 3,332,132 | $ | 3,354,926 | $ | 3,302,264 | |||||||||
Add: Loans Held-for-Sale | 357,755 | 340,329 | 394,710 | 361,117 | 465,328 | ||||||||||||||
Add: ORE | 7,621 | 8,624 | 9,382 | 11,284 | 14,814 | ||||||||||||||
Add: repossessions | 2,392 | 2,040 | 1,779 | 1,654 | 2,274 | ||||||||||||||
Total loans, ORE, and repossessions (GAAP) | 3,590,979 | 3,760,700 | 3,738,003 | 3,728,981 | 3,784,680 | ||||||||||||||
Less: acquired loans | 196,565 | 216,994 | 230,256 | 258,366 | 275,515 | ||||||||||||||
Total loans, ORE, and repossessions, less acquired loans (non-GAAP) | $ | 3,394,414 | $ | 3,543,706 | $ | 3,507,747 | $ | 3,470,615 | $ | 3,509,165 | |||||||||
Nonperforming assets to loans, ORE, and repossessions (GAAP) | 1.76 | % | 1.56 | % | 1.51 | % | 1.60 | % | 1.55 | % | |||||||||
Adjusted nonperforming assets to loans, ORE, and repossessions (non-GAAP) | 1.06 | % | 0.95 | % | 1.02 | % | 1.10 | % | 1.15 | % | |||||||||
Nonperforming assets to total assets (GAAP) | 1.38 | % | 1.30 | % | 1.22 | % | 1.32 | % | 1.34 | % | |||||||||
Adjusted nonperforming assets to total assets (non-GAAP) | 0.78 | % | 0.74 | % | 0.78 | % | 0.85 | % | 0.92 | % | |||||||||
Reconciliation of allowance to adjusted allowance: | |||||||||||||||||||
Allowance for loan losses (GAAP) | $ | 29,772 | $ | 30,703 | $ | 30,425 | $ | 30,455 | $ | 29,830 | |||||||||
Less: allowance allocated to indirect auto loans | (10,258 | ) | (10,116 | ) | (9,767 | ) | (9,442 | ) | (9,522 | ) | |||||||||
Less: allowance allocated to acquired loans | (209 | ) | (159 | ) | (284 | ) | (284 | ) | (284 | ) | |||||||||
Adjusted allowance for loan losses (non-GAAP) | $ | 19,305 | $ | 20,428 | $ | 20,374 | $ | 20,729 | $ | 20,024 | |||||||||
Reconciliation of total loans to adjusted total loans: | |||||||||||||||||||
Total loans, excluding Loans HFS | $ | 3,580,966 | $ | 3,409,707 | $ | 3,332,132 | $ | 3,354,926 | $ | 3,302,264 | |||||||||
Less: indirect auto loans | (1,716,156 | ) | (1,609,689 | ) | (1,531,761 | ) | (1,565,298 | ) | (1,575,865 | ) | |||||||||
Less: acquired loans | (196,565 | ) | (216,994 | ) | (230,256 | ) | (258,366 | ) | (275,515 | ) | |||||||||
Adjusted total loans (non-GAAP) | $ | 1,668,245 | $ | 1,583,024 | $ | 1,570,115 | $ | 1,531,262 | $ | 1,450,884 | |||||||||
Allowance to total loans (GAAP) | 0.83 | % | 0.90 | % | 0.91 | % | 0.91 | % | 0.90 | % | |||||||||
Adjusted allowance to adjusted total loans (non-GAAP) | 1.16 | % | 1.29 | % | 1.30 | % | 1.35 | % | 1.38 | % | |||||||||
17