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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
FORM 10-Q
     
x   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.

For the quarterly period ended          June 30, 2003

Commission File Number:          0-22374

Fidelity Southern Corporation

(Exact name of registrant as specified in its charter)
     
Georgia   58-1416811
 
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)
     
3490 Piedmont Road, Suite 1550   Atlanta, GA 30305
 
(Address of principal executive offices)   (Zip Code)

(404) 639-6500

(Registrant’s telephone number, including area code)

Fidelity National Corporation

(Former name, former address and former fiscal year, if changed since last report)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [x] Yes [ ] No

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [x] No

     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

     
Class   Shares Outstanding at, July 31, 2003
 
Common Stock, no par value   8,863,847

 

 

FIDELITY SOUTHERN CORPORATION

INDEX

                         
                    Page Number
                   
Part I           Financial Information        
        Item l.   Consolidated Financial Statements        
                Consolidated Balance Sheets as of June 30, 2003 (unaudited) and December 31, 2002     3  
                Consolidated Statements of Income (unaudited) for the Three Months and the Six Months Ended June 30, 2003 and 2002     4-5  
                Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2003 and 2002     6  
                Notes to Consolidated Financial Statements (unaudited)     7-11  
        Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations     11-21  
        Item 3.   Quantitative and Qualitative Disclosures about Market Risk (included in Part I Item 2)     15-16  
        Item 4.   Controls and Procedures     21-22  
Part II           Other Information     22-24  
        Item 1.   Legal Proceedings     22  
        Item 5.   Other Information     22  
        Item 6.   Exhibits and Reports on Form 8-K     23-24  
Signature Page         24  
Exhibits           31.1 Certification of Chief Executive Officer     25-26  
                31.2 Certification of Chief Financial Officer     27-28  
                32.1 Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act     29  
                32.2 Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act     30  

2

 

PART I — FINANCIAL INFORMATION
ITEM 1 – CONSOLIDATED FINANCIAL STATEMENTS

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

                         
            (Unaudited)        
            June 30,   December 31,
(Dollars in thousands)   2003   2002
 
 
Assets
                
 
Cash and due from banks
   $ 25,512     $ 32,144  
 
Interest-bearing deposits with banks
     1,650       25,339  
 
Federal funds sold
     19,513       69,455  
 
Investment securities available-for-sale (amortized cost of $111,136 and $107,615 at June 30, 2003, and December 31, 2002, respectively)
     114,141       110,866  
 
Investment securities held-to-maturity (approximate fair value of $7,176 and $9,086 at June 30, 2003, and December 31, 2002, respectively)
     7,051       8,888  
 
Loans held-for-sale
     74,876       35,467  
 
Loans
     776,836       754,830  
 
Allowance for loan losses
     (10,139 )     (9,665 )
 
    
     
 
 
Loans, net
     766,697       745,165  
 
Premises and equipment, net
     14,146       14,744  
 
Other real estate
     1,594       2,629  
 
Net liabilities of discontinued operations
     —       (1,189 )
 
Accrued interest receivable
     4,584       4,896  
 
Other assets
     17,215       17,957  
 
    
     
 
       
Total assets
   $ 1,046,979     $ 1,066,361  
 
    
     
 
Liabilities
                
 
Deposits
                
   
Noninterest-bearing demand deposits
   $ 107,116     $ 114,035  
   
Interest-bearing deposits:
                
     
Demand and money market
     164,054       157,652  
     
Savings
     115,359       105,810  
     
Time deposits, $100,000 and over
     152,549       177,423  
     
Other time deposits
     319,861       351,175  
 
    
     
 
       
Total deposits
     858,939       906,095  
 
Federal Home Loan Bank short-term borrowings
     24,000       —  
 
Other short-term borrowings
     47,656       17,326  
 
Other long-term debt
     1,508       40,508  
 
Trust preferred securities
     35,500       20,500  
 
Accrued interest payable
     3,002       4,301  
 
Other liabilities
     3,882       6,464  
 
    
     
 
       
Total liabilities
     974,487       995,194  
Shareholders’ Equity
                
Common stock, no par value. Authorized 50,000,000; issued 8,874,939 and 8,866,624; outstanding 8,863,847 and 8,855,532 at June 30, 2003, and December 31, 2002, respectively
     40,409       40,335  
Treasury stock
     (69 )     (69 )
Accumulated other comprehensive income, net of taxes
     1,863       2,146  
Retained earnings
     30,289       28,755  
 
    
     
 
       
Total shareholders’ equity
     72,492       71,167  
 
    
     
 
       
Total liabilities and shareholders’ equity
   $ 1,046,979     $ 1,066,361  
 
    
     
 

See accompanying notes to consolidated financial statements.

3

 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

                                     
(Dollars in thousands, except per share data)   Six Months Ended June 30,   Three Months Ended June 30,
 
 
        2003   2002   2003   2002
       
 
 
 
Interest income
                                
 
Loans, including fees
   $ 25,495     $ 25,300     $ 12,785     $ 12,645  
 
Investment securities
     3,327       2,922       1,583       1,434  
 
Federal funds sold
     113       76       36       37  
 
Deposits with other banks
     32       13       3       5  
 
    
     
     
     
 
   
Total interest income
     28,967       28,311       14,407       14,121  
Interest expense
                                
 
Deposits
     10,120       11,399       4,937       5,262  
 
Short-term borrowings
     445       664       359       290  
 
Trust preferred securities
     1,143       1,135       576       624  
 
Other long-term debt
     961       896       355       457  
 
    
     
     
     
 
   
Total interest expense
     12,669       14,094       6,227       6,633  
 
    
     
     
     
 
Net interest income
     16,298       14,217       8,180       7,488  
 
Provision for loan losses
     1,800       2,201       800       937  
 
    
     
     
     
 
Net interest income after provision for loan losses
     14,498       12,016       7,380       6,551  
Noninterest income
                                
 
Service charges on deposit accounts
     2,597       2,456       1,338       1,228  
 
Merchant activities
     —       5,008       —       743  
 
Mortgage banking activities
     1,844       991       971       456  
 
Brokerage activities
     211       401       93       163  
 
Indirect lending activities
     1,151       1,453       591       649  
 
Securities gains, net
     331       95       —       32  
 
Other operating income
     1,389       1,430       815       682  
 
    
     
     
     
 
   
Total noninterest income
     7,523       11,834       3,808       3,953  
Noninterest expense
                                
 
Salaries and employee benefits
     9,441       8,876       4,631       4,465  
 
Furniture and equipment
     1,365       1,604       683       779  
 
Net occupancy
     1,934       1,719       949       882  
 
Merchant processing
     —       1,051       —       526  
 
Communication expenses
     779       733       371       343  
 
Professional and other services
     1,828       2,067       638       944  
 
Other
     3,341       2,919       1,770       1,399  
 
    
     
     
     
 
   
Total noninterest expense
     18,688       18,969       9,042       9,338  
 
    
     
     
     
 
Income from continuing operations before income tax expense
     3,333       4,881       2,146       1,166  
Income tax expense
     992       1,590       667       367  
 
    
     
     
     
 
Income from continuing operations
     2,341       3,291       1,479       799  

See accompanying notes to consolidated financial statements.

4

 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)
(UNAUDITED)

                                   
(Dollars in thousands, except per share data)   Six Months Ended June 30,   Three Months Ended June 30,
 
 
      2003   2002   2003   2002
     
 
 
 
Discontinued operations:
                                
 
Income from discontinued operations (net of income tax expense of ($37, $443, $81 and $249, respectively)
     78       861       173       484  
 
 
    
     
     
     
 
Net Income
   $ 2,419     $ 4,152     $ 1,652     $ 1,283  
 
    
     
     
     
 
Earnings per share from continuing operations:
                                
 
Basic earnings per share
   $ 0.26     $ 0.37     $ 0.16     $ 0.09  
 
    
     
     
     
 
 
Diluted earnings per share
   $ 0.26     $ 0.37     $ 0.16     $ 0.09  
 
    
     
     
     
 
Earnings per share:
                                
 
Basic earnings per share
   $ 0.27     $ 0.47     $ 0.18     $ 0.14  
 
    
     
     
     
 
 
Diluted earnings per share
   $ 0.27     $ 0.47     $ 0.18     $ 0.14  
 
    
     
     
     
 
Dividends declared per share
   $ 0.10     $ 0.10     $ 0.05     $ 0.05  
 
    
     
     
     
 
Weighted average common shares outstanding-basic
     8,860,955       8,810,988       8,863,154       8,840,025  
 
    
     
     
     
 
Weighted average common shares outstanding – fully diluted
     8,930,930       8,855,968       8,936,415       8,916,969  
 
    
     
     
     
 

See accompanying notes to consolidated financial statements.

5

 

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

                         
(Dollars in thousands)   Six Months Ended June 30,
 
            2003   2002
           
 
Operating Activities
                
 
Net income from continuing operations
   $ 2,341     $ 3,291  
 
Net income from discontinued operations
     78       861  
 
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
                
   
Provision for loan losses
     1,800       2,201  
   
Depreciation and amortization of premises and equipment
     998       1,196  
   
Securities gains, net
     (331 )     (95 )
   
Gain on loan sales
     (122 )     (276 )
   
Proceeds from sales of other real estate
     1,253       1,435  
   
Gain on sales of other real estate
     (107 )     (119 )
   
Net (increase) decrease in loans held-for-sale
     (39,409 )     6,373  
   
Net decrease in accrued interest receivable
     312       241  
   
Net decrease in accrued interest payable
     (1,299 )     (1,020 )
   
Net decrease in other assets
     742       311  
   
Net (decrease) increase in other liabilities
     (2,582 )     1,350  
   
Other
     (37 )     (693 )
 
    
     
 
     
Net cash flows (used in) provided by operating activities
     (36,363 )     15,056  
Investing Activities
                
 
Purchases of investment securities held-to-maturity
     (30 )     —  
 
Purchases of investment securities available-for-sale