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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 September 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 October 31, 2003
 
Common Stock, no par value     8,877,847  

1

 

FIDELITY SOUTHERN CORPORATION

INDEX

                         
                    Page Number
                   
Part I.          
Financial Information
        
        Item 1.  
Consolidated Financial Statements
        
               
Consolidated Balance Sheets as of September 30, 2003 (unaudited) and December 31, 2002
     3  
               
Consolidated Statements of Income (unaudited) for the Nine Months Ended September 30, 2003 and 2002, and the Three Months Ended September 30, 2003 and 2002
     4-5  
               
Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 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  
        Item 4.  
Controls and Procedures
     21  
Part II.          
Other Information
     22-23  
        Item 1.  
Legal Proceedings
     22  
        Item 5.  
Other Information
     22  
        Item 6.  
Exhibits and Reports on Form 8-K
     22-23  
Signature Page         23  
Exhibits   31.3 Certification of Chief Executive Officer     24-25  
               
31.4 Certification of Chief Financial Officer
     26-27  
               
32.3 Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
     28  
               
32.4 Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
     29  

2

 

PART I - FINANCIAL INFORMATION
ITEM 1 – CONSOLIDATED FINANCIAL STATEMENTS

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

                         
            (Unaudited)        
            September 30,   December 31,
(Dollars in thousands)   2003   2002
   
 
Assets
                
 
Cash and due from banks
   $ 22,492     $ 32,144  
 
Interest-bearing deposits with banks
     1,056       25,339  
 
Federal funds sold
     2,873       69,455  
 
Investment securities available-for-sale (amortized cost of $122,169 and $107,615 at September 30, 2003, and December 31, 2002, respectively)
     122,424       110,866  
 
Investment securities held-to-maturity (approximate fair value of $6,415 and $9,086 at September 30, 2003, and December 31, 2002, respectively)
     6,323       8,888  
 
Loans held-for-sale
     54,394       35,467  
 
Loans
     782,988       753,935  
 
Allowance for loan losses
     (9,940 )     (9,404 )
 
    
     
 
 
Loans, net
     773,048       744,531  
 
Premises and equipment, net
     14,089       14,744  
 
Other real estate
     2,196       2,629  
 
Net liabilities of discontinued operations
     -       (1,189 )
 
Accrued interest receivable
     4,728       4,896  
 
Other assets
     16,256       17,957  
 
    
     
 
       
Total assets
   $ 1,019,879     $ 1,065,727  
 
    
     
 
Liabilities
                
 
Deposits
                
   
Noninterest-bearing demand deposits
   $ 106,123     $ 114,035  
   
Interest-bearing deposits:
                
     
Demand and money market
     164,307       157,652  
     
Savings
     119,839       105,810  
     
Time deposits, $100,000 and over
     156,320       177,423  
     
Other time deposits
     309,216       351,175  
 
 
    
     
 
       
Total deposits
     855,805       906,095  
 
Federal Home Loan Bank short-term borrowings
     24,000       -  
 
Other short-term borrowings
     27,935       17,326  
 
Other long-term debt
     1,662       40,508  
 
Trust preferred securities
     35,500       20,500  
 
Accrued interest payable
     2,245       4,301  
 
Other liabilities
     2,186       6,223  
 
    
     
 
       
Total liabilities
     949,333       994,953  
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 September 30, 2003, and December 31, 2002, respectively.
     40,409       40,335  
Treasury stock
     (69 )     (69 )
Accumulated other comprehensive income, net of taxes
     159       2,146  
Retained earnings
     30,047       28,362  
 
 
    
     
 
       
Total shareholders’ equity
     70,546       70,774  
 
    
     
 
       
Total liabilities and shareholders’ equity
   $ 1,019,879     $ 1,065,727  
 
    
     
 

See accompanying notes to consolidated financial statements.

3

 

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

                                     
        Nine Months Ended September 30,   Three Months Ended September 30,
       
 
(Dollars in thousands, except per share data)   2003   2002   2003   2002
   
 
 
 
Interest income
                                
 
Loans, including fees
   $ 37,849     $ 38,615     $ 12,354     $ 13,315  
 
Investment securities
     4,783       4,412       1,456       1,490  
 
Federal funds sold
     138       201       25       125  
 
Deposits with other banks
     37       32       5       18  
 
    
     
     
     
 
   
Total interest income
     42,807       43,260       13,840       14,948  
Interest expense
                                
 
Deposits
     14,591       16,813       4,473       5,413  
 
Short-term borrowings
     921       978       477       314  
 
Trust preferred securities
     1,878       1,646       734       518  
 
Other long-term debt
     963       1,478       —       576  
 
    
     
     
     
 
   
Total interest expense
     18,353       20,915       5,684       6,821  
 
    
     
     
     
 
Net interest income
     24,454       22,345       8,156       8,127  
 
Provision for loan losses
     3,750       3,824       1,950       1,623  
 
    
     
     
     
 
Net interest income after provision for loan losses
     20,704       18,521       6,206       6,504  
Noninterest income
                                
 
Service charges on deposit accounts
     3,868       3,684       1,271       1,227  
 
Merchant activities
     —       5,265       —       257  
 
Mortgage banking activities
     2,562       1,664       718       673  
 
Brokerage activities
     295       585       84       184  
 
Indirect lending activities
     1,835       2,233       684       780  
 
Securities gains, net
     331       300       —       205  
 
Other operating income
     1,914       1,985       525       555  
 
    
     
     
     
 
   
Total noninterest income
     10,805       15,716       3,282       3,881  
Noninterest expense
                                
 
Salaries and employee benefits
     14,041       13,440       4,600       4,563  
 
Furniture and equipment
     2,019       2,350       654       746  
 
Net occupancy
     2,866       2,583       932       864  
 
Merchant processing
     —       1,158       —       107  
 
Communication expenses
     1,089       1,101       310       368  
 
Professional and other services
     2,374       3,121       546       1,054  
 
Other
     5,087       5,579       1,746       2,659  
 
    
     
     
     
 
   
Total noninterest expense
     27,476       29,332       8,788       10,361  
 
    
     
     
     
 
Income from continuing operations before income tax expense
     4,033       4,905       700       24  
Income tax expense
     1,097       1,617       105       25  
 
    
     
     
     
 
Income (Loss) from continuing operations
     2,936       3,288       595       (1 )

See accompanying notes to consolidated financial statements.

4

 

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

                                   
      Nine Months Ended September 30,   Three Months Ended September 30,
     
 
(Dollars in thousands, except per share data)   2003   2002   2003   2002
   
 
 
 
Discontinued operations:
                                
 
Income from discontinued operations (net of income tax expense of $81, $613,($-0- and $68, respectively)
     78       1,245       —       383  
 
 
    
     
     
     
 
Net Income
   $ 3,014     $ 4,533     $ 595     $ 382  
 
    
     
     
     
 
Earnings per share from continuing operations:
                                
 
Basic earnings per share
   $ 0.33     $ 0.37     $ 0.07     $ 0.00  
 
    
     
     
     
 
 
Diluted earnings per share
   $ 0.33     $ 0.37     $ 0.07     $ 0.00  
 
    
     
     
     
 
Earnings per share:
                                
 
Basic earnings per share
   $ 0.34     $ 0.51     $ 0.07     $ 0.04  
 
    
     
     
     
 
 
Diluted earnings per share
   $ 0.34     $ 0.51     $ 0.07     $ 0.04  
 
    
     
     
     
 
Dividends declared per share
   $ 0.15     $ 0.15     $ 0.05     $ 0.05  
 
    
     
     
     
 
Weighted average common shares outstanding-basic
     8,861,930       8,824,559       8,863,847       8,851,258  
 
 
    
     
     
     
 
Weighted average common shares outstanding – fully diluted
     8,951,258       8,873,537       8,991,252       8,907,749  
 
 
    
     
     
     
 

See accompanying notes to consolidated financial statements.

5

 

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

                         
            Nine Months Ended September 30,
           
(Dollars in thousands)   2003   2002
   
 
Operating Activities
                
 
Net income from continuing operations
   $ 2,936     $ 3,288  
 
Net income from discontinued operations
     78       1,245  
 
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
                
   
Provision for loan losses
     3,750       3,824  
   
Depreciation and amortization of premises and equipment
     1,519       1,813  
   
Securities gains, net
     (331 )     (300 )
   
Gain on loan sales
     (305 )     (431 )
   
Proceeds from sales of other real estate
     1,299       1,678  
   
Gain on sales of other real estate
     (91 )     (125 )
   
Net (increase) decrease in loans held-for-sale
     (18,927 )     12,949  
   
Net decrease in accrued interest receivable
     168       279  
   
Net decrease in accrued interest payable
     (2,056 )     (1,189 )
   
Net decrease in other assets
     1,701       925  
   
Net (decrease) increase in other liabilities
     (4,038 )     1,069  
   
Other
     1,008       (1,155 )
 
    
     
 
     
Net cash flows (used in) provided by operating activities
     (13,289 )     23,870  
Investing Activities
                
 
Purchases of investm