UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

Fidelity Southern Corporation

(404) 639-6500

     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.

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FIDELITY SOUTHERN CORPORATION

INDEX

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PART I — FINANCIAL INFORMATION

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

See accompanying notes to consolidated financial statements.

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

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

See accompanying notes to consolidated financial statements.

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

See accompanying notes to consolidated financial statements.

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FIDELITY SOUTHERN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 2004

Note A — Basis of Presentation

     The accompanying unaudited consolidated financial statements of Fidelity Southern Corporation and Subsidiaries (“Fidelity”) have been prepared in accordance with accounting principles generally accepted in the United States followed within the financial services industry for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position and results of operations for the interim periods have been included. All such adjustments are normal recurring accruals. Certain prior period amounts have been reclassified to conform to current year presentation. These reclassifications had no impact on net income or shareholders’ equity. Operating results for the three month period ended March 31, 2004, are not necessarily indicative of the results that may be expected for the year ending December 31, 2004. These statements and the related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) should be read in conjunction with the consolidated financial statements and notes thereto included in Fidelity’s Annual Report on Form 10-K for the year ended December 31, 2003.

Note B — Shareholders’ Equity

     The Board of Governors of the Federal Reserve (the “FRB”) is the principal regulator of Fidelity Southern Corporation (“FSC”), a bank holding company. Fidelity Bank, (the “Bank”) is a state chartered commercial bank subject to Federal and state statutes applicable to banks chartered under the banking laws of the State of Georgia, to members of the Federal Reserve System and to banks whose deposits are insured by the Federal Deposit Insurance Corporation (the “FDIC”). The Bank is a wholly-owned subsidiary of Fidelity. The FRB, the FDIC and the Georgia Department of Banking and Finance (the “GDBF”) have established capital requirements as a function of their oversight of bank holding companies and state chartered banks. Each bank holding company and each bank must maintain the minimum capital ratios set forth in “Liquidity” and “Shareholders’ Equity” in MD&A.

     The Bank is principally regulated by the GDBF and the FDIC. At periodic intervals, the GDBF and the FDIC (the Bank’s primary Federal regulator) examine and evaluate the financial condition, operations and policies and procedures of Georgia state chartered commercial banks, such as the Bank, as part of their legally prescribed oversight responsibilities.

Note C — Regulatory Agreement

     Pursuant to the approval of the GBDF, the Bank, agreed, among other things, to maintain a leverage capital ratio of not less than 7.00% for the twenty-four month period following the conversion to a state chartered bank, which occurred on May 9, 2003. The Bank’s leverage capital ratio as of March 31, 2004, was 8.47%. (See “Shareholders’ Equity”.)

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Note D — Discontinued Operations

     In December 2002, Fidelity sold its credit card line of business, including all of its credit card accounts and outstanding balances. In accordance with the terms of the sale, Fidelity provided interim servicing for a fee until the conversion to the purchaser’s system on May 15, 2003, and substantially all related activities ceased by June 30, 2003. In accordance with accounting principles generally accepted in the United States, the earnings and net liabilities of the credit card business were shown separately in the consolidated statements of income for the quarter ended March 31, 2003. Accordingly, all information in these consolidated financial statements for 2003 reflects continuing operations only, unless otherwise noted.

Note E — Contingencies

     Fidelity is a party to claims and lawsuits arising in the course of normal business activities. Certain outstanding claims and lawsuits against Fidelity National Capital Investors, Inc. (“FNCI”), a former registered broker-dealer and a wholly owned subsidiary of Fidelity, were settled during the first quarter of 2004 and during 2003. The SEC is anticipated to file an administrative proceeding against FNCI charging it with the failure to supervise a FNCI registered representative of a client’s accounts with the objective of preventing the registered representative from aiding and abetting the client in violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. Such action by the SEC is anticipated to result in a fine in the amount of $125,000 and other sanctions. A provision was established for such possible fine during 2003. On April 15, 2003, the Bank began providing investment services to its customers through an affiliation with an independent broker-dealer. At that time, FNCI terminated its business as a registered broker-dealer.

     Although the ultimate outcome of all claims and lawsuits outstanding as of March 31, 2004, cannot be ascertained at this time, it is the opinion of management that these matters, when resolved, will not have a material adverse effect on Fidelity’s results of operations or financial condition.

Note F — Comprehensive Income (Loss)

     Fidelity’s comprehensive income (loss) items include net income and other comprehensive income (loss) related to unrealized gains and losses on investment securities classified as available-for-sale and reclassification adjustments for gains and losses on securities sales and calls included in net income. All other comprehensive income (loss) items are tax effected at a rate of 38%. During the first quarter of 2004, total other comprehensive income net of tax was $1.2 million. The other comprehensive loss net of tax benefit was $.4 million for the comparable period of 2003. Comprehensive income for the first quarter of 2004 was $2.7 million compared to comprehensive income of $.4 million for the same period in 2003.

Note G — Stock Based Compensation

     Pro forma information regarding net income and earnings per share is required by SFAS No. 123 and No. 148 and has been determined as if Fidelity had accounted for its employee stock options under the fair value method of those statements. The effects of applying SFAS No. 123 and No. 148 for providing pro forma disclosures are not likely to be representative of the effects on reported net income for future periods.

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     The following schedule reflects the pro forma results, for the three months ended March 31, 2004 and 2003, respectively (dollars in thousands except per share data):

Note H — Recent Accounting Pronouncements

     In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51” (“FIN 46”). FIN 46 addresses whether business enterprises must consolidate the financial statements of entities known as “variable interest entities”. A variable interest entity is defined by FIN 46 to be a business entity which has one or both of the following characteristics: (1) The equity investment at risk is not sufficient to permit the entity to finance its activities without additional support from other parties, which is provided through other interests that will absorb some or all of the expected losses of the entity; and (2) The equity investors lack one or more of the following essential characteristics of a controlling financial interest: (a) direct or indirect ability to make decisions about the entity’s activities through voting rights or similar rights, (b) the obligation to absorb the expected losses of the entity if they occur, which makes it possible for the entity to finance its activities, or (c) the right to receive the expected residual returns of the entity if they occur, which is the compensation for risk of absorbing expected losses.

     Fidelity adopted FIN 46 and through review and analysis determined that Fidelity was the primary beneficiary of its trust preferred securities and that they should be consolidated for financial reporting purposes as of December 31, 2003. FIN 46 was revised in December 2003 (“FIN 46 (Revised)”) and the revised interpretations clarified that trust preferred securities such as those issued by Fidelity had to be deconsolidated for financial reporting purposes no later than the end of the first reporting period ending after March 15, 2004. Fidelity has adopted FIN 46 (Revised) and consequently, the $35.5 million of trust preferred securities issued by trusts established by Fidelity are no longer consolidated for financial reporting purposes. Thus, the equity investments in the subsidiaries created to issue the obligations, the obligations themselves and related dividend income and interest expense are reported on a deconsolidated basis, with the investments in the amount of $1.1 million reported as investments held-to-maturity and dividends included as investment interest income. The obligations, including the amount related to the equity investments, in the amount of $36.6 million are reported as subordinated debt, with related interest expense reported as interest on subordinated debt. This change had no material effect on the operations, financial condition or regulatory capital ratios of Fidelity or the Bank. Financial statements for prior periods have not been restated to reflect the deconsolidation of the trust preferred issues.

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Note I — Variable Interest Entities

     FSC has three business trust subsidiaries that are variable interest entities, FNC Capital Trust 1 (“FNCCT1”), Fidelity National Capital Trust 1 (“FidNCT1”), and Fidelity Southern Statutory Trust 1 (“FSCST1”).

     During 2000, FNCCT1 and FidNCT1 and during 2003 FSCST1, issued common securities, all of which were purchased and are held by FSC, totaling $1.1 million and are classified by Fidelity as investments held-to-maturity in 2004 and trust preferred securities totaling $35.5 million and classified by Fidelity as subordinated debt beginning in 2004, which were sold to investors, with thirty year maturities. In addition, the $1.1 million borrowed from the business trust subsidiaries to purchase their respective common securities is classified as subordinated debt beginning in 2004. The trust preferred securities are callable by the business trust subsidiaries on or after defined periods. The trust preferred security holders may only terminate the business trusts under defined circumstances such as default, dissolution or bankruptcy. The trust preferred security holders and other creditors, if any, of each business trust have no recourse to Fidelity and may only look to the assets of each business trust to satisfy all debts and obligations.

     The only assets of FNCCT1, FidNCT1 and FSCST1 are subordinated debentures of FSC, which were purchased with the proceeds from the issuance of the common and preferred securities. FNCCT1 and FidNCT1 have fixed interest rates of 10.875% and 11.045%, respectively, while FSCST1 has a current interest rate of 4.21%, and reprices quarterly. FSC makes semi-annual interest payments on the subordinated debentures to FNCCT1 and FidNCT1 and quarterly interest payments to FSCST1, which use these payments to pay dividends on the common and preferred securities.

     The trust preferred securities are eligible for regulatory Tier 1 capital, with a limit of 25% of the sum of all core capital elements. All amounts exceeding the 25% limit are includable in regulatory Tier 2 capital.

     The FRB has determined that Fidelity and other financial institutions regulated by it should continue to include the trust preferred securities in their Tier 1 capital for regulatory capital purposes, subject, together with other cumulative preferred stock, if any, to the 25 percent of Tier 1 capital limit, until notice is given to the contrary. The FRB has indicated that it will review the regulatory implications of any accounting treatment changes and, if necessary or warranted, will provide further appropriate guidance. The impact, if any, on Fidelity’s regulatory capital ratios as a result of FIN 46 (Revised) should have no impact on the Bank’s capital ratios, operations or financial condition. (See “Shareholders’ Equity” in MD&A and Note H — “Recent Accounting Pronouncements”.)

ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Critical Accounting Policies

     The accounting and reporting policies of Fidelity are in accordance with accounting principles generally accepted in the United States and conform to general practices within the banking industry. Fidelity’s financial position and results of operations are affected by management’s application of accounting policies, including estimates, assumptions and judgments made to arrive at the carrying value of assets and liabilities and amounts reported for revenues, expenses and related disclosures. Different assumptions in the application of these policies, or results or conditions significantly different from certain assumptions could result in material changes in Fidelity’s consolidated financial position

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and/or consolidated results of operations. The more critical accounting and reporting policies include those related to the allowance for loan losses, loan related revenue recognition, other real estate owned and income taxes. Fidelity’s accounting policies are fundamental to understanding its consolidated financial position and consolidated results of operations. Significant accounting policies have been periodically discussed with and reviewed and approved by the Audit Committee of the Board of Directors.

     Fidelity’s critical accounting policies that are highly dependent on estimates, assumptions and judgment are substantially unchanged from the descriptions included in the notes to consolidated financial statements in Fidelity’s Annual Report on Form 10-K for the year ended December 31, 2003.

     The following analysis reviews important factors affecting Fidelity’s financial condition at March 31, 2004, compared to December 31, 2003, and compares the results of operations for the three month periods ended March 31, 2004 and 2003. These comments should be read in conjunction with Fidelity’s consolidated financial statements and accompanying notes appearing in this report.

Assets

     Total assets were $1,142 million at March 31, 2004, compared to $1,092 million at December 31, 2003, an increase of $50 million, or 4.6%. Loans increased $23 million or 2.9% to $819 million and loans held-for-sale increased $17 million or 46.8% to $55 million at March 31, 2004. The 4.9% increase in total loans to $874 million was a result of the growth in consumer installment loans, including indirect automobile loans held-for-sale, of $20 million or 4.6% to $469 million, the growth in commercial loans of $5 million or 5.9% to $85 million and the growth in mortgage loans, including mortgage loans held-for-sale, of $22 million or 11.7% to $206 million, offset by a decline in construction loans of $6 million or 5.3% to $114 million. The growth in loans reflects Fidelity’s strategic focus on and commitment to grow the core loan portfolio significantly while also increasing the profitable origination and sale of indirect automobile loans, the insured portion of SBA loans and residential mortgage loans. Commercial real estate mortgage loans, a component of real estate mortgage loans, grew 5.4% to $81 million during the first quarter of 2004.

     The commercial and residential mortgage lending areas have received new leadership through internal promotions. These lending areas, as well as the indirect lending area, have all recently added seasoned professional staff to further increase quality loan production, increase profitable loan sales and provide portfolio loan growth. Indirect automobile loan production for the first quarter of 2004 was $110 million compared to $82 million for the same period in 2003, a 33.2% increase.

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     The following schedule summarizes Fidelity ‘s total loans at March 31, 2004, and December 31, 2003 (dollars in thousands):

     Interest-bearing deposits with banks and Federal funds sold increased $.7 million and $8.6 million or 79.7% and 46.2%, respectively, at March 31, 2004, to $1.7 million and $27 million when compared to balances at December 31, 2003. These increases were due to funds provided by the growth in time deposits, the sale of indirect automobile loans and the growth in interest-bearing transaction accounts during the first quarter of 2004.

Asset Quality

     The following schedule summarizes Fidelity’s asset quality position at March 31, 2004, and December 31, 2003 (dollars in thousands):

     The above schedule reflects the continuing improvement in asset quality through the continued reduction in total nonperforming assets, which nonperforming assets total was reduced significantly during 2003.

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     Management is not aware of any potential problem loans other than those disclosed in the table above, which includes all loans recommended for classification by regulators, and certain loans for which specific allocations of the allowance for loan losses have been provided, which would have a material adverse impact on asset quality. (For additional information, see “Provision for Loan Losses.”)

Deposits

     Total deposits at March 31, 2004, were $950 million compared to $888 million at December 31, 2003, a $62 million or 7.0% increase. Interest-bearing demand and money market accounts increased $25.6 million or 15.1% to $195 million. Savings deposits decreased $13.0 million or 9.9% to $118 million. Time deposits $100,000 and over and other time deposits at March 31, 2004, totaled $529 million compared to $476 million at December 31, 2003, an increase of $53 million or 11.2%. Noninterest-bearing demand deposits decreased $3.3 million or 3.0% to $108 million. The increases in interest-bearing demand and money market accounts and in time deposits were in large measure due to advertised premium yield programs to provide funding for loan growth and to reduce borrowings.

Other Borrowings

     Federal Home Loan Bank (“FHLB”) short-term borrowings totaled $14.1 million at March 31, 2004, consisting of a $14 million 5.26% fixed rate advance maturing April 12, 2004. Short-term FHLB borrowings declined $10.4 million during the first quarter of 2004, primarily as a result of paying off a $10 million 4.12% advance which matured March 15, 2004. Other short-term borrowings decreased $8.8 million or 37.8% to $14.6 million at March 31, 2004, compared to other short-term borrowings at December 31, 2003, primarily as a result of a reduction in unsecured overnight Federal funds purchased from $11 million at December 31, 2003, to none at March 31, 2004. The remaining other short-term borrowings consisted of overnight repurchase agreements with commercial transaction account customers.

Subordinated Debt and Trust Preferred Securities

     Subordinated debt totaled $36.6 million at March 31, 2004, consisting of $35.5 million in outstanding obligations of three trust preferred issues and $1.1 million to fund the investment in the common stock of those entities. The total trust preferred outstanding obligation of $35.5 million was classified as trust preferred securities as of December 31, 2003, and the $1.1 million related to the funding of the investment in the common stock of those entities was eliminated in consolidation. The deconsolidation of the trust preferred entities in 2004 and the reclassification to subordinated debt was in accordance with the requirements of FIN 46 (Revised), which was adopted by Fidelity in 2004. (See Note I — “Variable Interest Entities and Note J - “Recent Accounting Pronouncements.”)

     On July 28, 2003, Fidelity redeemed at par its 8.50% Subordinated Notes due January 31, 2006, in the amount of $15.0 million. Interest expense on subordinated notes for the quarter ended March 31, 2003, reflects the interest expense related to these notes, while the interest expense on trust preferred securities for the same period was classified as interest expense on trust preferred securities.

Other Long-Term Debt

     In October and December of 2003, approximately $70 million in fixed rate Agency mortgage backed securities was purchased, $15 million of which was to replenish significant repayments on the underlying residential mortgage loans making up the mortgage backed securities portfolio and the

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remainder purchased as part of management’s plan to leverage the strong