Fidelity Southern Corporation Earns $8.0 Million In Second Quarter Of 2014

ATLANTA, July 17, 2014 /PRNewswire/ -- Fidelity Southern Corporation ("Fidelity" or the "Company") (NASDAQ: LION), holding company for Fidelity Bank (the "Bank"), today reported financial results for the three and six months ended June 30, 2014.

KEY RESULTS

Net Income of $8.0 million and $14.0 million in the three and six months ended June 30, 2014, respectively, or $0.34 and $0.60 per diluted share for the same periods
Return on average assets of 1.22% and 1.10% for the three and six months ended June 30, 2014, respectively
Increased tangible book value by $1.12 to $11.66 per share or 10.6%, year over year
Core deposit growth for the second quarter of 2014 and year over year of $40.1 million or 2.6% and $180.1 million or 12.9%, respectively
Net interest margin increased 36 basis points compared to the first quarter of 2014
Loan portfolio increased during the second quarter of 2014 and year over year by $120.5 million or 6.5% and $192.6 million or 10.8%, respectively, to almost $2.0 billion
Funded closed mortgage production of $561.4 million for the second quarter and $882.2 million so far in 2014
Sold $579.2 million in indirect, mortgage and SBA loans during the second quarter and $1.1 billion so far in 2014
Increased gross revenue by 16.3% during the second quarter of 2014 to $49.4 million and generated $91.8 million so far in 2014

Fidelity's Chairman, Jim Miller, said, "This was a strong quarter. Significantly, mortgage banking activity has increased during the year after the refinance boom ended to what is now a sustainable level and mortgage servicing also benefits from this. Overall, organic loan growth was strong, led by commercial, indirect automobile lending, and by single family construction lending, which will expand into Orlando this month.

"Trust and wealth management began operations in July and a substantial volume of trust assets is in process of being booked. Key personnel already hired will be supplemented by professionals in Georgia and Florida where offices in Savannah and Ponte Vedra are planned for this year.

"The nine newly acquired retail branches already reported should open now through December and we will seek further locations and deposits. As always, we remain focused on building long-term share value for our shareholders and on current return to them as well."

BALANCE SHEET

Total assets at June 30, 2014 were $2.7 billion, an increase of $180.9 million, or 7.1%, compared to March 31, 2014. This increase is primarily attributable to an increase in loan production for the second quarter of 2014, which resulted in a decrease of cash and cash equivalents of $108.9 million during the second quarter of 2014 and an increase in other borrowings of $144.1 million compared to March 31, 2014.

Loans

Total loans held for investment at June 30, 2014 increased by $120.5 million, or 6.5% compared to March 31, 2014, and $192.6 million, or 10.8% compared to June 30, 2013. This growth occurred largely due to an increase in indirect loans of $72.0 million, or 7.8%, compared to March 31, 2014 and an increase in mortgage loans of $26.4 million, or 18.6% compared to March 31, 2014. This increase is primarily due to mortgage and indirect lending increasing production and opening loan production offices in new market areas.

Loans held for sale also increased as of June 30, 2014 by $159.2 million, or 88.2%, compared to March 31, 2014. This increase was primarily attributable to growth in residential mortgage and indirect loans held for sale of $79.5 million, or 70.8% and $80.0 million, or 133.3%, respectively, compared to March 31, 2014.

Asset Quality

Asset quality trends continued to be favorable during the second quarter of 2014.

Net charge-off ratio, annualized of 0.42% for the second quarter of 2014 and 0.20% year to date 2014, compared to 0.40% for the second quarter of 2013 and 0.63% year to date 2013
Nonperforming asset ratio of 3.71% at June 30, 2014, a decrease from 4.39% and 6.30% at March 31, 2014, and June 30, 2013, respectively
Decrease in classified assets of $8.0 million or 7.4% for the second quarter and decrease of $45.0 million,or 31.3% year over year

Deposits

Total deposits of $2.2 billion at June 30, 2014 increased by $25.0 million, or 1.1%, and $70.4 million, or 3.3%, from March 31, 2014 and June 30, 2013, respectively. The quarterly and year-over-year increases were due primarily to growth of $35.1 million, or 6.7%, and $127.4 million, or 29.4%, during the second quarter of 2014 and year-over-year in noninterest-bearing demand deposits which comprised almost 25% of total average deposits in the second quarter of 2014 compared to just over 19% in the second quarter of 2013.

Core deposits, including noninterest-bearing demand deposits, increased by $40.1 million, or 2.6%, and $180.1 million, or 12.9%, during the second quarter of 2014 and year-over-year, respectively. The Bank has continued to strategically focus on core deposit growth and realized continued benefits from the transaction account acquisition initiative, particularly in business accounts, which has continued into 2014.

These increases in noninterest-bearing demand deposits were partially offset by a decrease in time deposits on a linked-quarter and year-over-year basis. Time deposits, including brokered deposits, decreased by $15.1 million, or 2.3%, during the second quarter of 2014 and $109.7 million, or 14.5%, year-over-year and comprised less than 30% of average deposits for the second quarter of 2014, down from over 35% of average deposits for the second quarter of 2013.

The following table summarizes average deposit composition and average rate paid for the periods presented.



	For the Three Months Ended
	June 30, 2014						March 31, 2014						June 30, 2013
($ in millions)	Average Amount		Rate		Percent of Total Deposits		Average Amount		Rate		Percent of Total Deposits		Average Amount		Rate		Percent of Total Deposits
Noninterest-bearing demand deposits	$	534.5	—	%	24.3	%	$	478.0	—	%	22.2	%	$	402.9	—	%	19.4	%
Interest-bearing demand deposits	694.1		0.27	%	31.6	%	698.8		0.29	%	32.3	%	627.9		0.27	%	30.2	%
Savings deposits	314.9		0.37	%	14.3	%	308.8		0.39	%	14.3	%	318.8		0.41	%	15.3	%
Time deposits	653.4		0.96	%	29.8	%	675.0		1.01	%	31.2	%	730.0		1.02	%	35.1	%
Total average deposits	$	2,196.9	0.43	%	100.0	%	$	2,160.6	0.47	%	100.0	%	$	2,079.6	0.50	%	100.0	%

INCOME STATEMENT

Net Interest Margin

Net interest margin was 3.92% and 3.75% for the three and six months ended June 30, 2014, respectively, compared to 3.42% and 3.59% for the same periods in 2013. The increase from 2013 to 2014 was primarily attributable to declines in subordinated debt expense. See "Average Balance, Interest and Yields" below. On a linked-quarter basis, net interest margin increased 36 basis points compared to 3.56% for the first quarter of 2014. This increase is primarily attributable to a 29 basis point increase in yield for total loans. The linked-quarter increase in yield on total loans is primarily attributable to accretion of the loan discount discussed in "Interest Income" below.

Excluding the accretion of the loan discount, the net interest margin was 3.63% and 3.59% for the three and six months ended June 30, 2014, respectively, compared to 3.34% and 3.42% for the same periods in 2013. The improvement in net interest margin for both periods from 2013 to 2014 is related to the decline in subordinated debt expense discussed above. See further discussion of accretion of the loan discount in "Interest Income" below. On a linked-quarter basis, net interest margin, excluding the accretion of the loan discount, declined 16 basis points from 3.47% for the first quarter of 2014 as new loans were originated in 2014 at lower market yields.

Interest Income

Interest income was $26.1 million and $49.1 million for the three and six months ended June 30, 2014, an increase of $2.2 million and $293,000, or 9.2% and 0.6%, respectively, as compared to the same periods in 2013. The increase in interest income for the three months ended June 30, 2014 was primarily attributable to the increase in accretion of the loan discount of $1.3 million due to improvements in cash flows on acquired loans and favorable resolution of covered assets.

On a linked-quarter basis, interest income increased by $3.0 million, or 12.9%. This increase occurred primarily due to the increase in accretion of the loan discount noted above and the increase in mortgage loans held for sale production volume during the second quarter of 2014 compared to the first quarter of 2014. This increase was partially offset by a slight decrease in loan yields as new loans were originated at lower market yields.

Interest Expense

Interest expense was $2.7 million and $5.5 million for the three and six months ended June 30, 2014, a decrease of $1.1 million and $2.2 million, or 28.5% and 28.3%, respectively, as compared to the same periods in 2013. The decrease from 2013 to 2014 for both periods occurred primarily due to a reduction of $591,000 and $1.2 million in subordinated debt expense from the repayment of $21.5 million in subordinated debt in the third quarter of 2013. On a linked-quarter basis, interest expense was flat, decreasing by just $131,000, or 4.7%.

Noninterest Income

Noninterest income was $23.3 million and $42.7 million for the three and six months ended June 30, 2014, a decrease of $4.9 million and $10.6 million, or 17.4% and 19.9%, respectively, as compared to the same periods in 2013. The decrease in noninterest income recorded for 2014 compared to 2013 was primarily attributable to decreases in noninterest income from mortgage banking activities of $6.6 million and $13.8 million for the same periods. Closed mortgage loan funding was $561.4 million and $882.2 million for the three and six months ended June 30, 2014, respectively, compared to $784.0 million and $1.4 billion for the same periods in 2013. The decrease in mortgage banking income was partially offset by increases in noninterest income from indirect lending activities of $850,000 and $3.9 million for the same periods, primarily due to higher volume of loans sold to investors.

On a linked-quarter basis, noninterest income increased by $3.9 million, or 20.3%. This increase was primarily attributable to an increase in noninterest income from mortgage banking activities of $3.0 million or 28.2%. Closed mortgage loan funding increased by $240.6 million, or 75.0%, during the second quarter of 2014 as compared to the first quarter of 2014.

Noninterest Expense

Noninterest expense was $33.7 million and $66.4 million for the three and six months ended June 30, 2014, an increase of $584,000 and $716,000, or 1.8% and 1.1%, respectively, as compared to the same periods in 2013. These increases are largely attributable to increases in salaries and benefits of $1.7 million and $3.5 million and net occupancy expenses of $1.1 million and $1.3 million, respectively, for the same periods due to the increased number of employees in our retail and mortgage divisions added to support organic growth and expansion of our branch network. These increases were partially offset by a reduction in commissions expense of $2.4 million and $5.3 million for the same periods due to lower mortgage banking volume from 2013 to 2014.

On a linked-quarter basis, noninterest expense increased $1.1 million, or 3.3%. This increase was primarily attributable to an increase in commissions expense of $2.1 million, or 61.7%, due to higher mortgage banking volume for the second quarter of 2014 as compared to the first quarter of 2014. See "Noninterest Income" above for further discussion of mortgage banking volume. This increase was partially offset by a decrease in write-downs on other real estate of $1.2 million or 85.2%.

ABOUT FIDELITY SOUTHERN CORPORATION

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

This news release contains forward-looking statements, as defined by Federal Securities Laws, including statements about financial outlook and business environment. These statements are provided to assist in the understanding of future financial performance and such performance involves risks and uncertainties that may cause actual results to differ materially from those in such statements. Any such statements are based on current expectations and involve a number of risks and uncertainties. For a discussion of 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 2013 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.

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (UNAUDITED)

	As of or for the Three Months Ended															As of or for the Six Months Ended
($ in thousands, except per share data)	June 30, 2014			March 31, 2014			December 31, 2013			September 30, 2013			June 30, 2013			June 30, 2014			June 30, 2013
RESULTS OF OPERATIONS
Net interest income	$	23,391		$	20,271		$	20,858		$	21,529		$	20,134		$	43,662		$	41,209
Provision for loan losses	566			(2,450)			273			1,122			570			(1,884)			4,046
Noninterest income	23,318			19,383			17,753			25,844			28,239			42,701			53,286
Noninterest expense	33,743			32,656			32,538			34,102			33,159			66,399			65,683
Income tax expense	4,442			3,385			1,937			4,298			5,211			7,827			8,842
Net income	7,958			6,063			3,863			7,851			9,433			14,021			15,924

PERFORMANCE
Earnings per share - basic ⁽¹⁾	$	0.37		$	0.28		$	0.18		$	0.33		$	0.52		$	0.66		$	0.90
Earnings per share - diluted ⁽¹⁾	0.34			0.26			0.16			0.30			0.46			0.60			0.80
Return on average assets	1.22		%	0.97		%	0.61		%	1.20		%	1.47		%	1.10		%	1.27		%
Return on average equity	13.09		%	10.36		%	6.54		%	12.04		%	17.40		%	11.75		%	15.58		%
Yield on interest earning assets	4.37		%	4.05		%	4.09		%	4.15		%	4.05		%	4.21		%	4.25		%
Cost of funds	0.60		%	0.63		%	0.64		%	0.72		%	0.77		%	0.61		%	0.81		%
Net interest margin	3.92		%	3.56		%	3.59		%	3.59		%	3.42		%	3.75		%	3.59		%

CAPITAL
Cash dividends paid per common share	$	0.08		$	0.04		$	0.02		$	—		$	—		$	0.12		$	—
Dividend payout ratio ⁽⁴⁾	21.62		%	14.29		%	11.11		%	—		%	—		%	18.18		%	—		%
Tier 1 risk-based capital	12.12		%	13.21		%	12.71		%	12.97		%	15.62		%	12.12		%	15.62		%
Total risk-based capital	13.34		%	14.46		%	13.96		%	14.23		%	16.88		%	13.34		%	16.88		%
Leverage ratio	11.14		%	11.21		%	11.02		%	10.53		%	12.96		%	11.14		%	12.96		%

BALANCE SHEET SUMMARY
Loans held for sale	$	339,719		$	180,550		$	187,366		$	216,736		$	355,017		$	339,719		$	355,017
Loans	1,968,614			1,848,092			1,893,037			1,831,708			1,775,972			1,968,614			1,775,972
Allowance for loan losses	(28,912)			(30,797)			(33,684)			(33,661)			(33,309)			(28,912)			(33,309)
Total assets	2,737,742			2,556,887			2,564,168			2,567,482			2,675,233			2,737,742			2,675,233
Total deposits	2,225,419			2,200,389			2,202,452			2,169,275			2,155,047			2,225,419			2,155,047
Shareholders' equity	250,775			242,391			236,230			233,300			273,102			250,775			273,102

STOCK PERFORMANCE
Market price:
Closing ⁽¹⁾	$	12.99		$	13.97		$	16.54		$	15.21		$	12.19		$	12.99		$	12.19
High close ⁽¹⁾	14.44			16.57			17.80			15.84			12.96			16.57			12.96
Low close ⁽¹⁾	12.80			13.63			13.32			12.47			10.65			12.80			9.35
Daily average trading volume	56,991			53,851			54,195			92,997			58,307			55,446			41,749
Shares of common stock outstanding ⁽¹⁾	21,318			21,277			21,343			21,240			21,147			21,318			21,147
Book value per common share ⁽¹⁾	$	11.76		$	11.39		$	11.07		$	10.98		$	10.65		$	11.76		$	10.65
Tangible book value per common share ⁽¹⁾	11.66			11.28			10.96			10.87			10.54			11.66			10.54
Price to book value	1.10			1.23			1.49			1.39			1.14			1.10			1.14
Price to tangible book value	1.11			1.24			1.51			1.40			1.16			1.11			1.16
ASSET QUALITY
Total nonperforming loans	$	46,132		$	56,600		$	59,582		$	61,458		$	72,388		$	46,132		$	72,388
Total nonperforming assets⁽²⁾	74,130			82,545			91,783			97,132			114,492			74,130			114,492
Nonperforming Asset Ratio ⁽³⁾	3.71		%	4.39		%	4.77		%	5.05		%	6.30		%	3.71		%	6.30		%
OTHER INFORMATION
Noninterest income to gross revenue ⁽⁵⁾	47.22		%	45.65		%	42.75		%	50.90		%	54.19		%	49.44		%	56.39		%
Full-Time equivalent employees	968.3			927.8			889.9			865.1			843.1			968.3			843.1


⁽¹⁾	Historical periods prior to December 31, 2013 adjusted for stock dividends
⁽²⁾	Nonperforming assets include nonaccrual loans, repossessions and ORE.
⁽³⁾	Nonperforming asset ratio is defined as nonperforming assets over gross total loans held to maturity, repossessions and ORE
⁽⁴⁾	Calculated using Dividends Paid divided by Basic EPS
⁽⁵⁾	Gross revenue is calculated as interest income plus non-interest income

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

	For the Three Months Ended										For the Six Months Ended
(in thousands, except per share data)	June 30, 2014		March 31, 2014		December 31, 2013		September 30, 2013		June 30, 2013		June 30, 2014		June 30, 2013
INTEREST INCOME
Loans, including fees	$	24,801	$	21,791	$	22,639	$	23,900	$	22,949	$	46,592	$	46,893
Investment securities	1,244		1,249		1,095		977		911		2,493		1,939
Federal funds sold and bank deposits	20		38		43		53		15		58		18
Total interest income	26,065		23,078		23,777		24,930		23,875		49,143		48,850
INTEREST EXPENSE
Deposits	2,328		2,488		2,590		2,601		2,600		4,816		5,227
Other borrowings	69		44		47		84		273		113		679
Subordinated debt	277		275		282		716		868		552		1,735
Total interest expense	2,674		2,807		2,919		3,401		3,741		5,481		7,641
Net interest income	23,391		20,271		20,858		21,529		20,134		43,662		41,209
Provision for loan losses	566		(2,450)		273		1,122		570		(1,884)		4,046
Net interest income after provision for loan losses	22,825		22,721		20,585		20,407		19,564		45,546		37,163
NONINTEREST INCOME
Service charges on deposit accounts	1,059		1,009		1,119		1,075		1,020		2,068		1,969
Other fees and charges	1,100		920		1,012		997		975		2,020		1,862
Mortgage banking activities	13,570		10,587		10,798		17,809		20,158		24,157		37,953
Indirect lending activities	3,631		4,676		2,030		2,583		2,781		8,307		4,427
SBA lending activities	1,359		844		492		647		1,417		2,203		2,501
Bank owned life insurance	755		301		308		326		326		1,056		639
Securities gains	—		—		188		—		—		—		—
Other	1,844		1,046		1,806		2,407		1,562		2,890		3,935
Total noninterest income	23,318		19,383		17,753		25,844		28,239		42,701		53,286
NONINTEREST EXPENSE
Salaries and employee benefits	15,973		16,085		14,660		14,424		14,278		32,058		28,560
Commissions	5,610		3,470		4,288		6,019		7,979		9,080		14,369
Net occupancy	3,407		2,603		2,799		2,844		2,291		6,010		4,698
Communication	977		972		856		754		805		1,949		1,565
Other	7,776		9,526		9,935		10,061		7,806		17,302		16,491
Total noninterest expense	33,743		32,656		32,538		34,102		33,159		66,399		65,683
Income before income tax expense	12,400		9,448		5,800		12,149		14,644		21,848		24,766
Income tax expense	4,442		3,385		1,937		4,298		5,211		7,827		8,842
NET INCOME	7,958		6,063		3,863		7,851		9,433		14,021		15,924
Preferred stock dividends and discount accretion	—		—		—		(817)		(823)		—		(1,646)
Net income available to common equity	$	7,958	$	6,063	$	3,863	$	7,034	$	8,610	$	14,021	$	14,278

EARNINGS PER SHARE: *⁽¹⁾*
Basic earnings per share	$	0.37	$	0.28	$	0.18	$	0.33	$	0.52	$	0.66	$	0.90
Diluted earnings per share	$	0.34	$	0.26	$	0.16	$	0.30	$	0.46	$	0.60	$	0.80
Weighted average common shares outstanding-basic	21,301		21,279		21,332		21,290		16,567		21,274		15,917
Weighted average common shares outstanding-diluted	23,427		23,439		23,533		23,428		18,582		23,417		17,883

⁽¹⁾

Historical periods prior to December 31, 2013 adjusted for stock dividends

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)

($ in thousands)	June 30, 2014		March 31, 2014		December 31, 2013		September 30, 2013		June 30, 2013
ASSETS
Cash and cash equivalents	$	55,139	$	166,952	$	116,559	$	140,871	$	158,837
Investment securities available-for-sale	164,190		163,803		168,865		170,338		163,764
Investment securities held-to-maturity	7,851		3,795		4,051		4,468		4,978
Loans held-for-sale	339,719		180,550		187,366		216,736		355,017
Loans	1,968,614		1,848,092		1,893,037		1,831,708		1,775,972
Allowance for loan losses	(28,912)		(30,797)		(33,684)		(33,661)		(33,309)
Loans, net of allowance for loan losses	1,939,702		1,817,295		1,859,353		1,798,047		1,742,663
Premises and equipment, net	50,419		48,937		44,555		41,964		41,843
Other real estate, net	26,930		24,547		30,982		34,493		40,882
Bank owned life insurance	33,995		34,127		33,855		33,575		33,276
Servicing rights	57,526		55,281		53,202		52,048		44,734
Other assets	62,271		61,600		65,380		74,942		89,239
Total assets	$	2,737,742	$	2,556,887	$	2,564,168	$	2,567,482	$	2,675,233

LIABILITIES
Deposits:
Noninterest-bearing demand deposits	$	560,932	$	525,853	$	488,224	$	448,087	$	433,565
Interest-bearing deposits:
Demand and money market	704,778		700,268		701,556		685,437		653,172
Savings	314,795		314,282		325,133		317,997		313,716
Time deposits	644,914		659,986		687,539		717,754		754,594
Total deposits	2,225,419		2,200,389		2,202,452		2,169,275		2,155,047
Other borrowings	187,815		43,685		59,233		88,422		143,641
Subordinated debt	46,393		46,393		46,393		46,393		67,527
Other liabilities	27,340		24,029		19,860		30,092		35,916
Total liabilities	2,486,967		2,314,496		2,327,938		2,334,182		2,402,131

SHAREHOLDERS' EQUITY
Preferred stock	—		—		—		—		47,785
Common stock	160,586		159,654		158,153		156,156		153,107
Accumulated other comprehensive gain, net of tax	2,804		1,606		968		1,723		1,475
Retained earnings	87,385		81,131		77,109		75,421		70,735
Total shareholders' equity	250,775		242,391		236,230		233,300		273,102
Total liabilities and shareholders' equity	$	2,737,742	$	2,556,887	$	2,564,168	$	2,567,482	$	2,675,233

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES LOANS BY CATEGORY (UNAUDITED)

($ in thousands)	June 30, 2014		March 31, 2014		December 31, 2013		September 30, 2013		June 30, 2013
Commercial	$	536,435	$	525,347	$	530,977	$	512,875	$	507,188
SBA	136,946		138,331		134,823		133,867		131,771
Total commercial and SBA loans	673,381		663,678		665,800		646,742		638,959
Construction loans	113,873		101,443		101,698		99,379		100,986
Indirect automobile	997,117		925,101		975,223		942,217		904,098
Installment	15,892		15,932		13,473		14,270		15,557
Total consumer loans	1,013,009		941,033		988,696		956,487		919,655
First mortgage	93,453		68,546		60,928		51,807		41,815
Second mortgage	74,898		73,392		75,915		77,293		74,557
Total mortgage loans	168,351		141,938		136,843		129,100		116,372
Loans	1,968,614		1,848,092		1,893,037		1,831,708		1,775,972

Loans held-for-sale:
Residential mortgage	191,666		112,195		127,850		174,409		309,175
SBA	8,053		8,355		9,516		7,327		10,842
Indirect automobile	140,000		60,000		50,000		35,000		35,000
Total loans held-for-sale	339,719		180,550		187,366		216,736		355,017
Total loans	$	2,308,333	$	2,028,642	$	2,080,403	$	2,048,444	$	2,130,989

Noncovered loans	$	1,923,088	$	1,796,256	$	1,834,675	$	1,768,384	$	1,691,258
Covered loans	45,526		51,836		58,362		63,324		84,714
Loans held-for-sale	339,719		180,550		187,366		216,736		355,017
Total loans	$	2,308,333	$	2,028,642	$	2,080,403	$	2,048,444	$	2,130,989

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (UNAUDITED)

	As of or for the Three Months Ended
($ in thousands)	June 30, 2014			March 31, 2014			December 31, 2013			September 30, 2013			June 30, 2013
Balance at beginning of period	$	30,797		$	33,684		$	33,661		$	33,309		$	33,910
Net charge-offs/(recoveries):
Commercial and SBA	1,467			364			(147)			406			695
Construction	14			(1,680)			(250)			(241)			40
Indirect automobile and installment loans	623			743			696			930			941
Mortgage	83			35			102			67			27
Covered	(161)			448			(57)			37			8
Acquired, noncovered	(1)			(15)			—			—			10
Total net charge-offs/(recoveries)	2,025			(105)			344			1,199			1,721
Provision for loan losses ⁽¹⁾	566			(2,450)			273			1,122			570
(Decrease)/increase in FDIC loss share receivable	(426)			(542)			94			429			550
Balance at end of period	$	28,912		$	30,797		$	33,684		$	33,661		$	33,309

Net charge-offs/(recoveries), annualized to average loans	0.42		%	(0.02)		%	0.06		%	0.27		%	0.40		%
Total Average Loans	$	2,179,846		$	2,070,909		$	2,070,909		$	2,061,358		$	2,150,917
Allowance for loan losses as a percentage of loans	1.47		%	1.67		%	1.78		%	1.83		%	1.86		%

⁽¹⁾ Net of benefit attributable to FDIC loss share receivable

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES NONPERFORMING AND CLASSIFIED ASSETS (UNAUDITED)

($ in thousands)	June 30, 2014			March 31, 2014			December 31, 2013			September 30, 2013			June 30, 2013
NONCOVERED NONPERFORMING ASSETS
Nonaccrual loans	$	35,283		$	40,983		$	40,944		$	36,711		$	41,757
Repossessions	1,068			1,398			1,219			1,181			1,222
Other real estate (ORE)	19,855			19,573			24,791			26,016			28,342
Noncovered nonperforming assets	$	56,206		$	61,954		$	66,954		$	63,908		$	71,321
NONCOVERED NONPERFORMING ASSET RATIOS
Loans 30-89 days past due	$	2,874		$	4,045		$	5,132		$	6,576		$	5,764
Loans past due 90 days or more and still accruing	$	—		$	488		$	—		$	—		$	—
Loans 30-89 days past due to total loans	0.15		%	0.23		%	0.28		%	0.37		%	0.34		%
Loans past due 90 days or more and still accruing to total loans	—		%	0.03		%	—		%	—		%	—		%
Nonperforming assets to total loans, ORE, and repossessions	2.89		%	3.41		%	3.60		%	3.56		%	4.14		%

COVERED NONPERFORMING ASSETS
Nonaccrual loans	$	10,849		$	15,617		$	18,638		$	24,747		$	30,631
Other real estate	7,075			4,974			6,191			8,477			12,540
Covered nonperforming assets	$	17,924		$	20,591		$	24,829		$	33,224		$	43,171

ASSET QUALITY RATIOS
Classified Asset Ratio ⁽³⁾	30.98		%	34.04		%	36.85		%	41.30		%	39.15		%
Including covered loans:
Nonperforming loans as a % of loans	2.34		%	3.06		%	3.15		%	3.36		%	4.08		%
Nonperforming assets as a % of loans plus ORE	3.71		%	4.39		%	4.77		%	5.05		%	5.05		%
ALL to nonperforming loans	62.67		%	54.41		%	56.53		%	54.77		%	46.01		%
Net charge-offs/(recoveries), annualized to average loans	0.42		%	(0.02)		%	0.06		%	0.27		%	0.40		%
ALL as a % of loans	1.47		%	1.67		%	1.78		%	1.83		%	1.86		%
Excluding covered loans:
Nonperforming loans as a % of loans	1.83		%	2.28		%	2.23		%	2.08		%	2.47		%
Nonperforming assets as a % of loans plus ORE	2.89		%	3.41		%	3.60		%	3.56		%	4.14		%
ALL to nonperforming loans	81.94		%	75.15		%	74.09		%	3.56		%	75.74		%
Net charge-offs/(recoveries), annualized to average loans	0.46		%	(0.12)		%	0.09		%	0.27		%	0.40		%
ALL as a % of loans	1.50		%	1.71		%	1.84		%	1.90		%	1.97		%

CLASSIFIED ASSETS
Classified loans ⁽¹⁾	$	71,022		$	81,037		$	82,625		$	91,450		$	101,957
ORE and repossessions	27,998			25,945			32,201			35,674			42,104
Total classified assets ⁽²⁾	$	99,020		$	106,982		$	114,826		$	127,124		$	144,061

⁽¹⁾ Amount of SBA guarantee included	$	6,462		$	8,506		$	7,869		$	13,115		$	14,379
⁽²⁾ Classified assets include loans having a risk rating of substandard or worse, both accrual and nonaccrual, repossessions and ORE.
⁽³⁾ Classified asset ratio is defined as classified assets as a percentage of Tier 1 capital plus allowance for loan losses.



FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES
ANALYSIS OF INDIRECT LENDING
(UNAUDITED)

			As of or for the Three Months Ended
($ in thousands)			June 30, 2014			March 31, 2014			December 31, 2013			September 30, 2013			June 30, 2013
Average loans outstanding ⁽⁴⁾			$	1,075,657		$	1,032,592		$	1,010,229		$	957,737		$	979,279
Past due loans:
	Amount 30+ days past due		$	1,363		$	1,117		$	1,561		$	1,277		$	1,697
	Number 30+ days past due		125			109			130			130			173
30+ day performing delinquency rate ⁽¹⁾			0.12		%	0.11		%	0.15		%	0.13		%	0.18		%
Nonperforming loans			$	743		$	772		$	806		$	925		$	594
Nonperforming loans as a percentage of period end loans ⁽¹⁾			0.07		%	0.08		%	0.08		%	0.09		%	0.06		%
Net charge-offs			$	614		$	733		$	703		$	908		$	886
Net charge-off rate ⁽²⁾			0.27		%	0.31		%	0.29		%	0.39		%	0.38		%
Number of vehicles repossessed during the period			126			143			198			199			168
Average beacon score of portfolio			745			752			740			739			739
Production by state:
	Alabama		$	28,530		$	22,155		$	19,798		$	22,599		$	16,576
	Arkansas		36,572			22,183			16,352			13,757			7,728
	North Carolina		24,069			18,980			18,731			19,292			18,750
	South Carolina		23,139			14,657			13,302			10,322			10,180
	Florida		110,940			76,829			76,253			77,873			72,676
	Georgia		54,592			45,154			43,064			44,171			38,203
	Mississippi		28,569			23,941			20,341			23,292			19,626
	Tennessee		22,196			15,746			13,674			17,122			19,347
	Virginia		16,017			11,458			11,040			11,877			10,339
	Texas ⁽³⁾		39,320			15,429			5,045			—			—
	Louisiana ⁽³⁾		$	2,595		—			—			—			—
		Total production by state	$	386,539		$	266,532		$	237,600		$	240,305		$	213,425
Loan sales			$	118,344		$	195,027		$	88,153		$	93,602		$	152,418
Portfolio yield ⁽⁴⁾			3.26		%	3.39		%	3.48		%	3.57		%	3.68		%

⁽¹⁾	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
⁽²⁾	Calculated by dividing annualized net charge-offs for the period by average loans held for investment during the period for the specified loan category
⁽³⁾	Expansion into Texas began in October of 2013. Expansion into Louisiana began in May of 2014
⁽⁴⁾	Includes held-for-sale



FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES
ANALYSIS OF MORTGAGE LENDING
(UNAUDITED)

	For the Three Months Ended
($ in thousands)	June 30, 2014			March 31, 2014			December 31, 2013			September 30, 2013			June 30, 2013
Average loans outstanding ⁽¹⁾	$	228,298		$	170,988		$	194,626		$	328,038		$	297,024
Average servicing outstanding	$	4,691,759		$	4,473,027		$	4,221,134		$	3,953,760		$	3,239,672
% of loan production for purchases	86.18		%	78.48		%	78.72		%	74.13		%	58.30		%
% of loan production for refinance loans	13.82		%	21.52		%	21.28		%	25.87		%	41.70		%
Production by region:
Georgia	$	328,936		$	181,667		$	259,289		$	353,187		$	427,815
Florida/Alabama	26,383			20,816			19,724			17,807			24,025
Virginia/Maryland	132,816			73,471			91,494			151,573			167,099
Total retail	488,135			275,954			370,507			522,567			618,939
Wholesale	73,252			44,862			55,149			96,773			165,022
Total production by region	$	561,387		$	320,816		$	425,656		$	619,340		$	783,961
Loan sales	$	446,176		$	328,145		$	467,932		$	753,196		$	756,224
Portfolio yield ⁽¹⁾	4.07		%	4.26		%	4.10		%	3.84		%	3.59		%



INCOME FROM MORTGAGE BANKING ACTIVITIES
(UNAUDITED)

	For the Three Months Ended
($ in thousands)	June 30, 2014			March 31, 2014			December 31, 2013			September 30, 2013			June 30, 2013
Marketing gain, net	$	10,954		$	7,991		$	8,568		$	12,785		$	13,916
Origination points and fees	3,148			1,787			2,474			3,806			4,212
Loan servicing revenue	2,998			3,005			2,609			2,402			2,021
MSR amortization and impairment adjustments	(3,530)			(2,196)			(2,853)			(1,184)			9
Total mortgage banking activities	$	13,570		$	10,587		$	10,798		$	17,809		$	20,158


Noncash items included in income from mortgage banking activities:
Capitalized MSR, net	$	3,693		$	2,170		$	3,992		$	7,367		$	5,934
Valuation on MSR	(1,838)			(619)			(1,360)			138			1,551
Mark to market adjustments	1,609			1,362			344			2,605			(6,634)
Total noncash items	$	3,464		$	2,913		$	2,976		$	10,110		$	851

⁽¹⁾ Includes held-for-sale

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES AVERAGE BALANCE, INTEREST AND YIELDS (UNAUDITED)

	For the Six Months Ended
	June 30, 2014						June 30, 2013
	Average		Income/		Yield/		Average		Income/		Yield/
($ in thousands)	Balance		Expense		Rate		Balance		Expense		Rate
Assets
Interest-earning assets:
Loans, net of unearned income:
Taxable	$	2,116,931	$	46,445	4.42	%	$	2,116,925	$	46,785	4.46	%
Tax-exempt ⁽¹⁾	8,747		227		5.23	%	6,959		167		4.84	%
Total loans	2,125,678		46,672		4.43	%	2,123,884		46,952		4.46	%
Investment securities:
Taxable	161,846		2,182		2.72	%	148,940		1,594		2.16	%
Tax-exempt ⁽²⁾	14,997		478		6.43	%	17,195		529		6.20	%
Total investment securities	176,843		2,660		3.03	%	166,135		2,123		2.58	%
Federal funds sold and bank deposits	61,633		58		0.19	%	41,642		18		0.09	%
Total interest-earning assets	2,364,154		49,390		4.21	%	2,331,661		49,093		4.25	%
Noninterest-earning assets:
Cash and due from banks	17,298						14,107
Allowance for loan losses	(32,309)						(33,462)
Premises and equipment, net	48,624						39,515
Other real estate	27,458						38,899
Other assets	144,103						134,409
Total assets	$	2,569,328					$	2,525,129
Liabilities and shareholders' equity
Interest-bearing liabilities:
Demand deposits	$	696,464	$	973	0.28	%	$	624,179	$	841	0.27	%
Savings deposits	311,871		589		0.38	%	324,552		706		0.44	%
Time deposits	664,169		3,254		0.99	%	721,348		3,680		1.03	%
Total interest-bearing deposits	1,672,504		4,816		0.58	%	1,670,079		5,227		0.63	%

Other borrowings	78,427		113		0.29	%	173,399		679		0.79	%
Subordinated debt	46,393		552		2.40	%	67,527		1,735		5.18	%
Total interest-bearing liabilities	1,797,324		5,481		0.61	%	1,911,005		7,641		0.81	%
Noninterest-bearing:
Demand deposits	506,418						386,460
Other liabilities	24,912						20,532
Shareholders' equity	240,674						206,088
Total liabilities and shareholders' equity	$	2,569,328					$	2,524,085
Net interest income/spread			$	43,909	3.60	%			$	41,452	3.44	%
Net interest margin					3.75	%					3.59	%

⁽¹⁾	Interest income includes the effect of taxable-equivalent adjustment for 2014 and 2013 of 79,500 and $58,000, respectively, using a 35% tax rate.
⁽²⁾	Interest income includes the effect of taxable-equivalent adjustment for 2014 and 2013 of $167,000 and $185,000, respectively, using a 35% tax rate.

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES AVERAGE BALANCE, INTEREST AND YIELDS (UNAUDITED)

	For the Three Months Ended
	June 30, 2014						June 30, 2013
	Average		Income/		Yield/		Average		Income/		Yield/
($ in thousands)	Balance		Expense		Rate		Balance		Expense		Rate
Assets
Interest-earning assets:
Loans, net of unearned income:
Taxable	$	2,170,978	$	24,725	4.57	%	$	2,142,852	$	22,883	4.28	%
Tax-exempt ⁽¹⁾	8,868		116		5.25	%	8,065		102		5.07	%
Total loans	2,179,846		24,841		4.57	%	2,150,917		22,985		4.29	%
Investment securities:
Taxable	162,435		1,089		2.69	%	153,860		745		1.94	%
Tax-exempt ⁽²⁾	15,073		239		6.36	%	16,502		253		6.15	%
Total investment securities	177,508		1,328		3.00	%	170,362		998		2.35	%
Federal funds sold and bank deposits	46,838		20		0.17	%	57,769		15		0.10	%
Total interest-earning assets	2,404,192		26,189		4.37	%	2,379,048		23,998		4.05	%
Noninterest-earning assets:
Cash and due from banks	15,615						14,250
Allowance for loan losses	(30,767)						(33,264)
Premises and equipment, net	48,767						41,126
Other real estate	26,133						39,014
Other assets	144,804						137,859
Total assets	$	2,608,744					$	2,578,033
Liabilities and shareholders' equity
Interest-bearing liabilities:
Demand deposits	$	694,144	$	466	0.27	%	$	627,892	$	423	0.27	%
Savings deposits	314,890		294		0.37	%	318,804		329		0.41	%
Time deposits	653,423		1,568		0.96	%	729,995		1,848		1.02	%
Total interest-bearing deposits	1,662,457		2,328		0.56	%	1,676,691		2,600		0.62	%
Other borrowings	93,374		69		0.30	%	192,089		273		0.57	%
Subordinated debt	46,393		277		2.39	%	67,527		868		5.16	%
Total interest-bearing liabilities	1,802,224		2,674		0.60	%	1,936,307		3,741		0.77	%
Noninterest-bearing liabilities and shareholders' equity:
Demand deposits	534,492						402,878
Other liabilities	28,124						21,357
Shareholders' equity	243,904						217,491
Total liabilities and shareholders' equity	$	2,608,744					$	2,578,033
Net interest income/spread			$	23,515	3.77	%			$	20,257	3.28	%
Net interest margin					3.92	%					3.42	%

⁽¹⁾	Interest income includes the effect of taxable-equivalent adjustment for 2014 and 2013 of $40,500 and $36,000, respectively.
⁽²⁾	Interest income includes the effect of taxable-equivalent adjustment for 2014 and 2013 of $84,000 and $88,000, respectively.