ATLANTA, July 19, 2018
/PRNewswire/ -- Fidelity Southern Corporation ("Fidelity" or
the "Company") (NASDAQ: LION), holding company for Fidelity Bank
(the "Bank"), today reported net income of $9.4 million, or $0.34 per diluted share, for the second quarter
of 2018, compared with $11.8 million,
or $0.43 per diluted share, for the
first quarter of 2018, and with $8.9
million or $0.33 per diluted
share for the second quarter of 2017. For the year to date ended
June 30, 2018, the Company reported
net income of $21.2 million, or
$0.78 per diluted share, compared
with $19.4 million, or $0.73 per diluted share, for the same period in
2017.
Fidelity's Chairman, Jim Miller,
said, "Our quarterly results reflect the ongoing strategy of
growing our top-line revenue, continued growth in low-cost
deposits, and enhancing our core infrastructure. It also became
very apparent during the quarter that the market pressures in
indirect auto required us to exit all remaining states outside of
our existing branch footprint in Georgia and Florida. We remain committed to the indirect
auto business as we have generated significant shareholder value
from this line of business over the past 25 years."
President Palmer Proctor added,
"We are pleased with the continued momentum of growth from our
commercial lines of business and growing higher yielding assets.
This momentum has also been a key factor in adding new commercial
services and deposits. Our investments in SBA and mortgage have
also contributed to increased production in a rising rate
environment. With the recent change in indirect auto, we anticipate
a reduction of approximately 5% per quarter in indirect auto
balances that will optimize liquidity and capital, decrease costs,
and better position our balance sheet for future growth."
BALANCE SHEET
Total assets grew by $80.7 million, or 1.7%, during the quarter, to
$4.9 billion at June 30, 2018.
Loan growth totaled $98.0 million,
primarily driven by commercial and mortgage loans. Investments also
increased by $23.2 million and
servicing rights increased by $6.2
million. The Bank has increased the investment securities
available for sale portfolio as part of its strategy to carry
higher yielding assets, reposition the balance sheet, and reduce
its reliance on "gain on sale" income. Cash balances decreased by
$42.9 million, from a decrease in fed
funds sold as funds were placed into higher yielding investments.
Other assets decreased by $4.2
million, of which $4.5 million
was a decrease in FHLB stock, as FHLB borrowings were reduced over
the quarter.
Asset growth for the quarter was funded by $101.9 million in core deposit growth and a
$67.3 million increase in time
deposits. Due to the strong deposit growth, short term borrowings
were decreased by $99.9 million.
Loans
Total loans, including loans held for sale,
increased during the quarter by $98.0
million, or 2.4%, to $4.2
billion at June 30, 2018.This increase was driven by
increases of $47.4 million in
commercial and SBA and $89.7 million
in mortgage. The commercial loan production momentum that began in
the fourth quarter of 2017 continues to be strong while we
implement strategies to grow our commercial bank. Partially
offsetting these increases was a decrease of $45.8 million in indirect loans, which included
$25.0 million of indirect loan
portfolio held for sale that reflects lower expected sales in the
third and fourth quarters to align our indirect auto operating
model to current market conditions. Applications are no longer
accepted in Texas, Oklahoma and Arkansas, Louisiana, Virginia, North
Carolina, South Carolina,
Alabama, Mississippi, and Tennessee. As a result, production of indirect
auto loans decreased by $74.9 million
compared to the previous quarter. Fidelity will continue to serve
the needs of our existing auto loan customers in all states, and
will remain active in Georgia and
Florida.
Asset Quality
Asset quality remained strong as
nonperforming assets, excluding the guaranteed portion of
government loans ("adjusted NPA's") and acquired loans, decreased
during the quarter. Adjusted NPA's, a non-GAAP measure, decreased
by $4.5 million during the quarter.
The decrease was mainly due to decreases in nonaccrual loans,
repossessions and real estate owned. Credit quality trend
performance remains consistent and strong as net charge-offs were
0.17% of average loans for the quarter.
Fair Value Adjustments
Loan servicing rights increased
by $6.2 million, or 5.1%, during the
quarter, to $125.7 million at
June 30, 2018, compared to $119.6
million at March 31, 2018. Mortgage servicing rights
("MSRs"), the primary component of loan servicing rights,
contributed the majority of the change, increasing by 6.3%, to
$114.8 million at June 30,
2018. MSRs increased as mortgage loans sold with servicing
retained increased by $250.2 million,
or 58.0%, from the previous quarter, as a result of seasonally high
production. The current estimated fair market value of MSRs was
$121.1 million at June 30,
2018.
At June 30, 2018, fair value adjustments recorded on the
balance sheet for loans held for sale, interest rate lock
commitments ("IRLCs"), and hedge items were $14.8 million, a $2.1
million, or 16.6% increase, from March 31, 2018. The
gross pipeline of interest rate lock commitments was slightly lower
at quarter end due to inventory, interest rates, and market
competition.
Deposits
Core deposit growth was strong for the
quarter as demand and money market deposits grew by $101.9 million, or 3.4%, to $3.1 billion. Money market account
promotions in Georgia and
Florida and new deposit accounts
from commercial loan relationships contributed to the growth. Time
deposits also increased by $67.3
million during the quarter, due to an increase in brokered
deposits of $69.5 million,
resulting in a total increase in deposits of $169.2 million, or 4.3%.
INCOME STATEMENT
Net Income
Net income was
$9.4 million, or $2.4 million less than the previous quarter, as
net interest income increased by $1.7
million and noninterest income remained relatively flat as
the MSRs impairment recovery was $3.9
million lower than the previous quarter. Noninterest expense
increased by $4.1 million as a 48.2%
increase in mortgage loan production drove higher mortgage
commissions.
Net income was $498,000 higher
compared to the same quarter a year ago.
Interest Income
Interest income of $44.7 million was higher by $3.2 million, compared to the previous
quarter. An increase in average loans of $245.0 million and average investment securities
of $19.4 million drove higher
interest income, while the yield on total average interest-bearing
assets increased 2 basis points from the previous quarter.
As compared to the same period in the prior year, interest
income increased by $5.2 million as
average loans increased by $486.3
million and the yield on total average interest-bearing
assets increased by 20 basis points, as market interest rates
increased year over year.
Interest Expense
Interest expense of $8.3 million increased by $1.5 million for the quarter due to a 5 basis
point increase in total interest-bearing deposits. The yield paid
on short-term borrowings increased 27 basis points as average FHLB
borrowings increased by $159.7
million during the quarter. FHLB borrowings were reduced by
quarter end.
As compared to the same period in the prior year, interest
expense increased by $2.4 million.
Growth in average deposits and borrowings balances, as well as
rising market rates, drove the increase.
Net Interest Margin
The net interest margin was 3.22%
for the quarter compared to 3.29% in the previous quarter, a
decrease of 7 basis points. Loan coupon yields, excluding fees, SBA
discount accretion, and accretable yields, increased faster than
deposit costs during the quarter. The increase was offset by higher
usage of short term borrowings to help fund loan growth during the
quarter.
The yield on total interest bearing liabilities increased by 12
basis points while the yield on average earning assets increased by
2 basis points from 3.93% to 3.95%. Average loans increased by
$245.0 million while the yield
remained flat at 4.07% for both periods. The loan coupon yields
increased by 7 basis points which was offset by a decrease in
accretable loan-related income of $878,000 during the quarter which caused the
overall loan yield to remain flat.
Average interest-bearing liabilities increased by $195.4 million, as average borrowings grew by
$159.7 million during the quarter to
help fund loan growth. Average interest-bearing deposits also
increased by $35.7 million for the
quarter.
As compared to the same period a year ago, the net interest
margin for the quarter increased by 2 basis points to 3.22% from
3.20%, primarily due to a 20 basis point increase in the yield on
total average interest-earning assets of $4.5 billion, offset by an increase of 27 basis
points in the yield on total average interest-bearing liabilities
of $3.3 billion. Average earning
assets increased by $299.1 million,
primarily due to an increase in average loans over the year.
Average interest-bearing liabilities increased by $126.0 million, primarily driven by an increase
in average borrowings of $151.9
million, offset by a decrease in average interest-bearing
deposits of $26.0 million.
Noninterest Income
Noninterest income remained flat on
a linked-quarter basis. Gross mortgage revenue increased by
$4.6 million during the quarter,
offset by a decrease of $3.9 million
in the MSRs impairment recovery for the quarter. While mortgage
production increased by $295.4
million during the quarter, the gain on sale margins
narrowed due to competitive pressures. Income from indirect lending
activities decreased by $878,000, as
indirect loans sales decreased by $56.7
million. Income from SBA lending activities remained flat on
a linked-quarter basis due to a higher concentration of
construction loan production that are sold when fully funded. The
SBA loan pipeline increased by approximately 43% on a linked
quarter-basis.
Compared to the same period a year ago, noninterest income for
the quarter of $37.0 million
increased by $1.9 million, or 5.5%,
primarily due to an increase in mortgage banking income of
$2.4 million, an increase in SBA
lending income of $536,000, and an
increase of $334,000 in trust and
wealth management income, offset by a decrease in income from
indirect lending activities of $2.4
million, due to a decrease in loan sales over the year as
investor demand declined.
Noninterest Expense
On a linked-quarter basis, total
noninterest expense increased by $4.1
million due to an increase in commissions expense of
$3.7 million from higher mortgage
loan originations and $654,000 in
salaries and employee benefits expense, offset by decreases in all
other noninterest expense categories. The increase in salaries and
benefits resulted from an increase in headcount from mortgage and
retail delivery and branches.
Compared to the second quarter of 2017, noninterest expense of
$58.9 million increased by
$4.3 million. Salaries,
commissions and employee benefits expense increased by $4.2 million due primarily to an increase in
headcount of 42, primarily in the mortgage and retail delivery and
branches, as well as higher cost of benefits.
Income Taxes
On a linked-quarter basis, income tax
expense decreased by $341,000,
primarily due to the decrease in pre-tax income for the
quarter.
Compared to the second quarter of 2017, income tax expense
decreased by $1.7 million as the
effective tax rate decreased from 34.1% to 23.7% primarily the
result of the Tax Cuts and Jobs Act enacted on December 22, 2017 which included, among other
things, a reduction in the federal corporate income tax rate from
35% to 21% from the beginning of the tax year 2018 going
forward.
OTHER NEWS
On June 27,
2018, the Bank entered into an agreement with the Federal
Deposit Insurance Corporation (the "FDIC") to terminate the loss
share agreements entered into with the FDIC. Fidelity made a
payment of approximately $632,000 to
the FDIC as consideration for the early termination of the
agreements. The Bank entered into the loss share agreements in 2011
and 2012 in connection with the Bank's acquisition of substantially
all of the assets and assumption of substantially all of the
deposits and certain liabilities of two failed banks in
FDIC-assisted transactions.
On June 29, 2018, Fidelity signed
a letter of intent with a third party for the sale of certain
residential mortgage servicing rights on a portfolio with a total
principal balance of $1.18 billion,
or approximately 12.5% percent of Fidelity's total residential
servicing portfolio as of the end of second quarter 2018. This sale
will help optimize and increase regulatory capital while reducing
future amortization expense and impairment risk of the MSRs asset.
The sale is anticipated to close by the end of the third quarter of
2018.
On July 9, 2018, Fidelity hired
Ross Creasy as the Chief Information
Officer ("CIO") to lead the Company's information technology
efforts. Mr. Creasy recently spent over two years with E-Trade and
the prior 15 years with Capital One. The CIO is a new position for
the Company and was added to align with its strategic initiative of
improving our technology and infrastructure.
On July 12, 2018, Fidelity opened
a new branch in Sugar Hill,
Georgia which brings the total number of retail branches to
69.
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
loans are provided in Georgia and
Florida and mortgage loans are
provided throughout the South, 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 2017
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
Quarter Ended
|
|
|
As of or for the
Six Months Ended
|
($ in thousands,
except per share data)
|
June 30,
2018
|
|
March 31,
2018
|
|
June 30,
2017
|
|
|
June 30,
2018
|
|
June 30,
2017
|
INCOME STATEMENT
DATA:
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
$
|
44,740
|
|
|
$
|
41,562
|
|
|
$
|
39,578
|
|
|
|
$
|
86,302
|
|
|
$
|
77,220
|
|
Interest
expense
|
8,268
|
|
|
6,794
|
|
|
5,832
|
|
|
|
15,062
|
|
|
11,240
|
|
Net interest
income
|
36,472
|
|
|
34,768
|
|
|
33,746
|
|
|
|
71,240
|
|
|
65,980
|
|
Provision for loan
losses
|
2,286
|
|
|
2,130
|
|
|
750
|
|
|
|
4,416
|
|
|
2,850
|
|
Noninterest
income
|
36,977
|
|
|
37,133
|
|
|
35,056
|
|
|
|
74,110
|
|
|
72,426
|
|
Noninterest
expense
|
58,852
|
|
|
54,742
|
|
|
54,551
|
|
|
|
113,594
|
|
|
105,122
|
|
Net income before
income taxes
|
12,311
|
|
|
15,029
|
|
|
13,501
|
|
|
|
27,340
|
|
|
30,435
|
|
Income tax
expense
|
2,921
|
|
|
3,262
|
|
|
4,609
|
|
|
|
6,183
|
|
|
11,015
|
|
Net income
|
9,390
|
|
|
11,767
|
|
|
8,892
|
|
|
|
21,157
|
|
|
19,419
|
|
PERFORMANCE:
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share - basic
|
$
|
0.35
|
|
|
$
|
0.44
|
|
|
$
|
0.34
|
|
|
|
$
|
0.78
|
|
|
$
|
0.74
|
|
Earnings per common
share - diluted
|
0.34
|
|
|
0.43
|
|
|
0.33
|
|
|
|
0.78
|
|
|
0.73
|
|
Total
revenues
|
81,717
|
|
|
78,695
|
|
|
74,634
|
|
|
|
160,412
|
|
|
149,646
|
|
Book value per common
share
|
15.48
|
|
|
15.19
|
|
|
14.21
|
|
|
|
15.48
|
|
|
14.21
|
|
Tangible book value
per common share(1)
|
15.05
|
|
|
14.75
|
|
|
13.72
|
|
|
|
15.05
|
|
|
13.72
|
|
Cash dividends paid
per common share
|
0.12
|
|
|
0.12
|
|
|
0.12
|
|
|
|
0.24
|
|
|
0.24
|
|
Dividend payout
ratio
|
34.29
|
%
|
|
27.27
|
%
|
|
35.29
|
%
|
|
|
30.77
|
%
|
|
32.43
|
%
|
Return on average
assets
|
0.77
|
%
|
|
1.03
|
%
|
|
0.78
|
%
|
|
|
0.90
|
%
|
|
0.87
|
%
|
Return on average
shareholders' equity
|
9.06
|
%
|
|
11.83
|
%
|
|
9.58
|
%
|
|
|
10.42
|
%
|
|
10.87
|
%
|
Equity to assets
ratio
|
8.60
|
%
|
|
8.54
|
%
|
|
8.23
|
%
|
|
|
8.60
|
%
|
|
8.23
|
%
|
Net interest
margin
|
3.22
|
%
|
|
3.29
|
%
|
|
3.20
|
%
|
|
|
3.25
|
%
|
|
3.20
|
%
|
END OF PERIOD
BALANCE SHEET SUMMARY:
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
$
|
4,892,369
|
|
|
$
|
4,811,659
|
|
|
$
|
4,609,280
|
|
|
|
$
|
4,892,369
|
|
|
$
|
4,609,280
|
|
Earning
assets
|
4,549,315
|
|
|
4,466,249
|
|
|
4,267,358
|
|
|
|
4,549,315
|
|
|
4,267,358
|
|
Loans, excluding
loans held-for-sale
|
3,792,886
|
|
|
3,714,308
|
|
|
3,332,132
|
|
|
|
3,792,886
|
|
|
3,332,132
|
|
Total
loans
|
4,237,572
|
|
|
4,139,608
|
|
|
3,726,842
|
|
|
|
4,237,572
|
|
|
3,726,842
|
|
Total
deposits
|
4,069,630
|
|
|
3,900,407
|
|
|
3,899,796
|
|
|
|
4,069,630
|
|
|
3,899,796
|
|
Shareholders'
equity
|
420,962
|
|
|
410,744
|
|
|
379,399
|
|
|
|
420,962
|
|
|
379,399
|
|
Assets serviced for
others
|
10,632,607
|
|
|
10,367,564
|
|
|
9,877,434
|
|
|
|
10,632,607
|
|
|
9,877,434
|
|
ASSET QUALITY
RATIOS:
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs to
average loans
|
0.17
|
%
|
|
0.11
|
%
|
|
0.09
|
%
|
|
|
0.14
|
%
|
|
0.13
|
%
|
Allowance to
period-end loans
|
0.83
|
%
|
|
0.83
|
%
|
|
0.91
|
%
|
|
|
0.83
|
%
|
|
0.91
|
%
|
Nonperforming assets
to total loans, ORE and repossessions
|
1.96
|
%
|
|
2.04
|
%
|
|
1.68
|
%
|
|
|
1.96
|
%
|
|
1.68
|
%
|
Adjusted
nonperforming assets to loans, ORE and
repossessions(2)
|
0.99
|
%
|
|
1.14
|
%
|
|
1.15
|
%
|
|
|
0.99
|
%
|
|
1.15
|
%
|
Allowance to
nonperforming loans, ORE and repossessions
|
0.42x
|
|
|
0.41x
|
|
|
0.54x
|
|
|
|
0.42x
|
|
|
0.54x
|
|
SELECTED
RATIOS:
|
|
|
|
|
|
|
|
|
|
|
Loans to total
deposits
|
93.20
|
%
|
|
95.23
|
%
|
|
85.44
|
%
|
|
|
93.20
|
%
|
|
85.44
|
%
|
Average total loans
to average earning assets
|
92.90
|
%
|
|
92.71
|
%
|
|
87.99
|
%
|
|
|
92.81
|
%
|
|
89.50
|
%
|
Noninterest income to
total revenue
|
50.34
|
%
|
|
51.64
|
%
|
|
50.95
|
%
|
|
|
50.99
|
%
|
|
52.33
|
%
|
Leverage
ratio
|
8.43
|
%
|
|
8.74
|
%
|
|
8.36
|
%
|
|
|
8.43
|
%
|
|
8.36
|
%
|
Common equity tier 1
capital
|
8.45
|
%
|
|
8.41
|
%
|
|
8.61
|
%
|
|
|
8.45
|
%
|
|
8.61
|
%
|
Tier 1 risk-based
capital
|
9.50
|
%
|
|
9.47
|
%
|
|
9.76
|
%
|
|
|
9.50
|
%
|
|
9.76
|
%
|
Total risk-based
capital
|
11.99
|
%
|
|
11.98
|
%
|
|
12.47
|
%
|
|
|
11.99
|
%
|
|
12.47
|
%
|
Mortgage loan
production
|
$
|
908,754
|
|
|
$
|
613,314
|
|
|
$
|
800,426
|
|
|
|
$
|
1,522,068
|
|
|
$
|
1,353,423
|
|
Total mortgage loan
sales
|
800,084
|
|
|
496,484
|
|
|
689,073
|
|
|
|
1,296,568
|
|
|
1,255,076
|
|
Indirect automobile
production
|
183,675
|
|
|
258,560
|
|
|
249,716
|
|
|
|
442,235
|
|
|
566,257
|
|
Total indirect
automobile sales
|
29,275
|
|
|
86,000
|
|
|
151,996
|
|
|
|
115,275
|
|
|
344,431
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Non-GAAP financial
measure. See non-GAAP reconciliation table for the comparable
GAAP.
|
(2)
Excludes acquired loans and net of government guarantees. See
non-GAAP reconciliation table for the comparable
GAAP.
|
FIDELITY SOUTHERN
CORPORATION AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
(UNAUDITED)
|
|
($ in
thousands)
|
|
June 30,
2018
|
|
March 31,
2018
|
|
June 30,
2017
|
ASSETS
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
157,586
|
|
|
$
|
200,496
|
|
|
$
|
430,547
|
|
Investment securities
available-for-sale
|
|
148,155
|
|
|
124,576
|
|
|
130,371
|
|
Investment securities
held-to-maturity
|
|
20,984
|
|
|
21,342
|
|
|
15,593
|
|
Loans
held-for-sale
|
|
444,686
|
|
|
425,300
|
|
|
394,710
|
|
|
|
|
|
|
|
|
Loans
|
|
3,792,886
|
|
|
3,714,308
|
|
|
3,332,132
|
|
Allowance for loan
losses
|
|
(31,623)
|
|
|
(30,940)
|
|
|
(30,425)
|
|
Loans, net of
allowance for loan losses
|
|
3,761,263
|
|
|
3,683,368
|
|
|
3,301,707
|
|
|
|
|
|
|
|
|
Premises and
equipment, net
|
|
90,246
|
|
|
88,624
|
|
|
87,253
|
|
Other real estate,
net
|
|
6,834
|
|
|
7,668
|
|
|
9,382
|
|
Bank owned life
insurance
|
|
72,703
|
|
|
72,284
|
|
|
71,027
|
|
Servicing rights,
net
|
|
125,704
|
|
|
119,553
|
|
|
108,216
|
|
Other
assets
|
|
64,208
|
|
|
68,448
|
|
|
60,474
|
|
Total
assets
|
|
$
|
4,892,369
|
|
|
$
|
4,811,659
|
|
|
$
|
4,609,280
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
Deposits
|
|
|
|
|
|
|
Noninterest-bearing
demand deposits
|
|
$
|
1,225,657
|
|
|
$
|
1,152,315
|
|
|
$
|
1,082,966
|
|
Interest-bearing
deposits
|
|
|
|
|
|
|
Demand and
money market
|
|
1,597,145
|
|
|
1,505,766
|
|
|
1,436,005
|
|
Savings
|
|
300,315
|
|
|
363,099
|
|
|
336,695
|
|
Time
deposits
|
|
946,513
|
|
|
879,227
|
|
|
1,044,130
|
|
Total
deposits
|
|
4,069,630
|
|
|
3,900,407
|
|
|
3,899,796
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
237,886
|
|
|
337,795
|
|
|
164,896
|
|
Subordinated debt,
net
|
|
120,653
|
|
|
120,620
|
|
|
120,521
|
|
Other
liabilities
|
|
43,238
|
|
|
42,093
|
|
|
44,668
|
|
Total
liabilities
|
|
4,471,407
|
|
|
4,400,915
|
|
|
4,229,881
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
Common
stock
|
|
223,771
|
|
|
219,234
|
|
|
208,699
|
|
Accumulated other
comprehensive (loss) income, net
|
|
(1,096)
|
|
|
(631)
|
|
|
959
|
|
Retained
earnings
|
|
198,287
|
|
|
192,141
|
|
|
169,741
|
|
Total
shareholders' equity
|
|
420,962
|
|
|
410,744
|
|
|
379,399
|
|
Total liabilities and
shareholders' equity
|
|
$
|
4,892,369
|
|
|
$
|
4,811,659
|
|
|
$
|
4,609,280
|
|
FIDELITY SOUTHERN
CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF INCOME
(UNAUDITED)
|
|
|
|
For the Quarter
Ended
|
|
|
For the Six Months
Ended
|
($ in thousands,
except per share data)
|
|
June 30,
2018
|
|
March 31,
2018
|
|
June 30,
2017
|
|
|
June 30,
2018
|
|
June 30,
2017
|
INTEREST
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
Loans, including
fees
|
|
$
|
42,845
|
|
|
$
|
39,849
|
|
|
$
|
37,560
|
|
|
|
$
|
82,694
|
|
|
$
|
73,643
|
|
Investment
securities
|
|
1,354
|
|
|
1,175
|
|
|
1,170
|
|
|
|
2,529
|
|
|
2,378
|
|
Other
|
|
541
|
|
|
538
|
|
|
848
|
|
|
|
1,079
|
|
|
1,199
|
|
Total interest
income
|
|
44,740
|
|
|
41,562
|
|
|
39,578
|
|
|
|
86,302
|
|
|
77,220
|
|
INTEREST
EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
4,823
|
|
|
4,313
|
|
|
3,891
|
|
|
|
9,136
|
|
|
7,340
|
|
Other
borrowings
|
|
1,812
|
|
|
910
|
|
|
502
|
|
|
|
2,722
|
|
|
894
|
|
Subordinated
debt
|
|
1,633
|
|
|
1,571
|
|
|
1,439
|
|
|
|
3,204
|
|
|
3,006
|
|
Total interest
expense
|
|
8,268
|
|
|
6,794
|
|
|
5,832
|
|
|
|
15,062
|
|
|
11,240
|
|
Net interest
income
|
|
36,472
|
|
|
34,768
|
|
|
33,746
|
|
|
|
71,240
|
|
|
65,980
|
|
Provision for loan
losses
|
|
2,286
|
|
|
2,130
|
|
|
750
|
|
|
|
4,416
|
|
|
2,850
|
|
Net interest
income after provision for loan losses
|
|
34,186
|
|
|
32,638
|
|
|
32,996
|
|
|
|
66,824
|
|
|
63,130
|
|
NONINTEREST
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on
deposit accounts
|
|
1,468
|
|
|
1,472
|
|
|
1,481
|
|
|
|
2,940
|
|
|
2,936
|
|
Other fees and
charges
|
|
2,449
|
|
|
2,235
|
|
|
2,006
|
|
|
|
4,684
|
|
|
3,863
|
|
Mortgage banking
activities
|
|
29,383
|
|
|
28,562
|
|
|
26,956
|
|
|
|
57,945
|
|
|
52,825
|
|
Indirect lending
activities
|
|
1,270
|
|
|
2,148
|
|
|
3,640
|
|
|
|
3,418
|
|
|
8,066
|
|
SBA lending
activities
|
|
1,217
|
|
|
1,157
|
|
|
681
|
|
|
|
2,374
|
|
|
2,499
|
|
Trust and wealth
management services
|
|
574
|
|
|
532
|
|
|
240
|
|
|
|
1,106
|
|
|
529
|
|
Other
|
|
616
|
|
|
1,027
|
|
|
52
|
|
|
|
1,643
|
|
|
1,708
|
|
Total noninterest
income
|
|
36,977
|
|
|
37,133
|
|
|
35,056
|
|
|
|
74,110
|
|
|
72,426
|
|
NONINTEREST
EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee
benefits
|
|
28,215
|
|
|
27,561
|
|
|
25,852
|
|
|
|
55,776
|
|
|
51,290
|
|
Commissions
|
|
11,242
|
|
|
7,506
|
|
|
9,384
|
|
|
|
18,748
|
|
|
16,882
|
|
Occupancy and
equipment
|
|
4,541
|
|
|
4,932
|
|
|
4,700
|
|
|
|
9,473
|
|
|
8,864
|
|
Professional and
other services
|
|
4,635
|
|
|
4,798
|
|
|
5,052
|
|
|
|
9,433
|
|
|
9,119
|
|
Other
|
|
10,219
|
|
|
9,945
|
|
|
9,563
|
|
|
|
20,164
|
|
|
18,967
|
|
Total noninterest
expense
|
|
58,852
|
|
|
54,742
|
|
|
54,551
|
|
|
|
113,594
|
|
|
105,122
|
|
Income before
income tax expense
|
|
12,311
|
|
|
15,029
|
|
|
13,501
|
|
|
|
27,340
|
|
|
30,434
|
|
Income tax
expense
|
|
2,921
|
|
|
3,262
|
|
|
4,609
|
|
|
|
6,183
|
|
|
11,015
|
|
NET
INCOME
|
|
$
|
9,390
|
|
|
$
|
11,767
|
|
|
$
|
8,892
|
|
|
|
$
|
21,157
|
|
|
$
|
19,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
COMMON SHARE:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.35
|
|
|
$
|
0.44
|
|
|
$
|
0.34
|
|
|
|
$
|
0.78
|
|
|
$
|
0.74
|
|
Diluted
|
|
$
|
0.34
|
|
|
$
|
0.43
|
|
|
$
|
0.33
|
|
|
|
$
|
0.78
|
|
|
$
|
0.73
|
|
Weighted average
common shares outstanding-basic
|
|
27,093
|
|
|
27,011
|
|
|
26,433
|
|
|
|
27,053
|
|
|
26,384
|
|
Weighted average
common shares outstanding-diluted
|
|
27,222
|
|
|
27,121
|
|
|
26,547
|
|
|
|
27,165
|
|
|
26,512
|
|
FIDELITY SOUTHERN
CORPORATION AND SUBSIDIARIES
LOANS BY
CATEGORY
(UNAUDITED)
|
|
($ in
thousands)
|
|
June 30,
2018
|
|
March 31,
2018
|
|
December 31,
2017
|
|
September 30,
2017
|
|
June 30,
2017
|
Commercial
|
|
$
|
938,203
|
|
|
$
|
897,297
|
|
|
$
|
811,199
|
|
|
$
|
789,788
|
|
|
$
|
796,699
|
|
SBA
|
|
146,508
|
|
|
140,308
|
|
|
141,208
|
|
|
142,989
|
|
|
145,311
|
|
Total commercial and
SBA loans
|
|
1,084,711
|
|
|
1,037,605
|
|
|
952,407
|
|
|
932,777
|
|
|
942,010
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction
loans
|
|
269,330
|
|
|
265,780
|
|
|
248,317
|
|
|
243,600
|
|
|
248,926
|
|
|
|
|
|
|
|
|
|
|
|
|
Indirect
automobile
|
|
1,698,879
|
|
|
1,719,670
|
|
|
1,716,156
|
|
|
1,609,678
|
|
|
1,531,761
|
|
Installment loans and
personal lines of credit
|
|
31,807
|
|
|
28,716
|
|
|
25,995
|
|
|
26,189
|
|
|
31,225
|
|
Total consumer
loans
|
|
1,730,686
|
|
|
1,748,386
|
|
|
1,742,151
|
|
|
1,635,867
|
|
|
1,562,986
|
|
Residential
mortgage
|
|
555,636
|
|
|
512,673
|
|
|
489,721
|
|
|
452,584
|
|
|
433,544
|
|
Home equity lines of
credit
|
|
152,523
|
|
|
149,864
|
|
|
148,370
|
|
|
144,879
|
|
|
144,666
|
|
Total mortgage
loans
|
|
708,159
|
|
|
662,537
|
|
|
638,091
|
|
|
597,463
|
|
|
578,210
|
|
Loans
|
|
3,792,886
|
|
|
3,714,308
|
|
|
3,580,966
|
|
|
3,409,707
|
|
|
3,332,132
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
held-for-sale:
|
|
|
|
|
|
|
|
|
|
|
Residential
mortgage
|
|
399,630
|
|
|
355,515
|
|
|
269,140
|
|
|
257,325
|
|
|
279,292
|
|
SBA
|
|
20,056
|
|
|
19,785
|
|
|
13,615
|
|
|
8,004
|
|
|
15,418
|
|
Indirect
automobile
|
|
25,000
|
|
|
50,000
|
|
|
75,000
|
|
|
75,000
|
|
|
100,000
|
|
Total loans
held-for-sale
|
|
444,686
|
|
|
425,300
|
|
|
357,755
|
|
|
340,329
|
|
|
394,710
|
|
Total loans
|
|
$
|
4,237,572
|
|
|
$
|
4,139,608
|
|
|
$
|
3,938,721
|
|
|
$
|
3,750,036
|
|
|
$
|
3,726,842
|
|
|
|
|
|
|
|
|
|
|
|
|
DEPOSITS BY
CATEGORY
(UNAUDITED)
|
|
|
For the Quarter
Ended
|
|
June 30,
2018
|
|
March 31,
2018
|
|
December 31,
2017
|
|
September 30,
2017
|
|
June 30,
2017
|
($ in
thousands)
|
Average
Amount
|
|
Rate
|
|
Average
Amount
|
|
Rate
|
|
Average
Amount
|
|
Rate
|
|
Average
Amount
|
|
Rate
|
|
Average
Amount
|
|
Rate
|
Noninterest-bearing
demand deposits
|
$
|
1,172,298
|
|
|
—
|
%
|
|
$
|
1,120,562
|
|
|
—
|
%
|
|
$
|
1,124,759
|
|
|
—
|
%
|
|
$
|
1,103,414
|
|
|
—
|
%
|
|
$
|
1,027,909
|
|
|
—
|
%
|
Interest-bearing
demand
deposits
|
489,051
|
|
|
0.14
|
%
|
|
461,614
|
|
|
0.14
|
%
|
|
453,714
|
|
|
0.11
|
%
|
|
447,348
|
|
|
0.12
|
%
|
|
437,034
|
|
|
0.11
|
%
|
Money market and
savings deposits
|
1,349,447
|
|
|
0.61
|
%
|
|
1,345,905
|
|
|
0.55
|
%
|
|
1,381,207
|
|
|
0.53
|
%
|
|
1,341,189
|
|
|
0.49
|
%
|
|
1,284,329
|
|
|
0.45
|
%
|
Time
deposits
|
906,133
|
|
|
1.16
|
%
|
|
901,394
|
|
|
1.04
|
%
|
|
958,790
|
|
|
0.94
|
%
|
|
1,021,563
|
|
|
0.92
|
%
|
|
1,049,248
|
|
|
0.90
|
%
|
Total average
deposits
|
$
|
3,916,929
|
|
|
0.49
|
%
|
|
$
|
3,829,475
|
|
|
0.46
|
%
|
|
$
|
3,918,470
|
|
|
0.43
|
%
|
|
$
|
3,913,514
|
|
|
0.42
|
%
|
|
$
|
3,798,520
|
|
|
0.41
|
%
|
FIDELITY SOUTHERN
CORPORATION AND SUBSIDIARIES
NONPERFORMING AND
CLASSIFIED ASSETS
(UNAUDITED)
|
|
($ in
thousands)
|
June 30,
2018
|
|
March 31,
2018
|
|
December 31,
2017
|
|
September 30,
2017
|
|
June 30,
2017
|
NONPERFORMING
ASSETS
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans
(2)(6)
|
$
|
58,027
|
|
|
$
|
58,706
|
|
|
$
|
47,012
|
|
|
$
|
41,408
|
|
|
$
|
37,894
|
|
Loans past due 90
days or more and still accruing
|
8,278
|
|
|
7,728
|
|
|
6,313
|
|
|
6,534
|
|
|
7,210
|
|
Repossessions
|
1,303
|
|
|
1,853
|
|
|
2,392
|
|
|
2,040
|
|
|
1,779
|
|
Other real estate
(ORE)
|
6,834
|
|
|
7,668
|
|
|
7,621
|
|
|
8,624
|
|
|
9,382
|
|
Nonperforming
assets
|
$
|
74,442
|
|
|
$
|
75,955
|
|
|
$
|
63,338
|
|
|
$
|
58,606
|
|
|
$
|
56,265
|
|
|
|
|
|
|
|
|
|
|
|
ASSET QUALITY
RATIOS
|
|
|
|
|
|
|
|
|
|
Loans 30-89 days past
due
|
$
|
6,514
|
|
|
$
|
15,695
|
|
|
$
|
22,079
|
|
|
$
|
10,193
|
|
|
$
|
7,181
|
|
Loans 30-89 days past
due to loans
|
0.17
|
%
|
|
0.42
|
%
|
|
0.62
|
%
|
|
0.30
|
%
|
|
0.22
|
%
|
Loans past due 90
days or more and still accruing to loans
|
0.22
|
%
|
|
0.21
|
%
|
|
0.18
|
%
|
|
0.19
|
%
|
|
0.22
|
%
|
Nonperforming loans
as a % of loans
|
1.75
|
%
|
|
1.79
|
%
|
|
1.49
|
%
|
|
1.41
|
%
|
|
1.35
|
%
|
Nonperforming assets
to loans, ORE, and repossessions
|
1.96
|
%
|
|
2.04
|
%
|
|
1.76
|
%
|
|
1.71
|
%
|
|
1.68
|
%
|
Adjusted
nonperforming assets to adjusted loans, ORE and
repossessions(8)
|
0.99
|
%
|
|
1.14
|
%
|
|
1.06
|
%
|
|
1.05
|
%
|
|
1.17
|
%
|
Nonperforming assets
to total assets
|
1.52
|
%
|
|
1.58
|
%
|
|
1.38
|
%
|
|
1.30
|
%
|
|
1.22
|
%
|
Adjusted
nonperforming assets to total
assets(8)
|
0.73
|
%
|
|
0.84
|
%
|
|
0.79
|
%
|
|
0.75
|
%
|
|
0.79
|
%
|
Classified Asset
Ratio(4)
|
21.84
|
%
|
|
21.70
|
%
|
|
20.70
|
%
|
|
20.59
|
%
|
|
20.14
|
%
|
ALL to nonperforming
loans
|
47.69
|
%
|
|
46.57
|
%
|
|
55.83
|
%
|
|
64.04
|
%
|
|
67.46
|
%
|
Net charge-offs,
annualized to average loans
|
0.17
|
%
|
|
0.11
|
%
|
|
0.11
|
%
|
|
0.13
|
%
|
|
0.09
|
%
|
ALL as a % of
loans
|
0.83
|
%
|
|
0.83
|
%
|
|
0.83
|
%
|
|
0.90
|
%
|
|
0.91
|
%
|
Adjusted ALL as a %
of adjusted loans(7)
|
1.16
|
%
|
|
1.15
|
%
|
|
1.16
|
%
|
|
1.29
|
%
|
|
1.30
|
%
|
ALL as a % of loans,
excluding acquired loans(5)
|
0.87
|
%
|
|
0.88
|
%
|
|
0.88
|
%
|
|
0.96
|
%
|
|
0.98
|
%
|
|
|
|
|
|
|
|
|
|
|
CLASSIFIED
ASSETS
|
|
|
|
|
|
|
|
|
|
Classified
loans(1)
|
$
|
87,688
|
|
|
$
|
83,867
|
|
|
$
|
77,679
|
|
|
$
|
75,033
|
|
|
$
|
71,040
|
|
ORE and
repossessions
|
8,137
|
|
|
9,521
|
|
|
10,013
|
|
|
10,664
|
|
|
11,161
|
|
Total classified
assets(3)
|
$
|
95,825
|
|
|
$
|
93,388
|
|
|
$
|
87,692
|
|
|
$
|
85,697
|
|
|
$
|
82,201
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Amount of SBA guarantee included in classified
loans
|
$
|
4,870
|
|
|
$
|
2,879
|
|
|
$
|
2,930
|
|
|
$
|
2,755
|
|
|
$
|
7,458
|
|
(2)
Amount of repurchased government-guaranteed loans, primarily
residential mortgage loans, included in nonaccrual
loans
|
$
|
27,220
|
|
|
$
|
26,091
|
|
|
$
|
19,478
|
|
|
$
|
15,450
|
|
|
$
|
12,502
|
|
(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 (for periods
prior to 2018)
|
(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 government guarantees. See
non-GAAP reconciliation table for a reconciliation to the
comparable GAAP measure
|
FIDELITY SOUTHERN
CORPORATION AND SUBSIDIARIES
|
INCOME FROM
INDIRECT LENDING ACTIVITIES
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter
Ended
|
(in
thousands)
|
|
June 30,
2018
|
|
March 31,
2018
|
|
December 31,
2017
|
|
September 30,
2017
|
|
June 30,
2017
|
Loan servicing
revenue
|
|
$
|
1,690
|
|
|
$
|
1,769
|
|
|
$
|
2,158
|
|
|
$
|
2,130
|
|
|
$
|
2,199
|
|
Gain on sale of
loans
|
|
22
|
|
|
442
|
|
|
532
|
|
|
263
|
|
|
1,074
|
|
Gain on
capitalization of servicing rights
|
|
196
|
|
|
569
|
|
|
406
|
|
|
182
|
|
|
1,020
|
|
Ancillary loan
servicing revenue
|
|
166
|
|
|
183
|
|
|
247
|
|
|
172
|
|
|
204
|
|
Gross indirect lending revenue
|
|
2,074
|
|
|
2,963
|
|
|
3,343
|
|
|
2,747
|
|
|
4,497
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
Amortization of
servicing rights, net
|
|
(804)
|
|
|
(815)
|
|
|
(777)
|
|
|
(846)
|
|
|
(857)
|
|
Total income from
indirect lending
activities
|
|
$
|
1,270
|
|
|
$
|
2,148
|
|
|
$
|
2,566
|
|
|
$
|
1,901
|
|
|
$
|
3,640
|
|
FIDELITY SOUTHERN
CORPORATION AND SUBSIDIARIES
|
ANALYSIS OF
INDIRECT LENDING
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of or for the
Quarter Ended
|
($ in
thousands)
|
|
June 30,
2018
|
|
March 31,
2018
|
|
December 31,
2017
|
|
September 30,
2017
|
|
June 30,
2017
|
Average loans
outstanding(1)
|
|
$
|
1,771,665
|
|
|
$
|
1,784,982
|
|
|
$
|
1,748,179
|
|
|
$
|
1,627,946
|
|
|
$
|
1,675,644
|
|
Loans serviced for
others
|
|
$
|
932,915
|
|
|
$
|
1,018,743
|
|
|
$
|
1,056,509
|
|
|
$
|
1,114,710
|
|
|
$
|
1,216,296
|
|
Past due
loans:
|
|
|
|
|
|
|
|
|
|
|
|
Amount 30+ days past
due
|
|
2,407
|
|
|
2,257
|
|
|
3,423
|
|
|
2,965
|
|
|
1,535
|
|
|
Number 30+ days past
due
|
|
217
|
|
|
197
|
|
|
283
|
|
|
255
|
|
|
143
|
|
30+ day performing
delinquency rate(2)
|
|
0.14
|
%
|
|
0.13
|
%
|
|
0.19
|
%
|
|
0.18
|
%
|
|
0.09
|
%
|
Nonperforming
loans
|
|
1,526
|
|
|
1,539
|
|
|
1,916
|
|
|
1,405
|
|
|
1,363
|
|
Nonperforming loans
as a percentage of
period end loans(2)
|
|
0.09
|
%
|
|
0.09
|
%
|
|
0.11
|
%
|
|
0.08
|
%
|
|
0.08
|
%
|
Net
charge-offs
|
|
$
|
864
|
|
|
$
|
1,147
|
|
|
$
|
798
|
|
|
$
|
1,047
|
|
|
$
|
1,332
|
|
Net charge-off
rate(3)
|
|
0.20
|
%
|
|
0.27
|
%
|
|
0.19
|
%
|
|
0.27
|
%
|
|
0.35
|
%
|
Number of vehicles
repossessed during
the period
|
|
132
|
|
|
140
|
|
|
107
|
|
|
132
|
|
|
147
|
|
Quarterly production
weighted average
beacon score
|
|
779
|
|
|
781
|
|
|
783
|
|
|
776
|
|
|
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
|
FIDELITY SOUTHERN
CORPORATION AND SUBSIDIARIES
|
ANALYSIS OF
INDIRECT LENDING
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of or for the
Quarter Ended
|
($ in
thousands)
|
|
June 30,
2018
|
|
March 31,
2018
|
|
December 31,
2017
|
|
September 30,
2017
|
|
June 30,
2017
|
Production by
state:
|
|
|
|
|
|
|
|
|
|
|
|
Alabama
(3)
|
|
$
|
9,920
|
|
|
$
|
12,239
|
|
|
$
|
19,216
|
|
|
$
|
13,587
|
|
|
$
|
10,399
|
|
|
Arkansas
(3)
|
|
4,488
|
|
|
20,322
|
|
|
30,732
|
|
|
26,997
|
|
|
26,569
|
|
|
North Carolina
(3)
|
|
15,580
|
|
|
23,383
|
|
|
28,912
|
|
|
16,545
|
|
|
14,110
|
|
|
South Carolina
(3)
|
|
11,065
|
|
|
12,322
|
|
|
16,559
|
|
|
10,959
|
|
|
11,232
|
|
|
Florida
|
|
52,645
|
|
|
65,786
|
|
|
87,750
|
|
|
51,723
|
|
|
49,976
|
|
|
Georgia
|
|
38,322
|
|
|
38,288
|
|
|
45,571
|
|
|
31,266
|
|
|
28,091
|
|
|
Mississippi
(3)
|
|
22,605
|
|
|
24,785
|
|
|
32,141
|
|
|
24,535
|
|
|
20,136
|
|
|
Tennessee
(3)
|
|
11,098
|
|
|
13,509
|
|
|
17,635
|
|
|
10,931
|
|
|
10,012
|
|
|
Virginia
(3)
|
|
—
|
|
|
3,620
|
|
|
6,495
|
|
|
8,223
|
|
|
6,292
|
|
|
Texas
(2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,312
|
|
|
26,542
|
|
|
Louisiana
(3)
|
|
17,952
|
|
|
44,306
|
|
|
60,021
|
|
|
47,576
|
|
|
45,306
|
|
|
Oklahoma
(2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
430
|
|
|
1,051
|
|
|
|
Total production by
state
|
|
$
|
183,675
|
|
|
$
|
258,560
|
|
|
$
|
345,032
|
|
|
$
|
256,084
|
|
|
$
|
249,716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan sales
|
|
$
|
29,275
|
|
|
$
|
86,000
|
|
|
$
|
59,681
|
|
|
$
|
27,115
|
|
|
$
|
151,996
|
|
Portfolio yield
(1)
|
|
3.02
|
%
|
|
2.98
|
%
|
|
2.98
|
%
|
|
2.92
|
%
|
|
2.84
|
%
|
|
|
(1)
|
Includes
held-for-sale
|
(2)
|
Fidelity exited
the Oklahoma and Texas markets in Q3 2017
|
(3)
|
Fidelity exited
the Alabama, Arkansas, North Carolina, South Carolina, Mississippi,
Tennessee, Virginia, and Louisiana markets in 2018
|
FIDELITY SOUTHERN
CORPORATION AND SUBSIDIARIES
|
INCOME FROM
MORTGAGE BANKING ACTIVITIES
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of or for the
Quarter Ended
|
(in
thousands)
|
|
June 30,
2018
|
|
March 31,
2018
|
|
December 31,
2017
|
|
September 30,
2017
|
|
June 30,
2017
|
Marketing gain,
net
|
|
$
|
20,330
|
|
|
$
|
17,575
|
|
|
$
|
16,683
|
|
|
$
|
19,713
|
|
|
$
|
21,355
|
|
Origination points
and fees
|
|
5,495
|
|
|
3,647
|
|
|
3,482
|
|
|
3,815
|
|
|
4,189
|
|
Loan servicing
revenue
|
|
6,206
|
|
|
6,221
|
|
|
5,851
|
|
|
5,616
|
|
|
5,379
|
|
Gross mortgage
revenue
|
|
$
|
32,031
|
|
|
$
|
27,443
|
|
|
$
|
26,016
|
|
|
$
|
29,144
|
|
|
$
|
30,923
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
MSR
amortization
|
|
(3,331)
|
|
|
(3,426)
|
|
|
(3,609)
|
|
|
(3,560)
|
|
|
(3,331)
|
|
MSR
recovery/(impairment), net
|
|
683
|
|
|
4,545
|
|
|
(1,476)
|
|
|
(544)
|
|
|
(636)
|
|
Total income from
mortgage
banking activities
|
|
$
|
29,383
|
|
|
$
|
28,562
|
|
|
$
|
20,931
|
|
|
$
|
25,040
|
|
|
$
|
26,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIDELITY SOUTHERN
CORPORATION AND SUBSIDIARIES
|
ANALYSIS OF
MORTGAGE LENDING
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of or for the
Quarter Ended
|
($ in
thousands)
|
|
June 30,
2018
|
|
March 31,
2018
|
|
December 31,
2017
|
|
September 30,
2017
|
|
June 30,
2017
|
Production by
region:
|
|
|
|
|
|
|
|
|
|
|
|
Georgia
|
|
$
|
545,951
|
|
|
$
|
368,739
|
|
|
$
|
423,876
|
|
|
$
|
490,323
|
|
|
$
|
519,497
|
|
|
Florida
|
|
136,990
|
|
|
109,034
|
|
|
103,490
|
|
|
95,010
|
|
|
95,983
|
|
|
Alabama/Tennessee
|
|
2,433
|
|
|
2,709
|
|
|
4,609
|
|
|
7,299
|
|
|
7,294
|
|
|
Virginia/Maryland
|
|
148,970
|
|
|
91,842
|
|
|
106,398
|
|
|
129,774
|
|
|
143,885
|
|
|
North and South
Carolina
|
|
74,410
|
|
|
40,990
|
|
|
31,360
|
|
|
30,448
|
|
|
33,767
|
|
|
Total production by
region
|
|
$
|
908,754
|
|
|
$
|
613,314
|
|
|
$
|
669,733
|
|
|
$
|
752,854
|
|
|
$
|
800,426
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% for
purchases
|
|
91.6
|
%
|
|
85.1
|
%
|
|
82.9
|
%
|
|
86.3
|
%
|
|
89.6
|
%
|
|
% for refinance
loans
|
|
8.4
|
%
|
|
14.9
|
%
|
|
17.1
|
%
|
|
13.7
|
%
|
|
10.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio
Production:
|
|
$
|
75,990
|
|
|
$
|
44,554
|
|
|
$
|
66,236
|
|
|
$
|
56,072
|
|
|
$
|
46,902
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded loan type
(UPB):
|
|
|
|
|
|
|
|
|
|
|
|
Conventional
|
|
63.8
|
%
|
|
65.9
|
%
|
|
62.0
|
%
|
|
62.0
|
%
|
|
62.5
|
%
|
|
FHA/VA/USDA
|
|
20.7
|
%
|
|
22.1
|
%
|
|
21.5
|
%
|
|
23.3
|
%
|
|
24.6
|
%
|
|
Jumbo
|
|
15.5
|
%
|
|
12.0
|
%
|
|
16.5
|
%
|
|
14.7
|
%
|
|
12.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross pipeline of
locked loans to be
sold (UPB)
|
|
$
|
354,735
|
|
|
$
|
382,386
|
|
|
$
|
203,896
|
|
|
$
|
265,444
|
|
|
$
|
360,551
|
|
Loans held for sale
(UPB)
|
|
$
|
389,858
|
|
|
$
|
348,797
|
|
|
$
|
262,315
|
|
|
$
|
250,960
|
|
|
$
|
271,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loan sales
(UPB)
|
|
$
|
800,084
|
|
|
$
|
496,484
|
|
|
$
|
602,171
|
|
|
$
|
731,595
|
|
|
$
|
689,073
|
|
|
Conventional
|
|
70.7
|
%
|
|
69.1
|
%
|
|
64.3
|
%
|
|
63.0
|
%
|
|
63.6
|
%
|
|
FHA/VA/USDA
|
|
21.3
|
%
|
|
27.2
|
%
|
|
25.0
|
%
|
|
27.1
|
%
|
|
26.6
|
%
|
|
Jumbo
|
|
8.0
|
%
|
|
3.7
|
%
|
|
10.7
|
%
|
|
9.9
|
%
|
|
9.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Average loans
outstanding(1)
|
|
$
|
913,430
|
|
|
$
|
725,444
|
|
|
$
|
701,932
|
|
|
$
|
698,068
|
|
|
$
|
664,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Includes held-for-sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIDELITY SOUTHERN
CORPORATION AND SUBSIDIARIES
|
THIRD PARTY
MORTGAGE LOAN SERVICING
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of or for the
Quarter Ended
|
($ in
thousands)
|
|
June 30,
2018
|
|
March 31,
2018
|
|
December 31,
2017
|
|
September 30,
2017
|
|
June 30,
2017
|
Loans serviced for
others (UPB)
|
|
$
|
9,450,326
|
|
|
$
|
9,097,869
|
|
|
$
|
8,917,117
|
|
|
$
|
8,715,198
|
|
|
$
|
8,357,934
|
|
Average loans
serviced for others
(UPB)
|
|
$
|
9,244,175
|
|
|
$
|
9,038,568
|
|
|
$
|
8,896,305
|
|
|
$
|
8,657,475
|
|
|
$
|
8,304,065
|
|
|
|
|
|
|
|
|
|
|
|
|
MSR book value, net
of amortization
|
|
$
|
119,372
|
|
|
$
|
113,217
|
|
|
$
|
110,497
|
|
|
$
|
107,434
|
|
|
$
|
102,549
|
|
MSR
impairment
|
|
(4,590)
|
|
|
(5,274)
|
|
|
(9,818)
|
|
|
(8,343)
|
|
|
(7,799)
|
|
MSR net carrying
value
|
|
$
|
114,782
|
|
|
$
|
107,943
|
|
|
$
|
100,679
|
|
|
$
|
99,091
|
|
|
$
|
94,750
|
|
|
|
|
|
|
|
|
|
|
|
|
MSR carrying value as
a % of period
end UPB
|
|
1.21
|
%
|
|
1.19
|
%
|
|
1.13
|
%
|
|
1.14
|
%
|
|
1.13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Delinquency % loans
serviced for
others
|
|
1.28
|
%
|
|
1.24
|
%
|
|
1.87
|
%
|
|
1.41
|
%
|
|
1.02
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
MSR revenue
multiple(1)
|
|
4.52
|
|
|
4.31
|
|
|
4.29
|
|
|
4.38
|
|
|
4.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
FIDELITY SOUTHERN
CORPORATION AND SUBSIDIARIES
AVERAGE BALANCE
AND YIELDS
(UNAUDITED)
|
|
|
For the Quarter
Ended
|
|
June 30,
2018
|
|
March 31,
2018
|
|
June 30,
2017
|
|
Average
|
|
Yield/
|
|
Average
|
|
Yield/
|
|
Average
|
|
Yield/
|
($ in
thousands)
|
Balance
|
|
Rate
|
|
Balance
|
|
Rate
|
|
Balance
|
|
Rate
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning
assets:
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
$
|
920,995
|
|
|
4.71
|
%
|
|
$
|
864,992
|
|
|
4.83
|
%
|
|
$
|
818,952
|
|
|
5.10
|
%
|
SBA
|
154,459
|
|
|
7.16
|
%
|
|
153,731
|
|
|
8.08
|
%
|
|
155,819
|
|
|
8.25
|
%
|
Construction
|
267,125
|
|
|
6.51
|
%
|
|
258,072
|
|
|
6.54
|
%
|
|
243,067
|
|
|
6.00
|
%
|
Indirect
automobile
|
1,771,665
|
|
|
3.02
|
%
|
|
1,784,982
|
|
|
2.98
|
%
|
|
1,670,576
|
|
|
2.85
|
%
|
Installment
loans and personal lines of credit
|
44,033
|
|
|
2.69
|
%
|
|
41,468
|
|
|
2.95
|
%
|
|
44,638
|
|
|
3.50
|
%
|
Residential
mortgage
|
912,700
|
|
|
4.15
|
%
|
|
724,684
|
|
|
3.99
|
%
|
|
662,664
|
|
|
3.93
|
%
|
Home equity
lines of credit
|
151,363
|
|
|
4.92
|
%
|
|
149,399
|
|
|
4.92
|
%
|
|
140,310
|
|
|
4.51
|
%
|
Total loans, net
of unearned income (1)
|
4,222,340
|
|
|
4.07
|
%
|
|
3,977,328
|
|
|
4.07
|
%
|
|
3,736,026
|
|
|
4.04
|
%
|
Investment securities
(1)
|
175,314
|
|
|
3.14
|
%
|
|
155,920
|
|
|
3.11
|
%
|
|
164,037
|
|
|
2.97
|
%
|
Other earning
assets
|
147,405
|
|
|
1.47
|
%
|
|
156,751
|
|
|
1.39
|
%
|
|
345,891
|
|
|
0.98
|
%
|
Total
interest-earning assets
|
4,545,059
|
|
|
3.95
|
%
|
|
4,289,999
|
|
|
3.93
|
%
|
|
4,245,954
|
|
|
3.75
|
%
|
Noninterest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from
banks
|
36,117
|
|
|
|
|
36,370
|
|
|
|
|
44,132
|
|
|
|
Allowance for loan
losses
|
(31,174)
|
|
|
|
|
(30,002)
|
|
|
|
|
(30,116)
|
|
|
|
Premises and
equipment, net
|
90,030
|
|
|
|
|
88,732
|
|
|
|
|
87,332
|
|
|
|
Other real
estate
|
7,383
|
|
|
|
|
7,606
|
|
|
|
|
10,907
|
|
|
|
Other
assets
|
243,119
|
|
|
|
|
233,677
|
|
|
|
|
221,322
|
|
|
|
Total
noninterest-earning assets
|
345,475
|
|
|
|
|
336,383
|
|
|
|
|
333,577
|
|
|
|
Total
assets
|
$
|
4,890,534
|
|
|
|
|
$
|
4,626,382
|
|
|
|
|
$
|
4,579,531
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Demand
deposits
|
$
|
489,051
|
|
|
0.14
|
%
|
|
$
|
461,614
|
|
|
0.14
|
%
|
|
$
|
437,034
|
|
|
0.11
|
%
|
Money market and
savings deposits
|
1,349,447
|
|
|
0.61
|
%
|
|
1,345,905
|
|
|
0.55
|
%
|
|
1,284,329
|
|
|
0.45
|
%
|
Time
deposits
|
906,133
|
|
|
1.16
|
%
|
|
901,394
|
|
|
1.04
|
%
|
|
1,049,248
|
|
|
0.90
|
%
|
Total
interest-bearing deposits
|
2,744,631
|
|
|
0.70
|
%
|
|
2,708,913
|
|
|
0.65
|
%
|
|
2,770,611
|
|
|
0.56
|
%
|
Other short-term
borrowings
|
395,215
|
|
|
1.84
|
%
|
|
235,519
|
|
|
1.57
|
%
|
|
243,359
|
|
|
0.83
|
%
|
Subordinated
debt
|
120,637
|
|
|
5.43
|
%
|
|
120,604
|
|
|
5.28
|
%
|
|
120,505
|
|
|
4.79
|
%
|
Total
interest-bearing liabilities
|
3,260,483
|
|
|
1.02
|
%
|
|
3,065,036
|
|
|
0.90
|
%
|
|
3,134,475
|
|
|
0.75
|
%
|
Noninterest-bearing liabilities and shareholders'
equity:
|
|
|
|
|
|
|
Demand
deposits
|
1,172,298
|
|
|
|
|
1,120,562
|
|
|
|
|
1,027,909
|
|
|
|
Other
liabilities
|
42,081
|
|
|
|
|
37,336
|
|
|
|
|
44,824
|
|
|
|
Shareholders'
equity
|
415,672
|
|
|
|
|
403,448
|
|
|
|
|
372,323
|
|
|
|
Total
noninterest-bearing liabilities and
shareholders' equity
|
1,630,051
|
|
|
|
|
1,561,346
|
|
|
|
|
1,445,056
|
|
|
|
Total
liabilities and shareholders' equity
|
$
|
4,890,534
|
|
|
|
|
$
|
4,626,382
|
|
|
|
|
$
|
4,579,531
|
|
|
|
Net interest
spread
|
|
|
2.93
|
%
|
|
|
|
3.03
|
%
|
|
|
|
3.00
|
%
|
Net interest
margin
|
|
|
3.22
|
%
|
|
|
|
3.29
|
%
|
|
|
|
3.20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Interest income includes the effect of
taxable-equivalent adjustment using a 21% tax rate for the quarters
ended June 30, 2018 and March 31, 2018 and a 35% tax rate for the
quarter ended June 30, 2017.
|
FIDELITY SOUTHERN
CORPORATION AND SUBSIDIARIES
GAAP TO NON-GAAP
RATIO RECONCILIATION
(UNAUDITED)
|
|
|
For the Quarter
Ended
|
($ in
thousands)
|
June 30,
2018
|
|
March 31,
2018
|
|
December 31,
2017
|
|
September 30,
2017
|
|
June 30,
2017
|
|
Reconciliation
of nonperforming assets to adjusted nonperforming
assets:
|
Nonperforming assets
(GAAP)
|
$
|
74,442
|
|
|
$
|
75,955
|
|
|
$
|
63,338
|
|
|
$
|
58,606
|
|
|
$
|
56,265
|
|
Less: repurchased
government-guaranteed mortgage
loans included on nonaccrual
|
(27,220)
|
|
|
(26,091)
|
|
|
(19,478)
|
|
|
(15,450)
|
|
|
(12,502)
|
|
Less: SBA guaranteed
loans included on nonaccrual
|
(3,639)
|
|
|
(1,541)
|
|
|
(1,652)
|
|
|
(2,145)
|
|
|
(2,949)
|
|
Less: Nonaccrual
acquired loans
|
(7,648)
|
|
|
(7,890)
|
|
|
(6,242)
|
|
|
(7,366)
|
|
|
(4,544)
|
|
Adjusted
nonperforming assets, excluding acquired
loans and government-guaranteed loans
(non-GAAP)
|
$
|
35,935
|
|
|
$
|
40,433
|
|
|
$
|
35,966
|
|
|
$
|
33,645
|
|
|
$
|
36,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of total loans, ORE and repossessions to total loans, ORE and
repossessions, less acquired loans:
|
Loans, excluding
Loans Held-for-Sale
|
$
|
3,792,886
|
|
|
$
|
3,714,308
|
|
|
$
|
3,580,966
|
|
|
$
|
3,409,707
|
|
|
$
|
3,332,132
|
|
Add: ORE
|
6,834
|
|
|
7,668
|
|
|
7,621
|
|
|
8,624
|
|
|
9,382
|
|
Add:
repossessions
|
1,303
|
|
|
1,853
|
|
|
2,392
|
|
|
2,040
|
|
|
1,779
|
|
Total loans, ORE, and
repossessions (GAAP)
|
3,801,023
|
|
|
3,723,829
|
|
|
3,590,979
|
|
|
3,420,371
|
|
|
3,343,293
|
|
Less: acquired
loans
|
(165,303)
|
|
|
(178,496)
|
|
|
(196,567)
|
|
|
(216,994)
|
|
|
(230,256)
|
|
Adjusted loans, ORE,
and repossessions, less acquired
loans (non-GAAP)
|
$
|
3,635,720
|
|
|
$
|
3,545,333
|
|
|
$
|
3,394,412
|
|
|
$
|
3,203,377
|
|
|
$
|
3,113,037
|
|
Nonperforming assets
to loans, ORE, and repossessions
(GAAP)
|
1.96
|
%
|
|
2.04
|
%
|
|
1.76
|
%
|
|
1.71
|
%
|
|
1.68
|
%
|
Adjusted
nonperforming assets to adjusted loans, ORE,
and repossessions (non-GAAP)
|
0.99
|
%
|
|
1.14
|
%
|
|
1.06
|
%
|
|
1.05
|
%
|
|
1.17
|
%
|
Nonperforming assets
to total assets (GAAP)
|
1.52
|
%
|
|
1.58
|
%
|
|
1.38
|
%
|
|
1.30
|
%
|
|
1.22
|
%
|
Adjusted
nonperforming assets to total assets (non-
GAAP)
|
0.73
|
%
|
|
0.84
|
%
|
|
0.79
|
%
|
|
0.75
|
%
|
|
0.79
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of allowance to adjusted allowance:
|
|
|
|
|
|
|
|
|
|
Allowance for loan
losses (GAAP)
|
$
|
31,623
|
|
|
$
|
30,940
|
|
|
$
|
29,772
|
|
|
$
|
30,703
|
|
|
$
|
30,425
|
|
Less: allowance
allocated to indirect auto loans
|
(9,210)
|
|
|
(9,888)
|
|
|
(10,258)
|
|
|
(10,116)
|
|
|
(9,767)
|
|
Less: allowance
allocated to acquired loans
|
(134)
|
|
|
(134)
|
|
|
(209)
|
|
|
(159)
|
|
|
(284)
|
|
Adjusted allowance
for loan losses (non-GAAP)
|
$
|
22,279
|
|
|
$
|
20,918
|
|
|
$
|
19,305
|
|
|
$
|
20,428
|
|
|
$
|
20,374
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of period end loans to adjusted period end
loans:
|
Loans, excluding
Loans Held-for-Sale
|
$
|
3,792,886
|
|
|
$
|
3,714,308
|
|
|
$
|
3,580,966
|
|
|
$
|
3,409,707
|
|
|
$
|
3,332,132
|
|
Less: indirect auto
loans
|
(1,698,879)
|
|
|
(1,719,670)
|
|
|
(1,716,156)
|
|
|
(1,609,678)
|
|
|
(1,531,761)
|
|
Less: acquired
loans
|
(165,303)
|
|
|
(178,496)
|
|
|
(196,567)
|
|
|
(216,994)
|
|
|
(230,256)
|
|
Adjusted total loans
(non-GAAP)
|
$
|
1,928,704
|
|
|
$
|
1,816,142
|
|
|
$
|
1,668,243
|
|
|
$
|
1,583,035
|
|
|
$
|
1,570,115
|
|
Allowance to total
loans (GAAP)
|
0.83
|
%
|
|
0.83
|
%
|
|
0.83
|
%
|
|
0.90
|
%
|
|
0.91
|
%
|
Adjusted allowance to
adjusted total loans (non-GAAP)
|
1.16
|
%
|
|
1.15
|
%
|
|
1.16
|
%
|
|
1.29
|
%
|
|
1.30
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of book value per common share to tangible book value per common
share:
|
Shareholders'
equity
|
$
|
420,962
|
|
|
$
|
410,744
|
|
|
$
|
401,632
|
|
|
$
|
388,068
|
|
|
$
|
379,399
|
|
Less: intangible
assets
|
(11,751)
|
|
|
(12,028)
|
|
|
(12,306)
|
|
|
(12,625)
|
|
|
(12,966)
|
|
Tangible
shareholders' equity
|
$
|
409,211
|
|
|
$
|
398,716
|
|
|
$
|
389,326
|
|
|
$
|
375,443
|
|
|
$
|
366,433
|
|
End of period common
shares outstanding
|
27,191,787
|
|
|
27,034,255
|
|
|
27,019,201
|
|
|
26,815,287
|
|
|
26,702,665
|
|
Book value per common
share (GAAP)
|
$
|
15.48
|
|
|
$
|
15.19
|
|
|
$
|
14.86
|
|
|
$
|
14.47
|
|
|
$
|
14.21
|
|
Tangible book value
per common share (non-GAAP)
|
15.05
|
|
|
14.75
|
|
|
14.41
|
|
|
14.00
|
|
|
13.72
|
|
Contacts:
Martha Fleming, Charles D. Christy
Fidelity Southern Corporation (404) 240-1504
View original
content:http://www.prnewswire.com/news-releases/fidelity-southern-corporation-reports-earnings-for-second-quarter-of-9-4-million-300683815.html
SOURCE Fidelity Southern Corporation