<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the quarterly period ended September 30, 1996
--------------------------------------------------
Commission File Number: 0-22374
---------------------------------------------------------
Fidelity National Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Georgia 58-1416811
- ------------------------------------------------------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
160 Clairemont Avenue, Suite 200 Decatur, GA 30030
- ------------------------------------------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
(404) 371-5500
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal
year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [x] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Shares Outstanding at October 31, 1996
--------------------------- --------------------------------------
Common Stock, no par value 4,652,398
<PAGE> 2
FIDELITY NATIONAL CORPORATION
INDEX
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Condition (unaudited)
September 30, 1996 and December 31, 1995 1
Consolidated Statements of Income (unaudited)
Three Months Ended September 30, 1996 and 1995
Nine Months Ended September 30, 1996 and 1995 2
Consolidated Statements of Cash Flows (unaudited)
Nine Months Ended September 30, 1996 and 1995 3
Notes to Consolidated Financial Statements 4
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 5-9
Part II. Other Information
None
Signature Page 9
</TABLE>
ii
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
FIDELITY NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
<TABLE>
<CAPTION>
(Unaudited)
September 30, December 31,
1996 1995
------------- --------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 28,247,605 $ 27,356,936
Federal funds sold 1,317,492 10,002,754
Investment securities available for sale 78,577,141 53,139,161
Investment securities held to maturity (approximate fair
value of $5,933,000 and $5,320,000 at September 30,
1996 and December 31, 1995, respectively) 6,310,139 5,291,733
Loans held for sale 9,175,462 47,112,535
Loans, net of unearned income 451,029,440 360,176,486
Less: Allowance for loan losses 6,896,996 5,536,504
-------------- --------------
Loans, net 444,132,444 354,639,982
Premises and equipment, net 17,010,256 10,588,433
Other real estate 1,256,604 1,339,318
Accrued interest receivable 4,737,941 3,577,862
Other assets 15,910,968 11,773,101
-------------- --------------
Total assets $ 606,676,052 $ 524,821,815
============== ==============
LIABILITIES
Deposits
Noninterest-bearing demand deposits $ 66,587,915 $ 75,120,501
Interest-bearing deposits:
Demand and money market 82,472,749 107,475,974
Savings 40,041,638 14,293,402
Time deposits, $100,000 and over 81,081,773 65,503,961
Other time deposits 271,448,237 204,113,471
-------------- --------------
Total deposits 541,632,312 466,507,309
Short-term borrowings 17,710,943 8,245,191
Long-term debt 16,500,000 16,750,000
Accrued interest payable 3,084,400 2,606,802
Other liabilities 1,479,978 2,950,233
-------------- --------------
Total liabilities 580,407,633 497,059,535
SHAREHOLDERS' EQUITY
Common stock, no par value. Authorized
50,000,000 and 5,000,000 shares in 1996 and 1995,
respectively, issued 4,663,490 and 4,619,475 shares
in 1996 and 1995, respectively; and outstanding 4,652,398
and 4,608,383 shares in 1996 and 1995, respectively 11,859,096 11,303,406
Treasury shares, at cost. 11,092 shares in 1996 and 1995 (69,325) (69,325)
Net unrealized holding (losses) gains on investment
securities available for sale
(844,936) 689,774
Retained earnings 15,323,584 15,838,425
-------------- --------------
Total shareholders' equity 26,268,419 27,762,280
-------------- --------------
Total liabilities and shareholders' equity $ 606,676,052 $ 524,821,815
============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE> 4
FIDELITY NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months Ended September 30, Three Months Ended September 30,
------------------------------- --------------------------------
1996 1995 1996 1995
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans, including fees $40,321,856 $31,686,298 $14,146,377 $11,205,430
Investment securities:
Taxable 3,694,763 2,968,304 1,328,964 1,053,276
Tax-exempt - 360 - -
Federal funds sold 279,126 235,512 143,591 61,035
Deposits with other banks 29,745 6,829 25,230 2,179
----------- ----------- ----------- -----------
Total interest income 44,325,490 34,897,303 15,644,162 12,321,920
INTEREST EXPENSE
Deposits 18,035,032 12,979,853 6,581,305 4,813,490
Short-term borrowings 544,858 482,637 182,075 123,486
Long-term debt 1,184,133 227,519 387,272 81,340
----------- ----------- ----------- -----------
Total interest expense 19,764,023 13,690,009 7,150,652 5,018,316
----------- ----------- ----------- -----------
NET INTEREST INCOME 24,561,467 21,207,294 8,493,510 7,303,604
Provision for loan losses 11,100,000 5,090,000 5,700,000 2,000,000
----------- ----------- ----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 13,461,467 16,117,294 2,793,510 5,303,604
NONINTEREST INCOME
Service charges on deposit accounts 1,290,474 1,081,473 455,752 364,364
Credit card fees 2,157,141 1,724,156 799,520 677,159
Mortgage banking activities 4,771,621 2,149,989 1,267,142 887,259
Securities gains, net 361,125 447,177 78,595 205,904
Other 4,031,644 2,289,078 1,530,826 946,702
----------- ----------- ----------- -----------
Total noninterest income 12,612,005 7,691,873 4,131,835 3,081,388
NONINTEREST EXPENSE
Salaries and employee benefits 12,059,396 8,596,717 3,878,508 3,048,711
Furniture and equipment 1,200,988 1,035,736 447,085 352,588
Net occupancy 1,743,241 1,422,724 637,857 483,682
Credit card processing 2,212,184 1,376,804 924,509 492,703
Mortgage servicing amortization 1,529,339 634,508 505,318 320,300
Other 7,402,339 5,458,163 3,128,277 1,759,581
----------- ----------- ----------- -----------
Total noninterest expense 26,147,487 18,524,652 9,521,554 6,457,565
----------- ----------- ----------- -----------
Income (loss) before income taxes (74,015) 5,284,515 (2,596,209) 1,927,427
Income tax (benefit) expense (77,616) 1,886,009 (991,878) 691,262
----------- ----------- ----------- -----------
NET INCOME $ 3,601 $ 3,398,506 $(1,604,331) $ 1,236,165
=========== =========== =========== ===========
INCOME PER SHARE
Net income $ .00 $ .74 $ (.35) $ .27
=========== =========== =========== ===========
Average common shares outstanding 4,609,026 4,608,383 4,610,297 4,608,383
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 5
FIDELITY NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------------------
1996 1995
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 3,601 $ 3,398,506
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Provision for loan losses 11,100,000 5,090,000
Depreciation and amortization of premises and equipment 1,069,290 802,788
Amortization of mortgage servicing rights 1,529,339 634,508
Additions of originated mortgage servicing rights (528,466) (652,319)
Other amortization and (accretion), net 251,684 (80,718)
Securities gains, net (282,530) (447,177)
Gain on loan sales (259,059) -
Decrease (increase) in loans held for sale 37,937,073 (30,193,555)
Net increase in accrued interest receivable (1,137,460) (453,369)
Net increase in accrued interest payable 477,598 552,610
Net increase in other assets (5,306,983) (1,001,826)
Net (decrease) increase in other liabilities (344,174) (1,304,212)
------------- ------------
Net cash flows provided by (used in) operating activities 44,509,913 (21,651,112)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities held to maturity (20,325,584) (11,009,522)
Maturities of investment securities held to maturity 22,368,709 12,061,250
Sales of investment securities available for sale 14,962,557 21,859,730
Purchase of investment securities available for sale (57,323,577) (21,417,170)
Maturities of investment securities available for sale 11,427,782 3,784,606
Loan originations, net of repayments (252,546,480) (16,037,830)
Purchases of mortgage servicing rights - (3,497,521)
Purchases of premises and equipment (7,491,113) (1,292,076)
Proceeds from sale of loans 152,003,660 -
Proceeds from sale of mortgage servicing rights 1,304,623 -
Gain on mortgage servicing rights sales (1,136,380) -
Proceeds from sale of other real estate 73,294 961,712
------------- ------------
Net cash flows used in investing activities (136,682,509) (14,586,821)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in demand deposits,
Money market accounts, and savings accounts (7,787,575) 4,111,493
Net increase in time deposits 82,912,578 38,420,106
Proceeds from issuance of long-term debt - 1,250,000
Repayment of long-term debt (250,000) (495,000)
Increase (decrease) in short-term borrowings 9,465,752 (9,349,016)
Dividends paid (518,442) (471,323)
Proceeds from the sale of common stock 555,690 -
------------- ------------
Net cash flows provided by financing activities 84,378,003 33,466,260
------------- ------------
Net decrease in cash and cash equivalents (7,794,593) (2,771,673)
Cash and cash equivalents, beginning of period 37,359,690 21,033,480
------------- ------------
Cash and cash equivalents, end of period $ 29,565,097 $ 18,261,807
============= ============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Total interest paid $ 19,286,425 $ 13,137,399
============= ============
Total income taxes paid $ 1,375,000 $ 1,420,973
============= ============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 6
FIDELITY NATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1996
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Fidelity
National Corporation and Subsidiaries (the Company) have been prepared in
accordance with generally accepted accounting principles 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 by generally accepted accounting principles 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. Operating results for the three-month and nine-month
periods ended September 30, 1996, are not necessarily indicative of the results
that may be expected for the year ending December 31, 1996. These statements
should be read in conjunction with the consolidated financial statements and
footnotes thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1995.
Effective January 1, 1996, the Company modified its classification of credit
card charge-offs. In prior years, the Company charged off all accrued
interest and principal against the allowance for loan losses. Beginning
January 1, 1996, the Company commenced reversing current period accrued
interest-related income on credit card loans being charged off to interest
income. For the three-month and nine-month periods ended September 30, 1996,
$666,000 and $1,382,000, respectively, of such costs had been reversed. Prior
period statements have not been restated for this change. The change was made
to be consistent with industry practice.
Note B - Shareholders' Equity
During the period ended September 30, 1995 and 1996, the Company declared and
paid dividends totaling $518,442 and $471,323, respectively.
4
<PAGE> 7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following analysis reviews important factors affecting the financial
condition at September 30, 1996, compared to December 31, 1995, and results of
operations for the three month and the nine-month periods ended September 30,
1996, of Fidelity National Corporation and subsidiaries (Company). These
comments should be read in conjunction with the Company's consolidated
financial statements and accompanying notes appearing in this report.
ASSETS
Total assets were $607 million at September 30, 1996, compared to $525 million
at December 31, 1995, a 15.6% increase. Loans, net of unearned income,
increased $91 million or 25.2% to $451 million and loans held for sale
decreased $38 million or 80.5% to $9 million at September 30, 1996. The
significant loan growth was primarily a result of further expansion in the
Company's indirect automobile lending activities.
The following schedule summarizes the Company's total loans at September 30,
1996, and December 31, 1995 (dollars in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
<S> <C> <C>
TOTAL LOANS
Loans, net of unearned income $ 451,029 $ 360,176
Loans held for sale:
Mortgage loans 9,175 12,113
Indirect Automobile loans - 35,000
---------- ---------
Total loans held for sale 9,175 47,113
---------- ---------
Total loans $ 460,204 $ 407,289
========== =========
</TABLE>
ASSET QUALITY
The following schedule summarizes the Company's asset quality position at
September 30, 1996, and December 31, 1995 (dollars in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
<S> <C> <C>
Nonperforming assets
Nonaccrual loans $ 2,958 $ 3,084
Other real estate owned 1,257 1,339
-------- -------
Total nonperforming assets $ 4,215 $ 4,423
======== =======
Loans 90 days past due $ 5,435 $ 3,077
======== =======
Allowance for possible loan losses $ 6,897 $ 5,537
======== =======
Ratio of past due loans to loans 1.18% .85%
======== =======
Ratio of nonperforming assets to loans
and other real estate owned .91% 1.22%
======== =======
Allowance to period-end loans 1.53% 1.54%
======== =======
Allowance to nonperforming loans
(coverage ratio) 2.33% 1.80%
======== =======
</TABLE>
5
<PAGE> 8
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, which would have a material impact on asset
quality.
DEPOSITS
Total deposits at September 30, 1996 were $542 million compared to $467 million
at December 31, 1995 a 16.1% increase. During this period total liabilities
increased $83 million or 16.8% to $580 million. The increase in deposits
occurred principally in time deposits which increased $94 million or 34.9%.
Included in time deposits at September 30, 1996 were $20 million of brokered
deposits. There were no brokered deposits at December 31, 1995. Demand and
money market deposits decreased $34 million or 18.4% and savings deposits
increased $26 million or 180.1%.
The balance sheet growth was primarily funded by the increase in total deposits
which was generated by expanding market share in current communities and the
acquisition of $20 million of brokered deposits.
LIQUIDITY AND SOURCES OF CAPITAL
Shareholders' equity was $26.3 million at September 30, 1996, compared to $27.8
million at December 31, 1995. The $1.5 million decrease in net unrealized
holding gains on investment securities available for sale was the primary cause
of the decreases. Shareholders' equity as a percent of total assets was 4.3%
at September 30, 1996 compared to 5.3% at December 31, 1995.
The purpose of liquidity management is to ensure that there is sufficient cash
flow to satisfy demands for credit, deposit withdrawals, and other corporate
needs. Traditional sources of liquidity include asset maturities and growth of
deposits, including brokered deposits. Other sources of funds, such as
securities sold under agreements to repurchase and Federal Home Loan Bank
borrowings, are sources of liquidity which the Company has utilized. The
Company has maintained adequate liquidity through cash flow from operating
activities, core deposit growth and the occasional use of brokered deposits to
fund loan growth and anticipates this will continue as the Company expands.
The Company has unused sources of liquidity in the form of unused federal funds
lines totalling $18.0 million and Federal Home Loan Bank advance lines
totalling $35.0 million at September 30, 1996.
There were no known trends, events, regulatory authority recommendations or
uncertainties that the Company was aware of that will have or are likely to
have a material effect on the Company's liquidity, capital resources or
operations.
At September 30, 1996, based on the Federal Reserve Board's guidelines, the
Company's tier I capital ratio was 4.59%, the total risk-based capital ratio
was 8.13%, and the leverage ratio was 3.51%. These ratios are in excess of the
Federal Reserve Board's requirements, as indicated in the Capital Adequacy
schedule below (dollars in thousands):
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
------------------------ ------------------------
Amount Percent Amount Percent
------ ------- ------ -------
<S> <C> <C> <C> <C>
Tier I capital:
Actual $22,986 4.59% $26,606 6.15%
Minimum 20,050 4.00 17,309 4.00
Excess 2,936 .59 9,297 2.15
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
------------------------- ----------------------
Amount Percent Amount Percent
------ ------- ------ -------
<S> <C> <C> <C> <C>
Total risk-based capital:
Actual $40,755 8.13% $45,323 10.47%
Minimum 40,101 8.00 34,619 8.00
Excess 654 .13 10,704 2.47
Tier I capital leverage ratio:
Actual 3.51% 5.42%
Minimum acceptable 3.00 3.00
Excess .51 2.42
</TABLE>
INTEREST RATE SENSITIVITY
The interest rate sensitivity structure within the Company's balance sheet at
September 30, 1996, has a net interest sensitive liability gap of 14.06% when
projecting out one year. In the near term, defined as 90 days, the Company
currently has a net interest sensitivity asset gap of 5.76%. This information
represents a general indication of repricing characteristics over time;
however, the sensitivity of certain deposit products may vary during extreme
swings in the interest rate cycle. Since all interest rates and yields do not
adjust at the same velocity, the interest rate sensitivity gap is only a
general indicator of the potential effects of interest rate changes on net
interest income.
EARNINGS
The net loss for the third quarter ended September 30, 1996, was $1,604,000
compared to net income $1,236,000 for the third quarter of 1995, a 229.8%
decrease. Net income (loss) per share was $(.35) for the third quarter of
1996, compared to $.27 for the same period in 1995.
The Company's net income was $4,000, or $.00 per share for the nine months
ended September 30, 1996. This compared to net income of $3,399,000, or $.74
per share for the nine months ended September 30, 1995.
The major factors contributing to third quarter losses and adversely affected
1996 earnings were the increase in the provision for loan losses related to
credit cards, the reversal of interest and related fees due to the above-normal
charge-offs on credit card loans, a one-time special Savings Association
Insurance Fund (SAIF) assessment and additional expenses attributable to recent
corporate expansion. Approximately 85% of the charge-offs for the quarter
ended September 30, 1996 were attributable to credit card losses.
NET INTEREST INCOME
Net interest income for the third quarter of 1996 was $8.5 million compared to
$7.3 million for 1995. The $150 million increase in average earning assets in
1996 over the comparable period in 1995 offset the increase in interest expense
attributable to the $172 million increase in average interest bearing
liabilities and the 15 basis point decline in net interest margin.
For the nine months ended September 30, 1996, net interest income increased
$3.4 million, or 15.8% over the nine months ended September 30, 1995. This
increase was primarily created by a $130 million increase in average
7
<PAGE> 10
earning assets to $548 million. The net interest margin for the third quarter
and nine months of 1996, were 5.71% and 6.01%, respectively, compared to 5.86%
and 6.08%, respectively for the same periods of 1995. The decreases in net
interest margin were due primarily to the increase in indirect auto loans held
for sale, the increased cost of deposits and increased volume of long term debt.
During July 1996, Fidelity National Bank securitized $92 million of indirect
automobile loans secured by new or used automobiles, light duty trucks, vans and
minivans pursuant to the Pooling and Servicing Agreement between the Bank and
The Bank of New York as Trustee of the Fidelity Grantor Trust 1996-1 ("Trust").
The purchase was financed by the Trust by the issuance of $92 million 6.85%
Asset Backed Certificates ("Certificates"). The certificates were initially
purchased by Salomon Brothers Inc. and sold by it to Qualify Institutional
Buyers and Institutional Credit Investors. Pursuant to the Agreement, the Bank
will act as servicer of the indirect automobile loans. Additionally, on
September 30, 1996, the Bank sold $45 million indirect automobile loans and $19
million of credit card loans. These sales produced a gain of $259,000. The
Bank periodically sells or securitizes and retains servicing on those loans to
enhance non-interest income.
PROVISION FOR LOAN LOSSES
The allowance for loan losses is established through provisions charged to
operations. Such provisions are based on management's evaluation of the loan
portfolio under current economic conditions, past loan and credit card loss
experience, adequacy of underlying collateral, and such other factors which, in
management's judgment, deserve recognition in estimating loan losses.
Management believes the allowance for loan losses is adequate to provide for
potential loan losses.
The provision for loan losses for the third quarter of 1996 was $5.7 million
compared to $2.0 million for the comparable period of 1995. Year to date, the
1996 provision for loan losses was $11.1 million compared to $5.1 million for
the same period in 1995, an increase of 118.1%. These increases were a result
of loan growth and the increases in net charge-offs, primarily credit card
related. Net charge-offs to average loans on an annualized basis for the nine
months ended September 30, 1996, were 2.82% compared to 1.88% for the same
period in 1995.
A significant portion of credit card portfolio's charge-offs was attributable
to one specific affinity program which the Company initiated in 1995. Under
this specific affinity program the Company initially issued credit cards to
customers on a pre-approved basis, without a credit review, because these
customers had recently completed the credit review process necessary to secure
a residential mortgage from a third party originator. In addition, initial
tests for this program indicated positive results could be anticipated.
In May of 1996, the Company ceased issuing pre-approved credit cards under this
specific special affinity program. The Company is increasing interest rates and
fees on a significant portion of its credit card accounts and also is taking
steps to improve its credit card collections and recoveries systems.
NONINTEREST INCOME
Noninterest income was $4.1 million for the third quarter of 1996 compared to
$3.1 million in 1995, a 34.1% increase. For the nine months ended September
30, 1996, noninterest income increased $4.9 million to $12.6 million or 64.8%
over the same period in 1995. Noninterest income in the third quarter and year
to date 1996 benefited from a $1.1 million gain on the sale of mortgage
servicing rights. There were no such sales in 1995. Year to date noninterest
income also benefited from a $882,000 increase in brokerage fee income and a
$467,000 increase in mortgage servicing fee income.
8
<PAGE> 11
NONINTEREST EXPENSE
Noninterest expense for the three months ended September 30, 1996, was $9.5
million compared to $6.5 million for the comparable period of 1995, a 47.5%
increase. Noninterest expense was $26.1 million for the nine months ended
September 30, 1996 compared to $18.5 million for the comparable period of 1995,
a 41.2% increase. The increase in salaries and benefits for the third quarter
and nine months of 1996 accounted for 27.1% and 45.4% of the total increase in
noninterest expense over the comparable periods in 1995.
The number of full time equivalent employees has increased from 289 on
September 30, 1995 to 406 at September 30, 1996. This increase was due to
general corporate growth and the Company opening four bank branches in the
greater Atlanta metropolitan area and three loan production offices in Florida
and South Carolina.
Mortgage servicing rights amortization attributable to mortgage loans serviced
and those which paid off during the third quarter of 1996 and 1995 was $505,000
and $320,000, respectively. Year to date amortization of mortgage servicing
rights was $1,529,000 compared to $634,508 for the first nine months of 1995.
Amortization due to loans prepaying began to decline in the third quarter as
mortgage interest rates continued to climb.
On September 30, 1996, The Deposit Insurance Funds Act of 1996 mandated a
one-time special assessment against SAIF deposits which will bring the SAIF up
to a level of $1.25 for every $100 in insured deposits. FNB has provided for
this expense in the amount of $250,000 in the third quarter of 1996. The Bank
had acquired deposits from a savings and loan institution, which deposits are
subject to Federal Deposit Insurance Corporation ("FDIC") deposit insurance
assessments for SAIF. The SAIF designated reserve ratio is 1.25% of total
estimated insured deposits.
PROVISION FOR INCOME TAXES
The provision (benefit) for income taxes for the third quarter and nine months
of 1996 was ($992,000) and ($78,000), respectively, compared to $691,000 and
$1,886,000, respectively, for the same periods in 1995. These changes were due
to changes in taxable income.
PART II - OTHER INFORMATION
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIDELITY NATIONAL CORPORATION
------------------------------
(Registrant)
Date: November 13, 1996 BY: /s/ JAMES B. MILLER, JR.
---------------------------
James B. Miller, Jr.
Chief Executive Officer
Date: November 13, 1996 BY: /s/ M. HOWARD GRIFFITH, JR.
---------------------------
M. Howard Griffith, Jr.
Chief Financial Officer
9
<PAGE> 12
EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
27 Financial Data Schedule (for SEC use only)
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 28,159,410
<INT-BEARING-DEPOSITS> 88,195
<FED-FUNDS-SOLD> 1,317,492
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 78,577,141
<INVESTMENTS-CARRYING> 6,310,139
<INVESTMENTS-MARKET> 5,933,000
<LOANS> 460,204,902
<ALLOWANCE> 6,896,996
<TOTAL-ASSETS> 606,676,052
<DEPOSITS> 541,632,312
<SHORT-TERM> 17,710,943
<LIABILITIES-OTHER> 4,564,378
<LONG-TERM> 16,500,000
0
0
<COMMON> 11,859,096
<OTHER-SE> 14,409,323
<TOTAL-LIABILITIES-AND-EQUITY> 606,676,052
<INTEREST-LOAN> 40,321,856
<INTEREST-INVEST> 3,694,763
<INTEREST-OTHER> 308,871
<INTEREST-TOTAL> 44,325,490
<INTEREST-DEPOSIT> 18,035,032
<INTEREST-EXPENSE> 19,764,023
<INTEREST-INCOME-NET> 24,561,467
<LOAN-LOSSES> 11,100,000
<SECURITIES-GAINS> 361,125
<EXPENSE-OTHER> 26,147,487
<INCOME-PRETAX> (74,015)
<INCOME-PRE-EXTRAORDINARY> (74,015)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,601
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 10.82
<LOANS-NON> 2,958,000
<LOANS-PAST> 5,435,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 5,536,504
<CHARGE-OFFS> 10,181,597
<RECOVERIES> 442,089
<ALLOWANCE-CLOSE> 6,896,996
<ALLOWANCE-DOMESTIC> 6,896,996
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
