<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 March 31, 1997
-------------------------------------------------
Commission File Number: 0-22374
--------------------------------------------------------
Fidelity National Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1416811
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3490 Piedmont Road, Suite 1550 Atlanta, GA 30305
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(404) 639-6500
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(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 March 31, 1997
-------------------------- ------------------------------------
Common Stock, no par value 4,656,665
<PAGE> 2
FIDELITY NATIONAL CORPORATION
INDEX
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Condition
March 31, 1997 (unaudited), and December 31, 1996 1
Consolidated Statements of Income (unaudited)
Three Months Ended March 31, 1997 and 1996 2
Consolidated Statements of Cash Flows (unaudited)
Three Months Ended March 31, 1997 and 1996 3
Notes to Consolidated Financial Statements 4-5
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 5-10
Part II. Other Information 11
Signature Page 11
</TABLE>
ii
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
FIDELITY NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
<TABLE>
<CAPTION>
(Unaudited)
March 31, December 31,
1997 1996
------------- -------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 27,575,174 $ 29,311,690
Interest-bearing deposits with banks 3,445,168 3,300,708
Federal funds sold 23,223,550 343,019
Investment securities available-for-sale 62,049,318 71,230,743
Investment securities held to maturity (approximate fair
value of $5,672,820 and $6,161,119 at March 31,
1997 and December 31, 1996, respectively) 6,280,027 6,279,816
Loans held for sale 22,457,570 38,105,868
Loans, net of unearned income 439,980,149 429,283,563
Less: Allowance for loan losses 16,018,527 16,510,842
------------- -------------
Loans, net 423,961,622 412,772,721
Premises and equipment, net 20,996,181 19,799,079
Other real estate 2,122,068 566,751
Accrued interest receivable 5,058,693 5,007,876
Other assets 18,421,213 18,702,026
------------- -------------
Total assets $ 615,590,584 $ 605,420,297
============= =============
LIABILITIES
Deposits
Noninterest-bearing demand deposits $ 79,694,595 $ 73,877,369
Interest-bearing deposits:
Demand and money market 89,747,886 78,451,267
Savings 34,667,788 38,867,549
Time deposits, $100,000 and over 84,454,898 86,630,315
Other time deposits 268,105,298 266,886,829
------------- -------------
Total deposits 556,670,465 544,713,329
Short-term borrowings 15,386,464 17,183,769
Long-term debt 16,500,000 16,500,000
Accrued interest payable 3,615,567 3,502,631
Other liabilities 2,547,157 2,447,752
------------- -------------
Total liabilities 594,719,653 584,347,481
SHAREHOLDERS' EQUITY
Common stock, no par value. Authorized
50,000,000; issued 4,667,757 and 4,665,256;
outstanding 4,656,665 and 4,654,164; in 1997
and 1996, respectively 11,898,105 11,878,597
Treasury shares, at cost. 11,092 shares in 1997 and 1996 (69,325) (69,325)
Net unrealized losses on investment
securities available-for-sale (670,245) (140,241)
Retained earnings 9,712,396 9,403,785
------------- -------------
Total shareholders' equity 20,870,931 21,072,816
------------- -------------
Total liabilities and shareholders' equity $ 615,590,584 $ 605,420,297
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE> 4
FIDELITY NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1997 1996
------------ -------------
<S> <C> <C>
INTEREST INCOME
Loans, including fees $13,965,378 $12,576,780
Investment securities-taxable 1,214,990 1,100,172
Federal funds sold 41,235 38,757
Deposits with other banks 18,357 2,158
----------- -----------
Total interest income 15,239,960 13,717,867
INTEREST EXPENSE
Deposits 5,896,003 5,262,723
Short-term borrowings 239,227 178,882
Long-term debt 380,074 395,302
----------- -----------
Total interest expense 6,515,304 5,836,907
----------- -----------
NET INTEREST INCOME 8,724,656 7,880,960
Provision for loan losses 4,770,000 2,400,000
----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 3,954,656 5,480,960
NONINTEREST INCOME
Service charges on deposit accounts 515,552 407,784
Credit card fees 670,918 573,303
Mortgage banking activities 2,523,254 1,239,946
Securities gains, net -- 86,709
Other 1,524,758 1,147,480
----------- -----------
Total noninterest income 5,234,482 3,455,222
NONINTEREST EXPENSE
Salaries and employee benefits 4,469,203 3,847,489
Furniture and equipment 496,477 376,159
Net occupancy 808,597 543,050
Credit card processing 664,216 617,368
Amortization of mortgage
servicing rights 248,642 582,095
Other 2,029,516 2,039,399
----------- -----------
Total noninterest expense 8,716,651 8,005,560
----------- -----------
Income before income taxes 472,487 930,622
Income tax expense 163,876 327,514
----------- -----------
NET INCOME $ 308,611 $ 603,108
=========== ===========
NET INCOME PER SHARE $ .07 $ .13
=========== ===========
Weighted average shares outstanding 4,655,808 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>
Three Months Ended March 31,
----------------------------
1997 1996
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 308,611 $ 603,108
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Provision for loan losses 4,770,000 2,400,000
Depreciation and amortization of premises and equipment 408,988 308,998
Amortization of mortgage servicing rights 248,642 286,521
Additions of originated mortgage servicing rights (82,046) 193,389
Other amortization and (accretion), net 407,244 (2,237)
Securities gains, net -- (86,660)
Gain on loan sales (184,608) --
Decrease (increase) in loans held for sale 15,648,298 (34,083,239)
Net increase in accrued interest receivable (50,817) (493,514)
Net increase in accrued interest payable 112,936 11,914
Net decrease (increase) in other assets 362,859 29,802
Net increase in other liabilities 99,405 1,450,917
------------ ------------
Net cash flows used in operating activities 22,049,512 (29,767,779)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities held to maturity -- (2,978,438)
Maturities of investment securities held to maturity 18,005,000 2,000,000
Sales of investment securities available for sale -- 9,564,602
Purchase of investment securities available for sale (14,000,625) (23,643,605)
Maturities of investment securities available for sale 4,601,496 3,681,536
Loan originations, net of repayments (45,498,579) (24,766,371)
Purchases of premises and equipment (1,606,090) (814,826)
Proceeds from sale of loans 28,059,286 --
Proceeds from sale of mortgage servicing rights 908,649 --
Gain on mortgage servicing rights sales (1,493,979) --
Proceeds from sale of other real estate 84,466 (53,217)
------------ ------------
Net cash flows used in investing activities (10,940,376) (37,010,319)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in demand deposits,
Money market accounts, and savings accounts 12,914,084 (11,280,543)
Net (decrease) increase in time deposits (956,948) 43,476,555
Repayment of long-term debt -- (250,000)
(Decrease) increase in short-term borrowings (1,797,305) 17,515,158
Dividends paid -- (172,813)
Proceeds from the sale of common stock 19,508 --
------------ ------------
Net cash flows provided by financing activities 10,179,339 49,288,357
------------ ------------
Net decrease in cash and cash equivalents 21,288,475 (17,489,741)
Cash and cash equivalents, beginning of period 32,955,417 37,359,690
------------ ------------
Cash and cash equivalents, end of period $ 54,243,892 $ 19,869,949
============ ============
Supplemental disclosures of cash flow information
Cash paid during the period for:
Total interest paid $ 6,402,368 $ 5,824,993
============ ============
Total income taxes paid $ -- $ 600,000
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 6
FIDELITY NATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1997
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 period ended March 31, 1997, are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1997. 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, 1996.
Note B - Shareholders' Equity
During the period ended March 31, 1996, the Company declared and paid dividends
totaling $172,815. The Board of Governors of the Federal Reserve has established
capital adequacy guidelines for bank holding companies. At March 31, 1997, the
Company did not meet the minimum capital ratios established by the guidelines
and accordingly was precluded from paying further dividends. During the period
ended March 31, 1997, no dividends were declared or paid by the Company.
The Company has previously reported that, as a result of the losses for the
fiscal year ending December 31, 1996, the Company and the Bank were no longer in
compliance with certain minimum capital requirements prescribed by the Federal
Reserve Bank and by the Office of the Comptroller of the Currency ("OCC") as of
December 31, 1996. At that time and as of March 31, 1997, the Company and the
Bank were deemed to be "undercapitalized" pursuant to the applicable
regulations. The additional capital needed to have the Bank meet the minimum
regulatory standards to be deemed adequately capitalized at March 31, 1997, was
$3 million. The Bank filed a capital restoration plan with the OCC in response
to the OCC's formal notification of the Bank's undercapitalized status dated
April 3, 1997. The capital restoration plan has been accepted and approved by
the OCC. The plan provides for the prompt raising of additional capital by the
Company and the Bank. In furtherance of this undertaking, the Company has
engaged an investment banker. Failure to timely achieve the specified capital
goals contained in the capital restoration plan will subject the Bank to various
regulatory actions by the OCC, including the restrictions applicable to
"significantly undercapitalized banks." There can be no assurances that the Bank
and the Company will be able to achieve the objectives of the plan on a timely
basis. See Item 1, "Recent Developments" and "Capital," of the Company's Report
on Form 10-K for 1996 and Note 2, "Regulatory Matters" of the Company's "Notes
to Consolidated Financial Statements" set forth in the Company's 1996 Annual
Report to Shareholders which has been filed as an exhibit to the Company's
Report on Form 10-K for 1996.
4
<PAGE> 7
Note C - Recent Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings per Share." The
statement revises standards for computing and presenting net income per share by
(a) replacing primary net income per share with basic net income per share, (b)
requiring dual presentation of basic and diluted net income per share for
entities with complex capital structures and (c) requiring a reconciliation of
the basic net income per share computation to diluted net income per share.
Basic net income per share is calculated by dividing net income available to
common shareholders by the weighted-average number of common shares outstanding
for the period. Diluted net income per share includes the effect of potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common shares. The adoption of SFAS No. 128
will not have a material effect on the Company's earnings per share
calculations.
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 March 31, 1997, compared to December 31, 1996, and results of
operations for the three month period ended March 31, 1997, 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 $616 million at March 31, 1997, compared to $605 million at
December 31, 1996, a 1.7% increase. Loans, net of unearned income, increased $11
million or 2.5% to $440 million and loans held for sale decreased $16 million or
41.1% to $22 million at March 31, 1997. The loan growth was primarily a result
of an increase in the Company's indirect automobile lending. During the quarter,
an $11 million decline in credit card loans was offset by the increases in
indirect automobile loans.
The following schedule summarizes the Company's total loans at March 31, 1997,
and December 31, 1996 (dollars in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- ------------
<S> <C> <C>
TOTAL LOANS
Loans, net of unearned income $439,980 $429,284
Loans held for sale:
Mortgage loans 12,458 13,106
Indirect Automobile loans 10,000 25,000
-------- --------
Total loans held for sale 22,458 38,106
-------- --------
Total loans $462,438 $467,390
======== ========
</TABLE>
5
<PAGE> 8
ASSET QUALITY
The following schedule summarizes the Company's asset quality position at March
31, 1997, and December 31, 1996 (dollars in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- ------------
<S> <C> <C>
Nonperforming assets
Nonaccrual loans $ 1,297 $ 2,940
Other real estate owned 2,097 567
------- -------
Total nonperforming assets $ 3,394 $ 3,507
======= =======
Loans 90 days past due and still accruing $ 6,758 $ 6,890
======= =======
Allowance for loan losses $16,019 $16,511
======= =======
Ratio of past due loans to loans 1.54% 1.66%
======= =======
Ratio of nonperforming assets to loans
and other real estate owned .77% .82%
======= =======
Allowance to period-end loans 3.64% 3.85%
======= =======
Allowance to nonperforming loans
(coverage ratio) 12.35 x 5.62 x
======= =======
</TABLE>
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 adverse impact on
asset quality. The adverse trends impacting the consumer portfolio, primarily
credit cards and indirect auto loans, have been discussed elsewhere herein.
DEPOSITS
Total deposits at March 31, 1997, were $557 million compared to $545 million at
December 31, 1996, a 2.2% increase. During this period total liabilities
increased $10 million or 1.8% to $595 million. The increase in deposits occurred
principally in money market deposits which increased $11 million or 14.4%.
Demand deposits increased $6 million or 7.9%, savings deposits decreased $4
million or 10.8% and time deposits decreased $1 million or .3%.
The balance sheet growth was primarily funded by the increase in total deposits
which was generated in current communities.
LIQUIDITY AND SOURCES OF CAPITAL
Market and public confidence in the financial strength of the Bank and financial
institutions in general will largely determine the Bank's access to appropriate
levels of liquidity. This confidence is significantly dependent on the Bank's
ability to maintain sound asset credit quality and appropriate levels of capital
resources.
6
<PAGE> 9
Liquidity is defined as the ability of the Bank to meet anticipated customer
demands for funds under credit commitments and deposit withdrawals at a
reasonable cost and on a timely basis. Management measures the Bank's liquidity
position by giving consideration to both on-and off-balance sheet sources of and
demands for funds on a daily and weekly basis.
Sources of liquidity include cash and cash equivalents, net of federal
requirements to maintain reserves against deposit liabilities; investment
securities eligible for pledging to secure borrowings from dealers and customers
pursuant to securities sold under agreements to repurchase ("repurchase
agreements"); loan repayments; loan sales; deposits, and certain interest
rate-sensitive deposits; and borrowings under overnight federal fund lines
available from correspondent banks. During the first quarter of 1997, the
Company sold $27.8 million in indirect automobile loans. In addition to
interest rate-sensitive deposits, the Bank's principal demand for liquidity is
anticipated fundings under credit commitments to customers.
Shareholders' equity was $20.9 million at March 31, 1997, compared to $21.1
million at December 31, 1996. The $.5 million increase in net unrealized holding
losses on investment securities available-for-sale was the primary cause of the
decrease. Shareholders' equity as a percent of total assets was 3.4% at March
31, 1997, compared to 3.5% at December 31, 1996.
Maintaining appropriate levels of capital is an important factor in determining
the availability of critical sources of liquidity. At March 31, 1997, capital
ratios were below regulatory minimums. This undercapitalized position has
tightened the Company's liquidity position and reduced funding sources available
to it in the past. These past sources include unsecured federal funds lines and
warehouse borrowing from the Federal Home Loan Bank.
Management of the Bank seeks to maintain a stable net liquidity position while
optimizing operating results, as reflected in net interest income, the net yield
on earning assets and the cost of interest-bearing liabilities in particular.
Key management meets regularly to review the Bank's current and projected net
liquidity position and to review actions taken by management to achieve this
liquidity objective.
The Company has unused sources of liquidity in the form of unused federal funds
lines totaling $10.4 million at March 31, 1997.
At March 31, 1997, based on the Federal Reserve Board's guidelines, the
Company's tier I capital ratio was 3.54%, the total risk-based capital ratio was
6.58%, and the leverage ratio was 2.96%. The following table represents the
regulatory capital position of the Company at March 31, 1997, and December 31,
1996 (dollars in thousands):
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
------------------------- ------------------------
Amount Percent Amount Percent
------ ------- ------ -------
Tier I capital:
<S> <C> <C> <C> <C>
Actual $17,941 3.54% $17,052 3.40%
Minimum 20,282 4.00 20,059 4.00
------- -------
Deficit $ 2,341 .46 $ 3,007 .60
======= =======
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
--------------------------- -------------------------
Amount Percent Amount Percent
------- ------- ------- -------
<S> <C> <C> <C> <C>
Total risk-based capital:
Actual $33,369 6.58% $31,976 6.38%
Minimum 40,565 8.00 40,118 8.00
------- -------
Deficit $ 7,196 1.42 $ 8,142 1.62
======= =======
Tier I capital leverage ratio:
Actual 2.96% 2.67%
Minimum acceptable 3.00 3.00
Deficit .04 .33
</TABLE>
For additional information, see page 4, B of the Notes to Consolidated Financial
Statements.
INTEREST RATE SENSITIVITY
The interest rate sensitivity structure within the Company's balance sheet at
March 31, 1997, has a net interest sensitive liability gap of 8.30 % when
projecting out one year. In the near term, defined as 90 days, the Company
currently has a net interest sensitivity asset gap of 17.32 %. 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 income for the first quarter ended March 31, 1997, was $308,611 compared
to net income of $603,108 for the first quarter of 1996, a 48.8% decrease. Net
income per share was $.07 for the first quarter of 1997, compared to $.13 for
the same period in 1996.
Earnings for the quarter resulted from an increase in net interest income of
$843,696 or 10.7% over first quarter 1996. Excluding a gain on the sale of
mortgage servicing rights of $1,493,979 in the first quarter of 1997,
noninterest income rose $285,281 or 8.3% over the comparable quarter in 1996.
Noninterest expense was $8,716,651 up 8.9% over 1996. The provision for loan
losses for the quarter was $4,770,000 up $2,370,000 over the first quarter of
1996. The allowance for loan losses as of March 31, 1997, was $16,018,527
compared to $6,112,029 at the end of the first quarter of 1996. The allowance
for loan losses is 3.64% of loans net of unearned income compared to 1.59% at
March 31, 1996.
NET INTEREST INCOME
Net interest income for the first quarter of 1997 was $8.7 million compared to
$7.9 million for 1996. The $56.8 million increase in average earning assets in
1997 over the comparable period in 1996 offset the increase in interest expense
attributable to the $38.0 million increase in average interest bearing
liabilities. The net interest margin for the first quarter 1997 was 6.48%
identical to the 6.48% for the first quarter of 1996.
8
<PAGE> 11
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. Loans are
charged off when, in the opinion of management, such loans are deemed to be
uncollectible. Subsequent recoveries are added to the allowance.
Management believes the allowance for loan losses is adequate to provide for
inherent loan losses. The provision for loan losses for the first quarter of
1997 was $4.8 million compared to $2.4 million for the comparable period of
1996. The increase was a result of loan growth and the increases in net
charge-offs and delinquencies, primarily credit card related. Net charge-offs to
average loans on an annualized basis for the three months ended March 31, 1997,
were 4.53% compared to 1.63% for the same period in 1996. The following schedule
summarizes changes in the allowance for loan losses for the periods indicated
(calculated in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED
------------------ ------------
December 31,
1997 1996 1996
-------- ------ ------------
<S> <C> <C> <C>
Balance at beginning of period $16,511 $5,537 $ 5,537
Charge-offs:
Commercial, financial and agricultural 137 3 3
Real estate-construction -- -- --
Real estate-mortgage -- -- --
Consumer installment 1,007 187 1,657
Credit cards 4,447 1,778 13,156
------- ------ -------
Total charge-offs 5,591 1,968 14,816
Recoveries:
Commercial, financial and agricultural 5 5 31
Real estate-construction -- -- --
Real estate-mortgage -- -- --
Consumer installment 42 13 64
Credit cards 282 125 568
------- ------ -------
Total recoveries 329 143 663
------- ------ -------
Net charge-offs 5,262 1,825 14,153
Provision for loan losses 4,770 2,400 25,127
======= ====== =======
Balance end of period $16,019 $6,112 $16,511
======= ====== =======
</TABLE>
NONINTEREST INCOME
Noninterest income was $5.2 million for the first quarter of 1997 compared to
$3.5 million in 1996, a 51.5% increase. Noninterest income in the first quarter
1997 benefited from a $1.49 million gain on the sale of mortgage servicing
rights. There were no such sales in the first quarter of 1996.
9
<PAGE> 12
NONINTEREST EXPENSE
Noninterest expense for the three months ended March 31, 1997, was $8.7 million
compared to $8.0 million for the comparable period of 1996, a 8.9% increase. The
increase in salaries and benefits for the first quarter 1997 accounted for 87.4%
of the total increase in noninterest expense over the comparable periods in
1996. While the number of full time equivalent employees has increased to 385 on
March 31, 1997, from 367 at March 31, 1996, this is a decrease from 436 full
time equivalents at December 31, 1996. This increase was due to expansion in
traditional banking activities and general corporate growth.
The increases in furniture and equipment expenses and net occupancy costs during
the first quarter of 1997 over the comparable period in 1996 was due to general
corporate growth including branch expansion, the opening of a new operations
center, and the opening of loan production offices.
Mortgage servicing rights amortization attributable to mortgage loans serviced
and those which paid off during the first quarter of 1997 and 1996 was $249,000
and $582,000, respectively. The decline in amortization during the first quarter
of 1997 compared to the comparable quarter in 1996 was primarily attributable to
sales of mortgage servicing rights during 1996.
PROVISION FOR INCOME TAXES
The provision for income taxes for the first quarter of 1997 was $163,000,
compared to $328,000 for the same period in 1996. These changes were due to
changes in taxable income.
SECURITIES LITIGATION REFORM ACT
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
- - This report contains certain forward-looking statements that involve risks,
future events and uncertainties, including but not limited to (i) economic and
competitive factors affecting the Company's operations, markets, products,
services and prices, (ii) financial matters, plans and objectives of the Company
or management for future operations, products or services, (iii) future economic
performances of the Company, (iv) actions by governmental regulatory agencies;
and (v) other factors discussed in the Company's filings with the Securities and
Exchange Commission and the assumptions underlying such beliefs, expectations
and intentions. Such statements are not guarantees of future performance and
involve certain risks and uncertainties that could cause the Company's future
results to differ materially from those expressed in any forward looking
statement made by or on behalf of the Company. Many of such factors are beyond
the Company's ability to control or predict. Readers are accordingly cautioned
not to place undue reliance on forward looking statements. There are many
factors that could cause actual results to differ materially from those in the
forward looking statement. Readers are urged to consider statements labeled with
the terms "believers," "belief," "experts," "intends," "plans," or "anticipates"
to be uncertain and forward-looking.
10
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
a. Exhibits
27 Financial Data Schedule (for SEC use only).
b. Reports on Form 8-K
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: May 14, 1997 BY: /s/ James B. Miller, Jr.
---------------------------------------
James B. Miller, Jr.
Chief Executive Officer
Date: May 14, 1997 /s/ M. Howard Griffith, Jr.
---------------------------------------
M. Howard Griffith, Jr.
Chief Financial Officer
11
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0
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