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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
Current report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): January 27, 1999
FIDELITY NATIONAL CORPORATION
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(Exact name of Registrant as Specified in Charter)
Georgia 0-22374 58-1416811
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification
incorporation) Number)
3490 Piedmont Road, Suite 1550, Atlanta, Georgia 30305
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(Address of Principal Executive Offices)
Registrant's Telephone Number, including area code: (404) 240-1504
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Item 5. Other Events
On January 27, 1999 Fidelity National Corporation issued the following
press release announcing its 1998 Fourth Quarter Year-End results and a Fourth
Quarter 1997 restatement of earnings.
FIDELITY NATIONAL CORPORATION
ANNOUNCES 1998 FOURTH QUARTER YEAR-END RESULTS
AND A FOURTH QUARTER 1997 RESTATEMENT
ATLANTA, GA (January 27, 1999) - Fidelity National Corporation
("Fidelity") (NASDAQ:LION) announced that Fidelity's net income for the year
ended December 31, 1998, was $3,853,000 compared to $963,000 for 1997, as
restated, a 300% increase. Basic earnings per share for 1998 were $.43 compared
to $.15 for 1997, as restated. Diluted earnings per share for 1998 were $.42
compared to $.15 for 1997, as restated.
Net income for the fourth quarter of 1998 was $504,000 or $.06 basic
earnings per share, compared to a loss of $225,000 or $.08 per share for the
same period of 1997, as restated. Diluted earnings per share for the fourth
quarter of 1998 were $.05 compared to a loss of $.08 per share for 1997, as
restated.
Total assets were $713 million at December 31, 1998, compared to $657
million at December 31, 1997. Compared to December 31, 1997, total loans
including loans held-for-sale increased 22.6% to $536 million and deposits
increased 9.3% to $621 million, while shareholders' equity increased 6.2% to $55
million.
Fidelity Chairman, Jim Miller, said that the 1998 results were affected
by an after-tax write-down of a piece of commercial real estate by $384,000 or
$.05 per share in the fourth quarter. He also said that anticipated on-going
reductions in regulatory costs and Y2K expenses and maturity of the three
branches opened in 1998 will benefit earnings in the future.
When operating results in 1998 are compared to 1997, some highlights
include a 20.2% reduction in loan charge-offs, 66.0% increase in loan loss
recoveries, 27.0% increase in Fidelity National Bank's non-interest income,
22.6% growth in total loans including loans held-for-sale, and a small .9%
increase in salary and benefit costs.
Fidelity reported that while closing its books for 1998, it discovered
an error which resulted in an overstatement of the value of its only
securitization asset at year-end 1997. The asset's lower valuation resulted from
higher than expected loan prepayments and credit losses. The restatement of
fourth quarter reduced 1997 earnings by $871,236 or $.18 per share.
Fidelity also announced that on December 1, 1998, the Office of the
Comptroller of the Currency lifted the Formal Agreement between Fidelity
National Bank and the OCC which releases Fidelity National Bank from certain
restrictions on capital levels and dividend payments.
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Fidelity National Corporation, through its operating companies,
Fidelity National Bank, Fidelity National Mortgage Corporation, and Fidelity
National Capital Investors, Inc., provides banking, trust, mortgage, and
investment brokerage services through 19 branches in Atlanta and loan production
offices in Jacksonville and Tampa, Florida.
This release contains certain forward-looking statements including
statements relating to present or future trends or factors generally affecting
the banking industry and specifically affecting Fidelity's operations, markets
and products. Without limiting the foregoing, the words "believes,"
"anticipates," "intends," "expects" or similar expressions are intended to
identify forward-looking statements. These forward-looking statements involve
certain risks and uncertainties. Actual results could differ materially from
those projected for many reasons, including, without limitation, changing events
and trends that have influenced Fidelity's assumptions, but that are beyond
Fidelity's control. These trends and events include (i) changes in the interest
rate environment which may reduce margins, (ii) non-achievement of expected
growth, (iii) less favorable than anticipated changes in the national and local
business environment and securities markets, (iv) adverse changes in the
regulatory requirements affecting Fidelity, and (v) greater competitive
pressures among financial institutions in Fidelity's market. Additional
information and other factors that could affect future financial results are
included in Fidelity's filings with the Securities and Exchange Commission.
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FIDELITY NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
ASSETS 1998 1997
------------- -------------
<S> <C> <C>
CASH AND DUE FROM BANKS $ 34,144,180 $ 28,192,714
FEDERAL FUNDS SOLD 45,785,746 41,068,827
INVESTMENTS AVAILABLE FOR SALE 43,404,870 88,007,985
INVESTMENTS HELD TO MATURITY 29,652,667 37,925,224
LOANS HELD FOR SALE 39,655,259 4,360,765
LOANS, NET OF UNEARNED INCOME 496,220,907 432,820,665
ALLOWANCE FOR LOAN LOSSES (11,910,601) (14,319,591)
------------- -------------
LOANS, NET 484,310,306 418,501,074
PREMISES AND EQUIPMENT 19,643,697 20,517,650
OTHER REAL ESTATE 1,093,264 2,259,704
ACCRUED INTEREST RECEIVABLE 4,560,617 3,917,066
OTHER ASSETS 10,626,947 12,181,758
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TOTAL ASSETS $ 712,877,553 $ 656,932,767
============= =============
LIABILITIES
DEPOSIT LIABILITIES:
NONINTEREST BEARING DEMAND $ 102,424,607 $ 87,054,288
INTEREST BEARING DEMAND/
MONEY MARKET 128,053,878 83,756,126
SAVINGS 21,867,183 21,748,732
TIME DEPOSITS, $100,000 AND OVER 107,599,557 98,190,352
OTHER TIME DEPOSITS 261,318,402 277,567,827
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TOTAL DEPOSIT LIABILITIES 621,263,627 568,317,325
FED FUNDS PURCHASED/SECURITIES SOLD/
OTHER SHORT-TERM BORROWINGS 16,515,867 16,367,839
LONG-TERM DEBT 15,650,000 15,800,000
ACCRUED INTEREST PAYABLE 3,189,129 3,192,701
OTHER LIABILITIES 1,703,450 1,906,800
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TOTAL LIABILITIES 658,322,073 605,584,665
SHAREHOLDERS' EQUITY
PREFERRED STOCK 6,150,000 6,150,000
COMMON STOCK 35,124,941 34,943,110
TREASURY STOCK (69,325) (69,325)
UNREALIZED GAIN ON INVESTMENTS, NET OF TAX 75,968 208,694
RETAINED EARNINGS 13,273,896 10,115,623
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TOTAL SHAREHOLDERS' EQUITY 54,555,480 51,348,102
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TOTAL LIABILITIES AND EQUITY $ 712,877,553 $ 656,932,767
============= =============
BOOK VALUE PER SHARE $ 5.95 $ 5.57
============= =============
SHARES OF COMMON STOCK OUTSTANDING 8,133,866 8,114,407
============= =============
</TABLE>
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FIDELITY NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED QUARTER ENDED
DECEMBER 31, DECEMBER 31,
---------------------------- -----------------------------
1998 1997 1998 1997
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
INTEREST INCOME
LOANS, INCLUDING FEES $55,295,291 $56,010,450 $14,267,172 $ 13,477,750
INVESTMENT SECURITIES
TAXABLE 6,631,283 4,835,128 1,553,691 1,253,266
FEDERAL FUNDS SOLD 1,689,132 1,238,941 421,540 600,482
DEPOSITS WITH OTHER BANKS 156,465 68,463 56,814 12,011
----------- ----------- ----------- ------------
TOTAL INTEREST INCOME 63,772,171 62,152,982 16,299,217 15,343,509
INTEREST EXPENSE
DEPOSITS 25,550,474 24,236,294 6,620,414 6,149,007
SHORT-TERM BORROWINGS 759,736 485,593 285,818 98,924
LONG-TERM DEBT 1,434,390 1,487,673 357,360 361,484
----------- ----------- ----------- ------------
TOTAL INTEREST EXPENSE 27,744,600 26,209,560 7,263,592 6,609,415
----------- ----------- ----------- ------------
NET INTEREST INCOME 36,027,571 35,943,422 9,035,625 8,734,094
PROVISION FOR LOAN LOSS 9,450,000 14,435,000 2,700,000 2,765,000
----------- ----------- ----------- ------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSS 26,577,571 21,508,422 6,335,625 5,969,094
NONINTEREST INCOME
SERVICE CHARGES/DEPOSITS 2,376,002 2,096,948 647,181 526,073
CREDIT CARD FEES 3,277,781 3,083,913 857,863 819,267
MORTGAGE BANKING ACTIVITIES 3,750,571 4,902,945 1,002,571 811,765
SECURITIES GAINS, NET 254,737 140,090 121,202 140,090
OTHER OPERATING INCOME 9,280,506 7,154,860 2,266,915 2,093,526
----------- ----------- ----------- ------------
TOTAL OTHER INCOME 18,939,597 17,378,756 4,895,732 4,390,721
NONINTEREST EXPENSE
SALARIES/EMPLOYEE BENEFITS 17,162,862 17,012,788 4,297,561 4,362,148
FURNITURE AND EQUIPMENT 2,757,686 2,293,866 747,303 616,037
NET OCCUPANCY 3,225,106 2,974,877 725,815 602,750
CREDIT CARD PROCESSING 3,011,844 2,814,563 714,375 657,417
MORTGAGE SERVICING RIGHTS AMORTIZATION 910,207 788,201 264,219 177,853
OTHER OPERATING EXPENSES 12,380,245 11,536,222 3,678,791 4,269,926
----------- ----------- ----------- ------------
TOTAL OTHER EXPENSE 39,447,950 37,420,517 10,428,064 10,686,131
----------- ----------- ----------- ------------
INCOME BEFORE INCOME TAXES 6,069,218 1,466,661 803,293 (326,316)
INCOME TAX EXPENSE 2,216,630 503,748 298,907 (101,246)
----------- ----------- ----------- ------------
NET INCOME $ 3,852,588 $ 962,913 $ 504,386 $ (225,070)
=========== =========== =========== ============
NET INCOME AVAILABLE TO
COMMON SHAREHOLDERS $ 3,483,588 $ 711,835 $ 504,386 $ (348,070)
=========== =========== =========== ============
BASIC EARNINGS PER SHARE $ 0.43 $ 0.15 $ 0.06 $ (0.08)
=========== =========== =========== ============
DILUTED EARNINGS PER SHARE $ 0.42 $ 0.15 $ 0.05 $ (0.08)
=========== =========== =========== ============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 8,123,049 4,831,364 8,132,320 5,344,959
=========== =========== =========== ============
</TABLE>
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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
BY: /S/ JAMES B. MILLER, JR.
---------------------------------
JAMES B. MILLER, JR.
CHAIRMAN
Date: January 28, 1999
