Fidelity Southern Corporation, holding company for Fidelity Bank (the "Bank"), today reported financial results for the three and six months ended June 30, 2014.

KEY RESULTS

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

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

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

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

BALANCE SHEET

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

Loans

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

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

Asset Quality

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

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

Deposits

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

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

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

INCOME STATEMENT

Net Interest Margin

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

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

Interest Income

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

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

Interest Expense

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

Noninterest Income

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

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

Noninterest Expense

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

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