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Financials : Banks | Small Cap BlendCompany profile

Fidelity Southern Corporation is a bank holding company. The Company conducts its operations through its subsidiary bank, Fidelity Bank, which is a state chartered bank (the Bank). The Company provides an array of financial products and services for business and retail customers in the metropolitan Atlanta and Jacksonville, Orlando and Sarasota-Bradenton, Florida markets. The Company provides mortgage loans, indirect automobile loans and Small Business Administration (SBA) loans throughout the South and parts of the Midwest. It delivers its products and services through a network of offices located in Southern states. As of December 31, 2016, it owned 55 and leased 10 retail bank branches and it leased 27 loan production offices. The Company is primarily engaged in attracting deposits from individuals and businesses and using these deposits and borrowed funds to originate commercial, residential mortgage, construction and installment loans.

Closing Price
$28.07
Day's Change
-0.45 (-1.58%)
Bid
--
Ask
--
B/A Size
--
Day's High
28.57
Day's Low
27.94
Volume
(Heavy Day)
Volume:
111,407

10-day average volume:
80,360
111,407

UPDATE: BB&T-SunTrust merger signals more bank deals are coming

4:26 pm ET February 7, 2019 (MarketWatch)
Print

UPDATE: BB&T-SunTrust merger signals more bank deals are coming

By Philip van Doorn, MarketWatch

Bigger is better, as large regional banks face profit pressures

The announcement of the $66 billion merger of BB&T Corp. and SunTrust could spur a wave of combinations for large regional banks. As banks grow -- and they need to grow to increase profits -- regulatory costs increase, and mergers can be an effective way to lower expenses.

This the largest U.S. bank combination, by far, since the crisis days of 2008. Investors are already pleased with the deal -- and thinking about which lenders could be next.

"The BB&T/SunTrust merger will open more eyes on the potential for more sizable bank M&A to occur," Jefferies analyst Ken Usdin wrote in a note to clients in the wake of Thursday's news. "Scale is the game here, as BBT/STI were both eventually going to cross into the $250B-$750B asset bucket."

BB&T(BBT)of Winston-Salem, N.C., and SunTrust(STI)of Atlanta announced they would combine in an all-stock merger of equals (http://www.marketwatch.com/story/suntrust-banks-and-bbt-combining-in-merger-worth-about-66-billion-2019-02-07), although BB&T's shareholders will own about 57% of the combined holding company. The deal is expected to be completed during the fourth quarter.

Shares of BB&T were up as much as 6% in early trading Thursday, while shares of SunTrust rose as much as 13%. Both have come off their highs in midday trade.

Read: RBC lands advisory record with $66bn SunTrust-BB&T merger (https://www.fnlondon.com/articles/rbc-lands-advisory-record-with-66bn-suntrust-bbt-merger-20190207)

Jefferies's Usdin called the merger of BB&T and SunTrust "attractive" because earnings per share are expected to increase 13% per BB&T share in 2021 and 9% for SunTrust shares, based on current consensus estimates among analysts.

For large bank holding companies, regulatory scrutiny, including the intricacy of the Federal Reserve's annual analysis of capital plans and failure contingency resolution plans, increases as they grow, leading to increased staffing and other costs. Another important asset-size threshold for banks is $50 billion. Federally insured depository institutions of that size or greater are required by the FDIC to file resolution plans, colloquially known as living wills.

BB&T was the 10th largest U.S. bank holding company as of Dec. 31, with $226 billion in assets, while SunTrust was the 11th largest, with $216 billion in assets. The combined company, whose name hasn't been determined, would be the nation's sixth largest, based on those figures. It will be based in Winston-Salem and be among the top three lenders by deposit market share in Florida, Georgia, North Carolina, South Carolina, Tennessee, Maryland, Virginia and West Virginia.

A similar deal (http://www.marketwatch.com/story/tcf-financial-to-merge-into-chemical-financial-to-create-midwest-bank-with-45-billion-in-assets-2019-01-28) was announced by TCF Financial(TCF)of Wayzata, Minn. ($23.7 billion in assets), and Chemical Financial(CHFC)of Midland, Mich. ($21.5 billion in assets), on Jan. 27.

"With the Chemical/TCF deal last week, the market was thinking this may work," KBW analyst Brian Klock said during a phone interview Thursday morning. "A lot of other banks in the range of $100 to $200 billion asset size may be thinking about this. This is the right thing to do, when you think about competing with the bigger banks that are putting so much investment into technology. If the franchises work well together, there are a lot of arguments in favor of deals like this.

Klock had a neutral rating on BB&T but an "outperform" rating for SunTrust before the deal eas announced.

Potential prey

We can't predict which banks will merge, and one comforting reason is that banks aren't in a crisis environment. Loan quality across the domestic industry remains very strong. But the regulatory burden has increased in the postcrisis environment, and the Federal Reserve's recent change in policy curtails the continual rise in interest rates that was expected to fatten lending margins.

So it may be worthwhile to look at the large regional banks that have shown the lowest returns on equity in recent years. These banks arguably face greater pressures to merge and enjoy "cost synergies" similar to the ones that BB&T and SunTrust expect.

KBW Bank Index

The KBW Bank Indexis made up of 24 stocks of large money-center and regional U.S. bank holding companies.

Leaving out the "big four" banks (JPMorgan Chase(JPM) , Bank of America(BAC) , Citigroup(C)and Wells Fargo(WFC)), here are the 15 banks in the index that have had the lowest average return on common equity (ROCE) over the past five years, through 2018:

Company Ticker City Average ROCE - 5 years Total assets ($bil) Total return - 2019 through Feb. 6 Total return - 2018 Total return - 3 Years

New York Community Bancorp Inc. US:NYCB Westbury, N.Y. 5.80 $52 27.8% -23.2% -9.4%

People's United Financial Inc. US:PBCT Bridgeport, Conn. 6.11 $48 17.2% -19.8% 32.3%

Citizens Financial Group Inc. US:CFG Providence, R. I 6.17 $161 17.2% -27.4% 85.8%

Zions Bancorporation N.A. US:ZION Salt Lake City 7.01 $69 20.2% -18.3% 135.5%

Regions Financial Corp. US:RF Birmingham, Ala. 7.58 $126 15.2% -20.6% 112.4%

Capital One Financial Corp. US:COF McLean, Va. 8.19 $373 6.0% -22.8% 34.2%

KeyCorp US:KEY Cleveland 9.11 $140 11.6% -24.6% 64.6%

SunTrust Banks Inc. US:STI Atlanta 9.25 $216 16.5% -19.8% 84.1%

Bank of New York Mellon Corp. US:BK New York 9.26 $363 11.7% -10.9% 60.6%

Comerica Inc. US:CMA Dallas 9.27 $71 15.9% -19.1% 143.3%

BB&T Corp. US:BBT Winston-Salem, N.C. 9.28 $226 12.0% -10.2% 65.6%

M&T Bank Corp. US:MTB Buffalo, N.Y. 9.33 $120 12.9% -14.6% 59.5%

PNC Financial Services Group Inc. US:PNC Pittsburgh 9.86 $382 5.7% -17.0% 57.6%

State Street Corp. US:STT Boston 10.66 $245 11.4% -34.0% 37.3%

Huntington Bancshares Inc. US:HBAN Columbus, Ohio 10.95 $109 12.2% -15.3% 70.3%

Source: FactSet

We left BB&T and SunTrust on the list, despite the merger announcement.

KBW Regional Banking Index

The KBW Regional Banking Indexconsists of 50 relatively large regional banks that aren't included in BKX. Here are the 15 banks in this index that have had the lowest average returns on common equity over the past five years:

Company Ticker City Average ROCE - 5 years Total assets ($bil) Total return - 2019 through Feb. 6 Total return - 2018 Total return - 3 Years Total Return - 5 Year

Investors Bancorp Inc. US:ISBC Short Hills, N.J. 5.45 $26 20.4% -22.8% 17.7% 41.3%

Umpqua Holdings Corp. US:UMPQ Portland, Ore. 6.24 $27 11.0% -20.3% 37.6% 23.6%

Sterling Bancorp US:STL Montebello, N.Y. 6.28 $31 19.3% -32.0% 40.9% 76.2%

Popular Inc. US:BPOP San Juan, P.R. 6.56 $48 13.9% 35.8% 128.7% 116.2%

Iberiabank Corp. US:IBKC Lafayette, La. 6.61 $31 17.3% -15.3% 70.3% 31.7%

Valley National Bancorp US:VLY Wayne, N.J. 6.99 $32 17.6% -17.8% 34.2% 34.5%

First Midwest Bancorp Inc. US:FMBI Chicago 7.11 $16 12.4% -15.9% 42.7% 52.1%

Hancock Whitney Corp. US:HWC Gulfport, Miss. 7.27 $28 18.4% -28.5% 87.9% 38.8%

(MORE TO FOLLOW) Dow Jones Newswires

February 07, 2019 16:26 ET (21:26 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

MW UPDATE: BB&T-SunTrust merger signals more bank -2-

F.N.B. Corp. US:FNB Pittsburgh 7.32 $33 19.2% -26.2% 8.0% 19.5%

Old National Bancorp US:ONB Evansville, Ind. 7.32 $20 8.1% -9.2% 63.7% 44.9%

Associated Banc-Corp US:ASB Green Bay, Wis. 7.34 $34 12.6% -20.2% 40.4% 54.3%

Provident Financial Services Inc. US:PFS Jersey City, N.J. 7.49 $10 14.0% -7.6% 64.1% 97.4%

Brookline Bancorp Inc. US:BRKL Boston 7.72 $7 12.1% -9.9% 60.7% 107.1%

United Bankshares Inc. US:UBSI Charleston, W.Va. 7.72 $19 16.6% -7.0% 18.8% 47.6%

Source:FactSet

Don't miss: These 2 stocks you've never heard of are better ways to profit from Amazon's growth (http://www.marketwatch.com/story/these-2-stocks-youve-never-heard-of-are-better-ways-to-profit-from-amazons-growth-2019-02-06)

Create an email alert for Philip van Doorn's Deep Dive columns here (http://www.marketwatch.com/tools/alerts/newsColumn.asp).

-Philip van Doorn; 415-439-6400; AskNewswires@dowjones.com

(END) Dow Jones Newswires

February 07, 2019 16:26 ET (21:26 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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