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Fidelity Southern Upped to Strong Buy on Organic Growth

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On Nov 25, Zacks Investment Research upgraded Fidelity Southern Corporation (LION - Free Report) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?

Fidelity Southern has been witnessing rising earnings estimates on the back of strong third-quarter 2014 results, which included improved revenues, growth in deposits and loans, and better asset position. In three out of the trailing four quarters, the company recorded positive earnings surprises with an average beat of 8.6%.

On Oct 16, Fidelity Southern reported third-quarter 2014 earnings of 38 cents per share, beating the Zacks Consensus Estimate by 15.2%. Robust results were primarily driven by higher top-line growth, partially offset by higher expenses and provision for loan losses.  

Net interest income increased 7.6% year over year to $23.3 million and non-interest income rose 8% year over year to $27.9 million. As of Sep 30, 2014, total loans held for investment grew to $2.1 billion, up 13.2% year over year. Total deposits on Sep 30, 2014 amounted to $2.5 billion, up 13.4% from the year-ago quarter. During the quarter, the Southeastern bank expanded its business in Florida by opening seven branches which included the acquisition of five branches and $170.7 million in deposits.

On Nov 6, 2014, Fidelity Southern announced its plan to acquire around $7 million in loans and $44 million in deposits from the Florida Capital Bank, N.A.’s St. Augustine branch. This acquisition, subject to certain regulatory and customary closing conditions, is expected to be completed in fourth-quarter 2014.

On the flip side, non-interest expenses rose 4.7% to $35.7 million. Further, capital ratios deteriorated during the quarter.

For 2014, the Zacks Consensus Estimate increased 10% to $1.32 per share over the last 60 days. For 2015, the Zacks Consensus Estimate advanced 7.6% to $1.28 per share over the same time period.

Other Stocks to Consider

Apart from Fidelity Southern, other Southeastern banks worth considering include Investar Holding Corporation (ISTR - Free Report) , Middleburg Financial Corporation and State Bank Financial Corporation (STBZ - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy).

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