Lakeland Financial Reports Record Performance

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Third Quarter Net Income of $20.6 million, Increases 30% From a Year Ago

WARSAW, Ind., Oct. 25, 2018 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq Global Select/LKFN), parent company of Lake City Bank, today reported record quarterly net income of $20.6 million for the three months ended September 30, an increase of 30% versus $15.8 million for the third quarter of 2017. Diluted earnings per share increased 29% to $0.80 for the third quarter of 2018, versus $0.62 for the third quarter of 2017, also representing a record quarter for the company and its shareholders. On a linked quarter basis, net income increased by 2% and diluted earnings per share increased 3%. Net income increased $428,000 from $20.1 million in the second quarter ended June 30, 2018 and diluted earnings per share increased $0.02 from $0.78.

The company further reported record net income of $59.0 million for the nine months ended September 30, 2018 versus $45.7 million for the comparable period of 2017, an increase of 29%. Diluted net income per common share was also a record for the period and increased 29% to $2.30 for the nine months ended September 30, 2018 versus $1.78 for the comparable period of 2017.

David M. Findlay, President and CEO commented, "With record net income for the quarter and the first nine months of 2018, the Lake City Bank team continues a strong 2018. We are particularly pleased with the strong revenue growth in the quarter. With a 12% growth in revenue, it's clear that our relationship driven business model is working. We benefited from a significant increase in fee-based services within our Commercial and Wealth Advisory business units, which complimented our healthy expansion in the net interest margin."

Highlights for the quarter are noted below.
3rd Quarter 2018 versus 3rd Quarter 2017 highlights:

  • Return on average equity of 16.6%, up from 13.7% a year ago
  • Organic average loan growth of $220 million or 6%
  • Average deposit growth of $309 million or 8%
  • Net interest income increase of $3.3 million or 10%
  • Net interest margin increase of 7 basis points to 3.42%
  • Noninterest income increase of $936,000, or 10%
  • Revenue growth of $4.2 million, or 10%
  • Total equity and tangible common equity1 increase of $36 million and $35 million, respectively, or 8%

3rd Quarter 2018 versus 2nd Quarter 2018 highlights:

  • Return on average assets of 1.72%, up from 1.70%
  • Core deposit growth of $124 million or 3%
  • Net interest income growth of $392,000 or 1%
  • Noninterest income increase of $740,000 or 8%
  • Revenue growth of $1.1 million or 2%
  • Reduced provision expense of $600,000 or down by 35%
  • Reduced watch list loans of $17.5 million or 8%
  • Average equity  increase of $13.9 million or 3%

As announced on October 9, 2018, the board of directors approved a cash dividend for the third quarter of $0.26 per share, payable on November 5, 2018, to shareholders of record as of October 25, 2018. The third quarter dividend per share represents an 18% increase over the third quarter 2017 dividend of $0.22 per share.

Return on average total equity for the third quarter of 2018 was 16.55%, compared to 13.71% in the third quarter of 2017 and 16.86% in the linked second quarter of 2018. Return on average total equity for the first nine months of 2018 was 16.42%, compared to 13.73% in the same period of 2017. Return on average assets for the third quarter of 2018 was 1.72%, compared to 1.41% in the third quarter of 2017 and 1.70% in the linked second quarter of 2018. Return on average assets for the first nine months of 2018 was 1.67% compared to 1.39% in the same period of 2017. The company's total capital as a percent of risk-weighted assets was 14.14% at September 30, 2018, compared to 13.58% at September 30, 2017 and 13.76% at June 30, 2018. The company's tangible common equity to tangible assets ratio2 was 10.41% at September 30, 2018, compared to 10.32% at September 30, 2017 and 10.15% at June 30, 2018.

Average total loans for the third quarter of 2018 were $3.84 billion, an increase of $220.0 million, or 6%, versus $3.62 billion for the third quarter 2017. On a linked quarter basis, total average loans were unchanged at $3.8 billion. Total loans outstanding grew $207.9 million, or 6%, from $3.64 billion as of September 30, 2017 to $3.84 billion as of September 30, 2018.

Findlay noted, "The overall strength of economic conditions in our markets is reflected in the 6% loan growth we experienced over the last year. We are pleased with our gross originations, which have been strong this year. We continue to experience higher than normal levels of loan payoffs in the agricultural and commercial real estate portfolios as long term, non-bank financing alternatives have emerged for these segments. In addition, the commercial and industrial portfolio has been impacted by large payoffs due to consolidations and business sales."

Average total deposits for the third quarter of 2018 were $4.03 billion, an increase of $309.1 million, or 8%, versus $3.72 billion for the third quarter of 2017. Total deposits grew $141.9 million, or 4%, from $3.87 billion as of September 30, 2017 to $4.02 billion as of September 30, 2018. In addition, total core deposits, which exclude brokered deposits, increased $255.0 million, or 7%, from $3.58 billion at September 30, 2017 to $3.84 billion at September 30, 2018 due to growth in commercial deposits of $115.8 million or 13%, growth in public fund deposits of $100.8 million or 9% and growth in retail deposits of $38.4 million or 3%. On a linked quarter basis, core deposits increased by $123.9 million or 3% due to growth in commercial deposits of $89.0 million, growth in public funds deposits of $25.6 million and retail deposit growth of $9.6 million.

The company's net interest margin increased seven basis points to 3.42% for the third quarter of 2018 compared to 3.35% for the third quarter of 2017 and was unchanged from the second quarter of 2018.  The higher margin in the third quarter of 2018 was due to higher yields on loans, partially offset by a higher cost of funds, which was driven by the Federal Reserve Bank increasing the target Federal Funds Rate in mid-March 2018, mid-June 2018 and late September 2018. Net interest income increased $3.3 million, or 10%, to $37.9 million for the third quarter of 2018, versus $34.6 million in the third quarter of 2017 due to both growth in loans and deposits as well as expanding net interest margin. Net interest income increased by $11.2 million or 11% for the nine months ended September 30, 2018 as compared to the first nine months of 2017 due to both net interest margin expansion and volume growth. The company's net interest margin for the nine months ended September 30, 2018 was 3.40% compared to 3.32% in the prior year nine-month period.

The company recorded a provision for loan losses of $1.1 million in the third quarter of 2018 compared to $450,000 for the third quarter 2017 and down from $1.7 million during the linked second quarter of 2018. The company's allowance for loan losses as of September 30, 2018 was $48.3 million compared to $45.5 million as of September 30, 2017 and $47.7 million as of June 30, 2018. The allowance for loan losses represented 1.26% of total loans as of September 30, 2018 versus 1.25% at September 30, 2017 and 1.24% as of June 30, 2018.

Net charge offs for the quarter were $463,000 versus net recoveries of $484,000 in the third quarter of 2017 and net recoveries of $379,000 during the linked second quarter 2018. Annualized net charge offs to average loans were 0.05% for the third quarter of 2018 compared to net recoveries of 0.05% for the third quarter of 2017 and net recoveries of 0.04% for the second quarter of 2018. On a year-to-date basis, net charge offs to average loans were 0.17% compared to net recoveries of 0.02% for the first nine months of 2017.

Nonperforming assets increased $2.3 million, or 22%, to $12.8 million as of September 30, 2018 versus $10.5 million as of September 30, 2017 due to an increase in nonaccrual loans. On a linked quarter basis, nonperforming assets were $128,000 lower than the $12.9 million reported as of June 30, 2018. The ratio of nonperforming assets to total assets at September 30, 2018 increased to 0.27% from 0.24% at September 30, 2017.  

"Asset quality trends remain stable with continued healthy economic performance in our Lake City Bank footprint. We are pleased with the reduction in watch list loans during the quarter as compared to the second quarter 2018," noted Findlay.

The company's noninterest income increased $936,000, or 10%, to $10.4 million for the third quarter of 2018, compared to $9.5 million for the third quarter of 2017. On a linked quarter basis, noninterest income increased by $740,000 or 8%. For the nine months ended September 30, 2018, the company's noninterest income increased 13% to $30.0 million compared to $26.5 million in the prior year period. Noninterest income was positively impacted for both the three- and nine-month periods ended September 30, 2018 by increases in service charges on deposit accounts primarily related to business accounts, loan and service fees, and wealth advisory and brokerage fees due to continued growth of client relationships.

Findlay commented, "We are pleased with the double digit growth in noninterest income on a quarter and year to date basis as compared to the same periods for 2017. This performance reflects strong growth in commercial deposit service charge income, loan and service fee income and wealth advisory fee income."

The company's noninterest expense increased $1.7 million, or 9%, to $22.0 million in the third quarter of 2018, compared to $20.3 million in the third quarter of 2017. On a linked quarter basis, noninterest expense increased by $1.7 million or 9%. For the nine months ended September 30, 2018, the company's noninterest expense increased by $3.8 million or 6% to $63.5 million compared to $59.7 million in the prior year period. Salaries and employee benefits increased during 2018 primarily due to an increase to the company's minimum hiring wage, normal merit increases and increased health insurance cost. Data processing fees also increased during 2018 primarily due to the company's continued investment in technology-based solutions. Corporate and business development expense decreased during 2018 primarily due to a reduction in charitable contributions as well as lower advertising expenses.

The company's efficiency ratio was 45.5% for the third quarter of 2018, compared to 45.9% for the third quarter of 2017 and 42.9% for the linked second quarter of 2018. The company's efficiency ratio was 44.8% for the nine months ended September 30, 2018 down from 47.0% in the prior year period due to revenue growth outpacing expense growth.

The effective tax rate for the third quarter 2018 was 18.5%, compared to 32.4% for the third quarter 2017 and reflects the effect of the Tax Cuts and Jobs Act, which lowered the company's federal tax rate to 21% from 35% effective January 1, 2018. The effective tax rate for the nine months ended September 30, 2018 was 18.1% compared with 31.0% in the prior year period. Through the preparation of the Company's 2017 corporate tax return and the completion of cost segregation studies on new construction projects, the Company was able to recognize a permanent tax savings of approximately $400,000, which was finalized and recognized during the third quarter of 2018.

Lakeland Financial Corporation is a $4.8 billion bank holding company headquartered in Warsaw, Indiana. Lake City Bank, its single bank subsidiary, is the fourth largest bank headquartered in the state, and the largest bank 100% invested in Indiana. Lake City Bank operates 49 offices in Northern and Central Indiana, delivering technology-driven and client-centric financial services solutions to individuals and businesses.

Information regarding Lakeland Financial Corporation may be accessed on the home page of its subsidiary, Lake City Bank, at lakecitybank.com. The company's common stock is traded on the Nasdaq Global Select Market under "LKFN." In addition to the results presented in accordance with generally accepted accounting principles in the United States, this earnings release contains certain non-GAAP financial measures. The company believes that providing non-GAAP financial measures provides investors with information useful to understanding the company's financial performance. Additionally, these non-GAAP measures are used by management for planning and forecasting purposes, including measures based on "tangible common equity" which is "common stockholders' equity" excluding intangible assets, net of deferred tax and "tangible assets" which is "assets" excluding intangible assets, net of deferred tax. A reconciliation of these non-GAAP measures to the most comparable GAAP equivalent are included in the attached financial tables where the non-GAAP measures are presented. 

This document contains, and future oral and written statements of the company and its management may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of the company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the company's management and on information currently available to management, are generally identifiable by the use of words such as "believe," "expect," "anticipate," "continue," "plan," "intend," "estimate," "may," "will," "would," "could," "should" or other similar expressions. The company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain and, accordingly, the reader is cautioned not to place undue reliance on any forward-looking statements made by the company. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the company undertakes no obligation to update any statement in light of new information or future events. Numerous factors could cause the company's actual results to differ from those reflected in forward-looking statements, including trade policy and those identified in the company's filings with the Securities and Exchange Commission, including the company's Annual Report on Form 10-K.


           
LAKELAND FINANCIAL CORPORATION
THIRD QUARTER 2018 FINANCIAL HIGHLIGHTS
 Three Months Ended Nine Months Ended 
(Unaudited – Dollars in thousands, except per share data)Sep. 30, Jun. 30, Sep. 30, Sep. 30, Sep. 30, 
END OF PERIOD BALANCES2018 2018 2017 2018 2017 
Assets$  4,757,619  $  4,760,869  $  4,454,236  $  4,757,619  $  4,454,236  
Deposits   4,015,924     3,934,953     3,873,990     4,015,924     3,873,990  
Brokered Deposits   176,927     219,901     289,991     176,927     289,991  
Core Deposits   3,838,997     3,715,052     3,583,999     3,838,997     3,583,999  
Loans   3,843,125     3,858,713     3,635,252     3,843,125     3,635,252  
Allowance for Loan Losses   48,343     47,706     45,497     48,343     45,497  
Total Equity   498,541     486,484     462,516     498,541     462,516  
Goodwill net of deferred tax assets   3,790     3,793     3,110     3,790     3,110  
Tangible Common Equity (1)   494,751     482,691     459,406     494,751     459,406  
AVERAGE BALANCES          
Total Assets$  4,748,953  $  4,739,163  $  4,464,568  $  4,731,769  $  4,390,635  
Earning Assets   4,451,449     4,448,240     4,196,041     4,440,493     4,135,885  
Investments   569,567     560,484     536,444     558,784     527,740  
Loans   3,837,595     3,839,441     3,617,624     3,823,153     3,571,459  
Total Deposits   4,025,398     4,092,145     3,716,303     4,070,565     3,678,897  
Interest Bearing Deposits   3,167,135     3,266,808     2,923,118     3,228,768     2,906,159  
Interest Bearing Liabilities   3,363,583     3,409,138     3,189,288     3,379,929     3,148,862  
Total Equity   493,145     479,291     458,074     480,896     445,181  
INCOME STATEMENT DATA          
Net Interest Income$  37,925  $  37,533  $  34,620  $  111,681  $  100,500  
Net Interest Income-Fully Tax Equivalent   38,397     37,973     35,433     112,998     102,785  
Provision for Loan Losses   1,100     1,700     450     6,100     1,150  
Noninterest Income   10,433     9,693     9,497     30,005     26,547  
Noninterest Expense   22,009     20,274     20,269     63,485     59,669  
Net Income   20,570     20,142     15,825     59,048     45,703  
PER SHARE DATA          
Basic Net Income Per Common Share$  0.81  $  0.80  $  0.63  $  2.33  $  1.82  
Diluted Net Income Per Common Share   0.80     0.78     0.62     2.30     1.78  
Cash Dividends Declared Per Common Share   0.26     0.26     0.22     0.74     0.63  
Dividend Payout   32.50 %   33.33 %   35.48 %   32.17 %   35.39 %
Book Value Per Common Share (equity per share issued)   19.70     19.23     18.36     19.70     18.36  
Tangible Book Value Per Common Share (1)   19.55     19.08     18.23     19.55     18.23  
Market Value – High   51.25     51.15     49.22     51.76     49.22  
Market Value – Low   46.35     45.15     41.30     45.01     39.68  
Basic Weighted Average Common Shares Outstanding   25,301,033     25,293,329     25,193,894     25,284,085     25,176,593  
Diluted Weighted Average Common Shares Outstanding   25,745,151     25,709,216     25,656,403     25,719,693     25,640,742  
KEY RATIOS          
Return on Average Assets   1.72 %   1.70 %   1.41 %   1.67 %   1.39 %
Return on Average Total Equity   16.55     16.86     13.71     16.42     13.73  
Average Equity to Average Assets   10.38     10.11     10.26     10.16     10.14  
Net Interest Margin   3.42     3.42     3.35     3.40     3.32  
Efficiency  (Noninterest Expense / Net Interest Income plus Noninterest Income)   45.51     42.93     45.94     44.81     46.97  
Tier 1 Leverage (2)   11.31     11.01     10.92     11.31     10.92  
Tier 1 Risk-Based Capital (2)   12.97     12.61     12.42     12.97     12.42  
Common Equity Tier 1 (CET1) (2)   12.24     11.88     11.65     12.24     11.65  
Total Capital (2)   14.14     13.76     13.58     14.14     13.58  
Tangible Capital (1) (2)   10.41     10.15     10.32     10.41     10.32  
ASSET QUALITY           
Loans Past Due 30 - 89 Days$  13,476  $  1,612  $  1,935  $  13,476  $  1,935  
Loans Past Due 90 Days or More   0     0     73     0     73  
Non-accrual Loans   12,337     12,773     10,279     12,337     10,279  
Nonperforming Loans (includes nonperforming TDR's)   12,337     12,773     10,352     12,337     10,352  
Other Real Estate Owned   316     10     115     316     115  
Other Nonperforming Assets   111     108     40     111     40  
Total Nonperforming Assets   12,763     12,891     10,507     12,763     10,507  
Performing Troubled Debt Restructurings   3,512     3,402     5,601     3,512     5,601  
Nonperforming Troubled Debt Restructurings (included in nonperforming loans)   7,313     7,666     7,946     7,313     7,946  
Total Troubled Debt Restructurings   10,825     11,068     13,547     10,825     13,547  
Impaired Loans   20,906     16,931     16,679     20,906     16,679  
Non-Impaired Watch List Loans   175,400     196,880     145,655     175,400     145,655  
Total Impaired and Watch List Loans   196,306     213,811     162,334     196,306     162,334  
Gross Charge Offs   581     128     170     5,686     935  
Recoveries   118     507     654     808     1,564  
Net Charge Offs/(Recoveries)   463     (379)    (484)    4,878     (629) 
Net Charge Offs/(Recoveries)  to Average Loans   0.05 %   (0.04)%   (0.05)%   0.17 %   (0.02)%
Loan Loss Reserve to Loans   1.26 %   1.24 %   1.25 %   1.26 %   1.25 %
Loan Loss Reserve to Nonperforming Loans   391.92 %   373.49 %   439.51 %   391.92 %   439.51 %
Loan Loss Reserve to Nonperforming Loans and Performing TDR's   305.03 %   294.94 %   285.20 %   305.03 %   285.20 %
Nonperforming Loans to Loans   0.32 %   0.33 %   0.28 %   0.32 %   0.28 %
Nonperforming Assets to Assets   0.27 %   0.27 %   0.24 %   0.27 %   0.24 %
Total Impaired and Watch List Loans to Total Loans   5.11 %   5.54 %   4.47 %   5.11 %   4.47 %
OTHER DATA          
Full Time Equivalent Employees   549     553     537     549     537  
Offices   49     49     49     49     49  
           
(1) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Financial Measures"     
(2) Capital ratios for September 30, 2018 are preliminary until the Call Report is filed.     
           

 

 

    
CONSOLIDATED BALANCE SHEETS (in thousands except share data)
 September 30, December 31,
 2018 2017
 (Unaudited)  
ASSETS   
Cash and due from banks$   151,127   $  140,402 
Short-term investments 31,193    35,778 
Total cash and cash equivalents 182,320    176,180 
    
Securities available for sale (carried at fair value) 570,568    538,493 
Real estate mortgage loans held for sale 3,488    3,346 
    
Loans, net of allowance for loan losses of $48,343 and $47,121 3,794,782    3,771,338 
    
Land, premises and equipment, net  57,644    56,466 
Bank owned life insurance 76,998    75,879 
Federal Reserve and Federal Home Loan Bank stock 13,772    13,772 
Accrued interest receivable 15,802    14,093 
Goodwill 4,970    4,970 
Other assets 37,275    28,439 
Total assets$   4,757,619   $  4,682,976 
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
    
LIABILITIES   
Noninterest bearing deposits$   880,363   $  885,622 
Interest bearing deposits  3,135,561    3,123,033 
Total deposits 4,015,924    4,008,655 
    
Borrowings   
Federal funds purchased 20,000    0 
Securities sold under agreements to repurchase  77,352    70,652 
Federal Home Loan Bank advances 80,000    80,030 
Subordinated debentures 30,928    30,928 
Total borrowings 208,280    181,610 
    
Accrued interest payable 8,742    6,311 
Other liabilities 26,132    17,733 
Total liabilities 4,259,078    4,214,309 
    
STOCKHOLDERS' EQUITY   
Common stock:  90,000,000 shares authorized, no par value   
25,301,732 shares issued and 25,129,796 outstanding as of September 30, 2018   
25,194,903 shares issued and 25,025,933 outstanding as of December 31, 2017 111,045    108,862 
Retained earnings 404,394    363,794 
Accumulated other comprehensive income/(loss) (13,276)  (670)
Treasury stock, at cost (2018 - 171,936 shares, 2017 - 168,970 shares) (3,711)  (3,408)
Total stockholders' equity 498,452    468,578 
Noncontrolling interest 89    89 
Total equity 498,541    468,667 
Total liabilities and equity$   4,757,619   $  4,682,976 
    

 

 

        
CONSOLIDATED STATEMENTS OF INCOME (unaudited - in thousands except share and per share data)    
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2018 2017 2018 2017
NET INTEREST INCOME       
Interest and fees on loans       
Taxable$   46,127  $  38,630 $   132,360   $  110,044
Tax exempt   208     205    627      517
Interest and dividends on securities       
Taxable   2,275     2,349    7,201      7,033
Tax exempt   1,570     1,309    4,367      3,745
Other interest income   199     96    687      198
Total interest income   50,379     42,589    145,242      121,537
        
Interest on deposits   11,473     7,037    31,488      18,722
Interest on borrowings       
Short-term   555     588    861      1,329
Long-term   426     344    1,212      986
Total interest expense   12,454     7,969    33,561      21,037
        
NET INTEREST INCOME   37,925     34,620    111,681      100,500
        
Provision for loan losses   1,100     450    6,100      1,150
        
NET INTEREST INCOME AFTER PROVISION FOR       
  LOAN LOSSES   36,825     34,170    105,581      99,350
        
NONINTEREST INCOME       
Wealth advisory fees   1,627     1,471    4,676      4,005
Investment brokerage fees   376     330    1,043      950
Service charges on deposit accounts   4,114     3,631    11,542      10,027
Loan and service fees   2,327     2,060    6,925      5,850
Merchant card fee income   643     588    1,834      1,696
Bank owned life insurance income   466     397    1,177      1,270
Other income   561     718    1,816      1,886
Mortgage banking income   319     302    998      811
Net securities gains/(losses)   0     0    (6)    52
Total noninterest income   10,433     9,497    30,005      26,547
        
NONINTEREST EXPENSE       
Salaries and employee benefits   12,755     11,678    36,267      34,062
Net occupancy expense   1,229     1,131    3,892      3,405
Equipment costs   1,316     1,182    3,840      3,413
Data processing fees and supplies   2,489     2,032    7,292      6,022
Corporate and business development   891     1,245    3,070      3,943
FDIC insurance and other regulatory fees   412     443    1,282      1,296
Professional fees   934     962    2,716      2,717
Other expense    1,983     1,596    5,126      4,811
Total noninterest expense   22,009     20,269    63,485      59,669
        
INCOME BEFORE INCOME TAX EXPENSE   25,249     23,398    72,101      66,228
Income tax expense    4,679     7,573    13,053      20,525
NET INCOME$   20,570  $  15,825 $   59,048   $  45,703
        
BASIC WEIGHTED AVERAGE COMMON SHARES   25,301,033   25,193,894    25,284,085      25,176,593
BASIC EARNINGS PER COMMON SHARE$   0.81  $  0.63 $   2.33   $  1.82
DILUTED WEIGHTED AVERAGE COMMON SHARES   25,745,151   25,656,403    25,719,693      25,640,742
DILUTED EARNINGS PER COMMON SHARE$   0.80  $  0.62 $   2.30   $  1.78
        

 

 

LAKELAND FINANCIAL CORPORATION
LOAN DETAIL
THIRD QUARTER 2018
(unaudited in thousands)
             
 September 30,June 30,December 31,September 30,
 2018201820172017
Commercial and industrial loans:            
Working capital lines of credit loans$  757,004   19.7 % $  780,910   20.2 % $  743,609   19.4 % $  703,953   19.4 % 
Non-working capital loans   693,402   18.0    691,118   17.9    675,072   17.7    658,167   18.1 
Total commercial and industrial loans   1,450,406   37.7    1,472,028   38.1    1,418,681   37.1    1,362,120   37.5 
             
Commercial real estate and multi-family residential loans:            
Construction and land development loans   231,795   6.0    200,438   5.2    224,474   5.9    287,778   7.9 
Owner occupied loans   571,998   14.9    569,453   14.8    538,603   14.1    499,651   13.7 
Nonowner occupied loans   520,414   13.5    518,840   13.4    508,121   13.3    456,930   12.6 
Multifamily loans   192,218   5.0    221,579   5.7    173,715   4.5    165,855   4.6 
Total commercial real estate and multi-family residential loans   1,516,425   39.4    1,510,310   39.1    1,444,913   37.8    1,410,214   38.8 
             
Agri-business and agricultural loans:            
Loans secured by farmland 159,256   4.2  148,396   3.9  186,437   4.9  161,553   4.4 
Loans for agricultural production 134,773   3.5  155,826   4.0  196,404   5.1  156,327   4.3 
Total agri-business and agricultural loans 294,029   7.7  304,222   7.9  382,841   10.0  317,880   8.7 
             
Other commercial loans   114,350   3.0    120,541   3.1    124,076   3.3    114,858   3.1 
Total commercial loans   3,375,210   87.8    3,407,101   88.2    3,370,511   88.2    3,205,072   88.1 
             
Consumer 1-4 family mortgage loans:            
Closed end first mortgage loans   185,212   4.8    180,099   4.7    179,302   4.7    171,946   4.7 
Open end and junior lien loans   185,869   4.8    179,622   4.7    181,865   4.8    181,338   5.0 
Residential construction and land development loans   15,128   0.4    13,226   0.3    13,478   0.3    10,530   0.3 
Total consumer 1-4 family mortgage loans   386,209   10.0    372,947   9.7    374,645   9.8    363,814   10.0 
             
Other consumer loans   83,203   2.2    80,097   2.1    74,369   2.0    67,545   1.9 
Total consumer loans   469,412   12.2    453,044   11.8    449,014   11.8    431,359   11.9 
Subtotal   3,844,622   100.0 %    3,860,145   100.0 %    3,819,525   100.0 %    3,636,431   100.0 % 
Less: Allowance for loan losses   (48,343)     (47,706)     (47,121)     (45,497)  
Net deferred loan fees   (1,497)     (1,432)     (1,066)     (1,179)  
Loans, net$  3,794,782   $  3,811,007   $  3,771,338   $  3,589,755   
             
             
             
LAKELAND FINANCIAL CORPORATION
DEPOSITS AND BORROWINGS
THIRD QUARTER 2018
(unaudited in thousands)
             
 September 30,  June 30,  December 31,  September 30,  
 2018  2018  2017  2017  
Non-interest bearing demand deposits$  880,363   $  839,784   $  885,622   $  821,589   
Savings and transaction accounts:            
Savings deposits   251,748      255,594      263,570      269,977   
Interest bearing demand deposits   1,388,934      1,422,840      1,446,880      1,390,335   
Time deposits:            
Deposits of $100,000 or more   1,223,457      1,149,197      1,161,365      1,149,152   
Other time deposits   271,422      267,538      251,218      242,937   
Total deposits$  4,015,924   $  3,934,953   $  4,008,655   $  3,873,990   
FHLB advances and other borrowings   208,280      312,167      181,610      94,846   
Total funding sources$  4,224,204   $  4,247,120   $  4,190,265   $  3,968,836   
             

 

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LAKELAND FINANCIAL CORPORATION
AVERAGE BALANCE SHEET AND NET INTEREST ANALYSIS
(UNAUDITED)

                     
 Three Months Ended  Three Months Ended  Three Months Ended 
 September 30, 2018  June 30, 2018  September 30, 2017 
 Average Interest Yield (1)/  Average Interest Yield (1)/  Average Interest Yield (1)/ 
(fully tax equivalent basis, dollars in thousands)Balance Income Rate  Balance Income Rate  Balance Income Rate 
Earning Assets                    
Loans:                    
Taxable (2)(3)$  3,814,831  $  46,127   4.80% $  3,816,879  $  44,439   4.67% $  3,595,753  $  38,630   4.26%
Tax exempt (1)   22,764     257   4.48     22,562     253   4.50     21,871     312   5.66 
Investments: (1)                    
Available for sale   569,567     4,263   2.97     560,484     4,347   3.11     536,444     4,364   3.23 
Short-term investments   3,480     14   1.60     4,079     11   1.08     6,633     8   0.48 
Interest bearing deposits   40,807     185   1.80     44,236     185   1.68     35,340     88   0.99 
Total earning assets$  4,451,449  $  50,846   4.53% $  4,448,240  $  49,235   4.44% $  4,196,041  $  43,402   4.10%
Less:  Allowance for loan losses   (48,137)         (46,494)         (45,018)     
Nonearning Assets                    
Cash and due from banks   144,605          139,677          122,429      
Premises and equipment   57,545          56,093          56,716      
Other nonearning assets   143,491          141,647          134,400      
Total assets$  4,748,953       $  4,739,163       $  4,464,568      
                     
Interest Bearing Liabilities                    
Savings deposits$  253,244  $  79   0.12% $  259,989  $  86   0.13% $  274,514  $  103   0.15%
Interest bearing checking accounts   1,407,460     4,455   1.26     1,528,733     4,412   1.16     1,365,617     2,636   0.77 
Time deposits:                    
In denominations under $100,000   270,480     1,055   1.55     264,294     946   1.44     240,444     746   1.23 
In denominations over $100,000   1,235,951     5,884   1.89     1,213,792     5,204   1.72     1,042,543     3,552   1.35 
Miscellaneous short-term borrowings   165,520     555   1.33     111,402     195   0.70     235,212     588   0.99 
Long-term borrowings and                    
subordinated debentures   30,928     426   5.46     30,928     419   5.43     30,958     344   4.41 
Total interest bearing liabilities$  3,363,583  $  12,454   1.47% $  3,409,138  $  11,262   1.33% $  3,189,288  $  7,969   0.99%
Noninterest Bearing Liabilities                    
Demand deposits   858,263          825,337          793,185      
Other liabilities   33,962          25,397          24,021      
Stockholders' Equity   493,145          479,291          458,074      
Total liabilities and stockholders' equity$  4,748,953       $  4,739,163       $  4,464,568      
                     
Interest Margin Recap                    
Interest income/average earning assets   50,846   4.53     49,235   4.44     43,402   4.10 
Interest expense/average earning assets   12,454   1.11     11,262   1.02     7,969   0.75 
Net interest income and margin  $  38,392   3.42%   $  37,973   3.42%   $  35,433   3.35%
                     


(1)Tax exempt income was converted to a fully taxable equivalent basis at a 21 percent tax rate for 2018 and a 35 percent tax rate for 2017. The tax equivalent rate for tax exempt loans and tax exempt securities acquired after January 1, 1983 included the Tax Equity and Fiscal Responsibility Act of 1982 ("TEFRA") adjustment applicable to nondeductible interest expenses.  Taxable equivalent basis adjustments were $467,000, $440,000 and $813,000 in the three-month periods ended September 30, 2018, June 30, 2018 and September 30, 2017, respectively.
(2)Loan fees, which are immaterial in relation to total taxable loan interest income for 2018 and 2017, are included as taxable loan interest income.
(3)Nonaccrual loans are included in the average balance of taxable loans.
   

(1) Reconciliation of Non-GAAP Financial Measures

   Tangible common equity, tangible assets, tangible book value per share and the tangible common equity to tangible assets ratio are non-GAAP financial measures calculated using GAAP amounts. Tangible common equity is calculated by excluding the balance of goodwill and other intangible assets from the calculation of stockholders' equity, net of deferred tax. Tangible assets are calculated by excluding the balance of goodwill and other intangible assets from the calculation of total assets, net of deferred tax. Tangible book value per share is calculated by dividing tangible common equity by the number of shares outstanding.  Because not all companies use the same calculation of tangible common equity and tangible assets, this presentation may not be comparable to other similarly titled measures calculated by other companies. However, management considers these measures of the company's value including only earning assets as meaningful to an understanding of the company's financial information. 

A reconciliation of these non-GAAP financial measures is provided below (dollars in thousands, except per share data).


 Three Months Ended Nine Months Ended 
 Sep. 30, Jun. 30, Sep. 30, Sep. 30, Sep. 30, 
 2018 2018 2017 2018 2017 
Total Equity$  498,541  $  486,484  $  462,516  $  498,541  $  462,516  
Less: Goodwill   (4,970)    (4,970)    (4,970)    (4,970)    (4,970) 
Plus: Deferred tax assets related to goodwill   1,180     1,177     1,860     1,180     1,860  
Tangible Common Equity   494,751     482,691     459,406     494,751     459,406  
           
Assets$  4,757,619  $  4,760,869  $  4,454,236  $  4,757,619  $  4,454,236  
Less: Goodwill   (4,970)    (4,970)    (4,970)    (4,970)    (4,970) 
Plus: Deferred tax assets related to goodwill   1,180     1,177     1,860     1,180     1,860  
Tangible Assets   4,753,829     4,757,076     4,451,126     4,753,829     4,451,126  
           
Ending common shares issued   25,301,732     25,294,582     25,194,903     25,301,732     25,194,903  
           
Tangible Book Value Per Common Share$  19.55  $  19.08  $  18.23  $  19.55  $  18.23  
           
Tangible Common Equity/Tangible Assets   10.41 %   10.15 %   10.32 %   10.41 %   10.32 %
           


Contact
Lisa M. O'Neill
Executive Vice President and Chief Financial Officer
(574) 267-9125
lisa.oneill@lakecitybank.com  

 

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