Lakeland Financial Reports Record Quarterly Performance

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WARSAW, Ind., July 25, 2019 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq Global Select/LKFN), parent company of Lake City Bank, today reported record quarterly net income of $21.7 million for the three months ended June 30, 2019, an increase of 8% versus $20.1 million for the second quarter of 2018. Diluted earnings per share increased 9% to $0.85 for the second quarter of 2019, versus $0.78 for the second quarter of 2018. On a linked quarter basis, net income increased $31,000 from the first quarter ended March 31, 2019, which had net income of $21.7 million and $0.84 diluted earnings per share.

The company further reported record net income of $43.4 million for the six months ended June 30, 2019 versus $38.5 million for the comparable period of 2018, an increase of 13%. Diluted net income per common share was also a record for the period and increased 13% to $1.69 for the six months ended June 30, 2019 versus $1.50 for the comparable period of 2018.

David M. Findlay, President and Chief Executive Officer, said, "Our record quarterly results were positively impacted by healthy loan and deposit growth. This balance sheet expansion reflects our continued growth throughout our Indiana footprint."

Highlights for the quarter are noted below.

2nd Quarter 2019 versus 2nd Quarter 2018 highlights:

  • Return on average equity of 15.8%, compared to 16.9%
  • Return on average assets of 1.76%, up from 1.70%
  • Organic loan growth of $140 million, or 4%
  • Core deposit growth of $288 million, or 8%
  • Net interest income increase of $878,000, or 2%
  • Net interest margin of 3.37% compared to 3.42%
  • Noninterest income increase of $1.9 million, or 19%
  • Revenue growth of $2.7 million, or 6%
  • Provision expense of $785,000 compared to $1.7 million
  • Nonperforming assets to total assets of 0.31% versus 0.27%
  • Total equity and tangible common equity1 increase of $79 million, or 16%

2nd Quarter 2019 versus 1st Quarter 2019 highlights:

  • Return on average equity of 15.8% compared to 16.6%
  • Return on average assets of 1.76%, compared to 1.80%
  • Organic loan growth of $60 million or 2%
  • Net interest income increase of $202,000, or 1%
  • Net interest margin decrease of 8 basis points to 3.37% from 3.45%
  • Noninterest income increase of $63,000, or 1%
  • Revenue growth of $265,000, or 1%
  • Provision expense of $785,000 compared to $1.2 million
  • Nonperforming assets to total assets of 0.31% versus 0.14%
  • Total equity and tangible common equity1 increase of $22 million,  or 4%

As announced on July 9, 2019, the board of directors approved a cash dividend for the second quarter of $0.30 per share, payable on August 5, 2019, to shareholders of record as of July 25, 2019. The 2019 dividend rate per share approved in July represents a 16% increase over the accumulated quarterly dividends paid in 2018.

Return on average total equity for the second quarter of 2019 was 15.76%, compared to 16.86% in the second quarter of 2018 and 16.59% in the linked first quarter of 2019. Return on average total equity for the first six months of 2019 was 16.17%, compared to 16.35% in the same period of 2018. Return on average assets for the second quarter of 2019 was 1.76%, compared to 1.70% in the second quarter of 2018 and 1.80% in the linked first quarter of 2019. Return on average assets for the first six months of 2019 was 1.78% compared to 1.64% in the same period of 2018. The company's total capital as a percentage of risk-weighted assets was 14.49% at June 30, 2019, compared to 13.76% at June 30, 2018 and 14.38% at March 31, 2019. The company's tangible common equity to tangible assets ratio2 was 11.30% at June 30, 2019, compared to 10.15% at June 30, 2018 and 11.04% at March 31, 2019.

Average total loans for the second quarter of 2019 were $3.96 billion, an increase of $121.9 million, or 3%, versus $3.84 billion for the second quarter 2018. On a linked quarter basis, total average loans grew $43.3 million from $3.92 billion at March 31, 2019. Total loans outstanding grew $139.9 million, or 4%, from $3.86 billion as of June 30, 2018 to $4.00 billion as of June 30, 2019.

"We are pleased to report $60 million in loan growth on a linked quarter basis. Line utilization for commercial committed lines has increased as compared to the first quarter 2019, but is still lower than our normal run rate for periods prior to 2018. Further, loan originations are outpacing loan paydowns," commented Findlay.

Average total deposits for the second quarter of 2019 were $4.30 billion, an increase of $208.6 million, or 5%, versus $4.09 billion for the second quarter of 2018. Average total deposits increased by $210.4 million or 5% as compared to average deposits of $4.09 billion on a linked quarter basis. Total deposits grew $286.3 million, or 7%, from $3.93 billion as of June 30, 2018 to $4.22 billion as of June 30, 2019. In addition, total core deposits, which exclude brokered deposits, increased $288.3 million, or 8%, from $3.72 billion at June 30, 2018 to $4.00 billion at June 30, 2019 due to growth in commercial deposits of $230.2 million or 24%, increases in retail deposits of $29.5 million, or 2%, and increases in public fund deposits of $28.6 million or 2%. Brokered deposits were $218.0 million at June 30, 2019, a decrease of $1.9 million, or 1%, as compared to $219.9 million as of June 30, 2018.

Findlay added, "The double digit growth in commercial deposits on a year over year basis was strong and reflective of our focus on growing these relationship driven, low cost deposits. Consistent with our strategic focus on these accounts, we continue to see growth in the number of commercial checking accounts and the volume of commercial checking account balances."

The company's net interest margin decreased five basis points to 3.37% for the second quarter of 2019 compared to 3.42% for the second quarter of 2018. The year over year decline in net interest margin was due to a higher cost of funds and lower yields on investment securities, partially offset by a higher yield on the company's loan portfolio. The decline in the investment securities yield was due to the combined effect of the flattening, and at times, inverted, yield curve, the corresponding increase in the fair value of the investment securities portfolio, as well as increased premium bond amortization resulting from elevated prepayment speeds.  

Linked quarter net interest margin declined by eight basis points from 3.45% as of March 31, 2019 to 3.37% as of June 30, 2019 due to an increase of five basis points in the cost of funds as well as a decline of three basis points in the yield on earning assets. The decline in investment securities yields resulted primarily from a decline in yields for agency mortgage backed securities and collateralized mortgage obligations.

The company's net interest margin increased three basis points to 3.42% for the six months ended June 30, 2019 compared to 3.39% for the six months ended June 30, 2018. The increase in net interest margin for the six month period was primarily attributable to increases in loan yields partially offset by higher cost of funds, driven by the Federal Reserve Bank increasing the target Federal Funds Rate in June, September and December of 2018. Net interest income increased by $2.9 million or 4% for the six months ended June 30, 2019 as compared to the first half of 2018 due to both net interest margin expansion and loan and deposit growth.

The company recorded a provision for loan losses of $785,000 in the second quarter of 2019, compared to $1.7 million in the second quarter of 2018 and $1.2 million in the linked first quarter of 2019. Net recoveries in the second quarter of 2019 were $217,000 versus net recoveries of $379,000 in the second quarter of 2018 and net charge offs of $91,000 during the linked first quarter of 2019. Annualized net recoveries to average loans were 0.02% for the second quarter of 2019 versus 0.04% for the second quarter of 2018. Annualized net charge offs to average loans were 0.01% for the linked first quarter of 2019. On a year to date basis, net recoveries to average loans were 0.01% compared to net charge offs to average loans of 0.23% for the first six months of 2018.

Nonperforming assets increased $2.4 million, or 19%, to $15.3 million as of June 30, 2019 versus $12.9 million as of June 30, 2018 due to an increase in nonaccrual loans. On a linked quarter basis, nonperforming assets were $15.3 million versus $7.0 million reported as of March 31, 2019. The increase was primarily driven by a single commercial relationship being placed in nonaccrual status, which was past due as of the first quarter of 2019. The ratio of nonperforming assets to total assets at June 30, 2019 was 0.31% compared to 0.27% at June 30, 2018 and 0.14% at March 31, 2019. Loan loss reserve to total loans was 1.26% as of June 30, 2019 as compared with 1.24% as of June 30, 2018 and unchanged from 1.26% as of March 31, 2019.

"We are proud of our asset quality performance during the first two quarters of 2019 with net recoveries year to date. While we encountered a slight shift in nonperforming loans, we don't believe that it is reflective of any broader concerns and our watch list loan totals are stable," commented Findlay.

The company's noninterest income increased $1.9 million, or 19%, to $11.6 million for the second quarter of 2019, compared to $9.7 million for the second quarter of 2018. Noninterest income was positively impacted by a 23% increase over the prior year second quarter in recurring fee income for service charges on deposit accounts, primarily due to growth in treasury management fees from business accounts. In addition, investment brokerage fees increased 40% and wealth advisory fees increased by 7% compared to the second quarter 2018 due to continued growth of client relationships. Noninterest income was $11.5 million in the linked first quarter of 2019.

The company's noninterest income increased $3.5 million, or 18%, to $23.1 million for the six months ended June 30, 2019 compared to $19.6 million in the prior year period. Noninterest income was positively impacted by $1.7 million increase in service charges on deposit accounts, as well as increases of $287,000 in loan and service fees, $247,000 in investment brokerage fees and $217,000 in wealth advisory fees.

During the second quarter, a single commercial treasury management relationship contributed $2.1 million in treasury management fees that are reported with service charges on deposit accounts. This relationship contributed $1.6 million in the first quarter of 2019, resulting in a total of $3.7 million of revenue on a year to date basis. As a result of the bank discovering potentially fraudulent activity by this client involving multiple banks, the related treasury management activity was terminated and the revenue will not recur in future periods. The bank has not incurred any loss related to this activity and we believe that an investigation is ongoing by authorities. In addition, the bank continues its review of its enterprise risk management policies and procedures.

The company's noninterest expense increased $1.8 million, or 9%, to $22.1 million in the second quarter of 2019, compared to $20.3 million in the second quarter of 2018 and decreased by $381,000 on a linked quarter basis. Salaries and employee benefits increased on a year over year basis primarily due to higher employee health insurance expense, staffing increases in revenue producing areas and normal merit increases. Other expense increased by $672,000 or 40% to $2.3 million from $1.7 million in the second quarter 2018.

The company's noninterest expense increased by $3.1 million, or 7%, to $44.6 million in the first six months of 2019 compared to $41.5 million in the prior year period. The increase was driven by salaries and employee benefits, which increased by 4%, or $882,000, primarily due to higher health insurance expense, staffing increases in revenue producing areas and normal merit increases. Other expense increased by $1.4 million or 44% to $4.6 million from $3.2 million in the six month period ended June 30, 2018.

The company's efficiency ratio was 44.2% for the second quarter of 2019, compared to 42.9% for the second quarter of 2018 and 45.2% for the linked first quarter of 2019. The company's efficiency ratio was 44.7% for the six months ended June 30, 2019 compared to 44.4% in the prior year period.

Lakeland Financial Corporation is a $5.0 billion bank holding company headquartered in Warsaw, Indiana. Lake City Bank, its single bank subsidiary, is the fifth largest bank headquartered in the state and the largest bank 100% invested in Indiana. Lake City Bank operates 50 offices in Northern and Central Indiana, delivering technology-driven and client-centric financial services solutions to individuals and businesses.

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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 "total equity" excluding intangible assets, net of deferred tax, and "tangible assets" which is "total assets" excluding intangible assets, net of deferred tax. A reconciliation of these non-GAAP measures to the most comparable GAAP equivalents is 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 and Quarterly Report on Form 10-Q.

           
           
           
LAKELAND FINANCIAL CORPORATION
SECOND QUARTER 2019 FINANCIAL HIGHLIGHTS
 Three Months Ended Six Months Ended 
(Unaudited – Dollars in thousands, except per share data)Jun. 30, Mar. 31, Jun. 30, Jun. 30, Jun. 30, 
END OF PERIOD BALANCES 2019   2019  2018   2019   2018 
  Assets$   4,975,519   $  4,891,885 $  4,760,869  $   4,975,519   $  4,760,869 
  Deposits   4,221,299      4,147,437    3,934,953     4,221,299      3,934,953 
  Brokered Deposits   217,981      140,078    219,900     217,981      219,900 
  Core Deposits (3)   4,003,318      4,007,359    3,715,053     4,003,318      3,715,053 
  Loans   3,998,618      3,939,010    3,858,713     3,998,618      3,858,713 
  Allowance for Loan Losses   50,564      49,562    47,706     50,564      47,706 
  Total Equity   565,363      543,267    486,484     565,363      486,484 
  Goodwill net of deferred tax assets   3,779      3,779    3,793     3,779      3,793 
  Tangible Common Equity (1)   561,584      539,488    482,691     561,584      482,691 
AVERAGE BALANCES         
  Total Assets$   4,961,453   $  4,881,572 $  4,739,163  $   4,921,733   $  4,723,034 
  Earning Assets   4,625,949      4,550,950    4,448,240     4,588,656      4,434,924 
  Investments - available for sale   601,178      587,026    560,484     594,141      553,303 
  Loans   3,961,322      3,918,024    3,839,441     3,939,792      3,815,813 
  Total Deposits   4,300,759      4,090,330    4,092,145     4,196,125      4,093,523 
  Interest Bearing Deposits   3,378,030      3,205,204    3,266,808     3,292,094      3,260,095 
  Interest Bearing Liabilities   3,444,382      3,426,250    3,409,138     3,435,366      3,388,236 
  Total Equity   552,536      529,989    479,291     541,325      474,670 
INCOME STATEMENT DATA         
  Net Interest Income$   38,411   $  38,209 $  37,533  $   76,620   $  73,756 
  Net Interest Income-Fully Tax Equivalent   38,923      38,708    37,973     77,631      74,604 
  Provision for Loan Losses   785      1,200    1,700     1,985      5,000 
  Noninterest Income   11,588      11,525    9,722     23,113      19,601 
  Noninterest Expense   22,092      22,473    20,303     44,565      41,505 
  Net Income   21,713      21,682    20,142     43,395      38,478 
PER SHARE DATA         
  Basic Net Income Per Common Share$   0.85   $  0.85 $  0.80  $   1.70   $  1.52 
  Diluted Net Income Per Common Share   0.85      0.84    0.78     1.69      1.50 
  Cash Dividends Declared Per Common Share   0.30      0.26    0.26     0.56      0.48 
  Dividend Payout   35.29  %   30.95%   33.33 %   33.14  %   32.00%
  Book Value Per Common Share (equity per share issued)   22.06      21.21    19.23     22.06      19.23 
  Tangible Book Value Per Common Share (1)   21.92      21.06    19.08     21.92      19.08 
  Market Value – High   49.20      48.99    51.15     49.20      51.76 
  Market Value – Low   43.76      39.78    45.15     39.78      45.01 
  Basic Weighted Average Common Shares Outstanding   25,614,701      25,491,093    25,293,329     25,553,254      25,275,471 
  Diluted Weighted Average Common Shares Outstanding   25,774,002      25,665,287    25,709,216     25,721,079      25,704,505 
KEY RATIOS          
  Return on Average Assets   1.76  %   1.80%   1.70 %   1.78  %   1.64%
  Return on Average Total Equity   15.76      16.59    16.86     16.17      16.35 
  Average Equity to Average Assets   11.14      10.86    10.11     11.00      10.05 
  Net Interest Margin   3.37      3.45    3.42     3.42      3.39 
  Efficiency  (Noninterest Expense / Net Interest Income plus Noninterest Income)   44.19      45.19    42.93     44.68      44.44 
  Tier 1 Leverage (2)   11.72      11.59    11.01     11.72      11.01 
  Tier 1 Risk-Based Capital (2)   13.33      13.22    12.61     13.33      12.61 
  Common Equity Tier 1 (CET1) (2)   12.64      12.52    11.88     12.64      11.88 
  Total Capital (2)   14.49      14.38    13.76     14.49      13.76 
  Tangible Capital (1) (2)   11.30      11.04    10.15     11.30      10.15 
ASSET QUALITY          
  Loans Past Due 30 - 89 Days$   2,451   $  9,694 $  1,612  $   2,451   $  1,612 
  Loans Past Due 90 Days or More   0      481    0     0      0 
  Non-accrual Loans   14,995      6,093    12,773     14,995      12,773 
  Nonperforming Loans (includes nonperforming TDRs)   14,995      6,574    12,773     14,995      12,773 
  Other Real Estate Owned   316      316    10     316      10 
  Other Nonperforming Assets   7      83    108     7      108 
  Total Nonperforming Assets   15,318      6,973    12,891     15,318      12,891 
  Performing Troubled Debt Restructurings   6,082      6,196    3,402     6,082      3,402 
  Nonperforming Troubled Debt Restructurings (included in nonperforming loans)   3,512      3,812    7,666     3,512      7,666 
  Total Troubled Debt Restructurings   9,594      10,008    11,068     9,594      11,068 
  Impaired Loans   24,271      24,501    16,931     24,271      16,931 
  Non-Impaired Watch List Loans   183,599      179,636    196,880     183,599      196,880 
  Total Impaired and Watch List Loans   207,870      204,137    213,811     207,870      213,811 
  Gross Charge Offs   84      284    128     368      5,105 
  Recoveries   301      193    507     494      690 
  Net Charge Offs/(Recoveries)   (217)    91    (379)    (126)    4,415 
  Net Charge Offs/(Recoveries)  to Average Loans   (0.02)%   0.01%   (0.04)%   (0.01)%   0.23%
  Loan Loss Reserve to Loans   1.26  %   1.26%   1.24 %   1.26  %   1.24%
  Loan Loss Reserve to Nonperforming Loans   337.18  %   753.91%   373.51 %   337.18  %   373.49%
  Loan Loss Reserve to Nonperforming Loans and Performing TDRs   239.90  %   388.11%   294.94 %   239.90  %   294.94%
  Nonperforming Loans to Loans   0.38  %   0.17%   0.33 %   0.38  %   0.33%
  Nonperforming Assets to Assets   0.31  %   0.14%   0.27 %   0.31  %   0.27%
  Total Impaired and Watch List Loans to Total Loans   5.20  %   5.18%   5.54 %   5.20  %   5.54%
OTHER DATA          
  Full Time Equivalent Employees   571      556    553     571      553 
  Offices   50      50    49     50      49 
           
  (1) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Financial Measures"  
  (2) Capital ratios for June 30, 2019 are preliminary until the Call Report is filed.   
  (3) Core deposits equals deposits less brokered deposits     
      
      
      

 

CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
 June 30, December 31,
  2019   2018 
 (Unaudited)  
ASSETS   
Cash and due from banks$   154,856   $  192,290 
Short-term investments 41,514    24,632 
  Total cash and cash equivalents 196,370    216,922 
    
Securities available-for-sale (carried at fair value) 609,826    585,549 
Real estate mortgage loans held-for-sale 5,929    2,293 
    
Loans, net of allowance for loan losses of $50,564 and $48,453 3,948,054    3,866,292 
    
Land, premises and equipment, net  58,719    58,097 
Bank owned life insurance 82,591    77,106 
Federal Reserve and Federal Home Loan Bank stock 13,772    13,772 
Accrued interest receivable 17,418    15,518 
Goodwill 4,970    4,970 
Other assets 37,870    34,735 
  Total assets$  4,975,519   $  4,875,254 
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
    
LIABILITIES   
Noninterest bearing deposits$   946,471   $  946,838 
Interest bearing deposits  3,274,828    3,097,227 
  Total deposits 4,221,299    4,044,065 
    
Borrowings   
  Federal funds purchased 15,000    0 
  Securities sold under agreements to repurchase  0    75,555 
  Federal Home Loan Bank advances 100,000    170,000 
  Subordinated debentures 30,928    30,928 
    Total borrowings 145,928    276,483 
    
Accrued interest payable 12,454    10,404 
Other liabilities 30,475    22,598 
    Total liabilities 4,410,156    4,353,550 
    
STOCKHOLDERS' EQUITY   
Common stock:  90,000,000 shares authorized, no par value   
 25,615,216 shares issued and 25,442,300 outstanding as of June 30, 2019  
 25,301,732 shares issued and 25,128,773 outstanding as of December 31, 2018 112,689    112,383 
Retained earnings 446,969    419,179 
Accumulated other comprehensive income (loss) 9,500    (6,191)
Treasury stock, at cost (2019 - 172,916 shares, 2018 - 172,959 shares) (3,884)  (3,756)
  Total stockholders' equity 565,274    521,615 
  Noncontrolling interest 89    89 
  Total equity 565,363    521,704 
    Total liabilities and equity$  4,975,519   $  4,875,254 
    
    
    

 

CONSOLIDATED STATEMENTS OF INCOME (unaudited - in thousands, except share and per share data)   
 Three Months Ended Six Months Ended
 June 30, June 30,
  2019  2018  2019  2018 
NET INTEREST INCOME       
Interest and fees on loans       
  Taxable$   50,089  $  44,439 $   98,955  $  86,233 
  Tax exempt   235     202    486     419 
Interest and dividends on securities       
  Taxable   2,250     2,492    4,747     4,926 
  Tax exempt   1,710     1,466    3,352     2,797 
Other interest income   351     196    589     488 
    Total interest income   54,635     48,795    108,129     94,863 
        
Interest on deposits   15,556     10,648    29,439     20,015 
Interest on borrowings       
  Short-term   232     195    1,182     306 
  Long-term   436     419    888     786 
    Total interest expense   16,224     11,262    31,509     21,107 
        
NET INTEREST INCOME   38,411     37,533    76,620     73,756 
        
Provision for loan losses   785     1,700    1,985     5,000 
        
NET INTEREST INCOME AFTER PROVISION FOR       
  LOAN LOSSES   37,626     35,833    74,635     68,756 
        
NONINTEREST INCOME       
Wealth advisory fees   1,646     1,544    3,266     3,049 
Investment brokerage fees   528     377    914     667 
Service charges on deposit accounts   4,850     3,800    9,137     7,428 
Loan and service fees   2,481     2,421    4,885     4,598 
Merchant card fee income   670     549    1,292     1,191 
Bank owned life insurance income   287     348    731     711 
Mortgage banking income   398     438    620     679 
Net securities gains (losses)   65     0    88     (6)
Other income   663     245    2,180     1,284 
  Total noninterest income   11,588     9,722    23,113     19,601 
        
NONINTEREST EXPENSE       
Salaries and employee benefits   11,835     11,493    24,394     23,512 
Net occupancy expense   1,283     1,237    2,649     2,663 
Equipment costs   1,409     1,250    2,758     2,524 
Data processing fees and supplies   2,574     2,290    4,999     4,803 
Corporate and business development   1,171     1,046    2,377     2,179 
FDIC insurance and other regulatory fees   409     409    815     870 
Professional fees   1,071     910    2,008     1,782 
Other expense    2,340     1,668    4,565     3,172 
  Total noninterest expense   22,092     20,303    44,565     41,505 
        
INCOME BEFORE INCOME TAX EXPENSE   27,122     25,252    53,183     46,852 
Income tax expense    5,409     5,110    9,788     8,374 
NET INCOME$   21,713  $  20,142 $   43,395  $  38,478 
        
BASIC WEIGHTED AVERAGE COMMON SHARES   25,614,701     25,293,329    25,553,254     25,275,471 
BASIC EARNINGS PER COMMON SHARE$   0.85  $  0.80 $   1.70  $  1.52 
DILUTED WEIGHTED AVERAGE COMMON SHARES   25,774,002     25,709,216    25,721,079     25,704,505 
DILUTED EARNINGS PER COMMON SHARE$   0.85  $  0.78 $   1.69  $  1.50 
        

 

 
 
LAKELAND FINANCIAL CORPORATION
LOAN DETAIL
SECOND QUARTER 2019
(unaudited, in thousands)
             
 June 30,March 31,December 31,June 30,
  2019 2019 2018 2018
Commercial and industrial loans:            
  Working capital lines of credit loans$  755,090   18.9 % $  726,895   18.4 % $  690,620   17.6 % $  780,910   20.2 % 
  Non-working capital loans   695,235   17.3    700,447   17.8    714,759   18.3    691,118   17.9 
    Total commercial and industrial loans   1,450,325   36.2    1,427,342   36.2    1,405,379   35.9    1,472,028   38.1 
             
Commercial real estate and multi-family residential loans:            
  Construction and land development loans   321,550   8.0    293,818   7.5    266,805   6.8    200,438   5.2 
  Owner occupied loans   557,115   13.9    557,296   14.1    586,325   15.0    569,453   14.8 
  Nonowner occupied loans   533,880   13.4    537,569   13.7    520,901   13.3    518,840   13.4 
  Multifamily loans   242,966   6.1    240,939   6.1    195,604   5.0    221,579   5.7 
    Total commercial real estate and multi-family residential loans   1,655,511   41.4    1,629,622   41.4    1,569,635   40.1    1,510,310   39.1 
             
Agri-business and agricultural loans:            
  Loans secured by farmland 148,883   3.7  139,645   3.6  177,503   4.6  148,396   3.9 
  Loans for agricultural production 165,595   4.2  162,662   4.1  193,010   4.9  155,826   4.0 
    Total agri-business and agricultural loans 314,478   7.9  302,307   7.7  370,513   9.5  304,222   7.9 
             
Other commercial loans   104,084   2.6    112,021   2.8    95,657   2.4    120,541   3.1 
  Total commercial loans   3,524,398   88.1    3,471,292   88.1    3,441,184   87.9    3,407,101   88.2 
             
Consumer 1-4 family mortgage loans:            
  Closed end first mortgage loans   187,863   4.7    188,777   4.8    185,822   4.7    180,099   4.7 
  Open end and junior lien loans   188,558   4.7    182,791   4.7    187,030   4.8    179,622   4.7 
  Residential construction and land development loans   12,270   0.3    13,142   0.3    16,226   0.4    13,226   0.3 
  Total consumer 1-4 family mortgage loans   388,691   9.7    384,710   9.8    389,078   9.9    372,947   9.7 
             
Other consumer loans   86,996   2.2    84,650   2.1    86,064   2.2    80,097   2.1 
  Total consumer loans   475,687   11.9    469,360   11.9    475,142   12.1    453,044   11.8 
  Subtotal   4,000,085   100.0 %    3,940,652   100.0 %    3,916,326   100.0 %    3,860,145   100.0 % 
Less:  Allowance for loan losses   (50,564)     (49,562)     (48,453)     (47,706)  
          Net deferred loan fees   (1,467)     (1,642)     (1,581)     (1,432)  
Loans, net$  3,948,054   $  3,889,448   $  3,866,292   $  3,811,007   
             
             
             
LAKELAND FINANCIAL CORPORATION 
DEPOSITS AND BORROWINGS 
SECOND QUARTER 2019 
(unaudited, in thousands) 
 
 June 30,  March 31,  December 31,  June 30,  
  2019    2019    2018    2018   
Non-interest bearing demand deposits$  946,471   $  931,832   $  946,838   $  839,784   
Savings and transaction accounts:            
  Savings deposits   238,369      246,936      247,903      255,594   
  Interest bearing demand deposits   1,708,397      1,562,089      1,429,570      1,422,840   
Time deposits:            
  Deposits of $100,000 or more   1,053,619      1,131,326      1,146,221      1,149,197   
  Other time deposits   274,443      275,254      273,533      267,538   
Total deposits$  4,221,299   $  4,147,437   $  4,044,065   $  3,934,953   
FHLB advances and other borrowings   145,928      152,928      276,483      312,167   
Total funding sources$  4,367,227   $  4,300,365   $  4,320,548   $  4,247,120   
             

 

 
 
 LAKELAND FINANCIAL CORPORATION
AVERAGE BALANCE SHEET AND NET INTEREST ANALYSIS
(UNAUDITED)
 Three Months Ended  Three Months Ended  Three Months Ended 
 June 30, 2019  March 31, 2019  June 30, 2018 
 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)$   3,936,747   $   50,089    5.10 % $  3,893,035  $  48,866   5.09% $  3,816,879  $  44,439   4.67%
    Tax exempt (1)   24,575      292    4.77      24,989     314   5.10     22,562     253   4.50 
  Investments: (1)                    
    Available for sale   601,178      4,415    2.95      587,026     4,575   3.16     560,484     4,347   3.11 
  Short-term investments   12,092      97    3.22      4,696     26   2.25     4,079     11   1.08 
  Interest bearing deposits   51,357      254    1.98      41,204     212   2.09     44,236     185   1.68 
Total earning assets$   4,625,949   $   55,147    4.78 % $  4,550,950  $  53,993   4.81% $  4,448,240  $  49,235   4.44%
Less:  Allowance for loan losses   (49,965)         (48,768)         (46,494)     
Nonearning Assets                    
  Cash and due from banks   171,313           164,820          139,677      
  Premises and equipment   58,857           58,599          56,093      
  Other nonearning assets   155,299           155,971          141,647      
Total assets$   4,961,453        $  4,881,572       $  4,739,163      
                     
Interest Bearing Liabilities                    
  Savings deposits$   240,824   $   71    0.12 % $  247,309  $  71   0.12% $  259,989  $  86   0.13%
  Interest bearing checking accounts   1,743,813      7,576    1.74      1,496,893     5,954   1.61     1,528,733     4,412   1.16 
  Time deposits:                    
    In denominations under $100,000   274,217      1,300    1.90      276,006     1,232   1.81     264,294     946   1.44 
    In denominations over $100,000   1,119,176      6,609    2.37      1,184,996     6,626   2.27     1,213,792     5,204   1.72 
  Miscellaneous short-term borrowings   35,424      232    2.63      190,118     950   2.03     111,402     195   0.70 
  Long-term borrowings and                    
   subordinated debentures   30,928      436    5.65      30,928     452   5.93     30,928     419   5.43 
Total interest bearing liabilities$   3,444,382   $   16,224    1.89 % $  3,426,250  $  15,285   1.81% $  3,409,138  $  11,262   1.33%
Noninterest Bearing Liabilities                    
  Demand deposits   922,729           885,126          825,337      
  Other liabilities   41,806           40,207          25,397      
Stockholders' Equity   552,536           529,989          479,291      
Total liabilities and stockholders' equity$   4,961,453        $  4,881,572       $  4,739,163      
                     
Interest Margin Recap                    
Interest income/average earning assets   55,147    4.78      53,993   4.81     49,235   4.44 
Interest expense/average earning assets   16,224    1.41      15,285   1.36     11,262   1.02 
Net interest income and margin  $   38,923    3.37 %   $  38,708   3.45%   $  37,973   3.42%
                     


(1) Tax exempt income was converted to a fully taxable equivalent basis at a 21 percent tax rate. 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 $512,000, $499,000 and $440,000 in the three-month periods ended June 30, 2019, March 31, 2019 and June 30, 2018, respectively.
(2) Loan fees, which are immaterial in relation to total taxable loan interest income for 2019 and 2018, are included as taxable loan interest income.
(3) Nonaccrual loans are included in the average balance of taxable loans.
   
   

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 Six Months Ended 
 Jun. 30, Mar. 31, Jun. 30, Jun. 30, Jun. 30, 
  2019   2019   2018   2019   2018  
  Total Equity$  565,363   $  543,267  $  486,484  $  565,363   $  486,484  
  Less: Goodwill   (4,970)    (4,970)    (4,970)    (4,970)    (4,970) 
  Plus: Deferred tax assets related to goodwill   1,191      1,191     1,177     1,191      1,177  
  Tangible Common Equity   561,584      539,488     482,691     561,584      482,691  
           
  Assets$  4,975,519   $  4,891,885  $  4,760,869  $  4,975,519   $  4,760,869  
  Less: Goodwill   (4,970)    (4,970)    (4,970)    (4,970)    (4,970) 
  Plus: Deferred tax assets related to goodwill   1,191      1,191     1,177     1,191      1,177  
  Tangible Assets   4,971,740      4,888,106     4,757,076     4,971,740      4,757,076  
           
  Ending common shares issued   25,615,216      25,614,665     25,294,582     25,615,216      25,294,582  
           
  Tangible Book Value Per Common Share$  21.92   $  21.06  $  19.08  $  21.92   $  19.08  
           
  Tangible Common Equity/Tangible Assets   11.30  %   11.04 %   10.15 %   11.30  %   10.15 %
           

1 Non-GAAP financial measure – see "Reconciliation of Non-GAAP Financial Measures."

2 Non-GAAP financial measure – see "Reconciliation of Non-GAAP Financial Measures"


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

 

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