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Lakeland Financial Reports Record Performance

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WARSAW, Ind., Jan. 25, 2018 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (NASDAQ:LKFN), parent company of Lake City Bank, today reported record net income of $61.5 million, excluding the impact of a non-cash, non-operating and non-recurring tax adjustment described below, which represents an increase of 18% compared with net income of $52.1 million for 2016.1 Diluted earnings per share were $2.40, excluding this tax item, representing an increase of 17% compared with diluted earnings per share of $2.05 for 2016.1 This per share performance also represents a record for the company and its shareholders. 

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Results for 2017 include a non-cash, non-operating and non-recurring income tax provision of $4.1 million or $0.16 per diluted share. Including this tax item, net income for Lakeland Financial Corporation was a record $57.3 million for 2017, versus $52.1 million for 2016. Diluted net income per common share increased to $2.23 for 2017, versus $2.05 for 2016. This per share performance also represents a record for the company and its shareholders. 

David M. Findlay, President and CEO commented, "We are pleased that 2017 marks our eighth consecutive year of record income performance. We are particularly proud of our performance over a long period of time as we have reported record net income in 28 of the last 29 years. Our performance-based culture is the result of Lake City Bank's unwavering focus on serving customers in our Indiana footprint each and every day with financial services solutions that help our Indiana communities prosper." 

Excluding the effect of the non-cash, non-operating and non-recurring income tax provision, net income for the three months ended December 31, 2017 was $15.8 million representing an increase of 17% over the fourth quarter of 2016. Diluted net income per common share, excluding the effect of the tax item was $0.61 for the three months and year ended December 31, 2017, representing an increase of 15% over the fourth quarter in 2016.1

Including the non-cash, non-operating and non-recurring tax adjustment, the company reported quarterly net income of $11.6 million for the fourth quarter of 2017, versus $13.5 million for the fourth quarter of 2016. Diluted net income per common share was $0.45 for the fourth quarter of 2017 versus $0.53 for the comparable period of 2016. Net income was $15.8 million and $0.62 per diluted common share for the third quarter 2017.

As a result of the Tax Cuts and Jobs Act that was enacted into law on December 22, 2017, the company revalued its net deferred tax asset position to reflect the reduction in its federal corporate income tax rate from 35% to 21%. This revaluation resulted in a non-cash, non-operating and non-recurring income tax expense adjustment of approximately $4.1 million, or $0.16 per diluted share, for the fourth quarter of 2017.  The company's revaluation of its net deferred asset and other relevant details remain subject to modifications as the company finalizes its financial results for the year ended December 31, 2017 and as information and analysis regarding the Act and other relevant factors emerge.

Highlights for the quarter are noted below:

4th Quarter 2017 versus 4th Quarter 2016 highlights:

  • Organic average loan growth of $354 million or 10%
  • Average deposit growth of $361 million or 10%
  • Net interest income increase of $4.5 million or 15%
  • Net interest margin increase of 15 basis points to 3.33%
  • Revenue growth of $5.2 million or 13%
  • Continued strong asset quality with nonperforming assets to total assets at 0.20% compared to 0.16%
  • Net charge-offs of $226,000 versus $285,000 a year ago
  • Tangible common equity1 increase of $40.9 million or 10%

4th Quarter 2017 versus 3rd Quarter 2017 highlights:

  • Organic average loan growth of $110 million or 3%
  • Average deposit growth of $273 million or 7%
  • Net interest income increase of $772,000 or 2%
  • Revenue growth of $737,000 or 2%
  • Continued strong asset quality with nonperforming assets to total assets at 0.20% compared to 0.24%
  • Net charge-offs of $226,000 versus net recoveries of $484,000 in the prior quarter
  • Tangible common equity1 increase of $5.5 million or 1%

Findlay added, "Our double digit loan and deposit growth in 2017 was the foundation of our continued growth in profitability. We experienced loan growth in every region of the bank and it was well-distributed in both new and mature markets. Similarly, each of our regions grew deposits in 2017."

As previously announced on January 9, 2018, the board of directors approved a cash dividend for the fourth quarter of $0.22 per share, payable on February 5, 2018, to shareholders of record as of January 25, 2018. The fourth quarter dividend per share represents a 16% increase over the dividend rate paid in the last three quarters of 2016 and in the first quarter of 2017 of $0.19 per share.

Return on average total equity for the year ended December 31, 2017 was 12.72% compared to 12.52% in 2016. Return on average assets for 2017 and 2016 was 1.29%. The company's total capital as a percent of risk-weighted assets was 13.26% at December 31, 2017, compared to 13.23% at December 31, 2016 and 13.58% at September 30, 2017. The company's tangible common equity1 to tangible assets ratio was 9.93% at December 31, 2017, compared to 9.89% at December 31, 2016 and 10.32% at September 30, 2017.

Average total loans for 2017 was $3.61 billion, an increase of $385.3 million, or 12%, versus $3.23 billion for 2016. Total loans outstanding grew $347.5 million, or 10%, from $3.47 billion as of December 31, 2016 to $3.82 billion as of December 31, 2017. On a linked quarter basis, total loans grew $183.2 million, or 5%, from $3.64 billion at September 30, 2017. Average total loans for the fourth quarter of 2017 was $3.73 billion, an increase of $354.2 million, or 10% versus $3.37 billion for the comparable period of 2016. On a linked quarter basis, average total loans increased by $110.3 million, or 3%, from $3.62 billion for the third quarter of 2017 to $3.73 billion for the fourth quarter of 2017.

Average total deposits for 2017 was $3.76 billion, an increase of $279.4 million, or 8%, versus $3.48 billion for 2016. Total deposits grew $430.7 million, or 12%, from $3.58 billion as of December 31, 2016 to $4.01 billion as of December 31, 2017. In addition, total core deposits, which exclude brokered deposits, increased $259.9 million, or 7%, from $3.48 billion at December 31, 2016 to $3.74 billion at December 31, 2017. This increase in core deposits was driven by growth of retail deposits, commercial deposits and public fund deposits, which increased by $118.1 million to $1.507 billion, $85.1 million to $969 million and $56.7 million to $1.264 billion, respectively, on a year over year basis.

The company's net interest margin increased 15 basis points to 3.33% for 2017 compared to 3.18% for 2016. The company's net interest margin was also 3.33% in the fourth quarter of 2017 versus 3.18% for the fourth quarter of 2016. The higher margin in the fourth quarter of 2017 was due to higher yields on both loans and securities, partially offset by a higher cost of funds. On a linked quarter basis, the net interest margin decreased two basis points from 3.35% in the third quarter of 2017 due to increased deposit costs which exceeded the increase in earning asset yields. Net interest income increased $17.4 million, or 15%, to $135.9 million in 2017 versus $118.5 million in 2016. Net interest income increased $4.5 million, or 15%, to $35.4 million for the fourth quarter of 2017, versus $30.9 million in the fourth quarter of 2016.

Findlay observed, "The three Federal Reserve Bank fed fund increases in 2017 positively impacted our asset sensitive balance sheet and resulted in net interest margin expansion of 15 basis points during the year. The positive impact of the rate increases enabled us to be more aggressive with deposit pricing, which clearly benefits our clients with higher earnings on their deposits with Lake City Bank."

The company recorded a provision for loan losses of $3.0 million in 2017, versus $1.2 million in 2016, primarily resulting from growth in the loan portfolio. On a linked quarter basis, provision for loan losses increased by $1.4 million from $450,000 in the third quarter 2017 to $1.9 million in the fourth quarter 2017. The company's allowance for loan losses as of December 31, 2017 was $47.1 million compared to $43.7 million as of December 31, 2016 and $45.5 million as of September 30, 2017. The allowance for loan losses represented 1.23% of total loans as of December 31, 2017 versus 1.26% at December 31, 2016 and 1.25% as of September 30, 2017.

Nonperforming assets increased $2.6 million, or 39%, to $9.5 million as of December 31, 2017 versus $6.9 million as of December 31, 2016 due to an increase in nonaccrual loans. On a linked quarter basis, nonperforming assets were $1.0 million lower than the $10.5 million reported as of September 30, 2017 due to a reduction in nonaccrual loans resulting primarily from loan pay downs. The ratio of nonperforming assets to total assets at December 31, 2017 increased to 0.20% from 0.16% at December 31, 2016 and decreased from 0.24% at September 30, 2017.  Net recoveries to average loans were 0.01% in 2017 compared to net charge-offs of 0.03% in 2016 and represent net recoveries of $403,000 in 2017 versus net charge-offs of $1.0 million in 2016.

Findlay noted, "We were pleased to report net recoveries for 2017. We believe that this reflects the general operating strength of our client base, as well as the overall healthy economic conditions in our Indiana markets. Our increased provision expense for the year is the direct result of our strong loan growth."

The company's noninterest income increased $3.1 million, or 10%, to $36.0 million in 2017, compared to $32.9 million in 2016. The company's noninterest income increased $726,000 or 8%, to $9.5 million for the fourth quarter of 2017 versus $8.7 million for the fourth quarter of 2016. During 2017, noninterest income was positively impacted by increases in recurring fee income for service charges on deposit accounts, primarily due to growth in fees from business accounts, and wealth advisory fees. Offsetting these increases were decreases in other income driven by lower mortgage banking income due to lower mortgage originations. Increases in noninterest income in the fourth quarter of 2017 compared to the fourth quarter of 2016 resulted from service charges on deposit accounts as well as higher wealth advisory fees, offset by lower mortgage banking income.

The company's noninterest expense increased $6.3 million, or 9%, to $79.3 million in 2017, compared to $73.0 million in 2016. The company's noninterest expense increased by $1.2 million, or 7% to $19.6 million in the fourth quarter of 2017 compared to $18.4 million in the fourth quarter of 2016. Salaries and employee benefits increased primarily due to incentive-based compensation costs, normal merit increases and staff additions related to the company's continued growth and expansion. Corporate and business development expense increased primarily due to higher community support and donation expense as well as higher advertising expenses. Equipment costs increased driven by the company's branch expansion, continued investment in technology based equipment and remodeling of existing branches and other offices. The company's efficiency ratio was 46.1% for 2017 compared to 48.2% for 2016. The company's efficiency ratio was 43.7% for the fourth quarter of 2017, compared to 46.4% for the fourth quarter of 2016 and 45.9% for the linked third quarter of 2017.

Findlay added, "During 2017, we continued to expand our presence in Indianapolis with the opening of a new office in Greenwood. In addition, we continue to prioritize investments in technology to enhance consumer banking solutions as well as to protect customer information."

Lakeland Financial Corporation is a $4.7 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. Lakeland Financial 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. Additional information concerning the company and its business, including factors that could materially affect the company's financial results, is included in the company's filings with the Securities and Exchange Commission, including the company's Annual Report on Form 10-K.

_____________________

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

                     
LAKELAND FINANCIAL CORPORATION
FOURTH QUARTER 2017 FINANCIAL HIGHLIGHTS
  Three Months Ended   Twelve Months Ended  
(Unaudited – Dollars in thousands, except per share data) Dec. 31,   Sep. 30,   Dec. 31,   Dec. 31,   Dec. 31,  
END OF PERIOD BALANCES 2017   2017
  2016   2017
  2016  
Assets $ 4,682,976   $ 4,454,236     $ 4,290,025   $ 4,682,976     $ 4,290,025  
Deposits   4,008,655     3,873,990       3,577,912     4,008,655       3,577,912  
Brokered Deposits   268,976     296,431       98,177     268,976       98,177  
Core Deposits   3,739,679     3,577,559       3,479,735     3,739,679       3,479,735  
Loans   3,818,459     3,635,252       3,470,927     3,818,459       3,470,927  
Allowance for Loan Losses   47,121     45,497       43,718     47,121       43,718  
Total Equity   468,667     462,516       427,067     468,667       427,067  
Goodwill net of deferred tax assets   3,799     3,110       3,134     3,799       3,134  
Tangible Common Equity (1)   464,868     459,406       423,933     464,868       423,933  
AVERAGE BALANCES                    
Total Assets $ 4,598,809   $ 4,464,568     $ 4,187,730   $ 4,443,106     $ 4,039,719  
Earning Assets   4,323,249     4,196,041       3,933,136     4,183,112       3,799,963  
Investments   537,796     536,444       506,722     530,275       493,656  
Loans   3,727,967     3,617,624       3,373,814     3,610,908       3,225,635  
Total Deposits   3,989,592     3,716,303       3,628,244     3,757,209       3,477,816  
Interest Bearing Deposits   3,151,116     2,923,118       2,839,518     2,967,902       2,753,466  
Interest Bearing Liabilities   3,266,206     3,189,288       2,941,281     3,178,439       2,872,691  
Total Equity   467,459     458,074       428,665     450,796       416,034  
INCOME STATEMENT DATA                    
Net Interest Income $ 35,392   $ 34,620     $ 30,907   $ 135,892     $ 118,481  
Net Interest Income-Fully Tax Equivalent   36,231     35,433       31,526     139,015       120,719  
Provision for Loan Losses   1,850     450       1,150     3,000       1,150  
Noninterest Income   9,462     9,497       8,736     36,009       32,864  
Noninterest Expense   19,598     20,269       18,389     79,267       72,978  
Net Income   11,627     15,825       13,522     57,330       52,084  
PER SHARE DATA                    
Basic Net Income Per Common Share $ 0.46   $ 0.63     $ 0.54   $ 2.28     $ 2.08  
Diluted Net Income Per Common Share   0.45     0.61       0.53     2.23       2.05  
Cash Dividends Declared Per Common Share   0.22     0.22       0.19     0.85       0.73  
Dividend Payout   48.89 %   36.07 %   35.85 %   38.12 %   35.61 %
Book Value Per Common Share (equity per share issued)   18.60     18.36       17.01     18.60       17.01  
Tangible Book Value Per Common Share (1)   18.45     18.23       16.89     18.45       16.89  
Market Value – High   52.43     49.22       48.88     52.43       48.88  
Market Value – Low   45.26     41.30       33.98     39.68       26.53  
Basic Weighted Average Common Shares Outstanding   25,194,903     25,193,894       25,091,685     25,181,208       25,056,095  
Diluted Weighted Average Common Shares Outstanding   25,701,337     25,656,403       25,518,069     25,663,381       25,460,727  
KEY RATIOS                    
Return on Average Assets   1.00 %   1.41 %   1.28 %   1.29 %   1.29 %
Return on Average Total Equity   9.87     13.71       12.55     12.72       12.52  
Average Equity to Average Assets   10.16     10.26       10.24     10.15       10.30  
Net Interest Margin   3.33     3.35       3.18     3.33       3.18  
Efficiency (Noninterest Expense / Net Interest Income plus Noninterest Income)   43.69     45.94       46.38     46.11       48.22  
Tier 1 Leverage (2)   10.76     10.92       10.86     10.76       10.86  
Tier 1 Risk-Based Capital (2)   12.10     12.42       12.07     12.10       12.07  
Common Equity Tier 1 (CET1) (2)   11.37     11.65       11.27     11.37       11.27  
Total Capital (2)   13.26     13.58       13.23     13.26       13.23  
Tangible Capital (1) (2)   9.93     10.32       9.89     9.93       9.89  
ASSET QUALITY                     
Loans Past Due 30 - 89 Days $ 9,613   $ 1,939     $ 1,593   $ 9,613     $ 1,593  
Loans Past Due 90 Days or More   6     73       53     6       53  
Non-accrual Loans   9,401     10,279       6,633     9,401       6,633  
Nonperforming Loans (includes nonperforming TDR's)   9,407     10,352       6,686     9,407       6,686  
Other Real Estate Owned   40     115       153     40       153  
Other Nonperforming Assets   55     40       11     55       11  
Total Nonperforming Assets   9,502     10,507       6,850     9,502       6,850  
Performing Troubled Debt Restructurings   2,893     5,601       10,351     2,893       10,351  
Nonperforming Troubled Debt Restructurings (included in nonperforming loans)   7,750     7,946       5,633     7,750       5,633  
Total Troubled Debt Restructurings   10,643     13,547       15,984     10,643       15,984  
Impaired Loans   13,869     16,679       20,692     13,869       20,692  
Non-Impaired Watch List Loans   157,834     145,655       127,933     157,834       127,933  
Total Impaired and Watch List Loans   171,703     162,334       148,631     171,703       148,631  
Gross Charge Offs   625     170       520     1,560       2,055  
Recoveries   399     654       235     1,963       1,013  
Net Charge Offs/(Recoveries)   226     (484 )     285     (403 )     1,042  
Net Charge Offs/(Recoveries) to Average Loans   0.02 %   (0.05 )%   0.03 %   (0.01 )%   0.03 %
Loan Loss Reserve to Loans   1.23 %   1.25 %   1.26 %   1.23 %   1.26 %
Loan Loss Reserve to Nonperforming Loans   500.91 %   439.51 %   653.31 %   500.91 %   653.31 %
Loan Loss Reserve to Nonperforming Loans and Performing TDR's   383.10 %   285.20 %   256.52 %   383.10 %   256.52 %
Nonperforming Loans to Loans   0.25 %   0.28 %   0.19 %   0.25 %   0.19 %
Nonperforming Assets to Assets   0.20 %   0.24 %   0.16 %   0.20 %   0.16 %
Total Impaired and Watch List Loans to Total Loans   4.50 %   4.47 %   4.28 %   4.50 %   4.28 %
OTHER DATA                    
Full Time Equivalent Employees   539     537       524     539       524  
Offices   49     49       48     49       48  
                     
(1) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Financial Measures"                    
(2) Capital ratios for December 31, 2017 are preliminary until the Call Report is filed.                    
                     

 

 
CONSOLIDATED BALANCE SHEETS (in thousands except share data)
  December 31,   December 31,
    2017       2016  
  (Unaudited)    
ASSETS      
Cash and due from banks $   156,679     $   142,408  
Short-term investments   19,501       24,872  
  Total cash and cash equivalents   176,180       167,280  
       
Securities available for sale (carried at fair value)   538,493       504,191  
Real estate mortgage loans held for sale   3,346       5,915  
       
Loans, net of allowance for loan losses of $47,121 and $43,718   3,771,338       3,427,209  
       
Land, premises and equipment, net   56,466       52,092  
Bank owned life insurance   75,879       74,006  
Federal Reserve and Federal Home Loan Bank stock   13,772       11,522  
Accrued interest receivable   14,093       11,687  
Goodwill   4,970       4,970  
Other assets   28,439       31,153  
  Total assets $   4,682,976     $   4,290,025  
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
       
LIABILITIES      
Noninterest bearing deposits $   885,622     $   819,803  
Interest bearing deposits   3,123,033       2,758,109  
  Total deposits   4,008,655       3,577,912  
       
Short-term borrowings      
  Securities sold under agreements to repurchase   70,652       50,045  
  Other short-term borrowings   80,000       180,000  
  Total short-term borrowings   150,652       230,045  
       
Long-term borrowings   30       32  
Subordinated debentures   30,928       30,928  
Accrued interest payable   6,311       5,676  
Other liabilities   17,733       18,365  
  Total liabilities   4,214,309       3,862,958  
       
STOCKHOLDERS' EQUITY      
Common stock:  90,000,000 shares authorized, no par value      
 25,194,903 shares issued and 25,025,933 outstanding as of December 31, 2017      
 25,096,087 shares issued and 24,937,865 outstanding as of December 31, 2016   108,862       104,405  
Retained earnings   363,794       327,873  
Accumulated other comprehensive loss   (670 )     (2,387 )
Treasury stock, at cost (2017 - 168,970 shares, 2016 - 158,222 shares)   (3,408 )     (2,913 )
  Total stockholders' equity   468,578       426,978  
  Noncontrolling interest   89       89  
  Total equity   468,667       427,067  
  Total liabilities and equity $   4,682,976     $   4,290,025  
               


                 
CONSOLIDATED STATEMENTS OF INCOME (unaudited - in thousands except share and per share data)
  Three Months Ended   Twelve Months Ended  
  December 31,   December 31,  
    2017       2016     2017     2016  
NET INTEREST INCOME                
Interest and fees on loans                
Taxable $    40,251     $ 32,744   $    150,295   $ 124,830  
Tax exempt     212       130       729     462  
Interest and dividends on securities                
Taxable     2,185       2,301       9,218     9,421  
Tax exempt     1,357       1,074       5,102     3,885  
Interest on short-term investments     156       58       354     353  
Total interest income     44,161       36,307       165,698     138,951  
                 
Interest on deposits     8,304       5,023       27,026     18,944  
Interest on borrowings                
Short-term     117       69       1,446     352  
Long-term     348       308       1,334     1,174  
Total interest expense     8,769       5,400       29,806     20,470  
                 
NET INTEREST INCOME     35,392       30,907       135,892     118,481  
                 
Provision for loan losses     1,850       1,150       3,000     1,150  
                 
NET INTEREST INCOME AFTER PROVISION FOR                
  LOAN LOSSES     33,542       29,757       132,892     117,331  
                 
NONINTEREST INCOME                
Wealth advisory fees     1,476       1,205       5,481     4,805  
Investment brokerage fees     323       258       1,273     1,010  
Service charges on deposit accounts     3,669       3,237       13,696     12,013  
Loan and service fees     2,050       1,846       7,900     7,681  
Merchant card fee income     583       522       2,279     2,098  
Bank owned life insurance income     498       338       1,768     1,392  
Other income     712       935       2,598     2,213  
Mortgage banking income     171       381       982     1,586  
Net securities gains/(losses)     (20 )     14       32     66  
Total noninterest income     9,462       8,736       36,009     32,864  
                 
NONINTEREST EXPENSE                
Salaries and employee benefits     11,296       10,905       45,510     41,934  
Net occupancy expense     1,190       1,061       4,595     4,266  
Equipment costs     1,216       1,022       4,629     3,850  
Data processing fees and supplies     2,211       2,013       8,233     8,148  
Corporate and business development     801       687       4,744     3,328  
FDIC insurance and other regulatory fees     502       463       1,798     2,001  
Professional fees     857       703       3,574     3,208  
Other expense     1,525       1,535       6,184     6,243  
Total noninterest expense     19,598       18,389       79,267     72,978  
                 
INCOME BEFORE INCOME TAX EXPENSE     23,406       20,104       89,634     77,217  
Income tax expense     11,779       6,582       32,304     25,133  
NET INCOME $    11,627     $ 13,522   $    57,330   $ 52,084  
                 
BASIC WEIGHTED AVERAGE COMMON SHARES     25,194,903       25,091,685       25,181,208     25,056,095  
BASIC EARNINGS PER COMMON SHARE $    0.46     $ 0.54   $    2.28   $ 2.08  
DILUTED WEIGHTED AVERAGE COMMON SHARES     25,701,337       25,518,069       25,663,381     25,460,727  
DILUTED EARNINGS PER COMMON SHARE $    0.45     $ 0.53   $    2.23   $ 2.05  
                 

 

 
LAKELAND FINANCIAL CORPORATION
LOAN DETAIL
FOURTH QUARTER 2017
(unaudited in thousands)
                   
  December 31, September 30, December 31,
  2017 2017 2016
Commercial and industrial loans:                  
Working capital lines of credit loans $ 743,609   19.4 % $ 703,953   19.4 % $ 624,404   18.0 %
Non-working capital loans   675,072   17.7     658,167   18.1     644,086   18.5  
Total commercial and industrial loans   1,418,681   37.1     1,362,120   37.5     1,268,490   36.5  
                   
Commercial real estate and multi-family residential loans:                  
Construction and land development loans   224,474   5.9     287,778   7.9     245,182   7.1  
Owner occupied loans   538,603   14.1     499,651   13.7     469,705   13.5  
Nonowner occupied loans   508,121   13.3     456,930   12.6     458,404   13.2  
Multifamily loans   173,715   4.5     165,855   4.6     127,632   3.7  
Total commercial real estate and multi-family residential loans   1,444,913   37.8     1,410,214   38.8     1,300,923   37.5  
                   
Agri-business and agricultural loans:                  
Loans secured by farmland   186,437   4.9     161,553   4.4     172,633   5.0  
Loans for agricultural production   196,404   5.1     156,327   4.3     222,210   6.4  
Total agri-business and agricultural loans   382,841   10.0     317,880   8.7     394,843   11.4  
                   
Other commercial loans   124,076   3.3     114,858   3.1     98,270   2.8  
Total commercial loans   3,370,511   88.2     3,205,072   88.1     3,062,526   88.2  
                   
Consumer 1-4 family mortgage loans:                  
Closed end first mortgage loans   179,302   4.7     171,946   4.7     163,155   4.7  
Open end and junior lien loans   181,865   4.8     181,338   5.0     169,664   4.9  
Residential construction and land development loans   13,478   0.3     10,530   0.3     15,015   0.4  
Total consumer 1-4 family mortgage loans   374,645   9.8     363,814   10.0     347,834   10.0  
                   
Other consumer loans   74,369   2.0     67,545   1.9     61,308   1.8  
Total consumer loans   449,014   11.8     431,359   11.9     409,142   11.8  
Subtotal   3,819,525   100.0 %   3,636,431   100.0 %   3,471,668   100.0 %
Less: Allowance for loan losses   (47,121 )       (45,497 )       (43,718 )    
Net deferred loan fees   (1,066 )       (1,179 )       (741 )    
Loans, net $ 3,771,338       $ 3,589,755       $ 3,427,209      
                   
                   
                   
LAKELAND FINANCIAL CORPORATION  
DEPOSITS AND BORROWINGS
FOURTH QUARTER 2017  
(unaudited in thousands)  
                   
  December 31,     September 30,     December 31,    
  2017
    2017
    2016
   
Non-interest bearing demand deposits $ 885,622       $ 821,589       $ 819,803      
Savings and transaction accounts:                  
Savings deposits   263,570         269,977         268,970      
Interest bearing demand deposits   1,446,880         1,390,335         1,325,320      
Time deposits:                  
Deposits of $100,000 or more   1,161,365         1,149,152         924,825      
Other time deposits   251,218         242,937         238,994      
Total deposits $ 4,008,655       $ 3,873,990       $ 3,577,912      
FHLB advances and other borrowings   181,610         94,846         261,005      
Total funding sources $ 4,190,265       $ 3,968,836       $ 3,838,917      
                   

 

                                           
LAKELAND FINANCIAL CORPORATION
AVERAGE BALANCE SHEET AND NET INTEREST ANALYSIS
(UNAUDITED)
                                           
  Three Months Ended     Three Months Ended     Three Months Ended    
  December 31, 2017     September 30, 2017     December 31, 2016    
  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) $ 3,703,260     $ 40,251   4.31 %   $ 3,595,753     $ 38,630   4.26 %   $ 3,359,305     $ 32,744   3.87 %  
Tax exempt (1)   24,707       321   5.15       21,871       312   5.66       14,508       194   5.30    
Investments: (1)                                          
Available for sale   537,796       4,272   3.15       536,444       4,364   3.23       506,722       3,940   3.09    
Short-term investments   4,377       7   0.63       6,633       8   0.48       5,128       17   1.32    
Interest bearing deposits   53,109       149   1.11       35,340       88   0.99       47,473       41   0.34    
Total earning assets $ 4,323,249     $ 45,000   4.13 %   $ 4,196,041     $ 43,402   4.10 %   $ 3,933,136     $ 36,936   3.73 %  
Less:  Allowance for loan losses   (46,281 )               (45,018 )               (43,072 )            
Nonearning Assets                                          
Cash and due from banks   127,028                 122,429                 120,170              
Premises and equipment   56,719                 56,716                 52,013              
Other nonearning assets   138,094                 134,400                 125,483              
Total assets $ 4,598,809               $ 4,464,568               $ 4,187,730              
                                           
Interest Bearing Liabilities                                          
Savings deposits $ 270,978     $ 95   0.14 %   $ 274,514     $ 103   0.15 %   $ 271,758     $ 101   0.15 %  
Interest bearing checking accounts   1,451,544       3,024   0.83       1,365,617       2,636   0.77       1,317,805       1,512   0.46    
Time deposits:                                          
In denominations under $100,000   247,875       811   1.30       240,444       746   1.23       240,790       681   1.12    
In denominations over $100,000   1,180,719       4,374   1.47       1,042,543       3,552   1.35       1,009,166       2,729   1.07    
Miscellaneous short-term borrowings   84,132       118   0.56       235,212       588   0.99       70,802       69   0.39    
Long-term borrowings and                                          
subordinated debentures   30,958       347   4.45       30,958       344   4.41       30,960       308   3.95    
Total interest bearing liabilities $ 3,266,206     $ 8,769   1.07 %   $ 3,189,288     $ 7,969   0.99 %   $ 2,941,281     $ 5,400   0.73 %  
Noninterest Bearing Liabilities                                          
Demand deposits   838,476                 793,185                 788,726              
Other liabilities   26,668                 24,021                 29,058              
Stockholders' Equity   467,459                 458,074                 428,665              
Total liabilities and stockholders' equity $ 4,598,809               $ 4,464,568               $ 4,187,730              
                                           
Interest Margin Recap                                          
Interest income/average earning assets       45,000   4.13           43,402   4.10           36,936   3.73    
Interest expense/average earning assets       8,769   0.80           7,969   0.75           5,400   0.55    
Net interest income and margin     $ 36,231   3.33 %       $ 35,433   3.35 %       $ 31,536   3.18 %  
                                           
   

 

(1 ) Tax exempt income was converted to a fully taxable equivalent basis at a 35 percent tax rate for 2017 and 2016. 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 $839,000, $813,000 and $619,000 in the three-month periods ended December 31, 2017, September 30, 2017 and December 31, 2016, respectively. 
(2 ) Loan fees, which are immaterial in relation to total taxable loan interest income for 2017 and 2016, 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.   

Net income applicable to Lakeland Financial Corporation and earnings per diluted share, excluding the income tax expense adjustment for the deferred tax asset revaluation, are non-GAAP financial measures that the company considers useful for investors to allow better comparability of operating performance. The income tax expense adjustment consists of a $4.1 million, or $0.16 per diluted common share, revaluation of the company's net deferred tax asset as a result of the enactment of the Tax Cuts and Jobs Act in 2017.

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

         
  Three Months Ended   Twelve Months Ended  
  Dec. 31,   Sep. 30,   Dec. 31,   Dec. 31,   Dec. 31,  
  2017
  2017
  2016
  2017
  2016
 
  Total Equity $   468,667     $   462,516     $   427,067     $   468,667     $   427,067    
  Less: Goodwill     (4,970 )       (4,970 )       (4,970 )       (4,970 )       (4,970 )  
  Plus: Deferred tax assets related to goodwill     1,171         1,860         1,836         1,171         1,836    
  Tangible Common Equity     464,868         459,406         423,933         464,868         423,933    
                     
  Assets $   4,682,976     $   4,454,236     $   4,290,025     $   4,682,976     $   4,290,025    
  Less: Goodwill     (4,970 )       (4,970 )       (4,970 )       (4,970 )       (4,970 )  
  Plus: Deferred tax assets related to goodwill     1,171         1,860         1,836         1,171         1,836    
  Tangible Assets     4,679,177         4,451,126         4,286,891         4,679,177         4,286,891    
                     
  Ending common shares issued     25,194,903         25,194,903         25,096,087         25,194,903         25,096,087    
                     
  Tangible Book Value Per Common Share $   18.45     $   18.23     $   16.89     $   18.45     $   16.89    
                     
  Tangible Common Equity/Tangible Assets     9.93   %     10.32   %     9.89   %     9.93   %     9.89   %
                     
                     
                     
  Net Income $   11,627     $   15,825     $   13,522     $   57,330     $   52,084    
  Plus:  Additional tax expense due to adjusting deferred tax asset     4,137         0         0         4,137         0    
  Net income excluding effect of deferred tax adjustment $   15,764     $   15,825     $   13,522     $   61,467     $   52,084    
                     
  Diluted Weighted Average Common Shares Outstanding     25,701,337         25,656,403         25,518,069         25,663,381         25,460,727    
                     
  Diluted net income per share excluding effect of                    
  of deferred tax adjustment $   0.61     $   0.62     $   0.53     $   2.40     $   2.05    
                     


Contact

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

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