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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 BALANCES 2018   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,
  2018 2018 2017 2017
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      
                         

 

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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