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Lakeland Financial Reports Record Performance

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