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Apple fiscal Q4 earnings preview

Lakeland Financial Reports Record Quarterly Performance

Net Income Increases 18% and Dividend Increases 16%

WARSAW, Ind., April 25, 2019 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq Global Select/LKFN), parent company of Lake City Bank, today reported record quarterly net income of $21.7 million for the three months ended March 31, 2019, an increase of 18% versus $18.3 million for the first quarter of 2018. Diluted earnings per share also increased 18% to $0.84 for the first quarter of 2019, versus $0.71 for the first quarter of 2018, also representing a record quarter for the company and its shareholders. On a linked quarter basis, net income increased $319,000, or 1% from the fourth quarter ended December 31, 2018, which had net income of $21.4 million and $0.83 diluted earnings per share.

David M. Findlay, President & CEO commented, “Our record results reflect our continued strong revenue growth, a healthy asset quality environment and stable economic trends in our Lake City Bank footprint. The opening of our 50th office in downtown Indianapolis this quarter highlights our continued organic growth strategy."

Highlights for the quarter are noted below.

1st Quarter 2019 versus 1st Quarter 2018 highlights:

  • Return on average equity of 16.6%, up from 15.8%

  • Return on average assets of 1.80%, up from 1.58%

  • Organic average loan growth of $126 million, or 3%

  • Core deposit growth of $129 million, or 3%

  • Net interest income increase of $2.0 million, or 5%

  • Net interest margin increase of 9 basis points to 3.45%

  • Noninterest income increase of $1.6 million, or 17%

  • Revenue growth of $3.6 million, or 8%

  • Nonperforming assets to total assets of 0.14% versus 0.24% a year ago

  • Total equity and tangible common equity1 increase of $70 million, or 15%

1st Quarter 2019 versus 4th Quarter 2018 highlights:

  • Return on average assets of 1.80%, up from 1.75%

  • Return on average equity of 16.6% compared to 16.8%

  • Organic loan growth of $24 million or 1%

  • Core deposit growth of $128 million, or 3%

  • Net interest income decrease of $1.4 million, or 3%

  • Net interest margin decrease of 7 basis points to 3.45%

  • Noninterest income increase of $1.4 million, or 14%

  • Nonperforming assets to total assets of 0.14% versus 0.16%

  • Total equity and tangible common equity1 increase of $22 million, or 4%

As announced on April 9, 2019, the board of directors approved a cash dividend for the first quarter of $0.30 per share, payable on May 6, 2019, to shareholders of record as of April 25, 2019. The 2019 dividend rate per share approved in April represents a 16% increase over the accumulated quarterly dividends paid in 2018.

Return on average total equity for the first quarter of 2019 was 16.59%, compared to 15.82% in the first quarter of 2018 and 16.76% in the linked fourth quarter of 2018. Return on average assets for the first quarter of 2018 was 1.80%, compared to 1.58% in the first quarter of 2018 and 1.75% in the linked fourth quarter of 2018. The company’s total capital as a percent of risk-weighted assets was 14.38% at March 31, 2019, compared to 13.41% at March 31, 2018 and 14.20% at December 31, 2018. The company’s tangible common equity to tangible assets ratio1 was 11.04% at March 31, 2019, compared to 9.94% at March 31, 2018 and 10.63% at December 31, 2018.

1 Non-GAAP financial measure – see “Reconciliation of Non-GAAP Financial Measures”

Findlay added, “The strength of our balance sheet is demonstrated by our strong capital position. We are pleased to continue our history of double digit dividend increases for our shareholders. The dividend increase is the outcome of consistent long-term growth in earnings and its positive impact to our capital base. Over the last five years, we have increased our dividend by 21% annually on a compound annual growth basis.”

Average total loans for the first quarter of 2019 were $3.92 billion, an increase of $126.1 million, or 3%, versus $3.79 billion for the first quarter 2018. On a linked quarter basis, total average loans grew $12.5 million from $3.91 billion at December 31, 2018. Total loans outstanding grew $93.3 million, or 2%, from $3.85 billion as of March 31, 2018 to $3.94 billion as of March 31, 2019.

Average total deposits were $4.09 billion for the first quarters of 2019 and 2018. Total deposits grew $47.9 million, or 1%, from $4.10 billion as of March 31, 2018 to $4.15 billion as of March 31, 2019. In addition, total core deposits, which exclude brokered deposits, increased $128.8 million, or 3%, from $3.88 billion at March 31, 2018 to $4.01 billion at March 31, 2019 due to growth in commercial deposits of $238.1 million or 25%, offset by decreases in public fund deposits of $80.0 million or 6%, and decreases in retail deposits of $29.3 million, or 2%.

Findlay noted, “We are pleased with the growth momentum reflected in the increase in commercial deposits. We are particularly pleased that the total number of commercial noninterest bearing checking accounts have increased by 11% over a two-year period. This increase in accounts has been accompanied by a 23% increase in balances over the same timeframe.”

The company’s net interest margin increased nine basis points to 3.45% for the first quarter of 2019 compared to 3.36% for the first quarter of 2018. The higher margin in the first quarter of 2019 was due to higher yields on loans, partially offset by a higher cost of funds, driven by the Federal Reserve Bank increasing the target Federal Funds Rate in March, June, September and December of 2018.

Linked quarter net interest margin declined by seven basis points due to an increase of five basis points in earning asset yields and an offsetting increase in cost of funds of twelve basis points. The net interest margin was 3.52% for the linked fourth quarter of 2018, and was positively impacted by four basis points due to the payoff of a nonaccrual loan and other nonaccrual loan adjustments. Thus, the net interest margin run rate for the fourth quarter excluding those adjustments was 3.48%. As a result, net interest margin in the first quarter declined by three basis points when compared to the fourth quarter core run rate net interest margin.

Earning asset yields were negatively impacted by a decline in investment security yields during the first quarter 2019 due to the combined effect of the flattening yield curve and the corresponding increase in the fair value of the investment securities portfolio, as well as the impact of the adoption of the FASB accounting standard update, which amended the amortization period for certain purchased callable debt securities held at a premium. The decline in investment security portfolio yields reduced net interest margin by two basis points during the quarter. In addition, loan yields were elevated by four basis points in the fourth quarter of 2018 as previously noted. On a linked fourth quarter basis, cost of funds increased by twelve basis points versus a thirteen basis point increase in the prior third linked quarter of 2018.

“With the widening expectation that the Federal Reserve may be in a holding pattern with respect to future rates changes, we have taken steps to maintain our net interest margin. Deposit rates have remained generally unchanged during the quarter in our markets and we believe that our net interest margin will be stable moving into the second quarter,” commented Findlay.

The company recorded a provision for loan losses of $1.2 million in the first quarter of 2019, compared to $3.3 million in the first quarter of 2018 and $300,000 in the linked fourth quarter of 2018. The lower provision in the first quarter of 2019 was primarily due to lower net charge offs compared to the first quarter of 2018. Net charge offs in the first quarter of 2019 were $91,000 versus net charge offs of $4.8 million in the first quarter of 2018 and net charge offs of $189,000 during the linked fourth quarter of 2018. Annualized net charge offs to average loans were 0.01% for the first quarter of 2019 versus 0.51% for the first quarter of 2018. Annualized net charge offs to average loans were 0.02% for the linked fourth quarter of 2018.

Nonperforming assets decreased $4.2 million, or 37%, to $7.0 million as of March 31, 2019 versus $11.2 million as of March 31, 2018 due to a decrease in nonaccrual loans. On a linked quarter basis, nonperforming assets were $604,000 or 8% lower than the $7.6 million reported as of December 31, 2018. The ratio of nonperforming assets to total assets at March 31, 2019 decreased to 0.14% from 0.24% at March 31, 2018 and 0.16% at December 31, 2018. Loan loss reserve to total loans increased to 1.26% as of March 31, 2019 as compared with 1.19% as of March 31, 2018 and up from 1.24% as of December 31, 2018.

The company’s noninterest income increased $1.6 million, or 17%, to $11.5 million for the first quarter of 2019, compared to $9.9 million for the first quarter of 2018. Noninterest income was positively impacted by an 18% increase over the prior year first quarter in recurring fee income for service charges on deposit accounts, primarily due to growth in treasury management fees from business accounts. In addition, loan and service fees increased 10% and wealth advisory fees increased by 8% compared to the first quarter 2018 due to continued growth of client relationships. Noninterest income increased by $1.4 million or 14% on a linked quarter basis to $11.5 million due to increases in bank owned life insurance income, swap fees generated from commercial lending transactions and improvement in mortgage banking income.

The company’s noninterest expense increased $1.3 million, or 6%, to $22.5 million in the first quarter of 2019, compared to $21.2 million in the first quarter of 2018 and decreased by $79,000 on a linked quarter basis. Salaries and employee benefits increased on a year over year basis primarily due to higher employee health insurance expense, staffing increases in revenue producing areas and normal merit increases.

Findlay commented, “Continued investment in our people and our technology-driven financial services solutions for clients is a critical part of our long term success. The Lake City Bank team is our defining difference, but we must remain committed to delivering innovative technology solutions as well. We continue to invest heavily in technology to ensure that we can deliver innovative, technology-driven solutions to our customers.”

The company’s efficiency ratio was 45.2% for the first quarter of 2019, compared to 46.0% for the first quarter of 2018 and 45.4% for the linked fourth quarter of 2018.

Lakeland Financial Corporation is a $4.9 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 50 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 “total equity” excluding intangible assets, net of deferred tax, and “tangible assets” which is “total assets” excluding intangible assets, net of deferred tax. A reconciliation of these non-GAAP measures to the most comparable GAAP equivalents is included in the attached financial tables where the non-GAAP measures are presented.

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

LAKELAND FINANCIAL CORPORATION

FIRST QUARTER 2019 FINANCIAL HIGHLIGHTS

Three Months Ended

(Unaudited – Dollars in thousands, except per share data)

Mar. 31,

Dec. 31,

Mar. 31,

END OF PERIOD BALANCES

2019

2018

2018

Assets

$

4,891,885

$

4,875,254

$

4,726,948

Deposits

4,147,437

4,044,065

4,099,488

Brokered Deposits

140,078

164,888

220,906

Core Deposits (3)

4,007,359

3,879,177

3,878,582

Loans

3,939,010

3,914,745

3,845,668

Allowance for Loan Losses

49,562

48,453

45,627

Total Equity

543,267

521,704

473,333

Goodwill net of deferred tax assets

3,779

3,779

3,796

Tangible Common Equity (1)

539,488

517,925

469,537

AVERAGE BALANCES

Total Assets

$

4,881,572

$

4,837,604

$

4,706,726

Earning Assets

4,550,950

4,523,304

4,421,461

Investments - available for sale

587,026

573,073

546,042

Loans

3,918,024

3,905,511

3,791,922

Total Deposits

4,090,330

4,163,118

4,094,917

Interest Bearing Deposits

3,205,204

3,256,930

3,253,309

Interest Bearing Liabilities

3,426,250

3,390,159

3,367,104

Total Equity

529,989

505,570

469,998

INCOME STATEMENT DATA

Net Interest Income

$

38,209

$

39,590

$

36,223

Net Interest Income-Fully Tax Equivalent

38,708

40,089

36,632

Provision for Loan Losses

1,200

300

3,300

Noninterest Income

11,525

10,105

9,879

Noninterest Expense

22,473

22,552

21,202

Net Income

21,682

21,363

18,336

PER SHARE DATA

Basic Net Income Per Common Share

$

0.85

$

0.84

$

0.73

Diluted Net Income Per Common Share

0.84

0.83

0.71

Cash Dividends Declared Per Common Share

0.26

0.26

0.22

Dividend Payout

30.95

%

31.33

%

30.99

%

Book Value Per Common Share (equity per share issued)

21.21

20.62

18.71

Tangible Book Value Per Common Share (1)

21.06

20.47

18.56

Market Value – High

48.99

47.41

51.76

Market Value – Low

39.78

37.79

45.01

Basic Weighted Average Common Shares Outstanding

25,491,093

25,301,732

25,257,414

Diluted Weighted Average Common Shares Outstanding

25,665,287

25,746,490

25,696,864

KEY RATIOS

Return on Average Assets

1.80

%

1.75

%

1.58

%

Return on Average Total Equity

16.59

16.76

15.82

Average Equity to Average Assets

10.86

10.45

9.99

Net Interest Margin

3.45

3.52

3.36

Efficiency (Noninterest Expense / Net Interest Income plus Noninterest Income)

45.19

45.38

45.99

Tier 1 Leverage (2)

11.59

11.44

10.77

Tier 1 Risk-Based Capital (2)

13.22

13.05

12.30

Common Equity Tier 1 (CET1) (2)

12.52

12.35

11.57

Total Capital (2)

14.38

14.20

13.41

Tangible Capital (1) (2)

11.04

10.63

9.94

ASSET QUALITY

Loans Past Due 30 - 89 Days

$

9,694

$

10,020

$

2,168

Loans Past Due 90 Days or More

481

0

26

Non-accrual Loans

6,093

7,260

11,002

Nonperforming Loans (includes nonperforming TDR's)

6,574

7,260

11,028

Other Real Estate Owned

316

316

10

Other Nonperforming Assets

83

0

114

Total Nonperforming Assets

6,973

7,576

11,152

Performing Troubled Debt Restructurings

6,196

8,016

4,085

Nonperforming Troubled Debt Restructurings (included in nonperforming loans)

3,812

4,384

7,945

Total Troubled Debt Restructurings

10,008

12,400

12,030

Impaired Loans

24,501

26,661

15,824

Non-Impaired Watch List Loans

179,636

159,938

166,205

Total Impaired and Watch List Loans

204,137

186,599

182,029

Gross Charge Offs

284

424

4,977

Recoveries

193

235

183

Net Charge Offs/(Recoveries)

91

189

4,794

Net Charge Offs/(Recoveries) to Average Loans

0.01

%

0.02

%

0.51

%

Loan Loss Reserve to Loans

1.26

%

1.24

%

1.19

%

Loan Loss Reserve to Nonperforming Loans

753.91

%

667.40

%

413.75

%

Loan Loss Reserve to Nonperforming Loans and Performing TDR's

388.11

%

317.17

%

301.92

%

Nonperforming Loans to Loans

0.17

%

0.19

%

0.29

%

Nonperforming Assets to Assets

0.14

%

0.16

%

0.24

%

Total Impaired and Watch List Loans to Total Loans

5.18

%

4.77

%

4.73

%

OTHER DATA

Full Time Equivalent Employees

556

553

539

Offices

50

49

49

(1) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Financial Measures"

(2) Capital ratios for March 31, 2019 are preliminary until the Call Report is filed.

(3) Core deposits equals deposits less brokered deposits

CONSOLIDATED BALANCE SHEETS (in thousands, except share data)

March 31,

December 31,

2019

2018

(Unaudited)

ASSETS

Cash and due from banks

$

143,081

$

192,290

Short-term investments

45,672

24,632

Total cash and cash equivalents

188,753

216,922

Securities available for sale (carried at fair value)

595,553

585,549

Real estate mortgage loans held for sale

3,047

2,293

Loans, net of allowance for loan losses of $49,562 and $48,453

3,889,448

3,866,292

Land, premises and equipment, net

58,760

58,097

Bank owned life insurance

82,253

77,106

Federal Reserve and Federal Home Loan Bank stock

13,772

13,772

Accrued interest receivable

17,387

15,518

Goodwill

4,970

4,970

Other assets

37,942

34,735

Total assets

$

4,891,885

$

4,875,254

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES

Noninterest bearing deposits

$

931,832

$

946,838

Interest bearing deposits

3,215,605

3,097,227

Total deposits

4,147,437

4,044,065

Borrowings

Federal funds purchased

122,000

0

Securities sold under agreements to repurchase

0

75,555

Federal Home Loan Bank advances

0

170,000

Subordinated debentures

30,928

30,928

Total borrowings

152,928

276,483

Accrued interest payable

11,794

10,404

Other liabilities

36,459

22,598

Total liabilities

4,348,618

4,353,550

STOCKHOLDERS' EQUITY

Common stock: 90,000,000 shares authorized, no par value

25,614,665 shares issued and 25,442,827 outstanding as of March 31, 2019

25,301,732 shares issued and 25,128,773 outstanding as of December 31, 2018

111,571

112,383

Retained earnings

432,953

419,179

Accumulated other comprehensive income (loss)

2,487

(6,191

)

Treasury stock, at cost (2019 - 171,838 shares, 2018 - 172,959 shares)

(3,833

)

(3,756

)

Total stockholders' equity

543,178

521,615

Noncontrolling interest

89

89

Total equity

543,267

521,704

Total liabilities and equity

$

4,891,885

$

4,875,254


CONSOLIDATED STATEMENTS OF INCOME (unaudited - in thousands, except share and per share data)

Three Months Ended

March 31,

2019

2018

NET INTEREST INCOME

Interest and fees on loans

Taxable

$

48,866

$

41,794

Tax exempt

251

217

Interest and dividends on securities

Taxable

2,497

2,434

Tax exempt

1,642

1,331

Other interest income

238

292

Total interest income

53,494

46,068

Interest on deposits

13,883

9,367

Interest on borrowings

Short-term

950

111

Long-term

452

367

Total interest expense

15,285

9,845

NET INTEREST INCOME

38,209

36,223

Provision for loan losses

1,200

3,300

NET INTEREST INCOME AFTER PROVISION FOR

LOAN LOSSES

37,009

32,923

NONINTEREST INCOME

Wealth advisory fees

1,620

1,505

Investment brokerage fees

386

290

Service charges on deposit accounts

4,287

3,628

Loan and service fees

2,404

2,177

Merchant card fee income

622

642

Bank owned life insurance income

444

363

Mortgage banking income

222

241

Net securities gains (losses)

23

(6

)

Other income

1,517

1,039

Total noninterest income

11,525

9,879

NONINTEREST EXPENSE

Salaries and employee benefits

12,559

12,019

Net occupancy expense

1,366

1,426

Equipment costs

1,349

1,274

Data processing fees and supplies

2,425

2,513

Corporate and business development

1,206

1,133

FDIC insurance and other regulatory fees

406

461

Professional fees

937

872

Other expense

2,225

1,504

Total noninterest expense

22,473

21,202

INCOME BEFORE INCOME TAX EXPENSE

26,061

21,600

Income tax expense

4,379

3,264

NET INCOME

$

21,682

$

18,336

BASIC WEIGHTED AVERAGE COMMON SHARES

25,491,093

25,257,414

BASIC EARNINGS PER COMMON SHARE

$

0.85

$

0.73

DILUTED WEIGHTED AVERAGE COMMON SHARES

25,665,287

25,696,864

DILUTED EARNINGS PER COMMON SHARE

$

0.84

$

0.71


LAKELAND FINANCIAL CORPORATION

LOAN DETAIL

FIRST QUARTER 2019

(unaudited, in thousands)

March 31,

December 31,

March 31,

2019

2018

2018

Commercial and industrial loans:

Working capital lines of credit loans

$

726,895

18.4

%

$

690,620

17.6

%

$

778,779

20.2

%

Non-working capital loans

700,447

17.8

714,759

18.3

706,228

18.4

Total commercial and industrial loans

1,427,342

36.2

1,405,379

35.9

1,485,007

38.6

Commercial real estate and multi-family residential loans:

Construction and land development loans

293,818

7.5

266,805

6.8

237,887

6.2

Owner occupied loans

557,296

14.1

586,325

15.0

543,192

14.1

Nonowner occupied loans

537,569

13.7

520,901

13.3

507,041

13.2

Multifamily loans

240,939

6.1

195,604

5.0

193,956

5.0

Total commercial real estate and multi-family residential loans

1,629,622

41.4

1,569,635

40.1

1,482,076

38.5

Agri-business and agricultural loans:

Loans secured by farmland

139,645

3.6

177,503

4.6

145,363

3.8

Loans for agricultural production

162,662

4.1

193,010

4.9

171,607

4.5

Total agri-business and agricultural loans

302,307

7.7

370,513

9.5

316,970

8.3

Other commercial loans

112,021

2.8

95,657

2.4

116,657

3.0

Total commercial loans

3,471,292

88.1

3,441,184

87.9

3,400,710

88.4

Consumer 1-4 family mortgage loans:

Closed end first mortgage loans

188,777

4.8

185,822

4.7

180,542

4.7

Open end and junior lien loans

182,791

4.7

187,030

4.8

179,065

4.7

Residential construction and land development loans

13,142

0.3

16,226

0.4

13,342

0.3

Total consumer 1-4 family mortgage loans

384,710

9.8

389,078

9.9

372,949

9.7

Other consumer loans

84,650

2.1

86,064

2.2

73,277

1.9

Total consumer loans

469,360

11.9

475,142

12.1

446,226

11.6

Subtotal

3,940,652

100.0

%

3,916,326

100.0

%

3,846,936

100.0

%

Less: Allowance for loan losses

(49,562

)

(48,453

)

(45,627

)

Net deferred loan fees

(1,642

)

(1,581

)

(1,268

)

Loans, net

$

3,889,448

$

3,866,292

$

3,800,041

LAKELAND FINANCIAL CORPORATION

DEPOSITS AND BORROWINGS

FIRST QUARTER 2019

(unaudited, in thousands)

March 31,

December 31,

March 31,

2019

2018

2018

Non-interest bearing demand deposits

$

931,832

$

946,838

$

858,950

Savings and transaction accounts:

Savings deposits

246,936

247,903

272,472

Interest bearing demand deposits

1,562,089

1,429,570

1,491,220

Time deposits:

Deposits of $100,000 or more

1,131,326

1,146,221

1,216,802

Other time deposits

275,254

273,533

260,044

Total deposits

$

4,147,437

$

4,044,065

$

4,099,488

FHLB advances and other borrowings

152,928

276,483

125,644

Total funding sources

$

4,300,365

$

4,320,548

$

4,225,132

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

Three Months Ended

Three Months Ended

Three Months Ended

March 31, 2019

December 31, 2018

March 31, 2018

Average

Interest

Yield (1)/

Average

Interest

Yield (1)/

Average

Interest

Yield (1)/

(fully tax equivalent basis, dollars in thousands)

Balance

Income

Rate

Balance

Income

Rate

Balance

Income

Rate

Earning Assets

Loans:

Taxable (2)(3)

$

3,893,035

$

48,866

5.09

%

$

3,884,500

$

49,091

5.01

%

$

3,767,300

$

41,794

4.50

%

Tax exempt (1)

24,989

314

5.10

21,011

234

4.42

24,622

272

4.48

Investments: (1)

Available for sale

587,026

4,575

3.16

573,073

4,682

3.24

546,042

4,119

3.06

Short-term investments

4,696

26

2.25

3,350

15

1.78

4,579

9

0.80

Interest bearing deposits

41,204

212

2.09

41,370

207

1.99

78,918

283

1.45

Total earning assets

$

4,550,950

$

53,993

4.81

%

$

4,523,304

$

54,229

4.76

%

$

4,421,461

$

46,477

4.26

%

Less: Allowance for loan losses

(48,768

)

(49,045

)

(47,189

)

Nonearning Assets

Cash and due from banks

164,820

156,681

137,738

Premises and equipment

58,599

57,516

56,192

Other nonearning assets

155,971

149,148

138,524

Total assets

$

4,881,572

$

4,837,604

$

4,706,726

Interest Bearing Liabilities

Savings deposits

$

247,309

$

71

0.12

%

$

250,755

$

76

0.12

%

$

268,091

$

89

0.13

%

Interest bearing checking accounts

1,496,893

5,954

1.61

1,476,013

5,498

1.48

1,491,820

3,575

0.97

Time deposits:

In denominations under $100,000

276,006

1,232

1.81

272,192

1,168

1.70

255,209

848

1.35

In denominations over $100,000

1,184,996

6,626

2.27

1,257,970

6,683

2.11

1,238,189

4,855

1.59

Miscellaneous short-term borrowings

190,118

950

2.03

102,301

282

1.09

82,862

111

0.54

Long-term borrowings and

subordinated debentures

30,928

452

5.93

30,928

431

5.53

30,933

367

4.81

Total interest bearing liabilities

$

3,426,250

$

15,285

1.81

%

$

3,390,159

$

14,138

1.65

%

$

3,367,104

$

9,845

1.19

%

Noninterest Bearing Liabilities

Demand deposits

885,126

906,188

841,608

Other liabilities

40,207

35,687

28,016

Stockholders' Equity

529,989

505,570

469,998

Total liabilities and stockholders' equity

$

4,881,572

$

4,837,604

$

4,706,726

Interest Margin Recap

Interest income/average earning assets

53,993

4.81

54,229

4.76

46,477

4.26

Interest expense/average earning assets

15,285

1.36

14,138

1.24

9,845

0.90

Net interest income and margin

$

38,708

3.45

%

$

40,091

3.52

%

$

36,632

3.36

%


(1

)

Tax exempt income was converted to a fully taxable equivalent basis at a 21 percent tax rate. The tax equivalent rate for tax exempt loans and tax exempt securities acquired after January 1, 1983 included the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) adjustment applicable to nondeductible interest expenses. Taxable equivalent basis adjustments were $499,000, $501,000 and $409,000 in the three-month periods ended March 31, 2019, December 31, 2018 and March 31, 2018, respectively.

(2

)

Loan fees, which are immaterial in relation to total taxable loan interest income for 2019 and 2018, are included as taxable loan interest income.

(3

)

Nonaccrual loans are included in the average balance of taxable loans.

Reconciliation of Non-GAAP Financial Measures

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

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

Three Months Ended

Mar. 31,

Dec. 31,

Mar. 31,

2019

2018

2018

Total Equity

$

543,267

$

521,704

$

473,333

Less: Goodwill

(4,970

)

(4,970

)

(4,970

)

Plus: Deferred tax assets related to goodwill

1,191

1,191

1,174

Tangible Common Equity

539,488

517,925

469,537

Assets

$

4,891,885

$

4,875,254

$

4,726,948

Less: Goodwill

(4,970

)

(4,970

)

(4,970

)

Plus: Deferred tax assets related to goodwill

1,191

1,191

1,174

Tangible Assets

4,888,106

4,871,475

4,723,152

Ending common shares issued

25,614,665

25,301,732

25,291,582

Tangible Book Value Per Common Share

$

21.06

$

20.47

$

18.56

Tangible Common Equity/Tangible Assets

11.04

%

10.63

%

9.94

%

Contact

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