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