Lakeland Financial Reports Record Performance

Quarterly and Annual Net Income and Earnings per Share Set New Highs


WARSAW, Ind., Jan. 27, 2020 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq Global Select/LKFN), parent company of Lake City Bank, today reported full year net income of $87.0 million, which represents an increase of $6.6 million or 8% compared with net income of $80.4 million for 2018. Diluted earnings per share also increased 8% to $3.38 compared to $3.13 for 2018. This per share performance also represents a record for the company and its shareholders.

The company further reported record quarterly net income of $22.2 million for the three months ended December 31, 2019 versus $21.4 million for the comparable period of 2018, an increase of 4%. Diluted net income per common share was also a record for the quarter and increased 4% to $0.86 for the three months ended December 31, 2019 versus $0.83 for the comparable period of 2018.

David M. Findlay, President and Chief Executive Officer commented, “2019 represents the tenth consecutive year of reporting record net income and earnings per share performance. In addition, we have reported record net income in 30 of the last 31 years. We are proud of the Lake City Bank team’s ability to produce consistently strong performance over the last three decades. It’s a reflection of our unwavering commitment to our team, our communities and our clients and an affirmation of our execution-driven culture.”

Highlights for the year and quarter are noted below.

Full year 2019 versus 2018 highlights:

  • Return on average assets of 1.76%, up from 1.69%
  • Return on average equity of 15.47% compared to 16.51%
  • Organic average loan growth of $131 million
  • Average deposit growth of $149 million
  • Net interest income increase of $3.8 million, or 2%
  • Net interest margin of 3.38% compared to 3.43%
  • Noninterest income increase of $4.7 million, or 12%
  • Revenue growth of $8.5 million, or 4%
  • Pretax net income growth of $8.4 million, or 9%
  • Net charge-offs to average loans of 0.03%, down from 0.13% a year ago
  • Total equity and tangible common equity1 increase of $76 million,  or 15%

4th Quarter 2019 versus 4th Quarter 2018 highlights:

  • Return on average assets of 1.77%, up from 1.75%
  • Return on average equity of 14.90% compared to 16.76%
  • Organic loan growth of $151 million, or 4%
  • Core deposit growth of $141 million, or 4%
  • Noninterest income increase of $1.0 million, or 10%
  • Noninterest expense decrease of $402,000, or 2%
  • Net income increase of $835,000, or 4%
  • Average total equity increase of $86 million, or 17%

4th Quarter 2019 versus 3rd Quarter 2019 highlights:

  • Return on average assets of 1.77%, compared to 1.72%
  • Return on average equity of 14.90% compared to 14.78%
  • Organic loan growth of $43 million or 1%
  • Noninterest income increase of $354,000, or 3%
  • Noninterest expense decrease of $615,000, or 3%
  • Provision expense of $250,000 compared to $1.0 million
  • Nonperforming assets to total assets of 0.38% versus 0.39%
  • Total equity and tangible common equity1 increase of $14 million,  or 2%

As announced on January 14, 2020, the board of directors approved a cash dividend for the fourth quarter of $0.30 per share, payable on February 5, 2020, to shareholders of record as of January 25, 2020. Including this dividend, the total dividends per share for 2019 represent a 16% increase over the total dividends per share paid for 2018.

In addition, on January 14, 2020, the board of directors reauthorized the purchase of up to $30 million worth of shares of the company’s common stock, representing approximately 2.4% of the company’s issued and outstanding shares of common stock as of December 31, 2019.

Return on average assets was 1.76% in 2019 compared to 1.69% in 2018. Return on average total equity for the year ended December 31, 2019 was 15.47%, compared to 16.51% in 2018. The company’s total capital as a percent of risk-weighted assets was 14.36% at December 31, 2019, compared to 14.20% at December 31, 2018 and 14.78% at September 30, 2019. The company’s tangible common equity to tangible assets ratio1 was 12.02% at December 31, 2019, compared to 10.63% at December 31, 2018 and 11.74% at September 30, 2019. Average equity was impacted during 2019 by the $18.3 million increase in the fair value adjustment for available-for-sale investment securities, net of tax.

Findlay continued, “The strength of our capital structure provides us with foundation for continued growth. Our strong profitability metrics reflect our ability to manage our capital structure conservatively while at the same time producing healthy returns for our shareholders.”

Average total loans for 2019 were $3.97 billion, an increase of $130.6 million, or 3%, versus $3.84 billion for 2018. Total loans outstanding grew $151.1 million, or 4%, from $3.91 billion as of December 31, 2018 to $4.07 billion as of December 31, 2019. On a linked quarter basis, total loans grew $42.6 million, or 1%, from $4.02 billion at September 30, 2019. Average total loans for the fourth quarter of 2019 were $4.00 billion, an increase of $96.1 million, or 2%, versus $3.91 billion for the comparable period of 2018. On a linked quarter basis, total average loans decreased by $14.1 million, from $4.02 billion for the third quarter of 2019 to $4.00 billion for the fourth quarter of 2019.

Average total deposits for 2019 were $4.24 billion, an increase of $148.6 million, or 4%, versus $4.09 billion for 2018. Importantly, average core deposits increased by 5% or $201.3 million, during 2019 to $4.1 billion from $3.9 billion in 2018 due to growth in average commercial deposits of $211.5 million, or 21%, growth in average retail deposits of $104.4 million, or 7%, offset by a decline in public funds of $114.6 million, or 8%.

Total deposits grew $89.8 million, or 2%, from $4.04 billion as of December 31, 2018 to $4.13 billion as of December 31, 2019. In addition, total core deposits, which exclude brokered deposits, increased $141.1 million, or 4%, from $3.88 billion at December 31, 2018 to $4.02 billion at December 31, 2019 due to growth in commercial deposits of $199.5 million, or 19%, growth in retail deposits of $30.9 million, or 2%, offset by declines in public fund deposits of $89.3 million, or 7%. Brokered deposits decreased by $51.4 million or 31% from $164.9 million at December 31, 2018 to $113.5 million at December 31, 2019 due primarily to the maturity of brokered certificates of deposit that were not renewed during the year.

Findlay added, “Commercial deposit growth continues to be a highlight in our deposit gathering results. Over the two year period ended December 31, 2019, new commercial deposit accounts represent 70% of commercial checking account growth. Organic deposit growth funded our organic loan growth this year and afforded us the liquidity to redeem our $30 million of trust preferred subordinated notes at the end of the year. ”

The company’s net interest margin decreased five basis points to 3.38% for 2019 compared to 3.43% for 2018. The company’s net interest margin was 3.30% in the fourth quarter of 2019 versus 3.52% for the fourth quarter of 2018 and 3.38% during the third quarter 2019. The lower year-to-date margin in 2019 was due to a higher cost of funds and lower yields on investment securities, partially offset by a higher yield on the company’s loan portfolio. The decline in the investment securities yield was due to the combined effect of the flattening, and at times inverted, yield curve and the overall decline interest rates experienced during the second half of 2019.

Net interest income increased $3.8 million, or 2%, to $155.0 million in 2019, versus $151.3 million in 2018 due to growth in earning assets during the year offset by net interest margin compression. Net interest margin was negatively impacted by the Federal Reserve Bank’s reduction of the target fed funds rate in July, September and October of 2019. Net interest income decreased $708,000, or 2%, to $38.9 million in the fourth quarter of 2019, versus $39.6 million in the fourth quarter of 2018. On a linked quarter basis, net interest income decreased by $663,000 from $39.5 million, or 2%.

The company recorded a provision for loan losses of $3.2 million in 2019 compared to $6.4 million in 2018. The company recorded a provision for loan losses of $250,000 in the fourth quarter of 2019, versus $300,000 in the fourth quarter of 2018 and $1.0 million in the third quarter of 2019. The company’s allowance for loan losses as of December 31, 2019 was $50.7 million compared to $48.5 million as of December 31, 2018 and $50.6 million as of September 30, 2019. The allowance for loan losses represented 1.25% of total loans as of December 31, 2019 versus 1.24% at December 31, 2018 and 1.26% as of September 30, 2019.

Net charge offs were $1.0 million in 2019 versus $5.1 million in 2018. Net charge offs for the fourth quarter of 2019 were $226,000 versus net charge offs of $189,000 in the fourth quarter of 2018 and net charge offs of $936,000 during the linked third quarter 2019. Net charge offs to average loans were 0.03% in 2019 compared to 0.13% for 2018. Annualized net charge offs to average loans were 0.02% for the fourth quarters of 2019 and 2018. Annualized net charge offs to average loans were 0.09% for the linked third quarter of 2019.

Nonperforming assets increased $11.5 million, or 151%, to $19.0 million as of December 31, 2019 versus $7.6 million as of December 31, 2018 due to an increase in nonaccrual loans. On a linked quarter basis, nonperforming assets were $250,000, or 1% lower than the $19.3 million reported as of September 30, 2019. The ratio of nonperforming assets to total assets at December 31, 2019 increased to 0.38% from 0.16% at December 31, 2018 and decreased from 0.39% at September 30, 2019.

Findlay noted, “Asset quality and general economic conditions in our markets are stable. We are particularly encouraged by the $23 million decline in watch list loans as compared to the recent third quarter. Although loan demand is softer than we have historically experienced, we do not see any signs of a credit downturn in our footprint.”

The company adopted the FASB’s new rule related to credit losses on financial instruments on January 1, 2020. The company intends to disclose an updated range of impact upon adoption of this new standard in its upcoming Form 10-K for the year ended December 31, 2019, based on the company’s loan portfolio composition as of December 31, 2019.

The company’s noninterest income increased $4.7 million, or 12%, to $45.0 million in 2019, compared to $40.3 million in 2018. The company’s noninterest income increased by $1.0 million, or 10%, to $11.1 million for the fourth quarter of 2019, compared to $10.1 million for the fourth quarter of 2018. Noninterest income increased by $354,000, or 3% from $10.8 million during the linked third quarter of 2019 due to increased revenue from swap fees generated from commercial lending transactions, mortgage banking income and 10% growth in wealth advisory fees during the quarter. For the full year of 2019, noninterest income was positively impacted by increases in other income driven by swap fees generated from commercial lending transactions, increases in bank owned life insurance income, loan and service fees, mortgage banking income, and wealth advisory and brokerage fees due to continued growth of client relationships. Offsetting the increases was a decrease in service charges on deposit accounts driven by lower treasury management fees due to the previously disclosed discontinuance of a treasury management relationship in July 2019.

The company’s noninterest expense increased $3.2 million, or 4%, to $89.4 million in 2019 compared to $86.2 million in 2018. The company’s noninterest expense decreased $402,000, or 2%, to $22.1 million in the fourth quarter of 2019, compared to $22.5 million in the fourth quarter of 2018 and was lower by $615,000, or 3%, on a linked quarter basis. Salaries and employee benefits increased during 2019 primarily due to an increase to staffing in revenue producing and risk management areas as well as normal merit increases. Professional fees increased due to higher legal expenses and increased utilization of accounting firms for outsourced services. Data processing fees also increased during 2019 primarily due to the company’s continued investment in customer focused, technology-based solutions and ongoing cybersecurity and data management enhancements. Offsetting these increases were decreases in FDIC insurance and other regulatory fees as well as decreases in corporate and business development expense. In the third quarter of 2019, the FDIC announced that due to the Deposit Insurance Fund reserve ratio exceeding 1.38%, banks with consolidated assets of less than $10 billion would receive credits against their deposit insurance assessments. The bank’s $1.1 million credit was applied as a reduction of FDIC assessments commencing with the payment of the second quarter assessment paid in July 2019 and is expected to be fully utilized by the first quarter of 2020.

The company’s efficiency ratio was 44.7% for 2019 compared to 45.0% for 2018. The company’s efficiency ratio was 44.2% for the fourth quarter of 2019, compared to 45.4% for the fourth quarter of 2018 and 45.2% for the linked third quarter of 2019.

Lakeland Financial Corporation is a $5.0 billion bank holding company headquartered in Warsaw, Indiana. Lake City Bank, its single bank subsidiary, is the sixth 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 policies and those identified in the company’s filings with the Securities and Exchange Commission, including the company’s Annual Report on Form 10-K and Quarterly Report on Form 10-Q.

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

LAKELAND FINANCIAL CORPORATION
FOURTH QUARTER 2019 FINANCIAL HIGHLIGHTS
 Three Months Ended Twelve Months Ended 
(Unaudited – Dollars in thousands, except per share data)Dec. 31, Sep. 30, Dec. 31, Dec. 31, Dec. 31, 
END OF PERIOD BALANCES 2019  2019  2018  2019  2018 
Assets$  4,946,745  $4,948,155 $4,875,254 $  4,946,745  $4,875,254 
Deposits   4,133,819   4,283,390  4,044,065    4,133,819   4,044,065 
Brokered Deposits   113,527   116,698  164,888    113,527   164,888 
Core Deposits (3)   4,020,292   4,166,692  3,879,177    4,020,292   3,879,177 
Loans   4,065,828   4,023,221  3,914,745    4,065,828   3,914,745 
Allowance for Loan Losses   50,652   50,628  48,453    50,652   48,453 
Total Equity   598,100   584,436  521,704    598,100   521,704 
Goodwill net of deferred tax assets   3,789   3,779  3,779    3,789   3,779 
Tangible Common Equity (1)   594,311   580,657  517,925    594,311   517,925 
AVERAGE BALANCES          
Total Assets$  4,981,989  $4,941,503 $4,837,604 $  4,941,904  $4,758,392 
Earning Assets   4,748,361   4,698,937  4,523,304    4,656,707   4,461,366 
Investments - available-for-sale   610,947   614,784  573,073    603,580   562,385 
Loans   4,001,640   4,015,773  3,905,511    3,974,532   3,843,912 
Total Deposits   4,308,623   4,267,708  4,163,118    4,242,524   4,093,894 
Interest Bearing Deposits   3,302,593   3,306,638  3,256,930    3,298,406   3,235,867 
Interest Bearing Liabilities   3,336,343   3,356,436  3,390,159    3,390,512   3,382,507 
Total Equity   591,193   575,865  505,570    562,601   487,062 
INCOME STATEMENT DATA          
Net Interest Income$  38,882  $39,545 $39,590 $  155,047  $151,271 
Net Interest Income-Fully Tax Equivalent   39,459   40,084  40,091    157,176   153,088 
Provision for Loan Losses   250   1,000  300    3,235   6,400 
Noninterest Income   11,119   10,765  10,077    44,997   40,302 
Noninterest Expense   22,122   22,737  22,524    89,424   86,229 
Net Income   22,198   21,454  21,363    87,047   80,411 
PER SHARE DATA          
Basic Net Income Per Common Share$  0.86  $0.84 $0.84 $  3.40  $3.18 
Diluted Net Income Per Common Share   0.86   0.83  0.83    3.38   3.13 
Cash Dividends Declared Per Common Share   0.30   0.30  0.26    1.16   1.00 
Dividend Payout   34.88 % 36.14% 31.33%   34.32 % 31.95%
Book Value Per Common Share (equity per share issued)   23.34   22.81  20.62    23.34   20.62 
Tangible Book Value Per Common Share (1)   23.19   22.66  20.47    23.19   20.47 
Market Value – High   50.00   47.46  47.41    50.00   51.76 
Market Value – Low   42.00   41.26  37.79    39.78   37.79 
Basic Weighted Average Common Shares Outstanding   25,623,016   25,622,338  25,301,732    25,588,404   25,288,533 
Diluted Weighted Average Common Shares Outstanding   25,818,433   25,796,696  25,746,490    25,758,893   25,727,831 
KEY RATIOS          
Return on Average Assets   1.77 % 1.72% 1.75%   1.76 % 1.69%
Return on Average Total Equity   14.90   14.78  16.76    15.47   16.51 
Average Equity to Average Assets   11.87   11.65  10.45    11.38   10.24 
Net Interest Margin   3.30   3.38  3.52    3.38   3.43 
Efficiency  (Noninterest Expense / Net Interest Income plus Noninterest Income)   44.24   45.19  45.38    44.70   44.96 
Tier 1 Leverage (2)   11.67   12.07  11.44    11.67   11.44 
Tier 1 Risk-Based Capital (2)   13.21   13.62  13.05    13.21   13.05 
Common Equity Tier 1 (CET1) (2)   13.21   12.94  12.35    13.21   12.35 
Total Capital (2)   14.36   14.78  14.20    14.36   14.20 
Tangible Capital (1) (2)   12.02   11.74  10.63    12.02   10.63 
ASSET QUALITY           
Loans Past Due 30 - 89 Days$  1,471  $922 $10,020 $  1,471  $10,020 
Loans Past Due 90 Days or More   45   306  0    45   0 
Non-accrual Loans   18,675   18,657  7,260    18,675   7,260 
Nonperforming Loans (includes nonperforming TDRs)   18,720   18,963  7,260    18,720   7,260 
Other Real Estate Owned   316   316  316    316   316 
Other Nonperforming Assets   0   7  0    0   0 
Total Nonperforming Assets   19,036   19,286  7,577    19,036   7,577 
Performing Troubled Debt Restructurings   5,909   5,975  8,016    5,909   8,016 
Nonperforming Troubled Debt Restructurings (included in nonperforming loans)   3,188   3,422  4,384    3,188   4,384 
Total Troubled Debt Restructurings   9,097   9,397  12,400    9,097   12,400 
Impaired Loans   27,763   28,070  26,661    27,763   26,661 
Non-Impaired Watch List Loans   152,421   174,768  159,938    152,421   159,938 
Total Impaired and Watch List Loans   180,184   202,838  186,599    180,184   186,599 
Gross Charge Offs   321   1,221  424    1,910   6,110 
Recoveries   95   285  235    874   1,043 
Net Charge Offs/(Recoveries)   226   936  189    1,036   5,067 
Net Charge Offs/(Recoveries) to Average Loans   0.02 % 0.09% 0.02%   0.03 % 0.13%
Loan Loss Reserve to Loans   1.25 % 1.26% 1.24%   1.25 % 1.24%
Loan Loss Reserve to Nonperforming Loans   270.58 % 266.98% 667.40%   270.58 % 667.40%
Loan Loss Reserve to Nonperforming Loans and Performing TDRs   205.66 % 203.02% 317.17%   205.66 % 317.17%
Nonperforming Loans to Loans   0.46 % 0.47% 0.19%   0.46 % 0.19%
Nonperforming Assets to Assets   0.38 % 0.39% 0.16%   0.38 % 0.16%
Total Impaired and Watch List Loans to Total Loans   4.43 % 5.04% 4.77%   4.43 % 4.77%
OTHER DATA          
Full Time Equivalent Employees   568   561  553    568   553 
Offices   50   50  49    50   49 
           
(1) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Financial Measures"          
(2) Capital ratios for December 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)
 December 31, December 31,
  2019   2018 
 (Unaudited)  
ASSETS   
Cash and due from banks$  68,605   $192,290 
Short-term investments 30,776    24,632 
Total cash and cash equivalents 99,381    216,922 
    
Securities available-for-sale (carried at fair value) 608,233    585,549 
Real estate mortgage loans held-for-sale 4,527    2,293 
    
Loans, net of allowance for loan losses of $50,652 and $48,453 4,015,176    3,866,292 
    
Land, premises and equipment, net 60,154    58,097 
Bank owned life insurance 83,848    77,106 
Federal Reserve and Federal Home Loan Bank stock 13,772    13,772 
Accrued interest receivable 15,391    15,518 
Goodwill 4,970    4,970 
Other assets 41,293    34,735 
Total assets$  4,946,745   $4,875,254 
    
    
LIABILITIES   
Noninterest bearing deposits$  983,307   $946,838 
Interest bearing deposits 3,150,512    3,097,227 
Total deposits 4,133,819    4,044,065 
    
Borrowings   
Securities sold under agreements to repurchase 0    75,555 
Federal Home Loan Bank advances 170,000    170,000 
Subordinated debentures 0    30,928 
Total borrowings 170,000    276,483 
    
Accrued interest payable 11,604    10,404 
Other liabilities 33,222    22,598 
Total liabilities 4,348,645    4,353,550 
    
STOCKHOLDERS' EQUITY   
Common stock:  90,000,000 shares authorized, no par value   
25,623,016 shares issued and 25,444,275 outstanding as of December 31, 2019   
25,301,732 shares issued and 25,128,773 outstanding as of December 31, 2018 114,858    112,383 
Retained earnings 475,247    419,179 
Accumulated other comprehensive income (loss) 12,059    (6,191)
Treasury stock at cost (178,741 shares as of December 31, 2019, 172,959 shares as of December 31, 2018) (4,153)  (3,756)
Total stockholders' equity 598,011    521,615 
Noncontrolling interest 89    89 
Total equity 598,100    521,704 
Total liabilities and equity$  4,946,745   $4,875,254 
    


CONSOLIDATED STATEMENTS OF INCOME (unaudited - in thousands, except share and per share data)    
 Three Months Ended Twelve Months Ended
 December 31, December 31,
  2019  2018   2019  2018 
NET INTEREST INCOME       
Interest and fees on loans       
Taxable$47,639 $49,091  $196,733 $181,451 
Tax exempt 231  187   951  814 
Interest and dividends on securities       
Taxable 1,953  2,516   8,909  9,717 
Tax exempt 1,956  1,712   7,127  6,079 
Other interest income 533  222   1,490  909 
Total interest income 52,312  53,728   215,210  198,970 
        
Interest on deposits 13,017  13,425   57,148  44,913 
Interest on borrowings       
Short-term 16  282   1,311  1,143 
Long-term 397  431   1,704  1,643 
Total interest expense 13,430  14,138   60,163  47,699 
        
NET INTEREST INCOME 38,882  39,590   155,047  151,271 
        
Provision for loan losses 250  300   3,235  6,400 
        
NET INTEREST INCOME AFTER PROVISION FOR       
LOAN LOSSES 38,632  39,290   151,812  144,871 
        
NONINTEREST INCOME       
Wealth advisory fees 1,833  1,668   6,835  6,344 
Investment brokerage fees 387  415   1,687  1,458 
Service charges on deposit accounts 2,926  4,289   15,717  15,831 
Loan and service fees 2,508  2,366   9,911  9,291 
Merchant card fee income 659  627   2,641  2,461 
Bank owned life insurance income 644  67   1,890  1,244 
Mortgage banking income 370  152   1,626  1,150 
Net securities gains (losses) 48  (44)  142  (50)
Other income 1,744  537   4,548  2,573 
Total noninterest income 11,119   10,077   44,997   40,302 
        
NONINTEREST EXPENSE       
Salaries and employee benefits 12,203  12,086   49,434  48,353 
Net occupancy expense 1,295  1,257   5,295  5,149 
Equipment costs 1,378  1,403   5,521  5,243 
Data processing fees and supplies 2,788  2,393   10,407  9,685 
Corporate and business development 995  1,996   4,371  5,066 
FDIC insurance and other regulatory fees 72  419   638  1,701 
Professional fees 1,157  1,082   4,644  3,798 
Other expense 2,234  1,888   9,114  7,234 
Total noninterest expense 22,122  22,524   89,424  86,229 
        
INCOME BEFORE INCOME TAX EXPENSE 27,629  26,843   107,385   98,944 
Income tax expense 5,431  5,480   20,338   18,533 
NET INCOME$22,198 $21,363  $87,047  $80,411 
        
BASIC WEIGHTED AVERAGE COMMON SHARES 25,623,016  25,301,732   25,588,404   25,288,533 
BASIC EARNINGS PER COMMON SHARE$0.86 $0.84  $3.40  $3.18 
DILUTED WEIGHTED AVERAGE COMMON SHARES 25,818,433  25,746,490   25,758,893   25,727,831 
DILUTED EARNINGS PER COMMON SHARE$0.86 $0.83  $3.38  $3.13 
        


LAKELAND FINANCIAL CORPORATION
LOAN DETAIL
FOURTH QUARTER 2019
(unaudited, in thousands)
          
 December 31,September 30,December 31,
  2019 2019 2018
Commercial and industrial loans:         
Working capital lines of credit loans$717,019 17.6%$730,557 18.2%$690,620 17.6%
Non-working capital loans 709,849 17.5  701,773 17.4  714,759 18.3 
Total commercial and industrial loans 1,426,868 35.1  1,432,330 35.6  1,405,379 35.9 
          
Commercial real estate and multi-family residential loans:         
Construction and land development loans 287,641 7.1  319,420 7.9  266,805 6.8 
Owner occupied loans 573,665 14.1  556,536 13.8  586,325 15.0 
Nonowner occupied loans 571,364 14.0  545,444 13.5  520,901 13.3 
Multifamily loans 240,652 5.9  259,408 6.5  195,604 5.0 
Total commercial real estate and multi-family residential loans 1,673,322 41.1  1,680,808 41.7  1,569,635 40.1 
          
Agri-business and agricultural loans:         
Loans secured by farmland 174,380 4.3  176,024 4.4  177,503 4.6 
Loans for agricultural production 205,151 5.0  153,943 3.8  193,010 4.9 
Total agri-business and agricultural loans 379,531 9.3  329,967 8.2  370,513 9.5 
          
Other commercial loans 112,302 2.8  100,100 2.5  95,657 2.4 
Total commercial loans 3,592,023 88.3  3,543,205 88.0  3,441,184 87.9 
          
Consumer 1-4 family mortgage loans:         
Closed end first mortgage loans 177,227 4.4  187,404 4.6  185,822 4.7 
Open end and junior lien loans 186,552 4.6  191,597 4.8  187,030 4.8 
Residential construction and land development loans 12,966 0.3  11,774 0.3  16,226 0.4 
Total consumer 1-4 family mortgage loans 376,745 9.3  390,775 9.7  389,078 9.9 
          
Other consumer loans 98,617 2.4  90,631 2.3  86,064 2.2 
Total consumer loans 475,362 11.7  481,406 12.0  475,142 12.1 
Subtotal 4,067,385 100.0% 4,024,611 100.0% 3,916,326 100.0%
Less:  Allowance for loan losses (50,652)   (50,628)   (48,453)  
Net deferred loan fees (1,557)   (1,390)   (1,581)  
Loans, net$4,015,176   $3,972,593   $3,866,292   
          
          
          
LAKELAND FINANCIAL CORPORATION  
DEPOSITS AND BORROWINGS  
FOURTH QUARTER 2019  
(unaudited, in thousands)  
          
 December 31,  September 30,  December 31,  
  2019    2019    2018   
Noninterest bearing demand deposits$983,307   $1,011,336   $946,838   
Savings and transaction accounts:         
Savings deposits 234,508    237,997    247,903   
Interest bearing demand deposits 1,723,937    1,650,691    1,429,570   
Time deposits:         
Deposits of $100,000 or more 910,134    1,101,730    1,146,221   
Other time deposits 281,933    281,636    273,533   
Total deposits$4,133,819   $4,283,390   $4,044,065   
FHLB advances and other borrowings 170,000    30,928    276,483   
Total funding sources$4,303,819   $4,314,318   $4,320,548   
          

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

 Three Months Ended  Three Months Ended  Three Months Ended 
 December 31, 2019  September 30, 2019  December 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)$3,977,782  $47,639 4.75% $3,991,572  $50,139 4.98% $3,884,500  $49,091 5.01%
Tax exempt (1) 23,858   288 4.79   24,201   292 4.78   21,011   234 4.42 
Investments: (1)                    
Available for sale 610,947   4,429 2.88   614,784   4,509 2.91   573,073   4,682 3.24 
Short-term investments 54,439   339 2.47   3,478   16 1.83   3,350   15 1.78 
Interest bearing deposits 81,335   194 0.95   64,902   352 2.15   41,370   207 1.99 
Total earning assets$4,748,361  $52,889 4.42% $4,698,937  $55,308 4.67% $4,523,304  $54,229 4.76%
Less:  Allowance for loan losses (50,753)       (50,732)       (49,045)     
Nonearning Assets                    
Cash and due from banks 65,294        77,921        156,681      
Premises and equipment 59,850        59,268        57,516      
Other nonearning assets 159,237        156,109        149,148      
Total assets$4,981,989       $4,941,503       $4,837,604      
                     
Interest Bearing Liabilities                    
Savings deposits$237,241  $55 0.09% $235,957  $62 0.10% $250,755  $76 0.12%
Interest bearing checking accounts 1,764,854   5,765 1.30   1,667,690   6,712 1.60   1,476,013   5,498 1.48 
Time deposits:                    
In denominations under $100,000 282,683   1,422 2.00   278,598   1,383 1.97   272,192   1,168 1.70 
In denominations over $100,000 1,017,815   5,775 2.25   1,124,393   6,535 2.31   1,257,970   6,683 2.11 
Miscellaneous short-term borrowings 3,495    16  1.82   18,870   113 2.38   102,301   282 1.09 
Long-term borrowings and                    
subordinated debentures 30,255    397  5.21   30,928   419 5.37   30,928   431 5.53 
Total interest bearing liabilities$3,336,343   $13,430  1.60% $3,356,436  $15,224 1.80% $3,390,159  $14,138 1.65%
Noninterest Bearing Liabilities                    
Demand deposits 1,006,030         961,070        906,188      
Other liabilities 48,423         48,132        35,687      
Stockholders' Equity 591,193         575,865        505,570      
Total liabilities and stockholders' equity$4,981,989        $4,941,503       $4,837,604      
                     
Interest Margin Recap                    
Interest income/average earning assets   52,889  4.42     55,308 4.67     54,229 4.76 
Interest expense/average earning assets   13,430  1.12     15,224 1.29     14,138 1.24 
Net interest income and margin  $39,459  3.30%   $40,084 3.38%   $40,091 3.52%
                     


(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 $577,000, $539,000 and $501,000 in the three-month periods ended December 31, 2019, September 30, 2019 and December 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 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 issued. 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 Twelve Months Ended 
 Dec. 31, Sep. 30, Dec. 31, Dec 31, Dec. 31, 
  2019   2019   2018   2019   2018  
Total Equity$598,100  $584,436  $521,704  $598,100  $521,704  
Less: Goodwill (4,970)  (4,970)  (4,970)  (4,970)  (4,970) 
Plus: Deferred tax assets related to goodwill 1,181   1,191   1,191   1,181   1,191  
Tangible Common Equity 594,311   580,657   517,925   594,311   517,925  
           
Assets$4,946,745  $4,948,155  $4,875,254  $4,946,745  $4,875,254  
Less: Goodwill (4,970)  (4,970)  (4,970)  (4,970)  (4,970) 
Plus: Deferred tax assets related to goodwill 1,181   1,191   1,191   1,181   1,191  
Tangible Assets 4,942,956   4,944,376   4,871,475   4,942,956   4,871,475  
           
Ending common shares issued 25,623,016   25,623,016   25,301,732   25,623,016   25,301,732  
           
Tangible Book Value Per Common Share$23.19  $22.66  $20.47  $23.19  $20.47  
           
Tangible Common Equity/Tangible Assets 12.02 % 11.74 % 10.63 % 12.02 % 10.63 %
           

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


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