WARSAW, Ind., April 25, 2018 (GLOBE NEWSWIRE) --
Lakeland Financial Corporation (Nasdaq:LKFN), parent company of Lake City Bank, today reported record first quarter net income of $18.3 million for the three months ended March 31, an increase of 26% versus $14.5 million for the first quarter of 2017. Diluted earnings per share increased 25% to $0.71 for the first quarter of 2018, versus $0.57 for the first quarter of 2017, representing a record quarter for the company and its shareholders. On a linked quarter basis, net income increased 58% or $6.7 million from the fourth quarter ended December 31, 2017, which had net income of $11.6 million and $0.45 diluted earnings per share. Results for the fourth quarter of 2017 included a $4.1 million income tax provision related to revaluing the company’s net deferred tax asset position as a result of the tax bill enacted at the end of the year.
David M. Findlay, President and CEO commented, “Lake City Bank’s strong first quarter performance was highlighted by the record net income for the quarter, but we are particularly proud of the healthy loan and deposit growth in the quarter. Our ability to consistently produce performance for our shareholders begins with balance sheet growth and this represents a good start to 2018.”
Highlights for the quarter are noted below.
1st Quarter 2018 versus 1st Quarter 2017 highlights:
- Organic average loan growth of $283 million or 8%
- Average deposit growth of $458 million or 13%
- Net interest income increase of $4.2 million or 13%
- Net interest margin increase of 9 basis points to 3.36%
- Revenue growth of $5.8 million or 14%
- Tangible common equity1 increase of $35.5 million or 8%
1st Quarter 2018 versus 4th Quarter 2017 highlights:
- Organic average loan growth of $64 million or 2%
- Average deposit growth of $105 million or 3%
- Net interest income increase of $831,000 or 2%
- Revenue growth of $1.2 million or 3%
- Tangible common equity1 increase of $4.7 million or 1%
As announced on April 10, 2018, the board of directors approved a cash dividend for the first quarter of $0.26 per share, payable on May 7, 2018, to shareholders of record as of April 25, 2018. The first quarter dividend per share represents an 18% increase over the dividend rate paid in the prior four quarters of $0.22 per share.
Findlay added, “Dividends represent a critical component of our shareholder value equation, and this 18% increase is made possible by our consistent long-term ability to produce quality earnings that contribute to a strong capital base.”
Return on average total equity for the first quarter of 2018 was 15.82%, compared to 13.63% in the first quarter of 2017 and 9.87% in the linked fourth quarter of 2017. Return on average assets for the first quarter of 2018 was 1.58%, compared to 1.37% in the first quarter of 2017 and 1.00% in the linked fourth quarter of 2017. The company’s total capital as a percent of risk-weighted assets was 13.41% at March 31, 2018, compared to 13.31% at March 31, 2017 and 13.26% at December 31, 2017. The company’s tangible common equity to tangible assets ratio1 was 9.94% at March 31, 2018, compared to 10.06% at March 31, 2017 and 9.93% at December 31, 2017.
Average total loans for the first quarter of 2018 were $3.79 billion, an increase of $282.8 million, or 8%, versus $3.51 billion for the first quarter 2017. On a linked quarter basis, total average loans grew $64.0 million, or 2%, from $3.73 billion at December 31, 2017. Total loans outstanding grew $313.4 million, or 9%, from $3.53 billion as of March 31, 2017 to $3.85 billion as of March 31, 2018.
Average total deposits for the first quarter of 2018 were $4.09 billion, an increase of $457.7 million, or 13%, versus $3.64 billion for the first quarter of 2017. On a linked quarter basis, total average deposits grew $105.3 million or 3% from $3.99 billion at December 31, 2017. Total deposits grew $420.1 million, or 11%, from $3.68 billion as of March 31, 2017 to $4.10 billion as of March 31, 2018. In addition, total core deposits, which exclude brokered deposits, increased $328.4 million, or 9%, from $3.54 billion at March 31, 2017 to $3.87 billion at March 31, 2018 due to growth in retail deposits of $165.6 million or 11%, growth in commercial deposits of $105.3 million or 12% and growth in public fund deposits of $57.6 million or 5%.
“We’re committed to a deposit growth strategy over all deposit categories and are particularly pleased that our non-interest bearing demand deposits increased 13% on a year over year basis. In addition, our focus on core deposit growth has translated into double digit growth in both our retail and commercial deposit client bases on a year over year basis,” Findlay observed.
The company’s net interest margin increased nine basis points to 3.36% for the first quarter of 2018 compared to 3.27% for the first quarter of 2017. The higher margin in the first quarter of 2018 was due to higher yields on loans, partially offset by a higher cost of funds. On a linked quarter basis, the net interest margin improved by three basis points from 3.33% in the fourth quarter of 2017 due to the positive impact of Federal Reserve Bank increases in the target Federal Funds Rate in mid-December 2017 and mid-March 2018. Net interest income increased $4.1 million, or 13%, to $36.2 million for the first quarter of 2018, versus $32.1 million in the first quarter of 2017.
The company recorded a provision for loan losses of $3.3 million in the first quarter of 2018, driven by strong loan growth and net charge offs during the quarter. Net charge offs in the quarter were $4.8 million versus net charge offs of $144,000 in the first quarter of 2017 and net charge offs of $226,000 during the linked fourth quarter 2017. Net charge offs included a $4.6 million charge off related to a single commercial borrower. At December 31, 2017, loans to the borrower were current and performing. Late in the first quarter of 2018, the borrower encountered working capital challenges and it became clear to the bank that the borrower was not able to generate sufficient cash flow from operations to fully support its business. As a result, it was determined that full collection of the outstanding loan balance of $6.8 million was not probable and would likely not be repaid. The remaining loan exposure of $2.2 million to this borrower, which is on nonaccrual status, is secured by a blanket lien on all assets, including accounts receivable, land, buildings and equipment. In addition the exposure is supported by personal guarantees and a security interest in undeveloped commercial real estate.
The company’s allowance for loan losses as of March 31, 2018 was $45.6 million compared to $43.8 million as of March 31, 2017 and $47.1 million as of December 31, 2017. The allowance for loan losses represented 1.19% of total loans as of March 31, 2018 versus 1.24% at March 31, 2017 and 1.23% as of December 31, 2017.
Nonperforming assets decreased $797,000, or 7%, to $11.2 million as of March 31, 2018 versus $12.0 million as of March 31, 2017 due to a decrease in loans past due 90 days or more. On a linked quarter basis, nonperforming assets were $1.6 million higher than the $9.5 million reported as of December 31, 2017 primarily due to placing one commercial relationship in nonaccrual status. The ratio of nonperforming assets to total assets at March 31, 2018 decreased to 0.24% from 0.28% at March 31, 2017 and increased from 0.20% at December 31, 2017. Annualized net charge-offs to average loans were 0.51% for the first quarter of 2018 compared to 0.02% for the first quarter of 2017 and 0.02% for the fourth quarter of 2017.
Findlay noted, “We continue to be encouraged by the strength of the general economic conditions in our markets and the bank’s overall credit quality remains stable. While we are disappointed with the notable charge off in the quarter, the factors impacting this borrower’s situation were unique and we believe are not reflective of any broader asset quality concerns.”
The company’s noninterest income increased $1.6 million, or 20%, to $9.9 million for the first quarter of 2018, compared to $8.3 million for the first quarter of 2017. Noninterest income was positively impacted by a 15% increase over the prior year first quarter in recurring fee income for service charges on deposit accounts, primarily due to growth in fees from business accounts. In addition, wealth advisory fees increased by 20% compared to the year ago period due to continued growth of client relationships.
Findlay added, “Effectively expanding our relationships with new and existing clients has contributed to this positive growth in fee-based services of 20%. These value-add products reflect both the adoption of technology by our clients and our ability to build upon existing client relationships with investment and treasury management products and services.”
The company adopted the new revenue recognition accounting standard effective on January 1, 2018 that requires the evaluation of all contracts and the related recognition of revenue. Although the adoption of this standard did not have a significant impact to net income, the evaluation of recording revenue gross versus net did cause some reclassifications of expenses associated with various revenue streams. Adoption of this standard resulted in an increase of $194,000 to the loans and service fee line item and a $70,000 increase to the merchant card fee line item, both due to reclassifications of data processing expenses to non-interest income based on interchange revenue related transactions.
The company’s noninterest expense increased $1.2 million, or 6%, to $21.2 million in the first quarter of 2018, compared to $20.0 million in the first quarter of 2017. Salaries and employee benefits increased primarily due to higher employee health insurance expense, an increase to the company’s minimum hiring wage, special bonuses paid to non-officer employees, and normal merit increases. Data processing fees increased due to the company’s continued investment in technology-based solutions as well as the adoption of the new FASB revenue recognition accounting standard. Corporate and business development expense decreased primarily due to a reduction in contributions as well as lower advertising expenses. The company’s efficiency ratio was 46.0% for the first quarter of 2018, compared to 49.7% for the first quarter of 2017 and 43.7% for the linked fourth quarter of 2017.
The effective tax rate for the first quarter 2018 was 15.1%, compared to 27.7% for the first quarter 2017 and reflects the effect of the Tax Cuts and Jobs Act, which lowered the company’s federal tax rate to 21% from 35%.
Lakeland Financial Corporation is a $4.7 billion bank holding company headquartered in Warsaw, Indiana. Lake City Bank, its single bank subsidiary, is the fourth largest bank headquartered in the state, and the largest bank 100% invested in Indiana. Lake City Bank operates 49 offices in Northern and Central Indiana, delivering technology-driven and client-centric financial services solutions to individuals and businesses.
Information regarding Lakeland Financial Corporation may be accessed on the home page of its subsidiary, Lake City Bank, at lakecitybank.com. The company’s common stock is traded on the Nasdaq Global Select Market under “LKFN.” In addition to the results presented in accordance with generally accepted accounting principles in the United States, this earnings release contains certain non-GAAP financial measures. Lakeland Financial believes that providing non-GAAP financial measures provides investors with information useful to understanding the company’s financial performance. Additionally, these non-GAAP measures are used by management for planning and forecasting purposes, including measures based on “tangible common equity” which is “common stockholders’ equity” excluding intangible assets, net of deferred tax and “tangible assets” which is “assets” excluding intangible assets, net of deferred tax. A reconciliation of these non-GAAP measures to the most comparable GAAP equivalent are included in the attached financial tables where the non-GAAP measures are presented.
This document contains, and future oral and written statements of the company and its management may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of the company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the company’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “continue,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. The company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain and, accordingly, the reader is cautioned not to place undue reliance on any forward-looking statements made by the company. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the company undertakes no obligation to update any statement in light of new information or future events. Additional information concerning the company and its business, including factors that could materially affect the company’s financial results, is included 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 2018 FINANCIAL HIGHLIGHTS | |||||||||
| Three Months Ended | |||||||||
| (Unaudited – Dollars in thousands, except per share data) | Mar. 31, | Dec. 31, | Mar. 31, | ||||||
| END OF PERIOD BALANCES | 2018 | 2017 | 2017 | ||||||
| Assets | $ | 4,726,948 | $ | 4,682,976 | $ | 4,319,103 | |||
| Deposits | 4,099,488 | 4,008,655 | 3,679,397 | ||||||
| Brokered Deposits | 227,260 | 268,976 | 135,595 | ||||||
| Core Deposits | 3,872,228 | 3,739,679 | 3,543,802 | ||||||
| Loans | 3,845,668 | 3,818,459 | 3,532,279 | ||||||
| Allowance for Loan Losses | 45,627 | 47,121 | 43,774 | ||||||
| Total Equity | 473,333 | 468,667 | 437,202 | ||||||
| Goodwill net of deferred tax assets | 3,796 | 3,799 | 3,130 | ||||||
| Tangible Common Equity (1) | 469,537 | 464,868 | 434,072 | ||||||
| AVERAGE BALANCES | |||||||||
| Total Assets | $ | 4,706,726 | $ | 4,598,809 | $ | 4,310,145 | |||
| Earning Assets | 4,421,461 | 4,323,249 | 4,059,885 | ||||||
| Investments | 546,042 | 537,796 | 515,283 | ||||||
| Loans | 3,791,922 | 3,727,967 | 3,509,155 | ||||||
| Total Deposits | 4,094,917 | 3,989,592 | 3,637,170 | ||||||
| Interest Bearing Deposits | 3,253,309 | 3,151,116 | 2,868,675 | ||||||
| Interest Bearing Liabilities | 3,367,104 | 3,266,206 | 3,084,584 | ||||||
| Total Equity | 469,998 | 467,459 | 431,894 | ||||||
| INCOME STATEMENT DATA | |||||||||
| Net Interest Income | $ | 36,223 | $ | 35,392 | $ | 32,061 | |||
| Net Interest Income-Fully Tax Equivalent | 36,632 | 36,231 | 32,733 | ||||||
| Provision for Loan Losses | 3,300 | 1,850 | 200 | ||||||
| Noninterest Income | 9,879 | 9,462 | 8,259 | ||||||
| Noninterest Expense | 21,202 | 19,598 | 20,048 | ||||||
| Net Income | 18,336 | 11,627 | 14,514 | ||||||
| PER SHARE DATA | |||||||||
| Basic Net Income Per Common Share | $ | 0.73 | $ | 0.46 | $ | 0.58 | |||
| Diluted Net Income Per Common Share | 0.71 | 0.45 | 0.57 | ||||||
| Cash Dividends Declared Per Common Share | 0.22 | 0.22 | 0.19 | ||||||
| Dividend Payout | 30.99 | % | 48.89 | % | 33.33 | % | |||
| Book Value Per Common Share (equity per share issued) | 18.71 | 18.6 | 17.36 | ||||||
| Tangible Book Value Per Common Share (1) | 18.56 | 18.45 | 17.24 | ||||||
| Market Value – High | 51.76 | 52.43 | 48.32 | ||||||
| Market Value – Low | 45.01 | 45.26 | 39.68 | ||||||
| Basic Weighted Average Common Shares Outstanding | 25,257,414 | 25,194,903 | 25,152,242 | ||||||
| Diluted Weighted Average Common Shares Outstanding | 25,696,864 | 25,701,337 | 25,596,136 | ||||||
| KEY RATIOS | |||||||||
| Return on Average Assets | 1.58 | % | 1.00 | % | 1.37 | % | |||
| Return on Average Total Equity | 15.82 | 9.87 | 13.63 | ||||||
| Average Equity to Average Assets | 9.99 | 10.16 | 10.02 | ||||||
| Net Interest Margin | 3.36 | 3.33 | 3.27 | ||||||
| Efficiency (Noninterest Expense / Net Interest Income plus Noninterest Income) | 45.99 | 43.69 | 49.72 | ||||||
| Tier 1 Leverage (2) | 10.77 | 10.76 | 10.78 | ||||||
| Tier 1 Risk-Based Capital (2) | 12.30 | 12.10 | 12.16 | ||||||
| Common Equity Tier 1 (CET1) (2) | 11.57 | 11.37 | 11.38 | ||||||
| Total Capital (2) | 13.41 | 13.26 | 13.31 | ||||||
| Tangible Capital (1) (2) | 9.94 | 9.93 | 10.06 | ||||||
| ASSET QUALITY | |||||||||
| Loans Past Due 30 - 89 Days | $ | 2,168 | $ | 9,613 | $ | 1,490 | |||
| Loans Past Due 90 Days or More | 26 | 6 | 1,633 | ||||||
| Non-accrual Loans | 11,002 | 9,401 | 10,185 | ||||||
| Nonperforming Loans (includes nonperforming TDR's) | 11,028 | 9,407 | 11,818 | ||||||
| Other Real Estate Owned | 10 | 40 | 115 | ||||||
| Other Nonperforming Assets | 114 | 55 | 15 | ||||||
| Total Nonperforming Assets | 11,151 | 9,502 | 11,948 | ||||||
| Performing Troubled Debt Restructurings | 4,085 | 2,893 | 10,234 | ||||||
| Nonperforming Troubled Debt Restructurings (included in nonperforming loans) | 7,945 | 7,750 | 7,180 | ||||||
| Total Troubled Debt Restructurings | 12,029 | 10,643 | 17,414 | ||||||
| Impaired Loans | 15,824 | 13,869 | 21,670 | ||||||
| Non-Impaired Watch List Loans | 166,205 | 157,834 | 130,551 | ||||||
| Total Impaired and Watch List Loans | 182,029 | 171,703 | 152,221 | ||||||
| Gross Charge Offs | 4,977 | 625 | 503 | ||||||
| Recoveries | 183 | 399 | 359 | ||||||
| Net Charge Offs/(Recoveries) | 4,794 | 226 | 144 | ||||||
| Net Charge Offs/(Recoveries) to Average Loans | 0.51 | % | 0.02 | % | 0.02 | % | |||
| Loan Loss Reserve to Loans | 1.19 | % | 1.23 | % | 1.24 | % | |||
| Loan Loss Reserve to Nonperforming Loans | 413.75 | % | 500.91 | % | 370.31 | % | |||
| Loan Loss Reserve to Nonperforming Loans and Performing TDR's | 301.92 | % | 383.1 | % | 198.48 | % | |||
| Nonperforming Loans to Loans | 0.29 | % | 0.25 | % | 0.33 | % | |||
| Nonperforming Assets to Assets | 0.24 | % | 0.20 | % | 0.28 | % | |||
| Total Impaired and Watch List Loans to Total Loans | 4.73 | % | 4.5 | % | 4.31 | % | |||
| OTHER DATA | |||||||||
| Full Time Equivalent Employees | 539 | 539 | 528 | ||||||
| Offices | 49 | 49 | 49 | ||||||
| (1) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Financial Measures" | |||||||||
| (2) Capital ratios for March 31, 2018 are preliminary until the Call Report is filed. | |||||||||
| CONSOLIDATED BALANCE SHEETS (in thousands except share data) | |||||||
| March 31, | December 31, | ||||||
| 2018 | 2017 | ||||||
| (Unaudited) | |||||||
| ASSETS | |||||||
| Cash and due from banks | $ | 113,509 | $ | 140,402 | |||
| Short-term investments | 54,042 | 35,778 | |||||
| Total cash and cash equivalents | 167,551 | 176,180 | |||||
| Securities available for sale (carried at fair value) | 560,664 | 538,493 | |||||
| Real estate mortgage loans held for sale | 1,511 | 3,346 | |||||
| Loans, net of allowance for loan losses of $45,627 and $47,121 | 3,800,041 | 3,771,338 | |||||
| Land, premises and equipment, net | 55,737 | 56,466 | |||||
| Bank owned life insurance | 76,109 | 75,879 | |||||
| Federal Reserve and Federal Home Loan Bank stock | 13,772 | 13,772 | |||||
| Accrued interest receivable | 14,616 | 14,093 | |||||
| Goodwill | 4,970 | 4,970 | |||||
| Other assets | 31,977 | 28,439 | |||||
| Total assets | $ | 4,726,948 | $ | 4,682,976 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| LIABILITIES | |||||||
| Noninterest bearing deposits | $ | 858,950 | $ | 885,622 | |||
| Interest bearing deposits | 3,240,538 | 3,123,033 | |||||
| Total deposits | 4,099,488 | 4,008,655 | |||||
| Borrowings | |||||||
| Securities sold under agreements to repurchase | 94,716 | 70,652 | |||||
| Federal Home Loan Bank advances | 0 | 80,030 | |||||
| Subordinated debentures | 30,928 | 30,928 | |||||
| Total borrowings | 125,644 | 181,610 | |||||
| Accrued interest payable | 7,484 | 6,311 | |||||
| Other liabilities | 20,999 | 17,733 | |||||
| Total liabilities | 4,253,615 | 4,214,309 | |||||
| STOCKHOLDERS' EQUITY | |||||||
| Common stock: 90,000,000 shares authorized, no par value | |||||||
| 25,291,582 shares issued and 25,124,441 outstanding as of March 31, 2018 | |||||||
| 25,194,903 shares issued and 25,025,933 outstanding as of December 31, 2017 | 107,860 | 108,862 | |||||
| Retained earnings | 376,782 | 363,794 | |||||
| Accumulated other comprehensive income/(loss) | (7,920 | ) | (670 | ) | |||
| Treasury stock, at cost (2018 - 167,141 shares, 2017 - 168,970 shares) | (3,478 | ) | (3,408 | ) | |||
| Total stockholders' equity | 473,244 | 468,578 | |||||
| Noncontrolling interest | 89 | 89 | |||||
| Total equity | 473,333 | 468,667 | |||||
| Total liabilities and equity | $ | 4,726,948 | $ | 4,682,976 | |||
| CONSOLIDATED STATEMENTS OF INCOME (unaudited - in thousands except share and per share data) | ||||||
| Three Months Ended | ||||||
| March 31, | ||||||
| 2018 | 2017 | |||||
| NET INTEREST INCOME | ||||||
| Interest and fees on loans | ||||||
| Taxable | $ | 41,794 | $ | 34,447 | ||
| Tax exempt | 217 | 150 | ||||
| Interest and dividends on securities | ||||||
| Taxable | 2,434 | 2,320 | ||||
| Tax exempt | 1,331 | 1,162 | ||||
| Interest on short-term investments | 292 | 48 | ||||
| Total interest income | 46,068 | 38,127 | ||||
| Interest on deposits | 9,367 | 5,442 | ||||
| Interest on borrowings | ||||||
| Short-term | 111 | 310 | ||||
| Long-term | 367 | 314 | ||||
| Total interest expense | 9,845 | 6,066 | ||||
| NET INTEREST INCOME | 36,223 | 32,061 | ||||
| Provision for loan losses | 3,300 | 200 | ||||
| NET INTEREST INCOME AFTER PROVISION FOR | ||||||
| LOAN LOSSES | 32,923 | 31,861 | ||||
| NONINTEREST INCOME | ||||||
| Wealth advisory fees | 1,505 | 1,250 | ||||
| Investment brokerage fees | 290 | 321 | ||||
| Service charges on deposit accounts | 3,628 | 3,143 | ||||
| Loan and service fees | 2,177 | 1,893 | ||||
| Merchant card fee income | 642 | 538 | ||||
| Bank owned life insurance income | 363 | 471 | ||||
| Other income | 1,039 | 509 | ||||
| Mortgage banking income | 241 | 131 | ||||
| Net securities gains/(losses) | (6 | ) | 3 | |||
| Total noninterest income | 9,879 | 8,259 | ||||
| NONINTEREST EXPENSE | ||||||
| Salaries and employee benefits | 12,019 | 11,370 | ||||
| Other components of net periodic pension cost | 49 | 51 | ||||
| Net occupancy expense | 1,426 | 1,120 | ||||
| Equipment costs | 1,274 | 1,075 | ||||
| Data processing fees and supplies | 2,513 | 2,016 | ||||
| Corporate and business development | 1,133 | 1,502 | ||||
| FDIC insurance and other regulatory fees | 461 | 434 | ||||
| Professional fees | 872 | 954 | ||||
| Other expense | 1,455 | 1,526 | ||||
| Total noninterest expense | 21,202 | 20,048 | ||||
| INCOME BEFORE INCOME TAX EXPENSE | 21,600 | 20,072 | ||||
| Income tax expense | 3,264 | 5,558 | ||||
| NET INCOME | $ | 18,336 | $ | 14,514 | ||
| BASIC WEIGHTED AVERAGE COMMON SHARES | 25,257,414 | 25,152,242 | ||||
| BASIC EARNINGS PER COMMON SHARE | $ | 0.73 | $ | 0.58 | ||
| DILUTED WEIGHTED AVERAGE COMMON SHARES | 25,696,864 | 25,596,136 | ||||
| DILUTED EARNINGS PER COMMON SHARE | $ | 0.71 | $ | 0.57 | ||
| LAKELAND FINANCIAL CORPORATION | |||||||||||||||
| LOAN DETAIL | |||||||||||||||
| FIRST QUARTER 2018 | |||||||||||||||
| (unaudited in thousands) | |||||||||||||||
| March 31, | December 31, | March 31, | |||||||||||||
| 2018 | 2017 | 2017 | |||||||||||||
| Commercial and industrial loans: | |||||||||||||||
| Working capital lines of credit loans | $ | 778,779 | 20.2 | % | $ | 743,609 | 19.4 | % | $ | 650,691 | 18.4 | % | |||
| Non-working capital loans | 706,228 | 18.4 | 675,072 | 17.7 | 673,374 | 19.1 | |||||||||
| Total commercial and industrial loans | 1,485,007 | 38.6 | 1,418,681 | 37.1 | 1,324,065 | 37.5 | |||||||||
| Commercial real estate and multi-family residential loans: | |||||||||||||||
| Construction and land development loans | 237,887 | 6.2 | 224,474 | 5.9 | 238,018 | 6.7 | |||||||||
| Owner occupied loans | 543,192 | 14.1 | 538,603 | 14.1 | 468,621 | 13.3 | |||||||||
| Nonowner occupied loans | 507,041 | 13.2 | 508,121 | 13.3 | 463,186 | 13.1 | |||||||||
| Multifamily loans | 193,956 | 5.0 | 173,715 | 4.5 | 201,147 | 5.7 | |||||||||
| Total commercial real estate and multi-family residential loans | 1,482,076 | 38.5 | 1,444,913 | 37.8 | 1,370,972 | 38.8 | |||||||||
| Agri-business and agricultural loans: | |||||||||||||||
| Loans secured by farmland | 145,363 | 3.8 | 186,437 | 4.9 | 138,071 | 3.9 | |||||||||
| Loans for agricultural production | 171,607 | 4.5 | 196,404 | 5.1 | 189,516 | 5.4 | |||||||||
| Total agri-business and agricultural loans | 316,970 | 8.3 | 382,841 | 10.0 | 327,587 | 9.3 | |||||||||
| Other commercial loans | 116,657 | 3.0 | 124,076 | 3.3 | 105,684 | 3.0 | |||||||||
| Total commercial loans | 3,400,710 | 88.4 | 3,370,511 | 88.2 | 3,128,308 | 88.6 | |||||||||
| Consumer 1-4 family mortgage loans: | |||||||||||||||
| Closed end first mortgage loans | 180,542 | 4.7 | 179,302 | 4.7 | 166,158 | 4.7 | |||||||||
| Open end and junior lien loans | 179,065 | 4.7 | 181,865 | 4.8 | 167,517 | 4.7 | |||||||||
| Residential construction and land development loans | 13,342 | 0.3 | 13,478 | 0.3 | 10,274 | 0.3 | |||||||||
| Total consumer 1-4 family mortgage loans | 372,949 | 9.7 | 374,645 | 9.8 | 343,949 | 9.7 | |||||||||
| Other consumer loans | 73,277 | 1.9 | 74,369 | 2.0 | 60,881 | 1.7 | |||||||||
| Total consumer loans | 446,226 | 11.6 | 449,014 | 11.8 | 404,830 | 11.4 | |||||||||
| Subtotal | 3,846,936 | 100.0 | % | 3,819,525 | 100.0 | % | 3,533,138 | 100.0 | % | ||||||
| Less: Allowance for loan losses | (45,627 | ) | (47,121 | ) | (43,774 | ) | |||||||||
| Net deferred loan fees | (1,268 | ) | (1,066 | ) | (859 | ) | |||||||||
| Loans, net | $ | 3,800,041 | $ | 3,771,338 | $ | 3,488,505 | |||||||||
| LAKELAND FINANCIAL CORPORATION | |||||||||||||||
| DEPOSITS AND BORROWINGS | |||||||||||||||
| FIRST QUARTER 2018 | |||||||||||||||
| (unaudited in thousands) | |||||||||||||||
| March 31, | December 31, | March 31, | |||||||||||||
| 2018 | 2017 | 2017 | |||||||||||||
| Non-interest bearing demand deposits | $ | 858,950 | $ | 885,622 | $ | 762,575 | |||||||||
| Savings and transaction accounts: | |||||||||||||||
| Savings deposits | 272,472 | 263,570 | 277,148 | ||||||||||||
| Interest bearing demand deposits | 1,491,220 | 1,446,880 | 1,346,651 | ||||||||||||
| Time deposits: | |||||||||||||||
| Deposits of $100,000 or more | 1,216,802 | 1,161,365 | 1,056,025 | ||||||||||||
| Other time deposits | 260,044 | 251,218 | 236,998 | ||||||||||||
| Total deposits | $ | 4,099,488 | $ | 4,008,655 | $ | 3,679,397 | |||||||||
| FHLB advances and other borrowings | 125,644 | 181,610 | 175,734 | ||||||||||||
| Total funding sources | $ | 4,225,132 | $ | 4,190,265 | $ | 3,855,131 | |||||||||
| LAKELAND FINANCIAL CORPORATION | |||||||||||||||||||||||||||||||
| AVERAGE BALANCE SHEET AND NET INTEREST ANALYSIS | |||||||||||||||||||||||||||||||
| (UNAUDITED) | |||||||||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||||
| March 31, 2018 | December 31, 2017 | March 31, 2017 | |||||||||||||||||||||||||||||
| Average | Interest | Yield (1)/ | Average | Interest | Yield (1)/ | Average | Interest | Yield (1)/ | |||||||||||||||||||||||
| (fully tax equivalent basis, dollars in thousands) | Balance | Income | Rate | Balance | Income | Rate | Balance | Income | Rate | ||||||||||||||||||||||
| Earning Assets | |||||||||||||||||||||||||||||||
| Loans: | |||||||||||||||||||||||||||||||
| Taxable (2)(3) | $ | 3,767,300 | $ | 41,794 | 4.50 | % | $ | 3,703,260 | $ | 40,251 | 4.31 | % | $ | 3,491,018 | $ | 34,447 | 4.00 | % | |||||||||||||
| Tax exempt (1) | 24,622 | 272 | 4.48 | 24,707 | 321 | 5.15 | 18,137 | 221 | 4.94 | ||||||||||||||||||||||
| Investments: (1) | |||||||||||||||||||||||||||||||
| Available for sale | 546,042 | 4,119 | 3.06 | 537,796 | 4,272 | 3.15 | 515,283 | 4,083 | 3.21 | ||||||||||||||||||||||
| Short-term investments | 4,579 | 9 | 0.80 | 4,377 | 7 | 0.63 | 5,121 | 5 | 0.40 | ||||||||||||||||||||||
| Interest bearing deposits | 78,918 | 283 | 1.45 | 53,109 | 149 | 1.11 | 30,326 | 43 | 0.58 | ||||||||||||||||||||||
| Total earning assets | $ | 4,421,461 | $ | 46,477 | 4.26 | % | $ | 4,323,249 | $ | 45,000 | 4.13 | % | $ | 4,059,885 | $ | 38,799 | 3.88 | % | |||||||||||||
| Less: Allowance for loan losses | (47,189 | ) | (46,281 | ) | (43,981 | ) | |||||||||||||||||||||||||
| Nonearning Assets | |||||||||||||||||||||||||||||||
| Cash and due from banks | 137,738 | 127,028 | 108,682 | ||||||||||||||||||||||||||||
| Premises and equipment | 56,192 | 56,719 | 52,729 | ||||||||||||||||||||||||||||
| Other nonearning assets | 138,524 | 138,094 | 132,830 | ||||||||||||||||||||||||||||
| Total assets | $ | 4,706,726 | $ | 4,598,809 | $ | 4,310,145 | |||||||||||||||||||||||||
| Interest Bearing Liabilities | |||||||||||||||||||||||||||||||
| Savings deposits | $ | 268,091 | $ | 89 | 0.13 | % | $ | 270,978 | $ | 95 | 0.14 | % | $ | 271,087 | $ | 99 | 0.15 | % | |||||||||||||
| Interest bearing checking accounts | 1,491,820 | 3,575 | 0.97 | 1,451,544 | 3,024 | 0.83 | 1,383,791 | 1,952 | 0.57 | ||||||||||||||||||||||
| Time deposits: | |||||||||||||||||||||||||||||||
| In denominations under $100,000 | 255,209 | 848 | 1.35 | 247,875 | 811 | 1.30 | 238,347 | 670 | 1.14 | ||||||||||||||||||||||
| In denominations over $100,000 | 1,238,189 | 4,855 | 1.59 | 1,180,719 | 4,374 | 1.47 | 975,450 | 2,721 | 1.13 | ||||||||||||||||||||||
| Miscellaneous short-term borrowings | 82,862 | 111 | 0.54 | 84,132 | 118 | 0.56 | 184,950 | 310 | 0.68 | ||||||||||||||||||||||
| Long-term borrowings and | |||||||||||||||||||||||||||||||
| subordinated debentures | 30,933 | 367 | 4.81 | 30,958 | 347 | 4.45 | 30,959 | 314 | 4.11 | ||||||||||||||||||||||
| Total interest bearing liabilities | $ | 3,367,104 | $ | 9,845 | 1.19 | % | $ | 3,266,206 | $ | 8,769 | 1.07 | % | $ | 3,084,584 | $ | 6,066 | 0.80 | % | |||||||||||||
| Noninterest Bearing Liabilities | |||||||||||||||||||||||||||||||
| Demand deposits | 841,608 | 838,476 | 768,495 | ||||||||||||||||||||||||||||
| Other liabilities | 28,016 | 26,668 | 25,172 | ||||||||||||||||||||||||||||
| Stockholders' Equity | 469,998 | 467,459 | 431,894 | ||||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 4,706,726 | $ | 4,598,809 | $ | 4,310,145 | |||||||||||||||||||||||||
| Interest Margin Recap | |||||||||||||||||||||||||||||||
| Interest income/average earning assets | 46,477 | 4.26 | 45,000 | 4.13 | 38,799 | 3.88 | |||||||||||||||||||||||||
| Interest expense/average earning assets | 9,845 | 0.90 | 8,769 | 0.80 | 6,066 | 0.61 | |||||||||||||||||||||||||
| Net interest income and margin | $ | 36,632 | 3.36 | % | $ | 36,231 | 3.33 | % | $ | 32,733 | 3.27 | % | |||||||||||||||||||
| (1) | Tax exempt income was converted to a fully taxable equivalent basis at a 21 percent tax rate for 2018 and a 35 percent tax rate for 2017. The tax equivalent rate for tax exempt loans and tax exempt securities acquired after January 1, 1983 included the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) adjustment applicable to nondeductible interest expenses. Taxable equivalent basis adjustments were $409,000, $839,000 and $672,000 in the three-month periods ended March 31, 2018, December 31, 2017 and March 31, 2017, respectively. | ||||||||||||||||||||||||||||||
| (2) | Loan fees, which are immaterial in relation to total taxable loan interest income for 2018 and 2017, are included as taxable loan interest income. | ||||||||||||||||||||||||||||||
| (3) | Nonaccrual loans are included in the average balance of taxable loans. | ||||||||||||||||||||||||||||||
| (1) | Reconciliation of Non-GAAP Financial Measures | |
| Tangible common equity, tangible assets, tangible book value per share and the tangible common equity to tangible assets ratio are non-GAAP financial measures calculated using GAAP amounts. Tangible common equity is calculated by excluding the balance of goodwill and other intangible assets from the calculation of stockholders’ equity, net of deferred tax. Tangible assets are calculated by excluding the balance of goodwill and other intangible assets from the calculation of total assets, net of deferred tax. Tangible book value per share is calculated by dividing tangible common equity by the number of shares outstanding. Because not all companies use the same calculation of tangible common equity and tangible assets, this presentation may not be comparable to other similarly titled measures calculated by other companies. However, management considers these measures of the company’s value including only earning assets as meaningful to an understanding of the company’s financial information. | ||
| Net income applicable to Lakeland Financial Corporation and earnings per diluted share, excluding the income tax expense adjustment for the deferred tax asset revaluation, are non-GAAP financial measures that the company considers useful for investors to allow better comparability of operating performance. The income tax expense adjustment consists of a $4.1 million, or $0.16 per diluted common share, revaluation of the company’s net deferred tax asset as a result of the enactment of the Tax Cuts and Jobs Act in 2017. | ||
| 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, | ||||||||||
| 2018 | 2017 | 2017 | ||||||||||
| Total Equity | $ | 473,333 | $ | 468,667 | $ | 437,202 | ||||||
| Less: Goodwill | (4,970 | ) | (4,970 | ) | (4,970 | ) | ||||||
| Plus: Deferred tax assets related to goodwill | 1,174 | 1,171 | 1,840 | |||||||||
| Tangible Common Equity | 469,537 | 464,868 | 434,072 | |||||||||
| Assets | $ | 4,726,948 | $ | 4,682,976 | $ | 4,319,103 | ||||||
| Less: Goodwill | (4,970 | ) | (4,970 | ) | (4,970 | ) | ||||||
| Plus: Deferred tax assets related to goodwill | 1,174 | 1,171 | 1,840 | |||||||||
| Tangible Assets | 4,723,152 | 4,679,177 | 4,315,973 | |||||||||
| Ending common shares issued | 25,291,582 | 25,194,903 | 25,180,759 | |||||||||
| Tangible Book Value Per Common Share | $ | 18.56 | $ | 18.45 | $ | 17.24 | ||||||
| Tangible Common Equity/Tangible Assets | 9.94 | % | 9.93 | % | 10.06 | % | ||||||
| Net Income | $ | 18,336 | $ | 11,627 | $ | 14,514 | ||||||
| Plus: Additional tax expense due to adjusting deferred tax asset | 0 | 4,137 | 0 | |||||||||
| Net income excluding effect of deferred tax adjustment | $ | 18,336 | $ | 15,764 | $ | 14,514 | ||||||
| Diluted Weighted Average Common Shares Outstanding | 25,696,864 | 25,701,337 | 25,596,136 | |||||||||
| Diluted net income per share excluding effect of | ||||||||||||
| of deferred tax adjustment | $ | 0.71 | $ | 0.61 | $ | 0.57 | ||||||
Contact
Lisa M. O’Neill
Executive Vice President and Chief Financial Officer
(574) 267-9125
lisa.oneill@lakecitybank.com
_____________________________
1 Non-GAAP financial measure – see “Reconciliation of Non-GAAP Financial Measures”