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Press Release

Press Release

Lakeland Financial Reports Record Performance

Net Income of $80.4 million, Increases 40% From a Year Ago

Company Release - 1/25/2019 8:00 AM ET

WARSAW, Ind., Jan. 25, 2019 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq Global Select/LKFN), parent company of Lake City Bank, today reported record net income of $80.4 million, which represents an increase of $23.1 million or 40% compared with net income of $57.3 million for 2017. Diluted earnings per share also increased 40% to $3.13 compared to $2.23 for 2017. This per share performance also represents a record for the company and its shareholders.

The company further reported record quarterly net income of $21.4 million for the three months ended December 31, 2018 versus $11.6 million for the comparable period of 2017, an increase of 84%. Diluted net income per common share was also a record for the quarter and increased 84% to $0.83 for the three months ended December 31, 2018 versus $0.45 for the comparable period of 2017. Excluding the $4.1 million 2017 income tax provision, net income increased 36% and diluted earnings per share increased 36% for the three months ended December 31, 2018 compared to the comparable period of 2017.

David M. Findlay, President and CEO commented, “2018 represents our ninth consecutive year of record income performance. Our long-term performance is especially gratifying as we have reported record net income in 29 of the last 30 years. We’re particularly proud of our ability to consistently produce quality earnings over the last three decades for our shareholders.”

Highlights for the year and quarter are noted below.

Full year 2018 versus 2017 highlights:

  • Return on average equity of 16.5%, up from 12.7%
  • Organic average loan growth of $233 million, or 6%
  • Average deposit growth of $337 million, or 9%
  • Net interest income increase of $15.4 million, or 11%
  • Net interest margin increase of 10 basis points to 3.43%
  • Noninterest income increase of $4.1 million, or 11%
  • Revenue growth of $19.5 million, or 11%
  • Pretax net income growth of $9.3 million, or 10%
  • Nonperforming assets to total assets of 0.16%, down from 0.20% a year ago
  • Total equity and tangible common equity1 increase of $53 million,  or 11%

4th Quarter 2018 versus 4th Quarter 2017 highlights:

  • Return on average equity of 16.8%, up from 9.9%
  • Organic average loan growth of $178 million, or 5%
  • Average deposit growth of $174 million, or 4%
  • Net interest income increase of $4.2 million, or 12%
  • Net interest margin increase of 19 basis points to 3.52%
  • Noninterest income increase of $643,000, or 7%
  • Pretax net income growth of $3.4 million, or 15%
  • Revenue growth of $4.8 million, or 11%
  • Total equity and tangible common equity2 increase of $53 million,  or 11%

4th Quarter 2018 versus 3rd Quarter 2018 highlights:

  • Return on average equity of 16.8% up from 16.6%
  • Organic average loan growth of $68 million, or 2%
  • Net interest income growth of $1.7 million, or 4%
  • Revenue growth of $1.3 million, or 3%
  • Reduced nonperforming assets of $5.2 million, or 41%
  • Average equity  increase of $12.4 million, or 3%

As announced on January 8, 2019, the board of directors approved a cash dividend for the fourth quarter of $0.26 per share, payable on February 5, 2019, to shareholders of record as of January 25, 2019. The fourth quarter dividend per share represents an 18% increase over the fourth quarter 2017 dividend of $0.22 per share.

In addition, on January 8, 2019, the Board of Directors authorized the purchase of up to $30,000,000 shares of the company’s common stock, representing approximately 3.0% of the company’s issued and outstanding shares of common stock as of December 31, 2018. The Board of Directors authorized this stock repurchase plan based on the strength of the company’s balance sheet and capital position. The Board believes that a stock repurchase plan is an important tool that can be utilized to enhance long term shareholder value. Share repurchases may be made periodically as permitted by securities laws and other legal and regulatory requirements and will be subject to market conditions as well as other factors. The timing, price and quantity of purchases will be at the discretion of the corporation and the program may be discontinued or suspended at any time. Repurchases may be made in the open market, through block trades or otherwise, and in privately negotiated transactions. If any share purchases are made, they will be made on or prior to December 31, 2019.

Findlay continued, “Revenue growth was once again a critical driver of our ability to generate strong earnings growth. We experienced healthy double digit increases in fee-based services in all three of our core business units, commercial, retail, and wealth advisory. In addition, our asset sensitive balance sheet contributed to an expansion of our net interest margin.”

Return on average total equity for the year ended December 31, 2018 was 16.51%, compared to 12.72% in 2017. Return on average assets was 1.69% in 2018 compared to 1.29% in 2017. The company’s total capital as a percent of risk-weighted assets was 14.20% at December 31, 2018, compared to 13.26% at December 31, 2017 and 14.14% at September 30, 2018. The company’s tangible common equity3 to tangible assets ratio was 10.63% at December 31, 2018, compared to 9.93% at December 31, 2017 and 10.41% at September 30, 2018.

Average total loans for 2018 were $3.84 billion, an increase of $233.0 million, or 6%, versus $3.61 billion for 2017. Total loans outstanding grew $96.3 million, or 3%, from $3.82 billion as of December 31, 2017 to $3.91 billion as of December 31, 2018. On a linked quarter basis, total loans grew $71.6 million, or 2%, from $3.84 billion at September 30, 2018. Average total loans for the fourth quarter of 2018 was $3.91 billion, an increase of $177.5 million, or 5%, versus $3.73 billion for the comparable period of 2017. On a linked quarter basis, total average loans increased by $67.9 million, or 2%, from $3.84 billion for the third quarter of 2018 to $3.91 billion for the fourth quarter of 2018.

Average total deposits for 2018 were $4.09 billion, an increase of $336.7 million, or 9%, versus $3.76 billion for 2017. Total deposits grew $35.4 million, or 1%, from $4.01 billion as of December 31, 2017 to $4.04 billion as of December 31, 2018. In addition, total core deposits, which exclude brokered deposits, increased $135.5 million, or 4%, from $3.74 billion at December 31, 2017 to $3.88 billion at December 31, 2018 due to growth in commercial deposits of $112.4, million or 12%, growth in retail deposits of $57.8 million, or 4%, offset by declines in public fund deposits of $34.7 million or 3%.

Findlay added, “Our commercial and retail banking teams delivered good core deposit growth in 2018, which provided deposit-driven funding for our loan growth. We are pleased that net loan growth returned to the balance sheet in the fourth quarter. We continued to experience strong organic growth in the quarter and did not incur the elevated level of loan pay downs that occurred in the second and third quarters.”

The company’s net interest margin increased 10 basis points to 3.43% for 2018 compared to 3.33% for 2017. The company’s net interest margin was 3.52% in the fourth quarter of 2018 versus 3.33% for the fourth quarter of 2017 and 3.42% during the third quarter 2018. The higher margin in 2018 was due to higher yields and growth in loans, and was partially offset by a higher cost of funds, which was driven by the Federal Reserve Bank increasing the target Federal Funds Rate in March, June, September and December of 2018. The company estimates that net interest margin benefited by four basis points during the fourth quarter 2018 from the payoff of a nonaccrual loan and other nonaccrual adjustments.

Net interest income increased $15.4 million, or 11%, to $151.3 million in 2018, versus $135.9 million in 2017 due to net interest margin expansion and growth in loans and deposits during the year. Net interest income increased $4.2 million, or 12%, to $39.6 million in the fourth quarter of 2018, versus $35.4 million in the fourth quarter of 2017. On a linked quarter basis, net interest income increased by $1.7 million from $37.9 million or 4%.

The company recorded a provision for loan losses of $6.4 million in 2018 compared to $3.0 million in 2017, primarily resulting from a charge off of $5.1 million from a single commercial loan relationship in addition to growth in the loan portfolio. The company recorded a provision for loan losses of $300,000 in the fourth quarter of 2018, versus $1.9 million in the fourth quarter of 2017 and $1.1 million in the third quarter of 2018. The company’s allowance for loan losses as of December 31, 2018 was $48.5 million compared to $47.1 million as of December 31, 2017 and $48.3 million as of September 30, 2018. The allowance for loan losses represented 1.24% of total loans as of December 31, 2018 versus 1.23% at December 31, 2017 and 1.26% as of September 30, 2018.

Net charge offs were $5.1 million in 2018 versus net recoveries of $403,000 in 2017. Net charge offs for the fourth quarter of 2018 were $189,000 versus net charge offs of $226,000 in the fourth quarter of 2017 and net charge offs of $463,000 during the linked third quarter 2018. Net charge offs to average loans were 0.13% in 2018 compared to net recoveries of 0.01% for 2017. Annualized net charge offs to average loans were 0.02% for the fourth quarters of 2018 and 2017. Annualized net charge offs to average loans were 0.05% for the linked third quarter of 2018.

Nonperforming assets decreased $1.9 million, or 20%, to $7.6 million as of December 31, 2018 versus $9.5 million as of December 31, 2017 due to a decrease in nonaccrual loans. On a linked quarter basis, nonperforming assets were $5.2 million lower than the $12.8 million reported as of September 30, 2018. The ratio of nonperforming assets to total assets at December 31, 2018 decreased to 0.16% from 0.20% at December 31, 2017 and 0.27% at September 30, 2018.  

Findlay stated, “We ended 2018 with stable asset quality and believe it’s reflective of broader economic conditions in our markets.”

The company’s noninterest income increased $4.1 million, or 11%, to $40.1 million in 2018, compared to $36.0 million in 2017. The company’s noninterest income increased by $643,000, or 7%, to $10.1 million for the fourth quarter of 2018, compared to $9.5 million for the fourth quarter of 2017. Noninterest income decreased by $328,000 from $10.4 million during the third quarter due to reduced mortgage banking income and reduced bank owned life equity based income. During 2018, noninterest income was positively impacted by increases in service charges on deposit accounts primarily related to business accounts, loan and service fees, and wealth advisory and brokerage fees due to continued growth of client relationships.

The company’s noninterest expense increased $6.8 million, or 9%, to $86.0 million in 2018 compared to $79.3 million in 2017. The company’s noninterest expense increased $3.0 million, or 15%, to $22.6 million in the fourth quarter of 2018, compared to $19.6 million in the fourth quarter of 2017 and was higher by $543,000, or 2% on a linked quarter basis. Salaries and employee benefits increased during 2018 primarily due to an increase to the company’s minimum hiring wage, normal merit increases and increased health insurance cost. Data processing fees also increased during 2018 primarily due to the company’s continued investment in technology-based solutions and ongoing transition to cloud-based technology. In addition, corporate and business development expense increased primarily due to higher community support and donation expense.

Findlay noted, “We continue to invest in our growing branch presence in our Indiana footprint with the opening of our 50th office in downtown Indianapolis. Importantly, we will stay focused on providing innovative and technology-based solutions for our customers. It is critical that we maintain and increase our investment in our technology platform as we continue to work with key technology and Fintech partners in this long-term strategy.”

The company’s efficiency ratio was 45.0% for 2018 compared to 46.1% for 2017. The company’s efficiency ratio was 45.4% for the fourth quarter of 2018, compared to 43.7% for the fourth quarter of 2017 and 45.5% for the linked third quarter of 2018.

The effective tax rate for 2018 was 18.7%, compared to 36.0% for 2017, and reflects the effect of the Tax Cuts and Jobs Act, which lowered the company’s federal tax rate to 21% from 35% effective January 1, 2018. Results for 2017 included a non-cash, non-operating and non-recurring income tax provision of $4.1 million or $0.16 per diluted share. Excluding this tax item, and calculating both periods at the 2017 effective tax rate of 31.3%, net income increased 10.4% for 2018 compared to 2017.

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 “common stockholders’ equity” excluding intangible assets, net of deferred tax and “tangible assets” which is “assets” excluding intangible assets, net of deferred tax. A reconciliation of these non-GAAP measures to the most comparable GAAP equivalent are included in the attached financial tables where the non-GAAP measures are presented. 

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

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

LAKELAND FINANCIAL CORPORATION
FOURTH QUARTER 2018 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 BALANCES2018 2018 2017 2018 2017
 
Assets$4,875,254 $4,757,619 $4,682,976 $4,875,254 $4,682,976  
Deposits 4,044,065  4,015,924  4,008,655  4,044,065  4,008,655  
Brokered Deposits 164,888  176,927  264,980  164,888  264,980  
Core Deposits 3,879,177  3,838,997  3,743,675  3,879,177  3,743,675  
Loans 3,914,745  3,843,125  3,818,459  3,914,745  3,818,459  
Allowance for Loan Losses 48,453  48,343  47,121  48,453  47,121  
Total Equity 521,704  498,541  468,667  521,704  468,667  
Goodwill net of deferred tax assets 3,779  3,790  3,799  3,779  3,799  
Tangible Common Equity (1) 517,925  494,751  464,868  517,925  464,868  
AVERAGE BALANCES          
Total Assets$4,837,604 $4,748,953 $4,598,809 $4,758,392 $4,443,106  
Earning Assets 4,523,304  4,451,449  4,323,249  4,461,366  4,183,112  
Investments 573,073  569,567  537,796  562,385  530,275  
Loans 3,905,511  3,837,595  3,727,967  3,843,912  3,610,908  
Total Deposits 4,163,118  4,025,398  3,989,592  4,093,894  3,757,209  
Interest Bearing Deposits 3,256,930  3,167,135  3,151,116  3,235,867  2,967,902  
Interest Bearing Liabilities 3,390,159  3,363,583  3,266,206  3,382,507  3,178,439  
Total Equity 505,570  493,145  467,459  487,062  450,796  
INCOME STATEMENT DATA          
Net Interest Income$39,590 $37,925 $35,392 $151,271 $135,892  
Net Interest Income-Fully Tax Equivalent 40,089  38,392  36,231  153,088  139,015  
Provision for Loan Losses 300  1,100  1,850  6,400  3,000  
Noninterest Income 10,105  10,433  9,462  40,110  36,009  
Noninterest Expense 22,552  22,009  19,598  86,037  79,267  
Net Income 21,363  20,570  11,627  80,411  57,330  
PER SHARE DATA          
Basic Net Income Per Common Share$0.84 $0.81 $0.46 $3.18 $2.28  
Diluted Net Income Per Common Share 0.83  0.80  0.45  3.13  2.23  
Cash Dividends Declared Per Common Share 0.26  0.26  0.22  1.00  0.85  
Dividend Payout 31.33% 32.50% 48.89% 31.95% 38.12 %
Book Value Per Common Share (equity per share issued) 20.62  19.70  18.60  20.62  18.60  
Tangible Book Value Per Common Share (1) 20.47  19.55  18.45  20.47  18.45  
Market Value – High 47.41  51.25  52.43  51.76  52.43  
Market Value – Low 37.79  46.35  45.26  37.79  39.68  
Basic Weighted Average Common Shares Outstanding 25,301,732  25,301,033  25,194,903  25,288,533  25,181,208  
Diluted Weighted Average Common Shares Outstanding 25,746,490  25,745,151  25,701,337  25,727,831  25,663,381  
KEY RATIOS          
Return on Average Assets 1.75% 1.72% 1.00% 1.69% 1.29 %
Return on Average Total Equity 16.76  16.55  9.87  16.51  12.72  
Average Equity to Average Assets 10.45  10.38  10.16  10.24  10.15  
Net Interest Margin 3.52  3.42  3.33  3.43  3.33  
Efficiency  (Noninterest Expense / Net Interest Income plus Noninterest Income) 45.38  45.51  43.69  44.96  46.11  
Tier 1 Leverage (2) 11.44  11.31  10.76  11.44  10.76  
Tier 1 Risk-Based Capital (2) 13.05  12.97  12.10  13.05  12.10  
Common Equity Tier 1 (CET1) (2) 12.35  12.24  11.37  12.35  11.37  
Total Capital (2) 14.20  14.14  13.26  14.20  13.26  
Tangible Capital (1) (2) 10.63  10.41  9.93  10.63  9.93  
ASSET QUALITY           
Loans Past Due 30 - 89 Days$10,020 $13,476 $9,613 $10,020 $9,613  
Loans Past Due 90 Days or More 0  0  6  0  6  
Non-accrual Loans 7,260  12,337  9,401  7,260  9,401  
Nonperforming Loans (includes nonperforming TDR's) 7,260  12,337  9,407  7,260  9,407  
Other Real Estate Owned 316  316  40  316  40  
Other Nonperforming Assets 0  111  55  0  55  
Total Nonperforming Assets 7,577  12,764  9,502  7,577  9,502  
Performing Troubled Debt Restructurings 8,016  3,512  2,893  8,016  2,893  
Nonperforming Troubled Debt Restructurings (included in nonperforming loans) 4,384  7,313  7,750  4,384  7,750  
Total Troubled Debt Restructurings 12,400  10,825  10,643  12,400  10,643  
Impaired Loans 26,661  20,906  13,869  26,661  13,869  
Non-Impaired Watch List Loans 159,938  175,400  157,834  159,938  157,834  
Total Impaired and Watch List Loans 186,599  196,306  171,703  186,599  171,703  
Gross Charge Offs 424  581  625  6,110  1,560  
Recoveries 235  118  399  1,043  1,963  
Net Charge Offs/(Recoveries) 189  463  226  5,067  (403) 
Net Charge Offs/(Recoveries)  to Average Loans 0.02% 0.05% 0.02% 0.13% (0.01)%
Loan Loss Reserve to Loans 1.24% 1.26% 1.23% 1.24% 1.23 %
Loan Loss Reserve to Nonperforming Loans 667.40% 391.92% 500.91% 667.40% 500.91 %
Loan Loss Reserve to Nonperforming Loans and Performing TDR's 317.17% 305.03% 383.10% 317.17% 383.10 %
Nonperforming Loans to Loans 0.19% 0.32% 0.25% 0.19% 0.25 %
Nonperforming Assets to Assets 0.16% 0.27% 0.20% 0.16% 0.20 %
Total Impaired and Watch List Loans to Total Loans 4.77% 5.11% 4.50% 4.77% 4.50 %
OTHER DATA          
Full Time Equivalent Employees 553  549  539  553  539  
Offices 49  49  49  49  49  
           
(1) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Financial Measures"          
(2) Capital ratios for December 31, 2018 are preliminary until the Call Report is filed.          
           


CONSOLIDATED BALANCE SHEETS (in thousands except share data)
 December 31, December 31,
  2018   2017 
 (Unaudited)  
ASSETS   
Cash and due from banks$192,290  $140,402 
Short-term investments 24,632   35,778 
Total cash and cash equivalents 216,922   176,180 
    
Securities available for sale (carried at fair value) 585,549   538,493 
Real estate mortgage loans held for sale 2,293   3,346 
    
Loans, net of allowance for loan losses of $48,453 and $47,121 3,866,292   3,771,338 
    
Land, premises and equipment, net 58,097   56,466 
Bank owned life insurance 77,106   75,879 
Federal Reserve and Federal Home Loan Bank stock 13,772   13,772 
Accrued interest receivable 15,518   14,093 
Goodwill 4,970   4,970 
Other assets 34,735   28,439 
Total assets$4,875,254  $4,682,976 
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
    
LIABILITIES   
Noninterest bearing deposits$946,838  $885,622 
Interest bearing deposits 3,097,227   3,123,033 
Total deposits 4,044,065   4,008,655 
    
Borrowings   
Securities sold under agreements to repurchase 75,555   70,652 
Federal Home Loan Bank advances 170,000   80,030 
Subordinated debentures 30,928   30,928 
Total borrowings 276,483   181,610 
    
Accrued interest payable 10,404   6,311 
Other liabilities 22,598   17,733 
Total liabilities 4,353,550   4,214,309 
    
STOCKHOLDERS' EQUITY   
Common stock:  90,000,000 shares authorized, no par value   
25,301,732 shares issued and 25,128,773 outstanding as of December 31, 2018   
25,194,903 shares issued and 25,025,933 outstanding as of December 31, 2017 112,383   108,862 
Retained earnings 419,179   363,794 
Accumulated other comprehensive loss (6,191)  (670)
Treasury stock, at cost (2018 - 172,959 shares, 2017 - 168,970 shares) (3,756)  (3,408)
Total stockholders' equity 521,615   468,578 
Noncontrolling interest 89   89 
Total equity 521,704   468,667 
Total liabilities and equity$4,875,254  $4,682,976 
    


CONSOLIDATED STATEMENTS OF INCOME (unaudited - in thousands except share and per share data)    
 Three Months Ended Twelve Months Ended
 December 31, December 31,
  2018   2017   2018   2017
NET INTEREST INCOME       
Interest and fees on loans       
Taxable$49,091  $40,251  $181,451  $150,295
Tax exempt 187   212   814   729
Interest and dividends on securities       
Taxable 2,516   2,185   9,717   9,218
Tax exempt 1,712   1,357   6,079   5,102
Other interest income 222   156   909   354
Total interest income 53,728   44,161   198,970   165,698
        
Interest on deposits 13,425   8,304   44,913   27,026
Interest on borrowings       
Short-term 282   117   1,143   1,446
Long-term 431   348   1,643   1,334
Total interest expense 14,138   8,769   47,699   29,806
        
NET INTEREST INCOME 39,590   35,392   151,271   135,892
        
Provision for loan losses 300   1,850   6,400   3,000
        
NET INTEREST INCOME AFTER PROVISION FOR       
  LOAN LOSSES 39,290   33,542   144,871   132,892
        
NONINTEREST INCOME       
Wealth advisory fees 1,668   1,476   6,344   5,481
Investment brokerage fees 415   323   1,458   1,273
Service charges on deposit accounts 4,289   3,669   15,831   13,696
Loan and service fees 2,366   2,050   9,291   7,900
Merchant card fee income 627   583   2,461   2,279
Bank owned life insurance income 67   498   1,244   1,768
Other income 565   712   2,381   2,598
Mortgage banking income 152   171   1,150   982
Net securities gains/(losses) (44)  (20)  (50)  32
Total noninterest income 10,105   9,462   40,110   36,009
        
NONINTEREST EXPENSE       
Salaries and employee benefits 12,086   11,244   48,353   45,306
Net occupancy expense 1,257   1,190   5,149   4,595
Equipment costs 1,403   1,216   5,243   4,629
Data processing fees and supplies 2,393   2,211   9,685   8,233
Corporate and business development 1,996   801   5,066   4,744
FDIC insurance and other regulatory fees 419   502   1,701   1,798
Professional fees 1,082   857   3,798   3,574
Other expense 1,916   1,577   7,042   6,388
Total noninterest expense 22,552   19,598   86,037   79,267
        
INCOME BEFORE INCOME TAX EXPENSE 26,843   23,406   98,944   89,634
Income tax expense 5,480   11,779   18,533   32,304
NET INCOME$21,363  $11,627  $80,411  $57,330
        
BASIC WEIGHTED AVERAGE COMMON SHARES 25,301,732   25,194,903   25,288,533   25,181,208
BASIC EARNINGS PER COMMON SHARE$0.84  $0.46  $3.18  $2.28
DILUTED WEIGHTED AVERAGE COMMON SHARES 25,746,490   25,701,337   25,727,831   25,663,381
DILUTED EARNINGS PER COMMON SHARE$0.83  $0.45  $3.13  $2.23
        


LAKELAND FINANCIAL CORPORATION
LOAN DETAIL
FOURTH QUARTER 2018
(unaudited in thousands)
          
 December 31,September 30,December 31,
  2018 2018 2017
Commercial and industrial loans:         
Working capital lines of credit loans$690,620 17.6 % $757,004 19.7%$743,609 19.4%
Non-working capital loans 714,759 18.3  693,402 18.0  675,072 17.7 
Total commercial and industrial loans 1,405,379 35.9  1,450,406 37.7  1,418,681 37.1 
          
Commercial real estate and multi-family residential loans:         
Construction and land development loans 266,805 6.8  231,795 6.0  224,474 5.9 
Owner occupied loans 586,325 15.0  571,998 14.9  538,603 14.1 
Nonowner occupied loans 520,901 13.3  520,414 13.5  508,121 13.3 
Multifamily loans 195,604 5.0  192,218 5.0  173,715 4.5 
Total commercial real estate and multi-family residential loans 1,569,635 40.1  1,516,425 39.4  1,444,913 37.8 
          
Agri-business and agricultural loans:         
Loans secured by farmland 177,503 4.6  159,256 4.2  186,437 4.9 
Loans for agricultural production 193,010 4.9  134,773 3.5  196,404 5.1 
Total agri-business and agricultural loans 370,513 9.5  294,029 7.7  382,841 10.0 
          
Other commercial loans 95,657 2.4  114,350 3.0  124,076 3.3 
Total commercial loans 3,441,184 87.9  3,375,210 87.8  3,370,511 88.2 
          
Consumer 1-4 family mortgage loans:         
Closed end first mortgage loans 185,822 4.7  185,212 4.8  179,302 4.7 
Open end and junior lien loans 187,030 4.8  185,869 4.8  181,865 4.8 
Residential construction and land development loans 16,226 0.4  15,128 0.4  13,478 0.3 
Total consumer 1-4 family mortgage loans 389,078 9.9  386,209 10.0  374,645 9.8 
          
Other consumer loans 86,064 2.2  83,203 2.2  74,369 2.0 
Total consumer loans 475,142 12.1  469,412 12.2  449,014 11.8 
Subtotal 3,916,326 100.0 %  3,844,622 100.0% 3,819,525 100.0%
Less:  Allowance for loan losses (48,453)   (48,343)   (47,121)  
Net deferred loan fees (1,581)   (1,497)   (1,066)  
Loans, net$3,866,292   $3,794,782   $3,771,338   
          


LAKELAND FINANCIAL CORPORATION 
DEPOSITS AND BORROWINGS
FOURTH QUARTER 2018 
(unaudited in thousands) 
          
 December 31,  September 30,  December 31,  
 2018  2018  2017  
Non-interest bearing demand deposits$946,838  $880,363  $885,622  
Savings and transaction accounts:         
Savings deposits 247,903   251,748   263,570  
Interest bearing demand deposits 1,429,570   1,388,934   1,446,880  
Time deposits:         
Deposits of $100,000 or more 1,146,221   1,223,457   1,161,365  
Other time deposits 273,533   271,422   251,218  
Total deposits$4,044,065  $4,015,924  $4,008,655  
FHLB advances and other borrowings 276,483   208,280   181,610  
Total funding sources$4,320,548  $4,224,204  $4,190,265  
          

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

 Three Months Ended  Three Months Ended  Three Months Ended 
 December 31, 2018  September 30, 2018  December 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)$3,884,500  $49,091 5.01% $3,814,831  $46,127 4.80% $3,703,260  $40,251 4.31%
Tax exempt (1) 21,011   234 4.42   22,764   257 4.48   24,707   321 5.15 
Investments: (1)                    
Available for sale 573,073   4,682 3.24   569,567   4,263 2.97   537,796   4,272 3.15 
Short-term investments 3,350   15 1.78   3,480   14 1.60   4,377   7 0.63 
Interest bearing deposits 41,370   207 1.99   40,807   185 1.80   53,109   149 1.11 
Total earning assets$4,523,304  $54,229 4.76% $4,451,449  $50,846 4.53% $4,323,249  $45,000 4.13%
Less:  Allowance for loan losses (49,045)       (48,137)       (46,281)     
Nonearning Assets                    
Cash and due from banks 156,681        144,605        127,028      
Premises and equipment 57,516        57,545        56,719      
Other nonearning assets 149,148        143,491        138,094      
Total assets$4,837,604       $4,748,953       $4,598,809      
                     
Interest Bearing Liabilities                    
Savings deposits$250,755  $76 0.12% $253,244  $79 0.12% $270,978  $95 0.14%
Interest bearing checking accounts 1,476,013   5,498 1.48   1,407,460   4,455 1.26   1,451,544   3,024 0.83 
Time deposits:                    
In denominations under $100,000 272,192   1,168 1.70   270,480   1,055 1.55   247,875   811 1.30 
In denominations over $100,000 1,257,970   6,683 2.11   1,235,951   5,884 1.89   1,180,719   4,374 1.47 
Miscellaneous short-term borrowings 102,301   282 1.09   165,520   555 1.33   84,132   118 0.56 
Long-term borrowings and                    
subordinated debentures 30,928   431 5.53   30,928   426 5.46   30,958   347 4.45 
Total interest bearing liabilities$3,390,159  $14,138 1.65% $3,363,583  $12,454 1.47% $3,266,206  $8,769 1.07%
Noninterest Bearing Liabilities                    
Demand deposits 906,188        858,263        838,476      
Other liabilities 35,687        33,962        26,668      
Stockholders' Equity 505,570        493,145        467,459      
Total liabilities and stockholders' equity$4,837,604       $4,748,953       $4,598,809      
                     
Interest Margin Recap                    
Interest income/average earning assets   54,229 4.76     50,846 4.53     45,000 4.13 
Interest expense/average earning assets   14,138 1.24     12,454 1.11     8,769 0.80 
Net interest income and margin  $40,091 3.52%   $38,392 3.42%   $36,231 3.33%


(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 $501,000, $467,000 and $839,000 in the three-month periods ended December 31, 2018, September 30, 2018 and December 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 for 2017 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 Twelve Months Ended 
 Dec. 31, Sep. 30, Dec. 31, Dec. 31, Dec. 31, 
  2018   2018   2017   2018   2017  
Total Equity$521,704  $498,541  $468,667  $521,704  $468,667  
Less: Goodwill (4,970)  (4,970)  (4,970)  (4,970)  (4,970) 
Plus: Deferred tax assets related to goodwill 1,191   1,180   1,171   1,191   1,171  
Tangible Common Equity 517,925   494,751   464,868   517,925   464,868  
           
Assets$4,875,254  $4,757,619  $4,682,976  $4,875,254  $4,682,976  
Less: Goodwill (4,970)  (4,970)  (4,970)  (4,970)  (4,970) 
Plus: Deferred tax assets related to goodwill 1,191   1,180   1,171   1,191   1,171  
Tangible Assets 4,871,475   4,753,829   4,679,177   4,871,475   4,679,177  
           
Ending common shares issued 25,301,732   25,301,732   25,194,903   25,301,732   25,194,903  
           
Tangible Book Value Per Common Share$20.47  $19.55  $18.45  $20.47  $18.45  
           
Tangible Common Equity/Tangible Assets 10.63 % 10.41 % 9.93 % 10.63 % 9.93 %
           
           
           
Net Income$21,363  $20,570  $11,627  $80,411  $57,330  
Plus:  Additional tax expense due to adjusting deferred tax asset 0   0   4,137   0   4,137  
Net income excluding effect of deferred tax adjustment$21,363  $20,570  $15,764  $80,411  $61,467  
           
Diluted Weighted Average Common Shares Outstanding 25,746,490   25,745,151   25,701,337   25,727,831   25,663,381  
           
Diluted net income per share excluding effect of          
of deferred tax adjustment$0.83  $0.80  $0.61  $3.13  $2.40  
           

Contact
Lisa M. O’Neill
Executive Vice President and Chief Financial Officer
(574) 267-9125
[email protected]

 

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