×

Lakeland Financial Reports Record Performance

WARSAW, Ind., July 25, 2017 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq:LKFN), parent company of Lake City Bank, today reported record second quarter net income of $15.4 million for the three months ended June 30, an increase of 20% versus $12.8 million for the second quarter of 2016. Diluted net income per common share also increased 20% to $0.60 for the second quarter of 2017, versus $0.50 for the second quarter of 2016, representing a record quarter for the company and its shareholders. On a linked quarter basis net income increased 6% or $850,000 from the first quarter ended March 31, 2017, which had net income of $14.5 million and $0.57 diluted net income per common share. All share and per share data presented in this press release has been adjusted for a 3-for-2 stock split paid in the form of a stock dividend on August 5, 2016.

The company further reported record net income of $29.9 million for the six months ended June 30, 2017 versus $25.1 million for the comparable period of 2016, an increase of 19%. Diluted net income per common share was also a record for the period and increased 18% to $1.17 for the six months ended June 30, 2017 versus $0.99 for the comparable period of 2016.

David M. Findlay, President and CEO commented, “The entire Lake City Bank team has contributed to these record results and we are very proud of the continued strength of the bank’s overall performance. These strong results reflect the overall economic vitality of our Indiana footprint and the continued growth of our commercial and consumer loan businesses. The best way for Lake City Bank to contribute to our markets is through the business of lending, and we are very pleased with our overall growth.”

Highlights for the quarter are noted below:

2nd Quarter 2017 versus 2nd Quarter 2016 highlights:

  • Organic average loan growth of $394 million or 12%
  • Average deposit growth of $245 million or 7%
  • Net interest income increase of $4.5 million or 16%
  • Net interest margin increase of 15 basis points to 3.34%
  • Revenue growth of $5.3 million or 14%
  • Continued strong asset quality with nonperforming assets to total assets at 0.23% compared to 0.24%
  • Tangible common equity1 increase of $31.6 million or 8%

2nd Quarter 2017 versus 1st Quarter 2017 highlights:

  • Organic average loan growth of $77 million or 2%
  • Average deposit growth of $45 million or 1%
  • Net interest income increase of $1.8 million or 5%
  • Net interest margin increase of 7 basis points to 3.34%
  • Revenue growth of $2.3 million or 6%
  • Continued strong asset quality with nonperforming assets to total assets at 0.23% compared to 0.28%
  • Tangible common equity1 increase of $13.3 million or 3%

As previously announced, the board of directors approved a cash dividend for the second quarter of $0.22 per share, payable on August 7, 2017, to shareholders of record as of July 25, 2017. The second quarter dividend per share represents a 16% increase over the dividend rate paid in the last three quarters of 2016 and in the first quarter of 2017 of $0.19 per share.

Findlay added, “Continued loan growth, stable asset quality and net interest margin expansion have positively impacted our profitability in the first half of 2017. As a result, our capital position remains solid and is supportive of this significant increase in our dividend and the continued growth in Lake City Bank.”

Return on average total equity for the second quarter of 2017 was 13.84%, compared to 12.50% in the second quarter of 2016 and 13.63% in the linked first quarter of 2017. Return on average total equity for the first six months of 2017 was 13.74%, compared to 12.43% in the same period of 2016. Return on average assets for the second quarter of 2017 was 1.40%, compared to 1.29% in the second quarter of 2016 and 1.37% in the linked first quarter of 2017. Return on average assets for the first six months of 2017 was 1.38% compared to 1.29% in the same period of 2016. The company’s total capital as a percent of risk-weighted assets was 13.30% at June 30, 2017, compared to 13.65% at June 30, 2016 and 13.16% at March 31, 2017. The company’s tangible common equity to tangible assets ratio1 was 10.19% at June 30, 2017, compared to 10.57% at June 30, 2016 and 10.06% at March 31, 2017.

Average total loans for the second quarter of 2017 were $3.59 billion, an increase of $393.9 million, or 12%, versus $3.19 billion for the second quarter of 2016. Total loans outstanding grew $379.0 million, or 12%, from $3.20 billion as of June 30, 2016 to $3.58 billion as of June 30, 2017. On a linked quarter basis, total loans grew $44.7 million, or 1%, from $3.53 billion at March 31, 2017.

Average total deposits for the second quarter of 2017 were $3.68 billion, an increase of $244.9 million, or 7%, versus $3.44 billion for the second quarter of 2016. Total deposits grew $212.5 million, or 6%, from $3.40 billion as of June 30, 2016 to $3.62 billion as of June 30, 2017. In addition, total core deposits, which exclude brokered deposits, increased $208.9 million, or 6%, from $3.29 billion at June 30, 2016 to $3.50 billion at June 30, 2017. The year over year core deposit growth was generated by retail deposit, public funds deposit, and commercial deposit growth in the amounts of $104.0 million, $75.4 million and $29.6 million, respectively. On a linked quarter basis, total average deposits grew $45.2 million, or 1%, from $3.64 billion at March 31, 2017.

The company’s net interest margin increased 15 basis points to 3.34% for the second quarter of 2017 compared to 3.19% for the second quarter of 2016. The higher margin in the second quarter of 2017 was due to higher yields on loans and securities, partially offset by a higher cost of funds. On a linked quarter basis, the net interest margin improved by 7 basis points from 3.27% in the first quarter of 2017 due to the positive impact of the Federal Reserve Bank increases in the target Federal Funds Rate in mid-March 2017 and mid-June 2017. Net interest income increased $4.5 million, or 16%, to $33.8 million for the second quarter of 2017, versus $29.3 million in the second quarter of 2016. The company’s net interest margin for the six months ended June 30, 2017 was 3.31% compared to 3.22% in the prior year six month period.

The company recorded a provision for loan losses of $500,000 in the second quarter of 2017, primarily driven by the growth in the loan portfolio. The company’s allowance for loan losses as of June 30, 2017 was $44.6 million compared to $43.2 million as of June 30, 2016 and $43.8 million as of March 31, 2017. The allowance for loan losses represented 1.25% of total loans as of June 30, 2017 versus 1.35% at June 30, 2016 and 1.24% as of March 31, 2017.

Nonperforming assets increased $513,000, or 5%, to $10.1 million as of June 30, 2017 versus $9.6 million as of June 30, 2016. On a linked quarter basis, nonperforming assets were $1.9 million lower than the $12.0 million reported as of March 31, 2017. The ratio of nonperforming assets to total assets at June 30, 2017 decreased to 0.23% from 0.24% at June 30, 2016 and 0.28% at March 31, 2017. The $1.9 million decrease in nonperforming assets during the quarter was primarily due to payments received from an accruing commercial relationship which had become 90 days past due. Net recoveries totaled $289,000 in the second quarter of 2017 versus net charge-offs of $36,000 during the second quarter of 2016 and net charge-offs of $144,000 during the linked first quarter of 2017.

Findlay added, “We are pleased that our asset quality trends continue to be stable. During the second quarter, nonperforming assets to total assets improved as compared to last quarter and we recorded net recoveries. The economic conditions in our Indiana markets are reflected in our asset quality performance and we remain optimistic about the future.”

The company’s noninterest income increased $724,000 or 9% to $8.8 million for the second quarter of 2017 versus $8.1 million for the second quarter of 2016. Noninterest income was positively impacted by a $410,000 increase in service charges on deposit accounts primarily due to growth in fees from business accounts. In addition, wealth advisory fees increased $151,000 or 13%.

The company’s noninterest income increased 13% to $17.1 million for the six months ended June 30, 2017 compared to $15.1 million in the prior year period. Noninterest income was positively impacted by a $773,000 or 14% increase in service charges on deposit accounts. In addition, wealth advisory fees increased by $241,000 or 11% and investment brokerage fees increased by $120,000 or 24%. Bank owned life insurance income increased $211,000 or 32% from first six months of 2016 to the first six months of 2017 primarily due to increased revenue from variable life insurance contracts owned by the company. In addition, other income increased $653,000 or 127% compared to the first six months of 2016. During the first quarter of 2016, other income was negatively impacted by credit valuation adjustment losses related to the company’s swap arrangements, which account for $295,000 of the increase in other income from the first six months of 2016 to the first six months of 2017. In addition, a write down in the first quarter of 2016 of $226,000 to a property formerly used as a Lake City Bank branch negatively impacted other income in 2016. Noninterest income during the first six months of 2017 was negatively impacted by a decrease of $202,000 or 28% in mortgage banking income resulting from lower mortgage loan originations as compared to the prior year period.

The company’s noninterest expense increased by 5% to $19.4 million in the second quarter of 2017 compared to $18.4 million in the second quarter of 2016. Salaries and employee benefits increased by 4% or $473,000 primarily due to incentive-based compensation costs, increased health insurance cost, normal merit increases and staff additions related to the company’s branch expansion. Corporate and business development expense increased by $433,000 or 57%, primarily due to an increase in the second quarter of 2017 of community support and donation expense. Equipment costs and net occupancy expense increased by $247,000 and $113,000 or 27% and 11%, respectively, driven by the company’s branch expansion as well as remodeling of existing branches. Noninterest expense was positively impacted by decreases of $146,000 or 7% in data processing fees and supplies and $138,000 or 25% in FDIC insurance and other regulatory fees.

The company’s noninterest expense increased by $3.6 million or 10% to $39.4 million in the first six months of 2017 compared to $35.8 million in the prior year period. The increase was driven by salaries and employee benefits, which increased by 11% or $2.3 million, primarily due to incentive-based compensation costs, increased health insurance cost, normal merit increases and staff additions related to the company’s branch expansion. In addition, corporate and business development increased by 67%, or $1.1 million, primarily due to community support and donation expense of $750,000 and $283,000 of increased advertising expense. The company's efficiency ratio was 45.4% for the second quarter of 2017, compared to 49.4% for the second quarter of 2016 and 49.7% for the linked first quarter of 2017.

Lakeland Financial Corporation is a $4.4 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 of America, 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 is included in the attached financial tables where the non-GAAP measure is 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.

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


LAKELAND FINANCIAL CORPORATION
SECOND QUARTER 2017 FINANCIAL HIGHLIGHTS
Three Months Ended Six Months Ended
(Unaudited – Dollars in thousands, except per share data)Jun. 30, Mar. 31, Jun. 30, Jun. 30, Jun. 30,
END OF PERIOD BALANCES 2017 2017 2016 2017 2016
Assets$ 4,392,999 $ 4,319,103 $ 3,937,304 $ 4,392,999 $ 3,937,304
Deposits 3,615,939 3,679,397 3,403,455 3,615,939 3,403,455
Brokered Deposits 116,435 135,595 112,884 116,435 112,884
Core Deposits 3,499,504 3,543,802 3,290,571 3,499,504 3,290,571
Loans 3,577,004 3,532,279 3,197,997 3,577,004 3,197,997
Allowance for Loan Losses 44,563 43,774 43,247 44,563 43,247
Total Equity 450,460 437,202 418,893 450,460 418,893
Goodwill net of deferred tax assets 3,126 3,130 3,137 3,126 3,137
Tangible Common Equity (1) 447,334 434,072 415,756 447,334 415,756
AVERAGE BALANCES
Total Assets$ 4,395,495 $ 4,310,145 $ 4,003,633 $ 4,353,056 $ 3,907,974
Earning Assets 4,150,234 4,059,885 3,763,022 4,105,309 3,681,747
Investments 531,262 515,283 488,762 523,317 483,650
Loans 3,586,408 3,509,155 3,192,545 3,547,995 3,140,947
Total Deposits 3,682,349 3,637,171 3,437,493 3,659,884 3,334,395
Interest Bearing Deposits 2,926,086 2,868,676 2,759,696 2,897,539 2,664,700
Interest Bearing Liabilities 3,171,565 3,084,584 2,887,534 3,128,315 2,807,478
Total Equity 445,287 431,895 411,986 438,628 405,953
INCOME STATEMENT DATA
Net Interest Income$ 33,819 $ 32,061 $ 29,273 $ 65,880 $ 57,855
Net Interest Income-Fully Tax Equivalent 34,550 32,733 29,818 67,281 58,920
Provision for Loan Losses 500 200 0 700 0
Noninterest Income 8,791 8,259 8,067 17,050 15,110
Noninterest Expense 19,352 20,048 18,446 39,400 35,830
Net Income 15,364 14,514 12,803 29,878 25,082
PER SHARE DATA
Basic Net Income Per Common Share *$ 0.61 $ 0.58 $ 0.51 $ 1.19 $ 1.00
Diluted Net Income Per Common Share * 0.60 0.57 0.51 1.17 0.99
Cash Dividends Declared Per Common Share * 0.22 0.19 0.19 0.41 0.35
Dividend Payout 36.67 % 33.33% 36.84% 35.04 % 35.47%
Book Value Per Common Share (equity per share issued) * 17.88 17.36 16.72 17.88 16.72
Tangible Book Value Per Common Share * (1) 17.76 17.24 16.60 17.76 16.60
Market Value – High * 48.70 48.32 33.27 48.70 33.27
Market Value – Low * 41.38 39.68 28.94 39.68 26.53
Basic Weighted Average Common Shares Outstanding * 25,183,186 25,152,242 25,045,251 25,167,799 25,032,502
Diluted Weighted Average Common Shares Outstanding * 25,619,977 25,596,136 25,395,770 25,618,552 25,370,607
KEY RATIOS
Return on Average Assets 1.40 % 1.37% 1.29% 1.38 % 1.29%
Return on Average Total Equity 13.84 13.63 12.50 13.74 12.43
Average Equity to Average Assets 10.13 10.02 10.29 10.08 10.39
Net Interest Margin 3.34 3.27 3.19 3.31 3.22
Efficiency (Noninterest Expense / Net Interest Income plus Noninterest Income) 45.42 49.72 49.40 47.51 49.11
Tier 1 Leverage (2) 10.82 10.78 10.85 10.82 10.85
Tier 1 Risk-Based Capital (2) 12.15 12.02 12.41 12.15 12.41
Common Equity Tier 1 (CET1) (2) 11.39 11.25 11.55 11.39 11.55
Total Capital (2) 13.30 13.16 13.65 13.30 13.65
Tangible Capital (1) (2) 10.19 10.06 10.57 10.19 10.57
ASSET QUALITY
Loans Past Due 30 - 89 Days$ 1,559 $ 1,490 $ 1,795 $ 1,559 $ 1,795
Loans Past Due 90 Days or More 0 1,633 0 0 0
Non-accrual Loans 9,886 10,188 9,329 9,886 9,329
Nonperforming Loans (includes nonperforming TDR's) 9,886 11,821 9,329 9,886 9,329
Other Real Estate Owned 194 115 238 194 238
Other Nonperforming Assets 0 15 0 0 0
Total Nonperforming Assets 10,080 11,951 9,567 10,080 9,567
Performing Troubled Debt Restructurings 8,425 10,234 8,647 8,425 8,647
Nonperforming Troubled Debt Restructurings (included in nonperforming loans) 6,852 7,180 6,040 6,852 6,040
Total Troubled Debt Restructurings 15,277 17,414 14,688 15,277 14,688
Impaired Loans 19,583 21,670 19,267 19,583 19,267
Non-Impaired Watch List Loans 133,526 130,551 139,706 133,526 139,706
Total Impaired and Watch List Loans 153,109 152,221 158,973 153,109 158,973
Gross Charge Offs 261 503 296 765 762
Recoveries 550 359 260 909 400
Net Charge Offs/(Recoveries) (289) 144 36 (145) 362
Net Charge Offs/(Recoveries) to Average Loans (0.03)% 0.02% 0.00% (0.01)% 0.02%
Loan Loss Reserve to Loans 1.25 % 1.24% 1.35% 1.25 % 1.35%
Loan Loss Reserve to Nonperforming Loans 450.75 % 370.31% 463.58% 450.75 % 463.58%
Loan Loss Reserve to Nonperforming Loans and Performing TDR's 243.37 % 198.48% 240.58% 243.37 % 240.58%
Nonperforming Loans to Loans 0.28 % 0.33% 0.29% 0.28 % 0.29%
Nonperforming Assets to Assets 0.23 % 0.28% 0.24% 0.23 % 0.24%
Total Impaired and Watch List Loans to Total Loans 4.28 % 4.31% 4.97% 4.28 % 4.97%
OTHER DATA
Full Time Equivalent Employees 540 528 531 540 531
Offices 49 49 48 49 48
(1) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Financial Measures"
(2) Capital ratios for June 30, 2017 are preliminary until the Call Report is filed.
* Share and per share data has been adjusted for a 3-for-2 stock split in the form of a stock dividend on August 5, 2016.

CONSOLIDATED BALANCE SHEETS (in thousands except share data)
June 30, December 31,
2017 2016
(Unaudited)
ASSETS
Cash and due from banks$ 111,406 $ 142,408
Short-term investments 25,930 24,872
Total cash and cash equivalents 137,336 167,280
Securities available for sale (carried at fair value) 530,312 504,191
Real estate mortgage loans held for sale 4,221 5,915
Loans, net of allowance for loan losses of $44,563 and $43,718 3,532,441 3,427,209
Land, premises and equipment, net 56,492 52,092
Bank owned life insurance 74,929 74,006
Federal Reserve and Federal Home Loan Bank stock 11,522 11,522
Accrued interest receivable 12,028 11,687
Goodwill 4,970 4,970
Other assets 28,748 31,153
Total assets$ 4,392,999 $ 4,290,025
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Noninterest bearing deposits$ 762,965 $ 819,803
Interest bearing deposits 2,852,974 2,758,109
Total deposits 3,615,939 3,577,912
Short-term borrowings
Securities sold under agreements to repurchase 60,188 50,045
Other short-term borrowings 215,000 180,000
Total short-term borrowings 275,188 230,045
Long-term borrowings 30 32
Subordinated debentures 30,928 30,928
Accrued interest payable 4,809 5,676
Other liabilities 15,645 18,365
Total liabilities 3,942,539 3,862,958
STOCKHOLDERS' EQUITY
Common stock: 90,000,000 shares authorized, no par value
25,185,619 shares issued and 25,021,759 outstanding as of June 30, 2017
25,096,087 shares issued and 24,937,865 outstanding as of December 31, 2016 105,744 104,405
Retained earnings 347,427 327,873
Accumulated other comprehensive income/(loss) 369 (2,387)
Treasury stock, at cost (2017 - 163,860 shares, 2016 - 158,222 shares) (3,169) (2,913)
Total stockholders' equity 450,371 426,978
Noncontrolling interest 89 89
Total equity 450,460 427,067
Total liabilities and equity$ 4,392,999 $ 4,290,025

CONSOLIDATED STATEMENTS OF INCOME (unaudited - in thousands except share and per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
NET INTEREST INCOME
Interest and fees on loans
Taxable$ 36,967 $ 30,918 $ 71,414 $ 60,548
Tax exempt 162 111 312 222
Interest and dividends on securities
Taxable 2,364 2,297 4,684 4,843
Tax exempt 1,274 947 2,436 1,842
Interest on short-term investments 54 82 102 110
Total interest income 40,821 34,355 78,948 67,565
Interest on deposits 6,243 4,694 11,685 8,889
Interest on borrowings
Short-term 431 99 741 246
Long-term 328 289 642 575
Total interest expense 7,002 5,082 13,068 9,710
NET INTEREST INCOME 33,819 29,273 65,880 57,855
Provision for loan losses 500 0 700 0
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 33,319 29,273 65,180 57,855
NONINTEREST INCOME
Wealth advisory fees 1,284 1,133 2,534 2,293
Investment brokerage fees 299 212 620 500
Service charges on deposit accounts 3,253 2,843 6,396 5,623
Loan, insurance and service fees 1,897 1,892 3,790 3,730
Merchant card fee income 570 527 1,108 1,024
Bank owned life insurance income 402 489 873 662
Other income 659 587 1,168 515
Mortgage banking income 378 384 509 711
Net securities gains 49 0 52 52
Total noninterest income 8,791 8,067 17,050 15,110
NONINTEREST EXPENSE
Salaries and employee benefits 11,065 10,592 22,486 20,197
Net occupancy expense 1,154 1,041 2,274 2,137
Equipment costs 1,156 909 2,231 1,810
Data processing fees and supplies 1,974 2,120 3,990 4,152
Corporate and business development 1,196 763 2,698 1,620
FDIC insurance and other regulatory fees 419 557 853 1,080
Professional fees 801 859 1,755 1,686
Other expense 1,587 1,605 3,113 3,148
Total noninterest expense 19,352 18,446 39,400 35,830
INCOME BEFORE INCOME TAX EXPENSE 22,758 18,894 42,830 37,135
Income tax expense 7,394 6,091 12,952 12,053
NET INCOME$ 15,364 $ 12,803 $ 29,878 $ 25,082
BASIC WEIGHTED AVERAGE COMMON SHARES 25,183,186 25,045,251 25,167,799 25,032,502
BASIC EARNINGS PER COMMON SHARE$ 0.61 $ 0.51 $ 1.19 $ 1.00
DILUTED WEIGHTED AVERAGE COMMON SHARES 25,619,977 25,395,770 25,618,552 25,370,607
DILUTED EARNINGS PER COMMON SHARE$ 0.60 $ 0.50 $ 1.17 $ 0.99

LAKELAND FINANCIAL CORPORATION
LOAN DETAIL
SECOND QUARTER 2017
(unaudited in thousands)
June 30, March 31, December 31, June 30,
2017 2017 2016 2016
Commercial and industrial loans:
Working capital lines of credit loans$ 717,875 20.0% $ 650,691 18.4% $ 624,404 18.0% $ 598,531 18.7%
Non-working capital loans 646,517 18.1 673,374 19.1 644,086 18.6 628,119 19.7
Total commercial and industrial loans 1,364,392 38.1 1,324,065 37.5 1,268,490 36.5 1,226,650 38.4
Commercial real estate and multi-family residential loans:
Construction and land development loans 209,772 5.8 238,018 6.7 245,182 7.1 221,027 6.9
Owner occupied loans 511,425 14.3 468,621 13.3 469,705 13.5 457,461 14.3
Nonowner occupied loans 450,907 12.6 463,186 13.1 458,404 13.2 395,597 12.4
Multifamily loans 170,902 4.8 201,147 5.7 127,632 3.7 114,618 3.6
Total commercial real estate and multi-family residential loans 1,343,006 37.5 1,370,972 38.8 1,300,923 37.5 1,188,703 37.2
Agri-business and agricultural loans:
Loans secured by farmland 156,053 4.4 138,071 3.9 172,633 5.0 146,519 4.6
Loans for agricultural production 175,334 4.9 189,516 5.4 222,210 6.4 162,240 5.1
Total agri-business and agricultural loans 331,387 9.3 327,587 9.3 394,843 11.4 308,759 9.7
Other commercial loans 116,651 3.3 105,684 3.0 98,270 2.8 82,786 2.5
Total commercial loans 3,155,436 88.2 3,128,308 88.6 3,062,526 88.2 2,806,898 87.8
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans 171,495 4.8 166,158 4.7 163,155 4.7 164,564 5.1
Open end and junior lien loans 172,530 4.8 167,517 4.7 169,664 4.9 164,645 5.2
Residential construction and land development loans 10,118 0.3 10,274 0.3 15,015 0.4 9,570 0.3
Total consumer 1-4 family mortgage loans 354,143 9.9 343,949 9.7 347,834 10.0 338,779 10.6
Other consumer loans 68,646 1.9 60,881 1.7 61,308 1.8 52,492 1.6
Total consumer loans 422,789 11.8 404,830 11.4 409,142 11.8 391,271 12.2
Subtotal 3,578,225 100.0% 3,533,138 100.0% 3,471,668 100.0% 3,198,169 100.0%
Less: Allowance for loan losses (44,563) (43,774) (43,718) (43,247)
Net deferred loan fees (1,221) (859) (741) (172)
Loans, net$ 3,532,441 $ 3,488,505 $ 3,427,209 $ 3,154,750
LAKELAND FINANCIAL CORPORATION
DEPOSITS AND BORROWINGS
SECOND QUARTER 2017
(unaudited in thousands)
June 30, March 31, December 31, June 30,
2017 2017 2016 2016
Non-interest bearing demand deposits$ 762,965 $ 762,575 $ 819,803 $ 727,308
Savings and transaction accounts:
Savings deposits 275,151 277,148 268,970 265,415
Interest bearing demand deposits 1,322,847 1,346,651 1,325,320 1,235,305
Time deposits:
Deposits of $100,000 or more 1,015,741 1,056,025 924,825 928,156
Other time deposits 239,235 236,998 238,994 247,271
Total deposits$ 3,615,939 $ 3,679,397 $ 3,577,912 $ 3,403,455
FHLB advances and other borrowings 275,188 175,734 261,005 87,328
Total funding sources$ 3,891,127 $ 3,855,131 $ 3,838,917 $ 3,490,783

LAKELAND FINANCIAL CORPORATION
AVERAGE BALANCE SHEET AND NET INTEREST ANALYSIS
(UNAUDITED)
Three Months Ended Three Months Ended Three Months Ended
June 30, 2017 March 31, 2017 June 30, 2016
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)$3,566,504 $36,967 4.16% $3,491,018 $34,447 4.00% $3,180,783 $30,918 3.91%
Tax exempt (1) 19,903 240 4.82 18,137 221 4.94 11,763 164 5.62
Investments: (1)
Available for sale 531,262 4,291 3.24 515,283 4,083 3.21 488,762 3,736 3.07
Short-term investments 6,124 8 0.52 5,121 5 0.40 5,805 3 0.21
Interest bearing deposits 26,441 46 0.70 30,326 43 0.58 75,908 79 0.42
Total earning assets$4,150,234 $41,552 4.02% $4,059,885 $38,799 3.88% $3,763,021 $34,900 3.73%
Less: Allowance for loan losses (44,090) (43,981) (43,228)
Nonearning Assets
Cash and due from banks 101,446 108,682 109,744
Premises and equipment 54,341 52,729 48,921
Other nonearning assets 133,564 132,830 125,175
Total assets$4,395,495 $4,310,145 $4,003,633
Interest Bearing Liabilities
Savings deposits$274,645 $105 0.15% $271,087 $99 0.15% $263,331 $115 0.18%
Interest bearing checking accounts 1,403,560 2,387 0.68 1,383,791 1,952 0.57 1,309,443 1,455 0.45
Time deposits:
In denominations under $100,000 237,917 700 1.18 238,347 670 1.14 249,452 719 1.16
In denominations over $100,000 1,009,964 3,051 1.21 975,450 2,721 1.13 937,470 2,405 1.03
Miscellaneous short-term borrowings 214,520 431 0.81 184,950 310 0.68 96,878 99 0.41
Long-term borrowings and subordinated debentures (4) 30,959 328 4.25 30,959 314 4.11 30,960 289 3.75
Total interest bearing liabilities$3,171,565 $7,002 0.89% $3,084,584 $6,066 0.80% $2,887,534 $5,082 0.71%
Noninterest Bearing Liabilities
Demand deposits 756,262 768,495 677,797
Other liabilities 22,381 25,172 26,316
Stockholders' Equity 445,287 431,894 411,986
Total liabilities and stockholders' equity$4,395,495 $4,310,145 $4,003,633
Interest Margin Recap
Interest income/average earning assets 41,552 4.02 38,799 3.88 34,900 3.73
Interest expense/average earning assets 7,002 0.68 6,066 0.61 5,082 0.54
Net interest income and margin $34,550 3.34% $32,733 3.27% $29,818 3.19%
(1)Tax exempt income was converted to a fully taxable equivalent basis at a 35 percent tax rate for 2017 and 2016. 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 $731,000, $672,000 and $545,000 in the three-month periods ended June 30, 2017, March 31, 2017 and June 30, 2016, respectively.
(2)Loan fees, which are immaterial in relation to total taxable loan interest income for 2017 and 2016, 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 and tangible book value per share 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. Tangible assets are calculated by excluding the balance of goodwill and other intangible assets from the calculation of total assets. Tangible book value per share is calculated by dividing tangible common equity by the number of shares outstanding. Because not all companies use the same calculation of tangible common equity and tangible assets, this presentation may not be comparable to other similarly titled measures calculated by other companies. However, management considers these measures of the company’s value including only earning assets as meaningful to an understanding of the company’s financial information. A reconciliation of these non-GAAP financial measures is provided below (dollars in thousands, except per share data).


Three Months Ended Six Months Ended
Jun. 30, Mar. 31, Jun. 30, Jun. 30, Jun. 30,
2017 2017 2016 2017 2016
Total Equity$ 450,460 $ 437,202 $ 418,893 $ 450,460 $ 418,893
Less: Goodwill (4,970) (4,970) (4,970) (4,970) (4,970)
Plus: Deferred tax assets related to goodwill 1,844 1,840 1,833 1,844 1,833
Tangible Common Equity 447,334 434,072 415,756 447,334 415,756
Assets$ 4,392,999 $ 4,319,103 $ 3,937,304 $ 4,392,999 $ 3,937,304
Less: Goodwill (4,970) (4,970) (4,970) (4,970) (4,970)
Plus: Deferred tax assets related to goodwill 1,844 1,840 1,833 1,844 1,833
Tangible Assets 4,389,873 4,315,973 3,934,167 4,389,873 3,934,167
Ending common shares issued 25,185,619 25,180,759 25,045,251 25,185,619 25,045,251
Tangible Book Value Per Common Share *$ 17.76 $ 17.24 $ 16.60 $ 17.76 $ 16.60
Tangible Common Equity/Tangible Assets 10.19% 10.06% 10.57% 10.19% 10.57%
*Share and per share data has been adjusted for a 3-for-2stock split in the form of a stock dividend on August 5, 2016.


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

Source:Lake City Bank