Lakeland Financial (LKFN) - 2019 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited consolidated financial statements for the periods ended September 30, 2019, and December 31, 2018 Consolidated Balance Sheets This statement summarizes the company's assets, liabilities, and stockholders' equity at specific points in time Consolidated Balance Sheet Summary (in thousands) | Metric | Sep 30, 2019 (Unaudited) | Dec 31, 2018 | | :--- | :--- | :--- | | Total assets | $4,948,155 | $4,875,254 | | Total liabilities | $4,363,719 | $4,353,550 | | Total stockholders' equity | $584,347 | $521,615 | - Total assets increased by $72.9 million (1.5%) from December 31, 2018, to September 30, 2019, driven by growth in net loans and securities[7][106] - Total stockholders' equity increased by $62.7 million (12.0%) from December 31, 2018, to September 30, 2019, due to net income and other comprehensive income[7][106][170] Consolidated Statements of Income This statement details the company's revenues, expenses, and net income over specific periods Consolidated Income Statement Summary | Metric (in thousands) | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $39,545 | $37,925 | $116,165 | $111,681 | | Provision for loan losses | $1,000 | $1,100 | $2,985 | $6,100 | | Noninterest income | $10,765 | $10,624 | $33,878 | $30,225 | | Noninterest expense | $22,737 | $22,200 | $67,302 | $63,705 | | Net income | $21,454 | $20,570 | $64,849 | $59,048 | | Basic EPS | $0.84 | $0.81 | $2.54 | $2.33 | | Diluted EPS | $0.83 | $0.80 | $2.52 | $2.30 | - Net income for the nine months ended September 30, 2019, increased by 9.8% to $64.8 million, driven by higher income and lower loan loss provisions[8][123] - Diluted EPS for the nine months ended September 30, 2019, increased by 9.6% to $2.52[8][104] Consolidated Statements of Comprehensive Income This statement reports net income and other comprehensive income, such as unrealized gains or losses Consolidated Comprehensive Income Summary | Metric (in thousands) | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Net income | $21,454 | $20,570 | $64,849 | $59,048 | | Total other comprehensive income (loss), net of tax | $3,967 | $(3,566) | $19,658 | $(12,365) | | Comprehensive income | $25,421 | $17,004 | $84,507 | $46,683 | - Comprehensive income for the nine months ended September 30, 2019, increased significantly to $84.5 million, driven by unrealized gains on securities[10][106] Consolidated Statements of Changes in Stockholders' Equity This statement tracks changes in equity from net income, dividends, and other comprehensive income Changes in Stockholders' Equity (Nine Months Ended Sep 30, 2019) | Metric (in thousands) | Balance at Jan 1, 2019 | Balance at Sep 30, 2019 | | :--- | :--- | :--- | | Total Stockholders' Equity | $521,615 | $584,347 | | Net income | $64,849 | | | Other comprehensive income, net of tax | $19,658 | | | Cash dividends declared | $(21,965) | | | Stock based compensation expense | $3,626 | | - Stockholders' equity increased by $62.7 million from January 1 to September 30, 2019, driven by net income and other comprehensive income[13][106][170] Consolidated Statements of Cash Flows This statement outlines cash movements from operating, investing, and financing activities Consolidated Cash Flow Summary | Metric (in thousands) | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :--- | :--- | :--- | | Net cash from operating activities | $71,874 | $75,168 | | Net cash from investing activities | $(121,456) | $(81,401) | | Net cash from financing activities | $(30,765) | $12,373 | | Net change in cash and cash equivalents | $(80,347) | $6,140 | | Cash and cash equivalents at end of period | $136,575 | $182,320 | - Net cash used in investing activities increased significantly due to a larger net increase in total loans and purchases of life insurance[14] - Net cash from financing activities shifted from an inflow to a significant outflow, mainly due to decreases in short-term borrowings and FHLB advances[14] Notes to the Consolidated Financial Statements This section provides detailed disclosures and explanations for the line items in the financial statements NOTE 1. BASIS OF PRESENTATION This note outlines the basis of presentation for the financial statements and the adoption of new accounting standards - The Company adopted ASU 2016-02 (Leases) on January 1, 2019, recognizing a $5.5 million right-of-use asset and lease liability[17] - Adoption of ASU 2017-08 resulted in a $1.3 million reduction in retained earnings, net of tax, due to accelerated premium amortization[18] - The Company estimates a 5%-15% increase in its allowance for credit losses upon adoption of the CECL methodology[22][24] NOTE 2. SECURITIES This note provides details on the company's securities, including fair value, cost, and unrealized gains and losses Securities Available-for-Sale Summary | Metric (in thousands) | Sep 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Total Amortized Cost | $594,564 | $591,621 | | Total Fair Value | $613,230 | $585,549 | | Gross Unrealized Gain | $19,192 | $2,795 | | Gross Unrealized Losses | $(526) | $(8,867) | - The fair value of securities available-for-sale increased by $27.7 million, with a significant increase in gross unrealized gains[29][106] - Securities with unrealized losses decreased from $384.5 million to $49.5 million, with losses deemed primarily interest rate driven[34][37] NOTE 3. LOANS This note details the composition of the company's loan portfolio by segment Loan Portfolio Composition | Loan Category (in thousands) | Sep 30, 2019 | % of Total | Dec 31, 2018 | % of Total | | :--- | :--- | :--- | :--- | :--- | | Commercial and industrial loans | $1,432,330 | 35.6% | $1,405,379 | 35.9% | | Commercial real estate and multi-family residential loans | $1,680,808 | 41.7% | $1,569,635 | 40.1% | | Agri-business and agricultural loans | $329,967 | 8.2% | $370,513 | 9.5% | | Other commercial loans | $100,100 | 2.5% | $95,657 | 2.4% | | Consumer 1-4 family mortgage loans | $390,775 | 9.7% | $389,078 | 9.9% | | Other consumer loans | $90,631 | 2.3% | $86,064 | 2.2% | | Subtotal | $4,024,611 | 100.0% | $3,916,326 | 100.0% | | Less: Allowance for loan losses | $(50,628) | | $(48,453) | | | Loans, net | $3,972,593 | | $3,866,292 | | - Net loans increased by $106.3 million (2.8%), driven by growth in commercial real estate and commercial and industrial loans[38][106][151] - Agri-business and agricultural loans decreased by $40.5 million due to seasonal repayments and yield curve impacts[38][151] NOTE 4. ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY This note details activity in the allowance for loan losses, impaired loans, and credit quality indicators Allowance for Loan Losses Activity | Metric (in thousands) | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Provision for loan losses | $1,000 | $1,100 | $2,985 | $6,100 | | Net loans charged-off | $(936) | $(463) | $(810) | $(4,878) | | Ending ALL balance | $50,628 | $48,343 | $50,628 | $48,343 | - The provision for loan losses decreased significantly to $3.0 million for the first nine months of 2019, compared to $6.1 million in 2018[40][135] - Total impaired loans increased by $1.4 million (5.3%) to $28.1 million at September 30, 2019, due to an increase in nonaccrual loans[41][155] - The allowance for loan losses as a percentage of total loans increased slightly to 1.26% at September 30, 2019[157] NOTE 5. FAIR VALUE DISCLOSURES This note describes the fair value measurement hierarchy and methodologies for various financial instruments - The Company's fair value measurements primarily use Level 2 inputs for securities and derivatives, reflecting observable market data[68][71][72][79] - Impaired loans are measured at fair value on a nonrecurring basis, primarily using Level 3 inputs based on collateral appraisals[73][83] Fair Value of Impaired Loans (Collateral Based) | Asset Category (in thousands) | Fair Value (Sep 30, 2019) | Valuation Methodology | Unobservable Inputs (Average Discount) | | :--- | :--- | :--- | :--- | | Commercial and industrial impaired loans | $8,255 | Collateral based | 53% (1%-100%) | | Commercial real estate impaired loans | $973 | Collateral based | 42% (30%-100%) | | Agri-business and agricultural impaired loans | $57 | Collateral based | 61% | | Consumer 1-4 family mortgage impaired loans | $1,044 | Collateral based | 13% (5%-100%) | NOTE 6. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE This note describes collateralized borrowings from securities sold under repurchase agreements - The Company had no securities sold under agreements to repurchase at September 30, 2019, a decrease from $75.6 million at year-end 2018[89] NOTE 7. EMPLOYEE BENEFIT PLANS This note provides details on the net periodic benefit cost for the company's pension and SERP plans Net Periodic Benefit Cost | Metric (in thousands) | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Net pension expense (benefit) | $21 | $37 | $62 | $111 | | Net SERP expense (benefit) | $13 | $12 | $41 | $35 | - The Company contributed $27,000 to its pension plan as of September 30, 2019, to maintain full funding[90] - There is no service cost for the pension plan or SERP as the plans were frozen effective April 1, 2000[90] NOTE 8. OFFSETTING ASSETS AND LIABILITIES This note summarizes information about financial instruments subject to master netting arrangements Offsetting Financial Instruments | Metric (in thousands) | Sep 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Gross Interest Rate Swap Derivatives (Assets) | $8,992 | $3,869 | | Gross Interest Rate Swap Derivatives (Liabilities) | $9,802 | $4,025 | | Repurchase Agreements (Liabilities) | $0 | $75,555 | - The Company had no repurchase agreements outstanding at September 30, 2019, compared to $75.6 million at year-end 2018[93] NOTE 9. EARNINGS PER SHARE This note provides the calculation of basic and diluted earnings per common share Earnings Per Share Calculation | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Basic EPS | $0.84 | $0.81 | $2.54 | $2.33 | | Diluted EPS | $0.83 | $0.80 | $2.52 | $2.30 | | Weighted average shares outstanding for basic EPS | 25,622,338 | 25,301,033 | 25,576,740 | 25,284,085 | | Dilutive effect of stock options, awards and warrants | 174,358 | 444,118 | 168,289 | 435,608 | - Diluted EPS increased by $0.22 (9.6%) for the nine months ended September 30, 2019, compared to the prior year period[96][104][105] NOTE 10. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) This note summarizes the changes within each classification of accumulated other comprehensive income Changes in Accumulated Other Comprehensive Income | Metric (in thousands) | Balance at Jan 1, 2019 | Net current period other comprehensive income | Balance at Sep 30, 2019 | | :--- | :--- | :--- | :--- | | Unrealized Gains and (Losses) on Available-for-Sales Securities | $(4,796) | $19,542 | $14,746 | | Defined Benefit Pension Gains (Losses) | $(1,395) | $116 | $(1,279) | | Total | $(6,191) | $19,658 | $13,467 | - Accumulated other comprehensive income shifted from a loss of $6.2 million to a gain of $13.5 million, driven by a $19.5 million increase in unrealized gains[99][106] NOTE 11. LEASES This note details the company's accounting for leases, including right-of-use assets and lease liabilities - The Company recognized a right-of-use asset and lease liability of $5.2 million each as of September 30, 2019, for operating leases[103] Lease Metrics | Lease Metric (in thousands) | 9 Months Ended Sep 30, 2019 | | :--- | :--- | | Total lease cost | $390 | | Operating cash outflows from operating leases | $372 | | Weighted-average remaining lease term | 10.1 years | | Weighted average discount rate | 2.8% | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial performance, condition, and key trends Overview This overview highlights key performance metrics and financial condition changes for the reported periods Key Performance Metrics | Metric | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Net income | $64.8 million | $59.0 million | $21.5 million | $20.6 million | | Diluted EPS | $2.52 | $2.30 | $0.83 | $0.80 | | Annualized return on average total equity | 15.68% | 16.42% | 14.78% | 16.55% | | Annualized return on average total assets | 1.76% | 1.67% | 1.72% | 1.72% | | Average equity to average assets ratio | 11.22% | 10.16% | 11.65% | 10.38% | - Net income for the first nine months of 2019 increased by 9.8% to $64.8 million, and diluted EPS rose by 9.6% to $2.52[104] - Total assets increased by $72.9 million (1.5%) to $4.948 billion, driven by growth in net loans and securities[106] Critical Accounting Policies This section describes accounting policies requiring significant management judgment and estimation - The Company's critical accounting policies include determining the allowance for loan losses and the valuation of investment securities[107] - The allowance for loan losses is determined through a detailed process considering portfolio quality, economic conditions, and historical loss analysis[108][112][114] - Other-than-temporary impairment for investment securities is assessed based on the extent of unrealized loss and the Company's intent to hold the security[119][120] Results of Operations This section provides a detailed analysis of the company's operational performance and financial results Overview This overview summarizes key financial performance metrics for the three and nine months ended September 30, 2019 and 2018 Financial Performance Summary | Metric (in thousands) | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $39,545 | $37,925 | $116,165 | $111,681 | | Provision for loan losses | $1,000 | $1,100 | $2,985 | $6,100 | | Noninterest income | $10,765 | $10,624 | $33,878 | $30,225 | | Noninterest expense | $22,737 | $22,200 | $67,302 | $63,705 | | Efficiency ratio | 45.19% | 45.51% | 44.86% | 44.81% | | Diluted EPS | $0.83 | $0.80 | $2.52 | $2.30 | - Net income for the first nine months of 2019 increased by $5.8 million (9.8%) to $64.8 million, driven by growth in net interest and noninterest income[123] Net Interest Income This section analyzes changes in net interest income, interest income, and interest expense Net Interest Income and Margin | Metric (in thousands) | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $116,165 | $111,681 | $39,545 | $37,925 | | Yield on earning assets | 4.75% | 4.41% | 4.67% | 4.53% | | Cost of funds (as % of average earning assets) | 1.35% | 1.01% | 1.29% | 1.11% | | Tax equivalent net interest margin | 3.40% | 3.40% | 3.38% | 3.42% | - Net interest income increased by $4.5 million (4.0%) for the nine months ended September 30, 2019, due to a $185.3 million increase in average earning assets[130] - The tax equivalent net interest margin remained stable at 3.40% for the nine-month period but declined to 3.38% for the third quarter of 2019[132][134] Provision for Loan Losses This section discusses the provision for loan losses, highlighting a decrease in expense due to lower net charge-offs Provision and Net Charge-offs | Metric (in thousands) | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Provision for loan loss expense | $3,000 | $6,100 | $1,000 | $1,100 | | Net charge-offs | $810 | $4,900 | $936 | $463 | - The provision for loan loss expense decreased by $3.1 million for the nine months ended September 30, 2019, due to lower net charge-offs[135] Noninterest Income This section analyzes the components of noninterest income, detailing increases across various fee categories Noninterest Income Breakdown | Noninterest Income Category (in thousands) | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | Dollar Change | Percent Change | | :--- | :--- | :--- | :--- | :--- | | Wealth advisory fees | $5,002 | $4,676 | $326 | 7.0% | | Investment brokerage fees | $1,300 | $1,043 | $257 | 24.6% | | Service charges on deposit accounts | $12,791 | $11,542 | $1,249 | 10.8% | | Loan and service fees | $7,403 | $6,925 | $478 | 6.9% | | Mortgage banking income | $1,256 | $998 | $258 | 25.9% | | Total noninterest income | $33,878 | $30,225 | $3,653 | 12.1% | - Total noninterest income increased by $3.7 million (12.1%) for the nine months ended September 30, 2019, with broad-based growth[137] - Mortgage banking income increased by $317,000 (99.4%) for the third quarter of 2019, driven by mortgage refinance volumes[138] Noninterest Expense This section details changes in noninterest expense categories, including salaries, professional fees, and FDIC insurance Noninterest Expense Breakdown | Noninterest Expense Category (in thousands) | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | Dollar Change | Percent Change | | :--- | :--- | :--- | :--- | :--- | | Salaries and employee benefits | $37,231 | $36,267 | $964 | 2.7% | | Professional fees | $3,487 | $2,716 | $771 | 28.4% | | Other expense | $6,880 | $5,346 | $1,534 | 28.7% | | FDIC insurance and other regulatory fees | $566 | $1,282 | $(716) | (55.9%) | | Total noninterest expense | $67,302 | $63,705 | $3,597 | 5.6% | - Total noninterest expense increased by $3.6 million (5.6%), driven by higher salaries, professional fees, and other expenses[139] - FDIC insurance fees decreased significantly due to credits received against the Bank's deposit insurance assessment[139][140] Income Tax Expense This section provides an overview of the company's income tax expense and effective tax rates Income Tax Summary | Metric | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Income tax expense | $14,907 | $13,053 | $5,119 | $4,679 | | Effective tax rate | 18.7% | 18.1% | 19.3% | 18.5% | - Income tax expense increased by $1.9 million for the nine months ended September 30, 2019, with the effective tax rate rising to 18.7%[142] Financial Condition This section analyzes the company's balance sheet, including assets, liabilities, and capital resources Overview This overview summarizes the company's total assets, their growth drivers, and changes in funding sources - Total assets increased by $72.9 million (1.5%) to $4.948 billion, driven by a $106.3 million increase in net loans[143] - Total deposits increased by $239.3 million, primarily from core deposits, while total borrowings decreased by $245.6 million[143] Uses of Funds This section details changes in the company's uses of funds, focusing on cash, investments, and loans held-for-sale - Total cash and cash equivalents decreased by $80.3 million (37%) to $136.6 million[144] - The fair value of the investment portfolio increased by $27.7 million to $613.2 million, with purchases totaling $91.7 million[145][146] Investment Portfolio Summary | Investment Category (in thousands) | Amortized Cost (Sep 30, 2019) | Fair Value (Sep 30, 2019) | Amortized Cost (Dec 31, 2018) | Fair Value (Dec 31, 2018) | | :--- | :--- | :--- | :--- | :--- | | U.S. Treasury securities | $995 | $1,007 | $994 | $987 | | U.S. government sponsored agencies | $2,303 | $2,308 | $4,435 | $4,350 | | Mortgage-backed securities: residential | $291,427 | $296,232 | $329,516 | $325,412 | | Mortgage-backed securities: commercial | $37,335 | $37,669 | $38,712 | $38,141 | | State and municipal securities | $262,504 | $276,014 | $217,964 | $216,659 | | Total | $594,564 | $613,230 | $591,621 | $585,549 | Loan Portfolio This section provides a detailed breakdown of the loan portfolio and discusses changes in non-performing assets Loan Portfolio Growth | Loan Category (in thousands) | Sep 30, 2019 | Dec 31, 2018 | Current Period Change | | :--- | :--- | :--- | :--- | | Commercial and industrial loans | $1,432,330 | $1,405,379 | $26,951 | | Commercial real estate and multi-family residential loans | $1,680,808 | $1,569,635 | $111,173 | | Agri-business and agricultural loans | $329,967 | $370,513 | $(40,546) | | Total gross loans | $4,024,611 | $3,916,326 | $108,285 | | Loans, net | $3,972,593 | $3,866,292 | $106,301 | Non-performing Assets | Non-performing Assets (in thousands) | Sep 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Nonaccrual loans | $18,657 | $7,260 | | Total nonperforming loans | $18,963 | $7,260 | | Total nonperforming assets | $19,286 | $7,576 | | Nonperforming loans to total loans | 0.47% | 0.19% | | Nonperforming assets to total assets | 0.39% | 0.16% | - Total nonperforming assets increased by $11.7 million (154.6%) to $19.3 million, due to four commercial relationships being placed in nonaccrual status[153] - The allowance for loan losses increased by $2.2 million (4.5%) to $50.6 million[163] Sources of Funds This section analyzes the company's funding sources, including deposits and borrowings Funding Source Summary | Funding Source (in thousands) | Balance (Sep 30, 2019) | Rate (Sep 30, 2019) | Balance (Sep 30, 2018) | Rate (Sep 30, 2018) | | :--- | :--- | :--- | :--- | :--- | | Noninterest bearing demand deposits | $923,253 | 0.00% | $841,797 | 0.00% | | Total deposits | $4,220,248 | 1.40% | $4,070,565 | 1.03% | | FHLB advances and other borrowings | $111,771 | 3.11% | $151,161 | 1.83% | | Total funding sources | $4,332,019 | 1.44% | $4,221,726 | 1.06% | - Total deposits increased by $239.3 million (5.9%), with core deposits increasing by $287.5 million[167] - Total borrowings decreased significantly by $245.6 million (88.8%), due to repayments of FHLB advances and repurchase agreements[169] Capital This section discusses the company's stockholders' equity and regulatory capital ratios - Total stockholders' equity increased by $62.7 million (12.0%) to $584.3 million, driven by net income and other comprehensive income[170] - The Company and the Bank remained 'well-capitalized' under regulatory guidelines as of September 30, 2019[172] Consolidated Capital Ratios | Capital Ratio (Consolidated) | Sep 30, 2019 (Actual) | Minimum Required for Capital Adequacy | Minimum Required for Well Capitalized | | :--- | :--- | :--- | :--- | | Total Capital (to Risk Weighted Assets) | 14.78% | 8.00% | N/A | | Tier I Capital (to Risk Weighted Assets) | 13.62% | 6.00% | N/A | | Common Equity Tier 1 (CET1) | 12.94% | 4.50% | N/A | | Tier I Capital (to Average Assets) | 12.07% | 4.00% | N/A | Item 3. Quantitative and Qualitative Disclosures About Market Risk This section addresses the company's primary market risk exposure, which is interest rate risk, and its management approach - Interest rate risk is the Company's primary market risk exposure, managed through computer simulated earnings impact analysis[179] - The Company's current balance sheet structure is considered within acceptable risk levels, with net interest income projected to increase in rising rate environments[179][182] Net Interest Income Sensitivity Analysis | Interest Rate Scenario | Net Interest Income (in thousands) | Percent of change from Base | | :--- | :--- | :--- | | Base | $160,465 | | | Falling 100 Basis Points | $149,468 | (6.85)% | | Rising 100 Basis Points | $168,806 | 5.20% | | Rising 300 Basis Points | $183,878 | 14.59% | Item 4. Controls and Procedures This section confirms management's evaluation of the effectiveness of the company's disclosure controls and procedures - The Company's disclosure controls and procedures were effective as of September 30, 2019[183] - No material changes to the Company's internal control over financial reporting occurred during the quarter ended September 30, 2019[184] PART II. OTHER INFORMATION Item 1. Legal Proceedings This section states that there are no material pending legal proceedings against the company or its subsidiaries - No material pending legal proceedings exist against the Company or its subsidiaries[186] Item 1A. Risk Factors This section indicates no material changes to previously disclosed risk factors - There have been no material changes to the risk factors disclosed in the Company's Form 10-K for the year ended December 31, 2018[187] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the issuance of common stock and the company's share repurchase program - On February 8, 2019, the Company issued 224,066 shares of common stock through a cashless exercise of a warrant[188] - The board approved a share repurchase program authorizing up to $30 million in common stock repurchases, expiring December 31, 2019[189] Share Repurchase Activity | Period | Total Number of Shares Purchased | Average Price Paid per Share | Maximum Number (or Appropriate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs | | :--- | :--- | :--- | :--- | | July 1-31 | 3,497 | $46.48 | $30,000,000 | | August 1-31 | 1,203 | $43.98 | $30,000,000 | | September 1-30 | 0 | $0 | $30,000,000 | | Total | 4,700 | $45.84 | $30,000,000 | Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities - No defaults upon senior securities occurred[190] Item 4. Mine Safety Disclosures This section indicates that there are no mine safety disclosures - No mine safety disclosures are reported[191] Item 5. Other Information This section states that there is no other information to disclose - No other information is disclosed[191] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q - Exhibits include CEO and CFO certifications and Interactive Data Files (XBRL) for the consolidated financial statements[193] SIGNATURES This section contains the signatures of the company's authorized officers certifying the report filing - The report was signed on November 1, 2019, by the President and CEO, EVP and CFO, and SVP and Chief Accounting Officer[196]