Strength Through Adversity
Heading into 2007, Lake City Bank had never been stronger. Net income at the end of 2006 was $18.7 million, which was up from the year before. Assets topped $2 billion, and business hummed along.
The bottom started to fall out of the economy in 2007 and by the fourth quarter of that year, the U.S. had entered what’s known as the Great Recession. By the time things turned around, housing prices had dropped roughly 30 percent and unemployment peaked at 10 percent.
Still, Lake City Bank’s net income continued to grow, and its balance sheet remained solid. In 2009, the government introduced the Capital Purchase Program (CPP) under the Emergency Economic Stabilization Act. CPP was designed to give healthy banks more money to lend to bolster the sluggish economy. In February, the bank sold shares of preferred stock to the federal government for $56 million as part of this program.
While many community banks struggled to buy back their shares in the intended five-year time frame, Lake City Bank did so in only 16 months. Just 12 percent—less than 100—of ALL banks had repaid the CPP investment at the time.
Lakeland Financial’s President and CEO Michael Kubacki noted that total loans increased by 10 percent during this period, which helped stabilize the region’s economy. “We have continued to use our balance sheet to support the Indiana markets we serve,” he said. “The robust loan growth demonstrates that we’re supporting our Hoosier communities.”
Though net income dipped slightly in 2009, by the time the Great Recession ended, Lake City Bank was back on its growth track. In Kubacki’s words, “Lake City Bank’s strong performance during these challenging times is gratifying to all of us who work here.” True, indeed.