Lakeland Financial’s Success Grounded in Old-School Banking

David Findlay started his career in banking almost forty years ago at Chicago-based Northern Trust Corp., but it was his brief detour in the restaurant business where he truly learned the value of discipline.

“When you’re in the restaurant business, every single cost item matters significantly — what a napkin costs, what a condiment costs, what a straw costs,” says Findlay, the CEO of $6.6 billion Lakeland Financial Corp. in Warsaw, Indiana, which placed in the top 25 of all 300 banks examined in this year’s RankingBanking study. In its asset class, between $5 billion and $50 billion, it ranked ninth. Simplifying a complex business requires discipline, a lesson that carries with him to this day. “I loved my experience in Northern,” he says, “but it was my experience in the restaurant industry that taught me how to run a business.”

And Findlay and his team run an efficient operation at Lakeland, with a 46.8% efficiency ratio in 2021, compared to an efficiency ratio of 64% for all banks above $1 billion in assets as of Dec. 31, 2021, according to the Federal Deposit Insurance Corp.

In the latest RankingBanking analysis sponsored by Crowe LLP, the company’s success was driven by a high level of profitability, strong capital adequacy, a low level of nonperforming assets and total shareholder return exceeding 50% for 2021. And Lakeland has been a ubiquitous high performer, landing on Bank Director’s radar in 2011, when it ranked 15th in the Bank Performance Scorecard, which at the time examined the 150 biggest banks. From 2012 to 2017, Bank Director examined public banks solely by asset size; during that period, Lakeland consistently appeared in the top 20 among banks between $1 billion to $5 billion in assets, peaking at fourth in 2014. When Bank Director started publishing the top 25 banks in 2018 based on 2017 performance — irrespective of asset group — Lakeland landed at No. 4 overall. It’s since appeared in the top 20 every year since. The Bank Performance Scorecard was renamed RankingBanking this year.

Lake City Bank, Lakeland’s banking subsidiary, dominates its home market in Kosciusko County, where Warsaw is the county seat, holding 58% of local deposits, according to the FDIC. Expanding that map out to include surrounding counties, it comes in at No. 2, with 23% deposit share, behind another local Indiana bank, 1st Source Corp. in South Bend.

How does Lakeland do so well, year after year? Interviews with the executives leading Lakeland and the analysts covering the bank reveal a deceptively simple formula for success. It all boils down to discipline — fueled by a culture that values people and relationships.

“This is a pure kind of commercial bank, relationship driven,” says Terry McEvoy, managing director and research analyst at Stephens. Commercial lending comprises 90% of Lakeland’s loan portfolio, split between commercial & industrial (C&I), agri-business and various forms of commercial real estate loans. Success “starts with the culture and the philosophy of focusing on organic growth versus acquiring growth,” McEvoy says.

A lot of banks talk about their culture, but few organizations dedicate the same level of attention, resources and energy to it that Lakeland does.

Banking is a commodity industry, where there’s little beyond rates and terms to set one bank’s products apart from a competitor. Lakeland’s traditional banking model and markets across Indiana — largely in the northern part of the state, with additional locations in Indianapolis and Fort Wayne — don’t set it apart. Rather, Findlay points to a culture that values relationship-building. “As an industry, we get caught up in ensuring that we’re evolving in a technology-driven world, and we lose track of the simple act of taking care of the customer,” he says. “The long-term discipline of focusing on the customer and the communities, and making sure we take care of them, day in and day out, is one of the biggest contributors to our success over a long period of time.”

Every Lake City Bank employee — from retail staff to key executives — starts off with two days at Lake City University, an internally staffed and managed training program located on the bank’s headquarters campus in Warsaw. It even includes a mock branch.

“They don’t learn their trade out in the field. They learn it in the controlled environment of Lake City University,” says Findlay. The training program isn’t just a one-and-done orientation program; the bank’s employees attend classes in-person or online several times a year. “We believe that there’s the right way and the wrong way to do things,” says Findlay, “and we reinforce that over and over [again].”

Lakeland takes training so seriously that it even tasks executives with teaching some of the courses. Eric Ottinger, the bank’s chief commercial banking officer, helps lead a monthly class for new employees about the bank’s products and services; Chief Financial Officer Lisa O’Neill gets employees up to speed on the bank’s financials — everything from understanding the balance sheet and income statement to performance ratios and other indicators.

“Depending on what your role is in the bank, you will have a personalized curriculum with required courses that you have to take,” O’Neill says. When she joined the team in 2014, “they set up probably 20 meetings for me to meet with different people throughout the company in various parts of the organization. And they signed me up for a whole bunch of classes,” she recalls. “I had probably the first six months to work it into my everyday routine.”

Classes and training opportunities stem from an employee’s specific role, but they can also fuel personal growth and development. O’Neill’s class — which she teaches with two other executives — is offered three times a year to anyone who wants to take it.

Culture starts with people, and banks frequently talk about their strong cultures and the value they place on their employees and customers. But Lakeland’s culture displays an intentionality — a discipline — that sets it apart.

“Everybody operates on the same page,” says Damon DelMonte, managing director at Keefe, Bruyette & Woods. “You have the same mentality and approach when you go to make loans; you have loan officers that are looking for similar credits with risk profiles that fit the broader view of the company and [its] strategy … it all starts at home with this culture.”

Lakeland hasn’t made an acquisition in almost two decades. It’s not for a lack of targets, necessarily. Findlay is often asked by analysts about whether he’s changed his mind on M&A. But he’s just not interested — not when an acquisition could derail the culture he and his predecessor — Mike Kubacki, now the board chair — worked so hard to build.

“By doing things organically, versus through mergers and acquisitions, we get to select the next banker, one at a time,” says Findlay. He’d rather focus on hiring, developing and training the right people for his bank, rather than integrating large groups of employees who might not fit with the culture that he and his team have so carefully built.

Findlay leads his own course at Lake City University, The Leader Within, where the CEO shares lessons from his own career in banking. “I try to encourage … the idea that it doesn’t matter whether you went to college or not, it doesn’t matter what your degree was; if you did go to college, it doesn’t matter what your previous work experience has been,” he explains. “If you focus on an objective inside the bank, and you want to develop into that role, you can do that.”

Findlay didn’t plan on a career in banking when he graduated from DePauw University, located about an hour outside Indianapolis, with a history degree in 1984. Northern Trust hired him as a commercial banker anyway and gave him the training he needed to do the job. “I went into the training program at Northern Trust without an ounce of accounting or finance background. But through development at Northern and through training, I was able to learn the trade,” he says. “Education is important, but it doesn’t define what you can or can’t do. And so I’ve talked a lot about my own personal experience in banking, and my own ups and downs within the industry.”

Findlay worked for about a decade at Northern Trust under Kubacki, whom he later followed to Lake City Bank in 2000. Findlay served as Lakeland’s chief financial officer until he succeeded Kubacki in 2014 as CEO. “We inherited an organization that had a strong culture,” says Findlay. “Then, Mike [Kubacki] and I together integrated some of the strengths and features of the Northern culture that we thought would work at Lake City Bank.” Lake City University started under Kubacki’s leadership.

If a company’s culture stems from its leaders, then understanding Findlay provides a key to understanding Lakeland. The executives I spoke with, in separate interviews, describe their boss as a consummate people person.

Findlay often joins commercial bankers when they meet with clients. It’s not that he doesn’t trust his bankers; he wants to ensure that clients have multiple touchpoints with the bank. “David is right there, making sure that the clients know him,” says Ottinger. “And we really take a team approach, starting with David all the way through everyone at the bank, to make sure that [clients] know someone besides their relationship manager.”

Any commercial banker can put a client meeting on Findlay’s calendar, and he says he’ll be there. It’s yet another benefit to Lakeland’s organic growth strategy. “I can focus my time on helping take care of customers,” says Findlay, “instead of [finding and integrating] the next acquisition.”

O’Neill describes Findlay as a leader who fosters meaningful relationships with the organization’s 600-plus employees. “When I started at the bank, he would take me around and meet the different teams,” recalls O’Neill. “He would walk up to an employee at any level and not only know their name, but know their husband’s name, their kids’ names, where they’re from, what might be going on in their life. He has a very strong connection with every employee at the bank.”

Long before he was a banker, Findlay learned how to build connections with people from his father, a dentist. “I was always amazed at how he knew so much about his patients,” he says. “My dad always made it a point to instill in us the idea that other people’s lives are a lot more interesting than your own. The more you can find out about the people around you, the more enriched you’ll be by knowing it. And I’ve carried that through my banking experience.”

Kubacki reinforced his dad’s lessons, teaching Findlay that “you get a very short window to be with a customer.” Inside that short window, “you’ve got to make sure you gather all the information you need to understand that customer, understand what motivates them and understand what drives their needs.” Quickly identifying a customer’s needs helps create a more effective banker.

O’Neill says you always know where you stand with Findlay. “He’s very direct,” she says. “He’s just an incredibly hard worker, but also an incredibly compassionate person.”

That mix of traits came in handy during the pandemic, O’Neill says. But for such a culture-intensive organization, what happens when a crisis forces financial institutions across the country, including Lakeland, to close branch lobbies and send staff home? And what happens after?

Findlay didn’t like remote work one bit. When I interviewed him in May 2021 for an article in Bank Director magazine, he had recently welcomed his team back into the bank’s offices and branches, offering incentives to get vaccinated. He called remote work a “culture killer,” but he also understood the need for more flexibility going forward. In 2022, Lake City Bank transitioned to a flexible schedule, allowing approved employees to work remotely one day a week, as long as it’s Tuesday, Wednesday or Thursday. “We’ve held very firm in our belief that the best approach to running the business, and being successful for people inside the bank and outside the bank, is limiting the remote workforce option,” says Findlay. The policy hasn’t resulted in employee turnover, he says; staff seem to be on board. “They understand that we’re an organization of togetherness and not an organization of remote workplaces. The culture cannot be enriched by a remote workplace.”

Clearly, one-on-one relationships still matter at Lake City Bank. “I continuously get notes, emails, texts, comments from customers [who] say, ‘What amazes me about Lake City Bank is, when I walk into one of your branches, your bankers know me,’” says Findlay. More than 2 million transactions occurred in the bank’s 52 branches last year, most of which could have been done digitally. People still come in.

But a focus on old-school banking still has to consider the digital realm. O’Neill points to Lakeland’s increased investments in technology, including hiring technologists. And last year, Lake City Bank upgraded its digital platform, using the provider Q2 to combine four disparate online and mobile solutions into one platform for retail and business banking accounts. Enhancements include financial management tools, controls to manage debit cards and a feature that lets consumers switch cards used for subscriptions to services like Netflix.

“We have to offer alternatives to our clients,” says Chief Administrative Officer Kristin Pruitt, reflecting on the bank’s response to the pandemic, when customers flocked to digital. “More and more transactions will happen outside of the branches. There’s no doubt about that.”

The pandemic may have taught Findlay the value of adaptability and flexibility, but it’s by no means the first crisis he’s faced. He worked at Northern Trust during the savings and loan crisis of the 1980s and 1990s. He was Lakeland’s CFO when the Great Recession started in 2007. Now, as the U.S. economy struggles with inflation, the industry appears to be on the precipice of another downturn. Findlay and his team believe the company’s focus on discipline will help it weather the next storm.

“We consistently approach credit with the same mindset and the same process and the same strategies, regardless of economic conditions,” says Findlay. Many banks stopped serving the recreational vehicle sector when sales dropped during the financial crisis; Lake City Bank swooped in. “We were one of the banks sitting there with our balance sheet open to them,” he says. RV sales boomed during the pandemic. “When the economy is good, we don’t soften our credit mindset. And when the economy’s bad, we don’t tighten it. We are consistently applying the same credit standards to underwriting commercial credits.”

Many of the high-performing RankingBanking banks remain true to their underwriting standards, says Rick Childs, a partner at Crowe LLP, and that contributes to their success. “They don’t chase the last dollar,” he says.

Pruitt describes a culture of excellence at Lakeland that starts with Findlay and carries throughout — how customers are served, how the bank develops business, how employees view compliance and their work in the bank’s communities. “The success of the bank is the sum of everybody holding themselves to a standard of excellence,” she says. Lake City Bank’s eight core values end with independence because, she says, “every day, if we come in and we do the jobs that we need to do, then we have the right to stay independent.”

On May 17, Lake City Bank celebrated its 150th anniversary. As part of that celebration, the bank gave $150,000 away, split equally among 15 community foundations across its footprint. “We said, ‘there’s no better way to start the 150th celebration than to give back to the communities that have made us successful,’” says Findlay.

Serving as an integral part of its communities is one of the reasons that Lake City Bank has continued to operate — under the same name, no less — for 150 years, through economic downturns, including the Great Depression and Great Recession, and a global pandemic. “It starts with honesty; [it] starts with community services, taking care of clients, making sure that we’re profitable, and that we have a strong reputation as well as strong financial position to take care of customers,” says Ottinger. “It’s one banker, one customer, one branch, one market at a time that we continue to grow, and [it] has served us well.”

Emily McCormick is vice president of research for Bank Director.