Lakeland Financial Corp. in Warsaw, Ind., said Monday that third-quarter net income fell 6%, to $4.4 million, on deteriorating credit quality.
Earnings per share fell 8%, to 35 cents, from the year earlier.
The $1.9 billion-asset parent of Lake City Bank blamed the decline on loan chargeoffs of $2 million in the quarter, compared with $14,000 the year earlier.
The company said that the problem loans were confined to a single commercial and residential real estate developer and that its overall exposure to the soft residential construction market in Indiana was relatively limited and manageable.
News of the spike in chargeoffs spooked investors. In late trading Monday, Lakeland's were down more than 10%, to $21.93.
Through the first nine months this year, Lakeland has earned $14.4 million, up 2% from the year before.
