×

Lakeland Financial Reports Record Performance

WARSAW, Ind., Oct. 27, 2014 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq:LKFN), parent company of Lake City Bank, today reported net income of $11.5 million for the third quarter of 2014, an increase of 18% versus $9.8 million for the third quarter of 2013. Diluted net income per common share increased 17% to $0.69 versus $0.59 for the comparable period of 2013. This quarterly net income and per share performance represents a record level for the company.

The company further reported net income of $32.7 million for the nine months ended September 30, 2014 versus $28.3 million for the comparable period of 2013, an increase of 16% over a nine-month period. Diluted net income per common share increased 15% to $1.95 for the nine months ended September 30, 2014 versus $1.70 for the comparable period of 2013. This net income and per share performance also represents a record level for the company over a nine-month period.

David M. Findlay, President and Chief Executive Officer, commented, "We are pleased with both the strength and quality of our record earnings performance in 2014. The expansion of our Indiana footprint, as well as our increased market share growth in every market we serve, has contributed to our success in 2014. We remain strategically focused on taking care of customers every day while at the same time continuing organic loan and deposit growth in our Indiana markets."

Return on average total equity for the first nine months of 2014 improved to 12.94% from 12.28% in the prior year period. Return on average assets for the first nine months of 2014 increased to 1.33% up from 1.27% in the same period of 2013. The company's tangible common equity to tangible assets ratio was 10.40% at September 30, 2014, compared to 10.25% at September 30, 2013 and 9.96% at June 30, 2014. As previously announced, the board of directors approved a cash dividend for the third quarter of $0.21 per share, payable on November 5, 2014, to shareholders of record as of October 25, 2014. The quarterly dividend represents an 11% increase over the quarterly dividends paid for each quarter of 2013 and for the first quarter of 2014.The dividend yield is currently 2.19% based on the $37.50 closing price of our common stock on September 30, 2014.

Total loans outstanding grew $309.2 million, or 13%, from $2.39 billion as of September 30, 2013 to $2.70 billion as of September 30, 2014. Average total loans for the third quarter of 2014 were $2.68 billion, an increase of $333.7 million, or 14%, versus $2.35 billion for the comparable period in 2013. On a linked quarter basis, average total loans increased $39.0 million, or 1%, from $2.65 billion for the second quarter of 2014 to $2.68 billion for the third quarter of 2014.

Total deposits grew $444.8 million, or 18%, from $2.44 billion as of September 30, 2013 to $2.89 billion as of September 30, 2014. Average total deposits for the third quarter of 2014 were $2.82 billion versus $2.48 billion for the third quarter of 2013, an increase of 14%. On a linked quarter basis, average total deposits increased $31.1 million, or 1%.

Findlay observed, "Market share growth is very important on both the loan and deposit fronts, and our overall progress in both categories in 2014 reflects the ongoing efforts of our commercial and retail banking teams working together to grow our balance sheet one client at a time."

The company's net interest margin was 3.31% in the third quarter of 2014, up from 3.29% for the third quarter of 2013. The net interest margin was 3.34% in the linked second quarter of 2014. The net interest margin for the nine months ended September 30, 2014 was 3.34% compared to 3.22% in the prior year nine month period. Net interest margin improved during the nine month period despite downward pressure on loan yields and the prolonged low interest rate environment. The net interest margin expansion was attributable primarily to declines in deposit rates and overall funding costs and improvement in the investment portfolio yields, which have offset declining loan yields.

Nonperforming assets decreased 36% to $15.0 million as of September 30, 2014 versus $23.3 million as of September 30, 2013. On a linked quarter basis, nonperforming assets were 2% lower than the $15.2 million reported as of June 30, 2014. The decrease in nonperforming assets during the third quarter of 2014 primarily resulted from sales of other real estate owned. The ratio of nonperforming assets to total assets at September 30, 2014, was 0.45% versus 0.77% at September 30, 2013 and 0.45% at June 30, 2014. Net recoveries totaled $782,000 in the third quarter of 2014 versus net charge-offs of $831,000 during the third quarter of 2013 and $532,000 during the linked second quarter of 2014. Net charge-offs to average loans were 0.12% for the nine months ended September 30, 2014 compared to 0.10% for the same period in 2013.

For the seventh consecutive quarter, the company did not record a provision for loan losses. The absence of a provision for loan losses was generally driven by continued stabilization and improvement in key loan quality metrics, including lower levels of nonperforming loans, appropriate reserve coverage of nonperforming loans, continuing signs of stabilization in the economic conditions of the company's markets and sustained signs of improvement in its borrowers' performance and future prospects. The company's allowance for loan losses as of September 30, 2014 was $46.4 million compared to $49.8 million as of September 30, 2013 and $45.6 million as of June 30, 2014. The allowance for loan losses represented 1.72% of total loans as of September 30, 2014 versus 2.08% at September 30, 2013 and 1.71% as of June 30, 2014. Further, the allowance for loan losses as a percentage of nonperforming loans increased to 314% as of September 30, 2014, versus 215% as of September 30, 2013, and 324% as of June 30, 2014.

Findlay added, "We've been able to maintain our historically strong asset quality trends as the loan portfolio has continued to grow. We're proud of the fact that we have not compromised our disciplined credit culture as this growth has occurred. We continue to be encouraged by the improved economic conditions in our Indiana markets. "

The company's noninterest income was $7.9 million for the third quarter of 2014 versus $7.8 million in the comparable quarter of 2013. Year-over-year, quarterly noninterest income was positively impacted by a $448,000 increase in loan, insurance and service fees driven by higher commercial loan fees. In addition, other income increased $398,000, driven by income related to bank owned life insurance proceeds. Offsetting the increase was an $804,000 decrease in investment brokerage fees due to lower production volumes. Noninterest income was $22.9 million for the nine months ended September 30, 2014, unchanged from the same period in 2013. Growth in deposit fees, loan fees and other income offset declines in mortgage banking income and investment brokerage fees.

The company's noninterest expense increased $394,000, or 2%, to $16.7 million in the third quarter of 2014 versus $16.3 million in the comparable quarter of 2013. On a linked quarter basis, noninterest expense increased by $576,000 from $16.1 million in the second quarter of 2014. Salaries and employee benefits increased by $419,000 in the three month period ended September 30, 2014 versus the same period of 2013. These increases in salary and employee benefits were driven by higher performance incentive-based compensation costs that resulted from the company's higher results versus internal objectives. Data processing fees increased by $114,000 due to a larger customer base as well as greater utilization of services from the company's core processor, which the company expects will improve the customer experience through delivery of electronic banking alternatives and improved commercial product solutions as well as enhancing our marketing and cross-selling opportunities. Offsetting these increases was a $313,000 decrease in professional fees. The decrease was related to $310,000 in nonrecurring consulting fees which the company incurred during the third quarter of 2013. The company's efficiency ratio was 49% for the third quarter of 2014, compared to 53% for the third quarter of 2013 and 49% for the linked second quarter of 2014, which consistently ranks in the top quartile of peer financial institutions in the country. For the nine months ended September 30, 2014, the efficiency ratio was 50% compared to 52% in the prior year period.

Lakeland Financial Corporation is a $3.4 billion bank holding company headquartered in Warsaw, Indiana. Lake City Bank, its single bank subsidiary, is the fourth largest bank in the state, and the largest bank 100% invested in Indiana. Lake City Bank operates 45 offices in Northern and Central Indiana, delivering technology driven and client-centric financial services solutions to individuals and businesses. The company expects to open an office in the Indianapolis market in the fourth quarter located in Indianapolis on 82nd Street at Clearwater Crossing.

Information regarding Lakeland Financial Corporation may be accessed on the home page of its subsidiary, Lake City Bank, at www.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 press 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. 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," "plan," "intend," "estimate," "may," "will," "would," "could," "should" or other similar expressions. 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.

LAKELAND FINANCIAL CORPORATION
THIRD QUARTER 2014 FINANCIAL HIGHLIGHTS
(Unaudited – Dollars in thousands except per share data)
Three Months Ended Nine Months Ended
END OF PERIOD BALANCES Sep. 30,
2014
Jun. 30,
2014
Sep. 30,
2013
Sep. 30,
2014
Sep. 30,
2013
Assets $ 3,355,903 $ 3,419,111 $ 3,041,237 $ 3,355,903 $ 3,041,237
Deposits 2,889,672 2,827,745 2,444,826 2,889,672 2,444,826
Brokered Deposits 224,486 141,420 6,600 224,486 6,600
Core Deposits 2,665,186 2,686,325 2,438,226 2,665,186 2,438,226
Loans 2,701,923 2,673,327 2,392,715 2,701,923 2,392,715
Allowance for Loan Losses 46,387 45,605 49,804 46,387 49,804
Total Equity 351,949 343,575 314,544 351,949 314,544
Tangible Common Equity 348,769 340,382 311,508 348,769 311,508
AVERAGE BALANCES
Total Assets $ 3,351,474 $ 3,319,795 $ 3,002,273 $ 3,286,736 $ 2,976,278
Earning Assets 3,172,423 3,129,928 2,825,503 3,108,483 2,796,663
Investments 476,643 474,561 464,652 474,809 475,077
Loans 2,684,667 2,645,673 2,350,983 2,623,522 2,304,003
Total Deposits 2,819,237 2,788,142 2,479,452 2,750,627 2,480,929
Interest Bearing Deposits 2,317,643 2,312,748 2,044,976 2,270,271 2,079,924
Interest Bearing Liabilities 2,485,979 2,491,332 2,242,072 2,453,021 2,251,195
Total Equity 348,154 337,919 310,070 338,118 307,596
INCOME STATEMENT DATA
Net Interest Income $ 25,965 $ 25,554 $ 22,972 $ 76,199 $ 66,141
Net Interest Income-Fully Tax Equivalent 26,451 26,038 23,429 77,641 67,467
Provision for Loan Losses 0 0 0 0 0
Noninterest Income 7,871 7,592 7,809 22,890 22,859
Noninterest Expense 16,660 16,084 16,266 49,534 46,250
Net Income 11,511 11,312 9,769 32,735 28,251
PER SHARE DATA
Basic Net Income Per Common Share $ 0.70 $ 0.68 $ 0.59 $ 1.98 $ 1.72
Diluted Net Income Per Common Share 0.69 0.68 0.59 1.95 1.70
Cash Dividends Declared Per Common Share 0.21 0.21 0.19 0.61 0.38
Book Value Per Common Share (equity per share issued) 21.26 20.77 19.11 21.26 19.11
Tangible Book Value Per Common Share 21.08 20.58 18.93 21.08 18.93
Market Value – High 39.93 41.26 34.69 41.46 34.69
Market Value – Low 35.50 34.96 27.74 34.96 23.92
Basic Weighted Average Common Shares Outstanding 16,547,551 16,536,112 16,451,199 16,531,411 16,427,060
Diluted Weighted Average Common Shares Outstanding 16,775,770 16,739,069 16,634,933 16,769,079 16,581,089
KEY RATIOS
Return on Average Assets 1.36% 1.37% 1.29% 1.33% 1.27%
Return on Average Total Equity 13.12 13.43 12.50 12.94 12.28
Efficiency (Noninterest Expense / Net Interest Income plus Noninterest Income) 49.24 48.53 52.84 49.99 51.97
Average Equity to Average Assets 10.39 10.18 10.33 10.29 10.33
Net Interest Margin 3.31 3.34 3.29 3.34 3.22
Net Charge Offs to Average Loans (0.12) 0.08 0.14 0.12 0.10
Loan Loss Reserve to Loans 1.72 1.71 2.08 1.72 2.08
Loan Loss Reserve to Nonperforming Loans 314.18 323.99 214.71 314.18 214.71
Loan Loss Reserve to Nonperforming Loans and Performing TDR's 143.11 153.01 108.07 143.11 108.07
Nonperforming Loans to Loans 0.55 0.53 0.97 0.55 0.97
Nonperforming Assets to Assets 0.45 0.45 0.77 0.45 0.77
Total Impaired and Watch List Loans to Total Loans 6.08 5.72 7.16 6.08 7.16
Tier 1 Leverage 11.18 11.01 11.37 11.18 11.37
Tier 1 Risk-Based Capital 13.15 12.86 13.39 13.15 13.39
Total Capital 14.40 14.12 14.65 14.40 14.65
Tangible Capital 10.40 9.96 10.25 10.40 10.25
ASSET QUALITY
Loans Past Due 30 - 89 Days $ 2,432 $ 3,042 $ 3,262 $ 2,432 $ 3,262
Loans Past Due 90 Days or More 0 4 364 0 364
Non-accrual Loans 14,764 14,071 22,833 14,764 22,833
Nonperforming Loans (includes nonperforming TDR's) 14,764 14,075 23,197 14,764 23,197
Other Real Estate Owned 200 1,136 117 200 117
Other Nonperforming Assets 6 5 10 6 10
Total Nonperforming Assets 14,970 15,216 23,324 14,970 23,324
Performing Troubled Debt Restructurings 17,650 15,607 22,888 17,650 22,888
Nonperforming Troubled Debt Restructurings (included in nonperforming loans) 9,841 10,349 18,691 9,841 18,691
Total Troubled Debt Restructurings 27,491 25,956 41,579 27,491 41,579
Impaired Loans 34,137 32,049 47,347 34,137 47,347
Non-Impaired Watch List Loans 130,014 120,690 124,075 130,014 124,075
Total Impaired and Watch List Loans 164,151 152,739 171,422 164,151 171,422
Gross Charge Offs 270 655 1,297 3,675 2,871
Recoveries 1,052 123 466 1,265 1,231
Net Charge Offs/(Recoveries) (782) 532 831 2,410 1,640
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
September 30, 2014 and December 31, 2013
(in thousands, except share data)
September 30,
2014
December 31,
2013
(Unaudited)
ASSETS
Cash and due from banks $ 58,945 $ 55,727
Short-term investments 11,257 7,378
Total cash and cash equivalents 70,202 63,105
Securities available for sale (carried at fair value) 473,075 468,967
Real estate mortgage loans held for sale 1,727 1,778
Loans, net of allowance for loan losses of $46,387 and $48,797 2,655,536 2,486,301
Land, premises and equipment, net 40,523 39,335
Bank owned life insurance 63,283 62,883
Federal Reserve and Federal Home Loan Bank stock 10,732 10,732
Accrued interest receivable 9,042 8,577
Goodwill 4,970 4,970
Other assets 26,813 29,116
Total assets $ 3,355,903 $ 3,175,764
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Noninterest bearing deposits $ 515,696 $ 479,606
Interest bearing deposits 2,373,976 2,066,462
Total deposits 2,889,672 2,546,068
Short-term borrowings
Federal funds purchased 8,000 11,000
Securities sold under agreements to repurchase 60,578 104,876
Other short-term borrowings 0 146,000
Total short-term borrowings 68,578 261,876
Long-term borrowings 35 37
Subordinated debentures 30,928 30,928
Accrued interest payable 2,748 2,918
Other liabilities 11,993 11,973
Total liabilities 3,003,954 2,853,800
STOCKHOLDERS' EQUITY
Common stock: 90,000,000 shares authorized, no par value
16,548,074 shares issued and 16,463,796 outstanding as of September 30, 2014
16,475,716 shares issued and 16,377,449 outstanding as of December 31, 2013 95,505 93,249
Retained earnings 255,751 233,108
Accumulated other comprehensive income/(loss) 2,587 (2,494)
Treasury stock, at cost (2014 - 84,278 shares, 2013 - 98,267 shares) (1,983) (1,988)
Total stockholders' equity 351,860 321,875
Noncontrolling interest 89 89
Total equity 351,949 321,964
Total liabilities and equity $ 3,355,903 $ 3,175,764
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months and Nine Months Ended September 30, 2014 and 2013
(in thousands except for share and per share data)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2014 2013 2014 2013
NET INTEREST INCOME
Interest and fees on loans
Taxable $ 26,713 $ 24,595 $ 78,317 $ 73,469
Tax exempt 125 100 348 304
Interest and dividends on securities
Taxable 2,075 1,463 6,114 3,560
Tax exempt 820 802 2,455 2,307
Interest on short-term investments 12 10 31 46
Total interest income 29,745 26,970 87,265 79,686
Interest on deposits 3,424 3,589 9,946 12,365
Interest on borrowings
Short-term 96 146 351 349
Long-term 260 263 769 831
Total interest expense 3,780 3,998 11,066 13,545
NET INTEREST INCOME 25,965 22,972 76,199 66,141
Provision for loan losses 0 0 0 0
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 25,965 22,972 76,199 66,141
NONINTEREST INCOME
Wealth advisory fees 1,030 980 3,046 2,895
Investment brokerage fees 699 1,503 2,739 3,449
Service charges on deposit accounts 2,474 2,325 6,973 6,548
Loan, insurance and service fees 1,972 1,524 5,187 4,792
Merchant card fee income 407 356 1,137 925
Bank owned life insurance income 372 373 1,082 1,184
Other income 881 483 2,442 1,753
Mortgage banking income 264 159 508 1,206
Net securities gains (losses) (228) 106 (224) 107
Total noninterest income 7,871 7,809 22,890 22,859
NONINTEREST EXPENSE
Salaries and employee benefits 9,856 9,437 29,310 27,493
Net occupancy expense 872 813 2,885 2,532
Equipment costs 812 758 2,346 2,021
Data processing fees and supplies 1,557 1,443 4,541 4,115
Corporate and business development 474 443 1,371 1,292
FDIC insurance and other regulatory fees 481 463 1,446 1,384
Professional fees 705 1,018 2,241 2,366
Other expense 1,903 1,891 5,394 5,047
Total noninterest expense 16,660 16,266 49,534 46,250
INCOME BEFORE INCOME TAX EXPENSE 17,176 14,515 49,555 42,750
Income tax expense 5,665 4,746 16,820 14,499
NET INCOME $ 11,511 $ 9,769 $ 32,735 $ 28,251
BASIC WEIGHTED AVERAGE COMMON SHARES 16,547,551 16,451,199 16,531,411 16,427,060
BASIC EARNINGS PER COMMON SHARE $ 0.70 $ 0.59 $ 1.98 $ 1.72
DILUTED WEIGHTED AVERAGE COMMON SHARES 16,775,770 16,634,933 16,769,079 16,581,089
DILUTED EARNINGS PER COMMON SHARE $ 0.69 $ 0.59 $ 1.95 $ 1.70
LAKELAND FINANCIAL CORPORATION
LOAN DETAIL
THIRD QUARTER 2014
(unaudited in thousands)
September 30,
2014
June 30,
2014
December 31,
2013
September 30,
2013
Commercial and industrial loans:
Working capital lines of credit loans $ 517,916 19.2% $ 509,725 19.1% $ 457,690 18.0% $ 462,098 19.3%
Non-working capital loans 513,525 19.0 526,221 19.7 443,877 17.5 435,968 18.2
Total commercial and industrial loans 1,031,441 38.2 1,035,946 38.7 901,567 35.6 898,066 37.5
Commercial real estate and multi-family residential loans:
Construction and land development loans 153,118 5.7 166,671 6.2 157,630 6.2 117,733 4.9
Owner occupied loans 396,207 14.7 385,706 14.4 370,386 14.6 371,500 15.5
Nonowner occupied loans 401,454 14.9 406,691 15.2 394,748 15.6 392,538 16.4
Multifamily loans 84,875 3.1 58,955 2.2 63,443 2.5 37,279 1.6
Total commercial real estate and multi-family residential loans 1,035,654 38.3 1,018,023 38.1 986,207 38.9 919,050 38.4
Agri-business and agricultural loans:
Loans secured by farmland 131,516 4.9 122,515 4.6 133,458 5.3 104,807 4.4
Loans for agricultural production 78,203 2.9 90,164 3.4 120,571 4.8 95,330 4.0
Total agri-business and agricultural loans 209,719 7.8 212,679 8.0 254,029 10.0 200,137 8.4
Other commercial loans 77,076 2.9 72,097 2.7 70,770 2.8 55,797 2.3
Total commercial loans 2,353,890 87.1 2,338,745 87.5 2,212,573 87.3 2,073,050 86.6
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans 143,892 5.3 138,773 5.2 125,444 4.9 119,788 5.0
Open end and junior lien loans 150,859 5.6 145,330 5.4 146,946 5.8 151,726 6.3
Residential construction and land development loans 5,726 0.2 7,114 0.3 4,640 0.2 4,705 0.2
Total consumer 1-4 family mortgage loans 300,477 11.1 291,217 10.9 277,030 10.9 276,219 11.5
Other consumer loans 47,967 1.8 43,907 1.6 46,125 1.8 44,091 1.8
Total consumer loans 348,444 12.9 335,124 12.5 323,155 12.7 320,310 13.4
Subtotal 2,702,334 100.0% 2,673,869 100.0% 2,535,728 100.0% 2,393,360 100.0%
Less: Allowance for loan losses (46,387) (45,605) (48,797) (49,804)
Net deferred loan fees (411) (542) (630) (645)
Loans, net $ 2,655,536 $ 2,627,722 $ 2,486,301 $ 2,342,911

CONTACT: Lisa M. O'Neill Executive Vice President and Chief Financial Officer (574) 267-9125 lisa.oneill@lakecitybank.com

Source:Lake City Bank