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Lakeland Financial Reports Strong First Quarter Performance

WARSAW, Ind., April 27, 2015 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq:LKFN), parent company of Lake City Bank, today reported net income of $11.1 million for the first quarter of 2015, an increase of 12% versus $9.9 million for the first quarter of 2014. Diluted net income per common share also increased 12% to $0.66 versus $0.59 for 2014.

"Our net income and earnings per share performance represents a record for the first quarter and are an excellent start to 2015. The Lake City Bank team continues to make inroads in the Indiana communities we serve and we are well positioned for continued future growth," commented David M. Findlay, President and Chief Executive Officer. "We remain 100% committed to our clients, shareholders, communities and team members and these results continue to benefit all of these constituencies."

Return on average total equity for the first quarter of 2015 improved to 12.32% from 12.25% in the first quarter of 2014 and 12.27% for the linked fourth quarter of 2014. Return on average assets for the first quarter of 2015 increased to 1.31% up from 1.26% in the first quarter of 2014. The company's tangible common equity to tangible assets ratio was 10.58% at March 31, 2015, compared to 10.18% at March 31, 2014 and 10.41% at December 31, 2014.

As previously announced, the board of directors approved a cash dividend for the first quarter of $0.245 per share, payable on May 5, 2015, to shareholders of record as of April 25, 2015. The quarterly dividend represents a 17% increase over the $0.21 quarterly dividends paid in the last three quarters of 2014 and in the first quarter of 2015.

"This significant increase in our dividend is a reflection of the strength of our balance sheet and our positive outlook for the future. Through consistently strong earnings momentum over a long period of time, we have built a fortress balance sheet that supports this 17% increase in our dividend to shareholders," observed Findlay.

Average total loans for the first quarter of 2015 were $2.75 billion, an increase of $216.2 million, or 9%, versus $2.54 billion for the comparable period of 2014. Total loans outstanding grew $198.0 million, or 8%, from $2.57 billion as of March 31, 2014 to $2.77 billion as of March 31, 2015. On a linked quarter basis, average total loans increased by $23.6 million, or 1%, from $2.73 billion for the fourth quarter of 2014 to $2.75 billion for the first quarter of 2015.

"We grew our commercial and industrial and our commercial real estate loan portfolios by $59.6 million during the quarter. While this healthy growth was offset by seasonal reduction in borrowings in our agribusiness sector, it was a great start to the year and we are pleased with the growth in our core commercial lending business. The greatest impact we can have on our Indiana communities and our regional economy is to stay focused on growing the loan portfolio." observed Findlay. "Importantly, our loan growth has been funded with core deposit growth."

Average total deposits for the first quarter of 2015 were $2.94 billion, an increase of $294.6 million, or 11%, versus $2.64 billion for the corresponding period of 2014. Total deposits grew $255.5 million, or 9%, from $2.74 billion as of March 31, 2014 to $2.99 billion as of March 31, 2015. In addition, total core deposits increased $275.0 million, or 11% from $2.60 billion at March 31, 2014 to $2.87 billion at March 31, 2015.

Despite the prolonged low interest rate environment including downward pressure on loan yields, the company's net interest margin was virtually unchanged at 3.27% for the first quarter of 2015, versus 3.28% for the linked fourth quarter of 2014. Net interest income increased $1.0 million or 4% to $25.7 million for the first quarter of 2015, versus $24.7 million in the first quarter of 2014. Net interest margin was 3.38% in the first quarter of 2014. The decline in net interest margin in the first quarter of 2015 compared to the first quarter 2014 resulted from a 9 basis point decline in earning asset yields and a 2 basis point increase in cost of funds.

For the ninth 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 appropriate reserve coverage of nonperforming loans, continuing signs of stabilization of 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 March 31, 2015 was $45.7 million compared to $46.1 million as of March 31, 2014 and $46.3 million as of December 31, 2014. The allowance for loan losses represented 1.65% of total loans as of March 31, 2015 versus 1.79% at March 31, 2014 and 1.67% as of December 31, 2014. The allowance for loan losses as a percentage of nonperforming loans was 293% as of March 31, 2015, versus 306% as of March 31, 2014, and 338% as of December 31, 2014.

Nonperforming assets decreased $191,000, or 1%, to $16.1 million as of March 31, 2015 versus $16.3 million as of March 31, 2014. On a linked quarter basis, nonperforming assets were $2.1 million, or 15%, higher than the $14.0 million reported as of December 31, 2014. The increase in nonperforming assets during the first quarter of 2015 primarily resulted from placing three commercial credits on nonaccrual status. The ratio of nonperforming assets to total assets at March 31, 2015, was 0.46% versus 0.50% at March 31, 2014 and 0.41% at December 31, 2014. Net charge-offs to average loans were 0.09% for the first quarter of 2015 compared to 0.42% for the first quarter of 2014 and 0.02% for the fourth quarter of 2014. Net charge-offs totaled $585,000 in the first quarter of 2015 versus net charge-offs of $2.7 million during the first quarter of 2014 and net charge-offs of $125,000 during the linked fourth quarter of 2014.

The company's noninterest income increased 5% to $7.8 million for the first quarter of 2015 versus $7.4 million for the first quarter of 2014. Noninterest income was positively impacted by increases in mortgage banking income due to higher production volumes, as well as increases in service charges on deposit accounts, wealth advisory fees and loan, insurance and service fees. Offsetting these increases was a decrease in investment brokerage fees driven by lower production volumes.

The company's noninterest expense increased by 1% to $16.9 million in the first quarter of 2015 compared to $16.8 million in the first quarter of 2014. Salaries and employee benefits decreased by $264,000 in the first quarter of 2015 versus the same period of 2014. The decrease in salary and employee benefits was driven by lower employee benefit costs and lower commissions paid on investment brokerage fees. Professional fees decreased by $111,000 driven by lower legal fees. Data processing fees increased by $276,000 due to technology related expenditures with the company's core processor and other technology based providers to enhance the delivery of electronic banking alternatives and improve commercial product solutions. Equipment costs increased due to higher depreciation expense. Corporate and business development expense increased during the quarter due to higher advertising and marketing expenses. The company's efficiency ratio was 50% for the first quarter of 2015, compared to 52% for the first quarter of 2014 and 50% for the linked fourth quarter of 2014.

Lakeland Financial Corporation is a $3.5 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 46 offices in Northern and Central Indiana, delivering technology driven and client-centric financial services solutions to individuals and businesses.

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 earnings 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
FIRST QUARTER 2015 FINANCIAL HIGHLIGHTS
Three Months Ended
(Unaudited – Dollars in thousands except Share and Per Share Data) Mar. 31, Dec. 31, Mar. 31,
END OF PERIOD BALANCES 2015 2014 2014
Assets $3,477,654 $3,443,284 $3,233,724
Deposits 2,994,239 2,873,120 2,738,774
Brokered Deposits 124,176 142,429 143,760
Core Deposits 2,870,063 2,730,691 2,595,014
Loans 2,772,213 2,762,320 2,574,190
Allowance for Loan Losses 45,677 46,262 46,137
Total Equity 370,839 361,385 332,091
Tangible Common Equity 367,659 358,209 329,024
AVERAGE BALANCES
Total Assets $3,441,078 $3,411,849 $3,187,133
Earning Assets 3,246,722 3,221,946 3,021,440
Investments 477,245 475,839 473,184
Loans 2,754,847 2,731,259 2,538,622
Total Deposits 2,937,172 2,938,291 2,642,562
Interest Bearing Deposits 2,381,187 2,386,541 2,178,898
Interest Bearing Liabilities 2,499,877 2,486,073 2,380,595
Total Equity 366,692 358,022 328,058
INCOME STATEMENT DATA
Net Interest Income $25,700 $26,104 $24,680
Net Interest Income-Fully Tax Equivalent 26,186 26,591 25,151
Provision for Loan Losses 0 0 0
Noninterest Income 7,795 7,163 7,427
Noninterest Expense 16,901 16,632 16,790
Net Income 11,136 11,070 9,912
PER SHARE DATA
Basic Net Income Per Common Share $0.67 $0.67 $0.60
Diluted Net Income Per Common Share 0.66 0.66 0.59
Cash Dividends Declared Per Common Share 0.21 0.21 0.19
Dividend Payout 31.82% 31.82% 32.20%
Book Value Per Common Share (equity per share issued) 22.32 21.83 20.08
Tangible Book Value Per Common Share 22.13 21.64 19.90
Market Value – High 43.83 44.15 41.46
Market Value – Low 37.42 36.98 35.31
Basic Weighted Average Common Shares Outstanding 16,590,285 16,549,466 16,513,645
Diluted Weighted Average Common Shares Outstanding 16,789,497 16,795,819 16,713,853
KEY RATIOS
Return on Average Assets 1.31% 1.29% 1.26%
Return on Average Total Equity 12.32 12.27 12.25
Average Equity to Average Assets 10.66 10.49 10.29
Net Interest Margin 3.27 3.28 3.38
Efficiency (Noninterest Expense / Net Interest Income plus Noninterest Income) 50.46 49.99 52.29
Tier 1 Leverage 11.35 11.22 11.20
Tier 1 Risk-Based Capital 12.83 13.11 13.08
Common Equity Tier 1 (CET1) 11.84 NA NA
Total Capital 14.09 14.36 14.34
Tangible Capital 10.58 10.41 10.18
ASSET QUALITY
Loans Past Due 30 - 89 Days $1,091 $2,367 $1,802
Loans Past Due 90 Days or More 88 130 20
Non-accrual Loans 15,520 13,577 15,082
Nonperforming Loans (includes nonperforming TDR's) 15,608 13,707 15,102
Other Real Estate Owned 473 284 1,192
Other Nonperforming Assets 31 9 9
Total Nonperforming Assets 16,112 14,000 16,303
Performing Troubled Debt Restructurings 13,014 16,492 16,222
Nonperforming Troubled Debt Restructurings (included in nonperforming loans) 11,973 9,160 10,721
Total Troubled Debt Restructurings 24,987 25,653 26,943
Impaired Loans 30,154 31,957 34,101
Non-Impaired Watch List Loans 136,119 126,782 134,680
Total Impaired and Watch List Loans 166,273 158,739 168,781
Gross Charge Offs 708 1,010 2,751
Recoveries 123 885 91
Net Charge Offs/(Recoveries) 585 125 2,659
Net Charge Offs/(Recoveries) to Average Loans 0.09% 0.02% 0.42%
Loan Loss Reserve to Loans 1.65% 1.67% 1.79%
Loan Loss Reserve to Nonperforming Loans 292.64% 337.51% 305.50%
Loan Loss Reserve to Nonperforming Loans and Performing TDR's 159.58% 153.19% 147.29%
Nonperforming Loans to Loans 0.56% 0.50% 0.59%
Nonperforming Assets to Assets 0.46% 0.41% 0.50%
Total Impaired and Watch List Loans to Total Loans 6.00% 5.75% 6.56%
OTHER DATA
Full Time Equivalent Employees 503 496 500
Offices 46 46 46
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
March 31, 2015 and December 31, 2014
(in thousands, except share data)
March 31, December 31,
2015 2014
(Unaudited)
ASSETS
Cash and due from banks $99,939 $75,381
Short-term investments 13,107 15,257
Total cash and cash equivalents 113,046 90,638
Securities available for sale (carried at fair value) 477,197 475,911
Real estate mortgage loans held for sale 2,248 1,585
Loans, net of allowance for loan losses of $45,677 and $46,262 2,726,536 2,716,058
Land, premises and equipment, net 42,438 41,983
Bank owned life insurance 67,021 66,612
Federal Reserve and Federal Home Loan Bank stock 9,413 9,413
Accrued interest receivable 9,091 8,662
Goodwill 4,970 4,970
Other assets 25,694 27,452
Total assets $3,477,654 $3,443,284
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Noninterest bearing deposits $589,773 $579,495
Interest bearing deposits 2,404,466 2,293,625
Total deposits 2,994,239 2,873,120
Short-term borrowings
Federal funds purchased 0 500
Securities sold under agreements to repurchase 60,517 54,907
Other short-term borrowings 0 105,000
Total short-term borrowings 60,517 160,407
Long-term borrowings 34 35
Subordinated debentures 30,928 30,928
Accrued interest payable 3,592 2,946
Other liabilities 17,505 14,463
Total liabilities 3,106,815 3,081,899
STOCKHOLDERS' EQUITY
Common stock: 90,000,000 shares authorized, no par value
16,610,688 shares issued and 16,521,255 outstanding as of March 31, 2015
16,550,324 shares issued and 16,465,621 outstanding as of December 31, 2014 96,068 96,121
Retained earnings 271,004 263,345
Accumulated other comprehensive income 5,869 3,830
Treasury stock, at cost (2015 - 89,433 shares, 2014 - 84,703 shares) (2,191) (2,000)
Total stockholders' equity 370,750 361,296
Noncontrolling interest 89 89
Total equity 370,839 361,385
Total liabilities and equity $3,477,654 $3,443,284
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended March 31, 2015 and 2014
(in thousands except for share and per share data)
(unaudited)
Three Months Ended
March 31,
2015 2014
NET INTEREST INCOME
Interest and fees on loans
Taxable $26,257 $25,334
Tax exempt 117 98
Interest and dividends on securities
Taxable 2,448 2,011
Tax exempt 829 819
Interest on short-term investments 13 8
Total interest income 29,664 28,270
Interest on deposits 3,648 3,187
Interest on borrowings
Short-term 60 151
Long-term 256 252
Total interest expense 3,964 3,590
NET INTEREST INCOME 25,700 24,680
Provision for loan losses 0 0
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 25,700 24,680
NONINTEREST INCOME
Wealth advisory fees 1,184 1,039
Investment brokerage fees 492 1,117
Service charges on deposit accounts 2,374 2,151
Loan, insurance and service fees 1,569 1,458
Merchant card fee income 416 350
Bank owned life insurance income 375 372
Other income 954 875
Mortgage banking income 389 65
Net securities gains 42 0
Total noninterest income 7,795 7,427
NONINTEREST EXPENSE
Salaries and employee benefits 9,723 9,987
Net occupancy expense 1,084 1,110
Equipment costs 916 773
Data processing fees and supplies 1,767 1,491
Corporate and business development 790 653
FDIC insurance and other regulatory fees 486 477
Professional fees 689 800
Other expense 1,446 1,499
Total noninterest expense 16,901 16,790
INCOME BEFORE INCOME TAX EXPENSE 16,594 15,317
Income tax expense 5,458 5,405
NET INCOME $11,136 $9,912
BASIC WEIGHTED AVERAGE COMMON SHARES 16,590,285 16,513,645
BASIC EARNINGS PER COMMON SHARE $0.67 $0.60
DILUTED WEIGHTED AVERAGE COMMON SHARES 16,789,497 16,713,853
DILUTED EARNINGS PER COMMON SHARE $0.66 $0.59
LAKELAND FINANCIAL CORPORATION
LOAN DETAIL
FIRST QUARTER 2015
(unaudited in thousands)
March 31, December 31, March 31,
2015 2014 2014
Commercial and industrial loans:
Working capital lines of credit loans $574,057 20.7% $544,043 19.7% $476,818 18.5%
Non-working capital loans 504,878 18.2 491,330 17.8 467,679 18.2
Total commercial and industrial loans 1,078,935 38.9 1,035,373 37.5 944,497 36.7
Commercial real estate and multi-family residential loans:
Construction and land development loans 151,065 5.4 156,636 5.7 144,978 5.6
Owner occupied loans 396,849 14.3 403,154 14.6 388,052 15.1
Nonowner occupied loans 399,842 14.4 394,458 14.3 424,143 16.5
Multifamily loans 94,327 3.4 71,811 2.6 57,882 2.2
Total commercial real estate and multi-family residential loans 1,042,083 37.6 1,026,059 37.1 1,015,055 39.4
Agri-business and agricultural loans:
Loans secured by farmland 119,934 4.3 137,407 5.0 109,260 4.2
Loans for agricultural production 96,307 3.5 136,380 4.9 104,384 4.1
Total agri-business and agricultural loans 216,241 7.8 273,787 9.9 213,644 8.3
Other commercial loans 82,478 3.0 75,715 2.7 77,324 3.0
Total commercial loans 2,419,737 87.3 2,410,934 87.3 2,250,520 87.4
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans 145,289 5.2 145,167 5.3 135,111 5.2
Open end and junior lien loans 150,007 5.4 150,220 5.4 139,185 5.4
Residential construction and land development loans 8,666 0.3 6,742 0.2 5,658 0.2
Total consumer 1-4 family mortgage loans 303,962 11.0 302,129 10.9 279,954 10.9
Other consumer loans 48,733 1.8 49,541 1.8 44,319 1.7
Total consumer loans 352,695 12.7 351,670 12.7 324,273 12.6
Subtotal 2,772,432 100.0% 2,762,604 100.0% 2,574,793 100.0%
Less: Allowance for loan losses (45,677) (46,262) (46,137)
Net deferred loan fees (219) (284) (603)
Loans, net $2,726,536 $2,716,058 $2,528,053

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

Source:Lake City Bank