×

Lakeland Second Quarter Financial Performance Driven by Strong Loan Growth

WARSAW, Ind., July 24, 2015 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq:LKFN), parent company of Lake City Bank, today reported net income of $22.5 million for the six months ended June 30, 2015 versus $21.2 million for the comparable period of 2014, an increase of 6%. Diluted net income per common share also increased 6% to $1.34 for the six months ended June 30, 2015 versus $1.27 for the comparable period of 2014.

The company further reported net income of $11.4 million for the second quarter of 2015, an increase of 1% versus $11.3 million for the second quarter of 2014. Diluted net income per common share was $0.68 for the second quarters of 2015 and 2014. On a quarter-linked basis net income increased by 2% or $244,000 from $11.1 million for the first quarter ended March 31, 2015.

As previously announced, the board of directors approved a cash dividend for the second quarter of $0.245 per share, payable on August 5, 2015, to shareholders of record as of July 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 dividend increase reflects both our healthy performance for the first six months of 2015 and the consistency of our long-term earnings strength. Further, it reaffirms the overall strength of our balance sheet as we continue to maintain very strong capital levels,” commented David M. Findlay, President and Chief Executive Officer.

Findlay further commented, “With loan growth of $121 million in the quarter, we again demonstrated that we are doing an excellent job in our Indiana markets of driving economic expansion and profitably growing our balance sheet. We are particularly pleased to report that loan growth was again spread throughout the bank’s markets. It’s a further affirmation that our client-focused commercial banking strategy is working.”

Return on average total equity for the first six months of 2015 was 12.25% compared to 12.85% in the prior year period. Return on average assets for the first six months of 2015 was 1.30% compared to 1.32% in the same period of 2014. The company’s tangible common equity to tangible assets ratio was 10.44% at June 30, 2015, compared to 9.96% at June 30, 2014 and 10.58% at March 31, 2015.

Average total loans for the second quarter of 2015 were $2.85 billion, an increase of $206.7 million, or 8% versus $2.65 billion for the comparable period in 2014. Total loans outstanding grew $220.1 million, or 8%, from $2.67 billion as of June 30, 2014 to $2.89 billion as of June 30, 2015. On a linked quarter basis, average total loans increased $97.5 million, or 4%, from $2.75 billion for the first quarter of 2015 to $2.85 billion for the second quarter of 2015.

Average total deposits for the second quarter of 2015 were $3.07 billion, an increase of $278.3 million, or 10%, versus $2.79 billion for the corresponding period of 2014. Total deposits grew $192.4 million, or 7%, from $2.83 billion as of June 30, 2014 to $3.02 billion as of June 30, 2015. Importantly, total core deposits increased $213.0 million, or 8% from $2.69 billion at June 30, 2014 to $2.90 billion at June 30, 2015. On a linked quarter basis, average total deposits increased $129.3 million, or 4%, from $2.94 billion for the first quarter of 2015 to $3.07 billion for the second quarter of 2015.

The company’s net interest margin was 3.18% in the second quarter of 2015, compared to 3.34% for the second quarter of 2014. Net interest margin was 3.27% in the linked first quarter of 2015. Net interest margin for the six months ended June 30, 2015 was 3.23% compared to 3.35% in the prior year six month period. The decline in net interest margin during the three month and six month periods ended June 30, 2015 was largely driven by competitive factors in the company’s markets, including more aggressive pricing of new loan opportunities as well as a slightly higher cost of funds. Net interest income increased $510,000, or 2%, to $26.1 million for the second quarter of 2015, versus $25.6 million in the second quarter of 2014. Net interest income for the six months ended June 30, 2015 increased $1.5 million, or 3%, to $51.8 million, versus $50.2 million for the six months ended June 30, 2014.

“The prolonged low interest rate environment continues to have an impact on our net interest margin and we continue to manage through this unprecedented period of low interest rates. While the margin decline has been significant, our overall growth mitigates that impact,” Findlay said.

For the tenth 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 June 30, 2015 was $44.8 million compared to $45.6 million as of June 30, 2014 and $45.7 million as of March 31, 2015. The allowance for loan losses represented 1.55% of total loans as of June 30, 2015 versus 1.71% at June 30, 2014 and 1.65% as of March 31, 2015. The allowance for loan losses as a percentage of nonperforming loans was 312% as of June 30, 2015, versus 324% as of June 30, 2014, and 293% as of March 31, 2015.

Nonperforming assets decreased $605,000, or 4%, to $14.6 million as of June 30, 2015 versus $15.2 million as of June 30, 2014. On a linked quarter basis, nonperforming assets were $1.5 million, or 9%, lower than the $16.1 million reported as of March 31, 2015. The decrease in nonperforming assets during the second quarter of 2015 primarily resulted from charge-offs taken and payments received on impaired loans. The ratio of nonperforming assets to total assets at June 30, 2015, was 0.41% versus 0.45% at June 30, 2014 and 0.46% at March 31, 2015. Net charge-offs to average loans were 0.12% for the second quarter of 2015 compared to 0.08% for the second quarter of 2014 and 0.09% for the first quarter of 2015. Net charge-offs totaled $861,000 in the second quarter of 2015 versus net charge-offs of $532,000 during the second quarter of 2014 and net charge-offs of $585,000 during the linked first quarter of 2015.

The company’s noninterest income increased 2% to $7.7 million for the second quarter of 2015 versus $7.6 million for the second quarter of 2014. Noninterest income increased 3% to $15.5 million in the six months ended June 30, 2015 versus $15.0 million in the comparable period 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 4% to $16.7 million in the second quarter of 2015 compared to $16.1 million in the second quarter of 2014. On a linked quarter basis, noninterest expense decreased by $160,000 from $16.9 million in the first quarter of 2015. Data processing fees increased by $445,000 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. Salaries and employee benefits decreased by $287,000 in the first six months 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 $119,000 in the first six months of 2015, driven by lower legal fees. The company's efficiency ratio was 50% for the second quarter of 2015, compared to 49% for the second quarter of 2014 and 50% for the linked first quarter of 2015.

“Overall, we are pleased to report growth in revenue, stable and strong asset quality and controlled expenses. Further, we continue to invest in our business through our upcoming office additions in Fort Wayne and Indianapolis and with significant investment in technology-based solutions for our commercial and retail customers,” concluded Findlay.

Lakeland Financial Corporation is a $3.6 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
SECOND QUARTER 2015 FINANCIAL HIGHLIGHTS
Three Months EndedSix Months Ended
(Unaudited – Dollars in thousands except Share and Per Share Data)Jun. 30,Mar. 31,Jun. 30,Jun. 30Jun. 30,
END OF PERIOD BALANCES 2015 2015 2014 2015 2014
Assets$ 3,572,106 $ 3,477,654 $ 3,419,111 $ 3,572,106 $ 3,419,111
Deposits 3,020,151 2,994,239 2,827,745 3,020,151 2,827,745
Brokered Deposits 120,861 124,176 141,420 120,861 141,420
Core Deposits 2,899,290 2,870,063 2,686,325 2,899,290 2,686,325
Loans 2,893,462 2,772,213 2,673,327 2,893,462 2,673,327
Allowance for Loan Losses 44,816 45,677 45,605 44,816 45,605
Total Equity 375,764 370,839 343,575 375,764 343,575
Tangible Common Equity 372,588 367,659 340,382 372,588 340,382
AVERAGE BALANCES
Total Assets$ 3,552,029 $ 3,441,078 $ 3,319,795 $ 3,496,860 $ 3,253,830
Earning Assets 3,342,275 3,246,722 3,129,928 3,294,762 3,075,984
Investments 475,803 477,245 474,561 476,520 473,876
Loans 2,852,382 2,754,847 2,645,673 2,803,884 2,592,443
Total Deposits 3,066,483 2,937,172 2,788,142 3,002,184 2,715,754
Interest Bearing Deposits 2,488,227 2,381,187 2,312,748 2,435,003 2,246,193
Interest Bearing Liabilities 2,581,664 2,499,877 2,491,332 2,540,996 2,436,269
Total Equity 374,339 366,692 337,919 370,536 333,016
INCOME STATEMENT DATA
Net Interest Income$ 26,064 $ 25,700 $ 25,554 $ 51,764 $ 50,234
Net Interest Income-Fully Tax Equivalent 26,559 26,186 26,038 52,745 51,194
Provision for Loan Losses 0 0 0 0 0
Noninterest Income 7,713 7,795 7,592 15,508 15,019
Noninterest Expense 16,741 16,901 16,084 33,642 32,874
Net Income 11,380 11,136 11,312 22,516 21,224
PER SHARE DATA
Basic Net Income Per Common Share$ 0.69 $ 0.67 $ 0.68 $ 1.36 $ 1.28
Diluted Net Income Per Common Share 0.68 0.66 0.68 1.34 1.27
Cash Dividends Declared Per Common Share 0.245 0.21 0.21 0.455 0.40
Dividend Payout 36.03% 31.82% 30.88% 33.96% 31.50%
Book Value Per Common Share (equity per share issued) 22.61 22.32 20.77 22.61 20.77
Tangible Book Value Per Common Share 22.42 22.13 20.58 22.42 20.58
Market Value – High 44.27 43.83 41.26 44.27 41.46
Market Value – Low 38.71 37.42 34.96 37.42 34.96
Basic Weighted Average Common Shares Outstanding 16,611,974 16,590,285 16,536,112 16,601,189 16,524,079
Diluted Weighted Average Common Shares Outstanding 16,820,052 16,789,497 16,739,069 16,795,907 16,729,479
KEY RATIOS
Return on Average Assets 1.29% 1.31% 1.37% 1.30% 1.32%
Return on Average Total Equity 12.19 12.32 13.43 12.25 12.85
Average Equity to Average Assets 10.54 10.66 10.18 10.60 10.23
Net Interest Margin 3.18 3.27 3.34 3.23 3.35
Efficiency (Noninterest Expense / Net Interest Income plus Noninterest Income) 49.57 50.46 48.53 50.01 50.38
Tier 1 Leverage 11.22 11.35 11.01 11.22 11.01
Tier 1 Risk-Based Capital 12.58 12.83 12.86 12.58 12.86
Common Equity Tier 1 (CET1) 11.63 11.84 NA 11.63 NA
Total Capital 13.83 14.09 14.12 13.83 14.12
Tangible Capital 10.44 10.58 9.96 10.44 9.96
ASSET QUALITY
Loans Past Due 30 - 89 Days$ 4,580 $ 1,091 $ 3,042 $ 4,580 $ 3,042
Loans Past Due 90 Days or More 284 88 4 284 4
Non-accrual Loans 14,089 15,520 14,071 14,089 14,071
Nonperforming Loans (includes nonperforming TDR's) 14,373 15,608 14,075 14,373 14,075
Other Real Estate Owned 231 473 1,136 231 1,136
Other Nonperforming Assets 7 31 5 7 5
Total Nonperforming Assets 14,611 16,112 15,216 14,611 15,216
Performing Troubled Debt Restructurings 7,606 13,014 15,607 7,606 15,607
Nonperforming Troubled Debt Restructurings (included in nonperforming loans) 11,176 11,973 10,349 11,176 10,349
Total Troubled Debt Restructurings 18,783 24,987 25,956 18,783 25,956
Impaired Loans 22,328 30,154 32,049 22,328 32,049
Non-Impaired Watch List Loans 130,735 136,119 120,690 130,735 120,690
Total Impaired and Watch List Loans 153,063 166,273 152,739 153,063 152,739
Gross Charge Offs 995 708 655 1,703 3,406
Recoveries 134 123 123 257 214
Net Charge Offs/(Recoveries) 861 585 532 1,446 3,191
Net Charge Offs/(Recoveries) to Average Loans 0.12% 0.09% 0.08% 0.10% 0.25%
Loan Loss Reserve to Loans 1.55% 1.65% 1.71% 1.55% 1.71%
Loan Loss Reserve to Nonperforming Loans 311.80% 292.64% 323.99% 311.80% 323.99%
Loan Loss Reserve to Nonperforming Loans and Performing TDR's 203.90% 159.58% 153.01% 203.90% 153.01%
Nonperforming Loans to Loans 0.50% 0.56% 0.53% 0.50% 0.53%
Nonperforming Assets to Assets 0.41% 0.46% 0.45% 0.41% 0.45%
Total Impaired and Watch List Loans to Total Loans 5.29% 6.00% 5.72% 5.29% 5.72%
OTHER DATA
Full Time Equivalent Employees 514 503 502 514 502
Offices 46 46 46 46 46



LAKELAND FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
June 30, 2015 and December 31, 2014
(in thousands, except share data)
June 30, December 31,
2015 2014
(Unaudited)
ASSETS
Cash and due from banks$ 77,567 $ 75,381
Short-term investments 11,913 15,257
Total cash and cash equivalents 89,480 90,638
Securities available for sale (carried at fair value) 470,383 475,911
Real estate mortgage loans held for sale 3,405 1,585
Loans, net of allowance for loan losses of $44,816 and $46,262 2,848,646 2,716,058
Land, premises and equipment, net 43,376 41,983
Bank owned life insurance 67,434 66,612
Federal Reserve and Federal Home Loan Bank stock 7,668 9,413
Accrued interest receivable 9,360 8,662
Goodwill 4,970 4,970
Other assets 27,384 27,452
Total assets$ 3,572,106 $ 3,443,284
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Noninterest bearing deposits$ 602,898 $ 579,495
Interest bearing deposits 2,417,253 2,293,625
Total deposits 3,020,151 2,873,120
Short-term borrowings
Federal funds purchased 0 500
Securities sold under agreements to repurchase 51,615 54,907
Other short-term borrowings 75,000 105,000
Total short-term borrowings 126,615 160,407
Long-term borrowings 34 35
Subordinated debentures 30,928 30,928
Accrued interest payable 3,921 2,946
Other liabilities 14,693 14,463
Total liabilities 3,196,342 3,081,899
STOCKHOLDERS' EQUITY
Common stock: 90,000,000 shares authorized, no par value
16,618,188 shares issued and 16,528,197 outstanding as of June 30, 2015
16,550,324 shares issued and 16,465,621 outstanding as of December 31, 2014 96,865 96,121
Retained earnings 278,301 263,345
Accumulated other comprehensive income 2,722 3,830
Treasury stock, at cost (2015 - 89,991 shares, 2014 - 84,703 shares) (2,213) (2,000)
Total stockholders' equity 375,675 361,296
Noncontrolling interest 89 89
Total equity 375,764 361,385
Total liabilities and equity$ 3,572,106 $ 3,443,284


LAKELAND FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months and Six Months Ended June 30, 2015 and 2014
(in thousands except for share and per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2015 2014 2015 2014
NET INTEREST INCOME
Interest and fees on loans
Taxable$ 27,315 $ 26,270 $ 53,572 $ 51,604
Tax exempt 117 125 234 223
Interest and dividends on securities
Taxable 2,002 2,028 4,450 4,039
Tax exempt 842 816 1,671 1,635
Interest on short-term investments 14 11 27 19
Total interest income 30,290 29,250 59,954 57,520
Interest on deposits 3,930 3,335 7,578 6,522
Interest on borrowings
Short-term 35 104 95 255
Long-term 261 257 517 509
Total interest expense 4,226 3,696 8,190 7,286
NET INTEREST INCOME 26,064 25,554 51,764 50,234
Provision for loan losses 0 0 0 0
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 26,064 25,554 51,764 50,234
NONINTEREST INCOME
Wealth advisory fees 1,106 977 2,290 2,016
Investment brokerage fees 311 923 803 2,040
Service charges on deposit accounts 2,573 2,348 4,947 4,499
Loan, insurance and service fees 1,900 1,757 3,469 3,215
Merchant card fee income 431 380 847 730
Bank owned life insurance income 360 338 735 710
Other income 681 686 1,635 1,561
Mortgage banking income 351 179 740 244
Net securities gains 0 4 42 4
Total noninterest income 7,713 7,592 15,508 15,019
NONINTEREST EXPENSE
Salaries and employee benefits 9,444 9,467 19,167 19,454
Net occupancy expense 915 903 1,999 2,013
Equipment costs 913 761 1,829 1,534
Data processing fees and supplies 1,938 1,493 3,705 2,984
Corporate and business development 714 673 1,504 1,326
FDIC insurance and other regulatory fees 511 488 997 965
Professional fees 728 736 1,417 1,536
Other expense 1,578 1,563 3,024 3,062
Total noninterest expense 16,741 16,084 33,642 32,874
INCOME BEFORE INCOME TAX EXPENSE 17,036 17,062 33,630 32,379
Income tax expense 5,656 5,750 11,114 11,155
NET INCOME$ 11,380 $ 11,312 $ 22,516 $ 21,224
BASIC WEIGHTED AVERAGE COMMON SHARES 16,611,974 16,536,112 16,601,189 16,524,079
BASIC EARNINGS PER COMMON SHARE$ 0.69 $ 0.68 $ 1.36 $ 1.28
DILUTED WEIGHTED AVERAGE COMMON SHARES 16,820,052 16,739,069 16,795,907 16,729,479
DILUTED EARNINGS PER COMMON SHARE$ 0.68 $ 0.68 $ 1.34 $ 1.27


LAKELAND FINANCIAL CORPORATION
LOAN DETAIL
SECOND QUARTER 2015
(unaudited in thousands)
June 30,March 31,December 31,June 30,
2015201520142014
Commercial and industrial loans:
Working capital lines of credit loans$ 606,169 20.9 %$ 574,057 20.7 %$ 544,043 19.7 %$ 509,725 19.1 %
Non-working capital loans 537,708 18.6 504,878 18.2 491,330 17.8 526,221 19.7
Total commercial and industrial loans 1,143,877 39.5 1,078,935 38.9 1,035,373 37.5 1,035,946 38.7
Commercial real estate and multi-family residential loans:
Construction and land development loans 152,292 5.3 151,065 5.4 156,636 5.7 166,671 6.2
Owner occupied loans 409,650 14.2 396,849 14.3 403,154 14.6 385,706 14.4
Nonowner occupied loans 399,583 13.8 399,842 14.4 394,458 14.3 406,691 15.2
Multifamily loans 90,175 3.1 94,327 3.4 71,811 2.6 58,955 2.2
Total commercial real estate and multi-family residential loans 1,051,700 36.3 1,042,083 37.6 1,026,059 37.1 1,018,023 38.1
Agri-business and agricultural loans:
Loans secured by farmland 156,001 5.4 119,934 4.3 137,407 5.0 122,515 4.6
Loans for agricultural production 95,327 3.3 96,307 3.5 136,380 4.9 90,164 3.4
Total agri-business and agricultural loans 251,328 8.7 216,241 7.8 273,787 9.9 212,679 8.0
Other commercial loans 82,247 2.8 82,478 3.0 75,715 2.7 72,097 2.7
Total commercial loans 2,529,152 87.4 2,419,737 87.3 2,410,934 87.3 2,338,745 87.5
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans 148,977 5.1 145,289 5.2 145,167 5.3 138,773 5.2
Open end and junior lien loans 155,902 5.4 150,007 5.4 150,220 5.4 145,330 5.4
Residential construction and land development loans 8,821 0.3 8,666 0.3 6,742 0.2 7,114 0.3
Total consumer 1-4 family mortgage loans 313,700 10.8 303,962 11.0 302,129 10.9 291,217 10.9
Other consumer loans 50,813 1.8 48,733 1.8 49,541 1.8 43,907 1.6
Total consumer loans 364,513 12.6 352,695 12.7 351,670 12.7 335,124 12.5
Subtotal 2,893,665 100.0 % 2,772,432 100.0 % 2,762,604 100.0 % 2,673,869 100.0 %
Less: Allowance for loan losses (44,816) (45,677) (46,262) (45,605)
Net deferred loan fees (203) (219) (284) (542)
Loans, net$ 2,848,646 $ 2,726,536 $ 2,716,058 $ 2,627,722




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

Source:Lake City Bank