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Lakeland Second Quarter Financial Performance Driven by Strong Loan Growth

20:00 EDT 23 Jul 2015 | Globe Newswire

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 

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