Lakeland Financial Reports Strong Organic Loan and Deposit Growth

WARSAW, Ind., Oct. 26, 2015 (GLOBE NEWSWIRE) — Lakeland Financial Corporation (Nasdaq:LKFN), parent company of Lake City Bank, today reported net income of $34.1 million for the nine months ended September 30, 2015, versus $32.7 million for the comparable period of 2014, an increase of 4%. Diluted net income per common share also increased 4% to $2.03 for the nine months ended September 30, 2015, versus $1.95 for the comparable period of 2014.

The company further reported net income of $11.6 million for the third quarter of 2015 versus $11.5 million for the third quarter of 2014. Diluted net income per common share was $0.69 for the third quarters of 2015 and 2014. On a quarter-linked basis net income increased by 2% or $185,000 from $11.4 million for the second quarter ended June 30, 2015.

As previously announced, the board of directors approved a cash dividend for the third quarter of $0.245 per share, payable on November 5, 2015, to shareholders of record as of October 25, 2015. The quarterly dividend, which is equal to the dividend paid in the second quarter 2015, 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.

Return on average total equity for the first nine months of 2015 was 12.18% compared to 12.94% in the prior year period. Return on average assets for the first nine months of 2015 was 1.29% compared to 1.33% in the same period of 2014. The company’s tangible common equity to tangible assets ratio was 10.47% at September 30, 2015, compared to 10.40% at September 30, 2014 and 10.44% at June 30, 2015.

“We continue to focus on the growth of our balance sheet as the primary driver of our financial success. Simply put, lending money in our Indiana communities contributes to their ongoing economic growth and recovery. Overall, we are very pleased with our loan growth in 2015,” commented David M. Findlay, President and Chief Executive Officer.

Average total loans for the third quarter of 2015 were $2.92 billion, an increase of $238.5 million, or 9% versus $2.68 billion for the comparable period in 2014. Total loans outstanding grew $270.4 million, or 10%, from $2.70 billion as of September 30, 2014 to $2.97 billion as of September 30, 2015. On a linked quarter basis, average total loans increased $70.8 million, or 2%, from $2.85 billion for the second quarter of 2015 to $2.92 billion for the third quarter of 2015.

Average total deposits for the third quarter of 2015 were $3.13 billion, an increase of $307.2 million, or 11%, versus $2.82 billion for the corresponding period of 2014. Total deposits grew $257.9 million, or 9%, from $2.89 billion as of September 30, 2014 to $3.15 billion as of September 30, 2015. Importantly, total core deposits increased $348.5 million, or 13% from $2.67 billion at September 30, 2014 to $3.01 billion at September 30, 2015. On a linked quarter basis, average total deposits increased $60.0 million, or 2%, from $3.07 billion for the second quarter of 2015 to $3.13 billion for the third quarter of 2015.

“We are particularly proud of our continued organic core deposit growth in our Indiana footprint.  Importantly, the growth is being generated in both our more mature Northern Indiana markets and in our Indianapolis market, which we entered in 2011. The core deposit growth is also coming from both our commercial and retail deposit clients in every market we serve,” added Findlay.

The company’s net interest margin was 3.16% in the third quarter of 2015, compared to  3.31% for the third quarter of 2014. Net interest margin was 3.18% in the linked second quarter of 2015. Net interest margin for the nine months ended September 30, 2015 was 3.21% compared to 3.34% in the prior year nine month period. The decline in net interest margin during the three month and nine month periods ended September 30, 2015 was largely driven by competitive factors in the company’s markets, including more aggressive pricing of new loan opportunities and renewed loans as well as a slightly higher cost of funds. Net interest income increased $746,000, or 3%, to $26.7 million for the third quarter of 2015, versus $26.0 million in the third quarter of 2014. Net interest income for the nine months ended September 30, 2015 increased $2.3 million, or 3%, to $78.5 million, versus $76.2 million for the nine months ended September 30, 2014.

Findlay commented further, “We continue to experience pressure on our net interest margin as a result of the low interest rate environment. We believe that our balance sheet is well positioned to benefit from an increase in overall interest rates, and we will continue to closely manage it until rates start to rise.”

For the eleventh 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, a decrease in historical loss percentages, stable economic conditions in 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, 2015 was $44.7 million compared to $46.4 million as of September 30, 2014 and $44.8 million as of June 30, 2015. The allowance for loan losses represented 1.50% of total loans as of September 30, 2015 versus 1.72% at September 30, 2014 and 1.55% as of June 30, 2015. The allowance for loan losses as a percentage of nonperforming loans was 312% as of September 30, 2015, versus 314% as of September 30, 2014, and 312% as of June 30, 2015.

Nonperforming assets decreased $431,000, or 3%, to $14.5 million as of September 30, 2015 versus $15.0 million as of September 30, 2014. On a linked quarter basis, nonperforming assets were $72,000 lower than the $14.6 million reported as of June 30, 2015. The ratio of nonperforming assets to total assets at September 30, 2015 was 0.40% versus 0.45% at September 30, 2014 and 0.41% at June 30, 2015. Net charge-offs to average loans were 0.02% for the third quarter of 2015 compared to net recoveries of 0.12% for the third quarter of 2014 and net charge-offs of 0.12% for the second quarter of 2015. Net charge-offs totaled $122,000 in the third quarter of 2015 versus net recoveries of $782,000 during the third quarter of 2014 and net charge-offs of $861,000 during the linked second quarter of 2015.

The company’s noninterest income was $7.9 million for both the third quarters of 2015 and 2014. On a linked quarter basis, noninterest income increased by $189,000 from $7.7 million in the second quarter of 2015. Noninterest income increased 2% to $23.4 million in the nine months ended September 30, 2015 versus $22.9 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, loan, insurance and service fees and wealth advisory fees. Offsetting these increases was a decrease in investment brokerage fees driven by lower production volumes as well as changes to the product mix designed to provide a more consistent revenue stream.

The company’s noninterest expense increased by 3% to $17.2 million in the third quarter of 2015 compared to $16.7 million in the third quarter of 2014. Noninterest expense increased 3% to $50.8 million in the nine months ended September 30, 2015 versus $49.5 million in the comparable period of 2014. Data processing fees increased by $1.1 million primarily due to increased technology and software related expenditures with the company’s core processor which are volume and product driven to enhance the delivery of electronic banking channels and enhance commercial product solutions. Equipment costs increased due to higher depreciation expense related to branch upgrades and expansion. Salaries and employee benefits decreased by $289,000 in the first nine months of 2015 versus the same period of 2014. The decrease in salary and employee benefits was driven by lower employee benefit costs including lower incentive-based compensation accruals and lower commissions paid on investment brokerage fees as a result of lower production. Professional fees decreased by $130,000 in the first nine months of 2015, driven by lower legal fees. The company’s efficiency ratio was 50% for the third quarter of 2015 compared to 49% in the third quarter of  2014, and unchanged from 50% for the linked second quarter of 2015.

Lakeland Financial Corporation is a $3.7 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    
THIRD QUARTER 2015 FINANCIAL HIGHLIGHTS    
  Three Months Ended   Nine Months Ended    
(Unaudited – Dollars in thousands except Shares not in dollars) Sep. 30,   Jun. 30,   Sep. 30,   Sep. 30,   Sep. 30,    
END OF PERIOD BALANCES   2015       2015       2014       2015       2014      
Assets $ 3,666,250     $ 3,572,106     $ 3,355,903     $ 3,666,250     $ 3,355,903      
Deposits   3,147,534       3,020,151       2,889,672       3,147,534       2,889,672      
Brokered Deposits   133,836       120,861       224,486       133,836       224,486      
Core Deposits   3,013,698       2,899,290       2,665,186       3,013,698       2,665,186      
Loans   2,972,280       2,893,462       2,701,923       2,972,280       2,701,923      
Allowance for Loan Losses   44,694       44,816       46,387       44,694       46,387      
Total Equity   386,700       375,764       351,949       386,700       351,949      
Tangible Common Equity   383,529       372,588       348,769       383,529       348,769      
AVERAGE BALANCES                      
Total Assets $ 3,640,769     $ 3,552,029     $ 3,351,474     $ 3,545,357     $ 3,286,736      
Earning Assets   3,409,445       3,342,275       3,172,423       3,333,410       3,108,483      
Investments   471,641       475,803       476,643       474,876       474,809      
Loans   2,923,159       2,852,382       2,684,667       2,844,079       2,623,522      
Total Deposits   3,126,472       3,066,483       2,819,237       3,044,069       2,750,627      
Interest Bearing Deposits   2,491,490       2,488,227       2,317,643       2,454,039       2,270,271      
Interest Bearing Liabilities   2,605,467       2,581,664       2,485,979       2,562,723       2,453,021      
Total Equity   380,865       374,339       348,154       374,017       338,118      
INCOME STATEMENT DATA                      
Net Interest Income $ 26,711     $ 26,064     $ 25,965     $ 78,475     $ 76,199      
Net Interest Income-Fully Tax Equivalent   27,181       26,559       26,451       79,926       77,641      
Provision for Loan Losses   0       0       0       0       0      
Noninterest Income   7,902       7,713       7,871       23,410       22,890      
Noninterest Expense   17,207       16,741       16,660       50,849       49,534      
Net Income   11,565       11,380       11,511       34,081       32,735      
PER SHARE DATA                      
Basic Net Income Per Common Share $ 0.70     $ 0.69     $ 0.70     $ 2.05     $ 1.98      
Diluted Net Income Per Common Share   0.69       0.68       0.69       2.03       1.95      
Cash Dividends Declared Per Common Share   0.245       0.245       0.21       0.70       0.61      
Dividend Payout   35.51   %   36.03   %   30.43   %   34.48   %   31.28   %  
Book Value Per Common Share (equity per share issued)   23.24       22.61       21.26       23.24       21.26      
Tangible Book Value Per Common Share   23.05       22.42       21.08       23.05       21.08      
Market Value – High   45.40       44.27       39.93       45.40       41.46      
Market Value – Low   39.01       38.71       35.50       37.42       34.96      
Basic Weighted Average Common Shares Outstanding   16,629,378       16,611,974       16,547,551       16,610,689       16,531,411      
Diluted Weighted Average Common Shares Outstanding   16,847,983       16,820,052       16,775,770       16,808,833       16,769,079      
KEY RATIOS                      
Return on Average Assets   1.26   %   1.29   %   1.36   %   1.29   %   1.33   %  
Return on Average Total Equity   12.05       12.19       13.12       12.18       12.94      
Average Equity to Average Assets   10.46       10.54       10.39       10.55       10.29      
Net Interest Margin   3.16       3.18       3.31       3.21       3.34      
Efficiency  (Noninterest Expense / Net Interest Income plus Noninterest Income)   49.71       49.57       49.24       49.91       49.99      
Tier 1 Leverage   11.18       11.22       11.18       11.18       11.18      
Tier 1 Risk-Based Capital   12.53       12.58       13.15       12.53       13.15      
Common Equity Tier 1 (CET1)   11.61       11.63       NA       11.61       NA      
Total Capital   13.79       13.83       14.40       13.79       14.40      
Tangible Capital   10.47       10.44       10.40       10.47       10.40      
ASSET QUALITY                      
Loans Past Due 30 – 89 Days $ 1,984     $ 4,580     $ 2,432     $ 1,984     $ 2,432      
Loans Past Due 90 Days or More   0       284       0       0       0      
Non-accrual Loans   14,308       14,089       14,764       14,308       14,764      
Nonperforming Loans (includes nonperforming TDR’s)   14,308       14,373       14,764       14,308       14,764      
Other Real Estate Owned   231       231       200       231       200      
Other Nonperforming Assets   0       7       6       0       6      
Total Nonperforming Assets   14,539       14,611       14,970       14,539       14,970      
Performing Troubled Debt Restructurings   7,605       7,606       17,650       7,605       17,650      
Nonperforming Troubled Debt Restructurings (included in nonperforming loans)   10,934       11,176       9,841       10,934       9,841      
Total Troubled Debt Restructurings   18,539       18,783       27,491       18,539       27,491      
Impaired Loans   22,660       22,328       34,137       22,660       34,137      
Non-Impaired Watch List Loans   122,116       130,735       130,014       122,116       130,014      
Total Impaired and Watch List Loans   144,776       153,063       164,151       144,776       164,151      
Gross Charge Offs   228       995       270       1,931       3,675      
Recoveries   106       134       1,052       364       1,265      
Net Charge Offs/(Recoveries)   122       861       (782 )     1,567       2,410      
Net Charge Offs/(Recoveries)  to Average Loans   0.02   %   0.12   %   (0.12 ) %   0.07   %   0.12   %  
Loan Loss Reserve to Loans   1.50   %   1.55   %   1.72   %   1.50   %   1.72   %  
Loan Loss Reserve to Nonperforming Loans   312.36   %   311.80   %   314.18   %   312.36   %   314.18   %  
Loan Loss Reserve to Nonperforming Loans and Performing TDR’s   203.96   %   203.90   %   143.11   %   203.96   %   143.11   %  
Nonperforming Loans to Loans   0.48   %   0.50   %   0.55   %   0.48   %   0.55   %  
Nonperforming Assets to Assets   0.40   %   0.41   %   0.45   %   0.40   %   0.45   %  
Total Impaired and Watch List Loans to Total Loans   4.87   %   5.29   %   6.08   %   4.87   %   6.08   %  
OTHER DATA                      
Full Time Equivalent Employees   518       514       495       518       495      
Offices   46       46       46       46       46      

 

LAKELAND FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
September 30, 2015 and December 31, 2014
(in thousands, except share data)
 
  September 30,   December 31,
    2015       2014  
  (Unaudited)    
ASSETS      
Cash and due from banks $   86,586     $ 75,381  
Short-term investments   11,485       15,257  
Total cash and cash equivalents   98,071       90,638  
       
Securities available for sale (carried at fair value)   477,699       475,911  
Real estate mortgage loans held for sale   3,132       1,585  
       
Loans, net of allowance for loan losses of $44,694 and $46,262   2,927,586       2,716,058  
       
Land, premises and equipment, net   44,013       41,983  
Bank owned life insurance   67,693       66,612  
Federal Reserve and Federal Home Loan Bank stock   7,668       9,413  
Accrued interest receivable   9,330       8,662  
Goodwill   4,970       4,970  
Other assets   26,088       27,452  
Total assets $   3,666,250     $ 3,443,284  
       
LIABILITIES AND STOCKHOLDERS’ EQUITY      
       
LIABILITIES      
Noninterest bearing deposits $   630,789     $ 579,495  
Interest bearing deposits   2,516,745       2,293,625  
Total deposits   3,147,534       2,873,120  
       
Short-term borrowings      
Federal funds purchased   0       500  
Securities sold under agreements to repurchase   80,414       54,907  
Other short-term borrowings   0       105,000  
Total short-term borrowings   80,414       160,407  
       
Long-term borrowings   34       35  
Subordinated debentures   30,928       30,928  
Accrued interest payable   3,712       2,946  
Other liabilities   16,928       14,463  
Total liabilities   3,279,550       3,081,899  
       
STOCKHOLDERS’ EQUITY      
Common stock:  90,000,000 shares authorized, no par value      
16,636,069 shares issued and 16,540,957 outstanding as of September 30, 2015      
16,550,324 shares issued and 16,465,621 outstanding as of December 31, 2014   98,216       96,121  
Retained earnings   285,792       263,345  
Accumulated other comprehensive income   5,035       3,830  
Treasury stock, at cost (2015 – 95,112 shares, 2014 – 84,703 shares)   (2,432 )     (2,000 )
Total stockholders’ equity   386,611       361,296  
Noncontrolling interest   89       89  
Total equity   386,700       361,385  
Total liabilities and equity $   3,666,250     $ 3,443,284  

 

LAKELAND FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months and Nine Months Ended September 30, 2015 and 2014
(in thousands except for share and per share data)
(unaudited)
 
  Three Months Ended   Nine Months Ended
  September 30,   September 30,
    2015       2014       2015       2014  
NET INTEREST INCOME              
Interest and fees on loans              
Taxable $   27,981     $ 26,713     $   81,553     $ 78,317  
Tax exempt     116       125         350       348  
Interest and dividends on securities              
Taxable     2,009       2,075         6,459       6,114  
Tax exempt     844       820         2,515       2,455  
Interest on short-term investments     16       12         43       31  
Total interest income     30,966       29,745         90,920       87,265  
               
Interest on deposits     3,973       3,424         11,551       9,946  
Interest on borrowings              
Short-term      43       96         138       351  
Long-term     239       260         756       769  
Total interest expense      4,255       3,780         12,445       11,066  
               
NET INTEREST INCOME     26,711       25,965         78,475       76,199  
               
Provision for loan losses     0       0         0       0  
               
NET INTEREST INCOME AFTER PROVISION FOR              
LOAN LOSSES     26,711       25,965         78,475       76,199  
               
NONINTEREST INCOME              
Wealth advisory fees     1,103       1,030         3,393       3,046  
Investment brokerage fees     405       699         1,208       2,739  
Service charges on deposit accounts     2,806       2,474         7,753       6,973  
Loan, insurance and service fees     2,147       1,972         5,616       5,187  
Merchant card fee income     485       407         1,332       1,137  
Bank owned life insurance income     221       372         956       1,082  
Other income     455       881         2,090       2,442  
Mortgage banking income     280       264         1,020       508  
Net securities gains/(losses)     0       (228 )       42       (224 )
Total noninterest income     7,902       7,871         23,410       22,890  
               
NONINTEREST EXPENSE              
Salaries and employee benefits     9,854       9,856         29,021       29,310  
Net occupancy expense     919       872         2,918       2,885  
Equipment costs     870       812         2,699       2,346  
Data processing fees and supplies     1,950       1,557         5,655       4,541  
Corporate and business development      780       726         2,284       2,052  
FDIC insurance and other regulatory fees     521       481         1,518       1,446  
Professional fees      694       705         2,111       2,241  
Other expense     1,619       1,651         4,643       4,713  
Total noninterest expense      17,207       16,660         50,849       49,534  
               
INCOME BEFORE INCOME TAX EXPENSE     17,406       17,176         51,036       49,555  
Income tax expense     5,841       5,665         16,955       16,820  
NET INCOME $   11,565     $ 11,511     $   34,081     $ 32,735  
               
BASIC WEIGHTED AVERAGE COMMON SHARES     16,629,378       16,547,551         16,610,689       16,531,411  
BASIC EARNINGS PER COMMON SHARE $   0.70     $ 0.70     $   2.05     $ 1.98  
DILUTED WEIGHTED AVERAGE COMMON SHARES     16,847,983       16,775,770         16,808,833       16,769,079  
DILUTED EARNINGS PER COMMON SHARE $   0.69     $ 0.69     $   2.03     $ 1.95  

 

LAKELAND FINANCIAL CORPORATION
LOAN DETAIL
THIRD QUARTER 2015
(unaudited in thousands)
                         
  September 30, June 30, December 31, September 30,
  2015 2015 2014 2014
Commercial and industrial loans:                        
Working capital lines of credit loans $ 593,780   20.0 % $ 606,169   20.9 % $ 544,043   19.7 % $ 517,916   19.2 %
Non-working capital loans   577,536   19.4     537,708   18.6     491,330   17.8     513,525   19.0  
Total commercial and industrial loans   1,171,316   39.4     1,143,877   39.5     1,035,373   37.5     1,031,441   38.2  
                         
Commercial real estate and multi-family residential loans:                        
Construction and land development loans   176,945   6.0     152,292   5.3     156,636   5.7     153,118   5.7  
Owner occupied loans   409,004   13.8     409,650   14.2     403,154   14.6     396,207   14.7  
Nonowner occupied loans   417,790   14.1     399,583   13.8     394,458   14.3     401,454   14.9  
Multifamily loans   93,075   3.1     90,175   3.1     71,811   2.6     84,875   3.1  
Total commercial real estate and multi-family residential loans   1,096,814   36.9     1,051,700   36.3     1,026,059   37.1     1,035,654   38.3  
                         
Agri-business and agricultural loans:                        
Loans secured by farmland   155,106   5.2     156,001   5.4     137,407   5.0     131,516   4.9  
Loans for agricultural production   93,964   3.2     95,327   3.3     136,380   4.9     78,203   2.9  
Total agri-business and agricultural loans   249,070   8.4     251,328   8.7     273,787   9.9     209,719   7.8  
                         
Other commercial loans   82,976   2.8     82,247   2.8     75,715   2.7     77,076   2.9  
Total commercial loans   2,600,176   87.5     2,529,152   87.4     2,410,934   87.3     2,353,890   87.1  
                         
Consumer 1-4 family mortgage loans:                        
Closed end first mortgage loans   154,019   5.2     148,977   5.1     145,167   5.3     143,892   5.3  
Open end and junior lien loans   160,485   5.4     155,902   5.4     150,220   5.4     150,859   5.6  
Residential construction and land development loans   8,445   0.3     8,821   0.3     6,742   0.2     5,726   0.2  
Total consumer 1-4 family mortgage loans   322,949   10.9     313,700   10.8     302,129   10.9     300,477   11.1  
                         
Other consumer loans   49,169   1.7     50,813   1.8     49,541   1.8     47,967   1.8  
Total consumer loans   372,118   12.5     364,513   12.6     351,670   12.7     348,444   12.9  
Subtotal   2,972,294   100.0 %   2,893,665   100.0 %   2,762,604   100.0 %   2,702,334   100.0 %
Less:  Allowance for loan losses   (44,694 )       (44,816 )       (46,262 )       (46,387 )    
          Net deferred loan fees   (14 )       (203 )       (284 )       (411 )    
Loans, net $ 2,927,586       $ 2,848,646       $ 2,716,058       $ 2,655,536      

 

 

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

Left Menu Icon
Right Menu Icon