Market Overview

Lake City Bank Continues Strong Financial Performance

Share:

WARSAW, Ind., Oct. 25, 2012 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq: LKFN), parent company of Lake City Bank, today reported the highest quarterly and nine month net income and earnings per share in its 140 year history. The Company achieved record net income of $9.3 million for the third quarter of 2012, an increase of 11% versus $8.4 million in the third quarter of 2011. Diluted net income per share increased 10% to a record level of $0.57 in the third quarter versus $0.52 for the comparable period of 2011.

The Company also announced that the Board of Directors approved a cash dividend for the third quarter of $0.17 per share, payable on November 5, 2012 to shareholders of record as of October 25, 2012. The quarterly dividend represents a 10% increase over the quarterly dividends paid in 2011.

Michael L. Kubacki, Chairman and Chief Executive Officer, commented, "Our execution focused team continues to provide us with the ability to deliver great service and technology-driven products to our customer, which in turn provides very strong results for our shareholders."

Kubacki continued, "In 2012, we are celebrating our 140th anniversary. When the Bank was founded in 1872, the name Lake City Bank was on the front door and it is still there today. We're proud of our legacy as a true Indiana community bank and our continuing strong performance reaffirms our reputation as one of the leading community banks in the state and allows us to effectively compete with banks of all sizes."

The Company further reported record net income of $26.8 million for the nine months ended September 30, 2012 versus $22.4 million for the comparable period of 2011, an increase of 20%. Diluted net income per common share also set a new record and increased 19% to $1.63 for the nine months ended September 30, 2012 versus $1.37 for the comparable period of 2011.

Average total loans for the third quarter of 2012 were $2.22 billion versus $2.16 billion for the third quarter of 2011, an increase of 3%. On a linked quarter basis, average loans decreased by $5 million compared to the second quarter of 2012. Total loans outstanding grew $22 million, or 1%, from $2.18 billion as of September 30, 2011 to $2.20 billion as of September 30, 2012. Gross loans outstanding at September 30, 2012 represented a decrease of $30 million versus $2.23 billion as of December 31, 2011. Driving this $30 million decrease in net loans outstanding were anticipated reductions in nonowner occupied commercial real estate loans of $77 million and seasonal reductions in total agribusiness loans of $24 million.

David M. Findlay, President and Chief Financial Officer, stated, "One of the biggest challenges we have faced in 2012 is loan growth, which is directly tied to the economy of our region and overall business expansion. From an economic strength perspective, we believe that the key reasons for some of the decreases are encouraging. Our commercial real estate loan balances have been significantly reduced in 2012 by the successful placement of long term, fixed rate financing. This is good for our clients and a positive sign that outside investors are returning to long term real estate activity. Yet, we have not seen any significant demand for new commercial real estate projects that fit our profile to replenish this runoff. On the agribusiness front, the reduction in loan balances is a positive reflection of the general health of this sector and the strength of the industry's balance sheets. Finally, loan demand in our traditional commercial and industrial sector has not been robust as these clients continue to be focused on strengthening their balance sheets through operational profitability. As a result, we are not seeing widespread or significant capital investment in buildings or equipment."

Findlay concluded, "We continue to be well positioned in our markets to capitalize on improved loan demand when it occurs. We believe that we've got the best commercial lending team in the markets we serve and look forward to the inevitable economic recovery and the loan demand it will bring."

The Company's net interest margin was 3.30% in the third quarter of 2012 versus 3.48% for the third quarter of 2011 and 3.32% in the linked second quarter of 2012. The year-over-year margin decline resulted primarily from reduced yields in the investment portfolio and slightly lower commercial loan yields as interest rates continue to be at historic lows. For the nine months ended September 30, 2012, the Company's net interest margin was 3.34% versus 3.60% for the comparable period in 2011.

The Company's tangible common equity to tangible assets ratio was 9.90% at September 30, 2012 compared to 9.40% at September 30, 2011 and 9.58% at June 30, 2012. Average total deposits for the quarter ended September 30, 2012 were $2.49 billion versus $2.55 billion for the second quarter of 2012 and $2.32 billion for the third quarter of 2011.

The Company's provision for loan losses in the third quarter of 2012 was $0 versus $2.4 million in the same period of 2011. In the second quarter of 2012, the provision was $500,000. For the nine months ended September 30, 2012, the Company's provision for loan losses was $1.3 million versus $10.9 million for the comparable period in 2011. The provision decrease on a year-over-year basis was generally driven by the stabilization and improvement in key loan quality metrics, adequate reserve coverage of nonperforming loans, continuing signs of stabilization in the economic conditions of the Company's markets and general signs of improvement in our borrowers' performance and future prospects. The Company's allowance for loan losses as of September 30, 2012 was $51.9 million compared to $52.1 million as of September 30, 2011 and $53.4 million as of December 31, 2011. The allowance for loan losses represented 2.36% of total loans as of September 30, 2012 versus 2.39% at September 30, 2011 and 2.34% as of June 30, 2012. The allowance for loan losses represented 156% of nonperforming loans as of September 30, 2012 versus 157% at September 30, 2011 and 150% as of June 30, 2012.

Net recoveries totaled $96,000 in the third quarter of 2012 versus net charge-offs of $1.6 million during the third quarter of 2011 and net charge-offs of $1.4 million during the linked second quarter of 2012. The largest charge-off attributable to a single commercial credit during the quarter was $112,000. For the nine months ended September 30, 2012, net charge-offs were $2.8 million versus $3.8 million for the comparable period in 2011. Nonperforming assets decreased 6% to $34.0 million as of September 30, 2012 versus $36.2 million as of September 30, 2011. On a linked quarter basis, nonperforming assets were 6% lower than the $36.4 million reported as of June 30, 2012. The decrease in nonperforming assets during the quarter primarily resulted from sales of other real estate owned as well as payments received on nonperforming loans. The ratio of nonperforming assets to total assets at September 30, 2012 was 1.15% versus 1.28% at September 30, 2011 and 1.22% at June 30, 2012. Total watch list loans were $150.7 million at September 30, 2012 versus $166.5 million at September 30, 2011, a decrease of 9%.

The Company's noninterest income increased 5% to $6.2 million for the third quarter of 2012, versus $5.9 million for the third quarter of 2011. On a linked quarter basis, noninterest income increased by $417,000 from $5.8 million in the second quarter of 2012. On a year-over-year basis, noninterest income was positively impacted by a $162,000 increase in loan, insurance and service fees and a $150,000 increase in mortgage banking income. In addition, other income was positively impacted by gains on the sale of other real estate of $174,000 during the third quarter of 2012, versus write downs on the value of other real estate during the third quarter of 2011 of $88,000. Noninterest income was negatively impacted by $380,000 in net losses on securities sales related to a strategic realignment in the investment portfolio, which included the sale of nine non-agency mortgage backed securities. The sale included all five of the non-agency mortgage backed securities on which the Company had previously recognized other than temporary impairment.

The Company's noninterest expense increased 6% to $14.3 million in the third quarter of 2012, versus $13.5 million in the comparable quarter of 2011. On a linked quarter basis, noninterest expense increased by $53,000 versus $14.2 million in the second quarter of 2012. On a year-over-year basis, data processing fees increased by $414,000 in the three-month period ended September 30, 2012 versus the same period of 2011. In addition, equipment costs increased $105,000 in the three month period ended September 30, 2012 versus the same period of 2011. The Company's efficiency ratio for the third quarter of 2012 was 50%, compared to a ratio of 47% for the comparable quarter of 2011 and 51% for the linked second quarter of 2012.

Lakeland Financial Corporation is a $3.0 billion bank holding company headquartered in Warsaw, Indiana. Lake City Bank serves Indiana with 45 branches located in the following Indiana counties: Kosciusko, Elkhart, Allen, St. Joseph, DeKalb, Fulton, Hamilton, Huntington, LaGrange, Marshall, Noble, Pulaski and Whitley.

Lakeland Financial Corporation may be accessed on the home page of its subsidiary, Lake City Bank, at www.lakecitybank.com. The Company's common stock is traded on the Nasdaq Global Select Market under "LKFN".

In addition to the results presented in accordance with generally accepted accounting principles in the United States of America, this press release contains certain non-GAAP financial measures. Lakeland Financial believes that providing non-GAAP financial measures provides investors with information useful to understanding Lakeland Financial'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 2012 FINANCIAL HIGHLIGHTS
(Unaudited – Dollars in thousands except share and per share data)
           
  Three Months Ended Nine Months Ended
  Sep. 30, Jun. 30, Sep. 30, Sep. 30, Sep. 30,
  2012 2012 2011 2012 2011
END OF PERIOD BALANCES          
Assets  $ 2,952,208  $ 2,974,438  $ 2,827,438  $ 2,952,208  $ 2,827,438
Deposits  2,476,097  2,525,485  2,356,359  2,476,097  2,356,359
Loans  2,203,388  2,214,400  2,181,008  2,203,388  2,181,008
Allowance for Loan Losses  51,912  51,817  52,073  51,912  52,073
Total Equity  294,990  287,658  268,847  294,990  268,847
Tangible Common Equity  291,946  284,543  265,590  291,946  265,590
AVERAGE BALANCES          
Total Assets  $ 2,960,363  $ 3,015,641  $ 2,790,191  $ 2,956,482  $ 2,757,766
Earning Assets  2,718,318  2,730,356  2,640,298   2,717,325  2,616,361
Investments  475,899  479,131  457,360  475,028  441,771
Loans  2,215,456  2,220,641  2,160,007  2,217,227  2,131,765
Total Deposits  2,492,042   2,554,013  2,316,323  2,491,258  2,292,776
Interest Bearing Deposits  2,127,463  2,208,292  1,998,402  2,142,978  1,990,605
Interest Bearing Liabilities  2,286,151  2,365,962  2,192,141  2,305,946  2,183,836
Total Equity  291,513  284,638  264,460  284,496  256,829
INCOME STATEMENT DATA          
Net Interest Income  $ 22,160  $ 22,148  $ 22,821  $ 66,805  $  69,300
Net Interest Income-Fully Tax Equivalent  22,561  22,550  23,198  68,014  70,443
Provision for Loan Losses  0  500  2,400  1,299  10,900
Noninterest Income  6,229  5,812  5,923  17,891  16,667
Noninterest Expense  14,302  14,249  13,479  43,231  41,620
Net Income  9,347  8,819  8,447  26,792  22,401
PER SHARE DATA          
Basic Net Income Per Common Share  $ 0.57  $ 0.54  $ 0.52  $ 1.64  $ 1.38
Diluted Net Income Per Common Share  0.57  0.54  0.52  1.63  1.37
Cash Dividends Declared Per Common Share  0.170  0.170  0.155  0.495  0.465
Book Value Per Common Share (equity per share issued)  18.04  17.61  16.58  18.04  16.58
Market Value – High  28.82  26.83  23.94   28.82  23.94
Market Value – Low  25.09  24.07  19.40  23.91  19.40
Basic Weighted Average Common Shares Outstanding  16,340,425  16,324,928  16,208,889  16,312,896  16,201,900
Diluted Weighted Average Common Shares Outstanding  16,490,390  16,453,561  16,324,058  16,470,485  16,309,814
KEY RATIOS          
Return on Average Assets  1.26%  1.18%   1.20%  1.21%  1.09%
Return on Average Total Equity  12.76  12.46  12.67  12.58  11.66
Efficiency (Noninterest Expense / Net Interest Income plus Noninterest Income)  50.38  50.96  46.89  51.04  48.41
Average Equity to Average Assets  9.85  9.44  9.48  9.62   9.31
Net Interest Margin  3.30  3.32  3.48  3.34  3.60
Net Charge Offs to Average Loans  (0.02)  0.26  0.29  0.17   0.24
Loan Loss Reserve to Loans  2.36  2.34  2.39  2.36  2.39
Loan Loss Reserve to Nonperforming Loans  155.73  149.67  156.61  155.73  156.61
Loan Loss Reserve to Nonperforming Loans and Performing TDR's  83.31  90.29  93.52  83.31  93.52
Nonperforming Loans to Loans  1.51   1.56  1.52  1.51  1.52
Nonperforming Assets to Assets  1.15  1.22  1.28  1.15  1.28
Tier 1 Leverage  10.59  10.16  10.29  10.59  10.29
Tier 1 Risk-Based Capital  13.32  12.85  12.33  13.32  12.33
Total Capital  14.59  14.11  13.59  14.59  13.59
Tangible Capital  9.90  9.58  9.40  9.90  9.40
ASSET QUALITY          
Loans Past Due 30 - 89 Days  $ 4,028  $ 6,744  $ 3,357  $ 4,028  $ 3,357
Loans Past Due 90 Days or More  109  106  61  109  61
Non-accrual Loans  33,226  34,514   33,190  33,226  33,190
Nonperforming Loans (includes nonperforming TDR's)  33,335  34,620  33,251  33,335  33,251
Other Real Estate Owned  681  1,737  2,889  681  2,889
Other Nonperforming Assets  5  13  25  5  25
Total Nonperforming Assets  34,021  36,370  36,165  34,021  36,165
Nonperforming Troubled Debt Restructurings (included in nonperforming loans)  28,979  32,129  9,300  28,979  9,300
Performing Troubled Debt Restructurings  26,106  22,767  22,428  26,106  22,428
Total Troubled Debt Restructurings  55,085  54,896  31,728  55,085  31,728
Impaired Loans  61,294  59,256  57,659  61,294  57,659
Total Watch List Loans  150,709  151,047  166,499  150,709  166,499
Gross Charge Offs  482  1,852  2,099  4,066  5,048
Recoveries  578  412  511  1,280  1,214
Net Charge Offs/(Recoveries)  (96)  1,440  1,588  2,786  3,834

 

LAKELAND FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
As of September 30, 2012 and December 31, 2011
(in thousands, except share data)
     
  September 30, December 31,
  2012 2011
  (Unaudited)  
ASSETS    
Cash and due from banks  $ 134,785  $ 56,909
Short-term investments 46,617 47,675
Total cash and cash equivalents 181,402 104,584
     
Securities available for sale (carried at fair value) 481,256 467,391
Real estate mortgage loans held for sale 6,707 2,953
     
Loans, net of allowance for loan losses of $51,912 and $53,400 2,151,476 2,180,309
     
Land, premises and equipment, net 34,969 34,736
Bank owned life insurance 40,848 39,959
Accrued income receivable 9,735 9,612
Goodwill 4,970 4,970
Other intangible assets 60 99
Other assets 40,785 45,075
Total assets  $ 2,952,208  $ 2,889,688
     
LIABILITIES AND EQUITY    
     
LIABILITIES    
Noninterest bearing deposits  $ 357,531  $ 356,682
Interest bearing deposits 2,118,566 2,056,014
Total deposits 2,476,097 2,412,696
     
Short-term borrowings    
Federal funds purchased 0 10,000
Securities sold under agreements to repurchase 118,552 131,990
Total short-term borrowings 118,552 141,990
     
Accrued expenses payable 15,414 13,550
Other liabilities 1,189 2,195
Long-term borrowings 15,038 15,040
Subordinated debentures 30,928 30,928
Total liabilities 2,657,218 2,616,399
     
EQUITY    
Common stock: 90,000,000 shares authorized, no par value 16,346,247 shares issued and 16,260,259 outstanding as of September 30, 2012 16,217,019 shares issued and 16,145,772 outstanding as of December 31, 2011 89,255 87,380
Retained earnings 200,615 181,903
Accumulated other comprehensive income 6,644 5,139
Treasury stock, at cost (2012 - 85,988 shares, 2011 - 71,247 shares) (1,613) (1,222)
Total stockholders' equity 294,901 273,200
     
Noncontrolling interest 89 89
Total equity 294,990 273,289
Total liabilities and equity  $ 2,952,208  $  2,889,688

 

LAKELAND FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months and Nine Months Ended September 30, 2012 and 2011
(in thousands except for share and per share data)
(unaudited)
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2012 2011 2012 2011
         
NET INTEREST INCOME        
Interest and fees on loans        
Taxable  $ 25,803  $ 26,390  $ 77,789  $ 78,555
Tax exempt   109  114  333  357
Interest and dividends on securities        
Taxable  2,034  3,217  7,425  10,635
Tax exempt   698  692  2,094  2,068
Interest on short-term investments  16  18  43  114
Total interest income  28,660   30,431  87,684  91,729
         
Interest on deposits  5,989  7,090  19,352  20,868
Interest on borrowings        
 Short-term  112   159  329  477
 Long-term  399  361  1,198  1,084
Total interest expense  6,500  7,610  20,879  22,429
         
NET INTEREST INCOME  22,160  22,821  66,805  69,300
         
Provision for loan losses  0  2,400  1,299   10,900
         
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES  22,160  20,421  65,506  58,400
         
NONINTEREST INCOME        
Wealth advisory fees  959  866  2,770  2,613
Investment brokerage fees  695  741  2,435  2,093
Service charges on deposit accounts  2,045  2,036  5,937  5,938
Loan, insurance and service fees  1,421  1,259  4,062  3,595
Merchant card fee income  297   253  902  775
Other income  669  362  1,614  1,380
Mortgage banking income  590  440  1,574   594
Net securities losses  (380)  (1)  (377)  (167)
Other than temporary impairment loss on available-for-sale securities:        
Total impairment losses recognized on securities  (67)  (33)  (1,052)  (154)
Loss recognized in other comprehensive income  0  0  26  0
Net impairment loss recognized in earnings  (67)  (33)  (1,026)  (154)
Total noninterest income  6,229  5,923  17,891  16,667
         
NONINTEREST EXPENSE        
Salaries and employee benefits  8,569  8,611  26,007  24,802
Net occupancy expense  803  746  2,519   2,373
Equipment costs  641  536  1,854  1,600
Data processing fees and supplies  1,143  729  3,044  2,820
Other expense   3,146  2,857  9,807  10,025
Total noninterest expense  14,302  13,479  43,231  41,620
         
INCOME BEFORE INCOME TAX EXPENSE  14,087  12,865  40,166  33,447
         
Income tax expense  4,740  4,418  13,374  11,046
         
NET INCOME  $ 9,347  $ 8,447  $ 26,792  $ 22,401
         
BASIC WEIGHTED AVERAGE COMMON SHARES  16,340,425  16,208,889  16,312,896  16,201,900
BASIC EARNINGS PER COMMON SHARE  $ 0.57  $ 0.52  $  1.64  $ 1.38
DILUTED WEIGHTED AVERAGE COMMON SHARES  16,490,390  16,324,058  16,470,485  16,309,814
DILUTED EARNINGS PER COMMON SHARE  $ 0.57  $ 0.52  $ 1.63  $ 1.37

 

LAKELAND FINANCIAL CORPORATION
LOAN DETAIL
THIRD QUARTER 2012
(unaudited in thousands)
             
  September 30, December 31, September 30,
  2012 2011 2011
Commercial and industrial loans:            
Working capital lines of credit loans  $ 445,981  20.2%  $ 373,768  16.7%  $ 382,202  17.5%
Non-working capital loans  382,850  17.4  377,388  16.9 380,125  17.4
Total commercial and industrial loans  828,831  37.6  751,156  33.6 762,327  34.9
             
Commercial real estate and multi-family residential loans:            
Construction and land development loans  87,949  4.0  82,284  3.7  110,493  5.1
Owner occupied loans  363,673  16.5  346,669  15.5  335,514  15.4
Nonowner occupied loans  308,146  14.0  385,090  17.2  363,777  16.7
Multifamily loans  25,482  1.2  38,477  1.7   19,578  0.9
Total commercial real estate and multi-family residential loans  785,250  35.6  852,520  38.2  829,362  38.0
             
Agri-business and agricultural loans:            
Loans secured by farmland 119,524  5.4 118,224  5.3  101,978  4.7
Loans for agricultural production 94,563  4.3 119,705  5.4 92,414  4.2
Total agri-business and agricultural loans 214,087  9.7 237,929  10.7 194,392   8.9
             
Other commercial loans  44,982  2.0  58,278  2.6 58,208  2.7
Total commercial loans  1,873,150  85.0  1,899,883  85.0  1,844,289  84.6
             
Consumer 1-4 family mortgage loans:            
Closed end first mortgage loans  106,147  4.8  106,999  4.8 107,026  4.9
Open end and junior lien loans  168,507  7.6  175,694  7.9 177,940  8.2
Residential construction and land development loans  11,303  0.5  5,462  0.2 4,380  0.2
Total consumer 1-4 family mortgage loans  285,957  13.0  288,155  12.9  289,346  13.3
             
Other consumer loans   44,691  2.0  45,999  2.1 47,623  2.2
Total consumer loans  330,648  15.0  334,154  15.0  336,969  15.4
Subtotal  2,203,798  100.0%  2,234,037  100.0%  2,181,258  100.0%
Less: Allowance for loan losses  (51,912)    (53,400)    (52,073)  
     Net deferred loan fees  (410)    (328)    (250)  
Loans, net  $2,151,476    $2,180,309    $2,128,935  
CONTACT: David M. Findlay President and Chief Financial Officer (574) 267-9197 david.findlay@lakecitybank.com
View Comments and Join the Discussion!