Lake City Bank Reports Record High Quarterly and Annual Net Income

By GlobeNewswire,  January 27, 2014, 08:00:00 AM EDT


WARSAW, Ind., Jan. 27, 2014 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq:LKFN), parent company of Lake City Bank, today reported record high net income of $38.8 million for 2013. Net income increased 10% from $35.4 million for 2012. Diluted net income per common share increased 8% to $2.33 for 2013 versus $2.15 for 2012. This per share performance also represents a record level for the company and its shareholders.

The company further reported record quarterly net income of $10.6 million for the fourth quarter of 2013, an increase of 23%, versus $8.6 million in the fourth quarter of 2012. Diluted net income per share was $0.63 for the fourth quarter of 2013, an increase of 21%, versus $0.52 for the comparable period of 2012. This performance represents the highest quarterly and annual net income and earnings per share in the company's 141 year history.

Michael L. Kubacki, Chairman and Chief Executive Officer, commented, "We've always believed that by adhering to our long term strategy of consistently taking care of clients each and every day, we would create value for our shareholders. The entire Lake City Bank team is proud of the strong earnings performance in the fourth quarter and for the full year. And our shareholders have benefitted as well, as they were rewarded with a healthy dividend and a 50% increase in our stock price in 2013."

The company also announced that the board of directors approved a cash dividend for the fourth quarter of $0.19 per share, payable on February 5, 2014, to shareholders of record as of January 25, 2014. The quarterly dividend represents a 12% increase over the quarterly dividends paid for each quarter of 2012.

Kubacki further observed, "With the January 2014 opening of our second office in the Indianapolis market, we are continuing to expand the business organically. While Indianapolis represents our newest market, we're getting great traction in that market and are pleased with the growth we've experienced there. Overall, it was a positive year as we experienced good loan growth in every market we serve."

David M. Findlay, President and Chief Financial Officer, stated, "In the fourth quarter, we grew our loan portfolio by $142 million, or 6%, versus the third quarter. This represents the largest quarterly loan growth in our history. For the full year, total loans grew by 12%, or $278 million. We believe that this lending growth is reflective of the strengthening regional economy and of our further market share expansion. We are clearly focused on growing our balance sheet through lending more money in our Northern and Central Indiana markets. This robust loan growth is further evidence of our mission to be the acknowledged and recognized leader in Indiana community banking."

For the year ended December 31, 2013, the company's average total loans increased 6% from $2.22 billion to $2.34 billion. Average total loans for the fourth quarter of 2013 were $2.46 billion versus $2.21 billion for the fourth quarter of 2012, an increase of 11%. Total loans outstanding grew $277.6 million, or 12%, from $2.26 billion as of December 31, 2012 to $2.54 billion as of December 31, 2013. On a linked quarter basis, average total loans increased $109.4 million, or 5%, from $2.35 billion for the third quarter of 2013 to $2.46 billion for the fourth quarter of 2013.

The company's net interest margin was 3.33% in the fourth quarter of 2013, up from 3.10% for the fourth quarter of 2012. Further, the net interest margin improved from 3.29% in the third quarter of 2013. Despite downward pressure on loan and investment portfolio yields, the company improved its net interest margin in each quarter of 2013 as a result of declines in deposit rates and overall funding costs.

The company's tangible book value per common share increased 7% in 2013 from $18.00 to $19.36. As a result, the company's tangible common equity to tangible assets ratio was 10.05% at December 31, 2013 compared to 9.63% at December 31, 2012 and 10.25% at September 30, 2013. Average total deposits for the quarter ended December 31, 2013 were $2.58 billion versus $2.48 billion for the third quarter of 2013 and $2.55 billion for the fourth quarter of 2012.

For the fourth consecutive quarter, the company did not record a provision for loan losses. As a result, the provision for loan losses for 2013 was $0 versus $2.5 million in 2012. The absence of a provision for loan losses was generally driven by the stabilization and improvement in key loan quality metrics, including lower levels of net charge offs, appropriate reserve coverage of nonperforming loans, continuing signs of stabilization in the economic conditions of the company's markets and general signs of improvement in its borrowers' performance and future prospects. The company's allowance for loan losses as of December 31, 2013 was $48.8 million compared to $51.4 million as of December 31, 2012 and $49.8 million as of September 30, 2013. The allowance for loan losses represented 1.92% of total loans as of December 31, 2013 versus 2.28% at December 31, 2012 and 2.08% as of September 30, 2013. Further, the allowance for loan losses as a percentage of nonperforming loans increased to 204% as of December 31, 2013 versus 167% at December 31, 2012 and 215% as of September 30, 2013.

For the year ended December 31, 2013, net charge-offs totaled $2.6 million versus $4.5 million in 2012, a decline of 41%. Net charge-offs totaled $1.0 million in the fourth quarter of 2013 versus $1.7 million during the fourth quarter of 2012 and $831,000 during the linked third quarter of 2013. Nonperforming assets decreased 23% to $24.4 million as of December 31, 2013 versus $31.6 million as of December 31, 2012. The decrease in nonperforming assets during 2013 primarily resulted from the removal of two commercial credits totaling $8.4 million from the impaired category, as well as charge-offs taken and payments received on nonperforming loans. The ratio of nonperforming assets to total assets at December 31, 2013 was 0.77% versus 1.03% at December 31, 2012 and 0.77% at September 30, 2013.

Findlay observed, "The strength of our balance sheet is critical to our ability to continue to lend money to growing businesses and retail banking clients in our Indiana markets. Our consistent earnings performance, combined with a prudent capital structure, has put us in a position of strength as a lender and we will continue to target quality loan growth throughout 2014."

For the year ended December 31, 2013, the company's noninterest income increased 22% from $25.2 million to $30.7 million. The company's noninterest income increased $573,000, or 8%, to $7.9 million for the fourth quarter of 2013, versus $7.3 million for the fourth quarter of 2012. On a year-over-year basis, quarterly noninterest income was positively impacted by a $661,000 increase in investment brokerage fees, driven by higher trading volumes and improvements in product mix. Income from bank owned life insurance increased $216,000, and other income increased by $455,000, driven by a $151,000 increase in income from leases. On a linked quarter basis, noninterest income increased by $69,000 from $7.8 million in the third quarter of 2013.

Kubacki concluded, "We experienced great growth in fee-based services in 2013 as we continued to expand relationships with our existing clients. We are very focused on establishing broader relationships with our clients and will remain committed to this in 2014. We have the technology-driven solutions that clients benefit from and we'll continue to grow existing relationships and add more."

For the year ended December 31, 2013, noninterest expense increased 9% from $57.7 million in 2012 to $62.8 million. The company's noninterest expense increased $2.0 million, or 14%, to $16.5 million in the fourth quarter of 2013 versus $14.5 million in the comparable quarter of 2012. On a linked quarter basis, noninterest expense increased by $262,000 from $16.3 million in the third quarter of 2013. On a year-over-year basis, salaries and employee benefits increased by $1.2 million in the three month period ended December 31, 2013 versus the same period of 2012. These increases in salary and employee benefits were driven by staff additions, normal merit increases, increased health insurance costs and higher performance incentive-based compensation costs. Quarterly data processing fees increased by $186,000 due to a larger customer base as well as greater utilization of services from the company's core processor, which the company expects will improve marketing and cross-selling initiatives. In addition, other expense increased $302,000 during the fourth quarter of 2013, driven by higher advertising expenses. The company's efficiency ratio was 51% for the fourth quarter of 2013 compared to 52% for the fourth quarter of 2012, and 53% for the linked third quarter of 2013, which consistently ranks in the top quartile of peer financial institutions in the country.

Lakeland Financial Corporation is a $3.2 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.

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
FOURTH QUARTER 2013 FINANCIAL HIGHLIGHTS
(Unaudited - Dollars in thousands except per share data)
           
  Three Months Ended Twelve Months Ended
  Dec. 31,

2013
Sep. 30,

2013
Dec. 31,

2012
Dec. 31,

2013
Dec. 31,

2012
END OF PERIOD BALANCES          
 Assets $3,175,764 $3,041,237 $3,064,144 $3,175,764 $3,064,144
 Deposits 2,546,068 2,444,826 2,581,756 2,546,068 2,581,756
 Loans 2,535,098 2,392,715 2,257,520 2,535,098 2,257,520
 Allowance for Loan Losses 48,797 49,804 51,445 48,797 51,445
 Total Equity 321,964 314,544 297,828 321,964 297,828
 Tangible Common Equity 318,914 311,508 294,821 318,914 294,821
AVERAGE BALANCES          
 Total Assets $3,109,027 $3,002,273 $3,035,160 $3,009,738 $2,976,239
 Earning Assets 2,942,828 2,825,503 2,731,083 2,833,505 2,720,783
 Investments 473,623 464,652 482,912 474,711 477,010
 Loans 2,460,396 2,350,983 2,212,867 2,343,422 2,216,131
 Total Deposits 2,577,777 2,479,452 2,546,704 2,505,340 2,505,195
 Interest Bearing Deposits 2,111,449 2,044,976 2,175,268 2,087,870 2,151,094
 Interest Bearing Liabilities 2,307,167 2,242,072 2,347,434 2,265,303 2,316,375
 Total Equity 319,620 310,070 297,982 310,627 287,866
INCOME STATEMENT DATA          
 Net Interest Income $24,298 $22,972 $20,866 $90,439 $87,671
 Net Interest Income-Fully Tax Equivalent 24,780 23,429 21,300 92,235 89,277
 Provision for Loan Losses 0 0 1,250 0 2,549
 Noninterest Income 7,878 7,809 7,305 30,737 25,196
 Noninterest Expense 16,528 16,266 14,511 62,778 57,742
 Net Income 10,588 9,769 8,602 38,839 35,394
PER SHARE DATA          
 Basic Net Income Per Common Share $0.64 $0.59 $0.53 $2.36 $2.17
 Diluted Net Income Per Common Share 0.63 0.59 0.52 2.33 2.15
 Cash Dividends Declared Per Common Share 0.19 0.19 0.34 0.57 0.84
 Book Value Per Common Share (equity per share issued) 19.54 19.11 18.18 19.54 18.18
 Tangible Book Value Per Common Share 19.36 18.93 18.00 19.36 18.00
 Market Value - High 39.32 34.69 27.89 39.32 28.82
 Market Value - Low 31.72 27.74 23.47 23.92 23.47
 Basic Weighted Average Common Shares Outstanding 16,466,461 16,451,199 16,356,551 16,436,131 16,323,870
 Diluted Weighted Average Common Shares Outstanding 16,688,793 16,634,933 16,502,313 16,634,338 16,482,937
KEY RATIOS          
 Return on Average Assets 1.35% 1.29% 1.13% 1.29% 1.19%
 Return on Average Total Equity 13.14 12.50 11.48 12.50 12.30
 Efficiency (Noninterest Expense / Net Interest Income plus Noninterest Income) 51.37 52.84 51.51 51.81 51.16
 Average Equity to Average Assets 10.28 10.33 9.82 10.32 9.67
 Net Interest Margin 3.33 3.29 3.10 3.26 3.28
 Net Charge Offs to Average Loans 0.16 0.14 0.31 0.11 0.20
 Loan Loss Reserve to Loans 1.92 2.08 2.28 1.92 2.28
 Loan Loss Reserve to Nonperforming Loans 203.79 214.71 166.60 203.79 166.60
 Loan Loss Reserve to Nonperforming Loans and Performing TDR's 117.13 108.07 96.68 117.13 96.68
 Nonperforming Loans to Loans 0.94 0.97 1.37 0.94 1.37
 Nonperforming Assets to Assets 0.77 0.77 1.03 0.77 1.03
 Total Impaired and Watch List Loans to Total Loans 6.64 7.16 8.15 6.64 8.15
 Tier 1 Leverage 11.25 11.37 10.46 11.25 10.46
 Tier 1 Risk-Based Capital 12.99 13.39 13.01 12.99 13.01
 Total Capital 14.25 14.65 14.27 14.25 14.27
 Tangible Capital 10.05 10.25 9.63 10.05 9.63
ASSET QUALITY           
 Loans Past Due 30 - 89 Days $1,968 $3,262 $4,253 $1,968 $4,253
 Loans Past Due 90 Days or More 46 364 50 46 50
 Non-accrual Loans 23,899 22,833 30,829 23,899 30,829
 Nonperforming Loans (includes nonperforming TDR's) 23,945 23,197 30,879 23,945 30,879
 Other Real Estate Owned 469 117 667 469 667
 Other Nonperforming Assets 12 10 23 12 23
 Total Nonperforming Assets 24,426 23,324 31,569 24,426 31,569
 Performing Troubled Debt Restructurings 17,714 22,888 22,332 17,714 22,332
 Nonperforming Troubled Debt Restructurings (included in nonperforming loans) 18,531 18,691 28,506 18,531 28,506
 Total Troubled Debt Restructurings 36,245 41,579 50,838 36,245 50,838
 Impaired Loans 43,218 47,347 58,935 43,218 58,935
 Non-Impaired Watch List Loans 125,045 124,075 125,158 125,045 125,158
 Total Impaired and Watch List Loans 168,263 171,422 184,093 168,263 184,093
 Gross Charge Offs 1,182 1,297 1,855 4,052 5,922
 Recoveries 174 466 138 1,404 1,418
 Net Charge Offs/(Recoveries) 1,008 831 1,717 2,648 4,504
     
     
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
As of December 31, 2013 and 2012
(in thousands, except share data)
     
  December 31,

2013
December 31,

2012
  (Unaudited)  
ASSETS    
Cash and due from banks $55,727 $156,666
Short-term investments 7,378 75,571
 Total cash and cash equivalents 63,105 232,237
     
Securities available for sale (carried at fair value) 468,967 467,021
Real estate mortgage loans held for sale 1,778 9,452
     
Loans, net of allowance for loan losses of $48,797 and $51,445 2,486,301 2,206,075
     
Land, premises and equipment, net  39,335 34,840
Bank owned life insurance 62,883 61,112
Federal Reserve and Federal Home Loan Bank stock 10,732 10,732
Accrued interest receivable 8,577 8,484
Goodwill 4,970 4,970
Other intangible assets 0 47
Other assets 29,116 29,174
 Total assets $3,175,764 $3,064,144
     
LIABILITIES AND EQUITY    
     
LIABILITIES    
Noninterest bearing deposits $479,606 $407,926
Interest bearing deposits  2,066,462 2,173,830
 Total deposits 2,546,068 2,581,756
     
Short-term borrowings    
 Federal funds purchased 11,000 0
 Securities sold under agreements to repurchase  104,876 121,883
 Other short-term borrowings 146,000 0
 Total short-term borrowings 261,876 121,883
     
Long-term borrowings 37 15,038
Subordinated debentures 30,928 30,928
Accrued interest payable 2,918 4,758
Other liabilities 11,973 11,953
 Total liabilities 2,853,800 2,766,316
     
EQUITY    
Common stock: 90,000,000 shares authorized, no par value    
 16,475,716 shares issued and 16,377,449 outstanding as of December 31, 2013    
 16,377,247 shares issued and 16,290,136 outstanding as of December 31, 2012 93,249 90,039
Retained earnings 233,108 203,654
Accumulated other comprehensive income/(loss) (2,494) 5,689
Treasury stock, at cost (2013 - 98,267 shares, 2012 - 87,111 shares) (1,988) (1,643)
 Total stockholders' equity 321,875 297,739
 Noncontrolling interest 89 89
 Total equity 321,964 297,828
 Total liabilities and equity $3,175,764 $3,064,144
         
         
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months and Twelve Months Ended December 31, 2013 and 2012
(in thousands except for share and per share data)
(unaudited)
         
  Three Months Ended

December 31,
Twelve Months Ended

December 31,
NET INTEREST INCOME 2013 2012 2013 2012
Interest and fees on loans        
 Taxable $25,288 $24,960 $98,757 $102,749
 Tax exempt 98 108 402 441
Interest and dividends on securities        
 Taxable 1,838 886 5,398 8,311
 Tax exempt 817 706 3,124 2,800
Interest on short-term investments 9 25 55 68
 Total interest income 28,050 26,685 107,736 114,369
         
Interest on deposits 3,380 5,315 15,745 24,667
Interest on borrowings        
 Short-term 141 112 490 441
 Long-term 231 392 1,062 1,590
 Total interest expense 3,752 5,819 17,297 26,698
         
NET INTEREST INCOME 24,298 20,866 90,439 87,671
Provision for loan losses 0 1,250 0 2,549
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 24,298 19,616 90,439 85,122
         
NONINTEREST INCOME        
Wealth advisory fees 952 1,053 3,847 3,823
Investment brokerage fees 1,287 626 4,736 3,061
Service charges on deposit accounts 2,258 2,078 8,806 8,015
Loan, insurance and service fees 1,612 1,761 6,404 5,876
Merchant card fee income 340 281 1,265 1,130
Bank owned life insurance income 469 253 1,653 973
Other income 735 280 2,488 1,174
Mortgage banking income 225 972 1,431 2,546
Net securities gains (losses) 0 1 107 (376)
Other than temporary impairment loss on available-for-sale securities:        
 Total impairment losses recognized on securities 0 0 0 (1,026)
 Loss recognized in other comprehensive income 0 0 0 0
 Net impairment loss recognized in earnings 0 0 0 (1,026)
 Total noninterest income 7,878 7,305 30,737 25,196
         
NONINTEREST EXPENSE        
Salaries and employee benefits 9,683 8,532 37,176 34,539
Net occupancy expense 844 777 3,376 3,296
Equipment costs 810 718 2,831 2,572
Data processing fees and supplies 1,520 1,334 5,635 4,378
Corporate and business development 485 477 1,777 1,666
FDIC insurance and other regulatory fees 471 515 1,855 2,097
Professional fees 805 550 3,171 2,453
Other expense  1,910 1,608 6,957 6,741
 Total noninterest expense 16,528 14,511 62,778 57,742
         
INCOME BEFORE INCOME TAX EXPENSE 15,648 12,410 58,398 52,576
Income tax expense  5,060 3,808 19,559 17,182
NET INCOME $10,588 $8,602 $38,839 $35,394
         
BASIC WEIGHTED AVERAGE COMMON SHARES 16,466,461 16,356,551 16,436,131 16,323,870
BASIC EARNINGS PER COMMON SHARE $0.64 $0.53 $2.36 $2.17
DILUTED WEIGHTED AVERAGE COMMON SHARES 16,688,793 16,502,313 16,634,338 16,482,937
DILUTED EARNINGS PER COMMON SHARE $0.63 $0.52 $2.33 $2.15
             
             
LAKELAND FINANCIAL CORPORATION
LOAN DETAIL
FOURTH QUARTER 2013
(unaudited in thousands)
             
  December 31,

2013
September 30,

2013
December 31,

2012
Commercial and industrial loans:            
 Working capital lines of credit loans $457,690 18.1% 462,098.0% 19.3% 439,638.0% 19.5%
 Non-working capital loans 443,877 17.5 435,968 18.2 407,184 18.0
 Total commercial and industrial loans 901,567 35.6 898,066 37.5 846,822 37.5
             
Commercial real estate and multi-family residential loans:            
 Construction and land development loans 157,630 6.2 117,733 4.9 82,494 3.7
 Owner occupied loans 370,386 14.6 371,500 15.5 358,617 15.9
 Nonowner occupied loans 394,748 15.6 392,538 16.4 314,889 13.9
 Multifamily loans 63,443 2.5 37,279 1.6 45,011 2.0
 Total commercial real estate and multi-family residential loans 986,207 38.9 919,050 38.4 801,011 35.5
             
Agri-business and agricultural loans:            
 Loans secured by farmland 133,458 5.3 104,807 4.4 109,147 4.8
 Loans for agricultural production 120,571 4.8 95,330 4.0 115,572 5.1
 Total agri-business and agricultural loans 254,029 10.0 200,137 8.4 224,719 10.0
             
Other commercial loans 70,770 2.8 55,797 2.3 56,807 2.5
 Total commercial loans 2,212,573 87.3 2,073,050 86.6 1,929,359 85.5
             
Consumer 1-4 family mortgage loans:            
 Closed end first mortgage loans 125,444 4.9 119,788 5.0 109,823 4.9
 Open end and junior lien loans 146,946 5.8 151,726 6.3 161,366 7.1
 Residential construction and land development loans 4,640 0.2 4,705 0.2 11,541 0.5
 Total consumer 1-4 family mortgage loans 277,030 10.9 276,219 11.5 282,730 12.5
             
Other consumer loans 46,125 1.8 44,091 1.8 45,755 2.0
 Total consumer loans 323,155 12.7 320,310 13.4 328,485 14.5
 Subtotal 2,535,728 100.0% 2,393,360.0% 100.0% 2,257,844.0% 100.0%
Less: Allowance for loan losses (48,797)   (49,804)   (51,445)  
 Net deferred loan fees (630)   (645)   (324)  
Loans, net $2,486,301   $2,342,911   $2,206,075  
CONTACT: David M. Findlay
         President and
         Chief Financial Officer
         (574) 267-9197
         david.findlay@lakecitybank.com

Source: Lake City Bank

This article appears in: News Headlines

Referenced Stocks: LKFN


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