Press Release

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.

 

 

 

 

 

  

 

 

  

 

 

 

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

 

Source: Lake City Bank