WARSAW, Ind., Jan. 26, 2009 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq:LKFN), parent company of Lake City Bank, today reported net income of $19.7 million for 2008 versus $19.2 million for 2007. "For the 21st consecutive year, Lake City Bank established a new record for net income. We are extremely proud of this performance in the face of the intense economic and industry challenges we faced during the year," commented Michael L. Kubacki, Chairman, President and Chief Executive Officer.
Net income of $19.7 million for 2008 represented an increase of 3% versus $19.2 million for 2007. Diluted net income per share for the year was $1.58 versus $1.55 for 2007. The Company reported net income of $4.4 million for the fourth quarter of 2008, a decrease of 8% versus $4.8 million reported for the fourth quarter of 2007. Diluted net income per share for the quarter was $0.35 versus $0.40 for the comparable period of 2007. On a linked quarter basis, fourth quarter results compared to net income of $5.2 million, or $0.42 per diluted share, for the third quarter of 2008.
"Our business is not immune to the challenging conditions we are experiencing nationally and locally. As a result, we were impacted by higher loan losses during the year. Further, there is no question that our traditional commercial and industrial commercial borrowing base is undergoing a very stressful period, as reflected in our loan loss provision for the quarter and full year. Yet, we were able to conclude the year with gratifying results," said Kubacki.
The Company also announced that the Board of Directors approved a cash dividend for the fourth quarter of $0.155 per share, payable on February 5, 2009 to shareholders of record as of January 25, 2009. The quarterly dividend represents an 11% increase over the quarterly dividends paid in 2007, and maintains the level of dividend paid for the third quarter of 2008.
Average total loans for the fourth quarter of 2008 were $1.77 billion versus $1.46 billion for the fourth quarter of 2007 and $1.69 billion for the linked third quarter of 2008. The year-over-year increase for the fourth quarter represented an increase of 21%, or $305 million. On a linked quarter basis, average loans increased by $82 million versus the third quarter of 2008. Total gross loans as of December 31, 2008 were $1.83 billion compared to $1.52 billion as of December 31, 2007 and $1.72 billion as of September 30, 2008.
"We are particularly proud of the fact that we are using our balance sheet to demonstrate our commitment to Lake City Bank's clients. In the fourth quarter, we grew our loan portfolio by $116 million, or 7%, over the third quarter totals. There has been quite a bit of commentary during the past several months about the banking industry's lack of commitment to expanding lending activity in 2008. Clearly, that is not the case with Lake City Bank, as we continued to maintain our historical lending standards while at the same time growing our loan portfolio to provide capital to our clients. Further, our participation in the Capital Purchase Program will bolster an already strong capital structure and balance sheet and provide us with the ability to continue to expand our lending activities in our Indiana footprint," stated Kubacki.
The Company's net interest margin was 3.14% in 2008 versus 3.22% in 2007. The net interest margin was 2.98% in the fourth quarter versus 3.14% in the comparable period of 2007 and 3.35% in the third quarter of 2008. The higher net interest margin in the third quarter of 2008 resulted primarily from the recognition of $1.2 million in interest income from the payoff of a loan that had been on nonaccrual. Excluding the impact of this event, the net interest margin would have been 3.12% for the third quarter. The decline in the net interest margin during the fourth quarter resulted primarily from the impact of the Federal Reserve Bank's Federal Open Market Committee (FOMC) actions. During the quarter, the FOMC reduced the target federal funds rate from 2.00% to a range of 0% to 0.25% at the conclusion of the quarter. The target fed funds rate on January 1, 2008 was 4.25%, therefore the FOMC lowered the target rate by a range of 4.00% to 4.25% in seven separate actions during the year. This unprecedented activity contributed to the decline in the Company's margin as the cost of deposits and borrowed funds did not decline as rapidly as loan revenue. The loan revenue decline resulted directly from variable rate loans, which are generally linked to the prime rate. The prime rate concluded the year at 3.25% versus 7.25% at December 31, 2007.
The previously noted loan growth led to an increase in average earning assets, which contributed to an increase in net interest income of 14%. Net interest income grew to $16.0 million in the fourth quarter of 2008 versus $14.1 million in the fourth quarter of 2007. The Company's provision for loan losses increased by $1.3 million, or 120%, to $2.3 million for the fourth quarter of 2008 versus $1.1 million in the same period of 2007. In the third quarter of 2008, the provision was $3.7 million. The provision increases in 2008 were primarily driven by a higher level of charge offs, strong loan growth and the overall weaker economic conditions in the Company's markets.
The Company's noninterest expense was $12.6 million for the fourth quarter of 2008 compared to $11.4 million for the same period in 2007, an increase of 10%. This increase was driven primarily by increased regulatory expenses, as well as increases in payroll and benefit expenses. Other expense increased by $611,000, or 24%, in the quarter driven primarily by higher regulatory expenses of $508,000 due to the Company's resumption of regular FDIC insurance premiums. Salaries and employee benefits increased by $258,000, or 4%, when compared to the same period in 2007 as a result of a combination of increases in health insurance and performance-based incentive expense, staff additions in administrative and commercial lending positions, normal merit increases and new office staff costs. The Company's efficiency ratio for the fourth quarter of 2008 was 59%, consistent with the same period in 2007. For the full year, the efficiency ratio was 55% versus 57% in 2007.
Net charge-offs totaled $1.6 million in the fourth quarter of 2008, versus $327,000 during the fourth quarter of 2007 and $3.6 million during the third quarter of 2008. Lakeland Financial's allowance for loan losses as of December 31, 2008 was $18.9 million, compared to $15.8 million as of December 31, 2007 and $18.1 million as of September 30, 2008.
Nonperforming assets totaled $22.4 million as of December 31, 2008 compared to $21.1 million as of September 30, 2008 and $9.9 million on December 31, 2007. The ratio of nonperforming assets to assets was 0.94% on both December 31, 2008 and September 30, 2008, compared to 0.50% at December 31, 2007. The allowance for loan losses represented 89% of nonperforming loans as of December 31, 2008 versus 90% at September 30, 2008 and 212% at December 30, 2007.
For the three months ended December 31, 2008, Lakeland Financial's average equity to average assets ratio was 6.56% compared to 6.88% for the third quarter of 2008 and 7.47% for the fourth quarter of 2007. Average stockholders' equity for the quarter ended December 31, 2008 was $151.3 million versus $152.0 million for the third quarter of 2008 and $143.9 million for the fourth quarter of 2007. Average total deposits for the quarter ended December 31, 2008 were $1.84 billion versus $1.64 billion for the third quarter of 2008 and $1.52 billion for the fourth quarter of 2007.
Earnings for the year ended December 31, 2008 were positively impacted by the pre-tax benefit of $642,000, or $382,000 after tax, realized from the first quarter initial public offering of Visa, Inc. common shares. Excluding the effect of the Visa transaction, net income for the year would have been $19.3 million and diluted earnings per share would have been $1.55.
Lakeland Financial Corporation is a $2.4 billion bank holding company headquartered in Warsaw, Indiana. Lake City Bank serves Northern Indiana with 43 branches located in the following Indiana counties: Kosciusko, Elkhart, Allen, St. Joseph, DeKalb, Fulton, Huntington, LaGrange, Marshall, Noble, Pulaski and Whitley. The Company also has a Loan Production Office in Indianapolis, Indiana.
Lakeland Financial Corporation may be accessed on its home page at www.lakecitybank.com. The Company's common stock is traded on the Nasdaq Global Select Market under "LKFN." Market makers in Lakeland Financial Corporation common shares include Automated Trading Desk Financial Services, LLC, B-Trade Services, LLC, Citadel Derivatives Group, LLC, Citigroup Global Markets Holdings, Inc., Domestic Securities, Inc., E*TRADE Capital Markets LLC, FTN Financial Securities Corp., FTN Midwest Securities Corp., Goldman Sachs & Company, Howe Barnes Hoefer & Arnett, Inc., Keefe, Bruyette & Woods, Inc., Knight Equity Markets, L.P., Lehman Brothers Inc., Morgan Stanley & Co., Inc., Stifel Nicolaus & Company, Inc., Susquehanna Capital Group and UBS Securities LLC.
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 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.
Visa Initial Public Offering Adjustments
Lake City Bank, as a member bank of Visa U.S.A. Inc., holds shares of restricted common stock in Visa. In connection with Visa's initial public offering in March 2008, a portion of our Visa shares were redeemed pursuant to a mandatory redemption. The after-tax benefit to the year-to-date net income from these Visa adjustments totaled $382,000, or $0.03 per diluted common share. This adjustment represents the net impact of the gain from the proceeds of the sale of these shares and the Company's portion of the settlement expenses related to litigation involving Visa, which Lake City Bank was subject to as a member bank. Lake City Bank's remaining shares of Visa stock are recorded at their original cost basis of zero. These shares have restrictions as to their sale or transfer and the ultimate realization of their value is subject to future adjustments based on the resolution of outstanding indemnified litigation.
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 2008 FINANCIAL HIGHLIGHTS
(Unaudited - Dollars in thousands except share and Per Share Data)
Three Months Ended
---------------------------------------
Dec. 31, Sep. 30, Dec. 31,
2008 2008 2007
----------- ----------- -----------
END OF PERIOD BALANCES
----------------------
Assets $ 2,376,967 $ 2,254,471 $ 1,989,133
Deposits 1,885,299 1,707,930 1,478,918
Loans 1,833,334 1,717,345 1,523,720
Allowance for Loan Losses 18,860 18,124 15,801
Common Stockholders' Equity 150,582 153,358 146,270
Tangible Equity 146,304 148,984 141,619
AVERAGE BALANCES
----------------
Total Assets $ 2,305,789 $ 2,208,067 $ 1,927,172
Earning Assets 2,175,121 2,085,042 1,811,630
Investments 384,096 389,817 325,226
Loans 1,767,818 1,685,963 1,463,085
Total Deposits 1,839,717 1,641,525 1,520,201
Interest Bearing Deposits 1,618,173 1,420,367 1,287,356
Interest Bearing Liabilities 1,916,463 1,817,981 1,532,760
Common Stockholders' Equity 151,293 151,992 143,948
INCOME STATEMENT DATA
---------------------
Net Interest Income $ 15,992 $ 17,272 $ 14,058
Net Interest Income-Fully
Tax Equivalent 16,271 17,549 14,340
Provision for Loan Losses 2,323 3,710 1,054
Noninterest Income 5,385 6,202 5,201
Noninterest Expense 12,550 11,942 11,369
Net Income 4,433 5,225 4,824
PER SHARE DATA
--------------
Basic Net Income Per Common
Share $ 0.36 $ 0.43 $ 0.40
Diluted Net Income Per
Common Share 0.35 0.42 0.40
Cash Dividends Declared Per
Common Share 0.155 0.155 0.14
Book Value Per Common Share
(equity per share issued) 12.17 12.47 11.98
Market Value - High 24.10 30.09 25.00
Market Value - Low 14.93 18.52 18.25
Basic Weighted Average
Common Shares Outstanding 12,318,204 12,290,055 12,206,210
Diluted Weighted Average
Common Shares Outstanding 12,476,884 12,468,446 12,420,827
KEY RATIOS
----------
Return on Average Assets 0.76% 0.94% 0.99%
Return on Average Common
Stockholders' Equity 11.65 13.68 13.30
Efficiency (Noninterest
Expense / Net Interest
Income plus Noninterest
Income) 58.71 50.88 59.03
Average Equity to Average
Assets 6.56 6.88 7.47
Net Interest Margin 2.98 3.35 3.14
Net Charge Offs to Average
Loans 0.36 0.85 0.09
Loan Loss Reserve to Loans 1.03 1.06 1.04
Nonperforming Loans to Loans 1.16 1.18 0.49
Nonperforming Assets to
Assets 0.94 0.94 0.50
Tier 1 Leverage 8.10 8.30 8.93
Tier 1 Risk-Based Capital 9.27 9.79 10.54
Total Capital 10.20 10.76 11.51
Tangible Capital 6.17 6.62 7.14
ASSET QUALITY
-------------
Loans Past Due 90 Days or
More $ 478 $ 1,669 $ 409
Non-accrual Loans 20,810 18,516 7,039
Nonperforming Loans 21,288 20,185 7,448
Other Real Estate Owned 953 879 2,387
Other Nonperforming Assets 150 30 24
Total Nonperforming Assets 22,391 21,094 9,859
Impaired Loans 20,304 19,464 6,748
Net Charge Offs/(Recoveries) 1,587 3,600 327
Twelve Months Ended
-------------------------
Dec. 31, Dec. 31,
2008 2007
----------- -----------
END OF PERIOD BALANCES
----------------------
Assets $ 2,376,967 $ 1,989,133
Deposits 1,885,299 1,478,918
Loans 1,833,334 1,523,720
Allowance for Loan Losses 18,860 15,801
Common Stockholders' Equity 150,582 146,270
Tangible Equity 146,304 141,619
AVERAGE BALANCES
----------------
Total Assets $ 2,170,673 $ 1,839,041
Earning Assets 2,047,783 1,729,259
Investments 368,578 306,293
Loans 1,665,024 1,404,068
Total Deposits 1,637,794 1,476,725
Interest Bearing Deposits 1,418,032 1,250,241
Interest Bearing Liabilities 1,782,714 1,458,556
Common Stockholders' Equity 151,062 137,767
INCOME STATEMENT DATA
---------------------
Net Interest Income $ 63,268 $ 54,556
Net Interest Income-Fully
Tax Equivalent 64,419 55,597
Provision for Loan Losses 10,207 4,298
Noninterest Income 23,328 20,242
Noninterest Expense 47,481 42,923
Net Income 19,701 19,211
PER SHARE DATA
--------------
Basic Net Income Per Common
Share $ 1.61 $ 1.58
Diluted Net Income Per
Common Share 1.58 1.55
Cash Dividends Declared Per
Common Share 0.605 0.545
Book Value Per Common Share
(equity per share issued) 12.17 11.98
Market Value - High 30.09 25.98
Market Value - Low 14.93 18.25
Basic Weighted Average
Common Shares Outstanding 12,271,927 12,188,594
Diluted Weighted Average
Common Shares Outstanding 12,459,802 12,424,137
KEY RATIOS
----------
Return on Average Assets 0.91% 1.04%
Return on Average Common
Stockholders' Equity 13.04 13.94
Efficiency (Noninterest
Expense / Net Interest
Income plus Noninterest
Income) 54.83 57.01
Average Equity to Average
Assets 6.96 7.49
Net Interest Margin 3.14 3.22
Net Charge Offs to Average
Loans 0.43 0.21
Loan Loss Reserve to Loans 1.03 1.04
Nonperforming Loans to Loans 1.16 0.49
Nonperforming Assets to
Assets 0.94 0.50
Tier 1 Leverage 8.10 8.93
Tier 1 Risk-Based Capital 9.27 10.54
Total Capital 10.20 11.51
Tangible Capital 6.17 7.14
ASSET QUALITY
-------------
Loans Past Due 90 Days or
More $ 478 $ 409
Non-accrual Loans 20,810 7,039
Nonperforming Loans 21,288 7,448
Other Real Estate Owned 953 2,387
Other Nonperforming Assets 150 24
Total Nonperforming Assets 22,391 9,859
Impaired Loans 20,304 6,748
Net Charge Offs/(Recoveries) 7,148 2,960
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
As of December 31, 2008 and 2007
(in thousands, except share data)
Dec. 31, Dec. 31,
2008 2007
----------- -----------
(Unaudited)
ASSETS
Cash and due from banks $ 57,149 $ 56,278
Short-term investments 6,858 11,413
----------- -----------
Total cash and cash equivalents 64,007 67,691
Securities available for sale
(carried at fair value) 387,030 327,757
Real estate mortgage loans held for sale 401 537
Loans, net of allowance for loan losses
of $18,860 and $15,801 1,814,474 1,507,919
Land, premises and equipment, net 30,519 27,525
Bank owned life insurance 33,966 21,543
Accrued income receivable 8,599 9,126
Goodwill 4,970 4,970
Other intangible assets 413 619
Other assets 32,588 21,446
----------- -----------
Total assets $ 2,376,967 $ 1,989,133
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Noninterest bearing deposits $ 230,716 $ 255,348
Interest bearing deposits 1,654,583 1,223,570
----------- -----------
Total deposits 1,885,299 1,478,918
Short-term borrowings
Federal funds purchased 19,000 70,010
Securities sold under agreements to
repurchase 137,769 154,913
U.S. Treasury demand notes 840 1,242
Other short-term borrowings 45,000 90,000
----------- -----------
Total short-term borrowings 202,609 316,165
Accrued expenses payable 15,983 15,497
Other liabilities 1,523 1,311
Long-term borrowings 90,043 44
Subordinated debentures 30,928 30,928
----------- -----------
Total liabilities 2,226,385 1,842,863
STOCKHOLDERS' EQUITY
Common stock: 180,000,000 shares
authorized, no par value
12,373,080 shares issued and 12,266,849
outstanding as of December 31, 2008
12,207,723 shares issued and 12,111,703
outstanding as of December 31, 2007 1,453 1,453
Additional paid-in capital 20,632 18,078
Retained earnings 141,371 129,090
Accumulated other comprehensive loss (11,322) (1,010)
Treasury stock, at cost (2008 - 106,231
shares, 2007 - 96,020 shares) (1,552) (1,341)
----------- -----------
Total stockholders' equity 150,582 146,270
----------- -----------
Total liabilities
and stockholders' equity $ 2,376,967 $ 1,989,133
=========== ===========
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months and Twelve Months Ended
December 31, 2008 and 2007
(in thousands except for share and per share data)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
----------------------- -----------------------
2008 2007 2008 2007
----------- ----------- ----------- -----------
NET INTEREST INCOME
Interest and fees on
loans
Taxable $ 23,865 $ 26,217 $ 99,538 $ 102,840
Tax exempt 26 27 113 137
Interest and dividends
on securities
Taxable 4,409 3,225 16,202 11,591
Tax exempt 591 636 2,411 2,474
Interest on short-term
investments 23 260 220 931
----------- ----------- ----------- -----------
Total interest
income 28,914 30,365 118,484 117,973
Interest on deposits 10,988 13,543 44,580 53,614
Interest on borrowings
Short-term 456 2,109 5,620 7,239
Long-term 1,478 655 5,016 2,564
----------- ----------- ----------- -----------
Total interest
expense 12,922 16,307 55,216 63,417
----------- ----------- ----------- -----------
NET INTEREST INCOME 15,992 14,058 63,268 54,556
Provision for loan
losses 2,323 1,004 10,207 4,298
----------- ----------- ----------- -----------
NET INTEREST INCOME
AFTER PROVISION FOR
LOAN LOSSES 13,669 13,004 53,061 50,258
NONINTEREST INCOME
Wealth advisory fees 737 836 3,278 3,142
Investment brokerage
fees 393 346 1,872 1,491
Service charges on
deposit accounts 2,248 1,883 8,603 7,238
Loan, insurance and
service fees 689 619 2,811 2,483
Merchant card fee
income 825 824 3,471 3,286
Other income 373 444 1,826 1,837
Net gains on sales of
real estate mortgage
loans held for sale 120 196 786 676
Net securities gains
(losses) 0 53 39 89
Gain on redemption of
Visa shares 0 0 642 0
----------- ----------- ----------- -----------
Total noninterest
income 5,385 5,201 23,328 20,242
NONINTEREST EXPENSE
Salaries and employee
benefits 6,369 6,111 25,482 23,817
Net occupancy expense 856 742 3,082 2,734
Equipment costs 597 534 1,941 1,906
Data processing fees
and supplies 984 850 3,645 3,096
Credit card
interchange 556 561 2,321 2,204
Other expense 3,188 2,571 11,010 9,166
----------- ----------- ----------- -----------
Total noninterest
expense 12,550 11,369 47,481 42,923
----------- ----------- ----------- -----------
INCOME BEFORE INCOME
TAX EXPENSE 6,510 6,836 28,908 27,577
Income tax expense 2,071 2,012 9,207 8,366
----------- ----------- ----------- -----------
NET INCOME $ 4,433 $ 4,824 $ 19,701 $ 19,211
=========== =========== =========== ===========
BASIC WEIGHTED
AVERAGE COMMON
SHARES 12,318,204 12,206,210 12,271,927 12,188,594
=========== =========== =========== ===========
BASIC EARNINGS PER
COMMON SHARE $ 0.36 $ 0.40 $ 1.61 $ 1.58
=========== =========== =========== ===========
DILUTED WEIGHTED
AVERAGE COMMON
SHARES 12,476,884 12,420,827 12,459,802 12,424,137
=========== =========== =========== ===========
DILUTED EARNINGS PER
COMMON SHARE $ 0.35 $ 0.40 $ 1.58 $ 1.55
=========== =========== =========== ===========
LAKELAND FINANCIAL CORPORATION
LOAN DETAIL
FOURTH QUARTER 2008
(unaudited in thousands)
December 31, September 30, December 31,
2008 2008 2007
------------------ ----------------- ---------------
Commercial
and
industrial
loans $1,201,611 65.5% $1,129,960 65.8 $968,336 63.6%
Commercial
real
estate -
multifamily
loans 25,428 1.4 23,674 1.4 16,839 1.1
Commercial
real
estate
construction
loans 116,970 6.4 96,004 5.6 84,498 5.6
Agri-business
and
agricultural
loans 189,007 10.3 174,462 10.2 170,921 11.2
Residential
real
estate
mortgage
loans 117,230 6.4 114,900 6.7 124,107 8.1
Home equity
loans 128,219 7.0 124,016 7.2 108,429 7.1
Installment
loans and
other
consumer
loans 55,102 3.0 54,504 3.1 50,516 3.3
------------------ ----------------- ---------------
Subtotal 1,833,567 100.0% 1,717,520 100.0% 1,523,646 100.0%
Less:
Allowance
for loan
losses (18,860) (18,124) (15,801)
Net
deferred
loan
(fees)/
costs (233) (175) 74
---------- ---------- ----------
Loans, net $1,814,474 $1,699,221 $1,507,919
========== ========== ==========