WARSAW, Ind., Oct. 26, 2009 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq:LKFN), parent company of Lake City Bank, today reported net income of $5.3 million for the third quarter of 2009 versus $5.2 million for the third quarter of 2008. Diluted net income per share for the quarter was $0.36 versus $0.42 for the comparable period of 2008. On a linked quarter basis, net income increased 18% compared to net income of $4.5 million, or $0.29 per diluted share, for the second quarter of 2009. Net income performance for the quarter was the highest reported net income in the Bank's 138 year history.
The Company further reported net income of $13.6 million for the nine months ended September 30, 2009 versus $15.3 million for the comparable period of 2008. Diluted net income per common share was $0.94 for the nine months ended September 30, 2009 versus $1.23 for the comparable period of 2008.
The Company also announced that the Board of Directors approved a cash dividend for the third quarter of $0.155 per share, payable on November 5, 2009 to shareholders of record as of October 25, 2009. The quarterly dividend is unchanged from the dividends paid in 2008 and in the first and second quarters of 2009.
Average total loans for the third quarter of 2009 were $1.91 billion versus $1.69 billion for the third quarter of 2008 and $1.89 billion for the linked second quarter of 2009. The year-over-year increase for the third quarter represented an increase of 13%, or $221 million. On a linked quarter basis, average loans increased by $15 million versus the second quarter of 2009. Total gross loans as of September 30, 2009 were $1.94 billion compared to $1.72 billion as of September 30, 2008 and $1.88 billion as of June 30, 2009.
Michael L. Kubacki, Chairman, President and Chief Executive Officer, commented, "While we are gratified with our record net income performance for the quarter, we are equally pleased that our track record demonstrates that we are a responsive and relationship-oriented bank. We further believe that we're developing a reputation throughout the state based upon this track record. In a tremendously challenging economic environment, we recognize that our clients need our support and we continue to use our balance sheet to lend to new and existing clients in Indiana. We are excited that Lake City Bank can contribute to the economic recovery by proactively growing our lending activities and we've demonstrated once again that we are doing just that with our loan growth this year."
Kubacki added, "This good performance clearly supports our position on paying dividends to our shareholders. We are proud that our ongoing financial strength makes it possible for us to continue our dividend at a level consistent with the past six quarters."
The Company's net interest margin was 3.69% in the third quarter versus 3.45% in the second quarter and 3.35% for the third quarter of 2008. This margin improvement, in conjunction with strong growth in loans, contributed to an increase of 23% in the Company's net interest income to $21.3 million in the third quarter of 2009 versus $17.3 million in the third quarter of 2008. On a linked quarter basis, net interest income increased by 9% versus the second quarter of 2009.
The Company's provision for loan losses in the quarter of $5.5 million represented an increase of $1.8 million, or 48%, versus $3.7 million in the same period of 2008. In the second quarter of 2009, the provision was $4.9 million. The provision increases in 2009 were primarily driven by continued loan growth, the difficult economic conditions in the Company's markets and the related possible weaknesses in our future borrowers' performance and prospects.
The Company's non-interest income was $5.3 million in the third quarter of 2009 versus $6.2 million in the third quarter of 2008 and $6.0 million for the second quarter of 2009. Several factors affected noninterest income in the quarter versus the linked second quarter of 2009, including recognition of a non-cash other than temporary impairment of $225,000 on available for sale securities, a decline in mortgage banking income of $123,000 and mortgage servicing impairment costs of $236,000. Also contributing to the lower noninterest income performance was a change related to the processing of merchant credit card activities. Prior to the third quarter of 2009, transaction driven revenue and expenses related to this category were reported on a gross basis in merchant card fee income in noninterest income and credit card interchange fees in noninterest expense. Beginning in the second quarter of 2009, the Company began converting clients to a new third party processor for this activity. As a result, only net revenues with the new processor are being recognized in merchant card fee income in noninterest expense. The conversion is ongoing and will be completed by the end of 2009. Total revenue for the third quarter of 2009 was $26.5 million versus $23.5 million for the comparable period of 2008, an increase of 13%. On a linked quarter basis, total revenue increased by 4% versus the second quarter of 2009.
The Company's non-interest expense was $13.1 million for the third quarter of 2009 compared to $11.9 million for the same period in 2008 and $14.2 million for the second quarter of 2009. On a year over year basis, salaries and employee benefits increased by $916,000, or 14%, versus the third quarter of 2008, primarily as a result of staff additions in lending positions in the Indianapolis loan production office, higher incentive-based compensation resulting from increased revenue and net income and overall improved performance, normal merit increases system-wide and increased health insurance costs. In addition, regulatory expense increased by $435,000 due to higher FDIC insurance premiums that have been levied on all financial institutions. The Company's efficiency ratio for the third quarter of 2009 was 49%, compared to 51% for the same period in 2008 and 55% for the second quarter of 2009.
Net charge-offs totaled $1.8 million in the third quarter of 2009, versus $3.6 million during the third quarter of 2008 and $1.3 million during the second quarter of 2009. Lakeland Financial's allowance for loan losses as of September 30, 2009 was $28.8 million, compared to $18.1 million as of September 30, 2008 and $25.1 million as of June 30, 2009. The allowance for loan losses increased to 1.48% of total loans as of September 30, 2009 versus 1.06% for the comparable period in 2008 and 1.33% as of June 30, 2009.
Nonperforming assets increased to $30.0 million as of September 30, 2009 compared to $20.5 million as of June 30, 2009 and $21.1 million on September 30, 2008. The ratio of nonperforming assets to total assets increased to 1.22% on September 30, 2009 compared to 0.85% on June 30, 2009 and 0.94% at September 30, 2008. The increase in nonperforming assets was due primarily to the addition of two commercial relationships totaling $9.4 million. One of the credits is engaged in commercial real estate development and the other is a real estate holding company which leased manufacturing buildings to an affiliated company involved in the recreational vehicle industry. The allowance for loan losses represented 98% of nonperforming loans as of September 30, 2009 versus 127% at June 30, 2009 and 90% at September 30, 2008.
Kubacki continued, "There are some signs of an economic recovery on the horizon, but we remain cautious in the short term. As the increase in nonperforming assets indicates, there remain real challenges in our Indiana markets. We are pleased that our net charge off activity has improved from 2008, yet this higher level of nonperforming assets provides cause for concern. We continue to work closely with our borrowers to work through these situations, as we're cognizant that our reputation and our clients are always at risk. There is no cookie cutter approach to managing through individual situations and we always try to work with our clients to seek a fair result."
"Our allowance for loan losses has grown by 53%, or $10 million, since year end 2008. We believe this growth reflects the challenges inherent in our loan portfolio. There remain clear risks of potential loan losses, but we believe our approach is appropriately conservative," Kubacki added.
For the three months ended September 30, 2009, Lakeland Financial's tangible equity to average assets ratio was 6.56% compared to 6.62% for the third quarter of 2008 and 6.42% for the second quarter of 2009. Average total capital to average assets for the quarter ended September 30, 2009 was 13.01% versus 10.76% for the third quarter of 2008 and 13.10% for the second quarter of 2009. Average total deposits for the quarter ended September 30, 2009 were $1.82 billion versus $1.85 billion for the second quarter of 2009 and $1.64 billion for the third quarter of 2008.
Lakeland Financial Corporation is a $2.5 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 Equity Capital Markets Corp., Goldman Sachs & Company, Howe Barnes Hoefer & Arnett, Inc., Keefe, Bruyette & Woods, Inc., Knight Equity Markets, L.P., 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.
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 2009 FINANCIAL HIGHLIGHTS
(Unaudited - Dollars in thousands except share and per share data)
Three Months Ended
------------------------------------
Sep. 30, Jun. 30, Sep. 30,
2009 2009 2008
---------- ---------- ----------
END OF PERIOD BALANCES
----------------------
Assets $2,469,882 $2,404,140 $2,254,471
Deposits 1,821,031 1,735,136 1,707,930
Loans 1,941,111 1,882,106 1,717,345
Allowance for Loan Losses 28,778 25,090 18,124
Total Equity 219,714 212,193 153,447
Tangible Common Equity 161,659 154,144 148,984
AVERAGE BALANCES
----------------
Total Assets $2,439,847 $2,426,602 $2,208,067
Earning Assets 2,322,134 2,304,684 2,085,042
Investments 401,192 395,711 389,817
Loans 1,906,496 1,891,724 1,685,963
Total Deposits 1,816,697 1,852,776 1,641,525
Interest Bearing Deposits 1,587,103 1,630,532 1,420,367
Interest Bearing Liabilities 1,974,106 1,972,947 1,817,981
Total Equity 215,508 210,824 152,081
INCOME STATEMENT DATA
---------------------
Net Interest Income $ 21,262 $ 19,538 $ 17,272
Net Interest Income-Fully Tax
Equivalent 21,565 19,844 17,549
Provision for Loan Losses 5,500 4,936 3,710
Noninterest Income 5,279 6,022 6,202
Noninterest Expense 13,097 14,153 11,942
Net Income 5,267 4,460 5,225
Net Income Available to Common
Shareholders 4,466 3,660 5,225
PER SHARE DATA
--------------
Basic Net Income Per Common
Share $ 0.36 $ 0.29 $ 0.43
Diluted Net Income Per Common
Share 0.36 0.29 0.42
Cash Dividends Declared Per
Common Share 0.155 0.155 0.155
Book Value Per Common Share
(equity per share issued) 13.32 12.75 12.47
Market Value - High 22.49 21.04 30.09
Market Value - Low 17.80 17.10 18.52
Basic Weighted Average Common
Shares Outstanding 12,432,135 12,416,710 12,290,055
Diluted Weighted Average
Common Shares Outstanding 12,531,264 12,515,196 12,468,446
KEY RATIOS
----------
Return on Average Assets 0.86% 0.74% 0.94%
Return on Average Total Equity 9.70 8.49 13.68
Efficiency (Noninterest
Expense / Net Interest Income
plus Noninterest Income) 49.35 55.37 50.88
Average Equity to Average
Assets 8.83 8.69 6.88
Net Interest Margin 3.69 3.45 3.35
Net Charge Offs to Average
Loans 0.38 0.27 0.85
Loan Loss Reserve to Loans 1.48 1.33 1.06
Nonperforming Loans to Loans 1.51 1.05 1.18
Nonperforming Assets to Assets 1.22 0.85 0.94
Tier 1 Leverage 10.20 10.19 8.30
Tier 1 Risk-Based Capital 11.76 11.89 9.79
Total Capital 13.01 13.10 10.76
Tangible Capital 6.56 6.42 6.62
ASSET QUALITY
-------------
Loans Past Due 30 - 89 Days $ 5,240 $ 13,805 $ 5,210
Loans Past Due 90 Days or More 5,547 253 1,669
Non-accrual Loans 23,708 19,446 18,516
Nonperforming Loans 29,255 19,699 20,185
Other Real Estate Owned 723 711 879
Other Nonperforming Assets 36 59 30
Total Nonperforming Assets 30,014 20,469 21,094
Impaired Loans 28,236 18,967 19,464
Net Charge Offs/(Recoveries) 1,812 1,264 3,600
Nine Months Ended
--------------------------
Sep. 30, Sep. 30,
2009 2008
---------- ----------
END OF PERIOD BALANCES
----------------------
Assets $2,469,882 $2,254,471
Deposits 1,821,031 1,707,930
Loans 1,941,111 1,717,345
Allowance for Loan Losses 28,778 18,124
Total Equity 219,714 153,447
Tangible Common Equity 161,659 148,984
AVERAGE BALANCES
----------------
Total Assets $2,417,422 $2,125,305
Earning Assets 2,294,411 2,005,027
Investments 395,424 363,367
Loans 1,881,157 1,630,510
Total Deposits 1,859,042 1,569,995
Interest Bearing Deposits 1,635,814 1,350,832
Interest Bearing Liabilities 1,974,046 1,737,806
Total Equity 200,055 151,067
INCOME STATEMENT DATA
---------------------
Net Interest Income $ 57,815 $ 47,276
Net Interest Income-Fully Tax
Equivalent 58,742 48,141
Provision for Loan Losses 14,952 7,884
Noninterest Income 16,871 17,943
Noninterest Expense 39,937 34,937
Net Income 13,597 15,262
Net Income Available to Common
Shareholders 11,706 15,262
PER SHARE DATA
--------------
Basic Net Income Per Common
Share $ 0.94 $ 1.25
Diluted Net Income Per Common
Share 0.94 1.23
Cash Dividends Declared Per
Common Share 0.465 0.45
Book Value Per Common Share
(equity per share issued) 13.32 12.47
Market Value - High 23.87 30.09
Market Value - Low 14.14 16.87
Basic Weighted Average Common
Shares Outstanding 12,416,894 12,256,389
Diluted Weighted Average
Common Shares Outstanding 12,519,460 12,454,426
KEY RATIOS
----------
Return on Average Assets 0.75% 0.96%
Return on Average Total Equity 9.09 13.50
Efficiency (Noninterest
Expense / Net Interest Income
plus Noninterest Income) 53.47 53.57
Average Equity to Average
Assets 8.28 7.10
Net Interest Margin 3.42 3.20
Net Charge Offs to Average
Loans 0.36 0.46
Loan Loss Reserve to Loans 1.48 1.06
Nonperforming Loans to Loans 1.51 1.18
Nonperforming Assets to Assets 1.22 0.94
Tier 1 Leverage 10.20 8.30
Tier 1 Risk-Based Capital 11.76 9.79
Total Capital 13.01 10.76
Tangible Capital 6.56 6.62
ASSET QUALITY
-------------
Loans Past Due 30 - 89 Days $ 5,240 $ 5,210
Loans Past Due 90 Days or More 5,547 1,669
Non-accrual Loans 23,708 18,516
Nonperforming Loans 29,255 20,185
Other Real Estate Owned 723 879
Other Nonperforming Assets 36 30
Total Nonperforming Assets 30,014 21,094
Impaired Loans 28,236 19,464
Net Charge Offs/(Recoveries) 5,034 5,561
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
As of September 30, 2009 and December 31, 2008
(in thousands, except share data)
September 30, December 31,
2009 2008
------------- -------------
(Unaudited)
ASSETS
Cash and due from banks $ 31,188 $ 57,149
Short-term investments 8,072 6,858
------------- -------------
Total cash and cash equivalents 39,260 64,007
Securities available for sale
(carried at fair value) 407,331 387,030
Real estate mortgage loans held for
sale 1,934 401
Loans, net of allowance for loan
losses of $28,778 and $18,860 1,912,333 1,814,474
Land, premises and equipment, net 30,108 30,519
Bank owned life insurance 34,383 33,966
Accrued income receivable 8,990 8,599
Goodwill 4,970 4,970
Other intangible assets 259 413
Other assets 30,314 33,066
------------- -------------
Total assets $ 2,469,882 $ 2,377,445
============= =============
LIABILITIES AND EQUITY
LIABILITIES
Noninterest bearing deposits $ 231,970 $ 230,716
Interest bearing deposits 1,589,061 1,654,583
------------- -------------
Total deposits 1,821,031 1,885,299
Short-term borrowings
Federal funds purchased 40,000 19,000
Securities sold under agreements
to repurchase 122,672 137,769
U.S. Treasury demand notes 2,563 840
Other short-term borrowings 175,000 45,000
------------- -------------
Total short-term borrowings 340,235 202,609
Accrued expenses payable 16,535 17,163
Other liabilities 1,397 1,434
Long-term borrowings 40,042 90,043
Subordinated debentures 30,928 30,928
------------- -------------
Total liabilities 2,250,168 2,227,476
EQUITY
Cumulative perpetual preferred stock:
1,000,000 shares authorized, no par
value, $1 liquidation value
56,044 shares issued and
outstanding as of September 30,
2009 53,992 0
Common stock: 90,000,000 shares
authorized, no par value
12,441,930 shares issued and
12,341,593 outstanding as of
September 30, 2009
12,373,080 shares issued and
12,266,849 outstanding as of
December 31, 2008 1,453 1,453
Additional paid-in capital 23,846 20,632
Retained earnings 147,295 141,371
Accumulated other comprehensive loss (5,437) (12,024)
Treasury stock, at cost
(2009 - 100,337 shares,
2008 - 106,231 shares) (1,524) (1,552)
------------- -------------
Total stockholders' equity 219,625 149,880
------------- -------------
Noncontrolling interest 89 89
------------- -------------
Total equity 219,714 149,969
------------- -------------
Total liabilities and equity $ 2,469,882 $ 2,377,445
============= =============
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months and Nine Months Ended September 30, 2009 and 2008
(in thousands except for share and per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
NET INTEREST INCOME
Interest and fees on
loans
Taxable $ 24,561 $ 25,872 $ 71,101 $ 75,673
Tax exempt 26 28 126 87
Interest and dividends
on securities
Taxable 4,335 4,437 13,231 11,793
Tax exempt 597 583 1,804 1,820
Interest on short-term
investments 11 46 39 197
---------- ---------- ---------- ----------
Total interest
income 29,530 30,966 86,301 89,570
Interest on deposits 7,431 10,854 25,464 33,592
Interest on borrowings
Short-term 268 1,435 841 5,164
Long-term 569 1,405 2,181 3,538
---------- ---------- ---------- ----------
Total interest
expense 8,268 13,694 28,486 42,294
---------- ---------- ---------- ----------
NET INTEREST INCOME 21,262 17,272 57,815 47,276
Provision for loan
losses 5,500 3,710 14,952 7,884
---------- ---------- ---------- ----------
NET INTEREST INCOME
AFTER PROVISION FOR
LOAN LOSSES 15,762 13,562 42,863 39,392
NONINTEREST INCOME
Wealth advisory fees 747 869 2,213 2,541
Investment brokerage
fees 410 582 1,300 1,479
Service charges on
deposit accounts 2,133 2,331 6,153 6,355
Loan, insurance and
service fees 711 729 1,941 2,122
Merchant card fee
income 536 949 2,179 2,646
Other income 506 585 1,459 1,453
Mortgage banking
income 459 146 1,849 666
Net securities gains
(losses) 2 11 2 39
Gain on redemption of
Visa shares 0 0 0 642
Impairment on
available-for-sale
securities (includes
total losses of
$2,831, net of
$2,606 recognized in
other comprehensive
income, pre-tax) (225) 0 (225) 0
---------- ---------- ---------- ----------
Total noninterest
income 5,279 6,202 16,871 17,943
NONINTEREST EXPENSE
Salaries and employee
benefits 7,327 6,411 20,516 19,113
Occupancy expense 751 741 2,392 2,226
Equipment costs 571 426 1,588 1,344
Data processing fees
and supplies 985 955 2,969 2,662
Credit card
interchange 302 651 1,353 1,765
Other expense 3,161 2,758 11,119 7,827
---------- ---------- ---------- ----------
Total noninterest
expense 13,097 11,942 39,937 34,937
---------- ---------- ---------- ----------
INCOME BEFORE INCOME
TAX EXPENSE 7,944 7,822 19,797 22,398
Income tax expense 2,677 2,597 6,200 7,136
---------- ---------- ---------- ----------
NET INCOME $ 5,267 $ 5,225 $ 13,597 $ 15,262
========== ========== ========== ==========
Dividends and
accretion of
discount on
preferred stock 801 0 1,891 0
---------- ---------- ---------- ----------
NET INCOME AVAILABLE
TO COMMON
SHAREHOLDERS $ 4,466 $ 5,225 $ 11,706 $ 15,262
========== ========== =========== =========
BASIC WEIGHTED AVERAGE
COMMON SHARES 12,432,135 12,290,055 12,416,894 12,256,389
========== ========== ========== ==========
BASIC EARNINGS PER
COMMON SHARE $ 0.36 $ 0.43 $ 0.94 $ 1.25
========== ========== ========== ==========
DILUTED WEIGHTED
AVERAGE COMMON
SHARES 12,531,264 12,468,446 12,519,460 12,454,426
========== ========== ========== ==========
DILUTED EARNINGS PER
COMMON SHARE $ 0.36 $ 0.42 $ 0.94 $ 1.23
========== ========== ========== ==========
LAKELAND FINANCIAL CORPORATION
LOAN DETAIL
THIRD QUARTER 2009
(unaudited in thousands)
September 30, December 31, September 30,
2009 2008 2008
----------------- ----------------- -----------------
Commercial
and
industrial
loans $ 691,012 35.5% $ 652,107 35.5% $ 612,895 35.7%
Commercial
real estate
- owner
occupied 340,899 17.5 337,060 18.4 325,878 19.0
Commercial
real estate -
nonowner
occupied 242,278 12.5 212,444 11.6 191,187 11.1
Commercial
real estate -
multifamily
loans 25,651 1.3 25,428 1.4 23,674 1.4
Commercial
real estate
construction
loans 153,426 7.9 116,970 6.4 96,004 5.6
Agri-business
and
agricultural
loans 178,683 9.2 189,007 10.3 174,462 10.2
Residential
real estate
mortgage
loans 95,095 4.9 117,230 6.4 114,900 6.7
Home equity
loans 158,706 8.2 128,219 7.0 124,016 7.2
Installment
loans and
other
consumer
loans 57,504 3.0 55,102 3.0 54,504 3.1
----------------- ----------------- -----------------
Subtotal 1,943,254 100.0% 1,833,567 100.0% 1,717,520 100.0%
Less:
Allowance for
loan losses (28,778) (18,860) (18,124)
Net deferred
loan (fees)/
costs (2,143) (233) (175)
---------- ---------- ----------
Loans, net $1,912,333 $1,814,474 $1,699,221
========== ========== ==========