WARSAW, Ind., Jan. 25, 2013 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq:LKFN), parent company of Lake City Bank, today reported record net income of $35.4 million for 2012. This performance represents a 15%, or $4.7 million, increase in net income versus $30.7 million for 2011. Diluted net income per share increased 14% to $2.15 for 2012, versus $1.88 in 2011, and also represents a Company record.
The Company further reported net income of $8.6 million for the fourth quarter of 2012, which represented a 4% increase over $8.3 million in the fourth quarter of 2011. Diluted net income per share for the quarter increased 4% to $0.52 versus $0.50 for the comparable period of 2011. Net income for the linked third quarter of 2012 was $9.3 million.
Michael L. Kubacki, Chairman and Chief Executive Officer, commented, "In the last quarter century, we've produced record net income for our shareholders in 24 of those 25 years and 2012 represents our third consecutive year of record performance. We believe that these consistent results are a reflection of our relentless focus on taking care of our customers every day in every office."
Kubacki continued, "2012 represented Lake City Bank's 140th year of continuous service under the same name in our Indiana communities. Since our 1872 opening as the fourth bank in the small town of Warsaw, we've grown to become the fourth largest bank headquartered in Indiana. As we have grown, we've successfully maintained our commitment to the Hoosier communities we serve. We're proud that we have preserved the principles and ideals of a community bank while at the same time delivering strong shareholder value."
The Company previously announced that its normal quarterly dividend of $0.17 for the fourth quarter would be paid in December of 2012 instead of the first quarter of 2013. This dividend was paid early due to the uncertainty, which existed at that time, regarding the future taxation of dividends. The quarterly dividends paid for each quarter of 2012 represents a 10% increase over those paid in 2011. The Company expects to return to its normal schedule for paying quarterly dividends during 2013.
Total loans outstanding increased by $54 million during the quarter, growing from $2.20 billion at September 30, 2012 to $2.26 billion at December 31, 2012. This represents a linked quarter increase of 2.5%. Average total loans for the fourth quarter of 2012 were $2.21 billion versus $2.20 billion for the fourth quarter of 2011, an increase of 1%. Total loans outstanding grew $24 million, or 1%, from $2.23 billion as of December 31, 2011 to $2.26 billion as of December 31, 2012.
David M. Findlay, President and Chief Financial Officer, stated, "We were pleased with the level of loan growth in the quarter. Despite organic loan demand continuing to be lower when compared to our historical levels, we have seen some improvement and believe that this kind of growth is reflective of our strong market position. While our pipeline indicates that there are encouraging signs of improving loan demand in the near future, the overall competitive environment will continue to temper market share gains."
The Company's net interest margin was 3.10% in the fourth quarter of 2012 versus 3.38% for the fourth quarter of 2011 and 3.30% in the linked third 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. The reduced yields in the investment portfolio were driven by prepayments in the Company's agency mortgage-backed securities portfolio. The prepayments generally have a negative impact on investment portfolio yields, including the Company having to reinvest in lower yielding securities and the acceleration of premium amortization. For the year ended December 31, 2012, the Company's net interest margin was 3.28% versus 3.54% for the comparable period in 2011.
Findlay observed, "As with most financial institutions, the unprecedented and prolonged low interest rate environment has continued to negatively impact our net interest margin performance. While we have some ability to further lower deposit costs, which we will pursue in 2013, the continued pressure on loan and investment yields will make it challenging for us to improve our net interest margin for the foreseeable future."
The Company's tangible common equity to tangible assets ratio was 9.63% at December 31, 2012 compared to 9.36% at December 31, 2011 and 9.90% at September 30, 2012. Average total deposits for the quarter ended December 31, 2012 were $2.55 billion versus $2.49 billion for the third quarter of 2012 and $2.42 billion for the fourth quarter of 2011.
The Company's provision for loan losses in the fourth quarter of 2012 was $1.3 million versus $2.9 million in the same period of 2011. In the third quarter of 2012, the provision was $0. For the year ended December 31, 2012, the Company's provision for loan losses was $2.5 million versus $13.8 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, 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 our borrowers' performance and future prospects. The Company's allowance for loan losses as of December 31, 2012 was $51.4 million compared to $53.4 million as of December 31, 2011 and $51.9 million as of September 30, 2012. The allowance for loan losses represented 2.28% of total loans as of December 31, 2012 versus 2.39% at December 31, 2011 and 2.36% as of September 30, 2012. Further, the allowance for loan losses represented 167% of nonperforming loans as of December 31, 2012 versus 135% at December 31, 2011 and 156% as of September 30, 2012.
Net charge-offs totaled $1.7 million in the fourth quarter of 2012 versus net charge-offs of $1.6 million during the fourth quarter of 2011 and net recoveries of $96,000 during the linked third quarter of 2012. The largest charge-off attributable to a single commercial credit during the quarter was $947,000. For the year ended December 31, 2012, net charge-offs were $4.5 million versus $5.4 million for the comparable period in 2011. Nonperforming assets decreased 24% to $31.6 million as of December 31, 2012 versus $41.6 million as of December 31, 2011. On a linked quarter basis, nonperforming assets were 7% lower than the $34.0 million reported as of September 30, 2012. The decrease in nonperforming assets during the quarter primarily resulted from charge-offs as well as payments received on nonperforming loans. The ratio of nonperforming assets to total assets at December 31, 2012 was 1.03% versus 1.44% at December 31, 2011 and 1.15% at September 30, 2012. Total watch list loans were $181.9 million at December 31, 2012 versus $166.7 million at December 31, 2011 and $150.7 million at September 30, 2012. The quarter over quarter increase in the watch list primarily resulted from the addition of four related loan relationships totaling $35.7 million.
Findlay added, "We're cautiously optimistic with the consistent improvements we have seen in our loan quality measures during 2012. Generally, our borrowers' balance sheet strength and financial performance have stabilized or improved. Yet, there continues to be uncertainty regarding the sustainability of this recovery, and we continue to monitor the impact on our borrowers closely."
For the year ended December 31, 2012, the Company's noninterest income increased 13% from $22.2 million in 2011 to $25.2 million. For the fourth quarter of 2012, noninterest income increased 32% to $7.3 million versus $5.5 million for the fourth quarter of 2011. On a linked quarter basis, noninterest income increased by $1.1 million from $6.2 million in the third quarter of 2012. On a year-over-year basis, quarterly noninterest income was positively impacted by a $506,000 increase in loan, insurance and service fees and a $566,000 increase in mortgage banking income. In addition, noninterest income was positively impacted by an increase of $204,000 in wealth advisory fees and increases of $159,000 in investment brokerage fees.
Kubacki concluded, "We experienced good growth in fee based businesses in 2012 as a result of our continuing focus on cross selling both retail and commercial services. These efforts have resulted in broader relationships with our clients and an increase in every line item category of fee based services in 2012. This will be key as we continue to develop and expand our technology driven solutions for our clients."
For the year ended December 31, 2012, noninterest expense increased 5% from $55.1 million in 2011 to $57.7 million. The Company's noninterest expense increased 8% to $14.5 million in the fourth quarter of 2012, versus $13.5 million in the comparable quarter of 2011. On a linked quarter basis, noninterest expense increased by $209,000 versus $14.3 million in the third quarter of 2012. On a year-over-year basis, quarterly salaries and employee benefits increased $527,000, driven by staff additions and normal merit increases. In addition, salaries and employee benefits were impacted by higher pension expense related to participants taking lump-sum distributions. Data processing fees increased by $499,000 driven by a larger customer base as well as greater utilization of services from the Company's core processor. In addition, equipment costs increased $114,000 in the three month period ended December 31, 2012 versus the same period of 2011 driven by higher depreciation expense. The Company's efficiency ratio for the fourth quarter of 2012 was 52%, compared to a ratio of 48% for the comparable quarter of 2011 and 50% for the linked third quarter of 2012.
Lakeland Financial Corporation is a $3.1 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|
|FOURTH QUARTER 2012 FINANCIAL HIGHLIGHTS|
|(Unaudited – Dollars in thousands except share and per share data)|
|Three Months Ended||Twelve Months Ended|
|END OF PERIOD BALANCES|
|Allowance for Loan Losses||51,445||51,912||53,400||51,445||53,400|
|Tangible Common Equity||294,821||291,946||270,078||294,821||270,078|
|Interest Bearing Deposits||2,175,268||2,127,463||2,089,130||2,151,094||2,015,439|
|Interest Bearing Liabilities||2,347,434||2,286,151||2,274,381||2,316,375||2,206,658|
|INCOME STATEMENT DATA|
|Net Interest Income||$20,866||$22,160||$22,780||$87,671||$92,080|
|Net Interest Income-Fully Tax Equivalent||21,272||22,561||23,166||89,290||93,611|
|Provision for Loan Losses||1,250||0||2,900||2,549||13,800|
|PER SHARE DATA|
|Basic Net Income Per Common Share||$0.53||$0.57||$0.51||$2.17||$1.89|
|Diluted Net Income Per Common Share||0.52||0.57||0.50||2.15||1.88|
|Cash Dividends Declared Per Common Share||0.34||0.17||0.155||0.835||0.62|
|Book Value Per Common Share (equity per share issued)||18.18||18.04||16.85||18.18||16.85|
|Market Value – High||27.89||28.82||26.48||28.82||26.48|
|Market Value – Low||23.47||25.09||19.67||23.47||19.40|
|Basic Weighted Average Common Shares Outstanding||16,356,551||16,340,425||16,214,006||16,323,870||16,204,952|
|Diluted Weighted Average Common Shares Outstanding||16,502,313||16,490,390||16,361,607||16,482,937||16,324,644|
|Return on Average Assets||1.13%||1.26%||1.13%||1.19%||1.10%|
|Return on Average Total Equity||11.48||12.76||12.11||12.30||11.78|
|Efficiency (Noninterest Expense / Net Interest Income plus Noninterest Income)||51.51||50.38||47.62||51.16||48.22|
|Average Equity to Average Assets||9.82||9.85||9.35||9.67||9.32|
|Net Interest Margin||3.10||3.30||3.38||3.28||3.54|
|Net Charge Offs to Average Loans||0.31||(0.02)||0.28||0.20||0.25|
|Loan Loss Reserve to Loans||2.28||2.36||2.39||2.28||2.39|
|Loan Loss Reserve to Nonperforming Loans||166.60||155.73||135.27||166.60||135.27|
|Loan Loss Reserve to Nonperforming Loans and Performing TDR's||96.68||83.31||86.61||96.68||86.61|
|Nonperforming Loans to Loans||1.37||1.51||1.77||1.37||1.77|
|Nonperforming Assets to Assets||1.03||1.15||1.44||1.03||1.44|
|Tier 1 Leverage||10.46||10.59||10.13||10.46||10.13|
|Tier 1 Risk-Based Capital||13.01||13.32||12.31||13.01||12.31|
|Loans Past Due 30 - 89 Days||$4,253||$4,028||$4,230||$4,253||$4,230|
|Loans Past Due 90 Days or More||50||109||52||50||52|
|Nonperforming Loans (includes nonperforming TDR's)||30,879||33,335||39,477||30,879||39,477|
|Other Real Estate Owned||667||681||2,075||667||2,075|
|Other Nonperforming Assets||23||5||33||23||33|
|Total Nonperforming Assets||31,569||34,021||41,584||31,569||41,584|
|Nonperforming Troubled Debt Restructurings (included in nonperforming loans)||28,506||28,979||34,272||28,506||34,272|
|Performing Troubled Debt Restructurings||22,332||26,106||22,177||22,332||22,177|
|Total Troubled Debt Restructurings||50,838||55,085||56,449||50,838||56,449|
|Total Watch List Loans||181,878||150,709||166,701||181,878||166,701|
|Gross Charge Offs||1,855||482||1,781||5,922||6,829|
|Net Charge Offs/(Recoveries)||1,717||(96)||1,573||4,504||5,407|
|LAKELAND FINANCIAL CORPORATION|
|CONSOLIDATED BALANCE SHEETS|
|As of December 31, 2012 and 2011|
|(in thousands, except share data)|
|Cash and due from banks||$156,666||$56,909|
|Total cash and cash equivalents||232,237||104,584|
|Securities available for sale (carried at fair value)||467,021||467,391|
|Real estate mortgage loans held for sale||9,452||2,953|
|Loans, net of allowance for loan losses of $51,445 and $53,400||2,206,075||2,180,309|
|Land, premises and equipment, net||34,840||34,736|
|Bank owned life insurance||61,112||39,959|
|Accrued income receivable||8,491||9,612|
|Other intangible assets||47||99|
|LIABILITIES AND EQUITY|
|Noninterest bearing deposits||$407,926||$356,682|
|Interest bearing deposits||2,173,830||2,056,014|
|Federal funds purchased||0||10,000|
|Securities sold under agreements to repurchase||121,883||131,990|
|Total short-term borrowings||121,883||141,990|
|Accrued expenses payable||15,321||13,550|
|Common stock: 90,000,000 shares authorized, no par value 16,377,247 shares issued and 16,290,136 outstanding as of December 31, 2012 16,217,019 shares issued and 16,145,772 outstanding as of December 31, 2011||90,039||87,380|
|Accumulated other comprehensive income||5,689||5,139|
|Treasury stock, at cost (2012 - 87,111 shares, 2011 - 71,247 shares)||(1,643)||(1,222)|
|Total stockholders' equity||297,739||273,200|
|Total liabilities and equity||$3,064,144||$2,889,688|
|LAKELAND FINANCIAL CORPORATION|
|CONSOLIDATED STATEMENTS OF INCOME|
|For the Three Months and Twelve Months Ended December 31, 2012 and 2011|
|(in thousands except for share and per share data)|
Three Months Ended
Twelve Months Ended
|NET INTEREST INCOME|
|Interest and fees on loans|
|Interest and dividends on securities|
|Interest on short-term investments||25||40||68||154|
|Total interest income||26,685||30,163||114,369||121,892|
|Interest on deposits||5,315||6,867||24,667||27,735|
|Interest on borrowings|
|Total interest expense||5,819||7,383||26,698||29,812|
|NET INTEREST INCOME||20,866||22,780||87,671||92,080|
|Provision for loan losses||1,250||2,900||2,549||13,800|
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES||19,616||19,880||85,122||78,280|
|Wealth advisory fees||1,053||849||3,823||3,462|
|Investment brokerage fees||626||467||3,061||2,560|
|Service charges on deposit accounts||2,078||2,012||8,015||7,950|
|Loan, insurance and service fees||1,760||1,254||5,822||4,849|
|Merchant card fee income||282||245||1,184||1,020|
|Mortgage banking income||972||406||2,546||1,000|
|Net securities gains (losses)||1||0||(376)||(167)|
|Other than temporary impairment loss on available-for-sale securities:|
|Total impairment losses recognized on securities||0||(132)||(1,026)||(286)|
|Loss recognized in other comprehensive income||0||0||0||0|
|Net impairment loss recognized in earnings||0||(132)||(1,026)||(286)|
|Total noninterest income||7,305||5,538||25,196||22,205|
|Salaries and employee benefits||8,532||8,005||34,539||32,807|
|Net occupancy expense||777||733||3,296||3,106|
|Data processing fees and supplies||1,334||835||4,378||3,655|
|Total noninterest expense||14,511||13,485||57,742||55,105|
|INCOME BEFORE INCOME TAX EXPENSE||12,410||11,933||52,576||45,380|
|Income tax expense||3,808||3,672||17,182||14,718|
|BASIC WEIGHTED AVERAGE COMMON SHARES||16,356,551||16,214,006||16,323,870||16,204,952|
|BASIC EARNINGS PER COMMON SHARE||$0.53||$0.51||$2.17||$1.89|
|DILUTED WEIGHTED AVERAGE COMMON SHARES||16,502,313||16,361,607||16,482,937||16,324,644|
|DILUTED EARNINGS PER COMMON SHARE||$0.52||$0.50||$2.15||$1.88|
|LAKELAND FINANCIAL CORPORATION|
|FOURTH QUARTER 2012|
|(unaudited in thousands)|
|Commercial and industrial loans:|
|Working capital lines of credit loans||$439,638||19.5%||$445,981||20.2%||$373,768||16.7%|
|Non-working capital loans||407,184||18.0||382,850||17.4||377,388||16.9|
|Total commercial and industrial loans||846,822||37.5||828,831||37.6||751,156||33.6|
|Commercial real estate and multi-family residential loans:|
|Construction and land development loans||82,494||3.7||87,949||4.0||82,284||3.7|
|Owner occupied loans||358,617||15.9||363,673||16.5||346,669||15.5|
|Nonowner occupied loans||314,889||13.9||308,146||14.0||385,090||17.2|
|Total commercial real estate and multi-family residential loans||801,011||35.5||785,250||35.6||852,520||38.2|
|Agri-business and agricultural loans:|
|Loans secured by farmland||109,147||4.8||119,524||5.4||118,224||5.3|
|Loans for agricultural production||115,572||5.1||94,563||4.3||119,705||5.4|
|Total agri-business and agricultural loans||224,719||10.0||214,087||9.7||237,929||10.7|
|Other commercial loans||56,807||2.5||44,982||2.0||58,278||2.6|
|Total commercial loans||1,929,359||85.5||1,873,150||85.0||1,899,883||85.0|
|Consumer 1-4 family mortgage loans:|
|Closed end first mortgage loans||109,823||4.9||106,147||4.8||106,999||4.8|
|Open end and junior lien loans||161,366||7.1||168,507||7.6||175,694||7.9|
|Residential construction and land development loans||11,541||0.5||11,303||0.5||5,462||0.2|
|Total consumer 1-4 family mortgage loans||282,730||12.5||285,957||13.0||288,155||12.9|
|Other consumer loans||45,755||2.0||44,691||2.0||45,999||2.1|
|Total consumer loans||328,485||14.5||330,648||15.0||334,154||15.0|
|Less: Allowance for loan losses||(51,445)||(51,912)||(53,400)|
|Net deferred loan fees||(324)||(410)||(328)|
David M. Findlay President and Chief Financial Officer (574) 267-9197
Lake City Bank
Warsaw, Indiana, UNITED STATES
David M. Findlay President and Chief Financial Officer (574) 267-9197
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