WARSAW, Ind., April 25, 2008 (PRIME NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq:LKFN), parent company of Lake City Bank, today reported record net income of $5.2 million for the first quarter of 2008. Net income increased 10% over the $4.8 million reported in the comparable quarter of 2007. On a linked quarter basis, net income increased 9% versus the fourth quarter of 2007. Diluted net income per share for the quarter was $0.42 versus $0.38 for the comparable period of 2007 and $0.40 for the fourth quarter of 2007.
"Highlighted by the single largest quarterly loan growth in our history, the Bank's overall performance reflects strong results in a challenging banking environment. With record first quarter income, our performance demonstrates that we've been able to manage through a somewhat weaker regional economy. We've done this by leading with lending relationships and expanding fee-based revenue opportunities with a growing customer base," commented Michael L. Kubacki, Chairman, President and Chief Executive Officer.
"The customer-first reputation that we've worked hard to earn in Indiana continues to lead to new and expanded relationship opportunities. As a result, we're able to generate overall loan and revenue growth from within our existing footprint," added Kubacki.
Kubacki continued, "Average loans increased by $101 million during the quarter, which far exceeds our previous record loan growth in a single quarter. We continue to benefit from our commitment to commercial banking with diversified growth occurring in every geographic market in which we operate. Our traditional commercial banking client base has continued to provide excellent growth opportunities for relationship-based lending opportunities. It's notable that loan growth during the quarter came primarily from the agribusiness and commercial and industrial lending sectors, which reinforces our emphasis on these traditional lending segments."
Contributing to earnings was a pre-tax benefit of $642,000, or $382,000 after tax, realized from the recent initial public offering of Visa, Inc. common shares. Excluding the effect of the Visa transaction, net income for the quarter would have been $4.9 million, an increase of 2% over the comparable quarter of 2007. Diluted net income per share would have been $0.39, an increase of 3% over the comparable quarter of 2007. This adjusted first quarter performance would have also represented record performance for the quarter.
The Company also announced that the Board of Directors approved a cash dividend for the first quarter of $0.155 per share, payable on May 5, 2008 to shareholders of record as of April 25, 2008. The quarterly dividend represents an 11% increase over the quarterly dividends paid in 2007.
The Company's net interest margin was relatively stable at 3.12% in the first quarter versus 3.14% in the fourth quarter of 2007 and 3.25% for the first quarter of 2007. Despite a continued shift in funding mix and the Federal Reserve Bank's recent interest rate cuts, the margin declined only nominally on a linked quarter basis. As a result of growth in earning assets, the Company's net interest income increased by 11% to $14.5 million in the first quarter of 2008 versus $13.1 million in the first quarter of 2007. On a linked quarter basis, net interest income increased by 3% versus the fourth quarter of 2007. The Company's provision for loan losses increased by $512,000, or 80%, to $1.2 million for the first quarter of 2008 versus $641,000 in the same period of 2007, principally as a result of loan growth and overall economic conditions in the Company's markets.
The Company's non-interest income was $5.8 million for the first quarter of 2008, an increase of 25% compared to $4.6 million for the same period in 2007. Excluding the effect of the Visa transaction, noninterest income would have been $5.1 million, an 11% increase over the same period in 2007. The increase was driven by increases in every client-driven revenue category. The largest increases came from service charges on deposit accounts, which increased by 8% and wealth advisory fees and investment brokerage fees, both of which increased by 17%.
The Company's non-interest expense was $11.4 million for the first quarter of 2008 compared to $10.3 million for the same period in 2007, an increase of 11%. This increase was driven primarily by increased payroll and benefit expense and general increases in operating and regulatory expenses. Employee payroll and benefit costs increased by $398,000 as a result of a combination of normal merit increases, increases in health insurance expense and performance-based incentive expense, the addition of revenue-producing staff in the commercial lending department and new office staff costs. In addition, advertising expenses were $171,000 higher in the first quarter of 2008 versus the same period in 2007 as a result of the rollout of a significant new deposit product. Further, regulatory expenses increased by $130,000 versus the comparable period in 2007 due to the Company's resumption of regular FDIC insurance premiums as prior credits expired early in 2008. Data processing fees and supplies increased by $139,000 primarily as a result of the implementation of a new corporate cash management platform and contractual increases in existing operating services. Finally, the Company incurred $105,000 of expense related to the impairment of other real estate owned. The Company's efficiency ratio improved to 56.1% compared to 58.0% for the same period a year ago.
Average total loans for the first quarter of 2008 were $1.56 billion versus $1.35 billion for the first quarter of 2007 and $1.46 billion for the linked fourth quarter of 2007. The year-over-year increase for the first quarter represented an increase of 16%, or $211 million. On a linked quarter basis, average loans increased by $101 million versus the fourth quarter of 2007. Total gross loans as of March 31, 2008 were $1.60 billion compared to $1.38 billion as of March 31, 2007 and $1.52 billion as of December 31, 2007.
Net charge offs totaled $196,000 in the first quarter of 2008, versus $327,000 during the fourth quarter of 2007, and $346,000 during the first quarter of 2007. Lakeland Financial's allowance for loan losses as of March 31, 2008 was $16.8 million, compared to $15.8 million as of December 31, 2007 and $14.8 million as of March 31, 2007.
Nonperforming assets totaled $9.6 million as of March 31, 2008 compared to $9.9 million as of December 31, 2007 and $13.9 million on March 31, 2007. The ratio of nonperforming assets to assets improved to 0.43% on March 31, 2008 compared to 0.50% at December 31, 2007 and 0.76% at March 31, 2007. The allowance for loan losses represented 228% of nonperforming loans as of March 31, 2008 versus 212% at December 31, 2007 and 107% at March 31, 2007.
For the three months ended March 31, 2008, Lakeland Financial's average equity to average assets ratio was 7.38% compared to 7.47% for the fourth quarter of 2007 and 7.45% for the first quarter of 2007. Average stockholders' equity for the quarter ended March 31, 2008 was $149.5 million versus $143.9 million for the fourth quarter of 2007 and $131.9 million for the first quarter of 2007. Average total deposits for the quarter ended March 31, 2008 were $1.51 billion versus $1.52 billion for the fourth quarter of 2007 and $1.45 billion for the first quarter of 2007.
Lakeland Financial Corporation is a $2.2 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 current quarter 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
FIRST QUARTER 2008 FINANCIAL HIGHLIGHTS
(Unaudited - Dollars in thousands except share and Per Share Data)
Three Months Ended
----------------------------------
Mar. 31, Dec. 31, Mar. 31,
2008 2007 2007
---------- ---------- ----------
END OF PERIOD BALANCES
Assets $2,204,995 $1,989,133 $1,818,260
Deposits 1,576,598 1,478,918 1,498,002
Loans 1,602,416 1,523,720 1,377,926
Allowance for Loan Losses 16,758 15,801 14,758
Common Stockholders' Equity 151,046 146,270 134,944
Tangible Equity 146,492 141,619 130,003
AVERAGE BALANCES
Assets
Total Assets $2,026,664 $1,927,172 $1,771,551
Earning Assets 1,911,079 1,811,630 1,664,938
Investments 333,699 325,226 295,706
Loans 1,564,552 1,463,085 1,353,378
Liabilities and Stockholders' Equity
Total Deposits 1,514,784 1,520,201 1,454,083
Interest Bearing Deposits 1,296,949 1,287,356 1,237,542
Interest Bearing Liabilities 1,642,609 1,532,760 1,408,401
Common Stockholders' Equity 149,533 143,948 131,907
INCOME STATEMENT DATA
Net Interest Income $ 14,506 $ 14,058 $ 13,098
Net Interest Income-Fully
Tax Equivalent 14,791 14,340 13,349
Provision for Loan Losses 1,153 1,054 641
Noninterest Income 5,769 5,201 4,603
Noninterest Expense 11,382 11,369 10,270
Net Income 5,241 4,824 4,758
PER SHARE DATA
Basic Net Income Per
Common Share $ 0.43 $ 0.40 $ 0.39
Diluted Net Income Per
Common Share 0.42 0.40 0.38
Cash Dividends Declared Per
Common Share 0.14 0.14 0.125
Book Value Per Common Share
(equity per share issued) 12.35 11.98 11.07
Market Value - High 23.97 25.00 25.92
Market Value - Low 16.87 18.25 21.85
Basic Weighted Average
Common Shares Outstanding 12,215,561 12,206,210 12,159,768
Diluted Weighted Average
Common Shares Outstanding 12,424,643 12,420,827 12,419,975
KEY RATIOS
Return on Average Assets 1.04% 0.99% 1.09%
Return on Average Common
Stockholders' Equity 14.10 13.30 14.63
Efficiency (Noninterest
Expense/Net Interest Income
plus Noninterest Income) 56.14 59.03 58.02
Average Equity to Average Assets 7.38 7.47 7.45
Net Interest Margin 3.12 3.14 3.25
Net Charge Offs to Average Loans 0.05 0.09 0.10
Loan Loss Reserve to Loans 1.05 1.04 1.07
Nonperforming Loans to Loans 0.46 0.49 1.00
Nonperforming Assets to Assets 0.43 0.50 0.76
Tier 1 Leverage 8.68 8.93 9.07
Tier 1 Risk-Based Capital 10.01 10.54 10.97
Total Capital 10.96 11.51 11.98
Tangible Capital 6.66 7.14 7.17
ASSET QUALITY
Loans Past Due 90 Days or More $ 508 $ 409 $ 334
Non-accrual Loans 6,852 7,039 13,438
Nonperforming Loans 7,360 7,448 13,772
Other Real Estate Owned 2,167 2,387 71
Other Nonperforming Assets 30 24 35
Total Nonperforming Assets 9,557 9,859 13,878
Impaired Loans 6,591 6,748 13,226
Net Charge Offs/(Recoveries) 196 327 346
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
As of March 31, 2008 and December 31, 2007
(in thousands, except per share data)
March 31, December 31,
2008 2007
---------- ----------
(Unaudited)
ASSETS
Cash and due from banks $ 170,651 $ 56,278
Short-term investments 8,448 11,413
---------- ----------
Total cash and cash equivalents 179,099 67,691
Securities available for sale
(carried at fair value) 340,602 327,757
Real estate mortgage loans held for sale 974 537
Loans, net of allowance for loan losses
of $16,758 and $15,801 1,585,658 1,507,919
Land, premises and equipment, net 27,314 27,525
Bank owned life insurance 33,166 21,543
Accrued income receivable 8,750 9,126
Goodwill 4,970 4,970
Other intangible assets 568 619
Other assets 23,894 21,446
---------- ----------
Total assets $2,204,995 $1,989,133
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Noninterest bearing deposits $ 342,432 $ 255,348
Interest bearing deposits 1,234,166 1,223,570
---------- ----------
Total deposits 1,576,598 1,478,918
Short-term borrowings
Federal funds purchased 99,500 70,010
Securities sold under agreements
to repurchase 164,348 154,913
U.S. Treasury demand notes 1,317 1,242
Other short-term borrowings 163,700 90,000
---------- ----------
Total short-term borrowings 428,865 316,165
Accrued expenses payable 16,276 15,497
Other liabilities 1,239 1,311
Long-term borrowings 43 44
Subordinated debentures 30,928 30,928
---------- ----------
Total liabilities 2,053,949 1,842,863
STOCKHOLDERS' EQUITY
Common stock: 180,000,000 shares
authorized, no par value 12,230,973 shares
issued and 12,130,676 outstanding as of
March 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 18,557 18,078
Retained earnings 132,621 129,090
Accumulated other comprehensive loss (158) (1,010)
Treasury stock, at cost
(2008 - 100,297 shares,
2007 - 96,020 shares) (1,427) (1,341)
---------- ----------
Total stockholders' equity 151,046 146,270
---------- ----------
Total liabilities and
stockholders' equity $2,204,995 $1,989,133
========== ==========
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended March 31, 2008 and 2007
(in thousands except for share and per share data)
(unaudited)
Three Months Ended
March 31,
-------------------------
2008 2007
----------- -----------
NET INTEREST INCOME
Interest and fees on loans
Taxable $ 25,475 $ 24,720
Tax exempt 32 50
Interest and dividends on securities
Taxable 3,380 2,678
Tax exempt 614 602
Interest on short-term investments 91 208
----------- -----------
Total interest income 29,592 28,258
Interest on deposits 12,047 13,098
Interest on borrowings
Short-term 2,424 1,430
Long-term 615 632
----------- -----------
Total interest expense 15,086 15,160
----------- -----------
NET INTEREST INCOME 14,506 13,098
Provision for loan losses 1,153 641
----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 13,353 12,457
NONINTEREST INCOME
Wealth advisory fees 809 689
Investment brokerage fees 283 243
Service charges on deposit accounts 1,769 1,632
Loan, insurance and service fees 655 581
Merchant card fee income 810 764
Other income 458 493
Net gains on sales of real estate
mortgage loans held for sale 315 165
Net securities gains (losses) 28 36
Gain on redemption of Visa shares 642 0
----------- -----------
Total noninterest income 5,769 4,603
NONINTEREST EXPENSE
Salaries and employee benefits 6,253 5,855
Net occupancy expense 796 674
Equipment costs 441 445
Data processing fees and supplies 840 701
Credit card interchange 535 489
Other expense 2,517 2,106
----------- -----------
Total noninterest expense 11,382 10,270
----------- -----------
INCOME BEFORE INCOME TAX EXPENSE 7,740 6,790
Income tax expense 2,499 2,032
----------- -----------
NET INCOME $ 5,241 $ 4,758
=========== ===========
BASIC WEIGHTED AVERAGE COMMON SHARES 12,215,561 12,159,768
=========== ===========
BASIC EARNINGS PER COMMON SHARE $ 0.43 $ 0.39
=========== ===========
DILUTED WEIGHTED AVERAGE COMMON SHARES 12,424,643 12,419,975
=========== ===========
DILUTED EARNINGS PER COMMON SHARE $ 0.42 $ 0.38
=========== ===========
LAKELAND FINANCIAL CORPORATION
LOAN DETAIL
FIRST QUARTER 2008
(unaudited in thousands)
March 31, December 31, March 31,
2008 2007 2007
----------------- ----------------- -----------------
Commercial and
industrial
loans $1,047,367 65.4% $ 968,336 63.6% $ 892,828 64.8%
Commercial real
estate - multi-
family loans 16,660 1.0 16,839 1.1 19,118 1.4
Commercial real
estate con-
struction
loans 83,378 5.2 84,498 5.6 67,885 4.9
Agri-business
and agricul-
tural loans 180,344 11.3 170,921 11.2 127,742 9.3
Residential
real estate
mortgage loans 115,953 7.2 124,107 8.1 113,814 8.3
Home equity
loans 108,558 6.8 108,429 7.1 103,885 7.5
Installment
loans and
other consumer
loans 50,250 3.1 50,516 3.3 52,743 3.8
---------- ----- ---------- ----- ---------- -----
Subtotal 1,602,510 100.0% 1,523,646 100.0% 1,378,015 100.0%
Less:
Allowance
for loan
losses (16,758) (15,801) (14,758)
Net deferred
loan (fees)/
costs (94) 74 (89)
---------- ---------- ----------
Loans, net $1,585,658 $1,507,919 $1,363,168
========== ========== ==========