WARSAW, Ind., Jan. 25, 2016 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq:LKFN), parent company of Lake City Bank, today reported record high net income of $46.4 million for 2015, versus $43.8 million for 2014, an increase of 6%.  Diluted net income per common share increased 5% to $2.75 for 2015, versus $2.61 for 2014. This per share performance also represents a record level for the company and its shareholders.

The company further reported record quarterly net income of $12.3 million for the fourth quarter of 2015, an increase of 11%, versus $11.1 million for the fourth quarter of 2014. Diluted net income per common share was $0.73 for the fourth quarter of 2015, also an increase of 11%, versus $0.66 for the comparable period of 2014. On a quarter-linked basis net income increased by 6% or $721,000 from $11.6 million for the third quarter ended September 30, 2015.

David M. Findlay, President and CEO, commented, "Our record performance in 2015 is the result of long-term, consistent, organic loan and deposit growth. We are particularly pleased to have crossed the $3 billion threshold in total loans in 2015. Our successful execution reflects the dedication and focus of the Lake City Bank team. We continue to focus on growing client relationships one at a time, with an emphasis on our Indiana communities.”

As previously announced, the board of directors approved a cash dividend for the fourth quarter of $0.245 per share, payable on February 5, 2016, to shareholders of record as of January 25, 2016. The quarterly dividend, which is equal to the dividends paid in the third and second quarters 2015, 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.

Return on average total equity for 2015 was 12.26% compared to 12.77% in 2014. Return on average assets for 2015 was 1.29% compared to 1.32% in 2014. The company’s tangible common equity to tangible assets ratio was 10.36% at December 31, 2015, compared to 10.41% at December 31, 2014 and 10.47% at September 30, 2015. 

The company experienced strong loan growth during the year as average total loans increased $234.9 million, or 9%, to $2.89 billion from $2.65 billion in 2014. Total loans outstanding grew $318.6 million, or 12%, from $2.76 billion as of December 31, 2014 to $3.08 billion as of December 31, 2015.  On a linked quarter basis, total loans grew $108.6 million, or 4%, from $2.97 billion as of September 30, 2015. Average total loans for the fourth quarter of 2015 were $3.01 billion, an increase of $277.4 million, or 10% versus $2.73 billion for the comparable period in 2014. On a linked quarter basis, average total loans increased $85.5 million, or 3%, from $2.92 billion for the third quarter of 2015 to $3.01 billion for the fourth quarter of 2015.

Total average deposits also experienced strong growth during the year and increased by $290.7 million, or 10%, to $3.09 billion from $2.80 billion. Total deposits grew $310.3 million, or 11%, from $2.87 billion as of December 31, 2014 to $3.18 billion as of December 31, 2015.  Importantly, total core deposits increased $304.7 million, or 11% from $2.73 billion at December 31, 2014 to $3.04 billion at December 31, 2015. Average total deposits for the fourth quarter of 2015 were $3.22 billion, an increase of $282.4 million, or 10%, versus $2.94 billion for the corresponding period of 2014. On a linked quarter basis, average total deposits increased $94.3 million, or 3%, from $3.13 billion for the third quarter of 2015 to $3.22 billion for the fourth quarter of 2015.

Findlay added, “We continue to experience strong loan and deposit increases throughout our Indiana footprint both in mature and new markets. Our organic growth strategy has translated into revenue growth and record profitability while we continue to invest in technology and infrastructure.”

The company’s net interest margin decreased 12 basis points to 3.20% for 2015 compared to 3.32% in 2014. The company’s net interest margin was 3.17% in the fourth quarter of 2015, compared to  3.28% for the fourth quarter of 2014. On a linked quarter basis, the net interest margin improved slightly from 3.16% in the third quarter of 2015 due to the Federal Reserve Bank increase in the Federal Funds Rate in mid-December. The decline in net interest margin during the twelve-month and three-month periods ended December 31, 2015 was largely driven by competitive factors in the company’s markets, including aggressive pricing of new loan opportunities and renewed loans.  Net interest income increased $3.6 million, or 4%, to $105.9 million in 2015 versus $102.3 million in 2014. Net interest income increased $1.3 million, or 5%, to $27.5 million for the fourth quarter of 2015, versus $26.1 million in the fourth quarter of 2014.

For the third consecutive year, the company did not record a provision for loan losses. The absence of a provision for loan losses was generally driven by continued improvement in key loan quality metrics, including appropriate reserve coverage of nonperforming loans, a decrease in historical loss percentages, stable economic conditions in 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 December 31, 2015 was $43.6 million compared to $46.3 million as of December 31, 2014 and $44.7 million as of September 30, 2015. The allowance for loan losses represented 1.42% of total loans as of December 31, 2015 versus 1.67% at December 31, 2014 and 1.50% as of September 30, 2015. The allowance for loan losses as a percentage of nonperforming loans was 334% as of December 31, 2015, versus 338% as of December 31, 2014, and 312% as of September 30, 2015.

Nonperforming assets decreased $720,000, or 5%, to $13.3 million as of December 31, 2015 versus $14.0 million as of December 31, 2014. On a linked quarter basis, nonperforming assets were $1.3 million lower than the $14.5 million reported as of September 30, 2015. The ratio of nonperforming assets to total assets at December 31, 2015 declined to 0.35% from 0.41% at December 31, 2014 and from 0.40% at September 30, 2015. Net charge-offs to average loans were 0.09% for 2015 compared to 0.10% for 2014. Net charge-offs totaled $2.7 million in 2015 versus $2.5 million in 2014. Net charge-offs totaled $1.1 million in the fourth quarter of 2015 versus net charge-offs of $125,000 during the fourth quarter of 2014 and net charge-offs of $122,000 during the linked third quarter of 2015.

The company’s noninterest income increased $1.4 million, or 5%, to $31.5 million in 2015, compared to $30.1 million in 2014. The company’s noninterest income increased $906,000, or 13%, to $8.1 million for the fourth quarter of 2015 compared to $7.2 million for the comparable quarter of 2014. On a linked quarter basis, noninterest income increased by $167,000 from $7.9 million in the third quarter of 2015. During 2015, noninterest income was positively impacted by increases in service charges on deposit accounts, loan fees, and wealth advisory fees. Increases in noninterest income in the fourth quarter 2015 compared to the prior year fourth quarter resulted from mortgage banking income,  service charges on deposit accounts, loan, insurance and service fees and wealth advisory fees. Offsetting these increases was a decrease in investment brokerage fees driven by lower production volumes as well as changes to the product mix designed to provide a more consistent revenue stream.

The company’s noninterest expense increased $2.0 million, or 3%, to $68.2 million in 2015, compared to $66.2 million in 2014. The company’s noninterest expense increased by $725,000, or 4% to $17.4 million in the fourth quarter of 2015 compared to $16.6 million in the comparable quarter of 2014. On a linked quarter basis, noninterest expense increased by $150,000 from $17.2 million in the third quarter of 2015. Data processing fees increased primarily due to increased technology and software related expenditures with the company’s core processor which are volume and product driven and represent digital solutions and forward technology for clients. Equipment costs increased due to higher depreciation expense related to branch expansion and upgrades. Salaries and employee benefits increased primarily due to staff additions, higher employee insurance costs and higher pension plan expense. Professional fees decreased primarily due to lower legal fees. The company's efficiency ratio was 49% for the fourth quarter of 2015 compared to 50% in both the fourth quarter of 2014 and the linked third quarter of 2015. The efficiency ratio was 50% for both 2015 and 2014.

Findlay concluded, “The Lake City Bank team produced record net income for the seventh consecutive year. In addition, we have reported record net income growth in 27 of the last 28 years.  As a result, the strength and consistency of this long-term, profitable performance has provided healthy dividend increases for our shareholders. Our strong asset quality trends and solid capital structure provide an excellent foundation for our continued growth in 2016.”  

Lakeland Financial Corporation is a $3.8 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 47 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,” “continue,” “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

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