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Lakeland Financial Corp. Reports Operating Results (10-Q)

October 26, 2009 | About:
10qk

10qk

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Lakeland Financial Corp. (LKFN) filed Quarterly Report for the period ended 2009-09-30.

LAKELAND FINANCIAL CORP. is a bank holding company engaged in general banking business. Lakeland Financial Corp. has a market cap of $265.05 million; its shares were traded at around $21.32 with a P/E ratio of 15.79 and P/S ratio of 1.87. The dividend yield of Lakeland Financial Corp. stocks is 2.91%. Lakeland Financial Corp. had an annual average earning growth of 10.3% over the past 5 years.

Highlight of Business Operations:

Lakeland Financial Corporation is the holding company for Lake City Bank. The Company is headquartered in Warsaw, Indiana and operates 43 offices in 12 counties in northern Indiana. The Company earned $13.6 million for the first nine months of 2009, versus $15.3 million in the same period of 2008, a decrease of 10.9%. Net income was positively impacted by a $10.5 million increase in net interest income. Offsetting this positive impact was an increase of $7.1 million in the provision for loan losses, an increase of $5.0 million in noninterest expense and a decrease of $1.1 million in noninterest income. Basic earnings per common share for the first nine months of 2009 were $0.94 per share, versus $1.25 per share for the first nine months of 2008. Diluted earnings per common share reflect the potential dilutive impact of stock options, stock awards and warrants. Diluted earnings per common share for the first nine months of 2009 were $0.94 per share, versus $1.23 for the first nine months of 2008. Basic and diluted earnings per share for the first nine months of 2009 were impacted by $1.9 million in dividends and accretion of discount on preferred stock.

Net income for the third quarter of 2009 was $5.3 million, an increase of 0.8% versus $5.2 million for the comparable period of 2008. The increase was driven by an increase of $4.0 million in net interest income. Offsetting this positive impact was a $1.8 million increase in the provision for loan losses as well as a $1.2 million increase in noninterest expense and a decrease of $923,000 in noninterest income. Basic earnings per share for the third quarter of 2009 were $0.36 per share, versus $0.43 per share for the third quarter of 2008. Diluted earnings per share for the third quarter of 2009 were $0.36 per share, versus $0.42 per share for the third quarter of 2008. Basic and diluted earnings per share for the third quarter of 2009 were impacted by $801,000 in dividends and accretion of discount on preferred stock.

During the first nine months of 2009, loan interest income decreased by $4.5 million, or 6.0%, to $71.2 million, versus $75.8 million during the first nine months of 2008. The decrease was driven by a 114 basis point decrease in the tax equivalent yield on loans to 5.1%, versus 6.2% in the first nine months of 2008, somewhat offset by a $250.6 million, or 15.4%, increase in average daily loan balances. During the third quarter of 2009, loan interest income decreased by $1.3 million, or 5.1%, to $24.6 million, versus $25.9 million during the third quarter of 2008. The decrease was driven by a 99 basis point decrease in the tax equivalent yield on loans to 5.1%, versus 6.1% in the third quarter of 2008, somewhat offset by a $220.5 million, or 13.1%, increase in average daily loan balances. In addition, loan interest income in the nine months and three months ended September 30, 2008, was positively impacted by $1.2 million as a result of the payoff of an impaired commercial credit, which had been in nonaccrual status.

The average daily securities balances for the first nine months of 2009 increased $32.1 million, or 8.8%, to $395.4 million, versus $363.4 million for the same period of 2008. During the same periods, income from securities increased by $1.4 million, or 10.4%, to $15.0 million versus $13.6 million during the first nine months of 2008. The increase was primarily the result of the increase in average daily securities balances, as well as a seven basis point increase in the tax equivalent yield on securities, to 5.4%, versus 5.3% in the first nine months of 2008. The average daily securities balances for the third quarter of 2009 increased $11.4 million, or 2.9%, to $401.2 million, versus $389.8 million for the same period of 2008. During the third quarter of 2009, income from securities was $4.9 million, a decrease of $88,000, or 1.8%, versus the third quarter of 2008. The decrease was primarily the result of a 23 basis point decrease in the tax equivalent yield on securities.

On an average daily basis, total deposits (including demand deposits) increased $289.0 million, or 18.4%, to $1.859 billion for the nine-month period ended September 30, 2009, versus $1.570 billion during the same period in 2008. The average daily balances for the third quarter of 2009 increased $175.2 million, or 10.7%, to $1.817 billion from $1.642 billion during the third quarter of 2008. On an average daily basis, noninterest bearing demand deposits were $223.2 million for the nine-month period ended September 30, 2009, versus $219.2 million for the same period in 2008. The average daily noninterest bearing demand deposit balances for the third quarter of 2009 were $229.6 million, versus $221.2 million for the third quarter of 2008. On an average daily basis, interest bearing transaction accounts increased $71.1 million, or 15.1%, to $542.6 million for the nine-month period ended September 30, 2009, versus the same period in 2008. Average daily interest bearing transaction accounts increased $45.5 million, or 9.0%, to $553.6 million for the third quarter of 2009, versus $508.1 million for the third quarter of 2008. When comparing the nine months ended September 30, 2009 with the same period of 2008, the average daily balance of time deposits, which pay a higher rate of interest compared to demand deposit and transaction accounts, increased $213.8 million, primarily as a result of increases in brokered time deposits and time deposits of $100,000 or more. The rate paid on time deposit accounts decreased 143 basis points to 2.8% for the nine-month period ended September 30, 2009, versus the same period in 2008. During the third quarter of 2009, the average daily balance of time deposits increased $118.5 million, and the rate paid decreased 133 basis points to 2.5%, versus the third quarter of 2008.

Due to strong loan growth and additional relationship opportunities, the Company continued to focus on public fund deposits as a core funding strategy. In addition, the Company has increased its usage of brokered certificates of deposits as a result of loan growth and overall liquidity and funding management. On an average daily basis, total brokered certificates of deposit increased $90.1 million to $160.2 million for the nine-month period ended September 30, 2009, versus $70.1 million for the same period in 2008. During the third quarter of 2009, average daily brokered certificates of deposit were $105.9 million, versus $93.2 million during the third quarter of 2008. On an average daily basis, total public fund certificates of deposit decreased $57.7 million to $201.7 million for the nine-month period ended September 30, 2009, versus $259.4 million for the same period in 2008. During the third quarter of 2009, average daily public fund certificates of deposit were $181.6 million, versus $252.8 million during the third quarter of 2008. Availability of public fund deposits can be cyclical, primarily due to the timing differences between when real estate property taxes are collected versus when those tax revenues are spent, as well as the intense competition for these funds. The Company is also a member of the Certificate of Deposit Account Registry Service (CDARS) deposit program, and initiated its participation in the program in the fourth quarter of 2008. The program is a convenient way for participating customers to enjoy full FDIC insurance coverage on large certificates of deposit, and consists of a network of financial institutions which exchange funds. The average daily balances of CDARS certificates of deposit were $73.2 million and $61.8 million, respectively, in the nine months and three months ended September 30, 2009. There were no CDARS deposits in the nine months and three months ended September 30, 2008.

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