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

May 05, 2010 | About:
10qk

10qk

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Lakeland Financial Corp. (LKFN) filed Quarterly Report for the period ended 2010-03-31.

Lakeland Financial Corp. has a market cap of $337 million; its shares were traded at around $20.94 with a P/E ratio of 16.2 and P/S ratio of 2.5. The dividend yield of Lakeland Financial Corp. stocks is 2.9%. Lakeland Financial Corp. had an annual average earning growth of 3% over the past 10 years.LKFN is in the portfolios of Jim Simons of Renaissance Technologies LLC.

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 and a loan production office in Indianapolis, Indiana. The Company earned $6.0 million for the first three months of 2010, versus $3.9 million in the same period of 2009, an increase of 55.6%. Net income was positively impacted by a $5.9 million increase in net interest income. Offsetting this positive impact was an increase of $1.0 million in the provision for loan losses, a decrease of $723,000 in noninterest income and an increase of $361,000 in noninterest expense. Basic earnings per common share for the first three months of 2010 were $0.32 per share, versus $0.29 per share for the first three months of 2009. 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 three months of 2010 were $0.32 per share, versus $0.29 for the first three months of 2009. Basic and diluted earnings per share for the first three months of 2010 and 2009 were impacted by $805,000 and $290,000, respectively, in dividends and accretion of discount on preferred stock. Earnings per share for the first three months of 2010 were also impacted by the Company s issuance of 3.6 million common shares during the fourth quarter of 2009.

During the first three months of 2010, loan interest income increased by $2.5 million, or 11.0%, to $25.4 million, versus $22.9 million during the first three months of 2009. The increase was driven by a $165.2 million, or 9.0%, increase in average daily loan balances. In addition the tax equivalent yield on loans increased to 5.1%, versus 5.0% in the first three months of 2009.

The average daily securities balances for the first three months of 2010 increased $24.8 million, or 6.4%, to $414.0 million, versus $389.2 million for the same period of 2009. During the same periods, income from securities decreased by $193,000, or 3.8%, to $4.9 million versus $5.1 million during the first three months of 2009. The decrease was primarily the result of a 49 basis point decrease in the tax equivalent yield on securities, to 5.1%, versus 5.6% in the first three months of 2009.

On an average daily basis, total deposits (including demand deposits) increased $19.2 million, or 1.0%, to $1.928 billion for the three-month period ended March 31, 2010, versus $1.909 billion during the same period in 2009. On an average daily basis, noninterest bearing demand deposits were $240.7 million for the three-month period ended March 31, 2010, versus $217.7 million for the same period in 2009. On an average daily basis, interest bearing transaction accounts increased $65.9 million, or 12.1%, to $611.9 million for the three-month period ended March 31, 2010, versus the same period in 2009. When comparing the three months ended March 31, 2010 with the same period of 2009, the average daily balance of time deposits, which pay a higher rate of interest compared to demand deposit and transaction accounts, decreased $104.1 million, primarily as a result of decreases in brokered time deposits and public fund certificates of deposit. The rate paid on time deposit accounts decreased 117 basis points to 2.0% for the three-month period ended March 31, 2010, versus the same period in 2009.

The Company s funding strategy is focused on leveraging its retail branch network to grow traditional retail deposits and on its presence with commercial customers and public fund entities in its Indiana markets. In addition, the Company has utilized out of market deposit programs such as brokered certificates of deposit and the Certificate of Deposit Account Registry Service (CDARS) program. Due to ongoing loan growth, the Company has expanded its funding strategy over time to include these out of market deposit programs. The Company believes that these deposit programs represent an appropriate tool in the overall liquidity and funding strategy. On an average daily basis, total brokered certificates of deposit decreased $121.1 million to $108.1 million for the three-month period ended March 31, 2010, versus $229.2 million for the same period in 2009. On an average daily basis, total public fund certificates of deposit decreased $63.6 million to $155.7 million for the three-month period ended March 31, 2010, versus $219.3 million for the same period in 2009. As noted above, the Company is also a member of the CDARS deposit program. 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 $101.4 million and $70.9 million, respectively, in the three months ended March 31, 2010 and 2009. 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.

Average daily balances of borrowings were $343.8 million during the three months ended March 31, 2010, versus $284.1 million during the same period of 2009, and the rate paid on borrowings decreased 75 basis points to 0.9%. The increase in average borrowings was driven by increases of $114.8 million in borrowings under the Federal Reserve Bank s Term Auction Facility (TAF). The Company began utilizing TAF borrowings during the first quarter of 2009. Average daily borrowings under the facility were $118.8 million and $4.0 million, respectively, during the three months ended March 31, 2010 and 2009. The average rate paid was 0.3% during both periods. During the first quarter of 2010, the Federal Reserve discontinued the TAF program and the Company s last borrowing matured on April 8, 2010. On an average daily basis, total deposits (including demand deposits) and purchased funds increased 3.6% when comparing the three-month period ended March 31, 2010 versus the same period in 2009.

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