Lakeland Financial Corporation (Nasdaq Global Select/LKFN), parent company of Lake City Bank, today reported record first quarter net income of $24.3 million for the three months ended March 31, 2023, which represents an increase of $636,000, or 3%, compared with net income of $23.6 million for the three months ended March 31, 2022. Diluted earnings per share of $0.94 was also a record for the first quarter and increased 2% compared to $0.92 for the first quarter of 2022. On a linked quarter basis, net income decreased 7%, or $1.7 million, from the fourth quarter of 2022 net income of $26.0 million, or $1.01 diluted earnings per share. Pretax pre-provision earnings, which is a non-GAAP financial measure, were $32.4 million for the first quarter of 2023, an increase of 13%, or $3.8 million, from $28.6 million from the first quarter of 2022. On a linked quarter basis, pretax pre-provision earnings decreased 19%, or $7.5 million, from $39.9 million for the fourth quarter of 2022.

“The continued strength of our balance sheet highlights another strong quarter for the Lake City Bank team. Healthy organic loan growth accompanied by a robust capital position contributed to a good start to 2023,” stated David M. Findlay, President, and Chief Executive Officer, “We also did a terrific job maintaining our core deposit franchise and delivering on our relationship-driven community banking model.”

Quarterly Financial Performance

First Quarter 2023 versus First Quarter 2022 highlights:

• Return on average equity of 16.81%, compared to 14.04%
• Return on average assets of 1.54%, compared to 1.44%
• Loan growth of $401.2 million, or 9%
• Investments as a percent of total assets decreased to 19% from 23%
• Deposit contraction of $302.9 million, or 5%
• Net interest margin expanded by 61 basis points from 2.93% to 3.54%
• Noninterest expense increased $2.5 million, or 9%
• Provision expense of $4.4 million, compared to $471,000
• Watch list loans as a percentage of total loans of 3.68% compared to 5.03%
• Total risk-based capital ratio of 15.21%, compared to 15.16%
• Tangible capital ratio of 9.34%, compared to 9.22%

First Quarter 2023 versus Fourth Quarter 2022 highlights:

• Return on average equity of 16.81%, compared to 19.16%
• Return on average assets of 1.54%, compared to 1.63%
• Loan growth of $44.5 million, or 1%
• Investments as a percent of total assets decreased to 19% from 20%
• Deposit growth of $57.1 million, or 1%
• Net interest margin contraction of 35 basis points from 3.89% to 3.54%
• Noninterest expense increased $2.0 million, or 7%
• Provision expense of $4.4 million, compared to $9.0 million
• Watch list loans as a percentage of total loans of 3.68% compared to 3.42%
• Total risk-based capital ratio of 15.21%, compared to 15.07%
• Tangible capital ratio of 9.34%, compared to 8.79%

Capital Strength
The company’s total capital as a percentage of risk-weighted assets was 15.21% at March 31, 2023, compared to 15.16% at March 31, 2022 and 15.07% at December 31, 2022. These healthy capital levels are well in excess of the 10.00% threshold required to be characterized as “well-capitalized” and represent a strong capital position to support the company’s balance sheet and future growth.
Findlay added, “Our focus on building a capital structure that provides the bank with a solid foundation for future growth has been unrelenting. Both the strength and consistency of our profits and the conservative balance sheet management approach that we have historically embraced are reflective of our dedication to our long-term strategy of retaining our roots as a community bank, while also building a fortress balance sheet.”
The company’s tangible common equity to tangible assets ratio, which is a non-GAAP financial measure, was 9.34% at March 31, 2023, compared to 9.22% at March 31, 2022 and 8.79% at December 31, 2022. Tangible equity and tangible assets have been impacted by declines in the market value of the company’s available-for-sale investment securities portfolio. The rising interest rate environment has generated unrealized losses in the available-for-sale investment securities portfolio which are reflected in the company’s reported accumulated other comprehensive income (loss). Unrealized losses from available-for-sale investment securities were $188.5 million at March 31, 2023, compared to $117.4 million at March 31, 2022 and improved from $215.3 million at December 31, 2022. When excluding the impact of accumulated other comprehensive income (loss) on tangible common equity and tangible assets, the company’s ratio of adjusted tangible common equity to adjusted tangible assets was 11.56% at March 31, 2023 compared to 10.44% at March 31, 2022, and 11.30% at December 31, 2022.

As announced on April 11, 2023, the board of directors approved a cash dividend for the first quarter of $0.46 per share, payable on May 5, 2023, to shareholders of record as of April 25, 2023. The first quarter dividend per share represents a 15% increase from the $0.40 dividend per share paid for the first quarter of 2022 and is unchanged from the dividend paid in February 2023.

“Our healthy dividend reflects both the operating performance in the first quarter of 2023 and the overall strength of our capital structure. It’s a continuation of a long history of delivering consistent and growing dividends to our shareholders,” continued Findlay.  Read More or Download the Report