Lakeland Financial Corporation, the bank holding company for Lake City Bank, reported a net income of $93.8 million in 2023, a 9.7% decrease from the previous year. This decline was primarily driven by a $20.5 million increase in noninterest expense and a $5.9 million decrease in net interest income. The company also faced a significant challenge when it discovered it had been the victim of an international wire fraud, resulting in a loss of $18.1 million. However, during the fourth quarter of 2023, the company recognized $6.3 million in insurance and loss recoveries associated with the wire fraud loss.
Despite these challenges, the company's total assets increased by 1.4% to $6.524 billion as of December 31, 2023, compared to $6.432 billion in the previous year. This growth was driven by a 4.4% increase in loans and a 4.8% increase in deposits. However, the company also experienced a decrease in investment securities of 10.1% and a decrease in borrowings of $247.0 million.
Lakeland Financial Corporation's core operational profitability, a non-GAAP financial measure that excludes the impact of the wire fraud loss and related insurance and loss recoveries, was $101.6 million for the twelve months ended December 31, 2023, a decrease of $2.2 million, or 2.2%, from the full year 2022. The company's diluted net income per common share was $3.65 in 2023, down from $4.04 in 2022. The company's return on average total assets was 1.45% in 2023, compared to 1.62% in 2022, and the return on average total equity was 15.93% in 2023, down from 17.40% in 2022.
In terms of asset quality, watch list loans as a percentage of total loans remained near historic lows at 3.72% at December 31, 2023, compared to 3.42% at December 31, 2022. The provision for credit losses decreased by $3.5 million, or 37.6%.
Overall, Lakeland Financial Corporation faced challenges in 2023, including the impact of the wire fraud loss, which affected its financial performance. However, the company also demonstrated resilience by maintaining stable asset quality and achieving growth in total assets, loans, and deposits.
Selected income statement information for the years ended December 31, 2023, 2022, and 2021, shows a decrease in net interest income, an increase in noninterest income, and an increase in noninterest expense. The efficiency ratio was 52.94% in 2023, up from 45.03% in 2022, indicating increased operating expenses relative to the company's revenue. Today the company's shares have moved -0.3% to a price of $63.88. For more information, read the company's full 10-K submission here.
