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3 Bank Stock Value Plays

3. Lakeland Financial

LKFN Chart LKFN data by YCharts

Shares of Lakeland Financial (LKFN - Get Report) of Warsaw, Ind., closed at $26.36 Wednesday, returning 3% this year, following a 3% return during 2012. The shares trade for 1.4 times tangible book value, and for 11.6 times the consensus 2014 earnings estimate of $2.28 a share, among analysts polled by Thomson Reuters. The consensus 2013 EPS estimate is $2.22.

Based on a quarterly payout of 19 cents, the shares have a dividend yield of 2.88%.

Lakeland Financial had $2.9 billion in total assets as of March 31. The company on April 25 reported first-quarter net of $9.3 million, or 56 cents a share, increasing from $8.6 million, or 53 cents a share, in the fourth quarter, and $8.6 million, or 53 cents a share in the first quarter of 2012.

A major factor in the earnings improvement was a decline in the provision for loan losses to zero in the first quarter from $1.25 million the previous quarter and $799 thousand a year earlier. The provision for loan losses is the amount added to loan loss reserves each quarter. It directly affects pretax earnings. Lakeland still had plenty of loan loss reserves, which covered 2.25% of total loans and 233.86% of nonperforming loans, as of March 31.

Lakeland reported first-quarter net interest income of $21.3 million, increasing from $20.9 million in the fourth quarter but declining from $22.5 million in the first quarter of 2012. The first-quarter net interest margin was 3.17%, expanding from 3.10% the previous quarter, but contracting from 3.41% a year earlier, in line with the industry trend.

Average loans increased 2% in the first quarter from the fourth quarter, to $2.26 billion.

The company's first-quarter ROA was a solid 1.27% and its return on average equity was 12.37%.

Rodis wrote in a note to clients following the earnings announcement that "the better than expected results were primarily driven by higher net interest income, as the NIM was better than expected, and higher fee income aided by interest rate swap and investment brokerage fees."

Rodis' price target for Lakeland's share is $30, and he estimates the company will earn $2.17 a share this year, with EPS rising to $2.30 in 2014.

Interested in more on Lakeland Financial? See TheStreet Ratings' report card for this stock.

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