SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report July 15, 2003
(Date of earliest event reported)
Lakeland Financial Corporation
(Exact name of Registrant as specified in its charter)
Indiana
(State or other jurisdiction of incorporation)
0-11487 35-1559596
(Commission File Number) (I.R.S. Employer Identification Number)
202 East Center Street, P.O. Box 1387, Warsaw, Indiana 46581-1387
(Address of principal executive offices) (Zip Code)
(574) 267-6144
(Registrant's telephone number, including area code)
Item 5. Other Information
On July 15, 2003, the Registrant issued a press release regarding its
earnings for the six-month and three-month periods ended June 30, 2003. The
press release is attached hereto as Exhibit 99.1.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired.
None.
(b) Pro Forma Financial Information.
None.
(c) Exhibits.
99.1 Press Release dated July 15, 2003
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LAKELAND FINANCIAL CORPORATION
Dated: July 15, 2003 By: /s/ David M. Findlay
David M. Findlay
Chief Financial Officer
Exhibit 99.1
LAKELAND FINANCIAL CORPORATION
FOR IMMEDIATE RELEASE Contact: David M. Findlay
Executive Vice President
and Chief Financial Officer
(574) 267-9197
RECORD INCOME REPORTED
FOR LAKELAND FINANCIAL
Quarterly Dividend of $0.19 Per Share Announced
Warsaw, Indiana (July 15, 2003) - Lakeland Financial Corporation
(Nasdaq/LKFN), parent company of Lake City Bank, today reported record
quarterly net income of $3.7 million for the second quarter of 2003, an
increase of 22.5% versus $3.1 million for the comparable period in 2002.
Diluted net income per common share for the quarter was $0.63 versus $0.51 for
the comparable period in 2002. Net income for the six months ended June 30,
2003 was a record $7.3 million versus $6.0 million for the comparable period
in 2002, an increase of 20.8%. Diluted net income per share for the six months
ended June 30, 2003 was $1.22 per share versus $1.01 per share in 2002.
The Company also announced that the Board of Directors approved a cash
dividend for the second quarter of $0.19 per share, payable on July 25, 2003
to shareholders of record on July 10, 2003. The quarterly dividend represents
a 12% increase over the quarterly dividend of $0.17 paid in 2002.
In addition, the Company announced the R. Douglas Grant had retired as
Chairman of the Board and that Eddie Creighton had retired from the Board.
Michael L. Kubacki, President and Chief Executive Officer, commented, "Doug
and Eddie played important roles in building the Bank to where it is today.
Eddie served the Board for 33 years, and Doug led the organization as Chief
Executive Officer from 1980 though 1998. They contributed to the establishment
of our solid position in Northern Indiana and helped create the foundation for
our continued growth and success." Mr. Kubacki succeeds Mr. Grant as the new
Chairman of the Board.
Kubacki further commented on the performance, "Despite the many
challenges for our industry created by a generally weak economy and
unprecedented low interest rates, the Lake City Bank team is pleased to report
strong results for the first six months of 2003. Outstanding growth in
noninterest income, in conjunction with good overall expense control, has
contributed to a good first half of the year. With an efficiency ratio lowered
to 59.6% for the first six months of the year versus 62.5% for the comparable
period in 2002, we continue to improve this key measure of performance."
Kubacki continued, "Noninterest income for the first six months increased
to $9.3 million versus $6.9 million in the comparable period in 2002, driven
by mortgage sales gains of $2.3 million, an increase of $1.6 million versus
the comparable period in 2002. With mortgage rates remaining at historical
lows during much of the year, the unmatched volume of mortgage originations
continued during the second quarter. With the recent interest rate cut by the
Federal Reserve Bank, we do not anticipate that mortgage rates will change
significantly during the third quarter. Nonetheless, we do not anticipate that
this level of mortgage sales gains will continue throughout the balance of the
year, as we believe the mortgage cycle simply cannot maintain this level of
activity. Also adding to the strong increase in noninterest income was a
$708,000 increase in other income, which grew from $1.7 million for the first
six months of 2002 to $2.5 million for the comparable period in 2003 as a
result of the implementation of an insurance investment program, income due to
a reduction in the valuation allowance related to accounting for mortgage
servicing rights and increased service fees.
"Net interest income after the provision for loan losses increased by
only 1.5% from $19.6 million in the first six months of 2002 to $19.9 million
for the comparable period in 2003. Net interest income continued to be
negatively impacted by a decline in the net interest margin from 4.14% in the
first six months of 2002 to 3.92% in the comparable period of 2003. Net
interest margin pressure remains one of our greatest challenges in this
unparalleled low interest rate environment. While we are pleased that the net
interest margin of 3.89% for the second quarter of 2003 remained stable when
compared to 3.93% in the first quarter, we expect margin pressures to continue
due to the recent rate cuts by the Federal Reserve Bank, the overall lower
asset yields and the generally lower interest rate environment," added
Kubacki.
Average loans for the six months ended June 30, 2003 were $838.1 million
versus $753.2 million during the comparable period in 2002. Total loans as of
June 30, 2003 were $839.4 million versus $826.9 million as of March 31, 2003.
Lakeland Financial's allowance for loan losses as of June 30, 2003 was $9.8
million, or 1.17% of gross loans, compared to $8.9 million, or 1.16% of gross
loans, as of June 30, 2002 and $9.7 million, or 1.18% of gross loans as of
March 31, 2003. Non-performing assets totaled $8.2 million as of June 30, 2003
versus $6.5 million on June 30, 2002 and $8.8 million as of March 31, 2003. On
a linked quarter basis, total nonperforming assets declined by approximately
$600,000 from the first quarter of 2003 to the second quarter. The ratio of
non-performing assets to loans was 0.98% on June 30, 2003 compared to 0.84% on
June 30, 2002 and 1.06% at March 31, 2003.
Kubacki commented, "During the first six months of 2003, average loans
increased by 8.7% to $838.1 million versus $770.9 million for all of 2002.
Average loans during the second quarter of 2003 were $846.5 million versus
$829.6 million in the first quarter of 2003, an increase of 1.9%. Clearly,
loan growth has slowed during the second quarter as our region continued to
experience economic uncertainty. Net charge offs totaled $673,000 in the
quarter versus $172,000 in the second quarter of 2002 and $458,000 during the
first quarter of 2003. Year-to-date, net charge offs totaled $1.1 million
versus $311,000 during the comparable period on 2002. For the six months ended
June 30, 2003, net charge offs were 0.27% of average loans on an annualized
basis. "
For the six months ended June 30, 2003, Lakeland Financial's average
equity to average assets ratio was 7.07% versus 6.82% for the comparable
period in 2002 and 7.07% for the first quarter of 2003. Average stockholders'
equity for the first six months of 2003 was $86.5 million versus $76.4 million
for the comparable period in 2002. Average total deposits for the six months
ended June 30, 2003 were $951.2 million versus $834.6 million for the
comparable period in 2002.
Lakeland Financial Corporation is a $1.2 billion bank holding company
headquartered in Warsaw, Indiana. Lake City Bank serves Northern Indiana with
41 branches located in the following Indiana counties: Kosciusko, Elkhart,
Allen, St. Joseph, DeKalb, Fulton, Huntington, LaGrange, Marshall, Noble,
Pulaski and Whitley. A 42nd office is currently under construction in Warsaw
and is expected to open in late 2003.
Lakeland Financial Corporation may be accessed on its home page at
www.lakecitybank.com. The Company's common stock is traded on the Nasdaq Stock
Market under "LKFN". Marketmakers in Lakeland Financial Corporation common
shares include Stifel Nicolaus & Company, Howe Barnes Investments, Inc.,
Raymond James & Associates, Inc., McDonald Investments, Inc., First Tennessee
Capital Markets and Trident Securities.
The Company's fixed rate cumulative trust preferred securities are traded
on the Nasdaq Stock Market under the symbols "LKFNP". The annual rate on the
fixed rate securities is 9.0%.
This document (including information incorporated by reference) contains,
and future oral and written statements of the Company and its management may
contain, forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 with respect to the financial
condition, results of operations, plans, objectives, future performance and
business of the Company. Forward-looking statements, which may be based upon
beliefs, expectations and assumptions of the Company's management and on
information currently available to management, are generally identifiable by
the use of words such as "believe," "expect," "anticipate," "plan," "intend,"
"estimate," "may," "will," "would," "could," "should" or other similar
expressions. Additionally, all statements in this document, including
forward-looking statements, speak only as of the date they are made, and the
Company undertakes no obligation to update any statement in light of new
information or future events.
A number of factors, many of which are beyond the ability of the Company
to control or predict, could cause actual results to differ materially from
those in its forward-looking statements. These factors include, among others,
the following: (i) the strength of the local and national economy; (ii) the
economic impact of September 11th; (iii) changes in state and federal laws,
regulations and governmental policies concerning the Company's general
business; (iv) changes in interest rates and prepayment rates of the Company's
assets; (v) increased competition in the financial services sector and the
inability to attract new customers; (vi) changes in technology and the ability
to develop and maintain secure and reliable electronic systems; (vii) the loss
of key executives or employees; (viii) changes in consumer spending; (ix)
unexpected results of acquisitions; (x) unexpected outcomes of existing or new
litigation involving the Company; and (xi) changes in accounting policies and
practices. These risks and uncertainties should be considered in evaluating
forward-looking statements and undue reliance should not be placed on such
statements. Additional information concerning the Company and its business,
including additional factors that could materially affect the Company's
financial results, is included in the Company's filings with the Securities
and Exchange Commission.
LAKELAND FINANCIAL CORPORATION
SECOND QUARTER 2003 FINANCIAL HIGHLIGHTS
(Unaudited - Dollars in thousands except Share and Per Share Data)
3 Months Ended 6 Months Ended
June 30 June 30
2003 2002 2003 2002
----------- ------------ ------------- -------------
END OF PERIOD BALANCES
Assets $ 1,239,573 $ 1,190,119 $ 1,239,573 $ 1,190,119
Deposits 966,244 843,162 966,244 843,162
Loans 839,355 764,212 839,355 764,212
Allowance for Loan Losses 9,786 8,884 9,786 8,884
Common Stockholders' Equity 87,543 79,954 87,543 79,954
AVERAGE BALANCES
Assets
Total Assets $ 1,236,266 $ 1,136,964 $ 1,223,639 $ 1,121,623
Earning Assets 1,136,951 1,050,187 1,125,294 1,038,148
Investments 269,945 273,989 272,560 273,857
Loans 846,479 760,742 838,109 753,211
Liabilities and Stockholders' Equity
Total Deposits 968,082 851,665 951,174 834,604
Interest Bearing Deposits 796,956 704,633 786,999 691,520
Interest Bearing Liabilities 967,525 898,171 961,244 890,349
Common Stockholders' Equity 87,379 77,680 86,489 76,443
INCOME STATEMENT DATA
Net Interest Income $ 10,751 $ 10,665 $ 21,309 $ 20,886
Net Interest Income-Fully Tax Equivalent 11,020 10,875 21,813 21,307
Provision for Loan Loss 717 747 1,384 1,249
Noninterest Income 4,925 3,560 9,297 6,905
Noninterest Expense 9,261 8,799 18,225 17,368
Net Income 3,749 3,060 7,264 6,013
PER SHARE DATA
Basic Net Income Per Common Share $ 0.64 $ 0.53 $ 1.25 $ 1.03
Diluted Net Income Per Common Share 0.63 0.51 1.22 1.01
Cash Dividends Per Common Share 0.19 0.17 0.38 0.34
Book Value Per Common Share (equity per share issued) 15.05 13.75 15.05 13.75
Market Value - High 31.22 28.84 31.22 28.84
Market Value - Low 24.40 20.10 23.00 17.26
Basic Weighted Average Common Shares Outstanding 5,819,448 5,813,984 5,815,386 5,813,984
Diluted Weighted Average Common Shares Outstanding 5,977,598 5,973,772 5,960,399 5,941,108
KEY RATIOS
Return on Average Assets 1.22% 1.08% 1.20% 1.08%
Return on Average Common Stockholders' Equity 17.21 15.80 16.94 15.84
Efficiency (Noninterest Expense / Gross Interest Income
plus Noninterest Income) 59.08 61.86 59.55 62.50
Average Equity to Average Assets 7.07 6.83 7.07 6.82
Net Interest Margin 3.89 4.15 3.92 4.14
Net Charge Offs to Average Loans 0.32 0.09 0.27 0.08
Loan Loss Reserve to Loans 1.17 1.16 1.17 1.16
Nonperforming Assets to Loans 0.98 0.84 0.98 0.84
Tier 1 Leverage 8.18 8.11 8.18 8.11
Tier 1 Risk-Based Capital 10.61 10.43 10.61 10.43
Total Capital 11.65 11.46 11.65 11.46
ASSET QUALITY
Loans Past Due 90 Days or More $ 3,085 $ 3,576 $ 3,085 $ 3,576
Non-accrual Loans 3,548 1,400 3,548 1,400
Net Charge Offs 673 172 1,131 311
Other Real Estate Owned 1,530 1,435 1,530 1,435
Other Nonperforming Assets 26 41 26 41
Total Nonperforming Assets 8,189 6,452 8,189 6,452
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
As of June 30, 2003 and December 31, 2002
(in thousands)
June 30, December 31,
2003 2002
------------ ------------
(Unaudited)
ASSETS
Cash and cash equivalents:
Cash and due from banks $ 56,412 $ 74,149
Short-term investments 7,184 13,000
------------ ------------
Total cash and cash equivalents 63,596 87,149
Securities available-for-sale:
U. S. Treasury and government agency securities 14,164 17,284
Mortgage-backed securities 211,228 222,036
State and municipal securities 45,928 34,785
------------ -----------
Total securities available-for-sale 271,320 274,105
Real estate mortgages held-for-sale 11,230 10,395
Loans:
Total loans 839,355 822,676
Less: Allowance for loan losses 9,786 9,533
------------ ------------
Net loans 829,569 813,143
Land, premises and equipment, net 26,286 24,768
Accrued income receivable 4,943 4,999
Goodwill 4,970 4,970
Other intangible assets 968 1,042
Other assets 26,691 27,215
------------ ------------
Total assets $ 1,239,573 $ 1,247,786
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest bearing deposits $ 183,436 $ 192,787
Interest bearing deposits 782,808 720,538
------------ ------------
Total deposits 966,244 913,325
Short-term borrowings:
Federal funds purchased 17,000 30,000
Securities sold under agreements
to repurchase 98,736 124,968
U.S. Treasury demand notes 1,848 4,000
Other borrowings 10,000 26,000
------------ ------------
Total short-term borrowings 127,584 184,968
Accrued expenses payable 7,430 12,503
Other liabilities 1,367 2,417
Long-term borrowings 30,047 31,348
Guaranteed preferred beneficial interests in
Company's subordinated debentures 19,358 19,345
------------ ------------
Total liabilities 1,152,030 1,163,906
STOCKHOLDERS' EQUITY
Common stock: No par value, 90,000,000 shares authorized,
5,817,459 shares issued and 5,773,731 outstanding as of
June 30 2003, and 5,813,984 shares issued and 5,767,010
outstanding at December 31, 2002 1,453 1,453
Additional paid-in capital 9,671 8,537
Retained earnings 75,873 70,819
Accumulated other comprehensive income 1,373 3,937
Treasury stock, at cost (827) (866)
------------ ------------
Total stockholders' equity 87,543 83,880
------------ ------------
Total liabilities and stockholders' equity $ 1,239,573 $ 1,247,786
============ ============
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months and Six Months Ended June 30, 2003 and 2002
(in thousands except for share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
INTEREST AND DIVIDEND INCOME
- ----------------------------
Interest and fees on loans: Taxable $ 12,077 $ 12,315 $ 23,910 $ 24,651
Tax exempt 66 34 129 67
------------ ------------ ------------ ------------
Total loan income 12,143 12,349 24,039 24,718
Short-term investments 58 64 85 92
Securities:
U.S. Treasury and government agency securities 145 342 315 737
Mortgage-backed securities 2,694 3,039 5,626 5,797
State and municipal securities 497 400 925 800
Other debt securities 0 87 0 202
------------ ------------ ------------ ------------
Total interest and dividend income 15,537 16,281 30,990 32,346
INTEREST EXPENSE
- ----------------
Interest on deposits 3,702 4,226 7,488 8,578
Interest on short-term borrowings 313 635 653 1,555
Interest on long-term debt 771 755 1,540 1,327
------------ ------------ ------------ ------------
Total interest expense 4,786 5,616 9,681 11,460
------------ ------------ ------------ ------------
NET INTEREST INCOME 10,751 10,665 21,309 20,886
- -------------------
Provision for loan losses 717 747 1,384 1,249
------------ ------------ ------------ ------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 10,034 9,918 19,925 19,637
- ------------------------- ------------ ------------ ------------ ------------
NONINTEREST INCOME
- ------------------
Trust and brokerage fees 565 641 1,175 1,299
Service charges on deposit accounts 1,736 1,739 3,400 3,137
Other income (net) 1,431 814 2,450 1,742
Net gains on the sale of real estate mortgages
held-for-sale 1,193 350 2,272 711
Net securities gains 0 16 0 16
------------ ------------ ------------ ------------
Total noninterest income 4,925 3,560 9,297 6,905
NONINTEREST EXPENSE
- -------------------
Salaries and employee benefits 5,008 4,536 9,713 9,134
Occupancy and equipment expense 1,218 1,082 2,580 2,181
Other expense 3,035 3,181 5,932 6,053
------------ ------------ ------------ ------------
Total noninterest expense 9,261 8,799 18,225 17,368
INCOME BEFORE INCOME TAX EXPENSE 5,698 4,679 10,997 9,174
- --------------------------------
Income tax expense 1,949 1,619 3,733 3,161
------------ ------------ ------------ ------------
NET INCOME $ 3,749 $ 3,060 $ 7,264 $ 6,013
- ---------- ============ ============ ============ ============
BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 5,819,448 5,813,984 5,815,386 5,813,984
BASIC EARNINGS PER COMMON SHARE $ 0.65 $ 0.53 $ 1.25 $ 1.04
- ------------------------------- ============ ============ ============ ============
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 5,977,598 5,973,772 5,960,399 5,941,108
DILUTED EARNINGS PER COMMON SHARE $ 0.63 $ 0.51 $ 1.22 $ 1.01
- --------------------------------- ============ ============ ============ ============