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 October 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 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 October 15, 2003
Item 12. Results of Operations and Financial Condition
On October 15, 2003, Lakeland Financial Corporation issued a press
release announcing its earnings for the quarter ended September 30, 2003. The
news release is attached as Exhibit 99.1.
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: October 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
LAKELAND FINANCIAL REPORTS THIRD QUARTER
PERFORMANCE AND CASH DIVIDEND
Warsaw, Indiana (October 15, 2003) - Lakeland Financial Corporation
(Nasdaq/LKFN), parent company of Lake City Bank, today reported quarterly net
income of $3.6 million for the third quarter of 2003, an increase of 18.9%
versus $3.0 million for the comparable period in 2002. Diluted net income per
common share for the quarter was $0.60 versus $0.50 for the comparable period
in 2002, an increase of 20.0%. Net income for the nine months ended September
30, 2003 was a record $10.9 million versus $9.0 million for the comparable
period in 2002, an increase of 20.2%. Diluted net income per share for the
nine months ended September 30, 2003 was $1.81 per share versus $1.52 per
share in 2002, an increase of 19.1%.
The Company also announced that the Board of Directors approved a cash
dividend for the third quarter of $0.19 per share, payable on October 24, 2003
to shareholders of record on October 10, 2003. The quarterly dividend
represents a 12% increase over the quarterly dividend of $0.17 paid in 2002.
Michael L. Kubacki, Chairman, President and Chief Executive Officer,
commented on the performance, "We continue to be pleased about our 2003
performance, with net income for the nine months ended September 30th up over
20%. The third quarter represented a challenging operating environment as we
continued to experience a decline in the net interest margin, which decreased
from 3.89% in the second quarter of 2003 to 3.72% in the third quarter, thus
putting pressure on net interest income. Negative earnings impact was created
by the significant decline in mortgage sales gains, which were $383,000 versus
$1.2 million in the second quarter of 2003. While these events have certainly
impacted on our linked quarter performance, which saw a slight decline in net
income from $3.7 million to $3.6 million, our overall results for the year are
outstanding."
Kubacki continued, "Noninterest income for the first nine months
increased to $13.8 million versus $10.5 million in the comparable period in
2002, driven by mortgage sales gains of $2.7 million, an increase of $1.5
million versus the comparable period in 2002. Also adding to the strong
increase in noninterest income was a $1.7 million increase in other income,
which grew from $2.5 million for the first nine months of 2002 to $4.2 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.
"Our income performance is notable given that net interest income after
the provision for loan losses increased by only 2.5% from $29.2 million in the
first nine months of 2002 to $30.0 million for the comparable period in 2003.
Net interest income continued to be negatively impacted by a decline in the
net interest margin from 4.10% in the first nine months of 2002 to 3.84% in
the comparable period of 2003. As we conclude 2003, we anticipate that the net
interest margin will remain one of our primary challenges, barring any upward
movement in rates. As a result of the overall low interest rate environment
throughout 2003, our margin has declined in each successive quarter of 2003,"
added Kubacki.
Average loans for the nine months ended September 30, 2003 were $843.3
million versus $759.4 million during the comparable period in 2002. Total
loans as of September 30, 2003 were $847.7 million versus $839.4 million as of
June 30, 2003. Lakeland Financial's allowance for loan losses as of September
30, 2003 was $10.1 million, or 1.19% of gross loans, compared to $9.1 million,
or 1.15% of gross loans, as of September 30, 2002 and $9.8 million, or 1.17%
of gross loans as of June 30, 2003. Non-performing assets totaled $6.2 million
as of September 30, 2003 versus $7.7 million on September 30, 2002 and $8.2
million as of June 30, 2003. On a linked quarter basis, total nonperforming
assets declined by approximately $2.0 million from the second quarter of 2003
to the third quarter. The ratio of non-performing assets to loans was 0.73% on
September 30, 2003 compared to 0.98% at both September 30, 2002 and June 30,
2003.
Kubacki commented, "During the first nine months of 2003, average loans
increased by 9.4% to $843.3 million versus $770.9 million for all of 2002.
Average loans during the third quarter of 2003 were $853.4 million versus
$846.5 million in the second quarter of 2003, an increase of only 1%. On a net
basis, loan growth was minimal as the region continues to slowly climb out of
the difficult economic conditions that we believe have suppressed overall loan
demand. Net charge offs totaled $102,000 in the quarter versus $843,000 in the
third quarter of 2002 and $673,000 during the second quarter of 2003. Net
charge offs totaled $1.2 million during both of the nine-month periods ended
September 30, 2003 and 2002. For the nine months ended September 30, 2003, net
charge offs were 0.20% of average loans on an annualized basis. We further
believe that the decline in nonperforming assets on a linked quarter basis is
reflective of the overall quality of our portfolio in a difficult commercial
lending environment."
For the nine months ended September 30, 2003, Lakeland Financial's
average equity to average assets ratio was 7.05% versus 6.91% for the
comparable period in 2002 and 7.07% for the second quarter of 2003. Average
stockholders' equity for the first nine months of 2003 was $86.7 million
versus $77.9 million for the comparable period in 2002. Average total deposits
for the nine months ended September 30, 2003 were $961.8 million versus $846.0
million for the comparable period in 2002.
In addition, the Company announced that D. Jean Northenor had retired
from the Board of Directors. Kubacki concluded, "For nearly 20 years, Jean has
helped define the organization and contributed to our many successes."
Lakeland Financial Corporation is a $1.2 billion bank holding company
headquartered in Warsaw, Indiana. Lake City Bank serves Northern Indiana with
42 branches located in the following Indiana counties: Kosciusko, Elkhart,
Allen, St. Joseph, DeKalb, Fulton, Huntington, LaGrange, Marshall, Noble,
Pulaski and Whitley.
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.
This document 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 past and any future terrorist attacks, acts of war or
threats thereof and the response of the United States to any such attacks and
threats; (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
THIRD QUARTER 2003 FINANCIAL HIGHLIGHTS
(Unaudited - Dollars in thousands except Share and Per Share Data)
3 Months Ended 9 Months Ended
September 30 September 30
2003 2002 2003 2002
----------- ------------ ------------- -------------
END OF PERIOD BALANCES
Assets $ 1,248,162 $ 1,172,049 $ 1,248,162 $ 1,172,049
Deposits 1,002,037 877,814 1,002,037 877,814
Loans 847,714 792,552 847,714 792,552
Allowance for Loan Losses 10,064 9,082 10,064 9,082
Common Stockholders' Equity 88,799 82,293 88,799 82,293
AVERAGE BALANCES
Assets
Total Assets $ 1,244,032 $ 1,145,577 $ 1,230,511 $ 1,129,696
Earning Assets 1,141,973 1,063,798 1,130,915 1,046,792
Investments 267,756 274,626 270,941 274,116
Loans 853,425 771,516 843,271 759,380
Liabilities and Stockholders' Equity
Total Deposits 982,617 868,450 961,770 846,010
Interest Bearing Deposits 804,096 716,002 792,761 699,770
Interest Bearing Liabilities 969,747 898,002 964,110 892,928
Common Stockholders' Equity 87,260 80,722 86,749 77,885
INCOME STATEMENT DATA
Net Interest Income $ 10,412 $ 10,625 $ 31,721 $ 31,511
Net Interest Income-Fully Tax Equivalent 10,718 10,840 32,535 32,148
Provision for Loan Loss 380 1,041 1,764 2,290
Noninterest Income 4,467 3,635 13,764 10,540
Noninterest Expense 9,089 8,593 27,314 25,961
Net Income 3,591 3,021 10,855 9,034
PER SHARE DATA
Basic Net Income Per Common Share $ 0.62 $ 0.52 $ 1.87 $ 1.55
Diluted Net Income Per Common Share 0.60 0.50 1.81 1.52
Cash Dividends Per Common Share 0.19 0.17 0.57 0.51
Book Value Per Common Share (equity per share issued) 15.25 14.15 15.25 14.15
Market Value - High 34.40 29.76 34.40 29.76
Market Value - Low 29.51 23.57 23.00 17.26
Basic Weighted Average Common Shares Outstanding 5,819,671 5,813,984 5,816,830 5,813,984
Diluted Weighted Average Common Shares Outstanding 6,017,241 5,992,824 5,982,283 5,957,792
KEY RATIOS
Return on Average Assets 1.15% 1.05% 1.18% 1.07%
Return on Average Common Stockholders' Equity 16.33 14.83 16.73 15.48
Efficiency (Noninterest Expense / Gross Interest Income
plus Noninterest Income) 61.08 60.26 60.05 61.74
Average Equity to Average Assets 7.01 7.05 7.05 6.91
Net Interest Margin 3.72 4.04 3.84 4.10
Net Charge Offs to Average Loans 0.05 0.43 0.20 0.20
Loan Loss Reserve to Loans 1.19 1.15 1.19 1.15
Nonperforming Assets to Loans 0.73 0.98 0.73 0.98
Tier 1 Leverage 8.31 8.07 8.31 8.07
Tier 1 Risk-Based Capital 10.81 10.49 10.81 10.49
Total Capital 11.86 11.53 11.86 11.53
ASSET QUALITY
Loans Past Due 90 Days or More $ 3,226 $ 3,627 $ 3,226 $ 3,627
Non-accrual Loans 1,291 3,973 1,291 3,973
Net Charge Offs 102 843 1,232 1,154
Other Real Estate Owned 1,530 38 1,530 38
Other Nonperforming Assets 120 104 120 104
Total Nonperforming Assets 6,167 7,742 6,167 7,742
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
As of September 30, 2003 and December 31, 2002
(in thousands)
September 30, December 31,
2003 2002
------------ ------------
(Unaudited)
ASSETS
Cash and cash equivalents:
Cash and due from banks $ 52,373 $ 74,149
Short-term investments 7,233 13,000
------------ ------------
Total cash and cash equivalents 59,606 87,149
Securities available-for-sale:
U. S. Treasury and government agency securities 13,962 17,284
Mortgage-backed securities 209,683 222,036
State and municipal securities 52,520 34,785
------------ -----------
Total securities available-for-sale 276,165 274,105
Real estate mortgages held-for-sale 9,742 10,395
Loans:
Total loans 847,714 822,676
Less: Allowance for loan losses 10,064 9,533
------------ ------------
Net loans 837,650 813,143
Land, premises and equipment, net 26,444 24,768
Accrued income receivable 4,945 4,999
Goodwill 4,970 4,970
Other intangible assets 930 1,042
Other assets 27,710 27,215
------------ ------------
Total assets $ 1,248,162 $ 1,247,786
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest bearing deposits $ 193,258 $ 192,787
Interest bearing deposits 808,779 720,538
------------ ------------
Total deposits 1,002,037 913,325
Short-term borrowings:
Federal funds purchased 7,000 30,000
Securities sold under agreements
to repurchase 78,765 124,968
U.S. Treasury demand notes 3,289 4,000
Other borrowings 10,000 26,000
------------ ------------
Total short-term borrowings 99,054 184,968
Accrued expenses payable 7,575 12,503
Other liabilities 1,285 2,417
Long-term borrowings 30,047 31,348
Guaranteed preferred beneficial interests in
Company's subordinated debentures 19,365 19,345
------------ ------------
Total liabilities 1,159,363 1,163,906
STOCKHOLDERS' EQUITY
Common stock: No par value, 90,000,000 shares authorized,
5,822,429 shares issued and 5,776,202 outstanding as of
September 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 9,924 8,537
Retained earnings 78,358 70,819
Accumulated other comprehensive income/(loss) (26) 3,937
Treasury stock, at cost (910) (866)
------------ ------------
Total stockholders' equity 88,799 83,880
------------ ------------
Total liabilities and stockholders' equity $ 1,248,162 $ 1,247,786
============ ============
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months and Nine Months Ended September 30, 2003 and 2002
(in thousands except for share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ---------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
INTEREST AND DIVIDEND INCOME
- ----------------------------
Interest and fees on loans: Taxable $ 11,543 $ 12,309 $ 35,453 $ 36,960
Tax exempt 74 58 203 125
------------ ------------ ------------ ------------
Total loan income 11,617 12,367 35,656 37,085
Short-term investments 48 73 133 165
Securities:
U.S. Treasury and government agency securities 145 340 460 1,077
Mortgage-backed securities 2,473 3,028 8,099 8,825
State and municipal securities 550 402 1,475 1,202
Other debt securities 0 6 0 208
------------ ------------ ------------ ------------
Total interest and dividend income 14,833 16,216 45,823 48,562
INTEREST EXPENSE
- ----------------
Interest on deposits 3,421 4,277 10,909 12,855
Interest on short-term borrowings 244 536 897 2,091
Interest on long-term debt 756 778 2,296 2,105
------------ ------------ ------------ ------------
Total interest expense 4,421 5,591 14,102 17,051
------------ ------------ ------------ ------------
NET INTEREST INCOME 10,412 10,625 31,721 31,511
- -------------------
Provision for loan losses 380 1,041 1,764 2,290
------------ ------------ ------------ ------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 10,032 9,584 29,957 29,221
- ------------------------- ------------ ------------ ------------ ------------
NONINTEREST INCOME
- ------------------
Trust and brokerage fees 627 590 1,802 1,889
Service charges on deposit accounts 1,736 1,785 5,136 4,922
Other income (net) 1,729 728 4,179 2,470
Net gains on the sale of real estate mortgages
held-for-sale 383 493 2,655 1,204
Net securities gains/(losses) (8) 39 (8) 55
------------ ------------ ------------ ------------
Total noninterest income 4,467 3,635 13,764 10,540
NONINTEREST EXPENSE
- -------------------
Salaries and employee benefits 5,076 4,803 14,789 13,937
Occupancy and equipment expense 1,192 1,171 3,772 3,352
Other expense 2,821 2,619 8,753 8,672
------------ ------------ ------------ ------------
Total noninterest expense 9,089 8,593 27,314 25,961
INCOME BEFORE INCOME TAX EXPENSE 5,410 4,626 16,407 13,800
- --------------------------------
Income tax expense 1,819 1,605 5,552 4,766
------------ ------------ ------------ ------------
NET INCOME $ 3,591 $ 3,021 $ 10,855 $ 9,034
- ---------- ============ ============ ============ ============
BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 5,819,671 5,813,984 5,816,830 5,813,984
BASIC EARNINGS PER COMMON SHARE $ 0.62 $ 0.52 $ 1.87 $ 1.55
- ------------------------------- ============ ============ ============ ============
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 6,017,241 5,992,824 5,982,283 5,957,792
DILUTED EARNINGS PER COMMON SHARE $ 0.60 $ 0.50 $ 1.81 $ 1.52
- --------------------------------- ============ ============ ============ ============