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, 2004
(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 July 15, 2004
Item 12. Results of Operations and Financial Condition
On July 15, 2004, Lakeland Financial Corporation issued a press release
announcing its earnings for the six-months and three-months ended June 30,
2004. 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: July 15, 2004 By: /s/David M. Findlay
David M. Findlay
Chief Financial Officer
Exhibit 99.1
FOR IMMEDIATE RELEASE Contact: David M. Findlay
Executive Vice President
and Chief Financial Officer
(574) 267-9197
LAKELAND FINANCIAL EXPERIENCES
STRONG LOAN GROWTH
Second Quarter Performance and Cash Dividend Announced
Warsaw, Indiana (July 15, 2004) - Lakeland Financial Corporation
(Nasdaq/LKFN), parent company of Lake City Bank, today reported net income of
$3.3 million for the second quarter of 2004. Diluted net income per share for
the quarter was $0.55. Net income for the six months ended June 30, 2004 was
$6.8 million, or diluted net income per share of $1.13.
Michael L. Kubacki, Chairman, President and Chief Executive Officer,
commented, "With loan growth of $45 million during the quarter, we experienced
the highest quarterly loan increase in the Bank's history. Since year-end
2003, loan growth of $59 million has resulted in a 7% increase in loans. With
this outstanding performance, we are in a great position to take advantage of
a more favorable interest rate environment that is expected to exist in the
second half of the year. Our market penetration in commercial lending improved
in every market we serve during the first half of 2004 as a result of great
business development efforts by our retail and commercial teams."
The Company also announced that the Board of Directors approved a cash
dividend for the second quarter of $0.21 per share, payable on July 26, 2004
to shareholders of record on July 10, 2004. The quarterly dividend represents
an 11% increase over the quarterly dividend of $0.19 paid in 2003.
The net income performance in the quarter compares to $3.7 million, or
$0.63 per diluted share, in the same period of 2003 and $3.5 million, or $0.58
per diluted share in the first quarter of 2004. Net income for the six months
ended June 30, 2004 compares to $7.3 million, or $1.22 per diluted share, for
the same period of 2003.
Kubacki continued, "The extended period of historically low interest
rates has significantly impacted our profitability, as demonstrated by the
performance of the net interest margin and the mortgage business during the
first half of 2004. Our net interest margin was 3.56% for the first six months
of 2004 versus 3.92% in the same period of 2003. This erosion in margin
reduced the positive impact of the record loan growth in the quarter and led
to relatively flat net interest income for the quarter versus the same period
of 2003. We expect to see an improvement in the net interest margin during the
third quarter as a result of the recent interest rate increase."
Noninterest income excluding mortgage sales gains increased by 11% versus
the comparable period in 2003. Leading the improvement were trust and
brokerage fees, which increased 38%, or $215,000. Other income increased by
14%, or $136,000, and credit card fees increased 25%, or $115,000. Total
noninterest income decreased by $793,000 in the second quarter, driven by a
$1.2 million reduction in mortgage sales gains versus the comparable period in
2003.
Kubacki observed, "Overall, fee based revenue improvement has been good
during 2004. We have made progress in continuing to build our portfolio of
fee-based services, with the exception of our mortgage business, which has
slowed considerably in 2004."
The Company did not have any gain on sale of mortgages in the quarter as
a result of the timing of mortgage rate increases. In addition, the value of
the Company's mortgage servicing rights portfolio increased by $230,000 during
the second quarter, but only by $71,000 year to date. The combination of
mortgage sales gains and mortgage servicing rights valuation resulted in a
decrease of $1.7 million in revenue from $2.1 million in the first six months
of 2003 to $364,000 in the same period in 2004.
"Recognizing the impact that the low interest rate environment has on our
earnings power, we have maintained a tight focus on managing noninterest
expenses. As a result, noninterest expense actually decreased by 1% for the
quarter and year to date versus the comparable periods in 2003," added
Kubacki.
Total loans as of June 30, 2004 were $929.6 million versus $884.5 million
as of March 31, 2004 and $839.4 million as of June 30, 2003. Average loans
during the second quarter of 2004 were $924.8 million compared to $883.7
million in the first quarter of 2004, an increase of 5%.
Lakeland Financial's allowance for loan losses as of June 30, 2004 was
$10.6 million, compared to $10.5 million as of March 31, 2004 and $9.8 million
as of June 30, 2003. Non-performing assets totaled $4.7 million as of June 30,
2004 versus $4.5 million as of March 31, 2004 and $8.2 million on June 30,
2003. The ratio of non-performing assets to loans was 0.51% at both June 30,
2004 and March 31, 2004 compared to 0.98% at June 30, 2003. Net charge offs
totaled $80,000 in the second quarter versus $9,000 during the first quarter
of 2004 and $673,000 in the second quarter of 2003. For the quarter ended June
30, 2004, net charge offs were 0.04% of average loans compared to 0.32% in the
same period in 2003.
Kubacki commented, "As evidenced by net charge offs of less than $100,000
in the first half of 2004 and total nonperforming assets holding steady at
very low levels, we believe that the overall quality of our loan portfolio is
exceptional. We continue to maintain a disciplined approach to our loan
administration and will not become complacent as a result of the continued
asset quality performance."
For the three months ended June 30, 2004, Lakeland Financial's average
equity to average assets ratio was 7.10% compared to 7.21% for the first
quarter of 2004 and 7.07% for the second quarter of 2003. Average
stockholders' equity for the quarter ended June 30, 2004 was $93.8 million
versus $92.4 million for the first quarter of 2004 and $87.6 million for the
comparable period in 2003. Average total deposits for the quarter ended June
30, 2004 were $1.0 billion compared to $968.7 million for the first quarter of
2004 and $968.1 million for the same period in 2003.
Lakeland Financial Corporation is a $1.3 billion bank holding company
headquartered in Warsaw, Indiana. Lake City Bank serves Northern Indiana with
43 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 FTN Financial Securities Corp., Goldman, Sachs & Co., Hill,
Thompson, Magid & Co., Howe Barnes Investments, Inc., Keefe, Bruyette & Woods,
Inc., Knight Equity Securities, L.P., Merrill Lynch & Co., Morgan Stanley &
Co., Inc., Sandler O'Neill & Partners, Schwab Capital Markets, Stifel Nicolaus
& Company, Inc., Susquehanna Capital Group 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
SECOND QUARTER 2004 FINANCIAL HIGHLIGHTS
(Unaudited - Dollars in thousands except Share and Per Share Data)
Three Months Ended Six Months Ended
------------------------------------------ -------------------------
Jun. 30, Mar. 31, Jun. 30, Jun. 30, Jun. 30,
2004 2004 2003 2004 2003
----------- ---------- ------------ ----------- -----------
END OF PERIOD BALANCES
Assets $ 1,338,100 $ 1,285,929 $ 1,240,834 $ 1,338,100 $ 1,240,834
Deposits 1,022,335 1,006,811 966,244 1,022,335 966,244
Loans 929,565 884,499 839,355 929,565 839,355
Allowance for Loan Losses 10,643 10,477 9,786 10,643 9,786
Common Stockholders' Equity 92,930 94,191 87,543 92,930 87,543
AVERAGE BALANCES
Assets
Total Assets $ 1,323,015 $ 1,281,413 $ 1,237,555 $ 1,302,961 $ 1,224,931
Earning Assets 1,212,945 1,176,928 1,136,951 1,194,936 1,125,294
Investments 280,159 282,053 269,945 281,106 272,560
Loans 924,817 883,692 846,479 904,254 838,109
Liabilities and Stockholders' Equity
Total Deposits 1,016,951 968,724 968,082 992,837 951,174
Interest Bearing Deposits 808,726 781,823 796,956 795,274 786,999
Interest Bearing Liabilities 1,013,015 993,786 968,790 1,004,122 962,512
Common Stockholders' Equity 93,808 92,444 87,570 93,126 86,680
INCOME STATEMENT DATA
Net Interest Income $ 10,278 $ 10,208 $ 10,743 $ 20,486 $ 21,294
Net Interest Income-Fully Tax Equivalent 10,609 10,534 11,010 21,144 21,492
Provision for Loan Losses 246 252 717 498 1,384
Noninterest Income 4,146 4,160 4,939 8,306 9,325
Noninterest Expense 9,195 8,908 9,267 18,103 18,238
Net Income 3,344 3,502 3,749 6,846 7,264
PER SHARE DATA
Basic Net Income Per Common Share $ 0.57 $ 0.60 $ 0.65 $ 1.17 $ 1.25
Diluted Net Income Per Common Share 0.55 0.58 0.63 1.13 1.22
Cash Dividends Per Common Share 0.21 0.21 0.19 0.42 0.38
Book Value Per Common Share (equity per share issued) 15.82 16.10 15.05 15.82 15.05
Market Value - High 34.49 38.05 31.22 38.05 31.22
Market Value - Low 28.31 31.41 24.40 28.31 23.00
Basic Weighted Average Common Shares Outstanding 5,859,474 5,842,946 5,819,448 5,851,210 5,815,386
Diluted Weighted Average Common Shares Outstanding 6,048,256 6,052,537 5,977,598 6,050,297 5,960,399
KEY RATIOS
Return on Average Assets 1.02 % 1.10 % 1.22 % 1.06 % 1.20 %
Return on Average Common Stockholders' Equity 14.34 15.24 17.21 14.78 16.94
Efficiency (Noninterest Expense / Net Interest Income
plus Noninterest Income) 65.19 61.98 59.08 62.88 59.55
Average Equity to Average Assets 7.10 7.21 7.07 7.16 7.07
Net Interest Margin 3.52 3.60 3.89 3.56 3.92
Net Charge Offs to Average Loans 0.04 0.00 0.32 0.02 0.27
Loan Loss Reserve to Loans 1.14 1.18 1.18 1.14 1.18
Nonperforming Assets to Loans 0.51 0.51 0.98 0.51 0.98
Tier 1 Leverage 9.14 9.23 8.18 9.14 8.18
Tier 1 Risk-Based Capital 11.60 11.95 10.61 11.60 10.61
Total Capital 12.63 13.02 11.65 12.63 11.65
ASSET QUALITY
Loans Past Due 90 Days or More $ 2,855 $ 3,211 $ 3,085 $ 2,855 $ 3,085
Non-accrual Loans 1,575 997 3,548 1,575 3.548
Net Charge Offs 80 9 673 89 1,131
Other Real Estate Owned 277 277 1,530 277 1,530
Other Nonperforming Assets 30 39 26 30 26
Total Nonperforming Assets 4,737 4,524 8,189 4,737 8,189
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
As of June 30, 2004 and December 31, 2003
(in thousands)
June 30, December 31,
2004 2003
------------ ------------
(Unaudited)
ASSETS
Cash and cash equivalents:
Cash and due from banks $ 60,849 $ 52,297
Short-term investments 6,095 5,144
------------ ------------
Total cash and cash equivalents 66,944 57,441
Securities available-for-sale:
U. S. Treasury and government agency securities 21,443 17,280
Mortgage-backed securities 204,681 211,142
State and municipal securities 51,763 52,945
------------ -----------
Total securities available-for-sale 277,887 281,367
Real estate mortgages held-for-sale 5,866 3,431
Loans:
Total loans 929,565 870,882
Less: Allowance for loan losses 10,643 10,234
------------ ------------
Net loans 918,922 860,648
Land, premises and equipment, net 25,790 26,157
Accrued income receivable 4,977 5,010
Goodwill 4,970 4,970
Other intangible assets 1,353 1,460
Other assets 31,391 30,930
------------ ------------
Total assets $ 1,338,100 $ 1,271,414
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest bearing deposits $ 210,437 $ 185,734
Interest bearing deposits 811,898 740,657
------------ ------------
Total deposits 1,022,335 926,391
Short-term borrowings:
Federal funds purchased 12,000 24,000
Securities sold under agreements
to repurchase 90,007 102,601
U.S. Treasury demand notes 1,662 3,160
Other borrowings 70,000 55,000
------------ ------------
Total short-term borrowings 173,669 184,761
Accrued expenses payable 6,674 7,804
Other liabilities 1,518 1,461
Long-term borrowings 10,046 30,047
Subordinated debentures 30,928 30,928
------------ ------------
Total liabilities 1,245,170 1,181,392
STOCKHOLDERS' EQUITY
Common stock: No par value, 90,000,000 shares authorized,
5,873,244 shares issued and 5,841,021 outstanding as of
June 30, 2004, and 5,834,744 shares issued and 5,788,263
outstanding at December 31, 2003 1,453 1,453
Additional paid-in capital 11,304 10,509
Retained earnings 84,647 80,260
Accumulated other comprehensive income/(loss) (3,803) (1,282)
Treasury stock, at cost (671) (918)
------------ ------------
Total stockholders' equity 92,930 90,022
------------ ------------
Total liabilities and stockholders' equity $ 1,338,100 $ 1,271,414
============ ============
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months and Six Months Ended June 30, 2004 and 2003
(in thousands except for share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
INTEREST AND DIVIDEND INCOME
- ----------------------------
Interest and fees on loans: Taxable $ 11,587 $ 12,077 $ 22,903 $ 23,910
Tax exempt 71 66 139 129
------------ ------------ ------------ ------------
Total loan income 11,658 12,143 23,042 24,039
Short-term investments 21 58 49 85
Securities:
U.S. Treasury and government agency securities 186 145 343 315
Mortgage-backed securities 1,682 2,694 3,704 5,626
State and municipal securities 588 497 1,172 925
------------ ------------ ------------ ------------
Total interest and dividend income 14,135 15,537 28,310 30,990
INTEREST EXPENSE
- ----------------
Interest on deposits 3,101 3,702 6,132 7,488
Interest on short-term borrowings 352 313 698 653
Interest on long-term debt 404 779 994 1,555
------------ ------------ ------------ ------------
Total interest expense 3,857 4,794 7,824 9,696
------------ ------------ ------------ ------------
NET INTEREST INCOME 10,278 10,743 20,486 21,294
- -------------------
Provision for loan losses 246 717 498 1,384
------------ ------------ ------------ ------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 10,032 10,026 19,988 19,910
- ------------------------- ------------ ------------ ------------ ------------
NONINTEREST INCOME
- ------------------
Trust and brokerage fees 780 565 1,519 1,175
Service charges on deposit accounts 1,697 1,736 3,354 3,400
Credit card fee income 581 466 1,081 826
Other income (net) 1,115 979 2,059 1,652
Net gains/losses on sale of real
estate mortgages held for sale (27) 1,193 293 2,272
------------ ------------ ------------ ------------
Total noninterest income 4,146 4,939 8,306 9,325
NONINTEREST EXPENSE
- -------------------
Salaries and employee benefits 4,859 5,008 9,784 9,713
Occupancy and equipment expense 1,114 1,218 2,131 2,580
Data processing expense 650 690 1,245 1,273
Credit card interchange 343 247 633 443
Other expense 2,229 2,104 4,310 4,229
------------ ------------ ------------ ------------
Total noninterest expense 9,195 9,267 18,103 18,238
INCOME BEFORE INCOME TAX EXPENSE 4,983 5,698 10,191 10,997
- --------------------------------
Income tax expense 1,639 1,949 3,345 3,733
------------ ------------ ------------ ------------
NET INCOME $ 3,344 $ 3,749 $ 6,846 $ 7,264
- ---------- ============ ============ ============ ============
BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 5,859,474 5,819,448 5,851,210 5,815,386
BASIC EARNINGS PER COMMON SHARE $ 0.57 $ 0.65 $ 1.17 $ 1.25
- ------------------------------- ============ ============ ============ ============
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 6,048,256 5,977,598 6,050,297 5,960,399
DILUTED EARNINGS PER COMMON SHARE $ 0.55 $ 0.63 $ 1.13 $ 1.22
- --------------------------------- ============ ============ ============ ============