SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 8-K

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CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) January 25, 2008

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Lakeland Financial Corporation

(Exact name of Registrant as specified in its charter)

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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)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Solicitation material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)

Item 2.02. Results of Operations and Financial Condition

On January 25, 2008, Lakeland Financial Corporation issued a press release announcing its earnings for the twelve-months and three-months ended December 31, 2007. The news release is attached as Exhibit 99.1.

Item 9.01. Financial Statements and Exhibits

99.1 Press Release dated January 25, 2008

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

 

David M. Findlay

Chief Financial Officer

 

 

Exhibit 99.1

 

 

LAKE CITY BANK REPORTS RECORD INCOME AND

EXTENDS STREAK TO 20 CONSECUTIVE YEARS

Warsaw, Indiana (January 25, 2008) – Lakeland Financial Corporation (Nasdaq Global Select/LKFN), parent company of Lake City Bank, today reported that it has extended its streak of record income performance to 20 consecutive years with net income of $19.2 million for 2007.

 

“When Lake City Bank began this unrivaled streak in 1988, we had 10 offices, total assets of $207 million and reported net income of $808,000. During the 20 years of record income performance, we have more than quadrupled the number of offices to 43, our total assets have increased by nearly nine-fold to $2.0 billion and we have grown income by a multiple of more than 23 times. As we have for 135 years, the Lake City Bank Team again proved that a community-focused bank can continue to serve the best interests of our clients while at the same time creating long-term shareholder value,” commented Michael L. Kubacki, Chairman, President and Chief Executive Officer.

 

Net income of $19.2 million for 2007 represented an increase of 3% versus $18.7 million for 2006. Diluted net income per share for the year was $1.55 versus $1.51 for 2006. The Company reported net income of $4.8 million for the fourth quarter of 2007, an increase of 6% over the $4.6 million reported for the fourth quarter of 2006. On a linked quarter basis, net income increased 10% versus the third quarter of 2007. Diluted net income per share for the quarter was $0.40 versus $0.38 for the comparable period of 2006 and $0.35 for the third quarter of 2007.

 

Kubacki observed, “Lake City Bank further reinforced its reputation as the bank for business with loan growth of 13%, or $170 million, for the year. This was driven by a $152 million increase in traditional commercial and industrial and agribusiness loans. Our focus on the commercial business lending has contributed to ongoing economic development in Indiana and helped our clients expand and grow their businesses and contribute to job creation in Indiana.”

 

“Revenue growth in 2007 was strong with a 7% increase in noninterest income, led by robust growth in our Wealth Advisory and Investment business-lines. We also continued to expand fee-based services to our core commercial clients with an improved cash management platform, which is designed to ensure that our clients have the latest technology-based banking products.”

 

The Company also announced that the Board of Directors approved a cash dividend for the fourth quarter of $0.14 per share, payable on February 5, 2008 to shareholders of record as of January 25, 2008. The quarterly dividend represents a 12% increase over the quarterly dividends paid in 2006.

 

The Company’s net interest margin was relatively stable at 3.14% in the fourth quarter versus 3.18% in the third quarter of 2007. Despite a continued shift in funding mix and the Federal Reserve Bank’s recent

 

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interest rate cuts, the margin declined only nominally. As a result of the loan growth during the year, the Company’s net interest income increased by 4% to $54.6 million in 2007 versus $52.3 million in 2006.

 

Kubacki added, “Net interest margin compression is an industry-wide challenge that we have been working hard to address with an ongoing focus on incremental fee generation and reasonable expense control. Accompanied by good loan growth during the year, these strategies helped us overcome the impact of a tightening interest margin.”

 

Average total loans for the fourth quarter of 2007 were $1.46 billion versus $1.33 billion during the fourth quarter of 2006, an increase of 10%. Total gross loans as of December 31, 2007 were $1.52 billion, an increase of $169.9 million, or 13%, versus $1.35 billion as of December 31, 2006.

 

Net charge offs totaled $327,000 in the fourth quarter of 2007, versus $2.0 million during the third quarter of 2007, and $867,000 during the fourth quarter of 2006. Lakeland Financial’s allowance for loan losses as of December 31, 2007 was $15.8 million, compared to $15.1 million as of September 30, 2007 and $14.5 million as of December 31, 2006.

 

Nonperforming assets declined during the quarter by 30% since the conclusion of the third quarter of 2007 and totaled $9.9 million as of December 31, 2007 compared to $14.1 million as of September 30, 2007 and $14.2 million on December 31, 2006. The ratio of nonperforming assets to assets improved to 0.50% on December 31, 2007 compared to 0.75% at September 30, 2007 and 0.77% at December 31, 2006. The allowance for loan losses represented 212% of nonperforming loans at year end versus 162% at September 30, 2007 and 103% at December 31, 2006.

 

The decrease in nonperforming assets during the fourth quarter of 2007 resulted from a reduction on other real estate owned of $2.4 million and a reduction of $1.9 million in nonperforming loans. The decline in other real estate owned was driven by the sale of assets related to a single former commercial borrower, a residential and commercial real estate developer. As of December 31, 2007, total exposure related to this former borrower was $2.2 million versus $5.3 million at the end of the third quarter. All of the remaining exposure represents other real estate and the Bank has no additional exposure to this borrower or its principals. The Company is managing the other real estate owned to resolve the situation and believes that the carrying value is representative of true market value, although there can be no assurance that the ultimate sale of the assets will result in proceeds equal to or greater than the carrying value.

 

Kubacki commented, “While we are proud of our progress on the asset quality front during the fourth quarter, we are cognizant of the economic and housing challenges facing the country and Northern Indiana. We will continue to closely monitor our portfolio and will not compromise our disciplined approach to lending in both the consumer and commercial segments.”

 

For the three months ended December 31, 2007, Lakeland Financial’s average equity to average assets ratio was 7.47% compared to 7.49% for the third quarter of 2007 and 7.30% for the fourth quarter of 2006. Average stockholders' equity for the quarter ended December 31, 2007 was $143.9 million versus $138.8 million for the third quarter of 2007 and $128.9 million for the fourth quarter of 2006. Average total deposits for the quarter ended December 31, 2007 were $1.52 billion versus $1.48 billion for the third quarter of 2007 and $1.46 billion for the fourth quarter of 2006.

 

Lakeland Financial Corporation is a $2.0 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. The Company also has a Loan Production Office in Indianapolis, Indiana.

 

In addition to the results presented in accordance with generally accepted accounting principles in the United States of America, this press release contains certain non-GAAP financial measures. Lakeland Financial believes that providing non-GAAP financial measures provides investors with information useful to understanding Lakeland Financial’s financial performance. Additionally, these non-GAAP measures are used by management for planning and forecasting purposes, including measures based on “tangible equity” which is “common stockholders’ equity” excluding intangible assets, net of deferred tax. A reconciliation of these non-

 

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GAAP measures to the most comparable GAAP equivalent is included in the attached financial tables where the non-GAAP measure is presented.

 

Lakeland Financial Corporation may be accessed on its home page at www.lakecitybank.com. The Company’s common stock is traded on the Nasdaq Global Select Market under “LKFN”. Market makers in Lakeland Financial Corporation common shares include Automated Trading Desk Financial Services, LLC, B-Trade Services, LLC, Citadel Derivatives Group, LLC, Citigroup Global Markets Holdings, Inc., Domestic Securities, Inc., E*TRADE Capital Markets LLC, FTN Financial Securities Corp., FTN Midwest Securities Corp., Goldman Sachs & Company, Howe Barnes Hoefer & Arnett, Inc., Keefe, Bruyette & Woods, Inc., Knight Equity Markets, L.P., Lehman Brothers Inc., Morgan Stanley & Co., Inc., Stifel Nicolaus & Company, Inc., Susquehanna Capital Group and UBS Securities LLC.

 

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. Additional information concerning the Company and its business, including factors that could materially affect the Company’s financial results, is included in the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on form 10-K.

 

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LAKELAND FINANCIAL CORPORATION

FOURTH QUARTER 2007 FINANCIAL HIGHLIGHTS

(Unaudited – Dollars in thousands except share and Per Share Data)

 

 

 

 

(1) Cash dividend of $0.125 declared on April 11, July 11, and October 10, 2006.

 

 

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LAKELAND FINANCIAL CORPORATION

CONSOLIDATED BALANCE SHEETS

As of December 31, 2007 and December 31, 2006

(in thousands)

 

 

 

 

 

 

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LAKELAND FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

For the Three Months and Twelve Months Ended December 31, 2007 and 2006

(in thousands except for share data)

(unaudited)

 

 

 

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