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 January 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 January 15, 2004
Item 12. Results of Operations and Financial Condition
On January 15, 2004, Lakeland Financial Corporation issued a press
release announcing its earnings for the year ended December 31, 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: January 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 CORPORATION REPORTS
RECORD 2003 PERFORMANCE
Warsaw, Indiana (January 15, 2004) - Lakeland Financial Corporation
(Nasdaq/LKFN), parent company of Lake City Bank, today reported record net
income of $13.9 million for the year ended December 31, 2003, an increase of
12.1% versus $12.4 million for 2002. Diluted net income per common share for
the year ended December 31, 2003 was $2.31 versus $2.08 for 2002, an increase
of 11.1%.
The Company also announced that the Board of Directors approved a cash
dividend for the fourth quarter of $0.19 per share, payable on January 26,
2004 to shareholders of record on January 10, 2004. 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 results, "2003 represents the 16th consecutive year of record
earnings for Lakeland Financial Corporation. Our ongoing earnings performance
is further evidenced by the consistency of an 11.9% compound annual growth
rate in net income over the past five years. Earnings have been driven by an
11.4% compound annual growth rate in average loans and supported by a 9.7%
compound annual growth rate in non-interest income. We believe that we have
effectively managed noninterest expense over the same time period, recording a
compound annual growth rate of 7.0%. This earnings performance has resulted
entirely from internal growth in our existing Northern Indiana markets."
Kubacki continued, "We are equally gratified in the improvement in asset
quality during 2003 as we concluded 2003 with total nonperforming assets of
$4.3 million, or 0.50% of total loans versus $7.7 million, or 0.94% of total
loans, at the end of 2002."
Net income was $3.0 million in the fourth quarter of 2003, versus $3.3
million for the comparable period in 2002, a decrease of 9.7%. Diluted net
income per share for the fourth quarter of 2003 was $0.50 versus $0.57 in the
comparable period of 2002. During the fourth quarter of 2003 the Company
completed the issuance of $30 million in floating rate trust preferred
securities and used part of the proceeds to redeem $20 million in existing
fixed rate trust preferred securities. The redemption of the fixed rate
securities resulted in a loss on extinguishment of $804,000, or $478,000 on a
tax-effected basis. Excluding the impact of the loss on extinguishment, net
income for the fourth quarter would have been $3.5 million, or diluted net
income per share of $0.58 per share. For the twelve months ended December 31,
2003, net income excluding the impact of the loss on extinguishment would have
been $14.3 million, or diluted net income per share of $2.39.
Although excluding this impact is a non-GAAP measure, management believes
that it is important to provide such information due to the non-recurring
nature of the trust preferred redemption and the ability it provides to more
accurately compare the results of the periods presented. Additionally,
management uses this information in evaluating the results of the operations
of the company for the fourth quarter and the twelve months ended December 31,
2003.
Kubacki commented on the financing activity, "We took advantage of market
conditions to replace our existing 9.00% fixed rate trust preferred securities
with a variable rate instrument that more appropriately fits our balance sheet
structure and should provide the Company with a considerably lower interest
cost in 2004. In addition, with the growth in our balance sheet, we further
strengthened our regulatory capital position with the increased amount of
securities."
Kubacki further commented, "Despite the decline in our net interest
margin, which decreased from 4.02% in 2002 to 3.82% in 2003, we were able to
post great earnings growth for the year. With general interest rates remaining
close to historical lows, it has become critical to our performance to focus
our resources on growth in noninterest income and tight management of our
expense environment. We succeeded on both fronts in 2003."
"Noninterest income for 2003 increased 24.0% to $18.4 million versus
$14.9 million in 2002, driven by mortgage sales gains of $3.0 million, an
increase of $1.1 million versus 2002. Also adding to the strong increase in
noninterest income was a $2.0 million increase in other income, which grew
from $3.7 million in 2002 to $5.7 million for the comparable period in 2003.
The drivers of this growth were the implementation of an insurance investment
program, income due to a reduction in the valuation allowance related to
accounting for mortgage servicing rights, increased lease income and gains on
securities sales. On December 1, 2003, we completed our acquisition of the
Fort Wayne trust operations of Indiana Capital Management and look forward to
the revenue opportunities and business synergies that this acquisition will
create in the Fort Wayne market," added Kubacki.
Average loans for the year ended December 31, 2003 increased by 9.9% to
$847.6 million versus $770.9 million during 2002. Total loans as of December
31, 2003 were $870.9 million versus $822.7 million as of December 31, 2002 and
$847.7 million as of September 30, 2003. Lakeland Financial's allowance for
loan losses as of December 31, 2003 was $10.2 million, or 1.18% of gross
loans, compared to $9.5 million, or 1.16% of gross loans, as of December 31,
2002 and $10.1 million, or 1.19% of gross loans as of September 30, 2003.
Non-performing assets totaled $4.3 million as of December 31, 2003 versus $7.7
million on December 31, 2002 and $6.2 million as of September 30, 2003. On a
linked quarter basis, total nonperforming assets declined by approximately
$1.8 million from the end of the third quarter of 2003 to the end of the
fourth quarter. The ratio of non-performing assets to loans was 0.50% on
December 31, 2003 compared to 0.94% at December 31, 2002 and 0.73% at
September 30, 2003.
Kubacki commented, "Average loans during the fourth quarter of 2003 were
$860.3 million versus $853.4 million in the third quarter of 2003, an increase
of approximately 1%. Net loan growth in the quarter continued to be
challenging as our markets experience a slow economic rebound. Notwithstanding
the moderate loan growth during the last half of 2003, we are beginning to
recognize some improvement in our loan demand as we enter 2004."
Net charge offs totaled $320,000 in the quarter versus $315,000 in the
fourth quarter of 2002 and $102,000 during the third quarter of 2003. Net
charge offs totaled $1.6 million during the year ended December 31, 2003
versus $1.5 million during the year ended December 31, 2002. For the year
ended December 31, 2003, net charge offs were 0.18% of average loans versus
0.19% in 2002.
For the twelve months ended December 31, 2003, Lakeland Financial's
average equity to average assets ratio was 7.05% versus 6.89% for 2002 and
7.01% for the third quarter of 2003. Average stockholders' equity for the year
ended December 31, 2003 was $87.3 million versus $79.1 million for the
comparable period in 2002. Average total deposits for the year ended December
31, 2003 were $969.7 million versus $863.7 million for the comparable period
in 2002.
Lakeland Financial Corporation is a $1.3 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
FOURTH QUARTER 2003 FINANCIAL HIGHLIGHTS
(Unaudited - Dollars in thousands except Share and Per Share Data)
3 Months Ended 12 Months Ended
December 31 December 31
2003 2002 2003 2002
----------- ------------ ------------- -------------
END OF PERIOD BALANCES
Assets $ 1,271,414 $ 1,249,060 $ 1,271,414 $ 1,249,060
Deposits 926,391 913,325 926,391 913,325
Loans 870,882 822,676 870,882 822,676
Allowance for Loan Losses 10,234 9,533 10,234 9,533
Common Stockholders' Equity 90,022 83,880 90,022 83,880
AVERAGE BALANCES
Assets
Total Assets $ 1,260,792 $ 1,201,460 $ 1,239,089 $ 1,148,750
Earning Assets 1,153,994 1,107,160 1,136,732 1,062,008
Investments 271,815 274,270 271,161 274,155
Loans 860,265 805,075 847,554 770,898
Liabilities and Stockholders' Equity
Total Deposits 993,267 916,181 969,709 863,697
Interest Bearing Deposits 805,586 754,130 795,993 713,472
Interest Bearing Liabilities 975,773 942,456 967,995 906,377
Common Stockholders' Equity 88,973 82,623 87,310 79,080
INCOME STATEMENT DATA
Net Interest Income $ 10,500 $ 10,288 $ 42,199 $ 41,777
Net Interest Income-Fully Tax Equivalent 10,836 10,519 43,373 42,690
Provision for Loan Loss 490 766 2,254 3,056
Noninterest Income 4,621 4,281 18,427 14,863
Noninterest Expense 10,345 8,717 37,679 34,698
Net Income 3,010 3,332 13,865 12,366
PER SHARE DATA
Basic Net Income Per Common Share $ 0.52 $ 0.57 $ 2.38 $ 2.13
Diluted Net Income Per Common Share 0.50 0.57 2.31 2.08
Cash Dividends Per Common Share 0.19 0.17 0.76 0.68
Book Value Per Common Share (equity per share issued) 15.43 14.54 15.43 14.54
Market Value - High 37.47 25.00 37.47 29.76
Market Value - Low 33.51 22.22 23.00 17.26
Basic Weighted Average Common Shares Outstanding 5,829,072 5,813,984 5,819,916 5,813,984
Diluted Weighted Average Common Shares Outstanding 6,046,778 5,954,589 6,001,449 5,958,386
KEY RATIOS
Return on Average Assets 0.95 % 1.10 % 1.12 % 1.08 %
Return on Average Common Stockholders' Equity 13.42 16.03 15.88 15.64
Efficiency (Noninterest Expense / Net Interest Income
plus Noninterest Income) 68.41 59.81 62.10 61.24
Average Equity to Average Assets 7.06 6.88 7.05 6.88
Net Interest Margin 3.73 3.77 3.82 4.02
Net Charge Offs to Average Loans 0.15 0.16 0.18 0.19
Loan Loss Reserve to Loans 1.18 1.16 1.18 1.16
Nonperforming Assets to Loans 0.50 0.94 0.50 0.94
Tier 1 Leverage 8.61 7.89 8.61 7.89
Tier 1 Risk-Based Capital 10.87 10.06 10.87 10.06
Total Capital 11.92 11.08 11.92 11.10
ASSET QUALITY
Loans Past Due 90 Days or More $ 3,191 $ 3,387 $ 3,191 $ 3,387
Non-accrual Loans 553 4,216 553 4,216
Net Charge Offs 320 315 1,553 1,469
Other Real Estate Owned 557 44 557 44
Other Nonperforming Assets 27 94 27 94
Total Nonperforming Assets 4,328 7,741 4,328 7,741
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
As of December 31, 2003 and December 31, 2002
(in thousands)
December 31, December 31,
2003 2002
------------ ------------
(Unaudited)
ASSETS
Cash and cash equivalents:
Cash and due from banks $ 52,297 $ 74,149
Short-term investments 5,144 13,000
------------ ------------
Total cash and cash equivalents 57,441 87,149
Securities available-for-sale:
U. S. Treasury and government agency securities 17,280 17,284
Mortgage-backed securities 211,142 222,036
State and municipal securities 52,945 34,785
------------ -----------
Total securities available-for-sale 281,367 274,105
Real estate mortgages held-for-sale 3,431 10,395
Loans:
Total loans 870,882 822,676
Less: Allowance for loan losses 10,234 9,533
------------ ------------
Net loans 860,648 813,143
Land, premises and equipment, net 26,157 24,768
Accrued income receivable 5,010 4,999
Goodwill 4,970 4,970
Other intangible assets 1,460 1,042
Other assets 30,930 28,489
------------ ------------
Total assets $ 1,271,414 $ 1,249,060
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest bearing deposits $ 185,734 $ 192,787
Interest bearing deposits 740,657 720,538
------------ ------------
Total deposits 926,391 913,325
Short-term borrowings:
Federal funds purchased 24,000 30,000
Securities sold under agreements
to repurchase 102,601 124,968
U.S. Treasury demand notes 3,160 4,000
Other borrowings 55,000 26,000
------------ ------------
Total short-term borrowings 184,761 184,968
Accrued expenses payable 7,804 12,503
Other liabilities 1,461 2,417
Long-term borrowings 30,047 31,348
Subordinated debentures 30,928 20,619
------------ ------------
Total liabilities 1,181,392 1,165,180
STOCKHOLDERS' EQUITY
Common stock: No par value, 90,000,000 shares authorized,
5,834,744 shares issued and 5,787,463 outstanding as of
December 31 2003, and 5,813,984 shares issued and 5,767,010
outstanding at December 31, 2002 1,453 1,453
Additional paid-in capital 10,509 8,537
Retained earnings 80,260 70,819
Accumulated other comprehensive income/(loss) (1,282) 3,937
Treasury stock, at cost (918) (866)
------------ ------------
Total stockholders' equity 90,022 83,880
------------ ------------
Total liabilities and stockholders' equity $ 1,271,414 $ 1,249,060
============ ============
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months and Twelve Months Ended December 31, 2003 and 2002
(in thousands except for share data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------------- ---------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
INTEREST AND DIVIDEND INCOME
- ----------------------------
Interest and fees on loans: Taxable $ 11,408 $ 12,123 $ 46,861 $ 49,083
Tax exempt 77 56 280 181
------------ ------------ ------------ ------------
Total loan income 11,485 12,179 47,141 49,264
Short-term investments 55 94 188 259
Securities:
U.S. Treasury and government agency securities 133 315 593 1,392
Mortgage-backed securities 2,254 2,780 10,353 11,605
State and municipal securities 586 405 2,061 1,607
Other debt securities 0 0 0 208
------------ ------------ ------------ ------------
Total interest and dividend income 14,513 15,773 60,336 64,335
INTEREST EXPENSE
- ----------------
Interest on deposits 3,170 4,236 14,079 17,091
Interest on short-term borrowings 213 461 1,110 2,552
Interest on long-term debt 630 788 2,948 2,915
------------ ------------ ------------ ------------
Total interest expense 4,013 5,485 18,137 22,558
------------ ------------ ------------ ------------
NET INTEREST INCOME 10,500 10,288 42,199 41,777
- -------------------
Provision for loan losses 490 766 2,254 3,056
------------ ------------ ------------ ------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 10,010 9,522 39,945 38,721
- ------------------------- ------------ ------------ ------------ ------------
NONINTEREST INCOME
- ------------------
Trust and brokerage fees 568 562 2,370 2,451
Service charges on deposit accounts 1,724 1,795 6,860 6,717
Other income (net) 1,458 1,214 5,679 3,726
Net gains on sale of real estate mortgages held for sale 363 710 3,018 1,914
Net securities gains/(losses) 508 0 500 55
------------ ------------ ------------ ------------
Total noninterest income 4,621 4,281 18,427 14,863
NONINTEREST EXPENSE
- -------------------
Salaries and employee benefits 5,040 4,564 19,829 18,501
Occupancy and equipment expense 1,210 1,305 4,982 4,657
Loss on extinguishment of debt 804 0 804 0
Other expense 3,291 2,848 12,064 11,540
------------ ------------ ------------ ------------
Total noninterest expense 10,345 8,717 37,679 34,698
INCOME BEFORE INCOME TAX EXPENSE 4,286 5,086 20,693 18,886
- --------------------------------
Income tax expense 1,276 1,754 6,828 6,520
------------ ------------ ------------ ------------
NET INCOME $ 3,010 $ 3,332 $ 13,865 $ 12,366
- ---------- ============ ============ ============ ============
BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 5,829,072 5,813,984 5,819,916 5,813,984
BASIC EARNINGS PER COMMON SHARE $ 0.52 $ 0.57 $ 2.38 $ 2.13
- ------------------------------- ============ ============ ============ ============
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 6,046,778 5,954,589 6,001,449 5,958,386
DILUTED EARNINGS PER COMMON SHARE $ 0.50 $ 0.57 $ 2.31 $ 2.08
- --------------------------------- ============ ============ ============ ============