July 15, 2003
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 $838.1million 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 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. |
