July 15, 2004
LAKELAND FINANCIAL EXPERIENCES STRONG LOAN GROWTH
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. |
