October 15, 2003
LAKELAND FINANCIAL REPORTS THIRD QUARTER PERFORMANCE AND CASH DIVIDEND
Warsaw, Indiana (October 15, 2003) – Lakeland Financial Corporation (Nasdaq/LKFN), parent company of Lake City Bank, today reported quarterly net income of $3.6 million for the third quarter of 2003, an increase of 18.9% versus $3.0 million for the comparable period in 2002. Diluted net income per common share for the quarter was $0.60 versus $0.50 for the comparable period in 2002, an increase of 20.0%. Net income for the nine months ended September 30, 2003 was a record $10.9 million versus $9.0 million for the comparable period in 2002, an increase of 20.2%. Diluted net income per share for the nine months ended September 30, 2003 was $1.81 per share versus $1.52 per share in 2002, an increase of 19.1%.
The Company also announced that the Board of Directors approved a cash dividend for the third quarter of $0.19 per share, payable on October 24, 2003 to shareholders of record on October 10, 2003. 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 performance, “We continue to be pleased about our 2003 performance, with net income for the nine months ended September 30th up over 20%. The third quarter represented a challenging operating environment as we continued to experience a decline in the net interest margin, which decreased from 3.89% in the second quarter of 2003 to 3.72% in the third quarter, thus putting pressure on net interest income. Negative earnings impact was created by the significant decline in mortgage sales gains, which were $383,000 versus $1.2 million in the second quarter of 2003. While these events have certainly impacted on our linked quarter performance, which saw a slight decline in net income from $3.7 million to $3.6 million, our overall results for the year are outstanding.”
Kubacki continued, “Noninterest income for the first nine months increased to $13.8 million versus $10.5 million in the comparable period in 2002, driven by mortgage sales gains of $2.7 million, an increase of $1.5 million versus the comparable period in 2002. Also adding to the strong increase in noninterest income was a $1.7 million increase in other income, which grew from $2.5 million for the first nine months of 2002 to $4.2 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.
“Our income performance is notable given that net interest income after the provision for loan losses increased by only 2.5% from $29.2 million in the first nine months of 2002 to $30.0 million for the comparable period in 2003. Net interest income continued to be negatively impacted by a decline in the net interest margin from 4.10% in the first nine months of 2002 to 3.84% in the comparable period of 2003. As we conclude 2003, we anticipate that the net interest margin will remain one of our primary challenges, barring any upward movement in rates. As a result of the overall low interest rate environment throughout 2003, our margin has declined in each successive quarter of 2003,” added Kubacki.
Average loans for the nine months ended September 30, 2003 were $843.3 million versus $759.4 million during the comparable period in 2002. Total loans as of September 30, 2003 were $847.7 million versus $839.4 million as of June 30, 2003. Lakeland Financial’s allowance for loan losses as of September 30, 2003 was $10.1 million, or 1.19% of gross loans, compared to $9.1 million, or 1.15% of gross loans, as of September 30, 2002 and $9.8 million, or 1.17% of gross loans as of June 30, 2003. Non-performing assets totaled $6.2 million as of September 30, 2003 versus $7.7 million on September 30, 2002 and $8.2 million as of June 30, 2003. On a linked quarter basis, total nonperforming assets declined by approximately $2.0 million from the second quarter of 2003 to the third quarter. The ratio of non-performing assets to loans was 0.73% on September 30, 2003 compared to 0.98% at both September 30, 2002 and June 30, 2003.
Kubacki commented, “During the first nine months of 2003, average loans increased by 9.4% to $843.3 million versus $770.9 million for all of 2002. Average loans during the third quarter of 2003 were $853.4 million versus $846.5 million in the second quarter of 2003, an increase of only 1%. On a net basis, loan growth was minimal as the region continues to slowly climb out of the difficult economic conditions that we believe have suppressed overall loan demand. Net charge offs totaled $102,000 in the quarter versus $843,000 in the third quarter of 2002 and $673,000 during the second quarter of 2003. Net charge offs totaled $1.2 million during both of the nine-month periods ended September 30, 2003 and 2002. For the nine months ended September 30, 2003, net charge offs were 0.20% of average loans on an annualized basis. We further believe that the decline in nonperforming assets on a linked quarter basis is reflective of the overall quality of our portfolio in a difficult commercial lending environment.”
For the nine months ended September 30, 2003, Lakeland Financial’s average equity to average assets ratio was 7.05% versus 6.91% for the comparable period in 2002 and 7.07% for the second quarter of 2003. Average stockholders' equity for the first nine months of 2003 was $86.7 million versus $77.9 million for the comparable period in 2002. Average total deposits for the nine months ended September 30, 2003 were $961.8 million versus $846.0 million for the comparable period in 2002.
In addition, the Company announced that D. Jean Northenor had retired from the Board of Directors. Kubacki concluded, “For nearly 20 years, Jean has helped define the organization and contributed to our many successes.”
Lakeland Financial Corporation is a $1.2 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. |
