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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____________ to ____________________
Commission File No. 0-11487
LAKELAND FINANCIAL CORPORATION
(exact name of registrant as specified in its charter)
INDIANA 35-1559596
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
202 East Center Street, P.O. Box 1387, Warsaw, Indiana 46581-1387
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 1-219-267-6144
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
COMMON
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such other period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No __
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of regulation S-K is not contained herein and will not be contained,
to the best of the Registrant's knowledge, in definitive Proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.[ ]
Aggregate market value of the voting stock held by non-affiliates of the
registrant, computed solely for the purposes of this requirement on the basis
of the book value at February 28, 1997, and assuming solely for the purposes
of this calculation that all Directors and executive officers of the
Registrant are "affiliates": $40,422,606.
Number of shares of common stock outstanding at February 28, 1997:
2,903,799
Cover page 1 of 2 pages
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference in the
Part of 10-K indicated:
Part Document
I, II & IV Lakeland Financial Corporation's Annual Report to
Shareholders for year ended December 31, 1996,
parts of which are incorporated into Parts I, II
and IV of this Form 10-K.
III Proxy statement mailed to Shareholders on March 13,
1997, which is incorporated into Part III of this
Form 10-K.
Cover page 2 of 2 pages
PART I.
ITEM 1. BUSINESS
The registrant was incorporated under the laws of the State of Indiana on
February 8, 1983. As used herein, the term "Registrant" refers to Lakeland
Financial Corporation or, if the context dictates, the Lakeland Financial
Corporation and its wholly owned subsidiary, Lake City Bank, Warsaw, Indiana.
GENERAL
Registrant's Business. The Registrant is a bank holding company as
defined in the Bank Holding Company Act of 1956, as amended. Registrant owns
all of the outstanding stock of Lake City Bank, Warsaw, Indiana, a full
service commercial bank organized under Indiana law (the "Bank"). Registrant
conducts no business except that incident to its ownership of the outstanding
stock of the Bank and the operation of the Bank.
The Bank's deposits are insured by the Federal Deposit Insurance
Corporation. The Bank's activities cover all phases of commercial banking,
including checking accounts, savings accounts, time deposits, the sale of
securities under agreements to repurchase, discount brokerage services,
commercial and agricultural lending, direct and indirect consumer lending,
real estate mortgage lending, safe deposit box service and trust services.
The Bank's main banking office is located at 202 East Center Street,
Warsaw, Indiana. As of December 31, 1996, the Bank had nine branch offices and
one drive-up facility in Kosciusko County, eight branch offices in Elkhart
County, three branch offices in Noble County, three branch offices in Wabash
County, two branch offices in LaGrange County, two branch offices in Marshall
County, one branch office in Whitley County and two branch offices and one
drive-up facility in Fulton County. The Bank's operations center is located at
113 East Market Street, Warsaw, Indiana.
Supervision and Regulation. The Registrant is a bank holding company
within the meaning of the Bank Holding Company Act of 1956, as amended ("BHC
Act"). As a bank holding company, the registrant is required to file with the
Federal Reserve Board (the "FRB") annual reports and such additional
information as the FRB may require. The FRB may also make an examination or
inspection of the Registrant.
The BHC Act prohibits a bank holding company from engaging in, or
acquiring direct or indirect control of more than five percent of the voting
shares of any company engaged in non-banking activities. One of the principal
exceptions to this prohibition is for activities deemed by the FRB to be
"closely related to banking". Under current regulations, bank holding
companies and their subsidiaries may engage in such bank related business
ventures as consumer finance, equipment leasing, computer service bureau and
software operations and mortgage banking.
The BHC Act also governs banking expansion by bank holding companies.
Before a bank holding company acquires more than five percent of the voting
shares of any other bank it must receive the prior written approval of the FRB
or its delegate. Furthermore, the BHC Act does not permit a bank holding
company to acquire a bank located outside the State of Indiana unless the
acquisition is specifically authorized by the laws of the State in which such
bank is located.
The acquisition of banking subsidiaries by bank holding companies is
subject to the jurisdiction of, and requires the prior approval of, the
Federal Reserve, and for institutions resident in Indiana, the Indiana
Department of Financial Institutions. Bank holding companies located in
Indiana are permitted to acquire banking subsidiaries throughout the state,
subject to limitations based upon the percentage of total state deposits of
the holding company's subsidiary banks. Indiana law permits the Registrant to
acquire banks, and be acquired by bank holding
-1-
companies, located in any state in the country which permits reciprocal entry
by Indiana bank holding companies.
The Registrant is an "affiliate" of the Bank within the meaning of
Section 23A of the Federal Reserve Act (as made applicable to the Bank by the
Federal Deposit Insurance Act) and Indiana Code 28-1-18.1. As a result, the
Bank is restricted in making loans to, investments in, or loans secured by
securities of, the Registrant. The BHC Act also prohibits the Registrant and
its subsidiaries from imposing "tie-in" requirements in connection with
extensions of credit and other services.
Under the provisions of Indiana law, the registrant may not acquire more
than twenty-five percent of the voting stock in any banks other than the Bank
without the approval of the Indiana Department of Financial Institutions. In
any such event, the Registrant would be required to obtain the prior approval
of the FRB as described above to purchase interest of five percent or more in
another bank.
The Bank is under supervision of and subject to examination by the
Indiana Department of Financial Institutions and the Federal Deposit Insurance
Corporation. Regulation and examination by banking regulatory agencies are
primarily for the benefit of depositors and not shareholders.
The earnings of commercial banks are affected not only by general
economic conditions, but also by the policies of various governmental
regulatory authorities. In particular, the FRB regulates money and credit
conditions and interest rates in order to influence general economic
conditions, primarily through open-market operations in U.S. Government
securities, the discount rate on bank borrowing, setting the reserves that
banks must maintain against certain bank deposits and the regulation of
interest rates payable by banks on certain time and savings deposits. These
policies have a significant effect on the overall growth and distribution of
bank loans, investments and deposits. They influence interest rates charged on
loans, earned on investments and paid for time and savings deposits. FRB
monetary policies have had significant effect on the operating results of
commercial banks in the past, and are expected to exert similar influence in
the future. The general effect, if any, of such policies upon the future
business and earnings of the Registrant and the Bank cannot be reasonably
predicted.
MATERIAL CHANGES AND BUSINESS DEVELOPMENTS
From the date of the Registrant's incorporation, February 8, 1983, until
October 31, 1983, the Registrant conducted no business and had no assets
(except nominal assets necessary to complete the acquisition of the Bank). The
Registrant has conducted no business since October 31, 1983, except that
incident to its ownership of the stock of the Bank, the collection of
dividends from the Bank, and the disbursement of dividends to the Registrant's
shareholders. During the period from 1985 to 1987, the Registrant owned all of
the outstanding shares of Lakeland Mortgage Corp., a mortgage lending and
servicing corporation doing business in Indiana. Lakeland Mortgage Corp.
discontinued business operations on December 15, 1987. The Registrant
continued to own all of the stock of Lakeland Mortgage Corp. until 1992,
during which year, Lakeland Mortgage Corp. was liquidated and all stock was
redeemed.
COMPETITION
The Bank was originally organized in 1872 and has continuously operated
under the laws of the State of Indiana since its organization. The Bank is a
full service bank providing both commercial and personal banking services.
Bank products offered include interest and noninterest bearing demand
accounts, savings and time deposit accounts, sale of securities under
agreements to repurchase, discount brokerage, commercial loans, mortgage
loans, consumer loans, letters of credit, and a wide range of trust services.
The interest rates for both deposits and loans, as well as the range of
services provided, are nearly the same for all banks competing within the
Bank's service area.
-2-
The Bank's service area is described as all of Kosciusko, Elkhart,
LaGrange, Noble and Wabash Counties and portions of Marshall, Fulton, Miami,
Huntington and Whitley Counties. In addition to the banks located within its
service area, the Bank also competes with savings and loan associations,
credit unions, farm credit services, finance companies, personal loan
companies, insurance companies, money market funds, and other non-depository
financial intermediaries. Also, financial intermediaries such as money market
mutual funds and large retailers are not subject to the same regulations and
laws that govern the operation of traditional depository institutions and
accordingly may have an advantage in competing for funds.
The Bank competes with other major banks for the large commercial deposit
and loan accounts. The Bank is presently subject to an aggregate maximum loan
limit to any single account in the amount of $7,012,000 pursuant to Indiana
law. This maximum prohibits the Bank from providing a full range of banking
services to those businesses or personal accounts whose borrowing periodically
exceed this amount. In order to retain at least a portion of the bank business
of these large borrowers, the Bank maintains correspondent relationships with
other financial institutions. The Bank also participates with local and other
banks in the placement of large borrowings in excess of its lending limit. The
Bank is also a member of the Federal Home Loan Bank of Indianapolis in order
to broaden its mortgage lending and investment activities and to provide
additional funds, if necessary, to support these activities.
FOREIGN OPERATIONS
The Bank has no investments with any foreign entity other than a nominal
demand deposit account which is maintained with a Canadian bank in order to
facilitate the clearing of checks drawn on banks located in that country.
There are no foreign loans.
EMPLOYEES
At December 31, 1996, the Registrant, including its subsidiary
corporation, had approximately 320 full time equivalent employees. Benefit
programs include a pension plan, 401(k) plan, group medical insurance, group
life insurance and paid vacations. The bank is not a party to any collective
bargaining agreement, and employee relations are considered good.
INDUSTRY SEGMENTS
The Registrant and the Bank are engaged in a single industry and perform
a single service -- commercial banking. On the pages that follow are tables
which set forth selected statistical information relative to the business of
the Registrant.
(Intentionally Left Blank)
-3-
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
(in thousands of dollars)
1996 1995
------------------------------------ ------------------------------------
Average Interest Average Interest
Balance Income Yield* Balance Income Yield*
---------- ---------- ---------- ---------- ---------- ----------
ASSETS
Earning assets:
Trading account investments $ 0 $ 0 0.00% $ 0 $ 0 0.00%
Loans:
Taxable ** 349,336 32,724 9.37 305,806 29,859 9.76
Tax Exempt * 3,475 373 10.73 3,435 389 11.32
Investments:
Taxable 181,411 11,348 6.26 170,788 10,723 6.28
Tax Exempt * 22,626 2,088 9.23 16,724 1,572 9.40
Short-term investment 4,250 226 5.32 3,293 192 5.83
Interest bearing deposits 213 19 8.92 108 10 9.26
---------- ---------- ---------- ---------- ---------- ----------
Total Earning Assets $ 561,311 $ 46,778 8.33% $ 500,154 $ 42,745 8.55%
========== ==========
Nonearning assets:
Cash and due from banks 24,533 0 20,725 0
Premises and equipment 14,724 0 12,386 0
Other assets 9,424 0 7,668 0
Less: allowance for loan losses (5,382) 0 (5,238) 0
---------- ---------- ---------- ----------
Total assets $ 604,610 $ 46,778 $ 535,695 $ 42,745
========== ========== ========== ==========
* Tax exempt income converted to fully taxable equivalent basis at a 34 percent tax rate for 1996 and 1995. Tax equivalent rate
for tax exempt loans and tax exempt securities acquired after January 1, 1983, includes TEFRA adjustment applicable to
nondeductible interest expenses. Nonaccrual loans are included in the above analysis as earning assets - loans.
**Loan fees, which are immaterial in relation to total taxable loan interest income for the years ended December 31, 1996, and
1995, are included as taxable loan interest income.
-4-
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL (cont.)
(in thousands of dollars)
1995 1994
------------------------------------- ------------------------------------
Average Interest Average Interest
Balance Income Yield* Balance Income Yield*
---------- ---------- ---------- ---------- ---------- ----------
ASSETS
Earning assets:
Trading account investments $ 0 $ 0 0.00% $ 0 $ 0 0.00%
Loans:
Taxable ** 305,806 29,859 9.76 267,604 23,658 8.84
Tax Exempt * 3,435 389 11.32 3,787 413 10.91
Investments:
Taxable 170,788 10,723 6.28 149,049 8,842 5.93
Tax Exempt * 16,724 1,572 9.40 11,436 1,102 9.64
Short-term investment 3,293 192 5.83 3,551 152 4.28
Interest bearing deposits 108 10 9.26 98 3 3.06
---------- ---------- ---------- ---------- ---------- ----------
Total earning assets $ 500,154 $ 42,745 8.55% $ 435,525 $ 34,170 7.85%
========== ==========
Nonearning assets:
Cash and due from banks 20,725 0 18,164 0
Premises and equipment 12,386 0 10,104 0
Other assets 7,668 0 7,508 0
Less: allowance for loan losses (5,238) 0 (4,417) 0
---------- ---------- ---------- ----------
Total assets $ 535,695 $ 42,745 $ 466,884 $ 34,170
========== ========== ========== ==========
* Tax exempt income converted to fully taxable equivalent basis at a 34 percent tax rate for 1995 and 1994. Tax equivalent
rate for tax exempt loans and tax exempt securities acquired after January 1, 1983, includes TEFRA adjustment applicable to
nondeductible interest expenses. Nonaccrual loans are included in the above analysis as earning assets - loans.
**Loan fees, which are immaterial in relation to total taxable loan interest income for the years ended December 31, 1995,
and 1994, are included as taxable loan interest income.
-5-
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL (cont.)
(in thousands of dollars)
1996 1995
------------------------------------ ------------------------------------
Average Interest Average Interest
Balance Expense Rate Balance Expense Rate
---------- ---------- ---------- ---------- ---------- ----------
LIABILITIES AND STOCKHOLDERS'
EQUITY
Interest bearing liabilities
Savings deposits $ 43,847 $ 1,118 2.55% $ 46,123 $ 1,069 2.32%
Interest bearing checking accounts 53,625 1,178 2.20 55,355 1,333 2.41
Time deposits
In denominations under $100,000 208,499 11,229 5.39 177,992 10,035 5.64
In denominations over $100,000 86,137 4,886 5.67 73,449 4,410 6.00
Miscellaneous short-term borrowings 78,823 4,213 5.34 66,610 3,803 5.71
Long-term borrowings 19,624 1,113 5.67 17,432 992 5.69
---------- ---------- ---------- ---------- ---------- ----------
Total interest bearing liabilities $ 490,555 $ 23,737 4.84% $ 436,961 $ 21,642 4.95%
========== ==========
Non-interest bearing liabilities
and stockholders' equity
Demand deposits 69,459 0 60,753 0
Other liabilities 5,553 0 4,897 0
Stockholders' equity 39,043 0 33,084 0
---------- ---------- ---------- ----------
Total liabilities and stock-
holders' equity $ 604,610 $ 23,737 3.93% $ 535,695 $ 21,642 4.04%
========== ========== ========== ========== ========== ==========
Net interest differential - yield on average
daily earning assets $ 23,041 4.10% $ 21,103 4.22%
========== ========== ========== ==========
-6-
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL (cont.)
(in thousands of dollars)
1995 1994
------------------------------------ ------------------------------------
Average Interest Average Interest
Balance Expense Rate Balance Expense Rate
---------- ---------- ---------- ---------- ---------- ----------
LIABILITIES AND STOCK-
HOLDERS' EQUITY
Interest bearing liabilities
Savings deposits $ 46,123 $ 1,069 2.32% $ 55,855 $ 1,517 2.72%
Interest bearing checking accounts 55,355 1,333 2.41 58,945 1,394 2.36
Time deposits
In denominations under $100,000 177,992 10,035 5.64 148,251 6,837 4.61
In denominations over $100,000 73,449 4,410 6.00 54,389 2,360 4.34
Miscellaneous short-term borrowings 66,610 3,803 5.71 47,220 1,879 3.98
Long-term borrowings 17,432 992 5.69 15,806 900 5.69
---------- ---------- ---------- ---------- ---------- ----------
Total interest bearing liabilities $ 436,961 $ 21,642 4.95% $ 380,466 $ 14,887 3.91%
========= ==========
Non-interest bearing liabilities
and stockholders' equity
Demand deposits 60,753 0 52,893 0
Other liabilities 4,897 0 4,606 0
Stockholders' equity 33,084 0 28,919 0
---------- ---------- ---------- ----------
Total liabilities and stock-
holders' equity $ 535,695 $ 21,642 4.04% $ 466,884 $ 14,887 3.19%
========== ========== ========== ========== ========== ==========
Net interest differential - yield on
average
daily earning assets $ 21,103 4.22% $ 19,283 4.43%
========== ========== ========== ==========
-7-
ANALYSIS OF CHANGES IN INTEREST DIFFERENTIALS
(Fully Taxable Equivalent Basis)
(in thousands of dollars)
YEAR ENDED DECEMBER 31,
1996 Over (under) 1995(1) 1995 Over (under) 1994(1)
------------------------------------ ------------------------------------
Volume Rate Total Volume Rate Total
---------- ---------- ---------- ---------- ---------- ----------
INTEREST AND LOAN FEE INCOME(2)
Loans:
Taxable $ 4,009 $ (1,144) $ 2,865 $ 3,581 $ 2,620 $ 6,201
Tax exempt 5 (21) (16) (39) 15 (24)
Investments:
Taxable 665 (40) 625 1,344 537 1,881
Tax exempt 544 (28) 516 496 (26) 470
Short-term investment 49 (15) 34 (12) 52 40
Interest bearing deposits 9 0 9 0 7 7
---------- ---------- ---------- ---------- ---------- ----------
Total interest income 5,281 (1,248) 4,033 5,370 3,205 8,575
---------- ---------- ---------- ---------- ---------- ----------
INTEREST EXPENSE
Savings deposits (48) 97 49 (243) (205) (448)
Interest bearing checking accounts (41) (114) (155) (86) 25 (61)
Time deposits
In denominations under $100,000 1,616 (422) 1,194 1,517 1,681 3,198
In denominations over $100,000 700 (224) 476 979 1,071 2,050
Miscellaneous short-term borrowings 629 (219) 410 935 989 1,924
Long-term borrowings 124 (3) 121 93 (1) 92
---------- ---------- ---------- ---------- ---------- ----------
Total interest expense 2,980 (885) 2,095 3,195 3,560 6,755
---------- ---------- ---------- ---------- ---------- ----------
INCREASE (DECREASE) IN
INTEREST DIFFERENTIALS $ 2,301 $ (363) $ 1,938 $ 2,175 $ (355) $ 1,820
========== ========== ========== ========== ========== ==========
(1) The earning assets and interest bearing liabilities used to calculate interest differentials are based on average daily
balances for 1996, 1995 and 1994. The changes in volume represent "changes in volume times the old rate". The changes in rate
represent "changes in rate times old volume". The change in rate/volume were also calculated by "change in rate times change
in volume" and allocated consistently based upon the relative absolute values of the changes in volume and changes in rate.
(2) Tax exempt income converted to fully taxable equivalent basis at a 34 percent tax rate for 1996, 1995 and 1994. Tax
equivalent rate for tax exempt loans and tax exempt securities acquired after January 1, 1983, includes TEFRA adjustment
applicable to nondeductible interest expense.
-8-
ANALYSIS OF SECURITIES
(in thousands of dollars)
The amortized cost and the fair value of securities as of December 31, 1996, 1995 and 1994 are as follows:
1996 1995 1994
----------------------- ---------------------- ------------------------
Amortized Fair Amortized Fair Amortized Fair
Cost Value Cost Value Cost Value
---------- ---------- ---------- ---------- ---------- ----------
Securities available-for-sale:
U.S. Treasury securities $ 31,604 $ 31,804 $ 27,549 $ 27,844 $ 26,960 $ 25,916
U.S. Government agencies and corporations 500 507 2,150 2,191 1,000 1,000
Mortgage-backed securities 46,002 46,332 48,302 48,843 30,734 28,987
Obligations of state and political
subdivisions 2,081 2,167 2,076 2,176 887 933
Other debt securities 1,000 1,032 999 1,066 999 1,026
---------- ---------- ---------- ---------- ---------- ----------
Total debt securities available-for-sale 81,187 81,842 81,076 82,120 60,580 57,862
========== ========== ========== ========== ========== ==========
Securities held-to-maturity:
U.S. Treasury securities $ 17,020 $ 17,077 $ 13,611 $ 13,576 $ 14,714 $ 13,876
U.S. Government agencies and corporations 2,262 2,362 2,898 3,033 2,034 2,037
Mortgage-backed securities 83,811 83,719 77,319 77,471 78,781 73,673
Obligations of state and political
subdivisions 21,172 22,095 19,047 20,077 13,608 13,061
Other debt securities 1,009 1,120 1,013 1,171 1,015 1,076
---------- ---------- ---------- ---------- ---------- ----------
Total debt securities held-to-maturity 125,274 126,373 113,888 115,328 110,152 103,723
Equity securities 0 0 0 0 0 0
---------- ---------- ---------- ---------- ---------- ----------
Total securities held to maturity $ 125,274 $ 126,373 $ 113,888 $ 115,328 $ 110,152 $ 103,723
========== ========== ========== ========== ========== ==========
-9-
ANALYSIS OF SECURITIES (cont.)
(Fully Tax Equivalent Basis)
(in thousands of dollars)
The maturity distribution (2) and weighted average yields (1) for debt securities portfolio at December 31, 1996, are as
follows:
After One After Five
Within Year Years Over
One Within Five Within Ten Ten
Year Years Years Years
------------ ------------ ------------ ------------
Securities available-for-sale:
U.S. Treasury securities
Book value 10,829 20,775 0 0
Yield 5.90 6.06
U.S. Government agencies and corporations
Book value 200 300 0 0
Yield 7.47 7.78
Mortgage-backed securities
Book value 0 10,568 25,065 10,369
Yield 6.74 6.72 6.90
Obligations of state and political
subdivisions
Book value 298 296 0 1,487
Yield 11.36 11.74 8.57
Other debt securities
Book value 1,000 0 0 0
Yield 9.39
------------ ------------ ------------ ------------
Total debt securities available-for-sale:
Book value 12,327 31,939 25,065 11,856
Yield 6.34 6.39 6.72 7.11
============ ============ ============ ============
Securities held-to-maturity:
U.S. Treasury securities
Book value 6,017 11,003 0 0
Yield 5.48 5.86
U.S. Government agencies and corporations
Book value 100 2,162 0 0
Yield 5.75 7.98
Mortgage-backed securities
Book value 402 19,984 36,955 26,470
Yield 5.63 7.02 6.20 6.03
Obligations of state and political
subdivisions
Book value 48 1,574 976 18,574
Yield 6.56 10.35 8.48 9.03
Other debt securities
Book value 0 1,009 0 0
Yield 9.73
------------ ------------ ------------ ------------
Total debt securities held-to-maturity:
Book value 6,567 35,732 37,931 45,044
Yield 5.51 6.90 6.24 7.30
============ ============ ============ ============
(1) Tax exempt income converted to a fully taxable equivalent basis at a 34% rate.
(2) The maturity distribution of mortgage-backed securities is based upon anticipated payments as computed by using the historic
average repayment speed from date of issue.
(3) There are no investments in securities of any one issuer that exceed 10% of stockholders' equity.
-10-
ANALYSIS OF LOAN PORTFOLIO
Analysis of Loans Outstanding
(in thousands of dollars)
The Registrant segregates its loan portfolio into four basic segments: commercial (including agri-business and agricultural
loans), real estate mortgages, installment and credit cards (including personal line of credit loans). The loan portfolio as of
December 31, 1996, 1995, 1994, 1993, and 1992 is as follows:
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
Commercial loans:
Taxable $ 226,190 $ 192,359 $ 173,325 $ 144,274 $ 128,268
Tax exempt 3,414 3,636 3,207 4,501 5,594
Total commercial loans 229,604 195,995 176,532 148,775 133,862
Real estate mortgage loans 60,949 55,948 47,296 49,816 50,413
Installment loans 71,398 58,175 48,228 46,914 36,111
Credit card and line of credit loans 20,314 17,499 15,900 14,680 13,816
---------- ---------- ---------- ---------- ----------
Total loans 382,265 327,617 287,956 260,185 234,202
Less allowance for loan losses 5,306 5,472 4,866 4,010 3,095
---------- ---------- ---------- ---------- ----------
Net loans $ 376,959 $ 322,145 $ 283,090 $ 256,175 $ 231,107
========== ========== ========== ========== ==========
The real estate mortgage loan portfolio includes construction loans totaling $1,647, $1,224, $426, $223, and $1,164 as of
December 31, 1996, 1995, 1994, 1993 and 1992, respectively. The above loan classifications are based on the nature of the loans as
of the loan origination date, and are independent as to the use of the funds by the borrower. There are no foreign loans included
in the above analysis.
-11-
ANALYSIS OF LOAN PORTFOLIO (cont.)
Analysis of Loans Outstanding (cont.)
(in thousands of dollars)
Repricing opportunities of the loan portfolio occur either according to predetermined adjustable rate schedules included in
the related loan agreements or upon scheduled maturity of each principal payment. The following table indicated the rate
sensitivity of the loan portfolio as of December 31, 1996. The table includes the real estate loans held-for-sale and assumes
these loans will not be sold during the various time horizons.
Credit
Card
Real and Line
Commercial Estate Installment of Credit Total Percent
---------- ---------- ----------- ---------- ---------- ----------
Immediately adjustable interest rates
or original maturity of one day $ 169,986 $ 2,091 $ 7,298 $ 17,317 $ 196,692 51.3%
Other within one year 17,267 24,834 23,731 0 65,832 17.2
After one year, within five years 38,357 21,737 39,584 2,997 102,675 26.8
Over five years 3,676 13,116 785 0 17,577 4.6
Nonaccrual loans 318 66 0 0 384 0.1
---------- ---------- ----------- ---------- ---------- ----------
Total loans $ 229,604 $ 61,844 $ 71,398 $ 20,314 $ 383,160 100.0%
========== ========== =========== ========== ========== ==========
A portion of the Bank's loans are short-term maturities. At maturity, credits are reviewed, and if renewed, are renewed at
rates and conditions that prevail at the time of maturity.
Loans due after one year which have a predetermined interest rate and loans due after one year which have floating or
adjustable interest rates as of December 31, 1996 amounted to $96,032 and $122,760 respectively.
-12-
ANALYSIS OF LOAN PORTFOLIO (cont.)
Review of Nonperforming Loans
(in thousands of dollars)
The following is a summary of nonperforming loans as of December 31, 1996, 1995, 1994, 1993 and 1992.
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
PART A - PAST DUE ACCRUING LOANS (90 DAYS OR MORE)
Real estate mortgage loans $ 126 $ 122 $ 0 $ 1 $ 79
Commercial and industrial loans 22 69 16 315 100
Loans to individuals for household,
family and other personal expenditures 68 18 19 346 42
Loans to finance agriculture production
and other loans to farmers 0 0 0 0 0
---------- ---------- ---------- ---------- ----------
Total past due loans 216 209 35 662 221
---------- ---------- ---------- ---------- ----------
PART B - NONACCRUAL LOANS
Real estate mortgage loans 155 76 18 0 0
Commercial and industrial loans 229 456 0 0 0
Loans to individuals for household,
family and other personal expenditures 0 0 0 0 0
Loans to finance agriculture production
and other loans to farmers 0 0 0 0 0
---------- ---------- ---------- ---------- ----------
Total nonaccrual loans 384 532 18 0 0
---------- ---------- ---------- ---------- ----------
PART C - TROUBLED DEBT RESTRUCTURED LOANS 1,284 1,432 1,484 0 86
---------- ---------- ---------- ---------- ----------
Total nonperforming loans $ 1,884 $ 2,173 $ 1,537 $ 662 $ 307
========== ========== ========== ========== ==========
Nonearning assets of the Corporation include nonaccrual loans (as indicated above), nonaccrual investments, other real
estate, and repossessions which amounted to $1,097 at December 31, 1996.
-13-
ANALYSIS OF LOAN PORTFOLIO (cont.)
Comments Regarding Nonperforming Assets
PART A - CONSUMER LOANS
Consumer installment loans, except those loans that are secured by real
estate, are not placed on a nonaccrual status since these loans are
charged-off when they have been delinquent from 90 to 180 days, and when the
related collateral, if any, is not sufficient to offset the indebtedness.
Advances under Mastercard and Visa programs, as well as advances under all
other consumer lines of credit programs, are charged-off when collection
appears doubtful.
PART B - NONPERFORMING LOANS
When a loan is classified as a nonaccrual loan, interest on the loan is
no longer accrued and all accrued interest receivable is charged off. It is
the policy of the Bank that all unsecured loans (i.e. loans for which the
collateral is insufficient to cover all principal and accrued interest) will
be reclassified as nonperforming loans to the extent they are unsecured, on or
before the loan becomes 90 days delinquent. Thereafter, interest is recognized
and included in income only when received.
As of December 31, 1996, loans totaling $384,000 were on nonaccrual
status.
PART C - TROUBLED DEBT RESTRUCTURED LOANS
Loans renegotiated as troubled debt restructuring are those loans for
which either the contractual interest rate has been reduced and/or other
concessions are granted to the borrower because of a deterioration in the
financial condition of the borrower which results in the inability of the
borrower to meet the terms of the loan.
Loans renegotiated as troubled debt restructuring totaled $1,284,000 as
of December 31, 1996. Interest income of $85,000 was recognized in 1996. Had
these loans been performing under the original contract terms, an additional
$44,000 would have been reflected in interest income during 1996. The Bank is
not committed to lend additional funds to debtors whose loans have been
modified.
PART D - OTHER NONPERFORMING ASSETS
The Bank adopted SFAS No. 114 and SFAS No. 118, 'Accounting by Creditors
for Impairment of a Loan' at January 1, 1995. Under these standards, loans
considered to be impaired are reduced to the present value of future cash
flows or to the fair value of collateral, by allocating a portion of the
allowance for loan losses to such loans. If these allocations cause the
allowance for loan losses to require an increase, such increase is reported as
bad debt expense. As part of the loan review process, management reviews all
loans classified as 'special mention' or below, as well as other loans that
might warrant application of SFAS No. 114 and SFAS No. 118. The effect of
adopting these accounting standards on January 1, 1995 was immaterial and at
December 31, 1996, no loans were considered as impaired.
The management of the Bank is of the opinion that there are no
significant foreseeable losses relating to substandard or nonperforming
assets, except as discussed above.
-14-
PART E - LOAN CONCENTRATIONS
There were no loan concentrations within industries which exceeded ten
percent of total assets. It is estimated that over 98% of all the Bank's
commercial, industrial, agri-business and agricultural real estate mortgage,
real estate construction mortgage and consumer loans are made within its basic
trade area.
Basis For Determining Allowance For Loan Losses
Management is charged with the responsibility of determining the adequacy
of the allowance for loan losses. This responsibility is fulfilled by
management in the following ways:
1. Management reviews the larger individual loans (primarily in the
commercial loan portfolio) for unfavorable collectibility factors and assesses
the requirement for specific reserves on such credits. For those loans not
subject to specific reviews, management reviews previous loan loss experience
to establish historical ratios and trends in charge-offs by loan category. The
ratios of net charge-offs to particular types of loans enable management to
estimate charge-offs in future periods by loan category and thereby establish
appropriate reserves for loans not specifically reviewed.
2. Management reviews the current and anticipated economic conditions of
its lending market to determine the effects on future loan charge-offs by loan
category, in addition to the effects on the loan portfolio as a whole.
3. Management reviews delinquent loan reports to determine risk of future
loan charge-offs. High delinquencies are generally indicative of an increase
in future loan charge-offs.
Based upon the above described policy and objectives, $120,000, $120,000
and $795,000 were charged to the provision for loan losses and added to the
allowance for loan losses in 1996, 1995 and 1994, respectively.
The allocation of the allowance for loan losses to the various lending
areas is performed by management in relation to perceived exposure to loss in
the various loan portfolios. However, the allowance for loan losses is
available in its entirety to absorb losses in any particular loan category.
(Intentionally Left Blank)
-15-
ANALYSIS OF LOAN PORTFOLIO (cont.)
Summary of Loan Loss
(in thousands of dollars)
Following is a summary of the loan loss experience for the years ended December 31, 1996, 1995, 1994, 1993, and 1992.
1996 1995 1993 1992 1991
---------- ---------- ---------- ---------- ----------
Amount of loans outstanding, December 31, $ 382,265 $ 327,617 $ 287,956 $ 260,185 $ 234,202
========== ========== ========== ========== ==========
Average daily loans outstanding during the
year ended December 31, $ 352,811 $ 309,241 $ 271,391 $ 240,466 $ 213,599
========== ========== ========== ========== ==========
Allowance for loan losses, January 1, $ 5,472 $ 4,866 $ 4,010 $ 3,095 $ 2,612
---------- ---------- ---------- ---------- ----------
Loans charged-off
Commercial 171 137 27 99 446
Real Estate 0 48 0 4 258
Installment 158 112 93 97 217
Credit cards and personal credit lines 39 58 15 28 39
---------- ---------- ---------- ---------- ----------
Total loans charged-off 368 355 135 228 960
---------- ---------- ---------- ---------- ----------
Recoveries of loans previously charged-off
Commercial 12 26 107 40 11
Real Estate 0 0 1 1 0
Installment 54 63 81 56 85
Credit cards and personal credit lines 16 6 7 6 7
---------- ---------- ---------- ---------- ----------
Total recoveries 82 95 196 103 103
---------- ---------- ---------- ---------- ----------
Net loans charged-off 286 260 (61) 125 857
Purchase loan adjustment 0 746 0 250 0
Provision for loan loss charged to expense 120 120 795 790 1,340
---------- ---------- ---------- ---------- ----------
Balance December 31, $ 5,306 $ 5,472 $ 4,866 $ 4,010 $ 3,095
========== ========== ========== ========== ==========
Ratio of net charge-offs during the period to
average daily loans outstanding
Commercial 0.03% 0.03% (0.03)% 0.02% 0.20%
Real Estate 0.01 0.01 0.00 0.00 0.12
Installment 0.00 0.02 0.01 0.02 0.06
Credit cards and personal credit lines 0.04 0.02 0.00 0.01 0.02
---------- ---------- ---------- ---------- ----------
Total 0.08% 0.08% (0.02)% 0.05% 0.40%
========== ========== ========== ========== ==========
-16-
ANALYSIS OF LOAN PORTFOLIO (cont.)
Allocation of Allowance for Loan Losses
(in thousands of dollars)
The following is a summary of the allocation for loan losses as of December 31, 1996, 1995, 1994, 1993 and 1992.
1996 1995 1994
----------------------- ----------------------- -----------------------
Allowance Loans as Allowance Loans as Allowance Loans as
For Percentage For Percentage For Percentage
Loan of Gross Loan of Gross Loan of Gross
Losses Loans Losses Loans Losses Loans
---------- ---------- ---------- ---------- ---------- ----------
Allocated allowance for loan losses
Commercial $ 1,213 60.07 $ 811 59.82 $ 665 61.31
Real Estate 123 15.94 112 17.08 95 16.42
Installment 530 18.68 376 17.76 311 16.75
Credit cards and personal credit lines 151 5.31 112 5.34 101 5.52
---------- ---------- ---------- ---------- ---------- ----------
Total allocated allowance for loan losses 2,017 100.00 1,411 100.00 1,172 100.00
========== ========== ==========
3,289 4,061 3,694
---------- ---------- ----------
Total allowance for loan losses $ 5,306 $ 5,472 $ 4,866
========== ========== ==========
1993 1992
----------------------- -----------------------
Allowance Loans as Allowance Loans as
For Percentage For Percentage
Loan of Gross Loan of Gross
Losses Loans Losses Loans
---------- ---------- ---------- ----------
Allocated allowance for loan losses
Commercial $ 1,120 57.18 $ 864 57.16
Real Estate 108 19.15 105 21.52
Installment 302 18.04 230 15.42
Credit cards and personal credit lines 95 5.63 87 5.90
---------- ---------- ---------- ----------
Total allocated allowance for loan losses 1,625 100.00 1,286 100.00
========== ==========
2,385 1,809
---------- ----------
Total allowance for loan losses $ 4,010 $ 3,095
========== ==========
-17-
ANALYSIS OF DEPOSITS
(in thousands of dollars)
The average daily deposits for the years ended December 31, 1996, 1995 and 1994, and the average rates paid on those deposits are
summarized in the following table:
1996 1995 1994
----------------------- ----------------------- -----------------------
Average Average Average Average Average Average
Daily Rate Daily Rate Daily Rate
Balance Paid Balance Paid Balance Paid
---------- ---------- ---------- ---------- ---------- ----------
Demand deposits $ 69,459 0.00 $ 60,753 0.00 $ 52,893 0.00
Savings accounts:
Regular savings 43,847 2.55 46,123 2.32 55,855 2.72
Interest bearing checking 53,625 2.20 55,355 2.41 58,945 2.36
Time deposits:
Deposits of $100,000 or more 86,137 5.67 73,449 6.00 54,389 4.34
Other time deposits 208,499 5.39 177,992 5.64 148,251 4.61
---------- ---------- ---------- ---------- ---------- ----------
Total deposits $ 461,567 3.99 $ 413,672 4.07 $ 370,333 3.27
========== ========== ========== ========== ========== ==========
As of December 31, 1996, time certificates of deposit in denominations of
$100,000 or more will mature as follows:
Within three months $ 54,553
Over three months, within six months 20,170
Over six months, within twelve months 14,012
Over twelve months 9,208
----------
Total time certificates of deposit in
denominations of $100,000 or more $ 97,943
==========
-18-
RETURN ON EQUITY AND ASSETS
The rates of return on average daily assets and stockholders' equity, the
dividend payout ratio, and the average daily stockholders' equity to average
daily assets for the years ended December 31, 1996, 1995 and 1994 are as
follows:
1996 1995 1994
-------- -------- --------
Percent of net income to:
Average daily total assets 1.07 1.05 1.10
Average daily stockholders' equity 16.50 17.06 17.73
Percentage of dividends declared per
common share to net income per
weighted average number of common
shares outstanding (2,896,992 shares
in 1996, and 2,876,992 shares in 1995
and 1994) 20.72 18.88 16.57
Percentage of average daily
stockholders' equity to average
daily total assets 6.46 6.18 6.19
-19-
SHORT-TERM BORROWINGS
The following is a schedule of statistical information relating to
securities sold under agreement to repurchase maturing within one year and are
secured by either U.S. Government agency securities or mortgage-backed
securities classified as other debt securities. There were no other categories
of short-term borrowings for which the average balance outstanding during the
period was 30 percent or more of shareholders' equity at the end of the
period.
1996 1995 1994
---------- ---------- ----------
Outstanding at year end $ 85,611 $ 58,151 $ 41,750
Approximate average interest rate at
year end 5.11% 5.35% 5.11%
Highest amount outstanding as of any
month end during the year $ 89,433 $ 79,334 $ 50,460
Approximate average outstanding
during the year $ 73,728 $ 61,398 $ 42,584
Approximate average interest rate
during the year 5.33% 5.69% 3.96%
Securities sold under agreement to repurchase include both transactions
initiated by the investment division of the Bank, as well as the automatic
borrowings from selected demand deposit customers who had excess balances in
their accounts.
-20-
ITEM 2. PROPERTIES
The Bank conducts its operations from the following locations:
Branches/Headquarters
- ---------------------
Main / Headquarters 202 E. Center St. Warsaw IN
Warsaw Drive-up East Center St. Warsaw IN
Akron 102 East Rochester Akron IN
Argos 100 North Michigan Argos IN
Bremen 1600 Indiana State Road 331 Bremen IN
Columbia City 507 North Main St. Columbia City IN
Concord 4202 Elkhart Road Goshen IN
Cromwell 111 North Jefferson St. Cromwell IN
Elkhart 864 East Beardsley St. Elkhart IN
Elkhart East 22050 State Road 120 Elkhart IN
Goshen Downtown 102 North Main St. Goshen IN
Goshen South 2513 South Main St. Goshen IN
Hubbard Hill 58404 St. Road 19 Elkhart IN
Kendallville 631 Professional Way Kendallville IN
LaGrange 901 South Detroit LaGrange IN
Ligonier 1470 U.S. Highway 33 South Ligonier IN
Mentone 202 East Main St. Mentone IN
Middlebury 712 Wayne Ave. Middlebury IN
Milford Indiana State Road 15 North Milford IN
Nappanee 202 West Market St. Nappanee IN
North Webster 644 North Main St. North Webster IN
Pierceton 202 South First St. Pierceton IN
Roann 110 Chippewa St. Roann IN
Rochester 507 East 9th St. Rochester IN
Shipshewana 895 North Van Buren St. Shipshewana IN
Silver Lake 102 Main St. Silver Lake IN
Syracuse 502 South Huntington Syracuse IN
Wabash North 1004 North Cass St. Wabash IN
Wabash South 1940 South Wabash St. Wabash IN
Warsaw East 3601 Commerce Dr. Warsaw IN
Warsaw West 1221 West Lake St. Warsaw IN
Winona Lake 99 Chestnut St. Winona Lake IN
The Bank leases from third parties the real estate and buildings for its
offices in Akron and Milford. In addition, the Bank leases the real estate for
its Wabash North office and its free-standing ATMs. All the other branch
facilities are owned by the Bank. The Bank also owns parking lots in downtown
Warsaw for the use and convenience of Bank employees and customers, as well as
leasehold improvements, equipment, furniture and fixtures necessary and
appropriate to operate the banking facilities.
In addition, the Bank owns a building at 110 South High St., Warsaw,
Indiana, which it uses for various offices and a building at 113 East Center
St., Warsaw, Indiana, which it uses for office and computer facilities. The
Bank also leases from third parties facilities in Warsaw, Indiana, for the
storage of supplies and for employee training.
-21-
None of the Bank's assets are the subject of any material encumbrances.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings other than ordinary
routine litigation incidental to the business to which the Registrant and the
Bank are a party or of which any of their property is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders from April 10, 1996
to December 31, 1996.
(Intentionally Left Blank)
-22-
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
Information relating to the principal market for and the prices of the
Registrant's common stock, and information as to dividends declared by the
Registrant, are contained under the caption "Stock and Dividend Information"
in the 1996 Annual Report and are incorporated herein by reference in response
to this item. On December 31, 1996, the Registrant had 976 shareholders,
including those employees who participate in the Registrant's 401(K) plan.
On January 9, 1996, Lakeland Financial Corporation sold 10,000 shares of
authorized but previously unissued common stock for $41.50 per share. On April
30, 1996, Lakeland Financial Corporation common stock split two-for-one.
ITEM 6. SELECTED FINANCIAL DATA
A five year consolidated financial summary, containing the required
selected financial data, appears under the caption "Selected Financial Data"
in the 1996 Annual Report and is incorporated herein by reference in response
to this item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results
of Operations appears under the caption "Management's Discussion and Analysis
of Financial Condition and Results of Operations" in the 1996 Annual Report
and is incorporated herein by reference in response to this item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements appear in the 1996 Annual
Report and are incorporated herein by reference in response to this item.
Consolidated Balance Sheets at December 31, 1996 and 1995.
Consolidated Statements of Income for the years ended December 31, 1996, 1995
and 1994.
Consolidated Statements of Changes in Stockholders' Equity for the years ended
December 31, 1996, 1995 and 1994.
Consolidated Statements of Cash Flows for the years ended December 31, 1996,
1995 and 1994.
Notes to Consolidated Financial Statements.
Report of Independent Auditors.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
-23-
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information appearing in the Registrant's definitive Proxy Statement
dated March 13, 1997, is incorporated herein by reference in response to this
item.
ITEM 11. EXECUTIVE COMPENSATION
The information appearing in the Registrant's definitive Proxy Statement
dated March 13, 1997, is incorporated herein by reference in response to this
item.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information appearing in the Registrant's definitive Proxy Statement
dated March 13, 1997, is incorporated herein by reference in response to this
item.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information appearing in the Registrant's definitive Proxy Statement
dated March 13, 1997, is incorporated herein by reference in response to this
item.
-24-
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The documents listed below are filed as a part of this report:
(1) Financial Statements.
The following financial statements of the Registrant and its
subsidiaries appear in the 1996 Annual Report and are specifically
incorporated by reference under Item 8 of this Form 10-K, or are a part of
this Form 10-K, as indicated and at the pages set forth below.
Reference
---------
1996 Annual
Form 10-K Report
--------- -----------
Consolidated Balance Sheets at December 31,
1996 and 1995. 8
Consolidated Statements of Income for the
years ended December 31, 1996, 1995 and 1994. 9
Consolidated Statements of Changes in
Stockholders' Equity for the years ended
December 31, 1996, 1995 and 1994. 10
Consolidated Statements of Cash Flows for the
years ended December 31, 1996, 1995 and 1994. 11
Notes to Consolidated Financial Statements. 12 - 21
Report of Independent Auditors. 22
(2) Financial Statement Schedules
The financial statement schedules of the Registrant and its subsidiary
have been omitted because of the absence of conditions under which they are
required or because the required information is given in the financial
statements or notes thereto.
[Intentionally Left Blank]
-25-
SIGNATURES
Pursuant to the requirements of Section 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
LAKELAND FINANCIAL CORPORATION
Date: March 11, 1997 By R Douglas Grant
(R. Douglas Grant) President
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date: March 11, 1997 R. Douglas Grant
(R. Douglas Grant) Principal Executive
Officer and Director
Date: March 11, 1997 Terry M. White
(Terry M. White) Principal Financial and
Accounting Officer
Date: March 11, 1997 Anna K. Duffin
(Anna K. Duffin) Director
Date: March 11, 1997 Eddie Creighton
(Eddie Creighton) Director
Date: March 11, 1997 L. Craig Fulmer
(L. Craig Fulmer) Director
Date:
(Jerry L. Helvey) Director
Date:
(Kevin L. Lambright) Director
Date: March 11, 1997 Allan J. Ludwig
(Allan J. Ludwig) Director
Date: March 11, 1997 J. Alan Morgan
(J. Alan Morgan) Director
Date: March 11, 1997 Richard L. Pletcher
(Richard L. Pletcher) Director
Date:
(Joseph P. Prout) Director
Date:
(Terry L. Tucker) Director
Date:
(G.L. White) Director
-26-
EXHIBIT INDEX
The following Exhibits are filed as part of this Report and not
incorporated by reference from another document:
Exhibit 13 - 1996 Report to Shareholders with Report of Independent
Auditors.
Exhibit 21 - Subsidiaries
Exhibit 27 - Financial Data Schedule
-27-
EXHIBIT 13
1996 Report to Shareholders with Report of Independent Auditors.
-28-
EXHIBIT 21
SUBSIDIARIES. The Registrant has one wholly owned subsidiary, Lake City Bank,
Warsaw, Indiana, a banking corporation organized under the laws of the State
of Indiana.
-29-