NOTICE OF ANNUAL MEETING
OF THE SHAREHOLDERS OF
LAKELAND FINANCIAL CORPORATION
The annual meeting of the shareholders of Lakeland Financial
Corporation will be held on Tuesday, April 9, 1996, at 12:00 Noon (EST) at the
Shrine Building located on the Kosciusko County Fairgrounds in Warsaw,
Indiana. The purpose of the meeting will be: (1) to elect four (4) members of
the Board of Directors; (2) to increase the authorized capital stock of the
Corporation from 2,750,000 shares to 10,000,000 shares; and (3) to transact
such other business as may properly be brought before the meeting.
Only shareholders of record on the Corporation's books at the close
of business on February 19, 1996, will be entitled to vote at the annual
meeting.
A Proxy Statement accompanies and forms a part of this Notice. Your
copy of the 1995 Annual Report is also enclosed.
--------------------------------------------
(R. Douglas Grant) President
Lakeland Financial Corporation
P.O. Box 1387
Warsaw, IN 46581-1387
(219) 267-6144
IMPORTANT - PLEASE SIGN, DATE AND MAIL YOUR PROXY PROMPTLY.
In order to have adequate representation to assure a voting quorum at
the meeting, you are urged to return your signed proxy in the enclosed
envelope, which requires no postage. If you are able to attend the annual
meeting, you may revoke your proxy prior to commencement of the meeting and
vote in person.
<PAGE>
LAKELAND FINANCIAL CORPORATION
202 East Center Street
Post Office Box 1387
Warsaw, Indiana 46581-1387
(219) 267-6144
PROXY STATEMENT
PERSONS MAKING THE SOLICITATION
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Lakeland Financial Corporation (the
"Corporation") of proxies for use at the annual meeting of shareholders of the
Corporation to be held on April 9, 1996.
Lakeland Financial Corporation owns all of the outstanding shares of
Lake City Bank, Warsaw, Indiana (the "Bank"). The total expense of this
solicitation will be paid by Lakeland Financial Corporation. In addition to
use of the mails, proxies may be solicited personally or by telephone or
telegraph by officers, directors and certain employees of the Corporation and
the Bank, who will not be specially compensated for such soliciting.
The approximate date on which this statement and accompanying form of
proxy are first mailed to shareholders is March 11, 1996.
REVOCABILITY OF PROXY
Any shareholder giving a proxy has the right to revoke it at any time
before it is exercised. Therefore, execution of the proxy will not in any way
affect the shareholder's right to vote in person if he or she attends the
meeting. Revocation may be made prior to the meeting by written notice sent to
the President of the Corporation at the offices of the Corporation at 202 East
Center Street, P.O. Box 1387, Warsaw, Indiana, 46581-1387; or it may be done
personally upon oral or written request at the annual meeting. The shares
represented by proxies will be voted as instructed by the shareholders giving
the proxies. In the absence of specific instructions to the contrary, proxies
will be voted "FOR" the election of the nominees for directors listed and
"FOR" the increase in capital stock.
VOTING OF SECURITIES
Only shareholders of record as of February 19, 1996, will be entitled
to vote. The Corporation has issued and outstanding, as its only class of
voting securities, 1,448,496 shares of common stock. Each share entitles the
holder thereof to one vote upon each matter to be voted upon at the annual
meeting. The affirmative vote of a majority of the shares present at the
annual meeting will be sufficient to elect nominees. It will require the
affirmative vote of at least two-thirds (2/3) of the total shares outstanding
to increase the authorized capital stock, or 965,665 or more affirmative
votes.
SECURITY OWNERSHIP
As of February 26, 1996, the following persons or groups, as best
known to the Corporation, were beneficial owners of more than 5 percent of the
Corporation's voting securities. The sole class of voting securities is common
stock.
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Amount and Nature
Name and Address of Beneficial Percent of
of Owners Ownership Class
- ----------------------------- ---------------------------- ---------------
Helen Koch 78,605 Shares (1) 5.43%
1511 Locust - Apt. 201
Elkhart, IN 46514
Lakeland Financial 150,786 Shares (2) 10.41%
Corporation 401(k)
Plan
Post Office Box 1387
Warsaw, Indiana 46581-1387
(1) This includes 78,526 shares held in the Ola Sloan Testamentary Trust for
Helen Koch. This information has been supplied by the trust for which the Bank
serves as trustee. Helen Koch, the beneficiary of this trust, exercises voting
power but not investment power over the shares held in the trust.
(2) This information has been supplied by the Bank which serves as trustee of
the trust. Participant employees of the Corporation and the Bank exercise
voting and investment power over the shares. The Bank exercises investment
power over those shares not allocated to any participant account.
As of February 26, 1996, the following table shows the number of
equity shares beneficially owned by all directors and nominees naming them,
and of all directors and officers as a group, not naming them. The sole class
of equity securities is common stock.
Name of Individual or Amount and Nature
Number of Persons of Beneficial Percent of
In Group Ownership (1) Class
- --------------------- --------------------- -------------
Eddie Creighton 35,040 (2) 2.42%
Anna K. Duffin 500 (3) (13)
L. Craig Fulmer 747 (13)
R. Douglas Grant 23,068 (4) 1.60%
Jerry L. Helvey 16,212 (5) 1.12%
Homer A. Kent 660 (6) (13)
J. Alan Morgan 1,069 (7) (13)
Richard L. Pletcher 310 (8) (13)
Joseph P. Prout 3,970 (9) (13)
Philip G. Spear 5,940 (10) (13)
Terry L. Tucker 1,320 (13)
George L. White 660 (11) (13)
Officers and Directors 100,394 (12) 6.93%
as a Group
(15) individuals
including those
named above)
(1) The information contained in this column is based upon information
furnished to the Corporation by the persons named above and as shown on
the transfer records of the Corporation. The nature of beneficial
ownership for shares shown in this column, unless otherwise noted,
represents sole voting and investment power.
(2) Includes 28,043 shares held by Creighton Brothers L.P., as to which Mr.
Creighton shares voting and investment powers; 2,047 shares held by Mr.
Creighton's Individual Retirement Account; and 990 shares held by Mr.
Creighton's wife.
2
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(3) All of which shares are owned jointly with her husband, with whom she
shares voting and investment power.
(4) This includes all shares which have been allocated to Mr. Grant under the
401(k) Plan for 1995 and all prior years.
(5) Includes 12,655 shares held individually by Mr. Helvey's wife, as to
which shares he disclaims any beneficial interest.
(6) Includes 440 shares held jointly with Dr. Kent's wife, with whom he
shares voting and investment power.
(7) Includes 79 shares held individually by Mr. Morgan's wife, with respect
to which shares Mr. Morgan disclaims any beneficial interest.
(8) Includes 100 shares held by Mr. Pletcher's Individual Retirement Account.
Also included are 100 shares held by Mr. Pletcher's wife's Individual
Retirement Account, with respect to which shares Mr. Pletcher disclaims
any beneficial interest.
(9) Includes 1,000 shares held individually by Mr. Prout's wife, with respect
to which shares Mr. Prout disclaims any beneficial interest.
(10) Includes 4,730 shares held in the Philip G. Spear Trust. Mr. Spear
exercises all voting and investment power over the shares held in trust.
Also included are 220 shares held by the Donna L. Spear Trust as to which
he disclaims any beneficial interest. Also included are 990 shares held
by Mr. Spear's Individual Retirement Account, over which he exercises
voting and investment power.
(11) Includes 605 shares held jointly with Mr. White's wife, with whom he
shares voting and investment power.
(12) This includes shares which have been allocated to Executive Officers
under the 401(k) Plan for 1995 and all prior years.
(13) The named director's percentage ownership of the Corporation's equity
securities is less than one percent (1%).
ELECTION OF DIRECTORS
It is intended that all shares represented by proxy will be voted
"FOR" the re-election of the incumbent directors listed below, unless
otherwise instructed.
The following table contains information with respect to nominees,
whose terms as incumbent directors expire on April 9, 1996. The information
includes service to Lake City Bank prior to the formation of Lakeland
Financial Corporation.
Term
Name Age Date Expires
Eddie Creighton 63 Director since 1970 4/96
Mr. Creighton is President of Creighton Brothers, the general partner
of Creighton Brothers L.P. and Crystal Lake L.P., both of which are
involved in poultry and egg production and sales, although they also
produce and sell other agricultural and food products.
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J. Alan Morgan 59 Director since 1974 4/96
Mr. Morgan is retired.
Philip G. Spear 67 Director since 1967 4/96
Mr. Spear retired as President of W.R. Thomas Stores, Inc., during
1994.
George L. White 62 Director since 1984 4/96
Mr. White retired as President of United Telephone Company of Indiana,
Inc. on December 31, 1991.
INCUMBENT DIRECTORS
In addition to the foregoing incumbent directors who shall stand for
election at the annual meeting April 9, 1996, the following named individuals
serve on the Board of Directors.
Term
Name Age Date Expires
Anna K. Duffin 62 Director since 1994 4/98
Mrs. Duffin is active in civic affairs in the Goshen area.
L. Craig Fulmer 53 Director since 1993 4/98
Mr. Fulmer is Chairman of Heritage Financial Group, Inc., a real
estate investment and management company based in Elkhart, Indiana.
R. Douglas Grant 62 Director since 1980 4/97
Mr. Grant has served as President of the Bank since October, 1980 and
as President of the Corporation since its formation. In January, 1993,
Mr. Grant was elected as Chairman of both the Corporation and the Bank.
Jerry L. Helvey 62 Director since 1974 4/97
Mr. Helvey is President of Helvey & Associates, Inc., a group of
collection agencies.
Homer A. Kent 69 Director since 1983 4/97
Dr. Kent has retired as President of Grace College and Grace
Theological Seminary, where he continues to serve as a member of the
faculty.
Richard L. Pletcher 54 Director since 1992 4/97
Mr. Pletcher is President of Pletcher Enterprises, Inc., a holding
company, and its principal subsidiary corporations, Amish Acres, Inc.
(a heritage resort), Pletcher Furniture Inc. (retail furniture sales)
and Pletcher Apparel, Inc. (retail women's wear).
Joseph P. Prout 67 Director since 1971 4/98
Mr. Prout is President of Owens Supermarkets, Inc., a food supermarket
chain.
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Terry L. Tucker 55 Director since 1988 4/98
Mr. Tucker is President of Maple Leaf Farms, Inc., which is primarily
engaged in duck production, processing and sales, although it also
processes and sells other food products.
No Director is a director of another "public corporation" (i.e.
subject to the reporting requirements of the Securities Exchange Act of 1934)
or of any investment company except Mr. White who is a Director of United
Telephone Company of Indiana, Inc.
INCREASE IN CAPITAL STOCK
It is intended that all shares represented by proxy will be voted
'FOR" the increase in capital stock, unless otherwise instructed.
At the 1987 meeting of the shareholders, more than two-thirds (2/3)
of the issued and outstanding shares were voted to increase the capital stock
of the Corporation from 750,000 shares to 2,750,000. Through stock splits and
stock dividends since that time, the number of shares issued and outstanding
has increased from 653,922 shares to 1,438,496 shares. Also, the Board of
Directors at its January, 1996 meeting authorized the issuance and sale of
10,000 shares to the 401(k) plan due to a shortage of shares being available
in the market. This brings the total number of shares presently issued and
outstanding to 1,448,496 shares and leaves the total number of authorized but
unissued shares at 1,301,504 shares.
In the judgment of the Corporation's Board of Directors, an increase
in capital stock is essential to continue to provide a ready market for your
shares and for the future orderly growth of the Corporation. Traditionally,
stock splits result in increased trading and a broader market for the
Corporation's shares. In recent years, the Bank's growth into the surrounding
counties has increased the demand for the Corporation's shares in those
counties. If the increase in shares is approved, it is the intention of the
Board of Directors to use 1,448,496 of the authorized but unissued shares of
the Corporation to make a two for one split, which was preliminarily approved
by the Board of Directors at its February meeting. The Board of Directors has
no present intention to issue the remainder of the proposed shares at this
time, but intends to retain them as authorized but unissued shares.
For purposes of capital structure and strategic planning, it is
desirable that the Corporation and its Board of Directors have authorized but
unissued shares available without the necessity of calling a special meeting
of the shareholders. Much like 1987 when the last increase was authorized,
there is substantial consolidation of banks taking place at the present time.
In such an environment Lakeland Financial Corporation must be in a position to
participate either as an acquiror or acquiree if it is
deemed to be in the best interest of the Corporation's shareholders. It is in
the area of acquiring additional assets that the authorized but unissued
shares may become important.
There are essentially two methods by which Lakeland Financial
Corporation can acquire the assets of a bank which the Board of Directors
determines to be desirable. One is by a cash purchase and the other is through
an exchange of shares. Either of these methods may require that the
Corporation be able to move quickly to negotiate and close the transaction.
Without the availability of authorized but unissued shares, the Board of
Directors would be required to make a costly and time consuming proxy
solicitation and conduct a shareholders' meeting to authorize the necessary
stock to close any transaction involving an exchange of shares. This delay
could result in the Corporation losing the transaction, even though the
amounts involved are relatively small compared to the Corporation's total
assets and capital. Without the ready assurance of the availability of the
shares to make such offers, the Corporation may be precluded from even
considering such transactions.
The Board of Directors has no intention at this time of selling any
authorized but unissued shares on the open market, having them sold through an
underwriter or otherwise issuing the shares. The Board does respect the
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proportion of ownership of the Corporation's present and future shareholders
and would expect to do all things reasonable to allow them to protect that
interest. The Board does not promise shareholders pre-emptive rights and none
are granted by the Articles of Incorporation. It is, however, the Board's
intention to consider all reasonable alternatives if sale should ever be
discussed, including solicitation of the then current shareholders.
EXECUTIVE OFFICERS
The following named individuals in addition to Mr. Grant serve as
executive officers of the Corporation.
Name Age Date
- ---- --- ----
William A. Henthorn 41 Officer since 1978
Mr. Henthorn presently serves as an Executive Vice President of both
the Corporation and the Bank and has served as Senior Vice President,
Vice President, Assistant Vice President and Loan Officer of the Bank
at various times since 1978.
Paul S. Siebenmorgen 46 Officer since 1980
Mr. Siebenmorgen presently serves as an Executive Vice President of
both the Corporation and the Bank and has served as Senior Vice
President, Vice President, Assistant Vice President, Branch Manager,
Loan Officer and Assistant Cashier of the Bank at various times since
1980.
Terry M. White 38 Officer since 1993
Mr. White presently serves as Secretary and Treasurer of the
Corporation and as Senior Vice President and Cashier of the Bank,
all of which positions he assumed effective January 1, 1994. He
first joined Lake City Bank as a Senior Vice President in April,
1993. Prior to joining Lake City Bank, Mr. White served as First
Vice President- Chief Planning and Investment Officer of Norwest,
Indiana, Fort Wayne and its predecessor Lincoln Financial Corp. from
December, 1985 to March, 1993.
There are no arrangements or understandings between any of the directors,
executive officers, or any other persons pursuant to which any of the
Corporation's directors or executive officers have been selected for their
respective positions.
COMPLIANCE WITH SECTION 16(a)
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Corporation pursuant to Securities and Exchange Act Rule
16a-3(e) during its most recent fiscal year and Form 5 and amendments thereto
furnished to the Corporation with respect to its most recent fiscal year, no
director or executive officer failed to file on a timely basis, as disclosed
in the above forms, reports required by Section 16(a) of the Securities
Exchange Act of 1934, except Mr. Prout who filed one late report during 1995
regarding one transaction by his spouse.
DIRECTORS' COMMITTEES
The standing committees of the Board of Directors are the Audit
Committee, the Loan and Investment Committee and the Trust Committee. There is
no standing Nominating Committee nor Compensation Committee.
6
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The Audit Committee was first established during 1985. Currently, Mrs.
Duffin, Mr. Pletcher, Mr. Spear, Mr. Tucker and Mr. White serve on the Audit
Committee. Its duties as established by the Board of Directors are:
1. Provide an open avenue of communications between management,
the independent and internal auditors and the Board of
Directors.
2. Review annually the engagement of the independent auditors,
including the scope and general extent of their review, the
audit procedures to be utilized and the basis for
compensation. Recommend for consideration the independent
auditors to be appointed by the Board of Directors.
3. Review at least annually the programs and functions of the
internal auditors.
4. Review and participate in the establishment of the broad
scope of the joint independent internal audit program with
both independent and internal auditors at least once each
year and review the implementation thereof during the year.
DIRECTORS' ATTENDANCE
During 1995, the full Board of Directors held 12 meetings; the Audit
Committee held 10 meetings; the Loan and Investment Committee held 12
meetings; and the Trust Committee held 10 meetings. No director attended less
than 75% of the total number of meetings they were eligible to attend, except
Mr. Morgan who attended 63% and Mr. Prout who attended 67%.
EXECUTIVE COMPENSATION
Shown below is the compensation paid by the Corporation, and its
subsidiary, for the years 1995, 1994 and 1993 to each of its executive
officers in an amount exceeding $100,000.
SUMMARY COMPENSATION TABLE1
Annual Compensation
(a) (b) (c) (d) (i)
Name and All other
Principal Position Year Salary($) Bonus($) Compensation($)2
- --------------------- ---- -------- ------- ----------------
R. Douglas Grant 1995 190,000 66,000 27,714
Chairman, President 1994 165,000 52,500 24,012
and Chief Executive 1993 150,000 34,000 22,200
Officer
Paul S. Siebenmorgen 1995 86,580 23,529 11,345
Executive Vice President 1994 78,430 19,202 10,278
1993 73,150 12,720 9,584
William A. Henthorn 1995 78,715 21,515 10,313
Executive Vice President 1994 71,715 17,922 9,395
1993 68,275 11,946 8,949
1 The Corporation does not maintain any Long Term Compensation Plans or
programs for its executive officers.
2 The amounts set forth in column (i) for Mr. Grant, Mr. Siebenmorgen and
Mr. Henthorn include the following:
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(a) Group Term Life Insurance Premiums Paid by the Corporation($)
Mr. Grant Mr. Siebenmorgen Mr. Henthorn
1995 - 4,914 955 867
1994 - 4,212 867 789
1993 - 4,212 806 756
(b) 401(k) Plan Corporation Contributions Paid by the Corporation($)
Mr. Grant Mr. Siebenmorgen Mr. Henthorn
1995 - 22,800 10,390 9,446
1994 - 19,800 9,411 8,606
1993 - 17,988 8,778 8,193
PENSION PLAN TABLE
The Corporation's defined benefit retirement plan covers all
employees over 21 years of age with more than one year of service. The benefit
is computed on the basis of average salary or wages for the five (5) years
preceding retirement which produces the highest benefit. Normal retirement age
is 65. Participants receive credit for 2-1/2% of their average salary for each
year up to 20 years service. The principal benefit under the plan is a
lifetime annuity for the joint lives of participants and their spouses. This
amount is offset by social security benefits. On December 31, 1985, the then
existing plan was terminated and the current plan was adopted effective
January 1, 1986. Participants in the terminated plan were paid cash or
received annuities for their earned benefits as of December 31, 1985. The
amounts paid for annuities purchased as a part of the plan termination will
reduce the benefits to be paid out of the new plan. Mr. Grant, Mr.
Siebenmorgen and Mr. Henthorn received annuities costing $33,286, $1,878 and
$1,229, respectively, as a part of the plan termination.
Remuneration Years of Credited Service
-------------------------
15 20 25 30 35
------------------------------------------------------------
100,000 37,500 50,000 50,000 50,000 50,000
125,000 46,875 62,500 62,500 62,500 62,500
150,000 56,250 75,000 75,000 75,000 75,000
175,000 65,625 87,500 87,500 87,500 87,500
200,000 75,000 100,000 100,000 100,000 100,000
225,000 84,375 112,500 112,500 112,500 112,500
250,000 93,750 125,000 125,000 125,000 125,000
275,000 103,125 137,500 137,500 137,500 137,500
The amounts shown above include amounts payable under a Supplemental
Employees Retirement Plan which is a non-qualified plan payable as a general
creditor of the Corporation. In 1989, the Corporation amended its defined
benefit plan and the amendments could result in highly compensated employees
receiving a reduced pension benefit. The Supplemental Employee Retirement Plan
did not create any new benefits, but was adopted to offset any such reduction
in pension benefits.
The salaries and bonuses shown in the Summary Compensation Table for
Mr. Grant, Mr. Siebenmorgen and Mr. Henthorn approximate covered compensation
under the plan. Mr. Grant, Mr. Siebenmorgen and Mr. Henthorn had 17, 15 and 19
years of credited service respectively at December 31, 1995.
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COMPENSATION COMMITTEE INTERLOCKS
and
INSIDER PARTICIPATION
The Corporation does not have a Compensation Committee, but executive
compensation is determined by the Board of Directors sitting as a Committee of
the Whole. During 1995, this consisted of Messrs. Creighton, Fulmer, Grant,
Helvey, Kent, Morgan, Pletcher, Prout, Spear, Tucker, White and Mrs. Duffin.
Inside directors (full-time employees of the Corporation) are asked to leave
the meeting during the time the Board is deliberating their compensation or
that of their superiors, but inside directors do participate in evaluating and
establishing the salaries of other executive officers. Mr. Grant, the
President and Chief Executive Officer of the Corporation, participated during
1995 in establishing the salaries of all executive officers except his own.
REPORT OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
The Board of Directors sitting as a Committee of the Whole has
furnished the following report on Executive Compensation.
General
- -------
The Corporation annually reviews executive officer compensation in
December with the new compensation to become effective on the following
January 1. In establishing executive compensation the Board has historically
divided compensation into two (2) separate components: salary and bonus. When
fixing an individual executive officer's compensation these two (2) components
are intended to work together to compensate the executive officer fairly for
his services and reward the executive officer based upon the Corporation's
performance during the year. The Corporation further encourages the executive
officers and all employees to purchase a personal stake in the long term
success of the Corporation through stock ownership under the Corporation's
401(k) Plan.
Salary
- ------
Executive officer salaries are established by the Board based upon a
wide variety of factors, including prior years salary, duties and
responsibilities, evaluations by supervisors, and salaries for comparable
positions paid by similarly situated financial institutions in Indiana. When
establishing the salary of executive officers other than Mr. Grant, Mr. Grant
participates and makes recommendations to the Board. Furthermore, the Board
has available copies of an annual survey of financial institution salaries
paid by Indiana banks published by the Indiana Banker's Association and also a
salary survey prepared by Crowe Chizek and Company. Using this information the
Board establishes salaries using an informal and subjective analysis,
primarily focused upon paying competitive salaries sufficient to retain the
services of its executive officers without paying salaries which are
significantly greater than those paid by similarly situated financial
institutions. Although overall profitability of the Corporation is a factor in
establishing executive officer salaries, no specific weight is given to
financial performance. Likewise, consideration is given to the performance of
the Corporation's stock during the past several years, but no specific weight
is given to this factor. The salary paid to Mr. Grant, as President and Chief
Executive Officer, during 1995 as shown in the Summary Compensation Table of
the Proxy Statement was based upon the Board's satisfaction with the overall
profitability of the Corporation and performance of the Corporation's stock
and retaining his services for future years, without any specific reference
being made to qualitative or quantitative performance factors. Similar
considerations were used in establishing Mr. Grant's 1996 salary.
Bonus
- -----
Executive officer bonuses, including Mr. Grant's, are determined by
an established Executive Incentive Compensation Program which is periodically
reviewed by the Board. The Bonus Program applies to all executive officers of
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the Corporation, as well as designated officers of the Bank. As established,
the Board retains the right to modify the Program and/or withhold payment at
any time. Historically, payments have not been withheld since its adoption.
The Bonus Program is designed to encourage the Executive Officers to maximize
the annual profits of Lake City Bank with an incentive to conserve capital.
During its December 1995 review, the Board chose not to modify the Bonus
Program or withhold payment for the fiscal year 1995. On December 31, 1993,
the Corporation and Bank adopted provisions of Statement of Financial
Accounting Standard ("SFAS") 115 which requires recognition of gain or loss on
certain securities and investments held in the Bank's securities and
investment portfolio at year end. For purposes of the Bonus Program,
unrealized gains and losses in the securities and investment portfolio of the
Bank are excluded from equity capital.
Bonuses are computed on the Return on Investment (Shareholders'
Equity). It is based upon net profit (after taxes) and includes all realized
securities gains and losses (including tax effect), before payment of bonuses
and contributions to the 401(k) Plan. Unless the year end Return on Investment
computed on the January 1 shareholders' equity equals or exceeds 12%, no bonus
is paid. Thereafter, based upon an established schedule, a percentage of each
eligible officer's salary is paid as a bonus.
As established, the Bonus Program provides that the President and
Chief Executive Officer of the Corporation receives two (2) times the
established percentage for his bonus and the Executive Vice Presidents receive
one and one half (1 1/2) times the established percentage for their bonuses.
During 1994 the Return on Investment established a 20% bonus. Since Mr.
Grant's percentage is multiplied by two (2) he received a bonus equal to 40%
of his 1994 base salary during 1995 and Mr. Siebenmorgen and Mr. Henthorn
received bonuses equal to 30% of their respective 1994 base salaries during
1995.
Stock Ownership
- ---------------
The Corporation encourages all employees, including executive
officers, to acquire its stock and participate in its long-term growth. To
facilitate this, the Corporation has adopted the Lakeland Financial
Corporation 401(k) Plan (the "Plan") effective January 1, 1984. Under the Plan
employees are eligible to redirect up to 9% of their regular basic
compensation into a tax deferred trust. All employees 21 years of age and
older having more than 1 year service with the Bank or the Corporation are
eligible to participate in the Plan; however, participation is voluntary. The
Plan requires that the Corporation make matching contributions for
participants under certain conditions described below. Corporation matching
contributions are made on up to 6% of each participant's regular basic
compensation. Furthermore, in those years in which the Corporation has paid a
dividend to its shareholders, the Corporation will make a contribution to the
Plan equal to 25% of the participant's contributions, which is allocated to
participant's accounts based upon their individual contributions. All
participant contributions and matching contributions are invested in
Corporation stock. Additionally, the Corporation will make an extra matching
contribution for those years in which the net earnings of the Corporation,
before making any deductions for employee incentive plans, expressed as a
percentage of the January 1 equity capital of the Corporation equal or exceed
12%, which contribution will be made according to the following schedule:
Percentage of Percentage Match of
Equity Capital Participant Contributions
-------------- -------------------------
12.00% to 12.99% 25%
13.00% to 13.99% 50%
14.00% to 14.99% 75%
15.00% to 15.99% 100%
16.00% to 16.99% 125%
17.00% to 17.99% 150%
Over 18% 175%
Due to the adoption of SFAS 115 requiring the recognition of unrealized gains
and losses in certain of the securities and investment portfolios, commencing
in 1993, equity capital is defined as the total of the capital stock, surplus
and retained earnings accounts, excluding the equity accounts relating to
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market valuation adjustments as defined in SFAS 115. The extra matching
contributions may, at the election of each participant, be invested in any one
or more of four equity and income accounts, one of which holds stock of the
Corporation exclusively. All Corporation stock held by the trust is purchased
by independent agents in open market transactions and voting power is
exercised by the individual participants. Participant accounts are distributed
to the individual participants upon retirement and may include Corporation
stock. All participants are always 100% vested in their salary redirections
and become 100% vested in Corporation contributions upon retirement,
disability or in accordance with the schedule shown below.
Years of Service 401(k) Percentage Vested
---------------- ------------------------
Less than 3 years 0%
3 years 20%
4 years 40%
5 years 60%
6 years 80%
7 years or more 100%
The contributions made to the Plan for 1995, 1994 and 1993 on behalf of Mr.
Grant, Mr. Siebenmorgen and Mr. Henthorn are shown in footnote 2 to the
Summary Compensation Table of the Proxy Statement. During 1994, a Supplemental
401(k) Plan was adopted to offset benefit reductions for highly compensated
officers. This new plan did not create any new benefits and is used solely to
offset required reductions in the 401(k) Plan. Contributions to the
Supplemental 401(k) Plan may not be invested in Corporation stock. The highly
compensated officers who participate in this Supplemental 401(k) Plan have no
interest in the trust established under the plan, but are general creditors.
Approved by the Lakeland Financial Corporation Board of Directors as
of December 31, 1995.
Eddie Creighton Jerry L. Helvey Joseph P. Prout
Anna Duffin Homer A. Kent Philip J. Spear
L. Craig Fulmer J. Alan Morgan Terry L. Tucker
R. Douglas Grant Richard L. Pletcher George L. White
[INTENTIONALLY LEFT BLANK]
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STOCK PRICE PERFORMANCE
The Stock Price Performance Graph below shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934, except to the extent Lakeland Financial
Corporation specifically incorporates this information by reference, and shall
not otherwise be deemed filed under such Acts.
The graph below compares cumulative total return* of Lakeland
Financial Corporation, the NASDAQ Market Index and a Peer Group Index.
Lakeland
Financial Peer
DATE Corp Group NASDAQ
- ------------------ ------------------ ------------------- ------------------
1/1/91 100.00 100.00 100.00
12/31/91 105.23 112.54 128.38
12/31/92 144.38 162.04 129.64
12/31/93 191.49 204.68 155.50
12/31/94 258.81 214.69 163.26
12/31/95 313.49 287.67 211.77
This table was presented as a graph in the proxy material mailed to
shareholders.
* Assumes $100 invested on January 1, 1991 and that all dividends were
reinvested.
The Peer Group selected for display in the above graph is all banks
in the United States with total assets of less than one billion dollars whose
equity securities were traded on an organized exchange for the last five (5)
consecutive years.
12
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DIRECTORS' COMPENSATION
During 1995, directors who were not full time employees of the
Corporation, or its subsidiaries, were paid an annual fee of $5,000.00 and an
additional $250.00 for each meeting of the board attended and $250.00 for each
committee meeting attended. They are not eligible to participate in the 401(k)
Plan or the Defined Benefit Plan. Inside directors (those who are full time
employees of the Corporation or its subsidiaries) are not paid a director's
fee. For 1996 the annual fee has been increased to $6,000.00.
INDEBTEDNESS OF MANAGEMENT
During 1995, the Bank had extended, and expects to continue to
extend, loans to its directors and officers and to their related interests.
Such loans were, and will continue to be, made only upon the same terms,
conditions, interest rates, and collateral requirements as those prevailing at
the same time for comparable loans extended from time to time to other,
unrelated borrowers. Loans to directors and officers do not and will not
involve greater risks of collectability, or present other unfavorable
features, than loans to other borrowers.
INDEPENDENT PUBLIC ACCOUNTANTS
During 1995, Crowe Chizek and Company again served as the
Corporation's Independent Public Accountants. As of this date no determination
has been made as to selection of Independent Public Accountants for 1996. As a
matter of practice for the past several years, the Directors have not made a
final decision on selection of Independent Public Accountants until after the
completion of all audit services for the prior year. This includes portions of
the Corporation's 10-K which is not completed as of the date of this proxy
statement. A representative of Crowe Chizek and Company is not expected to be
present at the annual meeting of the Corporation.
PROPOSALS OF SHAREHOLDERS
Any proposal which any shareholder may intend to present at the
annual meeting to be held in 1997 must be received by the Corporation on or
before the 16th day of November, 1996, if such proposal is to be included in
the Proxy Statement and Form of Proxy pertaining to the 1996 Annual Meeting.
GENERAL
ON YOUR WRITTEN REQUEST ADDRESSED TO TERRY M. WHITE AT P.O. BOX 1387,
WARSAW, INDIANA 46581-1387, A COPY OF LAKELAND FINANCIAL CORPORATION'S ANNUAL
REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO,
WILL BE PROVIDED WITHOUT CHARGE TO YOU.
As of the date of this Proxy Statement, management knows of no
matters to be brought before the annual meeting other than the review of the
annual report, the election of 4 directors and the increase in the capital
stock. If, however, further business should properly be introduced by others,
proxy holders will act in accordance with their own best judgment.
--------------------------------------------
(R. Douglas Grant, President)
13
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APPENDIX
FORM OF PROXY
<PAGE>
LAKELAND FINANCIAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints R. Douglas Grant and Terry M. White
proxies with full power of substitution to vote all Common Stock of Lakeland
Financial Corporation held of record by the undersigned on February 19, 1996,
at the annual meeting of shareholders on April 9, 1996, or any adjournment
thereof.
1. Election of Directors for all nominees listed below [ ]
Withhold authority to vote for all nominees listed below [ ]
Eddie Creighton, J. Alan Morgan, Philip G. Spear, George L. White
Instruction: To withhold authority to vote for any individual nominee
write that nominee's name on the space provided below.
--------------------------------------------------------
2. Directors' proposal to increase capital stock [ ] For [ ] Against
3. In their discretion the proxies are authorized to vote upon such other
business as may properly come before the meeting.
(continued and to be signed on the other side)
- -------------------------------------------------------------------------------
(CONTINUED FROM OTHER SIDE)
Unless otherwise specified, the proxies are appointed to vote for the
proposals. This proxy when properly executed will be voted in the manner
directed by the undersigned shareholder(s).
___________________________ _________________________ DATE__________, 1996
Signature of shareholder Signature of shareholder
Please sign exactly as your name is printed hereon. When signing as
attorney, executor, administrator, personal representative, trustee or
guardian, please give full title. If a corporation, please sign in full
corporate name by authorized officer. If a partnership, please sign in
partnership name by authorized person. Please mark, sign, date and return
promptly in the enclosed envelope.
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