Lakeland Financial repurchases $56 million in preferred stock issued to Treasury under TARP

Lakeland Financial buys back $56M in TARP shares

WARSAW, Ind. — Lakeland Financial Corp. on Wednesday said it bought back all of the 56,004 shares of preferred stock issued to the Treasury Department in exchange for federal bailout aid.

The parent of Lake City Bank paid $56 million to repurchase the shares it issued to the government in February 2009.

The bank also expects to notify Treasury that it intends to enter negotiations to repurchase the 10-year warrant issued in conjunction with the preferred stock. The warrant entitles the agency to purchase shares of common stock.

Lakeland said it was able to continue lending in Indiana as a result of the TARP funding. Since the end of 2008, Lakeland has increased total loans by $178 million, said its chairman, president and chief executive, Michael L. Kubacki.

At the height of the financial crisis in fall 2008, the government committed $700 billion of taxpayer funds to help banks under the so-called Troubled Asset Relief Program, or TARP. Hundreds of U.S. banks participated and received cash investments from the Treasury Department in exchange for preferred stock.

In late May, Treasury said the projected cost of the program has decreased to $105.4 billion. Approximately $190 billion had been repaid at that time, and the value of shares and other investments the government still holds has increased.

The program officially ends in October.

Lakeland Financial shares closed Wednesday up 3 cents at $19.77.