Lakeland Financial Reports Record Performance

Third Quarter Net Income Increases 17%

WARSAW, Ind., Oct. 25, 2016 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq:LKFN), parent company of Lake City Bank, today reported record quarterly net income of $13.5 million for the third quarter of 2016, an increase of 17%, versus $11.6 million for the third quarter of 2015. Diluted net income per common share of $0.53 for the third quarter of 2016 also represents a quarterly record and an increase of 15%, versus $0.46 for the comparable period of 2015. On a linked quarter basis net income increased by 5%, or $677,000 from $12.8 million for the second quarter ended June 30, 2016.

The company further reported record net income of $38.6 million for the nine months ended September 30, 2016 versus $34.1 million for the comparable period of 2015, an increase of 13%. Diluted net income per common share was also a record for the period and increased 13% to $1.52 for the nine months ended September 30, 2016 versus $1.35 for the comparable period of 2015. All share and per share data presented in this press release has been adjusted for a 3-for-2 stock split paid in the form of a stock dividend on August 5, 2016.

David M. Findlay, President and CEO, commented, “This strong performance reflects the continued growth of our balance sheet and our disciplined approach to operating the business. We are particularly proud of our consistent loan and deposit growth in 2016. This growth and the accompanying overall revenue increases were the drivers of this record income performance.”

Highlights for the quarter are noted below:

3^rd Quarter 2016 versus 3^rd Quarter 2015 highlights:

Organic average loan growth of $322 million or 11%
Average deposit growth of $485 million or 16%
Net interest income increase of $3.0 million or 11%
Continued strong asset quality with nonperforming assets to total assets at 0.18%
Tangible common equity increase of 11%

3^rd Quarter 2016 versus 2^nd Quarter 2016 highlights:

Organic average loan growth of $52 million or 2%
Core deposit growth of $255 million or 8%
Net interest income increase of $446,000 or 2%
Noninterest income increase of $951,000 or 12%

Findlay added, “Our stable and controlled approach to managing the business, combined with a constant focus on taking care of our clients, leads to this type of results. As we continue to operate in a challenging interest rate environment, we’ve maintained our focus on the clients and communities we serve. The resulting balance sheet and income statement growth are very gratifying to the Lake City Bank team.”

As previously announced, the board of directors approved a cash dividend for the third quarter of $0.19 per share, payable on November 7, 2016, to shareholders of record as of October 25, 2016. The third quarter dividend per share represents a 16% increase over the dividend rate paid in the last three quarters of 2015 and in the first quarter of 2016 of $0.163 per share on a split adjusted basis.

Return on average total equity for the first nine months of 2016 was 12.51% compared to 12.18% in the prior year period. Return on average assets for the first nine months of 2016 and 2015 was 1.29%. The company’s total capital as a percent of risk-weighted assets was 13.52% at September 30, 2016, compared to 13.79% at September 30, 2015 and 13.65% at June 30, 2016. The company’s tangible common equity to tangible assets ratio was 10.11% at September 30, 2016, compared to 10.47% at September 30, 2015 and 10.57% at June 30, 2016.

Average total loans for the third quarter of 2016 were $3.24 billion, an increase of $321.8 million, or 11%, versus $2.92 billion for the comparable period of 2015. Total loans outstanding grew $307.9 million, or 10%, from $2.97 billion as of September 30, 2015 to $3.28 billion as of September 30, 2016. On a linked quarter basis, average total loans increased by $52.4 million, or 2%, from $3.19 billion for the second quarter of 2016 to $3.24 billion for the third quarter of 2016.

Average total deposits for the third quarter of 2016 were $3.61 billion, an increase of $484.6 million, or 16%, versus $3.13 billion for the corresponding period of 2015. Total deposits grew $504.4 million, or 16%, from $3.15 billion as of September 30, 2015 to $3.65 billion as of September 30, 2016. In addition, total core deposits, which exclude brokered deposits, increased $531.5 million, or 18%, from $3.01 billion at September 30, 2015 to $3.55 billion at September 30, 2016. This increase in core deposits was driven by growth of public funds which increased by $363 million on a year over year basis.

The company’s net interest margin was 3.20% in the third quarter of 2016, compared to 3.16% for the third quarter of 2015. The higher margin in the third quarter of 2016 was due to higher yields on both loans and securities, partially offset by a higher cost of funds. The net interest margin was 3.24% in the linked second quarter of 2016. On a linked quarter basis, earning asset yields decreased by 3 basis points and cost of funds, measured as interest expense divided by average earning assets, increased by one basis point. The company’s net interest margin for the nine months ended September 30, 2016 was 3.22% compared to 3.21% in the prior year nine month period.

Net interest income increased $3.0 million, or 11%, to $29.7 million for the third quarter of 2016, versus $26.7 million in the third quarter of 2015. Net interest income for the nine months ended September 30, 2016 increased $9.1 million, or 12%, to $87.6 million, versus $78.5 million for the nine months ended September 30, 2015.

For the 15^th consecutive quarter, the company did not record a provision for loan losses. The absence of a provision for loan losses was generally driven by continued stability in key loan quality metrics, including appropriate reserve coverage of nonperforming loans, a decrease in historical loss percentages and stable economic conditions in the company’s markets. The company’s allowance for loan losses as of September 30, 2016 was $42.9 million compared to $44.7 million as of September 30, 2015 and $43.2 million as of June 30, 2016. The allowance for loan losses represented 1.31% of total loans as of September 30, 2016 versus 1.50% at September 30, 2015 and 1.35% as of June 30, 2016. The allowance for loan losses as a percentage of nonperforming loans was 590% as of September 30, 2016, versus 312% as of September 30, 2015, and 464% as of June 30, 2016.

Nonperforming assets decreased $7.1 million, or 49%, to $7.4 million as of September 30, 2016 versus $14.5 million as of September 30, 2015. On a linked quarter basis, nonperforming assets were $2.2 million lower than the $9.6 million reported as of June 30, 2016. The decrease in nonperforming assets from the linked quarter was primarily due to the payoff of a $2.0 million impaired commercial credit. The ratio of nonperforming assets to total assets at September 30, 2016 declined to 0.18% from 0.40% at September 30, 2015 and 0.24% at June 30, 2016. Net charge-offs totaled $394,000 in the third quarter of 2016 versus net charge-offs of $122,000 during the third quarter of 2015 and net charge-offs of $36,000 during the linked second quarter of 2016.

Findlay observed, “Our organic loan and deposit growth focus has generated double digit revenue growth for the quarter and year-to-date periods. We are proud of our stable asset quality trends, as they make an important contribution to our ability to produce the consistent earnings performance we have posted over a long period of time.”

The company’s noninterest income increased $1.1 million or 14% to $9.0 million for the third quarter of 2016 versus $7.9 million for the third quarter of 2015. Noninterest income was positively impacted during the quarter by increases in recurring fee income for service charges on deposit accounts, wealth advisory fees and mortgage banking income. The company’s noninterest income increased 3% to $24.1 million for the nine months ended September 30, 2016 compared to $23.4 million in the prior year period. Noninterest income was positively impacted by increases in recurring fee income for service charges on deposit accounts, merchant card fee income, loan fees and wealth advisory fees. Other income decreased primarily due to market related fluctuations in the fair value of the company’s swap arrangements totaling $605,000, which are expected to recover upon maturity of the swaps., as well as a $226,000 write down to a property formerly used as a Lake City Bank branch that is held for sale.

The company’s noninterest expense increased by $1.6 million or 9% to $18.8 million in the third quarter of 2016 compared to $17.2 million in the third quarter of 2015. Salaries and employee benefits increased by $978,000 in the three month period ended September 30, 2016 versus the same period of 2015. These increases in salary and employee benefits were driven by higher performance incentive-based compensation costs and normal merit increases. Corporate and business development expense increased due to increased advertising expense. The company's efficiency ratio was 48% for the third quarter of 2016, compared to 50% for the third quarter of 2015 and 49% for the linked second quarter of 2016. The company’s noninterest expense increased by 7% to $54.6 million for the nine months ended September 30, 2016 compared to $50.8 million in the prior year period primarily due to increases in salaries and employee benefits, data processing fees, professional fees and corporate and business development.

Lakeland Financial Corporation is a $4.2 billion bank holding company headquartered in Warsaw, Indiana. Lake City Bank, its single bank subsidiary, is the fourth largest bank headquartered in the state, and the largest bank 100% invested in Indiana. Lake City Bank operates 48 offices in Northern and Central Indiana, delivering technology driven and client-centric financial services solutions to individuals and businesses.

Information regarding Lakeland Financial Corporation may be accessed on the home page of its subsidiary, Lake City Bank, at www.lakecitybank.com. The company’s common stock is traded on the Nasdaq Global Select Market under “LKFN.” In addition to the results presented in accordance with generally accepted accounting principles in the United States of America, this earnings release contains certain non-GAAP financial measures. Lakeland Financial believes that providing non-GAAP financial measures provides investors with information useful to understanding the company’s financial performance. Additionally, these non-GAAP measures are used by management for planning and forecasting purposes, including measures based on “tangible common equity” which is “common stockholders’ equity” excluding intangible assets, net of deferred tax and “tangible assets” which is “assets” excluding intangible assets, net of deferred tax. A reconciliation of these non-GAAP measures to the most comparable GAAP equivalent is included in the attached financial tables where the non-GAAP measure is presented.

This document contains, and future oral and written statements of the company and its management may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of the company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the company’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “continue,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the company undertakes no obligation to update any statement in light of new information or future events. Additional information concerning the company and its business, including factors that could materially affect the company’s financial results, is included in the company’s filings with the Securities and Exchange Commission, including the company’s Annual Report on Form 10-K.


LAKELAND FINANCIAL CORPORATION
THIRD QUARTER 2016 FINANCIAL HIGHLIGHTS
	Three Months Ended									Nine Months Ended
(Unaudited – Dollars in thousands)	Sep. 30,			Jun. 30,			Sep. 30,			Sep. 30,			Sep. 30,
END OF PERIOD BALANCES		2016			2016			2015			2016			2015
Assets	$	4,197,320		$	3,937,304		$	3,666,250		$	4,197,320		$	3,666,250
Deposits		3,651,942			3,403,455			3,147,534			3,651,942			3,147,534
Brokered Deposits		106,752			112,884			133,836			106,752			133,836
Core Deposits		3,545,190			3,290,571			3,013,698			3,545,190			3,013,698
Loans		3,280,161			3,197,997			2,972,280			3,280,161			2,972,280
Allowance for Loan Losses		42,853			43,247			44,694			42,853			44,694
Total Equity		427,380			418,893			386,700			427,380			386,700
Goodwill net of deferred tax assets		3,138			3,137			3,171			3,138			3,171
Tangible Common Equity		424,242			415,756			383,529			424,242			383,529
AVERAGE BALANCES
Total Assets	$	4,152,333		$	4,003,633		$	3,640,769		$	3,990,022		$	3,545,357
Earning Assets		3,773,650			3,705,666			3,409,445			3,690,351			3,333,410
Investments		500,384			488,762			471,641			489,269			474,876
Loans		3,244,994			3,192,545			2,923,159			3,175,882			2,844,079
Total Deposits		3,611,111			3,437,493			3,126,472			3,427,307			3,044,069
Interest Bearing Deposits		2,843,015			2,759,696			2,491,490			2,724,572			2,454,039
Interest Bearing Liabilities		2,933,109			2,887,534			2,605,467			2,849,661			2,562,723
Total Equity		423,358			411,986			380,865			411,797			374,017
INCOME STATEMENT DATA
Net Interest Income	$	29,719		$	29,273		$	26,711		$	87,574		$	78,475
Net Interest Income-Fully Tax Equivalent		30,274			29,818			27,181			89,194			79,926
Provision for Loan Losses		0			0			0			0			0
Noninterest Income		9,018			8,067			7,902			24,128			23,410
Noninterest Expense		18,759			18,446			17,207			54,589			50,849
Net Income		13,480			12,803			11,565			38,562			34,081
PER SHARE DATA
Basic Net Income Per Common Share *	$	0.54		$	0.51		$	0.46		$	1.54		$	1.37
Diluted Net Income Per Common Share *		0.53			0.50			0.46			1.52			1.35
Cash Dividends Declared Per Common Share *		0.19			0.19			0.16			0.54			0.47
Dividend Payout		35.85	%		36.84	%		35.51	%		35.53	%		34.48	%
Book Value Per Common Share (equity per share issued) *		17.04			16.72			15.49			17.04			15.49
Tangible Book Value Per Common Share *		16.91			16.60			15.37			16.91			15.37
Market Value – High *		37.74			33.27			30.27			37.74			30.27
Market Value – Low *		30.21			28.94			26.01			26.53			24.95
Basic Weighted Average Common Shares Outstanding *		25,069,434			25,045,251			24,944,067			25,044,596			24,916,033
Diluted Weighted Average Common Shares Outstanding *		25,457,892			25,395,770			25,271,975			25,418,884			25,213,249
KEY RATIOS
Return on Average Assets		1.29	%		1.29	%		1.26	%		1.29	%		1.29	%
Return on Average Total Equity		12.67			12.50			12.05			12.51			12.18
Average Equity to Average Assets		10.20			10.29			10.46			10.32			10.55
Net Interest Margin		3.20			3.24			3.16			3.22			3.21
Efficiency (Noninterest Expense / Net Interest Income plus Noninterest Income)		48.43			49.40			49.71			48.87			49.91
Tier 1 Leverage (1)		10.71			10.85			11.18			10.71			11.18
Tier 1 Risk-Based Capital (1)		12.33			12.41			12.53			12.33			12.53
Common Equity Tier 1 (CET1) (1)		11.50			11.55			11.61			11.50			11.61
Total Capital (1)		13.52			13.65			13.79			13.52			13.79
Tangible Capital (1)		10.11			10.57			10.47			10.11			10.47
ASSET QUALITY
Loans Past Due 30 - 89 Days	$	1,734		$	1,795		$	1,984		$	1,734		$	1,984
Loans Past Due 90 Days or More		6			0			0			6			0
Non-accrual Loans		7,256			9,329			14,308			7,256			14,308
Nonperforming Loans (includes nonperforming TDR's)		7,262			9,329			14,308			7,262			14,308
Other Real Estate Owned		146			238			231			146			231
Other Nonperforming Assets		7			0			0			7			0
Total Nonperforming Assets		7,414			9,567			14,539			7,414			14,539
Performing Troubled Debt Restructurings		10,579			8,647			7,605			10,579			7,605
Nonperforming Troubled Debt Restructurings (included in nonperforming loans)		5,885			6,040			10,934			5,885			10,934
Total Troubled Debt Restructurings		16,464			14,688			18,539			16,464			18,539
Impaired Loans		18,605			19,267			22,660			18,605			22,660
Non-Impaired Watch List Loans		134,330			139,706			122,116			134,330			122,116
Total Impaired and Watch List Loans		152,935			158,973			144,776			152,935			144,776
Gross Charge Offs		773			296			228			1,535			1,931
Recoveries		379			260			106			778			364
Net Charge Offs/(Recoveries)		394			36			122			757			1,567
Net Charge Offs/(Recoveries) to Average Loans		0.05	%		0.00	%		0.02	%		0.03	%		0.07	%
Loan Loss Reserve to Loans		1.31	%		1.35	%		1.50	%		1.31	%		1.50	%
Loan Loss Reserve to Nonperforming Loans		590.10	%		463.58	%		312.36	%		590.10	%		312.36	%
Loan Loss Reserve to Nonperforming Loans and Performing TDR's		240.20	%		240.58	%		203.96	%		240.20	%		203.96	%
Nonperforming Loans to Loans		0.22	%		0.29	%		0.48	%		0.22	%		0.48	%
Nonperforming Assets to Assets		0.18	%		0.24	%		0.40	%		0.18	%		0.40	%
Total Impaired and Watch List Loans to Total Loans		4.66	%		4.97	%		4.87	%		4.66	%		4.87	%
OTHER DATA
Full Time Equivalent Employees		518			531			518			518			518
Offices		48			48			46			48			46

(1) Capital ratios for September 30, 2016 are preliminary until the Call Report is filed.

* Share and per share data has been adjusted for a 3-for-2 stock split in the form of a stock dividend on August 5, 2016.

LAKELAND FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
September 30, 2016 and December 31, 2015
(in thousands, except share data)

CONSOLIDATED BALANCE SHEETS (in thousands except share data)
	September 30,			December 31,
		2016			2015
	(Unaudited)
ASSETS
Cash and due from banks	$	252,978		$	67,484
Short-term investments		25,400			13,190
Total cash and cash equivalents		278,378			80,674

Securities available for sale (carried at fair value)		502,223			478,071
Real estate mortgage loans held for sale		5,447			3,294

Loans, net of allowance for loan losses of $42,853 and $43,610		3,237,308			3,037,319

Land, premises and equipment, net		52,167			46,684
Bank owned life insurance		70,712			69,698
Federal Reserve and Federal Home Loan Bank stock		8,373			7,668
Accrued interest receivable		10,548			9,462
Goodwill		4,970			4,970
Other assets		27,194			28,446
Total assets	$	4,197,320		$	3,766,286

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Noninterest bearing deposits	$	770,079		$	715,093
Interest bearing deposits		2,881,863			2,468,328
Total deposits		3,651,942			3,183,421

Short-term borrowings
Securities sold under agreements to repurchase		60,198			69,622
Other short-term borrowings		0			70,000
Total short-term borrowings		60,198			139,622

Long-term borrowings		32			34
Subordinated debentures		30,928			30,928
Accrued interest payable		5,142			3,773
Other liabilities		21,698			15,607
Total liabilities		3,769,940			3,373,385

STOCKHOLDERS' EQUITY
Common stock: 90,000,000 shares authorized, no par value
25,081,087 shares issued and 24,923,694 outstanding as of September 30, 2016
24,962,477 shares issued and 24,819,066 outstanding as of December 31, 2015		103,064			99,123
Retained earnings		319,118			294,002
Accumulated other comprehensive income		7,992			2,142
Treasury stock, at cost (2016 - 157,393 shares, 2015 - 143,411 shares)		(2,883	)		(2,455	)
Total stockholders' equity		427,291			392,812
Noncontrolling interest		89			89
Total equity		427,380			392,901
Total liabilities and equity	$	4,197,320		$	3,766,286

LAKELAND FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months and Nine Months Ended September 30, 2016 and 2015
(unaudited in thousands except for share and per share data)

CONSOLIDATED STATEMENTS OF INCOME (unaudited - in thousands except share and per share data)
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
		2016		2015		2016		2015
NET INTEREST INCOME
Interest and fees on loans
Taxable	$	31,538	$	27,981	$	92,086	$	81,553
Tax exempt		110		116		332		350
Interest and dividends on securities
Taxable		2,277		2,009		7,120		6,459
Tax exempt		969		844		2,811		2,515
Interest on short-term investments		185		16		295		43
Total interest income		35,079		30,966		102,644		90,920

Interest on deposits		5,032		3,973		13,921		11,551
Interest on borrowings
Short-term		37		43		283		138
Long-term		291		239		866		756
Total interest expense		5,360		4,255		15,070		12,445

NET INTEREST INCOME		29,719		26,711		87,574		78,475

Provision for loan losses		0		0		0		0

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		29,719		26,711		87,574		78,475

NONINTEREST INCOME
Wealth advisory fees		1,307		1,103		3,600		3,393
Investment brokerage fees		252		405		752		1,208
Service charges on deposit accounts		3,153		2,806		8,776		7,753
Loan, insurance and service fees		2,105		2,147		5,835		5,616
Merchant card fee income		552		485		1,576		1,332
Bank owned life insurance income		392		221		1,054		956
Other income		763		455		1,278		2,090
Mortgage banking income		494		280		1,205		1,020
Net securities gains/(losses)		0		0		52		42
Total noninterest income		9,018		7,902		24,128		23,410

NONINTEREST EXPENSE
Salaries and employee benefits		10,832		9,854		31,029		29,021
Net occupancy expense		1,068		919		3,205		2,918
Equipment costs		1,018		870		2,828		2,699
Data processing fees and supplies		1,983		1,950		6,135		5,655
Corporate and business development		1,021		780		2,641		2,284
FDIC insurance and other regulatory fees		458		521		1,538		1,518
Professional fees		819		694		2,505		2,111
Other expense		1,560		1,619		4,708		4,643
Total noninterest expense		18,759		17,207		54,589		50,849

INCOME BEFORE INCOME TAX EXPENSE		19,978		17,406		57,113		51,036
Income tax expense		6,498		5,841		18,551		16,955
NET INCOME	$	13,480	$	11,565	$	38,562	$	34,081

BASIC WEIGHTED AVERAGE COMMON SHARES		25,069,434		24,944,067		25,044,596		24,916,033
BASIC EARNINGS PER COMMON SHARE	$	0.54	$	0.46	$	1.54	$	1.37
DILUTED WEIGHTED AVERAGE COMMON SHARES		25,457,892		25,271,975		25,418,884		25,213,249
DILUTED EARNINGS PER COMMON SHARE	$	0.53	$	0.46	$	1.52	$	1.35

LAKELAND FINANCIAL CORPORATION
LOAN DETAIL
THIRD QUARTER 2016
(unaudited in thousands)

	September 30,					June 30,					December 31,					September 30,
	2016					2016					2015					2015
Commercial and industrial loans:
Working capital lines of credit loans	$	609,382		18.6	%	$	598,531		18.7	%	$	581,025		18.9	%	$	593,780		20.0	%
Non-working capital loans		641,599		19.6			628,119		19.6			598,487		19.4			577,536		19.4
Total commercial and industrial loans		1,250,981		38.1			1,226,650		38.4			1,179,512		38.3			1,171,316		39.4

Commercial real estate and multi-family residential loans:
Construction and land development loans		221,436		6.7			221,027		6.9			230,719		7.5			176,945		6.0
Owner occupied loans		468,582		14.3			457,461		14.3			412,026		13.4			409,004		13.8
Nonowner occupied loans		408,620		12.5			395,597		12.4			407,883		13.2			417,790		14.1
Multifamily loans		127,784		3.9			114,618		3.6			79,425		2.6			93,075		3.1
Total commercial real estate and multi-family residential loans		1,226,422		37.4			1,188,703		37.2			1,130,053		36.7			1,096,814		36.9

Agri-business and agricultural loans:
Loans secured by farmland		152,719		4.7			146,519		4.6			164,375		5.3			155,106		5.2
Loans for agricultural production		156,770		4.8			162,240		5.1			141,719		4.6			93,964		3.2
Total agri-business and agricultural loans		309,489		9.4			308,759		9.7			306,094		9.9			249,070		8.4

Other commercial loans		89,850		2.7			82,786		2.6			85,075		2.8			82,976		2.8
Total commercial loans		2,876,742		87.7			2,806,898		87.8			2,700,734		87.7			2,600,176		87.5

Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		161,907		4.9			164,564		5.1			158,062		5.1			154,019		5.2
Open end and junior lien loans		170,140		5.2			164,645		5.1			163,700		5.3			160,485		5.4
Residential construction and land development loans		12,801		0.4			9,570		0.3			9,341		0.3			8,445		0.3
Total consumer 1-4 family mortgage loans		344,848		10.5			338,779		10.6			331,103		10.7			322,949		10.9

Other consumer loans		58,957		1.8			52,492		1.6			49,113		1.6			49,169		1.7
Total consumer loans		403,805		12.3			391,271		12.2			380,216		12.3			372,118		12.5
Subtotal		3,280,547		100.0	%		3,198,169		100.0	%		3,080,950		100.0	%		2,972,294		100.0	%
Less: Allowance for loan losses		(42,853	)				(43,247	)				(43,610	)				(44,694	)
Net deferred loan fees		(386	)				(172	)				(21	)				(14	)
Loans, net	$	3,237,308				$	3,154,750				$	3,037,319				$	2,927,586


LAKELAND FINANCIAL CORPORATION
DEPOSITS AND BORROWINGS
THIRD QUARTER 2016
(unaudited in thousands)

	September 30,					June 30,					December 31,					September 30,
		2016					2016					2015					2015
Non-interest bearing demand deposits	$	770,079				$	727,308				$	715,093				$	630,789
Interest bearing demand, savings & money market accounts		1,562,252					1,500,720					1,470,814					1,460,261
Time deposits under $100,000		241,527					247,271					259,260					273,378
Time deposits of $100,000 or more		1,078,084					928,156					738,254					783,106
Total deposits		3,651,942					3,403,455					3,183,421					3,147,534
Short-term borrowings		60,198					56,368					139,622					80,414
Long-term borrowings		32					32					34					34
Subordinated debentures		30,928					30,928					30,928					30,928
Total borrowings		91,158					87,328					170,584					111,376
Total funding sources	$	3,743,100				$	3,490,783				$	3,354,005				$	3,258,910

LAKELAND FINANCIAL CORPORATION
AVERAGE BALANCE SHEET AND NET INTEREST ANALYSIS
(UNAUDITED)


	Three Months Ended							Three Months Ended							Three Months Ended
	September 30, 2016							June 30, 2016							September 30, 2015
	Average			Interest		Yield (1)/		Average			Interest		Yield (1)/		Average			Interest		Yield (1)/
(fully tax equivalent basis, dollars in thousands)	Balance			Income		Rate		Balance			Income		Rate		Balance			Income		Rate
Earning Assets
Loans:
Taxable (2)(3)	$	3,233,394		$	31,538	3.88	%	$	3,180,783		$	30,918	3.91	%	$	2,910,663		$	27,981	3.81	%
Tax exempt (1)		11,600			164	5.62			11,763			164	5.62			12,496			170	5.40
Investments: (1)
Available for sale		500,384			3,746	2.98			488,762			3,736	3.07			471,641			3,269	2.75
Short-term investments		6,885			4	0.23			5,805			3	0.21			5,836			1	0.07
Interest bearing deposits		21,387			181	3.37			18,553			79	1.71			8,809			15	0.68
Total earning assets	$	3,773,650		$	35,633	3.76	%	$	3,705,666		$	34,900	3.79	%	$	3,409,445		$	31,436	3.66	%
Less: Allowance for loan losses		(43,402	)						(43,228	)						(44,751	)
Nonearning Assets
Cash and due from banks		249,812							167,099							117,986
Premises and equipment		50,921							48,921							44,240
Other nonearning assets		121,352							125,175							113,849
Total assets	$	4,152,333						$	4,003,633						$	3,640,769

Interest Bearing Liabilities
Savings deposits	$	270,136		$	103	0.15	%	$	263,331		$	115	0.18	%	$	234,360		$	115	0.19	%
Interest bearing checking accounts		1,261,390			1,362	0.43			1,309,443			1,455	0.45			1,221,190			1,225	0.40
Time deposits:
In denominations under $100,000		243,148			696	1.14			249,452			719	1.16			279,734			846	1.20
In denominations over $100,000		1,068,341			2,870	1.07			937,470			2,405	1.03			756,206			1,787	0.94
Miscellaneous short-term borrowings		59,133			37	0.25			96,878			99	0.41			83,015			43	0.21
Long-term borrowings and subordinated debentures (4)		30,960			291	3.74			30,960			289	3.75			30,962			239	3.06
Total interest bearing liabilities	$	2,933,108		$	5,359	0.73	%	$	2,887,534		$	5,082	0.71	%	$	2,605,467		$	4,255	0.65	%
Noninterest Bearing Liabilities
Demand deposits		768,095							677,797							634,982
Other liabilities		27,772							26,316							19,455
Stockholders' Equity		423,358							411,986							380,865
Total liabilities and stockholders' equity	$	4,152,333						$	4,003,633						$	3,640,769

Interest Margin Recap
Interest income/average earning assets					35,633	3.76						34,900	3.79						31,436	3.66
Interest expense/average earning assets					5,359	0.56						5,082	0.55						4,255	0.50
Net interest income and margin				$	30,274	3.20	%				$	29,818	3.24	%				$	27,181	3.16	%

(1	)	Tax exempt income was converted to a fully taxable equivalent basis at a 35 percent tax rate for 2016 and 2015. The tax equivalent rate for tax exempt loans and tax exempt securities acquired after January 1, 1983 included the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) adjustment applicable to nondeductible interest expenses.
(2	)	Loan fees, which are immaterial in relation to total taxable loan interest income for 2016 and 2015, are included as taxable loan interest income.
(3	)	Nonaccrual loans are included in the average balance of taxable loans.
(4	)	Long-term borrowings and subordinated debentures interest expense was reduced by interest capitalized on construction in process for 2015.

Contact:
Lisa M. O’Neill
Executive Vice President and 
Chief Financial Officer
(574) 267-9125
lisa.oneill@lakecitybank.com

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Lakeland Financial Reports Record Performance

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