Year to Date Net Income Increases by 10% over 2018

WARSAW, Ind., Oct. 25, 2019 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq Global Select/LKFN), parent company of Lake City Bank, today reported record third quarter net income of $21.5 million for the three months ended September 30, 2019, an increase of 4% versus $20.6 million for the third quarter of 2018. Diluted earnings per share also increased 4% to $0.83 for the third quarter of 2019, versus $0.80 for the third quarter of 2018.

The company further reported record net income of $64.8 million for the nine months ended September 30, 2019 versus $59.0 million for the comparable period of 2018, an increase of 10%. Diluted net income per common share increased 10% to $2.52 for the nine months ended September 30, 2019 versus $2.30 for the comparable period of 2018 and also represents a record performance.

David M. Findlay, President and CEO, commented, “The Lake City bank team is proud of its continued growth in 2019. We experienced growth in every business unit and remain committed to our strategic growth in our Indiana markets. As the financial services sector continues to experience innovation in technology, we continue to invest in our people, infrastructure and technology to drive innovation for our customers.”

Highlights for the quarter are noted below.

3rd Quarter 2019 versus 3rd Quarter 2018 highlights:

• Return on average assets unchanged at 1.72%
• Return on average equity of 14.8%, compared to 16.6%
• Organic loan growth of $180 million, or 5%
• Core deposit growth of $328 million, or 9%
• Net interest income increase of $1.6 million, or 4%
• Net interest margin of 3.38% compared to 3.42%
• Noninterest income increase of $141,000, or 1%
• Revenue growth of $1.8 million, or 4%
• Provision expense of $1.0 million compared to $1.1 million
• Nonperforming assets to total assets of 0.39% versus 0.27%
• Total equity and tangible common equity¹ increase of $86 million, or 17%

3rd Quarter 2019 versus 2nd Quarter 2019 highlights:

• Return on average assets of 1.72%, compared to 1.76%
• Return on average equity of 14.8% compared to 15.8%
• Organic loan growth of $25 million or 1%
• Net interest income increase of $1.1 million, or 3%
• Net interest margin increase to 3.38% from 3.37%
• Noninterest expense increase of $645,000, or 3%
• Revenue growth of $311,000, or 1%
• Provision expense of $1.0 million compared to $785,000
• Nonperforming assets to total assets of 0.39% versus 0.31%
• Total equity and tangible common equity¹ increase of $19 million, or 3%

As announced on October 8, 2019, the board of directors approved a cash dividend for the third quarter of $0.30 per share, payable on November 5, 2019, to shareholders of record as of October 25, 2019. Including this dividend, the total dividends per share for 2019 represent a 16% increase over the total dividends per share paid during the same period of 2018.

Return on average total equity for the third quarter of 2019 was 14.78%, compared to 16.55% in the third quarter of 2018 and 15.76% in the linked second quarter of 2019. Return on average total equity for the first nine months of 2019 was 15.68%, compared to 16.42% in the same period of 2018. Average equity increased at a faster pace than net income in 2019 due to an increase in the fair value adjustment for investment securities, net of tax, which increases equity but does not affect net income. Return on average assets for the third quarters of 2019 and 2018 was 1.72%, compared to 1.76% in the linked second quarter of 2019. Return on average assets for the first nine months of 2019 was 1.76% compared to 1.67% in the same period of 2018. The company’s total capital as a percentage of risk-weighted assets was 14.78% at September 30, 2019, compared to 14.14% at September 30, 2018 and 14.49% at June 30, 2019. The company’s tangible common equity to tangible assets ratio¹ was 11.74% at September 30, 2019, compared to 10.41% at September 30, 2018 and 11.30% at June 30, 2019.

Average total loans for the third quarter of 2019 were $4.02 billion, an increase of $178.2 million, or 5%, versus $3.84 billion for the third quarter 2018. On a linked quarter basis, total average loans grew $54.5 million, or 1%, from $3.96 billion at June 30, 2019. Total loans outstanding grew $180.1 million, or 5%, from $3.84 billion as of September 30, 2018 to $4.02 billion as of September 30, 2019.

Findlay noted, “Overall, we are pleased with our organic loan growth across our markets, but we continue to see elevated levels of loan payoffs related to several factors, including long term non-bank financing and the sale of companies. Clearly, our commercial borrowers are approaching capital investment conservatively as our commercial line utilization has been lower than our historical levels. We continue to expect to see loan growth driven by ongoing market share growth and organic expansion.”

Average total deposits for the third quarter of 2019 were $4.27 billion, an increase of $242.3 million, or 6%, versus $4.03 billion for the third quarter of 2018. Average total deposits decreased by $33.1 million or 1% as compared to average deposits of $4.30 billion on a linked quarter basis. Total deposits grew $267.5 million, or 7%, from $4.02 billion as of September 30, 2018 to $4.28 billion as of September 30, 2019. In addition, total core deposits, which exclude brokered deposits, increased $327.7 million, or 9%, from $3.84 billion at September 30, 2018 to $4.17 billion at September 30, 2019 due primarily to growth in commercial deposits of $264.4 million or 25%, as well as increases in retail deposits of $32.4 million, or 2%, and increases in public fund deposits of $30.9 million or 2%. Brokered deposits were $116.7 million at September 30, 2019, a decrease of $60.2 million, or 34%, as compared to $176.9 million as of September 30, 2018 due to scheduled maturities of wholesale funding that was not renewed.

The company’s net interest margin decreased four basis points to 3.38% for the third quarter of 2019 compared to 3.42% for the third quarter of 2018. Net interest margin for 2018 benefited from the Federal Reserve Bank increases to the Federal Funds Rate, which increased by 25 basis points in March, June and September of that year. The year over year decline in net interest margin was due to a higher cost of funds and lower yields on investment securities, partially offset by a higher yield on the company’s loan portfolio. The decline in the investment securities yield was due to the combined effect of the flattening, and at times inverted, yield curve and the corresponding increase in the fair value of the investment securities portfolio.

Linked quarter net interest margin increased by one basis point from 3.37% as of June 30, 2019 to 3.38% as of September 30, 2019, due to a decrease of 12 basis points in the cost of funds partially offset by a decline of 11 basis points in the yield on earning assets.

Findlay added, “We are pleased with our net interest margin expansion this quarter despite the two federal fund rate decreases enacted by the Federal Reserve Bank. We implemented timely deposit rate reductions to offset the loan repricing effect of lower rates. In addition, our net interest margin has benefited from continued growth in our commercial checking accounts which have increased by 16% year over year. Commercial deposits now account for 31% of total deposits, up from 26% a year ago.”

The company’s net interest margin was 3.40% for the nine months ended September 30, 2019 and was unchanged from 2018. Net interest income increased by $4.5 million or 4% for the nine months ended September 30, 2019 as compared to the first nine months of 2018 due to loan and deposit growth.

The company recorded a provision for loan losses of $1.0 million in the third quarter of 2019, compared to $1.1 million in the third quarter of 2018 and $785,000 in the linked second quarter of 2019. Net charge-offs in the third quarter of 2019 were $936,000 versus net charge-offs of $463,000 in the third quarter of 2018 and net recoveries of $217,000 during the linked second quarter of 2019. Annualized net charge-offs to average loans were 0.09% for the third quarter of 2019 versus 0.05% for the third quarter of 2018. Annualized net recoveries to average loans were 0.02% for the linked second quarter of 2019. On a year to date basis, net charge-offs to average loans were 0.03% compared to net charge offs to average loans of 0.17% for the first nine months of 2018.

Nonperforming assets increased $6.5 million, or 51%, to $19.3 million as of September 30, 2019 versus $12.8 million as of September 30, 2018 due to an increase in nonaccrual loans. On a linked quarter basis, nonperforming assets increased $4.0 million, or 26%, from the $15.3 million reported as of June 30, 2019. The linked quarter increase was primarily driven by three commercial relationships being placed in nonaccrual status during the third quarter of 2019. The ratio of nonperforming assets to total assets at September 30, 2019 was 0.39% compared to 0.27% at September 30, 2018 and 0.31% at June 30, 2019. Loan loss reserve to total loans was unchanged at 1.26% as of September 30, 2019, September 30, 2018 and June 30, 2019.

The company continues to prepare and make progress on the planned adoption of the FASB’s new rule related to credit losses on financial instruments (“CECL”) that will be effective on January 1, 2020. The company intends to disclose a range of potential impact upon adoption of this new standard in its upcoming Form 10-Q for the quarter ended September 30, 2019, based on the company’s loan portfolio composition as of September 30, 2019. 

The company’s noninterest income increased $141,000, or 1%, to $10.8 million for the third quarter of 2019, compared to $10.6 million for the third quarter of 2018. Noninterest income was positively impacted by a 99% increase over the prior year third quarter in mortgage banking income, driven by higher mortgage refinance volumes. In addition, loan and serving fees increased by 8%, and wealth advisory fees increased by 7% compared to the third quarter of 2018. Offsetting the increases, was a decrease of 11% in service charges on deposit accounts driven by lower treasury management fees due to the previously disclosed discontinuance of a treasury management relationship in July 2019. Noninterest income was $11.6 million in the linked second quarter of 2019.

The company’s noninterest income increased $3.7 million, or 12%, to $33.9 million for the nine months ended September 30, 2019 compared to $30.2 million in the prior year period. Noninterest income was positively impacted by $1.2 million increase in service charges on deposit accounts. Loan and service fees increased by 7% or $478,000, wealth advisory fees increased by 7% or $326,000, mortgage banking income increased by 26% or $258,000 and investment brokerage fees increased by 25% or $257,000.

The company’s noninterest expense increased $537,000, or 2%, to $22.7 million in the third quarter of 2019, compared to $22.2 million in the third quarter of 2018 and increased by $645,000 on a linked quarter basis. Year over year quarter increases in professional fees resulted from higher legal expenses and costs related to CECL implementation. Data processing fees increased as a result of the company’s continued investment in technology driven solutions. Net occupancy expense increased due to higher depreciation and rent expenses related to new branch locations as well as remodeling and improvements made to existing branches and other offices. Offsetting these increases was a $661,000 decrease in FDIC insurance and other regulatory fees. In the third quarter of 2019, the FDIC announced that due to the Deposit Insurance Fund reserve ratio exceeding 1.38%, banks with consolidated assets of less than $10 billion would be receiving credits against their deposit insurance assessments. The $1.1 million credit is applied as a reduction of FDIC assessments commencing with the payment of the second quarter assessment paid in July 2019 and is expected to be fully utilized by the first quarter of 2020.

The company’s noninterest expense increased by $3.6 million, or 6%, to $67.3 million in the first nine months of 2019 compared to $63.7 million in the prior year period. The increase was driven by salaries and employee benefits, which increased by 3%, or $964,000, primarily due to staffing increases in revenue producing areas and normal merit increases. Other expense increased by $1.5 million or 29% to $6.9 million from $5.3 million in the nine month period ended September 30, 2018.  Offsetting these increases was a decrease in FDIC insurance and regulatory fees driven by the credits received against the bank’s FDIC deposit insurance assessment.

The company’s efficiency ratio was 45.2% for the third quarter of 2019, compared to 45.5% for the third quarter of 2018 and 44.2% for the linked second quarter of 2019. The company’s efficiency ratio was 44.9% for the nine months ended September 30, 2019 compared to 44.8% in the prior year period.

Lakeland Financial Corporation is a $5.0 billion bank holding company headquartered in Warsaw, Indiana. Lake City Bank, its single bank subsidiary, is the fifth largest bank headquartered in the state and the largest bank 100% invested in Indiana. Lake City Bank operates 50 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 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, this earnings release contains certain non-GAAP financial measures. The company 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 “total equity” excluding intangible assets, net of deferred tax, and “tangible assets” which is “total assets” excluding intangible assets, net of deferred tax. A reconciliation of these non-GAAP measures to the most comparable GAAP equivalents is included in the attached financial tables where the non-GAAP measures are 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. The company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain and, accordingly, the reader is cautioned not to place undue reliance on any forward-looking statements made by the company. 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. Numerous factors could cause the company’s actual results to differ from those reflected in forward-looking statements, including trade policy and those identified in the company’s filings with the Securities and Exchange Commission, including the company’s Annual Report on Form 10-K and Quarterly Report on Form 10-Q.

_____________________________
¹ Non-GAAP financial measure – see “Reconciliation of Non-GAAP Financial Measures.”

LAKELAND FINANCIAL CORPORATION
THIRD QUARTER 2019 FINANCIAL HIGHLIGHTS
	Three Months Ended												Nine Months Ended
(Unaudited – Dollars in thousands, except per share data)	Sep. 30,				Jun. 30,				Sep. 30,				Sep. 30,				Sep. 30,
END OF PERIOD BALANCES	2019				2019				2018				2019				2018
Assets	$	4,948,155			$	4,975,519			$	4,757,619			$	4,948,155			$	4,757,619
Deposits		4,283,390				4,221,299				4,015,924				4,283,390				4,015,924
Brokered Deposits		116,698				217,981				176,927				116,698				176,927
Core Deposits (3)		4,166,692				4,003,318				3,838,997				4,166,692				3,838,997
Loans		4,023,221				3,998,618				3,843,125				4,023,221				3,843,125
Allowance for Loan Losses		50,628				50,564				48,343				50,628				48,343
Total Equity		584,436				565,363				498,541				584,436				498,541
Goodwill net of deferred tax assets		3,799				3,779				3,790				3,799				3,790
Tangible Common Equity (1)		580,657				561,584				494,751				580,657				494,751
AVERAGE BALANCES
Total Assets	$	4,941,503			$	4,961,453			$	4,748,953			$	4,928,396			$	4,731,769
Earning Assets		4,698,937				4,625,949				4,451,449				4,625,820				4,440,493
Investments - available for sale		614,784				601,178				569,567				601,098				558,784
Loans		4,015,773				3,961,322				3,837,595				3,965,397				3,823,153
Total Deposits		4,267,708				4,300,759				4,025,398				4,220,248				4,070,565
Interest Bearing Deposits		3,306,638				3,378,030				3,167,135				3,296,995				3,228,768
Interest Bearing Liabilities		3,356,436				3,444,382				3,363,583				3,408,767				3,379,929
Total Equity		575,865				552,536				493,145				552,965				480,896
INCOME STATEMENT DATA
Net Interest Income	$	39,545			$	38,411			$	37,925			$	116,165			$	111,681
Net Interest Income-Fully Tax Equivalent		40,084				38,923				38,397				117,716				112,998
Provision for Loan Losses		1,000				785				1,100				2,985				6,100
Noninterest Income		10,765				11,588				10,624				33,878				30,225
Noninterest Expense		22,737				22,092				22,200				67,302				63,705
Net Income		21,454				21,713				20,570				64,849				59,048
PER SHARE DATA
Basic Net Income Per Common Share	$	0.84			$	0.85			$	0.81			$	2.54			$	2.33
Diluted Net Income Per Common Share		0.83				0.85				0.80				2.52				2.30
Cash Dividends Declared Per Common Share		0.30				0.30				0.26				0.86				0.74
Dividend Payout		36.14		%		35.29		%		32.50		%		34.13		%		32.17		%
Book Value Per Common Share (equity per share issued)		22.81				22.06				19.70				22.81				19.70
Tangible Book Value Per Common Share (1)		22.66				21.92				19.55				22.66				19.55
Market Value – High		47.46				49.20				51.25				49.20				51.76
Market Value – Low		41.26				43.76				46.35				39.78				45.01
Basic Weighted Average Common Shares Outstanding		25,622,338				25,614,701				25,301,033				25,576,740				25,284,085
Diluted Weighted Average Common Shares Outstanding		25,796,696				25,774,002				25,745,151				25,745,029				25,719,693
KEY RATIOS
Return on Average Assets		1.72		%		1.76		%		1.72		%		1.76		%		1.67		%
Return on Average Total Equity		14.78				15.76				16.55				15.68				16.42
Average Equity to Average Assets		11.65				11.14				10.38				11.22				10.16
Net Interest Margin		3.38				3.37				3.42				3.40				3.40
Efficiency (Noninterest Expense / Net Interest Income plus Noninterest Income)		45.19				44.19				45.51				44.86				44.81
Tier 1 Leverage (2)		12.07				11.72				11.31				12.07				11.31
Tier 1 Risk-Based Capital (2)		13.62				13.33				12.97				13.62				12.97
Common Equity Tier 1 (CET1) (2)		12.94				12.64				12.24				12.94				12.24
Total Capital (2)		14.78				14.49				14.14				14.78				14.14
Tangible Capital (1) (2)		11.74				11.30				10.41				11.74				10.41
ASSET QUALITY
Loans Past Due 30 - 89 Days	$	922			$	2,451			$	13,476			$	922			$	13,476
Loans Past Due 90 Days or More		306				0				0				306				0
Non-accrual Loans		18,657				14,995				12,337				18,657				12,337
Nonperforming Loans (includes nonperforming TDRs)		18,963				14,995				12,337				18,963				12,337
Other Real Estate Owned		316				316				316				316				316
Other Nonperforming Assets		7				7				111				7				111
Total Nonperforming Assets		19,286				15,318				12,763				19,286				12,763
Performing Troubled Debt Restructurings		5,975				6,082				3,512				5,975				3,512
Nonperforming Troubled Debt Restructurings (included in nonperforming loans)		3,422				3,512				7,313				3,422				7,313
Total Troubled Debt Restructurings		9,397				9,594				10,825				9,397				10,825
Impaired Loans		28,070				24,271				20,906				28,070				20,906
Non-Impaired Watch List Loans		174,768				183,599				175,400				174,768				175,400
Total Impaired and Watch List Loans		202,838				207,870				196,306				202,838				196,306
Gross Charge Offs		1,221				84				581				1,589				5,686
Recoveries		285				301				118				779				808
Net Charge Offs/(Recoveries)		936				(217	)			463				810				4,878
Net Charge Offs/(Recoveries) to Average Loans		0.09		%		(0.02	)	%		0.05		%		0.03		%		0.17		%
Loan Loss Reserve to Loans		1.26		%		1.26		%		1.26		%		1.26		%		1.26		%
Loan Loss Reserve to Nonperforming Loans		266.98		%		337.18		%		391.92		%		266.98		%		391.92		%
Loan Loss Reserve to Nonperforming Loans and Performing TDRs		203.02		%		239.90		%		305.03		%		203.02		%		305.03		%
Nonperforming Loans to Loans		0.47		%		0.38		%		0.32		%		0.47		%		0.32		%
Nonperforming Assets to Assets		0.39		%		0.31		%		0.27		%		0.39		%		0.27		%
Total Impaired and Watch List Loans to Total Loans		5.04		%		5.20		%		5.11		%		5.04		%		5.11		%
OTHER DATA
Full Time Equivalent Employees		561				571				549				561				549
Offices		50				50				49				50				49
(1) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Financial Measures"
(2) Capital ratios for September 30, 2019 are preliminary until the Call Report is filed.
(3) Core deposits equals deposits less brokered deposits

CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
	September 30,				December 31,
	2019				2018
	(Unaudited)
ASSETS
Cash and due from banks	$	90,442			$	192,290
Short-term investments		46,133				24,632
Total cash and cash equivalents		136,575				216,922
Securities available-for-sale (carried at fair value)		613,230				585,549
Real estate mortgage loans held-for-sale		7,424				2,293
Loans, net of allowance for loan losses of $50,628 and $48,453		3,972,593				3,866,292
Land, premises and equipment, net		59,631				58,097
Bank owned life insurance		83,153				77,106
Federal Reserve and Federal Home Loan Bank stock		13,772				13,772
Accrued interest receivable		15,823				15,518
Goodwill		4,970				4,970
Other assets		40,984				34,735
Total assets	$	4,948,155			$	4,875,254
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Noninterest bearing deposits	$	1,011,336			$	946,838
Interest bearing deposits		3,272,054				3,097,227
Total deposits		4,283,390				4,044,065
Borrowings
Securities sold under agreements to repurchase		0				75,555
Federal Home Loan Bank advances		0				170,000
Subordinated debentures		30,928				30,928
Total borrowings		30,928				276,483
Accrued interest payable		12,071				10,404
Other liabilities		37,330				22,598
Total liabilities		4,363,719				4,353,550
STOCKHOLDERS' EQUITY
Common stock: 90,000,000 shares authorized, no par value
25,623,016 shares issued and 25,445,400 outstanding as of September 30, 2019
25,301,732 shares issued and 25,128,773 outstanding as of December 31, 2018		114,243				112,383
Retained earnings		460,736				419,179
Accumulated other comprehensive income (loss)		13,467				(6,191	)
Treasury stock at cost (177,616 shares as of September 30, 2019, 172,959 shares as of December 31, 2018)		(4,099	)			(3,756	)
Total stockholders' equity		584,347				521,615
Noncontrolling interest		89				89
Total equity		584,436				521,704
Total liabilities and equity	$	4,948,155			$	4,875,254

CONSOLIDATED STATEMENTS OF INCOME (unaudited - in thousands, except share and per share data)
	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2019				2018				2019				2018
NET INTEREST INCOME
Interest and fees on loans
Taxable	$	50,139			$	46,127			$	149,094			$	132,360
Tax exempt		234				208				720				627
Interest and dividends on securities
Taxable		2,209				2,275				6,956				7,201
Tax exempt		1,819				1,570				5,171				4,367
Other interest income		368				199				957				687
Total interest income		54,769				50,379				162,898				145,242
Interest on deposits		14,692				11,473				44,131				31,488
Interest on borrowings
Short-term		113				555				1,295				861
Long-term		419				426				1,307				1,212
Total interest expense		15,224				12,454				46,733				33,561
NET INTEREST INCOME		39,545				37,925				116,165				111,681
Provision for loan losses		1,000				1,100				2,985				6,100
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES		38,545				36,825				113,180				105,581
NONINTEREST INCOME
Wealth advisory fees		1,736				1,627				5,002				4,676
Investment brokerage fees		386				376				1,300				1,043
Service charges on deposit accounts		3,654				4,114				12,791				11,542
Loan and service fees		2,518				2,327				7,403				6,925
Merchant card fee income		690				643				1,982				1,834
Bank owned life insurance income		515				466				1,246				1,177
Mortgage banking income		636				319				1,256				998
Net securities gains (losses)		6				0				94				(6	)
Other income		624				752				2,804				2,036
Total noninterest income		10,765				10,624				33,878				30,225
NONINTEREST EXPENSE
Salaries and employee benefits		12,837				12,755				37,231				36,267
Net occupancy expense		1,351				1,229				4,000				3,892
Equipment costs		1,385				1,316				4,143				3,840
Data processing fees and supplies		2,620				2,489				7,619				7,292
Corporate and business development		999				891				3,376				3,070
FDIC insurance and other regulatory fees		(249	)			412				566				1,282
Professional fees		1,479				934				3,487				2,716
Other expense		2,315				2,174				6,880				5,346
Total noninterest expense		22,737				22,200				67,302				63,705
INCOME BEFORE INCOME TAX EXPENSE		26,573				25,249				79,756				72,101
Income tax expense		5,119				4,679				14,907				13,053
NET INCOME	$	21,454			$	20,570			$	64,849			$	59,048
BASIC WEIGHTED AVERAGE COMMON SHARES		25,622,338				25,301,033				25,576,740				25,284,085
BASIC EARNINGS PER COMMON SHARE	$	0.84			$	0.81			$	2.54			$	2.33
DILUTED WEIGHTED AVERAGE COMMON SHARES		25,796,696				25,745,151				25,745,029				25,719,693
DILUTED EARNINGS PER COMMON SHARE	$	0.83			$	0.80			$	2.52			$	2.30

LAKELAND FINANCIAL CORPORATION
LOAN DETAIL
THIRD QUARTER 2019
(unaudited, in thousands)
	September 30,					June 30,					December 31,					September 30,
	2019					2019					2018					2018
Commercial and industrial loans:
Working capital lines of credit loans	$	730,557		18.2	%	$	755,090		18.9	%	$	690,620		17.6	%	$	757,004		19.7	%
Non-working capital loans		701,773		17.4			695,235		17.3			714,759		18.3			693,402		18.0
Total commercial and industrial loans		1,432,330		35.6			1,450,325		36.2			1,405,379		35.9			1,450,406		37.7
Commercial real estate and multi-family residential loans:
Construction and land development loans		319,420		7.9			321,550		8.0			266,805		6.8			231,795		6.0
Owner occupied loans		556,536		13.8			557,115		13.9			586,325		15.0			571,998		14.9
Nonowner occupied loans		545,444		13.5			533,880		13.4			520,901		13.3			520,414		13.5
Multifamily loans		259,408		6.5			242,966		6.1			195,604		5.0			192,218		5.0
Total commercial real estate and multi-family residential loans		1,680,808		41.7			1,655,511		41.4			1,569,635		40.1			1,516,425		39.4
Agri-business and agricultural loans:
Loans secured by farmland		176,024		4.4			148,883		3.7			177,503		4.6			159,256		4.2
Loans for agricultural production		153,943		3.8			165,595		4.2			193,010		4.9			134,773		3.5
Total agri-business and agricultural loans		329,967		8.2			314,478		7.9			370,513		9.5			294,029		7.7
Other commercial loans		100,100		2.5			104,084		2.6			95,657		2.4			114,350		3.0
Total commercial loans		3,543,205		88.0			3,524,398		88.1			3,441,184		87.9			3,375,210		87.8
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		187,404		4.6			187,863		4.7			185,822		4.7			185,212		4.8
Open end and junior lien loans		191,597		4.8			188,558		4.7			187,030		4.8			185,869		4.8
Residential construction and land development loans		11,774		0.3			12,270		0.3			16,226		0.4			15,128		0.4
Total consumer 1-4 family mortgage loans		390,775		9.7			388,691		9.7			389,078		9.9			386,209		10.0
Other consumer loans		90,631		2.3			86,996		2.2			86,064		2.2			83,203		2.2
Total consumer loans		481,406		12.0			475,687		11.9			475,142		12.1			469,412		12.2
Subtotal		4,024,611		100.0	%		4,000,085		100.0	%		3,916,326		100.0	%		3,844,622		100.0	%
Less: Allowance for loan losses		(50,628	)				(50,564	)				(48,453	)				(48,343	)
Net deferred loan fees		(1,390	)				(1,467	)				(1,581	)				(1,497	)
Loans, net	$	3,972,593				$	3,948,054				$	3,866,292				$	3,794,782
LAKELAND FINANCIAL CORPORATION
DEPOSITS AND BORROWINGS
THIRD QUARTER 2019
(unaudited, in thousands)
	September 30,					June 30,					December 31,					September 30,
	2019					2019					2018					2018
Non-interest bearing demand deposits	$	1,011,336				$	946,471				$	946,838				$	880,363
Savings and transaction accounts:
Savings deposits		237,997					238,369					247,903					251,748
Interest bearing demand deposits		1,650,691					1,708,397					1,429,570					1,388,934
Time deposits:
Deposits of $100,000 or more		1,101,730					1,053,619					1,146,221					1,223,457
Other time deposits		281,636					274,443					273,533					271,422
Total deposits	$	4,283,390				$	4,221,299				$	4,044,065				$	4,015,924
FHLB advances and other borrowings		30,928					145,928					276,483					208,280
Total funding sources	$	4,314,318				$	4,367,227				$	4,320,548				$	4,224,204

LAKELAND FINANCIAL CORPORATION
AVERAGE BALANCE SHEET AND NET INTEREST ANALYSIS
(UNAUDITED)
	Three Months Ended										Three Months Ended										Three Months Ended
	September 30, 2019										June 30, 2019										September 30, 2018
	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)	$	3,991,572			$	50,139		4.98	%		$	3,936,747			$	50,089		5.10	%		$	3,814,831			$	46,127		4.80	%
Tax exempt (1)		24,201				292		4.78				24,575				292		4.77				22,764				257		4.48
Investments: (1)
Available for sale		614,784				4,509		2.91				601,178				4,415		2.95				569,567				4,263		2.97
Short-term investments		3,478				16		1.83				12,092				97		3.22				3,480				14		1.60
Interest bearing deposits		64,902				352		2.15				51,357				254		1.98				40,807				185		1.80
Total earning assets	$	4,698,937			$	55,308		4.67	%		$	4,625,949			$	55,147		4.78	%		$	4,451,449			$	50,846		4.53	%
Less: Allowance for loan losses		(50,732	)									(49,965	)									(48,137	)
Nonearning Assets
Cash and due from banks		77,921										171,313										144,605
Premises and equipment		59,268										58,857										57,545
Other nonearning assets		156,109										155,299										143,491
Total assets	$	4,941,503									$	4,961,453									$	4,748,953
Interest Bearing Liabilities
Savings deposits	$	235,957			$	62		0.10	%		$	240,824			$	71		0.12	%		$	253,244			$	79		0.12	%
Interest bearing checking accounts		1,667,690				6,712		1.60				1,743,813				7,576		1.74				1,407,460				4,455		1.26
Time deposits:
In denominations under $100,000		278,598				1,383		1.97				274,217				1,300		1.90				270,480				1,055		1.55
In denominations over $100,000		1,124,393				6,535		2.31				1,119,176				6,609		2.37				1,235,951				5,884		1.89
Miscellaneous short-term borrowings		18,870				113		2.38				35,424				232		2.63				165,520				555		1.33
Long-term borrowings and
subordinated debentures		30,928				419		5.37				30,928				436		5.65				30,928				426		5.46
Total interest bearing liabilities	$	3,356,436			$	15,224		1.80	%		$	3,444,382			$	16,224		1.89	%		$	3,363,583			$	12,454		1.47	%
Noninterest Bearing Liabilities
Demand deposits		961,070										922,729										858,263
Other liabilities		48,132										41,806										33,962
Stockholders' Equity		575,865										552,536										493,145
Total liabilities and stockholders' equity	$	4,941,503									$	4,961,453									$	4,748,953
Interest Margin Recap
Interest income/average earning assets						55,308		4.67								55,147		4.78								50,846		4.53
Interest expense/average earning assets						15,224		1.29								16,224		1.41								12,454		1.11
Net interest income and margin					$	40,084		3.38	%						$	38,923		3.37	%						$	38,392		3.42	%

(1)		Tax exempt income was converted to a fully taxable equivalent basis at a 21 percent tax rate. 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.  Taxable equivalent basis adjustments were $539,000, $512,000 and $467,000 in the three-month periods ended September 30, 2019, June 30, 2019 and September 30, 2018, respectively.
(2)		Loan fees, which are immaterial in relation to total taxable loan interest income for 2019 and 2018, are included as taxable loan interest income.
(3)		Nonaccrual loans are included in the average balance of taxable loans.

Reconciliation of Non-GAAP Financial Measures
Tangible common equity, tangible assets, tangible book value per share and the tangible common equity to tangible assets ratio are non-GAAP financial measures calculated using GAAP amounts. Tangible common equity is calculated by excluding the balance of goodwill and other intangible assets from the calculation of stockholders’ equity, net of deferred tax. Tangible assets are calculated by excluding the balance of goodwill and other intangible assets from the calculation of total assets, net of deferred tax. Tangible book value per share is calculated by dividing tangible common equity by the number of shares issued. Because not all companies use the same calculation of tangible common equity and tangible assets, this presentation may not be comparable to other similarly titled measures calculated by other companies. However, management considers these measures of the company’s value including only earning assets as meaningful to an understanding of the company’s financial information.

A reconciliation of these non-GAAP financial measures is provided below (dollars in thousands, except per share data).

	Three Months Ended												Nine Months Ended
	Sep. 30,				Jun. 30,				Sep. 30,				Sep 30,				Sep. 30,
	2019				2019				2018				2019				2018
Total Equity	$	584,436			$	565,363			$	498,541			$	584,436			$	498,541
Less: Goodwill		(4,970	)			(4,970	)			(4,970	)			(4,970	)			(4,970	)
Plus: Deferred tax assets related to goodwill		1,191				1,191				1,180				1,191				1,180
Tangible Common Equity		580,657				561,584				494,751				580,657				494,751
Assets	$	4,948,155			$	4,975,519			$	4,757,619			$	4,948,155			$	4,757,619
Less: Goodwill		(4,970	)			(4,970	)			(4,970	)			(4,970	)			(4,970	)
Plus: Deferred tax assets related to goodwill		1,191				1,191				1,180				1,191				1,180
Tangible Assets		4,944,376				4,971,740				4,753,829				4,944,376				4,753,829
Ending common shares issued		25,623,016				25,615,216				25,301,732				25,623,016				25,301,732
Tangible Book Value Per Common Share	$	22.66			$	21.92			$	19.55			$	22.66			$	19.55
Tangible Common Equity/Tangible Assets		11.74		%		11.30		%		10.41		%		11.74		%		10.41		%

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

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