Quarterly and Annual Net Income and Earnings per Share Set New Highs

WARSAW, Ind., Jan. 27, 2020 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq Global Select/LKFN), parent company of Lake City Bank, today reported full year net income of $87.0 million, which represents an increase of $6.6 million or 8% compared with net income of $80.4 million for 2018. Diluted earnings per share also increased 8% to $3.38 compared to $3.13 for 2018. This per share performance also represents a record for the company and its shareholders.

The company further reported record quarterly net income of $22.2 million for the three months ended December 31, 2019 versus $21.4 million for the comparable period of 2018, an increase of 4%. Diluted net income per common share was also a record for the quarter and increased 4% to $0.86 for the three months ended December 31, 2019 versus $0.83 for the comparable period of 2018.

David M. Findlay, President and Chief Executive Officer commented, “2019 represents the tenth consecutive year of reporting record net income and earnings per share performance. In addition, we have reported record net income in 30 of the last 31 years. We are proud of the Lake City Bank team’s ability to produce consistently strong performance over the last three decades. It’s a reflection of our unwavering commitment to our team, our communities and our clients and an affirmation of our execution-driven culture.”

Highlights for the year and quarter are noted below.

Full year 2019 versus 2018 highlights:

• Return on average assets of 1.76%, up from 1.69%
• Return on average equity of 15.47% compared to 16.51%
• Organic average loan growth of $131 million
• Average deposit growth of $149 million
• Net interest income increase of $3.8 million, or 2%
• Net interest margin of 3.38% compared to 3.43%
• Noninterest income increase of $4.7 million, or 12%
• Revenue growth of $8.5 million, or 4%
• Pretax net income growth of $8.4 million, or 9%
• Net charge-offs to average loans of 0.03%, down from 0.13% a year ago
• Total equity and tangible common equity¹ increase of $76 million,  or 15%

4th Quarter 2019 versus 4th Quarter 2018 highlights:

• Return on average assets of 1.77%, up from 1.75%
• Return on average equity of 14.90% compared to 16.76%
• Organic loan growth of $151 million, or 4%
• Core deposit growth of $141 million, or 4%
• Noninterest income increase of $1.0 million, or 10%
• Noninterest expense decrease of $402,000, or 2%
• Net income increase of $835,000, or 4%
• Average total equity increase of $86 million, or 17%

4th Quarter 2019 versus 3rd Quarter 2019 highlights:

• Return on average assets of 1.77%, compared to 1.72%
• Return on average equity of 14.90% compared to 14.78%
• Organic loan growth of $43 million or 1%
• Noninterest income increase of $354,000, or 3%
• Noninterest expense decrease of $615,000, or 3%
• Provision expense of $250,000 compared to $1.0 million
• Nonperforming assets to total assets of 0.38% versus 0.39%
• Total equity and tangible common equity¹ increase of $14 million,  or 2%

As announced on January 14, 2020, the board of directors approved a cash dividend for the fourth quarter of $0.30 per share, payable on February 5, 2020, to shareholders of record as of January 25, 2020. Including this dividend, the total dividends per share for 2019 represent a 16% increase over the total dividends per share paid for 2018.

In addition, on January 14, 2020, the board of directors reauthorized the purchase of up to $30 million worth of shares of the company’s common stock, representing approximately 2.4% of the company’s issued and outstanding shares of common stock as of December 31, 2019.

Return on average assets was 1.76% in 2019 compared to 1.69% in 2018. Return on average total equity for the year ended December 31, 2019 was 15.47%, compared to 16.51% in 2018. The company’s total capital as a percent of risk-weighted assets was 14.36% at December 31, 2019, compared to 14.20% at December 31, 2018 and 14.78% at September 30, 2019. The company’s tangible common equity to tangible assets ratio¹ was 12.02% at December 31, 2019, compared to 10.63% at December 31, 2018 and 11.74% at September 30, 2019. Average equity was impacted during 2019 by the $18.3 million increase in the fair value adjustment for available-for-sale investment securities, net of tax.

Findlay continued, “The strength of our capital structure provides us with foundation for continued growth. Our strong profitability metrics reflect our ability to manage our capital structure conservatively while at the same time producing healthy returns for our shareholders.”

Average total loans for 2019 were $3.97 billion, an increase of $130.6 million, or 3%, versus $3.84 billion for 2018. Total loans outstanding grew $151.1 million, or 4%, from $3.91 billion as of December 31, 2018 to $4.07 billion as of December 31, 2019. On a linked quarter basis, total loans grew $42.6 million, or 1%, from $4.02 billion at September 30, 2019. Average total loans for the fourth quarter of 2019 were $4.00 billion, an increase of $96.1 million, or 2%, versus $3.91 billion for the comparable period of 2018. On a linked quarter basis, total average loans decreased by $14.1 million, from $4.02 billion for the third quarter of 2019 to $4.00 billion for the fourth quarter of 2019.

Average total deposits for 2019 were $4.24 billion, an increase of $148.6 million, or 4%, versus $4.09 billion for 2018. Importantly, average core deposits increased by 5% or $201.3 million, during 2019 to $4.1 billion from $3.9 billion in 2018 due to growth in average commercial deposits of $211.5 million, or 21%, growth in average retail deposits of $104.4 million, or 7%, offset by a decline in public funds of $114.6 million, or 8%.

Total deposits grew $89.8 million, or 2%, from $4.04 billion as of December 31, 2018 to $4.13 billion as of December 31, 2019. In addition, total core deposits, which exclude brokered deposits, increased $141.1 million, or 4%, from $3.88 billion at December 31, 2018 to $4.02 billion at December 31, 2019 due to growth in commercial deposits of $199.5 million, or 19%, growth in retail deposits of $30.9 million, or 2%, offset by declines in public fund deposits of $89.3 million, or 7%. Brokered deposits decreased by $51.4 million or 31% from $164.9 million at December 31, 2018 to $113.5 million at December 31, 2019 due primarily to the maturity of brokered certificates of deposit that were not renewed during the year.

Findlay added, “Commercial deposit growth continues to be a highlight in our deposit gathering results. Over the two year period ended December 31, 2019, new commercial deposit accounts represent 70% of commercial checking account growth. Organic deposit growth funded our organic loan growth this year and afforded us the liquidity to redeem our $30 million of trust preferred subordinated notes at the end of the year. ”

The company’s net interest margin decreased five basis points to 3.38% for 2019 compared to 3.43% for 2018. The company’s net interest margin was 3.30% in the fourth quarter of 2019 versus 3.52% for the fourth quarter of 2018 and 3.38% during the third quarter 2019. The lower year-to-date margin in 2019 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 overall decline interest rates experienced during the second half of 2019.

Net interest income increased $3.8 million, or 2%, to $155.0 million in 2019, versus $151.3 million in 2018 due to growth in earning assets during the year offset by net interest margin compression. Net interest margin was negatively impacted by the Federal Reserve Bank’s reduction of the target fed funds rate in July, September and October of 2019. Net interest income decreased $708,000, or 2%, to $38.9 million in the fourth quarter of 2019, versus $39.6 million in the fourth quarter of 2018. On a linked quarter basis, net interest income decreased by $663,000 from $39.5 million, or 2%.

The company recorded a provision for loan losses of $3.2 million in 2019 compared to $6.4 million in 2018. The company recorded a provision for loan losses of $250,000 in the fourth quarter of 2019, versus $300,000 in the fourth quarter of 2018 and $1.0 million in the third quarter of 2019. The company’s allowance for loan losses as of December 31, 2019 was $50.7 million compared to $48.5 million as of December 31, 2018 and $50.6 million as of September 30, 2019. The allowance for loan losses represented 1.25% of total loans as of December 31, 2019 versus 1.24% at December 31, 2018 and 1.26% as of September 30, 2019.

Net charge offs were $1.0 million in 2019 versus $5.1 million in 2018. Net charge offs for the fourth quarter of 2019 were $226,000 versus net charge offs of $189,000 in the fourth quarter of 2018 and net charge offs of $936,000 during the linked third quarter 2019. Net charge offs to average loans were 0.03% in 2019 compared to 0.13% for 2018. Annualized net charge offs to average loans were 0.02% for the fourth quarters of 2019 and 2018. Annualized net charge offs to average loans were 0.09% for the linked third quarter of 2019.

Nonperforming assets increased $11.5 million, or 151%, to $19.0 million as of December 31, 2019 versus $7.6 million as of December 31, 2018 due to an increase in nonaccrual loans. On a linked quarter basis, nonperforming assets were $250,000, or 1% lower than the $19.3 million reported as of September 30, 2019. The ratio of nonperforming assets to total assets at December 31, 2019 increased to 0.38% from 0.16% at December 31, 2018 and decreased from 0.39% at September 30, 2019.

Findlay noted, “Asset quality and general economic conditions in our markets are stable. We are particularly encouraged by the $23 million decline in watch list loans as compared to the recent third quarter. Although loan demand is softer than we have historically experienced, we do not see any signs of a credit downturn in our footprint.”

The company adopted the FASB’s new rule related to credit losses on financial instruments on January 1, 2020. The company intends to disclose an updated range of impact upon adoption of this new standard in its upcoming Form 10-K for the year ended December 31, 2019, based on the company’s loan portfolio composition as of December 31, 2019.

The company’s noninterest income increased $4.7 million, or 12%, to $45.0 million in 2019, compared to $40.3 million in 2018. The company’s noninterest income increased by $1.0 million, or 10%, to $11.1 million for the fourth quarter of 2019, compared to $10.1 million for the fourth quarter of 2018. Noninterest income increased by $354,000, or 3% from $10.8 million during the linked third quarter of 2019 due to increased revenue from swap fees generated from commercial lending transactions, mortgage banking income and 10% growth in wealth advisory fees during the quarter. For the full year of 2019, noninterest income was positively impacted by increases in other income driven by swap fees generated from commercial lending transactions, increases in bank owned life insurance income, loan and service fees, mortgage banking income, and wealth advisory and brokerage fees due to continued growth of client relationships. Offsetting the increases was a decrease 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.

The company’s noninterest expense increased $3.2 million, or 4%, to $89.4 million in 2019 compared to $86.2 million in 2018. The company’s noninterest expense decreased $402,000, or 2%, to $22.1 million in the fourth quarter of 2019, compared to $22.5 million in the fourth quarter of 2018 and was lower by $615,000, or 3%, on a linked quarter basis. Salaries and employee benefits increased during 2019 primarily due to an increase to staffing in revenue producing and risk management areas as well as normal merit increases. Professional fees increased due to higher legal expenses and increased utilization of accounting firms for outsourced services. Data processing fees also increased during 2019 primarily due to the company’s continued investment in customer focused, technology-based solutions and ongoing cybersecurity and data management enhancements. Offsetting these increases were decreases in FDIC insurance and other regulatory fees as well as decreases in corporate and business development expense. 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 receive credits against their deposit insurance assessments. The bank’s $1.1 million credit was 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 efficiency ratio was 44.7% for 2019 compared to 45.0% for 2018. The company’s efficiency ratio was 44.2% for the fourth quarter of 2019, compared to 45.4% for the fourth quarter of 2018 and 45.2% for the linked third quarter of 2019.

Lakeland Financial Corporation is a $5.0 billion bank holding company headquartered in Warsaw, Indiana. Lake City Bank, its single bank subsidiary, is the sixth 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 policies 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
FOURTH QUARTER 2019 FINANCIAL HIGHLIGHTS
	Three Months Ended									Twelve Months Ended
(Unaudited – Dollars in thousands, except per share data)	Dec. 31,			Sep. 30,			Dec. 31,			Dec. 31,			Dec. 31,
END OF PERIOD BALANCES		2019			2019			2018			2019			2018
Assets	$	4,946,745		$	4,948,155		$	4,875,254		$	4,946,745		$	4,875,254
Deposits		4,133,819			4,283,390			4,044,065			4,133,819			4,044,065
Brokered Deposits		113,527			116,698			164,888			113,527			164,888
Core Deposits (3)		4,020,292			4,166,692			3,879,177			4,020,292			3,879,177
Loans		4,065,828			4,023,221			3,914,745			4,065,828			3,914,745
Allowance for Loan Losses		50,652			50,628			48,453			50,652			48,453
Total Equity		598,100			584,436			521,704			598,100			521,704
Goodwill net of deferred tax assets		3,789			3,779			3,779			3,789			3,779
Tangible Common Equity (1)		594,311			580,657			517,925			594,311			517,925
AVERAGE BALANCES
Total Assets	$	4,981,989		$	4,941,503		$	4,837,604		$	4,941,904		$	4,758,392
Earning Assets		4,748,361			4,698,937			4,523,304			4,656,707			4,461,366
Investments - available-for-sale		610,947			614,784			573,073			603,580			562,385
Loans		4,001,640			4,015,773			3,905,511			3,974,532			3,843,912
Total Deposits		4,308,623			4,267,708			4,163,118			4,242,524			4,093,894
Interest Bearing Deposits		3,302,593			3,306,638			3,256,930			3,298,406			3,235,867
Interest Bearing Liabilities		3,336,343			3,356,436			3,390,159			3,390,512			3,382,507
Total Equity		591,193			575,865			505,570			562,601			487,062
INCOME STATEMENT DATA
Net Interest Income	$	38,882		$	39,545		$	39,590		$	155,047		$	151,271
Net Interest Income-Fully Tax Equivalent		39,459			40,084			40,091			157,176			153,088
Provision for Loan Losses		250			1,000			300			3,235			6,400
Noninterest Income		11,119			10,765			10,077			44,997			40,302
Noninterest Expense		22,122			22,737			22,524			89,424			86,229
Net Income		22,198			21,454			21,363			87,047			80,411
PER SHARE DATA
Basic Net Income Per Common Share	$	0.86		$	0.84		$	0.84		$	3.40		$	3.18
Diluted Net Income Per Common Share		0.86			0.83			0.83			3.38			3.13
Cash Dividends Declared Per Common Share		0.30			0.30			0.26			1.16			1.00
Dividend Payout		34.88	%		36.14	%		31.33	%		34.32	%		31.95	%
Book Value Per Common Share (equity per share issued)		23.34			22.81			20.62			23.34			20.62
Tangible Book Value Per Common Share (1)		23.19			22.66			20.47			23.19			20.47
Market Value – High		50.00			47.46			47.41			50.00			51.76
Market Value – Low		42.00			41.26			37.79			39.78			37.79
Basic Weighted Average Common Shares Outstanding		25,623,016			25,622,338			25,301,732			25,588,404			25,288,533
Diluted Weighted Average Common Shares Outstanding		25,818,433			25,796,696			25,746,490			25,758,893			25,727,831
KEY RATIOS
Return on Average Assets		1.77	%		1.72	%		1.75	%		1.76	%		1.69	%
Return on Average Total Equity		14.90			14.78			16.76			15.47			16.51
Average Equity to Average Assets		11.87			11.65			10.45			11.38			10.24
Net Interest Margin		3.30			3.38			3.52			3.38			3.43
Efficiency  (Noninterest Expense / Net Interest Income plus Noninterest Income)		44.24			45.19			45.38			44.70			44.96
Tier 1 Leverage (2)		11.67			12.07			11.44			11.67			11.44
Tier 1 Risk-Based Capital (2)		13.21			13.62			13.05			13.21			13.05
Common Equity Tier 1 (CET1) (2)		13.21			12.94			12.35			13.21			12.35
Total Capital (2)		14.36			14.78			14.20			14.36			14.20
Tangible Capital (1) (2)		12.02			11.74			10.63			12.02			10.63
ASSET QUALITY
Loans Past Due 30 - 89 Days	$	1,471		$	922		$	10,020		$	1,471		$	10,020
Loans Past Due 90 Days or More		45			306			0			45			0
Non-accrual Loans		18,675			18,657			7,260			18,675			7,260
Nonperforming Loans (includes nonperforming TDRs)		18,720			18,963			7,260			18,720			7,260
Other Real Estate Owned		316			316			316			316			316
Other Nonperforming Assets		0			7			0			0			0
Total Nonperforming Assets		19,036			19,286			7,577			19,036			7,577
Performing Troubled Debt Restructurings		5,909			5,975			8,016			5,909			8,016
Nonperforming Troubled Debt Restructurings (included in nonperforming loans)		3,188			3,422			4,384			3,188			4,384
Total Troubled Debt Restructurings		9,097			9,397			12,400			9,097			12,400
Impaired Loans		27,763			28,070			26,661			27,763			26,661
Non-Impaired Watch List Loans		152,421			174,768			159,938			152,421			159,938
Total Impaired and Watch List Loans		180,184			202,838			186,599			180,184			186,599
Gross Charge Offs		321			1,221			424			1,910			6,110
Recoveries		95			285			235			874			1,043
Net Charge Offs/(Recoveries)		226			936			189			1,036			5,067
Net Charge Offs/(Recoveries) to Average Loans		0.02	%		0.09	%		0.02	%		0.03	%		0.13	%
Loan Loss Reserve to Loans		1.25	%		1.26	%		1.24	%		1.25	%		1.24	%
Loan Loss Reserve to Nonperforming Loans		270.58	%		266.98	%		667.40	%		270.58	%		667.40	%
Loan Loss Reserve to Nonperforming Loans and Performing TDRs		205.66	%		203.02	%		317.17	%		205.66	%		317.17	%
Nonperforming Loans to Loans		0.46	%		0.47	%		0.19	%		0.46	%		0.19	%
Nonperforming Assets to Assets		0.38	%		0.39	%		0.16	%		0.38	%		0.16	%
Total Impaired and Watch List Loans to Total Loans		4.43	%		5.04	%		4.77	%		4.43	%		4.77	%
OTHER DATA
Full Time Equivalent Employees		568			561			553			568			553
Offices		50			50			49			50			49
(1) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Financial Measures"
(2) Capital ratios for December 31, 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)
	December 31,				December 31,
		2019				2018
	(Unaudited)
ASSETS
Cash and due from banks	$	68,605			$	192,290
Short-term investments		30,776				24,632
Total cash and cash equivalents		99,381				216,922
Securities available-for-sale (carried at fair value)		608,233				585,549
Real estate mortgage loans held-for-sale		4,527				2,293
Loans, net of allowance for loan losses of $50,652 and $48,453		4,015,176				3,866,292
Land, premises and equipment, net		60,154				58,097
Bank owned life insurance		83,848				77,106
Federal Reserve and Federal Home Loan Bank stock		13,772				13,772
Accrued interest receivable		15,391				15,518
Goodwill		4,970				4,970
Other assets		41,293				34,735
Total assets	$	4,946,745			$	4,875,254
LIABILITIES
Noninterest bearing deposits	$	983,307			$	946,838
Interest bearing deposits		3,150,512				3,097,227
Total deposits		4,133,819				4,044,065
Borrowings
Securities sold under agreements to repurchase		0				75,555
Federal Home Loan Bank advances		170,000				170,000
Subordinated debentures		0				30,928
Total borrowings		170,000				276,483
Accrued interest payable		11,604				10,404
Other liabilities		33,222				22,598
Total liabilities		4,348,645				4,353,550
STOCKHOLDERS' EQUITY
Common stock:  90,000,000 shares authorized, no par value
25,623,016 shares issued and 25,444,275 outstanding as of December 31, 2019
25,301,732 shares issued and 25,128,773 outstanding as of December 31, 2018		114,858				112,383
Retained earnings		475,247				419,179
Accumulated other comprehensive income (loss)		12,059				(6,191	)
Treasury stock at cost (178,741 shares as of December 31, 2019, 172,959 shares as of December 31, 2018)		(4,153	)			(3,756	)
Total stockholders' equity		598,011				521,615
Noncontrolling interest		89				89
Total equity		598,100				521,704
Total liabilities and equity	$	4,946,745			$	4,875,254

CONSOLIDATED STATEMENTS OF INCOME (unaudited - in thousands, except share and per share data)
	Three Months Ended							Twelve Months Ended
	December 31,							December 31,
		2019			2018				2019			2018
NET INTEREST INCOME
Interest and fees on loans
Taxable	$	47,639		$	49,091			$	196,733		$	181,451
Tax exempt		231			187				951			814
Interest and dividends on securities
Taxable		1,953			2,516				8,909			9,717
Tax exempt		1,956			1,712				7,127			6,079
Other interest income		533			222				1,490			909
Total interest income		52,312			53,728				215,210			198,970
Interest on deposits		13,017			13,425				57,148			44,913
Interest on borrowings
Short-term		16			282				1,311			1,143
Long-term		397			431				1,704			1,643
Total interest expense		13,430			14,138				60,163			47,699
NET INTEREST INCOME		38,882			39,590				155,047			151,271
Provision for loan losses		250			300				3,235			6,400
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES		38,632			39,290				151,812			144,871
NONINTEREST INCOME
Wealth advisory fees		1,833			1,668				6,835			6,344
Investment brokerage fees		387			415				1,687			1,458
Service charges on deposit accounts		2,926			4,289				15,717			15,831
Loan and service fees		2,508			2,366				9,911			9,291
Merchant card fee income		659			627				2,641			2,461
Bank owned life insurance income		644			67				1,890			1,244
Mortgage banking income		370			152				1,626			1,150
Net securities gains (losses)		48			(44	)			142			(50	)
Other income		1,744			537				4,548			2,573
Total noninterest income		11,119			10,077				44,997			40,302
NONINTEREST EXPENSE
Salaries and employee benefits		12,203			12,086				49,434			48,353
Net occupancy expense		1,295			1,257				5,295			5,149
Equipment costs		1,378			1,403				5,521			5,243
Data processing fees and supplies		2,788			2,393				10,407			9,685
Corporate and business development		995			1,996				4,371			5,066
FDIC insurance and other regulatory fees		72			419				638			1,701
Professional fees		1,157			1,082				4,644			3,798
Other expense		2,234			1,888				9,114			7,234
Total noninterest expense		22,122			22,524				89,424			86,229
INCOME BEFORE INCOME TAX EXPENSE		27,629			26,843				107,385			98,944
Income tax expense		5,431			5,480				20,338			18,533
NET INCOME	$	22,198		$	21,363			$	87,047		$	80,411
BASIC WEIGHTED AVERAGE COMMON SHARES		25,623,016			25,301,732				25,588,404			25,288,533
BASIC EARNINGS PER COMMON SHARE	$	0.86		$	0.84			$	3.40		$	3.18
DILUTED WEIGHTED AVERAGE COMMON SHARES		25,818,433			25,746,490				25,758,893			25,727,831
DILUTED EARNINGS PER COMMON SHARE	$	0.86		$	0.83			$	3.38		$	3.13

LAKELAND FINANCIAL CORPORATION
LOAN DETAIL
FOURTH QUARTER 2019
(unaudited, in thousands)
	December 31,					September 30,					December 31,
		2019					2019					2018
Commercial and industrial loans:
Working capital lines of credit loans	$	717,019		17.6	%	$	730,557		18.2	%	$	690,620		17.6	%
Non-working capital loans		709,849		17.5			701,773		17.4			714,759		18.3
Total commercial and industrial loans		1,426,868		35.1			1,432,330		35.6			1,405,379		35.9
Commercial real estate and multi-family residential loans:
Construction and land development loans		287,641		7.1			319,420		7.9			266,805		6.8
Owner occupied loans		573,665		14.1			556,536		13.8			586,325		15.0
Nonowner occupied loans		571,364		14.0			545,444		13.5			520,901		13.3
Multifamily loans		240,652		5.9			259,408		6.5			195,604		5.0
Total commercial real estate and multi-family residential loans		1,673,322		41.1			1,680,808		41.7			1,569,635		40.1
Agri-business and agricultural loans:
Loans secured by farmland		174,380		4.3			176,024		4.4			177,503		4.6
Loans for agricultural production		205,151		5.0			153,943		3.8			193,010		4.9
Total agri-business and agricultural loans		379,531		9.3			329,967		8.2			370,513		9.5
Other commercial loans		112,302		2.8			100,100		2.5			95,657		2.4
Total commercial loans		3,592,023		88.3			3,543,205		88.0			3,441,184		87.9
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		177,227		4.4			187,404		4.6			185,822		4.7
Open end and junior lien loans		186,552		4.6			191,597		4.8			187,030		4.8
Residential construction and land development loans		12,966		0.3			11,774		0.3			16,226		0.4
Total consumer 1-4 family mortgage loans		376,745		9.3			390,775		9.7			389,078		9.9
Other consumer loans		98,617		2.4			90,631		2.3			86,064		2.2
Total consumer loans		475,362		11.7			481,406		12.0			475,142		12.1
Subtotal		4,067,385		100.0	%		4,024,611		100.0	%		3,916,326		100.0	%
Less:  Allowance for loan losses		(50,652	)				(50,628	)				(48,453	)
Net deferred loan fees		(1,557	)				(1,390	)				(1,581	)
Loans, net	$	4,015,176				$	3,972,593				$	3,866,292
LAKELAND FINANCIAL CORPORATION
DEPOSITS AND BORROWINGS
FOURTH QUARTER 2019
(unaudited, in thousands)
	December 31,					September 30,					December 31,
		2019					2019					2018
Noninterest bearing demand deposits	$	983,307				$	1,011,336				$	946,838
Savings and transaction accounts:
Savings deposits		234,508					237,997					247,903
Interest bearing demand deposits		1,723,937					1,650,691					1,429,570
Time deposits:
Deposits of $100,000 or more		910,134					1,101,730					1,146,221
Other time deposits		281,933					281,636					273,533
Total deposits	$	4,133,819				$	4,283,390				$	4,044,065
FHLB advances and other borrowings		170,000					30,928					276,483
Total funding sources	$	4,303,819				$	4,314,318				$	4,320,548

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

	Three Months Ended										Three Months Ended										Three Months Ended
	December 31, 2019										September 30, 2019										December 31, 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)	$	3,977,782			$	47,639		4.75	%		$	3,991,572			$	50,139		4.98	%		$	3,884,500			$	49,091		5.01	%
Tax exempt (1)		23,858				288		4.79				24,201				292		4.78				21,011				234		4.42
Investments: (1)
Available for sale		610,947				4,429		2.88				614,784				4,509		2.91				573,073				4,682		3.24
Short-term investments		54,439				339		2.47				3,478				16		1.83				3,350				15		1.78
Interest bearing deposits		81,335				194		0.95				64,902				352		2.15				41,370				207		1.99
Total earning assets	$	4,748,361			$	52,889		4.42	%		$	4,698,937			$	55,308		4.67	%		$	4,523,304			$	54,229		4.76	%
Less:  Allowance for loan losses		(50,753	)									(50,732	)									(49,045	)
Nonearning Assets
Cash and due from banks		65,294										77,921										156,681
Premises and equipment		59,850										59,268										57,516
Other nonearning assets		159,237										156,109										149,148
Total assets	$	4,981,989									$	4,941,503									$	4,837,604
Interest Bearing Liabilities
Savings deposits	$	237,241			$	55		0.09	%		$	235,957			$	62		0.10	%		$	250,755			$	76		0.12	%
Interest bearing checking accounts		1,764,854				5,765		1.30				1,667,690				6,712		1.60				1,476,013				5,498		1.48
Time deposits:
In denominations under $100,000		282,683				1,422		2.00				278,598				1,383		1.97				272,192				1,168		1.70
In denominations over $100,000		1,017,815				5,775		2.25				1,124,393				6,535		2.31				1,257,970				6,683		2.11
Miscellaneous short-term borrowings		3,495				16		1.82				18,870				113		2.38				102,301				282		1.09
Long-term borrowings and
subordinated debentures		30,255				397		5.21				30,928				419		5.37				30,928				431		5.53
Total interest bearing liabilities	$	3,336,343			$	13,430		1.60	%		$	3,356,436			$	15,224		1.80	%		$	3,390,159			$	14,138		1.65	%
Noninterest Bearing Liabilities
Demand deposits		1,006,030										961,070										906,188
Other liabilities		48,423										48,132										35,687
Stockholders' Equity		591,193										575,865										505,570
Total liabilities and stockholders' equity	$	4,981,989									$	4,941,503									$	4,837,604
Interest Margin Recap
Interest income/average earning assets						52,889		4.42								55,308		4.67								54,229		4.76
Interest expense/average earning assets						13,430		1.12								15,224		1.29								14,138		1.24
Net interest income and margin					$	39,459		3.30	%						$	40,084		3.38	%						$	40,091		3.52	%

(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 $577,000, $539,000 and $501,000 in the three-month periods ended December 31, 2019, September 30, 2019 and December 31, 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 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												Twelve Months Ended
	Dec. 31,				Sep. 30,				Dec. 31,				Dec 31,				Dec. 31,
		2019				2019				2018				2019				2018
Total Equity	$	598,100			$	584,436			$	521,704			$	598,100			$	521,704
Less: Goodwill		(4,970	)			(4,970	)			(4,970	)			(4,970	)			(4,970	)
Plus: Deferred tax assets related to goodwill		1,181				1,191				1,191				1,181				1,191
Tangible Common Equity		594,311				580,657				517,925				594,311				517,925
Assets	$	4,946,745			$	4,948,155			$	4,875,254			$	4,946,745			$	4,875,254
Less: Goodwill		(4,970	)			(4,970	)			(4,970	)			(4,970	)			(4,970	)
Plus: Deferred tax assets related to goodwill		1,181				1,191				1,191				1,181				1,191
Tangible Assets		4,942,956				4,944,376				4,871,475				4,942,956				4,871,475
Ending common shares issued		25,623,016				25,623,016				25,301,732				25,623,016				25,301,732
Tangible Book Value Per Common Share	$	23.19			$	22.66			$	20.47			$	23.19			$	20.47
Tangible Common Equity/Tangible Assets		12.02		%		11.74		%		10.63		%		12.02		%		10.63		%

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

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