Net Income of $80.4 million, Increases 40% From a Year Ago

WARSAW, Ind., Jan. 25, 2019 (GLOBE NEWSWIRE) — Lakeland Financial Corporation (Nasdaq Global Select/LKFN), parent company of Lake City Bank, today reported record net income of $80.4 million, which represents an increase of $23.1 million or 40% compared with net income of $57.3 million for 2017. Diluted earnings per share also increased 40% to $3.13 compared to $2.23 for 2017. This per share performance also represents a record for the company and its shareholders.

The company further reported record quarterly net income of $21.4 million for the three months ended December 31, 2018 versus $11.6 million for the comparable period of 2017, an increase of 84%. Diluted net income per common share was also a record for the quarter and increased 84% to $0.83 for the three months ended December 31, 2018 versus $0.45 for the comparable period of 2017. Excluding the $4.1 million 2017 income tax provision, net income increased 36% and diluted earnings per share increased 36% for the three months ended December 31, 2018 compared to the comparable period of 2017.

David M. Findlay, President and CEO commented, “2018 represents our ninth consecutive year of record income performance. Our long-term performance is especially gratifying as we have reported record net income in 29 of the last 30 years. We’re particularly proud of our ability to consistently produce quality earnings over the last three decades for our shareholders.”

Highlights for the year and quarter are noted below.

Full year 2018 versus 2017 highlights:

• Return on average equity of 16.5%, up from 12.7%
• Organic average loan growth of $233 million, or 6%
• Average deposit growth of $337 million, or 9%
• Net interest income increase of $15.4 million, or 11%
• Net interest margin increase of 10 basis points to 3.43%
• Noninterest income increase of $4.1 million, or 11%
• Revenue growth of $19.5 million, or 11%
• Pretax net income growth of $9.3 million, or 10%
• Nonperforming assets to total assets of 0.16%, down from 0.20% a year ago
• Total equity and tangible common equity¹ increase of $53 million,  or 11%

4th Quarter 2018 versus 4th Quarter 2017 highlights:

• Return on average equity of 16.8%, up from 9.9%
• Organic average loan growth of $178 million, or 5%
• Average deposit growth of $174 million, or 4%
• Net interest income increase of $4.2 million, or 12%
• Net interest margin increase of 19 basis points to 3.52%
• Noninterest income increase of $643,000, or 7%
• Pretax net income growth of $3.4 million, or 15%
• Revenue growth of $4.8 million, or 11%
• Total equity and tangible common equity² increase of $53 million,  or 11%

4th Quarter 2018 versus 3rd Quarter 2018 highlights:

• Return on average equity of 16.8% up from 16.6%
• Organic average loan growth of $68 million, or 2%
• Net interest income growth of $1.7 million, or 4%
• Revenue growth of $1.3 million, or 3%
• Reduced nonperforming assets of $5.2 million, or 41%
• Average equity  increase of $12.4 million, or 3%

As announced on January 8, 2019, the board of directors approved a cash dividend for the fourth quarter of $0.26 per share, payable on February 5, 2019, to shareholders of record as of January 25, 2019. The fourth quarter dividend per share represents an 18% increase over the fourth quarter 2017 dividend of $0.22 per share.

In addition, on January 8, 2019, the Board of Directors authorized the purchase of up to $30,000,000 shares of the company’s common stock, representing approximately 3.0% of the company’s issued and outstanding shares of common stock as of December 31, 2018. The Board of Directors authorized this stock repurchase plan based on the strength of the company’s balance sheet and capital position. The Board believes that a stock repurchase plan is an important tool that can be utilized to enhance long term shareholder value. Share repurchases may be made periodically as permitted by securities laws and other legal and regulatory requirements and will be subject to market conditions as well as other factors. The timing, price and quantity of purchases will be at the discretion of the corporation and the program may be discontinued or suspended at any time. Repurchases may be made in the open market, through block trades or otherwise, and in privately negotiated transactions. If any share purchases are made, they will be made on or prior to December 31, 2019.

Findlay continued, “Revenue growth was once again a critical driver of our ability to generate strong earnings growth. We experienced healthy double digit increases in fee-based services in all three of our core business units, commercial, retail, and wealth advisory. In addition, our asset sensitive balance sheet contributed to an expansion of our net interest margin.”

Return on average total equity for the year ended December 31, 2018 was 16.51%, compared to 12.72% in 2017. Return on average assets was 1.69% in 2018 compared to 1.29% in 2017. The company’s total capital as a percent of risk-weighted assets was 14.20% at December 31, 2018, compared to 13.26% at December 31, 2017 and 14.14% at September 30, 2018. The company’s tangible common equity³ to tangible assets ratio was 10.63% at December 31, 2018, compared to 9.93% at December 31, 2017 and 10.41% at September 30, 2018.

Average total loans for 2018 were $3.84 billion, an increase of $233.0 million, or 6%, versus $3.61 billion for 2017. Total loans outstanding grew $96.3 million, or 3%, from $3.82 billion as of December 31, 2017 to $3.91 billion as of December 31, 2018. On a linked quarter basis, total loans grew $71.6 million, or 2%, from $3.84 billion at September 30, 2018. Average total loans for the fourth quarter of 2018 was $3.91 billion, an increase of $177.5 million, or 5%, versus $3.73 billion for the comparable period of 2017. On a linked quarter basis, total average loans increased by $67.9 million, or 2%, from $3.84 billion for the third quarter of 2018 to $3.91 billion for the fourth quarter of 2018.

Average total deposits for 2018 were $4.09 billion, an increase of $336.7 million, or 9%, versus $3.76 billion for 2017. Total deposits grew $35.4 million, or 1%, from $4.01 billion as of December 31, 2017 to $4.04 billion as of December 31, 2018. In addition, total core deposits, which exclude brokered deposits, increased $135.5 million, or 4%, from $3.74 billion at December 31, 2017 to $3.88 billion at December 31, 2018 due to growth in commercial deposits of $112.4, million or 12%, growth in retail deposits of $57.8 million, or 4%, offset by declines in public fund deposits of $34.7 million or 3%.

Findlay added, “Our commercial and retail banking teams delivered good core deposit growth in 2018, which provided deposit-driven funding for our loan growth. We are pleased that net loan growth returned to the balance sheet in the fourth quarter. We continued to experience strong organic growth in the quarter and did not incur the elevated level of loan pay downs that occurred in the second and third quarters.”

The company’s net interest margin increased 10 basis points to 3.43% for 2018 compared to 3.33% for 2017. The company’s net interest margin was 3.52% in the fourth quarter of 2018 versus 3.33% for the fourth quarter of 2017 and 3.42% during the third quarter 2018. The higher margin in 2018 was due to higher yields and growth in loans, and was partially offset by a higher cost of funds, which was driven by the Federal Reserve Bank increasing the target Federal Funds Rate in March, June, September and December of 2018. The company estimates that net interest margin benefited by four basis points during the fourth quarter 2018 from the payoff of a nonaccrual loan and other nonaccrual adjustments.

Net interest income increased $15.4 million, or 11%, to $151.3 million in 2018, versus $135.9 million in 2017 due to net interest margin expansion and growth in loans and deposits during the year. Net interest income increased $4.2 million, or 12%, to $39.6 million in the fourth quarter of 2018, versus $35.4 million in the fourth quarter of 2017. On a linked quarter basis, net interest income increased by $1.7 million from $37.9 million or 4%.

The company recorded a provision for loan losses of $6.4 million in 2018 compared to $3.0 million in 2017, primarily resulting from a charge off of $5.1 million from a single commercial loan relationship in addition to growth in the loan portfolio. The company recorded a provision for loan losses of $300,000 in the fourth quarter of 2018, versus $1.9 million in the fourth quarter of 2017 and $1.1 million in the third quarter of 2018. The company’s allowance for loan losses as of December 31, 2018 was $48.5 million compared to $47.1 million as of December 31, 2017 and $48.3 million as of September 30, 2018. The allowance for loan losses represented 1.24% of total loans as of December 31, 2018 versus 1.23% at December 31, 2017 and 1.26% as of September 30, 2018.

Net charge offs were $5.1 million in 2018 versus net recoveries of $403,000 in 2017. Net charge offs for the fourth quarter of 2018 were $189,000 versus net charge offs of $226,000 in the fourth quarter of 2017 and net charge offs of $463,000 during the linked third quarter 2018. Net charge offs to average loans were 0.13% in 2018 compared to net recoveries of 0.01% for 2017. Annualized net charge offs to average loans were 0.02% for the fourth quarters of 2018 and 2017. Annualized net charge offs to average loans were 0.05% for the linked third quarter of 2018.

Nonperforming assets decreased $1.9 million, or 20%, to $7.6 million as of December 31, 2018 versus $9.5 million as of December 31, 2017 due to a decrease in nonaccrual loans. On a linked quarter basis, nonperforming assets were $5.2 million lower than the $12.8 million reported as of September 30, 2018. The ratio of nonperforming assets to total assets at December 31, 2018 decreased to 0.16% from 0.20% at December 31, 2017 and 0.27% at September 30, 2018.  

Findlay stated, “We ended 2018 with stable asset quality and believe it’s reflective of broader economic conditions in our markets.”

The company’s noninterest income increased $4.1 million, or 11%, to $40.1 million in 2018, compared to $36.0 million in 2017. The company’s noninterest income increased by $643,000, or 7%, to $10.1 million for the fourth quarter of 2018, compared to $9.5 million for the fourth quarter of 2017. Noninterest income decreased by $328,000 from $10.4 million during the third quarter due to reduced mortgage banking income and reduced bank owned life equity based income. During 2018, noninterest income was positively impacted by increases in service charges on deposit accounts primarily related to business accounts, loan and service fees, and wealth advisory and brokerage fees due to continued growth of client relationships.

The company’s noninterest expense increased $6.8 million, or 9%, to $86.0 million in 2018 compared to $79.3 million in 2017. The company’s noninterest expense increased $3.0 million, or 15%, to $22.6 million in the fourth quarter of 2018, compared to $19.6 million in the fourth quarter of 2017 and was higher by $543,000, or 2% on a linked quarter basis. Salaries and employee benefits increased during 2018 primarily due to an increase to the company’s minimum hiring wage, normal merit increases and increased health insurance cost. Data processing fees also increased during 2018 primarily due to the company’s continued investment in technology-based solutions and ongoing transition to cloud-based technology. In addition, corporate and business development expense increased primarily due to higher community support and donation expense.

Findlay noted, “We continue to invest in our growing branch presence in our Indiana footprint with the opening of our 50^th office in downtown Indianapolis. Importantly, we will stay focused on providing innovative and technology-based solutions for our customers. It is critical that we maintain and increase our investment in our technology platform as we continue to work with key technology and Fintech partners in this long-term strategy.”

The company’s efficiency ratio was 45.0% for 2018 compared to 46.1% for 2017. The company’s efficiency ratio was 45.4% for the fourth quarter of 2018, compared to 43.7% for the fourth quarter of 2017 and 45.5% for the linked third quarter of 2018.

The effective tax rate for 2018 was 18.7%, compared to 36.0% for 2017, and reflects the effect of the Tax Cuts and Jobs Act, which lowered the company’s federal tax rate to 21% from 35% effective January 1, 2018. Results for 2017 included a non-cash, non-operating and non-recurring income tax provision of $4.1 million or $0.16 per diluted share. Excluding this tax item, and calculating both periods at the 2017 effective tax rate of 31.3%, net income increased 10.4% for 2018 compared to 2017.

Lakeland Financial Corporation is a $4.9 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 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 “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 are 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.

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

LAKELAND FINANCIAL CORPORATION
FOURTH QUARTER 2018 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	2018			2018			2017			2018			2017
Assets	$	4,875,254		$	4,757,619		$	4,682,976		$	4,875,254		$	4,682,976
Deposits		4,044,065			4,015,924			4,008,655			4,044,065			4,008,655
Brokered Deposits		164,888			176,927			264,980			164,888			264,980
Core Deposits		3,879,177			3,838,997			3,743,675			3,879,177			3,743,675
Loans		3,914,745			3,843,125			3,818,459			3,914,745			3,818,459
Allowance for Loan Losses		48,453			48,343			47,121			48,453			47,121
Total Equity		521,704			498,541			468,667			521,704			468,667
Goodwill net of deferred tax assets		3,779			3,790			3,799			3,779			3,799
Tangible Common Equity (1)		517,925			494,751			464,868			517,925			464,868
AVERAGE BALANCES
Total Assets	$	4,837,604		$	4,748,953		$	4,598,809		$	4,758,392		$	4,443,106
Earning Assets		4,523,304			4,451,449			4,323,249			4,461,366			4,183,112
Investments		573,073			569,567			537,796			562,385			530,275
Loans		3,905,511			3,837,595			3,727,967			3,843,912			3,610,908
Total Deposits		4,163,118			4,025,398			3,989,592			4,093,894			3,757,209
Interest Bearing Deposits		3,256,930			3,167,135			3,151,116			3,235,867			2,967,902
Interest Bearing Liabilities		3,390,159			3,363,583			3,266,206			3,382,507			3,178,439
Total Equity		505,570			493,145			467,459			487,062			450,796
INCOME STATEMENT DATA
Net Interest Income	$	39,590		$	37,925		$	35,392		$	151,271		$	135,892
Net Interest Income-Fully Tax Equivalent		40,089			38,392			36,231			153,088			139,015
Provision for Loan Losses		300			1,100			1,850			6,400			3,000
Noninterest Income		10,105			10,433			9,462			40,110			36,009
Noninterest Expense		22,552			22,009			19,598			86,037			79,267
Net Income		21,363			20,570			11,627			80,411			57,330
PER SHARE DATA
Basic Net Income Per Common Share	$	0.84		$	0.81		$	0.46		$	3.18		$	2.28
Diluted Net Income Per Common Share		0.83			0.80			0.45			3.13			2.23
Cash Dividends Declared Per Common Share		0.26			0.26			0.22			1.00			0.85
Dividend Payout		31.33	%		32.50	%		48.89	%		31.95	%		38.12		%
Book Value Per Common Share (equity per share issued)		20.62			19.70			18.60			20.62			18.60
Tangible Book Value Per Common Share (1)		20.47			19.55			18.45			20.47			18.45
Market Value – High		47.41			51.25			52.43			51.76			52.43
Market Value – Low		37.79			46.35			45.26			37.79			39.68
Basic Weighted Average Common Shares Outstanding		25,301,732			25,301,033			25,194,903			25,288,533			25,181,208
Diluted Weighted Average Common Shares Outstanding		25,746,490			25,745,151			25,701,337			25,727,831			25,663,381
KEY RATIOS
Return on Average Assets		1.75	%		1.72	%		1.00	%		1.69	%		1.29		%
Return on Average Total Equity		16.76			16.55			9.87			16.51			12.72
Average Equity to Average Assets		10.45			10.38			10.16			10.24			10.15
Net Interest Margin		3.52			3.42			3.33			3.43			3.33
Efficiency  (Noninterest Expense / Net Interest Income plus Noninterest Income)		45.38			45.51			43.69			44.96			46.11
Tier 1 Leverage (2)		11.44			11.31			10.76			11.44			10.76
Tier 1 Risk-Based Capital (2)		13.05			12.97			12.10			13.05			12.10
Common Equity Tier 1 (CET1) (2)		12.35			12.24			11.37			12.35			11.37
Total Capital (2)		14.20			14.14			13.26			14.20			13.26
Tangible Capital (1) (2)		10.63			10.41			9.93			10.63			9.93
ASSET QUALITY
Loans Past Due 30 – 89 Days	$	10,020		$	13,476		$	9,613		$	10,020		$	9,613
Loans Past Due 90 Days or More		0			0			6			0			6
Non-accrual Loans		7,260			12,337			9,401			7,260			9,401
Nonperforming Loans (includes nonperforming TDR’s)		7,260			12,337			9,407			7,260			9,407
Other Real Estate Owned		316			316			40			316			40
Other Nonperforming Assets		0			111			55			0			55
Total Nonperforming Assets		7,577			12,764			9,502			7,577			9,502
Performing Troubled Debt Restructurings		8,016			3,512			2,893			8,016			2,893
Nonperforming Troubled Debt Restructurings (included in nonperforming loans)		4,384			7,313			7,750			4,384			7,750
Total Troubled Debt Restructurings		12,400			10,825			10,643			12,400			10,643
Impaired Loans		26,661			20,906			13,869			26,661			13,869
Non-Impaired Watch List Loans		159,938			175,400			157,834			159,938			157,834
Total Impaired and Watch List Loans		186,599			196,306			171,703			186,599			171,703
Gross Charge Offs		424			581			625			6,110			1,560
Recoveries		235			118			399			1,043			1,963
Net Charge Offs/(Recoveries)		189			463			226			5,067			(403	)
Net Charge Offs/(Recoveries)  to Average Loans		0.02	%		0.05	%		0.02	%		0.13	%		(0.01	)	%
Loan Loss Reserve to Loans		1.24	%		1.26	%		1.23	%		1.24	%		1.23		%
Loan Loss Reserve to Nonperforming Loans		667.40	%		391.92	%		500.91	%		667.40	%		500.91		%
Loan Loss Reserve to Nonperforming Loans and Performing TDR’s		317.17	%		305.03	%		383.10	%		317.17	%		383.10		%
Nonperforming Loans to Loans		0.19	%		0.32	%		0.25	%		0.19	%		0.25		%
Nonperforming Assets to Assets		0.16	%		0.27	%		0.20	%		0.16	%		0.20		%
Total Impaired and Watch List Loans to Total Loans		4.77	%		5.11	%		4.50	%		4.77	%		4.50		%
OTHER DATA
Full Time Equivalent Employees		553			549			539			553			539
Offices		49			49			49			49			49
(1) Non-GAAP financial measure – see “Reconciliation of Non-GAAP Financial Measures”
(2) Capital ratios for December 31, 2018 are preliminary until the Call Report is filed.

CONSOLIDATED BALANCE SHEETS (in thousands except share data)
	December 31,				December 31,
		2018				2017
	(Unaudited)
ASSETS
Cash and due from banks	$	192,290			$	140,402
Short-term investments		24,632				35,778
Total cash and cash equivalents		216,922				176,180
Securities available for sale (carried at fair value)		585,549				538,493
Real estate mortgage loans held for sale		2,293				3,346
Loans, net of allowance for loan losses of $48,453 and $47,121		3,866,292				3,771,338
Land, premises and equipment, net		58,097				56,466
Bank owned life insurance		77,106				75,879
Federal Reserve and Federal Home Loan Bank stock		13,772				13,772
Accrued interest receivable		15,518				14,093
Goodwill		4,970				4,970
Other assets		34,735				28,439
Total assets	$	4,875,254			$	4,682,976
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Noninterest bearing deposits	$	946,838			$	885,622
Interest bearing deposits		3,097,227				3,123,033
Total deposits		4,044,065				4,008,655
Borrowings
Securities sold under agreements to repurchase		75,555				70,652
Federal Home Loan Bank advances		170,000				80,030
Subordinated debentures		30,928				30,928
Total borrowings		276,483				181,610
Accrued interest payable		10,404				6,311
Other liabilities		22,598				17,733
Total liabilities		4,353,550				4,214,309
STOCKHOLDERS’ EQUITY
Common stock:  90,000,000 shares authorized, no par value
25,301,732 shares issued and 25,128,773 outstanding as of December 31, 2018
25,194,903 shares issued and 25,025,933 outstanding as of December 31, 2017		112,383				108,862
Retained earnings		419,179				363,794
Accumulated other comprehensive loss		(6,191	)			(670	)
Treasury stock, at cost (2018 – 172,959 shares, 2017 – 168,970 shares)		(3,756	)			(3,408	)
Total stockholders’ equity		521,615				468,578
Noncontrolling interest		89				89
Total equity		521,704				468,667
Total liabilities and equity	$	4,875,254			$	4,682,976

CONSOLIDATED STATEMENTS OF INCOME (unaudited – in thousands except share and per share data)
	Three Months Ended								Twelve Months Ended
	December 31,								December 31,
		2018				2017				2018				2017
NET INTEREST INCOME
Interest and fees on loans
Taxable	$	49,091			$	40,251			$	181,451			$	150,295
Tax exempt		187				212				814				729
Interest and dividends on securities
Taxable		2,516				2,185				9,717				9,218
Tax exempt		1,712				1,357				6,079				5,102
Other interest income		222				156				909				354
Total interest income		53,728				44,161				198,970				165,698
Interest on deposits		13,425				8,304				44,913				27,026
Interest on borrowings
Short-term		282				117				1,143				1,446
Long-term		431				348				1,643				1,334
Total interest expense		14,138				8,769				47,699				29,806
NET INTEREST INCOME		39,590				35,392				151,271				135,892
Provision for loan losses		300				1,850				6,400				3,000
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES		39,290				33,542				144,871				132,892
NONINTEREST INCOME
Wealth advisory fees		1,668				1,476				6,344				5,481
Investment brokerage fees		415				323				1,458				1,273
Service charges on deposit accounts		4,289				3,669				15,831				13,696
Loan and service fees		2,366				2,050				9,291				7,900
Merchant card fee income		627				583				2,461				2,279
Bank owned life insurance income		67				498				1,244				1,768
Other income		565				712				2,381				2,598
Mortgage banking income		152				171				1,150				982
Net securities gains/(losses)		(44	)			(20	)			(50	)			32
Total noninterest income		10,105				9,462				40,110				36,009
NONINTEREST EXPENSE
Salaries and employee benefits		12,086				11,244				48,353				45,306
Net occupancy expense		1,257				1,190				5,149				4,595
Equipment costs		1,403				1,216				5,243				4,629
Data processing fees and supplies		2,393				2,211				9,685				8,233
Corporate and business development		1,996				801				5,066				4,744
FDIC insurance and other regulatory fees		419				502				1,701				1,798
Professional fees		1,082				857				3,798				3,574
Other expense		1,916				1,577				7,042				6,388
Total noninterest expense		22,552				19,598				86,037				79,267
INCOME BEFORE INCOME TAX EXPENSE		26,843				23,406				98,944				89,634
Income tax expense		5,480				11,779				18,533				32,304
NET INCOME	$	21,363			$	11,627			$	80,411			$	57,330
BASIC WEIGHTED AVERAGE COMMON SHARES		25,301,732				25,194,903				25,288,533				25,181,208
BASIC EARNINGS PER COMMON SHARE	$	0.84			$	0.46			$	3.18			$	2.28
DILUTED WEIGHTED AVERAGE COMMON SHARES		25,746,490				25,701,337				25,727,831				25,663,381
DILUTED EARNINGS PER COMMON SHARE	$	0.83			$	0.45			$	3.13			$	2.23

LAKELAND FINANCIAL CORPORATION
LOAN DETAIL
FOURTH QUARTER 2018
(unaudited in thousands)
	December 31,					September 30,					December 31,
		2018					2018					2017
Commercial and industrial loans:
Working capital lines of credit loans	$	690,620		17.6	%	$	757,004		19.7	%	$	743,609		19.4	%
Non-working capital loans		714,759		18.3			693,402		18.0			675,072		17.7
Total commercial and industrial loans		1,405,379		35.9			1,450,406		37.7			1,418,681		37.1
Commercial real estate and multi-family residential loans:
Construction and land development loans		266,805		6.8			231,795		6.0			224,474		5.9
Owner occupied loans		586,325		15.0			571,998		14.9			538,603		14.1
Nonowner occupied loans		520,901		13.3			520,414		13.5			508,121		13.3
Multifamily loans		195,604		5.0			192,218		5.0			173,715		4.5
Total commercial real estate and multi-family residential loans		1,569,635		40.1			1,516,425		39.4			1,444,913		37.8
Agri-business and agricultural loans:
Loans secured by farmland		177,503		4.6			159,256		4.2			186,437		4.9
Loans for agricultural production		193,010		4.9			134,773		3.5			196,404		5.1
Total agri-business and agricultural loans		370,513		9.5			294,029		7.7			382,841		10.0
Other commercial loans		95,657		2.4			114,350		3.0			124,076		3.3
Total commercial loans		3,441,184		87.9			3,375,210		87.8			3,370,511		88.2
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		185,822		4.7			185,212		4.8			179,302		4.7
Open end and junior lien loans		187,030		4.8			185,869		4.8			181,865		4.8
Residential construction and land development loans		16,226		0.4			15,128		0.4			13,478		0.3
Total consumer 1-4 family mortgage loans		389,078		9.9			386,209		10.0			374,645		9.8
Other consumer loans		86,064		2.2			83,203		2.2			74,369		2.0
Total consumer loans		475,142		12.1			469,412		12.2			449,014		11.8
Subtotal		3,916,326		100.0	%		3,844,622		100.0	%		3,819,525		100.0	%
Less:  Allowance for loan losses		(48,453	)				(48,343	)				(47,121	)
Net deferred loan fees		(1,581	)				(1,497	)				(1,066	)
Loans, net	$	3,866,292				$	3,794,782				$	3,771,338

LAKELAND FINANCIAL CORPORATION
DEPOSITS AND BORROWINGS
FOURTH QUARTER 2018
(unaudited in thousands)
	December 31,				September 30,				December 31,
	2018				2018				2017
Non-interest bearing demand deposits	$	946,838			$	880,363			$	885,622
Savings and transaction accounts:
Savings deposits		247,903				251,748				263,570
Interest bearing demand deposits		1,429,570				1,388,934				1,446,880
Time deposits:
Deposits of $100,000 or more		1,146,221				1,223,457				1,161,365
Other time deposits		273,533				271,422				251,218
Total deposits	$	4,044,065			$	4,015,924			$	4,008,655
FHLB advances and other borrowings		276,483				208,280				181,610
Total funding sources	$	4,320,548			$	4,224,204			$	4,190,265

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

	Three Months Ended										Three Months Ended										Three Months Ended
	December 31, 2018										September 30, 2018										December 31, 2017
	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)	$	3,884,500			$	49,091		5.01	%		$	3,814,831			$	46,127		4.80	%		$	3,703,260			$	40,251		4.31	%
Tax exempt (1)		21,011				234		4.42				22,764				257		4.48				24,707				321		5.15
Investments: (1)
Available for sale		573,073				4,682		3.24				569,567				4,263		2.97				537,796				4,272		3.15
Short-term investments		3,350				15		1.78				3,480				14		1.60				4,377				7		0.63
Interest bearing deposits		41,370				207		1.99				40,807				185		1.80				53,109				149		1.11
Total earning assets	$	4,523,304			$	54,229		4.76	%		$	4,451,449			$	50,846		4.53	%		$	4,323,249			$	45,000		4.13	%
Less:  Allowance for loan losses		(49,045	)									(48,137	)									(46,281	)
Nonearning Assets
Cash and due from banks		156,681										144,605										127,028
Premises and equipment		57,516										57,545										56,719
Other nonearning assets		149,148										143,491										138,094
Total assets	$	4,837,604									$	4,748,953									$	4,598,809
Interest Bearing Liabilities
Savings deposits	$	250,755			$	76		0.12	%		$	253,244			$	79		0.12	%		$	270,978			$	95		0.14	%
Interest bearing checking accounts		1,476,013				5,498		1.48				1,407,460				4,455		1.26				1,451,544				3,024		0.83
Time deposits:
In denominations under $100,000		272,192				1,168		1.70				270,480				1,055		1.55				247,875				811		1.30
In denominations over $100,000		1,257,970				6,683		2.11				1,235,951				5,884		1.89				1,180,719				4,374		1.47
Miscellaneous short-term borrowings		102,301				282		1.09				165,520				555		1.33				84,132				118		0.56
Long-term borrowings and
subordinated debentures		30,928				431		5.53				30,928				426		5.46				30,958				347		4.45
Total interest bearing liabilities	$	3,390,159			$	14,138		1.65	%		$	3,363,583			$	12,454		1.47	%		$	3,266,206			$	8,769		1.07	%
Noninterest Bearing Liabilities
Demand deposits		906,188										858,263										838,476
Other liabilities		35,687										33,962										26,668
Stockholders’ Equity		505,570										493,145										467,459
Total liabilities and stockholders’ equity	$	4,837,604									$	4,748,953									$	4,598,809
Interest Margin Recap
Interest income/average earning assets						54,229		4.76								50,846		4.53								45,000		4.13
Interest expense/average earning assets						14,138		1.24								12,454		1.11								8,769		0.80
Net interest income and margin					$	40,091		3.52	%						$	38,392		3.42	%						$	36,231		3.33	%

(1) Tax exempt income was converted to a fully taxable equivalent basis at a 21 percent tax rate for 2018 and a 35 percent tax rate for 2017. 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 $501,000, $467,000 and $839,000 in the three-month periods ended December 31, 2018, September 30, 2018 and December 31, 2017, respectively.

(2) Loan fees, which are immaterial in relation to total taxable loan interest income for 2018 and 2017, are included as taxable loan interest income.

(3) Nonaccrual loans are included in the average balance of taxable loans.

(1) 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 outstanding.  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.
			Net income applicable to Lakeland Financial Corporation and earnings per diluted share, excluding the income tax expense adjustment for the deferred tax asset revaluation, are non-GAAP financial measures that the company considers useful for investors to allow better comparability of operating performance. The income tax expense adjustment for 2017 consists of a $4.1 million, or $0.16 per diluted common share, revaluation of the company’s net deferred tax asset as a result of the enactment of the Tax Cuts and Jobs Act in 2017.
			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,
		2018				2018				2017				2018				2017
Total Equity	$	521,704			$	498,541			$	468,667			$	521,704			$	468,667
Less: Goodwill		(4,970	)			(4,970	)			(4,970	)			(4,970	)			(4,970	)
Plus: Deferred tax assets related to goodwill		1,191				1,180				1,171				1,191				1,171
Tangible Common Equity		517,925				494,751				464,868				517,925				464,868
Assets	$	4,875,254			$	4,757,619			$	4,682,976			$	4,875,254			$	4,682,976
Less: Goodwill		(4,970	)			(4,970	)			(4,970	)			(4,970	)			(4,970	)
Plus: Deferred tax assets related to goodwill		1,191				1,180				1,171				1,191				1,171
Tangible Assets		4,871,475				4,753,829				4,679,177				4,871,475				4,679,177
Ending common shares issued		25,301,732				25,301,732				25,194,903				25,301,732				25,194,903
Tangible Book Value Per Common Share	$	20.47			$	19.55			$	18.45			$	20.47			$	18.45
Tangible Common Equity/Tangible Assets		10.63		%		10.41		%		9.93		%		10.63		%		9.93		%
Net Income	$	21,363			$	20,570			$	11,627			$	80,411			$	57,330
Plus:  Additional tax expense due to adjusting deferred tax asset		0				0				4,137				0				4,137
Net income excluding effect of deferred tax adjustment	$	21,363			$	20,570			$	15,764			$	80,411			$	61,467
Diluted Weighted Average Common Shares Outstanding		25,746,490				25,745,151				25,701,337				25,727,831				25,663,381
Diluted net income per share excluding effect of
of deferred tax adjustment	$	0.83			$	0.80			$	0.61			$	3.13			$	2.40

Contact
Lisa M. O’Neill
Executive Vice President and Chief Financial Officer
(574) 267-9125
[email protected]