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Lakeland Financial Reports Record Performance

WARSAW, Ind., Jan. 26, 2015 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq:LKFN), parent company of Lake City Bank, today reported record high net income of $43.8 million for 2014. Net income increased 13% from $38.8 million for 2013. Diluted net income per common share increased 12% to $2.61 for 2014 versus $2.33 for 2013. This per share performance also represents a record level for the company and its shareholders since the company's founding in 1872.

The company further reported quarterly net income of $11.1 million for the fourth quarter of 2014, an increase of 5%, versus $10.6 million for the fourth quarter of 2013. Diluted net income per share was $0.66 for the fourth quarter of 2014, an increase of 5%, versus $0.63 for the comparable period of 2013.

David M. Findlay, President and CEO, commented, "Our success in 2014 was clearly driven by our ability to grow the loan portfolio and increase our market share of deposits. The most effective way for us to contribute to the economic strength of our communities is through this loan growth. Our record results reflect the efforts of the entire Lake City Bank team as we were able to successfully grow our balance sheet and significantly increase profitability. Our organic growth strategy is focused on building client relationships one at a time in our Indiana communities, and it is clearly working."

Return on average total equity for 2014 improved to 12.77% from 12.50% in 2013. Return on average assets for 2014 increased to 1.32% up from 1.29% in 2013. The company's tangible common equity to tangible assets ratio was 10.41% at December 31, 2014, compared to 10.05% at December 31, 2013 and 10.40% at September 30, 2014.

As previously announced, the board of directors approved a cash dividend for the fourth quarter of $0.21 per share, payable on February 5, 2015, to shareholders of record as of January 25, 2015. The quarterly dividend represents an 11% increase over the $0.19 quarterly dividends paid for each quarter of 2013 and for the first quarter of 2014.

The company experienced strong loan growth during the year as average total loans increased $307.3 million, or 13%, to $2.65 billion from $2.34 billion in 2013. Total loans outstanding grew $227.2 million, or 9%, from $2.54 billion as of December 31, 2013 to $2.76 billion as of December 31, 2014. On a linked quarter basis, total loans grew $60.4 million or 2% from $2.70 billion as of September 30, 2014. Average total loans for the fourth quarter of 2014 were $2.73 billion, an increase of $270.9 million, or 11%, versus $2.46 billion for the comparable period in 2013. On a linked quarter basis, average total loans increased $46.6 million, or 2%, from $2.68 billion for the third quarter of 2014 to $2.73 billion for the fourth quarter of 2014.

Total average deposits also experienced strong growth during the year and increased by $292.6 million, or 12% to $2.80 billion from $2.51 billion. Total deposits grew $327.1 million, or 13%, from $2.55 billion as of December 31, 2013 to $2.87 billion as of December 31, 2014. Average total deposits for the fourth quarter of 2014 were $2.94 billion versus $2.58 billion for the fourth quarter of 2013, an increase of 14%. On a linked quarter basis, average total deposits increased $119.1 million, or 4%.

Findlay added, "We're particularly proud that our robust loan growth was significantly funded by great core deposit growth in 2014. Our retail and commercial banking teams worked well together as this organic deposit growth was generated throughout our footprint and highlights our focus on growing relationships."

The company's net interest margin expanded by six basis points during 2014 to 3.32% for 2014 compared to 3.26% in 2013, although the net interest margin did decline sequentially in each quarter during 2014. The net interest margin improved for the year despite downward pressure on loan yields and the prolonged low interest rate environment. The net interest margin expansion was attributable primarily to declines in deposit rates and overall funding costs and improvement in the investment portfolio yields, which more than offset declining loan yields. The company's net interest margin was 3.28% in the fourth quarter of 2014, compared to 3.33% for the fourth quarter of 2013. The net interest margin was 3.31% in the linked third quarter of 2014, down three basis points due to declining loan yields and a one basis point increase in cost of funds.

Nonperforming assets decreased $10.4 million, or 43%, to $14.0 million as of December 31, 2014 versus $24.4 million as of December 31, 2013. On a linked quarter basis, nonperforming assets were $1.0 million, or 6%, lower than the $15.0 million reported as of September 30, 2014. The decrease in nonperforming assets during the fourth quarter of 2014 primarily resulted from payments received as well as charge-offs recognized on nonperforming loans. The ratio of nonperforming assets to total assets at December 31, 2014, was 0.41% versus 0.77% at December 31, 2013 and 0.45% at September 30, 2014. Net charge-offs to average loans were 0.10% for 2014 compared to 0.11% for 2013. Net charge offs totaled $2.6 million in 2014 compared to $2.5 million in 2013. Net charge-offs totaled $125,000 in the fourth quarter of 2014 versus net charge-offs of $1.0 million during the fourth quarter of 2013 and net recoveries of $782,000 during the linked third quarter of 2014.

For the second consecutive year, the company did not record a provision for loan losses. The absence of a provision for loan losses was generally driven by continued stabilization and improvement in key loan quality metrics, including lower levels of nonperforming loans, appropriate reserve coverage of nonperforming loans, continuing signs of stabilization of the economic conditions of the company's markets and sustained signs of improvement in its borrowers' performance and future prospects. The company's allowance for loan losses as of December 31, 2014 was $46.3 million compared to $48.8 million as of December 31, 2013 and $46.4 million as of September 30, 2014. The allowance for loan losses represented 1.67% of total loans as of December 31, 2014 versus 1.92% at December 31, 2013 and 1.72% as of September 30, 2014. As a result of improved asset quality during 2014, the allowance for loan losses as a percentage of nonperforming loans increased to 338% as of December 31, 2014, versus 204% as of December 31, 2013, and 314% as of September 30, 2014.

The company's noninterest income was $30.1 million in 2014, compared to $30.7 million in 2013. Declines in mortgage banking income and investment brokerage fees, more than offset growth in deposit fees, loan fees and other income during 2014. Noninterest income was $7.2 million for the fourth quarter of 2014 versus $7.9 million in the comparable quarter of 2013 and the linked quarter of 2014. Year-over-year, quarterly noninterest income was positively impacted by a $264,000 increase in service charges on deposit accounts driven by higher deposit fees. Offsetting the increase was a $656,000 decrease in investment brokerage fees due to lower production volumes.

The company's noninterest expense increased by $3.4 million, to $66.2 million in 2014 compared to $62.8 million in 2013. During 2014, the increase in noninterest expense was driven primarily by increases in salary and employee benefit costs and data processing fees. Noninterest expense increased $104,000, or 1%, to $16.6 million in the fourth quarter of 2014 versus $16.5 million in the comparable quarter of 2013. On a linked quarter basis, noninterest expense decreased by $28,000 from $16.7 million in the third quarter of 2014. Salaries and employee benefits decreased by $345,000 in the three month period ended December 31, 2014 versus the same period of 2013. The decrease in salary and employee benefits was driven by lower employee benefit costs and lower commissions paid on investment brokerage fees. Corporate and business development expense increased during the quarter by $207,000 due to higher advertising and marketing expenses. Data processing fees increased by $110,000 due to technology related expenditures with the company's core processor and other technology based providers to enhance the delivery of electronic banking alternatives and improve commercial product solutions. The company's efficiency ratio was 50% for the fourth quarter of 2014, compared to 51% for the fourth quarter of 2013 and 49% for the linked third quarter of 2014. For 2014, the efficiency ratio was 50% compared to 52% in 2013, and consistently ranks in the top quartile of peer financial institutions in the country. Revenue growth in 2014 outpaced expense growth for the same period, resulting in an improvement in the efficiency ratio for 2014 compared to 2013.

Findlay concluded, "Our strong capital structure provides a solid foundation for our continued growth in 2015. The Lake City Bank team has produced record net income in 26 of the last 27 years and the strength and consistency of this performance has provided healthy dividend increases for our shareholders. We are very well positioned for future growth and expansion in our Indiana communities and are particularly excited about Indianapolis, where we opened our third office in late 2014."

Lakeland Financial Corporation is a $3.4 billion bank holding company headquartered in Warsaw, Indiana. Lake City Bank, its single bank subsidiary, is the fourth largest bank in the state, and the largest bank 100% invested in Indiana. Lake City Bank operates 46 offices in Northern and Central Indiana, delivering technology driven and client-centric financial services solutions to individuals and businesses.

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

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

LAKELAND FINANCIAL CORPORATION
FOURTH QUARTER 2014 FINANCIAL HIGHLIGHTS
(Unaudited – Dollars in thousands except per share data)
Three Months Ended Twelve Months Ended
Dec. 31, Sep. 30, Dec. 31, Dec. 31 Dec. 31,
END OF PERIOD BALANCES 2014 2014 2013 2014 2013
Assets $3,443,284 $3,355,903 $3,175,764 $3,443,284 $3,175,764
Deposits 2,873,120 2,889,672 2,546,068 2,873,120 2,546,068
Brokered Deposits 142,429 224,486 29,755 142,429 29,755
Core Deposits 2,730,691 2,665,186 2,516,313 2,730,691 2,516,313
Loans 2,762,320 2,701,923 2,535,098 2,762,320 2,535,098
Allowance for Loan Losses 46,262 46,387 48,797 46,262 48,797
Total Equity 361,385 351,949 321,964 361,385 321,964
Tangible Common Equity 358,209 348,769 318,914 358,209 318,914
AVERAGE BALANCES
Total Assets $3,411,849 $3,351,474 $3,109,027 $3,318,271 $3,009,738
Earning Assets 3,221,946 3,172,423 2,942,828 3,137,082 2,833,505
Investments 475,839 476,643 473,623 475,069 474,711
Loans 2,731,259 2,684,667 2,460,396 2,650,678 2,343,422
Total Deposits 2,938,291 2,819,237 2,577,777 2,797,929 2,505,340
Interest Bearing Deposits 2,386,541 2,317,643 2,111,449 2,299,578 2,087,870
Interest Bearing Liabilities 2,486,073 2,485,979 2,307,167 2,461,352 2,265,303
Total Equity 358,022 348,154 319,620 343,135 310,627
INCOME STATEMENT DATA
Net Interest Income $26,104 $25,965 $24,298 $102,303 $90,439
Net Interest Income-Fully Tax Equivalent 26,591 26,451 24,780 104,232 92,235
Provision for Loan Losses 0 0 0 0 0
Noninterest Income 7,163 7,871 7,878 30,053 30,737
Noninterest Expense 16,632 16,660 16,528 66,166 62,778
Net Income 11,070 11,511 10,588 43,805 38,839
PER SHARE DATA
Basic Net Income Per Common Share $0.67 $0.70 $0.64 $2.65 $2.36
Diluted Net Income Per Common Share 0.66 0.69 0.63 2.61 2.33
Cash Dividends Declared Per Common Share 0.21 0.21 0.19 0.82 0.57
Book Value Per Common Share (equity per share issued) 21.83 21.26 19.54 21.83 19.54
Tangible Book Value Per Common Share 21.64 21.08 19.36 21.64 19.36
Market Value – High 44.15 39.93 39.32 44.15 39.32
Market Value – Low 36.98 35.5 31.72 34.96 23.92
Basic Weighted Average Common Shares Outstanding 16,549,466 16,547,551 16,466,461 16,535,530 16,436,131
Diluted Weighted Average Common Shares Outstanding 16,795,819 16,775,770 16,688,793 16,781,455 16,634,338
KEY RATIOS
Return on Average Assets 1.29% 1.36% 1.35% 1.32% 1.29%
Return on Average Total Equity 12.27 13.12 13.14 12.77 12.50
Efficiency (Noninterest Expense / Net Interest Income plus Noninterest Income) 49.99 49.24 51.37 49.99 51.81
Average Equity to Average Assets 10.49 10.39 10.28 10.34 10.32
Net Interest Margin 3.28 3.31 3.33 3.32 3.26
Net Charge Offs to Average Loans 0.02 (0.12) 0.16 0.10 0.11
Loan Loss Reserve to Loans 1.67 1.72 1.92 1.67 1.92
Loan Loss Reserve to Nonperforming Loans 337.51 314.18 203.79 337.51 203.79
Loan Loss Reserve to Nonperforming Loans and Performing TDR's 153.19 143.11 117.13 153.19 117.13
Nonperforming Loans to Loans 0.50 0.55 0.94 0.50 0.94
Nonperforming Assets to Assets 0.41 0.45 0.77 0.41 0.77
Total Impaired and Watch List Loans to Total Loans 5.75 6.08 6.64 5.75 6.64
Tier 1 Leverage 11.22 11.18 11.25 11.22 11.25
Tier 1 Risk-Based Capital 13.11 13.15 12.99 13.11 12.99
Total Capital 14.36 14.40 14.25 14.36 14.25
Tangible Capital 10.41 10.40 10.05 10.41 10.05
ASSET QUALITY
Loans Past Due 30 - 89 Days $2,367 $2,432 $1,968 $2,367 $1,968
Loans Past Due 90 Days or More 130 0 46 130 46
Non-accrual Loans 13,577 14,764 23,899 13,577 23,899
Nonperforming Loans (includes nonperforming TDR's) 13,707 14,764 23,945 13,707 23,945
Other Real Estate Owned 284 200 469 284 469
Other Nonperforming Assets 9 6 12 9 12
Total Nonperforming Assets 14,000 14,970 24,426 14,000 24,426
Performing Troubled Debt Restructurings 16,492 17,650 17,714 16,492 17,714
Nonperforming Troubled Debt Restructurings (included in nonperforming loans) 9,160 9,841 18,531 9,160 18,531
Total Troubled Debt Restructurings 25,653 27,491 36,245 25,653 36,245
Impaired Loans 31,957 34,137 43,218 31,957 43,218
Non-Impaired Watch List Loans 126,782 130,014 125,045 126,782 125,045
Total Impaired and Watch List Loans 158,739 164,151 168,263 158,739 168,263
Gross Charge Offs 1,010 270 1,182 4,685 4,052
Recoveries 885 1,052 174 2,150 1,404
Net Charge Offs/(Recoveries) 125 (782) 1,008 2,535 2,648
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31, 2014 and 2013
(in thousands, except share data)
December 31, December 31,
2014 2013
(Unaudited)
ASSETS
Cash and due from banks $75,381 $55,727
Short-term investments 15,257 7,378
Total cash and cash equivalents 90,638 63,105
Securities available for sale (carried at fair value) 475,911 468,967
Real estate mortgage loans held for sale 1,585 1,778
Loans, net of allowance for loan losses of $46,262 and $48,797 2,716,058 2,486,301
Land, premises and equipment, net 41,983 39,335
Bank owned life insurance 66,612 62,883
Federal Reserve and Federal Home Loan Bank stock 9,413 10,732
Accrued interest receivable 8,662 8,577
Goodwill 4,970 4,970
Other assets 27,452 29,116
Total assets $3,443,284 $3,175,764
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Noninterest bearing deposits $579,495 $479,606
Interest bearing deposits 2,293,625 2,066,462
Total deposits 2,873,120 2,546,068
Short-term borrowings
Federal funds purchased 500 11,000
Securities sold under agreements to repurchase 54,907 104,876
Other short-term borrowings 105,000 146,000
Total short-term borrowings 160,407 261,876
Long-term borrowings 35 37
Subordinated debentures 30,928 30,928
Accrued interest payable 2,946 2,918
Other liabilities 14,463 11,973
Total liabilities 3,081,899 2,853,800
STOCKHOLDERS' EQUITY
Common stock: 90,000,000 shares authorized, no par value 16,550,324 shares issued and 16,465,621 outstanding as of December 31, 2014 16,475,716 shares issued and 16,377,449 outstanding as of December 31, 2013 96,121 93,249
Retained earnings 263,345 233,108
Accumulated other comprehensive income/(loss) 3,830 (2,494)
Treasury stock, at cost (2014 - 84,703 shares, 2013 - 98,267 shares) (2,000) (1,988)
Total stockholders' equity 361,296 321,875
Noncontrolling interest 89 89
Total equity 361,385 321,964
Total liabilities and equity $3,443,284 $3,175,764
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months and Twelve Months Ended December 31, 2014 and 2013
(in thousands except for share and per share data)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2014 2013 2014 2013
NET INTEREST INCOME
Interest and fees on loans
Taxable $27,000 $25,288 $105,317 $98,757
Tax exempt 122 98 470 402
Interest and dividends on securities
Taxable 2,062 1,838 8,176 5,398
Tax exempt 826 817 3,281 3,124
Interest on short-term investments 13 9 44 55
Total interest income 30,023 28,050 117,288 107,736
Interest on deposits 3,622 3,380 13,568 15,745
Interest on borrowings
Short-term 37 141 388 490
Long-term 260 231 1,029 1,062
Total interest expense 3,919 3,752 14,985 17,297
NET INTEREST INCOME 26,104 24,298 102,303 90,439
Provision for loan losses 0 0 0 0
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 26,104 24,298 102,303 90,439
NONINTEREST INCOME
Wealth advisory fees 1,026 952 4,072 3,847
Investment brokerage fees 631 1,287 3,370 4,736
Service charges on deposit accounts 2,522 2,258 9,495 8,806
Loan, insurance and service fees 1,612 1,612 6,799 6,404
Merchant card fee income 412 340 1,549 1,265
Bank owned life insurance income 311 469 1,393 1,653
Other income 536 735 2,978 2,488
Mortgage banking income 113 225 621 1,431
Net securities gains (losses) 0 0 (224) 107
Total noninterest income 7,163 7,878 30,053 30,737
NONINTEREST EXPENSE
Salaries and employee benefits 9,338 9,683 38,648 37,176
Net occupancy expense 891 844 3,776 3,376
Equipment costs 885 810 3,231 2,831
Data processing fees and supplies 1,630 1,520 6,171 5,635
Corporate and business development 1,021 814 3,073 2,734
FDIC insurance and other regulatory fees 490 471 1,936 1,855
Professional fees 749 805 2,990 3,171
Other expense 1,628 1,581 6,341 6,000
Total noninterest expense 16,632 16,528 66,166 62,778
INCOME BEFORE INCOME TAX EXPENSE 16,635 15,648 66,190 58,398
Income tax expense 5,565 5,060 22,385 19,559
NET INCOME $11,070 $10,588 $43,805 $38,839
BASIC WEIGHTED AVERAGE COMMON SHARES 16,549,466 16,466,461 16,535,530 16,436,131
BASIC EARNINGS PER COMMON SHARE $0.67 $0.64 $2.65 $2.36
DILUTED WEIGHTED AVERAGE COMMON SHARES 16,795,819 16,688,793 16,781,455 16,634,338
DILUTED EARNINGS PER COMMON SHARE $0.66 $0.63 $2.61 $2.33
LAKELAND FINANCIAL CORPORATION
LOAN DETAIL
FOURTH QUARTER 2014
(unaudited in thousands)
December 31, September 30, December 31,
2014 2014 2013
Commercial and industrial loans:
Working capital lines of credit loans $544,043 19.7% $517,916 19.2% $457,690 18.0%
Non-working capital loans 491,330 17.8 513,525 19.0 443,877 17.5
Total commercial and industrial loans 1,035,373 37.5 1,031,441 38.2 901,567 35.6
Commercial real estate and multi-family residential loans:
Construction and land development loans 156,636 5.7 153,118 5.7 157,630 6.2
Owner occupied loans 403,154 14.6 396,207 14.7 370,386 14.6
Nonowner occupied loans 394,458 14.3 401,454 14.9 394,748 15.6
Multifamily loans 71,811 2.6 84,875 3.1 63,443 2.5
Total commercial real estate and multi-family residential loans 1,026,059 37.1 1,035,654 38.3 986,207 38.9
Agri-business and agricultural loans:
Loans secured by farmland 137,407 5.0 131,516 4.9 133,458 5.3
Loans for agricultural production 136,380 4.9 78,203 2.9 120,571 4.8
Total agri-business and agricultural loans 273,787 9.9 209,719 7.8 254,029 10.0
Other commercial loans 75,715 2.7 77,076 2.9 70,770 2.8
Total commercial loans 2,410,934 87.3 2,353,890 87.1 2,212,573 87.3
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans 145,167 5.3 143,892 5.3 125,444 4.9
Open end and junior lien loans 150,220 5.4 150,859 5.6 146,946 5.8
Residential construction and land development loans 6,742 0.2 5,726 0.2 4,640 0.2
Total consumer 1-4 family mortgage loans 302,129 10.9 300,477 11.1 277,030 10.9
Other consumer loans 49,541 1.8 47,967 1.8 46,125 1.8
Total consumer loans 351,670 12.7 348,444 12.9 323,155 12.7
Subtotal 2,762,604 100.0% 2,702,334 100.0% 2,535,728 100.0%
Less: Allowance for loan losses (46,262) (46,387) (48,797)
Net deferred loan fees (284) (411) (630)
Loans, net $2,716,058 $2,655,536 $2,486,301

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

Source:Lake City Bank