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Lakeland Financial Reports Record Quarterly and Annual Net Income

WARSAW, Ind., Jan. 25, 2016 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq:LKFN), parent company of Lake City Bank, today reported record high net income of $46.4 million for 2015, versus $43.8 million for 2014, an increase of 6%. Diluted net income per common share increased 5% to $2.75 for 2015, versus $2.61 for 2014. This per share performance also represents a record level for the company and its shareholders.

The company further reported record quarterly net income of $12.3 million for the fourth quarter of 2015, an increase of 11%, versus $11.1 million for the fourth quarter of 2014. Diluted net income per common share was $0.73 for the fourth quarter of 2015, also an increase of 11%, versus $0.66 for the comparable period of 2014. On a quarter-linked basis net income increased by 6% or $721,000 from $11.6 million for the third quarter ended September 30, 2015.

David M. Findlay, President and CEO, commented, "Our record performance in 2015 is the result of long-term, consistent, organic loan and deposit growth. We are particularly pleased to have crossed the $3 billion threshold in total loans in 2015. Our successful execution reflects the dedication and focus of the Lake City Bank team. We continue to focus on growing client relationships one at a time, with an emphasis on our Indiana communities.”

As previously announced, the board of directors approved a cash dividend for the fourth quarter of $0.245 per share, payable on February 5, 2016, to shareholders of record as of January 25, 2016. The quarterly dividend, which is equal to the dividends paid in the third and second quarters 2015, represents a 17% increase over the $0.21 quarterly dividends paid in the last three quarters of 2014 and in the first quarter of 2015.

Return on average total equity for 2015 was 12.26% compared to 12.77% in 2014. Return on average assets for 2015 was 1.29% compared to 1.32% in 2014. The company’s tangible common equity to tangible assets ratio was 10.36% at December 31, 2015, compared to 10.41% at December 31, 2014 and 10.47% at September 30, 2015.

The company experienced strong loan growth during the year as average total loans increased $234.9 million, or 9%, to $2.89 billion from $2.65 billion in 2014. Total loans outstanding grew $318.6 million, or 12%, from $2.76 billion as of December 31, 2014 to $3.08 billion as of December 31, 2015. On a linked quarter basis, total loans grew $108.6 million, or 4%, from $2.97 billion as of September 30, 2015. Average total loans for the fourth quarter of 2015 were $3.01 billion, an increase of $277.4 million, or 10% versus $2.73 billion for the comparable period in 2014. On a linked quarter basis, average total loans increased $85.5 million, or 3%, from $2.92 billion for the third quarter of 2015 to $3.01 billion for the fourth quarter of 2015.

Total average deposits also experienced strong growth during the year and increased by $290.7 million, or 10%, to $3.09 billion from $2.80 billion. Total deposits grew $310.3 million, or 11%, from $2.87 billion as of December 31, 2014 to $3.18 billion as of December 31, 2015. Importantly, total core deposits increased $304.7 million, or 11% from $2.73 billion at December 31, 2014 to $3.04 billion at December 31, 2015. Average total deposits for the fourth quarter of 2015 were $3.22 billion, an increase of $282.4 million, or 10%, versus $2.94 billion for the corresponding period of 2014. On a linked quarter basis, average total deposits increased $94.3 million, or 3%, from $3.13 billion for the third quarter of 2015 to $3.22 billion for the fourth quarter of 2015.

Findlay added, “We continue to experience strong loan and deposit increases throughout our Indiana footprint both in mature and new markets. Our organic growth strategy has translated into revenue growth and record profitability while we continue to invest in technology and infrastructure.”

The company’s net interest margin decreased 12 basis points to 3.20% for 2015 compared to 3.32% in 2014. The company’s net interest margin was 3.17% in the fourth quarter of 2015, compared to 3.28% for the fourth quarter of 2014. On a linked quarter basis, the net interest margin improved slightly from 3.16% in the third quarter of 2015 due to the Federal Reserve Bank increase in the Federal Funds Rate in mid-December. The decline in net interest margin during the twelve-month and three-month periods ended December 31, 2015 was largely driven by competitive factors in the company’s markets, including aggressive pricing of new loan opportunities and renewed loans. Net interest income increased $3.6 million, or 4%, to $105.9 million in 2015 versus $102.3 million in 2014. Net interest income increased $1.3 million, or 5%, to $27.5 million for the fourth quarter of 2015, versus $26.1 million in the fourth quarter of 2014.

For the third 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 improvement in key loan quality metrics, including appropriate reserve coverage of nonperforming loans, a decrease in historical loss percentages, stable economic conditions in 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, 2015 was $43.6 million compared to $46.3 million as of December 31, 2014 and $44.7 million as of September 30, 2015. The allowance for loan losses represented 1.42% of total loans as of December 31, 2015 versus 1.67% at December 31, 2014 and 1.50% as of September 30, 2015. The allowance for loan losses as a percentage of nonperforming loans was 334% as of December 31, 2015, versus 338% as of December 31, 2014, and 312% as of September 30, 2015.

Nonperforming assets decreased $720,000, or 5%, to $13.3 million as of December 31, 2015 versus $14.0 million as of December 31, 2014. On a linked quarter basis, nonperforming assets were $1.3 million lower than the $14.5 million reported as of September 30, 2015. The ratio of nonperforming assets to total assets at December 31, 2015 declined to 0.35% from 0.41% at December 31, 2014 and from 0.40% at September 30, 2015. Net charge-offs to average loans were 0.09% for 2015 compared to 0.10% for 2014. Net charge-offs totaled $2.7 million in 2015 versus $2.5 million in 2014. Net charge-offs totaled $1.1 million in the fourth quarter of 2015 versus net charge-offs of $125,000 during the fourth quarter of 2014 and net charge-offs of $122,000 during the linked third quarter of 2015.

The company’s noninterest income increased $1.4 million, or 5%, to $31.5 million in 2015, compared to $30.1 million in 2014. The company’s noninterest income increased $906,000, or 13%, to $8.1 million for the fourth quarter of 2015 compared to $7.2 million for the comparable quarter of 2014. On a linked quarter basis, noninterest income increased by $167,000 from $7.9 million in the third quarter of 2015. During 2015, noninterest income was positively impacted by increases in service charges on deposit accounts, loan fees, and wealth advisory fees. Increases in noninterest income in the fourth quarter 2015 compared to the prior year fourth quarter resulted from mortgage banking income, service charges on deposit accounts, loan, insurance and service fees and wealth advisory fees. Offsetting these increases was a decrease in investment brokerage fees driven by lower production volumes as well as changes to the product mix designed to provide a more consistent revenue stream.

The company’s noninterest expense increased $2.0 million, or 3%, to $68.2 million in 2015, compared to $66.2 million in 2014. The company’s noninterest expense increased by $725,000, or 4% to $17.4 million in the fourth quarter of 2015 compared to $16.6 million in the comparable quarter of 2014. On a linked quarter basis, noninterest expense increased by $150,000 from $17.2 million in the third quarter of 2015. Data processing fees increased primarily due to increased technology and software related expenditures with the company’s core processor which are volume and product driven and represent digital solutions and forward technology for clients. Equipment costs increased due to higher depreciation expense related to branch expansion and upgrades. Salaries and employee benefits increased primarily due to staff additions, higher employee insurance costs and higher pension plan expense. Professional fees decreased primarily due to lower legal fees. The company's efficiency ratio was 49% for the fourth quarter of 2015 compared to 50% in both the fourth quarter of 2014 and the linked third quarter of 2015. The efficiency ratio was 50% for both 2015 and 2014.

Findlay concluded, “The Lake City Bank team produced record net income for the seventh consecutive year. In addition, we have reported record net income growth in 27 of the last 28 years. As a result, the strength and consistency of this long-term, profitable performance has provided healthy dividend increases for our shareholders. Our strong asset quality trends and solid capital structure provide an excellent foundation for our continued growth in 2016.”

Lakeland Financial Corporation is a $3.8 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 47 offices in Northern and Central Indiana, delivering technology driven and client-centric financial services solutions to individuals and businesses.

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

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

LAKELAND FINANCIAL CORPORATION
FOURTH QUARTER 2015 FINANCIAL HIGHLIGHTS
Three Months Ended Twelve Months Ended
(Unaudited – Dollars in thousands)Dec. 31, Sep. 30, Dec. 31, Dec. 31, Dec. 31,
END OF PERIOD BALANCES 2015 2015 2014 2015 2014
Assets$3,766,286 $3,666,250 $3,443,284 $3,766,286 $3,443,284
Deposits 3,183,421 3,147,534 2,873,120 3,183,421 2,873,120
Brokered Deposits 148,040 133,836 142,429 148,040 142,429
Core Deposits 3,035,381 3,013,698 2,730,691 3,035,381 2,730,691
Loans 3,080,929 2,972,280 2,762,320 3,080,929 2,762,320
Allowance for Loan Losses 43,610 44,694 46,262 43,610 46,262
Total Equity 392,901 386,700 361,385 392,901 361,385
Tangible Common Equity 389,733 383,529 358,209 389,733 358,209
AVERAGE BALANCES
Total Assets$3,750,998 $3,640,769 $3,411,849 $3,597,190 $3,318,271
Earning Assets 3,502,618 3,409,445 3,221,946 3,376,060 3,137,082
Investments 479,942 471,641 475,839 476,153 475,069
Loans 3,008,681 2,923,159 2,731,259 2,885,568 2,650,678
Total Deposits 3,220,736 3,126,472 2,938,291 3,088,598 2,797,929
Interest Bearing Deposits 2,551,778 2,491,490 2,386,541 2,478,674 2,299,578
Interest Bearing Liabilities 2,670,605 2,605,467 2,486,073 2,589,915 2,461,352
Total Equity 390,241 380,865 358,022 378,106 343,135
INCOME STATEMENT DATA
Net Interest Income$27,452 $26,711 $26,104 $105,927 $102,303
Net Interest Income-Fully Tax Equivalent 27,976 27,181 26,591 107,902 104,232
Provision for Loan Losses 0 0 0 0 0
Noninterest Income 8,069 7,902 7,163 31,479 30,053
Noninterest Expense 17,357 17,207 16,632 68,206 66,166
Net Income 12,286 11,565 11,070 46,367 43,805
PER SHARE DATA
Basic Net Income Per Common Share$0.74 $0.70 $0.67 $2.79 $2.65
Diluted Net Income Per Common Share 0.73 0.69 0.66 2.75 2.61
Cash Dividends Declared Per Common Share 0.245 0.245 0.21 0.945 0.82
Dividend Payout 33.56 % 35.51 % 31.82 % 34.36 % 31.42 %
Book Value Per Common Share (equity per share issued) 23.60 23.24 21.83 23.60 21.83
Tangible Book Value Per Common Share 23.42 23.05 21.64 23.42 21.64
Market Value – High 49.49 45.40 44.15 49.49 44.15
Market Value – Low 43.38 39.01 36.98 37.42 34.96
Basic Weighted Average Common Shares Outstanding 16,637,986 16,629,378 16,549,466 16,617,569 16,535,530
Diluted Weighted Average Common Shares Outstanding 16,883,007 16,847,983 16,795,819 16,830,379 16,781,455
KEY RATIOS
Return on Average Assets 1.30 % 1.26 % 1.29 % 1.29 % 1.32 %
Return on Average Total Equity 12.49 12.05 12.27 12.26 12.77
Average Equity to Average Assets 10.40 10.46 10.49 10.51 10.34
Net Interest Margin 3.17 3.16 3.28 3.20 3.32
Efficiency (Noninterest Expense / Net Interest Income plus Noninterest Income) 48.86 49.71 49.99 49.64 49.99
Tier 1 Leverage 11.10 11.18 11.22 11.10 11.22
Tier 1 Risk-Based Capital 12.37 12.53 13.11 12.37 13.11
Common Equity Tier 1 (CET1) 11.48 11.61 NA 11.48 NA
Total Capital 13.62 13.79 14.36 13.62 14.36
Tangible Capital 10.36 10.47 10.41 10.36 10.41
ASSET QUALITY
Loans Past Due 30 - 89 Days$2,766 $1,984 $2,367 $2,766 $2,367
Loans Past Due 90 Days or More 0 0 130 0 130
Non-accrual Loans 13,055 14,308 13,577 13,055 13,577
Nonperforming Loans (includes nonperforming TDR's) 13,055 14,308 13,707 13,055 13,707
Other Real Estate Owned 210 231 284 210 284
Other Nonperforming Assets 15 0 9 15 9
Total Nonperforming Assets 13,280 14,539 14,000 13,280 14,000
Performing Troubled Debt Restructurings 6,260 7,605 16,492 6,260 16,492
Nonperforming Troubled Debt Restructurings (included in nonperforming loans) 10,914 10,934 9,160 10,914 9,160
Total Troubled Debt Restructurings 17,174 18,539 25,653 17,174 25,653
Impaired Loans 20,576 22,660 31,957 20,576 31,957
Non-Impaired Watch List Loans 122,332 122,116 126,782 122,332 126,782
Total Impaired and Watch List Loans 142,908 144,776 158,739 142,908 158,739
Gross Charge Offs 1,242 228 1,010 3,173 4,685
Recoveries 158 106 885 520 2,150
Net Charge Offs/(Recoveries) 1,084 122 125 2,652 2,535
Net Charge Offs/(Recoveries) to Average Loans 0.14 % 0.02 % 0.02 % 0.09 % 0.10 %
Loan Loss Reserve to Loans 1.42 % 1.50 % 1.67 % 1.42 % 1.67 %
Loan Loss Reserve to Nonperforming Loans 334.04 % 312.36 % 337.51 % 334.04 % 337.51 %
Loan Loss Reserve to Nonperforming Loans and Performing TDR's 225.78 % 203.96 % 153.19 % 225.78 % 153.19 %
Nonperforming Loans to Loans 0.42 % 0.48 % 0.50 % 0.42 % 0.50 %
Nonperforming Assets to Assets 0.35 % 0.40 % 0.41 % 0.35 % 0.41 %
Total Impaired and Watch List Loans to Total Loans 4.64 % 4.87 % 5.75 % 4.64 % 5.75 %
OTHER DATA
Full Time Equivalent Employees 518 518 496 518 496
Offices 47 46 46 47 46


LAKELAND FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31, 2015 and 2014
(in thousands, except share data)
December 31, December 31,
2015 2014
(unaudited)
ASSETS
Cash and due from banks$ 67,484 $75,381
Short-term investments 13,190 15,257
Total cash and cash equivalents 80,674 90,638
Securities available for sale (carried at fair value) 478,071 475,911
Real estate mortgage loans held for sale 3,294 1,585
Loans, net of allowance for loan losses of $43,610 and $46,262 3,037,319 2,716,058
Land, premises and equipment, net 46,684 41,983
Bank owned life insurance 69,698 66,612
Federal Reserve and Federal Home Loan Bank stock 7,668 9,413
Accrued interest receivable 9,462 8,662
Goodwill 4,970 4,970
Other assets 28,446 27,452
Total assets$ 3,766,286 $3,443,284
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Noninterest bearing deposits$ 715,093 $579,495
Interest bearing deposits 2,468,328 2,293,625
Total deposits 3,183,421 2,873,120
Short-term borrowings
Federal funds purchased 0 500
Securities sold under agreements to repurchase 69,622 54,907
Other short-term borrowings 70,000 105,000
Total short-term borrowings 139,622 160,407
Long-term borrowings 34 35
Subordinated debentures 30,928 30,928
Accrued interest payable 3,773 2,946
Other liabilities 15,607 14,463
Total liabilities 3,373,385 3,081,899
STOCKHOLDERS' EQUITY
Common stock: 90,000,000 shares authorized, no par value
16,641,651 shares issued and 16,546,044 outstanding as of December 31, 2015
16,550,324 shares issued and 16,465,621 outstanding as of December 31, 2014 99,123 96,121
Retained earnings 294,002 263,345
Accumulated other comprehensive income 2,142 3,830
Treasury stock, at cost (2015 - 95,607 shares, 2014 - 84,703 shares) (2,455) (2,000)
Total stockholders' equity 392,812 361,296
Noncontrolling interest 89 89
Total equity 392,901 361,385
Total liabilities and equity$ 3,766,286 $3,443,284


LAKELAND FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months and Twelve Months Ended December 31, 2015 and 2014
(in thousands except for share and per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
2015 2014 2015 2014
(unaudited) (unaudited) (unaudited)
NET INTEREST INCOME
Interest and fees on loans
Taxable$ 28,544 $27,000 $ 110,097 $105,317
Tax exempt 114 122 464 470
Interest and dividends on securities
Taxable 2,105 2,062 8,564 8,176
Tax exempt 840 826 3,355 3,281
Interest on short-term investments 16 13 59 44
Total interest income 31,619 30,023 122,539 117,288
Interest on deposits 3,864 3,622 15,415 13,568
Interest on borrowings
Short-term 50 37 188 388
Long-term 253 260 1,009 1,029
Total interest expense 4,167 3,919 16,612 14,985
NET INTEREST INCOME 27,452 26,104 105,927 102,303
Provision for loan losses 0 0 0 0
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 27,452 26,104 105,927 102,303
NONINTEREST INCOME
Wealth advisory fees 1,138 1,026 4,531 4,072
Investment brokerage fees 299 631 1,507 3,370
Service charges on deposit accounts 2,855 2,522 10,608 9,495
Loan, insurance and service fees 1,844 1,612 7,460 6,799
Merchant card fee income 511 412 1,843 1,549
Bank owned life insurance income 382 311 1,338 1,393
Other income 884 536 2,974 2,978
Mortgage banking income 156 113 1,176 621
Net securities gains/(losses) 0 0 42 (224)
Total noninterest income 8,069 7,163 31,479 30,053
NONINTEREST EXPENSE
Salaries and employee benefits 9,902 9,338 38,923 38,648
Net occupancy expense 902 891 3,820 3,776
Equipment costs 899 885 3,598 3,231
Data processing fees and supplies 1,937 1,630 7,592 6,171
Corporate and business development 889 1,021 3,173 3,073
FDIC insurance and other regulatory fees 526 490 2,044 1,936
Professional fees 683 749 2,794 2,990
Other expense 1,619 1,628 6,262 6,341
Total noninterest expense 17,357 16,632 68,206 66,166
INCOME BEFORE INCOME TAX EXPENSE 18,164 16,635 69,200 66,190
Income tax expense 5,878 5,565 22,833 22,385
NET INCOME$ 12,286 $11,070 $ 46,367 $43,805
BASIC WEIGHTED AVERAGE COMMON SHARES 16,637,986 16,549,466 16,617,569 16,535,530
BASIC EARNINGS PER COMMON SHARE$ 0.74 $0.67 $ 2.79 $2.65
DILUTED WEIGHTED AVERAGE COMMON SHARES 16,883,007 16,795,819 16,830,379 16,781,455
DILUTED EARNINGS PER COMMON SHARE$ 0.73 $0.66 $ 2.75 $2.61


LAKELAND FINANCIAL CORPORATION
LOAN DETAIL
FOURTH QUARTER 2015
(dollars in thousands)
December 31,September 30,December 31,
201520152014
(unaudited)(unaudited)
Commercial and industrial loans:
Working capital lines of credit loans$581,025 18.9%$593,780 20.0%$544,043 19.7%
Non-working capital loans 598,487 19.4 577,536 19.4 491,330 17.8
Total commercial and industrial loans 1,179,512 38.3 1,171,316 39.4 1,035,373 37.5
Commercial real estate and multi-family residential loans:
Construction and land development loans 230,719 7.5 176,945 6.0 156,636 5.7
Owner occupied loans 412,026 13.4 409,004 13.8 403,154 14.6
Nonowner occupied loans 407,883 13.2 417,790 14.1 394,458 14.3
Multifamily loans 79,425 2.6 93,075 3.1 71,811 2.6
Total commercial real estate and multi-family residential loans 1,130,053 36.7 1,096,814 36.9 1,026,059 37.1
Agri-business and agricultural loans:
Loans secured by farmland 164,375 5.3 155,106 5.2 137,407 5.0
Loans for agricultural production 141,719 4.6 93,964 3.2 136,380 4.9
Total agri-business and agricultural loans 306,094 9.9 249,070 8.4 273,787 9.9
Other commercial loans 85,075 2.8 82,976 2.8 75,715 2.7
Total commercial loans 2,700,734 87.7 2,600,176 87.5 2,410,934 87.3
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans 158,062 5.1 154,019 5.2 145,167 5.3
Open end and junior lien loans 163,700 5.3 160,485 5.4 150,220 5.4
Residential construction and land development loans 9,341 0.3 8,445 0.3 6,742 0.2
Total consumer 1-4 family mortgage loans 331,103 10.7 322,949 10.9 302,129 10.9
Other consumer loans 49,113 1.6 49,169 1.7 49,541 1.8
Total consumer loans 380,216 12.3 372,118 12.5 351,670 12.7
Subtotal 3,080,950 100.0% 2,972,294 100.0% 2,762,604 100.0%
Less: Allowance for loan losses (43,610) (44,694) (46,262)
Net deferred loan fees (21) (14) (284)
Loans, net$3,037,319 $2,927,586 $2,716,058


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

Source:Lake City Bank