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Lakeland Financial Reports Record Performance

WARSAW, Ind., July 25, 2016 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq:LKFN), parent company of Lake City Bank, today reported record quarterly net income of $12.8 million for the second quarter of 2016, an increase of 13%, versus $11.4 million for the second quarter of 2015. Diluted net income per common share of $0.76 for the second quarter of 2016 also represents a quarterly record and an increase of 12%, versus $0.68 for the comparable period of 2015. On a linked-quarter basis net income increased by 4% or $524,000 from $12.3 million for the first quarter ended March 31, 2016.

The company further reported record net income of $25.1 million for the six months ended June 30, 2016 versus $22.5 million for the comparable period of 2015, an increase of 11%. Diluted net income per common share was also a record for the period and increased 10% to $1.48 for the six months ended June 30, 2016 versus $1.34 for the comparable period of 2015.

David M. Findlay, President and CEO, commented, “The Lake City Bank team is very proud of this record quarterly and year-to-date performance. We continue to be focused on the healthy growth of our balance sheet and taking care of clients in our communities each and every day. It’s a combination that has produced disciplined and strategic growth in our Indiana markets over a long period of time.”

Highlights for the quarter are noted below:

2nd Quarter 2016 versus 2nd Quarter 2015 Highlights:

  • Organic average loan growth of $340 million or 12%
  • Average deposit growth of $371 million or 12%
  • Net interest income increase of $3.2 million or 12%
  • Continued strong asset quality with nonperforming assets to total assets at 0.24%
  • Tangible common equity increase of 12%

2nd Quarter 2016 versus 1st Quarter 2016 Highlights:

  • Organic average loan growth of $103 million or 3%
  • Core deposit growth of $160 million or 5%
  • Net interest income increase of $691,000 or 2%
  • Noninterest income increase of $1.0 million or 15%
  • Continued strong asset quality with loan loss reserve to nonperforming loans at 464%

Findlay noted, “We are particularly pleased with the continued loan and deposit growth that our retail and commercial banking teams are producing. At our core, we understand that an important part of our mission is to provide our clients with competitively priced and structured products and this overall growth is reflective of our success in delivering on this front.”

As previously announced, the board of directors approved a cash dividend for the second quarter of $0.28 per share, payable on August 5, 2016, to shareholders of record as of July 25, 2016. The quarterly dividend represents a 14% increase over the $0.245 quarterly dividends paid in the last three quarters of 2015 and in the first quarter of 2016.

On July 13, 2016, the company further announced that the board of directors approved a three-for-two common stock split that will be paid on August 5, 2016 in the form of a stock dividend to shareholders of record as of July 25, 2016. All per share data presented in this press release is prepared on a pre-split basis.

Findlay observed, “We’ve built a strong balance sheet with a conservative capital position that also has allowed us to pay a consistently healthy dividend. We further believe that the stock split is a reflection of our long-term value creation for shareholders. Over the past 10 years, our total return for shareholders, which reflects stock price performance and dividends, has increased by approximately 175%.”

Return on average total equity for the first six months of 2016 was 12.43% compared to 12.25% in the prior year period. Return on average assets for the first six months of 2016 was 1.29% compared to 1.30% in the same period of 2015. Total capital as a percent of assets was 13.65% at June 30, 2016, compared to 13.83% at June 30, 2015 and 13.72% at March 31, 2016. The company’s tangible common equity to tangible assets ratio was 10.57% at June 30, 2016, compared to 10.44% at June 30, 2015 and 10.61% at March 31, 2016.

Average total loans for the second quarter of 2016 were $3.19 billion, an increase of $340.2 million, or 12%, versus $2.85 billion for the comparable period of 2015. Total loans outstanding grew $304.5 million, or 11%, from $2.89 billion as of June 30, 2015 to $3.20 billion as of June 30, 2016. On a linked quarter basis, average total loans increased by $103.2 million, or 3%, from $3.09 billion for the first quarter of 2016 to $3.19 billion for the second quarter of 2016.

Average total deposits for the second quarter of 2016 were $3.44 billion, an increase of $371.0 million, or 12%, versus $3.07 billion for the corresponding period of 2015. Total deposits grew $383.3 million, or 13%, from $3.02 billion as of June 30, 2015 to $3.40 billion as of June 30, 2016. In addition, total core deposits, which exclude brokered deposits, increased $391.3 million, or 13%, from $2.90 billion at June 30, 2015 to $3.29 billion at June 30, 2016.

The company’s net interest margin was 3.24% in the second quarter of 2016, compared to 3.18% for the second quarter of 2015. The higher margin in the second quarter of 2016 was due to higher yields on both loans and securities, partially offset by a higher cost of funds. The net interest margin was 3.26% in the linked first quarter of 2016. On a quarter-linked basis, cost of funds increased by 3 basis points but was offset by improved earning asset yields of 1 basis point. The company’s net interest margin for the six months ended June 30, 2016 was 3.24% compared to 3.23% in the prior year six month period.

Findlay further commented, “The absence of any action by the Federal Reserve Bank will continue to create challenges for the industry, and for Lake City Bank. While we are pleased with our net interest margin performance in 2016, we believe, pressure will continue until we see some relief in the form of rate action by the Federal Reserve Bank.”

Net interest income increased $3.2 million, or 12%, to $29.3 million for the second quarter of 2016, versus $26.1 million in the second quarter of 2015. Net interest income for the six months ended June 30, 2016 increased $6.1 million, or 12%, to $57.9 million, versus $51.8 million for the six months ended June 30, 2015.

For the fourteenth consecutive quarter, the company did not record a provision for loan losses. The absence of a provision for loan losses was generally driven by continued stability 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 June 30, 2016 was $43.2 million compared to $44.8 million as of June 30, 2015 and $43.3 million as of March 31, 2016. The allowance for loan losses represented 1.35% of total loans as of June 30, 2016 versus 1.55% at June 30, 2015 and 1.39% as of March 31, 2016. The allowance for loan losses as a percentage of nonperforming loans was 464% as of June 30, 2016, versus 312% as of June 30, 2015, and 571% as of March 31, 2016.

Nonperforming assets decreased $5.0 million, or 35%, to $9.6 million as of June 30, 2016 versus $14.6 million as of June 30, 2015. On a linked quarter basis, nonperforming assets were $1.7 million higher than the $7.8 million reported as of March 31, 2016. The increase in nonperforming assets from the linked quarter was primarily due to placing a single $2.0 million commercial credit in nonaccrual status. The ratio of nonperforming assets to total assets at June 30, 2016 declined to 0.24% from 0.41% at June 30, 2015 and was 0.21% at March 31, 2016. Net charge-offs totaled $36,000 in the second quarter of 2016 versus net charge-offs of $861,000 during the second quarter of 2015 and net charge-offs of $326,000 during the linked first quarter of 2016.

The company’s noninterest income increased 5% to $8.1 million for the second quarter of 2016 versus $7.7 million for the second quarter of 2015. Noninterest income was positively impacted by increases in recurring fee income for service charges on deposit accounts, merchant card fee income and mortgage banking income. The company’s noninterest income decreased 3% to $15.1 million for the six months ended June 30, 2016 compared to $15.5 million in the prior year period. Noninterest income was negatively impacted by decreases in other income due primarily to credit valuation adjustment losses related to the company’s swap arrangements of $605,000, as well as a $226,000 write down to a property formerly used as a Lake City Bank branch that is held for sale.

The company’s noninterest expense increased by 10% to $18.4 million in the second quarter of 2016 compared to $16.7 million in the second quarter of 2015. Salaries and employee benefits increased by $1.1 million in the three month period ended June 30, 2016 versus the same period of 2015. These increases in salary and employee benefits were driven by higher performance incentive-based compensation costs, staff additions and normal merit increases. 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. The company's efficiency ratio was 49% for the second quarter of 2016, compared to 50% for the second quarter of 2015 and 49% for the linked first quarter of 2016. The company’s noninterest expense increased by 7% to $35.8 million for the six months ended June 30, 2016 compared to $33.6 million in the prior year period primarily due to increases in salaries and employee benefits, data processing fees and professional fees.

Lakeland Financial Corporation is a $3.9 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 48 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 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 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
SECOND QUARTER 2016 FINANCIAL HIGHLIGHTS
Three Months Ended Six Months Ended
(Unaudited – Dollars in thousands)Jun. 30, Mar. 31, Jun. 30, Jun. 30, Jun. 30,
END OF PERIOD BALANCES 2016 2016 2015 2016 2015
Assets$3,937,304 $3,808,907 $3,572,106 $3,937,304 $3,572,106
Deposits 3,403,455 3,250,735 3,020,151 3,403,455 3,020,151
Brokered Deposits 112,884 120,125 120,861 112,884 120,861
Core Deposits 3,290,571 3,130,610 2,899,290 3,290,571 2,899,290
Loans 3,197,997 3,113,300 2,893,462 3,197,997 2,893,462
Allowance for Loan Losses 43,247 43,284 44,816 43,247 44,816
Total Equity 418,893 406,963 375,764 418,893 375,764
Goodwill net of deferred tax assets 3,137 3,140 3,176 3,137 3,176
Tangible Common Equity 415,756 403,823 372,588 415,756 372,588
AVERAGE BALANCES
Total Assets$4,003,633 $3,812,316 $3,552,029 $3,907,974 $3,496,860
Earning Assets 3,705,666 3,590,822 3,342,275 3,648,244 3,294,762
Investments 488,762 478,537 475,803 483,650 476,520
Loans 3,192,545 3,089,348 2,852,382 3,140,947 2,803,884
Total Deposits 3,437,493 3,231,298 3,066,483 3,334,395 3,002,184
Interest Bearing Deposits 2,759,696 2,569,704 2,488,227 2,664,700 2,435,003
Interest Bearing Liabilities 2,887,534 2,727,422 2,581,664 2,807,478 2,540,996
Total Equity 411,986 399,921 374,339 405,953 370,536
INCOME STATEMENT DATA
Net Interest Income$29,273 $28,582 $26,064 $57,855 $51,764
Net Interest Income-Fully Tax Equivalent 29,818 29,102 26,559 58,920 52,745
Provision for Loan Losses 0 0 0 0 0
Noninterest Income 8,067 7,043 7,713 15,110 15,508
Noninterest Expense 18,446 17,384 16,741 35,830 33,642
Net Income 12,803 12,279 11,380 25,082 22,516
PER SHARE DATA
Basic Net Income Per Common Share$0.77 $0.74 $0.69 $1.50 $1.36
Diluted Net Income Per Common Share 0.76 0.73 0.68 1.48 1.34
Cash Dividends Declared Per Common Share 0.28 0.245 0.245 0.525 0.455
Dividend Payout 36.84 % 33.56 % 36.03 % 35.47 % 33.96 %
Book Value Per Common Share (equity per share issued) 25.08 24.37 22.61 25.08 22.61
Tangible Book Value Per Common Share 24.90 24.19 22.42 24.90 22.42
Market Value – High 49.91 46.55 44.27 49.91 44.27
Market Value – Low 43.41 39.80 38.71 39.80 37.42
Basic Weighted Average Common Shares Outstanding 16,696,834 16,679,835 16,611,974 16,688,335 16,601,189
Diluted Weighted Average Common Shares Outstanding 16,930,513 16,885,204 16,820,052 16,913,738 16,795,907
KEY RATIOS
Return on Average Assets 1.29 % 1.30 % 1.29 % 1.29 % 1.30 %
Return on Average Total Equity 12.50 12.35 12.19 12.43 12.25
Average Equity to Average Assets 10.29 10.49 10.54 10.39 10.60
Net Interest Margin 3.24 3.26 3.18 3.24 3.23
Efficiency (Noninterest Expense / Net Interest Income plus Noninterest Income) 49.40 48.80 49.57 49.11 50.01
Tier 1 Leverage (1) 10.85 11.15 11.22 10.85 11.22
Tier 1 Risk-Based Capital (1) 12.41 12.46 12.58 12.41 12.58
Common Equity Tier 1 (CET1) (1) 11.55 11.58 11.63 11.55 11.63
Total Capital (1) 13.65 13.72 13.83 13.65 13.83
Tangible Capital (1) 10.57 10.61 10.44 10.57 10.44
ASSET QUALITY
Loans Past Due 30 - 89 Days$1,795 $4,024 4,580 $1,795 $4,580
Loans Past Due 90 Days or More 0 0 284 0 284
Non-accrual Loans 9,329 7,579 14,089 9,329 14,089
Nonperforming Loans (includes nonperforming TDR's) 9,329 7,579 14,373 9,329 14,373
Other Real Estate Owned 238 243 231 238 231
Other Nonperforming Assets 0 0 7 0 7
Total Nonperforming Assets 9,567 7,822 14,611 9,567 14,611
Performing Troubled Debt Restructurings 8,647 8,590 7,606 8,647 7,606
Nonperforming Troubled Debt Restructurings (included in nonperforming loans) 6,040 5,519 11,176 6,040 11,176
Total Troubled Debt Restructurings 14,688 14,109 18,783 14,688 18,783
Impaired Loans 19,267 17,418 22,328 19,267 22,328
Non-Impaired Watch List Loans 139,706 123,984 130,735 139,706 130,735
Total Impaired and Watch List Loans 158,973 141,402 153,063 158,973 153,063
Gross Charge Offs 296 466 995 762 1,703
Recoveries 260 140 134 400 257
Net Charge Offs/(Recoveries) 36 326 861 362 1,446
Net Charge Offs/(Recoveries) to Average Loans 0.00 % 0.04 % 0.12 % 0.02 % 0.10 %
Loan Loss Reserve to Loans 1.35 % 1.39 % 1.55 % 1.35 % 1.55 %
Loan Loss Reserve to Nonperforming Loans 463.58 % 571.11 % 311.80 % 463.58 % 311.80 %
Loan Loss Reserve to Nonperforming Loans and Performing TDR's 240.58 % 267.70 % 203.90 % 240.58 % 203.90 %
Nonperforming Loans to Loans 0.29 % 0.24 % 0.50 % 0.29 % 0.50 %
Nonperforming Assets to Assets 0.24 % 0.21 % 0.41 % 0.24 % 0.41 %
Total Impaired and Watch List Loans to Total Loans 4.97 % 4.54 % 5.29 % 4.97 % 5.29 %
OTHER DATA
Full Time Equivalent Employees 531 521 514 531 514
Offices 48 48 46 48 46
(1) Capital ratios for June 30, 2016 are preliminary until the Call Report is filed.

LAKELAND FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
June 30, 2016 and December 31, 2015
(in thousands, except share data)
June 30, December 31,
2016 2015
(Unaudited)
ASSETS
Cash and due from banks$ 77,361 $67,484
Short-term investments 31,502 13,190
Total cash and cash equivalents 108,863 80,674
Securities available for sale (carried at fair value) 499,600 478,071
Real estate mortgage loans held for sale 4,009 3,294
Loans, net of allowance for loan losses of $43,247 and $43,610 3,154,750 3,037,319
Land, premises and equipment, net 49,144 46,684
Bank owned life insurance 70,610 69,698
Federal Reserve and Federal Home Loan Bank stock 8,373 7,668
Accrued interest receivable 10,294 9,462
Goodwill 4,970 4,970
Other assets 26,691 28,446
Total assets$ 3,937,304 $3,766,286
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Noninterest bearing deposits$ 727,308 $715,093
Interest bearing deposits 2,676,147 2,468,328
Total deposits 3,403,455 3,183,421
Short-term borrowings
Securities sold under agreements to repurchase 56,368 69,622
Other short-term borrowings 0 70,000
Total short-term borrowings 56,368 139,622
Long-term borrowings 32 34
Subordinated debentures 30,928 30,928
Accrued interest payable 4,403 3,773
Other liabilities 23,225 15,607
Total liabilities 3,518,411 3,373,385
STOCKHOLDERS' EQUITY
Common stock: 90,000,000 shares authorized, no par value
16,696,834 shares issued and 16,596,152 outstanding as of June 30, 2016
16,641,651 shares issued and 16,546,044 outstanding as of December 31, 2015 101,002 99,123
Retained earnings 310,317 294,002
Accumulated other comprehensive income 10,166 2,142
Treasury stock, at cost (2016 - 100,682 shares, 2015 - 95,607 shares) (2,681) (2,455)
Total stockholders' equity 418,804 392,812
Noncontrolling interest 89 89
Total equity 418,893 392,901
Total liabilities and equity$ 3,937,304 $3,766,286


LAKELAND FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months and Six Months Ended June 30, 2016 and 2015
(unaudited in thousands except for share and per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2015 2016 2015
NET INTEREST INCOME
Interest and fees on loans
Taxable$ 30,918 $27,315 $ 60,548 $53,572
Tax exempt 111 117 222 234
Interest and dividends on securities
Taxable 2,297 2,002 4,843 4,450
Tax exempt 947 842 1,842 1,671
Interest on short-term investments 82 14 110 27
Total interest income 34,355 30,290 67,565 59,954
Interest on deposits 4,694 3,930 8,889 7,578
Interest on borrowings
Short-term 99 35 246 95
Long-term 289 261 575 517
Total interest expense 5,082 4,226 9,710 8,190
NET INTEREST INCOME 29,273 26,064 57,855 51,764
Provision for loan losses 0 0 0 0
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 29,273 26,064 57,855 51,764
NONINTEREST INCOME
Wealth advisory fees 1,133 1,106 2,293 2,290
Investment brokerage fees 212 311 500 803
Service charges on deposit accounts 2,843 2,573 5,623 4,947
Loan, insurance and service fees 1,892 1,900 3,730 3,469
Merchant card fee income 527 431 1,024 847
Bank owned life insurance income 489 360 662 735
Other income 587 681 515 1,635
Mortgage banking income 384 351 711 740
Net securities gains/(losses) 0 0 52 42
Total noninterest income 8,067 7,713 15,110 15,508
NONINTEREST EXPENSE
Salaries and employee benefits 10,592 9,444 20,197 19,167
Net occupancy expense 1,041 915 2,137 1,999
Equipment costs 909 913 1,810 1,829
Data processing fees and supplies 2,120 1,938 4,152 3,705
Corporate and business development 763 714 1,620 1,504
FDIC insurance and other regulatory fees 557 511 1,080 997
Professional fees 859 728 1,686 1,417
Other expense 1,605 1,578 3,148 3,024
Total noninterest expense 18,446 16,741 35,830 33,642
INCOME BEFORE INCOME TAX EXPENSE 18,894 17,036 37,135 33,630
Income tax expense 6,091 5,656 12,053 11,114
NET INCOME$ 12,803 $11,380 $ 25,082 $22,516
BASIC WEIGHTED AVERAGE COMMON SHARES 16,696,834 16,611,974 16,688,335 16,601,189
BASIC EARNINGS PER COMMON SHARE$ 0.77 $0.69 $ 1.50 $1.36
DILUTED WEIGHTED AVERAGE COMMON SHARES 16,930,513 16,820,052 16,913,738 16,795,907
DILUTED EARNINGS PER COMMON SHARE$ 0.76 $0.68 $ 1.48 $1.34


LAKELAND FINANCIAL CORPORATION
LOAN DETAIL
SECOND QUARTER 2016
(unaudited in thousands)
June 30,March 31,December 31,June 30,
2016201620152015
Commercial and industrial loans:
Working capital lines of credit loans$598,531 18.7%$591,136 19.0%$581,025 18.9%$606,169 20.9%
Non-working capital loans 628,119 19.6 614,619 19.7 598,487 19.4 537,708 18.6
Total commercial and industrial loans 1,226,650 38.4 1,205,755 38.7 1,179,512 38.3 1,143,877 39.5
Commercial real estate and multi-family residential loans:
Construction and land development loans 221,027 6.9 206,378 6.6 230,719 7.5 152,292 5.3
Owner occupied loans 457,461 14.3 447,620 14.4 412,026 13.4 409,650 14.2
Nonowner occupied loans 395,597 12.4 408,273 13.1 407,883 13.2 399,583 13.8
Multifamily loans 114,618 3.6 104,303 3.4 79,425 2.6 90,175 3.1
Total commercial real estate and multi-family residential loans 1,188,703 37.2 1,166,574 37.5 1,130,053 36.7 1,051,700 36.3
Agri-business and agricultural loans:
Loans secured by farmland 146,519 4.6 144,687 4.6 164,375 5.3 156,001 5.4
Loans for agricultural production 162,240 5.1 128,456 4.1 141,719 4.6 95,327 3.3
Total agri-business and agricultural loans 308,759 9.7 273,143 8.8 306,094 9.9 251,328 8.7
Other commercial loans 82,786 2.6 83,617 2.7 85,075 2.8 82,247 2.8
Total commercial loans 2,806,898 87.8 2,729,089 87.7 2,700,734 87.7 2,529,152 87.4
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans 164,564 5.1 161,701 5.2 158,062 5.1 148,977 5.1
Open end and junior lien loans 164,645 5.1 160,734 5.2 163,700 5.3 155,902 5.4
Residential construction and land development loans 9,570 0.3 8,488 0.3 9,341 0.3 8,821 0.3
Total consumer 1-4 family mortgage loans 338,779 10.6 330,923 10.6 331,103 10.7 313,700 10.8
Other consumer loans 52,492 1.6 53,327 1.7 49,113 1.6 50,813 1.8
Total consumer loans 391,271 12.2 384,250 12.3 380,216 12.3 364,513 12.6
Subtotal 3,198,169 100.0% 3,113,339 100.0% 3,080,950 100.0% 2,893,665 100.0%
Less: Allowance for loan losses (43,247) (43,284) (43,610) (44,816)
Net deferred loan fees (172) (39) (21) (203)
Loans, net$3,154,750 $3,070,016 $3,037,319 $2,848,646
LAKELAND FINANCIAL CORPORATION
DEPOSITS AND BORROWINGS
SECOND QUARTER 2016
(unaudited in thousands)
June 30, March 31, December 31, June 30,
2016 2016 2015 2015
Non-interest bearing demand deposits$727,308 $660,318 $715,093 $602,898
Interest bearing demand, savings & money market accounts 1,500,720 1,475,291 1,470,814 1,422,200
Time deposits under $100,000 247,271 250,998 259,260 283,138
Time deposits of $100,000 or more 928,156 864,128 738,254 711,915
Total deposits 3,403,455 3,250,735 3,183,421 3,020,151
Short-term borrowings 56,368 94,504 139,622 126,615
Long-term borrowings 32 32 34 34
Subordinated debentures 30,928 30,928 30,928 30,928
Total borrowings 87,328 125,464 170,584 157,577
Total funding sources$3,490,783 $3,376,199 $3,354,005 $3,177,728


LAKELAND FINANCIAL CORPORATION
AVERAGE BALANCE SHEET AND NET INTEREST ANALYSIS
(UNAUDITED)
Three Months Ended Three Months Ended Three Months Ended
June 30, 2016 March 31, 2016 June 30, 2015
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)$ 3,180,783 $ 30,918 3.91% $ 3,077,441 $ 29,630 3.87% $ 2,839,605 $ 27,315 3.86%
Tax exempt (1) 11,763 164 5.62 11,907 166 5.61 12,777 174 5.47
Investments: (1)
Available for sale 488,762 3,736 3.07 478,537 3,906 3.28 475,803 3,282 2.77
Short-term investments 5,805 3 0.21 6,210 4 0.26 5,154 1 0.08
Interest bearing deposits 18,553 79 1.71 16,727 24 0.58 8,936 13 0.58
Total earning assets$ 3,705,666 $ 34,900 3.79% $ 3,590,822 $ 33,730 3.78% $ 3,342,275 $ 30,785 3.69%
Less: Allowance for loan losses (43,228) (43,394) (45,693)
Nonearning Assets
Cash and due from banks 167,099 97,093 98,133
Premises and equipment 48,921 47,237 42,919
Other nonearning assets 125,175 120,558 114,395
Total assets$ 4,003,633 $ 3,812,316 $ 3,552,029
Interest Bearing Liabilities
Savings deposits$ 263,331 $ 115 0.18% $ 253,313 $ 123 0.20% $ 231,505 $ 116 0.20%
Interest bearing checking accounts 1,309,443 1,455 0.45 1,240,226 1,324 0.43 1,255,838 1,250 0.40
Time deposits:
In denominations under $100,000 249,452 719 1.16 254,605 737 1.16 286,266 855 1.20
In denominations over $100,000 937,470 2,405 1.03 821,560 2,011 0.98 714,618 1,709 0.96
Miscellaneous short-term borrowings 96,878 99 0.41 126,758 147 0.47 62,475 35 0.22
Long-term borrowings and
subordinated debentures (4) 30,960 289 3.75 30,960 286 3.72 30,962 261 3.38
Total interest bearing liabilities$ 2,887,534 $ 5,082 0.71% $ 2,727,422 $ 4,628 0.68% $ 2,581,664 $ 4,226 0.66%
Noninterest Bearing Liabilities
Demand deposits 677,797 661,594 578,255
Other liabilities 26,316 23,379 17,772
Stockholders' Equity 411,986 399,921 374,338
Total liabilities and stockholders' equity$ 4,003,633 $ 3,812,316 $ 3,552,029
Interest Margin Recap
Interest income/average earning assets 34,900 3.79 33,730 3.78 30,785 3.69
Interest expense/average earning assets 5,082 0.55 4,628 0.52 4,226 0.51
Net interest income and margin $ 29,818 3.24% $ 29,102 3.26% $ 26,559 3.18%
(1) Tax exempt income was converted to a fully taxable equivalent basis at a 35 percent tax rate for 2016 and 2015. 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.
(2) Loan fees, which are immaterial in relation to total taxable loan interest income for 2016 and 2015, are included as taxable loan interest income.
(3) Nonaccrual loans are included in the average balance of taxable loans.
(4) Long-term borrowings and subordinated debentures interest expense was reduced by interest capitalized on construction in process for 2015.

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

Source:Lake City Bank