Lakeland Financial Reports Record Quarterly Performance

Rhea-AI Summary

Lakeland Financial Corporation (LKFN) reported full year 2020 net income of $84.3 million, down 3% from 2019. Diluted earnings per share decreased 2% to $3.30. Notably, pretax pre-provision earnings rose 7% to $118.6 million due to increased net interest income. The fourth quarter net income hit a record $24.6 million, marking an 11% growth year-over-year. Total assets grew 18% to $5.8 billion. Despite loan growth from the Paycheck Protection Program (PPP), the company faced challenges with a 21% increase in loan loss allowance and a 19 basis points decline in net interest margin.

Positive

• Fourth quarter net income increased 11% year-over-year to $24.6 million.
• Pretax pre-provision earnings rose 7% to $118.6 million compared to 2019.
• Total assets increased by 18% to $5.8 billion.
• Core deposit growth of $1.00 billion, or 25%.

Negative

• Full year net income decreased by $2.7 million, or 3%.
• Diluted EPS decreased 2% to $3.30.
• Provision for loan losses increased by 362% to $14.8 million.
• Net interest margin decreased by 19 basis points to 3.19%.

WARSAW, Ind., Jan. 25, 2021 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq Global Select/LKFN), parent company of Lake City Bank, today reported full year net income of $84.3 million, which represents a decrease of $2.7 million, or 3%, compared with net income of $87.0 million for 2019. Diluted earnings per share decreased 2% to $3.30 compared to $3.38 for 2019. Pretax pre-provision earnings¹ were $118.6 million for 2020 compared to $110.6 million for 2019, an increase of $8.0 million, or 7%, due primarily to an increase in net interest income.

The company further reported record quarterly net income of $24.6 million for the three months ended December 31, 2020 versus $22.2 million for the comparable period of 2019, an increase of 11%. Diluted net income per common share was also a record for the quarter and increased 13% to $0.97 for the three months ended December 31, 2020 versus $0.86 for the comparable period of 2019. On a linked quarter basis, net income increased $1.8 million, or 8%, from the third quarter of 2020, in which the company had net income of $22.8 million, or $0.89 diluted earnings per share. Pretax pre-provision earnings¹ were $31.6 million for the fourth quarter of 2020, an increase of 13%, or $3.7 million, from $27.9 million for the fourth quarter of 2019. On a linked quarter basis, pretax pre-provision earnings increased 6%, or $1.7 million, from $29.9 million for the third quarter of 2020.

David M. Findlay, President and Chief Executive Officer commented, “The Lake City Bank team demonstrated how much we can accomplish in a challenging environment when everyone steps up. During 2020, we experienced unprecedented loan growth on our balance sheet through the combination of the Paycheck Protection Program and more traditional organic loan growth. We are proud of the role we played in assisting our clients in working through the challenges presented by the COVID-19 crisis. Further, we provided uninterrupted service through our 50 branch offices in a continuously difficult environment. As we conclude 2020 with consecutive record results in the third and fourth quarters, we are well-positioned as we enter 2021.”

Highlights for the year and quarter are noted below.

Full year 2020 versus 2019 highlights:

• Total assets of $5.8 billion, an increase of $884 million, or 18%
• Return on average equity of 13.51% compared to 15.47%
• Return on average assets of 1.55% compared to 1.76%
• Average loan growth of $444.9 million, or 11%
  -- Paycheck Protection Program (PPP) loans originated of $570 million
  -- Loan growth, excluding PPP loans, of $171 million, or 4%
  -- PPP loans forgiveness applications approved by SBA of $142 million
• Core deposit growth of $1.00 billion, or 25%
  -- Noninterest bearing demand deposit growth of $555 million, or 56%
• Net interest income increase of $8.0 million, or 5%
• Noninterest income increase of $1.8 million, or 4%
• Revenue growth of $9.8 million, or 5%
• PPP interest and fee income of $12.8 million
• Pretax pre-provision earnings growth of $8.0 million, or 7%
• Provision expense of $14.8 million versus $3.2 million in 2019
• Allowance for loan losses increase of $11 million or 21%
• Total equity and tangible common equity² increase of $59 million, or 10%

Fourth Quarter 2020 versus Fourth Quarter 2019 highlights:

• Return on average equity of 15.18%, compared to 14.90%
• Loan growth, excluding PPP loans, of $171 million, or 4%
  -- PPP loans outstanding of $412 million
• Average fourth quarter deposit growth of $651 million, or 15%
• Net interest income increase of $5.8 million, or 15%
• PPP interest and fee income of $6.5 million
• Noninterest income increase of $663,000, or 6%
• Revenue growth of $6.5 million, or 13%
• Noninterest expense increase of $2.8 million, or 13%
• Pretax pre-provision earnings increase of $3.7 million, or 13%
• Average total equity increase of $53 million, or 9%
• Risk-based capital ratio of 14.7% at December 31, 2020 compared to 14.4% at December 31, 2019

Fourth Quarter 2020 versus Third Quarter 2020 highlights:

• Return on average equity of 15.18%, compared to 14.36%
• Return on average assets of 1.70%, compared to 1.64%
• Loan growth, excluding PPP loans, of $205 million, or 5%
• Core deposit growth of $284 million, or 6%
• Noninterest bearing demand deposit growth of $117 million, or 8%
• Net interest income increase of $4.8 million, or 12%
• Net interest margin of 3.28%, compared to 3.05%
• PPP interest and fee income of $6.5 million, compared to $3.3 million
• Revenue growth of $3.5 million, or 7%
• Provision for loan losses of $920,000 compared to $1.8 million, a decrease of $830,000, or 47%
• Nonperforming loans of $12.1 million, a reduction of $1.4 million, or 10%
• Noninterest expense increase of $1.8 million, or 8%
• Pretax pre-provision earnings increase of $1.7 million, or 6%
• Average total equity increase of $13.7 million, or 2%
• Full-time employee equivalent increase of 13

Return on average total equity for the year ended December 31, 2020 was 13.51%, compared to 15.47% in 2019. Return on average assets was 1.55% in 2020 compared to 1.76% in 2019. The company’s total capital as a percent of risk-weighted assets was 14.65% at December 31, 2020, compared to 14.36% at December 31, 2019 and 14.90% at September 30, 2020. The company’s tangible common equity to tangible assets ratio³ was 11.21% at December 31, 2020, compared to 12.02% at December 31, 2019 and 11.41% at September 30, 2020.

As announced on January 12, 2021, the board of directors approved a cash dividend for the fourth quarter of $0.34 per share, payable on February 5, 2021, to shareholders of record as of January 25, 2021. The fourth quarter dividend per share of $0.34 represents a 13% increase from the $0.30 dividend per share paid in the third quarter of 2020.

Findlay stated, “Our balance sheet strength is critical to our success. We concluded 2020 with a strong capital position, which was further bolstered by our strong 2020 earnings performance. This robust capital foundation supports our ability to increase the dividend for our shareholders.”

During the first quarter of 2020, the company repurchased 289,101 shares of its common stock for $10 million at a weighted average price per share of $34.63. Share repurchases under the repurchase plan were suspended in March with $20 million of authorization remaining available under the plan, although the company may resume repurchases at any time. No shares were repurchased under the plan during the second, third or fourth quarters of 2020. The company continues to evaluate the share repurchase program pursuant to its previously established criteria for execution, which is set to expire on January 31, 2021.

Average total loans for 2020 were $4.42 billion, an increase of $449.9 million, or 11%, versus $3.97 billion for 2019. Included in the 2020 average were $376.8 million in PPP loans. Total loans outstanding grew $583.3 million, or 14%, from $4.07 billion as of December 31, 2019 to $4.65 billion as of December 31, 2020. PPP loans outstanding were $412.0 million as of December 31, 2020. Core loan growth, which excludes PPP loans, of $171.3 million, or 4%, reflects the underlying strength of the economy in our Indiana footprint. On a linked quarter basis, total loans grew $59.2 million, or 1%, from $4.59 billion at September 30, 2020. Core loans grew by $205.1 million offset by PPP loans forgiven and repaid in the amount of $145.8 million.

As of December 31, 2020, 900 loans with an aggregate principal amount of $142 million, representing 37% of the 2,409 total PPP loans originated with an aggregate amount of $570.5 million, were forgiven during the fourth quarter. In addition, the company had submitted an additional 10% of the total PPP loans originated in 2020, totaling $159.3 million, to the Small Business Administration (SBA) for forgiveness as of year-end. As of January 20, 2021, 1,211, or 50%, of the total PPP loans originated in 2020 totaling $180.4 million, were forgiven and $174.1 million, or 31%, had been submitted to the SBA for forgiveness. The company introduced a Fintech solution through a partnership with Numerated to manage the PPP loan portfolio.  Additionally, the company has started accepting and submitting loan applications for the second round of PPP loans.

Findlay noted, “While the success of the PPP impacted our clients tremendously, we were also pleased with another strong quarter of organic loan growth. Clearly, despite its challenges, 2020 created opportunity for many of our clients and we were very pleased to see healthy loan demand as we moved through the third and fourth quarters.”

Average total loans for the fourth quarter of 2020 were $4.62 billion, an increase of $616.3 million, or 15%, versus $4.00 billion for the comparable period of 2019. On a linked quarter basis, average total loans increased by $61.1 million, or 1%, from $4.56 billion for the third quarter of 2020 to $4.62 billion for the fourth quarter of 2020. On a linked quarter basis, average core loans increased by $115.3 million, or 3%, and average PPP loans declined by $54.2 million, or 10%.

Average total deposits for 2020 were $4.65 billion, an increase of $408.1 million, or 10%, versus $4.24 billion for 2019. Importantly, average core deposits increased by 12%, or $506.1 million, during 2020 to $4.6 billion from $4.1 billion in 2019 due to growth in average commercial deposits of $453.5 million, or 37%, and growth in average retail deposits of $148.3 million, or 9%, offset by a decline in public funds of $95.6 million, or 7%.

Total deposits grew $903.0 million, or 22%, from $4.13 billion as of December 31, 2019 to $5.04 billion as of December 31, 2020. In addition, total core deposits, which exclude brokered deposits, increased $1.00 billion, or 25%, from $4.02 billion at December 31, 2019 to $5.02 billion at December 31, 2020 due to growth in commercial deposits of $664.3 million, or 52%, growth in retail deposits of $301.9 million, or 19%, and growth in public fund deposits of $35.3 million, or 3%. The growth in deposits during 2020 was due primarily to an increase of $555.0 million, or 56%, in noninterest bearing demand deposits of $1.5 billion. Commercial and retail customers increased their cash on hand in response to the challenging economic environment. Brokered deposits decreased by $98.5 million, or 87%, from $113.5 million at December 31, 2019 to $15.0 million at December 31, 2020 due to reduced reliance on wholesale funding as a result of core deposit growth.

Findlay added, “The growth in deposits in 2020 created unprecedented liquidity on our balance sheet and provided us with great flexibility in funding the high levels of loan growth we experienced. We ended 2020 with very low reliance on non-core funding tools. As a result, we enter 2021 with a liquidity position that will provide for continued funding of expected loan demand.”

The company’s net interest margin decreased 19 basis points to 3.19% for 2020 compared to 3.38% for 2019. The lower margin in 2020 was impacted by lower yields on loans and securities, partially offset by a lower cost of funds. The Federal Reserve Bank decreased the target Federal Funds Rate by 225 basis points since the second half of 2019, including two Federal Reserve Bank emergency cuts to the Federal Funds Rate during March 2020. The two emergency cuts in March reduced the Federal Funds Rate by 150 basis points and brought the Federal Funds Rate back to the zero-bound range of 0.00% to 0.25%.

The company’s net interest margin was 3.28% in the fourth quarter of 2020 versus 3.30% for the fourth quarter of 2019 and 3.05% during the third quarter 2020. Quarterly net interest margin was impacted by a lower yield on the PPP loan portfolio, offset by fees earned as a result of PPP loan forgiveness and excess liquidity on the balance sheet. The company’s net interest margin excluding PPP loans was 16 basis points lower at 3.12% and reflected an 18 basis point decline from 3.30% for the fourth quarter of 2019. Linked quarter net interest margin excluding PPP loans was 3.17% for the third quarter of 2020. The yield on PPP loans was 3.41% for year ended December 31, 2020, which reflects the combined impact of the 1.00% interest rate on PPP loans and net PPP loan fee accretion.

Net interest income increased $8.0 million, or 5%, to $163.0 million in 2020, versus $155.0 million in 2019, due to significant loan and core deposit growth offset by margin compression. PPP loan interest and fees were $12.8 million during 2020. Net interest income increased $5.8 million, or 15%, to $44.7 million in the fourth quarter of 2020, versus $38.9 million in the fourth quarter of 2019. On a linked quarter basis, net interest income increased by $4.8 million, or 12%, from $39.9 million recorded in the third quarter of 2020. PPP interest and loan fees were $6.5 million in the fourth quarter of 2020, up from $3.3 million in the linked quarter due to PPP loan forgiveness approvals from the SBA and the resulting impact of accelerated PPP loan fee recognition.

On December 27, 2020, President Trump signed into law the Consolidated Appropriations Act, 2021. This law extended relief for troubled debt restructurings and current expected credit losses (CECL) adoption under the CARES Act. The company elected to remain on the incurred loan loss methodology for 2020. The company will adopt the CECL standard during the first quarter of 2021, effective January 1, 2021 and is in the process of re-evaluating and finalizing CECL day 1 impact.

The company recorded a provision for loan losses of $14.8 million in 2020 compared to $3.2 million in 2019, an increase of 362%, or $11.6 million. The company recorded a provision for loan losses of $920,000 in the fourth quarter of 2020, versus $250,000 in the fourth quarter of 2019 and $1.8 million in the third quarter of 2020. The higher provision in 2020 was driven by the potential negative impact to the company’s borrowers from the economic conditions resulting from the COVID-19 pandemic.

The company’s allowance for loan losses as of December 31, 2020 was $61.4 million compared to $50.7 million as of December 31, 2019 and $60.7 million as of September 30, 2020. The allowance for loan losses represented 1.32% of total loans as of December 31, 2020 versus 1.25% as of December 31, 2019 and 1.32% as of September 30, 2020. The company’s loan loss reserve to total loans excluding PPP loans⁴ was 1.45% as of December 31, 2020. PPP loans are guaranteed by the United States SBA and have not been allocated for within the allowance for loan losses.

Net charge-offs were $4.0 million in 2020 versus $1.0 million in 2019. The increase in net charge-offs in 2020 was primarily due to a $3.7 million charge-off resulting from a single commercial manufacturing borrower recorded in the first quarter of 2020.  Net charge-offs for the fourth quarter of 2020 were $259,000 versus net charge-offs of $226,000 in the fourth quarter of 2019 and net charge-offs of $22,000 during the linked third quarter of 2020. Net charge-offs to average loans were 0.09% in 2020 compared to 0.03% for 2019. Annualized net charge-offs to average loans were 0.02% for the fourth quarters of 2020 and 2019 and 0.00% for the linked third quarter of 2020.

Nonperforming assets decreased $6.6 million, or 35%, to $12.4 million as of December 31, 2020 versus $19.0 million as of December 31, 2019 due to a decrease in nonaccrual loans. On a linked quarter basis, nonperforming assets were $1.4 million, or 10%, lower than the $13.8 million reported as of September 30, 2020. The ratio of nonperforming assets to total assets at December 31, 2020 decreased to 0.21% from 0.38% at December 31, 2019 and decreased from 0.25% at September 30, 2020. Watchlist loans as a percent of total loans, excluding PPP were 6.8% compared to 4.4% as of December 31, 2019 and 5.5% as of September 30, 2020.

“As we entered this crisis in the spring of 2020, we identified at-risk industries that totaled 19% of total loans. As we moved through 2020, it became clear that this was a conservative assessment of risk and we ended the year with identified at-risk industries totaling 3% of total loans. We are pleased to report that our borrowers fared better than our original concerns when the COVID-19 crisis started.” Findlay continued, “The increase in watch-list loans during 2020 reflects the challenges some of our borrowers are experiencing, particularly in the hotel and entertainment industries. We continue to work with these borrowers and believe our long track record of working through credit challenges will be valuable as we continue to support these borrowers.”

The company’s noninterest income increased $1.8 million, or 4%, to $46.8 million in 2020, compared to $45.0 million in 2019. The company’s noninterest income increased by $663,000, or 6%, to $11.8 million for the fourth quarter of 2020, compared to $11.1 million for the fourth quarter of 2019. Noninterest income decreased by $1.3 million, or 10%, from $13.1 million during the linked third quarter of 2020 due to lower interest rate swap fee income during the fourth quarter. For the full year of 2020, noninterest income was positively impacted by increases in interest rate swap fee income generated from commercial lending transactions, mortgage banking income, and wealth advisory fees due to continued growth of client relationships. Offsetting these increases was a decrease in service charges on deposit accounts driven primarily by lower treasury management fees as well as reduced levels of overdraft fee income.

The company’s noninterest expense increased $1.8 million, or 2%, to $91.2 million in 2020 compared to $89.4 million in 2019. The company’s noninterest expense increased $2.8 million, or 13%, to $24.9 million in the fourth quarter of 2020, compared to $22.1 million in the fourth quarter of 2019, and was higher by $1.8 million, or 8%, on a linked quarter basis. Data processing fees increased during 2020 primarily due to the company’s continued investment in customer-focused, technology-based solutions and ongoing cybersecurity and data management enhancements. FDIC insurance and other regulatory fees increased due to the expiration of insurance assessment credits and the impact of PPP loans on balance sheet growth. Salaries and employee benefits increased during 2020 primarily due to an increase to staffing in revenue producing and risk management areas as well as higher health insurance expenses. Professional fees increased due to higher legal expenses, increased fees to accounting firms and professional fees for innovative project implementations. Corporate and business development expenses decreased as in-person trainings and face-to-face customer and prospect meetings were limited due to COVID-19 safety protocols.

The company’s efficiency ratio was 43.5% for 2020 compared to 44.7% for 2019. The company’s efficiency ratio was 44.1% for the fourth quarter of 2020, compared to 44.2% for the fourth quarter of 2019 and 43.6% for the linked third quarter of 2020.

“2020 highlighted the strategic importance of our long-term strategy of continued focus and investment in technology and innovation. Fintech partnerships proved critical to us as we navigated the new banking environment for customer service delivery to our clients,” stated Findlay, “Despite the shift to remote workplaces, our teams continued to provide highly personalized services to our customers through technology. Innovation in technology, products and services and our brand is a marketplace expectation and critical to remaining relevant and competitive. Yet, we look forward to a return to a more normal operating environment when we can spend more time face-to-face with our clients and communities. It’s a hallmark of community banking and we’ll be ready for that when conditions permit. While keeping in contact through technology is great, it does not replicate the personal relationships we have with our clients, each other, and our communities.”

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

COVID-19 Crisis Management

On November 18, 2020, in response to the evolving COVID-19 situation in its markets, the company returned to limited lobby access to all its branch lobbies as well as a remote workplace environment for most non-retail employees.  The company continued to invest in personal protective equipment, protective barriers and enhanced social distancing measures for the safety of bank customers and employees. These investments have totaled approximately $640,000 since the pandemic began. The company will keep all safety protocols in place until it determines that the public health risks posed by COVID-19 no longer require them.

Active Management of Credit Risk

The company’s Commercial Banking and Credit Administration leadership continues to review and refine the list of industries that the company believes are most likely to be impacted materially by the potential economic impact resulting of the COVID-19 pandemic. The current assessment includes a smaller group of industries compared to the initial list of potentially affected industries disclosed in the company’s April 27, 2020 first quarter, July 27, 2020 second quarter, and October 26, 2020 third quarter news releases. The company’s current list of industries under review represents approximately 3.3%, or $141 million, of the total loan portfolio, excluding PPP loans, versus $765 million, or 18.7%, as of April 27, 2020, $261 million, or 6.6%, as of July 27, 2020 and $228 million, or 5.7%, as of October 26, 2020. The current list of industries under review, along with their respective percentage of the loan portfolio, is hotel and accommodations – 2.3%, entertainment and recreation – 0.6% and full-service restaurants – 0.4%. The company has no direct exposure to oil and gas and limited exposure to retail shopping centers.

The company’s commercial loan portfolio is highly diversified, and no industry sector represents more than 10% of the bank’s loan portfolio as of December 31, 2020. Agri-business and agricultural loans represented the highest specific industry concentration at 10% of total loans. The company’s Commercial Banking and Credit Administration teams continue to actively work with customers to understand their business challenges and credit needs during this time.

COVID-19 Related Loan Deferrals

As detailed below, loan deferrals peaked on June 17, 2020, at $737 million, which represented 16% of the total loan portfolio. As of December 31, 2020, total deferrals attributable to COVID-19 were $101 million, representing 49 borrowers, or 2% of the total loan portfolio. Total deferrals as of January 20, 2021 represented a decline in deferral balances of 86% from peak levels. Of the $104 million, 23 were commercial loan borrowers representing $101 million in loans, or 2% of total commercial loans, and 25 were retail loan borrowers representing $3 million, or 1%, of total retail loans.  All COVID-19 related loan deferrals remain on accrual status, as each deferral is evaluated individually, and management has determined that all contractual cashflows are collectable at this time.

As of January 20, 2021, nine borrowers with loans outstanding of $23 million were in their second deferral period and 11 borrowers with loans outstanding of $40 million were in their third deferral period, most of which were additional 90-day deferrals.  Additionally, 14 borrowers with loans outstanding of $27 million were in their fourth-deferral period.  Of the fourth deferral borrowers, two represented 82% of the fourth deferral population and were commercial real estate nonowner occupied loans supported by adequate collateral and personal guarantors and consist of loans to the hotel and accommodation industry. 

The company’s retail loan portfolio is comprised of 1-4 family mortgage loans, home equity lines of credit and other direct and indirect installment loans. A third-party vendor manages the company’s retail and commercial credit card program and the company does not have any balance sheet exposure with respect to this program except for nominal recourse on limited commercial card accounts.

Total Loan Deferrals
	Peak June 17, 2020		June 30, 2020		December 31, 2020		January 20, 2021		% change from Peak
Borrowers	487		384		49		48		-90	%
Amount (in millions)	$737		$653		$101		$104		-86	%
% of Total Loan Portfolio	16	%	15	%	2	%	2	%	NA

Total Commercial Loan Deferrals
	Peak June 17, 2020		June 30, 2020		December 31, 2020		January 20, 2021		% change from Peak
Borrowers	351		322		22		23		-93	%
Amount (in millions)	$730		$647		$98		$101		-86	%
% of  Commercial Loan Portfolio	18	%	16	%	2	%	2	%	NA

Total Retail Loan Deferrals
	Peak June 17, 2020		June 30, 2020		December 31, 2020		January 20, 2021		% change from Peak
Borrowers	136		62		27		25		-82	%
Amount (in millions)	$7		$6		$3		$3		-57	%
% of Retail Loan Portfolio	2	%	1	%	1	%	1	%	NA

Paycheck Protection Program

During the third quarter, the company began to process PPP loan forgiveness applications for its customers and in November 2020, the SBA began to approve forgiveness applications. In addition, the bank has engaged a third-party Fintech technology partner to assist the bank and its customers to automate the forgiveness application process. This application will also be used for the second round of PPP loan originations and forgiveness. As of December 31, 2020, Lake City Bank had 2,409 PPP loans originated representing $570.5 million in loan balances. Most of the PPP loans are for existing customers and 51% of the number of PPP loans are for amounts less than $50,000. As of December 31, 2020, the bank has submitted 1,145 loan forgiveness applications to the SBA in the amount of $300 million, which represented 48% of total PPP loans originated. The SBA has approved forgiveness for 900 loans in the amount of $142 million.

Liquidity Preparedness

Throughout the COVID-19 crisis, the company has monitored liquidity preparedness. Critical to this effort has been the monitoring of commercial and retail borrowers’ line of credit utilization. The company’s commercial and retail line of credit utilization at December 31, 2020 was 43% versus 46% at December 31, 2019. The company has a long-standing liquidity plan in place that ensures that appropriate liquidity resources are available to fund the balance sheet.

Lakeland Financial Corporation is a $5.8 billion bank holding company headquartered in Warsaw, Indiana. Lake City Bank, its single bank subsidiary, is the sixth largest bank headquartered in the state and the largest bank 100% invested in Indiana. Lake City Bank operates 50 offices in Northern and Central Indiana, delivering technology-driven and client-centric financial services solutions to individuals and businesses.

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

This document contains, and future oral and written statements of the company and its management may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of the company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the company’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “continue,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. The company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain and, accordingly, the reader is cautioned not to place undue reliance on any forward-looking statements made by the company. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the company undertakes no obligation to update any statement in light of new information or future events. Numerous factors could cause the company’s actual results to differ from those reflected in forward-looking statements, including the effects of the COVID-19 pandemic, including its effects on our customers, local economic conditions, our operations and vendors, and the responses of federal, state and local governmental authorities, as well as those identified in the company’s filings with the Securities and Exchange Commission, including the company’s Annual Report on Form 10-K and quarterly reports on Form 10-Q.

LAKELAND FINANCIAL CORPORATION
FOURTH QUARTER 2020 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	2020			2020			2019			2020			2019
Assets	$	5,830,435		$	5,551,108		$	4,946,745		$	5,830,435		$	4,946,745
Deposits	5,036,805			4,767,954			4,133,819			5,036,805			4,133,819
Brokered Deposits	15,002			29,703			113,527			15,002			113,527
Core Deposits (3)	5,021,803			4,738,251			4,020,292			5,021,803			4,020,292
Loans	4,649,156			4,589,924			4,065,828			4,649,156			4,065,828
Paycheck Protection Program (PPP) Loans	412,007			557,851			0			412,007			0
Allowance for Loan Losses	61,408			60,747			50,652			61,408			50,652
Total Equity	657,184			636,839			598,100			657,184			598,100
Goodwill net of deferred tax assets	3,794			3,794			3,789			3,794			3,789
Tangible Common Equity (1)	653,390			633,045			594,311			653,390			594,311
AVERAGE BALANCES
Total Assets	$	5,747,818		$	5,520,861		$	4,981,989		$	5,424,796		$	4,941,904
Earning Assets	5,501,505			5,282,569			4,748,361			5,184,836			4,656,707
Investments - available-for-sale	657,990			637,523			610,947			633,957			603,580
Loans	4,617,912			4,556,812			4,001,640			4,424,472			3,974,532
Paycheck Protection Program (PPP) Loans	503,041			557,290			0			376,785			0
Total Deposits	4,959,443			4,737,671			4,308,623			4,650,597			4,242,524
Interest Bearing Deposits	3,477,431			3,336,268			3,302,593			3,340,696			3,298,406
Interest Bearing Liabilities	3,568,572			3,433,326			3,336,343			3,437,338			3,390,512
Total Equity	644,677			630,978			591,193			624,174			562,601
INCOME STATEMENT DATA
Net Interest Income	$	44,713		$	39,913		$	38,882		$	163,008		$	155,047
Net Interest Income-Fully Tax Equivalent	45,362			40,523			39,459			165,454			157,176
Provision for Loan Losses	920			1,750			250			14,770			3,235
Noninterest Income	11,782			13,115			11,119			46,843			44,997
Noninterest Expense	24,912			23,125			22,122			91,205			89,424
Net Income	24,592			22,776			22,198			84,337			87,047
Pretax Pre-Provision Earnings (1)	31,583			29,903			27,879			118,646			110,620
PER SHARE DATA
Basic Net Income Per Common Share	$	0.97		$	0.89		$	0.86		$	3.31		$	3.40
Diluted Net Income Per Common Share	0.97			0.89			0.86			3.30			3.38
Cash Dividends Declared Per Common Share	0.30			0.30			0.30			1.20			1.16
Dividend Payout	30.93		%	33.71		%	34.88		%	36.36		%	34.32		%
Book Value Per Common Share (equity per share issued)	25.85			25.05			23.34			25.85			23.34
Tangible Book Value Per Common Share (1)	25.70			24.90			23.19			25.70			23.19
Market Value – High	56.28			53.00			50.00			56.28			50.00
Market Value – Low	40.57			39.38			42.00			30.49			39.78
Basic Weighted Average Common Shares Outstanding	25,424,307			25,418,712			25,623,016			25,469,242			25,588,404
Diluted Weighted Average Common Shares Outstanding	25,519,643			25,487,302			25,818,433			25,573,941			25,758,893
KEY RATIOS
Return on Average Assets	1.70		%	1.64		%	1.77		%	1.55		%	1.76		%
Return on Average Total Equity	15.18			14.36			14.90			13.51			15.47
Average Equity to Average Assets	11.22			11.43			11.87			11.49			11.38
Net Interest Margin	3.28			3.05			3.30			3.19			3.38
Net Interest Margin, Excluding PPP Loans (1)	3.12			3.17			3.30			3.19			3.38
Efficiency  (Noninterest Expense / Net Interest Income plus Noninterest Income)	44.10			43.61			44.24			43.46			44.70
Tier 1 Leverage (2)	10.93			11.07			11.67			10.93			11.67
Tier 1 Risk-Based Capital (2)	13.39			13.65			13.21			13.39			13.21
Common Equity Tier 1 (CET1) (2)	13.39			13.65			13.21			13.39			13.21
Total Capital (2)	14.65			14.90			14.36			14.65			14.36
Tangible Capital (1) (2)	11.21			11.41			12.02			11.21			12.02
ASSET QUALITY
Loans Past Due 30 - 89 Days	$	1,263		$	1,106		$	1,471		$	1,263		$	1,471
Loans Past Due 90 Days or More	116			19			45			116			45
Non-accrual Loans	11,986			13,478			18,675			11,986			18,675
Nonperforming Loans (includes nonperforming TDRs)	12,102			13,497			18,720			12,102			18,720
Other Real Estate Owned	316			316			316			316			316
Other Nonperforming Assets	6			0			0			6			0
Total Nonperforming Assets	12,424			13,813			19,036			12,424			19,036
Performing Troubled Debt Restructurings	5,237			5,658			5,909			5,237			5,909
Nonperforming Troubled Debt Restructurings (included in nonperforming loans)	6,476			6,547			3,188			6,476			3,188
Total Troubled Debt Restructurings	11,713			12,205			9,097			11,713			9,097
Impaired Loans	20,177			22,484			27,763			20,177			27,763
Non-Impaired Watch List Loans	265,970			198,851			152,421			265,970			152,421
Total Impaired and Watch List Loans	286,147			221,335			180,184			286,147			180,184
Gross Charge Offs	688			305			321			5,253			1,910
Recoveries	429			283			95			1,239			874
Net Charge Offs/(Recoveries)	259			22			226			4,014			1,036
Net Charge Offs/(Recoveries) to Average Loans	0.02		%	0.00		%	0.02		%	0.09		%	0.03		%
Loan Loss Reserve to Loans	1.32		%	1.32		%	1.25		%	1.32		%	1.25		%
Loan Loss Reserve to Loans, Excluding PPP Loans (1)	1.45		%	1.51		%	1.25		%	1.45		%	1.25		%
Loan Loss Reserve to Nonperforming Loans	507.42		%	450.09		%	270.58		%	507.42		%	270.58		%
Loan Loss Reserve to Nonperforming Loans and Performing TDRs	354.17		%	317.13		%	205.66		%	354.17		%	205.66		%
Nonperforming Loans to Loans	0.26		%	0.29		%	0.46		%	0.26		%	0.46		%
Nonperforming Assets to Assets	0.21		%	0.25		%	0.38		%	0.21		%	0.38		%
Total Impaired and Watch List Loans to Total Loans	6.15		%	4.82		%	4.43		%	6.15		%	4.43		%
Total Impaired and Watch List Loans to Total Loans, Excluding PPP Loans (1)	6.75		%	5.49		%	4.43		%	6.75		%	4.43		%
OTHER DATA
Full Time Equivalent Employees	585			571			568			585			568
Offices	50			50			50			50			50
(1) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Financial Measures"
(2) Capital ratios for December 31, 2020 are preliminary until the Call Report is filed.
(3) Core deposits equals deposits less brokered deposits

CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
	December 31,				December 31,
	2020				2019
	(Unaudited)
ASSETS
Cash and due from banks	$	74,457			$	68,605
Short-term investments	175,470				30,776
Total cash and cash equivalents	249,927				99,381
Securities available-for-sale (carried at fair value)	734,845				608,233
Real estate mortgage loans held-for-sale	11,218				4,527
Loans, net of allowance for loan losses of $61,408 and $50,652	4,587,748				4,015,176
Land, premises and equipment, net	59,298				60,365
Bank owned life insurance	95,227				83,848
Federal Reserve and Federal Home Loan Bank stock	13,772				13,772
Accrued interest receivable	18,761				15,391
Goodwill	4,970				4,970
Other assets	54,669				41,082
Total assets	$	5,830,435			$	4,946,745
LIABILITIES
Noninterest bearing deposits	$	1,538,331			$	983,307
Interest bearing deposits	3,498,474				3,150,512
Total deposits	5,036,805				4,133,819
Borrowings
Federal Home Loan Bank advances	75,000				170,000
Miscellaneous borrowings	10,500				0
Total borrowings	85,500				170,000
Accrued interest payable	5,959				11,604
Other liabilities	44,987				33,222
Total liabilities	5,173,251				4,348,645
STOCKHOLDERS' EQUITY
Common stock:  90,000,000 shares authorized, no par value
25,713,408 shares issued and 25,239,748 outstanding as of December 31, 2020
25,623,016 shares issued and 25,444,275 outstanding as of December 31, 2019	114,927				114,858
Retained earnings	529,005				475,247
Accumulated other comprehensive income	27,744				12,059
Treasury stock at cost (473,660 shares as of December 31, 2020, 178,741 shares as of December 31, 2019)	(14,581		)		(4,153)
Total stockholders' equity	657,095				598,011
Noncontrolling interest	89				89
Total equity	657,184				598,100
Total liabilities and equity	$	5,830,435			$	4,946,745

CONSOLIDATED STATEMENTS OF INCOME (unaudited - in thousands, except share and per share data)
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2020			2019			2020			2019
NET INTEREST INCOME
Interest and fees on loans
Taxable	$	45,779		$	47,639		$	176,538		$	196,733
Tax exempt	105			231			647			951
Interest and dividends on securities
Taxable	1,554			1,953			6,973			8,909
Tax exempt	2,340			1,956			8,577			7,127
Other interest income	76			533			368			1,490
Total interest income	49,854			52,312			193,103			215,210
Interest on deposits	5,018			13,017			29,342			57,148
Interest on borrowings
Short-term	48			16			506			1,311
Long-term	75			397			247			1,704
Total interest expense	5,141			13,430			30,095			60,163
NET INTEREST INCOME	44,713			38,882			163,008			155,047
Provision for loan losses	920			250			14,770			3,235
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES	43,793			38,632			148,238			151,812
NONINTEREST INCOME
Wealth advisory fees	1,874			1,833			7,468			6,835
Investment brokerage fees	522			387			1,670			1,687
Service charges on deposit accounts	2,658			2,926			10,110			15,717
Loan and service fees	2,615			2,508			10,085			9,911
Merchant card fee income	475			659			2,408			2,641
Bank owned life insurance income	629			644			2,105			1,890
Interest rate swap fee income	984			844			5,089			1,691
Mortgage banking income	966			370			3,911			1,626
Net securities gains	70			48			433			142
Other income	989			900			3,564			2,857
Total noninterest income	11,782			11,119			46,843			44,997
NONINTEREST EXPENSE
Salaries and employee benefits	13,717			12,203			49,413			48,742
Net occupancy expense	1,515			1,295			5,851			5,295
Equipment costs	1,550			1,378			5,766			5,521
Data processing fees and supplies	3,128			2,788			11,864			10,407
Corporate and business development	769			995			3,093			4,371
FDIC insurance and other regulatory fees	483			72			1,707			638
Professional fees	1,808			1,157			5,314			4,644
Other expense	1,942			2,234			8,197			9,806
Total noninterest expense	24,912			22,122			91,205			89,424
INCOME BEFORE INCOME TAX EXPENSE	30,663			27,629			103,876			107,385
Income tax expense	6,071			5,431			19,539			20,338
NET INCOME	$	24,592		$	22,198		$	84,337		$	87,047
BASIC WEIGHTED AVERAGE COMMON SHARES	25,424,307			25,623,016			25,469,242			25,588,404
BASIC EARNINGS PER COMMON SHARE	$	0.97		$	0.86		$	3.31		$	3.40
DILUTED WEIGHTED AVERAGE COMMON SHARES	25,519,643			25,818,433			25,573,941			25,758,893
DILUTED EARNINGS PER COMMON SHARE	$	0.97		$	0.86		$	3.30		$	3.38

LAKELAND FINANCIAL CORPORATION
LOAN DETAIL
FOURTH QUARTER 2020
(unaudited, in thousands)
	December 31,					September 30,					December 31,
	2020					2020					2019
Commercial and industrial loans:
Working capital lines of credit loans	$	626,023		13.5	%	$	592,560		12.9	%	$	709,849		17.5	%
Non-working capital loans	1,165,355			25.0		1,256,853			27.3		717,019			17.6
Total commercial and industrial loans	1,791,378			38.5		1,849,413			40.2		1,426,868			35.1
Commercial real estate and multi-family residential loans:
Construction and land development loans	362,653			7.8		393,101			8.5		287,641			7.1
Owner occupied loans	648,019			13.9		619,820			13.5		573,665			14.1
Nonowner occupied loans	579,625			12.5		567,674			12.3		571,364			14.0
Multifamily loans	304,717			6.5		279,713			6.1		240,652			5.9
Total commercial real estate and multi-family residential loans	1,895,014			40.7		1,860,308			40.4		1,673,322			41.1
Agri-business and agricultural loans:
Loans secured by farmland	195,410			4.2		150,503			3.2		174,380			4.3
Loans for agricultural production	234,234			5.0		187,651			4.1		205,151			5.0
Total agri-business and agricultural loans	429,644			9.2		338,154			7.3		379,531			9.3
Other commercial loans	94,013			2.0		97,533			2.1		112,302			2.8
Total commercial loans	4,210,049			90.4		4,145,408			90.0		3,592,023			88.3
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	167,847			3.6		170,671			3.7		177,227			4.4
Open end and junior lien loans	163,664			3.5		170,867			3.7		186,552			4.6
Residential construction and land development loans	12,007			0.3		11,012			0.3		12,966			0.3
Total consumer 1-4 family mortgage loans	343,518			7.4		352,550			7.7		376,745			9.3
Other consumer loans	103,616			2.2		105,285			2.3		98,617			2.4
Total consumer loans	447,134			9.6		457,835			10.0		475,362			11.7
Subtotal	4,657,183			100.0	%	4,603,243			100.0	%	4,067,385			100.0	%
Less:  Allowance for loan losses	(61,408		)			(60,747		)			(50,652		)
Net deferred loan fees	(8,027		)			(13,319		)			(1,557		)
Loans, net	$	4,587,748				$	4,529,177				$	4,015,176
LAKELAND FINANCIAL CORPORATION
DEPOSITS AND BORROWINGS
FOURTH QUARTER 2020
(unaudited, in thousands)
	December 31,					September 30,					December 31,
	2020					2020					2019
Noninterest bearing demand deposits	$	1,538,331				$	1,420,853				$	983,307
Savings and transaction accounts:
Savings deposits	312,702					289,500					234,508
Interest bearing demand deposits	2,160,953					1,844,211					1,723,937
Time deposits:
Deposits of $100,000 or more	785,238					965,709					910,134
Other time deposits	239,581					247,681					281,933
Total deposits	$	5,036,805				$	4,767,954				$	4,133,819
FHLB advances and other borrowings	85,500					85,500					170,000
Total funding sources	$	5,122,305				$	4,853,454				$	4,303,819

LAKELAND FINANCIAL CORPORATION
AVERAGE BALANCE SHEET AND NET INTEREST ANALYSIS
(UNAUDITED)
	Three Months Ended									Three Months Ended									Three Months Ended
	December 31, 2020									September 30, 2020									December 31, 2019
	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)	$	4,604,704		$	45,779		3.96	%		$	4,541,608		$	42,056		3.68	%		$	3,977,782		$	47,639		4.75	%
Tax exempt (1)	13,208			132			3.97			15,204			130			3.40			23,858			288			4.79
Investments: (1)
Available-for-sale	657,990			4,516			2.73			637,523			4,359			2.72			610,947			4,429			2.88
Short-term investments	2,334			1			0.17			8,865			3			0.13			54,439			339			2.47
Interest bearing deposits	223,269			75			0.13			79,369			41			0.21			81,335			194			0.95
Total earning assets	$	5,501,505		$	50,503		3.65	%		$	5,282,569		$	46,589		3.51	%		$	4,748,361		$	52,889		4.42	%
Less:  Allowance for loan losses	(61,438		)							(59,519		)							(50,753		)
Nonearning Assets
Cash and due from banks	66,851									61,656									65,294
Premises and equipment	59,942									60,554									59,850
Other nonearning assets	180,958									175,601									159,237
Total assets	$	5,747,818								$	5,520,861								$	4,981,989
Interest Bearing Liabilities
Savings deposits	$	297,832		$	57		0.08	%		$	282,456		$	53		0.07	%		$	237,241		$	55		0.09	%
Interest bearing checking accounts	2,058,069			1,585			0.31			1,827,061			1,405			0.31			1,764,854			5,765			1.30
Time deposits:
In denominations under $100,000	242,846			792			1.30			254,315			982			1.54			282,683			1,422			2.00
In denominations over $100,000	878,684			2,584			1.17			972,436			3,501			1.43			1,017,815			5,775			2.25
Miscellaneous short-term borrowings	16,141			48			1.18			22,058			51			0.92			3,495			16			1.82
Long-term borrowings and
subordinated debentures	75,000			75			0.40			75,000			74			0.39			30,255			397			5.21
Total interest bearing liabilities	$	3,568,572		$	5,141		0.57	%		$	3,433,326		$	6,066		0.70	%		$	3,336,343		$	13,430		1.60	%
Noninterest Bearing Liabilities
Demand deposits	1,482,012									1,401,403									1,006,030
Other liabilities	52,557									55,154									48,423
Stockholders' Equity	644,677									630,978									591,193
Total liabilities and stockholders' equity	$	5,747,818								$	5,520,861								$	4,981,989
Interest Margin Recap
Interest income/average earning assets				50,503			3.65						46,589			3.51						52,889			4.42
Interest expense/average earning assets				5,141			0.37						6,066			0.46						13,430			1.12
Net interest income and margin				$	45,362		3.28	%					$	40,523		3.05	%					$	39,459		3.30	%

(1)	Tax exempt income was converted to a fully taxable equivalent basis at a 21 percent tax rate. The tax equivalent rate for tax exempt loans and tax exempt securities acquired after January 1, 1983 included the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) adjustment applicable to nondeductible interest expenses. Taxable equivalent basis adjustments were $649,000, $610,000 and $577,000 in the three-month periods ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively.
(2)	Loan fees are included as taxable loan interest income. Net loan fees attributable to PPP loans were $5.21 million and $1.87 million for the three months ended December 31, 2020 and September 30, 2020, respectively. All other loan fees were immaterial in relation to total taxable loan interest income for the periods presented.
(3)	Nonaccrual loans are included in the average balance of taxable loans.

Reconciliation of Non-GAAP Financial Measures

The loan loss reserve to total loans, excluding PPP loans and total impaired and watch list loans to total loans, excluding PPP loans are non-GAAP ratios that management believes are important because they provide better comparability to prior periods. PPP loans are fully guaranteed by the SBA and have not been allocated for within the allowance for loan losses.
A reconciliation of these non-GAAP measures is provided below (dollars in thousands).

	Three Months Ended									Twelve Months Ended
	Dec. 31,			Sep. 30,			Dec. 31,			Dec 31,			Dec. 31,
	2020			2020			2019			2020			2019
Total Loans	$	4,649,156		$	4,589,924		$	4,065,828		$	4,649,156		$	4,065,828
Less: PPP Loans	412,007			557,851			0			412,007			0
Total Loans, Excluding PPP Loans	$	4,237,149		$	4,032,073		$	4,065,828		$	4,237,149		$	4,065,828
Allowance for Loan Losses	$	61,408		$	60,747		$	50,652		$	61,408		$	50,652
Loan Loss Reserve to Total Loans	1.32		%	1.32		%	1.25		%	1.32		%		1.25	%
Loan Loss Reserve to Total Loans, Excluding PPP Loans	1.45		%	1.51		%	1.25		%	1.45		%		1.25	%
	Three Months Ended									Twelve Months Ended
	Dec. 31,			Sep. 30,			Dec. 31,			Dec 31,			Dec. 31,
	2020			2020			2019			2020			2019
Total Loans	$	4,649,156		$	4,589,924		$	4,065,828		$	4,649,156		$	4,065,828
Less: PPP Loans	412,007			557,851			0			412,007			0
Total Loans, Excluding PPP Loans	$	4,237,149		$	4,032,073		$	4,065,828		$	4,237,149		$	4,065,828
Total Impaired and Watch List Loans	$	286,147		$	221,335		$	180,184		$	286,147		$	180,184
Total Impaired and Watch List Loans to Total Loans		6.15	%		4.82	%		4.43	%		6.15	%		4.43	%
Total Impaired and Watch List Loans to Total Loans, Excluding PPP Loans		6.75	%		5.49	%		4.43	%		6.75	%		4.43%	%

Tangible common equity, tangible assets, tangible book value per share, tangible common equity to tangible assets ratio and pretax pre-provision earnings are non-GAAP financial measures calculated using GAAP amounts. Tangible common equity is calculated by excluding the balance of goodwill and other intangible assets from the calculation of equity, net of deferred taxes. Tangible assets are calculated by excluding the balance of goodwill and other intangible assets from the calculation of total assets, net of deferred taxes. Tangible book value per share is calculated by dividing tangible common equity by the number of shares outstanding less true treasury stock. Pretax pre-provision earnings is calculated by adding net interest income to noninterest income and subtracting noninterest expense. Because not all companies use the same calculation of tangible common equity and tangible assets, this presentation may not be comparable to other similarly titled measures calculated by other companies. However, management considers these measures of the company’s value including only earning assets as meaningful to an understanding of the company’s financial information.

A reconciliation of these non-GAAP financial measures is provided below (dollars in thousands, except per share data).

		Three Months Ended											Twelve Months Ended
	Dec. 31,				Sep. 30,				Dec. 31,				Dec 31,				Dec. 31,
	2020				2020				2019				2020				2019
Total Equity	$	657,184			$	636,839			$	598,100			$	657,184			$	598,100
Less: Goodwill	(4,970		)		(4,970		)		(4,970		)		(4,970		)		(4,970		)
Plus: Deferred tax assets related to goodwill	1,176				1,176				1,181				1,176				1,181
Tangible Common Equity	653,390				633,045				594,311				653,390				594,311
Assets	$	5,830,435			$	5,551,108			$	4,946,745			$	5,830,435			$	4,946,745
Less: Goodwill	(4,970		)		(4,970		)		(4,970		)		(4,970		)		(4,970		)
Plus: Deferred tax assets related to goodwill	1,176				1,176				1,181				1,176				1,181
Tangible Assets	5,826,641				5,547,314				4,942,956				5,826,641				4,942,956
Ending common shares issued	25,424,307				25,419,814				25,623,016				25,424,307				25,623,016
Tangible Book Value Per Common Share	$	25.70			$	24.90			$	23.19			$	25.70			$	23.19
Tangible Common Equity/Tangible Assets	11.21		%		11.41		%		12.02		%		11.21		%		12.02		%
Net Interest Income	$	44,713			$	39,913			$	38,882			$	163,008			$	155,047
Plus:  Noninterest income	11,782				13,115				11,119				46,843				44,997
Pretax Pre-Provision Earnings	(24,912		)		(23,125		)		(22,122		)		(91,205		)		(89,424		)
	$	31,583			$	29,903			$	27,879			$	118,646			$	110,620

Net interest margin on a fully tax equivalent basis, net of PPP loan impact, is a non-GAAP measure that management believes is important because it provides for better comparability to prior periods.  Because PPP loans have a low fixed interest rate of 1.0% and because the accretion of net loan fee income can be accelerated upon borrower forgiveness and repayment by the SBA, management is actively monitoring net interest margin on a fully tax equivalent basis with and without PPP loan impact for the duration of this program.

A reconciliation of this non-GAAP financial measure is provided below (dollars in thousands).

Impact of Paycheck Protection Program on Net Interest Margin FTE
	Three Months Ended														Twelve Months Ended
	Dec. 31,					Sep. 30,					Dec. 31,				Dec. 31,				Dec. 31,
	2020					2020					2019				2020				2019
Total Average Earnings Assets	$	5,501,505				$	5,282,569				$	4,748,361			$	5,184,836			$	4,656,707
Less: Average Balance of PPP Loans	503,041					557,290					0				376,785				0
Total Adjusted Earning Assets	4,998,464					4,725,279					4,748,361				4,808,051				4,656,707
Total Interest Income FTE	$	50,503				$	46,589				$	52,889			$	195,549			$	217,339
Less: PPP Loan Income	(6,509		)			(3,294		)			0				(12,832		)		0
Total Adjusted Interest Income FTE	43,994					43,295					52,889				182,717				217,339
Adjusted Earning Asset Yield, net of PPP Impact	3.50		%			3.65		%			4.42		%		3.80		%		4.67		%
Total Average Interest Bearing Liabilities	$	3,568,572				$	3,433,326				$	3,336,343			$	3,437,338			$	3,390,512
Less: Average Balance of PPP Loans	503,041					557,290					0				376,785				0
Total Adjusted Interest Bearing Liabilities	4,071,613					3,990,616					3,336,343				3,814,123				3,390,512
Total Interest Expense FTE	$	5,141				$	6,066				$	13,430			$	30,095			$	60,163
Less: PPP Cost of Funds	(320		)			(350		)			0				(956		)		0
Total Adjusted Interest Expense FTE	4,821					5,716					13,430				29,139				60,163
Adjusted Cost of Funds, net of PPP Impact	0.38		%			0.48		%			1.12		%		0.61		%		1.29		%
Net Interest Margin FTE, net of PPP Impact	3.12		%			3.17		%			3.30		%		3.19		%		3.38		%

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

FAQ

What were Lakeland Financial Corporation's earnings for 2020?

Lakeland Financial Corporation reported a net income of $84.3 million for 2020.

How did diluted earnings per share change in 2020 for LKFN?

Diluted earnings per share decreased by 2% to $3.30 in 2020.

What was the record net income for Lakeland in Q4 2020?

The record net income for the fourth quarter of 2020 was $24.6 million.

What was the total asset growth for Lakeland Financial in 2020?

Total assets grew by 18%, reaching $5.8 billion in 2020.

What was the increase in the provision for loan losses for LKFN?

The provision for loan losses increased by 362% to $14.8 million in 2020.