Lakeland Financial Reports Record Annual Performance

来源: Nasdaq GlobeNewswire / 25 1月 2022 08:00:03 America/New_York

WARSAW, Ind., Jan. 25, 2022 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq Global Select/LKFN), parent company of Lake City Bank, today reported record full year net income of $95.7 million, which represents an increase of $11.4 million, or 13.5%, compared with net income of $84.3 million for 2020. Diluted earnings per share of $3.74 was also a record for 2021, which increased 13.3% compared to $3.30 for 2020. Net income for 2021 benefited from growth in net interest income and lower provision expense as compared to 2020, offset by an increase in noninterest expense.

The company further reported quarterly net income of $24.3 million for the three months ended December 31, 2021 versus $24.6 million for the comparable period of 2020, a decrease of 1.3%. Diluted net income per common share decreased 2.1% to $0.95 for the three months ended December 31, 2021 versus $0.97 for the comparable period of 2020. On a linked quarter basis, net income increased $164,000, or 0.7%, from the third quarter of 2021, of $24.1 million, or $0.94 diluted earnings per share. Pretax pre-provision earnings were $29.8 million for the fourth quarter of 2021, a decrease of 5.7%, or $1.8 million, from $31.6 million for the fourth quarter of 2020. On a linked quarter basis, pretax pre-provision earnings decreased 3.6%, or $1.1 million, from $30.9 million for the third quarter of 2021. The decreases in net income and pretax pre-provision earnings were driven primarily by lower Paycheck Protection Program (PPP) loan income in the fourth quarter of 2021. PPP loan income, which includes both interest income and fee accretion, was $2.2 million for the fourth quarter of 2021 compared to $6.5 million during the comparable quarter of 2020 and $3.9 million for the third quarter of 2021.

“We enter 2022 with great optimism and confidence in the core relationship businesses within Lake City Bank. During the last two years, we have experienced unprecedented growth that has challenged our management of the balance sheet and necessitated a level of flexibility and adaptability by the entire Lake City Bank team. We end 2021 strongly with record net income and a balance sheet ready for future growth. Our highly asset sensitive balance sheet is well-positioned for the interest rate hikes we expect to see in 2022. Further, we believe the liquidity on our balance sheet will prove valuable as we focus on future organic loan growth opportunities,” commented David M. Findlay, President and Chief Executive Officer.

Highlights for the year and quarter are noted below.

Full year 2021 versus 2020 highlights:

Total assets of $6.6 billion, an increase of $726.9 million, or 12%
Dividend per share increase of 13% to $1.36 from $1.20
Return on average equity of 14.19%, compared to 13.51%
Return on average assets of 1.56%, compared to 1.55%
Average loan growth, excluding PPP loans, of $135.5 million, or 3%
Core deposit growth of $703.6 million, or 14%
Noninterest bearing demand deposit account growth of $357.2 million, or 23%
Net interest margin of 3.07% compared to 3.19%
Net interest income increase of $15.1 million, or 9%
Revenue growth of $13.0 million, or 6%
Noninterest expense increase of $13.1 million, or 14%
Provision expense² of $1.1 million compared to provision expense of $14.8 million, a decrease of $13.7 million
Average total equity increase of $50.5 million, or 8%
Total risk-based capital ratio improved to 15.34% compared to 14.65%
Tangible capital ratio¹ of 10.70% compared to 11.21%

Fourth Quarter 2021 versus Fourth Quarter 2020 highlights:

Average loan growth, excluding PPP loans, of $101.5 million, or 2%
Core deposit growth of $703.6 million, or 14%
Noninterest bearing demand deposit account growth of $357.2 million, or 23%
Net interest margin of 2.98% compared to 3.28%
Net interest income increase of $294,000, or 1%
Noninterest expense increase of $14,000, or 0%
Provision expense of $0 compared to provision expense of $920,000
Average total equity increase of $47.7 million, or 7%

Fourth Quarter 2021 versus Third Quarter 2021 highlights:

Return on average equity of 13.91%, compared to 13.90%
Average loan growth, excluding PPP loans, of $5.2 million
Core deposit growth of $321.8 million, or 6%
Noninterest bearing demand deposit account growth of $133.5 million, or 8%
Net interest margin of 2.98% compared to 3.13%
Provision expense of $0 compared to a provision expense of $1.3 million
Nonperforming loans of $15.1 million, a decrease of $15.9 million
Average total equity increase of $4.1 million, or 1%
Tangible capital ratio¹ was 10.70% compared to 10.92%

Return on average total equity for the year ended December 31, 2021 was 14.19%, compared to 13.51% in 2020. Return on average assets was 1.56% in 2021 compared to 1.55% in 2020. The company's total capital as a percent of risk-weighted assets was 15.34% at December 31, 2021 compared to 14.65% at December 31, 2020 and 15.44% at September 30, 2021. The company's tangible common equity to tangible assets ratio¹ was 10.70% at December 31, 2021, compared to 11.21% at December 31, 2020 and 10.92% at September 30, 2021.

As previously announced, the board of directors approved a cash dividend for the fourth quarter of $0.40 per share, payable on February 7, 2022, to shareholders of record as of January 25, 2022. The fourth quarter dividend per share represents an 18% increase from the $0.34 dividend per share paid in the third quarter of 2021.

Findlay added, “Our capital structure is exceptionally strong. As a result, we can comfortably provide our shareholders with an 18% increase in the dividend. We are confident in our future growth and performance, and the strength of our balance sheet is critical to our long-term success.”

Average total loans were $4.28 billion in the fourth quarter of 2021, a decrease of $74.8 million, or 2%, from $4.35 billion for the third quarter of 2021, and a decrease of $338.7 million, or 7%, from $4.62 billion for the fourth quarter 2020, due primarily to PPP loan forgiveness. Average PPP loans were $62.9 million during the fourth quarter of 2021, down from $503.0 million during the fourth quarter of 2020. Average loans, excluding PPP loans, were $4.22 billion in the fourth quarter of 2021, compared to $4.11 billion for the fourth quarter of 2020, an increase of $101.5 million, or 2%. On a linked quarter basis, average loans, excluding PPP loans, increased by $5.2 million.

Total loans outstanding decreased by $361.3 million, or 8%, from $4.65 billion as of December 31, 2020 to $4.29 billion as of December 31, 2021, due primarily to PPP loan forgiveness. PPP loans outstanding were $26.2 million as of December 31, 2021, compared to $412.0 million at December 31, 2020. Total loans, excluding PPP loans, were $4.26 billion as of December 31, 2021, representing an increase of $24.5 million, or 1%, as compared to December 31, 2020. On a linked quarter basis, total loans excluding PPP increased $114.1 million, or 3%. The company received PPP forgiveness proceeds and borrower repayments of $709.5 million since the program's inception through December 31, 2021.

Findlay stated, “Commercial organic loan originations reached an all-time high this quarter. During the fourth quarter we originated more than $650 million of commercial loans, yet also experienced elevated levels of paydowns over $600 million. Commercial line utilization continues to incrementally improve, but is still near historic lows. We continue to expand existing relationships and establish new ones as available commercial lines of credit reached a record high of $4.01 billion and outstanding commercial lines grew by 9% during the fourth quarter. The loan pipeline as we entered 2022 was encouraging as we are beginning to see signs of improved loan demand and borrower activity.”

Average total deposits were $5.59 billion for the fourth quarter of 2021, an increase of $626.1 million, or 13%, versus $4.96 billion for the fourth quarter of 2020. On a linked quarter basis, average total deposits increased by $241.3 million, or 5%. Total deposits increased $698.6 million, or 14%, from $5.04 billion as of December 31, 2020 to $5.74 billion as of December 31, 2021. On a linked quarter basis, total deposits increased by $320.8 million, or 6%, from $5.41 billion as of September 30, 2021.

Core deposits, which exclude brokered deposits, increased by $703.6 million, or 14%, from $5.02 billion as of December 31, 2020 to $5.73 billion at December 31, 2021. This increase was due to growth in commercial deposits of $321.9 million, or 17%; growth in retail deposits of $259.5 million, or 14%; and growth in public fund deposits of $122.2 million, or 11%. On a linked quarter basis, core deposits increased by $321.8 million, or 6%. The linked quarter growth resulted from commercial deposit growth of $118.7 million, a 6% increase; retail growth of $208.1 million, an 11% increase; and offset by public fund contraction of $5.0 million.

Investment securities were $1.40 billion at December 31, 2021, reflecting an increase of $663.7 million, or 90%, as compared to $734.8 million at December 31, 2020. On a linked quarter basis, investment securities increased $158.8 million, or 13%. Investment securities represent 21% of total assets on December 31, 2021 compared to 13% on December 31, 2020 and 20% on September 30, 2021. The increase in investment securities reflects the deployment of $652 million in excess liquidity that resulted from deposit growth. Deposit growth was impacted by PPP and economic stimulus.

“During the last two years, we have seen core deposits grow by $1.7 billion, a portion of the resulting liquidity has been strategically deployed in our investment securities portfolio as an earning asset alternative while our customers’ deposits remain elevated. We remain focused on core organic loan growth as the primary driver of our balance sheet and are optimistic that we are well-positioned to grow market share as we transition to the next economic growth cycle. Additionally, we remain optimistic that the high percentage of variable rate loans on our balance sheet, coupled with cost of funds at historically low levels, position Lake City Bank with the ability to fund organic loan growth and benefit from the anticipated Federal Reserve Bank rising interest rate cycle,” Findlay commented.

Net interest margin was 3.07% for the full year 2021, down 12 basis points from 3.19% in 2020. Earnings assets yields declined by 44 basis points to 3.33%, offset by a decline of 32 basis points in the cost of funds. The strong 2021 deposit growth funded organic loan growth, and generated excess liquidity. Average investment securities increased by $434.4 million during 2021 and average interest-bearing deposits to the bank grew by $313.6 million. The shift in earning assets generated lower average yields. Net interest margin, excluding PPP loans, was 2.95% for the year ended 2021, down 24 basis points from 3.19% during 2020.

The company’s net interest margin decreased 30 basis points to 2.98% for the fourth quarter of 2021 compared to 3.28% for the fourth quarter of 2020. The lower margin in the fourth quarter of 2021 as compared to the prior year period was due to a slowing of PPP forgiveness as the bank's borrowers actively applied for and received forgiveness throughout the second half of 2020 and the first three quarters of 2021. PPP loan income for the fourth quarter of 2021 was $2.2 million, or $4.3 million less than PPP loan income of $6.5 million during the fourth quarter of 2020. PPP interest and fees represented 11 basis points of fourth quarter 2021 net interest margin compared to 16 basis points for the fourth quarter 2020 net interest margin.

Net interest margin was negatively impacted by the decrease in earning asset yields of 46 basis points from 3.65% for the fourth quarter of 2020 compared to 3.19% for the fourth quarter of 2021. As a result of the excess liquidity on the company's balance sheet, the mix of earning assets included lower yielding earning assets in the investment securities portfolio and cash balances at the Federal Reserve Bank. The lower yield on earning assets was offset by lower cost of funds, which decreased by 16 basis points, from 0.37% for the fourth quarter of 2020 to 0.21% for the fourth quarter of 2021. Net interest margin, excluding PPP loan income, was 2.87%, 25 basis points lower than 3.12% in the fourth quarter of 2020.

Fourth quarter net interest margin was 2.98%, a decline of 15 basis points compared to linked third quarter net interest margin of 3.13%. Net interest margin excluding PPP was 11 basis points lower at 2.87% for the fourth quarter of 2021 compared to 2.95% for the linked third quarter of 2021. Earning asset yields declined by 18 basis points offset by a decline in cost of funds of 3 basis points. Interest expense as a percentage of earning assets decreased to a historical low of 0.21% for the three-month period ended December 31, 2021, down from 0.24% for the three-month period ended September 30, 2021.

Net interest income was $178.1 million for the year ended December 31, 2021, representing an increase of $15.1 million, or 9.3%, as compared to the year ended December 31, 2020. The increase was due primarily to a decrease in interest expense of $15.0 million, or 50%, and an increase in investment securities income of $6.6 million, offset by a $6.6 million decline in loan interest income. PPP loan income, including interest and fees, was $14.9 million during the year ended December 31, 2021, compared to $12.8 million during 2020.

Net interest income was $45.0 million for the three months ended December 31, 2021, representing an increase of $294,000, or 1%, as compared to the three months ended December 31, 2020. On a linked quarter basis, net interest income decreased $734,000, or 2%, from the third quarter of 2021. PPP loan income, including interest and fees, was $2.2 million for the three months ended December 31, 2021, compared to $3.9 million during the third quarter of 2021.

Provision expense for 2021 was $1.1 million, down from $14.8 million in 2020. Provision expense for 2020 reflected the increased assessment of risk to the bank’s loan portfolio as a result of the economic downturn that resulted from the pandemic. The company recorded no provision for credit losses²in the fourth quarter of 2021, compared to $920,000 of provision expense in the fourth quarter of 2020. On a linked quarter basis, the provision expense decreased by $1.3 million from the third quarter of 2021. The company adopted CECL during the first quarter of 2021, effective January 1, 2021. The day one impact of adoption was an increase in the allowance for credit losses² of $9.1 million, with an offset, net of taxes, to beginning stockholders’ equity.

The credit loss reserve to total loans was 1.58% at December 31, 2021 versus 1.32% at December 31, 2020 and 1.72% at September 30, 2021. The decline in the credit reserve to total loans from September 2021 to December 2021, reflects the impact of charge offs as well as the impact of loan growth during the quarter. The credit loss reserve to total loans excluding PPP loans was 1.59% at December 31, 2021 versus 1.45% at December 31, 2020 and 1.76% at September 30, 2021. PPP loans are guaranteed by the United States Small Business Administration (SBA) and have not been allocated for within the allowance for credit losses².

Net charge offs in the fourth quarter of 2021 were $5.3 million versus net charge offs of $259,000 in the fourth quarter of 2020 and net recoveries of $35,000 during the linked third quarter of 2021. Annualized net charge offs (recoveries) to average loans were 0.49% for the fourth quarter of 2021 and 0.02% in the fourth quarter of 2020, and 0.00% for the linked third quarter of 2021. Net charge offs to average loans were 0.09% during the full year of 2021 unchanged from 2020.

Nonperforming assets increased $2.9 million, or 23%, to $15.3 million as of December 31, 2021 versus $12.4 million as of December 31, 2020. On a linked quarter basis, nonperforming assets decreased $16.0 million, or 51%, versus $31.3 million as of September 30, 2021. The net decrease in non-performing assets on a linked quarter basis resulted from net charge offs, net upgrades of non-individually analyzed watchlist credits of $3.3 million as well as recurring loan repayments. The company recorded a $5.2 million charge off in the fourth quarter on a commercial borrower that was downgraded to nonperforming status during the third quarter of 2021. The operations of the borrower, a retailer of party and special event supplies, were severely impacted by the economic conditions resulting from the COVID-19 pandemic. There is no remaining credit exposure to this customer. The ratio of nonperforming assets to total assets at December 31, 2021 increased to 0.23% from 0.21% at December 31, 2020 and decreased from 0.50% at September 30, 2021. Total individually analyzed and watch list loans decreased by $51.7 million, or 18%, to $234.5 million at December 31, 2021 versus $286.1 million as of December 31, 2020. On a linked quarter basis, total individually analyzed and watch list loans decreased by $24.1 million, or 9%, from $258.5 million at September 30, 2021.

“We remain cautiously optimistic on the asset quality front. Clearly, our commercial borrowers continue to feel the impact of inflation, supply chain challenges, workforce availability and readiness, and wage pressures. These are widespread and are impacting every sector of our loan portfolio. Yet, borrowers’ balance sheets are generally healthy and while operating margins are being impacted, our clients are managing through the challenges,” commented Findlay.

Noninterest income of $44.7 million decreased by $2.1 million, or 5%, for the year ended December 31, 2021 as compared to $46.8 million in 2020. The decrease was driven by a $4.1 million reduction in interest rate swap fees and a $2.5 million reduction in mortgage banking income, offset by a $1.8 million increase in loan service fees, a $1.6 million increase in wealth advisory fees, and a $615,000 increase in merchant card fee income. Interest rate swap arrangements have seen a decrease in demand during 2021 and the carrying value of mortgage servicing rights has been impacted by increased prepayment speeds, both due to the current interest rate environment. The increases in fee income were driven by higher transaction volumes and increased economic activity.

Noninterest income decreased $2.1 million, or 18%, to $9.7 million for the fourth quarter of 2021, compared to $11.8 million for the fourth quarter of 2020. Noninterest income was affected by a decrease of $1.3 million in mortgage banking income, or 135%, an $883,000 reduction in interest rate swap fee income, or 90%, and a $530,000 reduction in limited partnership income (a component of other income). These reductions were offset by improved loan and service fee income, which increased by $484,000, or 19%, growth in wealth advisory fees of $443,000, or 24%, and growth in merchant and interchange fee income of $322,000, or 68%. These changes were influenced by the same trends summarized in the preceding paragraph.

Noninterest income decreased by $1.4 million, or 13%, on a linked quarter from $11.1 million. The linked quarter decrease resulted primarily from decreases in limited partnership income of $656,000, mortgage banking income of $307,000, bank owned life insurance income of $273,000 and other noninterest income of $128,000. Offsetting these decreases was an increase in wealth advisory fee income of $140,000.

Noninterest expense increased by $13.1 million, or 14%, to $104.3 million for the year ended December 31, 2021 as compared to $91.2 million for 2020. Salaries and employee benefits increased by $8.5 million, or 17%, due primarily to increased performance-based compensation, increased salaries and increased health insurance expense. Additionally, increased legal fees and costs associated with the digital platform conversion contributed to an overall increase of $ 1.8 million, or 33%, in professional fees. Corporate and business development expenses increased as the economy re-opened in 2021, and client events and contributions increased in 2021.

Noninterest expense was $24.9 million in the fourth quarter of 2021, up by $14,000 from the fourth quarter of 2020. Corporate and business development expenses increased $285,000, or 37%, due to elevated business development and business contributions as in-person meetings with clients and prospects have resumed. Professional fees expenses increased $198,000, or 11%, over these periods. Offsetting these increases were decreases in salaries and employee benefits expense of $212,000, or 2%, and equipment costs of $154,000, or 10%.

On a linked quarter basis, noninterest expense decreased by $1.0 million, or 4%, from $26.0 million. Salaries and employee benefits decreased by $725,000, or 5%, driven by fluctuations in performance-based incentive compensation expense. Other expense decreased by $631,000, or 23%, due to board semi- annual share grant expense of $421,000 in the third quarter of 2021. Offsetting these decreases was an increase in professional fees of $664,000, or 49%. This was driven primarily by increased legal fees.

The company’s efficiency ratio was 45.6% for the fourth quarter of 2021, compared to 44.1% for the fourth quarter of 2020 and 45.7% for the linked third quarter of 2021. The company's efficiency ratio was 46.8% for the year ended December 31, 2021 compared to 43.5% in the prior year.

Paycheck Protection Program

During 2020 and the first half of 2021, the company funded PPP loans totaling $735.6 million for its customers through the PPP programs. In addition, the bank processed forgiveness applications for PPP loans representing 97% of loans originated. As of December 31, 2021, PPP loans outstanding, net of deferred fees, totaled $26.2 million; $3.8 million from PPP round one and $22.3 million from PPP round two. As of December 31, 2021, the SBA has approved forgiveness of, or the borrower had repaid, $709.5 million in PPP loans; $566.7 million for PPP loans originated during round one and $142.8 million for PPP loans originated during round two. As of December 31, 2021, the company had submitted additional PPP forgiveness applications on behalf of customers in the amount of $8.3 million that were awaiting SBA approval.

	December 31, 2021
	Originated			Forgiven / Repaid			Outstanding⁽¹⁾
	Number	Amount		Number	Amount		Number	Amount
PPP Round 1	2,409	$	570,500	2,390	$	566,682	19	$	3,818
PPP Round 2	1,192		165,142	1,117		142,809	75		22,333
Total	3,601	$	735,642	3,507	$	709,491	94	$	26,151

(1) Outstanding balance includes deferred loan origination fees, net of costs, and reflects any loans repaid by borrowers.

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 tangible common equity, tangible assets, tangible book value per share, tangible common equity to tangible assets ratio and pretax pre-provision earnings. A reconciliation of these and other 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.

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

Non-GAAP financial measure – see “Reconciliation of Non-GAAP Financial Measures”
Beginning January 1, 2021 calculation is based on the Current Expected Credit Loss methodology (CECL). Prior to January 1, 2021 calculation was based on the incurred loss methodology.

LAKELAND FINANCIAL CORPORATION
FOURTH QUARTER 2021 FINANCIAL HIGHLIGHTS

	Three Months Ended									Twelve Months Ended
(Unaudited – Dollars in thousands, except per share data)	December 31,			September 30,			December 31,			December 31,			December 31,
END OF PERIOD BALANCES		2021			2021			2020			2021			2020
Assets	$	6,557,323		$	6,222,916		$	5,830,435		$	6,557,323		$	5,830,435
Deposits		5,735,407			5,414,638			5,036,805			5,735,407			5,036,805
Brokered Deposits		10,003			11,012			15,002			10,003			15,002
Core Deposits (1)		5,725,404			5,403,626			5,021,803			5,725,404			5,021,803
Loans		4,287,841			4,239,453			4,649,156			4,287,841			4,649,156
Paycheck Protection Program (PPP) Loans		26,151			91,897			412,007			26,151			412,007
Allowance for Credit Losses (2)		67,773			73,048			61,408			67,773			61,408
Total Equity		704,906			683,202			657,184			704,906			657,184
Goodwill net of deferred tax assets		3,794			3,794			3,794			3,794			3,794
Tangible Common Equity (3)		701,112			679,408			653,390			701,112			653,390
AVERAGE BALANCES
Total Assets	$	6,397,397		$	6,153,334		$	5,747,818		$	6,153,780		$	5,424,796
Earning Assets		6,148,085			5,909,834			5,501,505			5,906,640			5,184,836
Investments - available-for-sale		1,336,492			1,201,657			657,990			1,068,325			633,957
Loans		4,279,262			4,354,104			4,617,912			4,421,094			4,424,472
Paycheck Protection Program (PPP) Loans		62,910			142,917			503,041			237,951			376,785
Total Deposits		5,585,537			5,344,272			4,959,443			5,357,284			4,650,597
Interest Bearing Deposits		3,784,837			3,662,707			3,477,431			3,686,112			3,340,696
Interest Bearing Liabilities		3,859,971			3,737,707			3,568,572			3,761,520			3,437,338
Total Equity		692,396			688,252			644,677			674,637			624,174
INCOME STATEMENT DATA
Net Interest Income	$	45,007		$	45,741		$	44,713		$	178,088		$	163,008
Net Interest Income-Fully Tax Equivalent		46,140			46,717			45,362			181,675			165,454
Provision for Credit Losses (2)		0			1,300			920			1,077			14,770
Noninterest Income		9,709			11,114			11,782			44,720			46,843
Noninterest Expense		24,926			25,967			24,912			104,287			91,205
Net Income		24,283			24,119			24,592			95,733			84,337
Pretax Pre-Provision Earnings (3)		29,790			30,888			31,583			118,521			118,646
PER SHARE DATA
Basic Net Income Per Common Share	$	0.95		$	0.95		$	0.97		$	3.76		$	3.31
Diluted Net Income Per Common Share		0.95			0.94			0.97			3.74			3.30
Cash Dividends Declared Per Common Share		0.34			0.34			0.30			1.36			1.20
Dividend Payout		35.79	%		36.17	%		30.93	%		36.36	%		36.36	%
Book Value Per Common Share (equity per share issued)		27.65			26.80			25.85			27.65			25.85
Tangible Book Value Per Common Share (3)		27.50			26.66			25.70			27.50			25.70
Market Value – High		80.77			73.04			56.28			80.77			56.28
Market Value – Low		71.19			56.06			40.57			50.71			30.49

	Three Months Ended									Twelve Months Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
		2021			2021			2020			2021			2020
Basic Weighted Average Common Shares Outstanding		25,486,484			25,479,654			25,424,307			25,475,994			25,469,242
Diluted Weighted Average Common Shares Outstanding		25,669,042			25,635,288			25,519,643			25,620,105			25,573,941
KEY RATIOS
Return on Average Assets		1.51	%		1.56	%		1.70	%		1.56	%		1.55	%
Return on Average Total Equity		13.91			13.90			15.18			14.19			13.51
Average Equity to Average Assets		10.82			11.19			11.22			10.96			11.51
Net Interest Margin		2.98			3.13			3.28			3.07			3.19
Net Interest Margin, Excluding PPP Loans (3)		2.87			2.95			3.12			2.95			3.19
Efficiency (Noninterest Expense / Net Interest Income plus Noninterest Income)		45.56			45.67			44.10			46.81			43.46
Tier 1 Leverage (4)		10.72			10.91			10.93			10.72			10.93
Tier 1 Risk-Based Capital (4)		14.09			14.18			13.39			14.09			13.39
Common Equity Tier 1 (CET1) (4)		14.09			14.18			13.39			14.09			13.39
Total Capital (4)		15.34			15.44			14.65			15.34			14.65
Tangible Capital (3) (4)		10.70			10.92			11.21			10.70			11.21
ASSET QUALITY
Loans Past Due 30 - 89 Days	$	729		$	1,245		$	1,263		$	729		$	1,263
Loans Past Due 90 Days or More		117			18			116			117			116
Non-accrual Loans		14,973			30,978			11,986			14,973			11,986
Nonperforming Loans (includes nonperforming TDRs)		15,090			30,996			12,102			15,090			12,102
Other Real Estate Owned		196			316			316			196			316
Other Nonperforming Assets		0			20			6			0			6
Total Nonperforming Assets		15,286			31,332			12,424			15,286			12,424
Performing Troubled Debt Restructurings		5,121			4,973			5,237			5,121			5,237
Nonperforming Troubled Debt Restructurings (included in nonperforming loans)		6,218			6,093			6,476			6,218			6,476
Total Troubled Debt Restructurings		11,339			11,066			11,713			11,339			11,713
Individually Analyzed Loans		25,581			41,148			20,177			25,581			20,177
Non-Individually Analyzed Watch List Loans		208,881			217,386			265,970			208,881			265,970
Total Individually Analyzed and Watch List Loans		234,462			258,534			286,147			234,462			286,147
Gross Charge Offs		5,390			90			688			5,983			5,253
Recoveries		115			125			429			2,221			1,239
Net Charge Offs/(Recoveries)		5,275			(35	)		259			3,762			4,014
Net Charge Offs/(Recoveries) to Average Loans		0.49	%		0.00	%		0.02	%		0.09	%		0.09	%
Credit Loss Reserve to Loans (2)		1.58	%		1.72	%		1.32	%		1.58	%		1.32	%
Credit Loss Reserve to Loans, Excluding PPP Loans (2) (3)		1.59	%		1.76	%		1.45	%		1.59	%		1.45	%
Credit Loss Reserve to Nonperforming Loans (2)		449.13	%		235.67	%		507.42	%		449.13	%		507.42	%

	Three Months Ended									Twelve Months Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
		2021			2021			2020			2021			2020
Credit Loss Reserve to Nonperforming Loans and Performing TDRs (2)		335.33	%		203.08	%		354.17	%		335.33	%		354.17	%
Nonperforming Loans to Loans		0.35	%		0.73	%		0.26	%		0.35	%		0.26	%
Nonperforming Assets to Assets		0.23	%		0.50	%		0.21	%		0.23	%		0.21	%
Total Individually Analyzed and Watch List Loans to Total Loans		5.47	%		6.10	%		6.15	%		5.47	%		6.15	%
Total Individually Analyzed and Watch List Loans to Total Loans, Excluding PPP Loans (3)		5.50	%		6.23	%		6.75	%		5.50	%		6.75	%
OTHER DATA
Full Time Equivalent Employees		582			592			585			582			585
Offices		51			51			50			51			50

(1) Core deposits equals deposits less brokered deposits
(2) Beginning January 1, 2021 calculation is based on the current expected credit loss methodology. Prior to January 1, 2021 calculation was based on the incurred loss methodology.
(3) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Financial Measures"
(4) Capital ratios for December 31, 2021 are preliminary until the Call Report is filed.

CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
	December 31, 2021			December 31, 2020
	(Unaudited)
ASSETS
Cash and due from banks	$	51,830		$	74,457
Short-term investments		631,410			175,470
Total cash and cash equivalents		683,240			249,927

Securities available-for-sale (carried at fair value)		1,398,558			734,845
Real estate mortgage loans held-for-sale		7,470			11,218

Loans, net of allowance for credit losses* of $67,773 and $61,408		4,220,068			4,587,748

Land, premises and equipment, net		59,309			59,298
Bank owned life insurance		97,652			95,227
Federal Reserve and Federal Home Loan Bank stock		13,772			13,772
Accrued interest receivable		17,674			18,761
Goodwill		4,970			4,970
Other assets		54,610			54,669
Total assets	$	6,557,323		$	5,830,435


LIABILITIES
Noninterest bearing deposits	$	1,895,481		$	1,538,331
Interest bearing deposits		3,839,926			3,498,474
Total deposits		5,735,407			5,036,805

Borrowings
Federal Home Loan Bank advances		75,000			75,000
Miscellaneous borrowings		0			10,500
Total borrowings		75,000			85,500

Accrued interest payable		2,619			5,959
Other liabilities		39,391			44,987
Total liabilities		5,852,417			5,173,251

STOCKHOLDERS’ EQUITY
Common stock: 90,000,000 shares authorized, no par value
25,777,609 shares issued and 25,300,793 outstanding as of December 31, 2021
25,713,408 shares issued and 25,239,748 outstanding as of December 31, 2020		120,615			114,927
Retained earnings		583,134			529,005
Accumulated other comprehensive income		16,093			27,744
Treasury stock, at cost (476,816 shares and 473,660 shares as of December 31, 2021 and 2020, respectively)		(15,025	)		(14,581	)
Total stockholders’ equity		704,817			657,095
Noncontrolling interest		89			89
Total equity		704,906			657,184
Total liabilities and equity	$	6,557,323		$	5,830,435

Beginning January 1, 2021 calculation is based on the current expected credit loss methodology. Prior to January 1, 2021 calculation was based on the incurred loss methodology.

CONSOLIDATED STATEMENTS OF INCOME (unaudited - in thousands, except share and per share data)
	Three Months Ended December 31,					Twelve Months Ended December 31,
		2021			2020		2021		2020
NET INTEREST INCOME
Interest and fees on loans
Taxable	$	41,253		$	45,779	$	170,081	$	176,538
Tax exempt		146			105		470		647
Interest and dividends on securities
Taxable		2,604			1,554		9,086		6,973
Tax exempt		4,118			2,340		13,033		8,577
Other interest income		201			76		549		368
Total interest income		48,322			49,854		193,219		193,103

Interest on deposits		3,240			5,018		14,827		29,342
Interest on borrowings
Short-term		0			48		7		506
Long-term		75			75		297		247
Total interest expense		3,315			5,141		15,131		30,095

NET INTEREST INCOME		45,007			44,713		178,088		163,008

Provision for credit losses*		0			920		1,077		14,770

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		45,007			43,793		177,011		148,238

NONINTEREST INCOME
Wealth advisory fees		2,317			1,874		8,750		7,468
Investment brokerage fees		415			522		1,975		1,670
Service charges on deposit accounts		2,840			2,658		10,608		10,110
Loan and service fees		3,099			2,615		11,922		10,085
Merchant card fee income		797			475		3,023		2,408
Bank owned life insurance income		366			629		2,467		2,105
Interest rate swap fee income		101			984		1,035		5,089
Mortgage banking income (loss)		(338	)		966		1,418		3,911
Net securities gains		0			70		797		433
Other income		112			989		2,725		3,564
Total noninterest income		9,709			11,782		44,720		46,843

NONINTEREST EXPENSE
Salaries and employee benefits		13,505			13,717		57,882		49,413
Net occupancy expense		1,385			1,515		5,728		5,851
Equipment costs		1,396			1,550		5,530		5,766
Data processing fees and supplies		2,982			3,128		12,674		11,864
Corporate and business development		1,054			769		4,262		3,093
FDIC insurance and other regulatory fees		535			483		2,242		1,707
Professional fees		2,006			1,808		7,064		5,314
Other expense		2,063			1,942		8,905		8,197
Total noninterest expense		24,926			24,912		104,287		91,205

INCOME BEFORE INCOME TAX EXPENSE		29,790			30,663		117,444		103,876
Income tax expense		5,507			6,071		21,711		19,539
NET INCOME	$	24,283		$	24,592	$	95,733	$	84,337

	Three Months Ended December 31,					Twelve Months Ended December 31,
		2021			2020		2021		2020

BASIC WEIGHTED AVERAGE COMMON SHARES	$	25,486,484		$	25,424,307	$	25,475,994	$	25,469,242

BASIC EARNINGS PER COMMON SHARE	$	0.95		$	0.97	$	3.76	$	3.31

DILUTED WEIGHTED AVERAGE COMMON SHARES	$	25,669,042			25,519,643	$	25,620,105		25,573,941

DILUTED EARNINGS PER COMMON SHARE	$	0.95		$	0.97	$	3.74	$	3.30

Beginning January 1, 2021 calculation is based on the current expected credit loss methodology. Prior to January 1, 2021 calculation was based on the incurred loss methodology.

LAKELAND FINANCIAL CORPORATION
LOAN DETAIL
(unaudited, in thousands)

	December 31, 2021					September 30, 2021					December 31, 2020
Commercial and industrial loans:
Working capital lines of credit loans	$	652,861		15.2	%	$	659,166		15.5	%	$	626,023		13.5	%
Non-working capital loans		736,608		17.2			782,618		18.5			1,165,355		25.0
Total commercial and industrial loans		1,389,469		32.4			1,441,784		34.0			1,791,378		38.5

Commercial real estate and multi-family residential loans:
Construction and land development loans		379,813		8.9			378,716		8.9			362,653		7.8
Owner occupied loans		739,371		17.2			740,836		17.4			648,019		13.9
Nonowner occupied loans		588,458		13.7			582,019		13.7			579,625		12.5
Multifamily loans		247,204		5.8			252,983		6.0			304,717		6.5
Total commercial real estate and multi-family residential loans		1,954,846		45.6			1,954,554		46.0			1,895,014		40.7

Agri-business and agricultural loans:
Loans secured by farmland		206,331		4.8			152,099		3.5			195,410		4.2
Loans for agricultural production		239,494		5.6			171,981		4.1			234,234		5.0
Total agri-business and agricultural loans		445,825		10.4			324,080		7.6			429,644		9.2

Other commercial loans		73,490		1.7			83,595		2.0			94,013		2.0
Total commercial loans		3,863,630		90.1			3,804,013		89.6			4,210,049		90.4

Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		176,561		4.1			173,689		4.1			167,847		3.6
Open end and junior lien loans		156,238		3.6			161,941		3.8			163,664		3.5
Residential construction and land development loans		11,921		0.3			12,542		0.3			12,007		0.3
Total consumer 1-4 family mortgage loans		344,720		8.0			348,172		8.2			343,518		7.4

Other consumer loans		82,755		1.9			92,169		2.2			103,616		2.2
Total consumer loans		427,475		9.9			440,341		10.4			447,134		9.6
Subtotal		4,291,105		100.0	%		4,244,354		100.0	%		4,657,183		100.0	%
Less: Allowance for credit losses (1)		(67,773	)				(73,048	)				(61,408	)
Net deferred loan fees		(3,264	)				(4,901	)				(8,027	)
Loans, net	$	4,220,068				$	4,166,405				$	4,587,748

(1) Beginning January 1, 2021 calculation is based on the current expected credit loss methodology. Prior to January 1, 2021 calculation was based on the incurred loss methodology.

LAKELAND FINANCIAL CORPORATION
DEPOSITS AND BORROWINGS
(unaudited, in thousands)

	December 31, 2021		September 30, 2021		December 31, 2020
Noninterest bearing demand deposits	$	1,895,481	$	1,762,021	$	1,538,331
Savings and transaction accounts:
Savings deposits		409,343		375,993		312,702
Interest bearing demand deposits		2,601,065		2,411,722		2,160,953
Time deposits:
Deposits of $100,000 or more		627,123		658,050		785,238
Other time deposits		202,395		206,852		239,581
Total deposits	$	5,735,407	$	5,414,638	$	5,036,805
FHLB advances and other borrowings		75,000		75,000		85,500
Total funding sources	$	5,810,407	$	5,489,638	$	5,122,305

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

	Three Months Ended December 31, 2021							Three months ended September 30, 2021							Three Months Ended December 31, 2020
(fully tax equivalent basis, dollars in thousands)	Average Balance			Interest Income		Yield (1)/ Rate		Average Balance			Interest Income		Yield (1)/ Rate		Average Balance			Interest Income		Yield (1)/ Rate
Earning Assets
Loans:
Taxable (2)(3)	$	4,260,960		$	41,253	3.84	%	$	4,339,792		$	43,025	3.93	%	$	4,604,704		$	45,779	3.96	%
Tax exempt (1)		18,302			184	3.99			14,312			150	4.16			13,208			132	3.97
Investments: (1)
Available-for-sale		1,336,492			7,817	2.32			1,201,657			6,971	2.30			657,990			4,516	2.73
Short-term investments		2,201			1	0.11			2,304			0	0.00			2,334			1	0.17
Interest bearing deposits		530,130			200	0.15			351,769			125	0.14			223,269			75	0.13
Total earning assets	$	6,148,085		$	49,455	3.19	%	$	5,909,834		$	50,271	3.37	%	$	5,501,505		$	50,503	3.65	%
Less: Allowance for credit losses (4)		(72,972	)						(72,157	)						(61,438	)
Nonearning Assets
Cash and due from banks		72,908							67,715							66,851
Premises and equipment		59,712							59,824							59,942
Other nonearning assets		189,664							188,118							180,958
Total assets	$	6,397,397						$	6,153,334						$	5,747,818

Interest Bearing Liabilities
Savings deposits	$	384,229		$	74	0.08	%	$	369,191		$	71	0.08	%	$	297,832		$	57	0.08	%
Interest bearing checking accounts		2,563,557			1,854	0.29			2,390,462			1,712	0.28			2,058,069			1,585	0.31
Time deposits:
In denominations under $100,000		203,706			388	0.76			211,911			457	0.86			242,846			792	1.30
In denominations over $100,000		633,345			924	0.58			691,143			1,239	0.71			878,684			2,584	1.17
Miscellaneous short-term borrowings		134			0	0.00			0			0	0.00			16,141			48	1.18
Long-term borrowings and subordinated debentures		75,000			75	0.40			75,000			75	0.40			75,000			75	0.40
Total interest bearing liabilities	$	3,859,971		$	3,315	0.34	%	$	3,737,707		$	3,554	0.38	%	$	3,568,572		$	5,141	0.57	%
Noninterest Bearing Liabilities
Demand deposits		1,800,700							1,681,565							1,482,012
Other liabilities		44,330							45,810							52,557
Stockholders' Equity		692,396							688,252							644,677
Total liabilities and stockholders' equity	$	6,397,397						$	6,153,334						$	5,747,818
Interest Margin Recap
Interest income/average earning assets					49,455	3.19						50,271	3.37						50,503	3.65
Interest expense/average earning assets					3,315	0.21						3,554	0.24						5,141	0.37
Net interest income and margin				$	46,140	2.98	%				$	46,717	3.13	%				$	45,362	3.28	%

(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 $1.13 million, $976,000 and $649,000 in the three-month periods ended December 31, 2021, September 30, 2021 and December 31, 2020, respectively.
(2) Loan fees are included as taxable loan interest income. Net loan fees attributable to PPP loans were $2.02 million, $3.57 million, and $5.21 million for the three-month periods ended December 31, 2021, September 30, 2021 and December 31, 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.
(4) Beginning January 1, 2021 calculation is based on the current expected credit loss methodology. Prior to January 1, 2021 calculation was based on the incurred loss methodology.

Reconciliation of Non-GAAP Financial Measures

The allowance for credit losses (1) to total loans, excluding PPP loans, and total individually analyzed 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 credit losses (1).

A reconciliation of these non-GAAP measures is provided below (dollars in thousands).

	Three Months Ended
	December 31, 2021			September 30, 2021			December 31, 2020
Total Loans	$	4,287,841		$	4,239,453		$	4,649,156
Less: PPP Loans		26,151			91,897			412,007
Total Loans, Excluding PPP Loans		4,261,690			4,147,556			4,237,149

Allowance for Credit Losses (1)	$	67,773		$	73,048		$	61,408

Credit Loss Reserve to Total Loans (1)		1.58	%		1.72	%		1.32	%
Credit Loss Reserve to Total Loans, Excluding PPP Loans (1)		1.59	%		1.76	%		1.45	%

Total Individually Analyzed and Watch List Loans	$	234,462		$	258,534		$	286,147

Total Individually Analyzed and Watch List Loans to Total Loans		5.47	%		6.10	%		6.15	%
Total Individually Analyzed and Watch List Loans to Total Loans, Excluding PPP Loans		5.50	%		6.23	%		6.75	%

(1) Beginning January 1, 2021 calculation is based on the current expected credit loss methodology. Prior to January 1, 2021 calculation was based on the incurred loss methodology.

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 tax. Tangible assets are calculated by excluding the balance of goodwill and other intangible assets from the calculation of total assets, net of deferred tax. Tangible book value per share is calculated by dividing tangible common equity by the number of shares outstanding 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, 2021			Sep. 30, 2021			Dec. 31, 2020			Dec. 31, 2021			Dec. 31, 2020
Total Equity	$	704,906		$	683,202		$	657,184		$	704,906		$	657,184
Less: Goodwill		(4,970	)		(4,970	)		(4,970	)		(4,970	)		(4,970	)
Plus: Deferred tax assets related to goodwill		1,176			1,176			1,176			1,176			1,176
Tangible Common Equity		701,112			679,408			653,390			701,112			653,390

Assets	$	6,557,323		$	6,222,916		$	5,830,435		$	6,557,323		$	5,830,435
Less: Goodwill		(4,970	)		(4,970	)		(4,970	)		(4,970	)		(4,970	)
Plus: Deferred tax assets related to goodwill		1,176			1,176			1,176			1,176			1,176
Tangible Assets		6,553,529			6,219,122			5,826,641			6,553,529			5,826,641

Ending common shares issued		25,488,508			25,486,032			25,424,307			25,488,508			25,424,307

Tangible Book Value Per Common Share	$	27.50		$	26.66		$	25.70		$	27.50		$	25.70

Tangible Common Equity/Tangible Assets		10.70	%		10.92	%		11.21	%		10.70	%		11.21	%

Net Interest Income	$	45,007		$	45,741		$	44,713		$	178,088		$	163,008
Plus: Noninterest income		9,709			11,114			11,782			44,720			46,843
Minus: Noninterest expense		(24,926	)		(25,967	)		(24,912	)		(104,287	)		(91,205	)

Pretax Pre-Provision Earnings	$	29,790		$	30,888		$	31,583		$	118,521		$	118,646

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, 2021			Sep. 30, 2021			Dec. 31, 2020			Dec. 31, 2021			Dec. 31, 2020
Total Average Earnings Assets	$	6,148,085		$	5,909,834		$	5,501,505		$	5,906,640		$	5,184,836
Less: Average Balance of PPP Loans		(62,910	)		(142,917	)		(503,041	)		(237,951	)		(376,785	)
Total Adjusted Earning Assets		6,085,175			5,766,917			4,998,464			5,668,689			4,808,051

Total Interest Income FTE	$	49,455		$	50,271		$	50,503		$	196,806		$	195,549
Less: PPP Loan Income		(2,182	)		(3,946	)		(6,509	)		(14,945	)		(12,832	)
Total Adjusted Interest Income FTE		47,273			46,325			43,994			181,861			182,717

Adjusted Earning Asset Yield, net of PPP Impact		3.08	%		3.19	%		3.50	%		3.21	%		3.80	%

Total Average Interest Bearing Liabilities	$	3,859,971		$	3,737,707		$	3,568,572		$	3,761,520		$	3,437,338
Less: Average Balance of PPP Loans		(62,910	)		(142,917	)		(503,041	)		(237,951	)		(376,785	)
Total Adjusted Interest Bearing Liabilities		3,797,061			3,594,790			3,065,531			3,523,569			3,060,553

Total Interest Expense FTE	$	3,315		$	3,554		$	5,141		$	15,131		$	30,095
Less: PPP Cost of Funds		(40	)		(90	)		(320	)		(595	)		(956	)
Total Adjusted Interest Expense FTE		3,275			3,464			4,821			14,536			29,139

Adjusted Cost of Funds, net of PPP Impact		0.21	%		0.24	%		0.38	%		0.26	%		0.61	%

Net Interest Margin FTE, net of PPP Impact		2.87	%		2.95	%		3.12	%		2.95	%		3.19	%

Lakeland Financial Reports Record Annual Performance

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