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2023 Report(888) 522-2265 lakecitybank.com LAKELAND FINANCIAL CORPORATION | 2019 ANNUAL REPORT It is the commonality and connectivity with our clients that contributes to our ability to be more than just a bank to them. Lake City Bank Shareholders, Clients and Community Partners: 2019 represented our tenth consecutive year of record net income and earnings per share. The Lake City Bank team is understandably proud of this financial performance as it reflects a decade of dedication and hard work. Additionally, we have reported record net income in 30 of the last 31 years. That said, we’d rather talk about the broader impact that we have had in the communities we serve. During our 147-year history, we’ve been properly focused on building sustainable and meaningful relationships with our clients and communities. We have never wavered from the understanding that our shareholders will benefit only if we focus first on our employees, communities and clients. That’s why we love this annual report. Every year we get another opportunity to talk about the relationships that we have built with our clients and our communities, because that’s what matters. Throughout this annual report, you will see a recurring theme in our client features that focuses on our consultative way of doing business. We try to be more than a financial services provider to our clients and are pleased that several of them featured in this report reflect on our role as value-added advisor and consultant. In a very crowded and competitive environment, our partnership approach to working with clients is a true differentiator and will remain at the forefront of our relationship building strategy. When we think about our core values of Honesty, Community Service, Customer Service, Professional Development, Stewardship, Profitability and Independence, it is refreshing to recognize that our clients share many of the same values. It is the commonality and connectivity with our clients that contributes to our ability to be more than just a bank to them. This year, stewardship stood out as a value both in our client stories and in our activities over the course of 2019. While stewardship might be a bit old-fashioned and hard to define, our clients helped us illustrate the concept. Several of our featured clients observed that we are good stewards of their resources. We’re proud of that characterization of our relationship but it reminds us that we share a lot in common with our clients as well. Speaking of stewardship and community service, we recently initiated the final phase of a $16 million capital investment in our Downtown Warsaw campus. Today, nearly 350 Lake City Bank team members work in the seven buildings that represent our headquarters presence in Warsaw. Further, over the past decade, we have remodeled every out-of-date office in the Lake City Bank system to bring all of them up to current branding and operational standards. This substantial capital commitment is a statement of our plans for the future and a reflection of our success in the past. We are proud of our Hoosier roots. Make no mistake, we understand that our role as a community bank has evolved dramatically 2 over the past decade. We realized long ago we have a singular focus on them. We are proud that both our retail office delivery channel and of that, just as we are proud of our 147-year our growing digital delivery channel would history of independence. determine our reputation as a community bank in the future. As a result, we’ve undertaken this update and modernization of our offices, while at the same time committing significant capital and resources to our expanding technology platforms. The speed of evolution on the technology front is a tremendous challenge to the community banking model. We can’t afford to be “good enough” in delivering digital solutions to our retail and commercial clients. Our shareholders saw a 22% increase in our stock price in 2019. While this is certainly rewarding, we remain focused on our performance over the long term. A dollar invested in Lakeland Financial on December 31, 2000, was worth $10.74 on December 31, 2019. Including the impact of our consistent dividend payments, our total return was 1,819% over that same 19-year period. Even more challenging, today’s market is We are well positioned for the future. We have filled with both traditional commercial bank invested in the technology to remain relevant competition and rapidly emerging Fintech and to our clients. We have built a cohesive team non-bank competitors. In 2020, we will continue focused on the right things. We have a strategic to focus on our competitive positioning and plan built around the challenges in front of us. will make a commitment to our next generation Finally, we have a proven history of shareholder of digital services for both our retail and value creation and a commitment to our commercial clients. We will remain competitive communities. We are grateful for the support of on the technology front, regardless of the size our clients, communities, employees of our competitor’s balance sheet. and shareholders. Speaking of competition, according to the FDIC, we entered the 21st century with more than 8,500 commercial banks in the United States. Today, there are less than 4,600 banks in the country. Over the last two decades, we have witnessed a significant consolidation in our industry with nearly 50% fewer banks today than in 1999. During the same period, Lake City Bank has grown from $1.0 billion in total assets to $4.9 billion today, an increase of 376%. All of this growth has come from organic balance sheet expansion without a single acquisition. Why does that matter? It matters because we have grown our balance sheet one loan and one deposit at a time. It is not the easiest or the fastest way to grow, but it has proven to be a very healthy way to grow. As a result, we know our clients and we know our communities, and David M. Findlay President and Chief Executive Officer 3 Management Committee Board of Directors David M. Findlay President and Chief Executive Officer Michael E. Gavin Executive Vice President Chief Credit Officer Lisa M. O’Neill Executive Vice President Chief Financial Officer The continuity of leadership represented by our Management Committee is critical to our success. It’s a powerful reflection of the consistency and strength of our historical performance and of our confidence in the future. We recognize the dynamic challenges ahead of the bank as technology continues to change our industry and are laser-focused on the key role that technological innovation will play in our future. While we are competitive today, we must look forward to ensure that we remain at the forefront of our technology-based solutions. We also recognize that our relationship-driven growth strategy is as relevant today as it was when the bank was founded in 1872. Technology is critical, but connectivity with our clients is just as important. In coordination with our Senior Leadership Council, and all of our Lake City Bank team, we will make sure to stay focused on the execution driven principles that have driven our performance over the last 147 years. Eric H. Ottinger Executive Vice President Commercial Banking Kristin L. Pruitt Executive Vice President Chief Administrative Officer Jill A. DeBatty Senior Vice President People Development J. Rickard Donovan Senior Vice President General Counsel Stephanie R. Leniski Senior Vice President Retail Banking Jonathan P. Steiner Senior Vice President Wealth Advisory Group and Brokerage Annually, our Board of Directors spends an offsite day focused on the strategic direction of the bank. In 2019, our regional leadership teams from our five markets spent the day with the board reviewing their respective strategies and plans. Our board has geographical representation from every market, so it was a great opportunity to ensure that our plans for each market were aligned and consistent with the tremendous market knowledge that our board brings to the table. Our Board of Directors is much more than a governance organization. It is an extension of our business development teams and a true partner in our growth and success. Front (left to right) Emily E. Pichon Chairman ExTech Plastics, Inc. Officer and Director Olive B Cole Foundation and M E Raker Foundation, Inc. Darrianne P. Christian Civic Leader Center (left to right) Ronald D. Truex Chairman Creighton Brothers Robert E. Bartels, Jr. Former President and Chief Executive Officer Martin’s Super Markets David M. Findlay President and Chief Executive Officer Lakeland Financial Corporation and Lake City Bank Back (Left to Right) M. Scott Welch Chief Executive Officer Welch Packaging Group Thomas A. Hiatt Former Founding Partner Centerfield Capital Partners, LP Michael L. Kubacki Chairman Lakeland Financial Corporation and Lake City Bank Steven D. Ross Former President Heartland Coffee Company Brian J. Smith Co-Chief Executive Officer Heritage Group, Inc. Blake W. Augsburger Founder and Chief Executive Officer LEA Professional Bradley J. Toothaker President and Chief Executive Officer Bradley Company Daniel F. Evans, Jr. President Emeritus Indiana University Health 4 5 Hochstetler Grain Equipment Inc. NAPPANEE | CLIENT SINCE 1991 Questa Education Foundation FORT WAYNE | CLIENT SINCE 2009 Above, left to right: Rod Hooley, Vice President, Commercial Banking Officer; Jeremy Yoder, Director, M-Line Electric; Larry Slabaugh, Chief Executive Officer; Dave Slabaugh, President; Kevin Herschberger, Vice President; and Chad Stoltzfus, Senior Vice President, Commercial Central Regional Manager. At left: Dave Slabaugh, President; Larry Slabaugh, Chief Executive Officer; Jeremy Yoder, Director, M-Line Electric; and Kevin Herschberger, Vice President. Above, left to right: Denise Ramsey, Retail Banking Officer; Emily Pichon, Cole Foundation, Questa Board Vice Chair; Gary Adkins, President, Parkview Noble Hospital, Questa Board Chair; Jenny King, Vice President, Personal Trust Officer; Andy Haddock, Senior Vice President, Chief Investment Officer; and Marc Levy, Executive Director. At left: Marc Levy, Executive Director; Emily Pichon, Cole Foundation, Questa Board Vice Chair; and Gary Adkins, President, Parkview Noble Hospital, Questa Board Chair. Travel through farm country in Indiana and you’ll undoubtedly notice grain storage and handling systems dotting the countryside. At first glance, they seem quite similar, but a visit to Hochstetler Grain Equipment, Inc. will show you that they are anything but. At Hochstetler, which has been designing, installing and providing service for grain handling systems for more than 50 years, creating the system that is just right for each customer takes careful planning and design, followed by a quality build. But that isn’t the end of the process. Hochstetler’s customer relationships continue for decades with long-term service, upgrades and expansion. Hochstetler prides itself on taking care of each client individually over the long term. “We’re very service oriented,” said Dave Slabaugh, President. “Everything we build is carefully designed based on our customers’ needs.” Hochstetler’s long-term relationships extend to Lake City Bank, where it has been a customer since 1991. The company has a commercial line of credit, commercial deposits and uses a variety of technology-driven treasury management solutions and merchant services. “We like Lake City Bank,” said Larry Slabaugh, Chief Executive Officer. “Other banks have tried to come in here and get our business, and they’ll keep trying, but we’re not interested. The bank has done a good job and we appreciate it.” Since 1973, the Questa Education Foundation has grown from increase access to post-secondary education, help students funding post-secondary education to a foundation creatively complete their programs with less debt, and to retain talent in addressing the larger issue of economic success in the 11 Northeast Indiana,” said Marc Levy, Executive Director. Lake counties of Northeast Indiana. Over the years, Questa has City Bank provides investment management and banking evolved by working with businesses to design programs services to Questa. “It’s been a good fit,” Levy said. “We’re that fund education and training for employees, often in the both local organizations that care about improving the business form of forgivable loans, which significantly reduce student environment in Northeast Indiana.” The formula seems to be debt. Northeast Indiana benefits from a more highly trained working. Questa has helped more than 1,000 scholars since workforce, and talent that stays in the area. “Our goals are to 2007, with graduation rates nearly double the national average. 6 7 Stauffer Dental Associates ELKHART | CLIENT SINCE 2015 Patriot Products, LLC FRANKLIN | CLIENT SINCE 2017 Above, left to right: Ron BonDurant, Vice President, Commercial Banking Officer; Randy Stauffer, DDS; Melissa Blosser, Vice President, Retail Banking Regional Manager; Richard Delks, Vice President, Wealth Advisor; and Randy Crouch, Vice President, Trust Officer and Retirement Services Manager. At left: Randy Stauffer, DDS. Above, left to right, back row: Bill Redman, Senior Vice President, Commercial Indianapolis Regional Manager; Amy Counts, Vice President, Commercial Banking Officer; Jerry Johnson, President; Mike Saunders, Vice President; and Jill Jackson, Chief Financial Officer. Front row, left to right: Daniel Johnson, Vice President, Marketing; Myrta McQueen, Business Operations Manager; and Joe Waltermann, Vice President, Retail Banking Officer. At left: Mike Saunders, Vice President; Jerry Johnson, President; and Daniel Johnson, Vice President, Marketing. Randy Stauffer, DDS, started his dental practice in Elkhart in 1996, just after graduating from dental school. While his business has grown in size, serving individuals and families in Elkhart and surrounding areas, Stauffer and his staff have worked hard to expand the services they offer as well. The latest advances in dental care and cosmetic dentistry are available at Stauffer Dental Associates, but its goal has remained traditional— providing the best care and comfort to patients. “I really enjoy being a dentist,” Stauffer said. “It’s a privilege for me to have anyone place their dental health care needs in my hands, and it’s a responsibility I take very seriously.” Stauffer has worked with Lake City Bank since 2015. The bank provides commercial loans and deposits, and a 401(k) plan for employees to the business. On the personal side, Lake City Bank provides personal accounts, including services from Lake City Bank’s Wealth Advisory Group. “Working with Lake City Bank has been a good fit for me and for my practice,” Stauffer said. “I’ve found that the people I work with at Lake City give the same care and attention to my business as I hope my patients experience from me and my team.” Patriot Products may have started small—creating a single product in a barn in Franklin, Indiana—but the company has grown in more ways than one since its entrepreneurial start in 2008. Patriot Products specializes in the design and build of custom military applications and products. Its products range from both ground and full-scale aerial targets for shooting ranges, to robotics, to site-built, realistic villages designed for urban combat training. Patriot Products is a trusted partner to the U.S. Military, United States Special Operations Command (SOCOM), the Department of Defense, state and local governments and U.S. allies around the world based on their quality products, design and commitment to client satisfaction. “We build relationships with our clients that last for years because they’re not based on price, but rather on service after the sale,” said Jerry Johnson, President. Patriot Products chose Lake City Bank for much the same reason. The company has loan products, technology-driven treasury management products, and credit cards with Lake City Bank. “The bank offered more than we expected right from the start,” said Johnson. “Others didn’t understand the business we were building, but Lake City Bank listened and understood. As soon as we met Amy, we felt comfortable.” 8 9 Minnick Services Corporation FORT WAYNE | CLIENT SINCE 2009 Pike Lumber Company, Inc. AKRON | CLIENT SINCE 1994 Above, left to right: Grant Daily, Vice President, Commercial Banking Officer; Jani MacDowell, Chief Financial Officer; Grace Minnick; Mark Minnick, Chief Executive Officer; Cammy Treadway, Senior Vice President, Commercial East Regional Manager; Alice Minnick, President; and Matt Minnick, Production Manager. At left: Alice Minnick, President; and Mark Minnick, Chief Executive Officer. Above, left to right: Rich Solano, Corporate Treasurer; Craig Brouyette, Executive Vice President; Jane Murphy, Vice President, Retail Banking Officer; Samantha Howard, Vice President of Administration; Jim Steen, President; and Nate Conley, Vice President, Commercial Banking Officer. At left: Rich Solano, Corporate Treasurer; Samantha Howard, Vice President of Administration; Jim Steen, President; and Craig Brouyette, Executive Vice President. Minnick Services has grown quite a bit since 1978. The Fort Wayne- based company serves 36 counties in Northeast and Central Indiana, as well as Northeast Illinois. Minnick manufactures precast concrete products including burial vaults, concrete manhole structures, retaining walls, and a precast custom utility system for installing light poles. Minnick prides itself on supplying the highest quality products that are manufactured using specialized concrete formulations that provide the strength and durability required for each application. Minnick’s employees are a big part of its success—its team includes many family connections and second-generation workers proud to join the company. Minnick has worked with Lake City Bank since 2009, using commercial loans, deposits and a variety of treasury management solutions in addition to personal accounts. Perhaps most important, the company relies on Lake City Bank for more than financial solutions. “We use the bank like it’s supposed to be used,” said Mark Minnick, Chief Executive Officer. “We use Lake City Bank, and Grant Daily in particular, as a sounding board and advisor to help us make wise decisions. We have a responsibility to be good stewards of our resources and Lake City Bank is a big part of that.” Pike Lumber provides fine, kiln-dried North American hardwood lumber for clients across the country and across the world. Its technology-driven production facilities enable the company to produce high quality lumber based on exacting customer specifications. Pike Lumber owns and manages forestland in Indiana, Ohio and Michigan, using university-trained foresters to improve and harvest timber according to sustainable forestry management methods. While Pike Lumber, in business since 1904, is Indiana’s largest manufacturer and distributer of kiln-dried hardwood lumber, the company’s growth has revolved around quality lumber and forest stewardship. “We manage forestland—our own and our customers’—based first and foremost on good stewardship,” said Jim Steen, President. “While we want to meet goals, including income, from the land we manage, we also look to sustain and improve forestland over time.” Pike Lumber has worked with Lake City Bank since 1994. In addition to a line of credit, the bank also provides credit cards, Health Savings Accounts for employees, and a suite of technology-driven treasury management solutions. “We’re pleased with our relationship with Lake City Bank,” Steen said. “They understand our business and our needs very well.” 10 11 Northern Indiana Axle and Financial Wellness Partner Program ACTIVE SINCE 2019 Iotron Industries USA COLUMBIA CITY | CLIENT SINCE 2010 Above, left to right: Ken Mullet, Owner; Kylee Coughenour, Financial Wellness Officer; Katina Stephenson, Assistant Vice President, Retail Banking Officer; Meg Waddell, Vice President, Retail Banking Regional Manager; Steven Mullet, Senior Production Manager; and Marcus Mullet, Purchasing Manager. At left: Kylee Coughenour, Financial Wellness Officer; and Meg Waddell, Vice President, Retail Banking Regional Manager. Above, left to right: Cameron Plew, Vice President, Commercial Banking Officer; Aaron Starkey, Vice President of U.S. Operations; Jeff Blakely, General Manager; Joe Kessie, Senior Vice President, Commercial South Regional Manager; and Tino Pereira, President and Chief Executive Officer. At left: Aaron Starkey, Vice President of U.S. Operations; Jeff Blakely, General Manager; and Tino Pereira, President and Chief Executive Officer. Northern Indiana Axle in Nappanee has been a Lake City Bank client since 1989. The company has been growing since Ken Mullet, Owner, purchased it in 1989, when the shop made axles for horse-drawn buggies in an all-manual process. Fast forward to today, and Northern Indiana Axle has expanded to a larger shop, more employees and nearly two dozen high-tech machining tools for producing a variety of parts. “We decided that we needed to get on with it or get out of it,” Mullet said. “We needed to expand our shop and our capabilities to compete.” Lake City Bank helped, providing business accounts, commercial loans, and personal accounts. More recently, the bank was able to provide something extra for Northern Indiana Axle’s employees—its new Financial Wellness Partner Program. “We developed this financial literacy program because we knew our customers wanted to help employees succeed financially in addition to succeeding at work,” said Meg Waddell, Vice President, Retail Banking Regional Manager, who led the team that developed the program. “We’ve trained team members in every branch to deliver workshops related to financial wellness.” The program, offered at no cost, includes 14 different topics. Employers can choose to offer any number of workshops and Lake City Bank will lead the class and provide all the materials. “We’ve had a great response to the program,” Waddell said. “It’s a benefit that employers can offer at no cost to them, and it can really make a difference for employees. We’re very happy with that.” Iotron Industries USA partnered with Lake City Bank right from the start when it decided to locate in Indiana in 2010. Iotron uses electron beam technology, including its patented IMPELA® service, to sterilize materials using a process that produces no waste since it is powered by electricity (unlike methods that use radioactive or other hazardous materials). Northern Indiana has proven to be a good location for the company, as its technology is particularly well suited to sterilization of medical equipment and agricultural products, both important industries in the area. Iotron was looking for the right financial partner when it moved to the area, and Lake City Bank had the collaborative, family environment they were looking for. “We see Lake City Bank as a trusted partner and like how the bank focused on developing a sustainable long- term relationship with us,” said Tino Pereira, President and Chief Executive Officer. “Cameron and Joe provide great support and connection with an intent to help us grow our business. They’re responsive and receptive to the goals we want to accomplish.” Iotron looks to Lake City Bank to provide commercial loans and deposits and technology-driven treasury management solutions, in addition to personal accounts. 12 13 Five Year Summary of Financial Highlights (in thousands, except share and per share data) Condensed Consolidated Balance Sheets (Years ended December 31) (in thousands, except share data) End of Period Balances Assets Deposits Loans, net of Deferred Fees Allowance for Loan Losses Total Equity Average Balances Assets Total Assets Earning Assets Investments - Available-for-Sale Loans, net of Deferred Fees Liabilities and Equity Total Deposits Interest Bearing Deposits Interest Bearing Liabilities Total Equity Income Statement Data Net Interest Income Net Interest Income - Fully Tax Equivalent Provision for Loan Loss Non Interest Income Non Interest Expense Net Income Per Share Data Basic Net Income Per Common Share Diluted Net Income Per Common Share Cash Dividends Per Common Share Dividend Payout Book Value Per Common Share Basic Weighted Average Common Shares Outstanding Diluted Weighted Average Common Shares Outstanding Key Ratios Return on Average Assets Return on Average Total Equity Average Equity to Average Assets Net Interest Margin Efficiency Net Charge Offs to Average Loans Loan Loss Reserve to Total Loans Loan Loss Reserve to Nonperforming Loans Nonperforming Assets to Total Loans 2019 $4,946,745 4,133,819 4,065,828 50,652 598,100 $4,941,904 4,656,707 603,580 3,974,532 $4,242,524 3,298,406 3,390,512 562,601 $155,047 157,176 3,235 44,997 89,424 87,047 $3.40 3.38 1.16 34.32% $23.34 2018 $4,875,254 4,044,065 3,914,745 48,453 521,704 2017 $4,682,976 4,008,655 3,818,459 47,121 468,667 2016 $4,290,025 3,577,912 3,470,927 43,718 427,067 2015 $3,766,286 3,183,421 3,080,929 43,610 392,901 $4,758,392 4,461,366 562,385 3,843,912 $4,443,106 4,183,112 530,275 3,610,908 $4,039,719 3,799,963 493,656 3,225,635 $4,093,894 3,235,867 3,382,507 487,062 $3,757,209 2,967,902 3,178,439 450,796 $3,477,816 2,753,466 2,872,691 416,034 $151,271 153,088 6,400 40,302 86,229 80,441 $3.18 3.13 1.00 31.95% $20.62 $135,892 139,015 3,000 36,040 79,298 57,330 $2.28 2.23 0.85 38.12% $18.60 $118,481 120,719 1,150 32,864 72,978 52,084 $2.08 2.05 0.73 35.61% $17.01 $3,597,190 3,384,178 476,153 2,885,568 $3,088,598 2,478,674 2,589,915 378,106 $105,927 107,902 0 31,479 68,206 46,367 $1.86 1.84 0.63 34.36% $15.74 25,588,404 25,758,893 25,288,533 25,181,208 25,056,095 24,926,354 25,727,831 25,663,381 25,460,727 25,245,569 1.76% 15.47% 11.38% 3.38% 44.70% 0.03% 1.25% 270.58% 0.47% 1.69% 16.51% 10.24% 3.43% 45.01% 0.13% 1.24% 1.29% 12.72% 10.15% 3.33% 46.11% -0.01% 1.23% 1.29% 12.52% 10.30% 3.18% 48.22% 0.03% 1.26% 1.29% 12.26% 10.51% 3.19% 49.64% 0.09% 1.42% 667.40% 500.91% 653.31% 334.04% 0.19% 0.25% 0.20% 0.43% The following selected data has been taken from the Company’s consolidated financial statements. Refer to Lakeland Financial Corporation’s Annual Report on Form 10-K for the year 2019 for a complete set of consolidated financials. 14 Assets Cash and due from banks Short-term investments Total cash and cash equivalents Securities available-for-sale (carried at fair value) Real estate mortgage loans held-for-sale Total loans Less: Allowance for loan losses Net Loans Land, premises and equipment, net Bank owned life insurance Federal Reserve and Federal Home Loan Bank stock Accrued interest receivable Goodwill Other assets Total Assets Liabilities Non Interest bearing deposits Interest bearing deposits Total deposits Accrued interest payable and other liabilities FHLB advances and other borrowings Subordinated debentures Total Liabilities Stockholders’ Equity Common stock: 90,000,000 shares authorized, no par value Retained earnings Accumulated other comprehensive income (loss) Treasury stock Total Stockholders’ Equity Total Noncontrolling Interest Total Equity Total Liabilities and Stockholders’ Equity End of period shares issued End of period shares outstanding 2019 $68,605 30,776 99,381 608,233 4,527 4,065,828 50,652 4,015,176 60,154 83,848 13,772 15,391 4,970 41,293 2018 $192,290 24,632 216,922 585,549 2,293 3,914,745 48,453 3,866,292 58,097 77,106 13,772 15,518 4,970 34,735 $4,946,745 $4,875,254 $983,307 3,150,512 4,133,819 44,826 170,000 0 4,348,645 114,858 475,247 12,059 (4,153) 598,011 89 598,100 $4,946,745 25,623,016 25,444,275 $946,838 3,097,227 4,044,065 33,002 245,555 30,928 4,353,550 112,383 419,179 (6,191) (3,756) 521,615 89 521,704 $4,875,254 25,301,732 25,128,773 Report of Independent Registered Public Accounting Firm Stockholders and the Board of Directors of Lakeland Financial Corporation, Warsaw, Indiana See Annual Report on Form 10-K We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of Lakeland Financial Corporation as of December 31, 2019 and 2018, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019 (not presented herein); and in our report dated February 24, 2020, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated financial statements is fairly stated, in all material respects, in relation to the December 31, 2019 consolidated financial statements from which it has been derived. Crowe LLP, South Bend, Indiana, February 24, 2020 15 Condensed Consolidated Statements of Income Corporate Information (Years ended December 31) (in thousands, except for share and per share data) Interest Income Interest and fees on loans Interest and dividends on securities Taxable Tax exempt Interest on short-term investments Total Interest Income Interest Expense Interest on deposits Interest on FHLB advances and other borrowings Total Interest Expense Net Interest Income Provision for loan losses Net Interest Income After Provision for Loan Losses Non-interest Income Wealth advisory and investment brokerage income Service charges on deposit accounts Loan and service fees Merchant card fee income Bank owned life insurance income Mortgage banking income Net securities gains (losses) Other income Total Non Interest Income Non-interest Expense Salaries and employee benefits Occupancy and equipment expense Data processing fees and supplies Other expense Total Non Interest Expense Income Before Income Tax Expense Income tax expense Net Income BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING BASIC EARNINGS PER COMMON SHARE DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING DILUTED EARNINGS PER COMMON SHARE 2019 $197,684 2018 $182,265 2017 $151,024 8,909 7,127 1,490 9,717 6,079 909 9,218 5,102 354 215,210 198,970 165,698 57,148 3,015 60,163 155,047 3,235 151,812 8,522 15,717 9,911 2,641 1,890 1,626 142 4,548 44,997 49,434 10,816 10,407 18,767 89,424 44,913 2,786 47,699 151,271 6,400 144,871 7,802 15,831 9,291 2,461 1,244 1,150 (50) 2,573 40,302 48,353 10,392 9,685 17,799 86,229 27,026 2,780 29,806 135,892 3,000 132,892 6,754 13,696 7,900 2,279 1,768 982 32 2,629 36,040 45,306 9,224 8,233 16,535 79,298 107,385 20,338 $87,047 25,588,404 $3.40 25,758,893 $3.38 98,944 18,533 $80,411 25,288,533 $3.18 25,727,831 $3.13 89,634 32,304 $57,330 25,181,208 $2.28 25,663,381 $2.23 See Annual Report on Form 10-K Nature of Business Lakeland Financial Corporation is a $4.9 billion bank holding company located 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. Headquarters Lakeland Financial Corporation 202 E Center Street Warsaw, IN 46580 (574) 267-6144 (800) 827-4522 lakecitybank.com Annual Meeting Tuesday, April 14, 2020 4:30 p.m. – Annual meeting followed by a reception Embassy Theatre 125 W Jefferson Boulevard, Fort Wayne, IN 46802 Common Stock Listing Lakeland Financial Corporation common stock is traded on the Nasdaq Global Select Market under the symbol “LKFN.” Market Makers Robert W. Baird & Co. Incorporated Bofa Securities, Inc. Cantor Fitzgerald & Co. Citadel Securities LLC Cowen and Company, LLC Canaccord Genuity Inc. Canaccord Genuity LLC. Citadel Derivatives Group LLC D.A. Davidson & Co. G1 Execution Services, LLC Goldman, Sachs & Co. LLC GTS Securities LLC Janney Montgomery Scott Inc. IMC Financial Markets Jefferies LLC Keefe, Bruyette & Woods, Inc. Keybanc Capital Markets Inc. Maxim Group LLC Morgan Stanley & Co. LLC OTA LLC VIRTU Americas LLC Piper Sandler & Co. Puma Capital, LLC Raymond James & Associates, Inc. RBC Capital Markets, LLC SG Americas Securities, LLC Two Sigma Securities, LLC Stephens, Inc. Susquehanna Securities Stifel, Nicolaus & Company, Incorporated Susquehanna Financial Group, LLP UBS Securities LLC Wall Street Access Wells Fargo Securities, LLC Wolverine Securities, LLC Latour Trading LLC Stock Transfer Agent and Registrar American Stock Transfer and Trust Company 6201 15th Avenue Brooklyn, NY 11219 (800) 937-5449 (718) 236-4588 fax info@astfinancial.com astfinancial.com Dividend Reinvestment and Stock Purchase Plan Lakeland Financial Corporation offers stockholders a convenient way to increase their investment through the Lakeland Financial Dividend Reinvestment and Stock Purchase Plan. Under the plan, investors can elect to acquire Lakeland Financial shares in the open market by reinvesting dividends and through optional cash payments. Lakeland Financial absorbs the fees and brokerage commissions on shares acquired through the plan. To obtain a plan prospectus and authorization form, call Tina Rensberger at (800) 827-4522. The plan prospectus is also available on the company’s website at lakecitybank.com. Direct Deposit of Dividends The direct deposit program, which is offered at no charge, provides for automatic deposit of quarterly dividends directly to a checking or savings account. For information regarding this program, call Tina Rensberger at (800) 827-4522. Form 10-K and Other Financial Reports The company maintains a website at lakecitybank.com. The company makes available free of charge on this site its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after it electronically files such material with, or furnishes it to, the Securities and Exchange Commission. The company will also provide copies of its filings free of charge upon written request to: Lakeland Financial Corporation Attn: Investor Relations PO Box 1387 Warsaw, IN 46581-1387 Corporate Governance Lakeland Financial Corporation corporate governance documents are available on the company’s website at lakecitybank.com or may be obtained in print form by contacting Tina Rensberger at (800) 827-4522. Independent Registered Public Accounting Firm Crowe LLP 330 E Jefferson Boulevard PO Box 7 South Bend, IN 46624-0007 Corporate Counsel John Freechack Barack Ferrazzano Kirschbaum & Nagelberg LLP 200 W Madison Street Suite 3900 Chicago, IL 60606 16 17 Lake City Bank Officers Lake City Bank Offices Management Committee David M. Findlay President & Chief Executive Officer Michael E. Gavin Executive Vice President Chief Credit Officer Lisa M. O’Neill Executive Vice President Chief Financial Officer Eric H. Ottinger Executive Vice President Commercial Banking Kristin L. Pruitt Executive Vice President Chief Administrative Officer Jill A. DeBatty Senior Vice President People Development J. Rickard Donovan Senior Vice President General Counsel Stephanie R. Leniski Senior Vice President Retail Banking Jonathan P. Steiner Senior Vice President Wealth Advisory Group & Brokerage Brokerage Vice President Scott M. Hartman Adam C. Johnston Officer Zachary A. Fiandt Lori A. Richcreek Commercial Banking Senior Vice President—Regional Manager Todd A. Bruce Joseph F. Kessie William R. Redman J. Chad Stoltzfus Camalyn M. Treadway Vice President Ronald L. BonDurant Gregory C. Brown Nathan R. Conley Amy M. Counts Grant N. Daily David E. Davis John F. Dietzen David S. Frey Chad A. Glassburn Keith B. Goodman Ryan L. Hart Matthew J. Highbarger Ryan J. Hoffman Rodney B. Hooley Karese E. Kitch Gregory W. Lentz Cory E. McClarnon Patricia T. McNarney Gavin S. Miller Everett L. Nifong Cameron V. Plew Michael J. Ryan Timothy M. Schlichte D. Andrew Skaggs Eric J. Steenman Nicholas A. Toney Steven J. Troike Marshall C. Weadick Christopher W. Wiggins Amber M. Wolfer 18 Assistant Vice President Holly A. Davis Cari J. Juillerat Kris J. Kerlin Sara B. Millspaugh Kevin R. Poe Nathan R. Poe Stacy M. Richardson Robin R. Ritchie Officer Corbin J. Holtsberry Kelsey M. Jenkins Luke C. Mungovan Elizabeth A. Schmidlin Consumer & Home Loans Senior Vice President Kirtus D. Murray Vice President Craig R. Atz Denise M. Brennan Sabrina N. Brown Scott B. Bucher Glenn A. Goudey Jodi L. Hammond Jeffery W. Krusenklaus W. John Pritz Mark R. Rensner Sue L. Sands Assistant Vice President Holly N. Clevenger Chad J. Clinton Anna A. Jimenez Kristi L. Manwaring Sarah J. Miller-Bontrager Todd E. Pequignot Amanda M. Tom J. Mark Ulrich Officer Heidi B. Bruner Corporate & Institutional Services Senior Vice President Douglas R. Samuels Vice President Anna N. Corkill Melanie A. McIntyre Sheena L. White Tabitha A. Williamson Assistant Vice President Michelle L. Harris Officer Tiffany R. Peterson Grant R. Toney Credit Administration Senior Vice President Kimberly A. Hooley H.A. “Rocky” Meyer Vice President Ronald E. Cotton Bradford S. Grabow Benjamin A. Rice Donald J. Robinson-Gay Assistant Vice President David J. Curry Amanda R. Ellsworth Justin T. Hayes Megan E. Ottinger Matthew R. Smith Officer Joseph D. Burtnette Jeffrey L. Wyckoff Executive Administration Officer Tina A. Rensberger Finance & Treasury Senior Vice President Jennifer M. Hurford—Treasurer Brok A. Lahrman—Chief Accounting Officer Vice President Melissa D. Davison Brian M. Lamb Ryan D. Neese Assistant Vice President Stacy L. Price Becka J. Turnbow Beth A. Weber Officer Samantha D. Ducey Marketing Vice President—Manager Mary S. Horan Vice President Cindy A. Bateman Assistant Vice President Caitlin E. Steiner Operations Senior Vice President Lisa A. Fulton Vice President Lili A. Dailey Shannan L. Hepler Jan R. Martin Eric D. Wagoner Assistant Vice President Leslie R. Baker Sherri L. DiRico Tana J. Johnson Miranda R. Jordon Karla J. Kroll Natalie M. Ousley Officer Christine M. Himes Ashley R. Hite Jennifer R. Hochstetler Cynthia L. Montel Jennifer L. Mosier People Development Vice President Alice G. Hitchcock Kathleen M. Keirn Tori L. Platt Assistant Vice President Ana Karina Cervantes Vicki J. Jones Mary A. Lepird Officer Rhonda K. Frank Brianna D. Kreczmer Property Management Vice President Rick Hatcher Officer Richard A. Hoover Retail Banking Retail Banking Advisor Kevin L. Deardorff Senior Vice President—Regional Manager Bruce A. Wright Vice President—Regional Manager Melissa J. Blosser Karen A. Francis Sara B. Hill Pamela F. Messmore Margaret A. Waddell Officer Kylee M. Coughenour Megan L. Sutter Risk Management Senior Vice President Matthew D. VanDeWielle Vice President Teresa A. Bartman Gloria J. Crawford Jeannine P. Draper Cooley Candy A. Little Amanda M. Longmire Kyle G. Schmidt Assistant Vice President Kristin D. Brown Aaron T. Connell Eric D. Neuenschwander Victoria L. Starr Rafael M. Villalon Officer Wendy N. Brown Hilda E. Cantu Kristina R. Kiracofe Kimberly A. Knoerzer Dakotah B. Lantz Ashley L. Pluta Technology Services Senior Vice President Angela K. Ritchey Vice President Joanie L. Foreman George H. Goodlink Jolene D. Howard Christopher D. Merrill Donna J. Wolfe Assistant Vice President Lisa M. Bicknese Jean A. Ciriello Lisa S. Fitzgerald Michele R. Ganser Jill E. Garber R. David Hume Scot A. Karbach Evan R. Kehr Sean P. Raver Melissa S. Rupe Diane M. Wirth Officer Jordan M. Bell Kimberly K. Mattke Wealth Advisory Group Senior Vice President Andrew R. Haddock James D. Westerfield Vice President Randall J. Crouch Richard A. Delks Michelle L. Kindler Jennifer I. King Peggy L. Michel Benjamin D. Shively Reneta U. Thurairatnam Assistant Vice President Lisa A. Mansberger Leslie E. Rohrer Officer Steven B. Burnside Deborah R. Cataldo Calisa M. Doll Akron Argos Auburn Bremen Columbia City Concord Elkhart Beardsley Elkhart East Elkhart Northwest Fishers Fort Wayne Downtown Fort Wayne Jefferson Fort Wayne North Fort Wayne Northeast Fort Wayne Southwest Goshen Downtown Goshen South Granger Greenwood Huntington Indianapolis Clearwater Indianapolis Downtown Indianapolis Michigan Road Indianapolis North Jimtown Kendallville LaGrange Ligonier Downtown Ligonier South Medaryville Mentone Middlebury Milford Mishawaka Nappanee North Webster Pierceton Plymouth Rochester Shipshewana Silver Lake South Bend Downtown South Bend Northwest Syracuse Warsaw Downtown Warsaw East Warsaw North Warsaw West Winona Lake L. Jane Murphy Kimberly K. Vermillion Rebekah K. Hefty Sonia R. Teske Carolyn M. Ross Andrea R. Bowers Rebecca L. Miller Phillip G. Ensley Alexandra L. Mitchell Emily E. Wold Dana L. Hess Denise M. Ramsey Bruce A. Wright Robert J. Savage Steve D. Schumacher Philip W. Dwire, Jr. Amy M. Weisman Angela M. Daly Rosa M. Alba Margaret A. Waddell Kathryn A. Smith Joseph P. Waltermann Paula J. Whiting Dereck L. Stinson Jody M. Meyer Terry L. Bradley Sara B. Hill Steven Colagrossi Barbara E. Keene Mareen L. Barton Lori I. Cunningham Jana L. Miller Karen S. Scott Karen A. Francis Kimberly S. Orr Lindsay N. Stanifer Cheryl L. Luke Fidencio Bueno Katina A. Stephenson Brenda S. Peterson Kelli-Anna Cook Carol D. Brown Penny S. Ramsey Jennifer M. Wilson Sandra A. Nelson-Rowland Melissa J. Blosser Christina J. Myer Mark A. Berta Kimberly K. Strawbridge Shelly R. Kammerer Jennifer M. Orr Pamela F. Messmore Kathleen Madden Sheryl L. Harlan Vice President, Retail Banking Officer Assistant Vice President, Retail Banking Officer Vice President, Retail Banking Officer Assistant Vice President, Retail Banking Officer Retail Banking Officer Retail Banking Officer Vice President, Retail Banking Officer Vice President, Retail Banking Officer Assistant Retail Banking Officer Retail Banking Officer Vice President, Retail Banking Officer Retail Banking Officer Senior Vice President, Regional Manager Vice President, Retail Banking Officer Vice President, Retail Banking Officer Vice President, Retail Banking Officer Vice President, Retail Banking Officer Assistant Vice President, Retail Banking Officer Assistant Vice President, Retail Banking Officer Vice President, Regional Manager Vice President, Retail Banking Officer Vice President, Retail Banking Officer Vice President, Retail Banking Officer Vice President, Retail Banking Officer Vice President, Retail Banking Officer Assistant Vice President, Retail Banking Officer Vice President, Regional Manager Vice President, Retail Banking Officer Vice President, Retail Banking Officer Retail Banking Officer Assistant Vice President, Retail Banking Officer Assistant Vice President, Retail Banking Officer Assistant Vice President, Retail Banking Officer Vice President, Regional Manager Assistant Retail Banking Officer Assistant Vice President, Retail Banking Officer Assistant Vice President, Retail Banking Officer Vice President, Retail Banking Officer Assistant Vice President, Retail Banking Officer Vice President, Retail Banking Officer Retail Banking Officer Vice President, Retail Banking Officer Assistant Vice President, Retail Banking Officer Retail Banking Officer Assistant Vice President, Retail Banking Officer Vice President, Regional Manager Assistant Retail Banking Officer Vice President, Retail Banking Officer Vice President, Retail Banking Officer Vice President, Retail Banking Officer Vice President, Retail Banking Officer Vice President, Regional Manager Retail Banking Officer Assistant Vice President, Retail Banking Officer Forward Looking Statement This document (including information incorporated by reference) contains, and future oral and written statements of the Company and its management may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the Company’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events. A number of factors, many of which are beyond the ability of the Company to control or predict, could cause actual results to differ materially from those in its forward- looking statements. These factors include, among others, the following: (i) the strength of the local and national economy; (ii) the economic impact of future terrorist attacks and threats or acts of war and the response of the United States to any such attacks or threats; (iii) changes in state and federal laws, regulations and governmental policies concerning the Company’s general business; (iv) changes in interest rates and prepayment rates of the Company’s assets; (v) increased competition in the financial services sector and the inability to attract new customers; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii) the loss of key executives or employees; (viii) changes in consumer spending; (ix) unexpected results of acquisitions; (x) unexpected outcomes of existing or new litigation involving the Company; and (xi) changes in accounting standards and practices. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s filings with the Securities and Exchange Commission. 19 (888) 522-2265 lakecitybank.com LAKELAND FINANCIAL CORPORATION | 2019 ANNUAL REPORT
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