To: RCMP Analyst Group

Real Client Managed Portfolio Memorandum

To: RCMP Analyst Group

From: Olamide Esan, Jingyuan (Summer) Xia, Kuralay Seitalina, Vignesh Murali

Subject: Bank Valuation Exercise on Lakeland Financial Corp.

Date: April 29th, 2010

The Purpose:

The purpose of our presentation was to understand the business and valuation techniques of financial companies using Lakeland Financial Corp as an example. Our intention is not to make any recommendations as a result of our presentation and findings but to provide an explanation of how a bank should be valued.

Company Overview:

Lakeland Financial Corp. (NASDAQ:LKFN) is a holding company of Lake City Bank, which provides traditional banking services to clients in the state of Indiana. The bank’s strategy encompasses all phases of traditional community banking, including consumer lending and wealth advisory and trust services. It focuses on building commercial relationships and developing retail and commercial deposit gathering strategies. The bank operates 43 branches in twelve Indiana counties and one loan production office served by 461 full-time equivalent employees.The company has a market capitalization of $339.8M. In February 2009, the company participated in TARP with $56M in capital infused into the bank and in November 2009, raised $57.9M in public offering of common stock to further strengthen its capital position.

Bank regulation:

Bank holding companies are required to maintain minimum levels of capital in accordance with Federal Reserve capital adequacy guidelines. Minimum regulatory capital requirements for bank holding companies established by Federal Reserve are the following: (1) A risk−based requirement expressed as a percentage of total assets weighted according to risk; (2) A leverage requirement expressed as a percentage of total assets. As of December 31, 2009, the company maintained its capital minimum requirements.

Valuation Method:

We evaluated the bank using (1) Multiple valuation and (2) Equity Cash Flow methods. Under the Equity Cash Flow method, we used two approaches to determine the appropriate cash flows. The first approach was estimating net cash inflows (dividends and repurchases) and outflows (issuance of common or preferred stock) from the shareholders perspective. The second approach was the balance sheet which involved estimating changes in equity through adjustments to net income, net changes in assets and liabilities. Finally, the estimated equity cash flows were discounted using the cost of equity (rather than a WACC) to determine the intrinsic value of the bank.