Pretax pre-provision earnings, which is a non-GAAP measure, were $34.6 million for the three months ended March 31, 2026, an increase of $3.5 million, or 11%, compared to $31.0 million for the three months ended March 31, 2025. On a linked quarter basis, pretax pre-provision earnings declined by $1.8 million, or 5%, from $36.4 million.
"We started 2026 with robust, record net income for the second consecutive quarter and high single-digit revenue growth on a year-over-year basis," noted David M. Findlay, Chairman and CEO. "Our record profitability in the first quarter was driven by healthy loan growth, strong net interest margin expansion, and across-the-board growth in fee based revenue. We entered 2026 with a focus of expanding existing client relationships and increasing market share growth opportunities and the Lake City Bank team delivered great results on the revenue generating front. It was a terrific start to 2026."
Quarterly Financial Performance
First Quarter 2026 versus First Quarter 2025 highlights:
Return on average equity improved to 13.89%, compared to 11.70%
Return on average assets improved to 1.52%, compared to 1.20%
Tangible book value per share grew by $2.84, or 11%, to $29.69
Average loans grew by $255.0 million, or 5%, to $5.44 billion
Average deposits grew by $180.8 million, or 3%, to $6.06 billion
Net interest margin improved 9 basis points to 3.49% versus 3.40%
Net interest income increased by $3.9 million, or 7%
Noninterest income increased by $2.0 million, or 18%
Watch list loans as a percentage of total loans improved to 3.33% from 4.13%
Nonaccrual loans declined to $20.9 million, compared to $57.4 million
Common dividend per share increased to $0.52, or 4%, compared to $0.50
Repurchased 336,853 shares at a weighted average per share price of $56.99, compared to zero shares
Common equity tier 1 capital ratio of 14.45%, compared to 14.51%
Total risk-based capital ratio of 15.58%, compared to 15.77%
Tangible capital ratio improved to 10.53%, compared to 10.09%
Tangible common equity improved by $54.5 million, or 8%
First Quarter 2026 versus Fourth Quarter 2025 highlights:
Return on average equity of 13.89%, compared to 15.59%
Return on average assets of 1.52%, compared to 1.70%
Average loans improved by $169.2 million, or 3%, to $5.44 billion
Net interest margin improved by 1 basis point to 3.49% versus 3.48%
Noninterest income increased by $330,000, or 3%
Watch list loans as a percentage of total loans improved to 3.33% from 3.42%
Repurchased 336,853 shares at a weighted average per share price of $56.99, compared to 307,590 shares at $58.23
Common equity tier 1 capital ratio decreased to 14.45%, compared to 14.77%
Total risk-based capital ratio decreased to 15.58%, compared to 15.92%
Tangible capital ratio decreased to 10.53%, compared to 10.86%
Capital Strength
The company's total capital as a percentage of risk-weighted assets was 15.58% at March 31, 2026, compared to 15.77% at March 31, 2025 and 15.92% at December 31, 2025. These capital levels significantly exceeded the 10.00% regulatory threshold required to be characterized as "well capitalized" and reflect the company's robust capital base.
The company's tangible common equity to tangible assets ratio, which is a non-GAAP financial measure, was 10.53% at March 31, 2026, compared to 10.09% at March 31, 2025 and 10.86% at December 31, 2025. Unrealized losses from available-for-sale investment securities were $154.5 million at March 31, 2026, compared to $188.3 million at March 31, 2025 and $143.3 million at December 31, 2025. Excluding the impact of accumulated other comprehensive income (loss) on tangible common equity and tangible assets, the company's ratio of adjusted tangible common equity to adjusted tangible assets, a non-GAAP financial measure, was 12.20% at March 31, 2026, compared to 12.19% at March 31, 2025, and 12.45% at December 31, 2025.
The company utilized its share repurchase program to repurchase 336,853 shares of its common stock at a weighted average price per share of $56.99 during the first quarter of 2026. The aggregate purchase price of these repurchases was $19.2 million. The current program, as amended on March 5, 2026, authorizes the company to repurchase up to $60.0 million in aggregate purchase price of the company's common stock through April 30, 2027. The company has repurchased a total of 674,743 shares at a weighted average purchase price of $57.51 under the current program and has $21.2 million in remaining repurchase authority as of March 31, 2026.
As announced on April 14, 2026, the board of directors approved a cash dividend for the first quarter of $0.52 per share, payable on May 5, 2026, to shareholders of record as of April 25, 2026. The first quarter dividend per share represents a 4% increase from the $0.50 dividend per share paid for the first quarter of 2025. Kristin L. Pruitt, President, commented, "We continue to operate with strong levels of capital to support our organic loan growth strategy and cash dividend return to shareholders, which increased by 4% in 2026. In addition, we opportunistically repurchased 3% of our year-end outstanding common stock during the last two quarters, reflecting our confidence in our continued ability to generate future shareholder value."
Net Interest Margin
Net interest margin was 3.49% for the first quarter of 2026, representing a 9 basis point increase from 3.40% for the first quarter of 2025. This improvement was driven by a reduction in the company's funding costs, with interest expense as a percentage of average earning assets falling by 25 basis points from 2.37% for the first quarter of 2025 to 2.12% for the first quarter of 2026. Offsetting the decrease in funding costs was a decrease to earning asset yields of 16 basis points from 5.77% for the first quarter of 2025 to 5.61% for the first quarter of 2026. The easing of monetary policy by the Federal Reserve Bank through the duration of 2025 favorably impacted net interest margin as the reduction in deposit pricing outpaced the decline in earning asset yields. The cumulative loan beta for the current rate-easing cycle that began in September 2024 is 33% compared to the deposit beta of 47% during this period and has resulted in net interest margin expansion that has benefited net interest income.
Net interest margin expanded by 1 basis point to 3.49% for the first quarter of 2026, compared to 3.48% for the linked fourth quarter of 2025. Average earning asset yields decreased by 7 basis points from 5.68% to 5.61% on a linked quarter basis and interest expense as a percentage of average earning assets decreased 8 basis points from 2.20% to 2.12%. The linked fourth quarter cost of funds was impacted by seasonal public funds deposits in higher priced deposit products.
Net interest income was $56.8 million for the first quarter of 2026, representing an increase of $3.9 million, or 7%, as compared to the first quarter of 2025. On a linked quarter basis, net interest income decreased $420,000, or 1%, from $57.2 million for the fourth quarter of 2025.
"We are pleased to report 3.49% net interest margin for the first quarter of 2026, which reflects margin expansion of 9 basis points as compared to the first quarter of 2025. Our cost of deposits has repriced quicker than loans following the three rate cuts by the Federal Reserve Bank in September, November and December of 2025 totaling 75 basis points," stated Lisa M. O'Neill, Executive Vice President and Chief Financial Officer. "We believe that our neutral interest rate position provides flexibility in the current interest rate environment."
Loan Portfolio
Average total loans of $5.44 billion in the first quarter of 2026 increased $255.0 million, or 5%, from $5.19 billion for the first quarter of 2025, and increased $169.2 million, or 3%, from $5.27 billion for the fourth quarter of 2025.
Total loans, net of deferred loan fees, increased by $250.3 million, or 5%, from $5.23 billion as of March 31, 2025, to $5.48 billion as of March 31, 2026. The growth in loans was driven by increases in both the commercial and consumer segments of the portfolio, with increases to commercial real estate and multi-family residential loans of $119.5 million, or 5%, commercial and industrial loan portfolio of $55.2 million, or 4%, consumer 1-4 family mortgage loans of $70.6 million, or 14%, and other consumer loans of $13.9 million, or 14%. Agri-business and agricultural loans declined $9.7 million, or 3%, due to seasonal fluctuations inherent in the portfolio. On a linked quarter basis, total loans increased by $98.0 million, or 2%, from $5.38 billion at December 31, 2025. The linked quarter increase was driven by growth in both the commercial and consumer segments of the portfolio, with increases to commercial real estate and multi-family residential loans of $73.8 million, or 3%, total commercial and industrial loans of $25.1 million, or 2%, and consumer 1-4 family mortgage loans of $33.6 million, or 6%. Agri-business and agricultural loans declined by $32.8 million, or 8%.
Commercial loan originations for the first quarter were approximately $478.0 million and were offset by approximately $414.0 million in loan pay downs. Line of credit usage increased to 45% as of March 31, 2026, from 43% at March 31, 2025, and 44% at December 31, 2025. Total available lines of credit expanded by $186.0 million, or 4%, as compared to a year ago, and line usage increased by $180.0 million, or 9%, over that period.
"We continued to experience healthy organic loan growth and are laser-focused on our strategy to increase market share in our commercial banking business," commented Findlay. "The growth in our commercial and consumer loan portfolios reflects our continued investment in human capital with additional bankers and physical capital with strategic branch expansion in our footprint. We are encouraged that commercial line utilization continues to grow and has reached 45% in the quarter. We are also encouraged by the commercial loan pipeline as we move into the second quarter. The double-digit loan growth generated by our consumer lending teams is also contributing to our overall loan growth."
Diversified Deposit Base
The bank's diversified deposit base has grown on a year-over-year basis and core deposits, which exclude brokered deposits, represented 94% of total deposits.
(in thousands)
March 31, 2026
December 31, 2025
March 31, 2025
Retail
$
1,800,420
29.1
%
$
1,763,452
29.5
%
$
1,787,992
30.0
%
Commercial
2,136,404
34.5
2,179,999
36.5
2,336,910
39.2
Public funds
1,877,855
30.3
1,979,327
33.2
1,709,883
28.7
Core deposits
5,814,679
93.9
5,922,778
99.2
5,834,785
97.9
Brokered deposits
375,581
6.1
50,572
0.8
125,409
2.1
Total
$
6,190,260
100.0
%
$
5,973,350
100.0
%
$
5,960,194
100.0
%
Total deposits increased $230.1 million, or 4%, from $5.96 billion as of March 31, 2025, to $6.19 billion as of March 31, 2026. The increase in total deposits was driven by an increase in brokered deposits of $250.2 million, or 199%. Core deposits decreased by $20.1 million, or less than 1%. Public funds deposits grew annually by $168.0 million, or 10%, to $1.88 billion. Public funds deposits as a percentage of total deposits were 30%, up from 29% a year ago. Growth in public funds was positively impacted by the addition of new public funds customers in the Lake City Bank footprint, including their operating accounts. Retail deposits expanded by $12.4 million, or 1%, to $1.80 billion. Commercial deposits contracted by $200.5 million, or 9%, to $2.14 billion.
On a linked quarter basis, total deposits increased $216.9 million, or 4%, from $5.97 billion at December 31, 2025, to $6.19 billion at March 31, 2026. Core deposits decreased by $108.1 million, or 2%, while brokered deposits increased by $325.0 million. The linked quarter reduction in core deposits was driven primarily by a seasonal reduction in public funds of $101.5 million, or 5%. Additionally, commercial deposits decreased by $43.6 million, or 2%. Retail deposits grew by $37.0 million, or 2%.
Average total deposits were $6.06 billion for the first quarter of 2026, an increase of $180.8 million, or 3%, from $5.87 billion for the first quarter of 2025. Average interest-bearing deposits drove the increase in average total deposits and increased by $204.6 million, or 4%. Contributing to the overall growth of interest-bearing deposits was an increase to average interest-bearing checking accounts of $200.2 million, or 6%. Average noninterest-bearing demand deposits decreased by $23.8 million, or 2%, to $1.23 billion.
On a linked quarter basis, average total deposits decreased by $100.0 million, or 2%, from $6.16 billion for the fourth quarter of 2025 to $6.06 billion for the first quarter of 2026. Average interest-bearing deposits drove the decrease in total average deposits, which declined by $62.5 million, or 1%. Interest bearing checking accounts declined by $163.5 million, or 4%, and were offset by growth in total average time deposits of $94.0 million, or 12%. Average noninterest bearing demand deposits decreased by $37.5 million, or 3%.
Checking account growth as of March 31, 2026, compared to March 31, 2025, includes growth of $259.1 million, or 17%, in aggregate public fund checking account balances and growth of $6.2 million, or 1%, in aggregate retail checking account balances. Aggregate commercial checking account balances declined by $239.7 million, or 11%. The number of accounts grew for all three segments, with growth of 7% for public funds accounts, 2% for commercial accounts and 1% for retail accounts.
"Our deposit base continues to be well-diversified and stable, with core deposits representing 94% of total deposits. Our strong loan growth during the quarter outpaced deposit growth and resulted in increased utilization of brokered funding currently at 6% of total deposits," noted O'Neill. "While we did experience some one-time commercial outflows during the quarter, our checking accounts for all three segments continue to grow annually. Core deposit growth is a focus for Lake City Bank and a driver of our continued branch expansion initiatives in our Indiana footprint."
Asset Quality
The company recorded a provision for credit losses of $2.0 million in the first quarter of 2026, compared to $6.8 million in the first quarter of 2025 and none for the linked fourth quarter of 2025.
The allowance for credit loss reserve to total loans was 1.26% at March 31, 2026, down from 1.77% at March 31, 2025, and 1.28% at December 31, 2025. The decrease in allowance coverage compared to the prior year was primarily driven by the previously disclosed commercial net charge off in 2025. The company recorded net charge offs of $2.1 million in the first quarter of 2026, compared to net charge offs of $327,000 in the first quarter of 2025 and net recoveries of $827,000 during the linked fourth quarter of 2025. Annualized net charge offs (recoveries) to average loans were 0.16% for the first quarter of 2026, compared to 0.03% for the first quarter of 2025 and (0.06)% for the linked fourth quarter of 2025.
Nonperforming assets decreased by $36.9 million, or 64%, to $20.9 million as of March 31, 2026, versus $57.9 million as of March 31, 2025. On a linked quarter basis, nonperforming assets were unchanged. The ratio of nonperforming assets to total assets at March 31, 2026, decreased to 0.30% from 0.84% at March 31, 2025. The ratio was unchanged at 0.30% when compared to December 31, 2025.
Total individually analyzed and watch list loans decreased by $33.3 million, or 15%, to $182.3 million as of March 31, 2026, versus $215.6 million as of March 31, 2025. On a linked quarter basis, total individually analyzed and watch list loans decreased by $1.7 million, or 1%, from $184.0 million at December 31, 2025. Watch list loans as a percentage of total loans were 3.33% at March 31, 2026, an 80 basis point decrease compared to 4.13% at March 31, 2025, and a 9 basis point decrease compared to 3.42% at December 31, 2025.
"We are pleased to report continued stable asset quality at Lake City Bank," commented Findlay. "Watch list loans have declined since year end and our asset quality metrics reflect our confidence in the strength of the portfolio. Our borrowers continue to manage through the uncertainty of the current economic environment, and we are encouraged by overall portfolio performance."
Investment Portfolio Overview
Total investment securities were $1.16 billion at March 31, 2026, reflecting an increase of $27.8 million, or 2%, as compared to $1.13 billion at March 31, 2025. Investment securities represented 16% of total assets on March 31, 2026, down from 17% at March 31, 2025, and December 31, 2025. The company anticipates receiving principal and interest cash flows of approximately $88.2 million during the remainder of 2026 from the investment securities portfolio and plans to use that liquidity to fund loan growth as well as reinvestments to the investment securities portfolio. Tax equivalent adjusted effective duration for the investment portfolio was 6.0 years at March 31, 2026, compared to 5.9 years at March 31, 2025, and December 31, 2025.
Noninterest Income
The company's noninterest income increased $2.0 million, or 18%, to $12.9 million for the first quarter of 2026, compared to $10.9 million for the first quarter of 2025. Loan and service fees income increased $323,000, or 11%, driven by increased commercial loan fees. Wealth advisory fees increased $196,000, or 7%, driven by continued growth in customers and assets under management. Investment brokerage fees increased $72,000, or 16%, due to increased volume and commissions on product mix. Bank owned life insurance income increased $654,000, or 203%, from improved market performance of the bank's variable owned life insurance policies, which reflect returns in the equity markets, as well as incremental income from policies purchased in 2025. Interest rate swap fee income was $701,000 for the first quarter of 2026, which is borrower and market driven. Offsetting these increases was a decrease to other income of $128,000, or 15%, primarily driven by reduced limited partnership investment income.
Noninterest income for the first quarter of 2026 increased by $330,000, or 3%, on a linked quarter basis from $12.6 million during the fourth quarter of 2025. Loan and service fee income increased $222,000, or 7%, and wealth advisory fees increased $87,000, or 3%. Interest rate swap fee income increased $638,000. Offsetting these increases was a decrease in bank owned life insurance of $351,000, or 26%, from reduced general account income, due to the timing of when annual insurance costs are charged against certain policies.
"Noninterest income was 18% higher in the first quarter of 2026 as compared to 2025, and importantly, our fee-based revenue for the first quarter improved by 7% as compared to 2025," added Findlay. "We are pleased with the contribution of noninterest income to total revenue growth and it reflects the impact of our growing customer base in commercial, wealth advisory and retail areas of the bank."
Noninterest Expense
Noninterest expense increased $2.4 million, or 7%, to $35.2 million for the first quarter of 2026, compared to $32.8 million during the first quarter of 2025. Salaries and employee benefits expense increased by $2.4 million, or 13%, primarily the result of increased salaries and wages, performance-based incentive pay, and benefits expenses. Deferred variable compensation expense, which is offset by noninterest income recorded from the performance of the company's variable bank owned life insurance policies, contributed further to the increase. Net occupancy expense increased $124,000, or 6%, and equipment costs increased $82,000, or 6%, from the company's continued expansion and reinvestment into its physical branch network. Corporate and business development expense increased $87,000, or 6%, and FDIC insurance and other regulatory fees increased $73,000, or 9%. Offsetting these increases was a decrease in professional fees of $443,000, or 19%, driven by reduced technology implementation fees incurred during the quarter.
On a linked quarter basis, noninterest expense increased by $1.7 million, or 5%, from $33.4 million during the fourth quarter of 2025. Salaries and employee benefits expense increased by $414,000, or 2%. Net occupancy expense and equipment costs increased by $184,000 and $42,000, or 10% and 3%, respectively. Corporate and business development expense increased by $345,000, or 30%, from increased seasonal advertising and other annual corporate expenses. Other expense increased by $383,000, or 16%, primarily from semi-annual board of directors share grants that occur in the first and third quarters each year.
The company's efficiency ratio was 50.4% for the first quarter of 2026, compared to 51.4% for the first quarter of 2025 and 47.9% for the linked fourth quarter of 2025.
"The growth in noninterest expense during the first quarter of 2026 reflects the continued investment in human capital and branch expansion to continue our organic growth plans," added Findlay. "The majority of our employee additions during the past year have been customer facing, revenue generating team members throughout our footprint with a focus on commercial lending, wealth advisory and private banking teams. We have two new branch locations under development in Indianapolis that will open in late 2026 or early 2027."
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." Lake City Bank, a $7.1 billion bank headquartered in Warsaw, Indiana, was founded in 1872 and serves Central and Northern Indiana communities with 55 branch offices and a robust digital banking platform. Lake City Bank's community banking model prioritizes building in-market long-term customer relationships while delivering technology-forward solutions for retail and commercial clients.
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, 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 the company's operating environment or its 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 economic, business and market conditions and changes, particularly in our Indiana market area, including prevailing interest rates and the rate of inflation; governmental trade, monetary and fiscal policies; including any effects resulting from international government conflicts; the risks of changes in interest rates on the levels, composition and costs of deposits, loan demand and the values and liquidity of loan collateral, securities and other interest sensitive assets and liabilities; and changes in borrowers' credit risks and payment behaviors, 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, which are incorporated herein by reference.
LAKELAND FINANCIAL CORPORATION
FIRST QUARTER 2026 FINANCIAL HIGHLIGHTS
Three Months Ended
(unaudited, dollars in thousands, except per share data)
March 31,
December 31,
March 31,
END OF PERIOD BALANCES
2026
2025
2025
Assets
$
7,083,680
$
6,990,022
$
6,851,178
Investments
1,160,608
1,185,270
1,132,854
Loans
5,473,358
5,375,349
5,223,221
Allowance for Credit Losses
68,914
68,995
92,433
Deposits
6,190,260
5,973,350
5,960,194
Brokered Deposits
375,581
50,572
125,409
Core Deposits (1)
5,814,679
5,922,778
5,834,785
Total Equity
748,993
762,492
694,509
Goodwill Net of Deferred Tax Assets
3,803
3,803
3,803
Tangible Common Equity (2)
745,190
758,689
690,706
Adjusted Tangible Common Equity (2)
880,296
885,298
854,585
AVERAGE BALANCES
Total Assets
$
7,082,213
$
6,993,954
$
6,762,970
Earning Assets
6,729,394
6,641,584
6,430,804
Investments
1,190,278
1,175,389
1,136,404
Loans
5,440,876
5,271,687
5,185,918
Total Deposits
6,055,539
6,155,526
5,874,725
Interest Bearing Deposits
4,821,000
4,883,496
4,616,381
Interest Bearing Liabilities
5,004,623
4,893,050
4,716,465
Total Equity
772,946
760,954
696,053
INCOME STATEMENT DATA
Net Interest Income
$
56,773
$
57,193
$
52,875
Net Interest Income-Fully Tax Equivalent
57,878
58,307
53,983
Provision for Credit Losses
2,000
0
6,800
Noninterest Income
12,933
12,603
10,928
Noninterest Expense
35,151
33,445
32,763
Net Income
26,478
29,906
20,085
Pretax Pre-Provision Earnings (2)
34,555
36,351
31,040
PER SHARE DATA
Basic Net Income Per Common Share
$
1.04
$
1.16
$
0.78
Diluted Net Income Per Common Share
1.04
1.16
0.78
Cash Dividends Declared Per Common Share
0.52
0.50
0.50
Dividend Payout
50.00
%
43.10
%
64.10
%
Book Value Per Common Share (equity per share issued)
$
29.84
$
30.02
$
26.99
Tangible Book Value Per Common Share (2)
29.69
29.87
26.85
Market Value, High
$
63.80
$
65.43
$
71.77
Market Value, Low
54.36
56.04
58.24
Basic Weighted Average Common Shares Outstanding
25,344,757
25,623,703
25,714,818
Diluted Weighted Average Common Shares Outstanding
25,493,920
25,770,280
25,802,865
Three Months Ended
(unaudited, dollars in thousands, except per share data)
March 31,
December 31,
March 31,
KEY RATIOS
2026
2025
2025
Return on Average Assets
1.52
%
1.70
%
1.20
%
Return on Average Total Equity
13.89
15.59
11.70
Average Equity to Average Assets
10.91
10.88
10.29
Net Interest Margin
3.49
3.48
3.40
Efficiency (Noninterest Expense/Net Interest Income plus Noninterest Income)
50.43
47.92
51.35
Loans to Deposits
88.42
89.99
87.64
Investment Securities to Total Assets
16.38
16.96
16.54
Tier 1 Leverage (3)
12.20
12.39
12.30
Tier 1 Risk-Based Capital (3)
14.45
14.77
14.51
Common Equity Tier 1 (CET1) (3)
14.45
14.77
14.51
Total Capital (3)
15.58
15.92
15.77
Tangible Capital (2)
10.53
10.86
10.09
Adjusted Tangible Capital (2)
12.20
12.45
12.19
ASSET QUALITY
Loans Past Due 30 - 89 Days
$
7,416
$
2,320
$
4,288
Loans Past Due 90 Days or More
7
7
7
Nonaccrual Loans
20,909
20,872
57,392
Nonperforming Loans
20,916
20,879
57,399
Other Real Estate Owned
0
0
284
Other Nonperforming Assets
