LAKELAND FINANCIAL CORP (LKFN)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 delivered double‑digit net interest income growth (+12% to $52.9M) and 25 bps net interest margin expansion to 3.40%, offset by higher provision expense tied to a previously disclosed $43.3M nonperforming credit; diluted EPS fell to $0.78 from $0.94 in Q4 and $0.91 YoY .
• Revenue was $63.8M (net interest + noninterest), up 6% YoY, driven by margin expansion and healthy loan growth; noninterest income declined 8% sequentially on weaker BOLI income tied to equity market performance .
• Capital returns accelerated: dividend increased to $0.50 (+4%) and buyback reauthorized with $30M capacity; management expects to activate repurchases in Q2 2025, a potential stock catalyst .
• Wall Street consensus (S&P Global) anticipated $0.886 EPS* and $63.7M revenue*; the company missed EPS and, on S&P’s revenue definition, missed revenue, although company-reported revenue was $63.8M (definition differences noted)* .
• Asset quality mixed: watch list loans held at 4.13% of loans, but allowance rose to 1.77% with provision at $6.8M due to the specific industrial credit; NPA ratio was 0.84% (down 1 bp QoQ) .

What Went Well and What Went Wrong

What Went Well

• Net interest margin expanded 25 bps YoY and 15 bps QoQ to 3.40%; deposit costs declined more than loan yields, supporting double‑digit NII growth. “Our deposit costs have declined more than loan yields… Net interest margin expansion combined with healthy loan growth has contributed to double digit growth in net interest income.” — CFO Lisa O’Neill .
• Organic loan growth: total loans increased $224.8M YoY (+4%) and $104.9M QoQ; commercial & industrial and CRE/multifamily led, with rising line utilization to 43% .
• Funding strength: core deposits up $402.5M YoY (+7%) and represented 98% of total; CET1 remained robust at 14.51% .

What Went Wrong

• EPS declined to $0.78 (−17% QoQ; −14% YoY) primarily due to higher provision expense ($6.8M vs $3.7M QoQ and $1.5M YoY) tied to the previously disclosed nonperforming industrial credit .
• Noninterest income fell 8% QoQ to $10.9M, driven by a $894K decline in BOLI income amid weaker equity market performance; efficiency ratio worsened to 51.35% from 48.22% in Q4 .
• Watch list loans remained elevated at 4.13% of total loans, and individually analyzed + watch list loans increased $32.3M YoY, reflecting ongoing credit scrutiny despite stable NCOs .

Financial Results

Segment and balance trends (selected):

KPIs and asset quality:

Guidance Changes

Earnings Call Themes & Trends

(Note: Full Q1 2025 call transcript not available via our document tools; themes reflect management commentary from earnings materials.)

Management Commentary

• “Our first quarter results are highlighted by double digit growth in net interest income and strong net interest margin expansion… healthy loan growth… funded with equally positive deposit growth.” — David M. Findlay, Chairman & CEO .
• “We continue to see improvements in net interest margin due to the Federal Reserve Bank’s rate easing cycle. Our deposit costs have declined more than loan yields… contributing to double digit growth in net interest income.” — Lisa M. O’Neill, EVP & CFO .
• “We are encouraged by the continued organic loan growth… commercial line utilization… reached 43%… C&I loan growth was a highlight.” — Findlay .
• “We believe… recent stock price performance, driven by the impact of tariff activity, provides us an opportunity to return capital to shareholders at attractive prices through our repurchase plan.” — Kristin L. Pruitt, President .

Q&A Highlights

The Q1 2025 earnings call transcript was not available via our document tools or public sources we checked; therefore, specific Q&A highlights and clarifications cannot be provided. Conference call timing reference: April 24, 2025 at 8:00AM ET (third‑party listing) .

Estimates Context

Notes:

• The company’s reported revenue (Net Interest Income + Noninterest Income) was $63.8M . S&P Global’s “actual revenue” figure differs in definition, leading to an apparent revenue miss on S&P’s basis*.
• Values with asterisks were retrieved from S&P Global via our estimates tool. Values retrieved from S&P Global.

Implications:

• EPS miss driven by higher provision expense tied to the specific industrial NPL; analysts may reassess credit cost assumptions and the timing of reserve normalization .
• NIM trajectory improved faster than expected; models may raise NII run‑rate while tempering noninterest income (BOLI variability) and raising provision outlook .

Key Takeaways for Investors

• Margin expansion is intact; deposit repricing in a rate‑easing cycle is a tailwind, supporting NII growth despite modest loan yield pressure .
• Credit costs are the swing factor near term; the specific industrial credit elevated provision, and watch list remains at 4.13% — monitor reserve build and any migration in watch list balances .
• Loan demand and utilization are improving; C&I momentum and 43% line usage support near‑term balance sheet growth .
• Capital return accelerates: $0.50 dividend and buyback activation expected in Q2 2025 — potential support for shares on weakness .
• Noninterest income variability (BOLI) impacted quarterly results; expect fee lines (wealth advisory +17% YoY) to provide steady support while BOLI remains market‐linked .
• Funding base resilient: core deposits +7% YoY and ~98% of total — liquidity and deposit mix underpin capacity for organic loan growth .
• Watch tariff developments; management is proactively assessing borrower exposure, but uncertainty could affect select C&I relationships and sentiment .