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LAKELAND FINANCIAL CORP (LKFN)·Q2 2025 Earnings Summary

Executive Summary

  • Record quarter: Net income $27.0M and diluted EPS $1.04, up 20% YoY; pretax pre-provision earnings $35.9M and efficiency ratio improved to 45.9% .
  • EPS beat vs S&P Global consensus $0.97* by $0.07; revenue missed consensus $67.2M* with actual $63.4M*; estimates based on 5 EPS and 4 revenue submissions* (Values retrieved from S&P Global).
  • Net interest margin expanded to 3.42% (+25 bps YoY); core deposits rose 8% YoY to $6.03B (98% of funding), with public funds strength; loan growth continued and watch list/nonaccruals declined materially .
  • Asset quality event resolved: charged off $28.6M on a previously disclosed $43.3M nonperforming industrial credit, with expected recoveries from sale/liquidation and personal guarantee; nonperforming assets fell 46% QoQ, improving risk posture .
  • Capital deployment: quarterly dividend increased 4% to $0.50 and buybacks of 30,300 shares ($1.7M); CET1 14.73% and Total RBC 15.86% support ongoing growth .

What Went Well and What Went Wrong

  • What Went Well

    • Net interest income +14% YoY to $54.9M; NIM +25 bps YoY to 3.42% (ex-prepayment penalty +22 bps), aided by deposit repricing in the Fed easing cycle .
    • Core deposits up $423.9M (+8%) YoY to $6.03B; checking balances up across public/commercial/retail; core funding covers 98% of deposits .
    • Asset quality improved: nonaccrual loans down 46% QoQ to $30.6M; watch list loans down to 3.67% of total; management: “asset quality is stable” .
    • Quote: “We are pleased to report strong earnings momentum… healthy loan and deposit growth” — David M. Findlay, Chairman & CEO .
    • Quote: “Net interest margin expansion… deposit growth has strengthened our liquidity” — Lisa M. O’Neill, CFO .

  • What Went Wrong

    • Revenue missed Street despite EPS beat; fee income mix remains modest and noninterest income fell YoY due to prior-year Visa gain .
    • Provision remained elevated ($3.0M) due to specific allocation on the industrial nonperforming borrower; annualized NCOs spiked to 2.22% on the charge-off .
    • Commercial & industrial and agri-business loan balances contracted YoY, offset by CRE/multifamily and consumer mortgage growth .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Net Interest Income ($USD Millions)$48.3 $52.9 $54.9
Noninterest Income ($USD Millions)$20.4 $10.9 $11.5
Provision for Credit Losses ($USD Millions)$8.5 $6.8 $3.0
Noninterest Expense ($USD Millions)$33.3 $32.8 $30.4
Net Income ($USD Millions)$22.5 $20.1 $27.0
Diluted EPS ($USD)$0.87 $0.78 $1.04
Margins & RatiosQ2 2024Q1 2025Q2 2025
Net Interest Margin %3.17% 3.40% 3.42%
Return on Avg Assets %1.37% 1.20% 1.57%
Return on Avg Equity %14.19% 11.70% 15.52%
Efficiency Ratio %48.49% 51.35% 45.86%
Loans / Deposits %87.66% 87.64% 84.62%
Estimates vs Actual (S&P Global)ConsensusActualBeat/Miss
EPS ($USD) Q2 2025$0.97*$1.04*Beat $0.07*
Revenue ($USD Millions) Q2 2025$67.2*$63.4*Miss $(3.8)*
Values retrieved from S&P Global.
Loan Mix (End of Period, $USD Millions)Q2 2024Q1 2025Q2 2025
Commercial & Industrial (Total)$1,526.3 $1,523.6 $1,493.8
CRE & Multifamily (Total)$2,503.4 $2,620.8 $2,680.4
Agri-business & Agricultural (Total)$361.1 $383.8 $339.4
Consumer 1–4 Family Mortgage (Total)$469.9 $500.2 $516.1
Other Consumer$97.9 $102.3 $103.9
Total Loans (Subtotal)$5,055.2 $5,225.5 $5,229.0
Deposit Composition ($USD Millions; % of Total)Q2 2024Q1 2025Q2 2025
Retail$1,724.8; 29.9% $1,788.0; 30.0% $1,755.8; 28.4%
Commercial$2,150.1; 37.3% $2,336.9; 39.2% $2,256.6; 36.6%
Public Funds$1,727.6; 30.0% $1,709.9; 28.7% $2,014.0; 32.6%
Core Deposits$5,602.5; 97.2% $5,834.8; 97.9% $6,026.4; 97.6%
Brokered Deposits$161.0; 2.8% $125.4; 2.1% $150.4; 2.4%
Total Deposits$5,763.5 $5,960.2 $6,176.8
KPIsQ2 2024Q1 2025Q2 2025
Nonaccrual Loans ($USD Millions)$57.1 $57.4 $30.6
Nonperforming Assets ($USD Millions)$57.6 $57.9 $31.1
NPA / Assets %0.88% 0.84% 0.45%
Watch List + Individually Analyzed ($USD Millions)$268.3 $215.6 $191.6
Watch List / Total Loans %5.31% 4.13% 3.67%
ACL / Loans %1.60% 1.77% 1.27%
Net Charge-offs ($USD Millions)$0.95 $0.33 $28.88
Annualized NCOs / Avg Loans %0.08% 0.03% 2.22%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareQ2 2025$0.48 (Q2 2024 paid) $0.50 payable Aug 5, 2025 Raised
Share repurchase authorizationAs of Q1–Q2 2025$30.0M authorization extended to Apr 30, 2027 $28.3M remaining after repurchasing 30,300 shares at $55.94 Maintained (utilized)
Formal financial guidanceFY/Q3 onwardsNone providedNone providedMaintained

Note: Management provided qualitative outlook on NIM and funding costs (Fed easing, deposit repricing) but no numerical forward guidance .

Earnings Call Themes & Trends

Transcript for Q2 2025 was not available via our document tools; themes reflect management’s published remarks.

TopicQ4 2024 (prior)Q1 2025 (prior)Q2 2025 (current)Trend
Net interest margin trajectoryNIM expanded 9 bps QoQ to 3.25% as deposit costs fell faster than loan yields NIM +15 bps QoQ to 3.40%; deposit beta 55%, loan beta 37% NIM 3.42%; +25 bps YoY; 3 bps benefit from prepayment; deposit beta 50%, loan beta 29% Improving, moderating sequentially
Funding mix & core depositsCore deposits 99%; public funds growth; liquidity lines ample Core deposits 98%; checking balances up; seasonality in public funds Core deposits 98%; new public fund customers; checking balances up across segments Strengthening diversified base
Asset quality & watch listWatch list down QoQ; NPA ratio ~0.85%; industrial credit on NPL list ACL up to 1.77%; NPA up to $57.9M due to industrial credit Charge-off $28.6M on industrial credit; NPA down to $31.1M; watch list % down to 3.67% Risk posture improving post-resolution
Tariffs/macro commentaryNoted macro stability and business development Initiated borrower exposure analysis for tariffs “Too early to quantify” tariff impact; less borrower concern vs prior period Monitoring; concerns easing
Technology investmentsOngoing investment in customer-facing/operational tech; higher data processing fees Continued tech investment; data processing up Continued tech investment; data processing up YoY Ongoing strategic spend
Market expansionFocus on Indianapolis growth, marketing/data-driven efforts Indianapolis expansion highlighted Indianapolis focus reiterated; Wealth Advisory build-out Steady execution

Management Commentary

  • David M. Findlay, Chairman & CEO: “We are pleased to report strong earnings momentum for the second quarter of 2025… with this strong financial performance, healthy balance sheet growth and continued success on the business development front” .
  • Lisa M. O’Neill, CFO: “We are pleased to report healthy net interest margin expansion of 25 basis points… Core deposit growth has outpaced our loan growth in 2025, which has strengthened our liquidity position” .
  • Kristin L. Pruitt, President: “Our capital position is strong and provides capacity for continued organic growth… our priority for capital is to continue capital retention to support loan growth in our Indiana markets” .
  • Findlay on asset quality: “We are pleased to have reached a resolution on the nonperforming loan… asset quality is stable… economic conditions… are contributing to new business development opportunities” .

Q&A Highlights

  • The Q2 2025 earnings call transcript was not available in our document catalog; no Q&A content to synthesize. Management’s clarifications in published materials note: NIM had a 3 bps boost from a loan prepayment fee; excluding this, NIM would have been down 1 bp QoQ . Deposit insurance coverage metrics and public funds mix were detailed (uninsured deposits 59%; uninsured excluding Indiana public funds 27%) .

Estimates Context

  • EPS beat and revenue miss vs S&P Global consensus: EPS $1.04 vs $0.97*; revenue $63.4M* vs $67.2M* (Values retrieved from S&P Global).
  • Given NIM expansion, lower funding costs, and improving asset quality post-charge-off, Street EPS estimates may drift higher; however, fee income normalization (absence of 2024 Visa gain) and ongoing credit cost discipline could temper revenue assumptions .

Key Takeaways for Investors

  • Earnings quality improved: NIM expansion and lower noninterest expense drove better efficiency (45.9%), with EPS +33% QoQ and +20% YoY .
  • Funding franchise resilient: core deposits 98% of total; public funds and checking growth underpin liquidity amid higher-for-longer rates .
  • Credit event addressed: $28.6M charge-off on the known industrial credit reduced NPA/NPL metrics; ACL coverage aligns with improved risk profile, but monitor near-term reserve trajectory .
  • Capital returns intact: dividend increased to $0.50 and modest buybacks; CET1 14.73% and Total RBC 15.86% provide capacity for organic growth and shareholder returns .
  • Loan mix shift: strength in CRE/multifamily and consumer mortgage offsets softness in C&I and agriculture; watch for sustained demand and line utilization (44% at quarter-end) .
  • Near-term trading lens: EPS beat vs consensus and NIM trajectory are positive; revenue miss and elevated charge-offs may cap upside near-term, but improving asset quality/supportive funding mix are constructive .
  • Medium-term thesis: deposit-led growth, Indianapolis expansion, tech investments, and fee-business development (Wealth Advisory) can sustain profitability improvements as funding costs normalize .