Lakeland Financial Corporation — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net income for the third quarter of 2026 reached a record $28.9 million, a 9% increase from $26.4 million in the same period of 2025; year-to-date net income was $83.8 million, up 14% from $73.5 million in 2025.
• Diluted earnings per share (EPS) were $1.14 for the quarter, an 11% increase from $1.03 in 2025, and $3.31 year-to-date, up 16% from $2.85 in 2025.
• Total revenue was $73.0 million for the quarter, a 6% increase from $69.0 million in 2025, and $213.6 million year-to-date, up 7% from $199.2 million in 2025.
• Net interest income increased 8% year-over-year to $60.7 million and 7% year-to-date to $175.8 million.
• Net interest margin expanded 8 basis points to 3.58% year-over-year and 9 basis points to 3.58% on a linked quarter basis.
• Noninterest income decreased 5% to $12.3 million for the quarter but increased 7% to $37.8 million year-to-date.
• Noninterest expense increased 3% to $36.1 million for the quarter and 8% to $105.7 million year-to-date.
• The efficiency ratio was 49.5% for the quarter and 49.5% year-to-date.
• Return on average equity was 14.88% for the quarter and 14.59% year-to-date; return on average assets was 1.59% for the quarter and 1.57% year-to-date.
• Provision for credit losses was $1.2 million for the quarter, down from $2.0 million in 2025.
• Net charge-offs were $3.0 million for the quarter, driven by a $2.8 million partial charge-off, compared to $384,000 in 2025.
• The allowance for credit loss reserve to total loans was 1.21% at September 30, 2026, down from 1.30% in 2025.
• Nonperforming loans to total loans improved to 0.32% from 0.36% in 2025.

Guidance and Future Outlook:

• Management anticipates receiving approximately $24.1 million in principal and interest cash flows from the investment securities portfolio during the remainder of 2026 to fund loan growth and reinvestments.
• The company plans to continue adding to commercial and retail lending teams and has three branches under development in the Indianapolis and Fort Wayne markets.
• Management expressed optimism regarding the manufacturing outlook in Indiana and noted the resilience of the state's economy despite challenges like rising oil prices and tariff policy uncertainty.
• Future revenue growth is expected to be supported by the rollout of a new customer relationship management program focusing on artificial intelligence capabilities.

Business Segments and Product Lines:

• Total loans increased 8% year-over-year to $5.68 billion, driven by growth across all segments: commercial and industrial loans up 12%, commercial real estate and multi-family residential loans up 4%, and consumer 1-4 family mortgage loans up 16%.
• Commercial loan originations for the quarter were approximately $525.0 million, offset by $443.0 million in paydowns.
• Commercial and industrial lines of credit usage was 42% as of September 30, 2026, with total availability growing 5% year-over-year.
• Core deposits expanded 3% to $6.05 billion, representing 96.2% of total deposits.
• Public funds deposits grew 10% to $2.02 billion, while commercial deposits contracted 3% to $2.21 billion.
• Wealth advisory fees increased 10% year-over-year, and mortgage banking income increased 343% year-to-date due to increased volume.
• The company opened an Innovation and Technology Center at its Warsaw headquarters and continues to invest in technology solutions including artificial intelligence.

Market and Competitive Landscape:

• The company reported growing market share in every market served.
• Deposit growth strategies in Indianapolis yielded $106.1 million in deposits, with $83.2 million identified as new money.
• The company serves Central and Northern Indiana communities with 55 branch offices.
• Brokered deposits increased 38% year-over-year to $241.8 million but remain a low level at 3.8% of total deposits.

Risks and Challenges:

• Unrealized losses on available-for-sale investment securities increased to $213.9 million at September 30, 2026, due to an 85 basis point rise in the 10-year Treasury yield, impacting the tangible common equity to tangible assets ratio.
• The company faces risks related to economic conditions, prevailing interest rates, inflation, and governmental trade and monetary policies.
• Borrowers continue to navigate challenges created by rising oil prices and tariff policy uncertainty.
• Equity market declines negatively impacted variable owned life insurance policies, reducing income by $476,000 in the quarter.

Management Commentary and Tone:

• Chairman and CEO David M. Findlay stated that strong loan growth and healthy net interest margin expansion reflected the quality of earnings and the team's efforts to grow market share.
• CFO Lisa M. O'Neill highlighted pride in net interest margin expansion and the positive impact of deposit pricing strategies.
• President Kristin L. Pruitt noted the company's confidence in its performance and long-term strength, citing the robust capital position enabling balance sheet growth and capital returns.
• Management emphasized a focus on adding revenue-producing personnel and investing in brick-and-mortar and technology infrastructure.

Other Key Points:

• The board approved a cash dividend of $0.52 per share for the third quarter, a 4% increase from the prior year, payable November 5, 2026.
• The company repurchased 41,550 shares in the third quarter for $2.4 million; the current program authorizes up to $60.0 million through April 30, 2027, with $14.6 million remaining at quarter-end.
• Full-time equivalent employees increased by 31 to 697, including 18 revenue-generating personnel and 13 support staff over the past year.
• The dividend payout ratio improved to 47.1% for the nine months ended September 30, 2026, from 52.6% in the prior year period.
• Total capital as a percentage of risk-weighted assets was 15.56% at September 30, 2026.
• The company's tangible common equity to tangible assets ratio was 10.11%, while the adjusted ratio excluding AOCI impact was 12.32%.