WARSAW, Ind., Oct. 26, 2026 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq Global Select/LKFN), parent company of Lake City Bank, today reported record third quarter net income of $28.9 million for the three months ended September 30, 2026, which represents an increase of $2.5 million, or 9%, compared to net income of $26.4 million for the three months ended September 30, 2025. Diluted earnings per share of $1.14 for the third quarter of 2026 also represents a record for third quarter performance and increased $0.11, or 11%, compared to $1.03 for the third quarter of 2025. On a linked quarter basis, net income increased $417,000 from $28.4 million. Diluted earnings per share increased $0.01 from $1.13 on a linked quarter basis.

The company further reported record performance year-to-date with net income of $83.8 million for the nine months ended September 30, 2026, versus $73.5 million for the corresponding period of 2025, an increase of $10.3 million, or 14%. Diluted earnings per share increased $0.46, or 16%, to $3.31 for the nine months ended September 30, 2026, versus $2.85 for the corresponding period of 2025.

Total revenue was $73.0 million for the third quarter of 2026 representing an increase of $4.0 million, or 6%, as compared to $69.0 million for the third quarter of 2025. On a linked quarter basis, total revenue increased by $2.1 million, or 3%, from $70.9 million in the second quarter of 2026. Total revenue increased by $14.4 million, or 7%, to $213.6 million for nine months ended September 30, 2026, as compared to $199.2 million for the corresponding period of 2025.

“Strong loan growth and healthy net interest margin expansion were reflected in the quality of our earnings performance in the quarter,” commented David M. Findlay, Chairman and CEO. “Clearly, the resulting record net income reflects the efforts of the entire Lake City Bank team as we continue to grow our market share in every market we serve.”

Quarterly Financial Performance

Third Quarter 2026 versus Third Quarter 2025 highlights:

• Loans increased by $431.4 million, or 8%, from $5.25 billion to $5.68 billion
• Average loans increased by $381.9 million, or 7%, to $5.59 billion
• Net interest income improved by $4.6 million, or 8%, from $56.1 million to $60.7 million
• Net interest margin improved 8 basis points to 3.58% from 3.50%
• Total revenue grew by 6% from $69.0 million to $73.0 million
• Core deposits expanded by $204.3 million, or 3%, to $6.05 billion
• Return on average equity improved to 14.88%, compared to 14.60%
• Average equity improved by $51.7 million, or 7%, from $717.4 million to $769.1 million
• Return on average assets improved to 1.59%, compared to 1.53%
• Nonperforming loans to total loans improved to 0.32%, from 0.36%
• Diluted weighted average common shares outstanding declined by 583,478, or 2%, as a result of the company’s ongoing share repurchase plan
  
  

Third Quarter 2026 versus Second Quarter 2026 highlights:

• Net interest margin improved 9 basis points to 3.58% from 3.49%
• Loans grew by $100.4 million, or 2%, from $5.58 billion to $5.68 billion
• Net interest income increased $2.4 million, or 4%, from $58.3 million to $60.7 million
• Average loans increased by $56.4 million, or 1%, to $5.59 billion
• Core deposits expanded by $22.5 million, or less than 1%, to $6.05 billion
• Total revenue grew by 3% from $70.9 million to $73.0 million
• Nonperforming loans declined by $2.0 million, or 10%, from $20 million to $18 million
  
  

Net Interest Margin

Net interest margin was 3.58% for the third quarter of 2026, representing an 8 basis point increase from 3.50% for the third quarter of 2025. Net interest margin was favorably impacted by a reduction in deposit pricing that outpaced the decline in earning asset yields. The company's funding costs fell by 24 basis points from 2.37% for the third quarter of 2025 to 2.13% for the third quarter of 2026. Offsetting the decrease in funding costs was a decrease to earning asset yields of 16 basis points from 5.87% for the third quarter of 2025 to 5.71% for the third quarter of 2026.

Net interest margin increased 9 basis points to 3.58% for the third quarter of 2026, as compared to 3.49% for the linked second quarter of 2026. Average earning asset yields increased by 6 basis points from 5.65% to 5.71% on a linked quarter basis and interest expense as a percentage of average earning assets decreased 3 basis points from 2.16% to 2.13%. The second quarter cost of funds were elevated by inflows of seasonal public funds deposits into higher priced deposit products.

Net interest income was $60.7 million for the third quarter of 2026, representing an increase of $4.6 million, or 8%, as compared to $56.1 million for the third quarter of 2025. On a linked quarter basis, net interest income increased by $2.4 million, or 4%, from $58.3 million. Net interest income increased by $12.0 million, or 7%, from $163.8 million for the nine months ended September 30, 2025, to $175.8 million for the nine months ended September 30, 2026.

“We’re particularly proud of the net interest margin expansion on a year-over-year basis as well as on a quarter-linked basis. This significant improvement reflects the positive impact of healthy loan growth combined with deposit pricing strategies to positively impact our net interest margin,” stated Lisa M. O’Neill, Executive Vice President and Chief Financial Officer.

Capital Strength

The company’s total capital as a percentage of risk-weighted assets was 15.56% at September 30, 2026, compared to 16.21% at September 30, 2025, and 15.61% at June 30, 2026. 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 10.11% at September 30, 2026, compared to 10.79% at September 30, 2025, and 10.63% at June 30, 2026. The decline in the tangible common equity to tangible assets ratio was primarily driven by an increase in unrealized losses from available-for-sale investment securities, resulting from the rapid 85 basis point rise in the 10-year Treasury yield during the third quarter. As a result, unrealized losses on available-for-sale investment securities increased to $213.9 million at September 30, 2026, up from $159.9 million at September 30, 2025, and $140.9 million at June 30, 2026. 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 12.32% at September 30, 2026, compared to 12.57% at September 30, 2025, and 12.14% at June 30, 2026.

The company continued to repurchase shares during the third quarter, with 41,550 shares of its common stock repurchased at a weighted average price per share of $58.45 with an aggregate purchase price of $2.4 million. The current program authorizes the company to repurchase up to $60.0 million in aggregate purchase price of the company's common stock through April 30, 2027, or 8.2% of current equity. The company has repurchased a total of 787,166 shares under the current program from April 1, 2025 through September 30, 2026 at an aggregate purchase price of $45.4 million and weighted average purchase price per share of $57.62, with remaining authorization of $14.6 million at quarter end.

As announced on October 13, 2026, the board of directors approved a cash dividend for the third quarter of $0.52 per share, payable on November 5, 2026, to shareholders of record as of October 25, 2026. The third quarter dividend per share represents a 4% increase from the $0.50 dividend per share paid for the third quarter of 2025. The dividend payout ratio improved to 47.1% for the nine months ended September 30, 2026 compared to 52.6% for the similar period in 2025.

Kristin L. Pruitt, President, noted, “We are pleased to continue to opportunistically leverage our share repurchase program to demonstrate our confidence in the quality of our performance and the long-term strength of our model, as well as our earnings potential. Our capital position remains robust, enabling us to grow the balance sheet while also returning excess capital to shareholders through a meaningful dividend as well as the common share repurchases.” 

Loan Portfolio

Average total loans of $5.59 billion in the third quarter of 2026 increased $381.9 million, or 7%, from $5.21 billion for the third quarter of 2025, and increased $56.4 million, or 1%, from $5.53 billion for the second quarter of 2026.

Total loans, net of deferred loan fees, increased by $431.4 million, or 8%, from $5.25 billion as of September 30, 2025, to $5.68 billion as of September 30, 2026. The growth in loans was driven by increases across all primary commercial and consumer segments of the portfolio, with increases to the commercial and industrial loans of $187.4 million, or 12%, commercial real estate and multi-family residential loans of $117.6 million, or 4%, consumer 1-4 family mortgage loans of $83.2 million, or 16%, other commercial loans of $28.8 million, or 31%, agri-business and agricultural loans of $8.2 million, or 2%, and other consumer loans of $6.7 million, or 6%.

On a linked quarter basis, total loans increased by $100.4 million, or 2%, from $5.58 billion at June 30, 2026. The linked quarter increase was driven by growth in both the commercial and consumer segments of the portfolio, with increases to the commercial and industrial loan portfolio of $61.1 million, or 4%, consumer 1-4 family mortgage loans of $18.0 million, or 3%, commercial real estate and multi-family residential loans of $12.2 million, or less than 1%, and agri-business and agricultural loans of $8.8 million, or 3%.

Commercial loan originations for the third quarter were approximately $525.0 million and were offset by approximately $443.0 million in loan pay downs. Commercial and industrial line of credit usage was 42% as of September 30, 2026, compared to 40% at September 30, 2025, and 43% at June 30, 2026. Total commercial and industrial lines of credit availability grew by $104.0 million, or 5%, as compared to the prior year, and line usage increased by $88.0 million, or 10%, over that period. On a linked quarter basis, total commercial and industrial lines of credit availability declined by $2.0 million, and line usage declined by $16.0 million, or 2%.

“The strength of loan growth during 2026 has been highlighted by double digit growth in commercial and industrial loans. This encouraging trend is further supported by commercial loan originations outpacing loan paydowns for the fourth quarter in a row,” stated Findlay. “We continue to make progress on our organic loan growth plans with high single digit loan growth on a year-over-year and quarter-linked bases. We are optimistic that our continued emphasis on client prospecting and joint calling is beginning to yield positive results. We continue to add to our commercial and retail lending teams throughout the Lake City Bank footprint.”

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 96% of total deposits at September 30, 2026.

Total deposits increased $270.5 million, or 4%, from $6.02 billion as of September 30, 2025, to $6.29 billion as of September 30, 2026. The increase in total deposits was driven by an increase in core deposits, which increased by $204.3 million, or 3%. Public funds deposits grew annually by $189.6 million, or 10%, to $2.02 billion and retail deposits expanded by $93.0 million, or 5%, to $1.82 billion. Conversely, commercial deposits contracted by $78.3 million, or 3%, to $2.21 billion. Brokered deposits increased by $66.2 million, or 38%, but remain at a low level, representing 4% of total deposits at September 30, 2026.

On a linked quarter basis, total deposits decreased $34.8 million, or 1%, from $6.33 billion at June 30, 2026, to $6.29 billion at September 30, 2026. Core deposits increased by $22.5 million, or less than 1%, while brokered deposits decreased by $57.3 million, or 19%. The linked quarter growth in core deposits was driven by an increase in commercial deposits of $96.6 million, or 5%, and an increase in retail deposits of $48.9 million, or 3%. This growth was offset by a seasonal reduction in public funds of $123.0 million, or 6%.

Average total deposits were $6.34 billion for the third quarter of 2026, an increase of $308.5 million, or 5%, from $6.03 billion for the third quarter of 2025. Average interest-bearing deposits drove the increase in average total deposits and increased by $259.3 million, or 5%. Contributing to the overall growth of interest-bearing deposits was an increase in total average time deposits of $174.4 million, or 23%, and an increase in average interest-bearing checking accounts of $88.6 million, or 2%. Additionally, average noninterest-bearing demand deposits increased by $49.3 million, or 4%, to $1.29 billion.

On a linked quarter basis, average total deposits increased by $25.4 million, or less than 1%, from $6.31 billion for the second quarter of 2026 to $6.34 billion for the third quarter of 2026. Driving the increase was an increase in noninterest bearing demand deposits of $65.9 million, or 5%, and an increase in average time deposits of $13.3 million, or 1%. Offsetting these increases were reductions in interest bearing checking accounts, which declined by $47.1 million, or 1%, and average savings accounts, which declined by $6.7 million, or 2%.

Checking account growth as of September 30, 2026, compared to September 30, 2025, includes growth of $261.3 million, or 15%, in aggregate public fund checking account balances and growth of $43.5 million, or 5%, in aggregate retail checking account balances. Offsetting these increases was a decline of $128.2 million, or 6%, in aggregate commercial checking account balances. The number of accounts expanded for all three segments, with growth of 2% for commercial accounts, 1% for public funds accounts and 1% for retail accounts.

“Core deposits remain stable at 96% of total deposits,” added O’Neill. “During the quarter we deployed deposit growth strategies in Indianapolis that yielded $106.1 million in deposits, of which $83.2 million was new money to Lake City Bank. This strategy contributed to the quarter linked growth in commercial and retail deposits and provides our revenue producing teams with new opportunities to continue to grow deposit and loan relationships.”

Asset Quality

The company recorded a provision for credit losses of $1.2 million in the third quarter of 2026, compared to $2.0 million in the third quarter of 2025 and $1.7 million for the linked second quarter of 2026.

The allowance for credit loss reserve to total loans was 1.21% at September 30, 2026, down from 1.30% at September 30, 2025, and 1.27% at June 30, 2026. The company recorded net charge offs of $3.0 million in the third quarter of 2026, compared to net charge offs of $384,000 in the third quarter of 2025 and $24,000 during the linked second quarter of 2026. Net charge offs during the third quarter of 2026 were driven by a partial charge off of $2.8 million to address a shortfall in collateral related to the ongoing workout of a nonperforming commercial credit, which was fully reserved for in prior quarters. Annualized net charge offs to average loans were 0.21% for the third quarter of 2026, compared to 0.03% for the third quarter of 2025 and 0.00% for the linked second quarter of 2026.

Nonperforming assets decreased by $1.1 million, or 6%, to $18.0 million as of September 30, 2026, versus $19.1 million as of September 30, 2025. On a linked quarter basis, nonperforming assets decreased by $2.0 million, or 10%, primarily driven by the aforementioned $2.8 million partial charge off. The ratio of nonperforming assets to total assets at September 30, 2026, decreased to 0.25%, down from 0.28% at September 30, 2025 and June 30, 2026.

Total individually analyzed and watch list loans increased by $44.7 million, or 28%, to $202.0 million as of September 30, 2026, versus $157.2 million as of September 30, 2025. On a linked quarter basis, total individually analyzed and watch list loans increased by $4.0 million, or 2%, from $198.0 million at June 30, 2026. The increase in individually analyzed and watch list loans during the linked quarter was driven primarily by credit downgrades to the watch list of approximately $15.6 million and offset by payoffs and upgrades of approximately $9.4 million and the $2.8 million partial charge off. Watch list loans as a percentage of total loans were 3.56% at September 30, 2026, a 56 basis point increase compared to 3.00% at September 30, 2025, and a 1 basis point increase from 3.55% at June 30, 2026.

Findlay stated, “The Indiana economy is resilient, diverse and expanding. Our borrowers continue to navigate through the challenges created by rising oil prices and tariff policy uncertainty. We are pleased that our asset quality trends continue to be stable with historically-low troubled loan totals, and we remain optimistic about the manufacturing outlook in our state.”

Investment Portfolio Overview

Total investment securities were $1.09 billion at September 30, 2026, reflecting a decrease of $74.3 million, or 6%, as compared to $1.16 billion at September 30, 2025. Investment securities represented 15% of total assets as of September 30, 2026, down from 17% at September 30, 2025 and 16% at June 30, 2026. The company anticipates receiving principal and interest cash flows of approximately $24.1 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 contracted to 5.6 years at September 30, 2026, compared to 5.8 years at September 30, 2025, and 5.8 years at June 30, 2026.

Noninterest Income

The company’s noninterest income decreased $680,000, or 5%, to $12.3 million for the third quarter of 2026, compared to $13.0 million for the third quarter of 2025. Wealth advisory fees increased $298,000, or 10%, driven by continued growth in customers and assets under management. Mortgage banking income increased $94,000 from increased pipeline volume. Service charges on deposit accounts increased by $84,000, or 3%. Equity market declines negatively impacted the performance of the bank's variable owned life insurance policies, which declined by $476,000 during the third quarter of 2026 as compared to the prior quarter. Loan and service fees decreased $384,000, or 11%, from reduced commercial loan fees. Other income decreased by $320,000, or 43%, from a reduction in limited partnership investment income.

Noninterest income for the third quarter of 2026 decreased by $298,000, or 2%, on a linked quarter basis from $12.6 million during the second quarter of 2026. Increases to fee-based revenue streams benefitted noninterest income, including wealth advisory fees, which increased $136,000, or 5%, service charges on deposit accounts, which increased $127,000, or 4%, merchant and interchange fee income, which increased $40,000, or 5%, and investment brokerage fees, which increased $24,000, or 5%. Offsetting these positive contributions to noninterest income were decreases to bank owned life insurance income of $464,000, or 29%, other income of $96,000, or 18%, and mortgage banking income of $40,000, or 31%. The decrease in bank owned life insurance income was driven by variable bank owned life insurance market performance. Reduced limited partnership income primarily drove the decrease in other income, and reduced pipeline volume contributed to the decrease in mortgage banking income.

Noninterest income increased by $2.4 million, or 7%, to $37.8 million for the nine months ended September 30, 2026, compared to $35.4 million for the prior year period. Increases in fee-based revenue streams contributed to the increase to noninterest income, with wealth advisory fees improving by $844,000, or 10%, and service charges on deposit accounts improving by $235,000, or 3%. Conversely, merchant and interchange fee income declined $79,000, or 3%. Bank owned life insurance income improved by $817,000, or 28%, from improved market performance from variable bank owned life insurance policies and incremental income from general account policies purchased in 2025. Interest rate swap fee income improved by $681,000 and mortgage banking income improved $230,000, or 343%, from increased volume.

“Our fee-based generating lines of business are contributing to revenue growth with high single digit year-over-year growth in noninterest income,” added Findlay. “We are seeing our investments in these business lines positively impact revenue outcomes. In particular, our Wealth Advisory fees grew by 10% on a year-to-date basis compared to the same period in 2025.”

Noninterest Expense

Noninterest expense increased $1.2 million, or 3%, to $36.1 million for the third quarter of 2026, compared to $35.0 million during the third quarter of 2025. Salaries and employee benefits expense increased by $368,000, or 2%, primarily as a result of increased salaries and wages and benefits expense, and was offset by reduced performance-based incentive compensation accruals. Full-time equivalent staff increased by 31 persons at September 30, 2026 compared to the same period in the prior year, or 5%. The growth in staff reflects the organic growth plans with an increase of 18 revenue generating personnel and 13 support staff over the past year. Professional fees increased $397,000, or 23%, from increased technology implementation fees and other professional expenses. Net occupancy expense increased $276,000, or 15%, from the company's continued expansion and reinvestment into its physical branch and operational infrastructure, including the Innovation and Technology Center at the company's downtown Warsaw campus. Data processing fees and supplies increased $234,000, or 6%, from continued investment in customer-facing and operational technology solutions, including artificial intelligence capabilities. Offsetting these increases was a decrease in other expense of $175,000, or 6%. The reduction in other expense was driven by reduced office supplies and telecommunications expenses.

On a linked quarter basis, noninterest expense increased by $1.7 million, or 5%, from $34.5 million during the second quarter of 2026. Other expense increased $436,000, or 19%, primarily from semi-annual board of directors share grants that occurred in the third quarter. Corporate and business development expense increased by $388,000, or 31%, from increased advertising, client entertainment and business development expenses. Professional fees increased $338,000, or 19%, from increased technology implementation fees and other professional fees. Salaries and employee benefits expense increased $288,000, or 1%, primarily from increased health insurance expense. Net occupancy expense increased by $186,000, or 9%. 

Noninterest expense increased by $7.6 million, or 8%, for the nine months ended September 30, 2026, to $105.7 million compared to $98.2 million for the comparable period of 2025. Salaries and employee benefits expense increased $6.2 million, or 11%, primarily due to increased salaries and wages of $2.9 million, performance-based incentive compensation accruals of $1.6 million, health insurance expense of $1.3 million, and variable deferred compensation expense of $370,000. Net occupancy expense increased $620,000, or 11%, from investing in our retail branch and operational infrastructure. Data processing fees and supplies expense increased $450,000, or 4%, from continued investment in customer-facing and operational technology solutions. Corporate and business development expense increased $236,000, or 6%, from increased advertising and corporate development expenses. FDIC insurance and other regulatory fees increased $147,000, or 6%, from increased FDIC insurance premium accruals due to balance sheet growth.

The company’s efficiency ratio was 49.5% for the third quarter of 2026, compared to 50.7% for the third quarter of 2025 and 48.6% for the linked second quarter of 2026. The company's efficiency ratio was 49.5% for the nine months ended September 30, 2026, compared to 49.3% for the comparable period in 2025.

“During 2026, we have made significant investments in people, brick and mortar and technology,” Findlay stated. “Our staffing focus has been on the addition of revenue producing team members, primarily in commercial banking.  In addition, we continue to invest in our footprint expansion in all Lake City Bank markets. We currently have three branches under development in the Indianapolis and Fort Wayne markets, and we opened the company’s Innovation and Technology Center in our Warsaw headquarters. Innovation that focuses on artificial intelligence capabilities is also a priority as we prepare for the rollout of our innovative, new customer relationship management program that will enhance relationship development and expansion, client communication, and allow for future revenue growth.”

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 $7.2 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; changes in borrowers’ credit risks and payment behaviors; and developments in technology, 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.

Reconciliation of Non-GAAP Financial Measures

Tangible common equity, adjusted tangible common equity, tangible assets, adjusted tangible assets, tangible book value per common share, tangible common equity to tangible assets, adjusted tangible common equity to adjusted tangible assets, and pretax pre-provision earnings are non-GAAP financial measures calculated based on GAAP amounts. Tangible common equity is calculated by excluding the balance of goodwill and other intangible assets from the calculation of equity, net of deferred tax. Tangible assets are calculated by excluding the balance of goodwill and other intangible assets from the calculation of total assets, net of deferred tax. Adjusted tangible assets and adjusted tangible common equity remove the fair market value adjustment impact of the available-for-sale investment securities portfolio in accumulated other comprehensive income (loss) ("AOCI"). Tangible book value per common share is calculated by dividing tangible common equity by the number of shares outstanding less true treasury stock. Pretax pre-provision earnings is calculated by adding net interest income to noninterest income and subtracting noninterest expense. Because not all companies use the same calculation of tangible common equity and tangible assets, this presentation may not be comparable to other similarly titled measures calculated by other companies. However, management considers these measures of the company’s value meaningful to understanding of the company’s financial information and performance.

A reconciliation of these non-GAAP financial measures is provided below (dollars in thousands, except per share data).

Contact
Lisa M. O’Neill
Executive Vice President and Chief Financial Officer
(574) 267-9125
lisa.oneill@lakecitybank.com