Core Insights - Lake City Bank plans to invest $12 million in the Innovation and Technology Center as part of its Downtown Warsaw Headquarters Campus expansion, continuing its investment in Warsaw and Kosciusko County, totaling $31 million since 2010 [1][6] - The construction of the 35,600 square foot office building is set to begin in early September 2025, with completion expected by summer 2026 [2] - The renovated center will support approximately 110 employees, enhancing collaboration among Technology Services, Information Security, Application Management, and Project Management teams [3][4] Investment and Expansion - The bank has invested $23 million in Downtown Warsaw and $31 million countywide since 2010, demonstrating a long-term commitment to the region [1] - The renovation aims to modernize a facility originally constructed in 1968, which was purchased by Lake City Bank in 2024 [2] Community and Employment Impact - Lake City Bank is the largest employer in Downtown Warsaw, with 283 team members currently working in the area [3] - The renovation is expected to foster collaboration and support the bank's growth as a technology-driven community bank [4] Architectural and Design Features - The Innovation and Technology Center will feature a modern design that aligns with the bank's forward-thinking brand identity, including the preservation and repurposing of the original brick façade [5] - The project reflects the bank's commitment to repurposing older buildings and making significant capital investments in the community [6] Company Overview - Lake City Bank, founded in 1872, is a $7.0 billion bank headquartered in Warsaw, Indiana, serving Central and Northern Indiana with 55 branch offices and a digital banking platform [6]

Core Viewpoint - Lakeland Financial (LKFN) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [4]. Company Performance and Outlook - The upgrade reflects an improvement in Lakeland Financial's underlying business, suggesting that investors may respond positively by driving the stock price higher [5]. - The Zacks Consensus Estimate for Lakeland Financial has increased by 3.5% over the past three months, with expected earnings of $3.89 per share for the fiscal year ending December 2025, indicating no year-over-year change [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7]. - Lakeland Financial's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Core Points - Lake City Bank opened its newest branch in Westfield, Indiana, on September 2, 2025, marking the bank's 55th office overall and ninth in the Indianapolis Region [1][2] - The new branch is located at 170 Jersey St. within The Union at Grand Junction development, which includes apartments, retail and office space, restaurants, and public parking [2] - The bank's community banking model emphasizes building long-term customer relationships while providing technology-forward solutions for retail and commercial clients [7] Company Overview - Lake City Bank is a $7 billion bank headquartered in Warsaw, Indiana, founded in 1872, serving Central and Northern Indiana communities with 55 branch offices and a robust digital banking platform [7] - The bank is the single bank subsidiary of Lakeland Financial Corporation, listed on Nasdaq Global Select under the ticker LKFN [8] Management and Community Engagement - Stacy R. Oswald, Vice President and Retail Banking Officer, has moved to the Westfield office from the Fishers office and has 23 years of experience in financial services [4] - The bank aims to expand its relationships in Westfield and engage with the community, reflecting its commitment to local economic development [2][3]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents Lakeland Financial Corporation's unaudited consolidated financial statements and notes for interim periods [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Lakeland Financial Corporation's unaudited consolidated financial statements and notes, detailing financial position and performance for the specified interim periods [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) This section presents the consolidated balance sheets, detailing assets, liabilities, and equity at June 30, 2025, and December 31, 2024 | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------- | :------------ | :---------------- | :--------- | :--------- | | Total assets | $6,964,301 | $6,678,374 | $285,927 | 4.28% | | Total liabilities | $6,254,314 | $5,994,463 | $259,851 | 4.33% | | Total equity | $709,987 | $683,911 | $26,076 | 3.81% | | Total deposits | $6,176,833 | $5,900,966 | $275,867 | 4.67% | | Loans, net | $5,160,275 | $5,031,988 | $128,287 | 2.55% | | Cash and cash equivalents | $310,180 | $168,205 | $141,975 | 84.41% | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) This section presents the consolidated statements of income, detailing net interest income, noninterest income, and net income for the three and six months ended June 30, 2025 and 2024 | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Net interest income | $54,876 | $48,296 | $6,580 | 13.62% | | Provision for credit losses | $3,000 | $8,480 | $(5,480) | -64.62% | | Noninterest income | $11,486 | $20,439 | $(8,953) | -43.81% | | Noninterest expense | $30,432 | $33,333 | $(2,901) | -8.70% | | Net income | $26,966 | $22,549 | $4,417 | 19.59% | | Basic EPS | $1.05 | $0.88 | $0.17 | 19.32% | | Diluted EPS | $1.04 | $0.87 | $0.17 | 19.54% | | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Net interest income | $107,751 | $95,712 | $12,039 | 12.58% | | Provision for credit losses | $9,800 | $10,000 | $(200) | -2.00% | | Noninterest income | $22,414 | $33,051 | $(10,637) | -32.18% | | Noninterest expense | $63,195 | $64,038 | $(843) | -1.32% | | Net income | $47,051 | $45,950 | $1,101 | 2.40% | | Basic EPS | $1.83 | $1.79 | $0.04 | 2.23% | | Diluted EPS | $1.82 | $1.78 | $0.04 | 2.25% | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the consolidated statements of comprehensive income, detailing net income and other comprehensive income (loss) for the three and six months ended June 30, 2025 and 2024 | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Net income | $26,966 | $22,549 | $4,417 | 19.59% | | Total other comprehensive income (loss), net of tax | $2,758 | $(3,545) | $6,303 | -177.81% | | Comprehensive income | $29,724 | $19,004 | $10,720 | 56.41% | | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Net income | $47,051 | $45,950 | $1,101 | 2.40% | | Total other comprehensive income (loss), net of tax | $5,379 | $(15,263) | $20,642 | -135.24% | | Comprehensive income | $52,430 | $30,687 | $21,743 | 70.85% | [Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This section presents the consolidated statements of changes in stockholders' equity, detailing total equity, retained earnings, and accumulated other comprehensive income (loss) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total Stockholders' Equity | $709,898 | $683,822 | | Retained Earnings | $757,739 | $736,412 | | Accumulated Other Comprehensive Income (Loss) | $(161,121) | $(166,500) | | Treasury Stock at Cost | $(17,384) | $(15,754) | - Total stockholders' equity increased by **$26.1 million** from December 31, 2024, to June 30, 2025, primarily due to net income of **$47.1 million**, partially offset by **$25.7 million** in cash dividends paid and an improvement of **$5.4 million** in accumulated other comprehensive income (loss)[120](index=120&type=chunk)[178](index=178&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents the consolidated statements of cash flows, detailing net cash from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Net cash from operating activities | $45,096 | $45,796 | $(700) | -1.53% | | Net cash from investing activities | $(156,340) | $(97,322) | $(59,018) | 60.64% | | Net cash from financing activities | $253,220 | $20,879 | $232,341 | 1112.80% | | Net change in cash and cash equivalents | $141,975 | $(30,647) | $172,622 | -563.29% | | Cash and cash equivalents at end of period | $310,180 | $121,177 | $189,003 | 155.97% | [Notes to the Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section provides detailed notes accompanying the consolidated financial statements, offering further explanations and disclosures on various accounting policies and financial items [NOTE 1. BASIS OF PRESENTATION](index=9&type=section&id=NOTE%201.%20BASIS%20OF%20PRESENTATION) This note clarifies the scope of the consolidated financial statements, the Company's single reportable segment, and the adoption and impact of new accounting standards - The Company's financial results are aggregated into one reportable segment, with the Chief Operating Decision Maker evaluating performance on a Company-wide basis, primarily using consolidated net income[18](index=18&type=chunk)[19](index=19&type=chunk) - ASU 2023-08, 'Intangibles—Goodwill and Other—Crypto Assets,' effective for annual periods after December 15, 2024, did not materially impact the consolidated financial statements due to the Company's current operations[20](index=20&type=chunk)[22](index=22&type

Core Viewpoint - Lakeland Financial (LKFN) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system emphasizes the correlation between changes in earnings estimates and stock price movements, suggesting that revisions in earnings estimates can lead to significant price changes [4][6]. - The recent upgrade reflects an improvement in Lakeland Financial's underlying business, which is expected to positively influence its stock price [5]. Zacks Rank System - The Zacks Rank system categorizes stocks based on earnings estimate revisions, with a proven track record of performance, where Zacks Rank 1 stocks have generated an average annual return of +25% since 1988 [7]. - Lakeland Financial's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating strong potential for market-beating returns in the near term [10]. Earnings Estimate Revisions for Lakeland Financial - For the fiscal year ending December 2025, Lakeland Financial is expected to earn $3.89 per share, which remains unchanged from the previous year, but the Zacks Consensus Estimate has increased by 4.5% over the past three months [8].

Company Performance - Lakeland Financial (LKFN) reported quarterly earnings of $1.04 per share, exceeding the Zacks Consensus Estimate of $0.93 per share, and up from $0.74 per share a year ago, representing an earnings surprise of +11.83% [1] - The company posted revenues of $66.36 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 0.25%, but down from $68.74 million year-over-year [2] - Over the last four quarters, Lakeland Financial has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Performance and Outlook - Lakeland Financial shares have declined approximately 6.5% since the beginning of the year, while the S&P 500 has gained 8.2% [3] - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $0.98 for the coming quarter and $3.76 for the current fiscal year, with revenues expected to be $67.8 million and $265.5 million respectively [7] Industry Context - The Zacks Industry Rank for Banks - Midwest, which includes Lakeland Financial, is currently in the top 22% of over 250 Zacks industries, indicating a favorable industry outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Lakeland Financial's stock performance [5]

Core Insights - Lakeland Financial Corporation reported record second quarter net income of $27.0 million for Q2 2025, a 20% increase from $22.5 million in Q2 2024 [1] - Diluted earnings per share for Q2 2025 were $1.04, up 20% from $0.87 in Q2 2024 [1] - The company experienced a 34% increase in net income from the previous quarter, rising from $20.1 million in Q1 2025 [1] Quarterly Financial Performance - Pretax pre-provision earnings for Q2 2025 were $35.9 million, a 1% increase from $35.4 million in Q2 2024 [2] - Adjusted core operational profitability improved by 41% from $19.2 million in Q2 2024 to $27.0 million in Q2 2025 [2] - Return on average equity increased to 15.52% in Q2 2025 from 14.19% in Q2 2024 [5] - Average loans grew by $194.8 million, or 4%, to $5.23 billion year-over-year [5] - Core deposits increased by $423.9 million, or 8%, to $6.03 billion year-over-year [5] Capital Strength - The total capital as a percentage of risk-weighted assets improved to 15.86% at June 30, 2025, exceeding the 10% regulatory threshold [6] - The tangible common equity to tangible assets ratio improved to 10.15% at June 30, 2025, compared to 9.91% a year earlier [7] Dividend and Share Repurchase - The board approved a cash dividend of $0.50 per share for Q2 2025, a 4% increase from $0.48 in Q2 2024 [8] - The company repurchased 30,300 shares for $1.7 million at an average price of $55.94 during Q2 2025 [9] Loan Portfolio - Average total loans for Q2 2025 were $5.23 billion, a 4% increase from $5.03 billion in Q2 2024 [10] - Total loans increased by $173.8 million, or 3%, from $5.06 billion as of June 30, 2024, to $5.23 billion as of June 30, 2025 [11] - Commercial real estate and multi-family residential loans grew by $177.0 million, or 7% [11] Asset Quality - The provision for credit losses was $3.0 million in Q2 2025, down from $8.5 million in Q2 2024 [28] - Nonaccrual loans decreased by 46% to $30.6 million compared to $57.1 million a year earlier [30] - The ratio of nonperforming assets to total assets decreased to 0.45% from 0.88% a year earlier [31] Investment Portfolio Overview - Total investment securities were $1.13 billion at June 30, 2025, reflecting a slight increase from $1.12 billion a year earlier [34] - The company anticipates receiving approximately $54.5 million in cash flows from the investment securities portfolio during the remainder of 2025 [34] Noninterest Income - Noninterest income decreased by $9.0 million, or 44%, to $11.5 million for Q2 2025 compared to $20.4 million in Q2 2024 [35] - Adjusted core noninterest income increased slightly by $58,000, or less than 1%, from $11.4 million in Q2 2024 [35] Noninterest Expense - Noninterest expense decreased by $2.9 million, or 9%, to $30.4 million for Q2 2025 compared to $33.3 million in Q2 2024 [39] - Adjusted core noninterest expense increased by $1.6 million, or 6%, from $28.8 million in Q2 2024 [39] Efficiency Ratio - The efficiency ratio improved to 45.9% for Q2 2025 from 48.5% in Q2 2024 [43] - The adjusted core efficiency ratio was 48.2% for Q2 2024 [43]

[Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) Lakeland Financial reported strong Q2 and YTD 2025 results, with significant growth in net income and diluted EPS driven by robust net interest income expansion [Second Quarter 2025 Performance Summary](index=1&type=section&id=Second%20Quarter%202025%20Performance%20Summary) Lakeland Financial reported a record net income of $27.0 million for the second quarter of 2025, a 20% increase year-over-year, driven by a 14% expansion in net interest income. Diluted earnings per share also grew by 20% to $1.04. On a linked-quarter basis, net income saw a significant 34% increase Q2 2025 Key Financial Metrics (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change ($ million) | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Income | $27.0 million | $22.5 million | +$4.4 million | +20% | | Diluted EPS | $1.04 | $0.87 | +$0.17 | +20% | | Net Interest Income | - | - | - | +14% | Q2 2025 Key Financial Metrics (vs. Q1 2025) | Metric | Q2 2025 | Q1 2025 | Change ($ million) | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Income | $27.0 million | $20.1 million | +$6.9 million | +34% | | Diluted EPS | $1.04 | $0.78 | +$0.26 | +33% | - Adjusted core operational profitability, a non-GAAP measure, improved by **41% to $27.0 million** for Q2 2025 compared to $19.2 million in Q2 2024[2](index=2&type=chunk) - Management highlighted strong earnings momentum driven by double-digit growth in net interest income, alongside healthy loan and deposit growth[4](index=4&type=chunk) [Year-to-Date 2025 Performance Summary](index=1&type=section&id=Year-to-Date%202025%20Performance%20Summary) For the first six months of 2025, net income increased by 2% to $47.1 million compared to the same period in 2024. Diluted earnings per share also rose by 2% to $1.82. Pretax pre-provision earnings grew by 3% to $67.0 million Six Months Ended June 30 Key Financial Metrics | Metric | 2025 ($ million) | 2024 ($ million) | Change ($ million) | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Income | $47.1 million | $46.0 million | +$1.1 million | +2% | | Diluted EPS | $1.82 | $1.78 | +$0.04 | +2% | | Pretax Pre-Provision Earnings | $67.0 million | $64.7 million | +$2.2 million | +3% | [Detailed Financial Analysis](index=3&type=section&id=Detailed%20Financial%20Analysis) This section provides an in-depth analysis of the company's capital management, loan and deposit portfolios, net interest margin, asset quality, investment portfolio, and noninterest income and expense [Capital Management](index=3&type=section&id=Capital%20Management) The company's capital position strengthened, with all capital ratios significantly exceeding 'well capitalized' regulatory thresholds. The board approved a 4% year-over-year increase in the quarterly cash dividend to $0.50 per share and repurchased $1.7 million of common stock during the quarter Capital Ratios | Ratio | June 30, 2025 | June 30, 2024 | March 31, 2025 | | :--- | :--- | :--- | :--- | | Total Capital to Risk-Weighted Assets | 15.86% | 15.53% | 15.77% | | Tangible Common Equity to Tangible Assets (Non-GAAP) | 10.15% | 9.91% | 10.09% | - The quarterly cash dividend was increased by **4% to $0.50 per share** compared to the second quarter of 2024[8](index=8&type=chunk) - The company repurchased **30,300 shares for $1.7 million** during Q2 2025, with **$28.3 million** remaining under the current repurchase program[9](index=9&type=chunk) - Management's capital priority is to support organic loan growth in Indiana markets, while also continuing dividend growth and opportunistic share repurchases[10](index=10&type=chunk) [Loan Portfolio Analysis](index=3&type=section&id=Loan%20Portfolio%20Analysis) Average total loans grew 4% year-over-year to $5.23 billion. Growth was primarily in commercial real estate, multi-family residential, and consumer mortgages, which was partially offset by contractions in commercial & industrial and agricultural loans. Commercial line of credit utilization improved to its highest rate since 2020 Year-over-Year Loan Portfolio Changes (June 30, 2024 to June 30, 2025) | Loan Category | Change ($ million) | Change (%) | | :--- | :--- | :--- | | Commercial Real Estate & Multi-family | +$177.0 | +7% | | Consumer 1-4 Family Mortgage | +$46.2 | +10% | | Other Consumer | +$6.0 | +6% | | Commercial and Industrial | -$32.5 | -2% | | Agri-business and Agricultural | -$21.6 | -6% | - Commercial line of credit usage increased to **44%** as of June 30, 2025, up from 41% a year ago, marking the highest utilization rate since 2020[14](index=14&type=chunk)[15](index=15&type=chunk) - The company has limited exposure to commercial office space, with loans in this sector representing only **2% of total loans**[14](index=14&type=chunk) [Deposit Portfolio Analysis](index=4&type=section&id=Deposit%20Portfolio%20Analysis) Total deposits grew 7% year-over-year to $6.18 billion, driven by an 8% increase in core deposits. Public funds were the primary growth driver, increasing 17% annually. Core deposits now constitute 98% of total deposits, up from 97% a year ago Deposit Composition as of June 30, 2025 | Deposit Type | Amount (in thousands) | % of Total | | :--- | :--- | :--- | | Retail | $1,755,750 | 28.4% | | Commercial | $2,256,620 | 36.6% | | Public funds | $2,014,047 | 32.6% | | **Core deposits** | **$6,026,417** | **97.6%** | | Brokered deposits | $150,416 | 2.4% | | **Total** | **$6,176,833** | **100.0%** | - Year-over-year, core deposits grew by **$423.9 million (8%)**, with public funds deposits growing by **$286.5 million (17%)**[17](index=17&type=chunk)[18](index=18&type=chunk) - Deposits not covered by FDIC insurance or the Indiana Public Deposit Insurance Fund were **27% of total deposits**, an improvement from 29% a year ago[24](index=24&type=chunk) [Net Interest Margin and Income](index=5&type=section&id=Net%20Interest%20Margin%20and%20Income) Net interest margin (NIM) expanded significantly by 25 basis points year-over-year to 3.42%, primarily due to a 49 basis point reduction in funding costs. This drove a 14% increase in net interest income to $54.9 million for the quarter. A loan prepayment fee contributed 3 basis points to the quarterly NIM Net Interest Margin Analysis (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (bps) | | :--- | :--- | :--- | :--- | | Net Interest Margin | 3.42% | 3.17% | +25 bps | | Earning Asset Yield | 5.83% | 6.07% | -24 bps | | Funding Costs (% of avg. earning assets) | 2.41% | 2.90% | -49 bps | - Net interest income increased by **14% YoY to $54.9 million** and by **4%** on a linked-quarter basis[28](index=28&type=chunk) - The easing of monetary policy that began in September 2024 drove the reduction in funding costs and subsequent NIM expansion[25](index=25&type=chunk) - The cumulative deposit beta of **50%** has outpaced the loan beta of **29%** in the current rate-easing cycle, benefiting net interest margin[27](index=27&type=chunk) [Asset Quality](index=6&type=section&id=Asset%20Quality) Asset quality showed significant improvement following the resolution of a large nonperforming industrial credit. The company took a $28.6 million charge-off on this loan, which was fully allocated. As a result, nonperforming assets decreased by 46% year-over-year to $31.1 million, and the ratio of nonperforming assets to total assets fell to 0.45% from 0.88% - A provision for credit losses of **$3.0 million** was recorded, a decrease from $8.5 million in Q2 2024 and $6.8 million in Q1 2025[30](index=30&type=chunk) - The company recognized a charge-off of **$28.6 million** during the quarter related to a previously disclosed nonperforming industrial loan, which is expected to be fully resolved in Q3 2025[30](index=30&type=chunk) Asset Quality Metrics Improvement | Metric | June 30, 2025 | June 30, 2024 | March 31, 2025 | | :--- | :--- | :--- | :--- | | Nonperforming Assets ($ million) | $31.1 million | $57.6 million | $57.9 million | | Nonperforming Assets to Total Assets | 0.45% | 0.88% | 0.84% | | Watch List Loans to Total Loans | 3.67% | 5.31% | 4.13% | [Investment Portfolio Overview](index=6&type=section&id=Investment%20Portfolio%20Overview) The total investment securities portfolio remained stable at $1.13 billion, representing 16% of total assets. The portfolio's tax-equivalent adjusted effective duration was 5.9 years. The company expects to receive approximately $54.5 million in cash flows from the portfolio during the remainder of 2025 - Total investment securities were **$1.13 billion** at June 30, 2025, largely unchanged from the prior year[35](index=35&type=chunk) - The portfolio's effective duration was **5.9 years**, down from 6.5 years a year ago[35](index=35&type=chunk) [Noninterest Income](index=6&type=section&id=Noninterest%20Income) Noninterest income for Q2 2025 was $11.5 million, a 44% decrease from Q2 2024. The decline was entirely due to a $9.0 million net gain on Visa shares recorded in the prior-year period. Excluding this item, adjusted core noninterest income was flat year-over-year. On a linked-quarter basis, noninterest income grew 5%, driven by bank-owned life insurance and mortgage banking income - The significant year-over-year decrease in noninterest income was caused by a one-time **$9.0 million gain on Visa shares** in Q2 2024[36](index=36&type=chunk) - Adjusted core noninterest income (non-GAAP) was essentially flat, increasing by less than **1%** compared to Q2 2024[36](index=36&type=chunk) - On a linked-quarter basis, noninterest income increased by **5%**, with notable growth in bank-owned life insurance income (**+223%**) and mortgage banking income[38](index=38&type=chunk) - Assets under management in the Wealth Advisory area reached nearly **$3.0 billion** at quarter-end[39](index=39&type=chunk) [Noninterest Expense](index=7&type=section&id=Noninterest%20Expense) Noninterest expense decreased 9% year-over-year to $30.4 million, driven by a $4.5 million legal accrual in Q2 2024. Excluding this, adjusted core noninterest expense rose 6%, primarily due to higher salaries and technology investments. The efficiency ratio improved to 45.9% from 48.5% in the prior-year quarter - The year-over-year decrease in noninterest expense was due to a **$4.5 million legal accrual** recorded in Q2 2024[40](index=40&type=chunk) - Adjusted core noninterest expense (non-GAAP) increased by **6% YoY**, driven by a **6%** rise in salaries and benefits and a **9%** increase in data processing fees[40](index=40&type=chunk) Efficiency Ratio | Period | Efficiency Ratio | | :--- | :--- | | Q2 2025 | 45.9% | | Q2 2024 | 48.5% | | Q1 2025 | 51.4% | [Financial Statements and Tables](index=9&type=section&id=Financial%20Statements%20and%20Tables) This section provides a comprehensive overview of the company's financial position and performance through selected financial highlights, consolidated balance sheets, income statements, and detailed portfolio breakdowns [Financial Highlights](index=9&type=section&id=Financial%20Highlights) This section provides a summary table of key financial data, including end-of-period balances, average balances, income statement data, per-share data, key ratios, and asset quality metrics for the second quarter of 2025 compared to previous periods Selected Financial Highlights (as of June 30, 2025) | Metric | Q2 2025 ($M) | Q1 2025 ($M) | Q2 2024 ($M) | | :--- | :--- | :--- | :--- | | Total Assets | $6,964.3M | $6,851.2M | $6,568.8M | | Total Loans | $5,226.8M | $5,223.2M | $5,052.3M | | Total Deposits | $6,176.8M | $5,960.2M | $5,763.5M | | Total Equity | $710.0M | $694.5M | $654.6M | | Net Income | $27.0M | $20.1M | $22.5M | | Diluted EPS | $1.04 | $0.78 | $0.87 | | Return on Average Assets | 1.57% | 1.20% | 1.37% | | Return on Average Equity | 15.52% | 11.70% | 14.19% | | Net Interest Margin | 3.42% | 3.40% | 3.17% | [Consolidated Balance Sheets](index=11&type=section&id=Consolidated%20Balance%20Sheets) This section presents the company's consolidated balance sheets as of June 30, 2025, and December 31, 2024, detailing assets, liabilities, and stockholders' equity Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $6,964,301 | $6,678,374 | | Loans, net | $5,160,275 | $5,031,988 | | Total Deposits | $6,176,833 | $5,900,966 | | Total Liabilities | $6,254,314 | $5,994,463 | | Total Stockholders' Equity | $709,898 | $683,822 | [Consolidated Statements of Income](index=12&type=section&id=Consolidated%20Statements%20of%20Income) This section provides the unaudited consolidated statements of income for the three and six months ended June 30, 2025, and June 30, 2024, detailing revenues, expenses, and net income Income Statement Summary - Three Months Ended June 30 (in thousands) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Net Interest Income | $54,876 | $48,296 | | Provision for credit losses | $3,000 | $8,480 | | Noninterest Income | $11,486 | $20,439 | | Noninterest Expense | $30,432 | $33,333 | | **Net Income** | **$26,966** | **$22,549** | [Loan Detail](index=14&type=section&id=Loan%20Detail) This table provides a detailed breakdown of the company's loan portfolio by category as of June 30, 2025, March 31, 2025, and June 30, 2024 Loan Portfolio Composition (June 30, 2025) | Loan Category | Amount (in thousands) | % of Total | | :--- | :--- | :--- | | Commercial and industrial | $1,493,762 | 28.6% | | Commercial real estate & multi-family | $2,680,389 | 51.2% | | Agri-business and agricultural | $339,435 | 6.5% | | Consumer 1-4 family mortgage | $516,068 | 9.9% | | Other consumer loans | $103,880 | 2.0% | | **Total Commercial Loans** | **$4,609,028** | **88.1%** | | **Total Consumer Loans** | **$619,948** | **11.9%** | [Deposits and Borrowings](index=14&type=section&id=Deposits%20and%20Borrowings) This section details the composition of the company's deposits and borrowings as of June 30, 2025, compared to previous quarters Funding Sources (June 30, 2025, in thousands) | Source | Amount | | :--- | :--- | | Noninterest bearing demand deposits | $1,261,740 | | Savings and transaction accounts | $4,125,679 | | Time deposits | $789,414 | | **Total deposits** | **$6,176,833** | | FHLB advances and other borrowings | $6,200 | | **Total funding sources** | **$6,183,033** | [Average Balance Sheet and Net Interest Analysis](index=16&type=section&id=Average%20Balance%20Sheet%20and%20Net%20Interest%20Analysis) This table presents a detailed analysis of the company's average balance sheet, interest income, interest expense, and net interest margin on a fully tax-equivalent basis for the second quarter of 2025 and comparative periods Net Interest Margin Calculation (Q2 2025) | Metric | Average Balance (in thousands) | Yield/Rate | | :--- | :--- | :--- | | Total earning assets | $6,570,607 | 5.83% | | Total interest bearing liabilities | $4,886,943 | 3.24% | | **Net interest margin** | - | **3.42%** | [Reconciliation of Non-GAAP Financial Measures](index=17&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This section provides reconciliations of GAAP financial measures to non-GAAP adjusted core performance measures, offering enhanced transparency into the company's underlying operational results [Reconciliation of Tangible Common Equity and Pretax Pre-Provision Earnings](index=17&type=section&id=Reconciliation%20of%20Tangible%20Common%20Equity%20and%20Pretax%20Pre-Provision%20Earnings) This section provides a reconciliation of GAAP measures to non-GAAP measures, including tangible common equity, tangible assets, tangible book value per share, and pretax pre-provision earnings. These measures are adjusted for goodwill and other intangible assets Tangible Common Equity Reconciliation (June 30, 2025, in thousands) | Item | Amount | | :--- | :--- | | Total Equity (GAAP) | $709,987 | | Less: Goodwill | ($4,970) | | Plus: DTA Related to Goodwill | $1,167 | | **Tangible Common Equity (Non-GAAP)** | **$706,184** | Pretax Pre-Provision Earnings Reconciliation (Q2 2025, in thousands) | Item | Amount | | :--- | :--- | | Net Interest Income | $54,876 | | Plus: Noninterest Income | $11,486 | | Minus: Noninterest Expense | ($30,432) | | **Pretax Pre-Provision Earnings (Non-GAAP)** | **$35,930** | [Reconciliation of Adjusted Core Performance Measures](index=18&type=section&id=Reconciliation%20of%20Adjusted%20Core%20Performance%20Measures) This section reconciles reported GAAP results to adjusted core performance measures, which exclude the impact of non-routine items such as the net gain on Visa shares and a legal accrual from the prior year. These adjustments provide insight into the company's core business performance Core Operational Profitability Reconciliation (Q2 2024, in thousands) | Item | Amount | | :--- | :--- | | Earnings Before Income Taxes (GAAP) | $26,922 | | Less: Net Gain on Visa Shares | ($9,011) | | Plus: Legal Accrual | $4,537 | | Adjusted Earnings Before Income Taxes | $22,448 | | Tax Effect | ($3,261) | | **Core Operational Profitability (Non-GAAP)** | **$19,187** |

Company Overview - Lake City Bank is a $6.9 billion bank headquartered in Warsaw, Indiana, founded in 1872, serving Central and Northern Indiana communities with 54 branch offices and a robust digital banking platform [4] - The bank operates as the single bank subsidiary of Lakeland Financial Corporation, listed on Nasdaq Global Select under the ticker LKFN [4] Leadership Recognition - David M. Findlay, Chairman and CEO of Lake City Bank, has been named to the Indianapolis Business Journal's Indiana 250 list for the fourth consecutive year, recognizing influential leaders in various sectors [1][2] - Findlay expressed honor in being recognized alongside other impactful leaders, highlighting the strength of leadership in Indiana [2] Community Engagement - Findlay is actively involved as a board member in several organizations, including the Indiana Bankers Association, Indiana Chamber of Commerce, and Parkview Health, among others [3]

Company Expansion - Lake City Bank has announced the acquisition of a property at 6388 Mills Drive in Whitestown, Indiana, with plans to renovate it into a full-service branch expected to open in 2026, marking the bank's expansion into Boone County [1][2] - This new branch will be the bank's 10th office in the Indianapolis Region, reflecting the bank's growth since entering the market in 2011 [2] Renovation and Services - Renovations will begin later this year to convert the existing structure, which previously housed several restaurants, into a modern banking facility that will cater to both personal and business banking needs [3] - The new branch will include a full-service lobby, drive-up banking, and an ATM [3] Strategic Location - The location is strategically positioned near Interstate 65, surrounded by residential neighborhoods and retail and industrial businesses, which will provide convenient access for customers and enhance community engagement [4] - The bank's community banking model focuses on building long-term customer relationships while offering technology-forward solutions for retail and commercial clients [4] Company Profile - Lake City Bank is a $6.9 billion bank headquartered in Warsaw, Indiana, with a total of 54 branch offices and a robust digital banking platform [4]