LAKELAND FINANCIAL CORPORATION (LKFN): what the price assumes

In the published model solve dated 2026-Q2, anchored at $63.97, LAKELAND FINANCIAL CORPORATION (LKFN) is priced for 14.6% return on equity. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.

Generated: 2026-07-29 · Exported: 2026-08-01 · Source: https://boothcheck.com/report/LKFN

Headline

FieldValue
TickerLKFN
CompanyLAKELAND FINANCIAL CORPORATION
Current price$63.97/sh

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basisfinancials
Elite ROE must persist for36.3y before normalizing (held at the 13.7% elite tier)
Perpetuity-equivalent ROE14.6%
Return on equity now13.6%
ROE gap+1.0pp
Price-to-book2.13x

Solve inputs: computed at a 9% cost of equity; ROE searched up to the 13.7% ROE ceiling.

How unusual the bet is: within-range

ReferenceValue
vs own history+1.31σ
cohort percentile (of 163 peers)89
sustained it ~10 years at this level61%
implied end-window share0%

Valuation X-Ray

The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.19x3expensive
Earnings0.93x2justifies
Relative0.67x3justifies
Growth0.99x2justifies

Families that justify the price: Asset, Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.6%); the inversion above states its own rate.

Per-Model Detail (n=10)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth——no—
Bank Fair Value (P/TBV)—$63.901.00xyesTBVPS $29.86 × 2.14x (ROE (TTM) 14.7% / CoE 9.3%, g=5.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption), credit 1.28% allowance/loans → ×0.94)
Relative ValuationRelative$49.101.30xyesP/E 10x (static sector reference · 2026-04), scenarios: 8.3x / 10.0x / 11.7x (bear / base = reference held flat / bull), EV/EBITDA N/Ax
Simple DDMGrowth——no—
Two-Stage DDMGrowth$75.190.85xyesStage 1: 20% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$47.631.34xyesBV/sh $30.06, ROE (TTM) 14.7%, ke 9.3%
Two-Stage Excess ReturnAsset$59.271.08xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$56.771.13xyesRev $0.2B, growth 11% (input: historical growth; tapered), Terminal P/S: 5.9x / 7.1x / 8.3x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$95.500.67xyesEPS $4.27, growth 22% (input: historical EPS growth), PEG=0.65 (Undervalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings——no—
Residual IncomeAsset——no—
Graham NumberAsset$53.741.19xyes√(22.5 × EPS $4.27 × BVPS $30.06) — Graham's conservative floor
EV/EBITDA RelativeRelative——no—
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$137.780.46xyesEPS $4.27 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative——no—
PEG Fair ValueRelative$143.260.45xyesEPS $4.27 × (PEG 1.5 × growth 22.4% (input: historical EPS growth)) → PE 33.5x
Earnings YieldEarnings$46.161.39xyesEPS $4.27 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Share count CAGR (buyback)-0.2%

Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).

Bullet Takeaways

Bull Case

The clearest way into the Lakeland story is to follow the capital, because a bank that earns well above its cost of equity and returns the surplus sensibly is the whole bull case in one sentence. Lake City Bank's return on average equity reached 13.89% in the most recent quarter, up from 11.70% a year earlier, against a cost of equity near 9.3%. The roughly five-point spread between what the bank earns on its capital and what that capital costs is the source of value: every dollar of retained earnings compounds at that elite return rather than at the cost of capital, which is precisely what justifies a bank trading at a premium to book. Management pairs that with a steadily rising dividend, lifted 4% year over year in the first quarter, so shareholders receive the surplus the bank does not need to fund growth.

The engine producing that return is an unglamorous, durable deposit franchise. Average deposits grew 3% to $6.06 billion and average loans grew 5% to $5.44 billion in the quarter, and net interest margin improved 9 basis points to 3.49%. For a community bank, the margin is the whole game: it is the spread between what the bank earns on loans and pays on deposits, and a widening margin in a competitive deposit market signals pricing discipline on both sides of the balance sheet. The 10-K shows the bank navigating the rate cycle deliberately, noting loan yields rose "as a result of the higher rate environment and loan repricing opportunities". A bank that can reprice its loan book upward faster than its deposit costs rise is one with genuine local franchise value, not just balance-sheet leverage.

The valuation support is unusually broad for a stock trading near record profitability. Every method family supports the price rather than fighting it: the asset-value methods, the earnings-power methods, the peer-multiple lens, and the dividend-discount approach all land at or above the current price. That is a rare configuration: a stock where the conservative methods and the growth methods agree, which means the buyer is not paying a speculative premium for a narrative. They are paying a justified premium for a demonstrated, capital-efficient return, with credit quality that the bank's 1.28% allowance against loans suggests is well-reserved.

Bear Case

The bear case is a cycle case, and it begins with the uncomfortable fact that bank earnings look best right before they look worst. Lakeland is posting near-record profitability: return on average equity of 13.89% and return on average assets of 1.52% are excellent numbers, but they are excellent because credit costs are low and the rate environment has favored the bank's loan repricing. The price pays roughly two times book for that return, and a price-to-book at the very top of the peer group is a bet that today's return is sustainable through a full cycle. The trouble is that a community bank's return is most flattering at the point in the cycle when loan losses are lowest, and the price has the least room to absorb the reversion that historically follows. Only about 63% of firms earning this kind of return sustained it for a decade.

The mechanism that would compress both the return and the multiple is credit. Lake City Bank is an Indiana commercial lender, and its loan book is concentrated in the regional economy it serves. The 10-K is direct about the exposure, warning that if the economy in its market areas "does not perform in the manner we expect... our borrowers may experience difficulties in repaying their loans, and the level of nonperforming loans, charge offs and delinquencies could rise and require increases in the provision for credit" losses. That single sentence is the bear thesis: the bank's enviable return rests on a benign credit environment, and a downturn in Indiana commercial and commercial-real-estate borrowers would force higher provisions, which flow straight out of the net income that the price capitalizes at two times book. The 1.28% allowance is adequate for today's conditions; it is thin if conditions turn.

The margin tailwind is also a cycle variable, not a permanent feature. The recent net interest margin improvement to 3.49% reflects favorable loan repricing, but the 10-K shows the margin moving the other way in prior years, falling to 3.18% in 2024 from 3.31% in 2023 as deposit costs rose. The margin is not a one-way ratchet; it expands and contracts with the rate cycle and with deposit competition, and a community bank has limited control over either. A stock priced at the top of its cohort for a peak-cycle return faces two-sided risk: the credit cycle turning and the margin cycle reversing, either of which would pull the return back toward the cost of equity and the multiple back toward book value. The bear does not need the bank to be poorly run; it needs only the cycle to behave the way cycles behave.

Valuation

A bank is worth the return it earns on its capital, so the right lens is price-to-book, not an operating multiple, and Lakeland trades at roughly two times book. At that price the market is pricing a return on equity at the top of what even an elite bank sustains, against a bank recently earning about 13.6% to 14%. This is a bound rather than a solved point: the price sits at the level where the assumed return is within reach of what Lakeland has actually earned, but it requires that return to persist, and the price-to-book sits at the very top of the peer group.

The method agreement here is the notable feature. Every family supports the price. The asset-value methods, built on the $29.38 book value and the bank's excess return, land at or modestly above it. The dividend-discount approach lands above the price on the bank's growth and payout. The peer-multiple lens, anchored on a sector P/E near 10 times, is the only one that reads the stock as somewhat full, which is consistent with a high-quality bank deserving a premium to the median. The pattern is a value-and-asset-supported name, not a growth bet: the price is paid for demonstrated profitability, not for a future the methods cannot frame.

The cohort comparison is where the caution lives. The peer set, community and regional banks like Nicolet Bankshares, Stock Yards Bancorp, First Financial Bancorp, and Byline Bancorp, trades on the same return-on-equity logic, and Lakeland's premium price-to-book reflects its superior return. That premium is earned today, but it is also the source of the downside: a stock at the top of the cohort on book multiple has the most to lose if the return reverts. On a bank, the balance-sheet frame is capital-return capacity rather than leverage, and Lakeland's capital position supports both its dividend and its loan growth, with credit reserves around 1.28% of loans. The decisive question is not whether the price is justified by today's economics, because the methods agree that it is. It is whether today's economics, a near-peak return earned in a benign credit environment, hold through the cycle, because that is what a top-of-cohort book multiple is paying for.

Catalysts

The Q1 CY2026 print was a record and it reinforced the quality thesis. Lakeland reported net income of $26.5 million, up 32% year over year, with diluted EPS of $1.04, up 33%, net interest margin improving 9 basis points to 3.49%, and return on average equity reaching 13.89%. Average loans grew 5% to $5.44 billion and average deposits grew 3% to $6.06 billion, with net interest income up 7% and noninterest income up 18%. The combination of margin expansion and balanced loan-and-deposit growth is exactly the profile that supports a premium book multiple, and the board raised the dividend 4% alongside the result.

The markers to track are the cyclical ones, because the franchise quality is not in doubt; the cycle is. The first is net interest margin direction: the recent expansion to 3.49% reversed a prior period of compression, and whether deposit competition and the rate path let the margin keep widening is the swing factor for net interest income, the bank's largest revenue line. The second is credit. With the allowance near 1.28% of loans and the loan book growing, the quarterly provision and the trend in nonperforming loans are the early indicators of whether the benign credit environment that supports today's return is holding in the bank's Indiana commercial markets.

There is no transformational catalyst here, and for a community bank that is the point: the thesis advances or retreats one quarterly print at a time, on margin, loan growth, and credit. The concrete watch items are the next two margin readings, the trajectory of commercial and commercial-real-estate credit quality in the regional economy, and the pace of the dividend and any buyback, since capital return is how a bank earning above its cost of equity converts that surplus into shareholder value when loan growth alone cannot absorb it.

Peer Cohorts (Per Segment, With Filing Citations)

Banking (consolidated) (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Q1 CY2026 earnings release · FY2024 10-K · FY2024 10-K risk factors

View the full interactive LKFN report on boothcheck