I’ve had plenty of fun with the Lloyds (LSE: LLOY) share price and I’m not alone. The FTSE 100 bank is up 60% over the last year and 137% over two.

After more than a decade of dour performance following the 2008 financial crisis, Lloyds investors finally have on their party hats.

Now we face the opposite problem. With the shares finally above £1, is the hangover about to kick in?

Talking to fellow writers at The Motley Fool, many are bracing themselves. Few, if any, are selling. On the Fool, we buy with a long-term mindset and aim to hold through thick and thin.

FTSE 100 sector surge

If the heat does come out of Lloyds, that doesn’t automatically make it a Sell. As long as dividends keep flowing, investors can reinvest at lower prices and build a bigger stake for the next upswing. Investing’s cyclical. Short-term volatility is the price we pay for long-term equity returns. In fact, it can enhance them. So I’m not selling. I’m not even considering it.

The trailing yield has slipped to around 3.6%, but forecasts suggest it could rise to 4.14% in 2026 and 4.94% in 2027. Dividends are never guaranteed, but Lloyds generates solid cash and knows income matters to its shareholder base. Why wouldn’t I want to share in its largesse?

Three years ago, the price-to-earnings ratio was around five or six. Today it’s closer to 14.5. That’s not nosebleed territory, but it’s no longer a bargain valuation either.

The price-to-book ratio sits between 1.3 and 1.5, above its 10-year average of roughly 0.9. That’s broadly in line with HSBC (around 1.4) and NatWest (1.2), but above Barclays (0.9). Again, hardly demanding, but not cheap. To me, that suggests the pace of gains is likely to slow.

Full-year 2025 results, published on 29 January, showed profits up 12%, ahead of expectations. That’s despite setting £800m aside for motor finance mis-selling. The board also announced a share buyback of up to £1.75bn, and lifted the final dividend more than 15% to 2.43p a share. Like I said, I’m not selling.

Net interest margin risk

There are risks. Interest rates are likely to fall further, squeezing net interest margins, the gap between what banks pay savers and charge borrowers. Lloyds is also heavily UK-focused, and the domestic economy isn’t exactly booming.

On the other hand, lower rates could stimulate mortgage demand and broader lending activity. And if the UK economy improves even modestly, Lloyds stands to benefit. But yes, I suspect the Lloyds share price party is winding down. But parties aren’t meant to last forever.

Others are still circling the punch bowl. The 18 analysts offering one-year share price forecasts produce a target of just over 117p. If correct, that’s an increase of around 14% from here. With dividends, we’re looking at a total return of around 18%. That would turn £10,000 into £11,800. I’d be happy with that. Forecasts are just guesses though.

For long-term investors, the shares still look worth considering. Especially if we get a meaningful dip. When the music starts again, I’d rather already be in the room.