Lakeland Financial Corporation · NASDAQ:LKFN
Lakeland Financial — Q2 2022 Earnings Presentation
51 slides from Lakeland Financial's earnings presentation, Aug 1, 2022
Slide 1: A Proven History of Shareholder Value Creation and Commitment to Our Communities
A Proven History of Shareholder Value Creation And Commitment to Our Communities 2nd Quarter 2022 Lakeland Financial Corporation LKFN L I S T E D
Slide 2: Celebrating 150 Years of Community
1872/2022 CELEBRATING 150 YEARS OF COMMUNITY
Slide 3: Presenters: David Findlay and Lisa O'Neill
3 David M. Findlay President & Chief Executive Officer david.findlay@lakecitybank.com (574) 267‐9197 Lisa M. O’Neill Executive Vice President & Chief Financial Officer lisa.oneill@lakecitybank.com (574) 267‐9125
Slide 4: Forward-looking statements
4 This presentation 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. Forward‐looking statements are not historical facts and are generally identifiabl
Slide 5: Bank Director's 2021 Scorecard
5 Bank Director’s 2021 Scorecard
Slide 6: Long Term Success for Shareholders
Consecutive Increases in PTPP Income Since 2012(3) Profitable for the Last 10 Years(2) Exchange Traded Depositories with Assets Between $1B and $10B(1) 6 Long Term Success for Shareholders (including LKFN) Source: S&P Capital IQ Pro. Financial data is as of March 31, 2022. (1) Includes banks and thr
Slide 7: Strong Capital Structure
7 Strong Capital Structure $1 .2 1 $2 1. 87 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 19 91 19 93 19 95 19 97 19 99 20 01 20 03 20 05 20 07 20 09 20 11 20 13 20 15 20 17 20 19 20 21 Tangible Book Value(1) Per Share (1)compounded annual growth rate computed from 1991‐2021 Note: Tangible Common E
Slide 8: Interest Rate Sensitivity
8 Interest Rate Sensitivity Highly Asset Sensitive Balance Sheet Fixed Rate $1,279,721 32% Prime $1,431,061 36% 1 Month LIBOR $704,266 18% FHLB/SOFR and Other $571,271 14% Commercial Loans $4.0 billion as of June 30, 2022 (000’s) • Every 25 basis point move up in the federal funds rate is expected t
Slide 9: Lake City Bank Today
9 Lake City Bank Today •A long‐term and consistent organic growth story •Headquartered in Warsaw, Indiana •52 branch offices ‐ $6.3 billion banking assets ‐ $2.6 billion trust, retirement and investment brokerage assets •Focused on execution – “blocking and tackling” •Continued growth potential Sesq
Slide 10: Years of Organic Growth
10 30 Years of Organic Growth $2 ,7 07 $9 5, 73 3 $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 20 20 20 21 Net Income
Slide 11: Established Market Presence
11 Established Market Presence Organic Growth Potential in Mature and Expanding Markets
Slide 12: Strong Regional and Statewide Economy
12 Strong Regional and Statewide Economy Indiana Unemployment Rate is Significantly Lower Than the National Average Source: United States Bureau of Labor Statistics. Lake City Bank footprint is defined as Kosciusko, Marshall, Fulton, Pulaski, Noble, Whitley, St. Joseph, Elkhart, LaGrange, Allen, DeK
Slide 13: Shareholder Value Strategy
Shareholder Value Strategy 1. Commercial Banking Focus 2. High Quality Team Members 3. Proven Organic Growth Experience 4. Focus on Core Deposit Funding 5. Commitment to Technology 13
Slide 14: Commercial Banking Focus
14 Commercial Banking Focus Experienced Relationship Driven Team • 40 credit “smart” commercial bankers • Average 23 years in banking & 13 years at Lake City Bank • We live where we lend • Face to face calling matters and is a team effort • We understand our clients’ needs • Deep organizational stru
Slide 15: Credit Process
15 Credit Process Commercial Banking Focus • Our credit discipline has never changed • We have a centralized committee structure • We are in‐market lender to in‐market clients • Character matters – we lend to people first • We focus on management/cash flow • Structure is important and is disciplined
Slide 16: Corporate Social Responsibility
16 Corporate Social Responsibility 150 Year History of Focusing on Our Customers, Employees and Our Communities • Supporting our communities since 1872 • Building and caring for our team •Delivering loan products to our communities • Supporting financial literacy in our footprint • Protecting our cu
Slide 17: Lake City Bank Culture
17 Lake City Bank Culture High Quality Team Members • Our culture is our greatest asset and we will preserve it • Lake City University drives our culture • Diversity, Equity and Inclusion ongoing initiatives • Our community involvement is real and critical to our strategy • Our culture has not been
Slide 18: Mature Market Deposit Performance
18 Mature1 Market Deposit Performance Organic Growth 2011 ‐ 2021 1Mature Markets include 12 Northern Indiana counties and exclude 3 Central Indiana counties Totals adjusted to include branches subsequently acquired by surviving banks. Source: FDIC 6/30/21 Statistics $2,501 $2,180 $2,157 $944 $622 $4
Slide 19: Indianapolis Market Opportunity
19 Organic Growth Indianapolis Market Opportunity Indianapolis Market Banks Share of Market 1. JPM Chase 23% 2. PNC 14% 3. Merchants Bank 11% 4. Fifth Third 10% 5. Huntington National 7% 6. BMO Harris 5% 7. Bank of America 5% 8. First Internet Bank 5% 9. National Bank of Indy 4% 10. KeyBank 4% 16. L
Slide 20: A Strong Environment for Growth and Expansion
20 (1) https://www.statsamerica.org/sip/rank_list.aspx?rank_label=gsp2_b&item_in=12&ct=S18 (2) Hoosiers By The Numbers‐ Indiana Department of Workforce Development (3) https://fred.stlouisfed.org/graph/?g=lc2J (4) https://www.cnbc.com/2022/07/13/top‐states‐for‐business‐indiana.html A Strong Environm
Slide 21: Core Deposit Funding Strategy
21 Core Deposit Funding Strategy Core Deposit Growth Impacted by Excess Liquidity in Economy • Deposit surge from PPP funding and stimulus starting to abate • DDA growth over two years of 26% – Retail growth of 57% – Commercial growth of 21% • Capitalize on market disruption in our footprint to grow
Slide 22: Commitment to Technology and Cyber Risk Management
22 Commitment to Technology and Cyber Risk Management Innovation and Competitive Technology is a Focus • Fintech partnerships play a growing role in our technology stack • Investments in Lake City Bank Digital, our focus on a solution that is experiencing increased demand • Technology partnership wi
Slide 23: Channel Utilization Over Three Year Horizon
23 Channel Utilization Over Three Year Horizon Mobile Channel Engagement Continues to Accelerate (1) Measurement period includes twelve months of data ending June 30, 2019 and June 30, 2022 (2) Includes mobile phone, Apple watch & iPad app use Channel Type Total Transactions 2019(1) % of Total Total
Slide 24: Customer Composition and Digital Adoption
24 Customer Composition and Digital Adoption June 2022 16% 25% 19% 31% 9% CUSTOMER BREAKDOWN Gen Z 1996 – Current Millennial 1977 – 1995 Gen X 1965 – 1976 Baby Boomer 1946 – 1964 Mature 1945 or before Digital Adoption Over Three Years Generation 6/30/22 6/30/21 6/30/20 Gen Z 51% 41% 41% Millennial 6
Slide 25: Technology Focused Solutions
25 Technology Focused Solutions Commitment to Technology and Cyber Risk Management
Slide 26: Financial Performance
Financial Performance 1872/2022
Slide 27: Income Performance Metrics
27 Income Performance Metrics LKFN Performance Exceeds National and Indiana Peers and Maintains Strong Capital Levels 1.29% 1.69% 1.76% 1.55% 1.56% 1.52% 12.72% 16.51% 15.47% 13.51% 14.19% 15.72% 12.83% 16.64% 15.57% 13.59% 14.27% 15.81% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 20.00% 0.
Slide 28: Net Income and EPS
$57,330 $80,411 $87,047 $84,337 $95,733 $47,331 $49,315 $2.23 $3.13 $3.38 $3.30 $3.74 $1.85 $1.92 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $0 $20,000 $40,000 $60,000 $80,000 $100,000 2017(1) 2018 2019 2020 2021 YTD 2021 YTD 2022 Net Income Diluted EPS 28 Net Income and EPS Profitability
Slide 29: Pretax Pre-Provision Earnings
$92,634 $105,344 $110,620 $118,646 $118,521 $57,843 $59,855 2.08% 2.21% 2.24% 2.19% 1.93% 1.93% 1.84% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 2017 2018 2019 2020 2021 YTD 2021 YTD 2022 Pretax Pre‐Provision Earnings Pretax Pre‐Provision/
Slide 30: Average Loans
96% 94% 94% 95% 83% 75% 50% 60% 70% 80% 90% 100% 110% 120% $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000 2017 2018 2019 2020(1) 2021(1) YTD 2022(1) Retail Commercial Average Loans to Average Deposits 30 Average Loans Organic Average Lo
Slide 31: Line of Credit Utilization
31 Line of Credit Utilization Utilization Improves in 2022 $1 ,5 91 $1 ,5 88 $1 ,7 53 $1 ,7 15 $1 ,6 55 $1 ,6 64 $1 ,6 96 $1 ,6 16 $1 ,6 69 $1 ,6 30 $1 ,5 93 $1 ,6 37 $1 ,4 73 $1 ,4 46 $1 ,4 99 $1 ,4 10 $1 ,4 94 $1 ,5 53 $1 ,6 90 $1 ,7 46 $1 ,8 05 $1 ,4 93 $1 ,5 46 $1 ,5 14 $1 ,6 12 $1 ,6 11 $1 ,8 0
Slide 32: Line of Credit Utilization vs. Commercial DDA
$3 89 ,0 51 $4 67 ,4 58 $5 72 ,9 66 $6 60 ,3 60 $6 20 ,1 74 $6 13 ,4 45 $6 79 ,0 78 $7 40 ,5 76 $6 84 ,5 11 $6 89 ,4 50 $7 30 ,3 73 $7 75 ,9 47 $7 61 ,6 86 $7 72 ,9 95 $8 49 ,0 92 $8 14 ,4 30 $8 83 ,9 56 $1 ,2 16 ,4 14 $1 ,2 18 ,9 43 $1 ,2 73 ,8 86 $1 ,3 39 ,6 73 $1 ,4 62 ,9 35 $1 ,4 93 ,2 45 $1 ,5
Slide 33: Loan Breakdown
33 Loan Breakdown C&I Drives Lending Business Commercial & Industrial $1,529,792 35%Commercial RE ‐ Owner Occupied $726,531 16% Commercial RE ‐ Nonowner Occupied $635,477 14% Commercial RE ‐Multifamily $173,875 4% Commercial RE ‐ Construction $418,284 10% Agri‐business ‐ Agriculture $387,902 9% Othe
Slide 34: Average Deposits
$3,757,209 $4,093,894 $4,242,524 $4,650,597 $5,357,284 $5,800,313 95% 97% 98% 98% 99% 99% 50% 60% 70% 80% 90% 100% 110% 120% 130% 140% 150% $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 2017 2018 2019 2020 2021 YTD 2022 Average Deposits % of Funding 34 Average Depos
Slide 35: Deposit Breakdown
35 Deposit Breakdown Deposit Costs at a Historic Lows Total Retail $2,071,059 37% Total Public Fund $1,458,179 26% Total Commercial $2,092,346 37% Brokered Deposits $10,008 0% June 30, 2022 Total Deposits ‐ $5.6 billion (000’s) 1.19% 0.98% 0.63% 0.48% 0.50% 0.54% 0.72% 1.10% 1.35% 0.63% 0.31% 0.28%
Slide 36: Investment Portfolio
36 Investment Portfolio Excess Liquidity Deployed to Investment Portfolio 14.1% 12.9% 11.8% 11.5% 12.0% 12.3% 13.6% 21.4% 22.6% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% 22.0% 24.0% 26.0% 2014 2015 2016 2017 2018 2019 2020(1) 2021(2) 2022(3) M V In ve st m en ts a s a % o f A ss et s (1) Ratio for 12/31/2
Slide 37: Net Interest Income
$135,892 $151,271 $155,047 $163,008 $178,088 $87,340 $93,558 3.33% 3.43% 3.38% 3.19% 3.07% 3.10% 3.09% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 $200,000 2017 2018 2019 2020 2021 YTD 2021 YTD 2022 Net Interest Inco
Slide 38: Asset Quality
1. 52 % 2. 15 % 2. 75 % 1. 37 % 0. 94 % 0. 50 % 0. 42 % 0. 19 % 0. 25 % 0. 19 % 0. 46 % 0. 26 % 0. 35 % 0. 28 % 1. 22 % 1. 82 % 2. 20 % 1. 75 % 1. 31 % 0. 41 % 0. 35 % 0. 16 % 0. 20 % 0. 16 % 0. 38 % 0. 21 % 0. 23 % 0. 20 % 8.86% 8.17% 7.46% 8.06% 6.64% 5.75% 4.64% 4.28% 4.50% 4.77% 4.43% 6.75% 5.50
Slide 39: Asset Quality: Allowance for Credit Losses
39 Asset Quality Allowance for Credit Losses Represents Strong Coverage 0. 42 % 0. 54 % 0. 25 % 0. 20 % 0. 11 % 0. 10 % 0. 09 % 0. 03 % ‐0 .0 1% 0. 13 % 0. 03 % 0. 09 % 0. 09 % 0. 03 % 1.59% 2.15% 2.39% 2.28% 1.92% 1.67% 1.42% 1.26% 1.23% 1.24% 1.25% 1.45% 1.59% 1.53% 0.00% 0.30% 0.60% 0.90% 1.20% 1
Slide 40: Non-Interest Income
$36,009 $40,302 $44,997 $46,843 $44,720 $23,897 $21,179 22% 21% 22% 22% 20% 21% 18% 0% 10% 20% 30% 40% 50% 60% $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 2017 2018 2019 2020 2021 YTD 2021 YTD 2022 N on ‐In te re st In co m e as % o f T ot al R ev en ue N on ‐In
Slide 41: Non-Interest Expense
41 Non‐Interest Expense Disciplined Operating Expense Management 2022 YOY Increase 3% $79,267 $86,229 $89,424 $91,205 $104,287 $53,394 $54,882 $0 $20,000 $40,000 $60,000 $80,000 $100,000 2017 2018 2019 2020 2021 YTD 2021 YTD 2022 (000’s)
Slide 42: Efficiency Ratio
42 Efficiency Ratio Revenue Growth Outpaces Expense Growth 51% 52% 50% 50% 48% 46% 45% 45% 43% 47% 48% 40% 45% 50% 55% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 YTD 2022 Constant investment in technology and facilities
Slide 43: Healthy Dividend Growth
432022 Growth 18% Stable Healthy Dividend Growth in Dividend Reflects Strength of Capital $0.85 $1.00 $1.16 $1.20 $1.36 $0.68 $0.80 1.77% 2.25% 2.40% 2.24% 1.70% 2.21% 2.41% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% $0.10 $0.30 $0.50 $0.70 $0.90 $1.10 $1.30 $1.50 2017 2018 2019 2020 2021 YTD 2
Slide 44: LKFN Shareholder Value Total Return Performance
44 LKFN Shareholder Value Total Return Performance from 12/31/00 to 6/30/22 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 LKFN S&P 500 S&P US BMI Banks Index S&P 500 Financials 3,500.00 3,000.00 2,500.00 2,000.00 1,500.00 1,000.00 500.0
Slide 45: Investment Highlights
45 Investment Highlights •Proven History of Organic Growth •Disciplined and Focused Strategy •Strong Internal Culture •Consistent Execution •Service Excellence Drives Shareholder Value
Slide 46: Supplemental Information
Supplemental Information 1872/2022
Slide 47: Commercial Loans by County
Allen 17% Elkhart 16%St. Joseph 9% Kosciusko 10% Hamilton 9% Marion 11% Marshall 4% Other IN Counties (1) 18% Outside IN 6% 47 Commercial Loans by County Commercial Customers in 46 Indiana Counties and 22 Other States June 30, 2022 (1) All other counties individually represent less than 0.5% of tota
Slide 48: Larger Market Organic Expansion
48 Larger Market Organic Expansion Organic Growth State Rank County Primary City Population* LCB Entry LCB Deposit Market Share** # of Branches 20. Kosciusko Warsaw 78,988 1872 58% 12 6. Elkhart Elkhart 206,161 1990 26% 10 5. St. Joseph South Bend 271,484 1997 10% 4 3. Allen Fort Wayne 382,187 1999
Slide 49: Mature Market Strength and Growth
49 1Mature Markets includes 12 Northern Indiana counties and excludes 3 Central Indiana counties Adjusted to include branches subsequently acquired by surviving banks. Data based on June 30th regulatory reporting for each year presented. Mature Market Strength and Growth Organic Growth (millions)1 2
Slide 50: Projected Impact of Rising/Falling Rates
50Graph presents 12 month projected net interest income simulation results as of June 30, 2022 using parallel shocks Projected Impact of Rising/Falling Rates Asset Sensitive Balance Sheet ‐6.39% ‐3.04% ‐1.37% 0.92% 1.83% 3.63% 7.18% 10.74% ‐10.00% ‐5.00% 0.00% 5.00% 10.00% 15.00% NII ‐ Rates Down 10
Slide 51: LakeCityBank.com
(888) 522-2265 LAKECITYBANK.COM