Lakeland Financial Corporation · NASDAQ:LKFN
Lakeland Financial — Investor Presentation (October 2022)
53 slides from Lakeland Financial's investor presentation, Oct 25, 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 3rd 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 June 30, 2022. (1) Includes banks and thri
Slide 7: Strong Capital Structure
Tangible Common Equity 91.8% Reserves 8.2% 7 Strong Capital Structure $1 .2 1 $2 0. 18 $2 8. 83 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 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
Slide 8: Interest Rate Sensitivity: Highly Asset Sensitive Balance Sheet
8 Interest Rate Sensitivity Highly Asset Sensitive Balance Sheet Fixed Rate $1,332,388 33% Prime $1,408,460 35% 1 Month LIBOR $621,550 16% FHLB/Other $648,562 16% Commercial Loans $4.0 billion as of September 30, 2022 (000’s) • Every 25 basis point move up in the federal funds rate is expected to im
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
Slide 14: Commercial Banking Focus: Experienced Relationship Driven Team
14 Commercial Banking Focus Experienced Relationship Driven Team • 40 credit “smart” commercial bankers • Average 23 years in banking & 12 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 c
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 2012 - 2022 1Mature Markets include 12 Northern Indiana counties and exclude 3 Central Indiana counties 2Flagstar acquired Wells Fargo branches in 2018 Totals adjusted to include branches subsequently acquired by surviving banks. Source: FDIC 6/30
Slide 19: Indianapolis Market Opportunity
19 Organic Growth Indianapolis Market Opportunity Indianapolis Market Banks Share of Market 1. JPM Chase 24% 2. PNC 14% 3. Merchants Bank 10% 4. Fifth Third 8% 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 3% 16. La
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 29% – Retail quarter average growth of 58% over two years – Commercial quarter average growth of 24% over two ye
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 September 30, 2019 and September 30, 2022 (2) Includes mobile phone, Apple watch & iPad app use Channel Type Total Transactions 2019(1) % of T
Slide 24: Customer Composition and Digital Adoption
24 Customer Composition and Digital Adoption September 2022 Customer Composition and Digital Adoption Over Three Years Generation Customer Breakdown 9/30/22 9/30/21 9/30/20 Gen Z (1996 - Current) 16% 54% 45% 43% Millennial (1977 - 1995) 25% 63% 56% 55% Gen X (1965 - 1976) 19% 52% 46% 44% Baby Boomer
Slide 25: Financial Performance
Financial Performance 48722022
Slide 26: Income Performance Metrics
26 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% 1.61% 12.72% 16.51% 15.47% 13.51% 14.19% 16.89% 12.83% 16.64% 15.57% 13.59% 14.27% 16.99% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 20.00% 0.
Slide 27: Net Income and EPS
$57,330 $80,411 $87,047 $84,337 $95,733 $71,450 $77,840 $2.23 $3.13 $3.38 $3.30 $3.74 $2.79 $3.03 $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 27 Net Income and EPS Profitability
Slide 28: Pretax Pre-Provision Earnings
$92,634 $105,344 $110,620 $118,646 $118,521 $88,731 $94,617 2.08% 2.21% 2.24% 2.19% 1.93% 1.46% 1.46% 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 29: Average Loans
96% 94% 94% 95% 83% 76% 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 29 Average Loans Organic Average Lo
Slide 30: Line of Credit Utilization
30 Line of Credit Utilization Utilization Improves in 2022 $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 ,8 24 $1 ,5 46 $1 ,5 14 $1 ,6 12 $1 ,6 11 $1 ,8 06 $1 ,7 3
Slide 31: 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 32: Loan Portfolio Breakdown
32 Loan Portfolio Breakdown C&I Drives Lending Business Commercial & Industrial $1,511,295 34%Commercial RE - Owner Occupied $741,293 17% Commercial RE - Nonowner Occupied $655,975 15% Commercial RE - Multifamily $191,212 4% Commercial RE - Construction $468,288 10% Agri-business - Agriculture $342,
Slide 33: Top Industry Concentrations
33 Top 10 Industry Concentrations Loan Portfolio is Diversified Agriculture & Agribusiness $393,669 9% Multifamily Housing $382,887 9% RV Industry $184,316 4% Nursing Homes & Assisted Living $161,113 4% Automobile Dealers $121,261 3% Hotels $106,843 2% Plastics Product Manufacturing $99,888 2% Durab
Slide 34: Average Deposits
$3,757,209 $4,093,894 $4,242,524 $4,650,597 $5,357,284 $5,745,771 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 Rise in Response to Rising Interest Rate Environment Total Retail $2,056,626 36% Total Public Fund $1,481,100 26% Total Commercial $2,116,390 38% Brokered Deposits $10,017 0% September 30, 2022 Total Deposits - $5.7 billion (000’s) 1.19% 0.98% 0.63% 0.48% 0.50% 0.5
Slide 36: Public Fund Deposit Trends
36 Public Fund Deposit Trends $6 29 ,8 92 $6 49 ,2 71 $6 38 ,3 49 $7 31 ,4 45 $7 52 ,7 45 $7 80 ,0 46 $7 21 ,2 03 $7 43 ,9 61 $6 95 ,9 81 $8 45 ,4 89 $8 28 ,1 57 $8 34 ,9 53 $7 92 ,0 55 $8 71 ,2 75 $9 04 ,1 53 $1 ,0 14 ,4 30 $1 ,0 81 ,8 65 $1 ,1 94 ,0 13 $1 ,2 25 ,4 13 $1 ,2 18 ,8 54 $1 ,2 79 ,1 18
Slide 37: Investment Portfolio
37 Investment Portfolio Excess Liquidity Temporarily Deployed to Investment Portfolio 14.1% 12.9% 11.8% 11.5% 12.0% 12.3% 13.6% 21.4% 20.6% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 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 12/31/20 exclud
Slide 38: Net Interest Income
$135,892 $151,271 $155,047 $163,008 $178,088 $133,081 $146,050 3.33% 3.43% 3.38% 3.19% 3.07% 3.11% 3.25% 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 In
Slide 39: 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. 22 % 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. 16 % 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 40: Asset Quality: Allowance for Credit Losses
40 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% 1.50% 0.00% 0.30% 0.60% 0.90% 1.20% 1
Slide 41: Noninterest Income
$36,009 $40,302 $44,997 $46,843 $44,720 $35,011 $31,343 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 42: Total Revenue
42 Total Revenue $171,932 $191,573 $200,044 $209,851 $222,808 $168,092 $177,393 $0 $50,000 $100,000 $150,000 $200,000 $250,000 2017 2018 2019 2020 2021 YTD 2021 YTD 2022 (000’s) Revenue Growth Benefited by Core Loan Growth and Rising Rates 2022 YOY Increase 6%
Slide 43: Non-Interest Expense
43 Non-Interest Expense Disciplined Operating Expense Management 2022 YOY Increase 4% $79,267 $86,229 $89,424 $91,205 $104,287 $79,361 $82,776 $0 $20,000 $40,000 $60,000 $80,000 $100,000 2017 2018 2019 2020 2021 YTD 2021 YTD 2022 (000’s)
Slide 44: Efficiency Ratio
44 Efficiency Ratio Revenue Growth Outpaces Expense Growth 51% 52% 50% 50% 48% 46% 45% 45% 43% 47% 47% 0% 10% 20% 30% 40% 50% 60% 70% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 YTD 2022 Constant investment in technology and facilities
Slide 45: Healthy Dividend
452022 Growth 18% Stable Healthy Dividend Growth in Dividend Reflects Strength of Capital $0.85 $1.00 $1.16 $1.20 $1.36 $1.02 $1.20 1.77% 2.25% 2.40% 2.24% 1.70% 1.91% 2.20% 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 46: LKFN Shareholder Value Total Return Performance
46 LKFN Shareholder Value Total Return Performance from 12/31/00 to 9/30/22 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 47: Investment Highlights
47 Investment Highlights •Proven History of Organic Growth •Disciplined and Focused Strategy •Strong Internal Culture •Consistent Execution •Service Excellence Drives Shareholder Value
Slide 48: Supplemental Information
Supplemental Information 48722022
Slide 49: Commercial Loans by County
Allen 17% Elkhart 15%St. Joseph 9% Kosciusko 11% Hamilton 8% Marion 12% Marshall 4% Other IN Counties (1) 18% Outside IN 6% 49 Commercial Loans by County Commercial Customers in 46 Indiana Counties and 22 Other States September 30, 2022 (1) All other counties individually represent less than 0.5% of
Slide 50: Larger Market Organic Expansion
50 Larger Market Organic Expansion Organic Growth State Rank County Primary City Population* LCB Entry LCB Deposit Market Share** # of Branches 22. Kosciusko Warsaw 80,106 1872 60% 12 6. Elkhart Elkhart 206,921 1990 23% 11 5. St. Joseph South Bend 272,212 1997 9% 4 3. Allen Fort Wayne 388,608 1999 1
Slide 51: Mature Market Strength and Growth
51 1Mature Markets includes 12 Northern Indiana counties and excludes 3 Central Indiana counties 2Flagstar purchased Wells Fargo Indiana branches in 2018 Adjusted to include branches subsequently acquired by surviving banks. Data based on June 30th regulatory reporting for each year presented. Matur
Slide 52: Projected Impact of Rising/Falling Rates
52 Graph presents 12 month projected net interest income simulation results as of September 30, 2022 using parallel shocks Projected Impact of Rising/Falling Rates Asset Sensitive Balance Sheet -17.41% -11.01% -5.13% -2.43% -1.16% 0.92% 1.84% 3.66% 7.36% 11.10% -20.00% -15.00% -10.00% -5.00% 0.00% 5
Slide 53: LakeCityBank.com
(888) 522-2265 LAKECITYBANK.COM
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