Somerset Hills Bancorp — Merger or Acquisition (February 2013)
32 slides from Somerset Hills Bancorp's merger presentation, Feb 7, 2013
Slide 1: Investor Presentation December 31, 2012
0, q) Lakeland Bancorp, Inc. INVESTOR PRESENTATION DECEMBER 31, 2012 THOMAS J. SHARA, PRESIDENT & CEO “> JOSEPH F. HURLEY, EVP & CFO
Slide 2: Statement Regarding Forward-Looking Information
Statement Regarding 4, 2 Lakeland Bancorp, Inc. Forward-Looking Information This communication contains forward-looking statements with respect to the proposed mergers and the timing of consummation of the mergers that are made in reliance upon the safe harbor provisions of the Private Securities Li
Slide 3: Corporate Profile
if ) Lakeland Bancorp, Inc. Co rporate 2) rofi le + Largest commercial bank focused exclusively on Northern New Jersey + Founded in 1969 + $2.9 billion commercial bank Pennsylvania ( SUSSEX \ + 46 branches
Slide 4: Stockholder Information
eee ocockholder Information | (“LBAI’) + Market Cap - $290 million + Book Value - $9.45 + 2.90% dividend yield + Tangible Book Value - $6.52 + Ownership - + Price/BV - 1.02% + Institutional - 42% + Price/TBV - 1.48% + Insider - 10% + Price/Earnings - 12.7 + Est. Price/Earnings - 12.0 ‘St02k price $9
Slide 5: New Jersey: #1 in Population Density & Household Income
7) Lakeland Bancorp, Inc. Y New Jersey #1 in Population Density & Household Income Current Counties of LBA Deposits Market Deposits 2011 Median Number of Small Operation (Smillions) ( (Smillions) Household Income @ Businesses © Bergen, NJ $39,721 $79,903 Essex, NJ $25,309 $52,839 Morris, NJ $22,386
Slide 6: Deposit Market Share
7) Lakeland Bancorp, Inc. Deposit Market Share + 24 largest independent commercial bank in counties of operation + Significant opportunity to take market share from larger competitors Bar In Counties of Operation ( Rank Institution 1__| Hudson City Bancorp ine. (NJ) 51 2 | Toronto-Dominion Bark [_a_
Slide 7: Management Team
6, q) Lakeland Bancorp, Inc. Thomas J. Shara le President & CEO Years Experienced Management Team Years ith Banking Lakeland 30 4 ious Expr Hudson United, TD Banknorth Robert A. Vandenbergh President, Lakeland Bank 30 13 Midlantic Joseph F. Hurley Chief Financial Officer 25 Hudson United, HSBC David
Slide 8: Loan Portfolio
6, 2 Lakeland Bancorp, Inc. Loa n Po gaie)| io (Dollars in Millions) CRE ($1,125m) C&l ($216m) Construction ($46m) Leases ($27m) Residential Mortgage ($423m) Consumer ($310m) 2009 2010 2011 HB Loans ex Leases li Leases
Slide 9: Commercial Loans
7) Lakeland Bancorp, Inc. Commercial Loans as of December 31, 2012 + Relationship banking and deposit focus + Four NJ Lending Offices + Centralized lending approval + Average Commercial loan size - $560k + Legal lending limit - $38m + House limit - $26m + Twenty-five borrowers > $10m exposure
Slide 10: Commercial Loan Growth
4) Lakeland Bancorp, Inc. & Commercial Loan Growth ex leases & consumer loans (dollars in millions) Mixed Other 5% 5% yner Occupied 39% 2008 2009 2010 2011 2012 | M@ CRE M® C&l W&® Construction
Slide 11: Residential & Consumer Loans
Residential & Consumer Loans as of December 31, 2012 7) Lakeland Bancorp, Inc. Consumer: + Outstanding $270m Home Equity + $39m Other + 12,937 Loans Residential: + Outstanding $423m of 1 - 4 Family loans + 1,781 Loans 9/ 0% ron "0 S00 0-7 SADt0 820450 m-800 0730 4070 78CNIO” > €20 % of known FICOs a
Slide 12: Investment Securities
if ) Lakeland Bancorp, Inc. | nvestment Secu rities as of December 31, 2012 $496m (17% of Total Assets) Primarily for liquidity purposes Short agencies, MBS, Munis No significant write downs + 2.20% Yield + 3.74 year Weighted Average Life @ MasicMo ($280m) @ Corporate Debt ($15m) @ Munis ($78m) @ Ag
Slide 13: Municipal Securities Portfolio
6, q) Lakeland Bancorp, Inc. Count 28 Market Value (%) Market Value ($) 18% as of December 31, 2012 $13,852,499 Municipal Securities Portfolio Gain/Loss ($) $656,290 59% 45,777,089 1,937,027 3% 2,639,979 78,161 BBB 1% 952,410 42,410 Below Inv. Grade 0% 19,865 -135) Not Rated 19% 14,614,933 58,281 To
Slide 14: Deposits
4, 2 Lakeland Bancorp, Inc. DDA ($498m) Savings ($354m) NOW ($839m) MMDA ($377m) Time < $100k ($188m) Time > $100k ($115m) Deposits Core Deposits 87% ot Total Deposits (Dollars in Millions) Demand Deposits $450 2009 % of Total Deposii 15% its
Slide 15: Capital Ratios
7) Lakeland Bancorp, Inc. Capital Ratios Tangible Common Equity Ratio Total Risk Based Capital Ratio 5.78% Tam 08% 5.63% “5.60% ° 46%
Slide 16: 2012 Highlights
7) Lakeland Bancorp, Inc. 2012 Highlights + Net Income of $21.1m up 19% from 2011 EPS of $0.76 vs. $0.66, up 15% from 2011 Loans up $105.9m (5%) from 2011 Demand Deposits up $48.5m (11%) from 2011 Total Deposits up $121.3m (5%) 2012 NIM 3.70% vs. 3.85% in 2011 NPAs of $28.5m down $21.7m (43%) from 2
Slide 17: Lakeland Bancorp, Inc. Net Income
if ) Lakeland Bancorp. Inc. Net Income {Dollars in millions) 2009
Slide 18: ROA & ROE
i) Lakeland Bancorp, Inc. ROA & ROE
Slide 19: Net Interest Margin
Mania a Net Interest Margin 4Q'11 1Q 12 2012 3Q 12 4Q 12 Asset Yield 4.46% 4.43% 4.35% 4.25% 414% 1B Liability Cost 0.90% 0.83% 0.81% 0.74% 0.59% Spread 3.56% 3.60% 3.54% 3.51% 3.55% NIM 3.73% 3.76% 3.70% 3.66% 3.67%
Slide 20: Deposit Pricing Trends
7) Lakeland Bancorp, Inc. ‘ Deposit Pricing Trends Weighted Average cost of total deposits for the quarter
Slide 21: Peer Group Performance
4, f) Lakeland Bancorp, Inc. Peer Group Performance Non-Interest Expenses / Avg. Assets Efficiency Ratio 3Q 12 $2-5 Bill. $1-10 Bill. $2-5 Bill. $1-10 Bill. Peer Avg. Mid-Atlantic Peer Avg. Mid-Atlantic Peer Avg. Peer Avg.
Slide 22: Non-Performing Assets
i, LakelandBancorp,Inc. | Non-Performi ng Assets (Dollars in millions) NPA/ Assets NPL/ Loans Allowance / Loans $35.3) $29.2) 2Q 3Q 2012
Slide 23: Credit Metrics
7) Lakeland Bancor p, Inc. GZ dit Metrics (Dollars in millions) Charge-Offs as a % of Offs Outstanding CRE $1,171 $14.5 $9.9 0.85% C&l 216 1.5 0.5 0.23% Consumer 310 3.2 1.8 0.58% Residential Mortgages PetGaenene, Outstanding = NPA Gaara, (dollars in millions) 423 87 1.7 0.40% Leasing 27 0.1 0.5 1.8
Slide 24: Acquisition
Acquisition
Slide 25: Transaction Overview
7) Lakeland Bancorp, Inc. + + + + + + + + + Per Share Consideration: Transaction Value (1) : Consideration Mix: Exchange: Shares Issued: Board Representation: Required Approvals: Due Diligence: Expected Closing: Transaction Overview $12.00 per share $64.4 million 90% sotck / 10% cash Exchange ratio
Slide 26: Overview of Somerset Hills Bancorp
4, f) Lakeland Bancorp, Inc. Summary Financial Information as of December 31, 2012 ($M) + Assets: $368.9 + Loans: $238.8 + Deposits: $320.2 + Equity: $41.8 + 2012 Net Income: $34 + Tang. BV/ Share: $779 + 2012 ROAA: 0.95% + 2012 ROAE: 8.15% + NPAs / Assets: 0.2% Overview of Somerset Hills Bancorp Su
Slide 27: Transaction Rationale
4, 2 Lakeland Bancorp, Inc. Transaction Rationale Acquisition of a high quality institution with strong asset quality (0.2% NPAs / Assets at December 31, 2012) and a strong track record of ) profitability (2012 ROAA of 0.95%) » +Extends and enhances Lakeland’s market presence south into the ) attrac
Slide 28: Summary Pro Forma Information
i) Lakeland Bancorp, Inc. yaaidey Mane Posing rain ais ee @oe ac FU ie “s > ‘Summary Pro Forma Information“ + Assets: $3.3 billion + Market Cap.: + Loans: $2.4 billion + Branches: + Deposits: $2.7 billion * Counties Served: Source: SNL (1) Data as of 12-31-2012 and does not include purchase accounti
Slide 29: Pro Forma Franchise & Market Share
Pro Forma Franchise & Market Share 2010-2011 2011-2016 Median 2011-2016 Dep Deposit Population Est. Populatior HH Est. HH Income| Market #of — InMarkot_ Market Share % of, Total Change Change. sIncomo Chango County Rank Branches __ (5000s) %) Franchise __Population f (4) (s) (%) Morris 493,572 1.70
Slide 30: Pro Forma Loans and Deposits
i) Lakeland Bancorp. Inc. Loans Lakeland Bancorp. Inc Home Equity and Cons. Constr. 13% teans 2% we Leases cal 1% 10% Pro Forma Deposits 9 Lakeland Bancorp, Inc. CRE Loans 1,190,099 cal Leases Resi. Mortgages Constr. Loans 50,514 Home Equity and Cons 345,879 Total 2,303,782 NIB Demand Savings and MM
Slide 31: LBAI Investment Considerations
LBAI Investment Considerations 4, f) Lakeland Bancorp, Inc. Attractive and expanding market demographics Experienced executive management team Right-sized institution Small business lending focus Low cost, core deposit franchise Disciplined expense culture ¢- + + + + % + Shareholder focus
Slide 32: Additional Information and Where to Find It
7) Lakeland Bancorp, Inc. Additional Information and Where to Find It This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the Propoted mergers, Lakeland Bancorp and Somerset Hills
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