Lakeland Financial Corporation · NASDAQ:LKFN
Lakeland Financial — Investor Presentation (September 2014)
36 slides from Lakeland Financial's investor presentation, September 2014
Slide 1: Lakeland Financial Corporation Investor Update
Lakeland Financial Corporation Investor Update September 2014 A Proven History of Shareholder Value Creation Driven by Service Excellence
Slide 2: David M. Findlay and Lisa M. O'Neill
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 2
Slide 3: Forward-Looking Information
Forward-Looking Information 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 with respect to the financial condition, results of oper
Slide 4: Lake City Bank Today
Lake City Bank Today • Headquartered in Warsaw, Indiana • 46 branch offices • 502 FTEs • $3.4 billion banking assets • $1.0 billion trust assets • Regional franchise • Low market shares – high growth potential 4
Slide 5: Established Market Presence
Established Market Presence Organic Growth Potential in Mature and New Markets 5
Slide 6: Growth Strategy
Lake City Bank Growth Strategy 1. Business Owner Focus 2. High Quality People 3. Larger Market Organic Expansion 6
Slide 7: Business Owner Focus
Business Owner Focus • 37 Commercial Banking Officers • Average 20 years experience in banking and 10 years at Lake City Bank • Significant credit and administrative support staff • Commercial staff reside in market they serve 7
Slide 8: Relationship Strategy
Business Owner Focus Relationship Strategy • Lead with Credit and Operating Relationship • Understand Client Needs • Cross-sell Aggressively by Leveraging Technology 8
Slide 9: Credit Process
Business Owner Focus Credit Process • Centralized/Committee Approvals • Focus on Management/Cash Flow • Collateral and Guarantees • Orientation Toward Owner-Occupied and well structured Nonowner Occupied RE • Be Responsive and Consistent 9
Slide 10: Lake City Bank Culture
Quality People Lake City Bank Culture • Core Values start with honesty • Lake City University drives education and culture • Community involvement is “Real” and critical to our strategy • Our Culture has not been diluted by acquisition • Leadership is key to culture and succession plan will ensure s
Slide 11: Face to Face Contact
Quality People Face to Face Contact • We Love to Call • Sales Calling Program Includes 105 Officers • 11,658 “Real” Client Contacts in 2013 • Our People are the Competitive Advantage 11
Slide 12: Larger Market Organic Expansion
Larger Market Organic Expansion State LCB LCB Deposit # of Rank County Primary City Population* Entry Market Share** Branches 20. Kosciusko Warsaw 77,609 1872 49% 12 6. Elkhart Elkhart 199,619 1990 20% 9 5. St. Joseph South Bend 266,344 1997 4% 4 3. Allen Fort Wayne 360,412 1999 10% 4 4. Hamilton/Ma
Slide 13: Commercial Banking Market
Larger Markets Commercial Banking Market Growth Potential in Every Market Elkhart/South Bend 2,296 22% Warsaw 650 6% Fort Wayne 1,757 17% Indianapolis 5,652 55% Companies with Revenue of $1 to $30 million 13 Source: 2012 Hoover’s
Slide 14: Lake City Bank Market Area
Larger Markets Lake City Bank Market Area* Key Competitors (millions) 2013 2003 2013 Deposits Share Deposits Share Increase # of Offices 1. JPM Chase $2,651 11.85% $1,528 12.51% 73.49% 46 2. 1st Source $2,627 11.75% $2,297 15.73% 14.37% 49 3. Lake City Bank $2,485 11.11% $967 6.62% 156.98% 46 4. Wel
Slide 15: Market Deposit Performance
Larger Markets Market Deposit Performance $1,800 $1,600 $1,518 $1,470 Lake City Bank is the $1,400 Market share winner in $1,200 $1,126 $1,123 last decade $1,000 $800 $600 $450 $330 $400 $257 $251 $232 $200 $0 -$69 -$200 Lake City Wells Fargo Bank of JPM Chase Fifth Third 1st Source IAB Financial Ke
Slide 16: Indianapolis Deposit Share
Larger Markets Indianapolis Deposit Share Indianapolis Market Banks Share of Market 14% 1. JPM Chase 28% 2. PNC 22% 3. Fifth Third 11% 4. Huntington National 9% 5. BMO Harris 6% 6. KeyBank 5% 7. National Bank of Indy 5% 8. Regions Bank 4% 86% 9. Merchants Bank of IN 2% 10. First Internet Bank of IN
Slide 17: Financial Performance
Lakeland Financial Corporation Financial Performance 17
Slide 18: Net Income and EPS
Net Income and EPS Record net income and EPS $40,000 $38,839 $35,394 $2.80 $35,000 $30,662 $30,000 $2.30 $2.33 $24,543 $25,000 $2.15 $21,224 $1.80 $20,000 $18,979 $1.88 $18,482 $15,000 $1.30 $1.26 $1.32 $1.27 $10,000 $1.12 $0.80 $5,000 $0 $0.30 2009 2010 2011 2012 2013 YTD 2013 YTD 2014 Net Income D
Slide 19: Average Loans
Average Loans Commercial Emphasis Drives Growth $3,000,000 $2,592,443 120% $2,343,422 $2,500,000 109% $2,216,131 $2,049,209 $2,148,046 100% $2,000,000 $1,901,746 95% 93% 93% 95% 87% 80% $1,500,000 60% $1,000,000 $500,000 40% $0 20% 2009 2010 2011 2012 2013 YTD 2014 Retail Commercial Loans to Deposit
Slide 20: Loan Breakdown
Loan Breakdown C & I Drives Lending Business Commercial RE - Agri-business – Other Construction Agriculture Commercial Residential Mortgage $166,671 $212,679 $72,097 $138,773 Home Equity 6% 8% 3% Commercial RE - 5% $145,330 Installment - Other Multifamily 6% $58,955 Consumer 2% $51,021 2% Commercial
Slide 21: Investment Portfolio
Investment Portfolio June 30, 2014 Security Average Book Effective Market Type Life Yield Duration Value MBS Pass-through 5.71 2.85% 5.68 $118,051 CMO 3.38 3.32% 2.71 $230,479 CMBS 6.57 2.37% 5.98 $26,048 Municipal 5.38 5.37% 5.54 $96,939 Taxable Municipal 6.06 2.54% 5.50 $3,339 Taxable Treasuries 0
Slide 22: Asset Quality
Asset Quality Nonperforming Levels Continue to Improve 2.50% 2.19% 2.00% 1.77% 1.80% 1.77% 1.75% 1.53% 1.37% 1.50% 1.31% 1.22% 0.94% 1.00% 0.53% 0.45% 0.50% 0.00% 2009 2010 2011 2012 2013 YTD 2014 Nonperforming Loans/Total Loans Nonperforming Assets/Total Assets 22
Slide 23: Asset Quality
Asset Quality Improving Credit Trends $200,000 $180,000 $180,042 $171,422 $168,781 $168,263 $160,000 $152,861 $140,000 $120,000 $100,000 $80,000 $60,000 $47,347 $46,903 $40,000 $43,218 $34,101 $32,170 $23,198 $21,646 $23,945 $15,102 $14,075 $20,000 $0 Q2-13 Q3-13 Q4-13 Q1-14 6/30/14 Impaired & Non-I
Slide 24: Net Chargeoffs/Average Loans
Asset Quality Strong Reserve Coverage 0.60% 2.70% 2.39% 2.28% 2.40% 2.15% Loan Loss Reserve to Total Loans 0.50% Net Chargeoffs/Average Loans 1.92% 2.10% 0.40% 1.71% 1.80% 1.59% Reserve to 1.50% Nonperforming 0.30% Loans = 324% 1.20% 0.20% 0.90% 0.60% 0.10% 0.42% 0.54% 0.25% 0.20% 0.11% 0.25% 0.30%
Slide 25: Average Deposits
Average Deposits Improved Funding Mix Deposits = 93% of Funding vs. 87% in 2009 $3,200,000 $2,715,754 $2,505,195 $2,505,340 $2,700,000 $2,325,963 $2,132,608 $2,200,000 $1,870,231 $1,700,000 $1,200,000 $700,000 $200,000 2009 2010 2011 2012 2013 YTD 2014 2014 Growth 9% 25
Slide 26: Deposit Breakdown
Deposit Breakdown Retail Strategy Key to Deposit Growth Cost of Deposits 4.00% 3.10% 3.00% 1.72% 2.00% 1.30% 1.19% 0.98% 0.63% 1.00% 0.48% 0.00% Pre-Liquidity Strategy 2008 2009 2010 2011 2012 2013 YTD December 31, 2008 2014 June 30, 2014 CDARS Total Total CDARS $3,899 Commercial Brokered CDs Commer
Slide 27: Net Interest Income
Net Interest Income Margin Improved Each Quarter in 2013 5.00% $120,000 $100,000 $92,653 4.50% $92,080 $90,439 $87,671 $80,281 $80,000 4.00% $60,000 3.73% $50,234 $43,169 3.50% 3.51% 3.54% $40,000 3.35% 3.28% 3.26% 3.19% 3.00% $20,000 $0 2.50% 2009 2010 2011 2012 2013 YTD 2013 YTD 2014 Net Interest
Slide 28: Impact of Rising Rates
Impact of Rising Rates • 90% of loan portfolio is commercial • 66% of commercial loans are variable rate – mostly Prime and LIBOR based o Floors with average rate of 3.80% exist on 46% of commercial variable rate loans • 34% of commercial loans are fixed rate with most less than 5 years • Deposit ra
Slide 29: Non-Interest Income
Non-Interest Income Stable, Fee-Based Strategy Drives Increases $35,000 50% $30,737 $30,000 45% $25,196 40% $25,000 Non-Interest Income/Total Revenue $22,243 $21,509 $22,205 35% Non-Interest Income $20,000 30% 26% $15,050 $15,019 $15,000 23% 22% 25% $10,000 20% 19% 20% $5,000 15% $0 10% 2009 2010 20
Slide 30: Non-Interest Expense
Non-Interest Expense Disciplined Approach to Cost Structure $70,000 $62,778 $57,742 $60,000 $53,475 $53,435 $55,105 $50,000 $40,000 $32,874 $29,984 $30,000 $20,000 $10,000 $0 2009 2010 2011 2012 2013 YTD 2013 YTD 2014 2014 YTD Growth 10% 30
Slide 31: Efficiency Ratio
Efficiency Ratio Leveraging Offices, People and Technology 60% 55% Indianapolis and South Bend Market Expansion Fishers office in Indianapolis 52% 50% 51% 52% 50% 48% 47% 45% 40% 2009 2010 2011 2012 2013 YTD 2014 31
Slide 32: Stable Healthy Dividend
Stable Healthy Dividend Dividend Payout Ratio of 31% $0.84 $0.90 $0.76 $0.80 $0.68 $0.62 $0.62 $0.62 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 2009 2010 2011 2012 2013 2014 Annualized Note - Split Adjusted 2014 Growth 8% - Paid Dividends 32
Slide 33: Strong Capital Structure
Strong Capital Structure Key Ratios and Per Share Data Subordinated As of June 30, 2014 Debt Reserves 8.0% 10.9% TCE /Tangible Assets 9.96% Tier 1 Common Risk-Based 11.80% Total Risk-Based 14.12% Tangible Common Leverage 11.01% Equity Book Value $20.77 81.7% Tangible Book Value $20.58 Tangible Book
Slide 34: LKFN Performance
LKFN Performance Lakeland Financial Corporation - Price Change (%) = LKFN (+320.06%) === NASDAQ Bank (+36.60%) w= S&P 500 Bank (-30.69%) === SNL U.S. Bank (-13.42%) 400 300 . anya 100 Pak Ly 0 -100'— T T T T T T T T T T T T T T 2000 ©2001 «2002» 2003-«« 2004 += 2005» 2006 »«= 2007 «2008 «= 2009S 201
Slide 35: Consistently Strong Performance
Consistently Strong Performance LTM 9 Institutions (including LKFN) ROE >12%(4) Consecutive Increases in Net 33 Institutions Income Since 2009(3) Profitable for the Last 10 Years(2) 84 Institutions Exchange Traded Depositories 180 Institutions with Assets Between $1B and $5B(1) Source Keefe, Bruyett
Slide 36: Investment Highlights
Investment Highlights • Proven History of Organic Growth • Disciplined Strategy • Strong Internal Culture • Consistent Execution • Service Excellence drives Shareholder Value 36
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