Lake Ridge Bancorp, Inc. · OTC:LRBI
Lake Ridge Bancorp — Shareholder Meeting (2023)
45 slides from Lake Ridge Bancorp's shareholder meeting presentation, 2023
Slide 1: 2023 Annual Shareholders Meeting
aWA&_ Lake Ridge WARD” Bancorp, Inc” 2023 ANNUAL SHAREHOLDERS MEETING
Slide 2: Welcome to the 2023 Annual Shareholders Meeting
W E L C O M E T O T H E 2023 Annual Shareholders Meeting The meeting will start promptly at 6:00 pm. Thank you for your investment in Lake Ridge Bancorp, Inc. 2
Slide 3: Agenda
ANNUAL SHAREHOLDERS MEETING AGENDA I. Welcome – Vern Jesse, Chairman of the Board II. Financial Overview – Tim Ryan, Chief Financial Officer III. Creation of Lake Ridge Bank – Paul Hoffmann, President IV. State of the Industry – Jim Tubbs, Chief Executive Officer 3
Slide 4: I. Welcome
2023 ANNUAL SHAREHOLDERS MEETING I. WELCOME Vern Jesse, Chairman of the Board 4
Slide 5: Verification of a Quorum
2023 ANNUAL SHAREHOLDERS MEETING VERIFICATION OF A QUORUM Total Shares Outstanding 1,967,653 Shares Voted Percent Voted Quorum Established 5
Slide 6: Election of Class I Directors
2023 ANNUAL SHAREHOLDERS MEETING ELECTION OF CLASS I DIRECTORS Steve Grundahl Paul Hoffmann 6
Slide 7: Appointment of Wipfli LLP
2023 ANNUAL SHAREHOLDERS MEETING APPOINTMENT OF WIPFLI LLP To ratify the appointment of Wipfli, LLP as the Company’s independent registered public accounting firm. 7
Slide 8: Thank You, Nancy and Charlie
2023 ANNUAL SHAREHOLDERS MEETING THANK YOU, NANCY AND CHARLIE Nancy Kiefer Charlie Saeman 8
Slide 9: Introduction of Current Directors
INTRODUCTION OF CURRENT DIRECTORS 9
Slide 10: II. Financial Overview
2023 ANNUAL SHAREHOLDERS MEETING II. FINANCIAL OVERVIEW Tim Ryan, Chief Financial Officer 10
Slide 11: Financial Performance and Update
Financial Performance and Update 2022 Financial results were impacted by several adjustments related to the merger. Created a lot of noise in 2022 and 2023. Through June 2023 we have been impacted by rapid increase in interest rates and three bank failures. Fed continues to raise rates and to remove
Slide 12: Financial Performance and Update
Financial Performance and Update As of June 2023, assets have grown 1% to $2.92 billion. Year-end balances are generally higher due to excess municipal and corporate deposits. Growth likely to be slower as the economy adjusts to higher interest rates. 12
Slide 13: Financial Performance and Update
Financial Performance and Update As of June 2023, loans have grown 6% to $2.37 billion. Growth coming from multi-family and construction type projects. 13
Slide 14: Financial Performance and Update
Financial Performance and Update As of June 2023, deposit balances have decreased by 10%. Higher rates, normal balance fluctuations, and depositors using cash to fund projects. Impact from merger minimal. 14
Slide 15: Financial Performance and Update
Financial Performance and Update 2022 and 2023 include one-time merger-related adjustments. YTD 2023 interest expense is twice the total expense for all of 2022. Only three months of Monona activity is included in 2022. 15
Slide 16: Financial Performance and Update
Financial Performance and Update On a pro forma basis 2022 net income was $31.3 million Merger related items decreased net income by $7.8 million Add in Monona’s nine-month performance of $8.5 million 2023 net income includes $2.8 million of additional merger related charges mostly related to the da
Slide 17: Financial Performance and Update
Financial Performance and Update Earnings per share impacted by items mentioned in net income discussion. 2021 and 2020 include impact of PPP originations and stronger residential mortgage volume. 17
Slide 18: Financial Performance and Update
Financial Performance and Update Book value is down slightly from year end 2021 but was impacted by large unrealized loss position. Adding back that impact book value as of June 2023 is $138.89 per share. 18
Slide 19: Financial Performance and Update
Financial Performance and Update Loan growth was strong during the first half of 2023 but likely will be impacted by Fed increasing borrowing rates 2023 decrease in deposits related to normal fluctuations, higher market rates, and clients spending down excess funds 2023 EPS impacted by higher intere
Slide 20: III. Creation of Lake Ridge Bank
2023 ANNUAL SHAREHOLDERS MEETING III. CREATION OF LAKE RIDGE BANK Paul Hoffmann, President 20
Slide 21: Why did we create LRB?
Why did we create LRB? • We knew it would create long-term viability and shareholder success to bring two great local banks together. • Continue the legacy of community- focused banking with scale. • Create synergies that mean together we are better than we are apart. 21
Slide 22: How did we become LRB?
How did we become LRB? Consolidation of Seven (7) Area Community Banks 2023 - State Bank of Cross Plains (est. 1908) and - Monona Bank (est. 1991) 2019 - Union Bank & Trust, Evansville (est. 1897) 2017 - Middleton Community Bank (est. 1995) 2010 - Black Earth State Bank (est. 1904) 2006 - Independen
Slide 23: More Growth than just Acquisitions
More Growth than just Acquisitions Total Assets Lake 3,500,000 Ridge Union Bank 3,000,000 Bank & Middleton Trust 2,500,000 Community In thousands of dollars 2,000,000 Bank Independent Black Earth 1,500,000 Bank State Bank Bank of Verona 1,000,000 Waunakee 500,000 0 2000 2001 2002 2003 2004 2005 2006
Slide 24: Who is LRB now?
Who is LRB now? • Asset Size: $2.9 Billion • Wealth Management Assets: $1 Billion + • Number of Associates: 368 • Number of Shareholders: 1,386 24
Slide 25: Full-Service Bank
Full-Service Bank • Deposits & Loans (Business, Consumer, Mortgages, & Credit Cards) • Products and Services (Mobile, Zelle, Bill-Pay, Treasury Management, Executive Banking, Prime Time, and more!) • Wealth Management (Trust & Financial Advisors) • Crop Insurance! 25
Slide 26: Where are we?
Where are we? • 21 Locations • 16 Communities • 11 Communities where we are #1 in Deposits • Dane, Green, Rock and Sauk Counties 26
Slide 27: Name, Image, and Likeness (NIL)
Name, Image, and Likeness (NIL) • New Name. It was important to find a new name that represented both of us. Geographic reference to Lakes and Ridges which is genuine, authentic Wisconsin. • New Image. A new logo & colors. • New Likeness. A new brand. 27
Slide 28: Culture of LRB and Values
Culture of LRB and Values • We are a community bank. It is who we are and how we make our decisions. • Our goal is to gain complete relationships with our clients through extraordinary service. We want to be their “bank”. • Make it easy for clients to bank with us where and when they want to. 28
Slide 29: Future of the LRB
Future of the LRB • Our communities grow and prosper because we make them better places to live and work. • Provide an extraordinary client experience both in-person and digitally. • Retain and hire outstanding associates giving them opportunities to contribute, lead, and succeed. • Enhance our shar
Slide 30: IV. State of the Industry
2023 ANNUAL SHAREHOLDERS MEETING IV. STATE OF THE INDUSTRY Jim Tubbs, Chief Executive Officer 30
Slide 31: Rebound in Rates Pressure Banks
REBOUND IN RATES PRESSURE BANKS WSJ July 2023
Slide 32: Industry Headwinds
INDUSTRY HEADWINDS I. Rapid Rising Short-Term Interest Rates II. Inverted Yield Curve III. Reduction in Liquidity 32
Slide 33: Fed Funds Rates, 2008 - 2021
Fed Funds Rates, 2008 - 2021 2.25% Interest Income (YLD) = 4.25% Interest Expense (COST) = 0.50% Net Interest Margin = 3.75% 0.37% 0.12% 0.12% 0.12% 33
Slide 34: Unprecedented Fed Action to Tame Inflation
Unprecedented Fed Action to Tame Inflation Interest Income (YLD) = 4.75% Interest Expense (COST) = 1.75% Net Interest Margin = 3.00% Deposits (Cost) are repricing higher/faster than loans (Income) 34
Slide 35: Markets Remove Expectation for 2023 Cuts
Markets Remove Expectation for 2023 Cuts Projected Cuts by Year-End 2023 from 2023 Peak -0.05% 35
Slide 36: II. Inverted Yield Curve
II. Inverted Yield Curve Deposits (short-term liabilities) reprice higher/faster than loans (long-term assets) 36
Slide 37: III. Reduction of Liquidity
III. Reduction of Liquidity For the first time ever, there was a reduction in deposits. As banks fight for deposits, cost continues to rise 37
Slide 38: Lake Ridge CD Rates
~A\N > \ Lake Ridge BANCORP, INC* CD RATES ANN sO GO oe THEY’LL MAKE YOU SMILE. Bank’ Go Far. Go Together. 9 MONTHS 15 MONTHS * The Annual Percentage Vield (APY) is effective as of uly 18, 2023. $1,000 minimum required to open this CD. Must maintain minimum daity balance of $2,000 to earn stated APY
Slide 39: So, Why Did The Dividend Get Reduced?
So, Why Did The Dividend Get Reduced? • Less profitability due to rapidly rising short-term interest rates while the yield curve is inverted, and liquidity (deposits) is shrinking. Causes the Net Interest Margin to be squeezed. 39
Slide 40: Our #1 Priority
Our #1 Priority Create Long-term Shareholder Value • In order to do this, we sometimes need to preserve short-term earnings to obtain long-term goals. 40
Slide 41: What Are My Shares Worth?
What Are My Shares Worth? DATA POINTS: Book Value (including unrealized loss) per share: $122.34 Book Value (excluding unrealized loss) per share: $138.89 Fairness Opinion at the Time of Merger: $138.12 Be careful using “last trade value.” You do not know the motivations of the buyer and/or seller.
Slide 42: Items On The Horizon
Items On The Horizon 1. Dividend Reinvestment Plan (DRIP) • You will have the option of receiving additional shares of stock instead of receiving cash dividend • Benefit to the shareholder – increase ownership in the company • Benefit to the Bank – cost effective way to raise capital 42
Slide 43: Items On The Horizon
Items On The Horizon 2. Create Greater Liquidity for Shares • We now have almost 1,400 current owners • Contract with online trading platform service • Create a greater presence on “pink sheets” • Possibly become listed/go public Pros vs. Cons 43
Slide 44: Any Questions?
2023 ANNUAL SHAREHOLDERS MEETING Any Questions? 44
Slide 45: Thank You for Your Investment and Trust in Lake Ridge Bank
2023 ANNUAL SHAREHOLDERS MEETING THANK YOU FOR YOUR INVESTMENT AND TRUST IN LAKE RIDGE BANK GO FAR. GO TOGETHER. 45