Lakeland Financial Corporation · NASDAQ:LKFN
Lakeland Financial — Investor Presentation (March 2013)
40 slides from Lakeland Financial's investor presentation, March 2013
Slide 1: Investor Update
Investor Update March 2013
Slide 2: 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 3: Lake City Bank Today
Lake City Bank Today • Headquartered in Warsaw, Indiana • 45 branch offices • 493 FTEs • $3.0 billion banking assets • $900 million trust assets • Regional franchise • Low market shares – high growth potential 3
Slide 4: Historical Highlights
Historical Highlights Founded as the Entered Opened Indianapolis 4th bank in Elkhart Indianapolis Loan Full Service Warsaw, IN Market Production Office Office opens 1872 1933 1965 1990 1999 2006 2011 2012 “It’s a Began Entered Fort Currently Wonderful Life” Branching Wayne Market Operate 45 Branch O
Slide 5: Diversified Market Area
Diversified Market Area 13 Counties and 30 Communities 5
Slide 6: Growth Strategy
Growth Strategy Business Owner Focus High Quality People Larger Market Organic Expansion 6
Slide 7: Business Owner Focus
Business Owner Focus • 35 Corporate Banking Officers • Average 20 years experience in banking • Average 10 years at Lake City Bank 7
Slide 8: Relationship Strategy
Business Owner Focus Relationship Strategy • Lead with Credit • Understand Client Needs • Cross-sell Aggressively • Want Clients, Not Borrowers 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 • Prudent . . . but Responsive 9
Slide 10: Lake City Bank Culture
Quality People Lake City Bank Culture 10
Slide 11: Commitment to Development
Quality People Commitment to Development • Over 90 instructor-led courses, seminars, workshops and live webinars • 17,000 Contact Hours • Average 34 hours training per employee • Over 3400 online courses completed through e-learning 11
Slide 12: Face to Face Contact
Quality People Face to Face Contact • Over 107 Calling Officers • 16,146 Calls in 2012 • Establish our people as the competitive advantage 12
Slide 13: Community Involvement
Quality People Community Involvement • Company-wide involvement • Connections with hundreds of community groups • Thousands of volunteer hours 13
Slide 14: 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 77,336 1872 51% 12 6. Elkhart Elkhart 198,941 1990 22% 9 5. St. Joseph South Bend 266,700 1997 5% 4 3. Allen Fort Wayne 358,327 1999 10% 4 4. Hamilton/Ma
Slide 15: Lake City Bank Market Area Deposit Performance
Larger Markets Lake City Bank Market Area* Deposit Performance (millions) 2012 2002 Deposits Share Deposits Share Increase # of Offices 1. First Source $2,550 12.08% $2,435 17.51% 4.72% 49 2. Lake City Bank $2,527 11.97% $845 6.07% 199.05% 47 3. JPM Chase $2,352 11.14% $1,698 12.21% 38.57% 47 4. Wel
Slide 16: Market Area Deposit Performance
Larger Markets Market Area Deposit Performance $1,800 $1,682 $1,600 Dominant market share $1,400 winner in last decade $1,158 $1,200 $1,000 $780 $800 $655 $600 $400 $300 $283 $237 $221 $200 $116 $115 $0 Lake City Wells Fargo Bank of JPM Chase Fifth Third Tower KeyBank Star PNC 1st Source Bank Americ
Slide 17: Commercial Banking Market
Larger Markets Commercial Banking Market Companies $1-30 Million Elkhart/South Bend 2,296 22% Warsaw 650 6% Fort Wayne 1,757 17% Indianapolis 5,652 17 55% Source: Hoover’s
Slide 18: Indianapolis Market Area Deposit Performance
Larger Markets Indianapolis Market Area* Deposit Performance (millions) 2012 2002 Deposits Share Deposits Share Increase 1. JPM Chase $7,540 28.44% $4,631 29.56% 62.82% 2. PNC $5,640 21.27% $4,176 26.66% 35.06% 3. Fifth Third $2,987 11.27% $1,263 8.06% 136.50% 4. Huntington National $2,200 8.30% $1,
Slide 19: Indianapolis Market Deposit Concentrations
Larger Markets Indianapolis Market Deposit Concentrations* 12% Great opportunity for Indiana-based players to grab market share 88% Out of State In State *Marion and Hamilton Counties as of 6/30/12 19
Slide 20: Financial Performance
Financial Performance (@ake City Bank
Slide 21: Net Income and EPS
Net Income and EPS Record net income and EPS $40,000 $35,394 $2.80 $35,000 $30,662 $30,000 $2.30 $24,543 $2.15 $25,000 $19,701 $1.88 $1.80 $20,000 $19,211 $18,979 $1.55 $1.58 $15,000 $1.30 $1.32 $1.26 $10,000 $0.80 $5,000 $0 $0.30 2007 2008 2009 2010 2011 2012 Net Income Diluted EPS 2012 Net Income
Slide 22: Average Loans
Average Loans $2,216,131 $2,148,046 $2,300,000 $2,049,209 $2,100,000 $1,901,746 $1,900,000 $1,665,024 $1,700,000 $1,404,068 $1,500,000 $1,300,000 $1,100,000 $900,000 $700,000 $500,000 $300,000 2007 2008 2009 2010 2011 2012 Commercial Retail 22 2012 Growth 3%
Slide 23: Loan Breakdown
Loan Breakdown C & I Drives Lending Business Residential Mortgage Commercial RE - Agri-business - Agriculture $109,823 Construction $224,719 5% Home Equity $82,494 10% $161,366 Commercial RE - Multifamily 4% Installment - Other 7% $45,011 Consumer 2% $57,296 3% Commercial RE - Nonowner Occupied $314
Slide 24: Investment Portfolio
Investment Portfolio December 31, 2012 Weighted Tax Security Average Equivalent Type Life Yield Agencies 3.03 1.37% Private Label CMOs 1.55 5.40% Municipal 5.41 5.10% Private Label Municipal Treasuries 1.75 2.26% CMOs Securities 1.36% Total 3.42 2.11% 18.31% Treasuries 0.22% Agencies 80.11% 24
Slide 25: Asset Quality
Asset Quality Nonperforming Asset Levels Stabilized 1.95% 1.86% 2.00% 1.77% 1.77% 1.80% 1.53% 1.57% 1.60% 1.37% 1.40% 1.40% 1.16% 1.22% 1.20% 1.00% 0.80% 0.65% 0.49% 0.60% 0.40% 0.20% 0.00% 2007 2008 2009 2010 2011 2012 Nonperforming Loans/Total Loans Nonperforming Assets/Total Loans 25
Slide 26: Net Chargeoffs/Average Loans
Asset Quality Charge Off and Reserve Summary 0.60% 2.70% 2.39% 2.28% 2.40% 2.15% Loan Loss Reserve to Total Loans 0.50% Net Chargeoffs/Average Loans 2.10% 0.40% 1.80% 1.59% 1.50% 0.30% 1.04% 1.03% 1.20% 0.20% 0.90% 0.60% 0.10% 0.21% 0.43% 0.42% 0.54% 0.25% 0.20% 0.30% 0.00% 0.00% 2007 2008 2009 2010
Slide 27: Asset Quality
Asset Quality Healthy Coverage of NPL’s 2007 Allowance = $15.8 million 250% 224% 2012 Allowance = $51.4 million 200% 167% 150% 135% 122% 104% 97% 89% 87% 87% 100% 50% 0% 2007 2008 2009 2010 2011 2012 Allowance/Nonperforming Loans Allowance/Nonperforming Loans + Performing TDR's 27
Slide 28: Disciplined Loan Workout Process
Asset Quality Disciplined Loan Workout Process • Consistent discipline in Watch List and Loan Review administration • Dedicated loan workout group under Chief Credit Officer • Engaged senior management team in Loan Review process • Work with borrowers to maximize collections 28
Slide 29: Strong Capital Structure
Strong Capital Structure Subordinated Key Ratios and Per Share Data Debt As of December 31, 2012 8.2% Reserves 13.6% TCE /Tangible Assets 9.63% Tier 1 Risk-Based 13.01% Total Risk-Based 14.27% Leverage 10.46% Tangible Common Book Value $18.18 Equity 78.2% Tangible Book Value $18.10 Tangible Equity R
Slide 30: Summary Funding 2009-2012
Summary Funding 2009-2012 Deposit Growth Drives Improved Funding Mix Total Total Dec 31, 2009 % of Mix Dec 31, 2012 % of Mix Client Funding Total Deposits $1,851 81% $2,582 94% Repurchase Agreements $127 6% $122 4% Total Client $1,978 87% $2,704 98% Wholesale Funding Federal Reserve Programs $85 4%
Slide 31: Average Deposits
Average Deposits $2,700,000 $2,505,195 $2,325,963 $2,132,608 $2,200,000 $1,870,231 $1,637,794 $1,700,000 $1,476,725 $1,200,000 $700,000 $200,000 2007 2008 2009 2010 2011 2012 2012 Growth 8% 31
Slide 32: Retail Strategy Key to Deposit Growth
Deposit Breakdown Retail Strategy Key to Deposit Growth Cost of Deposits in Period 5.00% 4.35% 3.96% 4.00% 3.10% 2.62% 3.00% 1.72% 2.00% 1.30%1.19% 0.98% 1.00% 0.00% December 31, 2008 2005 2006 2007 2008 2009 2010 2011 2012 December 31, 2012 Total Total Brokered CDARS Commercial CDARS Brokered Comme
Slide 33: Net Interest Income
Net Interest Income Margin Compression Impact is Significant $100,000 $92,653 5.00% $92,080 $90,000 $87,671 $80,281 $80,000 4.50% $70,000 $63,268 $60,000 $54,556 4.00% 3.73% $50,000 3.54% 3.51% $40,000 3.50% 3.28% 3.22% $30,000 3.14% $20,000 3.00% $10,000 $0 2.50% 2007 2008 2009 2010 2011 2012 Net I
Slide 34: Non-Interest Income
Non-Interest Income $30,000 50% $25,196 45% $25,000 $22,686 $22,243 $22,205 40% $21,509 Non-Interest Income/Total Revenue $20,242 35% $20,000 Non-Interest Income 27% 27% 30% $15,000 23% 25% 22% 20% 19% 20% $10,000 15% 10% $5,000 5% $0 0% 2007 2008(1) 2009 2010 2011 2012 % of Total Revenue 34 2012 Gr
Slide 35: Non-Interest Expense
Non-Interest Expense $57,742 $60,000 $53,895(2) $53,435 $55,105 $47,481 $50,000 $42,923 $40,000 $30,000 $20,000 $10,000 $0 2007 2008 2009 2010 2011 2012 2012 Growth 5% 35 (1) Excluding special FDIC assessment and temporary increase in 2009 (2) Includes FDIC special assessment of $2,614
Slide 36: Leveraging Offices, People and Technology
Efficiency Ratio Leveraging Offices, People and Technology 70% 65% 60% Indianapolis and South Bend Market Expansion 55% 57% 55% 50% 52% 51% 48% 45% 47% 40% 2007 2008 2009 2010 2011 2012 36
Slide 37: 2012 Quarterly Dividend Increase
2012 Quarterly Dividend Increase $0.68 $0.70 $0.62 $0.62 $0.62 $0.62 $0.55 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 2007 2008 2009 2010 2011 2012 Annualized Note - Split Adjusted 2012 Growth 10% - Paid Dividends 37
Slide 38: Investment Highlights
Investment Highlights • History of Organic Growth • Disciplined Strategy • Strong Internal Culture • Consistent Execution • Focus on Shareholder Value 38
Slide 39: LKFN Performance
o = = 5 = 6 a oe 8 = a ( LKFN SNL U.S. Bank $1B-$5B —— NASDAQ —— Russell 2000
Slide 40: Investor Update
Investor Update March 2013 (@bke City Bank
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