Lakeland Financial Corporation · NASDAQ:LKFN
Lakeland Financial — Investor Presentation (November 2021)
50 slides from Lakeland Financial's investor presentation, Nov 9, 2021
Slide 1: A Proven History of Shareholder Value Creation – 3rd Quarter 2021
A Proven History of Shareholder Value Creation And Commitment to Our Communities 3rd Quarter 2021 Lakeland Financial Corporation LKFN L I S T E D
Slide 2: Executive contacts
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
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 identifiable
Slide 4: Bank Director's 2021 Scorecard
4 Bank Director’s 2021 Scorecard
Slide 5: 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) 8 Institutions 30 Institutions 151 Institutions 214 Institutions (including LKFN) 5 Long Term Success for Shareholders Source: S&P Global Market Int
Slide 6: Strong Capital Structure
Strong Capital Structure 6 Tangible Common Equity 91.9% Reserves 8.1% $1 .2 1 $2 6. 66 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 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 growth rate comp
Slide 7: Lake City Bank Today
Lake City Bank Today • A long‐term and consistent organic growth story • Headquartered in Warsaw, Indiana • 51 branch offices ‐ $6.2 billion banking assets ‐ $3.0 billion trust, retirement and investment brokerage assets • Focused on execution – “blocking and tackling” • Continued growth potential 7
Slide 8: A Quarter Century of Organic Growth
A Quarter Century of Organic Growth 8 $2 ,7 07 $8 4, 33 7 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000 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
Slide 9: Established Market Presence
Established Market Presence Organic Growth Potential in Mature and Developing Markets 9
Slide 10: Strong Regional and Statewide Economy
Strong Regional and Statewide Economy Indiana Employment Trends Versus National Averages 10 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, DeKalb, Huntington, Marion,
Slide 11: Shareholder Value Strategy
Shareholder Value Strategy 11 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 12: Commercial Banking Focus: Experienced Relationship Driven Team
• 41 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 structure provides credit and administrative support • We cross‐sell a
Slide 13: Credit Process
Credit Process • We are in‐market lender to in‐market clients • Character matters – we lend to people first • Our credit discipline has never changed • We focus on management/cash flow • We have a centralized committee structure • Structure is important • Orientation towards owner occupied and well
Slide 14: Lake City Bank Culture
Lake City Bank Culture • Our culture is our greatest asset and we will preserve it • Lake City University drives our culture • Diversity, Equity and Inclusion initiatives underway • Our community involvement is real and critical to our strategy • Our culture has not been diluted by acquisition 14 Hi
Slide 15: Mature Market Deposit Performance
Mature1 Market Deposit Performance $2,501 $2,180 $2,157 $944 $622 $499 $3… $296 $51 ‐$215‐$350 $150 $650 $1,150 $1,650 $2,150 $2,650 Lake City Bank JPM Chase 1st Source Flagstar First M erchants Star PN C Fifth Third O ld N ational KeyBank Organic Growth 2011 ‐ 2021 1Mature Markets include 12 Northe
Slide 16: Indianapolis Market Opportunity
Organic Growth 16 Indianapolis Market Opportunity Indianapolis Market Banks Share of Market 1. JPM Chase 23% 2. PNC 14% 3. Merchants Bank 11% 4. Fifth Third 10% 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 4% 16. L
Slide 17: A Strong Environment for Growth and Expansion
17 A Strong Environment for Growth and Expansion • #1 manufacturing state in the country(1) • CNBC named Indiana as #1 state for infrastructure • K‐12 funding increased $1 billion since 2017 • Net population in‐migration in 2020 • Ten‐year population growth of 4% through 2020 • State GDP percent inc
Slide 18: Core Deposits Fund Organic Loan Growth
18 Core Deposits Fund Organic Loan Growth • Focus on core deposit growth in retail, commercial and public funds • Commercial deposit growth over 5 years = 22% CAGR • Capitalize on market disruption in our footprint to grow deposits • Emphasize checking account relationship products and flexible solu
Slide 19: Commitment to Technology and Cyber Risk Management
• Fintech partnerships play a growing role in our technology • Lake City Bank Digital, the next generation digital solution implemented in March 2021 • Technology partnership with FIS is strong – User Planning Council and Strategic Planning Advisory Council • Retail and Commercial platforms ensure c
Slide 20: Mobile Adoption is Growing Rapidly
Mobile Adoption is Growing Rapidly 20 Channel Utilization Over Three Year Horizon(1) Channel Type Total Transactions 2018 % of Total Total Transactions 2021 % of Total Three Year Change Branch Transactions 2,339,055 20% 2,027,652 15% (13)% ATM/ITM 941,512 8% 905, 213 6% (4)% Online Logins 4,969,352
Slide 21: Digital Adoption by Age Demographic
Lake City Bank Digital Adoption by Age Demographic 15% 25% 19% 31% 10% CUSTOMER BREAKDOWN 45% 56% 46% 41% 29% DIGITAL ADOPTION Gen Z Millennial Gen X Baby Boomer Mature Gen Z 1996 – Current Millennial 1977 – 1995 Gen X 1965 – 1976 Baby Boomer 1946 – 1964 Mature 1945 or before September 2021 21
Slide 22: Technology Focused Solutions
22 Technology Focused Solutions Commitment to Technology and Cyber Risk Management
Slide 23: Financial Performance
Financial Performance (lake City Bank
Slide 24: LKFN Performance Exceeds National and Indiana Peers
1.29% 1.29% 1.69% 1.76% 1.55% 1.57% 12.52% 12.72% 16.51% 15.47% 13.51% 14.29%12.61% 12.83% 16.64% 15.57% 13.59% 14.37% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 20.00% 0.70% 0.90% 1.10% 1.30% 1.50% 1.70% 1.90% 2.10% 2.30% 2.50% 2016 2017 2018 2019 2020 YTD 2021 Return on Average Assets Re
Slide 25: Net Income and EPS
$52,084 $57,330 $80,411 $87,047 $84,337 $59,745 $71,450 $2.05 $2.23 $3.13 $3.38 $3.30 $2.33 $2.79 $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 2016 2017(1) 2018 2019 2020 YTD 2020 YTD 2021 Net Income Diluted EPS Net Income and EPS 2021 Net Income
Slide 26: Pretax Pre-Provision Earnings
$78,367 $92,634 $105,344 $110,620 $118,646 $87,063 $88,731 1.94% 2.08% 2.21% 2.24% 2.40% 2.18% 1.95% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 2016 2017 2018 2019 2020 YTD 2020 YTD 2021 Pretax Pre‐Provision Earnings Pretax Pre‐Provision/Average
Slide 27: Average Loans
Average Loans Organic Loan Growth Despite Line Utilization Below Historical Standard 93% 96% 94% 94% 95% 81% 50% 60% 70% 80% 90% 100% 110% 120% 130% 140% 150% $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 2016 2017 2018 2019 2020(1) YT
Slide 28: Loan Breakdown
Loan Breakdown C&I Drives Lending Business Commercial & Industrial $1,441,784 34% Commercial RE ‐ Owner Occupied $740,836 17% Commercial RE ‐ Nonowner Occupied $582,019 14% Commercial RE ‐ Multifamily $252,983 6% Commercial RE ‐ Construction $378,716 9% Agri‐business ‐ Agriculture $324,080 8% Other
Slide 29: Paycheck Protection Program
• $165 million thru 1,191 loans • Average loan size $139,000 • 76% of loans, or $94 million forgiven as of 10/22/21 • PPP funding exhausted as of 5/4/21 Paycheck Protection Program PPP Loan Forgiveness Accelerates Unearned Fees into Net Interest Income • $571 million thru 2,409 loans • Average loan
Slide 30: Deposit Growth Impacted by PPP Loans and Federal Stimulus
$3,477,816 $3,757,209 $4,093,894 $4,242,524 $4,650,597 $5,280,361 97% 95% 97% 98% 98% 99% 50% 60% 70% 80% 90% 100% 110% 120% 130% $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 2016 2017 2018 2019 2020 YTD 2021 Average Deposits % of Funding Average Deposits Deposit Growth Impac
Slide 31: Deposit Breakdown and Cost of Deposits
Total Retail $1,970,447 36% Total Public Fund $1,289,603 24% Total Commercial $2,143,576 40% Brokered Deposits $11,654 0% Deposit Breakdown Cost of Deposits at Historical Low Rates 1.19% 0.98% 0.63% 0.48% 0.50% 0.54% 0.72% 1.10%1.35% 0.32% 0.29% 0.00% 1.00% 2.00% 3.00% 2011 2012 2013 2014 2015 2016
Slide 32: Net Interest Income
Net Interest Income Growth in Net Interest Income Offset by Margin Compression $118,481 $135,892 $151,271 $155,047 $163,008 $118,295 $133,081 3.18% 3.33% 3.43% 3.38% 3.19% 3.16% 3.11% 2.00% 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
Slide 33: Interest Rate Sensitivity
Fixed Rate $1,285,646 33% Prime $1,064,240 27% 1 Month LIBOR $1,106,358 29% FHLB/Other $428,243 11% Interest Rate Sensitivity • Proactive deposit pricing reductions • 70% of Public Funds are tied to Fed Funds effective rate • 90% of loan portfolio consists of commercial loans • Fixed rate commercial
Slide 34: Asset Quality
Asset Quality Asset Quality Trends Remain Stable Despite Increase in Nonperforming Loans 2. 15 % 2. 75 % 1. 37 % 0. 94 % 0. 50 % 0. 42 % 0. 19 % 0. 25 % 0. 19 % 0. 46 % 0. 26 % 0. 73 % 1. 82 % 2. 20 % 1. 75 % 1. 31 % 0. 41 % 0. 35 % 0. 16 % 0. 20 % 0. 16 % 0. 38 % 0. 21 % 0. 50 % 8.17% 7.46% 8.06% 6
Slide 35: Asset Quality: Reserve Coverage
0. 54 % 0. 25 % 0. 20 % 0. 11 % 0. 10 % 0. 09 % 0. 03 % ‐0 .0 1% 0. 13 % 0. 03 % 0. 09 % ‐0 .0 5% 2.15% 2.39% 2.28% 1.92% 1.67% 1.42% 1.26% 1.23% 1.24% 1.25% 1.45% 1.76% 0.00% 0.30% 0.60% 0.90% 1.20% 1.50% 1.80% 2.10% 2.40% 2.70% ‐0.10% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 2010 2011 2012 2013 2
Slide 36: Non-Interest Income
$32,864 $36,009 $40,302 $44,997 $46,843 $35,061 $35,011 22% 22% 21% 22% 22% 23% 21% 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 2016 2017 2018 2019 2020 YTD 2020 YTD 2021 N on ‐In te re st In co m e as % o f T ot al R ev en ue N on ‐In
Slide 37: Non-Interest Expense
Non‐Interest Expense Elevated Growth Rate for Non‐Interest Expense Results from Low 2020 Run‐Rate 37 $72,978 $79,267 $86,229 $89,424 $91,205 $66,293 $79,361 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000 2016 2017 2018 2019 2020 YTD 2020 YTD 2021 2021 YOY Increas
Slide 38: Efficiency Ratio
47% 48% 51% 52% 50% 50% 48% 46% 45% 45% 43% 47% 40% 45% 50% 55% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 YTD 2021 Efficiency Ratio Revenue Growth is Primary Driver Constant investment in technology and facilities 38
Slide 39: Stable Healthy Dividend
Stable Healthy Dividend $0.73 $0.85 $1.00 $1.16 $1.20 $0.90 $1.02 1.95% 1.77% 2.25% 2.40% 2.27% 2.91% 1.91% 1.00% 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 2016 2017 2018 2019 2020 YTD 2020 YTD 2021 Dividend Per Share ‐ split adjusted Dividend Yield 20
Slide 40: LKFN Shareholder Value Total Return Performance
2,818.98% 146.44% 389.55% 182.72% LKFN Shareholder Value Total Return Performance from 12/31/00 to 9/30/21 40 9/ 30 /2 02 1 4/ 20 /2 02 1 11 /6 /2 02 0 5/ 27 /2 02 0 12 /1 6/ 20 19 7/ 4/ 20 19 1/ 22 /2 01 9 8/ 10 /2 01 8 2/ 28 /2 01 8 9/ 18 /2 01 7 4/ 6/ 20 17 10 /2 5/ 20 16 5/ 13 /2 01 6 12 /2 /2 0
Slide 41: Investment Highlights
Investment Highlights • Proven History of Organic Growth • Disciplined and Focused Strategy • Strong Internal Culture • Consistent Execution • Service Excellence Drives Shareholder Value 41
Slide 42: Supplemental Information
Supplemental Information (lake City Bank
Slide 43: COVID-19 Loan Deferrals
$467 $737 $653 $158 $101 $85 $37 $22 $8 404 487 384 102 49 26 10 4 2 0 100 200 300 400 500 600 700 800 900 $0 $100 $200 $300 $400 $500 $600 $700 $800 Deferrals Borrowers COVID‐19 Related Loan Deferrals COVID‐19 Loan Deferrals as of October 20, 2021 Credit Risk Management Efforts Type of Loan # of Bo
Slide 44: Liquidity
44 Liquidity Line of Credit Utilization September 30, 2021
Slide 45: Commercial Loans by County
Commercial Loans by County Allen 17% Elkhart 15%St. Joseph 9% Kosciusko 9% Hamilton 9% Marion 12% Marshall 5% Other IN Counties (1) 18% Outside IN 6% September 30, 2021 45 (000’s) Commercial Loans Outstanding as of 9/30/2021 $3.8 million (1) All other counties individually represent less than 0.5% o
Slide 46: Larger Market Organic Expansion
Larger Market Organic Expansion 46 State Rank County Primary City Population* LCB Entry LCB Deposit Market Share** # of Branches 20. Kosciusko Warsaw 78,988 1872 58% 12 6. Elkhart Elkhart 206,161 1990 26% 10 5. St. Joseph South Bend 271,484 1997 10% 4 3. Allen Fort Wayne 382,187 1999 12% 5 1. Hamilt
Slide 47: Mature Market Strength and Growth
Mature Market Strength and Growth (millions)1 2021 2011 2021 # of OfficesDeposits Share Deposits Share Increase 1. Lake City Bank $4,778 18.74% $2,277 13.37% 109.84% 51 2. 1st Source $4,670 18.31% $2,513 14.75% 85.83% 53 3. JPM Chase $3,601 14.12% $1,421 8.34% 153.41% 21 4. PNC $1,764 6.92% $1,442 9
Slide 48: Investment Portfolio – Source of Liquidity
14.1% 12.9% 11.8% 11.5% 12.0% 12.3% 13.6% 20.2% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% 22.0% 2014 2015 2016 2017 2018 2019 2020(1) 2021(2) US Govt Treas 0.07% US Govt Remics 6.41% US Govt Pools 28.42% Exempt Municipals 53.76% US Govt Agencies 9.39% CMCL CMO 1.95% Investment Portfolio – Source of Liquid
Slide 49: Projected Impact of Rising/Falling Rates
Projected Impact of Rising/Falling Rates Asset Sensitive Balance Sheet ‐1.71% 1.51% 3.07% 6.29% 13.19% 20.09% ‐5.00% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% NII ‐ Rates Down 25 NII ‐ Rates Up 25 NII ‐ Rates Up 50 NII ‐ Rates Up 100 NII ‐ Rates Up 200 NII ‐ Rates Up 300 Graph presents 12 month projec
Slide 50: Contact
(800) 827‐4522 LAKECITYBANK.COM
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