Lakeland Financial Corporation · NASDAQ:LKFN
Lakeland Financial — Investor Presentation (November 2009)
42 slides from Lakeland Financial's investor presentation, Nov 9, 2009
Slide 1: Common Stock Offering November 2009
Common Stock Offering November 2009
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: Offering Summary
Issuer: Lakeland Financial Corporation Trading Symbol: LKFN (NASDAQ Market) Offering Size: 3.5 Million Shares Over-Allotment: 15% / 4.025 Million Shares Current Price per Share: $19.86 (11/06/09 close) Current Market Cap: $245 Million Use of Proceeds: General corporate purposes Book-Running Manager:
Slide 4: Strategic Overview
Strategic Overview Michael L. Kubacki Chairman, President & CEO
Slide 5: Lake City Bank Today
Headquartered in Warsaw, Indiana 43 branch offices and 1 Loan Production office 457 FTEs $2.5 billion banking assets $900 million trust assets Regional franchise Low market shares – high growth potential Lake City Bank Today
Slide 6: Historical Highlights
Founded as the 4th bank in Warsaw, IN Historical Highlights Began Branching Entered Elkhart Market Opened Indianapolis Loan Production Office Entered Fort Wayne Market Currently Operates 43 Branch Offices 1872 1965 1990 1999 2006 2009
Slide 7: Diversified Market Area
Diversified Market Area 13 Counties and 30 Communities
Slide 8: Home Market - Warsaw
Home Market - Warsaw Orthopedic Capital of the World Enterprises earn more than $11 billion in annual revenues, representing more than a 50% market share in the US and more than 33% market share in the World Zimmer, Biomet, and DePuy headquartered in Warsaw 50% deposit market share Stable deposit gr
Slide 9: Northern Indiana
Northern Indiana Diverse economic region Well established industrial base and service sectors Significant borrower diversification No dominant industries or employers No substantial industry concentrations in loan portfolio Recession has hit region hard Unemployment in footprint ranges from 10% to 1
Slide 10: Growth Strategy
Growth Strategy Business Owner Focus Expanding Into Larger Markets High Quality People
Slide 11: Business Owner Focus
Business Owner Focus 33 Corporate Banking Officers Average 20 years experience in banking Average 8 years at Lake City Bank
Slide 12: Business Owner Focus: Relationship Strategy
Business Owner Focus Relationship Strategy Lead with Credit Understand Client Needs Cross-sell Aggressively
Slide 13: Business Owner Focus: Credit Process
Centralized/Committee Approvals Focus on Management/Cash Flow Collateral and Guarantees Orientation Toward Owner-Occupied RE Detailed Knowledge of Borrowers Business Owner Focus Credit Process
Slide 14: Business Owner Focus: Face to Face Contact
Establish our people as the competitive advantage Over 100 Calling Officers 18,247 Business Contacts 15,006 Calls in 2008 Business Owner Focus Face to Face Contact
Slide 15: Expand Into Larger Markets
LPO 4 3 9 12 # of Branches State Rank County Primary City Population* LCB Entry LCB Deposit Market Share** 19. Kosciusko Warsaw 76,275 1872 50% 6. Elkhart Elkhart 199,137 1990 17% 5. St. Joseph South Bend 266,680 1997 3% 3. Allen Fort Wayne 350,523 1999 4% 1. Marion Indianapolis 880,380 2006 NA * So
Slide 16: Larger Markets: Deposit Performance
Larger Markets Lake City Bank Market Area* Deposit Performance * Includes the counties of Kosciusko, Elkhart, St. Joseph, Marshall, Allen, Whitley, Huntington, LaGrange, Noble, DeKalb, Fulton and Pulaski ** Adjusted to include branches subsequently acquired by surviving banks Source: SNL Financial (
Slide 17: Market Area Deposit Performance 2009 vs. 2004
Larger Markets Market Area Deposit Performance * Includes the counties of Kosciusko, Elkhart, St. Joseph, Marshall, Allen, Whitley, Huntington, LaGrange, Noble, DeKalb, Fulton and Pulaski ** Adjusted to include branches subsequently acquired by surviving banks Source: SNL Financial. 2009 vs. 2004 $7
Slide 18: High Quality People: Management Team
High Quality People Management Team 9 21 EVP – Administration and CFO David M. Findlay Name Function Years in Banking Years at LCB Michael L. Kubacki Chairman, President & CEO 37 12 Kevin L. Deardorff EVP – Retail 29 20 Charles D. Smith EVP – Commercial 27 27 Jill A. DeBatty SVP – Human Resources 33
Slide 19: Lake City Bank Culture
Honesty Client Service Profitability Community Service Professional Development Stewardship Independence Quality People Lake City Bank Culture
Slide 20: Quality People: Lake City University
Quality People Lake City University 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
Slide 21: Quality People: Community Involvement
Quality People Community Involvement Company-wide involvement Connections with hundreds of community groups Thousands of volunteer hours
Slide 22: Quality People: Employee Survey
“Strongly Agree – Strongly Disagree” In my workgroup, we actively seek to understand customer needs 92 – 0 I understand our organization’s mission and strategic goals 94 – 0 Our senior leadership has the capabilities necessary for us to be successful 95 – 0 This organization actively contributes to
Slide 23: Financial Review
Financial Review David M. Findlay Executive Vice President & CFO
Slide 24: Years of Record Earnings
1988 - 2008 21 Years of Record Earnings 21 Years of Record Earnings and EPS $20,000 $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $- 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Slide 25: Net Income and EPS
Net Income and EPS 7% CAGR 2008 Net Income Growth 3% 2009 Net Income Growth (11%) 2009 EPS Growth (24%) $1.16 $1.20 $1.46 $1.51 $1.55 $1.58 Note: Net income is before preferred dividends. $1.23 $0.94 $13,865 $14,545 $17,958 $19,211 $19,701 $15,262 $18,721 $13,597 $0 $5,000 $10,000 $15,000 $20,000 $2
Slide 26: Quarterly Net Income
Quarterly Net Income Record Net Income in the Third Quarter Note: Net income is before preferred dividends. $5,225 $4,433 $3,870 $4,460 $5,267 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 Thousands 3Q'08 4Q'08 1Q'09 2Q'09 3Q'09
Slide 27: Average Loans
Average Loans 14% CAGR $847,555 $930,934 $1,665,024 $1,404,068 $1,270,486 $1,088,788 $1,881,157 2008 Growth 19% 2009 Growth 13% $300,000 $500,000 $700,000 $900,000 $1,100,000 $1,300,000 $1,500,000 $1,700,000 $1,900,000 2003 2004 2005 2006 2007 2008 YTD 2009 Commercial Retail
Slide 28: Loan Breakdown
Loan Breakdown As of September 30, 2009 Commercial & Industrial $691,012 36% Commercial RE - Owner Occupied $340,899 18% Agri-business - Agriculture $178,683 9% Commercial RE - Nonowner Occupied $242,278 12% Commercial RE - Multifamily $25,651 1% Commercial RE - Construction $153,426 8% Residential
Slide 29: Average Deposits
Average Deposits 11% CAGR 2008 Growth 11% 2009 Growth 14% $969,709 $1,033,798 $1,184,670 $1,387,489 $1,476,725 $1,637,794 $1,859,042 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 $1,800,000 $2,000,000 $2,200,000 Thousands 2003 2004 2005 2006 2007 2008 YTD 2009
Slide 30: Deposit Breakdown
Deposit Breakdown As of September 30, 2009 1.87% 1.65% 2.62% 3.96% 4.35% 3.10% 1.93% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 2003 2004 2005 2006 2007 2008 YTD 2009 Cost of Deposits Retail CD’s $620,472 34% CDARS $67,909 4% Brokered CD’s $85,387 5% Public Fund CD’s $203,285 11% Public Fund Transaction $1
Slide 31: Net Interest Income
Net Interest Income 2008 Growth 16% 2009 Growth 22% 8% CAGR 3.42% 3.14% 3.22% 3.38% 3.71% 3.64% 3.83% 3.20% Q3 3.69% $42,380 $43,349 $50,263 $54,556 $63,268 $47,276 $57,815 $52,327 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 2003 2004 2005 2006 2007 2008 YTD 2008 YTD 2009 2.50% 3.00% 3.50% 4.
Slide 32: Asset Quality: NPAs vs. NCOs
Asset Quality Trends in NPA’s vs. NCO’s 2004 2005 2006 2007 2008 YTD 2009 0.08% 0.04% 0.08% 0.21% 0.43% 0.36% 1.07% 1.07% 1.07% 1.04% 1.03% 1.48% 2003 Net Chargeoffs/Average Loans 0.18% Loan Loss Reserve to Total Loans 1.18% 2003 Net Chargeoffs/Average Loans 0.18% Loan Loss Reserve to Total Loans 1.
Slide 33: Asset Quality: Watch List and Loan Review Management
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, not against them Absence of cookie cutter approach in loan workout situations Asset Quality Watch List
Slide 34: Asset Quality: Provision vs. Net Charge Offs
Asset Quality Provision vs. Net Charge Offs 2003 2004 2005 2006 2007 2008 YTD 2009 Net Chargeoffs/Average Loans 0.18% 0.08% 0.04% 0.08% 0.21% 0.43% 0.36% Loan Loss Reserve to Total Loans 1.18% 1.07% 1.07% 1.07% 1.04% 1.03% 1.48% 2003 2004 2005 2006 2007 2008 YTD 2009 Net Chargeoffs/Average Loans 0.1
Slide 35: Non-Interest Income
Non-Interest Income 2008 Growth 12% 2009 Growth (2)% (1) Excluding gain on redemption of VISA shares in 2008. 5% CAGR 23% 27% $18,475 $16,680 $18,086 $18,794 $20,242 $22,686 $17,301 $16,871 30% 28% 26% 26% 27% 27% $0 $5,000 $10,000 $15,000 $20,000 $25,000 2003 2004 2005 2006 2007 2008(1) YTD 2008 (1
Slide 36: Non-Interest Expense
Non-Interest Expense 2008 Growth 11% Adjusted 2009 Growth (1) 8% 5% CAGR (1) Excluding special FDIC assessment and temporary increase in 2009. FDIC Special Assessment of $2,193 $39,937 $37,450 $36,959 $38,432 $40,242 $42,923 $47,481 $34,937 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $
Slide 37: Efficiency Ratio
Efficiency Ratio (1) Excluding impact of debt extinguishment cost of $804,000 (2) Excluding impact of retail card portfolio sale of $863,000 Leveraging Offices, People and Technology 61.26% 60.22% 61.57% 56.95% 56.58% 57.39% 54.83% 53.47% 50.00% 55.00% 60.00% 65.00% 70.00% 2002 2003 (1) 2004 2005 (2
Slide 38: Paid Dividends Per Share
Paid Dividends Per Share 2008 Growth 11% 2009 Growth 0% Note - Split Adjusted - Paid Dividends $0.370 $0.410 $0.450 $0.490 $0.545 $0.605 $0.465 $0.000 $0.100 $0.200 $0.300 $0.400 $0.500 $0.600 $0.700 2003 2004 2005 2006 2007 2008 YTD 2009
Slide 39: Capital Structure
Capital Structure 6.56% TCE / Tangible Assets Key Ratios and Per Share Data As Reported Tangible Equity / Tangible Assets 8.75% Tier 1 Risk-Based 11.76% Total Risk-Based 13.01% Leverage 10.20% Book Value $13.32 Tangible Book Value $12.99 As of September 30, 2009 Subordinated Debt, 11.2% Reserves, 10
Slide 40: Use of Proceeds
Foundation for growth in existing markets Strengthen balance sheet with permanent capital and prepare for future TARP redemption Position for potential acquisitions Branch transactions FDIC-assisted transactions Use of Proceeds
Slide 41: Investment Highlights
History of Organic Growth Strong Internal Culture Disciplined Strategy Consistent Execution Business Model More Relevant Than Ever Investment Highlights
Slide 42: Common Stock Offering November 2009
Common Stock Offering November 2009
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