Lakeland Financial Corporation · NASDAQ:LKFN
Lakeland Financial — Q1 2024 Earnings Presentation
61 slides from Lakeland Financial's earnings presentation, Apr 25, 2024
Slide 1: A Proven History of Shareholder Value Creation – 1st Quarter 2024
Lakeland Financial Corporation A Proven History of Shareholder Value Creation And Commitment to Our Communities 1st Quarter 2024 LKFN L I S T E D
Slide 2: Executive Contacts
2 David M. Findlay Chairman & Chief Executive Officer david.findlay@lakecitybank.com (574) 267‐9197 Kristin L. Pruitt President kristin.pruitt@lakecitybank.com (574) 371‐9220 Lisa M. O’Neill Executive Vice President & Chief Financial Officer lisa.oneill@lakecitybank.com (574) 267‐9125
Slide 3: Forward-Looking Information
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 a
Slide 4: Long Term Success for Shareholders
4 Long Term Success for Shareholders LTM ROE >13% Source: S&P Capital IQ Pro. Financial data is as of December 31, 2023. (1) Includes banks and thrifts traded on the NYSE, NYSEAM or NASDAQ as of 4/5/24; excludes merger targets. (2) Defined as having positive net income before extraordinary items and
Slide 5: Strong Capital Structure
Tangible Common Equity 91.9% Allowance for Credit Losses 8.1% $2 5. 05 $3 1. 52 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 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 20 23 Tangible Book Value(1) Per Share 5 Strong Capital Structure Key
Slide 6: Lake City Bank Today
6 Lake City Bank Today •A long‐term and consistent organic growth story •Headquartered in Warsaw, Indiana • 53 branch offices ‐ $6.6 billion banking assets ‐ $3.3 billion trust, retirement and investment brokerage assets • Focused on execution – “blocking and tackling” • Continued growth potential
Slide 7: Years of Organic Growth
7 32 Years of Organic Growth Record Net Income for 32 of 35 Years $2 ,7 07 $9 3, 76 7 $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 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 17
Slide 8: Established Market Presence
8 Established Market Presence Organic Growth Potential in Mature and Expanding Markets
Slide 9: A Continued Path to Economic Growth
9 A Continued Path to Economic Growth • 67% of Lake City Bank counties are growth counties • 40% are high growth counties • Indiana is poised to experience continued economic strength and vitality
Slide 10: Strong Regional and Statewide Economy
10 Strong Regional and Statewide Economy Indiana Unemployment Rate is Lower than the National Average 8. 8% 6. 5% 5. 2% 4. 6% 3. 8% 3. 3% 3. 7% 3. 0% 11 .3 % 4. 5% 2. 4% 3. 3% 3. 9% 9. 0% 6. 9% 5. 6% 5. 1% 4. 3% 3. 8% 4. 1% 3. 4% 11 .9 % 4. 7% 3. 4% 3. 8% 4. 2% 8. 1% 7. 0% 5. 8% 5. 2% 4. 9% 4. 4% 4.
Slide 11: Lake City Bank Balance Sheet Dynamics
11 Lake City Bank Balance Sheet Dynamics 1. Capital Strength 2. Diversified Deposit Composition 3. Liquidity Availability 4. Investment Securities Portfolio 5. Asset Liability Management
Slide 12: Fortress Balance Sheet in Excess of Regulatory Capital Requirements
12 Fortress Balance Sheet in Excess of Regulatory Capital Requirements LKFN Above Peer Long‐Term Profitability has Contributed to a Strong Capital Foundation 13.3% 15.5% 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 16.0% Q4'10 Q4'11 Q4'12 Q4'13 Q4'14 Q4'15 Q4'16 Q4'17 Q4'18 Q4'19 Q4'20 Q4'21 Q4'22
Slide 13: Deposit Composition Provides Diversification
13 Deposit Composition Provides Diversification Commercial Deposits Increase Share of Total Deposits Total Retail $1,770,007 32% Total Public Fund $1,544,775 27% Total Commercial $2,117,536 38% Brokered Deposits $185,767 3% March 31, 2024 Total Deposits ‐ $5.6 billion DDA $1,254,200 DDA % of Total D
Slide 14: Diversified Deposit Base
14 Diversified Deposit Base Deposits Are Not Concentrated to Any Industry or Client • Deposit composition has remained stable with commercial deposits increasing as a percent of total deposits • Lake City Bank had 119,084 deposit accounts at March 31, 2024. 116,632, or 98%, of those accounts are les
Slide 15: Checking Account Trends by Deposit Sector
15 Checking Accounting Trends by Deposit Sector Commercial Accounts Grow by 20% since December 2019 $1 ,1 05 ,2 67 $2 ,0 79 ,4 07 $1 ,9 53 ,9 69 $2 ,1 05 ,4 11 $1 ,9 91 ,3 51 $6 58 ,4 51 $1 ,1 71 ,1 26 $1 ,0 73 ,3 14 $9 37 ,4 58 $9 39 ,0 93 $8 34 ,9 53 $1 ,2 18 ,8 54 $1 ,3 82 ,5 65 $1 ,3 09 ,9 65 $1
Slide 16: Liquidity Overview
16 Liquidity Overview • Available liquidity is stable at $3.1 billion, up from $3.0 billion at March 31, 2023 • Sources of liquidity are varied and represent wholesale funding and brokered deposits • Brokered deposits represent 3% of total deposits • Noncore funding represented 7% of total deposits
Slide 17: Projected Impact of Rising/Falling Rates
17 Projected Impact of Rising/Falling Rates Asset Sensitive Balance Sheet Continues Neutral Shift Graph presents 12 month projected net interest income simulation results as of March 31, 2024 using parallel shocks ‐5.62% ‐2.98% ‐1.16% ‐0.49% ‐0.22% 0.17% 0.31% 0.52% 0.95% 1.35% ‐10.00% ‐5.00% 0.00%
Slide 18: Evolution of Deposit and Loan Betas
18 Evolution of Deposit and Loan Betas Deposit Mix Shift Has Stabilized • NIM compressed by 39 basis points from 1Q23 to 1Q24 resulting primarily from a deposit mix shift to interest‐ bearing deposits • Noninterest bearing deposits represent 22% of total deposits at March 31, 2024 compared to 28% at
Slide 19: Interest Rate Sensitivity
19 Interest Rate Sensitivity Asset Sensitivity Decreased Due to Shift to Shorter Term Funding Fixed Rate $1,623,285 37% Prime $1,100,397 25% SOFR $1,125,127 25% FHLB/Other $594,063 13% Commercial Loans $4.4 billion as of March 31, 2024 (000’s) • Asset sensitivity impacted by shift to interest‐bearin
Slide 20: Shareholder Value Strategy
20 Shareholder Value Strategy 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 21: Commercial Banking Focus
21 Commercial Banking Focus Experienced Relationship Driven Team • 42 credit “smart” commercial bankers • Average 24 years in banking & 13 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 stru
Slide 22: Credit Process
22 Credit Process Commercial Banking Focus • Our credit discipline has never changed • We have a centralized committee structure • We are in‐market lender to in‐market clients • Character matters – we lend to people first • We focus on management/cash flow • Structure is important and is disciplined
Slide 23: Corporate Social Responsibility
23 Corporate Social Responsibility Over 150 Years of Focusing on Our Customers, Employees and Our Communities • Supporting our communities since 1872 • Caring for and building a diverse and inclusive team • Delivering customer‐focused loan and deposit products to our communities • Developing strong
Slide 24: Lake City Bank Culture
24 Lake City Bank Culture High Quality Team Members • Our culture is our greatest asset and we will preserve it • Lake City University drives our culture • Diversity, Equity and Inclusion are ongoing initiatives that create a culture of belonging • Our community involvement is real and critical to o
Slide 25: Mature Market Deposit Performance
25 Mature1 Market Deposit Performance Organic Growth 2013 – 2023 $2,631 $2,419 $1,975 $483 $459 $417 $359 $221 ‐$300 ‐$1,472 ‐$2,000 ‐$1,500 ‐$1,000 ‐$500 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 1st Source Lake City Bank JPM Chase PN C Star First M erchants Fifth Third O ld N ational KeyBank Flag
Slide 26: A Strong Environment for Growth and Expansion
26 A Strong Environment for Growth and Expansion • Indiana #1 manufacturing state in the country(1) • Indiana seasonally adjusted unemployment at 3.5% as of February 2024(2) • Indiana received three tech hub designations from the federal government in microelectronics, hydrogen energy and biotechnol
Slide 27: Commitment to Technology
27 Commitment to Technology Innovation and Competitive Technology is a Focus • Fintech partnerships play a significant role in our technology stack and enable delivery of innovative solutions to our customers • Investments in Lake City Bank Digital, a Q2 product implemented in 2021 with ongoing func
Slide 28: Channel Utilization Today versus Pre-Pandemic
28 Channel Utilization Today versus Pre‐Pandemic Mobile Adoption Outpacing All Other Delivery Channels Period Change % of Total Total Transactions 2024(1) % of Total Total Transactions 2019(1) Channel Type (10)%15%2,048,09418%2,279,975Branch Transactions (16)%6%790,4947%944,785ATM/ITM (36)%23%3,247,
Slide 29: Customer Composition and Digital Adoption
29 Customer Composition and Digital Adoption Digital Platform Upgrade with Fintech Partner in 2021 Positively Impacting Digital Adoption Across All Generations Customer Composition and Digital Adoption Over Three Years 3/31/223/31/233/31/24 Customer Breakdown Generation(1) n/an/a1%3%Gen Alpha (2010
Slide 30: Financial Performance
Financial Performance
Slide 31: Income Performance Metrics
31 Income Performance Metrics LKFN Performance Exceeds National Peers and Contributes to Strong Capital Levels 1.76% 1.55% 1.56% 1.62% 1.45% 1.44% 15.47% 13.51% 14.19% 17.40% 15.93% 14.59% 15.57% 13.59% 14.27% 17.52% 16.03% 14.68% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 20.00% 22.00% 0.
Slide 32: Net Income and EPS
32 Net Income and EPS Core Operational Profitability Declines by 7% in 2024 $87,047 $84,337 $95,733 $103,817 $93,767 $101,575 $24,278 $23,401 $3.38 $3.30 $3.74 $4.04 $3.65 $3.95 $0.94 $0.91 $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 2019 2020 20
Slide 33: Pretax Pre-Provision Earnings
33 Pretax Pre‐Provision Earnings Pretax Pre‐Provision Earnings Impacted by Decline in Net Interest Income $110,620 $118,646 $118,521 $134,539 $116,183 $126,544 $32,399 $29,323 2.24% 2.19% 1.93% 2.09% 1.80% 1.96% 2.05% 1.80% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% $0 $20,000 $40,000 $60,000 $80,000
Slide 34: Average Loans
34 Average Loans Average YTD Loan Growth of $246 million or 5% Compared to Prior Year 94% 95% 83% 77% 86% 88% 50% 60% 70% 80% 90% 100% 110% 120% $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 2019 2020 (1) 2021 (1) 2022 (1) 2023 YTD 2024 Retail Commercial Average Loans to Avera
Slide 35: Line of Credit Utilization
$1 ,6 16 $1 ,6 69 $1 ,6 30 $1 ,5 93 $1 ,6 37 $1 ,4 73 $1 ,4 46 $1 ,4 99 $1 ,4 10 $1 ,4 94 $1 ,5 53 $1 ,6 90 $1 ,7 46 $1 ,8 05 $1 ,8 24 $1 ,9 66 $1 ,8 85 $1 ,8 88 $1 ,8 07 $1 ,8 68 $1 ,8 37 $1 ,7 97 $1 ,7 38 $1 ,7 85 $1 ,8 35 $1 ,7 85 $2 ,0 66 $2 ,1 09 $2 ,0 44 $2 ,1 90 $2 ,2 06 $2 ,2 43 $2 ,3 21 $2
Slide 36: Line of Credit Utilization vs. Commercial DDA
36 Line of Credit Utilization vs. Commercial DDA Commercial DDA Deposit Balances Continue to Normalize $3 89 ,0 51 $4 67 ,4 58 $5 72 ,9 66 $6 60 ,3 60 $7 40 ,5 76 $7 75 ,9 47 $7 61 ,6 86 $7 72 ,9 95 $8 49 ,0 92 $8 14 ,4 30 $8 83 ,9 56 $1 ,2 16 ,4 14 $1 ,2 18 ,9 43 $1 ,2 73 ,8 86 $1 ,3 39 ,6 73 $1 ,4
Slide 37: Loan Portfolio Breakdown
37 Loan Portfolio Breakdown C&I Drives Lending Business Commercial & Industrial $1,477,276 30% Commercial RE ‐ Owner Occupied $833,410 17% Commercial RE ‐ Nonowner Occupied $744,346 15% Commercial RE ‐Multifamily $239,974 5% Commercial RE ‐ Construction $659,712 13% Agri‐business ‐ Agriculture $367,
Slide 38: Top 10 Industry Concentrations
Multifamily Housing $545,292 11% Agriculture $428,470 9% Industrial Warehouses $179,719 4% RV Industry $211,145 4% Senior Living $154,370 3% Lessors of Nonresidential Buildings $138,848 3% Automobile Dealers $125,751 2% Nonbank Lenders $126,083 2% Misc. Durable Goods Merchant Wholesalers $105,381 2%
Slide 39: Average Deposits
39 Average Deposits Pandemic’s Deposit Surge Peaked in 2022 $4,242,524 $4,650,597 $5,357,284 $5,717,358 $5,604,228 $5,630,431 98% 98% 99% 100% 97% 97% 50% 60% 70% 80% 90% 100% 110% 120% 130% 140% 150% $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 2019 2020 2021 2022 2023 YTD 2
Slide 40: Deposit Breakdown
40 Deposit Breakdown Deposit Costs Rise in Response to Interest Rate Environment and Increased Competition Total Retail $1,770,007 32% Total Public Fund $1,544,775 27% Total Commercial $2,117,536 38% Brokered Deposits $185,767 3% March 31, 2024 Total Deposits ‐ $5.6 billion (000’s) 1.19%0.98% 0.63%0
Slide 41: Public Fund Deposit Trends
‐$100,000 $100,000 $300,000 $500,000 $700,000 $900,000 $1,100,000 $1,300,000 $1,500,000 $1,700,000 Checking and MMA CDs 41 Public Fund Deposit Trends Majority of Public Funds are Core Checking Account Deposits $1 ,2 91 ,1 70 $1 ,2 25 ,1 27 $1 ,2 50 ,5 76 $1 ,2 15 ,5 33 $1 ,2 11 ,1 48 $1 ,2 53 ,7 04
Slide 42: Net Interest Income
42 Net Interest Income Deposit Mix Shift Reduces Net Interest Margin $155,047 $163,008 $178,088 $202,887 $197,035 $51,519 $47,416 3.38% 3.19% 3.07% 3.40% 3.31% 3.54% 3.15% 2.50% 3.00% 3.50% 4.00% 4.50% $0 $50,000 $100,000 $150,000 $200,000 $250,000 2019 2020 2021 2022 2023 YTD 2023 YTD 2024 Net Inte
Slide 43: Asset Quality: Watchlist Loans
43 Asset Quality Watchlist Loans as a Percentage of Total Loans Remain at Historic Lows 1. 52 % 2. 15 % 2. 75 % 1. 37 % 0. 94 % 0. 50 % 0. 42 % 0. 19 % 0. 25 % 0. 19 % 0. 46 % 0. 26 % 0. 35 % 0. 36 % 0. 32 % 0. 30 % 1. 22 % 1. 82 % 2. 20 % 1. 75 % 1. 31 % 0. 41 % 0. 35 % 0. 16 % 0. 20 % 0. 16 % 0. 3
Slide 44: Asset Quality: Allowance for Credit Losses
44 Asset Quality Allowance for Credit Losses Represents Strong Coverage 0. 42 % 0. 54 % 0. 25 % 0. 20 % 0. 11 % 0. 10 % 0. 09 % 0. 03 % ‐0 .0 1% 0. 13 % 0. 03 % 0. 09 % 0. 09 % 0. 10 % 0. 13 % 0. 03 % 1.59% 2.15% 2.39% 2.28% 1.92% 1.67% 1.42% 1.26% 1.23% 1.24% 1.25% 1.45% 1.59% 1.54% 1.46% 1.46% 0.0
Slide 45: Noninterest Income
45 Noninterest Income Noninterest Income Includes $1.0 million in Insurance Recoveries in 2024 $44,997 $46,843 $44,720 $41,862 $49,858 $10,314 $12,61222% 22% 20% 17% 20% 17% 21% 0% 10% 20% 30% 40% 50% 60% $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 2019 2020 2021 2022 2023 (1) YTD 2023 YTD 20
Slide 46: Total Revenue
46 2024 YOY Decrease (3)% Total Revenue Revenue Growth Benefited by Loan Growth and Improvement in Noninterest Income $200,044 $209,851 $222,808 $244,749 $246,893 $61,883 $60,028 $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 2019 2020 2021 2022 2023 YTD 2023 YTD 2024 (000’s) Compound annua
Slide 47: Non-Interest Expense
47 Non‐Interest Expense $89,424 $91,205 $104,287 $110,210 $130,710 $114,049 $29,434 $30,705 $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 2019 2020 2021 2022 2023 2023 Adj. (1) YTD 2023 YTD 2024 (000’s) 2024 YOY Increase 4% 12023 Year‐to‐date noninterest expense adjusted reflects Cor
Slide 48: Efficiency Ratio
48 Efficiency Ratio Efficiency Ratio Normalizing in 2024 51% 52% 50% 50% 48% 46% 45% 45% 43% 47% 45% 53% 51% 47% 0% 10% 20% 30% 40% 50% 60% 70% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 YTD 2024 Efficiency Ratio Adjusted Core Efficiency Ratio Constant investment in technology and f
Slide 49: Stable Healthy Dividend
49 Stable Healthy Dividend Growth in Dividend Reflects Strength of Capital $1.16 $1.20 $1.36 $1.60 $1.84 $0.46 $0.48 2.40% 2.24% 1.70% 2.19% 2.82% 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 $1.50 $1.70 $1.90 2019 2020 2021 2022 2023 YTD 2023 YTD 2
Slide 50: LKFN Shareholder Value Total Return Performance
50 LKFN Shareholder Value Total Return Performance from 12/31/00 to 3/31/24 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 17 20 18 20 19 20 20 20 21 20 22 20 23 LKFN S&P 500 S&P 500 Financials S&P US BMI Banks Index 3,500.00 3,000.00 2,500.0
Slide 51: Investment Highlights
51 Investment Highlights • Proven History of Organic Growth •Disciplined and Focused Strategy • Strong Internal Culture • Consistent Execution • Service Excellence Drives Shareholder Value
Slide 52: Supplemental Information
Supplemental Information
Slide 53: Lake City Bank Capital Adequacy
53 Lake City Bank Capital Adequacy Capital Strength Continues in March 2024 Non‐GAAP Adjusted Capital Ratios with AOCI and HTM Losses Non‐GAAP Excess Capital after AOCI and HTM Non‐GAAP AOCI and HTM Losses‐ after tax Capital Cushion (in 000’s) Well‐ Capitalized Threshold March 31, 2024 Actual Regula
Slide 54: Liquidity Preparedness
54 Liquidity Preparedness March 31, 2024 Additional Loan Collateral Available for PledgeUnused/ AvailableUsed Liquidity Availability(000) Secured/Committed Borrowings: $ ‐‐$ 408,036$ 200,000$ 608,036Federal Home Loan Bank‐Indianapolis(1) 205,0791,241,996‐‐1,241,996Federal Reserve Bank Discount Windo
Slide 55: Investment Portfolio
55 Investment Portfolio Recurring Cash Flows Used to Fund Organic Loan Growth M V In ve st m en ts a s a % o f A ss et s Note: Ratio of total securities to total assets excludes PPP loans of $412 million in 2020, $26 million in 2021 and $2 million in 2022 from total assets 13% 12% 12% 12% 12% 14% 21
Slide 56: Investment Security Portfolio Cashflows
56 Investment Security Portfolio Cashflows Cash Flows of $386 million Expected Through March 2028 18 ,6 92 ,6 99 18 ,4 30 ,7 39 17 ,2 61 ,2 99 16 ,5 76 ,6 91 16 ,7 57 ,3 28 17 ,0 54 ,1 99 16 ,0 31 ,2 91 18 ,1 26 ,6 89 15 ,3 79 ,4 20 23 ,6 36 ,2 36 14 ,7 87 ,8 36 14 ,4 44 ,9 40 16 ,6 15 ,7 68 14 ,5 5
Slide 57: Investment Portfolio Analysis
Investment Portfolio Analysis Investment Portfolio Declines as a Percentage of Total Assets in 2023 57 12/31/20233/31/2024 % of Total Market Value Weighted Maturity % of Total Market Value Weighted Maturity 8%98,2656.289%95,2194.27US Govt REMICS 30%349,5777.4430%336,7997.68US Govt Pools 10%119,4799.
Slide 58: Commercial Loans by County
58 Commercial Loans by County Commercial Customers in 49 Indiana Counties and 21 Other States (1) All other counties individually represent less than 2% of total March 31, 2024 (000’s) Allen 18% Elkhart 15%St. Joseph 8% Kosciusko 10% Hamilton 9% Marion 14% Marshall 3% Other IN Counties (1) 17% Outsi
Slide 59: Larger Market Organic Expansion
59 Larger Market Organic Expansion Organic Growth # of Branches LCB Deposit Market Share** LCB EntryPopulation*Primary CityCounty State Rank 1264%187280,826WarsawKosciusko 21. 1123%1990206,890ElkhartElkhart6. 48%1997272,234South BendSt. Joseph5. 512%1999391,449Fort WayneAllen3. 71%20111,500,169India
Slide 60: Mature Market Strength and Growth
60 Mature Market Strength and Growth Organic Growth 2023 # of Offices 20132023 (millions)1 IncreaseShareDepositsShareDeposits 53100.15%14.33%$2,62719.69%$5,2581. 1st Source 53100.42%13.14%$2,40918.08%$4,8282. Lake City Bank 20117.84%9.14%$1,67613.68%$3,6513. JPM Chase 1739.88%6.60%$1,2116.34%$1,6944
Slide 61: Lake City Bank
Qiake City Bank LAKECITYBANK.COM