Lakeland Financial Corporation · NASDAQ:LKFN
Lakeland Financial — Investor Presentation (July 2013)
33 slides from Lakeland Financial's investor presentation, July 2013
Slide 1: Investor Update
Investor Update July 2013 A Proven History of Shareholder Value Creation Driven by Service Excellence
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 • 502 FTEs • $3.0 billion banking assets • $1.0 billion trust assets • Regional franchise • Low market shares – high growth potential 3
Slide 4: Established Market Presence
Established Market Presence Organic Growth Potential in Existing and New Markets 4
Slide 5: Growth Strategy
Growth Strategy Business Owner Focus High Quality People Larger Market Organic Expansion 5
Slide 6: Business Owner Focus
Business Owner Focus • 35 Commercial Banking Officers • Average 20 years experience in banking • Average 10 years at Lake City Bank 6
Slide 7: Relationship Strategy
Business Owner Focus Relationship Strategy • Lead with Credit • Understand Client Needs • Cross-sell Aggressively by Leveraging Technology 7
Slide 8: 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 • Be Responsive and Consistent 8
Slide 9: Loan Breakdown
Loan Breakdown C & I Drives Lending Business Commercial RE - Residential Mortgage Construction Agri-business - Agriculture $198,300 $116,247 $108,695 9% 5% Home Equity Commercial RE - Multifamily 5% $152,571 $37,422 Installment - Other 7% 1% Consumer $48,733 2% Commercial RE - Nonowner Occupied $373
Slide 10: Lake City Bank Culture
Quality People Lake City Bank Culture • Core Values start with Honesty • Lake City University Drives Education and Culture • Community Involvement is “Real” and critical to our Strategy • Our Culture has not been Diluted by Acquisition University 10
Slide 11: Face to Face Contact
Quality People Face to Face Contact • We Love to Call • Sales Calling Program Includes 107 Officers • 16,146 “Real” Client Contacts in 2012 • Our People are the Competitive Advantage 11
Slide 12: 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 13: Commercial Banking Market
Larger Markets Commercial Banking Market Growth Potential in Every Market Elkhart/South Bend 2,296 22% Warsaw 650 6% Fort Wayne 1,757 17% Indianapolis 5,652 55% Companies with Revenue of $1 to $30 million 13 Source: Hoover’s
Slide 14: Lake City Bank Market Area Key Competitors
Larger Markets Lake City Bank Market Area* Key Competitors (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. Wells F
Slide 15: 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 16: Indianapolis Market Area Key Competitors
Larger Markets Indianapolis Market Area* Key Competitors (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% $1,687
Slide 17: Indianapolis Market Deposit Concentrations
Larger Markets Indianapolis Market Deposit Concentrations 12% Great opportunity for Indiana focused institutions to grab market share 88% Out of State In State *Marion and Hamilton Counties as of 6/30/12 17
Slide 18: Financial Performance
Financial Performance (Make City Bank
Slide 19: 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 $18,482 $17,445 $1.55 $1.58 $15,000 $1.30 $1.32 $1.26 $10,000 $1.06 $1.12 $0.80 $5,000 $0 $0.30 2007 2008 2009 2010 2011 2012 YTD 2012 YT
Slide 20: Average Loans
Average Loans Commercial Emphasis Continues to Drive Growth $2,500,000 109% $2,334,700 120% 103% $2,148,046 $2,216,131 97% $2,049,209 $1,901,746 100% $2,000,000 $1,665,024 95% 93% 94% 87% 80% $1,500,000 $1,404,068 60% $1,000,000 40% $500,000 20% $0 0% 2007 2008 2009 2010 2011 2012 YTD 2013 Retail Co
Slide 21: Investment Portfolio
Investment Portfolio June 30, 2013 Weighted Tax Security Average Equivalent Type Life Yield Agencies 4.04 1.84% Private Label CMOs 1.21 5.41% Municipal 5.58 4.77% Private Label Municipal CMOs Treasuries 1.25 2.26% Securities 1.36% Total 3.97 2.46% 19.68% Treasuries 0.21% Agencies 79.00% 21
Slide 22: Asset Quality
Asset Quality Nonperforming Asset Levels Continue to Improve 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% 0.93% 0.93% 1.00% 0.80% 0.65% 0.49% 0.60% 0.40% 0.20% 0.00% 2007 2008 2009 2010 2011 2012 YTD 2013 Nonperforming Loans/Total Loans Nonperforming Asse
Slide 23: Net Chargeoffs/Average Loans
Asset Quality Strong Reserve Coverage 0.60% 2.70% 2.39% 2.28% 2.17% 2.40% 2.15% Loan Loss Reserve to Total Loans 0.50% Net Chargeoffs/Average Loans 2.10% 0.40% 1.80% 1.59% Reserve to Nonperforming 1.50% 0.30% Loans = 234% 1.04% 1.03% 1.20% 0.20% 0.90% 0.60% 0.03% 0.10% 0.21% 0.43% 0.42% 0.54% 0.25%
Slide 24: Clients Drive Funding Mix
Average Deposits Clients Drive Funding Mix Deposits = 99% of Funding vs. 87% in 2009 $2,700,000 $2,505,195 $2,481,681 $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 YTD 2013 2013 YTD Growth (1)% 24
Slide 25: Retail Strategy Key to Deposit Growth
Deposit Breakdown Retail Strategy Key to Deposit Growth Cost of Deposits 5.00% 4.35% 3.96% 4.00% 3.10% 3.00% 1.72% 2.00% 1.30%1.19%0.98% 0.71% 1.00% 0.00% 2006 2007 2008 2009 2010 2011 2012 YTD 2013 December 31, 2008 June 30, 2013 Total CDARS Total Brokered Commercial CDARS CD's Commercial $16,311 B
Slide 26: Net Interest Income
Net Interest Income Margin Compression Stabilized in 2013 $100,000 $92,653 5.00% $92,080 $90,000 $87,671 NIM Q1 3.17% $80,281 $80,000 NIM Q2 3.20% 4.50% $70,000 $63,268 $60,000 $54,556 4.00% 3.73% $50,000 3.54% $43,346 $43,169 3.51% $40,000 3.37% 3.50% 3.28% 3.22% 3.19% $30,000 3.14% $20,000 3.00% $
Slide 27: Impact of Rising Rates
Impact of Rising Rates • 88% of loan portfolio is commercial • 64% of commercial loans are variable rate – Prime and LIBOR o Floors with average rate of 3.86% exist on 60% of commercial variable rate loans • 36% of commercial loans are fixed rate with most less than 5 years • Deposit rate increases
Slide 28: Non-Interest Income
Non-Interest Income Stable Fee-Based Strategy Drives Increases $30,000 50% $25,196 45% $25,000 $22,686 $22,243 $22,205 $21,509 40% Non-Interest Income/Total Revenue $20,242 $20,000 35% Non-Interest Income $15,050 $15,000 27% 27% 30% $11,662 23% 25% 22% 26% $10,000 20% 19% 21% 20% $5,000 15% $0 10% 2
Slide 29: Leveraging Offices, People and Technology
Efficiency Ratio Leveraging Offices, People and Technology 60% Indianapolis and South 57% 55% Bend Market Expansion 55% 52% 50% 51% 52% 48% 47% 45% 40% 2007 2008 2009 2010 2011 2012 YTD 2013 29
Slide 30: 2012 Quarterly Dividend Increase
2012 Quarterly Dividend Increase Dividend Payout Ratio of 34% $0.76 $0.80 $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 2013 Annualized Note - Split Adjusted 2013 Growth 12% - Paid Dividends 30
Slide 31: Strong Capital Structure
Strong Capital Structure Subordinated Key Ratios and Per Share Data Debt Reserves As of June 30, 2013 8.0% 13.1% TCE /Tangible Assets 10.25% Tier 1 Common Risk-Based 12.18% Total Risk-Based 14.65% Tangible Common Leverage 11.01% Equity 78.9% Book Value $18.71 Tangible Book Value $18.54 Tangible Book
Slide 32: LKFN Performance
LKFN Performance Price [% Change] SNL U.S. Bank $ Russell (@ake City Bank 32
Slide 33: Investment Highlights
Investment Highlights • Proven History of Organic Growth • Disciplined Strategy • Strong Internal Culture • Consistent Execution • Service Excellence drives Shareholder Value 33
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