Lakeland Financial Corporation · NASDAQ:LKFN
Lakeland Financial — Investor Presentation (May 2020)
52 slides from Lakeland Financial's investor presentation, May 5, 2020
Slide 1: A Proven History of Shareholder Value Creation and Commitment to Our Communities
A Proven History of Shareholder Value Creation And Commitment to Our Communities 1 st Quarter 2020 Lakeland Financial Corporation LKFN LISTED
Slide 2: Presenters: President & CEO and CFO
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 with respect to the financial condition, results of operations, plans, objectives,
Slide 4: Top Banks
é TOP 25 BANKS Profitability Capital Adequacy Asset Quality 5 xa! Neos) Tetatasats AGRA non HOKE noe gulgTanp OE Unneshe NPA. Arges NDS fil Teter state “Graens) "OO Hank tw) ak ASSO) funk HOE) aah)” Ram Sere Rank Company tome Ed Qoake City Bank 4
Slide 5: Long Term Success for Shareholders
LTM ROE >15% Consecutive Increases in Net Income Since 2010 (3) Profitable for the Last 10 Years (2) Exchange Traded Depositories with Assets Between $1B and $5B (1) 4 Institutions 17 Institutions 104 Institutions 164 Institutions (including LKFN) 5 Long Term Success for Shareholders Source: S&P Glo
Slide 6: Strong Capital Structure
Strong Capital Structure 6 Tangible Common Equity 91.8% Reserves 8.2% $1.21 $23.72 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Tangible Book Value (1) Per Share (1) compounded annual growth rate computed from 1991 - 2019 Key Rati
Slide 7: COVID-Crisis Management
7 COVID - 19 Crisis Management • Active Credit Risk Management • COVID - 19 Related Loan Deferrals • Paycheck Protection Program • Liquidity Preparedness • Deferment of CECL Implementation
Slide 8: Active Credit Risk Management
Active Credit Risk Management Recreational Vehicle 4.3% Nursing Home & Assisted Living 4.0% Hotel & Accomodations 2.4% Self - Storage Facilities 1.9% Automotive, Boating, Trailer & Truck 1.7% Transportation & Trucking Contractors 0.9% Higher Education 0.9% C&I Building Consruction 0.6% Restaurants 1
Slide 9: COVID-Related Loan Deferrals
9 COVID - 19 Related Loan Deferrals COVID - 19 Loan Deferrals as of April 22, 2020 Credit Risk Management Efforts Type of Loan # of Customers Loans (000’s) % of total Loan Portfolio Commercial 267 $459,788 13% Consumer 137 7,289 2% Total 404 $467,077 11% • Actively working with borrowers on COVID -
Slide 10: Paycheck Protection Program
10 Paycheck Protection Program 100% of Customer Applications Approved Phase I: • 1,677 Loans • $530 million • Average loans size of $316,000 Phase II: • 509 Loans • $37 million • Average loans size of $72,000 Total: • 2,186 Loans • $567 million • Average loans size of $259,000 Size of Loan Number of
Slide 11: Liquidity Preparedness
Liquidity Preparedness • Overall, line utilization has been stable in 2020 • Overall utilization rate of credit lines was 44% as of April 22, 2020 down from 48% as of March 31, 2020 • Expansion of funding sources has provided additional liquidity • Liquidity availability of $2.2 billion consists of
Slide 12: Deferment of CECL Implementation
Deferment of CECL Implementation • Incurred methodology provides: The ability to leverage objective and subjective data analysis for the most accurate calculation A tested and proven methodology to ensure the loan loss reserve is appropriately conservative A loan - by - loan evaluation of non
Slide 13: Lake City Bank Today
Lake City Bank Today • A long - term and consistent organic growth story • Headquartered in Warsaw, Indiana • 50 branch offices - $5.0 billion banking assets - $2.2 billion trust and investment assets • Focused on execution – “blocking and tackling” • Continued growth potential 13
Slide 14: A Quarter Century of Organic Growth
A Quarter Century of Organic Growth 14 $2,707 $87,047 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Net Income Compou
Slide 15: Established Market Presence
Established Market Presence Organic Growth Potential in Mature and Developing Markets 15 Market Data Warsaw – 1872 22 offices Elkhart – 1990 11 offices South Bend – 1997 4 offices Fort Wayne – 1999 7 offices Indianapolis – 2011 6 offices
Slide 16: Strong Regional and Statewide Economy
Strong Regional and Statewide Economy Indiana Employment Trends Versus National Averages 16 11.9% 9.6% 9.0% 8.8% 6.5% 5.2% 4.6% 3.8% 3.3% 3.7% 3.0% 11.8% 9.6% 9.0% 9.0% 6.9% 5.6% 5.1% 4.3% 3.8% 4.1% 3.4% 10.4% 9.5% 8.7% 8.1% 7.0% 5.8% 5.2% 4.9% 4.4% 4.1% 3.8% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 2010 Feb
Slide 17: Shareholder Value Strategy
Shareholder Value Strategy 17 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 18: Commercial Banking Focus: Experienced Relationship Driven Team
• 39 credit “smart” commercial bankers • Average 20 years in banking & 9 years at Lake City Bank • We live where we lend • Face to face calling matters and is a team effort • We understand our client needs • Deep organizational structure provides credit and administrative support • We cross - sell a
Slide 19: 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
Slide 20: 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 • Our community involvement is real and critical to our strategy • Our culture has not been diluted by acquisition 20 High Quality Team Members
Slide 21: Mature Market Deposit Performance
Mature 1 Market Deposit Performance $2,003 $1,376 $1,171 $704 $212 $167 $141 $14 - $71 - $219 -$350 $150 $650 $1,150 $1,650 $2,150 Lake City Bank 1st Source JPM Chase Flagstar First Merchants Star Fifth Third KeyBank Old National PNC Organic Growth 2009 - 2019 1 Mature Markets include 12 Northern In
Slide 22: Indianapolis Market Opportunity
Organic Growth 22 Indianapolis Market Opportunity Indianapolis Market Banks Share of Market 1. JPM Chase 22% 2. PNC 14% 3. Fifth Third 9% 4. Huntington National 7% 5. First Internet Bank 7% 6. BMO Harris 7% 7. KeyBank 6% 8. Bank of America 6% 9. Merchants Bank 5% 10. National Bank of Indy 4% 16. Lak
Slide 23: A Strong Environment for Growth and Expansion
23 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 2019 • Economic expansion of 1.25% in 2019 (2) (1) Based on per capita
Slide 24: Core Deposits Fund Organic Loan Growth
24 Core Deposits Fund Organic Loan Growth • We focus on core deposit growth in retail, commercial and public funds • Commercial deposit growth over 5 years is a 18% compounded annual growth rate • We capitalize on market disruption in our footprint to grow deposits • We emphasize checking account re
Slide 25: Commitment to Technology and Cyber Risk Management
• Technology partnership with FIS is strong – User Planning Council and Strategic Planning Advisory Council • Fintech partnerships play a growing role in our technology strategy • Mobile banking applications adoption accelerating in Retail and Commercial Banking • Retail and Commercial platforms ens
Slide 26: Digital Solutions Growing Rapidly
Digital Solutions Growing Rapidly 26 Channel Utilization Over Three Year Horizon Channel Type Total Transactions 2016 % of Total Total Transactions 2019 % of Total Three Year Change Branch Transactions 2,440,198 23% 2,279,975 18% (7)% ATM/ITM 754,695 7% 944,785 7% 25% Online Logins 4,795,231 44% 5,0
Slide 27: Technology Focused Solutions
27 Technology Focused Solutions Commitment to Technology and Cyber Risk Management
Slide 28: Financial Performance
Financial Performance O_O
Slide 29: Income Performance Metrics
1.29% 1.29% 1.29% 1.69% 1.76% 1.40% 12.26% 12.52% 12.72% 16.51% 15.47% 11.51% 12.45% 12.61% 12.83% 16.64% 15.57% 11.58% 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% 2015 2016 2017 2018 2019 YTD 2020 Return on Average Assets R
Slide 30: Net Income and EPS
$46,367 $52,084 $57,330 $80,411 $87,047 $21,682 $17,299 $1.84 $2.05 $2.23 $3.13 $3.38 $0.84 $0.67 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000 2015 2016 2017(1) 2018 2019 YTD 2019 YTD 2020 Net Income Diluted EPS N
Slide 31: Pretax Pre-Provision Earnings
$69,200 $78,367 $92,634 $105,344 $110,620 $27,261 $27,542 1.92% 1.94% 2.08% 2.21% 2.24% 2.23% 2.22% 1.50% 1.70% 1.90% 2.10% 2.30% 2.50% 2.70% 2.90% $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 2015 2016 2017 2018 2019 YTD 2019 YTD 2020 Pretax Pre - Provision Earnings 2020 Pretax Pre - Provis
Slide 32: Average Loans: Commercial Emphasis Drives Growth
Average Loans Commercial Emphasis Drives Growth 93% 93% 96% 94% 94% 95% 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 2015 2016 2017 2018 2019 YTD 2020 Retail Commercial Loans to Deposits 2020 YOY
Slide 33: Loan Breakdown
Loan Breakdown C&I Drives Lending Business Commercial & Industrial $1,428,719 35% Commercial RE - Owner Occupied $572,057 14% Commercial RE - Nonowner Occupied $584,418 14% Commercial RE - Multifamily $269,479 7% Commercial RE - Construction $334,524 8% Agri - business - Agriculture $329,397 8% Othe
Slide 34: Deposits
$3,088,598 $3,477,816 $3,757,209 $4,093,894 $4,242,524 $4,204,094 97% 97% 95% 97% 98% 97% 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 2015 2016 2017 2018 2019 YTD 2020 Average Deposits % of Fund
Slide 35: Deposit Breakdown
Total Retail $1,657,599 39% Total Public Fund $1,132,439 26% Total Commercial $1,382,090 32% CDARS $993 0% Brokered CDs $24,499 1% Brokered MMA $85,076 2% Deposit Breakdown Deposit Growth Key to Franchise Value 1.19% 0.98% 0.63% 0.48% 0.50% 0.54% 0.72% 1.10% 1.35% 1.38% 1.07% 0.00% 1.00% 2.00% 2011
Slide 36: Net Interest Income
Net Interest Income Loan Growth Driving Growth in Income $105,927 $118,481 $135,892 $151,271 $155,047 $38,209 $38,854 3.20% 3.18% 3.33% 3.43% 3.38% 3.45% 3.35% 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 $160,000 2015 2016 2017
Slide 37: Interest Rate Sensitivity
Fixed Rate $1,275,665 35% Prime $1,051,165 28% 1 Month LIBOR $978,873 26% FHLB/Other $391,986 11% Interest Rate Sensitivity • Proactive deposit pricing reductions concurrent with FOMC easing • 56% of Public Funds are tied to Fed Funds effective rate • 89 % of loan portfolio consists of commercial lo
Slide 38: Asset Quality
Asset Quality 38 Nonperforming Levels R eflect E conomic S trength of Markets 1.52% 2.15% 2.75% 1.37% 0.94% 0.50% 0.42% 0.19% 0.25% 0.19% 0.46% 0.34% 1.22% 1.82% 2.20% 1.75% 1.31% 0.41% 0.35% 0.16% 0.20% 0.16% 0.38% 0.28% 8.86% 8.17% 7.46% 8.06% 6.64% 5.75% 4.64% 4.28% 4.50% 4.77% 4.43% 4.50% 2.00%
Slide 39: Asset Quality: Strong Reserve Coverage
0.42% 0.54% 0.25% 0.20% 0.11% 0.10% 0.09% 0.03% - 0.01% 0.13% 0.03% 0.36% 1.59% 2.15% 2.39% 2.28% 1.92% 1.67% 1.42% 1.26% 1.23% 1.24% 1.25% 1.31% 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% 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 40: Non-Interest Income
$31,479 $32,864 $36,009 $40,302 $44,997 $11,525 $10,777 23% 22% 22% 21% 22% 23% 22% 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 2015 2016 2017 2018 2019 YTD 2019 YTD 2020 Non - Interest Income as % of Total Revenue Non - Interest Incom
Slide 41: Non-Interest Expense
Non - Interest Expense Disciplined Approach to Cost Structure While Continuing to Invest in the Future 41 $68,206 $72,978 $79,267 $86,229 $89,424 $22,473 $22,089 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000 2015 2016 2017 2018 2019 YTD 2019 YTD 2020 2020 YOY De
Slide 42: Efficiency Ratio
47% 48% 51% 52% 50% 50% 48% 46% 45% 45% 45% 40% 45% 50% 55% 60% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 YTD 2020 Efficiency Ratio Revenue Growth is Primary Driver of Low Efficiency Ratio Indianapolis North and South Bend Downtown Expansion Indianapolis Fishers and Clearwater Expansion Indi
Slide 43: Stable Healthy Dividend
Stable Healthy Dividend $0.63 $0.73 $0.85 $1.00 $1.16 $0.26 $0.30 2.10% 1.95% 1.77% 2.25% 2.40% 2.56% 2.75% 1.00% 1.50% 2.00% 2.50% 3.00% $0.10 $0.30 $0.50 $0.70 $0.90 $1.10 $1.30 2015 2016 2017 2018 2019 1Q19 1Q20 Dividend Per Share - split adjusted Dividend Yield - using average stock price 2020 G
Slide 44: LKFN Shareholder Value Total Return Performance
LKFN Shareholder Value 44 Total Return Performance from 12/31/00 to 3/31/20 Source: SNL database 1,350.07% 25.75% 186.78% 33.26% (500.00) 0.00 500.00 1,000.00 1,500.00 2,000.00 LKFN S&P 500 SNL U.S. Bank S&P 500 Bank
Slide 45: Investment Highlights
Investment Highlights • Proven History of Organic Growth • Disciplined and Focused Strategy • Strong Internal Culture • Consistent Execution • Service Excellence Drives Shareholder Value 45
Slide 46: Supplemental Information
Supplemental Information ON
Slide 47: Larger Market Organic Expansion
Larger Market Organic Expansion 47 State Rank County Primary City Population* LCB Entry LCB Deposit Market Share** # of Branches 20. Kosciusko Warsaw 79,344 1872 59% 12 6. Elkhart Elkhart 205,560 1990 21% 9 5. St. Joseph South Bend 270,771 1997 8% 4 3. Allen Fort Wayne 375,351 1999 14% 5 1. Hamilton
Slide 48: Mature Market Strength and Growth
Mature Market Strength and Growth (millions) 1 2019 2009 2019 # of Offices Deposits Share Deposits Share Increase 1. 1 st Source $4,053 19.62% $2,677 17.16% 51.40% 53 2. Lake City Bank $3,739 18.10% $1,736 11.13% 115.38% 50 3. JPM Chase $2,655 12.85% $1,484 9.51% 78.91% 23 4. PNC $1,432 6.93% $1,651
Slide 49: Commercial Banking Target Opportunities
Organic Growth 49 Commercial Banking Target Opportunities Growth Potential in Every Market Indianapolis 6,555 Fort Wayne 1,878 Elkhart/South Bend 2,220 Warsaw 313 Companies with Revenue of $1 to $50 million in Lake City Bank footprint by county Source: 2017 Hoover’s
Slide 50: Investment Portfolio – Source of Liquidity
14.1% 12.9% 11.8% 11.5% 12.0% 12.3% 12.4% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 16.0% 17.0% 2014 2015 2016 2017 2018 2019 2020 US Govt Remics 16.28% US Govt Pools 30.70% Exempt Municipals 46.00% Taxable Municipals 0.32% CMCL CMO 6.70% Investment Portfolio – Source of Liquidity 50 March 31, 2020 Weight
Slide 51: Projected Impact of Rising/Falling Rates
Projected Impact of Rising/Falling Rates Asset Sensitive Balance Sheet - 2.19% 1.23% 2.37% 4.81% 9.89% 14.98% -4.00% -2.00% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 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
Slide 52: Contact: Lakecitybank.com
(800) 827 - 4522 LAKECITYBANK.COM
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