Lakeland Financial Corporation · NASDAQ:LKFN
Lakeland Financial — Investor Presentation (May 2021)
52 slides from Lakeland Financial's investor presentation, May 4, 2021
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 2021 Lakeland Financial Corporation LKFN LISTED
Slide 2: Presenter 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 with respect to the financial condition, results of operations, plans, objectives,
Slide 4: Profitability, Capital Adequacy, Asset Quality peer comparison
Profitability Capital Adequacy Asset Quality cove ara Tang cmon sy cos eter site "Gaiters "og im “ty fie “Rg sank |B) 705" Mame Sere AR aave i923 1208 B38 a4 007 132 | 1385 3_Lve Oak Bancshares ob NC 2758 aaa a 25668 m3 [033 35 021 227 (163.0 Lakeland Financial Corp. LKFN IN 4603-138 29 1363 16 | 9.
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) 6 Institutions 35 Institutions 163 Institutions 223 Institutions (including LKFN) 5 Long Term Success for Shareholders Source: S&P Global Market
Slide 6: Strong Capital Structure
Strong Capital Structure 6 Tangible Common Equity 91.7% Reserves 8.3% $1.21 $25.43 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 Tangible Book Value (1) Per Share (1) compounded annual growth rate computed from 1991 - 2
Slide 7: COVID-Crisis Management
7 COVID - 19 Crisis Management • Active Credit Risk Management • COVID - 19 Related Loan Deferrals • Paycheck Protection Program
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% Education 0.9% C&I Building Construction 0.6% Restaurants 1.6% En
Slide 9: COVID-19 Related Loan Deferrals
$467 $737 $653 $158 $101 $85 $85 404 487 384 102 49 26 26 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 April 23, 2021 Credit Risk Management Efforts Type of Loan # of Borrowers L
Slide 10: Paycheck Protection Program
• 1,223 potential borrowers as of 4/26/21 • $158 million approved by SBA representing 1,106 borrowers • Average loan size $134,000 10 Paycheck Protection Program Significant Positive Impact to Borrowers Continues • $571 million thru 2,409 loans • Average loan size $237,000 • 82% of loans, or $305 mi
Slide 11: Lake City Bank Today
Lake City Bank Today • A long - term and consistent organic growth story • Headquartered in Warsaw, Indiana • 50 branch offices - $6.0 billion banking assets - $2.7 billion trust and investment brokerage assets • Focused on execution – “blocking and tackling” • Continued growth potential 11
Slide 12: A Quarter Century of Organic Growth
A Quarter Century of Organic Growth 12 $2,707 $84,337 $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 2020 Net Income C
Slide 13: Established Market Presence
Established Market Presence Organic Growth Potential in Mature and Developing Markets 13 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 14: Strong Regional and Statewide Economy
Strong Regional and Statewide Economy Indiana Employment Trends Versus National Averages 14 11.9% 9.6% 9.0% 8.8% 6.5% 5.2% 4.6% 3.8% 3.3% 3.7% 3.0% 11.3% 4.7% 11.8% 9.6% 9.0% 9.0% 6.9% 5.6% 5.1% 4.3% 3.8% 4.1% 3.4% 11.9% 4.0% 10.4% 9.5% 8.7% 8.1% 7.0% 5.8% 5.2% 4.9% 4.4% 4.1% 3.8% 13.0% 6.2% 2.0% 4.
Slide 15: Shareholder Value Strategy
Shareholder Value Strategy 15 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 16: Commercial Banking Focus: Experienced Relationship Driven Team
• 41 credit “smart” commercial bankers • Average 20 years in banking & 11 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
Slide 17: 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 18: 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 18 High Quality Team Members
Slide 19: Mature Market Deposit Performance
Mature 1 Market Deposit Performance $1,980 $1,757 $1,399 $824 $341 $339 $202 $83 - $83 - $328 -$350 $150 $650 $1,150 $1,650 $2,150 Lake City Bank 1st Source JPM Chase Flagstar First Merchants Star Fifth Third PNC Old National KeyBank Organic Growth 2010 - 2020 1 Mature Markets include 12 Northern In
Slide 20: Indianapolis Market Opportunity
Organic Growth 20 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 21: A Strong Environment for Growth and Expansion
21 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 • Economic expan
Slide 22: Core Deposits Fund Organic Loan Growth
22 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 23: 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 rolls out in March 2021 • Technology partnership with FIS is strong – User Planning Council and Strategic Planning Advisory Council • Retail and Commercial platforms ensure com
Slide 24: Mobile Adoption is Growing Rapidly
Mobile Adoption is Growing Rapidly 24 Channel Utilization Over Three Year Horizon (1) Channel Type Total Transactions 2018 % of Total Total Transactions 2021 % of Total Three Year Change Branch Transactions 2,384,159 20% 1,969,469 15% (17)% ATM/ITM 958,326 8% 878,845 6% (9)% Online Logins 4,855,943
Slide 25: Mobile App Adoption by Age Demographic
Lake City Bank Mobile App Adoption by Age Demographic 14% 25% 19% 32% 10% CUSTOMER BREAKDOWN 42% 50% 35% 21% 10% MOBILE APP ADOPTION Gen Z Millennial Gen X Baby Boomer Senior Gen Z 1996 – Current Millennial 1977 – 1995 Gen X 1965 – 1976 Baby Boomer 1946 – 1964 Senior 1945 or before March 2021 25
Slide 26: Technology Focused Solutions
26 Technology Focused Solutions Commitment to Technology and Cyber Risk Management
Slide 27: Financial Performance
Financial Performance
Slide 28: LKFN Performance Exceeds National and Indiana Peers
1.29% 1.29% 1.69% 1.76% 1.55% 1.58% 12.52% 12.72% 16.51% 15.47% 13.51% 14.27% 12.61% 12.83% 16.64% 15.57% 13.59% 14.35% 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 R
Slide 29: Net Income and EPS
$52,084 $57,330 $80,411 $87,047 $84,337 $17,299 $22,983 $2.05 $2.23 $3.13 $3.38 $3.30 $0.67 $0.90 $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 30: Pretax Pre-Provision Earnings
$78,367 $92,634 $105,344 $110,620 $118,646 $27,542 $29,490 1.94% 2.08% 2.21% 2.24% 2.40% 2.22% 2.00% 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 $140,000 2016 2017 2018 2019 2020 YTD 2020 YTD 2021 Pretax Pre-Provision Earnings Pretax Pre-Provi
Slide 31: Loans: PPP Loans Impact Growth
Average Loans PPP Loans Impact Growth in 2020 and 2021 93% 96% 94% 94% 95% 86% 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) YTD 2021 Retail Commercial Loans
Slide 32: Loan Breakdown
Loan Breakdown C&I Drives Lending Business Commercial & Industrial $1,676,464 37% Commercial RE - Owner Occupied $669,390 15% Commercial RE - Nonowner Occupied $605,640 13% Commercial RE - Multifamily $301,385 7% Commercial RE - Construction $370,906 8% Agri - business - Agriculture $347,167 8% Othe
Slide 33: Deposits
$3,477,816 $3,757,209 $4,093,894 $4,242,524 $4,650,597 $5,107,019 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 Core Deposits Grew b
Slide 34: Deposit Breakdown
Total Retail $2,008,185 39% Total Public Fund $1,204,153 23% Total Commercial $2,007,630 38% Brokered Deposits $10,003 0% Deposit Breakdown Demand Deposits Grew by $546 million or 52% in One Year 1.19% 0.98% 0.63% 0.48% 0.50% 0.54% 0.72% 1.10% 1.35% 0.63% 0.33% 0.00% 1.00% 2.00% 3.00% 2011 2012 2013
Slide 35: 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 $38,854 $43,679 3.18% 3.33% 3.43% 3.38% 3.19% 3.35% 3.19% 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 $1
Slide 36: Interest Rate Sensitivity
Fixed Rate $1,594,946 39% Prime $961,576 23% 1 Month LIBOR $1,172,229 28% FHLB/Other $403,606 10% Interest Rate Sensitivity • Proactive deposit pricing reductions • 65% of Public Funds are tied to Fed Funds effective rate • 91% of loan portfolio consists of commercial loans • Fixed rate commercial l
Slide 37: Asset Quality
Asset Quality Nonperforming Levels are Low Despite Economic Challenges 2.15% 2.75% 1.37% 0.94% 0.50% 0.42% 0.19% 0.25% 0.19% 0.46% 0.26% 0.26% 1.82% 2.20% 1.75% 1.31% 0.41% 0.35% 0.16% 0.20% 0.16% 0.38% 0.21% 0.20% 8.17% 7.46% 8.06% 6.64% 5.75% 4.64% 4.28% 4.50% 4.77% 4.43% 6.15% 6.06% 2.00% 4.00% 6
Slide 38: Asset Quality: Loan Loss Reserve and Chargeoffs
0.54% 0.25% 0.20% 0.11% 0.10% 0.09% 0.03% - 0.01% 0.13% 0.03% 0.09% 0.01% 2.15% 2.39% 2.28% 1.92% 1.67% 1.42% 1.26% 1.23% 1.24% 1.25% 1.32% 1.61% 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 2014 2015 2016 2017 2018
Slide 39: Non-Interest Income
$32,864 $36,009 $40,302 $44,997 $46,843 $10,777 $12,557 22% 22% 21% 22% 22% 22% 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 2016 2017 2018 2019 2020 YTD 2020 YTD 2021 Non - Interest Income as % of Total Revenue Non - Interest Incom
Slide 40: Non-Interest Expense
Non - Interest Expense Disciplined Approach to Cost Structure While Continuing to Invest in the Future 40 $72,978 $79,267 $86,229 $89,424 $91,205 $22,089 $26,746 $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 In
Slide 41: Efficiency Ratio
47% 48% 51% 52% 50% 50% 48% 46% 45% 45% 43% 48% 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 41
Slide 42: Stable Healthy Dividend
Stable Healthy Dividend $0.73 $0.85 $1.00 $1.16 $1.20 $0.30 $0.34 1.95% 1.77% 2.25% 2.40% 2.27% 3.27% 1.97% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% $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 - using averag
Slide 43: LKFN Shareholder Value Total Return Performance
(500.00) 0.00 500.00 1,000.00 1,500.00 2,000.00 2,500.00 3,000.00 3,500.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 LKFN S&P US BMI Banks Index S&P 500 S&P 500 Financials 2,703.74% 121.35% 348.39% 205.40% LKFN Shareholder Value Tot
Slide 44: Investment Highlights
Investment Highlights • Proven History of Organic Growth • Disciplined and Focused Strategy • Strong Internal Culture • Consistent Execution • Service Excellence Drives Shareholder Value 44
Slide 45: Supplemental Information
Supplemental Information
Slide 46: Liquidity: Line of Credit Utilization
Liquidity Line of Credit Utilization March 31, 2021 1,084 1,274 1,439 1,621 1,611 1,591 1,588 1,753 1,715 1,655 1,664 1,696 1,616 1,669 1,630 1,593 1,637 1,473 1,446 1,499 1,410 1,095 1,243 1,411 1,475 1,468 1,493 1,546 1,514 1,612 1,611 1,806 1,737 1,797 1,738 1,785 1,835 1,785 2,066 2,109 2,044 2,
Slide 47: Commercial Loans by County
Commercial Loans by County Allen 18% Elkhart 14% St. Joseph 11% Kosciusko 9% Hamilton 8% Marion 11% Marshall 5% Other IN Counties (1) 18% Outside IN 6% March 31, 2021 47 (000’s) Commercial Loans Outstanding as of 3/31/2021 $4.1 million (1) All other counties individually represent less than 0.5% of
Slide 48: Larger Market Organic Expansion
Larger Market Organic Expansion 48 State Rank County Primary City Population* LCB Entry LCB Deposit Market Share** # of Branches 20. Kosciusko Warsaw 79,456 1872 58% 12 6. Elkhart Elkhart 206,341 1990 23% 9 5. St. Joseph South Bend 271,286 1997 9% 4 3. Allen Fort Wayne 379,299 1999 14% 5 1. Hamilton
Slide 49: Mature Market Strength and Growth
Mature Market Strength and Growth (millions) 1 2020 2010 2020 # of Offices Deposits Share Deposits Share Increase 1. 1 st Source $4,433 19.68% $2,676 15.68% 65.66% 53 2. Lake City Bank $4,113 18.26% $2,133 12.50% 92.83% 50 3. JPM Chase $2,992 13.29% $1,593 10.81% 87.82% 22 4. PNC $1,626 7.22% $1,543
Slide 50: Investment Portfolio – Source of Liquidity
(1) Ratio for 2020 excludes PPP loans of $412 million in total assets (2) Ratio for 2021 excludes PPP loans of $405 million in total assets 14.1% 12.9% 11.8% 11.5% 12.0% 12.3% 13.6% 15.0% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 16.0% 17.0% 2014 2015 2016 2017 2018 2019 2020(1) 2021(2) US Govt Treas 0.11
Slide 51: Projected Impact of Rising/Falling Rates
Projected Impact of Rising/Falling Rates Asset Sensitive Balance Sheet - 1.85% 1.48% 3.02% 6.08% 12.82% 19.44% -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 proje
Slide 52: Lake City Bank contact
(800) 827 - 4522 LAKECITYBANK.COM
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