Lakeland Financial Corporation · NASDAQ:LKFN
Lakeland Financial — KBW Investor Update (November 2013)
34 slides from Lakeland Financial's conference presentation, November 2013
Slide 1: Investor Update
Investor Update November 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 • 37 Commercial Banking Officers • 5 Commercial Loan Administrators • 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: 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 • Leadership is key to culture and recent succession announcemen
Slide 10: 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 10
Slide 11: 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 77,609 1872 49% 12 6. Elkhart Elkhart 199,619 1990 20% 9 5. St. Joseph South Bend 266,344 1997 4% 4 3. Allen Fort Wayne 360,412 1999 10% 4 4. Hamilton/Ma
Slide 12: 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 12 Source: Hoover’s
Slide 13: Lake City Bank Market Area Key Competitors
Larger Markets Lake City Bank Market Area* Key Competitors (millions) 2013 2003 Deposits Share Deposits Share Increase # of Offices 1. JPM Chase $2,651 11.85% $1,528 12.51% 73.49% 46 2. 1st Source $2,627 11.75% $2,297 15.73% 14.37% 49 3. Lake City Bank $2,485 11.11% $967 6.62% 156.98% 47 4. Wells Fa
Slide 14: Market Area Deposit Performance
Larger Markets Market Area Deposit Performance $1,800 $1,600 $1,518 $1,470 Dominant market share $1,400 winner in last decade $1,126 $1,123 $1,200 $1,000 $800 $600 $450 $400 $330 $257 $251 $232 $200 $0 -$69 -$200 Lake City Wells Fargo Bank of JPM Chase Fifth Third 1st Source IAB Financial KeyBank To
Slide 15: Indianapolis Market Area Key Competitors
Larger Markets Indianapolis Market Area* Key Competitors (millions) 2013 2003 Deposits Share Deposits Share Increase 1. JPM Chase $7,877 27.98% $5,203 28.59% 51.39% 2. PNC $6,069 21.56% $4,482 24.63% 35.41% 3. Fifth Third $3,128 11.11% $1,427 7.84% 119.20% 4. Huntington National $2,498 8.87% $2,776
Slide 16: Indianapolis Market Deposit Concentrations
Larger Markets Indianapolis Market Deposit Concentrations 14% Great opportunity for Indiana focused institutions to grab market share 86% Out of State In State *Marion and Hamilton Counties as of 6/30/13 16
Slide 17: Financial Performance
Financial Performance (Make City Bank
Slide 18: 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 $28,251 $2.30 $26,792 $24,543 $2.15 $25,000 $19,701 $1.88 $1.80 $20,000 $19,211 $18,979 $1.70 $1.58 $1.63 $1.55 $15,000 $1.30 $1.32 $1.26 $10,000 $0.80 $5,000 $0 $0.30 2007 2008 2009 2010 2011 2012 YTD 2012 YT
Slide 19: Average Loans
Average Loans Commercial Emphasis Continues to Drive Growth $2,500,000 109% $2,304,003 120% 103% $2,148,046 $2,216,131 97% $2,049,209 $1,901,746 100% $2,000,000 $1,665,024 95% 93% 93% 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 20: Loan Breakdown
Loan Breakdown C & I Drives Lending Business Commercial RE - Construction Agri-business - Agriculture Residential Mortgage $117,733 $200,137 $119,788 5% 9% 5% Home Equity Commercial RE - Multifamily $37,279 $151,726 Installment - Other 2% 6% Consumer $48,796 2% Commercial RE - Nonowner Occupied $392
Slide 21: Investment Portfolio
Investment Portfolio September 30, 2013 Weighted Tax Security Average Equivalent Type Life Yield Agencies 4.42 2.71% Municipal 5.72 5.38% Treasuries 1.00 2.26% Municipal Total 4.66 3.24% Securities 19.83% Treasuries 0.22% Agencies 79.95% 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% 0.97% 0.97% 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% 2.40% 2.15% 2.08% 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 = 215% 1.04% 1.03% 1.20% 0.20% 0.90% 0.60% 0.10% 0.21% 0.43% 0.42% 0.54% 0.25% 0.20%
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 $2,480,929 $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% 0.67% 1.00% 0.00% 2006 2007 2008 2009 2010 2011 2012 YTD 2013 December 31, 2008 September 30, 2013 Total CDARS Total Brokered Brokered CDARS Commercial $6,600 Comm
Slide 26: Net Interest Income
Net Interest Income Margin Improved in 2013 NIM Q1 3.17% $100,000 Q2 3.20% 5.00% $92,653 $92,080 Q3 3.30% $90,000 $87,671 $80,281 $80,000 4.50% $70,000 $65,506 $66,141 $63,268 $60,000 $54,556 4.00% 3.73% $50,000 3.54% 3.51% $40,000 3.34% 3.50% 3.28% 3.22% 3.22% $30,000 3.14% $20,000 3.00% $10,000 $0
Slide 27: Impact of Rising Rates
Impact of Rising Rates • 89% of loan portfolio is commercial • 63% of commercial loans are variable rate – mostly Prime and LIBOR based o Floors with average rate of 3.82% exist on 56% of commercial variable rate loans • 37% of commercial loans are fixed rate with most less than 5 years • Deposit ra
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 $22,859 $21,509 40% Non-Interest Income/Total Revenue $20,242 $20,000 $17,891 35% Non-Interest Income $15,000 27% 27% 30% 23% 25% 22% 26% $10,000 20% 19% 21% 20% $5,000 15% $0 10% 2
Slide 29: Non-Interest Expense
Non-Interest Expense Historical Focus on Cost Control is Part of Culture $57,742 $60,000 $53,895(2) $55,105 $53,435 $47,481 $46,250 $50,000 $42,923 $43,231 $40,000 $30,000 $20,000 $10,000 $0 2007 2008 2009 2010 2011 2012 YTD 2012 YTD 2013 2013 YTD Growth 7% 29 (1) Excluding special FDIC assessment a
Slide 30: 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 30
Slide 31: Consistent and Healthy Dividend
Consistent and Healthy Dividend 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 31
Slide 32: Strong Capital Structure
Strong Capital Structure Subordinated Key Ratios and Per Share Data Debt Reserves As of September 30, 2013 8.0% 12.7% TCE /Tangible Assets 10.25% Tier 1 Common Risk-Based 12.21% Total Risk-Based 14.65% Tangible Common Leverage 11.02% Equity 79.4% Book Value $19.11 Tangible Book Value $18.93 Tangible
Slide 33: LKFN Performance
LKFN Performance SNL U.S. Bank $ (ake City Bank 33
Slide 34: Investment Highlights
Investment Highlights • Proven History of Organic Growth • Disciplined Strategy • Strong Internal Culture • Consistent Execution • Service Excellence drives Shareholder Value 34
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