Second Quarter INVESTOR PRESENTATION

Transcription

1 Second Quarter INVESTOR PRESENTATION

2 Statement Regarding Forward-Looking Information The information disclosed in this document includes various forward-looking statements that are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of The words anticipates, projects, intends, estimates, expects, believes, plans, may, will, should, could, and other similar expressions are intended to identify such forward-looking statements. The Company cautions that these forward-looking statements are necessarily speculative and speak only as of the date made, and are subject to numerous assumptions, risks and uncertainties, all of which may change over time. Actual results could differ materially from such forward-looking statements. The following factors, among others, could cause actual results to differ materially and adversely from such forward-looking statements: changes in the financial services industry and the U.S. and global capital markets, changes in economic conditions nationally, regionally and in the Company s markets, the nature and timing of actions of the Federal Reserve Board and other regulators, the nature and timing of legislation and regulation affecting the financial services industry, government intervention in the U.S. financial system, changes in federal and state tax laws, changes in levels of market interest rates, pricing pressures on loan and deposit products, credit risks of the Company s lending and leasing activities, successful implementation, deployment and upgrades of new and existing technology, systems, services and products, customers acceptance of the Company s products and services, and competition. Any statements made by the Company that are not historical facts should be considered to be forward-looking statements. The Company is not obligated to update and does not undertake to update any of its forward-looking statements made herein. 1

3 Corporate Profile Ticker: LBAI (NASDAQ) Orange Founded in 1969 Rockland Rockland 53 branches serving Northern/Central NJ and Hudson Valley, NY - 7 regional commercial lending centers - 1 commercial loan production offices Somerset Middlesex Monmouth Financial snapshot: - Assets: $5.5 Billion Ocean - Loans: $4.3 Billion - Deposits: $4.4 Billion - Market Cap: $943 Million (1) (1) Stock Price as of June 30, $19.85 Branches (53) Regional Commercial Lending Centers (7) Commercial Loan Production Offices (1) 2

4 Stockholder Information ( LBAI ) Tangible Book Value (6/30/18) $9.67 Price/TBV 2.05x (3) Price/Earnings (Q2 annualized) 15.04% (3) Institutional Ownership 52.38% (1) Average Daily Volume 111,957 (1)(2) (1) Source: SNL Financial (2) Three month period ending June 30, 2018 (3) Stock Price as of June 30, 2018 $

5 Who We Are Traditional Commercial Bank Relationship lender Diversified commercial real estate portfolio Focus is NOT multifamily lending Conservative and Consistent Banking Philosophy Not a high risk model Disciplined acquirer Scarce and Valuable Franchise One of the largest publicly traded banks in NJ One of the lowest cost of funds in the state (1) (1) Source: SNL Financial Q for NJ banks with total assets greater than $500 million. 4

6 Expanding & Enhancing Footprint 5 Years Ago Today 5 Legacy Lakeland Harmony Pascack Somerset Hills Branches: Commercial LPOs Orange Orange Orange Orange Orange Orange Orange Orange Orange Middlesex Middlesex Middlesex Middlesex Middlesex Middlesex Middlesex Middlesex Middlesex Monmouth Monmouth Monmouth Monmouth Monmouth Monmouth Monmouth Monmouth Monmouth Ocean Ocean Ocean Ocean Ocean Ocean Ocean Ocean Ocean Somerset Somerset Somerset Somerset Somerset Somerset Somerset Somerset Somerset NY Branch Opened 3/2017 Rockland

7 NJ Deposit Market Share NJ Based Banks Rank Institution Number of Branches Deposits in Market ($mm) Market Share (%) 1 Investors Bancorp Inc , Valley National Bancorp , Provident Financial Services Inc. 81 6, (1) 4 OceanFirst Financial Corp. 78 5, Lakeland Bancorp Inc. 52 4, Columbia Bank MHC 47 4, Peapack-Gladstone Financial Corp. 20 3, ConnectOne Bancorp Inc. 20 3, Kearny Financial Corp. 40 3, Oritani Financial Corp. 27 2, Top 10 New Jersey Banks , Total NJ Banks In Market 1,108 94, Source: SNL Financial data as of June (1) OceanFirst Financial Corp. includes merger of Sun Bancorp. 6

8 Deposit Market Share June 30, 2018 June 30, 2017 LBAI % of LBAI Market Total Market Median County Branches Deposits ($mm) Deposits Share Deposits ($mm) 2017 HHI 13 $ % 30.5% $3,144 $88, % 3.6% 24, , % 1.5% 54,013 88, % 6.6% 14,026 63,674 Ocean % 2.0% 15,509 67, % 0.8% 24,748 58,124 Somerset % 0.9% 14, , % 0.2% 28,591 52,939 Orange, NY % 0.1% 7,408 73,068 Total 53 $4, % (1) As of 2017, Somerset and Counties have the 9 th and 11 th highest household income of all counties in the U.S. (2) (1) Excludes non-branch deposits (2) Source: SNL Financial data 7

9 Branch Optimization Consistent with its strategy, Lakeland Bank has efficiently re-invested resources in target markets. Lakeland Bank s network has expanded by only 7 branches since 2011, despite acquiring whole banks with 17 total branches during that time. Deposits Per Branch $90.0 $85.0 $80.0 $75.0 $70.0 ($ in millions) LBAI CAGR: +9.1% (1) Peer CAGR: +7.5% $78.7 $82.4 $83.0 $65.0 $62.4 $60.0 $55.0 $50.0 $45.0 $51.5 $52.1 $54.7 $ Branch Count: (1) Peer Data Source: SNL Financial as of Q Peers include: BCBP, BDGE, BMTC, BWFG, CNOB, DCOM, FFIC, FLIC, KRNY, NFBK, OCFC, ORIT, PFS, PGC, and UVSP 8

10 Recent Acquisitions Harmony Bank Pascack Bancorp Somerset Hills Bancorp Announcement Date: Assets: Deal Value: Price/TBV: EPS Accretion: TBV Dilution: TBV Earnback: Board Seats: 8/4/2015 $403mm $43.8mm 1.31x 4.5% ~2.7% 3.5 Years Lawrence Inserra Jr. Rationale Growth opportunity in / Counties Exclusive negotiations Announcement Date: Assets: Deal Value: Price/TBV: EPS Accretion: TBV Dilution: TBV Earnback: Board Seats: 1/29/2013 $369mm $64.4mm 1.54x Accretive ~2.0% < 2 Years Edward Deutsch Thomas J. Marino Rationale Expansion into Somerset/ Counties Enhances presence in County Exclusive negotiations SOMH CEO Stew McClure stays with LBAI as Regional President Note: Represents data at announcement date 9

11 Experienced Management Team # of Years # of Years Name Position at LBAI Industry Exp. Previous Experience Thomas J. Shara President & CEO TD Banknorth; Hudson United Ronald E. Schwarz Sr. EVP & COO Sovereign; Independence Community Bank Thomas F. Splaine EVP & CFO 3 28 Investors Bank; CIT Group; Hewlett-Packard Financial Services James M. Nigro EVP & Chief Risk Officer 3 28 The Provident Bank; Somerset Hills Bank; Summit Bank Timothy J. Matteson, Esq. EVP & Chief Administration Officer Hudson United; IDB Bank; TD Banknorth; Summit Bank 10

12 Balanced Loan Portfolio Loan Portfolio Growth (1) Loan Composition (%) ($ in millions) CAGR excluding acquisitions: 9.4% CAGR: 13.0% $4,157 $4,281 $3,874 $2,968 $2,656 $2,470 Construction $297 7% Consumer Residential $315 Mortgage 7% $322 Leases 8% $82 2% C&I $340 8% ($ in millions) CRE $2,925 68% CRE / Capital 413% (2) (1) Acquired loans of $580 in 2016 (2) Represents Lakeland Bank s CRE to total risk based capital ratio, as of June 30, 2018, per regulatory guidelines 11

13 Commercial Loan Growth Commercial Portfolio Growth Commercial Loan Composition (%) ($ in millions) $3,118 $3,436 $3,562 Owner Occupied Multifamily 16% 20% Retail 16% $1,657 $1,832 $2,187 Industrial Office Mixed 7% 11% 10% Commercial Constr. 7% Comm'l Res 1-4 Fam 6% Other 5% Residential Constr. 2% ; CRE C&I Construction 12

14 Strong Asset Quality Conservative Credit Culture Nonaccruals / Loans (%) NPAs (1) / Loans + OREO (%) 1.40% 2.00% 1.05% 0.70% 0.35% 0.69% 0.78% 0.77% 0.53% 0.33% 0.33% 1.50% 1.00% 0.50% 1.12% 1.22% 1.14% 0.78% 0.62% 0.57% 0.00% 0.00% NCOs / Avg. Loans (%) Reserves / Nonaccrual Loans (%) 1.00% 0.75% 0.50% 0.36% 0.25% 0.19% 0.11% 0.06% 0.05% 0.05% 0.00% (1) NPAs include Troubled Debt Restructurings % 250.0% 200.0% 150.0% 100.0% 50.0% 0.0% 259.7% 256.6% 176.1% 148.5% 136.0% 153.1% 13

15 Core Deposit Focus Deposit Growth (2) ($ in millions) Retail Time $612 14% Demand Deposits $968 22% Deposit Composition Jumbo Time $195 4% (1) Savings and NOW Accounts $2,625 60% Q2 Cost of Total Deposits: 0.59% Core Deposits: 82% $5,000 $4,000 $3,000 $2,000 $1,000 $0 ($ in millions) CAGR: 11.4% CAGR ex acquisitions: 7.9% $2,709 $2,791 ($ in millions) $2,996 Demand Deposit Growth (3) CAGR: 11.2% CAGR ex acquisitions: 8.3% $4,093 4,369 4,400 Core Deposits CDs $601 $646 $694 $927 $967 $968 (1) Jumbo time deposits defined as time deposits above $250,000 (2) Acquired deposits in 2016 = $583 (3) Acquired demand deposits 2016 = $108 14

16 Investment Securities Portfolio Government & Agencies 24% Municipals 11% Securities Composition Corporate Debt 1% Equities, CRA 2% MBS/CMO 62% $782 million, or 14% of assets Primarily used for liquidity purposes Short term agencies, MBS, and municipals Average Yield: 2.26% Weighted Average Life: 5.12 years Effective Duration: 3.45 years 15

17 Franchise Growth Consistent and Reliable Growth ($ in millions) Total Assets (1) Tangible Book Value Per Share Core Earnings Per Share (2) CAGR: 12.0% $5,534 $5,406 $5,093 $3,870 $3,318 $3,538 $6.31 CAGR: 10.0% CAGR: 11.7% (3) $1.30 $9.67 $9.38 $8.70 $1.11 $1.02 $7.62 $7.06 $0.82 $0.88 $ (1) Acquired total assets of $732 in 2016 (2) Core earnings per share excludes non-recurring items, merger related expenses and related gains/losses on sale of securities (3) Q EPS annualized 16

18 Consistent Profitability Core Return on Assets (1) (%) Core Return on Equity (1) (%) 1.25% 1.00% 0.75% 0.50% 0.86% 0.92% 0.93% 0.96% 1.01% 1.17% (3) 11.25% 10.50% 9.75% 9.00% 8.25% 8.30% 8.48% 8.61% 9.34% 9.35% 10.71% (3) 0.25% 7.50% 0.00% 6.75% Net Interest Margin (%) Efficiency Ratio (2) (%) 66.0% 4.00% 3.75% 3.69% 3.64% 62.0% 60.8% 59.3% 61.1% 3.50% 3.47% 3.41% 3.38% 3.43% (3) 58.0% 56.7% 55.6% 3.25% 54.0% 53.4% 3.00% 50.0% (1) Core income excludes non-recurring items, merger related expenses and related gains/losses on sale of securities. (2) Source: SNL Financial through Company records for (3) Q annualized 17

19 Q Highlights Q2 Q2 ($mm except per share) Balance Sheet Total Assets $5,362 $5,534 Total Loans 4,054 4,281 Total Deposits 4,227 4,400 Consolidated Capital (%) TCE / TA 8.20 % 8.51 % Tier 1 Risk-Based Ratio Total Risk-Based Capital Ratio Q Net Income and EPS up 18% compared to Q Total loans increased 1% in Q and 6% vs. PY Total deposits increased 4% vs. PY Q NIM of 3.43% up 2 bp vs. PY Tangible book value per share up 7% in last 12 months Asset Quality (%) NPAs/ Loans + OREO (1) 0.72 % 0.57 % NCOs/ Avg Loans Reserves/ Gross Loans Profitability Net Income $13.4 $15.8 Diluted EPS ROAA 1.02 % 1.17 % ROAE Noninterest Inc./ Operating Rev Net Interest Margin (1) NPAs include Troubled Debt Restructurings 18

20 Enhanced Capital Position Recent Capital Actions: $75 million subordinated debt offering oversubscribed in September 2016 $50 million At-The-Market Common Stock offering oversubscribed in December 2016 Tangible Common Equity Ratio (%) Total Capital / Risk-Weighted Assets (%) 9.74% 9.86% 13.32% 13.67% 13.01% 12.81% 8.51% 8.20% 7.53% 7.90% 10.65% 10.30% Lakeland Bancorp Lakeland Bank Lakeland Bancorp Lakeland Bank June 30, 2016 June 30, 2017 June 30, 2018 June 30, 2016 June 30, 2017 June 30,

21 Dividend History Cash Dividends Per Share CAGR: 11.5% $0.46 $0.37 $0.40 $0.33 $0.24 $0.27 $0.29 Stock Dividends 5.0% 5.0% * % * May 2018 dividend of $0.115 per share, annualized 20

22 LBAI Summary As we approach the 50 th year since Lakeland Bank was founded, we are proud to be characterized as follows: Industry Recognition S&P Global Market Intelligence ranked Lakeland Bank 73 rd in the top 100 performing banks in the United States with assets between $1 billion and $10 billion, and Lakeland Bank was the highest rated bank in NJ Positive Stock Performance Annual increase in dividends Stock price up $0.60, or 3%, from December 31, 2017 to June 30, 2018 Above Peer-Level Performance Metrics Profitability metrics: ROA, ROE, NIM, and efficiency ratio exceed peer averages as of March 31, 2018 Continued growth in net income and EPS Stable low efficiency ratio Premier NJ Deposit Franchise Singular focus on high quality core deposits 22% of deposits in DDA, 82% in core (non-time) deposits Conservative Culture and Operating Philosophy Relationship-based community bank Track record of successful acquisitions and consistent organic growth Conduct business with transparency, honesty and integrity Robust risk management infrastructure Conservatively underwritten loan and lease portfolio Diligent attention to capital management; mindful of all constituencies Dedicated and Experienced Management Team and Board Extensive in-market experience with deep community ties Expanded depth of Management Team with larger bank experience 21