Statement Regarding Forward-Looking Information

Transcription

1 Statement Regarding Forward-Looking Information The information disclosed in this document includes various forward-looking statements (with respect to corporate objectives, trends, and other financial and business matters) 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. Statements regarding pro forma information with respect to Harmony Bank which Lakeland Bancorp acquired on July 1, 2016, and the growth opportunities applicable to the combined institution, are also forward-looking statements. Lakeland 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 affecting the financial services industry, government intervention in the U.S. financial system, changes in levels of market interest rates, pricing pressures on loan and deposit products, credit risks of the Company s lending and leasing activities, customers acceptance of the Company s products and services, competition, failure to successfully integrate and realize anticipated efficiencies and synergies after the Pascack Bancorp, Inc. and Harmony Bank mergers. Any statements made by Lakeland that are not historical facts should be considered to be forward-looking statements. Lakeland is not obligated to update and does not undertake to update any of its forward-looking statements made herein.

2 Corporate Profile Ticker: LBAI (NASDAQ) Founded in 1969 Rockland Rockland 53 branches serving Northern/Central NJ and Hudson Valley, NY - 5 regional commercial lending centers - 2 commercial loan production offices Somerset Middlesex Financial snapshot: - Assets: $4.9 Billion - Loans: $3.8 Billion - Deposits: $3.9 Billion - Market Cap: $631 Million Monmouth Ocean Stock Price as of November 2, $14.20 Branches (53) Regional Commercial Lending Centers (5) Commercial Loan Production Offices (2) 2

3 Stockholder Information ( LBAI ) Tangible Book Value (9/30/16) - $8.07 Price/TBV 1.76% Price/Earnings (2016e) 14.9% (1) Price/Earnings (2017e) 13.2% (1) Institutional Ownership 43% (1) Insider Ownership 7% (1) Average Daily Volume 96,964 (2) Stock Price as of November 2, $14.20 (1) Source: SNL financial (2) Three month period ending October 31,

4 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 4th largest publically traded bank in NJ Lowest cost of funds in the state (0.40%)* * Source SNL Financial Q for NJ banks with total assets greater than $500 million. 4

5 Expanding & Enhancing Footprint 5 Years Ago Today 5 Legacy Lakeland Harmony Pascack Somerset Hills Branches: Commercial LPOs 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 Rockland

6 NJ Deposit Market Share NJ Based Banks Rank Institution (ST) Number of Branches Deposits in Market ($mm) Market Share (%) 1 Investors Bancorp Inc , Valley National Bancorp , Provident Financial Services Inc. 84 6, OceanFirst Financial Corp. 62 4, Lakeland Bancorp Inc. 53 3, Columbia Bank MHC 45 3, ConnectOne Bancorp Inc. 21 3, Peapack-Gladstone Financial Corp. 19 3, Kearny Financial Corp. 40 2, Oritani Financial Corp. 27 2, Top 10 New Jersey Banks , Total NJ Banks In Market 1,125 87, Source: SNL Financial data as of June Pro forma for LBAI acquisition of HRMB 6

7 Deposit Market Share LBAI % of LBAI Market Total Market Median County Branches Deposits ($mm) Deposits Share Deposits ($mm) 2017 HHI 12 $ % 3.5% $23,220 $105, % 6.0% 13,084 63, % 1.4% 50,147 88,821 Ocean % 1.8% 15,083 67, % 0.8% 22,931 58,124 Somerset % 0.9% 12, , % 0.2% 24,916 72,505 Subtotal 39 2, % % 31.3% 2,932 88,343 Total 53 $3, % As of 2016, and Somerset Counties have the 8 th and 9 th highest household income of all counties in the U.S. Source: SNL Financial data as of June Pro forma for LBAI acquisition of HRMB 7

8 Branch Optimization Consistent with its strategy, Lakeland has efficiently re-invested resources in target markets. Lakeland s network has expanded by only 6 branches since 2011, despite acquiring whole banks with 17 total branches during that time. Deposits Per Branch ($ in millions) LBAI CAGR: +9.7% * Peer CAGR: +6.6% Branch Count: * Peer Data Source: SNL Financial Peers include: BCBP, BDGE, BMTC, BWFG, CNOB, CSBK, DCOM, FFIC, FLIC, KRNY, NFBK, OCFC, ORIT, PFS, PGC, SNBC, and UVSP Peer growth rate as of Q

9 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

10 Experienced Management Team # of Years Name Position at LBAI Previous Experience Thomas J. Shara President & CEO 8 TD Banknorth; Hudson United Joseph F. Hurley EVP & CFO 17 Hudson United; Westpac; HSBC Robert A. Vandenbergh Sr. EVP & COO 17 Midlantic Bank; The National Bank of County Stewart E. McClure, Jr. Regional President 3 Somerset Hills Bank Ronald E. Schwarz Sr. EVP & Chief Revenue Officer 7 Sovereign; Independence Community Bank James M. Nigro EVP & Chief Risk Officer 1 The Provident Bank; Somerset Hills Bank; Summit Bank Timothy J. Matteson, Esq. EVP, General Counsel 8 Hudson United; IDB Bank; TD Banknorth; Summit Bank Thomas F. Splaine First Sr. VP & Chief Accounting Officer 1 Investors Bank; KPMG 10

11 Balanced Loan Portfolio Loan Portfolio Growth Loan Composition (%) ($ in millions) ($ in millions) CAGR excluding acquisitions: 9.0% CAGR: 16.4% CRE / Capital 399%* * Represents Lakeland Bank s CRE to total risk based capital ratio, as of September 30, 2016, per regulatory guidelines 11

12 Commercial Loan Growth ($ in millions) Commercial Portfolio Growth Commercial Loan Composition (%) Source: SNL Financial and Company Documents; 12

13 Strong Asset Quality Conservative Credit Culture Nonaccruals / Loans (%) NPAs * / Loans + OREO (%) NCOs / Avg. Loans (%) Reserves / Nonaccrual Loans (%) Source: SNL Financial * NPAs include Troubled Debt Restructurings 13

14 Core Deposit Focus ($ in millions) Deposit Growth ($ in millions) Deposit Composition CAGR excluding acquisitions: 6.9% CAGR: 14.5% Demand Deposit Growth ($ in millions) CAGR excluding acquisitions: 11.2% CAGR: 18.2% Cost of Total Deposits: 0.29% Source: SNL Financial and Company Documents Note: Jumbo time deposits defined as time deposits above $100k 14

15 Investment Securities Portfolio Securities Composition $622 million, or 12.7% of assets Primarily used for liquidity purposes Short term agencies, MBS, and municipals Average Yield: 1.75% Weighted Average Life: 4.9 years Effective Duration: 3.6 years 15

16 Franchise Growth Consistent and Reliable Growth ($ in millions) Total Assets Tangible Book Value Per Share Core Earnings Per Share CAGR: 14.8% CAGR: 7.2% CAGR: 9.2% Source: SNL Financial Note: Core Income excludes non-recurring items, gains/losses on sale of securities, and merger related expenses 16

17 Consistent Profitability Core Return on Assets (1) (%) Core Return on Equity (1) (%) Net Interest Margin (%) Efficiency Ratio (2) (%) (1) Core Income excludes gains/losses on sale of securities, gain on debt extinguishment, debt prepayment fees, and merger related expenses (2) Source : SNL Financial 17

18 Third Quarter Highlights Q3 Q3 ($mm except per share) FY 2014 FY Balance Sheet Total Assets $3,538 $3,870 $3,743 $4,904 Total Loans 2,654 2,965 2,854 3,795 Total Deposits 2,791 2,996 2,920 3,942 Consolidated Capital (%) TCE / TA 7.81 % 7.69 % 7.88 % 7.53 % Tier 1 Risk Based Ratio Risk-Based Capital Ratio Asset Quality (%) NPAs/ Loans + OREO 1.22 % 1.14 % 1.20 % 0.89 % NCOs/ Avg Loans (0.07) 0.11 Reserves/ Gross Loans Profitability Core Income $31.1 $33.8 $8.3 $12.4 Core ROAA (1) 0.92 % 0.93 % 0.90 % 1.03 % Core ROAE (1) Noninterest Inc./ Operating Rev Net Interest Margin Diluted EPS $0.82 $0.85 $0.20 $0.25 Core EPS Core Income of $12.4M up 49% from $8.3M in 3Q 2015 Core EPS of $0.28 up 27% from 3Q 2015 Efficiency ratio dropped to 53.4% (lowest in 8 years) Total loans increased $81 million (2%) linked quarter, excluding Harmony acquisition Total deposits increased $126 million (4%) linked quarter, excluding Harmony acquisition NIM at 3.45% down 2 bp from 2Q 2016 Harmony acquisition closed July 1, 2016 Issued $75 million of 10 year fixed-to-floating rate subordinated notes at 5.125% on September 30, 2016 (1) Core Income excludes gains/losses on sale of securities, gain on debt extinguishment, debt prepayment fees, and merger related expenses 18

19 Holding Company Capital Ratios Capital Ratios as of September 30,

20 Dividend History Cash Dividends Per Share $0.22 $0.24 CAGR: 11.5% $0.27 $0.29 $0.33 $0.37 Stock Dividends 5.0% 5.0% 5.0% 2011Y 2012Y 2013Y 2014Y 2015Y 2016Y 20

21 Summary As we approach the 50 th year since Lakeland was founded, we are proud to be characterized as follows: Positive Stock Performance Annual increase in dividends Stock price up $2.41, or 20%, YTD as of November 2, 2016 Above Peer-Level Performance Metrics Profitability metrics: ROA, ROE, NIM, and efficiency exceed peer averages Diligent attention to capital management; mindful of all constituencies Growing net income and EPS Falling efficiency ratio Conservative Culture and Operating Philosophy Relationship-based community bank Consistent and sustainable growth over time Track record of successful acquisitions Conduct business with transparency, honesty and integrity Robust risk management infrastructure Conservatively underwritten loan and lease portfolio Dedicated and Experienced Management Team and Board Extensive in-market experience with deep community ties Expanded depth of Management Team with larger bank experience Premier Deposit Franchise Singular focus on high quality core deposits 24% of deposits in DDA 21

22 Awards Lakeland is proud to have been recognized by Forbes as one of America s 50 Most Trustworthy Financial Companies in both 2014 and