Park National Corporation · AMEX:PRK
Park National — Piper Sandler East Coast Financial Services Conference 2023
35 slides from Park National's conference presentation, Nov 15, 2023
Slide 1: Park National Corporation – Piper Sandler East Coast Financial Services Conference
Park National Corporation P A R K N A T I O N A L C O R P O R A T I O N Piper Sandler East Coast Financial Services Conference November 16, 2023
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains forward-looking statements that are provided to assist in the understanding of anticipated future financial performance. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance
Slide 3: Disclaimer: Non-GAAP Financial Measures
Disclaimer Non-GAAP Financial Measures This presentation contains certain financial information determined by methods other than in accordance with accounting principles generally accepted in the U.S. (“GAAP”). Management believes that the disclosure of these “non-GAAP” financial measures presents a
Slide 4: Overview of Park National Corporation
P A R K N A T I O N A L C O R P O R A T I O N Overview of Park National Corporation
Slide 5: Overview of Park National Corporation
Overview of Park National Corporation P A R K N A T I O N A L C O R P O R A T I O N 5 • Park’s bank subsidiary, The Park National Bank, is headquartered in Newark, Ohio and was founded in 1908. • $10 billion of total assets and $7.5 billion of assets under management(1) at September 30, 2023. • Park
Slide 6: Attractive Geographic Footprint
Attractive Geographic Footprint P A R K N A T I O N A L C O R P O R A T I O N 6 Ohio North Carolina South CarolinaKentucky Region Deposits Trust AUM(1) Full-Time(2) Employees Counties Served Offices Western Ohio $1.73B $1.17B 181 6 24 Northern Ohio $1.94B $1.24B 228 8 24 Metro $904M $1.05B 184 6 10
Slide 7: Senior Management
Senior Management P A R K N A T I O N A L C O R P O R A T I O N 7 David L. Trautman – Chairman of the Board and CEO – Age: 62 (40 years with Park) • Chairman of the Board since May 2019 and CEO since January 2014 of Park and Park National Bank. • President of Park and Park National Bank from January
Slide 8: Senior Management (continued)
Senior Management (continued) P A R K N A T I O N A L C O R P O R A T I O N 8 Brady T. Burt – Chief Financial Officer – Age: 51 (16 years with Park) • Chief Financial Officer of Park and Park National Bank since December 2012. • Chief Accounting Officer of Park and Park National Bank from April 2007
Slide 9: Experienced Management Team
Experienced Management Team • Park National Bank’s management team consists of leaders with deep local market knowledge. • The management team averages 25 years of banking experience. • The average team tenure with Park National Bank is approximately 18 years. P A R K N A T I O N A L C O R P O R A T
Slide 10: Regional bank model and branch consolidation
• Strong history of operating in Park’s regional bank model. • Moved to one brand, Park National Bank, in 2019 while maintaining local market leadership and advisory boards. • To better align its branch network with banking trends, Park National Bank consolidated 23 branch offices (approximately 20%
Slide 11: Park M&A Strategy
Park M&A Strategy Two-prong strategy guidelines: 1. Traditional M&A • Strong franchise, good reputation and asset quality • Competitive market share • Continuity of management and leadership • Traditional community bank structure • Sticky, low-cost core deposits • Disciplined approach to pricing and
Slide 12: Financial Summary
P A R K N A T I O N A L C O R P O R A T I O N Financial Summary
Slide 13: Strategic Portfolio Restructure
Strategic Portfolio Restructure Summary of Transactions • $291.0 million in securities sold with a $7.9 million loss and an earn back period of approximately 1.6 years • Net Interest Margin expected to improve by 15bps over a full year through a combination of deleverage and new loan funding • Impro
Slide 14: 2023 Third Quarter Highlights
2023 Third Quarter Highlights P A R K N A T I O N A L C O R P O R A T I O N 14 • Park’s Consolidated Capital Ratios at September 30, 2023: – Total Shareholders’ Equity to Total Assets of 10.85% – Tangible Common Equity to Tangible Assets of 9.36%(1) – Leverage Ratio of 10.56% – Total Risk-Based Capi
Slide 15: Steady Balance Sheet Growth
Steady Balance Sheet Growth P A R K N A T I O N A L C O R P O R A T I O N 15 Total Assets Total Loans (excluding PPP) (1) Total Deposits (2) Total Shareholders’ Equity (Dollars in millions) (Dollars in millions) (Dollars in millions) (Dollars in millions) (1) Excludes PPP loans of $2MM, $4MM, $74MM,
Slide 16: Strong Earnings
Efficiency Ratio & Non-Int. Exp. / Avg. Assets(1) Strong Earnings P A R K N A T I O N A L C O R P O R A T I O N 16 (Dollars in millions) Net Income, ROAA & ROATE(1) Non-Interest Income / Operating Revenue Pre-Tax, Pre-Provision Net Income / Avg. Assets(1) (1) See Reconciliation of Non-GAAP Financial
Slide 17: Stable Net Interest Margin
Stable Net Interest Margin P A R K N A T I O N A L C O R P O R A T I O N 17 Overview • Net interest margin has held steady due to stable asset yields and strong core deposits. Net Interest Income and Net Interest Margin(1) Asset Yields, Liability Costs, and Net Interest Margin(1) (Dollars in million
Slide 18: Diverse Fee Income
Diverse Fee Income P A R K N A T I O N A L C O R P O R A T I O N 18 Overview • Robust levels of fee income provide a hedge against a challenging interest rate environment. • The business lines responsible for generating the majority of fee income are trust and wealth management, mortgage banking, an
Slide 19: Disciplined Approach to Managing Operating Expenses
Disciplined Approach to Managing Operating Expenses P A R K N A T I O N A L C O R P O R A T I O N 19 Efficiency Ratio & Non-interest Expense Non-interest Expense Composition (YTD) Note: Financial data as of September 30, 2023 unless otherwise noted (Dollars in millions) $264.0 $286.6 $283.5 $298.0 $
Slide 20: High Quality Capital Structure
High Quality Capital Structure 99% of Park’s Tier 1 Capital is Common Equity P A R K N A T I O N A L C O R P O R A T I O N 20 Common Equity Tier 1 Trust Preferred Receives full Tier 1 Capital treatment Subordinated Notes and Allowance for Credit Losses Tier 1 Capital $1,050.3 million Tier 2 Capital
Slide 21: Robust Capital Ratios
Robust Capital Ratios P A R K N A T I O N A L C O R P O R A T I O N 21 (1) Adequately capitalized thresholds plus capital conservation buffer of 2.5% Note: All ratios presented are as of the end of the period. Note: Financial data as of September 30, 2023 unless otherwise noted; capital ratios were
Slide 22: High-Quality and Diversified Loan Portfolio
High-Quality and Diversified Loan Portfolio P A R K N A T I O N A L C O R P O R A T I O N 22 • Park has a well-secured loan portfolio with geographic and asset class diversity. • Out-of-market portfolio is limited to specialty lending, which has conservative underwriting and is subject to intensive
Slide 23: Installment Lending Portfolio
Installment Lending Portfolio P A R K N A T I O N A L C O R P O R A T I O N 23 Note: Financial data as of September 30, 2023 • Park National Bank’s installment portfolio includes $1.8B of indirect loans and $197MM of direct loans. • Balances have steadily increased since first exceeding $1B in 2017.
Slide 24: Installment Lending Portfolio (continued)
Installment Lending Portfolio (continued) P A R K N A T I O N A L C O R P O R A T I O N 24 Note: Financial data as of September 30, 2023. Pre-2019 2019 2020 2021 2022 2023 Total All Other 7,195,218 1,347,796 3,280,217 4,732,785 5,615,874 8,415,700 30,587,590 Watercraft 11,302,422 6,359,659 17,009,68
Slide 25: Specialty Lending
Specialty Lending • Park has successfully operated in the specialty finance area, specifically focusing on turbo-prop and light jets and structured finance lending to non-bank consumer finance companies, for many years. Net charge-offs in specialty lending have not materially impacted Park’s overall
Slide 26: Healthy Allowance Levels Safeguard Shareholders' Equity
Healthy Allowance Levels Safeguard Shareholders’ Equity P A R K N A T I O N A L C O R P O R A T I O N 26 Allowance / Total LoansOverview • Allowance for credit losses was 1.15% of total loans as of September 30, 2023. • Strong reserve levels reflect expectation of deteriorating economic conditions a
Slide 27: Stable Asset Quality
Stable Asset Quality P A R K N A T I O N A L C O R P O R A T I O N 27 Net Charge-Offs / Average Loans Classified Loans(2) / Tier 1 Capital + ACL Overview • Conservative underwriting and strong asset quality. • Of the $55.0 million in nonaccrual loans, $33.5 million, or about 61%, were current with c
Slide 28: Stable, Low Cost Core Deposits
Stable, Low Cost Core Deposits P A R K N A T I O N A L C O R P O R A T I O N 28 • With minimal reliance on costly time deposits and a relatively high level of non-interest bearing deposits, Park has cultivated a loyal and low-cost source of funds. • Non-interest bearing deposits represented 33% of t
Slide 29: High Quality Securities Portfolio
High Quality Securities Portfolio P A R K N A T I O N A L C O R P O R A T I O N 29 • Park’s investment securities portfolio is highly rated(1): • 74% are AAA rated • 25% are AA rated • 100% are rated investment grade • 33% of the portfolio is floating rate • All mortgage-backed securities and collat
Slide 30: Historical Borrowing Position
Historical Borrowing Position 30 *Includes FHLB advances, Brokered Deposits and Brokered Repurchase Agreements 0% 3% 6% 9% 12% 15% 18% 21% 24% - 200,000,000 400,000,000 600,000,000 800,000,000 1,000,000,000 1,200,000,000 1,400,000,000 1,600,000,000 Brokered Repurchase Agreements Brokered Deposits FH
Slide 31: Uninsured Deposits Trend
P A R K N A T I O N A L B A N K 31 Uninsured Deposits Trend 77.2% 78.8% 81.4% 83.0% 82.8% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Insured Collateralized Exposed
Slide 32: Appendix
P A R K N A T I O N A L C O R P O R A T I O N Appendix
Slide 33: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures P A R K N A T I O N A L C O R P O R A T I O N 33 Reconciliation of Average Shareholders' Equity to Average Tangible Equity For the Twelve Months Ended For the Three Months Ended For the Nine Months Ended 12/31/2019 12/31/2020 12/31/2021 12/31/2022 9/30/2
Slide 34: Reconciliation of Non-GAAP Financial Measures (continued)
Reconciliation of Non-GAAP Financial Measures (continued) P A R K N A T I O N A L C O R P O R A T I O N 34 Reconciliation of Fully Taxable Equivalent Net Interest Income to Net Interest Income For the Twelve Months Ended For the Three Months Ended For the Nine Months Ended 12/31/2019 12/31/2020 12/3
Slide 35: Park National Corporation – Piper Sandler Conference
Park National Corporation P A R K N A T I O N A L C O R P O R A T I O N Piper Sandler East Coast Financial Services Conference November 16, 2023
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