Park National Corporation · AMEX:PRK
Park National — Investor Presentation (August 2020)
43 slides from Park National's investor presentation, Aug 12, 2020
Slide 1: Park National Corporation Investor Presentation
August 2020 PARK NATIONAL CORPORATION: Where you mean more Investor Presentation
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 Metrics
Disclaimer Non-GAAP Financial Metrics This presentation contains certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States (“GAAP”). Management believes that the disclosure of these “non-GAAP” financial measures pr
Slide 4: Overview of Park National Corporation
Overview of Park National Corporation PARK NATIONAL CORPORATION
Slide 5: Company Overview
Overview of Park National Corporation Company Overview • Park’s bank subsidiary, Park National Bank, is headquartered in Newark, Ohio and was founded over 110 years ago in 1908. • $9.7 billion of total assets and $6.0 billion of assets under management(1) as of June 30, 2020. • Park common shares ar
Slide 6: Investment Highlights
Investment Highlights • Founded in 1908, Park National Bank has been serving its communities for over a century resulting in leading deposit market share in its core markets and low cost deposit funding. Exceptional Franchise • Proven, tenured management team with decades of experience. • Presence i
Slide 7: Senior Management
Senior Management David L. Trautman – Chairman of the Board and CEO – Age: 59 (37 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 2005 through April 2019. • President of First-Knox Nati
Slide 8: Senior Management (continued)
Senior Management (continued) Matthew R. Miller – President – Age: 42 (11 years with Park) • President of Park and Park National Bank since May 2019. • Executive Vice President of Park and Park National Bank from April 2017 through April 2019. • Chief Accounting Officer of Park and Park National Ban
Slide 9: Experienced Management Team
Experienced Management Team • Park National Bank’s management team consists of leaders with deep local market knowledge. • Senior leadership team averages 27 years of banking experience. • Average senior leadership tenure with Park National Bank is approximately 21 years. Years with Years in Name Po
Slide 10: The People of Park National Bank
The People of Park National Bank Our organization is a wonderful blend of promising rookies, top draft picks, and seasoned veterans. Each of us has a different story for why we came here and why we remain. A couple common threads knit us together: we love to serve, and we value an environment where
Slide 11: Community Banking Divisions
Community Banking Divisions • Strong history of operating in Park’s affiliate bank model. • Decided in 2019 to move to one brand (Park National Bank) while maintaining local market leadership and advisory boards. • To better align its branch network with banking trends, Park National Bank consolidat
Slide 12: Attractive Geographic Footprint
Attractive Geographic Footprint Ohio North Carolina Overview • Distinct operating regions provide for attractive mix of customers and demographic opportunities. • Park has entered several new geographic markets in recent years via acquisitions and de novo branch openings. • These new markets have af
Slide 13: 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 14: Recent M&A Highlights
Recent M&A Highlights • The acquisition of CAB Financial Corporation, the • The acquisition of NewDominion Bank ($329 million of parent of Carolina Alliance Bank ($761 million of assets) assets) closed on July 1, 2018. closed on April 1, 2019. • Demographically accretive, given attractive Charlotte
Slide 15: Pandemic Response
Pandemic Response • Park began work from home the week of March 16th and went to drive-thru only the week of March 23rd. Park successfully operated 90+ branches in this fashion and served customers through digital channels and by appointment only. • As of August 3rd, 69 lobbies (of 115 locations) ac
Slide 16: Financial Summary
Financial Summary PARK NATIONAL CORPORATION
Slide 17: 2020 Second Quarter Highlights
2020 Second Quarter Highlights Park Performance Summary (1) • Park’s Consolidated Capital Ratios as June 30, 2020: – Tangible Common Equity to Tangible Assets of 8.72%(1) – Leverage Ratio of 9.02% Worked closely with all – Total Risk-Based Capital Ratio of 12.54% stakeholders to proactively • Tangib
Slide 18: Steady Balance Sheet Growth
Steady Balance Sheet Growth Total Assets Total Loans (Dollars in millions) (Dollars in millions) $9,713 $8,558 $7,538 $7,804 $7,468 $7,204 $6,501 $5,692 $5,272 $5,372 2016Y 2017Y 2018Y 2019Y 2020Q2 2016Y 2017Y 2018Y 2019Y 2020Q2 Total Deposits Total Shareholders’ Equity (Dollars in millions) (Dollar
Slide 19: Strong Earnings Power
Strong Earnings Power Net Income, ROAA & ROATCE(1) Pre-Provision Net Revenue / Avg. Assets(1) (Dollars in millions) (Dollars in millions) Net Income ROAA ROATCE PPNR PPNR/Avg. Assets 16.1% 1.90% 1.83% $200.0 16.00% 13.4% 1.78% $180.0 1.80% 12.9% $110.4 12.7% $100.0 12.3% 1.64% $160.0 1.70% 1.59% 12.
Slide 20: Durable Net Interest Margin
Durable Net Interest Margin Pre-Provision Net Interest Income and Net Interest Margin(1) Overview (Dollars in millions) • Net interest margin has held steady due to stable asset yields and declining 3.92% 3.86% 3.90% 3.93% 3.84% deposit costs. $81.9 $76.6 $77.8 $77.7 $77.0 2019Q2 2019Q3 2019Q4 2020Q
Slide 21: Diverse & Significant Fee Income
Diverse & Significant Fee Income Overview Fee Income / Operating Revenue • Robust levels of fee income provide a hedge against (Dollars in millions) Pre-Provision Net Interest Income a very challenging interest rate environment. Fee Income Fee Income / Op. Rev. 27.5% • The business lines responsible
Slide 22: Disciplined Approach to Managing Operating Expenses
Disciplined Approach to Managing Operating Expenses Efficiency Ratio & Non-interest Expense Overview (Dollars in millions) • Disciplined cost management is a key element Non-interest Expense Efficiency Ratio 66.4% of Park’s financial success. 63.0% 60.6% 61.7% 61.7% • The efficiency ratio has consis
Slide 23: High Quality Capital Structure
High Quality Capital Structure 98% of Park’s Tier 1 Capital is Common Equity Regulatory Capital as of June 30, 2020 (Dollars in millions) Common Equity Tier 1 Common Equity Tier 1 Tier 1 Capital $816.0 $831.0 million Trust Preferred Receives full Tier 1 Capital treatment Trust Preferred $15.0 Tier 2
Slide 24: Robust Capital Ratios
Robust Capital Ratios Between $145M and $460M excess amount over regulatory minimums(1) Tier 1 Leverage Ratio Common Equity Tier 1 Ratio 12.0% 16.0% 10.0% 9.6% 9.6% 14.0% 12.9% 13.0% 10.0% 9.4% 12.6% 9.0% 11.6% 12.0% 11.3% 8.0% 10.0% 6.0% 8.0% 7.0% 6.0% 4.0% 4.0% 4.0% 2.0% 2.0% – – 2016Q4 2017Q4 201
Slide 25: High-Quality and Diversified Loan Portfolio
High-Quality and Diversified Loan Portfolio Leases < 1% • Park has a well-secured loan portfolio with geographic and asset class diversity. Commercial, • Out-of-market portfolio is limited to specialty lending, Consumer Financial, which has very conservative underwriting and is 21% and Agricultural
Slide 26: COVID-19 Loan Modifications
COVID-19 Loan Modifications As of June 30, 2020 Park had modified 10.4% of total loans (Dollars in thousands) Percent of June 30, 2020 Percent June 30, 2020 Total Loans as of Balance of Loan Type Total Balance June 30, 2020 Modified Modified Non-bank consumer finance companies $254,356 3.5% $0 0.0%
Slide 27: Commercial Loan Modifications in Response to COVID-19 Crisis
Commercial Loan Modifications in Response to COVID-19 Crisis (Dollars in thousands) June 30, 2020 Percent of Total Balance Percent of Loan Balance Percent of Loan Balance Loans Modified Type Modified Classified Type Classified Non-Bank Consumer Finance Companies $254,356 3.5% $0 0.0 % $0 0.0 % Hotel
Slide 28: Additional Loan Modification Data
Additional Loan Modification Data (Dollars in thousands) June 30, 2020 Percent of Total Balance Percent of Loan Balance Loans M odified Type Modified Hotels & Accomodations Hotels (except Casino Hotels) and Motels $200,473 2.8% $156,945 78.3% RV (Recreational Vehicle) Parks and Campgrounds 6,647 0.1
Slide 29: Overview of PPP Involvement
Overview of PPP Involvement • Originated 4,438 loans with a total loan amount of $543.1 million, predominantly to Park customers. The average loan amount was $122,000. • Originated 21 loans over $2 million with a total loan amount of $68 million. • Received fee income of $20.2 million. (Dollars in t
Slide 30: Top Loan Relationships by Industry
Top 25 Loan Relationships by Industry Top 25 Relationships: (Dollars in thousands) Total Total Balance as a % $562 million or Industry NAICS Code Description Commitment Balance of Total Loans 7.8% of loans Sales Financing $222,682 $130,293 1.81% • Reflects aggregate exposure to Hotels (except Casino
Slide 31: Specialty Lending
Specialty Lending • Park has successfully operated in the specialty finance area, specifically focusing on turbo-prop and light jets and structured warehouse lending to non-bank consumer finance companies for many years. Net charge-offs in specialty lending have not materially impacted PRK’s overall
Slide 32: Loan Approval Process & Loan Review
Loan Approval Process & Loan Review Loan Approval Process • While Park has a legal lending limit of approximately $125 million, its internal hold limit is $40 million. • Park’s highest individual lending authority is $3 million. • Loans which are greater than an individual’s lending authority go to
Slide 33: Healthy Allowance Levels Safeguard Shareholders' Equity
Healthy Allowance Levels Safeguard Shareholders’ Equity Allowance / Loans Overview (Dollars in millions) • Allowance for loan losses was 1.02% of 0.87% 1.02% total loans as of June 30, 2020, 1.09% of 0.96% 0.93% 0.90% originated loans and 1.17% of originated $6,501 $7,204 loans excluding PPP loans.
Slide 34: Stable Asset Quality
Stable Asset Quality Overview NPAs / Total Assets (1) • Conservative underwriting and strong 1.36% 1.21% asset quality allow Park to enter the 1.14% 1.08% economic downturn well-prepared. 0.97% • Of the $100.4 million in nonaccrual loans, $77.6 million, or about 77%, were current with regard to paym
Slide 35: Stable, Low Cost Core Deposits
Stable, Low Cost Core Deposits • With minimal reliance on costly time deposits and a relatively high level of non-interest bearing deposits, Park has cultivated a very attractive, loyal and low-cost source of funds. CDs 12% • Non-interest bearing deposits represented 31% of total deposits. Non-inter
Slide 36: High Quality Securities Portfolio
High Quality Securities Portfolio • Park’s securities portfolio is highly rated(1): • 90% are AAA rated • 10% are AA rated States & Political Subdivisions • 100% are rated investment grade 28% • All mortgage-backed securities and collateralized mortgage obligations are U.S. government agency issued,
Slide 37: High Levels of Liquidity
High Levels of Liquidity • Park has access to a strong “war chest” of liquidity with multiple sources of funds, including unpledged investment securities, unused available FHLB borrowings capacity, and overnight federal funds sold balances. • Park has the following sources of liquidity at the holdin
Slide 38: Stable Interest Rate Sensitivity
Stable Interest Rate Sensitivity • Management reviews interest rate sensitivity on a monthly basis by modeling the consolidated financial statements under various interest rate scenarios. The primary reason for these efforts is to guard Park from adverse impacts of unforeseen changes in interest rat
Slide 39: Appendix
Appendix PARK NATIONAL CORPORATION
Slide 40: Board of Directors
Board of Directors Management’s interests are aligned with shareholders as directors and executive officers owned approximately 2.40% of Park’s common shares outstanding as of February 28, 2020. The following table shows the Board’s ownership as of the most recent Form 4 filings. Common Years as Sha
Slide 41: Reconciliation of Non-GAAP Financial Metrics
Reconciliation of Non-GAAP Financial Metrics Reconciliation of Average Shareholders' Equity to Average Tangible Common Equity For the Six For the Twelve Months Ended For the Three Months Ended Months Ended 12/31/2016 12/31/2017 12/31/2018 12/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020 6/30/2020
Slide 42: Reconciliation of Non-GAAP Financial Metrics (continued)
Reconciliation of Non-GAAP Financial Metrics (continued) Reconciliation of Fully Taxable Equivalent Net Interest Income to Net Interest Income For the Six For the Twelve Months Ended For the Three Months Ended Months Ended 12/31/2016 12/31/2017 12/31/2018 12/31/2019 6/30/2019 9/30/2019 12/31/2019 3/
Slide 43: Where you mean more
PARK NATIONAL CORPORATION: Where you mean more