Park National Corporation · AMEX:PRK
Park National — Piper Sandler East Coast Financial Services Conference (November 2020)
39 slides from Park National's conference presentation, Nov 9, 2020
Slide 1: Piper Sandler East Coast Financial Services Conference
Piper Sandler East Coast Financial Services Conference PARK NATIONAL CORPORATION: Where you mean more
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. • $9.2 billion of total assets and $6.3 billion of assets under management(1) as of September 30, 2020. • Park common shar
Slide 6: 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 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 22 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: 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 October 15th, 74 lobbies (of 94 locations) a
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: Financial Summary
Financial Summary PARK NATIONAL CORPORATION
Slide 16: 2020 Third Quarter Highlights
2020 Third Quarter Highlights Park Performance Summary (1) • Park’s Consolidated Capital Ratios as September 30, 2020: Park issued $175 million of 4.50% Fixed-to-Floating (1) – Tangible Common Equity to Tangible Assets of 9.34% Subordinated Notes callable – Leverage Ratio of 9.05% 2025 – Total Risk-
Slide 17: Steady Balance Sheet Growth
Steady Balance Sheet Growth Total Assets Total Loans (Dollars in millions) (Dollars in millions) $9,240 $8,558 $7,804 $7,468 $7,538 $7,279 $6,501 $5,692 $5,272 $5,372 2016Y 2017Y 2018Y 2019Y 2020Q3 2016Y 2017Y 2018Y 2019Y 2020Q3 Total Deposits Total Shareholders’ Equity (Dollars in millions) (Dollar
Slide 18: 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 16.1% PPNR PPNR/Avg. Assets 16.00% 13.4% 2.00% $200.0 $100.0 1.89% 12.9% $110.4 13.3% 12.3% 1.90% 1.83% $180.0 1.80% $160.0 12.00% $102.7 $
Slide 19: 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 deposit costs. 3.86% 3.90% 3.93% 3.84% 3.85% $84.5 $81.9 $77.8 $77.7 $77.0 2019Q3 2019Q4 2020Q1 2020Q
Slide 20: Diverse & Significant Fee Income
Diverse & Significant Fee Income Overview Fee Income / Operating Revenue (Dollars in millions) • Robust levels of fee income provide a hedge against a Pre-Provision Net Interest Income very challenging interest rate environment. Fee Income Fee Income / Op. Rev. • The business lines responsible for g
Slide 21: Disciplined Approach to Managing Operating Expenses
Disciplined Approach to Managing Operating Expenses Efficiency Ratio & Non-interest Expense Overview (Dollars in millions) Non-interest Expense Efficiency Ratio • Disciplined cost management is a key element 66.4% of Park’s financial success. 63.0% 60.6% 61.7% 60.3% • The efficiency ratio has consis
Slide 22: High Quality Capital Structure
High Quality Capital Structure 98% of Park’s Tier 1 Capital is Common Equity Regulatory Capital as of September 30, 2020 (Dollars in millions) Common Equity Tier 1 Common Equity Tier 1 $831.4 Tier 1 Capital $846.4 million Trust Preferred Receives full Tier 1 Capital treatment Trust Preferred $15.0 S
Slide 23: Robust Capital Ratios
Robust Capital Ratios Tier 1 Leverage Ratio Common Equity Tier 1 Ratio 16.0% 12.0% 9.6% 10.0% 9.6% 14.0% 12.6% 12.9% 13.0% 10.0% 9.4% 9.1% 11.6% 11.4% 12.0% 8.0% 10.0% 8.0% 6.0% 7.0% 6.0% 4.0% 4.0% 4.0% 2.0% 2.0% – – 2016Q4 2017Q4 2018Q4 2019Q4 2020 Q3 2016Q4 2017Q4 2018Q4 2019Q4 2020 Q3 Tier 1 Risk
Slide 24: High-Quality and Diversified Loan Portfolio
High-Quality and Diversified Loan Portfolio Leases Commercial, • Park has a well-secured loan portfolio with geographic 0% Financial, and asset class diversity. and Consumer Agricultural 23% 24% • Out-of-market portfolio is limited to specialty lending, which has very conservative underwriting and i
Slide 25: COVID-19 Loan Modifications
COVID-19 Loan Modifications As of September 30, 2020 Park had modified 9.5% of total loans (Dollars in thousands) Percent of September 30, 2020 Percent September 30, 2020 Total Loans as of Balance of Loan Type Total Balance September 30, 2020 Modified Modified Non-bank consumer finance companies $26
Slide 26: Commercial Loan Modifications in Response to COVID-19 Crisis
Commercial Loan Modifications in Response to COVID-19 Crisis Commercial Loans (Dollars in thousands) Percent of September 30, Percent of Total Balance Percent of Loan Modified Balance Modified Loans 2020 Balance Loans Modified Type Modified Classified Classified Non-Bank Consumer Finance $266,187 3.
Slide 27: Loans Still in Deferral
Loans Still in Deferral • Park considers a loan out of deferral when the first regular payment is due and that payment is subsequently made. (Dollars in thousands) Percent in September 30, 2020 Percent in Deferral as Deferral as a Balance-Out of September 30, 2020 a Percent of Total Percent of Total
Slide 28: Overview of PPP Involvement
Overview of PPP Involvement • Originated 4,439 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. • Will generate fee income of $20.2 million. Recogniz
Slide 29: 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 Park’s overal
Slide 30: Loan Approval Process & Loan Review
Loan Approval Process & Loan Review Loan Approval Process • While Park has a legal lending limit of approximately $128 million, its internal hold limit is $42 million. • Park’s highest individual lending authority is $3 million. • Loans which are greater than an individual’s lending authority go to
Slide 31: Healthy Allowance Levels Safeguard Shareholders' Equity
Healthy Allowance Levels Safeguard Shareholders’ Equity Allowance / Loans Overview (Dollars in millions) • Allowance for loan losses was 1.20% of 1.20% total loans as of September 30, 2020, 0.87% 0.96% 1.28% of originated loans and 1.36% of 0.93% 0.90% originated loans excluding PPP loans. $6,501 $7
Slide 32: Stable Asset Quality
Stable Asset Quality Overview NPAs / Total Assets (1) • Conservative underwriting and strong 1.36% 1.39% 1.21% asset quality allow Park to enter the 1.14% economic downturn well-prepared. 0.97% • Of the $123.1 million in nonaccrual loans, $101.6 million, or about 82.5%, were current with regard to p
Slide 33: 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 • Non-interest bearing deposits represented 35% of total 12% deposits. Non-inter
Slide 34: 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 • 100% are rated investment grade Subdivisions 29% • All mortgage-backed securities and collateralized mortgage obligations are U.S. government agency issued,
Slide 35: 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 had the following sources of liquidity at the holdin
Slide 36: Appendix
Appendix PARK NATIONAL CORPORATION
Slide 37: Reconciliation of Non-GAAP Financial Metrics
Reconciliation of Non-GAAP Financial Metrics 37 PARK NATIONAL CORPORATION
Slide 38: Reconciliation of Non-GAAP Financial Metrics (continued)
Reconciliation of Non-GAAP Financial Metrics (continued) 38 PARK NATIONAL CORPORATION
Slide 39: Where you mean more
PARK NATIONAL CORPORATION: Where you mean more
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