Park National Corporation · AMEX:PRK
Park National — KBW Community Banking Investor Conference (July 2012)
36 slides from Park National's conference presentation, Jul 31, 2012
Slide 1: KBW Community Banking Investor Conference
1 July 31, 2012 KBW Community Banking Investor Conference
Slide 2: Forward-looking Statements
Forward - looking Statements This presentation presents management's discussion and analysis of the financial condition and results of operations for Park Na tional Corporation and its subsidiaries ("Park" or the "Corporation"). This discussion should be read in conjunction with the consol ida ted f
Slide 3: Park National Corporation Profile
3 3 Park National Corporation Profile (as of June 30, 2012) • 11 Community Banks • 2 Specialty Finance Companies • One non - bank workout subsidiary • 29 Ohio & 1 Kentucky counties • 124 bank branches • 7 specialty finance offices • 1,788 FTEs
Slide 4: Park Executive Management
Park Executive Management • C. Daniel DeLawder – Chairman and Chief Executive Officer – Age: 62 Chairman, Chief Executive Officer (1999) and Board Member of The Park National Bank and Park National Corporation (Corporation or Park) headquartered in Newark, Ohio. He served previously as President of
Slide 5: Park Executive Management (continued)
Park Executive Management (continued) • John W. Kozak – Chief Financial Officer – Age: 57 Chief Financial Officer of Park (1998); Senior Vice President since January 1999, a Member of the Board of Directors since December 2006, and Vice President from 1991 to 1998, of The Park National Bank; Chief F
Slide 6: Experienced Leadership Team
6 Experienced Leadership Team Name Position Age Years with PRK Years In Industry C. Daniel DeLawder Chairman & CEO 62 41 41 David L. Trautman President 51 29 29 John W. Kozak Chief Financial Officer 57 32 32 • Senior leadership consists of executives with proven local market experience • Leadership
Slide 7: Leadership Team – continued
7 Leadership Team – continued Name Position Age Years with PRK Years In Industry Brady T. Burt VP – Chief Accounting Officer 40 5 11 Thomas J. Button SVP – Chief Credit Officer 52 15 26 Thomas M. Cummiskey SVP – Trust 42 12 14 Lynn B. Fawcett SVP – Operations 53 21 21 Robert N. Kent President – Scop
Slide 8: Affiliate Leadership
8 Affiliate Leadership Name Position Age Years with PRK/Affiliate Years In Industry John A. Brown President – Richland Bank 43 21 21 Brett A. Baumeister President – Unity National Bank 46 8 22 William C. Fralick President – Security National Bank 57 36 36 David J. Gooch President – Park National Ban
Slide 9: Vision Bancshares, Inc. Acquisition
Vision Bancshares, Inc. Acquisition • On March 9, 2007, Park acquired all the stock and outstanding stock options of Vision Bancshares, Inc. for $87.8 million in cash and 792,937 shares of Park common stock valued at $83.3 million or $105.00 per share. • Following our acquisition, net losses at Visi
Slide 10: Regulatory Issues Pertaining to Vision Bank
Regulatory Issues Pertaining to Vision Bank 10 • On June 30, 2011 , Park made the first announcement regarding regulatory concern pertaining to the allowance for loan loss calculation at Vision Bank. Specifically, the Florida Office of Financial Regulation (the “OFR”) and the FDIC took exception to
Slide 11: Sale of Vision Bank
Sale of Vision Bank 11 • November 16, 2011 – Park entered into a Purchase and Assumption Agreement with Home BancShares and its wholly - owned subsidiary Centennial Bank to sell substantially all of the performing loans, operating assets and liabilities associated with Vision Bank for a purchase pri
Slide 12: Gain on sale of Vision Bank – First Quarter 2012
Gain on sale of Vision Bank – First Quarter 2012 12 Premium paid $ 27,913 One - time gains 2 98 Loss on sale of fixed assets (2,434) Employment and severance agreements (1,610) Other one - time charges, including estimates (2,000 ) Pre - tax gain $ 22,167 Federal income taxes 7,758 Net gain on sale
Slide 13: Lessons Learned from Vision Bank
Lessons Learned from Vision Bank 1. Bank Concentration Risks 2. Market Concentration Risks 3. Unequivocal Agreement 4. Understand Market Culture 5. Worst Case X Multiple 6. Physical Inspection of Collateral 7. Adopt PRK Underwriting 8. Seller’s Business Model 9. Attributes of Seller 10. Scrutinize S
Slide 14: TARP Repayment – Second Quarter 2012
TARP Repayment – Second Quarter 2012 • Park repurchased the $100 million of cumulative preferred shares from the U.S. Treasury on April 25, 2012. Total consideration paid of $101 million included accrued interest and unpaid dividends. The warrant associated with the preferred shares was repurchased
Slide 15: A Successful History of Disciplined Strategic Growth in Ohio
A Successful History of Disciplined Strategic Growth in Ohio (11 acquisitions; 2 De Novos ) 15 1908 1908 ▪ The Park National Bank is established 1985 1985 ▪ Acquisition of Fairfield National Bank 1987 1987 ▪ Park National Corporation holding company is established ▪ Acquisition of Richland Trust Com
Slide 16: ROA and ROE History – PRK and PRK, excluding Vision & SEPH
16 ROA and ROE History – PRK and PRK, excluding Vision & SEPH Results Count 1 Calculated using average common equity for Park National Corporation. 2 Calculated using average common equity for Park National Corporation, excluding Vision Bank and SE Property Holdings, LLC. 3 Adjusted for goodwill imp
Slide 17: The Park National Bank – The bank of choice
17 Bank Division Year joined Park Hdqtr. Co. deposits Total county Deposits Park % of market share Rank in market Park National 1908 $ 1,300,371 $ 2,169,768 59.9% 1 Fairfield National 1985 364,719 1,714,925 21.3% 1 Richland Bank 1987 449,246 1,695,857 26.5% 1 Century National 1990 342,490 1,159,446
Slide 18: Net income by operating segment
18 Net income by operating segment * As of June 30, 2012, SE Property Holdings had $120 million of 5% notes payable to the Parent Company, which is eliminat ed at the Total PRK level. However, the interest income and interest expense on these funds is included in the results for PRK Parent Company a
Slide 19: The Park National Bank Income Statement
19 Source: Company Filings The Park National Bank Income Statement (in thousands) Dec. 31, 2010 Dec. 31, 2011 Q1 2012 Q2 2012 2012 Projection Net interest income $ 237,281 $ 236,282 $ 55,846 $ 56,022 $ 223,982 Provision for loan losses 23,474 30,220 4,672 3,756 16,080 Net interest income after provi
Slide 20: Park National Bank Statement of Condition
Park National Bank Statement of Condition 20 Source: Company Filings (in millions) Dec. 31, 2010 Dec. 31, 2011 June 30, 2012 Annualized % Change From 2011 Investment securities $1,927 $1,604 $1,686 10.28% Loans 4,075 4,172 4,281 5.25% Allowance for loan losses ( 73) ( 55) ( 56) 3.66% Assets held for
Slide 21: Park National Bank Loans by Type
21 Park National Bank Loans by Type Source: Company Filings as of June 30, 2012 • Commercial lending focus on small, closely - held businesses within our markets • Consumer mortgage and home equity portfolios are originated by Park within our footprint and have been consistently underwrit ten for de
Slide 22: SEPH / Vision Bank Income Statement
22 Source: Company Filings SEPH / Vision Bank Income Statement (in thousands) Dec. 31, 2010 Dec. 31, 2011 Q1 2012 Q2 2012 2012 Projection Net interest income $ 27,867 $ 26,104 $ 2,610 $ (1,125) $ (1,195) Provision for loan losses 61,407 31,052 3,416 1,282 7,297 Net interest income after provision $
Slide 23: Nonperforming loans by type
23 Park National Corporation Nonperforming loans by type Source: Company Filings as of June 30, 2012 PNB Guardian SE LLC PRK Amount Percentage Amount Percentage Amount Percentage Amount Percentage Commercial Real Estate Owner Occupied $ 18,161 13.58% $ - 0.00% $ 9,441 12.73% $ 27,602 13.18% Non - Ow
Slide 24: Park National Corporation Nonperforming assets
24 Park National Corporation Nonperforming assets Source : BHC Performance Report and Company Filings (in thousands) June 30, 2012 Dec. 31, 2011 Dec. 31, 2010 Dec. 31, 2009 Non - accrual loans $180,381 $195,106 $289,268 $233,544 Renegotiated loans 27,250 28,607 - 142 Loans past due 90 days or more (
Slide 25: Vision Bank/SE Properties Holdings Nonperforming assets
25 Vision Bank/SE Properties Holdings Nonperforming assets Source : BHC Performance Report and Company Filings (in thousands) June 30, 2012 Dec. 31, 2011 Dec. 31, 2010 Dec. 31, 2009 Non - accrual loans $72,632 $98,993 $171,453 $148,347 Renegotiated loans 1,468 2,265 - - Loans past due 90 days or mor
Slide 26: SE LLC – Charge-Off History
SE LLC – Charge - Off History 26 SE LLC – Retained Vision Bank Loan Portfolio Charge - Offs as a percentage of unpaid principal balance June 30 , 2012 (In thousands) Unpaid Principal Balance Charge - Offs Net Book Balance Charge - Off Percentage Nonperforming loans – retained by SE LLC $ 150,284 $ 7
Slide 27: Nonperforming assets (PNB and Guardian)
27 Source : BHC Performance Report and Company Filings (in thousands) June 30, 2012 Dec. 31, 2011 Dec. 31, 2010 Dec. 31, 2009 Non - accrual loans $107,749 $96,113 $117,815 $85,197 Renegotiated loans 25,782 26,342 - 142 Loans past due 90 days or more (still accruing) 1,870 3,367 3,226 3,496 Total non
Slide 28: Park National Bank Commercial Loan Watch List Trends
Park National Bank Commercial Loan Watch List Trends 28 Commercial loans * ( In thousands ) June 30, 2012 December 31, 2011 December 31, 2010 Pass rated $ 2,167,745 $ 2,131,007 $ 2,046,016 Special Mention 59,568 66,254 85,287 Substandard 10,265 29,604 78,529 Impaired 103,126 95,109 90,694 Commercial
Slide 29: Park National Corporation (PRK) – Income Statement
29 Park National Corporation (PRK) – Income Statement Source: Company Filings (in thousands) Dec. 31, 2010 Dec. 31, 2011 Q1 2012 Q2 2012 2012 Projection Net interest income $ 274,044 $ 273,234 $ 61,728 $ 58,680 $ 237,482 Provision for loan losses 87,080 63,272 8,338 5,238 24,427 Net interest income
Slide 30: Park National Corporation Statement of Condition
PARK NATIONAL CORPORATION Statement of Condition 30 Source: Company Filings (in millions) Dec. 31, 2010 Dec. 31, 2011 June 30, 2012 Investment securities $ 2,040 $ 1,708 $ 1,689 Loans 4,733 4,317 4,387 Allowance for loan losses (144) (68) (59) Assets held for sale - 382 - Other assets 653 633 689 To
Slide 31: PRK comparison to peers
31 PRK comparison to peers * Calculated for the twelve months ended June 30, 2012. ** Annualized based on dividends and stock price through June 30, 2012. Source: Company Filings and Sandler O’Neill, using SNL data of $3 to $10 billion bank holding companies PRK Price to Book % Peer Group Price to B
Slide 32: Park National Corporation – Tax equivalent yield
32 Park National Corporation – Tax equivalent yield Source: Company Filings as of June 30, 2012 Tax equivalent yield Dec. 31, 2009 Dec. 31, 2010 Dec. 31, 2011 June 30, 2012 2012 Projection Loans 6.03% 5.80% 5.60% 5.44% Taxable investments 4.90% 4.44% 3.74% 3.31% Tax exempt investments 7.45% 7.24% 7.
Slide 33: PRK short interest position
PRK short interest position 33 Date Short Interest Position PRK Closing Price Average Annual Daily V olume Days to Cover Short Position 06/30/2012 1,467,075 $ 69.75 35,407 * 41.4 12/30/2011 1,654,098 $ 65.06 50,130 33.0 12/31/2010 922,074 $ 72.67 38,840 23.7 12/31/2009 1,127,086 $ 58.88 51,959 21.7
Slide 34: PRK short interest comparison to peers
PRK short interest comparison to peers 34 Entity Shares Outstanding Short Interest Position Average Daily Volume in 2012 Days to Cover Short Interest as a % of Total Shares Outstanding PRK 15,400,000 1,467,075 35,407 41.4 9.52% Midwest Peer Median 58,500,000 3,100,676 260,991 11.9 5.30% Midwest Peer
Slide 35: Why invest in Park National Corporation?
Why invest in Park National Corporation? • Unique, localized business model makes us the bank of choice for customers. • History of dividend payments to shareholders and a strong dividend yield. • Favorably positioned to take advantage of growth opportunities in our markets, largely caused by indust
Slide 36: KBW Community Banking Investor Conference
36 July 31, 2012 KBW Community Banking Investor Conference
Park National — KBW Community Banking Investor Conference (July 2012) on 6ix