Paragon Financial Solutions, Inc. (tn) · OTC:PGNN
Paragon Financial Solutions, Inc. (tn) — Paragon Financial Solutions — Shareholder Meeting (May 2022)
83 slides from Paragon Financial Solutions, Inc. (tn)'s shareholder meeting presentation, May 19, 2022
Slide 1: 2022 Shareholder Meeting
2022 Shareholder Meeting May 19, 2022 People you know. Solutions that work.
Slide 2: Call to Order and Welcome
Call to Order and Welcome Craig Weiss, Chairman of the Board People you know. Solutions that work.
Slide 3: Invocation
Invocation Napoleon Cassibry, Board Member People you know. Solutions that work.
Slide 4: Business Meeting
Business Meeting Robert Shaw, President and CEO People you know. Solutions that work.
Slide 5: Paragon’s Board of Directors
Paragon’s Board of Directors • Steve Bargiacchi • Chris Saenger • Napoleon Cassibry • Robert Shaw • Dr. James Freeman • Pete Stark • Mary McDaniel • Anita Vaughan • J.T. Novarese • Craig Weiss, Chair People you know. Solutions that work.
Slide 6: Paragon’s Executive Team and Auditor
Paragon’s Executive Team • Andy Taylor – Executive Vice President, Chief Banking Officer • Marshall Talley – Executive Vice President, Chief Credit Officer • Lewis Perkins – Executive Vice President, Chief Financial Officer Paragon’s Auditor • Joseph Callicut – Reynolds, Bone and Griesbeck, PLC Peop
Slide 7: Business Meeting
Business Meeting • Procedural Details • Proof of Notice of Meeting • Report on Quorum; Proxies • Proposals and Discussions People you know. Solutions that work.
Slide 8: Three Items of Business
Three Items of Business • Election of Directors: The Board recommends the following nominees: • Mary McDaniel • Anita Vaughan • Craig Weiss • Approval of the Paragon Financial Solutions 2022 Equity Incentive Plan: The Board recommends approval • Ratification of Independent Auditor: The Board recomme
Slide 9: Results of Voting
Results of Voting • Procedural Details • Proof of Notice of Meeting • Report on Quorum; Proxies • Proposals and Discussions Business Meeting Adjournment People you know. Solutions that work.
Slide 10: Executive Officer Remarks
Executive Officer Remarks Robert Shaw, President and CEO Lewis Perkins, CFO People you know. Solutions that work.
Slide 11: Forward-Looking Statements
Forward-Looking Statements Certain statements in this presentation include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, which statements generally can be identified by the use of forward-looking terminology, such as "may," "will," "expect,"
Slide 12: Paycheck Protection Program (PPP)
Paycheck Protection Program (PPP) 1ST QTR 1ST QTR 2020 2021 2021 2022 Total Number of Loans 799 425 1,224 Volume of Loans 94,094 42,229 136,323 Jobs Impacted 9,696 1,841 11,537 Loan Income 644,702 483,692 183,250 15,060 1,143,454 Loan Fees 1,665,933 3,159,437 1,156,872 147,502 4,972,872 Interest Exp
Slide 13: Trifecta: 4 years in a row
Trifecta ! 4 years in a row! People you know. Solutions that work.
Slide 14: People you know. Solutions that work.
People you know. Solutions that work.
Slide 15: Employment Awards
Employment Awards American Banker Best Bank to Work For Memphis Business Journal Best Places to Work » 2021 #10 in the U.S. » 2021 Finalist » 2020 #5 in the U.S. » 2020 Finalist » 2019 #10 in the U.S. » 2019 Finalist » 2018 #33 in the U.S. » 2018 Finalist Commercial Appeal Top Workplaces » 2017 Did
Slide 16: Producers
Producers (Relationship Mgrs., Business Dev. Officers, Mortgage Consultants) 24 26 30 25 18 20 15 10 5 0 12/31/2020 12/31/2021 3/31/2022 People you know. Solutions that work.
Slide 17: People you know. Solutions that work.
People you know. Solutions that work.
Slide 18: Wilmington, North Carolina
Wilmington, North Carolina People you know. Solutions that work.
Slide 19: Wilmington Metro Area Demographics
Wilmington Metro Area Demographics • Median Age: 39 • Number of Households: 120,810 • Median Household Income: $57,488 • Persons Below Poverty Line: 14.5% • Percent Married: 49% • Median Value of Owner-Occupied Housing: $243,700 • High School Grad or Higher: 92.3% People you know. Solutions that wor
Slide 20: New Banking Center Offices
New Banking Center Offices Park Central, Atlanta, GA 2401 South Lamar, Oxford, MS Branch Application Approved TDFI (9/13) Opening Mid-2023 FDIC (10/4) The Offices at Mayfaire I, Wilmington, NC People you know. Solutions that work.
Slide 21: Population Growth in Paragon Markets
Population Growth in Paragon Markets Metropolitan/Micropolitan Areas 2020 2010 Increase % Incr Atlanta-Sandy Springs-Alpharetta, GA 6,087,762 5,286,728 801,034 15.15% Memphis, TN-MS-AR 1,348,678 1,316,100 32,578 2.48% Wilmington, NC 300,401 254,884 45,517 17.86% Oxford, MS 54,411 47,351 7,060 14.91%
Slide 22: Wilmington and Oxford Forecast
Forecast Wilmington 2021 2022 2023 2024 Loans (in 000's) 0 40,726 81,452 122,178 Income before taxes (311,208) (576,150) 724,949 2,082,519 Oxford 2021 2022 2023 2024 Loans (in 000's) 13,430 24,039 33,222 42,404 Income before taxes 348,886 239,852 314,646 565,094 Total 2021 2022 2023 2024 Loans (in 0
Slide 23: Memphis Area Economic Activity Forecast
Memphis Area Economic Activity Forecast People you know. Solutions that work.
Slide 24: Market Share Shelby County, TN
Market Share Shelby County, TN 30-Jun-21 31-Mar-22 Outside of Inside of Market Market # of Deposits # of Deposits Market Deposits Institution Name Offices $0 Offices $0 Share $0 Independent Bank 0 0 9 1,045,611 3.21% 1,135,330 Bank of Bartlett 0 0 7 420,619 1.29% 436,928 Paragon Bank 1 8,644 4 411,9
Slide 25: Paragon Bank bankparagon.com/banklocal
Par agon Bank ban n.com/banklocal ‘ights reserved.
Slide 26: Community service hours (ACTS)
1,129 hours Team Paragon spent serving our communities 95.4 percent of Paragon Team Members participated in ACTS 47 Organizations were impacted by Paragon Team Members 13.6 average number of ACTS hours per team member 12,943 hours spent by Paragon Team members since 2008
Slide 27: Deposit Trends
DEPOSIT TRENDS People you know. Solutions that work.
Slide 28: Total Deposits
Total Deposits (end of period in millions) 13% 480 485 500 23% 424 400 343 346 302 279 300 251 200 100 0 2015 2016 2017 2018 2019 2020 2021 1Q22 Brokered Deposits 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 3/31/2022 (in millions) 57.7 70.3 41.1 29.6 19.6you know.17.3 People Solutions tha
Slide 29: DDAs to Average Total Deposits
DDAs to Average Total Deposits (end of period) 32.00% 30.86% 30.00% 28.00% 26.68% 26.00% 23.61% 24.00% 22.00% 20.20% 20.75% 20.83% 20.69% 19.98% 20.00% 17.72% 18.00% 16.00% FDIC Peer at 3-31-2022 23.63% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 4Q14 4Q15 4Q16 4Q17 4Q18 4Q19 4Q20 4Q21 1Q22 People
Slide 30: Deposit Mix
Deposit Mix as of March 31, 2022 CD'S, 9.24% DDA's, 34.47% MMDA, 23.52% NOW, 30.15% SAV, 2.63% People you know. Solutions that work.
Slide 31: Asset Trends
ASSET TRENDS People you know. Solutions that work.
Slide 32: Cash & Cash Equivalents
Cash & Cash Equivalents (end of period in millions) 100 90 80 71 70 60 50 35 33 40 29 21 25 30 20 12 8 4 10 0 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 People you know. Solutions that work.
Slide 33: Investments
INVESTMENTS People you know. Solutions that work.
Slide 34: Total Investments
Total Investments (end of period in millions) 100 88 90 79 80 68 70 62 60 53 51 47 50 41 37 40 30 20 10 0 4Q07 4Q15 4Q16 4Q17 4Q18 4Q19 4Q20 4Q21 1Q22 People you know. Solutions that work.
Slide 35: Unrealized Gain/(Loss) on Investments
Unrealized Gain/(Loss) on Investments (in thousands) 2,000 1,683 1,654 1,499 1,558 1,500 993 969 1,036 937 1,000 700 606 424 500 0 (100) -500 -1,000 (1,118) (1,044) -1,500 (1,422) -2,000 (1,846) -2,500 -3,000 (3,003) -3,500 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4
Slide 36: Total Assets & Loan Trends
TOTAL ASSETS & LOAN TRENDS People you know. Solutions that work.
Slide 37: Total Assets
Total Assets (end of period in millions) 600 539 541 484 500 401 404 377 400 352 304 300 200 100 0 2015 2016 2017 2018 2019 2020 2021 1Q22 People you know. Solutions that work.
Slide 38: Total Loans
Total Loans (end of period in millions) 450 423 393 394 400 331 333 350 315 289 300 246 250 200 150 100 50 0 2015 2016 2017 2018 2019 2020 2021 1Q22 People you know. Solutions that work.
Slide 39: Total Loans
Total Loans (end of period in millions) 450 423 393 394 5 400 9 350 75 300 250 418 385 200 333 8.6% 315 331 318 289 150 246 21% 100 50 0 2015 2016 2017 2018 2019 2020 2021 1Q22 Core Loans PPP Loans People you know. Solutions that work.
Slide 40: New Loan Volume Originated
New Loan Volume Originated (in millions) 350 19% 305.7 300 256.6 57% 42.3 250 190.0 182.3 54.5 163.4 95.2 200 154.9 42.3 33.2 10.2 150 34.0 33.0 100 75.0 147.7 149.1 129.4 151.2 208.8 121.9 35.7 50 11.3 0 28.0 2016 2017 2018 2019 2020 2021 1Q2022 Core Bank SBCG PPP Loans Wilmington Number of Loans O
Slide 41: Government Guaranteed Loans Retained
Government Guaranteed Loans Retained 2021 Gross Loans Kept 27,223,300 Guaranteed Loan 22,258,370 Fee Given Up 1,944,786 Interest Income 261,549 Subtotal 2,206,335 Annual Interest Income 1,435,181 Time to Make Up Fee 1.54 In Months 18 People you know. Solutions that work.
Slide 42: Loan Mix
Loan Mix as of March 31, 2022 Individuals, 2.68% Constr & Land Dev, 8.59% Other, 0.56% Farmland, 8.04% Comm & Ind, 27.87% Home Equity, 6.84% 1-4 Fam Resid, 18.39% Nonfarm Noresid, 13.22% Owner Occupied, 13.68% Multifamily, 0.12%
Slide 43: Capital Trends
CAPITAL TRENDS People you know. Solutions that work.
Slide 44: Capital Ratios
Capital Ratios 18.00% 17.20% 15.94% 15.98% 16.00% 15.37% 15.38% 14.22% 14.19% 14.48% 14.41% 15.94% 14.00% 14.69% 14.72% 14.11% 14.19% 12.00% 12.96% 12.94% 13.22% 13.15% 10.00% 10.92% 11.07% 10.50% 10.51% 10.21% 10.43% 9.87% 9.56% 9.33% 8.00% 6.00% 4Q14 4Q15 4Q16 4Q17 4Q18 4Q19 4Q20 4Q21 1Q22 Total R
Slide 45: Stock Repurchases
Stock Repurchases Paragon Financial Solutions Shares Repurchased and Retired Shares Gross Average Authorized Repurchased Repurchased Price $1,000,000 115,000 $999,018 $8.69 $500,000 55,000 $476,018 $8.65 $5,000,000 258,194 $2,697,201 $10.45 428,194 $4,172,236 $9.74 People you know. Solutions that wo
Slide 46: Capital Ratios: Memphis-Based Community Banks
Capital Ratios Memphis-Based Community Banks December 31, 2021 Total Trust Pre Risk-Based Tier 1 Leverage Hld Co Loan Capital Capital Ratio (000's) ** Financial Federal N/A N/A 11.58% 0 Bank3 11.89% 10.88% 9.81% 4,200 Paragon Bank 15.98% 14.72% 9.56% 0 Bank of Fayette County N/A N/A 9.49% 6,900 Bank
Slide 47: Credit Quality Trends
CREDIT QUALITY TRENDS People you know. Solutions that work.
Slide 48: Loan Loss Allowance
Loan Loss Allowance 2020 2021 Beginning Allowance 3,837,252 5,706,729 Loan Loss Provision 1,861,000 973,000 Net (Charge Offs)/Recoveries 8,477 415,902 Ending Allowance 5,706,729 7,095,631 People you know. Solutions that work.
Slide 49: Nonperforming Assets
Nonperforming Assets (end of period $000) 16,000 14,675 14,000 12,000 10,000 7,843 8,000 6,000 4,706 4,000 2,087 1,682 1,332 1,447 764 1,338 ** 2,000 620 555 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 1Q22 **$578 was resolved successfully shortly after quarter end. This brought this number
Slide 50: Nonperforming Assets as a % of Total Assets
Nonperforming Assets as a % of Total Assets 8.00% 7.35% 7.00% 6.00% 5.00% 4.00% 2.88% 3.00% 1.73% 2.00% 0.69% 0.48% 1.00% 0.35% 0.36%0.19% 0.13% 0.10% 0.25% ** 0.00% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 1Q22 **without the $578k successfully resolved soon after quarter end, the percentag
Slide 51: Loan Loss Reserve to Gross Loans
Loan Loss Reserve to Gross Loans (end of period) 2.00% 1.80% 1.68% 1.49% 1.47% 1.44% 1.45% 1.39% 1.45% 1.50% 1.31% 1.17% 1.15% 1.00% 0.50% 0.00% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 1Q22 People you know. Solutions that work.
Slide 52: Loan Loss Reserve to Gross Loans (excl. guaranteed)
Loan Loss Reserve to Gross Loans (end of period – excluding fully government-guaranteed loans) 2.50% 2.26% 1.97% 2.04% 2.00% 1.56% 1.62% 1.58% 1.58% 1.53% 1.43% 1.50% 1.29% 1.25% 1.00% 0.50% 0.00% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 1Q22 People you know. Solutions that work.
Slide 53: Income Trends
INCOME TRENDS People you know. Solutions that work.
Slide 54: Prime Rate
Prime Rate 7.00% 6.00% 5.50% 5.25% 5.25% 5.00% 5.00% 5.00% 4.75% 4.75% 4.25% 4.00% 4.00% 3.50% 3.25% 3.00% 2.00% 1.00% 0.00% 3/22/2018 6/14/2018 9/27/2018 12/20/2018 7/31/2019 9/18/2019 10/30/2019 3/3/2020 3/15/2020 3/16/2022 5/4/2022 People you know. Solutions that work.
Slide 55: Total Revenue
Total Revenue (in 000’s) 6,000 5,565 5,029 5,230 5,231 5,301 5,156 5,014 4,780 4,659 4,643 4,729 1,016 5,000 4,374 855 1,153 1,021 730 4,200 1,257 813 1,219 1,091 1,125 998 158 4,000 901 999 1,277 708 889 787 565 702 516 3,000 2,000 3,718 4,043 3,473 3,561 3,568 3,518 3,311 3,215 3,207 3,376 3,272 3
Slide 56: Interest Expense
Interest Expense 3.00% 2.42% 2.47% 2.39% 2.50% 2.22% 2.00% 1.82% 1.50% 1.01% 1.00% 1.15% 1.07% 1.11% 1.09% 0.98% 0.64% 0.53% 0.54% 0.54% 0.54% 0.46% 0.50% 0.37% 0.60% 0.44% 0.39% 0.32% 0.00% 0.25% 0.25% 0.23% 0.21% 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 Core Funding Brokere
Slide 57: Net Interest Margin
Net Interest Margin 4.50% 4.18% 4.08% 3.94% 3.98% 4.00% 3.73% 3.69% 3.62% 3.66% 3.54% 3.56% 3.50% 3.41% 3.50% 3.28% 3.33% 3.26% 3.47% 3.40% 3.39% 3.00% 3.20% 3.14% 3.16% 3.18% 3.05% 2.50% 2.00% 1.50% 1.00% 2014 2015 2016 2017 2018 2019 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 NIM Without PPP Peo
Slide 58: Impact of Rising Interest Rates
Impact of Rising Interest Rates Net Interest Income/Net Interest Margin Net Interest Income Projected Margin Year 1 Year 2 Year 1 Year 2 Up 100bp 1,724 3,439 3.33% 3.37% Up 200bp 2,100 4,193 3.68% 3.77% Up 300bp 2,456 4,919 3.87% 4.00% Projected NII is the extra income earned in a year after Prime R
Slide 59: Noninterest Income Trends
NONINTEREST INCOME TRENDS People you know. Solutions that work.
Slide 60: Total Noninterest Income
Total Noninterest Income (in 000’s) 5,694 6,000 4,941 4,648 5,000 4,361 4,006 3,970 4,000 3,488 3,052 3,121 2,841 1,628 1,549 3,000 2,335 1,096 1,689 1,627 2,000 1,112 1,150 38 699 939 446 582 530 701 503 1,000 1,267 1,290 1,361 1,444 1,086 1,257 1,266 1,271 988 0 2013 2014 2015 2016 2017 2018 2019
Slide 61: Mortgage Banking Income
Mortgage Banking Income (thousands) 1,112 1,149 1,200 939 1,000 800 699 582 600 503 530 446 400 189 200 0 2014 2015 2016 2017 2018 2019 2020 2021 1Q22 People you know. Solutions that work.
Slide 62: Small Business Capital Group Revenue
Small Business Capital Group Revenue (thousands) 6,000 5,299 5,337 5,203 4,758 5,000 4,435 4,269 4,000 1,151 2,722 3,273 2,789 1,770 1,264 385 3,000 362 88 166 274 2,000 168 1,306 3,210 2,494 2,495 2,633 1,812 2,082 269 34 1,000 1,002 0 2016 2017 2018 2019 2020 2021 1Q22 Interest Income Servicing In
Slide 63: Noninterest Expense Trends
NONINTEREST EXPENSE TRENDS People you know. Solutions that work.
Slide 64: Noninterest Expense
Noninterest Expense 16,000 14,969 13,693 14,006 14,144 13,557 13,847 311 14,000 12,557 732 169 284 555 660 2,394 2,766 12,000 3,019 3,129 2,697 2,440 2,565 10,000 8,000 6,000 10,322 10,715 10,457 11,284 11,892 9,992 10,390 4,000 2,000 0 2015 2016 2017 2018 2019 2020 2021 Core Bank SBCG Specialty Len
Slide 65: Efficiency Ratio
Efficiency Ratio 100.00% 97.10% 90.00% 80.00% 75.80% 74.40% 73.60% 73.50% 72.10% 70.43% 70.00% 60.00% 50.00% 2015 2016 2017 2018 2019 2020 2021 People you know. Solutions that work.
Slide 66: Income Statement Trends
INCOME STATEMENT TRENDS People you know. Solutions that work.
Slide 67: Net Income
Net Income 4,500 4,086 4,000 3,500 3,144 3,188 2,757 3,000 2,500 2,135 2,108 2,000 1,500 1,000 632 556 500 91 0 2014 2015 2016 2017 2018 2019 2020 2021 1Q22 People you know. Solutions that work.
Slide 68: Pre-Tax Net Income
Pre-Tax Net Income 5,442 6,000 5,000 3,724 2,782 4,000 746 3,000 4,126 4,138 4,275 2,000 2,978 1,068 3,421 2,971 743 1,000 157 132 763 0 (311) (177) -1,000 2014 2015 2016 2017 2018 2019 2020 2021 1Q22 Core Income PPP Income Wilmington People you know. Solutions that work.
Slide 69: Operating Income
Operating Income (Income before security G/L, provision, & taxes – in thousands) 7,000 6,284 6,000 5,342 5,073 4,824 4,898 5,000 4,384 4,000 3,000 2,000 743 585 1,000 379 0 2014 2015 2016 2017 2018 2019 2020 2021 1Q22 People you know. Solutions that work.
Slide 70: Return on Equity
Return on Equity 8.04% 8.20% 9.00% 7.21% 8.00% 7.00% 5.65% 5.69% 6.00% 4.51% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 2017 2018 2019 2020 2021 1Q22 People you know. Solutions that work.
Slide 71: Stock Trends
STOCK TRENDS People you know. Solutions that work.
Slide 72: Period-End Book Value
Period-End Book Value $12.00 $11.63 $11.55 $11.09 $11.04 $11.55 $11.00 $10.32 $10.81 $10.00 $9.52 $10.22 $8.91 $9.00 $9.35 $8.40 $8.84 $7.85 $7.89 $7.95 $8.00 $8.31 $7.89 $7.93 $7.00 $7.46 $6.00 Book Value Excluding Sec G/L $5.00 12/31/13 12/31/14 12/31/2015 12/31/2016 12/31/2017 12/31/18 12/31/19 1
Slide 73: PGNN v. KBW Bank Index – Year
PGNN v. KBW Bank Index – 1 Year The KBW Bank Index, developed by Keefe, Bruyette and Woods, includes 24 banking stocks. The stocks represent large U.S. national money center banks, regional banks, and thrift institutions. KBW Bank Index is a benchmark stock index for the banking sector. People you k
Slide 74: PGNN v. KBW Bank Index – Years
PGNN v. KBW Bank Index – 2 Years People you know. Solutions that work.
Slide 75: PGNN v. KBW Bank Index – Years
PGNN v. KBW Bank Index – 5 Years People you know. Solutions that work.
Slide 76: PGNN v. NASDAQ Bank Index – Year
PGNN v. NASDAQ Bank Index – 1 Year The NASDAQ Bank Index contains securities of NASDAQ- listed companies classified according to the Industry Classification Benchmark as Banks. People you know. Solutions that work.
Slide 77: PGNN v. NASDAQ Bank Index – Years
PGNN v. NASDAQ Bank Index – 5 Years People you know. Solutions that work.
Slide 78: Summary and Wrap Up
SUMMARY AND WRAP UP People you know. Solutions that work.
Slide 79: 2021 Records
2021 Records • Loan Volumes • Efficiency Ratio • Demand Deposits • Operating Income • Total Assets • Pre-Tax Income • Total Revenue • Lowest Level of NPA’s/Total • Net Interest Income Assets Since First Quarter 2007 • Mortgage Banking Income
Slide 80: 2021 Highlights
2021 Highlights • Recognized More Than $3 Million in PPP Loan Fees • Used a Portion of the PPP Fees to Build Loan Loss Reserves for Future Loan Growth • Because of the PPP Fees recognized, was able to Keep Government Guaranteed Loans to Build Future Net Interest Income • Grew Loan Volumes to Offset
Slide 81: 2021 Highlights
2021 Highlights • Hired a Team of Seasoned Bankers in Wilmington, NC and added Experienced Bankers in Memphis & Atlanta to Grow Paragon and Increase Future Profitability • Positioned Paragon for Rising Interest Rates • Recognizing the Value of Paragon Stock, Instituted a Three-Year Five Million Doll
Slide 82: Questions?
QUESTIONS? People you know. Solutions that work.
Slide 83: 2022 Shareholder Meeting
2022 Shareholder Meeting May 19, 2022
Paragon Financial Solutions — Shareholder Meeting (May 2022) on 6ix