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
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. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include, without limitation: the ability of Park National Corporation (“Park”) to execute our business plan successfully and within the expected timeframe as well as our ability to manage strategic initiatives; current and future economic and financial market conditions, either nationally or in the states in which Park and our subsidiaries do business, that may reflect deterioration in business and economic conditions, including the effects of higher unemployment rates or labor shortages, the impact of persistent inflation, the impact of continued elevated interest rates, changes in the economy or global supply chain, supply-demand imbalances affecting local real estate prices, United States (“U.S.”) fiscal debt, budget and tax matters, geopolitical matters (including the impact of the Russia-Ukraine conflict and associated sanctions and export controls as well as the Israel-Hamas conflict), and any slowdown in global economic growth, any of which may result in adverse impacts on the demand for loan, deposit and other financial services, delinquencies, defaults and counterparties' inability to meet credit and other obligations and the possible impairment of collectability of loans; factors that can impact the performance of our loan portfolio, including changes in real estate values and liquidity in our primary market areas, the financial health of our commercial borrowers and the success of construction projects that we finance; the effect of monetary and other fiscal policies (including the impact of money supply, ongoing increasing market interest rate policies and policies impacting inflation, of the Federal Reserve Board, the U.S. Treasury and other governmental agencies) as well as disruption in the liquidity and functioning of U.S. financial markets, may adversely impact prepayment penalty income, mortgage banking income, income from fiduciary activities, the value of securities, deposits and other financial instruments, in addition to the loan demand and the performance of our loan portfolio, and the interest rate sensitivity of our consolidated balance sheet as well as reduce net interest margins; changes in the federal, state, or local tax laws may adversely affect the fair values of net deferred tax assets and obligations of state and political subdivisions held in Park's investment securities portfolio and otherwise negatively impact our financial performance; the impact of the changes in federal, state and local governmental policy, including the regulatory landscape, capital markets, elevated government debt, potential changes in tax legislation that may increase tax rates, government shutdown, infrastructure spending and social programs; changes in laws or requirements imposed by Park's regulators impacting Park's capital actions, including dividend payments and stock repurchases; changes in consumer spending, borrowing and saving habits, whether due to changes in retail distribution strategies, consumer preferences and behaviors, changes in business and economic conditions, legislative and regulatory initiatives, or other factors may be different than anticipated; changes in customers', suppliers', and other counterparties' performance and creditworthiness, and Park's expectations regarding future credit losses and our allowance for credit losses, may be different than anticipated due to the continuing impact of and the various responses to inflationary pressures and continued elevated interest rates; Park may have more credit risk and higher credit losses to the extent there are loan concentrations by location or industry of borrowers or collateral; the volatility from quarter to quarter of mortgage banking income, whether due to interest rates, demand, the fair value of mortgage loans, or other factors; the adequacy of our internal controls and risk management program in the event of changes in the market, economic, operational (including those which may result from our associates working remotely), asset/liability repricing, legal, compliance, strategic, cybersecurity, liquidity, credit and interest rate risks associated with Park's business; competitive pressures among financial services organizations could increase significantly, including product and pricing pressures (which could in turn impact our credit spreads), changes to third-party relationships and revenues, changes in the manner of providing services, customer acquisition and retention pressures, and Park's ability to attract, develop and retain qualified banking professionals; uncertainty regarding the nature, timing, cost and effect of changes in banking regulations or other regulatory or legislative requirements affecting the respective businesses of Park and our subsidiaries, including major reform of the regulatory oversight structure of the financial services industry and changes in laws and regulations concerning taxes, Federal Deposit Insurance Corporation insurance premium levels, pensions, bankruptcy, consumer protection, rent regulation and housing, financial accounting and reporting, environmental protection, insurance, bank products and services, bank and bank holding company capital and liquidity standards, fiduciary standards, securities and other aspects of the financial services industry; Park's ability to meet heightened supervisory requirements and expectations; the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board (the "FASB"), the Securities and Exchange Commission (“SEC”), the Public Company Accounting Oversight Board and other regulatory agencies, may adversely affect Park's reported financial condition or results of operations; Park's assumptions and estimates used in applying critical accounting policies and modeling which may prove unreliable, inaccurate or not predictive of actual results; the possibility that future credit losses may be higher than currently expected due to changes in economic assumptions; Park's ability to anticipate and respond to technological changes and Park's reliance on, and the potential failure of, a number of third-party vendors to perform as expected, including Park's primary core banking system provider, which can impact Park's ability to respond to customer needs and meet competitive demands; operational issues stemming from and/or capital spending necessitated by the potential need to adapt to industry changes in information technology systems on which Park and our subsidiaries are highly dependent; Park's ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks, including those of Park's third-party vendors and other service providers, which may prove inadequate, and could adversely affect customer confidence in Park and/or result in Park incurring a financial loss; a failure in or breach of Park's operational or security systems or infrastructure, or those of our third-party vendors and other service providers, resulting in failures or disruptions in customer account management, general ledger, deposit, loan, or other systems, including as a result of cyber attacks; the impact on Park's business and operating results of any costs associated with obtaining rights in intellectual property claimed by others and of the adequacy of Park's intellectual property protection in general; the existence or exacerbation of general geopolitical instability and uncertainty as well as the effect of trade policies (including the impact of potential or imposed tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements, trade wars and other changes in trade regulations, closing of border crossings and changes in the relationship of the U.S. and its global trading partners); the impact on financial markets and the economy of any changes in the credit ratings of the U.S. Treasury obligations and other U.S. government-backed debt, as well as issues surrounding the levels of U.S., European and Asian government debt and concerns regarding the growth rates and financial stability of certain sovereign governments, supranationals and financial institutions in Europe and Asia and the risk they may face difficulties servicing their sovereign debt; the effect of a fall in stock market prices on Park's asset and wealth management businesses; our litigation and regulatory compliance exposure, including the costs and effects of any adverse developments in legal proceedings or other claims, the costs and effects of unfavorable resolution of regulatory and other governmental examinations or other inquiries, and liabilities and business restrictions resulting from litigation and regulatory investigations; continued availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends; the impact on Park's business, personnel, facilities or systems of losses related to acts of fraud, scams and schemes of third parties; the impact of widespread natural and other disasters, pandemics (including the COVID-19 pandemic), dislocations, regional or national protests and civil unrest (including any resulting branch closures or damages), military or terrorist activities or international hostilities (especially in light of the Russia-Ukraine conflict and the Israel-Hamas conflict) on the economy and financial markets generally and on us or our counterparties specifically; the potential further deterioration of the U.S. economy due to financial, political, or other shocks; the effect of healthcare laws in the U.S. and potential changes for such laws which may increase our healthcare and other costs and negatively impact our operations and financial results; the impact of larger or similar-sized financial institutions encountering problems, such as the recent closures of Silicon Valley Bank in California, Signature Bank in New York, First Republic Bank in California, and Heartland Tri-State Bank in Kansas, which may adversely affect the banking industry and/or Park's business generation and retention, funding and liquidity, including potential increased regulatory requirements and increased reputational risk and potential impacts to macroeconomic conditions; Park's continued ability to grow deposits or maintain adequate deposit levels in light of the recent bank failures; unexpected outflows of deposits which may require Park to sell investment securities at a loss; and other risk factors relating to the financial services industry as detailed from time to time in Park's reports filed with the SEC including those described in "Item 1A. Risk Factors" of Part I of Park's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, in "Item 1A. Risk Factors" of Part II of Park's Quarterly Report on Form 10- Q for the quarterly period ended March 31, 2023, in "Item 1A. Risk Factors" of Part II of Park's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023 and in "Item 1A. Risk Factors" of Part II of Park’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023. P A R K N A T I O N A L C O R P O R A T I O N 2
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 additional information which, when read in conjunction with Park’s consolidated financial statements prepared in accordance with GAAP, assists in analyzing Park’s operating performance, ensures comparability of operating performance from period to period, and facilitates comparisons with the performance of Park’s peer financial holding companies, while eliminating certain non-operational effects of acquisitions. Additionally, Park believes this financial information is utilized by regulators and market analysts to evaluate a company’s financial condition, and therefore, such information is useful to investors. The non-GAAP financial measures should not be viewed as substitutes for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. A reconciliation from the most directly comparable GAAP financial measures to the non-GAAP financial measures used in this presentation is provided on pages 33 and 34 of this presentation. P A R K N A T I O N A L C O R P O R A T I O N 3
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
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 common shares are publicly traded under the symbol “PRK” on NYSE American. • Diversified revenue base with approximately 21.7% non- interest income to operating revenue(5) ratio for the nine months ended September 30, 2023. • Diversified loan portfolio funded with customer deposits. • Below average historical net charge-offs relative to Midwest Peer Group. • Low-cost funding profile supports durable net interest margin and extended trend of stable operating results. • At June 30, 2023, Park’s average deposit market share was approximately 35% in Park’s six largest county markets in Ohio. (1) Market value of assets under management. (2) See “Reconciliation of Non-GAAP Financial Measures” shown on pages 33 and 34. (3) NPAs exclude accruing troubled debt restructuring loans and loans 90+ days past due. (4) Net interest margin shown on a fully taxable equivalent basis assuming a 21% corporate federal income tax rate. (5) Definitions: TE – Tangible Equity; TA – Tangible Assets; ACL – Allowance for Credit Losses; NPA – Non-Performing Assets, ROAA – Return on Average Assets; ROATE – Return on Average Tangible Equity; Operating Revenue = Non-Interest Income + Net Interest Income (6) For the purpose of calculating the annualized return on average tangible equity, a non-U.S. GAAP financial measure, net income for each period is divided by average tangible equity during the period. (7) Ratios presented YTD through September 30, 2023 are shown on an annualized basis. Note: Financial data as of September 30, 2023 unless otherwise noted; Source: S&P Global Market Intelligence. Company Overview At or YTD $ in millions 12/31/2021 12/31/2022 9/30/2023 Total Assets 9,560$ 9,855$ 10,001$ Total Loans (Gross) 6,871 7,142 7,350 Total Deposits 7,905 8,235 8,245 Total Shareholders' Equity 1,111 1,069 1,086 Total Equity / Total Assets 11.62% 10.85% 10.85% TE / TA (2) (5) 10.05% 9.33% 9.36% ACL / Loans (5) 1.21% 1.20% 1.15% NPAs / Total Assets (3) (5) 0.80% 0.82% 0.56% Net Interest Margin (4) (7) 3.69% 3.80% 4.09% ROAA (5) (7) 1.56% 1.48% 1.37% Return on Average Equity (7) 14.45% 13.78% 12.48% ROATE (2) (5) (6) (7) 17.15% 16.29% 14.70% At or Year Ended
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 Central Ohio $1.81B $3.27B 190 5 17 Eastern Ohio $892M $727M 105 4 12 Carolina $631M $70.9M 83 6 7 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 strong population growth and low rates of unemployment(3). • Combined with Park’s outstanding deposit franchise, these expansion markets present a promising opportunity for customer and revenue growth. August 2023 Unemployment Rate (%)(3) (1) Market value of assets under management. (2) Full-time employees do not include 821 full-time employees at Park’s operational support centers. (3) Source: Bureau of Labor Statistics; National unemployment data as of August 31, 2023 Note: Financial data as of September 30, 2023 unless otherwise noted. 2.9% 3.3% 3.5% 3.4% 3.8% 3.8% ASHEVILLE, NC CHARLOTTE, NC CINCINNATI, OH COLUMBUS, OH LOUISVILLE, KY USA
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 2005 through April 2019. • President of First-Knox National Bank, a division of Park National Bank, from 1997 through 2002, and its Chairman of the Board from 2001 to 2006. • Holds an MBA with honors from The Ohio State University. • Earned a B.A. from Duke University and joined Park immediately following graduation. Matthew R. Miller – President – Age: 45 (14 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 Bank from December 2012 through March 2017. • Vice President of Accounting at Park National Bank from March 2009 through December 2012. • Prior to joining Park, worked for eight years at Deloitte LLP, serving clients in the financial services industry. • Earned a B.A. in accounting, graduating summa cum laude, from University of Akron.
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 to December 2012. • Worked at Vail Banks, Inc. in various capacities from 2002 to 2006, including as CFO. • Earned a B.S. in accounting from Miami University. • Member of Board of Directors of Federal Home Loan Bank of Cincinnati, serving on each of the Audit Committee (which he has chaired since January 1, 2021) and the Risk Committee.
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 I O N 9 Name Position Age Years with PNB Years in Industry Todd M. Bogdan Chief Operations Officer 55 7 35 Adrienne M. Brokaw Chief Auditor 55 10 24 Bryan M. Campolo Chief Credit Officer 39 17 17 Thomas M. Cummiskey Chief Trust & Investments Officer 54 24 26 Malory Dcosta Chief Information Officer 50 1 20 Mark H. Miller Corporate Services Director 41 7 7 Cheryl L. Snyder Chief Retail Lending Officer 67 44 46 Laura F. Tussing Chief Banking Officer/Regional Banking Director 42 19 19 Jeffrey A. Wilson Chief Risk Officer 57 19 27
• 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% of then existing) in 2020. • Proximity to other branches and few competitors in impacted markets reduced the risk of attrition. • Below average transaction volume at impacted branches. • On October 23, 2023, Park announced the consolidation of 12 branch offices, 3 relocations and 2 new market locations, all of which are in Ohio. • Park continues to analyze its remaining branch network (geography, demographics, transaction volume, etc.) to identify sensible branch optimization opportunities. • Separate presidents and advisory boards, consisting of leaders with deep local market knowledge. • Regional leadership team averages approximately 30 years of banking experience and 17 years of leadership tenure with Park. P A R K N A T I O N A L C O R P O R A T I O N 10 Community Banking Regions Name Position Age Years with PNB Years in Industry Robert E. Boss President - Northern Ohio Region 67 16 45 John A. Brown President - Western Ohio Region 54 32 32 Bryant W. Fox Market President - Cincinnati 35 10 10 W. Andrew Holden Market President - Louisville 48 5 27 Tim J. Ignasher Market President - Charlotte 62 6 32 John D. Kimberly President - Carolina Region 59 16 37 Patrick L. Nash President - Eastern Ohio Region 59 36 36 Laura F. Tussing President - Central Ohio Region 42 19 19 Brady E. Waltz Market President - Columbus 52 16 30
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 diligence 2. Metro Strategy • Certain attractive markets in the Midwest, Southeast, and Mid-Atlantic regions • De novo branching – mirror successful Columbus, Ohio and Louisville, Kentucky de novo offices • Partner with banks that have the following characteristics: • Consistent loan growth • Acceptable asset quality • Existing trust and wealth management business, or the potential to grow the business in those areas • Commercial focus with potential to grow consumer • Proven leadership team P A R K N A T I O N A L C O R P O R A T I O N 11
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
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 • Improvements to liquidity on hand as well as preservation of borrowing capacity • Sale of variable rate CLOs reduces exposure to a declining rate environment • Balance sheet well positioned to end 2023 with less than $10 billion in total assets 13 *Income represents the net pre-tax impact of the interest income growth and interest expense reduction from the use of funds less the reduction in interest income from the debt securities sold. Loss represents the net pre-tax realized loss on sale of the AFS debt securities.
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 Capital Ratio of 16.16% • Book value per common share grew from $63.75 at September 30, 2022 to $67.41 at September 30, 2023. • Tangible book value per common share(1) grew from $53.54 at September 30, 2022 to $57.19 at September 30, 2023. • Net income of $36.9 million for Q3 2023, compared to $42.1 million for Q3 2022. • Pre-tax, pre-provision net income (“PTPP”)(1) of $44.2 million for Q3 2023, compared to $40.1 million and $40.7 million during Q1 2023 and Q2 2023, respectively. PTPP net income was $54.6 million in Q3 2022 and included a number of one-time items. • Recovery of credit losses for Q3 2023 of $1.6 million compared to a provision for credit losses of $3.2 million for Q3 2022. • Loans grew from $7.10 billion at September 30, 2022 to $7.35 billion at September 30, 2023. • Loan growth during Q3 2023 was $141.6 million, or 7.8% annualized. • ACL / Loans decreased to 1.15% at September 30, 2023, compared to 1.18% at September 30, 2022. • Net income for the third quarter of 2023 was $36.9 million, compared to $42.1 million for the third quarter of 2022. Net income for the third quarter of 2022 included an aggregate of $17.6 million related to gains on the sale of OREO, net and OREO valuation markups. Park Performance Summary (1) (1) See “Reconciliation of Non-GAAP Financial Measures” shown on pages 33 and 34.
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, $332MM and $0 at end of 2023Q3, 2022Y, 2021Y, 2020Y, and 2019Y, respectively (2) Excludes off balance sheet deposits of $763,000, $196MM, $983MM, $710MM and $0 at end of 2023Q3, 2022Y, 2021Y, 2020Y, and 2019Y, respectively. $8,558 $9,279 $9,560 $9,855 $10,001 2019Y 2020Y 2021Y 2022Y 2023Q3 $6,501 $6,846 $6,797 $7,138 $7,347 2019Y 2020Y 2021Y 2022Y 2023Q3 $7,053 $7,572 $7,905 $8,235 $8,245 2019Y 2020Y 2021Y 2022Y 2023Q3 $969 $1,040 $1,111 $1,069 $1,086 2019Y 2020Y 2021Y 2022Y 2023Q3
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 Measures shown on pages 33 and 34. (Dollars in millions) (Dollars in millions) $153.9$153.9 66.4% 62.8% 61.3% 61.2% 64.3% 3.12% 3.10% 2.88% 2.97% 3.08% 2019Y 2020Y 2021Y 2022Y 2023 YTD Efficiency Ratio Non-Int. Exp. / Avg. Assets $130.9 $166.7 $176.3 $185.0 $125.0 1.55% 1.80% 1.79% 1.84% 1.67% – $20 .0 $40 .0 $60 .0 $80 .0 $10 0.0 $12 0.0 $14 0.0 $16 0.0 $18 0.0 $20 0.0 1.0 0% 1.1 0% 1.2 0% 1.3 0% 1.4 0% 1.5 0% 1.6 0% 1.7 0% 1.8 0% 1.9 0% 2019Y 2020Y 2021Y 2022Y 2023 YTD PPNR PPNR/Avg. Assets $102.7 $127.9 $153.9 $148.4 $102.2 1.2% 1.4% 1.6% 1.5% 1.4% 13.4% 15.3% 17.2% 16.3% 14.7% – $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 $160.0 2019Y 2020Y 2021Y 2022Y 2023 YTD – 4.0% 8.0% 12.0% 16.0% 20.0% Net Income ROAA ROATE $97.2 $125.7 $129.9 $135.9 $77.1 $297.7 $327.6 $329.9 $347.1 $278.0 24.6% 27.7% 28.3% 28.1% 21.7% 2019 2020 2021 2022 2023 YTD Net Interest Income Non-Interest Income Non-Interest Income / Op. Rev.
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 millions) (1) Net interest margin shown on an annualized, fully taxable equivalent basis assuming a 21% corporate federal income tax rate. See “Reconciliation of Non-GAAP Financial Measures” shown on pages 33 and 34. 4.18% 4.57% 4.89% 5.08% 5.27% 3.81% 3.98% 4.08% 4.07% 4.12% 0.60% 0.95% 1.29% 1.58% 1.76% 0.46% 0.81% 1.15% 1.46% 1.63% 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3 Interest Earning Asset Yield (%) Net Interest Margin (%) Interest Bearing Liability Cost (%) Interest Bearing Deposit Cost (%) $90.8 $94.6 $92.2 $91.6 $94.3 3.81% 3.98% 4.08% 4.07% 4.12% 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3 Net Interest Income Net Interest Margin
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, and debit card fees. • Diversified revenue base with approximately 21.7% non-interest income to operating revenue ratio for the nine months ended September 30, 2023. • Anchored by trust and wealth management business lines, at September 30, 2023 had aggregate assets under management of $7.5 billion(1). Sources of Non-Interest Income (2023 YTD) Non-Interest Income / Operating Revenue (1) Market value of assets under management. Note: Financial data as of September 30, 2023 unless otherwise noted. (Dollars in millions) Fiduciary Activities 35% Service Charges 8% Other Service Income 10% Debit Card Fees 26% BOLI 5% Other Fee Income 16% $97.2 $125.7 $129.9 $135.9 $77.1 $297.7 $327.6 $329.9 $347.1 $278.0 24.6% 27.7% 28.3% 28.1% 21.7% 2019 2020 2021 2022 2023 YTD Net Interest Income Non-Interest Income Non-Interest Income / Op. Rev.
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 $230.2 66.4% 62.8% 61.3% 61.2% 64.3% 2019 2020 2021 2022 2023 YTD Non-interest Expense Efficiency Ratio Salaries & Benefits 59% Occupancy 4% FF&E 4% Data Processing 12% Professional Fees 10% Insurance 3% Other Non- interest Expense 8%
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 $263.8 million Note: Financial data as of September 30, 2023 unless otherwise noted ACL $89.8 Subdebt $174.0 Trust Preferred $15.0 Common Equity Tier 1 $1,035.3 1 Regulatory Capital at September 30, 2023 (Dollars in millions)
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 modestly impacted by two bank acquisitions, one which closed in the 2018 fiscal year and one the 2019 fiscal year. Tier 1 Leverage Ratio Common Equity Tier 1 Ratio Tier 1 Risk-based Capital Ratio Total Risk-based Capital Ratio Regulatory Minimums(1) (1) (1) (1) 9.6% 9.6% 9.8% 9.9% 10.6% 4.0% – 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 2019Q4 2020Q4 2021Q4 2022Q4 2023 Q3 11.6% 11.7% 12.4% 12.6% 12.7% 7.0% – 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 2019Q4 2020Q4 2021Q4 2022Q4 2023 Q3 11.8% 11.9% 12.6% 12.8% 12.9% 8.5% – 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 2019Q4 2020Q4 2021Q4 2022Q4 2023 Q3 12.6% 15.4% 16.1% 16.1% 16.2% 10.5% 9.0% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 16.0% 17.0% 2019Q4 2020Q4 2021Q4 2022Q4 2023 Q3
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 loan monitoring. • 50% of the loan portfolio have fixed interest rates with a weighted average contractual life of 81 months; the remaining 50% variable rate loans have a weighted average reprice of 32 months. • Included in commercial, financial, and agricultural loans were $300.5 million in loans originated through Scope Leasing, Inc. and $409.1 million in structured finance loans. • 2% of total loans were agriculture related(1). • 35% of commercial real estate loans were owner- occupied. • $212.7 million of commercial real estate loans were fully or partially collateralized by non-owner-occupied office space. Of this amount, $210.1 million were accruing. Total Loan Portfolio: $7.3B QTD Yield on Loans: 5.65% (1) Agriculture related loans include farm loans and agricultural production loans. Note: Financial data as of September 30, 2023 unless otherwise noted. Commercial, Financial, and Agricultural 18% Commercial Real Estate 25% Construction Real Estate 4% Residential Real Estate 26% Consumer 27% Leases 0%
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 $1B in 2017. Pre-2019 2019 2020 2021 2022 2023 Total Premier (FICO 780+) 32,821,264 50,055,491 137,453,344 186,814,765 363,649,181 271,538,856 1,042,332,902 A+ (FICO 740 - 779) 21,957,784 25,772,147 58,661,145 92,610,453 177,933,676 141,542,615 518,477,820 A (FICO 710 - 739) 15,572,541 14,642,991 33,522,554 52,044,969 95,836,530 81,277,430 292,897,015 B (FICO 680 - 709) 7,662,402 4,632,094 10,832,446 19,006,789 30,851,005 28,045,764 101,030,500 C or D (FICO < 680) 2,933,023 1,512,908 3,462,283 5,122,484 7,444,088 7,718,778 28,193,562 Total 80,947,013 96,615,630 243,931,772 355,599,461 675,714,480 530,123,442 1,982,931,799 - 100,000,000 200,000,000 300,000,000 400,000,000 500,000,000 600,000,000 700,000,000 800,000,000 ($ in 0 00 s) Installment Loan Balances by Origination Year/Credit Tier 52.57% 26.15% 14.77% 5.10% 0.83% 0.60% Installment Loan Portfolio by Credit Tier Premier (FICO 780+) A+ (FICO 740 - 779) A (FICO 710 - 739) B (FICO 680 - 709) C (FICO 641 - 679) D (FICO < 640)
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 17,009,683 16,614,079 24,538,258 18,828,569 94,652,671 RVs 45,971,452 22,827,108 72,966,358 99,409,426 152,681,421 92,675,093 486,530,858 Auto 16,477,922 66,081,068 150,675,514 234,843,170 492,878,926 410,204,079 1,371,160,680 Total 80,947,013 96,615,630 243,931,772 355,599,461 675,714,480 530,123,442 1,982,931,799 - 100,000,000 200,000,000 300,000,000 400,000,000 500,000,000 600,000,000 700,000,000 800,000,000 ($ in 0 00 s) Installment Loan Balances by Origination Year/Collateral Type
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 net charge-off rates over the last 10 years. • Park acquired Scope Leasing, Inc. in the mid-1990’s. Scope follows the same conservative underwriting posture as the commercial loan portfolio. Its lending team has years of industry experience and maintains a narrow focus as to acceptable aircraft underlying loans. Scope had loans of $301 million, or 4.1% of total loans, outstanding as of September 30, 2023. Scope offers aircraft loans from $200,000 to $5 million to individuals, small businesses, and major corporations across the country. • Park entered the structured finance lending business in 2008. It features a traditional asset-based lending line of business with daily cash collections, periodic customer audits, and an attractive risk/reward dynamic. The structured finance loans consist of loans to non-bank consumer finance companies throughout the nation. These asset-based loans are collateralized by cash flows from individuals, typically from auto loans financed by the non-bank consumer finance company. These loans have conservative underwriting and are subject to intensive loan monitoring. Structured finance loans represented $409 million, or 5.6% of total loans, outstanding as of September 30, 2023. P A R K N A T I O N A L C O R P O R A T I O N 25 Note: Financial data as of September 30, 2023 unless otherwise noted. Structured Finance 5.6% Scope Aircraft Finance 4.1% All Other Loans 90.3%
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 and credit stress to emerge in future periods. • Conservative classification of commercial loans and prudent identification of problem credits. • Adopted CECL 1/1/2021. Provision / Net Charge-Offs (1) (1) Park was in a net recovery position for the fiscal years ended December 31, 2020 and 2021. Note: YTD is the nine months ended September 30, 2023 6.1x – – 1.9x 0.5x FY 2019 FY 2020 FY 2021 FY 2022 2023 YTD $6,501 $7,178 $6,871 $7,142 $7,350 0.87% 1.19% 1.21% 1.20% 1.15% 2019 Q4 2020 Q4 2021 Q4 2022 Q4 2023 Q3 (Dollars in millions) Total Loans ACL / Loans $ in thousands Net Charge-Off (Recovery) 2023 YTD 2,255$ FY 2022 2,375 FY 2021 (3,348) FY 2020 (16,942) FY 2019 1,004
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 contractual payments at September 30, 2023. NPAs / Total Assets (1) (1) NPAs exclude accruing troubled debt restructuring loans and loans 90+ days past due. (2) Classified loans are defined as those rated substandard or impaired, excluding accruing purchase credit deteriorated (PCD) loans associated with the acquisitions of NewDominion Bank and CAB Financial Corporation. Note: YTD is the nine months ended September 30, 2023 1.14% 1.31% 0.80% 0.82% 0.56% 2019Q4 2020Q4 2021Q4 2022Q4 2023Q3 0.02% (0.24%) (0.05%) 0.03% 0.04% (0.70%) (0.20%) 0.30% 0.80% 1.30% 1.80% 2019Y 2020Y 2021Y 2022Y 2023 YTD 8.94% 11.25% 7.27% 7.27% 3.88% 2019Q4 2020Q4 2021Q4 2022Q4 2023Q3
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 total deposits. • Public funds made up $1.4 billion, or approximately 17%, of total deposits. • Uninsured deposits totaled approximately $1.4 billion, or 17% of total deposits. This $1.4 billion included $300 million of deposits which were over $250,000, but were fully collateralized by Park’s investment securities portfolio. Total Deposits: $8.2 billion QTD Cost of Interest Bearing Deposits: 1.63% QTD Cost of Total Deposits: 1.09% Non-CD Deposits / Total Deposits: 93% Note: Financial data as of September 30, 2023 unless otherwise noted Non-interest Bearing 33% Transaction 27% Savings 33% CDs 7%
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 collateralized mortgage obligations are U.S. government agency issued, and are primarily collateralized by 15-year residential mortgage loans. • All state and political subdivision securities are investment grade rated, many with credit enhancements. • The expected weighted average life of Park’s investment securities portfolio was 4.9 years at September 30, 2023. • Over $1.1 billion of the securities portfolio are unpledged. • Park had an net unrealized loss on securities of $138.2 million or 8.6% of the portfolio at September 30, 2023. • Park did not hold any held-to-maturity securities at September 30, 2023. QTD Yield on Securities: 3.73% Total Securities: $1.6 billion (1) Securities portfolio ratings as of September 30, 2023. Note: Financial data as of September 30, 2023 unless otherwise noted States & Political Subdivisions 24% Collateralized Loan Obligations 33% Corporate Debt Securities 1% Agency Mortgage- Backed Securities 42%
Historical Borrowing Position 30 *Includes FHLB advances, Brokered Deposits and Brokered Repurchase Agreements 0% 3% 6% 9% 12% 15% 18% 21% 24% - 200,000,000 400,000,000 600,000,000 800,000,000 1,000,000,000 1,200,000,000 1,400,000,000 1,600,000,000 Brokered Repurchase Agreements Brokered Deposits FHLB Advances FHLB Borrowings and Brokered Deposits/Repurchase Agreements as % of Total Liabilities
P A R K N A T I O N A L B A N K 31 Uninsured Deposits Trend 77.2% 78.8% 81.4% 83.0% 82.8% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Insured Collateralized Exposed
P A R K N A T I O N A L C O R P O R A T I O N Appendix
Reconciliation of Non-GAAP Financial Measures P A R K N A T I O N A L C O R P O R A T I O N 33 Reconciliation of Average Shareholders' Equity to Average Tangible Equity For the Twelve Months Ended For the Three Months Ended For the Nine Months Ended 12/31/2019 12/31/2020 12/31/2021 12/31/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 9/30/2023 9/30/2023 Average Shareholders' Equity 922,174$ 1,009,102$ 1,065,460$ 1,076,879$ 1,076,526$ 1,055,509$ 1,090,952$ 1,091,016$ 1,102,677$ 1,094,924$ Less: Average Goodwill and Other Intangible Assets 158,194 170,031 167,993 166,337 166,136 165,794 165,457 165,129 164,801 165,127 Average Tangible Equity 763,980$ 839,071$ 897,467$ 910,542$ 910,390$ 889,715$ 925,495$ 925,887$ 937,876$ 929,797$ Reconciliation of Total Shareholders' Equity to Tangible Equity As of As of 12/31/2019 12/31/2020 12/31/2021 12/31/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 9/30/2023 Total Shareholders' Equity 969,014$ 1,040,256$ 1,110,759$ 1,069,226$ 1,036,172$ 1,069,226$ 1,082,153$ 1,088,757$ 1,085,564$ Less: Goodwill and Other Intangible Assets 171,118 168,855 167,057 165,570 165,911 165,570 165,243 164,915 164,581 Tangible Equity 797,896$ 871,401$ 943,702$ 903,656$ 870,261$ 903,656$ 916,910$ 923,842$ 920,983$ Reconciliation of Total Assets to Tangible Assets As of As of 12/31/2019 12/31/2020 12/31/2021 12/31/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 9/30/2023 Total Assets 8,558,377$ 9,279,021$ 9,560,254$ 9,854,993$ 9,855,047$ 9,854,993$ 9,856,981$ 9,899,551$ 10,000,914$ Less: Goodwill and Other Intangible Assets 171,118 168,855 167,057 165,570 165,911 165,570 165,243 164,915 164,581 Tangible Assets 8,387,259$ 9,110,166$ 9,393,197$ 9,689,423$ 9,689,136$ 9,689,423$ 9,691,738$ 9,734,636$ 9,836,333$
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 12/31/2021 12/31/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 9/30/2023 9/30/2023 Interest Income 360,500$ 357,720$ 345,853$ 378,247$ 99,944$ 108,810$ 110,901$ 114,674$ 120,889$ 346,464$ Fully Taxable Equivalent Adjustment 2,956 2,866 2,911 3,541 932 918 926 920 1,042 2,888 Fully Taxable Equivalent Interest Income 363,456$ 360,586$ 348,764$ 381,788$ 100,876$ 109,728$ 111,827$ 115,594$ 121,931$ 349,352$ Less: Interest Expense 62,763 30,090 15,960 31,188 9,116 14,204 18,703 23,102 26,620 68,425 Fully Taxable Equivalent Net Interest Income 300,693$ 330,496$ 332,804$ 350,600$ 91,760$ 95,524$ 93,124$ 92,492$ 95,311$ 280,927$ Reconciliation of Pre-Tax, Pre-Provision Net Income 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 9/30/2022 12/31/2022 3/31/2023 6/30/2023 9/30/2023 9/30/2023 Net Income 102,700$ 127,923$ 153,945$ 148,351$ 42,068$ 33,084$ 33,733$ 31,584$ 36,917$ 102,234$ Plus: Income Taxes 22,071 26,722 34,290 32,108 9,361 7,279 6,166 6,626 8,837 21,629 Plus: Provision for (Recovery of) Credit Losses 6,171 12,054 (11,916) 4,557 3,190 2,981 183 2,492 (1,580) 1,095 Pre-Tax, Pre-Provision Net Income 130,942$ 166,699$ 176,319$ 185,016$ 54,619$ 43,344$ 40,082$ 40,702$ 44,174$ 124,958$ Calculation of Allowance for Credit Losses / Loans For the Twelve Months Ended For the Three Months Ended 12/31/2019 12/31/2020 12/31/2021 12/31/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 9/30/2023 Allowance for Credit Losses 56,679$ 85,675$ 83,197$ 85,379$ 83,961$ 85,379$ 85,946$ 87,206$ 84,602$ Loans 6,501,404 7,177,785 6,871,122 7,141,891 7,103,246 7,141,891 7,093,857 7,208,109 7,349,745 Allowance for Credit Losses / Loans 0.87% 1.19% 1.21% 1.20% 1.18% 1.20% 1.21% 1.21% 1.15% *Tangible book value = Tangible equity divided by common shares outstanding at period end. Tangible equity equals total shareholders' equity less goodwill and other intangible assets, in each case at the end of the period. *Return on Average Tangible Equity = Net income for each period divided by average tangible assets during the period. Average tangible assets equal average assets less average goodwill and other intangible assets, in each case during the applicable period. *Efficiency ratio is calculated by dividing total other expense by the sum of fully taxable equivalent net interest income and other income. Fully taxable equivalent net interest income reconciliation is shown assuming a 21% corporate federal income tax rate. *Net interest margin is calculated on a fully taxable equivalent basis by dividing fully taxable equivalent net interest income by average interest earning assets, in each case during the applicable period.
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