Paragon Financial Solutions, Inc. (tn) · OTC:PGNN
Paragon Financial Solutions, Inc. (tn) — Paragon Financial Solutions — Shareholder Meeting (May 2021)
73 slides from Paragon Financial Solutions, Inc. (tn)'s shareholder meeting presentation, May 20, 2021
Slide 1: Annual Shareholder Meeting
Annual Shareholder Meeting May 20, 2021
Slide 2: 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 3: Paragon Financial Solutions
PARAGON FINANCIAL SOLUTIONS PIRsOT ) People You Know, Solutions That Work
Slide 4: COVID Impact
COVID Impact Implemented Paragon’s Business Continuity Plan 3-16-2020 Branch lobbies were open by appointment only Restricted vendor access Many employees began working from home Several employees were relocated within Paragon facilities to provide separation Restricted travel Began assessing potent
Slide 5: Era Reed Walls
Era Reed Walls
Slide 6: COVID Impacted Many Areas
COVID Impacted Many Areas Conventional loans Investment yields SBA loans Loan fees PPP loans Service charge income Investment securities Mortgage income Deposits Noninterest expense Net interest margins Capital ratios
Slide 7: Trifecta! Top Work Places three years in a row
Trifecta! TOP WORK PLACES 2020 3 years in a row!
Slide 8: American Banker: Paragon Bank best places to work
AMERICAN BANKER LEADERS POLICY & REGULATION COMMUNITY BANKING CREDITUNIONS MORE 5 Paragon Bank Memphis, Tenn. Assets: $498 million Employees: 84 CEO: Robert Shaw, Jr. bankparagon.com Special delivery: During Paragon Bank's annual “employee appreciation week" in June, CEO Robert Shaw, Jr, personally
Slide 9: Asset Trends
J PARAGON FINANCIAL SOLUTIONS ASSET TRENDS N
Slide 10: Total Assets
Total Assets (end of period in millions) 20% 484 496 500 401 404 377 400 352 304 300 272 200 100 0 2014 2015 2016 2017 2018 2019 2020 1Q21
Slide 11: Total Loans
Total Loans (end of period in millions) 450 18% 393 400 331 333 350 315 289 300 246 250 215 200 150 100 50 0 2014 2015 2016 2017 2018 2019 2020
Slide 12: Paycheck Protection Program (PPP) Loans
Paycheck Protection Program (PPP) Loans Number of loans 799 Volume of loans 94,092,000 Loan fees 3,827,378 Jobs impacted 9,696 In a time of distancing, we worked closer together! PPP loans carry a 1% interest rate and are forgivable Fees are recognized over the life of the loan or at forgiveness As
Slide 13: Paycheck Protection Program (PPP) Loans: Peer Ranking
Paycheck Protection Program (PPP) Loans # Institution Total Loans PPP Loan $ Perc 1 Paragon Bank 416,282,000 93,451,000 22.45 2 Bank of Bartlett 300,082,000 63,132,000 21.04 3 Bank3 236,062,000 43,101,000 18.26 4 Tri-State Bank of Memphis 52,095,000 4,632,000 8.89 5 Triumph Bank 703,948,000 49,031,0
Slide 14: New Loan Volume Originated
New Loan Volume Originated (in millions) 300 256.6 57% 250 190.0 182.3 200 154.9 163.4 95.2 42.3 33.2 10.2 150 33.0 34.0 100 151.2 147.7 149.1 121.9 129.4 50 0 2016 2017 2018 2019 2020 Number of Loans Originated 2018 2019 2020 Core Bank SBCG PPP Loans Regular Loans 522 566 419 PPP Loans 799 Total Or
Slide 15: Total Loans by Category
Total Loans (end of period in thousands) $ % 12/31/2020 12/31/2019 Difference Difference Core Bank 260,196 275,565 (15,369) -5.6% Small Business Capital Group 42,686 42,533 153 0.4% Purchased Loans 17,777 15,013 2,764 18.4% Special Assets 205 247 (42) -17.0% Paycheck Protection Plan 72,243 0 72,243
Slide 16: The Consolidated Appropriations Act, 2021
The Consolidated Appropriations Act, 2021 Passed by Congress and signed by the President - December 2020 90% guarantee for new SBA loans with no fees Paycheck Protection Program (PPP) Second Draw
Slide 17: Paycheck Protection Program (PPP) Second Draw
Paycheck Protection Program (PPP) Second Draw March 31, 2021 Number of loans 366 Volume of loans 38,364,400 Loan fees 1,867,943 Jobs impacted 1,841 At March 31, 2021, Paragon had $2.1 million in unrecognized deferred first and second draw PPP fees.
Slide 18: Total Loans
Total Loans (end of period in millions) 450 403 393 400 331 333 350 315 289 300 246 250 215 200 150 100 50 0 2014 2015 2016 2017 2018 2019 2020 1Q21
Slide 19: Deposit Trends
J PARAGON FINANCIAL SOLUTIONS DEPOSIT TRENDS N
Slide 20: Total Deposits
Total Deposits (end of period in millions) 23% 424 436 450 400 346 343 350 302 279 300 251 250 224 200 150 100 50 0 2014 2015 2016 2017 2018 2019 2020 1Q21 Brokered Deposits 12/31/2016 12/31/2017 12/31/2018 12/31/2019 12/31/2020 3/31/2021 (in millions) 34.2 57.7 70.3 41.1 29.6 21.9
Slide 21: Core Deposits
Core Deposits (end of period in millions) 450 396 416 400 30% 350 305 300 273 245 244 250 216 227 200 150 100 50 0 2014 2015 2016 2017 2018 2019 2020 1Q21
Slide 22: DDAs to Average Total Deposits
DDAs to Average Total Deposits (end of period in millions) 28.00% 26.00% 24.88% 23.61% 23.22% 24.00% 22.58% 22.00% 20.75% 20.83% 20.69% 20.96% 20.20% 19.98% 20.00% 17.45%17.72% 18.00% 16.89% 16.00% 14.00% FDIC Peer at 3-31-2021 20.49% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 4Q12 4Q13 4Q14 4Q15 4Q16 4Q
Slide 23: Investments
J PARAGON FINANCIAL SOLUTIONS INVESTMENTS N
Slide 24: Total Investments
Total Investments (end of period in millions) 100 88 90 80 70 62 57 60 53 51 47 50 41 37 40 30 20 10 0 4Q07 4Q15 4Q16 4Q17 4Q18 4Q19 4Q20 1Q21
Slide 25: Unrealized Gain/(Loss) on Investments
Unrealized Gain/(Loss) on Investments (in thousands) 2,000 1,683 1,499 1,558 1,654 1,500 993 969 1,000 700 606 500 0 (100) -500 -1,000 (1,118) (1,044) (1,422) -1,500 (1,846) -2,000 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21
Slide 26: Capital Trends
J PARAGON FINANCIAL SOLUTIONS CAPITAL TRENDS N
Slide 27: Capital Ratios
Capital Ratios 18.00% 17.20% 17.22% 16.30% 15.94% 16.00% 15.37% 15.38% 14.22% 14.19% 14.48% 15.94% 15.96% 14.00% 15.06% 14.69% 14.11% 14.19% 12.00% 12.96% 12.94% 13.22% 10.00% 10.92% 11.07% 10.65% 10.50% 10.51% 10.43% 10.21% 9.87% 9.99% 8.00% 6.00% 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 4Q19 4Q20 1Q21 Total
Slide 28: 2020 Top 200 Healthiest Banks
Slide 29: LN ILM re hoy
LN ILM re hoy APIA TS Ae son Fe AIS oe Wc FETE ) People You Know, Solutions That Work
Slide 30: Capitalization, Deposit growth, Texas ratio
Capitalization Deposit growth Texas ratio
Slide 31: Capital Ratios: Memphis-Based Community Banks
Capital Ratios Memphis-Based Community Banks December 31, 2020 Total Risk-Based Tier 1 Leverage Capital Capital Ratio Financial Federal 11.54% First Capital 10.41% ** Landmark 14.89% 14.00% 10.08% Paragon Bank 17.20% 15.94% 9.99% Triumph Bank 12.54% 11.29% 9.57% Bank of Fayette County 9.13% ** Bank3
Slide 32: Stock Repurchases
Stock Repurchases Due to Paragon’s strong capital position, the Board of Directors has authorized three stock repurchase programs over the last twelve months: $1 million – announced 6-3-2020 $500 thousand – announced 11-4-2020 $5 million – announced 2-2-2021 (3-year program) The Board of Directors b
Slide 33: Stock Repurchases: Shares Repurchased and Retired
Stock Repurchases Paragon Financial Solutions Shares Repurchased and Retired Shares Gross Average Authorized Repurchased Repurchased Price $1,000,000 115,000 $ 999,017.85 $ 8.69 $500,000 55,000 $ 476,017.85 $ 8.65 $5,000,000 63,133 $ 620,449.75 $ 9.83 Thru 4/26/2021 233,133 $ 2,095,485.45 $ 8.99
Slide 34: Stock Repurchases: Dividends to Holding Company
Stock Repurchases Paragon Bank Dividend to Holding Company 6/18/2020 $ 375,000 11/13/2020 $ 125,000 11/18/2020 $ 150,000 11/24/2020 $ 180,000 2/10/2021 $ 241,250 2/22/2021 $ 220,000 3/16/2021 $ 85,000 3/31/2021 $ 33,750 $ 1,410,000
Slide 35: Income Trends
FINANCIAL SOLUTIONS INCOME TRENDS
Slide 36: Total Revenue
Total Revenue (in 000’s) 6,000 5,565 5,029 5,230 4,780 4,659 4,643 4,729 5,000 4,374 1,016 4,200 855 998 1,257 4,000 1,219 1,091 1,125 901 889 999 1,277 516 565 3,000 2,000 3,473 3,561 3,568 3,518 3,311 3,376 3,215 3,207 3,272 1,000 0 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 Net Interest Income
Slide 37: Prime Rate
Prime Rate 6.00% 5.00% 5.50% 5.25% 5.25% 5.00% 5.00% 4.75% 4.75% 4.00% 4.25% 3.00% 3.25% 2.00% 1.00% 0.00% 3/22/18 6/14/18 9/27/18 12/20/18 7/31/19 9/18/19 10/30/19 3/3/20 3/15/20
Slide 38: 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% 0.64% 0.98% 0.37% 0.46% 0.50% 0.60% 0.44% 0.39% 0.32% 0.00% 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 Core Funding Brokered & Wholesale
Slide 39: Net Interest Margin
Net Interest Margin 4.50% 4.18% 4.08% 3.98% 3.94% 4.00% 3.73% 3.69% 3.66% 3.62% 3.41% 3.50% 3.20% 3.14% 3.47% 3.40% 3.00% 3.28% 3.33% 2.50% 2.00% 1.50% 1.00% 2014 2015 2016 2017 2018 2019 1Q20 2Q20 3Q20 4Q20 1Q21 NIM Without PPP
Slide 40: Noninterest Income Trends
J PARAGON FINANCIAL SOLUTIONS NONINTEREST INCOME TRENDS N
Slide 41: Total Noninterest Income
Total Noninterest Income (in 000’s) 5,694 6,000 4,941 4,648 5,000 4,361 4,006 4,000 3,488 3,052 3,121 2,841 2,335 3,000 1,628 1,096 1,689 1,627 2,000 38 939 582 1,112 699 530 446 701 503 1,000 1,257 1,290 1,361 1,444 1,266 988 1,086 1,267 0 2013 2014 2015 2016 2017 2018 2019 2020 Core Noninterest In
Slide 42: Memphis MSA SBA Lenders
Memphis MSA SBA Lenders Year Ended 9-30-20 Year Ended 9-30-19 Year Ended 9-30-18 # of $ of # of $ of # of $ of Bank Loans Loans Loans Loans Loans Loans First Horizon Bank 63 69,835,000 16 22,096,500 16 18,101,800 Evolve Bank & Trust 33 24,698,900 24 16,309,400 34 28,399,800 Paragon Bank 21 23,445,00
Slide 43: 10 Year Treasury Yield
10 Year Treasury Yield B ) People You Know, Solutions That Work
Slide 44: Mortgage Loans Closed
Mortgage Loans Closed (thousands) 100,000 88,521 90,000 80,000 68,171 68,921 70,000 60,000 54,434 55,322 50,000 44,846 39,280 41,568 40,000 34,918 30,000 19,192 20,000 10,000 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 1Q21
Slide 45: Noninterest Expense Trends
J PARAGON FINANCIAL SOLUTIONS NONINTEREST EXPENSE TRENDS N
Slide 46: Noninterest Expense
Noninterest Expense 16,000 13,693 14,006 14,144 13,557 13,847 14,000 12,557 284 555 732 169 660 12,000 2,697 2,394 3,019 3,129 2,440 2,565 10,000 8,000 6,000 9,992 10,390 10,322 10,715 10,457 11,284 4,000 2,000 0 2015 2016 2017 2018 2019 2020 Core Bank SBCG Specialty Lending
Slide 47: Noninterest Expense
Noninterest Expense Total Bank 1 Year Average 2.14% 2 Year Average -1.05% 3 Year Average -0.38% 4 Year Average 0.28% 5 Year Average 2.05% Over the last 5 years, Paragon’s expenses have increased an average of 2%, while revenue has increased an average of 10%
Slide 48: Efficiency Ratio
Efficiency Ratio 100.00% 97.10% 90.00% 80.00% 75.80% 74.40% 73.60% 73.50% 72.10% 70.00% 60.00% 50.00% 2015 2016 2017 2018 2019 2020
Slide 49: Credit Quality Trends
J PARAGON FINANCIAL SOLUTIONS CREDIT QUALITY TRENDS N
Slide 50: Non-SBA Loan Deferrals
Non-SBA Loan Deferrals (end of period $000) % of Total Number Loan 3-31-21 of Loans Balances Loans Original Loans Deferred 169 60,617 15.04% Loans Paid Off (38) (5,718) Lines or HELOCs w/ multiple payments (9) (4,686) Two or more P&I payments made & current (117) (48,753) February 2021 deferral 1 16
Slide 51: SBA Loan Payments
SBA Loan Payments Coronavirus Aid, Relief, and Economic Security Act (CARES ACT) – March 2020 – SBA made 6 months of loan payments on SBA loans The Consolidated Appropriations Act – December 2020 – SBA made additional payments up to $9,000 per month • 5 months for restaurants and hospitality • 3 mon
Slide 52: Loan Loss Allowance Levels
Loan Loss Allowance Levels Paragon Bank’s Historical Allowance For Loan Losses: $1.8mm or 0.55% 12/31/19: $3.8mm or 1.17% of Loans Paragon Bank’s Allowance Build: 3/31/20; $4.0mm or 1.22% of Loans 6/30/20: $4.5mm or 1.08% of Loans 1.39% of Loans, Excluding PPP Loans
Slide 53: Loan Loss Allowance
Loan Loss Allowance 2020 Q1 2021 PPP Fees Recognized 1,875,768 1,390,891 2020 Q1 2021 Beginning Allowance 3,837,252 5,706,729 Provision 1,861,000 973,000 Net (Charge Offs)/Recoveries 8,477 197,532 ----------- ----------- Ending Allowance 5,706,729 6,877,261
Slide 54: 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 2,000 1,332 1,447 764 620 407 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 1Q21
Slide 55: 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% 1.00% 0.69% 0.48% 0.35% 0.36% 0.19% 0.13% 0.08% 0.00% 2012 2013 2014 2015 2016 2017 2018 2019 2020 1Q21
Slide 56: Loan Loss Reserve to Gross Loans
Loan Loss Reserve to Gross Loans (end of period) 1.80% 1.71% 1.60% 1.49% 1.47% 1.44% 1.45% 1.45% 1.39% 1.40% 1.31% 1.17% 1.15% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% 2012 2013 2014 2015 2016 2017 2018 2019 2020 1Q21
Slide 57: Loan Loss Reserve to Gross Loans
Loan Loss Reserve to Gross Loans (end of period – excluding fully government-guaranteed loans) 2.50% 2.36% 1.97% 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 1Q21
Slide 58: Income Statement Trends
J PARAGON FINANCIAL SOLUTIONS INCOME STATEMENT TRENDS N
Slide 59: Net Income
Net Income 5,000 4,647 4,500 4,000 3,500 3,144 3,188 3,000 2,757 2,500 2,135 2,108 2,000 1,500 1,000 880 632 500 91 0 2013 2014 2015 2016 2017 2018 2019 2020 1Q21
Slide 60: Pre-Tax Net Income
Pre-Tax Net Income 4,500 4,126 4,275 4,138 4,000 3,724 3,421 3,500 3,000 2,500 2,000 1,500 1,104 1,171 1,068 1,000 500 132 0 2013 2014 2015 2016 2017 2018 2019 2020 1Q21
Slide 61: Operating Income
Operating Income (income before security g/l, provision, & taxes – in thousands) 6,000 5,342 5,073 4,898 4,824 5,000 4,384 4,000 3,000 2,109 2,000 1,094 1,000 585 379 0 2013 2014 2015 2016 2017 2018 2019 2020 1Q21
Slide 62: Return on Equity
Return on Equity 0 8.04% 0 7.21% 7.24% 0 5.65% 5.69% 0 0 0 0 0 0 0 2017 2018 2019 2020 1Q21
Slide 63: Stock Trends
FINANCIAL SOLUTIONS STOCK TRENDS
Slide 64: PGNN
PGNN Paragon Financiat Solutions, tc. 10:30 2001000 ) People You Know, Solutions That Work
Slide 65: PGNN v. KBW Bank Index
PGNN v. KBW Bank Index The KBW Bank Index, developed by Keefe, Bruyette and Woods, includes 24 banking stocks. The stocks represent large U.S. 34.91% national money center banks, regional banks, and thrift institutions. KBW Bank Index is a benchmark stock index for the banking sector. 7.63% PGNN - K
Slide 66: PGNN v. NASDAQ Bank Index
PGNN v. NASDAQ Bank Index The NASDAQ Bank Index contains securities of NASDAQ- 31.34% listed companies classified according to the Industry Classification Benchmark as Banks. 7.63% PGNN - NASDAQ Index -
Slide 67: PGNN v. SNL Micro Cap U.S. Bank Index
PGNN v. SNL Micro Cap U.S. Bank Index 120.00 97.91% 100.00 80.00 89.02% 60.00 40.00 The SNL Micro Cap U.S. Bank Index includes all publicly traded (NYSE, NYSE MKT, NASDAQ, OTC) Banks in SNL’s coverage universe with less than 20.00 $250M Total Common Market Capitalization. 0.00 PGNN - SNL Index -
Slide 68: Period-End Book Value
Period-End Book Value $12.00 $11.09 $11.18 $11.00 Over the last eight years, book value has increased an $10.32 $10.00 average of 7.8% per year. $9.35 $8.84 $9.00 $8.31 $7.89 $7.95 $8.00 $7.46 $6.83 $7.00 $6.00 $5.00 12/31/12 12/31/13 12/31/14 12/31/2015 12/31/2016 12/31/2017 12/31/18 12/31/19 12/31
Slide 69: Summary & Wrap Up
J PARAGON FINANCIAL SOLUTIONS SUMMARY & WRAP UP N
Slide 70: 2020 Records
2020 Records • Loan Volumes • Demand Deposits • Total Assets • Net Interest Income • Mortgage Banking Income • Operating Income • Efficiency • Lowest Level of NPA’s/Total Assets Since First Quarter of 2007
Slide 71: First Quarter 2021 Records
First Quarter 2021 Records • Net Income • Net Interest Income • Mortgage Banking Income • Total Revenue • Efficiency • Operating Income • Lowest Level of NPA’s/Total Assets Since First Quarter of 2007
Slide 72: Questions
FINANCIAL SOLUTIONS QUESTIONS
Slide 73: Annual Shareholder Meeting
Annual Shareholder Meeting May 20, 2021
Paragon Financial Solutions — Shareholder Meeting (May 2021) on 6ix