PARK NATIONAL CORP /OH/ Material Event - Acquisition Completed

Park National Corp has just completed a significant acquisition, a move poised to reshape its market presence. This summary provides a clear, concise breakdown of the deal, explaining its impact on investors, employees, and customers, and outlining what to watch for next.

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Park National Corp Completes Major Acquisition

Park National Corp, a leading bank holding company, completed its acquisition of First Citizens Bancshares, Inc. on February 1, 2024. This strategic move integrates First Citizens and its banking subsidiary, First Citizens National Bank, into Park National's operations. The companies initially announced the merger agreement on October 27, 2023, and Park National publicly confirmed its completion via a press release on February 2, 2024.

In the transaction, each outstanding share of First Citizens common stock converted into 0.52 shares of Park National Corp common stock. This all-stock deal was valued at approximately $60 million based on Park National's stock price at the announcement, creating a significantly larger combined entity.

Why This Matters: Strategic Growth and Enhanced Market Position

This acquisition marks a pivotal step in Park National's long-term growth strategy, aiming to significantly expand its market presence and strengthen its competitive position.

• Expanded Footprint: The merger immediately strengthens Park National's presence by establishing a new, dedicated Tennessee Region. Former First Citizens CEO, Jeffrey D. Agee, will lead this region, expanding Park National's geographic reach and deepening its roots in key markets.
• Increased Scale: The combined organization now boasts approximately $10.4 billion in assets, $8.7 billion in deposits, and $7.2 billion in loans across 115 banking offices. Park National expects this larger scale to drive greater operational efficiencies and market share.
• Financial Synergies: Park National anticipates significant cost savings (synergies) from the integration, projected at approximately 15% of First Citizens' non-interest expenses. These savings should be fully phased in by late 2025. The company expects these savings to boost earnings per share (EPS) for Park National shareholders by approximately 5% in 2025 and 7% in 2026, excluding one-time merger-related costs.
• Diversified Offerings: The integration enables a broader range of financial products and services for the combined customer base, potentially leading to revenue growth.

Who Is Affected?

• Park National Corp Shareholders: Your investment now represents a larger, more geographically diverse banking entity. While issuing new shares to First Citizens shareholders causes some dilution, the expected EPS growth and long-term potential are key considerations. Monitor the stock's performance as integration progresses.
• First Citizens Shareholders: You are now Park National Corp shareholders, holding 0.52 shares of Park National for each First Citizens share previously owned. This gives you ownership in a larger, publicly traded regional bank.
• Employees: Park National welcomes new colleagues from First Citizens. While integration often involves some role adjustments, the new Tennessee Region and Jeffrey D. Agee's appointment to Park National's board and as its regional CEO highlight leadership and growth opportunities within the combined organization.
• Customers: Customers of both banks will experience a unified banking platform, potentially including new branch access, enhanced digital services, and a broader suite of financial products. Integration will involve system conversions, which Park National will communicate clearly.
• Competitors: Other regional banks now face a larger, more competitive Park National Corp with an expanded presence and enhanced financial capabilities.

What Happens Next: Integration, Performance, and Risk Management

With the merger complete, the focus shifts to integrating operations and realizing the anticipated benefits.

• Operational Integration: Over the next 12-18 months, Park National will merge systems, consolidate operations, and align corporate cultures. Key milestones include system conversions, branch branding updates, and fully integrating customer accounts. Establishing the Tennessee Region under Mr. Agee's leadership is crucial for regional growth.
• Financial Reporting: Investors should closely monitor Park National's upcoming earnings reports for updates on integration costs, synergy realization, and the combined entity's financial performance. The first full quarter reflecting the combined operations will be particularly important.
• Risk Management: While the strategic rationale is strong, acquisitions carry inherent risks. These include potential challenges in integrating disparate systems and cultures, retaining key employees and customers, and the possibility of integration costs exceeding initial estimates. Economic downturns or unexpected regulatory changes could also impact the projected benefits.

Key Takeaways for Investors

• Monitor Financial Performance: Closely follow Park National's earnings calls and investor presentations. Look for updates on actual cost savings achieved, revenue growth, and the impact on key metrics like Net Interest Margin (NIM), Return on Assets (ROA), and Efficiency Ratio.
• Integration Execution: Effective integration is crucial for this acquisition's success. Watch for management's comments on system conversion progress, customer retention rates, and employee morale. Any significant delays or unexpected costs could impact financial projections.
• Strategic Vision: The expansion into Tennessee and Jeffrey D. Agee's leadership role are central to the growth strategy. Evaluate how this new region contributes to overall loan and deposit growth and market share gains.
• Risk Assessment: While the deal is closed, integration risks remain. Consider the potential for customer attrition during system changes, cultural clashes, or higher-than-expected integration expenses. Assess how Park National's management mitigates these risks.
• Long-Term Perspective: Acquisitions are long-term plays. While initial market reactions can be volatile, the combined entity will realize true value over several years as it fully achieves synergies and leverages its increased scale and market position.