Investor Relations

Press Release

Park National Corporation reports financial results for second quarter and first half of 2018

Company Release - 7/23/2018 4:15 PM ET

NEWARK, Ohio, July 23, 2018 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE American:PRK) today reported financial results for the second quarter and first half of 2018 (three and six months ended June 30, 2018). Park's board of directors also declared a quarterly cash dividend of $0.96 per common share, payable on September 10, 2018 to common shareholders of record as of August 17, 2018.

Park’s net income for the second quarter of 2018 was $28.2 million, a 48.4 percent increase from $19.0 million for the second quarter of 2017. Second quarter 2018 net income per diluted common share was $1.83, compared to $1.24 in the second quarter of 2017. Park's net income for the six months ended 2018 was $59.4 million, a 51.1 percent increase from $39.3 million for the six months ended 2017. Six months ended 2018 net income per diluted common share was $3.85, compared to $2.55 for the six months ended 2017. Increased net interest income, steady fee income, benefits from credit recoveries, decreased loan loss provision, federal tax changes, and other factors all contributed to Park’s net income results in the second quarter.

“We continue to focus on long-term plans to fuel and sustain loan growth and strong overall performance,” said Park Chief Executive Officer David L. Trautman. “We celebrated NewDominion Bank officially joining our organization on July 1st, and everyone is engaged in further fortifying that relationship and ensuring a smooth transition.” 

Park's community-banking subsidiary, The Park National Bank, reported net income of $28.8 million for the second quarter of 2018, compared to $20.2 million for the second quarter of 2017 and $55.5 million for the six months ended 2018, compared to $41.6 million for the six months ended 2017.

Headquartered in Newark, Ohio, Park National Corporation had $7.5 billion in total assets (as of June 30, 2018). With the addition of NewDominion Bank effective July 1, 2018, the Park organization now consists of 11 community bank divisions, a non-bank subsidiary and two specialty finance companies. Park's banking operations are conducted through Park subsidiary The Park National Bank and its divisions, which include Fairfield National Bank Division, Richland Bank Division, Century National Bank Division, First-Knox National Bank Division, United Bank, N.A. Division, Second National Bank Division, Security National Bank Division, Unity National Bank Division, The Park National Bank of Southwest Ohio & Northern Kentucky Division, and NewDominion Bank Division. The Park organization also includes Scope Leasing, Inc. (d.b.a. Scope Aircraft Finance), Guardian Financial Services Company (d.b.a. Guardian Finance Company) and SE Property Holdings, LLC.

Complete financial tables are listed below…

Media contact: Bethany Lewis, 740.349.0421, blewis@parknationalbank.com
Investor contact: Brady Burt, 740.322.6844, bburt@parknationalbank.com
Park National Corporation
50 N. Third Street, Newark, Ohio 43055
www.parknationalcorp.com

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Park cautions that any forward-looking statements contained in this Current Report on Form 8-K or made by management of Park 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: Park's ability to execute our business plan successfully and within the expected timeframe; general economic and financial market conditions, specifically in the real estate markets and the credit markets, either nationally or in the states in which Park and our subsidiaries do business, may experience a slowing or reversal of the recent economic expansion in addition to continuing residual effects of recessionary conditions and an uneven spread of positive impacts of recovery on the economy and our counterparties, resulting in adverse impacts on the demand for loan, deposit and other financial services, delinquencies, defaults and counterparties' ability to meet credit and other obligations; changes in interest rates and prices may adversely impact prepayment penalty income, mortgage banking income, the value of securities, loans, deposits and other financial instruments and the interest rate sensitivity of our consolidated balance sheet as well as reduce interest margins and impact loan demand; changes in consumer spending, borrowing and saving habits, whether due to the newly-enacted tax reform legislation, changing business and economic conditions, legislative and regulatory initiatives, or other factors; changes in unemployment; changes in customers', suppliers', and other counterparties' performance and creditworthiness; asset/liability repricing risks and liquidity risks; our liquidity requirements could be adversely affected by changes to regulations governing bank and bank holding company capital and liquidity standards as well as by changes in our assets and liabilities; competitive factors among financial services organizations could increase significantly, including product and pricing pressures, changes to third-party relationships and our ability to attract, develop and retain qualified bank professionals; clients could pursue alternatives to bank deposits, causing us to lose a relatively inexpensive source of funding; 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, pensions, bankruptcy, consumer protection, rent regulation and housing, financial accounting and reporting, environmental protection, insurance, bank products and services, bank capital and liquidity standards, fiduciary standards, securities and other aspects of the financial services industry, specifically the reforms provided for in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and the Basel III regulatory capital reforms, as well as regulations already adopted and which may be adopted in the future by the relevant regulatory agencies, including the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve Board, to implement the Dodd-Frank Act's provisions, and the Basel III regulatory capital reforms; the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board, the SEC, the Public Company Accounting Oversight Board and other regulatory agencies, and the accuracy of our assumptions and estimates used to prepare our financial statements; changes in law and policy accompanying the current presidential administration, including the recently-enacted Tax Cuts and Jobs Act, and uncertainty or speculation pending the enactment of such changes; uncertainties in Park's preliminary review of, and additional analysis of, the impact of the Tax Cuts and Jobs Act; the effect of healthcare laws in the United States and potential changes for such laws which may increase our healthcare and other costs and negatively impact our operations and financial results; significant changes in the tax laws, which 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; the effect of trade, monetary, fiscal and other governmental policies of the U.S. federal government, including money supply and interest rate policies of the Federal Reserve Board; disruption in the liquidity and other functioning of U.S. financial markets; 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 creditworthiness of certain sovereign governments, supranationals and financial institutions in Europe and Asia; the uncertainty surrounding the actions to be taken to implement the referendum by United Kingdom voters to exit the European Union; our litigation and regulatory compliance exposure, including any adverse developments in legal proceedings or other claims and unfavorable resolution of regulatory and other governmental examinations or other inquiries; the adequacy of our risk management program; the impact of our ability to anticipate and respond to technological changes on our ability to respond to customer needs and meet competitive demands; the ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks; a failure in or breach of our 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; 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; fraud, scams and schemes of third parties; the impact of widespread natural and other disasters, pandemics, dislocations, civil unrest, terrorist activities or international hostilities on the economy and financial markets generally or on us or our counterparties specifically; demand for loans in the respective market areas served by Park and our subsidiaries; the risk that the businesses of PNB and NewDominion Bank will not be integrated successfully following the recently-completed merger transaction involving Park, PNB and NewDominion Bank (the "NewDominion Transaction") or such integration may be more difficult, time-consuming or costly than expected; expected revenue synergies and cost savings from the NewDominion Transaction may not be fully realized within the expected timeframe; revenues following the NewDominion Transaction may be lower than expected; customer and employee relationships and business operations may be disrupted by the NewDominion Transaction; Park issued equity securities in the NewDominion Transaction, and may issue equity securities in connection with future acquisitions, which could cause ownership and economic dilution to Park's current shareholders; and other risk factors relating to the banking 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, 2017. Park does not undertake, and specifically disclaims any obligation, to publicly release the results of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement was made, or reflect the occurrence of unanticipated events, except to the extent required by law.

PARK NATIONAL CORPORATION
Financial Highlights
As of or for the three months ended June 30, 2018, March 31, 2018, and June 30, 2017     
       
 201820182017 Percent change vs.
(in thousands, except share and per share data)2nd QTR1st QTR2nd QTR 1Q '182Q '17
INCOME STATEMENT:      
Net interest income$64,742 $64,850 $59,778  (0.2) %8.3%
Provision for loan losses1,386 260 4,581  N.M. N.M. 
Other income23,242 26,903 20,699  (13.6) %12.3%
Other expense52,534 54,308 49,554  (3.3) %6.0%
Income before income taxes$34,064 $37,185 $26,342  (8.4)%29.3%
Federal income taxes5,823 6,062 7,310  (3.9)%(20.3) %
Net income$28,241 $31,123 $19,032  (9.3)%48.4%
       
MARKET DATA:      
Earnings per common share - basic (b)$1.85 $2.04 $1.24  (9.3)%49.2%
Earnings per common share - diluted (b)1.83 2.02 1.24  (9.4)%47.6%
Cash dividends per common share1.21 0.94 0.94  28.7%28.7%
Book value per common share at period end49.51 49.20 49.18  0.6%0.7%
Market price per common share at period end111.42 103.76 103.72  7.4%7.4%
Market capitalization at period end1,699,277 1,587,642 1,586,613  7.0%7.1%
       
Weighted average common shares - basic (a)15,285,532 15,288,332 15,297,085  %(0.1)%
Weighted average common shares - diluted (a)15,417,607 15,431,328 15,398,865  (0.1)%0.1%
Common shares outstanding at period end15,251,095 15,301,103 15,297,080  (0.3)%(0.3)%
       
PERFORMANCE RATIOS: (annualized)      
Return on average assets (a)(b)1.52%1.69%0.99% (10.1) %53.5%
Return on average shareholders' equity (a)(b)15.02%16.84%10.13% (10.8) %48.3%
Yield on loans4.90%4.94%4.63% (0.8) %5.8%
Yield on investment securities2.73%2.62%2.44% 4.2%11.9%
Yield on money markets1.99%1.63%1.05% 22.1%89.5%
Yield on earning assets4.39%4.40%4.02% (0.2) %9.2%
Cost of interest bearing deposits0.64%0.54%0.44% 18.5%45.5%
Cost of borrowings1.84%1.72%2.38% 7.0%(22.7) %
Cost of paying liabilities0.79%0.71%0.80% 11.3%(1.3) %
Net interest margin (g)3.81%3.87%3.42% (1.6) %11.4%
Efficiency ratio (g)59.23%58.74%60.68% 0.8%(2.4) %
       
OTHER RATIOS (NON - GAAP):      
Annualized return on average tangible assets (a)(b)(e)1.53%1.71%1.00% (10.5)%53.0%
Annualized return on average tangible equity (a)(b)(c)16.61%18.64%11.21% (10.9)%48.2%
Tangible book value per share (d)$44.77 $44.47 $44.45  0.7%0.7%
       
N.M. - Not meaningful      
Note: Explanations for footnotes (a) - (g) are included at the end of the financial highlights.      
       
       
       
       
       
PARK NATIONAL CORPORATION
Financial Highlights (continued)
As of or for the three months ended June 30, 2018, March 31, 2018, and June 30, 2017     
       
     Percent change vs.
BALANCE SHEET:June 30, 2018March 31, 2018June 30, 2017 1Q '182Q '17
       
Investment securities$1,513,238 $1,464,356 $1,579,934  3.3%(4.2) %
Loans5,324,974 5,292,349 5,365,437  0.6%(0.8) %
Allowance for loan losses49,452 48,969 53,822  1.0%(8.1) %
Goodwill72,334 72,334 72,334  %%
Other real estate owned (OREO)5,729 9,055 14,881  (36.7) %(61.5) %
Total assets7,462,156 7,518,970 7,832,092  (0.8) %(4.7) %
Total deposits6,015,844 6,084,294 5,961,576  (1.1) %0.9%
Borrowings631,139 624,090 1,046,176  1.1%(39.7) %
Total shareholders' equity755,088 752,774 752,248  0.3%0.4%
Tangible equity (d)682,754 680,440 679,914  0.3%0.4%
Nonperforming loans98,867 86,205 110,904  14.7%(10.9) %
Nonperforming assets104,596 99,117 125,785  5.5%(16.8) %
       
ASSET QUALITY RATIOS:      
Loans as a % of period end total assets71.36%70.39%68.51% 1.4%4.2%
Nonperforming loans as a % of period end loans1.86%1.63%2.07% 14.1%(10.1) %
Nonperforming assets as a % of period end loans + OREO + other nonperforming assets1.96%1.87%2.34% 4.8%(16.2) %
Allowance for loan losses as a % of period end loans0.93%0.93%1.00% %(7.0) %
Net loan charge-offs$903 $1,279 $681  (29.4) %32.6%
Annualized net loan charge-offs as a % of average loans (a)0.07%0.10%0.05% (30.0) %40.0%
       
CAPITAL & LIQUIDITY:      
Total shareholders' equity / Period end total assets10.12%10.01%9.60% 1.1%5.4%
Tangible equity (d) / Tangible assets (f)9.24%9.14%8.76% 1.1%5.5%
Average shareholders' equity / Average assets (a)10.11%10.06%9.74% 0.5%3.8%
Average shareholders' equity / Average loans (a)14.26%14.14%14.14% 0.8%0.8%
Average loans / Average deposits (a)88.23%89.39%90.21% (1.3) %(2.2) %
       


PARK NATIONAL CORPORATION
Financial Highlights
Six months ended June 30, 2018 and 2017    
      
 20182017   
(in thousands, except share and per share data)Six months ended June 30Six months ended June 30 Percent change vs '17 
INCOME STATEMENT:     
Net interest income$129,592 $118,730  9.1% 
Provision for loan losses1,646 5,457  (69.8) % 
Other income50,145 39,654  26.5% 
Other expense106,842 98,464  8.5% 
Income before income taxes$71,249 $54,463  30.8% 
Income taxes11,885 15,164  (21.6)% 
Net income$59,364 $39,299  51.1% 
      
MARKET DATA:     
Earnings per common share - basic (b)$3.88 $2.57  51.0% 
Earnings per common share - diluted (b)3.85 2.55  51.0% 
Cash dividends per common share2.15 1.88  14.4% 
      
Weighted average common shares - basic (a)15,286,932 15,304,572  (0.1)% 
Weighted average common shares - diluted (a)15,424,585 15,415,765  0.1% 
      
PERFORMANCE RATIOS: (annualized)     
Return on average assets (a)(b)1.61%1.04% 54.8% 
Return on average shareholders' equity (a)(b)15.92%10.58% 50.5% 
Yield on loans4.92%4.63% 6.3% 
Yield on investment securities2.68%2.43% 10.3% 
Yield on money markets1.76%0.99% 77.8% 
Yield on earning assets4.39%4.04% 8.7% 
Cost of interest bearing deposits0.59%0.40% 47.5% 
Cost of borrowings1.78%2.37% (24.9) % 
Cost of paying liabilities0.75%0.78% (3.8) % 
Net interest margin (g)3.84%3.46% 11.0% 
Efficiency ratio (g)58.98%61.30% (3.8) % 
      
ASSET QUALITY RATIOS:     
Net loan charge-offs2,182 2,259  (3.4) % 
Annualized net loan charge-offs as a % of average loans (a)0.08%0.09% (11.1) % 
      
CAPITAL & LIQUIDITY:     
Average shareholders' equity / Average assets (a)10.08%9.79% 3.0% 
Average shareholders' equity / Average loans (a)14.20%14.12% 0.6% 
Average loans / Average deposits (a)88.80%91.31% (2.7) % 
      
OTHER RATIOS (NON - GAAP):     
Annualized return on average tangible assets (a)(b)(e)1.62%1.05% 54.3% 
Annualized return on average tangible equity (a)(b)(c)17.62%11.72% 50.3% 
      
N.M. - Not meaningful     
Note: Explanations (a) - (g) are included at the end of the financial highlights.     


PARK NATIONAL CORPORATION
Financial Highlights (continued) 
       
(a) Averages are for the three months ended June 30, 2018, March 31, 2018 and June 30, 2017 and the six months ended June 30, 2018 and June 30, 2017. 
    
(b) Reported measure uses net income. 
    
(c) Net income for each period divided by average tangible equity during the period. Average tangible equity equals average shareholders' equity during the applicable period less average goodwill during the applicable period. 
       
RECONCILIATION OF AVERAGE SHAREHOLDERS' EQUITY TO AVERAGE TANGIBLE EQUITY:   
 THREE MONTHS ENDED SIX MONTHS ENDED
 June 30, 2018March 31, 2018June 30, 2017 June 30, 2018June 30, 2017
AVERAGE SHAREHOLDERS' EQUITY$754,101 $749,627 $753,373  $751,876 $748,732 
Less: Average goodwill72,334 72,334 72,334  72,334 72,334 
AVERAGE TANGIBLE EQUITY$681,767 $677,293 $681,039  $679,542 $676,398 
       
(d) Tangible equity divided by common shares outstanding at period end. Tangible equity equals total shareholders' equity less goodwill, in each case at the end of the period. 
       
RECONCILIATION OF TOTAL SHAREHOLDERS' EQUITY TO TANGIBLE EQUITY:
 June 30, 2018March 31, 2018June 30, 2017   
TOTAL SHAREHOLDERS' EQUITY$755,088 $752,774 $752,248    
Less: Goodwill72,334 72,334 72,334    
TANGIBLE EQUITY$682,754 $680,440 $679,914    
       
(e) Net income for each period divided by average tangible assets during the period. Average tangible assets equals average assets less average goodwill, in each case during the applicable period. 
       
RECONCILIATION OF AVERAGE ASSETS TO AVERAGE TANGIBLE ASSETS:
 THREE MONTHS ENDED SIX MONTHS ENDED
 June 30, 2018March 31, 2018June 30, 2017 June 30, 2018June 30, 2017
AVERAGE ASSETS$7,459,748 $7,455,065 $7,736,884  $7,457,419 $7,648,777 
Less: Average goodwill72,334 72,334 72,334  72,334 72,334 
AVERAGE TANGIBLE ASSETS$7,387,414 $7,382,731 $7,664,550  $7,385,085 $7,576,443 
       
(f) Tangible equity divided by tangible assets. Tangible assets equals total assets less goodwill, in each case at the end of the period. 
       
RECONCILIATION OF TOTAL ASSETS TO TANGIBLE ASSETS:   
 June 30, 2018March 31, 2018June 30, 2017   
TOTAL ASSETS$7,462,156 $7,518,970 $7,832,092    
Less: Goodwill72,334 72,334 72,334    
TANGIBLE ASSETS$7,389,822 $7,446,636 $7,759,758    
       
(g) 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 below assuming a 21% corporate federal tax rate for 2018 and a 35% corporate federal tax rate for 2017. Additionally, net interest margin is calculated on a fully taxable equivalent basis by dividing fully taxable equivalent net interest income by average interest earning assets. 
       
RECONCILIATION OF FULLY TAXABLE EQUIVALENT NET INTEREST INCOME TO NET INTEREST INCOME
 THREE MONTHS ENDED SIX MONTHS ENDED
 June 30, 2018March 31, 2018June 30, 2017 June 30, 2018June 30, 2017
Interest income$74,691 $73,714 $70,476  $148,405 $139,231 
Fully taxable equivalent adjustment705 701 1,185  1,406 2,248 
Fully taxable equivalent interest income$75,396 $74,415 $71,661  $149,811 $141,479 
Interest expense9,949 8,864 10,698  18,813 20,501 
Fully taxable equivalent net interest income$65,447 $65,551 $60,963  $130,998 $120,978 
       


         
PARK NATIONAL CORPORATION    
Consolidated Statements of Income    
         
  Three Months Ended Six Months Ended
  June 30, June 30,
(in thousands, except share and per share data) 2018 2017 2018 2017
         
Interest income:        
  Interest and fees on loans $64,496  $61,222  128,898  121,130 
  Interest on:        
  Obligations of U.S. Government, its agencies        
  and other securities - taxable 7,746  6,892  14,513  14,030 
  Obligations of states and political subdivisions - tax-exempt 2,178  1,664  4,352  3,124 
  Other interest income 271  698  642  947 
  Total interest income 74,691  70,476  148,405  139,231 
         
Interest expense:        
  Interest on deposits:        
  Demand and savings deposits 4,107  2,291  7,397  3,905 
  Time deposits 2,886  2,457  5,437  4,618 
  Interest on borrowings 2,956  5,950  5,979  11,978 
  Total interest expense 9,949  10,698  18,813  20,501 
         
  Net interest income 64,742  59,778  129,592  118,730 
         
Provision for loan losses 1,386  4,581  1,646  5,457 
         
  Net interest income after provision for loan losses 63,356  55,197  127,946  113,273 
         
Other income 23,242  20,699  50,145  39,654 
         
Other expense 52,534  49,554  106,842  98,464 
         
  Income before income taxes 34,064  26,342  71,249  54,463 
         
Federal income taxes 5,823  7,310  11,885  15,164 
         
  Net income $28,241  $19,032  59,364  39,299 
         
Per Common Share:        
  Net income  - basic $1.85  $1.24  $3.88  $2.57 
  Net income  - diluted $1.83  $1.24  $3.85  $2.55 
         
  Weighted average shares - basic 15,285,532  15,297,085  15,286,932  15,304,572 
  Weighted average shares - diluted 15,417,607  15,398,865  15,424,585  15,415,765 
         
  Cash Dividends Declared $1.21  $0.94  $2.15  $1.88 
         


 
PARK NATIONAL CORPORATION
Consolidated Balance Sheets
   
(in thousands, except share data)June 30, 2018
 December 31, 2017
   
Assets  
   
Cash and due from banks$122,915    $131,946 
Money market instruments23,244  37,166 
Investment securities1,513,238  1,512,824 
Loans5,324,974  5,372,483 
Allowance for loan losses(49,452) (49,988)
Loans, net5,275,522  5,322,495 
Bank premises and equipment, net55,555  55,901 
Goodwill72,334  72,334 
Other real estate owned5,729  14,190 
Other assets393,619  390,764 
Total assets$7,462,156  $7,537,620 
   
Liabilities and Shareholders' Equity  
   
Deposits:  
Noninterest bearing$1,591,962  $1,633,941 
Interest bearing4,423,882  4,183,385 
Total deposits6,015,844  5,817,326 
Borrowings631,139  906,289 
Other liabilities60,085  57,904 
Total liabilities$6,707,068  $6,781,519 
   
   
Shareholders' Equity:  
Preferred shares (200,000 shares authorized; no shares outstanding at June 30, 2018 and December 31, 2017)
$  $ 
Common shares (No par value; 20,000,000 shares authorized in 2018 and 2017; 16,150,732 shares issued at June 30, 2018 and 16,150,752 shares issued at December 31, 2017)308,144  307,726 
Accumulated other comprehensive loss, net of taxes(55,009) (26,454)
Retained earnings593,512  561,908 
Treasury shares (899,637 shares at June 30, 2018 and 862,558 at December 31, 2017)(91,559) (87,079)
Total shareholders' equity$755,088  $756,101 
Total liabilities and shareholders' equity$7,462,156  $7,537,620 


    
PARK NATIONAL CORPORATION   
Consolidated Average Balance Sheets   
      
 Three Months Ended Six Months Ended
 June 30, June 30,
(in thousands)20182017 20182017
      
Assets     
      
Cash and due from banks$118,870 $108,317  $118,561 $113,931 
Money market instruments54,551 265,791  73,437 192,800 
Investment securities1,506,699 1,553,811  1,478,564 1,559,861 
Loans5,289,056 5,327,114  5,295,814 5,302,961 
Allowance for loan losses(49,750)(50,700) (50,168)(50,771)
Loans, net5,239,306 5,276,414  5,245,646 5,252,190 
Bank premises and equipment, net56,109 56,949  56,307 57,407 
Goodwill72,334 72,334  72,334 72,334 
Other real estate owned8,416 14,460  10,962 14,104 
Other assets403,463 388,808  401,608 386,150 
Total assets$7,459,748 $7,736,884  $7,457,419 $7,648,777 
      
      
Liabilities and Shareholders' Equity     
      
Deposits:     
Noninterest bearing$1,602,228 $1,534,272  $1,585,742 $1,516,910 
Interest bearing4,392,733 4,370,710  4,378,091 4,290,900 
Total deposits5,994,961 5,904,982  5,963,833 5,807,810 
Borrowings645,909 1,003,505  678,296 1,019,005 
Other liabilities64,777 75,024  63,414 73,230 
Total liabilities$6,705,647 $6,983,511  $6,705,543 $6,900,045 
      
Shareholders' Equity:     
Preferred shares$ $  $ $ 
Common shares307,689 305,892  307,714 305,900 
Accumulated other comprehensive loss, net of taxes(54,184)(13,814) (47,965)(15,514)
Retained earnings588,170 547,547  579,448 543,763 
Treasury shares(87,574)(86,252) (87,321)(85,417)
Total shareholders' equity$754,101 $753,373  $751,876 $748,732 
Total liabilities and shareholders' equity$7,459,748 $7,736,884  $7,457,419 $7,648,777 


 
PARK NATIONAL CORPORATION
Consolidated Statements of Income - Linked Quarters
      
 20182018201720172017
(in thousands, except per share data)2nd QTR1st QTR4th QTR3rd QTR2nd QTR
      
Interest income:     
Interest and fees on loans$64,496 $64,402 $64,447 $63,110 $61,222 
Interest on:     
Obligations of U.S. Government, its agencies and other securities - taxable7,746 6,767 6,653 6,757 6,892 
Obligations of states and political subdivisions - tax-exempt2,178 2,174 2,112 1,974 1,664 
Other interest income271 371 757 1,383 698 
Total interest income74,691 73,714 73,969 73,224 70,476 
      
Interest expense:     
Interest on deposits:     
Demand and savings deposits4,107 3,290 2,677 2,882 2,291 
Time deposits2,886 2,551 2,490 2,521 2,457 
Interest on borrowings2,956 3,023 5,324 6,270 5,950 
Total interest expense9,949 8,864 10,491 11,673 10,698 
      
Net interest income64,742 64,850 63,478 61,551 59,778 
      
Provision for (recovery of) loan losses1,386 260 (183)3,283 4,581 
      
Net interest income after provision for (recovery of) loan losses63,356 64,590 63,661 58,268 55,197 
      
Other income23,242 26,903 23,238 23,537 20,699 
      
Other expense52,534 54,308 53,439 51,259 49,554 
      
Income before income taxes34,064 37,185 33,460 30,546 26,342 
      
Federal income taxes5,823 6,062 10,629 8,434 7,310 
      
Net income$28,241 $31,123 $22,831 $22,112 $19,032 
      
Per Common Share:     
Net income - basic$1.85 $2.04 $1.49 $1.45 $1.24 
Net income - diluted$1.83 $2.02 $1.48 $1.44 $1.24 


 
PARK NATIONAL CORPORATION
Detail of other income and other expense - Linked Quarters
      
 20182018201720172017
(in thousands)2nd QTR1st QTR4th QTR3rd QTR2nd QTR
      
Other income:     
Income from fiduciary activities$6,666 $6,395 $6,264 $5,932 $6,025 
Service charges on deposits2,826 2,922 3,142 3,216 3,156 
Other service income3,472 4,172 3,554 3,357 3,447 
Checkcard fee income4,382 4,002 4,023 3,974 4,040 
Bank owned life insurance income1,031 1,009 1,068 1,573 1,114 
ATM fees510 524 545 605 561 
OREO valuation adjustments(114)(207)(91)(22)(272)
(Loss) gain on the sale of OREO, net(147)4,321 47 51 53 
Net (loss) gain on sale of investment securities (2,271)1,794  27 
Unrealized gain on equity securities304 3,489    
Other components of net periodic benefit income1,705 1,705 1,450 1,448 1,448 
Miscellaneous2,607 842 1,442 3,403 1,100 
Total other income$23,242 $26,903 $23,238 $23,537 $20,699 
      
Other expense:     
Salaries$24,103 $25,320 $23,157 $23,302 $23,001 
Employee benefits7,630 7,029 6,320 5,943 6,206 
Occupancy expense2,570 2,936 2,442 2,559 2,565 
Furniture and equipment expense4,013 4,149 4,198 3,868 3,640 
Data processing fees1,902 1,773 1,690 1,919 1,676 
Professional fees and services6,123 6,190 7,886 6,100 6,018 
Marketing1,185 1,218 1,112 1,122 1,084 
Insurance1,196 1,428 1,768 1,499 1,517 
Communication1,189 1,250 1,228 1,110 1,155 
State tax expense958 1,105 665 912 943 
Miscellaneous1,665 1,910 2,973 2,925 1,749 
Total other expense$52,534 $54,308 $53,439 $51,259 $49,554 


PARK NATIONAL CORPORATION
Asset Quality Information
         
    Year ended December 31,
(in thousands, except ratios)June 30, 2018March 31, 2018 2017201620152014 
         
Allowance for loan losses:        
Allowance for loan losses, beginning of period$48,969 $49,988  $50,624 $56,494 $54,352 $59,468  
Charge-offs2,716 3,450  19,403 20,799 14,290 24,780 (A)
Recoveries1,813 2,171  10,210 20,030 11,442 26,997  
Net charge-offs (recoveries)903 1,279  9,193 769 2,848 (2,217) 
Provision for (recovery of) loan losses1,386 260  8,557 (5,101)4,990 (7,333) 
Allowance for loan losses, end of period$49,452 $48,969  $49,988 $50,624 $56,494 $54,352  
(A) Year ended December 31, 2014 included $4.3 million in charge-offs related to the transfer of $22.0 million of commercial loans to the held for sale portfolio.
         
General reserve trends:        
Allowance for loan losses, end of period$49,452 $48,969  $49,988 $50,624 $56,494 $54,352  
Specific reserves1,396 1,207  684 548 4,191 3,660  
General reserves$48,056 $47,762  $49,304 $50,076 $52,303 $50,692  
         
Total loans$5,324,974 $5,292,349  $5,372,483 $5,271,857 $5,068,085 $4,829,682  
Impaired commercial loans61,705 50,292  56,545 70,415 80,599 73,676  
Total loans less impaired commercial loans$5,263,269 $5,242,057  $5,315,938 $5,201,442 $4,987,486 $4,756,006  
         
         
Asset Quality Ratios:        
Net charge-offs (recoveries) as a % of average loans (annualized)0.07%0.10% 0.17%0.02%0.06%(0.05) % 
Allowance for loan losses as a % of period end loans0.93%0.93% 0.93%0.96%1.11%1.13% 
General reserves as a % of total loans less impaired commercial loans0.91%0.91% 0.93%0.96%1.05%1.07% 
         
Nonperforming Assets - Park National Corporation:        
Nonaccrual loans$81,124 $66,151  $72,056 $87,822 $95,887 $100,393  
Accruing troubled debt restructuring16,306 18,682  20,111 18,175 24,979 16,254  
Loans past due 90 days or more1,437 1,372  1,792 2,086 1,921 2,641  
Total nonperforming loans$98,867 $86,205  $93,959 $108,083 $122,787 $119,288  
Other real estate owned - Park National Bank3,280 4,846  6,524 6,025 7,456 10,687  
Other real estate owned - SEPH2,449 4,209  7,666 7,901 11,195 11,918  
Other nonperforming assets - Park National Bank 3,857  4,849     
Total nonperforming assets$104,596 $99,117  $112,998 $122,009 $141,438 $141,893  
Percentage of nonaccrual loans to period end loans1.52%1.25% 1.34%1.67%1.89%2.08% 
Percentage of nonperforming loans to period end loans1.86%1.63% 1.75%2.05%2.42%2.47% 
Percentage of nonperforming assets to period end loans1.96%1.87% 2.10%2.31%2.79%2.94% 
Percentage of nonperforming assets to period end total assets1.40%1.32% 1.50%1.63%1.93%2.03% 
         
         
PARK NATIONAL CORPORATION
Asset Quality Information (continued)
         
    Year ended December 31,
(in thousands, except ratios)June 30, 2018March 31, 2018 2017201620152014 
         
Nonperforming Assets - Park National Bank and Guardian:        
Nonaccrual loans$79,489 $66,151  $61,753 $76,084 $81,468 $77,477  
Accruing troubled debt restructuring16,306 18,682  20,111 18,175 24,979 16,157  
Loans past due 90 days or more1,437 1,372  1,792 2,086 1,921 2,641  
Total nonperforming loans$97,232 $86,205  $83,656 $96,345 $108,368 $96,275  
Other real estate owned - Park National Bank3,280 4,846  6,524 6,025 7,456 10,687  
Other nonperforming assets - Park National Bank 3,857  4,849     
Total nonperforming assets$100,512 $94,908  $95,029 $102,370 $115,824 $106,962  
Percentage of nonaccrual loans to period end loans1.49%1.25% 1.15%1.45%1.61%1.61% 
Percentage of nonperforming loans to period end loans1.83%1.63% 1.56%1.83%2.14%2.00% 
Percentage of nonperforming assets to period end loans1.89%1.79% 1.77%1.95%2.29%2.23% 
Percentage of nonperforming assets to period end total assets1.36%1.27% 1.27%1.38%1.60%1.55% 
         
Nonperforming Assets - SEPH/Vision Bank (retained portfolio):
Nonaccrual loans$1,635 $  $10,303 $11,738 $14,419 $22,916  
Accruing troubled debt restructuring      97  
Loans past due 90 days or more        
Total nonperforming loans$1,635 $  $10,303 $11,738 $14,419 $23,013  
Other real estate owned - SEPH2,449 4,209  7,666 7,901 11,195 11,918  
Total nonperforming assets$4,084 $4,209  $17,969 $19,639 $25,614 $34,931  
         
New nonaccrual loan information - Park National Corporation        
Nonaccrual loans, beginning of period$66,151 $72,056  $87,822 $95,887 $100,393 $135,216  
New nonaccrual loans27,920 23,075  58,753 74,786 80,791 70,059  
Resolved nonaccrual loans12,947 28,980  74,519 82,851 85,165 86,384  
Sale of nonaccrual loans held for sale     132 18,498  
Nonaccrual loans, end of period$81,124 $66,151  $72,056 $87,822 $95,887 $100,393  
         
New nonaccrual loan information - Park National Bank and Guardian        
Nonaccrual loans, beginning of period$66,151 $61,753  $76,084 $81,468 $77,477 $99,108  
New nonaccrual loans - Ohio-based operations26,285 23,075  58,753 74,663 80,791 69,389  
Resolved nonaccrual loans12,947 18,677  73,084 80,047 76,800 78,288  
Sale of nonaccrual loans held for sale      12,732  
Nonaccrual loans, end of period$79,489 $66,151  $61,753 $76,084 $81,468 $77,477  
         
New nonaccrual loan information - SEPH/Vision Bank (retained portfolio)
Nonaccrual loans, beginning of period$ $10,303  $11,738 $14,419 $22,916 $36,108  
New nonaccrual loans - SEPH/Vision Bank1,635    123  670  
Resolved nonaccrual loans 10,303  1,435 2,804 8,365 8,096  
Sale of nonaccrual loans held for sale     132 5,766  
Nonaccrual loans, end of period$1,635 $  $10,303 $11,738 $14,419 $22,916  
         
Impaired Commercial Loan Portfolio Information (period end):        
Unpaid principal balance$73,089 $60,264  $66,585 $95,358 $109,304 $106,156  
Prior charge-offs11,384 9,972  10,040 24,943 28,705 32,480  
Remaining principal balance61,705 50,292  56,545 70,415 80,599 73,676  
Specific reserves1,396 1,207  684 548 4,191 3,660  
Book value, after specific reserves$60,309 $49,085  $55,861 $69,867 $76,408 $70,016  
         
  

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Source: Park National Corporation

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