Investor Relations

Press Release

Park National Corporation reports third quarter 2018 financial results

Company Release - 10/22/2018 4:10 PM ET

NEWARK, Ohio, Oct. 22, 2018 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE American: PRK) today reported financial results for the third quarter and first nine months of 2018 (three and nine months ended September 30, 2018). Park's board of directors also declared a quarterly cash dividend of $0.96 per common share, payable on December 10, 2018 to common shareholders of record as of November 16, 2018.

Park’s net income for the third quarter of 2018 was $24.8 million, a 12.0 percent increase from $22.1 million for the third quarter of 2017. Third quarter 2018 net income per diluted common share was $1.56, compared to $1.44 in the third quarter of 2017. Increased net interest income, increased non-interest income, and a decreased loan loss provision helped contribute to Park’s third quarter performance.

Park's net income for the first nine months of 2018 was $84.1 million, a 37.0 percent increase from $61.4 million for the same period in 2017. Net income per diluted common share was $5.41 for the first nine months of 2018, compared to $3.99 for the same period in 2017.

Park's community-banking subsidiary, The Park National Bank, reported net income of $27.9 million for the third quarter of 2018, a 31.0 percent increase from $21.3 million reported for the third quarter of 2017.The bank’s net income was $83.4 million for the nine months ended 2018, compared to $62.9 million for the same period in 2017.

“Our bankers are doing excellent work growing relationships with current and prospective clients, as well as with new colleagues,” said Park Chief Executive Officer David L. Trautman. “As we prepare to welcome Carolina Alliance Bank into our organization, it’s an exciting time in community banking. Our bankers are listening to our clients and communities, and we’re in a great position to respond with a blend of sophisticated resources and personalized service that clients have told us they want.”

Charlotte-based NewDominion Bank joined Park on July 1, 2018. On September 13, 2018 Park announced a definitive agreement and plan of merger with CAB Financial Corporation (OTCQX: CABF) based in Spartanburg, South Carolina. The transaction is expected to close in the first half of 2019.  

Headquartered in Newark, Ohio, Park National Corporation had $7.8 billion in total assets (as of September 30, 2018). The Park organization 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

Important Information About the Merger

In connection with the proposed merger between Park and CAB Financial Corporation (“CABF”), Park will file with the Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-4 that will include a Proxy Statement of CABF and a Prospectus of Park, as well as other relevant documents concerning the proposed transaction. SHAREHOLDERS OF CABF ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT PARK, CABF AND THE PROPOSED TRANSACTION.

A free copy of the Proxy Statement/Prospectus, as well as other filings containing information about Park and CABF, may be obtained at the SEC’s Internet site (http://www.sec.gov). You will also be able to obtain these documents, free of charge, from Park at the “Investor Relations” section of Park’s web site at www.parknationalcorp.com or from CABF at the “Investor Relations” section of CABF’s website at www.carolinaalliancebank.com. Copies of the Proxy Statement/Prospectus can also be obtained, free of charge, by directing a request to Park National Corporation, 50 North Third Street, P.O. Box 3500, Newark, OH 43058-3500, Attention: Brady Burt, Telephone: (740) 322-6844 or to CAB Financial Corporation, PO Box 932, Spartanburg, SC 29306, Attention: Lamar Simpson, Telephone: (864) 208-2265.

This communication shall not constitute an offer to sell or the solicitation of an offer to buy securities nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. This communication is also not a solicitation of any vote in any jurisdiction pursuant to the proposed transactions or otherwise. No offer of securities or solicitation will be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. The communication is not a substitute for the Registration Statement that will be filed with the SEC or the Proxy Statement/Prospectus that will be sent to CABF shareholders.

Proxy Solicitation

CABF and certain of its directors, executive officers and certain other persons may be deemed to be participants in the solicitation of proxies from CABF’s shareholders in favor of the approval of the Merger. Information about the directors and executive officers of CABF and their ownership of CABF common stock, as well as information regarding the interests of other persons who may be deemed participants in the transaction, may be obtained by reading the Proxy Statement/Prospectus regarding the proposed merger when it becomes available. Free copies of this document may be obtained as described above.

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 and the possible impairment of collectability of loans; 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 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; the adequacy of our risk management program in the event of changes in the market, economic, operational, asset/liability repricing, liquidity, credit and interest rate risks associated with Park's business; disruption in the liquidity and other functioning of U.S. financial markets; 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 banking professionals; customers 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 effects of easing restrictions on participants in the financial services industry; 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 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; 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 impact of our ability to anticipate and respond to technological changes on our 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; 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; the existence or exacerbation of general geopolitical instability and uncertainty; the effect of trade policies (including the impact of tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements, trade wars and other changes in trade regulations), monetary and other fiscal policies (including the impact of money supply and interest rate policies to the Federal Reserve Board) and other governmental policies of the U.S. federal government; 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 the costs and effects of any adverse developments in legal proceedings or other claims and the costs and effects of unfavorable resolution of regulatory and other governmental examinations or other inquiries; continued availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends; 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 and on us or our counterparties specifically; 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; Park's ability to integrate recent acquisitions (including NewDominion Bank) as well as any future acquisitions, which may be unsuccessful, or may be more difficult, time-consuming or costly than expected; the ability to obtain required governmental and shareholder approvals with respect to, and the ability to complete the proposed merger of Park and CAB Financial Corporation ("CAB") on the proposed terms and within the expected time frame; the risk that the businesses of Park and CAB will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; expected revenue synergies and cost savings from the proposed merger of Park and CAB may not be fully realized or realized within the expected time frame; revenues following the proposed merger of Park and CAB may be lower than expected; customer and employee relationships and business operations may be disrupted by the proposed merger of Park and CAB; Park issued equity securities in the acquisition of NewDominion Bank and may issue equity securities in connection with future acquisitions, including the proposed merger of Park and CAB, 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 September 30, 2018, June 30, 2018, and September 30, 2017     
       
 201820182017 Percent change vs.
(in thousands, except share and per share data)3rd QTR2nd QTR3rd QTR 2Q '183Q '17
INCOME STATEMENT:      
Net interest income$67,676 $64,742 $61,551  4.5%10.0%
Provision for loan losses2,940 1,386 3,283  112.1%(10.4)%
Other income24,064 23,242 23,537  3.5%2.2%
Other expense59,316 52,534 51,259  12.9%15.7%
Income before income taxes$29,484 $34,064 $30,546  (13.4)%(3.5)%
Federal income taxes4,722 5,823 8,434  (18.9)%(44.0)%
Net income$24,762 $28,241 $22,112  (12.3)%12.0%
       
MARKET DATA:      
Earnings per common share - basic (b)$1.58 $1.85 $1.45  (14.6)%9.0%
Earnings per common share - diluted (b)1.56 1.83 1.44  (14.8)%8.3%
Cash dividends per common share0.96 1.21 0.94  (20.7)%2.1%
Book value per common share at period end51.58 49.51 49.71  4.2%3.8%
Market price per common share at period end105.56 111.42 107.99  (5.3)%(2.3)%
Market capitalization at period end1,655,870 1,699,277 1,649,770  (2.6)%0.4%
       
Weighted average common shares - basic (a)15,686,542 15,285,532 15,287,974  2.6%2.6%
Weighted average common shares - diluted (a)15,832,734 15,417,607 15,351,590  2.7%3.1%
Common shares outstanding at period end15,686,532 15,251,095 15,277,061  2.9%2.7%
       
PERFORMANCE RATIOS: (annualized)      
Return on average assets (a)(b)1.26%1.52%1.11% (17.1)%13.5%
Return on average shareholders' equity (a)(b)12.11%15.02%11.52% (19.4)%5.1%
Yield on loans4.95%4.90%4.71% 1.0%5.1%
Yield on investment securities2.76%2.73%2.48% 1.1%11.3%
Yield on money markets2.61%1.99%1.28% 31.2%103.9%
Yield on earning assets4.47%4.39%4.03% 1.8%10.9%
Cost of interest bearing deposits0.83%0.64%0.48% 29.7%72.9%
Cost of borrowings1.88%1.84%2.37% 2.2%(20.7)%
Cost of paying liabilities0.95%0.79%0.83% 20.3%14.5%
Net interest margin (g)3.78%3.81%3.40% (0.8) %11.2%
Efficiency ratio (g)64.16%59.23%59.34% 8.3%8.1%
       
OTHER RATIOS (NON - GAAP):      
Annualized return on average tangible assets (a)(b)(e)1.27%1.53%1.12% (17.0)%13.4%
Annualized return on average tangible equity (a)(b)(c)14.21%16.61%12.73% (14.4)%11.6%
Tangible book value per share (d)$43.93 $44.77 $44.97  (1.9)%(2.3)%
       
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 September 30, 2018, June 30, 2018, and September 30, 2017     
       
     Percent change vs.
BALANCE SHEET:September 30, 2018June 30, 2018September 30, 2017 2Q '183Q '17
       
Investment securities$1,439,011 $1,513,238 $1,571,038  (4.9)%(8.4)%
Loans5,625,323 5,324,974 5,365,877  5.6%4.8%
Allowance for loan losses50,246 49,452 55,232  1.6%(9.0)%
Goodwill and other intangibles119,999 72,334 72,334  65.9%65.9%
Other real estate owned (OREO)5,276 5,729 14,366  (7.9)%(63.3)%
Total assets7,756,491 7,462,156 7,862,695  3.9%(1.4)%
Total deposits6,279,326 6,015,844 5,974,322  4.4%5.1%
Borrowings594,818 631,139 1,056,888  (5.8)%(43.7)%
Total shareholders' equity809,091 755,088 759,367  7.2%6.5%
Tangible equity (d)689,092 682,754 687,033  0.9%0.3%
Total nonperforming loans83,281 98,867 111,949  (15.8)%(25.6)%
Total nonperforming assets95,727 104,596 126,315  (8.5)%(24.2)%
       
ASSET QUALITY RATIOS:      
Loans as a % of period end total assets72.52%71.36%68.24% 1.6%6.3%
Nonperforming loans as a % of period end loans1.48%1.86%2.09% (20.4)%(29.2)%
Nonperforming assets as a % of period end loans + OREO + other nonperforming assets1.70%1.96%2.35% (13.3)%(27.7)%
Allowance for loan losses as a % of period end loans0.89%0.93%1.03% (4.3)%(13.6)%
Net loan charge-offs$2,146 $903 $1,873  137.7%14.6%
Annualized net loan charge-offs as a % of average loans (a)0.15%0.07%0.14% 114.3%7.1%
       
CAPITAL & LIQUIDITY:      
Total shareholders' equity / Period end total assets10.43%10.12%9.66% 3.1%8.0%
Tangible equity (d) / Tangible assets (f)9.02%9.24%8.82% (2.4)%2.3%
Average shareholders' equity / Average assets (a)10.37%10.11%9.60% 2.6%8.0%
Average shareholders' equity / Average loans (a)14.46%14.26%14.27% 1.4%1.3%
Average loans / Average deposits (a)88.36%88.23%88.37% 0.1%%


PARK NATIONAL CORPORATION
Financial Highlights
Nine months ended September 30, 2018 and 2017    
      
 20182017   
(in thousands, except share and per share data)Nine months ended September 30Nine months ended September 30 Percent change vs '17 
INCOME STATEMENT:     
Net interest income$197,268 $180,281  9.4% 
Provision for loan losses4,586 8,740  (47.5)% 
Other income74,209 63,191  17.4% 
Other expense166,158 149,723  11.0% 
Income before income taxes$100,733 $85,009  18.5% 
Income taxes16,607 23,598  (29.6)% 
Net income$84,126 $61,411  37.0% 
      
MARKET DATA:     
Earnings per common share - basic (b)$5.46 $4.01  36.2% 
Earnings per common share - diluted (b)5.41 3.99  35.6% 
Cash dividends per common share3.11 2.82  10.3% 
      
Weighted average common shares - basic (a)15,420,135 15,299,039  0.8% 
Weighted average common shares - diluted (a)15,560,666 15,394,199  1.1% 
      
PERFORMANCE RATIOS: (annualized)     
Return on average assets (a)(b)1.48%1.06% 39.6% 
Return on average shareholders' equity (a)(b)14.57%10.90% 33.7% 
Yield on loans4.93%4.66% 5.8% 
Yield on investment securities2.71%2.45% 10.6% 
Yield on money markets2.03%1.15% 76.5% 
Yield on earning assets4.42%4.04% 9.4% 
Cost of interest bearing deposits0.68%0.43% 58.1% 
Cost of borrowings1.81%2.37% (23.6)% 
Cost of paying liabilities0.82%0.80% 2.5% 
Net interest margin (g)3.82%3.44% 11.0% 
Efficiency ratio (g)60.73%60.61% 0.2% 
      
ASSET QUALITY RATIOS:     
Net loan charge-offs4,328 4,132  4.7% 
Annualized net loan charge-offs as a % of average loans (a)0.11%0.10% 10.0% 
      
CAPITAL & LIQUIDITY:     
Average shareholders' equity / Average assets (a)10.18%9.72% 4.7% 
Average shareholders' equity / Average loans (a)14.29%14.17% 0.8% 
Average loans / Average deposits (a)88.64%90.29% (1.8)% 
      
OTHER RATIOS (NON - GAAP):     
Annualized return on average tangible assets (a)(b)(e)1.50%1.07% 40.2% 
Annualized return on average tangible equity (a)(b)(c)16.46%12.06% 36.5% 
      
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 September 30, 2018, June 30, 2018 and September 30, 2017 and for the nine months ended September 30, 2018 and September 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 and other intangibles during the applicable period.   
       
RECONCILIATION OF AVERAGE SHAREHOLDERS' EQUITY TO AVERAGE TANGIBLE EQUITY:   
 THREE MONTHS ENDED NINE MONTHS ENDED
 September 30, 2018June 30, 2018September 30, 2017 September 30, 2018September 30, 2017
AVERAGE SHAREHOLDERS' EQUITY$811,313 $754,101 $761,448  $771,907 $753,017 
Less: Average goodwill and other intangibles120,188 72,334 72,334  88,461 72,334 
AVERAGE TANGIBLE EQUITY$691,125 $681,767 $689,114  $683,446 $680,683 
       
(d) Tangible equity divided by common shares outstanding at period end. Tangible equity equals total shareholders' equity less goodwill and other intangibles, in each case at the end of the period.   
       
RECONCILIATION OF TOTAL SHAREHOLDERS' EQUITY TO TANGIBLE EQUITY:   
 September 30, 2018June 30, 2018September 30, 2017   
TOTAL SHAREHOLDERS' EQUITY$809,091 $755,088 $759,367    
Less: Goodwill and other intangibles119,999 72,334 72,334    
TANGIBLE EQUITY$689,092 $682,754 $687,033    
       
(e) Net income for each period divided by average tangible assets during the period. Average tangible assets equals average assets less average goodwill and other intangibles, in each case during the applicable period.   
       
RECONCILIATION OF AVERAGE ASSETS TO AVERAGE TANGIBLE ASSETS:   
 THREE MONTHS ENDED NINE MONTHS ENDED
 September 30, 2018June 30, 2018September 30, 2017 September 30, 2018September 30, 2017
AVERAGE ASSETS$7,826,496 $7,459,748 $7,928,766  $7,581,798 $7,743,132 
Less: Average goodwill and other intangibles120,188 72,334 72,334  88,461 72,334 
AVERAGE TANGIBLE ASSETS$7,706,308 $7,387,414 $7,856,432  $7,493,337 $7,670,798 
       
(f) Tangible equity divided by tangible assets. Tangible assets equals total assets less goodwill and other intangibles, in each case at the end of the period.   
       
RECONCILIATION OF TOTAL ASSETS TO TANGIBLE ASSETS:   
 September 30, 2018June 30, 2018September 30, 2017   
TOTAL ASSETS$7,756,491 $7,462,156 $7,862,695    
Less: Goodwill and other intangibles119,999 72,334 72,334    
TANGIBLE ASSETS$7,636,492 $7,389,822 $7,790,361    
       
(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 income tax rate for 2018 and a 35% corporate federal income 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 NINE MONTHS ENDED
 September 30, 2018June 30, 2018September 30, 2017 September 30, 2018September 30, 2017
Interest income$80,229 $74,691 $73,224  $228,634 $212,455 
Fully taxable equivalent adjustment716 705 1,291  2,122 3,540 
Fully taxable equivalent interest income$80,945 $75,396 $74,515  $230,756 $215,995 
Interest expense12,553 9,949 11,673  31,366 32,174 
Fully taxable equivalent net interest income$68,392 $65,447 $62,842  $199,390 $183,821 


         
PARK NATIONAL CORPORATION    
Consolidated Statements of Income    
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
(in thousands, except share and per share data) 2018 2017 2018 2017
         
Interest income:        
Interest and fees on loans $69,905  $63,110  198,803  184,240 
Interest on:        
Obligations of U.S. Government, its agencies and other securities - taxable 7,691  6,757  22,204  20,787 
Obligations of states and political subdivisions - tax-exempt 2,205  1,974  6,557  5,098 
Other interest income 428  1,383  1,070  2,330 
  Total interest income 80,229  73,224  228,634  212,455 
         
Interest expense:        
Interest on deposits:        
Demand and savings deposits 6,412  2,882  13,809  6,787 
Time deposits 3,328  2,521  8,765  7,139 
Interest on borrowings 2,813  6,270  8,792  18,248 
  Total interest expense 12,553  11,673  31,366  32,174 
         
  Net interest income 67,676  61,551  197,268  180,281 
         
Provision for loan losses 2,940  3,283  4,586  8,740 
         
  Net interest income after provision for loan losses 64,736  58,268  192,682  171,541 
         
Other income 24,064  23,537  74,209  63,191 
         
Other expense 59,316  51,259  166,158  149,723 
         
  Income before income taxes 29,484  30,546  100,733  85,009 
         
Income taxes 4,722  8,434  16,607  23,598 
         
  Net income $24,762  $22,112  84,126  61,411 
         
Per Common Share:        
  Net income  - basic $1.58  $1.45  $5.46  $4.01 
  Net income  - diluted $1.56  $1.44  $5.41  $3.99 
         
  Weighted average shares - basic 15,686,542  15,287,974  15,420,135  15,299,039 
  Weighted average shares - diluted 15,832,734  15,351,590  15,560,666  15,394,199 
         
  Cash Dividends Declared $0.96  $0.94  $3.11  $2.82 
         


PARK NATIONAL CORPORATION
Consolidated Balance Sheets
   
(in thousands, except share data)September 30, 2018December 31, 2017
   
Assets  
   
Cash and due from banks$126,064 $131,946 
Money market instruments18,540 37,166 
Investment securities1,439,011 1,512,824 
Loans5,625,323 5,372,483 
Allowance for loan losses(50,246)(49,988)
Loans, net5,575,077 5,322,495 
Bank premises and equipment, net57,515 55,901 
Goodwill and other intangibles119,999 72,334 
Other real estate owned5,276 14,190 
Other assets415,009 390,764 
Total assets$7,756,491 $7,537,620 
   
Liabilities and Shareholders' Equity  
   
Deposits:  
Noninterest bearing$1,727,210 $1,633,941 
Interest bearing4,552,116 4,183,385 
Total deposits6,279,326 5,817,326 
Borrowings594,818 906,289 
Other liabilities73,256 57,904 
Total liabilities$6,947,400 $6,781,519 
   
   
Shareholders' Equity:  
Preferred shares (200,000 shares authorized; no shares outstanding at September 30, 2018 and December 31, 2017)

$ $ 
Common shares (No par value; 20,000,000 shares authorized in 2018 and 2017; 16,586,169 shares issued at September 30, 2018
and 16,150,752 shares issued at December 31, 2017)
357,709 307,726 
Accumulated other comprehensive loss, net of taxes(60,150)(26,454)
Retained earnings603,091 561,908 
Treasury shares (899,637 shares at September 30, 2018 and 862,558 at December 31, 2017)(91,559)(87,079)
Total shareholders' equity$809,091 $756,101 
Total liabilities and shareholders' equity$7,756,491 $7,537,620 
       


PARK NATIONAL CORPORATION   
Consolidated Average Balance Sheets   
      
 Three Months Ended Nine Months Ended
 September 30, September 30,
(in thousands)20182017 20182017
      
Assets     
      
Cash and due from banks$134,503 $114,313  $123,933 $114,060 
Money market instruments65,027 427,157  70,603 271,778 
Investment securities1,472,504 1,569,237  1,476,522 1,563,020 
Loans5,609,813 5,337,206  5,401,631 5,314,501 
Allowance for loan losses(49,788)(53,750) (50,040)(51,775)
Loans, net5,560,025 5,283,456  5,351,591 5,262,726 
Bank premises and equipment, net56,987 56,497  56,536 57,100 
Goodwill and other intangibles120,188 72,334  88,461 72,334 
Other real estate owned5,474 14,522  9,113 14,245 
Other assets411,788 391,250  405,039 387,869 
Total assets$7,826,496 $7,928,766  $7,581,798 $7,743,132 
      
      
Liabilities and Shareholders' Equity     
      
Deposits:     
Noninterest bearing$1,706,300 $1,534,395  $1,626,370 $1,522,802 
Interest bearing4,642,530 4,505,040  4,467,206 4,363,065 
Total deposits6,348,830 6,039,435  6,093,576 5,885,867 
Borrowings594,109 1,050,524  649,925 1,029,627 
Other liabilities72,244 77,359  66,390 74,621 
Total liabilities$7,015,183 $7,167,318  $6,809,891 $6,990,115 
      
Shareholders' Equity:     
Preferred shares$ $  $ $ 
Common shares356,768 306,496  324,245 306,101 
Accumulated other comprehensive loss, net of taxes(55,615)(11,905) (50,543)(14,298)
Retained earnings601,719 553,746  586,954 547,127 
Treasury shares(91,559)(86,889) (88,749)(85,913)
Total shareholders' equity$811,313 $761,448  $771,907 $753,017 
Total liabilities and shareholders' equity$7,826,496 $7,928,766  $7,581,798 $7,743,132 
              


PARK NATIONAL CORPORATION
Consolidated Statements of Income - Linked Quarters
      
 20182018201820172017
(in thousands, except per share data)3rd QTR2nd QTR1st QTR4th QTR3rd QTR
      
Interest income:     
Interest and fees on loans$69,905 $64,496 $64,402 $64,447 $63,110 
Interest on:     
Obligations of U.S. Government, its agencies and other securities - taxable7,691 7,746 6,767 6,653 6,757 
Obligations of states and political subdivisions - tax-exempt2,205 2,178 2,174 2,112 1,974 
Other interest income428 271 371 757 1,383 
Total interest income80,229 74,691 73,714 73,969 73,224 
      
Interest expense:     
Interest on deposits:     
Demand and savings deposits6,412 4,107 3,290 2,677 2,882 
Time deposits3,328 2,886 2,551 2,490 2,521 
Interest on borrowings2,813 2,956 3,023 5,324 6,270 
Total interest expense12,553 9,949 8,864 10,491 11,673 
      
Net interest income67,676 64,742 64,850 63,478 61,551 
      
Provision for (recovery of) loan losses2,940 1,386 260 (183)3,283 
      
Net interest income after provision for (recovery of) loan losses64,736 63,356 64,590 63,661 58,268 
      
Other income24,064 23,242 26,903 23,238 23,537 
      
Other expense59,316 52,534 54,308 53,439 51,259 
      
Income before income taxes29,484 34,064 37,185 33,460 30,546 
      
Income taxes4,722 5,823 6,062 10,629 8,434 
      
Net income$24,762 $28,241 $31,123 $22,831 $22,112 
      
Per Common Share:     
Net income - basic$1.58 $1.85 $2.04 $1.49 $1.45 
Net income - diluted$1.56 $1.83 $2.02 $1.48 $1.44 
                


PARK NATIONAL CORPORATION
Detail of other income and other expense - Linked Quarters
      
 20182018201820172017
(in thousands)3rd QTR2nd QTR1st QTR4th QTR3rd QTR
      
Other income:     
Income from fiduciary activities$6,418 $6,666 $6,395 $6,264 $5,932 
Service charges on deposits2,861 2,826 2,922 3,142 3,216 
Other service income3,246 3,472 4,172 3,554 3,357 
Checkcard fee income4,352 4,382 4,002 4,023 3,974 
Bank owned life insurance income2,585 1,031 1,009 1,068 1,573 
ATM fees500 510 524 545 605 
OREO valuation adjustments(77)(114)(207)(91)(22)
(Loss) gain on the sale of OREO, net(81)(147)4,321 47 51 
Net (loss) gain on sale of investment securities  (2,271)1,794  
Unrealized (loss) gain on equity securities(326)304 3,489   
Other components of net periodic benefit income1,705 1,705 1,705 1,450 1,448 
Miscellaneous2,881 2,607 842 1,442 3,403 
Total other income$24,064 $23,242 $26,903 $23,238 $23,537 
      
Other expense:     
Salaries$27,229 $24,103 $25,320 $23,157 $23,302 
Employee benefits7,653 7,630 7,029 6,320 5,943 
Occupancy expense2,976 2,570 2,936 2,442 2,559 
Furniture and equipment expense3,807 4,013 4,149 4,198 3,868 
Data processing fees2,580 1,902 1,773 1,690 1,919 
Professional fees and services8,065 6,123 6,190 7,886 6,100 
Marketing1,364 1,185 1,218 1,112 1,122 
Insurance1,388 1,196 1,428 1,768 1,499 
Communication1,207 1,189 1,250 1,228 1,110 
State tax expense1,000 958 1,105 665 912 
Amortization of intangibles289     
Miscellaneous1,758 1,665 1,910 2,973 2,925 
Total other expense$59,316 $52,534 $54,308 $53,439 $51,259 
                


PARK NATIONAL CORPORATION
Asset Quality Information
          
     Year ended December 31,
(in thousands, except ratios)September 30, 
2018
June 30,
2018
March 31,
2018
 2017201620152014 
          
Allowance for loan losses:         
Allowance for loan losses, beginning of period$49,452 $48,969 $49,988  $50,624 $56,494 $54,352 $59,468  
Charge-offs3,474 2,716 3,450  19,403 20,799 14,290 24,780 (A)
Recoveries1,328 1,813 2,171  10,210 20,030 11,442 26,997  
Net charge-offs (recoveries)2,146 903 1,279  9,193 769 2,848 (2,217) 
Provision for (recovery of) loan losses2,940 1,386 260  8,557 (5,101)4,990 (7,333) 
Allowance for loan losses, end of period$50,246 $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$50,246 $49,452 $48,969  $49,988 $50,624 $56,494 $54,352  
Specific reserves1,846 1,396 1,207  684 548 4,191 3,660  
General reserves$48,400 $48,056 $47,762  $49,304 $50,076 $52,303 $50,692  
          
Total loans$5,625,323 $5,324,974 $5,292,349  $5,372,483 $5,271,857 $5,068,085 $4,829,682  
Impaired commercial loans46,698 61,705 50,292  56,545 70,415 80,599 73,676  
Total loans less impaired commercial loans$5,578,625 $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)0.15%0.07%0.10% 0.17%0.02%0.06%(0.05)% 
Allowance for loan losses as a % of period end loans0.89%0.93%0.93% 0.93%0.96%1.11%1.13% 
General reserves as a % of total loans less impaired commercial loans0.87%0.91%0.91% 0.93%0.96%1.05%1.07% 
          
Nonperforming Assets - Park National Corporation:         
Nonaccrual loans$66,654 $81,124 $66,151  $72,056 $87,822 $95,887 $100,393  
Accruing troubled debt restructuring14,602 16,306 18,682  20,111 18,175 24,979 16,254  
Loans past due 90 days or more2,025 1,437 1,372  1,792 2,086 1,921 2,641  
Total nonperforming loans$83,281 $98,867 $86,205  $93,959 $108,083 $122,787 $119,288  
Other real estate owned - Park National Bank3,061 3,280 4,846  6,524 6,025 7,456 10,687  
Other real estate owned - SEPH2,215 2,449 4,209  7,666 7,901 11,195 11,918  
Other nonperforming assets - Park National Bank7,170  3,857  4,849     
Total nonperforming assets$95,727 $104,596 $99,117  $112,998 $122,009 $141,438 $141,893  
Percentage of nonaccrual loans to period end loans1.18%1.52%1.25% 1.34%1.67%1.89%2.08% 
Percentage of nonperforming loans to period end loans1.48%1.86%1.63% 1.75%2.05%2.42%2.47% 
Percentage of nonperforming assets to period end loans1.70%1.96%1.87% 2.10%2.31%2.79%2.94% 
Percentage of nonperforming assets to period end total assets1.23%1.40%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)September 30, 
2018
June 30,
2018
March 31,
2018
 2017201620152014 
          
Nonperforming Assets - Park National Bank and Guardian:        
Nonaccrual loans$65,019 $79,489 $66,151  $61,753 $76,084 $81,468 $77,477  
Accruing troubled debt restructuring14,602 16,306 18,682  20,111 18,175 24,979 16,157  
Loans past due 90 days or more2,025 1,437 1,372  1,792 2,086 1,921 2,641  
Total nonperforming loans$81,646 $97,232 $86,205  $83,656 $96,345 $108,368 $96,275  
Other real estate owned - Park National Bank3,061 3,280 4,846  6,524 6,025 7,456 10,687  
Other nonperforming assets - Park National Bank7,170  3,857  4,849     
Total nonperforming assets$91,877 $100,512 $94,908  $95,029 $102,370 $115,824 $106,962  
Percentage of nonaccrual loans to period end loans1.16%1.49%1.25% 1.15%1.45%1.61%1.61% 
Percentage of nonperforming loans to period end loans1.45%1.83%1.63% 1.56%1.83%2.14%2.00% 
Percentage of nonperforming assets to period end loans1.63%1.89%1.79% 1.77%1.95%2.29%2.23% 
Percentage of nonperforming assets to period end total assets1.19%1.36%1.27% 1.27%1.38%1.60%1.55% 
          
Nonperforming Assets - SEPH/Vision Bank (retained portfolio):
Nonaccrual loans$1,635 $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 $1,635 $  $10,303 $11,738 $14,419 $23,013  
Other real estate owned - SEPH2,215 2,449 4,209  7,666 7,901 11,195 11,918  
Total nonperforming assets$3,850 $4,084 $4,209  $17,969 $19,639 $25,614 $34,931  
          
New nonaccrual loan information - Park National Corporation       
Nonaccrual loans, beginning of period$81,124 $66,151 $72,056  $87,822 $95,887 $100,393 $135,216  
New nonaccrual loans10,450 27,920 23,075  58,753 74,786 80,791 70,059  
Resolved nonaccrual loans24,920 12,947 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$66,654 $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$79,489 $66,151 $61,753  $76,084 $81,468 $77,477 $99,108  
New nonaccrual loans10,450 26,285 23,075  58,753 74,663 80,791 69,389  
Resolved nonaccrual loans24,920 12,947 18,677  73,084 80,047 76,800 78,288  
Sale of nonaccrual loans held for sale       12,732  
Nonaccrual loans, end of period$65,019 $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$1,635 $ $10,303  $11,738 $14,419 $22,916 $36,108  
New nonaccrual loans 1,635    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 $1,635 $  $10,303 $11,738 $14,419 $22,916  
          
Impaired Commercial Loan Portfolio Information (period end):       
Unpaid principal balance$57,767 $73,089 $60,264  $66,585 $95,358 $109,304 $106,156  
Prior charge-offs11,069 11,384 9,972  10,040 24,943 28,705 32,480  
Remaining principal balance46,698 61,705 50,292  56,545 70,415 80,599 73,676  
Specific reserves1,846 1,396 1,207  684 548 4,191 3,660  
Book value, after specific reserves$44,852 $60,309 $49,085  $55,861 $69,867 $76,408 $70,016  
          

PRK Stacked 131andBlue.png

Source: Park National Corporation

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