Investor Relations

Press Release

Park National Corporation reports 2018 financial results and announces next step in leadership succession

Board increases quarterly cash dividend and awards special cash dividend

Company Release - 1/28/2019 4:10 PM ET

NEWARK, Ohio, Jan. 28, 2019 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE American: PRK) today reported increased net income and earnings per share among its financial results for the fourth quarter and full year of 2018 (three and twelve months ended December 31, 2018).

Park’s net income for the fourth quarter of 2018 was $26.3 million, a 15.0 percent increase from $22.8 million for the fourth quarter of 2017. Fourth quarter 2018 net income per diluted common share was $1.67, compared to $1.48 in the fourth quarter of 2017. Increased net interest income and increased non-interest income helped contribute to Park’s fourth quarter performance.

Park's net income for the full year 2018 was $110.4 million, a 31.0 percent increase from $84.2 million for the same period in 2017. Net income per diluted common share was $7.07 for 2018, compared to $5.47 for 2017.

Park's community-banking subsidiary, The Park National Bank, reported net income of $26.1 million for the fourth quarter of 2018, a 7.0 percent increase from $24.4 million reported for the fourth quarter of 2017. The bank’s net income was $109.5 million for the full year 2018, compared to $87.3 million for the same period in 2017.

“Our success in 2018 is the result of many factors, none more important than our bankers’ unwavering dedication and consistent hard work. From our most tenured bankers to our newest colleagues, each person played a critical role in producing excellent results,” said Park Chief Executive Officer (CEO) David L. Trautman.

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

Park's board of directors declared a quarterly cash dividend of $1.01 per common share and a special cash dividend of $0.20 per common share, payable on March 8, 2019 to common shareholders of record as of February 15, 2019.  The board also authorized Park to repurchase, from time to time following receipt of any required regulatory approvals, up to 500,000 Park common shares in addition to the 500,000 Park common shares which had been authorized for repurchase by Park’s board of directors on January 23, 2017 and currently remain available for repurchase. The authorizations result in an aggregate of up to 1,000,000 Park common shares being available for repurchase under the stock repurchase authorizations in the future.

The Park board proposed to take action to approve a plan for changes in executive leadership and governance at the Park board meeting immediately following Park’s annual shareholder meeting on April 22, 2019.

Park’s CEO David L. Trautman will be elected chairman of the board, as current Chairman C. Daniel DeLawder will continue employment in a reduced capacity and remain chair of the Park board’s executive committee. Trautman will retain the CEO role, and Park’s Executive Vice President Matthew R. Miller will be elected to serve as president and a member of the boards of directors for each of The Park National Bank and Park National Corporation. These changes will be effective May 1, 2019.

“We have a great history of carefully planned leadership succession at Park, and we’re following the model that has served our organization so well for several generations. Our consistent approach to leadership transition helps preserve our culture and community banking values,” said DeLawder, who has 48 years of service with Park. He has not announced a timeline for his official retirement.

At the April meeting, Park’s board will increase the number of directors from 13 to 14, and the additional director (Miller) will serve in the class of directors whose terms expire in 2020.

Headquartered in Newark, Ohio, Park National Corporation had $7.8 billion in total assets (as of December 31, 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

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; 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 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, if consummated, which could cause ownership and economic dilution to Park's current shareholders; the discontinuation of LIBOR and other reference rates which may result in increased expenses and litigation, and adversely impact the effectiveness of hedging strategies; 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 December 31, 2018, September 30, 2018, and December 31, 2017     
       
 201820182017 Percent change vs.
(in thousands, except share and per share data)4th QTR3rd QTR4th QTR 3Q '184Q '17
INCOME STATEMENT:      
Net interest income$69,630 $67,676 $63,478  2.9%9.7%
Provision for (recovery of) loan losses3,359 2,940 (183) 14.3%N.M. 
Other income26,892 24,064 23,238  11.8%15.7%
Other expense62,597 59,316 53,439  5.5%17.1%
Income before income taxes$30,566 $29,484 $33,460  3.7%(8.6) %
Income taxes4,305 4,722 10,629  (8.8)%(59.5) %
Net income$26,261 $24,762 $22,831  6.1%15.0%
         
MARKET DATA:        
Earnings per common share - basic (b)$1.67 $1.58 $1.49  5.7%12.1%
Earnings per common share - diluted (b)1.67 1.56 1.48  7.1%12.8%
Cash dividends declared per common share0.96 0.96 0.94  %2.1%
Book value per common share at period end53.03 51.58 49.46  2.8%7.2%
Market price per common share at period end84.95 105.56 104.00  (19.5)%(18.3)%
Market capitalization at period end1,333,560 1,655,870 1,589,972  (19.5)%(16.1)%
         
Weighted average common shares - basic (a)15,695,522 15,686,542 15,285,174  0.1%2.7%
Weighted average common shares - diluted (a)15,764,548 15,832,734 15,378,825  (0.4)%2.5%
Common shares outstanding at period end15,698,178 15,686,532 15,288,194  0.1%2.7%
         
PERFORMANCE RATIOS: (annualized)        
Return on average assets (a)(b)1.34%1.26%1.17% 6.3%14.5%
Return on average shareholders' equity (a)(b)12.70%12.11%11.85% 4.9%7.2%
Yield on loans5.10%4.95%4.79% 3.0%6.5%
Yield on investment securities2.74%2.76%2.55% (0.7) %7.5%
Yield on money market instruments2.46%2.61%1.29% (5.7) %90.7%
Yield on interest earning assets4.61%4.47%4.19% 3.1%10.0%
Cost of interest bearing deposits0.85%0.83%0.48% 2.4%77.1%
Cost of borrowings1.88%1.88%2.15% %(12.6) %
Cost of paying interest bearing liabilities0.97%0.95%0.79% 2.1%22.8%
Net interest margin (g)3.91%3.78%3.61% 3.4%8.3%
Efficiency ratio (g)64.36%64.16%60.64% 0.3%6.1%
               
OTHER RATIOS (NON - GAAP):              
Annualized return on average tangible assets (a)(b)(e)1.36%1.27%1.18% 7.1%15.3%
Annualized return on average tangible equity (a)(b)(c)14.87%14.21%13.09% 4.6%13.6%
Tangible book value per share (d)$45.41 $43.93 $44.73  3.4%1.5%
       
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 December 31, 2018, September 30, 2018, and December 31, 2017     
       
     Percent change vs.
BALANCE SHEET:December 31,
2018
September 30,
2018
December 31,
2017
 3Q '184Q '17
       
Investment securities$1,411,080 $1,439,011 $1,512,824  (1.9) %(6.7) %
Loans5,692,132 5,625,323 5,372,483  1.2%5.9%
Allowance for loan losses51,512 50,246 49,988  2.5%3.0%
Goodwill and other intangibles119,710 119,999 72,334  (0.2) %65.5%
Other real estate owned (OREO)4,303 5,276 14,190  (18.4) %(69.7) %
Total assets7,804,308 7,756,491 7,537,620  0.6%3.5%
Total deposits6,260,860 6,279,326 5,817,326  (0.3) %7.6%
Borrowings636,966 594,818 906,289  7.1%(29.7) %
Total shareholders' equity832,506 809,091 756,101  2.9%10.1%
Tangible equity (d)712,796 689,092 683,767  3.4%4.2%
Total nonperforming loans85,370 83,281 93,959  2.5%(9.1) %
Total nonperforming assets93,137 95,727 112,998  (2.7) %(17.6) %
         
ASSET QUALITY RATIOS:        
Loans as a % of period end total assets72.94%72.52%71.28% 0.6%2.3%
Total nonperforming loans as a % of period end loans1.50%1.48%1.75% 1.4%(14.3) %
Total nonperforming assets as a % of period end loans + OREO + other nonperforming assets1.63%1.70%2.10% (4.1) %(22.4) %
Allowance for loan losses as a % of period end loans0.90%0.89%0.93% 1.1%(3.2) %
Net loan charge-offs$2,093 $2,146 $5,061  (2.5) %(58.6) %
Annualized net loan charge-offs as a % of average loans (a)0.15%0.15%0.37% %(59.5) %
       
CAPITAL & LIQUIDITY:      
Total shareholders' equity / Period end total assets10.67%10.43%10.03% 2.3%6.4%
Tangible equity (d) / Tangible assets (f)9.28%9.02%9.16% 2.9%1.3%
Average shareholders' equity / Average assets (a)10.56%10.37%9.88% 1.8%6.9%
Average shareholders' equity / Average loans (a)14.56%14.46%14.24% 0.7%2.2%
Average loans / Average deposits (a)90.06%88.36%90.73% 1.9%(0.7) %
       


PARK NATIONAL CORPORATION
Financial Highlights
Twelve months ended December 31, 2018 and 2017    
      
      
(in thousands, except share and per share data)20182017 Percent
change vs '
17
 
INCOME STATEMENT:     
Net interest income$266,898 $243,759  9.5% 
Provision for loan losses7,945 8,557  (7.2) % 
Other income101,101 86,429  17.0% 
Other expense228,755 203,162  12.6% 
Income before income taxes$131,299 $118,469  10.8% 
Income taxes20,912 34,227  (38.9)% 
Net income$110,387 $84,242  31.0% 
       
MARKET DATA:      
Earnings per common share - basic (b)$7.13 $5.51  29.4% 
Earnings per common share - diluted (b)7.07 5.47  29.3% 
Cash dividends declared per common share4.07 3.76  8.2% 
       
Weighted average common shares - basic (a)15,488,982 15,295,573  1.3% 
Weighted average common shares - diluted (a)15,611,489 15,390,352  1.4% 
       
PERFORMANCE RATIOS:      
Return on average assets (a)(b)1.45%1.09% 33.0% 
Return on average shareholders' equity (a)(b)14.08%11.15% 26.3% 
Yield on loans4.98%4.69% 6.2% 
Yield on investment securities2.72%2.47% 10.1% 
Yield on money market instruments1.93%1.18% 63.6% 
Yield on interest earning assets4.46%4.08% 9.3% 
Cost of interest bearing deposits0.72%0.44% 63.6% 
Cost of borrowings1.83%2.32% (21.1) % 
Cost of paying interest bearing liabilities0.86%0.80% 7.5% 
Net interest margin (g)3.84%3.48% 10.3% 
Efficiency ratio (g)61.68%60.62% 1.7% 
           
ASSET QUALITY RATIOS:          
Net loan charge-offs6,421 9,193  (30.2) % 
Net loan charge-offs as a % of average loans (a)0.12%0.17% (29.4) % 
           
CAPITAL & LIQUIDITY:          
Average shareholders' equity / Average assets (a)10.28%9.76% 5.3% 
Average shareholders' equity / Average loans (a)14.36%14.19% 1.2% 
Average loans / Average deposits (a)89.01%90.40% (1.5) % 
           
OTHER RATIOS (NON - GAAP):          
Return on average tangible assets (a)(b)(e)1.47%1.10% 33.6% 
Return on average tangible equity (a)(b)(c)16.05%12.33% 30.2% 
      
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 December 31, 2018, September 30, 2018 and December 31, 2017 and for the twelve months ended December 31, 2018 and December 31, 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 TWELVE MONTHS ENDED
 December 31,
2018
September 30,
2018
December 31,
2017
 December 31,
2018
December 31,
2017
AVERAGE SHAREHOLDERS' EQUITY$820,445 $811,313 $764,211  $784,140 $755,839 
Less: Average goodwill and other intangibles119,899 120,188 72,334  96,385 72,334 
AVERAGE TANGIBLE EQUITY$700,546 $691,125 $691,877  $687,755 $683,505 
       
(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:   
 December 31,
2018
September 30,
2018
December 31,
2017
   
TOTAL SHAREHOLDERS' EQUITY$832,506 $809,091 $756,101    
Less: Goodwill and other intangibles119,710 119,999 72,334    
TANGIBLE EQUITY$712,796 $689,092 $683,767    
       
(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 TWELVE MONTHS ENDED
 December 31,
2018
September 30,
2018
December 31,
2017
 December 31,
2018
December 31,
2017
AVERAGE ASSETS$7,770,140 $7,826,496 $7,734,844  $7,629,269 $7,741,043 
Less: Average goodwill and other intangibles119,899 120,188 72,334  96,385 72,334 
AVERAGE TANGIBLE ASSETS$7,650,241 $7,706,308 $7,662,510  $7,532,884 $7,668,709 
       
(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:   
 December 31,
2018
September 30,
2018
December 31,
2017
   
TOTAL ASSETS$7,804,308 $7,756,491 $7,537,620    
Less: Goodwill and other intangibles119,710 119,999 72,334    
TANGIBLE ASSETS$7,684,598 $7,636,492 $7,465,286    
       
(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 TWELVE MONTHS ENDED
 December 31,
2018
September 30,
2018
December 31,
2017
 December 31,
2018
December 31,
2017
Interest income$82,167 $80,229 $73,969  $310,801 $286,424 
Fully taxable equivalent adjustment736 716 1,413  2,858 4,953 
Fully taxable equivalent interest income$82,903 $80,945 $75,382  $313,659 $291,377 
Interest expense12,537 12,553 10,491  43,903 42,665 
Fully taxable equivalent net interest income$70,366 $68,392 $64,891  $269,756 $248,712 
       


         
PARK NATIONAL CORPORATION
Consolidated Statements of Income
         
  Three Months Ended Twelve Months Ended
  December 31, December 31,
(in thousands, except share and per share data) 2018 2017 2018 2017
         
Interest income:        
Interest and fees on loans $72,342  $64,447  271,145  248,687 
Interest on:        
Obligations of U.S. Government, its agencies        
and other securities - taxable 7,275  6,653  29,479  27,440 
Obligations of states and political subdivisions - tax-exempt 2,213  2,112  8,770  7,210 
Other interest income 337  757  1,407  3,087 
Total interest income 82,167  73,969  310,801  286,424 
         
Interest expense:        
Interest on deposits:        
Demand and savings deposits 6,006  2,677  19,815  9,464 
Time deposits 3,610  2,490  12,375  9,629 
Interest on borrowings 2,921  5,324  11,713  23,572 
Total interest expense 12,537  10,491  43,903  42,665 
         
Net interest income 69,630  63,478  266,898  243,759 
         
Provision for (recovery of) loan losses 3,359  (183) 7,945  8,557 
         
Net interest income after provision for (recovery of) loan losses 66,271  63,661  258,953  235,202 
         
Other income 26,892  23,238  101,101  86,429 
         
Other expense 62,597  53,439  228,755  203,162 
         
Income before income taxes 30,566  33,460  131,299  118,469 
         
Income taxes 4,305  10,629  20,912  34,227 
         
Net income $26,261  $22,831  110,387  84,242 
         
Per Common Share:        
Net income  - basic $1.67  $1.49  $7.13  $5.51 
Net income  - diluted $1.67  $1.48  $7.07  $5.47 
         
Weighted average shares - basic 15,695,522  15,285,174  15,488,982  15,295,573 
Weighted average shares - diluted 15,764,548  15,378,825  15,611,489  15,390,352 
         
Cash dividends declared $0.96  $0.94  $4.07  $3.76 
         


 
PARK NATIONAL CORPORATION
Consolidated Balance Sheets
   
(in thousands, except share data)December 31, 2018December 31, 2017
   
Assets  
   
Cash and due from banks$141,890 $131,946 
Money market instruments25,324 37,166 
Investment securities1,411,080 1,512,824 
Loans5,692,132 5,372,483 
Allowance for loan losses(51,512)(49,988)
Loans, net5,640,620 5,322,495 
Bank premises and equipment, net59,771 55,901 
Goodwill and other intangibles119,710 72,334 
Other real estate owned4,303 14,190 
Other assets401,610 390,764 
Total assets$7,804,308 $7,537,620 
   
Liabilities and Shareholders' Equity  
   
Deposits:  
Noninterest bearing$1,804,881 $1,633,941 
Interest bearing4,455,979 4,183,385 
Total deposits6,260,860 5,817,326 
Borrowings636,966 906,289 
Other liabilities73,976 57,904 
Total liabilities$6,971,802 $6,781,519 
   
   
Shareholders' Equity:  
Preferred shares (200,000 shares authorized; no shares outstanding at December 31, 2018 and December 31, 2017)
$ $ 
Common shares (No par value; 20,000,000 shares authorized in 2018 and 2017; 16,586,165 shares issued at December 31, 2018 and 16,150,752 shares issued at December 31, 2017)358,598 307,726 
Accumulated other comprehensive loss, net of taxes(49,788)(26,454)
Retained earnings614,069 561,908 
Treasury shares (887,987 shares at December 31, 2018 and 862,558 shares at December 31, 2017)(90,373)(87,079)
Total shareholders' equity$832,506 $756,101 
Total liabilities and shareholders' equity$7,804,308 $7,537,620 


    
PARK NATIONAL CORPORATION
Consolidated Average Balance Sheets
      
 Three Months Ended Twelve Months Ended
 December 31, December 31,
(in thousands)20182017 20182017
      
Assets     
      
Cash and due from banks$111,617 $113,355  $114,357 $113,882 
Money market instruments54,443 233,384  73,001 262,100 
Investment securities1,415,210 1,542,367  1,461,068 1,557,815 
Loans5,635,837 5,366,100  5,460,664 5,327,507 
Allowance for loan losses(50,478)(55,397) (50,151)(52,688)
Loans, net5,585,359 5,310,703  5,410,513 5,274,819 
Bank premises and equipment, net59,153 56,345  57,195 56,910 
Goodwill and other intangibles119,899 72,334  96,385 72,334 
Other real estate owned4,760 14,315  8,016 14,262 
Other assets419,699 392,041  408,734 388,921 
Total assets$7,770,140 $7,734,844  $7,629,269 $7,741,043 
      
      
Liabilities and Shareholders' Equity     
      
Deposits:     
Noninterest bearing$1,765,670 $1,610,815  $1,661,481 $1,544,986 
Interest bearing4,492,046 4,303,732  4,473,467 4,348,110 
Total deposits6,257,716 5,914,547  6,134,948 5,893,096 
Borrowings616,519 982,245  641,505 1,017,684 
Other liabilities75,460 73,841  68,676 74,424 
Total liabilities$6,949,695 $6,970,633  $6,845,129 $6,985,204 
      
Shareholders' Equity:     
Preferred shares$ $  $ $ 
Common shares357,766 307,173  332,694 306,371 
Accumulated other comprehensive loss, net of taxes(59,780)(14,641) (52,871)(14,384)
Retained earnings613,103 559,064  593,544 550,136 
Treasury shares(90,644)(87,385) (89,227)(86,284)
Total shareholders' equity$820,445 $764,211  $784,140 $755,839 
Total liabilities and shareholders' equity$7,770,140 $7,734,844  $7,629,269 $7,741,043 


 
PARK NATIONAL CORPORATION
Consolidated Statements of Income - Linked Quarters
      
 20182018201820182017
(in thousands, except per share data)4th QTR3rd QTR2nd QTR1st QTR4th QTR
      
Interest income:     
Interest and fees on loans$72,342 $69,905 $64,496 $64,402 $64,447 
Interest on:     
Obligations of U.S. Government, its agencies and other securities - taxable7,275 7,691 7,746 6,767 6,653 
Obligations of states and political subdivisions - tax-exempt2,213 2,205 2,178 2,174 2,112 
Other interest income337 428 271 371 757 
Total interest income82,167 80,229 74,691 73,714 73,969 
      
Interest expense:     
Interest on deposits:     
Demand and savings deposits6,006 6,412 4,107 3,290 2,677 
Time deposits3,610 3,328 2,886 2,551 2,490 
Interest on borrowings2,921 2,813 2,956 3,023 5,324 
Total interest expense12,537 12,553 9,949 8,864 10,491 
      
Net interest income69,630 67,676 64,742 64,850 63,478 
      
Provision for (recovery of) loan losses3,359 2,940 1,386 260 (183)
      
Net interest income after provision for (recovery of) loan losses66,271 64,736 63,356 64,590 63,661 
      
Other income26,892 24,064 23,242 26,903 23,238 
      
Other expense62,597 59,316 52,534 54,308 53,439 
      
Income before income taxes30,566 29,484 34,064 37,185 33,460 
      
Income taxes4,305 4,722 5,823 6,062 10,629 
      
Net income$26,261 $24,762 $28,241 $31,123 $22,831 
      
Per Common Share:     
Net income - basic$1.67 $1.58 $1.85 $2.04 $1.49 
Net income - diluted$1.67 $1.56 $1.83 $2.02 $1.48 


 
PARK NATIONAL CORPORATION
Detail of other income and other expense - Linked Quarters
      
 20182018201820182017
(in thousands)4th QTR3rd QTR2nd QTR1st QTR4th QTR
      
Other income:     
Income from fiduciary activities$6,814 $6,418 $6,666 $6,395 $6,264 
Service charges on deposits2,852 2,861 2,826 2,922 3,142 
Other service income3,279 3,246 3,472 4,172 3,554 
Checkcard fee income4,581 4,352 4,382 4,002 4,023 
Bank owned life insurance income2,190 2,585 1,031 1,009 1,068 
ATM fees444 500 510 524 545 
OREO valuation adjustments(93)(77)(114)(207)(91)
Gain (loss) on the sale of OREO, net142 (81)(147)4,321 47 
Net (loss) gain on the sale of investment securities   (2,271)1,794 
Unrealized (loss) gain on equity securities(254)(326)304 3,489  
Other components of net periodic benefit income1,705 1,705 1,705 1,705 1,450 
Gain on the sale of loans2,826     
Miscellaneous2,406 2,881 2,607 842 1,442 
Total other income$26,892 $24,064 $23,242 $26,903 $23,238 
      
Other expense:     
Salaries$27,103 $27,229 $24,103 $25,320 $23,157 
Employee benefits7,977 7,653 7,630 7,029 6,320 
Occupancy expense2,769 2,976 2,570 2,936 2,442 
Furniture and equipment expense4,170 3,807 4,013 4,149 4,198 
Data processing fees2,222 2,580 1,902 1,773 1,690 
Professional fees and services8,516 8,065 6,123 6,190 7,886 
Marketing1,377 1,364 1,185 1,218 1,112 
Insurance1,277 1,388 1,196 1,428 1,768 
Communication1,335 1,207 1,189 1,250 1,228 
State tax expense750 1,000 958 1,105 665 
Amortization of intangibles289 289    
Miscellaneous4,812 1,758 1,665 1,910 2,973 
Total other expense$62,597 $59,316 $52,534 $54,308 $53,439 


PARK NATIONAL CORPORATION
Asset Quality Information
       
 Year ended December 31,
(in thousands, except ratios)20182017201620152014 
       
Allowance for loan losses:      
Allowance for loan losses, beginning of period$49,988 $50,624 $56,494 $54,352 $59,468  
Charge-offs13,552 19,403 20,799 14,290 24,780 (A)
Recoveries7,131 10,210 20,030 11,442 26,997  
Net charge-offs (recoveries)6,421 9,193 769 2,848 (2,217) 
Provision for (recovery of) loan losses7,945 8,557 (5,101)4,990 (7,333) 
Allowance for loan losses, end of period$51,512 $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$51,512 $49,988 $50,624 $56,494 $54,352  
Specific reserves2,273 684 548 4,191 3,660  
General reserves$49,239 $49,304 $50,076 $52,303 $50,692  
       
Total loans$5,692,132 $5,372,483 $5,271,857 $5,068,085 $4,829,682  
Impaired commercial loans48,135 56,545 70,415 80,599 73,676  
Total loans less impaired commercial loans$5,643,997 $5,315,938 $5,201,442 $4,987,486 $4,756,006  
       
       
Asset Quality Ratios:      
Net charge-offs (recoveries) as a % of average loans0.12%0.17%0.02%0.06%(0.05) % 
Allowance for loan losses as a % of period end loans0.90%0.93%0.96%1.11%1.13% 
General reserves as a % of total loans less impaired commercial loans0.87%0.93%0.96%1.05%1.07% 
General reserves as a % of total loans less impaired commercial loans (excluding acquired loans)0.91%N.A. N.A. N.A. N.A.  
       
Nonperforming assets - Park National Corporation:      
Nonaccrual loans$67,954 $72,056 $87,822 $95,887 $100,393  
Accruing troubled debt restructurings15,173 20,111 18,175 24,979 16,254  
Loans past due 90 days or more2,243 1,792 2,086 1,921 2,641  
Total nonperforming loans$85,370 $93,959 $108,083 $122,787 $119,288  
Other real estate owned - Park National Bank2,788 6,524 6,025 7,456 10,687  
Other real estate owned - SEPH1,515 7,666 7,901 11,195 11,918  
Other nonperforming assets - Park National Bank3,464 4,849     
Total nonperforming assets$93,137 $112,998 $122,009 $141,438 $141,893  
Percentage of nonaccrual loans to period end loans1.19%1.34%1.67%1.89%2.08% 
Percentage of nonperforming loans to period end loans1.50%1.75%2.05%2.42%2.47% 
Percentage of nonperforming assets to period end loans1.64%2.10%2.31%2.79%2.94% 
Percentage of nonperforming assets to period end total assets1.19%1.50%1.63%1.93%2.03% 
       
       
       
PARK NATIONAL CORPORATION
Asset Quality Information (continued)
       
 Year ended December 31,
(in thousands, except ratios)20182017201620152014 
       
Nonperforming assets - Park National Bank and Guardian:      
Nonaccrual loans$66,319 $61,753 $76,084 $81,468 $77,477  
Accruing troubled debt restructurings15,173 20,111 18,175 24,979 16,157  
Loans past due 90 days or more2,243 1,792 2,086 1,921 2,641  
Total nonperforming loans$83,735 $83,656 $96,345 $108,368 $96,275  
Other real estate owned - Park National Bank2,788 6,524 6,025 7,456 10,687  
Other nonperforming assets - Park National Bank3,464 4,849     
Total nonperforming assets$89,987 $95,029 $102,370 $115,824 $106,962  
Percentage of nonaccrual loans to period end loans1.17%1.15%1.45%1.61%1.61% 
Percentage of nonperforming loans to period end loans1.47%1.56%1.83%2.14%2.00% 
Percentage of nonperforming assets to period end loans1.58%1.77%1.95%2.29%2.23% 
Percentage of nonperforming assets to period end total assets1.16%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 restructurings    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 - SEPH1,515 7,666 7,901 11,195 11,918  
Total nonperforming assets$3,150 $17,969 $19,639 $25,614 $34,931  
       
New nonaccrual loan information - Park National Corporation      
Nonaccrual loans, beginning of period$72,056 $87,822 $95,887 $100,393 $135,216  
New nonaccrual loans76,611 58,753 74,786 80,791 70,059  
Resolved nonaccrual loans80,713 74,519 82,851 85,165 86,384  
Sale of nonaccrual loans held for sale   132 18,498  
Nonaccrual loans, end of period$67,954 $72,056 $87,822 $95,887 $100,393  
       
New nonaccrual loan information - Park National Bank and Guardian      
Nonaccrual loans, beginning of period$61,753 $76,084 $81,468 $77,477 $99,108  
New nonaccrual loans74,976 58,753 74,663 80,791 69,389  
Resolved nonaccrual loans70,410 73,084 80,047 76,800 78,288  
Sale of nonaccrual loans held for sale    12,732  
Nonaccrual loans, end of period$66,319 $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 loans1,635  123  670  
Resolved nonaccrual loans10,303 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$59,381 $66,585 $95,358 $109,304 $106,156  
Prior charge-offs11,246 10,040 24,943 28,705 32,480  
Remaining principal balance48,135 56,545 70,415 80,599 73,676  
Specific reserves2,273 684 548 4,191 3,660  
Book value, after specific reserves$45,862 $55,861 $69,867 $76,408 $70,016  
       

PRK Stacked 131andBlue.png

Source: Park National Corporation

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