Investor Relations

Press Release

Park National Corporation reports financial results for third quarter and first nine months of 2019

Company Release - 10/28/2019 4:15 PM ET

NEWARK, Ohio, Oct. 28, 2019 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE American: PRK) today reported financial results for the third quarter and first nine months of 2019 (three and nine months ended September 30, 2019). Park's board of directors declared a quarterly cash dividend of $1.01 per common share, payable on December 10, 2019 to common shareholders of record as of November 15, 2019.

“We continue to benefit from welcoming our newest banking teams into our family,” said Park Chairman David Trautman. In the past two years, Park has added NewDominion Bank Division (Charlotte, NC) and Carolina Alliance Bank Division (Spartanburg, SC), as well as a Park National Bank division team in Louisville, KY. “Our colleagues remain unrelenting in their efforts to share resources and information, further uniting our divisions and serving customers and prospects more.”  

Park’s net income for the third quarter of 2019 was $31.1 million, a 25.8 percent increase from $24.8 million for the third quarter of 2018. Third quarter 2019 net income per diluted common share was $1.89, compared to $1.56 in the third quarter of 2018. Park's net income for first nine months of 2019 was $78.8 million, a 6.4 percent decrease from $84.1 million for first nine months of 2018. Net income per diluted common share was $4.84 for the first nine months of 2019, compared to $5.41 for the first nine months of 2018.

“Our financial performance and earnings per share include some effects of our recent partnerships with NewDominion Bank and Carolina Alliance Bank,” said Park President Matthew Miller. “Our investments into growth markets, among other activities, include some one-time revenue and expenses. Those influence comparisons between 2019 and 2018 results, as exhibited in the financial tables.”

Park's community-banking subsidiary, The Park National Bank, reported net income of $30.9 million for the third quarter of 2019, an 11.1 percent increase from $27.9 million reported for the third quarter of 2018. The bank reported net income of $87.0 million for the first nine months of 2019, compared to $83.4 million for the first nine months of 2018. In the first nine months of 2019, the bank (not including loans from the Carolina Alliance Bank Division) grew installment loans by 13.2 percent annualized, real estate loans by 2.0 percent annualized and total deposits by 5.6 percent annualized.

Headquartered in Newark, Ohio, Park National Corporation had $8.7 billion in total assets (as of September 30, 2019). 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, NewDominion Bank Division and Carolina Alliance Bank Division. Park 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 News Release 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 current 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' inability 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 tax reform legislation, changes in retail distribution strategies, consumer preferences and behavior, changes in 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 internal controls and risk management program in the event of changes in the market, economic, operational, asset/liability repricing, legal, compliance, strategic, cybersecurity, 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 (which could in turn impact our credit spreads), customer acquisition and retention, changes to third-party relationships and revenues, changes in the manner of providing services, customer acquisition and retention pressures, 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 "FASB"), the SEC, the Public Company Accounting Oversight Board and other regulatory agencies, including the extent to which the new current expected credit loss rule issued by the FASB in June 2016, which will require banks to record, at the time of origination, credit losses expected throughout the life of the asset portfolio on loans and HTM securities, as opposed to the current practice of recording losses which it is probable that a loss event has occurred, may adversely affect Park's reported financial condition or results of operations; Park's assumptions and estimates used in applying critical accounting policies, which may prove unreliable, inaccurate or not predictive of actual results; changes in law and policy accompanying the current presidential administration 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 potential or imposed tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements, trade wars and other changes in trade regulations and changes in the relationship of the U.S. and its global trading partners), 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 CAB Financial Corporation ("CAB")) as well as to identify, make or integrate any future suitable strategic acquisitions, which may be unsuccessful, or may be more difficult, time-consuming or costly than expected; risk and uncertainties associated with Park's entry into new geographic markets with its recent acquisitions, including expected revenue synergies and cost savings from the merger of Park and CAB not being fully realized or realized within the expected time frame; revenues following the merger of Park and CAB may be lower than expected; customer and employee relationships and business operations may be disrupted by the merger of Park and CAB; Park issued equity securities in the acquisitions of NewDominion Bank and CAB and may issue equity securities in connection with future acquisitions, 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, 2018. 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, 2019, June 30, 2019, and September 30, 2018     
       
 201920192018 Percent change vs.
(in thousands, except share and per share data)3rd QTR2nd QTR3rd QTR 2Q '193Q '18
INCOME STATEMENT:      
Net interest income$77,101 $75,851 $67,676  1.6%13.9%
Provision for loan losses1,967 1,919 2,940  2.5%(33.1)%
Other income28,136 22,808 24,064  23.4%16.9%
Other expense65,738 70,192 59,316  (6.3)%10.8%
Income before income taxes$37,532 $26,548 $29,484  41.4%27.3%
Income taxes6,386 4,385 4,722  45.6%35.2%
Net income$31,146 $22,163 $24,762  40.5%25.8%
       
MARKET DATA:      
Earnings per common share - basic (b)$1.90 $1.34 $1.58  41.8%20.3%
Earnings per common share - diluted (b)1.89 1.33 1.56  42.1%21.2%
Cash dividends declared per common share1.01 1.01 0.96  %5.2%
Book value per common share at period end58.54 56.92 51.58  2.8%13.5%
Market price per common share at period end94.81 99.39 105.56  (4.6)%(10.2)%
Market capitalization at period end1,548,527 1,631,741 1,655,870  (5.1)%(6.5)%
       
Weighted average common shares - basic (a)16,382,798 16,560,545 15,686,542  (1.1)%4.4%
Weighted average common shares - diluted (a)16,475,741 16,642,571 15,832,734  (1.0)%4.1%
Common shares outstanding at period end16,332,951 16,417,562 15,686,532  (0.5)%4.1%
       
PERFORMANCE RATIOS: (annualized)      
Return on average assets (a)(b)1.41%1.04%1.26% 35.6%11.9%
Return on average shareholders' equity (a)(b)13.07%9.49%12.11% 37.7%7.9%
Yield on loans5.25%5.23%4.95% 0.4%6.1%
Yield on investment securities2.72%2.78%2.76% (2.2)%(1.4)%
Yield on money market instruments2.43%2.64%1.95% (8.0)%24.6%
Yield on interest earning assets4.73%4.76%4.46% (0.6)%6.1%
Cost of interest bearing deposits1.08%1.04%0.83% 3.8%30.1%
Cost of borrowings2.25%2.15%1.88% 4.7%19.7%
Cost of paying interest bearing liabilities1.19%1.16%0.95% 2.6%25.3%
Net interest margin (g)3.86%3.92%3.77% (1.5)%2.4%
Efficiency ratio (g)62.03%70.61%64.16% (12.2)%(3.3)%
       
OTHER RATIOS (NON-GAAP):      
Tangible book value per share (d)$47.92 $46.30 $43.93  3.5%9.1%
       
Note: Explanations for footnotes (a) - (i) are included at the end of the financial tables in the "Financial Reconciliations" section. 
       
       
       
       
PARK NATIONAL CORPORATION
Financial Highlights (continued)
As of or for the three months ended September 30, 2019, June 30, 2019, and September 30, 2018     
       
     Percent change vs.
(in thousands, except ratios)September 30,
2019
June 30,
2019
September 30,
2018
 2Q '193Q '18
BALANCE SHEET:      
Investment securities$1,328,930 $1,396,530 $1,439,011  (4.8)%(7.6)%
Loans6,403,647 6,376,737 5,625,323  0.4%13.8%
Allowance for loan losses55,853 54,003 50,246  3.4%11.2%
Goodwill and other intangible assets173,489 174,288 119,999  (0.5)%44.6%
Other real estate owned (OREO)3,779 3,839 5,276  (1.6)%(28.4)%
Total assets8,723,610 8,657,453 7,756,491  0.8%12.5%
Total deposits7,168,259 7,032,120 6,279,326  1.9%14.2%
Borrowings498,338 595,578 594,818  (16.3)%(16.2)%
Total shareholders' equity956,140 934,432 809,091  2.3%18.2%
Tangible equity (d)782,651 760,144 689,092  3.0%13.6%
Total nonperforming loans111,184 86,833 83,281  28.0%33.5%
Total nonperforming assets118,561 94,168 95,727  25.9%23.9%
       
ASSET QUALITY RATIOS:      
Loans as a % of period end total assets73.41%73.66%72.52% (0.3)%1.2%
Total nonperforming loans as a % of period end loans1.74%1.36%1.48% 27.9%17.6%
Total nonperforming assets as a % of period end loans + OREO + other nonperforming assets1.85%1.48%1.70% 25.0%8.8%
Allowance for loan losses as a % of period end loans0.87%0.85%0.89% 2.4%(2.2)%
Net loan charge-offs$117 $1,284 $2,146  (90.9)%(94.5)%
Annualized net loan charge-offs as a % of average loans (a)0.01%0.08%0.15% (87.5)%(93.3)%
       
CAPITAL & LIQUIDITY:      
Total shareholders' equity / Period end total assets10.96%10.79%10.43% 1.6%5.1%
Tangible equity (d) / Tangible assets (f)9.15%8.96%9.02% 2.1%1.4%
Average shareholders' equity / Average assets (a)10.76%10.92%10.37% (1.5)%3.8%
Average shareholders' equity / Average loans (a)14.83%14.79%14.46% 0.3%2.6%
Average loans / Average deposits (a)88.63%91.03%88.36% (2.6)%0.3%
       


PARK NATIONAL CORPORATION
Financial Highlights
Nine months ended September 30, 2019 and September 30, 2018   
     
 20192018  
(in thousands, except share and per share data and ratios)Nine months
ended
September 30
Nine months
ended
September 30
 Percent
change vs '18
INCOME STATEMENT:    
Net interest income$220,728 $197,268  11.9%
Provision for loan losses6,384 4,586  39.2%
Other income72,969 74,209  (1.7)%
Other expense192,757 166,158  16.0%
Income before income taxes$94,556 $100,733  (6.1)%
Income taxes15,792 16,607  (4.9)%
Net income$78,764 $84,126  (6.4)%
     
MARKET DATA:    
Earnings per common share - basic (b)$4.86 $5.46  (11.0)%
Earnings per common share - diluted (b)4.84 5.41  (10.5)%
Cash dividends declared per common share3.23 3.11  3.9%
     
Weighted average common shares - basic (a)16,198,294 15,420,135  5.0%
Weighted average common shares - diluted (a)16,287,695 15,560,666  4.7%
     
PERFORMANCE RATIOS: (annualized)    
Return on average assets (a)(b)1.25%1.48% (15.5)%
Return on average shareholders' equity (a)(b)11.61%14.57% (20.3)%
Yield on loans5.21%4.93% 5.7%
Yield on investment securities2.77%2.71% 2.2%
Yield on money market instruments2.53%1.80% 40.6%
Yield on interest earning assets4.72%4.41% 7.0%
Cost of interest bearing deposits1.03%0.68% 51.5%
Cost of borrowings2.13%1.81% 17.7%
Cost of paying interest bearing liabilities1.15%0.82% 40.2%
Net interest margin (g)3.88%3.81% 1.8%
Efficiency ratio (g)65.14%60.73% 7.3%
     
ASSET QUALITY RATIOS:    
Net loan charge-offs$2,043 $4,328  (52.8)%
Annualized net loan charge-offs as a % of average loans (a)0.04%0.11% (63.6)%
     
CAPITAL & LIQUIDITY:    
Average shareholders' equity / Average assets (a)10.80%10.18% 6.1%
Average shareholders' equity / Average loans (a)14.79%14.29% 3.5%
Average loans / Average deposits (a)90.10%88.64% 1.6%
     
Note: Explanations for footnotes (a) - (i) are included at the end of the financial tables in the "Financial Reconciliations" section. 


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) 2019 2018 2019 2018
         
Interest income:        
Interest and fees on loans $84,213  $69,905  $238,687  $198,803 
Interest on:        
Obligations of U.S. Government, its agencies and other securities - taxable 6,326  7,691  20,240  22,204 
Obligations of states and political subdivisions - tax-exempt 2,225  2,205  6,750  6,557 
Other interest income 1,825  428  2,994  1,070 
Total interest income 94,589  80,229  268,671  228,634 
         
Interest expense:        
Interest on deposits:        
Demand and savings deposits 9,649  6,412  25,553  13,809 
Time deposits 4,694  3,328  12,828  8,765 
Interest on borrowings 3,145  2,813  9,562  8,792 
Total interest expense 17,488  12,553  47,943  31,366 
         
Net interest income 77,101  67,676  220,728  197,268 
         
Provision for loan losses 1,967  2,940  6,384  4,586 
         
Net interest income after provision for loan losses 75,134  64,736  214,344  192,682 
         
Other income 28,136  24,064  72,969  74,209 
         
Other expense 65,738  59,316  192,757  166,158 
         
Income before income taxes 37,532  29,484  94,556  100,733 
         
Income taxes 6,386  4,722  15,792  16,607 
         
Net income $31,146  $24,762  $78,764  $84,126 
         
Per Common Share:        
Net income  - basic $1.90  $1.58  $4.86  $5.46 
Net income  - diluted $1.89  $1.56  $4.84  $5.41 
         
Weighted average shares - basic 16,382,798  15,686,542  16,198,294  15,420,135 
Weighted average shares - diluted 16,475,741  15,832,734  16,287,695  15,560,666 
         
Cash dividends declared $1.01  $0.96  $3.23  $3.11 
         


 
PARK NATIONAL CORPORATION
Consolidated Balance Sheets
   
(in thousands, except share data)September 30, 2019December 31, 2018
   
Assets  
   
Cash and due from banks$190,353 $141,890 
Money market instruments182,373 25,324 
Investment securities1,328,930 1,428,145 
Loans6,403,647 5,692,132 
Allowance for loan losses(55,853)(51,512)
Loans, net6,347,794 5,640,620 
Bank premises and equipment, net72,779 59,771 
Goodwill and other intangible assets173,489 119,710 
Other real estate owned3,779 4,303 
Other assets424,113 384,545 
Total assets$8,723,610 $7,804,308 
   
Liabilities and Shareholders' Equity  
   
Deposits:  
Noninterest bearing$1,941,694 $1,804,881 
Interest bearing5,226,565 4,455,979 
Total deposits7,168,259 6,260,860 
Borrowings498,338 636,966 
Other liabilities100,873 73,976 
Total liabilities$7,767,470 $6,971,802 
   
   
Shareholders' Equity:  
Preferred shares (200,000 shares authorized; no shares outstanding at September 30, 2019 and December 31, 2018)
$ $ 
Common shares (No par value; 20,000,000 shares authorized in 2019 and 2018; 17,623,208 shares issued at September 30, 2019 and 16,586,165 shares issued at December 31, 2018)458,142 358,598 
Accumulated other comprehensive loss, net of taxes(12,614)(49,788)
Retained earnings639,594 614,069 
Treasury shares (1,290,257 shares at September 30, 2019 and 887,987 shares at December 31, 2018)(128,982)(90,373)
Total shareholders' equity$956,140 $832,506 
Total liabilities and shareholders' equity$8,723,610 $7,804,308 


    
PARK NATIONAL CORPORATION
Consolidated Average Balance Sheets
      
 Three Months Ended Nine Months Ended
 September 30, September 30,
(in thousands)20192018 20192018
      
Assets     
      
Cash and due from banks$147,156 $112,387  $130,799 $115,280 
Money market instruments298,441 87,143  158,395 79,256 
Investment securities1,339,292 1,472,504  1,380,629 1,476,522 
Loans6,371,323 5,609,813  6,133,386 5,401,631 
Allowance for loan losses(54,867)(49,788) (53,711)(50,040)
Loans, net6,316,456 5,560,025  6,079,675 5,351,591 
Bank premises and equipment, net73,077 56,987  68,437 56,536 
Goodwill and other intangible assets174,027 120,188  153,182 88,461 
Other real estate owned3,845 5,474  4,132 9,113 
Other assets433,398 411,788  426,438 405,039 
Total assets$8,785,692 $7,826,496  $8,401,687 $7,581,798 
      
      
Liabilities and Shareholders' Equity     
      
Deposits:     
Noninterest bearing$1,901,024 $1,706,300  $1,840,153 $1,626,370 
Interest bearing5,287,851 4,642,530  4,967,106 4,467,206 
Total deposits7,188,875 6,348,830  6,807,259 6,093,576 
Borrowings553,595 594,109  599,223 649,925 
Other liabilities98,077 72,244  87,984 66,390 
Total liabilities$7,840,547 $7,015,183  $7,494,466 $6,809,891 
      
Shareholders' Equity:     
Preferred shares$ $  $ $ 
Common shares457,029 356,768  424,213 324,245 
Accumulated other comprehensive loss, net of taxes(26,010)(55,615) (36,383)(50,543)
Retained earnings638,639 601,719  628,463 586,954 
Treasury shares(124,513)(91,559) (109,072)(88,749)
Total shareholders' equity$945,145 $811,313  $907,221 $771,907 
Total liabilities and shareholders' equity$8,785,692 $7,826,496  $8,401,687 $7,581,798 


 
PARK NATIONAL CORPORATION
Consolidated Statements of Income - Linked Quarters
      
 20192019201920182018
(in thousands, except per share data)3rd QTR2nd QTR1st QTR4th QTR3rd QTR
      
Interest income:     
Interest and fees on loans$84,213 $82,471 $72,003 $72,342 $69,905 
Interest on:     
Obligations of U.S. Government, its agencies and other securities - taxable6,326 6,919 6,995 7,275 7,691 
Obligations of states and political subdivisions - tax-exempt2,225 2,308 2,217 2,213 2,205 
Other interest income1,825 528 641 337 428 
Total interest income94,589 92,226 81,856 82,167 80,229 
      
Interest expense:     
Interest on deposits:     
Demand and savings deposits9,649 8,811 7,093 6,006 6,412 
Time deposits4,694 4,357 3,777 3,610 3,328 
Interest on borrowings3,145 3,207 3,210 2,921 2,813 
Total interest expense17,488 16,375 14,080 12,537 12,553 
      
Net interest income77,101 75,851 67,776 69,630 67,676 
      
Provision for loan losses1,967 1,919 2,498 3,359 2,940 
      
Net interest income after provision for loan losses75,134 73,932 65,278 66,271 64,736 
      
Other income28,136 22,808 22,025 26,892 24,064 
      
Other expense65,738 70,192 56,827 62,597 59,316 
      
Income before income taxes37,532 26,548 30,476 30,566 29,484 
      
Income taxes6,386 4,385 5,021 4,305 4,722 
      
Net income$31,146 $22,163 $25,455 $26,261 $24,762 
      
Per Common Share:     
Net income - basic$1.90 $1.34 $1.63 $1.67 $1.58 
Net income - diluted$1.89 $1.33 $1.62 $1.67 $1.56 


 
PARK NATIONAL CORPORATION
Detail of other income and other expense - Linked Quarters
      
 20192019201920182018
(in thousands)3rd QTR2nd QTR1st QTR4th QTR3rd QTR
      
Other income:     
Income from fiduciary activities$6,842 $6,935 $6,723 $6,814 $6,418 
Service charges on deposit accounts2,864 2,655 2,559 2,852 2,861 
Other service income4,260 4,040 2,818 3,279 3,246 
Debit card fee income5,313 5,227 4,369 4,581 4,352 
Bank owned life insurance income1,107 1,286 1,006 2,190 2,585 
ATM fees482 460 440 444 500 
OREO valuation adjustments(41)(55)(27)(93)(77)
(Loss) gain on the sale of OREO, net(53)(159)(12)142 (81)
Net gain (loss) on the sale of investment securities186 (607)   
Gain (loss) on equity securities, net3,335 232 1,742 (17)89 
Other components of net periodic benefit income1,183 1,183 1,183 1,705 1,705 
Gain on the sale of loans   2,826  
Miscellaneous2,658 1,611 1,224 2,169 2,466 
Total other income$28,136 $22,808 $22,025 $26,892 $24,064 
      
Other expense:     
Salaries$30,713 $32,093 $25,805 $27,103 $27,229 
Employee benefits10,389 9,014 8,430 7,977 7,653 
Occupancy expense3,226 3,223 3,011 2,769 2,976 
Furniture and equipment expense4,177 4,386 4,150 4,170 3,807 
Data processing fees2,935 2,905 2,133 2,222 2,580 
Professional fees and services6,702 10,106 6,006 8,516 8,065 
Marketing1,604 1,455 1,226 1,377 1,364 
Insurance276 1,381 1,156 1,277 1,388 
Communication1,387 1,375 1,333 1,335 1,207 
State tax expense746 1,054 1,005 750 1,000 
Amortization of intangible assets741 702 289 289 289 
Miscellaneous2,842 2,498 2,283 4,812 1,758 
Total other expense$65,738 $70,192 $56,827 $62,597 $59,316 


PARK NATIONAL CORPORATION
Asset Quality Information
        
    Year ended December 31,
(in thousands, except ratios)September 30,
2019
June 30,
2019
March 31,
2019
2018201720162015
        
Allowance for loan losses:       
Allowance for loan losses, beginning of period$54,003 $53,368 $51,512 $49,988 $50,624 $56,494 $54,352 
Charge-offs2,479 2,928 2,987 13,552 19,403 20,799 14,290 
Recoveries2,362 1,644 2,345 7,131 10,210 20,030 11,442 
Net charge-offs117 1,284 642 6,421 9,193 769 2,848 
Provision for (recovery of) loan losses1,967 1,919 2,498 7,945 8,557 (5,101)4,990 
Allowance for loan losses, end of period$55,853 $54,003 $53,368 $51,512 $49,988 $50,624 $56,494 
        
        
General reserve trends:       
Allowance for loan losses, end of period$55,853 $54,003 $53,368 $51,512 $49,988 $50,624 $56,494 
Specific reserves3,083 2,379 2,468 2,273 684 548 4,191 
General reserves$52,770 $51,624 $50,900 $49,239 $49,304 $50,076 $52,303 
        
Total loans$6,403,647 $6,376,737 $5,740,760 $5,692,132 $5,372,483 $5,271,857 $5,068,085 
Impaired commercial loans74,424 50,225 50,881 48,135 56,545 70,415 80,599 
Total loans less impaired commercial loans$6,329,223 $6,326,512 $5,689,879 $5,643,997 $5,315,938 $5,201,442 $4,987,486 
        
        
Asset Quality Ratios:       
Net charge-offs as a % of average loans (annualized)0.01%0.08%0.05%0.12%0.17%0.02%0.06%
Allowance for loan losses as a % of period end loans0.87%0.85%0.93%0.90%0.93%0.96%1.11%
General reserves as a % of total loans less impaired commercial loans0.83%0.82%0.89%0.87%0.93%0.96%1.05%
General reserves as a % of total loans less impaired commercial loans (excluding performing acquired loans)0.93%0.92%0.93%0.91% N.A.  N.A.  N.A. 
        
Nonperforming assets:       
Nonaccrual loans$89,555 $66,675 $69,175 $67,954 $72,056 $87,822 $95,887 
Accruing troubled debt restructurings18,382 17,759 15,757 15,173 20,111 18,175 24,979 
Loans past due 90 days or more3,247 2,399 1,539 2,243 1,792 2,086 1,921 
Total nonperforming loans$111,184 $86,833 $86,471 $85,370 $93,959 $108,083 $122,787 
Other real estate owned - Park National Bank2,982 3,042 3,114 2,788 6,524 6,025 7,456 
Other real estate owned - SEPH797 797 1,515 1,515 7,666 7,901 11,195 
Other nonperforming assets - Park National Bank3,598 3,496 3,496 3,464 4,849   
Total nonperforming assets$118,561 $94,168 $94,596 $93,137 $112,998 $122,009 $141,438 
Percentage of nonaccrual loans to period end loans1.40%1.05%1.20%1.19%1.34%1.67%1.89%
Percentage of nonperforming loans to period end loans1.74%1.36%1.51%1.50%1.75%2.05%2.42%
Percentage of nonperforming assets to period end loans1.85%1.48%1.65%1.64%2.10%2.31%2.79%
Percentage of nonperforming assets to period end total assets1.36%1.09%1.20%1.19%1.50%1.63%1.93%
        
        
PARK NATIONAL CORPORATION
Asset Quality Information (continued)
        
    Year ended December 31,
(in thousands, except ratios)September 30,
2019
June 30,
2019
March 31,
2019
2018201720162015
        
        
New nonaccrual loan information:       
Nonaccrual loans, beginning of period$66,675 $69,175 $67,954 $72,056 $87,822 $95,887 $100,393 
New nonaccrual loans34,035 17,952 12,484 76,611 58,753 74,786 80,791 
Resolved nonaccrual loans11,155 20,452 11,263 80,713 74,519 82,851 85,297 
Nonaccrual loans, end of period$89,555 $66,675 $69,175 $67,954 $72,056 $87,822 $95,887 
        
Impaired commercial loan portfolio information (period end):       
Unpaid principal balance$80,057 $56,338 $61,838 $59,381 $66,585 $95,358 $109,304 
Prior charge-offs5,633 6,113 10,957 11,246 10,040 24,943 28,705 
Remaining principal balance74,424 50,225 50,881 48,135 56,545 70,415 80,599 
Specific reserves3,083 2,379 2,468 2,273 684 548 4,191 
Book value, after specific reserves$71,341 $47,846 $48,413 $45,862 $55,861 $69,867 $76,408 
        
 


PARK NATIONAL CORPORATION   
    
Financial Reconciliations      
                 
NON-GAAP RECONCILIATIONS      
 THREE MONTHS ENDED NINE MONTHS ENDED
(in thousands, except share and per share data)September 30,
2019
June 30,
2019
September 30,
2018
 September 30,
2019
September 30,
2018
Net interest income$77,101 $75,851 $67,676  $220,728 $197,268 
less purchase accounting accretion related to NewDominion and Carolina Alliance acquisitions1,967 1,606 582  3,839 582 
less interest income on former Vision Bank relationships  119  7 3,429 
Net interest income - adjusted$75,134 $74,245 $66,975  $216,882 $193,257 
       
Provision for loan losses$1,967 $1,919 $2,940  $6,384 $4,586 
less recoveries on former Vision Bank relationships(575)(65)(179) (740)(684)
Provision for loan losses - adjusted$2,542 $1,984 $3,119  $7,124 $5,270 
       
Other income$28,136 $22,808 $24,064  $72,969 $74,209 
less net (loss) gain on sale of former Vision Bank OREO properties (139)(118) (139)4,084 
less gain on 8.55% prior investment in NewDominion     3,500 
less other service income related to former Vision Bank relationships52  24  52 1,081 
less net gain (loss) on the sale of debt securities in the ordinary course of business186 (607)  (421)(2,271)
Other income - adjusted$27,898 $23,554 $24,158  $73,477 $67,815 
       
Other expense$65,738 $70,192 $59,316  $192,757 $166,158 
less merger related expenses related to NewDominion and Carolina Alliance acquisitions658 6,058 3,323  6,992 3,918 
less core deposit intangible amortization related to NewDominion and Carolina Alliance acquisitions741 702 289  1,732 289 
less FDIC assessment credit(1,057)   (1,057) 
less management and consulting expenses related to collection of payments on former Vision Bank loan relationships  36   1,272 
less one-time incentive expense     1,128 
Other expense - adjusted$65,396 $63,432 $55,668  $185,090 $159,551 
       
Tax effect of adjustments to net income identified above (i)$(512)$1,225 $601  $754 $(941)
       
Net income - reported$31,146 $22,163 $24,762  $78,764 $84,126 
Net income - adjusted$29,220 $26,773 $27,023  $81,599 $80,585 
       
Diluted EPS$1.89 $1.33 $1.56  $4.84 $5.41 
Diluted EPS, adjusted (h)$1.77 $1.61 $1.71  $5.01 $5.18 
       
Annualized return on average assets (a)(b)1.41%1.04%1.26% 1.25%1.48%
Annualized return on average assets, adjusted (a)(b)(h)1.32%1.25%1.37% 1.30%1.42%
       
Annualized return on average tangible assets (a)(b)(e)1.43%1.06%1.27% 1.28%1.50%
Annualized return on average tangible assets, adjusted (a)(b)(e)(h)1.35%1.28%1.39% 1.32%1.44%
       
Annualized return on average equity (a)(b)13.07%9.49%12.11% 11.61%14.57%
Annualized return on average equity, adjusted (a)(b)(h)12.27%11.47%13.21% 12.03%13.96%
       
Annualized return on average tangible equity (a)(b)(c)16.02%11.53%14.21% 13.97%16.46%
Annualized return on average tangible equity, adjusted (a)(b)(c)(h)15.03%13.92%15.51% 14.47%15.76%
       
Efficiency ratio (g)62.03%70.61%64.16% 65.14%60.73%
Efficiency ratio, adjusted (g)(h)63.02%64.36%60.61% 63.26%60.62%
       
Annualized net interest margin (g)3.86%3.92%3.77% 3.88%3.81%
Annualized net interest margin, adjusted (g)(h)3.76%3.84%3.73% 3.81%3.74%
       
Note: Explanations for footnotes (a) - (i) are included at the end of the financial tables in this "Financial Reconciliations" section. 
                 
(a) Averages are for the three months ended September 30, 2019, June 30, 2019 and September 30, 2018 and the nine months ended September 30, 2019 and September 30, 2018. 
(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 intangible assets during the applicable period. 


RECONCILIATION OF AVERAGE SHAREHOLDERS' EQUITY TO AVERAGE TANGIBLE EQUITY: 
 THREE MONTHS ENDED NINE MONTHS ENDED 
 September 30,
2019
June 30,
2019
September 30,
2018
 September 30,
2019
September 30,
2018
 
AVERAGE SHAREHOLDERS' EQUITY$945,145 $936,626 $811,313  $907,221 $771,907 
Less: Average goodwill and other intangible assets174,027 165,311 120,188  153,182 88,461 
AVERAGE TANGIBLE EQUITY$771,118 $771,315 $691,125  $754,039 $683,446 
        
(d) Tangible equity divided by common shares outstanding at period end. Tangible equity equals total shareholders' equity less goodwill and other intangible assets, in each case at the end of the period. 
        
RECONCILIATION OF TOTAL SHAREHOLDERS' EQUITY TO TANGIBLE EQUITY: 
 September 30,
2019
June 30,
2019
September 30,
2018
    
TOTAL SHAREHOLDERS' EQUITY$956,140 $934,432 $809,091     
Less: Goodwill and other intangible assets173,489 174,288 119,999     
TANGIBLE EQUITY$782,651 $760,144 $689,092     
        
(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 intangible assets, in each case during the applicable period. 
        
RECONCILIATION OF AVERAGE ASSETS TO AVERAGE TANGIBLE ASSETS   
 THREE MONTHS ENDED NINE MONTHS ENDED 
 September 30,
2019
June 30,
2019
September 30,
2018
 September 30,
2019
September 30,
2018
 
AVERAGE ASSETS$8,785,692 $8,576,495 $7,826,496  $8,401,687 $7,581,798 
Less: Average goodwill and other intangible assets174,027 165,311 120,188  153,182 88,461 
AVERAGE TANGIBLE ASSETS$8,611,665 $8,411,184 $7,706,308  $8,248,505 $7,493,337 
        
(f) Tangible equity divided by tangible assets. Tangible assets equals total assets less goodwill and other intangible assets, in each case at the end of the period. 
                 
RECONCILIATION OF TOTAL ASSETS TO TANGIBLE ASSETS: 
 September 30,
2019
June 30,
2019
September 30,
2018
    
TOTAL ASSETS$8,723,610 $8,657,453 $7,756,491     
Less: Goodwill and other intangible assets173,489 174,288 119,999     
TANGIBLE ASSETS$8,550,121 $8,483,165 $7,636,492     
        
(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 assuming a 21% corporate federal income tax rate. 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,
2019
June 30,
2019
September 30,
2018
 September 30,
2019
September 30, 2018 
Interest income$94,589 $92,226 $80,229  $268,671 $228,634 
Fully taxable equivalent adjustment744 752 716  2,230 2,122 
Fully taxable equivalent interest income$95,333 $92,978 $80,945  $270,901 $230,756 
Interest expense17,488 16,375 12,553  47,943 31,366 
Fully taxable equivalent net interest income$77,845 $76,603 $68,392  $222,958 $199,390 
        
(h) Adjustments to net income for each period presented are detailed in the non-GAAP reconciliations of net interest income, provision for loan losses, other income and other expense above.
(i) The tax effect of adjustments to net income was calculated assuming a 21% corporate federal income tax rate.


PRK Stacked 131andBlue.png

Source: Park National Corporation

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