Investor Relations

Press Release

Park National Corporation reports 2019 financial results

Board increases quarterly dividend and declares special dividend

Company Release - 1/28/2020 9:10 AM ET

NEWARK, Ohio, Jan. 28, 2020 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE American: PRK) today reported financial results for the fourth quarter and full year of 2019 (three and twelve months ended December 31, 2019). Park's board of directors authorized a special cash dividend of $0.20 per common share, and increased the quarterly cash dividend to $1.02 per common share. Both dividends are payable on March 10, 2020 to common shareholders of record as of February 21, 2020.

“Our performance in 2019 aligned well with our expectations,” said Park President Matthew Miller. “Corporate results reflect our investments into new areas, and the financial tables included in our public filing detail acquisition-related costs from the past two years. Our community banking operations generated steady results, increasing loans and deposits for local families and businesses.”

Park’s net income for the fourth quarter of 2019 was $23.9 million, an 8.9 percent decrease from $26.3 million for the fourth quarter of 2018. Fourth quarter 2019 net income per diluted common share was $1.45, compared to $1.67 in the fourth quarter of 2018. Park's net income for full year of 2019 was $102.7 million, a 7.0 percent decrease from $110.4 million for the same period of 2018. Net income per diluted common share was $6.29 for 2019, compared to $7.07 for 2018.

Park's community-banking subsidiary, The Park National Bank, reported net income of $113.6 million for the full year of 2019, a 3.7 percent increase compared to $109.5 million for the same period of 2018.

“Our growing team of community bankers continues to deliver an extraordinary experience for those they serve, and we could not be more grateful for their dedication and excellence,” said Park Chairman and Chief Executive Officer David Trautman. “This year holds great promise as we focus on serving customers and prospects more, all together under our unified brand and stronger than ever.” 

Headquartered in Newark, Ohio, Park National Corporation had $8.6 billion in total assets (as of December 31, 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.

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 as well as Park's ability to manage strategic initiatives; 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 prior 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 as well as disruption in the liquidity and functioning of U.S. financial markets may adversely impact prepayment penalty income, mortgage banking income, income from fiduciary activities, 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 changes in retail distribution strategies, consumer preferences and behavior, changes in business and economic conditions, legislative and regulatory initiatives, or other factors may be different than anticipated; changes in unemployment may be different than anticipated; changes in customers', suppliers', and other counterparties' performance and creditworthiness may be different than anticipated; 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 pressures 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, FDIC insurance premium levels, 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 accounting standard issued by the FASB in June 2016 and effective for Park as of January 1, 2020, which will require banks to record, at the time of origination, credit losses expected throughout the life of the asset portfolio on loans and held-to-maturity 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 and modeling, which may prove unreliable, inaccurate or not predictive of actual results; significant changes in the tax laws, which may adversely affect the fair values of net deferred tax assets and obligations of state and political subdivisions held in Park's investment securities portfolio; the 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; the impact on Park's business, personnel, facilities or systems of losses related to acts of 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 recent acquisitions 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 the London Inter-Bank Offered Rate (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 December 31, 2019, September 30, 2019, and December 31, 2018     
       
 201920192018 Percent change vs.
(in thousands, except share and per share data)4th QTR3rd QTR4th QTR 3Q '194Q '18
INCOME STATEMENT:      
Net interest income$77,009  $77,101 $69,630  (0.1)%10.6 %
(Recovery of) provision for loan losses(213) 1,967 3,359  (110.8)%(106.3)%
Other income24,224  28,136 26,892  (13.9)%(9.9)%
Other expense71,231  65,738 62,597  8.4 %13.8 %
Income before income taxes$30,215  $37,532 $30,566  (19.5)%(1.1)%
Income taxes6,279  6,386 4,305  (1.7)%45.9 %
Net income$23,936  $31,146 $26,261  (23.1)%(8.9)%
       
MARKET DATA:      
Earnings per common share - basic (b)$1.46  $1.90 $1.67  (23.2)%(12.6)%
Earnings per common share - diluted (b)1.45  1.89 1.67  (23.3)%(13.2)%
Cash dividends declared per common share1.01  1.01 0.96   %5.2 %
Book value per common share at period end59.28  58.54 53.03  1.3 %11.8 %
Market price per common share at period end102.38  94.81 84.95  8.0 %20.5 %
Market capitalization at period end1,673,549  1,548,527 1,333,560  8.1 %25.5 %
       
Weighted average common shares - basic (a)16,342,485  16,382,798 15,695,522  (0.2)%4.1 %
Weighted average common shares - diluted (a)16,454,553  16,475,741 15,764,548  (0.1)%4.4 %
Common shares outstanding at period end16,346,442  16,332,951 15,698,178  0.1 %4.1 %
       
PERFORMANCE RATIOS: (annualized)      
Return on average assets (a)(b)1.09 %1.41%1.34% (22.7)%(18.7)%
Return on average shareholders' equity (a)(b)9.83 %13.07%12.70% (24.8)%(22.6)%
Yield on loans5.11 %5.25%5.10% (2.7)%0.2 %
Yield on investment securities2.72 %2.72%2.74%  %(0.7)%
Yield on money market instruments1.86 %2.43%2.46% (23.5)%(24.4)%
Yield on interest earning assets4.64 %4.73%4.61% (1.9)%0.7 %
Cost of interest bearing deposits0.95 %1.08%0.85% (12.0)%11.8 %
Cost of borrowings2.18 %2.25%1.88% (3.1)%16.0 %
Cost of paying interest bearing liabilities1.04 %1.19%0.97% (12.6)%7.2 %
Net interest margin (g)3.90 %3.86%3.91% 1.0 %(0.3)%
Efficiency ratio (g)69.86 %62.03%64.36% 12.6 %8.5 %
       
OTHER RATIOS (NON-GAAP):      
Tangible book value per share (d)$48.81  $47.92 $45.41  1.9 %7.5 %
       
       
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 December 31, 2019, September 30, 2019, and December 31, 2018     
       
     Percent change vs.
(in thousands, except ratios)December 31,
2019
September 30,
2019
December 31,
2018
 3Q '194Q '18
BALANCE SHEET:      
Investment securities$1,279,507  $1,328,930 $1,411,080  (3.7)%(9.3)%
Loans6,501,404  6,403,647 5,692,132  1.5 %14.2 %
Allowance for loan losses56,679  55,853 51,512  1.5 %10.0 %
Goodwill and other intangible assets171,118  173,489 119,710  (1.4)%42.9 %
Other real estate owned (OREO)4,029  3,779 4,303  6.6 %(6.4)%
Total assets8,558,377  8,723,610 7,804,308  (1.9)%9.7 %
Total deposits7,052,612  7,168,259 6,260,860  (1.6)%12.6 %
Borrowings438,157  498,338 636,966  (12.1)%(31.2)%
Total shareholders' equity969,014  956,140 832,506  1.3 %16.4 %
Tangible equity (d)797,896  782,651 712,796  1.9 %11.9 %
Total nonperforming loans113,953  111,184 85,370  2.5 %33.5 %
Total nonperforming assets121,581  118,561 93,137  2.5 %30.5 %
       
ASSET QUALITY RATIOS:      
Loans as a % of period end total assets75.97 %73.41%72.94% 3.5 %4.2 %
Total nonperforming loans as a % of period end loans1.75 %1.74%1.50% 0.6 %16.7 %
Total nonperforming assets as a % of period end loans + OREO + other nonperforming assets1.87 %1.85%1.63% 1.1 %14.7 %
Allowance for loan losses as a % of period end loans0.87 %0.87%0.90%  %(3.3)%
Net loan (recoveries) charge-offs$(1,039) $117 $2,093  N.M.  N.M.  
Annualized net loan (recoveries) charge-offs as a % of average loans (a)(0.06)%0.01%0.15% N.M.  N.M.  
       
CAPITAL & LIQUIDITY:      
Total shareholders' equity / Period end total assets11.32 %10.96%10.67% 3.3 %6.1 %
Tangible equity (d) / Tangible assets (f)9.51 %9.15%9.28% 3.9 %2.5 %
Average shareholders' equity / Average assets (a)11.12 %10.76%10.56% 3.3 %5.3 %
Average shareholders' equity / Average loans (a)15.03 %14.83%14.56% 1.3 %3.2 %
Average loans / Average deposits (a)89.36 %88.63%90.06% 0.8 %(0.8)%
       


 
PARK NATIONAL CORPORATION
Financial Highlights
Twelve months ended December 31, 2019 and December 31, 2018   
     
     
(in thousands, except share and per share data and ratios)20192018 Percent change
vs '18
INCOME STATEMENT:    
Net interest income$297,737 $266,898  11.6 %
Provision for loan losses6,171 7,945  (22.3)%
Other income97,193 101,101  (3.9)%
Other expense263,988 228,755  15.4 %
Income before income taxes$124,771 $131,299  (5.0)%
Income taxes22,071 20,912  5.5 %
Net income$102,700 $110,387  (7.0)%
     
MARKET DATA:    
Earnings per common share - basic (b)$6.33 $7.13  (11.2)%
Earnings per common share - diluted (b)6.29 7.07  (11.0)%
Cash dividends declared per common share4.24 4.07  4.2 %
     
Weighted average common shares - basic (a)16,234,342 15,488,982  4.8 %
Weighted average common shares - diluted (a)16,329,456 15,611,489  4.6 %
     
PERFORMANCE RATIOS:    
Return on average assets (a)(b)1.21%1.45% (16.6)%
Return on average shareholders' equity (a)(b)11.14%14.08% (20.9)%
Yield on loans5.19%4.98% 4.2 %
Yield on investment securities2.76%2.72% 1.5 %
Yield on money market instruments2.33%1.93% 20.7 %
Yield on interest earning assets4.70%4.46% 5.4 %
Cost of interest bearing deposits1.01%0.72% 40.3 %
Cost of borrowings2.14%1.83% 16.9 %
Cost of paying interest bearing liabilities1.12%0.86% 30.2 %
Net interest margin (g)3.89%3.84% 1.3 %
Efficiency ratio (g)66.35%61.68% 7.6 %
     
ASSET QUALITY RATIOS:    
Net loan charge-offs$1,004 $6,421  (84.4)%
Annualized net loan charge-offs as a % of average loans (a)0.02%0.12% (83.3)%
     
CAPITAL & LIQUIDITY:    
Average shareholders' equity / Average assets (a)10.88%10.28% 5.8 %
Average shareholders' equity / Average loans (a)14.85%14.36% 3.4 %
Average loans / Average deposits (a)89.91%89.01% 1.0 %
     
     
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 Twelve Months Ended
  December 31, December 31,
(in thousands, except share and per share data) 2019 2018 2019 2018
         
Interest income:        
Interest and fees on loans $82,698    $72,342  $321,385   $271,145 
Interest on:        
Obligations of U.S. Government, its agencies        
and other securities - taxable 5,973    7,275  26,213   29,479 
Obligations of states and political subdivisions - tax-exempt 2,205    2,213  8,955   8,770 
Other interest income 953    337  3,947   1,407 
Total interest income 91,829    82,167  360,500   310,801 
         
Interest expense:        
Interest on deposits:        
Demand and savings deposits 7,795    6,006  33,348   19,815 
Time deposits 4,666    3,610  17,494   12,375 
Interest on borrowings 2,359    2,921  11,921   11,713 
Total interest expense 14,820    12,537  62,763   43,903 
         
Net interest income 77,009    69,630  297,737   266,898 
         
(Recovery of) provision for loan losses (213)  3,359  6,171   7,945 
         
Net interest income after (recovery of) provision for loan losses 77,222    66,271  291,566   258,953 
         
Other income 24,224    26,892  97,193   101,101 
         
Other expense 71,231    62,597  263,988   228,755 
         
Income before income taxes 30,215    30,566  124,771   131,299 
         
Income taxes 6,279    4,305  22,071   20,912 
         
Net income $23,936    $26,261  $102,700   $110,387 
         
Per Common Share:        
Net income  - basic $1.46    $1.67  $6.33   $7.13 
Net income  - diluted $1.45    $1.67  $6.29   $7.07 
         
Weighted average shares - basic 16,342,485    15,695,522  16,234,342   15,488,982 
Weighted average shares - diluted 16,454,553    15,764,548  16,329,456   15,611,489 
         
Cash dividends declared $1.01    $0.96  $4.24   $4.07 
         


 
PARK NATIONAL CORPORATION 
Consolidated Balance Sheets
   
(in thousands, except share data)December 31, 2019December 31, 2018
   
Assets  
   
Cash and due from banks$135,567   $141,890  
Money market instruments24,389   25,324  
Investment securities1,279,507   1,428,145  
Loans6,501,404   5,692,132  
Allowance for loan losses(56,679) (51,512) 
Loans, net6,444,725   5,640,620  
Bank premises and equipment, net73,322   59,771  
Goodwill and other intangible assets171,118   119,710  
Other real estate owned4,029   4,303  
Other assets425,720   384,545  
Total assets$8,558,377   $7,804,308  
   
Liabilities and Shareholders' Equity  
   
Deposits:  
Noninterest bearing$1,959,935   $1,804,881  
Interest bearing5,092,677   4,455,979  
Total deposits7,052,612   6,260,860  
Borrowings438,157   636,966  
Other liabilities98,594   73,976  
Total liabilities$7,589,363   $6,971,802  
   
   
Shareholders' Equity:  
Preferred shares (200,000 shares authorized; no shares outstanding at December 31, 2019 and December 31, 2018)$—   $  
Common shares (No par value; 20,000,000 shares authorized in 2019 and 2018; 17,623,199 shares issued at December 31, 2019 and 16,586,165 shares issued at December 31, 2018)459,389   358,598  
Accumulated other comprehensive loss, net of taxes(9,589) (49,788) 
Retained earnings646,847   614,069  
Treasury shares (1,276,757 shares at December 31, 2019 and 887,987 shares at December 31, 2018)(127,633) (90,373) 
Total shareholders' equity$969,014   $832,506  
Total liabilities and shareholders' equity$8,558,377   $7,804,308  
         


    
PARK NATIONAL CORPORATION 
Consolidated Average Balance Sheets
      
 Three Months Ended Twelve Months Ended
 December 31, December 31,
(in thousands)20192018 20192018
      
Assets     
      
Cash and due from banks$129,105   $111,617   $130,372   $114,357  
Money market instruments203,259   54,443   169,703   73,001  
Investment securities1,300,927   1,415,210   1,360,540   1,461,068  
Loans6,431,374   5,635,837   6,208,496   5,460,664  
Allowance for loan losses(56,904) (50,478)  (54,516) (50,151) 
Loans, net6,374,470   5,585,359   6,153,980   5,410,513  
Bank premises and equipment, net73,487   59,153   69,710   57,195  
Goodwill and other intangible assets173,065   119,899   158,194   96,385  
Other real estate owned3,871   4,760   4,066   8,016  
Other assets430,513   419,699   427,464   408,734  
Total assets$8,688,697   $7,770,140   $8,474,029   $7,629,269  
      
      
Liabilities and Shareholders' Equity     
      
Deposits:     
Noninterest bearing$1,980,898   $1,765,670   $1,875,628   $1,661,481  
Interest bearing5,216,050   4,492,046   5,029,854   4,473,467  
Total deposits7,196,948   6,257,716   6,905,482   6,134,948  
Borrowings429,979   616,519   556,564   641,505  
Other liabilities95,222   75,460   89,809   68,676  
Total liabilities$7,722,149   $6,949,695   $7,551,855   $6,845,129  
      
Shareholders' Equity:     
Preferred shares$—   $   $—   $  
Common shares458,264   357,766   432,795   332,694  
Accumulated other comprehensive loss, net of taxes(11,694) (59,780)  (30,160) (52,871) 
Retained earnings648,007   613,103   633,389   593,544  
Treasury shares(128,029) (90,644)  (113,850) (89,227) 
Total shareholders' equity$966,548   $820,445   $922,174   $784,140  
Total liabilities and shareholders' equity$8,688,697   $7,770,140   $8,474,029   $7,629,269  
                  


 
PARK NATIONAL CORPORATION 
Consolidated Statements of Income - Linked Quarters
      
 20192019201920192018
(in thousands, except per share data)4th QTR3rd QTR2nd QTR1st QTR4th QTR
      
Interest income:     
Interest and fees on loans$82,698   $84,213 $82,471 $72,003 $72,342 
Interest on:     
Obligations of U.S. Government, its agencies and other securities - taxable5,973   6,326 6,919 6,995 7,275 
Obligations of states and political subdivisions - tax-exempt2,205   2,225 2,308 2,217 2,213 
Other interest income953   1,825 528 641 337 
Total interest income91,829   94,589 92,226 81,856 82,167 
      
Interest expense:     
Interest on deposits:     
Demand and savings deposits7,795   9,649 8,811 7,093 6,006 
Time deposits4,666   4,694 4,357 3,777 3,610 
Interest on borrowings2,359   3,145 3,207 3,210 2,921 
Total interest expense14,820   17,488 16,375 14,080 12,537 
      
Net interest income77,009   77,101 75,851 67,776 69,630 
      
(Recovery of) provision for loan losses(213) 1,967 1,919 2,498 3,359 
      
Net interest income after (recovery of) provision for loan losses77,222   75,134 73,932 65,278 66,271 
      
Other income24,224   28,136 22,808 22,025 26,892 
      
Other expense71,231   65,738 70,192 56,827 62,597 
      
Income before income taxes30,215   37,532 26,548 30,476 30,566 
      
Income taxes6,279   6,386 4,385 5,021 4,305 
      
Net income $23,936   $31,146 $22,163 $25,455 $26,261 
      
Per Common Share:     
Net income - basic$1.46   $1.90 $1.34 $1.63 $1.67 
Net income - diluted$1.45   $1.89 $1.33 $1.62 $1.67 
                 


 
PARK NATIONAL CORPORATION 
Detail of other income and other expense - Linked Quarters
      
 20192019201920192018
(in thousands)4th QTR3rd QTR2nd QTR1st QTR4th QTR
      
Other income:     
Income from fiduciary activities$7,268   $6,842  $6,935  $6,723  $6,814  
Service charges on deposit accounts2,757   2,864  2,655  2,559  2,852  
Other service income4,382   4,260  4,040  2,818  3,279  
Debit card fee income5,341   5,313  5,227  4,369  4,581  
Bank owned life insurance income1,158   1,107  1,286  1,006  2,190  
ATM fees446   482  460  440  444  
OREO valuation adjustments(102) (41) (55) (27) (93) 
Gain (loss) on the sale of OREO, net  (53) (159) (12) 142  
Net gain (loss) on the sale of investment securities—   186  (607)     
(Loss) gain on equity securities, net(191) 3,335  232  1,742  (17) 
Other components of net periodic benefit income1,183   1,183  1,183  1,183  1,705  
Gain on the sale of non-performing loans—         2,826  
Miscellaneous1,980   2,658  1,611  1,224  2,169  
Total other income$24,224   $28,136  $22,808  $22,025  $26,892  
      
Other expense:     
Salaries$30,903   $30,713  $32,093  $25,805  $27,103  
Employee benefits8,973   10,389  9,014  8,430  7,977  
Occupancy expense3,355   3,226  3,223  3,011  2,769  
Furniture and equipment expense4,319   4,177  4,386  4,150  4,170  
Data processing fees2,777   2,935  2,905  2,133  2,222  
Professional fees and services10,503   6,702  10,106  6,006  8,516  
Marketing1,468   1,604  1,455  1,226  1,377  
Insurance317   276  1,381  1,156  1,277  
Communication1,256   1,387  1,375  1,333  1,335  
State tax expense1,024   746  1,054  1,005  750  
Amortization of intangible assets623   741  702  289  289  
Miscellaneous5,713   2,842  2,498  2,283  4,812  
Total other expense$71,231   $65,738  $70,192  $56,827  $62,597  
                     


 
PARK NATIONAL CORPORATION 
Asset Quality Information
      
 Year ended December 31,
(in thousands, except ratios)20192018201720162015
      
Allowance for loan losses:     
Allowance for loan losses, beginning of period$51,512 $49,988 $50,624 $56,494  $54,352 
Charge-offs11,177 13,552 19,403 20,799  14,290 
Recoveries10,173 7,131 10,210 20,030  11,442 
Net charge-offs1,004 6,421 9,193 769  2,848 
Provision for (recovery of) loan losses6,171 7,945 8,557 (5,101) 4,990 
Allowance for loan losses, end of period$56,679 $51,512 $49,988 $50,624  $56,494 
      
      
General reserve trends:     
Allowance for loan losses, end of period$56,679 $51,512 $49,988 $50,624  $56,494 
Specific reserves5,230 2,273 684 548  4,191 
General reserves$51,449 $49,239 $49,304 $50,076  $52,303 
      
Total loans$6,501,404 $5,692,132 $5,372,483 $5,271,857  $5,068,085 
Impaired commercial loans77,459 48,135 56,545 70,415  80,599 
Total loans less impaired commercial loans$6,423,945 $5,643,997 $5,315,938 $5,201,442  $4,987,486 
      
      
Asset Quality Ratios:     
Net charge-offs as a % of average loans0.02%0.12%0.17%0.02 %0.06%
Allowance for loan losses as a % of period end loans0.87%0.90%0.93%0.96 %1.11%
General reserves as a % of total loans less impaired commercial loans0.80%0.87%0.93%0.96 %1.05%
General reserves as a % of total loans less impaired commercial loans (excluding performing acquired loans)0.88%0.91%N.A. N.A.  N.A. 
      
Nonperforming assets:     
Nonaccrual loans$90,080 $67,954 $72,056 $87,822  $95,887 
Accruing troubled debt restructurings21,215 15,173 20,111 18,175  24,979 
Loans past due 90 days or more2,658 2,243 1,792 2,086  1,921 
Total nonperforming loans$113,953 $85,370 $93,959 $108,083  $122,787 
Other real estate owned - Park National Bank3,100 2,788 6,524 6,025  7,456 
Other real estate owned - SEPH929 1,515 7,666 7,901  11,195 
Other nonperforming assets - Park National Bank3,599 3,464 4,849    
Total nonperforming assets$121,581 $93,137 $112,998 $122,009  $141,438 
Percentage of nonaccrual loans to period end loans1.39%1.19%1.34%1.67 %1.89%
Percentage of nonperforming loans to period end loans1.75%1.50%1.75%2.05 %2.42%
Percentage of nonperforming assets to period end loans1.87%1.64%2.10%2.31 %2.79%
Percentage of nonperforming assets to period end total assets1.42%1.19%1.50%1.63 %1.93%
      
      
PARK NATIONAL CORPORATION 
Asset Quality Information (continued)
      
 Year ended December 31,
(in thousands, except ratios)20192018201720162015
      
      
New nonaccrual loan information:     
Nonaccrual loans, beginning of period$67,954 $72,056 $87,822 $95,887  $100,393 
New nonaccrual loans81,009 76,611 58,753 74,786  80,791 
Resolved nonaccrual loans58,883 80,713 74,519 82,851  85,297 
Nonaccrual loans, end of period$90,080 $67,954 $72,056 $87,822  $95,887 
      
Impaired commercial loan portfolio information (period end):     
Unpaid principal balance$78,178 $59,381 $66,585 $95,358  $109,304 
Prior charge-offs719 11,246 10,040 24,943  28,705 
Remaining principal balance77,459 48,135 56,545 70,415  80,599 
Specific reserves5,230 2,273 684 548  4,191 
Book value, after specific reserves$72,229 $45,862 $55,861 $69,867  $76,408 
      


    
PARK NATIONAL CORPORATION   
Financial Reconciliations      
NON-GAAP RECONCILIATIONS      
 THREE MONTHS ENDED TWELVE MONTHS ENDED
(in thousands, except share and per share data)December 31,
2019
September 30,
2019
December 31,
2018
 December 31,
2019
December 31,
2018
Net interest income$77,009  $77,101  $69,630   $297,737  $266,898  
less purchase accounting accretion related to NewDominion and Carolina Alliance acquisitions1,947  1,967  801   5,786  1,383  
less interest income on former Vision Bank relationships249       256  3,429  
Net interest income - adjusted$74,813  $75,134  $68,829   $291,695  $262,086  
       
(Recovery of) provision for loan losses$(213) $1,967  $3,359   $6,171  $7,945  
less recoveries on former Vision Bank relationships(2,302) (575) (287)  (3,042) (971) 
(Recovery of) provision for loan losses - adjusted$2,089  $2,542  $3,646   $9,213  $8,916  
       
Other income$24,224  $28,136  $26,892   $97,193  $101,101  
less net gain (loss) on sale of former Vision Bank OREO properties28    145   (111) 4,229  
less gain on 8.55% prior investment in NewDominion         3,500  
less other service income related to former Vision Bank relationships  52     52  1,081  
less net gain on sale of non-performing loans    2,826     2,826  
less net gain (loss) on the sale of debt securities in the ordinary course of business  186     (421) (2,271) 
Other income - adjusted$24,196  $27,898  $23,921   $97,673  $91,736  
       
Other expense$71,231  $65,738  $62,597   $263,988  $228,755  
less merger-related expenses related to NewDominion and Carolina Alliance acquisitions1,885  658  1,266   8,877  5,184  
less core deposit intangible amortization related to NewDominion and Carolina Alliance acquisitions623  741  289   2,355  578  
less FDIC assessment credit(1,136) (1,057)    (2,193)   
less rebranding initiative related expenses (including trade name intangible expense)2,134  139  102   2,476  102  
less management and consulting expenses related to collection of payments on former Vision Bank loan relationships622       622  1,272  
less one-time incentive expense         1,128  
Other expense - adjusted$67,103  $65,257  $60,940   $251,851  $220,491  
       
Tax effect of adjustments to net income identified above (i)$(84) $(483) $(504)  $742  $(1,446) 
       
Net income - reported$23,936  $31,146  $26,261   $102,700  $110,387  
Net income - adjusted$23,622  $29,330  $24,363   $105,491  $104,949  
       
Diluted EPS$1.45  $1.89  $1.67   $6.29  $7.07  
Diluted EPS, adjusted (h)$1.44  $1.78  $1.55   $6.46  $6.72  
       
Annualized return on average assets (a)(b)1.09 %1.41 %1.34 % 1.21 %1.45 %
Annualized return on average assets, adjusted (a)(b)(h)1.08 %1.32 %1.24 % 1.24 %1.38 %
       
Annualized return on average tangible assets (a)(b)(e)1.12 %1.43 %1.36 % 1.23 %1.47 %
Annualized return on average tangible assets, adjusted (a)(b)(e)(h)1.10 %1.35 %1.26 % 1.27 %1.39 %
       
Annualized return on average equity (a)(b)9.83 %13.07 %12.70 % 11.14 %14.08 %
Annualized return on average equity, adjusted (a)(b)(h)9.70 %12.31 %11.78 % 11.44 %13.38 %
       
Annualized return on average tangible equity (a)(b)(c)11.97 %16.02 %14.87 % 13.44 %16.05 %
Annualized return on average tangible equity, adjusted (a)(b)(c)(h)11.81 %15.09 %13.80 % 13.81 %15.26 %
       
Efficiency ratio (g)69.86 %62.03 %64.36 % 66.35 %61.68 %
Efficiency ratio, adjusted (g)(h)67.28 %62.88 %65.19 % 64.19 %61.82 %
       
Annualized net interest margin (g)3.90 %3.86 %3.91 % 3.89 %3.84 %
Annualized net interest margin, adjusted (g)(h)3.79 %3.76 %3.86 % 3.81 %3.77 %
       
Note: Explanations for footnotes (a) - (i) are included at the end of the financial tables in this "Financial Reconciliations" section.
 


    
PARK NATIONAL CORPORATION   
Financial Reconciliations (continued)      
       
(a) Averages are for the three months ended December 31, 2019, September 30, 2019 and December 31, 2018 and the twelve months ended December 31, 2019 and December 31, 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 TWELVE MONTHS ENDED
 December 31,
2019
September 30,
2019
December 31,
2018
 December 31,
2019
December 31,
2018
AVERAGE SHAREHOLDERS' EQUITY$966,548 $945,145 $820,445  $922,174 $784,140 
Less: Average goodwill and other intangible assets173,065 174,027 119,899  158,194 96,385 
AVERAGE TANGIBLE EQUITY$793,483 $771,118 $700,546  $763,980 $687,755 
       
(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:
 December 31,
2019
September 30,
2019
December 31,
2018
   
TOTAL SHAREHOLDERS' EQUITY$969,014 $956,140 $832,506    
Less: Goodwill and other intangible assets171,118 173,489 119,710    
TANGIBLE EQUITY$797,896 $782,651 $712,796    
       
(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 TWELVE MONTHS ENDED
 December 31,
2019
September 30,
2019
December 31,
2018
 December 31,
2019
December 31,
2018
AVERAGE ASSETS$8,688,697 $8,785,692 $7,770,140  $8,474,029 $7,629,269 
Less: Average goodwill and other intangible assets173,065 174,027 119,899  158,194 96,385 
AVERAGE TANGIBLE ASSETS$8,515,632 $8,611,665 $7,650,241  $8,315,835 $7,532,884 
       
(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:
 December 31,
2019
September 30,
2019
December 31,
2018
   
TOTAL ASSETS$8,558,377 $8,723,610 $7,804,308    
Less: Goodwill and other intangible assets171,118 173,489 119,710    
TANGIBLE ASSETS$8,387,259 $8,550,121 $7,684,598    
       
(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 TWELVE MONTHS ENDED
 December 31,
2019
September 30,
2019
December 31,
2018
 December 31,
2019
December 31,
2018
Interest income$91,829 $94,589 $82,167  $360,500 $310,801 
Fully taxable equivalent adjustment726 744 736  2,956 2,858 
Fully taxable equivalent interest income$92,555 $95,333 $82,903  $363,456 $313,659 
Interest expense14,820 17,488 12,537  62,763 43,903 
Fully taxable equivalent net interest income$77,735 $77,845 $70,366  $300,693 $269,756 
       
(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.
 

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

Park National Corporation Stacked - Color.png

Source: Park National Corporation

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