Investor Relations

Press Release

Park National Corporation reports financial results for first quarter 2020

Company Release - 4/27/2020 4:15 PM ET

NEWARK, Ohio, April 27, 2020 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE American: PRK) today reported financial results for the first quarter of 2020 (three months ended March 31, 2020). Park's board of directors declared a quarterly cash dividend of $1.02 per common share, payable on June 10, 2020 to common shareholders of record as of May 22, 2020.

Park’s net income for the first quarter of 2020 was $22.4 million, a 12.1 percent decrease from $25.5 million for the first quarter of 2019. First quarter 2020 net income per diluted common share was $1.36, compared to $1.62 in the first quarter of 2019.

Park's community-banking subsidiary, The Park National Bank, reported net income of $25.9 million for the first quarter of 2020, a 2.9 percent decrease compared to $26.7 million for the same period of 2019.

“In the face of unprecedented activity and uncertainty brought on by the COVID-19 situation, our bankers have responded with energy, enthusiasm and imagination. We are honored that people rely on us for a multitude of services throughout this crisis,” Park Chief Executive Officer David Trautman said. “We’ve found new ways to live out our motto, demonstrating daily that our customers and communities mean more to us than simple transactions or accounts.”

Headquartered in Newark, Ohio, Park National Corporation had $8.7 billion in total assets (as of March 31, 2020). 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: the ever-changing effects of the novel coronavirus (COVID-19) pandemic - - the duration, extent and severity of which are impossible to predict - - on economies (local, national and international) and markets, and on our customers, counterparties, employees and third-party service providers, as well as the effects of various responses of governmental and nongovernmental authorities to the COVID-19 pandemic, including actions directed toward the containment of the COVID-19 pandemic and stimulus packages; 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 in addition to continuing residual effects of prior recessionary conditions, 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; higher default rates on loans made to our customers due to the COVID-19 pandemic and its impact on our customers' operations and financial condition; changes in interest rates and prices as well as disruption in the liquidity and functioning of U.S. financial markets, as a result of the COVID-19 pandemic and reactions thereto, 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 (including as a result of the COVID-19 pandemic and reactions thereto), legislative and regulatory initiatives (including those undertaken in response to the COVID-19 pandemic), or other factors may be different than anticipated; changes in unemployment may be different than anticipated in light of the impacts of the COVID-19 pandemic; changes in customers', suppliers', and other counterparties' performance and creditworthiness may be different than anticipated in light of the impacts of the COVID-19 pandemic; 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 Coronavirus Aid, Relief and Economic Security (CARES) Act, 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 provisions of the CARES Act, the provisions of the Dodd-Frank Act, and the Basel III regulatory capital reforms; the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board (the "FASB"), the SEC, the Public Company Accounting Oversight Board and other regulatory agencies, including the extent to which the new current expected credit loss ("CECL") accounting standard issued by the FASB in June 2016 and in accordance with the CARES Act, the adoption of which can be deferred by Park (with retrospective application as of January 1, 2020) until the earlier of: (1) the interim reporting period during which the national emergency concerning the COVID-19 outbreak declared by the President on March 15, 2020 terminates; or (2) December 31, 2020, 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, including under the CECL model, when adopted by Park, 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 of the Federal Reserve Board) and other governmental policies of the U.S. federal government, including those implemented in response to the COVID-19 pandemic; unexpected changes in interest rates or disruptions in the financial markets related to COVID-19 or responses to the related health crisis; 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 (including the COVID-19 pandemic), dislocations, civil unrest, terrorist activities or international hostilities on the economy and financial markets generally and on us or our counterparties specifically; any of the foregoing factors, or other cascading effects of the COVID-19 pandemic that are not currently foreseeable, could materially affect our business, including our customers' willingness to conduct banking transactions and their ability to pay on existing obligations; the effect of healthcare laws in the U.S. and potential changes for such laws, especially in light of the COVID-19 pandemic, which may increase our healthcare and other costs and negatively impact our operations and financial results; 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; 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, 2019. 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 March 31, 2020, December 31, 2019, and March 31, 2019     
       
 202020192019 Percent change vs.
(in thousands, except share and per share data)1st QTR4th QTR1st QTR 4Q '191Q '19
INCOME STATEMENT:      
Net interest income$76,283 $77,009  $67,776  (0.9)%12.6 %
Provision for (recovery of) loan losses5,153 (213) 2,498  N.M.106.3 %
Other income22,486 24,224  22,025  (7.2)%2.1 %
Other expense66,276 71,231  56,827  (7.0)%16.6 %
Income before income taxes$27,340 $30,215  $30,476  (9.5)%(10.3)%
Income taxes4,968 6,279  5,021  (20.9)%(1.1)%
Net income$22,372 $23,936  $25,455  (6.5)%(12.1)%
       
MARKET DATA:      
Earnings per common share - basic (b)$1.37 $1.46  $1.63  (6.2)%(16.0)%
Earnings per common share - diluted (b)1.36 1.45  1.62  (6.2)%(16.0)%
Cash dividends declared per common share1.22 1.01  1.21  20.8 %0.8 %
Book value per common share at period end60.25 59.28  54.06  1.6 %11.5 %
Market price per common share at period end77.64 102.38  94.75  (24.2)%(18.1)%
Market capitalization at period end1,265,180 1,673,549  1,480,990  (24.4)%(14.6)%
       
Weighted average common shares - basic (a)16,303,602 16,342,485  15,651,541  (0.2)%4.2 %
Weighted average common shares - diluted (a)16,425,881 16,454,553  15,744,777  (0.2)%4.3 %
Common shares outstanding at period end16,295,461 16,346,442  15,630,499  (0.3)%4.3 %
       
PERFORMANCE RATIOS: (annualized)      
Return on average assets (a)(b)1.04%1.09 %1.32% (4.6)%(21.2)%
Return on average shareholders' equity (a)(b)9.16%9.83 %12.31% (6.8)%(25.6)%
Yield on loans5.02%5.11 %5.14% (1.8)%(2.3)%
Yield on investment securities2.72%2.72 %2.82%  %(3.5)%
Yield on money market instruments1.12%1.86 %2.76% (39.8)%(59.4)%
Yield on interest earning assets4.57%4.64 %4.66% (1.5)%(1.9)%
Cost of interest bearing deposits0.81%0.95 %0.97% (14.7)%(16.5)%
Cost of borrowings2.08%2.18 %2.01% (4.6)%3.5 %
Cost of paying interest bearing liabilities0.90%1.04 %1.10% (13.5)%(18.2)%
Net interest margin (g)3.93%3.90 %3.86% 0.8 %1.8 %
Efficiency ratio (g)66.61%69.86 %62.77% (4.7)%6.1 %
       
OTHER RATIOS (NON-GAAP):      
Tangible book value per share (d)$49.79 $48.81  $46.42  2.0 %7.3 %
       
       
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 March 31, 2020, December 31, 2019, and March 31, 2019     
       
     Percent change vs.
(in thousands, except ratios)March 31, 2020December 31, 2019March 31, 2019 4Q '191Q '19
BALANCE SHEET:      
Investment securities$1,253,087 $1,279,507  $1,382,301  (2.1)%(9.3)%
Loans6,522,519 6,501,404  5,740,760  0.3 %13.6 %
Allowance for loan losses61,503 56,679  53,368  8.5 %15.2 %
Goodwill and other intangible assets170,512 171,118  119,421  (0.4)%42.8 %
Other real estate owned (OREO)3,600 4,029  4,629  (10.6)%(22.2)%
Total assets8,719,291 8,558,377  7,852,246  1.9 %11.0 %
Total deposits7,290,133 7,052,612  6,325,212  3.4 %15.3 %
Borrowings348,373 438,157  602,569  (20.5)%(42.2)%
Total shareholders' equity981,877 969,014  845,044  1.3 %16.2 %
Tangible equity (d)811,365 797,896  725,623  1.7 %11.8 %
Total nonperforming loans119,311 113,953  86,471  4.7 %38.0 %
Total nonperforming assets126,510 121,581  94,596  4.1 %33.7 %
       
ASSET QUALITY RATIOS:      
Loans as a % of period end total assets74.81%75.97 %73.11% (1.5)%2.3 %
Total nonperforming loans as a % of period end loans1.83%1.75 %1.51% 4.6 %21.2 %
Total nonperforming assets as a % of period end loans + OREO + other nonperforming assets1.94%1.87 %1.65% 3.7 %17.6 %
Allowance for loan losses as a % of period end loans0.94%0.87 %0.93% 8.0 %1.1 %
Net loan charge-offs (recoveries)$329 $(1,039) $642  N.M.N.M.
Annualized net loan charge-offs (recoveries) as a % of average loans (a)0.02%(0.06)%0.05% N.M.N.M.
       
CAPITAL & LIQUIDITY:      
Total shareholders' equity / Period end total assets11.26%11.32 %10.76% (0.5)%4.6 %
Tangible equity (d) / Tangible assets (f)9.49%9.51 %9.38% (0.2)%1.2 %
Average shareholders' equity / Average assets (a)11.31%11.12 %10.71% 1.7 %5.6 %
Average shareholders' equity / Average loans (a)15.15%15.03 %14.74% 0.8 %2.8 %
Average loans / Average deposits (a)89.90%89.36 %90.78% 0.6 %(1.0)%
       


      
PARK NATIONAL CORPORATION 
Consolidated Statements of Income 
      
  Three Months Ended 
  March 31, 
(in thousands, except share and per share data) 2020 2019 
      
Interest income:     
Interest and fees on loans $80,687  $72,003  
Interest on:     
Obligations of U.S. Government, its agencies     
and other securities - taxable 5,531  6,995  
Obligations of states and political subdivisions - tax-exempt 2,200  2,217  
Other interest income 491  641  
Total interest income 88,909  81,856  
      
Interest expense:     
Interest on deposits:     
Demand and savings deposits 6,342  7,093  
Time deposits 4,285  3,777  
Interest on borrowings 1,999  3,210  
Total interest expense 12,626  14,080  
      
Net interest income 76,283  67,776  
      
Provision for loan losses 5,153  2,498  
      
Net interest income after provision for loan losses 71,130  65,278  
      
Other income 22,486  22,025  
      
Other expense 66,276  56,827  
      
Income before income taxes 27,340  30,476  
      
Income taxes 4,968  5,021  
      
Net income $22,372   $25,455  
      
Per common share:     
Net income - basic $1.37  $1.63  
Net income - diluted $1.36  $1.62  
      
Weighted average shares - basic 16,303,602  15,651,541  
Weighted average shares - diluted 16,425,881  15,744,777  
      
Cash dividends declared $1.22  $1.21  
      


 
PARK NATIONAL CORPORATION 
Consolidated Balance Sheets
    
(in thousands, except share data) March 31, 2020December 31, 2019
    
Assets   
    
Cash and due from banks $145,062  $135,567   
Money market instruments 175,858  24,389   
Investment securities 1,253,087  1,279,507   
Loans 6,522,519  6,501,404   
Allowance for loan losses (61,503) (56,679) 
Loans, net 6,461,016  6,444,725   
Bank premises and equipment, net 77,330  73,322   
Goodwill and other intangible assets 170,512  171,118   
Other real estate owned 3,600  4,029   
Other assets 432,826  425,720   
Total assets $8,719,291  $8,558,377   
    
Liabilities and Shareholders' Equity   
    
Deposits:   
Noninterest bearing $1,976,565  $1,959,935   
Interest bearing 5,313,568  5,092,677   
Total deposits 7,290,133  7,052,612   
Borrowings 348,373  438,157   
Other liabilities 98,908  98,594   
Total liabilities $7,737,414  $7,589,363   
    
    
Shareholders' Equity:   
Preferred shares (200,000 shares authorized; no shares outstanding at March 31, 2020 and December 31, 2019) $—   $—   
Common shares (No par value; 20,000,000 shares authorized; 17,623,190 shares issued at March 31, 2020 and 17,623,199 shares issued at December 31, 2019) 456,777  459,389   
Accumulated other comprehensive gain (loss), net of taxes 8,104  (9,589) 
Retained earnings 649,636  646,847   
Treasury shares (1,327,729 shares at March 31, 2020 and 1,276,757 shares at December 31, 2019) (132,640) (127,633) 
Total shareholders' equity $981,877  $969,014   
Total liabilities and shareholders' equity $8,719,291  $8,558,377   


 
PARK NATIONAL CORPORATION 
Consolidated Average Balance Sheets
    
  Three Months Ended
  March 31,
(in thousands) 20202019
    
Assets   
    
Cash and due from banks $132,029  $117,803  
Money market instruments 176,805  94,262  
Investment securities 1,264,452  1,389,842  
Loans 6,482,137  5,689,173  
Allowance for loan losses (57,615) (52,390) 
Loans, net 6,424,522  5,636,783  
Bank premises and equipment, net 74,922  60,847  
Goodwill and other intangible assets 170,909  119,611  
Other real estate owned 3,800  4,373  
Other assets 432,350  408,876  
Total assets $8,679,789  $7,832,397  
    
    
Liabilities and Shareholders' Equity   
    
Deposits:   
Noninterest bearing $1,949,991  $1,730,224  
Interest bearing 5,260,385  4,536,501  
Total deposits 7,210,376  6,266,725  
Borrowings 386,511  647,658  
Other liabilities 100,926  79,291  
Total liabilities $7,697,813  $6,993,674  
    
Shareholders' Equity:   
Preferred shares $—   $  
Common shares 459,462  358,633  
Accumulated other comprehensive loss, net of taxes (94) (46,539) 
Retained earnings 654,465  621,568  
Treasury shares (131,857) (94,939) 
Total shareholders' equity $981,976  $838,723  
Total liabilities and shareholders' equity $8,679,789  $7,832,397  


 
PARK NATIONAL CORPORATION 
Consolidated Statements of Income - Linked Quarters
      
 20202019201920192019
(in thousands, except per share data)1st QTR4th QTR3rd QTR2nd QTR1st QTR
      
Interest income:     
Interest and fees on loans$80,687  $82,698  $84,213 $82,471 $72,003 
Interest on:     
Obligations of U.S. Government, its agencies and other securities - taxable5,531  5,973  6,326 6,919 6,995 
Obligations of states and political subdivisions - tax-exempt2,200  2,205  2,225 2,308 2,217 
Other interest income491  953  1,825 528 641 
Total interest income88,909  91,829  94,589 92,226 81,856 
      
Interest expense:     
Interest on deposits:     
Demand and savings deposits6,342  7,795  9,649 8,811 7,093 
Time deposits4,285  4,666  4,694 4,357 3,777 
Interest on borrowings1,999  2,359  3,145 3,207 3,210 
Total interest expense12,626  14,820  17,488 16,375 14,080 
      
Net interest income76,283  77,009  77,101 75,851 67,776 
      
Provision for (recovery of) loan losses5,153  (213) 1,967 1,919 2,498 
      
Net interest income after provision for (recovery of) loan losses71,130  77,222  75,134 73,932 65,278 
      
Other income22,486  24,224  28,136 22,808 22,025 
      
Other expense66,276  71,231  65,738 70,192 56,827 
      
Income before income taxes27,340  30,215  37,532 26,548 30,476 
      
Income taxes4,968  6,279  6,386 4,385 5,021 
      
Net income $22,372  $23,936  $31,146 $22,163 $25,455 
      
Per common share:     
Net income - basic$1.37  $1.46  $1.90 $1.34 $1.63 
Net income - diluted$1.36  $1.45  $1.89 $1.33 $1.62 


 
PARK NATIONAL CORPORATION 
Detail of other income and other expense - Linked Quarters
      
 20202019201920192019
(in thousands)1st QTR4th QTR3rd QTR2nd QTR1st QTR
      
Other income:     
Income from fiduciary activities$7,113  $7,268  $6,842  $6,935  $6,723  
Service charges on deposit accounts2,528  2,757  2,864  2,655  2,559  
Other service income3,766  4,382  4,260  4,040  2,818  
Debit card fee income4,960  5,341  5,313  5,227  4,369  
Bank owned life insurance income1,248  1,158  1,107  1,286  1,006  
ATM fees412  446  482  460  440  
(Loss) gain on the sale of OREO, net(196) 2  (53) (159) (12) 
Net gain (loss) on the sale of investment securities—     186  (607)   
(Loss) gain on equity securities, net(973) (191) 3,335  232  1,742  
Other components of net periodic benefit income1,988  1,183  1,183  1,183  1,183  
Miscellaneous1,640  1,878  2,617  1,556  1,197  
Total other income$22,486  $24,224  $28,136  $22,808  $22,025  
      
Other expense:     
Salaries$28,429  $30,903  $30,713  $32,093  $25,805  
Employee benefits10,043  8,973  10,389  9,014  8,430  
Occupancy expense3,480  3,355  3,226  3,223  3,011  
Furniture and equipment expense4,319  4,319  4,177  4,386  4,150  
Data processing fees2,492  2,777  2,935  2,905  2,133  
Professional fees and services7,066  10,503  6,702  10,106  6,006  
Marketing1,486  1,468  1,604  1,455  1,226  
Insurance1,550  317  276  1,381  1,156  
Communication1,155  1,256  1,387  1,375  1,333  
State tax expense1,145  1,024  746  1,054  1,005  
Amortization of intangible assets606  623  741  702  289  
Miscellaneous4,505  5,713  2,842  2,498  2,283  
Total other expense$66,276  $71,231  $65,738  $70,192  $56,827  


PARK NATIONAL CORPORATION 
Asset Quality Information
      
  Year ended December 31,
(in thousands, except ratios)March 31, 20202019201820172016
      
Allowance for loan losses:     
Allowance for loan losses, beginning of period$56,679 $51,512 $49,988 $50,624 $56,494  
Charge-offs2,685 11,177 13,552 19,403 20,799  
Recoveries2,356 10,173 7,131 10,210 20,030  
Net charge-offs329 1,004 6,421 9,193 769  
Provision for (recovery of) loan losses5,153 6,171 7,945 8,557 (5,101) 
Allowance for loan losses, end of period$61,503 $56,679 $51,512 $49,988 $50,624  
      
      
General reserve trends:     
Allowance for loan losses, end of period$61,503 $56,679 $51,512 $49,988 $50,624  
Specific reserves5,531 5,230 2,273 684 548  
General reserves$55,972 $51,449 $49,239 $49,304 $50,076  
      
Total loans$6,522,519 $6,501,404 $5,692,132 $5,372,483 $5,271,857  
Impaired commercial loans85,646 77,459 48,135 56,545 70,415  
Total loans less impaired commercial loans$6,436,873 $6,423,945 $5,643,997 $5,315,938 $5,201,442  
      
      
Asset Quality Ratios:     
Net charge-offs as a % of average loans (annualized)0.02%0.02%0.12%0.17%0.02 %
Allowance for loan losses as a % of period end loans0.94%0.87%0.90%0.93%0.96 %
General reserves as a % of total loans less impaired commercial loans0.87%0.80%0.87%0.93%0.96 %
General reserves as a % of total loans less impaired commercial loans (excluding performing acquired loans)0.94%0.88%0.91%N.A.N.A.
      
Nonperforming assets:     
Nonaccrual loans$90,354 $90,080 $67,954 $72,056 $87,822  
Accruing troubled debt restructurings27,168 21,215 15,173 20,111 18,175  
Loans past due 90 days or more1,789 2,658 2,243 1,792 2,086  
Total nonperforming loans$119,311 $113,953 $85,370 $93,959 $108,083  
Other real estate owned - Park National Bank2,671 3,100 2,788 6,524 6,025  
Other real estate owned - SEPH929 929 1,515 7,666 7,901  
Other nonperforming assets - Park National Bank3,599 3,599 3,464 4,849   
Total nonperforming assets$126,510 $121,581 $93,137 $112,998 $122,009  
Percentage of nonaccrual loans to period end loans1.39%1.39%1.19%1.34%1.67 %
Percentage of nonperforming loans to period end loans1.83%1.75%1.50%1.75%2.05 %
Percentage of nonperforming assets to period end loans1.94%1.87%1.64%2.10%2.31 %
Percentage of nonperforming assets to period end total assets1.45%1.42%1.19%1.50%1.63 %
      
      
PARK NATIONAL CORPORATION 
Asset Quality Information (continued)
      
  Year ended December 31,
(in thousands, except ratios)March 31, 20202019201820172016
      
      
New nonaccrual loan information:     
Nonaccrual loans, beginning of period$90,080 $67,954 $72,056 $87,822 $95,887  
New nonaccrual loans21,651 81,009 76,611 58,753 74,786  
Resolved nonaccrual loans21,377 58,883 80,713 74,519 82,851  
Nonaccrual loans, end of period$90,354 $90,080 $67,954 $72,056 $87,822  
      
Impaired commercial loan portfolio information (period end):     
Unpaid principal balance$86,379 $78,178 $59,381 $66,585 $95,358  
Prior charge-offs733 719 11,246 10,040 24,943  
Remaining principal balance85,646 77,459 48,135 56,545 70,415  
Specific reserves5,531 5,230 2,273 684 548  
Book value, after specific reserves$80,115 $72,229 $45,862 $55,861 $69,867  
      
 


PARK NATIONAL CORPORATION 
Financial Reconciliations    
NON-GAAP RECONCILIATIONS    
 THREE MONTHS ENDED 
(in thousands, except share and per share data)March 31, 2020December 31, 2019March 31, 2019 
Net interest income$76,283  $77,009  $67,776   
less purchase accounting accretion related to NewDominion and Carolina Alliance acquisitions1,378  1,947  266   
less interest income on former Vision Bank relationships77  249  7   
Net interest income - adjusted$74,828  $74,813  $67,503   
     
Provision for (recovery of) loan losses$5,153  $(213) $2,498   
less recoveries on former Vision Bank relationships(764) (2,302) (100)  
Provision for (recovery of) loan losses - adjusted$5,917  $2,089  $2,598   
     
Other income$22,486  $24,224  $22,025   
less net gain (loss) on sale of former Vision Bank OREO properties  28     
Other income - adjusted$22,486  $24,196  $22,025   
     
Other expense$66,276  $71,231  $56,827   
less merger-related expenses related to NewDominion and Carolina Alliance acquisitions243  1,885  276   
less core deposit intangible amortization related to NewDominion and Carolina Alliance acquisitions606  623  289   
less FDIC assessment credit  (1,136)    
less FHLB prepayment penalty1,793  492     
less rebranding initiative related expenses (including trade name intangible expense)270  2,134     
less management and consulting expenses related to collection of payments on former Vision Bank loan relationships  622     
Other expense - adjusted$63,364  $66,611  $56,262   
     
Tax effect of adjustments to net income identified above (i)$146  $20  $40   
     
Net income - reported$22,372  $23,936  $25,455   
Net income - adjusted$22,919  $24,010  $25,607   
     
Diluted EPS$1.36  $1.45  $1.62   
Diluted EPS, adjusted (h)$1.40  $1.46  $1.63   
     
Annualized return on average assets (a)(b)1.04 %1.09 %1.32 % 
Annualized return on average assets, adjusted (a)(b)(h)1.06 %1.10 %1.33 % 
     
Annualized return on average tangible assets (a)(b)(e)1.06 %1.12 %1.34 % 
Annualized return on average tangible assets, adjusted (a)(b)(e)(h)1.08 %1.12 %1.35 % 
     
Annualized return on average equity (a)(b)9.16 %9.83 %12.31 % 
Annualized return on average equity, adjusted (a)(b)(h)9.39 %9.86 %12.38 % 
     
Annualized return on average tangible equity (a)(b)(c)11.09 %11.97 %14.36 % 
Annualized return on average tangible equity, adjusted (a)(b)(c)(h)11.37 %12.00 %14.44 % 
     
Efficiency ratio (g)66.61 %69.86 %62.77 % 
Efficiency ratio, adjusted (g)(h)64.63 %66.79 %62.33 % 
     
Annualized net interest margin (g)3.93 %3.90 %3.86 % 
Annualized net interest margin, adjusted (g)(h)3.85 %3.79 %3.85 % 
     
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 March 31, 2020, December 31, 2019 and March 31, 2019. 
(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 
 March 31, 2020December 31, 2019March 31, 2019 
AVERAGE SHAREHOLDERS' EQUITY$981,976 $966,548 $838,723  
Less: Average goodwill and other intangible assets170,909 173,065 119,611  
AVERAGE TANGIBLE EQUITY$811,067 $793,483 $719,112  
     
(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:
 March 31, 2020December 31, 2019March 31, 2019 
TOTAL SHAREHOLDERS' EQUITY$981,877 $969,014 $845,044  
Less: Goodwill and other intangible assets170,512 171,118 119,421  
TANGIBLE EQUITY$811,365 $797,896 $725,623  
     
(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 
 March 31, 2020December 31, 2019March 31, 2019 
AVERAGE ASSETS$8,679,789 $8,688,697 $7,832,397  
Less: Average goodwill and other intangible assets170,909 173,065 119,611  
AVERAGE TANGIBLE ASSETS$8,508,880 $8,515,632 $7,712,786  
     
(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:
 March 31, 2020December 31, 2019March 31, 2019 
TOTAL ASSETS$8,719,291 $8,558,377 $7,852,246  
Less: Goodwill and other intangible assets170,512 171,118 119,421  
TANGIBLE ASSETS$8,548,779 $8,387,259 $7,732,825  
     
(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 
 March 31, 2020December 31, 2019March 31, 2019 
Interest income$88,909 $91,829 $81,856  
Fully taxable equivalent adjustment725 726 734  
Fully taxable equivalent interest income$89,634 $92,555 $82,590  
Interest expense12,626 14,820 14,080  
Fully taxable equivalent net interest income$77,008 $77,735 $68,510  
     
(h) Adjustments to net income for each period presented are detailed in the non-GAAP reconciliations of net interest income, provision for (recovery of) 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

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Source: Park National Corporation

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