PARK NATIONAL CORPORATION Item 2.02 - Results of Operations and Financial Condition.
On
Non-GAAP Financial Measures
Item 7.01 of this Current Report on Form 8-K as well as the Financial Results
News Release contain non-GAAP (generally accepted accounting principles)
financial measures where management believes it to be helpful in understanding
Park's results of operations or financial position. Where non-GAAP financial
measures are used, the comparable
Items Impacting Comparability of Period Results From time to time, revenue, expenses, and/or taxes are impacted by items judged by management of Park to be outside of ordinary banking activities and/or by items that, while they may be associated with ordinary banking activities, are so unusually large that their outsized impact is believed by management of Park at that time to be infrequent or short-term in nature. Most often, these items impacting comparability of period results are due to merger and acquisition activities and revenue and expenses related to former Vision Bank loan relationships. In other cases, they may result from management's decisions associated with significant corporate actions outside of the ordinary course of business.
Even though certain revenue and expense items are naturally subject to more volatility than others due to changes in market and economic environment conditions, as a general rule volatility alone does not result in the inclusion of an item as one impacting comparability of period results. For example, changes in the provision for credit losses (aside from those related to former Vision Bank loan relationships), gains (losses) on equity securities, and asset valuation writedowns, reflect ordinary banking activities and are, therefore, typically excluded from consideration as items impacting comparability of period results.
Management believes the disclosure of items impacting comparability of period results provides a better understanding of our performance and trends and allows management to ascertain which of such items, if any, to include or exclude from an analysis of our performance; i.e., within the context of determining how that performance differed from expectations, as well as how, if at all, to adjust estimates of future performance taking such items into account.
Items impacting comparability of the results of particular periods are not intended to be a complete list of items that may materially impact current or future period performance.
Management has included in the Financial Results News Release information
relating to the annualized return on average tangible equity, annualized return
on average tangible assets, the tangible equity to tangible assets ratio and
tangible book value per share for the three months ended and at
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Management believes that the disclosure of return on average tangible equity,
return on average tangible assets, the tangible equity to tangible assets ratio
and tangible book value per share presents additional information to the reader
of the consolidated financial statements, which, when read in conjunction with
the consolidated financial statements prepared in accordance with
FTE (fully taxable equivalent) Ratios
Interest income, yields, and ratios on a FTE basis are considered non-GAAP
financial measures. Management believes net interest income on a FTE basis
provides an insightful picture of the interest margin for comparison purposes.
The FTE basis also allows management to assess the comparability of revenue
arising from both taxable and tax-exempt sources. The FTE basis assumes a
federal statutory tax rate of 21 percent. In the Financial Results News Release,
Park has provided a reconciliation of FTE interest income solely for the purpose
of complying with SEC Regulation G and not as an indication that FTE interest
income, yields and ratios are substitutes for interest income, yields and
ratios, as determined in accordance with
Item 7.01 - Regulation FD Disclosure
Financial Results by Segment
The table below reflects the net income (loss) by segment for the first quarters
of 2020 and 2019 and for the years ended
(In thousands) Q1 2020 Q1 2019 2019 2018
PNB $ 25,908 $ 26,692 $ 113,600 $ 109,472
GFSC 112 287 762 521
All Other (3,648) (1,524) (11,662) 394
Total Park $ 22,372 $ 25,455 $ 102,700 $ 110,387 Net income for the three months ended
Banking has been identified by federal and state governmental authorities to be an essential service and Park is fully committed to continue serving our customers and communities through the COVID-19 public health crisis. For those in our communities experiencing a financial hardship, Park offers various methods of support including loan modifications, payment deferral programs, participation in the CARES Act Paycheck Protection Program ("PPP") and various other case by case accommodations. Park has implemented various social distancing guidelines to help protect employees, such as allowing associates to work from home, where practical, while maintaining customer service via our online banking services, mobile app, ATMs, by keeping drive-thru lanes open to serve customers, and offering other banking services by appointment when necessary.
Park is committed to helping individuals and businesses in the communities it
serves. Park has approved 3,393 loans under the PPP during the period from
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Paycheck Protection Program Liquidity Facility. Additionally, as of
Park continues its historically strong financial performance, with adequate capital and liquidity, and is well prepared to support our employees, customers and communities in these difficult times.
The following discussion provides additional information regarding the two segments that make up Park's ongoing operations, followed by additional information regarding All Other, which consists of the Parent Company and SEPH.
In 2020, Park will execute a rebranding initiative to operate all 12 banking divisions of PNB under one name. The banking divisions will discontinue use of their respective former bank division names and logos; and they will share new, unified PNB branding in all marketing and communications to the communities they serve. This rebranding will make it easier for bank customers and prospective customers to recognize and access the full depth and breadth of the banking organization. Leadership structure, service style, and local community involvement will not be affected by the rebranding.
The table below reflects PNB's net income for the first quarters of 2020 and
2019 and for the years ended
(In thousands) Q1 2020 Q1 2019 2019 2018
Net interest income $ 75,214 $ 66,282 $ 293,130 $ 258,547
Provision for loan losses 5,534 2,440 8,356 7,569
Other income 23,481 20,708 92,392 88,981
Other expense 61,368 51,974 237,433 206,843
Income before income taxes $ 31,793 $ 32,576 $ 139,733 $ 133,116
Income tax expense 5,885 5,884 26,133 23,644
Net income $ 25,908 $ 26,692 $ 113,600 $ 109,472 Net interest income of
Item 8.01 - Other Events
Declaration of Cash Dividend
As reported in the Financial Results News Release, on
Item 9.01 - Financial Statements and Exhibits.
(a)Not applicable (b)Not applicable (c)Not applicable
(d)Exhibits. The following exhibits are included with this Current Report on Form 8-K:
Exhibit No. Description
99.1 News Release issued by
104 Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document)
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