NEWARK, Ohio, July 22, 2019 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE American: PRK) today reported financial results for the second quarter and first half of 2019 (three and six months ended June 30, 2019). Park's board of directors declared a quarterly cash dividend of $1.01 per common share, payable on September 10, 2019 to common shareholders of record as of August 16, 2019.

Park’s net income for the second quarter of 2019 was $22.2 million, a 21.5 percent decrease from $28.2 million for the second quarter of 2018. Second quarter 2019 net income per diluted common share was $1.33, compared to $1.83 in the second quarter of 2018. Park's net income for first half of 2019 was $47.6 million, a 19.8 percent decrease from $59.4 million for first half of 2018. Net income per diluted common share was $2.94 for the first half of 2019, compared to $3.85 for the first half of 2018.

Park Chairman and CEO David Trautman said, “Comparing the first half of 2019 to the first half of 2018 is a challenge. The first half of 2018 included some unanticipated nonrecurring revenue and the second quarter of 2019 included anticipated merger-related expenses.”

“Our banking organization continues to perform consistently well, including increases in commercial loans and installment loans in the first half of this year,” Trautman said.

Park's community-banking subsidiary, The Park National Bank, reported net income of $29.4 million for the second quarter of 2019, a 2.1 percent increase from $28.8 million reported for the second quarter of 2018. The bank reported net income of $56.1 million for the first half of 2019, compared to $55.5 million for the first half of 2018. In the first half of 2019, the bank (not including loans from the Carolina Alliance Bank Division) grew installment loans by 10.1 percent annualized and commercial loans by 3.5 percent annualized.

Headquartered in Newark, Ohio, Park National Corporation had $8.7 billion in total assets (as of June 30, 2019). The Park organization consists of community bank divisions, specialty finance companies, and a non-bank subsidiary. 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 recent economic expansion in addition to continuing residual effects of recessionary conditions and an uneven spread of positive impacts of recovery on the economy and our counterparties, resulting in adverse impacts on the demand for loan, deposit and other financial services, delinquencies, defaults and counterparties' 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, 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 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, which 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), 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 any future 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, expected revenue synergies and cost savings from the merger of Park and CAB may not be 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 June 30, 2019, March 31, 2019, and June 30, 2018
       
 201920192018 Percent change vs.
(in thousands, except share and per share data)2nd QTR1st QTR2nd QTR 1Q '192Q '18
INCOME STATEMENT:      
Net interest income$75,851 $67,776 $64,742  11.9%17.2%
Provision for loan losses1,919 2,498 1,386  (23.2)%38.5%
Other income22,808 22,025 23,242  3.6%(1.9)%
Other expense70,192 56,827 52,534  23.5%33.6%
Income before income taxes$26,548 $30,476 $34,064  (12.9)%(22.1)%
Income taxes4,385 5,021 5,823  (12.7)%(24.7)%
Net income$22,163 $25,455 $28,241  (12.9)%(21.5)%
       
MARKET DATA:      
Earnings per common share - basic (b)$1.34 $1.63 $1.85  (17.8)%(27.6)%
Earnings per common share - diluted (b)1.33 1.62 1.83  (17.9)%(27.3)%
Cash dividends declared per common share1.01 1.21 1.21  (16.5)%(16.5)%
Book value per common share at period end56.92 54.06 49.51  5.3%15.0%
Market price per common share at period end99.39 94.75 111.42  4.9%(10.8)%
Market capitalization at period end1,631,741 1,480,990 1,699,277  10.2%(4.0)%
       
Weighted average common shares - basic (a)16,560,545 15,651,541 15,285,532  5.8%8.3%
Weighted average common shares - diluted (a)16,642,571 15,744,777 15,417,607  5.7%7.9%
Common shares outstanding at period end16,417,562 15,630,499 15,251,095  5.0%7.6%
       
PERFORMANCE RATIOS: (annualized)      
Return on average assets (a)(b)1.04%1.32%1.52% (21.2)%(31.6)%
Return on average shareholders' equity (a)(b)9.49%12.31%15.02% (22.9)%(36.8)%
Yield on loans5.23%5.14%4.90% 1.8%6.7%
Yield on investment securities2.78%2.82%2.73% (1.4) %1.8%
Yield on money market instruments2.64%2.76%1.99% (4.3) %32.7%
Yield on interest earning assets4.76%4.66%4.39% 2.1%8.4%
Cost of interest bearing deposits1.04%0.97%0.64% 7.2%62.5%
Cost of borrowings2.15%2.01%1.84% 7.0%16.8%
Cost of paying interest bearing liabilities1.16%1.10%0.79% 5.5%46.8%
Net interest margin (g)3.92%3.86%3.81% 1.6%2.9%
Efficiency ratio (g)70.61%62.77%59.23% 12.5%19.2%
       
OTHER RATIOS (NON-GAAP):      
Tangible book value per share (d)$46.30 $46.42 $44.77  (0.3)%3.4%
       
N.M. - Not meaningful      
Note: Explanations for footnotes (a) - (i) are included at the end of the financial tables      
       
       
PARK NATIONAL CORPORATION
Financial Highlights (continued)
As of or for the three months ended June 30, 2019, March 31, 2019, and June 30, 2018
       
     Percent change vs.
(in thousands, except ratios)June 30, 2019March 31, 2019June 30, 2018 1Q '192Q '18
BALANCE SHEET:      
Investment securities$1,396,530 $1,400,987 $1,529,783  (0.3)%(8.7)%
Loans6,376,737 5,740,760 5,324,974  11.1%19.8%
Allowance for loan losses54,003 53,368 49,452  1.2%9.2%
Goodwill and other intangibles174,288 119,421 72,334  45.9%140.9%
Other real estate owned (OREO)3,839 4,629 5,729  (17.1)%(33.0)%
Total assets8,657,453 7,852,246 7,462,156  10.3%16.0%
Total deposits7,032,120 6,325,212 6,015,844  11.2%16.9%
Borrowings595,578 602,569 631,139  (1.2)%(5.6)%
Total shareholders' equity934,432 845,044 755,088  10.6%23.8%
Tangible equity (d)760,144 725,623 682,754  4.8%11.3%
Total nonperforming loans86,833 86,471 98,867  0.4%(12.2)%
Total nonperforming assets94,168 94,596 104,596  (0.5)%(10.0)%
       
ASSET QUALITY RATIOS:      
Loans as a % of period end total assets73.66%73.11%71.36% 0.8%3.2%
Total nonperforming loans as a % of period end loans1.36%1.51%1.86% (9.9)%(26.9)%
Total nonperforming assets as a % of period end loans + OREO + other nonperforming assets1.48%1.65%1.96% (10.3)%(24.5)%
Allowance for loan losses as a % of period end loans0.85%0.93%0.93% (8.6)%(8.6)%
Net loan charge-offs$1,284 $642 $903  100.0%42.2%
Annualized net loan charge-offs as a % of average loans (a)0.08%0.05%0.07% 60.0%14.3%
       
CAPITAL & LIQUIDITY:      
Total shareholders' equity / Period end total assets10.79%10.76%10.12% 0.3%6.6%
Tangible equity (d) / Tangible assets (f)8.96%9.38%9.24% (4.5)%(3.0)%
Average shareholders' equity / Average assets (a)10.92%10.71%10.11% 2.0%8.0%
Average shareholders' equity / Average loans (a)14.79%14.74%14.26% 0.3%3.7%
Average loans / Average deposits (a)91.03%90.78%88.23% 0.3%3.2%
       

 

PARK NATIONAL CORPORATION
Financial Highlights
Six months ended June 30, 2019 and June 30, 2018
     
 20192018  
(in thousands, except share and per share data and ratios)Six months
ended June 30		Six months
ended June 30		 Percent
change vs '18
INCOME STATEMENT:    
Net interest income$143,627 $129,592  10.8%
Provision for loan losses4,417 1,646  168.3%
Other income44,833 50,145  (10.6)%
Other expense127,019 106,842  18.9%
Income before income taxes$57,024 $71,249  (20.0)%
Income taxes9,406 11,885  (20.9)%
Net income$47,618 $59,364  (19.8)%
     
MARKET DATA:    
Earnings per common share - basic (b)$2.96 $3.88  (23.7)%
Earnings per common share - diluted (b)2.94 3.85  (23.6)%
Cash dividends declared per common share2.22 2.15  3.3%
     
Weighted average common shares - basic (a)16,106,043 15,286,932  5.4%
Weighted average common shares - diluted (a)16,193,643 15,424,585  5.0%
     
PERFORMANCE RATIOS: (annualized)    
Return on average assets (a)(b)1.17%1.61% (27.3)%
Return on average shareholders' equity (a)(b)10.81%15.92% (32.1)%
Yield on loans5.19%4.92% 5.5%
Yield on investment securities2.80%2.68% 4.5%
Yield on money market instruments2.70%1.76% 53.4%
Yield on interest earning assets4.71%4.39% 7.3%
Cost of interest bearing deposits1.01%0.59% 71.2%
Cost of borrowings2.08%1.78% 16.9%
Cost of paying interest bearing liabilities1.13%0.75% 50.7%
Net interest margin (g)3.89%3.84% 1.3%
Efficiency ratio (g)66.87%58.98% 13.4%
     
ASSET QUALITY RATIOS:    
Net loan charge-offs$1,926 $2,182  (11.7)%
Annualized net loan charge-offs as a % of average loans (a)0.06%0.08% (25.0)%
     
CAPITAL & LIQUIDITY:    
Average shareholders' equity / Average assets (a)10.82%10.08% 7.3%
Average shareholders' equity / Average loans (a)14.77%14.20% 4.0%
Average loans / Average deposits (a)90.91%88.80% 2.4%
     
N.M. - Not meaningful    
Note: Explanations for footnotes (a) - (i) are included at the end of the financial tables    

 

         
PARK NATIONAL CORPORATION 
Consolidated Statements of Income 
         
  Three Months Ended Six Months Ended
  June 30, June 30,
(in thousands, except share and per share data) 2019 2018 2019 2018
         
Interest income:        
  Interest and fees on loans $82,471  $64,496  $154,474  $128,898 
  Interest on:        
  Obligations of U.S. Government, its agencies        
  and other securities - taxable 6,919  7,746  13,914  14,513 
  Obligations of states and political subdivisions - tax-exempt 2,308  2,178  4,525  4,352 
  Other interest income 528  271  1,169  642 
  Total interest income 92,226  74,691  174,082  148,405 
         
Interest expense:        
  Interest on deposits:        
  Demand and savings deposits 8,811  4,107  15,904  7,397 
  Time deposits 4,357  2,886  8,134  5,437 
  Interest on borrowings 3,207  2,956  6,417  5,979 
  Total interest expense 16,375  9,949  30,455  18,813 
         
  Net interest income 75,851  64,742  143,627  129,592 
         
Provision for loan losses 1,919  1,386  4,417  1,646 
         
  Net interest income after provision for loan losses 73,932  63,356  139,210  127,946 
         
Other income 22,808  23,242  44,833  50,145 
         
Other expense 70,192  52,534  127,019  106,842 
         
  Income before income taxes 26,548  34,064  57,024  71,249 
         
Income taxes 4,385  5,823  9,406  11,885 
         
  Net income $22,163  $28,241  $47,618  $59,364 
         
Per Common Share:        
  Net income  - basic $1.34  $1.85  $2.96  $3.88 
  Net income  - diluted $1.33  $1.83  $2.94  $3.85 
         
  Weighted average shares - basic 16,560,545  15,285,532  16,106,043  15,286,932 
  Weighted average shares - diluted 16,642,571  15,417,607  16,193,643  15,424,585 
         
  Cash dividends declared $1.01  $1.21  $2.22  $2.15 
         

 

 
PARK NATIONAL CORPORATION
Consolidated Balance Sheets
   
(in thousands, except share data)June 30, 2019December 31, 2018
   
Assets  
   
Cash and due from banks$160,589 $141,890 
Money market instruments98,916 25,324 
Investment securities1,396,530 1,428,145 
Loans6,376,737 5,692,132 
Allowance for loan losses(54,003)(51,512)
Loans, net6,322,734 5,640,620 
Bank premises and equipment, net72,129 59,771 
Goodwill and other intangible assets174,288 119,710 
Other real estate owned3,839 4,303 
Other assets428,428 384,545 
Total assets$8,657,453 $7,804,308 
   
Liabilities and Shareholders' Equity  
   
Deposits:  
Noninterest bearing$1,907,027 $1,804,881 
Interest bearing5,125,093 4,455,979 
Total deposits7,032,120 6,260,860 
Borrowings595,578 636,966 
Other liabilities95,323 73,976 
Total liabilities$7,723,021 $6,971,802 
   
   
Shareholders' Equity:  
Preferred shares (200,000 shares authorized; no shares outstanding at June 30, 2019 and December 31, 2018)

 		$— $— 
Common shares (No par value; 20,000,000 shares authorized in 2019 and 2018; 17,623,216 shares issued at June 30, 2019 and
16,586,165 shares issued at December 31, 2018)		456,911 358,598 
Accumulated other comprehensive loss, net of taxes(26,307)(49,788)
Retained earnings625,227 614,069 
Treasury shares (1,205,654 shares at June 30, 2019 and 887,987 shares at December 31, 2018)(121,399)(90,373)
Total shareholders' equity$934,432 $832,506 
Total liabilities and shareholders' equity$8,657,453 $7,804,308 

 

    
PARK NATIONAL CORPORATION 
Consolidated Average Balance Sheets 
      
 Three Months Ended Six Months Ended
 June 30, June 30,
(in thousands)20192018 20192018
      
Assets     
      
Cash and due from banks$127,115 $118,870  $122,485 $118,561 
Money market instruments80,239 54,551  87,212 73,437 
Investment securities1,413,309 1,506,699  1,401,641 1,478,564 
Loans6,332,167 5,289,056  6,012,446 5,295,814 
Allowance for loan losses(53,849)(49,750) (53,124)(50,168)
Loans, net6,278,318 5,239,306  5,959,322 5,245,646 
Bank premises and equipment, net71,253 56,109  66,079 56,307 
Goodwill and other intangible assets165,311 72,334  142,587 72,334 
Other real estate owned4,183 8,416  4,277 10,962 
Other assets436,767 403,463  422,899 401,608 
Total assets$8,576,495 $7,459,748  $8,206,502 $7,457,419 
      
      
Liabilities and Shareholders' Equity     
      
Deposits:     
Noninterest bearing$1,887,335 $1,602,228  $1,809,213 $1,585,742 
Interest bearing5,068,709 4,392,733  4,804,076 4,378,091 
Total deposits6,956,044 5,994,961  6,613,289 5,963,833 
Borrowings597,448 645,909  622,414 678,296 
Other liabilities86,377 64,777  82,853 63,414 
Total liabilities$7,639,869 $6,705,647  $7,318,556 $6,705,543 
      
Shareholders' Equity:     
Preferred shares$— $—  $— $— 
Common shares455,895 307,689  407,533 307,714 
Accumulated other comprehensive loss, net of taxes(36,825)(54,184) (41,655)(47,965)
Retained earnings624,995 588,170  623,291 579,448 
Treasury shares(107,439)(87,574) (101,223)(87,321)
Total shareholders' equity$936,626 $754,101  $887,946 $751,876 
Total liabilities and shareholders' equity$8,576,495 $7,459,748  $8,206,502 $7,457,419 

 

 
PARK NATIONAL CORPORATION
Consolidated Statements of Income - Linked Quarters
      
 20192019201820182018
(in thousands, except per share data)2nd QTR1st QTR4th QTR3rd QTR2nd QTR
      
Interest income:     
Interest and fees on loans$82,471 $72,003 $72,342 $69,905 $64,496 
Interest on:     
Obligations of U.S. Government, its agencies and other securities - taxable6,919 6,995 7,275 7,691 7,746 
Obligations of states and political subdivisions - tax-exempt2,308 2,217 2,213 2,205 2,178 
Other interest income528 641 337 428 271 
Total interest income92,226 81,856 82,167 80,229 74,691 
      
Interest expense:     
Interest on deposits:     
Demand and savings deposits8,811 7,093 6,006 6,412 4,107 
Time deposits4,357 3,777 3,610 3,328 2,886 
Interest on borrowings3,207 3,210 2,921 2,813 2,956 
Total interest expense16,375 14,080 12,537 12,553 9,949 
      
Net interest income75,851 67,776 69,630 67,676 64,742 
      
Provision for loan losses1,919 2,498 3,359 2,940 1,386 
      
Net interest income after provision for loan losses73,932 65,278 66,271 64,736 63,356 
      
Other income22,808 22,025 26,892 24,064 23,242 
      
Other expense70,192 56,827 62,597 59,316 52,534 
      
Income before income taxes26,548 30,476 30,566 29,484 34,064 
      
Income taxes4,385 5,021 4,305 4,722 5,823 
      
Net income$22,163 $25,455 $26,261 $24,762 $28,241 
      
Per Common Share:     
Net income - basic$1.34 $1.63 $1.67 $1.58 $1.85 
Net income - diluted$1.33 $1.62 $1.67 $1.56 $1.83 

 

 
PARK NATIONAL CORPORATION
Detail of other income and other expense - Linked Quarters
      
 20192019201820182018
(in thousands)2nd QTR1st QTR4th QTR3rd QTR2nd QTR
      
Other income:     
Income from fiduciary activities$6,935 $6,723 $6,814 $6,418 $6,666 
Service charges on deposits2,655 2,559 2,852 2,861 2,826 
Other service income4,040 2,818 3,279 3,246 3,472 
Debit card fee income5,227 4,369 4,581 4,352 4,382 
Bank owned life insurance income1,286 1,006 2,190 2,585 1,031 
ATM fees460 440 444 500 510 
OREO valuation adjustments(55)(27)(93)(77)(114)
(Loss) gain on the sale of OREO, net(159)(12)142 (81)(147)
Net loss on the sale of investment securities(607)— — — — 
Unrealized gain (loss) on equity securities232 1,742 (17)89 1,348 
Other components of net periodic benefit income1,183 1,183 1,705 1,705 1,705 
Gain on the sale of loans— — 2,826 — — 
Miscellaneous1,611 1,224 2,169 2,466 1,563 
Total other income$22,808 $22,025 $26,892 $24,064 $23,242 
      
Other expense:     
Salaries$32,093 $25,805 $27,103 $27,229 $24,103 
Employee benefits9,014 8,430 7,977 7,653 7,630 
Occupancy expense3,223 3,011 2,769 2,976 2,570 
Furniture and equipment expense4,386 4,150 4,170 3,807 4,013 
Data processing fees2,905 2,133 2,222 2,580 1,902 
Professional fees and services10,106 6,006 8,516 8,065 6,123 
Marketing1,455 1,226 1,377 1,364 1,185 
Insurance1,381 1,156 1,277 1,388 1,196 
Communication1,375 1,333 1,335 1,207 1,189 
State tax expense1,054 1,005 750 1,000 958 
Amortization of intangible assets702 289 289 289 — 
Miscellaneous2,498 2,283 4,812 1,758 1,665 
Total other expense$70,192 $56,827 $62,597 $59,316 $52,534 

 

PARK NATIONAL CORPORATION
Asset Quality Information
       
   Year ended December 31,
(in thousands, except ratios)June 30,
2019		March 31,
2019		2018201720162015
       
Allowance for loan losses:      
Allowance for loan losses, beginning of period$53,368 $51,512 $49,988 $50,624 $56,494 $54,352 
Charge-offs2,928 2,987 13,552 19,403 20,799 14,290 
Recoveries1,644 2,345 7,131 10,210 20,030 11,442 
Net charge-offs1,284 642 6,421 9,193 769 2,848 
Provision for (recovery of) loan losses1,919 2,498 7,945 8,557 (5,101)4,990 
Allowance for loan losses, end of period$54,003 $53,368 $51,512 $49,988 $50,624 $56,494 
       
       
General reserve trends:      
Allowance for loan losses, end of period$54,003 $53,368 $51,512 $49,988 $50,624 $56,494 
Specific reserves2,379 2,468 2,273 684 548 4,191 
General reserves$51,624 $50,900 $49,239 $49,304 $50,076 $52,303 
       
Total loans$6,376,737 $5,740,760 $5,692,132 $5,372,483 $5,271,857 $5,068,085 
Impaired commercial loans50,225 50,881 48,135 56,545 70,415 80,599 
Total loans less impaired commercial loans$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)0.08%0.05%0.12%0.17%0.02%0.06%
Allowance for loan losses as a % of period end loans0.85%0.93%0.90%0.93%0.96%1.11%
General reserves as a % of total loans less impaired commercial loans0.82%0.89%0.87%0.93%0.96%1.05%
General reserves as a % of total loans less impaired commercial loans (excluding
acquired loans)		0.92%0.93%0.91% N.A.  N.A.  N.A. 
       
Nonperforming assets:      
Nonaccrual loans$66,675 $69,175 $67,954 $72,056 $87,822 $95,887 
Accruing troubled debt restructurings17,759 15,757 15,173 20,111 18,175 24,979 
Loans past due 90 days or more2,399 1,539 2,243 1,792 2,086 1,921 
Total nonperforming loans$86,833 $86,471 $85,370 $93,959 $108,083 $122,787 
Other real estate owned - Park National Bank3,042 3,114 2,788 6,524 6,025 7,456 
Other real estate owned - SEPH797 1,515 1,515 7,666 7,901 11,195 
Other nonperforming assets - Park National Bank3,496 3,496 3,464 4,849 — — 
Total nonperforming assets$94,168 $94,596 $93,137 $112,998 $122,009 $141,438 
Percentage of nonaccrual loans to period end loans1.05%1.20%1.19%1.34%1.67%1.89%
Percentage of nonperforming loans to period end loans1.36%1.51%1.50%1.75%2.05%2.42%
Percentage of nonperforming assets to period end loans1.48%1.65%1.64%2.10%2.31%2.79%
Percentage of nonperforming assets to period end total assets1.09%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)June 30,
2019		March 31,
2019		2018201720162015
       
       
New nonaccrual loan information:      
Nonaccrual loans, beginning of period$69,175 $67,954 $72,056 $87,822 $95,887 $100,393 
New nonaccrual loans17,952 12,484 76,611 58,753 74,786 80,791 
Resolved nonaccrual loans20,452 11,263 80,713 74,519 82,851 85,297 
Nonaccrual loans, end of period$66,675 $69,175 $67,954 $72,056 $87,822 $95,887 
       
Impaired commercial loan portfolio information (period end):      
Unpaid principal balance$56,338 $61,838 $59,381 $66,585 $95,358 $109,304 
Prior charge-offs6,113 10,957 11,246 10,040 24,943 28,705 
Remaining principal balance50,225 50,881 48,135 56,545 70,415 80,599 
Specific reserves2,379 2,468 2,273 684 548 4,191 
Book value, after specific reserves$47,846 $48,413 $45,862 $55,861 $69,867 $76,408 
       
 

 

PARK NATIONAL CORPORATION 
Financial Reconciliations 
       
NON-GAAP RECONCILIATIONS      
 THREE MONTHS ENDED SIX MONTHS ENDED
(in thousands, except share and per share data)June 30, 2019March 31, 2019June 30, 2018 June 30, 2019June 30, 2018
Net interest income$75,851 $67,776 $64,742  $143,627 $129,592 
less purchase accounting accretion related to NewDominion and
Carolina Alliance acquisitions		1,606 266 —  1,872 — 
less interest income on former Vision Bank relationships— 7 814  7 3,310 
Net interest income - adjusted$74,245 $67,503 $63,928  $141,748 $126,282 
       
Provision for loan losses$1,919 $2,498 $1,386  $4,417 $1,646 
less recoveries on former Vision Bank relationships(65)(100)(325) (165)(505)
Provision for loan losses - adjusted$1,984 $2,598 $1,711  $4,582 $2,151 
       
Other income$22,808 $22,025 $23,242  $44,833 $50,145 
less net (loss) gain on sale of former Vision Bank OREO properties$(139)$— $32  $(139)$4,202 
less gain on 8.55% prior investment in NewDominion— — —  — 3,500 
less other service income related to former Vision Bank relationships— — 46  — 1,057 
less net loss on the sale of debt securities in the ordinary course of
business		(607)— —  (607)(2,271)
Other income - adjusted$23,554 $22,025 $23,164  $45,579 $43,657 
       
Other expense$70,192 $56,827 $52,534  $127,019 $106,842 
less merger related expenses related to NewDominion and Carolina
Alliance acquisitions		6,058 276 445  6,334 595 
less core deposit intangible amortization related to NewDominion and
Carolina Alliance acquisitions		702 289 —  991 — 
less management and consulting expenses related to collection of
payments on former Vision Bank loan relationships		— — 47  — 1,236 
less one-time incentive expense— — —  — 1,128 
Other expense - adjusted$63,432 $56,262 $52,042  $119,694 $103,883 
       
Tax effect of adjustments to net income identified above (i)$1,225 $40 $(152) $1,266 $(1,542)
       
Net income - reported$22,163 $25,455 $28,241  $47,618 $59,364 
Net income - adjusted$26,773 $25,607 $27,668  $52,379 $53,562 
       
Diluted EPS$1.33 $1.62 $1.83  $2.94 $3.85 
Diluted EPS, adjusted (h)$1.61 $1.63 $1.79  $3.23 $3.47 
       
Annualized return on average assets (a)(b)1.04%1.32%1.52% 1.17%1.61%
Annualized return on average assets, adjusted (a)(b)(h)1.25%1.33%1.49% 1.29%1.45%
       
Annualized return on average tangible assets (a)(b)(e)1.06%1.34%1.53% 1.19%1.62%
Annualized return on average tangible assets, adjusted (a)(b)(e)(h)1.28%1.35%1.50% 1.31%1.46%
       
Annualized return on average equity (a)(b)9.49%12.31%15.02% 10.81%15.92%
Annualized return on average equity, adjusted (a)(b)(h)11.47%12.38%14.72% 11.90%14.37%
       
Annualized return on average tangible equity (a)(b)(c)11.53%14.36%16.61% 12.88%17.62%
Annualized return on average tangible equity, adjusted (a)(b)(c)(h)13.92%14.44%16.28% 14.17%15.89%
       
Efficiency ratio (g)70.61%62.77%59.23% 66.87%58.98%
Efficiency ratio, adjusted (g)(h)64.36%62.33%59.28% 63.39%60.63%
       
Annualized net interest margin (g)3.92%3.86%3.81% 3.89%3.84%
Annualized net interest margin, adjusted (g)(h)3.84%3.85%3.77% 3.84%3.75%
       
Note: Explanations for footnotes (a) - (i) are included at the end of the financial tables    


PARK NATIONAL CORPORATION
Financial Highlights (continued)
 
(a) Averages are for the three months ended June 30, 2019, March 31, 2019 and June 30, 2018 and the six months ended June 30, 2019 and June 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 SIX MONTHS ENDED
 June 30, 2019March 31, 2019June 30, 2018 June 30, 2019June 30, 2018
AVERAGE SHAREHOLDERS' EQUITY$936,626 $838,723 $754,101  $887,946 $751,876 
Less: Average goodwill and other intangible assets165,311 119,611 72,334  142,587 72,334 
AVERAGE TANGIBLE EQUITY$771,315 $719,112 $681,767  $745,359 $679,542 
       
(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:
 June 30, 2019March 31, 2019June 30, 2018   
TOTAL SHAREHOLDERS' EQUITY$934,432 $845,044 $755,088    
Less: Goodwill and other intangible assets174,288 119,421 72,334    
TANGIBLE EQUITY$760,144 $725,623 $682,754    
       
(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 SIX MONTHS ENDED
 June 30, 2019March 31, 2019June 30, 2018 June 30, 2019June 30, 2018
AVERAGE ASSETS$8,576,495 $7,832,397 $7,459,748  $8,206,502 $7,457,419 
Less: Average goodwill and other intangible assets165,311 119,611 72,334  142,587 72,334 
AVERAGE TANGIBLE ASSETS$8,411,184 $7,712,786 $7,387,414  $8,063,915 $7,385,085 
       
(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:
 June 30, 2019March 31, 2019June 30, 2018   
TOTAL ASSETS$8,657,453 $7,852,246 $7,462,156    
Less: Goodwill and other intangible assets174,288 119,421 72,334    
TANGIBLE ASSETS$8,483,165 $7,732,825 $7,389,822    
       
(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 SIX MONTHS ENDED
 June 30, 2019March 31, 2019June 30, 2018 June 30, 2019June 30, 2018
Interest income$92,226 $81,856 $74,691  $174,082 $148,405 
Fully taxable equivalent adjustment752 734 705  1,486 1,406 
Fully taxable equivalent interest income$92,978 $82,590 $75,396  $175,568 $149,811 
Interest expense16,375 14,080 9,949  30,455 18,813 
Fully taxable equivalent net interest income$76,603 $68,510 $65,447  $145,113 $130,998 
       
(h) Adjustments to net income for each period presented are detailed in the non-GAAP reconciliation above. 
(i) The tax effect of adjustments to net income was calculated assuming a 21% corporate federal income tax rate. 

 

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