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Park National Corporation reports financial results for second quarter and first half of 2018

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NEWARK, Ohio, July 23, 2018 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE:PRK) today reported financial results for the second quarter and first half of 2018 (three and six months ended June 30, 2018). Park's board of directors also declared a quarterly cash dividend of $0.96 per common share, payable on September 10, 2018 to common shareholders of record as of August 17, 2018.

Park's net income for the second quarter of 2018 was $28.2 million, a 48.4 percent increase from $19.0 million for the second quarter of 2017. Second quarter 2018 net income per diluted common share was $1.83, compared to $1.24 in the second quarter of 2017. Park's net income for the six months ended 2018 was $59.4 million, a 51.1 percent increase from $39.3 million for the six months ended 2017. Six months ended 2018 net income per diluted common share was $3.85, compared to $2.55 for the six months ended 2017. Increased net interest income, steady fee income, benefits from credit recoveries, decreased loan loss provision, federal tax changes, and other factors all contributed to Park's net income results in the second quarter.

"We continue to focus on long-term plans to fuel and sustain loan growth and strong overall performance," said Park Chief Executive Officer David L. Trautman. "We celebrated NewDominion Bank officially joining our organization on July 1st, and everyone is engaged in further fortifying that relationship and ensuring a smooth transition." 

Park's community-banking subsidiary, The Park National Bank, reported net income of $28.8 million for the second quarter of 2018, compared to $20.2 million for the second quarter of 2017 and $55.5 million for the six months ended 2018, compared to $41.6 million for the six months ended 2017.

Headquartered in Newark, Ohio, Park National Corporation had $7.5 billion in total assets (as of June 30, 2018). With the addition of NewDominion Bank effective July 1, 2018, the Park organization now consists of 11 community bank divisions, a non-bank subsidiary and two specialty finance companies. 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, and NewDominion Bank Division. The Park organization 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
www.parknationalcorp.com

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Park cautions that any forward-looking statements contained in this Current Report on Form 8-K 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' ability to meet credit and other obligations; 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 the newly-enacted tax reform legislation, changing business and economic conditions, legislative and regulatory initiatives, or other factors; changes in unemployment; changes in customers', suppliers', and other counterparties' performance and creditworthiness; asset/liability repricing risks and liquidity risks; 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, changes to third-party relationships and our ability to attract, develop and retain qualified bank professionals; clients 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 effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board, the SEC, the Public Company Accounting Oversight Board and other regulatory agencies, and the accuracy of our assumptions and estimates used to prepare our financial statements; changes in law and policy accompanying the current presidential administration, including the recently-enacted Tax Cuts and Jobs Act, and uncertainty or speculation pending the enactment of such changes; uncertainties in Park's preliminary review of, and additional analysis of, the impact of the Tax Cuts and Jobs Act; the effect of healthcare laws in the United States and potential changes for such laws which may increase our healthcare and other costs and negatively impact our operations and financial 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 effect of trade, monetary, fiscal and other governmental policies of the U.S. federal government, including money supply and interest rate policies of the Federal Reserve Board; disruption in the liquidity and other functioning of U.S. financial markets; 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 any adverse developments in legal proceedings or other claims and unfavorable resolution of regulatory and other governmental examinations or other inquiries; the adequacy of our risk management program; the impact of our ability to anticipate and respond to technological changes on our ability to respond to customer needs and meet competitive demands; 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; 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; 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 or on us or our counterparties specifically; demand for loans in the respective market areas served by Park and our subsidiaries; the risk that the businesses of PNB and NewDominion Bank will not be integrated successfully following the recently-completed merger transaction involving Park, PNB and NewDominion Bank (the "NewDominion Transaction") or such integration may be more difficult, time-consuming or costly than expected; expected revenue synergies and cost savings from the NewDominion Transaction may not be fully realized within the expected timeframe; revenues following the NewDominion Transaction may be lower than expected; customer and employee relationships and business operations may be disrupted by the NewDominion Transaction; Park issued equity securities in the NewDominion Transaction, and may issue equity securities in connection with future acquisitions, which could cause ownership and economic dilution to Park's current shareholders; 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, 2017. 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, 2018, March 31, 2018, and June 30, 2017          
             
  2018 2018 2017   Percent change vs.
(in thousands, except share and per share data) 2nd QTR 1st QTR 2nd QTR   1Q '18 2Q '17
INCOME STATEMENT:            
Net interest income $ 64,742   $ 64,850   $ 59,778     (0.2 ) % 8.3 %
Provision for loan losses 1,386   260   4,581     N.M.   N.M.  
Other income 23,242   26,903   20,699     (13.6 ) % 12.3 %
Other expense 52,534   54,308   49,554     (3.3 ) % 6.0 %
Income before income taxes $ 34,064   $ 37,185   $ 26,342     (8.4 )% 29.3 %
Federal income taxes 5,823   6,062   7,310     (3.9 )% (20.3 ) %
Net income $ 28,241   $ 31,123   $ 19,032     (9.3 )% 48.4 %
             
MARKET DATA:            
Earnings per common share - basic (b) $ 1.85   $ 2.04   $ 1.24     (9.3 )% 49.2 %
Earnings per common share - diluted (b) 1.83   2.02   1.24     (9.4 )% 47.6 %
Cash dividends per common share 1.21   0.94   0.94     28.7 % 28.7 %
Book value per common share at period end 49.51   49.20   49.18     0.6 % 0.7 %
Market price per common share at period end 111.42   103.76   103.72     7.4 % 7.4 %
Market capitalization at period end 1,699,277   1,587,642   1,586,613     7.0 % 7.1 %
             
Weighted average common shares - basic (a) 15,285,532   15,288,332   15,297,085     % (0.1 )%
Weighted average common shares - diluted (a) 15,417,607   15,431,328   15,398,865     (0.1 )% 0.1 %
Common shares outstanding at period end 15,251,095   15,301,103   15,297,080     (0.3 )% (0.3 )%
             
PERFORMANCE RATIOS: (annualized)            
Return on average assets (a)(b) 1.52 % 1.69 % 0.99 %   (10.1 ) % 53.5 %
Return on average shareholders' equity (a)(b) 15.02 % 16.84 % 10.13 %   (10.8 ) % 48.3 %
Yield on loans 4.90 % 4.94 % 4.63 %   (0.8 ) % 5.8 %
Yield on investment securities 2.73 % 2.62 % 2.44 %   4.2 % 11.9 %
Yield on money markets 1.99 % 1.63 % 1.05 %   22.1 % 89.5 %
Yield on earning assets 4.39 % 4.40 % 4.02 %   (0.2 ) % 9.2 %
Cost of interest bearing deposits 0.64 % 0.54 % 0.44 %   18.5 % 45.5 %
Cost of borrowings 1.84 % 1.72 % 2.38 %   7.0 % (22.7 ) %
Cost of paying liabilities 0.79 % 0.71 % 0.80 %   11.3 % (1.3 ) %
Net interest margin (g) 3.81 % 3.87 % 3.42 %   (1.6 ) % 11.4 %
Efficiency ratio (g) 59.23 % 58.74 % 60.68 %   0.8 % (2.4 ) %
             
OTHER RATIOS (NON - GAAP):            
Annualized return on average tangible assets (a)(b)(e) 1.53 % 1.71 % 1.00 %   (10.5 )% 53.0 %
Annualized return on average tangible equity (a)(b)(c) 16.61 % 18.64 % 11.21 %   (10.9 )% 48.2 %
Tangible book value per share (d) $ 44.77   $ 44.47   $ 44.45     0.7 % 0.7 %
             
N.M. - Not meaningful            
Note: Explanations for footnotes (a) - (g) are included at the end of the financial highlights.            
             
             
             
             
             
PARK NATIONAL CORPORATION
Financial Highlights (continued)
As of or for the three months ended June 30, 2018, March 31, 2018, and June 30, 2017          
             
          Percent change vs.
BALANCE SHEET: June 30, 2018 March 31, 2018 June 30, 2017   1Q '18 2Q '17
             
Investment securities $ 1,513,238   $ 1,464,356   $ 1,579,934     3.3 % (4.2 ) %
Loans 5,324,974   5,292,349   5,365,437     0.6 % (0.8 ) %
Allowance for loan losses 49,452   48,969   53,822     1.0 % (8.1 ) %
Goodwill 72,334   72,334   72,334     % %
Other real estate owned (OREO) 5,729   9,055   14,881     (36.7 ) % (61.5 ) %
Total assets 7,462,156   7,518,970   7,832,092     (0.8 ) % (4.7 ) %
Total deposits 6,015,844   6,084,294   5,961,576     (1.1 ) % 0.9 %
Borrowings 631,139   624,090   1,046,176     1.1 % (39.7 ) %
Total shareholders' equity 755,088   752,774   752,248     0.3 % 0.4 %
Tangible equity (d) 682,754   680,440   679,914     0.3 % 0.4 %
Nonperforming loans 98,867   86,205   110,904     14.7 % (10.9 ) %
Nonperforming assets 104,596   99,117   125,785     5.5 % (16.8 ) %
             
ASSET QUALITY RATIOS:            
Loans as a % of period end total assets 71.36 % 70.39 % 68.51 %   1.4 % 4.2 %
Nonperforming loans as a % of period end loans 1.86 % 1.63 % 2.07 %   14.1 % (10.1 ) %
Nonperforming assets as a % of period end loans + OREO + other nonperforming assets 1.96 % 1.87 % 2.34 %   4.8 % (16.2 ) %
Allowance for loan losses as a % of period end loans 0.93 % 0.93 % 1.00 %   % (7.0 ) %
Net loan charge-offs $ 903   $ 1,279   $ 681     (29.4 ) % 32.6 %
Annualized net loan charge-offs as a % of average loans (a) 0.07 % 0.10 % 0.05 %   (30.0 ) % 40.0 %
             
CAPITAL & LIQUIDITY:            
Total shareholders' equity / Period end total assets 10.12 % 10.01 % 9.60 %   1.1 % 5.4 %
Tangible equity (d) / Tangible assets (f) 9.24 % 9.14 % 8.76 %   1.1 % 5.5 %
Average shareholders' equity / Average assets (a) 10.11 % 10.06 % 9.74 %   0.5 % 3.8 %
Average shareholders' equity / Average loans (a) 14.26 % 14.14 % 14.14 %   0.8 % 0.8 %
Average loans / Average deposits (a) 88.23 % 89.39 % 90.21 %   (1.3 ) % (2.2 ) %
             


PARK NATIONAL CORPORATION
Financial Highlights
Six months ended June 30, 2018 and 2017        
           
  2018 2017      
(in thousands, except share and per share data) Six months ended June 30 Six months ended June 30   Percent change vs '17  
INCOME STATEMENT:          
Net interest income $ 129,592   $ 118,730     9.1 %  
Provision for loan losses 1,646   5,457     (69.8 ) %  
Other income 50,145   39,654     26.5 %  
Other expense 106,842   98,464     8.5 %  
Income before income taxes $ 71,249   $ 54,463     30.8 %  
Income taxes 11,885   15,164     (21.6 )%  
Net income $ 59,364   $ 39,299     51.1 %  
           
MARKET DATA:          
Earnings per common share - basic (b) $ 3.88   $ 2.57     51.0 %  
Earnings per common share - diluted (b) 3.85   2.55     51.0 %  
Cash dividends per common share 2.15   1.88     14.4 %  
           
Weighted average common shares - basic (a) 15,286,932   15,304,572     (0.1 )%  
Weighted average common shares - diluted (a) 15,424,585   15,415,765     0.1 %  
           
PERFORMANCE RATIOS: (annualized)          
Return on average assets (a)(b) 1.61 % 1.04 %   54.8 %  
Return on average shareholders' equity (a)(b) 15.92 % 10.58 %   50.5 %  
Yield on loans 4.92 % 4.63 %   6.3 %  
Yield on investment securities 2.68 % 2.43 %   10.3 %  
Yield on money markets 1.76 % 0.99 %   77.8 %  
Yield on earning assets 4.39 % 4.04 %   8.7 %  
Cost of interest bearing deposits 0.59 % 0.40 %   47.5 %  
Cost of borrowings 1.78 % 2.37 %   (24.9 ) %  
Cost of paying liabilities 0.75 % 0.78 %   (3.8 ) %  
Net interest margin (g) 3.84 % 3.46 %   11.0 %  
Efficiency ratio (g) 58.98 % 61.30 %   (3.8 ) %  
           
ASSET QUALITY RATIOS:          
Net loan charge-offs 2,182   2,259     (3.4 ) %  
Annualized net loan charge-offs as a % of average loans (a) 0.08 % 0.09 %   (11.1 ) %  
           
CAPITAL & LIQUIDITY:          
Average shareholders' equity / Average assets (a) 10.08 % 9.79 %   3.0 %  
Average shareholders' equity / Average loans (a) 14.20 % 14.12 %   0.6 %  
Average loans / Average deposits (a) 88.80 % 91.31 %   (2.7 ) %  
           
OTHER RATIOS (NON - GAAP):          
Annualized return on average tangible assets (a)(b)(e) 1.62 % 1.05 %   54.3 %  
Annualized return on average tangible equity (a)(b)(c) 17.62 % 11.72 %   50.3 %  
           
N.M. - Not meaningful          
Note: Explanations (a) - (g) are included at the end of the financial highlights.          


PARK NATIONAL CORPORATION
Financial Highlights (continued) 
             
(a) Averages are for the three months ended June 30, 2018, March 31, 2018 and June 30, 2017 and the six months ended June 30, 2018 and June 30, 2017. 
       
(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 during the applicable period. 
             
RECONCILIATION OF AVERAGE SHAREHOLDERS' EQUITY TO AVERAGE TANGIBLE EQUITY:      
  THREE MONTHS ENDED   SIX MONTHS ENDED
  June 30, 2018 March 31, 2018 June 30, 2017   June 30, 2018 June 30, 2017
AVERAGE SHAREHOLDERS' EQUITY $ 754,101   $ 749,627   $ 753,373     $ 751,876   $ 748,732  
Less: Average goodwill 72,334   72,334   72,334     72,334   72,334  
AVERAGE TANGIBLE EQUITY $ 681,767   $ 677,293   $ 681,039     $ 679,542   $ 676,398  
             
(d) Tangible equity divided by common shares outstanding at period end. Tangible equity equals total shareholders' equity less goodwill, in each case at the end of the period. 
             
RECONCILIATION OF TOTAL SHAREHOLDERS' EQUITY TO TANGIBLE EQUITY:
  June 30, 2018 March 31, 2018 June 30, 2017      
TOTAL SHAREHOLDERS' EQUITY $ 755,088   $ 752,774   $ 752,248        
Less: Goodwill 72,334   72,334   72,334        
TANGIBLE EQUITY $ 682,754   $ 680,440   $ 679,914        
             
(e) Net income for each period divided by average tangible assets during the period. Average tangible assets equals average assets less average goodwill, in each case during the applicable period. 
             
RECONCILIATION OF AVERAGE ASSETS TO AVERAGE TANGIBLE ASSETS:
  THREE MONTHS ENDED   SIX MONTHS ENDED
  June 30, 2018 March 31, 2018 June 30, 2017   June 30, 2018 June 30, 2017
AVERAGE ASSETS $ 7,459,748   $ 7,455,065   $ 7,736,884     $ 7,457,419   $ 7,648,777  
Less: Average goodwill 72,334   72,334   72,334     72,334   72,334  
AVERAGE TANGIBLE ASSETS $ 7,387,414   $ 7,382,731   $ 7,664,550     $ 7,385,085   $ 7,576,443  
             
(f) Tangible equity divided by tangible assets. Tangible assets equals total assets less goodwill, in each case at the end of the period. 
             
RECONCILIATION OF TOTAL ASSETS TO TANGIBLE ASSETS:      
  June 30, 2018 March 31, 2018 June 30, 2017      
TOTAL ASSETS $ 7,462,156   $ 7,518,970   $ 7,832,092        
Less: Goodwill 72,334   72,334   72,334        
TANGIBLE ASSETS $ 7,389,822   $ 7,446,636   $ 7,759,758        
             
(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 below assuming a 21% corporate federal tax rate for 2018 and a 35% corporate federal tax rate for 2017. 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, 2018 March 31, 2018 June 30, 2017   June 30, 2018 June 30, 2017
Interest income $ 74,691   $ 73,714   $ 70,476     $ 148,405   $ 139,231  
Fully taxable equivalent adjustment 705   701   1,185     1,406   2,248  
Fully taxable equivalent interest income $ 75,396   $ 74,415   $ 71,661     $ 149,811   $ 141,479  
Interest expense 9,949   8,864   10,698     18,813   20,501  
Fully taxable equivalent net interest income $ 65,447   $ 65,551   $ 60,963     $ 130,998   $ 120,978  
             


                 
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)   2018   2017   2018   2017
                 
Interest income:                
  Interest and fees on loans   $ 64,496     $ 61,222     128,898     121,130  
  Interest on:                
  Obligations of U.S. Government, its agencies                
  and other securities - taxable   7,746     6,892     14,513     14,030  
  Obligations of states and political subdivisions - tax-exempt   2,178     1,664     4,352     3,124  
  Other interest income   271     698     642     947  
  Total interest income   74,691     70,476     148,405     139,231  
                 
Interest expense:                
  Interest on deposits:                
  Demand and savings deposits   4,107     2,291     7,397     3,905  
  Time deposits   2,886     2,457     5,437     4,618  
  Interest on borrowings   2,956     5,950     5,979     11,978  
  Total interest expense   9,949     10,698     18,813     20,501  
                 
  Net interest income   64,742     59,778     129,592     118,730  
                 
Provision for loan losses   1,386     4,581     1,646     5,457  
                 
  Net interest income after provision for loan losses   63,356     55,197     127,946     113,273  
                 
Other income   23,242     20,699     50,145     39,654  
                 
Other expense   52,534     49,554     106,842     98,464  
                 
  Income before income taxes   34,064     26,342     71,249     54,463  
                 
Federal income taxes   5,823     7,310     11,885     15,164  
                 
  Net income   $ 28,241     $ 19,032     59,364     39,299  
                 
Per Common Share:                
  Net income  - basic   $ 1.85     $ 1.24     $ 3.88     $ 2.57  
  Net income  - diluted   $ 1.83     $ 1.24     $ 3.85     $ 2.55  
                 
  Weighted average shares - basic   15,285,532     15,297,085     15,286,932     15,304,572  
  Weighted average shares - diluted   15,417,607     15,398,865     15,424,585     15,415,765  
                 
  Cash Dividends Declared   $ 1.21     $ 0.94     $ 2.15     $ 1.88  
                 


 
PARK NATIONAL CORPORATION
Consolidated Balance Sheets
     
(in thousands, except share data) June 30, 2018
  December 31, 2017
     
Assets    
     
Cash and due from banks $ 122,915       $ 131,946  
Money market instruments 23,244     37,166  
Investment securities 1,513,238     1,512,824  
Loans 5,324,974     5,372,483  
Allowance for loan losses (49,452 )   (49,988 )
Loans, net 5,275,522     5,322,495  
Bank premises and equipment, net 55,555     55,901  
Goodwill 72,334     72,334  
Other real estate owned 5,729     14,190  
Other assets 393,619     390,764  
Total assets $ 7,462,156     $ 7,537,620  
     
Liabilities and Shareholders' Equity    
     
Deposits:    
Noninterest bearing $ 1,591,962     $ 1,633,941  
Interest bearing 4,423,882     4,183,385  
Total deposits 6,015,844     5,817,326  
Borrowings 631,139     906,289  
Other liabilities 60,085     57,904  
Total liabilities $ 6,707,068     $ 6,781,519  
     
     
Shareholders' Equity:    
Preferred shares (200,000 shares authorized; no shares outstanding at June 30, 2018 and December 31, 2017)
$     $  
Common shares (No par value; 20,000,000 shares authorized in 2018 and 2017; 16,150,732 shares issued at June 30, 2018 and 16,150,752 shares issued at December 31, 2017) 308,144     307,726  
Accumulated other comprehensive loss, net of taxes (55,009 )   (26,454 )
Retained earnings 593,512     561,908  
Treasury shares (899,637 shares at June 30, 2018 and 862,558 at December 31, 2017) (91,559 )   (87,079 )
Total shareholders' equity $ 755,088     $ 756,101  
Total liabilities and shareholders' equity $ 7,462,156     $ 7,537,620  


       
PARK NATIONAL CORPORATION      
Consolidated Average Balance Sheets      
           
  Three Months Ended   Six Months Ended
  June 30,   June 30,
(in thousands) 2018 2017   2018 2017
           
Assets          
           
Cash and due from banks $ 118,870   $ 108,317     $ 118,561   $ 113,931  
Money market instruments 54,551   265,791     73,437   192,800  
Investment securities 1,506,699   1,553,811     1,478,564   1,559,861  
Loans 5,289,056   5,327,114     5,295,814   5,302,961  
Allowance for loan losses (49,750 ) (50,700 )   (50,168 ) (50,771 )
Loans, net 5,239,306   5,276,414     5,245,646   5,252,190  
Bank premises and equipment, net 56,109   56,949     56,307   57,407  
Goodwill 72,334   72,334     72,334   72,334  
Other real estate owned 8,416   14,460     10,962   14,104  
Other assets 403,463   388,808     401,608   386,150  
Total assets $ 7,459,748   $ 7,736,884     $ 7,457,419   $ 7,648,777  
           
           
Liabilities and Shareholders' Equity          
           
Deposits:          
Noninterest bearing $ 1,602,228   $ 1,534,272     $ 1,585,742   $ 1,516,910  
Interest bearing 4,392,733   4,370,710     4,378,091   4,290,900  
Total deposits 5,994,961   5,904,982     5,963,833   5,807,810  
Borrowings 645,909   1,003,505     678,296   1,019,005  
Other liabilities 64,777   75,024     63,414   73,230  
Total liabilities $ 6,705,647   $ 6,983,511     $ 6,705,543   $ 6,900,045  
           
Shareholders' Equity:          
Preferred shares $   $     $   $  
Common shares 307,689   305,892     307,714   305,900  
Accumulated other comprehensive loss, net of taxes (54,184 ) (13,814 )   (47,965 ) (15,514 )
Retained earnings 588,170   547,547     579,448   543,763  
Treasury shares (87,574 ) (86,252 )   (87,321 ) (85,417 )
Total shareholders' equity $ 754,101   $ 753,373     $ 751,876   $ 748,732  
Total liabilities and shareholders' equity $ 7,459,748   $ 7,736,884     $ 7,457,419   $ 7,648,777  


 
PARK NATIONAL CORPORATION
Consolidated Statements of Income - Linked Quarters
           
  2018 2018 2017 2017 2017
(in thousands, except per share data) 2nd QTR 1st QTR 4th QTR 3rd QTR 2nd QTR
           
Interest income:          
Interest and fees on loans $ 64,496   $ 64,402   $ 64,447   $ 63,110   $ 61,222  
Interest on:          
Obligations of U.S. Government, its agencies and other securities - taxable 7,746   6,767   6,653   6,757   6,892  
Obligations of states and political subdivisions - tax-exempt 2,178   2,174   2,112   1,974   1,664  
Other interest income 271   371   757   1,383   698  
Total interest income 74,691   73,714   73,969   73,224   70,476  
           
Interest expense:          
Interest on deposits:          
Demand and savings deposits 4,107   3,290   2,677   2,882   2,291  
Time deposits 2,886   2,551   2,490   2,521   2,457  
Interest on borrowings 2,956   3,023   5,324   6,270   5,950  
Total interest expense 9,949   8,864   10,491   11,673   10,698  
           
Net interest income 64,742   64,850   63,478   61,551   59,778  
           
Provision for (recovery of) loan losses 1,386   260   (183 ) 3,283   4,581  
           
Net interest income after provision for (recovery of) loan losses 63,356   64,590   63,661   58,268   55,197  
           
Other income 23,242   26,903   23,238   23,537   20,699  
           
Other expense 52,534   54,308   53,439   51,259   49,554  
           
Income before income taxes 34,064   37,185   33,460   30,546   26,342  
           
Federal income taxes 5,823   6,062   10,629   8,434   7,310  
           
Net income $ 28,241   $ 31,123   $ 22,831   $ 22,112   $ 19,032  
           
Per Common Share:          
Net income - basic $ 1.85   $ 2.04   $ 1.49   $ 1.45   $ 1.24  
Net income - diluted $ 1.83   $ 2.02   $ 1.48   $ 1.44   $ 1.24  


 
PARK NATIONAL CORPORATION
Detail of other income and other expense - Linked Quarters
           
  2018 2018 2017 2017 2017
(in thousands) 2nd QTR 1st QTR 4th QTR 3rd QTR 2nd QTR
           
Other income:          
Income from fiduciary activities $ 6,666   $ 6,395   $ 6,264   $ 5,932   $ 6,025  
Service charges on deposits 2,826   2,922   3,142   3,216   3,156  
Other service income 3,472   4,172   3,554   3,357   3,447  
Checkcard fee income 4,382   4,002   4,023   3,974   4,040  
Bank owned life insurance income 1,031   1,009   1,068   1,573   1,114  
ATM fees 510   524   545   605   561  
OREO valuation adjustments (114 ) (207 ) (91 ) (22 ) (272 )
(Loss) gain on the sale of OREO, net (147 ) 4,321   47   51   53  
Net (loss) gain on sale of investment securities   (2,271 ) 1,794     27  
Unrealized gain on equity securities 304   3,489        
Other components of net periodic benefit income 1,705   1,705   1,450   1,448   1,448  
Miscellaneous 2,607   842   1,442   3,403   1,100  
Total other income $ 23,242   $ 26,903   $ 23,238   $ 23,537   $ 20,699  
           
Other expense:          
Salaries $ 24,103   $ 25,320   $ 23,157   $ 23,302   $ 23,001  
Employee benefits 7,630   7,029   6,320   5,943   6,206  
Occupancy expense 2,570   2,936   2,442   2,559   2,565  
Furniture and equipment expense 4,013   4,149   4,198   3,868   3,640  
Data processing fees 1,902   1,773   1,690   1,919   1,676  
Professional fees and services 6,123   6,190   7,886   6,100   6,018  
Marketing 1,185   1,218   1,112   1,122   1,084  
Insurance 1,196   1,428   1,768   1,499   1,517  
Communication 1,189   1,250   1,228   1,110   1,155  
State tax expense 958   1,105   665   912   943  
Miscellaneous 1,665   1,910   2,973   2,925   1,749  
Total other expense $ 52,534   $ 54,308   $ 53,439   $ 51,259   $ 49,554  


PARK NATIONAL CORPORATION
Asset Quality Information
                 
        Year ended December 31,
(in thousands, except ratios) June 30, 2018 March 31, 2018   2017 2016 2015 2014  
                 
Allowance for loan losses:                
Allowance for loan losses, beginning of period $ 48,969   $ 49,988     $ 50,624   $ 56,494   $ 54,352   $ 59,468    
Charge-offs 2,716   3,450     19,403   20,799   14,290   24,780   (A)
Recoveries 1,813   2,171     10,210   20,030   11,442   26,997    
Net charge-offs (recoveries) 903   1,279     9,193   769   2,848   (2,217 )  
Provision for (recovery of) loan losses 1,386   260     8,557   (5,101 ) 4,990   (7,333 )  
Allowance for loan losses, end of period $ 49,452   $ 48,969     $ 49,988   $ 50,624   $ 56,494   $ 54,352    
(A) Year ended December 31, 2014 included $4.3 million in charge-offs related to the transfer of $22.0 million of commercial loans to the held for sale portfolio.
                 
General reserve trends:                
Allowance for loan losses, end of period $ 49,452   $ 48,969     $ 49,988   $ 50,624   $ 56,494   $ 54,352    
Specific reserves 1,396   1,207     684   548   4,191   3,660    
General reserves $ 48,056   $ 47,762     $ 49,304   $ 50,076   $ 52,303   $ 50,692    
                 
Total loans $ 5,324,974   $ 5,292,349     $ 5,372,483   $ 5,271,857   $ 5,068,085   $ 4,829,682    
Impaired commercial loans 61,705   50,292     56,545   70,415   80,599   73,676    
Total loans less impaired commercial loans $ 5,263,269   $ 5,242,057     $ 5,315,938   $ 5,201,442   $ 4,987,486   $ 4,756,006    
                 
                 
Asset Quality Ratios:                
Net charge-offs (recoveries) as a % of average loans (annualized) 0.07 % 0.10 %   0.17 % 0.02 % 0.06 % (0.05 ) %  
Allowance for loan losses as a % of period end loans 0.93 % 0.93 %   0.93 % 0.96 % 1.11 % 1.13 %  
General reserves as a % of total loans less impaired commercial loans 0.91 % 0.91 %   0.93 % 0.96 % 1.05 % 1.07 %  
                 
Nonperforming Assets - Park National Corporation:                
Nonaccrual loans $ 81,124   $ 66,151     $ 72,056   $ 87,822   $ 95,887   $ 100,393    
Accruing troubled debt restructuring 16,306   18,682     20,111   18,175   24,979   16,254    
Loans past due 90 days or more 1,437   1,372     1,792   2,086   1,921   2,641    
Total nonperforming loans $ 98,867   $ 86,205     $ 93,959   $ 108,083   $ 122,787   $ 119,288    
Other real estate owned - Park National Bank 3,280   4,846     6,524   6,025   7,456   10,687    
Other real estate owned - SEPH 2,449   4,209     7,666   7,901   11,195   11,918    
Other nonperforming assets - Park National Bank   3,857     4,849          
Total nonperforming assets $ 104,596   $ 99,117     $ 112,998   $ 122,009   $ 141,438   $ 141,893    
Percentage of nonaccrual loans to period end loans 1.52 % 1.25 %   1.34 % 1.67 % 1.89 % 2.08 %  
Percentage of nonperforming loans to period end loans 1.86 % 1.63 %   1.75 % 2.05 % 2.42 % 2.47 %  
Percentage of nonperforming assets to period end loans 1.96 % 1.87 %   2.10 % 2.31 % 2.79 % 2.94 %  
Percentage of nonperforming assets to period end total assets 1.40 % 1.32 %   1.50 % 1.63 % 1.93 % 2.03 %  
                 
                 
PARK NATIONAL CORPORATION
Asset Quality Information (continued)
                 
        Year ended December 31,
(in thousands, except ratios) June 30, 2018 March 31, 2018   2017 2016 2015 2014  
                 
Nonperforming Assets - Park National Bank and Guardian:                
Nonaccrual loans $ 79,489   $ 66,151     $ 61,753   $ 76,084   $ 81,468   $ 77,477    
Accruing troubled debt restructuring 16,306   18,682     20,111   18,175   24,979   16,157    
Loans past due 90 days or more 1,437   1,372     1,792   2,086   1,921   2,641    
Total nonperforming loans $ 97,232   $ 86,205     $ 83,656   $ 96,345   $ 108,368   $ 96,275    
Other real estate owned - Park National Bank 3,280   4,846     6,524   6,025   7,456   10,687    
Other nonperforming assets - Park National Bank   3,857     4,849          
Total nonperforming assets $ 100,512   $ 94,908     $ 95,029   $ 102,370   $ 115,824   $ 106,962    
Percentage of nonaccrual loans to period end loans 1.49 % 1.25 %   1.15 % 1.45 % 1.61 % 1.61 %  
Percentage of nonperforming loans to period end loans 1.83 % 1.63 %   1.56 % 1.83 % 2.14 % 2.00 %  
Percentage of nonperforming assets to period end loans 1.89 % 1.79 %   1.77 % 1.95 % 2.29 % 2.23 %  
Percentage of nonperforming assets to period end total assets 1.36 % 1.27 %   1.27 % 1.38 % 1.60 % 1.55 %  
                 
Nonperforming Assets - SEPH/Vision Bank (retained portfolio):
Nonaccrual loans $ 1,635   $     $ 10,303   $ 11,738   $ 14,419   $ 22,916    
Accruing troubled debt restructuring             97    
Loans past due 90 days or more                
Total nonperforming loans $ 1,635   $     $ 10,303   $ 11,738   $ 14,419   $ 23,013    
Other real estate owned - SEPH 2,449   4,209     7,666   7,901   11,195   11,918    
Total nonperforming assets $ 4,084   $ 4,209     $ 17,969   $ 19,639   $ 25,614   $ 34,931    
                 
New nonaccrual loan information - Park National Corporation                
Nonaccrual loans, beginning of period $ 66,151   $ 72,056     $ 87,822   $ 95,887   $ 100,393   $ 135,216    
New nonaccrual loans 27,920   23,075     58,753   74,786   80,791   70,059    
Resolved nonaccrual loans 12,947   28,980     74,519   82,851   85,165   86,384    
Sale of nonaccrual loans held for sale           132   18,498    
Nonaccrual loans, end of period $ 81,124   $ 66,151     $ 72,056   $ 87,822   $ 95,887   $ 100,393    
                 
New nonaccrual loan information - Park National Bank and Guardian                
Nonaccrual loans, beginning of period $ 66,151   $ 61,753     $ 76,084   $ 81,468   $ 77,477   $ 99,108    
New nonaccrual loans - Ohio-based operations 26,285   23,075     58,753   74,663   80,791   69,389    
Resolved nonaccrual loans 12,947   18,677     73,084   80,047   76,800   78,288    
Sale of nonaccrual loans held for sale             12,732    
Nonaccrual loans, end of period $ 79,489   $ 66,151     $ 61,753   $ 76,084   $ 81,468   $ 77,477    
                 
New nonaccrual loan information - SEPH/Vision Bank (retained portfolio)
Nonaccrual loans, beginning of period $   $ 10,303     $ 11,738   $ 14,419   $ 22,916   $ 36,108    
New nonaccrual loans - SEPH/Vision Bank 1,635         123     670    
Resolved nonaccrual loans   10,303     1,435   2,804   8,365   8,096    
Sale of nonaccrual loans held for sale           132   5,766    
Nonaccrual loans, end of period $ 1,635   $     $ 10,303   $ 11,738   $ 14,419   $ 22,916    
                 
Impaired Commercial Loan Portfolio Information (period end):                
Unpaid principal balance $ 73,089   $ 60,264     $ 66,585   $ 95,358   $ 109,304   $ 106,156    
Prior charge-offs 11,384   9,972     10,040   24,943   28,705   32,480    
Remaining principal balance 61,705   50,292     56,545   70,415   80,599   73,676    
Specific reserves 1,396   1,207     684   548   4,191   3,660    
Book value, after specific reserves $ 60,309   $ 49,085     $ 55,861   $ 69,867   $ 76,408   $ 70,016    
                 
   

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