PRK - Park National Corporation reports financial results for first quarter 2019

April, 19 2019 02:15 PM Park National Corporation

NEWARK, Ohio, April 19, 2019 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE American: PRK) today reported financial results for the first quarter 2019 (three months ended March 31, 2019). Park's board of directors declared a quarterly cash dividend of $1.01 per common share, payable on June 10, 2019 to common shareholders of record as of May 17, 2019.

Park’s net income for the first quarter of 2019 was $25.5 million, an 18.2 percent decrease from $31.1 million for the first quarter of 2018. First quarter 2019 net income per diluted common share was $1.62, compared to $2.02 in the first quarter of 2018. The first quarter of 2018 included income related to asset recoveries at its Southeast Property Holdings subsidiary.

Park's community-banking subsidiary, The Park National Bank, reported net income of $26.7 million for the first quarter of 2019, a 0.2 percent decrease from $26.7 million reported for the first quarter of 2018. Commercial loans grew $51.7 million over last quarter and the bank’s consumer loans increased $9.1 million compared to the previous quarter.

“This year has begun with great momentum as we deepen our partnership with two excellent banking divisions in the Carolinas and also see the results of our hard work in Ohio and Kentucky,” said Park Chief Executive Officer David L. Trautman. “Our people deliver extraordinary service that has helped us grow loans, deposits, and investment services in a number of areas. And, our commitment to local leadership and non-profit support is helping our communities thrive.”

On April 1, 2019 Park closed its merger transaction with CAB Financial Corporation, officially adding Carolina Alliance Bank as a division of Park’s banking subsidiary The Park National Bank.

Headquartered in Newark, Ohio, Park National Corporation had $7.9 billion in total assets (as of March 31, 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. 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 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' 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, 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; 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 and 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 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 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 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; 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 March 31, 2019, December 31, 2018, and March 31, 2018













2019
2018
2018

Percent change vs.
*(in thousands, except share and per share data)*
1st QTR
4th QTR
1st QTR

4Q '18
1Q '18
INCOME STATEMENT:






Net interest income
$
67,776

$
69,630

$
64,850


(2.7
) %
4.5
%
Provision for loan losses
2,498

3,359

260


(25.6
) %
N.M.
Other income
22,025

26,892

26,903


(18.1
) %
(18.1
) %
Other expense
56,827

62,597

54,308


(9.2
) %
4.6
%
Income before income taxes
$
30,476

$
30,566

$
37,185


(0.3
)%
(18.0
) %
Income taxes
5,021

4,305

6,062


16.6
%
(17.2
) %
Net income
$
25,455

$
26,261

$
31,123


(3.1
)%
(18.2
) %







MARKET DATA:






Earnings per common share - basic (b)
$
1.63

$
1.67

$
2.04


(2.4
)%
(20.1
)%
Earnings per common share - diluted (b)
1.62

1.67

2.02


(3.0
)%
(19.8
)%
Cash dividends declared per common share
1.21

0.96

0.94


26.0
%
28.7
%
Book value per common share at period end
54.06

53.03

49.20


1.9
%
9.9
%
Market price per common share at period end
94.75

84.95

103.76


11.5
%
(8.7
)%
Market capitalization at period end
1,480,990

1,333,560

1,587,642


11.1
%
(6.7
)%







Weighted average common shares - basic (a)
15,651,541

15,695,522

15,288,332


(0.3
)%
2.4
%
Weighted average common shares - diluted (a)
15,744,777

15,764,548

15,431,328


(0.1
)%
2.0
%
Common shares outstanding at period end
15,630,499

15,698,178

15,301,103


(0.4
)%
2.2
%







PERFORMANCE RATIOS: (annualized)






Return on average assets (a)(b)
1.32
%
1.34
%
1.69
%

(1.5
) %
(21.9
) %
Return on average shareholders' equity (a)(b)
12.31
%
12.70
%
16.84
%

(3.1
) %
(26.9
) %
Yield on loans
5.14
%
5.10
%
4.94
%

0.8
%
4.0
%
Yield on investment securities
2.82
%
2.74
%
2.62
%

2.9
%
7.6
%
Yield on money market instruments
2.76
%
2.46
%
1.63
%

12.2
%
69.3
%
Yield on interest earning assets
4.66
%
4.61
%
4.40
%

1.1
%
5.9
%
Cost of interest bearing deposits
0.97
%
0.85
%
0.54
%

14.1
%
79.6
%
Cost of borrowings
2.01
%
1.88
%
1.72
%

6.9
%
16.9
%
Cost of paying interest bearing liabilities
1.10
%
0.97
%
0.71
%

13.4
%
54.9
%
Net interest margin (g)
3.86
%
3.91
%
3.87
%

(1.3
) %
(0.3
) %
Efficiency ratio (g)
62.77
%
64.36
%
58.74
%

(2.5
) %
6.9
%







OTHER RATIOS (NON - GAAP):






Annualized return on average tangible assets (a)(b)(e)
1.34
%
1.36
%
1.71
%

(1.5
)%
(21.6
)%
Annualized return on average tangible equity (a)(b)(c)
14.36
%
14.87
%
18.64
%

(3.4
)%
(23.0
)%
Tangible book value per share (d)
$
46.42

$
45.41

$
44.47


2.2
%
4.4
%







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 March 31, 2019, December 31, 2018, and March 31, 2018

















Percent change vs.
BALANCE SHEET:
March 31, 2019
December 31, 2018
March 31, 2018

4Q '18
1Q '18







Investment securities
$
1,382,301

$
1,411,080

$
1,464,356


(2.0
) %
(5.6
) %
Loans
5,740,760

5,692,132

5,292,349


0.9
%
8.5
%
Allowance for loan losses
53,368

51,512

48,969


3.6
%
9.0
%
Goodwill and other intangibles
119,421

119,710

72,334


(0.2
) %
65.1
%
Other real estate owned (OREO)
4,629

4,303

9,055


7.6
%
(48.9
) %
Total assets
7,852,246

7,804,308

7,518,970


0.6
%
4.4
%
Total deposits
6,325,212

6,260,860

6,084,294


1.0
%
4.0
%
Borrowings
602,569

636,966

624,090


(5.4
) %
(3.4
) %
Total shareholders' equity
845,044

832,506

752,774


1.5
%
12.3
%
Tangible equity (d)
725,623

712,796

680,440


1.8
%
6.6
%
Total nonperforming loans
86,471

85,370

86,205


1.3
%
0.3
%
Total nonperforming assets
94,596

93,137

99,117


1.6
%
(4.6
) %







ASSET QUALITY RATIOS:






Loans as a % of period end total assets
73.11
%
72.94
%
70.39
%

0.2
%
3.9
%
Total nonperforming loans as a % of period end loans
1.51
%
1.50
%
1.63
%

0.7
%
(7.4
) %
Total nonperforming assets as a % of period end loans + OREO + other nonperforming assets
1.65
%
1.63
%
1.87
%

1.2
%
(11.8
) %
Allowance for loan losses as a % of period end loans
0.93
%
0.90
%
0.93
%

3.3
%
—
%
Net loan charge-offs
$
642

$
2,093

$
1,279


(69.3
) %
(49.8
) %
Annualized net loan charge-offs as a % of average loans (a)
0.05
%
0.15
%
0.10
%

(66.7
) %
(50.0
) %







CAPITAL & LIQUIDITY:






Total shareholders' equity / Period end total assets
10.76
%
10.67
%
10.01
%

0.8
%
7.5
%
Tangible equity (d) / Tangible assets (f)
9.38
%
9.28
%
9.14
%

1.1
%
2.6
%
Average shareholders' equity / Average assets (a)
10.71
%
10.56
%
10.06
%

1.4
%
6.5
%
Average shareholders' equity / Average loans (a)
14.74
%
14.56
%
14.14
%

1.2
%
4.2
%
Average loans / Average deposits (a)
90.78
%
90.06
%
89.39
%

0.8
%
1.6
%


PARK NATIONAL CORPORATION
Financial Highlights (continued)

(a) Averages are for the three months ended March 31, 2019, December 31, 2018 and March 31, 2018.
(b) Reported measure uses net income.
(c) Net income for each period divided by average tangible equity during the period. Average tangible equity equals average shareholders' equity during the applicable period less average goodwill and other intangibles during the applicable period.

RECONCILIATION OF AVERAGE SHAREHOLDERS' EQUITY TO AVERAGE TANGIBLE EQUITY:

THREE MONTHS ENDED

March 31, 2019
December 31, 2018
March 31, 2018
AVERAGE SHAREHOLDERS' EQUITY
$
838,723

$
820,445

$
749,627

Less: Average goodwill and other intangibles
119,611

119,899

72,334

AVERAGE TANGIBLE EQUITY
$
719,112

$
700,546

$
677,293





(d) Tangible equity divided by common shares outstanding at period end. Tangible equity equals total shareholders' equity less goodwill and other intangibles, in each case at the end of the period.




RECONCILIATION OF TOTAL SHAREHOLDERS' EQUITY TO TANGIBLE EQUITY:

March 31, 2019
December 31, 2018
March 31, 2018
TOTAL SHAREHOLDERS' EQUITY
$
845,044

$
832,506

$
752,774

Less: Goodwill and other intangibles
119,421

119,710

72,334

TANGIBLE EQUITY
$
725,623

$
712,796

$
680,440





(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 intangibles, in each case during the applicable period.




RECONCILIATION OF AVERAGE ASSETS TO AVERAGE TANGIBLE ASSETS:

THREE MONTHS ENDED

March 31, 2019
December 31, 2018
March 31, 2018
AVERAGE ASSETS
$
7,832,397

$
7,770,140

$
7,455,065

Less: Average goodwill and other intangibles
119,611

119,899

72,334

AVERAGE TANGIBLE ASSETS
$
7,712,786

$
7,650,241

$
7,382,731





(f) Tangible equity divided by tangible assets. Tangible assets equals total assets less goodwill and other intangibles, in each case at the end of the period.




RECONCILIATION OF TOTAL ASSETS TO TANGIBLE ASSETS:

March 31, 2019
December 31, 2018
March 31, 2018
TOTAL ASSETS
$
7,852,246

$
7,804,308

$
7,518,970

Less: Goodwill and other intangibles
119,421

119,710

72,334

TANGIBLE ASSETS
$
7,732,825

$
7,684,598

$
7,446,636





(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 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, 2019
December 31, 2018
March 31, 2018
Interest income
$
81,856

$
82,167

$
73,714

Fully taxable equivalent adjustment
734

736

701

Fully taxable equivalent interest income
$
82,590

$
82,903

$
74,415

Interest expense
14,080

12,537

8,864

Fully taxable equivalent net interest income
$
68,510

$
70,366

$
65,551

PARK NATIONAL CORPORATION

Consolidated Statements of Income

Three Months Ended

March 31,

(in thousands, except share and per share data)

2019

2018

Interest income:

Interest and fees on loans

72,003

64,402

Interest on:

Obligations of U.S. Government, its agencies

and other securities - taxable

6,995

6,767

Obligations of states and political subdivisions - tax-exempt

2,217

2,174

Other interest income

641

371

Total interest income

81,856

73,714

Interest expense:

Interest on deposits:

Demand and savings deposits

7,093

3,290

Time deposits

3,777

2,551

Interest on borrowings

3,210

3,023

Total interest expense

14,080

8,864

Net interest income

67,776

64,850

Provision for loan losses

2,498

260

Net interest income after provision for loan losses

65,278

64,590

Other income

22,025

26,903

Other expense

56,827

54,308

Income before income taxes

30,476

37,185

Income taxes

5,021

6,062

Net income

25,455

31,123

Per Common Share:

Net income - basic

1.63

2.04

Net income - diluted

1.62

2.02

Weighted average shares - basic

15,651,541

15,288,332

Weighted average shares - diluted

15,744,777

15,431,328

Cash dividends declared

1.21

0.94


PARK NATIONAL CORPORATION
Consolidated Balance Sheets



*(in thousands, except share data)*
March 31, 2019
December 31, 2018



Assets





Cash and due from banks
$
116,870

$
141,890

Money market instruments
70,609

25,324

Investment securities
1,382,301

1,411,080

Loans
5,740,760

5,692,132

Allowance for loan losses
(53,368
)
(51,512
)
Loans, net
5,687,392

5,640,620

Bank premises and equipment, net
60,506

59,771

Goodwill and other intangibles
119,421

119,710

Other real estate owned
4,629

4,303

Other assets
410,518

401,610

Total assets
$
7,852,246

$
7,804,308




Liabilities and Shareholders' Equity





Deposits:


Noninterest bearing
$
1,767,596

$
1,804,881

Interest bearing
4,557,616

4,455,979

Total deposits
6,325,212

6,260,860

Borrowings
602,569

636,966

Other liabilities
79,421

73,976

Total liabilities
$
7,007,202

$
6,971,802







Shareholders' Equity:


Preferred shares (200,000 shares authorized; no shares outstanding at March 31, 2019 and December 31, 2018)
$
—

$
—

Common shares (No par value; 20,000,000 shares authorized in 2019 and 2018; 16,586,153 shares issued at March 31, 2019 and 16,586,165 shares issued at December 31, 2018)
357,475

358,598

Accumulated other comprehensive loss, net of taxes
(35,453
)
(49,788
)
Retained earnings
619,971

614,069

Treasury shares (955,654 shares at March 31, 2019 and 887,987 shares at December 31, 2018)
(96,949
)
(90,373
)
Total shareholders' equity
$
845,044

$
832,506

Total liabilities and shareholders' equity
$
7,852,246

$
7,804,308


PARK NATIONAL CORPORATION
Consolidated Average Balance Sheets




Three Months Ended

March 31,
*(in thousands)*
2019
2018



Assets





Cash and due from banks
$
117,803

$
118,248

Money market instruments
94,262

92,533

Investment securities
1,389,842

1,450,116

Loans
5,689,173

5,302,648

Allowance for loan losses
(52,390
)
(50,590
)
Loans, net
5,636,783

5,252,058

Bank premises and equipment, net
60,847

56,506

Goodwill and other intangibles
119,611

72,334

Other real estate owned
4,373

13,537

Other assets
408,876

399,733

Total assets
$
7,832,397

$
7,455,065







Liabilities and Shareholders' Equity





Deposits:


Noninterest bearing
$
1,730,224

$
1,569,072

Interest bearing
4,536,501

4,363,287

Total deposits
6,266,725

5,932,359

Borrowings
647,658

711,044

Other liabilities
79,291

62,035

Total liabilities
$
6,993,674

$
6,705,438




Shareholders' Equity:


Preferred shares
$
—

$
—

Common shares
358,633

307,740

Accumulated other comprehensive loss, net of taxes
(46,539
)
(41,677
)
Retained earnings
621,568

570,629

Treasury shares
(94,939
)
(87,065
)
Total shareholders' equity
$
838,723

$
749,627

Total liabilities and shareholders' equity
$
7,832,397

$
7,455,065


PARK NATIONAL CORPORATION
Consolidated Statements of Income - Linked Quarters







2019
2018
2018
2018
2018
*(in thousands, except per share data)*
1st QTR
4th QTR
3rd QTR
2nd QTR
1st QTR






Interest income:





Interest and fees on loans
$
72,003

$
72,342

$
69,905

$
64,496

$
64,402

Interest on:





Obligations of U.S. Government, its agencies and other securities - taxable
6,995

7,275

7,691

7,746

6,767

Obligations of states and political subdivisions - tax-exempt
2,217

2,213

2,205

2,178

2,174

Other interest income
641

337

428

271

371

Total interest income
81,856

82,167

80,229

74,691

73,714







Interest expense:





Interest on deposits:





Demand and savings deposits
7,093

6,006

6,412

4,107

3,290

Time deposits
3,777

3,610

3,328

2,886

2,551

Interest on borrowings
3,210

2,921

2,813

2,956

3,023

Total interest expense
14,080

12,537

12,553

9,949

8,864







Net interest income
67,776

69,630

67,676

64,742

64,850







Provision for loan losses
2,498

3,359

2,940

1,386

260







Net interest income after provision for loan losses
65,278

66,271

64,736

63,356

64,590







Other income
22,025

26,892

24,064

23,242

26,903







Other expense
56,827

62,597

59,316

52,534

54,308







Income before income taxes
30,476

30,566

29,484

34,064

37,185







Income taxes
5,021

4,305

4,722

5,823

6,062







Net income
$
25,455

$
26,261

$
24,762

$
28,241

$
31,123







Per Common Share:





Net income - basic
$
1.63

$
1.67

$
1.58

$
1.85

$
2.04

Net income - diluted
$
1.62

$
1.67

$
1.56

$
1.83

$
2.02


PARK NATIONAL CORPORATION
Detail of other income and other expense - Linked Quarters







2019
2018
2018
2018
2018
(in thousands)
1st QTR
4th QTR
3rd QTR
2nd QTR
1st QTR






Other income:





Income from fiduciary activities
$
6,723

$
6,814

$
6,418

$
6,666

$
6,395

Service charges on deposits
2,559

2,852

2,861

2,826

2,922

Other service income
2,818

3,279

3,246

3,472

4,172

Debit card fee income
4,369

4,581

4,352

4,382

4,002

Bank owned life insurance income
1,006

2,190

2,585

1,031

1,009

ATM fees
440

444

500

510

524

OREO valuation adjustments
(27
)
(93
)
(77
)
(114
)
(207
)
(Loss) gain on the sale of OREO, net
(12
)
142

(81
)
(147
)
4,321

Net loss on the sale of investment securities
—

—

—

—

(2,271
)
Unrealized gain (loss) on equity securities
121

(254
)
(326
)
304

3,489

Other components of net periodic benefit income
1,183

1,705

1,705

1,705

1,705

Gain on the sale of loans
—

2,826

—

—

—

Miscellaneous
2,845

2,406

2,881

2,607

842

Total other income
$
22,025

$
26,892

$
24,064

$
23,242

$
26,903







Other expense:





Salaries
$
25,805

$
27,103

$
27,229

$
24,103

$
25,320

Employee benefits
8,430

7,977

7,653

7,630

7,029

Occupancy expense
3,011

2,769

2,976

2,570

2,936

Furniture and equipment expense
4,150

4,170

3,807

4,013

4,149

Data processing fees
2,133

2,222

2,580

1,902

1,773

Professional fees and services
6,006

8,516

8,065

6,123

6,190

Marketing
1,226

1,377

1,364

1,185

1,218

Insurance
1,156

1,277

1,388

1,196

1,428

Communication
1,333

1,335

1,207

1,189

1,250

State tax expense
1,005

750

1,000

958

1,105

Amortization of intangibles
289

289

289

—

—

Miscellaneous
2,283

4,812

1,758

1,665

1,910

Total other expense
$
56,827

$
62,597

$
59,316

$
52,534

$
54,308

PARK NATIONAL CORPORATION
Asset Quality Information








Year ended December 31,
*(in thousands, except ratios)*
March 31, 2019
2018
2017
2016
2015






Allowance for loan losses:





Allowance for loan losses, beginning of period
$
51,512

$
49,988

$
50,624

$
56,494

$
54,352

Charge-offs
2,987

13,552

19,403

20,799

14,290

Recoveries
2,345

7,131

10,210

20,030

11,442

Net charge-offs
642

6,421

9,193

769

2,848

Provision for (recovery of) loan losses
2,498

7,945

8,557

(5,101
)
4,990

Allowance for loan losses, end of period
$
53,368

$
51,512

$
49,988

$
50,624

$
56,494













General reserve trends:





Allowance for loan losses, end of period
$
53,368

$
51,512

$
49,988

$
50,624

$
56,494

Specific reserves
2,468

2,273

684

548

4,191

General reserves
$
50,900

$
49,239

$
49,304

$
50,076

$
52,303







Total loans
$
5,740,760

$
5,692,132

$
5,372,483

$
5,271,857

$
5,068,085

Impaired commercial loans
50,881

48,135

56,545

70,415

80,599

Total loans less impaired commercial loans
$
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)
0.05
%
0.12
%
0.17
%
0.02
%
0.06
%
Allowance for loan losses as a % of period end loans
0.93
%
0.90
%
0.93
%
0.96
%
1.11
%
General reserves as a % of total loans less impaired commercial loans
0.89
%
0.87
%
0.93
%
0.96
%
1.05
%
General reserves as a % of total loans less impaired commercial loans (excluding acquired loans)
0.93
%
0.91
%
N.A.
N.A.
N.A.






Nonperforming assets - Park National Corporation:





Nonaccrual loans
$
69,175

$
67,954

$
72,056

$
87,822

$
95,887

Accruing troubled debt restructurings
15,757

15,173

20,111

18,175

24,979

Loans past due 90 days or more
1,539

2,243

1,792

2,086

1,921

Total nonperforming loans
$
86,471

$
85,370

$
93,959

$
108,083

$
122,787

Other real estate owned - Park National Bank
3,114

2,788

6,524

6,025

7,456

Other real estate owned - SEPH
1,515

1,515

7,666

7,901

11,195

Other nonperforming assets - Park National Bank
3,496

3,464

4,849

—

—

Total nonperforming assets
$
94,596

$
93,137

$
112,998

$
122,009

$
141,438

Percentage of nonaccrual loans to period end loans
1.20
%
1.19
%
1.34
%
1.67
%
1.89
%
Percentage of nonperforming loans to period end loans
1.51
%
1.50
%
1.75
%
2.05
%
2.42
%
Percentage of nonperforming assets to period end loans
1.65
%
1.64
%
2.10
%
2.31
%
2.79
%
Percentage of nonperforming assets to period end total assets
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)
March 31, 2019
2018
2017
2016
2015






Nonperforming assets - Park National Bank and Guardian:





Nonaccrual loans
$
67,540

$
66,319

$
61,753

$
76,084

$
81,468

Accruing troubled debt restructurings
15,757

15,173

20,111

18,175

24,979

Loans past due 90 days or more
1,539

2,243

1,792

2,086

1,921

Total nonperforming loans
$
84,836

$
83,735

$
83,656

$
96,345

$
108,368

Other real estate owned - Park National Bank
3,114

2,788

6,524

6,025

7,456

Other nonperforming assets - Park National Bank
3,496

3,464

4,849

—

—

Total nonperforming assets
$
91,446

$
89,987

$
95,029

$
102,370

$
115,824

Percentage of nonaccrual loans to period end loans
1.18
%
1.17
%
1.15
%
1.45
%
1.61
%
Percentage of nonperforming loans to period end loans
1.48
%
1.47
%
1.56
%
1.83
%
2.14
%
Percentage of nonperforming assets to period end loans
1.59
%
1.58
%
1.77
%
1.95
%
2.29
%
Percentage of nonperforming assets to period end total assets
1.17
%
1.16
%
1.27
%
1.38
%
1.60
%






Nonperforming assets - SEPH/Vision Bank (retained portfolio):





Nonaccrual loans
$
1,635

$
1,635

$
10,303

$
11,738

$
14,419

Accruing troubled debt restructurings
—

—

—

—

—

Loans past due 90 days or more
—

—

—

—

—

Total nonperforming loans
$
1,635

$
1,635

$
10,303

$
11,738

$
14,419

Other real estate owned - SEPH
1,515

1,515

7,666

7,901

11,195

Total nonperforming assets
$
3,150

$
3,150

$
17,969

$
19,639

$
25,614







New nonaccrual loan information - Park National Corporation





Nonaccrual loans, beginning of period
$
67,954

$
72,056

$
87,822

$
95,887

$
100,393

New nonaccrual loans
12,484

76,611

58,753

74,786

80,791

Resolved nonaccrual loans
11,263

80,713

74,519

82,851

85,297

Nonaccrual loans, end of period
$
69,175

$
67,954

$
72,056

$
87,822

$
95,887







New nonaccrual loan information - Park National Bank and Guardian





Nonaccrual loans, beginning of period
$
66,319

$
61,753

$
76,084

$
81,468

$
77,477

New nonaccrual loans
12,484

74,976

58,753

74,663

80,791

Resolved nonaccrual loans
11,263

70,410

73,084

80,047

76,800

Nonaccrual loans, end of period
$
67,540

$
66,319

$
61,753

$
76,084

$
81,468







New nonaccrual loan information - SEPH/Vision Bank (retained portfolio)





Nonaccrual loans, beginning of period
$
1,635

$
10,303

$
11,738

$
14,419

$
22,916

New nonaccrual loans
—

1,635

—

123

—

Resolved nonaccrual loans
—

10,303

1,435

2,804

8,497

Nonaccrual loans, end of period
$
1,635

$
1,635

$
10,303

$
11,738

$
14,419







Impaired commercial loan portfolio information (period end):





Unpaid principal balance
$
61,838

$
59,381

$
66,585

$
95,358

$
109,304

Prior charge-offs
10,957

11,246

10,040

24,943

28,705

Remaining principal balance
50,881

48,135

56,545

70,415

80,599

Specific reserves
2,468

2,273

684

548

4,191

Book value, after specific reserves
$
48,413

$
45,862

$
55,861

$
69,867

$
76,408

Company Name:	Park National Corporation
Stock Symbol:	PRK
Market:	NYSE
Website:	parknationalcorp.com

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