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CST: 26/01/2020 21:14:16   

Park National Corporation reports financial results for second quarter and first half of 2019

188 Days ago

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
             
  2019 2019 2018   Percent change vs.
(in thousands, except share and per share data) 2nd QTR 1st QTR 2nd QTR   1Q '19 2Q '18
INCOME STATEMENT:            
Net interest income $ 75,851   $ 67,776   $ 64,742     11.9 % 17.2 %
Provision for loan losses 1,919   2,498   1,386     (23.2 )% 38.5 %
Other income 22,808   22,025   23,242     3.6 % (1.9 )%
Other expense 70,192   56,827   52,534     23.5 % 33.6 %
Income before income taxes $ 26,548   $ 30,476   $ 34,064     (12.9 )% (22.1 )%
Income taxes 4,385   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 share 1.01   1.21   1.21     (16.5 )% (16.5 )%
Book value per common share at period end 56.92   54.06   49.51     5.3 % 15.0 %
Market price per common share at period end 99.39   94.75   111.42     4.9 % (10.8 )%
Market capitalization at period end 1,631,741   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 end 16,417,562   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 loans 5.23 % 5.14 % 4.90 %   1.8 % 6.7 %
Yield on investment securities 2.78 % 2.82 % 2.73 %   (1.4 ) % 1.8 %
Yield on money market instruments 2.64 % 2.76 % 1.99 %   (4.3 ) % 32.7 %
Yield on interest earning assets 4.76 % 4.66 % 4.39 %   2.1 % 8.4 %
Cost of interest bearing deposits 1.04 % 0.97 % 0.64 %   7.2 % 62.5 %
Cost of borrowings 2.15 % 2.01 % 1.84 %   7.0 % 16.8 %
Cost of paying interest bearing liabilities 1.16 % 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, 2019 March 31, 2019 June 30, 2018   1Q '19 2Q '18
BALANCE SHEET:            
Investment securities $ 1,396,530   $ 1,400,987   $ 1,529,783     (0.3 )% (8.7 )%
Loans 6,376,737   5,740,760   5,324,974     11.1 % 19.8 %
Allowance for loan losses 54,003   53,368   49,452     1.2 % 9.2 %
Goodwill and other intangibles 174,288   119,421   72,334     45.9 % 140.9 %
Other real estate owned (OREO) 3,839   4,629   5,729     (17.1 )% (33.0 )%
Total assets 8,657,453   7,852,246   7,462,156     10.3 % 16.0 %
Total deposits 7,032,120   6,325,212   6,015,844     11.2 % 16.9 %
Borrowings 595,578   602,569   631,139     (1.2 )% (5.6 )%
Total shareholders' equity 934,432   845,044   755,088     10.6 % 23.8 %
Tangible equity (d) 760,144   725,623   682,754     4.8 % 11.3 %
Total nonperforming loans 86,833   86,471   98,867     0.4 % (12.2 )%
Total nonperforming assets 94,168   94,596   104,596     (0.5 )% (10.0 )%
             
ASSET QUALITY RATIOS:            
Loans as a % of period end total assets 73.66 % 73.11 % 71.36 %   0.8 % 3.2 %
Total nonperforming loans as a % of period end loans 1.36 % 1.51 % 1.86 %   (9.9 )% (26.9 )%
Total nonperforming assets as a % of period end loans + OREO + other nonperforming assets 1.48 % 1.65 % 1.96 %   (10.3 )% (24.5 )%
Allowance for loan losses as a % of period end loans 0.85 % 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 assets 10.79 % 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
         
  2019 2018    
(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 losses 4,417   1,646     168.3 %
Other income 44,833   50,145     (10.6 )%
Other expense 127,019   106,842     18.9 %
Income before income taxes $ 57,024   $ 71,249     (20.0 )%
Income taxes 9,406   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 share 2.22   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 loans 5.19 % 4.92 %   5.5 %
Yield on investment securities 2.80 % 2.68 %   4.5 %
Yield on money market instruments 2.70 % 1.76 %   53.4 %
Yield on interest earning assets 4.71 % 4.39 %   7.3 %
Cost of interest bearing deposits 1.01 % 0.59 %   71.2 %
Cost of borrowings 2.08 % 1.78 %   16.9 %
Cost of paying interest bearing liabilities 1.13 % 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, 2019 December 31, 2018
     
Assets    
     
Cash and due from banks $ 160,589   $ 141,890  
Money market instruments 98,916   25,324  
Investment securities 1,396,530   1,428,145  
Loans 6,376,737   5,692,132  
Allowance for loan losses (54,003 ) (51,512 )
Loans, net 6,322,734   5,640,620  
Bank premises and equipment, net 72,129   59,771  
Goodwill and other intangible assets 174,288   119,710  
Other real estate owned 3,839   4,303  
Other assets 428,428   384,545  
Total assets $ 8,657,453   $ 7,804,308  
     
Liabilities and Shareholders' Equity    
     
Deposits:    
Noninterest bearing $ 1,907,027   $ 1,804,881  
Interest bearing 5,125,093   4,455,979  
Total deposits 7,032,120   6,260,860  
Borrowings 595,578   636,966  
Other liabilities 95,323   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 earnings 625,227   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) 2019 2018   2019 2018
           
Assets          
           
Cash and due from banks $ 127,115   $ 118,870     $ 122,485   $ 118,561  
Money market instruments 80,239   54,551     87,212   73,437  
Investment securities 1,413,309   1,506,699     1,401,641   1,478,564  
Loans 6,332,167   5,289,056     6,012,446   5,295,814  
Allowance for loan losses (53,849 ) (49,750 )   (53,124 ) (50,168 )
Loans, net 6,278,318   5,239,306     5,959,322   5,245,646  
Bank premises and equipment, net 71,253   56,109     66,079   56,307  
Goodwill and other intangible assets 165,311   72,334     142,587   72,334  
Other real estate owned 4,183   8,416     4,277   10,962  
Other assets 436,767   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 bearing 5,068,709   4,392,733     4,804,076   4,378,091  
Total deposits 6,956,044   5,994,961     6,613,289   5,963,833  
Borrowings 597,448   645,909     622,414   678,296  
Other liabilities 86,377   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 shares 455,895   307,689     407,533   307,714  
Accumulated other comprehensive loss, net of taxes (36,825 ) (54,184 )   (41,655 ) (47,965 )
Retained earnings 624,995   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
           
  2019 2019 2018 2018 2018
(in thousands, except per share data) 2nd QTR 1st QTR 4th QTR 3rd QTR 2nd 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 - taxable 6,919   6,995   7,275   7,691   7,746  
Obligations of states and political subdivisions - tax-exempt 2,308   2,217   2,213   2,205   2,178  
Other interest income 528   641   337   428   271  
Total interest income 92,226   81,856   82,167   80,229   74,691  
           
Interest expense:          
Interest on deposits:          
Demand and savings deposits 8,811   7,093   6,006   6,412   4,107  
Time deposits 4,357   3,777   3,610   3,328   2,886  
Interest on borrowings 3,207   3,210   2,921   2,813   2,956  
Total interest expense 16,375   14,080   12,537   12,553   9,949  
           
Net interest income 75,851   67,776   69,630   67,676   64,742  
           
Provision for loan losses 1,919   2,498   3,359   2,940   1,386  
           
Net interest income after provision for loan losses 73,932   65,278   66,271   64,736   63,356  
           
Other income 22,808   22,025   26,892   24,064   23,242  
           
Other expense 70,192   56,827   62,597   59,316   52,534  
           
Income before income taxes 26,548   30,476   30,566   29,484   34,064  
           
Income taxes 4,385   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
           
  2019 2019 2018 2018 2018
(in thousands) 2nd QTR 1st QTR 4th QTR 3rd QTR 2nd QTR
           
Other income:          
Income from fiduciary activities $ 6,935   $ 6,723   $ 6,814   $ 6,418   $ 6,666  
Service charges on deposits 2,655   2,559   2,852   2,861   2,826  
Other service income 4,040   2,818   3,279   3,246   3,472  
Debit card fee income 5,227   4,369   4,581   4,352   4,382  
Bank owned life insurance income 1,286   1,006   2,190   2,585   1,031  
ATM fees 460   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 securities 232   1,742   (17 ) 89   1,348  
Other components of net periodic benefit income 1,183   1,183   1,705   1,705   1,705  
Gain on the sale of loans     2,826      
Miscellaneous 1,611   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 benefits 9,014   8,430   7,977   7,653   7,630  
Occupancy expense 3,223   3,011   2,769   2,976   2,570  
Furniture and equipment expense 4,386   4,150   4,170   3,807   4,013  
Data processing fees 2,905   2,133   2,222   2,580   1,902  
Professional fees and services 10,106   6,006   8,516   8,065   6,123  
Marketing 1,455   1,226   1,377   1,364   1,185  
Insurance 1,381   1,156   1,277   1,388   1,196  
Communication 1,375   1,333   1,335   1,207   1,189  
State tax expense 1,054   1,005   750   1,000   958  
Amortization of intangible assets 702   289   289   289    
Miscellaneous 2,498   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
2018 2017 2016 2015
             
Allowance for loan losses:            
Allowance for loan losses, beginning of period $ 53,368   $ 51,512   $ 49,988   $ 50,624   $ 56,494   $ 54,352  
Charge-offs 2,928   2,987   13,552   19,403   20,799   14,290  
Recoveries 1,644   2,345   7,131   10,210   20,030   11,442  
Net charge-offs 1,284   642   6,421   9,193   769   2,848  
Provision for (recovery of) loan losses 1,919   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 reserves 2,379   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 loans 50,225   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 loans 0.85 % 0.93 % 0.90 % 0.93 % 0.96 % 1.11 %
General reserves as a % of total loans less impaired commercial loans 0.82 % 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 restructurings 17,759   15,757   15,173   20,111   18,175   24,979  
Loans past due 90 days or more 2,399   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 Bank 3,042   3,114   2,788   6,524   6,025   7,456  
Other real estate owned - SEPH 797   1,515   1,515   7,666   7,901   11,195  
Other nonperforming assets - Park National Bank 3,496   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 loans 1.05 % 1.20 % 1.19 % 1.34 % 1.67 % 1.89 %
Percentage of nonperforming loans to period end loans 1.36 % 1.51 % 1.50 % 1.75 % 2.05 % 2.42 %
Percentage of nonperforming assets to period end loans 1.48 % 1.65 % 1.64 % 2.10 % 2.31 % 2.79 %
Percentage of nonperforming assets to period end total assets 1.09 % 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
2018 2017 2016 2015
             
             
New nonaccrual loan information:            
Nonaccrual loans, beginning of period $ 69,175   $ 67,954   $ 72,056   $ 87,822   $ 95,887   $ 100,393  
New nonaccrual loans 17,952   12,484   76,611   58,753   74,786   80,791  
Resolved nonaccrual loans 20,452   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-offs 6,113   10,957   11,246   10,040   24,943   28,705  
Remaining principal balance 50,225   50,881   48,135   56,545   70,415   80,599  
Specific reserves 2,379   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, 2019 March 31, 2019 June 30, 2018   June 30, 2019 June 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, 2019 March 31, 2019 June 30, 2018   June 30, 2019 June 30, 2018
AVERAGE SHAREHOLDERS' EQUITY $ 936,626   $ 838,723   $ 754,101     $ 887,946   $ 751,876  
Less: Average goodwill and other intangible assets 165,311   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, 2019 March 31, 2019 June 30, 2018      
TOTAL SHAREHOLDERS' EQUITY $ 934,432   $ 845,044   $ 755,088        
Less: Goodwill and other intangible assets 174,288   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, 2019 March 31, 2019 June 30, 2018   June 30, 2019 June 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 assets 165,311   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, 2019 March 31, 2019 June 30, 2018      
TOTAL ASSETS $ 8,657,453   $ 7,852,246   $ 7,462,156        
Less: Goodwill and other intangible assets 174,288   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, 2019 March 31, 2019 June 30, 2018   June 30, 2019 June 30, 2018
Interest income $ 92,226   $ 81,856   $ 74,691     $ 174,082   $ 148,405  
Fully taxable equivalent adjustment 752   734   705     1,486   1,406  
Fully taxable equivalent interest income $ 92,978   $ 82,590   $ 75,396     $ 175,568   $ 149,811  
Interest expense 16,375   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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