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Park National Corporation Reports Financial Results for Third Quarter and First Nine Months of 2016

Consumer and commercial loans propel community bank income

NEWARK, Ohio, Oct. 24, 2016 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE MKT:PRK) today announced increased net income and other financial results for the third quarter and first nine months of 2016 (three and nine months ended September 30, 2016). The board of directors also declared a quarterly cash dividend of $0.94 per common share, payable on December 9, 2016 to common shareholders of record as of November 18, 2016.

Park’s third quarter net income in 2016 was $27.4 million, a 37.0 percent increase from $20.0 million for the same period in 2015. Net income per diluted common share for the third quarter of 2016 was $1.78, compared to $1.30 in the third quarter of 2015. Park cited substantial recoveries from loans in its Southeast Property Holdings unit as part of the boost in income for the quarter.

Park’s net income for the first nine months of 2016 was $66.1 million, compared to $60.1 million for the same period in 2015, an increase of 10.0 percent. Net income per diluted common share for the first nine months of 2016 was $4.29, compared to $3.90 in the same period of 2015.

“Our results this year position us well as we look ahead and make plans for the future,” said Park President and CEO David L. Trautman. “We lead our organization with long-run performance in mind. While any given quarter may contain one-time income items or expenses, it’s the consistency of our community banks that demonstrates our strength and steady success.”

Park's community-banking subsidiary, The Park National Bank, reported net income of $25.5 million for the third quarter of 2016, compared to $20.7 million for the third quarter of 2015. The bank’s first nine months of 2016 net income was $68.3 million, compared to $61.2 million for the same period of 2015. The bank had total assets of $7.3 billion at September 30, 2016, rising from $7.2 billion at December 31, 2015.

In the first nine months of 2016, the bank grew consumer loans by $100.2 million (13.7 percent annualized) and commercial loans by $35.9 million (1.9 percent annualized). Total loans for the bank were $5.15 billion at September 30, 2016, up $187.8 million (3.79 percent) from $4.96 billion at September 30, 2015.

About Park National Corporation

Headquartered in Newark, Ohio, Park National Corporation had $7.4 billion in total assets (as of September 30, 2016). The Park organization principally consists of 11 community bank divisions, a non-bank subsidiary and two specialty finance companies. Park's Ohio-based 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, Farmers Bank Division, United Bank, N.A. Division, Second National Bank Division, Security National Bank Division, Unity National Bank Division, and The Park National Bank of Southwest Ohio & Northern Kentucky Division; and Scope Leasing, Inc. (d.b.a. Scope Aircraft Finance). The Park organization also includes Guardian Financial Services Company (d.b.a. Guardian Finance Company) and SE Property Holdings, LLC.

Complete financial tables are listed below…

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, including 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 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; changes in consumer spending, borrowing and saving habits, whether due to 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; the nature, timing 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, accounting, banking, 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”), 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, to implement the Dodd-Frank Act's provisions, the Budget Control Act of 2011, the American Taxpayer Relief Act of 2012, the JOBS Act, the FAST Act 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; 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; 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 United Kingdom's exit from the European Union and its consequences; 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 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, including as a result of cyber attacks; fraud, scams and schemes of third parties; the impact of widespread natural and other disasters, pandemics, dislocations, 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; 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, 2015. 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
Three months ended September 30, 2016, June 30, 2016, and September 30, 2015          
             
  2016 2016 2015   Percent change vs.
(in thousands, except share and per share data) 3rd QTR 2nd QTR 3rd QTR   2Q '16 3Q '15
INCOME STATEMENT:            
Net interest income $ 58,533   $ 57,485   $ 57,715     1.8 % 1.4 %
(Recovery of) provision for loan losses (7,366 ) 2,637   2,404     N.M.   N.M.  
Other income 20,535   18,736   20,191     9.6 % 1.7 %
Other expense 46,756   45,306   47,429     3.2 % (1.4 ) %
Income before income taxes $ 39,678   $ 28,278   $ 28,073     40.3 % 41.3 %
Income taxes 12,229   8,280   8,033     47.7 % 52.2 %
Net income $ 27,449   $ 19,998   $ 20,040     37.3 % 37.0 %
                 
MARKET DATA:                
Earnings per common share - basic (b) $ 1.79   $ 1.30   $ 1.30     37.7 % 37.7 %
Earnings per common share - diluted (b) 1.78   1.30   1.30     36.9 % 36.9 %
Cash dividends per common share 0.94   0.94   0.94     % %
Book value per common share at period end 48.99   48.26   46.66     1.5 % 5.0 %
Market price per common share at period end 96.00   91.78   90.22     4.6 % 6.4 %
Market capitalization at period end 1,471,755   1,407,060   1,384,035     4.6 % 6.3 %
                 
Weighted average common shares - basic (a) 15,330,791   15,330,802   15,361,087     % (0.2 )%
Weighted average common shares - diluted (a) 15,399,707   15,399,283   15,401,808     % %
Common shares outstanding at period end 15,330,781   15,330,796   15,340,670     % (0.1 )%
                 
PERFORMANCE RATIOS: (annualized)                
Return on average assets (a)(b) 1.46 % 1.09 % 1.07 %   33.9 % 36.4 %
Return on average equity (a)(b) 14.67 % 10.98 % 11.20 %   33.6 % 31.0 %
Yield on loans 4.66 % 4.64 % 4.65 %   0.4 % 0.2 %
Yield on investments 2.25 % 2.30 % 2.39 %   (2.2 )% (5.9 )%
Yield on money markets 0.52 % 0.51 % 0.25 %   2.0 % 108.0 %
Yield on earning assets 3.99 % 4.00 % 3.91 %   (0.3 )% 2.0 %
Cost of interest bearing deposits 0.32 % 0.32 % 0.29 %   % 10.3 %
Cost of borrowings 2.49 % 2.50 % 2.39 %   (0.4 )% 4.2 %
Cost of paying liabilities 0.74 % 0.74 % 0.70 %   % 5.7 %
Net interest margin (g) 3.42 % 3.43 % 3.37 %   (0.3 )% 1.5 %
Efficiency ratio (g) 58.67 % 59.01 % 60.71 %   (0.6 )% (3.4 )%
                             
OTHER RATIOS (NON - GAAP):                            
Annualized return on average tangible assets (a)(b)(e) 1.48 % 1.10 % 1.08 %   34.5 % 37.0 %
Annualized return on average tangible equity (a)(b)(c) 16.24 % 12.18 % 12.47 %   33.3 % 30.2 %
Tangible book value per share (d) $ 44.27   $ 43.54   $ 41.95     1.7 % 5.5 %
             
N.M. - Not meaningful
Note: Explanations (a) - (g) are included at the end of the financial highlights.
             
             
             
PARK NATIONAL CORPORATION
Financial Highlights (continued)
Three months ended September 30, 2016, June 30, 2016, and September 30, 2015          
             
          Percent change vs.
BALANCE SHEET: September 30,
2016
June 30, 2016 September 30,
2015
  2Q '16 3Q '15
             
Investment securities $ 1,478,255   $ 1,548,006   $ 1,469,284     (4.5 )% 0.6 %
Loans 5,187,004   5,127,644   4,999,912     1.2 % 3.7 %
Allowance for loan losses 53,562   58,699   58,483     (8.8 )% (8.4 )%
Goodwill 72,334   72,334   72,334     % %
Other real estate owned (OREO) 14,941   17,566   20,136     (14.9 )% (25.8 )%
Total assets 7,364,092   7,431,610   7,300,340     (0.9 )% 0.9 %
Total deposits 5,519,659   5,623,879   5,454,982     (1.9 )% 1.2 %
Borrowings 1,005,937   996,905   1,059,904     0.9 % (5.1 )%
Shareholders' equity 751,063   739,887   715,803     1.5 % 4.9 %
Tangible equity (d) 678,729   667,553   643,469     1.7 % 5.5 %
Nonperforming loans 116,864   131,456   109,638     (11.1 )% 6.6 %
Nonperforming assets 131,805   149,022   129,774     (11.6 )% 1.6 %
                 
ASSET QUALITY RATIOS:                
Loans as a % of period end total assets 70.44 % 69.00 % 68.49 %   2.1 % 2.8 %
Nonperforming loans as a % of period end loans 2.25 % 2.56 % 2.19 %   (12.1 )% 2.7 %
Nonperforming assets as a % of period end loans + OREO 2.53 % 2.90 % 2.59 %   (12.8 )% (2.3 )%
Allowance for loan losses as a % of period end loans 1.03 % 1.14 % 1.17 %   (9.6 )% (12.0 )%
Net loan (recoveries) charge-offs $ (2,229 ) $ 886   $ 1,348     N.M.   N.M.  
Annualized net loan (recoveries) charge-offs  as a % of average loans (a) (0.17 ) % 0.07 % 0.11 %   N.M.   N.M.  
                             
CAPITAL & LIQUIDITY:                            
Total equity / Period end total assets 10.20 % 9.96 % 9.81 %   2.4 % 4.0 %
Tangible equity (d) / Tangible assets (f) 9.31 % 9.07 % 8.90 %   2.6 % 4.6 %
Average equity / Average assets (a) 9.97 % 9.92 % 9.59 %   0.5 % 4.0 %
Average equity / Average loans (a) 14.49 % 14.41 % 14.37 %   0.6 % 0.8 %
Average loans / Average deposits (a) 91.14 % 91.18 % 88.61 %   % 2.9 %
             
N.M. - Not meaningful
Note: Explanations (a) - (h) are included at the end of the financial highlights.


PARK NATIONAL CORPORATION              
Financial Highlights              
Nine months ended September 30, 2016 and 2015              
               
(in thousands, except share and per share data)   2016   2015     Percent change
vs. 2015
INCOME STATEMENT:              
Net interest income   $ 175,837     $ 169,765       3.6 %
(Recovery of) provision for loan losses   (3,819 )   5,648       N.M.  
Other income   56,660     58,255       (2.7 )%
Total other expense   141,961     137,816       3.0 %
Income before income taxes   $ 94,355     $ 84,556       11.6 %
Income taxes   28,222     24,433       15.5 %
Net income   $ 66,133     $ 60,123       10.0 %
                 
MARKET DATA:                
Earnings per common share - basic (b)   $ 4.31     $ 3.91       10.2 %
Earnings per common share - diluted (b)   4.29     3.90       10.0 %
Cash dividends per common share   2.82     2.82       %
                 
Weighted average common shares - basic (a)   15,330,802     15,370,380       (0.3 )%
Weighted average common shares - diluted (a)   15,401,825     15,411,511       (0.1 )%
                 
PERFORMANCE RATIOS: (Annualized)                
Return on average assets (a)(b)   1.19 %   1.10 %     8.2 %
Return on average common equity (a)(b)   12.04 %   11.35 %     6.1 %
Yield on loans   4.70 %   4.67 %     0.6 %
Yield on investments   2.31 %   2.48 %     (6.9 )%
Yield on earning assets   4.03 %   3.95 %     2.0 %
Cost of interest bearing deposits   0.32 %   0.30 %     6.7 %
Cost of borrowings   2.44 %   2.40 %     1.7 %
Cost of paying liabilities   0.74 %   0.72 %     2.8 %
Net interest margin (g)   3.47 %   3.39 %     2.4 %
Efficiency ratio (g)   60.64 %   60.29 %     0.6 %
                         
ASSET QUALITY RATIOS:                        
Net loan (recoveries) charge-offs   $ (887 )   $ 1,517       N.M.  
Annualized net loan (recoveries) charge-offs as a % of average loans (a)   (0.02 )%   0.04 %     N.M.  
                         
CAPITAL & LIQUIDITY:                        
Average stockholders' equity / Average assets (a)   9.89 %   9.71 %     1.9 %
Average stockholders' equity / Average loans (a)   14.42 %   14.53 %     (0.8 )%
Average loans / Average deposits (a)   91.21 %   89.23 %     2.2 %
                         
OTHER RATIOS (NON-GAAP):                        
Annualized return on average tangible assets (a)(b)(e)   1.20 %   1.11 %     8.1 %
Annualized return on average tangible common equity (a)(b)(c)   13.35 %   12.64 %     5.6 %
               


PARK NATIONAL CORPORATION      
Financial Highlights (continued)            
             
(a) Averages are for the three months ended September 30, 2016, June 30, 2016 and September 30, 2015 and the nine months ended September 30, 2016 and September 30, 2015.
 
(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   NINE MONTHS ENDED
  September 30, 2016 June 30, 2016 September 30, 2015   September 30, 2016 September 30, 2015
AVERAGE SHAREHOLDERS' EQUITY $ 744,620   $ 732,759   $ 710,128     $ 733,937   $ 708,085  
Less: Average goodwill 72,334   72,334   72,334     72,334   72,334  
AVERAGE TANGIBLE EQUITY $ 672,286   $ 660,425   $ 637,794     $ 661,603   $ 635,751  
             
(d) Tangible book value divided by common shares outstanding at period end. Tangible equity equals ending shareholders' equity less goodwill, in each case at the end of the period.
             
RECONCILIATION OF SHAREHOLDERS' EQUITY TO TANGIBLE EQUITY:    
  September 30, 2016 June 30, 2016 September 30, 2015      
SHAREHOLDERS' EQUITY $ 751,063   $ 739,887   $ 715,803        
Less: Goodwill 72,334   72,334   72,334        
TANGIBLE EQUITY $ 678,729   $ 667,553   $ 643,469        
             
(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   NINE MONTHS ENDED
  September 30, 2016 June 30, 2016 September 30, 2015   September 30, 2016 September 30, 2015
AVERAGE ASSETS $ 7,468,439   $ 7,383,703   $ 7,405,178     $ 7,419,342   $ 7,294,077  
Less: Average goodwill 72,334   72,334   72,334     72,334   72,334  
AVERAGE TANGIBLE ASSETS $ 7,396,105   $ 7,311,369   $ 7,332,844     $ 7,347,008   $ 7,221,743  
             
(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:    
  September 30, 2016 June 30, 2016 September 30, 2015      
TOTAL ASSETS $ 7,364,092   $ 7,431,610   $ 7,300,340        
Less: Goodwill 72,334   72,334   72,334        
TANGIBLE ASSETS $ 7,291,758   $ 7,359,276   $ 7,228,006        
             
(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 35% tax rate. Additionally, net interest margin is calculated on a fully taxable equivalent basis.
             
RECONCILIATION OF FULLY TAXABLE EQUIVALENT NET INTEREST INCOME TO NET INTEREST INCOME      
  THREE MONTHS ENDED   NINE MONTHS ENDED
  September 30, 2016 June 30, 2016 September 30, 2015   September 30, 2016 September 30, 2015
Interest income $ 68,242   $ 67,011   $ 67,087     $ 204,561   $ 197,909  
Fully taxable equivalent adjustment 619   555   220     1,618   551  
Fully taxable equivalent interest income $ 68,861   $ 67,566   $ 67,307     $ 206,179   $ 198,460  
Interest expense 9,709   9,526   9,372     28,724   28,144  
Fully taxable equivalent net interest income $ 59,152   $ 58,040   $ 57,935     $ 177,455   $ 170,316  
             


                 
PARK NATIONAL CORPORATION
Consolidated Statements of Income
                 
    Three Months Ended   Nine Months Ended
    September 30,   September 30,
(in thousands, except share and per share data)   2016   2015   2016   2015
                 
Interest income:                
Interest and fees on loans   $ 59,893     $ 57,680     $ 178,346     $ 169,555  
Interest on:                
Obligations of U.S. Government, its agencies                
  and other securities   7,339     9,163     23,718     27,665  
Obligations of states and political subdivisions   689     12     1,653     12  
Other interest income   321     232     844     677  
Total interest income   68,242     67,087     204,561     197,909  
                 
Interest expense:                
Interest on deposits:                
Demand and savings deposits   1,094     614     2,851     1,656  
Time deposits   2,352     2,508     7,128     7,672  
Interest on borrowings   6,263     6,250     18,745     18,816  
Total interest expense   9,709     9,372     28,724     28,144  
                 
Net interest income   58,533     57,715     175,837     169,765  
                 
(Recovery of) provision for loan losses   (7,366 )   2,404     (3,819 )   5,648  
                 
Net interest income after (recovery of) provision for loan losses   65,899     55,311     179,656     164,117  
                 
Other income   20,535     20,191     56,660     58,255  
                 
Other expense   46,756     47,429     141,961     137,816  
                 
Income before income taxes   39,678     28,073     94,355     84,556  
                 
Income taxes   12,229     8,033     28,222     24,433  
                 
Net income   $ 27,449     $ 20,040     $ 66,133     $ 60,123  
                 
Per Common Share:                
Net income  - basic   $ 1.79     $ 1.30     $ 4.31     $ 3.91  
Net income  - diluted   $ 1.78     $ 1.30     $ 4.29     $ 3.90  
                 
Weighted average shares - basic   15,330,791     15,361,087     15,330,802     15,370,380  
Weighted average shares - diluted   15,399,707     15,401,808     15,401,825     15,411,511  
                 
Cash Dividends Declared   $ 0.94     $ 0.94     $ 2.82     $ 2.82  
                 


 
PARK NATIONAL CORPORATION
Consolidated Balance Sheets
     
(in thousands, except share data) September 30, 2016
  December 31, 2015  
     
Assets    
     
Cash and due from banks $ 117,457   $ 119,412  
Money market instruments 122,541   30,047  
Investment securities 1,478,255   1,643,879  
Loans 5,187,004   5,068,085  
Allowance for loan losses (53,562 ) (56,494 )
Loans, net 5,133,442   5,011,591  
Bank premises and equipment, net 58,361   59,493  
Goodwill 72,334   72,334  
Other real estate owned 14,941   18,651  
Other assets 366,761   355,947  
Total assets $ 7,364,092   $ 7,311,354  
     
Liabilities and Shareholders' Equity    
     
Deposits:    
Noninterest bearing $ 1,429,024   $ 1,404,032  
Interest bearing 4,090,635   3,943,610  
Total deposits 5,519,659   5,347,642  
Borrowings 1,005,937   1,177,347  
Other liabilities 87,433   73,010  
Total liabilities $ 6,613,029   $ 6,597,999  
     
     
Shareholders' Equity:    
Preferred shares (200,000 shares authorized; no shares outstanding at September 30, 2016 and December 31, 2015)
$   $  
Common shares (No par value; 20,000,000 shares authorized in 2016 and 2015; 16,150,820 shares issued at September 30, 2016 and 16,150,854 shares issued at December 31, 2015) 305,152   303,966  
Accumulated other comprehensive loss, net of taxes (1,793 ) (15,643 )
Retained earnings 530,177   507,505  
Treasury shares (820,039 shares at both September 30, 2016 and December 31, 2015) (82,473 ) (82,473 )
Total shareholders' equity $ 751,063   $ 713,355  
     
Total liabilities and shareholders' equity $ 7,364,092   $ 7,311,354  
             


       
PARK NATIONAL CORPORATION
Consolidated Average Balance Sheets
           
  Three Months Ended   Nine Months Ended
  September 30,   September 30,
(in thousands) 2016 2015   2016 2015
           
Assets          
           
Cash and due from banks $ 116,069   $ 113,708     $ 115,588   $ 117,617  
Money market instruments 247,475   362,420     220,461   355,240  
Investment securities 1,507,484   1,528,404     1,535,235   1,500,275  
Loans 5,139,781   4,942,024     5,091,148   4,872,191  
Allowance for loan losses (59,470 ) (57,798 )   (57,835 ) (56,383 )
Loans, net 5,080,311   4,884,226     5,033,313   4,815,808  
Bank premises and equipment, net 58,890   59,386     59,252   57,985  
Goodwill 72,334   72,334     72,334   72,334  
Other real estate owned 17,374   20,970     17,700   22,310  
Other assets 368,502   363,730     365,459   352,508  
Total assets $ 7,468,439   $ 7,405,178     $ 7,419,342   $ 7,294,077  
           
           
Liabilities and Shareholders' Equity          
           
Deposits:          
Noninterest bearing $ 1,401,201   $ 1,302,987     $ 1,386,518   $ 1,290,383  
Interest bearing 4,238,301   4,274,375     4,195,328   4,169,895  
Total deposits 5,639,502   5,577,362     5,581,846   5,460,278  
Borrowings 1,001,761   1,037,158     1,024,175   1,049,041  
Other liabilities 82,556   80,530     79,384   76,673  
Total liabilities $ 6,723,819   $ 6,695,050     $ 6,685,405   $ 6,585,992  
           
Shareholders' Equity:          
Preferred shares $   $     $   $  
Common shares 304,885   303,631     304,449   303,392  
Accumulated other comprehensive loss, net of taxes (350 ) (12,136 )   (4,584 ) (9,154 )
Retained earnings 522,558   498,670     516,545   493,117  
Treasury shares (82,473 ) (80,037 )   (82,473 ) (79,270 )
Total shareholders' equity $ 744,620   $ 710,128     $ 733,937   $ 708,085  
           
Total liabilities and shareholders' equity $ 7,468,439   $ 7,405,178     $ 7,419,342   $ 7,294,077  
                           


PARK NATIONAL CORPORATION
Consolidated Statements of Income - Linked Quarters
           
  2016 2016 2016 2015 2015
(in thousands, except per share data) 3rd QTR 2nd QTR 1st QTR 4th QTR 3rd QTR
           
Interest income:          
Interest and fees on loans $ 59,893   $ 58,401   $ 60,052   $ 58,424   $ 57,680  
Interest on:          
Obligations of U.S. Government, its agencies and other securities 7,339   7,770   8,609   8,360   9,163  
Obligations of states and political subdivisions 689   591   373   170   12  
Other interest income 321   249   274   211   232  
Total interest income 68,242   67,011   69,308   67,165   67,087  
           
Interest expense:          
Interest on deposits:          
Demand and savings deposits 1,094   933   824   573   614  
Time deposits 2,352   2,389   2,387   2,453   2,508  
Interest on borrowings 6,263   6,204   6,278   6,272   6,250  
Total interest expense 9,709   9,526   9,489   9,298   9,372  
           
Net interest income 58,533   57,485   59,819   57,867   57,715  
           
(Recovery of) provision for loan losses (7,366 ) 2,637   910   (658 ) 2,404  
           
Net interest income after (recovery of) provision for loan losses 65,899   54,848   58,909   58,525   55,311  
           
Other income 20,535   18,736   17,389   19,296   20,191  
           
Other expense 46,756   45,306   49,899   48,798   47,429  
           
Income before income taxes 39,678   28,278   26,399   29,023   28,073  
           
Income taxes 12,229   8,280   7,713   8,134   8,033  
           
Net income $ 27,449   $ 19,998   $ 18,686   $ 20,889   $ 20,040  
           
Per Common Share:          
Net income - basic $ 1.79   $ 1.30   $ 1.22   $ 1.36   $ 1.30  
Net income - diluted $ 1.78   $ 1.30   $ 1.21   $ 1.36   $ 1.30  
                               


PARK NATIONAL CORPORATION
Detail of other income and other expense - Linked Quarters
           
  2016 2016 2016 2015 2015
(in thousands) 3rd QTR 2nd QTR 1st QTR 4th QTR 3rd QTR
           
Other income:          
Income from fiduciary activities $ 5,315   $ 5,438   $ 5,113   $ 5,140   $ 4,933  
Service charges on deposits 3,800   3,575   3,423   3,777   3,909  
Other service income 3,640   3,351   2,574   2,861   3,251  
Checkcard fee income 3,780   3,868   3,532   3,902   3,643  
Bank owned life insurance income 1,038   1,049   1,197   1,245   1,574  
ATM fees 581   570   583   588   648  
OREO valuation adjustments (233 ) (221 ) (118 ) (319 ) (718 )
Gain on the sale of OREO, net 783   162   134   175   243  
Gain on sale of investments       88    
Miscellaneous 1,831   944   951   1,839   2,708  
Total other income $ 20,535   $ 18,736   $ 17,389   $ 19,296   $ 20,191  
           
Other expense:          
Salaries $ 22,084   $ 21,256   $ 21,554   $ 22,520   $ 21,692  
Employee benefits 5,073   4,894   4,773   4,161   6,721  
Occupancy expense 2,506   2,639   2,548   2,257   2,469  
Furniture and equipment expense 3,437   3,416   3,443   3,069   3,044  
Data processing fees 1,450   1,373   1,217   1,190   1,383  
Professional fees and services 6,356   5,401   6,667   7,751   5,424  
Marketing 1,062   1,073   1,111   975   1,058  
Insurance 1,423   1,438   1,411   1,407   1,399  
Communication 1,154   1,353   1,221   1,321   1,245  
State tax expense 895   798   926   857   779  
Miscellaneous 1,316   1,665   5,028   3,290   2,215  
Total other expense $ 46,756   $ 45,306   $ 49,899   $ 48,798   $ 47,429  
                               


PARK NATIONAL CORPORATION
Asset Quality Information
                   
        Year ended December 31,
(in thousands, except ratios) September 30,
2016
June 30,
2016
March 31,
2016
2015 2014   2013 2012  
                   
Allowance for loan losses:                  
Allowance for loan losses, beginning of period $ 58,699   $ 56,948   $ 56,494   $ 54,352   $ 59,468     $ 55,537   $ 68,444    
Charge-offs 4,140   4,419   3,401   14,290   24,780   (B) 19,153   61,268   (A)
Recoveries 6,369   3,533   2,945   11,442   26,997     19,669   12,942    
Net (recoveries) charge-offs (2,229 ) 886   456   2,848   (2,217 )   (516 ) 48,326    
(Recovery of) provision for loan losses (7,366 ) 2,637   910   4,990   (7,333 )   3,415   35,419    
Allowance for loan losses, end of period $ 53,562   $ 58,699   $ 56,948   $ 56,494   $ 54,352     $ 59,468   $ 55,537    
(A) Year ended December 31, 2012 included the full charge-off of the Vision Bank ALLL of $12.1 million to bring the retained Vision Bank loan portfolio to fair value prior to the merger of Vision Bank (as constituted following the transaction with Centennial Bank and Home BancShares, Inc.) with and into SEPH, the non-bank subsidiary of Park, on February 16, 2012..
(B) 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 $ 53,562   $ 58,699   $ 56,948   $ 56,494   $ 54,352     $ 59,468   $ 55,537    
Specific reserves 4,232   6,287   4,930   4,191   3,660     10,451   8,276    
General reserves $ 49,330   $ 52,412   $ 52,018   $ 52,303   $ 50,692     $ 49,017   $ 47,261    
                   
Total loans $ 5,187,004   $ 5,127,644   $ 5,062,185   $ 5,068,085   $ 4,829,682     $ 4,620,505   $ 4,450,322    
Impaired commercial loans 77,986   90,828   78,117   80,599   73,676     112,304   137,238    
Total loans less impaired commercial loans $ 5,109,018   $ 5,036,816   $ 4,984,068   $ 4,987,486   $ 4,756,006     $ 4,508,201   $ 4,313,084    
                   
                   
Asset Quality Ratios:                  
Annualized net (recoveries) charge-offs as a % of average loans (0.17 ) % 0.07 % 0.04 % 0.06 % (0.05 ) %   (0.01 ) % 1.10 %  
Allowance for loan losses as a % of period end loans 1.03 % 1.14 % 1.12 % 1.11 % 1.13 %   1.29 % 1.25 %  
General reserves as a % of total loans less impaired commercial loans 0.97 % 1.04 % 1.04 % 1.05 % 1.07 %   1.09 % 1.10 %  
                                               
Nonperforming Assets - Park National Corporation:                                              
Nonaccrual loans $ 97,832   $ 111,429   $ 102,625   $ 95,887   $ 100,393     $ 135,216   $ 155,536    
Accruing troubled debt restructuring 17,350   17,722   14,999   24,979   16,254     18,747   29,800    
Loans past due 90 days or more 1,682   2,305   1,336   1,921   2,641     1,677   2,970    
Total nonperforming loans $ 116,864   $ 131,456   $ 118,960   $ 122,787   $ 119,288     $ 155,640   $ 188,306    
Other real estate owned - Park National Bank 7,004   7,038   6,846   7,456   10,687     11,412   14,715    
Other real estate owned - SEPH 7,937   10,528   10,899   11,195   11,918     23,224   21,003    
Total nonperforming assets $ 131,805   $ 149,022   $ 136,705   $ 141,438   $ 141,893     $ 190,276   $ 224,024    
Percentage of nonaccrual loans to period end loans 1.89 % 2.17 % 2.03 % 1.89 % 2.08 %   2.93 % 3.49 %  
Percentage of nonperforming loans to period end loans 2.25 % 2.56 % 2.35 % 2.42 % 2.47 %   3.37 % 4.23 %  
Percentage of nonperforming assets to period end loans 2.54 % 2.91 % 2.70 % 2.79 % 2.94 %   4.12 % 5.03 %  
Percentage of nonperforming assets to period end total assets 1.79 % 2.01 % 1.84 % 1.93 % 2.03 %   2.87 % 3.37 %  
                   
                   
PARK NATIONAL CORPORATION
Asset Quality Information (continued)
                   
        Year ended December 31,
(in thousands, except ratios) September 30,
2016
June 30,
2016
March 31,
2016
2015 2014   2013 2012  
                   
Nonperforming Assets - Park National Bank and Guardian:                
Nonaccrual loans $ 84,045   $ 97,642   $ 88,351   $ 81,468   $ 77,477     $ 99,108   $ 100,244    
Accruing troubled debt restructuring 17,350   17,722   14,999   24,979   16,157     18,747   29,800    
Loans past due 90 days or more 1,682   2,305   1,336   1,921   2,641     1,677   2,970    
Total nonperforming loans $ 103,077   $ 117,669   $ 104,686   $ 108,368   $ 96,275     $ 119,532   $ 133,014    
Other real estate owned - Park National Bank 7,004   7,038   6,846   7,456   10,687     11,412   14,715    
Total nonperforming assets $ 110,081   $ 124,707   $ 111,532   $ 115,824   $ 106,962     $ 130,944   $ 147,729    
Percentage of nonaccrual loans to period end loans 1.62 % 1.91 % 1.75 % 1.61 % 1.61 %   2.16 % 2.28 %  
Percentage of nonperforming loans to period end loans 1.99 % 2.30 % 2.07 % 2.14 % 2.00 %   2.61 % 3.03 %  
Percentage of nonperforming assets to period end loans 2.13 % 2.44 % 2.21 % 2.29 % 2.23 %   2.86 % 3.36 %  
Percentage of nonperforming assets to period end total assets 1.51 % 1.69 % 1.52 % 1.60 % 1.55 %   2.01 % 2.27 %  
                                               
Nonperforming Assets - SEPH/Vision Bank (retained portfolio):                                              
Nonaccrual loans $ 13,787   $ 13,787   $ 14,274   $ 14,419   $ 22,916     $ 36,108   $ 55,292    
Accruing troubled debt restructuring         97          
Loans past due 90 days or more                  
Total nonperforming loans $ 13,787   $ 13,787   $ 14,274   $ 14,419   $ 23,013     $ 36,108   $ 55,292    
Other real estate owned - SEPH 7,937   10,528   10,899   11,195   11,918     23,224   21,003    
Total nonperforming assets $ 21,724   $ 24,315   $ 25,173   $ 25,614   $ 34,931     $ 59,332   $ 76,295    
                   
New nonaccrual loan information - Park National Corporation                
Nonaccrual loans, beginning of period $ 111,429   $ 102,625   $ 95,887   $ 100,393   $ 135,216     $ 155,536   $ 195,106    
New nonaccrual loans 12,363   26,858   21,339   80,791   70,059     67,398   83,204    
Resolved nonaccrual loans 25,960   18,054   14,601   85,165   86,384     87,718   122,774    
Sale of nonaccrual loans held for sale       132   18,498          
Nonaccrual loans, end of period $ 97,832   $ 111,429   $ 102,625   $ 95,887   $ 100,393     $ 135,216   $ 155,536    
                   
New nonaccrual loan information - Ohio-based operations                
Nonaccrual loans, beginning of period $ 97,642   $ 88,351   $ 81,468   $ 77,477   $ 99,108     $ 100,244   $ 96,113    
New nonaccrual loans - Ohio-based operations 12,363   26,735   21,339   80,791   69,389     66,197   68,960    
Resolved nonaccrual loans 25,960   17,444   14,456   76,800   78,288     67,333   64,829    
Sale of nonaccrual loans held for sale         12,732          
Nonaccrual loans, end of period $ 84,045   $ 97,642   $ 88,351   $ 81,468   $ 77,477     $ 99,108   $ 100,244    
                   
New nonaccrual loan information - SEPH/Vision Bank
Nonaccrual loans, beginning of period $ 13,787   $ 14,274   $ 14,419   $ 22,916   $ 36,108     $ 55,292   $ 98,993    
New nonaccrual loans - SEPH/Vision Bank   123       670     1,201   14,243    
Resolved nonaccrual loans   610   145   8,365   8,096     20,385   57,944    
Sale of nonaccrual loans held for sale       132   5,766          
Nonaccrual loans, end of period $ 13,787   $ 13,787   $ 14,274   $ 14,419   $ 22,916     $ 36,108   $ 55,292    
                   
Impaired Commercial Loan Portfolio Information (period end):                
Unpaid principal balance $ 100,187   $ 115,186   $ 106,539   $ 109,304   $ 106,156     $ 175,576   $ 242,345    
Prior charge-offs 22,201   24,358   28,422   28,705   32,480     63,272   105,107    
Remaining principal balance 77,986   90,828   78,117   80,599   73,676     112,304   137,238    
Specific reserves 4,232   6,287   4,930   4,191   3,660     10,451   8,276    
Book value, after specific reserve $ 73,754   $ 84,541   $ 73,187   $ 76,408   $ 70,016     $ 101,853   $ 128,962    
                   
         

 

Media contact: 
Bethany Lewis, 
740.349.0421, 
blewis@parknationalbank.com

Investor contact: 
Brady Burt, 
740.322.6844, 
bburt@parknationalbank.com

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