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Park National Corporation reports financial results for first quarter 2019

/EIN News/ -- 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  

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