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Park National Corporation Reports Second Quarter 2015 Financial Results and Declares Quarterly Dividend

NEWARK, Ohio, July 27, 2015 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE MKT:PRK) today announced financial results for the second quarter and first half of 2015, which included loan growth in all loan categories. The board of directors also declared a quarterly cash dividend of $0.94 per common share, payable on September 10, 2015 to common shareholders of record as of August 21, 2015.

Park’s net income for the three months ended June 30, 2015 (second quarter) was $21.0 million, compared to $21.8 million for the same period in 2014, a decrease of $0.8 million or 3.5 percent. Net income per diluted common share for the second quarter of 2015 was $1.37, compared to $1.42 in the same period of 2014. Net income for the six months ended June 30, 2015 (first half) was $40.1 million, compared to $41.4 million for the same period in 2014, a decrease of $1.3 million or 3.2 percent. Net income per diluted common share for the first half of 2015 was $2.60, compared to $2.69 in the same period of 2014.

Park’s community-banking subsidiary, The Park National Bank, reported net income of $40.5 million for the six-months ended June 30, 2015, compared to net income of $41.7 million for the same period of 2014. The Park National Bank had total assets of $7.2 billion at June 30, 2015 and $6.7 billion at June 30, 2014. This performance generated an annualized return on average assets of 1.14 percent and 1.26 percent for the bank for first half periods of 2015 and 2014, respectively.

The Park National Bank loan portfolio expanded during the second quarter of 2015. Loans outstanding at June 30, 2015 were $4.86 billion, compared to $4.79 billion at March 31, 2015, an increase of $73 million or an annualized 6.15 percent. The bank reported growth in the second quarter across all loan categories: mortgage loan growth of $13 million (4.4 percent annualized), commercial loan growth of $23 million (3.8 percent annualized) and consumer loan growth of $37 million (16.4 percent annualized).

“We remain energized by business owners and individuals who value excellent service, which is what they receive from their Park affiliate bankers. Our local lenders stand ready to help anyone who wants practical and creative banking solutions,” said Park Chief Executive Officer David L. Trautman.

About Park National Corporation

Headquartered in Newark, Ohio, Park National Corporation had $7.3 billion in total assets (as of June 30, 2015). 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 current 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 demand for loan, deposit and other financial services, delinquencies, defaults and counterparty 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 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 changes in laws and regulations concerning taxes, pensions, bankruptcy, consumer protection, accounting, banking, securities and other aspects of the financial services industry, specifically the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), as well as future regulations which will be adopted 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 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; unfavorable resolution of legal proceedings or other claims and 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; 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, 2014. 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 June 30, 2015, March 31, 2015, and June 30, 2014
2015 2015 2014 Percent change vs.
(in thousands, except share and per share data)2nd QTR1st QTR2nd QTR1Q '152Q '14
INCOME STATEMENT:
Net interest income$ 56,515 $ 55,535 $ 56,561 1.8% (0.1)%
Provision for (recovery of) loan losses 1,612 1,632 (1,260)N.M.N.M.
Other income 19,191 18,873 19,671 1.7% (2.4)%
Other expense 44,667 45,720 46,241 (2.3)% (3.4)%
Income before income taxes$ 29,427 $ 27,056 $ 31,251 8.8% (5.8)%
Income taxes 8,388 8,012 9,441 4.7% (11.2)%
Net income$ 21,039 $ 19,044 $ 21,810 10.5% (3.5)%
MARKET DATA:
Earnings per common share - basic (b)$ 1.37 $ 1.24 $ 1.42 10.5% (3.5)%
Earnings per common share - diluted (b) 1.37 1.23 1.42 11.4% (3.5)%
Cash dividends per common share 0.94 0.94 0.94 —%—%
Book value per common share at period end 45.93 46.02 44.50 (0.2)% 3.2%
Stock price per common share at period end 87.37 85.56 77.20 2.1% 13.2%
Market capitalization at period end 1,342,954 1,315,133 1,188,295 2.1% 13.0%
Weighted average common shares - basic (a) 15,370,882 15,379,170 15,392,435 (0.1)% (0.1)%
Weighted average common shares - diluted (a) 15,407,881 15,421,928 15,412,167 (0.1)%—%
Common shares outstanding at period end 15,370,877 15,370,887 15,392,425 —% (0.1)%
PERFORMANCE RATIOS: (annualized)
Return on average assets (a)(b) 1.16% 1.07% 1.29% 8.4% (10.1)%
Return on average equity (a)(b) 11.90% 10.95% 12.96% 8.7% (8.2)%
Yield on loans 4.68% 4.68% 4.91%—% (4.7)%
Yield on investments 2.49% 2.57% 2.60% (3.1)% (4.2)%
Yield on money markets 0.25% 0.25% 0.25%—%—%
Yield on earning assets 3.96% 3.98% 4.28% (0.5)% (7.5)%
Cost of interest bearing deposits 0.30% 0.31% 0.27% (3.2)% 11.1%
Cost of borrowings 2.46% 2.34% 2.60% 5.1% (5.4)%
Cost of paying liabilities 0.72% 0.74% 0.81% (2.7)% (11.1)%
Net interest margin (g) 3.40% 3.40% 3.65%—% (6.8)%
Efficiency ratio (g) 58.87% 61.31% 60.48% (4.0)% (2.7)%
OTHER RATIOS (NON - GAAP):
Annualized return on average tangible assets (a)(b)(e) 1.17% 1.08% 1.31% 8.3% (10.7)%
Annualized return on average tangible equity (a)(b)(c) 13.25% 12.21% 14.51% 8.5% (8.7)%
Tangible book value per share (d)$ 41.22 $ 41.32 $ 39.80 (0.2)% 3.6%
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 June 30, 2015, March 31, 2015, and June 30, 2014
Percent change vs.
BALANCE SHEET:June 30, 2015March 31, 2015June 30, 20141Q '152Q '14
Investment securities$ 1,550,103 $ 1,457,171 $ 1,417,910 6.4% 9.3%
Loans 4,900,974 4,830,830 4,735,487 1.5% 3.5%
Allowance for loan losses 57,427 55,408 57,911 3.6% (0.8)%
Goodwill and other intangibles 72,334 72,334 72,334 —%—%
Other real estate owned 21,876 26,337 23,909 (16.9)% (8.5)%
Total assets 7,309,569 7,303,999 6,787,190 0.1% 7.7%
Total deposits 5,512,366 5,515,847 4,927,211 (0.1)% 11.9%
Borrowings 1,018,680 1,018,516 1,118,404 —% (8.9)%
Shareholders' equity 705,963 707,431 684,988 (0.2)% 3.1%
Tangible equity (d) 633,629 635,097 612,654 (0.2)% 3.4%
Nonperforming loans 113,795 114,304 142,902 (0.4)% (20.4)%
Nonperforming assets 135,671 140,641 166,811 (3.5)% (18.7)%
ASSET QUALITY RATIOS:
Loans as a % of period end assets 67.05% 66.14% 69.77% 1.4% (3.9)%
Nonperforming loans as a % of period end loans 2.32% 2.37% 3.02% (2.1)% (23.2)%
Nonperforming assets as a % of period end loans + OREO 2.76% 2.90% 3.50% (4.8)% (21.1)%
Allowance for loan losses as a % of period end loans 1.17% 1.15% 1.22% 1.7% (4.1)%
Net loan (recoveries) charge-offs$ (407 )$ 576 $ 1,086 N.M.N.M.
Annualized net loan (recoveries) charge-offs as a % of average loans (a) (0.03)% 0.05% 0.09% N.M.N.M.
CAPITAL & LIQUIDITY:
Total equity / Period end assets 9.66% 9.69% 10.09% (0.3)% (4.3)%
Tangible equity (d) / Tangible assets (f) 8.76% 8.78% 9.12% (0.2)% (3.9)%
Average equity / Average assets (a) 9.76% 9.78% 9.97% (0.2)% (2.1)%
Average equity / Average loans (a) 14.60% 14.64% 14.43% (0.3)% 1.2%
Average loans / Average deposits (a) 88.80% 90.34% 95.12% (1.7)% (6.6)%
N.M. - Not meaningful
Note: Explanations (a) - (g) are included at the end of the financial highlights.

PARK NATIONAL CORPORATION
Financial Highlights
Six months ended June 30, 2015 and 2014
(in thousands, except share and per share data) 2015 2014 Percent change vs. 2014
INCOME STATEMENT:
Net interest income$ 112,050 $ 111,041 0.9%
Provision for (recovery of) loan losses 3,244 (3,485)N.M.
Other income 38,064 36,319 4.8%
Total other expense 90,387 92,020 (1.8)%
Income before income taxes$ 56,483 $ 58,825 (4.0)%
Income taxes 16,400 17,438 (6.0)%
Net income$ 40,083 $ 41,387 (3.2)%
MARKET DATA:
Earnings per common share - basic (b) 2.61 2.69 (3.0)%
Earnings per common share - diluted (b) 2.60 2.69 (3.3)%
Cash dividends per common share 1.88 1.88 —%
Weighted average common shares - basic (a) 15,375,026 15,396,770 (0.1)%
Weighted average common shares - diluted (a) 15,411,920 15,413,568 —%
PERFORMANCE RATIOS: (Annualized)
Return on average assets (a)(b) 1.12% 1.23% (8.9)%
Return on average common equity (a)(b) 11.43% 12.50% (8.6)%
Yield on loans 4.68% 4.87% (3.9)%
Yield on investments 2.53% 2.63% (3.8)%
Yield on earning assets 3.97% 4.24% (6.4)%
Cost of interest bearing deposits 0.30% 0.28% 7.1%
Cost of borrowings 2.40% 2.61% (8.0)%
Cost of paying liabilities 0.73% 0.81% (9.9)%
Net interest margin (g) 3.40% 3.60% (5.6)%
Efficiency ratio (g) 60.08% 62.26% (3.5)%
ASSET QUALITY RATIOS:
Net loan charge-offs (recoveries)$ 169 $ (1,928 )N.M.
Annualized net loan charge-offs (recoveries) as a % of average loans (a) 0.01% (0.08)%N.M.
CAPITAL & LIQUIDITY:
Average stockholders' equity / Average assets (a) 9.77% 9.86% (0.9)%
Average stockholders' equity / Average loans (a) 14.62% 14.38% 1.7%
Average loans / Average deposits (a) 89.56% 94.34% (5.1)%
OTHER RATIOS (NON-GAAP):
Annualized return on average tangible assets (a)(b)(e) 1.13% 1.25% (9.6)%
Annualized return on average tangible common equity (a)(b)(c) 12.73% 14.02% (9.2)%

PARK NATIONAL CORPORATION
Financial Highlights (continued)
(a) Averages are for the quarters and six months ended June 30, 2015, March 31, 2015 and June 30, 2014.
(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 ENDEDSIX MONTHS ENDED
June 30, 2015March 31, 2015June 30, 2014June 30, 2015June 30, 2014
AVERAGE SHAREHOLDERS' EQUITY$ 709,031 $ 705,041 $ 675,243 $ 707,047 $ 667,564
Less: Average goodwill and other intangibles 72,334 72,334 72,334 72,334 72,334
AVERAGE TANGIBLE EQUITY$ 636,697 $ 632,707 $ 602,909 $ 634,713 $ 595,230
(d) Tangible book value divided by common shares outstanding at period end. Tangible equity equals ending shareholders' equity less goodwill and other intangibles, in each case at the end of the period.
RECONCILIATION OF SHAREHOLDERS' EQUITY TO TANGIBLE EQUITY:
June 30, 2015March 31, 2015June 30, 2014
SHAREHOLDERS' EQUITY$ 705,963 $ 707,431 $ 684,988
Less: Goodwill and other intangibles 72,334 72,334 72,334
TANGIBLE EQUITY$ 633,629 $ 635,097 $ 612,654
(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 ENDEDSIX MONTHS ENDED
June 30, 2015March 31, 2015June 30, 2014June 30, 2015June 30, 2014
AVERAGE ASSETS$ 7,265,755 $ 7,209,143 $ 6,772,407 $ 7,237,605 $ 6,768,636
Less: Average goodwill and other intangibles 72,334 72,334 72,334 72,334 72,334
AVERAGE TANGIBLE ASSETS$ 7,193,421 $ 7,136,809 $ 6,700,073 $ 7,165,271 $ 6,696,302
(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:
June 30, 2015March 31, 2015June 30, 2014
TOTAL ASSETS$ 7,309,569 $ 7,303,999 $ 6,787,190
Less: Goodwill and other intangibles 72,334 72,334 72,334
TANGIBLE ASSETS$ 7,237,235 $ 7,231,665 $ 6,714,856
(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 ENDEDSIX MONTHS ENDED
June 30, 2015March 31, 2015June 30, 2014June 30, 2015June 30, 2014
Interest income$ 65,804 $ 65,018 $ 66,363 $ 130,822 $ 130,705
Fully taxable equivalent adjustment 170 161 221 331 444
Fully taxable equivalent interest income$ 65,974 $ 65,179 $ 66,584 $ 131,153 $ 131,149
Interest expense 9,289 9,483 9,802 18,772 19,664
Fully taxable equivalent net interest income$ 56,685 $ 55,696 $ 56,782 $ 112,381 $ 111,485

PARK NATIONAL CORPORATION
Consolidated Statements of Income
Three Months EndedSix Months Ended
June 30,June 30,
(in thousands, except share and per share data) 2015 2014 2015 2014
Interest income:
Interest and fees on loans$ 56,463 $ 57,004 $ 111,875 $ 111,757
Interest on:
Obligations of U.S. Government, its agencies
and other securities 9,113 9,271 18,502 18,747
Other interest income 228 88 445 201
Total interest income 65,804 66,363 130,822 130,705
Interest expense:
Interest on deposits:
Demand and savings deposits 556 399 1,042 792
Time deposits 2,542 2,133 5,164 4,411
Interest on borrowings 6,191 7,270 12,566 14,461
Total interest expense 9,289 9,802 18,772 19,664
Net interest income 56,515 56,561 112,050 111,041
Provision for (recovery of) loan losses 1,612 (1,260) 3,244 (3,485)
Net interest income after provision for (recovery of) loan losses 54,903 57,821 108,806 114,526
Other income 19,191 19,671 38,064 36,319
Other expense 44,667 46,241 90,387 92,020
Income before income taxes 29,427 31,251 56,483 58,825
Income taxes 8,388 9,441 16,400 17,438
Net income$ 21,039 $ 21,810 $ 40,083 $ 41,387
Per Common Share:
Net income - basic$ 1.37 $ 1.42 $ 2.61 $ 2.69
Net income - diluted$ 1.37 $ 1.42 $ 2.60 $ 2.69
Weighted average shares - basic 15,370,882 15,392,435 15,375,026 15,396,770
Weighted average shares - diluted 15,407,881 15,412,167 15,411,920 15,413,568
Cash Dividends Declared$ 0.94 $ 0.94 $ 1.88 $ 1.88

PARK NATIONAL CORPORATION
Consolidated Balance Sheets
(in thousands, except share data)June 30, 2015December 31, 2014
Assets
Cash and due from banks$ 127,501 $ 133,511
Money market instruments 276,785 104,188
Investment securities 1,550,103 1,500,788
Loans 4,900,974 4,829,682
Allowance for loan losses (57,427) (54,352)
Loans, net 4,843,547 4,775,330
Bank premises and equipment, net 58,725 55,479
Goodwill 72,334 72,334
Other real estate owned 21,876 22,605
Other assets 358,698 336,964
Total assets$ 7,309,569 $ 7,001,199
Liabilities and Shareholders' Equity
Deposits:
Noninterest bearing$ 1,299,264 $ 1,269,296
Interest bearing 4,213,102 3,858,704
Total deposits 5,512,366 5,128,000
Borrowings 1,018,680 1,108,582
Other liabilities 72,560 68,076
Total liabilities$ 6,603,606 $ 6,304,658
Shareholders' Equity:
Preferred shares (200,000 shares authorized; no shares outstanding at June 30, 2015 and December 31, 2014)$—$—
Common shares (No par value; 20,000,000 shares authorized in 2015 and 2014; 16,150,866 shares issued at June 30, 2015 and 16,150,888 shares issued at December 31, 2014) 303,573 303,104
Accumulated other comprehensive loss, net of taxes (13,980) (13,608)
Retained earnings 495,592 484,484
Treasury shares (779,989 shares at June 30, 2015 and 758,489 shares at December 31, 2014) (79,222) (77,439)
Total shareholders' equity$ 705,963 $ 696,541
Total liabilities and shareholders' equity$ 7,309,569 $ 7,001,199

PARK NATIONAL CORPORATION
Consolidated Average Balance Sheets
Three Months EndedSix Months Ended
June 30,June 30,
(in thousands) 2015 2014 2015 2014
Assets
Cash and due from banks$ 116,542 $ 106,844 $ 119,603 $ 110,169
Money market instruments 361,994 137,219 351,591 159,001
Investment securities 1,481,460 1,409,368 1,485,978 1,413,252
Loans 4,857,799 4,678,483 4,836,696 4,643,037
Allowance for loan losses (56,291) (58,234) (55,664) (59,487)
Loans, net 4,801,508 4,620,249 4,781,032 4,583,550
Bank premises and equipment, net 57,978 55,453 57,272 55,633
Goodwill and other intangibles 72,334 72,334 72,334 72,334
Other real estate owned 22,661 29,017 22,991 31,489
Other assets 351,278 341,923 346,804 343,208
Total assets$ 7,265,755 $ 6,772,407 $ 7,237,605 $ 6,768,636
Liabilities and Shareholders' Equity
Deposits:
Noninterest bearing$ 1,303,420 $ 1,172,952 $ 1,283,977 $ 1,174,520
Interest bearing 4,166,835 3,745,385 4,116,789 3,747,105
Total deposits 5,470,255 4,918,337 5,400,766 4,921,625
Borrowings 1,007,975 1,120,608 1,055,081 1,119,263
Other liabilities 78,494 58,219 74,711 60,184
Total liabilities$ 6,556,724 $ 6,097,164 $ 6,530,558 $ 6,101,072
Shareholders' Equity:
Preferred shares $ $ — $ $ —
Common shares 303,431 302,754 303,270 302,706
Accumulated other comprehensive loss, net of taxes (7,224) (17,968) (7,638) (22,457)
Retained earnings 492,046 468,070 490,295 464,608
Treasury shares (79,222) (77,613) (78,880) (77,293)
Total shareholders' equity$ 709,031 $ 675,243 $ 707,047 $ 667,564
Total liabilities and shareholders' equity$ 7,265,755 $ 6,772,407 $ 7,237,605 $ 6,768,636

PARK NATIONAL CORPORATION
Consolidated Statements of Income - Linked Quarters
2015 2015 2014 2014 2014
(in thousands, except per share data)2nd QTR1st QTR4th QTR3rd QTR2nd QTR
Interest income:
Interest and fees on loans$ 56,463 $ 55,412 $ 58,395 $ 57,492 $ 57,004
Interest on:
Obligations of U.S. Government, its agencies and other securities 9,113 9,389 9,223 9,011 9,271
Obligations of states and political subdivisions 1
Other interest income 228 217 198 119 87
Total interest income 65,804 65,018 67,816 66,622 66,363
Interest expense:
Interest on deposits:
Demand and savings deposits 556 486 445 440 399
Time deposits 2,542 2,622 2,776 2,136 2,133
Interest on borrowings 6,191 6,375 7,301 7,337 7,270
Total interest expense 9,289 9,483 10,522 9,913 9,802
Net interest income 56,515 55,535 57,294 56,709 56,561
Provision for (recovery of) loan losses 1,612 1,632 (8,349) 4,501 (1,260)
Net interest income after provision for (recovery of) loan losses 54,903 53,903 65,643 52,208 57,821
Other income 19,191 18,873 19,834 19,396 19,671
Other expense 44,667 45,720 50,518 44,972 46,241
Income before income taxes 29,427 27,056 34,959 26,632 31,251
Income taxes 8,388 8,012 10,658 8,363 9,441
Net income$ 21,039 $ 19,044 $ 24,301 $ 18,269 $ 21,810
Per Common Share:
Net income - basic$ 1.37 $ 1.24 $ 1.58 $ 1.19 $ 1.42
Net income - diluted$ 1.37 $ 1.23 $ 1.58 $ 1.19 $ 1.42

PARK NATIONAL CORPORATION
Detail of other income and other expense - Linked Quarters
2015 2015 2014 2014 2014
(in thousands)2nd QTR1st QTR4th QTR3rd QTR2nd QTR
Other income:
Income from fiduciary activities$ 5,210 $ 4,912 $ 5,050 $ 4,734 $ 4,825
Service charges on deposits 3,684 3,381 3,651 4,171 3,942
Other service income 3,025 2,301 3,564 2,450 2,527
Checkcard fee income 3,665 3,351 3,433 3,431 3,493
Bank owned life insurance income 1,086 1,878 1,153 1,420 1,026
OREO valuation adjustments (251) (304) (380) (935) (675)
Gain on the sale of OREO, net 513 673 45 2,149 2,603
Gain on commercial loans held for sale 756 1,867
(Loss) gain on sale of investments (1,175) 17
Miscellaneous 2,259 1,925 2,626 1,976 1,913
Total other income$ 19,191 $ 18,873 $ 19,834 $ 19,396 $ 19,671
Other expense:
Salaries and employee benefits$ 25,724 $ 26,667 $ 24,525 $ 26,243 $ 26,140
Occupancy expense 2,381 2,579 2,378 2,339 2,457
Furniture and equipment expense 2,831 2,862 2,709 2,870 2,994
Data processing fees 1,197 1,267 1,196 1,281 1,121
Professional fees and services 5,583 4,694 8,195 6,934 8,168
Marketing 937 1,013 1,160 1,087 1,006
Insurance 1,362 1,461 1,413 1,396 1,467
Communication 1,233 1,331 1,328 1,304 1,293
Miscellaneous 3,419 3,846 7,614 1,518 1,595
Total other expense$ 44,667 $ 45,720 $ 50,518 $ 44,972 $ 46,241

PARK NATIONAL CORPORATION
Asset Quality Information
Year ended December 31,
(in thousands, except ratios)June 30,
2015
March 31,
2015
2014 2013 2012 2011
Allowance for loan losses:
Allowance for loan losses, beginning of period$ 55,408 $ 54,352 $ 59,468 $ 55,537 $ 68,444 $ 143,575
Transfer of loans at fair value (219)
Transfer of allowance to held for sale (13,100)
Charge-offs 3,027 3,418 24,780 (B) 19,153 61,268 (A) 133,882
Recoveries 3,434 2,842 26,997 19,669 12,942 8,798
Net (recoveries) charge-offs (407) 576 (2,217) (516) 48,326 125,084
Provision for (recovery of) loan losses 1,612 1,632 (7,333) 3,415 35,419 63,272
Allowance for loan losses, end of period$ 57,427 $ 55,408 $ 54,352 $ 59,468 $ 55,537 $ 68,444
(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 $22.0 million of commercial loans to the held for sale portfolio.
General reserve trends:
Allowance for loan losses, end of period$ 57,427 $ 55,408 $ 54,352 $ 59,468 $ 55,537 $ 68,444
Specific reserves 6,597 5,064 3,660 10,451 8,276 15,935
General reserves$ 50,830 $ 50,344 $ 50,692 $ 49,017 $ 47,261 $ 52,509
Total loans$ 4,900,974 $ 4,830,830 $ 4,829,682 $ 4,620,505 $ 4,450,322 $ 4,317,099
Impaired commercial loans 70,553 70,461 73,676 112,304 137,238 187,074
Total loans less impaired commercial loans$ 4,830,421 $ 4,760,369 $ 4,756,006 $ 4,508,201 $ 4,313,084 $ 4,130,025
Asset Quality Ratios:
Net (recoveries) charge-offs as a % of average loans (0.03%) 0.05% (0.05)% (0.01)% 1.10% 2.65 %
Allowance for loan losses as a % of period end loans 1.17% 1.15% 1.13% 1.29% 1.25% 1.59 %
General reserves as a % of total loans less impaired commercial loans 1.05% 1.06 1.07% 1.09% 1.10% 1.27 %
Nonperforming Assets - Park National Corporation:
Nonaccrual loans$ 95,739 $ 95,873 $ 100,393 $ 135,216 $ 155,536 $ 195,106
Accruing troubled debt restructuring 16,520 16,802 16,254 18,747 29,800 28,607
Loans past due 90 days or more 1,536 1,629 2,641 1,677 2,970 3,489
Total nonperforming loans$ 113,795 $ 114,304 $ 119,288 $ 155,640 $ 188,306 $ 227,202
Other real estate owned - Park National Bank 8,774 10,223 10,687 11,412 14,715 13,240
Other real estate owned - SEPH 13,102 16,114 11,918 23,224 21,003 29,032
Other real estate owned - Vision Bank
Total nonperforming assets$ 135,671 $ 140,641 $ 141,893 $ 190,276 $ 224,024 $ 269,474
Percentage of nonaccrual loans to period end loans 1.95% 1.98% 2.08% 2.93% 3.49% 4.52 %
Percentage of nonperforming loans to period end loans 2.32% 2.37% 2.47% 3.37% 4.23% 5.26 %
Percentage of nonperforming assets to period end loans 2.77% 2.91% 2.94% 4.12% 5.03% 6.24 %
Percentage of nonperforming assets to period end assets 1.86% 1.92% 2.03% 2.87% 3.37% 3.86 %

PARK NATIONAL CORPORATION
Asset Quality Information (continued)
Year ended December 31,
(in thousands, except ratios)June 30, 2015March 31, 2015 2014 2013 2012 2011
Nonperforming Assets - Park National Bank and Guardian:
Nonaccrual loans$ 80,470 $ 77,387 $ 77,477 $ 99,108 $ 100,244 $ 96,113
Accruing troubled debt restructuring 16,423 16,706 16,157 18,747 29,800 26,342
Loans past due 90 days or more 1,536 1,629 2,641 1,677 2,970 3,367
Total nonperforming loans$ 98,429 $ 95,722 $ 96,275 $ 119,532 $ 133,014 $ 125,822
Other real estate owned - Park National Bank 8,774 10,223 10,687 11,412 14,715 13,240
Total nonperforming assets$ 107,203 $ 105,945 $ 106,962 $ 130,944 $ 147,729 $ 139,062
Percentage of nonaccrual loans to period end loans 1.65% 1.61% 1.61% 2.16% 2.28% 2.29%
Percentage of nonperforming loans to period end loans 2.02% 1.99% 2.00% 2.61% 3.03% 3.00%
Percentage of nonperforming assets to period end loans 2.19% 2.20% 2.23% 2.86% 3.36% 3.32%
Percentage of nonperforming assets to period end assets 1.48% 1.47% 1.55% 2.01% 2.27% 2.21%
Nonperforming Assets - SEPH/Vision Bank (retained portfolio as of June 30, 2015, March 31, 2015, and December 31, 2014, 2013, 2012, and 2011):
Nonaccrual loans$ 15,269 $ 18,486 $ 22,916 $ 36,108 $ 55,292 $ 98,993
Accruing troubled debt restructuring 97 96 97 2,265
Loans past due 90 days or more 122
Total nonperforming loans$ 15,366 $ 18,582 $ 23,013 $ 36,108 $ 55,292 $ 101,380
Other real estate owned - Vision Bank
Other real estate owned - SEPH 13,102 16,114 11,918 23,224 21,003 29,032
Total nonperforming assets$ 28,468 $ 34,696 $ 34,931 $ 59,332 $ 76,295 $ 130,412
Percentage of nonaccrual loans to period end loansN.M.N.M.N.M.N.M.N.M.N.M.
Percentage of nonperforming loans to period end loansN.M.N.M.N.M.N.M.N.M.N.M.
Percentage of nonperforming assets to period end loansN.M.N.M.N.M.N.M.N.M.N.M.
Percentage of nonperforming assets to period end assetsN.M.N.M.N.M.N.M.N.M.N.M.

PARK NATIONAL CORPORATION
Asset Quality Information (continued)
Year ended December 31,
(in thousands, except ratios)June 30,
2015
March 31,
2015
2014 2013 2012 2011
New nonaccrual loan information - Park National Corporation
Nonaccrual loans, beginning of period$ 95,873 $ 100,393 $ 135,216 $ 155,536 $ 195,106 $ 289,268
New nonaccrual loans 23,974 13,844 70,059 67,398 83,204 124,158
Resolved nonaccrual loans 24,108 18,232 86,384 87,718 122,774 218,320
Sale of nonaccrual loans held for sale 132 18,498
Nonaccrual loans, end of period$ 95,739 $ 95,873 $ 100,393 $ 135,216 $ 155,536 $ 195,106
New nonaccrual loan information - Ohio - based operations
Nonaccrual loans, beginning of period$ 77,387 $ 77,477 $ 99,108 $ 100,244 $ 96,113 $ 117,815
New nonaccrual loans - Ohio-based operations 23,974 13,844 69,389 66,197 68,960 78,316
Resolved nonaccrual loans 20,891 13,934 78,288 67,333 64,829 100,018
Sale of nonaccrual loans held for sale 12,732
Nonaccrual loans, end of period$ 80,470 $ 77,387 $ 77,477 $ 99,108 $ 100,244 $ 96,113
New nonaccrual loan information - SEPH/Vision Bank
Nonaccrual loans, beginning of period$ 18,486 $ 22,916 $ 36,108 $ 55,292 $ 98,993 $ 171,453
New nonaccrual loans - SEPH/Vision Bank 670 1,201 14,243 45,842
Resolved nonaccrual loans 3,217 4,298 8,096 20,385 57,944 118,302
Sale of nonaccrual loans held for sale 132 5,766
Nonaccrual loans, end of period$ 15,269 $ 18,486 $ 22,916 $ 36,108 $ 55,292 $ 98,993
Impaired Commercial Loan Portfolio Information (period end):
Unpaid principal balance$ 100,577 $ 96,235 $ 106,156 $ 175,576 $ 242,345 $ 290,908
Prior charge-offs 30,024 25,774 32,480 63,272 105,107 103,834
Remaining principal balance 70,553 70,461 73,676 112,304 137,238 187,074
Specific reserves 6,597 5,064 3,660 10,451 8,276 15,935
Book value, after specific reserve$ 63,956 $ 65,397 $ 70,016 $ 101,853 $ 128,962 $ 171,139

Media contact: Bethany Lewis, 740.349.0421, blewis@parknationalbank.com Investor contact: Brady Burt, 740.322.6844, bburt@parknationalbank.com

Source:Park National Corporation