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Park National Corporation Reports Fourth Quarter and Full Year 2015 Financial Results and Declares Quarterly Dividend

NEWARK, Ohio, Jan. 25, 2016 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE MKT:PRK) today announced financial results for the fourth quarter and the year ended 2015. The board of directors also declared a quarterly cash dividend of $0.94 per common share, payable on March 10, 2016 to common shareholders of record as of February 19, 2016.

Park’s net income for the three months ended December 31, 2015 (fourth quarter) was $20.9 million, compared to $24.3 million for the same period in 2014, a decrease of $3.4 million or 14.0 percent. Net income per diluted common share for the fourth quarter of 2015 was $1.36, compared to $1.58 in the same period of 2014.

Net income for the twelve months ended December 31, 2015 (the year) was $81.0 million, compared to $84.0 million for the same period in 2014. Net income per diluted common share for the year ended 2015 was $5.26, compared to $5.45 in the same period of 2014.

Park’s community-banking subsidiary, The Park National Bank, reported net income of $84.3 million for the year ended December 31, 2015, compared to net income of $82.9 million for the same period of 2014. The bank’s fourth quarter net income was $23.1 million, an increase over the $22.0 million in net income during the same period in 2014.

“We are energized by our loan and assets under management growth in 2015. As financial markets become more fragmented and uncertain, we find more customers value predictable, excellent service from bankers they know and trust,” said Park Chief Executive Officer David L. Trautman.

The Park National Bank had total assets of $7.2 billion at December 31, 2015 and $6.9 billion at December 31, 2014. This performance generated an annualized return on average assets of 1.17 percent and 1.22 percent for the bank for the year ended 2015 and 2014, respectively.

The Park National Bank grew loans in all categories in 2015. Loans outstanding at December 31, 2015 were $5.03 billion, compared to $4.78 billion at December 31, 2014, an increase of $247 million or 5.2 percent. For 2015, the bank reported mortgage loan growth of $27 million (2.2 percent), commercial loan growth of $143 million (5.9 percent) and consumer loan growth of $77 million (6.9 percent).

The board also expressed appreciation for 19 years of service from Director Maureen Buchwald, owner of Glen Hill Orchards, LLC. Buchwald’s membership on the board expires on April 25, 2016 and she is not seeking another term because she is reducing her professional commitments to enjoy more time with family and friends. She will remain an advisory board member for First-Knox National Bank (a division of The Park National Bank), a role she has held for 28 years.

“Maureen’s service to our board has been significant and greatly appreciated. Since joining Park in 1997, she helped foster our growth and continued success, offering her valuable perspective as a successful business person and as a director of one of our largest affiliate banks. We are pleased she wishes to continue serving our First-Knox division. We wish Maureen the very best,” said Park Chairman C. Daniel DeLawder.

About Park National Corporation

Headquartered in Newark, Ohio, Park National Corporation had $7.3 billion in total assets (as of December 31, 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…

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

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Park cautions that any forward-looking statements contained in this release or made by management of Park are provided to assist in the understanding of anticipated future financial performance. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include, without limitation: Park's ability to execute our business plan successfully and within the expected timeframe; general economic and financial market conditions, specifically in the real estate markets and the credit markets, either nationally or in the states in which Park and our subsidiaries do business, may experience a slowing or reversal of the 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 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 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 and Asia; 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 December 31, 2015, September 30, 2015, and December 31, 2014
201520152014 Percent change vs.
(in thousands, except share and per share data)4th QTR3rd QTR4th QTR 3Q '154Q '14
INCOME STATEMENT:
Net interest income$57,867 $57,715 $57,294 0.3%1.0%
(Recovery of) provision for loan losses(658)2,404 (8,349) N.M. (92.1)%
Other income19,296 20,191 19,834 (4.4)%(2.7)%
Other expense48,798 47,429 50,518 2.9%(3.4)%
Income before income taxes$29,023 $28,073 $34,959 3.4%(17.0)%
Income taxes8,134 8,033 10,658 1.3%(23.7)%
Net income$20,889 $20,040 $24,301 4.2%(14.0)%
MARKET DATA:
Earnings per common share - basic (b)$1.36 $1.30 $1.58 4.6%(13.9)%
Earnings per common share - diluted (b)1.36 1.30 1.58 4.6%(13.9)%
Cash dividends per common share0.94 0.94 0.94 %%
Book value per common share at period end46.53 46.66 45.25 (0.3)%2.8%
Stock price per common share at period end90.48 90.22 88.48 0.3%2.3%
Market capitalization at period end1,387,132 1,384,035 1,361,919 0.2%1.9%
Weighted average common shares - basic (a)15,345,986 15,361,087 15,393,924 (0.1)%(0.3)%
Weighted average common shares - diluted (a)15,384,451 15,401,808 15,414,433 (0.1)%(0.2)%
Common shares outstanding at period end15,330,815 15,340,670 15,392,399 (0.1)%(0.4)%
PERFORMANCE RATIOS: (annualized)
Return on average assets (a)(b)1.13%1.07%1.35% 5.6%(16.3)%
Return on average equity (a)(b)11.56%11.20%13.83% 3.2%(16.4)%
Yield on loans4.63%4.65%4.83% (0.4) (4.1)%
Yield on investments2.38%2.39%2.53% (0.4)%(5.9)%
Yield on money markets0.27%0.25%0.25% 8.0%8.0%
Yield on earning assets3.96%3.91%4.11% 1.3%(3.6)%
Cost of interest bearing deposits0.29%0.29%0.32% %(9.4)%
Cost of borrowings2.34%2.39%2.51% (2.1)%(6.8)%
Cost of paying liabilities0.71%0.70%0.82% 1.4%(13.4)%
Net interest margin (g)3.41%3.37%3.47% 1.2%(1.7)%
Efficiency ratio (g)62.98%60.71%65.34% 3.7%(3.6)%
OTHER RATIOS (NON - GAAP):
Annualized return on average tangible assets (a)(b)(e)1.14%1.08%1.37% 5.6%(16.8)%
Annualized return on average tangible equity (a)(b)(c)12.86%12.47%15.43% 3.1%(16.7)%
Tangible book value per share (d)$41.81 $41.95 $40.55 (0.3)%3.1%
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 December 31, 2015, September 30, 2015, and December 31, 2014
Percent change vs.
BALANCE SHEET:December 31, 2015September 30, 2015December 31, 2014 3Q '154Q '14
Investment securities$1,643,879 $1,469,284 $1,500,788 11.9%9.5%
Loans5,068,085 4,999,912 4,829,682 1.4%4.9%
Allowance for loan losses56,494 58,483 54,352 (3.4)%3.9%
Goodwill72,334 72,334 72,334 %%
Other real estate owned (OREO)18,651 20,136 22,605 (7.4)%(17.5)%
Total assets7,311,354 7,300,340 7,001,199 0.2%4.4%
Total deposits5,347,642 5,454,982 5,128,000 (2.0)%4.3%
Borrowings1,177,347 1,059,904 1,108,582 11.1%6.2%
Shareholders' equity713,355 715,803 696,541 (0.3)%2.4%
Tangible equity (d)641,021 643,469 624,207 (0.4)%2.7%
Nonperforming loans122,787 109,638 119,288 12.0%2.9%
Nonperforming assets141,438 129,774 141,893 9.0%(0.3)%
ASSET QUALITY RATIOS:
Loans as a % of period end total assets69.32%68.49%68.98% 1.2%0.5%
Nonperforming loans as a % of period end loans2.42%2.19%2.47% 10.5%(2.0)%
Nonperforming assets as a % of period end loans + OREO2.78%2.59%2.92% 7.3%(4.8)%
Allowance for loan losses as a % of period end loans1.11%1.17%1.13% (5.1)%(1.8)%
Net loan charge-offs (recoveries)$1,331 $1,348 $(5,027) (1.3)%N.M.
Annualized net loan charge-offs (recoveries) as a % of average loans (a)0.11%0.11%(0.41)% %N.M.
CAPITAL & LIQUIDITY:
Total equity / Period end total assets9.76%9.81%9.95% (0.5)%(1.9)%
Tangible equity (d) / Tangible assets (f)8.86%8.90%9.01% (0.4)%(1.7)%
Average equity / Average assets (a)9.76%9.59%9.78% 1.8%(0.2)%
Average equity / Average loans (a)14.28%14.37%14.49% (0.6)%(1.4)%
Average loans / Average deposits (a)91.51%88.61%92.43% 3.3%(1.0)%
N.M. - Not meaningful
Note: Explanations (a) - (h) are included at the end of the financial highlights.


PARK NATIONAL CORPORATION
Financial Highlights
Twelve months ended December 31, 2015 and 2014
(in thousands, except share and per share data) 2015 2014 Percent change
vs. 2014
INCOME STATEMENT:
Net interest income $227,632 $225,044 1.1%
Provision for (recovery of) loan losses 4,990 (7,333) N.M.
Other income 77,551 75,549 2.6%
Total other expense 186,614 187,510 (0.5)%
Income before income taxes $113,579 $120,416 (5.7)%
Income taxes 32,567 36,459 (10.7)%
Net income $81,012 $83,957 (3.5)%
MARKET DATA:
Earnings per common share - basic (b) $5.27 $5.45 (3.3)%
Earnings per common share - diluted (b) 5.26 5.45 (3.5)%
Cash dividends per common share 3.76 3.76 %
Weighted average common shares - basic (a) 15,364,281 15,394,971 (0.2)%
Weighted average common shares - diluted (a) 15,404,740 15,413,832 (0.1)%
PERFORMANCE RATIOS: (Annualized)
Return on average assets (a)(b) 1.11% 1.22% (9.0)%
Return on average equity (a)(b) 11.40% 12.34% (7.6)%
Yield on loans 4.66% 4.84% (3.7)%
Yield on investments 2.46% 2.58% (4.7)%
Yield on earning assets 3.95% 4.19% (5.7)%
Cost of interest bearing deposits 0.30% 0.29% 3.4%
Cost of borrowings 2.38% 2.57% (7.4)%
Cost of paying liabilities 0.72% 0.81% (11.1)%
Net interest margin (g) 3.39% 3.55% (4.5)%
Efficiency ratio (g) 60.98% 62.21% (2.0)%
ASSET QUALITY RATIOS:
Net loan charge-offs (recoveries) $2,848 $(2,217) N.M.
Annualized net loan charge-offs (recoveries) as a % of average loans (a) 0.06% (0.05)% N.M.
CAPITAL & LIQUIDITY:
Average stockholders' equity / Average assets (a) 9.72% 9.87% (1.5)%
Average stockholders' equity / Average loans (a) 14.47% 14.42% 0.3%
Average loans / Average deposits (a) 89.81% 94.02% (4.5)%
OTHER RATIOS (NON-GAAP):
Annualized return on average tangible assets (a)(b)(e) 1.12% 1.23% (8.9)%
Annualized return on average tangible equity (a)(b)(c) 12.70% 13.81% (8.0)%


PARK NATIONAL CORPORATION
Financial Highlights (continued)
(a) Averages are for the three months ended December 31, 2015, September 30, 2015 and December 31, 2014 and the twelve months ended December 31, 2015 and December 31, 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 during the applicable period.
RECONCILIATION OF AVERAGE SHAREHOLDERS' EQUITY TO AVERAGE TANGIBLE EQUITY:
THREE MONTHS ENDED TWELVE MONTHS ENDED
December 31, 2015September 30, 2015December 31, 2014 December 31, 2015December 31, 2014
AVERAGE SHAREHOLDERS' EQUITY$716,977 $710,128 $697,161 $710,327 $680,449
Less: Average goodwill72,334 72,334 72,334 72,334 72,334
AVERAGE TANGIBLE EQUITY$644,643 $637,794 $624,827 $637,993 $608,115
(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:
December 31, 2015September 30, 2015December 31, 2014
SHAREHOLDERS' EQUITY$713,355 $715,803 $696,541
Less: Goodwill72,334 72,334 72,334
TANGIBLE EQUITY$641,021 $643,469 $624,207
(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 TWELVE MONTHS ENDED
December 31, 2015September 30, 2015December 31, 2014 December 31, 2015December 31, 2014
AVERAGE ASSETS$7,343,206 $7,405,178 $7,130,743 $7,306,460 $6,893,302
Less: Average goodwill72,334 72,334 72,334 72,334 72,334
AVERAGE TANGIBLE ASSETS$7,270,872 $7,332,844 $7,058,409 $7,234,126 $6,820,968
(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:
December 31, 2015September 30, 2015December 31, 2014
TOTAL ASSETS$7,311,354 $7,300,340 $7,001,199
Less: Goodwill72,334 72,334 72,334
TANGIBLE ASSETS$7,239,020 $7,228,006 $6,928,865
(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 TWELVE MONTHS ENDED
December 31, 2015September 30, 2015December 31, 2014 December 31, 2015December 31, 2014
Interest income$67,165 $67,087 $67,816 $265,074 $265,143
Fully taxable equivalent adjustment314 220 191 865 845
Fully taxable equivalent interest income$67,479 $67,307 $68,007 $265,939 $265,988
Interest expense9,298 9,372 10,522 37,442 40,099
Fully taxable equivalent net interest income$58,181 $57,935 $57,485 $228,497 $225,889


PARK NATIONAL CORPORATION
Consolidated Statements of Income
Three Months Ended Twelve Months Ended
December 31, December 31,
(in thousands, except share and per share data) 2015 2014 2015 2014
Interest income:
Interest and fees on loans $58,424 $58,395 $227,979 $227,644
Interest on:
Obligations of U.S. Government, its agencies
and other securities 8,360 9,223 36,025 36,981
Obligations of states and political subdivisions 170 182 3
Other interest income 211 198 888 515
Total interest income 67,165 67,816 265,074 265,143
Interest expense:
Interest on deposits:
Demand and savings deposits 573 445 2,229 1,677
Time deposits 2,453 2,776 10,125 9,323
Interest on borrowings 6,272 7,301 25,088 29,099
Total interest expense 9,298 10,522 37,442 40,099
Net interest income 57,867 57,294 227,632 225,044
(Recovery of) provision for loan losses (658) (8,349) 4,990 (7,333)
Net interest income after (recovery of) provision for loan losses 58,525 65,643 222,642 232,377
Other income 19,296 19,834 77,551 75,549
Other expense 48,798 50,518 186,614 187,510
Income before income taxes 29,023 34,959 113,579 120,416
Income taxes 8,134 10,658 32,567 36,459
Net income $20,889 $24,301 $81,012 $83,957
Per Common Share:
Net income - basic $1.36 $1.58 $5.27 $5.45
Net income - diluted $1.36 $1.58 $5.26 $5.45
Weighted average shares - basic 15,345,986 15,393,924 15,364,281 15,394,971
Weighted average shares - diluted 15,384,451 15,414,433 15,404,740 15,413,832
Cash Dividends Declared $0.94 $0.94 $3.76 $3.76


PARK NATIONAL CORPORATION
Consolidated Balance Sheets
(in thousands, except share data)December 31, 2015December 31, 2014
Assets
Cash and due from banks$119,412 $133,511
Money market instruments30,047 104,188
Investment securities1,643,879 1,500,788
Loans5,068,085 4,829,682
Allowance for loan losses(56,494)(54,352)
Loans, net5,011,591 4,775,330
Bank premises and equipment, net59,493 55,479
Goodwill72,334 72,334
Other real estate owned18,651 22,605
Other assets355,947 336,964
Total assets$7,311,354 $7,001,199
Liabilities and Shareholders' Equity
Deposits:
Noninterest bearing$1,404,032 $1,269,296
Interest bearing3,943,610 3,858,704
Total deposits5,347,642 5,128,000
Borrowings1,177,347 1,108,582
Other liabilities73,010 68,076
Total liabilities$6,597,999 $6,304,658
Shareholders' Equity:
Preferred shares (200,000 shares authorized; no shares outstanding at December 31, 2015 and December 31, 2014)

$ $
Common shares (No par value; 20,000,000 shares authorized in 2015 and 2014; 16,150,854 shares issued at December 31, 2015 and 16,150,888 shares issued at December 31, 2014)303,966 303,104
Accumulated other comprehensive loss, net of taxes(15,643)(13,608)
Retained earnings507,505 484,484
Treasury shares (820,039 shares at December 31, 2015 and 758,489 shares at December 31, 2014)(82,473)(77,439)
Total shareholders' equity$713,355 $696,541
Total liabilities and shareholders' equity$7,311,354 $7,001,199


PARK NATIONAL CORPORATION
Consolidated Average Balance Sheets
Three Months Ended Twelve Months Ended
December 31, December 31,
(in thousands)20152014 20152014
Assets
Cash and due from banks$116,302 $118,027 $117,286 $112,113
Money market instruments306,667 314,096 342,997 204,874
Investment securities1,447,293 1,442,416 1,486,921 1,416,476
Loans5,020,525 4,812,439 4,909,579 4,717,297
Allowance for loan losses(58,621)(58,760) (56,947)(58,917)
Loans, net4,961,904 4,753,679 4,852,632 4,658,380
Bank premises and equipment, net59,540 55,236 58,377 55,407
Goodwill72,334 72,334 72,334 72,334
Other real estate owned19,365 21,016 21,568 26,543
Other assets359,801 353,939 354,345 347,175
Total assets$7,343,206 $7,130,743 $7,306,460 $6,893,302
Liabilities and Shareholders' Equity
Deposits:
Noninterest bearing$1,374,672 $1,266,459 $1,311,628 $1,196,625
Interest bearing4,111,578 3,940,248 4,155,196 3,820,928
Total deposits5,486,250 5,206,707 5,466,824 5,017,553
Borrowings1,061,519 1,154,502 1,052,186 1,130,885
Other liabilities78,460 72,373 77,123 64,415
Total liabilities$6,626,229 $6,433,582 $6,596,133 $6,212,853
Shareholders' Equity:
Preferred shares$ $ $ $
Common shares303,824 303,004 303,501 302,822
Accumulated other comprehensive loss, net of taxes(9,353)(7,982) (9,204)(16,164)
Retained earnings503,665 479,502 495,776 471,182
Treasury shares(81,159)(77,363) (79,746)(77,391)
Total shareholders' equity$716,977 $697,161 $710,327 $680,449
Total liabilities and shareholders' equity$7,343,206 $7,130,743 $7,306,460 $6,893,302


PARK NATIONAL CORPORATION
Consolidated Statements of Income - Linked Quarters
20152015201520152014
(in thousands, except per share data)4th QTR3rd QTR2nd QTR1st QTR4th QTR
Interest income:
Interest and fees on loans$58,424 $57,680 $56,463 $55,412 $58,395
Interest on:
Obligations of U.S. Government, its agencies and other securities8,360 9,163 9,113 9,389 9,223
Obligations of states and political subdivisions170 12
Other interest income211 232 228 217 198
Total interest income67,165 67,087 65,804 65,018 67,816
Interest expense:
Interest on deposits:
Demand and savings deposits573 614 556 486 445
Time deposits2,453 2,508 2,542 2,622 2,776
Interest on borrowings6,272 6,250 6,191 6,375 7,301
Total interest expense9,298 9,372 9,289 9,483 10,522
Net interest income57,867 57,715 56,515 55,535 57,294
(Recovery of) provision for loan losses(658)2,404 1,612 1,632 (8,349)
Net interest income after (recovery of) provision for loan losses58,525 55,311 54,903 53,903 65,643
Other income19,296 20,191 19,191 18,873 19,834
Other expense48,798 47,429 44,667 45,720 50,518
Income before income taxes29,023 28,073 29,427 27,056 34,959
Income taxes8,134 8,033 8,388 8,012 10,658
Net income$20,889 $20,040 $21,039 $19,044 $24,301
Per Common Share:
Net income - basic$1.36 $1.30 $1.37 $1.24 $1.58
Net income - diluted$1.36 $1.30 $1.37 $1.23 $1.58


PARK NATIONAL CORPORATION
Detail of other income and other expense - Linked Quarters
20152015201520152014
(in thousands)4th QTR3rd QTR2nd QTR1st QTR4th QTR
Other income:
Income from fiduciary activities$5,140 $4,933 $5,210 $4,912 $5,050
Service charges on deposits3,777 3,909 3,684 3,381 3,651
Other service income2,861 3,251 3,025 2,301 3,564
Checkcard fee income3,902 3,643 3,665 3,351 3,433
Bank owned life insurance income1,245 1,574 1,086 1,878 1,153
OREO valuation adjustments(319)(718)(251)(304)(380)
Gain on the sale of OREO, net175 243 513 673 45
Gain on commercial loans held for sale 756 1,867
Gain (loss) on sale of investments88 (1,175)
Miscellaneous2,427 3,356 2,259 1,925 2,626
Total other income$19,296 $20,191 $19,191 $18,873 $19,834
Other expense:
Salaries$22,520 $21,692 $20,995 $20,982 $21,552
Employee benefits4,161 6,721 4,729 5,685 2,973
Occupancy expense2,257 2,469 2,381 2,579 2,378
Furniture and equipment expense3,069 3,044 2,831 2,862 2,709
Data processing fees1,190 1,383 1,197 1,267 1,196
Professional fees and services7,751 5,424 5,583 4,694 8,195
Marketing975 1,058 937 1,013 1,160
Insurance1,407 1,399 1,362 1,461 1,413
Communication1,321 1,245 1,233 1,331 1,328
Miscellaneous4,147 2,994 3,419 3,846 7,614
Total other expense$48,798 $47,429 $44,667 $45,720 $50,518


PARK NATIONAL CORPORATION
Asset Quality Information
Year ended December 31,
(in thousands, except ratios)20152014 20132012 2011
Allowance for loan losses:
Allowance for loan losses, beginning of period$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-offs14,290 24,780 (B)19,153 61,268 (A)133,882
Recoveries11,442 26,997 19,669 12,942 8,798
Net charge-offs (recoveries)2,848 (2,217) (516)48,326 125,084
Provision for (recovery of) loan losses4,990 (7,333) 3,415 35,419 63,272
Allowance for loan losses, end of period$56,494 $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$56,494 $54,352 $59,468 $55,537 $68,444
Specific reserves4,191 3,660 10,451 8,276 15,935
General reserves$52,303 $50,692 $49,017 $47,261 $52,509
Total loans$5,068,085 $4,829,682 $4,620,505 $4,450,322 $4,317,099
Impaired commercial loans80,599 73,676 112,304 137,238 187,074
Total loans less impaired commercial loans$4,987,486 $4,756,006 $4,508,201 $4,313,084 $4,130,025
Asset Quality Ratios:
Net charge-offs (recoveries) as a % of average loans0.06%(0.05)% (0.01)%1.10% 2.65%
Allowance for loan losses as a % of period end loans1.11%1.13% 1.29%1.25% 1.59%
General reserves as a % of total loans less impaired commercial loans1.05%1.07% 1.09%1.10% 1.27%
Nonperforming Assets - Park National Corporation:
Nonaccrual loans$95,887 $100,393 $135,216 $155,536 $195,106
Accruing troubled debt restructuring24,979 16,254 18,747 29,800 28,607
Loans past due 90 days or more1,921 2,641 1,677 2,970 3,489
Total nonperforming loans$122,787 $119,288 $155,640 $188,306 $227,202
Other real estate owned - Park National Bank7,456 10,687 11,412 14,715 13,240
Other real estate owned - SEPH11,195 11,918 23,224 21,003 29,032
Other real estate owned - Vision Bank
Total nonperforming assets$141,438 $141,893 $190,276 $224,024 $269,474
Percentage of nonaccrual loans to period end loans1.89%2.08% 2.93%3.49% 4.52%
Percentage of nonperforming loans to period end loans2.42%2.47% 3.37%4.23% 5.26%
Percentage of nonperforming assets to period end loans2.79%2.94% 4.12%5.03% 6.24%
Percentage of nonperforming assets to period end total assets1.93%2.03% 2.87%3.37% 3.86%
PARK NATIONAL CORPORATION
Asset Quality Information (continued)
Year ended December 31,
(in thousands, except ratios)20152014 20132012 2011
Nonperforming Assets - Park National Bank and Guardian:
Nonaccrual loans$81,468 $77,477 $99,108 $100,244 $96,113
Accruing troubled debt restructuring24,979 16,157 18,747 29,800 26,342
Loans past due 90 days or more1,921 2,641 1,677 2,970 3,367
Total nonperforming loans$108,368 $96,275 $119,532 $133,014 $125,822
Other real estate owned - Park National Bank7,456 10,687 11,412 14,715 13,240
Total nonperforming assets$115,824 $106,962 $130,944 $147,729 $139,062
Percentage of nonaccrual loans to period end loans1.61%1.61% 2.16%2.28% 2.29%
Percentage of nonperforming loans to period end loans2.14%2.00% 2.61%3.03% 3.00%
Percentage of nonperforming assets to period end loans2.29%2.23% 2.86%3.36% 3.32%
Percentage of nonperforming assets to period end total assets1.60%1.55% 2.01%2.27% 2.21%
Nonperforming Assets - SEPH/Vision Bank (retained portfolio as of December 31, 2015, 2014, 2013, 2012, and 2011):
Nonaccrual loans$14,419 $22,916 $36,108 $55,292 $98,993
Accruing troubled debt restructuring 97 2,265
Loans past due 90 days or more 122
Total nonperforming loans$14,419 $23,013 $36,108 $55,292 $101,380
Other real estate owned - Vision Bank
Other real estate owned - SEPH11,195 11,918 23,224 21,003 29,032
Total nonperforming assets$25,614 $34,931 $59,332 $76,295 $130,412
New nonaccrual loan information - Park National Corporation
Nonaccrual loans, beginning of period$100,393 $135,216 $155,536 $195,106 $289,268
New nonaccrual loans80,791 70,059 67,398 83,204 124,158
Resolved nonaccrual loans85,165 86,384 87,718 122,774 218,320
Sale of nonaccrual loans held for sale132 18,498
Nonaccrual loans, end of period$95,887 $100,393 $135,216 $155,536 $195,106
New nonaccrual loan information - Ohio - based operations
Nonaccrual loans, beginning of period$77,477 $99,108 $100,244 $96,113 $117,815
New nonaccrual loans - Ohio-based operations80,791 69,389 66,197 68,960 78,316
Resolved nonaccrual loans76,800 78,288 67,333 64,829 100,018
Sale of nonaccrual loans held for sale 12,732
Nonaccrual loans, end of period$81,468 $77,477 $99,108 $100,244 $96,113
New nonaccrual loan information - SEPH/Vision Bank
Nonaccrual loans, beginning of period$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 loans8,365 8,096 20,385 57,944 118,302
Sale of nonaccrual loans held for sale132 5,766
Nonaccrual loans, end of period$14,419 $22,916 $36,108 $55,292 $98,993
Impaired Commercial Loan Portfolio Information (period end):
Unpaid principal balance$109,304 $106,156 $175,576 $242,345 $290,908
Prior charge-offs28,705 32,480 63,272 105,107 103,834
Remaining principal balance80,599 73,676 112,304 137,238 187,074
Specific reserves4,191 3,660 10,451 8,276 15,935
Book value, after specific reserve$76,408 $70,016 $101,853 $128,962 $171,139


Source:Park National Corporation