Park National Corporation Reports Financial Results for Second Quarter and First Half of 2016

NEWARK, Ohio, July 25, 2016 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE MKT:PRK) today announced financial results for the second quarter and first half of 2016 (three and six months ended June 30, 2016). The board of directors also declared a quarterly cash dividend of $0.94 per common share, payable on September 9, 2016 to common shareholders of record as of August 19, 2016.

Park’s second quarter net income in 2016 was $20.0 million, a 4.9 percent decrease from $21.0 million for the same period in 2015. Net income per diluted common share for the second quarter of 2016 was $1.30, compared to $1.37 in the second quarter of 2015.

Park’s net income for the first half of 2016 was $38.7 million, compared to $40.1 million for the same period in 2015, a decrease of 3.5 percent. Net income per diluted common share for the first half of 2016 was $2.51, compared to $2.60 in the same period of 2015.

“Advancements in our consumer lending operations have helped us respond to requests even more swiftly and thoroughly,” said Park Chief Executive Officer David L. Trautman. “The service style of our local lenders continues to be a driver of growth for our organization, and we look forward to the rest of 2016.”

In the first half of 2016, The Park National Bank grew consumer loans by $46.5 million (9.6 percent annualized) and commercial loans by $24.0 million (1.9 percent annualized). Total loans for the bank were $5.09 billion at June 30, 2016, up $227.7 million (4.68 percent) from $4.86 billion at June 30, 2015.

The bank generated net income of $21.1 million for the second quarter of 2016, compared to $21.3 million for the same period of 2015. The bank’s first half of 2016 net income was $42.8 million, compared to $40.5 million for the first half of 2015. The bank had total assets of $7.4 billion at June 30, 2016, rising from $7.2 billion at each of December 31, 2015 and June 30, 2015.

About Park National Corporation

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

Complete financial tables are listed below…

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Park cautions that any forward-looking statements contained in this release or made by management of Park are provided to assist in the understanding of anticipated future financial performance. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include, without limitation: Park's ability to execute our business plan successfully and within the expected timeframe; general economic and financial market conditions, specifically in the real estate markets and the credit markets, either nationally or in the states in which Park and our subsidiaries do business, may experience a slowing or reversal of the recent economic expansion in addition to continuing residual effects of recessionary conditions and an uneven spread of positive impacts of recovery on the economy and our counterparties, including adverse impacts on the demand for loan, deposit and other financial services, delinquencies, defaults and counterparties' ability to meet credit and other obligations; changes in interest rates and prices may adversely impact the value of securities, loans, deposits and other financial instruments and the interest rate sensitivity of our consolidated balance sheet as well as reduce interest margins; changes in consumer spending, borrowing and saving habits, whether due to changing business and economic conditions, legislative and regulatory initiatives, or other factors; changes in unemployment; changes in customers', suppliers', and other counterparties' performance and creditworthiness; asset/liability repricing risks and liquidity risks; our liquidity requirements could be adversely affected by changes to regulations governing bank and bank holding company capital and liquidity standards as well as by changes in our assets and liabilities; competitive factors among financial services organizations could increase significantly, including product and pricing pressures, changes to third-party relationships and our ability to attract, develop and retain qualified bank professionals; clients could pursue alternatives to bank deposits, causing us to lose a relatively inexpensive source of funding; the nature, timing and effect of changes in banking regulations or other regulatory or legislative requirements affecting the respective businesses of Park and our subsidiaries, including major reform of the regulatory oversight structure of the financial services industry and changes in laws and regulations concerning taxes, pensions, bankruptcy, consumer protection, accounting, banking, securities and other aspects of the financial services industry, specifically the reforms provided for in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), as well as regulations already adopted and which may be adopted in the future by the relevant regulatory agencies, including the Consumer Financial Protection Bureau, to implement the Dodd-Frank Act's provisions, the Budget Control Act of 2011, the American Taxpayer Relief Act of 2012 and the Basel III regulatory capital reforms; the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board, the SEC, the Public Company Accounting Oversight Board and other regulatory agencies, and the accuracy of our assumptions and estimates used to prepare our financial statements; the effect of trade, monetary, fiscal and other governmental policies of the U.S. federal government, including money supply and interest rate policies of the Federal Reserve; disruption in the liquidity and other functioning of U.S. financial markets; the impact on financial markets and the economy of any changes in the credit ratings of the U.S. Treasury obligations and other U.S. government-backed debt, as well as issues surrounding the levels of U.S., European and Asian government debt and concerns regarding the creditworthiness of certain sovereign governments, supranationals and financial institutions in Europe and Asia; the uncertainty surrounding the United Kingdom's exit from the European Union and its consequences; our litigation and regulatory compliance exposure, including any adverse developments in legal proceedings or other claims and unfavorable resolution of regulatory and other governmental examinations or other inquiries; the adequacy of our risk management program; the ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks; a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors and other service providers, including as a result of cyber attacks; fraud, scams and schemes of third parties; demand for loans in the respective market areas served by Park and our subsidiaries; and other risk factors relating to the banking industry as detailed from time to time in Park's reports filed with the SEC including those described in "Item 1A. Risk Factors" of Part I of Park's Annual Report on Form 10-K for the fiscal year ended December 31, 2015. Park does not undertake, and specifically disclaims any obligation, to publicly release the results of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement was made, or reflect the occurrence of unanticipated events, except to the extent required by law.

PARK NATIONAL CORPORATION
Financial Highlights
Three months ended June 30, 2016, March 31, 2016, and June 30, 2015
201620162015 Percent change vs.
(in thousands, except share and per share data)2nd QTR1st QTR2nd QTR 1Q '162Q '15
INCOME STATEMENT:
Net interest income$57,485 $59,819 $56,515 (3.9) %1.7%
Provision for loan losses2,637 910 1,612 189.8%63.6%
Other income18,736 17,389 19,191 7.7%(2.4) %
Other expense45,306 49,899 44,667 (9.2) %1.4%
Income before income taxes$28,278 $26,399 $29,427 7.1%(3.9) %
Income taxes8,280 7,713 8,388 7.4%(1.3) %
Net income$19,998 $18,686 $21,039 7.0%(4.9) %
MARKET DATA:
Earnings per common share - basic (b)$1.30 $1.22 $1.37 6.6%(5.1)%
Earnings per common share - diluted (b)1.30 1.21 1.37 7.4%(5.1)%
Cash dividends per common share0.94 0.94 0.94 %%
Book value per common share at period end48.26 47.60 45.93 1.4%5.1%
Stock price per common share at period end91.78 90.00 87.37 2.0%5.0%
Market capitalization at period end1,407,060 1,379,773 1,342,954 2.0%4.8%
Weighted average common shares - basic (a)15,330,802 15,330,813 15,370,882 %(0.3)%
Weighted average common shares - diluted (a)15,399,283 15,406,508 15,407,881 %(0.1)%
Common shares outstanding at period end15,330,796 15,330,807 15,370,877 %(0.3)%
PERFORMANCE RATIOS: (annualized)
Return on average assets (a)(b)1.09%1.01%1.16% 7.9%(6.0) %
Return on average equity (a)(b)10.98%10.38%11.90% 5.8%(7.7) %
Yield on loans4.64%4.80%4.68% (3.3) %(0.9) %
Yield on investments2.30%2.38%2.49% (3.4) %(7.6) %
Yield on money markets0.51%0.51%0.25% %104.0%
Yield on earning assets4.00%4.11%3.96% (2.7) %1.0%
Cost of interest bearing deposits0.32%0.31%0.30% 3.2%6.7%
Cost of borrowings2.50%2.35%2.46% 6.4%1.6%
Cost of paying liabilities0.74%0.73%0.72% 1.4%2.8%
Net interest margin (g)3.43%3.55%3.40% (3.4) %0.9%
Efficiency ratio (g)59.01%64.26%58.87% (8.2) %0.2%
OTHER RATIOS (NON - GAAP):
Annualized return on average tangible assets (a)(b)(e)1.10%1.02%1.17% 7.8%(6.0)%
Annualized return on average tangible equity (a)(b)(c)12.18%11.53%13.25% 5.6%(8.1)%
Tangible book value per share (d)$43.54 $42.88 $41.22 1.5%5.6%
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, 2016, March 31, 2016, and June 30, 2015
Percent change vs.
BALANCE SHEET:June 30, 2016March 31, 2016June 30, 2015 1Q '162Q '15
Investment securities$1,548,006 $1,601,767 $1,550,103 (3.4) %(0.1) %
Loans5,127,644 5,062,185 4,900,974 1.3%4.6%
Allowance for loan losses58,699 56,948 57,427 3.1%2.2%
Goodwill72,334 72,334 72,334 %%
Other real estate owned (OREO)17,566 17,745 21,876 (1.0) %(19.7) %
Total assets7,431,610 7,428,185 7,309,569 %1.7%
Total deposits5,623,879 5,606,790 5,512,366 0.3%2.0%
Borrowings996,905 1,004,279 1,018,680 (0.7) %(2.1) %
Shareholders' equity739,887 729,701 705,963 1.4%4.8%
Tangible equity (d)667,553 657,367 633,629 1.5%5.4%
Nonperforming loans131,456 118,960 113,795 10.5%15.5%
Nonperforming assets149,022 136,705 135,671 9.0%9.8%
ASSET QUALITY RATIOS:
Loans as a % of period end total assets69.00%68.15%67.05% 1.2%2.9%
Nonperforming loans as a % of period end loans2.56%2.35%2.32% 8.9%10.3%
Nonperforming assets as a % of period end loans + OREO2.90%2.69%2.76% 7.8%5.1%
Allowance for loan losses as a % of period end loans1.14%1.12%1.17% 1.8%(2.6) %
Net loan charge-offs (recoveries)$886 $456 $(407) N.M. N.M.
Annualized net loan charge-offs (recoveries) as a % of average loans (a)0.07%0.04%(0.03) % N.M. N.M.
CAPITAL & LIQUIDITY:
Total equity / Period end total assets9.96%9.82%9.66% 1.4%3.1%
Tangible equity (d) / Tangible assets (f)9.07%8.94%8.76% 1.5%3.5%
Average equity / Average assets (a)9.92%9.78%9.76% 1.4%1.6%
Average equity / Average loans (a)14.41%14.34%14.60% 0.5%(1.3) %
Average loans / Average deposits (a)91.18%91.31%88.80% (0.1) %2.7%
N.M. - Not meaningful
Note: Explanations (a) - (h) are included at the end of the financial highlights.


PARK NATIONAL CORPORATION
Financial Highlights
Six months ended June 30, 2016 and 2015
Percent change
(in thousands, except share and per share data) 2016 2015 vs. 2015
INCOME STATEMENT:
Net interest income $117,304 $112,050 4.7%
Provision for loan losses 3,547 3,244 9.3%
Other income 36,125 38,064 (5.1)%
Total other expense 95,205 90,387 5.3%
Income before income taxes $54,677 $56,483 (3.2)%
Income taxes 15,993 16,400 (2.5)%
Net income $38,684 $40,083 (3.5)%
MARKET DATA:
Earnings per common share - basic (b) $2.52 $2.61 (3.4)%
Earnings per common share - diluted (b) 2.51 2.60 (3.5)%
Cash dividends per common share 1.88 1.88 %
Weighted average common shares - basic (a) 15,330,808 15,375,026 (0.3)%
Weighted average common shares - diluted (a) 15,402,896 15,411,920 (0.1)%
PERFORMANCE RATIOS: (Annualized)
Return on average assets (a)(b) 1.05% 1.12% (6.3)%
Return on average common equity (a)(b) 10.68% 11.43% (6.6)%
Yield on loans 4.72% 4.68% 0.9%
Yield on investments 2.34% 2.53% (7.5)%
Yield on earning assets 4.06% 3.97% 2.3%
Cost of interest bearing deposits 0.31% 0.30% 3.3%
Cost of borrowings 2.42% 2.40% 0.8%
Cost of paying liabilities 0.73% 0.73% %
Net interest margin (g) 3.49% 3.40% 2.6%
Efficiency ratio (g) 61.65% 60.08% 2.6%
ASSET QUALITY RATIOS:
Net loan charge-offs $1,342 $169 N.M.
Annualized net loan charge-offs as a % of average loans (a) 0.05% 0.01% N.M.
CAPITAL & LIQUIDITY:
Average stockholders' equity / Average assets (a) 9.85% 9.77% 0.8%
Average stockholders' equity / Average loans (a) 14.38% 14.62% (1.6)%
Average loans / Average deposits (a) 91.25% 89.56% 1.9%
OTHER RATIOS (NON-GAAP):
Annualized return on average tangible assets (a)(b)(e) 1.06% 1.13% (6.2)%
Annualized return on average tangible common equity (a)(b)(c) 11.86% 12.73% (6.8)%


PARK NATIONAL CORPORATION
Financial Highlights (continued)
(a) Averages are for the three months ended June 30, 2016, March 31, 2016 and June 30, 2015 and the six months ended June 30, 2016 and June 30, 2015.
(b) Reported measure uses net income.
(c) Net income for each period divided by average tangible equity during the period. Average tangible equity equals average shareholders' equity during the applicable period less average goodwill during the applicable period.
RECONCILIATION OF AVERAGE SHAREHOLDERS' EQUITY TO AVERAGE TANGIBLE EQUITY:
THREE MONTHS ENDED SIX MONTHS ENDED
June 30, 2016March 31, 2016June 30, 2015 June 30, 2016June 30, 2015
AVERAGE SHAREHOLDERS' EQUITY$732,759 $724,316 $709,031 $728,537 $707,047
Less: Average goodwill72,334 72,334 72,334 72,334 72,334
AVERAGE TANGIBLE EQUITY$660,425 $651,982 $636,697 $656,203 $634,713
(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:
June 30, 2016March 31, 2016June 30, 2015
SHAREHOLDERS' EQUITY$739,887 $729,701 $705,963
Less: Goodwill72,334 72,334 72,334
TANGIBLE EQUITY$667,553 $657,367 $633,629
(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 SIX MONTHS ENDED
June 30, 2016March 31, 2016June 30, 2015 June 30, 2016June 30, 2015
AVERAGE ASSETS$7,383,703 $7,405,345 $7,265,755 $7,394,524 $7,237,605
Less: Average goodwill72,334 72,334 72,334 72,334 72,334
AVERAGE TANGIBLE ASSETS$7,311,369 $7,333,011 $7,193,421 $7,322,190 $7,165,271
(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:
June 30, 2016March 31, 2016June 30, 2015
TOTAL ASSETS$7,431,610 $7,428,185 $7,309,569
Less: Goodwill72,334 72,334 72,334
TANGIBLE ASSETS$7,359,276 $7,355,851 $7,237,235
(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 SIX MONTHS ENDED
June 30, 2016March 31, 2016June 30, 2015 June 30, 2016June 30, 2015
Interest income$67,011 $69,308 $65,804 $136,319 $130,822
Fully taxable equivalent adjustment555 444 170 999 331
Fully taxable equivalent interest income$67,566 $69,752 $65,974 $137,318 $131,153
Interest expense9,526 9,489 9,289 19,015 18,772
Fully taxable equivalent net interest income$58,040 $60,263 $56,685 $118,303 $112,381


PARK NATIONAL CORPORATION
Consolidated Statements of Income
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands, except share and per share data) 2016 2015 2016 2015
Interest income:
Interest and fees on loans $58,401 $56,463 $118,453 $111,875
Interest on:
Obligations of U.S. Government, its agencies
and other securities 7,770 9,113 16,379 18,502
Obligations of states and political subdivisions 591 964
Other interest income 249 228 523 445
Total interest income 67,011 65,804 136,319 130,822
Interest expense:
Interest on deposits:
Demand and savings deposits 933 556 1,757 1,042
Time deposits 2,389 2,542 4,776 5,164
Interest on borrowings 6,204 6,191 12,482 12,566
Total interest expense 9,526 9,289 19,015 18,772
Net interest income 57,485 56,515 117,304 112,050
Provision for loan losses 2,637 1,612 3,547 3,244
Net interest income after provision for loan losses 54,848 54,903 113,757 108,806
Other income 18,736 19,191 36,125 38,064
Other expense 45,306 44,667 95,205 90,387
Income before income taxes 28,278 29,427 54,677 56,483
Income taxes 8,280 8,388 15,993 16,400
Net income $19,998 $21,039 $38,684 $40,083
Per Common Share:
Net income - basic $1.30 $1.37 $2.52 $2.61
Net income - diluted $1.30 $1.37 $2.51 $2.60
Weighted average shares - basic 15,330,802 15,370,882 15,330,808 15,375,026
Weighted average shares - diluted 15,399,283 15,407,881 15,402,896 15,411,920
Cash Dividends Declared $0.94 $0.94 $1.88 $1.88


PARK NATIONAL CORPORATION
Consolidated Balance Sheets
(in thousands, except share data)June 30, 2016December 31, 2015
Assets
Cash and due from banks$119,873 $119,412
Money market instruments196,016 30,047
Investment securities1,548,006 1,643,879
Loans5,127,644 5,068,085
Allowance for loan losses(58,699)(56,494)
Loans, net5,068,945 5,011,591
Bank premises and equipment, net58,962 59,493
Goodwill72,334 72,334
Other real estate owned17,566 18,651
Other assets349,908 355,947
Total assets$7,431,610 $7,311,354
Liabilities and Shareholders' Equity
Deposits:
Noninterest bearing$1,378,053 $1,404,032
Interest bearing4,245,826 3,943,610
Total deposits5,623,879 5,347,642
Borrowings996,905 1,177,347
Other liabilities70,939 73,010
Total liabilities$6,691,723 $6,597,999
Shareholders' Equity:
Preferred shares (200,000 shares authorized; no shares outstanding at June 30, 2016 and December 31, 2015)$ $
Common shares (No par value; 20,000,000 shares authorized in 2016 and 2015; 16,150,835 shares issued at June 30, 2016 and 16,150,854 shares issued at December 31, 2015)304,756 303,966
Accumulated other comprehensive income (loss), net of taxes389 (15,643)
Retained earnings517,215 507,505
Treasury shares (820,039 shares at both June 30, 2016 and December 31, 2015)(82,473)(82,473)
Total shareholders' equity$739,887 $713,355
Total liabilities and shareholders' equity$7,431,610 $7,311,354


PARK NATIONAL CORPORATION
Consolidated Average Balance Sheets
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands)20162015 20162015
Assets
Cash and due from banks$111,709 $116,542 $115,345 $119,603
Money market instruments196,226 361,994 206,805 351,591
Investment securities1,536,331 1,481,460 1,549,263 1,485,978
Loans5,083,802 4,857,799 5,066,565 4,836,696
Allowance for loan losses(57,016)(56,291) (57,008)(55,664)
Loans, net5,026,786 4,801,508 5,009,557 4,781,032
Bank premises and equipment, net59,293 57,978 59,435 57,272
Goodwill72,334 72,334 72,334 72,334
Other real estate owned17,427 22,661 17,865 22,991
Other assets363,597 351,278 363,920 346,804
Total assets$7,383,703 $7,265,755 $7,394,524 $7,237,605
Liabilities and Shareholders' Equity
Deposits:
Noninterest bearing$1,400,195 $1,303,420 $1,379,096 $1,283,977
Interest bearing4,175,344 4,166,835 4,173,605 4,116,789
Total deposits5,575,539 5,470,255 5,552,701 5,400,766
Borrowings998,195 1,007,975 1,035,505 1,055,081
Other liabilities77,210 78,494 77,781 74,711
Total liabilities$6,650,944 $6,556,724 $6,665,987 $6,530,558
Shareholders' Equity:
Preferred shares$ $ $ $
Common shares304,472 303,431 304,229 303,270
Accumulated other comprehensive loss, net of taxes(5,002)(7,224) (6,724)(7,638)
Retained earnings515,762 492,046 513,505 490,295
Treasury shares(82,473)(79,222) (82,473)(78,880)
Total shareholders' equity$732,759 $709,031 $728,537 $707,047
Total liabilities and shareholders' equity$7,383,703 $7,265,755 $7,394,524 $7,237,605


PARK NATIONAL CORPORATION
Consolidated Statements of Income - Linked Quarters
20162016201520152015
(in thousands, except per share data)2nd QTR1st QTR4th QTR3rd QTR2nd QTR
Interest income:
Interest and fees on loans$58,401 $60,052 $58,424 $57,680 $56,463
Interest on:
Obligations of U.S. Government, its agencies and other securities7,770 8,609 8,360 9,163 9,113
Obligations of states and political subdivisions591 373 170 12
Other interest income249 274 211 232 228
Total interest income67,011 69,308 67,165 67,087 65,804
Interest expense:
Interest on deposits:
Demand and savings deposits933 824 573 614 556
Time deposits2,389 2,387 2,453 2,508 2,542
Interest on borrowings6,204 6,278 6,272 6,250 6,191
Total interest expense9,526 9,489 9,298 9,372 9,289
Net interest income57,485 59,819 57,867 57,715 56,515
Provision for (recovery of) loan losses2,637 910 (658)2,404 1,612
Net interest income after provision for (recovery of) loan losses54,848 58,909 58,525 55,311 54,903
Other income18,736 17,389 19,296 20,191 19,191
Other expense45,306 49,899 48,798 47,429 44,667
Income before income taxes28,278 26,399 29,023 28,073 29,427
Income taxes8,280 7,713 8,134 8,033 8,388
Net income$19,998 $18,686 $20,889 $20,040 $21,039
Per Common Share:
Net income - basic$1.30 $1.22 $1.36 $1.30 $1.37
Net income - diluted$1.30 $1.21 $1.36 $1.30 $1.37


PARK NATIONAL CORPORATION
Detail of other income and other expense - Linked Quarters
20162016201520152015
(in thousands)2nd QTR1st QTR4th QTR3rd QTR2nd QTR
Other income:
Income from fiduciary activities$5,438 $5,113 $5,140 $4,933 $5,210
Service charges on deposits3,575 3,423 3,777 3,909 3,684
Other service income3,351 2,574 2,861 3,251 3,025
Checkcard fee income3,868 3,532 3,902 3,643 3,665
Bank owned life insurance income1,049 1,197 1,245 1,574 1,086
ATM fees570 583 588 648 614
OREO valuation adjustments(221)(118)(319)(718)(251)
Gain on the sale of OREO, net162 134 175 243 513
Gain on sale of investments 88
Miscellaneous944 951 1,839 2,708 1,645
Total other income$18,736 $17,389 $19,296 $20,191 $19,191
Other expense:
Salaries$21,256 $21,554 $22,520 $21,692 $20,995
Employee benefits4,894 4,773 4,161 6,721 4,729
Occupancy expense2,639 2,548 2,257 2,469 2,381
Furniture and equipment expense3,416 3,443 3,069 3,044 2,831
Data processing fees1,373 1,217 1,190 1,383 1,197
Professional fees and services5,401 6,667 7,751 5,424 5,583
Marketing1,073 1,111 975 1,058 937
Insurance1,438 1,411 1,407 1,399 1,362
Communication1,353 1,221 1,321 1,245 1,233
State tax expense798 926 857 779 883
Miscellaneous1,665 5,028 3,290 2,215 2,536
Total other expense$45,306 $49,899 $48,798 $47,429 $44,667


PARK NATIONAL CORPORATION
Asset Quality Information
Year ended December 31,
(in thousands, except ratios)June 30,
2016
March 31,
2016
20152014 20132012
Allowance for loan losses:
Allowance for loan losses, beginning of period$56,948 $56,494 $54,352 $59,468 $55,537 $68,444
Charge-offs4,419 3,401 14,290 24,780 (B)19,153 61,268 (A)
Recoveries3,533 2,945 11,442 26,997 19,669 12,942
Net charge-offs (recoveries)886 456 2,848 (2,217) (516)48,326
Provision for (recovery of) loan losses2,637 910 4,990 (7,333) 3,415 35,419
Allowance for loan losses, end of period$58,699 $56,948 $56,494 $54,352 $59,468 $55,537
(A) Year ended December 31, 2012 included the full charge-off of the Vision Bank ALLL of $12.1 million to bring the retained Vision Bank loan portfolio to fair value prior to the merger of Vision Bank (as constituted following the transaction with Centennial Bank and Home BancShares, Inc.) with and into SEPH, the non-bank subsidiary of Park, on February 16, 2012.
(B) Year ended December 31, 2014 included $4.3 million in charge-offs related to the transfer of $22.0 million of commercial loans to the held for sale portfolio.
General reserve trends:
Allowance for loan losses, end of period$58,699 $56,948 $56,494 $54,352 $59,468 $55,537
Specific reserves6,287 4,930 4,191 3,660 10,451 8,276
General reserves$52,412 $52,018 $52,303 $50,692 $49,017 $47,261
Total loans$5,127,644 $5,062,185 $5,068,085 $4,829,682 $4,620,505 $4,450,322
Impaired commercial loans90,828 78,117 80,599 73,676 112,304 137,238
Total loans less impaired commercial loans$5,036,816 $4,984,068 $4,987,486 $4,756,006 $4,508,201 $4,313,084
Asset Quality Ratios:
Annualized net charge-offs (recoveries) as a % of average loans0.07%0.04%0.06%(0.05) % (0.01) %1.10%
Allowance for loan losses as a % of period end loans1.14%1.12%1.11%1.13% 1.29%1.25%
General reserves as a % of total loans less impaired commercial loans1.04%1.04%1.05%1.07% 1.09%1.10%
Nonperforming Assets - Park National Corporation:
Nonaccrual loans$111,429 $102,625 $95,887 $100,393 $135,216 $155,536
Accruing troubled debt restructuring17,722 14,999 24,979 16,254 18,747 29,800
Loans past due 90 days or more2,305 1,336 1,921 2,641 1,677 2,970
Total nonperforming loans$131,456 $118,960 $122,787 $119,288 $155,640 $188,306
Other real estate owned - Park National Bank7,038 6,846 7,456 10,687 11,412 14,715
Other real estate owned - SEPH10,528 10,899 11,195 11,918 23,224 21,003
Total nonperforming assets$149,022 $136,705 $141,438 $141,893 $190,276 $224,024
Percentage of nonaccrual loans to period end loans2.17%2.03%1.89%2.08% 2.93%3.49%
Percentage of nonperforming loans to period end loans2.56%2.35%2.42%2.47% 3.37%4.23%
Percentage of nonperforming assets to period end loans2.91%2.70%2.79%2.94% 4.12%5.03%
Percentage of nonperforming assets to period end total assets2.01%1.84%1.93%2.03% 2.87%3.37%
PARK NATIONAL CORPORATION
Asset Quality Information (continued)
Year ended December 31,
(in thousands, except ratios)June 30,
2016
March 31,
2016
20152014 20132012
Nonperforming Assets - Park National Bank and Guardian:
Nonaccrual loans$97,642 $88,351 $81,468 $77,477 $99,108 $100,244
Accruing troubled debt restructuring17,722 14,999 24,979 16,157 18,747 29,800
Loans past due 90 days or more2,305 1,336 1,921 2,641 1,677 2,970
Total nonperforming loans$117,669 $104,686 $108,368 $96,275 $119,532 $133,014
Other real estate owned - Park National Bank7,038 6,846 7,456 10,687 11,412 14,715
Total nonperforming assets$124,707 $111,532 $115,824 $106,962 $130,944 $147,729
Percentage of nonaccrual loans to period end loans1.91%1.75%1.61%1.61% 2.16%2.28%
Percentage of nonperforming loans to period end loans2.30%2.07%2.14%2.00% 2.61%3.03%
Percentage of nonperforming assets to period end loans2.44%2.21%2.29%2.23% 2.86%3.36%
Percentage of nonperforming assets to period end total assets1.69%1.52%1.60%1.55% 2.01%2.27%
Nonperforming Assets - SEPH/Vision Bank (retained portfolio):
Nonaccrual loans$13,787 $14,274 $14,419 $22,916 $36,108 $55,292
Accruing troubled debt restructuring 97
Loans past due 90 days or more
Total nonperforming loans$13,787 $14,274 $14,419 $23,013 $36,108 $55,292
Other real estate owned - SEPH10,528 10,899 11,195 11,918 23,224 21,003
Total nonperforming assets$24,315 $25,173 $25,614 $34,931 $59,332 $76,295
New nonaccrual loan information - Park National Corporation
Nonaccrual loans, beginning of period$102,625 $95,887 $100,393 $135,216 $155,536 $195,106
New nonaccrual loans26,858 21,339 80,791 70,059 67,398 83,204
Resolved nonaccrual loans18,054 14,601 85,165 86,384 87,718 122,774
Sale of nonaccrual loans held for sale 132 18,498
Nonaccrual loans, end of period$111,429 $102,625 $95,887 $100,393 $135,216 $155,536
New nonaccrual loan information - Ohio-based operations
Nonaccrual loans, beginning of period$88,351 $81,468 $77,477 $99,108 $100,244 $96,113
New nonaccrual loans - Ohio-based operations26,735 21,339 80,791 69,389 66,197 68,960
Resolved nonaccrual loans17,444 14,456 76,800 78,288 67,333 64,829
Sale of nonaccrual loans held for sale 12,732
Nonaccrual loans, end of period$97,642 $88,351 $81,468 $77,477 $99,108 $100,244
New nonaccrual loan information - SEPH/Vision Bank
Nonaccrual loans, beginning of period$14,274 $14,419 $22,916 $36,108 $55,292 $98,993
New nonaccrual loans - SEPH/Vision Bank123 670 1,201 14,243
Resolved nonaccrual loans610 145 8,365 8,096 20,385 57,944
Sale of nonaccrual loans held for sale 132 5,766
Nonaccrual loans, end of period$13,787 $14,274 $14,419 $22,916 $36,108 $55,292
Impaired Commercial Loan Portfolio Information (period end):
Unpaid principal balance$115,186 $106,539 $109,304 $106,156 $175,576 $242,345
Prior charge-offs24,358 28,422 28,705 32,480 63,272 105,107
Remaining principal balance90,828 78,117 80,599 73,676 112,304 137,238
Specific reserves6,287 4,930 4,191 3,660 10,451 8,276
Book value, after specific reserve$84,541 $73,187 $76,408 $70,016 $101,853 $128,962


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

Source:Park National Corporation