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

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

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

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

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

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

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

About Park National Corporation

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

Complete financial tables are listed below…

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Park cautions that any forward-looking statements contained in this Current Report on Form 8-K or made by management of Park are provided to assist in the understanding of anticipated future financial performance. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include, without limitation: Park's ability to execute our business plan successfully and within the expected timeframe; general economic and financial market conditions, specifically in the real estate markets and the credit markets, either nationally or in the states in which Park and our subsidiaries do business, may experience a slowing or reversal of the recent economic expansion in addition to continuing residual effects of recessionary conditions and an uneven spread of positive impacts of recovery on the economy and our counterparties, including adverse impacts on the demand for loan, deposit and other financial services, delinquencies, defaults and counterparties' ability to meet credit and other obligations; changes in interest rates and prices may adversely impact the value of securities, loans, deposits and other financial instruments and the interest rate sensitivity of our consolidated balance sheet as well as reduce interest margins; changes in consumer spending, borrowing and saving habits, whether due to changing business and economic conditions, legislative and regulatory initiatives, or other factors; changes in unemployment; changes in customers', suppliers', and other counterparties' performance and creditworthiness; asset/liability repricing risks and liquidity risks; our liquidity requirements could be adversely affected by changes to regulations governing bank and bank holding company capital and liquidity standards as well as by changes in our assets and liabilities; competitive factors among financial services organizations could increase significantly, including product and pricing pressures, changes to third-party relationships and our ability to attract, develop and retain qualified bank professionals; clients could pursue alternatives to bank deposits, causing us to lose a relatively inexpensive source of funding; the nature, timing and effect of changes in banking regulations or other regulatory or legislative requirements affecting the respective businesses of Park and our subsidiaries, including major reform of the regulatory oversight structure of the financial services industry and changes in laws and regulations concerning taxes, pensions, bankruptcy, consumer protection, accounting, banking, securities and other aspects of the financial services industry, specifically the reforms provided for in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), as well as regulations already adopted and which may be adopted in the future by the relevant regulatory agencies, including the Consumer Financial Protection Bureau, to implement the Dodd-Frank Act's provisions, the Budget Control Act of 2011, the American Taxpayer Relief Act of 2012, the JOBS Act, the FAST Act and the Basel III regulatory capital reforms; the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board, the SEC, the Public Company Accounting Oversight Board and other regulatory agencies, and the accuracy of our assumptions and estimates used to prepare our financial statements; the effect of trade, monetary, fiscal and other governmental policies of the U.S. federal government, including money supply and interest rate policies of the Federal Reserve; disruption in the liquidity and other functioning of U.S. financial markets; the impact on financial markets and the economy of any changes in the credit ratings of the U.S. Treasury obligations and other U.S. government-backed debt, as well as issues surrounding the levels of U.S., European and Asian government debt and concerns regarding the creditworthiness of certain sovereign governments, supranationals and financial institutions in Europe and Asia; the uncertainty surrounding the United Kingdom's exit from the European Union and its consequences; our litigation and regulatory compliance exposure, including any adverse developments in legal proceedings or other claims and unfavorable resolution of regulatory and other governmental examinations or other inquiries; the adequacy of our risk management program; the ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks; a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors and other service providers, including as a result of cyber attacks; fraud, scams and schemes of third parties; the impact of widespread natural and other disasters, pandemics, dislocations, terrorist activities or international hostilities on the economy and financial markets generally or on US or our counterparties specifically; demand for loans in the respective market areas served by Park and our subsidiaries; and other risk factors relating to the banking industry as detailed from time to time in Park's reports filed with the SEC including those described in "Item 1A. Risk Factors" of Part I of Park's Annual Report on Form 10-K for the fiscal year ended December 31, 2015. Park does not undertake, and specifically disclaims any obligation, to publicly release the results of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement was made, or reflect the occurrence of unanticipated events, except to the extent required by law.


PARK NATIONAL CORPORATION
Financial Highlights
Three months ended September 30, 2016, June 30, 2016, and September 30, 2015
201620162015 Percent change vs.
(in thousands, except share and per share data)3rd QTR2nd QTR3rd QTR 2Q '163Q '15
INCOME STATEMENT:
Net interest income$58,533 $57,485 $57,715 1.8%1.4%
(Recovery of) provision for loan losses(7,366)2,637 2,404 N.M. N.M.
Other income20,535 18,736 20,191 9.6%1.7%
Other expense46,756 45,306 47,429 3.2%(1.4) %
Income before income taxes$39,678 $28,278 $28,073 40.3%41.3%
Income taxes12,229 8,280 8,033 47.7%52.2%
Net income$27,449 $19,998 $20,040 37.3%37.0%
MARKET DATA:
Earnings per common share - basic (b)$1.79 $1.30 $1.30 37.7%37.7%
Earnings per common share - diluted (b)1.78 1.30 1.30 36.9%36.9%
Cash dividends per common share0.94 0.94 0.94 %%
Book value per common share at period end48.99 48.26 46.66 1.5%5.0%
Market price per common share at period end96.00 91.78 90.22 4.6%6.4%
Market capitalization at period end1,471,755 1,407,060 1,384,035 4.6%6.3%
Weighted average common shares - basic (a)15,330,791 15,330,802 15,361,087 %(0.2)%
Weighted average common shares - diluted (a)15,399,707 15,399,283 15,401,808 %%
Common shares outstanding at period end15,330,781 15,330,796 15,340,670 %(0.1)%
PERFORMANCE RATIOS: (annualized)
Return on average assets (a)(b)1.46%1.09%1.07% 33.9%36.4%
Return on average equity (a)(b)14.67%10.98%11.20% 33.6%31.0%
Yield on loans4.66%4.64%4.65% 0.4%0.2%
Yield on investments2.25%2.30%2.39% (2.2)%(5.9)%
Yield on money markets0.52%0.51%0.25% 2.0%108.0%
Yield on earning assets3.99%4.00%3.91% (0.3)%2.0%
Cost of interest bearing deposits0.32%0.32%0.29% %10.3%
Cost of borrowings2.49%2.50%2.39% (0.4)%4.2%
Cost of paying liabilities0.74%0.74%0.70% %5.7%
Net interest margin (g)3.42%3.43%3.37% (0.3)%1.5%
Efficiency ratio (g)58.67%59.01%60.71% (0.6)%(3.4)%
OTHER RATIOS (NON - GAAP):
Annualized return on average tangible assets (a)(b)(e)1.48%1.10%1.08% 34.5%37.0%
Annualized return on average tangible equity (a)(b)(c)16.24%12.18%12.47% 33.3%30.2%
Tangible book value per share (d)$44.27 $43.54 $41.95 1.7%5.5%
N.M. - Not meaningful
Note: Explanations (a) - (g) are included at the end of the financial highlights.
PARK NATIONAL CORPORATION
Financial Highlights (continued)
Three months ended September 30, 2016, June 30, 2016, and September 30, 2015
Percent change vs.
BALANCE SHEET:September 30,
2016
June 30, 2016September 30,
2015
2Q '163Q '15
Investment securities$1,478,255 $1,548,006 $1,469,284 (4.5)%0.6%
Loans5,187,004 5,127,644 4,999,912 1.2%3.7%
Allowance for loan losses53,562 58,699 58,483 (8.8)%(8.4)%
Goodwill72,334 72,334 72,334 %%
Other real estate owned (OREO)14,941 17,566 20,136 (14.9)%(25.8)%
Total assets7,364,092 7,431,610 7,300,340 (0.9)%0.9%
Total deposits5,519,659 5,623,879 5,454,982 (1.9)%1.2%
Borrowings1,005,937 996,905 1,059,904 0.9%(5.1)%
Shareholders' equity751,063 739,887 715,803 1.5%4.9%
Tangible equity (d)678,729 667,553 643,469 1.7%5.5%
Nonperforming loans116,864 131,456 109,638 (11.1)%6.6%
Nonperforming assets131,805 149,022 129,774 (11.6)%1.6%
ASSET QUALITY RATIOS:
Loans as a % of period end total assets70.44%69.00%68.49% 2.1%2.8%
Nonperforming loans as a % of period end loans2.25%2.56%2.19% (12.1)%2.7%
Nonperforming assets as a % of period end loans + OREO2.53%2.90%2.59% (12.8)%(2.3)%
Allowance for loan losses as a % of period end loans1.03%1.14%1.17% (9.6)%(12.0)%
Net loan (recoveries) charge-offs$(2,229)$886 $1,348 N.M. N.M.
Annualized net loan (recoveries) charge-offs as a % of average loans (a)(0.17) %0.07%0.11% N.M. N.M.
CAPITAL & LIQUIDITY:
Total equity / Period end total assets10.20%9.96%9.81% 2.4%4.0%
Tangible equity (d) / Tangible assets (f)9.31%9.07%8.90% 2.6%4.6%
Average equity / Average assets (a)9.97%9.92%9.59% 0.5%4.0%
Average equity / Average loans (a)14.49%14.41%14.37% 0.6%0.8%
Average loans / Average deposits (a)91.14%91.18%88.61% %2.9%
N.M. - Not meaningful
Note: Explanations (a) - (h) are included at the end of the financial highlights.


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


PARK NATIONAL CORPORATION
Financial Highlights (continued)
(a) Averages are for the three months ended September 30, 2016, June 30, 2016 and September 30, 2015 and the nine months ended September 30, 2016 and September 30, 2015.
(b) Reported measure uses net income.
(c) Net income for each period divided by average tangible equity during the period. Average tangible equity equals average shareholders' equity during the applicable period less average goodwill during the applicable period.
RECONCILIATION OF AVERAGE SHAREHOLDERS' EQUITY TO AVERAGE TANGIBLE EQUITY:
THREE MONTHS ENDED NINE MONTHS ENDED
September 30, 2016June 30, 2016September 30, 2015 September 30, 2016September 30, 2015
AVERAGE SHAREHOLDERS' EQUITY$744,620 $732,759 $710,128 $733,937 $708,085
Less: Average goodwill72,334 72,334 72,334 72,334 72,334
AVERAGE TANGIBLE EQUITY$672,286 $660,425 $637,794 $661,603 $635,751
(d) Tangible book value divided by common shares outstanding at period end. Tangible equity equals ending shareholders' equity less goodwill, in each case at the end of the period.
RECONCILIATION OF SHAREHOLDERS' EQUITY TO TANGIBLE EQUITY:
September 30, 2016June 30, 2016September 30, 2015
SHAREHOLDERS' EQUITY$751,063 $739,887 $715,803
Less: Goodwill72,334 72,334 72,334
TANGIBLE EQUITY$678,729 $667,553 $643,469
(e) Net income for each period divided by average tangible assets during the period. Average tangible assets equals average assets less average goodwill, in each case during the applicable period.
RECONCILIATION OF AVERAGE ASSETS TO AVERAGE TANGIBLE ASSETS:
THREE MONTHS ENDED NINE MONTHS ENDED
September 30, 2016June 30, 2016September 30, 2015 September 30, 2016September 30, 2015
AVERAGE ASSETS$7,468,439 $7,383,703 $7,405,178 $7,419,342 $7,294,077
Less: Average goodwill72,334 72,334 72,334 72,334 72,334
AVERAGE TANGIBLE ASSETS$7,396,105 $7,311,369 $7,332,844 $7,347,008 $7,221,743
(f) Tangible equity divided by tangible assets. Tangible assets equals total assets less goodwill, in each case at the end of the period.
RECONCILIATION OF TOTAL ASSETS TO TANGIBLE ASSETS:
September 30, 2016June 30, 2016September 30, 2015
TOTAL ASSETS$7,364,092 $7,431,610 $7,300,340
Less: Goodwill72,334 72,334 72,334
TANGIBLE ASSETS$7,291,758 $7,359,276 $7,228,006
(g) Efficiency ratio is calculated by dividing total other expense by the sum of fully taxable equivalent net interest income and other income. Fully taxable equivalent net interest income reconciliation is shown below assuming a 35% tax rate. Additionally, net interest margin is calculated on a fully taxable equivalent basis.
RECONCILIATION OF FULLY TAXABLE EQUIVALENT NET INTEREST INCOME TO NET INTEREST INCOME
THREE MONTHS ENDED NINE MONTHS ENDED
September 30, 2016June 30, 2016September 30, 2015 September 30, 2016September 30, 2015
Interest income$68,242 $67,011 $67,087 $204,561 $197,909
Fully taxable equivalent adjustment619 555 220 1,618 551
Fully taxable equivalent interest income$68,861 $67,566 $67,307 $206,179 $198,460
Interest expense9,709 9,526 9,372 28,724 28,144
Fully taxable equivalent net interest income$59,152 $58,040 $57,935 $177,455 $170,316


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


PARK NATIONAL CORPORATION
Consolidated Balance Sheets
(in thousands, except share data)September 30, 2016
December 31, 2015
Assets
Cash and due from banks$117,457 $119,412
Money market instruments122,541 30,047
Investment securities1,478,255 1,643,879
Loans5,187,004 5,068,085
Allowance for loan losses(53,562)(56,494)
Loans, net5,133,442 5,011,591
Bank premises and equipment, net58,361 59,493
Goodwill72,334 72,334
Other real estate owned14,941 18,651
Other assets366,761 355,947
Total assets$7,364,092 $7,311,354
Liabilities and Shareholders' Equity
Deposits:
Noninterest bearing$1,429,024 $1,404,032
Interest bearing4,090,635 3,943,610
Total deposits5,519,659 5,347,642
Borrowings1,005,937 1,177,347
Other liabilities87,433 73,010
Total liabilities$6,613,029 $6,597,999
Shareholders' Equity:
Preferred shares (200,000 shares authorized; no shares outstanding at September 30, 2016 and December 31, 2015)
$ $
Common shares (No par value; 20,000,000 shares authorized in 2016 and 2015; 16,150,820 shares issued at September 30, 2016 and 16,150,854 shares issued at December 31, 2015)305,152 303,966
Accumulated other comprehensive loss, net of taxes(1,793)(15,643)
Retained earnings530,177 507,505
Treasury shares (820,039 shares at both September 30, 2016 and December 31, 2015)(82,473)(82,473)
Total shareholders' equity$751,063 $713,355
Total liabilities and shareholders' equity$7,364,092 $7,311,354


PARK NATIONAL CORPORATION
Consolidated Average Balance Sheets
Three Months Ended Nine Months Ended
September 30, September 30,
(in thousands)20162015 20162015
Assets
Cash and due from banks$116,069 $113,708 $115,588 $117,617
Money market instruments247,475 362,420 220,461 355,240
Investment securities1,507,484 1,528,404 1,535,235 1,500,275
Loans5,139,781 4,942,024 5,091,148 4,872,191
Allowance for loan losses(59,470)(57,798) (57,835)(56,383)
Loans, net5,080,311 4,884,226 5,033,313 4,815,808
Bank premises and equipment, net58,890 59,386 59,252 57,985
Goodwill72,334 72,334 72,334 72,334
Other real estate owned17,374 20,970 17,700 22,310
Other assets368,502 363,730 365,459 352,508
Total assets$7,468,439 $7,405,178 $7,419,342 $7,294,077
Liabilities and Shareholders' Equity
Deposits:
Noninterest bearing$1,401,201 $1,302,987 $1,386,518 $1,290,383
Interest bearing4,238,301 4,274,375 4,195,328 4,169,895
Total deposits5,639,502 5,577,362 5,581,846 5,460,278
Borrowings1,001,761 1,037,158 1,024,175 1,049,041
Other liabilities82,556 80,530 79,384 76,673
Total liabilities$6,723,819 $6,695,050 $6,685,405 $6,585,992
Shareholders' Equity:
Preferred shares$ $ $ $
Common shares304,885 303,631 304,449 303,392
Accumulated other comprehensive loss, net of taxes(350)(12,136) (4,584)(9,154)
Retained earnings522,558 498,670 516,545 493,117
Treasury shares(82,473)(80,037) (82,473)(79,270)
Total shareholders' equity$744,620 $710,128 $733,937 $708,085
Total liabilities and shareholders' equity$7,468,439 $7,405,178 $7,419,342 $7,294,077


PARK NATIONAL CORPORATION
Consolidated Statements of Income - Linked Quarters
20162016201620152015
(in thousands, except per share data)3rd QTR2nd QTR1st QTR4th QTR3rd QTR
Interest income:
Interest and fees on loans$59,893 $58,401 $60,052 $58,424 $57,680
Interest on:
Obligations of U.S. Government, its agencies and other securities7,339 7,770 8,609 8,360 9,163
Obligations of states and political subdivisions689 591 373 170 12
Other interest income321 249 274 211 232
Total interest income68,242 67,011 69,308 67,165 67,087
Interest expense:
Interest on deposits:
Demand and savings deposits1,094 933 824 573 614
Time deposits2,352 2,389 2,387 2,453 2,508
Interest on borrowings6,263 6,204 6,278 6,272 6,250
Total interest expense9,709 9,526 9,489 9,298 9,372
Net interest income58,533 57,485 59,819 57,867 57,715
(Recovery of) provision for loan losses(7,366)2,637 910 (658)2,404
Net interest income after (recovery of) provision for loan losses65,899 54,848 58,909 58,525 55,311
Other income20,535 18,736 17,389 19,296 20,191
Other expense46,756 45,306 49,899 48,798 47,429
Income before income taxes39,678 28,278 26,399 29,023 28,073
Income taxes12,229 8,280 7,713 8,134 8,033
Net income$27,449 $19,998 $18,686 $20,889 $20,040
Per Common Share:
Net income - basic$1.79 $1.30 $1.22 $1.36 $1.30
Net income - diluted$1.78 $1.30 $1.21 $1.36 $1.30


PARK NATIONAL CORPORATION
Detail of other income and other expense - Linked Quarters
20162016201620152015
(in thousands)3rd QTR2nd QTR1st QTR4th QTR3rd QTR
Other income:
Income from fiduciary activities$5,315 $5,438 $5,113 $5,140 $4,933
Service charges on deposits3,800 3,575 3,423 3,777 3,909
Other service income3,640 3,351 2,574 2,861 3,251
Checkcard fee income3,780 3,868 3,532 3,902 3,643
Bank owned life insurance income1,038 1,049 1,197 1,245 1,574
ATM fees581 570 583 588 648
OREO valuation adjustments(233)(221)(118)(319)(718)
Gain on the sale of OREO, net783 162 134 175 243
Gain on sale of investments 88
Miscellaneous1,831 944 951 1,839 2,708
Total other income$20,535 $18,736 $17,389 $19,296 $20,191
Other expense:
Salaries$22,084 $21,256 $21,554 $22,520 $21,692
Employee benefits5,073 4,894 4,773 4,161 6,721
Occupancy expense2,506 2,639 2,548 2,257 2,469
Furniture and equipment expense3,437 3,416 3,443 3,069 3,044
Data processing fees1,450 1,373 1,217 1,190 1,383
Professional fees and services6,356 5,401 6,667 7,751 5,424
Marketing1,062 1,073 1,111 975 1,058
Insurance1,423 1,438 1,411 1,407 1,399
Communication1,154 1,353 1,221 1,321 1,245
State tax expense895 798 926 857 779
Miscellaneous1,316 1,665 5,028 3,290 2,215
Total other expense$46,756 $45,306 $49,899 $48,798 $47,429


PARK NATIONAL CORPORATION
Asset Quality Information
Year ended December 31,
(in thousands, except ratios)September 30,
2016
June 30,
2016
March 31,
2016
20152014 20132012
Allowance for loan losses:
Allowance for loan losses, beginning of period$58,699 $56,948 $56,494 $54,352 $59,468 $55,537 $68,444
Charge-offs4,140 4,419 3,401 14,290 24,780 (B)19,153 61,268 (A)
Recoveries6,369 3,533 2,945 11,442 26,997 19,669 12,942
Net (recoveries) charge-offs(2,229)886 456 2,848 (2,217) (516)48,326
(Recovery of) provision for loan losses(7,366)2,637 910 4,990 (7,333) 3,415 35,419
Allowance for loan losses, end of period$53,562 $58,699 $56,948 $56,494 $54,352 $59,468 $55,537
(A) Year ended December 31, 2012 included the full charge-off of the Vision Bank ALLL of $12.1 million to bring the retained Vision Bank loan portfolio to fair value prior to the merger of Vision Bank (as constituted following the transaction with Centennial Bank and Home BancShares, Inc.) with and into SEPH, the non-bank subsidiary of Park, on February 16, 2012..
(B) Year ended December 31, 2014 included $4.3 million in charge-offs related to the transfer of $22.0 million of commercial loans to the held for sale portfolio
General reserve trends:
Allowance for loan losses, end of period$53,562 $58,699 $56,948 $56,494 $54,352 $59,468 $55,537
Specific reserves4,232 6,287 4,930 4,191 3,660 10,451 8,276
General reserves$49,330 $52,412 $52,018 $52,303 $50,692 $49,017 $47,261
Total loans$5,187,004 $5,127,644 $5,062,185 $5,068,085 $4,829,682 $4,620,505 $4,450,322
Impaired commercial loans77,986 90,828 78,117 80,599 73,676 112,304 137,238
Total loans less impaired commercial loans$5,109,018 $5,036,816 $4,984,068 $4,987,486 $4,756,006 $4,508,201 $4,313,084
Asset Quality Ratios:
Annualized net (recoveries) charge-offs as a % of average loans(0.17) %0.07%0.04%0.06%(0.05) % (0.01) %1.10%
Allowance for loan losses as a % of period end loans1.03%1.14%1.12%1.11%1.13% 1.29%1.25%
General reserves as a % of total loans less impaired commercial loans0.97%1.04%1.04%1.05%1.07% 1.09%1.10%
Nonperforming Assets - Park National Corporation:
Nonaccrual loans$97,832 $111,429 $102,625 $95,887 $100,393 $135,216 $155,536
Accruing troubled debt restructuring17,350 17,722 14,999 24,979 16,254 18,747 29,800
Loans past due 90 days or more1,682 2,305 1,336 1,921 2,641 1,677 2,970
Total nonperforming loans$116,864 $131,456 $118,960 $122,787 $119,288 $155,640 $188,306
Other real estate owned - Park National Bank7,004 7,038 6,846 7,456 10,687 11,412 14,715
Other real estate owned - SEPH7,937 10,528 10,899 11,195 11,918 23,224 21,003
Total nonperforming assets$131,805 $149,022 $136,705 $141,438 $141,893 $190,276 $224,024
Percentage of nonaccrual loans to period end loans1.89%2.17%2.03%1.89%2.08% 2.93%3.49%
Percentage of nonperforming loans to period end loans2.25%2.56%2.35%2.42%2.47% 3.37%4.23%
Percentage of nonperforming assets to period end loans2.54%2.91%2.70%2.79%2.94% 4.12%5.03%
Percentage of nonperforming assets to period end total assets1.79%2.01%1.84%1.93%2.03% 2.87%3.37%
PARK NATIONAL CORPORATION
Asset Quality Information (continued)
Year ended December 31,
(in thousands, except ratios)September 30,
2016
June 30,
2016
March 31,
2016
20152014 20132012
Nonperforming Assets - Park National Bank and Guardian:
Nonaccrual loans$84,045 $97,642 $88,351 $81,468 $77,477 $99,108 $100,244
Accruing troubled debt restructuring17,350 17,722 14,999 24,979 16,157 18,747 29,800
Loans past due 90 days or more1,682 2,305 1,336 1,921 2,641 1,677 2,970
Total nonperforming loans$103,077 $117,669 $104,686 $108,368 $96,275 $119,532 $133,014
Other real estate owned - Park National Bank7,004 7,038 6,846 7,456 10,687 11,412 14,715
Total nonperforming assets$110,081 $124,707 $111,532 $115,824 $106,962 $130,944 $147,729
Percentage of nonaccrual loans to period end loans1.62%1.91%1.75%1.61%1.61% 2.16%2.28%
Percentage of nonperforming loans to period end loans1.99%2.30%2.07%2.14%2.00% 2.61%3.03%
Percentage of nonperforming assets to period end loans2.13%2.44%2.21%2.29%2.23% 2.86%3.36%
Percentage of nonperforming assets to period end total assets1.51%1.69%1.52%1.60%1.55% 2.01%2.27%
Nonperforming Assets - SEPH/Vision Bank (retained portfolio):
Nonaccrual loans$13,787 $13,787 $14,274 $14,419 $22,916 $36,108 $55,292
Accruing troubled debt restructuring 97
Loans past due 90 days or more
Total nonperforming loans$13,787 $13,787 $14,274 $14,419 $23,013 $36,108 $55,292
Other real estate owned - SEPH7,937 10,528 10,899 11,195 11,918 23,224 21,003
Total nonperforming assets$21,724 $24,315 $25,173 $25,614 $34,931 $59,332 $76,295
New nonaccrual loan information - Park National Corporation
Nonaccrual loans, beginning of period$111,429 $102,625 $95,887 $100,393 $135,216 $155,536 $195,106
New nonaccrual loans12,363 26,858 21,339 80,791 70,059 67,398 83,204
Resolved nonaccrual loans25,960 18,054 14,601 85,165 86,384 87,718 122,774
Sale of nonaccrual loans held for sale 132 18,498
Nonaccrual loans, end of period$97,832 $111,429 $102,625 $95,887 $100,393 $135,216 $155,536
New nonaccrual loan information - Ohio-based operations
Nonaccrual loans, beginning of period$97,642 $88,351 $81,468 $77,477 $99,108 $100,244 $96,113
New nonaccrual loans - Ohio-based operations12,363 26,735 21,339 80,791 69,389 66,197 68,960
Resolved nonaccrual loans25,960 17,444 14,456 76,800 78,288 67,333 64,829
Sale of nonaccrual loans held for sale 12,732
Nonaccrual loans, end of period$84,045 $97,642 $88,351 $81,468 $77,477 $99,108 $100,244
New nonaccrual loan information - SEPH/Vision Bank
Nonaccrual loans, beginning of period$13,787 $14,274 $14,419 $22,916 $36,108 $55,292 $98,993
New nonaccrual loans - SEPH/Vision Bank 123 670 1,201 14,243
Resolved nonaccrual loans 610 145 8,365 8,096 20,385 57,944
Sale of nonaccrual loans held for sale 132 5,766
Nonaccrual loans, end of period$13,787 $13,787 $14,274 $14,419 $22,916 $36,108 $55,292
Impaired Commercial Loan Portfolio Information (period end):
Unpaid principal balance$100,187 $115,186 $106,539 $109,304 $106,156 $175,576 $242,345
Prior charge-offs22,201 24,358 28,422 28,705 32,480 63,272 105,107
Remaining principal balance77,986 90,828 78,117 80,599 73,676 112,304 137,238
Specific reserves4,232 6,287 4,930 4,191 3,660 10,451 8,276
Book value, after specific reserve$73,754 $84,541 $73,187 $76,408 $70,016 $101,853 $128,962


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

Source:Park National Corporation