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Park National Corporation reports financial results for fourth quarter and full year 2016

NEWARK, Ohio, Jan. 23, 2017 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE MKT:PRK) today announced financial results for the fourth quarter and the year ended 2016 (three and twelve months ended December 31, 2016). Park’s Chief Accounting Officer Matthew R. Miller was named executive vice president of Park and its community banking subsidiary The Park National Bank, effective April 1, 2017. Vice President Kelly A. Edds was appointed to assume the chief accounting officer role on the same date.

Park’s board of directors declared a quarterly cash dividend of $0.94 per common share, payable on March 10, 2017 to common shareholders of record as of February 17, 2017. The board also approved a share repurchase program authorizing Park to repurchase up to 500,000 of Park’s common shares.

“We ended 2016 as we hoped, increasing loans, deposits, assets under management and net income over 2015,” said Park Chief Executive Officer David L. Trautman. “We are grateful to our associates for another excellent year, and we look forward to finding new ways to serve our clients and communities in 2017.”

Park reported $20.0 million in net income for the fourth quarter of 2016, a 4.2 percent decrease from $20.9 million for the same period in 2015. Net income per diluted common share for the fourth quarter of 2016 was $1.30, compared to $1.36 in the fourth quarter of 2015.

Park’s net income for the 2016 year was $86.1 million, a 6.3 percent increase over $81.0 million for the 2015 year. Net income per diluted common share for the 2016 year was $5.59, compared to $5.26 for the 2015 year.

Park's community-banking subsidiary, The Park National Bank, reported net income of $16.1 million for the fourth quarter of 2016, compared to $23.1 million for the fourth quarter of 2015. The bank’s 2016 net income was $84.5 million, compared to $84.3 million for 2015. The bank had total assets of $7.4 billion at December 31, 2016, rising from $7.2 billion at December 31, 2015.

In 2016, the bank grew consumer loans by $152.5 million (15.6 percent) and commercial loans by $82.2 million (3.2 percent). Total loans for the bank were $5.23 billion at December 31, 2016, a $205.8 million (4.1 percent) increase over $5.03 billion at December 31, 2015.

The board of directors appointed Matthew R. Miller to serve as executive vice president, effective April 1, 2017. Miller joined Park in 2009. In his current role as a senior vice president and chief accounting officer, he is involved in Park’s financial performance, overall growth and ongoing community support. As executive vice president, Miller will provide additional focus on strategic opportunities, such as merger and acquisition options, specific business initiatives, and enhancing relationships throughout Park’s communities and industry.

“Matt exemplifies the best attributes of a Park National banker,” Trautman said. “He welcomes responsibility and the opportunity to serve others. He is humble and dedicated to helping his colleagues, our clients and our communities thrive.”

Miller began his financial career at Deloitte & Touche, LLP after graduating summa cum laude from the University of Akron. He is a graduate of the Ohio Bankers League Bank Leadership Institute. He has completed the Chicago Booth Executive Education program in Strategic Business Leadership, as well as the Licking County Chamber of Commerce Community Leadership Program. Miller is a member of the Ohio Society of Certified Public Accountants and the American Institute of Certified Public Accountants. He is vice-chair of the Next Generation Advisory Board for the Ohio Bankers League, and has been part of that board since 2014.

Miller has extensive experience in community leadership, serving currently as president of the Licking County YMCA board (board member since 2009) and chair of the annual giving committee for The Works. He is a member of the development councils for The Works and Licking Memorial Hospital, respectively. He is a member of the Granville chapter of Rotary International. Previously, he served as a board member for Big Brothers and Big Sisters of Licking and Perry Counties and as campaign chair for the United Way of Licking County. He also has led the event and finance committees for The Works HATSOFF! Event.

Kelly A. Edds will become chief accounting officer for Park on April 1, 2017. She joined Park in 2010 and currently serves as a vice president and financial reporting manager in the accounting department. Prior to Park, she worked six years at Deloitte & Touche, LLP in Columbus, Ohio. She earned bachelor’s degrees from Ohio University in accounting and management information systems. Edds has served as board treasurer for Pathways of Central Ohio since 2013. She was a campaign ambassador twice for United Way of Licking County and has been a planning committee member for Licking County’s Relay for Life event.

About Park National Corporation:

Headquartered in Newark, Ohio, Park National Corporation had $7.5 billion in total assets (as of December 31, 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 news 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 and impact loan demand; 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; uncertainty regarding 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, bank products and services, fiduciary standards, securities and other aspects of the financial services industry, specifically the reforms provided for in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and Basel III regulatory capital reforms, as well as regulations already adopted and which may be adopted in the future by the relevant regulatory agencies, including the Consumer Financial Protection Bureau, the OCC, the FDIC, and the Federal Reserve Board, 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 Board; 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 December 31, 2016, September 30, 2016, and December 31, 2015
201620162015 Percent change vs.
(in thousands, except share and per share data)4th QTR3rd QTR4th QTR 3Q '164Q '15
INCOME STATEMENT:
Net interest income$62,249 $58,533 $57,867 6.3%7.6%
Recovery of loan losses(1,282)(7,366)(658) N.M. N.M.
Other income22,071 20,535 19,296 7.5%14.4%
Other expense57,062 46,756 48,798 22.0%16.9%
Income before income taxes$28,540 $39,678 $29,023 (28.1)%(1.7)%
Income taxes8,538 12,229 8,134 (30.2)%5.0%
Net income$20,002 $27,449 $20,889 (27.1)%(4.2)%
MARKET DATA:
Earnings per common share - basic (b)$1.30 $1.79 $1.36 (27.4)%(4.4)%
Earnings per common share - diluted (b)1.30 1.78 1.36 (27.0)%(4.4)%
Cash dividends per common share0.94 0.94 0.94 %%
Book value per common share at period end48.38 48.99 46.53 (1.2)%4.0%
Market price per common share at period end119.66 96.00 90.48 24.6%32.3%
Market capitalization at period end1,835,670 1,471,755 1,387,132 24.7%32.3%
Weighted average common shares - basic (a)15,337,806 15,330,791 15,345,986 %(0.1)%
Weighted average common shares - diluted (a)15,415,132 15,399,707 15,384,451 0.1%0.2%
Common shares outstanding at period end15,340,718 15,330,781 15,330,815 0.1%0.1%
PERFORMANCE RATIOS: (annualized)
Return on average assets (a)(b)1.07%1.46%1.13% (26.7)%(5.3)%
Return on average equity (a)(b)10.62%14.67%11.56% (27.6)%(8.1)%
Yield on loans4.87%4.66%4.63% 4.5%5.2%
Yield on investments2.29%2.25%2.38% 1.8%(3.8)%
Yield on money markets0.53%0.52%0.27% 1.9%96.3%
Yield on earning assets4.23%3.99%3.96% 6.0%6.8%
Cost of interest bearing deposits0.34%0.32%0.29% 6.3%17.2%
Cost of borrowings2.40%2.49%2.34% (3.6)%2.6%
Cost of paying liabilities0.74%0.74%0.71% %4.2%
Net interest margin (g)3.68%3.42%3.41% 7.6%7.9%
Efficiency ratio (g)67.04%58.67%62.98% 14.3%6.4%
OTHER RATIOS (NON - GAAP):
Annualized return on average tangible assets (a)(b)(e)1.08%1.48%1.14% (27.0)%(5.3)%
Annualized return on average tangible equity (a)(b)(c)11.76%16.24%12.86% (27.6)%(8.6)%
Tangible book value per share (d)$43.67 $44.27 $41.81 (1.4)%4.4%
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, 2016, September 30, 2016, and December 31, 2015
Percent change vs.
BALANCE SHEET:December 31,
2016
September 30,
2016
December 31,
2015
3Q '164Q '15
Investment securities$1,579,783 $1,478,255 $1,643,879 6.9%(3.9)%
Loans5,271,857 5,187,004 5,068,085 1.6%4.0%
Allowance for loan losses50,624 53,562 56,494 (5.5)%(10.4)%
Goodwill72,334 72,334 72,334 %%
Other real estate owned (OREO)13,926 14,941 18,651 (6.8)%(25.3)%
Total assets7,467,586 7,364,092 7,311,354 1.4%2.1%
Total deposits5,521,956 5,519,659 5,347,642 %3.3%
Borrowings1,134,076 1,005,937 1,177,347 12.7%(3.7)%
Shareholders' equity742,240 751,063 713,355 (1.2)%4.0%
Tangible equity (d)669,906 678,729 641,021 (1.3)%4.5%
Nonperforming loans108,083 116,864 122,787 (7.5)%(12.0)%
Nonperforming assets122,009 131,805 141,438 (7.4)%(13.7)%
ASSET QUALITY RATIOS:
Loans as a % of period end total assets70.60%70.44%69.32% 0.2%1.8%
Nonperforming loans as a % of period end loans2.05%2.25%2.42% (8.9)%(15.3)%
Nonperforming assets as a % of period end loans + OREO2.31%2.53%2.78% (8.7)%(16.9)%
Allowance for loan losses as a % of period end loans0.96%1.03%1.11% (6.8)%(13.5)%
Net loan charge-offs (recoveries)$1,656 $(2,229)$1,331 N.M. N.M.
Annualized net loan charge-offs (recoveries) as a % of average loans (a)0.13%(0.17)%0.11% N.M. N.M.
CAPITAL & LIQUIDITY:
Total equity / Period end total assets9.94%10.20%9.76% (2.5)%1.8%
Tangible equity (d) / Tangible assets (f)9.06%9.31%8.86% (2.7)%2.3%
Average equity / Average assets (a)10.11%9.97%9.76% 1.4%3.6%
Average equity / Average loans (a)14.36%14.49%14.28% (0.9)%0.6%
Average loans / Average deposits (a)93.54%91.14%91.51% 2.6%2.2%
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, 2016 and 2015
(in thousands, except share and per share data) 2016 2015 Percent change
vs. 2015
INCOME STATEMENT:
Net interest income $238,086 $227,632 4.6%
(Recovery of) provision for loan losses (5,101) 4,990 N.M.
Other income 78,731 77,551 1.5%
Total other expense 199,023 186,614 6.6%
Income before income taxes $122,895 $113,579 8.2%
Income taxes 36,760 32,567 12.9%
Net income $86,135 $81,012 6.3%
MARKET DATA:
Earnings per common share - basic (b) $5.62 $5.27 6.6%
Earnings per common share - diluted (b) 5.59 5.26 6.3%
Cash dividends per common share 3.76 3.76 %
Weighted average common shares - basic (a) 15,332,553 15,364,281 (0.2)%
Weighted average common shares - diluted (a) 15,405,160 15,404,740 %
PERFORMANCE RATIOS:
Return on average assets (a)(b) 1.16% 1.11% 4.5%
Return on average common equity (a)(b) 11.68% 11.40% 2.5%
Yield on loans 4.74% 4.66% 1.7%
Yield on investments 2.30% 2.46% (6.5)%
Yield on earning assets 4.08% 3.95% 3.3%
Cost of interest bearing deposits 0.32% 0.30% 6.7%
Cost of borrowings 2.43% 2.38% 2.1%
Cost of paying liabilities 0.74% 0.72% 2.8%
Net interest margin (g) 3.52% 3.39% 3.8%
Efficiency ratio (g) 62.34% 60.98% 2.2%
ASSET QUALITY RATIOS:
Net loan charge-offs $769 $2,848 N.M.
Net loan charge-offs as a % of average loans (a) 0.02% 0.06% N.M.
CAPITAL & LIQUIDITY:
Average stockholders' equity / Average assets (a) 9.95% 9.72% 2.4%
Average stockholders' equity / Average loans (a) 14.40% 14.47% (0.5)%
Average loans / Average deposits (a) 91.79% 89.81% 2.2%
OTHER RATIOS (NON-GAAP):
Return on average tangible assets (a)(b)(e) 1.17% 1.12% 4.5%
Return on average tangible equity (a)(b)(c) 12.94% 12.70% 1.9%


PARK NATIONAL CORPORATION
Financial Highlights (continued)
(a) Averages are for the three months ended December 31, 2016, September 30, 2016 and December 31, 2015 and the fiscal years ended December 31, 2016 and December 31, 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 TWELVE MONTHS ENDED
December 31, 2016September 30, 2016December 31, 2015 December 31, 2016December 31, 2015
AVERAGE SHAREHOLDERS' EQUITY$749,053 $744,620 $716,977 $737,737 $710,327
Less: Average goodwill72,334 72,334 72,334 72,334 72,334
AVERAGE TANGIBLE EQUITY$676,719 $672,286 $644,643 $665,403 $637,993
(d) Tangible equity 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, 2016September 30, 2016December 31, 2015
SHAREHOLDERS' EQUITY$742,240 $751,063 $713,355
Less: Goodwill72,334 72,334 72,334
TANGIBLE EQUITY$669,906 $678,729 $641,021
(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, 2016September 30, 2016December 31, 2015 December 31, 2016December 31, 2015
AVERAGE ASSETS$7,408,109 $7,468,439 $7,343,206 $7,416,519 $7,306,460
Less: Average goodwill72,334 72,334 72,334 72,334 72,334
AVERAGE TANGIBLE ASSETS$7,335,775 $7,396,105 $7,270,872 $7,344,185 $7,234,126
(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, 2016September 30, 2016December 31, 2015
TOTAL ASSETS$7,467,586 $7,364,092 $7,311,354
Less: Goodwill72,334 72,334 72,334
TANGIBLE ASSETS$7,395,252 $7,291,758 $7,239,020
(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, 2016September 30, 2016December 31, 2015 December 31, 2016December 31, 2015
Interest income$71,697 $68,242 $67,165 $276,258 $265,074
Fully taxable equivalent adjustment799 619 314 2,417 865
Fully taxable equivalent interest income$72,496 $68,861 $67,479 $278,675 $265,939
Interest expense9,448 9,709 9,298 38,172 37,442
Fully taxable equivalent net interest income$63,048 $59,152 $58,181 $240,503 $228,497


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) 2016 2015 2016 2015
Interest income:
Interest and fees on loans $63,633 $58,424 $241,979 $227,979
Interest on:
Obligations of U.S. Government, its agencies
and other securities 6,909 8,360 30,627 36,025
Obligations of states and political subdivisions 979 170 2,632 182
Other interest income 176 211 1,020 888
Total interest income 71,697 67,165 276,258 265,074
Interest expense:
Interest on deposits:
Demand and savings deposits 1,228 573 4,079 2,229
Time deposits 2,209 2,453 9,337 10,125
Interest on borrowings 6,011 6,272 24,756 25,088
Total interest expense 9,448 9,298 38,172 37,442
Net interest income 62,249 57,867 238,086 227,632
(Recovery of) provision for loan losses (1,282) (658) (5,101) 4,990
Net interest income after (recovery of) provision for loan losses 63,531 58,525 243,187 222,642
Other income 22,071 19,296 78,731 77,551
Other expense 57,062 48,798 199,023 186,614
Income before income taxes 28,540 29,023 122,895 113,579
Income taxes 8,538 8,134 36,760 32,567
Net income $20,002 $20,889 $86,135 $81,012
Per Common Share:
Net income - basic $1.30 $1.36 $5.62 $5.27
Net income - diluted $1.30 $1.36 $5.59 $5.26
Weighted average shares - basic 15,337,806 15,345,986 15,332,553 15,364,281
Weighted average shares - diluted 15,415,132 15,384,451 15,405,160 15,404,740
Cash Dividends Declared $0.94 $0.94 $3.76 $3.76


PARK NATIONAL CORPORATION
Consolidated Balance Sheets
(in thousands, except share data)December 31, 2016December 31, 2015
Assets
Cash and due from banks$122,811 $119,412
Money market instruments23,635 30,047
Investment securities1,579,783 1,643,879
Loans5,271,857 5,068,085
Allowance for loan losses(50,624)(56,494)
Loans, net5,221,233 5,011,591
Bank premises and equipment, net57,971 59,493
Goodwill72,334 72,334
Other real estate owned13,926 18,651
Other assets375,893 355,947
Total assets$7,467,586 $7,311,354
Liabilities and Shareholders' Equity
Deposits:
Noninterest bearing$1,523,417 $1,404,032
Interest bearing3,998,539 3,943,610
Total deposits5,521,956 5,347,642
Borrowings1,134,076 1,177,347
Other liabilities69,314 73,010
Total liabilities$6,725,346 $6,597,999
Shareholders' Equity:
Preferred shares (200,000 shares authorized; no shares outstanding at December 31, 2016 and December 31, 2015)
$ $
Common shares (No par value; 20,000,000 shares authorized in 2016 and 2015; 16,150,807 shares issued at December 31, 2016 and 16,150,854 shares issued at December 31, 2015)305,826 303,966
Accumulated other comprehensive loss, net of taxes(17,745)(15,643)
Retained earnings535,631 507,505
Treasury shares (810,089 shares at December 31, 2016 and 820,039 shares at December 31, 2015)(81,472)(82,473)
Total shareholders' equity$742,240 $713,355
Total liabilities and shareholders' equity$7,467,586 $7,311,354


PARK NATIONAL CORPORATION
Consolidated Average Balance Sheets
Three Months Ended Twelve Months Ended
December 31, December 31,
(in thousands)20162015 20162015
Assets
Cash and due from banks$116,349 $116,302 $115,779 $117,286
Money market instruments131,890 306,667 198,197 342,997
Investment securities1,475,097 1,447,293 1,520,118 1,486,921
Loans5,217,313 5,020,525 5,122,862 4,909,579
Allowance for loan losses(54,077)(58,621) (56,890)(56,947)
Loans, net5,163,236 4,961,904 5,065,972 4,852,632
Bank premises and equipment, net58,664 59,540 59,104 58,377
Goodwill72,334 72,334 72,334 72,334
Other real estate owned14,404 19,365 16,871 21,568
Other assets376,135 359,801 368,144 354,345
Total assets$7,408,109 $7,343,206 $7,416,519 $7,306,460
Liabilities and Shareholders' Equity
Deposits:
Noninterest bearing$1,499,367 $1,374,672 $1,414,885 $1,311,628
Interest bearing4,078,333 4,111,578 4,165,919 4,155,196
Total deposits5,577,700 5,486,250 5,580,804 5,466,824
Borrowings995,320 1,061,519 1,016,922 1,052,186
Other liabilities86,036 78,460 81,056 77,123
Total liabilities$6,659,056 $6,626,229 $6,678,782 $6,596,133
Shareholders' Equity:
Preferred shares$ $ $ $
Common shares305,299 303,824 304,663 303,501
Accumulated other comprehensive loss, net of taxes(7,460)(9,353) (5,307)(9,204)
Retained earnings532,980 503,665 520,676 495,776
Treasury shares(81,766)(81,159) (82,295)(79,746)
Total shareholders' equity$749,053 $716,977 $737,737 $710,327
Total liabilities and shareholders' equity$7,408,109 $7,343,206 $7,416,519 $7,306,460


PARK NATIONAL CORPORATION
Consolidated Statements of Income - Linked Quarters
20162016201620162015
(in thousands, except per share data)4th QTR3rd QTR2nd QTR1st QTR4th QTR
Interest income:
Interest and fees on loans$63,633 $59,893 $58,401 $60,052 $58,424
Interest on:
Obligations of U.S. Government, its agencies and other securities6,909 7,339 7,770 8,609 8,360
Obligations of states and political subdivisions979 689 591 373 170
Other interest income176 321 249 274 211
Total interest income71,697 68,242 67,011 69,308 67,165
Interest expense:
Interest on deposits:
Demand and savings deposits1,228 1,094 933 824 573
Time deposits2,209 2,352 2,389 2,387 2,453
Interest on borrowings6,011 6,263 6,204 6,278 6,272
Total interest expense9,448 9,709 9,526 9,489 9,298
Net interest income62,249 58,533 57,485 59,819 57,867
(Recovery of) provision for loan losses(1,282)(7,366)2,637 910 (658)
Net interest income after (recovery of) provision for loan losses63,531 65,899 54,848 58,909 58,525
Other income22,071 20,535 18,736 17,389 19,296
Other expense57,062 46,756 45,306 49,899 48,798
Income before income taxes28,540 39,678 28,278 26,399 29,023
Income taxes8,538 12,229 8,280 7,713 8,134
Net income$20,002 $27,449 $19,998 $18,686 $20,889
Per Common Share:
Net income - basic$1.30 $1.79 $1.30 $1.22 $1.36
Net income - diluted$1.30 $1.78 $1.30 $1.21 $1.36


PARK NATIONAL CORPORATION
Detail of other income and other expense - Linked Quarters
20162016201620162015
(in thousands)4th QTR3rd QTR2nd QTR1st QTR4th QTR
Other income:
Income from fiduciary activities$5,534 $5,315 $5,438 $5,113 $5,140
Service charges on deposits3,461 3,800 3,575 3,423 3,777
Other service income4,854 3,640 3,351 2,574 2,861
Checkcard fee income3,877 3,780 3,868 3,532 3,902
Bank owned life insurance income1,054 1,038 1,049 1,197 1,245
ATM fees534 581 570 583 588
OREO valuation adjustments(29)(233)(221)(118)(319)
Gain on the sale of OREO, net244 783 162 134 175
Gain on sale of investments 88
Miscellaneous2,542 1,831 944 951 1,839
Total other income$22,071 $20,535 $18,736 $17,389 $19,296
Other expense:
Salaries$22,140 $22,084 $21,256 $21,554 $22,520
Employee benefits4,522 5,073 4,894 4,773 4,161
Occupancy expense2,546 2,506 2,639 2,548 2,257
Furniture and equipment expense3,470 3,437 3,416 3,443 3,069
Data processing fees1,568 1,450 1,373 1,217 1,190
Professional fees and services8,757 6,356 5,401 6,667 7,751
Marketing1,277 1,062 1,073 1,111 975
Insurance1,553 1,423 1,438 1,411 1,407
Communication1,257 1,154 1,353 1,221 1,321
State tax expense941 895 798 926 857
Debt prepayment penalty5,554
Miscellaneous3,477 1,316 1,665 5,028 3,290
Total other expense$57,062 $46,756 $45,306 $49,899 $48,798


PARK NATIONAL CORPORATION
Asset Quality Information
Year ended December 31,
(in thousands, except ratios)201620152014 20132012
Allowance for loan losses:
Allowance for loan losses, beginning of period$56,494 $54,352 $59,468 $55,537 $68,444
Charge-offs20,799 14,290 24,780 (B)19,153 61,268 (A)
Recoveries20,030 11,442 26,997 19,669 12,942
Net charge-offs (recoveries)769 2,848 (2,217) (516)48,326
(Recovery of) provision for loan losses(5,101)4,990 (7,333) 3,415 35,419
Allowance for loan losses, end of period$50,624 $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$50,624 $56,494 $54,352 $59,468 $55,537
Specific reserves548 4,191 3,660 10,451 8,276
General reserves$50,076 $52,303 $50,692 $49,017 $47,261
Total loans$5,271,857 $5,068,085 $4,829,682 $4,620,505 $4,450,322
Impaired commercial loans70,415 80,599 73,676 112,304 137,238
Total loans less impaired commercial loans$5,201,442 $4,987,486 $4,756,006 $4,508,201 $4,313,084
Asset Quality Ratios:
Net charge-offs (recoveries) as a % of average loans0.02%0.06%(0.05)% (0.01)%1.10%
Allowance for loan losses as a % of period end loans0.96%1.11%1.13% 1.29%1.25%
General reserves as a % of total loans less impaired commercial loans0.96%1.05%1.07% 1.09%1.10%
Nonperforming Assets - Park National Corporation:
Nonaccrual loans$87,822 $95,887 $100,393 $135,216 $155,536
Accruing troubled debt restructuring18,175 24,979 16,254 18,747 29,800
Loans past due 90 days or more2,086 1,921 2,641 1,677 2,970
Total nonperforming loans$108,083 $122,787 $119,288 $155,640 $188,306
Other real estate owned - Park National Bank6,025 7,456 10,687 11,412 14,715
Other real estate owned - SEPH7,901 11,195 11,918 23,224 21,003
Total nonperforming assets$122,009 $141,438 $141,893 $190,276 $224,024
Percentage of nonaccrual loans to period end loans1.67%1.89%2.08% 2.93%3.49%
Percentage of nonperforming loans to period end loans2.05%2.42%2.47% 3.37%4.23%
Percentage of nonperforming assets to period end loans2.31%2.79%2.94% 4.12%5.03%
Percentage of nonperforming assets to period end total assets1.63%1.93%2.03% 2.87%3.37%
PARK NATIONAL CORPORATION
Asset Quality Information (continued)
Year ended December 31,
(in thousands, except ratios)201620152014 20132012
Nonperforming Assets - Park National Bank and Guardian:
Nonaccrual loans$76,084 $81,468 $77,477 $99,108 $100,244
Accruing troubled debt restructuring18,175 24,979 16,157 18,747 29,800
Loans past due 90 days or more2,086 1,921 2,641 1,677 2,970
Total nonperforming loans$96,345 $108,368 $96,275 $119,532 $133,014
Other real estate owned - Park National Bank6,025 7,456 10,687 11,412 14,715
Total nonperforming assets$102,370 $115,824 $106,962 $130,944 $147,729
Percentage of nonaccrual loans to period end loans1.45%1.61%1.61% 2.16%2.28%
Percentage of nonperforming loans to period end loans1.83%2.14%2.00% 2.61%3.03%
Percentage of nonperforming assets to period end loans1.95%2.29%2.23% 2.86%3.36%
Percentage of nonperforming assets to period end total assets1.38%1.60%1.55% 2.01%2.27%
Nonperforming Assets - SEPH/Vision Bank (retained portfolio):
Nonaccrual loans$11,738 $14,419 $22,916 $36,108 $55,292
Accruing troubled debt restructuring 97
Loans past due 90 days or more
Total nonperforming loans$11,738 $14,419 $23,013 $36,108 $55,292
Other real estate owned - SEPH7,901 11,195 11,918 23,224 21,003
Total nonperforming assets$19,639 $25,614 $34,931 $59,332 $76,295
New nonaccrual loan information - Park National Corporation
Nonaccrual loans, beginning of period$95,887 $100,393 $135,216 $155,536 $195,106
New nonaccrual loans74,786 80,791 70,059 67,398 83,204
Resolved nonaccrual loans82,851 85,165 86,384 87,718 122,774
Sale of nonaccrual loans held for sale 132 18,498
Nonaccrual loans, end of period$87,822 $95,887 $100,393 $135,216 $155,536
New nonaccrual loan information - Park National Bank and Guardian
Nonaccrual loans, beginning of period$81,468 $77,477 $99,108 $100,244 $96,113
New nonaccrual loans - Ohio-based operations74,663 80,791 69,389 66,197 68,960
Resolved nonaccrual loans80,047 76,800 78,288 67,333 64,829
Sale of nonaccrual loans held for sale 12,732
Nonaccrual loans, end of period$76,084 $81,468 $77,477 $99,108 $100,244
New nonaccrual loan information - SEPH/Vision Bank
Nonaccrual loans, beginning of period$14,419 $22,916 $36,108 $55,292 $98,993
New nonaccrual loans - SEPH/Vision Bank123 670 1,201 14,243
Resolved nonaccrual loans2,804 8,365 8,096 20,385 57,944
Sale of nonaccrual loans held for sale 132 5,766
Nonaccrual loans, end of period$11,738 $14,419 $22,916 $36,108 $55,292
Impaired Commercial Loan Portfolio Information (period end):
Unpaid principal balance$95,358 $109,304 $106,156 $175,576 $242,345
Prior charge-offs24,943 28,705 32,480 63,272 105,107
Remaining principal balance70,415 80,599 73,676 112,304 137,238
Specific reserves548 4,191 3,660 10,451 8,276
Book value, after specific reserve$69,867 $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 Park National Corporation 50 N. Third Street, Newark, Ohio 43055 www.parknationalcorp.com

Source:Park National Corporation