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Park National Corporation reports financial results for second quarter and first half of 2017

NEWARK, Ohio, July 24, 2017 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE American:PRK) today announced financial results for the second quarter and first half of 2017 (three and six months ended June 30, 2017). Park’s board of directors declared a quarterly cash dividend of $0.94 per common share, payable on September 8, 2017 to common shareholders of record as of August 18, 2017.

Park reported $19.0 million in net income for the second quarter of 2017, a 4.8 percent decrease from $20.0 million for the same period in 2016. Net income per diluted common share for the second quarter of 2017 was $1.24, compared to $1.30 in the second quarter of 2016.

Net income for the first six months of 2017 was $39.3 million, a 1.6 percent increase from $38.7 million for the same period in 2016. Net income per diluted common share for the first half of 2017 was $2.55, compared to $2.51 for the first half of 2016.

Park's community-banking subsidiary, The Park National Bank, reported net income of $20.2 million for the second quarter of 2017, compared to $21.1 million for the second quarter of 2016. Park increased its provision for loan losses this quarter, preparing for potential loss related to a specific commercial loan.

Net income for the first six months of 2017 was $41.6 million, compared to $42.8 million for the same period in 2016. The bank had total assets of $7.8 billion at June 30, 2017, rising from $7.4 billion at December 31, 2016.

“Our associates have made great effort to grow deposit relationships and match new clients up with the account services that best fit them,” Park Chief Executive Officer David L. Trautman said about Park’s six percent increase in deposit balances over the last year. “Recent enhancements to our fraud protection, mobile banking, and non-profit group accounts helped generate momentum, and we believe the new personal accounts we’ll launch later this year will attract more clients to our banks throughout 2018.”

In the first half of 2017, the bank grew consumer loans by $96.8 million (17.3 percent annualized) and commercial loans by $21.6 million (1.6 percent annualized). Total loans for the bank were $5.33 billion at June 30, 2017, a $94.3 million (3.6 percent annualized) increase over $5.23 billion at December 31, 2016.

About Park National Corporation:

Headquartered in Newark, Ohio, Park National Corporation had $7.8 billion in total assets (as of June 30, 2017). 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, resulting in 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 the 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; changes in law and policy accompanying the new presidential administration and uncertainty or speculation pending the enactment of such changes; the effect of healthcare laws in the United States and potential changes for such laws which may increase our healthcare and other costs and negatively impact our operations and financial results; significant changes in the tax laws, which may adversely affect the fair values of net deferred tax assets and obligations of state and political subdivisions held in Park's investment securities portfolio; 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 actions to be taken to implement the referendum by United Kingdom voters to exit the European Union; 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, civil unrest, terrorist activities or international conflicts 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, 2016. 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
As of or for the three months ended June 30, 2017, March 31, 2017, and June 30, 2016
201720172016 Percent change vs.
(in thousands, except share and per share data)2nd QTR1st QTR2nd QTR 1Q '172Q '16
INCOME STATEMENT:
Net interest income$59,778 $58,952 $57,485 1.4%4.0%
Provision for loan losses4,581 876 2,637 N.M. N.M.
Other income19,251 17,507 18,736 10.0%2.7%
Other expense48,106 47,462 45,306 1.4%6.2%
Income before income taxes$26,342 $28,121 $28,278 (6.3) %(6.8) %
Income taxes7,310 7,854 8,280 (6.9) %(11.7) %
Net income$19,032 $20,267 $19,998 (6.1) %(4.8) %
MARKET DATA:
Earnings per common share - basic (b)$1.24 $1.32 $1.30 (6.1) %(4.6) %
Earnings per common share - diluted (b)1.24 1.31 1.30 (5.3) %(4.6) %
Cash dividends per common share0.94 0.94 0.94 %%
Book value per common share at period end49.18 48.64 48.26 1.1%1.9%
Market price per common share at period end103.72 105.20 91.78 (1.4)%13.0%
Market capitalization at period end1,586,613 1,609,254 1,407,060 (1.4)%12.8%
Weighted average common shares - basic (a)15,297,085 15,312,059 15,330,802 (0.1) %(0.2) %
Weighted average common shares - diluted (a)15,398,865 15,432,769 15,399,283 (0.2) %%
Common shares outstanding at period end15,297,080 15,297,087 15,330,796 %(0.2) %
PERFORMANCE RATIOS: (annualized)
Return on average assets (a)(b)0.99%1.09%1.09% (9.2) %(9.2) %
Return on average shareholders' equity (a)(b)10.13%11.05%10.98% (8.3) %(7.7) %
Yield on loans4.63%4.62%4.64% 0.2%(0.2) %
Yield on investment securities2.44%2.42%2.30% 0.8%6.1%
Yield on money markets1.05%0.85%0.51% 23.5%105.9%
Yield on earning assets4.02%4.06%4.00% (1.0) %0.5%
Cost of interest bearing deposits0.44%0.36%0.32% 22.2%37.5%
Cost of borrowings2.38%2.36%2.50% 0.8%(4.8) %
Cost of paying liabilities0.80%0.76%0.74% 5.3%8.1%
Net interest margin (g)3.42%3.49%3.43% (2.0) %(0.3) %
Efficiency ratio (g)59.97%61.22%59.01% (2.0) %1.6%
OTHER RATIOS (NON - GAAP):
Annualized return on average tangible assets (a)(b)(e)1.00%1.10%1.10% (9.1) %(9.1) %
Annualized return on average tangible equity (a)(b)(c)11.21%12.24%12.18% (8.4) %(8.0) %
Tangible book value per share (d)$44.45 $43.92 $43.54 1.2%2.1%
N.M. - Not meaningful
Note: Explanations (a) - (g) are included at the end of the financial highlights.
PARK NATIONAL CORPORATION
Financial Highlights (continued)
Three months ended June 30, 2017, March 31, 2017, and June 30, 2016
Percent change vs.
BALANCE SHEET:June 30,
2017
March 31,
2017
June 30,
2016
1Q '172Q '16
Investment securities$1,579,934 $1,565,668 $1,548,006 0.9%2.1%
Loans5,365,437 5,313,641 5,127,644 1.0%4.6%
Allowance for loan losses53,822 49,922 58,699 7.8%(8.3) %
Goodwill72,334 72,334 72,334 %%
Other real estate owned (OREO)14,881 13,693 17,566 8.7%(15.3) %
Total assets7,832,092 7,744,690 7,431,610 1.1%5.4%
Total deposits5,961,576 5,920,560 5,623,879 0.7%6.0%
Borrowings1,046,176 1,010,703 996,905 3.5%4.9%
Total shareholders' equity752,248 744,122 739,887 1.1%1.7%
Tangible equity (d)679,914 671,788 667,553 1.2%1.9%
Nonperforming loans110,904 107,284 131,456 3.4%(15.6) %
Nonperforming assets125,785 120,977 149,022 4.0%(15.6) %
ASSET QUALITY RATIOS:
Loans as a % of period end total assets68.51%68.61%69.00% (0.1) %(0.7) %
Nonperforming loans as a % of period end loans2.07%2.02%2.56% 2.5%(19.1) %
Nonperforming assets as a % of period end loans + OREO2.34%2.27%2.90% 3.1%(19.3) %
Allowance for loan losses as a % of period end loans1.00%0.94%1.14% 6.4%(12.3) %
Net loan charge-offs$681 $1,578 $886 N.M. N.M.
Annualized net loan charge-offs as a % of average loans (a)0.05%0.12%0.07% N.M. N.M.
CAPITAL & LIQUIDITY:
Total shareholders' equity / Period end total assets9.60%9.61%9.96% (0.1) %(3.6) %
Tangible equity (d) / Tangible assets (f)8.76%8.76%9.07% %(3.4) %
Average shareholders' equity / Average assets (a)9.74%9.84%9.92% (1.0) %(1.8) %
Average shareholders' equity / Average loans (a)14.14%14.10%14.41% 0.3%(1.9) %
Average loans / Average deposits (a)90.21%92.45%91.18% (2.4) %(1.1) %


PARK NATIONAL CORPORATION
Financial Highlights
Six months ended June 30, 2017 and 2016
20172016
(in thousands, except share and per share data)2nd QTR2nd QTR 2Q '16
INCOME STATEMENT:
Net interest income$118,730 $117,304 1.2%
Provision for loan losses5,457 3,547 N.M.
Other income36,758 36,125 1.8%
Other expense95,568 95,205 0.4%
Income before income taxes$54,463 $54,677 (0.4) %
Income taxes15,164 15,993 (5.2) %
Net income$39,299 $38,684 1.6%
MARKET DATA:
Earnings per common share - basic (b)$2.57 $2.52 2.0%
Earnings per common share - diluted (b)2.55 2.51 1.6%
Cash dividends per common share1.88 1.88 %
Weighted average common shares - basic (a)15,304,572 15,330,808 (0.2) %
Weighted average common shares - diluted (a)15,415,765 15,402,896 0.1%
PERFORMANCE RATIOS: (annualized)
Return on average assets (a)(b)1.04%1.05% (1.0) %
Return on average shareholders' equity (a)(b)10.58%10.68% (0.9) %
Yield on loans4.63%4.72% (1.9) %
Yield on investment securities2.43%2.34% 3.8%
Yield on earning assets4.04%4.06% (0.5) %
Cost of interest bearing deposits0.40%0.31% 29.0%
Cost of borrowings2.37%2.42% (2.1) %
Cost of paying liabilities0.78%0.73% 6.8%
Net interest margin (g)3.46%3.49% (0.9) %
Efficiency ratio (g)60.59%61.65% (1.7) %
ASSET QUALITY RATIOS:
Net loan charge-offs2,259 1,342 68.3%
Annualized net loan charge-offs as a % of average loans (a)0.09%0.05% 80.0%
CAPITAL & LIQUIDITY:
Average shareholders' equity / Average assets (a)9.79%9.85% (0.6) %
Average shareholders' equity / Average loans (a)14.12%14.38% (1.8) %
Average loans / Average deposits (a)91.31%91.25% 0.1%
OTHER RATIOS (NON - GAAP):
Annualized return on average tangible assets (a)(b)(e)1.05%1.06% (0.9) %
Annualized return on average tangible equity (a)(b)(c)11.72%11.86% (1.2) %
N.M. - Not meaningful
Note: Explanations (a) - (g) are included at the end of the financial highlights.


PARK NATIONAL CORPORATION
Financial Highlights (continued)
(a) Averages are for the three months ended June 30, 2017, March 31, 2017 and June 30, 2016 and the six months ended June 30, 2017 and June 30, 2016.
(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, 2017March 31, 2017June 30, 2016 June 30, 2017June 30, 2016
AVERAGE SHAREHOLDERS' EQUITY$753,373 $744,040 $732,759 $748,732 $728,537
Less: Average goodwill72,334 72,334 72,334 72,334 72,334
AVERAGE TANGIBLE EQUITY$681,039 $671,706 $660,425 $676,398 $656,203
(d) Tangible equity divided by common shares outstanding at period end. Tangible equity equals total shareholders' equity less goodwill, in each case at the end of the period.
RECONCILIATION OF TOTAL SHAREHOLDERS' EQUITY TO TANGIBLE EQUITY:
June 30, 2017March 31, 2017June 30, 2016
TOTAL SHAREHOLDERS' EQUITY$752,248 $744,122 $739,887
Less: Goodwill72,334 72,334 72,334
TANGIBLE EQUITY$679,914 $671,788 $667,553
(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, 2017March 31, 2017June 30, 2016 June 30, 2017June 30, 2016
AVERAGE ASSETS$7,736,884 $7,559,691 $7,383,703 $7,648,777 $7,394,524
Less: Average goodwill72,334 72,334 72,334 72,334 72,334
AVERAGE TANGIBLE ASSETS$7,664,550 $7,487,357 $7,311,369 $7,576,443 $7,322,190
(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, 2017March 31, 2017June 30, 2016
TOTAL ASSETS$7,832,092 $7,744,690 $7,431,610
Less: Goodwill72,334 72,334 72,334
TANGIBLE ASSETS$7,759,758 $7,672,356 $7,359,276
(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 by dividing fully taxable equivalent net interest income by average interest earning assets.
RECONCILIATION OF FULLY TAXABLE EQUIVALENT NET INTEREST INCOME TO NET INTEREST INCOME
THREE MONTHS ENDED SIX MONTHS ENDED
June 30, 2017March 31, 2017June 30, 2016 June 30, 2017June 30, 2016
Interest income$70,476 $68,755 $67,011 $139,231 $136,319
Fully taxable equivalent adjustment1,185 1,063 555 2,248 999
Fully taxable equivalent interest income$71,661 $69,818 $67,566 $141,479 $137,318
Interest expense10,698 9,803 9,526 20,501 19,015
Fully taxable equivalent net interest income$60,963 $60,015 $58,040 $120,978 $118,303


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) 2017 2016 2017 2016
Interest income:
Interest and fees on loans $61,222 $58,401 $121,130 $118,453
Interest on:
Obligations of U.S. Government, its agencies
and other securities 6,892 7,770 14,030 16,379
Obligations of states and political subdivisions 1,664 591 3,124 964
Other interest income 698 249 947 523
Total interest income 70,476 67,011 139,231 136,319
Interest expense:
Interest on deposits:
Demand and savings deposits 2,291 933 3,905 1,757
Time deposits 2,457 2,389 4,618 4,776
Interest on borrowings 5,950 6,204 11,978 12,482
Total interest expense 10,698 9,526 20,501 19,015
Net interest income 59,778 57,485 118,730 117,304
Provision for loan losses 4,581 2,637 5,457 3,547
Net interest income after provision for loan losses 55,197 54,848 113,273 113,757
Other income 19,251 18,736 36,758 36,125
Other expense 48,106 45,306 95,568 95,205
Income before income taxes 26,342 28,278 54,463 54,677
Income taxes 7,310 8,280 15,164 15,993
Net income $19,032 $19,998 $39,299 $38,684
Per Common Share:
Net income - basic $1.24 $1.30 $2.57 $2.52
Net income - diluted $1.24 $1.30 $2.55 $2.51
Weighted average shares - basic 15,297,085 15,330,802 15,304,572 15,330,808
Weighted average shares - diluted 15,398,865 15,399,283 15,415,765 15,402,896
Cash Dividends Declared $0.94 $0.94 $1.88 $1.88


PARK NATIONAL CORPORATION
Consolidated Balance Sheets
(in thousands, except share data)June 30, 2017December 31, 2016
Assets
Cash and due from banks$128,420 $122,811
Money market instruments282,659 23,635
Investment securities1,579,934 1,579,783
Loans5,365,437 5,271,857
Allowance for loan losses(53,822)(50,624)
Loans, net5,311,615 5,221,233
Bank premises and equipment, net56,108 57,971
Goodwill72,334 72,334
Other real estate owned14,881 13,926
Other assets386,141 375,893
Total assets$7,832,092 $7,467,586
Liabilities and Shareholders' Equity
Deposits:
Noninterest bearing$1,545,279 $1,523,417
Interest bearing4,416,297 3,998,539
Total deposits5,961,576 5,521,956
Borrowings1,046,176 1,134,076
Other liabilities72,092 69,314
Total liabilities$7,079,844 $6,725,346
Shareholders' Equity:
Preferred shares (200,000 shares authorized; no shares outstanding at June 30, 2017 and December 31, 2016)
$ $
Common shares (No par value; 20,000,000 shares authorized in 2016 and 2015; 16,150,788 shares issued at June 30, 2017 and 16,150,807 shares issued at December 31, 2016)306,418 305,826
Accumulated other comprehensive loss, net of taxes(13,712)(17,745)
Retained earnings545,794 535,631
Treasury shares (853,708 shares at June 30, 2017 and 810,089 shares at December 31, 2016)(86,252)(81,472)
Total shareholders' equity$752,248 $742,240
Total liabilities and shareholders' equity$7,832,092 $7,467,586


PARK NATIONAL CORPORATION
Consolidated Average Balance Sheets
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands)20172016 20172016
Assets
Cash and due from banks$108,317 $111,709 $113,931 $115,345
Money market instruments265,791 196,226 192,800 206,805
Investment securities1,553,811 1,536,331 1,559,861 1,549,263
Loans5,327,114 5,083,802 5,302,961 5,066,565
Allowance for loan losses(50,700)(57,016) (50,771)(57,008)
Loans, net5,276,414 5,026,786 5,252,190 5,009,557
Bank premises and equipment, net56,949 59,293 57,407 59,435
Goodwill72,334 72,334 72,334 72,334
Other real estate owned14,460 17,427 14,104 17,865
Other assets388,808 363,597 386,150 363,920
Total assets$7,736,884 $7,383,703 $7,648,777 $7,394,524
Liabilities and Shareholders' Equity
Deposits:
Noninterest bearing$1,534,272 $1,400,195 $1,516,910 $1,379,096
Interest bearing4,370,710 4,175,344 4,290,900 4,173,605
Total deposits5,904,982 5,575,539 5,807,810 5,552,701
Borrowings1,003,505 998,195 1,019,005 1,035,505
Other liabilities75,024 77,210 73,230 77,781
Total liabilities$6,983,511 $6,650,944 $6,900,045 $6,665,987
Shareholders' Equity:
Preferred shares$ $ $ $
Common shares305,892 304,472 305,900 304,229
Accumulated other comprehensive loss, net of taxes(13,814)(5,002) (15,514)(6,724)
Retained earnings547,547 515,762 543,763 513,505
Treasury shares(86,252)(82,473) (85,417)(82,473)
Total shareholders' equity$753,373 $732,759 $748,732 $728,537
Total liabilities and shareholders' equity$7,736,884 $7,383,703 $7,648,777 $7,394,524


PARK NATIONAL CORPORATION
Consolidated Statements of Income - Linked Quarters
20172017201620162016
(in thousands, except per share data)2nd QTR1st QTR4th QTR3rd QTR2nd QTR
Interest income:
Interest and fees on loans$61,222 $59,908 $63,633 $59,893 $58,401
Interest on:
Obligations of U.S. Government, its agencies and other securities6,892 7,138 6,909 7,339 7,770
Obligations of states and political subdivisions1,664 1,460 979 689 591
Other interest income698 249 176 321 249
Total interest income70,476 68,755 71,697 68,242 67,011
Interest expense:
Interest on deposits:
Demand and savings deposits2,291 1,614 1,228 1,094 933
Time deposits2,457 2,161 2,209 2,352 2,389
Interest on borrowings5,950 6,028 6,011 6,263 6,204
Total interest expense10,698 9,803 9,448 9,709 9,526
Net interest income59,778 58,952 62,249 58,533 57,485
Provision for (recovery of) loan losses4,581 876 (1,282)(7,366)2,637
Net interest income after provision for (recovery of) loan losses55,197 58,076 63,531 65,899 54,848
Other income19,251 17,507 22,071 20,535 18,736
Other expense48,106 47,462 57,062 46,756 45,306
Income before income taxes26,342 28,121 28,540 39,678 28,278
Income taxes7,310 7,854 8,538 12,229 8,280
Net income$19,032 $20,267 $20,002 $27,449 $19,998
Per Common Share:
Net income - basic$1.24 $1.32 $1.30 $1.79 $1.30
Net income - diluted$1.24 $1.31 $1.30 $1.78 $1.30


PARK NATIONAL CORPORATION
Detail of other income and other expense - Linked Quarters
20172017201620162016
(in thousands)2nd QTR1st QTR4th QTR3rd QTR2nd QTR
Other income:
Income from fiduciary activities$6,025 $5,514 $5,534 $5,315 $5,438
Service charges on deposits3,156 3,139 3,461 3,800 3,575
Other service income3,447 2,804 4,854 3,640 3,351
Checkcard fee income4,040 3,761 3,877 3,780 3,868
Bank owned life insurance income1,114 1,103 1,054 1,038 1,049
ATM fees561 542 534 581 570
OREO valuation adjustments(272)(73)(29)(233)(221)
Gain on the sale of OREO, net53 100 244 783 162
Miscellaneous1,127 617 2,542 1,831 944
Total other income$19,251 $17,507 $22,071 $20,535 $18,736
Other expense:
Salaries$23,001 $22,717 $22,140 $22,084 $21,256
Employee benefits4,919 5,181 4,522 5,073 4,894
Occupancy expense2,565 2,635 2,546 2,506 2,639
Furniture and equipment expense3,640 3,618 3,470 3,437 3,416
Data processing fees1,676 1,965 1,568 1,450 1,373
Professional fees and services6,018 4,829 8,757 6,356 5,401
Marketing1,084 1,056 1,277 1,062 1,073
Insurance1,517 1,570 1,553 1,423 1,438
Communication1,155 1,333 1,257 1,154 1,353
State tax expense943 1,063 941 895 798
Debt prepayment penalty 5,554
Miscellaneous1,588 1,495 3,477 1,316 1,665
Total other expense$48,106 $47,462 $57,062 $46,756 $45,306


PARK NATIONAL CORPORATION
Asset Quality Information
Year ended December 31,
(in thousands, except ratios)June 30,
2017
March 31, 2017201620152014 2013
Allowance for loan losses:
Allowance for loan losses, beginning of period$49,922 $50,624 $56,494 $54,352 $59,468 $55,537
Charge-offs3,046 3,708 20,799 14,290 24,780 (A)19,153
Recoveries2,365 2,130 20,030 11,442 26,997 19,669
Net charge-offs (recoveries)681 1,578 769 2,848 (2,217) (516)
Provision for (recovery of) loan losses4,581 876 (5,101)4,990 (7,333) 3,415
Allowance for loan losses, end of period$53,822 $49,922 $50,624 $56,494 $54,352 $59,468
(A) 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$53,822 $49,922 $50,624 $56,494 $54,352 $59,468
Specific reserves4,145 1,091 548 4,191 3,660 10,451
General reserves$49,677 $48,831 $50,076 $52,303 $50,692 $49,017
Total loans$5,365,437 $5,313,641 $5,271,857 $5,068,085 $4,829,682 $4,620,505
Impaired commercial loans73,095 70,099 70,415 80,599 73,676 112,304
Total loans less impaired commercial loans$5,292,342 $5,243,542 $5,201,442 $4,987,486 $4,756,006 $4,508,201
Asset Quality Ratios:
Net charge-offs (recoveries) as a % of average loans (annualized)0.05%0.12%0.02%0.06%(0.05)% (0.01)%
Allowance for loan losses as a % of period end loans1.00%0.94%0.96%1.11%1.13% 1.29%
General reserves as a % of total loans less impaired commercial loans0.94%0.93%0.96%1.05%1.07% 1.09%
Nonperforming Assets - Park National Corporation:
Nonaccrual loans$90,378 $84,294 $87,822 $95,887 $100,393 $135,216
Accruing troubled debt restructuring18,631 21,153 18,175 24,979 16,254 18,747
Loans past due 90 days or more1,895 1,837 2,086 1,921 2,641 1,677
Total nonperforming loans$110,904 $107,284 $108,083 $122,787 $119,288 $155,640
Other real estate owned - Park National Bank7,108 5,792 6,025 7,456 10,687 11,412
Other real estate owned - SEPH7,773 7,901 7,901 11,195 11,918 23,224
Total nonperforming assets$125,785 $120,977 $122,009 $141,438 $141,893 $190,276
Percentage of nonaccrual loans to period end loans1.68%1.59%1.67%1.89%2.08% 2.93%
Percentage of nonperforming loans to period end loans2.07%2.02%2.05%2.42%2.47% 3.37%
Percentage of nonperforming assets to period end loans2.34%2.28%2.31%2.79%2.94% 4.12%
Percentage of nonperforming assets to period end total assets1.61%1.56%1.63%1.93%2.03% 2.87%
PARK NATIONAL CORPORATION
Asset Quality Information (continued)
Year ended December 31,
(in thousands, except ratios)June 30,
2017
March 31, 2017201620152014 2013
Nonperforming Assets - Park National Bank and Guardian:
Nonaccrual loans$79,688 $72,780 $76,084 $81,468 $77,477 $99,108
Accruing troubled debt restructuring18,631 21,153 18,175 24,979 16,157 18,747
Loans past due 90 days or more1,895 1,837 2,086 1,921 2,641 1,677
Total nonperforming loans$100,214 $95,770 $96,345 $108,368 $96,275 $119,532
Other real estate owned - Park National Bank7,108 5,792 6,025 7,456 10,687 11,412
Total nonperforming assets$107,322 $101,562 $102,370 $115,824 $106,962 $130,944
Percentage of nonaccrual loans to period end loans1.49%1.37%1.45%1.61%1.61% 2.16%
Percentage of nonperforming loans to period end loans1.87%1.81%1.83%2.14%2.00% 2.61%
Percentage of nonperforming assets to period end loans2.00%1.92%1.95%2.29%2.23% 2.86%
Percentage of nonperforming assets to period end total assets1.38%1.32%1.38%1.60%1.55% 2.01%
Nonperforming Assets - SEPH/Vision Bank (retained portfolio):
Nonaccrual loans$10,690 $11,514 $11,738 $14,419 $22,916 $36,108
Accruing troubled debt restructuring 97
Loans past due 90 days or more
Total nonperforming loans$10,690 $11,514 $11,738 $14,419 $23,013 $36,108
Other real estate owned - SEPH7,773 7,901 7,901 11,195 11,918 23,224
Total nonperforming assets$18,463 $19,415 $19,639 $25,614 $34,931 $59,332
New nonaccrual loan information - Park National Corporation
Nonaccrual loans, beginning of period$84,294 $87,822 $95,887 $100,393 $135,216 $155,536
New nonaccrual loans21,562 11,733 74,786 80,791 70,059 67,398
Resolved nonaccrual loans15,478 15,261 82,851 85,165 86,384 87,718
Sale of nonaccrual loans held for sale 132 18,498
Nonaccrual loans, end of period$90,378 $84,294 $87,822 $95,887 $100,393 $135,216
New nonaccrual loan information - Park National Bank and Guardian
Nonaccrual loans, beginning of period$72,780 $76,084 $81,468 $77,477 $99,108 $100,244
New nonaccrual loans - Ohio-based operations21,562 11,733 74,663 80,791 69,389 66,197
Resolved nonaccrual loans14,654 15,037 80,047 76,800 78,288 67,333
Sale of nonaccrual loans held for sale 12,732
Nonaccrual loans, end of period$79,688 $72,780 $76,084 $81,468 $77,477 $99,108
New nonaccrual loan information - SEPH/Vision Bank
Nonaccrual loans, beginning of period$11,514 $11,738 $14,419 $22,916 $36,108 $55,292
New nonaccrual loans - SEPH/Vision Bank 123 670 1,201
Resolved nonaccrual loans824 224 2,804 8,365 8,096 20,385
Sale of nonaccrual loans held for sale 132 5,766
Nonaccrual loans, end of period$10,690 $11,514 $11,738 $14,419 $22,916 $36,108
Impaired Commercial Loan Portfolio Information (period end):
Unpaid principal balance$82,225 $93,830 $95,358 $109,304 $106,156 $175,576
Prior charge-offs9,130 23,731 24,943 28,705 32,480 63,272
Remaining principal balance73,095 70,099 70,415 80,599 73,676 112,304
Specific reserves4,145 1,091 548 4,191 3,660 10,451
Book value, after specific reserve$68,950 $69,008 $69,867 $76,408 $70,016 $101,853

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