Park National Corporation reports 2020 financial results

Loan activity generated income growth and supported community outreach

Newark, Ohio, UNITED STATES


NEWARK, Ohio, Jan. 25, 2021 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE American: PRK) today reported financial results for the fourth quarter and full year of 2020 (three and twelve months ended December 31, 2020). The board of directors increased Park’s quarterly cash dividend, declaring it as $1.03 per common share. The board also declared a special cash dividend of $0.20 per common share, payable on March 10, 2021 to common shareholders of record as of February 19, 2021.

Park’s net income for the fourth quarter of 2020 was $45.2 million, an 88.8 percent increase from $23.9 million for the fourth quarter of 2019. Fourth quarter 2020 net income per diluted common share was $2.75, compared to $1.45 in the fourth quarter of 2019. Park's net income for the full year of 2020 was $127.9 million, a 24.6 percent increase from $102.7 million for the full year of 2019. Net income per diluted common share was $7.80 for 2020, compared to $6.29 for 2019.

“Our lending services throughout the year were a main driver in our overall performance. Our bankers mobilized to serve in new ways, delivering prompt advice and service to families and businesses who were struggling due to the pandemic or rushing to take advantage of opportunities,” said Park President Matthew Miller. “We’re proud of our lending teams’ outstanding response to the surge of home loan activity and demand for U.S. PPP loans; and we’re deeply grateful to all our associates who showed extraordinary dedication to caring for customers and each other every day in 2020.”

Park's community-banking subsidiary, The Park National Bank, reported net income of $34.2 million for the fourth quarter of 2020, a 28.6 percent increase compared to $26.6 million for the same period of 2019. The bank reported net income of $123.7 million for the full year of 2020, compared to $113.6 million for the full year of 2019.

“Park National bankers’ reliability and flexibility were never more important than in 2020,” Park Chairman and Chief Executive Officer David Trautman said. “In a year filled with odd and often uncomfortable circumstances, we grew relationships with our customers and communities by responding to their needs in consistent, compassionate, and creative ways.”

In 2020, Park National Corporation:

  • Donated $4 million dollars to local organizations like shelters, theaters, support agencies, youth teams, and clubs.
  • Helped over 8,000 families purchase a new home or refinance their current one to put themselves in a better financial situation.
  • Helped small businesses maintain their workforces with the preservation of over 65,000 jobs through the Paycheck Protection Program. 
  • Rapidly approved vehicle loans for 42,518 families who needed more space or more recreational time with the family.
  • Guided local business owners in sustaining their retirement plans that support over 24,000 employees – including many individuals saving for the first time in 2020.
  • Offered video chat sessions for senior citizens on topics like fraud awareness, online banking, and ways to stay socially connected from home.
  • Donated $600,000 to school programs, supporting educators whose response during these challenging times was an inspiration.
  • Paid over $3 million to bank employees regardless if they could be at work, and offered bonus pay to Park’s frontline employees.

Headquartered in Newark, Ohio, Park National Corporation has $9.3 billion in total assets (as of December 31, 2020). Park's banking operations are conducted through its subsidiary The Park National Bank. Other Park subsidiaries are Scope Leasing, Inc. (d.b.a. Scope Aircraft Finance), Guardian Financial Services Company (d.b.a. Guardian Finance Company) and SE Property Holdings, LLC.

Complete financial tables are listed below.

Category: Earnings

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:

  • the ever-changing effects of the novel coronavirus (COVID-19) pandemic - - the duration, extent and severity of which are impossible to predict, including the possibility of further resurgence in the spread of COVID-19 - - on economies (local, national and international) and markets, and on our customers, counterparties, employees and third-party service providers, as well as the effects of various responses of governmental and nongovernmental authorities to the COVID-19 pandemic, including public health actions directed toward the containment of the COVID-19 pandemic (such as quarantines, shut downs and other restrictions on travel and commercial, social or other activities), the development, availability and effectiveness of vaccines, and the implementation of fiscal stimulus packages;
  • the impact of future governmental and regulatory actions upon our participation in and execution of government programs related to the COVID-19 pandemic;
  • Park's ability to execute our business plan successfully and within the expected timeframe as well as our ability to manage strategic initiatives in light of the impact of the COVID-19 pandemic and the various responses to the COVID-19 pandemic;
  • 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 weaker recovery than anticipated, in addition to the continuing impact of the COVID-19 pandemic on our customers’ operations and financial condition, either of which may result in adverse impacts on the demand for loan, deposit and other financial services, delinquencies, defaults and counterparties' inability to meet credit and other obligations and the possible impairment of collectability of loans;
  • factors that can impact the performance of our loan portfolio, including real estate values and liquidity in our primary market areas, the financial health of our commercial borrowers and the success of construction projects that we finance, including any loans acquired in acquisition transactions;
  • the effect of monetary and other fiscal policies (including the impact of money supply and interest rate policies of the Federal Reserve Board) as well as disruption in the liquidity and functioning of U.S. financial markets, as a result of the COVID-19 pandemic and government policies implemented in response thereto, may adversely impact prepayment penalty income, mortgage banking income, income from fiduciary activities, the value of securities, deposits and other financial instruments, in addition to the loan demand and the performance of our loan portfolio, 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 changes in retail distribution strategies, consumer preferences and behavior, changes in business and economic conditions (including as a result of the COVID-19 pandemic and reactions thereto), legislative and regulatory initiatives (including those undertaken in response to the COVID-19 pandemic), or other factors may be different than anticipated;
  • changes in unemployment levels in the states in which Park and our subsidiaries do business may be different than anticipated due to the continuing impact of the COVID-19 pandemic;
  • changes in customers', suppliers', and other counterparties' performance and creditworthiness may be different than anticipated due to the continuing impact of the COVID-19 pandemic;
  • the adequacy of our internal controls and risk management program in the event of changes in the market, economic, operational (including those which may result from more of our associates working remotely), asset/liability repricing, legal, compliance, strategic, cybersecurity, liquidity, credit and interest rate risks associated with Park's business;
  • competitive pressures among financial services organizations could increase significantly, including product and pricing pressures (which could in turn impact our credit spreads), changes to third-party relationships and revenues, changes in the manner of providing services, customer acquisition and retention pressures, and our ability to attract, develop and retain qualified banking professionals;
  • uncertainty regarding the nature, timing, cost 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, FDIC insurance premium levels, pensions, bankruptcy, consumer protection, rent regulation and housing, financial accounting and reporting, environmental protection, insurance, bank products and services, bank and bank holding company capital and liquidity standards, fiduciary standards, securities and other aspects of the financial services industry, specifically the reforms provided for in the Coronavirus Aid, Relief and Economic Security (CARES) Act and the follow-up legislation in the Consolidated Appropriations Act, 2021, 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 Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve Board, to implement the provisions of the CARES Act and the follow-up legislation in the Consolidated Appropriations Act, 2021, the provisions of the Dodd-Frank 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 "FASB"), the SEC, the Public Company Accounting Oversight Board and other regulatory agencies, including the extent to which the new current expected credit loss ("CECL") accounting standard issued by the FASB in June 2016 and in accordance with the CARES Act and the follow-up legislation in the Consolidated Appropriations Act, 2021, the adoption of which can be deferred by Park until the earlier of: (1) the first day of the fiscal year that begins after the date on which the national emergency concerning the COVID-19 outbreak terminates; or (2) January 1, 2022, may adversely affect Park's reported financial condition or results of operations;
  • Park's assumptions and estimates used in applying critical accounting policies and modeling, including under the CECL model, when adopted by Park, which may prove unreliable, inaccurate or not predictive of actual 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 impact of Park's ability to anticipate and respond to technological changes on Park's ability to respond to customer needs and meet competitive demands;
  • operational issues stemming from and/or capital spending necessitated by the potential need to adapt to industry changes in information technology systems on which Park and our subsidiaries are highly dependent;
  • 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 Park's operational or security systems or infrastructure, or those of our third-party vendors and other service providers, resulting in failures or disruptions in customer account management, general ledger, deposit, loan, or other systems, including as a result of cyber attacks;
  • the existence or exacerbation of general geopolitical instability and uncertainty as well as the effect of trade policies (including the impact of potential or imposed tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements, trade wars and other changes in trade regulations and changes in the relationship of the U.S. and its global trading partners);
  • uncertainty regarding the impact of changes to the U.S. presidential administration and Congress on the regulatory landscape, capital markets, and the response to and management of the COVID-19 pandemic;
  • 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 growth rates and financial stability of certain sovereign governments, supranationals and financial institutions in Europe and Asia and the risk they may face difficulties servicing their sovereign debt;
  • 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 the costs and effects of any adverse developments in legal proceedings or other claims and the costs and effects of unfavorable resolution of regulatory and other governmental examinations or other inquiries;
  • continued availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends;
  • the impact on Park's business, personnel, facilities or systems of losses related to acts of fraud, scams and schemes of third parties;
  • the impact of widespread natural and other disasters, pandemics (including the COVID-19 pandemic), dislocations, regional or national protests and civil unrest (including any resulting branch closures or damages), military or terrorist activities or international hostilities on the economy and financial markets generally and on us or our counterparties specifically;
  • any of the foregoing factors, or other cascading effects of the COVID-19 pandemic that are not currently foreseeable, could materially affect our business, including our customers' willingness to conduct banking transactions and their ability to pay on existing obligations;
  • the effect of healthcare laws in the U.S. and potential changes for such laws, especially in light of the COVID-19 pandemic, which may increase our healthcare and other costs and negatively impact our operations and financial results;
  • risk and uncertainties associated with Park's entry into new geographic markets with our recent acquisitions, including expected revenue synergies and cost savings from recent acquisitions not being fully realized or realized within the expected time frame;
  • the discontinuation of the London Inter-Bank Offered Rate (LIBOR) and other reference rates which may result in increased expenses and litigation, and adversely impact the effectiveness of hedging strategies;
  • 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, 2019 and in "Item 1A. Risk Factors" of Part II of Park's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020.

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 December 31, 2020, September 30, 2020, and December 31, 2019    
       
 202020202019 Percent change vs.
(in thousands, except share and per share data)4th QTR3rd QTR4th QTR 3Q '204Q '19
INCOME STATEMENT:      
Net interest income$86,321  $83,840 $77,009   3.0 %12.1 %
(Recovery of) provision for loan losses(19,159) 13,836 (213)  N.M  N.M  
Other income35,656  36,558 24,224   (2.5)%47.2 %
Other expense85,661  69,859 71,231   22.6 %20.3 %
Income before income taxes$55,475  $36,703 $30,215   51.1 %83.6 %
Income taxes10,275  5,857 6,279   75.4 %63.6 %
Net income$45,200  $30,846 $23,936   46.5 %88.8 %
       
MARKET DATA:      
Earnings per common share - basic (a)$2.77  $1.89 $1.46   46.6 %89.7 %
Earnings per common share - diluted (a)2.75  1.88 1.45   46.3 %89.7 %
Cash dividends declared per common share1.02  1.02 1.01    %1.0 %
Book value per common share at period end63.76  62.39 59.28   2.2 %7.6 %
Market price per common share at period end105.01  81.96 102.38   28.1 %2.6 %
Market capitalization at period end1,713,154  1,336,011 1,673,549   28.2 %2.4 %
       
Weighted average common shares - basic (b)16,310,551  16,300,720 16,342,485   0.1 %(0.2)%
Weighted average common shares - diluted (b)16,434,812  16,393,792 16,454,553   0.3 %(0.1)%
Common shares outstanding at period end16,314,197  16,300,763 16,346,442   0.1 %(0.2)%
       
PERFORMANCE RATIOS: (annualized)      
Return on average assets (a)(b)1.93 %1.28%1.09 % 50.8 %77.1 %
Return on average shareholders' equity (a)(b)17.37 %12.03%9.83 % 44.4 %76.7 %
Yield on loans4.69 %4.54%5.11 % 3.3 %(8.2)%
Yield on investment securities2.80 %2.35%2.72 % 19.1 %2.9 %
Yield on money market instruments0.11 %0.11%1.86 %  %(94.1)%
Yield on interest earning assets4.33 %4.12%4.64 % 5.1 %(6.7)%
Cost of interest bearing deposits0.19 %0.26%0.95 % (26.9)%(80.0)%
Cost of borrowings2.01 %1.63%2.18 % 23.3 %(7.8)%
Cost of paying interest bearing liabilities0.40 %0.39%1.04 % 2.6 %(61.5)%
Net interest margin (g)4.07 %3.85%3.90 % 5.7 %4.4 %
Efficiency ratio (g)69.82 %57.69%69.86 % 21.0 %(0.1)%
       
OTHER RATIOS (NON-GAAP):      
Tangible book value per share (d)$53.41  $52.00 $48.81   2.7 %9.4 %
       
       
Note: Explanations for footnotes (a) - (k) are included at the end of the financial tables in the "Financial Reconciliations" section.
       
       
       
PARK NATIONAL CORPORATION
Financial Highlights (continued)
As of or for the three months ended December 31, 2020, September 30, 2020, and December 31, 2019
       
     Percent change vs.
(in thousands, except ratios)December 31, 2020September 30, 2020December 31, 2019 3Q '204Q '19
BALANCE SHEET:      
Investment securities$1,124,806  $1,097,598 $1,279,507   2.5 %(12.1)%
Loans7,177,785  7,278,546 6,501,404   (1.4)%10.4 %
Allowance for loan losses85,675  87,038 56,679   (1.6)%51.2 %
Goodwill and other intangible assets168,855  169,380 171,118   (0.3)%(1.3)%
Other real estate owned (OREO)1,431  836 4,029   71.2 %(64.5)%
Total assets9,279,021  9,240,006 8,558,377   0.4 %8.4 %
Total deposits7,572,358  7,475,829 7,052,612   1.3 %7.4 %
Borrowings562,504  643,103 438,157   (12.5)%28.4 %
Total shareholders' equity1,040,256  1,016,996 969,014   2.3 %7.4 %
Tangible equity (d)871,401  847,616 797,896   2.8 %9.2 %
Total nonperforming loans139,614  148,442 113,953   (5.9)%22.5 %
Total nonperforming assets144,209  152,670 121,581   (5.5)%18.6 %
       
ASSET QUALITY RATIOS:      
Loans as a % of period end total assets77.35 %78.77%75.97 % (1.8)%1.8 %
Total nonperforming loans as a % of period end loans1.95 %2.04%1.75 % (4.4)%11.4 %
Total nonperforming assets as a % of period end loans + OREO + other nonperforming assets2.01 %2.10%1.87 % (4.3)%7.5 %
Allowance for loan losses as a % of period end loans1.19 %1.20%0.87 % (0.8)%36.8 %
Net loan (recoveries) charge-offs$(17,796) $274 $(1,039)  N.M  N.M  
Annualized net loan (recoveries) charge-offs as a % of average loans (b)(0.98)%0.02%(0.06)% N.M  N.M  
       
CAPITAL & LIQUIDITY:      
Total shareholders' equity / Period end total assets11.21 %11.01%11.32 % 1.8 %(1.0)%
Tangible equity (d) / Tangible assets (f)9.57 %9.34%9.51 % 2.5 %0.6 %
Average shareholders' equity / Average assets (b)11.11 %10.67%11.12 % 4.1 %(0.1)%
Average shareholders' equity / Average loans (b)14.29 %14.08%15.03 % 1.5 %(4.9)%
Average loans / Average deposits (b)95.80 %92.02%89.36 % 4.1 %7.2 %
       
Note: Explanations for footnotes (a) - (k) are included at the end of the financial tables in the "Financial Reconciliations" section.


PARK NATIONAL CORPORATION
Financial Highlights
Twelve months ended December 31, 2020 and December 31, 2019   
     
(in thousands, except share and per share data and ratios)20202019 Percent change vs '19
INCOME STATEMENT:    
Net interest income$327,630  $297,737  10.0 %
Provision for loan losses12,054  6,171  95.3 %
Other income125,664  97,193  29.3 %
Other expense286,595  263,988  8.6 %
Income before income taxes$154,645  $124,771  23.9 %
Income taxes26,722  22,071  21.1 %
Net income$127,923  $102,700  24.6 %
     
MARKET DATA:    
Earnings per common share - basic (a)$7.85  $6.33  24.0 %
Earnings per common share - diluted (a)7.80  6.29  24.0 %
Cash dividends declared per common share4.28  4.24  0.9 %
     
Weighted average common shares - basic (b)16,302,825  16,234,342  0.4 %
Weighted average common shares - diluted (b)16,407,502  16,329,456  0.5 %
     
PERFORMANCE RATIOS:     
Return on average assets (a)(b)1.38 %1.21% 14.0 %
Return on average shareholders' equity (a)(b)12.68 %11.14% 13.8 %
Yield on loans4.71 %5.19% (9.2)%
Yield on investment securities2.66 %2.76% (3.6)%
Yield on money market instruments0.26 %2.33% (88.8)%
Yield on interest earning assets4.28 %4.70% (8.9)%
Cost of interest bearing deposits0.41 %1.01% (59.4)%
Cost of borrowings1.77 %2.14% (17.3)%
Cost of paying interest bearing liabilities0.52 %1.12% (53.6)%
Net interest margin (g)3.93 %3.89% 1.0 %
Efficiency ratio (g)62.83 %66.35% (5.3)%
     
ASSET QUALITY RATIOS:    
Net loan charge-offs$(16,942) $1,004  N.M.  
Net loan charge-offs as a % of average loans (b)(0.24)%0.02% N.M.  
     
CAPITAL & LIQUIDITY:    
Average shareholders' equity / Average assets (b)10.92 %10.88% 0.4 %
Average shareholders' equity / Average loans (b)14.44 %14.85% (2.8)%
Average loans / Average deposits (b)91.58 %89.91% 1.9 %
     
Note: Explanations for footnotes (a) - (k) are included at the end of the financial tables in the "Financial Reconciliations" section.    


         
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) 2020 2019 2020 2019
         
Interest income:        
Interest and fees on loans $85,268   $82,698   $328,727  $321,385 
Interest on:        
Obligations of U.S. Government, its agencies        
and other securities - taxable 4,420   5,973   19,818  26,213 
Obligations of states and political subdivisions - tax-exempt 2,040   2,205   8,436  8,955 
Other interest income 72   953   739  3,947 
Total interest income 91,800   91,829   357,720  360,500 
         
Interest expense:        
Interest on deposits:        
Demand and savings deposits 490   7,795   9,142  33,348 
Time deposits 1,893   4,666   12,186  17,494 
Interest on borrowings 3,096   2,359   8,762  11,921 
Total interest expense 5,479   14,820   30,090  62,763 
         
Net interest income 86,321   77,009   327,630  297,737 
         
(Recovery of) provision for loan losses (19,159)  (213)  12,054  6,171 
         
Net interest income after (recovery of) provision for loan losses 105,480   77,222   315,576  291,566 
         
Other income 35,656   24,224   125,664  97,193 
         
Other expense 85,661   71,231   286,595  263,988 
         
Income before income taxes 55,475   30,215   154,645  124,771 
         
Income taxes 10,275   6,279   26,722  22,071 
         
Net income $45,200   $23,936   $127,923  $102,700 
         
Per common share:        
Net income - basic $2.77   $1.46   $7.85  $6.33 
Net income - diluted $2.75   $1.45   $7.80  $6.29 
         
Weighted average shares - basic 16,310,551   16,342,485   16,302,825  16,234,342 
Weighted average shares - diluted 16,434,812   16,454,553   16,407,502  16,329,456 
         
Cash dividends declared $1.02   $1.01   $4.28  $4.24 
         


 
PARK NATIONAL CORPORATION 
Consolidated Balance Sheets
   
(in thousands, except share data)December 31, 2020December 31, 2019
   
Assets  
   
Cash and due from banks$155,596  $135,567  
Money market instruments214,878  24,389  
Investment securities1,124,806  1,279,507  
Loans7,177,785  6,501,404  
Allowance for loan losses(85,675) (56,679) 
Loans, net7,092,110  6,444,725  
Bank premises and equipment, net88,660  73,322  
Goodwill and other intangible assets168,855  171,118  
Other real estate owned1,431  4,029  
Other assets432,685  425,720  
Total assets$9,279,021  $8,558,377  
   
Liabilities and Shareholders' Equity  
   
Deposits:  
Noninterest bearing$2,727,100  $1,959,935  
Interest bearing4,845,258  5,092,677  
Total deposits7,572,358  7,052,612  
Borrowings562,504  438,157  
Other liabilities103,903  98,594  
Total liabilities$8,238,765  $7,589,363  
   
   
Shareholders' Equity:  
Preferred shares (200,000 shares authorized; no shares outstanding at December 31, 2020 and December 31, 2019)$  $  
Common shares (No par value; 20,000,000 shares authorized; 17,623,163 shares issued at December 31, 2020 and 17,623,199 shares issued at December 31, 2019)460,687  459,389  
Accumulated other comprehensive income (loss), net of taxes5,571  (9,589) 
Retained earnings704,764  646,847  
Treasury shares (1,308,966 shares at December 31, 2020 and 1,276,757 shares at December 31, 2019)(130,766) (127,633) 
Total shareholders' equity$1,040,256  $969,014  
Total liabilities and shareholders' equity$9,279,021  $8,558,377  


    
PARK NATIONAL CORPORATION    
Consolidated Average Balance Sheets   
      
 Three Months Ended Twelve Months Ended
 Dec 31 Dec 31
(in thousands)20202019 20202019
      
Assets     
      
Cash and due from banks$120,599  $129,105   $127,214  $130,372  
Money market instruments263,212  203,259   280,952  169,703  
Investment securities1,066,145  1,300,927   1,214,551  1,360,540  
Loans7,245,273  6,431,374   6,990,458  6,208,496  
Allowance for loan losses(89,920) (56,904)  (71,221) (54,516) 
Loans, net7,155,353  6,374,470   6,919,237  6,153,980  
Bank premises and equipment, net86,717  73,487   81,357  69,710  
Goodwill and other intangible assets169,199  173,065   170,031  158,194  
Other real estate owned856  3,871   2,174  4,066  
Other assets454,418  430,513   446,117  427,464  
Total assets$9,316,499  $8,688,697   $9,241,633  $8,474,029  
      
      
Liabilities and Shareholders' Equity     
      
Deposits:     
Noninterest bearing$2,657,881  $1,980,898   $2,394,717  $1,875,628  
Interest bearing4,904,995  5,216,050   5,238,147  5,029,854  
Total deposits7,562,876  7,196,948   7,632,864  6,905,482  
Borrowings611,890  429,979   494,532  556,564  
Other liabilities106,240  95,222   105,135  89,809  
Total liabilities$8,281,006  $7,722,149   $8,232,531  $7,551,855  
      
Shareholders' Equity:     
Preferred shares$  $   $  $  
Common shares458,521  458,264   458,096  432,795  
Accumulated other comprehensive income (loss), net of taxes12,594  (11,694)  9,688  (30,160) 
Retained earnings695,509  648,007   673,273  633,389  
Treasury shares(131,131) (128,029)  (131,955) (113,850) 
Total shareholders' equity$1,035,493  $966,548   $1,009,102  $922,174  
Total liabilities and shareholders' equity$9,316,499  $8,688,697   $9,241,633  $8,474,029  


 
PARK NATIONAL CORPORATION 
Consolidated Statements of Income - Linked Quarters
      
 20202020202020202019
(in thousands, except per share data)4th QTR3rd QTR2nd QTR1st QTR4th QTR
      
Interest income:     
Interest and fees on loans$85,268   $82,617 $80,155 $80,687 $82,698  
Interest on:     
Obligations of U.S. Government, its agencies and other securities - taxable4,420   4,841 5,026 5,531 5,973  
Obligations of states and political subdivisions - tax-exempt2,040   2,045 2,151 2,200 2,205  
Other interest income72   63 113 491 953  
Total interest income91,800   89,566 87,445 88,909 91,829  
      
Interest expense:     
Interest on deposits:     
Demand and savings deposits490   803 1,507 6,342 7,795  
Time deposits1,893   2,662 3,346 4,285 4,666  
Interest on borrowings3,096   2,261 1,406 1,999 2,359  
Total interest expense5,479   5,726 6,259 12,626 14,820  
      
Net interest income86,321   83,840 81,186 76,283 77,009  
      
(Recovery of) provision for loan losses(19,159) 13,836 12,224 5,153 (213) 
      
Net interest income after (recovery of) provision for loan losses105,480   70,004 68,962 71,130 77,222  
      
Other income35,656   36,558 30,964 22,486 24,224  
      
Other expense85,661   69,859 64,799 66,276 71,231  
      
Income before income taxes55,475   36,703 35,127 27,340 30,215  
      
Income taxes10,275   5,857 5,622 4,968 6,279  
      
Net income $45,200   $30,846 $29,505 $22,372 $23,936  
      
Per common share:     
Net income - basic$2.77   $1.89 $1.81 $1.37 $1.46  
Net income - diluted$2.75   $1.88 $1.80 $1.36 $1.45  


 
PARK NATIONAL CORPORATION 
Detail of other income and other expense - Linked Quarters
      
 20202020202020202019
(in thousands)4th QTR3rd QTR2nd QTR1st QTR4th QTR
      
Other income:     
Income from fiduciary activities$7,632  $7,335  $6,793  $7,113  $7,268  
Service charges on deposit accounts2,123  2,118  1,676  2,528  2,757  
Other service income12,040  13,047  8,758  3,766  4,382  
Debit card fee income5,787  5,853  5,560  4,960  5,341  
Bank owned life insurance income1,170  1,192  1,179  1,248  1,158  
ATM fees432  491  438  412  446  
(Loss) gain on the sale of OREO, net(7) 569  841  (196) 2  
Net (loss) gain on the sale of investment securities  (27) 3,313      
Gain (loss) on equity securities, net2,931  1,201  (977) (973) (191) 
Other components of net periodic benefit income1,988  1,988  1,988  1,988  1,183  
Miscellaneous1,560  2,791  1,395  1,640  1,878  
Total other income$35,656  $36,558  $30,964  $22,486  $24,224  
      
Other expense:     
Salaries$37,280  $31,632  $30,699  $28,429  $30,903  
Employee benefits7,316  10,676  9,080  10,043  8,973  
Occupancy expense3,231  3,835  3,256  3,480  3,355  
Furniture and equipment expense4,949  4,687  4,850  4,319  4,319  
Data processing fees3,315  3,275  2,577  2,492  2,777  
Professional fees and services9,359  7,977  6,901  7,066  10,503  
Marketing1,752  1,454  1,136  1,486  1,468  
Insurance1,855  1,541  1,477  1,550  317  
Communication1,097  958  874  1,155  1,256  
State tax expense605  1,125  1,116  1,145  1,024  
Amortization of intangible assets525  525  607  606  623  
FHLB prepayment penalty8,736      1,793  492  
Foundation contributions3,000        1,500  
Miscellaneous2,641  2,174  2,226  2,712  3,721  
Total other expense$85,661  $69,859  $64,799  $66,276  $71,231  


PARK NATIONAL CORPORATION 
Asset Quality Information
      
 Year ended December 31,
(in thousands, except ratios)20202019201820172016
      
Allowance for loan losses:     
Allowance for loan losses, beginning of period$56,679  $51,512 $49,988 $50,624 $56,494  
Charge-offs10,304  11,177 13,552 19,403 20,799  
Recoveries27,246  10,173 7,131 10,210 20,030  
Net (recoveries) charge-offs(16,942) 1,004 6,421 9,193 769  
Provision for (recovery of) loan losses12,054  6,171 7,945 8,557 (5,101) 
Allowance for loan losses, end of period$85,675  $56,679 $51,512 $49,988 $50,624  
      
      
General reserve trends:     
Allowance for loan losses, end of period$85,675  $56,679 $51,512 $49,988 $50,624  
Allowance on purchased credit impaired ("PCI") loans167  268     
Allowance on purchased loans678       
Specific reserves5,434  5,230 2,273 684 548  
General reserves on originated loans$79,396  $51,181 $49,239 $49,304 $50,076  
      
Total loans$7,177,785  $6,501,404 $5,692,132 $5,372,483 $5,271,857  
PCI loans11,153  14,331 3,943    
Purchased loans360,056  548,436 225,029    
Impaired commercial loans108,407  77,459 48,135 56,545 70,415  
Originated loans excluding impaired commercial loans$6,698,169  $5,861,178 $5,415,025 $5,315,938 $5,201,442  
      
      
Asset Quality Ratios:     
Net (recoveries) charge-offs as a % of average loans(0.24)%0.02%0.12%0.17%0.02 %
Allowance for loan losses as a % of period end loans1.19 %0.87%0.90%0.93%0.96 %
Allowance for loan losses on originated loans as % of originated total loans (excluding PPP loans) (k)1.31 %N.A. N.A. N.A. N.A.  
General reserve as a % of originated total loans less impaired commercial loans1.19 %0.87%0.91%0.93%0.96 %
General reserves as a % of originated total loans less impaired commercial loans (excluding PPP loans) (k)1.24 %N.A. N.A. N.A. N.A.  
      
Nonperforming assets:     
Nonaccrual loans$117,368  $90,080 $67,954 $72,056 $87,822  
Accruing troubled debt restructurings20,788  21,215 15,173 20,111 18,175  
Loans past due 90 days or more1,458  2,658 2,243 1,792 2,086  
Total nonperforming loans$139,614  $113,953 $85,370 $93,959 $108,083  
Other real estate owned - Park National Bank837  3,100 2,788 6,524 6,025  
Other real estate owned - SEPH594  929 1,515 7,666 7,901  
Other nonperforming assets - Park National Bank3,164  3,599 3,464 4,849   
Total nonperforming assets$144,209  $121,581 $93,137 $112,998 $122,009  
Percentage of nonaccrual loans to period end loans1.64 %1.39%1.19%1.34%1.67 %
Percentage of nonperforming loans to period end loans1.95 %1.75%1.50%1.75%2.05 %
Percentage of nonperforming assets to period end loans2.01 %1.87%1.64%2.10%2.31 %
Percentage of nonperforming assets to period end total assets1.55 %1.42%1.19%1.50%1.63 %
      
Note: Explanations for footnotes (a) - (k) are included at the end of the financial tables in the "Financial Reconciliations" section.


PARK NATIONAL CORPORATION 
Asset Quality Information (continued)
      
 Year ended December 31,
(in thousands, except ratios)20202019201820172016
      
      
New nonaccrual loan information:     
Nonaccrual loans, beginning of period$90,080 $67,954 $72,056 $87,822 $95,887 
New nonaccrual loans103,386 81,009 76,611 58,753 74,786 
Resolved nonaccrual loans76,098 58,883 80,713 74,519 82,851 
Nonaccrual loans, end of period$117,368 $90,080 $67,954 $72,056 $87,822 
      
Impaired commercial loan portfolio information (period end):     
Unpaid principal balance$109,062 $78,178 $59,381 $66,585 $95,358 
Prior charge-offs655 719 11,246 10,040 24,943 
Remaining principal balance108,407 77,459 48,135 56,545 70,415 
Specific reserves5,434 5,230 2,273 684 548 
Book value, after specific reserves$102,973 $72,229 $45,862 $55,861 $69,867 
      
 


PARK NATIONAL CORPORATION   
Financial Reconciliations      
NON-GAAP RECONCILIATIONS      
 THREE MONTHS ENDED TWELVE MONTHS ENDED
(in thousands, except share and per share data)December 31, 2020September 30, 2020December 31, 2019 December 31, 2020December 31, 2019
Net interest income$86,321  $83,840  $77,009   $327,630  $297,737  
less purchase accounting accretion related to NewDominion and Carolina Alliance acquisitions919  1,071  1,947   4,669  5,786  
less interest income on former Vision Bank relationships102  8  249   453  256  
Net interest income - adjusted$85,300  $82,761  $74,813   $322,508  $291,695  
       
(Recovery of) provision for loan losses$(19,159) $13,836  $(213)  $12,054  $6,171  
less recoveries on former Vision Bank relationships(20,496) (37) (2,302)  (21,982) (3,042) 
(Recovery of) provision for loan losses - adjusted$1,337  $13,873  $2,089   $34,036  $9,213  
       
Other income$35,656  $36,558  $24,224   $125,664  $97,193  
less other service income related to former Vision Bank relationships503  35     590  52  
less net gain (loss) on sale of former Vision Bank OREO properties  371  28   1,208  (111) 
less rebranding initiative related expenses(298)      (572)   
less net (loss) gain on the sale of debt securities in the ordinary course of business  (27)    3,286  (421) 
Other income - adjusted$35,451  $36,179  $24,196   $121,152  $97,673  
       
Other expense$85,661  $69,859  $71,231   $286,595  $263,988  
less merger-related expenses related to NewDominion and Carolina Alliance acquisitions9  163  1,885   629  8,877  
less core deposit intangible amortization related to NewDominion and Carolina Alliance acquisitions525  525  623   2,263  2,355  
less FDIC assessment credit    (1,136)    (2,193) 
less direct expenses related to collection of payments on former Vision Bank loan relationships4,051  232  622   4,283  622  
less FHLB prepayment penalty8,736    492   10,529  612  
less rebranding initiative related expenses (including trade name intangible expense)229  429  2,134   1,040  2,476  
less Foundation contribution3,000    1,500   3,000  1,500  
less severance and restructuring charges4,039  67  22   4,443  107  
less COVID-19 related expenses (j)738  744     3,622    
Other expense - adjusted$64,334  $67,699  $65,089   $256,786  $249,632  
       
Tax effect of adjustments to net income identified above (i)$(83) $140  $339   $(379) $1,208  
       
Net income - reported$45,200  $30,846  $23,936   $127,923  $102,700  
Net income - adjusted$44,888  $31,371  $25,213   $126,495  $107,244  
       


        
Diluted EPS$2.75  $1.88  $1.45   $7.80  $6.29  
Diluted EPS, adjusted (h)$2.73  $1.91  $1.53   $7.71  $6.57  
        
Annualized return on average assets (a)(b)1.93% 1.28% 1.09%  1.38 %1.21% 
Annualized return on average assets, adjusted (a)(b)(h)1.92% 1.31% 1.15%  1.37 %1.27% 
        
Annualized return on average tangible assets (a)(b)(e)1.97% 1.31% 1.12%  1.41 %1.23% 
Annualized return on average tangible assets, adjusted (a)(b)(e)(h)1.95% 1.33% 1.17%  1.39 %1.29% 
        
Annualized return on average shareholders' equity (a)(b)17.37% 12.03% 9.83%  12.68 %11.14% 
Annualized return on average shareholders' equity, adjusted (a)(b)(h)17.25% 12.23% 10.35%  12.54 %11.63% 
        
Annualized return on average tangible equity (a)(b)(c)20.76% 14.43% 11.97%  15.25 %13.44% 
Annualized return on average tangible equity, adjusted (a)(b)(c)(h)20.61% 14.67% 12.61%  15.08 %14.04% 
        
Efficiency ratio (g)69.82% 57.69% 69.86%  62.83 %66.35% 
Efficiency ratio, adjusted (g)(h)52.97% 56.58% 65.26%  57.51 %63.63% 
        
Annualized net interest margin (g)4.07% 3.85% 3.90%  3.93 %3.89% 
Annualized net interest margin, adjusted (g)(h)4.02% 3.80% 3.79%  3.86 %3.81% 
        
     


PARK NATIONAL CORPORATION   
Financial Reconciliations (continued)      
       
(a) Reported measure uses net income
(b) Averages are for the three months ended December 31, 2020, September 30, 2020, and December 31, 2019 and for the twelve months ended December 31, 2020 and December 31, 2019, as appropriate
(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 and other intangible assets during the applicable period.
       
RECONCILIATION OF AVERAGE SHAREHOLDERS' EQUITY TO AVERAGE TANGIBLE EQUITY:   
 THREE MONTHS ENDED TWELVE MONTHS ENDED
 December 31, 2020September 30, 2020December 31, 2019 December 31, 2020December 31, 2019
AVERAGE SHAREHOLDERS' EQUITY$1,035,493 $1,020,239 $966,548  $1,009,102 $922,174 
Less: Average goodwill and other intangible assets169,199 169,726 173,065  170,031 158,194 
AVERAGE TANGIBLE EQUITY$866,294 $850,513 $793,483  $839,071 $763,980 
       
(d) Tangible equity divided by common shares outstanding at period end. Tangible equity equals total shareholders' equity less goodwill and other intangible assets, in each case at the end of the period.
       
RECONCILIATION OF TOTAL SHAREHOLDERS' EQUITY TO TANGIBLE EQUITY:  
 December 31, 2020September 30, 2020December 31, 2019  
TOTAL SHAREHOLDERS' EQUITY$1,040,256 $1,016,996 $969,014    
Less: Goodwill and other intangible assets168,855 169,380 171,118    
TANGIBLE EQUITY$871,401 $847,616 $797,896    
       
(e) Net income for each period divided by average tangible assets during the period. Average tangible assets equals average assets less average goodwill and other intangible assets, in each case during the applicable period.
       
RECONCILIATION OF AVERAGE ASSETS TO AVERAGE TANGIBLE ASSETS   
 THREE MONTHS ENDED TWELVE MONTHS ENDED
 December 31, 2020September 30, 2020December 31, 2019 December 31, 2020December 31, 2019
AVERAGE ASSETS$9,316,499 $9,557,682 $8,688,697  $9,241,633 $8,474,029 
Less: Average goodwill and other intangible assets169,199 169,726 173,065  170,031 158,194 
AVERAGE TANGIBLE ASSETS$9,147,300 $9,387,956 $8,515,632  $9,071,602 $8,315,835 
       
(f) Tangible equity divided by tangible assets. Tangible assets equals total assets less goodwill and other intangible assets, in each case at the end of the period.
       
RECONCILIATION OF TOTAL ASSETS TO TANGIBLE ASSETS:  
 December 31, 2020September 30, 2020December 31, 2019   
TOTAL ASSETS$9,279,021 $9,240,006 $8,558,377    
Less: Goodwill and other intangible assets168,855 169,380 171,118    
TANGIBLE ASSETS$9,110,166 $9,070,626 $8,387,259    
       
(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 assuming a 21% corporate federal income 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 TWELVE MONTHS ENDED
 December 31, 2020September 30, 2020December 31, 2019 December 31, 2020December 31, 2019
Interest income$91,800 $89,566 $91,829  $357,720 $360,500 
Fully taxable equivalent adjustment712 706 726  2,866 2,956 
Fully taxable equivalent interest income$92,512 $90,272 $92,555  $360,586 $363,456 
Interest expense5,479 5,726 14,820  30,090 62,763 
Fully taxable equivalent net interest income$87,033 $84,546 $77,735  $330,496 $300,693 
       
(h) Adjustments to net income for each period presented are detailed in the non-GAAP reconciliations of net interest income, (recovery of) provision for loan losses, other income and other expense.
(i) The tax effect of adjustments to net income was calculated assuming a 21% corporate federal income tax rate.   
(j) COVID-19 related expenses include calamity pay and special one-time bonuses to certain associates.    
(k) Excludes $337.1 million and $542.8 million of PPP loans at December 31, 2020 and September 30, 2020, respectively.
 

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