Park National Corporation reports financial results for first quarter 2021

Newark, Ohio, UNITED STATES


NEWARK, Ohio, April 23, 2021 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE American: PRK) today reported financial results for the first quarter of 2021 (three months ended March 31, 2021), including net income growth driven by continued increases in lending activity. Park's board of directors declared a quarterly cash dividend of $1.03 per common share, payable on June 10, 2021 to common shareholders of record as of May 21, 2021.

Park’s net income for the first quarter of 2021 was $42.8 million, a 91.4 percent increase from $22.4 million for the first quarter of 2020. First quarter 2021 net income per diluted common share was $2.61, compared to $1.36 in the first quarter of 2020. Like many financial institutions, Park did not experience the credit losses it had prepared for throughout the pandemic; and Park thus recognized a recovery in the first quarter of 2021. Additionally, steady growth in its consumer and commercial lending services over the past year helped drive first quarter 2021 performance.

“Business owners are financing property, equipment, and other developments throughout our communities. Columbus, Cincinnati, Charlotte and Louisville have been particularly robust,” Park Chairman and Chief Executive Officer David Trautman said. “We have been available for our business customers through periods of stress and we are here for them as the economy picks up momentum.”

Park's community-banking subsidiary, The Park National Bank, reported net income of $45.1 million for the first quarter of 2021, a 74.2 percent increase compared to $25.9 million for the same period of 2020. The bank’s first quarter 2021 mortgage origination volume was $304 million, whereas it was $178 million in the first quarter of 2020.

“The real estate environment can be intense right now, and our customers continue to rely on our local bankers to help them take advantage of great opportunities in home buying and refinancing,” said Park President Matthew Miller. “Our responsiveness and experience with a variety of lending situations positioned us to serve customers more in the first quarter.”

Headquartered in Newark, Ohio, Park National Corporation has $9.9 billion in total assets (as of March 31, 2021). 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
Media contact: Bethany Lewis, 740.349.0421, bethany.lewis@parknationalbank.com
Investor contact: Brady Burt, 740.322.6844, brady.burt@parknationalbank.com
Park National Corporation, 50 N. Third Street, Newark, Ohio 43055

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:

  • 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;
  • Park may have more credit risk and higher credit losses to the extent there are loan concentrations by location or industry of borrowers or collateral;
  • the volatility from quarter to quarter of mortgage banking income, whether due to interest rates, demand, the fair value of mortgage loans, or other factors;
  • 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, 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, 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, including those of Park's third-party vendors and other service providers, which may prove inadequate, and could adversely affect customer confidence in Park and/or result in Park incurring a financial loss;
  • 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, elevated U.S. government debt, potential changes in tax legislation that may increase tax rates 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;
  • 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, 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 March 31, 2021, December 31, 2020, and March 31, 2020
       
 202120202020 Percent change vs.
(in thousands, except share and per share data)1st QTR4th QTR1st QTR 4Q '20
 1Q '20
INCOME STATEMENT:                   
Net interest income$80,734  $86,321  $76,283  (6.5)% 5.8 %
(Recovery of) provision for credit losses (l)(4,855) (19,159) 5,153  N.M   N.M  
Other income34,089  35,656  22,486  (4.4)% 51.6 %
Other expense67,865  85,661  66,276  (20.8)% 2.4 %
Income before income taxes$51,813  $55,475  $27,340  (6.6)% 89.5 %
Income taxes8,982  10,275  4,968  (12.6)% 80.8 %
Net income$42,831  $45,200  $22,372  (5.2)% 91.4 %
       
MARKET DATA:      
Earnings per common share - basic (a)$2.63  $2.77  $1.37  (5.1)% 92.0 %
Earnings per common share - diluted (a)2.61  2.75  1.36  (5.1)% 91.9 %
Cash dividends declared per common share1.23  1.02  1.22  20.6 % 0.8 %
Book value per common share at period end63.74  63.76  60.25   % 5.8 %
Market price per common share at period end129.30  105.01  77.64  23.1 % 66.5 %
Market capitalization at period end2,112,238  1,713,154  1,265,180  23.3 % 67.0 %
       
Weighted average common shares - basic (b)16,314,987  16,310,551  16,303,602   % 0.1 %
Weighted average common shares - diluted (b)16,439,920  16,434,812  16,425,881   % 0.1 %
Common shares outstanding at period end16,335,951  16,314,197  16,295,461  0.1 % 0.2 %
       
PERFORMANCE RATIOS: (annualized)      
Return on average assets (a)(b)1.81 %1.93 %1.04% (6.2)% 74.0 %
Return on average shareholders' equity (a)(b)16.63 %17.37 %9.16% (4.3)% 81.6 %
Yield on loans4.48 %4.69 %5.02% (4.5)% (10.8)%
Yield on investment securities2.53 %2.80 %2.72% (9.6)% (7.0)%
Yield on money market instruments0.11 %0.11 %1.12%  % (90.2)%
Yield on interest earning assets3.96 %4.33 %4.57% (8.5)% (13.3)%
Cost of interest bearing deposits0.16 %0.19 %0.81% (15.8)% (80.2)%
Cost of borrowings1.86 %2.01 %2.08% (7.5)% (10.6)%
Cost of paying interest bearing liabilities0.32 %0.40 %0.90% (20.0)% (64.4)%
Net interest margin (g)3.76 %4.07 %3.93% (7.6)% (4.3)%
Efficiency ratio (g)58.74 %69.82 %66.61% (15.9)% (11.8)%
       
OTHER RATIOS (NON-GAAP):      
Tangible book value per share (d)$53.43  $53.41  $49.79   % 7.3 %
       
       
Note: Explanations for footnotes (a) - (l) 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 March 31, 2021, December 31, 2020, and March 31, 2020     
       
     Percent change vs.
(in thousands, except ratios)March 31, 2021December 31, 2020March 31, 2020 4Q '20
 1Q '20
BALANCE SHEET:                   
Investment securities$1,176,240  $1,124,806  $1,253,087  4.6 % (6.1)%
Loans7,168,745  7,177,785  6,522,519  (0.1)% 9.9 %
Allowance for credit losses (l)86,886  85,675  61,503  1.4 % 41.3 %
Goodwill and other intangible assets168,376  168,855  170,512  (0.3)% (1.3)%
Other real estate owned (OREO)844  1,431  3,600  (41.0)% (76.6)%
Total assets9,914,069  9,279,021  8,719,291  6.8 % 13.7 %
Total deposits8,236,199  7,572,358  7,290,133  8.8 % 13.0 %
Borrowings523,266  562,504  348,373  (7.0)% 50.2 %
Total shareholders' equity1,041,271  1,040,256  981,877  0.1 % 6.0 %
Tangible equity (d)872,895  871,401  811,365  0.2 % 7.6 %
Total nonperforming loans130,327  139,614  119,311  (6.7)% 9.2 %
Total nonperforming assets134,335  144,209  126,510  (6.8)% 6.2 %
                    
ASSET QUALITY RATIOS:                   
Loans as a % of period end total assets72.31 %77.35 %74.81% (6.5)% (3.3)%
Total nonperforming loans as a % of period end loans1.82 %1.95 %1.83% (6.7)% (0.5)%
Total nonperforming assets as a % of period end loans + OREO + other nonperforming assets1.87 %2.01 %1.94% (7.0)% (3.6)%
Allowance for credit losses as a % of period end loans1.21 %1.19 %0.94% 1.7 % 28.7 %
Net loan charge-offs (recoveries)$24  $(17,796) $329  N.M   N.M  
Annualized net loan charge-offs (recoveries) as a % of average loans (b) %(0.98)%0.02% N.M   N.M  
       
CAPITAL & LIQUIDITY:      
Total shareholders' equity / Period end total assets10.50 %11.21 %11.26% (6.3)% (6.7)%
Tangible equity (d) / Tangible assets (f)8.96 %9.57 %9.49% (6.4)% (5.6)%
Average shareholders' equity / Average assets (b)10.87 %11.11 %11.31% (2.2)% (3.9)%
Average shareholders' equity / Average loans (b)14.63 %14.29 %15.15% 2.4 % (3.4)%
Average loans / Average deposits (b)90.12 %95.80 %89.90% (5.9)% 0.2 %
       
Note: Explanations for footnotes (a) - (l) are included at the end of the financial tables in the "Financial Reconciliations" section.   
    


PARK NATIONAL CORPORATION
Consolidated Statements of Income
     
  Three Months Ended
  March 31
(in thousands, except share and per share data) 2021 2020
     
Interest income:    
Interest and fees on loans $78,737   $80,687 
Interest on:    
Obligations of U.S. Government, its agencies    
 and other securities - taxable 4,256   5,531 
Obligations of states and political subdivisions - tax-exempt 2,037   2,200 
Other interest income 143   491 
 Total interest income 85,173   88,909 
     
Interest expense:    
Interest on deposits:    
Demand and savings deposits 386   6,342 
Time deposits 1,584   4,285 
Interest on borrowings 2,469   1,999 
Total interest expense 4,439   12,626 
     
Net interest income 80,734   76,283 
     
(Recovery of) provision for credit losses (l) (4,855) 5,153 
     
Net interest income after (recovery of) provision for credit losses 85,589   71,130 
     
Other income 34,089   22,486 
     
Other expense 67,865   66,276 
     
Income before income taxes 51,813   27,340 
     
Income taxes 8,982   4,968 
     
Net income $42,831   $22,372 
     
Per common share:    
Net income - basic $2.63   $1.37 
Net income - diluted $2.61   $1.36 
     
Weighted average shares - basic 16,314,987   16,303,602 
Weighted average shares - diluted 16,439,920   16,425,881 
     
Cash dividends declared $1.23   $1.22 
     


PARK NATIONAL CORPORATION 
Consolidated Balance Sheets
   
(in thousands, except share data)March 31, 2021
 December 31, 2020
        
Assets       
        
Cash and due from banks$131,357   $155,596 
Money market instruments811,918   214,878 
Investment securities1,176,240   1,124,806 
Loans7,168,745   7,177,785 
Allowance for credit losses (l)(86,886) (85,675)
Loans, net7,081,859   7,092,110 
Bank premises and equipment, net89,533   88,660 
Goodwill and other intangible assets168,376   168,855 
Other real estate owned844   1,431 
Other assets453,942   432,685 
Total assets$9,914,069   $9,279,021 
   
Liabilities and Shareholders' Equity  
   
Deposits:  
Noninterest bearing$2,907,020   $2,727,100 
Interest bearing5,329,179   4,845,258 
Total deposits8,236,199   7,572,358 
Borrowings523,266   562,504 
Other liabilities113,333   103,903 
Total liabilities$8,872,798   $8,238,765 
   
   
Shareholders' Equity:  
Preferred shares (200,000 shares authorized; no shares outstanding at March 31, 2021 and December 31, 2020)$—   $ 
Common shares (No par value; 20,000,000 shares authorized; 17,623,154 shares issued at March 31, 2021 and 17,623,163 shares issued at December 31, 2020)458,534   460,687 
Accumulated other comprehensive (loss) income, net of taxes(7,901) 5,571 
Retained earnings719,230   704,764 
Treasury shares (1,287,203 shares at March 31, 2021 and 1,308,966 shares at December 31, 2020)(128,592) (130,766)
Total shareholders' equity$1,041,271   $1,040,256 
Total liabilities and shareholders' equity$9,914,069   $9,279,021 


 
PARK NATIONAL CORPORATION 
Consolidated Average Balance Sheets
   
 Three Months Ended
 Mar 31
(in thousands)2021
 2020
        
Assets       
        
Cash and due from banks$148,264   $132,029 
Money market instruments553,906   176,805 
Investment securities1,160,509   1,264,452 
Loans7,138,854   6,482,137 
Allowance for credit losses (l)(89,954) (57,615)
Loans, net7,048,900   6,424,522 
Bank premises and equipment, net89,740   74,922 
Goodwill and other intangible assets168,690   170,909 
Other real estate owned1,212   3,800 
Other assets441,321   432,350 
Total assets$9,612,542   $8,679,789 
   
   
Liabilities and Shareholders' Equity  
   
Deposits:  
Noninterest bearing$2,792,398   $1,949,991 
Interest bearing5,129,357   5,260,385 
Total deposits7,921,755   7,210,376 
Borrowings538,706   386,511 
Other liabilities107,669   100,926 
Total liabilities$8,568,130   $7,697,813 
        
Shareholders' Equity:       
Preferred shares$—   $ 
Common shares460,721   459,462 
Accumulated other comprehensive income (loss), net of taxes1,179   (94)
Retained earnings713,254   654,465 
Treasury shares(130,742) (131,857)
Total shareholders' equity$1,044,412   $981,976 
Total liabilities and shareholders' equity$9,612,542   $8,679,789 


 
PARK NATIONAL CORPORATION 
Consolidated Statements of Income - Linked Quarters
      
 20212020202020202020
(in thousands, except per share data)1st QTR4th QTR3rd QTR2nd QTR1st QTR
      
Interest income:     
Interest and fees on loans $78,737  $85,268  $82,617  $80,155  $80,687  
Interest on:     
Obligations of U.S. Government, its agencies and other securities - taxable4,256  4,420  4,841  5,026  5,531  
Obligations of states and political subdivisions - tax-exempt2,037  2,040  2,045  2,151  2,200  
Other interest income143  72  63  113  491  
Total interest income85,173  91,800  89,566  87,445  88,909  
      
Interest expense:     
Interest on deposits:     
Demand and savings deposits386  490  803  1,507  6,342  
Time deposits1,584  1,893  2,662  3,346  4,285  
Interest on borrowings2,469  3,096  2,261  1,406  1,999  
Total interest expense4,439  5,479  5,726  6,259  12,626  
      
Net interest income80,734  86,321  83,840  81,186  76,283  
      
(Recovery of) provision for credit losses (l)(4,855 (19,159 13,836  12,224  5,153  
      
Net interest income after (recovery of) provision for credit losses85,589  105,480  70,004  68,962  71,130  
      
Other income34,089  35,656  36,558  30,964  22,486  
      
Other expense67,865  85,661  69,859  64,799  66,276  
      
Income before income taxes51,813  55,475  36,703  35,127  27,340  
                
Income taxes8,982  10,275  5,857  5,622  4,968  
                
Net income $42,831  $45,200  $30,846  $29,505  $22,372  
                
Per common share:               
Net income - basic$2.63  $2.77  $1.89  $1.81  $1.37  
Net income - diluted$2.61  $2.75  $1.88  $1.80  $1.36  


 
PARK NATIONAL CORPORATION 
Detail of other income and other expense - Linked Quarters
      
 20212020202020202020
(in thousands)1st QTR4th QTR3rd QTR2nd QTR1st QTR
      
Other income:     
Income from fiduciary activities$8,173   $7,632  $7,335  $6,793  $7,113 
Service charges on deposit accounts2,054   2,123  2,118  1,676  2,528 
Other service income9,617   12,040  13,047  8,758  3,766 
Debit card fee income6,086   5,787  5,853  5,560  4,960 
Bank owned life insurance income1,165   1,170  1,192  1,179  1,248 
ATM fees530   432  491  438  412 
(Loss) gain on the sale of OREO, net(33) (7) 569  841  (196)
Net gain (loss) on the sale of investment securities177     (27) 3,313   
Gain (loss) on equity securities, net1,633   2,931  1,201  (977) (973)
Other components of net periodic benefit income2,038   1,988  1,988  1,988  1,988 
Miscellaneous2,649   1,560  2,791  1,395  1,640 
Total other income$34,089   $35,656  $36,558  $30,964  $22,486 
      
Other expense:     
Salaries$29,896   $37,280  $31,632  $30,699  $28,429 
Employee benefits10,201   7,316  10,676  9,080  10,043 
Occupancy expense3,640   3,231  3,835  3,256  3,480 
Furniture and equipment expense2,610   4,949  4,687  4,850  4,319 
Data processing fees7,712   3,315  3,275  2,577  2,492 
Professional fees and services5,664   9,359  7,977  6,901  7,066 
Marketing1,491   1,752  1,454  1,136  1,486 
Insurance1,691   1,855  1,541  1,477  1,550 
Communication1,122   1,097  958  874  1,155 
State tax expense1,108   605  1,125  1,116  1,145 
Amortization of intangible assets479   525  525  607  606 
FHLB prepayment penalty—   8,736      1,793 
Foundation contributions—   3,000       
Miscellaneous2,251   2,641  2,174  2,226  2,712 
Total other expense$67,865   $85,661  $69,859  $64,799  $66,276 


PARK NATIONAL CORPORATION 
Asset Quality Information
      
  Year ended December 31,
(in thousands, except ratios)March 31,
2021

 2020201920182017
                  
Allowance for credit losses:                 
Allowance for credit losses, beginning of period$85,675  $56,679  $51,512 $49,988 $50,624 
Cumulative change in accounting principle; adoption of ASU 2016-136,090       
Charge-offs1,701  10,304  11,177 13,552 19,403 
Recoveries1,677  27,246  10,173 7,131 10,210 
Net charge-offs (recoveries)24  (16,942) 1,004 6,421 9,193 
(Recovery of) provision for credit losses(4,855) 12,054  6,171 7,945 8,557 
Allowance for credit losses, end of period$86,886  $85,675  $56,679 $51,512 $49,988 
                  
                  
General reserve trends:                 
Allowance for credit losses, end of period$86,886  $85,675  $56,679 $51,512 $49,988 
Allowance on purchased credit deteriorated ("PCD") loans (purchased credit impaired ("PCI") loans for years 2020 and prior)  167  268   
Allowance on purchased loans excluded from the general reserve  678     
Specific reserves on individually evaluated loans4,962  5,434  5,230 2,273 684 
General reserves on collectively evaluated loans$81,924  $79,396  $51,181 $49,239 $49,304 
      
Total loans$7,168,745  $7,177,785  $6,501,404 $5,692,132 $5,372,483 
PCD loans (PCI loans for years 2020 and prior)10,284  11,153  14,331 3,943  
Purchased loans excluded from collectively evaluated loans  360,056  548,436 225,029  
Individually evaluated loans100,407  108,407  77,459 48,135 56,545 
Collectively evaluated loans$7,058,054  $6,698,169  $5,861,178 $5,415,025 $5,315,938 
      
Asset Quality Ratios:     
Net charge-offs (recoveries) as a % of average loans (annualized) %(0.24)%0.02%0.12%0.17%
Allowance for credit losses as a % of period end loans1.21 %1.19 %0.87%0.90%0.93%
Allowance for credit losses as a % of period end loans (excluding PPP loans) (k)1.28 %1.25 %.N.A .N.A .N.A 
General reserve as a % of collectively evaluated loans1.16 %1.19 %0.87%0.91%0.93%
General reserves as a % of collectively evaluated loans (excluding PPP loans) (k)1.22 %1.24 %.N.A .N.A .N.A 
      
Nonperforming assets:     
Nonaccrual loans$114,708  $117,368  $90,080 $67,954 $72,056 
Accruing troubled debt restructurings14,817  20,788  21,215 15,173 20,111 
Loans past due 90 days or more802  1,458  2,658 2,243 1,792 
Total nonperforming loans$130,327  $139,614  $113,953 $85,370 $93,959 
Other real estate owned - Park National Bank250  837  3,100 2,788 6,524 
Other real estate owned - SEPH594  594  929 1,515 7,666 
Other nonperforming assets - Park National Bank3,164  3,164  3,599 3,464 4,849 
Total nonperforming assets$134,335  $144,209  $121,581 $93,137 $112,998 
Percentage of nonaccrual loans to period end loans1.60 %1.64 %1.39%1.19%1.34%
Percentage of nonperforming loans to period end loans1.82 %1.95 %1.75%1.50%1.75%
Percentage of nonperforming assets to period end loans1.87 %2.01 %1.87%1.64%2.10%
Percentage of nonperforming assets to period end total assets1.35 %1.55 %1.42%1.19%1.50%
      
Note: Explanations for footnotes (a) - (l) 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)March 31, 20212020201920182017
      
      
New nonaccrual loan information:     
Nonaccrual loans, beginning of period$117,368 $90,080 $67,954 $72,056 $87,822 
New nonaccrual loans12,540 103,386 81,009 76,611 58,753 
Resolved nonaccrual loans15,200 76,098 58,883 80,713 74,519 
Nonaccrual loans, end of period$114,708 $117,368 $90,080 $67,954 $72,056 
      
Impaired commercial loan portfolio information (period end):     
Unpaid principal balance$100,996 $109,062 $78,178 $59,381 $66,585 
Prior charge-offs589 655 719 11,246 10,040 
Remaining principal balance100,407 108,407 77,459 48,135 56,545 
Specific reserves4,962 5,434 5,230 2,273 684 
Book value, after specific reserves$95,445 $102,973 $72,229 $45,862 $55,861 
      


PARK NATIONAL CORPORATION
Financial Reconciliations   
NON-GAAP RECONCILIATIONS   
    
 THREE MONTHS ENDED
  
(in thousands, except share and per share data)March 31, 2021December 31,
2020
March 31, 2020
Net interest income$80,734  $86,321  $76,283  
less purchase accounting accretion related to NewDominion
and Carolina Alliance acquisitions
1,131  919  1,378  
less interest income on former Vision Bank relationships105  102  77  
Net interest income - adjusted$79,498  $85,300  $74,828  
    
(Recovery of) provision for credit losses$(4,855) $(19,159) $5,153  
less recoveries on former Vision Bank relationships(257) (20,496) (764) 
(Recovery of) provision for credit losses - adjusted$(4,598) $1,337  $5,917  
             
Other income$34,089  $35,656  $22,486  
less other service income related to former Vision Bank relationships58  503    
less rebranding initiative related expenses  (298)   
Other income - adjusted$34,031  $35,451  $22,486  
    
Other expense$67,865  $85,661  $66,276  
less merger-related expenses related to NewDominion and Carolina Alliance acquisitions12  9  243  
less core deposit intangible amortization related to NewDominion and Carolina Alliance acquisitions479  525  606  
less direct expenses related to collection of payments on former Vision Bank loan relationships107  4,051    
less FHLB prepayment penalty  8,736  1,793  
less rebranding initiative related expenses618  229  270  
less Foundation contribution  3,000    
less severance and restructuring charges108  4,039  88  
less COVID-19 related expenses (j)634  738  262  
Other expense - adjusted$65,907  $64,334  $63,014  
    
Tax effect of adjustments to net income identified above (i)$85  $(83) $219  
    
Net income - reported$42,831  $45,200  $22,372  
Net income - adjusted$43,153  $44,888  $23,196  
    
Diluted EPS$2.61  $2.75  $1.36  
Diluted EPS, adjusted (h)$2.62  $2.73  $1.41  
    
Annualized return on average assets (a)(b)1.81 %1.93 %1.04 %
Annualized return on average assets, adjusted (a)(b)(h)1.82 %1.92 %1.07 %
    
Annualized return on average tangible assets (a)(b)(e)1.84 %1.97 %1.06 %
Annualized return on average tangible assets, adjusted (a)(b)(e)(h)1.85 %1.95 %1.10 %
    
Annualized return on average shareholders' equity (a)(b)16.63 %17.37 %9.16 %
Annualized return on average shareholders' equity, adjusted (a)(b)(h)16.76 %17.25 %9.50 %
    
Annualized return on average tangible equity (a)(b)(c)19.84 %20.76 %11.09 %
Annualized return on average tangible equity, adjusted (a)(b)(c)(h)19.98 %20.61 %11.50 %
    
Efficiency ratio (g)58.74 %69.82 %66.61 %
Efficiency ratio, adjusted (g)(h)57.69 %52.97 %64.27 %
    
Annualized net interest margin (g)3.76 %4.07 %3.93 %
Annualized net interest margin, adjusted (g)(h)3.70 %4.02 %3.86 %
    


PARK NATIONAL CORPORATION
Financial Reconciliations (continued)   
    
(a) Reported measure uses net income
(b) Averages are for the three months ended March 31, 2021, December 31, 2020, and March 31, 2020, 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
 March 31, 2021December 31,
2020
March 31, 2020
AVERAGE SHAREHOLDERS' EQUITY$1,044,412 $1,035,493 $981,976 
Less: Average goodwill and other intangible assets168,690 169,199 170,909 
AVERAGE TANGIBLE EQUITY$875,722 $866,294 $811,067 
    
(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:
 March 31, 2021December 31,
2020
March 31, 2020
TOTAL SHAREHOLDERS' EQUITY$1,041,271 $1,040,256 $981,877 
Less: Goodwill and other intangible assets168,376 168,855 170,512 
TANGIBLE EQUITY$872,895 $871,401 $811,365 
    
(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
 March 31, 2021December 31,
2020
March 31, 2020
AVERAGE ASSETS$9,612,542 $9,316,499 $8,679,789 
Less: Average goodwill and other intangible assets168,690 169,199 170,909 
AVERAGE TANGIBLE ASSETS$9,443,852 $9,147,300 $8,508,880 
    
(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:
 March 31, 2021December 31,
2020
March 31, 2020
TOTAL ASSETS$9,914,069 $9,279,021 $8,719,291 
Less: Goodwill and other intangible assets168,376 168,855 170,512 
TANGIBLE ASSETS$9,745,693 $9,110,166 $8,548,779 
    
(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
 March 31, 2021December 31,
2020
March 31, 2020
Interest income$85,173 $91,800 $88,909 
Fully taxable equivalent adjustment714 712 725 
Fully taxable equivalent interest income$85,887 $92,512 $89,634 
Interest expense4,439 5,479 12,626 
Fully taxable equivalent net interest income$81,448 $87,033 $77,008 
    
(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 $387.0 million and $331.6 million of PPP loans at March 31, 2021 and December 31, 2020, respectively.
(l) Park adopted ASU 2016-13 effective January 1, 2021. The allowance for credit losses as of March 31, 2021 and the related (recovery of) provision for credit losses for the three months ended March 31, 2021 was calculated utilizing this new guidance.