Park National Corp. (PRK) Reports Q4 EPS of $2.23

January 24, 2022 4:18 PM EST
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Park National Corporation (Park) (NYSE American: PRK) today reported financial results for the fourth quarter and full year of 2021 (three and twelve months ended December 31, 2021). Park's board of directors declared a quarterly cash dividend of $1.04 per common share, payable on March 10, 2022 to common shareholders of record as of February 18, 2022.

Park’s net income for the fourth quarter of 2021 was $36.5 million, a 19.1 percent decrease from $45.2 million for the fourth quarter of 2020. Fourth quarter 2021 net income per diluted common share was $2.23, compared to $2.75 in the fourth quarter of 2020. Park's net income for the full year of 2021 was $153.9 million, a 20.3 percent increase from $127.9 million for the full year of 2020. Net income per diluted common share was $9.37 for the full year of 2021, compared to $7.80 for the full year of 2020.

“Our colleagues live and love to serve. While the last two years have been trying, Park bankers have used their creativity, energy and imagination to serve our customers, prospects and communities more. Our financial results reflect our colleagues’ sustained efforts on all levels,” said Park Chairman and Chief Executive Officer David Trautman. “We look forward to finding opportunities to serve customers more and to invite prospects to the Park family this year.”

Park's community-banking subsidiary, The Park National Bank, reported net income of $37.0 million for the fourth quarter of 2021, an 8.2 percent increase compared to $34.2 million for the same period of 2020. Park National Bank reported net income of $159.5 million for the full year of 2021, compared to $123.7 million for the full year of 2020.

“I am continuously impressed by our bankers’ flexibility and resiliency. Park bankers rose to the challenge of another unpredictable year and found inventive ways to serve our customers more,” said Park President Matthew Miller.

Park also announced that the board of directors approved a second bonus payment, in addition to the one paid in 2021, for all associates who are not eligible for Park’s incentive compensation program. In February, each full-time associate in that group will receive an extra payment of $1,000, and part-time associates will receive $750. With these two bonus payments, Park awarded associates an extra $2.5 million to recognize their contributions to the bank’s strong financial performance.

Headquartered in Newark, Ohio, Park National Corporation had $9.6 billion in total assets (as of December 31, 2021). Park’s banking operations are conducted through Park subsidiary Park National Bank. Other bank subsidiaries are Scope Leasing Inc. (dba Scope Aircraft Finance), Guardian Financial Services Company (dba Guardian Finance Company) and SE Property Holdings, LLC.

Complete financial tables are listed below.

Category: EarningsMedia contact: Ellie Akey, Marketing & Communication Officer, 740-349-5493 or [email protected] Investor contact: Brady Burt, Chief Financial Officer, 740-322-6844 or [email protected]

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 or variants thereof - - on economies (local, national and international), supply chains and markets, on the labor market, including the potential for a sustained reduction in labor force participation, 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 availability, effectiveness and acceptance of vaccines, and the implementation of fiscal stimulus packages;
  • government imposed COVID-19 vaccine mandates could have a material adverse impact on our business, results of operations and ability to retain and recruit key management and other personnel;
  • 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, interest rate policies and policies impacting inflation of the Federal Reserve Board, the U.S. Treasury and other governmental agencies) 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 the federal, state, or local tax laws 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 and otherwise negatively impact our financial performance;
  • the impact of the changes in federal, state and local governmental policy, including the regulatory landscape, capital markets, elevated government debt, potential changes in tax legislation that may increase tax rates, infrastructure spending and social programs;
  • changes in laws or requirements imposed by Park's regulators impacting Park's capital actions, including dividend payments and stock repurchases;
  • 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, and Park's expectations regarding future loan losses and our allowance for credit losses, may be different than anticipated due to the continuing impact of and the various responses to 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 Park's 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 American Rescue Plan Act of 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 American Rescue Plan Act of 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;
  • 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 impact on Park's business and operating results of any costs associated with obtaining rights in intellectual property claimed by others and of adequacy of Park's intellectual property protection in general;
  • 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, closing of border crossings and changes in the relationship of the U.S. and its global trading partners);
  • 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 effect of a fall in stock market prices on Park's asset and wealth management businesses;
  • 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 December 31, 2021, September 30, 2021, and December 31, 2020
2021 2021 2020 Percent change vs.
(in thousands, except share and per share data)4th QTR3rd QTR4th QTR 3Q '214Q '20
INCOME STATEMENT:
Net interest income$83,706 $81,602 $86,321 2.6%(3.0) %
(Recovery of) provision for credit losses (l) (4,993) 1,972 (19,159) N.MN.M
Other income 32,206 32,411 35,656 (0.6) %(9.7) %
Other expense 75,764 68,489 85,661 10.6%(11.6) %
Income before income taxes$45,141 $43,552 $55,475 3.6%(18.6) %
Income taxes 8,593 8,118 10,275 5.9%(16.4) %
Net income$36,548 $35,434 $45,200 3.1%(19.1) %
MARKET DATA:
Earnings per common share - basic (a)$2.25 $2.17 $2.77 3.7%(18.8) %
Earnings per common share - diluted (a) 2.23 2.16 2.75 3.2%(18.9) %
Cash dividends declared per common share 1.23 1.03 1.02 19.4%20.6%
Book value per common share at period end 68.48 65.90 63.76 3.9%7.4%
Market price per common share at period end 137.31 121.95 105.01 12.6%30.8%
Market capitalization at period end 2,227,108 1,976,343 1,713,154 12.7%30.0%
Weighted average common shares - basic (b) 16,216,076 16,292,312 16,310,551 (0.5) %(0.6) %
Weighted average common shares - diluted (b) 16,363,968 16,423,912 16,434,812 (0.4) %(0.4) %
Common shares outstanding at period end 16,219,563 16,206,177 16,314,197 0.1%(0.6) %
PERFORMANCE RATIOS: (annualized)
Return on average assets (a)(b) 1.48% 1.40% 1.93% 5.7%(23.3) %
Return on average shareholders' equity (a)(b) 13.44% 13.04% 17.37% 3.1%(22.6) %
Yield on loans 4.58% 4.47% 4.69% 2.5%(2.3) %
Yield on investment securities 2.05% 2.12% 2.80% (3.3) %(26.8) %
Yield on money market instruments 0.15% 0.16% 0.11% (6.3) %36.4%
Yield on interest earning assets 3.88% 3.69% 4.33% 5.1%(10.4) %
Cost of interest bearing deposits 0.09% 0.11% 0.19% (18.2) %(52.6) %
Cost of borrowings 2.09% 2.00% 2.01% 4.5%4.0%
Cost of paying interest bearing liabilities 0.25% 0.26% 0.40% (3.8) %(37.5) %
Net interest margin (g) 3.72% 3.53% 4.07% 5.4%(8.6) %
Efficiency ratio (g) 64.94% 59.70% 69.82% 8.8%(7.0) %
OTHER RATIOS (NON-GAAP):
Tangible book value per share (d)$58.18 $55.56 $53.41 4.7%8.9%
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 December 31, 2021, September 30, 2021, and December 31, 2020
Percent change vs.
(in thousands, except ratios)December 31, 2021September 30, 2021December 31, 2020 3Q '214Q '20
BALANCE SHEET:
Investment securities$1,815,408 $1,609,303 $1,124,806 12.8%61.4%
Loans 6,871,122 6,908,417 7,177,785 (0.5) %(4.3) %
Allowance for credit losses (l) 83,197 88,129 85,675 (5.6) %(2.9) %
Goodwill and other intangible assets 167,057 167,477 168,855 (0.3) %(1.1) %
Other real estate owned (OREO) 775 813 1,431 (4.7) %(45.8) %
Total assets 9,560,254 10,034,018 9,279,021 (4.7) %3.0%
Total deposits 7,904,528 8,364,385 7,572,358 (5.5) %4.4%
Borrowings 426,996 424,078 562,504 0.7%(24.1) %
Total shareholders' equity 1,110,759 1,067,912 1,040,256 4.0%6.8%
Tangible equity (d) 943,702 900,435 871,401 4.8%8.3%
Total nonperforming loans 102,652 106,872 139,614 (3.9) %(26.5) %
Total nonperforming assets 106,177 110,849 144,209 (4.2) %(26.4) %
ASSET QUALITY RATIOS:
Loans as a % of period end total assets 71.87% 68.85% 77.35% 4.4%(7.1) %
Total nonperforming loans as a % of period end loans 1.49% 1.55% 1.95% (3.9) %(23.6) %
Total nonperforming assets as a % of period end loans + OREO + other nonperforming assets 1.54% 1.60% 2.01% (3.8) %(23.4) %
Allowance for credit losses as a % of period end loans 1.21% 1.28% 1.19% (5.5) %1.7%
Net loan recoveries$(61)$(2,580)$(17,796) N.MN.M
Annualized net loan recoveries as a % of average loans (b) %(0.15) %(0.98) % N.MN.M
CAPITAL & LIQUIDITY:
Total shareholders' equity / Period end total assets 11.62% 10.64% 11.21% 9.2%3.7%
Tangible equity (d) / Tangible assets (f) 10.05% 9.13% 9.57% 10.1%5.0%
Average shareholders' equity / Average assets (b) 10.97% 10.71% 11.11% 2.4%(1.3) %
Average shareholders' equity / Average loans (b) 15.69% 15.50% 14.29% 1.2%9.8%
Average loans / Average deposits (b) 83.78% 82.68% 95.80% 1.3%(12.5) %
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
Year ended December 31, 2021 and December 31, 2020
(in thousands, except share and per share data) 2021 2020 Percent change vs '20
INCOME STATEMENT:
Net interest income$329,893 $327,630 0.7%
(Recovery of) provision for credit losses (l) (11,916) 12,054 N.M
Other income 129,944 125,664 3.4%
Other expense 283,518 286,595 (1.1)%
Income before income taxes$188,235 $154,645 21.7 %
Income taxes 34,290 26,722 28.3 %
Net income$153,945 $127,923 20.3 %
MARKET DATA:
Earnings per common share - basic (a)$9.45 $7.85 20.4%
Earnings per common share - diluted (a) 9.37 7.80 20.1%
Cash dividends declared per common share 4.52 4.28 5.6%
Weighted average common shares - basic (b) 16,291,016 16,302,825 (0.1)%
Weighted average common shares - diluted (b) 16,425,206 16,407,502 0.1%
PERFORMANCE RATIOS:
Return on average assets (a)(b) 1.56% 1.38% 13.0%
Return on average shareholders' equity (a)(b) 14.45% 12.68% 14.0%
Yield on loans 4.53% 4.71% (3.8) %
Yield on investment securities 2.22% 2.66% (16.5) %
Yield on money market instruments 0.13% 0.26% (50.0) %
Yield on interest earning assets 3.86% 4.28% (9.8) %
Cost of interest bearing deposits 0.12% 0.41% (70.7) %
Cost of borrowings 1.96% 1.77% 10.7%
Cost of paying interest bearing liabilities 0.28% 0.52% (46.2) %
Net interest margin (g) 3.69% 3.93% (6.1) %
Efficiency ratio (g) 61.27% 62.83% (2.5) %
ASSET QUALITY RATIOS
Net loan recoveries$(3,348)$(16,942) N.M.
Net loan recoveries as a % of average loans (b)(0.05)%(0.24)% N.M.
CAPITAL & LIQUIDITY
Average shareholders' equity / Average assets (b) 10.82% 10.92% (0.9)%
Average shareholders' equity / Average loans (b) 15.19% 14.44% 5.2%
Average loans / Average deposits (b) 85.68% 91.58% (6.4)%
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 Year Ended
December 31, December 31,
(in thousands, except share and per share data) 2021 2020 2021 2020
Interest income:
Interest and fees on loans $79,168 $85,268 $317,208 $328,727
Interest on:
Obligations of U.S. Government, its agencies
and other securities - taxable 5,698 4,420 19,458 19,818
Obligations of states and political subdivisions - tax-exempt 2,209 2,040 8,307 8,436
Other interest income 191 72 880 739
Total interest income 87,266 91,800 345,853 357,720
Interest expense:
Interest on deposits:
Demand and savings deposits 373 490 1,595 9,142
Time deposits 831 1,893 4,711 12,186
Interest on borrowings 2,356 3,096 9,654 8,762
Total interest expense 3,560 5,479 15,960 30,090
Net interest income 83,706 86,321 329,893 327,630
(Recovery of) provision for credit losses (l) (4,993) (19,159) (11,916) 12,054
Net interest income after (recovery of) provision for credit losses 88,699 105,480 341,809 315,576
Other income 32,206 35,656 129,944 125,664
Other expense 75,764 85,661 283,518 286,595
Income before income taxes 45,141 55,475 188,235 154,645
Income taxes 8,593 10,275 34,290 26,722
Net income $36,548 $45,200 $153,945 $127,923
Per common share:
Net income - basic $2.25 $2.77 $9.45 $7.85
Net income - diluted $2.23 $2.75 $9.37 $7.80
Weighted average shares - basic 16,216,076 16,310,551 16,291,016 16,302,825
Weighted average shares - diluted 16,363,968 16,434,812 16,425,206 16,407,502
Cash dividends declared $1.23 $1.02 $4.52 $4.28

PARK NATIONAL CORPORATION
Consolidated Balance Sheets
(in thousands, except share data)December 31, 2021December 31, 2020
Assets
Cash and due from banks$144,507 $155,596
Money market instruments 74,673 214,878
Investment securities 1,815,408 1,124,806
Loans 6,871,122 7,177,785
Allowance for credit losses (l) (83,197) (85,675)
Loans, net 6,787,925 7,092,110
Bank premises and equipment, net 89,008 88,660
Goodwill and other intangible assets 167,057 168,855
Other real estate owned 775 1,431
Other assets 480,901 432,685
Total assets$9,560,254 $9,279,021
Liabilities and Shareholders' Equity
Deposits:
Noninterest bearing$3,066,419 $2,727,100
Interest bearing 4,838,109 4,845,258
Total deposits 7,904,528 7,572,358
Borrowings 426,996 562,504
Other liabilities 117,971 103,903
Total liabilities$8,449,495 $8,238,765
Shareholders' Equity:
Preferred shares (200,000 shares authorized; no shares outstanding at December 31, 2021 and December 31, 2020)$ $
Common shares (No par value; 20,000,000 shares authorized; 17,623,118 shares issued at December 31, 2021 and 17,623,163 shares issued at December 31, 2020) 461,800 460,687
Accumulated other comprehensive income, net of taxes 15,155 5,571
Retained earnings 776,294 704,764
Treasury shares (1,403,555 shares at December 31, 2021 and 1,308,966 shares at December 31, 2020) (142,490) (130,766)
Total shareholders' equity$1,110,759 $1,040,256
Total liabilities and shareholders' equity$9,560,254 $9,279,021

PARK NATIONAL CORPORATION
Consolidated Average Balance Sheets
Three Months Ended Year Ended
December 31, December 31,
(in thousands) 2021 2020 2021 2020
Assets
Cash and due from banks$148,433 $120,599 $139,678 $127,214
Money market instruments 491,093 263,212 665,714 280,952
Investment securities 1,696,537 1,066,145 1,407,999 1,214,551
Loans 6,872,620 7,245,273 7,014,517 6,990,458
Allowance for credit losses (l) (88,017) (89,920) (87,233) (71,221)
Loans, net 6,784,603 7,155,353 6,927,284 6,919,237
Bank premises and equipment, net 89,312 86,717 89,758 81,357
Goodwill and other intangible assets 167,332 169,199 167,993 170,031
Other real estate owned 802 856 902 2,174
Other assets 451,545 454,418 448,130 446,117
Total assets$9,829,657 $9,316,499 $9,847,458 $9,241,633
Liabilities and Shareholders' Equity
Deposits:
Noninterest bearing$3,058,428 $2,657,881 $2,937,035 $2,394,717
Interest bearing 5,145,026 4,904,995 5,249,467 5,238,147
Total deposits 8,203,454 7,562,876 8,186,502 7,632,864
Borrowings 448,298 611,890 492,943 494,532
Other liabilities 99,411 106,240 102,553 105,135
Total liabilities$8,751,163 $8,281,006 $8,781,998 $8,232,531
Shareholders' Equity:
Preferred shares$ $ $ $
Common shares 460,037 458,521 459,421 458,096
Accumulated other comprehensive (loss) income, net of taxes (10,656) 12,594 (4,120) 9,688
Retained earnings 771,957 695,509 744,102 673,273
Treasury shares (142,844) (131,131) (133,943) (131,955)
Total shareholders' equity$1,078,494 $1,035,493 $1,065,460 $1,009,102
Total liabilities and shareholders' equity$9,829,657 $9,316,499 $9,847,458 $9,241,633

PARK NATIONAL CORPORATION
Consolidated Statements of Income - Linked Quarters
2021 2021 2021 2021 2020
(in thousands, except per share data)4th QTR3rd QTR2nd QTR1st QTR4th QTR
Interest income:
Interest and fees on loans$79,168 $78,127$81,176 $78,737 $85,268
Interest on:
Obligations of U.S. Government, its agencies and other securities - taxable 5,698 4,904 4,600 4,256 4,420
Obligations of states and political subdivisions - tax-exempt 2,209 2,029 2,032 2,037 2,040
Other interest income 191 360 186 143 72
Total interest income 87,266 85,420 87,994 85,173 91,800
Interest expense:
Interest on deposits:
Demand and savings deposits 373 435 401 386 490
Time deposits 831 1,011 1,285 1,584 1,893
Interest on borrowings 2,356 2,372 2,457 2,469 3,096
Total interest expense 3,560 3,818 4,143 4,439 5,479
Net interest income 83,706 81,602 83,851 80,734 86,321
(Recovery of) provision for credit losses (l) (4,993) 1,972 (4,040) (4,855) (19,159)
Net interest income after (recovery of) provision for credit losses 88,699 79,630 87,891 85,589 105,480
Other income 32,206 32,411 31,238 34,089 35,656
Other expense 75,764 68,489 71,400 67,865 85,661
Income before income taxes 45,141 43,552 47,729 51,813 55,475
Income taxes 8,593 8,118 8,597 8,982 10,275
Net income $36,548 $35,434$39,132 $42,831 $45,200
Per common share:
Net income - basic$2.25 $2.17$2.39 $2.63 $2.77
Net income - diluted$2.23 $2.16$2.38 $2.61 $2.75

PARK NATIONAL CORPORATION
Detail of other income and other expense - Linked Quarters
2021202120212021 2020
(in thousands)4th QTR3rd QTR2nd QTR1st QTR4th QTR
Other income:
Income from fiduciary activities$8,887$8,820$8,569$8,173 $7,632
Service charges on deposit accounts 2,357 2,389 2,032 2,054 2,123
Other service income 6,368 6,668 7,159 9,617 12,040
Debit card fee income 6,568 6,453 6,758 6,086 5,787
Bank owned life insurance income 1,121 1,462 1,149 1,165 1,170
ATM fees 572 622 655 530 432
Gain (loss) on the sale of OREO, net 22 3 4 (33) (7)
Gain on equity securities, net 2,125 609 467 1,810 2,931
Other components of net periodic benefit income 2,038 2,038 2,038 2,038 1,988
Miscellaneous 2,148 3,347 2,407 2,649 1,560
Total other income$32,206$32,411$31,238$34,089 $35,656
Other expense:
Salaries$35,953$29,433$30,303$29,896 $37,280
Employee benefits 10,706 10,640 10,056 10,201 7,316
Occupancy expense 3,161 3,211 3,027 3,640 3,231
Furniture and equipment expense 2,724 2,797 2,756 2,610 4,949
Data processing fees 7,860 7,817 7,150 7,712 3,315
Professional fees and services 7,840 6,973 6,973 5,664 9,359
Marketing 1,718 1,574 1,290 1,491 1,752
Insurance 1,547 1,403 1,276 1,691 1,855
Communication 851 796 770 1,122 1,097
State tax expense 931 1,113 1,103 1,108 605
Amortization of intangible assets 420 420 479 479 525
FHLB prepayment penalty 8,736
Foundation contributions 4,000 3,000
Miscellaneous 2,053 2,312 2,217 2,251 2,641
Total other expense$75,764$68,489$71,400$67,865 $85,661

PARK NATIONAL CORPORATION
Asset Quality Information
Year ended December 31,
(in thousands, except ratios) 2021 2020 2019 2018 2017
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 2016-13 6,090
Charge-offs 5,093 10,304 11,177 13,552 19,403
Recoveries 8,441 27,246 10,173 7,131 10,210
Net (recoveries) charge-offs (3,348) (16,942) 1,004 6,421 9,193
(Recovery of) provision for credit losses (11,916) 12,054 6,171 7,945 8,557
Allowance for credit losses, end of period$83,197 $85,675 $56,679 $51,512 $49,988
General reserve trends:
Allowance for credit losses, end of period$83,197 $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 loans 1,616 5,434 5,230 2,273 684
General reserves on collectively evaluated loans$81,581 $79,396 $51,181 $49,239 $49,304
Total loans$6,871,122 $7,177,785 $6,501,404 $5,692,132 $5,372,483
PCD loans (PCI loans for years 2020 and prior) 7,149 11,153 14,331 3,943
Purchased loans excluded from collectively evaluated loans 360,056 548,436 225,029
Individually evaluated loans 74,502 108,407 77,459 48,135 56,545
Collectively evaluated loans$6,789,471 $6,698,169 $5,861,178 $5,415,025 $5,315,938
Asset Quality Ratios:
Net (recoveries) charge-offs as a % of average loans(0.05)%(0.24)% 0.02% 0.12% 0.17%
Allowance for credit losses as a % of period end loans 1.21% 1.19% 0.87% 0.90% 0.93%
Allowance for credit losses as a % of period end loans (excluding PPP loans) (k) 1.22% 1.25%N.A.N.A.N.A.
General reserve as a % of collectively evaluated loans 1.20% 1.19% 0.87% 0.91% 0.93%
General reserves as a % of collectively evaluated loans (excluding PPP loans) (k) 1.21% 1.24%N.A.N.A.N.A.
Nonperforming assets:
Nonaccrual loans$72,722 $117,368 $90,080 $67,954 $72,056
Accruing troubled debt restructurings 28,323 20,788 21,215 15,173 20,111
Loans past due 90 days or more 1,607 1,458 2,658 2,243 1,792
Total nonperforming loans$102,652 $139,614 $113,953 $85,370 $93,959
Other real estate owned - Park National Bank 181 837 3,100 2,788 6,524
Other real estate owned - SEPH 594 594 929 1,515 7,666
Other nonperforming assets - Park National Bank 2,750 3,164 3,599 3,464 4,849
Total nonperforming assets$106,177 $144,209 $121,581 $93,137 $112,998
Percentage of nonaccrual loans to period end loans 1.06% 1.64% 1.39% 1.19% 1.34%
Percentage of nonperforming loans to period end loans 1.49% 1.95% 1.75% 1.50% 1.75%
Percentage of nonperforming assets to period end loans 1.55% 2.01% 1.87% 1.64% 2.10%
Percentage of nonperforming assets to period end total assets 1.11% 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) 2021 2020 2019 2018 2017
New nonaccrual loan information:
Nonaccrual loans, beginning of period$117,368 $90,080 $67,954 $72,056 $87,822
New nonaccrual loans 38,478 103,386 81,009 76,611 58,753
Resolved nonaccrual loans 83,124 76,098 58,883 80,713 74,519
Nonaccrual loans, end of period$72,722 $117,368 $90,080 $67,954 $72,056
Impaired commercial loan portfolio information (period end):
Unpaid principal balance$75,126 $109,062 $78,178 $59,381 $66,585
Prior charge-offs 624 655 719 11,246 10,040
Remaining principal balance 74,502 108,407 77,459 48,135 56,545
Specific reserves 1,616 5,434 5,230 2,273 684
Book value, after specific reserves$72,886 $102,973 $72,229 $45,862 $55,861

PARK NATIONAL CORPORATION
Financial Reconciliations
NON-GAAP RECONCILIATIONS
THREE MONTHS ENDED YEAR ENDED
(in thousands, except share and per share data)December 31, 2021September 30, 2021December 31, 2020 December 31, 2021December 31, 2020
Net interest income$83,706 $81,602 $86,321 $329,893 $327,630
less purchase accounting accretion related to NewDominion and Carolina Alliance acquisitions 559 807 919 3,303 4,669
less interest income on former Vision Bank relationships 4,628 414 102 7,985 453
Net interest income - adjusted$78,519 $80,381 $85,300 $318,605 $322,508
(Recovery of) provision for credit losses$(4,993)$1,972 $(19,159) $(11,916)$12,054
less recoveries on former Vision Bank relationships (106) (2,654) (20,496) (3,169) (21,982)
(Recovery of) provision for credit losses - adjusted$(4,887)$4,626 $1,337 $(8,747)$34,036
Other income$32,206 $32,411 $35,656 $129,944 $125,664
less net gain on sale of former Vision Bank OREO properties 1,208
less other service income related to former Vision Bank relationships 321 143 503 525 590
less rebranding initiative related expenses (298) (572)
less net gain on the sale of debt securities in the ordinary course of business 3,286
Other income - adjusted$31,885 $32,268 $35,451 $129,419 $121,152
Other expense$75,764 $68,489 $85,661 $283,518 $286,595
less merger-related expenses related to NewDominion and Carolina Alliance acquisitions 4 4 9 24 629
less core deposit intangible amortization related to NewDominion and Carolina Alliance acquisitions 420 420 525 1,798 2,263
less direct expenses related to collection of payments on former Vision Bank loan relationships 700 254 4,051 1,361 4,283
less FHLB prepayment penalty 8,736 10,529
less rebranding initiative related expenses 351 437 229 2,085 1,040
less Foundation contribution 3,000 4,000 3,000
less severance and restructuring charges 73 140 4,039 367 4,443
less COVID-19 related expenses (j) 587 738 2,122 3,622
Other expense - adjusted$73,629 $67,234 $64,334 $271,761 $256,786
Tax effect of adjustments to net income identified above (i)$(731)$(580)$(83) $(677)$(379)
Net income - reported$36,548 $35,434 $45,200 $153,945 $127,923
Net income - adjusted (h)$33,800 $33,251 $44,888 $151,397 $126,495
Diluted earnings per share$2.23 $2.16 $2.75 $9.37 $7.80
Diluted earnings per share, adjusted (h)$2.07 $2.02 $2.73 $9.22 $7.71
Annualized return on average assets (a)(b) 1.48% 1.40% 1.93% 1.56% 1.38%
Annualized return on average assets, adjusted (a)(b)(h) 1.36% 1.31% 1.92% 1.54% 1.37%
Annualized return on average tangible assets (a)(b)(e) 1.50% 1.42% 1.97% 1.59% 1.41%
Annualized return on average tangible assets, adjusted (a)(b)(e)(h) 1.39% 1.33% 1.95% 1.56% 1.39%
Annualized return on average shareholders' equity (a)(b) 13.44% 13.04% 17.37% 14.45% 12.68%
Annualized return on average shareholders' equity, adjusted (a)(b)(h) 12.43% 12.23% 17.25% 14.21% 12.54%
Annualized return on average tangible equity (a)(b)(c) 15.91% 15.44% 20.76% 17.15% 15.25%
Annualized return on average tangible equity, adjusted (a)(b)(c)(h) 14.72% 14.49% 20.61% 16.87% 15.08%
Efficiency ratio (g) 64.94% 59.70% 69.82% 61.27% 62.83%
Efficiency ratio, adjusted (g)(h) 66.23% 59.31% 52.97% 60.27% 57.51%
Annualized net interest margin (g) 3.72% 3.53% 4.07% 3.69% 3.93%
Annualized net interest margin, adjusted (g)(h) 3.49% 3.48% 4.02% 3.56% 3.86%
Note: Explanations for footnotes (a) - (l) are included at the end of the financial tables in the "Financial Reconciliations" section.

PARK NATIONAL CORPORATION
Financial Reconciliations (continued)
(a) Reported measure uses net income
(b) Averages are for the three months ended December 31, 2021, September 30, 2021, and December 31, 2020 and the twelve months ended December 31, 2021 and December 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 YEAR ENDED
December 31, 2021September 30, 2021December 31, 2020 December 31, 2021December 31, 2020
AVERAGE SHAREHOLDERS' EQUITY$1,078,494$1,078,465$1,035,493 $1,065,460$1,009,102
Less: Average goodwill and other intangible assets 167,332 167,754 169,199 167,993 170,031
AVERAGE TANGIBLE EQUITY$911,162$910,711$866,294 $897,467$839,071
(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, 2021September 30, 2021December 31, 2020
TOTAL SHAREHOLDERS' EQUITY$1,110,759$1,067,912$1,040,256
Less: Goodwill and other intangible assets 167,057 167,477 168,855
TANGIBLE EQUITY$943,702$900,435$871,401
(e) Net income for each period divided by average tangible assets during the period. Average tangible assets equal 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 YEAR ENDED
December 31, 2021September 30, 2021December 31, 2020 December 31, 2021December 31, 2020
AVERAGE ASSETS$9,829,657$10,070,716$9,316,499 $9,847,458$9,241,633
Less: Average goodwill and other intangible assets 167,332 167,754 169,199 167,993 170,031
AVERAGE TANGIBLE ASSETS$9,662,325$9,902,962$9,147,300 $9,679,465$9,071,602
(f) Tangible equity divided by tangible assets. Tangible assets equal 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, 2021September 30, 2021December 31, 2020
TOTAL ASSETS$9,560,254$10,034,018$9,279,021
Less: Goodwill and other intangible assets 167,057 167,477 168,855
TANGIBLE ASSETS$9,393,197$9,866,541$9,110,166
(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 YEAR ENDED
December 31, 2021September 30, 2021December 31, 2020 December 31, 2021December 31, 2020
Interest income$87,266$85,420$91,800 $345,853$357,720
Fully taxable equivalent adjustment 762 717 712 2,911 2,866
Fully taxable equivalent interest income$88,028$86,137$92,512 $348,764$360,586
Interest expense 3,560 3,818 5,479 15,960 30,090
Fully taxable equivalent net interest income$84,468$82,319$87,033 $332,804$330,496
(h) Adjustments to net income for each period presented are detailed in the non-GAAP reconciliations of net interest income, (recovery of) provision for credit 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 $74.4 million, $131.5 million and $331.6 million of PPP loans at December 31, 2021, September 30, 2021 and December 31, 2020, respectively.
(l) Park adopted ASU 2016-13 effective January 1, 2021. The allowance for credit losses at December 31, 2021 and September 30, 2021 and the related (recovery of) provision for credit losses for the three months ended December 31, 2021 and September 30, 2021 and the twelve months ended December 31, 2021 were calculated utilizing this new guidance.

PARK NATIONAL CORPORATION
Asset Quality Information
Year ended December 31,
(in thousands, except ratios) 2021 2020 2019 2018 2017
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 2016-13 6,090
Charge-offs 5,093 10,304 11,177 13,552 19,403
Recoveries 8,441 27,246 10,173 7,131 10,210
Net (recoveries) charge-offs (3,348) (16,942) 1,004 6,421 9,193
(Recovery of) provision for credit losses (11,916) 12,054 6,171 7,945 8,557
Allowance for credit losses, end of period$83,197 $85,675 $56,679 $51,512 $49,988
General reserve trends:
Allowance for credit losses, end of period$83,197 $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 loans 1,616 5,434 5,230 2,273 684
General reserves on collectively evaluated loans$81,581 $79,396 $51,181 $49,239 $49,304
Total loans$6,871,122 $7,177,785 $6,501,404 $5,692,132 $5,372,483
PCD loans (PCI loans for years 2020 and prior) 7,149 11,153 14,331 3,943
Purchased loans excluded from collectively evaluated loans 360,056 548,436 225,029
Individually evaluated loans 74,502 108,407 77,459 48,135 56,545
Collectively evaluated loans$6,789,471 $6,698,169 $5,861,178 $5,415,025 $5,315,938
Asset Quality Ratios:
Net (recoveries) charge-offs as a % of average loans(0.05) %(0.24) % 0.02% 0.12% 0.17%
Allowance for credit losses as a % of period end loans 1.21% 1.19% 0.87% 0.90% 0.93%
Allowance for credit losses as a % of period end loans (excluding PPP loans) (k) 1.22% 1.25%N.A.N.A.N.A.
General reserve as a % of collectively evaluated loans 1.20% 1.19% 0.87% 0.91% 0.93%
General reserves as a % of collectively evaluated loans (excluding PPP loans) (k) 1.21% 1.24%N.A.N.A.N.A.
Nonperforming assets:
Nonaccrual loans$72,722 $117,368 $90,080 $67,954 $72,056
Accruing troubled debt restructurings 28,323 20,788 21,215 15,173 20,111
Loans past due 90 days or more 1,607 1,458 2,658 2,243 1,792
Total nonperforming loans$102,652 $139,614 $113,953 $85,370 $93,959
Other real estate owned - Park National Bank 181 837 3,100 2,788 6,524
Other real estate owned - SEPH 594 594 929 1,515 7,666
Other nonperforming assets - Park National Bank 2,750 3,164 3,599 3,464 4,849
Total nonperforming assets$106,177 $144,209 $121,581 $93,137 $112,998
Percentage of nonaccrual loans to period end loans 1.06% 1.64% 1.39% 1.19% 1.34%
Percentage of nonperforming loans to period end loans 1.49% 1.95% 1.75% 1.50% 1.75%
Percentage of nonperforming assets to period end loans 1.55% 2.01% 1.87% 1.64% 2.10%
Percentage of nonperforming assets to period end total assets 1.11% 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) 2021 2020 2019 2018 2017
New nonaccrual loan information:
Nonaccrual loans, beginning of period$117,368 $90,080 $67,954 $72,056 $87,822
New nonaccrual loans 38,478 103,386 81,009 76,611 58,753
Resolved nonaccrual loans 83,124 76,098 58,883 80,713 74,519
Nonaccrual loans, end of period$72,722 $117,368 $90,080 $67,954 $72,056
Impaired commercial loan portfolio information (period end):
Unpaid principal balance$75,126 $109,062 $78,178 $59,381 $66,585
Prior charge-offs 624 655 719 11,246 10,040
Remaining principal balance 74,502 108,407 77,459 48,135 56,545
Specific reserves 1,616 5,434 5,230 2,273 684
Book value, after specific reserves$72,886 $102,973 $72,229 $45,862 $55,861

PARK NATIONAL CORPORATION
Financial Reconciliations
NON-GAAP RECONCILIATIONS
THREE MONTHS ENDED YEAR ENDED
(in thousands, except share and per share data)December 31, 2021September 30, 2021December 31, 2020 December 31, 2021December 31, 2020
Net interest income$83,706 $81,602 $86,321 $329,893 $327,630
less purchase accounting accretion related to NewDominion and Carolina Alliance acquisitions 559 807 919 3,303 4,669
less interest income on former Vision Bank relationships 4,628 414 102 7,985 453
Net interest income - adjusted$78,519 $80,381 $85,300 $318,605 $322,508
(Recovery of) provision for credit losses$(4,993)$1,972 $(19,159) $(11,916)$12,054
less recoveries on former Vision Bank relationships (106) (2,654) (20,496) (3,169) (21,982)
(Recovery of) provision for credit losses - adjusted$(4,887)$4,626 $1,337 $(8,747)$34,036
Other income$32,206 $32,411 $35,656 $129,944 $125,664
less net gain on sale of former Vision Bank OREO properties 1,208
less other service income related to former Vision Bank relationships 321 143 503 525 590
less rebranding initiative related expenses (298) (572)
less net gain on the sale of debt securities in the ordinary course of business 3,286
Other income - adjusted$31,885 $32,268 $35,451 $129,419 $121,152
Other expense$75,764 $68,489 $85,661 $283,518 $286,595
less merger-related expenses related to NewDominion and Carolina Alliance acquisitions 4 4 9 24 629
less core deposit intangible amortization related to NewDominion and Carolina Alliance acquisitions 420 420 525 1,798 2,263
less direct expenses related to collection of payments on former Vision Bank loan relationships 700 254 4,051 1,361 4,283
less FHLB prepayment penalty 8,736 10,529
less rebranding initiative related expenses 351 437 229 2,085 1,040
less Foundation contribution 3,000 4,000 3,000
less severance and restructuring charges 73 140 4,039 367 4,443
less COVID-19 related expenses (j) 587 738 2,122 3,622
Other expense - adjusted$73,629 $67,234 $64,334 $271,761 $256,786
Tax effect of adjustments to net income identified above (i)$(731)$(580)$(83) $(677)$(379)
Net income - reported$36,548 $35,434 $45,200 $153,945 $127,923
Net income - adjusted (h)$33,800 $33,251 $44,888 $151,397 $126,495
Diluted earnings per share$2.23 $2.16 $2.75 $9.37 $7.80
Diluted earnings per share, adjusted (h)$2.07 $2.02 $2.73 $9.22 $7.71
Annualized return on average assets (a)(b) 1.48% 1.40% 1.93% 1.56% 1.38%
Annualized return on average assets, adjusted (a)(b)(h) 1.36% 1.31% 1.92% 1.54% 1.37%
Annualized return on average tangible assets (a)(b)(e) 1.50% 1.42% 1.97% 1.59% 1.41%
Annualized return on average tangible assets, adjusted (a)(b)(e)(h) 1.39% 1.33% 1.95% 1.56% 1.39%
Annualized return on average shareholders' equity (a)(b) 13.44% 13.04% 17.37% 14.45% 12.68%
Annualized return on average shareholders' equity, adjusted (a)(b)(h) 12.43% 12.23% 17.25% 14.21% 12.54%
Annualized return on average tangible equity (a)(b)(c) 15.91% 15.44% 20.76% 17.15% 15.25%
Annualized return on average tangible equity, adjusted (a)(b)(c)(h) 14.72% 14.49% 20.61% 16.87% 15.08%
Efficiency ratio (g) 64.94% 59.70% 69.82% 61.27% 62.83%
Efficiency ratio, adjusted (g)(h) 66.23% 59.31% 52.97% 60.27% 57.51%
Annualized net interest margin (g) 3.72% 3.53% 4.07% 3.69% 3.93%
Annualized net interest margin, adjusted (g)(h) 3.49% 3.48% 4.02% 3.56% 3.86%
Note: Explanations for footnotes (a) - (l) are included at the end of the financial tables in the "Financial Reconciliations" section.

PARK NATIONAL CORPORATION
Financial Reconciliations (continued)
(a) Reported measure uses net income
(b) Averages are for the three months ended December 31, 2021, September 30, 2021, and December 31, 2020 and the twelve months ended December 31, 2021 and December 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 YEAR ENDED
December 31, 2021September 30, 2021December 31, 2020 December 31, 2021December 31, 2020
AVERAGE SHAREHOLDERS' EQUITY$1,078,494$1,078,465$1,035,493 $1,065,460$1,009,102
Less: Average goodwill and other intangible assets 167,332 167,754 169,199 167,993 170,031
AVERAGE TANGIBLE EQUITY$911,162$910,711$866,294 $897,467$839,071
(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, 2021September 30, 2021December 31, 2020
TOTAL SHAREHOLDERS' EQUITY$1,110,759$1,067,912$1,040,256
Less: Goodwill and other intangible assets 167,057 167,477 168,855
TANGIBLE EQUITY$943,702$900,435$871,401
(e) Net income for each period divided by average tangible assets during the period. Average tangible assets equal 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 YEAR ENDED
December 31, 2021September 30, 2021December 31, 2020 December 31, 2021December 31, 2020
AVERAGE ASSETS$9,829,657$10,070,716$9,316,499 $9,847,458$9,241,633
Less: Average goodwill and other intangible assets 167,332 167,754 169,199 167,993 170,031
AVERAGE TANGIBLE ASSETS$9,662,325$9,902,962$9,147,300 $9,679,465$9,071,602
(f) Tangible equity divided by tangible assets. Tangible assets equal 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, 2021September 30, 2021December 31, 2020
TOTAL ASSETS$9,560,254$10,034,018$9,279,021
Less: Goodwill and other intangible assets 167,057 167,477 168,855
TANGIBLE ASSETS$9,393,197$9,866,541$9,110,166
(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 YEAR ENDED
December 31, 2021September 30, 2021December 31, 2020 December 31, 2021December 31, 2020
Interest income$87,266$85,420$91,800 $345,853$357,720
Fully taxable equivalent adjustment 762 717 712 2,911 2,866
Fully taxable equivalent interest income$88,028$86,137$92,512 $348,764$360,586
Interest expense 3,560 3,818 5,479 15,960 30,090
Fully taxable equivalent net interest income$84,468$82,319$87,033 $332,804$330,496
(h) Adjustments to net income for each period presented are detailed in the non-GAAP reconciliations of net interest income, (recovery of) provision for credit 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 $74.4 million, $131.5 million and $331.6 million of PPP loans at December 31, 2021, September 30, 2021 and December 31, 2020, respectively.
(l) Park adopted ASU 2016-13 effective January 1, 2021. The allowance for credit losses at December 31, 2021 and September 30, 2021 and the related (recovery of) provision for credit losses for the three months ended December 31, 2021 and September 30, 2021 and the twelve months ended December 31, 2021 were calculated utilizing this new guidance.

PARK NATIONAL CORPORATION
Asset Quality Information
Year ended December 31,
(in thousands, except ratios) 2021 2020 2019 2018 2017
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 2016-13 6,090
Charge-offs 5,093 10,304 11,177 13,552 19,403
Recoveries 8,441 27,246 10,173 7,131 10,210
Net (recoveries) charge-offs (3,348) (16,942) 1,004 6,421 9,193
(Recovery of) provision for credit losses (11,916) 12,054 6,171 7,945 8,557
Allowance for credit losses, end of period$83,197 $85,675 $56,679 $51,512 $49,988
General reserve trends:
Allowance for credit losses, end of period$83,197 $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 loans 1,616 5,434 5,230 2,273 684
General reserves on collectively evaluated loans$81,581 $79,396 $51,181 $49,239 $49,304
Total loans$6,871,122 $7,177,785 $6,501,404 $5,692,132 $5,372,483
PCD loans (PCI loans for years 2020 and prior) 7,149 11,153 14,331 3,943
Purchased loans excluded from collectively evaluated loans 360,056 548,436 225,029
Individually evaluated loans 74,502 108,407 77,459 48,135 56,545
Collectively evaluated loans$6,789,471 $6,698,169 $5,861,178 $5,415,025 $5,315,938
Asset Quality Ratios:
Net (recoveries) charge-offs as a % of average loans(0.05) %(0.24) % 0.02% 0.12% 0.17%
Allowance for credit losses as a % of period end loans 1.21% 1.19% 0.87% 0.90% 0.93%
Allowance for credit losses as a % of period end loans (excluding PPP loans) (k) 1.22% 1.25%N.A.N.A.N.A.
General reserve as a % of collectively evaluated loans 1.20% 1.19% 0.87% 0.91% 0.93%
General reserves as a % of collectively evaluated loans (excluding PPP loans) (k) 1.21% 1.24%N.A.N.A.N.A.
Nonperforming assets:
Nonaccrual loans$72,722 $117,368 $90,080 $67,954 $72,056
Accruing troubled debt restructurings 28,323 20,788 21,215 15,173 20,111
Loans past due 90 days or more 1,607 1,458 2,658 2,243 1,792
Total nonperforming loans$102,652 $139,614 $113,953 $85,370 $93,959
Other real estate owned - Park National Bank 181 837 3,100 2,788 6,524
Other real estate owned - SEPH 594 594 929 1,515 7,666
Other nonperforming assets - Park National Bank 2,750 3,164 3,599 3,464 4,849
Total nonperforming assets$106,177 $144,209 $121,581 $93,137 $112,998
Percentage of nonaccrual loans to period end loans 1.06% 1.64% 1.39% 1.19% 1.34%
Percentage of nonperforming loans to period end loans 1.49% 1.95% 1.75% 1.50% 1.75%
Percentage of nonperforming assets to period end loans 1.55% 2.01% 1.87% 1.64% 2.10%
Percentage of nonperforming assets to period end total assets 1.11% 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) 2021 2020 2019 2018 2017
New nonaccrual loan information:
Nonaccrual loans, beginning of period$117,368 $90,080 $67,954 $72,056 $87,822
New nonaccrual loans 38,478 103,386 81,009 76,611 58,753
Resolved nonaccrual loans 83,124 76,098 58,883 80,713 74,519
Nonaccrual loans, end of period$72,722 $117,368 $90,080 $67,954 $72,056
Impaired commercial loan portfolio information (period end):
Unpaid principal balance$75,126 $109,062 $78,178 $59,381 $66,585
Prior charge-offs 624 655 719 11,246 10,040
Remaining principal balance 74,502 108,407 77,459 48,135 56,545
Specific reserves 1,616 5,434 5,230 2,273 684
Book value, after specific reserves$72,886 $102,973 $72,229 $45,862 $55,861

PARK NATIONAL CORPORATION
Financial Reconciliations
NON-GAAP RECONCILIATIONS
THREE MONTHS ENDED YEAR ENDED
(in thousands, except share and per share data)December 31, 2021September 30, 2021December 31, 2020 December 31, 2021December 31, 2020
Net interest income$83,706 $81,602 $86,321 $329,893 $327,630
less purchase accounting accretion related to NewDominion and Carolina Alliance acquisitions 559 807 919 3,303 4,669
less interest income on former Vision Bank relationships 4,628 414 102 7,985 453
Net interest income - adjusted$78,519 $80,381 $85,300 $318,605 $322,508
(Recovery of) provision for credit losses$(4,993)$1,972 $(19,159) $(11,916)$12,054
less recoveries on former Vision Bank relationships (106) (2,654) (20,496) (3,169) (21,982)
(Recovery of) provision for credit losses - adjusted$(4,887)$4,626 $1,337 $(8,747)$34,036
Other income$32,206 $32,411 $35,656 $129,944 $125,664
less net gain on sale of former Vision Bank OREO properties 1,208
less other service income related to former Vision Bank relationships 321 143 503 525 590
less rebranding initiative related expenses (298) (572)
less net gain on the sale of debt securities in the ordinary course of business 3,286
Other income - adjusted$31,885 $32,268 $35,451 $129,419 $121,152
Other expense$75,764 $68,489 $85,661 $283,518 $286,595
less merger-related expenses related to NewDominion and Carolina Alliance acquisitions 4 4 9 24 629
less core deposit intangible amortization related to NewDominion and Carolina Alliance acquisitions 420 420 525 1,798 2,263
less direct expenses related to collection of payments on former Vision Bank loan relationships 700 254 4,051 1,361 4,283
less FHLB prepayment penalty 8,736 10,529
less rebranding initiative related expenses 351 437 229 2,085 1,040
less Foundation contribution 3,000 4,000 3,000
less severance and restructuring charges 73 140 4,039 367 4,443
less COVID-19 related expenses (j)