Park National Corporation reports financial results for second quarter and first half of 2021

July 26, 2021 4:15 PM EDT

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NEWARK, Ohio, July 26, 2021 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE American: PRK) today reported financial results for the second quarter and first half of 2021 (three and six months ended June 30, 2021). Park's board of directors declared a quarterly cash dividend of $1.03 per common share, payable on September 10, 2021 to common shareholders of record as of August 20, 2021.

Park’s net income for the second quarter of 2021 was $39.1 million, a 32.6 percent increase from $29.5 million for the second quarter of 2020. Second quarter 2021 net income per diluted common share was $2.38, compared to $1.80 in the second quarter of 2020. Park's net income for the first half of 2021 was $82.0 million, a 58.0 percent increase from $51.9 million for the first half of 2020. Net income per diluted common share was $4.98 for the first half of 2021, compared to $3.16 for the first half of 2020. Various governmental programs and economic conditions continue to affect performance reports throughout the financial industry.

“Our positive results reflect the dedication of our associates, who’ve been unwavering in serving our clients throughout the ups and downs of the past year. From lending to digital services to philanthropic support – we do not take lightly the trust our communities place in Park National Bank,” Park Chairman David Trautman said. “We remain focused on delivering on our promises to local families and businesses.”

Park's community-banking subsidiary, The Park National Bank, reported net income of $40.9 million for the second quarter of 2021, a 33.0 percent increase compared to $30.8 million for the same period of 2020. Park National Bank reported net income of $86.0 million for the first half of 2021, compared to $56.7 million for the first half of 2020. Park National Bank's mortgage origination volume for the first half of 2021 was $561 million; whereas, it was $527 million for the first half of 2020.

Park’s board also recognized the retirement of C. Daniel DeLawder, thanking him for his 50 years of service and leadership with the Park National organization. DeLawder, a former chairman and chief executive officer for Park, retired from employment on June 30, 2021. He will remain on the boards of directors for the Park National Corporation and Park National Bank; and will continue to serve as chair of the executive committee for the corporation and chair of Park National Bank’s trust committee until his term expires in 2023.

Headquartered in Newark, Ohio, Park National Corporation has $9.9 billion in total assets (as of June 30, 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: EarningsMedia contact: Bethany Lewis, 740.349.0421, bethany.lewis@parknationalbank.comInvestor contact: Brady Burt, 740.322.6844, brady.burt@parknationalbank.comPark National Corporation, 50 N. Third Street, Newark, Ohio 43055

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995Park 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 the federal, state, or local tax laws may negatively impact our financial performance. On March 31, 2021, President Biden unveiled his infrastructure plan, which includes a proposal to increase the federal corporate tax rate from 21% to 28% as part of a package of tax reforms to help fund the spending proposals in the plan. The Biden plan is in the early stages of the legislative process, which is expected to proceed this year due to the Democratic Party's majority in both houses of Congress. If adopted as proposed, the increase of the corporate tax rate would adversely affect our results of operations in future periods.
  • 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 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 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 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;
  • 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 June 30, 2021, March 31, 2021, and June 30, 2020     
       
 202120212020 Percent change vs.
(in thousands, except share and per share data)2nd QTR1st QTR2nd QTR 1Q '212Q '20
INCOME STATEMENT:      
Net interest income$83,851  $80,734  $81,186   3.9 %3.3 %
(Recovery of) provision for credit losses (l)(4,040) (4,855) 12,224   (16.8)%N.M
Other income31,238  34,089  30,964   (8.4)%0.9 %
Other expense71,400  67,865  64,799   5.2 %10.2 %
Income before income taxes$47,729  $51,813  $35,127   (7.9)%35.9 %
Income taxes8,597  8,982  5,622   (4.3)%52.9 %
Net income$39,132  $42,831  $29,505   (8.6)%32.6 %
       
MARKET DATA:      
Earnings per common share - basic (a)$2.39  $2.63  $1.81   (9.1)%32.0 %
Earnings per common share - diluted (a)2.38  2.61  1.80   (8.8)%32.2 %
Cash dividends declared per common share1.03  1.23  1.02   (16.3)%1.0 %
Book value per common share at period end65.44  63.74  61.46   2.7 %6.5 %
Market price per common share at period end117.42  129.30  70.38   (9.2)%66.8 %
Market capitalization at period end1,918,733  2,112,238  1,146,942   (9.2)%67.3 %
       
Weighted average common shares - basic (b)16,340,690  16,314,987  16,296,427   0.2 %0.3 %
Weighted average common shares - diluted (b)16,472,800  16,439,920  16,375,434   0.2 %0.6 %
Common shares outstanding at period end16,340,772  16,335,951  16,296,425    %0.3 %
       
PERFORMANCE RATIOS: (annualized)      
Return on average assets (a)(b)1.59 %1.81 %1.26 % (12.2)%26.2 %
Return on average shareholders' equity (a)(b)14.81 %16.63 %11.89 % (10.9)%24.6 %
Yield on loans4.60 %4.48 %4.63 % 2.7 %(0.6)%
Yield on investment securities2.31 %2.53 %2.76 % (8.7)%(16.3)%
Yield on money market instruments0.10 %0.11 %0.10 % (9.1)% %
Yield on interest earning assets3.93 %3.96 %4.14 % (0.8)%(5.1)%
Cost of interest bearing deposits0.13 %0.16 %0.36 % (18.8)%(63.9)%
Cost of borrowings1.91 %1.86 %1.33 % 2.7 %43.6 %
Cost of paying interest bearing liabilities0.29 %0.32 %0.43 % (9.4)%(32.6)%
Net interest margin (g)3.74 %3.76 %3.84 % (0.5)%(2.6)%
Efficiency ratio (g)61.65 %58.74 %57.41 % 5.0 %7.4 %
       
OTHER RATIOS (NON-GAAP):      
Tangible book value per share (d)$55.17  $53.43  $51.04   3.3 %8.1 %
       
       
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 June 30, 2021, March 31, 2021, and June 30, 2020     
       
     Percent change vs.
(in thousands, except ratios)June 30, 2021March 31, 2021June 30, 2020 1Q '212Q '20
BALANCE SHEET:      
Investment securities$1,461,916  $1,176,240  $1,153,186   24.3 %26.8 %
Loans7,035,646  7,168,745  7,204,445   (1.9)%(2.3)%
Allowance for credit losses (l)83,577  86,886  73,476   (3.8)%13.7 %
Goodwill and other intangible assets167,897  168,376  169,905   (0.3)%(1.2)%
Other real estate owned (OREO)813  844  1,356   (3.7)%(40.0)%
Total assets9,947,994  9,914,069  9,712,994   0.3 %2.4 %
Total deposits8,214,624  8,236,199  8,161,900   (0.3)%0.6 %
Borrowings501,350  523,266  444,410   (4.2)%12.8 %
Total shareholders' equity1,069,392  1,041,271  1,001,594   2.7 %6.8 %
Tangible equity (d)901,495  872,895  831,689   3.3 %8.4 %
Total nonperforming loans114,695  130,327  126,044   (12.0)%(9.0)%
Total nonperforming assets118,672  134,335  130,999   (11.7)%(9.4)%
       
ASSET QUALITY RATIOS:      
Loans as a % of period end total assets70.72 %72.31 %74.17 % (2.2)%(4.7)%
Total nonperforming loans as a % of period end loans1.63 %1.82 %1.75 % (10.4)%(6.9)%
Total nonperforming assets as a % of period end loans + OREO + other nonperforming assets1.69 %1.87 %1.82 % (9.6)%(7.1)%
Allowance for credit losses as a % of period end loans1.19 %1.21 %1.02 % (1.7)%16.7 %
Net loan (recoveries) charge-offs$(731) $24  $251   N.MN.M
Annualized net loan (recoveries) charge-offs as a % of average loans (b)(0.04)% %0.01 % N.MN.M
       
CAPITAL & LIQUIDITY:      
Total shareholders' equity / Period end total assets10.75 %10.50 %10.31 % 2.4 %4.3 %
Tangible equity (d) / Tangible assets (f)9.22 %8.96 %8.72 % 2.9 %5.7 %
Average shareholders' equity / Average assets (b)10.74 %10.87 %10.61 % (1.2)%1.2 %
Average shareholders' equity / Average loans (b)14.94 %14.63 %14.30 % 2.1 %4.5 %
Average loans / Average deposits (b)86.49 %90.12 %88.59 % (4.0)%(2.4)%
       
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
Six months ended June 30, 2021 and June 30, 2020   
     
 20212020  
(in thousands, except share and per share data)Six months ended June 30Six months ended June 30 Percent change vs '20
INCOME STATEMENT:    
Net interest income$164,585   $157,469    4.5   %
(Recovery of) provision for credit losses (l)(8,895) 17,377    N.M
Other income65,327   53,450    22.2   %
Other expense139,265   131,075    6.2   %
Income before income taxes$99,542   $62,467    59.4  %
Income taxes17,579   10,590    66.0  %
Net income$81,963   $51,877    58.0  %
     
MARKET DATA:    
Earnings per common share - basic (a)$5.02   $3.18    57.9  %
Earnings per common share - diluted (a)4.98   3.16    57.6  %
Cash dividends declared per common share2.26   2.24    0.9  %
     
Weighted average common shares - basic (b)16,327,838   16,300,015    0.2  %
Weighted average common shares - diluted (b)16,455,673   16,400,657    0.3  %
     
PERFORMANCE RATIOS: (annualized)    
Return on average assets (a)(b)1.70  %1.15  % 47.8   %
Return on average shareholders' equity (a)(b)15.71  %10.54  % 49.1   %
Yield on loans4.54  %4.81  % (5.6) %
Yield on investment securities2.41  %2.76  % (12.7) %
Yield on money market instruments0.10  %0.38  % (73.7) %
Yield on interest earning assets3.95  %4.35  % (9.2) %
Cost of interest bearing deposits0.14  %0.58  % (75.9) %
Cost of borrowings1.89  %1.69  % 11.8   %
Cost of paying interest bearing liabilities0.30  %0.66  % (54.5) %
Net interest margin (g)3.75  %3.89  % (3.6)%
Efficiency ratio (g)60.20  %61.72  % (2.5) %
     
ASSET QUALITY RATIOS    
Net loan (recoveries) charge-offs$(707) $580    N.M.
Net loan (recoveries) charge-offs as a % of average loans (b)(0.02)%0.02  % N.M.
     
CAPITAL & LIQUIDITY    
Average shareholders' equity / Average assets (b)10.80  %10.95  % (1.4)%
Average shareholders' equity / Average loans (b)14.79  %14.71  % 0.5   %
Average loans / Average deposits (b)88.26  %89.21  % (1.1) %
     
     
     
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 Six Months Ended 
  June 30, June 30, 
(in thousands, except share and per share data) 2021 2020 2021 2020 
          
Interest income:         
Interest and fees on loans $81,176    $80,155  $159,913    $160,842  
Interest on:         
Obligations of U.S. Government, its agencies         
and other securities - taxable 4,600    5,026  8,856    10,557  
Obligations of states and political subdivisions - tax-exempt 2,032    2,151  4,069    4,351  
Other interest income 186    113  329    604  
Total interest income 87,994    87,445  173,167    176,354  
          
Interest expense:         
Interest on deposits:         
Demand and savings deposits 401    1,507  787    7,849  
Time deposits 1,285    3,346  2,869    7,631  
Interest on borrowings 2,457    1,406  4,926    3,405  
Total interest expense 4,143    6,259  8,582    18,885  
          
Net interest income 83,851    81,186  164,585    157,469  
          
(Recovery of) provision for credit losses (l) (4,040)  12,224  (8,895)  17,377  
          
Net interest income after (recovery of) provision for credit losses 87,891    68,962  173,480    140,092  
          
Other income 31,238    30,964  65,327    53,450  
          
Other expense 71,400    64,799  139,265    131,075  
          
Income before income taxes 47,729    35,127  99,542    62,467  
          
Income taxes 8,597    5,622  17,579    10,590  
          
Net income $39,132    $29,505  $81,963    $51,877  
          
Per common share:         
Net income - basic $2.39    $1.81  $5.02    $3.18  
Net income - diluted $2.38    $1.80  $4.98    $3.16  
          
Weighted average shares - basic 16,340,690    16,296,427  16,327,838    16,300,015  
Weighted average shares - diluted 16,472,800    16,375,434  16,455,673    16,400,657  
          
Cash dividends declared $1.03    $1.02  $2.26    $2.24  
          

PARK NATIONAL CORPORATION 
Consolidated Balance Sheets
   
(in thousands, except share data)June 30, 2021December 31, 2020
   
Assets  
   
Cash and due from banks$134,182   $155,596   
Money market instruments673,242   214,878   
Investment securities1,461,916   1,124,806   
Loans7,035,646   7,177,785   
Allowance for credit losses (l)(83,577) (85,675) 
Loans, net6,952,069   7,092,110   
Bank premises and equipment, net89,570   88,660   
Goodwill and other intangible assets167,897   168,855   
Other real estate owned813   1,431   
Other assets468,305   432,685   
Total assets$9,947,994   $9,279,021   
   
Liabilities and Shareholders' Equity  
   
Deposits:  
Noninterest bearing$2,876,110   $2,727,100   
Interest bearing5,338,514   4,845,258   
Total deposits8,214,624   7,572,358   
Borrowings501,350   562,504   
Other liabilities162,628   103,903   
Total liabilities$8,878,602   $8,238,765   
   
   
Shareholders' Equity:  
Preferred shares (200,000 shares authorized; no shares outstanding at June 30, 2021 and December 31, 2020)$—   $—   
Common shares (No par value; 20,000,000 shares authorized; 17,623,143 shares issued at June 30, 2021 and 17,623,163 shares issued at December 31, 2020)459,276   460,687   
Accumulated other comprehensive (loss) income, net of taxes(2,930) 5,571   
Retained earnings741,155   704,764   
Treasury shares (1,282,371 shares at June 30, 2021 and 1,308,966 shares at December 31, 2020)(128,109) (130,766) 
Total shareholders' equity$1,069,392   $1,040,256   
Total liabilities and shareholders' equity$9,947,994   $9,279,021   

PARK NATIONAL CORPORATION    
Consolidated Average Balance Sheets   
      
 Three Months Ended Six Months Ended
 June 30, June 30,
(in thousands)20212020 20212020
      
Assets     
      
Cash and due from banks$131,397   $134,386   $139,784   $133,208  
Money market instruments720,238   461,055   637,531   318,930  
Investment securities1,307,037   1,197,445   1,234,178   1,230,948  
Loans7,094,099   6,981,783   7,116,353   6,731,960  
Allowance for credit losses (l)(87,083) (62,387)  (88,511) (60,001) 
Loans, net7,007,016   6,919,396   7,027,842   6,671,959  
Bank premises and equipment, net90,269   80,096   90,006   77,509  
Goodwill and other intangible assets168,211   170,303   168,449   170,606  
Other real estate owned822   2,765   1,016   3,282  
Other assets447,088   442,819   444,221   437,585  
Total assets$9,872,078   $9,408,265   $9,743,027   $9,044,027  
      
      
Liabilities and Shareholders' Equity     
      
Deposits:     
Noninterest bearing$2,940,602   $2,400,809   $2,866,909   $2,175,400  
Interest bearing5,261,608   5,480,366   5,195,848   5,370,376  
Total deposits8,202,210   7,881,175   8,062,757   7,545,776  
Borrowings514,855   425,349   526,715   405,930  
Other liabilities95,064   103,453   101,332   102,189  
Total liabilities$8,812,129   $8,409,977   $8,690,804   $8,053,895  
      
Shareholders' Equity:     
Preferred shares$—   $   $—   $  
Common shares457,949   456,830   459,327   458,146  
Accumulated other comprehensive (loss) income, net of taxes(4,876) 10,756   (1,865) 5,331  
Retained earnings734,993   663,290   724,183   658,877  
Treasury shares(128,117) (132,588)  (129,422) (132,222) 
Total shareholders' equity$1,059,949   $998,288   $1,052,223   $990,132  
Total liabilities and shareholders' equity$9,872,078   $9,408,265   $9,743,027   $9,044,027  

PARK NATIONAL CORPORATION 
Consolidated Statements of Income - Linked Quarters
      
 20212021202020202020
(in thousands, except per share data)2nd QTR1st QTR4th QTR3rd QTR2nd QTR
      
Interest income:     
Interest and fees on loans$81,176   $78,737  $85,268  $82,617 $80,155 
Interest on:     
Obligations of U.S. Government, its agencies and other securities - taxable4,600   4,256  4,420  4,841 5,026 
Obligations of states and political subdivisions - tax-exempt2,032   2,037  2,040  2,045 2,151 
Other interest income186   143  72  63 113 
Total interest income87,994   85,173  91,800  89,566 87,445 
      
Interest expense:     
Interest on deposits:     
Demand and savings deposits401   386  490  803 1,507 
Time deposits1,285   1,584  1,893  2,662 3,346 
Interest on borrowings2,457   2,469  3,096  2,261 1,406 
Total interest expense4,143   4,439  5,479  5,726 6,259 
      
Net interest income83,851   80,734  86,321  83,840 81,186 
      
(Recovery of) provision for credit losses (l)(4,040) (4,855) (19,159) 13,836 12,224 
      
Net interest income after (recovery of) provision for credit losses87,891   85,589  105,480  70,004 68,962 
      
Other income31,238   34,089  35,656  36,558 30,964 
      
Other expense71,400   67,865  85,661  69,859 64,799 
      
Income before income taxes47,729   51,813  55,475  36,703 35,127 
      
Income taxes8,597   8,982  10,275  5,857 5,622 
      
Net income $39,132   $42,831  $45,200  $30,846 $29,505 
      
Per common share:     
Net income - basic$2.39   $2.63  $2.77  $1.89 $1.81 
Net income - diluted$2.38   $2.61  $2.75  $1.88 $1.80 

PARK NATIONAL CORPORATION 
Detail of other income and other expense - Linked Quarters
      
 20212021202020202020
(in thousands)2nd QTR1st QTR4th QTR3rd QTR2nd QTR
      
Other income:     
Income from fiduciary activities$8,569  $8,173  $7,632  $7,335  $6,793  
Service charges on deposit accounts2,032  2,054  2,123  2,118  1,676  
Other service income7,159  9,617  12,040  13,047  8,758  
Debit card fee income6,758  6,086  5,787  5,853  5,560  
Bank owned life insurance income1,149  1,165  1,170  1,192  1,179  
ATM fees655  530  432  491  438  
Gain (loss) on the sale of OREO, net (33) (7) 569  841  
Net (loss) gain on the sale of debt securities—      (27) 3,313  
Gain (loss) on equity securities, net467  1,810  2,931  1,201  (977) 
Other components of net periodic benefit income2,038  2,038  1,988  1,988  1,988  
Miscellaneous2,407  2,649  1,560  2,791  1,395  
Total other income$31,238  $34,089  $35,656  $36,558  $30,964  
      
Other expense:     
Salaries$30,303  $29,896  $37,280  $31,632  $30,699  
Employee benefits10,056  10,201  7,316  10,676  9,080  
Occupancy expense3,027  3,640  3,231  3,835  3,256  
Furniture and equipment expense2,756  2,610  4,949  4,687  4,850  
Data processing fees7,150  7,712  3,315  3,275  2,577  
Professional fees and services6,973  5,664  9,359  7,977  6,901  
Marketing1,290  1,491  1,752  1,454  1,136  
Insurance1,276  1,691  1,855  1,541  1,477  
Communication770  1,122  1,097  958  874  
State tax expense1,103  1,108  605  1,125  1,116  
Amortization of intangible assets479  479  525  525  607  
FHLB prepayment penalty—    8,736      
Foundation contributions4,000    3,000      
Miscellaneous2,217  2,251  2,641  2,174  2,226  
Total other expense$71,400  $67,865  $85,661  $69,859  $64,799  

PARK NATIONAL CORPORATION 
Asset Quality Information
       
   Year ended December 31,
(in thousands, except ratios)June 30, 2021March 31, 20212020201920182017
       
Allowance for credit losses:      
Allowance for credit losses, beginning of period$86,886  $85,675  $56,679  $51,512  $49,988  $50,624 
Cumulative change in accounting principle; adoption of ASU 2016-13  6,090         
Charge-offs1,070  1,701  10,304  11,177  13,552  19,403 
Recoveries1,801  1,677  27,246  10,173  7,131  10,210 
Net (recoveries) charge-offs(731) 24  (16,942) 1,004  6,421  9,193 
(Recovery of) provision for credit losses(4,040) (4,855) 12,054  6,171  7,945  8,557 
Allowance for credit losses, end of period$83,577  $86,886  $85,675  $56,679  $51,512  $49,988 
       
       
General reserve trends:      
Allowance for credit losses, end of period$83,577  $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 loans3,915  4,962  5,434  5,230  2,273  684 
General reserves on collectively evaluated loans$79,662  $81,924  $79,396  $51,181  $49,239  $49,304 
       
Total loans$7,035,646  $7,168,745  $7,177,785  $6,501,404  $5,692,132  $5,372,483 
PCD loans (PCI loans for years 2020 and prior)10,007  10,284  11,153  14,331  3,943   
Purchased loans excluded from collectively evaluated loans    360,056  548,436  225,029   
Individually evaluated loans86,874  100,407  108,407  77,459  48,135  56,545 
Collectively evaluated loans$6,938,765  $7,058,054  $6,698,169  $5,861,178  $5,415,025  $5,315,938 
       
Asset Quality Ratios:      
Net (recoveries) charge-offs as a % of average loans (annualized)(0.04)% %(0.24)%0.02 %0.12 %0.17%
Allowance for credit losses as a % of period end loans1.19 %1.21 %1.19 %0.87 %0.90 %0.93%
Allowance for credit losses as a % of period end loans (excluding PPP loans) (k)1.23 %1.28 %1.25 %N.A.N.A.N.A.
General reserve as a % of collectively evaluated loans1.15 %1.16 %1.19 %0.87 %0.91 %0.93%
General reserves as a % of collectively evaluated loans (excluding PPP loans) (k)1.19 %1.22 %1.24 %N.A.N.A.N.A.
       
Nonperforming assets:      
Nonaccrual loans$96,760  $114,708  $117,368  $90,080  $67,954  $72,056 
Accruing troubled debt restructurings17,420  14,817  20,788  21,215  15,173  20,111 
Loans past due 90 days or more515  802  1,458  2,658  2,243  1,792 
Total nonperforming loans$114,695  $130,327  $139,614  $113,953  $85,370  $93,959 
Other real estate owned - Park National Bank219  250  837  3,100  2,788  6,524 
Other real estate owned - SEPH594  594  594  929  1,515  7,666 
Other nonperforming assets - Park National Bank3,164  3,164  3,164  3,599  3,464  4,849 
Total nonperforming assets$118,672  $134,335  $144,209  $121,581  $93,137  $112,998 
Percentage of nonaccrual loans to period end loans1.38 %1.60 %1.64 %1.39 %1.19 %1.34%
Percentage of nonperforming loans to period end loans1.63 %1.82 %1.95 %1.75 %1.50 %1.75%
Percentage of nonperforming assets to period end loans1.69 %1.87 %2.01 %1.87 %1.64 %2.10%
Percentage of nonperforming assets to period end total assets1.19 %1.35 %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)June 30, 2021March 31, 20212020201920182017
       
       
New nonaccrual loan information:      
Nonaccrual loans, beginning of period$114,708 $117,368 $90,080 $67,954 $72,056 $87,822 
New nonaccrual loans11,342 12,540 103,386 81,009 76,611 58,753 
Resolved nonaccrual loans29,290 15,200 76,098 58,883 80,713 74,519 
Nonaccrual loans, end of period$96,760 $114,708 $117,368 $90,080 $67,954 $72,056 
       
Impaired commercial loan portfolio information (period end):      
Unpaid principal balance$87,502 $100,996 $109,062 $78,178 $59,381 $66,585 
Prior charge-offs628 589 655 719 11,246 10,040 
Remaining principal balance86,874 100,407 108,407 77,459 48,135 56,545 
Specific reserves3,915 4,962 5,434 5,230 2,273 684 
Book value, after specific reserves$82,959 $95,445 $102,973 $72,229 $45,862 $55,861 

PARK NATIONAL CORPORATION    
Financial Reconciliations       
NON-GAAP RECONCILIATIONS       
 THREE MONTHS ENDED SIX MONTHS ENDED 
(in thousands, except share and per share data)June 30, 2021March 31, 2021June 30, 2020 June 30, 2021June 30, 2020 
Net interest income$83,851   $80,734   $81,186    $164,585   $157,469    
less purchase accounting accretion related to NewDominion and Carolina Alliance acquisitions806   1,131   1,301    1,937   2,679    
less interest income on former Vision Bank relationships2,838   105   266    2,943   343    
Net interest income - adjusted$80,207   $79,498   $79,619    $159,705   $154,447    
        
(Recovery of) provision for credit losses$(4,040) $(4,855) $12,224    $(8,895) $17,377    
less recoveries on former Vision Bank relationships(152) (257) (685)  (409) (1,449)  
(Recovery of) provision for credit losses - adjusted$(3,888) $(4,598) $12,909    $(8,486) $18,826    
        
Other income$31,238   $34,089   $30,964    $65,327   $53,450    
less net gain on sale of former Vision Bank OREO properties—   —   837    —   837    
less other service income related to former Vision Bank relationships  58   52    61   52    
less rebranding initiative related expenses—   —   (274)  —   (274)  
less net gain on the sale of debt securities in the ordinary course of business—   —   3,313    —   3,313    
Other income - adjusted$31,235   $34,031   $27,036    $65,266   $49,522    
        
Other expense$71,400   $67,865   $64,799    $139,265   $131,075    
less merger-related expenses related to NewDominion and Carolina Alliance acquisitions  12   214    16   457    
less core deposit intangible amortization related to NewDominion and Carolina Alliance acquisitions479   479   607    958   1,213    
less direct expenses related to collection of payments on former Vision Bank loan relationships300   107   —    407   —    
less FHLB prepayment penalty—   —   —    —   1,793    
less rebranding initiative related expenses342   955   138    1,297   408    
less Foundation contribution4,000   —   —    4,000   —    
less severance and restructuring charges46   108   248    154   336    
less COVID-19 related expenses (j)670   865   1,919    1,535   2,181    
Other expense - adjusted$65,559   $65,339   $61,673    $130,898   $124,687    
        
Tax effect of adjustments to net income identified above (i)$429   $205   $(641)  $634   $(422)  
        
Net income - reported$39,132   $42,831   $29,505    $81,963   $51,877    
Net income - adjusted (h)$40,745   $43,601   $27,092    $84,346   $50,288    
        
Diluted EPS$2.38   $2.61   $1.80    $4.98   $3.16    
Diluted EPS, adjusted (h)$2.47   $2.65   $1.65    $5.13   $3.07    
        
Annualized return on average assets (a)(b)1.59  %1.81  %1.26  % 1.70  %1.15  % 
Annualized return on average assets, adjusted (a)(b)(h)1.66  %1.84  %1.16  % 1.75  %1.12  % 
        
Annualized return on average tangible assets (a)(b)(e)1.62  %1.84  %1.28  % 1.73  %1.18  % 
Annualized return on average tangible assets, adjusted (a)(b)(e)(h)1.68  %1.87  %1.18  % 1.78  %1.14  % 
        
Annualized return on average shareholders' equity (a)(b)14.81  %16.63  %11.89  % 15.71  %10.54  % 
Annualized return on average shareholders' equity, adjusted (a)(b)(h)15.42  %16.93  %10.92  % 16.16  %10.21  % 
        
Annualized return on average tangible equity (a)(b)(c)17.60  %19.84  %14.33  % 18.70  %12.73  % 
Annualized return on average tangible equity, adjusted (a)(b)(c)(h)18.33  %20.19  %13.16  % 19.25  %12.34  % 
        
Efficiency ratio (g)61.65  %58.74  %57.41  % 60.20  %61.72  % 
Efficiency ratio, adjusted (g)(h)58.45  %57.19  %57.44  % 57.82  %60.70  % 
        
Annualized net interest margin (g)3.74  %3.76  %3.84  % 3.75  %3.89  % 
Annualized net interest margin, adjusted (g)(h)3.58  %3.70  %3.77  % 3.64  %3.81  % 
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 June 30, 2021, March 31, 2021, and June 30, 2020 and the six months ended June 30, 2021 and June 30, 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 SIX MONTHS ENDED
 June 30, 2021March 31, 2021June 30, 2020 June 30, 2021June 30, 2020
AVERAGE SHAREHOLDERS' EQUITY$1,059,949 $1,044,412 $998,288  $1,052,223 $990,132 
Less: Average goodwill and other intangible assets168,211 168,690 170,303  168,449 170,606 
AVERAGE TANGIBLE EQUITY$891,738 $875,722 $827,985  $883,774 $819,526 
       
(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:
 June 30, 2021March 31, 2021June 30, 2020   
TOTAL SHAREHOLDERS' EQUITY$1,069,392 $1,041,271 $1,001,594    
Less: Goodwill and other intangible assets167,897 168,376 169,905    
TANGIBLE EQUITY$901,495 $872,895 $831,689    
       
(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 SIX MONTHS ENDED
 June 30, 2021March 31, 2021June 30, 2020 June 30, 2021June 30, 2020
AVERAGE ASSETS$9,872,078 $9,612,542 $9,408,265  $9,743,027 $9,044,027 
Less: Average goodwill and other intangible assets168,211 168,690 170,303  168,449 170,606 
AVERAGE TANGIBLE ASSETS$9,703,867 $9,443,852 $9,237,962  $9,574,578 $8,873,421 
       
(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:
 June 30, 2021March 31, 2021June 30, 2020   
TOTAL ASSETS$9,947,994 $9,914,069 $9,712,994    
Less: Goodwill and other intangible assets167,897 168,376 169,905    
TANGIBLE ASSETS$9,780,097 $9,745,693 $9,543,089    
       
(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 SIX MONTHS ENDED
 June 30, 2021March 31, 2021June 30, 2020 June 30, 2021June 30, 2020
Interest income$87,994 $85,173 $87,445  $173,167 $176,354 
Fully taxable equivalent adjustment718 714 723  1,432 1,448 
Fully taxable equivalent interest income$88,712 $85,887 $88,168  $174,599 $177,802 
Interest expense4,143 4,439 6,259  8,582 18,885 
Fully taxable equivalent net interest income$84,569 $81,448 $81,909  $166,017 $158,917 
       
(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 $248.9 million, $387.0 million and $331.6 million of PPP loans at June 30, 2021, March 31, 2021 and December 31, 2020, respectively.
(l) Park adopted ASU 2016-13 effective January 1, 2021. The allowance for credit losses at June 30, 2021 and March 31, 2021 and the related (recovery of) provision for credit losses for the three months ended June 30, 2021 and March 31, 2021 and the six months ended June 30, 2021 were calculated utilizing this new guidance.

 

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Source: Park National Corporation


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