Form 8-K PARK NATIONAL CORP /OH/ For: Jul 23

July 23, 2018 4:20 PM

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934



Date of Report (Date of earliest event reported)	July 23, 2018

Park National Corporation

(Exact name of registrant as specified in its charter)



Ohio	1-13006	31-1179518
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)



50 North Third Street, P.O. Box 3500, Newark, Ohio	43058-3500
(Address of principal executive offices)	(Zip Code)

(740) 349-8451

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:



	¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)



	¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)



	¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))



	¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Item 2.02 - Results of Operations and Financial Condition.

On July 23, 2018, Park National Corporation (“Park”) issued a news release (the “Financial Results News Release”) announcing financial results for the three and six months ended June 30, 2018. A copy of the Financial Results News Release is included as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference herein.

Park's management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate Park's performance. Specifically, management reviews return on average tangible equity, return on average tangible assets, tangible equity to tangible assets and tangible book value per share. Management has included in the Financial Results News Release information relating to the annualized return on average tangible equity, annualized return on average tangible assets, tangible equity to tangible assets and tangible book value per share for the three months ended and at June 30, 2018, March 31, 2018 and June 30, 2017 and the six months ended June 30, 2018 and June 30, 2017. For purposes of calculating the annualized return on average tangible equity, a non-GAAP financial measure, net income for each period is divided by average tangible equity during the period. Average tangible equity equals average shareholders' equity during the applicable period less average goodwill during the applicable period. For the purpose of calculating the annualized return on average tangible assets, a non-GAAP financial measure, net income for each period is divided by average tangible assets during the period. Average tangible assets equals average assets during the applicable period less average goodwill during the applicable period. For the purpose of calculating tangible equity to tangible assets, a non-GAAP financial measure, tangible equity is divided by tangible assets. Tangible equity equals total shareholders' equity less goodwill, in each case at period end. Tangible assets equals total assets less goodwill, in each case at period end. For the purpose of calculating tangible book value per share, a non-GAAP financial measure, tangible equity is divided by the number of common shares outstanding at period end. Management believes that the disclosure of return on average tangible equity, return on average tangible assets, tangible equity to tangible assets and tangible book value per share presents additional information to the reader of the consolidated financial statements, which, when read in conjunction with the consolidated financial statements prepared in accordance with GAAP, assists in analyzing Park's operating performance, ensures comparability of operating performance from period to period, and facilitates comparisons with the performance of Park's peer financial holding companies and bank holding companies, while eliminating certain non-operational effects of acquisitions. In the Financial Results News Release, Park has provided a reconciliation of average tangible equity to average shareholders' equity, average tangible assets to average assets, tangible equity to total shareholders' equity and tangible assets to total assets solely for the purpose of complying with SEC Regulation G and not as an indication that return on average tangible equity, return on average tangible assets, tangible equity to tangible assets and tangible book value per share are substitutes for return on average equity, return on average assets, total shareholders' equity to total assets and book value per share, respectively, as determined in accordance with GAAP.

Item 7.01 - Regulation FD Disclosure

Financial Results by Segment

The table below reflects the net income (loss) by segment for the first and second quarters of 2018, for the first half of 2018 and 2017, and for the fiscal years ended December 31, 2017 and 2016. Park's segments include The Park National Bank ("PNB"), Guardian Financial Services Company (“GFSC”), SE Property Holdings, LLC ("SEPH") and all other which primarily consists of Park as the "Parent Company."



Net income (loss) by segment
(In thousands)	Q2 2018			Q1 2018		Six months YTD 2018		Six months YTD 2017			2017			2016
PNB	$	28,797		$	26,745	$	55,542	$	41,649		$	87,315		$	84,451
GFSC	295			57		352		384			260			(307		)
Parent Company	(973		)	1,465		492		(2,145		)	(2,457		)	(4,557		)
Ongoing operations	$	28,119		$	28,267	$	56,386	$	39,888		$	85,118		$	79,587
SEPH	122			2,856		2,978		(589		)	(876		)	6,548
Total Park	$	28,241		$	31,123	$	59,364	$	39,299		$	84,242		$	86,135

The category “Parent Company” above excludes the results for SEPH, an entity which is winding down commensurate with the disposition of SEPH's nonperforming assets. Management considers the “Ongoing operations” results, which exclude the results of SEPH, to reflect the business of Park and Park's subsidiaries going forward. The discussion below provides additional information regarding the segments that make up the “Ongoing operations”, followed by additional information regarding SEPH.

During the first quarter of 2018, Park adopted ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU requires that an employer report the service cost component in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost. This ASU is required to be applied retrospectively to all periods presented. As a result of the adoption of this ASU, all prior periods have been recast to separately record the service cost component and other components of net benefit cost. For Park, this resulted in an increase in other income and an offsetting increase in other expense with no change to net income.

During the first quarter of 2018, Park adopted ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. Changes reflected in the current U.S. GAAP model primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. As a result of the adoption of this ASU, Park recorded an increase of $1.9 million to beginning retained earnings and a $995,000 increase to beginning accumulated other comprehensive loss. Additional income of $3.2 million and $1.3 million was recorded in other income in the first and second quarters of 2018, respectively, as the result of changes to the accounting for equity investments.

The Park National Bank (PNB)

The table below reflects PNB's net income for the first and second quarters of 2018, for the first half of 2018 and 2017, and for the fiscal years ended December 31, 2017 and 2016.



(In thousands)	Q2 2018		Q1 2018			Six months YTD 2018		Six months YTD 2017		2017		2016
Net interest income	$	62,683	$	61,441		$	124,124	$	115,302	$	235,243	$	227,576
Provision for (recovery of) loan losses	1,623		(67		)	1,556		5,294		9,898		2,611
Other income	22,070		19,915			41,985		39,696		82,742		79,959
Other expense	48,169		49,001			97,170		90,486		185,891		182,718
Income before income taxes	$	34,961	$	32,422		$	67,383	$	59,218	$	122,196	$	122,206
Federal income tax expense	6,164		5,677			11,841		17,569		34,881		37,755
Net income	$	28,797	$	26,745		$	55,542	$	41,649	$	87,315	$	84,451

Net interest income of $124.1 million for the six months ended June 30, 2018 represented a $8.8 million, or 7.7%, increase compared to $115.3 million for the six months ended June 30, 2017. The increase was the result of a $7.6 million increase in interest income and a $1.2 million decrease in interest expense.

The $7.6 million increase in interest income was due to a $6.2 million increase in interest income on loans, along with a $1.4 million increase in interest income on investments. The increase in interest income on loans was the result of higher yields on loans. The yield on loans was 4.74% for the six months ended June 30, 2018, compared to 4.53% for the six months ended June 30, 2017. Included in interest income for the six months ended June 30, 2018 was $817,000 in interest income, related to PNB participations in legacy Vision Bank ("Vision") assets.

The $1.2 million decrease in interest expense was due to a $4.3 million increase in interest expense on deposits offset by a $5.5 million decrease in interest expense on borrowings. The increase in interest expense on deposits was partially the result of a $87.9 million, or 2.0%, increase in average interest-bearing deposits from $4.29 billion for the six months ended June 30, 2017, to $4.37 billion for the six months ended June 30, 2018. Additionally, the cost of deposits increased by 19 basis points from 0.40% for the six months ended June 30, 2017 to 0.59% for the six months ended June 30, 2018. The decrease in interest expense on borrowings was the result of a decrease in long-term debt. During the fourth quarter of 2017, Park utilized excess cash to repay $350 million of long-term debt which matured during November 2017. The effective interest rate on the repaid long-term debt had been 3.22%.

The provision for loan losses of $1.6 million for the six months ended June 30, 2018 represented a decrease of $3.7 million, compared to $5.3 million for the six months ended June 30, 2017. Refer to the “Credit Metrics and Provision for (Recovery of) Loan Losses” section for additional details regarding the level of the provision for (recovery of) loan losses recognized in each period presented above.

Other income of $42.0 million for the six months ended June 30, 2018 represented an increase of $2.3 million, or 5.8%, compared to $39.7 million for the six months ended June 30, 2017. The $2.3 million increase was primarily related to a $1.3 million increase in gains on sale of OREO, net, a $1.5 million increase in fiduciary income, a $486,000 increase in gains on sale of assets, net, a $498,000 increase in other components of net periodic benefit income, a $339,000 increase in other service income, and a $583,000 increase in check card fee income, offset by a $2.3 million net loss on sales of securities during the six months ended June 30, 2018 and a $547,000 decrease in service charges on deposit accounts.

Other expense of $97.2 million for the six months ended June 30, 2018 represented an increase of $6.7 million, or 7.4%, compared to $90.5 million for the six months ended June 30, 2017. The $6.7 million increase was primarily related to a $3.0 million increase in salaries expense, a $1.8 million increase in employee benefits expense, a $887,000 increase in furniture and equipment expense, a $358,000 increase in state tax expense, a $259,000 increase in non-loan related losses which are included in miscellaneous expense, and a $307,000 increase in occupancy expense, offset by a $418,000 decrease in other insurance.

Federal income tax expense of $11.8 million for the six months ended June 30, 2018 represented a decrease of $5.7 million compared to $17.6 million for the six months ended June 30, 2017. The decrease in federal income tax expense was largely due to a decrease in the corporate federal income tax rate from 35% to 21%, effective January 1, 2018.

PNB's results for the first six months of 2018 and 2017, and for the fiscal year ended December 31, 2017, included income and

expense related to participations in legacy Vision assets. The impact of these participations on particular items within PNB's income and expense for these fiscal periods is detailed in the table below:



	2Q YTD 2018							2Q YTD 2017							2017
(In thousands)	PNB as reported		Adjustments⁽¹⁾			PNB as adjusted		PNB as reported		Adjustments ⁽¹⁾			PNB as adjusted		PNB as reported		Adjustments ⁽¹⁾			PNB as adjusted
Net interest income	$	124,124	$	817		$	123,307	$	115,302	$	—		$	115,302	$	235,243	$	233		$	235,010
Provision for (recovery of) loan losses	1,556		(5		)	1,561		5,294		(5		)	5,299		9,898		(5		)	9,903
Other income	41,985		1,431			40,554		39,696		24			39,672		82,742		244			82,498
Other expense	97,170		113			97,057		90,486		222			90,264		185,891		492			185,399
Income (loss) before income taxes	$	67,383	$	2,140		$	65,243	$	59,218	$	(193	)	$	59,411	$	122,196	$	(10	)	$	122,206
Federal income tax expense (benefit)	11,841		376			11,465		17,569		(57		)	17,626		34,881		(3		)	34,884
Net income (loss)	$	55,542	$	1,764		$	53,778	$	41,649	$	(136	)	$	41,785	$	87,315	$	(7	)	$	87,322

(1) Adjustments consist of the impact on the particular items reported in PNB's income statement of PNB participations in legacy Vision assets.

The table below provides certain balance sheet information and financial ratios for PNB as of or for the six months ended June 30, 2018 and 2017 and the fiscal year ended December 31, 2017.



(In thousands)	June 30, 2018			March 31, 2018			December 31, 2017			June 30, 2017			% change from 12/31/17		% change from 3/31/18		% change from 06/30/17
Loans	$	5,305,560		$	5,274,340		$	5,339,255		$	5,329,172		(0.63	)%	0.59	%	(0.44	)%
Allowance for loan losses	47,110			46,519			47,607			51,699			(1.04	)%	1.27	%	(8.88	)%
Net loans	5,258,450			5,227,821			5,291,648			5,277,473			(0.63	)%	0.59	%	(0.36	)%
Investment securities	1,501,991			1,453,407			1,507,926			1,573,092			(0.39	)%	3.34	%	(4.52	)%
Total assets	7,404,498			7,455,518			7,467,851			7,754,898			(0.85	)%	(0.68	)%	(4.52	)%
Total deposits	6,126,119			6,177,238			5,896,676			6,037,148			3.89	%	(0.83	)%	1.47	%
Average assets ⁽¹⁾	7,396,316			7,392,786			7,664,725			7,571,295			(3.50	)%	0.05	%	(2.31	)%
Efficiency ratio	58.01		%	59.72		%	57.56		%	57.54		%	0.78	%	(2.86	)%	0.82	%
Return on average assets ⁽²⁾	1.51		%	1.47		%	1.14		%	1.11		%	32.46	%	2.72	%	36.04	%

(1) Average assets for the six months ended June 30, 2018 and 2017, the three months ended March 31, 2018 and for the fiscal year ended December 31, 2017.

(2) Annualized for the six months ended June 30, 2018 and 2017 and for the three months ended March 31, 2018.

Loans outstanding at June 30, 2018 were $5.31 billion, compared to $5.27 billion at March 31, 2018, an increase of $31.2 million, or 0.6%. The increase loan balances from March 31, 2018 to June 30, 2018 resulted from an increase in commercial loan balances of $18.7 million (0.7%) and consumer loan balances of $18.6 million (1.5%), offset by a decline in home equity line of credit balances of $5.1 million (2.6%) and residential loan balances of $1.0 million (0.1%).

Loans outstanding at June 30, 2018 were $5.31 billion, compared to $5.34 billion at December 31, 2017, a decrease of $33.7 million, or 0.6%. The loan decline in the first six months of 2018 resulted from a decline in commercial loan balances of $30.9 million (1.1%), residential loan balances of $15.3 million (1.3%) and home equity line of credit balances of $14.1 million (6.9%), offset by consumer loan growth of $26.9 million (2.2%).

PNB's allowance for loan losses decreased by $497,000, or 1.0%, to $47.1 million at June 30, 2018, compared to $47.6 million at December 31, 2017. Net charge-offs were $2.1 million, or 0.08% of total average loans, for the six months ended June 30, 2018 and were $2.4 million, or 0.09% of total average loans, for the six months ended June 30, 2017. Refer to the “Credit Metrics and Provision for (Recovery of) Loan Losses” section for additional information regarding PNB's loan portfolio and the level of provision for (recovery of) loan losses recognized in each period presented.

Total deposits at June 30, 2018 were $6.13 billion, compared to $5.90 billion at December 31, 2017, an increase of $229.4 million, or 3.9%. The deposit growth for the six months ended June 30, 2018 consisted of savings deposit growth of $173.7 million (9.2%) and transaction account growth of $70.7 million (5.6%), offset by a reduction in non-interest bearing deposits of $11.1 million (0.6%) and a reduction in time deposits of $6.6 million (0.6%).

Guardian Financial Services Company (GFSC)

The table below reflects GFSC's net income (loss) for the first and second quarters of 2018, for the first half of 2018 and 2017, and for the fiscal years ended December 31, 2017 and 2016.



(In thousands)	Q2 2018		Q1 2018		Six months YTD 2018		Six months YTD 2017		2017		2016
Net interest income	$	1,261	$	1,305	$	2,566	$	2,969	$	5,839	$	5,874
Provision for loan losses	87		503		590		810		1,917		1,887
Other income	42		30		72		24		103		57
Other expense	842		760		1,602		1,593		3,099		4,515
Income (loss) before income taxes	$	374	$	72	$	446	$	590	$	926	$	(471	)
Federal income tax expense (benefit)	79		15		94		206		666		(164		)
Net income (loss)	$	295	$	57	$	352	$	384	$	260	$	(307	)

The table below provides certain balance sheet information and financial ratios for GFSC as of or for the six months ended June 30, 2018 and 2017 and the fiscal year ended December 31, 2017.



(In thousands)	June 30, 2018			December 31, 2017			June 30, 2017			% change from 12/31/17		% change from 6/30/17
Loans	$	30,612		$	33,385		$	34,179		(8.31	)%	(10.44	)%
Allowance for loan losses	2,342			2,382			2,123			(1.68	)%	10.32	%
Net loans	28,270			31,003			32,056			(8.82	)%	(11.81	)%
Total assets	29,232			32,077			33,860			(8.87	)%	(13.67	)%
Average assets⁽¹⁾	30,656			33,509			33,691			(8.51	)%	(9.01	)%
Return on average assets ⁽²⁾	2.32		%	0.78		%	2.29		%	197.44	%	1.31	%

(1) Average assets for the six months ended June 30, 2018 and 2017 and for the fiscal year ended December 31, 2017.

(2) Annualized for the six months ended June 30, 2018 and 2017.

Park Parent Company

The table below reflects the Park Parent Company net (loss) income for the first and second quarters of 2018, the first half of 2018 and 2017, and for the fiscal years ended December 31, 2017 and 2016.



(In thousands)	Q2 2018			Q1 2018			Six months YTD 2018			Six months YTD 2017			2017			2016
Net interest income (expense)	$	182		$	227		$	409		$	(24	)	$	588		$	(138	)
Provision for loan losses	—			—			—			—			—			—
Other income (loss)	1,059			3,371			4,430			(103		)	3,065			955
Other expense	2,666			2,522			5,188			4,313			8,805			9,731
Net (loss) income before income tax benefit	$	(1,425	)	$	1,076		$	(349	)	$	(4,440	)	$	(5,152	)	$	(8,914	)
Federal income tax benefit	(452		)	(389		)	(841		)	(2,295		)	(2,695		)	(4,357		)
Net (loss) income	$	(973	)	$	1,465		$	492		$	(2,145	)	$	(2,457	)	$	(4,557	)

The net interest income (expense) for Park's parent company included, for all periods presented, interest income on subordinated debt investments in PNB, which were eliminated in the consolidated Park National Corporation totals. For the fiscal year ended December 31, 2016, the net interest income (expense) included interest income on loans to SEPH (paid off on December 14, 2016). Additionally, net interest income (expense) for all periods except the first and second quarters of 2018 and the first half of 2018, included interest expense related to the $30.00 million of 7% Subordinated Notes due April 20, 2022 issued by Park to accredited investors on April 20, 2012, which Park prepaid in full (principal plus accrued interest) on April 24, 2017.

Other income of $4.4 million for the six months ended June 30, 2018 represented an increase of $4.5 million compared to other loss of $103,000 for the six months ended June 30, 2017. The $4.5 million increase was largely due to a $4.3 million increase in income related to certain equity securities.

Other expense of $5.2 million for the six months ended June 30, 2018 represented an increase of $875,000, or 20.3%, compared to $4.3 million for the six months ended June 30, 2017. The $875,000 increase was primarily related to an increase of $608,000 in salaries expense and an increase of $582,000 in professional fees and services, primarily related to the acquisition of NewDominion Bank, which was effective July 1, 2018, offset by a $316,000 decrease in state tax expense.

SEPH

The table below reflects SEPH's net income (loss) for the first and second quarters of 2018, the first half of 2018 and 2017, and for the fiscal years ended December 31, 2017 and 2016. SEPH holds the remaining assets and liabilities retained by Vision subsequent to the sale of the Vision business on February 16, 2012. Prior to holding the remaining Vision assets, SEPH held OREO assets that were transferred from Vision to SEPH. This segment represents a run-off portfolio of the legacy Vision assets.



(In thousands)	Q2 2018			Q1 2018			Six months YTD 2018			Six months YTD 2017			2017			2016
Net interest income	$	616		$	1,877		$	2,493		$	483		$	2,089		$	4,774
Recovery of loan losses	(324		)	(176		)	(500		)	(647		)	(3,258		)	(9,599		)
Other income	71			3,587			3,658			37			519			3,068
Other expense	857			2,025			2,882			2,072			5,367			7,367
Income (loss) before income taxes	$	154		$	3,615		$	3,769		$	(905	)	$	499		$	10,074
Federal income tax expense (benefit)	32			759			791			(316		)	1,375			3,526
Net income (loss)	$	122		$	2,856		$	2,978		$	(589	)	$	(876	)	$	6,548

Net interest income increased to $2.5 million for the six months ended June 30, 2018 from $483,000 for the six months ended June 30, 2017. The increase was the result of an increase in interest payments received from SEPH impaired loan relationships.

For the six months ended June 30, 2018, SEPH had net recoveries of loan losses of $500,000, compared to net recoveries of loan losses of $647,000 for the six months ended June 30, 2017.

The $3.6 million increase in other income for the six months ended June 30, 2018, compared to the six months ended June 30, 2017, was primarily the result of a $2.8 million increase in gains on sale of OREO and a $1.0 million increase in loan fee income as a result of payments received from SEPH impaired loan relationships.

The $810,000 increase in other expense for the six months ended June 30, 2018, compared to the six months ended June 30, 2017, was the result of a $1.2 million increase in management and consulting fees resulting from the collection of payments on certain SEPH impaired loan relationships during 2018, offset by a $435,000 decrease in legal fees.

Legacy Vision assets at SEPH totaled $4.5 million as of June 30, 2018, compared to $18.8 million at December 31, 2017 and $19.4 million at June 30, 2017. In addition to these SEPH assets, PNB participations in legacy Vision assets totaled $2.5 million at June 30, 2018, compared to $9.0 million at December 31, 2017 and $9.1 million at June 30, 2017.

Park National Corporation

The table below reflects Park's consolidated net income for the first and second quarters of 2018, the first half of 2018 and 2017, and for the fiscal years ended December 31, 2017 and 2016.



(In thousands)	Q2 2018		Q1 2018		Six months YTD 2018		Six months YTD 2017		2017		2016
Net interest income	$	64,742	$	64,850	$	129,592	$	118,730	$	243,759	$	238,086
Provision for (recovery of) loan losses	1,386		260		1,646		5,457		8,557		(5,101		)
Other income	23,242		26,903		50,145		39,654		86,429		84,039
Other expense	52,534		54,308		106,842		98,464		203,162		204,331
Income before income taxes	$	34,064	$	37,185	$	71,249	$	54,463	$	118,469	$	122,895
Federal income taxes	5,823		6,062		11,885		15,164		34,227		36,760
Net income	$	28,241	$	31,123	$	59,364	$	39,299	$	84,242	$	86,135

Credit Metrics and Provision for (Recovery of) Loan Losses

On a consolidated basis, Park reported a provision for loan losses for the six months ended June 30, 2018 of $1.6 million, compared to $5.5 million for the six months ended June 30, 2017. The table below shows a breakdown of the provision for (recovery of) loan losses by reportable segment.



(In thousands)	Q2 2018			Q1 2018			Six months YTD 2018			Six months YTD 2017			2017			2016
PNB	$	1,623		$	(67	)	$	1,556		$	5,294		$	9,898		$	2,611
GFSC	87			503			590			810			1,917			1,887
Park Parent	—			—			—			—			—			—
Total Ongoing Operations	$	1,710		$	436		$	2,146		$	6,104		$	11,815		$	4,498
SEPH	(324		)	(176		)	(500		)	(647		)	(3,258		)	(9,599		)
Total Park	$	1,386		$	260		$	1,646		$	5,457		$	8,557		$	(5,101	)

PNB had net charge-offs of $2.1 million, GFSC had net charge-offs of $630,000, and SEPH had net recoveries of $500,000 for the six months ended June 30, 2018, resulting in net charge-offs of $2.2 million for Park, on a consolidated basis.

The table below provides additional information related to specific reserves and general reserves for Park's ongoing operations as of June 30, 2018, December 31, 2017, and June 30, 2017.



(In thousands)	6/30/2018			12/31/2017			6/30/2017
Total allowance for loan losses	$	49,452		$	49,988		$	53,822
Specific reserve	1,396			684			4,145
General reserve	$	48,056		$	49,304		$	49,677

Total loans	$	5,323,163		$	5,361,593		$	5,354,148
Impaired commercial loans	60,070			46,242			62,405
Total loans less impaired commercial loans	$	5,263,093		$	5,315,351		$	5,291,743

General reserve as a % of total loans less impaired commercial loans	0.91		%	0.93		%	0.94		%

Note: The table above includes only those loans at PNB and GFSC, as these are the entities that have an allowance for loan loss balance. The table in the "Asset Quality Information" section of the financial information included with the Financial Results News Release, includes all Park loans (including those at SEPH) and thus shows slightly different information.

The allowance for loan losses of $49.5 million at June 30, 2018 represented a $536,000, or 1.1%, decrease compared to $50.0 million at December 31, 2017. This decrease was the result of a $1.2 million decrease in general reserves, offset by a $712,000 increase in specific reserves. The decrease in general reserves was largely the result of a decline in loan balances.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Park cautions that any forward-looking statements contained in this Current Report on Form 8-K or made by management of Park are provided to assist in the understanding of anticipated future financial performance. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include, without limitation: Park's ability to execute our business plan successfully and within the expected timeframe; general economic and financial market conditions, specifically in the real estate markets and the credit markets, either nationally or in the states in which Park and our subsidiaries do business, may experience a slowing or reversal of the recent economic expansion in addition to continuing residual effects of recessionary conditions and an uneven spread of positive impacts of recovery on the economy and our counterparties, resulting in adverse impacts on the demand for loan, deposit and other financial services, delinquencies, defaults and counterparties' ability to meet credit and other obligations; changes in interest rates and prices may adversely impact prepayment penalty income, mortgage banking income, the value of securities, loans, deposits and other financial instruments and the interest rate sensitivity of our consolidated balance sheet as well as reduce interest margins and impact loan demand; changes in consumer spending, borrowing and saving habits, whether due to the newly-enacted tax reform legislation, changing business and economic conditions, legislative and regulatory initiatives, or other factors; changes in unemployment; changes in customers', suppliers', and other counterparties' performance and creditworthiness; asset/liability repricing risks and liquidity risks; our liquidity requirements could be adversely affected by changes to regulations governing bank and bank holding company capital and liquidity standards as well as by changes in our assets and liabilities; competitive factors among financial services organizations could increase significantly, including product and pricing pressures, changes to third-party relationships and our ability to attract, develop and retain qualified bank professionals; clients could pursue alternatives to bank deposits, causing us to lose a relatively inexpensive source of funding; uncertainty regarding the nature, timing, 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, pensions, bankruptcy, consumer protection, rent regulation and housing, financial accounting and reporting, environmental protection, insurance, bank products and services, bank capital and liquidity standards, fiduciary standards, securities and other aspects of the financial services industry, specifically the reforms provided for in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and the Basel III regulatory capital reforms, as well as regulations already adopted and which may be adopted in the future by the relevant regulatory agencies, including the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve Board, to implement the Dodd-Frank Act's provisions, and the Basel III regulatory capital reforms; the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board, the SEC, the Public Company Accounting Oversight Board and other regulatory agencies, and the accuracy of our assumptions and estimates used to prepare our financial statements; changes in law and policy accompanying the current presidential administration, including the recently-enacted Tax Cuts and Jobs Act, and uncertainty or speculation pending the enactment of such changes; uncertainties in Park's preliminary review of, and additional analysis of, the impact of the Tax Cuts and Jobs Act; the effect of healthcare laws in the United States and potential changes for such laws which may increase our healthcare and other costs and negatively impact our operations and financial results; significant changes in the tax laws, which may adversely affect the fair values of net deferred tax assets and obligations of state and political subdivisions held in Park's investment securities portfolio; the effect of trade, monetary, fiscal and other governmental policies of the U.S. federal government, including money supply and interest rate policies of the Federal Reserve Board; disruption in the liquidity and other functioning of U.S. financial markets; the impact on financial markets and the economy of any changes in the credit ratings of the U.S. Treasury obligations and other U.S. government-backed debt, as well as issues surrounding the levels of U.S., European and Asian government debt and concerns regarding the creditworthiness of certain sovereign governments, supranationals and financial institutions in Europe and Asia; the uncertainty surrounding the actions to be taken to implement the referendum by United Kingdom voters to exit the European Union; our litigation and regulatory compliance exposure, including any adverse developments in legal proceedings or other claims and unfavorable resolution of regulatory and other governmental examinations or other inquiries; the adequacy of our risk management program; the impact of our ability to anticipate and respond to technological changes on our ability to respond to customer needs and meet competitive demands; the ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks; a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors and other service providers, resulting in failures or disruptions in customer account management, general ledger, deposit, loan, or other systems, including as a result of cyber attacks; 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; fraud, scams and schemes of third parties; the impact of widespread natural and other disasters, pandemics, dislocations, civil unrest, terrorist activities or international hostilities on the economy and financial markets generally or on us or our counterparties specifically; demand for loans in the respective market areas served by Park and our subsidiaries; the risk that the businesses of PNB and NewDominion Bank will not be integrated successfully following the recently-completed merger transaction involving Park, PNB and NewDominion Bank (the "NewDominion Transaction") or such integration may be more difficult, time-consuming or costly than expected; expected revenue synergies and cost savings from the NewDominion Transaction may not be fully realized within the expected timeframe; revenues following the NewDominion Transaction may be lower than expected; customer and employee relationships and business operations may be disrupted by the NewDominion Transaction; Park issued equity securities in the NewDominion Transaction, and may issue equity securities in connection with future acquisitions, which could cause ownership and economic dilution to Park's current shareholders; 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, 2017. 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.

Item 8.01 - Other Events

Declaration of Cash Dividend

As reported in the Financial Results News Release, on July 23, 2018, the Park Board of Directors declared a $0.96 per common share quarterly cash dividend in respect of Park's common shares. The dividend is payable on September 10, 2018 to common shareholders of record as of the close of business on August 17, 2018. A copy of the Financial Results News Release is included as Exhibit 99.1 and the portion thereof addressing the declaration of the cash dividends by Park's Board of Directors is incorporated by reference herein.

Item 9.01 - Financial Statements and Exhibits.


(a)	Not applicable


(b)	Not applicable


(c)	Not applicable


(d)	Exhibits. The following exhibit is included with this Current Report on Form 8-K:

Exhibit No. Description

99.1News Release issued by Park National Corporation on July 23, 2018 addressing financial results for the three and six months ended June 30, 2018.

[Remainder of page intentionally left blank;

signature page follows.]

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



	PARK NATIONAL CORPORATION

Dated: July 23, 2018	By:	/s/ Brady T. Burt
		Brady T. Burt
		Chief Financial Officer, Secretary and Treasurer

July 23, 2018 Exhibit 99.1

Park National Corporation reports financial results for second quarter and first half of 2018

NEWARK, Ohio - Park National Corporation (Park) (NYSE American: PRK) today reported financial results for the second quarter and first half of 2018 (three and six months ended June 30, 2018). Park's board of directors also declared a quarterly cash dividend of $0.96 per common share, payable on September 10, 2018 to common shareholders of record as of August 17, 2018.

Net Income Results

Park’s net income for the second quarter of 2018 was $28.2 million, a 48.4 percent increase from $19.0 million for the second quarter of 2017. Second quarter 2018 net income per diluted common share was $1.83, compared to $1.24 in the second quarter of 2017. Park's net income for the six months ended 2018 was $59.4 million, a 51.1 percent increase from $39.3 million for the six months ended 2017. Six months ended 2018 net income per diluted common share was $3.85, compared to $2.55 for the six months ended 2017. Increased net interest income, steady fee income, benefits from credit recoveries, decreased loan loss provision, federal tax changes, and other factors all contributed to Park’s net income results in the second quarter.

“We continue to focus on long-term plans to fuel and sustain loan growth and strong overall performance,” said Park Chief Executive Officer David L. Trautman. “We celebrated NewDominion Bank officially joining our organization on July 1^st, and everyone is engaged in further fortifying that relationship and ensuring a smooth transition.”

Park's community-banking subsidiary, The Park National Bank, reported net income of $28.8 million for the second quarter of 2018, compared to $20.2 million for the second quarter of 2017 and $55.5 million for the six months ended 2018, compared to $41.6 million for the six months ended 2017.

Headquartered in Newark, Ohio, Park National Corporation had $7.5 billion in total assets (as of June 30, 2018). With the addition of NewDominion Bank effective July 1, 2018, the Park organization now consists of 11 community bank divisions, a non-bank subsidiary and two specialty finance companies. Park's banking operations are conducted through Park subsidiary The Park National Bank and its divisions, which include Fairfield National Bank Division, Richland Bank Division, Century National Bank Division, First-Knox National Bank Division, United Bank, N.A. Division, Second National Bank Division, Security National Bank Division, Unity National Bank Division, The Park National Bank of Southwest Ohio & Northern Kentucky Division, and NewDominion Bank Division. The Park organization also includes 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…

Media contact: Bethany Lewis, 740.349.0421, [email protected]

Investor contact: Brady Burt, 740.322.6844, [email protected]

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com



PARK NATIONAL CORPORATION
Financial Highlights
As of or for the three months ended June 30, 2018, March 31, 2018, and June 30, 2017

	2018			2018			2017			Percent change vs.
(in thousands, except share and per share data)	2nd QTR			1st QTR			2nd QTR			1Q '18		2Q '17
INCOME STATEMENT:
Net interest income	$	64,742		$	64,850		$	59,778		(0.2)	%	8.3	%
Provision for loan losses	1,386			260			4,581			N.M.		N.M.
Other income	23,242			26,903			20,699			(13.6)	%	12.3	%
Other expense	52,534			54,308			49,554			(3.3)	%	6.0	%
Income before income taxes	$	34,064		$	37,185		$	26,342		(8.4	)%	29.3	%
Federal income taxes	5,823			6,062			7,310			(3.9	)%	(20.3)	%
Net income	$	28,241		$	31,123		$	19,032		(9.3	)%	48.4	%

MARKET DATA:
Earnings per common share - basic (b)	$	1.85		$	2.04		$	1.24		(9.3	)%	49.2	%
Earnings per common share - diluted (b)	1.83			2.02			1.24			(9.4	)%	47.6	%
Cash dividends per common share	1.21			0.94			0.94			28.7	%	28.7	%
Book value per common share at period end	49.51			49.20			49.18			0.6	%	0.7	%
Market price per common share at period end	111.42			103.76			103.72			7.4	%	7.4	%
Market capitalization at period end	1,699,277			1,587,642			1,586,613			7.0	%	7.1	%

Weighted average common shares - basic (a)	15,285,532			15,288,332			15,297,085			—	%	(0.1	)%
Weighted average common shares - diluted (a)	15,417,607			15,431,328			15,398,865			(0.1	)%	0.1	%
Common shares outstanding at period end	15,251,095			15,301,103			15,297,080			(0.3	)%	(0.3	)%

PERFORMANCE RATIOS: (annualized)
Return on average assets (a)(b)	1.52		%	1.69		%	0.99		%	(10.1)	%	53.5	%
Return on average shareholders' equity (a)(b)	15.02		%	16.84		%	10.13		%	(10.8)	%	48.3	%
Yield on loans	4.90		%	4.94		%	4.63		%	(0.8)	%	5.8	%
Yield on investment securities	2.73		%	2.62		%	2.44		%	4.2	%	11.9	%
Yield on money markets	1.99		%	1.63		%	1.05		%	22.1	%	89.5	%
Yield on earning assets	4.39		%	4.40		%	4.02		%	(0.2)	%	9.2	%
Cost of interest bearing deposits	0.64		%	0.54		%	0.44		%	18.5	%	45.5	%
Cost of borrowings	1.84		%	1.72		%	2.38		%	7.0	%	(22.7)	%
Cost of paying liabilities	0.79		%	0.71		%	0.80		%	11.3	%	(1.3)	%
Net interest margin (g)	3.81		%	3.87		%	3.42		%	(1.6)	%	11.4	%
Efficiency ratio (g)	59.23		%	58.74		%	60.68		%	0.8	%	(2.4)	%

OTHER RATIOS (NON - GAAP):
Annualized return on average tangible assets (a)(b)(e)	1.53		%	1.71		%	1.00		%	(10.5	)%	53.0	%
Annualized return on average tangible equity (a)(b)(c)	16.61		%	18.64		%	11.21		%	(10.9	)%	48.2	%
Tangible book value per share (d)	$	44.77		$	44.47		$	44.45		0.7	%	0.7	%

N.M. - Not meaningful
Note: Explanations for footnotes (a) - (g) are included at the end of the financial highlights.

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com



PARK NATIONAL CORPORATION
Financial Highlights (continued)
As of or for the three months ended June 30, 2018, March 31, 2018, and June 30, 2017

										Percent change vs.
BALANCE SHEET:	June 30, 2018			March 31, 2018			June 30, 2017			1Q '18		2Q '17

Investment securities	$	1,513,238		$	1,464,356		$	1,579,934		3.3	%	(4.2)	%
Loans	5,324,974			5,292,349			5,365,437			0.6	%	(0.8)	%
Allowance for loan losses	49,452			48,969			53,822			1.0	%	(8.1)	%
Goodwill	72,334			72,334			72,334			—	%	—	%
Other real estate owned (OREO)	5,729			9,055			14,881			(36.7)	%	(61.5)	%
Total assets	7,462,156			7,518,970			7,832,092			(0.8)	%	(4.7)	%
Total deposits	6,015,844			6,084,294			5,961,576			(1.1)	%	0.9	%
Borrowings	631,139			624,090			1,046,176			1.1	%	(39.7)	%
Total shareholders' equity	755,088			752,774			752,248			0.3	%	0.4	%
Tangible equity (d)	682,754			680,440			679,914			0.3	%	0.4	%
Nonperforming loans	98,867			86,205			110,904			14.7	%	(10.9)	%
Nonperforming assets	104,596			99,117			125,785			5.5	%	(16.8)	%

ASSET QUALITY RATIOS:
Loans as a % of period end total assets	71.36		%	70.39		%	68.51		%	1.4	%	4.2	%
Nonperforming loans as a % of period end loans	1.86		%	1.63		%	2.07		%	14.1	%	(10.1)	%
Nonperforming assets as a % of period end loans + OREO + other nonperforming assets	1.96		%	1.87		%	2.34		%	4.8	%	(16.2)	%
Allowance for loan losses as a % of period end loans	0.93		%	0.93		%	1.00		%	—	%	(7.0)	%
Net loan charge-offs	$	903		$	1,279		$	681		(29.4)	%	32.6	%
Annualized net loan charge-offs as a % of average loans (a)	0.07		%	0.10		%	0.05		%	(30.0)	%	40.0	%

CAPITAL & LIQUIDITY:
Total shareholders' equity / Period end total assets	10.12		%	10.01		%	9.60		%	1.1	%	5.4	%
Tangible equity (d) / Tangible assets (f)	9.24		%	9.14		%	8.76		%	1.1	%	5.5	%
Average shareholders' equity / Average assets (a)	10.11		%	10.06		%	9.74		%	0.5	%	3.8	%
Average shareholders' equity / Average loans (a)	14.26		%	14.14		%	14.14		%	0.8	%	0.8	%
Average loans / Average deposits (a)	88.23		%	89.39		%	90.21		%	(1.3)	%	(2.2)	%

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com



PARK NATIONAL CORPORATION
Financial Highlights
Six months ended June 30, 2018 and 2017

	2018			2017
(in thousands, except share and per share data)	Six months ended June 30			Six months ended June 30			Percent change vs '17
INCOME STATEMENT:
Net interest income	$	129,592		$	118,730		9.1	%
Provision for loan losses	1,646			5,457			(69.8)	%
Other income	50,145			39,654			26.5	%
Other expense	106,842			98,464			8.5	%
Income before income taxes	$	71,249		$	54,463		30.8	%
Income taxes	11,885			15,164			(21.6	)%
Net income	$	59,364		$	39,299		51.1	%

MARKET DATA:
Earnings per common share - basic (b)	$	3.88		$	2.57		51.0	%
Earnings per common share - diluted (b)	3.85			2.55			51.0	%
Cash dividends per common share	2.15			1.88			14.4	%

Weighted average common shares - basic (a)	15,286,932			15,304,572			(0.1	)%
Weighted average common shares - diluted (a)	15,424,585			15,415,765			0.1	%

PERFORMANCE RATIOS: (annualized)
Return on average assets (a)(b)	1.61		%	1.04		%	54.8	%
Return on average shareholders' equity (a)(b)	15.92		%	10.58		%	50.5	%
Yield on loans	4.92		%	4.63		%	6.3	%
Yield on investment securities	2.68		%	2.43		%	10.3	%
Yield on money markets	1.76		%	0.99		%	77.8	%
Yield on earning assets	4.39		%	4.04		%	8.7	%
Cost of interest bearing deposits	0.59		%	0.40		%	47.5	%
Cost of borrowings	1.78		%	2.37		%	(24.9)	%
Cost of paying liabilities	0.75		%	0.78		%	(3.8)	%
Net interest margin (g)	3.84		%	3.46		%	11.0	%
Efficiency ratio (g)	58.98		%	61.30		%	(3.8)	%

ASSET QUALITY RATIOS:
Net loan charge-offs	2,182			2,259			(3.4)	%
Annualized net loan charge-offs as a % of average loans (a)	0.08		%	0.09		%	(11.1)	%

CAPITAL & LIQUIDITY:
Average shareholders' equity / Average assets (a)	10.08		%	9.79		%	3.0	%
Average shareholders' equity / Average loans (a)	14.20		%	14.12		%	0.6	%
Average loans / Average deposits (a)	88.80		%	91.31		%	(2.7)	%

OTHER RATIOS (NON - GAAP):
Annualized return on average tangible assets (a)(b)(e)	1.62		%	1.05		%	54.3	%
Annualized return on average tangible equity (a)(b)(c)	17.62		%	11.72		%	50.3	%

N.M. - Not meaningful
Note: Explanations (a) - (g) are included at the end of the financial highlights.

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com



PARK NATIONAL CORPORATION
Financial Highlights (continued)

(a) Averages are for the three months ended June 30, 2018, March 31, 2018 and June 30, 2017 and the six months ended June 30, 2018 and June 30, 2017.

(b) Reported measure uses net income.

(c) Net income for each period divided by average tangible equity during the period. Average tangible equity equals average shareholders' equity during the applicable period less average goodwill during the applicable period.

RECONCILIATION OF AVERAGE SHAREHOLDERS' EQUITY TO AVERAGE TANGIBLE EQUITY:
	THREE MONTHS ENDED						SIX MONTHS ENDED
	June 30, 2018		March 31, 2018		June 30, 2017		June 30, 2018		June 30, 2017
AVERAGE SHAREHOLDERS' EQUITY	$	754,101	$	749,627	$	753,373	$	751,876	$	748,732
Less: Average goodwill	72,334		72,334		72,334		72,334		72,334
AVERAGE TANGIBLE EQUITY	$	681,767	$	677,293	$	681,039	$	679,542	$	676,398

(d) Tangible equity divided by common shares outstanding at period end. Tangible equity equals total shareholders' equity less goodwill, in each case at the end of the period.

RECONCILIATION OF TOTAL SHAREHOLDERS' EQUITY TO TANGIBLE EQUITY:
	June 30, 2018		March 31, 2018		June 30, 2017
TOTAL SHAREHOLDERS' EQUITY	$	755,088	$	752,774	$	752,248
Less: Goodwill	72,334		72,334		72,334
TANGIBLE EQUITY	$	682,754	$	680,440	$	679,914

(e) Net income for each period divided by average tangible assets during the period. Average tangible assets equals average assets less average goodwill, in each case during the applicable period.

RECONCILIATION OF AVERAGE ASSETS TO AVERAGE TANGIBLE ASSETS:
	THREE MONTHS ENDED						SIX MONTHS ENDED
	June 30, 2018		March 31, 2018		June 30, 2017		June 30, 2018		June 30, 2017
AVERAGE ASSETS	$	7,459,748	$	7,455,065	$	7,736,884	$	7,457,419	$	7,648,777
Less: Average goodwill	72,334		72,334		72,334		72,334		72,334
AVERAGE TANGIBLE ASSETS	$	7,387,414	$	7,382,731	$	7,664,550	$	7,385,085	$	7,576,443

(f) Tangible equity divided by tangible assets. Tangible assets equals total assets less goodwill, in each case at the end of the period.

RECONCILIATION OF TOTAL ASSETS TO TANGIBLE ASSETS:
	June 30, 2018		March 31, 2018		June 30, 2017
TOTAL ASSETS	$	7,462,156	$	7,518,970	$	7,832,092
Less: Goodwill	72,334		72,334		72,334
TANGIBLE ASSETS	$	7,389,822	$	7,446,636	$	7,759,758

(g) Efficiency ratio is calculated by dividing total other expense by the sum of fully taxable equivalent net interest income and other income. Fully taxable equivalent net interest income reconciliation is shown below assuming a 21% corporate federal tax rate for 2018 and a 35% corporate federal tax rate for 2017. 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, 2018		March 31, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Interest income	$	74,691	$	73,714	$	70,476	$	148,405	$	139,231
Fully taxable equivalent adjustment	705		701		1,185		1,406		2,248
Fully taxable equivalent interest income	$	75,396	$	74,415	$	71,661	$	149,811	$	141,479
Interest expense	9,949		8,864		10,698		18,813		20,501
Fully taxable equivalent net interest income	$	65,447	$	65,551	$	60,963	$	130,998	$	120,978

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com




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)	2018		2017		2018		2017

Interest income:
Interest and fees on loans	$	64,496	$	61,222	128,898		121,130
Interest on:
Obligations of U.S. Government, its agencies
and other securities - taxable	7,746		6,892		14,513		14,030
Obligations of states and political subdivisions - tax-exempt	2,178		1,664		4,352		3,124
Other interest income	271		698		642		947
Total interest income	74,691		70,476		148,405		139,231

Interest expense:
Interest on deposits:
Demand and savings deposits	4,107		2,291		7,397		3,905
Time deposits	2,886		2,457		5,437		4,618
Interest on borrowings	2,956		5,950		5,979		11,978
Total interest expense	9,949		10,698		18,813		20,501

Net interest income	64,742		59,778		129,592		118,730

Provision for loan losses	1,386		4,581		1,646		5,457

Net interest income after provision for loan losses	63,356		55,197		127,946		113,273

Other income	23,242		20,699		50,145		39,654

Other expense	52,534		49,554		106,842		98,464

Income before income taxes	34,064		26,342		71,249		54,463

Federal income taxes	5,823		7,310		11,885		15,164

Net income	$	28,241	$	19,032	59,364		39,299

Per Common Share:
Net income - basic	$	1.85	$	1.24	$	3.88	$	2.57
Net income - diluted	$	1.83	$	1.24	$	3.85	$	2.55

Weighted average shares - basic	15,285,532		15,297,085		15,286,932		15,304,572
Weighted average shares - diluted	15,417,607		15,398,865		15,424,585		15,415,765

Cash Dividends Declared	$	1.21	$	0.94	$	2.15	$	1.88

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com




PARK NATIONAL CORPORATION
Consolidated Balance Sheets

(in thousands, except share data)	June 30, 2018			December 31, 2017

Assets

Cash and due from banks	$	122,915		$	131,946
Money market instruments	23,244			37,166
Investment securities	1,513,238			1,512,824
Loans	5,324,974			5,372,483
Allowance for loan losses	(49,452		)	(49,988		)
Loans, net	5,275,522			5,322,495
Bank premises and equipment, net	55,555			55,901
Goodwill	72,334			72,334
Other real estate owned	5,729			14,190
Other assets	393,619			390,764
Total assets	$	7,462,156		$	7,537,620

Liabilities and Shareholders' Equity

Deposits:
Noninterest bearing	$	1,591,962		$	1,633,941
Interest bearing	4,423,882			4,183,385
Total deposits	6,015,844			5,817,326
Borrowings	631,139			906,289
Other liabilities	60,085			57,904
Total liabilities	$	6,707,068		$	6,781,519


Shareholders' Equity:
Preferred shares (200,000 shares authorized; no shares outstanding at June 30, 2018 and December 31, 2017)	$	—		$	—
Common shares (No par value; 20,000,000 shares authorized in 2018 and 2017; 16,150,732 shares issued at June 30, 2018 and 16,150,752 shares issued at December 31, 2017)	308,144			307,726
Accumulated other comprehensive loss, net of taxes	(55,009		)	(26,454		)
Retained earnings	593,512			561,908
Treasury shares (899,637 shares at June 30, 2018 and 862,558 at December 31, 2017)	(91,559		)	(87,079		)
Total shareholders' equity	$	755,088		$	756,101
Total liabilities and shareholders' equity	$	7,462,156		$	7,537,620

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com




PARK NATIONAL CORPORATION
Consolidated Average Balance Sheets

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in thousands)	2018			2017			2018			2017

Assets

Cash and due from banks	$	118,870		$	108,317		$	118,561		$	113,931
Money market instruments	54,551			265,791			73,437			192,800
Investment securities	1,506,699			1,553,811			1,478,564			1,559,861
Loans	5,289,056			5,327,114			5,295,814			5,302,961
Allowance for loan losses	(49,750		)	(50,700		)	(50,168		)	(50,771		)
Loans, net	5,239,306			5,276,414			5,245,646			5,252,190
Bank premises and equipment, net	56,109			56,949			56,307			57,407
Goodwill	72,334			72,334			72,334			72,334
Other real estate owned	8,416			14,460			10,962			14,104
Other assets	403,463			388,808			401,608			386,150
Total assets	$	7,459,748		$	7,736,884		$	7,457,419		$	7,648,777


Liabilities and Shareholders' Equity

Deposits:
Noninterest bearing	$	1,602,228		$	1,534,272		$	1,585,742		$	1,516,910
Interest bearing	4,392,733			4,370,710			4,378,091			4,290,900
Total deposits	5,994,961			5,904,982			5,963,833			5,807,810
Borrowings	645,909			1,003,505			678,296			1,019,005
Other liabilities	64,777			75,024			63,414			73,230
Total liabilities	$	6,705,647		$	6,983,511		$	6,705,543		$	6,900,045

Shareholders' Equity:
Preferred shares	$	—		$	—		$	—		$	—
Common shares	307,689			305,892			307,714			305,900
Accumulated other comprehensive loss, net of taxes	(54,184		)	(13,814		)	(47,965		)	(15,514		)
Retained earnings	588,170			547,547			579,448			543,763
Treasury shares	(87,574		)	(86,252		)	(87,321		)	(85,417		)
Total shareholders' equity	$	754,101		$	753,373		$	751,876		$	748,732
Total liabilities and shareholders' equity	$	7,459,748		$	7,736,884		$	7,457,419		$	7,648,777

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com




PARK NATIONAL CORPORATION
Consolidated Statements of Income - Linked Quarters

	2018		2018		2017			2017		2017
(in thousands, except per share data)	2nd QTR		1st QTR		4th QTR			3rd QTR		2nd QTR

Interest income:
Interest and fees on loans	$	64,496	$	64,402	$	64,447		$	63,110	$	61,222
Interest on:
Obligations of U.S. Government, its agencies and other securities - taxable	7,746		6,767		6,653			6,757		6,892
Obligations of states and political subdivisions - tax-exempt	2,178		2,174		2,112			1,974		1,664
Other interest income	271		371		757			1,383		698
Total interest income	74,691		73,714		73,969			73,224		70,476

Interest expense:
Interest on deposits:
Demand and savings deposits	4,107		3,290		2,677			2,882		2,291
Time deposits	2,886		2,551		2,490			2,521		2,457
Interest on borrowings	2,956		3,023		5,324			6,270		5,950
Total interest expense	9,949		8,864		10,491			11,673		10,698

Net interest income	64,742		64,850		63,478			61,551		59,778

Provision for (recovery of) loan losses	1,386		260		(183		)	3,283		4,581

Net interest income after provision for (recovery of) loan losses	63,356		64,590		63,661			58,268		55,197

Other income	23,242		26,903		23,238			23,537		20,699

Other expense	52,534		54,308		53,439			51,259		49,554

Income before income taxes	34,064		37,185		33,460			30,546		26,342

Federal income taxes	5,823		6,062		10,629			8,434		7,310

Net income	$	28,241	$	31,123	$	22,831		$	22,112	$	19,032

Per Common Share:
Net income - basic	$	1.85	$	2.04	$	1.49		$	1.45	$	1.24
Net income - diluted	$	1.83	$	2.02	$	1.48		$	1.44	$	1.24

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com




PARK NATIONAL CORPORATION
Detail of other income and other expense - Linked Quarters

	2018			2018			2017			2017			2017
(in thousands)	2nd QTR			1st QTR			4th QTR			3rd QTR			2nd QTR

Other income:
Income from fiduciary activities	$	6,666		$	6,395		$	6,264		$	5,932		$	6,025
Service charges on deposits	2,826			2,922			3,142			3,216			3,156
Other service income	3,472			4,172			3,554			3,357			3,447
Checkcard fee income	4,382			4,002			4,023			3,974			4,040
Bank owned life insurance income	1,031			1,009			1,068			1,573			1,114
ATM fees	510			524			545			605			561
OREO valuation adjustments	(114		)	(207		)	(91		)	(22		)	(272		)
(Loss) gain on the sale of OREO, net	(147		)	4,321			47			51			53
Net (loss) gain on sale of investment securities	—			(2,271		)	1,794			—			27
Unrealized gain on equity securities	304			3,489			—			—			—
Other components of net periodic benefit income	1,705			1,705			1,450			1,448			1,448
Miscellaneous	2,607			842			1,442			3,403			1,100
Total other income	$	23,242		$	26,903		$	23,238		$	23,537		$	20,699

Other expense:
Salaries	$	24,103		$	25,320		$	23,157		$	23,302		$	23,001
Employee benefits	7,630			7,029			6,320			5,943			6,206
Occupancy expense	2,570			2,936			2,442			2,559			2,565
Furniture and equipment expense	4,013			4,149			4,198			3,868			3,640
Data processing fees	1,902			1,773			1,690			1,919			1,676
Professional fees and services	6,123			6,190			7,886			6,100			6,018
Marketing	1,185			1,218			1,112			1,122			1,084
Insurance	1,196			1,428			1,768			1,499			1,517
Communication	1,189			1,250			1,228			1,110			1,155
State tax expense	958			1,105			665			912			943
Miscellaneous	1,665			1,910			2,973			2,925			1,749
Total other expense	$	52,534		$	54,308		$	53,439		$	51,259		$	49,554

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com



PARK NATIONAL CORPORATION
Asset Quality Information

							Year ended December 31,
(in thousands, except ratios)	June 30, 2018			March 31, 2018			2017			2016			2015			2014

Allowance for loan losses:
Allowance for loan losses, beginning of period	$	48,969		$	49,988		$	50,624		$	56,494		$	54,352		$	59,468
Charge-offs	2,716			3,450			19,403			20,799			14,290			24,780			(A)
Recoveries	1,813			2,171			10,210			20,030			11,442			26,997
Net charge-offs (recoveries)	903			1,279			9,193			769			2,848			(2,217		)
Provision for (recovery of) loan losses	1,386			260			8,557			(5,101		)	4,990			(7,333		)
Allowance for loan losses, end of period	$	49,452		$	48,969		$	49,988		$	50,624		$	56,494		$	54,352
(A) Year ended December 31, 2014 included $4.3 million in charge-offs related to the transfer of $22.0 million of commercial loans to the held for sale portfolio.

General reserve trends:
Allowance for loan losses, end of period	$	49,452		$	48,969		$	49,988		$	50,624		$	56,494		$	54,352
Specific reserves	1,396			1,207			684			548			4,191			3,660
General reserves	$	48,056		$	47,762		$	49,304		$	50,076		$	52,303		$	50,692

Total loans	$	5,324,974		$	5,292,349		$	5,372,483		$	5,271,857		$	5,068,085		$	4,829,682
Impaired commercial loans	61,705			50,292			56,545			70,415			80,599			73,676
Total loans less impaired commercial loans	$	5,263,269		$	5,242,057		$	5,315,938		$	5,201,442		$	4,987,486		$	4,756,006


Asset Quality Ratios:
Net charge-offs (recoveries) as a % of average loans (annualized)	0.07		%	0.10		%	0.17		%	0.02		%	0.06		%	(0.05)		%
Allowance for loan losses as a % of period end loans	0.93		%	0.93		%	0.93		%	0.96		%	1.11		%	1.13		%
General reserves as a % of total loans less impaired commercial loans	0.91		%	0.91		%	0.93		%	0.96		%	1.05		%	1.07		%

Nonperforming Assets - Park National Corporation:
Nonaccrual loans	$	81,124		$	66,151		$	72,056		$	87,822		$	95,887		$	100,393
Accruing troubled debt restructuring	16,306			18,682			20,111			18,175			24,979			16,254
Loans past due 90 days or more	1,437			1,372			1,792			2,086			1,921			2,641
Total nonperforming loans	$	98,867		$	86,205		$	93,959		$	108,083		$	122,787		$	119,288
Other real estate owned - Park National Bank	3,280			4,846			6,524			6,025			7,456			10,687
Other real estate owned - SEPH	2,449			4,209			7,666			7,901			11,195			11,918
Other nonperforming assets - Park National Bank	—			3,857			4,849			—			—			—
Total nonperforming assets	$	104,596		$	99,117		$	112,998		$	122,009		$	141,438		$	141,893
Percentage of nonaccrual loans to period end loans	1.52		%	1.25		%	1.34		%	1.67		%	1.89		%	2.08		%
Percentage of nonperforming loans to period end loans	1.86		%	1.63		%	1.75		%	2.05		%	2.42		%	2.47		%
Percentage of nonperforming assets to period end loans	1.96		%	1.87		%	2.10		%	2.31		%	2.79		%	2.94		%
Percentage of nonperforming assets to period end total assets	1.40		%	1.32		%	1.50		%	1.63		%	1.93		%	2.03		%

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com



PARK NATIONAL CORPORATION
Asset Quality Information (continued)

							Year ended December 31,
(in thousands, except ratios)	June 30, 2018			March 31, 2018			2017			2016			2015			2014

Nonperforming Assets - Park National Bank and Guardian:
Nonaccrual loans	$	79,489		$	66,151		$	61,753		$	76,084		$	81,468		$	77,477
Accruing troubled debt restructuring	16,306			18,682			20,111			18,175			24,979			16,157
Loans past due 90 days or more	1,437			1,372			1,792			2,086			1,921			2,641
Total nonperforming loans	$	97,232		$	86,205		$	83,656		$	96,345		$	108,368		$	96,275
Other real estate owned - Park National Bank	3,280			4,846			6,524			6,025			7,456			10,687
Other nonperforming assets - Park National Bank	—			3,857			4,849			—			—			—
Total nonperforming assets	$	100,512		$	94,908		$	95,029		$	102,370		$	115,824		$	106,962
Percentage of nonaccrual loans to period end loans	1.49		%	1.25		%	1.15		%	1.45		%	1.61		%	1.61		%
Percentage of nonperforming loans to period end loans	1.83		%	1.63		%	1.56		%	1.83		%	2.14		%	2.00		%
Percentage of nonperforming assets to period end loans	1.89		%	1.79		%	1.77		%	1.95		%	2.29		%	2.23		%
Percentage of nonperforming assets to period end total assets	1.36		%	1.27		%	1.27		%	1.38		%	1.60		%	1.55		%

Nonperforming Assets - SEPH/Vision Bank (retained portfolio):
Nonaccrual loans	$	1,635		$	—		$	10,303		$	11,738		$	14,419		$	22,916
Accruing troubled debt restructuring	—			—			—			—			—			97
Loans past due 90 days or more	—			—			—			—			—			—
Total nonperforming loans	$	1,635		$	—		$	10,303		$	11,738		$	14,419		$	23,013
Other real estate owned - SEPH	2,449			4,209			7,666			7,901			11,195			11,918
Total nonperforming assets	$	4,084		$	4,209		$	17,969		$	19,639		$	25,614		$	34,931

New nonaccrual loan information - Park National Corporation
Nonaccrual loans, beginning of period	$	66,151		$	72,056		$	87,822		$	95,887		$	100,393		$	135,216
New nonaccrual loans	27,920			23,075			58,753			74,786			80,791			70,059
Resolved nonaccrual loans	12,947			28,980			74,519			82,851			85,165			86,384
Sale of nonaccrual loans held for sale	—			—			—			—			132			18,498
Nonaccrual loans, end of period	$	81,124		$	66,151		$	72,056		$	87,822		$	95,887		$	100,393

New nonaccrual loan information - Park National Bank and Guardian
Nonaccrual loans, beginning of period	$	66,151		$	61,753		$	76,084		$	81,468		$	77,477		$	99,108
New nonaccrual loans - Ohio-based operations	26,285			23,075			58,753			74,663			80,791			69,389
Resolved nonaccrual loans	12,947			18,677			73,084			80,047			76,800			78,288
Sale of nonaccrual loans held for sale	—			—			—			—			—			12,732
Nonaccrual loans, end of period	$	79,489		$	66,151		$	61,753		$	76,084		$	81,468		$	77,477

New nonaccrual loan information - SEPH/Vision Bank (retained portfolio)
Nonaccrual loans, beginning of period	$	—		$	10,303		$	11,738		$	14,419		$	22,916		$	36,108
New nonaccrual loans - SEPH/Vision Bank	1,635			—			—			123			—			670
Resolved nonaccrual loans	—			10,303			1,435			2,804			8,365			8,096
Sale of nonaccrual loans held for sale	—			—			—			—			132			5,766
Nonaccrual loans, end of period	$	1,635		$	—		$	10,303		$	11,738		$	14,419		$	22,916

Impaired Commercial Loan Portfolio Information (period end):
Unpaid principal balance	$	73,089		$	60,264		$	66,585		$	95,358		$	109,304		$	106,156
Prior charge-offs	11,384			9,972			10,040			24,943			28,705			32,480
Remaining principal balance	61,705			50,292			56,545			70,415			80,599			73,676
Specific reserves	1,396			1,207			684			548			4,191			3,660
Book value, after specific reserves	$	60,309		$	49,085		$	55,861		$	69,867		$	76,408		$	70,016

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com

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Form 8-K PARK NATIONAL CORP /OH/ For: Jul 23

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