Park National Corporation Reports Third Quarter 2015 Financial Results and Declares Quarterly Dividend

NEWARK, Ohio, Oct. 26, 2015 (GLOBE NEWSWIRE) — Park National Corporation (Park) (NYSE MKT: PRK) today announced financial results for the third quarter and first nine months of 2015, including increased net income and continued loan growth in the commercial, consumer, and mortgage categories. The board of directors also declared a quarterly cash dividend of $0.94 per common share, payable on December 10, 2015 to common shareholders of record as of November 20, 2015.

Park’s net income for the three months ended September 30, 2015 (third quarter) was $20.0 million, compared to $18.3 million for the same period in 2014, an increase of $1.7 million or 9.7 percent. Net income per diluted common share for the third quarter of 2015 was $1.30, compared to $1.19 in the same period of 2014. Net income for the nine months ended September 30, 2015 (first nine months) was $60.1 million, compared to $59.7 million for the same period in 2014. Net income per diluted common share for the first nine months of 2015 was $3.90, compared to $3.87 in the same period of 2014.

Park’s community-banking subsidiary, The Park National Bank, reported net income of $61.2 million for the nine months ended September 30, 2015, compared to net income of $60.9 million for the same period of 2014. The Park National Bank had total assets of $7.2 billion at September 30, 2015 and $6.9 billion at September 30, 2014. This performance generated an annualized return on average assets of 1.14 percent and 1.21 percent for the bank for the first nine-month periods of 2015 and 2014, respectively.

The Park National Bank loan portfolio expanded during the third quarter of 2015. Loans outstanding at September 30, 2015 were $4.96 billion, compared to $4.86 billion at June 30, 2015, an increase of $100 million or an annualized 8.19 percent. The bank reported growth in the third quarter across all loan categories: mortgage loan growth of $10 million (3.2 percent annualized), commercial loan growth of $70 million (11.4 percent annualized) and consumer loan growth of $20 million (8.4 percent annualized).

“This quarter, our strong lending capabilities combined with our reputation for reliability created more opportunities for us to serve business owners and families,” said Park Chief Executive Officer David L. Trautman. “We continue to focus our energy and resources on being a top provider of financing.”

About Park National Corporation

Headquartered in Newark, Ohio, Park National Corporation had $7.3 billion in total assets (as of September 30, 2015). The Park organization principally consists of 11 community bank divisions, a non-bank subsidiary and two specialty finance companies. Park’s Ohio-based 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, Farmers Bank Division, United Bank, N.A. Division, Second National Bank Division, Security National Bank Division, Unity National Bank Division, and The Park National Bank of Southwest Ohio & Northern Kentucky Division; and Scope Leasing, Inc. (d.b.a. Scope Aircraft Finance). The Park organization also includes Guardian Financial Services Company (d.b.a. Guardian Finance Company) and SE Property Holdings, LLC.

Complete financial tables are listed below…

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 
Park cautions that any forward-looking statements contained in this 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: 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 current 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, including adverse impacts on demand for loan, deposit and other financial services, delinquencies, defaults and counterparty ability to meet credit and other obligations; changes in interest rates and prices may adversely impact 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; changes in consumer spending, borrowing and saving habits, whether due to changing business and economic conditions, legislative and regulatory initiatives, or other factors; 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; the nature, timing 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, accounting, banking, 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”), as well as future regulations which will be adopted by the relevant regulatory agencies, including the Consumer Financial Protection Bureau, to implement the Dodd-Frank Act’s provisions, the Budget Control Act of 2011, the American Taxpayer Relief Act of 2012 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; 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; 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; unfavorable resolution of legal proceedings or other claims and regulatory and other governmental examinations or other inquiries; the adequacy of our risk management program; 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, including as a result of cyber attacks; demand for loans in the respective market areas served by Park and our subsidiaries; 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, 2014. 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
Three months ended September 30, 2015, June 30, 2015, and September 30, 2014 
             
  2015 2015 2014   Percent change vs.
(in thousands, except share and per share data) 3rd QTR 2nd QTR 3rd QTR   2Q ’15 3Q ’14
INCOME STATEMENT:            
Net interest income $ 57,715   $ 56,515   $ 56,709     2.1 % 1.8 %
Provision for loan losses 2,404   1,612   4,501     N.M.   N.M.  
Other income 20,191   19,191   19,396     5.2 % 4.1 %
Other expense 47,429   44,667   44,972     6.2 % 5.5 %
Income before income taxes $ 28,073   $ 29,427   $ 26,632     (4.6 )% 5.4 %
Income taxes 8,033   8,388   8,363     (4.2 )% (3.9 )%
Net income $ 20,040   $ 21,039   $ 18,269     (4.7 )% 9.7 %
                             
MARKET DATA:                            
Earnings per common share – basic (b) $ 1.30   $ 1.37   $ 1.19     (5.1 )% 9.2 %
Earnings per common share – diluted (b) 1.30   1.37   1.19     (5.1 )% 9.2 %
Cash dividends per common share 0.94   0.94   0.94     % %
Book value per common share at period end 46.66   45.93   44.57     1.6 % 4.7 %
Stock price per common share at period end 90.22   87.37   75.42     3.3 % 19.6 %
Market capitalization at period end 1,384,035   1,342,954   1,160,896     3.1 % 19.2 %
                             
Weighted average common shares – basic (a) 15,361,087   15,370,882   15,392,421     (0.1 )% (0.2 )%
Weighted average common shares – diluted (a) 15,401,808   15,407,881   15,413,664     % (0.1 )%
Common shares outstanding at period end 15,340,670   15,370,877   15,392,413     (0.2 )% (0.3 )%
                             
PERFORMANCE RATIOS: (annualized)                            
Return on average assets (a)(b) 1.07 % 1.16 % 1.05 %   (7.8 )% 1.9 %
Return on average equity (a)(b) 11.20 % 11.90 % 10.52 %   (5.9 )% 6.5 %
Yield on loans 4.65 % 4.68 % 4.80 %   (0.6 )% (3.1 )%
Yield on investments 2.39 % 2.49 % 2.54 %   (4.0 )% (5.9 )%
Yield on money markets 0.25 % 0.25 % 0.25 %   % %
Yield on earning assets 3.91 % 3.96 % 4.17 %   (1.3 )% (6.2 )%
Cost of interest bearing deposits 0.29 % 0.30 % 0.27 %   (3.3 )% 7.4 %
Cost of borrowings 2.39 % 2.46 % 2.58 %   (2.8 )% (7.4 )%
Cost of paying liabilities 0.70 % 0.72 % 0.79 %   (2.8 )% (11.4 )%
Net interest margin (g) 3.37 % 3.40 % 3.55 %   (0.9 )% (5.1 )%
Efficiency ratio (g) 60.71 % 58.87 % 58.93 %   3.1 % 3.0 %
                             
OTHER RATIOS (NON – GAAP):                            
Annualized return on average tangible assets (a)(b)(e) 1.08 % 1.17 % 1.06 %   (7.7 )% 1.9 %
Annualized return on average tangible equity (a)(b)(c) 12.47 % 13.25 % 11.75 %   (5.9 )% 6.1 %
Tangible book value per share (d) $ 41.95   $ 41.22   $ 39.87     1.8 % 5.2 %
             
N.M. – Not meaningful 
Note: Explanations (a) – (g) are included at the end of the financial highlights. 
             
             
             
PARK NATIONAL CORPORATION
Financial Highlights (continued)
Three months ended September 30, 2015, June 30, 2015, and September 30, 2014 
             
          Percent change vs.
BALANCE SHEET: September 30,
2015
June 30, 2015 September 30,
2014
  2Q ’15 3Q ’14
             
Investment securities $ 1,469,284   $ 1,550,103   $ 1,472,625     (5.2 )% (0.2 )%
Loans (h) 4,999,912   4,900,974   4,799,039     2.0 % 4.2 %
Allowance for loan losses 58,483   57,427   57,674     1.8 % 1.4 %
Goodwill 72,334   72,334   72,334     % %
Other real estate owned (OREO) 20,136   21,876   19,185     (8.0 )% 5.0 %
Total assets 7,300,340   7,309,569   7,011,255     (0.1 )% 4.1 %
Total deposits 5,454,982   5,512,366   5,129,004     (1.0 )% 6.4 %
Borrowings 1,059,904   1,018,680   1,137,653     4.0 % (6.8 )%
Shareholders’ equity 715,803   705,963   685,999     1.4 % 4.3 %
Tangible equity (d) 643,469   633,629   613,665     1.6 % 4.9 %
Nonperforming loans 109,638   113,795   119,393     (3.7 )% (8.2 )%
Nonperforming assets 129,774   135,671   160,563     (4.3 )% (19.2 )%
                             
ASSET QUALITY RATIOS:                            
Loans as a % of period end total assets 68.49 % 67.05 % 68.45 %   2.1 % 0.1 %
Nonperforming loans as a % of period end loans 2.19 % 2.32 % 2.49 %   (5.6 )% (12.0 )%
Nonperforming assets as a % of period end loans + OREO 2.59 % 2.76 % 3.33 %   (6.2 )% (22.2 )%
Allowance for loan losses as a % of period end loans 1.17 % 1.17 % 1.20 %   % (2.5 )%
Net loan charge-offs (recoveries) $ 1,348   $ (407 ) $ 4,738     N.M.   N.M.  
Annualized net loan charge-offs (recoveries) as a % of average loans (a) 0.11 % (0.03 )% 0.39 %   N.M.   N.M.  
                             
CAPITAL & LIQUIDITY:                            
Total equity / Period end total assets 9.81 % 9.66 % 9.78 %   1.6 % 0.3 %
Tangible equity (d) / Tangible assets (f) 8.90 % 8.76 % 8.84 %   1.6 % 0.7 %
Average equity / Average assets (a) 9.59 % 9.76 % 9.98 %   (1.7 )% (3.9 )%
Average equity / Average loans (a) 14.37 % 14.60 % 14.45 %   (1.6 )% (0.6 )%
Average loans / Average deposits (a) 88.61 % 88.80 % 95.04 %   (0.2 )% (6.8 )%
             
N.M. – Not meaningful
Note: Explanations (a) – (h) are included at the end of the financial highlights. 

PARK NATIONAL CORPORATION 
Financial Highlights 
Nine months ended September 30, 2015 and 2014 
               
(in thousands, except share and per share data)   2015   2014     Percent change
vs. 2014
INCOME STATEMENT:              
Net interest income   $ 169,765     $ 167,750       1.2 %
Provision for loan losses   5,648     1,016       N.M.  
Other income   58,255     55,715       4.6 %
Total other expense   137,816     136,992       0.6 %
Income before income taxes   $ 84,556     $ 85,457       (1.1 )%
Income taxes   24,433     25,801       (5.3 )%
Net income   $ 60,123     $ 59,656       0.8 %
                 
MARKET DATA:                
Earnings per common share – basic (b)   $ 3.91     $ 3.87       1.0 %
Earnings per common share – diluted (b)   3.90     3.87       0.8 %
Cash dividends per common share   2.82     2.82       %
                         
Weighted average common shares – basic (a)   15,370,380     15,395,320       (0.2 )%
Weighted average common shares – diluted (a)   15,411,511     15,413,625       %
                         
PERFORMANCE RATIOS: (Annualized)                        
Return on average assets (a)(b)   1.10 %   1.17 %     (6.0 )%
Return on average equity (a)(b)   11.35 %   11.82 %     (4.0 )%
Yield on loans   4.67 %   4.85 %     (3.7 )%
Yield on investments   2.48 %   2.60 %     (4.6 )%
Yield on earning assets   3.95 %   4.21 %     (6.2 )%
Cost of interest bearing deposits   0.30 %   0.28 %     7.1 %
Cost of borrowings   2.40 %   2.60 %     (7.7 )%
Cost of paying liabilities   0.72 %   0.81 %     (11.1 )%
Net interest margin (g)   3.39 %   3.58 %     (5.3 )%
Efficiency ratio (g)   60.29 %   61.12 %     (1.4 )%
                         
ASSET QUALITY RATIOS:                        
Net loan charge-offs   $ 1,517     $ 2,810       (46.0 )%
Annualized net loan charge-offs as a % of average loans (a)   0.04 %   0.08 %     (50.0 )%
                         
CAPITAL & LIQUIDITY:                        
Average stockholders’ equity / Average assets (a)   9.71 %   9.90 %     (1.9 )%
Average stockholders’ equity / Average loans (a)   14.53 %   14.40 %     0.9 %
Average loans / Average deposits (a)   89.23 %   94.58 %     (5.7 )%
                         
OTHER RATIOS (NON-GAAP):                        
Annualized return on average tangible assets (a)(b)(e)   1.11 %   1.18 %     (5.9 )%
Annualized return on average tangible equity (a)(b)(c)   12.64 %   13.24 %     (4.5 )%
               

PARK NATIONAL CORPORATION      
Financial Highlights (continued)            
             
(a) Averages are for the three months ended September 30, 2015, June 30, 2015 and September 30, 2014 and the nine months ended September 30, 2015 and September 30, 2014.
 
(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   NINE MONTHS ENDED
  September 30, 2015 June 30, 2015 September 30, 2014   September 30, 2015 September 30, 2014
AVERAGE SHAREHOLDERS’ EQUITY $ 710,128   $ 709,031   $ 689,068     $ 708,085   $ 674,789  
Less: Average goodwill 72,334   72,334   72,334     72,334   72,334  
AVERAGE TANGIBLE EQUITY $ 637,794   $ 636,697   $ 616,734     $ 635,751   $ 602,455  
             
(d) Tangible book value divided by common shares outstanding at period end. Tangible equity equals ending shareholders’ equity less goodwill, in each case at the end of the period.
             
RECONCILIATION OF SHAREHOLDERS’ EQUITY TO TANGIBLE EQUITY:    
  September 30, 2015 June 30, 2015 September 30, 2014      
SHAREHOLDERS’ EQUITY $ 715,803   $ 705,963   $ 685,999        
Less: Goodwill 72,334   72,334   72,334        
TANGIBLE EQUITY $ 643,469   $ 633,629   $ 613,665        
             
(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   NINE MONTHS ENDED
  September 30, 2015 June 30, 2015 September 30, 2014   September 30, 2015 September 30, 2014
AVERAGE ASSETS $ 7,405,178   $ 7,265,755   $ 6,901,110     $ 7,294,077   $ 6,813,257  
Less: Average goodwill 72,334   72,334   72,334     72,334   72,334  
AVERAGE TANGIBLE ASSETS $ 7,332,844   $ 7,193,421   $ 6,828,776     $ 7,221,743   $ 6,740,923  
             
(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:    
  September 30, 2015 June 30, 2015 September 30, 2014      
TOTAL ASSETS $ 7,300,340   $ 7,309,569   $ 7,011,255        
Less: Goodwill 72,334   72,334   72,334        
TANGIBLE ASSETS $ 7,228,006   $ 7,237,235   $ 6,938,921        
             
(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 35% tax rate. Additionally, net interest margin is calculated on a fully taxable equivalent basis.
             
RECONCILIATION OF FULLY TAXABLE EQUIVALENT NET INTEREST INCOME TO NET INTEREST INCOME      
  THREE MONTHS ENDED   NINE MONTHS ENDED
  September 30, 2015 June 30, 2015 September 30, 2014   September 30, 2015 September 30, 2014
Interest income $ 67,087   $ 65,804   $ 66,622     $ 197,909   $ 197,327  
Fully taxable equivalent adjustment 220   170   209     551   653  
Fully taxable equivalent interest income $ 67,307   $ 65,974   $ 66,831     $ 198,460   $ 197,980  
Interest expense 9,372   9,289   9,913     28,144   29,577  
Fully taxable equivalent net interest income $ 57,935   $ 56,685   $ 56,918     $ 170,316   $ 168,403  
             
(h) Includes $11.4 million, $9.2 million, and $28.6 million of loans held for sale as of September 30, 2015, June 30, 2015 and September 30, 2014, respectively.

                   
PARK NATIONAL CORPORATION
Consolidated Statements of Income
                   
    Three Months Ended   Nine Months Ended  
    Sept 30,   Sept 30,  
(in thousands, except share and per share data)   2015   2014   2015   2014  
                   
Interest income:                  
  Interest and fees on loans   $ 57,680     $ 57,492     $ 169,555     $ 169,249    
  Interest on:                  
  Obligations of U.S. Government, its agencies                  
  and other securities   9,175     9,011     27,677     27,758    
  Other interest income   232     119     677     320    
  Total interest income   67,087     66,622     197,909     197,327    
                   
Interest expense:                  
  Interest on deposits:                  
  Demand and savings deposits   614     440     1,656     1,232    
  Time deposits   2,508     2,136     7,672     6,547    
  Interest on borrowings   6,250     7,337     18,816     21,798    
  Total interest expense   9,372     9,913     28,144     29,577    
                   
  Net interest income   57,715     56,709     169,765     167,750    
                   
Provision for loan losses   2,404     4,501     5,648     1,016    
                   
  Net interest income after provision for loan losses   55,311     52,208     164,117     166,734    
                   
Other income   20,191     19,396     58,255     55,715    
                   
Other expense   47,429     44,972     137,816     136,992    
                   
  Income before income taxes   28,073     26,632     84,556     85,457    
                   
Income taxes   8,033     8,363     24,433     25,801    
                   
  Net income   $ 20,040     $ 18,269     $ 60,123     $ 59,656    
                   
Per Common Share:                  
  Net income  – basic   $ 1.30     $ 1.19     $ 3.91     $ 3.87    
  Net income  – diluted   $ 1.30     $ 1.19     $ 3.90     $ 3.87    
                   
  Weighted average shares – basic   15,361,087     15,392,421     15,370,380     15,395,320    
  Weighted average shares – diluted   15,401,808     15,413,664     15,411,511     15,413,625    
                   
  Cash Dividends Declared   $ 0.94     $ 0.94     $ 2.82     $ 2.82    
               

 
PARK NATIONAL CORPORATION
Consolidated Balance Sheets
     
(in thousands, except share data) September 30, 2015 December 31, 2014
     
Assets    
     
Cash and due from banks $ 102,928   $ 133,511  
Money market instruments 279,327   104,188  
Investment securities 1,469,284   1,500,788  
Loans 4,999,912   4,829,682  
Allowance for loan losses (58,483 ) (54,352 )
Loans, net 4,941,429   4,775,330  
Bank premises and equipment, net 59,581   55,479  
Goodwill 72,334   72,334  
Other real estate owned 20,136   22,605  
Other assets 355,321   336,964  
Total assets $ 7,300,340   $ 7,001,199  
     
Liabilities and Shareholders’ Equity    
     
Deposits:    
Noninterest bearing $ 1,288,750   $ 1,269,296  
Interest bearing 4,166,232   3,858,704  
Total deposits 5,454,982   5,128,000  
Borrowings 1,059,904   1,108,582  
Other liabilities 69,651   68,076  
Total liabilities $ 6,584,537   $ 6,304,658  
     
     
Shareholders’ Equity:    
Preferred shares (200,000 shares authorized; no shares outstanding at September 30, 2015 and December 31, 2014) $   $  
Common shares (No par value; 20,000,000 shares authorized in 2015 and 2014; 16,150,859 shares issued at September 30, 2015 and 16,150,888 shares issued at December 31, 2014) 303,805   303,104  
Accumulated other comprehensive loss, net of taxes (7,429 ) (13,608 )
Retained earnings 501,145   484,484  
Treasury shares (810,189 shares at September 30, 2015 and 758,489 shares at December 31, 2014) (81,718 ) (77,439 )
Total shareholders’ equity $ 715,803   $ 696,541  
     
Total liabilities and shareholders’ equity $ 7,300,340   $ 7,001,199  

       
PARK NATIONAL CORPORATION 
Consolidated Average Balance Sheets 
           
  Three Months Ended   Nine Months Ended
  September 30,   September 30,
(in thousands) 2015 2014   2015 2014
           
Assets          
           
Cash and due from banks $ 113,708   $ 110,023     $ 117,617   $ 110,120  
Money market instruments 362,420   185,899     355,240   168,066  
Investment securities 1,528,404   1,396,880     1,500,275   1,407,734  
Loans 4,942,024   4,768,253     4,872,191   4,685,235  
Allowance for loan losses (57,798 ) (57,949 )   (56,383 ) (58,969 )
Loans, net 4,884,226   4,710,304     4,815,808   4,626,266  
Bank premises and equipment, net 59,386   55,133     57,985   55,465  
Goodwill and other intangibles 72,334   72,334     72,334   72,334  
Other real estate owned 20,970   22,340     22,310   28,406  
Other assets 363,730   348,197     352,508   344,866  
Total assets $ 7,405,178   $ 6,901,110     $ 7,294,077   $ 6,813,257  
           
           
Liabilities and Shareholders’ Equity          
           
Deposits:          
Noninterest bearing $ 1,302,987   $ 1,170,280     $ 1,290,383   $ 1,173,091  
Interest bearing 4,274,375   3,846,846     4,169,895   3,780,717  
Total deposits 5,577,362   5,017,126     5,460,278   4,953,808  
Borrowings 1,037,158   1,130,133     1,049,041   1,122,926  
Other liabilities 80,530   64,783     76,673   61,734  
Total liabilities $ 6,695,050   $ 6,212,042     $ 6,585,992   $ 6,138,468  
           
Shareholders’ Equity:          
Preferred shares $   $     $   $  
Common shares 303,631   302,870     303,392   302,762  
Accumulated other comprehensive loss, net of taxes (12,136 ) (11,967 )   (9,154 ) (18,922 )
Retained earnings 498,670   475,778     493,117   468,350  
Treasury shares (80,037 ) (77,613 )   (79,270 ) (77,401 )
Total shareholders’ equity $ 710,128   $ 689,068     $ 708,085   $ 674,789  
           
Total liabilities and shareholders’ equity $ 7,405,178   $ 6,901,110     $ 7,294,077   $ 6,813,257  

 
PARK NATIONAL CORPORATION
Consolidated Statements of Income – Linked Quarters
           
  2015 2015 2015 2014 2014
(in thousands, except per share data) 3rd QTR 2nd QTR 1st QTR 4th QTR 3rd QTR
           
Interest income:          
Interest and fees on loans $ 57,680   $ 56,463   $ 55,412   $ 58,395   $ 57,492  
Interest on:          
Obligations of U.S. Government, its agencies and other securities 9,175   9,113   9,389   9,223   9,011  
Other interest income 232   228   217   198   119  
Total interest income 67,087   65,804   65,018   67,816   66,622  
           
Interest expense:          
Interest on deposits:          
Demand and savings deposits 614   556   486   445   440  
Time deposits 2,508   2,542   2,622   2,776   2,136  
Interest on borrowings 6,250   6,191   6,375   7,301   7,337  
Total interest expense 9,372   9,289   9,483   10,522   9,913  
           
Net interest income 57,715   56,515   55,535   57,294   56,709  
           
Provision for (recovery of) loan losses 2,404   1,612   1,632   (8,349 ) 4,501  
           
Net interest income after provision for (recovery of) loan losses 55,311   54,903   53,903   65,643   52,208  
           
Other income 20,191   19,191   18,873   19,834   19,396  
           
Other expense 47,429   44,667   45,720   50,518   44,972  
           
Income before income taxes 28,073   29,427   27,056   34,959   26,632  
           
Income taxes 8,033   8,388   8,012   10,658   8,363  
           
Net income $ 20,040   $ 21,039   $ 19,044   $ 24,301   $ 18,269  
           
Per Common Share:          
Net income – basic $ 1.30   $ 1.37   $ 1.24   $ 1.58   $ 1.19  
Net income – diluted $ 1.30   $ 1.37   $ 1.23   $ 1.58   $ 1.19  

 
PARK NATIONAL CORPORATION
Detail of other income and other expense – Linked Quarters
           
  2015 2015 2015 2014 2014
(in thousands) 3rd QTR 2nd QTR 1st QTR 4th QTR 3rd QTR
           
Other income:          
Income from fiduciary activities $ 4,933   $ 5,210   $ 4,912   $ 5,050   $ 4,734  
Service charges on deposits 3,909   3,684   3,381   3,651   4,171  
Other service income 3,251   3,025   2,301   3,564   2,450  
Checkcard fee income 3,643   3,665   3,351   3,433   3,431  
Bank owned life insurance income 1,574   1,086   1,878   1,153   1,420  
OREO valuation adjustments (718 ) (251 ) (304 ) (380 ) (935 )
Gain on the sale of OREO, net 243   513   673   45   2,149  
Gain on commercial loans held for sale     756   1,867    
Loss on sale of investments       (1,175 )  
Miscellaneous 3,356   2,259   1,925   2,626   1,976  
Total other income $ 20,191   $ 19,191   $ 18,873   $ 19,834   $ 19,396  
           
Other expense:          
Salaries $ 21,692   $ 20,995   $ 20,982   $ 21,552   $ 20,515  
Employee benefits 6,721   4,729   5,685   2,973   5,728  
Occupancy expense 2,469   2,381   2,579   2,378   2,339  
Furniture and equipment expense 3,044   2,831   2,862   2,709   2,870  
Data processing fees 1,383   1,197   1,267   1,196   1,281  
Professional fees and services 5,424   5,583   4,694   8,195   6,934  
Marketing 1,058   937   1,013   1,160   1,087  
Insurance 1,399   1,362   1,461   1,413   1,396  
Communication 1,245   1,233   1,331   1,328   1,304  
Miscellaneous 2,994   3,419   3,846   7,614   1,518  
Total other expense $ 47,429   $ 44,667   $ 45,720   $ 50,518   $ 44,972  

PARK NATIONAL CORPORATION
Asset Quality Information
                   
        Year ended December 31,
(in thousands, except ratios) September 30, 2015 June 30, 2015 March 31, 2015 2014   2013 2012   2011
                   
Allowance for loan losses:                  
Allowance for loan losses, beginning of period $ 57,427   $ 55,408   $ 54,352   $ 59,468     $ 55,537   $ 68,444     $ 143,575  
Transfer of loans at fair value                 (219 )
Transfer of allowance to held for sale                 (13,100 )
Charge-offs 3,716   3,027   3,418   24,780   (B) 19,153   61,268   (A) 133,882  
Recoveries 2,368   3,434   2,842   26,997     19,669   12,942     8,798  
Net charge-offs (recoveries) 1,348   (407 ) 576   (2,217 )   (516 ) 48,326     125,084  
Provision for (recovery of) loan losses 2,404   1,612   1,632   (7,333 )   3,415   35,419     63,272  
Allowance for loan losses, end of period $ 58,483   $ 57,427   $ 55,408   $ 54,352     $ 59,468   $ 55,537     $ 68,444  
(A) Year ended December 31, 2012 included the full charge-off of the Vision Bank ALLL of $12.1 million to bring the retained Vision Bank loan portfolio to fair value prior to the merger of Vision Bank (as constituted following the transaction with Centennial Bank and Home BancShares, Inc.) with and into SEPH, the non-bank subsidiary of Park, on February 16, 2012.
(B) 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 $ 58,483   $ 57,427   $ 55,408   $ 54,352     $ 59,468   $ 55,537     $ 68,444  
Specific reserves 5,738   6,597   5,064   3,660     10,451   8,276     15,935  
General reserves $ 52,745   $ 50,830   $ 50,344   $ 50,692     $ 49,017   $ 47,261     $ 52,509  
                   
Total loans $ 4,999,912   $ 4,900,974   $ 4,830,830   $ 4,829,682     $ 4,620,505   $ 4,450,322     $ 4,317,099  
Impaired commercial loans 69,188   70,553   70,461   73,676     112,304   137,238     187,074  
Total loans less impaired commercial loans $ 4,930,724   $ 4,830,421   $ 4,760,369   $ 4,756,006     $ 4,508,201   $ 4,313,084     $ 4,130,025  
                   
                   
Asset Quality Ratios:                  
Net charge-offs (recoveries) as a % of average loans 0.11 % (0.03 )% 0.05 % (0.05 )%   (0.01 )% 1.10 %   2.65 %
Allowance for loan losses as a % of period end loans 1.17 % 1.17 % 1.15 % 1.13 %   1.29 % 1.25 %   1.59 %
General reserves as a % of total loans less impaired commercial loans 1.07 % 1.05 % 1.06 % 1.07 %   1.09 % 1.10 %   1.27 %
                                               
Nonperforming Assets – Park National Corporation:                                              
Nonaccrual loans $ 90,995   $ 95,739   $ 95,873   $ 100,393     $ 135,216   $ 155,536     $ 195,106  
Accruing troubled debt restructuring 17,131   16,520   16,802   16,254     18,747   29,800     28,607  
Loans past due 90 days or more 1,512   1,536   1,629   2,641     1,677   2,970     3,489  
Total nonperforming loans $ 109,638   $ 113,795   $ 114,304   $ 119,288     $ 155,640   $ 188,306     $ 227,202  
Other real estate owned – Park National Bank 7,797   8,774   10,223   10,687     11,412   14,715     13,240  
Other real estate owned – SEPH 12,339   13,102   16,114   11,918     23,224   21,003     29,032  
Other real estate owned – Vision Bank                  
Total nonperforming assets $ 129,774   $ 135,671   $ 140,641   $ 141,893     $ 190,276   $ 224,024     $ 269,474  
Percentage of nonaccrual loans to period end loans 1.82 % 1.95 % 1.98 % 2.08 %   2.93 % 3.49 %   4.52 %
Percentage of nonperforming loans to period end loans 2.19 % 2.32 % 2.37 % 2.47 %   3.37 % 4.23 %   5.26 %
Percentage of nonperforming assets to period end loans 2.60 % 2.77 % 2.91 % 2.94 %   4.12 % 5.03 %   6.24 %
Percentage of nonperforming assets to period end total assets 1.78 % 1.86 % 1.92 % 2.03 %   2.87 % 3.37 %   3.86 %
                   
                   
PARK NATIONAL CORPORATION
Asset Quality Information (continued)
                   
        Year ended December 31,
(in thousands, except ratios) September 30, 2015 June 30, 2015 March 31, 2015 2014   2013 2012   2011
                   
Nonperforming Assets – Park National Bank and Guardian:                
Nonaccrual loans $ 76,387   $ 80,470   $ 77,387   $ 77,477     $ 99,108   $ 100,244     $ 96,113  
Accruing troubled debt restructuring 17,036   16,423   16,706   16,157     18,747   29,800     26,342  
Loans past due 90 days or more 1,512   1,536   1,629   2,641     1,677   2,970     3,367  
Total nonperforming loans $ 94,935   $ 98,429   $ 95,722   $ 96,275     $ 119,532   $ 133,014     $ 125,822  
Other real estate owned – Park National Bank 7,797   8,774   10,223   10,687     11,412   14,715     13,240  
Total nonperforming assets $ 102,732   $ 107,203   $ 105,945   $ 106,962     $ 130,944   $ 147,729     $ 139,062  
Percentage of nonaccrual loans to period end loans 1.53 % 1.65 % 1.61 % 1.61 %   2.16 % 2.28 %   2.29 %
Percentage of nonperforming loans to period end loans 1.90 % 2.02 % 1.99 % 2.00 %   2.61 % 3.03 %   3.00 %
Percentage of nonperforming assets to period end loans 2.06 % 2.19 % 2.20 % 2.23 %   2.86 % 3.36 %   3.32 %
Percentage of nonperforming assets to period end total assets 1.42 % 1.48 % 1.47 % 1.55 %   2.01 % 2.27 %   2.21 %
                                               
Nonperforming Assets – SEPH/Vision Bank (retained portfolio as of September 30, 2015, June 30, 2015, March 31, 2015, and December 31, 2014, 2013, 2012, and 2011):                                              
Nonaccrual loans $ 14,608   $ 15,269   $ 18,486   $ 22,916     $ 36,108   $ 55,292     $ 98,993  
Accruing troubled debt restructuring 95   97   96   97           2,265  
Loans past due 90 days or more                 122  
Total nonperforming loans $ 14,703   $ 15,366   $ 18,582   $ 23,013     $ 36,108   $ 55,292     $ 101,380  
Other real estate owned – Vision Bank                  
Other real estate owned – SEPH 12,339   13,102   16,114   11,918     23,224   21,003     29,032  
Total nonperforming assets $ 27,042   $ 28,468   $ 34,696   $ 34,931     $ 59,332   $ 76,295     $ 130,412  
Percentage of nonaccrual loans to period end loans   N.M.     N.M.     N.M.     N.M.       N.M.     N.M.       N.M.  
Percentage of nonperforming loans to period end loans   N.M.     N.M.     N.M.     N.M.       N.M.     N.M.       N.M.  
Percentage of nonperforming assets to period end loans   N.M.     N.M.     N.M.     N.M.       N.M.     N.M.       N.M.  
Percentage of nonperforming assets to period end total assets   N.M.     N.M.     N.M.     N.M.       N.M.     N.M.       N.M.  
                   
New nonaccrual loan information – Park National Corporation                
Nonaccrual loans, beginning of period $ 95,739   $ 95,873   $ 100,393   $ 135,216     $ 155,536   $ 195,106     $ 289,268  
New nonaccrual loans 9,231   23,974   13,844   70,059     67,398   83,204     124,158  
Resolved nonaccrual loans 13,975   24,108   18,232   86,384     87,718   122,774     218,320  
Sale of nonaccrual loans held for sale     132   18,498            
Nonaccrual loans, end of period $ 90,995   $ 95,739   $ 95,873   $ 100,393     $ 135,216   $ 155,536     $ 195,106  
                   
New nonaccrual loan information – Ohio – based operations                
Nonaccrual loans, beginning of period $ 80,470   $ 77,387   $ 77,477   $ 99,108     $ 100,244   $ 96,113     $ 117,815  
New nonaccrual loans – Ohio-based operations 9,231   23,974   13,844   69,389     66,197   68,960     78,316  
Resolved nonaccrual loans 13,314   20,891   13,934   78,288     67,333   64,829     100,018  
Sale of nonaccrual loans held for sale       12,732            
Nonaccrual loans, end of period $ 76,387   $ 80,470   $ 77,387   $ 77,477     $ 99,108   $ 100,244     $ 96,113  
                   
New nonaccrual loan information – SEPH/Vision Bank
Nonaccrual loans, beginning of period $ 15,269   $ 18,486   $ 22,916   $ 36,108     $ 55,292   $ 98,993     $ 171,453  
New nonaccrual loans – SEPH/Vision Bank       670     1,201   14,243     45,842  
Resolved nonaccrual loans 661   3,217   4,298   8,096     20,385   57,944     118,302  
Sale of nonaccrual loans held for sale     132   5,766            
Nonaccrual loans, end of period $ 14,608   $ 15,269   $ 18,486   $ 22,916     $ 36,108   $ 55,292     $ 98,993  
                   
                   
                   
PARK NATIONAL CORPORATION
Asset Quality Information (continued)
        Year ended December 31,
(in thousands, except ratios) September 30, 2015 June 30, 2015 March 31, 2015 2014   2013 2012   2011
                   
Impaired Commercial Loan Portfolio Information (period end):                
Unpaid principal balance $ 99,172   $ 100,577   $ 96,235   $ 106,156     $ 175,576   $ 242,345     $ 290,908  
Prior charge-offs 29,984   30,024   25,774   32,480     63,272   105,107     103,834  
Remaining principal balance 69,188   70,553   70,461   73,676     112,304   137,238     187,074  
Specific reserves 5,738   6,597   5,064   3,660     10,451   8,276     15,935  
Book value, after specific reserve $ 63,450   $ 63,956   $ 65,397   $ 70,016     $ 101,853   $ 128,962     $ 171,139  
                   
           

 

CONTACT: Media contact: Bethany Lewis, 740.349.0421, blewis@parknationalbank.com

Investor contact: Brady Burt, 740.322.6844, bburt@parknationalbank.com

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