Park National Corporation reports first quarter 2017 financial results

NEWARK, Ohio, April 21, 2017 (GLOBE NEWSWIRE) — Park National Corporation (Park) (NYSE MKT:PRK) today announced financial results for the first quarter of 2017 (three months ended March 31, 2017). Park’s board of directors also declared a quarterly cash dividend of $0.94 per common share, payable on June 9, 2017 to common shareholders of record as of May 19, 2017.

Park reported $20.3 million in net income for the first quarter of 2017, an 8.5 percent increase from $18.7 million for the same period in 2016. Net income per diluted common share for the first quarter of 2017 was $1.31, compared to $1.21 in the first quarter of 2016.

Park’s community-banking subsidiary, The Park National Bank, reported net income of $21.5 million for the first quarter of 2017, compared to $21.7 million for the first quarter of 2016. The bank had total assets of $7.7 billion at March 31, 2017, rising from $7.4 billion at December 31, 2016.

In the first quarter of 2017, the bank grew consumer loans by $59.7 million (21.5 percent annualized). Total loans for the bank were $5.28 billion at March 31, 2017, a $42 million (3.2 percent annualized) increase over $5.23 billion at December 31, 2016.

About Park National Corporation:

Headquartered in Newark, Ohio, Park National Corporation had $7.7 billion in total assets (as of March 31, 2017). 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 news release or made by management of Park are provided to assist in the understanding of anticipated future financial performance. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance.  The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties.  Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements.  Risks and uncertainties that could cause actual results to differ materially include, without limitation: 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, including 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 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 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 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, bank products and services, 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 OCC, the FDIC, and the Federal Reserve Board, to implement the Dodd-Frank Act’s provisions, the Budget Control Act of 2011, the American Taxpayer Relief Act of 2012, the JOBS Act, the FAST Act and the Basel III regulatory capital reforms; the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board, the 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 new presidential administration and uncertainty or speculation pending the enactment of such changes; 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 United Kingdom’s exit from the European Union and its consequences; 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 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; fraud, scams and schemes of third parties; the impact of widespread natural and other disasters, pandemics, dislocations, 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; 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, 2016. Park does not undertake, and specifically disclaims any obligation, to publicly release the results of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement was made, or reflect the occurrence of unanticipated events, except to the extent required by law.

 
PARK NATIONAL CORPORATION
Financial Highlights
As of or for the three months ended March 31, 2017, December 31, 2016, and March 31, 2016
             
  2017 2016 2016   Percent change vs.
(in thousands, except share and per share data) 1st QTR 4th QTR 1st QTR   4Q ’16 1Q ’16
INCOME STATEMENT:            
Net interest income $ 58,952   $ 62,249   $ 59,819     (5.3 ) % (1.4 ) %
Provision for (recovery of) loan losses 876   (1,282 ) 910     N.M.   N.M.  
Other income 17,507   22,071   17,389     (20.7 ) % 0.7 %
Other expense 47,462   57,062   49,899     (16.8 ) % (4.9 ) %
Income before income taxes $ 28,121   $ 28,540   $ 26,399     (1.5 )% 6.5 %
Income taxes 7,854   8,538   7,713     (8.0 )% 1.8 %
Net income $ 20,267   $ 20,002   $ 18,686     1.3 % 8.5 %
             
MARKET DATA:            
Earnings per common share – basic (b) $ 1.32   $ 1.30   $ 1.22     1.5 % 8.2 %
Earnings per common share – diluted (b) 1.31   1.30   1.21     0.8 % 8.3 %
Cash dividends per common share 0.94   0.94   0.94     % %
Book value per common share at period end 48.64   48.38   47.60     0.5 % 2.2 %
Market price per common share at period end 105.20   119.66   90.00     (12.1 )% 16.9 %
Market capitalization at period end 1,609,254   1,835,670   1,379,773     (12.3 )% 16.6 %
             
Weighted average common shares – basic (a) 15,312,059   15,337,806   15,330,813     (0.2 )% (0.1 )%
Weighted average common shares – diluted (a) 15,432,769   15,415,132   15,406,508     0.1 % 0.2 %
Common shares outstanding at period end 15,297,087   15,340,718   15,330,807     (0.3 )% (0.2 )%
             
PERFORMANCE RATIOS: (annualized)            
Return on average assets (a)(b) 1.09 % 1.07 % 1.01 %   1.9 % 7.9 %
Return on average shareholders’ equity (a)(b) 11.05 % 10.62 % 10.38 %   4.0 % 6.5 %
Yield on loans 4.62 % 4.87 % 4.80 %   (5.1 ) % (3.8 ) %
Yield on investment securities 2.42 % 2.29 % 2.38 %   5.7 % 1.7 %
Yield on money markets 0.85 % 0.53 % 0.51 %   60.4 % 66.7 %
Yield on earning assets 4.06 % 4.23 % 4.11 %   (4.0 ) % (1.2 ) %
Cost of interest bearing deposits 0.36 % 0.34 % 0.31 %   5.9 % 16.1 %
Cost of borrowings 2.36 % 2.40 % 2.35 %   (1.7 ) % 0.4 %
Cost of paying liabilities 0.76 % 0.74 % 0.73 %   2.7 % 4.1 %
Net interest margin (g) 3.49 % 3.68 % 3.55 %   (5.2 ) % (1.7 ) %
Efficiency ratio (g) 61.22 % 67.04 % 64.26 %   (8.7 ) % (4.7 ) %
             
OTHER RATIOS (NON – GAAP):            
Annualized return on average tangible assets (a)(b)(e) 1.10 % 1.08 % 1.02 %   1.9 % 7.8 %
Annualized return on average tangible equity (a)(b)(c) 12.24 % 11.76 % 11.53 %   4.1 % 6.2 %
Tangible book value per share (d) $ 43.92   $ 43.67   $ 42.88     0.6 % 2.4 %
             
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 March 31, 2017, December 31, 2016, and March 31, 2016
             
          Percent change vs.
BALANCE SHEET:  March 31,
2017
 December 31,
2016
 March 31,
2016
  4Q ’16 1Q ’16
             
Investment securities $ 1,565,668   $ 1,579,783   $ 1,601,767     (0.9 ) % (2.3 ) %
Loans 5,313,641   5,271,857   5,062,185     0.8 % 5.0 %
Allowance for loan losses 49,922   50,624   56,948     (1.4 ) %   (12.3 ) %
Goodwill 72,334   72,334   72,334     % %
Other real estate owned (OREO) 13,693   13,926   17,745     (1.7 ) % (22.8 ) %
Total assets 7,744,690   7,467,586   7,428,185     3.7 % 4.3 %
Total deposits 5,920,560   5,521,956   5,606,790     7.2 % 5.6 %
Borrowings 1,010,703   1,134,076   1,004,279       (10.9 ) % 0.6 %
Total shareholders’ equity 744,122   742,240   729,701     0.3 % 2.0 %
Tangible equity (d) 671,788   669,906   657,367     0.3 % 2.2 %
Nonperforming loans 107,284   108,083   118,960     (0.7 ) % (9.8 ) %
Nonperforming assets 120,977   122,009   136,705     (0.8 ) % (11.5 ) %
             
ASSET QUALITY RATIOS:            
Loans as a % of period end total assets 68.61 % 70.60 % 68.15 %   (2.8 ) % 0.7 %
Nonperforming loans as a % of period end loans 2.02 % 2.05 % 2.35 %   (1.5 ) % (14.0 ) %
Nonperforming assets as a % of period end loans + OREO 2.27 % 2.31 % 2.69 %   (1.7 ) % (15.6 ) %
Allowance for loan losses as a % of period end loans 0.94 % 0.96 % 1.12 %   (2.1 ) % (16.1 ) %
Net loan charge-offs $ 1,578   $ 1,656   $ 456     N.M.   N.M.  
Annualized net loan charge-offs as a % of average loans (a)   0.12 % 0.13 % 0.04 %   N.M.   N.M.  
             
CAPITAL & LIQUIDITY:            
Total shareholders’ equity / Period end total assets 9.61 % 9.94 % 9.82 %   (3.3 ) % (2.1 ) %
Tangible equity (d) / Tangible assets (f) 8.76 % 9.06 % 8.94 %   (3.3 ) % (2.0 ) %
Average shareholders’ equity / Average assets (a) 9.84 % 10.11 % 9.78 %   (2.7 ) % 0.6 %
Average shareholders’ equity / Average loans (a) 14.10 % 14.36 % 14.34 %   (1.8 ) % (1.7 ) %
Average loans / Average deposits (a) 92.45 % 93.54 % 91.31 %   (1.2 ) % 1.2 %
             
N.M. – Not meaningful
Note: Explanations (a) – (h) are included at the end of the financial highlights. 
             

 
PARK NATIONAL CORPORATION
Financial Highlights (continued)      
       
(a) Averages are for the three months ended March 31, 2017, December 31, 2016 and March 31, 2016.
(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
  March 31, 2017 December 31, 2016 March 31, 2016
AVERAGE SHAREHOLDERS’ EQUITY $ 744,040   $ 749,053   $ 724,316  
Less: Average goodwill 72,334   72,334   72,334  
AVERAGE TANGIBLE EQUITY $ 671,706   $ 676,719   $ 651,982  
       
(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:
  March 31, 2017 December 31, 2016 March 31, 2016
TOTAL SHAREHOLDERS’ EQUITY $ 744,122   $ 742,240   $ 729,701  
Less: Goodwill 72,334   72,334   72,334  
TANGIBLE EQUITY $ 671,788   $ 669,906   $ 657,367  
       
(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
  March 31, 2017 December 31, 2016 March 31, 2016
AVERAGE ASSETS $ 7,559,691   $ 7,408,109   $ 7,405,345  
Less: Average goodwill 72,334   72,334   72,334  
AVERAGE TANGIBLE ASSETS $ 7,487,357   $ 7,335,775   $ 7,333,011  
       
(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:
  March 31, 2017 December 31, 2016 March 31, 2016
TOTAL ASSETS $ 7,744,690   $ 7,467,586   $ 7,428,185  
Less: Goodwill 72,334   72,334   72,334  
TANGIBLE ASSETS $ 7,672,356   $ 7,395,252   $ 7,355,851  
       
(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 by dividing fully taxable equivalent net interest income by average interest earning assets.
       
RECONCILIATION OF FULLY TAXABLE EQUIVALENT NET INTEREST INCOME TO NET INTEREST INCOME
  THREE MONTHS ENDED
  March 31, 2017 December 31, 2016 March 31, 2016
Interest income $ 68,755   $ 71,697   $ 69,308  
Fully taxable equivalent adjustment 1,072   799   444  
Fully taxable equivalent interest income $ 69,827   $ 72,496   $ 69,752  
Interest expense 9,803   9,448   9,489  
Fully taxable equivalent net interest income $ 60,024   $ 63,048   $ 60,263  
       

         
PARK NATIONAL CORPORATION
Consolidated Statements of Income
         
    Three Months Ended
    March 31,
(in thousands, except share and per share data)   2017   2016
         
Interest income:        
Interest and fees on loans   $ 59,908     $ 60,052  
Interest on:        
Obligations of U.S. Government, its agencies and other securities     7,138     8,609  
Obligations of states and political subdivisions   1,460     373  
Other interest income   249     274  
  Total interest income   68,755     69,308  
         
Interest expense:        
Interest on deposits:        
Demand and savings deposits   1,614     824  
Time deposits   2,161     2,387  
Interest on borrowings   6,028     6,278  
  Total interest expense   9,803     9,489  
         
     Net interest income   58,952     59,819  
         
Provision for loan losses   876     910  
         
     Net interest income after provision for loan losses     58,076     58,909  
         
Other income   17,507     17,389  
         
Other expense   47,462     49,899  
         
      Income before income taxes   28,121     26,399  
         
Income taxes   7,854     7,713  
         
     Net income   $ 20,267     $ 18,686  
         
Per Common Share:        
     Net income  – basic   $ 1.32     $ 1.22  
     Net income  – diluted   $ 1.31     $ 1.21  
         
     Weighted average shares – basic    15,312,059      15,330,813  
     Weighted average shares – diluted   15,432,769     15,406,508  
         
     Cash Dividends Declared   $ 0.94     $ 0.94  
         

 
PARK NATIONAL CORPORATION
Consolidated Balance Sheets
     
(in thousands, except share data)   March 31, 2017     December 31, 2016  
     
Assets    
     
Cash and due from banks $ 106,529   $ 122,811  
Money market instruments 285,243   23,635  
Investment securities 1,565,668   1,579,783  
Loans 5,313,641   5,271,857  
Allowance for loan losses (49,922 ) (50,624 )
Loans, net 5,263,719   5,221,233  
Bank premises and equipment, net 57,220   57,971  
Goodwill 72,334   72,334  
Other real estate owned 13,693   13,926  
Other assets 380,284   375,893  
Total assets $ 7,744,690   $ 7,467,586  
     
Liabilities and Shareholders’ Equity    
     
Deposits:    
Noninterest bearing $ 1,548,363   $ 1,523,417  
Interest bearing 4,372,197   3,998,539  
Total deposits 5,920,560   5,521,956  
Borrowings 1,010,703   1,134,076  
Other liabilities 69,305   69,314  
Total liabilities $ 7,000,568   $ 6,725,346  
     
     
Shareholders’ Equity:    
Preferred shares (200,000 shares authorized; no shares outstanding at March 31, 2017 and December 31, 2016) $   $  
Common shares (No par value; 20,000,000 shares authorized in 2016 and 2015; 16,150,795 shares issued at March 31, 2017 and 16,150,807 shares issued at December 31, 2016)   305,856   305,826  
Accumulated other comprehensive loss, net of taxes (16,723 ) (17,745 )
Retained earnings 541,241   535,631  
Treasury shares (853,708 shares at March 31, 2017 and 810,089 shares at December 31, 2016) (86,252 ) (81,472 )
Total shareholders’ equity $ 744,122   $ 742,240  
     
Total liabilities and shareholders’ equity $ 7,744,690   $ 7,467,586  
             

 
PARK NATIONAL CORPORATION
Consolidated Average Balance Sheets
     
  Three Months Ended
  March 31,
(in thousands) 2017 2016
     
Assets    
     
Cash and due from banks $ 119,608   $ 118,981  
Money market instruments 118,999   217,384  
Investment securities 1,565,977   1,562,194  
Loans 5,278,539   5,049,327  
Allowance for loan losses (50,843 ) (56,999 )
Loans, net 5,227,696   4,992,328  
Bank premises and equipment, net 57,870   59,577  
Goodwill 72,334   72,334  
Other real estate owned 13,744   18,303  
Other assets 383,463   364,244  
Total assets $ 7,559,691   $ 7,405,345  
     
     
Liabilities and Shareholders’ Equity    
     
Deposits:    
Noninterest bearing $ 1,499,355   $ 1,357,998  
Interest bearing 4,210,203   4,171,865  
Total deposits 5,709,558   5,529,863  
Borrowings 1,034,678   1,072,814  
Other liabilities 71,415   78,352  
Total liabilities $ 6,815,651   $ 6,681,029  
     
Shareholders’ Equity:    
Preferred shares $   $  
Common shares 305,908   303,986  
Accumulated other comprehensive loss, net of taxes (17,232 ) (8,446 )
Retained earnings 539,936   511,249  
Treasury shares (84,572 ) (82,473 )
Total shareholders’ equity $ 744,040   $ 724,316  
     
Total liabilities and shareholders’ equity $ 7,559,691   $ 7,405,345  
 
 
PARK NATIONAL CORPORATION
Consolidated Statements of Income – Linked Quarters
           
  2017 2016 2016 2016 2016
(in thousands, except per share data) 1st QTR 4th QTR 3rd QTR 2nd QTR 1st QTR
           
Interest income:          
Interest and fees on loans $  59,908   $  63,633   $ 59,893   $ 58,401   $ 60,052  
Interest on:          
Obligations of U.S. Government, its agencies and other securities 7,138   6,909   7,339   7,770   8,609  
Obligations of states and political subdivisions 1,460   979   689   591   373  
Other interest income 249   176   321   249   274  
Total interest income 68,755   71,697   68,242   67,011   69,308  
           
Interest expense:          
Interest on deposits:          
Demand and savings deposits 1,614   1,228   1,094   933   824  
Time deposits 2,161   2,209   2,352   2,389   2,387  
Interest on borrowings 6,028   6,011   6,263   6,204   6,278  
Total interest expense 9,803   9,448   9,709   9,526   9,489  
           
Net interest income 58,952   62,249   58,533   57,485   59,819  
           
Provision for (recovery of) loan losses 876   (1,282 ) (7,366 ) 2,637   910  
           
Net interest income after provision for (recovery of) loan losses   58,076   63,531   65,899   54,848   58,909  
           
Other income 17,507   22,071   20,535   18,736   17,389  
           
Other expense 47,462   57,062   46,756   45,306   49,899  
           
Income before income taxes 28,121   28,540   39,678   28,278   26,399  
           
Income taxes 7,854   8,538   12,229   8,280   7,713  
           
Net income $ 20,267   $ 20,002   $ 27,449   $ 19,998   $ 18,686  
           
Per Common Share:          
Net income – basic $ 1.32   $ 1.30   $ 1.79   $ 1.30   $ 1.22  
Net income – diluted $ 1.31   $ 1.30   $ 1.78   $ 1.30   $ 1.21  
                               

 
PARK NATIONAL CORPORATION
Detail of other income and other expense – Linked Quarters
           
  2017 2016 2016 2016 2016
(in thousands) 1st QTR 4th QTR 3rd QTR 2nd QTR 1st QTR
           
Other income:          
Income from fiduciary activities $ 5,514   $ 5,534   $ 5,315   $ 5,438   $ 5,113  
Service charges on deposits 3,139   3,461   3,800   3,575   3,423  
Other service income 2,804   4,854   3,640   3,351   2,574  
Checkcard fee income 3,761   3,877   3,780   3,868   3,532  
Bank owned life insurance income 1,103   1,054   1,038   1,049   1,197  
ATM fees 542   534   581   570   583  
OREO valuation adjustments (73 ) (29 ) (233 ) (221 ) (118 )
Gain on the sale of OREO, net 100   244   783   162   134  
Miscellaneous 617   2,542   1,831   944   951  
Total other income $ 17,507   $ 22,071   $ 20,535   $ 18,736   $ 17,389  
           
Other expense:          
Salaries $ 22,717   $ 22,140   $ 22,084   $ 21,256   $ 21,554  
Employee benefits 5,181   4,522   5,073   4,894   4,773  
Occupancy expense 2,635   2,546   2,506   2,639   2,548  
Furniture and equipment expense 3,618   3,470   3,437   3,416   3,443  
Data processing fees 1,965   1,568   1,450   1,373   1,217  
Professional fees and services 4,829   8,757   6,356   5,401   6,667  
Marketing 1,056   1,277   1,062   1,073   1,111  
Insurance 1,570   1,553   1,423   1,438   1,411  
Communication 1,333   1,257   1,154   1,353   1,221  
State tax expense 1,063   941   895   798   926  
Debt prepayment penalty   5,554        
Miscellaneous 1,495   3,477   1,316   1,665   5,028  
Total other expense $ 47,462   $ 57,062   $ 46,756   $ 45,306   $ 49,899  
                               

 
PARK NATIONAL CORPORATION
Asset Quality Information
             
    Year ended December 31,
(in thousands, except ratios)  March 31, 2017  2016 2015 2014   2013
             
Allowance for loan losses:            
Allowance for loan losses, beginning of period $ 50,624   $ 56,494   $ 54,352   $ 59,468     $ 55,537  
Charge-offs 3,708   20,799   14,290   24,780   (A) 19,153  
Recoveries 2,130   20,030   11,442   26,997     19,669  
Net charge-offs (recoveries) 1,578   769   2,848   (2,217 )   (516 )
Provision for (recovery of) loan losses 876   (5,101 ) 4,990   (7,333 )   3,415  
Allowance for loan losses, end of period $ 49,922   $ 50,624   $ 56,494   $ 54,352     $ 59,468  
(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 $ 49,922   $ 50,624   $ 56,494   $ 54,352     $ 59,468  
Specific reserves 1,091   548   4,191   3,660     10,451  
General reserves $ 48,831   $ 50,076   $ 52,303   $ 50,692     $ 49,017  
             
Total loans $ 5,313,641   $ 5,271,857   $ 5,068,085   $ 4,829,682     $ 4,620,505  
Impaired commercial loans 70,099   70,415   80,599   73,676     112,304  
Total loans less impaired commercial loans $ 5,243,542   $ 5,201,442   $ 4,987,486   $ 4,756,006     $ 4,508,201  
             
             
Asset Quality Ratios:            
Net charge-offs (recoveries) as a % of average loans 0.12 % 0.02 % 0.06 % (0.05 ) %   (0.01 ) %
Allowance for loan losses as a % of period end loans 0.94 % 0.96 % 1.11 % 1.13 %   1.29 %
General reserves as a % of total loans less impaired commercial loans 0.93 % 0.96 % 1.05 % 1.07 %   1.09 %
             
Nonperforming Assets – Park National Corporation:            
Nonaccrual loans $ 84,294   $ 87,822   $ 95,887   $ 100,393     $ 135,216  
Accruing troubled debt restructuring 21,153   18,175   24,979   16,254     18,747  
Loans past due 90 days or more 1,837   2,086   1,921   2,641     1,677  
Total nonperforming loans $ 107,284   $ 108,083   $ 122,787   $ 119,288     $ 155,640  
Other real estate owned – Park National Bank 5,792   6,025   7,456   10,687     11,412  
Other real estate owned – SEPH 7,901   7,901   11,195   11,918     23,224  
Total nonperforming assets $ 120,977   $ 122,009   $ 141,438   $ 141,893     $ 190,276  
Percentage of nonaccrual loans to period end loans 1.59 % 1.67 % 1.89 % 2.08 %   2.93 %
Percentage of nonperforming loans to period end loans 2.02 % 2.05 % 2.42 % 2.47 %   3.37 %
Percentage of nonperforming assets to period end loans 2.28 % 2.31 % 2.79 % 2.94 %   4.12 %
Percentage of nonperforming assets to period end total assets 1.56 % 1.63 % 1.93 % 2.03 %   2.87 %
             
             
PARK NATIONAL CORPORATION
Asset Quality Information (continued)
             
    Year ended December 31,
(in thousands, except ratios) March 31, 2017 2016 2015 2014   2013
             
Nonperforming Assets – Park National Bank and Guardian:            
Nonaccrual loans $ 72,780   $ 76,084   $ 81,468   $ 77,477     $ 99,108  
Accruing troubled debt restructuring 21,153   18,175   24,979   16,157     18,747  
Loans past due 90 days or more 1,837   2,086   1,921   2,641     1,677  
Total nonperforming loans $ 95,770   $ 96,345   $ 108,368   $ 96,275     $ 119,532  
Other real estate owned – Park National Bank 5,792   6,025   7,456   10,687     11,412  
Total nonperforming assets $ 101,562   $ 102,370   $ 115,824   $ 106,962     $ 130,944  
Percentage of nonaccrual loans to period end loans 1.37 % 1.45 % 1.61 % 1.61 %   2.16 %
Percentage of nonperforming loans to period end loans 1.81 % 1.83 % 2.14 % 2.00 %   2.61 %
Percentage of nonperforming assets to period end loans 1.92 % 1.95 % 2.29 % 2.23 %   2.86 %
Percentage of nonperforming assets to period end total assets 1.32 % 1.38 % 1.60 % 1.55 %   2.01 %
             
Nonperforming Assets – SEPH/Vision Bank (retained portfolio):
Nonaccrual loans $ 11,514   $ 11,738   $ 14,419   $ 22,916     $ 36,108  
Accruing troubled debt restructuring       97      
Loans past due 90 days or more            
Total nonperforming loans $ 11,514   $ 11,738   $ 14,419   $ 23,013     $ 36,108  
Other real estate owned – SEPH 7,901   7,901   11,195   11,918     23,224  
Total nonperforming assets $ 19,415   $ 19,639   $ 25,614   $ 34,931     $ 59,332  
             
New nonaccrual loan information – Park National Corporation            
Nonaccrual loans, beginning of period $ 87,822   $ 95,887   $ 100,393   $ 135,216     $ 155,536  
New nonaccrual loans 11,733   74,786   80,791   70,059     67,398  
Resolved nonaccrual loans 15,261   82,851   85,165   86,384     87,718  
Sale of nonaccrual loans held for sale     132   18,498      
Nonaccrual loans, end of period $ 84,294   $ 87,822   $ 95,887   $ 100,393     $ 135,216  
             
New nonaccrual loan information – Park National Bank and Guardian              
Nonaccrual loans, beginning of period $ 76,084   $ 81,468   $ 77,477   $ 99,108     $ 100,244  
New nonaccrual loans – Ohio-based operations 11,733   74,663   80,791   69,389     66,197  
Resolved nonaccrual loans 15,037   80,047   76,800   78,288     67,333  
Sale of nonaccrual loans held for sale       12,732      
Nonaccrual loans, end of period $ 72,780   $ 76,084   $ 81,468   $ 77,477     $ 99,108  
             
New nonaccrual loan information – SEPH/Vision Bank
Nonaccrual loans, beginning of period $ 11,738   $ 14,419   $ 22,916   $ 36,108     $ 55,292  
New nonaccrual loans – SEPH/Vision Bank   123     670     1,201  
Resolved nonaccrual loans 224   2,804   8,365   8,096     20,385  
Sale of nonaccrual loans held for sale     132   5,766      
Nonaccrual loans, end of period $ 11,514   $ 11,738   $ 14,419   $ 22,916     $ 36,108  
             
Impaired Commercial Loan Portfolio Information (period end):            
Unpaid principal balance $ 93,830   $ 95,358   $ 109,304   $ 106,156     $ 175,576  
Prior charge-offs 23,731   24,943   28,705   32,480     63,272  
Remaining principal balance 70,099   70,415   80,599   73,676     112,304  
Specific reserves 1,091   548   4,191   3,660     10,451  
Book value, after specific reserve $ 69,008   $ 69,867   $ 76,408   $ 70,016     $ 101,853  
             

 

CONTACT: Media contact: Bethany Lewis, 740.349.0421, blewis@parknationalbank.com
Investor contact: Brady Burt, 740.322.6844, bburt@parknationalbank.com
Park National Corporation
50 N. Third Street, Newark, Ohio 43055
www.parknationalcorp.com

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