Park National Corporation reports third quarter 2017 financial results

NEWARK, Ohio, Oct. 23, 2017 (GLOBE NEWSWIRE) — Park National Corporation (Park) (NYSE AMERICAN:PRK) today announced financial results for the third quarter and first nine months of 2017 (three and nine months ended September 30, 2017), including continued growth in deposit accounts, commercial loans and consumer loans. Park’s board of directors also declared a quarterly cash dividend of $0.94 per common share, payable on December 8, 2017 to common shareholders of record as of November 17, 2017.

Park’s third quarter of 2017 net income was $22.1 million, a 16.2 percent rise from $19.0 million in the second quarter 2017 and a 9.1 percent increase from the first quarter of 2017 net income results of $20.3 million.

Compared to the third quarter of 2016, Park’s third quarter net income this year is a 19.4 percent decrease from $27.4 million. Third quarter net income per diluted common share was $1.44, compared to $1.78 in the third quarter of 2016. Net income for the first nine months of 2017 was $61.4 million, a 7.1 percent decrease from $66.1 million for the same period in 2016. Net income per diluted common share for the first nine months of 2017 was $3.99, compared to $4.29 for the first nine months of 2016. Financial results in 2016 were influenced by significant recoveries from loans related to Park’s Southeast Property Holdings subsidiary and an overall reduction of the allowance for loan losses.

Park’s community-banking subsidiary, The Park National Bank, reported net income of $21.3 million for the third quarter of 2017, compared to $25.5 million for the third quarter of 2016. The bank’s third quarter 2017 net income was a 5.6 percent rise from $20.2 million in the second quarter 2017 and a 0.9 percent decline from the first quarter of 2017 net income results of $21.5 million. Net income for the first nine months of 2017 was $62.9 million, compared to $68.3 million for the same period in 2016. The bank’s total assets were $7.8 billion at September 30, 2017, rising from $7.4 billion at December 31, 2016.

In the first nine months of 2017, the bank grew consumer loans by $116.2 million (13.8 percent annualized) and commercial loans by $21.9 million (1.1 percent annualized), offset by a reduction in home equity line of credit balances of $5.8 million (3.6 percent annualized) and residential loan balances of $33.7 million (3.7 percent annualized). The bank’s total loans were $5.33 billion at September 30, 2017, a $97.5 million (2.5 percent annualized) increase over $5.23 billion at December 31, 2016.

Headquartered in Newark, Ohio, Park National Corporation had $7.8 billion in total assets (as of September 30, 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…

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

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 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, 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 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; 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, including as a result of cyber attacks; 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; 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 September 30, 2017, June 30, 2017, and September 30, 2016          
             
  2017 2017 2016   Percent change vs.
(in thousands, except share and per share data) 3rd QTR 2nd QTR 3rd QTR   2Q ’17 3Q ’16
INCOME STATEMENT:            
Net interest income $ 61,551     $ 59,778     $ 58,533     3.0 %   5.2 %
Provision for loan losses 3,283     4,581     (7,366 )   N.M.     N.M.  
Other income 22,089     19,251     20,535     14.7 %   7.6 %
Other expense 49,811     48,106     46,756     3.5 %   6.5 %
Income before income taxes $ 30,546     $ 26,342     $ 39,678     16.0 %   (23.0 ) %
Income taxes 8,434     7,310     12,229     15.4 %   (31.0 ) %
Net income $ 22,112     $ 19,032     $ 27,449     16.2 %   (19.4 ) %
             
MARKET DATA:            
Earnings per common share – basic (b) $ 1.45     $ 1.24     $ 1.79     16.9 %   (19.0 )%
Earnings per common share – diluted (b) 1.44     1.24     1.78     16.1 %   (19.1 )%
Cash dividends per common share 0.94     0.94     0.94     %   %
Book value per common share at period end 49.71     49.18     48.99     1.1 %   1.5 %
Market price per common share at period end 107.99     103.72     96.00     4.1 %   12.5 %
Market capitalization at period end 1,649,770     1,586,613     1,471,755     4.0 %   12.1 %
             
Weighted average common shares – basic (a) 15,287,974     15,297,085     15,330,791     (0.1 )%   (0.3 )%
Weighted average common shares – diluted (a) 15,351,590     15,398,865     15,399,707     (0.3 )%   (0.3 )%
Common shares outstanding at period end 15,277,061     15,297,080     15,330,781     (0.1 )%   (0.4 )%
             
PERFORMANCE RATIOS: (annualized)            
Return on average assets (a)(b) 1.11 %   0.99 %   1.46 %   12.1 %   (24.0 ) %
Return on average shareholders’ equity (a)(b) 11.52 %   10.13 %   14.67 %   13.7 %   (21.5 ) %
Yield on loans 4.71 %   4.63 %   4.66 %   1.7 %   1.1 %
Yield on investment securities 2.48 %   2.44 %   2.25 %   1.6 %   10.2 %
Yield on money markets 1.28 %   1.05 %   0.52 %   21.9 %   146.2 %
Yield on earning assets 4.03 %   4.02 %   3.99 %   0.2 %   1.0 %
Cost of interest bearing deposits 0.48 %   0.44 %   0.32 %   9.1 %   50.0 %
Cost of borrowings 2.37 %   2.38 %   2.49 %   (0.4 ) %   (4.8 ) %
Cost of paying liabilities 0.83 %   0.80 %   0.74 %   3.8 %   12.2 %
Net interest margin (g) 3.40 %   3.42 %   3.42 %   (0.6 ) %   (0.6 ) %
Efficiency ratio (g) 58.65 %   59.97 %   58.67 %   (2.2 ) %   %
             
OTHER RATIOS (NON – GAAP):            
Annualized return on average tangible assets (a)(b)(e) 1.12 %   1.00 %   1.48 %   12.0 %   (24.3 )%
Annualized return on average tangible equity (a)(b)(c) 12.73 %   11.21 %   16.24 %   13.6 %   (21.6 )%
Tangible book value per share (d) $ 44.97     $ 44.45     $ 44.27     1.2 %   1.6 %
             
N.M. – Not meaningful              
Note: Explanations for footnotes (a) – (g) are included at the end of the financial highlights.            
             
             
             
             
             
PARK NATIONAL CORPORATION
Financial Highlights (continued)
Three months ended September 30, 2017, June 30, 2017, and September 30, 2016          
             
          Percent change vs.
BALANCE SHEET: September 30, 2017 June 30, 2017 September 30, 2016   2Q ’17 3Q ’16
             
Investment securities $ 1,571,038     $ 1,579,934     $ 1,478,255     (0.6 ) %   6.3 %
Loans 5,365,877     5,365,437     5,187,004     %   3.4 %
Allowance for loan losses 55,232     53,822     53,562     2.6 %   3.1 %
Goodwill 72,334     72,334     72,334     %   %
Other real estate owned (OREO) 14,366     14,881     14,941     (3.5 ) %   (3.8 ) %
Total assets 7,862,695     7,832,092     7,364,092     0.4 %   6.8 %
Total deposits 5,974,322     5,961,576     5,519,659     0.2 %   8.2 %
Borrowings 1,056,888     1,046,176     1,005,937     1.0 %   5.1 %
Total shareholders’ equity 759,367     752,248     751,063     0.9 %   1.1 %
Tangible equity (d) 687,033     679,914     678,729     1.0 %   1.2 %
Nonperforming loans 111,949     110,904     116,864     0.9 %   (4.2 ) %
Nonperforming assets 126,315     125,785     131,805     0.4 %   (4.2 ) %
             
ASSET QUALITY RATIOS:            
Loans as a % of period end total assets 68.24 %   68.51 %   70.44 %   (0.4 ) %   (3.1 ) %
Nonperforming loans as a % of period end loans 2.09 %   2.07 %   2.25 %   1.0 %   (7.1 ) %
Nonperforming assets as a % of period end loans + OREO 2.35 %   2.34 %   2.53 %   0.4 %   (7.1 ) %
Allowance for loan losses as a % of period end loans 1.03 %   1.00 %   1.03 %   3.0 %   %
Net loan charge-offs (recoveries) $ 1,873     $ 681     $ (2,229 )   N.M.     N.M.  
Annualized net loan charge-offs (recoveries) as a % of average loans (a) 0.14 %   0.05 %   (0.17 ) %   N.M.     N.M.  
             
CAPITAL & LIQUIDITY:            
Total shareholders’ equity / Period end total assets 9.66 %   9.60 %   10.20 %   0.6 %   (5.3 ) %
Tangible equity (d) / Tangible assets (f) 8.82 %   8.76 %   9.31 %   0.7 %   (5.3 ) %
Average shareholders’ equity / Average assets (a) 9.60 %   9.74 %   9.97 %   (1.4 ) %   (3.7 ) %
Average shareholders’ equity / Average loans (a) 14.27 %   14.14 %   14.49 %   0.9 %   (1.5 ) %
Average loans / Average deposits (a) 88.37 %   90.21 %   91.14 %   (2.0 ) %   (3.0 ) %
             

PARK NATIONAL CORPORATION
Financial Highlights
Nine months ended September 30, 2017 and 2016      
         
  2017
  2016    
(in thousands, except share and per share data) YTD
  YTD       Percent change
vs. YTD
INCOME STATEMENT:        
Net interest income $ 180,281     $ 175,837     2.5 %
Provision for (recovery of) loan losses 8,740     (3,819 )   N.M.  
Other income 58,847     56,660     3.9 %
Other expense 145,379     141,961     2.4 %
Income before income taxes $ 85,009     $ 94,355     (9.9 )%
Income taxes 23,598     28,222     (16.4 )%
Net income $ 61,411     $ 66,133     (7.1 )%
         
MARKET DATA:        
Earnings per common share – basic (b) $ 4.01     $ 4.31     (7.0 )%
Earnings per common share – diluted (b) 3.99     4.29     (7.0 )%
Cash dividends per common share 2.82     2.82     %
         
Weighted average common shares – basic (a) 15,299,039     15,330,802     (0.2 )%
Weighted average common shares – diluted (a) 15,394,199     15,401,825     %
         
PERFORMANCE RATIOS: (annualized)        
Return on average assets (a)(b) 1.06 %   1.19 %   (10.9 ) %
Return on average shareholders’ equity (a)(b) 10.90 %   12.04 %   (9.5 ) %
Yield on loans 4.66 %   4.70 %   (0.9 ) %
Yield on investment securities 2.45 %   2.31 %   6.1 %
Yield on earning assets 4.04 %   4.03 %   0.2 %
Cost of interest bearing deposits 0.43 %   0.32 %   34.4 %
Cost of borrowings 2.37 %   2.44 %   (2.9 ) %
Cost of paying liabilities 0.80 %   0.74 %   8.1 %
Net interest margin (g) 3.44 %   3.47 %   (0.9 ) %
Efficiency ratio (g) 59.91 %   60.64 %   (1.2 ) %
         
ASSET QUALITY RATIOS:        
Net loan charge-offs (recoveries) 4,132     (887 )    N.M.  
Annualized net loan charge-offs (recoveries) as a % of average loans (a) 0.10 %   (0.02 )%   N.M.  
         
CAPITAL & LIQUIDITY:        
Average shareholders’ equity / Average assets (a) 9.72 %   9.89 %   (1.7 ) %
Average shareholders’ equity / Average loans (a) 14.17 %   14.42 %   (1.7 ) %
Average loans / Average deposits (a) 90.29 %   91.21 %   (1.0 ) %
         
OTHER RATIOS (NON – GAAP):        
Annualized return on average tangible assets (a)(b)(e) 1.07 %   1.20 %   (10.8 )%
Annualized return on average tangible equity (a)(b)(c) 12.06 %   13.35 %   (9.7 )%
         
N.M. – Not meaningful        
Note: Explanations for footnotes (a) – (g) are included at the end of the financial highlights      .        
         

PARK NATIONAL CORPORATION      
Financial Highlights (continued)            
             
(a) Averages are for the three months ended September 30, 2017, June 30, 2017 and September 30, 2016 or for the nine months ended September 30,
2017 and September 30, 2016, as appropriate.
     
       
(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,
2017
June 30,
2017
September 30,
2016
    September 30, 2017 September 30, 2016
AVERAGE SHAREHOLDERS’ EQUITY $ 761,448   $ 753,373   $ 744,620   $ 753,017   $ 733,937  
Less: Average goodwill 72,334   72,334   72,334   72,334   72,334  
AVERAGE TANGIBLE EQUITY $ 689,114   $ 681,039   $ 672,286   $ 680,683   $ 661,603  
             
(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:      
  September 30,
2017
June 30,
2017
September 30,
2016
     
TOTAL SHAREHOLDERS’ EQUITY $ 759,367   $ 752,248   $ 751,063      
Less: Goodwill 72,334   72,334   72,334      
TANGIBLE EQUITY $ 687,033   $ 679,914   $ 678,729      
             
(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,
2017
June 30,
2017
September 30,
2016
  September 30, 2017 September 30, 2016
AVERAGE ASSETS $ 7,928,766   $ 7,736,884   $ 7,468,439   $ 7,743,132   $ 7,419,342  
Less: Average goodwill 72,334   72,334   72,334   72,334   72,334  
AVERAGE TANGIBLE ASSETS $ 7,856,432   $ 7,664,550   $ 7,396,105   $ 7,670,798   $ 7,347,008  
             
(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,
2017
June 30,
2017
September 30,
2016
     
TOTAL ASSETS $ 7,862,695   $ 7,832,092   $ 7,364,092      
Less: Goodwill 72,334   72,334   72,334      
TANGIBLE ASSETS $ 7,790,361   $ 7,759,758   $ 7,291,758      
             
(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 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   NINE MONTHS ENDED
  September 30,
2017
June 30,
2017
September 30,
2016
  September 30, 2017 September 30, 2016
Interest income $ 73,224   $ 70,476   $ 68,242   $ 212,455   $ 204,561  
Fully taxable equivalent adjustment 1,291   1,185   619   3,540   1,618  
Fully taxable equivalent interest income $ 74,515   $ 71,661   $ 68,861   $ 215,995   $ 206,179  
Interest expense 11,673   10,698   9,709   32,174   28,724  
Fully taxable equivalent net interest income $ 62,842   $ 60,963   $ 59,152   $ 183,821   $ 177,455  
             

PARK NATIONAL CORPORATION
Consolidated Statements of Income
                 
    Three Months Ended   Nine Months Ended
              September 30,       September 30,
(in thousands, except share and per share data)   2017     2016   2017     2016
                 
Interest income:                
Interest and fees on loans   $ 63,110     $ 59,893     $ 184,240     $ 178,346  
Interest on:                
Obligations of U.S. Government, its agencies and other securities   6,757     7,339     20,787     23,718  
Obligations of states and political subdivisions   1,974     689     5,098     1,653  
Other interest income   1,383     321     2,330     844  
  Total interest income   73,224     68,242     212,455     204,561  
                 
Interest expense:                
Interest on deposits:                
Demand and savings deposits   2,882     1,094     6,787     2,851  
Time deposits   2,521     2,352     7,139     7,128  
Interest on borrowings   6,270     6,263     18,248     18,745  
  Total interest expense   11,673     9,709     32,174     28,724  
                 
  Net interest income   61,551     58,533     180,281     175,837  
                 
Provision for (recovery of) loan losses   3,283     (7,366 )   8,740     (3,819 )
                 
  Net interest income after provision for (recovery of) loan losses        58,268     65,899     171,541     179,656  
                 
Other income   22,089     20,535     58,847     56,660  
                 
Other expense   49,811     46,756     145,379     141,961  
                 
  Income before income taxes   30,546     39,678     85,009     94,355  
                 
Income taxes   8,434     12,229     23,598     28,222  
                 
  Net income   $ 22,112     $ 27,449     $ 61,411     $ 66,133  
                 
Per Common Share:                
  Net income  – basic   $ 1.45     $ 1.79     $ 4.01     $ 4.31  
  Net income  – diluted   $ 1.44     $ 1.78     $ 3.99     $ 4.29  
                 
  Weighted average shares – basic   15,287,974     15,330,791     15,299,039     15,330,802  
  Weighted average shares – diluted   15,351,590     15,399,707     15,394,199     15,401,825  
                 
  Cash Dividends Declared   $ 0.94     $ 0.94     $ 2.82     $ 2.82  
                 

PARK NATIONAL CORPORATION
Consolidated Balance Sheets
     
(in thousands, except share data) September 30, 2017
  December 31, 2016
     
Assets    
     
Cash and due from banks $ 118,884     $ 122,811  
Money market instruments 331,468     23,635  
Investment securities 1,571,038     1,579,783  
Loans 5,365,877     5,271,857  
Allowance for loan losses (55,232 )   (50,624 )
Loans, net 5,310,645     5,221,233  
Bank premises and equipment, net 56,179     57,971  
Goodwill 72,334     72,334  
Other real estate owned 14,366     13,926  
Other assets 387,781     375,893  
Total assets $ 7,862,695     $ 7,467,586  
     
Liabilities and Shareholders’ Equity    
     
Deposits:    
Noninterest bearing $ 1,568,177     $ 1,523,417  
Interest bearing 4,406,145     3,998,539  
Total deposits 5,974,322     5,521,956  
Borrowings 1,056,888     1,134,076  
Other liabilities 72,118     69,314  
Total liabilities $ 7,103,328     $ 6,725,346  
     
     
Shareholders’ Equity:    
Preferred shares (200,000 shares authorized; no shares outstanding at September 30, 2017 and December 31, 2016)

$     $  
Common shares (No par value; 20,000,000 shares authorized in 2016 and 2015; 16,150,769 shares issued at September 30, 2017 
and 16,150,807 shares issued at December 31, 2016)
307,143     305,826  
Accumulated other comprehensive loss, net of taxes (13,005 )   (17,745 )
Retained earnings 553,434     535,631  
Treasury shares (873,708 shares at September 30, 2017 and 810,089 shares at December 31, 2016) (88,205 )   (81,472 )
Total shareholders’ equity $ 759,367     $ 742,240  
     
Total liabilities and shareholders’ equity $ 7,862,695     $ 7,467,586  

       
PARK NATIONAL CORPORATION
Consolidated Average Balance Sheets
             
    Three Months Ended   Nine Months Ended
    September 30,       September 30,
(in thousands)   2017
  2016         2017   2016
                             
Assets            
             
Cash and due from banks   $ 114,313     $ 116,069     $ 114,060       $ 115,588  
Money market instruments   427,157     247,475     271,778     220,461  
Investment securities   1,569,237     1,507,484     1,563,020     1,535,235  
Loans   5,337,206     5,139,781     5,314,501     5,091,148  
Allowance for loan losses   (53,750 )   (59,470 )   (51,775 )   (57,835 )
Loans, net   5,283,456     5,080,311     5,262,726     5,033,313  
Bank premises and equipment, net   56,497     58,890     57,100     59,252  
Goodwill   72,334     72,334     72,334     72,334  
Other real estate owned   14,522     17,374     14,245     17,700  
Other assets   391,250     368,502     387,869     365,459  
Total assets   $ 7,928,766       $ 7,468,439     $ 7,743,132     $ 7,419,342  
             
             
Liabilities and Shareholders’ Equity            
             
Deposits:            
Noninterest bearing   $ 1,534,395     $ 1,401,201     $ 1,522,802     $ 1,386,518  
Interest bearing   4,505,040     4,238,301     4,363,065     4,195,328  
Total deposits   6,039,435     5,639,502     5,885,867     5,581,846  
Borrowings   1,050,524     1,001,761     1,029,627     1,024,175  
Other liabilities   77,359     82,556     74,621     79,384  
Total liabilities   $ 7,167,318     $ 6,723,819     $ 6,990,115     $ 6,685,405  
             
Shareholders’ Equity:            
Preferred shares   $     $     $     $  
Common shares   306,496     304,885     306,101     304,449  
Accumulated other comprehensive loss, net of taxes      (11,905 )   (350 )   (14,298 )   (4,584 )
Retained earnings   553,746     522,558     547,127     516,545  
Treasury shares   (86,889 )   (82,473 )   (85,913 )   (82,473 )
Total shareholders’ equity   $ 761,448     $ 744,620     $ 753,017     $ 733,937  
             
Total liabilities and shareholders’ equity     $ 7,928,766     $ 7,468,439     $ 7,743,132     $ 7,419,342  

 
PARK NATIONAL CORPORATION
Consolidated Statements of Income – Linked Quarters
           
  2017
  2017   2017   2016   2016
(in thousands, except per share data) 3rd QTR
  2nd QTR   1st QTR   4th QTR   3rd QTR
           
Interest income:          
Interest and fees on loans $ 63,110   $ 61,222   $ 59,908   $ 63,633     $ 59,893  
Interest on:          
Obligations of U.S. Government, its agencies and other securities 6,757   6,892   7,138   6,909     7,339  
Obligations of states and political subdivisions 1,974   1,664   1,460   979     689  
Other interest income 1,383   698   249   176     321  
Total interest income 73,224   70,476   68,755   71,697     68,242  
           
Interest expense:          
Interest on deposits:          
Demand and savings deposits 2,882   2,291   1,614   1,228     1,094  
Time deposits 2,521   2,457   2,161   2,209     2,352  
Interest on borrowings 6,270   5,950   6,028   6,011     6,263  
Total interest expense 11,673   10,698   9,803   9,448     9,709  
           
Net interest income 61,551   59,778   58,952   62,249     58,533  
           
Provision for (recovery of) loan losses 3,283   4,581   876   (1,282 )   (7,366 )
           
Net interest income after provision for (recovery of) loan losses  58,268   55,197   58,076   63,531     65,899  
           
Other income 22,089   19,251   17,507   22,071     20,535  
           
Other expense 49,811   48,106   47,462   57,062     46,756  
           
Income before income taxes 30,546   26,342   28,121   28,540     39,678  
           
Income taxes 8,434   7,310   7,854   8,538     12,229  
           
Net income $ 22,112   $ 19,032   $ 20,267   $ 20,002     $ 27,449  
           
Per Common Share:          
Net income – basic $ 1.45   $ 1.24   $ 1.32   $ 1.30     $ 1.79  
Net income – diluted $ 1.44   $ 1.24   $ 1.31   $ 1.30     $ 1.78  

 
PARK NATIONAL CORPORATION
Detail of other income and other expense – Linked Quarters
               
      2017
  2017   2017   2016   2016
(in thousands)                             3rd QTR
    2nd QTR     1st QTR     4th QTR     3rd QTR
               
Other income:              
Income from fiduciary activities     $ 5,932     $ 6,025     $ 5,514     $ 5,534     $ 5,315  
Service charges on deposits     3,216     3,156     3,139     3,461     3,800  
Other service income     3,357     3,447     2,804     4,854     3,640  
Checkcard fee income     3,974       4,040     3,761     3,877     3,780  
Bank owned life insurance income             1,573     1,114     1,103     1,054     1,038  
ATM fees     605     561     542     534     581  
OREO valuation adjustments     (22 )   (272 )   (73 )   (29 )   (233 )
Gain on the sale of OREO, net     51     53     100     244     783  
Miscellaneous     3,403     1,127     617     2,542     1,831  
Total other income     $ 22,089     $ 19,251     $ 17,507     $ 22,071     $ 20,535  
               
Other expense:              
Salaries     $ 23,302     $ 23,001     $ 22,717     $ 22,140     $ 22,084  
Employee benefits     4,656     4,919     5,181     4,522     5,073  
Occupancy expense     2,559     2,565     2,635     2,546     2,506  
Furniture and equipment expense     3,868     3,640     3,618     3,470     3,437  
Data processing fees     1,919     1,676     1,965     1,568     1,450  
Professional fees and services     6,100     6,018     4,829     8,757     6,356  
Marketing     1,122     1,084     1,056     1,277     1,062  
Insurance     1,499     1,517     1,570     1,553     1,423  
Communication     1,110     1,155     1,333     1,257     1,154  
State tax expense     912     943     1,063     941     895  
Debt prepayment penalty                 5,554      
Miscellaneous     2,764     1,588     1,495     3,477     1,316  
Total other expense                 $ 49,811     $ 48,106     $ 47,462     $ 57,062     $ 46,756  

PARK NATIONAL CORPORATION
Asset Quality Information
                 
        Year ended December 31,
(in thousands, except ratios)   September 30, 2017   June 30, 2017  March 31, 2017 2016 2015 2014   2013
                 
Allowance for loan losses:                
Allowance for loan losses, beginning of period $ 53,822   $ 49,922     $ 50,624    $ 56,494   $ 54,352   $ 59,468     $ 55,537  
Charge-offs 4,377   3,046   3,708   20,799   14,290   24,780   (A) 19,153  
Recoveries 2,504   2,365   2,130   20,030   11,442   26,997     19,669  
Net charge-offs (recoveries) 1,873   681   1,578   769   2,848   (2,217 )   (516 )
Provision for (recovery of) loan losses 3,283   4,581   876   (5,101 ) 4,990   (7,333 )   3,415  
Allowance for loan losses, end of period $ 55,232   $ 53,822     $ 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 $ 55,232   $ 53,822     $ 49,922    $ 50,624   $ 56,494   $ 54,352     $ 59,468  
Specific reserves 5,102   4,145   1,091   548   4,191   3,660     10,451  
General reserves $ 50,130   $ 49,677     $ 48,831    $ 50,076   $ 52,303   $ 50,692     $ 49,017  
                 
Total loans $ 5,365,877   $ 5,365,437     $ 5,313,641    $ 5,271,857   $ 5,068,085   $ 4,829,682     $ 4,620,505  
Impaired commercial loans 73,550   73,095   70,099   70,415   80,599   73,676     112,304  
Total loans less impaired commercial loans $ 5,292,327   $ 5,292,342     $ 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 (annualized) 0.14 % 0.05 % 0.12 % 0.02 % 0.06 % (0.05 ) %   (0.01 ) %
Allowance for loan losses as a % of period end loans 1.03 % 1.00 % 0.94 % 0.96 % 1.11 % 1.13 %   1.29 %
General reserves as a % of total loans less impaired commercial loans 0.95 % 0.94 % 0.93 % 0.96 % 1.05 % 1.07 %   1.09 %
                 
Nonperforming Assets – Park National Corporation:              
Nonaccrual loans $ 90,568   $ 90,378     $ 84,294    $ 87,822   $ 95,887   $ 100,393     $ 135,216  
Accruing troubled debt restructuring 19,401   18,631   21,153   18,175   24,979   16,254     18,747  
Loans past due 90 days or more 1,980   1,895   1,837   2,086   1,921   2,641     1,677  
Total nonperforming loans $ 111,949   $ 110,904     $ 107,284    $ 108,083   $ 122,787   $ 119,288     $ 155,640  
Other real estate owned – Park National Bank 6,701   7,108   5,792   6,025   7,456   10,687     11,412  
Other real estate owned – SEPH 7,665   7,773   7,901   7,901   11,195   11,918     23,224  
Total nonperforming assets $ 126,315   $ 125,785     $ 120,977    $ 122,009   $ 141,438   $ 141,893     $ 190,276  
Percentage of nonaccrual loans to period end loans 1.69 % 1.68 % 1.59 % 1.67 % 1.89 % 2.08 %   2.93 %
Percentage of nonperforming loans to period end loans 2.09 % 2.07 % 2.02 % 2.05 % 2.42 % 2.47 %   3.37 %
Percentage of nonperforming assets to period end loans 2.35 % 2.34 % 2.28 % 2.31 % 2.79 % 2.94 %   4.12 %
Percentage of nonperforming assets to period end total assets 1.61 % 1.61 % 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) September 30, 2017 June 30, 2017   March 31, 2017  2016 2015 2014   2013
                 
Nonperforming Assets – Park National Bank and Guardian:              
Nonaccrual loans $ 80,424   $ 79,688     $ 72,780    $ 76,084   $ 81,468   $ 77,477     $ 99,108  
Accruing troubled debt restructuring 19,401   18,631   21,153   18,175   24,979   16,157     18,747  
Loans past due 90 days or more 1,980   1,895   1,837   2,086   1,921   2,641     1,677  
Total nonperforming loans $ 101,805   $ 100,214     $ 95,770    $ 96,345   $ 108,368   $ 96,275     $ 119,532  
Other real estate owned – Park National Bank 6,701   7,108   5,792   6,025   7,456   10,687     11,412  
Total nonperforming assets $ 108,506   $ 107,322     $ 101,562    $ 102,370   $ 115,824   $ 106,962     $ 130,944  
Percentage of nonaccrual loans to period end loans 1.50 % 1.49 % 1.37 % 1.45 % 1.61 1.61 %   2.16 %
Percentage of nonperforming loans to period end loans 1.90 % 1.87 % 1.81 % 1.83 % 2.14 % 2.00 %   2.61 %
Percentage of nonperforming assets to period end loans 2.03 % 2.00 % 1.92 % 1.95 % 2.29 % 2.23 %   2.86 %
Percentage of nonperforming assets to period end total assets 1.39 % 1.38 % 1.32 % 1.38 % 1.60 % 1.55 %   2.01 %
                 
Nonperforming Assets – SEPH/Vision Bank (retained portfolio):
Nonaccrual loans $ 10,144   $ 10,690     $ 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 $ 10,144   $ 10,690     $ 11,514    $ 11,738   $ 14,419   $ 23,013     $ 36,108  
Other real estate owned – SEPH 7,665   7,773   7,901   7,901   11,195   11,918     23,224  
Total nonperforming assets $ 17,809   $ 18,463     $ 19,415    $ 19,639   $ 25,614   $ 34,931     $ 59,332  
                 
New nonaccrual loan information – Park National Corporation              
Nonaccrual loans, beginning of period $ 90,378   $ 84,294     $ 87,822    $ 95,887   $ 100,393   $ 135,216     $ 155,536  
New nonaccrual loans 15,323   21,562   11,733   74,786   80,791   70,059     67,398  
Resolved nonaccrual loans 15,133   15,478   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 $ 90,568   $ 90,378     $ 84,294    $ 87,822   $ 95,887   $ 100,393     $ 135,216  
                 
New nonaccrual loan information – Park National Bank and Guardian            
Nonaccrual loans, beginning of period $ 79,688   $ 72,780     $ 76,084    $ 81,468   $ 77,477   $ 99,108     $ 100,244  
New nonaccrual loans – Ohio-based operations 15,323   21,562   11,733   74,663   80,791   69,389     66,197  
Resolved nonaccrual loans 14,587   14,654   15,037   80,047   76,800   78,288     67,333  
Sale of nonaccrual loans held for sale           12,732      
Nonaccrual loans, end of period $ 80,424   $ 79,688     $ 72,780    $ 76,084   $ 81,468   $ 77,477     $ 99,108  
                 
New nonaccrual loan information – SEPH/Vision Bank
Nonaccrual loans, beginning of period $ 10,690   $ 11,514     $ 11,738    $ 14,419   $ 22,916   $ 36,108     $ 55,292  
New nonaccrual loans – SEPH/Vision Bank       123     670     1,201  
Resolved nonaccrual loans 546   824   224   2,804   8,365   8,096     20,385  
Sale of nonaccrual loans held for sale         132   5,766      
Nonaccrual loans, end of period $ 10,144   $ 10,690     $ 11,514    $ 11,738   $ 14,419   $ 22,916     $ 36,108  
                 
Impaired Commercial Loan Portfolio Information (period end):            
Unpaid principal balance $ 83,496   $ 82,225     $ 93,830    $ 95,358   $ 109,304   $ 106,156     $ 175,576  
Prior charge-offs 9,946   9,130   23,731   24,943   28,705   32,480     63,272  
Remaining principal balance 73,550   73,095   70,099   70,415   80,599   73,676     112,304  
Specific reserves 5,102   4,145   1,091   548   4,191   3,660     10,451  
Book value, after specific reserve $ 68,448   $ 68,950     $ 69,008    $ 69,867   $ 76,408   $ 70,016     $ 101,853