Park National Corporation reports 2020 financial results

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  • PRK

Loan activity generated income growth and supported community outreach

NEWARK, Ohio, Jan. 25, 2021 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE American: PRK) today reported financial results for the fourth quarter and full year of 2020 (three and twelve months ended December 31, 2020). The board of directors increased Park’s quarterly cash dividend, declaring it as $1.03 per common share. The board also declared a special cash dividend of $0.20 per common share, payable on March 10, 2021 to common shareholders of record as of February 19, 2021.

Park’s net income for the fourth quarter of 2020 was $45.2 million, an 88.8 percent increase from $23.9 million for the fourth quarter of 2019. Fourth quarter 2020 net income per diluted common share was $2.75, compared to $1.45 in the fourth quarter of 2019. Park's net income for the full year of 2020 was $127.9 million, a 24.6 percent increase from $102.7 million for the full year of 2019. Net income per diluted common share was $7.80 for 2020, compared to $6.29 for 2019.

“Our lending services throughout the year were a main driver in our overall performance. Our bankers mobilized to serve in new ways, delivering prompt advice and service to families and businesses who were struggling due to the pandemic or rushing to take advantage of opportunities,” said Park President Matthew Miller. “We’re proud of our lending teams’ outstanding response to the surge of home loan activity and demand for U.S. PPP loans; and we’re deeply grateful to all our associates who showed extraordinary dedication to caring for customers and each other every day in 2020.”

Park's community-banking subsidiary, The Park National Bank, reported net income of $34.2 million for the fourth quarter of 2020, a 28.6 percent increase compared to $26.6 million for the same period of 2019. The bank reported net income of $123.7 million for the full year of 2020, compared to $113.6 million for the full year of 2019.

“Park National bankers’ reliability and flexibility were never more important than in 2020,” Park Chairman and Chief Executive Officer David Trautman said. “In a year filled with odd and often uncomfortable circumstances, we grew relationships with our customers and communities by responding to their needs in consistent, compassionate, and creative ways.”

In 2020, Park National Corporation:

  • Donated $4 million dollars to local organizations like shelters, theaters, support agencies, youth teams, and clubs.

  • Helped over 8,000 families purchase a new home or refinance their current one to put themselves in a better financial situation.

  • Helped small businesses maintain their workforces with the preservation of over 65,000 jobs through the Paycheck Protection Program.

  • Rapidly approved vehicle loans for 42,518 families who needed more space or more recreational time with the family.

  • Guided local business owners in sustaining their retirement plans that support over 24,000 employees – including many individuals saving for the first time in 2020.

  • Offered video chat sessions for senior citizens on topics like fraud awareness, online banking, and ways to stay socially connected from home.

  • Donated $600,000 to school programs, supporting educators whose response during these challenging times was an inspiration.

  • Paid over $3 million to bank employees regardless if they could be at work, and offered bonus pay to Park’s frontline employees.

Headquartered in Newark, Ohio, Park National Corporation has $9.3 billion in total assets (as of December 31, 2020). Park's banking operations are conducted through its subsidiary The Park National Bank. Other Park subsidiaries are Scope Leasing, Inc. (d.b.a. Scope Aircraft Finance), Guardian Financial Services Company (d.b.a. Guardian Finance Company) and SE Property Holdings, LLC.

Complete financial tables are listed below.

Category: Earnings

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:

  • the ever-changing effects of the novel coronavirus (COVID-19) pandemic - - the duration, extent and severity of which are impossible to predict, including the possibility of further resurgence in the spread of COVID-19 - - on economies (local, national and international) and markets, and on our customers, counterparties, employees and third-party service providers, as well as the effects of various responses of governmental and nongovernmental authorities to the COVID-19 pandemic, including public health actions directed toward the containment of the COVID-19 pandemic (such as quarantines, shut downs and other restrictions on travel and commercial, social or other activities), the development, availability and effectiveness of vaccines, and the implementation of fiscal stimulus packages;

  • the impact of future governmental and regulatory actions upon our participation in and execution of government programs related to the COVID-19 pandemic;

  • Park's ability to execute our business plan successfully and within the expected timeframe as well as our ability to manage strategic initiatives in light of the impact of the COVID-19 pandemic and the various responses to the COVID-19 pandemic;

  • general economic and financial market conditions, specifically in the real estate markets and the credit markets, either nationally or in the states in which Park and our subsidiaries do business, may experience a weaker recovery than anticipated, in addition to the continuing impact of the COVID-19 pandemic on our customers’ operations and financial condition, either of which may result in adverse impacts on the demand for loan, deposit and other financial services, delinquencies, defaults and counterparties' inability to meet credit and other obligations and the possible impairment of collectability of loans;

  • factors that can impact the performance of our loan portfolio, including real estate values and liquidity in our primary market areas, the financial health of our commercial borrowers and the success of construction projects that we finance, including any loans acquired in acquisition transactions;

  • the effect of monetary and other fiscal policies (including the impact of money supply and interest rate policies of the Federal Reserve Board) as well as disruption in the liquidity and functioning of U.S. financial markets, as a result of the COVID-19 pandemic and government policies implemented in response thereto, may adversely impact prepayment penalty income, mortgage banking income, income from fiduciary activities, the value of securities, deposits and other financial instruments, in addition to the loan demand and the performance of our loan portfolio, and the interest rate sensitivity of our consolidated balance sheet as well as reduce interest margins;

  • changes in consumer spending, borrowing and saving habits, whether due to changes in retail distribution strategies, consumer preferences and behavior, changes in business and economic conditions (including as a result of the COVID-19 pandemic and reactions thereto), legislative and regulatory initiatives (including those undertaken in response to the COVID-19 pandemic), or other factors may be different than anticipated;

  • changes in unemployment levels in the states in which Park and our subsidiaries do business may be different than anticipated due to the continuing impact of the COVID-19 pandemic;

  • changes in customers', suppliers', and other counterparties' performance and creditworthiness may be different than anticipated due to the continuing impact of the COVID-19 pandemic;

  • the adequacy of our internal controls and risk management program in the event of changes in the market, economic, operational (including those which may result from more of our associates working remotely), asset/liability repricing, legal, compliance, strategic, cybersecurity, liquidity, credit and interest rate risks associated with Park's business;

  • competitive pressures among financial services organizations could increase significantly, including product and pricing pressures (which could in turn impact our credit spreads), changes to third-party relationships and revenues, changes in the manner of providing services, customer acquisition and retention pressures, and our ability to attract, develop and retain qualified banking professionals;

  • uncertainty regarding the nature, timing, cost and effect of changes in banking regulations or other regulatory or legislative requirements affecting the respective businesses of Park and our subsidiaries, including major reform of the regulatory oversight structure of the financial services industry and changes in laws and regulations concerning taxes, FDIC insurance premium levels, pensions, bankruptcy, consumer protection, rent regulation and housing, financial accounting and reporting, environmental protection, insurance, bank products and services, bank and bank holding company capital and liquidity standards, fiduciary standards, securities and other aspects of the financial services industry, specifically the reforms provided for in the Coronavirus Aid, Relief and Economic Security (CARES) Act and the follow-up legislation in the Consolidated Appropriations Act, 2021, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and the Basel III regulatory capital reforms, as well as regulations already adopted and which may be adopted in the future by the relevant regulatory agencies, including the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve Board, to implement the provisions of the CARES Act and the follow-up legislation in the Consolidated Appropriations Act, 2021, the provisions of the Dodd-Frank Act, and the Basel III regulatory capital reforms;

  • the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board (the "FASB"), the SEC, the Public Company Accounting Oversight Board and other regulatory agencies, including the extent to which the new current expected credit loss ("CECL") accounting standard issued by the FASB in June 2016 and in accordance with the CARES Act and the follow-up legislation in the Consolidated Appropriations Act, 2021, the adoption of which can be deferred by Park until the earlier of: (1) the first day of the fiscal year that begins after the date on which the national emergency concerning the COVID-19 outbreak terminates; or (2) January 1, 2022, may adversely affect Park's reported financial condition or results of operations;

  • Park's assumptions and estimates used in applying critical accounting policies and modeling, including under the CECL model, when adopted by Park, which may prove unreliable, inaccurate or not predictive of actual results;

  • significant changes in the tax laws, which may adversely affect the fair values of net deferred tax assets and obligations of state and political subdivisions held in Park's investment securities portfolio;

  • the impact of Park's ability to anticipate and respond to technological changes on Park's ability to respond to customer needs and meet competitive demands;

  • operational issues stemming from and/or capital spending necessitated by the potential need to adapt to industry changes in information technology systems on which Park and our subsidiaries are highly dependent;

  • the ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks;

  • a failure in or breach of Park's operational or security systems or infrastructure, or those of our third-party vendors and other service providers, resulting in failures or disruptions in customer account management, general ledger, deposit, loan, or other systems, including as a result of cyber attacks;

  • the existence or exacerbation of general geopolitical instability and uncertainty as well as the effect of trade policies (including the impact of potential or imposed tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements, trade wars and other changes in trade regulations and changes in the relationship of the U.S. and its global trading partners);

  • uncertainty regarding the impact of changes to the U.S. presidential administration and Congress on the regulatory landscape, capital markets, and the response to and management of the COVID-19 pandemic;

  • the impact on financial markets and the economy of any changes in the credit ratings of the U.S. Treasury obligations and other U.S. government - backed debt, as well as issues surrounding the levels of U.S., European and Asian government debt and concerns regarding the growth rates and financial stability of certain sovereign governments, supranationals and financial institutions in Europe and Asia and the risk they may face difficulties servicing their sovereign debt;

  • 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 the costs and effects of any adverse developments in legal proceedings or other claims and the costs and effects of unfavorable resolution of regulatory and other governmental examinations or other inquiries;

  • continued availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends;

  • the impact on Park's business, personnel, facilities or systems of losses related to acts of fraud, scams and schemes of third parties;

  • the impact of widespread natural and other disasters, pandemics (including the COVID-19 pandemic), dislocations, regional or national protests and civil unrest (including any resulting branch closures or damages), military or terrorist activities or international hostilities on the economy and financial markets generally and on us or our counterparties specifically;

  • any of the foregoing factors, or other cascading effects of the COVID-19 pandemic that are not currently foreseeable, could materially affect our business, including our customers' willingness to conduct banking transactions and their ability to pay on existing obligations;

  • the effect of healthcare laws in the U.S. and potential changes for such laws, especially in light of the COVID-19 pandemic, which may increase our healthcare and other costs and negatively impact our operations and financial results;

  • risk and uncertainties associated with Park's entry into new geographic markets with our recent acquisitions, including expected revenue synergies and cost savings from recent acquisitions not being fully realized or realized within the expected time frame;

  • the discontinuation of the London Inter-Bank Offered Rate (LIBOR) and other reference rates which may result in increased expenses and litigation, and adversely impact the effectiveness of hedging strategies;

  • and other risk factors relating to the banking industry as detailed from time to time in Park's reports filed with the SEC including those described in "Item 1A. Risk Factors" of Part I of Park's Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and in "Item 1A. Risk Factors" of Part II of Park's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020.

Park does not undertake, and specifically disclaims any obligation, to publicly release the results of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement was made, or reflect the occurrence of unanticipated events, except to the extent required by law.

PARK NATIONAL CORPORATION

Financial Highlights

As of or for the three months ended December 31, 2020, September 30, 2020, and December 31, 2019

2020

2020

2019

Percent change vs.

(in thousands, except share and per share data)

4th QTR

3rd QTR

4th QTR

3Q '20

4Q '19

INCOME STATEMENT:

Net interest income

$

86,321

$

83,840

$

77,009

3.0

%

12.1

%

(Recovery of) provision for loan losses

(19,159

)

13,836

(213

)

N.M

N.M

Other income

35,656

36,558

24,224

(2.5

)

%

47.2

%

Other expense

85,661

69,859

71,231

22.6

%

20.3

%

Income before income taxes

$

55,475

$

36,703

$

30,215

51.1

%

83.6

%

Income taxes

10,275

5,857

6,279

75.4

%

63.6

%

Net income

$

45,200

$

30,846

$

23,936

46.5

%

88.8

%

MARKET DATA:

Earnings per common share - basic (a)

$

2.77

$

1.89

$

1.46

46.6

%

89.7

%

Earnings per common share - diluted (a)

2.75

1.88

1.45

46.3

%

89.7

%

Cash dividends declared per common share

1.02

1.02

1.01

%

1.0

%

Book value per common share at period end

63.76

62.39

59.28

2.2

%

7.6

%

Market price per common share at period end

105.01

81.96

102.38

28.1

%

2.6

%

Market capitalization at period end

1,713,154

1,336,011

1,673,549

28.2

%

2.4

%

Weighted average common shares - basic (b)

16,310,551

16,300,720

16,342,485

0.1

%

(0.2

)

%

Weighted average common shares - diluted (b)

16,434,812

16,393,792

16,454,553

0.3

%

(0.1

)

%

Common shares outstanding at period end

16,314,197

16,300,763

16,346,442

0.1

%

(0.2

)

%

PERFORMANCE RATIOS: (annualized)

Return on average assets (a)(b)

1.93

%

1.28

%

1.09

%

50.8

%

77.1

%

Return on average shareholders' equity (a)(b)

17.37

%

12.03

%

9.83

%

44.4

%

76.7

%

Yield on loans

4.69

%

4.54

%

5.11

%

3.3

%

(8.2

)

%

Yield on investment securities

2.80

%

2.35

%

2.72

%

19.1

%

2.9

%

Yield on money market instruments

0.11

%

0.11

%

1.86

%

%

(94.1

)

%

Yield on interest earning assets

4.33

%

4.12

%

4.64

%

5.1

%

(6.7

)

%

Cost of interest bearing deposits

0.19

%

0.26

%

0.95

%

(26.9

)

%

(80.0

)

%

Cost of borrowings

2.01

%

1.63

%

2.18

%

23.3

%

(7.8

)

%

Cost of paying interest bearing liabilities

0.40

%

0.39

%

1.04

%

2.6

%

(61.5

)

%

Net interest margin (g)

4.07

%

3.85

%

3.90

%

5.7

%

4.4

%

Efficiency ratio (g)

69.82

%

57.69

%

69.86

%

21.0

%

(0.1

)

%

OTHER RATIOS (NON-GAAP):

Tangible book value per share (d)

$

53.41

$

52.00

$

48.81

2.7

%

9.4

%

Note: Explanations for footnotes (a) - (k) are included at the end of the financial tables in the "Financial Reconciliations" section.

PARK NATIONAL CORPORATION

Financial Highlights (continued)

As of or for the three months ended December 31, 2020, September 30, 2020, and December 31, 2019

Percent change vs.

(in thousands, except ratios)

December 31, 2020

September 30, 2020

December 31, 2019

3Q '20

4Q '19

BALANCE SHEET:

Investment securities

$

1,124,806

$

1,097,598

$

1,279,507

2.5

%

(12.1

)

%

Loans

7,177,785

7,278,546

6,501,404

(1.4

)

%

10.4

%

Allowance for loan losses

85,675

87,038

56,679

(1.6

)

%

51.2

%

Goodwill and other intangible assets

168,855

169,380

171,118

(0.3

)

%

(1.3

)

%

Other real estate owned (OREO)

1,431

836

4,029

71.2

%

(64.5

)

%

Total assets

9,279,021

9,240,006

8,558,377

0.4

%

8.4

%

Total deposits

7,572,358

7,475,829

7,052,612

1.3

%

7.4

%

Borrowings

562,504

643,103

438,157

(12.5

)

%

28.4

%

Total shareholders' equity

1,040,256

1,016,996

969,014

2.3

%

7.4

%

Tangible equity (d)

871,401

847,616

797,896

2.8

%

9.2

%

Total nonperforming loans

139,614

148,442

113,953

(5.9

)

%

22.5

%

Total nonperforming assets

144,209

152,670

121,581

(5.5

)

%

18.6

%

ASSET QUALITY RATIOS:

Loans as a % of period end total assets

77.35

%

78.77

%

75.97

%

(1.8

)

%

1.8

%

Total nonperforming loans as a % of period end loans

1.95

%

2.04

%

1.75

%

(4.4

)

%

11.4

%

Total nonperforming assets as a % of period end loans + OREO + other nonperforming assets

2.01

%

2.10

%

1.87

%

(4.3

)

%

7.5

%

Allowance for loan losses as a % of period end loans

1.19

%

1.20

%

0.87

%

(0.8

)

%

36.8

%

Net loan (recoveries) charge-offs

$

(17,796

)

$

274

$

(1,039

)

N.M

N.M

Annualized net loan (recoveries) charge-offs as a % of average loans (b)

(0.98

)

%

0.02

%

(0.06

)

%

N.M

N.M

CAPITAL & LIQUIDITY:

Total shareholders' equity / Period end total assets

11.21

%

11.01

%

11.32

%

1.8

%

(1.0

)

%

Tangible equity (d) / Tangible assets (f)

9.57

%

9.34

%

9.51

%

2.5

%

0.6

%

Average shareholders' equity / Average assets (b)

11.11

%

10.67

%

11.12

%

4.1

%

(0.1

)

%

Average shareholders' equity / Average loans (b)

14.29

%

14.08

%

15.03

%

1.5

%

(4.9

)

%

Average loans / Average deposits (b)

95.80

%

92.02

%

89.36

%

4.1

%

7.2

%

Note: Explanations for footnotes (a) - (k) are included at the end of the financial tables in the "Financial Reconciliations" section.


PARK NATIONAL CORPORATION

Financial Highlights

Twelve months ended December 31, 2020 and December 31, 2019

(in thousands, except share and per share data and ratios)

2020

2019

Percent change vs '19

INCOME STATEMENT:

Net interest income

$

327,630

$

297,737

10.0

%

Provision for loan losses

12,054

6,171

95.3

%

Other income

125,664

97,193

29.3

%

Other expense

286,595

263,988

8.6

%

Income before income taxes

$

154,645

$

124,771

23.9

%

Income taxes

26,722

22,071

21.1

%

Net income

$

127,923

$

102,700

24.6

%

MARKET DATA:

Earnings per common share - basic (a)

$

7.85

$

6.33

24.0

%

Earnings per common share - diluted (a)

7.80

6.29

24.0

%

Cash dividends declared per common share

4.28

4.24

0.9

%

Weighted average common shares - basic (b)

16,302,825

16,234,342

0.4

%

Weighted average common shares - diluted (b)

16,407,502

16,329,456

0.5

%

PERFORMANCE RATIOS:

Return on average assets (a)(b)

1.38

%

1.21

%

14.0

%

Return on average shareholders' equity (a)(b)

12.68

%

11.14

%

13.8

%

Yield on loans

4.71

%

5.19

%

(9.2

)

%

Yield on investment securities

2.66

%

2.76

%

(3.6

)

%

Yield on money market instruments

0.26

%

2.33

%

(88.8

)

%

Yield on interest earning assets

4.28

%

4.70

%

(8.9

)

%

Cost of interest bearing deposits

0.41

%

1.01

%

(59.4

)

%

Cost of borrowings

1.77

%

2.14

%

(17.3

)

%

Cost of paying interest bearing liabilities

0.52

%

1.12

%

(53.6

)

%

Net interest margin (g)

3.93

%

3.89

%

1.0

%

Efficiency ratio (g)

62.83

%

66.35

%

(5.3

)

%

ASSET QUALITY RATIOS:

Net loan charge-offs

$

(16,942

)

$

1,004

N.M.

Net loan charge-offs as a % of average loans (b)

(0.24

)

%

0.02

%

N.M.

CAPITAL & LIQUIDITY:

Average shareholders' equity / Average assets (b)

10.92

%

10.88

%

0.4

%

Average shareholders' equity / Average loans (b)

14.44

%

14.85

%

(2.8

)

%

Average loans / Average deposits (b)

91.58

%

89.91

%

1.9

%

Note: Explanations for footnotes (a) - (k) are included at the end of the financial tables in the "Financial Reconciliations" section.


PARK NATIONAL CORPORATION

Consolidated Statements of Income

Three Months Ended

Twelve Months Ended

December 31,

December 31,

(in thousands, except share and per share data)

2020

2019

2020

2019

Interest income:

Interest and fees on loans

$

85,268

$

82,698

$

328,727

$

321,385

Interest on:

Obligations of U.S. Government, its agencies

and other securities - taxable

4,420

5,973

19,818

26,213

Obligations of states and political subdivisions - tax-exempt

2,040

2,205

8,436

8,955

Other interest income

72

953

739

3,947

Total interest income

91,800

91,829

357,720

360,500

Interest expense:

Interest on deposits:

Demand and savings deposits

490

7,795

9,142

33,348

Time deposits

1,893

4,666

12,186

17,494

Interest on borrowings

3,096

2,359

8,762

11,921

Total interest expense

5,479

14,820

30,090

62,763

Net interest income

86,321

77,009

327,630

297,737

(Recovery of) provision for loan losses

(19,159

)

(213

)

12,054

6,171

Net interest income after (recovery of) provision for loan losses

105,480

77,222

315,576

291,566

Other income

35,656

24,224

125,664

97,193

Other expense

85,661

71,231

286,595

263,988

Income before income taxes

55,475

30,215

154,645

124,771

Income taxes

10,275

6,279

26,722

22,071

Net income

$

45,200

$

23,936

$

127,923

$

102,700

Per common share:

Net income - basic

$

2.77

$

1.46

$

7.85

$

6.33

Net income - diluted

$

2.75

$

1.45

$

7.80

$

6.29

Weighted average shares - basic

16,310,551

16,342,485

16,302,825

16,234,342

Weighted average shares - diluted

16,434,812

16,454,553

16,407,502

16,329,456

Cash dividends declared

$

1.02

$

1.01

$

4.28

$

4.24


PARK NATIONAL CORPORATION

Consolidated Balance Sheets

(in thousands, except share data)

December 31, 2020

December 31, 2019

Assets

Cash and due from banks

$

155,596

$

135,567

Money market instruments

214,878

24,389

Investment securities

1,124,806

1,279,507

Loans

7,177,785

6,501,404

Allowance for loan losses

(85,675

)

(56,679

)

Loans, net

7,092,110

6,444,725

Bank premises and equipment, net

88,660

73,322

Goodwill and other intangible assets

168,855

171,118

Other real estate owned

1,431

4,029

Other assets

432,685

425,720

Total assets

$

9,279,021

$

8,558,377

Liabilities and Shareholders' Equity

Deposits:

Noninterest bearing

$

2,727,100

$

1,959,935

Interest bearing

4,845,258

5,092,677

Total deposits

7,572,358

7,052,612

Borrowings

562,504

438,157

Other liabilities

103,903

98,594

Total liabilities

$

8,238,765

$

7,589,363

Shareholders' Equity:

Preferred shares (200,000 shares authorized; no shares outstanding at December 31, 2020 and December 31, 2019)

$

$

Common shares (No par value; 20,000,000 shares authorized; 17,623,163 shares issued at December 31, 2020 and 17,623,199 shares issued at December 31, 2019)

460,687

459,389

Accumulated other comprehensive income (loss), net of taxes

5,571

(9,589

)

Retained earnings

704,764

646,847

Treasury shares (1,308,966 shares at December 31, 2020 and 1,276,757 shares at December 31, 2019)

(130,766

)

(127,633

)

Total shareholders' equity

$

1,040,256

$

969,014

Total liabilities and shareholders' equity

$

9,279,021

$

8,558,377


PARK NATIONAL CORPORATION

Consolidated Average Balance Sheets

Three Months Ended

Twelve Months Ended

Dec 31

Dec 31

(in thousands)

2020

2019

2020

2019

Assets

Cash and due from banks

$

120,599

$

129,105

$

127,214

$

130,372

Money market instruments

263,212

203,259

280,952

169,703

Investment securities

1,066,145

1,300,927

1,214,551

1,360,540

Loans

7,245,273

6,431,374

6,990,458

6,208,496

Allowance for loan losses

(89,920

)

(56,904

)

(71,221

)

(54,516

)

Loans, net

7,155,353

6,374,470

6,919,237

6,153,980

Bank premises and equipment, net

86,717

73,487

81,357

69,710

Goodwill and other intangible assets

169,199

173,065

170,031

158,194

Other real estate owned

856

3,871

2,174

4,066

Other assets

454,418

430,513

446,117

427,464

Total assets

$

9,316,499

$

8,688,697

$

9,241,633

$

8,474,029

Liabilities and Shareholders' Equity

Deposits:

Noninterest bearing

$

2,657,881

$

1,980,898

$

2,394,717

$

1,875,628

Interest bearing

4,904,995

5,216,050

5,238,147

5,029,854

Total deposits

7,562,876

7,196,948

7,632,864

6,905,482

Borrowings

611,890

429,979

494,532

556,564

Other liabilities

106,240

95,222

105,135

89,809

Total liabilities

$

8,281,006

$

7,722,149

$

8,232,531

$

7,551,855

Shareholders' Equity:

Preferred shares

$

$

$

$

Common shares

458,521

458,264

458,096

432,795

Accumulated other comprehensive income (loss), net of taxes

12,594

(11,694

)

9,688

(30,160

)

Retained earnings

695,509

648,007

673,273

633,389

Treasury shares

(131,131

)

(128,029

)

(131,955

)

(113,850

)

Total shareholders' equity

$

1,035,493

$

966,548

$

1,009,102

$

922,174

Total liabilities and shareholders' equity

$

9,316,499

$

8,688,697

$

9,241,633

$

8,474,029


PARK NATIONAL CORPORATION

Consolidated Statements of Income - Linked Quarters

2020

2020

2020

2020

2019

(in thousands, except per share data)

4th QTR

3rd QTR

2nd QTR

1st QTR

4th QTR

Interest income:

Interest and fees on loans

$

85,268

$

82,617

$

80,155

$

80,687

$

82,698

Interest on:

Obligations of U.S. Government, its agencies and other securities - taxable

4,420

4,841

5,026

5,531

5,973

Obligations of states and political subdivisions - tax-exempt

2,040

2,045

2,151

2,200

2,205

Other interest income

72

63

491

953

Total interest income

91,800

89,566

87,445

88,909

91,829

Interest expense:

Interest on deposits:

Demand and savings deposits

490

803

1,507

6,342

7,795

Time deposits

1,893

2,662

3,346

4,285

4,666

Interest on borrowings

3,096

2,261

1,406

1,999

2,359

Total interest expense

5,479

5,726

6,259

12,626

14,820

Net interest income

86,321

83,840

81,186

76,283

77,009

(Recovery of) provision for loan losses

(19,159

)

13,836

12,224

5,153

(213

)

Net interest income after (recovery of) provision for loan losses

105,480

70,004

68,962

71,130

77,222

Other income

35,656

36,558

30,964

22,486

24,224

Other expense

85,661

69,859

64,799

66,276

71,231

Income before income taxes

55,475

36,703

35,127

27,340

30,215

Income taxes

10,275

5,857

5,622

4,968

6,279

Net income

$

45,200

$

30,846

$

29,505

$

22,372

$

23,936

Per common share:

Net income - basic

$

2.77

$

1.89

$

1.81

$

1.37

$

1.46

Net income - diluted

$

2.75

$

1.88

$

1.80

$

1.36

$

1.45


PARK NATIONAL CORPORATION

Detail of other income and other expense - Linked Quarters

2020

2020

2020

2020

2019

(in thousands)

4th QTR

3rd QTR

2nd QTR

1st QTR

4th QTR

Other income:

Income from fiduciary activities

$

7,632

$

7,335

$

6,793

$

7,113

$

7,268

Service charges on deposit accounts

2,123

2,118

1,676

2,528

2,757

Other service income

12,040

13,047

8,758

3,766

4,382

Debit card fee income

5,787

5,853

5,560

4,960

5,341

Bank owned life insurance income

1,170

1,192

1,179

1,248

1,158

ATM fees

432

491

438

412

446

(Loss) gain on the sale of OREO, net

(7

)

569

841

(196

)

2

Net (loss) gain on the sale of investment securities

(27

)

3,313

Gain (loss) on equity securities, net

2,931

1,201

(977

)

(973

)

(191

)

Other components of net periodic benefit income

1,988

1,988

1,988

1,988

1,183

Miscellaneous

1,560

2,791

1,395

1,640

1,878

Total other income

$

35,656

$

36,558

$

30,964

$

22,486

$

24,224

Other expense:

Salaries

$

37,280

$

31,632

$

30,699

$

28,429

$

30,903

Employee benefits

7,316

10,676

9,080

10,043

8,973

Occupancy expense

3,231

3,835

3,256

3,480

3,355

Furniture and equipment expense

4,949

4,687

4,850

4,319

4,319

Data processing fees

3,315

3,275

2,577

2,492

2,777

Professional fees and services

9,359

7,977

6,901

7,066

10,503

Marketing

1,752

1,454

1,136

1,486

1,468

Insurance

1,855

1,541

1,477

1,550

317

Communication

1,097

958

874

1,155

1,256

State tax expense

605

1,125

1,116

1,145

1,024

Amortization of intangible assets

525

525

607

606

623

FHLB prepayment penalty

8,736

1,793

492

Foundation contributions

3,000

1,500

Miscellaneous

2,641

2,174

2,226

2,712

3,721

Total other expense

$

85,661

$

69,859

$

64,799

$

66,276

$

71,231


PARK NATIONAL CORPORATION

Asset Quality Information

Year ended December 31,

(in thousands, except ratios)

2020

2019

2018

2017

2016

Allowance for loan losses:

Allowance for loan losses, beginning of period

$

56,679

$

51,512

$

49,988

$

50,624

$

56,494

Charge-offs

10,304

11,177

13,552

19,403

20,799

Recoveries

27,246

10,173

7,131

10,210

20,030

Net (recoveries) charge-offs

(16,942

)

1,004

6,421

9,193

769

Provision for (recovery of) loan losses

12,054

6,171

7,945

8,557

(5,101

)

Allowance for loan losses, end of period

$

85,675

$

56,679

$

51,512

$

49,988

$

50,624

General reserve trends:

Allowance for loan losses, end of period

$

85,675

$

56,679

$

51,512

$

49,988

$

50,624

Allowance on purchased credit impaired ("PCI") loans

167

268

Allowance on purchased loans

678

Specific reserves

5,434

5,230

2,273

684

548

General reserves on originated loans

$

79,396

$

51,181

$

49,239

$

49,304

$

50,076

Total loans

$

7,177,785

$

6,501,404

$

5,692,132

$

5,372,483

$

5,271,857

PCI loans

11,153

14,331

3,943

Purchased loans

360,056

548,436

225,029

Impaired commercial loans

108,407

77,459

48,135

56,545

70,415

Originated loans excluding impaired commercial loans

$

6,698,169

$

5,861,178

$

5,415,025

$

5,315,938

$

5,201,442

Asset Quality Ratios:

Net (recoveries) charge-offs as a % of average loans

(0.24

)

%

0.02

%

0.12

%

0.17

%

0.02

%

Allowance for loan losses as a % of period end loans

1.19

%

0.87

%

0.90

%

0.93

%

0.96

%

Allowance for loan losses on originated loans as % of originated total loans (excluding PPP loans) (k)

1.31

%

N.A.

N.A.

N.A.

N.A.

General reserve as a % of originated total loans less impaired commercial loans

1.19

%

0.87

%

0.91

%

0.93

%

0.96

%

General reserves as a % of originated total loans less impaired commercial loans (excluding PPP loans) (k)

1.24

%

N.A.

N.A.

N.A.

N.A.

Nonperforming assets:

Nonaccrual loans

$

117,368

$

90,080

$

67,954

$

72,056

$

87,822

Accruing troubled debt restructurings

20,788

21,215

15,173

20,111

18,175

Loans past due 90 days or more

1,458

2,658

2,243

1,792

2,086

Total nonperforming loans

$

139,614

$

113,953

$

85,370

$

93,959

$

108,083

Other real estate owned - Park National Bank

837

3,100

2,788

6,524

6,025

Other real estate owned - SEPH

594

929

1,515

7,666

7,901

Other nonperforming assets - Park National Bank

3,164

3,599

3,464

4,849

Total nonperforming assets

$

144,209

$

121,581

$

93,137

$

112,998

$

122,009

Percentage of nonaccrual loans to period end loans

1.64

%

1.39

%

1.19

%

1.34

%

1.67

%

Percentage of nonperforming loans to period end loans

1.95

%

1.75

%

1.50

%

1.75

%

2.05

%

Percentage of nonperforming assets to period end loans

2.01

%

1.87

%

1.64

%

2.10

%

2.31

%

Percentage of nonperforming assets to period end total assets

1.55

%

1.42

%

1.19

%

1.50

%

1.63

%

Note: Explanations for footnotes (a) - (k) are included at the end of the financial tables in the "Financial Reconciliations" section.


PARK NATIONAL CORPORATION

Asset Quality Information (continued)

Year ended December 31,

(in thousands, except ratios)

2020

2019

2018

2017

2016

New nonaccrual loan information:

Nonaccrual loans, beginning of period

$

90,080

$

67,954

$

72,056

$

87,822

$

95,887

New nonaccrual loans

103,386

81,009

76,611

58,753

74,786

Resolved nonaccrual loans

76,098

58,883

80,713

74,519

82,851

Nonaccrual loans, end of period

$

117,368

$

90,080

$

67,954

$

72,056

$

87,822

Impaired commercial loan portfolio information (period end):

Unpaid principal balance

$

109,062

$

78,178

$

59,381

$

66,585

$

95,358

Prior charge-offs

655

719

11,246

10,040

24,943

Remaining principal balance

108,407

77,459

48,135

56,545

70,415

Specific reserves

5,434

5,230

2,273

684

548

Book value, after specific reserves

$

102,973

$

72,229

$

45,862

$

55,861

$

69,867


PARK NATIONAL CORPORATION

Financial Reconciliations

NON-GAAP RECONCILIATIONS

THREE MONTHS ENDED

TWELVE MONTHS ENDED

(in thousands, except share and per share data)

December 31, 2020

September 30, 2020

December 31, 2019

December 31, 2020

December 31, 2019

Net interest income

$

86,321

$

83,840

$

77,009

$

327,630

$

297,737

less purchase accounting accretion related to NewDominion and Carolina Alliance acquisitions

919

1,071

1,947

4,669

5,786

less interest income on former Vision Bank relationships

102

8

249

453

256

Net interest income - adjusted

$

85,300

$

82,761

$

74,813

$

322,508

$

291,695

(Recovery of) provision for loan losses

$

(19,159

)

$

13,836

$

(213

)

$

12,054

$

6,171

less recoveries on former Vision Bank relationships

(20,496

)

(37

)

(2,302

)

(21,982

)

(3,042

)

(Recovery of) provision for loan losses - adjusted

$

1,337

$

13,873

$

2,089

$

34,036

$

9,213

Other income

$

35,656

$

36,558

$

24,224

$

125,664

$

97,193

less other service income related to former Vision Bank relationships

503

35

590

52

less net gain (loss) on sale of former Vision Bank OREO properties

371

28

1,208

(111

)

less rebranding initiative related expenses

(298

)

(572

)

less net (loss) gain on the sale of debt securities in the ordinary course of business

(27

)

3,286

(421

)

Other income - adjusted

$

35,451

$

36,179

$

24,196

$

121,152

$

97,673

Other expense

$

85,661

$

69,859

$

71,231

$

286,595

$

263,988

less merger-related expenses related to NewDominion and Carolina Alliance acquisitions

9

163

1,885

629

8,877

less core deposit intangible amortization related to NewDominion and Carolina Alliance acquisitions

525

525

623

2,263

2,355

less FDIC assessment credit

(1,136

)

(2,193

)

less direct expenses related to collection of payments on former Vision Bank loan relationships

4,051

232

622

4,283

622

less FHLB prepayment penalty

8,736

492

10,529

612

less rebranding initiative related expenses (including trade name intangible expense)

229

429

2,134

1,040

2,476

less Foundation contribution

3,000

1,500

3,000

1,500

less severance and restructuring charges

4,039

67

22

4,443

107

less COVID-19 related expenses (j)

738

744

3,622

Other expense - adjusted

$

64,334

$

67,699

$

65,089

$

256,786

$

249,632

Tax effect of adjustments to net income identified above (i)

$

(83

)

$

140

$

339

$

(379

)

$

1,208

Net income - reported

$

45,200

$

30,846

$

23,936

$

127,923

$

102,700

Net income - adjusted

$

44,888

$

31,371

$

25,213

$

126,495

$

107,244


Diluted EPS

$

2.75

$

1.88

$

1.45

$

7.80

$

6.29

Diluted EPS, adjusted (h)

$

2.73

$

1.91

$

1.53

$

7.71

$

6.57

Annualized return on average assets (a)(b)

1.93

%

1.28

%

1.09

%

1.38

%

1.21

%

Annualized return on average assets, adjusted (a)(b)(h)

1.92

%

1.31

%

1.15

%

1.37

%

1.27

%

Annualized return on average tangible assets (a)(b)(e)

1.97

%

1.31

%

1.12

%

1.41

%

1.23

%

Annualized return on average tangible assets, adjusted (a)(b)(e)(h)

1.95

%

1.33

%

1.17

%

1.39

%

1.29

%

Annualized return on average shareholders' equity (a)(b)

17.37

%

12.03

%

9.83

%

12.68

%

11.14

%

Annualized return on average shareholders' equity, adjusted (a)(b)(h)

17.25

%

12.23

%

10.35

%

12.54

%

11.63

%

Annualized return on average tangible equity (a)(b)(c)

20.76

%

14.43

%

11.97

%

15.25

%

13.44

%

Annualized return on average tangible equity, adjusted (a)(b)(c)(h)

20.61

%

14.67

%

12.61

%

15.08

%

14.04

%

Efficiency ratio (g)

69.82

%

57.69

%

69.86

%

62.83

%

66.35

%

Efficiency ratio, adjusted (g)(h)

52.97

%

56.58

%

65.26

%

57.51

%

63.63

%

Annualized net interest margin (g)

4.07

%

3.85

%

3.90

%

3.93

%

3.89

%

Annualized net interest margin, adjusted (g)(h)

4.02

%

3.80

%

3.79

%

3.86

%

3.81

%


PARK NATIONAL CORPORATION

Financial Reconciliations (continued)

(a) Reported measure uses net income

(b) Averages are for the three months ended December 31, 2020, September 30, 2020, and December 31, 2019 and for the twelve months ended December 31, 2020 and December 31, 2019, as appropriate

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

RECONCILIATION OF AVERAGE SHAREHOLDERS' EQUITY TO AVERAGE TANGIBLE EQUITY:

THREE MONTHS ENDED

TWELVE MONTHS ENDED

December 31, 2020

September 30, 2020

December 31, 2019

December 31, 2020

December 31, 2019

AVERAGE SHAREHOLDERS' EQUITY

$

1,035,493

$

1,020,239

$

966,548

$

1,009,102

$

922,174

Less: Average goodwill and other intangible assets

169,199

169,726

173,065

170,031

158,194

AVERAGE TANGIBLE EQUITY

$

866,294

$

850,513

$

793,483

$

839,071

$

763,980

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

RECONCILIATION OF TOTAL SHAREHOLDERS' EQUITY TO TANGIBLE EQUITY:

December 31, 2020

September 30, 2020

December 31, 2019

TOTAL SHAREHOLDERS' EQUITY

$

1,040,256

$

1,016,996

$

969,014

Less: Goodwill and other intangible assets

168,855

169,380

171,118

TANGIBLE EQUITY

$

871,401

$

847,616

$

797,896

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

RECONCILIATION OF AVERAGE ASSETS TO AVERAGE TANGIBLE ASSETS

THREE MONTHS ENDED

TWELVE MONTHS ENDED

December 31, 2020

September 30, 2020

December 31, 2019

December 31, 2020

December 31, 2019

AVERAGE ASSETS

$

9,316,499

$

9,557,682

$

8,688,697

$

9,241,633

$

8,474,029

Less: Average goodwill and other intangible assets

169,199

169,726

173,065

170,031

158,194

AVERAGE TANGIBLE ASSETS

$

9,147,300

$

9,387,956

$

8,515,632

$

9,071,602

$

8,315,835

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

RECONCILIATION OF TOTAL ASSETS TO TANGIBLE ASSETS:

December 31, 2020

September 30, 2020

December 31, 2019

TOTAL ASSETS

$

9,279,021

$

9,240,006