U.S. Markets closed
  • Gold

    1,768.10
    -29.80 (-1.66%)
     
  • EUR/USD

    1.1606
    +0.0005 (+0.0464%)
     
  • 10-Yr Bond

    1.5760
    +0.0570 (+3.75%)
     
  • Vix

    16.30
    -0.56 (-3.32%)
     
  • GBP/USD

    1.3751
    +0.0074 (+0.5418%)
     
  • USD/JPY

    114.2000
    +0.5230 (+0.4601%)
     
  • BTC-USD

    61,318.83
    +359.11 (+0.59%)
     
  • CMC Crypto 200

    1,464.06
    +57.32 (+4.07%)
     
  • FTSE 100

    7,234.03
    +26.32 (+0.37%)
     
  • Nikkei 225

    29,068.63
    +517.70 (+1.81%)
     

Park National Corporation reports financial results for second quarter and first half of 2021

  • Oops!
    Something went wrong.
    Please try again later.
·24 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

NEWARK, Ohio, July 26, 2021 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE American: PRK) today reported financial results for the second quarter and first half of 2021 (three and six months ended June 30, 2021). Park's board of directors declared a quarterly cash dividend of $1.03 per common share, payable on September 10, 2021 to common shareholders of record as of August 20, 2021.

Park’s net income for the second quarter of 2021 was $39.1 million, a 32.6 percent increase from $29.5 million for the second quarter of 2020. Second quarter 2021 net income per diluted common share was $2.38, compared to $1.80 in the second quarter of 2020. Park's net income for the first half of 2021 was $82.0 million, a 58.0 percent increase from $51.9 million for the first half of 2020. Net income per diluted common share was $4.98 for the first half of 2021, compared to $3.16 for the first half of 2020. Various governmental programs and economic conditions continue to affect performance reports throughout the financial industry.

“Our positive results reflect the dedication of our associates, who’ve been unwavering in serving our clients throughout the ups and downs of the past year. From lending to digital services to philanthropic support – we do not take lightly the trust our communities place in Park National Bank,” Park Chairman David Trautman said. “We remain focused on delivering on our promises to local families and businesses.”

Park's community-banking subsidiary, The Park National Bank, reported net income of $40.9 million for the second quarter of 2021, a 33.0 percent increase compared to $30.8 million for the same period of 2020. Park National Bank reported net income of $86.0 million for the first half of 2021, compared to $56.7 million for the first half of 2020. Park National Bank's mortgage origination volume for the first half of 2021 was $561 million; whereas, it was $527 million for the first half of 2020.

Park’s board also recognized the retirement of C. Daniel DeLawder, thanking him for his 50 years of service and leadership with the Park National organization. DeLawder, a former chairman and chief executive officer for Park, retired from employment on June 30, 2021. He will remain on the boards of directors for the Park National Corporation and Park National Bank; and will continue to serve as chair of the executive committee for the corporation and chair of Park National Bank’s trust committee until his term expires in 2023.

Headquartered in Newark, Ohio, Park National Corporation has $9.9 billion in total assets (as of June 30, 2021). 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
Media contact: Bethany Lewis, 740.349.0421, bethany.lewis@parknationalbank.com
Investor contact: Brady Burt, 740.322.6844, brady.burt@parknationalbank.com
Park National Corporation, 50 N. Third Street, Newark, Ohio 43055

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:

  • 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 the federal, state, or local tax laws may negatively impact our financial performance. On March 31, 2021, President Biden unveiled his infrastructure plan, which includes a proposal to increase the federal corporate tax rate from 21% to 28% as part of a package of tax reforms to help fund the spending proposals in the plan. The Biden plan is in the early stages of the legislative process, which is expected to proceed this year due to the Democratic Party's majority in both houses of Congress. If adopted as proposed, the increase of the corporate tax rate would adversely affect our results of operations in future periods.

  • 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 and the various responses to the COVID-19 pandemic;

  • Park may have more credit risk and higher credit losses to the extent there are loan concentrations by location or industry of borrowers or collateral;

  • the volatility from quarter to quarter of mortgage banking income, whether due to interest rates, demand, the fair value of mortgage loans, or other factors;

  • 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 American Rescue Plan Act of 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 American Rescue Plan Act of 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, 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, 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, including those of Park's third-party vendors and other service providers, which may prove inadequate, and could adversely affect customer confidence in Park and/or result in Park incurring a financial loss;

  • 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, elevated U.S. government debt, potential changes in tax legislation that may increase tax rates 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;

  • 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, 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 June 30, 2021, March 31, 2021, and June 30, 2020

2021

2021

2020

Percent change vs.

(in thousands, except share and per share data)

2nd QTR

1st QTR

2nd QTR

1Q '21

2Q '20

INCOME STATEMENT:

Net interest income

$

83,851

$

80,734

$

81,186

3.9

%

3.3

%

(Recovery of) provision for credit losses (l)

(4,040

)

(4,855

)

12,224

(16.8

)

%

N.M

Other income

31,238

34,089

30,964

(8.4

)

%

0.9

%

Other expense

71,400

67,865

64,799

5.2

%

10.2

%

Income before income taxes

$

47,729

$

51,813

$

35,127

(7.9

)

%

35.9

%

Income taxes

8,597

8,982

5,622

(4.3

)

%

52.9

%

Net income

$

39,132

$

42,831

$

29,505

(8.6

)

%

32.6

%

MARKET DATA:

Earnings per common share - basic (a)

$

2.39

$

2.63

$

1.81

(9.1

)

%

32.0

%

Earnings per common share - diluted (a)

2.38

2.61

1.80

(8.8

)

%

32.2

%

Cash dividends declared per common share

1.03

1.23

1.02

(16.3

)

%

1.0

%

Book value per common share at period end

65.44

63.74

61.46

2.7

%

6.5

%

Market price per common share at period end

117.42

129.30

70.38

(9.2

)

%

66.8

%

Market capitalization at period end

1,918,733

2,112,238

1,146,942

(9.2

)

%

67.3

%

Weighted average common shares - basic (b)

16,340,690

16,314,987

16,296,427

0.2

%

0.3

%

Weighted average common shares - diluted (b)

16,472,800

16,439,920

16,375,434

0.2

%

0.6

%

Common shares outstanding at period end

16,340,772

16,335,951

16,296,425

%

0.3

%

PERFORMANCE RATIOS: (annualized)

Return on average assets (a)(b)

1.59

%

1.81

%

1.26

%

(12.2

)

%

26.2

%

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

14.81

%

16.63

%

11.89

%

(10.9

)

%

24.6

%

Yield on loans

4.60

%

4.48

%

4.63

%

2.7

%

(0.6

)

%

Yield on investment securities

2.31

%

2.53

%

2.76

%

(8.7

)

%

(16.3

)

%

Yield on money market instruments

0.10

%

0.11

%

0.10

%

(9.1

)

%

%

Yield on interest earning assets

3.93

%

3.96

%

4.14

%

(0.8

)

%

(5.1

)

%

Cost of interest bearing deposits

0.13

%

0.16

%

0.36

%

(18.8

)

%

(63.9

)

%

Cost of borrowings

1.91

%

1.86

%

1.33

%

2.7

%

43.6

%

Cost of paying interest bearing liabilities

0.29

%

0.32

%

0.43

%

(9.4

)

%

(32.6

)

%

Net interest margin (g)

3.74

%

3.76

%

3.84

%

(0.5

)

%

(2.6

)

%

Efficiency ratio (g)

61.65

%

58.74

%

57.41

%

5.0

%

7.4

%

OTHER RATIOS (NON-GAAP):

Tangible book value per share (d)

$

55.17

$

53.43

$

51.04

3.3

%

8.1

%

Note: Explanations for footnotes (a) - (l) 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 June 30, 2021, March 31, 2021, and June 30, 2020

Percent change vs.

(in thousands, except ratios)

June 30, 2021

March 31, 2021

June 30, 2020

1Q '21

2Q '20

BALANCE SHEET:

Investment securities

$

1,461,916

$

1,176,240

$

1,153,186

24.3

%

26.8

%

Loans

7,035,646

7,168,745

7,204,445

(1.9

)

%

(2.3

)

%

Allowance for credit losses (l)

83,577

86,886

73,476

(3.8

)

%

13.7

%

Goodwill and other intangible assets

167,897

168,376

169,905

(0.3

)

%

(1.2

)

%

Other real estate owned (OREO)

813

844

1,356

(3.7

)

%

(40.0

)

%

Total assets

9,947,994

9,914,069

9,712,994

0.3

%

2.4

%

Total deposits

8,214,624

8,236,199

8,161,900

(0.3

)

%

0.6

%

Borrowings

501,350

523,266

444,410

(4.2

)

%

12.8

%

Total shareholders' equity

1,069,392

1,041,271

1,001,594

2.7

%

6.8

%

Tangible equity (d)

901,495

872,895

831,689

3.3

%

8.4

%

Total nonperforming loans

114,695

130,327

126,044

(12.0

)

%

(9.0

)

%

Total nonperforming assets

118,672

134,335

130,999

(11.7

)

%

(9.4

)

%

ASSET QUALITY RATIOS:

Loans as a % of period end total assets

70.72

%

72.31

%

74.17

%

(2.2

)

%

(4.7

)

%

Total nonperforming loans as a % of period end loans

1.63

%

1.82

%

1.75

%

(10.4

)

%

(6.9

)

%

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

1.69

%

1.87

%

1.82

%

(9.6

)

%

(7.1

)

%

Allowance for credit losses as a % of period end loans

1.19

%

1.21

%

1.02

%

(1.7

)

%

16.7

%

Net loan (recoveries) charge-offs

$

(731

)

$

24

$

251

N.M

N.M

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

(0.04

)

%

%

0.01

%

N.M

N.M

CAPITAL & LIQUIDITY:

Total shareholders' equity / Period end total assets

10.75

%

10.50

%

10.31

%

2.4

%

4.3

%

Tangible equity (d) / Tangible assets (f)

9.22

%

8.96

%

8.72

%

2.9

%

5.7

%

Average shareholders' equity / Average assets (b)

10.74

%

10.87

%

10.61

%

(1.2

)

%

1.2

%

Average shareholders' equity / Average loans (b)

14.94

%

14.63

%

14.30

%

2.1

%

4.5

%

Average loans / Average deposits (b)

86.49

%

90.12

%

88.59

%

(4.0

)

%

(2.4

)

%

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


PARK NATIONAL CORPORATION

Financial Highlights

Six months ended June 30, 2021 and June 30, 2020

2021

2020

(in thousands, except share and per share data)

Six months
ended June 30

Six months
ended June 30

Percent change
vs '20

INCOME STATEMENT:

Net interest income

$

164,585

$

157,469

4.5

%

(Recovery of) provision for credit losses (l)

(8,895

)

17,377

N.M

Other income

65,327

53,450

22.2

%

Other expense

139,265

131,075

6.2

%

Income before income taxes

$

99,542

$

62,467

59.4

%

Income taxes

17,579

10,590

66.0

%

Net income

$

81,963

$

51,877

58.0

%

MARKET DATA:

Earnings per common share - basic (a)

$

5.02

$

3.18

57.9

%

Earnings per common share - diluted (a)

4.98

3.16

57.6

%

Cash dividends declared per common share

2.26

2.24

0.9

%

Weighted average common shares - basic (b)

16,327,838

16,300,015

0.2

%

Weighted average common shares - diluted (b)

16,455,673

16,400,657

0.3

%

PERFORMANCE RATIOS: (annualized)

Return on average assets (a)(b)

1.70

%

1.15

%

47.8

%

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

15.71

%

10.54

%

49.1

%

Yield on loans

4.54

%

4.81

%

(5.6

)

%

Yield on investment securities

2.41

%

2.76

%

(12.7

)

%

Yield on money market instruments

0.10

%

0.38

%

(73.7

)

%

Yield on interest earning assets

3.95

%

4.35

%

(9.2

)

%

Cost of interest bearing deposits

0.14

%

0.58

%

(75.9

)

%

Cost of borrowings

1.89

%

1.69

%

11.8

%

Cost of paying interest bearing liabilities

0.30

%

0.66

%

(54.5

)

%

Net interest margin (g)

3.75

%

3.89

%

(3.6

)

%

Efficiency ratio (g)

60.20

%

61.72

%

(2.5

)

%

ASSET QUALITY RATIOS

Net loan (recoveries) charge-offs

$

(707

)

$

580

N.M.

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

(0.02

)

%

0.02

%

N.M.

CAPITAL & LIQUIDITY

Average shareholders' equity / Average assets (b)

10.80

%

10.95

%

(1.4

)

%

Average shareholders' equity / Average loans (b)

14.79

%

14.71

%

0.5

%

Average loans / Average deposits (b)

88.26

%

89.21

%

(1.1

)

%

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


PARK NATIONAL CORPORATION

Consolidated Statements of Income

Three Months Ended

Six Months Ended

June 30,

June 30,

(in thousands, except share and per share data)

2021

2020

2021

2020

Interest income:

Interest and fees on loans

$

81,176

$

80,155

$

159,913

$

160,842

Interest on:

Obligations of U.S. Government, its agencies

and other securities - taxable

4,600

5,026

8,856

10,557

Obligations of states and political subdivisions - tax-exempt

2,032

2,151

4,069

4,351

Other interest income

186

113

329

604

Total interest income

87,994

87,445

173,167

176,354

Interest expense:

Interest on deposits:

Demand and savings deposits

401

1,507

787

7,849

Time deposits

1,285

3,346

2,869

7,631

Interest on borrowings

2,457

1,406

4,926

3,405

Total interest expense

4,143

6,259

8,582

18,885

Net interest income

83,851

81,186

164,585

157,469

(Recovery of) provision for credit losses (l)

(4,040

)

12,224

(8,895

)

17,377

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

87,891

68,962

173,480

140,092

Other income

31,238

30,964

65,327

53,450

Other expense

71,400

64,799

139,265

131,075

Income before income taxes

47,729

35,127

99,542

62,467

Income taxes

8,597

5,622

17,579

10,590

Net income

$

39,132

$

29,505

$

81,963

$

51,877

Per common share:

Net income - basic

$

2.39

$

1.81

$

5.02

$

3.18

Net income - diluted

$

2.38

$

1.80

$

4.98

$

3.16

Weighted average shares - basic

16,340,690

16,296,427

16,327,838

16,300,015

Weighted average shares - diluted

16,472,800

16,375,434

16,455,673

16,400,657

Cash dividends declared

$

1.03

$

1.02

$

2.26

$

2.24


PARK NATIONAL CORPORATION

Consolidated Balance Sheets

(in thousands, except share data)

June 30, 2021

December 31, 2020

Assets

Cash and due from banks

$

134,182

$

155,596

Money market instruments

673,242

214,878

Investment securities

1,461,916

1,124,806

Loans

7,035,646

7,177,785

Allowance for credit losses (l)

(83,577

)

(85,675

)

Loans, net

6,952,069

7,092,110

Bank premises and equipment, net

89,570

88,660

Goodwill and other intangible assets

167,897

168,855

Other real estate owned

813

1,431

Other assets

468,305

432,685

Total assets

$

9,947,994

$

9,279,021

Liabilities and Shareholders' Equity

Deposits:

Noninterest bearing

$

2,876,110

$

2,727,100

Interest bearing

5,338,514

4,845,258

Total deposits

8,214,624

7,572,358

Borrowings

501,350

562,504

Other liabilities

162,628

103,903

Total liabilities

$

8,878,602

$

8,238,765

Shareholders' Equity:

Preferred shares (200,000 shares authorized; no shares outstanding at June 30, 2021 and December 31, 2020)

$

$

Common shares (No par value; 20,000,000 shares authorized; 17,623,143 shares issued at June 30, 2021 and 17,623,163 shares issued at December 31, 2020)

459,276

460,687

Accumulated other comprehensive (loss) income, net of taxes

(2,930

)

5,571

Retained earnings

741,155

704,764

Treasury shares (1,282,371 shares at June 30, 2021 and 1,308,966 shares at December 31, 2020)

(128,109

)

(130,766

)

Total shareholders' equity

$

1,069,392

$

1,040,256

Total liabilities and shareholders' equity

$

9,947,994

$

9,279,021


PARK NATIONAL CORPORATION

Consolidated Average Balance Sheets

Three Months Ended

Six Months Ended

June 30,

June 30,

(in thousands)

2021

2020

2021

2020

Assets

Cash and due from banks

$

131,397

$

134,386

$

139,784

$

133,208

Money market instruments

720,238

461,055

637,531

318,930

Investment securities

1,307,037

1,197,445

1,234,178

1,230,948

Loans

7,094,099

6,981,783

7,116,353

6,731,960

Allowance for credit losses (l)

(87,083

)

(62,387

)

(88,511

)

(60,001

)

Loans, net

7,007,016

6,919,396

7,027,842

6,671,959

Bank premises and equipment, net

90,269

80,096

90,006

77,509

Goodwill and other intangible assets

168,211

170,303

168,449

170,606

Other real estate owned

822

2,765

1,016

3,282

Other assets

447,088

442,819

444,221

437,585

Total assets

$

9,872,078

$

9,408,265

$

9,743,027

$

9,044,027

Liabilities and Shareholders' Equity

Deposits:

Noninterest bearing

$

2,940,602

$

2,400,809

$

2,866,909

$

2,175,400

Interest bearing

5,261,608

5,480,366

5,195,848

5,370,376

Total deposits

8,202,210

7,881,175

8,062,757

7,545,776

Borrowings

514,855

425,349

526,715

405,930

Other liabilities

95,064

103,453

101,332

102,189

Total liabilities

$

8,812,129

$

8,409,977

$

8,690,804

$

8,053,895

Shareholders' Equity:

Preferred shares

$

$

$

$

Common shares

457,949

456,830

459,327

458,146

Accumulated other comprehensive (loss) income, net of taxes

(4,876

)

10,756

(1,865

)

5,331

Retained earnings

734,993

663,290

724,183

658,877

Treasury shares

(128,117

)

(132,588

)

(129,422

)

(132,222

)

Total shareholders' equity

$

1,059,949

$

998,288

$

1,052,223

$

990,132

Total liabilities and shareholders' equity

$

9,872,078

$

9,408,265

$

9,743,027

$

9,044,027


PARK NATIONAL CORPORATION

Consolidated Statements of Income - Linked Quarters

2021

2021

2020

2020

2020

(in thousands, except per share data)

2nd QTR

1st QTR

4th QTR

3rd QTR

2nd QTR

Interest income:

Interest and fees on loans

$

81,176

$

78,737

$

85,268

$

82,617

$

80,155

Interest on:

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

4,600

4,256

4,420

4,841

5,026

Obligations of states and political subdivisions - tax-exempt

2,032

2,037

2,040

2,045

2,151

Other interest income

186

143

72

63

113

Total interest income

87,994

85,173

91,800

89,566

87,445

Interest expense:

Interest on deposits:

Demand and savings deposits

401

386

490

803

1,507

Time deposits

1,285

1,584

1,893

2,662

3,346

Interest on borrowings

2,457

...

2,469

3,096

2,261

1,406

Total interest expense

4,143

4,439

5,479

5,726

6,259

Net interest income

83,851

80,734

86,321

83,840

81,186

(Recovery of) provision for credit losses (l)

(4,040

)

(4,855

)

(19,159

)

13,836

12,224

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

87,891

85,589

105,480

70,004

68,962

Other income

31,238

34,089

35,656

36,558

30,964

Other expense

71,400

67,865

85,661

69,859

64,799

Income before income taxes

47,729

51,813

55,475

36,703

35,127

Income taxes

8,597

8,982

10,275

5,857

5,622

Net income

$

39,132

$

42,831

$

45,200

$

30,846

$

29,505

Per common share:

Net income - basic

$

2.39

$

2.63

$

2.77

$

1.89

$

1.81

Net income - diluted

$

2.38

$

2.61

$

2.75

$

1.88

$

1.80


PARK NATIONAL CORPORATION

Detail of other income and other expense - Linked Quarters

2021

2021

2020

2020

2020

(in thousands)

2nd QTR

1st QTR

4th QTR

3rd QTR

2nd QTR

Other income:

Income from fiduciary activities

$

8,569

$

8,173

$

7,632

$

7,335

$

6,793

Service charges on deposit accounts

2,032

2,054

2,123

2,118

1,676

Other service income

7,159

9,617

12,040

13,047

8,758

Debit card fee income

6,758

6,086

5,787

5,853

5,560

Bank owned life insurance income

1,149

1,165

1,170

1,192

1,179

ATM fees

655

530

432

491

438

Gain (loss) on the sale of OREO, net

4

(33

)

(7

)

569

841

Net (loss) gain on the sale of debt securities

(27

)

3,313

Gain (loss) on equity securities, net

467

1,810

2,931

1,201

(977

)

Other components of net periodic benefit income

2,038

2,038

1,988

1,988

1,988

Miscellaneous

2,407

2,649

1,560

2,791

1,395

Total other income

$

31,238

$

34,089

$

35,656

$

36,558

$

30,964

Other expense:

Salaries

$

30,303

$

29,896

$

37,280

$

31,632

$

30,699

Employee benefits

10,056

10,201

7,316

10,676

9,080

Occupancy expense

3,027

3,640

3,231

3,835

3,256

Furniture and equipment expense

2,756

2,610

4,949

4,687

4,850

Data processing fees

7,150

7,712

3,315

3,275

2,577

Professional fees and services

6,973

5,664

9,359

7,977

6,901

Marketing

1,290

1,491

1,752

1,454

1,136

Insurance

1,276

1,691

1,855

1,541

1,477

Communication

770

1,122

1,097

958

874

State tax expense

1,103

1,108

605

1,125

1,116

Amortization of intangible assets

479

479

525

525

607

FHLB prepayment penalty

8,736

Foundation contributions

4,000

3,000

Miscellaneous

2,217

2,251

2,641

2,174

2,226

Total other expense

$

71,400

$

67,865

$

85,661

$

69,859

$

64,799


PARK NATIONAL CORPORATION

Asset Quality Information

Year ended December 31,

(in thousands, except ratios)

June 30, 2021

March 31, 2021

2020

2019

2018

2017

Allowance for credit losses:

Allowance for credit losses, beginning of period

$

86,886

$

85,675

$

56,679

$

51,512

$

49,988

$

50,624

Cumulative change in accounting principle; adoption of ASU 2016-13

6,090

Charge-offs

1,070

1,701

10,304

11,177

13,552

19,403

Recoveries

1,801

1,677

27,246

10,173

7,131

10,210

Net (recoveries) charge-offs

(731

)

24

(16,942

)

1,004

6,421

9,193

(Recovery of) provision for credit losses

(4,040

)

(4,855

)

12,054

6,171

7,945

8,557

Allowance for credit losses, end of period

$

83,577

$

86,886

$

85,675

$

56,679

$

51,512

$

49,988

General reserve trends:

Allowance for credit losses, end of period

$

83,577

$

86,886

$

85,675

$

56,679

$

51,512

$

49,988

Allowance on purchased credit deteriorated ("PCD") loans (purchased credit impaired ("PCI") loans for years 2020 and prior)

167

268

Allowance on purchased loans excluded from the general reserve

678

Specific reserves on individually evaluated loans

3,915

4,962

5,434

5,230

2,273

684

General reserves on collectively evaluated loans

$

79,662

$

81,924

$

79,396

$

51,181

$

49,239

$

49,304

Total loans

$

7,035,646

$

7,168,745

$

7,177,785

$

6,501,404

$

5,692,132

$

5,372,483

PCD loans (PCI loans for years 2020 and prior)

10,007

10,284

11,153

14,331

3,943

Purchased loans excluded from collectively evaluated loans

360,056

548,436

225,029

Individually evaluated loans

86,874

100,407

108,407

77,459

48,135

56,545

Collectively evaluated loans

$

6,938,765

$

7,058,054

$

6,698,169

$

5,861,178

$

5,415,025

$

5,315,938

Asset Quality Ratios:

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

(0.04

)

%

%

(0.24

)

%

0.02

%

0.12

%

0.17

%

Allowance for credit losses as a % of period end loans

1.19

%

1.21

%

1.19

%

0.87

%

0.90

%

0.93

%

Allowance for credit losses as a % of period end loans (excluding PPP loans) (k)

1.23

%

1.28

%

1.25

%

N.A.

N.A.

N.A.

General reserve as a % of collectively evaluated loans

1.15

%

1.16

%

1.19

%

0.87

%

0.91

%

0.93

%

General reserves as a % of collectively evaluated loans (excluding PPP loans) (k)

1.19

%

1.22

%

1.24

%

N.A.

N.A.

N.A.

Nonperforming assets:

Nonaccrual loans

$

96,760

$

114,708

$

117,368

$

90,080

$

67,954

$

72,056

Accruing troubled debt restructurings

17,420

14,817

20,788

21,215

15,173

20,111

Loans past due 90 days or more

515

802

1,458

2,658

2,243

1,792

Total nonperforming loans

$

114,695

$

130,327

$

139,614

$

113,953

$

85,370

$

93,959

Other real estate owned - Park National Bank

219

250

837

3,100

2,788

6,524

Other real estate owned - SEPH

594

594

594

929

1,515

7,666

Other nonperforming assets - Park National Bank

3,164

3,164

3,164

3,599

3,464

4,849

Total nonperforming assets

$

118,672

$

134,335

$

144,209

$

121,581

$

93,137

$

112,998

Percentage of nonaccrual loans to period end loans

1.38

%

1.60

%

1.64

%

1.39

%

1.19

%

1.34

%

Percentage of nonperforming loans to period end loans

1.63

%

1.82

%

1.95

%

1.75

%

1.50

%

1.75

%

Percentage of nonperforming assets to period end loans

1.69

%

1.87

%

2.01

%

1.87

%

1.64

%

2.10

%

Percentage of nonperforming assets to period end total assets

1.19

%

1.35

%

1.55

%

1.42

%

1.19

%

1.50

%

Note: Explanations for footnotes (a) - (l) 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)

June 30, 2021

March 31, 2021

2020

2019

2018

2017

New nonaccrual loan information:

Nonaccrual loans, beginning of period

$

114,708

$

117,368

$

90,080

$

67,954

$

72,056

$

87,822

New nonaccrual loans

11,342

12,540

103,386

81,009

76,611

58,753

Resolved nonaccrual loans

29,290

15,200

76,098

58,883

80,713

74,519

Nonaccrual loans, end of period

$

96,760

$

114,708

$

117,368

$

90,080

$

67,954

$

72,056

Impaired commercial loan portfolio information (period end):

Unpaid principal balance

$

87,502

$

100,996

$

109,062

$

78,178

$

59,381

$

66,585

Prior charge-offs

628

589

655

719

11,246

10,040

Remaining principal balance

86,874

100,407

108,407

77,459

48,135

56,545

Specific reserves

3,915

4,962

5,434

5,230

2,273

684

Book value, after specific reserves

$

82,959

$

95,445

$

102,973

$

72,229

$

45,862

$

55,861


PARK NATIONAL CORPORATION

Financial Reconciliations

NON-GAAP RECONCILIATIONS

THREE MONTHS ENDED

SIX MONTHS ENDED

(in thousands, except share and per share data)

June 30, 2021

March 31, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Net interest income

$

83,851

$

80,734

$

81,186

$

164,585

$

157,469

less purchase accounting accretion related to NewDominion and Carolina Alliance acquisitions

806

1,131

1,301

1,937

2,679

less interest income on former Vision Bank relationships

2,838

105

266

2,943

343

Net interest income - adjusted

$

80,207

$

79,498

$

79,619

$

159,705

$

154,447

(Recovery of) provision for credit losses

$

(4,040

)

$

(4,855

)

$

12,224

$

(8,895

)

$

17,377

less recoveries on former Vision Bank relationships

(152

)

(257

)

(685

)

(409

)

(1,449

)

(Recovery of) provision for credit losses - adjusted

$

(3,888

)

$

(4,598

)

$

12,909

$

(8,486

)

$

18,826

Other income

$

31,238

$

34,089

$

30,964

$

65,327

$

53,450

less net gain on sale of former Vision Bank OREO properties

837

837

less other service income related to former Vision Bank relationships

3

58

52

61

52

less rebranding initiative related expenses

(274

)

(274

)

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

3,313

3,313

Other income - adjusted

$

31,235

$

34,031

$

27,036

$

65,266

$

49,522

Other expense

$

71,400

$

67,865

$

64,799

$

139,265

$

131,075

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

4

12

214

16

457

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

479

479

607

958

1,213

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

300

107

407

less FHLB prepayment penalty

1,793

less rebranding initiative related expenses

342

955

138

1,297

408

less Foundation contribution

4,000

4,000

less severance and restructuring charges

46

108

248

154

336

less COVID-19 related expenses (j)

670

865

1,919

1,535

2,181

Other expense - adjusted

$

65,559

$

65,339

$

61,673

$

130,898

$

124,687

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

$

429

$

205

$

(641

)

$

634

$

(422

)

Net income - reported

$

39,132

$

42,831

$

29,505

$

81,963

$

51,877

Net income - adjusted (h)

$

40,745

$

43,601

$

27,092

$

84,346

$

50,288

Diluted EPS

$

2.38

$

2.61

$

1.80

$

4.98

$

3.16

Diluted EPS, adjusted (h)

$

2.47

$

2.65

$

1.65

$

5.13

$

3.07

Annualized return on average assets (a)(b)

1.59

%

1.81

%

1.26

%

1.70

%

1.15

%

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

1.66

%

1.84

%

1.16

%

1.75

%

1.12

%

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

1.62

%

1.84

%

1.28

%

1.73

%

1.18

%

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

1.68

%

1.87

%

1.18

%

1.78

%

1.14

%

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

14.81

%

16.63

%

11.89

%

15.71

%

10.54

%

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

15.42

%

16.93

%

10.92

%

16.16

%

10.21

%

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

17.60

%

19.84

%

14.33

%

18.70

%

12.73

%

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

18.33

%

20.19

%

13.16

%

19.25

%

12.34

%

Efficiency ratio (g)

61.65

%

58.74

%

57.41

%

60.20

%

61.72

%

Efficiency ratio, adjusted (g)(h)

58.45

%

57.19

%

57.44

%

57.82

%

60.70

%

Annualized net interest margin (g)

3.74

%

3.76

%

3.84

%

3.75

%

3.89

%

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

3.58

%

3.70

%

3.77

%

3.64

%

3.81

%

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


PARK NATIONAL CORPORATION

Financial Reconciliations (continued)

(a) Reported measure uses net income

(b) Averages are for the three months ended June 30, 2021, March 31, 2021, and June 30, 2020 and the six months ended June 30, 2021 and June 30, 2020, 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

SIX MONTHS ENDED

June 30, 2021

March 31, 2021

June 30, 2020

June 30, 2021

June 30, 2020

AVERAGE SHAREHOLDERS' EQUITY

$

1,059,949

$

1,044,412

$

998,288

$

1,052,223

$

990,132

Less: Average goodwill and other intangible assets

168,211

168,690

170,303

168,449

170,606

AVERAGE TANGIBLE EQUITY

$

891,738

$

875,722

$

827,985

$

883,774

$

819,526

(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:

June 30, 2021

March 31, 2021

June 30, 2020

TOTAL SHAREHOLDERS' EQUITY

$

1,069,392

$

1,041,271

$

1,001,594

Less: Goodwill and other intangible assets

167,897

168,376

169,905

TANGIBLE EQUITY

$

901,495

$

872,895

$

831,689

(e) Net income for each period divided by average tangible assets during the period. Average tangible assets equal 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

SIX MONTHS ENDED

June 30, 2021

March 31, 2021

June 30, 2020

June 30, 2021

June 30, 2020

AVERAGE ASSETS

$

9,872,078

$

9,612,542

$

9,408,265

$

9,743,027

$

9,044,027

Less: Average goodwill and other intangible assets

168,211

168,690

170,303

168,449

170,606

AVERAGE TANGIBLE ASSETS

$

9,703,867

$

9,443,852

$

9,237,962

$

9,574,578

$

8,873,421

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

RECONCILIATION OF TOTAL ASSETS TO TANGIBLE ASSETS:

June 30, 2021

March 31, 2021

June 30, 2020

TOTAL ASSETS

$

9,947,994

$

9,914,069

$

9,712,994

Less: Goodwill and other intangible assets

167,897

168,376

169,905

TANGIBLE ASSETS

$

9,780,097

$

9,745,693

$

9,543,089

(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 assuming a 21% corporate federal income 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

SIX MONTHS ENDED

June 30, 2021

March 31, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Interest income

$

87,994

$

85,173

$

87,445

$

173,167

$

176,354

Fully taxable equivalent adjustment

718

714

723

1,432

1,448

Fully taxable equivalent interest income

$

88,712

$

85,887

$

88,168

$

174,599

$

177,802

Interest expense

4,143

4,439

6,259

8,582

18,885

Fully taxable equivalent net interest income

$

84,569

$

81,448

$

81,909

$

166,017

$

158,917

(h) Adjustments to net income for each period presented are detailed in the non-GAAP reconciliations of net interest income, (recovery of) provision for credit losses, other income and other expense.

(i) The tax effect of adjustments to net income was calculated assuming a 21% corporate federal income tax rate.

(j) COVID-19 related expenses include calamity pay and special one-time bonuses to certain associates.

(k) Excludes $248.9 million, $387.0 million and $331.6 million of PPP loans at June 30, 2021, March 31, 2021 and December 31, 2020, respectively.

(l) Park adopted ASU 2016-13 effective January 1, 2021. The allowance for credit losses at June 30, 2021 and March 31, 2021 and the related (recovery of) provision for credit losses for the three months ended June 30, 2021 and March 31, 2021 and the six months ended June 30, 2021 were calculated utilizing this new guidance.