Park National Corporation reports 2020 financial results NYSE:PRK

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   113   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   $ 8,558,377        
Less: Goodwill and other intangible assets 168,855   169,380   171,118        
TANGIBLE ASSETS $ 9,110,166   $ 9,070,626   $ 8,387,259        
             
(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   TWELVE MONTHS ENDED
  December 31, 2020 September 30, 2020 December 31, 2019   December 31, 2020 December 31, 2019
Interest income $ 91,800   $ 89,566   $ 91,829     $ 357,720   $ 360,500  
Fully taxable equivalent adjustment 712   706   726     2,866   2,956  
Fully taxable equivalent interest income $ 92,512   $ 90,272   $ 92,555     $ 360,586   $ 363,456  
Interest expense 5,479   5,726   14,820     30,090   62,763  
Fully taxable equivalent net interest income $ 87,033   $ 84,546   $ 77,735     $ 330,496   $ 300,693  
             
(h) Adjustments to net income for each period presented are detailed in the non-GAAP reconciliations of net interest income, (recovery of) provision for loan 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 $337.1 million and $542.8 million of PPP loans at December 31, 2020 and September 30, 2020, respectively.
Media contact: Bethany Lewis, 740.349.0421, 
Investor contact: Brady Burt, 740.322.6844, 
Park National Corporation, 50 N. Third Street, Newark, Ohio 43055

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