PRK 8-K
Park National Corp /Oh/ (PRK)
8-K
2024-07-22
For: 2024-07-22
View Original
Added on
April 07, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
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Item 2.02 - Results of Operations and Financial Condition
On July 22, 2024, Park National Corporation (“Park”) issued a news release (the “Financial Results News Release”) announcing financial results for the three and six months ended June 30, 2024. A copy of the Financial Results News Release is included as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference herein.
Non-U.S. GAAP Financial Measures
Item 7.01 of this Current Report on Form 8-K as well as the Financial Results News Release contain non-U.S. GAAP (generally accepted accounting principles in the United States or "U.S. GAAP") financial measures where management believes them to be helpful in understanding Park’s results of operations or financial position. Where non-U.S. GAAP financial measures are used, the comparable U.S. GAAP financial measures, as well as the reconciliation from the comparable U.S. GAAP financial measures, can be found in the Financial Results News Release.
Items Impacting Comparability of Period Results
From time to time, revenue, expenses and/or taxes are impacted by items judged by management of Park to be outside of ordinary banking activities and/or by items that, while they may be associated with ordinary banking activities, are so unusually large that their impact is believed by management of Park at that time to be infrequent or short-term in nature. Most often, these items impacting comparability of period results are due to merger and acquisition activities and revenue and expenses related to former Vision Bank loan relationships. In other cases, they may result from management's decisions associated with significant corporate actions outside of the ordinary course of business.
Even though certain revenue and expense items are naturally subject to more volatility than others due to changes in market and economic environment conditions, as a general rule, volatility alone does not result in the inclusion of an item as one impacting comparability of period results. For example, changes in the provision for credit losses (aside from those related to former Vision Bank loan relationships), (losses) gains on equity securities, net, and asset valuation adjustments, reflect ordinary banking activities and are, therefore, typically excluded from consideration as items impacting comparability of period results.
Management believes the disclosure of items impacting comparability of period results provides a better understanding of Park's performance and trends and allows management to ascertain which of such items, if any, to include or exclude from an analysis of Park's performance; i.e., within the context of determining how that performance differed from expectations, as well as how, if at all, to adjust estimates of future performance taking such items into account.
Items impacting comparability of the results of particular periods are not intended to be a complete list of items that may materially impact current or future period performance.
Non-U.S. GAAP Financial Measures
Park's management uses certain non-U.S. GAAP financial measures to evaluate Park's performance. Specifically, management reviews the return on average tangible equity, the return on average tangible assets, the tangible equity to tangible assets ratio, tangible book value per common share and pre-tax, pre-provision net income.
Management has included in the Financial Results News Release information relating to the annualized return on average tangible equity, the annualized return on average tangible assets, the tangible equity to tangible assets ratio, tangible book value per common share and pre-tax, pre-provision net income for the three months ended and at June 30, 2024, March 31, 2024, and June 30, 2023 and for the six months ended June 30, 2024 and June 30, 2023. For the purpose of calculating the annualized return on average tangible equity, a non-U.S. GAAP financial measure, net income for each period is 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. For the purpose of calculating the annualized return on average tangible assets, a non-U.S. GAAP financial measure, net income for each period is divided by average tangible assets during the period. Average tangible assets equals average assets during the applicable period less average goodwill and other intangible assets during the applicable period. For the purpose of calculating the tangible equity to tangible assets ratio, a non-U.S. GAAP financial measure, tangible equity is divided by tangible assets. Tangible equity equals total shareholders' equity less goodwill and other intangible assets, in each case at period end. Tangible assets equal total assets less goodwill and other intangible assets, in each case at period end. For the purpose of calculating tangible book value per common share, a non-U.S. GAAP financial measure, tangible equity is divided by the number of common shares outstanding, in each case at period end. For the purpose of calculating pre-tax, pre-provision net income, a non-U.S. GAAP financial measure, income taxes and the provision for credit losses are added back to net income, in each case during the applicable period.
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Management believes that the disclosure of the annualized return on average tangible equity, the annualized return on average tangible assets, the tangible equity to tangible assets ratio, tangible book value per common share and pre-tax, pre-provision net income presents additional information to the reader of the consolidated financial statements, which, when read in conjunction with the consolidated financial statements prepared in accordance with U.S. GAAP, assists in analyzing Park's operating performance, ensures comparability of operating performance from period to period, and facilitates comparisons with the performance of Park's peer financial holding companies and bank holding companies, while eliminating certain non-operational effects of acquisitions. In the Financial Results News Release, Park has provided a reconciliation of average tangible equity from average shareholders' equity, average tangible assets from average assets, tangible equity from total shareholders' equity, tangible assets from total assets, and pre-tax, pre-provision net income from net income solely for the purpose of complying with SEC Regulation G and not as an indication that the annualized return on average tangible equity, the annualized return on average tangible assets, the tangible equity to tangible assets ratio, tangible book value per common share and pre-tax, pre-provision net income are substitutes for the annualized return on average equity, the annualized return on average assets, the total shareholders' equity to total assets ratio, book value per common share and net income, respectively, as determined in accordance with U.S. GAAP.
FTE (fully taxable equivalent) Financial Measures
Interest income, yields, and ratios on a FTE basis are considered non-U.S. GAAP financial measures. Management believes net interest income on a FTE basis provides an insightful picture of the interest margin for comparison purposes. The FTE basis also allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The FTE basis assumes a corporate federal statutory tax rate of 21 percent. In the Financial Results News Release, Park has provided a reconciliation of FTE interest income solely for the purpose of complying with SEC Regulation G and not as an indication that FTE interest income, yields and ratios are substitutes for interest income, yields and ratios, as determined in accordance with U.S. GAAP.
Item 7.01 - Regulation FD Disclosure
Financial Results
Net income for the three months ended June 30, 2024 of $39.4 million represented a $7.8 million, or 24.6%, increase compared to $31.6 million for the three months ended June 30, 2023. Pre-tax, pre-provision net income for the three months ended June 30, 2024 of $51.4 million represented a $10.7 million, or 26.4%, increase compared to $40.7 million for the three months ended June 30, 2023.
Net income for the six months ended June 30, 2024 of $74.6 million represented a $9.3 million, or 14.2%, increase compared to $65.3 million for the six months ended June 30, 2023. Pre-tax, pre-provision net income for the six months ended June 30, 2024 of $96.0 million represented a $15.2 million, or 18.9%, increase compared to $80.8 million for the six months ended June 30, 2023.
Net income for each of the three months ended June 30, 2024, March 31, 2024 and June 30, 2023 and for the six months ended June 30, 2024 and June 30, 2023, included several items of income and expense that impacted comparability of period results. These items are detailed in the "Financial Reconciliations" section within the Financial Results News Release.
The following discussion provides additional information regarding Park.
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Park National Corporation (Park)
The following table reflects the net income for the first and second quarters of 2024, for the first half of 2024 and 2023 (the six months ended June 30) and for the year ended December 31, 2023.
| (In thousands) | Q2 2024 | Q1 2024 | Six months YTD 2024 | Six months YTD 2023 | 2023 | ||||||||||||
| Net interest income | $ | 97,837 | $ | 95,623 | $ | 193,460 | $ | 183,770 | $ | 373,113 | |||||||
| Provision for credit losses | 3,113 | 2,180 | 5,293 | 2,675 | 2,904 | ||||||||||||
| Other income | 28,794 | 26,200 | 54,994 | 49,402 | 92,634 | ||||||||||||
| Other expense | 75,189 | 77,228 | 152,417 | 152,388 | 309,239 | ||||||||||||
| Income before income taxes | $ | 48,329 | $ | 42,415 | $ | 90,744 | $ | 78,109 | $ | 153,604 | |||||||
| Income tax expense | 8,960 | 7,211 | 16,171 | 12,792 | 26,870 | ||||||||||||
| Net income | $ | 39,369 | $ | 35,204 | $ | 74,573 | $ | 65,317 | $ | 126,734 | |||||||
Net interest income of $193.5 million for the six months ended June 30, 2024 represented a $9.7 million, or 5.3%, increase compared to $183.8 million for the six months ended June 30, 2023. The increase was a result of a $30.0 million increase in interest income, partially offset by a $20.3 million increase in interest expense.
The $30.0 million increase in interest income was due to a $38.5 million increase in interest income on loans, partially offset by a $8.5 million decrease in investment income. The $38.5 million increase in interest income on loans was primarily the result of a $419.2 million (or 5.89%) increase in average loans, from $7.12 billion for the six months ended June 30, 2023 to $7.53 billion for the six months ended June 30, 2024, as well as an increase in the yield on loans, which increased 72 basis points to 6.06% for the six months ended June 30, 2024, compared to 5.34% for the six months ended June 30, 2023. The $8.5 million decrease in investment income was primarily the result of a $581.1 million (or 28.0%) decrease in average investments, including money market investments, from $2.08 billion for the six months ended June 30, 2023 to $1.50 billion for the six months ended June 30, 2024. The decrease in average investments was partially offset by an increase in the yield on investments, including money market investments, which increased 21 basis points to 4.00% for the six months ended June 30, 2024, compared to 3.79% for the six months ended June 30, 2023.
The $20.3 million increase in interest expense was due to a $19.5 million increase in interest expense on deposits, as well as a $0.8 million increase in interest expense on borrowings. The increase in interest expense on deposits was the result of a $142.4 million (or 2.59%) increase in average on-balance sheet interest bearing deposits from $5.49 billion for the six months ended June 30, 2023, to $5.64 billion for the six months ended June 30, 2024, as well as an increase in the cost of deposits of 66 basis points, from 1.31% for the six months ended June 30, 2023 to 1.97% for the six months ended June 30, 2024. The increase in on-balance sheet interest bearing deposits was due to an increase in brokered deposits, bid CD deposits and time deposits, which was partially offset by decreases in savings accounts and transaction accounts.
The provision for credit losses of $5.3 million for the six months ended June 30, 2024 represented an increase of $2.6 million, compared to $2.7 million for the six months ended June 30, 2023. Refer to the “Credit Metrics and Provision for Credit Losses” section for additional details regarding the level of the provision for credit losses recognized in each period presented.
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The table below reflects Park's total other income for the six months ended June 30, 2024 and 2023.
| (Dollars in thousands) | 2024 | 2023 | $ change | % change | ||||||||||
| Other income: | ||||||||||||||
| Income from fiduciary activities | $ | 20,752 | $ | 17,431 | $ | 3,321 | 19.1 | % | ||||||
| Service charges on deposit accounts | 4,320 | 4,282 | 38 | 0.9 | % | |||||||||
| Other service income | 5,430 | 5,336 | 94 | 1.8 | % | |||||||||
| Debit card fee income | 12,823 | 13,287 | (464) | (3.5) | % | |||||||||
| Bank owned life insurance income | 4,194 | 2,517 | 1,677 | 66.6 | % | |||||||||
| ATM fees | 954 | 1,086 | (132) | (12.2) | % | |||||||||
| Loss on sale of debt securities, net | (398) | — | (398) | N.M. | ||||||||||
| Loss on equity securities, net | (329) | (380) | 51 | (13.4) | % | |||||||||
| Other components of net periodic benefit income | 4,408 | 3,786 | 622 | 16.4 | % | |||||||||
| Miscellaneous | 2,840 | 2,057 | 783 | 38.1 | % | |||||||||
| Total other income | $ | 54,994 | $ | 49,402 | $ | 5,592 | 11.3 | % | ||||||
Other income of $55.0 million for the six months ended June 30, 2024 represented an increase of $5.6 million, or 11.3%, compared to $49.4 million for the six months ended June 30, 2023. The $3.3 million increase in income from fiduciary activities was largely due to an increase in the market value of assets under management as well as updates to the fee structure. The $464,000 decrease in debit card fee income was partially due to a decrease in the average blended interchange rate per transaction, which is influenced by various factors, including the average spend per transaction. The $1.7 million increase in bank owned life insurance income was primarily related to an increase in death benefits received during the six months ended June 30, 2024. The change in loss on sale of debt securities, net was due to net losses on the sale of debt securities of $398,000 recorded during the six months ended June 30, 2024. No loss on sale of debt securities, net was recorded during the six months ended June 30, 2023. The $622,000 increase in other components of net periodic benefit income was largely due to an increase in the expected return on plan assets, and was partially offset by an increase in interest cost. The increase in miscellaneous income was largely due to an increase in net gain on sale of assets.
The table below reflects Park's total other expense for the six months ended June 30, 2024 and 2023.
| (Dollars in thousands) | 2024 | 2023 | $ change | % change | ||||||||||
| Other expense: | ||||||||||||||
| Salaries | $ | 71,687 | $ | 68,520 | $ | 3,167 | 4.6 | % | ||||||
| Employee benefits | 21,433 | 21,354 | 79 | 0.4 | % | |||||||||
| Occupancy expense | 6,156 | 6,567 | (411) | (6.3) | % | |||||||||
| Furniture and equipment expense | 5,037 | 6,349 | (1,312) | (20.7) | % | |||||||||
| Data processing fees | 18,350 | 18,332 | 18 | 0.1 | % | |||||||||
| Professional fees and services | 12,839 | 14,586 | (1,747) | (12.0) | % | |||||||||
| Marketing | 2,905 | 2,558 | 347 | 13.6 | % | |||||||||
| Insurance | 3,495 | 3,774 | (279) | (7.4) | % | |||||||||
| Communication | 2,038 | 2,082 | (44) | (2.1) | % | |||||||||
| State tax expense | 2,239 | 2,374 | (135) | (5.7) | % | |||||||||
| Amortization of intangible assets | 640 | 655 | (15) | (2.3) | % | |||||||||
| Miscellaneous | 5,598 | 5,237 | 361 | 6.9 | % | |||||||||
| Total other expense | $ | 152,417 | $ | 152,388 | $ | 29 | — | % | ||||||
Total other expense of $152.4 million for the six months ended June 30, 2024 represented an increase of $29,000 compared to $152.4 million for the six months ended June 30, 2023. The increase in salaries expense was primarily related to increases in base salary expense and officer incentive compensation expense, partially offset by decreases in share-based compensation
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expense and additional compensation expense. The decrease in occupancy expense was primarily due to decreases in lease expense and utilities expense. The decrease in furniture and equipment expense was primarily due to decreases in depreciation expense and maintenance and repairs expense. The decrease in professional fees and services expense was primarily due to decreases in legal expenses, consulting expenses and other fees expense, partially offset by increases in credit services expense and IntraFi deposit fee expense.
The table below provides certain balance sheet information and financial ratios for Park as of or for the six months ended June 30, 2024 and 2023 and the year ended December 31, 2023.
| (Dollars in thousands) | June 30, 2024 | December 31, 2023 | June 30, 2023 | % change from 12/31/23 | % change from 6/30/23 | |||||||||||||||
| Loans | 7,664,377 | 7,476,221 | 7,208,109 | 2.52 | % | 6.33 | % | |||||||||||||
| Allowance for credit losses | 86,575 | 83,745 | 87,206 | 3.38 | % | (0.72) | % | |||||||||||||
| Net loans | 7,577,802 | 7,392,476 | 7,120,903 | 2.51 | % | 6.42 | % | |||||||||||||
| Investment securities | 1,264,858 | 1,429,144 | 1,756,953 | (11.50) | % | (28.01) | % | |||||||||||||
| Total assets | 9,919,783 | 9,836,453 | 9,899,551 | 0.85 | % | 0.20 | % | |||||||||||||
| Total deposits | 8,312,505 | 8,042,566 | 8,358,976 | 3.36 | % | (0.56) | % | |||||||||||||
Average assets (1) | 9,837,352 | 9,957,554 | 9,987,953 | (1.21) | % | (1.51) | % | |||||||||||||
Efficiency ratio (2) | 61.05 | % | 65.87 | % | 64.84 | % | (7.32) | % | (5.85) | % | ||||||||||
Return on average assets (3) | 1.52 | % | 1.27 | % | 1.32 | % | 19.69 | % | 15.15 | % | ||||||||||
(1) Average assets for the six months ended June 30, 2024 and 2023 and for the year ended December 31, 2023.
(2) 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 includes the effects of taxable equivalent adjustments using a 21% federal corporate income tax rate. The taxable equivalent adjustments were $1.2 million and $1.8 million for the six months ended June 30, 2024 and 2023 and $3.7 million for the year ended December 31, 2023.
(3) Annualized for the six months ended June 30, 2024 and 2023.
Loans
Loans outstanding at June 30, 2024 were $7.66 billion, compared to (i) $7.48 billion at December 31, 2023, an increase of $188.2 million, and (ii) $7.21 billion at June 30, 2023, an increase of $456.3 million. The table below breaks out the change in loans outstanding, by loan type.
| (Dollars in thousands) | June 30, 2024 | December 31, 2023 | June 30, 2023 | $ change from 12/31/23 | % change from 12/31/23 | $ change from 6/30/23 | % change from 6/30/23 | ||||||||||||||||||||||
| Home equity | $ | 185,635 | $ | 174,621 | $ | 168,256 | $ | 11,014 | 6.3 | % | $ | 17,379 | 10.3 | % | |||||||||||||||
| Installment | 1,943,108 | 1,950,304 | 1,945,190 | (7,196) | (0.4) | % | (2,082) | (0.1) | % | ||||||||||||||||||||
| Real estate | 1,394,468 | 1,340,169 | 1,252,243 | 54,299 | 4.1 | % | 142,225 | 11.4 | % | ||||||||||||||||||||
| Commercial | 4,135,595 | 4,007,941 | 3,838,318 | 127,654 | 3.2 | % | 297,277 | 7.7 | % | ||||||||||||||||||||
| Other | 5,571 | 3,186 | 4,102 | 2,385 | 74.9 | % | 1,469 | 35.8 | % | ||||||||||||||||||||
Total loans | $ | 7,664,377 | $ | 7,476,221 | $ | 7,208,109 | $ | 188,156 | 2.5 | % | $ | 456,268 | 6.3 | % | |||||||||||||||
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Loans outstanding at June 30, 2024 were $7.66 billion, compared to $7.53 billion at March 31, 2024, an increase of $139.4 million. The $139.4 million increase represented a 1.9% (7.4% annualized) increase during the three months ended June 30, 2024. The table below breaks out the change in loans outstanding, by loan type.
| (Dollars in thousands) | June 30, 2024 | March 31, 2024 | $ change from 3/31/24 | % change from 3/31/24 | |||||||||||||
| Home equity | $ | 185,635 | $ | 177,094 | $ | 8,541 | 4.8 | % | |||||||||
| Installment | 1,943,108 | 1,947,215 | (4,107) | (0.2) | % | ||||||||||||
| Real estate | 1,394,468 | 1,359,193 | 35,275 | 2.6 | % | ||||||||||||
| Commercial | 4,135,595 | 4,038,327 | 97,268 | 2.4 | % | ||||||||||||
| Other | 5,571 | 3,176 | 2,395 | 75.4 | % | ||||||||||||
Total loans | $ | 7,664,377 | $ | 7,525,005 | $ | 139,372 | 1.9 | % | |||||||||
Park's allowance for credit losses was $86.6 million at June 30, 2024, compared to $83.7 million at December 31, 2023, an increase of $2.8 million, or 3.4%. Refer to the “Credit Metrics and Provision for Credit Losses” section for additional information regarding Park's loan portfolio and the level of provision for credit losses recognized in each period presented.
Deposits
Total deposits at June 30, 2024 were $8.31 billion, compared to (i) $8.04 billion at December 31, 2023, an increase of $269.9 million and (ii) $8.36 billion at June 30, 2023, a decrease of $46.5 million.
| (Dollars in thousands) | June 30, 2024 | December 31, 2023 | June 30, 2023 | $ change from 12/31/23 | % change from 12/31/23 | $ change from 6/30/23 | % change from 6/30/23 | ||||||||||||||||||||||
| Non-interest bearing deposits | $ | 2,542,446 | $ | 2,628,234 | $ | 2,796,009 | $ | (85,788) | (3.3) | % | $ | (253,563) | (9.1) | % | |||||||||||||||
| Transaction accounts | 2,146,457 | 2,064,512 | 2,238,131 | 81,945 | 4.0 | % | (91,674) | (4.1) | % | ||||||||||||||||||||
| Savings | 2,765,196 | 2,543,220 | 2,756,228 | 221,976 | 8.7 | % | 8,968 | 0.3 | % | ||||||||||||||||||||
| Certificates of deposit | 682,207 | 641,615 | 568,608 | 40,592 | 6.3 | % | 113,599 | 20.0 | % | ||||||||||||||||||||
| Brokered and bid CD deposits | 176,199 | 164,985 | — | 11,214 | 6.8 | % | 176,199 | N.M. | |||||||||||||||||||||
| Total deposits | $ | 8,312,505 | $ | 8,042,566 | $ | 8,358,976 | $ | 269,939 | 3.4 | % | $ | (46,471) | (0.6) | % | |||||||||||||||
Park's deposits grew during the COVID pandemic and declined toward pre-pandemic levels throughout 2022 and 2023. In order to manage the impact of this growth on its balance sheet, Park utilized a program where certain deposit balances are transferred off balance sheet while maintaining the customer relationship. Park is able to increase or decrease the amount of deposit balances transferred off balance sheet based on its balance sheet management strategies and liquidity needs. The balance of deposits transferred off balance sheet has declined as deposit balances declined toward pre-pandemic levels.
The table below breaks out the change in deposit balances, by deposit type, for Park.
| (Dollars in thousands) | June 30, 2024 | December 31, 2023 | December 31, 2022 | December 31, 2021 | December 31, 2020 | December 31, 2019 | ||||||||||||||
| Retail deposits | $ | 3,968,739 | $ | 4,080,372 | $ | 4,388,394 | $ | 4,416,228 | $ | 4,025,852 | $ | 3,748,039 | ||||||||
| Commercial deposits | 4,167,567 | 3,797,209 | 3,846,321 | 3,488,300 | 3,535,578 | 3,233,269 | ||||||||||||||
| Brokered and bid CD deposits | 176,199 | 164,985 | — | — | 10,928 | 71,304 | ||||||||||||||
| Total deposits | $ | 8,312,505 | $ | 8,042,566 | $ | 8,234,715 | $ | 7,904,528 | $ | 7,572,358 | $ | 7,052,612 | ||||||||
| Off balance sheet deposits | — | 1,185 | 195,937 | 983,053 | 710,101 | — | ||||||||||||||
| Total deposits including off balance sheet deposits | $ | 8,312,505 | $ | 8,043,751 | $ | 8,430,652 | $ | 8,887,581 | $ | 8,282,459 | $ | 7,052,612 | ||||||||
| $ change from prior period end | $ | 268,754 | $ | (386,901) | $ | (456,929) | $ | 605,122 | $ | 1,229,847 | ||||||||||
| % change from prior period end | 3.3 | % | (4.6) | % | (5.1) | % | 7.3 | % | 17.4 | % | ||||||||||
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During the six months ended June 30, 2024, total deposits including off balance sheet deposits increased by $268.8 million, or 3.3%. This increase consisted of a $370.4 million increase in total commercial deposits and a $11.2 million increase in brokered and bid CD deposits, partially offset by a $111.6 million decrease in total retail deposits and a $1.2 million decrease in off balance sheet deposits. The majority of off balance sheet deposits were commercial and thus impact the increase in commercial deposits as the deposits are moved back onto the balance sheet.
The table below breaks out the change in deposit balance, by deposit type, for June 30, 2024 compared to June 30, 2023.
| (Dollars in thousands) | June 30, 2024 | June 30, 2023 | $ change from 6/30/23 | % change from 6/30/23 | ||||||||||
| Retail deposits | $ | 3,968,739 | $ | 4,136,401 | $ | (167,662) | (4.1) | % | ||||||
| Commercial deposits | 4,167,567 | 4,222,575 | (55,008) | (1.3) | % | |||||||||
| Brokered and bid CD deposits | 176,199 | — | 176,199 | N.M. | ||||||||||
| Total deposits | $ | 8,312,505 | $ | 8,358,976 | $ | (46,471) | (0.6) | % | ||||||
| Off balance sheet deposits | $ | — | $ | 767 | $ | (767) | (100.0) | % | ||||||
| Total deposits including off balance sheet deposits | $ | 8,312,505 | $ | 8,359,743 | $ | (47,238) | (0.6) | % | ||||||
At June 30, 2024, total deposits including off balance sheet deposits decreased by $47.2 million, or 0.6%, to $8.31 billion compared to $8.36 billion at June 30, 2023. This decrease consisted of a $167.7 million decrease in total retail deposits and a $55.0 million decrease in total commercial deposits, partially offset by a $176.2 million increase in brokered and bid CD deposits.
Included in the total commercial deposits and off balance sheet deposits shown in the previous tables are public fund deposits. These balances fluctuate based on seasonality and the cycle of collection and remittance of tax funds. Public funds are also included in Bid Ohio CDs and repurchase agreement borrowings, which are included in short term borrowings. The following table details the change in public funds held on Park's balance sheet.
| (Dollars in thousands) | June 30, 2024 | December 31, 2023 | June 30, 2023 | December 31, 2022 | December 31, 2021 | December 31, 2020 | December 31, 2019 | ||||||||||||||||
| Public funds included in commercial deposits | $ | 1,461,362 | $ | 1,090,236 | $ | 1,429,770 | $ | 1,108,055 | $ | 1,334,431 | $ | 1,088,871 | $ | 1,117,433 | |||||||||
| Public funds included in repurchase agreement borrowings | 94,479 | 108,182 | 143,914 | 227,345 | 213,786 | 317,230 | 175,657 | ||||||||||||||||
| Bid Ohio CDs | 135,000 | 15,000 | — | — | — | — | — | ||||||||||||||||
| Total public fund deposits | $ | 1,690,841 | $ | 1,213,418 | $ | 1,573,684 | $ | 1,335,400 | $ | 1,548,217 | $ | 1,406,101 | $ | 1,293,090 | |||||||||
| $ change from prior period end | $ | 477,423 | $ | (360,266) | $ | 238,284 | $ | (212,817) | $ | 142,116 | $ | 113,011 | |||||||||||
| % change from prior period end | 39.3 | % | (22.9) | % | 17.8 | % | (13.7) | % | 10.1 | % | 8.7 | % | |||||||||||
As of June 30, 2024, Park had approximately $1.4 billion of uninsured deposits, which was 16.9% of total deposits. Uninsured deposits of $1.4 billion included $455.0 million of deposits that were over $250,000, but were fully collateralized by Park's investment securities portfolio.
Credit Metrics and Provision for Credit Losses
Park reported a provision for credit losses for the six months ended June 30, 2024 of $5.3 million, compared to $2.7 million for the six months ended June 30, 2023. Net charge-offs were $2.5 million, or 0.07% annualized, of total average loans, for the six months ended June 30, 2024, compared to $1.2 million, or 0.03% annualized, of total average loans, for the six months ended June 30, 2023.
8
The table below provides additional information related to Park's allowance for credit losses as of June 30, 2024, December 31, 2023 and June 30, 2023.
| (Dollars in thousands) | 6/30/2024 | 12/31/2023 | 6/30/2023 | ||||||||
| Total allowance for credit losses | $ | 86,575 | $ | 83,745 | $ | 87,206 | |||||
| Allowance on accruing purchased credit deteriorated ("PCD") loans | — | — | — | ||||||||
| Specific reserves on individually evaluated loans | 5,311 | 4,983 | 4,132 | ||||||||
| General reserves on collectively evaluated loans | $ | 81,264 | $ | 78,762 | $ | 83,074 | |||||
| Total loans | $ | 7,664,377 | $ | 7,476,221 | $ | 7,208,109 | |||||
| Accruing PCD loans | 2,420 | 2,835 | 4,455 | ||||||||
| Individually evaluated loans | 54,993 | 45,215 | 43,887 | ||||||||
| Collectively evaluated loans | $ | 7,606,964 | $ | 7,428,171 | $ | 7,159,767 | |||||
| Total allowance for credit losses as a % of total loans | 1.13 | % | 1.12 | % | 1.21 | % | |||||
| General reserve as a % of collectively evaluated loans | 1.07 | % | 1.06 | % | 1.16 | % | |||||
The total allowance for credit losses of $86.6 million at June 30, 2024 represented a $2.8 million, or 3.4%, increase compared to $83.7 million at December 31, 2023. The increase was due to a $2.5 million increase in general reserves and a $328,000 increase in specific reserves.
As part of its quarterly allowance process, Park evaluates certain industries which are more likely to be under economic stress in the current environment. The office sector continues to face challenges as it adjusts to the new normal of work from home brought on by the pandemic. Nationally, office properties in downtown and urban business districts are seeing the most stress. As of June 30, 2024, Park had $226.4 million of loans which were fully or partially secured by non-owner-occupied office space, $224.9 million of which were accruing. This portfolio is not currently exhibiting signs of stress, but Park continues to monitor this portfolio, and others, for signs of deterioration.
9
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Park cautions that any forward-looking statements contained in this Current Report on Form 8-K or made by management of Park are provided to assist in the understanding of anticipated future financial performance. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements.
Risks and uncertainties that could cause actual results to differ materially include, without limitation:
◦Park's ability to execute our business plan successfully and within the expected timeframe as well as our ability to manage strategic initiatives;
◦current and future economic and financial market conditions, either nationally or in the states in which Park and our subsidiaries do business, that may reflect deterioration in business and economic conditions, including the effects of higher unemployment rates or labor shortages, the impact of persistent inflation, the impact of continued elevated interest rates, changes in the economy or global supply chain, supply-demand imbalances affecting local real estate prices, U.S. fiscal debt, budget and tax matters, geopolitical matters (including the impact of the Russia-Ukraine conflict and associated sanctions and export controls as well as the Israel-Hamas conflict), and any slowdown in global economic growth, any 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 changes in 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;
◦the effect of monetary and other fiscal policies (including the impact of money supply, ongoing increasing market interest rate policies and policies impacting inflation, of the Federal Reserve Board, the U.S. Treasury and other governmental agencies) as well as disruption in the liquidity and functioning of U.S. financial markets, 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 net interest margins;
◦changes in the federal, state, or local tax laws 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 and otherwise negatively impact our financial performance;
◦the impact of the changes in federal, state and local governmental policy, including the regulatory landscape, capital markets, elevated government debt, potential changes in tax legislation that may increase tax rates, government shutdown, infrastructure spending and social programs;
◦changes in laws or requirements imposed by Park's regulators impacting Park's capital actions, including dividend payments and stock repurchases;
◦changes in consumer spending, borrowing and saving habits, whether due to changes in retail distribution strategies, consumer preferences and behaviors, changes in business and economic conditions, legislative and regulatory initiatives, or other factors may be different than anticipated;
◦changes in customers', suppliers', and other counterparties' performance and creditworthiness, and Park's expectations regarding future credit losses and our allowance for credit losses, may be different than anticipated due to the continuing impact of and the various responses to inflationary pressures and continued elevated interest rates;
◦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 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 Park's 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;
◦Park's ability to meet heightened supervisory requirements and expectations;
◦the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board, the SEC, the Public Company Accounting Oversight Board and other regulatory agencies, 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 which may prove unreliable, inaccurate or not predictive of actual results;
◦the possibility that future credit losses may be higher than currently expected due to changes in economic assumptions;
10
◦Park's ability to anticipate and respond to technological changes and Park's reliance on, and the potential failure of, a number of third-party vendors to perform as expected, including Park's primary core banking system provider, which can impact 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;
◦Park's 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 impact on Park's business and operating results of any costs associated with obtaining rights in intellectual property claimed by others and of the adequacy of Park's intellectual property protection in general;
◦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, closing of border crossings and changes in the relationship of the U.S. and its global trading partners);
◦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 effect of a fall in stock market prices on Park's asset and wealth management businesses;
◦our litigation and regulatory compliance exposure, including the costs and effects of any adverse developments in legal proceedings or other claims, the costs and effects of unfavorable resolution of regulatory and other governmental examinations or other inquiries, and liabilities and business restrictions resulting from litigation and regulatory investigations;
◦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, dislocations, regional or national protests and civil unrest (including any resulting branch closures or damages), military or terrorist activities or international hostilities (especially in light of the Russia-Ukraine conflict and the Israel-Hamas conflict) on the economy and financial markets generally and on us or our counterparties specifically;
◦the potential further deterioration of the U.S. economy due to financial, political, or other shocks;
◦the effect of healthcare laws in the U.S. and potential changes for such laws which may increase our healthcare and other costs and negatively impact our operations and financial results;
◦the impact of larger or similar-sized financial institutions encountering problems which may adversely affect the banking industry and/or Park's business generation and retention, funding and liquidity, including potential increased regulatory requirements and increased reputational risk and potential impacts to macroeconomic conditions;
◦Park's continued ability to grow deposits or maintain adequate deposit levels due to changing customer behaviors;
◦unexpected outflows of deposits which may require Park to sell assets at a loss; and
◦other risk factors included in the current and periodic reports filed by Park with the SEC from time to time.
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.
11
Item 8.01 - Other Events
Declaration of Cash Dividend
As reported in the Financial Results News Release, on July 22, 2024, the Park Board declared a $1.06 per common share quarterly cash dividend in respect of Park's common shares. The cash dividend is payable on September 10, 2024 to common shareholders of record as of the close of business on August 16, 2024. A copy of the Financial Results News Release is included as Exhibit 99.1 and the portion thereof addressing the declaration of the quarterly cash dividend by the Park Board is incorporated by reference herein.
Item 9.01 - Financial Statements and Exhibits.
(a)Not applicable
(b)Not applicable
(c)Not applicable
(d)Exhibits. The following exhibits are included with this Current Report on Form 8-K:
Exhibit No. Description
99.1 News Release issued by Park National Corporation on July 22, 2024 addressing financial results for the three months and six months ended June 30, 2024 and declaration of quarterly cash dividend
104 Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document)
12
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PARK NATIONAL CORPORATION | ||||||||
| Dated: July 22, 2024 | By: | /s/ Brady T. Burt | ||||||
| Brady T. Burt | ||||||||
| Chief Financial Officer, Secretary and Treasurer | ||||||||
13
July 22, 2024 Exhibit 99.1
Park National Corporation reports financial results
for second quarter and first half of 2024
NEWARK, Ohio ‒ Park National Corporation (Park) (NYSE American: PRK) today reported financial results for the second quarter and first half of 2024. Park's board of directors declared a quarterly cash dividend of $1.06 per common share, payable on September 10, 2024, to common shareholders of record as of August 16, 2024.
“Our performance stems from our commitment to provide consistent financial support, to remain resilient in uncertain times, and to never stop searching for new ways to serve customers,” said Park Chairman and Chief Executive Officer David Trautman. “We’re eager to introduce new tools that will make our banking services more accessible than ever and allow more people to experience a wonderful blend of digital elegance and human empathy in banking with Park.”
Park’s net income for the second quarter of 2024 was $39.4 million, a 24.6 percent increase from $31.6 million for the second quarter of 2023. Second quarter 2024 net income per diluted common share was $2.42, compared to $1.94 for the second quarter of 2023. Park's net income for the first half of 2024 was $74.6 million, a 14.2 percent increase from $65.3 million for the first half of 2023. Net income per diluted common share for the first half of 2024 was $4.60 compared to $4.01 for the first half of 2023.
Park’s total loans increased 2.5 percent (5.1 percent annualized) during the first half of 2024 and increased 6.3% for the 12-month period ended June 30, 2024. Park's total loans increased 1.9 percent (7.4 percent annualized) during the three months ended June 30, 2024.
Park's total deposits increased 3.4 percent (6.7 percent annualized) during the first half of 2024 and decreased 0.6 percent for the 12-month period ended June 30, 2024. The combination of strong loan growth and steady deposits resulted in a net interest margin of 4.39 percent for the three months ended June 30, 2024, compared to 4.28 percent for the three months ended March 31, 2024, and 4.07 percent for the three months ended June 30, 2023. For the first half of 2024 the net interest margin was 4.33 percent compared to 4.07 percent for the first half of 2023.
“We continue to experience growth in net interest income, supported by year-to-date annualized commercial loan growth of 6.4 percent that reflects our consistent approach to lending regardless of economic fluctuations and the interest rate environment,” said Park President Matthew Miller. “We’re also pleased to report growth in net income and earnings per share, demonstrating our bankers’ commitment to controlling expenses and leveraging technology as we prepare to cross $10 billion in assets.”
Headquartered in Newark, Ohio, Park National Corporation has $9.9 billion in total assets (as of June 30, 2024). 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: Michelle Hamilton, 740.349.6014, [email protected]
Investor contact: Brady Burt, 740.322.6844, [email protected]
Park National Corporation, 50 N. Third Street, Newark, Ohio 43055
Park National Corporation
50 N. Third Street, Newark, Ohio 43055
www.parknationalcorp.com
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Park cautions that any forward-looking statements contained in this 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, including those described in Park's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as updated by our filings with the SEC. 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: (1) Park's ability to execute our business plan successfully and within the expected timeframe; (2) adverse changes in future economic and financial market conditions; (3) adverse changes in real estate values and liquidity in our primary market areas; (4) the financial health of our commercial borrowers; (5) adverse changes in federal, state and local governmental law and policy, including the regulatory landscape, capital markets, elevated government debt, potential changes in tax legislation, government shutdown, infrastructure spending and social programs; (6) changes in consumer spending, borrowing and saving habits; (7) our litigation and regulatory compliance exposure; (8) increased credit risk and higher credit losses resulting from loan concentrations; (9) competitive pressures among financial services organizations; (10) changes in accounting policies and practices as may be adopted by regulatory agencies; (11) Park's assumptions and estimates used in applying critical accounting policies and modeling which may prove unreliable, inaccurate or not predictive of actual results; (12) Park's ability to anticipate and respond to technological changes and Park's reliance on, and the potential failure of, a number of third-party vendors to perform as expected; (13) failures in or breaches of Park's operational or security systems or infrastructure, or those of our third-party vendors and other service providers; (14) negative impacts 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; (15) effects of a fall in stock market prices on Park's asset and wealth management businesses; (16) continued availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends; (17) the impact on Park's business, personnel, facilities or systems of losses related to acts of fraud, scams and schemes of third parties; (18) the impact of widespread natural and other disasters, pandemics, 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; (19) the potential further deterioration of the U.S. economy due to financial, political, or other shocks; (20) the effect of healthcare laws in the U.S. and potential changes for such laws that may increase our healthcare and other costs and negatively impact our operations and financial results; (21) the impact of larger or similar-sized financial institutions encountering problems that may adversely affect the banking industry; (22) and other risk factors relating to the financial services industry.
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
50 N. Third Street, Newark, Ohio 43055
www.parknationalcorp.com
| PARK NATIONAL CORPORATION | ||||||||||||||||||||
| Financial Highlights | ||||||||||||||||||||
| As of or for the three months ended June 30, 2024, March 31, 2024 and June 30, 2023 | ||||||||||||||||||||
| 2024 | 2024 | 2023 | Percent change vs. | |||||||||||||||||
| (in thousands, except common share and per common share data and ratios) | 2nd QTR | 1st QTR | 2nd QTR | 1Q '24 | 2Q '23 | |||||||||||||||
| INCOME STATEMENT: | ||||||||||||||||||||
| Net interest income | $ | 97,837 | $ | 95,623 | $ | 91,572 | 2.3 | % | 6.8 | % | ||||||||||
| Provision for credit losses | 3,113 | 2,180 | 2,492 | 42.8 | % | 24.9 | % | |||||||||||||
| Other income | 28,794 | 26,200 | 25,015 | 9.9 | % | 15.1 | % | |||||||||||||
| Other expense | 75,189 | 77,228 | 75,885 | (2.6) | % | (0.9) | % | |||||||||||||
| Income before income taxes | $ | 48,329 | $ | 42,415 | $ | 38,210 | 13.9 | % | 26.5 | % | ||||||||||
| Income taxes | 8,960 | 7,211 | 6,626 | 24.3 | % | 35.2 | % | |||||||||||||
| Net income | $ | 39,369 | $ | 35,204 | $ | 31,584 | 11.8 | % | 24.6 | % | ||||||||||
| MARKET DATA: | ||||||||||||||||||||
| Earnings per common share - basic (a) | $ | 2.44 | $ | 2.18 | $ | 1.95 | 11.9 | % | 25.1 | % | ||||||||||
| Earnings per common share - diluted (a) | 2.42 | 2.17 | 1.94 | 11.5 | % | 24.7 | % | |||||||||||||
| Quarterly cash dividend declared per common share | 1.06 | 1.06 | 1.05 | — | % | 1.0 | % | |||||||||||||
| Book value per common share at period end | 73.27 | 71.95 | 67.40 | 1.8 | % | 8.7 | % | |||||||||||||
| Market price per common share at period end | 142.34 | 135.85 | 102.32 | 4.8 | % | 39.1 | % | |||||||||||||
| Market capitalization at period end | 2,298,723 | 2,199,556 | 1,652,818 | 4.5 | % | 39.1 | % | |||||||||||||
| Weighted average common shares - basic (b) | 16,149,523 | 16,116,842 | 16,165,119 | 0.2 | % | (0.1) | % | |||||||||||||
| Weighted average common shares - diluted (b) | 16,239,617 | 16,191,065 | 16,240,600 | 0.3 | % | — | % | |||||||||||||
| Common shares outstanding at period end | 16,149,523 | 16,149,523 | 16,153,425 | — | % | — | % | |||||||||||||
| PERFORMANCE RATIOS: (annualized) | ||||||||||||||||||||
| Return on average assets (a)(b) | 1.61 | % | 1.44 | % | 1.28 | % | 11.8 | % | 25.8 | % | ||||||||||
| Return on average shareholders' equity (a)(b) | 13.52 | % | 12.23 | % | 11.61 | % | 10.5 | % | 16.5 | % | ||||||||||
| Yield on loans | 6.13 | % | 5.99 | % | 5.43 | % | 2.3 | % | 12.9 | % | ||||||||||
| Yield on investment securities | 3.83 | % | 3.90 | % | 3.73 | % | (1.8) | % | 2.7 | % | ||||||||||
| Yield on money market instruments | 5.33 | % | 5.48 | % | 5.11 | % | (2.7) | % | 4.3 | % | ||||||||||
| Yield on interest earning assets | 5.78 | % | 5.66 | % | 5.08 | % | 2.1 | % | 13.8 | % | ||||||||||
| Cost of interest bearing deposits | 1.99 | % | 1.94 | % | 1.46 | % | 2.6 | % | 36.3 | % | ||||||||||
| Cost of borrowings | 4.08 | % | 4.25 | % | 3.54 | % | (4.0) | % | 15.3 | % | ||||||||||
| Cost of paying interest bearing liabilities | 2.10 | % | 2.08 | % | 1.58 | % | 1.0 | % | 32.9 | % | ||||||||||
| Net interest margin (g) | 4.39 | % | 4.28 | % | 4.07 | % | 2.6 | % | 7.9 | % | ||||||||||
| Efficiency ratio (g) | 59.09 | % | 63.07 | % | 64.58 | % | (6.3) | % | (8.5) | % | ||||||||||
| OTHER DATA (NON-GAAP) AND BALANCE SHEET INFORMATION: | ||||||||||||||||||||
| Tangible book value per common share (d) | $ | 63.14 | $ | 61.80 | $ | 57.19 | 2.2 | % | 10.4 | % | ||||||||||
| Average interest earning assets | 9,016,905 | 9,048,204 | 9,122,323 | (0.3) | % | (1.2) | % | |||||||||||||
| Pre-tax, pre-provision net income (j) | 51,442 | 44,595 | 40,702 | 15.4 | % | 26.4 | % | |||||||||||||
| Note: Explanations for footnotes (a) - (k) are included at the end of the financial tables in the "Financial Reconciliations" section. | ||||||||||||||||||||
Park National Corporation
50 N. Third Street, Newark, Ohio 43055
www.parknationalcorp.com
| PARK NATIONAL CORPORATION | ||||||||||||||||||||
| Financial Highlights (continued) | ||||||||||||||||||||
| As of or for the three months ended June 30, 2024, March 31, 2024 and June 30, 2023 | ||||||||||||||||||||
| Percent change vs. | ||||||||||||||||||||
| (in thousands, except ratios) | June 30, 2024 | March 31, 2024 | June 30, 2023 | 1Q '24 | 2Q '23 | |||||||||||||||
| BALANCE SHEET: | ||||||||||||||||||||
| Investment securities | $ | 1,264,858 | $ | 1,339,747 | $ | 1,756,953 | (5.6) | % | (28.0) | % | ||||||||||
| Loans | 7,664,377 | 7,525,005 | 7,208,109 | 1.9 | % | 6.3 | % | |||||||||||||
| Allowance for credit losses | 86,575 | 85,084 | 87,206 | 1.8 | % | (0.7) | % | |||||||||||||
| Goodwill and other intangible assets | 163,607 | 163,927 | 164,915 | (0.2) | % | (0.8) | % | |||||||||||||
| Other real estate owned (OREO) | 1,210 | 1,674 | 2,267 | (27.7) | % | (46.6) | % | |||||||||||||
| Total assets | 9,919,783 | 9,881,077 | 9,899,551 | 0.4 | % | 0.2 | % | |||||||||||||
| Total deposits | 8,312,505 | 8,306,032 | 8,358,976 | 0.1 | % | (0.6) | % | |||||||||||||
| Borrowings | 283,874 | 295,130 | 332,818 | (3.8) | % | (14.7) | % | |||||||||||||
| Total shareholders' equity | 1,183,257 | 1,161,979 | 1,088,757 | 1.8 | % | 8.7 | % | |||||||||||||
| Tangible equity (d) | 1,019,650 | 998,052 | 923,842 | 2.2 | % | 10.4 | % | |||||||||||||
| Total nonperforming loans | 72,745 | 71,759 | 58,229 | 1.4 | % | 24.9 | % | |||||||||||||
| Total nonperforming assets | 73,955 | 73,433 | 60,496 | 0.7 | % | 22.2 | % | |||||||||||||
| ASSET QUALITY RATIOS: | ||||||||||||||||||||
| Loans as a % of period end total assets | 77.26 | % | 76.16 | % | 72.81 | % | 1.4 | % | 6.1 | % | ||||||||||
| Total nonperforming loans as a % of period end loans | 0.95 | % | 0.95 | % | 0.81 | % | — | % | 17.3 | % | ||||||||||
| Total nonperforming assets as a % of period end loans + OREO + other nonperforming assets | 0.96 | % | 0.98 | % | 0.84 | % | (2.0) | % | 14.3 | % | ||||||||||
| Allowance for credit losses as a % of period end loans | 1.13 | % | 1.13 | % | 1.21 | % | — | % | (6.6) | % | ||||||||||
| Net loan charge-offs | $ | 1,622 | $ | 841 | $ | 1,232 | 92.9 | % | 31.7 | % | ||||||||||
| Annualized net loan charge-offs as a % of average loans (b) | 0.09 | % | 0.05 | % | 0.07 | % | 80.0 | % | 28.6 | % | ||||||||||
| CAPITAL & LIQUIDITY: | ||||||||||||||||||||
| Total shareholders' equity / Period end total assets | 11.93 | % | 11.76 | % | 11.00 | % | 1.4 | % | 8.5 | % | ||||||||||
| Tangible equity (d) / Tangible assets (f) | 10.45 | % | 10.27 | % | 9.49 | % | 1.8 | % | 10.1 | % | ||||||||||
| Average shareholders' equity / Average assets (b) | 11.94 | % | 11.74 | % | 11.00 | % | 1.7 | % | 8.5 | % | ||||||||||
| Average shareholders' equity / Average loans (b) | 15.44 | % | 15.48 | % | 15.30 | % | (0.3) | % | 0.9 | % | ||||||||||
| Average loans / Average deposits (b) | 92.53 | % | 91.11 | % | 85.34 | % | 1.6 | % | 8.4 | % | ||||||||||
| Note: Explanations for footnotes (a) - (k) are included at the end of the financial tables in the "Financial Reconciliations" section. | ||||||||||||||||||||
Park National Corporation
50 N. Third Street, Newark, Ohio 43055
www.parknationalcorp.com
| PARK NATIONAL CORPORATION | ||||||||||||||
| Financial Highlights | ||||||||||||||
| Six months ended June 30, 2024 and June 30, 2023 | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| (in thousands, except common share and per common share data and ratios) | Six months ended June 30 | Six months ended June 30 | Percent change vs '23 | |||||||||||
| INCOME STATEMENT: | ||||||||||||||
| Net interest income | $ | 193,460 | $ | 183,770 | 5.3 | % | ||||||||
| Provision for credit losses | 5,293 | 2,675 | 97.9 | % | ||||||||||
| Other income | 54,994 | 49,402 | 11.3 | % | ||||||||||
| Other expense | 152,417 | 152,388 | — | % | ||||||||||
| Income before income taxes | $ | 90,744 | $ | 78,109 | 16.2 | % | ||||||||
| Income taxes | 16,171 | 12,792 | 26.4 | % | ||||||||||
| Net income | $ | 74,573 | $ | 65,317 | 14.2 | % | ||||||||
| MARKET DATA: | ||||||||||||||
| Earnings per common share - basic (a) | $ | 4.62 | $ | 4.03 | 14.6 | % | ||||||||
| Earnings per common share - diluted (a) | 4.60 | 4.01 | 14.7 | % | ||||||||||
| Quarterly cash dividend declared per common share | 2.12 | 2.10 | 1.0 | % | ||||||||||
| Weighted average common shares - basic (b) | 16,133,183 | 16,203,736 | (0.4) | % | ||||||||||
| Weighted average common shares - diluted (b) | 16,215,342 | 16,282,693 | (0.4) | % | ||||||||||
| PERFORMANCE RATIOS: (annualized) | ||||||||||||||
| Return on average assets (a)(b) | 1.52 | % | 1.32 | % | 15.2 | % | ||||||||
| Return on average shareholders' equity (a)(b) | 12.88 | % | 12.07 | % | 6.7 | % | ||||||||
| Yield on loans | 6.06 | % | 5.34 | % | 13.5 | % | ||||||||
| Yield on investment securities | 3.87 | % | 3.67 | % | 5.4 | % | ||||||||
| Yield on money market instruments | 5.42 | % | 4.84 | % | 12.0 | % | ||||||||
| Yield on interest earning assets | 5.72 | % | 4.99 | % | 14.6 | % | ||||||||
| Cost of interest bearing deposits | 1.97 | % | 1.31 | % | 50.4 | % | ||||||||
| Cost of borrowings | 4.17 | % | 3.39 | % | 23.0 | % | ||||||||
| Cost of paying interest bearing liabilities | 2.09 | % | 1.44 | % | 45.1 | % | ||||||||
| Net interest margin (g) | 4.33 | % | 4.07 | % | 6.4 | % | ||||||||
| Efficiency ratio (g) | 61.05 | % | 64.84 | % | (5.8) | % | ||||||||
| ASSET QUALITY RATIOS: | ||||||||||||||
| Net loan charge-offs | $ | 2,463 | $ | 1,231 | 100.1 | % | ||||||||
| Net loan charge-offs as a % of average loans (b) | 0.07 | % | 0.03 | % | 133.3 | % | ||||||||
| CAPITAL & LIQUIDITY | ||||||||||||||
| Average shareholders' equity / Average Assets (b) | 11.84 | % | 10.92 | % | 8.4 | % | ||||||||
| Average shareholders' equity / Average loans (b) | 15.46 | % | 15.33 | % | 0.8 | % | ||||||||
| Average loans / Average deposits (b) | 91.82 | % | 84.69 | % | 8.4 | % | ||||||||
| OTHER DATA (NON-GAAP) AND BALANCE SHEET INFORMATION: | ||||||||||||||
| Average interest earning assets | 9,032,554 | 9,194,469 | (1.8) | % | ||||||||||
| Pre-tax, pre-provision net income (j) | 96,037 | 80,784 | 18.9 | % | ||||||||||
| Note: Explanations for footnotes (a) - (k) are included at the end of the financial tables in the "Financial Reconciliations" section. | ||||||||||||||
Park National Corporation
50 N. Third Street, Newark, Ohio 43055
www.parknationalcorp.com
| PARK NATIONAL CORPORATION | ||||||||||||||||||||||||||
| Consolidated Statements of Income | ||||||||||||||||||||||||||
| Three Months Ended | Six Month Ended | |||||||||||||||||||||||||
| June 30 | June 30 | |||||||||||||||||||||||||
| (in thousands, except share and per share data) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Interest income: | ||||||||||||||||||||||||||
| Interest and fees on loans | $ | 115,318 | $ | 96,428 | $ | 226,529 | $ | 188,042 | ||||||||||||||||||
| Interest on debt securities: | ||||||||||||||||||||||||||
| Taxable | 10,950 | 13,431 | 22,849 | 26,410 | ||||||||||||||||||||||
| Tax-exempt | 1,382 | 2,906 | 2,792 | 5,818 | ||||||||||||||||||||||
| Other interest income | 1,254 | 1,909 | 3,374 | 5,305 | ||||||||||||||||||||||
| Total interest income | 128,904 | 114,674 | 255,544 | 225,575 | ||||||||||||||||||||||
| Interest expense: | ||||||||||||||||||||||||||
| Interest on deposits: | ||||||||||||||||||||||||||
| Demand and savings deposits | 20,370 | 18,068 | 40,225 | 32,280 | ||||||||||||||||||||||
| Time deposits | 7,525 | 1,966 | 14,863 | 3,313 | ||||||||||||||||||||||
| Interest on borrowings | 3,172 | 3,068 | 6,996 | 6,212 | ||||||||||||||||||||||
| Total interest expense | 31,067 | 23,102 | 62,084 | 41,805 | ||||||||||||||||||||||
| Net interest income | 97,837 | 91,572 | 193,460 | 183,770 | ||||||||||||||||||||||
| Provision for credit losses | 3,113 | 2,492 | 5,293 | 2,675 | ||||||||||||||||||||||
| Net interest income after provision for credit losses | 94,724 | 89,080 | 188,167 | 181,095 | ||||||||||||||||||||||
| Other income | 28,794 | 25,015 | 54,994 | 49,402 | ||||||||||||||||||||||
| Other expense | 75,189 | 75,885 | 152,417 | 152,388 | ||||||||||||||||||||||
| Income before income taxes | 48,329 | 38,210 | 90,744 | 78,109 | ||||||||||||||||||||||
| Income taxes | 8,960 | 6,626 | 16,171 | 12,792 | ||||||||||||||||||||||
| Net income | $ | 39,369 | $ | 31,584 | $ | 74,573 | $ | 65,317 | ||||||||||||||||||
| Per common share: | ||||||||||||||||||||||||||
| Net income - basic | $ | 2.44 | $ | 1.95 | $ | 4.62 | $ | 4.03 | ||||||||||||||||||
| Net income - diluted | $ | 2.42 | $ | 1.94 | $ | 4.60 | $ | 4.01 | ||||||||||||||||||
| Weighted average common shares - basic | 16,149,523 | 16,165,119 | 16,133,183 | 16,203,736 | ||||||||||||||||||||||
| Weighted average common shares - diluted | 16,239,617 | 16,240,600 | 16,215,342 | 16,282,693 | ||||||||||||||||||||||
| Cash dividends declared: | ||||||||||||||||||||||||||
| Quarterly dividend | $ | 1.06 | $ | 1.05 | $ | 2.12 | $ | 2.10 | ||||||||||||||||||
Park National Corporation
50 N. Third Street, Newark, Ohio 43055
www.parknationalcorp.com
| PARK NATIONAL CORPORATION | ||||||||
| Consolidated Balance Sheets | ||||||||
| (in thousands, except share data) | June 30, 2024 | December 31, 2023 | ||||||
| Assets | ||||||||
| Cash and due from banks | $ | 142,593 | $ | 160,477 | ||||
| Money market instruments | 118,872 | 57,791 | ||||||
| Investment securities | 1,264,858 | 1,429,144 | ||||||
| Loans | 7,664,377 | 7,476,221 | ||||||
| Allowance for credit losses | (86,575) | (83,745) | ||||||
| Loans, net | 7,577,802 | 7,392,476 | ||||||
| Bank premises and equipment, net | 72,131 | 74,211 | ||||||
| Goodwill and other intangible assets | 163,607 | 164,247 | ||||||
| Other real estate owned | 1,210 | 983 | ||||||
| Other assets | 578,710 | 557,124 | ||||||
| Total assets | $ | 9,919,783 | $ | 9,836,453 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Deposits: | ||||||||
| Noninterest bearing | $ | 2,542,446 | $ | 2,628,234 | ||||
| Interest bearing | 5,770,059 | 5,414,332 | ||||||
| Total deposits | 8,312,505 | 8,042,566 | ||||||
| Borrowings | 283,874 | 517,329 | ||||||
| Other liabilities | 140,147 | 131,265 | ||||||
| Total liabilities | $ | 8,736,526 | $ | 8,691,160 | ||||
| Shareholders' Equity: | ||||||||
| Preferred shares (200,000 shares authorized; no shares outstanding at June 30, 2024 and December 31, 2023) | $ | — | $ | — | ||||
| Common shares (No par value; 20,000,000 shares authorized; 17,623,104 shares issued at June 30, 2024 and December 31, 2023) | 460,821 | 463,280 | ||||||
| Accumulated other comprehensive loss, net of taxes | (68,454) | (66,191) | ||||||
| Retained earnings | 943,149 | 903,877 | ||||||
| Treasury shares (1,473,581 shares at June 30, 2024 and 1,506,625 shares at December 31, 2023) | (152,259) | (155,673) | ||||||
| Total shareholders' equity | $ | 1,183,257 | $ | 1,145,293 | ||||
| Total liabilities and shareholders' equity | $ | 9,919,783 | $ | 9,836,453 | ||||
Park National Corporation
50 N. Third Street, Newark, Ohio 43055
www.parknationalcorp.com
| PARK NATIONAL CORPORATION | |||||||||||||||||
| Consolidated Average Balance Sheets | |||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||
| June 30, | June 30, | ||||||||||||||||
| (in thousands) | 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Assets | |||||||||||||||||
| Cash and due from banks | $ | 124,906 | $ | 153,564 | $ | 134,310 | $ | 154,568 | |||||||||
| Money market instruments | 94,658 | 149,745 | 125,084 | 220,951 | |||||||||||||
| Investment securities | 1,285,086 | 1,777,878 | 1,326,807 | 1,792,199 | |||||||||||||
| Loans | 7,587,127 | 7,132,025 | 7,534,889 | 7,115,723 | |||||||||||||
| Allowance for credit losses | (85,397) | (87,182) | (84,732) | (86,996) | |||||||||||||
| Loans, net | 7,501,730 | 7,044,843 | 7,450,157 | 7,028,727 | |||||||||||||
| Bank premises and equipment, net | 73,340 | 80,592 | 74,130 | 81,316 | |||||||||||||
| Goodwill and other intangible assets | 163,816 | 165,129 | 163,977 | 165,292 | |||||||||||||
| Other real estate owned | 1,389 | 1,966 | 1,239 | 1,702 | |||||||||||||
| Other assets | 566,401 | 544,088 | 561,648 | 543,198 | |||||||||||||
| Total assets | $ | 9,811,326 | $ | 9,917,805 | $ | 9,837,352 | $ | 9,987,953 | |||||||||
| Liabilities and Shareholders' Equity | |||||||||||||||||
| Deposits: | |||||||||||||||||
| Noninterest bearing | $ | 2,572,947 | $ | 2,847,921 | $ | 2,570,989 | $ | 2,908,857 | |||||||||
| Interest bearing | 5,626,577 | 5,509,022 | 5,635,332 | 5,492,931 | |||||||||||||
| Total deposits | 8,199,524 | 8,356,943 | 8,206,321 | 8,401,788 | |||||||||||||
| Borrowings | 312,963 | 347,191 | 337,333 | 370,067 | |||||||||||||
| Other liabilities | 127,492 | 122,655 | 128,933 | 125,113 | |||||||||||||
| Total liabilities | $ | 8,639,979 | $ | 8,826,789 | $ | 8,672,587 | $ | 8,896,968 | |||||||||
| Shareholders' Equity: | |||||||||||||||||
| Preferred shares | $ | — | $ | — | $ | — | $ | — | |||||||||
| Common shares | 459,546 | 458,884 | 461,532 | 460,713 | |||||||||||||
| Accumulated other comprehensive loss, net of taxes | (73,705) | (91,007) | (70,524) | (93,609) | |||||||||||||
| Retained earnings | 937,765 | 873,810 | 927,705 | 869,567 | |||||||||||||
| Treasury shares | (152,259) | (150,671) | (153,948) | (145,686) | |||||||||||||
| Total shareholders' equity | $ | 1,171,347 | $ | 1,091,016 | $ | 1,164,765 | $ | 1,090,985 | |||||||||
| Total liabilities and shareholders' equity | $ | 9,811,326 | $ | 9,917,805 | $ | 9,837,352 | $ | 9,987,953 | |||||||||
Park National Corporation
50 N. Third Street, Newark, Ohio 43055
www.parknationalcorp.com
| PARK NATIONAL CORPORATION | |||||||||||||||||
| Consolidated Statements of Income - Linked Quarters | |||||||||||||||||
| 2024 | 2024 | 2023 | 2023 | 2023 | |||||||||||||
| (in thousands, except per share data) | 2nd QTR | 1st QTR | 4th QTR | 3rd QTR | 2nd QTR | ||||||||||||
| Interest income: | |||||||||||||||||
| Interest and fees on loans | $ | 115,318 | $ | 111,211 | $ | 108,495 | $ | 103,258 | $ | 96,428 | |||||||
| Interest on debt securities: | |||||||||||||||||
| Taxable | 10,950 | 11,899 | 13,055 | 13,321 | 13,431 | ||||||||||||
| Tax-exempt | 1,382 | 1,410 | 2,248 | 2,900 | 2,906 | ||||||||||||
| Other interest income | 1,254 | 2,120 | 1,408 | 1,410 | 1,909 | ||||||||||||
| Total interest income | 128,904 | 126,640 | 125,206 | 120,889 | 114,674 | ||||||||||||
| Interest expense: | |||||||||||||||||
| Interest on deposits: | |||||||||||||||||
| Demand and savings deposits | 20,370 | 19,855 | 19,467 | 20,029 | 18,068 | ||||||||||||
| Time deposits | 7,525 | 7,338 | 6,267 | 3,097 | 1,966 | ||||||||||||
| Interest on borrowings | 3,172 | 3,824 | 4,398 | 3,494 | 3,068 | ||||||||||||
| Total interest expense | 31,067 | 31,017 | 30,132 | 26,620 | 23,102 | ||||||||||||
| Net interest income | 97,837 | 95,623 | 95,074 | 94,269 | 91,572 | ||||||||||||
| Provision for (recovery of) credit losses | 3,113 | 2,180 | 1,809 | (1,580) | 2,492 | ||||||||||||
| Net interest income after provision for (recovery of ) credit losses | 94,724 | 93,443 | 93,265 | 95,849 | 89,080 | ||||||||||||
| Other income | 28,794 | 26,200 | 15,519 | 27,713 | 25,015 | ||||||||||||
| Other expense | 75,189 | 77,228 | 79,043 | 77,808 | 75,885 | ||||||||||||
| Income before income taxes | 48,329 | 42,415 | 29,741 | 45,754 | 38,210 | ||||||||||||
| Income taxes | 8,960 | 7,211 | 5,241 | 8,837 | 6,626 | ||||||||||||
| Net income | $ | 39,369 | $ | 35,204 | $ | 24,500 | $ | 36,917 | $ | 31,584 | |||||||
| Per common share: | |||||||||||||||||
| Net income - basic | $ | 2.44 | $ | 2.18 | $ | 1.52 | $ | 2.29 | $ | 1.95 | |||||||
| Net income - diluted | $ | 2.42 | $ | 2.17 | $ | 1.51 | $ | 2.28 | $ | 1.94 | |||||||
Park National Corporation
50 N. Third Street, Newark, Ohio 43055
www.parknationalcorp.com
| PARK NATIONAL CORPORATION | |||||||||||||||||
| Detail of other income and other expense - Linked Quarters | |||||||||||||||||
| 2024 | 2024 | 2023 | 2023 | 2023 | |||||||||||||
| (in thousands) | 2nd QTR | 1st QTR | 4th QTR | 3rd QTR | 2nd QTR | ||||||||||||
| Other income: | |||||||||||||||||
| Income from fiduciary activities | $ | 10,728 | $ | 10,024 | $ | 8,943 | $ | 9,100 | $ | 8,816 | |||||||
| Service charges on deposit accounts | 2,214 | 2,106 | 2,054 | 2,109 | 2,041 | ||||||||||||
| Other service income | 2,906 | 2,524 | 2,349 | 2,615 | 2,639 | ||||||||||||
| Debit card fee income | 6,580 | 6,243 | 6,583 | 6,652 | 6,830 | ||||||||||||
| Bank owned life insurance income | 1,565 | 2,629 | 1,373 | 1,448 | 1,332 | ||||||||||||
| ATM fees | 458 | 496 | 517 | 575 | 553 | ||||||||||||
| Loss on sale of debt securities, net | — | (398) | (7,875) | — | — | ||||||||||||
| Gain (loss) on equity securities, net | 358 | (687) | 353 | 998 | 25 | ||||||||||||
| Other components of net periodic benefit income | 2,204 | 2,204 | 1,893 | 1,893 | 1,893 | ||||||||||||
| Miscellaneous | 1,781 | 1,059 | (671) | 2,323 | 886 | ||||||||||||
| Total other income | $ | 28,794 | $ | 26,200 | $ | 15,519 | $ | 27,713 | $ | 25,015 | |||||||
| Other expense: | |||||||||||||||||
| Salaries | $ | 35,954 | $ | 35,733 | $ | 36,192 | $ | 34,525 | $ | 33,649 | |||||||
| Employee benefits | 9,873 | 11,560 | 10,088 | 10,822 | 10,538 | ||||||||||||
| Occupancy expense | 2,975 | 3,181 | 3,344 | 3,203 | 3,214 | ||||||||||||
| Furniture and equipment expense | 2,454 | 2,583 | 2,824 | 3,060 | 3,103 | ||||||||||||
| Data processing fees | 9,542 | 8,808 | 9,605 | 9,700 | 9,582 | ||||||||||||
| Professional fees and services | 6,022 | 6,817 | 7,015 | 7,572 | 7,365 | ||||||||||||
| Marketing | 1,164 | 1,741 | 1,716 | 1,197 | 1,239 | ||||||||||||
| Insurance | 1,777 | 1,718 | 1,708 | 2,158 | 1,960 | ||||||||||||
| Communication | 1,002 | 1,036 | 993 | 1,135 | 1,045 | ||||||||||||
| State tax expense | 1,129 | 1,110 | 1,158 | 1,125 | 1,096 | ||||||||||||
| Amortization of intangible assets | 320 | 320 | 334 | 334 | 328 | ||||||||||||
| Foundation contributions | — | — | 1,000 | — | — | ||||||||||||
| Miscellaneous | 2,977 | 2,621 | 3,066 | 2,977 | 2,766 | ||||||||||||
| Total other expense | $ | 75,189 | $ | 77,228 | $ | 79,043 | $ | 77,808 | $ | 75,885 | |||||||
Park National Corporation
50 N. Third Street, Newark, Ohio 43055
www.parknationalcorp.com
| PARK NATIONAL CORPORATION | |||||||||||||||||||||||
| Asset Quality Information | |||||||||||||||||||||||
| Year ended December 31, | |||||||||||||||||||||||
| (in thousands, except ratios) | June 30, 2024 | March 31, 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | ||||||||||||||||
| Allowance for credit losses: | |||||||||||||||||||||||
| Allowance for credit losses, beginning of period | $ | 85,084 | $ | 83,745 | $ | 85,379 | $ | 83,197 | $ | 85,675 | $ | 56,679 | $ | 51,512 | |||||||||
| Cumulative change in accounting principle; adoption of ASU 2022-02 in 2023 and ASU 2016-13 in 2021 | — | — | 383 | — | 6,090 | — | — | ||||||||||||||||
| Charge-offs | 3,097 | 3,240 | 10,863 | 9,133 | 5,093 | 10,304 | 11,177 | ||||||||||||||||
| Recoveries | 1,475 | 2,399 | 5,942 | 6,758 | 8,441 | 27,246 | 10,173 | ||||||||||||||||
| Net charge-offs (recoveries) | 1,622 | 841 | 4,921 | 2,375 | (3,348) | (16,942) | 1,004 | ||||||||||||||||
| Provision for (recovery of) credit losses | 3,113 | 2,180 | 2,904 | 4,557 | (11,916) | 12,054 | 6,171 | ||||||||||||||||
| Allowance for credit losses, end of period | $ | 86,575 | $ | 85,084 | $ | 83,745 | $ | 85,379 | $ | 83,197 | $ | 85,675 | $ | 56,679 | |||||||||
| General reserve trends: | |||||||||||||||||||||||
| Allowance for credit losses, end of period | $ | 86,575 | $ | 85,084 | $ | 83,745 | $ | 85,379 | $ | 83,197 | $ | 85,675 | $ | 56,679 | |||||||||
| Allowance on accruing purchased credit deteriorated ("PCD") loans (purchased credit impaired ("PCI") loans for years 2020 and prior) | — | — | — | — | — | 167 | 268 | ||||||||||||||||
| Allowance on purchased loans excluded from collectively evaluated loans (for years 2020 and prior) | N.A. | N.A. | N.A. | N.A. | N.A. | 678 | — | ||||||||||||||||
| Specific reserves on individually evaluated loans | 5,311 | 5,032 | 4,983 | 3,566 | 1,616 | 5,434 | 5,230 | ||||||||||||||||
| General reserves on collectively evaluated loans | $ | 81,264 | $ | 80,052 | $ | 78,762 | $ | 81,813 | $ | 81,581 | $ | 79,396 | $ | 51,181 | |||||||||
| Total loans | $ | 7,664,377 | $ | 7,525,005 | $ | 7,476,221 | $ | 7,141,891 | $ | 6,871,122 | $ | 7,177,785 | $ | 6,501,404 | |||||||||
| Accruing PCD loans (PCI loans for years 2020 and prior) | 2,420 | 2,454 | 2,835 | 4,653 | 7,149 | 11,153 | 14,331 | ||||||||||||||||
| Purchased loans excluded from collectively evaluated loans (for years 2020 and prior) | N.A. | N.A. | N.A. | N.A. | N.A. | 360,056 | 548,436 | ||||||||||||||||
| Individually evaluated loans (k) | 54,993 | 54,742 | 45,215 | 78,341 | 74,502 | 108,407 | 77,459 | ||||||||||||||||
| Collectively evaluated loans | $ | 7,606,964 | $ | 7,467,809 | $ | 7,428,171 | $ | 7,058,897 | $ | 6,789,471 | $ | 6,698,169 | $ | 5,861,178 | |||||||||
| Asset Quality Ratios: | |||||||||||||||||||||||
| Net charge-offs (recoveries) as a % of average loans | 0.09 | % | 0.05 | % | 0.07 | % | 0.03 | % | (0.05) | % | (0.24) | % | 0.02 | % | |||||||||
| Allowance for credit losses as a % of period end loans | 1.13 | % | 1.13 | % | 1.12 | % | 1.20 | % | 1.21 | % | 1.19 | % | 0.87 | % | |||||||||
| General reserve as a % of collectively evaluated loans | 1.07 | % | 1.07 | % | 1.06 | % | 1.16 | % | 1.20 | % | 1.19 | % | 0.87 | % | |||||||||
| Nonperforming assets: | |||||||||||||||||||||||
| Nonaccrual loans | $ | 71,368 | $ | 70,189 | $ | 60,259 | $ | 79,696 | $ | 72,722 | $ | 117,368 | $ | 90,080 | |||||||||
| Accruing troubled debt restructurings (for years 2022 and prior) (k) | N.A. | N.A. | N.A. | 20,134 | 28,323 | 20,788 | 21,215 | ||||||||||||||||
| Loans past due 90 days or more | 1,377 | 1,570 | 859 | 1,281 | 1,607 | 1,458 | 2,658 | ||||||||||||||||
| Total nonperforming loans | $ | 72,745 | $ | 71,759 | $ | 61,118 | $ | 101,111 | $ | 102,652 | $ | 139,614 | $ | 113,953 | |||||||||
| Other real estate owned | 1,210 | 1,674 | 983 | 1,354 | 775 | 1,431 | 4,029 | ||||||||||||||||
| Other nonperforming assets | — | — | — | — | 2,750 | 3,164 | 3,599 | ||||||||||||||||
| Total nonperforming assets | $ | 73,955 | $ | 73,433 | $ | 62,101 | $ | 102,465 | $ | 106,177 | $ | 144,209 | $ | 121,581 | |||||||||
| Percentage of nonaccrual loans to period end loans | 0.93 | % | 0.93 | % | 0.81 | % | 1.12 | % | 1.06 | % | 1.64 | % | 1.39 | % | |||||||||
| Percentage of nonperforming loans to period end loans | 0.95 | % | 0.95 | % | 0.82 | % | 1.42 | % | 1.49 | % | 1.95 | % | 1.75 | % | |||||||||
| Percentage of nonperforming assets to period end loans | 0.96 | % | 0.98 | % | 0.83 | % | 1.43 | % | 1.55 | % | 2.01 | % | 1.87 | % | |||||||||
| Percentage of nonperforming assets to period end total assets | 0.75 | % | 0.74 | % | 0.63 | % | 1.04 | % | 1.11 | % | 1.55 | % | 1.42 | % | |||||||||
| Note: Explanations for footnotes (a) - (k) are included at the end of the financial tables in the "Financial Reconciliations" section. | |||||||||||||||||||||||
Park National Corporation
50 N. Third Street, Newark, Ohio 43055
www.parknationalcorp.com
| PARK NATIONAL CORPORATION | |||||||||||||||||||||||
| Asset Quality Information (continued) | |||||||||||||||||||||||
| Year ended December 31, | |||||||||||||||||||||||
| (in thousands, except ratios) | June 30, 2024 | March 31, 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | ||||||||||||||||
| New nonaccrual loan information: | |||||||||||||||||||||||
| Nonaccrual loans, beginning of period | $ | 70,189 | $ | 60,259 | $ | 79,696 | $ | 72,722 | $ | 117,368 | $ | 90,080 | $ | 67,954 | |||||||||
| New nonaccrual loans | 13,180 | 19,012 | 48,280 | 64,918 | 38,478 | 103,386 | 81,009 | ||||||||||||||||
| Resolved nonaccrual loans | 12,001 | 9,082 | 67,717 | 57,944 | 83,124 | 76,098 | 58,883 | ||||||||||||||||
| Nonaccrual loans, end of period | $ | 71,368 | $ | 70,189 | $ | 60,259 | $ | 79,696 | $ | 72,722 | $ | 117,368 | $ | 90,080 | |||||||||
| Individually evaluated commercial loan portfolio information (period end): (k) | |||||||||||||||||||||||
| Unpaid principal balance | $ | 57,184 | $ | 57,053 | $ | 47,564 | $ | 80,116 | $ | 75,126 | $ | 109,062 | $ | 78,178 | |||||||||
| Prior charge-offs | 2,191 | 2,311 | 2,349 | 1,775 | 624 | 655 | 719 | ||||||||||||||||
| Remaining principal balance | 54,993 | 54,742 | 45,215 | 78,341 | 74,502 | 108,407 | 77,459 | ||||||||||||||||
| Specific reserves | 5,311 | 5,032 | 4,983 | 3,566 | 1,616 | 5,434 | 5,230 | ||||||||||||||||
| Book value, after specific reserves | $ | 49,682 | $ | 49,710 | $ | 40,232 | $ | 74,775 | $ | 72,886 | $ | 102,973 | $ | 72,229 | |||||||||
| Note: Explanations for footnotes (a) - (k) are included at the end of the financial tables in the "Financial Reconciliations" section. | |||||||||||||||||||||||
Park National Corporation
50 N. Third Street, Newark, Ohio 43055
www.parknationalcorp.com
| PARK NATIONAL CORPORATION | ||||||||||||||||||||
| Financial Reconciliations | ||||||||||||||||||||
| NON-GAAP RECONCILIATIONS | ||||||||||||||||||||
| THREE MONTHS ENDED | SIX MONTHS ENDED | |||||||||||||||||||
| (in thousands, except share and per share data) | June 30, 2024 | March 31, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |||||||||||||||
| Net interest income | $ | 97,837 | $ | 95,623 | $ | 91,572 | $ | 193,460 | $ | 183,770 | ||||||||||
| less purchase accounting accretion related to NewDominion and Carolina Alliance acquisitions | 271 | 352 | 164 | 623 | 364 | |||||||||||||||
| less interest income on former Vision Bank relationships | 5 | 2 | 13 | 7 | 587 | |||||||||||||||
| Net interest income - adjusted | $ | 97,561 | $ | 95,269 | $ | 91,395 | $ | 192,830 | $ | 182,819 | ||||||||||
| Provision for credit losses | $ | 3,113 | $ | 2,180 | $ | 2,492 | $ | 5,293 | $ | 2,675 | ||||||||||
| less recoveries on former Vision Bank relationships | (117) | (953) | (25) | (1,070) | (748) | |||||||||||||||
| Provision for credit losses - adjusted | $ | 3,230 | $ | 3,133 | $ | 2,517 | $ | 6,363 | $ | 3,423 | ||||||||||
| Other income | $ | 28,794 | $ | 26,200 | $ | 25,015 | $ | 54,994 | $ | 49,402 | ||||||||||
| less loss on sale of debt securities, net | — | (398) | — | (398) | — | |||||||||||||||
| less impact of strategic initiatives | 813 | (155) | — | 658 | — | |||||||||||||||
| less Vision related gain on the sale of OREO, net | (7) | 121 | — | 114 | — | |||||||||||||||
| less other service income related to former Vision Bank relationships | 6 | 7 | — | 13 | 135 | |||||||||||||||
| Other income - adjusted | $ | 27,982 | $ | 26,625 | $ | 25,015 | $ | 54,607 | $ | 49,267 | ||||||||||
| Other expense | $ | 75,189 | $ | 77,228 | $ | 75,885 | $ | 152,417 | $ | 152,388 | ||||||||||
| less core deposit intangible amortization related to NewDominion and Carolina Alliance acquisitions | 320 | 320 | 328 | 640 | 655 | |||||||||||||||
| less direct expenses related to collection of payments on former Vision Bank loan relationships | — | — | — | — | 100 | |||||||||||||||
| Other expense - adjusted | $ | 74,869 | $ | 76,908 | $ | 75,557 | $ | 151,777 | $ | 151,633 | ||||||||||
| Tax effect of adjustments to net income identified above (i) | $ | (186) | $ | (118) | $ | 26 | $ | (304) | $ | (227) | ||||||||||
| Net income - reported | $ | 39,369 | $ | 35,204 | $ | 31,584 | $ | 74,573 | $ | 65,317 | ||||||||||
| Net income - adjusted (h) | $ | 38,670 | $ | 34,760 | $ | 31,684 | $ | 73,430 | $ | 64,465 | ||||||||||
| Diluted earnings per common share | $ | 2.42 | $ | 2.17 | $ | 1.94 | $ | 4.60 | $ | 4.01 | ||||||||||
| Diluted earnings per common share, adjusted (h) | $ | 2.38 | $ | 2.15 | $ | 1.95 | $ | 4.53 | $ | 3.96 | ||||||||||
| Annualized return on average assets (a)(b) | 1.61 | % | 1.44 | % | 1.28 | % | 1.52 | % | 1.32 | % | ||||||||||
Annualized return on average assets, adjusted (a)(b)(h) | 1.59 | % | 1.42 | % | 1.28 | % | 1.50 | % | 1.30 | % | ||||||||||
| Annualized return on average tangible assets (a)(b)(e) | 1.64 | % | 1.46 | % | 1.30 | % | 1.55 | % | 1.34 | % | ||||||||||
| Annualized return on average tangible assets, adjusted (a)(b)(e)(h) | 1.61 | % | 1.44 | % | 1.30 | % | 1.53 | % | 1.32 | % | ||||||||||
| Annualized return on average shareholders' equity (a)(b) | 13.52 | % | 12.23 | % | 11.61 | % | 12.88 | % | 12.07 | % | ||||||||||
| Annualized return on average shareholders' equity, adjusted (a)(b)(h) | 13.28 | % | 12.07 | % | 11.65 | % | 12.68 | % | 11.92 | % | ||||||||||
| Annualized return on average tangible equity (a)(b)(c) | 15.72 | % | 14.24 | % | 13.68 | % | 14.98 | % | 14.23 | % | ||||||||||
| Annualized return on average tangible equity, adjusted (a)(b)(c)(h) | 15.44 | % | 14.06 | % | 13.73 | % | 14.76 | % | 14.04 | % | ||||||||||
| Efficiency ratio (g) | 59.09 | % | 63.07 | % | 64.58 | % | 61.05 | % | 64.84 | % | ||||||||||
| Efficiency ratio, adjusted (g)(h) | 59.35 | % | 62.78 | % | 64.40 | % | 61.04 | % | 64.82 | % | ||||||||||
| Annualized net interest margin (g) | 4.39 | % | 4.28 | % | 4.07 | % | 4.33 | % | 4.07 | % | ||||||||||
| Annualized net interest margin, adjusted (g)(h) | 4.38 | % | 4.26 | % | 4.06 | % | 4.32 | % | 4.05 | % | ||||||||||
| Note: Explanations for footnotes (a) - (k) are included at the end of the financial tables in the "Financial Reconciliations" section. | ||||||||||||||||||||
Park National Corporation
50 N. Third Street, Newark, Ohio 43055
www.parknationalcorp.com
| PARK NATIONAL CORPORATION | ||||||||||||||||||||
| Financial Reconciliations (continued) | ||||||||||||||||||||
| (a) Reported measure uses net income | ||||||||||||||||||||
| (b) Averages are for the three months ended June 30, 2024, March 31, 2024, and June 30, 2023 and the six months ended June 30, 2024 and June 30, 2023, 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, 2024 | March 31, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | ||||||||||||||||
| AVERAGE SHAREHOLDERS' EQUITY | $ | 1,171,347 | $ | 1,158,184 | $ | 1,091,016 | $ | 1,164,765 | $ | 1,090,985 | ||||||||||
| Less: Average goodwill and other intangible assets | 163,816 | 164,137 | 165,129 | 163,977 | 165,292 | |||||||||||||||
| AVERAGE TANGIBLE EQUITY | $ | 1,007,531 | $ | 994,047 | $ | 925,887 | $ | 1,000,788 | $ | 925,693 | ||||||||||
| (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, 2024 | March 31, 2024 | June 30, 2023 | ||||||||||||||||||
| TOTAL SHAREHOLDERS' EQUITY | $ | 1,183,257 | $ | 1,161,979 | $ | 1,088,757 | ||||||||||||||
| Less: Goodwill and other intangible assets | 163,607 | 163,927 | 164,915 | |||||||||||||||||
| TANGIBLE EQUITY | $ | 1,019,650 | $ | 998,052 | $ | 923,842 | ||||||||||||||
| (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, 2024 | March 31, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | ||||||||||||||||
| AVERAGE ASSETS | $ | 9,811,326 | $ | 9,863,378 | $ | 9,917,805 | $ | 9,837,352 | $ | 9,987,953 | ||||||||||
| Less: Average goodwill and other intangible assets | 163,816 | 164,137 | 165,129 | 163,977 | 165,292 | |||||||||||||||
| AVERAGE TANGIBLE ASSETS | $ | 9,647,510 | $ | 9,699,241 | $ | 9,752,676 | $ | 9,673,375 | $ | 9,822,661 | ||||||||||
| (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, 2024 | March 31, 2024 | June 30, 2023 | ||||||||||||||||||
| TOTAL ASSETS | $ | 9,919,783 | $ | 9,881,077 | $ | 9,899,551 | ||||||||||||||
| Less: Goodwill and other intangible assets | 163,607 | 163,927 | 164,915 | |||||||||||||||||
| TANGIBLE ASSETS | $ | 9,756,176 | $ | 9,717,150 | $ | 9,734,636 | ||||||||||||||
Park National Corporation
50 N. Third Street, Newark, Ohio 43055
www.parknationalcorp.com
| PARK NATIONAL CORPORATION | ||||||||||||||||||||
| Financial Reconciliations (continued) | ||||||||||||||||||||
| (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, in each case during the applicable period. | ||||||||||||||||||||
| RECONCILIATION OF FULLY TAXABLE EQUIVALENT NET INTEREST INCOME TO NET INTEREST INCOME | ||||||||||||||||||||
| THREE MONTHS ENDED | SIX MONTHS ENDED | |||||||||||||||||||
| June 30, 2024 | March 31, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | ||||||||||||||||
| Interest income | $ | 128,904 | $ | 126,640 | $ | 114,674 | $ | 255,544 | $ | 225,575 | ||||||||||
| Fully taxable equivalent adjustment | 605 | 616 | 920 | 1,221 | 1,846 | |||||||||||||||
| Fully taxable equivalent interest income | $ | 129,509 | $ | 127,256 | $ | 115,594 | $ | 256,765 | $ | 227,421 | ||||||||||
| Interest expense | 31,067 | 31,017 | 23,102 | 62,084 | 41,805 | |||||||||||||||
| Fully taxable equivalent net interest income | $ | 98,442 | $ | 96,239 | $ | 92,492 | $ | 194,681 | $ | 185,616 | ||||||||||
| (h) Adjustments to net income for each period presented are detailed in the non-GAAP reconciliations of net interest income, provision for credit losses, other income, other expense and tax effect of adjustments to net income. | ||||||||||||||||||||
| (i) The tax effect of adjustments to net income was calculated assuming a 21% corporate federal income tax rate. | ||||||||||||||||||||
| (j) Pre-tax, pre-provision ("PTPP") net income is calculated as net income, plus income taxes, plus the provision for credit losses, in each case during the applicable period. PTPP net income is a common industry metric utilized in capital analysis and review. PTPP is used to assess the operating performance of Park while excluding the impact of the provision for credit losses. | ||||||||||||||||||||
| RECONCILIATION OF PRE-TAX, PRE-PROVISION NET INCOME | ||||||||||||||||||||
| THREE MONTHS ENDED | SIX MONTHS ENDED | |||||||||||||||||||
| June 30, 2024 | March 31, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | ||||||||||||||||
| Net income | $ | 39,369 | $ | 35,204 | $ | 31,584 | $ | 74,573 | $ | 65,317 | ||||||||||
| Plus: Income taxes | 8,960 | 7,211 | 6,626 | 16,171 | 12,792 | |||||||||||||||
| Plus: Provision for credit losses | 3,113 | 2,180 | 2,492 | 5,293 | 2,675 | |||||||||||||||
| Pre-tax, pre-provision net income | $ | 51,442 | $ | 44,595 | $ | 40,702 | $ | 96,037 | $ | 80,784 | ||||||||||
| (k) Effective January 1, 2023, Park adopted Accounting Standards Update ("ASU") 2022-02. Among other things, this ASU eliminated the concept of troubled debt restructurings ("TDRs"). As a result of the adoption of this ASU and elimination of the concept of TDRs, total nonperforming loans ("NPLs") and total nonperforming assets ("NPAs") each decreased by $20.1 million effective January 1, 2023. Additionally, as a result of the adoption of this ASU, individually evaluated loans decreased by $11.5 million effective January 1, 2023. | ||||||||||||||||||||
Park National Corporation
50 N. Third Street, Newark, Ohio 43055
www.parknationalcorp.com