Park National Corporation reports financial results for third quarter and first nine months of 2024

Park National Corporation reports financial results for third quarter and first nine months of 2024 October 28, 2024 NEWARK, Ohio, Oct. 28, 2024 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE American: PRK) today reported financial results for the third quarter and first nine months of 2024. Park's board of directors declared a quarterly cash dividend of $1.06 per common share and a special one-time dividend of $0.50 per common share, both payable on December 10, 2024, to common shareholders of record as of November 15, 2024. “Our bankers remain unwavering in their desire to serve more and find creative ways to meet the needs of our customers,” said Park Chairman and Chief Executive Officer David Trautman. “Our bankers are diligent, compassionate and resilient. We saw it firsthand this month as Park bankers and customers in the Carolinas and Florida weathered hurricanes Helene and Milton and overcame extreme challenges and devastation. I couldn’t be prouder of our team and how they stepped up to take care of each other and their communities.” Park’s net income for the third quarter of 2024 was $38.2 million, a 3.5 percent increase from $36.9 million for the third quarter of 2023. Third quarter 2024 net income per diluted common share was $2.35, compared to $2.28 for the third quarter of 2023. Park's net income for the first nine months of 2024 was $112.8 million, a 10.3 percent increase from $102.2 million for the first nine months of 2023. Net income per diluted common share for the first nine months of 2024 was $6.95 compared to $6.29 for the first nine months of 2023. Park’s total loans increased 3.4 percent (4.6 percent annualized) during the first nine months of 2024 and increased 5.2 percent for the 12-month period ended September 30, 2024. Park's total deposits increased 2.1 percent (2.9 percent annualized) during the first nine months of 2024 and decreased 0.4 percent for the 12-month period ended September 30, 2024. The combination of solid loan growth and steady deposits resulted in a net interest margin of 4.45 percent for the three months ended September 30, 2024, compared to 4.39 percent for the three months ended June 30, 2024, and 4.12 percent for the three months ended September 30, 2023. For the first nine months of 2024, the net interest margin was 4.37 percent compared to 4.09 percent for the first nine months of 2023. “We have enjoyed consistent loan growth in 2024, coupled with disciplined control of funding costs and exceptional customer service, resulting in near-record earnings,” said Park President Matthew Miller. “Our performance is driven by our bankers’ commitment to produce exceptional results for our customers, communities and shareholders.” Headquartered in Newark, Ohio, Park National Corporation has $9.9 billion in total assets (as of September 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] 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; and (22) 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 CORPORATIONFinancial HighlightsAs of or for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023 2024 2024 2023 Percent change vs.(in thousands, except common share and per common share data and ratios)3rd QTR2nd QTR3rd QTR 2Q '243Q '23INCOME STATEMENT: Net interest income$101,114 $97,837 $94,269 3.3%7.3%Provision for (recovery of) credit losses 5,315 3,113 (1,580) 70.7%N.M.Other income 36,530 28,794 27,713 26.9%31.8%Other expense 85,681 75,189 77,808 14.0%10.1%Income before income taxes$46,648 $48,329 $45,754 (3.5)%2.0%Income taxes 8,431 8,960 8,837 (5.9)%(4.6)%Net income$38,217 $39,369 $36,917 (2.9)%3.5% MARKET DATA: Earnings per common share - basic (a)$2.37 $2.44 $2.29 (2.9)%3.5%Earnings per common share - diluted (a) 2.35 2.42 2.28 (2.9)%3.1%Quarterly cash dividend declared per common share 1.06 1.06 1.05 —%1.0%Book value per common share at period end 76.74 73.27 67.41 4.7%13.8%Market price per common share at period end 167.98 142.34 94.52 18.0%77.7%Market capitalization at period end 2,713,152 2,298,723 1,522,096 18.0%78.3% Weighted average common shares - basic (b) 16,151,640 16,149,523 16,133,310 —%0.1%Weighted average common shares - diluted (b) 16,264,393 16,239,617 16,217,880 0.2%0.3%Common shares outstanding at period end 16,151,640 16,149,523 16,103,425 —%0.3% PERFORMANCE RATIOS: (annualized) Return on average assets (a)(b) 1.53% 1.61% 1.47% (5.0)%4.1%Return on average shareholders' equity (a)(b) 12.56% 13.52% 13.28% (7.1)%(5.4)%Yield on loans 6.24% 6.13% 5.65% 1.8%10.4%Yield on investment securities 3.74% 3.83% 3.73% (2.3)%0.3%Yield on money market instruments 5.38% 5.33% 5.34% 0.9%0.7%Yield on interest earning assets 5.88% 5.78% 5.27% 1.7%11.6%Cost of interest bearing deposits 2.06% 1.99% 1.63% 3.5%26.4%Cost of borrowings 3.97% 4.08% 3.92% (2.7)%1.3%Cost of paying interest bearing liabilities 2.15% 2.10% 1.76% 2.4%22.2%Net interest margin (g) 4.45% 4.39% 4.12% 1.4%8.0%Efficiency ratio (g) 61.98% 59.09% 63.25% 4.9%(2.0)% OTHER DATA (NON-GAAP) AND BALANCE SHEET INFORMATION: Tangible book value per common share (d)$66.62 $63.14 $57.19 5.5%16.5%Average interest earning assets 9,100,594 9,016,905 9,178,281 0.9%(0.8)%Pre-tax, pre-provision net income (j) 51,963 51,442 44,174 1.0%17.6% Note: Explanations for footnotes (a) - (k) are included at the end of the financial tables in the "Financial Reconciliations" section. PARK NATIONAL CORPORATIONFinancial Highlights (continued)As of or for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023 Percent change vs.(in thousands, except ratios)September 30, 2024June 30, 2024September 30, 2023 2Q '243Q '23BALANCE SHEET: Investment securities$1,233,297 $1,264,858 $1,708,827 (2.5)%(27.8)%Loans 7,730,984 7,664,377 7,349,745 0.9%5.2%Allowance for credit losses 87,237 86,575 84,602 0.8%3.1%Goodwill and other intangible assets 163,320 163,607 164,581 (0.2)%(0.8)%Other real estate owned (OREO) 1,119 1,210 1,354 (7.5)%(17.4)%Total assets 9,903,049 9,919,783 10,000,914 (0.2)%(1.0)%Total deposits 8,214,671 8,312,505 8,244,724 (1.2)%(0.4)%Borrowings 306,964 283,874 541,811 8.1%(43.3)%Total shareholders' equity 1,239,413 1,183,257 1,085,564 4.7%14.2%Tangible equity (d) 1,076,093 1,019,650 920,983 5.5%16.8%Total nonperforming loans 71,541 72,745 55,635 (1.7)%28.6%Total nonperforming assets 72,660 73,955 56,989 (1.8)%27.5% ASSET QUALITY RATIOS: Loans as a % of period end total assets 78.07% 77.26% 73.49% 1.0%6.2%Total nonperforming loans as a % of period end loans 0.93% 0.95% 0.76% (2.1)%22.4%Total nonperforming assets as a % of period end loans + OREO + other nonperforming assets 0.94% 0.96% 0.78% (2.1)%20.5%Allowance for credit losses as a % of period end loans 1.13% 1.13% 1.15% —%(1.7)%Net loan charge-offs$4,653 $1,622 $1,024 186.9%354.4%Annualized net loan charge-offs as a % of average loans (b) 0.24% 0.09% 0.06% 166.7%300.0% CAPITAL & LIQUIDITY: Total shareholders' equity / Period end total assets 12.52% 11.93% 10.85% 4.9%15.4%Tangible equity (d) / Tangible assets (f) 11.05% 10.45% 9.36% 5.7%18.1%Average shareholders' equity / Average assets (b) 12.20% 11.94% 11.07% 2.2%10.2%Average shareholders' equity / Average loans (b) 15.76% 15.44% 15.17% 2.1%3.9%Average loans / Average deposits (b) 92.69% 92.53% 86.69% 0.2%6.9% Note: Explanations for footnotes (a) - (k) are included at the end of the financial tables in the "Financial Reconciliations" section. PARK NATIONAL CORPORATIONFinancial HighlightsNine months ended September 30, 2024 and September 30, 2023 2024 2023 (in thousands, except common share and per common share data and ratios)Nine months ended September 30Nine months ended September 30 Percent change vs '23INCOME STATEMENT: Net interest income$294,574 $278,039 5.9%Provision for credit losses 10,608 1,095 N.M.Other income 91,524 77,115 18.7%Other expense 238,098 230,196 3.4%Income before income taxes$137,392 $123,863 10.9%Income taxes 24,602 21,629 13.7%Net income$112,790 $102,234 10.3% MARKET DATA: Earnings per common share - basic (a)$6.99 $6.32 10.6%Earnings per common share - diluted (a) 6.95 6.29 10.5%Quarterly cash dividend declared per common share 3.18 3.15 1.0% Weighted average common shares - basic (b) 16,139,335 16,180,261 (0.3)%Weighted average common shares - diluted (b) 16,231,766 16,261,109 (0.2)% PERFORMANCE RATIOS: (annualized) Return on average assets (a)(b) 1.53% 1.37% 11.7%Return on average shareholders' equity (a)(b) 12.77% 12.48% 2.3%Yield on loans 6.12% 5.44% 12.5%Yield on investment securities 3.83% 3.69% 3.8%Yield on money market instruments 5.41% 4.94% 9.5%Yield on interest earning assets 5.77% 5.08% 13.6%Cost of interest bearing deposits 2.00% 1.42% 40.8%Cost of borrowings 4.11% 3.56% 15.4%Cost of paying interest bearing liabilities 2.11% 1.55% 36.1%Net interest margin (g) 4.37% 4.09% 6.8%Efficiency ratio (g) 61.38% 64.29% (4.5)% ASSET QUALITY RATIOS: Net loan charge-offs$7,116 $2,255 215.6%Net loan charge-offs as a % of average loans (b) 0.13% 0.04% 225.0% CAPITAL & LIQUIDITY Average shareholders' equity / Average Assets (b) 11.96% 10.97% 9.0%Average shareholders' equity / Average loans (b) 15.56% 15.28% 1.8%Average loans / Average deposits (b) 92.11% 85.37% 7.9% OTHER DATA (NON-GAAP) AND BALANCE SHEET INFORMATION: Average interest earning assets 9,055,400 9,189,014 (1.5)%Pre-tax, pre-provision net income (j) 148,000 124,958 18.4% Note: Explanations for footnotes (a) - (k) are included at the end of the financial tables in the "Financial Reconciliations" section. PARK NATIONAL CORPORATIONConsolidated Statements of Income Three Months Ended Nine Month Ended September 30 September 30(in thousands, except share and per share data) 2024 2023 2024 2023 Interest income: Interest and fees on loans $120,203 $103,258 $346,732 $291,300Interest on debt securities: Taxable 10,228 13,321 33,077 39,731Tax-exempt 1,381 2,900 4,173 8,718Other interest income 1,996 1,410 5,370 6,715 Total interest income 133,808 120,889 389,352 346,464 Interest expense: Interest on deposits: Demand and savings deposits 22,762 20,029 62,987 52,309Time deposits 7,073 3,097 21,936 6,410Interest on borrowings 2,859 3,494 9,855 9,706 Total interest expense 32,694 26,620 94,778 68,425 Net interest income 101,114 94,269 294,574 278,039 Provision for (recovery of) credit losses 5,315 (1,580) 10,608 1,095 Net interest income after provision for (recovery of) credit losses 95,799 95,849 283,966 276,944 Other income 36,530 27,713 91,524 77,115 Other expense 85,681 77,808 238,098 230,196 Income before income taxes 46,648 45,754 137,392 123,863 Income taxes 8,431 8,837 24,602 21,629 Net income $38,217 $36,917 $112,790 $102,234 Per common share: Net income - basic $2.37 $2.29 $6.99 $6.32 Net income - diluted $2.35 $2.28 $6.95 $6.29 Weighted average common shares - basic 16,151,640 16,133,310 16,139,335 16,180,261 Weighted average common shares - diluted 16,264,393 16,217,880 16,231,766 16,261,109 Cash dividends declared: Quarterly dividend $1.06 $1.05 $3.18 $3.15 PARK NATIONAL CORPORATION Consolidated Balance Sheets (in thousands, except share data)September 30, 2024 December 31, 2023 Assets Cash and due from banks$147,338 $160,477 Money market instruments 54,345 57,791 Investment securities 1,233,297 1,429,144 Loans 7,730,984 7,476,221 Allowance for credit losses (87,237) (83,745)Loans, net 7,643,747 7,392,476 Bank premises and equipment, net 70,939 74,211 Goodwill and other intangible assets 163,320 164,247 Other real estate owned 1,119 983 Other assets 588,944 557,124 Total assets$9,903,049 $9,836,453 Liabilities and Shareholders' Equity Deposits: Noninterest bearing$2,516,722 $2,628,234 Interest bearing 5,697,949 5,414,332 Total deposits 8,214,671 8,042,566 Borrowings 306,964 517,329 Other liabilities 142,001 131,265 Total liabilities$8,663,636 $8,691,160 Shareholders' Equity: Preferred shares (200,000 shares authorized; no shares outstanding at September 30, 2024 and December 31, 2023)$— $— Common shares (No par value; 20,000,000 shares authorized; 17,623,104 shares issued at September 30, 2024 and December 31, 2023) 462,129 463,280 Accumulated other comprehensive loss, net of taxes (34,684) (66,191)Retained earnings 964,008 903,877 Treasury shares (1,471,464 shares at September 30, 2024 and 1,506,625 shares at December 31, 2023) (152,040) (155,673)Total shareholders' equity$1,239,413 $1,145,293 Total liabilities and shareholders' equity$9,903,049 $9,836,453 PARK NATIONAL CORPORATION Consolidated Average Balance Sheets Three Months Ended Nine Months Ended September 30, September 30,(in thousands) 2024 2023 2024 2023 Assets Cash and due from banks$124,825 $146,162 $131,125 $151,735 Money market instruments 147,708 104,754 132,681 181,793 Investment securities 1,242,969 1,737,292 1,298,657 1,773,695 Loans 7,680,657 7,267,476 7,583,833 7,166,863 Allowance for credit losses (86,623) (88,522) (85,367) (87,511)Loans, net 7,594,034 7,178,954 7,498,466 7,079,352 Bank premises and equipment, net 71,913 78,483 73,386 80,361 Goodwill and other intangible assets 163,509 164,801 163,820 165,127 Other real estate owned 1,214 1,870 1,230 1,759 Other assets 574,461 552,798 565,950 546,434 Total assets$9,920,633 $9,965,114 $9,865,315 $9,980,256 Liabilities and Shareholders' Equity Deposits: Noninterest bearing$2,521,083 $2,748,259 $2,554,232 $2,854,736 Interest bearing 5,765,082 5,634,621 5,678,898 5,540,680 Total deposits 8,286,165 8,382,880 8,233,130 8,395,416 Borrowings 286,763 353,203 320,353 364,384 Other liabilities 137,140 126,354 131,689 125,532 Total liabilities$8,710,068 $8,862,437 $8,685,172 $8,885,332 Shareholders' Equity: Preferred shares$— $— $— $— Common shares 460,524 460,592 461,193 460,672 Accumulated other comprehensive loss, net of taxes (60,415) (97,029) (67,130) (94,762)Retained earnings 962,496 893,124 939,387 877,506 Treasury shares (152,040) (154,010) (153,307) (148,492)Total shareholders' equity$1,210,565 $1,102,677 $1,180,143 $1,094,924 Total liabilities and shareholders' equity$9,920,633 $9,965,114 $9,865,315 $9,980,256 PARK NATIONAL CORPORATION Consolidated Statements of Income - Linked Quarters 2024 2024 2024 2023 2023 (in thousands, except per share data)3rd QTR2nd QTR1st QTR4th QTR3rd QTR Interest income: Interest and fees on loans$120,203$115,318$111,211$108,495$103,258 Interest on debt securities: Taxable 10,228 10,950 11,899 13,055 13,321 Tax-exempt 1,381 1,382 1,410 2,248 2,900 Other interest income 1,996 1,254 2,120 1,408 1,410 Total interest income 133,808 128,904 126,640 125,206 120,889 Interest expense: Interest on deposits: Demand and savings deposits 22,762 20,370 19,855 19,467 20,029 Time deposits 7,073 7,525 7,338 6,267 3,097 Interest on borrowings 2,859 3,172 3,824 4,398 3,494 Total interest expense 32,694 31,067 31,017 30,132 26,620 Net interest income 101,114 97,837 95,623 95,074 94,269 Provision for (recovery of) credit losses 5,315 3,113 2,180 1,809 (1,580) Net interest income after provision for (recovery of ) credit losses 95,799 94,724 93,443 93,265 95,849 Other income 36,530 28,794 26,200 15,519 27,713 Other expense 85,681 75,189 77,228 79,043 77,808 Income before income taxes 46,648 48,329 42,415 29,741 45,754 Income taxes 8,431 8,960 7,211 5,241 8,837 Net income $38,217$39,369$35,204$24,500$36,917 Per common share: Net income - basic$2.37$2.44$2.18$1.52$2.29 Net income - diluted$2.35$2.42$2.17$1.51$2.28 PARK NATIONAL CORPORATION Detail of other income and other expense - Linked Quarters 2024 2024 2024 2023 2023(in thousands)3rd QTR2nd QTR1st QTR4th QTR3rd QTR Other income: Income from fiduciary activities$10,615$10,728$10,024 $8,943 $9,100Service charges on deposit accounts 2,362 2,214 2,106 2,054 2,109Other service income 3,036 2,906 2,524 2,349 2,615Debit card fee income 6,539 6,580 6,243 6,583 6,652Bank owned life insurance income 2,057 1,565 2,629 1,373 1,448ATM fees 471 458 496 517 575Pension settlement gain 5,783 — — — —Loss on sale of debt securities, net — — (398) (7,875) —Gain (loss) on equity securities, net 1,557 358 (687) 353 998Other components of net periodic benefit income 2,204 2,204 2,204 1,893 1,893Miscellaneous 1,906 1,781 1,059 (671) 2,323Total other income$36,530$28,794$26,200 $15,519 $27,713 Other expense: Salaries$38,370$35,954$35,733 $36,192 $34,525Employee benefits 10,162 9,873 11,560 10,088 10,822Occupancy expense 3,731 2,975 3,181 3,344 3,203Furniture and equipment expense 2,571 2,454 2,583 2,824 3,060Data processing fees 11,764 9,542 8,808 9,605 9,700Professional fees and services 7,842 6,022 6,817 7,015 7,572Marketing 1,464 1,164 1,741 1,716 1,197Insurance 1,640 1,777 1,718 1,708 2,158Communication 955 1,002 1,036 993 1,135State tax expense 1,116 1,129 1,110 1,158 1,125Amortization of intangible assets 287 320 320 334 334Foundation contributions 2,000 — — 1,000 —Miscellaneous 3,779 2,977 2,621 3,066 2,977Total other expense$85,681$75,189$77,228 $79,043 $77,808 PARK NATIONAL CORPORATION Asset Quality Information Year ended December 31,(in thousands, except ratios)September 30, 2024June 30, 2024March 31, 2024 2023 2022 2021 2020 2019 Allowance for credit losses: Allowance for credit losses, beginning of period$86,575 $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 6,554 3,097 3,240 10,863 9,133 5,093 10,304 11,177 Recoveries 1,901 1,475 2,399 5,942 6,758 8,441 27,246 10,173 Net charge-offs (recoveries) 4,653 1,622 841 4,921 2,375 (3,348) (16,942) 1,004 Provision for (recovery of) credit losses 5,315 3,113 2,180 2,904 4,557 (11,916) 12,054 6,171 Allowance for credit losses, end of period$87,237 $86,575 $85,084 $83,745 $85,379 $83,197 $85,675 $56,679 General reserve trends: Allowance for credit losses, end of period$87,237 $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. N.A. 678 — Specific reserves on individually evaluated loans 2,489 5,311 5,032 4,983 3,566 1,616 5,434 5,230 General reserves on collectively evaluated loans$84,748 $81,264 $80,052 $78,762 $81,813 $81,581 $79,396 $51,181 Total loans$7,730,984 $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) 2,191 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. N.A. 360,056 548,436 Individually evaluated loans (k) 53,573 54,993 54,742 45,215 78,341 74,502 108,407 77,459 Collectively evaluated loans$7,675,220 $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 0.24% 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% 1.13% 1.12% 1.20% 1.21% 1.19% 0.87%General reserve as a % of collectively evaluated loans 1.10% 1.07% 1.07% 1.06% 1.16% 1.20% 1.19% 0.87% Nonperforming assets: Nonaccrual loans$67,991 $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. N.A. 20,134 28,323 20,788 21,215 Loans past due 90 days or more 3,550 1,377 1,570 859 1,281 1,607 1,458 2,658 Total nonperforming loans$71,541 $72,745 $71,759 $61,118 $101,111 $102,652 $139,614 $113,953 Other real estate owned 1,119 1,210 1,674 983 1,354 775 1,431 4,029 Other nonperforming assets — — — — — 2,750 3,164 3,599 Total nonperforming assets$72,660 $73,955 $73,433 $62,101 $102,465 $106,177 $144,209 $121,581 Percentage of nonaccrual loans to period end loans 0.88% 0.93% 0.93% 0.81% 1.12% 1.06% 1.64% 1.39%Percentage of nonperforming loans to period end loans 0.93% 0.95% 0.95% 0.82% 1.42% 1.49% 1.95% 1.75%Percentage of nonperforming assets to period end loans 0.94% 0.96% 0.98% 0.83% 1.43% 1.55% 2.01% 1.87%Percentage of nonperforming assets to period end total assets 0.73% 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 Asset Quality Information (continued) Year ended December 31,(in thousands, except ratios)September 30, 2024June 30, 2024March 31, 2024 2023 2022 2021 2020 2019 New nonaccrual loan information: Nonaccrual loans, beginning of period$71,368$70,189$60,259$79,696$72,722$117,368$90,080$67,954New nonaccrual loans 14,171 13,180 19,012 48,280 64,918 38,478 103,386 81,009Resolved nonaccrual loans 17,548 12,001 9,082 67,717 57,944 83,124 76,098 58,883Nonaccrual loans, end of period$67,991$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$58,643$57,184$57,053$47,564$80,116$75,126$109,062$78,178Prior charge-offs 5,070 2,191 2,311 2,349 1,775 624 655 719Remaining principal balance 53,573 54,993 54,742 45,215 78,341 74,502 108,407 77,459Specific reserves 2,489 5,311 5,032 4,983 3,566 1,616 5,434 5,230Book value, after specific reserves$51,084$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 Financial Reconciliations NON-GAAP RECONCILIATIONS THREE MONTHS ENDED NINE MONTHS ENDED(in thousands, except share and per share data)September 30, 2024June 30, 2024September 30, 2023 September 30, 2024September 30, 2023Net interest income$101,114 $97,837 $94,269 $294,574 $278,039 less purchase accounting accretion related to NewDominion and Carolina Alliance acquisitions 281 271 145 904 509 less interest income on former Vision Bank relationships 9 5 9 16 596 Net interest income - adjusted$100,824 $97,561 $94,115 $293,654 $276,934 Provision for (recovery of) credit losses$5,315 $3,113 $(1,580) $10,608 $1,095 less recoveries on former Vision Bank relationships (234) (117) (40) (1,304) (788)Provision for (recovery of) credit losses - adjusted$5,549 $3,230 $(1,540) $11,912 $1,883 Other income$36,530 $28,794 $27,713 $91,524 $77,115 less loss on sale of debt securities, net — — — (398) — less pension settlement gain 5,783 — — 5,783 — less impact of strategic initiatives — 813 — 658 — less Vision related gain on the sale of OREO, net 1 (7) — 115 — less other service income related to former Vision Bank relationships — 6 — 13 135 Other income - adjusted$30,746 $27,982 $27,713 $85,353 $76,980 Other expense$85,681 $75,189 $77,808 $238,098 $230,196 less core deposit intangible amortization related to NewDominion and Carolina Alliance acquisitions 287 320 334 927 989 less Foundation contribution 2,000 — — 2,000 — less one-time incentive 1,700 — — 1,700 — less building demolition costs 349 — — 414 — less direct expenses related to collection of payments on former Vision Bank loan relationships — — — — 100 Other expense - adjusted$81,345 $74,869 $77,474 $233,057 $229,107 Tax effect of adjustments to net income identified above (i)$(414)$(186)$29 $(704)$(197) Net income - reported$38,217 $39,369 $36,917 $112,790 $102,234 Net income - adjusted (h)$36,659 $38,670 $37,028 $110,140 $101,492 Diluted earnings per common share$2.35 $2.42 $2.28 $6.95 $6.29 Diluted earnings per common share, adjusted (h)$2.25 $2.38 $2.28 $6.79 $6.24 Annualized return on average assets (a)(b) 1.53% 1.61% 1.47% 1.53% 1.37%Annualized return on average assets, adjusted (a)(b)(h) 1.47% 1.59% 1.47% 1.49% 1.36% Annualized return on average tangible assets (a)(b)(e) 1.56% 1.64% 1.49% 1.55% 1.39%Annualized return on average tangible assets, adjusted (a)(b)(e)(h) 1.49% 1.61% 1.50% 1.52% 1.38% Annualized return on average shareholders' equity (a)(b) 12.56% 13.52% 13.28% 12.77% 12.48%Annualized return on average shareholders' equity, adjusted (a)(b)(h) 12.05% 13.28% 13.32% 12.47% 12.39% Annualized return on average tangible equity (a)(b)(c) 14.52% 15.72% 15.62% 14.82% 14.70%Annualized return on average tangible equity, adjusted (a)(b)(c)(h) 13.93% 15.44% 15.66% 14.48% 14.59% Efficiency ratio (g) 61.98% 59.09% 63.25% 61.38% 64.29%Efficiency ratio, adjusted (g)(h) 61.55% 59.35% 63.05% 61.20% 64.21% Annualized net interest margin (g) 4.45% 4.39% 4.12% 4.37% 4.09%Annualized net interest margin, adjusted (g)(h) 4.43% 4.38% 4.11% 4.36% 4.07%Note: Explanations for footnotes (a) - (k) are included at the end of the financial tables in the "Financial Reconciliations" section. PARK NATIONAL CORPORATION Financial Reconciliations (continued) (a) Reported measure uses net income.(b) Averages are for the three months ended September 30, 2024, June 30, 2024, and September 30, 2023, and the nine months ended September 30, 2024 and September 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 NINE MONTHS ENDED September 30, 2024June 30, 2024September 30, 2023 September 30, 2024September 30, 2023AVERAGE SHAREHOLDERS' EQUITY$1,210,565$1,171,347$1,102,677 $1,180,143$1,094,924Less: Average goodwill and other intangible assets 163,509 163,816 164,801 163,820 165,127AVERAGE TANGIBLE EQUITY$1,047,056$1,007,531$937,876 $1,016,323$929,797 (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: September 30, 2024June 30, 2024September 30, 2023 TOTAL SHAREHOLDERS' EQUITY$1,239,413$1,183,257$1,085,564 Less: Goodwill and other intangible assets 163,320 163,607 164,581 TANGIBLE EQUITY$1,076,093$1,019,650$920,983 (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 NINE MONTHS ENDED September 30, 2024June 30, 2024September 30, 2023 September 30, 2024September 30, 2023AVERAGE ASSETS$9,920,633$9,811,326$9,965,114 $9,865,315$9,980,256Less: Average goodwill and other intangible assets 163,509 163,816 164,801 163,820 165,127AVERAGE TANGIBLE ASSETS$9,757,124$9,647,510$9,800,313 $9,701,495$9,815,129 (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: September 30, 2024June 30, 2024September 30, 2023 TOTAL ASSETS$9,903,049$9,919,783$10,000,914 Less: Goodwill and other intangible assets 163,320 163,607 164,581 TANGIBLE ASSETS$9,739,729$9,756,176$9,836,333 (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 NINE MONTHS ENDED September 30, 2024June 30, 2024September 30, 2023 September 30, 2024September 30, 2023Interest income$133,808$128,904$120,889 $389,352$346,464Fully taxable equivalent adjustment 594 605 1,042 1,815 2,888Fully taxable equivalent interest income$134,402$129,509$121,931 $391,167$349,352Interest expense 32,694 31,067 26,620 94,778 68,425Fully taxable equivalent net interest income$101,708$98,442$95,311 $296,389$280,927 (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 NINE MONTHS ENDED September 30, 2024June 30, 2024September 30, 2023 September 30, 2024September 30, 2023Net income$38,217$39,369$36,917 $112,790$102,234Plus: Income taxes 8,431 8,960 8,837 24,602 21,629Plus: Provision for (recovery of) credit losses 5,315 3,113 (1,580) 10,608 1,095Pre-tax, pre-provision net income$51,963$51,442$44,174 $148,000$124,958 (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. Source: Park National Bank