Park National Corporation reports financial results for first quarter 2024

Bay Street

8 months ago

NEWARK, Ohio, April 19, 2024 (GLOBE NEWSWIRE) — Park National Corporation (Park) (NYSE American: PRK) today reported financial results for the first quarter of 2024. Park’s board of directors declared a quarterly cash dividend of $1.06 per common share, payable on June 10, 2024, to common shareholders of record as of May 17, 2024.

“Park bankers meet customers when, where and how they wish. In doing so, we remain alert to service opportunities of all types,” said Park Chairman and Chief Executive Officer David Trautman. “Our consistent and predictable approach helps build long-lasting relationships that customers tell us they value.”

Park’s net income for the first quarter of 2024 was $35.2 million, a 4.4 percent increase from $33.7 million for the first quarter of 2023. First quarter 2024 net income per diluted common share was $2.17, compared to $2.07 for the first quarter of 2023.

Park’s total loans increased 0.7 percent (2.6 percent annualized) during the first quarter of 2024 and increased 6.1% for the 12-month period ended March 31, 2024.

“We prioritize being readily available for customers and prospects, as highlighted by our loan growth over the most recent 12-month period,” said Park President Matthew Miller. “Our bankers find joy in serving others and look for opportunities to make a meaningful impact within each of our communities.”

Headquartered in Newark, Ohio, Park National Corporation has $9.9 billion in total assets (as of March 31, 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

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
Financial Highlights
As of or for the three months ended March 31, 2024, December 31, 2023 and March 31, 2023

		2024			2023			2023		Percent change vs.
*(in thousands, except common share and per common share data and ratios)*	1st QTR			4th QTR			1st QTR			4Q ’23		1Q ’23
INCOME STATEMENT:
Net interest income	$	95,623		$	95,074		$	92,198		0.6	%	3.7	%
Provision for credit losses		2,180			1,809			183		20.5	%	N.M.
Other income		26,200			15,519			24,387		68.8	%	7.4	%
Other expense		77,228			79,043			76,503		(2.3	)%	0.9	%
Income before income taxes	$	42,415		$	29,741		$	39,899		42.6	%	6.3	%
Income taxes		7,211			5,241			6,166		37.6	%	16.9	%
Net income	$	35,204		$	24,500		$	33,733		43.7	%	4.4	%

MARKET DATA:
Earnings per common share – basic (a)	$	2.18		$	1.52		$	2.08		43.4	%	4.8	%
Earnings per common share – diluted (a)		2.17			1.51			2.07		43.7	%	4.8	%
Quarterly cash dividend declared per common share		1.06			1.05			1.05		1.0	%	1.0	%
Book value per common share at period end		71.95			71.06			66.91		1.3	%	7.5	%
Market price per common share at period end		135.85			132.86			118.57		2.3	%	14.6	%
Market capitalization at period end		2,199,556			2,141,235			1,917,759		2.7	%	14.7	%

Weighted average common shares – basic (b)		16,116,842			16,113,215			16,242,353		—	%	(0.8	)%
Weighted average common shares – diluted (b)		16,191,065			16,216,562			16,324,823		(0.2	)%	(0.8	)%
Common shares outstanding at period end		16,149,523			16,116,479			16,174,067		0.2	%	(0.2	)%

PERFORMANCE RATIOS: (annualized)
Return on average assets (a)(b)		1.44	%		0.98	%		1.36	%	46.9	%	5.9	%
Return on average shareholders’ equity (a)(b)		12.23	%		8.81	%		12.54	%	38.8	%	(2.5	)%
Yield on loans		5.99	%		5.84	%		5.24	%	2.6	%	14.3	%
Yield on investment securities		3.90	%		3.88	%		3.60	%	0.5	%	8.3	%
Yield on money market instruments		5.48	%		5.30	%		4.70	%	3.4	%	16.6	%
Yield on interest earning assets		5.66	%		5.48	%		4.89	%	3.3	%	15.7	%
Cost of interest bearing deposits		1.94	%		1.84	%		1.15	%	5.4	%	68.7	%
Cost of borrowings		4.25	%		4.42	%		3.24	%	(3.8	)%	31.2	%
Cost of paying interest bearing liabilities		2.08	%		2.01	%		1.29	%	3.5	%	61.2	%
Net interest margin (g)		4.28	%		4.17	%		4.08	%	2.6	%	4.9	%
Efficiency ratio (g)		63.07	%		70.93	%		65.10	%	(11.1	)%	(3.1	)%

OTHER DATA (NON-GAAP) AND BALANCE SHEET INFORMATION:
Tangible book value per common share (d)	$	61.80		$	60.87		$	56.69		1.5	%	9.0	%
Average interest earning assets		9,048,204			9,120,407			9,267,418		(0.8	)%	(2.4	)%
Pre-tax, pre-provision net income (j)		44,595			31,550			40,082		41.3	%	11.3	%

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


PARK NATIONAL CORPORATION
Financial Highlights (continued)
As of or for the three months ended March 31, 2024, December 31, 2023 and March 31, 2023

										Percent change vs.
*(in thousands, except ratios)*	March 31, 2024			December 31, 2023			March 31, 2023			4Q ’23		1Q ’23
BALANCE SHEET:
Investment securities	$	1,339,747		$	1,429,144		$	1,800,410		(6.3	)%	(25.6	)%
Loans		7,525,005			7,476,221			7,093,857		0.7	%	6.1	%
Allowance for credit losses		85,084			83,745			85,946		1.6	%	(1.0	)%
Goodwill and other intangible assets		163,927			164,247			165,243		(0.2	)%	(0.8	)%
Other real estate owned (OREO)		1,674			983			1,468		70.3	%	14.0	%
Total assets		9,881,077			9,836,453			9,856,981		0.5	%	0.2	%
Total deposits		8,306,032			8,042,566			8,294,444		3.3	%	0.1	%
Borrowings		295,130			517,329			360,843		(43.0	)%	(18.2	)%
Total shareholders’ equity		1,161,979			1,145,293			1,082,153		1.5	%	7.4	%
Tangible equity (d)		998,052			981,046			916,910		1.7	%	8.8	%
Total nonperforming loans		71,759			61,118			74,365		17.4	%	(3.5	)%
Total nonperforming assets		73,433			62,101			75,833		18.2	%	(3.2	)%

ASSET QUALITY RATIOS:
Loans as a % of period end total assets		76.16	%		76.01	%		71.97	%	0.2	%	5.8	%
Total nonperforming loans as a % of period end loans		0.95	%		0.82	%		1.05	%	15.9	%	(9.5	)%
Total nonperforming assets as a % of period end loans + OREO + other nonperforming assets		0.98	%		0.83	%		1.07	%	18.1	%	(8.4	)%
Allowance for credit losses as a % of period end loans		1.13	%		1.12	%		1.21	%	0.9	%	(6.6	)%
Net loan charge-offs (recoveries)	$	841		$	2,666		$	(1	)	(68.5	)%	N.M.
Annualized net loan charge-offs (recoveries) as a % of average loans (b)		0.05	%		0.14	%		—	%	(64.3	)%	N.M.

CAPITAL & LIQUIDITY:
Total shareholders’ equity / Period end total assets		11.76	%		11.64	%		10.98	%	1.0	%	7.1	%
Tangible equity (d) / Tangible assets (f)		10.27	%		10.14	%		9.46	%	1.3	%	8.6	%
Average shareholders’ equity / Average assets (b)		11.74	%		11.16	%		10.85	%	5.2	%	8.2	%
Average shareholders’ equity / Average loans (b)		15.48	%		14.94	%		15.37	%	3.6	%	0.7	%
Average loans / Average deposits (b)		91.11	%		89.48	%		84.04	%	1.8	%	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
Consolidated Statements of Income

	Three Months Ended
	March 31
*(in thousands, except share and per share data)*		2024		2023

Interest income:
Interest and fees on loans	$	111,211	$	91,614
Interest on debt securities:
Taxable		11,899		12,979
Tax-exempt		1,410		2,912
Other interest income		2,120		3,396
Total interest income		126,640		110,901

Interest expense:
Interest on deposits:
Demand and savings deposits		19,855		14,212
Time deposits		7,338		1,347
Interest on borrowings		3,824		3,144
Total interest expense		31,017		18,703

Net interest income		95,623		92,198

Provision for credit losses		2,180		183

Net interest income after provision for credit losses		93,443		92,015

Other income		26,200		24,387

Other expense		77,228		76,503

Income before income taxes		42,415		39,899

Income taxes		7,211		6,166

Net income	$	35,204	$	33,733

Per common share:
Net income – basic	$	2.18	$	2.08
Net income – diluted	$	2.17	$	2.07

Weighted average common shares – basic		16,116,842		16,242,353
Weighted average common shares – diluted		16,191,065		16,324,823

Cash dividends declared:
Quarterly dividend	$	1.06	$	1.05


PARK NATIONAL CORPORATION
Consolidated Balance Sheets

*(in thousands, except share data)*	March 31, 2024			December 31, 2023

Assets

Cash and due from banks	$	112,117		$	160,477
Money market instruments		193,964			57,791
Investment securities		1,339,747			1,429,144
Loans		7,525,005			7,476,221
Allowance for credit losses		(85,084	)		(83,745	)
Loans, net		7,439,921			7,392,476
Bank premises and equipment, net		73,818			74,211
Goodwill and other intangible assets		163,927			164,247
Other real estate owned		1,674			983
Other assets		555,909			557,124
Total assets	$	9,881,077		$	9,836,453

Liabilities and Shareholders’ Equity

Deposits:
Noninterest bearing	$	2,587,152		$	2,628,234
Interest bearing		5,718,880			5,414,332
Total deposits		8,306,032			8,042,566
Borrowings		295,130			517,329
Other liabilities		117,936			131,265
Total liabilities	$	8,719,098		$	8,691,160


Shareholders’ Equity:
Preferred shares (200,000 shares authorized; no shares outstanding at March 31, 2024 and December 31, 2023)	$	—		$	—
Common shares (No par value; 20,000,000 shares authorized; 17,623,104 shares issued at March 31, 2024 and December 31, 2023)		459,532			463,280
Accumulated other comprehensive loss, net of taxes		(66,395	)		(66,191	)
Retained earnings		921,101			903,877
Treasury shares (1,473,581 shares at March 31, 2024 and 1,506,625 shares at December 31, 2023)		(152,259	)		(155,673	)
Total shareholders’ equity	$	1,161,979		$	1,145,293
Total liabilities and shareholders’ equity	$	9,881,077		$	9,836,453


PARK NATIONAL CORPORATION
Consolidated Average Balance Sheets

	Three Months Ended
	March 31,
*(in thousands)*		2024			2023

Assets

Cash and due from banks	$	143,714		$	155,582
Money market instruments		155,511			292,948
Investment securities		1,368,527			1,806,679
Loans		7,482,650			7,099,240
Allowance for credit losses		(84,067	)		(86,809	)
Loans, net		7,398,583			7,012,431
Bank premises and equipment, net		74,919			82,047
Goodwill and other intangible assets		164,137			165,457
Other real estate owned		1,088			1,434
Other assets		556,899			542,302
Total assets	$	9,863,378		$	10,058,880


Liabilities and Shareholders’ Equity

Deposits:
Noninterest bearing	$	2,569,030		$	2,970,470
Interest bearing		5,644,088			5,476,661
Total deposits		8,213,118			8,447,131
Borrowings		361,703			393,198
Other liabilities		130,373			127,599
Total liabilities	$	8,705,194		$	8,967,928

Shareholders’ Equity:
Preferred shares	$	—		$	—
Common shares		463,518			462,562
Accumulated other comprehensive loss, net of taxes		(67,343	)		(96,240	)
Retained earnings		917,645			865,276
Treasury shares		(155,636	)		(140,646	)
Total shareholders’ equity	$	1,158,184		$	1,090,952
Total liabilities and shareholders’ equity	$	9,863,378		$	10,058,880


PARK NATIONAL CORPORATION
Consolidated Statements of Income – Linked Quarters

	2024		2023		2023			2023		2023
*(in thousands, except per share data)*	1st QTR		4th QTR		3rd QTR			2nd QTR		1st QTR

Interest income:
Interest and fees on loans	$	111,211	$	108,495	$	103,258		$	96,428	$	91,614
Interest on debt securities:
Taxable		11,899		13,055		13,321			13,431		12,979
Tax-exempt		1,410		2,248		2,900			2,906		2,912
Other interest income		2,120		1,408		1,410			1,909		3,396
Total interest income		126,640		125,206		120,889			114,674		110,901

Interest expense:
Interest on deposits:
Demand and savings deposits		19,855		19,467		20,029			18,068		14,212
Time deposits		7,338		6,267		3,097			1,966		1,347
Interest on borrowings		3,824		4,398		3,494			3,068		3,144
Total interest expense		31,017		30,132		26,620			23,102		18,703

Net interest income		95,623		95,074		94,269			91,572		92,198

Provision for (recovery of) credit losses		2,180		1,809		(1,580	)		2,492		183

Net interest income after provision for (recovery of ) credit losses		93,443		93,265		95,849			89,080		92,015

Other income		26,200		15,519		27,713			25,015		24,387

Other expense		77,228		79,043		77,808			75,885		76,503

Income before income taxes		42,415		29,741		45,754			38,210		39,899

Income taxes		7,211		5,241		8,837			6,626		6,166

Net income	$	35,204	$	24,500	$	36,917		$	31,584	$	33,733

Per common share:
Net income – basic	$	2.18	$	1.52	$	2.29		$	1.95	$	2.08
Net income – diluted	$	2.17	$	1.51	$	2.28		$	1.94	$	2.07


PARK NATIONAL CORPORATION
Detail of other income and other expense – Linked Quarters

	2024			2023			2023			2023		2023
(in thousands)	1st QTR			4th QTR			3rd QTR			2nd QTR		1st QTR

Other income:
Income from fiduciary activities	$	10,024		$	8,943		$	9,100		$	8,816	$	8,615
Service charges on deposit accounts		2,106			2,054			2,109			2,041		2,241
Other service income		2,524			2,349			2,615			2,639		2,697
Debit card fee income		6,243			6,583			6,652			6,830		6,457
Bank owned life insurance income		2,629			1,373			1,448			1,332		1,185
ATM fees		496			517			575			553		533
Gain (loss) on the sale of OREO, net		121			—			(6	)		12		(9	)
Loss on sale of debt securities, net		(398	)		(7,875	)		—			—		—
(Loss) gain on equity securities, net		(687	)		353			998			25		(405	)
Other components of net periodic benefit income		2,204			1,893			1,893			1,893		1,893
Miscellaneous		938			(671	)		2,329			874		1,180
Total other income	$	26,200		$	15,519		$	27,713		$	25,015	$	24,387

Other expense:
Salaries	$	35,733		$	36,192		$	34,525		$	33,649	$	34,871
Employee benefits		11,560			10,088			10,822			10,538		10,816
Occupancy expense		3,181			3,344			3,203			3,214		3,353
Furniture and equipment expense		2,583			2,824			3,060			3,103		3,246
Data processing fees		8,808			9,605			9,700			9,582		8,750
Professional fees and services		6,817			7,015			7,572			7,365		7,221
Marketing		1,741			1,716			1,197			1,239		1,319
Insurance		1,718			1,708			2,158			1,960		1,814
Communication		1,036			993			1,135			1,045		1,037
State tax expense		1,110			1,158			1,125			1,096		1,278
Amortization of intangible assets		320			334			334			328		327
Foundation contributions		—			1,000			—			—		—
Miscellaneous		2,621			3,066			2,977			2,766		2,471
Total other expense	$	77,228		$	79,043		$	77,808		$	75,885	$	76,503

PARK NATIONAL CORPORATION
Asset Quality Information

				Year ended December 31,
*(in thousands, except ratios)*	March 31, 2024				2023			2022			2021			2020			2019

Allowance for credit losses:
Allowance for credit losses, beginning of period	$	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		3,240			10,863			9,133			5,093			10,304			11,177
Recoveries		2,399			5,942			6,758			8,441			27,246			10,173
Net charge-offs (recoveries)		841			4,921			2,375			(3,348	)		(16,942	)		1,004
Provision for (recovery of) credit losses		2,180			2,904			4,557			(11,916	)		12,054			6,171
Allowance for credit losses, end of period	$	85,084		$	83,745		$	85,379		$	83,197		$	85,675		$	56,679

General reserve trends:
Allowance for credit losses, end of period	$	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.			678			—
Specific reserves on individually evaluated loans		5,032			4,983			3,566			1,616			5,434			5,230
General reserves on collectively evaluated loans	$	80,052		$	78,762		$	81,813		$	81,581		$	79,396		$	51,181

Total loans	$	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)		2,454			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.			360,056			548,436
Individually evaluated loans (k)		54,742			45,215			78,341			74,502			108,407			77,459
Collectively evaluated loans	$	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		0.05	%		0.07	%		0.03	%	(0.05		)%	(0.24		)%		0.02	%
Allowance for credit losses as a % of period end loans		1.13	%		1.12	%		1.20	%		1.21	%		1.19	%		0.87	%
General reserve as a % of collectively evaluated loans		1.07	%		1.06	%		1.16	%		1.20	%		1.19	%		0.87	%

Nonperforming assets:
Nonaccrual loans	$	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.			20,134			28,323			20,788			21,215
Loans past due 90 days or more		1,570			859			1,281			1,607			1,458			2,658
Total nonperforming loans	$	71,759		$	61,118		$	101,111		$	102,652		$	139,614		$	113,953
Other real estate owned		1,674			983			1,354			775			1,431			4,029
Other nonperforming assets		—			—			—			2,750			3,164			3,599
Total nonperforming assets	$	73,433		$	62,101		$	102,465		$	106,177		$	144,209		$	121,581
Percentage of nonaccrual loans to period end loans		0.93	%		0.81	%		1.12	%		1.06	%		1.64	%		1.39	%
Percentage of nonperforming loans to period end loans		0.95	%		0.82	%		1.42	%		1.49	%		1.95	%		1.75	%
Percentage of nonperforming assets to period end loans		0.98	%		0.83	%		1.43	%		1.55	%		2.01	%		1.87	%
Percentage of nonperforming assets to period end total assets		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)	March 31, 2024				2023			2022			2021			2020			2019

New nonaccrual loan information:
Nonaccrual loans, beginning of period	$	60,259		$	79,696		$	72,722		$	117,368		$	90,080		$	67,954
New nonaccrual loans		19,012			48,280			64,918			38,478			103,386			81,009
Resolved nonaccrual loans		9,082			67,717			57,944			83,124			76,098			58,883
Nonaccrual loans, end of period	$	70,189		$	60,259		$	79,696		$	72,722		$	117,368		$	90,080

Individually evaluated commercial loan portfolio information (period end): (k)
Unpaid principal balance	$	57,053		$	47,564		$	80,116		$	75,126		$	109,062		$	78,178
Prior charge-offs		2,311			2,349			1,775			624			655			719
Remaining principal balance		54,742			45,215			78,341			74,502			108,407			77,459
Specific reserves		5,032			4,983			3,566			1,616			5,434			5,230
Book value, after specific reserves	$	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
*(in thousands, except share and per share data)*	March 31, 2024			December 31, 2023			March 31, 2023
Net interest income	$	95,623		$	95,074		$	92,198
less purchase accounting accretion related to NewDominion and Carolina Alliance acquisitions		352			124			200
less interest income on former Vision Bank relationships		2			35			574
Net interest income – adjusted	$	95,269		$	94,915		$	91,424

Provision for credit losses	$	2,180		$	1,809		$	183
less recoveries on former Vision Bank relationships		(953	)		—			(723	)
Provision for credit losses – adjusted	$	3,133		$	1,809		$	906

Other income	$	26,200		$	15,519		$	24,387
less loss on sale of debt securities, net		(398	)		(7,875	)		—
less write-downs on strategic initiatives		(155	)		(1,038	)		—
less Vision related gain on the sale of OREO, net		121			—			—
less Vision related OREO valuation markup		—			46			—
less other service income related to former Vision Bank relationships		7			40			135
Other income – adjusted	$	26,625		$	24,346		$	24,252

Other expense	$	77,228		$	79,043		$	76,503
less Foundation contribution		—			1,000			—
less core deposit intangible amortization related to NewDominion and Carolina Alliance acquisitions		320			334			327
less direct expenses related to collection of payments on former Vision Bank loan relationships		—			—			100
Other expense – adjusted	$	76,908		$	77,709		$	76,076

Tax effect of adjustments to net income identified above (i)	$	(118	)	$	2,100		$	(253	)

Net income – reported	$	35,204		$	24,500		$	33,733
Net income – adjusted (h)	$	34,760		$	32,402		$	32,781

Diluted earnings per common share	$	2.17		$	1.51		$	2.07
Diluted earnings per common share, adjusted (h)	$	2.15		$	2.00		$	2.01

Annualized return on average assets (a)(b)		1.44	%		0.98	%		1.36	%
Annualized return on average assets, adjusted (a)(b)(h)		1.42	%		1.30	%		1.32	%

Annualized return on average tangible assets (a)(b)(e)		1.46	%		1.00	%		1.38	%
Annualized return on average tangible assets, adjusted (a)(b)(e)(h)		1.44	%		1.32	%		1.34	%

Annualized return on average shareholders’ equity (a)(b)		12.23	%		8.81	%		12.54	%
Annualized return on average shareholders’ equity, adjusted (a)(b)(h)		12.07	%		11.65	%		12.19	%

Annualized return on average tangible equity (a)(b)(c)		14.24	%		10.35	%		14.78	%
Annualized return on average tangible equity, adjusted (a)(b)(c)(h)		14.06	%		13.69	%		14.36	%

Efficiency ratio (g)		63.07	%		70.93	%		65.10	%
Efficiency ratio, adjusted (g)(h)		62.78	%		64.70	%		65.24	%

Annualized net interest margin (g)		4.28	%		4.17	%		4.08	%
Annualized net interest margin, adjusted (g)(h)		4.26	%		4.17	%		4.04	%

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 March 31, 2024, December 31, 2023, and March 31, 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
	March 31, 2024		December 31, 2023		March 31, 2023
AVERAGE SHAREHOLDERS’ EQUITY	$	1,158,184	$	1,103,726	$	1,090,952
Less: Average goodwill and other intangible assets		164,137		164,466		165,457
AVERAGE TANGIBLE EQUITY	$	994,047	$	939,260	$	925,495

(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:
	March 31, 2024		December 31, 2023		March 31, 2023
TOTAL SHAREHOLDERS’ EQUITY	$	1,161,979	$	1,145,293	$	1,082,153
Less: Goodwill and other intangible assets		163,927		164,247		165,243
TANGIBLE EQUITY	$	998,052	$	981,046	$	916,910

(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
	March 31, 2024		December 31, 2023		March 31, 2023
AVERAGE ASSETS	$	9,863,378	$	9,890,188	$	10,058,880
Less: Average goodwill and other intangible assets		164,137		164,466		165,457
AVERAGE TANGIBLE ASSETS	$	9,699,241	$	9,725,722	$	9,893,423

(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:
	March 31, 2024		December 31, 2023		March 31, 2023
TOTAL ASSETS	$	9,881,077	$	9,836,453	$	9,856,981
Less: Goodwill and other intangible assets		163,927		164,247		165,243
TANGIBLE ASSETS	$	9,717,150	$	9,672,206	$	9,691,738

(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
	March 31, 2024		December 31, 2023		March 31, 2023
Interest income	$	126,640	$	125,206	$	110,901
Fully taxable equivalent adjustment		616		838		926
Fully taxable equivalent interest income	$	127,256	$	126,044	$	111,827
Interest expense		31,017		30,132		18,703
Fully taxable equivalent net interest income	$	96,239	$	95,912	$	93,124

(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
	March 31, 2024		December 31, 2023		March 31, 2023
Net income	$	35,204	$	24,500	$	33,733
Plus: Income taxes		7,211		5,241		6,166
Plus: Provision for credit losses		2,180		1,809		183
Pre-tax, pre-provision net income	$	44,595	$	31,550	$	40,082

(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.

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