Park National Corporation reports financial results for second quarter and first half of 2024

NEWARK, Ohio, July 22, 2024 (GLOBE NEWSWIRE) — 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

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 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
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
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
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 
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 
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 
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 
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 
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 
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      
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   (111 )   (953 )   (25 )     (1,064 )   (748 )
Provision for credit losses – adjusted $ 3,224   $ 3,133   $ 2,517     $ 6,357   $ 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) $ (185 ) $ (118 ) $ 26     $ (303 ) $ (227 )
             
Net income – reported $ 39,369   $ 35,204   $ 31,584     $ 74,573   $ 65,317  
Net income – adjusted (h) $ 38,675   $ 34,760   $ 31,684     $ 73,435   $ 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      
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, 2024      
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      
             
             
(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.


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