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Park National Corporation reports 2023 financial results
Press Releases

Park National Corporation reports 2023 financial results

NEWARK, Ohio, Jan. 22, 2024 (GLOBE NEWSWIRE) — Park National Corporation (Park) (NYSE American: PRK) today reported financial results for the fourth quarter and the full year of 2023. Park’s board of directors declared a quarterly cash dividend of $1.06 per common share, payable on March 8, 2024, to common shareholders of record as of February 16, 2024.

“We are pleased to end the year with solid loan growth for the third consecutive quarter and enter 2024 with strong asset quality,” Park Chairman and Chief Executive Officer David Trautman said. “Park bankers remain committed to providing robust financial solutions in all market conditions.”

Park’s net income for the fourth quarter of 2023 was $24.5 million, a 25.9 percent decrease from $33.1 million for the fourth quarter of 2022. Fourth quarter 2023 net income per diluted common share was $1.51, compared to $2.02 for the fourth quarter of 2022. Park’s net income for the full year of 2023 was $126.7 million, a 14.6 percent decrease from $148.4 million for the full year of 2022. Net income per diluted common share was $7.80 for the full year of 2023, compared to $9.06 for the full year of 2022.

Net income for the fourth quarter of 2023 and 2022 and the full year 2023 and 2022 included several items of income and expense that impacted comparability of prior results. These items are detailed in the "Financial Reconciliation" section of this report. Considering these items impacting comparability of prior results, Park’s adjusted (non-gaap) net income for the fourth quarter of 2023 was $32.4 million, a 1.9 percent increase from adjusted (non-gaap) net income of $31.8 million for the fourth quarter of 2022. Park’s adjusted (non-gaap) net income for the full year of 2023 was $133.9 million, a 0.2 percent decrease from adjusted (non-gaap) net income of $134.2 million for the full year of 2022.

Park’s total loans increased 4.7 percent during 2023.

“The personal relationships our bankers build with customers and a substantial core deposit base are pivotal factors impacting our stable net interest margin and overall financial results,” said Park President Matthew Miller. “Our unwavering attention to these factors serves as a testament to our customers that we are a reliable and trustworthy financial partner.”

Headquartered in Newark, Ohio, Park National Corporation has $9.8 billion in total assets (as of December 31, 2023). 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. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements.

Risks and uncertainties that could cause actual results to differ materially include, without limitation:

  • Park’s ability to execute our business plan successfully and within the expected timeframe as well as our ability to manage strategic initiatives;
  • current and future economic and financial market conditions, either nationally or in the states in which Park and our subsidiaries do business, that may reflect deterioration in business and economic conditions, including the effects of higher unemployment rates or labor shortages, the impact of persistent inflation, the impact of continued elevated interest rates, changes in the economy or global supply chain, supply-demand imbalances affecting local real estate prices, U.S. fiscal debt, budget and tax matters, geopolitical matters (including the impact of the Russia-Ukraine conflict and associated sanctions and export controls as well as the Israel-Hamas conflict), and any slowdown in global economic growth, any of which may result in adverse impacts on the demand for loan, deposit and other financial services, delinquencies, defaults and counterparties’ inability to meet credit and other obligations and the possible impairment of collectability of loans;
  • factors that can impact the performance of our loan portfolio, including changes in real estate values and liquidity in our primary market areas, the financial health of our commercial borrowers and the success of construction projects that we finance;
  • the effect of monetary and other fiscal policies (including the impact of money supply, ongoing increasing market interest rate policies and policies impacting inflation, of the Federal Reserve Board, the U.S. Treasury and other governmental agencies) as well as disruption in the liquidity and functioning of U.S. financial markets, may adversely impact prepayment penalty income, mortgage banking income, income from fiduciary activities, the value of securities, deposits and other financial instruments, in addition to the loan demand and the performance of our loan portfolio, and the interest rate sensitivity of our consolidated balance sheet as well as reduce net interest margins;
  • changes in the federal, state, or local tax laws may adversely affect the fair values of net deferred tax assets and obligations of state and political subdivisions held in Park’s investment securities portfolio and otherwise negatively impact our financial performance;
  • the impact of the changes in federal, state and local governmental policy, including the regulatory landscape, capital markets, elevated government debt, potential changes in tax legislation that may increase tax rates, government shutdown, infrastructure spending and social programs;
  • changes in laws or requirements imposed by Park’s regulators impacting Park’s capital actions, including dividend payments and stock repurchases;
  • changes in consumer spending, borrowing and saving habits, whether due to changes in retail distribution strategies, consumer preferences and behaviors, changes in business and economic conditions, legislative and regulatory initiatives, or other factors may be different than anticipated;
  • changes in customers’, suppliers’, and other counterparties’ performance and creditworthiness, and Park’s expectations regarding future credit losses and our allowance for credit losses, may be different than anticipated due to the continuing impact of and the various responses to inflationary pressures and continued elevated interest rates;
  • Park may have more credit risk and higher credit losses to the extent there are loan concentrations by location or industry of borrowers or collateral;
  • the volatility from quarter to quarter of mortgage banking income, whether due to interest rates, demand, the fair value of mortgage loans, or other factors;
  • the adequacy of our internal controls and risk management program in the event of changes in the market, economic, operational (including those which may result from our associates working remotely), asset/liability repricing, legal, compliance, strategic, cybersecurity, liquidity, credit and interest rate risks associated with Park’s business;
  • competitive pressures among financial services organizations could increase significantly, including product and pricing pressures (which could in turn impact our credit spreads), changes to third-party relationships and revenues, changes in the manner of providing services, customer acquisition and retention pressures, and Park’s ability to attract, develop and retain qualified banking professionals;
  • uncertainty regarding the nature, timing, cost and effect of changes in banking regulations or other regulatory or legislative requirements affecting the respective businesses of Park and our subsidiaries, including major reform of the regulatory oversight structure of the financial services industry and changes in laws and regulations concerning taxes, FDIC insurance premium levels, pensions, bankruptcy, consumer protection, rent regulation and housing, financial accounting and reporting, environmental protection, insurance, bank products and services, bank and bank holding company capital and liquidity standards, fiduciary standards, securities and other aspects of the financial services industry;
  • Park’s ability to meet heightened supervisory requirements and expectations;
  • the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board, the SEC, the Public Company Accounting Oversight Board and other regulatory agencies, may adversely affect Park’s reported financial condition or results of operations;
  • Park’s assumptions and estimates used in applying critical accounting policies and modeling which may prove unreliable, inaccurate or not predictive of actual results;
  • the possibility that future credit losses may be higher than currently expected due to changes in economic assumptions;
  • Park’s ability to anticipate and respond to technological changes and Park’s reliance on, and the potential failure of, a number of third-party vendors to perform as expected, including Park’s primary core banking system provider, which can impact Park’s ability to respond to customer needs and meet competitive demands;
  • operational issues stemming from and/or capital spending necessitated by the potential need to adapt to industry changes in information technology systems on which Park and our subsidiaries are highly dependent;
  • Park’s ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks, including those of Park’s third-party vendors and other service providers, which may prove inadequate, and could adversely affect customer confidence in Park and/or result in Park incurring a financial loss;
  • a failure in or breach of Park’s operational or security systems or infrastructure, or those of our third-party vendors and other service providers, resulting in failures or disruptions in customer account management, general ledger, deposit, loan, or other systems, including as a result of cyber attacks;
  • the impact on Park’s business and operating results of any costs associated with obtaining rights in intellectual property claimed by others and of the adequacy of Park’s intellectual property protection in general;
  • the existence or exacerbation of general geopolitical instability and uncertainty as well as the effect of trade policies (including the impact of potential or imposed tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements, trade wars and other changes in trade regulations, closing of border crossings and changes in the relationship of the U.S. and its global trading partners);
  • the impact on financial markets and the economy of any changes in the credit ratings of the U.S. Treasury obligations and other U.S. government-backed debt, as well as issues surrounding the levels of U.S., European and Asian government debt and concerns regarding the growth rates and financial stability of certain sovereign governments, supranationals and financial institutions in Europe and Asia and the risk they may face difficulties servicing their sovereign debt;
  • the effect of a fall in stock market prices on Park’s asset and wealth management businesses;
  • our litigation and regulatory compliance exposure, including the costs and effects of any adverse developments in legal proceedings or other claims, the costs and effects of unfavorable resolution of regulatory and other governmental examinations or other inquiries, and liabilities and business restrictions resulting from litigation and regulatory investigations;
  • continued availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends;
  • the impact on Park’s business, personnel, facilities or systems of losses related to acts of fraud, scams and schemes of third parties;
  • the impact of widespread natural and other disasters, pandemics (including the COVID-19 pandemic), dislocations, regional or national protests and civil unrest (including any resulting branch closures or damages), military or terrorist activities or international hostilities (especially in light of the Russia-Ukraine conflict and the Israel-Hamas conflict) on the economy and financial markets generally and on us or our counterparties specifically;  
  • the potential further deterioration of the U.S. economy due to financial, political, or other shocks;
  • the effect of healthcare laws in the U.S. and potential changes for such laws which may increase our healthcare and other costs and negatively impact our operations and financial results;
  • the impact of larger or similar-sized financial institutions encountering problems, such as the recent closures of Silicon Valley Bank in California, Signature Bank in New York, First Republic Bank in California, and Heartland Tri-State Bank in Kansas, which may adversely affect the banking industry and/or Park’s business generation and retention, funding and liquidity, including potential increased regulatory requirements and increased reputational risk and potential impacts to macroeconomic conditions;
  • Park’s continued ability to grow deposits or maintain adequate deposit levels in light of the recent bank failures;
  • unexpected outflows of deposits which may require Park to sell investment securities at a loss;
  • and other risk factors relating to the financial services industry as detailed from time to time in Park’s reports filed with the SEC including those described in "Item 1A. Risk Factors" of Part I of Park’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, in "Item 1A. Risk Factors" of Part II of Park’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023, in "Item 1A. Risk Factors" of Part II of Park’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023 and in "Item 1A. Risk Factors" of Part II of Park’s Quarterly Report on Form 10-Q for the quarterly period ended September, 30, 2023.

Park does not undertake, and specifically disclaims any obligation, to publicly release the results of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement was made, or reflect the occurrence of unanticipated events, except to the extent required by law.

 
PARK NATIONAL CORPORATION
Financial Highlights
As of or for the three months ended December 31, 2023, September 30, 2023 and December 31, 2022          
             
    2023     2023     2022     Percent change vs.
(in thousands, except common share and per common share data and ratios) 4th QTR 3rd QTR 4th QTR   3Q ’23 4Q ’22
INCOME STATEMENT:            
Net interest income $ 95,074   $ 94,269   $ 94,606     0.9 % 0.5 %
Provision for (recovery of) credit losses   1,809     (1,580 )   2,981     N.M. N.M.
Other income   15,519     27,713     26,392     (44.0 )% (41.2 )%
Other expense   79,043     77,808     77,654     1.6 % 1.8 %
Income before income taxes $ 29,741   $ 45,754   $ 40,363     (35.0 )% (26.3 )%
Income taxes   5,241     8,837     7,279     (40.7 )% (28.0 )%
Net income $ 24,500   $ 36,917   $ 33,084     (33.6 )% (25.9 )%
             
MARKET DATA:            
Earnings per common share – basic (a) $ 1.52   $ 2.29   $ 2.03     (33.6 )% (25.1 )%
Earnings per common share – diluted (a)   1.51     2.28     2.02     (33.8 )% (25.2 )%
Quarterly cash dividend declared per common share   1.05     1.05     1.04     % 1.0 %
Special cash dividend declared per common share           0.50     N.M. N.M.
Book value per common share at period end   71.06     67.41     65.74     5.4 % 8.1 %
Market price per common share at period end   132.86     94.52     140.75     40.6 % (5.6 )%
Market capitalization at period end   2,141,235     1,522,096     2,289,099     40.7 % (6.5 )%
             
Weighted average common shares – basic (b)   16,113,215     16,133,310     16,261,136     (0.1 )% (0.9 )%
Weighted average common shares – diluted (b)   16,216,562     16,217,880     16,393,179     % (1.1 )%
Common shares outstanding at period end   16,116,479     16,103,425     16,263,583     0.1 % (0.9 )%
             
PERFORMANCE RATIOS: (annualized)            
Return on average assets (a)(b)   0.98 %   1.47 %   1.28 %   (33.3 )% (23.4 )%
Return on average shareholders’ equity (a)(b)   8.81 %   13.28 %   12.44 %   (33.7 )% (29.2 )%
Yield on loans   5.84 %   5.65 %   5.00 %   3.4 % 16.8 %
Yield on investment securities   3.88 %   3.73 %   3.25 %   4.0 % 19.4 %
Yield on money market instruments   5.30 %   5.34 %   3.63 %   (0.7 )% 46.0 %
Yield on interest earning assets   5.48 %   5.27 %   4.57 %   4.0 % 19.9 %
Cost of interest bearing deposits   1.84 %   1.63 %   0.81 %   12.9 % 127.2 %
Cost of borrowings   4.42 %   3.92 %   2.88 %   12.8 % 53.5 %
Cost of paying interest bearing liabilities   2.01 %   1.76 %   0.95 %   14.2 % 111.6 %
Net interest margin (g)   4.17 %   4.12 %   3.98 %   1.2 % 4.8 %
Efficiency ratio (g)   70.93 %   63.25 %   63.69 %   12.1 % 11.4 %
             
OTHER DATA (NON-GAAP) AND BALANCE SHEET INFORMATION:            
Tangible book value per common share (d) $ 60.87   $ 57.19   $ 55.56     6.4 % 9.6 %
Average interest earning assets   9,120,407     9,178,281     9,517,746     (0.6 )% (4.2 )%
Pre-tax, pre-provision net income (k)   31,550     44,174     43,344     (28.6 )% (27.2 )%
             
Note: Explanations for footnotes (a) – (l) are included at the end of the financial tables in the "Financial Reconciliations" section.
             
             
PARK NATIONAL CORPORATION
Financial Highlights (continued)
As of or for the three months ended December 31, 2023, September 30, 2023 and December 31, 2022          
             
          Percent change vs.
(in thousands, except ratios) December 31,
2023
September 30,
2023
December 31,
2022
  3Q ’23 4Q ’22
BALANCE SHEET:            
Investment securities $ 1,429,144   $ 1,708,827   $ 1,820,787     (16.4 )% (21.5 )%
Loans   7,476,221     7,349,745     7,141,891     1.7 % 4.7 %
Allowance for credit losses   83,745     84,602     85,379     (1.0 )% (1.9 )%
Goodwill and other intangible assets   164,247     164,581     165,570     (0.2 )% (0.8 )%
Other real estate owned (OREO)   983     1,354     1,354     (27.4 )% (27.4 )%
Total assets   9,836,453     10,000,914     9,854,993     (1.6 )% (0.2 )%
Total deposits   8,042,566     8,244,724     8,234,715     (2.5 )% (2.3 )%
Borrowings   517,329     541,811     416,009     (4.5 )% 24.4 %
Total shareholders’ equity   1,145,293     1,085,564     1,069,226     5.5 % 7.1 %
Tangible equity (d)   981,046     920,983     903,656     6.5 % 8.6 %
Total nonperforming loans (l)   61,118     55,635     101,111     9.9 % (39.6 )%
Total nonperforming assets (l)   62,101     56,989     102,465     9.0 % (39.4 )%
             
ASSET QUALITY RATIOS:            
Loans as a % of period end total assets   76.01 %   73.49 %   72.47 %   3.4 % 4.9 %
Total nonperforming loans as a % of period end loans   0.82 %   0.76 %   1.42 %   7.9 % (42.3 )%
Total nonperforming assets as a % of period end loans + OREO + other nonperforming assets   0.83 %   0.78 %   1.43 %   6.4 % (42.0 )%
Allowance for credit losses as a % of period end loans   1.12 %   1.15 %   1.20 %   (2.6 )% (6.7 )%
Net loan charge-offs $ 2,666   $ 1,024   $ 1,563     160.4 % 70.6 %
Annualized net loan charge-offs as a % of average loans (b)   0.14 %   0.06 %   0.09 %   133.3 % 55.6 %
             
CAPITAL & LIQUIDITY:            
Total shareholders’ equity / Period end total assets   11.64 %   10.85 %   10.85 %   7.3 % 7.3 %
Tangible equity (d) / Tangible assets (f)   10.14 %   9.36 %   9.33 %   8.3 % 8.7 %
Average shareholders’ equity / Average assets (b)   11.16 %   11.07 %   10.27 %   0.8 % 8.7 %
Average shareholders’ equity / Average loans (b)   14.94 %   15.17 %   14.85 %   (1.5 )% 0.6 %
Average loans / Average deposits (b)   89.48 %   86.69 %   81.87 %   3.2 % 9.3 %
             
Note: Explanations for footnotes (a) – (l) are included at the end of the financial tables in the "Financial Reconciliations" section.   

PARK NATIONAL CORPORATION
Financial Highlights
Year ended December 31, 2023 and December 31, 2022      
         
         
(in thousands, except share and per share data)   2023     2022     Percent
change vs
’22
INCOME STATEMENT:        
Net interest income $ 373,113   $ 347,059     7.5 %
Provision for credit losses   2,904     4,557     (36.3 )%
Other income   92,634     135,935     (31.9 )%
Other expense   309,239     297,978     3.8 %
Income before income taxes $ 153,604   $ 180,459     (14.9 )%
Income taxes   26,870     32,108     (16.3 )%
Net income $ 126,734   $ 148,351     (14.6 )%
         
MARKET DATA:        
Earnings per common share – basic (a) $ 7.84   $ 9.13     (14.1 )%
Earnings per common share – diluted (a)   7.80     9.06     (13.9 )%
Quarterly cash dividends declared per common share   4.20     4.16     1.0 %
Special cash dividends declared per common share       0.50     N.M.
         
Weighted average common shares – basic (b)   16,163,500     16,246,009     (0.5 )%
Weighted average common shares – diluted (b)   16,250,019     16,365,309     (0.7 )%
         
PERFORMANCE RATIOS:        
Return on average assets (a)(b)   1.27 %   1.48 %   (14.2 )%
Return on average shareholders’ equity (a)(b)   11.55 %   13.78 %   (16.2 )%
Yield on loans   5.55 %   4.65 %   19.4 %
Yield on investment securities   3.73 %   2.66 %   40.2 %
Yield on money market instruments   5.00 %   2.07 %   141.5 %
Yield on interest earning assets   5.18 %   4.14 %   25.1 %
Cost of interest bearing deposits   1.52 %   0.39 %   289.7 %
Cost of borrowings   3.79 %   2.59 %   46.3 %
Cost of paying interest bearing liabilities   1.67 %   0.54 %   209.3 %
Net interest margin (g)   4.11 %   3.80 %   8.2 %
Efficiency ratio (g)   65.87 %   61.24 %   7.6 %
         
ASSET QUALITY RATIOS        
Net loan charge-offs $ 4,921   $ 2,375     107.2 %
Net loan charge-offs as a % of average loans (b)   0.07 %   0.03 %   133.3 %
         
CAPITAL & LIQUIDITY        
Average shareholders’ equity / Average assets (b)   11.02 %   10.72 %   2.8 %
Average shareholders’ equity / Average loans (b)   15.19 %   15.48 %   (1.9 )%
Average loans / Average deposits (b)   86.39 %   82.32 %   4.9 %
         
OTHER DATA (NON-GAAP) AND BALANCE SHEET:        
Average interest earning assets $ 9,171,721   $ 9,227,377     (0.6 )%
Pre-tax, pre-provision net income (k)   156,508     185,016     (15.4 )%
         
Note: Explanations for footnotes (a) – (l) are included at the end of the financial tables in the "Financial Reconciliations" section.

               
PARK NATIONAL CORPORATION
Consolidated Statements of Income
               
  Three Months Ended   Twelve Months Ended
  December 31   December 31
(in thousands, except share and per share data)   2023     2022     2023     2022
               
Interest income:              
Interest and fees on loans $ 108,495   $ 89,382   $ 399,795   $ 323,107
Interest on debt securities:              
Taxable   13,055     11,974     52,786     36,047
Tax-exempt   2,248     2,918     10,966     10,964
Other interest income   1,408     4,536     8,123     8,129
Total interest income   125,206     108,810     471,670     378,247
               
Interest expense:              
Interest on deposits:              
Demand and savings deposits   19,467     10,205     71,776     17,646
Time deposits   6,267     1,061     12,677     3,314
Interest on borrowings   4,398     2,938     14,104     10,228
Total interest expense   30,132     14,204     98,557     31,188
               
Net interest income   95,074     94,606     373,113     347,059
               
Provision for credit losses   1,809     2,981     2,904     4,557
               
Net interest income after provision for credit losses   93,265     91,625     370,209     342,502
               
Other income   15,519     26,392     92,634     135,935
               
Other expense   79,043     77,654     309,239     297,978
               
Income before income taxes   29,741     40,363     153,604     180,459
               
Income taxes   5,241     7,279     26,870     32,108
               
Net income $ 24,500   $ 33,084   $ 126,734   $ 148,351
               
Per common share:              
Net income – basic $ 1.52   $ 2.03   $ 7.84   $ 9.13
Net income – diluted $ 1.51   $ 2.02   $ 7.80   $ 9.06
               
Weighted average common shares – basic   16,113,215     16,261,136     16,163,500     16,246,009
Weighted average common shares – diluted   16,216,562     16,393,719     16,250,019     16,365,309
               
Cash dividends declared:              
Quarterly dividend $ 1.05   $ 1.04   $ 4.20   $ 4.16
Special dividend $   $ 0.50   $   $ 0.50

 
PARK NATIONAL CORPORATION 
Consolidated Balance Sheets
     
(in thousands, except share data) December 31, 2023 December 31, 2022
     
Assets    
     
Cash and due from banks $ 160,477   $ 156,750  
Money market instruments   57,791     32,978  
Investment securities   1,429,144     1,820,787  
Loans   7,476,221     7,141,891  
Allowance for credit losses   (83,745 )   (85,379 )
Loans, net   7,392,476     7,056,512  
Bank premises and equipment, net   74,211     82,126  
Goodwill and other intangible assets   164,247     165,570  
Other real estate owned   983     1,354  
Other assets   557,124     538,916  
Total assets $ 9,836,453   $ 9,854,993  
     
Liabilities and Shareholders’ Equity    
     
Deposits:    
Noninterest bearing $ 2,628,234   $ 3,074,276  
Interest bearing   5,414,332     5,160,439  
Total deposits   8,042,566     8,234,715  
Borrowings   517,329     416,009  
Other liabilities   131,265     135,043  
Total liabilities $ 8,691,160   $ 8,785,767  
     
     
Shareholders’ Equity:    
Preferred shares (200,000 shares authorized; no shares outstanding at December 31, 2023 and December 31, 2022) $   $  
Common shares (No par value; 20,000,000 shares authorized; 17,623,104 shares issued at December 31, 2023 and December 31, 2022)   463,280     462,404  
Accumulated other comprehensive loss, net of taxes   (66,191 )   (102,394 )
Retained earnings   903,877     847,235  
Treasury shares (1,506,625 shares at December 31, 2023 and 1,359,521 shares at December 31, 2022)   (155,673 )   (138,019 )
Total shareholders’ equity $ 1,145,293   $ 1,069,226  
Total liabilities and shareholders’ equity $ 9,836,453   $ 9,854,993  

       
PARK NATIONAL CORPORATION 
Consolidated Average Balance Sheets
           
  Three Months Ended   Twelve Months Ended
  December 31,   December 31,
(in thousands)   2023     2022       2023     2022  
           
Assets          
           
Cash and due from banks $ 134,593   $ 145,040     $ 147,414   $ 157,295  
Money market instruments   105,425     495,350       162,544     392,256  
Investment securities   1,544,942     1,811,403       1,716,037     1,843,484  
Loans   7,387,512     7,108,956       7,222,479     6,955,674  
Allowance for credit losses   (85,493 )   (83,478 )     (87,002 )   (81,736 )
Loans, net   7,302,019     7,025,478       7,135,477     6,873,938  
Bank premises and equipment, net   76,718     83,992       79,443     86,322  
Goodwill and other intangible assets   164,466     165,794       164,960     166,337  
Other real estate owned   1,342     1,354       1,654     1,161  
Other assets   560,683     551,245       550,025     523,415  
Total assets $ 9,890,188   $ 10,279,656     $ 9,957,554   $ 10,044,208  
           
           
Liabilities and Shareholders’ Equity          
           
Deposits:          
Noninterest bearing $ 2,694,148   $ 3,134,544     $ 2,814,259   $ 3,093,019  
Interest bearing   5,561,845     5,548,542       5,546,015     5,356,809  
Total deposits   8,255,993     8,683,086       8,360,274     8,449,828  
Borrowings   394,423     405,146       371,955     395,515  
Other liabilities   136,046     135,915       128,182     121,986  
Total liabilities $ 8,786,462   $ 9,224,147     $ 8,860,411   $ 8,967,329  
           
Shareholders’ Equity:          
Preferred shares $   $     $   $  
Common shares   461,864     461,391       460,973     460,696  
Accumulated other comprehensive loss, net of taxes   (108,219 )   (121,416 )     (98,154 )   (65,374 )
Retained earnings   906,091     853,802       884,711     821,382  
Treasury shares   (156,010 )   (138,268 )     (150,387 )   (139,825 )
Total shareholders’ equity $ 1,103,726   $ 1,055,509     $ 1,097,143   $ 1,076,879  
Total liabilities and shareholders’ equity $ 9,890,188   $ 10,279,656     $ 9,957,554   $ 10,044,208  

 
PARK NATIONAL CORPORATION 
Consolidated Statements of Income – Linked Quarters
           
  2023 2023 2023 2023 2022
(in thousands, except per share data) 4th QTR 3rd QTR 2nd QTR 1st QTR 4th QTR
           
Interest income:          
Interest and fees on loans $ 108,495 $ 103,258   $ 96,428 $ 91,614 $ 89,382
Interest on debt securities:          
Taxable   13,055   13,321     13,431   12,979   11,974
Tax-exempt   2,248   2,900     2,906   2,912   2,918
Other interest income   1,408   1,410     1,909   3,396   4,536
Total interest income   125,206   120,889     114,674   110,901   108,810
           
Interest expense:          
Interest on deposits:          
Demand and savings deposits   19,467   20,029     18,068   14,212   10,205
Time deposits   6,267   3,097     1,966   1,347   1,061
Interest on borrowings   4,398   3,494     3,068   3,144   2,938
Total interest expense   30,132   26,620     23,102   18,703   14,204
           
Net interest income   95,074   94,269     91,572   92,198   94,606
           
Provision for (recovery of) credit losses   1,809   (1,580 )   2,492   183   2,981
           
Net interest income after provision for (recovery of ) credit losses   93,265   95,849     89,080   92,015   91,625
           
Other income   15,519   27,713     25,015   24,387   26,392
           
Other expense   79,043   77,808     75,885   76,503   77,654
           
Income before income taxes   29,741   45,754     38,210   39,899   40,363
           
Income taxes   5,241   8,837     6,626   6,166   7,279
           
Net income  $ 24,500 $ 36,917   $ 31,584 $ 33,733 $ 33,084
           
Per common share:          
Net income – basic $ 1.52 $ 2.29   $ 1.95 $ 2.08 $ 2.03
Net income – diluted $ 1.51 $ 2.28   $ 1.94 $ 2.07 $ 2.02

 
PARK NATIONAL CORPORATION 
Detail of other income and other expense – Linked Quarters
           
  2023 2023 2023 2023 2022
(in thousands) 4th QTR 3rd QTR 2nd QTR 1st QTR 4th QTR
           
Other income:          
Income from fiduciary activities $ 8,943   $ 9,100   $ 8,816 $ 8,615   $ 8,219  
Service charges on deposit accounts   2,054     2,109     2,041   2,241     2,595  
Other service income   2,349     2,615     2,639   2,697     2,580  
Debit card fee income   6,583     6,652     6,830   6,457     6,675  
Bank owned life insurance income   1,373     1,448     1,332   1,185     1,366  
ATM fees   517     575     553   533     548  
(Loss) gain on the sale of OREO, net       (6 )   12   (9 )    
Loss on sale of debt securities, net   (7,875 )              
Gain (loss) on equity securities, net   353     998     25   (405 )   (165 )
Other components of net periodic benefit income   1,893     1,893     1,893   1,893     3,027  
Miscellaneous   (671 )   2,329     874   1,180     1,547  
Total other income $ 15,519   $ 27,713   $ 25,015 $ 24,387   $ 26,392  
           
Other expense:          
Salaries $ 36,192   $ 34,525   $ 33,649 $ 34,871   $ 33,837  
Employee benefits   10,088     10,822     10,538   10,816     9,895  
Occupancy expense   3,344     3,203     3,214   3,353     4,157  
Furniture and equipment expense   2,824     3,060     3,103   3,246     3,118  
Data processing fees   9,605     9,700     9,582   8,750     8,537  
Professional fees and services   7,015     7,572     7,365   7,221     9,845  
Marketing   1,716     1,197     1,239   1,319     1,404  
Insurance   1,708     2,158     1,960   1,814     1,526  
Communication   993     1,135     1,045   1,037     968  
State tax expense   1,158     1,125     1,096   1,278     1,040  
Amortization of intangible assets   334     334     328   327     341  
Foundation contributions   1,000                
Miscellaneous   3,066     2,977     2,766   2,471     2,986  
Total other expense $ 79,043   $ 77,808   $ 75,885 $ 76,503   $ 77,654  
           

-+

PARK NATIONAL CORPORATION 
Asset Quality Information
           
  Year ended December 31,
(in thousands, except ratios)   2023     2022     2021     2020     2019  
           
Allowance for credit losses:          
Allowance for credit losses, beginning of period $ 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   10,863     9,133     5,093     10,304     11,177  
Recoveries   5,942     6,758     8,441     27,246     10,173  
Net charge-offs (recoveries)   4,921     2,375     (3,348 )   (16,942 )   1,004  
Provision for (recovery of) credit losses   2,904     4,557     (11,916 )   12,054     6,171  
Allowance for credit losses, end of period $ 83,745   $ 85,379   $ 83,197   $ 85,675   $ 56,679  
           
General reserve trends:          
Allowance for credit losses, end of period $ 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.     678      
Specific reserves on individually evaluated loans   4,983     3,566     1,616     5,434     5,230  
General reserves on collectively evaluated loans $ 78,762   $ 81,813   $ 81,581   $ 79,396   $ 51,181  
           
Total loans $ 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)   2,835     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.     360,056     548,436  
Individually evaluated loans (l)   45,215     78,341     74,502     108,407     77,459  
Collectively evaluated loans $ 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   0.07 %   0.03 % (0.05 )% (0.24 )%   0.02 %
Allowance for credit losses as a % of period end loans   1.12 %   1.20 %   1.21 %   1.19 %   0.87 %
Allowance for credit losses as a % of period end loans (excluding PPP loans) (j)   1.12 %   1.20 %   1.22 %   1.25 % N.A.  
General reserve as a % of collectively evaluated loans   1.06 %   1.16 %   1.20 %   1.19 %   0.87 %
General reserves as a % of collectively evaluated loans (excluding PPP loans) (j)   1.06 %   1.16 %   1.21 %   1.24 % N.A.  
           
Nonperforming assets:          
Nonaccrual loans $ 60,259   $ 79,696   $ 72,722   $ 117,368   $ 90,080  
Accruing troubled debt restructurings (for years 2022 and prior) (l)   N.A.     20,134     28,323     20,788     21,215  
Loans past due 90 days or more   859     1,281     1,607     1,458     2,658  
Total nonperforming loans $ 61,118   $ 101,111   $ 102,652   $ 139,614   $ 113,953  
Other real estate owned   983     1,354     775     1,431     4,029  
Other nonperforming assets           2,750     3,164     3,599  
Total nonperforming assets $ 62,101   $ 102,465   $ 106,177   $ 144,209   $ 121,581  
Percentage of nonaccrual loans to period end loans   0.81 %   1.12 %   1.06 %   1.64 %   1.39 %
Percentage of nonperforming loans to period end loans   0.82 %   1.42 %   1.49 %   1.95 %   1.75 %
Percentage of nonperforming assets to period end loans   0.83 %   1.43 %   1.55 %   2.01 %   1.87 %
Percentage of nonperforming assets to period end total assets   0.63 %   1.04 %   1.11 %   1.55 %   1.42 %
           
Note: Explanations for footnotes (a) – (l) 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)   2023     2022     2021     2020     2019  
           
New nonaccrual loan information:          
Nonaccrual loans, beginning of period $ 79,696   $ 72,722   $ 117,368   $ 90,080   $ 67,954  
New nonaccrual loans   48,280     64,918     38,478     103,386     81,009  
Resolved nonaccrual loans   67,717     57,944     83,124     76,098     58,883  
Nonaccrual loans, end of period $ 60,259   $ 79,696   $ 72,722   $ 117,368   $ 90,080  
           
Individually evaluated commercial loan portfolio information (period end): (l)
Unpaid principal balance $ 47,564   $ 80,116   $ 75,126   $ 109,062   $ 78,178  
Prior charge-offs   2,349     1,775     624     655     719  
Remaining principal balance   45,215     78,341     74,502     108,407     77,459  
Specific reserves   4,983     3,566     1,616     5,434     5,230  
Book value, after specific reserves $ 40,232   $ 74,775   $ 72,886   $ 102,973   $ 72,229  
           
Note: Explanations for footnotes (a) – (l) 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   TWELVE MONTHS ENDED
(in thousands, except share and per share data) December 31,
2023
September 30,
2023
December 31,
2022
  December 31,
2023
December 31,
2022
Net interest income $ 95,074   $ 94,269   $ 94,606     $ 373,113   $ 347,059  
less purchase accounting accretion related to NewDominion and Carolina Alliance acquisitions   124     145     258       633     1,780  
less interest income on former Vision Bank relationships   35     9     707       631     3,703  
Net interest income – adjusted $ 94,915   $ 94,115   $ 93,641     $ 371,849   $ 341,576  
             
Provision for (recovery of) credit losses $ 1,809   $ (1,580 ) $ 2,981     $ 2,904   $ 4,557  
less recoveries on former Vision Bank relationships       (40 )   (792 )     (788 )   (1,319 )
Provision for (recovery of) credit losses – adjusted $ 1,809   $ (1,540 ) $ 3,773     $ 3,692   $ 5,876  
             
Other income $ 15,519   $ 27,713   $ 26,392     $ 92,634   $ 135,935  
less loss on sale of debt securities, net   (7,875 )             (7,875 )    
less write-downs on strategic initiatives   (1,038 )             (1,038 )    
less Vision related gain on the sale of OREO, net                     5,607  
less Vision related OREO valuation markup   46               46     12,009  
less other service income related to former Vision Bank relationships   40         285       175     788  
Other income – adjusted $ 24,346   $ 27,713   $ 26,107     $ 101,326   $ 117,531  
             
Other expense $ 79,043   $ 77,808   $ 77,654     $ 309,239   $ 297,978  
less Foundation contribution   1,000               1,000     4,000  
less core deposit intangible amortization related to NewDominion and Carolina Alliance acquisitions   334     334     341       1,323     1,487  
less direct expenses related to collection of payments on former Vision Bank loan relationships           100       100     1,761  
Other expense – adjusted $ 77,709   $ 77,474   $ 77,213     $ 306,816   $ 290,730  
             
Tax effect of adjustments to net income identified above (i) $ 2,100   $ 29   $ (336 )   $ 1,903   $ (3,771 )
             
Net income – reported $ 24,500   $ 36,917   $ 33,084     $ 126,734   $ 148,351  
Net income – adjusted (h) $ 32,402   $ 37,028   $ 31,819     $ 133,894   $ 134,164  
             
Diluted earnings per common share $ 1.51   $ 2.28   $ 2.02     $ 7.80   $ 9.06  
Diluted earnings per common share, adjusted (h) $ 2.00   $ 2.28   $ 1.94     $ 8.24   $ 8.20  
             
Annualized return on average assets (a)(b)   0.98 %   1.47 %   1.28 %     1.27 %   1.48 %
Annualized return on average assets, adjusted (a)(b)(h)   1.30 %   1.47 %   1.23 %     1.34 %   1.34 %
             
Annualized return on average tangible assets (a)(b)(e)   1.00 %   1.49 %   1.30 %     1.29 %   1.50 %
Annualized return on average tangible assets, adjusted (a)(b)(e)(h)   1.32 %   1.50 %   1.25 %     1.37 %   1.36 %
             
Annualized return on average shareholders’ equity (a)(b)   8.81 %   13.28 %   12.44 %     11.55 %   13.78 %
Annualized return on average shareholders’ equity, adjusted (a)(b)(h)   11.65 %   13.32 %   11.96 %     12.20 %   12.46 %
             
Annualized return on average tangible equity (a)(b)(c)   10.35 %   15.62 %   14.75 %     13.60 %   16.29 %
Annualized return on average tangible equity, adjusted (a)(b)(c)(h)   13.69 %   15.66 %   14.19 %     14.36 %   14.73 %
             
Efficiency ratio (g)   70.93 %   63.25 %   63.69 %     65.87 %   61.24 %
Efficiency ratio, adjusted (g)(h)   64.70 %   63.05 %   63.99 %     64.34 %   62.84 %
             
Annualized net interest margin (g)   4.17 %   4.12 %   3.98 %     4.11 %   3.80 %
Annualized net interest margin, adjusted (g)(h)   4.17 %   4.11 %   3.94 %     4.09 %   3.74 %
                                 
Note: Explanations for footnotes (a) – (l) 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 December 31, 2023, September 30, 2023, and December 31, 2022 and the twelve months ended December 31, 2023 and December 30, 2022, as appropriate
(c) Net income for each period divided by average tangible equity during the period. Average tangible equity equals average shareholders’ equity during the applicable period less average goodwill and other intangible assets during the applicable period.
             
RECONCILIATION OF AVERAGE SHAREHOLDERS’ EQUITY TO AVERAGE TANGIBLE EQUITY:      
  THREE MONTHS ENDED   TWELVE MONTHS ENDED
  December 31,
2023
September 30,
2023
December 31,
2022
  December 31,
2023
December 31,
2022
AVERAGE SHAREHOLDERS’ EQUITY $ 1,103,726 $ 1,102,677   $ 1,055,509   $ 1,097,143 $ 1,076,879
Less: Average goodwill and other intangible assets   164,466   164,801     165,794     164,960   166,337
AVERAGE TANGIBLE EQUITY $ 939,260 $ 937,876   $ 889,715   $ 932,183 $ 910,542
             
(d) Tangible equity divided by common shares outstanding at period end. Tangible equity equals total shareholders’ equity less goodwill and other intangible assets, in each case at the end of the period.
             
RECONCILIATION OF TOTAL SHAREHOLDERS’ EQUITY TO TANGIBLE EQUITY:
  December 31,
2023
September 30,
2023
December 31,
2022
     
TOTAL SHAREHOLDERS’ EQUITY $ 1,145,293 $ 1,085,564   $ 1,069,226      
Less: Goodwill and other intangible assets   164,247   164,581     165,570      
TANGIBLE EQUITY $ 981,046 $ 920,983   $ 903,656      
             
(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   TWELVE MONTHS ENDED
  December 31,
2023
September 30,
2023
December 31,
2022
  December 31,
2023
December 31,
2022
AVERAGE ASSETS $ 9,890,188 $ 9,965,114   $ 10,279,656   $ 9,957,554 $ 10,044,208
Less: Average goodwill and other intangible assets   164,466   164,801     165,794     164,960   166,337
AVERAGE TANGIBLE ASSETS $ 9,725,722 $ 9,800,313   $ 10,113,862   $ 9,792,594 $ 9,877,871
             
(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:
  December 31,
2023
September 30,
2023
December 31,
2022
     
TOTAL ASSETS $ 9,836,453 $ 10,000,914   $ 9,854,993      
Less: Goodwill and other intangible assets   164,247   164,581     165,570      
TANGIBLE ASSETS $ 9,672,206 $ 9,836,333   $ 9,689,423      
             
(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   TWELVE MONTHS ENDED
  December 31,
2023
September 30,
2023
December 31,
2022
  December 31,
2023
December 31,
2022
Interest income $ 125,206 $ 120,889   $ 108,810   $ 471,670 $ 378,247
Fully taxable equivalent adjustment   838   1,042     918     3,726   3,541
Fully taxable equivalent interest income $ 126,044 $ 121,931   $ 109,728   $ 475,396 $ 381,788
Interest expense   30,132   26,620     14,204     98,557   31,188
Fully taxable equivalent net interest income $ 95,912 $ 95,311   $ 95,524   $ 376,839 $ 350,600
             
(h) Adjustments to net income for each period presented are detailed in the non-GAAP reconciliations of net interest income, provision for (recovery of) 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) Excludes $2.1 million of PPP loans and $2,000 in related allowance at December 31, 2023, $4.2 million of PPP loans and $4,000 in related allowance at December 31, 2022, $74.4 million of PPP loans and $77,000 in related allowance at December 31, 2021 and $331.6 million of PPP loans and $337,000 in related allowance at December 31, 2020.
(k) Pre-tax, pre-provision ("PTPP") net income is calculated as net income, plus income taxes, plus the provision for (recovery of) 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 (recovery of) credit losses.
             
RECONCILIATION OF PRE-TAX, PRE-PROVISION NET INCOME
  THREE MONTHS ENDED   TWELVE MONTHS ENDED
  December 31,
2023
September 30,
2023
December 31,
2022
  December 31,
2023
December 31,
2022
Net income $ 24,500 $ 36,917   $ 33,084   $ 126,734 $ 148,351
Plus: Income taxes   5,241   8,837     7,279     26,870   32,108
Plus: Provision for (recovery of) credit losses   1,809   (1,580 )   2,981     2,904   4,557
Pre-tax, pre-provision net income $ 31,550 $ 44,174   $ 43,344   $ 156,508 $ 185,016
             
(l) 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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