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Park National Corporation reports 2023 financial results

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Park National Corporation reported a decrease in net income for the fourth quarter and full year of 2023 compared to 2022. The company's board of directors declared a quarterly cash dividend of $1.06 per common share. Park's total loans increased by 4.7 percent during 2023. The company's adjusted (non-gaap) net income for the fourth quarter of 2023 increased by 1.9 percent from the previous year.
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Insights

The reported financial results from Park National Corporation reveal a mixed performance for the fourth quarter and full year of 2023. A key highlight is the quarterly cash dividend of $1.06 per common share, which is indicative of the company's commitment to returning value to shareholders. However, the 25.9 percent decrease in net income for the fourth quarter year-over-year and a 14.6 percent decrease for the full year raise concerns about the company's profitability trajectory.

From a financial perspective, the decline in net income is significant and may reflect underlying challenges in the business environment or operational issues. Investors and analysts may scrutinize the detailed financial reconciliation to understand the non-GAAP adjustments and their impact on the adjusted net income figures. The slight increase in adjusted net income for the fourth quarter suggests some underlying strength when one-time items are excluded. Still, the nearly flat year-over-year adjusted net income indicates a potential plateau in growth, which could be a point of analysis for long-term strategic planning.

Examining Park National Corporation's performance from a market perspective, the 4.7 percent increase in total loans during 2023 is a positive signal, as loan growth is often a key driver of revenue for financial institutions. The company's emphasis on personal relationships and a substantial core deposit base may resonate well with customers, potentially enhancing customer retention and attracting new clients. This strategy could be a competitive advantage in maintaining a stable net interest margin in a fluctuating economic environment.

However, the broader market context, including interest rate trends, regulatory changes and economic indicators, would also affect Park's operations. Investors might consider how Park's financials compare with industry benchmarks and peers, as well as the potential impact of the company's financial health on its ability to capitalize on market opportunities and navigate risks.

From an economic standpoint, the dividend declaration amidst a decline in net income may reflect a strategic decision to maintain investor confidence during times of lower earnings. The company's ability to continue paying dividends could be seen as a sign of underlying financial stability. However, it is essential to consider the sustainability of such dividends if profitability does not improve.

Additionally, the financial results must be contextualized within the broader economic environment of 2023, including inflation, employment rates and GDP growth, which could have influenced Park's business operations and financial performance. The company's resilience in maintaining loan growth despite a decrease in net income could indicate robust demand for its services, which might bode well for recovery prospects in a more favorable economic climate.

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 QTR3rd QTR4th QTR 3Q '234Q '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 '234Q '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, 2023December 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
      
 20232023202320232022
(in thousands, except per share data)4th QTR3rd QTR2nd QTR1st QTR4th 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
      
 20232023202320232022
(in thousands)4th QTR3rd QTR2nd QTR1st QTR4th 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.

FAQ

What was Park National Corporation's net income for the fourth quarter of 2023?

Park National Corporation's net income for the fourth quarter of 2023 was $24.5 million, a 25.9 percent decrease from the fourth quarter of 2022.

What was the total assets of Park National Corporation as of December 31, 2023?

Park National Corporation had $9.8 billion in total assets as of December 31, 2023.

What was the percentage increase in Park National Corporation's total loans during 2023?

Park National Corporation's total loans increased by 4.7 percent during 2023.

What was the quarterly cash dividend declared by Park National Corporation's board of directors?

Park National Corporation's board of directors declared a quarterly cash dividend of $1.06 per common share.

What was Park National Corporation's adjusted (non-gaap) net income for the fourth quarter of 2023?

Park National Corporation's adjusted (non-gaap) net income for the fourth quarter of 2023 was $32.4 million, a 1.9 percent increase from the fourth quarter of 2022.

Park National Corporation

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