Park National Corporation filed SEC Form 8-K: Results of Operations and Financial Condition, Regulation FD Disclosure, Other Events, Financial Statements and Exhibits
$PRK
Major Banks
Finance
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
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Item 2.02 - Results of Operations and Financial Condition
On April 25, 2025, Park National Corporation (“Park”) issued a news release (the “Financial Results News Release”) announcing financial results for the three months ended March 31, 2025. A copy of the Financial Results News Release is included as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference herein.
Non-U.S. GAAP Financial Measures
Item 7.01 of this Current Report on Form 8-K as well as the Financial Results News Release contain non-U.S. GAAP (generally accepted accounting principles in the United States or "U.S. GAAP") financial measures where management believes them to be helpful in understanding Park’s results of operations or financial position. Where non-U.S. GAAP financial measures are used, the comparable U.S. GAAP financial measures, as well as the reconciliation from the comparable U.S. GAAP financial measures, can be found in the Financial Results News Release.
Items Impacting Comparability of Period Results
From time to time, revenue, expenses and/or taxes are impacted by items judged by management of Park to be outside of ordinary banking activities and/or by items that, while they may be associated with ordinary banking activities, are so unusually large that their impact is believed by management of Park at that time to be infrequent or short-term in nature. Most often, these items impacting comparability of period results are due to merger and acquisition activities and revenue and expenses related to former Vision Bank loan relationships. In other cases, they may result from management's decisions associated with significant corporate actions outside of the ordinary course of business.
Even though certain revenue and expense items are naturally subject to more volatility than others due to changes in market and economic environment conditions, as a general rule, volatility alone does not result in the inclusion of an item as one impacting comparability of period results. For example, changes in the provision for credit losses (aside from those related to former Vision Bank loan relationships), gains (losses) on equity securities, net, and asset valuation adjustments, reflect ordinary banking activities and are, therefore, typically excluded from consideration as items impacting comparability of period results.
Management believes the disclosure of items impacting comparability of period results provides a better understanding of Park's performance and trends and allows management to ascertain which of such items, if any, to include or exclude from an analysis of Park's performance; i.e., within the context of determining how that performance differed from expectations, as well as how, if at all, to adjust estimates of future performance taking such items into account.
Items impacting comparability of the results of particular periods are not intended to be a complete list of items that may materially impact current or future period performance.
Non-U.S. GAAP Financial Measures
Park's management uses certain non-U.S. GAAP financial measures to evaluate Park's performance. Specifically, management reviews the return on average tangible equity, the return on average tangible assets, the tangible equity to tangible assets ratio, tangible book value per common share and pre-tax, pre-provision net income.
Management has included in the Financial Results News Release information relating to the annualized return on average tangible equity, the annualized return on average tangible assets, the tangible equity to tangible assets ratio, tangible book value per common share and pre-tax, pre-provision net income for the three months ended and at March 31, 2025, December 31, 2024, and March 31, 2024. For the purpose of calculating the annualized return on average tangible equity, a non-U.S. GAAP financial measure, net income for each period is 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. For the purpose of calculating the annualized return on average tangible assets, a non-U.S. GAAP financial measure, net income for each period is divided by average tangible assets during the period. Average tangible assets equals average assets during the applicable period less average goodwill and other intangible assets during the applicable period. For the purpose of calculating the tangible equity to tangible assets ratio, a non-U.S. GAAP financial measure, tangible equity is divided by tangible assets. Tangible equity equals total shareholders' equity less goodwill and other intangible assets, in each case at period end. Tangible assets equal total assets less goodwill and other intangible assets, in each case at period end. For the purpose of calculating tangible book value per common share, a non-U.S. GAAP financial measure, tangible equity is divided by the number of common shares outstanding, in each case at period end. For the purpose of calculating pre-tax, pre-provision net income, a non-U.S. GAAP financial measure, income taxes and the provision for credit losses are added back to net income, in each case during the applicable period.
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Management believes that the disclosure of the annualized return on average tangible equity, the annualized return on average tangible assets, the tangible equity to tangible assets ratio, tangible book value per common share and pre-tax, pre-provision net income presents additional information to the reader of the consolidated financial statements, which, when read in conjunction with the consolidated financial statements prepared in accordance with U.S. GAAP, assists in analyzing Park's operating performance, ensures comparability of operating performance from period to period, and facilitates comparisons with the performance of Park's peer financial holding companies and bank holding companies, while eliminating certain non-operational effects of acquisitions. In the Financial Results News Release, Park has provided a reconciliation of average tangible equity from average shareholders' equity, average tangible assets from average assets, tangible equity from total shareholders' equity, tangible assets from total assets, and pre-tax, pre-provision net income from net income solely for the purpose of complying with SEC Regulation G and not as an indication that the annualized return on average tangible equity, the annualized return on average tangible assets, the tangible equity to tangible assets ratio, tangible book value per common share and pre-tax, pre-provision net income are substitutes for the annualized return on average equity, the annualized return on average assets, the total shareholders' equity to total assets ratio, book value per common share and net income, respectively, as determined in accordance with U.S. GAAP.
FTE (fully taxable equivalent) Financial Measures
Interest income, yields, and ratios on a FTE basis are considered non-U.S. GAAP financial measures. Management believes net interest income on a FTE basis provides an insightful picture of the interest margin for comparison purposes. The FTE basis also allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The FTE basis assumes a corporate federal statutory tax rate of 21 percent. In the Financial Results News Release, Park has provided a reconciliation of FTE interest income solely for the purpose of complying with SEC Regulation G and not as an indication that FTE interest income, yields and ratios are substitutes for interest income, yields and ratios, as determined in accordance with U.S. GAAP.
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Item 7.01 - Regulation FD Disclosure
Financial Results
Net income for the three months ended March 31, 2025 of $42.2 million represented a $7.0 million, or 19.8%, increase compared to $35.2 million for the three months ended March 31, 2024. Pre-tax, pre-provision net income for the three months ended March 31, 2025 of $52.0 million represented a $7.4 million, or 16.5%, increase compared to $44.6 million for the three months ended March 31, 2024.
Net income for each of the three months ended March 31, 2025, December 31, 2024 and March 31, 2024, included several items of income and expense that impacted comparability of period results. These items are detailed in the "Financial Reconciliations" section within the Financial Results News Release.
The following discussion provides additional information regarding Park.
Overview
The following table reflects Park's net income for the first quarters (the three months ended March 31) of 2025 and 2024, and for the years ended December 31, 2024 and 2023.
| (In thousands) | Q1 2025 | Q1 2024 | 2024 | 2023 | ||||||||||||||||
| Net interest income | $ | 104,377 | $ | 95,623 | $ | 398,019 | $ | 373,113 | ||||||||||||
| Provision for credit losses | 756 | 2,180 | 14,543 | 2,904 | ||||||||||||||||
| Other income | 25,746 | 26,200 | 122,588 | 92,634 | ||||||||||||||||
| Other expense | 78,164 | 77,228 | 321,339 | 309,239 | ||||||||||||||||
| Income before income taxes | $ | 51,203 | $ | 42,415 | $ | 184,725 | $ | 153,604 | ||||||||||||
| Income tax expense | 9,046 | 7,211 | 33,305 | 26,870 | ||||||||||||||||
| Net income | $ | 42,157 | $ | 35,204 | $ | 151,420 | $ | 126,734 | ||||||||||||
Net interest income of $104.4 million for the three months ended March 31, 2025 represented a $8.8 million, or 9.2%, increase compared to $95.6 million for the three months ended March 31, 2024. The increase was a result of a $5.6 million increase in interest income and a $3.2 million decrease in interest expense.
The $5.6 million increase in interest income was due to a $9.4 million increase in interest income on loans, partially offset by a $3.8 million decrease in investment income. The $9.4 million increase in interest income on loans was primarily the result of a $350.6 million (or 4.69%) increase in average loans, from $7.48 billion for the three months ended March 31, 2024 to $7.83 billion for the three months ended March 31, 2025, as well as an increase in the yield on loans, which increased 27 basis points to 6.26% for the three months ended March 31, 2025, compared to 5.99% for the three months ended March 31, 2024. The $3.8 million decrease in investment income was primarily the result of a $188.4 million (or 12.03%) decrease in average investments, including money market investments, from $1.57 billion for the three months ended March 31, 2024 to $1.38 billion for the three months ended March 31, 2025. The decrease in investment income was also due to a decrease in the yield on investments, including money market investments, which decreased 56 basis points to 3.50% for the three months ended March 31, 2025, compared to 4.06% for the three months ended March 31, 2024.
The $3.2 million decrease in interest expense was due to a $2.0 million decrease in interest expense on deposits, as well as a $1.2 million decrease in interest expense on borrowings. The decrease in interest expense on deposits was the result of a decrease in the cost of deposits of 18 basis points, from 1.94% for the three months ended March 31, 2024 to 1.76% for the three months ended March 31, 2025. This decrease was partially offset by a $149.8 million (or 2.65%) increase in average on-balance sheet interest bearing deposits from $5.64 billion for the three months ended March 31, 2024, to $5.79 billion for the three months ended March 31, 2025. The increase in on-balance sheet interest bearing deposits was due to an increase in savings accounts and time deposits, which was partially offset by decreases in transaction accounts and brokered and bid CD deposits. The decrease in interest expense on borrowings was the result of a decrease in the cost of borrowings of 31 basis points, from 4.25% for the three months ended March 31, 2024 to 3.94% for the three months ended March 31, 2025 as well as a $92.4 million (or 25.56%) decrease in average borrowings from $361.7 million for the three months ended March 31, 2024, to $269.3 million for the three months ended March 31, 2025.
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The provision for credit losses of $756,000 for the three months ended March 31, 2025 represented a decrease of $1.4 million, compared to $2.2 million for the three months ended March 31, 2024. Refer to the “Credit Metrics and Provision for Credit Losses” section for additional details regarding the level of the provision for credit losses recognized in each period presented.
The table below reflects Park's total other income for the three months ended March 31, 2025 and 2024.
| (Dollars in thousands) | 2025 | 2024 | $ change | % change | ||||||||||
| Other income: | ||||||||||||||
| Income from fiduciary activities | $ | 10,994 | $ | 10,024 | $ | 970 | 9.7 | % | ||||||
| Service charges on deposit accounts | 2,407 | 2,106 | 301 | 14.3 | % | |||||||||
| Other service income | 2,936 | 2,524 | 412 | 16.3 | % | |||||||||
| Debit card fee income | 6,089 | 6,243 | (154) | (2.5) | % | |||||||||
| Bank owned life insurance income | 1,512 | 2,629 | (1,117) | (42.5) | % | |||||||||
| ATM fees | 335 | 496 | (161) | (32.5) | % | |||||||||
| (Loss) gain on the sale of OREO, net | (229) | 121 | (350) | N.M. | ||||||||||
| Loss on sale of debt securities, net | — | (398) | 398 | N.M. | ||||||||||
| Loss on equity securities, net | (862) | (687) | (175) | 25.5 | % | |||||||||
| Other components of net periodic benefit income | 2,344 | 2,204 | 140 | 6.4 | % | |||||||||
| Miscellaneous | 220 | 938 | (718) | (76.5) | % | |||||||||
| Total other income | $ | 25,746 | $ | 26,200 | $ | (454) | (1.7) | % | ||||||
Other income of $25.7 million for the three months ended March 31, 2025 represented a decrease of $454,000, or 1.7%, compared to $26.2 million for the three months ended March 31, 2024. The $970,000 increase in income from fiduciary activities was largely due to an increase in the market value of assets under management. The $301,000 increase in service charges on deposits was largely due to an increase in maintenance fees on deposits. The $412,000 increase in other service income was mainly due to an increase in mortgage related other service income. The $1.1 million decrease in bank owned life insurance income was primarily related to a decrease in death benefits received during the three months ended March 31, 2025. The change in loss on sale of debt securities, net was due to net losses on the sale of debt securities of $398,000 recorded during the three months ended March 31, 2024 compared to no net losses on sale of debt securities during the three months ended March 31, 2025. The decrease in miscellaneous income was largely due to an increase in net loss on sale and disposal of assets, largely due to the impact of strategic initiatives.
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The table below reflects Park's total other expense for the three months ended March 31, 2025 and 2024.
| (Dollars in thousands) | 2025 | 2024 | $ change | % change | ||||||||||
| Other expense: | ||||||||||||||
| Salaries | $ | 36,216 | $ | 35,733 | $ | 483 | 1.4 | % | ||||||
| Employee benefits | 10,516 | 11,560 | (1,044) | (9.0) | % | |||||||||
| Occupancy expense | 3,519 | 3,181 | 338 | 10.6 | % | |||||||||
| Furniture and equipment expense | 2,301 | 2,583 | (282) | (10.9) | % | |||||||||
| Data processing fees | 10,529 | 8,808 | 1,721 | 19.5 | % | |||||||||
| Professional fees and services | 7,307 | 6,817 | 490 | 7.2 | % | |||||||||
| Marketing | 1,528 | 1,741 | (213) | (12.2) | % | |||||||||
| Insurance | 1,686 | 1,718 | (32) | (1.9) | % | |||||||||
| Communication | 1,202 | 1,036 | 166 | 16.0 | % | |||||||||
| State tax expense | 1,186 | 1,110 | 76 | 6.8 | % | |||||||||
| Amortization of intangible assets | 274 | 320 | (46) | (14.4) | % | |||||||||
| Miscellaneous | 1,900 | 2,621 | (721) | (27.5) | % | |||||||||
| Total other expense | $ | 78,164 | $ | 77,228 | $ | 936 | 1.2 | % | ||||||
Total other expense of $78.2 million for the three months ended March 31, 2025 represented an increase of $936,000 compared to $77.2 million for the three months ended March 31, 2024. The increase in salaries expense was primarily related to increases in base salary expense, incentive compensation expense, and share-based compensation expense. The decrease in employee benefit expense was primarily due to a decrease in group insurance expense, partially offset by an increase in payroll tax related expense. The increase in occupancy expense was related to increases in rental of lease space expense and utilities expense. The decrease in furniture and equipment expense was primarily due to decreases in depreciation expense. The increase in data processing fees was mainly related to an increase in software related expenses, partially offset by a decrease in ATM and debit card processing expense. The increase in professional fees and services expense was primarily due to increases in legal expenses, consulting expenses, credit services expense and trust system provider expense, partially offset by decreases in other fees expense, temporary wages expense and appraisal related expense. The decrease in marketing expense was primarily due to decreases in advertising expense. The decrease in miscellaneous expense is primarily due to a decrease in expense for the allowance for unfunded credit losses and other non-loan related losses.
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The table below provides certain balance sheet information and financial ratios for Park as of or for the three months ended March 31, 2025 and 2024 and the year ended December 31, 2024.
| (Dollars in thousands) | March 31, 2025 | December 31, 2024 | March 31, 2024 | % change from 12/31/24 | % change from 3/31/24 | |||||||||||||||
| Loans | 7,883,735 | 7,817,128 | 7,525,005 | 0.85 | % | 4.77 | % | |||||||||||||
| Allowance for credit losses | 88,130 | 87,966 | 85,084 | 0.19 | % | 3.58 | % | |||||||||||||
| Net loans | 7,795,605 | 7,729,162 | 7,439,921 | 0.86 | % | 4.78 | % | |||||||||||||
| Investment securities | 1,042,163 | 1,100,861 | 1,339,747 | (5.33) | % | (22.21) | % | |||||||||||||
| Total assets | 9,886,612 | 9,805,350 | 9,881,077 | 0.83 | % | 0.06 | % | |||||||||||||
| Total deposits | 8,201,695 | 8,143,526 | 8,306,032 | 0.71 | % | (1.26) | % | |||||||||||||
Average assets (1) | 10,045,607 | 9,901,264 | 9,863,378 | 1.46 | % | 1.85 | % | |||||||||||||
Efficiency ratio (2) | 59.79 | % | 61.44 | % | 63.07 | % | (2.69) | % | (5.20) | % | ||||||||||
Return on average assets (3) | 1.70 | % | 1.53 | % | 1.44 | % | 11.11 | % | 18.06 | % | ||||||||||
(1) Average assets for the three months ended March 31, 2025 and 2024 and for the year ended December 31, 2024.
(2) 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 includes the effects of taxable equivalent adjustments using a 21% federal corporate income tax rate. The taxable equivalent adjustments were $607,000, $616,000 and $2.4 million for the three months ended March 31, 2025 and 2024 and the year ended December 31, 2024, respectively.
(3) Annualized for the three months ended March 31, 2025 and 2024.
Loans
Loans outstanding at March 31, 2025 were $7.88 billion, compared to (i) $7.82 billion at December 31, 2024, an increase of $66.6 million, and (ii) $7.53 billion at March 31, 2024, an increase of $358.7 million. The table below breaks out the change in loans outstanding, by loan type.
| (Dollars in thousands) | March 31, 2025 | December 31, 2024 | March 31, 2024 | $ change from 12/31/24 | % change from 12/31/24 | $ change from 03/31/24 | % change from 03/31/24 | ||||||||||||||||||||||
| Home equity | $ | 209,657 | $ | 203,927 | $ | 177,094 | $ | 5,730 | 2.8 | % | $ | 32,563 | 18.4 | % | |||||||||||||||
| Installment | 1,895,950 | 1,927,168 | 1,947,215 | (31,218) | (1.6) | % | (51,265) | (2.6) | % | ||||||||||||||||||||
| Real estate | 1,465,123 | 1,452,833 | 1,359,193 | 12,290 | 0.8 | % | 105,930 | 7.8 | % | ||||||||||||||||||||
| Commercial | 4,311,093 | 4,230,399 | 4,038,327 | 80,694 | 1.9 | % | 272,766 | 6.8 | % | ||||||||||||||||||||
| Other | 1,912 | 2,801 | 3,176 | (889) | (31.7) | % | (1,264) | (39.8) | % | ||||||||||||||||||||
Total loans | $ | 7,883,735 | $ | 7,817,128 | $ | 7,525,005 | $ | 66,607 | 0.9 | % | $ | 358,730 | 4.8 | % | |||||||||||||||
Park's allowance for credit losses was $88.1 million at March 31, 2025, compared to $88.0 million at December 31, 2024, an increase of $164,000, or 0.2%. Refer to the “Credit Metrics and Provision for Credit Losses” section for additional information regarding Park's loan portfolio and the level of provision for credit losses recognized in each period presented.
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Deposits
Total deposits at March 31, 2025 were $8.20 billion, compared to (i) $8.14 billion at December 31, 2024, an increase of $58.2 million and (ii) $8.31 billion at March 31, 2024, a decrease of $104.3 million. Total deposits including off balance sheet deposits at March 31, 2025 were $8.45 billion, compared to (i) $8.26 billion at December 31, 2024, an increase of $193.8 million and (ii) $8.31 billion at March 31, 2024, an increase of $144.2 million.
| (Dollars in thousands) | March 31, 2025 | December 31, 2024 | March 31, 2024 | $ change from 12/31/24 | % change from 12/31/24 | $ change from 03/31/24 | % change from 03/31/24 | ||||||||||||||||||||||
| Non-interest bearing deposits | $ | 2,637,577 | $ | 2,612,708 | $ | 2,587,152 | $ | 24,869 | 1.0 | % | $ | 50,425 | 1.9 | % | |||||||||||||||
| Transaction accounts | 2,095,687 | 1,939,755 | 2,270,677 | 155,932 | 8.0 | % | (174,990) | (7.7) | % | ||||||||||||||||||||
| Savings | 2,658,210 | 2,679,280 | 2,604,012 | (21,070) | (0.8) | % | 54,198 | 2.1 | % | ||||||||||||||||||||
| Certificates of deposit | 764,722 | 735,297 | 663,859 | 29,425 | 4.0 | % | 100,863 | 15.2 | % | ||||||||||||||||||||
| Brokered and bid CD deposits | 45,499 | 176,486 | 180,332 | (130,987) | (74.2) | % | (134,833) | (74.8) | % | ||||||||||||||||||||
| Total deposits | $ | 8,201,695 | $ | 8,143,526 | $ | 8,306,032 | $ | 58,169 | 0.7 | % | $ | (104,337) | (1.3) | % | |||||||||||||||
| Off balance sheet deposits | $ | 250,847 | $ | 115,186 | $ | 2,279 | 135,661 | 117.8 | % | 248,568 | N.M. | ||||||||||||||||||
| Total deposits including off balance sheet deposits | $ | 8,452,542 | $ | 8,258,712 | $ | 8,308,311 | 193,830 | 2.3 | % | 144,231 | 1.7 | % | |||||||||||||||||
In order to manage the impact of deposit growth on its balance sheet, Park utilizes a program where certain deposit balances are transferred off balance sheet while maintaining the customer relationship. Park is able to increase or decrease the amount of deposit balances transferred off balance sheet based on its balance sheet management strategies and liquidity needs.
The table below breaks out the change in deposit balances, by deposit type, for Park.
| (Dollars in thousands) | March 31, 2025 | December 31, 2024 | March 31, 2024 | $ change from 12/31/24 | % change from 12/31/24 | $ change from 03/31/24 | % change from 03/31/24 | ||||||||||||||||
| Retail deposits | $ | 4,078,123 | $ | 4,035,351 | $ | 4,027,777 | $ | 42,772 | 1.1 | % | $ | 50,346 | 1.2 | % | |||||||||
| Commercial deposits | 4,078,073 | 3,931,689 | 4,097,923 | 146,384 | 3.7 | % | $ | (19,850) | (0.5) | % | |||||||||||||
| Brokered and bid CD deposits | 45,499 | 176,486 | 180,332 | (130,987) | (74.2) | % | $ | (134,833) | (74.8) | % | |||||||||||||
| Total deposits | $ | 8,201,695 | $ | 8,143,526 | $ | 8,306,032 | $ | 58,169 | 0.7 | % | $ | (104,337) | (1.3) | % | |||||||||
| Off balance sheet deposits | 250,847 | 115,186 | 2,279 | $ | 135,661 | 117.8 | % | $ | 248,568 | N.M. | |||||||||||||
| Total deposits including off balance sheet deposits | $ | 8,452,542 | $ | 8,258,712 | $ | 8,308,311 | $ | 193,830 | 2.3 | % | $ | 144,231 | 1.7 | % | |||||||||
| Noninterest bearing deposits to total deposits | 32.2 | % | 32.1 | % | 31.1 | % | |||||||||||||||||
During the three months ended March 31, 2025, total deposits including off balance sheet deposits increased by $193.8 million, or 2.3%. This increase consisted of a $146.4 million increase in total commercial deposits, a $135.7 million increase in off balance sheet deposits and a $42.8 million increase in retail deposits, partially offset by a $131.0 million decrease in brokered and bid CD deposits. The majority of off balance sheet deposits are commercial and thus impact the change in commercial deposits as the deposits are moved on or off the balance sheet.
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Included in the total commercial deposits and off balance sheet deposits shown in the previous tables are public fund deposits. These balances fluctuate based on seasonality and the cycle of collection and remittance of tax funds. Public funds are also included in Bid Ohio CDs. The following table details the change in public funds held on and off Park's balance sheet.
| (Dollars in thousands) | March 31, 2025 | December 31, 2024 | March 31, 2024 | $ change from 12/31/24 | % change from 12/31/24 | $ change from 03/31/24 | % change from 03/31/24 | ||||||||||||||||
| Public funds included in commercial deposits | $ | 1,482,976 | $ | 1,278,325 | $ | 1,513,494 | $ | 204,651 | 16.0 | % | $ | (30,518) | (2.0) | % | |||||||||
| Bid Ohio CDs | 45,499 | 76,497 | 89,996 | $ | (30,998) | (40.5) | % | $ | (44,497) | (49.4) | % | ||||||||||||
| Total public fund deposits | $ | 1,528,475 | $ | 1,354,822 | $ | 1,603,490 | $ | 173,653 | 12.8 | % | $ | (75,015) | (4.7) | % | |||||||||
| Cost of public fund deposits | 1.97 | % | 2.36 | % | 2.41 | % | |||||||||||||||||
| Cost of total interest bearing deposits | 1.76 | % | 1.97 | % | 1.94 | % | |||||||||||||||||
As of March 31, 2025, Park had approximately $1.5 billion of uninsured deposits, which was 18.2% of total deposits. Uninsured deposits of $1.5 billion included $400.2 million of deposits that were over $250,000, but were fully collateralized by Park's investment securities portfolio.
Credit Metrics and Provision for Credit Losses
Park reported a provision for credit losses for the three months ended March 31, 2025 of $756,000, compared to $2.2 million for the three months ended March 31, 2024. Net charge-offs were $592,000, or 0.03% annualized, of total average loans, for the three months ended March 31, 2025, compared to $841,000, or 0.05% annualized, of total average loans, for the three months ended March 31, 2024.
The table below provides additional information related to Park's allowance for credit losses as of March 31, 2025, December 31, 2024 and March 31, 2024.
| (Dollars in thousands) | 3/31/2025 | 12/31/2024 | 3/31/2024 | ||||||||
| Total allowance for credit losses | $ | 88,130 | $ | 87,966 | $ | 85,084 | |||||
| Allowance on accruing purchased credit deteriorated ("PCD") loans | — | — | — | ||||||||
| Specific reserves on individually evaluated loans - accrual | — | — | — | ||||||||
| Specific reserves on individually evaluated loans - nonaccrual | 1,044 | 1,299 | 5,032 | ||||||||
| General reserves on collectively evaluated loans | $ | 87,086 | $ | 86,667 | $ | 80,052 | |||||
| Total loans | $ | 7,883,735 | $ | 7,817,128 | $ | 7,525,005 | |||||
| Accruing PCD loans | 2,139 | 2,174 | 2,454 | ||||||||
| Individually evaluated loans - accrual | 13,935 | 15,290 | — | ||||||||
| Individually evaluated loans - nonaccrual | 47,718 | 53,149 | 54,742 | ||||||||
| Collectively evaluated loans | $ | 7,819,943 | $ | 7,746,515 | $ | 7,467,809 | |||||
| Total allowance for credit losses as a % of total loans | 1.12 | % | 1.13 | % | 1.13 | % | |||||
| General reserve as a % of collectively evaluated loans | 1.11 | % | 1.12 | % | 1.07 | % | |||||
The total allowance for credit losses of $88.1 million at March 31, 2025 represented a $164,000, or 0.2%, increase compared to $88.0 million at December 31, 2024. The increase was due to a $419,000 increase in general reserves partially offset by a $255,000 decrease in specific reserves.
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As part of its quarterly allowance process, Park evaluates certain industries which are more likely to be under economic stress in the current environment. The office sector continues to face challenges as it adjusts to the new normal of work from home brought on by the pandemic. Nationally, office properties in downtown and urban business districts are seeing the most stress. As of March 31, 2025, Park had $247.4 million of loans which were fully or partially secured by non-owner-occupied office space, $245.2 million of which were accruing. This portfolio is not currently exhibiting signs of stress, but Park continues to monitor this portfolio, and others, for signs of deterioration.
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SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Park cautions that any forward-looking statements contained in this Current Report on Form 8-K 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 include, without limitation: (1) the ability to execute our business plan successfully and manage strategic initiatives; (2) the impact of current and future economic and financial market conditions, including unemployment rates, inflation, interest rates, supply-demand imbalances, and geopolitical matters; (3) factors impacting the performance of our loan portfolio, including real estate values, financial health of borrowers, and loan concentrations; (4) the effects of monetary and fiscal policies, including interest rates, money supply, and inflation; (5) changes in federal, state, or local tax laws; (6) the impact of changes in governmental policy and regulatory requirements on our operations; (7) changes in consumer spending, borrowing, and saving habits; (8) changes in the performance and creditworthiness of customers, suppliers, and counterparties; (9) increased credit risk and higher credit losses due to loan concentrations; (10) volatility in mortgage banking income due to interest rates and demand; (11) adequacy of our internal controls and risk management programs; (12) competitive pressures among financial services organizations; (13) uncertainty regarding changes in banking regulations and other regulatory requirements; (14) our ability to meet heightened supervisory requirements and expectations; (15) the impact of changes in accounting policies and practices on our financial condition; (16) the reliability and accuracy of assumptions and estimates used in applying critical accounting estimates; (17) the potential for higher future credit losses due to changes in economic assumptions; (18) the ability to anticipate and respond to technological changes and our reliance on third-party vendors; (19) operational issues related to and capital spending necessitated by the implementation of information technology systems on which we are highly dependent; (20) the ability to secure confidential information and deliver products and services through computer systems and telecommunications networks; (21) the impact of security breaches or failures in operational systems; (22) the impact of geopolitical instability and trade policies on our operations including the imposition of tariffs and retaliatory tariffs; (23) the impact of changes in credit ratings of government debt and financial stability of sovereign governments; (24) the effect of stock market price fluctuations on our asset and wealth management businesses; (25) litigation and regulatory compliance exposure; (26) availability of earnings and excess capital for dividend declarations; (27) the impact of fraud, scams, and schemes on our business; (28) the impact of natural disasters, pandemics, and other emergencies on our operations; (29) potential deterioration of the economy due to financial, political, or other shocks; (30) impact of healthcare laws and potential changes on our costs and operations; (31) the ability to grow deposits and maintain adequate deposit levels, including by mitigating the effect of unexpected deposit outflows on our financial condition; and (32) other risk factors related to the banking industry.
Park does not undertake, and specifically disclaims any obligation, to publicly release the results of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement was made, or reflect the occurrence of unanticipated events, except to the extent required by law.
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Item 8.01 - Other Events
Declaration of Cash Dividend
As reported in the Financial Results News Release, on April 25, 2025, the Park Board declared a $1.07 per common share quarterly cash dividend in respect of Park's common shares. The cash dividend is payable on June 10, 2025 to common shareholders of record as of the close of business on May 16, 2025. A copy of the Financial Results News Release is included as Exhibit 99.1 and the portion thereof addressing the declaration of the quarterly cash dividend by the Park Board is incorporated by reference herein.
Item 9.01 - Financial Statements and Exhibits.
(a)Not applicable
(b)Not applicable
(c)Not applicable
(d)Exhibits. The following exhibits are included with this Current Report on Form 8-K:
Exhibit No. Description
99.1 News Release issued on April 25, 2025.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PARK NATIONAL CORPORATION | ||||||||
| Dated: April 25, 2025 | By: | /s/ Brady T. Burt | ||||||
| Brady T. Burt | ||||||||
| Chief Financial Officer, Secretary and Treasurer | ||||||||
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