Park National (PRK) - 2024 Q2 - Quarterly Results

Executive Summary & Key Highlights This section provides an overview of Park National Corporation's strong financial performance for Q2 and H1 2024, management's strategic commentary, and the declared dividend Q2 and H1 2024 Financial Performance Overview Park National Corporation achieved strong Q2 and H1 2024 financial results, with significant increases in net income and diluted EPS, alongside growth in deposits and loans Key Financial Performance (Q2 2024 vs. Q2 2023) | Metric | Q2 2024 | Q2 2023 | Change (%) | | :-------------------------- | :------ | :------ | :--------- | | Net Income | $39.4 million | $31.6 million | 24.6% | | Net Income per Diluted Share| $2.42 | $1.94 | 24.7% | Key Financial Performance (H1 2024 vs. H1 2023) | Metric | H1 2024 | H1 2023 | Change (%) | | :-------------------------- | :------ | :------ | :--------- | | Net Income | $74.6 million | $65.3 million | 14.2% | | Net Income per Diluted Share| $4.60 | $4.01 | 14.7% | Balance Sheet & Margin Highlights (as of June 30, 2024) | Metric | Value | Change (H1 2024) | Change (12-month) | | :---------------- | :---------- | :--------------- | :---------------- | | Total Assets | $9.9 billion | N/A | N/A | | Total Deposits | N/A | +3.4% | -0.6% | | Net Interest Margin (Q2 2024) | 4.39% | N/A | N/A | | Net Interest Margin (H1 2024) | 4.33% | N/A | N/A | Management Commentary & Strategic Outlook Management emphasized consistent financial support, resilience, customer service, and strategic focus on expense control and technology as assets approach $10 billion - Park's performance is attributed to its commitment to consistent financial support, resilience, and continuous search for new ways to serve customers, including introducing new tools for more accessible banking services[11] - Net interest income continues to grow, supported by a year-to-date annualized commercial loan growth of 6.4%, reflecting a consistent lending approach regardless of economic fluctuations[12] - The company is pleased with growth in net income and earnings per share, demonstrating a commitment to controlling expenses and leveraging technology in preparation for crossing $10 billion in assets[12] Dividend Declaration Park National Corporation's board of directors declared a quarterly cash dividend of $1.06 per common share - A quarterly cash dividend of $1.06 per common share was declared, payable on September 10, 2024, to shareholders of record as of August 16, 2024[1] Risk Factors & Forward-Looking Statements This section discusses potential risks and the nature of forward-looking statements Safe Harbor Statement The Safe Harbor Statement clarifies that forward-looking statements are not guarantees and are subject to various risks detailed in SEC filings, with no obligation to update - Forward-looking statements are provided to assist in understanding anticipated future financial performance but are not guarantees and are subject to numerous risks and uncertainties[13] - Park specifically disclaims any obligation to publicly release revisions to forward-looking statements to reflect events or circumstances after the statement date, except as required by law[37] - Risks and uncertainties include, but are not limited to, the ability to execute business plans, adverse changes in economic and financial market conditions, real estate values, borrower health, regulatory changes, consumer habits, litigation, credit risk, and technological changes[6] Consolidated Financial Highlights This section provides an overview of the company's key financial results from income statements, balance sheets, and performance ratios Income Statement Highlights (Quarterly) Q2 2024 showed significant year-over-year and quarter-over-quarter growth in net interest income, other income, and net income, with managed expenses Income Statement Highlights (Q2 2024 vs. Q1 2024 & Q2 2023) | Metric | Q2 2024 ($ thousand) | Q1 2024 ($ thousand) | Q2 2023 ($ thousand) | % Change (QoQ) | % Change (YoY) | | :-------------------------- | :----------- | :----------- | :----------- | :------------- | :------------- | | Net Interest Income | 97,837 | 95,623 | 91,572 | 2.3% | 6.8% | | Provision for Credit Losses | 3,113 | 2,180 | 2,492 | 42.8% | 24.9% | | Other Income | 28,794 | 26,200 | 25,015 | 9.9% | 15.1% | | Other Expense | 75,189 | 77,228 | 75,885 | (2.6)% | (0.9)% | | Income Before Income Taxes | 48,329 | 42,415 | 38,210 | 13.9% | 26.5% | | Income Taxes | 8,960 | 7,211 | 6,626 | 24.3% | 35.2% | | Net Income | 39,369 | 35,204 | 31,584 | 11.8% | 24.6% | Income Statement Highlights (Six Months) For the first half of 2024, the company demonstrated strong growth in net interest income, other income, and net income compared to the first half of 2023, despite a significant increase in provision for credit losses Income Statement Highlights (Six Months Ended June 30, 2024 vs. 2023) | Metric | H1 2024 ($ thousand) | H1 2023 ($ thousand) | % Change | | :-------------------------- | :----------- | :----------- | :--------- | | Net Interest Income | 193,460 | 183,770 | 5.3% | | Provision for Credit Losses | 5,293 | 2,675 | 97.9% | | Other Income | 54,994 | 49,402 | 11.3% | | Other Expense | 152,417 | 152,388 | —% | | Income Before Income Taxes | 90,744 | 78,109 | 16.2% | | Income Taxes | 16,171 | 12,792 | 26.4% | | Net Income | 74,573 | 65,317 | 14.2% | Balance Sheet Highlights As of June 30, 2024, Park National Corporation reported a slight increase in total assets, driven by loan growth, while investment securities and borrowings decreased, and total shareholders' equity saw a notable increase Balance Sheet Highlights (as of June 30, 2024 vs. March 31, 2024 & June 30, 2023) | Metric | June 30, 2024 ($ thousand) | March 31, 2024 ($ thousand) | June 30, 2023 ($ thousand) | % Change (QoQ) | % Change (YoY) | | :-------------------------- | :----------------- | :------------------ | :----------------- | :------------- | :------------- | | Investment Securities | 1,264,858 | 1,339,747 | 1,756,953 | (5.6)% | (28.0)% | | Loans | 7,664,377 | 7,525,005 | 7,208,109 | 1.9% | 6.3% | | Total Assets | 9,919,783 | 9,881,077 | 9,899,551 | 0.4% | 0.2% | | Total Deposits | 8,312,505 | 8,306,032 | 8,358,976 | 0.1% | (0.6)% | | Borrowings | 283,874 | 295,130 | 332,818 | (3.8)% | (14.7)% | | Total Shareholders' Equity | 1,183,257 | 1,161,979 | 1,088,757 | 1.8% | 8.7% | | Total Nonperforming Loans | 72,745 | 71,759 | 58,229 | 1.4% | 24.9% | | Total Nonperforming Assets | 73,955 | 73,433 | 60,496 | 0.7% | 22.2% | Market Data & Performance Ratios (Quarterly) Quarterly performance ratios show improvements in profitability and efficiency, with diluted EPS increasing significantly year-over-year and the efficiency ratio decreasing, indicating better cost management Market Data & Performance Ratios (Q2 2024 vs. Q1 2024 & Q2 2023) | Metric | Q2 2024 | Q1 2024 | Q2 2023 | % Change (QoQ) | % Change (YoY) | | :------------------------------------ | :------ | :------ | :------ | :------------- | :------------- | | Diluted EPS | $2.42 | $2.17 | $1.94 | 11.5% | 24.7% | | Quarterly Cash Dividend per Share | $1.06 | $1.06 | $1.05 | —% | 1.0% | | Book Value per Common Share | $73.27 | $71.95 | $67.40 | 1.8% | 8.7% | | Return on Average Assets (annualized, %) | 1.61% | 1.44% | 1.28% | 11.8% | 25.8% | | Return on Average Shareholders' Equity (%)| 13.52% | 12.23% | 11.61% | 10.5% | 16.5% | | Net Interest Margin (%) | 4.39% | 4.28% | 4.07% | 2.6% | 7.9% | | Efficiency Ratio (%) | 59.09% | 63.07% | 64.58% | (6.3)% | (8.5)% | Market Data & Performance Ratios (Six Months) For the first half of 2024, key performance ratios improved, including return on average assets and equity, and net interest margin, while the efficiency ratio decreased, indicating enhanced operational effectiveness Market Data & Performance Ratios (Six Months Ended June 30, 2024 vs. 2023) | Metric | H1 2024 | H1 2023 | % Change | | :------------------------------------ | :------ | :------ | :--------- | | Diluted EPS | $4.60 | $4.01 | 14.7% | | Quarterly Cash Dividend Declared | $2.12 | $2.10 | 1.0% | | Return on Average Assets (annualized, %) | 1.52% | 1.32% | 15.2% | | Return on Average Shareholders' Equity (%)| 12.88% | 12.07% | 6.7% | | Net Interest Margin (%) | 4.33% | 4.07% | 6.4% | | Efficiency Ratio (%) | 61.05% | 64.84% | (5.8)% | | Net Loan Charge-offs as % of Avg Loans (%)| 0.07% | 0.03% | 133.3% | Detailed Financial Statements This section provides a comprehensive presentation of the company's income statements and balance sheets, including average balances and detailed expense breakdowns Consolidated Statements of Income (Quarterly & Six Months) The consolidated statements of income show a consistent increase in total interest income for both the three and six months ended June 30, 2024, compared to the prior year, driven by higher interest and fees on loans, with interest expense also rising, particularly on time deposits Consolidated Statements of Income (Three Months Ended June 30) | Metric | 2024 ($ thousand) | 2023 ($ thousand) | | :-------------------------- | :-------- | :-------- | | Interest and Fees on Loans | 115,318 | 96,428 | | Total Interest Income | 128,904 | 114,674 | | Interest on Deposits (Demand & Savings) | 20,370 | 18,068 | | Interest on Deposits (Time) | 7,525 | 1,966 | | Total Interest Expense | 31,067 | 23,102 | | Net Interest Income | 97,837 | 91,572 | | Provision for Credit Losses | 3,113 | 2,492 | | Other Income | 28,794 | 25,015 | | Other Expense | 75,189 | 75,885 | | Net Income | 39,369 | 31,584 | Consolidated Statements of Income (Six Months Ended June 30) | Metric | 2024 ($ thousand) | 2023 ($ thousand) | | :-------------------------- | :-------- | :-------- | | Interest and Fees on Loans | 226,529 | 188,042 | | Total Interest Income | 255,544 | 225,575 | | Interest on Deposits (Demand & Savings) | 40,225 | 32,280 | | Interest on Deposits (Time) | 14,863 | 3,313 | | Total Interest Expense | 62,084 | 41,805 | | Net Interest Income | 193,460 | 183,770 | | Provision for Credit Losses | 5,293 | 2,675 | | Other Income | 54,994 | 49,402 | | Other Expense | 152,417 | 152,388 | | Net Income | 74,573 | 65,317 | Consolidated Statements of Income - Linked Quarters Quarterly income statements show a positive trend in net income and diluted EPS from Q2 2023 through Q2 2024, with Q2 2024 net income reaching $39.37 million and diluted EPS at $2.42 Consolidated Statements of Income (Linked Quarters, $ thousand except per share data) | Metric | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | | :-------------------------- | :------ | :------ | :------ | :------ | :------ | | Total Interest Income | 128,904 | 126,640 | 125,206 | 120,889 | 114,674 | | Total Interest Expense | 31,067 | 31,017 | 30,132 | 26,620 | 23,102 | | Net Interest Income | 97,837 | 95,623 | 95,074 | 94,269 | 91,572 | | Provision for Credit Losses | 3,113 | 2,180 | 1,809 | (1,580) | 2,492 | | Other Income | 28,794 | 26,200 | 15,519 | 27,713 | 25,015 | | Other Expense | 75,189 | 77,228 | 79,043 | 77,808 | 75,885 | | Net Income | 39,369 | 35,204 | 24,500 | 36,917 | 31,584 | | Net Income - Diluted (per share, $) | $2.42 | $2.17 | $1.51 | $2.28 | $1.94 | Consolidated Balance Sheets As of June 30, 2024, total assets increased slightly from December 31, 2023, primarily due to growth in loans, while investment securities decreased, and total deposits and shareholders' equity also increased Consolidated Balance Sheets (as of June 30, 2024 vs. December 31, 2023) | Metric | June 30, 2024 ($ thousand) | December 31, 2023 ($ thousand) | | :-------------------------- | :----------------- | :--------------------- | | Cash and Due from Banks | 142,593 | 160,477 | | Money Market Instruments | 118,872 | 57,791 | | Investment Securities | 1,264,858 | 1,429,144 | | Loans, Net | 7,577,802 | 7,392,476 | | Total Assets | 9,919,783 | 9,836,453 | | Noninterest Bearing Deposits| 2,542,446 | 2,628,234 | | Interest Bearing Deposits | 5,770,059 | 5,414,332 | | Total Deposits | 8,312,505 | 8,042,566 | | Borrowings | 283,874 | 517,329 | | Total Liabilities | 8,736,526 | 8,691,160 | | Total Shareholders' Equity | 1,183,257 | 1,145,293 | Consolidated Average Balance Sheets Average total assets for the three and six months ended June 30, 2024, decreased slightly compared to the prior year, primarily due to lower average investment securities, despite an increase in average loans Consolidated Average Balance Sheets (Three Months Ended June 30) | Metric | 2024 ($ thousand) | 2023 ($ thousand) | | :-------------------------- | :-------- | :-------- | | Average Investment Securities | 1,285,086 | 1,777,878 | | Average Loans | 7,587,127 | 7,132,025 | | Average Total Assets | 9,811,326 | 9,917,805 | | Average Total Deposits | 8,199,524 | 8,356,943 | | Average Total Shareholders' Equity | 1,171,347 | 1,091,016 | Consolidated Average Balance Sheets (Six Months Ended June 30) | Metric | 2024 ($ thousand) | 2023 ($ thousand) | | :-------------------------- | :-------- | :-------- | | Average Investment Securities | 1,326,807 | 1,792,199 | | Average Loans | 7,534,889 | 7,115,723 | | Average Total Assets | 9,837,352 | 9,987,953 | | Average Total Deposits | 8,206,321 | 8,401,788 | | Average Total Shareholders' Equity | 1,164,765 | 1,090,985 | Detail of Other Income and Other Expense - Linked Quarters Other income for Q2 2024 increased quarter-over-quarter and year-over-year, primarily driven by higher income from fiduciary activities, while other expenses decreased quarter-over-quarter due to lower employee benefits and professional fees Detail of Other Income (Linked Quarters, $ thousand) | Metric | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | | :------------------------------------ | :------ | :------ | :------ | :------ | :------ | | Income from Fiduciary Activities | 10,728 | 10,024 | 8,943 | 9,100 | 8,816 | | Service Charges on Deposit Accounts | 2,214 | 2,106 | 2,054 | 2,109 | 2,041 | | Debit Card Fee Income | 6,580 | 6,243 | 6,583 | 6,652 | 6,830 | | Bank Owned Life Insurance Income | 1,565 | 2,629 | 1,373 | 1,448 | 1,332 | | Total Other Income | 28,794 | 26,200 | 15,519 | 27,713 | 25,015 | Detail of Other Expense (Linked Quarters, $ thousand) | Metric | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | | :------------------------------------ | :------ | :------ | :------ | :------ | :------ | | Salaries | 35,954 | 35,733 | 36,192 | 34,525 | 33,649 | | Employee Benefits | 9,873 | 11,560 | 10,088 | 10,822 | 10,538 | | Data Processing Fees | 9,542 | 8,808 | 9,605 | 9,700 | 9,582 | | Professional Fees and Services | 6,022 | 6,817 | 7,015 | 7,572 | 7,365 | | Total Other Expense | 75,189 | 77,228 | 79,043 | 77,808 | 75,885 | Asset Quality Information This section provides an analysis of the company's asset quality, including allowance for credit losses, nonperforming assets, and individually evaluated commercial loans Allowance for Credit Losses The allowance for credit losses increased slightly at the end of Q2 2024 compared to the previous quarter and year-end 2023, reflecting an increase in net charge-offs and provision for credit losses Allowance for Credit Losses (as of June 30, 2024 vs. March 31, 2024 & Year Ended 2023) | Metric | June 30, 2024 ($ thousand) | March 31, 2024 ($ thousand) | Year Ended 2023 ($ thousand) | | :------------------------------------ | :----------------- | :------------------ | :------------------- | | Allowance for Credit Losses, Beginning| 85,084 | 83,745 | 85,379 | | Net Charge-offs | 1,622 | 841 | 4,921 | | Provision for Credit Losses | 3,113 | 2,180 | 2,904 | | Allowance for Credit Losses, End | 86,575 | 85,084 | 83,745 | | Allowance for Credit Losses as % of Loans (%) | 1.13% | 1.13% | 1.12% | Nonperforming Assets & Ratios Total nonperforming loans and assets increased year-over-year, with nonaccrual loans being the primary component, though the percentage of nonperforming assets to total assets remained relatively stable quarter-over-quarter Nonperforming Assets (as of June 30, 2024 vs. March 31, 2024 & Year Ended 2023) | Metric | June 30, 2024 ($ thousand) | March 31, 2024 ($ thousand) | Year Ended 2023 ($ thousand) | | :-------------------------- | :----------------- | :------------------ | :------------------- | | Nonaccrual Loans | 71,368 | 70,189 | 60,259 | | Loans Past Due 90 Days or More | 1,377 | 1,570 | 859 | | Total Nonperforming Loans | 72,745 | 71,759 | 61,118 | | Other Real Estate Owned | 1,210 | 1,674 | 983 | | Total Nonperforming Assets | 73,955 | 73,433 | 62,101 | | % of Nonperforming Loans to Loans (%) | 0.95% | 0.95% | 0.82% | | % of Nonperforming Assets to Total Assets (%) | 0.75% | 0.74% | 0.63% | New Nonaccrual Loan Information New nonaccrual loans for Q2 2024 were $13.18 million, a decrease from Q1 2024, with resolved nonaccrual loans also showing a slight increase, leading to a modest rise in end-of-period nonaccrual loans New Nonaccrual Loan Information (Linked Quarters, $ thousand) | Metric | Q2 2024 | Q1 2024 | Year Ended 2023 | | :-------------------------- | :------ | :------ | :-------------- | | Nonaccrual Loans, Beginning | 70,189 | 60,259 | 79,696 | | New Nonaccrual Loans | 13,180 | 19,012 | 48,280 | | Resolved Nonaccrual Loans | 12,001 | 9,082 | 67,717 | | Nonaccrual Loans, End | 71,368 | 70,189 | 60,259 | Individually Evaluated Commercial Loan Portfolio The unpaid principal balance of individually evaluated commercial loans remained stable quarter-over-quarter, with specific reserves also showing a slight increase Individually Evaluated Commercial Loan Portfolio (Period End, $ thousand) | Metric | June 30, 2024 | March 31, 2024 | Year Ended 2023 | | :-------------------------- | :------------ | :------------- | :-------------- | | Unpaid Principal Balance | 57,184 | 57,053 | 47,564 | | Remaining Principal Balance | 54,993 | 54,742 | 45,215 | | Specific Reserves | 5,311 | 5,032 | 4,983 | | Book Value, After Specific Reserves | 49,682 | 49,710 | 40,232 | Financial Reconciliations (Non-GAAP Measures) This section provides reconciliations of non-GAAP financial measures, including adjusted performance metrics, tangible assets and equity, and pre-tax, pre-provision net income Adjusted Financial Performance Adjusted financial metrics for Q2 and H1 2024 show slightly lower net income and diluted EPS compared to reported figures, after accounting for specific adjustments related to acquisitions, debt securities, and strategic initiatives Adjusted Financial Performance (Q2 2024 vs. Q1 2024 & Q2 2023) | Metric | Q2 2024 | Q1 2024 | Q2 2023 | | :------------------------------------ | :------ | :------ | :------ | | Net Interest Income - Adjusted ($ thousand) | 97,561 | 95,269 | 91,395 | | Provision for Credit Losses - Adjusted ($ thousand) | 3,230 | 3,133 | 2,517 | | Other Income - Adjusted ($ thousand) | 27,982 | 26,625 | 25,015 | | Other Expense - Adjusted ($ thousand) | 74,869 | 76,908 | 75,557 | | Net Income - Adjusted ($ thousand) | 38,670 | 34,760 | 31,684 | | Diluted EPS - Adjusted | $2.38 | $2.15 | $1.95 | Adjusted Financial Performance (Six Months Ended June 30, 2024 vs. 2023) | Metric | H1 2024 | H1 2023 | | :------------------------------------ | :------ | :------ | | Net Interest Income - Adjusted ($ thousand) | 192,830 | 182,819 | | Provision for Credit Losses - Adjusted ($ thousand) | 6,363 | 3,423 | | Other Income - Adjusted ($ thousand) | 54,607 | 49,267 | | Other Expense - Adjusted ($ thousand) | 151,777 | 151,633 | | Net Income - Adjusted ($ thousand) | 73,430 | 64,465 | | Diluted EPS - Adjusted | $4.53 | $3.96 | Adjusted Performance Ratios Adjusted performance ratios for Q2 and H1 2024 generally show slightly lower profitability metrics compared to reported figures, reflecting the impact of non-GAAP adjustments, while efficiency ratios remain strong Adjusted Performance Ratios (Q2 2024 vs. Q1 2024 & Q2 2023) | Metric | Q2 2024 | Q1 2024 | Q2 2023 | | :------------------------------------ | :------ | :------ | :------ | | Annualized Return on Average Assets, Adjusted (%) | 1.59% | 1.42% | 1.28% | | Annualized Return on Average Shareholders' Equity, Adjusted (%) | 13.28% | 12.07% | 11.65% | | Annualized Return on Average Tangible Equity, Adjusted (%) | 15.44% | 14.06% | 13.73% | | Efficiency Ratio, Adjusted (%) | 59.35% | 62.78% | 64.40% | | Annualized Net Interest Margin, Adjusted (%) | 4.38% | 4.26% | 4.06% | Adjusted Performance Ratios (Six Months Ended June 30, 2024 vs. 2023) | Metric | H1 2024 | H1 2023 | | :------------------------------------ | :------ | :------ | | Annualized Return on Average Assets, Adjusted (%) | 1.50% | 1.30% | | Annualized Return on Average Shareholders' Equity, Adjusted (%) | 12.68% | 11.92% | | Annualized Return on Average Tangible Equity, Adjusted (%) | 14.76% | 14.04% | | Efficiency Ratio, Adjusted (%) | 61.04% | 64.82% | | Annualized Net Interest Margin, Adjusted (%) | 4.32% | 4.05% | Reconciliation of Tangible Assets and Equity Reconciliations show that tangible assets and equity are derived by subtracting goodwill and other intangible assets from total assets and shareholders' equity, providing a clearer view of the company's physical and financial capital Reconciliation of Average Assets to Average Tangible Assets ($ thousand) | Metric | Q2 2024 | Q1 2024 | Q2 2023 | H1 2024 | H1 2023 | | :------------------------------------ | :------ | :------ | :------ | :------ | :------ | | Average Assets | 9,811,326 | 9,863,378 | 9,917,805 | 9,837,352 | 9,987,953 | | Less: Average Goodwill & Other Intangible Assets | 163,816 | 164,137 | 165,129 | 163,977 | 165,292 | | Average Tangible Assets | 9,647,510 | 9,699,241 | 9,752,676 | 9,673,375 | 9,822,661 | Reconciliation of Total Assets to Tangible Assets ($ thousand) | Metric | June 30, 2024 | March 31, 2024 | June 30, 2023 | | :------------------------------------ | :------------ | :------------- | :------------ | | Total Assets | 9,919,783 | 9,881,077 | 9,899,551 | | Less: Goodwill & Other Intangible Assets | 163,607 | 163,927 | 164,915 | | Tangible Assets | 9,756,176 | 9,717,150 | 9,734,636 | Reconciliation of Total Shareholders' Equity to Tangible Equity ($ thousand) | Metric | June 30, 2024 | March 31, 2024 | June 30, 2023 | | :------------------------------------ | :------------ | :------------- | :------------ | | Total Shareholders' Equity | 1,183,257 | 1,161,979 | 1,088,757 | | Less: Goodwill & Other Intangible Assets | 163,607 | 163,927 | 164,915 | | Tangible Equity | 1,019,650 | 998,052 | 923,842 | Reconciliation of Pre-Tax, Pre-Provision Net Income Pre-tax, pre-provision (PTPP) net income, a key metric for assessing operating performance, increased significantly for both the quarter and six months ended June 30, 2024, compared to the prior year Reconciliation of Pre-Tax, Pre-Provision Net Income ($ thousand) | Metric | Q2 2024 | Q1 2024 | Q2 2023 | H1 2024 | H1 2023 | | :-------------------------- | :------ | :------ | :------ | :------ | :------ | | Net Income | 39,369 | 35,204 | 31,584 | 74,573 | 65,317 | | Plus: Income Taxes | 8,960 | 7,211 | 6,626 | 16,171 | 12,792 | | Plus: Provision for Credit Losses | 3,113 | 2,180 | 2,492 | 5,293 | 2,675 | | Pre-tax, Pre-provision Net Income | 51,442 | 44,595 | 40,702 | 96,037 | 80,784 | - PTPP net income is a common industry metric used to assess operating performance by excluding the impact of the provision for credit losses[63] Reconciliation of Fully Taxable Equivalent Net Interest Income The fully taxable equivalent (FTE) net interest income, which adjusts for the tax-exempt status of certain interest income, shows a higher net interest income compared to the reported figures, indicating the benefit of tax-exempt investments Reconciliation of Fully Taxable Equivalent Net Interest Income ($ thousand) | Metric | Q2 2024 | Q1 2024 | Q2 2023 | H1 2024 | H1 2023 | | :------------------------------------ | :------ | :------ | :------ | :------ | :------ | | Interest Income | 128,904 | 126,640 | 114,674 | 255,544 | 225,575 | | Fully Taxable Equivalent Adjustment | 605 | 616 | 920 | 1,221 | 1,846 | | Fully Taxable Equivalent Interest Income | 129,509 | 127,256 | 115,594 | 256,765 | 227,421 | | Interest Expense | 31,067 | 31,017 | 23,102 | 62,084 | 41,805 | | Fully Taxable Equivalent Net Interest Income | 98,442 | 96,239 | 92,492 | 194,681 | 185,616 | - The efficiency ratio is calculated by dividing total other expense by the sum of fully taxable equivalent net interest income and other income, using a 21% corporate federal income tax rate for FTE adjustments[63] Footnote Explanations This section provides detailed explanations for the footnotes (a) through (k) referenced throughout the financial tables, clarifying the methodologies and definitions used for various financial metrics and adjustments, including the adoption of ASU 2022-02 - Footnotes (a) through (k) provide explanations for reported measures, average calculations, tangible equity/assets definitions, efficiency ratio calculation, adjusted net income methodology, tax effect assumptions, and the definition of pre-tax, pre-provision net income[29][30][31][63] - Effective January 1, 2023, Park adopted ASU 2022-02, which eliminated the concept of troubled debt restructurings (TDRs), resulting in a decrease in total nonperforming loans and assets by $20.1 million and individually evaluated loans by $11.5 million[64]