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Park National Corporation Reports Third Quarter 2014 Financial Results and Declares Dividend

NEWARK, Ohio, Oct. 27, 2014 (GLOBE NEWSWIRE) — Park National Corporation (Park) (NYSE MKT:PRK) today announced financial results for the three months (third quarter) and nine months ended September 30, 2014. While Park reported its net income for the nine-month period was nearly the same as the previous year, its banking subsidiary posted increases in net income due to the impact of continued loan growth. Park’s board of directors declared a quarterly cash dividend of $0.94 per common share, payable on December 10, 2014 to common shareholders of record as of November 21, 2014.

Net income for the third quarter of 2014 was $18.3 million, compared to $19.0 million for the same period in 2013, a decrease of $700,000, or 3.7 percent. Net income per diluted common share for the third quarter of 2014 was $1.19, compared to $1.23 in the same period of 2013.

Net income for the nine months ended September 30, 2014 was $59.7 million, compared to $59.8 million for the same period in 2013. Net income per diluted common share was $3.88 for the first nine months of both 2014 and 2013.

The Park National Bank Results

Park’s community-banking subsidiary, The Park National Bank, reported net income of $61.0 million for the nine months ended September 30, 2014, compared to net income of $57.5 million for the same period of 2013. The Park National Bank had total assets of $6.9 billion at September 30, 2014 and $6.6 billion at September 30, 2013. This performance generated a return on average assets of 1.22 percent and 1.17 percent for the bank for the periods ended September 30, 2014 and 2013, respectively.

The Park National Bank loan portfolio continued its steady growth during the third quarter and first nine months of 2014. Loans outstanding at September 30, 2014 were $4.72 billion, compared to $4.67 billion at June 30, 2014, an increase of $49 million or an annualized 4.14 percent. Loan growth through the first nine months of 2014 was $164 million, an annualized increase of 4.82 percent, compared to the $4.56 billion outstanding at December 31, 2013. The $164 million increase in loans through the first nine months of 2014 was largely due to new loans added in the consumer loan portfolio, which increased by approximately $158 million.

About Park National Corporation

Headquartered in Newark, Ohio, Park National Corporation had $7.0 billion in total assets (as of September 30, 2014). The Park organization principally consists of 11 community bank divisions, a non-bank subsidiary and two specialty finance companies. Park’s Ohio-based banking operations are conducted through Park subsidiary The Park National Bank and its divisions, which include Fairfield National Bank Division, Richland Bank Division, Century National Bank Division, First-Knox National Bank Division, Farmers Bank Division, United Bank, N.A. Division, Second National Bank Division, Security National Bank Division, Unity National Bank Division, and The Park National Bank of Southwest Ohio & Northern Kentucky Division; and Scope Leasing, Inc. (d.b.a. Scope Aircraft Finance). The Park organization also includes Guardian Financial Services Company (d.b.a. Guardian Finance Company) and SE Property Holdings, LLC.

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 materially include, without limitation: Park’s ability to execute our business plan successfully and within the expected timeframe; general economic and financial market conditions, and the uneven spread of positive impacts of the recovery on the economy, specifically in the real estate markets and the credit markets, either nationally or in the states in which Park and our subsidiaries do business, may be worse or slower than expected which could adversely impact the demand for loan, deposit and other financial services as well as loan delinquencies and defaults; changes in interest rates and prices may adversely impact the value of securities, loans, deposits and other financial instruments and the interest rate sensitivity of our consolidated balance sheet; changes in consumer spending, borrowing and saving habits; changes in unemployment; asset/liability repricing risks and liquidity risks; our liquidity requirements could be adversely affected by changes to regulations governing bank capital and liquidity standards as well as by changes in our assets and liabilities; competitive factors among financial services organizations could increase significantly, including product and pricing pressures, changes to third-party relationships and our ability to attract, develop and retain qualified bank professionals; clients could pursue alternatives to bank deposits, causing us to lose a relatively inexpensive source of funding; the nature, timing and effect of changes in banking regulations or other regulatory or legislative requirements affecting the respective businesses of Park and our subsidiaries, including changes in laws and regulations concerning taxes, accounting, banking, securities and other aspects of the financial services industry, specifically the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), as well as future regulations which will be adopted by the relevant regulatory agencies, including the Consumer Financial Protection Bureau, to implement the Dodd-Frank Act’s provisions, the Budget Control Act of 2011, the American Taxpayer Relief Act of 2012 and the Basel III regulatory capital reforms; 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, and the accuracy of our assumptions and estimates used to prepare our financial statements; the effect of trade, monetary, fiscal and other governmental policies of the United States federal government, including interest rate policies of the Federal Reserve; the adequacy of our risk management program; a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors and other service providers, including as a result of cyber attacks; demand for loans in the respective market areas served by Park and our subsidiaries; and other risk factors relating to the banking industry as detailed from time to time in Park’s reports filed with the Securities and Exchange Commission 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, 2013. 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

Three months ended September 30, 2014, June 30, 2014, and September 30, 2013

2014

2014

2013

Percent change vs.

(in thousands, except share and per share data)

3rd QTR

2nd QTR

3rd QTR

2Q ’14

3Q ’13

INCOME STATEMENT:

Net interest income

$ 56,709

$ 56,561

$ 54,960

0.3%

3.2%

Provision for (recovery of) loan losses

4,501

(1,260)

2,498

N.M.

N.M.

Other income

19,396

19,671

17,396

(1.4)%

11.5%

Other expense

46,903

48,196

44,715

(2.7)%

4.9%

Income before income taxes

$ 24,701

$ 29,296

$ 25,143

(15.7)%

(1.8)%

Income taxes

6,398

7,469

6,114

(14.3)%

4.6%

Net income

$ 18,303

$ 21,827

$ 19,029

(16.1)%

(3.8)%

MARKET DATA:

Earnings per common share – basic (b)

$ 1.19

$ 1.42

$ 1.23

(16.2)%

(3.3)%

Earnings per common share – diluted (b)

1.19

1.42

1.23

(16.2)%

(3.3)%

Cash dividends per common share

0.94

0.94

0.94

—%

—%

Common book value per common share at period end

44.70

44.63

41.06

0.2%

8.9%

Stock price per common share at period end

75.42

77.20

79.08

(2.3)%

(4.6)%

Market capitalization at period end

1,160,896

1,188,295

1,218,778

(2.3)%

(4.7)%

Weighted average common shares – basic (a)

15,392,421

15,392,435

15,411,972

—%

(0.1)%

Weighted average common shares – diluted (a)

15,413,664

15,412,167

15,411,972

—%

—%

Common shares outstanding at period end

15,392,413

15,392,425

15,411,963

—%

(0.1)%

PERFORMANCE RATIOS: (annualized)

Return on average assets (a)(b)

1.05%

1.29%

1.12%

(18.6)%

(6.3)%

Return on average common equity (a)(b)

10.51%

12.93%

11.84%

(18.7)%

(11.2)%

Yield on loans

4.80%

4.91%

4.95%

(2.2)%

(3.0)%

Yield on investments

2.54%

2.60%

2.55%

(2.3)%

(0.4)%

Yield on money markets

0.25%

0.25%

0.25%

—%

—%

Yield on earning assets

4.17%

4.28%

4.19%

(2.6)%

(0.5)%

Cost of interest bearing deposits

0.27%

0.27%

0.33%

—%

(18.2)%

Cost of borrowings

2.58%

2.60%

2.54%

(0.8)%

1.6%

Cost of paying liabilities

0.79%

0.81%

0.84%

(2.5)%

(6.0)%

Net interest margin

3.55%

3.65%

3.52%

(2.7)%

0.9%

Efficiency ratio (g)

61.46%

63.04%

61.57%

(2.5)%

(0.2)%

OTHER RATIOS (NON – GAAP):

Annualized return on average tangible assets (a)(b)(e)

1.06%

1.31%

1.13%

(19.1)%

(6.2)%

Annualized return on average tangible common equity (a)(b)(c)

11.74%

14.47%

13.36%

(18.9)%

(12.1)%

Tangible common book value per common share (d)

$ 40.00

$ 39.93

$ 36.36

0.2%

10.0%

N.M. – Not meaningful

Note: Explanations (a) – (g) are included at the end of the financial highlights.

PARK NATIONAL CORPORATION

Financial Highlights (continued)

Three months ended September 30, 2014, June 30, 2014, and September 30, 2013

Percent change vs.

BALANCE SHEET:

September 30,
2014

June 30,
2014

September 30,
2013


2Q ’14


3Q ’13

Investment securities

$ 1,472,625

$ 1,417,910

$ 1,389,387

3.9%

6.0%

Loans

4,770,433

4,728,910

4,566,966

0.9%

4.5%

Allowance for loan losses

57,674

57,911

57,894

(0.4)%

(0.4)%

Goodwill and other intangibles

72,334

72,334

72,334

—%

—%

Other real estate owned

19,185

23,909

35,412

(19.8)%

(45.8)%

Loans held for sale

28,606

6,577

6,571

N.M.

N.M.

Total assets

7,013,272

6,789,173

6,705,891

3.3%

4.6%

Total deposits

5,129,004

4,927,211

4,850,692

4.1%

5.7%

Borrowings

1,137,653

1,118,404

1,162,091

1.7%

(2.1)%

Shareholders’ equity

688,016

686,971

632,745

0.2%

8.7%

Common equity

688,016

686,971

632,745

0.2%

8.7%

Tangible common equity (d)

615,682

614,637

560,411

0.2%

9.9%

Nonperforming loans

119,393

142,902

162,522

(16.5)%

(26.5)%

Nonperforming including loans held for sale

141,378

142,902

162,522

(1.1)%

(13.0)%

Nonperforming assets

160,563

166,811

197,934

(3.7)%

(18.9)%

ASSET QUALITY RATIOS:

Loans as a % of period end assets

68.02%

69.65%

68.10%

(2.3)%

(0.1)%

Nonperforming loans as a % of period end loans

2.50%

3.02%

3.56%

(17.2)%

(29.8)%

Nonperforming assets / Period end loans + OREO

3.35%

3.51%

4.30%

(4.6)%

(22.1)%

Allowance for loan losses as a % of period end loans

1.21%

1.22%

1.27%

(0.8)%

(4.7)%

Net loan charge-offs (recoveries)

$ 4,738

$ 1,086

$ (285)

N.M.

N.M.

Annualized net loan charge-offs (recoveries) as a % of average loans (a)

0.39%

0.09%

(0.02)%

N.M.

N.M.

CAPITAL & LIQUIDITY:

Total equity / Period end assets

9.81%

10.12%

9.44%

(3.1)%

3.9%

Common equity / Period end assets

9.81%

10.12%

9.44%

(3.1)%

3.9%

Tangible common equity (d) / Tangible assets (f)

8.87%

9.15%

8.45%

(3.1)%

5.0%

Average equity / Average assets (a)

10.01%

10.00%

9.46%

0.1%

5.8%

Average equity / Average loans (a)

14.49%

14.48%

14.04%

0.1%

3.2%

Average loans / Average deposits (a)

95.04%

95.12%

92.77%

(0.1)%

2.4%

N.M. – Not meaningful

Note: Explanations (a) – (g) are included at the end of the financial highlights.

PARK NATIONAL CORPORATION

Financial Highlights

Nine months ended September 30, 2014 and 2013

(in thousands, except share and per share data)


2014


2013

Percent change
vs. 2013

INCOME STATEMENT:

Net interest income

$ 167,750

$ 165,125

1.6%

Provision for loan losses

1,016

3,500

N.M.

Other income

55,715

55,499

0.4%

Other expense

142,797

137,383

3.9%

Income before income taxes

$ 79,652

$ 79,741

(0.1)%

Income taxes

19,903

19,968

(0.3)%

Net income

$ 59,749

$ 59,773

—%

MARKET DATA:

Earnings per common share – basic (b)

$ 3.88

$ 3.88

—%

Earnings per common share – diluted (b)

3.88

3.88

—%

Cash dividends per common share

2.82

2.82

—%

Weighted average common shares – basic (a)

15,395,320

15,411,981

(0.1)%

Weighted average common shares – diluted (a)

15,413,625

15,411,981

—%

PERFORMANCE RATIOS: (Annualized)

Return on average assets (a)(b)

1.17%

1.19%

(1.7)%

Return on average common equity (a)(b)

11.80%

12.32%

(4.2)%

Yield on loans

4.85%

5.05%

(4.0)%

Yield on investments

2.60%

2.72%

(4.4)%

Yield on earning assets

4.21%

4.30%

(2.1)%

Cost of interest bearing deposits

0.28%

0.36%

(22.2)%

Cost of borrowings

2.60%

2.60%

—%

Cost of paying liabilities

0.81%

0.87%

(6.9)%

Net interest margin (g)

3.58%

3.61%

(0.8)%

Efficiency ratio (g)

63.72%

61.98%

2.8%

ASSET QUALITY RATIOS:

Net loan charge-offs

$ 2,810

$ 1,143

N.M.

Annualized net loan charge-offs as a % of average loans (a)

0.08%

0.03%

N.M.

CAPITAL & LIQUIDITY:

Average stockholders’ equity / Average assets (a)

9.93%

9.68%

2.6%

Average stockholders’ equity / Average loans (a)

14.45%

14.45%

—%

Average loans / Average deposits (a)

94.58%

92.28%

2.5%

OTHER RATIOS (NON GAAP):

Annualized return on average tangible assets (a)(b)(e)

1.18%

1.21%

(2.5)%

Annualized return on average tangible common equity (a)(b)(c)

13.22%

13.88%

(4.8)%

Note: Explanations (a) – (g) are included at the end of the financial highlights.

PARK NATIONAL CORPORATION

Financial Highlights (continued)

(a) Averages are for the quarters ended September 30, 2014, June 30, 2014 and September 30, 2013.

(b) Reported measure uses net income available to common shareholders.

(c) Net income for each period divided by average tangible common equity during the period. Average tangible common equity equals average shareholders’ equity during the applicable period less average goodwill and other intangibles during the applicable period.

RECONCILIATION OF AVERAGE SHAREHOLDERS’ EQUITY TO AVERAGE TANGIBLE COMMON EQUITY:

THREE MONTHS ENDED

NINE MONTHS ENDED

September 30, 2014

June 30, 2014

September 30, 2013

September 30, 2014

September 30, 2013

AVERAGE SHAREHOLDERS’ EQUITY

$ 691,085

$ 677,226

$ 637,529

$ 676,806

$ 648,446

Less: Average goodwill and other intangibles

72,334

72,334

72,397

72,334

72,508

AVERAGE TANGIBLE COMMON EQUITY

$ 618,751

$ 604,892

$ 565,132

$ 604,472

$ 575,938

(d) Tangible common book value divided by common shares outstanding at period end. Tangible common equity equals ending shareholders’ equity less goodwill and other intangibles, in each case at the end of the period.

RECONCILIATION OF SHAREHOLDERS’ EQUITY TO TANGIBLE COMMON EQUITY:

September 30, 2014

June 30, 2014

September 30, 2013

SHAREHOLDERS’ EQUITY

$ 688,016

$ 686,971

$ 632,745

Less: Goodwill and other intangibles

72,334

72,334

72,334

TANGIBLE COMMON EQUITY

$ 615,682

$ 614,637

$ 560,411

(e) Net income available to common shareholders for each period divided by average tangible assets during the period. Average tangible assets equals average assets less average goodwill and other intangibles, in each case during the applicable period.

RECONCILIATION OF AVERAGE ASSETS TO AVERAGE TANGIBLE ASSETS:

THREE MONTHS ENDED

NINE MONTHS ENDED

September 30, 2014

June 30, 2014

September 30, 2013

September 30, 2014

September 30, 2013

AVERAGE ASSETS

$ 6,903,127

$ 6,774,390

$ 6,739,055

$ 6,815,274

$ 6,701,287

Less: Average goodwill and other intangibles

72,334

72,334

72,397

72,334

72,508

AVERAGE TANGIBLE ASSETS

$ 6,830,793

$ 6,702,056

$ 6,666,658

$ 6,742,940

$ 6,628,779

(f) Tangible common equity divided by tangible assets. Tangible assets equals total assets less goodwill and other intangibles, in each case at the end of the period.

RECONCILIATION OF TOTAL ASSETS TO TANGIBLE ASSETS:

September 30, 2014

June 30, 2014

September 30, 2013

TOTAL ASSETS

$ 7,013,272

$ 6,789,173

$ 6,705,891

Less: Goodwill and other intangibles

72,334

72,334

72,334

TANGIBLE ASSETS

$ 6,940,938

$ 6,716,839

$ 6,633,557

(g) Efficiency ratio is calculated by taking total other expense divided by the sum of fully taxable equivalent net interest income and other income. Fully taxable equivalent net interest income reconciliation is shown below assuming a 35% tax rate. Additionally, net interest margin is calculated on a fully taxable equivalent basis.

RECONCILIATION OF FULLY TAXABLE EQUIVALENT NET INTEREST INCOME TO NET INTEREST INCOME

THREE MONTHS ENDED

NINE MONTHS ENDED

September 30, 2014

June 30, 2014

September 30, 2013

September 30, 2014

September 30, 2013

Interest income

$ 66,622

$ 66,363

$ 65,410

$ 197,327

$ 196,881

Fully taxable equivalent adjustment

209

221

273

653

1,029

Fully taxable equivalent interest income

$ 66,831

$ 66,584

$ 65,683

$ 197,980

$ 197,910

Interest expense

9,913

9,802

10,450

29,577

31,756

Fully taxable equivalent net interest income

$ 56,918

$ 56,782

$ 55,233

$ 168,403

$ 166,154

PARK NATIONAL CORPORATION

Consolidated Statements of Income

Three Months Ended
September 30,

Nine Months Ended
September 30,

(in thousands, except share and per share data)

2014

2013

2014

2013

Interest income:

Interest and fees on loans

57,492

56,337

169,249

168,500

Interest on:

Obligations of U.S. Government, its agencies and other securities

9,011

8,880

27,758

27,795

Obligations of states and political subdivisions

7

3

40

Other interest income

119

186

317

546

Total interest income

66,622

65,410

197,327

196,881

Interest expense:

Interest on deposits:

Demand and savings deposits

440

422

1,232

1,391

Time deposits

2,136

2,729

6,547

8,719

Interest on borrowings

7,337

7,299

21,798

21,646

Total interest expense

9,913

10,450

29,577

31,756

Net interest income

56,709

54,960

167,750

165,125

Provision for loan losses

4,501

2,498

1,016

3,500

Net interest income after provision for loan losses

52,208

52,462

166,734

161,625

Other income

19,396

17,396

55,715

55,499

Other expense

46,903

44,715

142,797

137,383

Income before income taxes

24,701

25,143

79,652

79,741

Income taxes

6,398

6,114

19,903

19,968

Net income

18,303

19,029

59,749

59,773

Per Common Share:

Net income – basic

1.19

1.23

3.88

3.88

Net income – diluted

1.19

1.23

3.88

3.88

Weighted average shares – basic

15,392,421

15,411,972

15,395,320

15,411,981

Weighted average shares – diluted

15,413,664

15,411,972

15,413,625

15,411,981

Cash Dividends Declared

0.94

0.94

2.82

2.82

PARK NATIONAL CORPORATION

Consolidated Balance Sheets

(in thousands, except share data)

September 30, 2014

December 31, 2013

Assets

Cash and due from banks

$ 101,760

$ 129,078

Money market instruments

201,526

17,952

Investment securities

1,472,625

1,424,234

Loans held for sale

28,606

1,666

Loans

4,770,433

4,618,839

Allowance for loan losses

(57,674)

(59,468)

Loans, net

4,712,759

4,559,371

Bank premises and equipment, net

54,654

55,278

Goodwill and other intangibles

72,334

72,334

Other real estate owned

19,185

34,636

Other assets

349,823

343,798

Total assets

$ 7,013,272

$ 6,638,347

Liabilities and Shareholders’ Equity

Deposits:

Noninterest bearing

$ 1,175,991

$ 1,193,553

Interest bearing

3,953,013

3,596,441

Total deposits

5,129,004

4,789,994

Borrowings

1,137,653

1,132,820

Other liabilities

58,599

63,786

Total liabilities

$ 6,325,256

$ 5,986,600

Shareholders’ Equity:

Preferred shares (200,000 shares authorized; no shares outstanding at September 30, 2014 and December 31, 2013)

$

$ —

Common shares (No par value; 20,000,000 shares authorized in 2014 and 2013; 16,150,902 shares issued at September 30, 2014 and 16,150,941 shares issued at December 31, 2013)

303,003

302,651

Accumulated other comprehensive loss, net of taxes

(14,304)

(35,419)

Retained earnings

476,930

460,643

Treasury shares (758,489 shares at September 30, 2014 and 738,989 at December 31, 2013)

(77,613)

(76,128)

Total shareholders’ equity

$ 688,016

$ 651,747

Total liabilities and shareholders’ equity

$ 7,013,272

$ 6,638,347

PARK NATIONAL CORPORATION

Consolidated Average Balance Sheets

Three Months Ended
September 30,

Nine Months Ended
September 30,

(in thousands)

2014

2013

2014

2013

Assets

Cash and due from banks

$ 110,023

$ 108,813

$ 110,120

$ 110,847

Money market instruments

185,899

295,634

168,066

293,511

Investment securities

1,396,880

1,359,690

1,407,734

1,370,627

Loans

4,768,253

4,539,685

4,685,235

4,487,756

Allowance for loan losses

(57,949)

(55,697)

(58,969)

(56,186)

Loans, net

4,710,304

4,483,988

4,626,266

4,431,570

Bank premises and equipment, net

55,133

56,643

55,465

56,352

Goodwill and other intangibles

72,334

72,397

72,334

72,508

Other real estate owned

22,340

36,363

28,406

35,446

Other assets

350,214

325,527

346,883

330,426

Total assets

$ 6,903,127

$ 6,739,055

$ 6,815,274

$ 6,701,287

Liabilities and Shareholders’ Equity

Deposits:

Noninterest bearing

$ 1,170,280

$ 1,096,178

$ 1,173,091

$ 1,101,929

Interest bearing

3,846,846

3,797,118

3,780,717

3,761,111

Total deposits

5,017,126

4,893,296

4,953,808

4,863,040

Borrowings

1,130,133

1,137,877

1,122,926

1,114,113

Other liabilities

64,783

70,353

61,734

75,688

Total liabilities

$ 6,212,042

$ 6,101,526

$ 6,138,468

$ 6,052,841

Shareholders’ Equity:

Preferred shares

$

$ —

$

$ —

Common shares

302,870

302,652

302,762

302,653

Accumulated other comprehensive loss, net of taxes

(11,967)

(43,255)

(18,922)

(27,825)

Retained earnings

477,795

454,507

470,367

449,993

Treasury shares

(77,613)

(76,375)

(77,401)

(76,375)

Total shareholders’ equity

$ 691,085

$ 637,529

$ 676,806

$ 648,446

Total liabilities and shareholders’ equity

$ 6,903,127

$ 6,739,055

$ 6,815,274

$ 6,701,287

PARK NATIONAL CORPORATION

Consolidated Statements of Income – Linked Quarters

2014

2014

2014

2013

2013

(in thousands, except per share data)

3rd QTR

2nd QTR

1st QTR

4th QTR

3rd QTR

Interest income:

Interest and fees on loans

$ 57,492

$ 57,004

$ 54,753

$ 57,038

$ 56,337

Interest on:

Obligations of U.S. Government, its agencies and other securities

9,011

9,271

9,476

8,911

8,880

Obligations of states and political subdivisions

1

2

4

7

Other interest income

119

87

111

113

186

Total interest income

66,622

66,363

64,342

66,066

65,410

Interest expense:

Interest on deposits:

Demand and savings deposits

440

399

393

382

422

Time deposits

2,136

2,133

2,278

2,516

2,729

Interest on borrowings

7,337

7,270

7,191

7,268

7,299

Total interest expense

9,913

9,802

9,862

10,166

10,450

Net interest income

56,709

56,561

54,480

55,900

54,960

Provision for (recovery of) loan losses

4,501

(1,260)

(2,225)

(85)

2,498

Net interest income after provision for (recovery of) loan losses

52,208

57,821

56,705

55,985

52,462

Other income

19,396

19,671

16,648

17,778

17,396

Other expense

46,903

48,196

47,698

51,146

44,715

Income before income taxes

24,701

29,296

25,655

22,617

25,143

Income taxes

6,398

7,469

6,036

5,163

6,114

Net income

$ 18,303

$ 21,827

$ 19,619

$ 17,454

$ 19,029

Per Common Share:

Net income – basic

$ 1.19

$ 1.42

$ 1.27

$ 1.13

$ 1.23

Net income – diluted

$ 1.19

$ 1.42

$ 1.27

$ 1.13

$ 1.23

PARK NATIONAL CORPORATION

Detail of other income and other expense – Linked Quarters

2014

2014

2014

2013

2013

(in thousands)

3rd QTR

2nd QTR

1st QTR

4th QTR

3rd QTR

Other income:

Income from fiduciary activities

$ 4,734

$ 4,825

$ 4,541

$ 4,590

$ 4,139

Service charges on deposits

4,171

3,942

3,659

4,169

4,255

Other service income

2,450

2,527

1,918

2,185

3,391

Checkcard fee income

3,431

3,493

3,213

3,330

3,326

Bank owned life insurance income

1,420

1,026

1,262

1,274

1,311

OREO valuation adjustments

(935)

(675)

(416)

(951)

(2,030)

Gain on the sale of OREO, net

2,149

2,603

706

358

895

Miscellaneous

1,976

1,930

1,765

2,823

2,109

Total other income

$ 19,396

$ 19,671

$ 16,648

$ 17,778

$ 17,396

Other expense:

Salaries and employee benefits

$ 26,243

$ 26,140

$ 25,060

$ 25,115

$ 25,871

Net occupancy expense

2,339

2,457

2,832

2,415

2,348

Furniture and equipment expense

2,870

2,994

2,998

3,022

2,639

Data processing fees

1,281

1,121

1,114

1,064

1,042

Professional fees and services

6,934

8,168

6,283

10,520

5,601

Amortization of intangibles

112

Marketing

1,087

1,006

1,118

1,126

863

Insurance

1,396

1,467

1,447

1,391

1,174

Communication

1,304

1,293

1,343

1,489

1,268

Miscellaneous

3,449

3,550

5,503

5,004

3,797

Total other expense

$ 46,903

$ 48,196

$ 47,698

$ 51,146

$ 44,715

PARK NATIONAL CORPORATION

Asset Quality Information

Quarter ended

Year ended December 31,

(in thousands, except ratios)

September 30, 2014

June 30, 2014

March 31, 2014


2013


2012


2011


2010

Allowance for loan losses:

Allowance for loan losses, beginning of period

$ 57,911

$ 60,257

$ 59,468

$ 55,537

$ 68,444

$ 143,575

$ 116,717

Transfer of loans at fair value

(219)

Transfer of allowance to held for sale

(13,100)

Charge-offs

8,323 (B)

7,695

3,827

19,153

61,268 (A)

133,882

66,314

Recoveries

3,585

6,609

6,841

19,669

12,942

8,798

6,092

Net charge-offs (recoveries)

4,738

1,086

(3,014)

(516)

48,326

125,084

60,222

Provision for (recovery of) loan losses

4,501

(1,260)

(2,225)

3,415

35,419

63,272

87,080

Allowance for loan losses, end of period

$ 57,674

$ 57,911

$ 60,257

$ 59,468

$ 55,537

$ 68,444

$ 143,575

(A) Year ended December 31, 2012 included the full charge-off of the Vision Bank ALLL of $12.1 million to bring the retained Vision Bank loan portfolio to fair value prior to the merger of Vision Bank (as constituted following the transaction with Centennial Bank and Home BancShares, Inc.) with and into SEPH, the non-bank subsidiary of Park, on February 16, 2012.

(B) Quarter ended September 30, 2014 included $4.3 million in charge-offs related to the transfer of $22.0 million of commercial loans to the held for sale portfolio.

General reserve trends:

Allowance for loan losses, end of period

$ 57,674

$ 57,911

$ 60,257

$ 59,468

$ 55,537

$ 68,444

$ 143,575

Specific reserves

4,120

6,343

11,322

10,451

8,276

15,935

66,904

General reserves

$ 53,554

$ 51,568

$ 48,935

$ 49,017

$ 47,261

$ 52,509

$ 76,671

Total loans

$ 4,770,433

$ 4,728,910

$ 4,620,416

$ 4,618,839

$ 4,424,579

$ 4,305,564

$ 4,724,345

Impaired commercial loans

76,198

95,974

105,833

112,304

137,238

187,074

250,933

Total loans less impaired commercial loans

$ 4,694,235

$ 4,632,936

$ 4,514,583

$ 4,506,535

$ 4,287,341

$ 4,118,490

$ 4,473,412

Asset Quality Ratios:

Net charge-offs (recoveries) as a % of average loans (annualized for quarterly periods)

0.39%

0.09%

(0.27)%

(0.01)%

1.10%

2.65%

1.30%

Allowance for loan losses as a % of period end loans

1.21%

1.22%

1.30%

1.29%

1.26%

1.59%

3.04%

General reserves as a % of total loans less impaired commercial loans

1.14%

1.11%

1.08%

1.09%

1.10%

1.27%

1.71%

Nonperforming Assets – Park National Corporation:

Nonaccrual loans

$ 100,471

$ 118,895

$ 128,026

$ 135,216

$ 155,536

$ 195,106

$ 289,268

Accruing troubled debt restructuring

17,135

17,514

17,957

18,747

29,800

28,607

Loans past due 90 days or more

1,787

6,493

1,289

1,677

2,970

3,489

3,590

Total nonperforming loans

$ 119,393

$ 142,902

$ 147,272

$ 155,640

$ 188,306

$ 227,202

$ 292,858

Loans held for sale

21,985

Total nonperforming loans, including loans held for sale

$ 141,378

$ 142,902

$ 147,272

$ 155,640

$ 188,306

$ 227,202

$ 292,858

Other real estate owned – Park National Bank

7,082

7,727

12,486

11,412

14,715

13,240

8,385

Other real estate owned – SEPH

12,103

16,182

22,626

23,224

21,003

29,032

Other real estate owned – Vision Bank

33,324

Total nonperforming assets

$ 160,563

$ 166,811

$ 182,384

$ 190,276

$ 224,024

$ 269,474

$ 334,567

Percentage of nonaccrual loans to period end loans

2.11%

2.51%

2.77%

2.93%

3.52%

4.53%

6.12%

Percentage of nonperforming loans to period end loans

2.50%

3.02%

3.19%

3.37%

4.26%

5.28%

6.20%

Percentage of nonperforming assets to period end loans

3.37%

3.53%

3.95%

4.12%

5.06%

6.26%

7.08%

Percentage of nonperforming assets to period end assets

2.29%

2.46%

2.68%

2.87%

3.37%

3.86%

4.59%

PARK NATIONAL CORPORATION

Asset Quality Information (continued)

Year ended December 31,

(in thousands, except ratios)

September 30, 2014

June 30, 2014

March 31, 2014


2013


2012


2011


2010

Nonperforming Assets – Park National Bank and Guardian:

Nonaccrual loans

$ 77,160

$ 89,231

$ 96,672

$ 99,108

$ 100,244

$ 96,113

$ 117,815

Accruing troubled debt restructuring

17,038

17,417

17,860

18,747

29,800

26,342

Loans past due 90 days or more

1,787

6,493

1,289

1,677

2,970

3,367

3,226

Total nonperforming loans

$ 95,985

$ 113,141

$ 115,821

$ 119,532

$ 133,014

$ 125,822

$ 121,041

Loans held for sale

15,475

Total nonperforming loans, including loans held for sale

$ 111,460

$ 113,141

$ 115,821

$ 119,532

$ 133,014

$ 125,822

$ 121,041

Other real estate owned – Park National Bank

7,082

7,727

12,486

11,412

14,715

13,240

8,385

Total nonperforming assets

$ 118,542

$ 120,868

$ 128,307

$ 130,944

$ 147,729

$ 139,062

$ 129,426

Percentage of nonaccrual loans to period end loans

1.63%

1.90%

2.11%

2.16%

2.30%

2.30%

2.88%

Percentage of nonperforming loans to period end loans

2.02%

2.41%

2.52%

2.61%

3.05%

3.00%

2.96%

Percentage of nonperforming assets to period end loans

2.50%

2.57%

2.80%

2.86%

3.38%

3.32%

3.16%

Percentage of nonperforming assets to period end assets

1.71%

1.81%

1.91%

2.00%

2.27%

2.21%

1.99%

Nonperforming Assets – SEPH/Vision Bank (retained portfolio as of September 30, 2014, June 30, 2014, March 31, 2014, December 31, 2013, 2012, and 2011):

Nonaccrual loans

$ 23,311

$ 29,664

$ 31,354

$ 36,108

$ 55,292

$ 98,993

$ 171,453

Accruing troubled debt restructuring

97

97

97

2,265

Loans past due 90 days or more

122

364

Total nonperforming loans

$ 23,408

$ 29,761

$ 31,451

$ 36,108

$ 55,292

$ 101,380

$ 171,817

Loans held for sale

6,511

Total nonperforming loans, including loans held for sale

$ 29,919

$ 29,761

$ 31,451

$ 36,108

$ 55,292

$ 101,380

$ 171,817

Other real estate owned – Vision Bank

33,324

Other real estate owned – SEPH

12,103

16,182

22,626

23,224

21,003

29,032

Total nonperforming assets

$ 42,022

$ 45,943

$ 54,077

$ 59,332

$ 76,295

$ 130,412

$ 205,141

Percentage of nonaccrual loans to period end loans

N.M.

N.M.

N.M.

N.M.

N.M.

N.M.

27.02%

Percentage of nonperforming loans to period end loans

N.M.

N.M.

N.M.

N.M.

N.M.

N.M.

27.07%

Percentage of nonperforming assets to period end loans

N.M.

N.M.

N.M.

N.M.

N.M.

N.M.

32.32%

Percentage of nonperforming assets to period end assets

N.M.

N.M.

N.M.

N.M.

N.M.

N.M.

25.90%

PARK NATIONAL CORPORATION

Asset Quality Information (continued)

Year ended December 31,

(in thousands, except ratios)

September 30, 2014

June 30, 2014

March 31, 2014


2013


2012


2011


2010

New nonaccrual loan information – Park National Corporation

Nonaccrual loans, beginning of period

$ 118,895

$ 128,026

$ 135,216

$ 155,536

$ 195,106

$ 289,268

$ 233,544

New nonaccrual loans

25,739

14,785

12,875

67,398

83,204

124,158

175,175

Resolved nonaccrual loans

22,178

23,916

20,065

87,718

122,774

218,320

119,451

Loans transferred to held for sale

21,985

Nonaccrual loans, end of period

$ 100,471

$ 118,895

$ 128,026

$ 135,216

$ 155,536

$ 195,106

$ 289,268

New nonaccrual loan information – Ohio – based operations

Nonaccrual loans, beginning of period

$ 89,231

$ 96,672

$ 99,108

$ 100,244

$ 96,113

$ 117,815

$ 85,197

New nonaccrual loans – Ohio-based operations

25,069

14,785

12,875

66,197

68,960

78,316

85,081

Resolved nonaccrual loans

21,665

22,226

15,311

67,333

64,829

100,018

52,463

Loans transferred to held for sale

15,475

Nonaccrual loans, end of period

$ 77,160

$ 89,231

$ 96,672

$ 99,108

$ 100,244

$ 96,113

$ 117,815

New nonaccrual loan information – SEPH/Vision Bank

Nonaccrual loans, beginning of period

$ 29,664

$ 31,354

$ 36,108

$ 55,292

$ 98,993

$ 171,453

$ 148,347

New nonaccrual loans – SEPH/Vision Bank

670

1,201

14,243

45,842

90,094

Resolved nonaccrual loans

512

1,690

4,754

20,385

57,944

118,302

66,988

Loans transferred to held for sale

6,511

Nonaccrual loans, end of period

$ 23,311

$ 29,664

$ 31,354

$ 36,108

$ 55,292

$ 98,993

$ 171,453

Impaired Commercial Loan Portfolio Information (period end): (1)

Unpaid principal balance

$ 120,773

$ 154,396

$ 160,199

$ 175,576

$ 242,345

$ 290,908

$ 304,534

Prior charge-offs

44,575

58,422

54,366

63,272

105,107

103,834

53,601

Remaining principal balance

76,198

95,974

105,833

112,304

137,238

187,074

250,933

Specific reserves

4,120

6,343

11,322

10,451

8,276

15,935

66,904

Book value, after specific reserve

$ 72,078

$ 89,631

$ 94,511

$ 101,853

$ 128,962

$ 171,139

$ 184,029

(1) Excludes $22.0 million of commercial loans held for sale for the period ended September 30, 2014.
View photo.FinanceInvestment & Company InformationPark National Corporation
Contact:
Media contact: Bethany Lewis, 740.349.0421,
blewis@parknationalbank.com
Investor contact: Brady Burt, 740.322.6844,
bburt@parknationalbank.com

More here:
Park National Corporation Reports Third Quarter 2014 Financial Results and Declares Dividend

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