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Park National Corporation Reports Fourth Quarter and Full Year 2014 Financial Results and Declares Dividend

From
cash loan – Yahoo News Search Results:

NEWARK, Ohio, Jan. 26, 2015 (GLOBE NEWSWIRE) — Park National Corporation (Park) (NYSE MKT:PRK) today announced financial results for the three months (fourth quarter) and year ended December 31, 2014. Park’s steady loan growth helped generate increased earnings for both the quarter and the year. The board of directors declared a quarterly cash dividend of $0.94 per common share, payable on March 10, 2015 to common shareholders of record as of February 20, 2015. The board also acknowledged the upcoming retirement of its past Chairman William T. McConnell.

Financial performance highlights

Park’s net income for the fourth quarter of 2014 was $24.3 million, compared to $17.5 million for the same period in 2013, an increase of $6.8 million or 38.9 percent. Net income per diluted common share for the fourth quarter of 2014 was $1.58, compared to $1.13 in the same period of 2013.

Park’s net income for the twelve months ended December 31, 2014 was $84.1 million, compared to $77.2 million for the same period in 2013, an increase of $6.9 million or 8.9 percent. Net income per diluted common share was $5.46 for the year ended December 31, 2014, compared to $5.01 for the same period of 2013.

“Individuals and business owners continue to tell us our local lenders consistently deliver professional, reliable service and a variety of loan options,” said Park President and CEO David L. Trautman. “I applaud our associates for their unwavering focus on serving our customers and inviting more to choose our bank.”

Park’s community-banking subsidiary, The Park National Bank, reported net income of $83.0 million for the year ended December 31, 2014, compared to net income of $75.6 million for the same period of 2013. The Park National Bank had total assets of $6.9 billion at December 31, 2014 and $6.5 billion at December 31, 2013. This performance generated a return on average assets of 1.22 percent and 1.15 percent for the bank for the twelve-month periods ended December 31, 2014 and 2013, respectively.

The Park National Bank loan portfolio expanded during the fourth quarter and full year 2014. Loans outstanding at December 31, 2014 were $4.78 billion, compared to $4.74 billion at September 30, 2014, an increase of $38 million or an annualized 3.14 percent. Loan growth for the year ended December 31, 2014 was $222 million, an increase of 4.88 percent, compared to the $4.56 billion outstanding at December 31, 2013. The $222 million increase in loans during 2014 was largely due to new loans added in the consumer loan portfolio, which increased by approximately $167 million.

Board member changes

Park Director William T. McConnell notified the board that he will retire from board service, effective April 27, 2015 at the end of his current term. A Park National Corporation board member since 1986, he is a past chairman of the board and most recently led the board’s executive committee. Also today, the board reported its plan to name McConnell a Director Emeritus on April 27, 2015.

“After 55 years of service to the Park National organization, we want to express our profound gratitude for all that Bill has given us,” said Park Chairman C. Daniel DeLawder. “He is a man of impeccable integrity, quick witted and smart as a whip. Bill’s forward-thinking style and superb leadership shaped this organization into what it is today. Individuals here at Park National, within our larger community and those exposed to the broader role he played within our industry at the state and national level have relied on his counsel and benefitted from his support. It’s an honor to call him a friend.”

The board elected a new board member to fill a vacancy in class of directors whose terms expire at the 2017 annual meeting of Park shareholders. James R. DeRoberts will join the boards of directors for both Park National Corporation and The Park National Bank effective February 16, 2015. DeRoberts is a partner at Gardiner Allen DeRoberts Insurance.

About Park National Corporation

Headquartered in Newark, Ohio, Park National Corporation had $7.0 billion in total assets (as of December 31, 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.

Complete financial tables are listed below…

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; changes in customers’, suppliers’, and other counterparties’ performance and creditworthiness; 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; disruption in the liquidity and other functioning of United States financial markets; the impact on financial markets and the economy of any changes in the credit ratings of the U.S. Treasury obligations and other U.S. government-backed debt, as well as issues surrounding the levels of U.S. and European government debt and concerns regarding the creditworthiness of certain sovereign governments, supranationals and financial institutions in Europe; unfavorable resolution of legal proceedings or other claims and regulatory and other governmental examinations or other inquiries; 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 December 31, 2014, September 30, 2014, and December 31, 2013

2014

2014

2013

Percent change vs.

(in thousands, except share and per share data)

4th QTR

3rd QTR

4th QTR

3Q ’14

4Q ’13

INCOME STATEMENT:

Net interest income

$ 57,294

$ 56,709

$ 55,900

1.0%

2.5%

(Recovery of) provision for loan losses

(8,349)

4,501

(85)

N.M.

N.M.

Other income

21,009

19,396

17,778

8.3%

18.2%

Loss on sale of investment securities

(1,175)

N.M.

N.M.

Other expense

52,437

46,903

51,146

11.8%

2.5%

Income before income taxes

$ 33,040

$ 24,701

$ 22,617

33.8%

46.1%

Income taxes

8,699

6,398

5,163

36.0%

68.5%

Net income

$ 24,341

$ 18,303

$ 17,454

33.0%

39.5%

MARKET DATA:

Earnings per common share – basic (b)

$ 1.58

$ 1.19

$ 1.13

32.8%

39.8%

Earnings per common share – diluted (b)

1.58

1.19

1.13

32.8%

39.8%

Cash dividends per common share

0.94

0.94

0.94

—%

—%

Book value per common share at period end

45.39

44.70

42.29

1.5%

7.3%

Stock price per common share at period end

88.48

75.42

85.07

17.3%

4.0%

Market capitalization at period end

1,361,919

1,160,896

1,311,095

17.3%

3.9%

Weighted average common shares – basic (a)

15,393,924

15,392,421

15,413,517

—%

(0.1)%

Weighted average common shares – diluted (a)

15,414,433

15,413,664

15,413,517

—%

—%

Common shares outstanding at period end

15,392,399

15,392,413

15,411,952

—%

(0.1)%

PERFORMANCE RATIOS: (annualized)

Return on average assets (a)(b)

1.35%

1.05%

1.03%

28.6%

31.1%

Return on average equity (a)(b)

13.81%

10.51%

10.87%

31.4%

27.0%

Yield on loans

4.83%

4.80%

4.95%

0.6%

(2.4)%

Yield on investments

2.53%

2.54%

2.53%

(0.4)%

—%

Yield on money markets

0.25%

0.25%

0.21%

—%

19.0%

Yield on earning assets

4.11%

4.17%

4.24%

(1.4)%

(3.1)%

Cost of interest bearing deposits

0.32%

0.27%

0.31%

18.5%

3.2%

Cost of borrowings

2.51%

2.58%

2.50%

(2.7)%

0.4%

Cost of paying liabilities

0.82%

0.79%

0.83%

3.8%

(1.2)%

Net interest margin (g)

3.47%

3.55%

3.59%

(2.3)%

(3.3)%

Efficiency ratio (g)

67.82%

61.46%

69.16%

10.3%

(1.9)%

OTHER RATIOS (NON – GAAP):

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

1.37%

1.06%

1.04%

29.2%

31.7%

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

15.40%

11.74%

12.27%

31.2%

25.5%

Tangible book value per share (d)

$ 40.69

$ 40.00

$ 37.60

1.7%

8.2%

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 December 31, 2014, September 30, 2014, and December 31, 2013

Percent change vs.

BALANCE SHEET:

December 31, 2014

September 30, 2014

December 31, 2013

3Q ’14

4Q ’13

Investment securities

$ 1,500,788

$ 1,472,625

$ 1,424,234

1.9%

5.4%

Loans

4,829,682

4,770,433

4,620,505

1.2%

4.5%

Allowance for loan losses

54,352

57,674

59,468

(5.8)%

(8.6)%

Goodwill and other intangibles

72,334

72,334

72,334

—%

—%

Other real estate owned

22,605

19,185

34,636

17.8%

(34.7)%

Loans held for sale 1

28,606

N.M.

N.M.

Total assets

7,003,256

7,013,272

6,638,347

(0.1)%

5.5%

Total deposits

5,128,000

5,129,004

4,789,994

—%

7.1%

Borrowings

1,108,582

1,137,653

1,132,820

(2.6)%

(2.1)%

Shareholders’ equity

698,598

688,016

651,747

1.5%

7.2%

Tangible equity (d)

626,264

615,682

579,413

1.7%

8.1%

Nonperforming loans

119,288

119,393

155,640

(0.1)%

(23.4)%

Nonperforming assets

141,893

160,563

190,276

(11.6)%

(25.4)%

1 Loans held for sale at September 30, 2014 included both commercial ($22.0 million) and mortgage loans ($6.6 million) held for sale. There were no amounts reported as held for sale as of December 31, 2014 and 2013, respectively, as the only loans held for sale are the mortgage loans held for sale in each period, which were deemed immaterial and are thus not broken out separately.

ASSET QUALITY RATIOS:

Loans as a % of period end assets

68.96%

68.02%

69.60%

1.4%

(0.9)%

Nonperforming loans as a % of period end loans

2.47%

2.50%

3.37%

(1.2)%

(26.7)%

Nonperforming assets as a % of period end loans + OREO

2.92%

3.35%

4.09%

(12.8)%

(28.6)%

Allowance for loan losses as a % of period end loans

1.13%

1.21%

1.29%

(6.6)%

(12.4)%

Net loan charge-offs (recoveries)

$ (5,027)

$ 4,738

$ (1,659)

N.M.

N.M.

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

(0.41)%

0.39%

(0.14)%

N.M.

N.M.

CAPITAL & LIQUIDITY:

Total equity / Period end assets

9.98%

9.81%

9.82%

1.7%

1.6%

Tangible equity (d) / Tangible assets (f)

9.04%

8.87%

8.82%

1.9%

2.5%

Average equity / Average assets (a)

9.80%

10.01%

9.49%

(2.1)%

3.3%

Average equity / Average loans (a)

14.53%

14.49%

13.86%

0.3%

4.8%

Average loans / Average deposits (a)

92.43%

95.04%

94.74%

(2.7)%

(2.4)%

N.M. – Not meaningful

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

PARK NATIONAL CORPORATION

Financial Highlights

Twelve months ended December 31, 2014 and 2013

(in thousands, except share and per share data)


2014


2013

Percent change
vs. 2013

INCOME STATEMENT:

Net interest income

$ 225,044

$ 221,025

1.8%

(Recovery of) provision for loan losses

(7,333)

3,415

N.M.

Other income

76,707

73,277

4.7%

Loss on sale of investment securities

(1,158)

N.M.

Other expense

195,234

188,529

3.6%

Income before income taxes

$ 112,692

$ 102,358

10.1%

Income taxes

28,602

25,131

13.8%

Net income

$ 84,090

$ 77,227

8.9%

MARKET DATA:

Earnings per common share – basic (b)

$ 5.46

$ 5.01

9.0%

Earnings per common share – diluted (b)

5.46

5.01

9.0%

Cash dividends per common share

3.76

3.76

—%

Weighted average common shares – basic (a)

15,394,971

15,412,365

(0.1)%

Weighted average common shares – diluted (a)

15,413,832

15,412,365

—%

PERFORMANCE RATIOS: (Annualized)

Return on average assets (a)(b)

1.22%

1.15%

6.1%

Return on average equity (a)(b)

12.32%

11.96%

3.0%

Yield on loans

4.84%

5.02%

(3.6)%

Yield on investments

2.58%

2.67%

(3.4)%

Yield on earning assets

4.19%

4.29%

(2.3)%

Cost of interest bearing deposits

0.29%

0.35%

(17.1)%

Cost of borrowings

2.57%

2.57%

—%

Cost of paying liabilities

0.81%

0.86%

(5.8)%

Net interest margin (g)

3.55%

3.61%

(1.7)%

Efficiency ratio (g)

64.77%

63.78%

1.6%

ASSET QUALITY RATIOS:

Net loan charge-offs

$ (2,217)

$ (516)

N.M.

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

(0.05)%

(0.01)%

N.M.

CAPITAL & LIQUIDITY:

Average stockholders’ equity / Average assets (a)

9.90%

9.63%

2.8%

Average stockholders’ equity / Average loans (a)

14.47%

14.30%

1.2%

Average loans / Average deposits (a)

94.02%

92.90%

1.2%

OTHER RATIOS (NON GAAP):

Return on average tangible assets (a)(b)(e)

1.23%

1.16%

6.0%

Return on average tangible equity (a)(b)(c)

13.78%

13.48%

2.2%

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 December 31, 2014, September 30, 2014 and December 31, 2013 or for the fiscal years ended December 31, 2014 and 2013, as appropriate.

(b) Reported measure uses net income.

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

RECONCILIATION OF AVERAGE SHAREHOLDERS’ EQUITY TO AVERAGE TANGIBLE EQUITY:

THREE MONTHS ENDED

TWELVE MONTHS ENDED

December 31, 2014

September 30, 2014

December 31, 2013

December 31, 2014

December 31, 2013

AVERAGE SHAREHOLDERS’ EQUITY

$ 699,218

$ 691,085

$ 636,886

$ 682,455

$ 645,533

Less: Average goodwill and other intangibles

72,334

72,334

72,334

72,334

72,464

AVERAGE TANGIBLE EQUITY

$ 626,884

$ 618,751

$ 564,552

$ 610,121

$ 573,069

(d) Tangible book value divided by common shares outstanding at period end. Tangible 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 EQUITY:

December 31, 2014

September 30, 2014

December 31, 2013

SHAREHOLDERS’ EQUITY

$ 698,598

$ 688,016

$ 651,747

Less: Goodwill and other intangibles

72,334

72,334

72,334

TANGIBLE EQUITY

$ 626,264

$ 615,682

$ 579,413

(e) Net income available to 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

TWELVE MONTHS ENDED

December 31, 2014

September 30, 2014

December 31, 2013

December 31, 2014

December 31, 2013

AVERAGE ASSETS

$ 7,132,800

$ 6,903,127

$ 6,707,975

$ 6,895,308

$ 6,702,973

Less: Average goodwill and other intangibles

72,334

72,334

72,334

72,334

72,464

AVERAGE TANGIBLE ASSETS

$ 7,060,466

$ 6,830,793

$ 6,635,641

$ 6,822,974

$ 6,630,509

(f) Tangible 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:

December 31, 2014

September 30, 2014

December 31, 2013

TOTAL ASSETS

$ 7,003,256

$ 7,013,272

$ 6,638,347

Less: Goodwill and other intangibles

72,334

72,334

72,334

TANGIBLE ASSETS

$ 6,930,922

$ 6,940,938

$ 6,566,013

(g) Efficiency ratio is calculated by dividing total other expense by the sum of fully taxable equivalent net interest income and other income. Fully taxable equivalent net interest income reconciliation is shown 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


THREE MONTHS ENDED

TWELVE MONTHS ENDED

December 31, 2014

September 30, 2014

December 31, 2013

December 31, 2014

December 31, 2013

Interest income

$ 67,816

$ 66,622

$ 66,066

$ 265,143

$ 262,947

Fully taxable equivalent adjustment

191

209

273

845

1,302

Fully taxable equivalent interest income

$ 68,007

$ 66,831

$ 66,339

$ 265,988

$ 264,249

Interest expense

10,522

9,913

10,166

40,099

41,922

Fully taxable equivalent net interest income

$ 57,485

$ 56,918

$ 56,173

$ 225,889

$ 222,327

PARK NATIONAL CORPORATION

Consolidated Statements of Income



Three Months Ended

Twelve Months Ended

December 31,

December 31,

(in thousands, except share and per share data)

2014

2013

2014

2013

Interest income:

Interest and fees on loans

$ 58,395

$ 57,038

$ 227,644

$ 225,538

Interest on:

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

9,223

8,911

36,981

36,686

Obligations of states and political subdivisions

4

3

45

Other interest income

198

113

515

678

Total interest income

67,816

66,066

265,143

262,947

Interest expense:

Interest on deposits:

Demand and savings deposits

445

382

1,677

1,773

Time deposits

2,776

2,516

9,323

11,235

Interest on borrowings

7,301

7,268

29,099

28,914

Total interest expense

10,522

10,166

40,099

41,922

Net interest income

57,294

55,900

225,044

221,025

(Recovery of) provision for loan losses

(8,349)

(85)

(7,333)

3,415

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

65,643

55,985

232,377

217,610

Other income

21,009

17,778

76,707

73,277

Loss on sale of investment securities

(1,175)

(1,158)

Other expense

52,437

51,146

195,234

188,529

Income before income taxes

33,040

22,617

112,692

102,358

Income taxes

8,699

5,163

28,602

25,131

Net income

$ 24,341

$ 17,454

$ 84,090

$ 77,227

Per Common Share:

Net income – basic

$ 1.58

$ 1.13

$ 5.46

$ 5.01

Net income – diluted

$ 1.58

$ 1.13

$ 5.46

$ 5.01

Weighted average shares – basic

15,393,924

15,413,517

15,394,971

15,412,365

Weighted average shares – diluted

15,414,433

15,413,517

15,413,832

15,412,365

Cash Dividends Declared

$ 0.94

$ 0.94

$ 3.76

$ 3.76

PARK NATIONAL CORPORATION

Consolidated Balance Sheets


(in thousands, except share data)

December 31, 2014

December 31, 2013

Assets

Cash and due from banks

$ 133,511

$ 129,078

Money market instruments

104,188

17,952

Investment securities

1,500,788

1,424,234

Loans

4,829,682

4,620,505

Allowance for loan losses

(54,352)

(59,468)

Loans, net

4,775,330

4,561,037

Bank premises and equipment, net

55,479

55,278

Goodwill

72,334

72,334

Other real estate owned

22,605

34,636

Other assets

339,021

343,798

Total assets

$ 7,003,256

$ 6,638,347

Liabilities and Shareholders’ Equity

Deposits:

Noninterest bearing

$ 1,269,296

$ 1,193,553

Interest bearing

3,858,704

3,596,441

Total deposits

5,128,000

4,789,994

Borrowings

1,108,582

1,132,820

Other liabilities

68,076

63,786

Total liabilities

$ 6,304,658

$ 5,986,600

Shareholders’ Equity:

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

$

$ —

Common shares (No par value; 20,000,000 shares authorized in 2014 and 2013; 16,150,888 shares issued at December 31, 2014 and 16,150,941 shares issued at December 31, 2013)

303,104

302,651

Accumulated other comprehensive loss, net of taxes

(13,608)

(35,419)

Retained earnings

486,541

460,643

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

(77,439)

(76,128)

Total shareholders’ equity

$ 698,598

$ 651,747

Total liabilities and shareholders’ equity

$ 7,003,256

$ 6,638,347

PARK NATIONAL CORPORATION

Consolidated Average Balance Sheets



Three Months Ended

Twelve Months Ended

December 31,

December 31,

(in thousands)

2014

2013

2014

2013

Assets

Cash and due from banks

$ 118,027

$ 110,644

$ 112,113

$ 110,796

Money market instruments

314,096

211,544

204,874

272,851

Investment securities

1,442,416

1,361,295

1,416,476

1,368,275

Loans

4,812,439

4,594,974

4,717,297

4,514,781

Allowance for loan losses

(58,760)

(58,862)

(58,917)

(56,860)

Loans, net

4,753,679

4,536,112

4,658,380

4,457,921

Bank premises and equipment, net

55,236

56,156

55,407

56,303

Goodwill and other intangibles

72,334

72,334

72,334

72,464

Other real estate owned

21,016

34,533

26,543

35,216

Other assets

355,996

325,357

349,181

329,147

Total assets

$ 7,132,800

$ 6,707,975

$ 6,895,308

$ 6,702,973

Liabilities and Shareholders’ Equity

Deposits:

Noninterest bearing

$ 1,266,459

$ 1,163,227

$ 1,196,625

$ 1,117,379

Interest bearing

3,940,248

3,686,721

3,820,928

3,742,361

Total deposits

5,206,707

4,849,948

5,017,553

4,859,740

Borrowings

1,154,502

1,151,994

1,130,885

1,123,661

Other liabilities

72,373

69,147

64,415

74,039

Total liabilities

$ 6,433,582

$ 6,071,089

$ 6,212,853

$ 6,057,440

Shareholders’ Equity:

Preferred shares

$

$ —

$

$ —

Common shares

303,004

302,651

302,822

302,652

Accumulated other comprehensive loss, net of taxes

(7,982)

(49,640)

(16,164)

(33,324)

Retained earnings

481,559

459,947

473,188

452,503

Treasury shares

(77,363)

(76,072)

(77,391)

(76,298)

Total shareholders’ equity

$ 699,218

$ 636,886

$ 682,455

$ 645,533

Total liabilities and shareholders’ equity

$ 7,132,800

$ 6,707,975

$ 6,895,308

$ 6,702,973

PARK NATIONAL CORPORATION

Consolidated Statements of Income – Linked Quarters

2014

2014

2014

2014

2013

(in thousands, except per share data)

4th QTR

3rd QTR

2nd QTR

1st QTR

4th QTR

Interest income:

Interest and fees on loans

$ 58,395

$ 57,492

$ 57,004

$ 54,753

$ 57,038

Interest on:

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

9,223

9,011

9,271

9,476

8,911

Obligations of states and political subdivisions

1

2

4

Other interest income

198

119

87

111

113

Total interest income

67,816

66,622

66,363

64,342

66,066

Interest expense:

Interest on deposits:

Demand and savings deposits

445

440

399

393

382

Time deposits

2,776

2,136

2,133

2,278

2,516

Interest on borrowings

7,301

7,337

7,270

7,191

7,268

Total interest expense

10,522

9,913

9,802

9,862

10,166

Net interest income

57,294

56,709

56,561

54,480

55,900

(Recovery of) provision for loan losses

(8,349)

4,501

(1,260)

(2,225)

(85)

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

65,643

52,208

57,821

56,705

55,985

Other income

21,009

19,396

19,654

16,648

17,778

Gain/(loss) on sale of investment securities

(1,175)

17

Other expense

52,437

46,903

48,196

47,698

51,146

Income before income taxes

33,040

24,701

29,296

25,655

22,617

Income taxes

8,699

6,398

7,469

6,036

5,163

Net income

$ 24,341

$ 18,303

$ 21,827

$ 19,619

$ 17,454

Per Common Share:

Net income – basic

$ 1.58

$ 1.19

$ 1.42

$ 1.27

$ 1.13

Net income – diluted

$ 1.58

$ 1.19

$ 1.42

$ 1.27

$ 1.13

PARK NATIONAL CORPORATION

Detail of other income and other expense – Linked Quarters

2014

2014

2014

2014

2013

(in thousands)

4th QTR

3rd QTR

2nd QTR

1st QTR

4th QTR

Other income:

Income from fiduciary activities

$ 5,050

$ 4,734

$ 4,825

$ 4,541

$ 4,590

Service charges on deposits

3,651

4,171

3,942

3,659

4,169

Other service income

3,564

2,450

2,527

1,918

2,185

Checkcard fee income

3,433

3,431

3,493

3,213

3,330

Bank owned life insurance income

1,153

1,420

1,026

1,262

1,274

OREO valuation adjustments

(380)

(935)

(675)

(416)

(951)

Gain on the sale of OREO, net

45

2,149

2,603

706

358

Gain on loans held for sale

1,867

Miscellaneous

2,626

1,976

1,913

1,765

2,823

Total other income

$ 21,009

$ 19,396

$ 19,654

$ 16,648

$ 17,778

Other expense:

Salaries and employee benefits

$ 24,525

$ 26,243

$ 26,140

$ 25,060

$ 25,115

Net occupancy expense

2,378

2,339

2,457

2,832

2,415

Furniture and equipment expense

2,709

2,870

2,994

2,998

3,022

Data processing fees

1,196

1,281

1,121

1,114

1,064

Professional fees and services

8,195

6,934

8,168

6,283

10,520

Marketing

1,160

1,087

1,006

1,118

1,126

Insurance

1,413

1,396

1,467

1,447

1,391

Communication

1,328

1,304

1,293

1,343

1,489

Miscellaneous

9,533

3,449

3,550

5,503

5,004

Total other expense

$ 52,437

$ 46,903

$ 48,196

$ 47,698

$ 51,146

PARK NATIONAL CORPORATION

Asset Quality Information

Year ended December 31,

(in thousands, except ratios)

2014

2013

2012

2011

2010

Allowance for loan losses:

Allowance for loan losses, beginning of period

$ 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

24,780

(B)

19,153

61,268

(A)

133,882

66,314

Recoveries

26,997

19,669

12,942

8,798

6,092

Net (recoveries) charge-offs

(2,217)

(516)

48,326

125,084

60,222

(Recovery of) provision for loan losses

(7,333)

3,415

35,419

63,272

87,080

Allowance for loan losses, end of period

$ 54,352

$ 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) Year ended December 31, 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

$ 54,352

$ 59,468

$ 55,537

$ 68,444

$ 143,575

Specific reserves

3,660

10,451

8,276

15,935

66,904

General reserves

$ 50,692

$ 49,017

$ 47,261

$ 52,509

$ 76,671

Total loans

$ 4,829,682

$ 4,620,505

$ 4,450,322

$ 4,317,099

$ 4,732,685

Impaired commercial loans

73,676

112,304

137,238

187,074

250,933

Total loans less impaired commercial loans

$ 4,756,006

$ 4,508,201

$ 4,313,084

$ 4,130,025

$ 4,481,752

Asset Quality Ratios:

Net (recoveries) charge-offs as a % of average loans

(0.05)%

(0.01)%

1.10%

2.65%

1.30%

Allowance for loan losses as a % of period end loans

1.13%

1.29%

1.25%

1.59%

3.03%

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

1.07%

1.09%

1.10%

1.27%

1.71%

Nonperforming Assets – Park National Corporation:

Nonaccrual loans

$ 100,393

$ 135,216

$ 155,536

$ 195,106

$ 289,268

Accruing troubled debt restructuring

16,254

18,747

29,800

28,607

Loans past due 90 days or more

2,641

1,677

2,970

3,489

3,590

Total nonperforming loans

$ 119,288

$ 155,640

$ 188,306

$ 227,202

$ 292,858

Other real estate owned – Park National Bank

10,687

11,412

14,715

13,240

8,385

Other real estate owned – SEPH

11,918

23,224

21,003

29,032

Other real estate owned – Vision Bank



33,324

Total nonperforming assets

$ 141,893

$ 190,276

$ 224,024

$ 269,474

$ 334,567

Percentage of nonaccrual loans to period end loans

2.08%

2.93%

3.49%

4.52%

6.11%

Percentage of nonperforming loans to period end loans

2.47%

3.37%

4.23%

5.26%

6.19%

Percentage of nonperforming assets to period end loans

2.94%

4.12%

5.03%

6.24%

7.07%

Percentage of nonperforming assets to period end assets

2.03%

2.87%

3.37%

3.86%

4.59%

PARK NATIONAL CORPORATION

Asset Quality Information (continued)

Year ended December 31,

(in thousands, except ratios)

2014

2013

2012

2011

2010

Nonperforming Assets – Park National Bank and Guardian:

Nonaccrual loans

$ 77,477

$ 99,108

$ 100,244

$ 96,113

$ 117,815

Accruing troubled debt restructuring

16,157

18,747

29,800

26,342

Loans past due 90 days or more

2,641

1,677

2,970

3,367

3,226

Total nonperforming loans

$ 96,275

$ 119,532

$ 133,014

$ 125,822

$ 121,041

Other real estate owned – Park National Bank

10,687

11,412

14,715

13,240

8,385

Total nonperforming assets

$ 106,962

$ 130,944

$ 147,729

$ 139,062

$ 129,426

Percentage of nonaccrual loans to period end loans

1.61%

2.16%

2.28%

2.29%

2.88%

Percentage of nonperforming loans to period end loans

2.00%

2.61%

3.03%

3.00%

2.96%

Percentage of nonperforming assets to period end loans

2.23%

2.86%

3.36%

3.32%

3.16%

Percentage of nonperforming assets to period end assets

1.55%

2.00%

2.27%

2.21%

1.99%

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

Nonaccrual loans

$ 22,916

$ 36,108

$ 55,292

$ 98,993

$ 171,453

Accruing troubled debt restructuring

97


2,265

Loans past due 90 days or more



122

364

Total nonperforming loans

$ 23,013

$ 36,108

$ 55,292

$ 101,380

$ 171,817

Other real estate owned – Vision Bank



33,324

Other real estate owned – SEPH

11,918

23,224

21,003

29,032

Total nonperforming assets

$ 34,931

$ 59,332

$ 76,295

$ 130,412

$ 205,141

Percentage of nonaccrual loans to period end loans

N.M.

N.M.

N.M.

N.M.

26.77%

Percentage of nonperforming loans to period end loans

N.M.

N.M.

N.M.

N.M.

26.82%

Percentage of nonperforming assets to period end loans

N.M.

N.M.

N.M.

N.M.

32.02%

Percentage of nonperforming assets to period end assets

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)

2014

2013

2012

2011

2010

New nonaccrual loan information – Park National Corporation

Nonaccrual loans, beginning of period

$ 135,216

$ 155,536

$ 195,106

$ 289,268

$ 233,544

New nonaccrual loans

70,059

67,398

83,204

124,158

175,175

Resolved nonaccrual loans

86,384

87,718

122,774

218,320

119,451

Sale of nonaccrual loans held for sale

18,498


Nonaccrual loans, end of period

$ 100,393

$ 135,216

$ 155,536

$ 195,106

$ 289,268

New nonaccrual loan information – Ohio – based operations

Nonaccrual loans, beginning of period

$ 99,108

$ 100,244

$ 96,113

$ 117,815

$ 85,197

New nonaccrual loans – Ohio-based operations

69,389

66,197

68,960

78,316

85,081

Resolved nonaccrual loans

78,288

67,333

64,829

100,018

52,463

Sale of nonaccrual loans held for sale

12,732


Nonaccrual loans, end of period

$ 77,477

$ 99,108

$ 100,244

$ 96,113

$ 117,815

New nonaccrual loan information – SEPH/Vision Bank

Nonaccrual loans, beginning of period

$ 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

8,096

20,385

57,944

118,302

66,988

Sale of nonaccrual loans held for sale

5,766


Nonaccrual loans, end of period

$ 22,916

$ 36,108

$ 55,292

$ 98,993

$ 171,453

Impaired Commercial Loan Portfolio Information (period end):

Unpaid principal balance

$ 106,156

$ 175,576

$ 242,345

$ 290,908

$ 304,534

Prior charge-offs

32,480

63,272

105,107

103,834

53,601

Remaining principal balance

73,676

112,304

137,238

187,074

250,933

Specific reserves

3,660

10,451

8,276

15,935

66,904

Book value, after specific reserve

$ 70,016

$ 101,853

$ 128,962

$ 171,139

$ 184,029
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

Read more:
Park National Corporation Reports Fourth Quarter and Full Year 2014 Financial Results and Declares Dividend

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