Park National Corporation Reports Financial Results for Third Quarter 2012

        Print
| Source: Park National Bank

NEWARK, Ohio, Oct. 29, 2012 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE:PRK) today reported financial results for the three-month (third quarter) and nine-month periods ended September 30, 2012.

Net income for the first nine months of 2012 was $62.3 million, a 12.8 percent decline from the $71.5 million in net income for the same period in 2011. Net income per diluted common share was $3.82, a 12.4 percent decrease from the $4.36 net income per diluted common share reported for the first nine months of 2011.

Net income for the third quarter of 2012 was $12.0 million, a 41.2 percent decline from the $20.4 million in net income for the same period in 2011. Net income per diluted common share was $0.78, a 36.6 percent decrease from the $1.23 net income per diluted common share reported in the third quarter of 2011.

Net income for the third quarter and first nine months of 2011 included pre-tax gains of $3.5 million and $25.5 million, respectively, from the sale of investment securities. Net income for the first nine months of 2012 also included a pre-tax gain of $22.2 million from the sale of substantially all of the performing loans, operating assets and the liabilities of Vision Bank, which closed on February 16, 2012. Excluding securities gains in 2011 and the gain from the sale of the Vision Bank business in 2012, net income for the nine months ended September 30, 2012 and 2011 would have been $47.9 million and $55.0 million, respectively.

The Park National Bank Results

Park's community-banking subsidiary in Ohio, The Park National Bank (PNB), reported net income of $22.1 million for the third quarter of 2012, compared to net income of $24.5 million ($22.3 million, excluding the gain on sale of securities) for the same period in 2011. PNB reported net income of $67.1 million for the first nine months of 2012, compared to net income of $87.8 million ($72.4 million, excluding the gain on sale of securities) for the same period in 2011. The Park National Bank had total assets of $6.6 billion at September 30, 2012, compared to $6.3 billion at September 30, 2011. This performance generated a return on average assets of 1.37 percent and 1.81 percent (1.49 percent, excluding the gain on sale of securities) for The Park National Bank in the first nine months of 2012 and 2011, respectively.

"We are proud of our performance in Ohio. The dedicated associates of our affiliates continue to do extraordinary work – serving customers, lending money, helping with deposit services and wealth management, all of which provide personalized financial solutions for our clients," said Park Chairman C. Daniel DeLawder.

According to DeLawder, the extremely low interest rate environment continues to be a major factor fueling Park's mortgage loan volume and customer base expansion. The bank originated $536.4 million of mortgage loans through the nine months ended September 30, 2012, a 50 percent increase in origination volume compared to $357.5 million through the same period in 2011. "We welcome the opportunity to serve people who have not dealt with a strong community bank before and to expand our relationships with our current clients," he said.

Headquartered in Newark, Ohio, Park National Corporation has $6.8 billion in total assets (as of September 30, 2012). Park 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 & Savings Bank Division, United Bank Division, Second National Bank Division, Security National Bank Division, Unity National Bank Division, The Park National Bank of Southwest Ohio & Northern Kentucky Division and Scope Leasing, Inc. (d.b.a. Scope Aircraft Finance). Park 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 news release or made by management of Park are provided to assist in the understanding of anticipated future financial performance. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management's expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include, without limitation: deterioration in the asset value of Park's loan portfolio may be worse than expected due to a number of factors, such as adverse changes in economic conditions that impair the ability of borrowers to repay their loans, the underlying value of the collateral could prove less valuable than assumed and cash flows may be worse than expected; Park's ability to sell OREO properties at prices as favorable as anticipated; Park's ability to execute its business plan successfully and within the expected timeframe; general economic and financial market conditions, and weakening in the economy, specifically the real estate market and the credit market, either nationally or in the states in which Park and its subsidiaries do business, may be worse than expected which could decrease the demand for loan, deposit and other financial services and increase 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 in our assets and liabilities; competitive factors among financial service organizations increase significantly, including product and pricing pressures and our ability to attract, develop and retain qualified bank professionals; the nature, timing and effect of changes in banking regulations or other regulatory or legislative requirements affecting the respective businesses of Park and its 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 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 fiscal and governmental policies of the United States federal government; 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 its 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, 2011 and in "Item 1A. Risk Factors" of Part II of Park's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012. Undue reliance should not be placed on the forward-looking statements, which speak only as of the date hereof. Park does not undertake, and specifically disclaims any obligation, to publicly release the result 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 is 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, 2012, June 30, 2012, and September 30, 2011          
           
  2012 2012 2011 Percent change vs.
(in thousands, except share and per share data) 3rd QTR 2nd QTR 3rd QTR 2Q '12 3Q '11
INCOME STATEMENT:          
Net interest income $ 58,016 $ 58,680 $ 67,620 (1.1)% (14.2)%
Provision for loan losses 16,655 5,238 16,438 218.0% 1.3%
Other income 18,079 17,508 18,027 3.3% 0.3%
Gain on sale of securities 3,465 N.M. N.M.
Total other expense 45,683 45,804 45,599 (0.3)% 0.2%
Income before income taxes $ 13,757 $ 25,146 $ 27,075 (45.3)% (49.2)%
Income taxes 1,775 6,260 6,694 (71.6)% (73.5)%
Net income $ 11,982 $ 18,886 $ 20,381 (36.6)% (41.2)%
Preferred stock dividends and accretion 1,948 1,464 (100.0)% (100.0)%
Net income available to common shareholders $ 11,982 $ 16,938 $ 18,917 (29.3)% (36.7)%
           
MARKET DATA:          
Earnings per common share - basic (b) $ 0.78 $ 1.10 $ 1.23 (29.1)% (36.6)%
Earnings per common share - diluted (b) 0.78 1.10 1.23 (29.1)% (36.6)%
Cash dividends per common share 0.94 0.94 0.94 —% —%
Common book value per common share at period end 42.78 42.88 42.67 (0.2)% 0.3%
Stock price per common share at period end 70.02 69.75 52.88 0.4% 32.4%
Market capitalization at period end 1,078,720 1,074,561 814,294 0.4% 32.5%
           
Weighted average common shares - basic (a) 15,405,894 15,405,902 15,398,909 —% —%
Weighted average common shares - diluted (a) 15,405,894 15,405,902 15,398,909 —% —%
Common shares outstanding at period end 15,405,887 15,405,898 15,398,904 —% —%
           
PERFORMANCE RATIOS: (annualized)          
Return on average assets (a)(b) 0.70% 1.01% 1.04% (30.7)% (32.7)%
Return on average common equity (a)(b) 7.19% 10.33% 11.51% (30.4)% (37.5)%
Yield on loans 5.31% 5.36% 5.59% (0.9)% (5.0)%
Yield on investments 3.04% 3.30% 3.58% (7.9)% (15.1)%
Yield on money markets 0.25% 0.25% 0.24% —% 4.2%
Yield on earning assets 4.56% 4.71% 4.95% (3.2)% (7.9)%
Cost of interest bearing deposits 0.46% 0.51% 0.63% (9.8)% (27.0)%
Cost of borrowings 2.79% 2.81% 2.69% (0.7)% 3.7%
Cost of paying liabilities 1.00% 1.05% 1.07% (4.8)% (6.5)%
Net interest margin 3.75% 3.87% 4.09% (3.1)% (8.3)%
Efficiency ratio (g) 59.71% 59.80% 52.95% (0.2)% 12.8%
           
OTHER RATIOS (NON GAAP):          
Annualized return on average tangible assets (a)(b)(e) 0.71% 1.03% 1.05% (31.1)% (32.4)%
Annualized return on average tangible common equity (a)(b)(c) 8.07% 11.62% 13.05% (30.6)% (38.2)%
Tangible common book value per common share (d) $ 38.06 $ 38.15 $ 37.71 (0.2)% 0.9%
           
           
PARK NATIONAL CORPORATION          
Financial Highlights          
Three months ended September 30, 2012, June 30, 2012, and September 30, 2011          
     
    Percent change vs.
BALANCE SHEET: September 30, 2012 June 30, 2012 September 30, 2011 2Q '12 3Q '11
           
Investment securities $ 1,653,381 $ 1,688,654 $ 1,708,631 (2.1)% (3.2)%
Loans 4,400,510 4,386,851 4,680,575 0.3% (6.0)%
Allowance for loan losses 55,565 58,696 107,310 (5.3)% (48.2)%
Goodwill and other intangibles 72,810 72,949 76,370 (0.2)% (4.7)%
Other real estate owned 35,633 38,424 46,911 (7.3)% (24.0)%
Total assets 6,752,938 6,705,574 7,095,098 0.7% (4.8)%
Total deposits 4,793,077 4,822,975 5,089,187 (0.6)% (5.8)%
Borrowings 1,187,431 1,152,139 1,142,043 3.1% 4.0%
Stockholders' equity 659,127 660,623 755,053 (0.2)% (12.7)%
Common equity 659,127 660,623 657,121 (0.2)% 0.3%
Tangible common equity (d) 586,317 587,674 580,751 (0.2)% 1.0%
Nonperforming loans 191,432 207,631 229,814 (7.8)% (16.7)%
Nonperforming assets 227,065 246,055 276,725 (7.7)% (17.9)%
Past due 90 day loans and still accruing 2,076 1,870 2,162 11.0% (4.0)%
           
ASSET QUALITY RATIOS:          
Loans as a % of period end assets 65.16% 65.42% 65.97% (0.4)% (1.2)%
Nonperforming loans as a % of period end loans 4.35% 4.73% 4.91% (8.0)% (11.4)%
Past due 90 day loans as a % of period end loans 0.05% 0.04% 0.05% 25.0% —%
Nonperforming assets / Period end loans + OREO 5.12% 5.56% 5.85% (7.9)% (12.5)%
Allowance for loan losses as a % of period end loans 1.26% 1.34% 2.29% (6.0)% (45.0)%
Net loan charge-offs $ 19,786 $ 6,469 $ 29,302 205.9% (32.5)%
Annualized net loan charge-offs as a % of average loans (a) 1.79% 0.6% 2.48% 198.3% (27.8)%
           
CAPITAL & LIQUIDITY:          
Total equity / Period end assets 9.76% 9.85% 10.64% (0.9)% (8.3)%
Common equity / Period end assets 9.76% 9.85% 9.26% (0.9)% 5.4%
Tangible common equity (d) / Tangible assets (f) 8.78% 8.86% 8.27% (0.9)% 6.2%
Average equity / Average assets (a) 9.80% 10.21% 10.42% (4.0)% (6.0)%
Average equity / Average loans (a) 15.10% 15.74% 15.98% (4.1)% (5.5)%
Average loans / Average deposits (a) 90.46% 90.83% 90.32% (0.4)% 0.2%
           
N.M. - Not meaningful          
       
PARK NATIONAL CORPORATION      
Financial Highlights      
Nine months ended September 30, 2012 and 2011      
  2012 2011 Percent change vs.
(in thousands, except share and per share data)     3Q '11
INCOME STATEMENT:      
Net interest income $ 178,424 $ 206,955 (13.8)%
Provision for loan losses 30,231 43,054 (29.8)%
Gain on sale of Vision Bank 22,167 N.M.
Other income 53,040 48,195 10.1%
Gain on sale of securities 25,462 N.M.
Total other expense 139,957 138,952 0.7%
Income before income taxes $ 83,443 $ 98,606 (15.4)%
Income taxes 21,100 27,076 (22.1)%
Net income $ 62,343 $ 71,530 (12.8)%
Preferred stock dividends and accretion 3,425 4,392 (22.0)%
Net income available to common shareholders $ 58,918 $ 67,138 (12.2)%
       
MARKET DATA:      
Earnings per common share - basic (b) $ 3.82 $ 4.36 (12.4)%
Earnings per common share - diluted (b) 3.82 4.36 (12.4)%
Cash dividends per common share 2.82 2.82 —%
       
Weighted average common shares - basic (a) 15,405,902 15,398,919 —%
Weighted average common shares - diluted (a) 15,409,186 15,400,641 0.1%
       
PERFORMANCE RATIOS: (Annualized)      
       
Return on average assets (a)(b) 1.16% 1.24% (6.5)%
       
Return on average common equity (a)(b) 11.95% 13.96% (14.4)%
       
Yield on loans 5.40% 5.61% (3.7)%
Yield on investments 3.23% 3.82% (15.4)%
Yield on earning assets 4.69% 5.06% (7.3)%
Cost of interest bearing deposits 0.51% 0.68% (25.0)%
Cost of borrowings 2.77% 2.61% 6.1
Cost of paying liabilities 1.03% 1.10% (6.4)%
Net interest margin (g) 3.86% 4.16% (7.2)%
Efficiency ratio (g) 54.91% 54.14% 1.4%
       
ASSET QUALITY RATIOS:      
Net loan charge-offs $ 43,110 $ 79,320 (45.7)%
Annualized net loan charge-offs as a % of average loans (a) 1.31% 2.24% (41.5)%
       
CAPITAL & LIQUIDITY:      
Average equity / Average assets (a) 10.30% 10.22% 0.8%
Average equity / Average loans (a) 15.86% 15.67% 1.2%
Average loans / Average deposits (a) 90.70% 90.39% 0.3%
       
OTHER RATIOS (NON GAAP):      
Annualized return on average tangible assets (a)(b)(e) 1.17% 1.25% (6.4)%
Annualized return on average tangible common equity (a)(b)(c) 13.45% 15.88% (15.3)%
       
(a) Averages are for the quarters or nine months ended September 30, 2012 and September 30, 2011, as appropriate.
(b) Reported measure uses net income available to common shareholders.
(c) Net income available to common shareholders for each period divided by average tangible common equity during the period. Average tangible common equity equals average stockholders' equity during the applicable period less (i) average preferred stock during the applicable period and (ii) average goodwill and other intangibles during the applicable period.
       
RECONCILIATION OF AVERAGE STOCKHOLDERS' EQUITY TO AVERAGE TANGIBLE COMMON EQUITY:
  THREE MONTHS ENDED NINE MONTHS ENDED
  September 30, 2012 June 30, 2012 September 30, 2011 September 30, 2012 September 30, 2011
AVERAGE STOCKHOLDERS' EQUITY $ 663,314 $ 685,305 $ 749,610 $ 699,575 $ 740,392
Less: Average preferred stock 25,944 97,808 41,244 97,596
Average goodwill and other intangibles 72,888 73,027 76,734 73,177 77,397
AVERAGE TANGIBLE COMMON EQUITY $ 590,426 $ 586,334 $ 575,068 $ 585,154 $ 565,399
           
(d) Tangible common equity equals ending stockholders' equity less preferred stock and goodwill and other intangibles, in each case at the end of the period.  
           
           
RECONCILIATION OF STOCKHOLDERS' EQUITY TO TANGIBLE COMMON EQUITY:
  September 30, 2012 June 30, 2012 September 30, 2011    
STOCKHOLDERS' EQUITY $ 659,127 $ 660,623 $ 755,053    
Less: Preferred stock 97,932    
Goodwill and other intangibles 72,810 72,949 76,370    
TANGIBLE COMMON EQUITY $ 586,317 $ 587,674 $ 580,751    
           
(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, 2012 June 30, 2012 September 30, 2011 September 30, 2012 September 30, 2011
AVERAGE ASSETS $ 6,769,735 $ 6,712,439 $ 7,190,843 $ 6,792,822 $ 7,244,487
Less: Average goodwill and other intangibles 72,888 73,027  76, 734 73,177 77,397
AVERAGE TANGIBLE ASSETS $ 6,696,847 $ 6,639,412 $ 7,114,109 $ 6,719,645 $ 7,167,090
           
(f) Tangible common equity divided by tangible assets. Tangible assets equals total assets less goodwill and other intangibles.
           
RECONCILIATION OF TOTAL ASSETS TO TANGIBLE ASSETS:    
  September 30, 2012 June 30, 2012 September 30, 2011    
TOTAL ASSETS $ 6,752,938 $ 6,705,574 $ 7,095,098    
Less: Goodwill and other intangibles 72,810 72,949 76,370    
TANGIBLE ASSETS $ 6,680,128 $ 6,632,625 $ 7,018,728    
           
(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, 2012 June 30, 2012 September 30, 2011 September 30, 2012 September 30, 2011
Interest income $ 70,618 $ 71,486 $ 82,065 $ 216,942 $ 251,649
Fully taxable equivalent adjustment 408 406 474 1,241 1,482
Fully taxable equivalent interest income $ 71,026 $ 71,892 $ 82,539 $ 218,183 $ 253,131
Interest expense 12,602 12,806 14,445 38,518 44,694
Fully taxable equivalent net interest income $ 58,424 $ 59,086 $ 68,094 $ 179,665 $ 208,437
           
PARK NATIONAL CORPORATION
Consolidated Statements of Income
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
(in thousands, except share and per share data) 2012 2011 2012 2011
         
Interest income:        
Interest and fees on loans $ 58,269 $ 65,645 $ 176,967 $ 196,961
Interest on:        
Obligations of U.S. Government, its agencies and other securities 12,187 16,289 39,565 54,302
Obligations of states and political subdivisions 33 69 121 310
Other interest income 129 62 289 76
Total interest income 70,618 82,065 216,942 251,649
         
Interest expense:        
Interest on deposits:        
Demand and savings deposits 636 976 1,992 2,918
Time deposits 3,757 5,661 12,517 18,595
Interest on borrowings 8,209 7,808 24,009 23,181
Total interest expense 12,602 14,445 38,518 44,694
         
Net interest income 58,016 67,620 178,424 206,955
         
Provision for loan losses 16,655 16,438 30,231 43,054
         
Net interest income after provision for loan losses 41,361 51,182 148,193 163,901
         
Gain on sale of Vision Bank 22,167
Other income 18,079 18,027 53,040 48,195
         
Gain on sale of securities 3,465 25,462
         
Total other expense 45,683 45,599 139,957 138,952
         
Income before income taxes 13,757 27,075 83,443 98,606
         
Income taxes 1,775 6,694 21,100 27,076
         
Net income $ 11,982 $ 20,381 $ 62,343 $ 71,530
         
Preferred stock dividends and accretion 1,464 3,425 4,392
         
Net income available to common shareholders $ 11,982 $ 18,917 $ 58,918 $ 67,138
         
Per Common Share:        
Net income - basic $ 0.78 $ 1.23 $ 3.82 $ 4.36
Net income - diluted $ 0.78 $ 1.23 $ 3.82 $ 4.36
         
Weighted average shares - basic 15,405,894 15,398,909 15,405,902 15,398,919
Weighted average shares - diluted 15,405,894 15,398,909 15,409,186 15,400,641
         
Cash Dividends Declared $ 0.94 $ 0.94 $ 2.82 $ 2.82
         
PARK NATIONAL CORPORATION
Consolidated Balance Sheets
 
(in thousands, except share data) September 30, 2012 December 31, 2011
     
Assets    
     
Cash and due from banks $ 114,186 $ 137,770
Money market instruments 167,109 19,716
Investment securities 1,653,381 1,708,473
Loans 4,400,510 4,317,099
Allowance for loan losses 55,565 68,444
Loans, net 4,344,945 4,248,655
Bank premises and equipment, net 54,416 53,741
Goodwill and other intangibles 72,810 74,843
Other real estate owned 35,633 42,272
Other assets 310,458 304,313
Assets held for sale 382,462
Total assets $ 6,752,938 $ 6,972,245
     
Liabilities and Stockholders' Equity    
     
Deposits:    
Noninterest bearing $ 1,043,460 $ 995,733
Interest bearing 3,749,617 3,469,381
Total deposits 4,793,077 4,465,114
Borrowings 1,187,431 1,162,026
Other liabilities 113,303 66,555
Liabilities held for sale 536,186
Total liabilities $ 6,093,811 $ 6,229,881
     
Stockholders' Equity:    
Preferred Stock (200,000 shares authorized in 2012 and 2011; No shares issued at September 30, 2012 and 100,000 shares issued at December 31, 2011) $ — $ 98,146
     
Common stock (No par value; 20,000,000 shares authorized in 2011 and 2010; 16,150,996 shares issued at September 30, 2012 and 16,151,021 shares issued at December 31, 2011) 302,654 301,202
     
Common stock warrants 4,297
Accumulated other comprehensive loss, net of taxes (6,550) (8,831)
Retained earnings 440,030 424,557
     
Treasury stock (745,109 shares at September 30, 2012 and at December 31, 2011) (77,007) (77,007)
Total stockholders' equity $ 659,127 $ 742,364
 
Total liabilities and stockholders' equity $ 6,752,938 $ 6,972,245
     
         
PARK NATIONAL CORPORATION
Consolidated Average Balance Sheets
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
(in thousands) 2012 2011 2012 2011
         
Assets        
         
Cash and due from banks $ 115,198 $ 129,604 $  122,258 $ 124,114
Money market instruments 208,191 100,635 156,830 49,877
Investment securities 1,621,365 1,834,610 1,664,365 1,935,579
Loans 4,392,067 4,692,013 4,410,042 4,726,074
Allowance for loan losses 59,686 119,866 63,525 138,495
Loans, net 4,332,381 4,572,147 4,346,517 4,587,579
Bank premises and equipment, net 52,671 69,534 55,123 69,659
Goodwill and other intangibles 72,888 76,734 73,177 77,397
Other real estate owned 36,575 45,898 39,760 45,351
Other assets 330,466 361,681 334,792 354,931
 
Total assets $ 6,769,735 $ 7,190,843 $ 6,792,822 $ 7,244,487
         
Liabilities and Stockholders' Equity        
         
Deposits:        
Noninterest bearing $ 1,026,690 $ 1,003,706 $ 1,034,801 $ 982,772
Interest bearing 3,828,830 4,191,313 3,827,370 4,245,949
Total deposits 4,855,520 5,195,019 4,862,171 5,228,721
Borrowings 1,172,379 1,152,489 1,155,900 1,187,509
Other liabilities 78,522 93,725 75,176 87,865
Total liabilities $ 6,106,421 $ 6,441,233 $ 6,093,247 $ 6,504,095
         
Stockholders' Equity:        
Preferred stock $ — $ 97,808 $ 41,244 $ 97,596
Common stock 302,655 301,203 301,992 301,202
Common stock warrants 4,406 1,929 4,446
Accumulated other comprehensive loss, net of taxes (7,009) (6,202) (7,874) (4,563)
Retained earnings 444,675 430,128 439,291 419,444
Treasury stock (77,007) (77,733) (77,007) (77,733)
Total stockholders' equity $ 663,314 $ 749,610 $ 699,575 $ 740,392
 
Total liabilities and stockholders' equity $ 6,769,735 $ 7,190,843 $ 6,792,822 $ 7,244,487
         

 

PARK NATIONAL CORPORATION
Consolidated Statements of Income - Linked Quarters
           
  2012 2012 2012 2011 2011
(in thousands, except per share data) 3rd QTR 2nd QTR 1st QTR 4th QTR 3rd QTR
           
Interest income:          
Interest and fees on loans $ 58,269 $ 57,593 $ 61,105 $ 65,497 $ 65,645
Interest on:          
Obligations of U.S. Government, its agencies and other securities 12,187 13,794 13,584 14,571 16,289
Obligations of states and political subdivisions 33 42 46 61 69
Other interest income 129 57 103 102 62
Total interest income 70,618 71,486 74,838 80,231 82,065
           
Interest expense:          
Interest on deposits:          
Demand and savings deposits 636 602 754 894 976
Time deposits 3,757 4,121 4,639 5,247 5,661
Interest on borrowings 8,209 8,083 7,717 7,811 7,808
Total interest expense 12,602 12,806 13,110 13,952 14,445
 
Net interest income 58,016 58,680 61,728 66,279 67,620
           
Provision for loan losses 16,655 5,238 8,338 20,218 16,438
 
Net interest income after provision for loan losses 41,361 53,442 53,390 46,061 51,182
           
Gain on sale of Vision business 22,167
Other income 18,079 17,508 17,453 17,885 18,027
           
Gain on sale of securities 3,367 3,465
           
Total other expense 45,683 45,804 48,470 49,365 45,599
 
Income before income taxes 13,757 25,146 44,540 17,948 27,075
           
Income taxes 1,775 6,260 13,065 7,339 6,694
 
Net income $ 11,982 $ 18,886 $ 31,475 $ 10,609 $ 20,381
           
Preferred stock dividends and accretion 1,948 1,477 1,464 1,464
 
Net income available to common shareholders $ 11,982 $ 16,938 $ 29,998 $ 9,145 $ 18,917
           
Per Common Share:          
Net income - basic $ 0.78 $ 1.1 $ 1.95 $ 0.59 $ 1.23
Net income - diluted $ 0.78 $ 1.1 $ 1.95 $ 0.59 $ 1.23
           
           
PARK NATIONAL CORPORATION
Detail of other income and other expense - Linked Quarters
           
  2012 2012 2012 2011 2011
(in thousands) 3rd QTR 2nd QTR 1st QTR 4th QTR 3rd QTR
           
Other income:          
Income from fiduciary activities $ 4,019 $ 4,044 $ 3,828 $ 3,699 $ 3,615
Service charges on deposits 4,244 4,154 4,071 4,643 4,894
Other service income 4,017 3,417 2,734 2,484 3,087
Checkcard fee income 3,038 3,180 3,172 3,115 3,154
Bank owned life insurance income 1,184 1,184 1,202 1,403 1,229
ATM fees 565 536 608 641 726
OREO devaluations (425) (2,648) (1,359) (1,742) (588)
Gain/(loss) on the sale of OREO, net 138 2,203 1,045 619 210
Gain on sale of Vision Bank 22,167
Other 1,299 1,438 2,152 3,023 1,700
Total other income $ 18,079 $ 17,508 $ 39,620 $ 17,885 $ 18,027
           
Other expense:          
Salaries and employee benefits $ 24,255 $ 22,813 $ 24,823 $ 25,952 $ 25,799
Net occupancy expense 2,303 2,249 2,670 2,866 2,665
Furniture and equipment expense 2,666 2,727 2,621 2,643 2,688
Data processing fees 904 899 1,200 1,393 1,184
Professional fees and services 6,040 5,800 5,581 5,920 5,005
Amortization of intangibles 139 139 1,754 1,528 669
Marketing 924 705 843 852 764
Insurance 1,408 1,400 1,490 1,526 681
Communication 1,470 1,494 1,537 1,544 1,475
Loan put provision 346 2,701 662
Other 5,228 4,877 5,289 5,141 4,669
Total other expense $ 45,683 $ 45,804 $ 48,470 $ 49,365 $ 45,599
           
                 
PARK NATIONAL CORPORATION
Asset Quality Information
                 
                 
  Quarter ended   Year ended December 31,
(in thousands, except ratios) September 30, 2012 June 30, 2012 March 31, 2012   2011 2010 2009 2008
                 
Allowance for loan losses:                
Allowance for loan losses, beginning of period  $ 58,696  $ 59,758  $ 68,444    $ 143,575  $ 116,717  $ 100,088  $ 87,102
Transfer of loans at fair value   (219)
Transfer of allowance to held for sale   (13,100)
Charge-offs 22,878 10,064 18,967 (A) 133,882 66,314 59,022 62,916
Recoveries 3,092 3,764 1,943   8,798 6,092 6,830 5,415
Net charge-offs 19,786 6,300 17,024   125,084 60,222 52,192 57,501
Provision for loan losses 16,655 5,238 8,338   63,272 87,080 68,821 70,487
Allowance for loan losses, end of period  $ 55,565  $ 58,696  $ 59,758    $ 68,444  $ 143,575  $ 116,717  $ 100,088
(A) Includes 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.
                 
General reserve trends:                
Allowance for loan losses, end of period  $ 55,565  $ 58,696  $ 59,758    $ 68,444  $ 143,575  $ 116,717  $ 100,088
Specific reserves 7,579 10,946 9,505   15,935 66,904 36,721 8,875
General reserves  $ 47,986  $ 47,750  $ 50,253    $ 52,509  $ 76,671  $ 79,996  $ 91,213
                 
Total loans $ 4,400,510 $ 4,386,851 $ 4,324,383   $ 4,317,099 $ 4,732,685 $ 4,640,432 $ 4,491,337
Impaired commercial loans 142,288 170,224 179,293   187,074 250,933 201,143 141,343
Non-impaired loans  $ 4,258,222  $ 4,216,627  $ 4,145,090    $ 4,130,025  $ 4,481,752  $ 4,439,289  $ 4,349,994
                 
                 
Asset Quality Ratios:                
Net charge-offs as a % of average loans (annualized for quarterly periods) 1.79% 0.60% 1.53%   2.65% 1.30% 1.14% 1.32%
Allowance for loan losses as a % of period end loans 1.26% 1.34% 1.38%   1.59% 3.03% 2.52% 2.23%
General reserves as a % of non-impaired loans 1.13% 1.13% 1.21%   1.27% 1.71% 1.80% 2.10%
                 
Nonperforming Assets - Park National Corporation:                
Nonaccrual loans  $ 160,064  $ 180,381  $ 183,227    $ 195,106  $ 289,268  $ 233,544  $ 159,512
Accruing troubled debt restructuring 31,368 27,250 34,436   28,607 -- 142 2,845
Loans past due 90 days or more 2,076 1,870 2,281   3,489 3,590 14,773 5,421
Total nonperforming loans  $ 193,508  $ 209,501  $ 219,944    $ 227,202  $ 292,858  $ 248,459  $ 167,778
Other real estate owned - Park National Bank 13,699 13,439 13,387   13,240 8,385 6,037 6,149
Other real estate owned - SEPH 21,934 24,985 28,578   29,032 -- -- --
Other real estate owned - Vision Bank -- --   -- 33,324 35,203 19,699
Total nonperforming assets  $ 229,141  $ 247,925  $ 261,909    $ 269,474  $ 334,567  $ 289,699  $ 193,626
Percentage of nonaccrual loans to period end loans 3.64% 4.11% 4.24%   4.52% 6.11% 5.03% 3.55%
Percentage of nonperforming loans to period end loans 4.40% 4.78% 5.09%   5.26% 6.19% 5.35% 3.74%
Percentage of nonperforming assets to period end loans 5.21% 5.65% 6.06%   6.24% 7.07% 6.24% 4.31%
Percentage of nonperforming assets to period end assets 3.39% 3.70% 3.86%   3.86% 4.59% 4.11% 2.74%
                 
               
PARK NATIONAL CORPORATION
Asset Quality Information (continued)
               
  Quarter ended Year ended December 31,
(in thousands, except ratios) September 30, 2012 June 30, 2012 March 31, 2012 2011 2010 2009 2008
               
Nonperforming Assets - Park National Bank and Guardian:              
Nonaccrual loans  $ 101,226  $ 107,749  $ 102,886  $ 96,113  $ 117,815  $ 85,197  $ 68,306
Accruing troubled debt restructuring 31,368 25,782 32,451 26,342 -- 142 --
Loans past due 90 days or more 2,076 1,870 2,281 3,367 3,226 3,496 4,777
Total nonperforming loans  $ 134,670  $ 135,401  $ 137,618  $ 125,822  $ 121,041  $ 88,835  $ 73,083
Other real estate owned - Park National Bank 13,699 13,439 13,387 13,240 8,385 6,037 6,149
Total nonperforming assets  $ 148,369  $ 148,840  $ 151,005  $ 139,062  $ 129,426  $ 94,872  $ 79,232
Percentage of nonaccrual loans to period end loans 2.34% 2.50% 2.43% 2.29% 2.88% 2.15% 1.80%
Percentage of nonperforming loans to period end loans 3.11% 3.15% 3.26% 3.00% 2.96% 2.24% 1.92%
Percentage of nonperforming assets to period end loans 3.42% 3.46% 3.57% 3.32% 3.16% 2.39% 2.08%
Percentage of nonperforming assets to period end assets 2.24% 2.27% 2.29% 2.21% 1.99% 1.53% 1.27%
               
               
Nonperforming Assets -SEPH/Vision Bank (retained portfolio as of September 30, 2012, June 30, 2012, March 31, 2012, and December 31, 2011):
Nonaccrual loans  $ 58,838  $ 72,632  $ 80,341  $ 98,993  $ 171,453  $ 148,347  $ 91,206
Accruing troubled debt restructuring 1,468 1,985 2,265 -- -- 2,845
Loans past due 90 days or more -- -- 122 364 11,277 644
Total nonperforming loans  $ 58,838  $ 74,100  $ 82,326  $ 101,380  $ 171,817  $ 159,624  $ 94,695
Other real estate owned - Vision Bank -- -- -- 33,324 35,023 19,699
Other real estate owned - SEPH 21,934 24,985 28,578 29,032 -- -- --
Total nonperforming assets  $ 80,772  $ 99,085  $ 110,904  $ 130,412  $ 205,141  $ 194,647  $ 114,394
Percentage of nonaccrual loans to period end loans N.M. N.M. N.M. N.M. 26.77% 21.91% 13.21%
Percentage of nonperforming loans to period end loans N.M. N.M. N.M. N.M. 26.82% 23.58% 13.71%
Percentage of nonperforming assets to period end loans N.M. N.M. N.M. N.M. 32.02% 28.78% 16.57%
Percentage of nonperforming assets to period end assets N.M. N.M. N.M. N.M. 25.90% 21.70% 12.47%
               
               
New nonaccrual loan information-Park National Corporation              
Nonaccrual loans, beginning of period  $ 180,381  $ 183,227  $ 195,106  $ 289,268  $ 233,544  $ 159,512  $ 101,128
New nonaccrual loans 18,660 23,769 21,778 124,158 175,175 184,181 141,749
Resolved nonaccrual loans 38,977 26,615 33,657 218,320 119,451 110,149 83,365
Nonaccrual loans, end of period  $ 160,064  $ 180,381  $ 183,227  $ 195,106  $ 289,268  $ 233,544  $ 159,512
               
New nonaccrual loan information-Ohio based operations              
Nonaccrual loans, beginning of period  $ 107,749  $ 102,886  $ 96,113  $ 117,815  $ 85,197  $ 68,306  $ 38,113
New nonaccrual loans - Ohio-based operations 14,378 19,604 21,210 78,316 85,081 57,641 58,161
Resolved nonaccrual loans 20,901 14,741 14,437 100,018 52,463 40,750 27,968
Nonaccrual loans, end of period  $ 101,226  $ 107,749  $ 102,886  $ 96,113  $ 117,815  $ 85,197  $ 68,306
               
New nonaccrual loan information-SEPH/Vision Bank (SEPH as of March 31, 2012)            
Nonaccrual loans, beginning of period  $ 72,632  $ 80,341  $ 98,993  $ 171,453  $ 148,347  $ 91,206  $ 63,015
New nonaccrual loans - SEPH/Vision Bank 4,282 4,165 568 45,842 90,094 126,540 83,588
Resolved nonaccrual loans 18,076 11,874 19,220 118,302 66,988 69,399 55,397
Nonaccrual loans, end of period  $ 58,838  $ 72,632  $ 80,341  $ 98,993  $ 171,453  $ 148,347  $ 91,206
               
Impaired Commercial Loan Portfolio Information (period end):              
Unpaid principal balance  $ 259,827  $ 277,375  $ 287,623  $ 290,908  $ 304,534  $ 245,092  $ 171,310
Prior charge-offs 117,539 107,151 108,330 103,834 53,601 43,949 29,967
Remaining principal balance 142,288 170,224 179,293 187,074 250,933 201,143 141,343
Specific reserves 7,579 10,946 9,505 15,935 66,904 36,721 8,875
Book value, after specific reserve  $ 134,709  $ 159,278  $ 169,788  $ 171,139  $ 184,029  $ 164,422  $ 132,468
               
Media contacts:
Bethany Lewis
740.349.0421