Park National Corporation Reports Third Quarter Financial Results and Continues $0.94 Cash Dividend

NEWARK, Ohio, Oct. 28, 2013 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE MKT:PRK) today reported financial results for the three-month (third quarter) and nine-month periods ended September 30, 2013. Park's quarterly net income rose compared to 2012, and loan growth continued in both the retail and commercial categories. Also, Park's board of directors declared a $0.94 per common share quarterly cash dividend, payable on December 10, 2013 to common shareholders of record as of November 22, 2013.

Net income for the third quarter of 2013 was $19.0 million, compared to $12.0 million for the same period in 2012. Net income for the nine months ended September 30, 2013 was $59.8 million. Net income for the same period in 2012 was $62.3 million, which included a gain of $22.2 million ($14.4 million after-tax) from the sale of substantially all of the performing loans, operating assets and the liabilities of Vision Bank. That transaction closed on February 16, 2012.

Excluding the gain from the sale of the Vision Bank business in 2012, net income for the first nine months of 2012 would have been $47.9 million. Park's net income in the first nine months of 2013 of $59.8 million was an increase of $11.9 million, or 24.8 percent, above first nine months of 2012 results excluding the gain related to this sale.

Net income per diluted common share for the third quarter of 2013 was $1.23, compared to $0.78 in the same period of 2012. Net income per diluted common share for the first nine months of 2013 was $3.88. Net income per diluted common share was $3.82 for the first nine months of 2012. Excluding the gain on sale of the Vision Bank business, net income per diluted common share would have been $2.88 for the nine months ended September 30, 2012.

"The economy continues to improve, although slowly. And in spite of uncertainty at the national level, Park affiliates remain focused and decisive," said Park Chairman C. Daniel DeLawder. "We are proud of the way our associates attract and retain new relationships from customers who value our service-oriented philosophy. We are very pleased with our results in the first nine months of 2013."

The Park National Bank Results

Park's community-banking subsidiary in Ohio, The Park National Bank, reported net income of $57.5 million for the first nine months of 2013, compared to net income of $67.1 million for the same period in 2012. The Park National Bank had total assets of $6.6 billion at both September 30, 2013 and 2012. This performance generated an annualized return on average assets of 1.17 percent and 1.37 percent for the bank through the first nine months of 2013 and 2012, respectively.

The Park National Bank loan portfolio continued to experience its measured growth during the third quarter of 2013. Loans outstanding at September 30, 2013 of $4.51 billion represented an increase of $66 million, compared to $4.44 billion outstanding at June 30, 2013. Further, this represented a twelve month increase of $197 million, compared to the loans outstanding of $4.31 billion at September 30, 2012.

"Our experienced associates are talented and possess a deep knowledge of all types of consumer, mortgage and business loans," said Park President David L. Trautman. "We cannot and do not compel customers and prospects to borrow, but when they are ready, so are we. And our third-quarter performance indicates customers were ready."

About Park National Corporation

Headquartered in Newark, Ohio, Park National Corporation had $6.7 billion in total assets (as of September 30, 2013). 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 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 its 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 its 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 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 Budget Control Act of 2011 and the American Taxpayer Relief Act of 2012; 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; 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 its subsidiaries; the outcome of future negotiations surrounding the United States debt and budget, which may be adverse due to its impact on tax increases, governmental spending and consumer confidence and spending; 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, 2012 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, 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, 2013, June 30, 2013, and September 30, 2012
2013 2013 2012 Percent change vs.
(in thousands, except share and per share data) 3rd QTR 2nd QTR 3rd QTR 2Q '13 3Q '12
INCOME STATEMENT:
Net interest income $ 54,960 $ 54,712 $ 58,016 0.5% (5.3)%
Provision for loan losses 2,498 673 16,655 271.2% (85.0)%
Other income 17,396 19,298 18,079 (9.9)% (3.8)%
Total other expense 44,715 46,570 45,683 (4.0)% (2.1)%
Income before income taxes $ 25,143 $ 26,767 $ 13,757 (6.1)% 82.8%
Income taxes 6,114 6,733 1,775 (9.2)% 244.5%
Net income $ 19,029 $ 20,034 $ 11,982 (5.0)% 58.8%
MARKET DATA:
Earnings per common share - basic (b) $ 1.23 $ 1.30 $ 0.78 (5.4)% 57.7%
Earnings per common share - diluted (b) 1.23 1.3 0.78 (5.4)% 57.7%
Cash dividends per common share 0.94 0.94 0.94 —% —%
Common book value per common share at period end 41.06 41.48 42.78 (1.0)% (4.0)%
Stock price per common share at period end 79.08 68.79 70.02 15.0% 12.9%
Market capitalization at period end 1,218,778 1,060,190 1,078,720 15.0% 13.0%
Weighted average common shares - basic (a) 15,411,972 15,411,981 15,405,894 —% —%
Weighted average common shares - diluted (a) 15,411,972 15,411,981 15,405,894 —% —%
Common shares outstanding at period end 15,411,963 15,411,977 15,405,887 —% —%
PERFORMANCE RATIOS: (annualized)
Return on average assets (a)(b) 1.12% 1.20% 0.70% (6.7)% 60.0%
Return on average common equity (a)(b) 11.84% 12.26% 7.19% (3.4)% 64.7%
Yield on loans 4.95% 5.08% 5.31% (2.6)% (6.8)%
Yield on investments 2.55% 2.68% 3.04% (4.9)% (16.1)%
Yield on money markets 0.25% 0.25% 0.25% —% —%
Yield on earning assets 4.19% 4.31% 4.56% (2.8)% (8.1)%
Cost of interest bearing deposits 0.33% 0.36% 0.46% (8.3)% (28.3)%
Cost of borrowings 2.54% 2.64% 2.79% (3.8)% (9.0)%
Cost of paying liabilities 0.84% 0.88% 1.00% (4.5)% (16.0)%
Net interest margin 3.52% 3.61% 3.75% (2.5)% (6.1)%
Efficiency ratio (g) 61.57% 62.61% 59.71% (1.7)% 3.1%
OTHER RATIOS (NON GAAP):
Annualized return on average tangible assets (a)(b)(e) 1.13% 1.22% 0.71% (7.4)% 59.2%
Annualized return on average tangible common equity (a)(b)(c) 13.36% 13.79% 8.07% (3.1)% 65.6%
Tangible common book value per common share (d) $ 36.36 $ 36.77 $ 38.06 (1.1)% (4.5)%
Note: Explanations (a) -(g) are included at the end of the financial highlights.
PARK NATIONAL CORPORATION
Financial Highlights
Three months ended September 30, 2013, June 30, 2013, and September 30, 2012
Percent change vs.
BALANCE SHEET: 30-Sep-13 30-Jun-13 30-Sep-12 2Q '13 3Q '12
Investment securities $ 1,389,387 $ 1,345,069 $ 1,653,381 3.3% (16.0)%
Loans 4,573,537 4,510,716 4,400,510 1.4% 3.9%
Allowance for loan losses 57,894 55,111 55,565 5.0% 4.2%
Goodwill and other intangibles 72,334 72,446 72,810 (0.2)% (0.7)%
Other real estate owned 35,412 35,662 35,633 (0.7)% (0.6)%
Total assets 6,705,891 6,640,473 6,752,938 1.0% (0.7)%
Total deposits 4,850,692 4,851,314 4,793,077 —% 1.2%
Borrowings 1,162,091 1,086,875 1,187,431 6.9% (2.1)%
Stockholders' equity 632,745 639,219 659,127 (1.0)% (4.0)%
Common equity 632,745 639,219 659,127 (1.0)% (4.0)%
Tangible common equity (d) 560,411 566,773 586,317 (1.1)% (4.4)%
Nonperforming loans 162,522 169,313 193,508 (4.0)% (16.0)%
Nonperforming assets 197,934 204,975 229,141 (3.4)% (13.6)%
ASSET QUALITY RATIOS:
Loans as a % of period end assets 68.20% 67.93% 65.16% 0.4% 4.7%
Nonperforming loans as a % of period end loans 3.55% 3.75% 4.40% (5.3)% (19.3)%
Nonperforming assets / Period end loans + OREO 4.29% 4.51% 5.16% (4.9)% (16.9)%
Allowance for loan losses as a % of period end loans 1.27% 1.22% 1.26% 4.1% 0.8%
Net loan charge-offs (recoveries) $ (285) $ 877 $ 19,786 (132.5)% (101.4)%
Annualized net loan charge-offs (recoveries) as a % of average loans (a) (0.02)% 0.08% 1.79% (125.0)% (101.1)%
CAPITAL & LIQUIDITY:
Total equity / Period end assets 9.44% 9.63% 9.76% (2.0)% (3.3)%
Common equity / Period end assets 9.44% 9.63% 9.76% (2.0)% (3.3)%
Tangible common equity (d) / Tangible assets (f) 8.45% 8.63% 8.78% (2.1)% (3.8)%
Average equity / Average assets (a) 9.46% 9.83% 9.80% (3.8)% (3.5)%
Average equity / Average loans (a) 14.04% 14.62% 15.10% (4.0)% (7.0)%
Average loans / Average deposits (a) 92.77% 92.52% 90.46% 0.3% 2.6%
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, 2013 and 2012
(in thousands, except share and per share data) 2013 2012 Percent change
vs. 2012
INCOME STATEMENT:
Net interest income $ 165,125 $ 178,424 (7.5)%
Provision for loan losses 3,500 30,231 (88.4)%
Gain on sale of Vision Bank business 22,167 N.M.
Other income 55,499 53,040 4.6%
Total other expense 137,383 139,957 (1.8)%
Income before income taxes $ 79,741 $ 83,443 (4.4)%
Income taxes 19,968 21,100 (5.4)%
Net income $ 59,773 $ 62,343 (4.1)%
Preferred stock dividends and accretion 3,425 N.M.
Net income available to common shareholders $ 59,773 $ 58,918 1.5%
MARKET DATA:
Earnings per common share - basic (b) $ 3.88 $ 3.82 1.6%
Earnings per common share - diluted (b) 3.88 3.82 1.6%
Cash dividends per common share 2.82 2.82 —%
Weighted average common shares - basic (a) 15,411,981 15,405,902 —%
Weighted average common shares - diluted (a) 15,411,981 15,409,186 —%
PERFORMANCE RATIOS: (Annualized)
Return on average assets (a)(b) 1.19% 1.16% 2.6%
Return on average common equity (a)(b) 12.32% 11.95% 3.1%
Yield on loans 5.05% 5.40% (6.5)%
Yield on investments 2.72% 3.23% (15.8)%
Yield on money markets 0.25% 0.25% —%
Yield on earning assets 4.30% 4.69% (8.3)%
Cost of interest bearing deposits 0.36% 0.51% (29.4)%
Cost of borrowings 2.60% 2.77% (6.1)%
Cost of paying liabilities 0.87% 1.03% (15.5)%
Net interest margin 3.61% 3.86% (6.5)%
Efficiency ratio (g) 61.98% 54.91% 12.9%
ASSET QUALITY RATIOS:
Net loan charge-offs $ 1,143 $ 43,110 (97.3)%
Annualized net loan charge-offs as a % of average loans (a) 0.03% 1.31% (97.7)%
CAPITAL & LIQUIDITY:
Average stockholders' equity / Average assets (a) 9.68% 10.30% (6.0)%
Average stockholders' equity / Average loans (a) 14.45% 15.86% (8.9)%
Average loans / Average deposits (a) 92.28% 90.70% 1.7%
OTHER RATIOS (NON GAAP):
Annualized return on average tangible assets (a)(b)(e) 1.21% 1.17% 3.4%
Annualized return on average tangible common equity (a)(b)(c) 13.88% 13.45% 3.2%
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 September 30, 2013, June 30, 2013 and September 30, 2012, 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,
2013
June 30,
2013
September 30,
2012
September 30,
2013
September 30, 2012
AVERAGE STOCKHOLDERS' EQUITY $ 637,529 $ 655,432 $ 663,314 $ 648,446 $ 699,575
Less: Average preferred stock 41,244
Less: Average goodwill and other intangibles 72,397 72,509 72,888 72,508 73,177
AVERAGE TANGIBLE COMMON EQUITY $ 565,132 $ 582,923 $ 590,426 $ 575,938 $ 585,154
(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,
2013
June 30,
2013
September 30,
2012
STOCKHOLDERS' EQUITY $ 632,745 $ 639,219 $ 659,127
Less: Preferred stock
Less: Goodwill and other intangibles 72,334 72,446 72,810
TANGIBLE COMMON EQUITY $ 560,411 $ 566,773 $ 586,317
(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,
2013
June 30,
2013
September 30,
2012
September 30,
2013
September 30, 2012
AVERAGE ASSETS $ 6,739,055 $ 6,670,829 $ 6,769,735 $ 6,701,287 $ 6,792,822
Less: Average goodwill and other intangibles 72,397 72,509 72,888 72,508 73,177
AVERAGE TANGIBLE ASSETS $ 6,666,658 $ 6,598,320 $ 6,696,847 $ 6,628,779 $ 6,719,645
(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,
2013
June 30,
2013
September 30,
2012
TOTAL ASSETS $ 6,705,891 $ 6,640,473 $ 6,752,938
Less: Goodwill and other intangibles 72,334 72,446 72,810
TANGIBLE ASSETS $ 6,633,557 $ 6,568,027 $ 6,680,128
(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,
2013
June 30,
2013
September 30,
2012
September 30,
2013
September 30,
2012
Interest income $ 65,410 $ 65,279 $ 70,618 $ 196,881 $ 216,942
Fully taxable equivalent adjustment 273 368 408 1,029 1,241
Fully taxable equivalent interest income $ 65,683 $ 65,647 $ 71,026 $ 197,910 $ 218,183
Interest expense 10,450 10,567 12,602 31,756 38,518
Fully taxable equivalent net interest income $ 55,233 $ 55,080 $ 58,424 $ 166,154 $ 179,665
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) 2013 2012 2013 2012
Interest income:
Interest and fees on loans 56,337 58,269 168,500 176,967
Interest on:
Obligations of U.S. Government, its agencies
and other securities 8,880 12,187 27,795 39,565
Obligations of states and political subdivisions 7 33 40 121
Other interest income 186 129 546 289
Total interest income 65,410 70,618 196,881 216,942
Interest expense:
Interest on deposits:
Demand and savings deposits 422 636 1,391 1,992
Time deposits 2,729 3,757 8,719 12,517
Interest on borrowings 7,299 8,209 21,646 24,009
Total interest expense 10,450 12,602 31,756 38,518
Net interest income 54,960 58,016 165,125 178,424
Provision for loan losses 2,498 16,655 3,500 30,231
Net interest income after provision for loan losses 52,462 41,361 161,625 148,193
Gain on sale of Vision Bank business 22,167
Other income 17,396 18,079 55,499 53,040
Total other expense 44,715 45,683 137,383 139,957
Income before income taxes 25,143 13,757 79,741 83,443
Income taxes 6,114 1,775 19,968 21,100
Net income 19,029 11,982 59,773 62,343
Preferred stock dividends and accretion 3,425
Net income available to common shareholders 19,029 11,982 59,773 58,918
Per Common Share:
Net income - basic 1.23 0.78 3.88 3.82
Net income - diluted 1.23 0.78 3.88 3.82
Weighted average shares - basic 15,411,972 15,405,894 15,411,981 15,405,902
Weighted average shares - diluted 15,411,972 15,405,894 15,411,981 15,409,186
Cash Dividends Declared 0.94 0.94 2.82 2.82
PARK NATIONAL CORPORATION
Consolidated Balance Sheets
(in thousands, except share data) September 30, 2013 December 31, 2012
Assets
Cash and due from banks $ 135,440 $ 164,120
Money market instruments 179,434 37,185
Investment securities 1,389,387 1,581,751
Loans 4,573,537 4,450,322
Allowance for loan losses 57,894 55,537
Loans, net 4,515,643 4,394,785
Bank premises and equipment, net 56,116 53,751
Goodwill and other intangibles 72,334 72,671
Other real estate owned 35,412 35,718
Other assets 322,125 302,822
Total assets $ 6,705,891 $ 6,642,803
Liabilities and Stockholders' Equity
Deposits:
Noninterest bearing $ 1,109,194 $ 1,137,290
Interest bearing 3,741,498 3,578,742
Total deposits 4,850,692 4,716,032
Borrowings 1,162,091 1,206,076
Other liabilities 60,363 70,329
Total liabilities $ 6,073,146 $ 5,992,437
Stockholders' Equity:
Common stock (No par value; 20,000,000 shares authorized in 2013 and 2012; 16,150,952 shares issued at September 30, 2013 and 16,150,987 shares issued at December 31, 2012) $ 302,652 $ 302,654
Accumulated other comprehensive loss, net of taxes (51,449) (17,518)
Retained earnings 457,917 441,605
Treasury stock (738,989 shares at September 30, 2013 and December 31, 2012) (76,375) (76,375)
Total stockholders' equity $ 632,745 $ 650,366
Total liabilities and stockholders' equity $ 6,705,891 $ 6,642,803
PARK NATIONAL CORPORATION
Consolidated Average Balance Sheets
Three Months Ended Nine Months Ended
September 30, September 30,
(in thousands) 2013 2012 2013 2012
Assets
Cash and due from banks $ 108,813 $ 115,198 $ 110,847 $ 122,258
Money market instruments 295,634 208,191 293,511 156,830
Investment securities 1,359,690 1,621,365 1,370,627 1,664,365
Loans 4,539,685 4,392,067 4,487,756 4,410,042
Allowance for loan losses 55,697 59,686 56,186 63,525
Loans, net 4,483,988 4,332,381 4,431,570 4,346,517
Bank premises and equipment, net 56,643 52,671 56,352 55,123
Goodwill and other intangibles 72,397 72,888 72,508 73,177
Other real estate owned 36,363 36,575 35,446 39,760
Other assets 325,527 330,466 330,426 334,792
Total assets $ 6,739,055 $ 6,769,735 $ 6,701,287 $ 6,792,822
Liabilities and Stockholders' Equity
Deposits:
Noninterest bearing $ 1,096,178 $ 1,026,690 $ 1,101,929 $ 1,034,801
Interest bearing 3,797,118 3,828,830 3,761,111 3,827,370
Total deposits 4,893,296 4,855,520 4,863,040 4,862,171
Borrowings 1,137,877 1,172,379 1,114,113 1,155,900
Other liabilities 70,353 78,522 75,688 75,176
Total liabilities $ 6,101,526 $ 6,106,421 $ 6,052,841 $ 6,093,247
Stockholders' Equity:
Preferred stock $ — $ — $ — $ 41,244
Common stock 302,652 302,655 302,653 301,992
Common stock warrants 1,929
Accumulated other comprehensive loss, net of taxes (43,255) (7,009) (27,825) (7,874)
Retained earnings 454,507 444,675 449,993 439,291
Treasury stock (76,375) (77,007) (76,375) (77,007)
Total stockholders' equity $ 637,529 $ 663,314 $ 648,446 $ 699,575
Total liabilities and stockholders' equity $ 6,739,055 $ 6,769,735 $ 6,701,287 $ 6,792,822
PARK NATIONAL CORPORATION
Consolidated Statements of Income - Linked Quarters
2013 2013 2013 2012 2012
(in thousands, except per share data) 3rd QTR 2nd QTR 1st QTR 4th QTR 3rd QTR
Interest income:
Interest and fees on loans $ 56,337 $ 56,388 $ 55,775 $ 57,671 $ 58,269
Interest on:
Obligations of U.S. Government, its agencies and other securities 8,880 8,673 10,242 10,984 12,187
Obligations of states and political subdivisions 7 16 17 19 33
Other interest income 186 202 158 119 129
Total interest income 65,410 65,279 66,192 68,793 70,618
Interest expense:
Interest on deposits:
Demand and savings deposits 422 468 501 491 636
Time deposits 2,729 2,900 3,090 3,404 3,757
Interest on borrowings 7,299 7,199 7,148 8,007 8,209
Total interest expense 10,450 10,567 10,739 11,902 12,602
Net interest income 54,960 54,712 55,453 56,891 58,016
Provision for loan losses 2,498 673 329 5,188 16,655
Net interest income after provision for loan losses 52,462 54,039 55,124 51,703 41,361
Other income 17,396 19,298 18,805 17,196 18,079
Total other expense 44,715 46,570 46,098 48,011 45,683
Income before income taxes 25,143 26,767 27,831 20,888 13,757
Income taxes 6,114 6,733 7,121 4,601 1,775
Net income $ 19,029 $ 20,034 $ 20,710 $ 16,287 $ 11,982
Preferred stock dividends and accretion
Net income available to common shareholders $ 19,029 $ 20,034 $ 20,710 $ 16,287 $ 11,982
Per Common Share:
Net income - basic $ 1.23 $ 1.30 $ 1.34 $ 1.06 $ 0.78
Net income - diluted $ 1.23 $ 1.30 $ 1.34 $ 1.06 $ 0.78
PARK NATIONAL CORPORATION
Detail of other income and other expense - Linked Quarters
2013 2013 2013 2012 2012
(in thousands) 3rd QTR 2nd QTR 1st QTR 4th QTR 3rd QTR
Other income:
Income from fiduciary activities $ 4,139 $ 4,328 $ 4,076 $ 4,056 $ 4,019
Service charges on deposits 4,255 4,070 3,822 4,235 4,244
Other service income 3,391 3,352 3,985 3,463 4,017
Checkcard fee income 3,326 3,316 2,983 3,151 3,038
Bank owned life insurance income 1,311 1,254 1,202 1,184 1,184
ATM fees 705 677 627 650 565
OREO valuation adjustments (2,030) (600) 401 (2,440) (425)
Gain on the sale of OREO, net 895 1,633 224 1,028 138
Other 1,404 1,268 1,485 1,869 1,299
Total other income $ 17,396 $ 19,298 $ 18,805 $ 17,196 $ 18,079
Other expense:
Salaries and employee benefits $ 25,871 $ 24,679 $ 24,633 $ 24,086 $ 24,255
Net occupancy expense 2,348 2,444 2,597 2,222 2,303
Furniture and equipment expense 2,639 2,981 2,607 2,774 2,666
Data processing fees 1,042 1,049 1,019 913 904
Professional fees and services 5,601 5,880 5,864 6,846 6,040
Amortization of intangibles 112 113 112 139 139
Marketing 863 953 848 1,002 924
Insurance 1,174 1,338 1,302 1,482 1,408
Communication 1,268 1,453 1,580 1,482 1,470
Loan put provision 346
Other 3,797 5,680 5,536 7,065 5,228
Total other expense $ 44,715 $ 46,570 $ 46,098 $ 48,011 $ 45,683
PARK NATIONAL CORPORATION
Asset Quality Information
Year ended December 31,
(in thousands, except ratios) September 30,
2013
June 30,
2013
March 31,
2013
2012 2011 2010 2009
Allowance for loan losses:
Allowance for loan losses, beginning of period $ 55,111 $ 55,315 $ 55,537 $ 68,444 $ 143,575 $ 116,717 $ 100,088
Transfer of loans at fair value (219)
Transfer of allowance to held for sale (13,100)
Charge-offs (A) 5,288 3,839 6,508 61,268 133,882 66,314 59,022
Recoveries 5,573 2,962 5,957 12,942 8,798 6,092 6,830
Net charge-offs (recoveries) (285) 877 551 48,326 125,084 60,222 52,192
Provision for loan losses 2,498 673 329 35,419 63,272 87,080 68,821
Allowance for loan losses, end of period $ 57,894 $ 55,111 $ 55,315 $ 55,537 $ 68,444 $ 143,575 $ 116,717
(A) Year ended 2012 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 $ 57,894 $ 55,111 $ 55,315 $ 55,537 $ 68,444 $ 143,575 $ 116,717
Specific reserves 9,297 7,466 8,260 8,276 15,935 66,904 36,721
General reserves $ 48,597 $ 47,645 $ 47,055 $ 47,261 $ 52,509 $ 76,671 $ 79,996
Total loans $ 4,573,537 $ 4,510,716 $ 4,443,523 $ 4,450,322 $ 4,317,099 $ 4,732,685 $ 4,640,432
Impaired commercial loans 118,225 126,080 130,270 137,238 187,074 250,933 201,143
Non-impaired loans $ 4,455,312 $ 4,384,636 $ 4,313,253 $ 4,313,084 $ 4,130,025 $ 4,481,752 $ 4,439,289
Asset Quality Ratios:
Net charge-offs (recoveries) as a % of average loans (annualized for quarterly periods) (0.02)% 0.08% 0.05% 1.10% 2.65% 1.30% 1.14%
Allowance for loan losses as a % of period end loans 1.27% 1.22% 1.24% 1.25% 1.59% 3.03% 2.52%
General reserves as a % of non-impaired loans 1.09% 1.09% 1.09% 1.10% 1.27% 1.71% 1.80%
Nonperforming Assets - Park National Corporation:
Nonaccrual loans $ 136,470 $ 145,398 $ 151,539 $ 155,536 $ 195,106 $ 289,268 $ 233,544
Accruing troubled debt restructuring 24,398 22,413 24,274 29,800 28,607 ---- 142
Loans past due 90 days or more 1,654 1,502 1,350 2,970 3,489 3,590 14,773
Total nonperforming loans $ 162,522 $ 169,313 $ 177,163 $ 188,306 $ 227,202 $ 292,858 $ 248,459
Other real estate owned - Park National Bank 13,019 14,273 14,587 14,715 13,240 8,385 6,037
Other real estate owned - SEPH 22,393 21,389 21,705 21,003 29,032 ---- ----
Other real estate owned - Vision Bank ---- ---- ---- 33,324 35,203
Total nonperforming assets $ 197,934 $ 204,975 $ 213,455 $ 224,024 $ 269,474 $ 334,567 $ 289,699
Percentage of nonaccrual loans to period end loans 2.98% 3.22% 3.41% 3.49% 4.52% 6.11% 5.03%
Percentage of nonperforming loans to period end loans 3.55% 3.75% 3.99% 4.23% 5.26% 6.19% 5.35%
Percentage of nonperforming assets to period end loans 4.33% 4.54% 4.80% 5.03% 6.24% 7.07% 6.24%
Percentage of nonperforming assets to period end assets 2.95% 3.09% 3.16% 3.37% 3.86% 4.59% 4.11%
PARK NATIONAL CORPORATION
Asset Quality Information (continued)
Year ended December 31,
(in thousands, except ratios) September 30,
2013
June 30, 2013 March 31,
2013
2012 2011 2010 2009
Nonperforming Assets - Park National Bank and Guardian:
Nonaccrual loans $ 97,122 $ 102,182 $ 103,246 $ 100,244 $ 96,113 $ 117,815 $ 85,197
Accruing troubled debt restructuring 24,398 22,413 24,274 29,800 26,342 142
Loans past due 90 days or more 1,654 1,502 1,350 2,970 3,367 3,226 3,496
Total nonperforming loans $ 123,174 $ 126,097 $ 128,870 $ 133,014 $ 125,822 $ 121,041 $ 88,835
Other real estate owned - Park National Bank 13,019 14,273 14,587 14,715 13,240 8,385 6,037
Total nonperforming assets $ 136,193 $ 140,370 $ 143,457 $ 147,729 $ 139,062 $ 129,426 $ 94,872
Percentage of nonaccrual loans to period end loans 2.14% 2.29% 2.35% 2.28% 2.29% 2.88% 2.15%
Percentage of nonperforming loans to period end loans 2.72% 2.82% 2.93% 3.03% 3.00% 2.96% 2.24%
Percentage of nonperforming assets to period end loans 3.01% 3.14% 3.27% 3.36% 3.32% 3.16% 2.39%
Percentage of nonperforming assets to period end assets 2.06% 2.15% 2.17% 2.27% 2.21% 1.99% 1.53%
Nonperforming Assets - SEPH/Vision Bank (retained portfolio as of September 30, 2013, June 30, 3013, March 31, 2013, December 31, 2012, and December 31, 2011):
Nonaccrual loans $ 39,348 $ 43,216 $ 48,293 $ 55,292 $ 98,993 $ 171,453 $ 148,347
Accruing troubled debt restructuring 2,265
Loans past due 90 days or more 122 364 11,277
Total nonperforming loans $ 39,348 $ 43,216 $ 48,293 $ 55,292 $ 101,380 $ 171,817 $ 159,624
Other real estate owned - Vision Bank 33,324 35,203
Other real estate owned - SEPH 22,393 21,389 21,705 21,003 29,032
Total nonperforming assets $ 61,741 $ 64,605 $ 69,998 $ 76,295 $ 130,412 $ 205,141 $ 194,827
Percentage of nonaccrual loans to period end loans N.M. N.M. N.M. N.M. N.M. 26.77% 21.91%
Percentage of nonperforming loans to period end loans N.M. N.M. N.M. N.M. N.M. 26.82% 23.58%
Percentage of nonperforming assets to period end loans N.M. N.M. N.M. N.M. N.M. 32.02% 28.78%
Percentage of nonperforming assets to period end assets N.M. N.M. N.M. N.M. N.M. 25.90% 21.70%
New nonaccrual loan information - Park National Corporation
Nonaccrual loans, beginning of period $ 145,398 $ 151,539 $ 155,536 $ 195,106 $ 289,268 $ 233,544 $ 159,512
New nonaccrual loans 12,362 15,404 21,141 83,204 124,158 175,175 184,181
Resolved nonaccrual loans 21,290 21,545 25,138 122,774 218,320 119,451 110,149
Nonaccrual loans, end of period $ 136,470 $ 145,398 $ 151,539 $ 155,536 $ 195,106 $ 289,268 $ 233,544
New nonaccrual loan information - Ohio based operations
Nonaccrual loans, beginning of period $ 102,182 $ 103,246 $ 100,244 $ 96,113 $ 117,815 $ 85,197 $ 68,306
New nonaccrual loans - Ohio-based operations 12,362 15,404 21,141 68,960 78,316 85,081 57,641
Resolved nonaccrual loans 17,422 16,468 18,139 64,829 100,018 52,463 40,750
Nonaccrual loans, end of period $ 97,122 $ 102,182 $ 103,246 $ 100,244 $ 96,113 $ 117,815 $ 85,197
New nonaccrual loan information - SEPH/Vision Bank (SEPH as of September 30, 2013, June 30, 2013 and March 31, 2012)
Nonaccrual loans, beginning of period $ 43,216 $ 48,293 $ 55,292 $ 98,993 $ 171,453 $ 148,347 $ 91,206
New nonaccrual loans - SEPH/Vision Bank 14,243 45,842 90,094 126,540
Resolved nonaccrual loans 3,868 5,077 6,999 57,944 118,302 66,988 69,399
Nonaccrual loans, end of period $ 39,348 $ 43,216 $ 48,293 $ 55,292 $ 98,993 $ 171,453 $ 148,347
Impaired Commercial Loan Portfolio Information (period end):
Unpaid principal balance $ 201,573 $ 222,871 $ 233,144 $ 242,345 $ 290,908 $ 304,534 $ 245,092
Prior charge-offs 83,348 96,791 102,874 105,107 103,834 53,601 43,949
Remaining principal balance 118,225 126,080 130,270 137,238 187,074 250,933 201,143
Specific reserves 9,297 7,466 8,260 8,276 15,935 66,904 36,721
Book value, after specific reserve $ 108,928 $ 118,614 $ 122,010 $ 128,962 $ 171,139 $ 184,029 $ 164,422

CONTACT: Media contact: Bethany Lewis, 740.349.0421, blewis@parknationalbank.com Investor contact: Brady Burt, 740.322.6844, bburt@parknationalbank.comSource:Park National Bank