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

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

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

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

The Park National Bank Results

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

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

About Park National Corporation

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

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Park cautions that any forward-looking statements contained in this Current Report on Form 8-K or made by management of Park are provided to assist in the understanding of anticipated future financial performance. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management's expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include, without limitation: Park's ability to execute our business plan successfully and within the expected timeframe; general economic and financial market conditions, and the uneven spread of positive impacts of the recovery on the economy, specifically in the real estate markets and the credit markets, either nationally or in the states in which Park and our subsidiaries do business, may be worse or slower than expected which could adversely impact the demand for loan, deposit and other financial services as well as loan delinquencies and defaults; changes in interest rates and prices may adversely impact the value of securities, loans, deposits and other financial instruments and the interest rate sensitivity of our consolidated balance sheet; changes in consumer spending, borrowing and saving habits; changes in unemployment; asset/liability repricing risks and liquidity risks; our liquidity requirements could be adversely affected by changes to regulations governing bank capital and liquidity standards as well as by changes in our assets and liabilities; competitive factors among financial services organizations could increase significantly, including product and pricing pressures, changes to third-party relationships and our ability to attract, develop and retain qualified bank professionals; clients could pursue alternatives to bank deposits, causing us to lose a relatively inexpensive source of funding; the nature, timing and effect of changes in banking regulations or other regulatory or legislative requirements affecting the respective businesses of Park and our subsidiaries, including changes in laws and regulations concerning taxes, accounting, banking, securities and other aspects of the financial services industry, specifically the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act"), as well as future regulations which will be adopted by the relevant regulatory agencies, including the Consumer Financial Protection Bureau, to implement the Dodd-Frank Act's provisions, the Budget Control Act of 2011, the American Taxpayer Relief Act of 2012 and the Basel III regulatory capital reforms; the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board, the SEC, the Public Company Accounting Oversight Board and other regulatory agencies, and the accuracy of our assumptions and estimates used to prepare our financial statements; the effect of trade, monetary, fiscal and other governmental policies of the United States federal government, including interest rate policies of the Federal Reserve; the adequacy of our risk management program; a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors and other service providers, including as a result of cyber attacks; demand for loans in the respective market areas served by Park and our subsidiaries; and other risk factors relating to the banking industry as detailed from time to time in Park's reports filed with the Securities and Exchange Commission including those described in "Item 1A. Risk Factors" of Part I of Park's Annual Report on Form 10-K for the fiscal year ended December 31, 2013. Park does not undertake, and specifically disclaims any obligation, to publicly release the results of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement was made, or reflect the occurrence of unanticipated events, except to the extent required by law.

PARK NATIONAL CORPORATION
Financial Highlights
Three months ended September 30, 2014, June 30, 2014, and September 30, 2013
2014 2014 2013 Percent change vs.
(in thousands, except share and per share data) 3rd QTR 2nd QTR 3rd QTR 2Q '14 3Q '13
INCOME STATEMENT:
Net interest income $ 56,709 $ 56,561 $ 54,960 0.3% 3.2%
Provision for (recovery of) loan losses 4,501 (1,260) 2,498 N.M. N.M.
Other income 19,396 19,671 17,396 (1.4)% 11.5%
Other expense 46,903 48,196 44,715 (2.7)% 4.9%
Income before income taxes $ 24,701 $ 29,296 $ 25,143 (15.7)% (1.8)%
Income taxes 6,398 7,469 6,114 (14.3)% 4.6%
Net income $ 18,303 $ 21,827 $ 19,029 (16.1)% (3.8)%
MARKET DATA:
Earnings per common share - basic (b) $ 1.19 $ 1.42 $ 1.23 (16.2)% (3.3)%
Earnings per common share - diluted (b) 1.19 1.42 1.23 (16.2)% (3.3)%
Cash dividends per common share 0.94 0.94 0.94 —% —%
Common book value per common share at period end 44.70 44.63 41.06 0.2% 8.9%
Stock price per common share at period end 75.42 77.20 79.08 (2.3)% (4.6)%
Market capitalization at period end 1,160,896 1,188,295 1,218,778 (2.3)% (4.7)%
Weighted average common shares - basic (a) 15,392,421 15,392,435 15,411,972 —% (0.1)%
Weighted average common shares - diluted (a) 15,413,664 15,412,167 15,411,972 —% —%
Common shares outstanding at period end 15,392,413 15,392,425 15,411,963 —% (0.1)%
PERFORMANCE RATIOS: (annualized)
Return on average assets (a)(b) 1.05% 1.29% 1.12% (18.6)% (6.3)%
Return on average common equity (a)(b) 10.51% 12.93% 11.84% (18.7)% (11.2)%
Yield on loans 4.80% 4.91% 4.95% (2.2)% (3.0)%
Yield on investments 2.54% 2.60% 2.55% (2.3)% (0.4)%
Yield on money markets 0.25% 0.25% 0.25% —% —%
Yield on earning assets 4.17% 4.28% 4.19% (2.6)% (0.5)%
Cost of interest bearing deposits 0.27% 0.27% 0.33% —% (18.2)%
Cost of borrowings 2.58% 2.60% 2.54% (0.8)% 1.6%
Cost of paying liabilities 0.79% 0.81% 0.84% (2.5)% (6.0)%
Net interest margin 3.55% 3.65% 3.52% (2.7)% 0.9%
Efficiency ratio (g) 61.46% 63.04% 61.57% (2.5)% (0.2)%
OTHER RATIOS (NON - GAAP):
Annualized return on average tangible assets (a)(b)(e) 1.06% 1.31% 1.13% (19.1)% (6.2)%
Annualized return on average tangible common equity (a)(b)(c) 11.74% 14.47% 13.36% (18.9)% (12.1)%
Tangible common book value per common share (d) $ 40.00 $ 39.93 $ 36.36 0.2% 10.0%
N.M. - Not meaningful
Note: Explanations (a) - (g) are included at the end of the financial highlights.
PARK NATIONAL CORPORATION
Financial Highlights (continued)
Three months ended September 30, 2014, June 30, 2014, and September 30, 2013
Percent change vs.
BALANCE SHEET: September 30,
2014
June 30,
2014
September 30,
2013

2Q '14

3Q '13
Investment securities $ 1,472,625 $ 1,417,910 $ 1,389,387 3.9% 6.0%
Loans 4,770,433 4,728,910 4,566,966 0.9% 4.5%
Allowance for loan losses 57,674 57,911 57,894 (0.4)% (0.4)%
Goodwill and other intangibles 72,334 72,334 72,334 —% —%
Other real estate owned 19,185 23,909 35,412 (19.8)% (45.8)%
Loans held for sale 28,606 6,577 6,571 N.M. N.M.
Total assets 7,013,272 6,789,173 6,705,891 3.3% 4.6%
Total deposits 5,129,004 4,927,211 4,850,692 4.1% 5.7%
Borrowings 1,137,653 1,118,404 1,162,091 1.7% (2.1)%
Shareholders' equity 688,016 686,971 632,745 0.2% 8.7%
Common equity 688,016 686,971 632,745 0.2% 8.7%
Tangible common equity (d) 615,682 614,637 560,411 0.2% 9.9%
Nonperforming loans 119,393 142,902 162,522 (16.5)% (26.5)%
Nonperforming including loans held for sale 141,378 142,902 162,522 (1.1)% (13.0)%
Nonperforming assets 160,563 166,811 197,934 (3.7)% (18.9)%
ASSET QUALITY RATIOS:
Loans as a % of period end assets 68.02% 69.65% 68.10% (2.3)% (0.1)%
Nonperforming loans as a % of period end loans 2.50% 3.02% 3.56% (17.2)% (29.8)%
Nonperforming assets / Period end loans + OREO 3.35% 3.51% 4.30% (4.6)% (22.1)%
Allowance for loan losses as a % of period end loans 1.21% 1.22% 1.27% (0.8)% (4.7)%
Net loan charge-offs (recoveries) $ 4,738 $ 1,086 $ (285) N.M. N.M.
Annualized net loan charge-offs (recoveries) as a % of average loans (a) 0.39% 0.09% (0.02)% N.M. N.M.
CAPITAL & LIQUIDITY:
Total equity / Period end assets 9.81% 10.12% 9.44% (3.1)% 3.9%
Common equity / Period end assets 9.81% 10.12% 9.44% (3.1)% 3.9%
Tangible common equity (d) / Tangible assets (f) 8.87% 9.15% 8.45% (3.1)% 5.0%
Average equity / Average assets (a) 10.01% 10.00% 9.46% 0.1% 5.8%
Average equity / Average loans (a) 14.49% 14.48% 14.04% 0.1% 3.2%
Average loans / Average deposits (a) 95.04% 95.12% 92.77% (0.1)% 2.4%
N.M. - Not meaningful
Note: Explanations (a) - (g) are included at the end of the financial highlights.
PARK NATIONAL CORPORATION
Financial Highlights
Nine months ended September 30, 2014 and 2013
(in thousands, except share and per share data)
2014

2013
Percent change
vs. 2013
INCOME STATEMENT:
Net interest income $ 167,750 $ 165,125 1.6%
Provision for loan losses 1,016 3,500 N.M.
Other income 55,715 55,499 0.4%
Other expense 142,797 137,383 3.9%
Income before income taxes $ 79,652 $ 79,741 (0.1)%
Income taxes 19,903 19,968 (0.3)%
Net income $ 59,749 $ 59,773 —%
MARKET DATA:
Earnings per common share - basic (b) $ 3.88 $ 3.88 —%
Earnings per common share - diluted (b) 3.88 3.88 —%
Cash dividends per common share 2.82 2.82 —%
Weighted average common shares - basic (a) 15,395,320 15,411,981 (0.1)%
Weighted average common shares - diluted (a) 15,413,625 15,411,981 —%
PERFORMANCE RATIOS: (Annualized)
Return on average assets (a)(b) 1.17% 1.19% (1.7)%
Return on average common equity (a)(b) 11.80% 12.32% (4.2)%
Yield on loans 4.85% 5.05% (4.0)%
Yield on investments 2.60% 2.72% (4.4)%
Yield on earning assets 4.21% 4.30% (2.1)%
Cost of interest bearing deposits 0.28% 0.36% (22.2)%
Cost of borrowings 2.60% 2.60% —%
Cost of paying liabilities 0.81% 0.87% (6.9)%
Net interest margin (g) 3.58% 3.61% (0.8)%
Efficiency ratio (g) 63.72% 61.98% 2.8%
ASSET QUALITY RATIOS:
Net loan charge-offs $ 2,810 $ 1,143 N.M.
Annualized net loan charge-offs as a % of average loans (a) 0.08% 0.03% N.M.
CAPITAL & LIQUIDITY:
Average stockholders' equity / Average assets (a) 9.93% 9.68% 2.6%
Average stockholders' equity / Average loans (a) 14.45% 14.45% —%
Average loans / Average deposits (a) 94.58% 92.28% 2.5%
OTHER RATIOS (NON GAAP):
Annualized return on average tangible assets (a)(b)(e) 1.18% 1.21% (2.5)%
Annualized return on average tangible common equity (a)(b)(c) 13.22% 13.88% (4.8)%
Note: Explanations (a) - (g) are included at the end of the financial highlights.
PARK NATIONAL CORPORATION
Financial Highlights (continued)
(a) Averages are for the quarters ended September 30, 2014, June 30, 2014 and September 30, 2013.
(b) Reported measure uses net income available to common shareholders.
(c) Net income for each period divided by average tangible common equity during the period. Average tangible common equity equals average shareholders' equity during the applicable period less average goodwill and other intangibles during the applicable period.
RECONCILIATION OF AVERAGE SHAREHOLDERS' EQUITY TO AVERAGE TANGIBLE COMMON EQUITY:
THREE MONTHS ENDED NINE MONTHS ENDED
September 30, 2014 June 30, 2014 September 30, 2013 September 30, 2014 September 30, 2013
AVERAGE SHAREHOLDERS' EQUITY $ 691,085 $ 677,226 $ 637,529 $ 676,806 $ 648,446
Less: Average goodwill and other intangibles 72,334 72,334 72,397 72,334 72,508
AVERAGE TANGIBLE COMMON EQUITY $ 618,751 $ 604,892 $ 565,132 $ 604,472 $ 575,938
(d) Tangible common book value divided by common shares outstanding at period end. Tangible common equity equals ending shareholders' equity less goodwill and other intangibles, in each case at the end of the period.
RECONCILIATION OF SHAREHOLDERS' EQUITY TO TANGIBLE COMMON EQUITY:
September 30, 2014 June 30, 2014 September 30, 2013
SHAREHOLDERS' EQUITY $ 688,016 $ 686,971 $ 632,745
Less: Goodwill and other intangibles 72,334 72,334 72,334
TANGIBLE COMMON EQUITY $ 615,682 $ 614,637 $ 560,411
(e) Net income available to common shareholders for each period divided by average tangible assets during the period. Average tangible assets equals average assets less average goodwill and other intangibles, in each case during the applicable period.
RECONCILIATION OF AVERAGE ASSETS TO AVERAGE TANGIBLE ASSETS:
THREE MONTHS ENDED NINE MONTHS ENDED
September 30, 2014 June 30, 2014 September 30, 2013 September 30, 2014 September 30, 2013
AVERAGE ASSETS $ 6,903,127 $ 6,774,390 $ 6,739,055 $ 6,815,274 $ 6,701,287
Less: Average goodwill and other intangibles 72,334 72,334 72,397 72,334 72,508
AVERAGE TANGIBLE ASSETS $ 6,830,793 $ 6,702,056 $ 6,666,658 $ 6,742,940 $ 6,628,779
(f) Tangible common equity divided by tangible assets. Tangible assets equals total assets less goodwill and other intangibles, in each case at the end of the period.
RECONCILIATION OF TOTAL ASSETS TO TANGIBLE ASSETS:
September 30, 2014 June 30, 2014 September 30, 2013
TOTAL ASSETS $ 7,013,272 $ 6,789,173 $ 6,705,891
Less: Goodwill and other intangibles 72,334 72,334 72,334
TANGIBLE ASSETS $ 6,940,938 $ 6,716,839 $ 6,633,557
(g) Efficiency ratio is calculated by taking total other expense divided by the sum of fully taxable equivalent net interest income and other income. Fully taxable equivalent net interest income reconciliation is shown below assuming a 35% tax rate. Additionally, net interest margin is calculated on a fully taxable equivalent basis.
RECONCILIATION OF FULLY TAXABLE EQUIVALENT NET INTEREST INCOME TO NET INTEREST INCOME
THREE MONTHS ENDED NINE MONTHS ENDED
September 30, 2014 June 30, 2014 September 30, 2013 September 30, 2014 September 30, 2013
Interest income $ 66,622 $ 66,363 $ 65,410 $ 197,327 $ 196,881
Fully taxable equivalent adjustment 209 221 273 653 1,029
Fully taxable equivalent interest income $ 66,831 $ 66,584 $ 65,683 $ 197,980 $ 197,910
Interest expense 9,913 9,802 10,450 29,577 31,756
Fully taxable equivalent net interest income $ 56,918 $ 56,782 $ 55,233 $ 168,403 $ 166,154
PARK NATIONAL CORPORATION
Consolidated Statements of Income
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands, except share and per share data) 2014 2013 2014 2013
Interest income:
Interest and fees on loans 57,492 56,337 169,249 168,500
Interest on:
Obligations of U.S. Government, its agencies and other securities 9,011 8,880 27,758 27,795
Obligations of states and political subdivisions 7 3 40
Other interest income 119 186 317 546
Total interest income 66,622 65,410 197,327 196,881
Interest expense:
Interest on deposits:
Demand and savings deposits 440 422 1,232 1,391
Time deposits 2,136 2,729 6,547 8,719
Interest on borrowings 7,337 7,299 21,798 21,646
Total interest expense 9,913 10,450 29,577 31,756
Net interest income 56,709 54,960 167,750 165,125
Provision for loan losses 4,501 2,498 1,016 3,500
Net interest income after provision for loan losses 52,208 52,462 166,734 161,625
Other income 19,396 17,396 55,715 55,499
Other expense 46,903 44,715 142,797 137,383
Income before income taxes 24,701 25,143 79,652 79,741
Income taxes 6,398 6,114 19,903 19,968
Net income 18,303 19,029 59,749 59,773
Per Common Share:
Net income - basic 1.19 1.23 3.88 3.88
Net income - diluted 1.19 1.23 3.88 3.88
Weighted average shares - basic 15,392,421 15,411,972 15,395,320 15,411,981
Weighted average shares - diluted 15,413,664 15,411,972 15,413,625 15,411,981
Cash Dividends Declared 0.94 0.94 2.82 2.82
PARK NATIONAL CORPORATION
Consolidated Balance Sheets
(in thousands, except share data) September 30, 2014 December 31, 2013
Assets
Cash and due from banks $ 101,760 $ 129,078
Money market instruments 201,526 17,952
Investment securities 1,472,625 1,424,234
Loans held for sale 28,606 1,666
Loans 4,770,433 4,618,839
Allowance for loan losses (57,674) (59,468)
Loans, net 4,712,759 4,559,371
Bank premises and equipment, net 54,654 55,278
Goodwill and other intangibles 72,334 72,334
Other real estate owned 19,185 34,636
Other assets 349,823 343,798
Total assets $ 7,013,272 $ 6,638,347
Liabilities and Shareholders' Equity
Deposits:
Noninterest bearing $ 1,175,991 $ 1,193,553
Interest bearing 3,953,013 3,596,441
Total deposits 5,129,004 4,789,994
Borrowings 1,137,653 1,132,820
Other liabilities 58,599 63,786
Total liabilities $ 6,325,256 $ 5,986,600
Shareholders' Equity:
Preferred shares (200,000 shares authorized; no shares outstanding at September 30, 2014 and December 31, 2013) $ $ —
Common shares (No par value; 20,000,000 shares authorized in 2014 and 2013; 16,150,902 shares issued at September 30, 2014 and 16,150,941 shares issued at December 31, 2013) 303,003 302,651
Accumulated other comprehensive loss, net of taxes (14,304) (35,419)
Retained earnings 476,930 460,643
Treasury shares (758,489 shares at September 30, 2014 and 738,989 at December 31, 2013) (77,613) (76,128)
Total shareholders' equity $ 688,016 $ 651,747
Total liabilities and shareholders' equity $ 7,013,272 $ 6,638,347
PARK NATIONAL CORPORATION
Consolidated Average Balance Sheets
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands) 2014 2013 2014 2013
Assets
Cash and due from banks $ 110,023 $ 108,813 $ 110,120 $ 110,847
Money market instruments 185,899 295,634 168,066 293,511
Investment securities 1,396,880 1,359,690 1,407,734 1,370,627
Loans 4,768,253 4,539,685 4,685,235 4,487,756
Allowance for loan losses (57,949) (55,697) (58,969) (56,186)
Loans, net 4,710,304 4,483,988 4,626,266 4,431,570
Bank premises and equipment, net 55,133 56,643 55,465 56,352
Goodwill and other intangibles 72,334 72,397 72,334 72,508
Other real estate owned 22,340 36,363 28,406 35,446
Other assets 350,214 325,527 346,883 330,426
Total assets $ 6,903,127 $ 6,739,055 $ 6,815,274 $ 6,701,287
Liabilities and Shareholders' Equity
Deposits:
Noninterest bearing $ 1,170,280 $ 1,096,178 $ 1,173,091 $ 1,101,929
Interest bearing 3,846,846 3,797,118 3,780,717 3,761,111
Total deposits 5,017,126 4,893,296 4,953,808 4,863,040
Borrowings 1,130,133 1,137,877 1,122,926 1,114,113
Other liabilities 64,783 70,353 61,734 75,688
Total liabilities $ 6,212,042 $ 6,101,526 $ 6,138,468 $ 6,052,841
Shareholders' Equity:
Preferred shares $ $ — $ $ —
Common shares 302,870 302,652 302,762 302,653
Accumulated other comprehensive loss, net of taxes (11,967) (43,255) (18,922) (27,825)
Retained earnings 477,795 454,507 470,367 449,993
Treasury shares (77,613) (76,375) (77,401) (76,375)
Total shareholders' equity $ 691,085 $ 637,529 $ 676,806 $ 648,446
Total liabilities and shareholders' equity $ 6,903,127 $ 6,739,055 $ 6,815,274 $ 6,701,287
PARK NATIONAL CORPORATION
Consolidated Statements of Income - Linked Quarters
2014 2014 2014 2013 2013
(in thousands, except per share data) 3rd QTR 2nd QTR 1st QTR 4th QTR 3rd QTR
Interest income:
Interest and fees on loans $ 57,492 $ 57,004 $ 54,753 $ 57,038 $ 56,337
Interest on:
Obligations of U.S. Government, its agencies and other securities 9,011 9,271 9,476 8,911 8,880
Obligations of states and political subdivisions 1 2 4 7
Other interest income 119 87 111 113 186
Total interest income 66,622 66,363 64,342 66,066 65,410
Interest expense:
Interest on deposits:
Demand and savings deposits 440 399 393 382 422
Time deposits 2,136 2,133 2,278 2,516 2,729
Interest on borrowings 7,337 7,270 7,191 7,268 7,299
Total interest expense 9,913 9,802 9,862 10,166 10,450
Net interest income 56,709 56,561 54,480 55,900 54,960
Provision for (recovery of) loan losses 4,501 (1,260) (2,225) (85) 2,498
Net interest income after provision for (recovery of) loan losses 52,208 57,821 56,705 55,985 52,462
Other income 19,396 19,671 16,648 17,778 17,396
Other expense 46,903 48,196 47,698 51,146 44,715
Income before income taxes 24,701 29,296 25,655 22,617 25,143
Income taxes 6,398 7,469 6,036 5,163 6,114
Net income $ 18,303 $ 21,827 $ 19,619 $ 17,454 $ 19,029
Per Common Share:
Net income - basic $ 1.19 $ 1.42 $ 1.27 $ 1.13 $ 1.23
Net income - diluted $ 1.19 $ 1.42 $ 1.27 $ 1.13 $ 1.23
PARK NATIONAL CORPORATION
Detail of other income and other expense - Linked Quarters
2014 2014 2014 2013 2013
(in thousands) 3rd QTR 2nd QTR 1st QTR 4th QTR 3rd QTR
Other income:
Income from fiduciary activities $ 4,734 $ 4,825 $ 4,541 $ 4,590 $ 4,139
Service charges on deposits 4,171 3,942 3,659 4,169 4,255
Other service income 2,450 2,527 1,918 2,185 3,391
Checkcard fee income 3,431 3,493 3,213 3,330 3,326
Bank owned life insurance income 1,420 1,026 1,262 1,274 1,311
OREO valuation adjustments (935) (675) (416) (951) (2,030)
Gain on the sale of OREO, net 2,149 2,603 706 358 895
Miscellaneous 1,976 1,930 1,765 2,823 2,109
Total other income $ 19,396 $ 19,671 $ 16,648 $ 17,778 $ 17,396
Other expense:
Salaries and employee benefits $ 26,243 $ 26,140 $ 25,060 $ 25,115 $ 25,871
Net occupancy expense 2,339 2,457 2,832 2,415 2,348
Furniture and equipment expense 2,870 2,994 2,998 3,022 2,639
Data processing fees 1,281 1,121 1,114 1,064 1,042
Professional fees and services 6,934 8,168 6,283 10,520 5,601
Amortization of intangibles 112
Marketing 1,087 1,006 1,118 1,126 863
Insurance 1,396 1,467 1,447 1,391 1,174
Communication 1,304 1,293 1,343 1,489 1,268
Miscellaneous 3,449 3,550 5,503 5,004 3,797
Total other expense $ 46,903 $ 48,196 $ 47,698 $ 51,146 $ 44,715
PARK NATIONAL CORPORATION
Asset Quality Information
Quarter ended Year ended December 31,
(in thousands, except ratios) September 30, 2014 June 30, 2014 March 31, 2014
2013

2012

2011

2010
Allowance for loan losses:
Allowance for loan losses, beginning of period $ 57,911 $ 60,257 $ 59,468 $ 55,537 $ 68,444 $ 143,575 $ 116,717
Transfer of loans at fair value (219)
Transfer of allowance to held for sale (13,100)
Charge-offs 8,323 (B) 7,695 3,827 19,153 61,268 (A) 133,882 66,314
Recoveries 3,585 6,609 6,841 19,669 12,942 8,798 6,092
Net charge-offs (recoveries) 4,738 1,086 (3,014) (516) 48,326 125,084 60,222
Provision for (recovery of) loan losses 4,501 (1,260) (2,225) 3,415 35,419 63,272 87,080
Allowance for loan losses, end of period $ 57,674 $ 57,911 $ 60,257 $ 59,468 $ 55,537 $ 68,444 $ 143,575
(A) Year ended December 31, 2012 included the full charge-off of the Vision Bank ALLL of $12.1 million to bring the retained Vision Bank loan portfolio to fair value prior to the merger of Vision Bank (as constituted following the transaction with Centennial Bank and Home BancShares, Inc.) with and into SEPH, the non-bank subsidiary of Park, on February 16, 2012.
(B) Quarter ended September 30, 2014 included $4.3 million in charge-offs related to the transfer of $22.0 million of commercial loans to the held for sale portfolio.
General reserve trends:
Allowance for loan losses, end of period $ 57,674 $ 57,911 $ 60,257 $ 59,468 $ 55,537 $ 68,444 $ 143,575
Specific reserves 4,120 6,343 11,322 10,451 8,276 15,935 66,904
General reserves $ 53,554 $ 51,568 $ 48,935 $ 49,017 $ 47,261 $ 52,509 $ 76,671
Total loans $ 4,770,433 $ 4,728,910 $ 4,620,416 $ 4,618,839 $ 4,424,579 $ 4,305,564 $ 4,724,345
Impaired commercial loans 76,198 95,974 105,833 112,304 137,238 187,074 250,933
Total loans less impaired commercial loans $ 4,694,235 $ 4,632,936 $ 4,514,583 $ 4,506,535 $ 4,287,341 $ 4,118,490 $ 4,473,412
Asset Quality Ratios:
Net charge-offs (recoveries) as a % of average loans (annualized for quarterly periods) 0.39% 0.09% (0.27)% (0.01)% 1.10% 2.65% 1.30%
Allowance for loan losses as a % of period end loans 1.21% 1.22% 1.30% 1.29% 1.26% 1.59% 3.04%
General reserves as a % of total loans less impaired commercial loans 1.14% 1.11% 1.08% 1.09% 1.10% 1.27% 1.71%
Nonperforming Assets - Park National Corporation:
Nonaccrual loans $ 100,471 $ 118,895 $ 128,026 $ 135,216 $ 155,536 $ 195,106 $ 289,268
Accruing troubled debt restructuring 17,135 17,514 17,957 18,747 29,800 28,607
Loans past due 90 days or more 1,787 6,493 1,289 1,677 2,970 3,489 3,590
Total nonperforming loans $ 119,393 $ 142,902 $ 147,272 $ 155,640 $ 188,306 $ 227,202 $ 292,858
Loans held for sale 21,985
Total nonperforming loans, including loans held for sale $ 141,378 $ 142,902 $ 147,272 $ 155,640 $ 188,306 $ 227,202 $ 292,858
Other real estate owned - Park National Bank 7,082 7,727 12,486 11,412 14,715 13,240 8,385
Other real estate owned - SEPH 12,103 16,182 22,626 23,224 21,003 29,032
Other real estate owned - Vision Bank 33,324
Total nonperforming assets $ 160,563 $ 166,811 $ 182,384 $ 190,276 $ 224,024 $ 269,474 $ 334,567
Percentage of nonaccrual loans to period end loans 2.11% 2.51% 2.77% 2.93% 3.52% 4.53% 6.12%
Percentage of nonperforming loans to period end loans 2.50% 3.02% 3.19% 3.37% 4.26% 5.28% 6.20%
Percentage of nonperforming assets to period end loans 3.37% 3.53% 3.95% 4.12% 5.06% 6.26% 7.08%
Percentage of nonperforming assets to period end assets 2.29% 2.46% 2.68% 2.87% 3.37% 3.86% 4.59%
PARK NATIONAL CORPORATION
Asset Quality Information (continued)
Year ended December 31,
(in thousands, except ratios) September 30, 2014 June 30, 2014 March 31, 2014
2013

2012

2011

2010
Nonperforming Assets - Park National Bank and Guardian:
Nonaccrual loans $ 77,160 $ 89,231 $ 96,672 $ 99,108 $ 100,244 $ 96,113 $ 117,815
Accruing troubled debt restructuring 17,038 17,417 17,860 18,747 29,800 26,342
Loans past due 90 days or more 1,787 6,493 1,289 1,677 2,970 3,367 3,226
Total nonperforming loans $ 95,985 $ 113,141 $ 115,821 $ 119,532 $ 133,014 $ 125,822 $ 121,041
Loans held for sale 15,475
Total nonperforming loans, including loans held for sale $ 111,460 $ 113,141 $ 115,821 $ 119,532 $ 133,014 $ 125,822 $ 121,041
Other real estate owned - Park National Bank 7,082 7,727 12,486 11,412 14,715 13,240 8,385
Total nonperforming assets $ 118,542 $ 120,868 $ 128,307 $ 130,944 $ 147,729 $ 139,062 $ 129,426
Percentage of nonaccrual loans to period end loans 1.63% 1.90% 2.11% 2.16% 2.30% 2.30% 2.88%
Percentage of nonperforming loans to period end loans 2.02% 2.41% 2.52% 2.61% 3.05% 3.00% 2.96%
Percentage of nonperforming assets to period end loans 2.50% 2.57% 2.80% 2.86% 3.38% 3.32% 3.16%
Percentage of nonperforming assets to period end assets 1.71% 1.81% 1.91% 2.00% 2.27% 2.21% 1.99%
Nonperforming Assets - SEPH/Vision Bank (retained portfolio as of September 30, 2014, June 30, 2014, March 31, 2014, December 31, 2013, 2012, and 2011):
Nonaccrual loans $ 23,311 $ 29,664 $ 31,354 $ 36,108 $ 55,292 $ 98,993 $ 171,453
Accruing troubled debt restructuring 97 97 97 2,265
Loans past due 90 days or more 122 364
Total nonperforming loans $ 23,408 $ 29,761 $ 31,451 $ 36,108 $ 55,292 $ 101,380 $ 171,817
Loans held for sale 6,511
Total nonperforming loans, including loans held for sale $ 29,919 $ 29,761 $ 31,451 $ 36,108 $ 55,292 $ 101,380 $ 171,817
Other real estate owned - Vision Bank 33,324
Other real estate owned - SEPH 12,103 16,182 22,626 23,224 21,003 29,032
Total nonperforming assets $ 42,022 $ 45,943 $ 54,077 $ 59,332 $ 76,295 $ 130,412 $ 205,141
Percentage of nonaccrual loans to period end loans N.M. N.M. N.M. N.M. N.M. N.M. 27.02%
Percentage of nonperforming loans to period end loans N.M. N.M. N.M. N.M. N.M. N.M. 27.07%
Percentage of nonperforming assets to period end loans N.M. N.M. N.M. N.M. N.M. N.M. 32.32%
Percentage of nonperforming assets to period end assets N.M. N.M. N.M. N.M. N.M. N.M. 25.90%
PARK NATIONAL CORPORATION
Asset Quality Information (continued)
Year ended December 31,
(in thousands, except ratios) September 30, 2014 June 30, 2014 March 31, 2014
2013

2012

2011

2010
New nonaccrual loan information - Park National Corporation
Nonaccrual loans, beginning of period $ 118,895 $ 128,026 $ 135,216 $ 155,536 $ 195,106 $ 289,268 $ 233,544
New nonaccrual loans 25,739 14,785 12,875 67,398 83,204 124,158 175,175
Resolved nonaccrual loans 22,178 23,916 20,065 87,718 122,774 218,320 119,451
Loans transferred to held for sale 21,985
Nonaccrual loans, end of period $ 100,471 $ 118,895 $ 128,026 $ 135,216 $ 155,536 $ 195,106 $ 289,268
New nonaccrual loan information - Ohio - based operations
Nonaccrual loans, beginning of period $ 89,231 $ 96,672 $ 99,108 $ 100,244 $ 96,113 $ 117,815 $ 85,197
New nonaccrual loans - Ohio-based operations 25,069 14,785 12,875 66,197 68,960 78,316 85,081
Resolved nonaccrual loans 21,665 22,226 15,311 67,333 64,829 100,018 52,463
Loans transferred to held for sale 15,475
Nonaccrual loans, end of period $ 77,160 $ 89,231 $ 96,672 $ 99,108 $ 100,244 $ 96,113 $ 117,815
New nonaccrual loan information - SEPH/Vision Bank
Nonaccrual loans, beginning of period $ 29,664 $ 31,354 $ 36,108 $ 55,292 $ 98,993 $ 171,453 $ 148,347
New nonaccrual loans - SEPH/Vision Bank 670 1,201 14,243 45,842 90,094
Resolved nonaccrual loans 512 1,690 4,754 20,385 57,944 118,302 66,988
Loans transferred to held for sale 6,511
Nonaccrual loans, end of period $ 23,311 $ 29,664 $ 31,354 $ 36,108 $ 55,292 $ 98,993 $ 171,453
Impaired Commercial Loan Portfolio Information (period end): (1)
Unpaid principal balance $ 120,773 $ 154,396 $ 160,199 $ 175,576 $ 242,345 $ 290,908 $ 304,534
Prior charge-offs 44,575 58,422 54,366 63,272 105,107 103,834 53,601
Remaining principal balance 76,198 95,974 105,833 112,304 137,238 187,074 250,933
Specific reserves 4,120 6,343 11,322 10,451 8,276 15,935 66,904
Book value, after specific reserve $ 72,078 $ 89,631 $ 94,511 $ 101,853 $ 128,962 $ 171,139 $ 184,029
(1) Excludes $22.0 million of commercial loans held for sale for the period ended September 30, 2014.

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