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

NEWARK, Ohio, July 22, 2013 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE MKT:PRK) today reported financial results for the three-month (second quarter) and six-month (first half) periods ended June 30, 2013. The report showed increased second quarter income compared to 2012 as well as notable loan growth. Also, Park's board of directors declared a $0.94 per common share quarterly cash dividend, payable on September 10, 2013 to common shareholders of record as of August 23, 2013.

The board of directors also today announced that effective January 1, 2014, Park President David L. Trautman will become chief executive officer of Park National Corporation and The Park National Bank. Trautman will then serve as president and chief executive officer, while C. Daniel DeLawder will continue in his role as chairman of both Park National Corporation and The Park National Bank.

Net income for the second quarter of 2013 was $20.0 million, compared to $18.9 million for the same period in 2012. Net income for the six months ended June 30, 2013 was $40.7 million. Net income for the same period in 2012 was $50.4 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 half of 2012 would have been $36.0 million. Park's net income in the first half of 2013 of $40.7 million was an increase of $4.7 million, or 13.1 percent, above first half of 2012 results excluding the gain related to this sale.

Net income per diluted common share for the second quarter of 2013 was $1.30, compared to $1.10 in the same period of 2012. Net income per diluted common share for the first half of 2013 was $2.64. Net income per diluted common share was $3.05 for the first half of 2012. Excluding the gain on sale of the Vision Bank business, net income per diluted common share would have been $2.11 for the six months ended June 30, 2012.

"We are pleased with the results for the second quarter and first half of 2013. Our steadfast commitment to our long-standing principles and practices continues to generate successful performance, despite the ongoing challenging economic environment," said Park Chairman C. Daniel DeLawder.

The Park National Bank Results

Park's community-banking subsidiary in Ohio, The Park National Bank, reported net income of $40.3 million for the first half of 2013, compared to net income of $45.0 million for the same period in 2012. The Park National Bank had total assets of $6.5 billion at both June 30, 2013 and 2012. This performance generated an annualized return on average assets of 1.24 percent and 1.40 percent for The Park National Bank through the first six months of 2013 and 2012, respectively.

The Park National Bank loan portfolio experienced good growth during the second quarter of 2013 and first half of 2013. Through the first six months of 2013, loan balances increased by $72.4 million. Loans outstanding at June 30, 2013 of $4.44 billion represented an increase of $160 million compared to the loans outstanding of $4.28 billion at June 30, 2012. The $160 million increase in loans over the last twelve months is related to continued growth in the bank's retained mortgage loan portfolio, growth in the consumer loan portfolio, and increases in the commercial loan portfolio.

"We continue to find new opportunities to help families and businesses secure smart, reliable loans. We'll strive to sustain the loan growth in the second half of the year," said Park President David L. Trautman. "Our associates are focused, devoting consistent attention to the financial needs and goals of our customers."

Headquartered in Newark, Ohio, Park National Corporation had $6.6 billion in total assets (as of June 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 uneven spread of positive impacts of recovery on the economy, specifically in 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 or slower than expected which could adversely impact the demand for loan, deposit and other financial services and 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 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; 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, 2012. 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 June 30, 2013, March 31, 2013, and June 30, 2012
2013 2013 2012 Percent change vs.
(in thousands, except share and per share data) 2nd QTR 1st QTR 2nd QTR 1Q '13 2Q '12
INCOME STATEMENT:
Net interest income $ 54,712 $ 55,453 $ 58,680 (1.3)% (6.8)%
Provision for loan losses 673 329 5,238 104.6% (87.2)%
Other income 19,298 18,805 17,508 2.6% 10.2%
Total other expense 46,570 46,098 45,804 1.0% 1.7%
Income before income taxes $ 26,767 $ 27,831 $ 25,146 (3.8)% 6.4%
Income taxes 6,733 7,121 6,260 (5.4)% 7.6%
Net income $ 20,034 $ 20,710 $ 18,886 (3.3)% 6.1%
Preferred stock dividends and accretion -- -- 1,948 N.M. N.M.
Net income available to common shareholders $ 20,034 $ 20,710 $ 16,938 (3.3)% 18.3%
MARKET DATA:
Earnings per common share - basic (b) $ 1.30 $ 1.34 $ 1.10 (3.0)% 18.2%
Earnings per common share - diluted (b) 1.30 1.34 1.10 (3.0)% 18.2%
Cash dividends per common share 0.94 0.94 0.94 --% --%
Common book value per common share at period end 41.48 42.45 42.88 (2.3)% (3.3)%
Stock price per common share at period end 68.79 69.79 69.75 (1.4)% (1.4)%
Market capitalization at period end 1,060,190 1,075,602 1,074,561 (1.4)% (1.3)%
Weighted average common shares - basic (a) 15,411,981 15,411,990 15,405,902 --% --%
Weighted average common shares - diluted (a) 15,411,981 15,411,990 15,405,902 --% --%
Common shares outstanding at period end 15,411,977 15,411,984 15,405,898 --% --%
PERFORMANCE RATIOS: (annualized)
Return on average assets (a)(b) 1.20% 1.25% 1.01% (4.0)% 18.8%
Return on average common equity (a)(b) 12.26% 12.87% 10.33% (4.7)% 18.7%
Yield on loans 5.08% 5.13% 5.36% (1.0)% (5.2)%
Yield on investments 2.68% 2.91% 3.30% (7.9)% (18.8)%
Yield on money markets 0.25% 0.25% 0.25% --% --%
Yield on earning assets 4.31% 4.41% 4.71% (2.3)% (8.5)%
Cost of interest bearing deposits 0.36% 0.39% 0.51% (7.7)% (29.4)%
Cost of borrowings 2.64% 2.62% 2.81% 0.8% (6.0)%
Cost of paying liabilities 0.88% 0.90% 1.05% (2.2)% (16.2)%
Net interest margin 3.61% 3.70% 3.87% (2.4)% (6.7)%
Efficiency ratio (g) 62.61% 61.76% 59.80% 1.4% 4.7%
OTHER RATIOS (NON GAAP):
Annualized return on average tangible assets (a)(b)(e) 1.22% 1.27% 1.03% (3.9)% 18.4%
Annualized return on average tangible common equity (a)(b)(c) 13.79% 14.48% 11.62% (4.8)% 18.7%
Tangible common book value per common share (d) $ 36.77 $ 37.74 $ 38.15 (2.6)% (3.6)%
PARK NATIONAL CORPORATION
Financial Highlights (continued)
Three months ended June 30, 2013, March 31, 2013, and June 30, 2012
Percent change vs.
BALANCE SHEET: June 30, 2013 March 31, 2013 June 30, 2012 1Q '13 2Q '12
Investment securities $ 1,345,069 $ 1,352,408 $ 1,688,654 (0.5)% (20.3%
Loans 4,510,716 4,443,523 4,386,851 1.5% 2.8%
Allowance for loan losses 55,111 55,315 58,696 (0.4)% (6.1%
Goodwill and other intangibles 72,446 72,559 72,949 (0.2)% (0.7)%
Other real estate owned 35,662 36,292 38,424 (1.7)% (7.2)%
Total assets 6,640,473 6,747,155 6,705,574 (1.6)% (1.0)%
Total deposits 4,851,314 4,916,541 4,822,975 (1.3)% 0.6%
Borrowings 1,086,875 1,107,097 1,152,139 (1.8)% (5.7)%
Stockholders' equity 639,219 654,210 660,623 (2.3)% (3.2)%
Common equity 639,219 654,210 660,623 (2.3)% (3.2)%
Tangible common equity (d) 566,773 581,651 587,674 (2.6)% (3.6)%
Nonperforming loans 169,313 177,163 207,631 (4.4)% (18.5)%
Nonperforming assets 204,975 213,455 246,055 (4.0)% (16.7)%
ASSET QUALITY RATIOS:
Loans as a % of period end assets 67.93% 65.86% 65.42% 3.1% 3.8%
Nonperforming loans as a % of period end loans 3.75% 3.99% 4.73% (6.0)% (20.7)%
Nonperforming assets / Period end loans + OREO 4.51% 4.76% 5.56% (5.3)% (18.9)%
Allowance for loan losses as a % of period end loans 1.22% 1.24% 1.34% (1.6)% (9.0)%
Net loan charge-offs $ 877 $ 551 $ 6,469 59.2% (86.4)%
Annualized net loan charge-offs as a % of average loans (a) 0.08% 0.05% 0.60% 60.0% (86.7)%
CAPITAL & LIQUIDITY:
Total equity / Period end assets 9.63% 9.70% 9.85% (0.7)% (2.2)%
Common equity / Period end assets 9.63% 9.70% 9.85% (0.7)% (2.2)%
Tangible common equity (d) / Tangible assets (f) 8.63% 8.71% 8.86% (0.9)% (2.6)%
Average equity / Average assets (a) 9.83% 9.75% 10.21% 0.8% (3.7)%
Average equity / Average loans (a) 14.62% 14.70% 15.74% (0.5)% (7.1)%
Average loans / Average deposits (a) 92.52% 91.54% 90.83% 1.1% 1.9%
N.M. - Not meaningful
PARK NATIONAL CORPORATION
Financial Highlights
Six months ended June 30, 2013 and 2012
Percent change
(in thousands, except share and per share data) 2013 2012 vs. 2012
INCOME STATEMENT:
Net interest income $ 110,165 $ 120,408 (8.5)%
Provision for loan losses 1,002 13,576 (92.6)%
Gain on sale of Vision Bank business -- 22,167 N.M.
Other income 38,103 34,961 9.0%
Total other expense 92,668 94,274 (1.7)%
Income before income taxes $ 54,598 $ 69,686 (21.7)%
Income taxes 13,854 19,325 (28.3)%
Net income $ 40,744 $ 50,361 (19.1)%
Preferred stock dividends and accretion -- 3,425 N.M.
Net income available to common shareholders $ 40,744 $ 46,936 (13.2)%
MARKET DATA:
Earnings per common share - basic (b) $ 2.64 $ 3.05 (13.4)%
Earnings per common share - diluted (b) 2.64 3.05 (13.4)%
Cash dividends per common share 1.88 1.88 --%
Weighted average common shares - basic (a) 15,411,986 15,405,906 --%
Weighted average common shares - diluted (a) 15,411,986 15,409,690 --%
PERFORMANCE RATIOS: (Annualized)
Return on average assets (a)(b) 1.23% 1.39% (11.5)%
Return on average common equity (a)(b) 12.56% 14.39% (12.7)%
Yield on loans 5.10% 5.44% (6.3)%
Yield on investments 2.80% 3.32% (15.7)%
Yield on earning assets 4.36% 4.76% (8.4)%
Cost of interest bearing deposits 0.37% 0.53% (30.2)%
Cost of borrowings 2.63% 2.77% (5.1)%
Cost of paying liabilities 0.89% 1.05% (15.2)%
Net interest margin (g) 3.66% 3.92% (6.6)%
Efficiency ratio (g) 62.18% 52.85% 17.7%
ASSET QUALITY RATIOS:
Net loan charge-offs $ 1,428 $ 23,493 (93.9)%
Annualized net loan charge-offs as a % of average loans (a) 0.06% 1.07% (94.4)%
CAPITAL & LIQUIDITY:
Average stockholders' equity / Average assets (a) 9.79% 10.55% (7.2)%
Average stockholders' equity / Average loans (a) 14.66% 16.25% (9.8)%
Average loans / Average deposits (a) 92.03% 90.83% 1.3%
OTHER RATIOS (NON GAAP):
Annualized return on average tangible assets (a)(b)(e) 1.24% 1.40% (11.4)%
Annualized return on average tangible common equity (a)(b)(c) 14.13% 16.20% (12.8)%
PARK NATIONAL CORPORATION
Financial Highlights (continued)
a) Averages are for the quarters ended June 30, 2013, March 31, 2013 and June 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 SIX MONTHS ENDED
June 30, 2013 March 31, 2013 June 30, 2012 June 30, 2013 June 30, 2012
AVERAGE STOCKHOLDERS' EQUITY $ 655,432 $ 652,543 $ 685,305 $ 653,995 $ 717,905
Less: Average preferred stock -- -- 25,944 -- 62,093
Average goodwill and other intangibles 72,509 72,621 73,027 72,565 73,323
AVERAGE TANGIBLE COMMON EQUITY $ 582,923 $ 579,922 $ 586,334 $ 581,430 $ 582,489
(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:
June 30, 2013 March 31, 2013 June 30, 2012
STOCKHOLDERS' EQUITY $ 639,219 $ 654,210 $ 660,623
Less: Preferred stock -- -- --
Goodwill and other intangibles 72,446 72,559 72,949
TANGIBLE COMMON EQUITY $ 566,773 $ 581,651 $ 587,674
(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 SIX MONTHS ENDED
June 30, 2013 March 31, 2013 June 30, 2012 June 30, 2013 June 30, 2012
AVERAGE ASSETS $ 6,670,829 $ 6,693,476 $ 6,712,439 $ 6,682,090 $ 6,804,493
Less: Average goodwill and other intangibles 72,509 72,621 73,027 72,565 73,323
AVERAGE TANGIBLE ASSETS $ 6,598,320 $ 6,620,855 $ 6,639,412 $ 6,609,525 $ 6,731,170
(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:
June 30, 2013 March 31, 2013 June 30, 2012 ��
TOTAL ASSETS $ 6,640,473 $ 6,747,155 $ 6,705,574
Less: Goodwill and other intangibles 72,446 72,559 72,949
TANGIBLE ASSETS $ 6,568,027 $ 6,674,596 $ 6,632,625
(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 SIX MONTHS ENDED
June 30, 2013 March 31, 2013 June 30, 2012 June 30, 2013 June 30, 2012
Interest income $ 65,279 $ 66,192 $ 71,486 $ 131,471 $ 146,324
Fully taxable equivalent adjustment 368 387 406 755 833
Fully taxable equivalent interest income $ 65,647 $ 66,579 $ 71,892 $ 132,226 $ 147,157
Interest expense 10,567 10,739 12,806 21,306 25,916
Fully taxable equivalent net interest income $ 55,080 $ 55,840 $ 59,086 $ 110,920 $ 121,241
PARK NATIONAL CORPORATION
Consolidated Statements of Income
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands, except share and per share data) 2013 2012 2013 2012
Interest income:
Interest and fees on loans $ 56,388 $ 57,593 $ 112,163 $ 118,698
Interest on:
Obligations of U.S. Government, its agencies and other securities 8,673 13,794 18,915 27,378
Obligations of states and political subdivisions 16 42 33 88
Other interest income 202 57 360 160
Total interest income 65,279 71,486 131,471 146,324
Interest expense:
Interest on deposits:
Demand and savings deposits 468 602 969 1,356
Time deposits 2,900 4,121 5,990 8,760
Interest on borrowings 7,199 8,083 14,347 15,800
Total interest expense 10,567 12,806 21,306 25,916
Net interest income 54,712 58,680 110,165 120,408
Provision for loan losses 673 5,238 1,002 13,576
Net interest income after provision for loan losses 54,039 53,442 109,163 106,832
Gain on sale of Vision Bank business -- -- -- 22,167
Other income 19,298 17,508 38,103 34,961
Total other expense 46,570 45,804 92,668 94,274
Income before income taxes 26,767 25,146 54,598 69,686
Income taxes 6,733 6,260 13,854 19,325
Net income $ 20,034 $ 18,886 $ 40,744 $ 50,361
Preferred stock dividends and accretion -- 1,948 -- 3,425
Net income available to common shareholders $ 20,034 $ 16,938 $ 40,744 $ 46,936
Per Common Share:
Net income - basic $ 1.30 $ 1.10 $ 2.64 $ 3.05
Net income - diluted $ 1.30 $ 1.10 $ 2.64 $ 3.05
Weighted average shares - basic 15,411,981 15,405,902 15,411,986 15,405,906
Weighted average shares - diluted 15,411,981 15,405,902 15,411,986 15,409,690
Cash Dividends Declared 0.94 0.94 1.88 1.88
PARK NATIONAL CORPORATION
Consolidated Balance Sheets
(in thousands, except share data) June 30, 2013 December 31, 2012
Assets
Cash and due from banks $ 117,910 $ 164,120
Money market instruments 236,016 37,185
Investment securities 1,345,069 1,581,751
Loans 4,510,716 4,450,322
Allowance for loan losses 55,111 55,537
Loans, net 4,455,605 4,394,785
Bank premises and equipment, net 56,822 53,751
Goodwill and other intangibles 72,446 72,671
Other real estate owned 35,662 35,718
Other assets 320,943 302,822
Total assets $ 6,640,473 $ 6,642,803
Liabilities and Stockholders' Equity
Deposits:
Noninterest bearing $ 1,095,454 $ 1,137,290
Interest bearing 3,755,860 3,578,742
Total deposits 4,851,314 4,716,032
Borrowings 1,086,875 1,206,076
Other liabilities 63,065 70,329
Total liabilities $ 6,001,254 $ 5,992,437
Stockholders' Equity:
Common stock (No par value; 20,000,000 shares authorized in 2013 and 2012; 16,150,966 shares issued at June 30, 2013, and 16,150,987 shares issued at December 31, 2012) $ 302,653 $ 302,654
Accumulated other comprehensive loss, net of taxes (40,434) (17,518)
Retained earnings 453,375 441,605
Treasury stock (738,989 shares at June 30, 2013 and December 31, 2012) (76,375) (76,375)
Total stockholders' equity $ 639,219 $ 650,366
Total liabilities and stockholders' equity $ 6,640,473 $ 6,642,803
PARK NATIONAL CORPORATION
Consolidated Average Balance Sheets
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands) 2013 2012 2013 2012
Assets
Cash and due from banks $ 109,130 $ 115,175 $ 111,881 $ 125,827
Money market instruments 324,783 92,854 292,433 130,867
Investment securities 1,312,796 1,708,312 1,376,186 1,686,102
Loans 4,484,161 4,353,181 4,461,361 4,419,128
Allowance for loan losses 55,579 60,490 56,434 65,466
Loans, net 4,428,582 4,292,691 4,404,927 4,353,662
Bank premises and equipment, net 57,306 52,328 56,204 56,363
Goodwill and other intangibles 72,509 73,027 72,565 73,323
Other real estate owned 35,671 40,078 34,980 41,370
Other assets 330,052 337,974 332,914 336,979
Total assets $ 6,670,829 $ 6,712,439 $ 6,682,090 $ 6,804,493
Liabilities and Stockholders' Equity
Deposits:
Noninterest bearing $ 1,108,705 $ 1,030,740 $ 1,104,851 $ 1,038,901
Interest bearing 3,738,039 3,761,781 3,742,810 3,826,631
Total deposits 4,846,744 4,792,521 4,847,661 4,865,532
Borrowings 1,095,832 1,156,113 1,102,034 1,147,570
Other liabilities 72,821 78,500 78,400 73,486
Total liabilities $ 6,015,397 $ 6,027,134 $ 6,028,095 $ 6,086,588
Stockholders' Equity:
Preferred stock $ -- $ 25,944 $ -- $ 62,093
Common stock 302,653 302,113 302,653 301,657
Common stock warrants -- 1,511 -- 2,904
Accumulated other comprehensive loss, net of taxes (21,207) (8,267) (19,983) (8,312)
Retained earnings 450,361 441,011 447,700 436,570
Treasury stock (76,375) (77,007) (76,375) (77,007)
Total stockholders' equity $ 655,432 $ 685,305 $ 653,995 $ 717,905
Total liabilities and stockholders' equity $ 6,670,829 $ 6,712,439 $ 6,682,090 $ 6,804,493
PARK NATIONAL CORPORATION
Consolidated Statements of Income - Linked Quarters
2013 2013 2012 2012 2012
(in thousands, except per share data) 2nd QTR 1st QTR 4th QTR 3rd QTR 2nd QTR
Interest income:
Interest and fees on loans $ 56,388 $ 55,775 $ 57,671 $ 58,269 $ 57,593
Interest on:
Obligations of U.S. Government, its agencies and other securities 8,673 10,242 10,984 12,187 13,794
Obligations of states and political subdivisions 16 17 19 33 42
Other interest income 202 158 119 129 57
Total interest income 65,279 66,192 68,793 70,618 71,486
Interest expense:
Interest on deposits:
Demand and savings deposits 468 501 491 636 602
Time deposits 2,900 3,090 3,404 3,757 4,121
Interest on borrowings 7,199 7,148 8,007 8,209 8,083
Total interest expense 10,567 10,739 11,902 12,602 12,806
Net interest income 54,712 55,453 56,891 58,016 58,680
Provision for loan losses 673 329 5,188 16,655 5,238
Net interest income after provision for loan losses 54,039 55,124 51,703 41,361 53,442
Other income 19,298 18,805 17,196 18,079 17,508
Total other expense 46,570 46,098 48,011 45,683 45,804
Income before income taxes 26,767 27,831 20,888 13,757 25,146
Income taxes 6,733 7,121 4,601 1,775 6,260
Net income $ 20,034 $ 20,710 $ 16,287 $ 11,982 $ 18,886
Preferred stock dividends and accretion -- -- -- -- 1,948
Net income available to common shareholders $ 20,034 $ 20,710 $ 16,287 $ 11,982 $ 16,938
Per Common Share:
Net income - basic $ 1.30 $ 1.34 $ 1.06 $ 0.78 $ 1.10
Net income - diluted $ 1.30 $ 1.34 $ 1.06 $ 0.78 $ 1.10
PARK NATIONAL CORPORATION
Detail of other income and other expense - Linked Quarters
2013 2013 2012 2012 2012
(in thousands) 2nd QTR 1st QTR 4th QTR 3rd QTR 2nd QTR
Other income:
Income from fiduciary activities $ 4,328 $ 4,076 $ 4,056 $ 4,019 $ 4,044
Service charges on deposits 4,070 3,822 4,235 4,244 4,154
Other service income 3,352 3,985 3,463 4,017 3,417
Checkcard fee income 3,316 2,983 3,151 3,038 3,180
Bank owned life insurance income 1,254 1,202 1,184 1,184 1,184
ATM fees 677 627 650 565 536
OREO devaluations, net (600) 401 (2,440) (425) (2,648)
Gain on the sale of OREO, net 1,633 224 1,028 138 2,203
Other 1,268 1,485 1,869 1,299 1,438
Total other income $ 19,298 $ 18,805 $ 17,196 $ 18,079 $ 17,508
Other expense:
Salaries and employee benefits $ 24,679 $ 24,633 $ 24,086 $ 24,255 $ 22,813
Net occupancy expense 2,444 2,597 2,222 2,303 2,249
Furniture and equipment expense 2,981 2,607 2,774 2,666 2,727
Data processing fees 1,049 1,019 913 904 899
Professional fees and services 5,880 5,864 6,846 6,040 5,800
Amortization of intangibles 113 112 139 139 139
Marketing 953 848 1,002 924 705
Insurance 1,338 1,302 1,482 1,408 1,400
Communication 1,453 1,580 1,482 1,470 1,494
Loan put provision -- -- -- 346 2,701
Other 5,680 5,536 7,065 5,228 4,877
Total other expense $ 46,570 $ 46,098 $ 48,011 $ 45,683 $ 45,804
PARK NATIONAL CORPORATION
Asset Quality Information
Year ended December 31,
(in thousands, except ratios) June 30, 2013 March 31, 2013 2012 2011 2010 2009
Allowance for loan losses:
Allowance for loan losses, beginning of period $ 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) 3,839 6,508 61,268 133,882 66,314 59,022
Recoveries 2,962 5,957 12,942 8,798 6,092 6,830
Net charge-offs 877 551 48,326 125,084 60,222 52,192
Provision for loan losses 673 329 35,419 63,272 87,080 68,821
Allowance for loan losses, end of period $ 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 $ 55,111 $ 55,315 $ 55,537 $ 68,444 $ 143,575 $ 116,717
Specific reserves 7,466 8,260 8,276 15,935 66,904 36,721
General reserves $ 47,645 $ 47,055 $ 47,261 $ 52,509 $ 76,671 $ 79,996
Total loans $ 4,510,716 $ 4,443,523 $ 4,450,322 $ 4,317,099 $ 4,732,685 $ 4,640,432
Impaired commercial loans 126,080 130,270 137,238 187,074 250,933 201,143
Non-impaired loans $ 4,384,636 $ 4,313,253 $ 4,313,084 $ 4,130,025 $ 4,481,752 $ 4,439,289
Asset Quality Ratios:
Net charge-offs as a % of average loans (annualized for quarterly periods) 0.08% 0.05% 1.10% 2.65% 1.30% 1.14%
Allowance for loan losses as a % of period end loans 1.22% 1.24% 1.25% 1.59% 3.03% 2.52%
General reserves as a % of non-impaired loans 1.09% 1.09% 1.10% 1.27% 1.71% 1.80%
Nonperforming Assets - Park National Corporation:
Nonaccrual loans $ 145,398 $ 151,539 $ 155,536 $ 195,106 $ 289,268 $ 233,544
Accruing troubled debt restructurings 22,413 24,274 29,800 28,607 -- 142
Loans past due 90 days or more 1,502 1,350 2,970 3,489 3,590 14,773
Total nonperforming loans $ 169,313 $ 177,163 $ 188,306 $ 227,202 $ 292,858 $ 248,459
Other real estate owned - Park National Bank 14,273 14,587 14,715 13,240 8,385 6,037
Other real estate owned - SEPH 21,389 21,705 21,003 29,032 -- --
Other real estate owned - Vision Bank -- -- -- -- 33,324 35,203
Total nonperforming assets $ 204,975 $ 213,455 $ 224,024 $ 269,474 $ 334,567 $ 289,699
Percentage of nonaccrual loans to period end loans 3.22% 3.41% 3.49% 4.52% 6.11% 5.03%
Percentage of nonperforming loans to period end loans 3.75% 3.99% 4.23% 5.26% 6.19% 5.35%
Percentage of nonperforming assets to period end loans 4.54% 4.80% 5.03% 6.24% 7.07% 6.24%
Percentage of nonperforming assets to period end assets 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) June 30, 2013 March 31, 2013 2012 2011 2010 2009
Nonperforming Assets - Park National Bank and Guardian:
Nonaccrual loans $ 102,182 $ 103,246 $ 100,244 $ 96,113 $ 117,815 $ 85,197
Accruing troubled debt restructuring 22,413 24,274 29,800 26,342 -- 142
Loans past due 90 days or more 1,502 1,350 2,970 3,367 3,226 3,496
Total nonperforming loans $ 126,097 $ 128,870 $ 133,014 $ 125,822 $ 121,041 $ 88,835
Other real estate owned - Park National Bank 14,273 14,587 14,715 13,240 8,385 6,037
Total nonperforming assets $ 140,370 $ 143,457 $ 147,729 $ 139,062 $ 129,426 $ 94,872
Percentage of nonaccrual loans to period end loans 2.29% 2.35% 2.28% 2.29% 2.88% 2.15%
Percentage of nonperforming loans to period end loans 2.82% 2.93% 3.03% 3.00% 2.96% 2.24%
Percentage of nonperforming assets to period end loans 3.14% 3.27% 3.36% 3.32% 3.16% 2.39%
Percentage of nonperforming assets to period end assets 2.15% 2.17% 2.27% 2.21% 1.99% 1.53%
Nonperforming Assets - SEPH/Vision Bank (retained portfolio as of June 30, 2013, March 31, 2013, December 31, 2012, and December 31, 2011):
Nonaccrual loans $ 43,216 $ 48,293 $ 55,292 $ 98,993 $ 171,453 $ 148,347
Accruing troubled debt restructurings -- -- -- 2,265 -- --
Loans past due 90 days or more -- -- -- 122 364 11,277
Total nonperforming loans $ 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 21,389 21,705 21,003 29,032 -- --
Total nonperforming assets $ 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. 26.77% 21.91%
Percentage of nonperforming loans to period end loans 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. 32.02% 28.78%
Percentage of nonperforming assets to period end assets N.M. N.M. N.M. N.M. 25.90% 21.70%
New nonaccrual loan information - Park National Corporation
Nonaccrual loans, beginning of period $ 151,539 $ 155,536 $ 195,106 $ 289,268 $ 233,544 $ 159,512
New nonaccrual loans 15,404 21,141 83,204 124,158 175,175 184,181
Resolved nonaccrual loans 21,545 25,138 122,774 218,320 119,451 110,149
Nonaccrual loans, end of period $ 145,398 $ 151,539 $ 155,536 $ 195,106 $ 289,268 $ 233,544
New nonaccrual loan information - Ohio based operations
Nonaccrual loans, beginning of period $ 103,246 $ 100,244 $ 96,113 $ 117,815 $ 85,197 $ 68,306
New nonaccrual loans - Ohio based operations 15,404 21,141 68,960 78,316 85,081 57,641
Resolved nonaccrual loans 16,468 18,139 64,829 100,018 52,463 40,750
Nonaccrual loans, end of period $ 102,182 $ 103,246 $ 100,244 $ 96,113 $ 117,815 $ 85,197
New nonaccrual loan information- SEPH/Vision Bank (SEPH as of June 30, 2013 and March 31, 2012)
Nonaccrual loans, beginning of period $ 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 5,077 6,999 57,944 118,302 66,988 69,399
Nonaccrual loans, end of period $ 43,216 $ 48,293 $ 55,292 $ 98,993 $ 171,453 $ 148,347
Impaired Commercial Loan Portfolio Information (period end):
Unpaid principal balance $ 222,871 $ 233,144 $ 242,345 $ 290,908 $ 304,534 $ 245,092
Prior charge-offs 96,791 102,874 105,107 103,834 53,601 43,949
Remaining principal balance 126,080 130,270 137,238 187,074 250,933 201,143
Specific reserves 7,466 8,260 8,276 15,935 66,904 36,721
Book value, after specific reserve $ 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