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TheStreet Open House

Park National Corporation Reports Second Quarter 2010 Financial Results And Declares Quarterly Cash Dividend

Additional information

During the 2010 second quarter, Park completed the sale of approximately $56.8 million of investment securities, which resulted in a pre-tax gain of $3.5 million.

Headquartered in Newark, Ohio, Park National Corporation has $7.1 billion in total assets (as of June 30, 2010). Park consists of 13 community bank divisions 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 and The Park National Bank of Southwest Ohio & Northern Kentucky Division. Park's other banking subsidiary is Vision Bank (headquartered in Panama City, Florida), and its Vision Bank Division (of Gulf Shores, Alabama). Park also includes Scope Leasing, Inc. (d.b.a. Scope Aircraft Finance) and Guardian Financial Services Company (d.b.a. Guardian Finance Company).

Complete financial tables are included below.

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

This news release contains forward-looking statements that are provided to assist in the understanding of anticipated future financial performance. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management's expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include, without limitation: deterioration in the asset value of Park's loan portfolio may be worse than expected due to a number of factors, such as adverse changes in economic conditions that impair the ability of borrowers to repay their loans, the underlying value of the collateral could prove less valuable than assumed and cash flows may be worse than expected; Park's ability to execute its business plan successfully and within the expected timeframe; general economic and financial market conditions, and weakening in the economy, specifically, the real estate market and credit market, either nationally or in the states in which Park and its subsidiaries do business, may be worse than expected which could decrease the demand for loan, deposit and other financial services and increase loan delinquencies and defaults; the effects of the Gulf of Mexico oil spill; changes in market 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; our liquidity requirements could be adversely affected by changes in our assets and liabilities; competitive factors among financial institutions 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 effect of fiscal and governmental policies of the United States federal government; 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, 2009 and in "Item 1A. Risk Factors" of Part II of Park's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2010. Undue reliance should not be placed on the forward-looking statements, which speak only as of the date hereof. Park does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.

PARK NATIONAL CORPORATION
Financial Highlights
Three months ended June 30, 2010, March 31, 2010 and June 30, 2009              
               
  2010   2009   Percent change vs.
(in thousands, except share and per share data) 2nd QTR 1st QTR   2nd QTR   1Q '10 2Q '09
INCOME STATEMENT:              
Net interest income  $ 68,721  $ 67,380    $ 67,994   2.0% 1.1%
Provision for loan losses 13,250 16,550   15,856   -19.9% -16.4%
Other income 16,647 16,710   19,757   -0.4% -15.7%
Gain on sale of securities  3,515  8,304    7,340   -57.7% -52.1%
Total other expense 47,001 47,890   50,151   -1.9% -6.3%
Income before income taxes  $ 28,632  $ 27,954    $ 29,084   2.4% -1.6%
Income taxes 7,466 7,175    7,777   4.1% -4.0%
Net income  $ 21,166  $ 20,779    $ 21,307   1.9% -0.7%
Preferred stock dividends and accretion 1,451 1,452    1,441   -0.1% 0.7%
Net income available to common shareholders  $ 19,715  $ 19,327    $ 19,866   2.0% -0.8%
               
MARKET DATA:              
Earnings per common share - basic (b)  $ 1.30  $ 1.30    $ 1.42   0.0% -8.5%
Earnings per common share - diluted (b)  1.30  1.30    1.42   0.0% -8.5%
Cash dividends per common share  0.94  0.94    0.94   0.0% 0.0%
Common book value per common share at period end  42.94 41.94    40.20   2.4% 6.8%
Stock price per common share at period end  65.04  62.31    56.48   4.4% 15.2%
Market capitalization at period end  989,054  927,345    799,469   6.7% 23.7%
               
Weighted average common shares - basic (a)  15,114,846  14,882,774    14,001,608   1.6% 8.0%
Weighted average common shares - diluted (a)  15,114,846  14,882,774    14,001,608   1.6% 8.0%
Common shares outstanding at period end  15,206,854  14,882,765    14,154,908   2.2% 7.4%
               
PERFORMANCE RATIOS:              
Annualized return on average assets (a)(b) 1.13% 1.11%   1.13%   1.8% 0.0%
Annualized return on average common equity (a)(b) 12.27% 12.43%   14.11%   -1.3% -13.0%
Yield on loans 5.84% 5.87%   6.02%   -0.5% -3.0%
Yield on investments 4.44% 4.43%   4.92%   0.2% -9.8%
Yield on earning assets 5.44% 5.45%   5.69%   -0.2% -4.4%
Cost of interest bearing deposits 1.04% 1.15%   1.59%   -9.6% -34.6%
Cost of borrowings 2.94% 2.90%   2.41%   1.4% 22.0%
Cost of paying liabilities 1.40% 1.49%   1.78%   -6.0% -21.3%
Net interest margin (annualized) (g) 4.29% 4.22%   4.21%   1.7% 1.9%
Efficiency ratio (g) 54.75% 56.63%   56.81%   -3.3% -3.6%
               
OTHER RATIOS (NON GAAP):              
Annualized return on average tangible assets (a)(b)(e) 1.14% 1.12%   1.15%   1.8% -0.9%
Annualized return on average tangible common equity (a)(b)(c) 14.03% 14.27%   16.58%   -1.7% -15.4%
Tangible common book value per common share (d)   $ 37.68  $ 36.51    $ 34.29   3.2% 9.9%
               
               
PARK NATIONAL CORPORATION
Financial Highlights (continued)
Three months ended June 30, 2010, March 31, 2010 and June 30, 2009              
            Percent change vs.
BALANCE SHEET: June 30, 2010 March 31, 2010   June 30, 2009   1Q '10 2Q '09
Investment securities  $ 1,845,594  $ 1,941,465    $ 1,913,620   -4.9% -3.6%
Loans 4,655,997 4,597,304   4,620,026   1.3% 0.8%
Allowance for loan losses 120,676 119,674   104,804   0.8% 15.1%
Goodwill and other intangibles 80,021 80,863   83,672   -1.0% -4.4%
Other real estate owned 46,456 45,854   41,279   1.3% 12.5%
Total assets 7,093,098 7,176,087   7,007,610   -1.2% 1.2%
Total deposits 5,168,814 5,268,858   5,053,424   -1.9% 2.3%
Borrowings 1,008,748 996,686   1,180,688   1.2% -14.6%
Stockholders' equity 749,939 720,898   665,141   4.0% 12.7%
Common equity 653,053 624,213   569,039   4.6% 14.8%
Tangible common equity (d) 573,032 543,350   485,367   5.5% 18.1%
Nonperforming loans 237,854 230,558   206,581   3.2% 15.1%
Nonperforming assets 284,310 276,412   247,860   2.9% 14.7%
Past due 90 day loans and still accruing 17,283 11,853   4,417   45.8% 291.3%
               
ASSET QUALITY RATIOS:              
Loans as a % of period end assets 65.64% 64.06%   65.93%   2.5% -0.4%
Nonperforming loans as a % of period end loans 5.11% 5.02%   4.47%   1.8% 14.3%
Past due 90 day loans as a % of period end loans 0.37% 0.26%   0.10%   42.3% 270.0%
Nonperforming assets / Period end loans + OREO  6.05% 5.95%   5.32%   1.7% 13.7%
Allowance for loan losses as a % of period end loans 2.59% 2.60%   2.27%   -0.4% 14.1%
Net loan charge-offs  $ 12,248  $ 13,593    $ 12,331   -9.9% -0.7%
Annualized net loan charge-offs as a % of average loans (a) 1.07% 1.19%   1.08%   -10.1% -0.9%
               
CAPITAL & LIQUIDITY:              
Total equity / Period end assets 10.57% 10.05%   9.49%   5.2% 11.4%
Common equity / Period end assets 9.21% 8.70%   8.12%   5.9% 13.4%
Tangible common equity (d) / Tangible assets (f) 8.17% 7.66%   7.01%   6.7% 16.5%
Average equity / Average assets (a) 10.56% 10.26%   9.40%   2.9% 12.3%
Average equity / Average loans (a) 16.09% 15.75%   14.41%   2.2% 11.7%
Average loans / Average deposits (a) 88.85% 88.19%   91.52%   0.7% -2.9%
               
               
               
PARK NATIONAL CORPORATION
Financial Highlights (continued)
Six months ended June 30, 2010 and 2009              
               
(in thousands, except share and per share data)   June 30, 2010   June 30, 2009   Percent change  
INCOME STATEMENT:              
Net interest income    $ 136,101    $ 136,227   -0.1%  
Provision for loan losses   29,800   28,143   5.9%  
Other income   33,357   38,967   -14.4%  
Gain on sale of securities    11,819    7,340   61.0%  
Total other expense   94,891   96,013   -1.2%  
Income before income taxes    $ 56,586    $ 58,378   -3.1%  
Income taxes   14,641    15,681   -6.6%  
Net income    $ 41,945    $ 42,697   -1.8%  
Preferred stock dividends and accretion   2,903    2,881   0.8%  
Net income available to common shareholders    $ 39,042    $ 39,816   -1.9%  
               
MARKET DATA:              
Earnings per common share - basic (b)    $ 2.60    $ 2.85   -8.8%  
Earnings per common share - diluted (b)    2.60    2.85   -8.8%  
Cash dividends per common share    1.88    1.88   0.0%  
               
Weighted average common shares - basic (a)    14,998,810    13,986,664   7.2%  
Weighted average common shares - diluted (a)    14,998,810    13,986,664   7.2%  
               
PERFORMANCE RATIOS:              
Annualized return on average assets (a)(b)   1.12%   1.15%   -2.6%  
Annualized return on average common equity (a)(b)   12.35%   17.35%   -28.8%  
Yield on loans    5.86%   6.10%   -3.9%  
Yield on investments   4.44%   4.95%   -10.3%  
Yield on earning assets   5.44%   5.75%   -5.4%  
Cost of interest bearing deposits   1.10%   1.66%   -33.7%  
Cost of borrowings   2.92%   2.28%   28.1%  
Cost of paying liabilities   1.44%   1.81%   -20.4%  
Net interest margin (annualized) (g)   4.25%   4.24%   0.2%  
Efficiency ratio (g)   55.68%   54.46%   2.2%  
               
ASSET QUALITY RATIOS:              
Net loan charge-offs    $ 25,841    $ 23,427   10.3%  
Annualized net loan charge-offs as a % of average loans (a)   1.13%   1.03%   9.7%  
               
CAPITAL AND LIQUIDITY:              
Average equity / Average assets (a)   10.41%   9.29%   12.1%  
Average equity / Average loans (a)   15.92%   14.33%   11.1%  
Average loans / Average deposits (a)   88.52%   92.83%   -4.6%  
               
OTHER RATIOS (NON GAAP):              
Annualized return on average tangible assets (a)(b)(e)   1.13%   1.15%   -1.7%  
Annualized return on average tangible common equity (a)(b)(c)   14.15%   16.95%   -16.5%  
               
N.M. - Not meaningful              
               
PARK NATIONAL CORPORATION
Financial Highlights (continued)
               
(a) Averages are for the quarters ended June 30, 2010, March 31, 2010 and June 30, 2009, and the six-month periods ended June 30, 2010 and June 30, 2009.
               
(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, 2010 March 31, 2010   June 30, 2009   June 30, 2010 June 30, 2009
AVERAGE STOCKHOLDERS' EQUITY  $ 741,006  $ 727,237    $ 660,837    $ 734,160  $ 654,381
Less: Average preferred stock  96,770  96,568    95,992    96,670  95,897
Average goodwill and other intangibles  80,469  81,376   84,199    80,920  84,668
AVERAGE TANGIBLE COMMON EQUITY  $ 563,767  $ 549,293    $ 480,646    $ 556,570  $ 473,816
               
               
(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, 2010 March 31, 2010   June 30, 2009      
STOCKHOLDERS' EQUITY  $ 749,939  $ 720,898    $ 665,141      
Less: Preferred stock 96,886 96,685    96,102      
Goodwill and other intangibles 80,021 80,863   83,672      
TANGIBLE COMMON EQUITY  $ 573,032  $ 543,350    $ 485,367      
               
               
(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.  
               
RECONCILIATION OF AVERAGE ASSETS TO AVERAGE TANGIBLE ASSETS:            
  THREE MONTHS ENDED   SIX MONTHS ENDED
  June 30, 2010 March 31, 2010   June 30, 2009   June 30, 2010 June 30, 2009
AVERAGE ASSETS  $ 7,018,710  $ 7,086,333    $ 7,030,456    $ 7,052,335  $ 7,045,010
Less: Average goodwill and other intangibles  80,469  81,376   84,199   80,920 84,668
AVERAGE TANGIBLE ASSETS  $ 6,938,241  $ 7,004,957    $ 6,946,257    $ 6,971,415  $ 6,960,342
               
               
(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, 2010 March 31, 2010   June 30, 2009      
TOTAL ASSETS  $ 7,093,098  $ 7,176,087    $ 7,007,610      
Less: Goodwill and other intangibles 80,021 80,863   83,672      
TANGIBLE ASSETS  $ 7,013,077  $ 7,095,224    $ 6,923,938      
               
               
PARK NATIONAL CORPORATION
Financial Highlights (continued)
               
(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.  
               
RECONCILIATION OF FULLY TAXABLE EQUIVALENT NET INTEREST INCOME TO NET INTEREST INCOME          
  THREE MONTHS ENDED   SIX MONTHS ENDED
  June 30, 2010 March 31, 2010   June 30, 2009   June 30, 2010 June 30, 2009
Interest income  $ 87,242  $ 87,202    $ 92,092    $ 174,444  $ 185,457
Fully taxable equivalent adjustment  473  481    524    954  1,100
Fully taxable equivalent interest income  $ 87,715  $ 87,683    $ 92,616    $ 175,398  $ 186,557
Interest expense  18,521  19,822    24,097    38,343  49,230
Fully taxable equivalent net interest income  $ 69,194  $ 67,861    $ 68,519    $ 137,055  $ 137,327
 
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) 2010 2009 2010 2009
         
Interest income:        
Interest and fees on loans   $ 66,723  $ 68,496  $ 133,164  $ 137,584
Interest on:        
Obligations of U.S. Government, its agencies and other securities  20,263  23,201  40,738  47,029
Obligations of states and political subdivisions  204  393  421  815
Other interest income  52  2  121  29
Total interest income  87,242 92,092  174,444 185,457
         
Interest expense:        
Interest on deposits:        
Demand and savings deposits  1,582  2,809  3,357  5,714
Time deposits  9,518  13,800  20,168  28,174
Interest on borrowings  7,421  7,489  14,818  15,342
Total interest expense  18,521 24,098  38,343 49,230
         
Net interest income  68,721 67,994  136,101 136,227
         
Provision for loan losses  13,250  15,856  29,800 28,143
         
Net interest income after provision for loan losses  55,471 52,138  106,301 108,084
         
Other income  16,647  19,757  33,357  38,967
         
Gain on sale of securities  3,515  7,340  11,819  7,340
         
Other expense:        
Salaries and employee benefits  24,013  25,334  49,184  50,821
Occupancy expense  2,793  2,882  5,910  6,040
Furniture and equipment expense  2,564  2,498  5,196  4,876
Other expense  17,631  19,437  34,601  34,276
Total other expense  47,001 50,151  94,891 96,013
         
Income before income taxes  28,632 29,084  56,586 58,378
         
Income taxes  7,466  7,777  14,641  15,681
         
Net income   $ 21,166  $ 21,307  $ 41,945  $ 42,697
         
Preferred stock dividends and accretion  1,451  1,441  2,903  2,881
         
Net income available to common shareholders  $ 19,715  $ 19,866  $ 39,042  $ 39,816
         
Per Common Share:        
Net income - basic  $ 1.30  $ 1.42  $ 2.60  $ 2.85
Net income - diluted  $ 1.30  $ 1.42  $ 2.60  $ 2.85
         
Weighted average shares - basic  15,114,846  14,001,608  14,998,810  13,986,664
Weighted average shares - diluted  15,114,846  14,001,608  14,998,810  13,986,664
 
PARK NATIONAL CORPORATION 
Consolidated Balance Sheets
       
       
(in thousands, except share data) June 30, 2010 Dec. 31, 2009 June 30, 2009
       
Assets      
       
Cash and due from banks  $ 126,222  $ 116,802  $ 107,053
Money market instruments 75,323 42,289 23,960
Investment securities 1,845,594 1,863,560 1,913,620
Loans 4,655,997 4,640,432 4,620,026
Allowance for loan losses 120,676 116,717 104,804
Loans, net  4,535,321 4,523,715 4,515,222
Bank premises and equipment, net 68,929 69,091 67,254
Goodwill and other intangibles 80,021 81,799 83,672
Other real estate owned 46,456 41,240 41,279
Other assets 315,232 301,833 255,550
       
Total assets  $ 7,093,098  $ 7,040,329  $ 7,007,610
       
       
Liabilities and Stockholders' Equity      
       
Deposits:      
Noninterest bearing  $ 884,912  897,243  812,959
Interest bearing 4,283,902 4,290,809 4,240,465
Total deposits  5,168,814 5,188,052 5,053,424
Borrowings 1,008,748 1,053,850 1,180,688
Other liabilities 165,597 81,163 108,357
Total liabilities  $ 6,343,159  $ 6,323,065  $ 6,342,469
       
Stockholders' Equity:      
Preferred Stock (200,000 shares authorized in 2010 and 2009; 100,000 shares issued in 2010 and 2009)  $ 96,886  $ 96,483  $ 96,102
Common stock (No par value; 20,000,000 shares authorized in 2010 and 2009; 16,151,086 shares issued at June 30, 2010, 16,151,112 at December 31, 2009, and 16,151,137 at June 30, 2009) 301,206 301,208 301,209
Common stock warrants 4,761  5,361  4,297
Accumulated other comprehensive income, net of taxes 15,879 15,661 8,612
Retained earnings 427,236 423,872 446,028
Treasury stock (944,232 shares at June 30, 2010, 1,268,332 at December 31, 2009 and 2,179,424 shares at June 30, 2009) (96,029) (125,321) (191,107)
 Total stockholders' equity  $ 749,939  $ 717,264  $ 665,141
       
 Total liabilities and stockholders' equity  $ 7,093,098  $ 7,040,329  $ 7,007,610
 
 
PARK NATIONAL CORPORATION 
Consolidated Average Balance Sheets
         
         
  Three Months Ended Six Months Ended
  June 30, June 30,
(in thousands) 2010 2009 2010 2009
         
Assets        
         
Cash and due from banks  $ 110,450  $ 98,026  $ 112,660  $ 113,032
Money market instruments 94,669 21,221 110,146 22,477
Investment securities  1,814,859 1,974,176 1,826,563 1,996,788
Loans 4,604,481 4,585,406 4,610,944 4,567,459
Allowance for loan losses 120,424 100,198 118,857 100,325
Loans, net  4,484,057 4,485,208  4,492,087 4,467,134
Bank premises and equipment, net 69,286 68,076 69,419 68,213
Goodwill and other intangibles 80,469 84,199 80,920 84,668
Other real estate owned 46,127 38,584 44,061 32,662
Other assets 318,793 260,966 316,479 260,036
         
Total assets  $ 7,018,710  $ 7,030,456  $ 7,052,335  $ 7,045,010
         
         
Liabilities and Stockholders' Equity        
         
Deposits:        
Noninterest bearing  $ 893,962  $ 824,841  $ 881,575  799,319
Interest bearing 4,288,551 4,185,578 4,327,568 4,120,986
Total deposits  5,182,513 5,010,419  5,209,143 4,920,305
Borrowings 1,013,006 1,248,571 1,024,382 1,359,010
Other liabilities 82,185 110,629 84,650 111,314
Total liabilities  $ 6,277,704  $ 6,369,619  $ 6,318,175  $ 6,390,629
         
Stockholders' Equity:        
Preferred stock  $ 96,770  $ 95,992  $ 96,670  $ 95,897
Common stock  301,246 301,209 301,226 301,210
Common stock warrants 4,943  4,297 5,151  4,297
Accumulated other comprehensive income, net of taxes 15,217 13,088 17,676 11,054
Retained earnings 427,363 451,245 428,306 448,245
Treasury stock  (104,533) (204,994) (114,869) (206,322)
Total stockholders' equity  $ 741,006  $ 660,837  $ 734,160  $ 654,381
         
Total liabilities and stockholders' equity  $ 7,018,710  $ 7,030,456  $ 7,052,335  $ 7,045,010
 
PARK NATIONAL CORPORATION 
Consolidated Statements of Income - Linked Quarters
           
           
  2010 2010 2009 2009 2009
(in thousands, except per share data) 2nd QTR 1st QTR 4th QTR 3rd QTR 2nd QTR
           
Interest income:          
Interest and fees on loans   $ 66,723  $ 66,441  $ 68,676  $ 69,339  $ 68,496
Interest on:          
Obligations of U.S. Government, its agencies and other securities  20,263  20,475 21,325  22,204  23,201
Obligations of states and political subdivisions  204  217  286  316  393
Other interest income  52  69  78  9  2
Total interest income  87,242  87,202  90,365  91,868  92,092
           
Interest expense:          
Interest on deposits:          
Demand and savings deposits  1,582  1,775  2,333  2,768  2,809
Time deposits  9,518  10,650  12,269  13,362  13,800
Interest on borrowings  7,421  7,397  6,961  7,276  7,489
Total interest expense  18,521  19,822  21,563  23,406  24,098
           
Net interest income  68,721  67,380  68,802  68,462  67,994
           
Provision for loan losses  13,250  16,550  25,720  14,958  15,856
           
Net interest income after provision for loan losses  55,471  50,830  43,082  53,504  52,138
           
Other income  16,647  16,710  16,718  18,165  19,757
           
Gain on sale of securities  3,515  8,304  --   --   7,340
           
Other expense:          
Salaries and employee benefits  24,013  25,171  24,815  25,589  25,334
Occupancy expense  2,793  3,117  2,740  2,772  2,882
Furniture and equipment expense  2,564  2,632  2,395  2,463  2,498
Other expense  17,631  16,970  16,710  15,228  19,437
Total other expense  47,001  47,890  46,660  46,052  50,151
           
Income before income taxes  28,632  27,954  13,140  25,617  29,084
           
Income taxes  7,466  7,175  844  6,418  7,777
           
Net income   $ 21,166  $ 20,779  $ 12,296  $ 19,199  $ 21,307
           
Preferred stock dividends and accretion  1,451  1,452  1,441  1,440  1,441
           
Net income available to common shareholders  $ 19,715  $ 19,327  $ 10,855  $ 17,759  $ 19,866
           
Per Common Share:          
Net income - basic  $ 1.30  $ 1.30  $ 0.74  $ 1.25  $ 1.42
Net income - diluted  $ 1.30  $ 1.30  $ 0.74  $ 1.25  $ 1.42
 
PARK NATIONAL CORPORATION 
Detail of other income and other expense - Linked Quarters
           
           
  2010 2010 2009 2009 2009
(in thousands) 2nd QTR 1st QTR 4th QTR 3rd QTR 2nd QTR
           
Other income:          
Income from fiduciary activities  $ 3,528  $ 3,422  $ 3,397  $ 3,071  $ 3,140
Service charges on deposits  5,092  4,746  5,604  5,788  5,432
Other service income  3,476  2,982  3,588  3,895  5,738
Checkcard fee income  2,765  2,444  2,488  2,342  2,381
Bank owned life insurance income  1,254  1,216  1,329  1,297  1,235
Other  532  1,900  312  1,772  1,831
Total other income  $ 16,647  $ 16,710  $ 16,718  $ 18,165  $ 19,757
           
Other expense:          
Salaries and employee benefits  $ 24,013  $ 25,171  $ 24,815  $ 25,589  $ 25,334
Net occupancy expense  2,793  3,117  2,740  2,772  2,882
Furniture and equipment expense  2,564  2,632  2,395  2,463  2,498
Data processing fees  1,394  1,593  1,544  1,323  1,459
Professional fees and services  5,299  4,856  5,385  3,725  3,605
Amortization of intangibles  842  936  937  936  937
Marketing  946  902  943  983  939
Insurance  2,333  2,198  2,376  2,254  5,840
Communication  1,647  1,769  1,720  1,652  1,619
State taxes  838  845  424  892  949
Other  4,332  3,871  3,381  3,463  4,089
Total other expense  $ 47,001  $ 47,890  $ 46,660  $ 46,052  $ 50,151
 
PARK NATIONAL CORPORATION 
Asset Quality Information
             
             
             
  Quarter ended Year ended December 31,
(in thousands, except ratios) June 30, 2010 March 31, 2010 2009 2008 2007 2006
             
Allowance for loan losses:            
Allowance for loan losses, beginning of period  $ 119,674  $ 116,717  $ 100,088  $ 87,102  $ 70,500  $ 69,694
Charge-offs 13,273 15,578 59,022 62,916 27,776 10,772
Recoveries  1,025  1,985  6,830  5,415  5,568  6,853
Net charge-offs  12,248  13,593  52,192  57,501  22,208  3,919
Provision for loan losses  13,250  16,550  68,821  70,487  29,476  3,927
Allowance for loan losses of acquired bank  --   --   --   --   9,334  798
Allowance for loan losses, end of period  $ 120,676  $ 119,674  $ 116,717  $ 100,088  $ 87,102  $ 70,500
             
             
Asset Quality Ratios:            
Net charge-offs as a % of average loans (annualized for quarterly periods) 1.07% 1.19% 1.14% 1.32% 0.55% 0.12%
Allowance for loan losses as a % of period end loans 2.59% 2.60% 2.52% 2.23% 2.06% 2.03%
             
             
Nonperforming Assets:            
Nonaccrual loans  $ 237,640  $ 230,498  $ 233,544  $ 159,512  $ 101,128  $ 16,004
Renegotiated loans  214  60  142  2,845  2,804  9,113
Loans past due 90 days or more  17,283  11,853  14,773  5,421  4,545  7,832
Total nonperforming loans  $ 255,137  $ 242,411  $ 248,459  $ 167,778  $ 108,477  $ 32,949
Other real estate owned  46,456  45,854  41,240  25,848  13,443  3,351
Total nonperforming assets  $ 301,593  $ 288,265  $ 289,699  $ 193,626  $ 121,920  $ 36,300
Percentage of nonperforming loans to period end loans 5.48% 5.27% 5.35% 3.74% 2.57% 0.95%
Percentage of nonperforming assets to period end loans 6.48% 6.27% 6.24% 4.31% 2.89% 1.04%
Percentage of nonperforming assets to period end assets 4.25% 4.02% 4.11% 2.74% 1.88% 0.66%
             
             
New nonaccrual loan information:            
Nonaccrual loans, beginning of period  $ 230,498  $ 233,544  $ 159,512  $ 101,128  $ 16,004  $ 14,922
New nonaccrual loans  30,870  30,252  184,181  141,749  113,720  4,949
Resolved nonaccrual loans  23,728  33,298  110,149  83,365  28,596  3,867
Nonaccrual loans, end of period  $ 237,640  $ 230,498  $ 233,544  $ 159,512  $ 101,128  $ 16,004
             
             
Impaired Commercial Loan Portfolio Information (period end):            
Unpaid principal balance  $ 250,305  $ 244,822  $ 245,092  $ 171,310  $ 100,307  $ 21,926
Prior charge-offs  46,731  46,175  43,949  29,967  10,226  2,446
Remaining principal balance  203,574  198,647  201,143  141,343  90,081  19,480
Specific reserves  38,767  38,739  36,721  8,875  3,492  2,002
Book value, after specific reserve  $ 164,807  $ 159,908  $ 164,422  $ 132,468  $ 86,589  $ 17,478
             
             
Vision Bank Commercial Land & Development (CL&D) Loan Portfolio Information:            
CL&D loans, period end  $ 192,051  $ 200,112  $ 218,205  $ 251,443  $ 295,743  
Performing CL&D loans, period end  97,562  116,672  132,788  191,712  260,195  
Impaired CL&D loans, period end  94,489  83,440  85,417  59,731  35,548  
Specific reserve on impaired CL&D loans  25,006  24,404  21,706  3,134  1,184  
Book value of impaired CL&D loans, after specific reserve  $ 69,483  $ 59,036  $ 63,711  $ 56,597  $ 34,364  
             
Cumulative prior charge-offs on impaired Vision Bank CL&D loans, period end  $ 23,973  $ 26,334  $ 24,931  $ 18,839  $ 7,399  
CONTACT:  Park National Bank
          Media Contacts:
          Bethany Lewis, Communications Specialist
            740.349.0421
          John Kozak, CFO
            740.349.3792

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