Park National Corporation Reports Fourth Quarter And Year-End 2013 Financial Results

NEWARK, Ohio, Jan. 27, 2014 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE MKT:PRK) today reported financial results for the three-months (fourth quarter) and twelve-months (year) ended December 31, 2013. Park's board of directors declared a quarterly cash dividend of $0.94 per common share, payable on March 10, 2014 to common shareholders of record as of February 21, 2014. Park's quarterly and annual earnings per common share rose compared to 2012, and loan growth continued in both the retail and commercial categories.

Net income for the fourth quarter of 2013 was $17.5 million, compared to $16.3 million for the same period in 2012. Net income for the year 2013 was $77.2 million, an increase of $13.0 million, or 20.3 percent, above the 2012 results excluding the gain related to the sale of the Vision Bank business (on February 16, 2012).

Net income for the 2012 year was $78.6 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. Excluding the gain from the sale of the Vision Bank business in 2012, net income for the year 2012 would have been $64.2 million.

Net income per diluted common share for the fourth quarter of 2013 was $1.13, compared to $1.06 in the same period of 2012. Net income per diluted common share for the year 2013 was $5.01, an increase from 2012's net income per diluted common share of $4.88. Excluding the gain on sale of the Vision Bank business, net income per diluted common share would have been $3.95 for the 2012 year.

"Loan growth and new customer relationships in 2013 exceeded our expectations," said Park Chairman Dan DeLawder. "Individuals and businesses rely on our local lenders' experience and dedication to service. That caused our loan balances to increase more than market conditions suggest might be possible. The new relationships established during the year will continue to distinguish Park and our affiliates in the communities we serve."

The Park National Bank Results

Park's community-banking subsidiary in Ohio, The Park National Bank, reported net income of $75.6 million for the 2013 year, compared to net income of $87.1 million in 2012. The Park National Bank had total assets of $6.5 billion at both December 31, 2013 and 2012. This performance generated a return on average assets of 1.15 percent and 1.33 percent for the bank for the years 2013 and 2012, respectively.

The Park National Bank loan portfolio growth continued in the fourth quarter. At December 31, 2013 the bank reported $4.56 billion in loans outstanding, which is a $51 million increase over the $4.51 billion outstanding at September 30, 2013. It also represents a 12-month increase of $190 million, compared to the loans outstanding of $4.37 billion at December 31, 2012.

About Park National Corporation

Headquartered in Newark, Ohio, Park National Corporation had $6.6 billion in total assets (as of December 31, 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, and The Park National Bank of Southwest Ohio & Northern Kentucky Division, and Scope Leasing, Inc. (d.b.a. Scope Aircraft Finance). Park also includes Guardian Financial Services Company (d.b.a. Guardian Finance Company) and SE Property Holdings, LLC.

Complete financial tables are listed below…

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

Park cautions that any forward-looking statements contained in this News Release or made by management of Park are provided to assist in the understanding of anticipated future financial performance. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management's expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include, without limitation: Park's ability to execute its business plan successfully and within the expected timeframe; general economic and financial market conditions, and the uneven spread of positive impacts of the recovery on the economy, specifically in the real estate markets and the credit markets, either nationally or in the states in which Park and its subsidiaries do business, may be worse or slower than expected which could adversely impact the demand for loan, deposit and other financial services as well as loan delinquencies and defaults; changes in interest rates and prices may adversely impact the value of securities, loans, deposits and other financial instruments and the interest rate sensitivity of our consolidated balance sheet; changes in consumer spending, borrowing and saving habits; changes in unemployment; asset/liability repricing risks and liquidity risks; our liquidity requirements could be adversely affected by changes to regulations governing bank capital and liquidity standards as well as by changes in our assets and liabilities; competitive factors among financial services organizations could increase significantly, including product and pricing pressures and our ability to attract, develop and retain qualified bank professionals; the nature, timing and effect of changes in banking regulations or other regulatory or legislative requirements affecting the respective businesses of Park and its subsidiaries, including changes in laws and regulations concerning taxes, accounting, banking, securities and other aspects of the financial services industry, specifically the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act"), as well as future regulations which will be adopted by the relevant regulatory agencies, including the Consumer Financial Protection Bureau, to implement the Dodd-Frank Act's provisions, the Budget Control Act of 2011 and the American Taxpayer Relief Act of 2012; the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board, the SEC, the Public Company Accounting Oversight Board and other regulatory agencies, and the accuracy of our assumptions and estimates used to prepare our financial statements; the effect of fiscal and governmental policies of the United States federal government; the adequacy of our risk management program; a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors and other service providers, including as a result of cyber attacks; demand for loans in the respective market areas served by Park and its subsidiaries; the outcome of future negotiations surrounding the United States debt and budget, which may be adverse due to its impact on tax increases, governmental spending and consumer confidence and spending; and other risk factors relating to the banking industry as detailed from time to time in Park's reports filed with the Securities and Exchange Commission including those described in "Item 1A. Risk Factors" of Part I of Park's Annual Report on Form 10-K for the fiscal year ended December 31, 2012 and in "Item 1A. Risk Factors" of Part II of Park's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013. Park does not undertake, and specifically disclaims any obligation, to publicly release the results of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement was made, or reflect the occurrence of unanticipated events, except to the extent required by law.
PARK NATIONAL CORPORATION
Financial Highlights
Three months ended December 31, 2013, September 30, 2013, and December 31, 2012
           
  2013 2013 2012 Percent change vs.
(in thousands, except share and per share data) 4th QTR 3rd QTR 4th QTR 3Q '13 4Q '12
INCOME STATEMENT:          
Net interest income  $ 55,900  $ 54,960  $ 56,891 1.7% (1.7)%
Provision for (recovery of) loan losses (85) 2,498 5,188 N.M. N.M.
Other income 17,778 17,396 17,196 2.2% 3.4%
Total other expense 51,146 44,715 48,011 14.4% 6.5%
Income before income taxes  $ 22,617  $ 25,143  $ 20,888 (10.0)% 8.3%
Income taxes 5,163 6,114 4,601 (15.6)% 12.2%
Net income  $ 17,454  $ 19,029  $ 16,287 (8.3)% 7.2%
           
MARKET DATA:          
Earnings per common share - basic (b)  $ 1.13  $ 1.23  $ 1.06 (8.1)% 6.6%
Earnings per common share - diluted (b) 1.13 1.23 1.06 (8.1)% 6.6%
Cash dividends per common share 0.94 0.94 0.94 —% —%
Common book value per common share at period end 42.29 41.06 42.20 3.0% 0.2%
Stock price per common share at period end 85.07 79.08 64.63 7.6% 31.6%
Market capitalization at period end 1,311,095 1,218,778 996,077 7.6% 31.6%
           
Weighted average common shares - basic (a) 15,413,517 15,411,972 15,410,606 —% —%
Weighted average common shares - diluted (a) 15,413,517 15,411,972 15,410,606 —% —%
Common shares outstanding at period end 15,411,952 15,411,963 15,411,998 —% —%
           
PERFORMANCE RATIOS: (annualized)          
Return on average assets (a)(b) 1.03% 1.12% 0.97% (8.0)% 6.2%
Return on average common equity (a)(b) 10.87% 11.84% 9.81% (8.2)% 10.8%
Yield on loans 4.95% 4.95% 5.23% —% (5.4)%
Yield on investments 2.53% 2.55% 2.88% (0.8)% (12.2)%
Yield on money markets 0.21% 0.25% 0.24% (16.0)% (12.5)%
Yield on earning assets 4.24% 4.19% 4.49% 1.2% (5.6)%
Cost of interest bearing deposits 0.31% 0.33% 0.42% (6.1)% (26.2)%
Cost of borrowings 2.50% 2.54% 2.66% (1.6)% (6.0)%
Cost of paying liabilities 0.83% 0.84% 0.97% (1.2)% (14.4)%
Net interest margin 3.59% 3.52% 3.72% 2.0% (3.5)%
Efficiency ratio (g) 69.16% 61.57% 64.47% 12.3% 7.3%
           
OTHER RATIOS (NON GAAP):          
Annualized return on average tangible assets (a)(b)(e) 1.04% 1.13% 0.98% (8.0)% 6.1%
Annualized return on average tangible common equity (a)(b)(c) 12.27% 13.36% 11.03% (8.2)% 11.2%
Tangible common book value per common share (d)   $ 37.60  $ 36.36  $ 37.48 3.4% 0.3%
           
N.M. - Not meaningful          
Note: Explanations (a)-(g) are included at the end of the financial highlights.          
           
PARK NATIONAL CORPORATION          
Financial Highlights          
Three months ended December 31, 2013, September 30, 2013, and December 31, 2012          
           
        Percent change vs.
BALANCE SHEET: December 31, 2013 September 30, 2013 December 31, 2012 3Q '13 4Q '12
           
Investment securities  $ 1,424,234  $ 1,389,387  $ 1,581,751 2.5% (10.0)%
Loans 4,620,505 4,573,537 4,450,322 1.0% 3.8%
Allowance for loan losses 59,468 57,894 55,537 2.7% 7.1%
Goodwill and other intangibles 72,334 72,334 72,671 —% (0.5)%
Other real estate owned 34,636 35,412 35,718 (2.2)% (3.0)%
Total assets 6,638,347 6,705,891 6,642,803 (1.0)% (0.1)%
Total deposits 4,789,994 4,850,692 4,716,032 (1.3)% 1.6%
Borrowings 1,132,820 1,162,091 1,206,076 (2.5)% (6.1)%
Stockholders' equity 651,747 632,745 650,366 3.0% 0.2%
Common equity 651,747 632,745 650,366 3.0% 0.2%
Tangible common equity (d) 579,413 560,411 577,695 3.4% 0.3%
Nonperforming loans 155,640 162,522 188,306 (4.2)% (17.3)%
Nonperforming assets 190,276 197,934 224,024 (3.9)% (15.1)%
           
ASSET QUALITY RATIOS:          
Loans as a % of period end assets 69.60% 68.20% 66.99% 2.1% 3.9%
Nonperforming loans as a % of period end loans 3.37% 3.55% 4.23% (5.1)% (20.3)%
Nonperforming assets / Period end loans + OREO  4.09% 4.29% 4.99% (4.7)% (18.0)%
Allowance for loan losses as a % of period end loans 1.29% 1.27% 1.25% 1.6% 3.2%
Net loan charge-offs (recoveries) $ (1,659) $ (285) $ 5,216 N.M. N.M.
Annualized net loan charge-offs (recoveries) as a % of average loans (a) (0.14)% (0.02)% 0.47% N.M. N.M.
           
CAPITAL & LIQUIDITY:          
Total equity / Period end assets 9.82% 9.44% 9.79% 4.0% 0.3%
Common equity / Period end assets 9.82% 9.44% 9.79% 4.0% 0.3%
Tangible common equity (d) / Tangible assets (f) 8.82% 8.45% 8.79% 4.4% 0.3%
Average equity / Average assets (a) 9.49% 9.46% 9.87% 0.3% (3.9)%
Average equity / Average loans (a) 13.86% 14.04% 14.97% (1.3)% (7.4)%
Average loans / Average deposits (a) 94.74% 92.77% 92.78% 2.1% 2.1%
           
N.M. - Not meaningful          
Note: Explanations (a)-(g) are included at the end of the financial highlights.          
       
PARK NATIONAL CORPORATION      
Financial Highlights      
Years ended December 31, 2013 and 2012      
       
(in thousands, except share and per share data) 2013 2012 Percent change vs. 2012
INCOME STATEMENT:      
Net interest income  $ 221,025  $ 235,315 (6.1)%
Provision for loan losses 3,415 35,419 (90.4)%
Gain on sale of Vision Bank business 22,167 N.M.
Other income 73,277 70,236 4.3%
Total other expense 188,529 187,968 0.3%
Income before income taxes  $ 102,358  $ 104,331 (1.9)%
Income taxes 25,131 25,701 (2.2)%
Net income  $ 77,227  $ 78,630 (1.8)%
Preferred stock dividends and accretion 3,425 N.M.
Net income available to common shareholders  $ 77,227  $ 75,205 2.7%
       
MARKET DATA:      
Earnings per common share - basic (b)  $ 5.01  $ 4.88 2.7%
Earnings per common share - diluted (b) 5.01 4.88 2.7%
Cash dividends per common share 3.76 3.76 —%
       
Weighted average common shares - basic (a) 15,412,365 15,407,078 —%
Weighted average common shares - diluted (a) 15,412,365 15,408,141 —%
       
PERFORMANCE RATIOS:      
       
Return on average assets (a)(b) 1.15% 1.11% 3.6%
Return on average common equity (a)(b) 11.96% 11.41% 4.8%
Yield on loans 5.02% 5.35% (6.2)%
Yield on investments 2.67% 3.14% (15.0)%
Yield on money markets 0.25% 0.25% —%
Yield on earning assets 4.29% 4.64% (7.5)%
Cost of interest bearing deposits 0.35% 0.49% (28.6)%
Cost of borrowings 2.57% 2.74% (6.2)%
Cost of paying liabilities 0.86% 1.02% (15.7)%
Net interest margin 3.61% 3.83% (5.7)%
Efficiency ratio (g) 63.78% 57.07% 11.8%
       
ASSET QUALITY RATIOS:      
Net loan charge-offs $ (516)  $ 48,326 (101.1)%
Net loan charge-offs as a % of average loans (a) (0.01)% 1.10% (100.9)%
       
CAPITAL & LIQUIDITY:      
Average stockholders' equity / Average assets (a) 9.63% 10.19% (5.5)%
Average stockholders' equity / Average loans (a) 14.30% 15.64% (8.6)%
Average loans / Average deposits (a) 92.90% 91.22% 1.8%
       
OTHER RATIOS (NON GAAP):      
       
Return on average tangible assets (a)(b)(e) 1.16% 1.12% 3.6%
       
Return on average tangible common equity (a)(b)(c) 13.48% 12.84% 5.0%
       
N.M. - Not meaningful      
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 December 31, 2013, September 30, 2013 and December 31, 2012 and the fiscal years ended December 31, 2013 and December 31, 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 TWELVE MONTHS ENDED
  December 31, 2013 September 30, 2013 December 13, 2012 December 31, 2013 December 31, 2012
AVERAGE STOCKHOLDERS' EQUITY  $ 636,886  $ 637,529  $ 660,416  $ 645,533  $ 689,732
Less: Average preferred stock 30,877
Less: Average goodwill and other intangibles 72,334 72,397 72,748 72,464 73,069
AVERAGE TANGIBLE COMMON EQUITY  $ 564,552  $ 565,132  $ 587,668  $ 573,069  $ 585,786
           
(d) Tangible common book value divided by common shares outstanding at period end. Tangible common equity equals ending stockholders' equity less goodwill and other intangibles, in each case at the end of the period.
           
RECONCILIATION OF STOCKHOLDERS' EQUITY TO TANGIBLE COMMON EQUITY:    
  December 31, 2013 September 30, 2013 December 13, 2012    
STOCKHOLDERS' EQUITY  $ 651,747  $ 632,745  $ 650,366    
Less: Goodwill and other intangibles 72,334 72,334 72,671    
TANGIBLE COMMON EQUITY  $ 579,413  $ 560,411  $ 577,695    
           
(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 TWELVE MONTHS ENDED
  December 31, 2013 September 30, 2013 December 13, 2012 December 31, 2013 December 31, 2012
AVERAGE ASSETS  $ 6,707,975  $ 6,739,055  $ 6,689,321  $ 6,702,973  $ 6,766,806
Less: Average goodwill and other intangibles 72,334 72,397 72,748 72,464 73,069
AVERAGE TANGIBLE ASSETS  $ 6,635,641  $ 6,666,658  $ 6,616,573  $ 6,630,509  $ 6,693,737
           
(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:    
  December 31, 2013 September 30, 2013 December 13, 2012    
TOTAL ASSETS  $ 6,638,347  $ 6,705,891  $ 6,642,803    
Less: Goodwill and other intangibles 72,334 72,334 72,671    
TANGIBLE ASSETS  $ 6,566,013  $ 6,633,557  $ 6,570,132    
           
(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 TWELVE MONTHS ENDED
  December 31, 2013 September 30, 2013 December 13, 2012 December 31, 2013 December 31, 2012
Interest income  $ 66,066  $ 65,410  $ 68,793  $ 262,947  $ 285,735
Fully taxable equivalent adjustment 273 273 382 1,302 1,623
Fully taxable equivalent interest income  $ 66,339  $ 65,683  $ 69,175  $ 264,249  $ 287,358
Interest expense 10,166 10,450 11,902 41,922 50,420
Fully taxable equivalent net interest income  $ 56,173  $ 55,233  $ 57,273  $ 222,327  $ 236,938
 
PARK NATIONAL CORPORATION
Consolidated Statements of Income
         
  Three Months Ended Twelve Months Ended
  December 31, December 31,
(in thousands, except share and per share data) 2013 2012 2013 2012
         
Interest income:        
Interest and fees on loans 57,038 57,671 225,538 234,638
Interest on:        
Obligations of U.S. Government, its agencies        
and other securities 8,911 10,984 36,686 50,549
Obligations of states and political subdivisions 4 19 45 140
Other interest income 113 119 678 408
Total interest income 66,066 68,793 262,947 285,735
         
Interest expense:        
Interest on deposits:        
Demand and savings deposits 382 491 1,773 2,483
Time deposits 2,516 3,404 11,235 15,921
Interest on borrowings 7,268 8,007 28,914 32,016
Total interest expense 10,166 11,902 41,922 50,420
         
Net interest income 55,900 56,891 221,025 235,315
         
Provision for (recovery of) loan losses (85) 5,188 3,415 35,419
         
Net interest income after provision for (recovery of) loan losses 55,985 51,703 217,610 199,896
         
Gain on sale of Vision Bank business 22,167
Other income 17,778 17,196 73,277 70,236
         
Total other expense 51,146 48,011 188,529 187,968
         
Income before income taxes 22,617 20,888 102,358 104,331
         
Income taxes 5,163 4,601 25,131 25,701
         
Net income 17,454 16,287 77,227 78,630
         
Preferred stock dividends and accretion 3,425
         
Net income available to common shareholders 17,454 16,287 77,227 75,205
         
Per Common Share:        
Net income - basic 1.13 1.06 5.01 4.88
Net income - diluted 1.13 1.06 5.01 4.88
         
Weighted average shares - basic 15,413,517 15,410,606 15,412,365 15,407,078
Weighted average shares - diluted 15,413,517 15,410,606 15,412,365 15,408,141
         
Cash Dividends Declared 0.94 0.94 3.76 3.76
 
PARK NATIONAL CORPORATION 
Consolidated Balance Sheets
     
(in thousands, except share data) December 31, 2013 December 31, 2012
     
Assets    
     
Cash and due from banks  $ 129,078  $ 164,120
Money market instruments 17,952 37,185
Investment securities 1,424,234 1,581,751
Loans 4,620,505 4,450,322
Allowance for loan losses 59,468 55,537
Loans, net 4,561,037 4,394,785
Bank premises and equipment, net 55,278 53,751
Goodwill and other intangibles 72,334 72,671
Other real estate owned 34,636 35,718
Other assets 343,798 302,822
Total assets  $ 6,638,347  $ 6,642,803
     
Liabilities and Stockholders' Equity    
     
Deposits:    
Noninterest bearing  $ 1,193,553  $ 1,137,290
Interest bearing 3,596,441 3,578,742
Total deposits 4,789,994 4,716,032
Borrowings 1,132,820 1,206,076
Other liabilities 63,786 70,329
Total liabilities  $ 5,986,600  $ 5,992,437
     
     
Stockholders' Equity:    
Common stock (No par value; 20,000,000 shares authorized in 2013 and 2012; 16,150,941 shares issued at December 31, 2013 and 16,150,987 shares issued at December 31, 2012)  $ 302,651  $ 302,654
Accumulated other comprehensive loss, net of taxes (35,419) (17,518)
Retained earnings 460,643 441,605
Treasury stock (738,989 shares at December 31, 2013 and December 31, 2012) (76,128) (76,375)
Total stockholders' equity  $ 651,747  $ 650,366
     
Total liabilities and stockholders' equity  $ 6,638,347  $ 6,642,803
 
PARK NATIONAL CORPORATION 
Consolidated Average Balance Sheets
         
  Three Months Ended Twelve Months Ended
  December 31, December 31,
(in thousands) 2013 2012 2013 2012
         
Assets        
         
Cash and due from banks  $ 110,644  $ 110,926  $ 110,796  $ 119,410
Money market instruments 211,544 194,582 272,851 166,319
Investment securities  1,361,295 1,540,650 1,368,275 1,633,268
Loans 4,594,974 4,412,508 4,514,781 4,410,661
Allowance for loan losses 58,862 57,436 56,860 61,995
Loans, net 4,536,112 4,355,072 4,457,921 4,348,666
Bank premises and equipment, net 56,156 54,300 56,303 54,917
Goodwill and other intangibles 72,334 72,748 72,464 73,069
Other real estate owned 34,533 35,848 35,216 38,777
Other assets 325,357 325,195 329,147 332,380
Total assets  $ 6,707,975  $ 6,689,321  $ 6,702,973  $ 6,766,806
         
         
Liabilities and Stockholders' Equity        
         
Deposits:        
Noninterest bearing  $ 1,163,227  $ 1,090,475  $ 1,117,379  $ 1,048,796
Interest bearing 3,686,721 3,665,181 3,742,361 3,786,601
Total deposits 4,849,948 4,755,656 4,859,740 4,835,397
Borrowings 1,151,994 1,197,532 1,123,661 1,166,365
Other liabilities 69,147 75,717 74,039 75,312
Total liabilities  $ 6,071,089  $ 6,028,905  $ 6,057,440  $ 6,077,074
         
Stockholders' Equity:        
Preferred stock  $ —   $ —   $ —   $ 30,877
Common stock  302,651 302,654 302,652 302,159
Common stock warrants 1,444
Accumulated other comprehensive loss, net of taxes (49,640) (8,035) (33,324) (7,915)
Retained earnings 459,947 442,378 452,503 440,067
Treasury stock  (76,072) (76,581) (76,298) (76,900)
Total stockholders' equity  $ 636,886  $ 660,416  $ 645,533  $ 689,732
         
Total liabilities and stockholders' equity  $ 6,707,975  $ 6,689,321  $ 6,702,973  $ 6,766,806
 
PARK NATIONAL CORPORATION 
Consolidated Statements of Income - Linked Quarters
           
  2013 2013 2013 2013 2012
(in thousands, except per share data) 4th QTR 3rd QTR 2nd QTR 1st QTR 4th QTR
           
Interest income:          
Interest and fees on loans   $ 57,038  $ 56,337  $ 56,388  $ 55,775  $ 57,671
Interest on:          
Obligations of U.S. Government, its agencies and other securities 8,911 8,880 8,673 10,242 10,984
Obligations of states and political subdivisions 4 7 16 17 19
Other interest income 113 186 202 158 119
Total interest income 66,066 65,410 65,279 66,192 68,793
           
Interest expense:          
Interest on deposits:          
Demand and savings deposits 382 422 468 501 491
Time deposits 2,516 2,729 2,900 3,090 3,404
Interest on borrowings 7,268 7,299 7,199 7,148 8,007
Total interest expense 10,166 10,450 10,567 10,739 11,902
           
Net interest income 55,900 54,960 54,712 55,453 56,891
           
Provision for (recovery of) loan losses (85) 2,498 673 329 5,188
           
Net interest income after provision for (recovery of) loan losses 55,985 52,462 54,039 55,124 51,703
           
Other income 17,778 17,396 19,298 18,805 17,196
           
Total other expense 51,146 44,715 46,570 46,098 48,011
           
Income before income taxes 22,617 25,143 26,767 27,831 20,888
           
Income taxes 5,163 6,114 6,733 7,121 4,601
           
Net income   $ 17,454  $ 19,029  $ 20,034  $ 20,710  $ 16,287
           
Per Common Share:          
Net income - basic  $ 1.13  $ 1.23  $ 1.30  $ 1.34  $ 1.06
Net income - diluted  $ 1.13  $ 1.23  $ 1.30  $ 1.34  $ 1.06
 
PARK NATIONAL CORPORATION 
Detail of other income and other expense - Linked Quarters
           
  2013 2013 2013 2013 2012
(in thousands) 4th QTR 3rd QTR 2nd QTR 1st QTR 4th QTR
           
Other income:          
Income from fiduciary activities  $ 4,590  $ 4,139  $ 4,328  $ 4,076  $ 4,056
Service charges on deposits 4,169 4,255 4,070 3,822 4,235
Other service income 2,185 3,391 3,352 3,985 3,463
Checkcard fee income 3,330 3,326 3,316 2,983 3,151
Bank owned life insurance income 1,274 1,311 1,254 1,202 1,184
ATM fees 623 705 677 627 650
OREO valuation adjustments (951) (2,030) (600) 401 (2,440)
Gain on the sale of OREO, net 358 895 1,633 224 1,028
Miscellaneous 2,200 1,404 1,268 1,485 1,869
Total other income  $ 17,778  $ 17,396  $ 19,298  $ 18,805  $ 17,196
           
Other expense:          
Salaries and employee benefits  $ 25,115  $ 25,871  $ 24,679  $ 24,633  $ 24,086
Net occupancy expense 2,415 2,348 2,444 2,597 2,222
Furniture and equipment expense 3,022 2,639 2,981 2,607 2,774
Data processing fees 1,064 1,042 1,049 1,019 913
Professional fees and services 10,520 5,601 5,880 5,864 6,846
Amortization of intangibles 112 113 112 139
Marketing 1,126 863 953 848 1,002
Insurance 1,391 1,174 1,338 1,302 1,482
Communication 1,489 1,268 1,453 1,580 1,482
Miscellaneous 5,004 3,797 5,680 5,536 7,065
Total other expense  $ 51,146  $ 44,715  $ 46,570  $ 46,098  $ 48,011
 
PARK NATIONAL CORPORATION
Asset Quality Information
 
  Year ended December 31,
(in thousands, except ratios) 2013 2012 2011 2010 2009
           
Allowance for loan losses:          
Allowance for loan losses, beginning of period $ 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) 19,153 61,268 133,882 66,314 59,022
Recoveries 19,669 12,942 8,798 6,092 6,830
Net charge-offs (recoveries) (516) 48,326 125,084 60,222 52,192
Provision for loan losses 3,415 35,419 63,272 87,080 68,821
Allowance for loan losses, end of period $ 59,468 $ 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 $ 59,468 $ 55,537 $ 68,444 $ 143,575 $ 116,717
Specific reserves 10,451 8,276 15,935 66,904 36,721
General reserves $ 49,017 $ 47,261 $ 52,509 $ 76,671 $ 79,996
           
Total loans $ 4,620,505 $ 4,450,322 $ 4,317,099 $ 4,732,685 $ 4,640,432
Impaired commercial loans 112,304 137,238 187,074 250,933 201,143
Non-impaired loans $ 4,508,201 $ 4,313,084 $ 4,130,025 $ 4,481,752 $ 4,439,289
           
           
Asset Quality Ratios:          
           
Net charge-offs (recoveries) as a % of average loans (0.01)% 1.10% 2.65% 1.30% 1.14%
Allowance for loan losses as a % of period end loans 1.29% 1.25% 1.59% 3.03% 2.52%
General reserves as a % of non-impaired loans 1.09% 1.10% 1.27% 1.71% 1.80%
           
Nonperforming Assets - Park National Corporation:          
Nonaccrual loans $ 135,216 $ 155,536 $ 195,106 $ 289,268 $ 233,544
Accruing troubled debt restructuring 18,747 29,800 28,607 142
Loans past due 90 days or more 1,677 2,970 3,489 3,590 14,773
Total nonperforming loans $ 155,640 $ 188,306 $ 227,202 $ 292,858 $ 248,459
Other real estate owned - Park National Bank 11,412 14,715 13,240 8,385 6,037
Other real estate owned - SEPH 23,224 21,003 29,032
Other real estate owned - Vision Bank 33,324 35,203
Total nonperforming assets $ 190,276 $ 224,024 $ 269,474 $ 334,567 $ 289,699
Percentage of nonaccrual loans to period end loans 2.93% 3.49% 4.52% 6.11% 5.03%
Percentage of nonperforming loans to period end loans 3.37% 4.23% 5.26% 6.19% 5.35%
Percentage of nonperforming assets to period end loans 4.12% 5.03% 6.24% 7.07% 6.24%
Percentage of nonperforming assets to period end assets 2.87% 3.37% 3.86% 4.59% 4.11%
 
 
PARK NATIONAL CORPORATION
Asset Quality Information (continued)
 
  Year ended December 31,
(in thousands, except ratios) 2013 2012 2011 2010 2009
           
Nonperforming Assets - Park National Bank and Guardian:          
Nonaccrual loans $ 99,108 $ 100,244 $ 96,113 $ 117,815 $ 85,197
Accruing troubled debt restructuring 18,747 29,800 26,342 142
Loans past due 90 days or more 1,677 2,970 3,367 3,226 3,496
Total nonperforming loans $ 119,532 $ 133,014 $ 125,822 $ 121,041 $ 88,835
Other real estate owned - Park National Bank 11,412 14,715 13,240 8,385 6,037
Total nonperforming assets $ 130,944 $ 147,729 $ 139,062 $ 129,426 $ 94,872
Percentage of nonaccrual loans to period end loans 2.16% 2.28% 2.29% 2.88% 2.15%
Percentage of nonperforming loans to period end loans 2.61% 3.03% 3.00% 2.96% 2.24%
Percentage of nonperforming assets to period end loans 2.86% 3.36% 3.32% 3.16% 2.39%
Percentage of nonperforming assets to period end assets 2.00% 2.27% 2.21% 1.99% 1.53%
           
           
Nonperforming Assets - SEPH/Vision Bank (retained portfolio as of December 31, 2013, 2012, and 2011):          
Nonaccrual loans $ 36,108 $ 55,292 $ 98,993 $ 171,453 $ 148,347
Accruing troubled debt restructuring 2,265
Loans past due 90 days or more 122 364 11,277
Total nonperforming loans $ 36,108 $ 55,292 $ 101,380 $ 171,817 $ 159,624
Other real estate owned - Vision Bank 33,324 35,203
Other real estate owned - SEPH 23,224 21,003 29,032
Total nonperforming assets $ 59,332 $ 76,295 $ 130,412 $ 205,141 $ 194,827
Percentage of nonaccrual loans to period end loans N.M. N.M. N.M. 26.77% 21.91%
Percentage of nonperforming loans to period end loans N.M. N.M. N.M. 26.82% 23.58%
Percentage of nonperforming assets to period end loans N.M. N.M. N.M. 32.02% 28.78%
Percentage of nonperforming assets to period end assets N.M. N.M. N.M. 25.90% 21.70%
           
           
New nonaccrual loan information - Park National Corporation          
Nonaccrual loans, beginning of period $ 155,536 $ 195,106 $ 289,268 $ 233,544 $ 159,512
New nonaccrual loans 67,398 83,204 124,158 175,175 184,181
Resolved nonaccrual loans 87,718 122,774 218,320 119,451 110,149
Nonaccrual loans, end of period $ 135,216 $ 155,536 $ 195,106 $ 289,268 $ 233,544
           
New nonaccrual loan information - Ohio based operations          
Nonaccrual loans, beginning of period $ 100,244 $ 96,113 $ 117,815 $ 85,197 $ 68,306
New nonaccrual loans - Ohio-based operations 66,197 68,960 78,316 85,081 57,641
Resolved nonaccrual loans 67,333 64,829 100,018 52,463 40,750
Nonaccrual loans, end of period $ 99,108 $ 100,244 $ 96,113 $ 117,815 $ 85,197
           
New nonaccrual loan information - SEPH/Vision Bank          
Nonaccrual loans, beginning of period $ 55,292 $ 98,993 $ 171,453 $ 148,347 $ 91,206
New nonaccrual loans - SEPH/Vision Bank 1,201 14,243 45,842 90,094 126,540
Resolved nonaccrual loans 20,385 57,944 118,302 66,988 69,399
Nonaccrual loans, end of period $ 36,108 $ 55,292 $ 98,993 $ 171,453 $ 148,347
           
Impaired Commercial Loan Portfolio Information (period end):          
Unpaid principal balance $ 175,576 $ 242,345 $ 290,908 $ 304,534 $ 245,092
Prior charge-offs 63,272 105,107 103,834 53,601 43,949
Remaining principal balance 112,304 137,238 187,074 250,933 201,143
Specific reserves 10,451 8,276 15,935 66,904 36,721
Book value, after specific reserve $ 101,853 $ 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.com

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