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PRK > SEC Filings for PRK > Form 8-K on 19-Apr-2013All Recent SEC Filings

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Form 8-K for PARK NATIONAL CORP /OH/


19-Apr-2013

Results of Operations and Financial Condition, Regulation FD Disclosure,


Item 2.02 - Results of Operations and Financial Condition.

On April 19, 2013, Park National Corporation ("Park") issued a news release (the "Financial Results News Release") announcing financial results for the three months ended March 31, 2013. A copy of this Financial Results News Release is included as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference herein.

Park's management uses certain non-U.S. GAAP (U.S. generally accepted accounting principles) financial measures to evaluate Park's performance. Specifically, management reviews return on average tangible common equity, return on average tangible assets, tangible common equity to tangible assets and tangible common book value per common share. Management has included in the Financial Results News Release information relating to the return on average tangible common equity, return on average tangible assets, tangible common equity to tangible assets and tangible common book value per common share for the three month periods ended March 31, 2013 and 2012. For purposes of calculating the return on average tangible common equity, a non-U.S. GAAP financial measure, net income available to common shareholders for each period is divided by average tangible common equity during the period. Average tangible common equity equals average stockholders' equity during the applicable period less (i) average goodwill and other intangible assets during the applicable period and (ii) average preferred stock during the applicable period. For the purpose of calculating the return on average tangible assets, a non-U.S. GAAP financial measure, net income available to common shareholders for each period is divided by average tangible assets during the period. Average tangible assets equals average assets during the applicable period less average goodwill and other intangible assets during the applicable period. For the purpose of calculating tangible common equity to tangible assets, a non-U.S. GAAP financial measure, tangible common equity is divided by tangible assets. Tangible common equity equals stockholders' equity less preferred stock and goodwill and intangible assets, in each case at period end. Tangible assets equals total assets less goodwill and intangible assets, in each case at period end. For the purpose of calculating tangible common book value per common share, a non-U.S. GAAP financial measure, tangible common equity is divided by common shares outstanding at period end. Management believes that the disclosure of return on average tangible common equity, return on average tangible assets, tangible common equity to tangible assets and tangible common book value per common share presents additional information to the reader of the consolidated financial statements, which, when read in conjunction with the consolidated financial statements prepared in accordance with U.S. GAAP, assists in analyzing Park's operating performance and ensures comparability of operating performance from period to period while eliminating certain non-operational effects of acquisitions and, in the case of return on average common equity and tangible common book value per common share, the impact of preferred stock. In the Financial Results News Release, Park has provided a reconciliation of average tangible common equity to average stockholders' equity, average tangible assets to average assets, tangible common equity to stockholders' equity and tangible assets to total assets solely for the purpose of complying with SEC Regulation G and not as an indication that return on average tangible common equity, return on average tangible assets, tangible common equity to tangible assets and tangible common book value per common share are substitutes for return on average equity, return on average assets, common equity to assets and common book value per common share, respectively, as determined by U.S. GAAP.




Item 7.01 - Regulation FD Disclosure

Projection of fiscal 2013 results - by operating segment

The information below begins with Park's projected consolidated pre-tax, pre-provision income and incorporates a projected range for provision for loan losses, income before income tax, income taxes and net income for Park on a consolidated basis in 2013.

Projected Net Income
                          Original projection for       25% of
   (In thousands)                   2013               midpoint        Q1 2013      Current projection for 2013
Pre-tax, pre-provision
income                    $  113,000   $ 131,000     $    30,500     $  28,160     $       106,000   $ 118,000
  Provision for loan
losses                        20,000      15,000           4,375           329              14,000      10,000
Income before income
tax                       $   93,000   $ 116,000     $    26,125     $  27,831     $        92,000   $ 108,000
  Federal income taxes        23,250      30,160           6,676         7,121              22,000      27,600
Net income                $   69,750   $  85,840     $    19,449     $  20,710     $        70,000   $  80,400

The decline in pre-tax, pre-provision income (from management's original projection) results from the continued low interest rate environment, resulting in lower than previously projected net interest income. Conversely, management currently projects that the provision for loan losses will be lower than originally projected as a result of positive credit experience at both The Park National Bank ("PNB") and SE Property Holdings, LLC ("SEPH"). See detailed segment information below.

First quarter of 2013 - Financial Results by segment The table below reflects the net income (loss) by segment for the first quarter of 2013, for the first quarter of 2012 and results for each of the fiscal years ended December 31, 2012 and 2011. Park's segments include PNB, Guardian Financial Services Company ("GFSC"), SEPH and "All Other" which primarily consists of Park as the "Parent Company."

   (In thousands)       Q1 2013    Q1 2012       2012       2011
PNB                    $ 19,940   $ 21,561    $ 87,106   $ 106,851
GFSC                        740        806       3,550       2,721
Park Parent Company         132         49         195      (1,595 )
  Ongoing operations   $ 20,812   $ 22,416    $ 90,851   $ 107,977
Vision Bank                   -          -           -     (22,526 )
SEPH                       (102 )    9,059     (12,221 )    (3,311 )
  Total Park           $ 20,710   $ 31,475    $ 78,630   $  82,140

The "Park Parent Company" above excludes the results for SEPH, an entity which is winding down commensurate with the disposition of its problem assets. Management considers the "Ongoing operations" results to be reflective of the business of Park and its subsidiaries on a going forward basis. The discussion below provides some additional information regarding the segments that make up the "Ongoing operations", followed by additional information on SEPH.

Vision Bank ("Vision") merged with and into SEPH, a non-bank subsidiary of Park, following the sale of the Vision business to Centennial Bank ("Centennial") on February 16, 2012. The sale of the Vision business in the first quarter of 2012 resulted in a pre-tax gain of $22.2 million ($14.4 million after-tax), which is included in the Q1 2012 SEPH results presented in the table above. SEPH holds the remaining assets and liabilities retained by Vision subsequent to the sale. SEPH assets consist primarily of performing and nonperforming loans and other real estate owned ("OREO"). This segment represents a run-off portfolio of the legacy Vision assets.


The Park National Bank (PNB)

The table below reflects the results for PNB for the first quarter of 2013, for
the first quarter of 2012 and for each of the fiscal years ended December 31,
2012 and 2011.

          (In thousands)               Q1 2013   Q1 2012       2012       2011
Net interest income                   $ 52,735  $ 55,846    $ 221,758  $ 236,282
Provision for loan losses                3,130     4,672       16,678     30,220
Fee income                              17,872    16,661       70,739     67,348
Security gains                               -         -            -     23,634
Total other expense                     40,324    38,056      156,516    146,235
Income before income taxes            $ 27,153  $ 29,779    $ 119,303  $ 150,809
  Federal income taxes                   7,213     8,218       32,197     43,958
Net income                            $ 19,940  $ 21,561    $  87,106  $ 106,851
Net income excluding security gains   $ 19,940  $ 21,561    $  87,106  $  91,489

The table below provides certain balance sheet information and financial ratios for PNB as of March 31, 2013, for the year ended December 31, 2012 and as of March 31, 2012.

                                      March 31,      Dec. 31,                        % change from  % change from
          (In thousands)                2013           2012       March 31, 2012        12/31/12       3/31/12
Loans                                $ 4,368,446   $ 4,369,173   $     4,203,435      (0.02 )%         3.93  %
Allowance for loan losses                 52,901        53,131            57,408      (0.43 )%        (7.85 )%
Net loans                              4,315,545     4,316,042         4,146,027      (0.01 )%         4.09  %
Total assets                           6,611,802     6,502,579         6,587,773       1.68  %         0.36  %
Average assets (YTD)                   6,555,952     6,532,683         6,451,704       0.36  %         1.62  %
Deposits                               5,005,238     4,814,107         4,961,121       3.97  %         0.89  %
Return on average assets *                  1.23 %        1.33 %            1.34 %    (7.52 )%        (8.21 )%


* Annualized for the three months ended March 31, 2013 and 2012.

Loan balances were largely stable in the first quarter of 2013, declining $727,000, or 0.02%. Loans outstanding at March 31, 2013 of $4.37 billion represented an increase of $165 million, or 3.93%, compared to the loans outstanding of $4.20 billion at March 31, 2012. The $165 million increase in loans experienced at PNB over the last twelve months is primarily related to continued growth in the 15-year, fixed-rate mortgage loan portfolio of approximately $52 million, growth in the consumer loan portfolio of approximately $45 million and increases in the commercial loan portfolio of approximately $70 million. As noted above, PNB's allowance for loan losses has declined by $4.5 million, or 7.85%, to $52.9 million at March 31, 2013 compared to $57.4 million at March 31, 2012. The decline in PNB's allowance for loan losses is due to continued improvement in the credit metrics across the PNB loan portfolio. Refer to the "Credit Metrics and Provision for Loan Losses" section below for additional information regarding the improvements in the credit metrics of PNB's loan portfolio.


Guardian Financial Services Company (GFSC)

The table below reflects the results for GFSC for the first quarter of 2013, for
the first quarter of 2012 and for each of the fiscal years ended December 31,
2012 and 2011.

      (In thousands)          Q1 2013   Q1 2012      2012     2011
Net interest income          $  2,133  $  2,211    $ 9,156  $ 8,693
. . .


Item 8.01 - Other Events

Declaration of Cash Dividend

As reported in the Financial Results News Release, on April 19, 2013, the Park Board of Directors declared a $0.94 per share quarterly cash dividend in respect of Park's common shares. The dividend is payable on June 10, 2013 to common shareholders of record as of the close of business on May 22, 2013. A copy of the Financial Results News Release is included as Exhibit 99.1 and the portion thereof addressing the declaration of the cash dividend by Park's Board of Directors is incorporated by reference herein.




Item 9.01 - Financial Statements and Exhibits.

(a) Not applicable

(b) Not applicable

(c) Not applicable

(d) Exhibits. The following exhibit is included with this Current Report on Form 8-K:

Exhibit No.    Description
99.1                     News Release issued by Park National Corporation on
                         April 19, 2013 addressing operating results for the
                         three months ended March 31, 2013.

[Remainder of page intentionally left blank; signature on following page.]


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