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PRK > SEC Filings for PRK > Form 8-K on 28-Oct-2013All Recent SEC Filings

Show all filings for PARK NATIONAL CORP /OH/

Form 8-K for PARK NATIONAL CORP /OH/


28-Oct-2013

Results of Operations and Financial Condition, Regulation FD Disclosure,


Item 2.02 - Results of Operations and Financial Condition.

On October 28, 2013, Park National Corporation ("Park") issued a news release (the "Financial Results News Release") announcing financial results for the three and nine months ended September 30, 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-GAAP (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 and nine month periods ended September 30, 2013 and 2012. For purposes of calculating the return on average tangible common equity, a non-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-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-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-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 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 GAAP.




Item 7.01 - Regulation FD Disclosure

Projection of fiscal 2013 results

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. Management's original projection for 2013 as discussed in Park's Form 10-K for the year ended December 31, 2012 is presented below, along with Park's performance through September 30, 2013 and our current projection for the year ending December 31, 2013. Following our inclusion of this information in our Form 10-Q for the period ended September 30, 2013, management plans to discontinue the use of financial projections in future filings.

                                Original projection for       75% of      Nine months
   (In thousands)                         2013               midpoint       YTD 2013      Current projection for 2013
Pre-tax, pre-provision income   $  113,000   $ 131,000     $   91,500     $   83,241     $       109,500   $ 112,500
  Provision for loan losses         20,000      15,000         13,125          3,500               7,500       4,500
Income before income tax        $   93,000   $ 116,000     $   78,375     $   79,741     $       102,000   $ 108,000
  Federal income taxes              23,250      30,160         20,029         19,968              25,700      27,600
Net income                      $   69,750   $  85,840     $   58,346     $   59,773     $        76,300   $  80,400

The decline in pre-tax, pre-provision income (from management's original projection) resulted 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 net recoveries at SE Property Holdings, LLC ("SEPH"). See detailed segment information below.

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

                                                                   Nine months    Nine months
      (In thousands)        Q3 2013      Q2 2013      Q1 2013        YTD 2013       YTD 2012         2012       2011
PNB                        $ 17,249     $ 20,322     $ 19,940     $   57,511     $   67,112       $ 87,106   $ 106,851
GFSC                            731          790          740          2,261          2,686          3,550       2,721
Park Parent Company            (244 )        191          132             79            457            195      (1,595 )
  Ongoing operations       $ 17,736     $ 21,303     $ 20,812     $   59,851     $   70,255       $ 90,851   $ 107,977
Vision Bank                       -            -            -              -              -              -     (22,526 )
SEPH                          1,293       (1,269 )       (102 )          (78 )       (7,912 )      (12,221 )    (3,311 )
  Total Park               $ 19,029     $ 20,034     $ 20,710     $   59,773     $   62,343       $ 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 nine months year-to-date 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, second and third
quarters of 2013, for the first nine months of 2013, for the first nine months
of 2012 and for each of the fiscal years ended December 31, 2012 and 2011.

                                                                 Nine months   Nine months
     (In thousands)       Q3 2013      Q2 2013      Q1 2013       YTD 2013      YTD 2012         2012        2011
Net interest income      $ 52,348     $ 51,736     $ 52,735     $   156,819   $   167,234     $ 221,758   $ 236,282
Provision for loan
losses                      6,339        2,122        3,130          11,591        12,553        16,678      30,220
Fee income                 16,756       18,536       17,872          53,164        52,511        70,739      67,348
Security gains                  -            -            -               -             -             -      23,634
Total other expense        39,860       40,408       40,324         120,592       114,925       156,516     146,235
Income before income
taxes                    $ 22,905     $ 27,742     $ 27,153     $    77,800   $    92,267     $ 119,303   $ 150,809
  Federal income taxes      5,656        7,420        7,213          20,289        25,155        32,197      43,958
Net income               $ 17,249     $ 20,322     $ 19,940     $    57,511   $    67,112     $  87,106   $ 106,851
Net income excluding
security gains           $ 17,249     $ 20,322     $ 19,940     $    57,511   $    67,112     $  87,106   $  91,489

The table below provides certain balance sheet information and financial ratios for PNB as of and for the year-to-date periods ended September 30, 2013, December 31, 2012 and September 30, 2012.

                                September 30,                      September 30,    % change from % change from
       (In thousands)                2013       December 31, 2012       2012          12/31/12       9/30/12
Loans                           $  4,508,156   $       4,369,173   $  4,311,117       3.18  %        4.57  %
Allowance for loan losses             55,425              53,131         53,145       4.32  %        4.29  %
Net loans                          4,452,731           4,316,042      4,257,972       3.17  %        4.57  %
Investment securities              1,387,259           1,579,889      1,651,482     (12.19 )%      (16.00 )%
Total assets                       6,588,368           6,502,579      6,601,785       1.32  %       (0.20 )%
Average assets (YTD)               6,570,918           6,532,683      6,530,055       0.59  %        0.63  %
Deposits                           4,956,249           4,814,107      4,895,627       2.95  %        1.24  %
Return on average assets *              1.17 %              1.33 %         1.37 %   (12.03 )%      (14.60 )%


* Annualized for the nine months ended September 30, 2013 and 2012.

Through the first nine months of 2013, loan balances increased by $139 million, or an annualized 4.25%. Loans outstanding at September 30, 2013 of $4.51 billion . . .



Item 8.01 - Other Events

Declaration of Cash Dividend

As reported in the Financial Results News Release, on October 28, 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 December 10, 2013 to common shareholders of record as of the close of business on November 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 October
                   28, 2013 addressing operating results for the three and nine
                   months ended September 30, 2013.

[Remainder of page intentionally left blank; signature page follows.]


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