NEWARK, Ohio, Jan. 26, 2007 (PRIME NEWSWIRE) -- Park National Corporation (Park) (AMEX:PRK) today reported a correction to net income for the fourth quarter and for the full year of 2006, which had previously been reported in Park's news release issued on Tuesday, January 16, 2007. Park's net income (as a result of the correction) decreased by $1.256 million for both the three- and twelve-month periods ended December 31, 2006, as compared to Park's net income reported in the January 16, 2007 news release.
For the full year of 2006, Park's net income was $94.091 million or $6.74 per diluted share, compared to that reported in the previous news release (from January 16, 2007) which had reported net income of $95.347 million and $6.83 per diluted share. This correction of $1.256 million resulted in a 1.3 percent decrease in both previously reported net income and previously reported diluted earnings per share for 2006.
Park's net income for the year ended December 31, 2006 (as corrected), decreased by $1.147 million or 1.2 percent to $94.091 million compared to $95.238 million for 2005. Park's diluted earnings per share increased by $.10 per share or 1.5 percent to $6.74 in 2006 (as corrected) compared to $6.64 for 2005.
For the fourth quarter of 2006, Park's net income was $22.593 million or $1.63 per diluted share, compared to that reported in the previous news release (from January 16, 2007) which had reported net income of $23.849 million or $1.72 per diluted share. This correction of $1.256 million, resulted in a 5.3 percent decrease in previously reported net income and a 5.2 percent decrease in previously reported diluted earnings per share for the fourth quarter of 2006.
Park's net income for the fourth quarter of 2006 (as corrected), decreased by $238,000 or 1.0 percent to $22.593 million compared to $22.831 million for the fourth quarter of 2005. Park's diluted earnings per share increased by $.02 or 1.2 percent to $1.63 for the fourth quarter of 2006 (as corrected) compared to $1.61 for the fourth quarter of 2005.
Earlier this week, Park's management discovered that the accrued interest receivable balance for loans was overstated by $1.933 million due to interest income being accrued on certain previously charged-off loans. When a loan is charged-off, the loan balance is reduced to zero and a charge is made to the loan loss reserve. No additional interest income is to be accrued on charged-off loans. However, for this to be properly reflected within Park's data processing system, the charged-off loan also needs to be coded as being nonaccrual. Primarily, one of Park's subsidiary banks did not code charged-off installment loans within Park's data processing system as nonaccrual. This error started approximately 10 years ago and resulted in an overstatement on a cumulative basis of $1.933 million for both accrued interest receivable on loans and interest income on loans. Park recorded this cumulative adjustment in the fourth quarter of 2006. This reduction in interest income on loans of $1.933 million caused a reduction in federal income tax expense of $677,000, which resulted in the decrease in net income of $1.256 million.
Park's management has determined that the amount by which accrued interest receivable on loans and the related interest income on loans was overstated is not material to any previously issued financial statements. Accordingly, Park has recorded the cumulative adjustment of $1.933 million in the fourth quarter of 2006 and has not restated any previously issued financial statements. Management estimates that the impact on interest income on loans for the previous several quarters was an overstatement of approximately $100,000 per quarter. This overstatement had no impact on Park's customer accounts or Park's assets, other than accrued interest receivable on loans.
Headquartered in Newark, Ohio, Park holds $5.47 billion in assets (based on asset totals as of December 31, 2006). Park and its subsidiaries consist of 12 community banking divisions and two specialty finance companies, all based in Ohio. Park operates 138 offices across 29 Ohio counties and one Kentucky county through the following organizations: The Park National Bank, The Park National Bank of Southwest Ohio & Northern Kentucky Division, Fairfield National Division, The Richland Trust Company, Century National Bank, The First-Knox National Bank of Mount Vernon, Farmers and Savings Division, United Bank, N.A., Second National Bank, The Security National Bank and Trust Co., Unity National Division, The Citizens National Bank of Urbana, Scope Leasing, Inc., and Guardian Financial Services Company.
Financial Tables are below and reflect the corrections discussed above for all periods contained therein.
PARK NATIONAL CORPORATION
FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)
DECEMBER 31, 2006
INCOME STATEMENT
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
PERCENT PERCENT
2006 2005 CHANGE 2006 2005 CHANGE
---- ---- ------ ---- ---- ------
NET INTEREST
INCOME $52,441 $55,156 -4.92% $213,244 $220,564 -3.32%
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PROVISION FOR
LOAN LOSSES 1,525 1,400 8.93% 3,927 5,407 -27.37%
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OTHER INCOME 16,590 14,889 11.42% 64,665 59,609 8.48%
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GAIN (LOSS)
ON SALE OF
SECURITIES 0 0 97 96
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OTHER EXPENSE 35,645 36,358 -1.96% 141,002 139,438 1.12%
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INCOME BEFORE
TAXES 31,861 32,287 -1.32% 133,077 135,424 -1.73%
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NET INCOME 22,593 22,831 -1.04% 94,091 95,238 -1.20%
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NET INCOME
PER SHARE-
BASIC 1.63 1.62 0.62% 6.75 6.68 1.05%
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NET INCOME PER
SHARE-DILUTED 1.63 1.61 1.24% 6.74 6.64 1.51%
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CASH DIVIDENDS
PER SHARE 0.93 0.92 1.09% 3.69 3.62 1.93%
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RATIOS AND
OTHER
INFORMATION
RETURN ON
AVERAGE
ASSETS 1.67% 1.66% 1.75% 1.71%
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RETURN ON
AVERAGE
EQUITY 15.93% 16.33% 17.26% 17.03%
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YIELD ON
EARNING
ASSETS 6.85% 6.41% 6.77% 6.17%
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COST OF PAYING
LIABILITIES 3.20% 2.46% 2.97% 2.19%
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NET INTEREST
MARGIN 4.23% 4.39% 4.33% 4.34%
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EFFICIENCY
RATIO 51.26% 51.48% 50.35% 49.32%
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NET LOAN
CHARGE-OFFS $1,522 $2,073 $3,920 $5,890
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NET CHARGE-
OFFS AS A
PERCENT OF
LOANS 0.18% 0.25% 0.12% 0.18%
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BALANCE SHEET
AT DECEMBER 31,
PERCENT
2006 2005 CHANGE
---- ---- ------
INVESTMENTS $1,513,498 $1,663,342 -9.01%
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LOANS 3,480,702 3,328,112 4.58%
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LOAN LOSS RESERVE 70,500 69,694 1.16%
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GOODWILL AND OTHER
INTANGIBLES 78,003 69,188 12.74%
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TOTAL ASSETS 5,470,876 5,436,048 0.64%
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DEPOSITS 3,825,534 3,757,757 1.80%
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BORROWINGS 979,913 1,028,858 -4.76%
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EQUITY 570,439 558,430 2.15%
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BOOK VALUE PER SHARE 40.98 39.63 3.41%
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NONPERFORMING LOANS 25,117 22,363 12.31%
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NONPERFORMING ASSETS 28,468 24,731 15.11%
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PAST DUE 90 DAY LOANS 7,832 7,661 2.23%
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RATIOS
LOANS/ASSETS 63.62% 61.22%
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NONPERFORMING LOANS/LOANS 0.73% 0.67%
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PAST DUE 90 DAY LOANS/LOANS 0.23% 0.23%
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LOAN LOSS RESERVE/LOANS 2.03% 2.09%
--------------------------------------------------------
EQUITY/ASSETS 10.43% 10.27%
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PARK NATIONAL CORPORATION
Consolidated Balance Sheets
(dollars in thousands, except share data)
December 31,
--------------------------
2006 2005
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Assets
Cash and due from banks $177,990 $169,690
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Money market instruments 8,266 4,283
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Interest bearing deposits 1 300
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Investment securities 1,513,498 1,663,342
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Loans (net of unearned interest) 3,480,702 3,328,112
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Allowance for possible
loan losses 70,500 69,694
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Loans, net 3,410,202 3,258,418
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Bank premises and
equipment, net 47,554 47,172
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Other assets 313,365 292,843
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Total assets $5,470,876 $5,436,048
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Liabilities and Stockholders' Equity
Deposits:
Noninterest bearing $664,962 $667,328
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Interest bearing 3,160,572 3,090,429
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Total deposits 3,825,534 3,757,757
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Borrowings 979,913 1,028,858
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Other liabilities 94,990 91,003
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Total liabilities 4,900,437 4,877,618
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Stockholders' Equity:
Common stock (No par value;
20,000,000 shares authorized
in 2006 and 2005; 15,358,323
shares issued in 2006 and
15,271,574 in 2005) 217,067 208,365
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Accumulated other
comprehensive income
(loss), net of taxes (22,820) (10,143)
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Retained earnings 519,563 476,889
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Treasury stock (1,436,794
shares in 2006 and
1,178,948 shares in 2005) (143,371) (116,681)
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Total stockholders' equity 570,439 558,430
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Total liabilities and
stockholders' equity $5,470,876 $5,436,048
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PARK NATIONAL CORPORATION
Consolidated Statements of Income
(dollars in thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
----------------------- ------------------------
2006 2005 2006 2005
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Interest income:
Interest and fees
on loans $ 66,132 $ 59,759 $ 255,123 $ 223,868
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Interest on:
Obligations of U.S.
Government, its
agencies and other
securities 18,268 19,886 75,300 85,664
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Obligations of
states and political
subdivisions 852 1,037 3,667 4,486
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Other interest income 123 122 469 441
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Total interest
income 85,375 80,804 334,559 314,459
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Interest expense:
Interest on deposits:
Demand and savings
deposits 7,225 4,490 25,870 15,091
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Time deposits 15,774 11,502 56,402 41,808
------------------------------------------- ------------------------
Interest on borrowings 9,935 9,656 39,043 36,996
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Total interest
expense 32,934 25,648 121,315 93,895
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Net interest
income 52,441 55,156 213,244 220,564
------------------------------------------- ------------------------
Provision for loan
losses 1,525 1,400 3,927 5,407
------------------------------------------- ------------------------
Net interest
income after
provision for
loan losses 50,916 53,756 209,317 215,157
------------------------------------------- ------------------------
Other income 16,590 14,889 64,665 59,609
------------------------------------------- ------------------------
Gain (loss) on sale
of securities -- -- 97 96
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Other expense:
Salaries and
employee benefits 20,393 19,134 80,227 78,498
------------------------------------------- ------------------------
Occupancy expense 2,347 2,097 9,066 8,641
------------------------------------------- ------------------------
Furniture and
equipment expense 1,202 1,287 5,166 5,278
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Other expense 11,703 13,840 46,543 47,021
------------------------------------------- ------------------------
Total other expense 35,645 36,358 141,002 139,438
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Income before federal
income taxes 31,861 32,287 133,077 135,424
------------------------------------------- ------------------------
Federal income taxes 9,268 9,456 38,986 40,186
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Net income $ 22,593 $ 22,831 $ 94,091 $ 95,238
=========================================== ========================
Per Share:
Net income
- basic $ 1.63 $ 1.62 $ 6.75 $ 6.68
------------------------------------------- ------------------------
Net income
- diluted $ 1.63 $ 1.61 $ 6.74 $ 6.64
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Weighted average
shares - basic 13,845,071 14,134,058 13,929,090 14,258,519
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Weighted average
shares - diluted 13,872,586 14,199,455 13,966,836 14,348,243
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PARK NATIONAL CORPORATION
Consolidated Average Balance Sheets
(dollars in thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
----------------------- -----------------------
2006 2005 2006 2005
------------------------------------------- -----------------------
Assets
Cash and due from
banks $ 139,743 $ 148,566 $ 142,794 $ 148,303
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Money market
instruments 10,445 12,713 8,639 11,272
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Interest bearing
deposits 1 305 84 986
------------------------------------------- -----------------------
Investment
securities 1,526,529 1,694,688 1,578,244 1,853,524
------------------------------------------- -----------------------
Loans (net of
unearned interest) 3,411,449 3,312,164 3,357,278 3,278,092
------------------------------------------- -----------------------
Allowance for
possible loan
losses 70,188 71,050 70,386 71,052
------------------------------------------- -----------------------
Loans, net 3,341,261 3,241,114 3,286,892 3,207,040
------------------------------------------- -----------------------
Bank premises and
equipment, net 46,704 47,331 46,894 46,418
------------------------------------------- -----------------------
Other assets 318,400 302,330 317,076 290,545
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Total assets $5,383,083 $5,447,047 $5,380,623 $5,558,088
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Liabilities and
Stockholders' Equity
Deposits:
Noninterest
bearing $ 651,753 $ 665,426 $ 662,077 $ 643,032
------------------------------------------- -----------------------
Interest bearing 3,162,943 3,135,084 3,162,867 3,187,033
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Total deposits 3,814,696 3,800,510 3,824,944 3,830,065
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Borrowings 924,075 1,009,117 928,639 1,091,730
------------------------------------------- -----------------------
Other liabilities 81,518 82,760 81,966 77,082
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Total
liabilities 4,820,289 4,892,387 4,835,549 4,998,877
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Stockholders' Equity:
Common stock 209,721 208,367 208,733 208,349
------------------------------------------- -----------------------
Accumulated other
comprehensive
income (loss), net
of taxes (14,798) (10,310) (21,085) 1,309
------------------------------------------- -----------------------
Retained earnings 511,583 468,847 491,723 448,354
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Treasury stock (143,712) (112,244) (134,297) (98,801)
------------------------------------------- -----------------------
Total stockholders'
equity 562,794 554,660 545,074 559,211
------------------------------------------- -----------------------
Total liabilities
and stockholders'
equity $5,383,083 $5,447,047 $5,380,623 $5,558,088
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