NEWARK, Ohio, Oct. 20, 2008 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (AMEX:PRK) today reported results for the third quarter 2008 and the nine months ended September 30, 2008. Park recognized a $55 million impairment charge to the goodwill value of its Vision Bank subsidiary at the end of the third quarter, which eliminated the remaining goodwill resulting from Park's acquisition of Vision Bank. As a result, Park recorded a third quarter 2008 net loss of $38.4 million and a loss of $2.75 per diluted share. Including the impairment charge, Park's net income in the nine months ended September 30, 2008 was $2.8 million and $0.20 per diluted share.
Without the goodwill impairment charge, Park's net income for the third quarter 2008 was $16.6 million and $1.19 earnings per diluted share. Net income from the third quarter 2007 was $21.3 million and $1.50 per share. Net income for the nine months ended September 30, 2008 was $57.7 million and $4.14 earnings per diluted share, prior to the impairment charge. Net income for the same time period in 2007 was $65.9 million and $4.61 earnings per diluted share.
Without the impairment charge, net income for the third quarter of 2008 declined by 22.2 percent from the same period in 2007, and net income decreased by 12.4 percent for the nine months ended September 30, 2008 compared to the same period in 2007. The decreases in net income (net of the impairment charge) were primarily caused by recognizing additional loan losses in 2008 compared to 2007.
"The impact of the impairment is obvious in our short-term stated income results, although it has no effect on our regulatory capital, cash, or dividends. We remain well capitalized and are performing with strong operating results through periods of unprecedented economic change," said Park Chairman C. Daniel DeLawder. "Loans and deposits continue to grow. Our unique style of community banking has proven particularly comforting to both clients and prospects during these unsettling times."
"Technical accounting issues and headlines can be confusing. The fact is we're doing fine in challenging times. We are proud of the continuing strong operating results due to the focused efforts of our associates," DeLawder added.
In the third quarter of 2008 Park's 12 Ohio-based banking divisions consistently performed among the best of its peers, recording net income of $23.3 million and controlling net loan charge-offs at $3.9 million, with a loan loss provision of $4.4 million. Park's results from Ohio for the nine months ended September 30, 2008 showed a net income of $73.0 million, net loan charge-offs of $10.6 million, and a loan loss provision of $10.1 million. In the first nine months of 2008, Park's Ohio-based banking divisions increased loans by $198 million or 5.5 percent.
Vision Bank has also increased its loans by $45 million or 7 percent in the first nine months of 2008. However, the severe real estate market conditions and deterioration of credit in Florida and Alabama markets remain a challenge. Vision Bank's third quarter 2008 net loan charge-offs totaled $8.9 million, with a loan loss provision of $11.5 million.
Headquartered in Newark, Ohio, Park National Corporation holds $6.8 billion in assets (as of September 30, 2008). Park consists of 14 community bank divisions, a data processing and information technology division, two specialty finance companies and a title company. Park's Ohio-based banking operations are conducted through Park subsidiary The Park National Bank and its divisions which include Fairfield National Bank, Richland Bank, Century National Bank, First-Knox National Bank, Farmers and Savings Bank, United Bank, Second National Bank, Security National Bank, Unity National Bank, Citizens National Bank and The Park National Bank of Southwest Ohio & Northern Kentucky. 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), Guardian Finance Company and Park Title Agency.
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 Vision Bank's loan portfolio 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, either national or in the states in which Park and its subsidiaries do business, are worse than expected; changes in the interest rate environment reduce net interest margins; competitive pressures among financial institutions increase significantly; 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; 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, 2007 and in "Item 1A. Risk Factors" of Part II of Park's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008. 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
(Dollars in thousands, except per share data)
INCOME STATEMENT THREE MONTHS ENDED NINE MONTHS ENDED
AND RATIOS SEPTEMBER 30, SEPTEMBER 30,
PERCENT PERCENT
2008 2007 CHANGE 2008 2007 CHANGE
---- ---- ------ ---- ---- ------
NET INTEREST
INCOME $65,228 $59,416 9.78% $191,038 $174,724 9.34%
---------------------------------------------------------------------
PROVISION FOR
LOAN LOSSES 15,906 5,793 174.57% 37,869 10,879 248.09%
---------------------------------------------------------------------
OTHER INCOME 17,088 19,060 -10.35% 56,670 53,696 5.54%
---------------------------------------------------------------------
GAIN ON SALE
OF SECURITIES -- -- 896 --
---------------------------------------------------------------------
GOODWILL
IMPAIRMENT
CHARGE 54,986 -- 54,986 --
---------------------------------------------------------------------
OTHER EXPENSE 44,493 42,817 3.91% 132,203 124,606 6.10%
---------------------------------------------------------------------
INCOME (LOSS)
BEFORE TAXES (33,069) 29,866 -210.72% 23,546 92,935 -74.66%
---------------------------------------------------------------------
NET INCOME
(LOSS) (38,412) 21,304 -280.30% 2,757 65,877 -95.81%
---------------------------------------------------------------------
NET INCOME
(LOSS) PER
SHARE-BASIC (2.75) 1.50 -283.33% 0.20 4.62 -95.67%
---------------------------------------------------------------------
NET INCOME
(LOSS) PER
SHARE-DILUTED (2.75) 1.50 -283.33% 0.20 4.61 -95.66%
---------------------------------------------------------------------
RETURN ON
AVERAGE
ASSETS -2.25% 1.35% 0.06% 1.46%
---------------------------------------------------------------------
RETURN ON
AVERAGE
EQUITY -26.72% 13.69% 0.64% 14.33%
---------------------------------------------------------------------
EFFICIENCY
RATIO 120.22% 54.25% 75.17% 54.22%
---------------------------------------------------------------------
CASH DIVIDENDS
DECLARED PER
SHARE 0.94 0.93 1.08% 2.82 2.79 1.08%
---------------------------------------------------------------------
INCOME STATEMENT AND RATIOS (NON GAAP)
NET INCOME
BEFORE
IMPAIRMENT
CHARGE (a) 16,574 21,304 -22.20% 57,743 65,877 -12.35%
---------------------------------------------------------------------
NET INCOME
BEFORE
IMPAIRMENT
CHARGE PER
SHARE-DILUTED
(a) 1.19 1.50 -20.67% 4.14 4.61 -10.20%
---------------------------------------------------------------------
RETURN ON
AVERAGE
TANGIBLE
ASSETS
BEFORE
IMPAIRMENT
CHARGE (e) 0.99% 1.40% 1.18% 1.50%
---------------------------------------------------------------------
RETURN ON
AVERAGE
ASSETS BEFORE
IMPAIRMENT
CHARGE (a) 0.97% 1.35% 1.15% 1.46%
---------------------------------------------------------------------
RETURN ON
AVERAGE
TANGIBLE
REALIZED
EQUITY BEFORE
IMPAIRMENT
CHARGE (b) 15.00% 18.89% 17.78% 18.74%
---------------------------------------------------------------------
RETURN ON
AVERAGE
EQUITY BEFORE
IMPAIRMENT
CHARGE (a) 11.53% 13.69% 13.36% 14.33%
---------------------------------------------------------------------
EFFICIENCY
RATIO BEFORE
IMPAIRMENT
CHARGE (d) 52.56% 54.25% 53.09% 54.22%
---------------------------------------------------------------------
OTHER RATIOS
YIELD ON
EARNING
ASSETS 6.25% 7.26% 6.48% 7.23%
---------------------------------------------------------------------
COST OF PAYING
LIABILITIES 2.42% 3.62% 2.67% 3.52%
---------------------------------------------------------------------
NET INTEREST
MARGIN 4.17% 4.17% 4.18% 4.26%
---------------------------------------------------------------------
NET LOAN
CHARGE-OFFS $12,756 $5,851 $35,776 $10,866
---------------------------------------------------------------------
NET
CHARGE-OFFS
AS A PERCENT
OF LOANS 1.15% 0.56% 1.11% 0.37%
---------------------------------------------------------------------
BALANCE SHEET September 30, December 31, September 30,
2008 2007 2007
---- ---- ----
INVESTMENTS $1,807,464 $1,703,103 $1,735,145
-------------------------------------------------------------
LOANS 4,466,671 4,224,134 4,174,652
-------------------------------------------------------------
LOAN LOSS RESERVE 89,195 87,102 79,846
-------------------------------------------------------------
GOODWILL AND OTHER
INTANGIBLES 86,551 144,556 199,679
-------------------------------------------------------------
TOTAL ASSETS 6,799,733 6,501,102 6,511,136
-------------------------------------------------------------
TOTAL DEPOSITS 4,774,509 4,439,239 4,535,172
-------------------------------------------------------------
BORROWINGS 1,404,747 1,389,727 1,276,321
-------------------------------------------------------------
EQUITY 529,685 580,012 628,338
-------------------------------------------------------------
TANGIBLE EQUITY 443,134 435,456 428,659
-------------------------------------------------------------
BOOK VALUE PER SHARE 37.93 41.54 44.57
-------------------------------------------------------------
TANGIBLE BOOK VALUE
PER SHARE (c) 31.73 31.18 30.41
-------------------------------------------------------------
NONPERFORMING
LOANS 126,336 103,932 61,444
-------------------------------------------------------------
NONPERFORMING ASSETS 146,086 117,375 69,509
-------------------------------------------------------------
PAST DUE 90 DAY LOANS 4,388 4,545 4,734
-------------------------------------------------------------
RATIOS
LOANS/ASSETS 65.69% 64.98% 64.12%
-------------------------------------------------------------
NONPERFORMING LOANS/LOANS 2.83% 2.46% 1.47%
-------------------------------------------------------------
PAST DUE 90 DAY LOANS/
LOANS 0.10% 0.11% 0.11%
-------------------------------------------------------------
LOAN LOSS RESERVE/LOANS 2.00% 2.06% 1.91%
-------------------------------------------------------------
EQUITY/ASSETS 7.79% 8.92% 9.65%
-------------------------------------------------------------
(a) Net income (loss) for the three months and the nine months ended
September 30, 2008 has been adjusted for the impairment charge to
goodwill. Net income before impairment charge equals net income
(loss) for the period plus the impairment charge to the goodwill
value of Vision Bank of $54,986.
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2008 2007 2008 2007
---- ---- ---- ----
RECONCILIATION OF NET
INCOME (LOSS) TO NET
INCOME BEFORE
IMPAIRMENT CHARGE:
NET INCOME (LOSS) ($38,412) $21,304 $2,757 $65,877
---------------------------------------------------------------------
Plus goodwill
impairment
charge 54,986 -- 54,986 --
---------------------------------------------------------------------
NET INCOME BEFORE
IMPAIRMENT
CHARGE $16,574 $21,304 $57,743 $65,877
=================================================
RECONCILIATION OF NET INCOME (LOSS) PER SHARE-DILUTED TO NET INCOME
BEFORE IMPAIRMENT CHARGE PER SHARE-DILUTED:
NET INCOME (LOSS)
PER SHARE-DILUTED ($2.75) $1.50 $0.20 $4.61
---------------------------------------------------------------------
Plus impairment
charge to
goodwill per
share-diluted 3.94 -- 3.94 --
---------------------------------------------------------------------
NET INCOME BEFORE
IMPAIRMENT
CHARGE PER
SHARE-DILUTED $1.19 $1.50 $4.14 $4.61
=================================================
(b) Net Income before impairment charge for each period divided by
average tangible realized equity during the period. Average tangible
realized equity equals average stockholders' equity during the
applicable period less (i) average goodwill and other intangible
assets during the period and (ii) average accumulated other
comprehensive income (loss), net of taxes, during the period.
RECONCILIATION OF AVERAGE STOCKHOLDERS' EQUITY TO AVERAGE TANGIBLE
REALIZED EQUITY:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2008 2007 2008 2007
---- ---- ---- ----
AVERAGE
STOCKHOLDERS'
EQUITY $ 571,910 $ 617,506 $ 577,251 $ 614,612
---------------------------------------------------------------------
Less Average
Goodwill and
Other Intangible
Assets 141,511 197,778 142,903 168,734
---------------------------------------------------------------------
Average
Accumulated
Other
Comprehensive
(Income)Loss,
Net of Taxes 9,184 27,611 (456) 24,167
---------------------------------------------------------------------
AVERAGE TANGIBLE
REALIZED EQUITY $ 439,583 $ 447,339 $ 433,892 $ 470,045
====================================================
(c) Tangible book value per share equals stockholders' equity at the
end of the period less goodwill and other intangibles at the end of
the period, divided by actual shares outstanding at the end of the
period.
RECONCILIATION OF STOCKHOLDERS' EQUITY TO TANGIBLE EQUITY:
September 30, December 31, September 30,
2008 2007 2007
---- ---- ----
STOCKHOLDERS'
EQUITY $ 529,685 $ 580,012 $ 628,338
-------------------------------------------------------------
Less Goodwill and
Other Intangible
Assets 86,551 144,556 199,679
-------------------------------------------------------------
TANGIBLE EQUITY $ 443,134 $ 435,456 $ 428,659
=======================================
(d) Efficiency ratio before impairment charge is calculated by
reducing non-interest expense by the goodwill impairment charge, and
dividing that result by non-interest income and net interest income
(on a tax equivalent basis) for each period.
RECONCILIATION OF NON-INTEREST EXPENSE TO NON-INTEREST EXPENSE
BEFORE IMPAIRMENT CHARGE
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2008 2007 2008 2007
---- ---- ---- ----
NON-INTEREST
EXPENSE $ 99,479 $ 42,817 $ 187,189 $ 124,606
---------------------------------------------------------------------
Less Goodwill
Impairment
Charge (54,986) -- (54,986) --
---------------------------------------------------------------------
NON-INTEREST
EXPENSE BEFORE
IMPAIRMENT
CHARGE $ 44,493 $ 42,817 $ 132,203 $ 124,606
====================================================
(e) Net income before impairment charge 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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2008 2007 2008 2007
---- ---- ---- ----
AVERAGE ASSETS $ 6,797,792 $ 6,253,784 $ 6,681,524 $ 6,053,164
---------------------------------------------------------------------
Less Average
Goodwill and
Other Intangible
Assets 141,511 197,778 142,903 168,734
---------------------------------------------------------------------
AVERAGE TANGIBLE
ASSETS $ 6,656,281 $ 6,056,006 $ 6,538,621 $ 5,884,430
====================================================
PARK NATIONAL CORPORATION
Consolidated Statements of Income
(dollars in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ------------------------
2008 2007 2008 2007
---------------------------------------- ------------------------
Interest income:
Interest and
fees on loans $75,167 $83,964 $229,109 $238,625
---------------------------------------- ------------------------
Interest on:
Obligations of
U.S. Government,
its agencies
and other
securities 22,204 18,826 65,538 55,651
---------------------------------------- ------------------------
Obligations of
states and
political
subdivisions 488 754 1,707 2,349
---------------------------------------- ------------------------
Other interest 88 222 262 802
---------------------------------------- ------------------------
Total interest
income 97,947 103,766 296,616 297,427
---------------------------------------- ------------------------
Interest expense:
Interest on
deposits:
Demand and
savings
deposits 5,573 11,309 18,266 29,936
---------------------------------------- ------------------------
Time deposits 15,527 21,440 51,344 60,249
---------------------------------------- ------------------------
Interest on
borrowings 11,619 11,601 35,968 32,518
---------------------------------------- ------------------------
Total interest
expense 32,719 44,350 105,578 122,703
---------------------------------------- ------------------------
Net interest
income 65,228 59,416 191,038 174,724
---------------------------------------- ------------------------
Provision for
loan losses 15,906 5,793 37,869 10,879
---------------------------------------- ------------------------
Net interest
income after
provision for
loan losses 49,322 53,623 153,169 163,845
---------------------------------------- ------------------------
Other income 17,088 19,060 56,670 53,696
---------------------------------------- ------------------------
Gain on sale of
securities -- -- 896 --
---------------------------------------- ------------------------
Other expense:
Salaries and
employee
benefits 25,105 24,980 74,262 72,776
---------------------------------------- ------------------------
Occupancy
expense 2,850 2,700 8,758 8,054
---------------------------------------- ------------------------
Furniture and
equipment
expense 2,412 2,407 7,305 6,964
---------------------------------------- ------------------------
Goodwill
Impairment
charge 54,986 -- 54,986 -
---------------------------------------- ------------------------
Other expense 14,126 12,730 41,878 36,812
---------------------------------------- ------------------------
Total other
expense 99,479 42,817 187,189 124,606
---------------------------------------- ------------------------
Income (loss)
before income
taxes (33,069) 29,866 23,546 92,935
---------------------------------------- ------------------------
Income taxes 5,343 8,562 20,789 27,058
---------------------------------------- ------------------------
Net income (loss) ($38,412) $21,304 $2,757 $65,877
======================================== ========================
Per Share:
Net income
(loss) - basic ($2.75) $1.50 $0.20 $4.62
---------------------------------------- ------------------------
Net income
(loss) - diluted ($2.75) $1.50 $0.20 $4.61
---------------------------------------- ------------------------
Weighted average
shares - basic 13,964,549 14,193,019 13,964,561 14,273,759
---------------------------------------- ------------------------
Weighted average
shares - diluted 13,964,549 14,193,019 13,964,561 14,279,810
---------------------------------------- ------------------------
PARK NATIONAL CORPORATION
Consolidated Balance Sheets
(dollars in thousands)
September 30,
-------------------------
2008 2007
--------------------------------------------------------------------
Assets
Cash and due from banks $161,591 $154,472
--------------------------------------------------------------------
Money market instruments 22,378 11,991
--------------------------------------------------------------------
Interest bearing deposits 1 1
--------------------------------------------------------------------
Investment securities 1,807,464 1,735,145
--------------------------------------------------------------------
Loans (net of unearned income) 4,466,671 4,174,652
--------------------------------------------------------------------
Allowance for loan losses 89,195 79,846
--------------------------------------------------------------------
Loans, net 4,377,476 4,094,806
--------------------------------------------------------------------
Bank premises and equipment, net 69,562 66,527
--------------------------------------------------------------------
Other assets 361,261 448,194
--------------------------------------------------------------------
Total assets $6,799,733 $6,511,136
--------------------------------------------------------------------
Liabilities and Stockholders' Equity
Deposits:
Noninterest bearing $725,859 $692,749
--------------------------------------------------------------------
Interest bearing 4,048,650 3,842,423
--------------------------------------------------------------------
Total deposits 4,774,509 4,535,172
--------------------------------------------------------------------
Borrowings 1,404,747 1,276,321
--------------------------------------------------------------------
Other liabilities 90,792 71,305
--------------------------------------------------------------------
Total liabilities 6,270,048 5,882,798
--------------------------------------------------------------------
Stockholders' Equity:
Common stock (No par value; 20,000,000
shares authorized in 2008 and 2007;
16,151,162 shares issued in 2008 and
16,151,213 in 2007) 301,211 300,321
--------------------------------------------------------------------
Accumulated other comprehensive (loss),
net of taxes (4,390) (19,945)
--------------------------------------------------------------------
Retained earnings 440,968 545,854
--------------------------------------------------------------------
Treasury stock (2,186,624 shares in 2008
and 2,053,764 shares in 2007) (208,104) (197,892)
--------------------------------------------------------------------
Total stockholders' equity 529,685 628,338
--------------------------------------------------------------------
Total liabilities and stockholders'
equity $6,799,733 $6,511,136
--------------------------------------------------------------------
PARK NATIONAL CORPORATION
Consolidated Average Balance Sheets
(dollars in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2008 2007 2008 2007
---------------------------------------- -----------------------
Assets
Cash and due from
banks $145,365 $147,393 $144,879 $151,997
---------------------------------------- -----------------------
Money market
instruments 17,970 16,800 14,733 20,206
---------------------------------------- -----------------------
Interest bearing
deposits 1 1 1 1
---------------------------------------- -----------------------
Investment
securities 1,817,128 1,531,063 1,803,391 1,527,891
---------------------------------------- -----------------------
Loans (net of
unearned income) 4,409,188 4,115,617 4,317,204 3,948,942
---------------------------------------- -----------------------
Allowance for
loan losses 85,512 79,862 85,786 77,441
---------------------------------------- -----------------------
Loans, net 4,323,676 4,035,755 4,231,418 3,871,501
---------------------------------------- -----------------------
Bank premises and
equipment, net 69,545 64,747 69,246 59,860
---------------------------------------- -----------------------
Other assets 424,107 458,025 417,856 421,708
---------------------------------------- -----------------------
Total assets $6,797,792 $6,253,784 $6,681,524 $6,053,164
---------------------------------------- -----------------------
Liabilities and Stockholders' Equity
Deposits:
Noninterest
bearing $747,978 $699,274 $730,436 $690,323
---------------------------------------- -----------------------
Interest bearing 3,873,958 3,837,602 3,803,386 3,678,205
---------------------------------------- -----------------------
Total deposits 4,621,936 4,536,876 4,533,822 4,368,528
---------------------------------------- -----------------------
Borrowings 1,514,906 1,019,870 1,476,378 986,424
---------------------------------------- -----------------------
Other liabilities 89,040 79,555 94,073 83,600
---------------------------------------- -----------------------
Total
liabilities 6,225,882 5,636,301 6,104,273 5,438,552
---------------------------------------- -----------------------
Stockholders' Equity:
Common stock 301,211 300,322 301,212 279,285
---------------------------------------- -----------------------
Accumulated
other
comprehensive
income (loss),
net of taxes (9,184) (27,616) 456 (24,167)
---------------------------------------- -----------------------
Retained earnings 487,986 534,323 483,686 524,827
---------------------------------------- -----------------------
Treasury stock (208,103) 189,546) (208,103) (165,333)
---------------------------------------- -----------------------
Total
stockholders'
equity 571,910 617,483 577,251 614,612
---------------------------------------- -----------------------
Total
liabilities
and stock-
holders'
equity $6,797,792 $6,253,784 $6,681,524 $6,053,164
---------------------------------------- -----------------------