Park National Corp.
) shares slid 1.6% in the intra-day trading on Jan 28 following
the company's release of its fourth-quarter 2013 results after
the closing bell on Jan 27. Earnings per share of $1.13
missed the Zacks Consensus Estimate of $1.23. However, the
reported figure compared favorably with $1.06 earned in the
For the full year 2013, the company recorded earnings per share
of $5.01 versus $4.88 in 2012. Moreover, earnings comfortably
beat the Zacks Consensus Estimate of $4.81.
Results were negatively impacted by decline in net interest
income and higher operating expense, partially offset by lower
provision for loan losses and rise in non-interest income.
However, improvement in credit quality and growth in loans and
deposits were tailwinds for the quarter.
Net income was $17.5 million, up 7% year over year. Net income
for the year 2013 was $77.2 million, up 20% year over year. Net
income in 2012 excluded the gains related to the sale of Vision
Bank business on Feb 2012.
Performance in Detail
Taxable equivalent net interest income was $56.2 million, down 2%
from the prior-year quarter. The decline was largely due to lower
For 2013, taxable equivalent net interest income was $ 222.3
million, down 6% year over year.
Other income was $17.8 million, up 3% on a year-over-year basis.
The rise was mainly due to higher income from fiduciary
activities and substantially lower other real estate owned (OREO)
Total other expenses moved up 7% to $51.1 million. The increase
was mainly due to a rise in salaries and employee benefits
expenses, professional fees and services expenses as well as net
Park National's total loans improved 4% year over year to $4.6
billion as of Dec 31, 2013. Additionally, total deposits rose 2%
year over year to $4.8 billion.
Most of the credit quality metrics depicted an improvement in the
quarter. Total nonperforming assets as a percentage of period end
loans and OREO was 4.09%, down 90 basis points (bps) year over
year. However, allowance for loan losses as a percentage of total
loans was 1.29%, up 4 bps from the prior-year quarter.
Moreover, net loan recoveries were $1.7 million compared to
charge-offs of $5.2 million in the prior-year quarter. Likewise,
recovery of loan losses was $0.085 million, down from provisions
of $5.2 million in the prior-year quarter.
Capital ratios improved in the quarter. As of Dec 31, 2013, the
ratio of common equity to period end assets came in at 9.82%, up
from 9.79% in the prior-year quarter. Tangible common equity to
assets ratio as of Dec 31, 2013 was 8.82%, compared with 8.79% as
of Dec 31, 2012.
Performance of Other Midwest Banks
Among other Midwest Banks,
Commerce Bancshares, Inc.
) missed the Zacks Consensus Estimate while
Huntington Bancshares Inc.
) beat the Estimate.
The present near-zero interest rate levels, sluggish economic
recovery and a stringent regulatory environment will continue to
pressure the top line in the quarters ahead. Additionally,
mounting expenses is a concern.
However, we remain optimistic about the company's organic growth
and efficient capital deployment activities aided by its sound
capital base and solid liquidity.
Currently, Park National carries a Zacks Rank #4 (Sell).
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