1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ----------------------- ---------------------- Commission File Number 1-13006 --------------------------------------------------------- Park National Corporation - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Ohio 31-1179518 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 50 North Third Street, Newark, Ohio 43055 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (614) 349-8451 - ------------------------------------------------------------------------------- (Registrant's telephone number, including area code) N/A - ------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----------- ----------- 7,130,997 common shares, no par value per share, outstanding at October 31, 1996. Page 1 of 77 Exhibit Index at Page 19
2 PARK NATIONAL CORPORATION CONTENTS -------- <TABLE> <CAPTION> Page ---- <S> <C> <C> PART I. FINANCIAL INFORMATION 3-8 Item 1. Financial Statements 3-8 Consolidated Balance Sheet as of September 30, 1996 and December 31, 1995 (unaudited) 3 Consolidated Condensed Statement of Income for the Three Months Ended and for the Nine Months Ended September 30, 1996 and 1995 (unaudited) 4,5 Consolidated Statement of Cash Flows for the Nine Months Ended September 30, 1996 and 1995 (unaudited) 6,7 Notes to Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial 9-15 Condition and Results of Operations PART II. OTHER INFORMATION 16 Item 1. Legal Proceedings 16 Item 2. Changes in Securities 16 Item 3. Defaults Upon Senior Securities 16 Item 4. Submission of Matters to a Vote of Security Holders 16 Item 5. Other Information 16 Item 6. Exhibits and Reports on Form 8-K 17 SIGNATURES 18 Exhibits 19-77 </TABLE> 2
3 PARK NATIONAL CORPORATION Consolidated Balance Sheet (Unaudited) (Dollars in thousands, except share data) <TABLE> <CAPTION> Sept. 30, December 31, 1996 1995 ----------- ----------- <S> <C> <C> Assets: Cash and due from banks $ 55,194 $ 92,752 Money market investments 35,500 0 Securities available-for-sale, at fair value (amortized cost of $311,489 and $308,298 at September 30, 1996 and December 31, 1995) 313,853 317,414 Securities held-to-maturity, at amortized cost (fair value approximates $12,116 and $11,917 at September 30, 1996 and December 31, 1995) 11,684 11,316 Loans (net of unearned interest) 1,064,022 1,024,727 Allowance for possible loan losses 27,212 25,073 Net loans 1,036,810 999,654 Bank premises and equipment, net 16,590 17,161 Other assets 41,575 37,911 ----------- ----------- Total assets $ 1,511,206 $ 1,476,208 Liabilities and Stockholders' Equity Deposits: Noninterest-bearing $ 160,749 $ 190,014 Interest-bearing 1,068,115 1,016,526 Total deposits 1,228,864 1,206,540 Short-term borrowings 121,386 113,992 Other liabilities 16,403 19,252 Total liabilities 1,366,653 1,339,784 Stockholders' Equity: Common stock (No par value; 20,000,000 shares authorized in 1996 and 10,000,000 authorized in 1995; 7,222,610 shares issued in 1996 and 1995) 26,819 26,819 Unrealized holding gain on available-for-sale securities, net 1,536 5,926 Retained earnings 119,248 106,508 Treasury stock (91,613 shares in 1996 and 87,388 shares in 1995) (3,050) (2,829) Total stockholders' equity 144,553 136,424 ----------- ----------- Total liabilities and stockholders' equity $ 1,511,206 $ 1,476,208 </TABLE> SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3
4 PARK NATIONAL CORPORATION Consolidated Condensed Statement of Income (Unaudited) (Dollars in thousands, except per share data) <TABLE> <CAPTION> Three Months Nine Months Ended Sept. 30, Ended Sept. 30, 1996 1995 1996 1995 ------ ------ ------ ------ <S> <C> <C> <C> <C> Interest Income: Interest & fees on loans $24,669 $23,899 $72,726 $68,588 Interest on: Obligations of U.S. Govt., its agencies & other securities 5,378 4,922 15,951 13,724 Obligations of states & political subdivisions 154 167 451 483 Other interest income 459 236 1,351 403 Total interest income 30,660 29,224 90,479 83,198 Interest expense: Interest on deposits: Demand & savings deposits 3,132 3,179 9,241 9,651 Time deposits 7,888 7,395 23,633 19,508 Non-deposit interest 1,269 1,732 3,821 5,173 Total interest expense 12,289 12,306 36,695 34,332 Net interest income 18,371 16,918 53,784 48,866 Provision for loan losses 1,005 1,540 3,015 3,450 Net interest income after provision 17,366 15,378 50,769 45,416 </TABLE> 4
5 PARK NATIONAL CORPORATION Consolidated Condensed Statement of Income (Unaudited) - (Continued) (Dollars in thousands, except per share data) <TABLE> <CAPTION> Three Months Nine Months Ended Sept. 30, Ended Sept. 30, 1996 1995 1996 1995 ---------- ---------- ----------- ----------- <S> <C> <C> <C> <C> Other income $ 3,595 $ 3,233 $ 10,863 $ 9,797 Loss on sale of securities (157) 0 (852) (614) Other expense: Salaries & employee benefits 5,278 5,071 16,012 15,107 Occupancy 536 496 1,659 1,508 Furniture & equipment 547 519 1,668 1,562 Other expenses 3,542 3,538 11,498 11,503 Total other expense 9,903 9,624 30,837 29,680 Income before federal income taxes 10,901 8,987 29,943 24,919 Federal income taxes 3,558 2,981 9,701 8,184 Net income $ 7,343 $ 6,006 $ 20,242 $ 16,735 ========== ========== =========== =========== Per Share: Net income $ 1.03 $ 0.84 $ 2.84 $ 2.33 Weighted average common shares outstanding 7,138,155 7,151,101 7,138,623 7,172,926 Cash dividends declared $ 0.35 $ 0.30 $ 1.05 $ 0.90 </TABLE> SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5
6 PARK NATIONAL CORPORATION Consolidated Statement of Cash Flows (Unaudited) (Dollars in thousands) <TABLE> <CAPTION> Nine Months Ended Sept. 30, 1996 1995 -------- -------- <S> <C> <C> Operating activities: Net income $ 20,242 $ 16,735 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization & accretion 248 527 Provision for loan losses 3,015 3,450 Amortization of the excess of cost over net assets of banks purchased 194 298 Realized investment security losses 852 614 Changes in assets & liabilities: Increase in other assets (1,495) (2,076) (Decrease) increase in other liabilities (353) 1,833 Net cash provided by operating activities 22,703 21,381 Investing activities: Proceeds from sales of: Available-for-sale securities 46,813 31,363 Proceeds from maturities of: Available-for-sale securities 62,113 31,131 Held-to-maturity securities 1,207 1,172 Purchases of: Available-for-sale securities (112,087) (85,935) Held-to-maturity securities (1,575) (914) Net increase in loans (39,778) (37,331) Purchases of premises & equipment, net (952) (1,135) Net cash used by investing activities (44,259) (61,649) </TABLE> 6
7 PARK NATIONAL CORPORATION Consolidated Statement of Cash Flows (Unaudited) - (Continued) (Dollars in thousands) <TABLE> <CAPTION> Nine Months Ended Sept. 30, 1996 1995 ------- ------- <S> <C> <C> Financing activities: Net increase in deposits $ 22,324 $ 84,428 Increase (decrease) in short-term borrowings 7,394 (24,769) Purchase of treasury stock (221) (1,904) Cash dividends paid (9,999) (8,610) Net cash provided by financing activities 19,498 49,145 (Decrease) increase in cash and cash equivalents (2,058) 8 877 Cash & cash equivalents at beginning of year 92,752 64,116 Cash & cash equivalents at end of period $ 90,694 $ 72,993 ======== ======== Supplemental disclosures of cash flow information: Cash paid for: Interest $ 36,841 $ 33,160 Income taxes 10,900 5,800 </TABLE> SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS 7
8 PARK NATIONAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Three and Nine Month Periods Ended September 30, 1996 & 1995. Note 1 - Basis of Presentation --------------------- The consolidated financial statements included in this report have been prepared by Park National Corporation (the "Registrant", "Corporation", or "Park") without audit. In the opinion of management, all adjustments (consisting solely of normal recurring accruals) necessary for a fair presentation of results of operations for the interim periods included herein have been made. The results of operations for the periods ended September 30, 1996 are not necessarily indicative of the operating results to be anticipated for the fiscal year ended December 31, 1996. The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q, and therefore, do not include all information and footnotes necessary for a fair presentation of the balance sheet, condensed statement of income and statement of cash flows in conformity with generally accepted accounting principles. These financial statements should be read in conjunction with the financial statements included in the Annual Report for the year ended December 31, 1995. Certain amounts in prior periods have been reclassified to conform to the financial statement presentation used for current periods. 8
9 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Comparison of Results of Operations for the Three and Nine Month Periods Ended September 30, 1996 and 1995 Net Interest Income - ------------------- The Corporation's principal source of earnings is net interest income, the difference between total interest income and total interest expense. Net interest income increased by $1.5 million or 8.6% to $18.4 million for the three months ended September 30, 1996 compared to $16.9 million for the third quarter of 1995. The following table indicates that the tax equivalent net interest margin (defined as net interest income divided by average earning assets) increased to 5.35% for the third quarter of 1996 compared to 5.18% for the third quarter of 1995. <TABLE> <CAPTION> Three Months Ended September 30th (In Thousands) 1996 1995 --------------------- --------------------- Tax Tax Average Equivalent Average Equivalent Balance % Balance % --------------------- --------------------- <S> <C> <C> <C> <C> Loans, Net $1,016,338 9.68% $ 989,329 9.61% Taxable Investments $ 314,955 6.79% $ 291,012 6.71% Tax-Exempt Investments $ 10,312 8.54% $ 11,185 8.48% Money Markets $ 33,893 5.39% $ 16,053 5.84% ---------- ---- ---------- ---- Interest-Earning Assets $1,375,498 8.90% $1,307,579 8.91% ---------- ---- ---------- ---- Interest-Bearing Deposits $1,052,867 4.16% $ 991,543 4.24% Borrowings $ 113,839 4.44% $ 136,881 5.02% ---------- ---- ---------- ---- Interest-Bearing Liabilities $1,166,706 4.19% $1,128,424 4.33% ---------- ---- ---------- ---- Excess Interest- Earning Assets $ 208,792 4.71% $ 179,155 4.58% Net Interest Margin 5.35% 5.18% </TABLE> 9
10 Average interest-earning assets increased by 5.2% to $1,375 million for the quarter ended September 30, 1996 compared to the same quarter in 1995. Net average loans outstanding increased by 2.7% to $1,016 million for the third quarter of 1996 compared to the same period in 1995. Average investment securities including money markets increased by 12.9% to $359 million in 1996 compared to $318 million in 1995. The growth in average net loans outstanding of 2.7% in 1996 is somewhat slower than the 8.0% loan growth rate in the third quarter of 1995. The primary reason for the slower growth in net average loan balances has been weaker loan demand. Excess funds generated from the growth of interest-bearing deposits, and not needed to fund loans, have increased average investment securities and money markets by 12.9%. Average interest-bearing liabilities increased by 3.4% to $1,167 million for the three months ended September 30, 1996 compared to the same quarter in 1995. This increase was due to a 6.2% increase in average interest-bearing deposits to $1,053 million in the third quarter of 1996 compared to the same quarter in 1995. The increase in average interest-bearing deposits was primarily due to an increase in the average balance of certificates of deposit. For the three months ended September 30, 1996, the net interest spread improved to 4.71% compared to 4.58% for the same quarter in 1995. The average yield on interest-earning assets decreased by .01% to 8.90% and the average cost of interest-bearing liabilities decreased by .14% to 4.19%. The net interest margin increased to 5.35% for the third quarter of 1996 compared to 5.18% for the same quarter in 1995. The increase in the net interest margin was due to the increase in the net interest spread and the increase in the amount of excess interest-earning assets. Net interest income increased by $4.9 million or 10.1% to $53.8 million for the nine months ended September 30, 1996 compared to $48.9 million for the same period in 1995. The following table indicates that the tax equivalent net interest margin increased to 5.35% for the first three quarters of 1996 compared to 5.18% for the same period in 1995. <TABLE> <CAPTION> Nine Months Ended September 30th (In Thousands) 1996 1995 ------------------- --------------------- Tax Tax Average Equivalent Average Equivalent Balance % Balance % ------------------- --------------------- <S> <C> <C> <C> <C> Loans, Net $1,000,124 9.74% $ 977,739 9.41% Taxable $ 314,286 6.78% $ 268,463 6.83% Investments </TABLE> 10
11 <TABLE> <S> <C> <C> <C> <C> Tax-Exempt Investments $ 9,939 8.71% $ 10,667 8.73% Money Markets $ 33,727 5.35% $ 9,080 5.94% ---------- ---- ---------- ---- Interest-Earning Assets $1,358,076 8.94% $1,265,949 8.83% ---------- ---- ---------- ---- Interest-Bearing Deposits $1,042,287 4.21% $ 961,905 4.05% Borrowings $ 113,687 4.49% $ 133,933 5.16% ---------- ---- ---------- ---- Interest-Bearing Liabilities $1,155,974 4.24% $1,095,838 4.19% ---------- ---- ---------- ---- Excess Interest- Earning Assets $ 202,102 4.70% $ 170,111 4.64% Net Interest Margin 5.33% 5.20% </TABLE> Average interest-earning assets increased by 7.3% to $1,358 million for the nine months ended September 30, 1996 compared to the same period in 1995. Net average loans outstanding increased by 2.3% to $1,000 million for the first three quarters of 1996 compared to the same period in 1995. Average investment securities including money markets increased by 24.2% to $358 million in 1996 compared to $288 million in 1995. The primary reason for the slow growth in net average loan balances has been weaker loan demand. Excess funds generated from the growth of interest-bearing deposits, and not needed to fund loans, have increased average investment securities and money markets by 24.2%. Average interest-bearing liabilities increased by 5.5% to $1,156 million for the nine months ended September 30, 1996 compared to the same period in 1995. This increase was due to a 8.4% increase in average interest-bearing deposits to $1,042 million for the first nine months of 1996 compared to the same period in 1995. The increase in average interest-bearing deposits was primarily due to an increase in the average balance of certificates of deposit. For the nine months ended September 30, 1996, the net interest spread improved to 4.70% compared to 4.64% for the same period in 1995. The average yield on interest-earning assets increased by .11% to 8.94% and the average cost of interest-bearing liabilities increased by .05% to 4.24%. The net interest margin increased to 5.33% for the first nine months of 1996 compared to 5.20% for the same period in 1995. This increase was primarily due to both the increase in the net interest spread and the increase in the amount of excess interest-earning assets. 11
12 Provision For Loan Losses - ------------------------- The provision for loan losses decreased by $535,000 to $1.0 million for the three months ended September 30, 1996 and by $435,000 to $3.0 million for the nine months ended September 30, 1996 compared to the same periods in 1995. Net charge-offs were $358,000 and $876,000, respectively, for the three and nine month periods ended September 30, 1996 compared to net charge-offs of $429,000 and $675,000, respectively, for the same periods in 1995. Non-performing loans, defined as loans that are 90 days past due, renegotiated loans and non-accrual loans, were $5.4 million or .51% of loans at September 30, 1996 compared to $4.5 million or .43% of loans at December 31, 1995 and $5.3 million or .53% of loans at September 30, 1995. The reserve for loan losses as a percentage of outstanding loans was 2.56% at September 30, 1996 compared to 2.45% at December 31, 1995 and 2.39% at September 30, 1995. The provision for loan losses has been approximately $1.0 million for each quarter in 1996 for a year to date total of $3.0 million which exceeds year to date net charge-offs by $2.1 million. The reserve for loan losses as a percentage of outstanding loans has increased to 2.56% at September 30, 1996, which management believes is adequate. Non-Interest Income - ------------------- Non-interest income increased by $362,000 or 11.2% to $3.6 million for the three months ended September 30, 1996 and increased by $1.1 million or 10.9% to $10.9 million for the nine months ended September 30, 1996 compared to the same periods in 1995. The increase in non-interest income for the three months ended September 30, 1996 compared to the same period in 1995 was primarily due to increases in fees from fiduciary activities and service charges on deposit accounts. For the nine months ended September 30, 1996, the increase in non-interest income in 1996 compared to 1995 was primarily due to increases in fees from fiduciary activities, service charges on deposit accounts, and non-yield loan fees. The increase in non-yield loan fees resulted from increased originations and sales into the secondary market of fixed rate mortgage loans during the first six months of 1996. Security Losses - --------------- Investment security losses were $157,000 for the three month period ended September 30, 1996 and $852,000 for the nine months ended September 30, 1996 compared to no loss for the third quarter of 1995 and a loss of $614,000 for the first nine months of 1995. In both 1996 and 1995, taxable investment securities were sold and the proceeds reinvested into taxable investment securities with slightly longer maturities. The average life of the taxable investment portfolio was approximately three years at September 30, 1996 and 1995. 12
13 During 1996, longer-term taxable investment rates increased which resulted in the net unrealized holding gain on available-for-sale securities decreasing to $1.5 million at September 30, 1996 compared to $5.9 million at December 31, 1995. The Corporation could realize additional investment security losses in the fourth quarter of 1996. Other Expense - ------------- Total other expense increased by $279,000 or 2.9% to $9.9 million for the three month period ended September 30, 1996 compared to $9.6 million for the same period in 1995. This increase was primarily due to a $207,000 or 4.1% increase in salaries and employee benefits expense to $5.3 million for the three months ended September 30, 1996 compared to $5.1 million for the same quarter in 1995. Full time equivalent employees were 689 at September 30, 1996 compared to 681 at September 30, 1995. For the nine months ended September 30, 1996, total other expense increased by $1.2 million or 3.9% to $30.8 million compared to the same period in 1995. This increase was primarily due to a $905,000 or 6.0% increase to $16.0 million in salaries and employee benefits expense for the first nine months of 1996 compared to $15.1 million for the same period in 1995. Federal Income Taxes - -------------------- Federal income tax expense increased by $577,000 to $3.6 million and by $1.5 million to $9.7 million for the three and nine month periods ended September 30, 1996, respectively, compared to the same periods in 1995. The ratio of federal income tax expense to income before taxes was approximately 32.5% for both periods in 1996 and approximately 33% for both periods in 1995. Net Income - ---------- Net income increased by $1.3 million or 22.3% to $7.3 million for the three months ended September 30, 1996 compared to $6.0 million for the same quarter in 1995. For the nine months ended September 30, 1996, net income increased by $3.5 million or 21.0% to $20.2 million compared to $16.7 million for the same period in 1995. The annualized, net income to average asset ratios (ROA) were 1.97% and 1.84%, respectively, for the three and nine month periods ended September 30, 1996 compared to 1.68% and 1.62%, respectively, for the same periods in 1995. The annualized, net income to average equity ratios (ROE) were 21.0% and 19.7%, respectively, for the three and nine month periods ended September 30, 1996 compared to 18.7% and 18.3%, respectively, for the same periods in 1995. 13
14 COMPARISON OF FINANCIAL CONDITION FOR SEPTEMBER 30, 1996 AND DECEMBER 31, 1995 Changes in Financial Condition and Liquidity - -------------------------------------------- Total assets increased by $35.0 million to $1,511 million at September 30, 1996 compared to $1,476 million at December 31, 1995. This increase was primarily due to increases in loans, federal funds sold and investment securities which offset the decrease in cash and due from banks. Loan balances increased by $39.3 million or 3.8% to $1,064 million at September 30, 1996 compared to $1,025 million at December 31, 1995. Loan balances were 70.4% of total assets at September 30, 1996 compared to 69.4% at December 31, 1995 and 70.8% at September 30, 1995. Federal funds sold and investment securities increased by $32.3 million or 9.8% to $361 million compared to $329 million at December 31, 1995. Cash and due from banks decreased by $37.6 million to $55 million at September 30, 1996 compared to $93 million at December 31, 1995. This decrease was primarily due to a decrease in noninterest-bearing deposits of $29.3 million to $161 million at September 30, 1996 compared to $190 million at December 31, 1995. Noninterest-bearing deposit accounts had temporarily increased at year-end 1995 which caused cash and due from banks to also temporarily increase. The average balance for cash and due from banks was $54 million for the first nine months of 1996 and the average 1996 balance for noninterest-bearing deposit accounts was $158 million. Total liabilities increased by $26.9 million to $1,367 million at September 30, 1996 compared to $1,340 million at December 31, 1995. This increase was primarily due to a $51.6 million or a 5.1% increase in interest-bearing deposits to $1,068 million at September 30, 1996 compared to $1,016 million at December 31, 1995. This increase exceeded the $29.3 million decrease in noninterest-bearing deposits. Capital Resources - ----------------- Stockholders' equity at September 30, 1996 was $144.6 million or 9.57% of total assets compared to $136.4 or 9.24% of total assets at December 31, 1995 and $130.9 million or 9.10% of total assets at September 30, 1995. Financial institution regulators have established guidelines for minimum capital ratios and well capitalized capital ratios for banks, thrifts, and bank holding companies. The unrealized net gain on available-for-sale securities is not included in computing regulatory capital. The minimum leverage capital ratio (defined as stockholders' 14
15 equity less intangible assets divided by assets less intangible assets) is 4% and the well capitalized ratio is greater than or equal to 5%. Park's leverage capital ratio was 9.54% at September 30, 1996 and 8.91% at December 31, 1995. The minimum Tier I risk-based capital ratio (defined as leverage capital divided by risk-adjusted assets) is 4% and the well capitalized ratio is greater than or equal to 6%. Park's Tier I risk-based capital ratio was 14.18% at September 30, 1996 and 13.35% at December 31, 1995. The minimum total risk-based capital ratio (defined as leverage capital plus supplemental capital divided by risk-adjusted assets) is 8% and the well capitalized ratio is greater than or equal to 10%. Park's total risk-based capital ratio was 15.45% at September 30, 1996 and 14.61% at December 31, 1995. The financial institution subsidiaries of Park each met the applicable well capitalized capital ratio guidelines at September 30, 1996. The following table indicates the capital ratios for each subsidiary at September 30, 1996: <TABLE> <CAPTION> Tier I Tier I Leverage Risk-Based Risk-Based -------- ---------- ---------- <S> <C> <C> <C> Park National Bank 8.82% 12.48% 13.75% Richland Trust Company 8.35% 12.84% 14.11% Mutual Federal Savings Bank 7.96% 13.43% 14.70% </TABLE> On August 29, 1996, Park announced that its subsidiary, Richland Trust Company had entered into a definitive agreement to acquire five branch offices in Richland County from Peoples National Bank. In addition to the fixed assets, the purchase includes approximately $105 million in deposits and $30 million in loans. The banking business of the five branches will be integrated into current Richland Trust Company operations, which consist of nine branches in Richland County. This acquisition is expected to be completed in December 1996. Park will infuse approximately $7 million of capital into Richland Trust Company so that it will continue to meet the well capitalized capital requirements. This transaction will not have a significant impact on the capital ratios and the operating results of Park. 15
16 PARK NATIONAL CORPORATION PART II - OTHER INFORMATION Item 1. Legal Proceedings ----------------- Park National Corporation is not engaged in any legal proceedings of a material nature at the present time. Item 2. Changes in Securities --------------------- Not applicable Item 3. Defaults Upon Senior Securities ------------------------------- Not applicable Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- Not applicable Item 5. Other Information ----------------- Park National Corporation ("Park") and First-Knox Banc Corp. ("First-Knox") jointly announced on October 29, 1996, that they had entered into a definitive Agreement and Plan of Merger (the "Merger Agreement") providing for a merger of First-Knox into Park. Under the terms of the Merger Agreement, the stockholders of First-Knox are expected to receive .5914 shares of Park common stock per share of First-Knox common stock. Completion of the merger is subject to certain conditions, including (i) the approval of the stockholders of First- Knox, (ii) the approval of the stockholders of Park, (iii) the approval of the appropriate bank regulators and other governmental agencies, (iv) the receipt by Park and First-Knox of a letter from Ernst & Young that the transaction contemplated by the Merger Agreement qualifies for pooling-of-interests accounting treatment, (v) the receipt by Park and First-Knox of an opinion by Porter, Wright, Morris & Arthur that the merger will be treated for federal income tax purposes as a tax free reorganization and (vi) other conditions to closing customary of a transaction of this type. 16
17 Reference is made to the news release, dated October 29, 1996, a copy of which is filed as Exhibit 99 and the Agreement and Plan of Merger, dated October 28, 1996, a copy of which is filed as Exhibit 2 for a complete description of the terms of the merger. Item 6. Exhibits and Reports on Form 8-K -------------------------------- a. Exhibits -------- See Exhibit Index at Page 19 b. Reports on Form 8-K ------------------- No reports on Form 8-K were filed during the quarter ended September 30, 1996. 17
18 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PARK NATIONAL CORPORATION DATE: November 8, 1996 BY: /s/ C. Daniel DeLawder ---------------------------------- C. Daniel DeLawder President DATE: November 8, 1996 BY: /s/ David C. Bowers ---------------------------------- David C. Bowers Chief Financial Officer/Secretary 18
19 PARK NATIONAL CORPORATION EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION - -------------- ----------- 2 Agreement and Plan of Merger, dated as of October 28, 1996 by and between Park National Corporation and First- Knox Banc Corp. 27 Financial Data Schedule 99 Press Release dated October 29, 1996. 19