<PAGE> 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 June 30, 1998
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 Identification No.)
incorporation or organization)
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
--- ---
9,314,859 common shares, no par value per share, outstanding at July 31, 1998.
Page 1 of 22
Exhibit Index at Page 20
<PAGE> 2
<TABLE>
PARK NATIONAL CORPORATION
CONTENTS
--------
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION 3-11
Item 1. Financial Statements 3-11
Consolidated Balance Sheets as of June 30, 1998 and
and December 31, 1997 (unaudited) 3
Consolidated Condensed Statements of Income for the
Three Months and Six Months ended June 30, 1998 and 1997 (unaudited) 4,5
Consolidated Condensed Statements of Changes in Stockholders'
Equity for the Six Months ended June 30, 1998 and 1997 (unaudited) 6
Consolidated Statements of Cash Flows for the Six Months
ended June 30, 1998 and 1997 (unaudited) 7,8
Notes to Consolidated Financial Statements 9-12
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 13-19
Item 3. Quantitative and Qualitative Disclosure About Market Risk 19
PART II. OTHER INFORMATION 20
Item 1. Legal Proceedings 20
Item 2. Changes in Securities and Use of Proceeds 20
Item 3. Defaults Upon Senior Securities 20
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 5. Other Information 20
Item 6. Exhibits and Reports on Form 8-K 20
SIGNATURES 21
EXHIBIT 27 22
</TABLE>
2
<PAGE> 3
<TABLE>
PARK NATIONAL CORPORATION
Consolidated Balance Sheets (Unaudited)
(dollars in thousands, except per share data)
<CAPTION>
June 30, December 31,
1998 1997
---------- ------------
<S> <C> <C>
Assets:
Cash and due from banks $ 92,026 $ 93,585
Securities available-for-sale, at fair value
(amortized cost of $593,607 and $522,179
at June 30, 1998 and December 31,1997) 603,806 532,922
Securities held-to-maturity, at amortized cost
(fair value approximates $7,124 and $8,156
at June 30, 1998 and December 31,1997) 6,820 7,808
Loans (net of unearned interest) 1,608,382 1,591,927
Allowance for possible loan losses 38,279 35,595
Net loans 1,570,103 1,556,332
Bank premises and equipment, net 27,392 27,805
Other assets 81,574 69,931
---------- ----------
Total assets $2,381,721 $2,288,383
Liabilities and Stockholders' Equity:
Deposits:
Noninterest bearing $ 264,289 $ 257,867
Interest bearing 1,613,302 1,597,097
Total deposits 1,877,591 1,854,964
Short-term borrowings 242,351 151,624
Long-term debt 14,561 30,868
Other liabilities 20,087 28,810
---------- ----------
Total liabilities 2,154,590 2,066,266
Stockholders' Equity:
Common stock (No par value; 20,000,000 shares
authorized; 9,552,816 shares issued in
1998 and 9,551,203 issued in 1997) 68,364 68,275
Retained earnings 167,067 154,535
Treasury stock (225,530 shares in 1998
and 158,864 in 1997) (14,659) (7,712)
Accumulated other comprehensive income
net of taxes 6,359 7,019
---------- ----------
Total stockholders' equity 227,131 222,117
---------- ----------
Total liabilities and
stockholders' equity $2,381,721 $2,288,383
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE> 4
<TABLE>
PARK NATIONAL CORPORATION
Consolidated Condensed Statements of Income (Unaudited)
(dollars in thousands, except per share data)
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $36,863 $35,253 $73,309 $69,124
Interest on:
Obligations of U.S. Gov't,
its agencies and
other securities 8,367 8,812 16,332 17,184
Obligations of states and
political subdivisions 1,147 938 2,240 1,808
Other interest income 73 141 129 426
------- ------- ------- -------
Total interest income 46,450 45,144 92,010 88,542
Interest expense:
Interest on deposits:
Demand and savings deposits 4,124 4,269 8,204 8,362
Time deposits 13,158 12,300 26,068 24,537
Interest on borrowings:
Short-term borrowings 2,097 2,058 4,060 3,425
Long-term debt 225 839 507 1,919
------- ------- ------- -------
Total interest expense 19,604 19,466 38,839 38,243
------- ------- ------- -------
Net interest income 26,846 25,678 53,171 50,299
Provision for loan losses 1,674 1,454 3,348 2,648
------- ------- ------- -------
Net interest income after
provision for loan losses 25,172 24,224 49,823 47,651
Other income 5,848 5,091 11,829 10,292
Gain on sale of securities 0 0 97 0
</TABLE>
Continued
4
<PAGE> 5
<TABLE>
PARK NATIONAL CORPORATION
Consolidated Condensed Statements of Income (Unaudited) - Continued
(dollars in thousands, except per share data)
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1998 1997 1998 1997
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Other expense:
Salaries and employee benefits $ 7,724 $ 7,734 $ 15,620 $ 15,387
Occupancy expense 876 822 1,713 1,652
Furniture and equipment 968 890 1,934 1,789
Other expense 5,637 6,020 11,362 12,250
---------- ---------- ---------- ----------
Total other expense 15,205 15,466 30,629 31,078
---------- ---------- ---------- ----------
Income before federal
income taxes 15,815 13,849 31,120 26,865
Federal income taxes 4,866 4,297 9,588 8,324
---------- ---------- ---------- ----------
Net income $ 10,949 $ 9,552 $ 21,532 $ 18,541
========== ========== ========== ==========
PER SHARE:
Net income:
Basic $ 1.17 $ 1.02 $ 2.30 $ 1.98
Diluted 1.17 1.01 2.29 1.97
========== ========== ========== ==========
Weighted average common shares outstanding:
Basic 9,352,684 9,402,886 9,369,799 9,373,122
Diluted 9,397,929 9,420,240 9,414,913 9,405,445
========== ========== ========== ==========
Cash dividends declared $ 0.48 $ 0.40 $ 0.96 $ 0.80
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE> 6
<TABLE>
PARK NATIONAL CORPORATION
Consolidated Condensed Statements of Changes in Stockholders' Equity (Unaudited)
(dollars in thousands, except per share data)
<CAPTION>
Accumulated
Treasury Other
Common Retained Stock Comprehensive Comprehensive
Stock Earnings at Cost Income Income
------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1996 $64,611 $132,648 ($2,985) $4,687
Net income 18,541 $18,541
Net unrealized losses on securities
available-for-sale net of income
taxes of ($291) (541) (541)
-------
Total comprehensive income $18,000
Cash dividends on common stock:
Park at $.80 per share (6,622)
First-Knox prior to merger (902)
Shares issued for stock options - 104,346 shares 2,184
Cash payment for fractional shares in merger - 600 shares (40)
Tax benefit from exercise of stock options 1,307
Treasury stock purchased - 50,721 shares (2,807)
Treasury stock reissued for options - 10,250 shares 491
BALANCE AT JUNE 30, 1997 $68,062 $143,665 ($5,301) $4,146
===============================================================================================================================
BALANCE AT DECEMBER 31, 1997 $68,275 $154,535 ($7,712) $7,019
Net income 21,532 $21,532
Net unrealized losses on securities available-for sale
net of income taxes of ($355) (660) (660)
-------
Total comprehensive income $ 9,926
Cash dividends on common stock:
Park at $.96 per share (9,000)
Shares issued for stock options - 1,613 shares 89
Treasury stock purchased - 86,158 shares (8,007)
Treasury stock reissued for options - 19,492 shares 1,060
BALANCE AT JUNE 30, 1998 $68,364 $167,067 ($14,659) $6,359
===============================================================================================================================
THREE MONTHS ENDED JUNE 30, 1998 1997
------- --------
Net income $10,949 $ 9,552
Accumulated other comprehensive income, net of income
taxes of ($2) in 1998 and ($2,015) in 1997 (3) 3,743
Total comprehensive income $10,946 $ 13,295
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6
<PAGE> 7
<TABLE>
PARK NATIONAL CORPORATION
Consolidated Statements of Cash Flows (Unaudited)
(dollars in thousands)
<CAPTION>
Six Months Ended
June 30,
1998 1997
--------- ---------
<S> <C> <C>
Operating activities:
Net income $ 21,532 $ 18,541
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, amortization and accretion 622 95
Provision for loan losses 3,348 2,648
Amortization of the excess of cost over
net assets of banks purchased 1,393 978
Realized net investment security gain (97) 0
Changes in assets and liabilities:
Increase in other assets (13,150) (4,959)
Decrease in other liabilities (4,213) (2,969)
--------- ---------
Net cash provided from
operating activities 9,435 14,334
Investing activities:
Proceeds from sales of:
Available-for-sale securities 51,839 24,924
Proceeds from maturity of:
Available-for-sale securities 58,015 85,874
Held-to-maturity securities 989 1,888
Purchases of:
Available-for-sale securities (180,405) (129,974)
Net increase in loans (16,717) (62,380)
Purchases of premises and equipment, net (1,391) (1,358)
--------- ---------
Net cash used by investing activities (87,670) (81,026)
</TABLE>
7
<PAGE> 8
<TABLE>
PARK NATIONAL CORPORATION
Consolidated Statements of Cash Flows (Unaudited) - Continued
(dollars in thousands)
<CAPTION>
Six Months Ended
June 30,
1998 1997
-------- --------
<S> <C> <C>
Financing activities:
Net increase in deposits $ 22,627 $ 14,379
Net increase in short-term borrowings 90,727 83,245
Issuance of common stock 0 27
Exercise of stock options 89 3,424
Purchase of treasury stock, net (6,947) (2,317)
Repayment of long-term debt (16,307) (21,029)
Cash dividends paid (13,513) (11,278)
-------- --------
Net cash provided from
financing activities 76,676 66,451
-------- --------
Decrease in cash and cash equivalents (1,559) (241)
Cash and cash equivalents at beginning of year 93,585 81,765
-------- --------
Cash and cash equivalents at end of period $ 92,026 $ 81,524
======== ========
Supplemental disclosure of cash flow information:
Cash paid for:
Interest $ 38,606 $ 39,729
======== ========
Income taxes $ 11,550 $ 7,455
======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8
<PAGE> 9
PARK NATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Month Periods Ended June 30, 1998 and 1997.
Note 1 - Basis of Presentation
---------------------
The consolidated financial statements included in this report have been prepared
by Park National Corporation (the "Registrant", "Corporation", "Company", 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 June 30, 1998 are not
necessarily indicative of the operating results to be anticipated for the fiscal
year ended December 31, 1998.
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
sheets, condensed statements of income, condensed statements of changes in
stockholders' equity and statements 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 on Form
10-K for the year ended December 31, 1997. Certain amounts in 1997 have been
reclassified to conform to the financial statement presentation used for 1998.
Park does not have any off-balance sheet derivative financial instruments such
as interest-rate swap agreements.
As of January 1, 1998, Park adopted Statement of Financial Accounting Standard
("SFAS") No. 130, "Reporting Comprehensive Income". SFAS No. 130 establishes
reporting and display standards for comprehensive income and its components in a
full set of general-purpose financial statements. Comprehensive income is
defined as the change in equity of a business enterprise during a period from
transactions and other events and circumstances arising from nonowner sources.
The new statement requires Park's unrealized gains or losses on securities
available-for-sale, which prior to adoption were reported as a separate
component of stockholders' equity, to be included in other comprehensive income.
Since SFAS No. 130 only requires additional information, it had no impact on
Park's financial position or results of operation. Prior year financial
statements have been reclassified to conform with the new requirements.
Comprehensive income is presented in the Statements of Changes in Stockholders'
Equity on page 6.
Note 2 - Acquisition
-----------
On May 5, 1997, Park merged with First-Knox Banc Corp. ("First-Knox"), a $569
million bank holding company headquartered in Mount Vernon, Ohio, in a
transaction accounted for as a pooling of interests. Park issued approximately
2.3 million shares of common stock to the stockholders of First-Knox based upon
an exchange ratio of .5914 shares of Park common stock for each outstanding
share of First-Knox common stock. The historical financial statements of Park
have been restated to show Park and First-Knox on a combined basis.
Separate results of operations for Park and First-Knox follow:
9
<PAGE> 10
Three Months
Ended March 31, 1997
--------------------
Net Interest Income
Park $19,077
First-Knox 5,544
-------
Combined $24,621
Net Income
Park $ 7,296
First-Knox 1,693
-------
Combined $ 8,989
Basic Net Income Per Share
Park $ 1.02
First-Knox .45
-------
Combined $ .96
Diluted Net Income Per Share
Park $ 1.02
First-Knox .44
-------
Combined $ .96
Certain amounts in 1997 have been reclassified to conform to the financial
statement presentation used in 1998.
Note 3 - Allowance for Possible Loan Losses
----------------------------------
The allowance for possible loan losses is that amount believed adequate to
absorb estimated credit losses in the loan portfolio based on management's
evaluation of various factors including overall growth in the loan portfolio, an
analysis of individual loans, prior and current loss experience, and current and
anticipated economic conditions. A provision for loan losses is charged to
operations based on management's periodic evaluation of these and other
pertinent factors.
<TABLE>
<CAPTION>
(In Thousands)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Beginning of Period $37,251 $33,586 $35,595 $32,347
Provision for loan losses 1,674 1,454 3,348 2,648
Losses charged to the reserve (1,449) (1,192) (2,661) (2,102)
Recoveries 803 477 1,997 1,432
------- ------- ------- -------
End of Period $38,279 $34,325 $38,279 $34,325
======= ======= ======= =======
</TABLE>
10
<PAGE> 11
Note 4 - Long-Term Debt
--------------
<TABLE>
<CAPTION>
(IN THOUSANDS)
DESCRIPTION JUNE 30, DECEMBER 31,
1998 1997
---- ----
<S> <C> <C>
- --------------------------------------------------------------------------------
FIXED RATE FEDERAL HOME LOAN BANK ADVANCES WITH
MONTHLY PRINCIPAL AND INTEREST PAYMENTS:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5.60% ADVANCE DUE AUGUST 1, 2003 $ 1,758 $ 1,902
- --------------------------------------------------------------------------------
6.35% ADVANCE DUE AUGUST 1, 2013 -0- 2,628
- --------------------------------------------------------------------------------
5.95% ADVANCE DUE MARCH 1, 2004 -0- 519
- --------------------------------------------------------------------------------
5.70% ADVANCE DUE MAY 1, 2004 3,952 4,230
- --------------------------------------------------------------------------------
5.85% ADVANCE DUE JANUARY 1, 2016 3,773 4,259
- --------------------------------------------------------------------------------
2.00% ADVANCE DUE NOVEMBER 1, 2027 39 40
- --------------------------------------------------------------------------------
2.00% ADVANCE DUE JANUARY 1, 2028 39 40
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FIXED RATE FEDERAL HOME LOAN BANK ADVANCES WITH
MONTHLY INTEREST PAYMENTS:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5.35% ADVANCE DUE FEBRUARY 1, 1999 5,000 5,000
- --------------------------------------------------------------------------------
5.60% ADVANCE DUE APRIL 1, 1999 -0- 5,000
- --------------------------------------------------------------------------------
5.70% ADVANCE DUE JUNE 1, 1999 -0- 7,000
- --------------------------------------------------------------------------------
6.35% ADVANCE DUE MARCH 1, 2004 -0- 250
- --------------------------------------------------------------------------------
$14,561 $30,868
======= =======
- --------------------------------------------------------------------------------
</TABLE>
Federal Home Loan Bank (FHLB) advances are collateralized by the FHLB stock
owned by Park's affiliate banks and by residential mortgage loans pledged under
a blanket agreement by Park's affiliate banks.
Note 5 - Earnings Per Share
------------------
The following table sets forth the computation of basic and diluted earnings per
share for the three and six month periods ended June 30, 1998 and 1997.
<TABLE>
<CAPTION>
THREE MONTHS ENDED (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
JUNE 30,
1998 1997
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
NUMERATOR:
- ---------------------------------------------------------------------------------------------------
NET INCOME $ 10,949 $ 9,552
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
DENOMINATOR:
- ---------------------------------------------------------------------------------------------------
DENOMINATOR FOR BASIC EARNINGS PER SHARE WEIGHTED-AVERAGE
SHARES 9,352,684 9,402,886
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
EFFECT OF DILUTIVE SECURITIES 45,245 17,354
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
DENOMINATOR FOR DILUTED EARNINGS PER SHARE-ADJUSTED WEIGHTED-
AVERAGE SHARES AND ASSUMED CONVERSIONS 9,397,929 9,420,240
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
EARNINGS PER SHARE:
- ---------------------------------------------------------------------------------------------------
BASIC EARNINGS PER SHARE $ 1.17 $ 1.02
- ---------------------------------------------------------------------------------------------------
DILUTED EARNINGS PER SHARE $ 1.17 $ 1.01
- ---------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 12
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
SIX MONTHS ENDED
JUNE 30, 1998 1997
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
NUMERATOR:
- ---------------------------------------------------------------------------------------------------
NET INCOME $ 21,532 $ 18,541
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
DENOMINATOR:
- ---------------------------------------------------------------------------------------------------
DENOMINATOR FOR BASIC EARNINGS PER SHARE WEIGHTED-AVERAGE
SHARES 9,369,799 9,373,122
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
EFFECT OF DILUTIVE SECURITIES 45,114 32,323
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
DENOMINATOR FOR DILUTED EARNINGS PER SHARE-ADJUSTED WEIGHTED-
AVERAGE SHARES AND ASSUMED CONVERSIONS 9,414,913 9,405,445
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
EARNINGS PER SHARE:
- ---------------------------------------------------------------------------------------------------
BASIC EARNINGS PER SHARE $ 2.30 $ 1.98
- ---------------------------------------------------------------------------------------------------
DILUTED EARNINGS PER SHARE $ 2.29 $ 1.97
- ---------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 13
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Comparison of Results of Operations for the Three and Six Month Periods Ended
June 30, 1998 and 1997
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 $1.2 million or 4.6% to $26.85 million for the
three months ended June 30, 1998 compared to $25.68 million for the second
quarter of 1997. The following table compares the average balance and tax
equivalent yield/cost for interest earning assets and interest bearing
liabilities for the second quarter of 1998 with the same quarter in 1997.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
(IN THOUSANDS)
1998 1997
---- ----
TAX TAX
AVERAGE EQUIVALENT AVERAGE EQUIVALENT
BALANCE % BALANCE %
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
LOANS $1,586,077 9.35% $1,511,320 9.39%
- -------------------------------------------------------------------------------------
TAXABLE INVESTMENTS $ 481,996 6.96% $ 501,946 7.04%
- -------------------------------------------------------------------------------------
TAX EXEMPT INVESTMENTS $ 87,944 7.35% $ 67,140 7.93%
- -------------------------------------------------------------------------------------
FEDERAL FUNDS SOLD $ 5,266 5.51% $ 11,155 5.08%
- -------------------------------------------------------------------------------------
INTEREST EARNING ASSETS $2,161,283 8.73% $2,091,561 8.75%
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
INTEREST BEARING DEPOSITS $1,620,718 4.28% $1,555,073 4.27%
- -------------------------------------------------------------------------------------
SHORT-TERM BORROWINGS $ 174,284 4.83% $ 160,674 4.90%
- -------------------------------------------------------------------------------------
LONG-TERM DEBT $ 15,691 5.77% $ 61,265 6.06%
- -------------------------------------------------------------------------------------
INTEREST BEARING LIABILITIES $1,810,693 4.35% $1,777,012 4.39%
- -------------------------------------------------------------------------------------
EXCESS INTEREST EARNING ASSETS $ 350,590 4.38% $ 314,549 4.36%
- -------------------------------------------------------------------------------------
NET INTEREST MARGIN 5.09% 5.02%
- -------------------------------------------------------------------------------------
</TABLE>
Average interest earning assets increased by $70 million or 3.3% to $2,161
million for the quarter ended June 30, 1998 compared to the same quarter in
1997. Average loans outstanding increased by $75 million or 5.0% to $1,586
million for the second quarter of 1998 compared to the same quarter in 1997.
Approximately $12 million of this increase was due to loans acquired as part of
the purchase of branch offices in Lancaster, Ohio in December, 1997. The demand
for fixed-rate residential real estate loans has been quite strong during the
first half of 1998 due to relatively low longer term interest rates. However, a
large percentage of the fixed-rate loan originations are refinances of existing
mortgages. Park sells in the secondary market all fixed-rate mortgage loans that
are originated and as a result has experienced a decrease of $16 million in
residential real estate loans during the first six months of 1998. This trend in
residential real estate loans may continue at current interest rate levels. The
demand for commercial, commercial real estate, and consumer loans secured by
automobiles has continued to be relatively strong and accounts for the 5.0%
growth in average loan balances for the second quarter of 1998 compared to the
same period in 1997. The average yield on the loan portfolio was 9.35% for the
second quarter of 1998 compared to 9.39% for the same period in 1997. The
pricing of variable-rate interest rate loans has been relatively unchanged in
1998 compared to 1997, as short-term interest rates have been stable.
-13-
<PAGE> 14
Average investment securities including federal funds sold decreased by $5
million to $575 million for the second quarter of 1998 compared to $580 million
for the same quarter in 1997. The yield on taxable investment securities was
6.96% in 1998 compared to 7.04% in 1997 while the tax equivalent yield on
tax-exempt investments decreased to 7.35% in 1998 compared to 7.93% in 1997. The
decrease in the yield on tax-exempt investments was primarily due to purchases
of lower yielding securities. Long-term interest rates have decreased over the
past year and as a result, purchases of investment securities generally yield
less than the average yield of the portfolio.
Average interest bearing liabilities increased by $34 million or 1.9% to $1,811
million for the quarter ended June 30, 1998 compared to the same quarter in
1997. Average interest bearing deposits increased by $66 million or 4.2% to
$1,621 million for the second quarter of 1998 compared to the same period in
1997. This increase in deposits was primarily due to $49 million of deposits
acquired as part of the purchase of branch offices in Lancaster, Ohio in
December, 1997.
Average short-term borrowings increased by $14 million to $174 million for the
second quarter of 1998 compared to the same period in 1997, while average
long-term borrowings decreased to $16 million in 1998 compared to $61 million in
1997. Higher rate long-term debt was repaid from additional short-term
borrowings and from the proceeds from the sale of taxable investment securities.
The increase in net interest income of $1.2 million or 4.6% to $26.85 million
for the quarter ended June 30, 1998 was primarily due to an increase in average
interest earning assets and to a lesser extent an increase in the net interest
spread. Average interest earning assets increased by $70 million or 3.3% to
$2,161 million and excess interest earning assets increased by $36 million to
$351 million for the quarter ended June 30, 1998 compared to the same period in
1997. The net interest spread (the difference between the yield on interest
earning assets and the cost of interest bearing liabilities) increased by .02%
to 4.38% in 1998 compared to 4.36% in 1997. The yield on interest earning assets
decreased by .02% to 8.73% for the second quarter of 1998 compared to 8.75% for
the same period in 1997 and the cost of interest bearing liabilities decreased
by .04% to 4.35% for the second quarter of 1998 compared to 4.39% for the same
period in 1997.
Net interest income increased by $2.9 million or 5.7% to $53.2 million for the
six months ended June 30, 1998 compared to $50.3 million for the same period in
1997. The following table compares the average balance and tax equivalent
yield/cost for interest earning assets and interest bearing liabilities for the
first six months of 1998 with the same period in 1997.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
(IN THOUSANDS)
1998 1997
TAX TAX
AVERAGE EQUIVALENT AVERAGE EQUIVALENT
BALANCE % BALANCE %
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
LOANS $1,584,759 9.35% $1,495,690 9.35%
- -------------------------------------------------------------------------------------
TAXABLE INVESTMENTS $ 467,116 7.05% $ 494,554 7.01%
- -------------------------------------------------------------------------------------
TAX EXEMPT INVESTMENTS $ 84,933 7.47% $ 63,806 8.07%
- -------------------------------------------------------------------------------------
FEDERAL FUNDS SOLD $ 4,575 5.57% $ 16,086 5.33%
- -------------------------------------------------------------------------------------
INTEREST EARNING ASSETS $2,141,383 8.77% $2,070,136 8.72%
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
INTEREST BEARING DEPOSITS $1,609,730 4.29% $1,551,011 4.28%
- -------------------------------------------------------------------------------------
SHORT-TERM BORROWINGS $ 168,506 4.86% $ 145,517 4.68%
- -------------------------------------------------------------------------------------
LONG-TERM BORROWINGS $ 17,551 5.83% $ 63,494 6.29%
- -------------------------------------------------------------------------------------
INTEREST BEARING LIABILITIES $1,795,787 4.36% $1,760,022 4.38%
- -------------------------------------------------------------------------------------
EXCESS INTEREST-EARNING ASSETS $ 345,596 4.41% $ 310,114 4.34%
- -------------------------------------------------------------------------------------
NET INTEREST MARGIN 5.11% 4.99%
- -------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 15
Average interest earning assets increased by $71 million or 3.4% to $2,141
million for the six months ended June 30, 1998 compared to the same period in
1997. Average loans increased by $89 million or 6.0% to $1,585 million for the
first half of 1998 compared to the same period in 1997. Approximately $12
million of this increase was due to loans acquired as part of the purchase of
branch offices in Lancaster, Ohio in December, 1997. Loan demand continues to be
relatively strong for commercial, commercial real estate, consumer loans secured
by automobiles and for fixed-rate residential mortgage loans. Park sells the
fixed-rate mortgage loans in the secondary market and although this activity
doesn't add to loan growth, it does produce fee income. The yield on loans was
9.35% for both the first half of 1998 and 1997.
Average investment securities including federal funds sold decreased by $18
million or 3.1% to $557 million for the first six months of 1998 compared to the
same period in 1997. Taxable investment securities were sold in 1997 to provide
funds to repay long-term debt.
Average interest bearing liabilities increased by $36 million or 2.0% to $1,796
million for the first six months of 1998 compared to the same period in 1997.
Average interest bearing deposits increased by $59 million or 3.8% to $1,610
million for the first half of 1998 compared to the same period in 1997.
Approximately $49 million of this increase was due to deposits acquired as part
of the purchase of branch offices in Lancaster, Ohio in December, 1997. Internal
deposit growth of $10 million in 1998 has been small but Park has been able to
control the average rate paid on deposits which was 4.29% for the first six
months of 1998 compared to 4.28% for the same period in 1997.
Average short-term borrowings increased by $23 million or 15.8% to $169 million
for the first half of 1998 compared to the same period in 1997. This increase in
short-term borrowings was used to assist in funding the repayment of long-term
debt. Average long-term debt decreased by $46 million to $18 million for the
first six months of 1998 compared to the same period in 1997. Higher rate
long-term debt was repaid from additional short-term borrowings and from the
proceeds from the sale of taxable investment securities.
The increase in net interest income of $2.9 million or 5.7% to $53.2 million for
the first six months of 1998 was primarily due to an increase in average
interest earning assets and to a lesser extent an increase in the net interest
spread. Average interest earning assets increased by $71 million or 3.4% to
$2,141 million and excess interest earning assets increased by $35 million to
$346 million for the first half of 1998 compared to the same period in 1997. The
net interest spread (the difference between the yield on interest earning assets
and the cost of interest bearing liabilities) increased by .07% to 4.41% in 1998
compared to 4.34% in 1997. The yield on interest earning assets increased by
.05% to 8.77% for the first half of 1998 compared to 8.72% for the same period
in 1997 and the cost of interest bearing liabilities decreased by .02% to 4.36%
for the first half of 1998 compared to 4.38% for the first half of 1997.
Provision for Loan Losses
- -------------------------
The provision for loan losses increased by $220,000 to $1.67 million for the
three months ended June 30, 1998 and increased by $700,000 to $3.35 million for
the six months ended June 30, 1998 compared to the same periods in 1997. Net
charge-offs were $646,000 and $664,000, respectively, for the three and six
month periods ended June 30, 1998 compared to net charge-offs of $715,000 and
$670,000, respectively, for the same periods in 1997. Nonperforming loans,
defined as loans that are 90 days past due, renegotiated loans and nonaccrual
loans were $5.3 million or .33% of loans at June 30, 1998 compared to $6.2
million or .39% of loans at December 31, 1997 and $7.2 million or .47% of loans
at June 30, 1997. The reserve for loans losses as a percentage of outstanding
loans was 2.38% at June 30, 1998 compared to 2.24% at December 31, 1997 and June
30, 1997. See Footnote 3 for a discussion of the factors considered by
management in determining the provision for loan losses.
15
<PAGE> 16
Noninterest Income
- ------------------
Noninterest income increased by $757,000 or 14.9% to $5.85 million for the three
months ended June 30, 1998 and increased by $1.5 million or 14.9% to $11.83
million for the six months ended June 30, 1998 compared to the same periods in
1997. The following is a summary of the change in noninterest income.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
JUNE 30,
--------
- ---------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
- ---------------------------------------------------------------------------------------------------------------------------
1998 1997 Change 1998 1997 Change
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Fees from fiduciary activities $1,185 $1,227 $ (42) $ 2,470 $ 2,583 $ (113)
- ---------------------------------------------------------------------------------------------------------------------------
Service charges on deposit accounts 1,683 1,583 100 3,277 3,106 171
- ---------------------------------------------------------------------------------------------------------------------------
Other service income 1,304 888 416 2,662 1,779 883
- ---------------------------------------------------------------------------------------------------------------------------
Other income 1,676 1,393 283 3,420 2,824 596
------ ------ ----- ------- ------- -------
- ---------------------------------------------------------------------------------------------------------------------------
Total $5,848 $5,091 $ 757 $11,829 $10,292 $ 1,537
====== ====== ===== ======= ======= =======
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The increase in other service income for both periods was primarily due to fee
income earned from the origination and sale in the secondary market of
fixed-rate residential mortgage loans. The increase in the subcategory other
income for both periods was primarily due to an increase in rental fees from
operating leases.
Security Gains
- --------------
Investment security gains were $97,000 for the six months ended June 30, 1998
compared to no gains for the same period in 1997. Securities sold for gains were
due to mature later in 1998 and the proceeds from the sales were used to
purchase mortgage-backed securities with an average life of approximately 4.5
years.
At June 30, 1998, the net unrealized holding gain on available-for-sale
securities was $6.4 million compared to a net unrealized gain of $7.0 million at
December 31, 1997. An increase in longer term interest rates would decrease the
net unrealized gain in available-for-sale securities and possibly cause Park to
realize some investment security losses later in 1998. The average maturity of
the investment portfolio was approximately 3.5 years at June 30, 1998 and
December 31, 1997.
Other Expense
- -------------
Total other expense decreased by $261,000 or 1.7% to $15.2 million for the three
months ended June 30, 1998 and decreased by $449,000 or 1.4% to $30.6 million
for the six months ended June 30, 1998 compared to the same periods in 1997.
Salaries and employee benefits expense decreased by $10,000 to $7.72 million for
the quarter ended June 30, 1998 and increased by $233,000 or 1.5% to $15.62
million for the six months ended June 30, 1998 compared to the same periods in
1997. The small change in salaries and employee benefits is primarily due to the
periods in 1997 including expense for the payment of stock appreciation rights
and the related payroll taxes, and payroll taxes pertaining to the exercise of
nonqualifying employee stock options related to the First-Knox merger. The stock
appreciation rights and the stock options were exercised by the First-Knox
employees during May, 1997 after the merger with Park was completed. See
Footnote 2 for information about the merger. The additional expense due to the
exercise of the stock appreciation rights and the stock options was $339,000 for
the three months ended June 30, 1997 and $437,000 for the six months ended June
30, 1997. Full time equivalent employees were 1,020 at June 30, 1998 compared to
980 at June 30, 1997.
16
<PAGE> 17
The subcategory other expense which includes data processing expense, fees and
service charges, supplies, marketing, telephone, postage, deposit insurance
premiums, amortization of intangibles and expenses pertaining to other real
estate owned, decreased by $383,000 or 6.4% for the quarter ended June 30, 1998
and decreased by $888,000 or 7.3% for the six months ended June 30, 1998
compared to the same periods in 1997. Park has achieved some expense savings in
1998 from the elimination of First-Knox's separate data processing system and
from the consolidation of other back office functions. For both periods in 1998,
the decrease in other operating expense was primarily due to decreases in data
processing expense and fees and service charges.
Federal Income Taxes
- --------------------
Federal income tax expense increased by $569,000 to $4.87 million and by $1.26
million to $9.59 million for the three and six month periods ended June 30,
1998, respectively, compared to the same periods in 1997. The ratio of federal
income tax expense to income before taxes was approximately 31% for both periods
in 1998 and 1997.
Net Income
- ----------
Net income increased by $1.4 million or 14.6% to $10.95 million for the three
months ended June 30, 1998 compared to $9.55 million for the same period in
1997. For the six months ended June 30, 1998, net income increased by $3.0
million or 16.1% to $21.5 million compared to $18.5 million for the same period
in 1997. The annualized, net income to average assets ratio (ROA) was 1.90% and
1.89%, respectively, for the three and six month periods ended June 30, 1998
compared to 1.73% and 1.70%, respectively, for the same periods in 1997. The
annualized, net income to average equity ratios (ROE) was 19.72% and 19.54%,
respectively, for the three and six months periods ended June 30, 1998 compared
to 19.25% and 18.81%, respectively, for the same periods in 1997.
COMPARISON OF FINANCIAL CONDITION
FOR JUNE 30, 1998 AND DECEMBER 31, 1997
Changes in Financial Condition and Liquidity
- --------------------------------------------
Total assets increased by $94 million or 4.1% to $2,382 million at June 30, 1998
compared to $2,288 million at December 31, 1997. Investment securities increased
by $70 million to $611 million and loan balances increased by $16 million to
$1,608 million. The small increase in loan balances was due to the strong demand
for fixed-rate mortgage loans which when originated, are sold in the secondary
market. Some of the fixed-rate mortgage loan originations were refinances of
adjustable-rate mortgage loan balances.
Total liabilities increased by $89 million or 4.3% to $2,155 million at June 30,
1998 compared to $2,066 million at December 31, 1997. Total deposits increased
by $23 million to $1,878 million and total borrowed money increased by $74
million to $257 million. During the first half of 1998, $16 million of long-term
debt was repaid and replaced with lower rate short-term debt.
Effective liquidity management ensures that the cash flow requirements of
depositors and borrowers, as well as the operating cash needs of the
Corporation, are met.
Funds are available from a number of sources, including the securities
portfolio, the core deposit base, Federal Home Loan Bank borrowings, and the
capability to securitize or package loans for sale. The Corporation's loan to
asset ratio was 67.5% at June 30, 1998 compared to 69.6% at December 31, 1997
and 67.7% at June 30, 1997. Cash and cash equivalents totaled $92 million at
June 30, 1998 compared
17
<PAGE> 18
to $94 million at December 31, 1997 and $82 million at June 30, 1997. The
present funding sources provide more than adequate liquidity for the Corporation
to meet its cash flow needs.
Capital Resources
- -----------------
Stockholders' equity at June 30, 1998 was $227.1 million or 9.54% of total
assets compared to $222.1 million or 9.71% of total assets at December 31, 1997
and $210.6 million or 9.29% of total assets at June 30, 1997.
Financial institution regulators have established guidelines for minimum capital
ratios for banks, thrifts, and bank holding companies. The net unrealized gain
or loss on available-for-sale securities is not included in computing regulatory
capital. The minimum leverage capital ratio (defined as stockholders' equity
less intangible assets divided by tangible assets) is 4% and the well
capitalized ratio is greater than or equal to 5%. Park's leverage ratio was
8.96% at June 30, 1998 and 8.91% at December 31, 1997. 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 13.44% at June 30, 1998 and 13.46% at
December 31, 1997. 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 14.71% at June 30, 1998 and 14.72% at December 31,
1997.
The financial institution subsidiaries of Park each met the well capitalized
capital ratio guidelines at June 30, 1998. The following table indicates the
capital ratios for each subsidiary and Park at June 30, 1998:
TIER I TOTAL
LEVERAGE RISK-BASED RISK-BASED
- -----------------------------------------------------------------------
Park National Bank 6.83% 9.49% 12.06%
- -----------------------------------------------------------------------
Richland Trust Company 6.70% 12.49% 13.75%
- -----------------------------------------------------------------------
Century National Bank 6.72% 11.57% 12.84%
- -----------------------------------------------------------------------
First-Knox National Bank 6.92% 10.64% 12.47%
- -----------------------------------------------------------------------
Park National Corporation 8.96% 13.44% 14.71%
- -----------------------------------------------------------------------
Minimum Capital Ratio 4.00% 4.00% 8.00%
- -----------------------------------------------------------------------
Well Capitalized Ratio 5.00% 6.00% 10.00%
- -----------------------------------------------------------------------
At the July 13, 1998 Park National Corporation Board of Directors' Meeting, a
cash dividend of $.48 per share was declared payable on September 10, 1998 to
stockholders of record on August 21, 1998.
Year 2000 Compliance Issues
- ---------------------------
In early 1997, Park formed a Year 2000 (Y2K) project team to identify and
remediate software systems and computer-related devices that require
modification for the Year 2000. A project plan has been developed with goals and
target dates. It has been approved by Park's Board of Directors and will be
monitored by the Board on a quarterly basis. The Corporation's business units
are in various stages of completing this project plan. The project plan follows
a five phase approach recommended by regulators and others: awareness,
assessment, renovation, validation, and implementation.
Park's State of Readiness
- -------------------------
With regard to information technology (IT) systems, Park uses off-the-shelf
banking software packages to satisfy most internal and customer requirements.
These software packages are purchased without source code, which prevents Park
from making program modifications. All software and hardware vendors have been
asked and indicated their products' Y2K readiness. In the majority of cases, the
vendor has indicated its software or hardware is Y2K compliant. This requires
testing by Park to confirm the state of readiness for all mission-critical
systems. In those cases when the software or hardware is not Y2K compliant, an
upgrade or another vendor's replacement software will be purchased, tested for
Y2K compliance and installed. Testing and replacement of all
18
<PAGE> 19
internal software and hardware systems should be completed by December 31, 1998.
Testing and replacement of out-sourced systems will be completed by March 31,
1999.
For non-IT systems vendor inquiries and tests have been completed. The age and
complexity of Park's buildings and equipment are such that microcontrollers are
generally not present. Upgrades of selected Automated Teller Machines (ATMs) and
selected building security systems have been ordered and will be installed by
December 31, 1998.
Y2K readiness inquiries of Park's major borrowers, funds providers and third
party suppliers of products and services are being performed. This is
particularly challenging considering the number and complexity of such entities.
The Y2K readiness inquiries of these entities to date have not indicated
significant concern.
Costs to Address Park's Year 2000 Issues
- ----------------------------------------
The Corporation has incurred expenses throughout 1998 related to this project
and will continue to incur expenses over the next two years. These expenses are
not expected to materially impact operating results in any one period, with a
significant portion of these expenses represented by existing staff that has
been redeployed to this project. Estimates are that incremental expenses in each
of 1998, 1999 and 2000 for remediation will be $500,000 and for redeployed staff
$1,000,000. Incremental expenses thru June 30, 1998 are approximately $180,000
and redeployment expenses are approximately $300,000 through June 30, 1998.
Risks of the Company's Year 2000 Issues
- ---------------------------------------
Park cannot determine the consequences of Y2K problems, if any, on its results
of operations, liquidity and financial condition. While management is executing
steps to assure compliance with systems over which it has control, it cannot be
assured that third parties upon which Park relies will not have business
interruptions due to Y2K problems.
The Corporation and its banking affiliates are regulated by both state and
federal bank regulatory agencies. These agencies have issued numerous directives
with respect to the Year 2000 issue, with which Park is acting to comply.
Additionally, these regulatory agencies make on-site examinations to determine
Y2K readiness.
Park's Contingency Plan
- -----------------------
Park currently has a business resumption contingency plan for the IT function.
The plan is being modified to address Y2K risks. Additionally, other non-IT
business functions are being included in the business resumption plan. The
modification of this plan will be completed by March 31, 1999.
Safe Harbor Statement Under the Private Securities Litigation Report Act of 1995
- --------------------------------------------------------------------------------
This Management's Discussion and Analysis of Financial Condition and Results of
Operations, including the discussion under "Year 2000 Compliance Issues,"
contains forward-looking statements within the meaning of federal securities
laws. Actual results are subject to risks and uncertainties, including those
specific to the Company and those specific to the industry which could cause
results to differ materially from those contemplated. The risks and
uncertainties include, but are not limited to third-party or Company failures to
achieve timely, effective remediation of Year 2000 issues, general economic
conditions, actions of competitors, regulatory actions, changes in legislation
and technology changes. Undue reliance should not be placed on the
forward-looking statements, which speak only as of the date of this Form 10-Q.
The Company does not undertake any obligation to publicly update any
forward-looking statement.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
See Footnote 1 for disclosure that Park does not have any off-balance sheet
derivative financial instruments.
19
<PAGE> 20
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 and Use of Proceeds
-----------------------------------------
Not applicable
Item 3. Defaults Upon Senior Securities
-------------------------------
Not applicable
Item 4. Other Information
-----------------
As discussed in the Company's Proxy Statement for the 1998 Annual
Meeting of Shareholders, any qualified shareholder of the Company who
intends to submit a proposal to the Company at the 1999 Annual Meeting
of Shareholders (the "1999 Annual Meeting") must submit such proposal
to the Company not later than November 9, 1998 to be considered for
inclusion in the Company's Proxy Statement and form of Proxy (the
"Proxy Materials") relating to that meeting. If a shareholder intends
to present a proposal at the 1999 Annual Meeting of Shareholders, but
has not sought the inclusion of such proposal in the Company's Proxy
Materials, such proposal must be received by the Company prior to
January 23, 1999 or the Company's management proxies for the 1999
Annual Meeting will be entitled to use their discretionary voting
authority should such proposal then be raised, without any discussion
of the matter in the Company's Proxy Materials.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a. Exhibits
--------
See Exhibit 27, Financial Data Schedule on Page 22
b. Reports on Form 8-K
-------------------
No reports on Form 8-K have been filed by Park since the report
dated April 17, 1998 which provided an updated summary of the
material attributes of the common shares, without par value, of
Park National Corporation.
20
<PAGE> 21
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: August 11, 1998 BY: /s/ C. Daniel DeLawder
--------------- ----------------------
C. Daniel DeLawder
President
DATE: August 11, 1998 BY: /s/ John W. Kozak
--------------- ----------------------
John W. Kozak
Chief Financial Officer
21
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 92,026
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 603,806
<INVESTMENTS-CARRYING> 6,820
<INVESTMENTS-MARKET> 7,124
<LOANS> 1,608,382
<ALLOWANCE> 38,279
<TOTAL-ASSETS> 2,381,721
<DEPOSITS> 1,877,591
<SHORT-TERM> 242,351
<LIABILITIES-OTHER> 20,087
<LONG-TERM> 14,561
0
0
<COMMON> 68,364
<OTHER-SE> 158,767
<TOTAL-LIABILITIES-AND-EQUITY> 2,381,721
<INTEREST-LOAN> 73,309
<INTEREST-INVEST> 18,572
<INTEREST-OTHER> 129
<INTEREST-TOTAL> 92,010
<INTEREST-DEPOSIT> 34,272
<INTEREST-EXPENSE> 38,839
<INTEREST-INCOME-NET> 53,171
<LOAN-LOSSES> 3,348
<SECURITIES-GAINS> 97
<EXPENSE-OTHER> 30,629
<INCOME-PRETAX> 31,120
<INCOME-PRE-EXTRAORDINARY> 21,532
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,532
<EPS-PRIMARY> 2.30
<EPS-DILUTED> 2.29
<YIELD-ACTUAL> 5.11
<LOANS-NON> 2,385
<LOANS-PAST> 2,402
<LOANS-TROUBLED> 465
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 35,595
<CHARGE-OFFS> 2,661
<RECOVERIES> 1,997
<ALLOWANCE-CLOSE> 38,279
<ALLOWANCE-DOMESTIC> 38,279
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
