Form 425 PARK NATIONAL CORP /OH/ Filed by: PARK NATIONAL CORP /OH/
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) | April 23, 2018 |
Park National Corporation |
(Exact name of registrant as specified in its charter) |
Ohio | 1-13006 | 31-1179518 |
(State or other jurisdiction | (Commission | (IRS Employer |
of incorporation) | File Number) | Identification No.) |
50 North Third Street, P.O. Box 3500, Newark, Ohio | 43058-3500 |
(Address of principal executive offices) | (Zip Code) |
(740) 349-8451 |
(Registrant’s telephone number, including area code) |
Not Applicable |
(Former name or former address, if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
ý | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 7.01 - Regulation FD Disclosure.
C. Daniel DeLawder, Chairman of the Board of Park National Corporation (“Park” or the “Company”), and David L.Trautman, Chief Executive Officer and President of Park, will make a presentation at the Company's Annual Meeting of Shareholders on April 23, 2018 which will be held at 2:00 p.m., Eastern Daylight Saving Time. The slides that will accompany the presentation are furnished in this Current Report on Form 8-K, pursuant to this Item 7.01, as Exhibit 99.1, and are incorporated herein by reference. The slides are also available in the “Investor Relations” section of Park's web site at www.parknationalcorp.com.
The text of the slide entitled “Safe Harbor Statement” is incorporated by reference into this Item 7.01.
Item 8.01 - Other Events.
On April 20, 2018, Park and its wholly-owned national bank subsidiary, The Park National Bank ("PNB"), received all required regulatory approvals from the Office of the Comptroller of the Currency ("OCC") for the merger (the "Merger") of NewDominion Bank, a North Carolina state-chartered bank ("NewDominion"), with and into PNB.
The Merger remains subject to the approval by the shareholders of NewDominion of the Agreement and Plan of Merger and Reorganization among Park, PNB and NewDominion, dated as of January 22, 2018, and the satisfaction of customary closing conditions. Park expects that the closing of the Merger will occur on or about July 1, 2018.
Important Information About the Merger
In connection with the proposed Merger, Park has filed with the Securities and Exchange Commission (the "SEC") a Registration Statement on Form S-4 that includes a Proxy Statement of NewDominion and a Prospectus of Park, as well as other relevant documents concerning the proposed Merger. The proposed Merger is being submitted to NewDominion's shareholders for their consideration. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or the solicitation of any vote or approval. SHAREHOLDERS OF NEWDOMINION ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED MERGER AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT PARK, PNB, NEWDOMINION AND THE PROPOSED MERGER.
A free copy of the definitive Proxy Statement/Prospectus, as well as other filings containing information about Park and NewDominion, may be obtained at the SEC's Internet site (http://www.sec.gov). These documents may also be obtained, free of charge, from Park at the "Investor Information" section of Park's web site at www.parknationalcorp.com or from NewDominion at the "Investor Relations" section of NewDominion's website at www.newdominionbank.com. Copies of the Proxy Statement/Prospectus can also be obtained, free of charge, by directing a request to Park National Corporation, 50 North Third St, P.O. Box 3500, Newark, OH 43058-3500, Attention: Investor Relations, Telephone: (740) 322-6844 or to NewDominion Bank, P.O. Box 37389, Charlotte, NC 28237, Attention: Investor Relations, Telephone: (704) 943-5725.
Item 9.01 - Financial Statements and Exhibits.
(a) | Not applicable |
(b) | Not applicable |
(c) | Not applicable |
(d) | Exhibits. The following exhibit is included with this Current Report on Form 8-K: |
Exhibit No. Description
99.1Slide presentation for the Park National Corporation Annual Meeting of Shareholders on April 23, 2018 (furnished pursuant to Item 7.01 hereof).
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: April 23, 2018 | /s/ Brady T. Burt | |
Brady T. Burt | ||
Chief Financial Officer, Secretary and Treasurer | ||
ANNUAL MEETING OF SHAREHOLDERS
April 23, 2018
1
File by Park National Corporation
Pursuant to Rule 425 under the Securities Act of 1933
Issuing Company: Park National Corporation
Registration Statement on Form S-4 File No. 333-2233559
Subject Company : NewDominion Bank
Safe Harbor Statement
2
Park cautions that any forward-looking statements contained in this presentation or otherwise made by management of Park 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: Park's ability to execute our business plan successfully and within the
expected timeframe; general economic and financial market conditions, specifically in the real estate markets and the credit markets, either
nationally or in the states in which Park and our subsidiaries do business, may experience a slowing or reversal of the recent economic
expansion in addition to continuing residual effects of recessionary conditions and an uneven spread of positive impacts of recovery on the
economy and our counterparties, resulting in adverse impacts on the demand for loan, deposit and other financial services, delinquencies,
defaults and counterparties' ability to meet credit and other obligations; changes in interest rates and prices may adversely impact prepayment
penalty income, mortgage banking income, the value of securities, loans, deposits and other financial instruments and the interest rate
sensitivity of our consolidated balance sheet as well as reduce interest margins and impact loan demand; changes in consumer spending,
borrowing and saving habits, whether due to the newly-enacted tax legislation, changing business and economic conditions, legislative and
regulatory initiatives, or other factors; changes in unemployment; changes in customers', suppliers', and other counterparties‘ performance and
creditworthiness; asset/liability repricing risks and liquidity risks; our liquidity requirements could be adversely affected by changes to regulations
governing bank and bank holding company capital and liquidity standards as well as by changes in our assets and liabilities; competitive factors
among financial services organizations could increase significantly, including product and pricing pressures, changes to third-party relationships
and our ability to attract, develop and retain qualified bank professionals; clients could pursue alternatives to bank deposits, causing us to lose a
relatively inexpensive source of funding; uncertainty regarding the nature, timing and effect of changes in banking regulations or other regulatory
or legislative requirements affecting the respective businesses of Park and our subsidiaries, including major reform of the regulatory oversight
structure of the financial services industry and changes in laws and regulations concerning taxes, pensions, bankruptcy, consumer protection,
rent regulation and housing, financial accounting and reporting, environmental protection, insurance, bank products and services, bank capital
and liquidity standards, fiduciary standards, securities and other aspects of the financial services industry, specifically the reforms provided for in
the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and the Basel III regulatory capital reforms, as
well as regulations already adopted and which may be adopted in the future by the relevant regulatory agencies, including the Consumer
Financial Protection Bureau, the OCC, the FDIC, and the Federal Reserve Board, to implement the Dodd-Frank Act's provisions, and the Basel
III regulatory capital reforms; the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting
Standards Board, the SEC, the Public Company Accounting Oversight Board and other regulatory agencies, and the accuracy of our
assumptions and estimates used to prepare our financial statements; changes in law and policy accompanying the current presidential
administration, including the recently enacted Tax Cuts and Jobs Act, and uncertainty or speculation pending the enactment of such changes;
uncertainties in Park's preliminary review of, and additional analysis of, the impact of the Tax Cuts and Jobs Act;
3
Safe Harbor Statement (cont.)
the effect of healthcare laws in the United States and potential changes for such laws which may increase our healthcare and other costs and
negatively impact our operations and financial results; significant changes in the tax laws, which may adversely affect the fair values of net
deferred tax assets and obligations of state and political subdivisions held in Park's investment securities portfolio; the effect of trade, monetary,
fiscal and other governmental policies of the U.S. federal government, including money supply and interest rate policies of the Federal Reserve
Board; disruption in the liquidity and other functioning of U.S. financial markets; the impact on financial markets and the economy of any
changes in the credit ratings of the U.S. Treasury obligations and other U.S. government-backed debt, as well as issues surrounding the levels
of U.S., European and Asian government debt and concerns regarding the creditworthiness of certain sovereign governments, supranationals
and financial institutions in Europe and Asia; the uncertainty surrounding the actions to be taken to implement the referendum by United
Kingdom voters to exit the European Union; our litigation and regulatory compliance exposure, including any adverse developments in legal
proceedings or other claims and unfavorable resolution of regulatory and other governmental examinations or other inquiries; the adequacy of
our risk management program; the impact of our ability to anticipate and respond to technological changes on our ability to respond to customer
needs and meet competitive demands; the ability to secure confidential information and deliver products and services through the use of
computer systems and telecommunications networks; a failure in or breach of our operational or security systems or infrastructure, or those of
our third-party vendors and other service providers, resulting in failures or disruptions in customer account management, general ledger,
deposit, loan, or other systems, including as a result of cyber attacks; operational issues stemming from and/or capital spending necessitated
by, the potential need to adapt to industry changes in information technology systems on which Park and our subsidiaries are highly dependent;
fraud, scams and schemes of third parties; the impact of widespread natural and other disasters, pandemics, dislocations, civil unrest, terrorist
activities or international hostilities on the economy and financial markets generally or on us or our counterparties specifically; demand for loans
in the respective market areas served by Park and our subsidiaries; the ability to obtain required governmental and shareholder approvals with
respect to, and the ability to complete, the proposed merger transaction involving Park, PNB and NewDominion Bank (the “NewDominion
Transaction”) on the proposed terms within the expected timeframe; the risk that the businesses of PNB and NewDominion Bank will not be
integrated successfully or such integration may be more difficult, time-consuming or costly than expected; expected revenue synergies and cost
savings from the NewDominion Transaction may not be fully realized within the expected timeframe; revenues following the NewDominion
Transaction may be lower than expected; customer and employee relationships and business operations may be disrupted by the NewDominion
Transaction; and other risk factors relating to the banking industry as detailed from time to time in Park's reports filed with the SEC 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, 2017. Park
does not undertake, and specifically disclaims any obligation, to publicly release the results 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 was made, or reflect the
occurrence of unanticipated events, except to the extent required by law.
Park National Corporation Profile
(as of March 31, 2018)
• 10 Community Bank Divisions
• 2 Specialty Finance Companies
• One non-bank workout subsidiary
• 29 Ohio counties
• 108 bank offices
• 6 specialty finance offices
• 1,750 FTEs
4
Affiliate Relative Size
Based on aggregate amount of deposits, loans, repurchase
agreements, and trust assets (as of March 31, 2018)
PND
36%
FND
7%
PSD
5%
RBD
7%
CND
9%
FKD
13%
UBD
2%
SND
6%
SED
12%
UND
3%
5
Park National Corporation
Consolidated Statements of Income
Source: Company Filings 6
(in thousands) Dec. 31, 2016 Dec. 31, 2017 Mar. 31, 2017 Mar. 31, 2018
Net interest income $ 238,086 $ 243,759 $ 58,952 $ 64,850
(Recovery of) provision for loan losses (5,101) 8,557 876 260
Net interest income after (recovery of)
provision for loan losses $ 243,187 $ 235,202 $ 58,076 $ 64,590
Other income 84,039 86,429 18,955 26,903
Other expense 204,331 203,162 48,910 54,308
Income before income taxes $ 122,895 $ 118,469 $ 28,121 $ 37,185
Income taxes 36,760 34,227 7,854 6,062
Net income $ 86,135 $ 84,242 $ 20,267 $ 31,123
Park National Corporation
Consolidated Balance Sheets
Source: Company Filings 7
(in millions) Dec. 31, 2016 Dec. 31, 2017 Mar. 31, 2018
Cash & cash equivalents $ 146 $ 169 $ 277
Investment securities 1,580 1,513 1,464
Loans 5,272 5,372 5,292
Allowance for loan losses (51) (50) (49)
Other assets 521 534 535
Total assets $ 7,468 $ 7,538 $ 7,519
Noninterest bearing deposits 1,523 1,634 1,618
Interest bearing deposits 3,999 4,183 4,466
Total deposits 5,522 5,817 6,084
Total borrowings 1,134 906 624
Other liabilities 70 59 58
Total shareholders’ equity 742 756 753
Total liabilities & shareholders’ equity $ 7,468 $ 7,538 $ 7,519
The Park National Bank
Consolidated Statements of Income
Source: Company Filings 8
(in thousands) Dec. 31, 2016 Dec. 31, 2017 Mar. 31, 2017 Mar. 31, 2018
Net interest income $ 227,576 $ 235,243 $ 57,480 $ 61,441
Provision for (recovery of) loan losses 2,611 9,898 720 (67)
Net interest income after provision for
(recovery of) loan losses $ 224,965 $ 225,345 $ 56,760 $ 61,508
Other income 79,959 82,742 19,114 19,915
Other expense 182,718 185,891 45,206 49,001
Income before income taxes $ 122,206 $ 122,196 $ 30,668 $ 32,422
Income taxes 37,755 34,881 9,182 5,677
Net income $ 84,451 $ 87,315 $ 21,486 $ 26,745
The Park National Bank
Consolidated Balance Sheets
Source: Company Filings 9
(in millions) Dec. 31, 2016 Dec. 31, 2017 Mar. 31, 2018
Cash & cash equivalents $ 146 $ 168 $ 270
Investment securities 1,573 1,508 1,453
Loans 5,235 5,339 5,274
Allowance for loan losses (49) (48) (47)
Other assets 485 501 506
Total assets $ 7,390 $ 7,468 $ 7,456
Noninterest bearing deposits 1,635 1,717 1,714
Interest bearing deposits 3,995 4,180 4,463
Total deposits 5,630 5,897 6,177
Total borrowings 1,115 917 634
Other liabilities 58 48 49
Total shareholders’ equity 587 606 596
Total liabilities & shareholders’ equity $ 7,390 $ 7,468 $ 7,456
PRK Comparison to Peers
Ratios at December 31 for each year
Source: Company Filings and SNL data of $3 to $10 billion bank holding companies 10
PRK
Price to
Book %
Peer
Group
Price to
Book %
PRK
Price to
Tangible
Book
Peer
Group
Price to
Tangible
Book %
PRK
Price to
Earnings
Peer
Group
Price to
Earnings
PRK
Dividend
Yield
Peer
Group
Dividend
Yield
2017 210% 162% 233% 203% 19.0 20.9 3.6 1.9
2016 247% 171% 274% 221% 21.4 20.5 3.1 1.7
2015 194% 136% 216% 168% 17.2 16.2 4.2 2.1
2014 196% 146% 218% 178% 16.2 19.8 4.2 1.9
2013 202% 170% 227% 192% 17.0 19.9 4.4 2.1
2012 153% 117% 172% 145% 13.2 13.4 5.8 2.8
2011 156% 109% 176% 135% 13.1 14.7 5.8 2.4
2010 177% 127% 202% 155% 21.1 17.8 5.2 2.1
2009 141% 105% 163% 140% 12.2 16.9 6.4 2.5
2008 183% 135% 217% 211% 14.6 15.7 5.3 2.9
2007 155% 138% 207% 206% 11.9 13.2 5.8 3.3
2006 242% 206% 280% 291% 14.7 17.1 3.8 2.3
Dividends
11
On April 20, 2018, the Park Board of Directors declared a quarterly cash
dividend of $0.96 per common share, an increase of $0.02 per common
share.
Additionally, the Park Board of Directors declared a $0.25 per common
share special cash dividend.
12
64.06
64.70
61.17
62.82
61.19
58.74
68.95
68.00
64.98
64.03
62.21
50
55
60
65
70
75
12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017 3/31/2018
Pe
rc
en
t
(%
)
Efficiency Ratio
PRK Peer Group
PRK vs. Peers
Source: BHC Performance Report; Peers include all bank holding companies nationwide with total assets between $3.0 and $10.0 billion.
March 31, 2018 data not available for Peer Group.
Park National Corporation
Nonperforming Assets
Source: BHC Performance Report and Company Filings; March 31, 2018 data unavailable for Peer Group (N/A)
Peers include all bank holding companies nationwide with total assets between $3.0 and $10.0 billion 13
(in thousands)
Dec. 31,
2016
Dec. 31,
2017
Mar. 31,
2018
Total nonperforming loans1 $ 89,908 $ 73,848 $ 67,523
Other real estate owned 13,926 14,190 9,055
Total nonperforming assets2 $ 103,834 $ 88,038 $ 76,578
Percentage of nonperforming loans to loans (PRK) 1.71% 1.37% 1.28%
Percentage of nonperforming assets to total assets (PRK) 1.39% 1.17% 1.02%
Peer Group Information
Percentage of nonperforming loans to loans 0.64% 0.55% N/A
Percentage of nonperforming assets to total assets 0.57% 0.48% N/A
Note: Total Legacy Vision Bank nonperforming assets at December 31, 2016, December 31, 2017, and March 31, 2018 were $29.2 million, $27.2 million, and $7.3
million, respectively.
1 Includes nonaccrual loans and loans past due 90 days or more and still accruing.
2 Excludes other nonperforming assets at PNB of $3.9 million and $4.8 million as of March 31, 2018 and December 31, 2017, respectively.
14
3.00
3.50
4.00
4.50
5.00
5.50
12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017 3/31/2018
14.0
16.0
18.0
20.0
22.0
24.0
26.0
28.0
(A
ss
et
s
in
m
ill
io
ns
)
(R
ev
en
ue
in
m
ill
io
ns
)
Trust Assets (market value) (left Y axis) Fiduciary Revenue (right Y axis)
The Park National Bank
Fiduciary Income and Asset Trends
Source: Company Filings
Fiduciary income for 2018 is calculated as the annualized fiduciary income of $6.4 million for the three months ended March 31, 2018.
The Park National Bank
Indirect Loan Trends
Source: Company Filings
15
$0
$200
$400
$600
$800
$1,000
$1,200
12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017 3/31/2018
(L
oa
ns
in
m
ill
io
ns
)
Indirect Loan Totals
16
The Park National Bank Mortgage Totals
Source: Company Filings
Dec. 31, 2013 Dec. 31, 2014 Dec. 31, 2015 Dec. 31, 2016 Dec. 31, 2017 Mar. 31, 2018
Portfolio Loans $1,177 $1,221 $1,248 $1,219 $1,165 $1,151
Serviced Loans $1,326 $1,264 $1,273 $1,328 $1,370 $1,369
Total Mortgage Loans $2,503 $2,485 $2,521 $2,547 $2,535 $2,520
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
D
ep
os
it
s
(in
m
ill
io
ns
)
17
The Park National Bank Deposit Totals
Source: Company Filings
Dec. 31, 2015 Dec. 31, 2016 Dec. 31, 2017 Mar. 31, 2017 Mar. 31, 2018
Noninterest Bearing $1,508 $1,635 $1,717 $1,655 $1,714
Interest Bearing $3,939 $3,995 $4,180 $4,368 $4,463
Total Deposits $5,447 $5,630 $5,897 $6,023 $6,177
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
D
ep
os
it
s
(in
m
ill
io
ns
)
The Park National Bank
The bank of choice
Headquarter Counties – Deposits (in thousands)
Source: SNL, June 30, 2017 18
Bank Division
Year Joined
Park
Hdqtr. Co.
Deposits
Total County
Deposits
% of 2017
Market Share
% of 2016
Market Share
2017
Headquarter
County
Market Share
Rank
2016
Headquarter
County
Market Share
Rank
Park National 1908 $1,613,780 $2,611,419 61.80% 62.04% 1 1
Fairfield National 1985 374,477 2,096,636 17.86% 18.68% 1 1
Richland Bank 1987 567,846 1,840,054 30.86% 29.17% 1 1
Century National 1990 471,279 1,409,758 33.43% 33.92% 1 1
First-Knox National 1997 543,554 876,117 62.04% 61.62% 1 1
Second National 2000 285,655 1,168,809 24.44% 24.73% 2 2
Security National 2001 492,712 1,529,161 32.22% 32.39% 1 1
Seven largest OH divisions $4,349,303 $11,531,954 37.72% 37.74%
Other OH divisions – headquarter counties 626,405 5,387,683 11.63% 11.48%
Total OH divisions – headquarter counties $4,975,708 $16,919,637 29.41% 29.39%
Remaining Ohio bank deposits $1,061,440
Total Ohio bank deposits $6,037,148
Net Promoter Score
Comparison of Results
35
77 78.61 79.86
0
10
20
30
40
50
60
70
80
90
Financial Industry Average 2015 PRK Average 2016 PRK Average 2017 PRK Average
World Class
Companies
19
Financial Industry Includes direct banks, credit unions, community banks, regional banks and national banks.
Source: 2017 Satmetrix, Net Promoter Industry Benchmarks
PRK data as of 12/31/2015, 12/31/2016, and 12/31/2017
All PNB banking divisions surveyed quarterly through four segments – 1Q Onilne Banking, 2Q Checking Statements, 3Q Lobbies
and Drive-Thrus, 4Q Mortgage Customers.
Priority Series of Accounts
Four great accounts, one is perfect for you!
Advantage Account
Premium perks
⎼ Earns interest
⎼ ATM fee refunds ($20/month)
⎼ Free checks
⎼ Overdraft Guard
Simplicity Account
Uncomplicated banking
⎼ Free introductory checks
⎼ Paperless statement
Access Account
Popular for a reason
⎼ ATM fee refunds ($10/month)
⎼ Free checks
⎼ Mailed or paperless statement
Connect Account
All the basics
⎼ Checkless checking
⎼ Paperless statement
Park National / NewDominion
21
Park Branches (108)
NewDominion Branches (2)
22
ANNUAL MEETING OF SHAREHOLDERS
April 23, 2018
23