UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
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
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(Exact name of Registrant as specified in its charter)
Ohio 31-1179518
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(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
50 North Third Street, P.O. Box 3500, Newark, Ohio 43058-3500
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (740) 349-8451
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common Shares, without par value American Stock Exchange LLC
Securities registered pursuant to Section 12(g) of the Act: None
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [X] No [ ]
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of
the last business day of the Registrant's most recently completed second fiscal
quarter: $1,446,425,794 as of June 30, 2003 (the common shares represent the
only common equity of the Registrant -- for the purpose of this computation,
common shares held by the Registrant's banking subsidiaries in fiduciary
accounts are not considered to be held by affiliates).
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date: 13,765,320 common shares,
without par value, as of February 23, 2004.
Documents Incorporated by Reference:
(1) Portions of the Registrant's 2003 Annual Report to Shareholders
are incorporated by reference into Parts I and II of this Annual
Report on Form 10-K.
(2) Portions of the Registrant's definitive Proxy Statement for its
Annual Meeting of Shareholders to be held on April 19, 2004, are
incorporated by reference into Part III of this Annual Report on
Form 10-K.
Exhibit Index on Page E-1
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PART I
ITEM 1. BUSINESS.
GENERAL
Park National Corporation ("Park") is a bank holding company under the
Bank Holding Company Act of 1956 and is subject to regulation by the Federal
Reserve Board. Park was incorporated under Ohio law in 1992. Park's principal
executive offices are located at 50 North Third Street, Newark, Ohio 43055, and
its telephone number is (740) 349-8451. Park's common shares are listed on the
American Stock Exchange LLC under the symbol "PRK."
Park maintains an Internet website at www.parknationalcorp.com (this
uniform resource locator, or URL, is an inactive textual reference only and is
not intended to incorporate Park's website into this Annual Report on Form
10-K). Park makes available free of charge on or through its website, its annual
report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form
8-K, and amendments to those reports filed or furnished pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as soon as reasonably practicable after Park electronically files such
material with, or furnishes it to, the Securities and Exchange Commission (the
"SEC").
Through its subsidiaries, The Park National Bank, Newark, Ohio, a
national banking association, The Richland Trust Company, Mansfield, Ohio, an
Ohio state-chartered bank, Century National Bank, Zanesville, Ohio, a national
banking association, The First-Knox National Bank of Mount Vernon, a national
banking association, United Bank, N.A., Bucyrus, Ohio, a national banking
association, Second National Bank, Greenville, Ohio, a national banking
association, The Security National Bank and Trust Co., Springfield, Ohio, a
national banking association, and The Citizens National Bank of Urbana, Urbana,
Ohio, a national banking association, Park engages in a general commercial
banking and trust business in small and medium population Ohio communities. Park
National Bank operates through two banking divisions with the Park National
Division headquartered in Newark, Ohio and the Fairfield National Division
headquartered in Lancaster, Ohio. First-Knox National Bank also operates through
two banking divisions with the First-Knox National Division headquartered in
Mount Vernon, Ohio and the Farmers and Savings Division headquartered in
Loudonville, Ohio. Security National Bank also operates through two banking
divisions with the Security National Division headquartered in Springfield, Ohio
and the Unity National Division (formerly The Third Savings and Loan Company)
headquartered in Piqua, Ohio. Park's banking subsidiaries and their respective
divisions comprise Park's segments. Financial information about Park's
reportable segments is included in Note 19 of the Notes to Consolidated
Financial Statements located on pages 48 and 49 of Park's 2003 Annual Report to
Shareholders. That financial information is incorporated herein by reference.
Guardian Financial Services Company, an Ohio consumer finance company
based in Hilliard, Ohio ("Guardian Finance"), also operates as a separate
subsidiary of Park. Guardian Finance provides consumer finance services in the
central Ohio area.
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SERVICES PROVIDED BY PARK'S SUBSIDIARIES
All of Park's banking subsidiaries and their respective divisions
provide the following principal services:
- the acceptance of deposits for demand, savings and time
accounts and the servicing of those accounts;
- commercial, industrial, consumer and real estate lending,
including installment loans, credit cards, home equity lines
of credit and commercial and auto leasing;
- trust services;
- cash management;
- safe deposit operations;
- electronic funds transfers;
- online Internet banking with bill pay service; and
- a variety of additional banking-related services tailored to
the needs of individual customers.
Park believes that the deposit mix of its banking subsidiaries is such
that no material portion has been obtained from a single customer and,
consequently, the loss of any one customer of any banking subsidiary would not
have a materially adverse effect on the business of that banking subsidiary or
Park.
Park's banking subsidiaries deal with a wide cross-section of
businesses and corporations located primarily in Ashland, Athens, Champaign,
Clark, Coshocton, Crawford, Darke, Delaware, Fairfield, Fayette, Franklin,
Greene, Hamilton, Hocking, Holmes, Knox, Licking, Madison, Marion, Mercer,
Miami, Montgomery, Morrow, Muskingum, Perry and Richland Counties in Ohio. Few
loans are made to borrowers outside these counties. Each banking subsidiary
makes lending decisions in accordance with written loan policies designed to
maintain loan quality. Each banking subsidiary originates and retains for its
own portfolio commercial and commercial real estate loans, variable rate
residential real estate loans, home equity lines of credit, installment loans
and credit card loans. Each banking subsidiary also generates fixed rate
residential real estate loans for the secondary market. The loans of each
banking subsidiary are spread over a broad range of industrial classifications.
Park believes that its banking subsidiaries have no significant concentrations
of loans to borrowers engaged in the same or similar industries and have no
loans to foreign entities.
There are certain risks inherent in making loans. These risks include
interest rate changes over the time period in which the loans may be repaid,
risks resulting from changes in the economy, risks inherent in dealing with
borrowers and, in the case of loans secured by collateral, risks resulting from
uncertainties about the future value of the collateral.
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Commercial loans generally are viewed as having a higher credit risk
than residential real estate or consumer loans because commercial loans usually
involve larger loan balances to a single borrower and are more susceptible to a
risk of default during an economic downturn. The primary technique used in
determining whether to grant a commercial loan is the review of a schedule of
cash flows to evaluate whether anticipated future cash flows will be adequate to
service both interest and principal due. Commercial loans may also be based on
the underlying collateral provided by the borrower. Most often, the collateral
is inventory, machinery, real estate or accounts receivable. In the case of
loans secured by accounts receivable, the availability of funds for the
repayment of these loans may be substantially dependent on the ability of the
borrower to collect amounts due from its customers. The other collateral
securing loans may depreciate over time, may be difficult to appraise and may
fluctuate in value based on success of the business.
At December 31, 2003, Park's banking subsidiaries had outstanding
approximately $1,139.2 million in commercial loans (including commercial real
estate loans) and commercial leases, representing approximately 41.7% of their
total aggregate loan portfolio as of that date. The regulatory limits for loans
made to one borrower by Park National Bank, Richland Trust Company, Century
National Bank, First-Knox National Bank, United Bank, Second National Bank,
Security National Bank and Citizens National Bank were $19.6 million, $5.3
million, $5.4 million, $9.4 million, $2.2 million, $4.4 million, $10.7 million
and $2.5 million, respectively, at December 31, 2003. However, participations in
loans of amounts larger than $18.0 million are generally sold to other banks or
financial institutions. Loan terms include amortization schedules commensurate
with the purpose of each loan, the source of each repayment and the risk
involved. Approval by the Executive Committee of the Board of Directors of Park
is required for loans to existing borrowers whose aggregate total debt,
including the principal amount of the proposed loan, exceeds $8.0 million. For
new borrowers, a loan of $4.0 million or more requires the approval of the
Executive Committee.
Park has a loan review program which evaluates annually all loans
with an outstanding balance greater than $250,000. If deterioration has
occurred, the lender subsidiary takes effective and prompt action designed to
increase the likelihood of payment of the loan. Upon detection of the reduced
ability of a borrower to service interest and/or principal on a loan, the
subsidiary may downgrade the loan and, under certain circumstances, place it on
non-accrual status. The subsidiary then works with the borrower to develop a
payment schedule which they anticipate will permit service of the principal and
interest on the loan by the borrower. Loans which deteriorate and show the
inability of a borrower to repay principal and do not meet the subsidiary's
standards are charged off quarterly.
Park National Bank and its subsidiaries also lease equipment under
terms similar to the commercial lending policies described above. Park
Commercial Leasing, a division of Park National Bank, originates and services
direct leases of equipment which it acquires with no outside financing. Scope
Leasing, Inc., a wholly-owned subsidiary of Park National Bank, specializes in
aircraft financing. At December 31, 2003, Scope Leasing had approximately $59.3
million of loans and operating leases secured by aircraft.
At December 31, 2003, Park's banking subsidiaries, Park Leasing Company
and Guardian Finance had outstanding consumer loans (including automobile leases
and credit cards) in an aggregate amount of approximately $486.7 million,
constituting approximately 17.8% of their aggregate total loan portfolio. These
subsidiaries make installment credit available to customers and
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prospective customers in their primary market area of Ashland, Athens,
Champaign, Clark, Coshocton, Crawford, Darke, Delaware, Fairfield, Fayette,
Franklin, Greene, Hamilton, Hocking, Holmes, Knox, Licking, Madison, Marion,
Mercer, Miami, Montgomery, Morrow, Muskingum, Perry and Richland Counties in
Ohio. Park Leasing Company, a wholly-owned subsidiary of Park National Bank, has
an automobile leasing program with a major national insurance company under
which automobile leases may be entered into with lessees throughout several
states including the State of Ohio. Park Leasing Company had approximately $11.6
million of automobile leases outstanding under this program at December 31,
2003.
Credit approval for consumer loans requires demonstration of sufficient
income to repay principal and interest due, stability of employment, a positive
credit record and sufficient collateral for secured loans. It is the policy of
Park's subsidiaries to adhere strictly to all laws and regulations governing
consumer lending. A qualified compliance officer is responsible for monitoring
each subsidiary's performance in this area and for advising and updating loan
personnel. Park's subsidiaries make credit life insurance and health and
accident insurance available to all qualified buyers, thus reducing their risk
of loss when a borrower's income is terminated or interrupted. Each subsidiary
reviews its consumer loan portfolio monthly and charges off loans which do not
meet that subsidiary's standards. Each banking subsidiary also offers credit
card accounts through its consumer lending department. These accounts are
administered under the same standards as other consumer loans and leases.
Consumer loans generally have a higher risk of default than real estate
mortgage loans. Consumer loans typically have shorter terms and lower balances
with higher yields as compared to real estate mortgage loans, but generally
carry higher risks of default. Consumer loan collections are dependent on the
borrower's continuing financial stability, and thus are more likely to be
affected by adverse personal circumstances. Furthermore, the application of
various federal and state laws, including bankruptcy and insolvency laws, may
limit the amount that can be recovered on these loans.
At December 31, 2003, Park's banking subsidiaries had outstanding
approximately $1,104.9 million in residential real estate, home equity lines of
credit and construction mortgages, representing approximately 40.5% of total
loans outstanding. The market area for real estate lending by the banking
subsidiaries is concentrated in Ashland, Athens, Champaign, Clark, Coshocton,
Crawford, Darke, Fairfield, Fayette, Franklin, Greene, Hamilton, Hocking,
Holmes, Knox, Licking, Madison, Marion, Mercer, Miami, Montgomery, Morrow,
Muskingum, Perry and Richland Counties in Ohio. Each banking subsidiary
generally requires that the residential real estate loan amount be no more than
80% of the purchase price or the appraised value of the real estate securing the
loan, unless private mortgage insurance is obtained by the borrower. Loans made
for each banking subsidiary's portfolio in this lending category are generally
adjustable rate, fully amortized mortgages. Each banking subsidiary also
originates fixed rate real estate loans for the secondary market. These loans
are generally sold immediately after closing. All real estate loans are secured
by first mortgages with evidence of title in favor of the banking subsidiary in
the form of an attorney's opinion of title or a title insurance policy. Each
banking subsidiary also requires proof of hazard insurance with the banking
subsidiary named as the mortgagee and as the loss payee. Independent appraisals
are generally obtained for consumer real estate loans.
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Home equity lines of credit are generally made as second mortgages by
Park's banking subsidiaries. The maximum amount of a home equity line of credit
is generally limited to 85% of the appraised value of the property less the
balance of the first mortgage. The home equity lines of credit are written with
ten-year terms but are subject to review and reappraisal every three years. A
variable interest rate is generally charged on the home equity lines of credit.
Construction financing is generally considered to involve a higher
degree of risk of loss than long-term financing on improved, occupied real
estate. Risk of loss on a construction loan depends largely upon the accuracy of
the initial estimate of the property's value at completion of construction and
the estimated cost (including interest) of construction. If the estimate of
construction cost proves to be inaccurate, the banking subsidiary making the
loan may be required to advance funds beyond the amount originally committed to
permit completion of the project. If the estimate of value proves inaccurate,
the banking subsidiary may be confronted, at or prior to the maturity of the
loan, with a project having a value insufficient to assure full repayment,
should the borrower default.
COMPETITION
Park's subsidiaries compete for deposits and loans with other banks,
savings associations, credit unions and other types of financial institutions
and operate 115 financial service offices and a network of 117 automatic teller
machines in 26 central and southern Ohio counties. Other competitors include
securities dealers, brokers, mortgage bankers, investment advisors, finance
companies, insurance companies and financial services subsidiaries of commercial
and manufacturing companies. Many of these competitors enjoy the benefits of
advanced technology, fewer regulatory constraints and lower cost structures.
Many of the newer competitors offer one-stop financial services to their
customers that may include services that banks may not have been able or legally
permitted to offer their customers in the past. The primary factors in competing
for loans are interest rates charged and overall services provided to borrowers.
The primary factors in competing for deposits are interest rates paid on
deposits, account liquidity, convenience and hours of office locations as well
as having trained and competent staff to deliver services.
EMPLOYEES
As of December 31, 2003, Park and its subsidiaries had 1,645
full-time equivalent employees.
SUPERVISION AND REGULATION
Park, as a bank holding company, is regulated extensively under federal
law. Park National Bank, Century National Bank, First-Knox National Bank, United
Bank, Second National Bank, Security National Bank and Citizens National Bank,
as national banks, and Richland Trust Company, as an Ohio state-chartered bank,
are regulated extensively under federal and state law. Guardian Finance, as an
Ohio state-chartered consumer finance company, is regulated under state law.
Park is subject to regulation, supervision and examination by the Federal
Reserve Board. Park National Bank, Century National Bank, First-Knox National
Bank, United Bank, Second National Bank, Security National Bank and Citizens
National Bank are subject to regulation by the Office of the Comptroller of the
Currency ("OCC") and the Federal Deposit Insurance Corporation ("FDIC").
Richland Trust Company is subject to regulation, supervision and examination by
the Ohio Division
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of Financial Institutions and the FDIC and Guardian Finance is subject to
regulation, supervision and examination by the Ohio Division of Financial
Institutions.
The following information describes selected federal and Ohio statutory
and regulatory provisions and is qualified in its entirety by reference to the
full text of the particular statutory or regulatory provisions. These statutes
and regulations are continually under review by Congress and state legislatures
and federal and state regulatory agencies. A change in statutes, regulations or
regulatory policies applicable to Park and its subsidiaries could have a
material effect on their respective businesses.
REGULATION OF BANK HOLDING COMPANIES
Park is registered with the Federal Reserve Board as a bank holding
company under the Bank Holding Company Act. Bank holding companies and their
activities are subject to extensive regulation by the Federal Reserve Board.
Bank holding companies are required to file reports with the Federal Reserve
Board and such additional information as the Federal Reserve Board may require,
and are subject to regular examinations by the Federal Reserve Board.
The Federal Reserve Board also has extensive enforcement authority over
bank holding companies, including, among other things, the ability to:
- assess civil money penalties;
- issue cease and desist or removal orders; and
- require that a bank holding company divest subsidiaries
(including its banking subsidiaries).
In general, the Federal Reserve Board may initiate enforcement actions for
violations of laws and regulations and unsafe or unsound practices.
Under Federal Reserve Board policy, a bank holding company is expected
to act as a source of financial strength to each subsidiary bank and to commit
resources to support those subsidiary banks. Under this policy, the Federal
Reserve Board may require a bank holding company to contribute additional
capital to an undercapitalized subsidiary bank.
The Bank Holding Company Act requires the prior approval of the Federal
Reserve Board in any case where a bank holding company proposes to:
- acquire direct or indirect ownership or control of more than
5% of the voting shares of any bank that is not already
majority-owned by it;
- acquire all or substantially all of the assets of another bank
or bank holding company; or
- merge or consolidate with any other bank holding company.
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Section 4 of the Bank Holding Company Act also prohibits a bank holding
company, with certain exceptions, from acquiring more than 5% of the voting
shares of any company that is not a bank and from engaging in any business other
than banking or managing or controlling banks. The primary exception allows the
ownership of shares by a bank holding company in any company the activities of
which the Federal Reserve Board had determined as of November 19, 1999 to be so
closely related to banking as to be a proper incident thereto. The Federal
Reserve Board by regulation had determined that the following activities, among
others, were so closely related to banking:
- operating a savings association, mortgage company, finance
company, credit card company or factoring company;
- performing certain data processing operations;
- providing investment and financial advice; and
- acting as an insurance agent for certain types of
credit-related insurance.
Subsidiary banks of a bank holding company are subject to certain
restrictions imposed by the Federal Reserve Act on the maintenance of reserves
against deposits, extensions of credit to the bank holding company or any of its
subsidiaries, investments in the stock or other securities of the bank holding
company or its subsidiaries and the taking of such stock or securities as
collateral for loans to any borrower. Further, a bank holding company and its
subsidiaries are prohibited from engaging in certain tying arrangements in
connection with any extension of credit, lease or sale of property or furnishing
of any services. Various consumer laws and regulations also affect the
operations of these subsidiaries.
TRANSACTIONS WITH AFFILIATES, DIRECTORS, EXECUTIVE OFFICERS AND SHAREHOLDERS
On October 31, 2002, the Federal Reserve Board approved Regulation W
which comprehensively implements Sections 23A and 23B of the Federal Reserve
Act. Sections 23A and 23B and Regulation W restrict transactions by banks and
their subsidiaries with their affiliates. An affiliate of a bank is any company
or entity which controls, is controlled by or is under common control with the
bank.
Generally, Sections 23A and 23B and Regulation W:
- limit the extent to which a bank or its subsidiaries may
engage in "covered transactions" with any one affiliate to an
amount equal to 10% of that bank's capital stock and surplus
(i.e., tangible capital);
- limit the extent to which a bank or its subsidiaries may
engage in "covered transactions" with all affiliates to 20% of
that bank's capital stock and surplus; and
- require that all such transactions be on terms substantially
the same, or at least as favorable to the bank or subsidiary,
as those provided to a non-affiliate.
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The term "covered transaction" includes the making of loans, purchase of assets,
issuance of a guarantee and other similar types of transactions.
Regulation W became effective on April 1, 2003. All Federal Reserve
Board interpretations regarding Sections 23A and 23B issued prior to April 1,
2003 have been rescinded.
A bank's authority to extend credit to executive officers, directors
and greater than 10% shareholders, as well as entities such persons control, is
subject to Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O
promulgated thereunder by the Federal Reserve Board. Among other things, these
loans must be made on terms substantially the same as those offered to
unaffiliated individuals or be made as part of a benefit or compensation program
and on terms widely available to employees, and must not involve a greater than
normal risk of repayment. In addition, the amount of loans a bank may make to
these persons is based, in part, on the bank's capital position, and specified
approval procedures must be followed in making loans which exceed specified
amounts.
REGULATION OF NATIONALLY-CHARTERED BANKS
As national banking associations, Park National Bank, Century National
Bank, First-Knox National Bank, United Bank, Second National Bank, Security
National Bank and Citizens National Bank are subject to regulation under the
National Banking Act and are periodically examined by the OCC. Furthermore, they
are subject, as member banks, to the rules and regulations of the Federal
Reserve Board. Each is an insured institution. Park National Bank, First-Knox
National Bank, United Bank, Second National Bank, Security National Bank and
Citizens National Bank are members of the Bank Insurance Fund, and Century
National Bank is a member of the Savings Association Insurance Fund. As a
result, they are subject to regulation by the FDIC. In addition, the
establishment of branches by each of Park National Bank, Century National Bank,
First-Knox National Bank, United Bank, Second National Bank, Security National
Bank and Citizens National Bank is subject to prior approval of the OCC.
REGULATION OF OHIO STATE-CHARTERED BANKS AND CONSUMER FINANCE COMPANIES
The FDIC is the primary federal regulator of Richland Trust Company.
The FDIC issues regulations governing the operations of Richland Trust Company
and examines Richland Trust Company. The FDIC may initiate enforcement actions
against insured depository institutions and persons affiliated with them for
violations of laws and regulations or for engaging in unsafe or unsound
practices. If the grounds provided by law exist, the FDIC may appoint a
conservator or a receiver for a nonmember bank.
As a bank incorporated under Ohio law, Richland Trust Company is
subject to regulation and supervision by the Ohio Division of Financial
Institutions. Division regulation and supervision affects the internal
organization of Richland Trust Company, as well as its savings, mortgage lending
and other investment activities. The Division of Financial Institutions may
initiate supervisory measures or formal enforcement actions against Ohio
commercial banks. Ultimately, if the grounds provided by law exist, the Division
of Financial Institutions may place an Ohio bank in conservatorship or
receivership. Whenever the Superintendent of Financial Institutions considers it
neces-
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sary or appropriate, the Superintendent may also examine the affairs of any
holding company or any affiliate or subsidiary of an Ohio bank.
As a consumer finance company incorporated under Ohio law, Guardian
Finance is also subject to regulation and supervision by the Division of
Financial Institutions. Division regulation and supervision affect the lending
activities of Guardian Finance. If grounds provided by law exist, the Division
of Financial Institutions may suspend or revoke an Ohio consumer finance
company's ability to make loans.
FEDERAL DEPOSIT INSURANCE CORPORATION
The FDIC is an independent federal agency which insures the deposits,
up to prescribed statutory limits, of federally-insured banks and savings
associations and safeguards the safety and soundness of the financial
institution industry. Two separate insurance funds are maintained and
administered by the FDIC. In general, banking institutions are members of the
"BIF", and savings associations are "SAIF" members. The insurance fund
conversion provisions do not prohibit a SAIF member from either converting to a
bank charter, as long as the resulting bank remains a SAIF member (as Century
National Bank did when it converted to a national bank charter in April 1998),
or merging with a bank, as long as the bank continues to pay the SAIF insurance
assessments on the deposits acquired. Exit and entrance fees must be paid to the
FDIC in full conversions.
INSURANCE PREMIUMS. Insurance premiums for SAIF and BIF members are
determined during each semi-annual assessment period based upon the members'
respective categorization as well capitalized, adequately capitalized or
undercapitalized. The FDIC assigns banks to one of three supervisory subgroups
within each capital group. The supervisory subgroup to which a bank is assigned
is based on a supervisory evaluation provided to the FDIC by the bank's primary
federal regulator and information which the FDIC determines to be relevant to
the bank's financial condition and the risk posed to the deposit insurance funds
(which may include, if applicable, information provided by the bank's state
supervisor). A bank's assessment rate depends on the capital category and
supervisory category to which it is assigned.
Since January 1, 2000, the BIF assessment rate and the SAIF assessment
rate have been the same. This assessment (which includes the FICO assessment)
currently ranges from 1.54 to 28.54 cents per $100 of domestic deposits. Each of
Park's banking subsidiaries is currently paying an assessment rate of 1.54 cents
per $100 of domestic deposits. An increase in this assessment rate could have a
material adverse effect on the earnings of the affected banks, depending on the
amount of the increase.
Insurance of deposits may be terminated by the FDIC upon a finding that
the insured institution has engaged in unsafe or unsound practices, is in an
unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, rule, order or condition enacted or imposed by the
bank's regulatory agency.
DEPOSITOR PREFERENCE. The Federal Deposit Insurance Act provides that,
in the event of the "liquidation or other resolution" of a bank, the claims of
depositors of the bank, including the claims of the FDIC as subrogee of insured
depositors, and certain claims for administrative expenses of the FDIC as a
receiver will have priority over other general unsecured claims against the
bank. If a
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bank fails, insured and uninsured depositors, along with the FDIC, will have
priority in payment ahead of unsecured, non-depositor creditors.
LIABILITY OF COMMONLY CONTROLLED BANKS. Under the Federal Deposit
Insurance Act, a bank is generally liable for any loss incurred, or reasonably
expected to be incurred, by the FDIC in connection with (a) the default of a
commonly controlled bank or (b) any assistance provided by the FDIC to a
commonly controlled bank in danger of default. "Default" means generally the
appointment of a conservator or receiver. "In danger of default" means generally
the existence of conditions indicating that a default is likely to occur in the
absence of regulatory assistance.
FEDERAL HOME LOAN BANK
The Federal Home Loan Banks ("FHLBs") provide credit to their members
in the form of advances. As a member of the FHLB of Cincinnati, each of the
banking subsidiaries of Park must maintain an investment in the capital stock of
the FHLB of Cincinnati. The minimum capital stock amount for a financial
institution is based on a membership requirement of 0.15% of the member's assets
plus 4% of mission asset activity which includes advances and the mortgage
purchase program. Each of Park's banking subsidiaries is in compliance with this
requirement, with the following investments in the capital stock of the FHLB of
Cincinnati at December 31, 2003: Park National Bank -- $7.5 million; Richland
Trust Company -- $4.2 million; Century National Bank -- $5.7 million; First-Knox
National Bank -- $10.4 million; United Bank -- $1.1 million; Second National
Bank -- $2.0 million; Security National Bank -- $7.3 million; and Citizens
National Bank -- $1.3 million.
Generally, the FHLBs are not permitted to make new advances to a member
without positive tangible capital. Upon the origination or renewal of a loan or
advance, each FHLB is required by law to obtain and maintain a security interest
in collateral in one or more of the following categories: fully-disbursed, whole
first mortgage loans on improved residential property not more than 90 days
delinquent or securities representing a whole interest in such loans; securities
issued, insured or guaranteed by the United States Government or an agency
thereof; deposits in any FHLB; or other real estate related collateral
acceptable to the applicable FHLB, if such collateral has a readily
ascertainable value and the FHLB can perfect its security interest in the
collateral.
Each FHLB is required to establish standards of community investment or
service that its members must maintain for continued access to long-term
advances from the FHLB. The standards take into account a member's performance
under the Community Reinvestment Act and its record of lending to first-time
home buyers. All long-term advances by each FHLB must be made only to provide
funds for residential housing finance.
REGULATORY CAPITAL
The Federal Reserve Board has adopted risk-based capital guidelines for
bank holding companies and state member banks. The OCC and the FDIC have adopted
risk-based capital guidelines for national banks and state non-member banks,
respectively. The guidelines provide a systematic analytical framework which
makes regulatory capital requirements sensitive to differences in risk profiles
among banking organizations, takes off-balance sheet exposures expressly into
account in evaluating capital adequacy, and minimizes disincentives to holding
-12-
liquid, low-risk assets. Capital levels as measured by these standards are also
used to categorize financial institutions for purposes of certain prompt
corrective action regulatory provisions.
The minimum guideline for the ratio of total capital to risk-weighted
assets (including certain off-balance sheet items such as standby letters of
credit) is 8%. This total risk-based capital ratio must be at least 10% for a
bank holding company to be considered well capitalized. At least half of the
minimum total risk-based capital ratio (4%) must be composed of common
shareholders' equity, minority interests in the equity accounts of consolidated
subsidiaries, a limited amount of qualifying preferred stock, less goodwill and
certain other deductions, including the unrealized net gains and losses, after
applicable taxes, on available-for-sale securities carried at fair value
(commonly known as "Tier 1" risk-based capital). To be considered well
capitalized, the Tier 1 risk-based capital ratio must be at least 6%. The
remainder of total risk-based capital (commonly known as "Tier 2" risk-based
capital) may consist of certain amounts of mandatory convertible debt,
subordinated debt, preferred stock not qualifying as Tier 1 capital, loan and
lease loss allowance and net unrealized gains, after applicable taxes, on
available-for-sale equity securities with readily determinable fair values, all
subject to limitations established by the guidelines.
Under the guidelines, capital is compared to the relative risk related
to the balance sheet. To derive the risk included in the balance sheet, one of
four risk weights (0%, 20%, 50% and 100%) is applied to different balance sheet
and off-balance sheet assets, primarily based on the relative credit risk of the
counterparty. For example, claims guaranteed by the U.S. government or one of
its agencies are risk-weighted at 0%. Off-balance sheet items, such as loan
commitments and derivative financial instruments, are also assigned one of the
above risk weights after calculating balance sheet equivalent amounts. For
example, certain loan commitments are converted at 50% and then risk-weighted at
100%. Derivative financial instruments are converted to balance sheet
equivalents based on notional values, replacement costs and remaining
contractual terms. The capital amounts and classification are also subject to
qualitative judgments by the regulators about components, risk weightings and
other factors.
The Federal Reserve Board has established minimum leverage ratio
guidelines for bank holding companies. The Federal Reserve Board guidelines
provide for a minimum ratio of Tier 1 risk-based capital to average assets
(excluding the loan and lease loss allowance, goodwill and certain other
intangibles), or "leverage ratio," of 3% for bank holding companies that meet
certain criteria, including having the highest regulatory rating, and 4% for all
other bank holding companies. To be considered well capitalized, the leverage
ratio for a bank holding company must be at least 5%. The guidelines further
provide that bank holding companies making acquisitions will be expected to
maintain strong capital positions substantially above the minimum levels. The
OCC and the FDIC have each also adopted minimum leverage ratio guidelines for
national banks and for state non-member banks, respectively.
The federal banking agencies have established a system of prompt
corrective action to resolve certain of the problems of undercapitalized
institutions. This system is based on five capital level categories for insured
depository institutions: "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized," and "critically
undercapitalized."
The federal banking agencies may (or in some cases must) take certain
supervisory actions depending upon a bank's capital level. For example, the
banking agencies must appoint a receiver
-13-
or conservator for a bank within 90 days after it becomes "critically
undercapitalized" unless the bank's primary regulator determines, with the
concurrence of the FDIC, that other action would better achieve regulatory
purposes. Banking operations otherwise may be significantly affected depending
on a bank's capital category. For example, a bank that is not "well capitalized"
generally is prohibited from accepting brokered deposits and offering interest
rates on deposits higher than the prevailing rate in its market, and the holding
company of any undercapitalized depository institution must guarantee, in part,
specific aspects of the bank's capital plan for the plan to be acceptable.
Park is in compliance with the current applicable capital guideline
ratios. As of December 31, 2003, Park had a total risk-based capital ratio of
17.78%, Tier 1 risk-based capital ratio of 16.51% and a leverage ratio of
10.79%. Park's management believes that each of its subsidiary banks is "well
capitalized" according to the guidelines described above. See Table 13 --
Capital Ratios included in the section of Park's 2003 Annual Report to
Shareholders captioned "Financial Review" on page 32, which is incorporated
herein by reference.
FISCAL AND MONETARY POLICIES
The business and earnings of Park are affected significantly by the
fiscal and monetary policies of the Federal Government and its agencies. Park is
particularly affected by the policies of the Federal Reserve Board, which
regulates the supply of money and credit in the United States. Among the
instruments of monetary policy available to the Federal Reserve Board are
- conducting open market operations in United States government
securities;
- changing the discount rates of borrowings of depository
institutions;
- imposing or changing reserve requirements against depository
institutions' deposits; and
- imposing or changing reserve requirements against certain
borrowing by banks and their affiliates.
These methods are used in varying degrees and combinations to directly affect
the availability of bank loans and deposits, as well as the interest rates
charged on loans and paid on deposits. For that reason alone, the policies of
the Federal Reserve Board have a material effect on the earnings of Park.
LIMITS ON DIVIDENDS AND OTHER PAYMENTS
There are various legal limitations on the extent to which subsidiary
banks may finance or otherwise supply funds to their parent holding companies.
Under federal and Ohio law, subsidiary banks may not, subject to certain limited
exceptions, make loans or extensions of credit to, or investments in the
securities of, their bank holding companies. Subsidiary banks are also subject
to collateral security requirements for any loans or extension of credit
permitted by such exceptions.
None of the Park banking subsidiaries may pay dividends out of its
surplus if, after paying these dividends, it would fail to meet the required
minimum levels under the risk-based capital
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guidelines and minimum leverage ratio requirements established by the OCC and
the FDIC. In addition, each bank must have the approval of its regulatory
authority if a dividend in any year would cause the total dividends for that
year to exceed the sum of the bank's current year's "net profits" (or net
income, less dividends declared during the period based on regulatory accounting
principles) and the retained net profits for the preceding two years, less
required transfers to surplus. Payment of dividends by any of the Park banking
subsidiaries may be restricted at any time at the discretion of its regulatory
authorities, if such regulatory authorities deem such dividends to constitute
unsafe and/or unsound banking practices or if necessary to maintain adequate
capital.
The ability of Park to obtain funds for the payment of dividends and
for other cash requirements is largely dependent on the amount of dividends
which may be declared by its subsidiary banks. However, the Federal Reserve
Board expects Park to serve as a source of strength to its subsidiary banks,
which may require Park to retain capital for further investment in its
subsidiary banks, rather than pay dividends to the Park shareholders. Payment of
dividends by one of Park's banking subsidiaries may be restricted at any time at
the discretion of its applicable regulatory authorities, if they deem such
dividends to constitute an unsafe and/or unsound banking practice. These
provisions could have the effect of limiting Park's ability to pay dividends on
its common shares.
GRAMM-LEACH-BLILEY ACT
Since March 11, 2000, the Gramm-Leach-Bliley Act (also known as the
Financial Services Modernization Act of 1999) has permitted bank holding
companies to become financial holding companies and thereby affiliate with
securities firms and insurance companies and engage in other activities that are
financial in nature. A bank holding company may become a financial holding
company if each of its subsidiary banks is well capitalized, is well managed,
and has at least a satisfactory rating under the Community Reinvestment Act, by
filing a declaration that the bank holding company wishes to become a financial
holding company. No regulatory approval will be required for a financial holding
company to acquire a company, other than a bank or savings association, engaged
in activities that are financial in nature or incidental to activities that are
financial in nature, as determined by the Federal Reserve Board.
The Gramm-Leach-Bliley Act defines "financial in nature" to include:
- securities underwriting, dealing and market making;
- sponsoring mutual funds and investment companies;
- insurance underwriting and agency;
- merchant banking activities; and
- activities that the Federal Reserve Board has determined to be
closely related to banking.
A national bank also may engage, subject to limitations on investment,
in activities that are financial in nature (other than insurance underwriting,
insurance company portfolio investment, real
-15-
estate development and real estate investment) through a financial subsidiary of
the bank, if the bank is well capitalized and well managed, has at least a
satisfactory Community Reinvestment Act rating and has received the prior
approval of the OCC to engage in such activities. Subsidiary banks of a
financial holding company or national banks with financial subsidiaries must
continue to be well capitalized and well managed in order to continue to engage
in activities that are financial in nature without regulatory actions or
restrictions, which could include divestiture of the financial-in-nature
subsidiary or subsidiaries. In addition, a financial holding company or a bank
may not acquire a company that is engaged in activities that are financial in
nature unless each of the subsidiary banks of the financial holding company or
the bank has a Community Reinvestment Act rating of satisfactory or better.
As of the date of this Annual Report on Form 10-K, Park had not elected
to become a financial holding company.
SARBANES-OXLEY ACT OF 2002 AND RELATED RULES AFFECTING CORPORATE GOVERNANCE
On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act
of 2002 (the "Sarbanes-Oxley Act"). The stated goals of the Sarbanes-Oxley Act
are to increase corporate responsibility, to provide for enhanced penalties for
accounting and auditing improprieties at publicly traded companies and to
protect investors by improving the accuracy and reliability of corporate
disclosures made pursuant to the securities laws. The changes are intended to
allow shareholders to monitor the performance of companies and directors more
easily and efficiently.
The Sarbanes-Oxley Act addresses, among other matters: increased
responsibilities of audit committees; corporate responsibility for financial
reports; a requirement that chief executive and chief financial officers forfeit
certain bonuses and profits if their companies issue an accounting restatement
as a result of misconduct; a prohibition on insider trading during pension fund
blackout periods; disclosure of off-balance sheet transactions; conditions for
the use of pro forma financial information; a prohibition on personal loans to
directors and executive officers (excluding loans by insured depository
institutions that are subject to the insider lending restrictions of the Federal
Reserve Act); expedited filing requirements for stock transaction reports by
officers and directors; the formation of the Public Company Accounting Oversight
Board; auditor independence; and various increased criminal penalties for
violations of securities laws.
As mandated by the Sarbanes-Oxley Act, the SEC has adopted rules and
regulations governing, among other issues, corporate governance, auditing and
accounting, executive compensation and enhanced and timely disclosure of
corporate information. The SEC has also approved corporate governance rules
proposed by the American Stock Exchange LLC. The Board of Directors of Park has
taken a series of actions to strengthen and improve Park's already strong
corporate governance practices in light of the new rules of the SEC and the
American Stock Exchange. At its January 20, 2004 meeting, the Board of Directors
created the Compensation Committee and the Nominating Committee, each of which
is comprised of directors who qualify as independent under the applicable
sections of the American Stock Exchange Company Guide. At that meeting, the
Board of Directors also adopted new charters for the Audit Committee, the
Compensation Committee and the Nominating Committee. On July 21, 2003, the Board
of Directors adopted a new Code of Business Conduct and Ethics governing the
directors, officers and associates of Park and its affiliates. In addition, Park
has implemented a "whistleblower" hotline
-16-
called the "PRK Improvement Line." Calls that relate to accounting, internal
accounting controls or auditing matters or that relate to possible wrongdoing by
associates of Park or one of its affiliates can be made anonymously through this
hotline. The calls are received by an independent third party service and
forwarded directly to the Chair of the Audit Committee and the Head of Internal
Audit. The PRK Improvement Line number is 1-800-418-6423, Ext. PRK (775).
The text of each of the Audit Committee Charter, the Nominating
Committee Charter, the Compensation Committee Charter and the Code of Business
Conduct and Ethics is posted on the "Corporate Governance" page of Park's
website located at www.parknationalcorp.com. Interested persons may also obtain
copies of these documents, without charge, by writing to the Secretary of Park
at Park National Corporation, 50 North Third Street, P.O. Box 3500, Newark, Ohio
43058-3500, Attention: David L. Trautman, Secretary.
STATISTICAL DISCLOSURE
The statistical disclosure relating to Park and its subsidiaries
required under the SEC's Industry Guide 3, "Statistical Disclosure by Bank
Holding Companies," is included in the section of Park's 2003 Annual Report to
Shareholders captioned "Financial Review," on pages 25 through 33 and in Note 1
of the Notes to Consolidated Financial Statements located on pages 40 and 41 of
Park's 2003 Annual Report to Shareholders, Note 4 of the Notes to Consolidated
Financial Statements located on pages 42 and 43 of Park's 2003 Annual Report to
Shareholders and Note 9 of the Notes to Consolidated Financial Statements
located on page 44 of Park's 2003 Annual Report to Shareholders. This
statistical disclosure is incorporated herein by reference.
EFFECT OF ENVIRONMENTAL REGULATION
Compliance with federal, state and local provisions regulating the
discharge of materials into the environment, or otherwise relating to the
protection of the environment, has not had a material effect upon the capital
expenditures, earnings or competitive position of Park and its subsidiaries.
Park believes the nature of the operations of its subsidiaries has little, if
any, environmental impact. Park, therefore, anticipates no material capital
expenditures for environmental control facilities for its current fiscal year or
for the foreseeable future.
Park believes its primary exposure to environmental risk is through the
lending activities of its subsidiaries. In cases where management believes
environmental risk potentially exists, Park's subsidiaries mitigate their
environmental risk exposures by requiring environmental site assessments at the
time of loan origination to confirm collateral quality as to commercial real
estate parcels posing higher than normal potential for environmental impact, as
determined by reference to present and past uses of the subject property and
adjacent sites. Environmental assessments are typically required prior to any
foreclosure activity involving non-residential real estate collateral.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Certain statements contained in this Annual Report on Form 10-K which
are not statements of historical fact constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995,
including, without limitation, the statements specifically identified as
forward-looking statements within this document. In addition, certain statements
in future filings by Park with the SEC, in press releases, and in oral and
written statements made by or with the approval of Park which are not statements
of historical fact constitute forward-looking statements
-17-
within the meaning of the Private Securities Litigation Reform Act. Examples of
forward-looking statements include: (i) projections of income or expense,
earnings or loss per share, the payment or non-payment of dividends, capital
structure and other financial items; (ii) statements of plans and objectives of
Park or its management or Board of Directors, including those relating to
products or services; (iii) statements of future economic performance; and (iv)
statements of assumptions underlying such statements. Words such as "believes",
"anticipates", "expects", "intends", "targeted", and similar expressions are
intended to identify forward-looking statements but are not the exclusive means
of identifying those statements.
Forward-looking statements involve risks and uncertainties. Actual
results may differ materially from those predicted by the forward-looking
statements because of various factors and possible events, including the
following:
- the costs of providing compensation and benefits to Park's
employees increase;
- competitive pressures among depository institutions increase
significantly;
- consolidation in the financial services industry continues;
- general economic conditions, either national or in the
geographic areas in which Park's subsidiaries do business, are
less favorable than expected;
- prepayment speeds, loan origination and sale volumes,
charge-offs and loan loss provisions are less favorable than
expected;
- technological changes are more difficult or expensive to
implement than anticipated;
- changes in the interest rate environment reduce interest
margins;
- legislative or regulatory changes adversely affect financial
services companies;
- there are adverse changes in the securities markets; and
- Park suffers the loss of key personnel.
There is also the risk that Park's management or Board of Directors
incorrectly analyzes these risks and forces, or that the strategies Park
develops to address them are unsuccessful.
Forward-looking statements speak only as of the date on which they are
made, and, except as may be required by law, Park undertakes no obligation to
update any forward-looking statement to reflect events or circumstances after
the date on which the statement is made to reflect unanticipated events. All
subsequent written and oral forward-looking statements attributable to Park or
any person acting on our behalf are qualified by the cautionary statements in
this section.
ITEM 2. PROPERTIES.
Park's principal executive offices are located at 50 North Third
Street, Newark, Ohio 43055. Park does not lease or own any physical property,
real or personal.
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Park National Bank, in addition to having six financial service offices
(including the main office) and the operations center in Newark, has financial
service offices in Granville, Heath (two offices), Hebron, Johnstown,
Kirkersville, Pataskala and Utica in Licking County, financial service offices
in Canal Winchester, Columbus, Gahanna and Worthington in Franklin County, a
financial service office in Cincinnati in Hamilton County, a financial service
office in Dayton in Montgomery County and financial service offices in
Baltimore, Pickerington and Lancaster (eight offices) in Fairfield County. The
financial service offices in Canal Winchester and Fairfield County comprise the
Fairfield National Division. Park National Bank also operates ten off-site
automatic teller machines, three of which are operated by the Fairfield National
Division.
Richland Trust Company, in addition to eight financial service offices
in Mansfield (including the main office), has financial service offices in
Butler, Lexington, Ontario and Shelby (two offices) in Richland County. Richland
Trust Company also operates four off-site automatic teller machines.
Century National Bank, in addition to having five financial service
offices (including the main office) and a mortgage lending office in Zanesville,
has financial service offices in New Concord and Dresden in Muskingum County, a
financial service office in New Lexington in Perry County, a financial service
office in Logan in Hocking County, a financial service office in Athens in
Athens County and a financial service office in Coshocton in Coshocton County.
Century National Bank also operates five off-site automatic teller machines.
First-Knox National Bank, in addition to having three financial service
offices (including the main office) and the operations center in Mount Vernon,
has financial service offices in Ashland, Loudonville and Perrysville in Ashland
County, two financial service offices in Millersburg in Holmes County, financial
service offices in Centerburg, Danville and Fredericktown in Knox County, two
financial service offices in Mount Gilead in Morrow County and a financial
service office in Bellville in Richland County. The financial service offices in
Ashland County comprise the Farmers and Savings Division. First-Knox National
Bank also operates 11 off-site automatic teller machines, one of which is
operated by the Farmers and Savings Division.
United Bank, in addition to its main office in Bucyrus, has financial
service offices in Crestline and Galion in Crawford County and financial service
offices in Caledonia, Marion, Prospect and Waldo in Marion County. United Bank
also operates two off-site automatic teller machines.
Second National Bank, in addition to having five financial service
offices (including the main office) in Greenville, has two financial service
offices in Arcanum and a financial service office in Versailles in Darke County
and a financial service office in Fort Recovery in Mercer County. Second
National Bank also operates two off-site automatic teller machines.
Security National Bank, in addition to having five financial service
offices (including the main office) in Springfield, has financial service
offices in Enon, Medway, New Carlisle (two offices) and South Charleston in
Clark County, two financial service offices in Jamestown and two financial
services offices in Xenia in Greene County, a financial service office in
Jeffersonville in Fayette County and financial service offices in Piqua (three
offices including an administrative building), Tipp City and Troy in Miami
County. The financial service offices in Miami County
-19-
comprise the Unity National Division. Security National Bank also operates five
off-site automatic teller machines.
Citizens National Bank, in addition to having two financial service
offices (including the main office) in Urbana, has a financial service office in
Mechanicsburg and North Lewisburg in Champaign County and a financial service
office in Plain City in Madison County. Citizens National Bank also operates two
off-site automatic teller machines.
Guardian Finance, in addition to having its main office in Hilliard,
has a financial service office in Columbus in Franklin County, a financial
service office in Mansfield in Richland County where it leases space from
Richland Trust Company, a financial service office in Lancaster in Fairfield
County where it leases space from the Fairfield National Division of Park
National Bank, a financial service office in Heath in Licking County, a
financial service office in Springfield in Clark County, and a financial service
office in Delaware in Delaware County.
ITEM 3. LEGAL PROCEEDINGS.
There are no pending legal proceedings to which Park or any of its
subsidiaries is a party or to which any of their property is subject, except
routine legal proceedings to which Park's banking subsidiaries are parties
incidental to their respective banking businesses. Park considers none of those
proceedings to be material.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of the security holders of
Park during the fourth quarter of the fiscal year ended December 31, 2003.
SUPPLEMENTAL ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table lists the names and ages of the executive officers
of Park as of February 23, 2004, the positions presently held by those
individuals with Park and its principal subsidiaries and their individual
business experience during the past five years.
Positions Held with Park and its
Name Age Principal Subsidiaries and Principal Occupation
---- --- -----------------------------------------------
William T. McConnell 70 Chairman of the Board since 1994, Chief Executive Officer from 1986 to
1999, President from 1986 to 1994 and a Director since 1986, of Park;
Chairman of the Board since 1993, Chief Executive Officer from 1983 to
1999, President from 1979 to 1993, and a Director since 1977, of Park
National Bank
-20-
Positions Held with Park and its
Name Age Principal Subsidiaries and Principal Occupation
---- --- -----------------------------------------------
Harry O. Egger 64 Vice Chairman of the Board and a Director of Park since March 2001;
Chairman of the Board since 1997, Chief Executive Officer from 1997 to
March 2003, President from 1981 to 1997, and a Director since 1977, of
Security National Bank; Chairman of the Board, President and Chief
Executive Officer of Security Banc Corporation from 1997 until its merger
with Park in March 2001
C. Daniel DeLawder 54 Chief Executive Officer since 1999, President since 1994 and a Director
since 1994, of Park; Chief Executive Officer since January 1999, President
since 1993, Executive Vice President from 1992 to 1993, and a Director
since 1992, of Park National Bank; Chairman of Advisory Board since 1989
and President from 1985 to 1992 of the Fairfield National Division of Park
National Bank; a Director of Richland Trust Company since 1997; a Director
of Second National Bank since 2000
David L. Trautman 42 Secretary of Park since July 2002; Executive Vice President since February
2002, Vice President from 1993 to May 1997, and a Director since February
2002, of Park National Bank; Chairman of the Board since March 2001,
President and Chief Executive from May 1997 to February 2002, and a
Director since May 1997, of First-Knox National Bank; a Director of United
Bank, N.A. since 2000
John W. Kozak 48 Chief Financial Officer of Park since 1998 (became an executive officer of
Park on July 22, 2002); Senior Vice President and Chief Financial Officer
since 1998, and Vice President from 1991 to 1998, of Park National Bank;
Chief Financial Officer from 1980 to 1991 and a Director since 1988 of
Century National Bank
The executive officers serve at the pleasure of the Board of Directors
of Park. Until his retirement on March 31, 2003, Mr. Egger was party to an
employment agreement with Security National Bank.
-21-
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES.
The information called for in this Item 5 by Items 201(a) through (c)
of SEC Regulation S-K is incorporated herein by reference to page 33 of Park's
2003 Annual Report to Shareholders.
On November 5, 2003, Park issued (a) 180 common shares to each of nine
non-employee directors of Park (for an aggregate of 1,620 common shares), (b) 60
common shares to each of 66 non-employee directors of one of Park's banking
subsidiaries or non-employee members of the advisory board of a division of a
banking subsidiary, who is not also a director of Park (for an aggregate of
3,960 common shares) and (c) 120 common shares to one individual who served as a
non-employee director of one of Park's banking subsidiaries and as a member of
the advisory board of a division of that banking subsidiary. These common shares
were issued in lieu of an annual cash retainer for serving as a director or
advisory board member. The common shares had a market value of $118.00 per
share. Park issued the common shares in reliance upon the exemptions from
registration provided by Sections 4(2) and 4(6) under the Securities Act of 1933
based upon the limited number of individuals to whom the common shares were
"sold" and the status of each individual as a director of Park or of one of its
subsidiaries.
The SEC recently amended Item 5 of Form 10-K to add the requirement
that a registrant furnish the information required by Item 703 of SEC Regulation
S-K for any repurchase of shares made in a month within the fourth quarter of
the fiscal year covered by the Form 10-K. Although compliance with this new
disclosure requirement is not required in a Form 10-K for a fiscal year ending
prior to March 15, 2004, Park has included the following table in order to
provide information regarding Park's purchases of its common shares during the
three months ended December 31, 2003:
Maximum Number (or
Total Number of Approximate Dollar Value)
Common Shares of Common Shares that
Total Number of Purchased as Part of May Yet be Purchased
Common Shares Average Price Paid Publicly Announced under the Plans or
Period Purchased per Common Share Plans or Programs Programs (1)
------ --------- ------------------ -------------------- -------------------------
October 1 through 31, 2003 -- -- -- 900,827
November 1 through 30, 2003 -- -- -- 900,827
-22-
Maximum Number (or
Total Number of Approximate Dollar Value)
Common Shares of Common Shares that
Total Number of Purchased as Part of May Yet be Purchased
Common Shares Average Price Paid Publicly Announced under the Plans or
Period Purchased per Common Share Plans or Programs Programs (1)
------ --------- ------------------ -------------------- -------------------------
December 1 through 31, 2003 15,300(2) $106.64 15,300(2) 885,527
--------- ------- --------- -------
Total 15,300(2) $106.64 15,300(2) 885,527
(1) The number shown represents, as of the end of each period, the maximum
aggregate number of common shares that may yet be purchased as part of
Park's publicly announced repurchase program to fund the Park National
Corporation 1995 Incentive Stock Option Plan as well as Park's publicly
announced stock repurchase program.
On November 18, 2002, Park announced a stock repurchase program under
which up to an aggregate of 500,000 common shares may be repurchased
from time to time over the three-year period ending November 17, 2005.
These repurchases may be made in open market transactions or through
privately negotiated transactions. As of December 31, 2003, Park had
the authority to still repurchase an aggregate of 488,300 common shares
under this stock repurchase program.
The Park National Corporation 1995 Incentive Stock Option Plan (the
"1995 Plan") was initially approved by the shareholders of Park on
April 7, 1995 and 200,000 common shares were authorized for delivery
upon exercise of incentive stuck options granted under the 1995 Plan.
The shareholders approved an amendment to the 1995 Plan on April 20,
1998 to increase the number of common shares of Park available for
delivery under the 1995 Plan to 735,000 common shares (after adjustment
for stock dividends) and another amendment on April 16, 2001 to
increase the number of common shares available for delivery under the
1995 Plan to 1,200,000 common shares. Pursuant to the terms of the 1995
Plan, all of the common shares delivered upon exercise of incentive
stock options granted under the 1995 Plan are to be treasury shares. No
incentive stock options may be granted under the 1995 Plan after
January 16, 2005. As of December 31, 2003, incentive stock options
covering 590,568 common shares were outstanding and 471,937 common
shares are available for future grants. With 665,278 common shares held
as treasury shares for purposes of the 1995 Plan at December 31, 2003,
an additional 397,227 common shares remained authorized for repurchase
for purposes of funding the 1995 Plan.
(2) All of the common shares reported were purchased in the open market for
the purpose of providing common shares for the 1995 Stock Option Plan,
as previously publicly announced.
-23-
ITEM 6. SELECTED FINANCIAL DATA.
The information called for in this Item 6 is incorporated herein by
reference to page 33 of Park's 2003 Annual Report to Shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
The information called for in this Item 7 is incorporated herein by
reference to pages 25 through 33 of Park's 2003 Annual Report to Shareholders.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As noted on page 41 of Park's 2003 Annual Report to Shareholders, Park
and its subsidiaries did not use any derivative instruments in 2003 or 2002. The
discussion of interest rate sensitivity included on pages 30 through 32 of
Park's 2003 Annual Report to Shareholders is incorporated herein by reference.
In addition, the discussion of Park's commitments, contingent liabilities and
off-balance sheet arrangements included on page 32 of Park's 2003 Annual Report
to Shareholders is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Consolidated Balance Sheets of Park and its subsidiaries at
December 31, 2003 and 2002, the related Consolidated Statements of Income, of
Changes in Stockholders' Equity and of Cash Flows for each of the fiscal years
in the three-year period ended December 31, 2003, the related Notes to
Consolidated Financial Statements, and the Report of Independent Auditors
appearing on pages 34 through 51 of Park's 2003 Annual Report to Shareholders,
are incorporated herein by reference. Quarterly Financial Data set forth on page
33 of Park's 2003 Annual Report to Shareholders are also incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
No response required.
ITEM 9A. CONTROLS AND PROCEDURES.
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
With the participation of the President and Chief Executive Officer
(the principal executive officer) and the Chief Financial Officer (the principal
financial officer) of Park, Park's management has evaluated the effectiveness of
Park's disclosure controls and procedures (as defined in Rule 13a-15(e) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the
end of the period covered by this Annual Report on Form 10-K.
-24-
Based on that evaluation, Park's President and Chief Executive Officer and Chief
Financial Officer have concluded that:
- information required to be disclosed by Park in this Annual
Report on Form 10-K would be accumulated and communicated to
Park's management, including its principal executive officer
and principal financial officer, as appropriate to allow
timely decisions regarding required disclosure;
- information required to be disclosed by Park in this Annual
Report on Form 10-K would be recorded, processed, summarized
and reported within the time periods specified in the SEC's
rules and forms; and
- Park's disclosure controls and procedures are effective as of
the end of the period covered by this Annual Report on Form
10-K to ensure that material information relating to Park and
its consolidated subsidiaries is made known to them,
particularly during the period for which the periodic reports
of Park, including this Annual Report on Form 10-K, are being
prepared.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in Park's internal control over financial
reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred
during Park's fiscal quarter ended December 31, 2003, that have materially
affected, or are reasonably likely to materially affect, Park's internal control
over financial reporting.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information called for in this Item 10 is incorporated herein by
reference to Park's definitive Proxy Statement relating to the Annual Meeting of
Shareholders to be held on April 19, 2004 ("Park's 2004 Proxy Statement"), under
the captions "PRINCIPAL SHAREHOLDERS OF PARK - Section 16(a) Beneficial
Ownership Reporting Compliance" and "ELECTION OF DIRECTORS." In addition,
certain information concerning the executive officers of Park is set forth in
the portion of Part I of this Annual Report on Form 10-K entitled "SUPPLEMENTAL
ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT." Also, information concerning Park's
Audit Committee and the determination by Park's Board of Directors that at least
one member of the Audit Committee qualifies as an "audit committee financial
expert" is incorporated herein by reference to Park's 2004 Proxy Statement,
under the caption "ELECTION OF DIRECTORS - Committees of the Board - Audit
Committee." Information concerning the nomination process for director
candidates is incorporated herein by reference to Park's 2004 Proxy Statement,
under the captions "ELECTION OF DIRECTORS-Committees of the Board-Nominating
Committee" and "ELECTION OF DIRECTORS-Nominating Procedures."
-25-
Park's Board of Directors has adopted charters for each of the Audit
Committee, the Nominating Committee and the Compensation Committee.
In accordance with the requirements of Section 807 of the American
Stock Exchange LLC Company Guide, the Board of Directors of Park has adopted a
Code of Business Conduct and Ethics covering the directors, officers and
associates of Park and its affiliates, including Park's President and Chief
Executive Officer (the principal executive officer) and Chief Financial Officer
(the principal financial officer and principal accounting officer). Park intends
to disclose the following on the "Corporate Governance" page of its website
located at www.parknationalcorp.com within five business days following their
occurrence: (A) the nature of any amendment to a provision of its Code of
Business Conduct and Ethics that (i) applies to Park's principal executive
officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions, (ii) relates to any element
of the code of ethics definition enumerated in Item 406(b) of SEC Regulation
S-K, and (iii) is not a technical, administrative or other non-substantive
amendment; and (B) a description of any waiver (including the nature of the
waiver, the name of the person to whom the waiver was granted and the date of
the waiver), including an implicit waiver, from a provision of the Code of
Business Conduct and Ethics granted to Park's principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions that relates to one or more of the items
set forth in Item 406(b) of SEC Regulation S-K.
The text of each of the Code of Business Conduct and Ethics, the Audit
Committee Charter, the Nominating Committee Charter and the Compensation
Committee Charter is posted on the "Corporate Governance" page of Park's website
located at www.parknationalcorp.com. Interested persons may also obtain copies
of the Code of Business Conduct and Ethics, the Audit Committee Charter, the
Nominating Committee Charter and the Compensation Committee Charter, without
charge, by writing to the Secretary of Park at Park National Corporation, 50
North Third Street, P.O. Box 3500, Newark, Ohio 43058-3500, Attention: David L.
Trautman, Secretary. In addition, a copy of Park's Code of Business Conduct and
Ethics is attached to this Annual Report on Form 10-K as Exhibit 14.
ITEM 11. EXECUTIVE COMPENSATION.
The information called for in this Item 11 is incorporated herein by
reference to Park's 2004 Proxy Statement, under the captions "ELECTION OF
DIRECTORS - Compensation of Directors", "COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION", and "COMPENSATION OF EXECUTIVE OFFICERS." Such
incorporation by reference shall not be deemed to specifically incorporate by
reference the information referred to in Item 402(a)(8) of SEC Regulation S-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
The information called for in this Item 12 regarding the security
ownership of certain beneficial owners and management is incorporated herein by
reference to Park's 2004 Proxy Statement, under the caption "PRINCIPAL
SHAREHOLDERS OF PARK."
-26-
The information called for in this Item 12 regarding securities
authorized for issuance under equity compensation plans is incorporated herein
by reference to Park's 2004 Proxy Statement, under the caption "COMPENSATION OF
EXECUTIVE OFFICERS - Equity Compensation Plan Information."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information called for in this Item 13 is incorporated herein by
reference to Park's 2004 Proxy Statement, under the captions "ELECTION OF
DIRECTORS ," "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION,"
"COMPENSATION OF EXECUTIVE OFFICERS" and "TRANSACTIONS INVOLVING MANAGEMENT."
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICE.
The information called for in this Item 14 is incorporated herein by
reference to Park's 2004 Proxy Statement, under the captions "AUDIT COMMITTEE
MATTERS - Pre-Approval of Services Performed by Independent Auditors" and "AUDIT
COMMITTEE MATTERS - Fees of Independent Auditors."
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1) Financial Statements.
For a list of all financial statements included with this Annual Report
on Form 10-K, see "Index to Financial Statements" at page 31.
(a)(2) Financial Statement Schedules.
All schedules for which provision is made in the applicable accounting
regulations of the SEC are not required under the related instructions
or are inapplicable and have been omitted.
(a)(3) Exhibits.
Exhibits filed with this Annual Report on Form 10-K are attached
hereto. For a list of such exhibits, see the Index to Exhibits
beginning at page E-1.
(b) Reports on Form 8-K.
On October 14, 2003, Park National Corporation furnished information
regarding the press release announcing earnings for the three and nine
months ended September 30, 2003, for Park National Corporation under
Item 12 in a Form 8-K. The press release was included as Exhibit 99.
-27-
(c) Exhibits.
Exhibits filed with this Annual Report on Form 10-K are attached
hereto. For a list of such exhibits, see the Index to Exhibits
beginning at page E-1.
(d) Financial Statement Schedules.
None
-28-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: March 11, 2004 By: /s/ C. Daniel DeLawder
-------------------------------------------
C. Daniel DeLawder,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on the 11th day of March, 2004.
Name Capacity
---- --------
* Chairman of the Board and Director
- ------------------------------
William T. McConnell
/s/ C. Daniel DeLawder President, Chief Executive Officer and Director
- ------------------------------
C. Daniel DeLawder
* Vice Chairman of the Board and Director
- ------------------------------
Harry O. Egger
/s/ John W. Kozak Chief Financial Officer and Principal Accounting Officer
- ------------------------------
John W. Kozak
* Director
- ------------------------------
Maureen Buchwald
* Director
- ------------------------------
James J. Cullers
* Director
- ------------------------------
R. William Geyer
* Director
- ------------------------------
Howard E. LeFevre
-29-
Name Capacity
---- --------
* Director
- ------------------------------
John J. O'Neill
* Director
- ------------------------------
William A. Phillips
* Director
- ------------------------------
J. Gilbert Reese
* Director
- ------------------------------
Rick R. Taylor
* Director
- ------------------------------
Leon Zazworsky
- ----------------
(*) By C. Daniel DeLawder pursuant to Powers of Attorney executed by the
directors and executive officers listed above, which Powers of Attorney
have been filed with the Securities and Exchange Commission.
/s/ C. Daniel DeLawder
- ------------------------------
C. Daniel DeLawder
President and Chief Executive Officer
-30-
PARK NATIONAL CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 2003
INDEX TO FINANCIAL STATEMENTS
PAGE(S) IN
2003 ANNUAL
REPORT TO
DESCRIPTION SHAREHOLDERS
----------- ------------
Consolidated Balance Sheets at December 31, 2003 and 2002........................................ 34-35
Consolidated Statements of Income for the years ended December 31,
2003, 2002 and 2001......................................................................... 36-37
Consolidated Statements of Changes in Stockholders' Equity for the
years ended December 31, 2003, 2002 and 2001............................................... 38
Consolidated Statements of Cash Flows for the years ended
December 31, 2003, 2002 and 2001............................................................ 39
Notes to Consolidated Financial Statements....................................................... 40-50
Report of Independent Auditors (Ernst & Young LLP)............................................... 51
-31-
PARK NATIONAL CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 2003
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
3.1 Articles of Incorporation of Park National Corporation
("Park") as filed with the Ohio Secretary of State on March
24, 1992 (incorporated herein by reference to Exhibit 3(a) to
Park's Form 8-B, filed on May 20, 1992 (File No. 0-18772)
("Park's Form 8-B"))
3.2 Certificate of Amendment to the Articles of Incorporation of Park
as filed with the Ohio Secretary of State on May 6, 1993
(incorporated herein by reference to Exhibit 3(b) to Park's Annual
Report on Form 10-K for the fiscal year ended December 31, 1993
(File No. 0-18772))
3.3 Certificate of Amendment to the Articles of Incorporation of
Park as filed with the Ohio Secretary of State on April 16,
1996 (incorporated herein by reference to Exhibit 3(a) to
Park's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1996 (File No. 1-13006))
3.4 Certificate of Amendment by Shareholders to the Articles of
Incorporation of Park as filed with the Ohio Secretary of
State on April 22, 1997 (incorporated herein by reference to
Exhibit 3(a)(1) to Park's Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 1997 (File No.
1-13006)("Park's June 1997 Form 10-Q"))
3.5 Articles of Incorporation of Park (reflecting amendments
through April 22, 1997) [for SEC reporting compliance purposes
only - not filed with Ohio Secretary of State] (incorporated
herein by reference to Exhibit 3(a)(2) to Park's June 1997
Form 10-Q)
3.6 Regulations of Park (incorporated herein by reference to
Exhibit 3(b) to Park's Form 8-B)
3.7 Certified Resolution regarding adoption of amendment to
Subsection 2.02(A) of the Regulations of Park by Shareholders
on April 22, 1997 (incorporated herein by reference to Exhibit
3(b)(1) to Park's June 1997 Form 10-Q)
3.8 Regulations of Park (reflecting amendments through April 22,
1997) [for SEC reporting compliance purposes only]
(incorporated herein by reference to Exhibit 3(b)(2) to Park's
June 1997 Form 10-Q)
4.1 Agreement to furnish instruments defining rights of holders of
long-term debt **
E-1
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
*10.1 Summary of Incentive Compensation Plan of Park National
Corporation**
*10.2 Split-Dollar Agreement, dated May 17, 1993, between William T.
McConnell and The Park National Bank (incorporated herein by
reference to Exhibit 10(f) to Park's Annual Report on Form
10-K for the fiscal year ended December 31, 1993 (File No.
0-18772)); and Schedule A to Exhibit 10.2 identifying other
identical Split-Dollar Agreements between subsidiaries of Park
and executive officers of such subsidiaries who are directors
or executive officers of Park **
*10.3 Split-Dollar Agreement, dated September 3, 1993, between Leon
Zazworsky and The Park National Bank and Schedule A to Exhibit
10.3 identifying other identical Split-Dollar Agreements
between directors of Park and The Park National Bank, The
Richland Trust Company, Century National Bank or The
First-Knox National Bank of Mount Vernon as identified in such
Schedule A **
*10.4 Park National Corporation 1995 Incentive Stock Option Plan
(reflects amendments and share dividends through April 16,
2001) (incorporated herein by reference to Exhibit 10 to
Park's Registration Statement on Form S-8 filed April 23, 2001
(Registration No. 333-59360))
*10.5 Form of Stock Option Agreement executed in connection with the
grant of options under the Park National Corporation 1995
Incentive Stock Option Plan, as amended (incorporated herein
by reference to Exhibit 10(i) to Park's Annual Report on Form
10-K for the fiscal year ended December 31, 1998 (File No.
1-13006))
*10.6 Description of Park National Corporation Supplemental
Executive Retirement Plan **
*10.7 Security Banc Corporation 1987 Stock Option Plan, which was
assumed by Park (incorporated herein by reference to Exhibit
10(a) to Park's Registration Statement on Form S-8 filed April
23, 2001 (Registration No. 333-59378))
*10.8 Security Banc Corporation 1995 Stock Option Plan, which was
assumed by Park (incorporated herein by reference to Exhibit
10(b) to Park's Registration Statement on Form S-8 filed April
23, 2001 (Registration No. 333-59378))
*10.9 Security Banc Corporation 1998 Stock Option Plan, which was
assumed by Park (incorporated herein by reference to Exhibit
10(c) to Park's Registration Statement on Form S-8 filed April
23, 2001 (Registration No. 333-59378))
E-2
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
*10.10 Employment Agreement, made and entered into as of December 22,
1999, and the Amendment thereto, dated March 23, 2001, between The
Security National Bank and Trust Co. (also known as Security
National Bank and Trust Co.) and Harry O. Egger (incorporated
herein by reference to Exhibit 10(e) to Park's Quarterly Report on
Form 10-Q for the fiscal quarter ended March 31, 2001 (File No.
1-13006))
*10.11 First-Knox Banc Corp. 1990 Non-Qualified Stock Option and
Stock Appreciation Rights Plan (incorporated herein by
reference to Exhibit A to Exhibit 23 to the Annual Report on
Form 10-K for the fiscal year ended December 31, 1989 of
First-Knox Banc Corp. (File No. 0-13161))
*10.12 Resolution Regarding Amendment to First-Knox Banc Corp. 1990
Non-Qualified Stock Option and Stock Appreciation Rights Plan on
May 14, 1996 (incorporated herein by reference to Exhibit 10(h) to
the Annual Report on Form 10-K for the fiscal year ended December
31, 1996 of First-Knox Banc Corp. (File No. 0-13161))
*10.13 Description of the Annual Retainer for Service During the Fiscal
Year Ended December 31, 2003 as a Member of the Board of Directors
of Park National Corporation or of a Bank Subsidiary of Park
National Corporation or as a Member of the Advisory Board for a
Division of a Bank Subsidiary**
13 2003 Annual Report to Shareholders (not deemed filed except
for portions thereof which are specifically incorporated by
reference in this Annual Report on Form 10-K) (incorporated by
reference to the financial statements portion of this Annual
Report on Form 10-K beginning at page 31) **
14 Code of Business Conduct and Ethics**
21 Subsidiaries of Park National Corporation**
23 Consent of Ernst & Young LLP **
24 Powers of Attorney of Directors and Executive Officers of Park
**
31.1 Rule 13a-14(a)/15d-14(a) Certification -- Principal Executive
Officer**
31.2 Rule 13a-14(a)/15d-14(a) Certification -- Principal Financial
Officer**
32.1 Section 1350 Certification -- Principal Executive Officer and
Principal Financial Officer**
- --------------------
* Management contract or compensatory plan or arrangement
** Filed herewith
E-3