Park National Corp. in Newark, Ohio, will take a higher-than-expected provision for loan losses in the second quarter due to continued credit problems at its Florida banking subsidiary.
The $7.3 billion-asset company said in a Securities and Exchange Commission filing Thursday that its second-quarter loss provision will be in the range of $21 million to $26 million, compared to $13 million analysts had projected. For the full year, Park National said its loss provision would be in the range of $56 million to $66 million, compared to analysts' estimates of $47 million to $57 million.
Park National said that the increase would primarily be recorded at its Vision Bank subsidiary, which it acquired in 2007 and has been hammered by defaults on real estate loans. Vision, based in Panama City, Fla., has lost more than $200 million over the last four years, according to Federal Deposit Insurance Corp. data, and at March 31 more than 26% of its loans were more than 90 days past due.
Analysts at Sandler O'Neill and Partners estimate that the additional provision for loan losses will cost Park National between 45 cents and 50 cents per share in the second quarter. In the first quarter, the company reported a profit of $21 million, or $1.29 share.
Park National also disclosed this week that examiners have taken issue with the accounting treatment of roughly $18 million in impaired loans. Regulators had recommended that the company charge off the loans, but Park National said it is continuing to discuss the accounting treatment with its regulators.
Sandler O'Neill said that if the loans are ultimately charged off the hit to Park National's earnings would be about 76 cents per share.