Park National Corp. in Newark, Ohio, warned in a regulatory filing Wednesday that its 2011 loan-loss provision will be higher than anticipated after regulators said its Vision Bank unit improperly accounted for guarantor-support loans.

Park National forecast a 2011 provision of $71 million to $75 million, compared to its previous estimate of $68 million. The filing said that increase is due to a "combination of various factors," including the "typical quarterly procedures for impaired commercial loans" and the issue with guarantor loans.

Vision Bank received a letter from the Federal Deposit Insurance Corp. on Friday, which said the unit's allowance for loan losses was underfunded by $19 million because of its accounting treatment of guarantor support loans. As a result, Park National expects to conduct a writedown of a guarantor support. Additionally, the company will amend certain regulatory filings to reflect an additional $19 million for the loan allowance.

The $7.1 billion-asset Park National last month reached an agreement to sell 17 Vision Bank branches to Home BancShares Inc. in Conway, Ark. in a purchase-and-assumption agreement. Park National bought Vision Bank in 2007 to expand into what had been the fast-growing market of the Gulf Coast of Florida and Alabama, but the deal quickly turned into a nightmare as the seller was plagued by nonperforming loans.

As a result of the FDIC ruling on the guarantor support loans, and the adjustments in its allowance and provision, Park National said in this week's filing that there will be an "impact" on its capital ratios, though they will remain above well-capitalized levels. Specific figures on the ratios will be disclosed in Park National's 2011 annual filing with the Securities and Exchange Commission.

In a piece of positive news, Park National said income from check card fees, automated teller machine fees, service charges on deposits and other categories classified by the bank as "other income" will be near the high end of a previously estimated range of $58 million to $62 million. Previous projections for net interest income and other expenses for the full-year 2011 remain unchanged.

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