Park National Corp. of Newark, Ohio, is eyeing an expansion into neighboring Kentucky.
Seeking to boost its lackluster loan and deposit growth, the $5.7 billion-asset multibank holding company has applied for a Kentucky charter so that it can start opening branches there.
It is planning to open a loan production office in Florence by May 1. The office, which would be Park National’s first of any kind outside Ohio, would focus primarily on commercial lending.
Doug Compton, the regional president of Park National’s newly created southwestern Ohio and northern Kentucky division, said his company already has loan customers in northeastern Kentucky and wants to tap into the region’s growth.
The region is home to a large Toyota Motor Corp. plant, as well as the Cincinnati/Northern Kentucky International Airport, and Mr. Compton said Park is eager to lend to the small businesses that serve and supply them.
“Commercially, we’re looking primarily at the family-owned companies; the target market for us would be companies [with] under $20 million in annual sales,” he said.
Fred A. Cummings, an analyst with KeyBanc Capital Markets of Cleveland, said that Park National needs to consider expanding into new markets, because loan and deposit growth in its current markets has been slow.
Last year its net loans and leases increased 7%, to $3.3 billion, and deposits rose 2%, to $3.8 billion, according to the Federal Deposit Insurance Corp.
In 2004 net loans and leases grew 14.3% over the previous year and total deposits grew 8.3%.
Mr. Cummings said it “wouldn’t surprise” him if Park bought a bank in Kentucky to increase its assets and deposits there more quickly.
David Coyle, the director of the Kentucky Division of Financial Institutions, said state law requires out-of-state banks that want branches there to either buy a Kentucky bank or apply for a state charter.
Mr. Compton said that for now the company is focused on getting its charter application approved and is not likely to buy a bank in Kentucky anytime soon.
In January of last year Park National bought the $210 million-asset First Clermont Bank of Milford in Ohio. Like other banks Park National has acquired, First Clermont was supposed to operate under its own name, but it did not take long for company officials to recognize that lenders from First Clermont and Park’s lead subsidiary, Park National Bank, were bumping into each other as they competed for loans, Mr. Compton said.
“As time went on, we had customers start to ask us why we were operating as two separate entities in the same market,” he said. “We had Park National officers and First Clermont commercial lending officers calling on the same accounts.”
Park National reorganized itself by merging First Clermont’s branches with Park National’s Cincinnati, Dayton, and West Chester offices to form the new division.
The company probably will want to reorganize the division before acquiring again, Mr. Compton said.
The division will improve the company’s growth, because it eliminated internal competition, and Park National is adding services to the First Clermont branches, he said.
Previously, customers coming to First Clermont for treasury management and trust services were referred to Park National offices, but now those services are available at all First Clermont branches.
Mr. Compton said the reorganization should be complete July 1.
In the meantime, since taking his new position March 1, he has been meeting with First Clermont customers and the Clermont Chamber of Commerce to introduce himself and prepare people for the name change.
Before taking that job Mr. Compton was a Park National vice president and the head of its offices in Dayton, West Chester, and Cincinnati.
“We do have to introduce Park National to these folks and let them know the First Clermont community bank structure is not going to change,” he said. The new division will have its own board.
