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Item 5. Market for Registrant’s Common Equity

2022-02-24 compared with 2021-02-26 · 23 added, 76 removed, 37 unchanged (73% of the section changed)

7 unchanged sentences

Performance Graph

The following graph compares the cumulative total shareholder return performance for Park's Common Shares with the NYSE Composite Index, the SNL Bank and Thrift Index, and the SNL U.S.

Bank NYSE Index for the five-year period from December 31, 2015 to December 31, 2020.

The following graph compares the cumulative total shareholder return performance for Park's Common Shares with the NYSE Composite Index, the KBW NASDAQ Bank Index, and the S&P U.S.

SmallCap Banks Index for the five-year period from December 31, 2016 to December 31, 2021.

The NYSE Composite Index is a market capitalization-weighted index of the stocks listed on NYSE.

The SNL Bank and Thrift Index is comprised of all publicly-traded bank holding company and thrift holding company stocks researched by SNL Financial.

Bank NYSE index is comprised of all publicly-traded U.S.

bank holding company stocks listed on NYSE researched by SNL Financial.

The KBW NASDAQ Bank Index is comprised of 24 banking stocks representing the large U.S.

national money centers, regional banks and thrift institutions.

SmallCap Banks Index is a market capitalization-weighted index comprised of common stocks of U.S.

financial services companies that are principally engaged in the business of providing services and products, including banking, investment services, insurance and real estate finance services.

Prior to 2021, Park utilized the NYSE Composite Index, SNL Bank and Thrift Index and SNL U.S.

Bank NYSE Index in comparing market performance.

The SNL Bank and Thrift Index and the SNL U.S.

Bank NYSE Index were retired as of August 7, 2021 and Park selected the KBW NASDAQ Bank Index and the S&P U.S.

SmallCap Banks Index as replacement indices.

The performance of the SNL Bank and Thrift Index and SNL U.S.

Bank NYSE Index are included in the following graph for the 4-year period from December 31, 2016 to December 31, 2020 for comparative purposes.

The NYSE Financial Stocks Index includes the stocks of bank holding companies, thrift holding companies, finance companies and securities broker-dealers.

Park believes that the SNL Bank and Thrift Index and the SNL U.S.

Bank NYSE Index are more appropriate industry indices for Park to use for the five-year total shareholder return performance comparison.

Park believes that the KBW NASDAQ Bank Index and the S&P U.S.

SmallCap Banks Index are more appropriate industry indices for Park to use for the five-year total shareholder return performance comparison given the nature of the services provided by the financial services companies included in each.

Total Return Performance

Period Ending

Index 12/31/16 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21

1 unchanged sentence

NYSE Composite Index 100.00 118.73 108.10 135.68 145.16 175.17

SNL Bank and Thrift Index 100.00 126.25 148.45 123.32 166.67 144.61

Bank NYSE Index 100.00 123.93 150.02 124.34 171.26 146.30

KBW NASDAQ Bank Index 100.00 118.59 97.58 132.84 119.14 164.80

SmallCap Banks Index 100.00 104.33 87.06 109.22 99.19 138.09

SNL Bank and Thrift Index 100.00 117.59 97.68 132.02 114.55 N.A.

Bank NYSE Index 100.00 121.05 100.33 138.19 118.05 N.A.

The annual compound total return on Park’s Common Shares for the past five years was a positive 7.1%.

By comparison, the annual compound total returns for the past five years on the NYSE Composite Index, the SNL Bank and Thrift Index, and the SNL U.S.

Bank NYSE Index were a positive 10.2%, a positive 7.7% and a positive 7.9%, respectively.

By comparison, the annual compound total returns for the past five years on the NYSE Composite Index, the KBW NASDAQ Bank Index, and the S&P U.S.

SmallCap Banks Index were a positive 11.9%, a positive 10.5% and a positive 6.7%, respectively.

Issuer Purchases of Equity Securities

The following table provides information regarding purchases of Park's Common Shares made by or on behalf of Park or any "affiliated purchaser" as defined in Rule 10b-18(a)(3) under the Exchange Act during the fiscal quarter ended December 31, 2020, as well as the maximum number of Common Shares that may be purchased under Park’s previously announced stock repurchase authorizations to fund the 2017 Long-Term Incentive Plan for Employees (the "2017 Employees LTIP") and the 2017 Long-Term Incentive Plan for Non-Employee Directors (the "2017 Non-Employee Directors LTIP") and Park's previously announced 2017 and 2019 stock repurchase authorizations:

The following table provides information regarding purchases of Park's Common Shares made by or on behalf of Park or any "affiliated purchaser" as defined in Rule 10b-18(a)(3) under the Exchange Act during the fiscal quarter ended December 31, 2021, as well as the maximum number of Common Shares that may be purchased under Park’s previously announced stock repurchase authorizations to fund the 2017 Long-Term Incentive Plan for Employees (the "2017 Employees LTIP") and the

2017 Long-Term Incentive Plan for Non-Employee Directors (the "2017 Non-Employee Directors LTIP") and Park's previously announced 2017 and 2019 stock repurchase authorizations:

Period Total Number of

19 unchanged sentences

The January 23, 2017 stock repurchase authorization and the January 28, 2019 stock repurchase authorization are distinct from the stock repurchase authorizations to fund the 2017 Employees LTIP and the 2017 Non-Employee Directors LTIP.

SELECTED FINANCIAL DATA.

Consolidated Five-Year Selected Financial Data

December 31, (Dollars in thousands, except per share data) 2020 2019 (5)

Results of Operations:

Interest income $ 357,720 $ 360,500 $ 310,801 $ 286,424 $ 276,258

Interest expense 30,090 62,763 43,903 42,665 38,172

Net interest income 327,630 297,737 266,898 243,759 238,086

Provision for (recovery of) loan losses 12,054 6,171 7,945 8,557 (5,101)

Net interest income after provision for (recovery of)

loan losses 315,576 291,566 258,953 235,202 243,187

Non-interest income (1)

125,664 97,193 101,101 86,429 84,039

Non-interest expense (1)

286,595 263,988 228,755 203,162 204,331

Net income 127,923 102,700 110,387 84,242 86,135

Net income available to common shareholders 127,923 102,700 110,387 84,242 86,135

Per common share:

Net income per common share - basic $ 7.85 $ 6.33 $ 7.13 $ 5.51 $ 5.62

Net income per common share - diluted 7.80 6.29 7.07 5.47 5.59

Cash dividends declared 4.28 4.24 4.07 3.76 3.76

Average Balances:

Loans $ 6,990,458 $ 6,208,496 $ 5,460,664 $ 5,327,507 $ 5,122,862

Investment securities 1,147,118 1,360,540 1,461,068 1,557,156 1,504,667

Money market instruments and other 280,952 169,703 73,001 262,100 198,197

Total earning assets 8,418,528 7,738,739 6,994,733 7,146,763 6,825,726

Non-interest bearing deposits 2,394,717 1,875,628 1,661,481 1,544,986 1,414,885

Interest bearing deposits 5,238,147 5,029,854 4,473,467 4,348,110 4,165,919

Total deposits 7,632,864 6,905,482 6,134,948 5,893,096 5,580,804

Short-term borrowings $ 278,887 $ 215,900 $ 217,327 $ 229,193 $ 240,457

Long-term debt 215,645 340,664 424,178 788,491 776,465

Shareholders' equity 1,009,102 922,174 784,140 755,839 737,737

Common shareholders' equity 1,009,102 922,174 784,140 755,839 737,737

Total assets 9,241,633 8,474,029 7,629,269 7,741,043 7,416,519

Consolidated Five-Year Selected Financial Data - continued

2020 2019 (5)

Return on average assets (x)

1.38 % 1.21 % 1.45 % 1.09 % 1.16 %

Return on average common equity (x)

12.68 % 11.14 % 14.08 % 11.15 % 11.68 %

Net interest margin (2)

3.93 % 3.89 % 3.84 % 3.48 % 3.52 %

Efficiency ratio (1)(2)

62.83 % 66.35 % 61.68 % 60.62 % 62.96 %

Dividend payout ratio (3)

55.19 % 67.66 % 57.57 % 68.71 % 67.29 %

Average shareholders' equity to average total assets 10.92 % 10.88 % 10.28 % 9.76 % 9.95 %

Common equity tier 1 capital ratio 11.72 % 12.11 % 13.04 % 12.94 % 12.83 %

Leverage ratio 9.63 % 9.64 % 10.04 % 9.44 % 9.56 %

Tier 1 capital ratio 11.92 % 12.33 % 13.30 % 13.22 % 13.11 %

Total risk-based capital ratio 15.43 % 13.19 % 14.19 % 14.14 % 14.63 %

(1) During the first quarter of 2018, Park adopted ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost , pursuant to which an employer is required to report the service cost component in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period.

All other components of net benefit cost are required to be presented in the income statement separately from the service cost.

For Park, this resulted in an increase in non-interest income and an offsetting increase in non-interest expense with no change to net income as well as an increase to the efficiency ratio.

This ASU is required to be applied retrospectively to all periods presented and therefore non-interest income, non-interest expense and the efficiency ratio for the annual periods ended December 31, 2017 and December 31, 2016 shown in the table above have been adjusted from the figures presented in Park’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

(2) Calculated utilizing fully taxable equivalent net interest income which includes the effects of taxable equivalent adjustments using a 21% federal corporate income tax rate for 2020, 2019 and 2018 and a 35% federal corporate income tax rate for 2017 and 2016.

The taxable equivalent adjustments were $2.9 million for 2020, $3.0 million for 2019, $2.9 million for 2018, $5.0 million for 2017, and $2.4 million for 2016

(3) Cash dividends paid divided by net income.

(4) NewDominion Bank was acquired July 1, 2018.

Financial data for 2018 reflects the six months that the NewDominion business was a division of Park National Bank.

(5) Carolina Alliance was acquired April 1, 2019.

Financial data for 2019 reflects the nine months that the Carolina Alliance business was a

division of Park National Bank.

(x) Reported measure uses net income available to common shareholders

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity