What changed in this filing

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Item 1. Financial Statements

2023-08-01 compared with 2023-05-01 · 534 added, 259 removed, 1420 unchanged (36% of the section changed)

8 unchanged sentences

Investment securities:

Debt securities available-for-sale, at fair value (amortized cost of $ 1,819,950 and $ 1,854,852 at March 31, 2023 and December 31, 2022, respectively, and no allowance for credit losses at March 31, 2023 and at December 31, 2022)

Debt securities available-for-sale, at fair value (amortized cost of $ 1,782,922 and $ 1,854,852 at June 30, 2023 and December 31, 2022, respectively, and no allowance for credit losses at June 30, 2023 or at December 31, 2022)

1,668,864 1,733,696

12 unchanged sentences

Accrued interest receivable 36,416 34,704

Operating lease right-of-use asset 17,150 17,600

Operating lease ROU asset 16,609 17,600

Mortgage loan servicing rights 15,237 15,792

23 unchanged sentences

20,000,000 shares authorized;

17,623,104 shares issued at March 31, 2023 and at December 31, 2022)

17,623,104 common shares issued at June 30, 2023 and at December 31, 2022)

460,578 462,404

Retained earnings 876,830 847,235

Treasury shares ( 1,449,037 shares at March 31, 2023 and 1,359,521 shares at December 31, 2022)

Treasury shares ( 1,469,679 common shares at June 30, 2023 and 1,359,521 common shares at December 31, 2022)

( 151,865 ) ( 138,019 )

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Interest and dividend income:

23 unchanged sentences

ATM fees 553 583 1,086 1,115

Loss on the sale of OREO, net ( 9 ) —

Gain on the sale of OREO, net 12 4 3 4

OREO valuation markup — — 15 30

(Loss) gain on equity securities, net ( 405 ) 2,353

Gain (loss) on equity securities, net 25 709 ( 380 ) 3,062

Other components of net periodic pension benefit income 1,893 3,027 3,786 6,054

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended June 30,

2023 2022 2023 2022

Other expense:

27 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Net income $ 31,584 $ 34,324 $ 65,317 $ 73,199

Other comprehensive income (loss), net of tax:

Unrealized net holding gain (loss) on debt securities available-for-sale, net of income tax effect of $ 3,285 and $( 14,823 ) for the three months ended March 31, 2023 and 2022, respectively

Other comprehensive (loss) income, net of tax:

Unrealized net holding (loss) gain on debt securities available-for-sale, net of income tax effect of $( 1,795 ) and $( 11,963 ) for the three months ended June 30, 2023 and 2022, respectively, and $ 1,490 and $( 26,786 ) for the six months ended June 30, 2023 and 2022, respectively.

( 6,753 ) ( 45,002 ) 5,608 ( 100,765 )

Unrealized gain on cash flow hedging derivatives, net of income tax effect of $ 37 for the three months ended March 31, 2022

Other comprehensive income (loss) $ 12,361 $ ( 55,624 )

Reclassification adjustment for losses included in net income on cash flow hedging derivatives, net of income tax effect of $ 14 for both the three months and six months ended June 30, 2022.

Unrealized gain on cash flow hedging derivatives, net of income tax effect of $ 4 for the three months ended June 30, 2022 and $ 41 for the six months ended June 30, 2022.

Other comprehensive (loss) income $ ( 6,753 ) $ ( 44,935 ) $ 5,608 $ ( 100,559 )

Comprehensive income (loss) $ 24,831 $ ( 10,611 ) $ 70,925 $ ( 27,360 )

19 unchanged sentences

Balance at March 31, 2023 $ — $ 459,431 $ 862,518 $ ( 149,763 ) $ ( 90,033 )

Net income 31,584

Other comprehensive loss net of tax ( 6,753 )

Dividends on common shares at $ 1.05 per common share

Issuance of 4,358 common shares under share-based compensation awards, net of 1,992 common shares withheld to pay employee income taxes

( 602 ) ( 85 ) $ 450

Share-based compensation expense 1,749

Repurchase of 25,000 common shares to be held as treasury shares

Balance at June 30, 2023 $ — $ 460,578 $ 876,830 $ ( 151,865 ) $ ( 96,786 )

PARK NATIONAL CORPORATION AND SUBSIDIARIES

Consolidated Condensed Statements of Changes in Shareholders' Equity (Unaudited) (Continued)

(in thousands, except common share and per common share data)

Shares Common

13 unchanged sentences

Balance at March 31, 2022 $ — $ 459,271 $ 797,033 $ ( 139,469 ) $ ( 40,469 )

Net income 34,324

Other comprehensive loss, net of tax ( 44,935 )

Dividends on common shares at $ 1.04 per common share

Share-based compensation expense 1,374

Balance at June 30, 2022 $ — $ 460,645 $ 814,241 $ ( 139,469 ) $ ( 85,404 )

SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

2 unchanged sentences

(in thousands)

Three Months Ended

Six Months Ended

Operating activities:

11 unchanged sentences

Share-based compensation expense 4,085 3,355

Loss on sale of OREO, net 9 —

Gain on sale of OREO, net ( 3 ) ( 4 )

OREO valuation markup ( 15 ) ( 30 )

2 unchanged sentences

Changes in assets and liabilities:

Decrease in prepaid dealer premiums 601 94

(Increase) decrease in other assets ( 2,116 ) 1,253

Increase in prepaid dealer premiums ( 244 ) ( 4,795 )

Increase in other assets ( 7,312 ) ( 2,178 )

Decrease in other liabilities ( 12,261 ) ( 13,802 )

7 unchanged sentences

Equity securities ( 2,195 ) ( 2,630 )

Net (increase) decrease in other investments ( 183 ) 124

Net loan paydowns, portfolio loans 50,208 52,474

FHLB stock ( 1,407 ) —

Net decrease in other investments 1,114 339

Net loan originations, portfolio loans ( 62,384 ) ( 90,952 )

Investment in qualified affordable housing tax credits ( 5,576 ) ( 7,252 )

Proceeds from the sale of OREO 57 67

Life insurance death benefits 229 367

Bank owned life insurance death benefits 1,104 7,525

Purchases of bank owned life insurance ( 2,500 ) ( 7,500 )

Purchases of premises and equipment ( 4,047 ) ( 3,740 )

Net cash provided by (used in) investing activities $ 78,668 $ ( 39,974 )

Net cash used in investing activities $ ( 2,021 ) $ ( 318,361 )

PARK NATIONAL CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(in thousands)

Three Months Ended

Six Months Ended

Financing activities:

Net increase in deposits $ 28,392 $ 257,927

Net decrease (increase) in off-balance sheet deposits 31,337 ( 166,134 )

Net (decrease) increase in deposits $ ( 70,909 ) $ 219,870

Net decrease in off-balance sheet deposits 195,170 173,261

Net decrease in short-term borrowings ( 83,428 ) ( 66,987 )

9 unchanged sentences

Interest $ 41,243 $ 7,904

Federal income tax 7,350 10,500

Non-cash items:

Loans transferred to OREO $ 1,051 $ 1,409

Right-of-use assets obtained in exchange for lease obligations 136 —

Transfers from loans to commercial loans held for sale — 6,321

ROU assets obtained in exchange for lease obligations 179 4,182

New commitments in other investment securities 2,495 15,000

6 unchanged sentences

In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the results of operations for the interim periods included herein have been made.

The results of operations for the three-month period ended March 31, 2023 are not necessarily indicative of the operating results to be anticipated for the year ending December 31, 2023.

The results of operations for the three-month and the six-month periods ended June 30, 2023 are not necessarily indicative of the operating results to be anticipated for the year ending December 31, 2023.

The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with the instructions for Quarterly Reports on Form 10-Q and, therefore, do not include all information and footnotes necessary for a fair presentation of the consolidated condensed balance sheets, consolidated condensed statements of income, consolidated condensed statements of comprehensive income (loss), consolidated condensed statements of changes in shareholders’ equity and consolidated condensed statements of cash flows in conformity with U.S.

16 unchanged sentences

Park recorded a $ 383,000 increase to the ACL, a $ 303,000 decrease to retained earnings and an $ 80,000 increase to deferred tax assets as of January 1, 2023 for the cumulative effect of adopting ASU 2022-02.

Additionally, as a result of the adoption of this ASU and elimination of the concept of TDRs, total nonperforming loans decreased by $ 20.1 million during the three months ended March 31, 2023 and individually evaluated loans decreased by $ 11.5 million.

Additionally, as a result of the adoption of this ASU and elimination of the concept of TDRs, total nonperforming loans decreased by $ 20.1 million effective January 1, 2023 and individually evaluated loans decreased by $ 11.5 million.

The adoption of ASU 2022-02 impacted disclosures in Note 5 - Loans and Note 6 - Allowance for Credit Losses.

2 unchanged sentences

Note 3 – Investment Securities

Investment securities at March 31, 2023 and at December 31, 2022, were as follows:

Investment securities at June 30, 2023 and at December 31, 2022, were as follows:

Debt securities AFS (In thousands) Amortized

Losses Fair Value

March 31, 2023:

June 30, 2023:

Obligations of U.S.

15 unchanged sentences

Total $ 1,854,852 $ 1,620 $ 122,776 $ 1,733,696

Investment securities in an unrealized loss position at March 31, 2023, were as follows:

Investment securities in an unrealized loss position at June 30, 2023, were as follows:

Unrealized loss position for less than 12 months Unrealized loss position for 12 months or longer Total

23 unchanged sentences

Total $ 1,177,420 $ 63,796 $ 413,070 $ 58,980 $ 1,590,490 $ 122,776

At March 31, 2023, Park’s debt securities portfolio consisted of $ 1.7 billion of securities, $ 1.4 billion of which were in an unrealized loss position with unrealized losses of $ 109.5 million.

At June 30, 2023, Park’s debt securities portfolio consisted of $ 1.7 billion of securities, $ 1.5 billion of which were in an unrealized loss position with unrealized losses of $ 115.8 million.

Of the $ 1.5 billion of securities in an unrealized loss position, $ 1.3 billion were in an unrealized loss position for 12 months or longer.

3 unchanged sentences

For non-agency debt securities, Park verified that the current credit ratings remain above investment grade.

Management periodically reviews the credit profile of each non-agency debt security and assesses whether any impairment to the contractually obligated cash flow is likely to occur.

Quarterly, management reviews the credit profile of each non-agency debt security and assesses whether any impairment to the contractually obligated cash flow is likely to occur.

Based on these reviews, management has concluded that the underlying creditworthiness for each security remains sufficient to maintain required payment obligations and, therefore, unrealized losses have not been recognized into net income.

Management does not intend to sell, and it is not more likely than not that management would be required to sell, the securities prior to their anticipated recovery in respect of the unrealized losses.

Management believes the value will recover as the securities approach maturity or market rates change.

There was no allowance for credit losses recorded for debt securities AFS at either March 31, 2023 or December 31, 2022.

Additionally, for the three months ended March 31, 2023 and 2022, there were no credit-related investment impairment losses recognized.

The amortized cost and estimated fair value of investments in debt securities AFS at March 31, 2023, are shown in the following table by contractual maturity, except for asset-backed securities and collateral loan obligations, which are shown as a single total, due to the unpredictability of the timing of principal repayments.

Management believes the value will recover as the securities approach maturity or market interest rates change.

There was no allowance for credit losses recorded for debt securities AFS at either June 30, 2023 or December 31, 2022.

Additionally, for the three months and the six months ended June 30, 2023 and 2022, there were no credit-related investment impairment losses recognized.

The amortized cost and estimated fair value of investments in debt securities AFS at June 30, 2023, are shown in the following table by contractual maturity, except for asset-backed securities and collateral loan obligations, which are shown as a single total, due to the unpredictability of the timing of principal repayments.

Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

14 unchanged sentences

Corporate debt securities

Due one through five years $ 912 $ 899 9.67 %

Due five through ten years 17,650 14,609 3.89 %

Total $ 18,562 $ 15,508 4.17 %

(1) The tax equivalent yield for certain obligations of state and political subdivisions includes the effect of a taxable equivalent adjustment using a 21 % federal corporate income tax rate.

There were no sales of debt securities AFS during the three-month periods ended March 31, 2023 or 2022.

Investment securities having a fair value of $ 778.7 million and $ 753.6 million at March 31, 2023 and December 31, 2022, respectively, were pledged to collateralize government and public fund deposits, to secure repurchase agreements sold and as collateral for FHLB advance borrowings.

There were no sales of debt securities AFS during the three-month or the six-month periods ended June 30, 2023 or 2022.

Investment securities having a fair value of $ 722.6 million and $ 753.6 million at June 30, 2023 and December 31, 2022, respectively, were pledged to collateralize government and public fund deposits, to secure repurchase agreements sold and as collateral for FHLB advance borrowings.

Note 4 – Other Investment Securities

4 unchanged sentences

Park's portfolio of equity investments in limited partnerships which provide mezzanine funding ("Partnership Investments") are valued using the NAV practical expedient in accordance with ASC 820.

The carrying amounts of other investment securities at March 31, 2023 and December 31, 2022 were as follows:

(In thousands) March 31, 2023 December 31, 2022

The carrying amounts of other investment securities at June 30, 2023 and December 31, 2022 were as follows:

(In thousands) June 30, 2023 December 31, 2022

FHLB stock $ 8,999 $ 11,197

6 unchanged sentences

(1) There have been no impairments or downward adjustments made to equity investments carried at modified cost.

An upward adjustment of $ 871,000 was recorded during the year ended December 31, 2022 as a result of observable price changes.

There were no adjustments recorded during the three months ended March 31, 2023 or March 31, 2022 as a result of observable price changes.

During the three months ended March 31, 2023, the FHLB repurchased 30,938 shares of FHLB stock with a book value of $ 3.1 million.

No shares of FHLB stock were repurchased during the the three months ended March 31, 2022.

No shares of FRB stock were purchased or sold during the three months ended March 31, 2023 or 2022.

During the three months ended March 31, 2023 and 2022, $( 27,000 ) and $( 92,000 ), respectively, of losses on equity investments carried at fair value were recorded within "(Loss) gain on equity securities, net" on the Consolidated Condensed Statements of Income.

During the three months ended March 31, 2023 and 2022, $( 378,000 ) and $ 2.4 million, respectively, of (losses) gains on equity investments carried at NAV were recorded within “(Loss) gain on equity securities, net” on the Consolidated Condensed Statements of Income.

An upward adjustment of $ 871,000 was recorded during the three months and the six months ended June 30, 2022 as a result of observable price changes.

There were no adjustments recorded during the three months or the six months ended June 30, 2023 as a result of observable price changes.

During the three months and the six months ended June 30, 2023, Park purchased 14,075 shares of FHLB stock with a book value of $ 1.4 million.

During the three months ended June 30, 2023, the FHLB repurchased 5,114 shares of FHLB stock with a book value of $ 511,000 .

During the six months ended June 30, 2023, the FHLB repurchased 36,052 shares of FHLB stock with a book value of $ 3.6 million.

No shares of FHLB stock were repurchased during the three months or the six months ended June 30, 2022.

No shares of FRB stock were purchased or sold during the three months or the six months ended June 30, 2023 or 2022.

During the three months ended June 30, 2023 and 2022, $( 112,000 ) and $ 619,000 , respectively, of (losses) gains on equity investments carried at fair value were recorded within "Gain (loss) on equity securities, net" on the Consolidated Condensed Statements of Income.

During the six months ended June 30, 2023 and 2022, $( 139,000 ) and $ 527,000 , respectively, of (losses) gains on equity investments carried at fair value were recorded within "Gain (loss) on equity securities, net" on the Consolidated Condensed Statements of Income.

During the three months ended June 30, 2023 and 2022, $ 137,000 and $ 90,000 , respectively, of gains on equity investments carried at NAV were recorded within “Gain (loss) on equity securities, net” on the Consolidated Condensed Statements of Income.

During the six months ended June 30, 2023 and 2022, $( 241,000 ) and $ 2.5 million, respectively, of (losses) gains on equity investments carried at NAV were recorded within “Gain (loss) on equity securities, net” on the Consolidated Condensed Statements of Income.

Note 5 – Loans

The composition of the loan portfolio at March 31, 2023 and December 31, 2022 was as follows:

March 31, 2023 December 31, 2022

The composition of the loan portfolio at June 30, 2023 and at December 31, 2022 was as follows:

June 30, 2023 December 31, 2022

(In thousands) Amortized Cost Amortized Cost

23 unchanged sentences

For its assistance in making and retaining these loans, Park received an aggregate of $ 33.1 million in fees from the SBA.

During the three months ended March 31, 2023 and March 31, 2022, $ 17,400 and $ 1.5 million, respectively, of PPP fee income was recognized within loan interest income.

Loans are shown net of deferred origination fees, costs and unearned income of $ 17.7 million at March 31, 2023, and of $ 18.2 million at December 31, 2022, which represented a net deferred income position in both years.

At March 31, 2023 and December 31, 2022, included in the net deferred origination fees, costs and unearned income were $ 51,000 and $ 68,000 , respectively, in net origination fees related to PPP loans.

At March 31, 2023 and December 31, 2022, loans included purchase accounting adjustments of $ 2.3 million and $ 2.5 million, respectively, which represented a net deferred income position at each date.

During the three months ended June 30, 2023 and June 30, 2022, $ 7,000 and $ 989,000 , respectively, of PPP fee income was recognized within loan interest income.

During the six months ended June 30, 2023 and June 30, 2022, $ 25,000 and $ 2.5 million, respectively, of PPP fee income was recognized within loan interest income.

Loans are shown net of deferred origination fees, costs and unearned income of $ 18.4 million at June 30, 2023, and of $ 18.2 million at December 31, 2022, which represented a net deferred income position at both dates.

At June 30, 2023 and December 31, 2022, loans included purchase accounting adjustments of $ 2.1 million and $ 2.5 million, respectively, which represented a net deferred income position at each date.

This fair market value purchase accounting adjustment is expected to be recognized into interest income on a level yield basis over the remaining expected life of the loans.

Overdrawn deposit accounts of $ 1.8 million and $ 1.5 million were reclassified to loans at March 31, 2023 and December 31, 2022, respectively.

Overdrawn deposit accounts of $ 1.6 million and $ 1.5 million were reclassified to loans at June 30, 2023 and at December 31, 2022, respectively.

Credit Quality

2 unchanged sentences

Prior to the adoption of ASU 2022-02, nonperforming loans consisted of nonaccrual loans, accruing TDRs and loans past due 90 days or more and still accruing.

The following table presents the amortized cost of nonaccrual loans and loans past due 90 days or more and still accruing, by class of loan, at March 31, 2023.

March 31, 2023

The following table presents the amortized cost of nonaccrual loans and loans past due 90 days or more and still accruing, by class of loan, at June 30, 2023.

June 30, 2023

(In thousands) Nonaccrual

42 unchanged sentences

Total loans $ 79,696 $ 20,134 $ 1,281 $ 101,111

The following tables provide additional detail on nonaccrual loans and the related ACL, by class of loan, at March 31, 2023 and December 31, 2022:

March 31, 2023

The following tables provide additional detail on nonaccrual loans and the related ACL, by class of loan, at June 30, 2023 and December 31, 2022:

June 30, 2023

(In thousands) Nonaccrual Loans With No ACL Nonaccrual Loans With an ACL Related ACL

37 unchanged sentences

Nonaccrual consumer loans are collectively evaluated based on similar risk characteristics.

The following tables provide the amortized cost basis of collateral-dependent loans by class of loan, as of March 31, 2023 and December 31, 2022:

March 31, 2023

The following tables provide the amortized cost basis of collateral-dependent loans by class of loan, as of June 30, 2023 and December 31, 2022:

June 30, 2023

(In thousands) Real Estate Business Assets Other Total

22 unchanged sentences

Interest income on nonaccrual loans individually evaluated for impairment is recognized on a cash basis only when Park expects to receive the entire recorded investment in the loans.

The following table presents interest income recognized on nonaccrual loans for the three-month periods ended March 31, 2023 and 2022:

The following table presents interest income recognized on nonaccrual loans for the three-month and the six-month periods ended June 30, 2023 and 2022:

Interest Income Recognized

(In thousands) Three Months Ended

March 31, 2023 Three Months Ended

March 31, 2022

June 30, 2023 Three Months Ended

June 30, 2022 Six Months Ended

June 30, 2023 Six Months Ended

June 30, 2022

Commercial, financial and agricultural:

5 unchanged sentences

Commercial 22 3 54 4

Retail — — — 4

Residential real estate:

1 unchanged sentence

Mortgage 53 36 102 69

HELOC 7 2 15 6

Installment 1 — 2 2

1 unchanged sentence

Check loans — — — —

Leases — 10 — 24

Total loans $ 1,063 $ 356 $ 1,963 $ 724

The following tables present the aging of the amortized cost in past due loans at March 31, 2023 and December 31, 2022 by class of loan:

March 31, 2023

The following tables present the aging of the amortized cost in past due loans at June 30, 2023 and December 31, 2022 by class of loan:

June 30, 2023

(In thousands) Accruing

53 unchanged sentences

Management utilizes past due information as a credit quality indicator across the loan portfolio.

Past due information at March 31, 2023 and December 31, 2022 is included in the previous tables.

Past due information at June 30, 2023 and December 31, 2022 is included in the previous tables.

The past due information is the primary credit quality indicator within the following classes of loans:

13 unchanged sentences

Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.

They are characterized by the distinct possibility that Park will sustain some loss if the deficiencies are not corrected.

They are characterized by the distinct possibility that Park will sustain some loss if the weaknesses are not corrected.

Commercial loans graded a 7 (doubtful) are shown as nonaccrual and Park generally charges these loans down to their fair value by taking a partial charge-off or recording a specific reserve.

4 unchanged sentences

Any commercial loan graded an 8 (loss) is completely charged off.

Based on the then most recent analysis performed, the risk category of commercial loans by class of loans as of March 31, 2023 and December 31, 2022 were as follows:

March 31, 2023 Term Loans Amortized Cost Basis by Origination Year

Based on the most recent analysis performed, the risk category of commercial loans by class of loans as of June 30, 2023 and as of December 31, 2022 were as follows:

June 30, 2023 Term Loans Amortized Cost Basis by Origination Year

(In thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total

6 unchanged sentences

Total $ 85,466 $ 178,432 $ 178,712 $ 128,830 $ 50,456 $ 77,826 $ 582,607 $ 1,282,329

Current period gross write offs $ — $ — $ — $ — $ — $ 52 $ — $ 52

Current period gross charge-offs $ — $ — $ — $ — $ — $ 51 $ — $ 51

Commercial, financial and agricultural:

4 unchanged sentences

Total $ — $ — $ 1,223 $ 1,855 $ — $ — $ — $ 3,078

Current period gross write offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Commercial real estate (1)

4 unchanged sentences

Total $ 128,701 $ 330,619 $ 357,426 $ 345,699 $ 217,106 $ 404,107 $ 15,782 $ 1,799,440

Current period gross write offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period gross charge-offs $ — $ — $ — $ — $ — $ 530 $ — $ 530

Construction real estate:

4 unchanged sentences

Total $ 46,397 $ 75,065 $ 8,990 $ 18,696 $ 1,992 $ 3,718 $ 5,486 $ 160,344

Current period gross write offs $ — $ — $ — $ — $ — $ — $ — $ —

March 31, 2023 Term Loans Amortized Cost Basis by Origination Year

Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

June 30, 2023 Term Loans Amortized Cost Basis by Origination Year

(In thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total

5 unchanged sentences

Total $ 59,866 $ 113,342 $ 113,401 $ 133,138 $ 53,565 $ 87,050 $ 20,083 $ 580,445

Current period gross write offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Pass $ 2,785 $ 6,216 $ 2,693 $ 2,513 $ 641 $ 1,129 $ — $ 15,977

3 unchanged sentences

Total $ 3,381 $ 7,005 $ 3,168 $ 2,855 $ 821 $ 1,150 $ — $ 18,380

Current period gross write offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Total Commercial Loans

4 unchanged sentences

Total $ 323,811 $ 704,463 $ 662,920 $ 631,073 $ 323,940 $ 573,851 $ 623,958 $ 3,844,016

Current period gross write offs $ — $ — $ — $ — $ — $ 52 $ — $ 52

Current period gross charge-offs $ — $ — $ — $ — $ — $ 581 $ — $ 581

(1) Included within each of commercial, financial and agricultural loans and commercial real estate loans is an immaterial amount of consumer loans that are not broken out by class.

52 unchanged sentences

Prior to the adoption of ASU 2022-02, nonperforming loans consisted of nonaccrual loans, accruing TDRs and loans past due 90 days or more and still accruing.

March 31, 2023 Term Loans Amortized Cost Basis by Origination Year

June 30, 2023 Term Loans Amortized Cost Basis by Origination Year

(In thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total

4 unchanged sentences

Total $ 1,596 $ — $ — $ — $ — $ — $ — $ 1,596

Current period gross write offs $ 297 $ — $ — $ — $ — $ — $ — $ 297

Current period gross charge-offs $ 486 $ — $ — $ — $ — $ — $ — $ 486

Construction Real Estate:

3 unchanged sentences

Total $ 16,380 $ 72,444 $ 13,107 $ 4,818 $ 4,029 $ 3,273 $ 311 $ 114,362

Current period gross write offs $ — $ — $ — $ — $ — $ — $ — $ —

March 31, 2023 Term Loans Amortized Cost Basis by Origination Year

Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

June 30, 2023 Term Loans Amortized Cost Basis by Origination Year

(In thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total

4 unchanged sentences

Total $ 84,568 $ 220,733 $ 228,071 $ 185,872 $ 86,608 $ 327,824 $ — $ 1,133,676

Current period gross write offs $ — $ — $ — $ — $ — $ 20 $ — $ 20

Current period gross charge-offs $ — $ — $ — $ — $ — $ 35 $ — $ 35

Residential Real Estate:

3 unchanged sentences

Total $ 12 $ 140 $ 299 $ 105 $ 278 $ 2,648 $ 164,458 $ 167,940

Current period gross write offs $ — $ — $ — $ — $ — $ 9 $ — $ 9

Current period gross charge-offs $ — $ — $ — $ — $ — $ 8 $ — $ 8

Residential Real Estate:

3 unchanged sentences

Total $ 674 $ 174 $ — $ 5 $ 185 $ 3,224 $ — $ 4,262

Current period gross write offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Performing $ 341,371 $ 716,915 $ 384,552 $ 267,877 $ 111,626 $ 98,446 $ 17,352 $ 1,938,139

1 unchanged sentence

Total $ 341,371 $ 717,341 $ 385,052 $ 268,231 $ 111,911 $ 98,890 $ 17,352 $ 1,940,148

Current period gross write offs $ 8 $ 600 $ 588 $ 314 $ 195 $ 142 $ — $ 1,847

Current period gross charge-offs $ 55 $ 1,449 $ 1,192 $ 466 $ 345 $ 280 $ — $ 3,787

Performing $ — $ — $ — $ 23 $ 2 $ 6 $ 28 $ 59

1 unchanged sentence

Total $ — $ — $ — $ 23 $ 8 $ 6 $ 28 $ 65

Current period gross write offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period gross charge-offs $ — $ — $ — $ — $ 2 $ — $ 1 $ 3

Performing $ — $ — $ — $ — $ — $ — $ 2,044 $ 2,044

2 unchanged sentences

Total $ — $ — $ — $ — $ — $ — $ 2,044 $ 2,044

Current period gross write offs $ — $ — $ — $ — $ — $ — $ 10 $ 10

Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ 20 $ 20

Total Consumer Loans

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Total $ 444,601 $ 1,010,832 $ 626,529 $ 459,054 $ 203,019 $ 435,865 $ 184,193 $ 3,364,093

Current period gross write offs $ 305 $ 600 $ 588 $ 314 $ 195 $ 171 $ 10 $ 2,183

Current period gross charge-offs $ 541 $ 1,449 $ 1,192 $ 466 $ 347 $ 323 $ 21 $ 4,339

December 31, 2022 Term Loans Amortized Cost Basis by Origination Year

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Loans and leases acquired with deteriorated credit quality (ASC 310-30) with a book value of $ 19.9 million were recorded at the initial fair value of $ 18.4 million.

Upon adoption of CECL on January 1, 2021, $ 52,000 of the credit discount on PCD loans was reclassified to the allowance for credit losses.

Upon Park's adoption of CECL on January 1, 2021, $ 52,000 of the credit discount on PCD loans was reclassified to the allowance for credit losses.

PCD loans are individually evaluated on a quarterly basis to determine if a specific reserve is necessary.

At March 31, 2023 and December 31, 2022, there was no allowance for credit losses on PCD loans.

The carrying amount of loans acquired with deteriorated credit quality at March 31, 2023 and December 31, 2022 was $ 4.6 million and $ 4.7 million, respectively.

At June 30, 2023 and at December 31, 2022, there was no allowance for credit losses on PCD loans.

The carrying amount of loans acquired with deteriorated credit quality at June 30, 2023 and at December 31, 2022 was $ 4.5 million and $ 4.7 million, respectively.

Modifications to Borrowers Experiencing Financial Difficulty

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This evaluation is performed in accordance with the Company’s internal underwriting policy.

Park modifies loans to borrowers experiencing financial difficulty by providing principal forgiveness, term extension, an other-than-insignificant payment delay or interest rate adjustments.

Park modifies loans to borrowers experiencing financial difficulty by providing principal forgiveness, a term extension, an other-than-insignificant payment delay or interest rate adjustments.

In some cases, Park provides multiple types of modifications on one loan.

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When principal forgiveness is provided, the amount of forgiveness is charged off against the allowance for credit losses.

The following table presents the amortized cost basis of loans at March 31, 2023 that were both experiencing financial difficulty and modified during the three months ended March 31, 2023 by class of and by type of modification.

The following tables present the amortized cost basis of loans at June 30, 2023 that were both experiencing financial difficulty and modified during the three months and the six months ended June 30, 2023 by class of and by type of modification.

The percentage of the amortized cost basis of loans that were modified to borrowers in financial difficulty as compared to the amortized cost basis of each class of financing receivable is also presented below.

March 31, 2023

(In thousands) Principal Forgiveness Payment Delay Term Extension Interest Rate Adjustment Combination Term Extension and Interest Rate Adjustment Total Percent of Total Class of Financing Receivable

Three Months Ended

June 30, 2023

(Dollars in thousands) Principal Forgiveness Payment Delay Term Extension Interest Rate Adjustment Combination Term Extension and Interest Rate Adjustment Other Total Percent of Total Class of Financing Receivable

Commercial, financial and agricultural:

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Total $ — $ — $ 1,353 $ 8 $ 10,374 $ 12 $ 11,747 0.16 %

Park has committed to lend additional amounts totaling $1.7 million to the borrowers included in the previous table as of March 31, 2023.

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the three months ended March 31, 2023:

Principal Forgiveness Weighted Average Interest Rate Adjustment Weighted Average Term Extension (years)

Six Months Ended

June 30, 2023

Commercial, financial and agricultural:

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Total $ — $ — $ 2,545 $ 22 $ 10,449 $ 12 $ 13,028 0.18 %

Park closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

There were no loans modified to borrowers experiencing financial difficulty that had been modified during the three months ended March 31, 2023 that were greater than 30 days past due as of March 31, 2023.

Additionally, there were no loans that had a payment default during the three months ended March 31, 2023 and were modified to borrowers experiencing financial difficulty in the three months prior to that default.

Upon the determination that a modified loan (or a portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off.

Park has committed to lend additional amounts totaling $ 1.7 million to the borrowers included in the previous two tables as of June 30, 2023.

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the three months and the six months ended June 30, 2023:

Three Months Ended

June 30, 2023

(Dollars in thousands) Principal Forgiveness Weighted Average Interest Rate Adjustment Weighted Average Term Extension (years)

Commercial, financial and agricultural:

Commercial, financial and agricultural $ — 0.82 % 0.6

PPP loans — — % 0.0

Overdrafts — — % 0.0

Commercial real estate — — % 3.6

Construction real estate:

Commercial — — % 1.0

Retail — — % 0.0

Residential real estate:

Commercial — — % 0.0

Mortgage — ( 1.88 ) % 0.4

HELOC — — % 0.0

Installment — ( 4.13 ) % 10.0

Consumer — ( 0.69 ) % 0.0

GFSC — — % 0.0

Check loans — — % 0.0

Leases — — % 0.0

Total $ — 0.77 % 0.8

Six Months Ended

June 30, 2023

(Dollars in thousands) Principal Forgiveness Weighted Average Interest Rate Adjustment Weighted Average Term Extension (years)

Commercial, financial and agricultural:

Commercial, financial and agricultural $ — 0.82 % 0.6

PPP loans — — % 0.0

Overdrafts — — % 0.0

Commercial real estate — — % 3.6

Construction real estate:

Commercial — — % 1.0

Retail — — % 0.0

Residential real estate:

Commercial — 1.43 % 0.4

Mortgage — ( 1.88 ) % 0.4

HELOC — — % 0.0

Installment — ( 1.72 ) % 10.0

Consumer — ( 2.92 ) % 0.0

GFSC — — % 0.0

Check loans — — % 0.0

Leases — — % 0.0

Total $ — 0.75 % 0.9

Park closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of Park's modification efforts.

There were no loans modified to borrowers experiencing financial difficulty that had been modified during the three months ended June 30, 2023 that were greater than 30 days past due as of June 30, 2023.

There were $ 150,000 of loans modified to borrowers experiencing financial difficulty that had been modified during the six months ended June 30, 2023 that were 30-59 days past due as of June 30, 2023 in the Residential Real Estate:

Commercial segment.

The following table presents the amortized cost basis of loans that had a payment default during the three months ended June 30, 2023 and were modified in the six months prior to that default to borrowers experiencing financial difficulty.

For this table, a loan is considered to be in default when it becomes 30 days contractually past due under the modified terms:

Three Months Ended

June 30, 2023

(In thousands) Term Extension Interest Rate Adjustment Combination Term Extension and Interest Rate Adjustment Other

Commercial, financial and agricultural:

Commercial, financial and agricultural $ — $ — $ — $ —

PPP loans — — — —

Overdrafts — — — —

Commercial real estate — — — —

Construction real estate:

Commercial — — — —

Retail — — — —

Residential real estate:

Commercial 150 — — —

Mortgage — — 135 —

HELOC — — — —

Installment — — — —

Consumer — 8 — —

Check loans — — — —

Leases — — — —

Total loans $ 150 $ 8 $ 135 $ —

The following table presents the amortized cost basis of loans that had a payment default during the six months ended June 30, 2023 and were modified in the six months prior to that default to borrowers experiencing financial difficulty.

For this table, a loan is considered to be in default when it becomes 30 days contractually past due under the modified terms:

Six Months Ended

June 30, 2023

(In thousands) Term Extension Interest Rate Adjustment Combination Term Extension and Interest Rate Adjustment Other

Commercial, financial and agricultural:

Commercial, financial and agricultural $ — $ — $ — $ —

PPP loans — — — —

Overdrafts — — — —

Commercial real estate — — — —

Construction real estate:

Commercial — — — —

Retail — — — —

Residential real estate:

Commercial 150 — — —

Mortgage — — 135 —

HELOC — — — —

Installment — — — —

Consumer — 8 — —

Check loans — — — —

Leases — — — —

Total loans $ 150 $ 8 $ 135 $ —

Upon the determination that a modified loan (or a portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is charged-off.

Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amounts.

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• Forecast model - For each portfolio segment, a LDA was performed in order to identify appropriate loss drivers and create a regression model for use in forecasting cash flows.

The LDA analysis utilized Park's own FFIEC Call Report data for the commercial, financial and agricultural and residential real estate portfolio segments.

Peer data was incorporated into the analysis for the commercial real estate, construction real estate, and consumer portfolio segments.

The LDA analysis utilized Park's own FFIEC Call Report data for the commercial, financial and agricultural and the residential real estate portfolio segments.

Peer data was incorporated into the analysis for the commercial real estate, the construction real estate, and the consumer portfolio segments.

Park updated the LDA in the fourth quarter of 2022 with data through September 30, 2022.

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Considering these factors, management determined it was appropriate to maintain the existing weighting, and weigh the "most likely" scenario 50% and the "moderate recession" scenario 50% at March 31, 2023 .

◦ A s of June 30, 2023, the "most likely" scenario forecasted Ohio unemployment between 4.01% and 4.62% during the next four quarters.

In determining the appropriate weighting of scenarios at June 30, 2023, management considered the range of forecasted unemployment as well as a number of economic indicators.

The continued elevated levels of inflation, volatile levels of consumer confidence, the likelihood of interest rates increasing, financial system stress and geopolitical conflict continued to cause uncertainty as to the overall economic environment.

Qualitative Considerations

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◦ Level of and trend in loan charge-offs and recoveries.

• Park's lending policies and procedures, including changes in lending strategies, underwriting standards and practices for collections, write-offs, and recoveries.

• Park's lending policies and procedures, including changes in lending strategies, underwriting standards and practices for collections, charge-offs, and recoveries.

• The quality of Park’s credit review function.

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• The extent that there is government assistance (stimulus).

As of March 31, 2023 and December 31, 2022, Park had $ 3.4 million and $ 4.2 million, respectively, of PPP loans which were included in the commercial, financial and agricultural portfolio segment.

As of June 30, 2023 and December 31, 2022, Park had $ 3.1 million and $ 4.2 million, respectively, of PPP loans which were included in the commercial, financial and agricultural portfolio segment.

These loans are guaranteed by the SBA and thus have not been reserved for using the same methodology as the rest of Park’s loan portfolio.

A 10 basis point reserve at both March 31, 2023 and December 31, 2022 was calculated for these loans to reflect minimal credit risk.

The activity in the ACL for the three-month periods ended March 31, 2023 and March 31, 2022 is summarized in the following tables:

A 10 basis point reserve at each of June 30, 2023 and December 31, 2022 was calculated for these loans to reflect minimal credit risk.

The activity in the ACL for the three-month and the six-month periods ended June 30, 2023 and June 30, 2022 is summarized in the following tables:

Three Months Ended

March 31, 2023

June 30, 2023

(In thousands) Commercial,

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Beginning balance $ 16,572 $ 17,946 $ 5,362 $ 17,889 $ 28,053 $ 124 $ 85,946

Impact of Adoption of ASU 2022-02 222 181 — ( 20 ) — — 383

Charge-offs 188 530 — 14 1,953 — 2,685

4 unchanged sentences

Three Months Ended

March 31, 2022

June 30, 2022

(In thousands) Commercial,

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Ending balance $ 12,747 $ 22,339 $ 4,391 $ 13,619 $ 28,149 $ 203 $ 81,448

Loans collectively evaluated for impairment in the following tables include all performing loans at March 31, 2023 and December 31, 2022, as well as nonperforming loans internally classified as consumer loans.

Six Months Ended

June 30, 2023

(In thousands) Commercial,

financial and

agricultural Commercial

real estate Construction

real estate Residential

real estate Consumer Leases Total

Beginning balance $ 16,987 $ 17,829 $ 5,550 $ 16,831 $ 28,021 $ 161 $ 85,379

Impact of Adoption of ASU 2022-02 222 181 — ( 20 ) — — 383

Charge-offs 537 530 — 43 3,810 — 4,920

Recoveries 130 232 508 471 2,348 — 3,689

Net charge-offs/(recoveries) $ 407 $ 298 $ ( 508 ) $ ( 428 ) $ 1,462 $ — $ 1,231

(Recovery of) provision for credit losses ( 524 ) 1,429 ( 1,172 ) 1,180 1,811 ( 49 ) 2,675

Ending balance $ 16,278 $ 19,141 $ 4,886 $ 18,419 $ 28,370 $ 112 $ 87,206

Six Months Ended

June 30, 2022

(In thousands) Commercial,

financial and

agricultural Commercial

real estate Construction

real estate Residential

real estate Consumer Leases Total

Beginning balance $ 14,025 $ 25,466 $ 5,758 $ 11,424 $ 26,286 $ 238 $ 83,197

Charge-offs 913 598 33 81 2,118 6 3,749

Recoveries 434 588 530 86 1,975 1 3,614

Net charge-offs/(recoveries) $ 479 $ 10 $ ( 497 ) $ ( 5 ) $ 143 $ 5 $ 135

(Recovery of) provision for credit losses ( 799 ) ( 3,117 ) ( 1,864 ) 2,190 2,006 ( 30 ) ( 1,614 )

Ending balance $ 12,747 $ 22,339 $ 4,391 $ 13,619 $ 28,149 $ 203 $ 81,448

Loans collectively evaluated for impairment in the following tables include all performing loans at June 30, 2023 and December 31, 2022, as well as nonperforming loans internally classified as consumer loans.

Nonperforming consumer loans are not typically individually evaluated for impairment, but receive a portion of the statistical allocation of the ACL.

Loans individually evaluated for impairment include all internally classified commercial nonaccrual loans at March 31, 2023 and all internally classified commercial nonaccrual loans and TDRs at December 31, 2022, which are individually evaluated for impairment in accordance with U.S.

Loans individually evaluated for impairment include all internally classified commercial nonaccrual loans at June 30, 2023 and all internally classified commercial nonaccrual loans and TDRs at December 31, 2022, which are individually evaluated for impairment in accordance with U.S.

GAAP (see Note 1 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements included in Park’s 2022 Form 10-K).

The composition of the ACL at March 31, 2023 and at December 31, 2022 was as follows:

March 31, 2023

The composition of the ACL at June 30, 2023 and at December 31, 2022 was as follows:

June 30, 2023

(In thousands) Commercial,

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Mortgage loans held for sale are carried at their fair value.

At both March 31, 2023 and December 31, 2022, Park had $ 2.1 million in mortgage loans held for sale.

At June 30, 2023 and December 31, 2022, respectively, Park had $ 3.5 million and $ 2.1 million in mortgage loans held for sale.

These amounts are included in loans on the Consolidated Condensed Balance Sheets and in the residential real estate loan portfolio segment in Note 5 - Loans, and Note 6 - Allowance for Credit Losses.

The contractual balance was $ 2.0 million and $ 2.1 million at March 31, 2023 and December 31, 2022, respectively.

The gain expected upon sale was $ 32,000 and $ 41,000 at March 31, 2023 and December 31, 2022, respectively.

None of these loans were 90 days or more past due or on nonaccrual status at March 31, 2023 or December 31, 2022.

The contractual balance was $ 3.4 million and $ 2.1 million at June 30, 2023 and December 31, 2022, respectively.

The gain expected upon sale was $ 52,000 and $ 41,000 at June 30, 2023 and December 31, 2022, respectively.

None of these loans were 90 days or more past due or on nonaccrual status at June 30, 2023 or December 31, 2022.

During the three months ended June 30, 2022, Park transferred certain commercial loans held for investment with an amortized cost of $ 6.3 million, to the loans held for sale portfolio.

The transferred loans were recorded at the lower of cost or fair value, recording a charge-off in each instance where the fair value of an individual loan was deemed to be below the carrying cost at the time the loan was moved to the held for sale portfolio.

Note 8 – Goodwill and Other Intangible Assets

The following table shows the activity in goodwill and other intangible assets for the three-month periods ended March 31, 2023 and 2022.

The following table shows the activity in goodwill and other intangible assets for the three-month and the six-month periods ended June 30, 2023 and 2022.

(in thousands) Goodwill Other

intangible assets Total

April 1, 2022 $ 159,595 $ 7,060 $ 166,655

Amortization — 403 403

June 30, 2022 $ 159,595 $ 6,657 $ 166,252

April 1, 2023 $ 159,595 $ 5,648 $ 165,243

Amortization — 328 328

June 30, 2023 $ 159,595 $ 5,320 $ 164,915

(in thousands) Goodwill Other

intangible assets Total

December 31, 2021 $ 159,595 $ 7,462 $ 167,057

Amortization — 805 805

March 31, 2022 $ 159,595 $ 7,060 $ 166,655

June 30, 2022 $ 159,595 $ 6,657 $ 166,252

December 31, 2022 $ 159,595 $ 5,975 $ 165,570

Amortization — 655 655

March 31, 2023 $ 159,595 $ 5,648 $ 165,243

June 30, 2023 $ 159,595 $ 5,320 $ 164,915

Park evaluates goodwill for impairment during the second quarter of each year, with financial data as of the immediately prior March 31.

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Acquired Intangible Assets

The following table shows the balance of acquired intangible assets at March 31, 2023 and at December 31, 2022.

March 31, 2023

The following table shows the balance of acquired intangible assets at June 30, 2023 and at December 31, 2022.

June 30, 2023

December 31, 2022

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Core deposit intangible assets are being amortized, on an accelerated basis, over a period of ten years.

Aggregate amortization expense was $ 327,000 and $ 402,000 for the three months ended March 31, 2023 and 2022, respectively.

Estimated amortization expense related to core deposit intangible assets for each of the next five years follows:

Aggregate amortization expense was $ 328,000 and $ 403,000 for the three months ended June 30, 2023 and 2022, respectively, and was $ 655,000 and $ 805,000 for the six months ended June 30, 2023 and 2022, respectively.

Estimated amortization expense related to core deposit intangible assets for the remainder of 2023 and the next four years follows:

(in thousands) Total

Nine months ending December 31, 2023 $ 995

Six months ending December 31, 2023 $ 668

Note 9 – Investment in Qualified Affordable Housing

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The purposes of these investments are to achieve a satisfactory return on capital, help create affordable housing opportunities, and assist the Company to achieve its goals associated with the Community Reinvestment Act.

The table below details the balances of Park’s affordable housing tax credit investments and related unfunded commitments at March 31, 2023 and December 31, 2022.

(in thousands) March 31, 2023

The table below details the balances of Park’s affordable housing tax credit investments and related unfunded commitments at June 30, 2023 and December 31, 2022.

(in thousands) June 30, 2023

December 31, 2022

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Park expects that the current commitments will be funded between the remainder of 2023 through 2032.

Park recognized amortization expense of $ 2.1 million and $ 2.0 million, respectively, for the three months ended March 31, 2023 and 2022, which was included within the provision for income taxes.

Additionally, during the three months ended March 31, 2023 and 2022, Park recognized tax credits and other benefits from its affordable housing tax credit investments of $ 2.4 million and $ 2.8 million, respectively, which were included within the provision for income taxes.

Park recognized amortization expense of $ 2.1 million and $ 2.0 million, respectively, for the three months ended June 30, 2023 and 2022, and $ 4.2 million and $ 4.0 million, respectively, for the six months ended June 30, 2023 and 2022, which was included within the provision for income taxes.

Additionally, during the three months ended June 30, 2023 and 2022, Park recognized tax credits and other benefits from its affordable housing tax credit investments of $ 2.6 million and $ 2.1 million, respectively, and during six months ended June 30, 2023 and 2022, recognized $ 5.0 million and $ 4.9 million, respectively, which were included within the provision for income taxes.

Note 10 – Foreclosed and Repossessed Assets

Park typically transfers a loan to OREO at the time that Park takes deed/title to the real estate property asset.

The carrying amounts of foreclosed real estate properties held at March 31, 2023 and December 31, 2022 are listed below, as well as the

recorded investment of loans secured by residential real estate properties for which formal foreclosure proceedings were in process at those dates.

(in thousands) March 31, 2023 December 31, 2022

The carrying amounts of foreclosed real estate properties held at June 30, 2023 and December 31, 2022 are listed below, as well as the recorded investment of loans secured by residential real estate properties for which formal foreclosure proceedings were in process at those dates.

(in thousands) June 30, 2023 December 31, 2022

Commercial real estate $ 1,354 $ 1,354

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In addition to real estate, Park may also repossess different types of collateral.

At March 31, 2023 and December 31, 2022, Park had $ 0.7 million and $ 0.6 million, respectively, in other repossessed assets which are included in "Other assets" on the Consolidated Condensed Balance Sheets.

At June 30, 2023 and December 31, 2022, Park had $ 1.0 million and $ 0.6 million, respectively, in other repossessed assets which are included in "Other assets" on the Consolidated Condensed Balance Sheets.

Note 11 – Loan Servicing

Park serviced sold mortgage loans of $ 2.02 billion at March 31, 2023, $ 2.05 billion at December 31, 2022 and $ 2.14 billion at March 31, 2022.

At March 31, 2023, $ 3.2 million of the sold mortgage loans were sold with recourse, compared to $ 3.2 million at December 31, 2022 and $ 3.4 million at March 31, 2022.

Park serviced sold mortgage loans of $ 1.99 billion at June 30, 2023, $ 2.05 billion at December 31, 2022 and $ 2.12 billion at June 30, 2022.

At June 30, 2023, $ 3.1 million of the sold mortgage loans were sold with recourse, compared to $ 3.2 million at December 31, 2022 and $ 3.3 million at June 30, 2022.

Management closely monitors the delinquency rates on the mortgage loans sold with recourse.

At March 31, 2023 and December 31, 2022, management had established reserves of $ 56,000 and $ 59,000 , respectively, to account for expected losses on loan repurchases.

At June 30, 2023 and December 31, 2022, management had established reserves of $ 54,000 and $ 59,000 , respectively, to account for expected losses on loan repurchases.

When Park sells mortgage loans with servicing rights retained, these servicing rights are initially recorded at fair value.

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In thousands) 2023 2022 2023 2022

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End of period $ 101 $ 232 $ 101 $ 232

Servicing fees included in "Other service income" were $ 1.3 million and $ 1.4 million for the three months ended March 31, 2023 and 2022, respectively.

Servicing fees included in "Other service income" were $ 1.3 million and $ 1.4 million for the three months ended June 30, 2023 and 2022, respectively, and were $ 2.6 million and $ 2.7 million for the six months ended June 30, 2023 and 2022, respectively.

Note 12 - Leases

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Payments due under the lease arrangements include fixed payments plus, for many of Park’s real estate leases, variable payments such as Park's proportionate share of property taxes, insurance and common area maintenance.

Park's operating lease ROU asset and lease liability are presented in “Operating lease right-of-use asset" and "Operating lease liability," respectively, on Park's Consolidated Condensed Balance Sheets.

The carrying amounts of Park's ROU asset and lease liability at March 31, 2023 were $ 17.2 million and $ 18.7 million, respectively.

Park's operating lease ROU asset and lease liability are presented in “Operating lease ROU asset" and "Operating lease liability," respectively, on Park's Consolidated Condensed Balance Sheets.

The carrying amounts of Park's ROU asset and lease liability at June 30, 2023 were $ 16.6 million and $ 17.9 million, respectively.

At December 31, 2022, the carrying amounts of Park's ROU asset and lease liability were $ 17.6 million and $ 19.3 million, respectively.

Park's operating lease expense is recorded in "Occupancy expense" on the Company's Consolidated Condensed Statements of Income.

Other information related to operating leases for the three-month periods ended March 31, 2023 and 2022 follows:

Three Months Ended

(in thousands) March 31, 2023 March 31, 2022

Other information related to operating leases for the three-month and the six-month periods ended June 30, 2023 and 2022 follows:

Three Months Ended Six Months Ended

(in thousands) June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Operating lease cost $ 728 $ 751 $ 1,460 $ 1,475

6 unchanged sentences

Reductions to ROU assets resulting from reductions to lease obligations $ ( 777 ) $ ( 695 ) $ ( 1,554 ) $ ( 1,393 )

At both March 31, 2023 and December 31, 2022, Park's operating leases had a weighted average remaining term of 10.0 years.

The weighted average discount rate of Park's operating leases wa s 3.3 % at both March 31, 2023 and December 31, 2022.

At each of June 30, 2023 and December 31, 2022, Park's operating leases had a weighted average remaining term of 10.0 years.

The weighted average discount rate of Park's operating leases was 3.4 % and 3.3 % at June 30, 2023 and December 31, 2022, respectively.

Undiscounted cash flows included in lease liabilities have expected contractual payments as follows:

(in thousands) March 31, 2023

Nine months ending December 31, 2023 $ 2,713

(in thousands) June 30, 2023

Six months ending December 31, 2023 $ 1,805

Thereafter 11,020

7 unchanged sentences

Park's repurchase agreements consist of customer accounts and securities which are pledged on an individual security basis.

At March 31, 2023 and December 31, 2022, Park's repurchase agreement borrowings totaled $ 172.1 million and $ 227.3 million, respectively.

At June 30, 2023 and December 31, 2022, Park's repurchase agreement borrowings totaled $ 143.9 million and $ 227.3 million, respectively.

These borrowings were collateralized with U.S.

Government sponsored entities' asset-backed securities with a fair value of $ 304.8 million and $ 313.1 million at March 31, 2023 and December 31, 2022, respectively.

Government sponsored entities' asset-backed securities with a fair value of $ 235.7 million and $ 313.1 million at June 30, 2023 and December 31, 2022, respectively.

Declines in the value of the collateral would require Park to pledge additional securities.

As of March 31, 2023 and December 31, 2022, Park had $ 1,150 million and $ 1,147 million, respectively, of available unpledged securities.

The table below shows the remaining contractual maturity of repurchase agreements by collateral pledged at March 31, 2023 and December 31, 2022:

March 31, 2023

As of June 30, 2023 and December 31, 2022, Park had $ 1,122 million and $ 1,147 million, respectively, of available unpledged securities.

The table below shows the remaining contractual maturity of repurchase agreements by collateral pledged at June 30, 2023 and December 31, 2022:

June 30, 2023

(in thousands) Remaining Contractual Maturity of the Agreements

10 unchanged sentences

Interest Rate Swaps

Park utilizes interest rate swap agreements as part of its asset-liability management strategy to help manage its interest rate risk position and as a means to meet the financing, interest rate and other risk management needs of qualifying commercial banking customers.

Park utilizes interest rate swap agreements (or "interest rate swaps") as part of its asset-liability management strategy to help manage its interest rate risk position and as a means to meet the financing, interest rate and other risk management needs of qualifying commercial banking customers.

The notional amount of the interest rate swaps does not represent the amount exchanged by the parties.

1 unchanged sentence

Borrowing Derivatives :

At March 31, 2023 and December 31, 2022, Park had no borrowing derivatives.

During the three-month period ended March 31, 2022, Park recognized interest expense of $ 148,000 related to borrowing swaps.

Additionally, during the three-month period ended March 31, 2022, Park recognized a gain of $ 139,000 , net of income taxes, related to borrowing swaps that was recorded in "Other comprehensive income (loss)" on the Consolidated Condensed Statements of Comprehensive Income.

At June 30, 2023 and December 31, 2022, Park had no borrowing derivatives.

During the three -month and the six-month periods ended June 30, 2022, Park recognized interest expense of $ 23,000 and $ 171,000 , respectively, related to borrowing swaps.

Additionally, Park recognized gains of $ 15,000 and $ 154,000 , net of income taxes, related to borrowing swaps that were recorded in "Other comprehensive income (loss)" on the Consolidated Condensed Statements of Comprehensive Income (Loss) during the three -month and the six-month periods ended June 30, 2022, respectively.

Loan Derivatives :

1 unchanged sentence

Simultaneously with borrowers entering into interest rate swaps, Carolina Alliance entered into offsetting interest rate swaps executed with a third party, such that Carolina Alliance minimized its net interest rate risk exposure resulting from such transactions.

These interest rate swaps had a notional amount totaling $ 21.3 million and $ 21.7 million at March 31, 2023 and December 31, 2022, respectively.

All of the Company's interest rate swaps were determined to be fully effective during each of the three-month periods ended March 31, 2023 and March 31, 2022.

These interest rate swaps had a notional amount totaling $ 19.8 million and $ 21.7 million at June 30, 2023 and at December 31, 2022, respectively.

All of the Company's interest rate swaps were determined to be fully effective during each of the three-month and the six-month periods ended June 30, 2023 and June 30, 2022.

As such, no amount of ineffectiveness has been included in net income.

Therefore, the aggregate fair value of the swaps is recorded in "Other assets" and "Other liabilities" with changes in fair value recorded in "Other comprehensive income (loss)".

The amount included in "Accumulated other comprehensive loss, net of tax" would be

reclassified to net income should the hedges no longer be considered effective.

Park expects the outstanding hedges to remain fully effective during the remaining respective terms of the swaps.

Summary information about Park's interest rate swaps at March 31, 2023 and at December 31, 2022 follows:

March 31, 2023 December 31, 2022

Therefore, the aggregate fair value of the interest rate swaps is recorded in "Other assets" and "Other liabilities" with changes in fair value recorded in "Other comprehensive income (loss)".

The amount included in "Accumulated other comprehensive loss, net of tax" would be reclassified to net income should the hedges no longer be considered effective.

During both the three-month and the six-month periods ended June 30, 2022, Park recognized expense of $ 66,000 , or $ 52,000 , net of taxes, as the result of the early termination of a borrowing interest rate swap.

Park expects the outstanding hedges to remain fully effective during the remaining respective terms of the interest rate swaps.

Summary information about Park's interest rate swaps at June 30, 2023 and at December 31, 2022 follows:

June 30, 2023 December 31, 2022

(In thousands, except weighted average data) Loan

6 unchanged sentences

Interest Rate Swaps

The following table reflects the interest rate swaps included in the Consolidated Condensed Balance Sheets at March 31, 2023 and at December 31, 2022.

(In thousands) March 31, 2023 December 31, 2022

The following table reflects the interest rate swaps included in the Consolidated Condensed Balance Sheets at June 30, 2023 and at December 31, 2022.

(In thousands) June 30, 2023 December 31, 2022

Notional Amount Fair Value Notional Amount Fair Value

16 unchanged sentences

Changes in the fair values of these derivatives are included in "Other service income" in the Condensed Consolidated Statements of Income.

At March 31, 2023 and December 31, 2022 , Park had $ 3.9 million and $ 2.1 million, respectively, of interest rate lock commitments.

The fair value of these mortgage banking derivatives was reflected by a derivative asset of $ 77,000 and $ 46,000 at March 31, 2023 and December 31, 2022 , respectively.

At June 30, 2023 and at December 31, 2022 , Park had $ 1.8 million and $ 2.1 million, respectively, of interest rate lock commitments.

The fair value of these mortgage banking derivatives was reflected by a derivative asset of $ 41,000 and $ 46,000 at June 30, 2023 and at December 31, 2022 , respectively.

Other Derivatives

1 unchanged sentence

The swap agreement adjusts for dilution in the conversion ratio of Class B Visa shares resulting from certain Visa litigation.

At March 31, 2023 and December 31, 2022 , the fair value of the swap liability of $ 121,000 and $ 243,000 , respectively, represented an estimate of the exposure based upon probability-weighted potential Visa litigation losses.

At June 30, 2023 and at December 31, 2022 , the fair value of the swap liability of $ 296,000 and $ 243,000 , respectively, represented an estimate of the exposure based upon probability-weighted potential Visa litigation losses.

Note 15 – Accumulated Other Comprehensive Loss

Other comprehensive loss components, net of tax, are shown in the following table for the three- month periods ended March 31, 2023 and 2022:

Other comprehensive loss components, net of tax, are shown in the following table for the three- month and the six-month periods ended June 30, 2023 and 2022:

(in thousands) Changes in pension plan assets and benefit obligations Unrealized net holding (loss) gain on cash flow hedge Unrealized (losses) gains on debt securities AFS Total

Beginning balance at April 1, 2023 $ ( 6,680 ) $ — $ ( 83,353 ) $ ( 90,033 )

Other comprehensive loss before reclassifications — — ( 6,753 ) ( 6,753 )

Net current period other comprehensive loss — — ( 6,753 ) ( 6,753 )

Ending balance at June 30, 2023 $ ( 6,680 ) $ — $ ( 90,106 ) $ ( 96,786 )

Beginning balance at April 1, 2022 $ ( 5,792 ) $ ( 67 ) $ ( 34,610 ) $ ( 40,469 )

Other comprehensive income (loss) before reclassifications — 15 ( 45,002 ) ( 44,987 )

Amounts reclassified from other comprehensive loss — 52 — 52

Net current period other comprehensive income (loss) — 67 ( 45,002 ) ( 44,935 )

Ending balance at June 30, 2022 $ ( 5,792 ) $ — $ ( 79,612 ) $ ( 85,404 )

(in thousands) Changes in pension plan assets and benefit obligations Unrealized net holding (loss) gain on cash flow hedge Unrealized (losses) gains on debt securities AFS Total

Beginning balance at January 1, 2023 $ ( 6,680 ) $ — $ ( 95,714 ) $ ( 102,394 )

1 unchanged sentence

Net current period other comprehensive income — — 5,608 5,608

Ending balance at March 31, 2023 $ ( 6,680 ) $ — $ ( 83,353 ) $ ( 90,033 )

Ending balance at June 30, 2023 $ ( 6,680 ) $ — $ ( 90,106 ) $ ( 96,786 )

Beginning balance at January 1, 2022 $ ( 5,792 ) $ ( 206 ) $ 21,153 $ 15,155

Other comprehensive income (loss) before reclassifications — 154 ( 100,765 ) ( 100,611 )

Amounts reclassified from other comprehensive loss — 52 — 52

Net current period other comprehensive income (loss) — 206 ( 100,765 ) ( 100,559 )

Ending balance at March 31, 2022 $ ( 5,792 ) $ ( 67 ) $ ( 34,610 ) $ ( 40,469 )

During the three -month periods ended March 31, 2023 and 2022, there were no reclassifications out of accumulated other comprehensive loss.

Ending balance at June 30, 2022 $ ( 5,792 ) $ — $ ( 79,612 ) $ ( 85,404 )

During the three -month and the six-month periods ended June 30, 2023, there were no reclassifications out of accumulated other comprehensive loss.

During the three -month and the six-month periods ended June 30, 2022, there was $ 66,000 ($ 52,000 net of tax) reclassified out of accumulated other comprehensive loss due to a net loss on the early termination of a borrowing interest rate swap.

This loss was recorded within "Miscellaneous" other expense on the Consolidated Condensed Statements of Income.

Note 16 – Earnings Per Common Share

The following table sets forth the computation of basic and diluted earnings per common share for the three months ended March 31, 2023 and 2022.

The following table sets forth the computation of basic and diluted earnings per common share for the three months and the six months ended June 30, 2023 and 2022.

Three Months Ended

(In thousands, except share and per common share data) 2023 2022

June 30, Six Months Ended

(In thousands, except common share and per common share data) 2023 2022 2023 2022

Net income $ 31,584 $ 34,324 $ 65,317 $ 73,199

5 unchanged sentences

Diluted earnings per common share $ 1.94 $ 2.10 $ 4.01 $ 4.48

Park awarded 54,698 PBRSUs and 52,335 PBRSUs to certain employees during the three months ended March 31, 2023 and 2022, respectively.

Park repurchased an aggregate of 124,000 common shares during the three months ended March 31, 2023, to fund the PBRSUs, the TBRSUs and the common shares to be awarded to directors of Park and to directors of Park's subsidiary PNB (and its divisions).

These repurchases were made pursuant to Park's previously announced stock repurchase authorizations.

No common shares were repurchased during the three months ended March 31, 2022.

Park awarded 54,698 PBRSUs and 52,335 PBRSUs to certain employees during the six months ended June 30, 2023 and 2022, respectively.

No PBRSUs were awarded during either of the three months ended June 30, 2023 or 2022.

Park repurchased an aggregate of 25,000 and 149,000 common shares during the three months and the six months ended June 30, 2023, respectively, to fund the PBRSUs, the TBRSUs and the common shares to be awarded to directors of Park and to directors of Park's subsidiary PNB (and its divisions) as well as pursuant to Park's previously announced stock repurchase authorizations.

No common shares were repurchased during the three months or the six months ended June 30, 2022.

Note 17 – Segment Information

4 unchanged sentences

Park has one reportable segment, as:

(i) discrete financial information is available for this reportable segment and (ii) the segment is aligned with internal reporting to Park’s Chief Executive Officer, who is the chief operating decision-maker.

Operating Results for the three months ended March 31, 2023

(i) discrete financial information

is available for this reportable segment and (ii) the segment is aligned with internal reporting to Park’s Chief Executive Officer, who is the chief operating decision-maker.

Operating Results for the three months ended June 30, 2023

(In thousands) PNB All Other Total

1 unchanged sentence

Provision for (recovery of) credit losses 2,524 ( 32 ) 2,492

Other income (loss) 25,091 ( 76 ) 25,015

Other expense 73,121 2,764 75,885

Income (loss) before income taxes $ 42,995 $ ( 4,785 ) $ 38,210

Income tax expense (benefit) 7,510 ( 884 ) 6,626

Net income (loss) $ 35,485 $ ( 3,901 ) $ 31,584

Assets (at June 30, 2023) $ 9,857,452 $ 42,099 $ 9,899,551

Operating Results for the three months ended June 30, 2022

(In thousands) PNB All Other Total

Net interest income $ 83,411 $ 528 $ 83,939

Provision for (recovery of) credit losses 3,357 ( 366 ) 2,991

Other income 29,255 1,938 31,193

3 unchanged sentences

Net income (loss) $ 34,940 $ ( 616 ) $ 34,324

Assets (at March 31, 2023) $ 9,817,967 $ 39,014 $ 9,856,981

Operating Results for the three months ended March 31, 2022

Assets (at June 30, 2022) $ 9,794,711 $ 31,959 $ 9,826,670

Operating Results for the six months ended June 30, 2023

(In thousands) PNB All Other Total

Net interest income (expense) $ 187,138 $ ( 3,368 ) $ 183,770

Provision for (recovery of) credit losses 3,439 ( 764 ) 2,675

Other income 49,353 49 49,402

Other expense 146,118 6,270 152,388

Income (loss) before income taxes $ 86,934 $ ( 8,825 ) $ 78,109

Income tax expense (benefit) 15,180 ( 2,388 ) 12,792

Net income (loss) $ 71,754 $ ( 6,437 ) $ 65,317

Operating Results for the six months ended June 30, 2022

(In thousands) PNB All Other Total

Net interest income (expense) $ 162,783 $ ( 1,158 ) $ 161,625

Recovery of credit losses ( 1,190 ) ( 424 ) ( 1,614 )

4 unchanged sentences

Net income (loss) $ 76,408 $ ( 3,209 ) $ 73,199

Assets (at March 31, 2022) $ 9,544,545 $ 31,807 $ 9,576,352

The operating results in the “All Other” column are used to reconcile the segment totals to the Consolidated Condensed Statements of Income for the three -month period s ended March 31, 2023 and 2022.

The reconciling amounts for consolidated total assets for the periods ended March 31, 2023 and 2022 consisted of the elimination of intersegment borrowings and the assets of the Parent Company, GFSC and SEPH which were not eliminated.

The operating results in the “All Other” column are used to reconcile the segment totals to the Consolidated Condensed Statements of Income for the three -month and the six-month period s ended June 30, 2023 and 2022.

The reconciling amounts for consolidated total assets for the periods ended June 30, 2023 and 2022 consisted of the elimination of intersegment borrowings and the assets of the Parent Company, GFSC and SEPH which were not eliminated.

Note 18 - Share-Based Compensation

3 unchanged sentences

The common shares to be delivered under the 2017 Employees LTIP are to consist of either common shares currently held or common shares subsequently acquired by Park as treasury shares, including common shares purchased in the open market or in private transactions.

At March 31, 2023, 320,302 common shares were available for future grants under the 2017 Employees LTIP.

At June 30, 2023, 320,302 common shares were available for future grants under the 2017 Employees LTIP.

The Park National Corporation 2017 Long-Term Incentive Plan for Non-Employee Directors (the "2017 Non-Employee Directors LTIP") was adopted by the Board of Directors of Park on January 23, 2017 and was approved by Park's shareholders at the Annual Meeting of Shareholders on April 24, 2017.

2 unchanged sentences

The common shares to be delivered under the 2017 Non-Employee Directors LTIP are to consist of either common shares currently held or common shares subsequently acquired by Park as treasury shares, including common shares purchased in the open market or in private transactions.

At March 31, 2023, 75,000 common shares were available for future grants under the 2017 Non-Employee Directors LTIP.

During the three months ended March 31, 2023 and 2022, the Compensation Committee of the Board of Directors of Park granted awards of PBRSUs, under the 2017 Employees LTIP, covering an aggregate of 54,698 common shares and 52,335 common shares, respectively, to certain employees of Park and its subsidiaries.

As of March 31, 2023, Park has nonvested PBRSUs as well as TBRSUs.

The number of PBRSUs earned or settled will depend on the level of achievement with respect to certain performance criteria over a three-year period and are also subject to subsequent service-based vesting.

The number of TBRSUs earned or settled are subject to service-based vesting.

A summary of changes in the common shares subject to nonvested PBRSUs and TBRSUs for the three months ended March 31, 2023 follows:

Common shares subject to PBRSUs and TBRSUs

At June 30, 2023, 75,000 common shares were available for future grants under the 2017 Non-Employee Directors LTIP.

During the six months ended June 30, 2023 and 2022, the Compensation Committee of the Board of Directors of Park granted awards of PBRSUs, under the 2017 Employees LTIP, covering an aggregate of 54,698 common shares and 52,335 common shares, respectively, to certain employees of Park and its subsidiaries.

No awards were granted during either of the three months ended June 30, 2023 or 2022.

As of June 30, 2023, Park has nonvested PBRSUs.

The number of PBRSUs earned or settled will depend on the level of achievement with respect to certain performance criteria over a three-year period.

The PBRSUs are also subject to subsequent service-based vesting.

A summary of changes in the common shares subject to nonvested PBRSUs for the six months ended June 30, 2023 follows:

Common shares subject to PBRSUs

Nonvested at January 1, 2023 199,650

3 unchanged sentences

Adjustment for performance conditions of PBRSUs (1)

Nonvested at March 31, 2023 (2)

Nonvested at June 30, 2023 (2)

(1) The number of PBRSUs earned depends on the level of achievement with respect to certain performance criteria.

Adjustment herein, if any, represents the difference between the maximum number of common shares which could be earned and the actual number earned for those PBRSUs as to which the performance period was completed.

(2) Nonvested amount herein represents the maximum number of nonvested PBRSUs and TBRSUs.

As of March 31, 2023, an aggregate of 194,287 PBRSUs and TBRSUs were expected to vest.

A summary of awards vested during the three months ended March 31, 2023 and 2022 follows:

(2) Nonvested amount herein represents the maximum number of nonvested PBRSUs.

As of June 30, 2023, an aggregate of 184,732 PBRSUs were expected to vest.

A summary of awards vested during the three months and the six months ended June 30, 2023 and 2022 follows:

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

PBRSUs and TBRSUs vested 6,350 — 62,815 48,415

1 unchanged sentence

Net common shares issued 4,358 — 38,842 29,757

Share-based compensation expense of $ 2.3 million and $ 2.0 million was recognized for the three-month periods ended March 31, 2023 and 2022, respectively.

The following table details expected additional share-based compensation expense related to PBRSUs and TBRSUs outstanding at March 31, 2023:

Share-based compensation expense of $ 1.7 million and $ 1.4 million was recognized for the three-month periods ended June 30, 2023 and 2022, respectively, and share-based compensation expense of $ 4.1 million and $ 3.4 million was recognized for the six-month periods ended June 30, 2023 and 2022, respectively.

The following table details expected additional share-based compensation expense related to PBRSUs outstanding at June 30, 2023:

(In thousands)

Nine months ending December 31, 2023 $ 4,350

Six months ending December 31, 2023 $ 2,733

Total $ 11,431

2 unchanged sentences

The Pension Plan provides benefits based on an employee’s years of service and compensation.

There were no Pension Plan contributions for either of the three-month periods ended March 31, 2023 and 2022.

There were no Pension Plan contributions for any of the three-month or the six-month periods ended June 30, 2023 and 2022.

Additionally, no contributions are expected to be made during the remainder of 2023.

1 unchanged sentence

Three Months Ended

March 31, Affected Line Item in the Consolidated

June 30, Six Months Ended

June 30, Affected Line Item in the Consolidated

Condensed Statements of Income

7 unchanged sentences

periodic pension benefit income

Net periodic pension benefit (income) expense $ ( 334 ) $ ( 590 )

Net periodic pension benefit income $ ( 334 ) $ ( 590 ) $ ( 668 ) $ ( 1,180 )

Park has entered into Supplemental Executive Retirement Plan Agreements (the “SERP Agreements”) with certain key officers of Park and its subsidiaries which provide defined pension benefits in excess of limits imposed by federal tax law.

The expense for the Corporation related to the SERP Agreements for the three months ended March 31, 2023 and 2022 was as follows:

for the Corporation related to the SERP Agreements for the three months and the six months ended June 30, 2023 and 2022 was as follows:

Three Months Ended

March 31, Affected Line Item in the Consolidated

June 30, Six Months Ended

June 30, Affected Line Item in the Consolidated

Condensed Statements of Income

19 unchanged sentences

The following table presents assets and liabilities measured at fair value on a recurring basis:

Fair Value Measurements at March 31, 2023 using:

(In thousands) Level 1 Level 2 Level 3 Balance at March 31, 2023

Fair Value Measurements at June 30, 2023 using:

(In thousands) Level 1 Level 2 Level 3 Balance at June 30, 2023

Investment securities:

26 unchanged sentences

Loan interest rate swaps — 1,508 — 1,508

The following methods and assumptions were used by the Company in determining the fair value of the financial assets and liabilities discussed above:

The following methods and assumptions were used by the Company in determining the fair value of the financial assets and financial liabilities discussed above:

Interest rate swaps:

11 unchanged sentences

Mortgage loans held for sale are estimated using market prices for similar product types and, therefore, are classified in Level 2.

The following tables present a reconciliation of the beginning and ending balances of the Level 3 inputs for the three-month periods ended March 31, 2023 and 2022, for financial instruments measured on a recurring basis and classified as Level 3:

The following tables present a reconciliation of the beginning and ending balances of the Level 3 inputs for the three-month and the six-month periods ended June 30, 2023 and 2022, for financial instruments measured on a recurring basis and classified as Level 3:

Level 3 Fair Value Measurements

Three months ended March 31, 2023 and 2022

Three months ended June 30, 2023 and 2022

(In thousands) Corporate Debt Securities Equity securities Fair value

Balance at April 1, 2023 $ 6,855 $ 449 $ ( 121 )

Transfer into (out of) level 3, net ( 611 ) — —

Total (losses) / gains

Included in other income / other expense — 6 ( 175 )

Included in other comprehensive income ( 128 ) — —

Balance at June 30, 2023 $ 6,116 $ 455 $ ( 296 )

Balance at April 1, 2022 $ — $ 491 $ ( 226 )

Included in other income / other expense — — ( 221 )

Balance at June 30, 2022 $ — $ 491 $ ( 447 )

Level 3 Fair Value Measurements

Six months ended June 30, 2023 and 2022

(In thousands) Corporate Debt Securities Equity securities Fair value

Balance at January 1, 2023 $ 7,000 $ 439 $ ( 243 )

Transfers into level 3 622 — —

Transfers into (out of) level 3, net 11 — —

Total (losses) / gains

Included in other income — 10 —

Included in other income / other expense — 16 ( 175 )

Included in other comprehensive income ( 895 ) — —

Purchases, sales, issuances and settlements, other, net — — 122

Balance at March 31, 2023 $ 6,855 $ 449 $ ( 121 )

Balance at June 30, 2023 $ 6,116 $ 455 $ ( 296 )

Balance at January 1, 2022 $ — $ 499 $ ( 226 )

Included in other income — ( 8 ) —

Balance at March 31, 2022 $ — $ 491 $ ( 226 )

Included in other income / other expense — ( 8 ) ( 221 )

Balance at June 30, 2022 $ — $ 491 $ ( 447 )

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis:

7 unchanged sentences

Such adjustments result in a Level 3 classification of the inputs for determining fair value.

Collateral is then adjusted or discounted based on

management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and the client’s business, resulting in a Level 3 fair value classification.

Collateral is then adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and the client’s business, resulting in a Level 3 fair value classification.

Individually evaluated loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

11 unchanged sentences

Appraisals are generally obtained to support the fair value of collateral.

In general, there are three types of appraisals received by the Company:

In general, there are three types of appraisals received

by the Company:

real estate appraisals, income approach appraisals, and lot development loan appraisals.

18 unchanged sentences

Individually evaluated collateral dependent loans secured by real estate are carried at fair value if they have been charged down to fair value or if a specific valuation allowance has been established.

At March 31, 2023 and December 31, 2022, there were no PCD loans carried at fair value.

At June 30, 2023 and December 31, 2022, there were no PCD loans carried at fair value.

A new cost basis is established at the time a property is initially recorded in OREO.

OREO properties are carried at fair value if a devaluation has been taken with respect to the property's value subsequent to the initial measurement.

At March 31, 2023 and December 31, 2022, there were no OREO properties held by Park that were carried at fair value due to fair value adjustments made subsequent to the initial OREO measurement.

Fair Value Measurements at March 31, 2023 using:

(In thousands) Level 1 Level 2 Level 3 Balance at March 31, 2023

At June 30, 2023 and December 31, 2022, there were no OREO properties held by Park that were carried at fair value due to fair value adjustments made subsequent to the initial OREO measurement.

Fair Value Measurements at June 30, 2023 using:

(In thousands) Level 1 Level 2 Level 3 Balance at June 30, 2023

Individually evaluated collateral dependent loans recorded at fair value:

12 unchanged sentences

The remaining individually evaluated loans consist of 1) loans which are not collateral dependent, 2) loans which are not secured by real estate, and 3) loans carried at cost as the fair value of the underlying collateral or the present value of expected future cash flows on each of the loans exceeded the book value for each respective credit.

March 31, 2023

June 30, 2023

(In thousands) Loan Balance Prior Charge-Offs Specific Valuation Allowance Carrying Balance

7 unchanged sentences

Total individually evaluated loans $ 78,341 $ 1,775 $ 3,566 $ 74,775

The (expense) income from credit adjustments related to individually evaluated loans carried at fair value was $( 107,000 ) and $ 24,000 for the three-month periods ended March 31, 2023 and 2022, respectively.

MSRs totaled $ 15.5 million at March 31, 2023.

Of this $ 15.5 million MSR carrying balance, $ 1.8 million were recorded at fair value and included a valuation allowance of $ 0.2 million.

The remaining $ 13.7 million were recorded at cost, as the fair value exceeded cost at March 31, 2023.

The expense from credit adjustments related to individually evaluated loans carried at fair value was $ 0.6 million and $ 1.0 million for the three-month periods ended June 30, 2023 and 2022, respectively, and was $ 0.7 million and $ 1.0 million for the six-month periods ended June 30, 2023 and 2022, respectively.

MSRs totaled $ 15.2 million at June 30, 2023.

Of this $ 15.2 million MSR carrying balance, $ 0.8 million were recorded at fair value and included a valuation allowance of $ 101,000 .

The remaining $ 14.4 million were recorded at cost, as the fair value exceeded cost at June 30, 2023.

At December 31, 2022, MSRs totaled $ 15.8 million.

Of this $ 15.8 million MSR carrying balance, $ 1.7 million were recorded at fair value and included a valuation allowance of $ 0.2 million.

Of this $ 15.8 million MSR carrying balance, $ 1.7 million were recorded at fair value and included a valuation allowance of $ 182,000 .

The remaining $ 14.1 million were recorded at cost, as the fair value exceeded cost at December 31, 2022.

The income r elated to MSRs carried at fair value during the three-month periods ended March 31, 2023 and 2022 was $ 14,000 and $ 442,000 , respectively.

The following tables present qualitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis at March 31, 2023 and December 31, 2022:

March 31, 2023

The income r elated to MSRs carried at fair value during the three-month periods ended June 30, 2023 and June 30, 2022 was $ 67,000 and $ 894,000 , respectively, and was $ 81,000 and $ 1.3 million for the six-month periods ended June 30, 2023 and 2022, respectively.

The following tables present qualitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis at June 30, 2023 and December 31, 2022:

June 30, 2023

(In thousands) Fair Value Valuation Technique Unobservable Input(s) Range

14 unchanged sentences

Assets Measured at Net Asset Value:

Park's portfolio of Partnership Investments are valued using the NAV practical expedient in accordance with ASC 820.

At March 31, 2023 and December 31, 2022, Park had Partnership Investments with a NAV of $ 24.9 million and $ 24.4 million, respectively.

At March 31, 2023 and December 31, 2022, Park had $ 19.6 million and $ 20.3 million, respectively, in unfunded commitments related to these Partnership Investments.

For the three-month periods ended March 31, 2023 and 2022, Park recognized (expense) income of $( 0.4 ) million and $ 2.4 million respectively, related to these Partnership Investments.

The fair value of certain financial instruments at March 31, 2023 and December 31, 2022, was as follows:

March 31, 2023

Park's portfolio of Partnership Investments is valued using the NAV practical expedient in accordance with ASC 820.

At June 30, 2023 and December 31, 2022, Park had Partnership Investments with a NAV of $ 24.2 million and $ 24.4 million, respectively.

At June 30, 2023 and December 31, 2022, Park had $ 21.6 million and $ 20.3 million, respectively, in unfunded commitments related to these Partnership Investments.

For the three-month periods ended June 30, 2023 and 2022, Park recognized income of $ 137,000 and $ 90,000 , respectively, and for the six-month periods ended June 30, 2023 and 2022, recognized (expense) income of $( 241,000 ) and $ 2.5 million, respectively, related to these Partnership Investments.

The fair value of certain financial instruments at June 30, 2023 and December 31, 2022, was as follows:

June 30, 2023

Fair Value Measurements

6 unchanged sentences

2,720 2,265 — 455 2,720

Mortgage IRLCs 77 — 77 — 77

Mortgage loans held for sale 3,486 — 3,486 — 3,486

Mortgage IRLCs 41 — 41 — 41

Individually evaluated loans carried at fair value 2,957 — — 2,957 2,957

43 unchanged sentences

All of Park's revenue from contracts with customers within the scope of ASC 606 is recognized within "Other income" in the Consolidated Condensed Statements of Income.

The following table presents the Corporation's sources of other income by revenue stream and operating segment for the three-month periods ended March 31, 2023 and March 31, 2022:

The following table presents the Corporation's sources of other income by revenue stream and operating segment for the three-month and the six-month periods ended June 30, 2023 and June 30, 2022:

Three Months Ended

March 31, 2023

June 30, 2023

Revenue by Operating Segment (in thousands) PNB All Other Total

18 unchanged sentences

ATM fees 553 — 553

Loss on sale of OREO, net ( 9 ) — ( 9 )

Gain on sale of OREO, net 12 — 12

OREO valuation markup — — —

Loss on equity securities, net (2)

Gain (loss) on equity securities, net (2)

189 ( 164 ) 25

4 unchanged sentences

Total other income $ 25,091 $ ( 76 ) $ 25,015

(1) Of the $ 2.7 million of aggregate revenue included within "Other service income", approximately $ 1.4 million is within the scope of ASC 606, with the remaining $ 1.3 million consisting primarily of certain residential real estate loan fees which are out of scope.

(1) Of the $ 2.6 million of aggregate revenue included within "Other service income", approximately $ 1.3 million was within the scope of ASC 606, with the remaining $ 1.3 million consisting primarily of certain residential real estate loan fees which were out of scope.

(2) Not within the scope of ASC 606.

(3) "Miscellaneous" income includes brokerage income, safe deposit box rentals, and miscellaneous bank fees totaling $ 1.2 million, all of which are within scope of ASC 606.

(3) "Miscellaneous" income included brokerage income, safe deposit box rentals, and miscellaneous bank fees totaling $ 0.9 million, all of which were within scope of ASC 606.

Three Months Ended

March 31, 2022

June 30, 2022

Revenue by Operating Segment (in thousands) PNB All Other Total

18 unchanged sentences

ATM fees 583 — 583

Loss on sale of OREO, net — — —

Gain on sale of OREO, net 4 — 4

OREO valuation markup — — —

Gain on equity securities, net (2)

Other components of net periodic pension benefit income (2)

2,954 73 3,027

Miscellaneous (3)

1,950 ( 547 ) 1,403

Total other income $ 29,255 $ 1,938 $ 31,193

(1) Of the $ 4.9 million of aggregate revenue included within "Other service income", approximately $ 1.7 million was within the scope of ASC 606, with the remaining $ 3.2 million consisting primarily of certain residential real estate loan fees which were out of scope.

(2) Not within the scope of ASC 606.

(3) "Miscellaneous" income included brokerage income, safe deposit box rentals, and miscellaneous bank fees totaling $ 1.4 million, all of which were within scope of ASC 606.

Six Months Ended

June 30, 2023

Revenue by Operating Segment (in thousands) PNB All Other Total

Income from fiduciary activities

Personal trust and agency accounts $ 5,075 $ — $ 5,075

Employee benefit and retirement-related accounts 4,939 — 4,939

Investment management and investment advisory agency accounts 6,435 — 6,435

Other 982 — 982

Service charges on deposit accounts

Non-sufficient funds (NSF) fees 1,921 — 1,921

Demand deposit account (DDA) charges 2,107 — 2,107

Other 254 — 254

Other service income (1)

Credit card 1,413 — 1,413

HELOC 197 — 197

Installment 84 — 84

Real estate 2,965 — 2,965

Commercial 542 135 677

Debit card fee income 13,287 — 13,287

Bank owned life insurance income (2)

2,413 104 2,517

ATM fees 1,086 — 1,086

Gain on sale of OREO, net 3 — 3

OREO valuation markup 15 — 15

Loss on equity securities, net (2)

( 118 ) ( 262 ) ( 380 )

Other components of net periodic pension benefit income (2)

3 unchanged sentences

Total other income $ 49,353 $ 49 $ 49,402

(1) Of the $ 4.8 million of aggregate revenue included within "Other service income", approximately $ 1.2 million is within the scope of ASC 606, with the remaining $ 3.6 million consisting primarily of certain residential real estate loan fees which are out of scope.

(1) Of the $ 5.3 million of aggregate revenue included within "Other service income", approximately $ 2.7 million was within the scope of ASC 606, with the remaining $ 2.6 million consisting primarily of certain residential real estate loan fees which were out of scope.

(2) Not within the scope of ASC 606.

(3) "Miscellaneous" income includes brokerage income, safe deposit box rentals, and miscellaneous bank fees totaling $ 2.7 million, all of which are within scope of ASC 606.

(3) "Miscellaneous" income included brokerage income, safe deposit box rentals, and miscellaneous bank fees totaling $ 2.0 million, all of which were within scope of ASC 606.

Six Months Ended

June 30, 2022

Revenue by Operating Segment (in thousands) PNB All Other Total

Income from fiduciary activities

Personal trust and agency accounts $ 5,270 $ — $ 5,270

Employee benefit and retirement-related accounts 5,031 — 5,031

Investment management and investment advisory agency accounts 6,403 — 6,403

Other 952 — 952

Service charges on deposit accounts

Non-sufficient funds (NSF) fees 2,936 — 2,936

Demand deposit account (DDA) charges 1,429 — 1,429

Other 272 — 272

Other service income (1)

Credit card 1,357 — 1,357

HELOC 194 — 194

Installment 88 — 88

Real estate 6,993 — 6,993

Commercial 655 472 1,127

Debit card fee income 12,857 — 12,857

Bank owned life insurance income (2)

2,223 1,326 3,549

ATM fees 1,115 — 1,115

Gain on sale of OREO, net 4 — 4

OREO valuation markup 30 — 30

Gain on equity securities, net (2)

2,260 802 3,062

Other components of net periodic pension benefit income (2)

5,909 145 6,054

Miscellaneous (3)

4,524 ( 398 ) 4,126

Total other income $ 60,502 $ 2,347 $ 62,849

(1) Of the $ 9.8 million of aggregate revenue included within "Other service income", approximately $ 3.0 million was within the scope of ASC 606, with the remaining $ 6.8 million consisting primarily of certain residential real estate loan fees which were out of scope.

(2) Not within the scope of ASC 606.

(3) "Miscellaneous" income included brokerage income, safe deposit box rentals, and miscellaneous bank fees totaling $ 4.1 million, all of which were within scope of ASC 606.

A description of Park's material revenue streams accounted for under ASC 606 follows:

4 unchanged sentences

The Corporation earns fees from the Corporation's deposit customers for transaction-based, account maintenance, and overdraft services.

Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering fees, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Corporation fulfills the customer's request.

Fees for transaction-based services, which include services such as ATM use fees, stop payment charges, statement rendering fees, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Corporation fulfills the customer's request.

Account maintenance fees, which relate primarily to monthly maintenance, are generally recognized at the end of the month, representing the period over which the Corporation satisfies the performance obligation.

15 unchanged sentences

The Corporation records an OREO valuation markup immediately prior to the transfer of a loan to OREO when the fair market value of the property less costs to sell exceeds the principal balance of the loan.

Note 22 - Other Matters

On February 28, 2023, Park National Bank reached an agreement with the DOJ to increase the efforts of Park National Bank to promote home lending in the Columbus, Ohio market.

The agreement, which is reflected in the consent order filed on February 28, 2023, in the U.S.

District Court for the Southern District of Ohio (the “DOJ Consent Order”) and approved by that Court on March 2, 2023, served to voluntarily resolve all claims of the U.S.

alleging that Park National Bank’s mortgage lending practices within the Columbus, Ohio Metropolitan Statistical Area violated the Fair Housing Act and the Equal Credit Opportunity Act.

In accordance with the terms of the DOJ Consent Order, Park National Bank will invest a minimum of $ 7.75 million over five years in a loan subsidy fund to increase credit opportunities for home mortgage loans, home improvement loans, home refinance loans and home equity loans and lines of credit for consumers applying for loans in majority-minority census tracts ("MMCTs") in Fairfield, Franklin, Hocking, Licking, Morrow and Perry counties in Ohio (the “Columbus Lending Area”).

Park National Bank will also devote a minimum of $ 500,000 over five years toward one or more community development partnership programs that provide services to residents of MMCTs in the Columbus Lending Area related to credit, financial education, homeownership and foreclosure prevention;

and at least $ 750,000 over five years toward advertising, community outreach, consumer financial education and credit counseling in the Columbus Lending Area.

Park National Bank will also establish one new mortgage loan production office and one new full-service branch in MMCTs in the Columbus Lending Area and hire four lenders, one of whom will be Spanish-speaking, focused on serving these communities.

In addition, Park National Bank will continue to maintain, throughout the term of the DOJ Consent Order, Park National Bank’s full-time Director of Community Home Lending and Development position, who will oversee Park National Bank’s lending in MMCTs in the Columbus Lending Area.

Park is committed to investing at least $ 9.0 million over five years and will record the related expenses incurred in the period in which the associated activities occur.

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-Q

Item 1. Financial Statements