What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-01 compared with 2023-08-01 · 362 added, 305 removed, 1649 unchanged (29% of the section changed)

3 unchanged sentences

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

September 30,

2023 December 31, 2022

3 unchanged sentences

Investment securities:

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)

Debt securities available-for-sale, at fair value (amortized cost of $ 1,747,396 and $ 1,854,852 at September 30, 2023 and December 31, 2022, respectively, and no allowance for credit losses at September 30, 2023 or at December 31, 2022)

1,609,156 1,733,696

19 unchanged sentences

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

September 30,

2023 December 31, 2022

17 unchanged sentences

20,000,000 shares authorized;

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

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

461,849 462,404

Retained earnings 896,627 847,235

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

Treasury shares ( 1,519,679 common shares at September 30, 2023 and 1,359,521 common shares at December 31, 2022)

( 157,022 ) ( 138,019 )

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

15 unchanged sentences

Net interest income 94,269 90,828 278,039 252,453

Provision for (recovery of) credit losses 2,492 2,991 2,675 ( 1,614 )

Net interest income after provision for (recovery of) credit losses $ 89,080 $ 80,948 $ 181,095 $ 163,239

(Recovery of) provision for credit losses ( 1,580 ) 3,190 1,095 1,576

Net interest income after (recovery of) provision for credit losses $ 95,849 $ 87,638 $ 276,944 $ 250,877

Other income:

5 unchanged sentences

ATM fees 575 610 1,661 1,725

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

(Loss) gain on the sale of OREO, net ( 6 ) 5,607 ( 3 ) 5,611

OREO valuation markup — 12,009 15 12,039

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

Gain on equity securities, net 998 58 618 3,120

Other components of net periodic pension benefit income 1,893 3,027 5,679 9,081

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended June 30,

September 30, Nine Months Ended September 30,

2023 2022 2023 2022

11 unchanged sentences

Amortization of intangible assets 334 341 989 1,146

Foundation contribution — 4,000 — 4,000

Miscellaneous 2,977 2,764 8,214 7,261

15 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net income $ 36,917 $ 42,068 $ 102,234 $ 115,267

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.

Other comprehensive loss, net of tax:

Unrealized net holding loss on debt securities available-for-sale, net of income tax effect of $( 5,078 ) and $( 10,617 ) for the three months ended September 30, 2023 and 2022, respectively, and $( 3,588 ) and $( 37,403 ) for the nine months ended September 30, 2023 and 2022, respectively.

( 19,104 ) ( 39,939 ) ( 13,496 ) ( 140,704 )

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 )

Reclassification adjustment for losses included in net income on cash flow hedging derivatives, net of income tax effect of $ 14 for the nine months ended September 30, 2022.

Unrealized gain on cash flow hedging derivatives, net of income tax effect of $ 41 for the nine months ended September 30, 2022.

Other comprehensive loss $ ( 19,104 ) $ ( 39,939 ) $ ( 13,496 ) $ ( 140,498 )

Comprehensive income (loss) $ 17,813 $ 2,129 $ 88,738 $ ( 25,231 )

27 unchanged sentences

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

Net income 36,917

Other comprehensive loss, net of tax ( 19,104 )

Dividends on common shares at $ 1.05 per common share

Share-based compensation expense 1,271

Repurchase of 50,000 common shares to be held as treasury shares

Balance at September 30, 2023 $ — $ 461,849 $ 896,627 $ ( 157,022 ) $ ( 115,890 )

PARK NATIONAL CORPORATION AND SUBSIDIARIES

21 unchanged sentences

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

Net income 42,068

Other comprehensive loss, net of tax ( 39,939 )

Dividends on common shares at $ 1.04 per common share

Issuance of 4,490 common shares under share-based compensation awards, net of 2,559 common shares withheld to pay employee income taxes

( 765 ) ( 1 ) 456

Share-based compensation expense 1,441

Balance at September 30, 2022 $ — $ 461,321 $ 839,207 $ ( 139,013 ) $ ( 125,343 )

SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

2 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Operating activities:

1 unchanged sentence

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for (recovery of) credit losses 2,675 ( 1,614 )

Provision for credit losses 1,095 1,576

Accretion of loan fees and costs, net ( 6,621 ) ( 9,869 )

2 unchanged sentences

Net amortization (accretion) of purchase accounting adjustments 451 ( 402 )

Loss (gain) on equity securities, net 380 ( 3,062 )

Gain on equity securities, net ( 618 ) ( 3,120 )

Loan originations to be sold in secondary market ( 53,432 ) ( 157,868 )

2 unchanged sentences

Share-based compensation expense 5,356 4,796

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

Loss (gain) on sale of OREO, net 3 ( 5,611 )

OREO valuation markup ( 15 ) ( 12,039 )

Gain on sale of non-mortgage loans — ( 495 )

Bank owned life insurance income ( 3,965 ) ( 4,734 )

6 unchanged sentences

Investing activities:

Proceeds from the redemption/repurchase of Federal Home Loan Bank stock $ 3,605 $ —

Proceeds from the redemption/repurchase of FHLB stock $ 4,605 $ 2,216

Proceeds from calls and maturities of:

6 unchanged sentences

Net loan originations, portfolio loans ( 203,298 ) ( 234,239 )

Proceeds from the sale of non-mortgage loans — 4,345

Investment in qualified affordable housing tax credits ( 6,579 ) ( 10,004 )

7 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Financing activities:

1 unchanged sentence

Net decrease in off-balance sheet deposits 195,173 216,869

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

Net increase (decrease) in short-term borrowings 125,444 ( 49,293 )

Value of common shares withheld to pay employee income taxes ( 2,844 ) ( 2,761 )

1 unchanged sentence

Cash dividends paid ( 52,028 ) ( 51,558 )

Net cash (used in) provided by financing activities $ ( 14,979 ) $ 289,160

Increase in cash and cash equivalents 40,669 27,261

Net cash provided by financing activities $ 57,564 $ 301,793

Increase (decrease) in cash and cash equivalents 33,890 ( 11,747 )

Cash and cash equivalents at beginning of year 189,728 219,180

6 unchanged sentences

Loans transferred to OREO $ 1,051 $ 13,418

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

ROU assets obtained in exchange for lease obligations 499 4,270

New commitments in affordable housing tax credits 10,000 10,000

New commitments in other investment securities 2,745 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 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 results of operations for the three-month and the nine-month periods ended September 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.

5 unchanged sentences

For interim reporting purposes, Park follows the same basic accounting policies, as updated by the information contained in this report, and considers each interim period an integral part of an annual period.

Recent bank failures have called into question the stability of the financial services industry.

While Park is well capitalized and has significant available liquidity, the effects of these failures and potential future failures may meaningfully impact significant estimates such as the allowance for credit losses, goodwill, and pension plan obligations and related expenses.

Note 2 - Adoption of New Accounting Pronouncements and Issued But Not Yet Effective Accounting Standards

2 unchanged sentences

ASU 2022-02 - Financial Instruments - Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures:

In March 2022, FASB issued ASU 2022-02 - Financial Instruments - Credit Losses (Topic 326) Troubled Debt Restructuring and Vintage Disclosures .

ASU 2022-02 eliminated the accounting guidance for TDRs by creditors in Subtopic 310-40, Receivables - Troubled Debt Restructurings by Creditors , while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty.

In March 2022, FASB issued ASU 2022-02 - Financial Instruments - Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures .

Additionally, the amendments in this ASU require that public business entities disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments - Credit Losses - Measured at Amortized Cost.

4 unchanged sentences

Issued But Not Yet Effective Accounting Standards

There are no issued but not yet effective accounting standards that are significant to Park.

SEC Cybersecurity Disclosures:

In July 2023, the SEC voted to standardize disclosures about cybersecurity risk management, strategy, governance, and material cybersecurity incidents by public companies subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act").

The Current Report on Form 8-K has a new item, Item 1.05, and registrants will be required to disclose under this Item 1.05 any cybersecurity incident that is deemed to be material and describe the material aspects of the incident's nature, scope, and timing, as well as its material impact, or reasonably likely material impact on a registrant, including its financial condition and results of operations.

The Form 8-K filing will generally be due four business days after a registrant determines that the cybersecurity incident is material.

Also, SEC Regulation S-K has a new item, Item 106, which will require registrants to describe, on an annual basis, the processes for assessing, identifying, and managing material risks from cybersecurity threats as well as the material effects, or reasonably likely material effects, of risk from cybersecurity threats and previous cybersecurity incidents.

Item 106 will also require registrants to describe the board of directors' oversight of risks from cybersecurity threats and management's role and expertise in assessing and managing material risks from cybersecurity threats.

These disclosures will be required in the annual report on Form 10-K.

Compliance with the material incident disclosure requirements in Item 1.05 of Form 8-K is to begin on December 18, 2023 and the annual disclosures are to be provided beginning with annual reports for fiscal years ending on or after December 15, 2023.

Management intends to adopt the SEC cybersecurity rules effective December 18, 2023 and will include annual disclosures in the Annual Report on Form 10-K of Park National Corporation for the fiscal year ending December 31, 2023.

ASU 2023-06 - Disclosure Improvements - Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative:

In October 2023, FASB issued ASU 2023-06 - Disclosure Improvements - Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative.

ASU 2023-06 amends the disclosure or presentation requirements related to various subtopics in the FASB Accounting Standards Codification.

ASU 2023-06 was issued in response to the SEC's August 2018 final rule that updated and simplified disclosure requirements.

In the final rule, the SEC identified 27 disclosure requirements that were incremental to those in the ASC and referred them to the FASB for potential incorporation into US GAAP.

To avoid duplication, the SEC intended to eliminate those disclosure requirements from existing SEC regulations if the FASB incorporated them into the relevant ASC subtopics.

The disclosure requirements are currently included in either SEC Regulation S-X or SEC Regulation S-K.

ASU 2023-06 adds 14 of the 27 identified disclosure or presentation requirements to the ASC.

For entities, like Park, that are subject to the SEC's existing disclosure requirements, the effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited.

The amendments are to be applied prospectively and if by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or S-K, the pending content of the related amendment will be removed from the ASC and will not become effective for any entity.

Management intends to adopt the provisions of ASU 2023-06 on their respective effective dates.

The adoption of the provisions of ASU 2023-06 is not expected to have a material impact on Park's consolidated financial statements.

Note 3 – Investment Securities

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

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

Debt securities AFS (In thousands) Amortized

Losses Fair Value

June 30, 2023:

September 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 June 30, 2023, were as follows:

Investment securities in an unrealized loss position at September 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 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.

At September 30, 2023, Park’s debt securities portfolio consisted of $ 1.6 billion of securities, $ 1.6 billion of which were in an unrealized loss position with aggregate unrealized losses of $ 138.3 million.

Of the $ 1.6 billion of securities in an unrealized loss position, $ 1.3 billion were in an unrealized loss position for 12 months or longer.

7 unchanged sentences

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.

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

Additionally, for the three months and the nine months ended September 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 September 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.

18 unchanged sentences

(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 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.

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

Investment securities having a fair value of $ 606.2 million and $ 753.6 million at September 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 June 30, 2023 and December 31, 2022 were as follows:

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

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

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

FHLB stock $ 20,229 $ 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 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.

An upward adjustment of $ 871,000 was recorded during the nine months ended September 30, 2022 as a result of observable price changes.

There were no adjustments recorded during the three months ended September 30, 2022.

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

During the three months ended September 30, 2023, Park purchased 122,296 shares of FHLB stock with a book value of $ 12.2 million.

During the nine months ended September 30, 2023, Park purchased 136,371 shares of FHLB stock with a book value of $ 13.6 million.

During the three months ended September 30, 2023, the FHLB repurchased 10,002 shares of FHLB stock with a book value of $ 1.0 million.

During the nine months ended September 30, 2023, the FHLB repurchased 46,054 shares of FHLB stock with a book value of $ 4.6 million.

During the three months and the nine months ended September 30, 2022, the FHLB repurchased 22,160 shares of FHLB stock with a book value of $ 2.2 million.

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

During the three months ended September 30, 2023 and 2022, $ 74,000 and $( 39,000 ), respectively, of gains (losses) on equity investments carried at fair value were recorded within "Gain on equity securities, net" on the Consolidated Condensed Statements of Income.

During the nine months ended September 30, 2023 and 2022, $( 65,000 ) and $ 488,000 , respectively, of (losses) gains on equity investments carried at fair value were recorded within "Gain on equity securities, net" on the Consolidated Condensed Statements of Income.

During the three months ended September 30, 2023 and 2022, $ 924,000 and $ 97,000 , respectively, of gains on equity investments carried at NAV were recorded within “Gain on equity securities, net” on the Consolidated Condensed Statements of Income.

During the nine months ended September 30, 2023 and 2022, $ 683,000 and $ 2.6 million, respectively, of gains on equity investments carried at NAV were recorded within “Gain on equity securities, net” on the Consolidated Condensed Statements of Income.

Note 5 – Loans

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

June 30, 2023 December 31, 2022

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

September 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 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.

During the three months ended September 30, 2023 and September 30, 2022, $ 9,000 and $ 361,000 , respectively, of PPP fee income was recognized within loan interest income.

During the nine months ended September 30, 2023 and September 30, 2022, $ 34,000 and $ 2.9 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 $ 18.9 million at September 30, 2023, and of $ 18.2 million at December 31, 2022, which represented a net deferred income position at both dates.

At September 30, 2023 and December 31, 2022, loans included purchase accounting adjustments of $ 1.9 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 $ 1.6 million and $ 1.5 million were reclassified to loans at June 30, 2023 and at December 31, 2022, respectively.

Overdrawn deposit accounts of $ 3.1 million and $ 1.5 million were reclassified to loans at September 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 June 30, 2023.

June 30, 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 September 30, 2023.

September 30, 2023

(In thousands) Nonaccrual

38 unchanged sentences

Consumer 1,022 670 703 2,395

GFSC 10 — — 10

Check loans — — — —

1 unchanged sentence

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 June 30, 2023 and December 31, 2022:

June 30, 2023

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

September 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 June 30, 2023 and December 31, 2022:

June 30, 2023

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

September 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 and the six-month periods ended June 30, 2023 and 2022:

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

Interest Income Recognized

(In thousands) Three Months Ended

June 30, 2023 Three Months Ended

June 30, 2022 Six Months Ended

June 30, 2023 Six Months Ended

June 30, 2022

September 30, 2023 Three Months Ended

September 30, 2022 Nine Months Ended

September 30, 2023 Nine Months Ended

September 30, 2022

Commercial, financial and agricultural:

15 unchanged sentences

Total loans $ 557 $ 355 $ 2,520 $ 1,079

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

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

September 30, 2023

(In thousands) Accruing

17 unchanged sentences

Consumer 6,732 838 7,570 1,963,000 1,970,570

GFSC 13 5 18 47 65

Check loans 4 — 4 2,049 2,053

3 unchanged sentences

The remaining loans were past due nonaccrual loans.

(2) Includes an aggregate of $ 36.6 million of nonaccrual loans which were current in regards to contractual principal and interest payments .

(2) Includes an aggregate of $ 33.5 million of nonaccrual loans which were current with respect to contractual principal and interest payments .

December 31, 2022

18 unchanged sentences

Consumer 5,499 964 6,463 1,896,368 1,902,831

GFSC 48 — 48 226 274

Check loans 2 — 2 2,148 2,150

3 unchanged sentences

The remaining loans were past due nonaccrual loans.

(2) Includes an aggregate of $ 58.9 million of nonaccrual loans which were current in regards to contractual principal and interest payments.

(2) Includes an aggregate of $ 58.9 million of nonaccrual loans which were current with respect to contractual principal and interest payments.

Credit Quality Indicators

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

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

Past due information at September 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:

2 unchanged sentences

(3) mortgage loans, HELOC and installment loans in the residential real estate portfolio segment;

and (4) consumer loans, GFSC loans, and check loans in the consumer portfolio segment.

and (4) consumer loans and check loans in the consumer portfolio segment.

The primary credit indicator for commercial loans is based on an internal grading system that grades all commercial loans on a scale from 1 to 8.

12 unchanged sentences

Certain 6-rated loans and all 7-rated loans are placed on nonaccrual status and included within the individually evaluated category.

A commercial loan is deemed nonaccrual, and is individually evaluated, when management

determines the borrower's ability to perform in accordance with the contractual loan agreement is in doubt.

A commercial loan is deemed nonaccrual, and is individually evaluated, when management determines the borrower's ability to perform in accordance with the contractual loan agreement is in doubt.

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

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

Based on the most recent analysis performed, the risk category of commercial loans by class of loans at September 30, 2023 and at December 31, 2022 are detailed in the tables below.

Also included in the table detailing loan balances at September 30, 2023 are gross charge offs for the nine months ended September 30, 2023.

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

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

28 unchanged sentences

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

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

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

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

70 unchanged sentences

The following tables present the amortized cost in residential and consumer loans based on performing status.

Also included in the table detailing loan balances at September 30, 2023 are gross charge offs for the nine months ended September 30, 2023.

As previously mentioned, the adoption of ASU 2022-02 on January 1, 2023 eliminated the concept of TDRs.

1 unchanged sentence

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.

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

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

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

11 unchanged sentences

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

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

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

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

23 unchanged sentences

Nonperforming

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

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

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

Nonperforming

— — — — — — — —

40 unchanged sentences

Nonperforming

Total $ — $ — $ 55 $ 121 $ 45 $ 2 $ 51 $ 274

Performing $ — $ — $ — $ — $ — $ — $ 2,150 $ 2,150

Nonperforming

— — — — — — — —

14 unchanged sentences

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

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.

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

The carrying amount of accruing loans acquired with deteriorated credit quality at September 30, 2023 and at December 31, 2022 was $ 3.8 million and $ 4.7 million, respectively.

The carrying amount of nonaccrual loans acquired with deteriorated credit quality was $ 549,000 at September 30, 2023.

There were no nonaccrual loans acquired with deteriorated quality at December 31, 2022.

Modifications to Borrowers Experiencing Financial Difficulty

Management identifies loans as modifications to borrowers experiencing financial difficulty when a borrower is experiencing financial difficulties and Park has altered the cash flow of the the loan as part of a modification or in the loan renewal process.

Management identifies loans as modifications to borrowers experiencing financial difficulty when a borrower is experiencing financial difficulties and Park has altered the cash flow of the loan as part of a modification or in the loan renewal process.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of the borrower's debt in the foreseeable future without the modification.

10 unchanged sentences

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

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 following tables present the amortized cost basis of loans at September 30, 2023 that were both experiencing financial difficulty and modified during the three months and the nine months ended September 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.

Three Months Ended

June 30, 2023

September 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

13 unchanged sentences

Consumer — — — 22 — — 22 — %

GFSC — — — — — — — — %

Check loans — — — — — — — — %

1 unchanged sentence

Total $ — $ — $ 2,688 $ 409 $ 4,079 $ — $ 7,176 0.10 %

Six Months Ended

June 30, 2023

Nine Months Ended

September 30, 2023

13 unchanged sentences

Consumer — — — 39 — — 39 — %

GFSC — — — — — — — — %

Check loans — — — — — — — — %

1 unchanged sentence

Total $ — $ — $ 2,224 $ 426 $ 13,046 $ 11 $ 15,707 0.21 %

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:

Park has committed to lend additional amounts totaling $ 3.4 million to the borrowers included in the previous table as of September 30, 2023.

The following tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the three months and the nine months ended September 30, 2023:

Three Months Ended

June 30, 2023

September 30, 2023

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

13 unchanged sentences

Consumer — ( 1.49 ) % 0.0

GFSC — — % 0.0

Check loans — — % 0.0

1 unchanged sentence

Total $ — 0.34 % 1.4

Six Months Ended

June 30, 2023

Nine Months Ended

September 30, 2023

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

13 unchanged sentences

Consumer — ( 2.33 ) % 0.0

GFSC — — % 0.0

Check loans — — % 0.0

2 unchanged sentences

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.

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

There were $ 11,000 of loans modified to borrowers experiencing financial difficulty that had been modified during the nine months ended September 30, 2023 that were 30-59 days past due as of September 30, 2023 in the Commercial, financial, and agricultural loan portfolio segment.

The following table presents the amortized cost basis of loans that had a payment default during the three months ended September 30, 2023 and were modified in the nine 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

September 30, 2023

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

16 unchanged sentences

Total loans $ — $ — $ — $ 11

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.

The following table presents the amortized cost basis of loans that had a payment default during the nine months ended September 30, 2023 and were modified in the nine 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

Nine Months Ended

September 30, 2023

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

28 unchanged sentences

• 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 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.

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

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

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

24 unchanged sentences

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 June 30, 2023.

◦ As of September 30, 2023, the "most likely" scenario forecasted Ohio unemployment between 4.07% and 4.66% during the next four quarters.

In determining the appropriate weighting of scenarios at September 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, continued elevated interest rates, financial system stress and geopolitical conflict (including the conflicts between Russia and Ukraine and between Israel and Hamas), continued to cause uncertainty as to the overall economic environment.

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 September 30, 2023.

Qualitative Considerations

14 unchanged sentences

and events such as natural disasters or pandemics.

• Actual and expected changes in international, national, regional, and local economic and business conditions and developments in the markets in which Park operates that affect the collectibility of financial assets.

• Where the U.S.

1 unchanged sentence

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

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.

At September 30, 2023 and at December 31, 2022, Park had $ 2.4 million and $ 4.2 million, respectively, of PPP loans which were included in the commercial, financial and agricultural loan 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 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:

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

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

Three Months Ended

June 30, 2023

September 30, 2023

(In thousands) Commercial,

11 unchanged sentences

Three Months Ended

June 30, 2022

September 30, 2022

(In thousands) Commercial,

8 unchanged sentences

Net charge-offs/(recoveries) $ 433 $ ( 36 ) $ ( 20 ) $ ( 20 ) $ 285 $ 35 $ 677

(Recovery of) provision for credit losses ( 134 ) ( 1,334 ) 165 2,027 2,296 ( 29 ) 2,991

Provision for (recovery of) credit losses 563 ( 1,653 ) 87 1,464 2,699 30 3,190

Ending balance $ 12,877 $ 20,722 $ 4,498 $ 15,103 $ 30,563 $ 198 $ 83,961

Six Months Ended

June 30, 2023

Nine Months Ended

September 30, 2023

(In thousands) Commercial,

11 unchanged sentences

Ending balance $ 14,968 $ 18,618 $ 5,299 $ 16,989 $ 28,620 $ 108 $ 84,602

Six Months Ended

June 30, 2022

Nine Months Ended

September 30, 2022

(In thousands) Commercial,

10 unchanged sentences

Ending balance $ 12,877 $ 20,722 $ 4,498 $ 15,103 $ 30,563 $ 198 $ 83,961

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.

Loans collectively evaluated for impairment in the following tables include all performing loans at September 30, 2023 and at 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 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.

Loans individually evaluated for impairment include all internally classified commercial nonaccrual loans at September 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 June 30, 2023 and at December 31, 2022 was as follows:

June 30, 2023

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

September 30, 2023

(In thousands) Commercial,

7 unchanged sentences

Collectively evaluated for impairment 11,846 18,413 5,204 16,989 28,620 108 81,180

Acquired with deteriorated credit quality — — — — — — —

Accruing loans acquired with deteriorated credit quality — — — — — — —

Total ending allowance balance $ 14,968 $ 18,618 $ 5,299 $ 16,989 $ 28,620 $ 108 $ 84,602

2 unchanged sentences

Loans collectively evaluated for impairment 1,271,722 1,810,736 287,165 1,944,776 1,972,623 18,077 7,305,099

Loans acquired with deteriorated credit quality 63 3,401 643 348 — — 4,455

Accruing loans acquired with deteriorated credit quality 42 2,795 637 333 — — 3,807

Total ending loan balance $ 1,289,021 $ 1,833,400 $ 288,926 $ 1,947,346 $ 1,972,623 $ 18,429 $ 7,349,745

2 unchanged sentences

Loans collectively evaluated for impairment 0.93 % 1.02 % 1.81 % 0.87 % 1.45 % 0.60 % 1.11 %

Loans acquired with deteriorated credit quality — % — % — % — % — % — % — %

Accruing loans acquired with deteriorated credit quality — % — % — % — % — % — % — %

Total 1.16 % 1.02 % 1.83 % 0.87 % 1.45 % 0.59 % 1.15 %

9 unchanged sentences

Collectively evaluated for impairment 13,561 17,698 5,550 16,831 28,021 152 81,813

Acquired with deteriorated credit quality — — — — — — —

Accruing loans acquired with deteriorated credit quality — — — — — — —

Total ending allowance balance $ 16,987 $ 17,829 $ 5,550 $ 16,831 $ 28,021 $ 161 $ 85,379

2 unchanged sentences

Loans collectively evaluated for impairment 1,259,524 1,758,118 323,043 1,794,302 1,904,981 18,929 7,058,897

Loans acquired with deteriorated credit quality

102 3,513 660 378 — — 4,653

Accruing loans acquired with deteriorated credit quality 102 3,513 660 378 — — 4,653

Total ending loan balance $ 1,300,933 $ 1,794,054 $ 325,415 $ 1,796,871 $ 1,904,981 $ 19,637 $ 7,141,891

2 unchanged sentences

Loans collectively evaluated for impairment 1.08 % 1.01 % 1.72 % 0.94 % 1.47 % 0.80 % 1.16 %

Loans acquired with deteriorated credit quality — % — % — % — % — % — % — %

Accruing loans acquired with deteriorated credit quality — % — % — % — % — % — % — %

Total 1.31 % 0.99 % 1.71 % 0.94 % 1.47 % 0.82 % 1.20 %

1 unchanged sentence

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

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

At September 30, 2023 and at December 31, 2022, respectively, Park had $ 2.9 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 $ 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.

The contractual balance was $ 2.8 million and $ 2.1 million at September 30, 2023 and at December 31, 2022, respectively.

The gain expected upon sale was $ 44,000 and $ 41,000 at September 30, 2023 and at December 31, 2022, respectively.

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

During the three months ended June 30, 2022, Park transferred certain commercial loans held for investment, previously nonperforming, 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, with a charge-off recorded in each instance where the fair value of an individual loan was deemed to be below the carrying cost at the time the loans were moved to the held for sale portfolio.

The sale of $ 3.9 million in loans held for sale was subsequently completed during the three months ended September 30, 2022, and Park recognized a gain on sale of $ 495,000 which is recorded within "Miscellaneous income" on the Consolidated Condensed Statements of Income for the three months ended September 30, 2022.

The remaining $ 2.4 million in loans held for sale were transferred back to loans held for investment at the lower of cost or fair value.

No non-performing loans were held for sale or sold during the three months or the nine months ended September 30, 2023.

Note 8 – Goodwill and Other Intangible Assets

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.

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

(in thousands) Goodwill Other

intangible assets Total

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

July 1, 2022 $ 159,595 $ 6,657 $ 166,252

Amortization — 341 341

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

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

September 30, 2022 $ 159,595 $ 6,316 $ 165,911

July 1, 2023 $ 159,595 $ 5,320 $ 164,915

Amortization — 334 334

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

September 30, 2023 $ 159,595 $ 4,986 $ 164,581

(in thousands) Goodwill Other

2 unchanged sentences

Amortization — 1,146 1,146

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

September 30, 2022 $ 159,595 $ 6,316 $ 165,911

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

Amortization — 989 989

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

September 30, 2023 $ 159,595 $ 4,986 $ 164,581

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

1 unchanged sentence

Acquired Intangible Assets

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

June 30, 2023

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

September 30, 2023

December 31, 2022

5 unchanged sentences

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

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.

Aggregate amortization expense was $ 334,000 and $ 341,000 for the three months ended September 30, 2023 and 2022, respectively, and was $ 989,000 and $ 1.1 million for the nine months ended September 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

Six months ending December 31, 2023 $ 668

Three months ending December 31, 2023 $ 334

Note 9 – Investment in Qualified Affordable Housing

1 unchanged sentence

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 June 30, 2023 and December 31, 2022.

(in thousands) June 30, 2023

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

(in thousands) September 30, 2023

December 31, 2022

3 unchanged sentences

Park expects that the current commitments will be funded between the remainder of 2023 through 2033.

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.

Park recognized amortization expense of $ 2.1 million and $ 2.0 million, respectively, for the three months ended September 30, 2023 and 2022, and $ 6.3 million and $ 5.9 million, respectively, for the nine months ended September 30, 2023 and 2022, which were included within the provision for income taxes.

Additionally, during the three months ended September 30, 2023 and 2022, Park recognized tax credits and other benefits from its affordable housing tax credit investments of $ 2.6 million and $ 2.5 million, respectively, and during the nine months ended September 30, 2023 and 2022, recognized $ 7.6 million and $ 7.4 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 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

The carrying amounts of foreclosed real estate properties held at September 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) September 30, 2023 December 31, 2022

Commercial real estate $ 1,354 $ 1,354

3 unchanged sentences

Residential real estate $ 1,877 $ 1,614

Assets acquired through or in lieu of loan foreclosure are initially recorded at fair value, less costs to sell, when acquired.

During the three months and the nine months ended September 30, 2022, Park recognized a $ 12.0 million OREO valuation markup related to the foreclosure and subsequent sale of a property collateralizing a former Vision Bank relationship.

This income is included in "OREO valuation markup" on the Consolidated Condensed Statements of Income.

There was no OREO

valuation markup related to former Vision Bank relationships during the three months or the nine months ended September 30, 2023.

During the three months and the nine months ended September 30, 2022, Park recognized a $ 5.6 million gain on the sale of OREO related to former Vision Bank relationships.

This income is included in "(Loss) gain on sale of OREO, net" on the Consolidated Condensed Statements of Income.

There was no gain or loss on the sale of OREO related to former Vision Bank

relationships during the three months or the nine months ended September 30, 2023.

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

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.

At September 30, 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.

Note 11 – Loan Servicing

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.

Park serviced sold mortgage loans of $ 1.96 billion at September 30, 2023, $ 2.05 billion at December 31, 2022 and $ 2.09 billion at September 30, 2022.

At September 30, 2023, $ 3.0 million of the sold mortgage loans were sold with recourse, compared to $ 3.2 million at December 31, 2022 and $ 3.3 million at September 30, 2022.

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

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.

At September 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

September 30, Nine Months Ended

September 30,

(In thousands) 2023 2022 2023 2022

9 unchanged sentences

End of period $ 85 $ 173 $ 85 $ 173

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.

Servicing fees included in "Other service income" were $ 1.3 million and $ 1.4 million for the three months ended September 30, 2023 and 2022, respectively, and were $ 3.9 million and $ 4.1 million for the nine months ended September 30, 2023 and 2022, respectively.

Note 12 - Leases

Park is a lessee in several noncancellable operating lease arrangements, primarily for retail branches, administrative and warehouse buildings, ATMs, and certain office equipment within its Ohio, North Carolina, South Carolina, and Kentucky markets.

Certain of these leases contain renewal options for periods ranging from one to five years.

Certain of these leases contain renewal options for periods ranging from one year to five years.

Park’s leases generally do not include termination options for either party to the lease or restrictive financial or other covenants.

1 unchanged sentence

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.

The carrying amounts of Park's ROU asset and lease liability at September 30, 2023 were $ 16.3 million and $ 17.4 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 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

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

Three Months Ended Nine Months Ended

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

Operating lease cost $ 727 $ 811 $ 2,187 $ 2,286

6 unchanged sentences

Reductions to ROU assets resulting from reductions to lease obligations $ ( 753 ) $ ( 697 ) $ ( 2,307 ) $ ( 2,090 )

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.

At each of September 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 3.5 % and 3.3 % at September 30, 2023 and at December 31, 2022, respectively.

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

(in thousands) June 30, 2023

Six months ending December 31, 2023 $ 1,805

(in thousands) September 30, 2023

Three months ending December 31, 2023 $ 884

Thereafter 11,474

7 unchanged sentences

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

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

At September 30, 2023 and at December 31, 2022, Park's repurchase agreement borrowings totaled $ 105.8 million and $ 227.3 million, respectively.

These borrowings were collateralized with U.S.

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.

Government sponsored entities' asset-backed securities with a fair value of $ 179.0 million and $ 313.1 million at September 30, 2023 and at December 31, 2022, respectively.

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

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

At September 30, 2023 and at December 31, 2022, Park had $ 1,106 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 September 30, 2023 and at December 31, 2022:

September 30, 2023

(in thousands) Remaining Contractual Maturity of the Agreements

14 unchanged sentences

Borrowing Derivatives :

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.

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

There was no interest expense recorded on swap transactions for the three -month period ended September 30, 2022.

Interest expense recorded on swap transactions was $ 171,000 for the nine -month period ended September 30, 2022.

Additionally, Park recognized a $ 154,000 gain , net of income taxes, related to borrowing swaps that was recorded in "Other comprehensive loss" on the Consolidated Condensed Statements of Comprehensive Income (Loss) during the nine-month period ended September 30, 2022.

No gain (loss) related to borrowing swaps was recorded during the three -month period ended September 30, 2022.

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 $ 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.

These interest rate swaps had a notional amount totaling $ 18.6 million and $ 21.7 million at September 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 nine-month periods ended September 30, 2023 and September 30, 2022.

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

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)".

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 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.

During the nine-month period ended September 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.

There was no early termination expense related to borrowing interest rate swaps during the three-month period ended September 30, 2022 or during the three -month period or the nine -month period ended

September 30, 2023.

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

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

September 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 June 30, 2023 and at December 31, 2022.

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

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

(In thousands) September 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 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.

At September 30, 2023 and at December 31, 2022 , Park had $ 1.7 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 $ 30,000 and $ 46,000 at September 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 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.

At September 30, 2023 and at December 31, 2022 , the fair value of the swap liability of $ 123,000 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 and the six-month periods ended June 30, 2023 and 2022:

Other comprehensive loss components, net of tax, are shown in the following table for the three- month and the nine-month periods ended September 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 )

Beginning balance at July 1, 2023 $ ( 6,680 ) $ — $ ( 90,106 ) $ ( 96,786 )

Other comprehensive loss before reclassifications — — ( 19,104 ) ( 19,104 )

Net current period other comprehensive loss — — ( 19,104 ) ( 19,104 )

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 )

Ending balance at September 30, 2023 $ ( 6,680 ) $ — $ ( 109,210 ) $ ( 115,890 )

Beginning balance at July 1, 2022 $ ( 5,792 ) $ — $ ( 79,612 ) $ ( 85,404 )

Other comprehensive loss before reclassifications — — ( 39,939 ) ( 39,939 )

Net current period other comprehensive loss — — ( 39,939 ) ( 39,939 )

Ending balance at September 30, 2022 $ ( 5,792 ) $ — $ ( 119,551 ) $ ( 125,343 )

(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 )

Other comprehensive income before reclassifications — — 5,608 5,608

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

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

Other comprehensive loss before reclassifications — — ( 13,496 ) ( 13,496 )

Net current period other comprehensive loss — — ( 13,496 ) ( 13,496 )

Ending balance at September 30, 2023 $ ( 6,680 ) $ — $ ( 109,210 ) $ ( 115,890 )

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

2 unchanged sentences

Net current period other comprehensive income (loss) — 206 ( 140,704 ) ( 140,498 )

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.

Ending balance at September 30, 2022 $ ( 5,792 ) $ — $ ( 119,551 ) $ ( 125,343 )

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

During the three -month period ended September 30, 2022, there were no reclassifications out of accumulated other comprehensive loss.

During the nine-month period ended September 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 and the six months ended June 30, 2023 and 2022.

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

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

6 unchanged sentences

Diluted earnings per common share $ 2.28 $ 2.57 $ 6.29 $ 7.05

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.

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

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

Park repurchased an aggregate of 50,000 and 199,000 common shares during the three months and the nine months ended September 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 nine months ended September 30, 2022.

Note 17 – Segment Information

The Corporation is a financial holding company headquartered in Newark, Ohio.

The reportable segment for the Corporation is its chartered national bank subsidiary, PNB (headquartered in Newark, Ohio).

"All Other", which primarily consists of Park as the "Parent Company", GFSC and SEPH, is shown to reconcile the segment totals to the Consolidated Condensed Statements of Income.

The reportable segments for the Corporation are its chartered national bank subsidiary, PNB (headquartered in Newark, Ohio) and "All Other", which primarily consists of Park as the "Parent Company", GFSC and SEPH.

Management is required to disclose information about the different types of business activities in which a company engages and also information on the different economic environments in which a company operates, so that the users of the financial statements can better understand the company’s performance, better understand the potential for future cash flows, and make more informed judgments about the company as a whole.

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 June 30, 2023

Park has two reportable segments, as:

(i) discrete financial

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

Operating Results for the three months ended September 30, 2023

(In thousands) PNB All Other Total

Net interest income (expense) $ 96,078 $ ( 1,809 ) $ 94,269

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

Recovery of credit losses ( 1,538 ) ( 42 ) ( 1,580 )

Other income (loss) 27,888 ( 175 ) 27,713

3 unchanged sentences

Net income (loss) $ 40,788 $ ( 3,871 ) $ 36,917

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

Operating Results for the three months ended June 30, 2022

Assets (at September 30, 2023) $ 9,959,528 $ 41,386 $ 10,000,914

Operating Results for the three months ended September 30, 2022

(In thousands) PNB All Other Total

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

Net interest income (expense) $ 92,035 $ ( 1,207 ) $ 90,828

Provision for (recovery of) credit losses 3,235 ( 45 ) 3,190

1 unchanged sentence

Other expense 79,070 3,833 82,903

Income (loss) before income taxes $ 43,095 $ ( 1,002 ) $ 42,093

Income tax expense (benefit) 8,155 ( 386 ) 7,769

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

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

Operating Results for the six months ended June 30, 2023

Income before income taxes $ 38,648 $ 12,781 $ 51,429

Income tax expense 7,133 2,228 9,361

Net income $ 31,515 $ 10,553 $ 42,068

Assets (at September 30, 2022) $ 9,816,644 $ 38,403 $ 9,855,047

Operating Results for the nine months ended September 30, 2023

(In thousands) PNB All Other Total

1 unchanged sentence

Provision for (recovery of) credit losses 1,901 ( 806 ) 1,095

Other income 49,353 49 49,402

Other income (loss) 77,241 ( 126 ) 77,115

Other expense 220,741 9,455 230,196

2 unchanged sentences

Net income (loss) $ 112,542 $ ( 10,308 ) $ 102,234

Operating Results for the six months ended June 30, 2022

Operating Results for the nine months ended September 30, 2022

(In thousands) PNB All Other Total

Net interest income (expense) $ 254,818 $ ( 2,365 ) $ 252,453

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

Provision for (recovery of) credit losses 2,045 ( 469 ) 1,576

Other income 89,420 20,123 109,543

Other expense 209,500 10,824 220,324

Income (loss) before income taxes $ 94,045 $ ( 5,378 ) $ 88,667

Income tax expense (benefit) 17,637 ( 2,169 ) 15,468

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

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.

Income before income taxes $ 132,693 $ 7,403 $ 140,096

Income tax expense 24,770 59 24,829

Net income $ 107,923 $ 7,344 $ 115,267

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 nine-month period s ended September 30, 2023 and 2022.

The reconciling amounts for consolidated total assets for the periods ended September 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 June 30, 2023, 320,302 common shares were available for future grants under the 2017 Employees LTIP.

At September 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 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.

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

During the nine months ended September 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 September 30, 2023 or 2022.

At September 30, 2023, Park reported 187,461 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:

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

Common shares subject to PBRSUs

4 unchanged sentences

Adjustment for performance conditions of PBRSUs (1)

Nonvested at June 30, 2023 (2)

Nonvested at September 30, 2023 (2)

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

1 unchanged sentence

(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:

As of September 30, 2023, an aggregate of 182,647 PBRSUs were expected to vest.

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

2 unchanged sentences

Net common shares issued — 4,490 38,842 34,247

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:

Share-based compensation expense of $ 1.3 million and $ 1.4 million was recognized for the three-month periods ended September 30, 2023 and 2022, respectively, and share-based compensation expense of $ 5.4 million and $ 4.8 million was recognized for the nine-month periods ended September 30, 2023 and 2022, respectively.

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

(In thousands)

Six months ending December 31, 2023 $ 2,733

Three months ending December 31, 2023 $ 1,341

Total $ 9,890

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 any of the three-month or the six-month periods ended June 30, 2023 and 2022.

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

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

The following table shows the components of net periodic pension benefit (income) expense:

The following table shows the components of net periodic pension benefit income:

Three Months Ended

June 30, Six Months Ended

June 30, Affected Line Item in the Consolidated

September 30, Nine Months Ended

September 30, Affected Line Item in the Consolidated

Condensed Statements of Income

9 unchanged sentences

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.

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:

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

Three Months Ended

June 30, Six Months Ended

June 30, Affected Line Item in the Consolidated

September 30, Nine Months Ended

September 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 June 30, 2023 using:

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

Fair Value Measurements at September 30, 2023 using:

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

Investment securities:

40 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 and the six-month periods ended June 30, 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 nine-month periods ended September 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 June 30, 2023 and 2022

Three months ended September 30, 2023 and 2022

(In thousands) Corporate debt securities Equity securities Fair value

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

Balance at July 1, 2023 $ 6,116 $ 455 $ ( 296 )

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

2 unchanged sentences

Included in other comprehensive income 10 — —

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

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

Purchases, sales, issuances and settlements, other, net — — 173

Balance at September 30, 2023 $ 6,126 $ 466 $ ( 123 )

Balance at July 1, 2022 $ — $ 491 $ ( 447 )

Included in other income / other expense — ( 22 ) —

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

Purchases, sales, issuances and settlements, other, net

Balance at September 30, 2022 $ — $ 469 $ ( 243 )

Level 3 Fair Value Measurements

Six months ended June 30, 2023 and 2022

Nine months ended September 30, 2023 and 2022

(In thousands) Corporate debt securities Equity securities Fair value

5 unchanged sentences

Purchases, sales, issuances and settlements, other, net — — 295

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

Balance at September 30, 2023 $ 6,126 $ 466 $ ( 123 )

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

Included in other income / other (expense) — ( 30 ) ( 221 )

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

Purchases, sales, issuances and settlements, other, net — — 204

Balance at September 30, 2022 $ — $ 469 $ ( 243 )

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

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

At September 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 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

At September 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 September 30, 2023 using:

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

Individually evaluated collateral dependent loans recorded at fair value:

Commercial real estate $ — $ — $ 2,289 $ 2,289

Construction real estate — — 455 455

Residential real estate — — 186 186

10 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.

June 30, 2023

September 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 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.

The (expense) income from credit adjustments related to individually evaluated loans carried at fair value was $( 0.3 ) million and $ 7,000 for the three-month periods ended September 30, 2023 and 2022, respectively, and was $( 0.9 ) million and $( 1.0 ) million for the nine-month periods ended September 30, 2023 and 2022, respectively.

MSRs totaled $ 15.0 million at September 30, 2023.

Of this $ 15.0 million MSR carrying balance, $ 0.9 million were recorded at fair value and included a valuation allowance of $ 85,000 .

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

The remaining $ 14.1 million were recorded at cost, as the fair value exceeded cost at September 30, 2023.

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

1 unchanged sentence

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 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

The income r elated to MSRs carried at fair value during the three-month periods ended September 30, 2023 and September 30, 2022 was $ 16,000 and $ 59,000 , respectively, and was $ 97,000 and $ 1.4 million for the nine-month periods ended September 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 September 30, 2023 and December 31, 2022:

September 30, 2023

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

3 unchanged sentences

Income approach Capitalization rate 7.3 % - 8.5 % ( 7.8 %)

Construction real estate $ 455 Sales comparison approach Adj to comparables 0.0 % - 20.0 % ( 10.0 %)

Income approach Capitalization rate 7.3 % ( 7.3 %)

Residential real estate $ 186 Sales comparison approach Adj to comparables 1.2 % - 78.6 % ( 7.7 %)

10 unchanged sentences

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

At September 30, 2023 and at December 31, 2022, Park had Partnership Investments with a NAV of $ 26.7 million and $ 24.4 million, respectively.

At September 30, 2023 and at December 31, 2022, Park had $ 19.4 million and $ 20.3 million, respectively, in unfunded commitments related to these Partnership Investments.

For the three-month periods ended September 30, 2023 and 2022, Park recogniz ed income of $ 924,000 and $ 97,000 , respectively, and for the nine-month periods ended September 30, 2023 and 2022, recogn ized income of $ 683,000 and $ 2.6 million, respectively, related to these Partnership Investments.

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

September 30, 2023

Fair Value Measurements

53 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 and the six-month periods ended June 30, 2023 and June 30, 2022:

The following tables present the Corporation's sources of other income by revenue stream and operating segment for the three-month and the nine-month periods ended September 30, 2023 and September 30, 2022:

Three Months Ended

June 30, 2023

September 30, 2023

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

18 unchanged sentences

ATM fees 575 — 575

Gain on sale of OREO, net 12 — 12

Loss on sale of OREO, net ( 6 ) — ( 6 )

OREO valuation markup — — —

8 unchanged sentences

(2) Not within the 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.

(3) "Miscellaneous" income included brokerage income, safe deposit box rentals, and miscellaneous bank fees totaling $ 2.3 million, all of which were within the scope of ASC 606.

Three Months Ended

June 30, 2022

September 30, 2022

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

28 unchanged sentences

(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

(3) "Miscellaneous" income included brokerage income, safe deposit box rentals, and miscellaneous bank fees totaling $ 3.7 million, all of which were within the scope of ASC 606.

Nine Months Ended

September 30, 2023

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

18 unchanged sentences

ATM fees 1,661 — 1,661

Gain on sale of OREO, net 3 — 3

Loss on sale of OREO, net ( 3 ) — ( 3 )

OREO valuation markup 15 — 15

Loss on equity securities, net (2)

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

1,146 ( 528 ) 618

6 unchanged sentences

(2) Not within the 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

(3) "Miscellaneous" income included brokerage income, safe deposit box rentals, and miscellaneous bank fees totaling $ 4.4 million, all of which were within the scope of ASC 606.

Nine Months Ended

September 30, 2022

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

29 unchanged sentences

(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.

(3) "Miscellaneous" income included brokerage income, safe deposit box rentals, and miscellaneous bank fees totaling $ 7.8 million, all of which were within the scope of ASC 606.

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

23 unchanged sentences

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