What changed in this filing

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Item 1. Financial Statements

2024-05-02 compared with 2023-11-01 · 349 added, 672 removed, 1339 unchanged (43% of the section changed)

3 unchanged sentences

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

September 30,

2024 December 31, 2023

3 unchanged sentences

Investment securities:

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)

Debt securities available-for-sale, at fair value (amortized cost of $ 1,334,973 and $ 1,418,770 at March 31, 2024 and December 31, 2023, respectively, and no allowance for credit losses at March 31, 2024 or at December 31, 2023)

1,248,787 1,332,842

19 unchanged sentences

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

September 30,

2024 December 31, 2023

17 unchanged sentences

20,000,000 shares authorized;

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

17,623,104 common shares issued at March 31, 2024 and at December 31, 2023)

459,532 463,280

Retained earnings 921,101 903,877

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

Treasury shares ( 1,473,581 common shares at March 31, 2024 and 1,506,625 common shares at December 31, 2023)

( 152,259 ) ( 155,673 )

7 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Interest and dividend income:

11 unchanged sentences

Short-term borrowings 1,464 824

Subordinated notes and long-term debt 2,358 2,228 7,018 6,550

Subordinated notes 2,360 2,320

Total interest expense 31,017 18,703

Net interest income 95,623 92,198

(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

Provision for credit losses 2,180 183

Net interest income after provision for credit losses $ 93,443 $ 92,015

Other income:

5 unchanged sentences

ATM fees 496 533

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

OREO valuation markup — 12,009 15 12,039

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

Gain (loss) on the sale of OREO, net 121 ( 9 )

Loss on the sale of debt securities, net ( 398 ) —

Loss on equity securities, net ( 687 ) ( 405 )

Other components of net periodic pension benefit income 2,204 1,893

5 unchanged sentences

Three Months Ended

September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Other expense:

10 unchanged sentences

Amortization of intangible assets 320 327

Foundation contribution — 4,000 — 4,000

Miscellaneous 2,621 2,471

12 unchanged sentences

PARK NATIONAL CORPORATION AND SUBSIDIARIES

Consolidated Condensed Statements of Comprehensive Income (Loss) (Unaudited)

Consolidated Condensed Statements of Comprehensive Income (Unaudited)

(in thousands)

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net income $ 35,204 $ 33,733

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.

Other comprehensive (loss) income, net of tax:

Unrealized net holding (loss) gain on debt securities available-for-sale, net of income tax effect of $( 138 ) and $ 3,285 for the three months ended March 31, 2024 and 2023, respectively

( 518 ) 12,361

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 )

Net loss realized on sale of debt securities, AFS, net of income tax effect of $ 84 for the three months ended March 31, 2024

Other comprehensive (loss) income $ ( 204 ) $ 12,361

Comprehensive income $ 35,000 $ 46,094

SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

8 unchanged sentences

Balance at December 31, 2023 $ — $ 463,280 $ 903,877 $ ( 155,673 ) $ ( 66,191 )

Cumulative effect of a change in accounting principle ( 303 )

Balance at January 1, 2023 $ — $ 462,404 $ 846,932 $ ( 138,019 ) $ ( 102,394 )

Net income 35,204

Other comprehensive income, net of tax 12,361

Dividends on common shares at $ 1.05 per common share

Issuance of 34,484 common shares under share-based compensation awards, net of 21,981 common shares withheld to pay employee income taxes

( 5,309 ) ( 862 ) 3,564

Share-based compensation expense 2,336

Repurchase of 124,000 common shares to be held as treasury shares

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

Net income 31,584

Other comprehensive loss, net of tax ( 204 )

3 unchanged sentences

Share-based compensation expense 1,953

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

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

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

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

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

Balance at March 31, 2024 $ — $ 459,532 $ 921,101 $ ( 152,259 ) $ ( 66,395 )

Shares Common

3 unchanged sentences

Comprehensive

Income (Loss)

Balance at December 31, 2022 $ — $ 462,404 $ 847,235 $ ( 138,019 ) $ ( 102,394 )

Cumulative effect of a change in accounting principle ( 303 )

Balance at January 1, 2023 $ — $ 462,404 $ 846,932 $ ( 138,019 ) $ ( 102,394 )

Net income 33,733

Other comprehensive loss, net of tax ( 55,624 )

Other comprehensive income, net of tax 12,361

Dividends on common shares at $ 1.05 per common share

Cash payment for fractional common shares in dividend reinvestment plan ( 2 )

Issuance of 34,484 common shares under share-based compensation awards, net of 21,981 common shares withheld to pay employee income taxes

1 unchanged sentence

Share-based compensation expense 2,336

Repurchase of 124,000 common shares to be held as treasury shares

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

Net income 34,324

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

Dividends on common shares at $ 1.04 per common share

Share-based compensation expense 1,374

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

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)

Nine Months Ended

September 30,

Three Months Ended

Operating activities:

5 unchanged sentences

Amortization of investment securities, net 415 817

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

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

Net (accretion) amortization of purchase accounting adjustments ( 30 ) 119

Loss on the sale of debt securities, net 398 —

Loss on equity securities, net 687 405

Loan originations to be sold in secondary market ( 16,382 ) ( 15,332 )

2 unchanged sentences

Share-based compensation expense 1,953 2,336

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

OREO valuation markup ( 15 ) ( 12,039 )

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

(Gain) loss on sale of OREO, net ( 121 ) 9

Bank owned life insurance income ( 2,629 ) ( 1,185 )

1 unchanged sentence

Changes in assets and liabilities:

Increase in prepaid dealer premiums ( 1,339 ) ( 10,827 )

Increase in other assets ( 7,000 ) ( 2,302 )

Decrease in prepaid dealer premiums 173 601

Decrease (increase) in other assets 1,533 ( 2,116 )

Decrease in other liabilities ( 9,537 ) ( 13,986 )

1 unchanged sentence

Investing activities:

Proceeds from sales of investment securities $ 30,797 $ —

Proceeds from the redemption/repurchase of FHLB stock 4,563 3,094

5 unchanged sentences

FHLB stock ( 225 ) —

Net decrease in other investments 2,009 392

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

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

Net decrease (increase) in other investments 317 ( 183 )

Net loan (originations) paydowns, portfolio loans ( 49,181 ) 50,193

Investment in qualified affordable housing tax credits ( 4,094 ) ( 1,409 )

3 unchanged sentences

Purchases of premises and equipment ( 3,142 ) ( 2,674 )

Net cash used in investing activities $ ( 120,529 ) $ ( 403,153 )

Net cash provided by investing activities $ 32,404 $ 78,653

PARK NATIONAL CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(in thousands)

Nine Months Ended

September 30,

Three Months Ended

Financing activities:

Net (decrease) increase in deposits $ ( 185,164 ) $ 188,536

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

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

Net increase in deposits $ 264,560 $ 28,392

Net (increase) decrease in off-balance sheet deposits ( 1,094 ) 31,337

Net decrease in short-term borrowings ( 222,323 ) ( 55,284 )

Value of common shares withheld to pay employee income taxes ( 2,980 ) ( 2,607 )

1 unchanged sentence

Cash dividends paid ( 17,408 ) ( 17,409 )

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

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

Net cash provided by (used in) financing activities $ 20,755 $ ( 30,879 )

Increase in cash and cash equivalents 87,813 72,191

Cash and cash equivalents at beginning of year 218,268 189,728

3 unchanged sentences

Interest $ 32,383 $ 20,528

Federal income tax 12,200 16,070

Non-cash items:

1 unchanged sentence

ROU assets obtained in exchange for lease obligations 547 136

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

New commitments in other investment securities 2,745 15,000

SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

5 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 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.

The results of operations for the three-month period ended March 31, 2024 are not necessarily indicative of the operating results to be anticipated for the year ending December 31, 2024.

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, consolidated condensed statements of changes in shareholders’ equity and consolidated condensed statements of cash flows in conformity with U.S.

These financial statements should be read in conjunction with the consolidated financial statements included in Item 8.

7 unchanged sentences

Adoption of New Accounting Pronouncements

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 Restructurings 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 borrowers are experiencing financial difficulty.

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.

Park adopted ASU 2022-02 using the modified retrospective transition method on January 1, 2023.

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

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

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

No significant new pronouncements were adopted during the three months ended March 31, 2024.

Issued But Not Yet Effective Accounting Standards

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:

10 unchanged sentences

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

ASU 2023-07 - Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures

In November 2023, FASB issued ASU 2023-07 -Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

ASU 2023-07 will require public entities to disclose information about their reportable segments' significant expenses on an interim and annual basis.

Public entities will be required to disclose other segment items for each reportable segment and provide a description of its composition.

Significant expense categories are derived from expenses that are regularly reported to an entity's chief operating decision-makers and included in a segments' reported measures of profit or loss.

ASU 2023-07 will also require for an entity to disclose the title and position of the chief operating decision-maker and explain how the chief operating decision-maker uses the reported measures of profit or loss to assess segment performance.

ASU 2023-07 also requires interim disclosures of certain segment-related disclosures that previously were required only on an annual basis and clarifies that entities with a single reportable segment are subject to both new and existing segment reporting requirements under Topic 280.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

ASU 2023-07 requires entities to adopt the changes to the segment reporting guidance on a retrospective basis and early adoption is permitted.

The adoption of the provisions of ASU 2023-07 is not expected to have an impact on Park's consolidated financial statements.

ASU 2023-09- Income Taxes (Topic 740) Improvement to Income Tax Disclosures

In December 2023, FASB issued ASU 2023-09 - Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

ASU 2023-09 will require entities to disclose more detailed information in the reconciliation of their statutory tax rate to their effective tax rate.

ASU 2023-09 also requires entities to disclose more detailed information about income taxes paid, including by jurisdiction.

ASU 2023-09 is effective for public business entities for annual reporting periods beginning after December 15, 2024 and interim periods beginning after December 15, 2025.

The adoption of the provisions of ASU 2023-09 is not expected to have an impact on Park's consolidated financial statements, but will impact disclosures.

Note 3 – Investment Securities

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

Investment securities at March 31, 2024 and at December 31, 2023, were as follows:

Debt securities AFS (In thousands) Amortized

Losses Fair Value

September 30, 2023:

Obligations of U.S.

Government sponsored entities $ 39,000 $ — $ 1,700 $ 37,300

March 31, 2024:

Obligations of states and political subdivisions $ 219,886 $ 392 $ 13,752 $ 206,526

6 unchanged sentences

December 31, 2023:

Obligations of U.S.

Government sponsored entities $ 39,000 $ — $ 1,787 $ 37,213

Obligations of states and political subdivisions $ 251,531 $ 1,173 $ 11,520 $ 241,184

3 unchanged sentences

Total $ 1,418,770 $ 1,227 $ 87,155 $ 1,332,842

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

Investment securities in an unrealized loss position at March 31, 2024, were as follows:

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

3 unchanged sentences

Debt securities AFS:

Obligations of U.S.

Government sponsored entities $ — $ — $ 37,300 $ 1,700 $ 37,300 $ 1,700

Obligations of states and political subdivisions $ 37,808 $ 276 $ 131,395 $ 13,476 $ 169,203 $ 13,752

9 unchanged sentences

Debt securities AFS:

Obligations of U.S.

Government sponsored entities $ 37,213 $ 1,787 $ — $ — $ 37,213 $ 1,787

Obligations of states and political subdivisions $ 46,685 $ 420 $ 103,993 $ 11,100 $ 150,678 $ 11,520

3 unchanged sentences

Total $ 56,215 $ 1,122 $ 1,150,640 $ 86,033 $ 1,206,855 $ 87,155

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.

At March 31, 2024, Park’s debt securities portfolio consisted of $ 1.2 billion of securities, $ 1.1 billion of which were in an unrealized loss position with aggregate unrealized losses of $ 86.9 million.

Of the $ 1.1 billion of securities in an unrealized loss position, $ 1.0 billion were in an unrealized loss position for 12 months or longer.

Of the $ 138.3 million in unrealized losses, an aggregate of $ 96.7 million were related to Park's "Obligations of U.S.

Government sponsored entities" portfolio and Park's "U.S.

Of the $ 86.9 million in unrealized losses, $ 69.5 million were related to Park's "U.S.

Government sponsored entities' asset-backed securities" portfolio.

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

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

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

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

1 unchanged sentence

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 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.

There was no allowance for credit losses recorded for debt securities AFS at either March 31, 2024 or December 31, 2023.

Additionally, for the three months ended March 31, 2024 and 2023, there were no credit-related investment impairment losses recognized.

The amortized cost and estimated fair value of investments in debt securities AFS at March 31, 2024, 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.

2 unchanged sentences

Debt Securities AFS

Obligations of U.S.

Treasury and other U.S.

Government sponsored entities

Due one through five years $ 39,000 $ 37,300 2.37 %

Obligations of state and political subdivisions:

10 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 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.

During the three-month period ended March 31, 2024, Park sold certain AFS debt securities with a book value of $ 31.2 million at a gross loss of $ 398,000 .

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

Investment securities having a fair value of $ 762.1 million and $ 602.0 million at March 31, 2024 and December 31, 2023, respectively, were pledged to collateralize government and public fund deposits, to secure repurchase agreements 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 September 30, 2023 and December 31, 2022 were as follows:

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

The carrying amounts of other investment securities at March 31, 2024 and December 31, 2023 were as follows:

(In thousands) March 31, 2024 December 31, 2023

FHLB stock $ 13,415 $ 17,754

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 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.

Cumulatively, upward adjustments of $ 871,000 have been recorded as a result of observable price changes.

There were no adjustments recorded during the three months March 31, 2024 or March 31, 2023 as a result of observable price changes.

During the three months ended March 31, 2024, Park purchased 2,246 shares of FHLB stock with a book value of $ 225,000 .

No shares of FHLB stock were purchased during the three months ended March 31, 2023.

During the three months ended March 31, 2024, the FHLB repurchased 45,630 shares of FHLB stock with a book value of $ 4.6 million.

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

No shares of FRB stock were purchased or sold during the three months ended March 31, 2024 or 2023.

During the three months ended March 31, 2024 and 2023, $ 3,000 and $( 27,000 ), respectively, of gains (losses) on equity investments carried at fair value were recorded within "Loss on equity securities, net" on the Consolidated Condensed Statements of Income.

During the three months ended March 31, 2024 and 2023, $( 690,000 ) and $( 378,000 ), respectively, of losses on equity investments carried at NAV were recorded within “Loss on equity securities, net” on the Consolidated Condensed Statements of Income.

Note 5 – Loans

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

September 30, 2023 December 31, 2022

The composition of the loan portfolio at March 31, 2024 and at December 31, 2023 was as follows:

March 31, 2024 December 31, 2023

(In thousands) Amortized Cost Amortized Cost

21 unchanged sentences

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

In order to support customers, Park participated in the CARES Act Paycheck Protection Program ("PPP").

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 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.

Loans are shown net of deferred origination fees, costs and unearned income of $ 20.3 million at March 31, 2024, and of $ 19.8 million at December 31, 2023, which represented a net deferred income position at both dates.

At March 31, 2024 and December 31, 2023, loans included purchase accounting adjustments of $ 1.5 million and $ 1.8 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 $ 3.1 million and $ 1.5 million were reclassified to loans at September 30, 2023 and at December 31, 2022, respectively.

Overdrawn deposit accounts of $ 1.6 million and $ 1.5 million were reclassified to loans at March 31, 2024 and at December 31, 2023, respectively.

Credit Quality

Among other things, the adoption of ASU 2022-02 on January 1, 2023 eliminated the concept of TDRs.

After the adoption of ASU 2022-02 on January 1, 2023, nonperforming loans consisted of nonaccrual loans and loans past due 90 days or more and still accruing.

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 September 30, 2023.

September 30, 2023

Nonperforming loans consist of nonaccrual loans and loans past due 90 days or more and still accruing.

The following tables present the amortized cost of nonaccrual loans and loans past due 90 days or more and still accruing, by class of loan, at March 31, 2024 and December 31, 2023.

March 31, 2024

(In thousands) Nonaccrual

9 unchanged sentences

Commercial 1,949 — 1,949

Retail 148 251 399

Residential real estate:

7 unchanged sentences

Total loans $ 70,189 $ 1,570 $ 71,759

The following table presents the amortized cost of nonaccrual loans, accruing TDRs, and loans past due 90 days or more and still accruing, by class of loan, at December 31, 2022:

December 31, 2023

(In thousands) Nonaccrual

Loans Accruing

TDRs Loans Past Due 90 Days or More and Accruing Total

Loans Loans Past Due 90 Days or More and Accruing Total

Nonperforming

16 unchanged sentences

Total loans $ 60,259 $ 859 $ 61,118

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

The following tables provide additional detail on nonaccrual loans and the related ACL, by class of loan, at March 31, 2024 and December 31, 2023:

March 31, 2024

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

6 unchanged sentences

Commercial 1,949 — —

Retail — 148 148

Residential real estate:

16 unchanged sentences

Commercial 504 — —

Retail — 1,254 19

Residential real estate:

10 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, at September 30, 2023 and at December 31, 2022:

September 30, 2023

The following tables provide the amortized cost basis of collateral-dependent loans by class of loan, at March 31, 2024 and at December 31, 2023:

March 31, 2024

(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 nine-month periods ended September 30, 2023 and 2022:

The following table presents interest income recognized on nonaccrual loans for the three-month periods ended March 31, 2024 and 2023:

Interest Income Recognized

(In thousands) Three Months Ended

September 30, 2023 Three Months Ended

September 30, 2022 Nine Months Ended

September 30, 2023 Nine Months Ended

September 30, 2022

March 31, 2024 Three Months Ended

March 31, 2023

Commercial, financial and agricultural:

5 unchanged sentences

Commercial 37 32

Retail — — — 4

Residential real estate:

1 unchanged sentence

Mortgage 70 49

HELOC 1 5 16 11

Installment — 1

1 unchanged sentence

Check loans — —

Leases — 9 — 33

Total loans $ 710 $ 900

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

The following tables present the aging of the amortized cost in past due loans at March 31, 2024 and at December 31, 2023 by class of loan:

March 31, 2024

(In thousands) Accruing

51 unchanged sentences

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

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

Past due information at March 31, 2024 and December 31, 2023 is included in the previous tables.

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

14 unchanged sentences

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

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

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

Loans classified as doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

2 unchanged sentences

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 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

Based on the most recent analysis performed, the risk category of commercial loans by class of loans at March 31, 2024 and at December 31, 2023 are detailed in the tables below.

Also included in the tables detailing loan balances are gross charge offs for the three months ended March 31, 2024 and for the year ended December 31, 2023.

March 31, 2024 Term Loans Amortized Cost Basis by Origination Year

(In thousands) 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Total

28 unchanged sentences

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

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

March 31, 2024 Term Loans Amortized Cost Basis by Origination Year

(In thousands) 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Total

29 unchanged sentences

Total $ 205,280 $ 151,829 $ 120,507 $ 96,527 $ 38,696 $ 54,246 $ 624,940 $ 1,292,025

Current period gross charge-offs $ — $ 13 $ 73 $ — $ 5 $ 52 $ 19 $ 162

Commercial, financial and agricultural:

4 unchanged sentences

Total $ — $ — $ 925 $ 1,191 $ — $ — $ — $ 2,116

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

Commercial real estate (1)

4 unchanged sentences

Total $ 283,731 $ 326,636 $ 341,598 $ 328,770 $ 208,146 $ 368,256 $ 18,856 $ 1,875,993

Current period gross charge-offs $ 224 $ — $ — $ — $ — $ 530 $ — $ 754

Construction real estate:

4 unchanged sentences

Total $ 90,114 $ 78,224 $ 7,543 $ 18,195 $ 1,090 $ 2,718 $ 11,342 $ 209,226

Current period gross charge-offs $ 546 $ — $ — $ — $ — $ — $ — $ 546

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

(In thousands) 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis Total

Residential Real Estate:

4 unchanged sentences

Total $ 128,784 $ 104,901 $ 106,007 $ 120,598 $ 50,727 $ 74,668 $ 23,725 $ 609,410

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

(In thousands) 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis Total

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

Pass $ 11,440 $ 4,404 $ 2,197 $ 1,941 $ 356 $ 623 $ — $ 20,961

3 unchanged sentences

Total $ 12,171 $ 5,968 $ 2,588 $ 2,238 $ 433 $ 631 $ — $ 24,029

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

Total Commercial Loans

4 unchanged sentences

Total $ 720,080 $ 667,558 $ 579,168 $ 567,519 $ 299,092 $ 500,519 $ 678,863 $ 4,012,799

Current period gross charge-offs $ 770 $ 13 $ 73 $ — $ 5 $ 582 $ 19 $ 1,462

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

1 unchanged sentence

For residential and consumer loan classes, Park also evaluates credit quality based on the aging status of the loan, which was previously presented, and by performing status.

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.

After the adoption of ASU 2022-02 on January 1, 2023, nonperforming loans consisted of nonaccrual loans and loans past due 90 days or more and still accruing.

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.

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

The following tables present the amortized cost in residential and consumer loans based on performing status and gross charge offs for the three months ended March 31, 2024 and for the year ended December 31, 2023.

Nonperforming loans consisted of nonaccrual loans and loans past due 90 days or more and still accruing.

March 31, 2024 Term Loans Amortized Cost Basis by Origination Year

(In thousands) 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Total

11 unchanged sentences

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

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

Residential Real Estate:

20 unchanged sentences

Current period gross charge-offs $ — $ 620 $ 1,107 $ 891 $ 246 $ 134 $ 2 $ 3,000

March 31, 2024 Term Loans Amortized Cost Basis by Origination Year

(In thousands) 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Total

Performing $ — $ — $ — $ — $ — $ — $ 1,900 $ 1,900

16 unchanged sentences

Total 1,499 $ — $ — $ — $ — $ — $ — $ 1,499

Current period gross charge-offs $ 1,064 $ — $ — $ — $ — $ — $ — $ 1,064

Construction Real Estate:

3 unchanged sentences

Total $ 52,904 $ 24,219 $ 7,709 $ 4,277 $ 3,604 $ 2,891 $ 269 $ 95,873

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

Residential Real Estate:

3 unchanged sentences

Total $ 209,512 $ 260,220 $ 219,589 $ 177,924 $ 81,208 $ 291,408 $ — $ 1,239,861

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

Residential Real Estate:

3 unchanged sentences

Total $ 99 $ 205 $ 379 $ 98 $ 253 $ 2,441 $ 170,874 $ 174,349

Current period gross charge-offs $ — $ — $ — $ — $ — $ 9 $ — $ 9

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

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

Residential Real Estate:

3 unchanged sentences

Total $ 2,225 $ 162 $ — $ 3 $ 144 $ 3,370 $ — $ 5,904

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

Performing $ 627,985 $ 613,019 $ 319,161 $ 214,714 $ 81,446 $ 65,955 $ 18,605 $ 1,940,885

2 unchanged sentences

Total $ 628,380 $ 613,910 $ 319,815 $ 215,149 $ 81,662 $ 66,344 $ 18,609 $ 1,943,869

Current period gross charge-offs $ 560 $ 3,517 $ 2,371 $ 763 $ 545 $ 480 $ 6 $ 8,242

Performing $ — $ — $ — $ — $ — $ — $ 2,067 $ 2,067

2 unchanged sentences

Total $ — $ — $ — $ — $ — $ — $ 2,067 $ 2,067

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

Total Consumer Loans

3 unchanged sentences

Total $ 894,619 $ 898,716 $ 547,492 $ 397,451 $ 166,871 $ 366,454 $ 191,819 $ 3,463,422

Current period gross charge-offs $ 1,624 $ 3,517 $ 2,371 $ 763 $ 545 $ 524 $ 57 $ 9,401

Loans and Leases Acquired with Deteriorated Credit Quality

In conjunction with the NewDominion acquisition, Park acquired loans with a book value of $ 277.9 million as of the July 1, 2018 acquisition date.

These loans were recorded at the initial fair value of $ 272.8 million.

Loans acquired with deteriorated credit quality (ASC 310-30) with a book value of $ 5.1 million were recorded at the initial fair value of $ 4.9 million.

In conjunction with the Carolina Alliance acquisition, Park acquired loans and leases with a book value of $ 589.7 million as of the April 1, 2019 acquisition date.

These loans and leases were recorded at the initial fair value of $ 578.6 million.

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

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

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

At 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.

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

At March 31, 2024 and at December 31, 2023, there was no allowance for credit losses on PCD loans.

The carrying amount of accruing loans acquired with deteriorated credit quality at March 31, 2024 and at December 31, 2023 was $ 2.5 million and $ 2.8 million, respectively.

The carrying amount of nonaccrual loans acquired with deteriorated credit quality was $ 544,000 and $ 534,000 at March 31, 2024 and at December 31, 2023, respectively.

Modifications to Borrowers Experiencing Financial Difficulty

2 unchanged sentences

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

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

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

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

3 unchanged sentences

The combination is at least two of the following:

a term extension, principal forgiveness, an other-than-insignificant payment delay and/or an interest rate adjustment.

a term extension, principal forgiveness, an other-than-insignificant payment delay and/or an interest rate reduction.

The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty.

1 unchanged sentence

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 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 following tables present the amortized cost basis of loans at March 31, 2024 and 2023 that were both experiencing financial difficulty and modified during the three months ended March 31, 2024 and 2023 by class and 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

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

March 31, 2024

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

Commercial, financial and agricultural:

15 unchanged sentences

Total $ — $ 215 $ 17,209 $ 354 $ 342 $ — $ 18,120 0.24 %

Nine Months Ended

September 30, 2023

Three Months Ended

March 31, 2023

Commercial, financial and agricultural:

15 unchanged sentences

Total $ — $ — $ 4,255 $ 15 $ 64 $ — $ 4,334 0.06 %

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:

At March 31, 2024 Park had commitments to lend $ 1.4 million related to to loans which were both experiencing financial difficulty and modified during the three months ended March 31, 2024.

The following tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the three months ended March 31, 2024 and 2023:

Three Months Ended

September 30, 2023

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

March 31, 2024

(Dollars in thousands) Principal Forgiveness Weighted Average Interest Rate Reduction Weighted Average Term Extension (years) Weighted Average Payment Delay (years)

Commercial, financial and agricultural:

15 unchanged sentences

Total $ — ( 1.68 ) % 1.2 0.4

Nine Months Ended

September 30, 2023

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

Three Months Ended

March 31, 2023

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

Commercial, financial and agricultural:

16 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 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.

There were $ 3.5 million in loans modified to borrowers experiencing financial difficulty that had been modified during the twelve months ended March 31, 2024 that were 60-89 days past due as of March 31, 2024 in the Commercial, financial, and agricultural loan portfolio segment.

There were $ 9,000 in loans modified to borrowers experiencing financial difficulty that had been modified during the previous twelve months that were 30-59 days past due as of March 31, 2024 in the Commercial, financial, and agricultural loan portfolio segment.

All other loans modified to borrowers experiencing financial difficulty during the twelve months ended March 31, 2024 were less than 30 days past due as of March 31, 2024.

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

The following table presents the amortized cost basis of loans that had a payment default subsequent to modification during the three months ended March 31, 2024 and were modified in the twelve 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

September 30, 2023

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

Commercial, financial and agricultural:

Commercial, financial and agricultural $ — $ — $ — $ 11

PPP loans — — — —

Overdrafts — — — —

Commercial real estate — — — —

Construction real estate:

Commercial — — — —

Retail — — — —

Residential real estate:

Commercial — — — —

Mortgage — — — —

HELOC — — — —

Installment — — — —

Consumer — — — —

Check loans — — — —

Leases — — — —

Total loans $ — $ — $ — $ 11

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:

Nine Months Ended

September 30, 2023

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

March 31, 2024

Term Extension Interest Rate Reduction Combination Term Extension and Interest Rate Reduction Other

Commercial, financial and agricultural:

15 unchanged sentences

Total loans $ 3,526 $ — $ — $ 9

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

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

5 unchanged sentences

This standard was adopted using a modified retrospective transition method on January 1, 2023, resulting in a $ 383,000 increase to the ACL.

A cumulative effect adjustment resulting in a $ 303,000 decrease to retained earnings was also recorded as a result of the adoption of ASU 2022-02.

A cumulative effect adjustment resulting in a $ 303,000 decrease to retained earnings and an $ 80,000 increase to deferred tax assets was also recorded as a result of the adoption of ASU 2022-02 was also recorded as a result of the adoption of ASU 2022-02.

Quantitative Considerations

2 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 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.

After considering the impact of the inclusion of periods impacted by COVID, as well as analysis of the ongoing applicability of the selected peer group, management decided it was appropriate to continue to utilize the LDA analysis from the fourth quarter of 2019 as the correlation of the LDA was higher.

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

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

Park updated the LDA in the fourth quarter of 2023.

Per review of the correlation of data and subsequent results, management refined the peer group in the LDA and maintained the exclusion of periods impacted by COVID-19.

Management reviewed and considered the impact of the inclusion of periods impacted by COVID-19 as part of the LDA update, but the correlation of the inclusion of COVID-19 periods was lower.

• Probability of default – PD is the probability that an asset will be in default within a given time frame.

1 unchanged sentence

Whenever possible, Park utilizes its own loan-level PDs for the reasonable and supportable forecast period.

When loan-level data is not available reflecting the forecasted economic conditions, a forecast model is utilized to estimate PDs.

When loan-level data is not available reflecting the forecasted economic conditions, the LDA is utilized to estimate PDs.

In all cases, the LDA is then utilized to determine the long-term historical average, which is reached over the reversion period.

• Loss given default – LGD is the percentage of the asset not expected to be collected due to default.

1 unchanged sentence

When it is not possible to use Park's own LGDs, the LGD is derived using a method referred to as Frye Jacobs.

In all cases, the Frye Jacobs method is utilized to calculate LGDs during the reversion period and long-term historical average.

• Prepayments and curtailments – Prepayments and curtailments are calculated based on Park’s own data utilizing a three-year average.

3 unchanged sentences

The scenario weighting is evaluated by management on a quarterly basis.

◦ A s of December 31, 2022, the "most likely" scenario forecasted Ohio unemployment between 4.14% and 4.36% during the next four quarters.

◦ As of December 31, 2023, the "most likely" scenario forecasted Ohio unemployment between 4.05% and 4.66% during the next four quarters.

In determining the appropriate weighting of scenarios at December 31, 2023, management considered the range of forecasted unemployment as well as a number of economic indicators.

The continued high level of inflation, historically low consumer confidence, rising interest rates, geopolitical conflict (including the conflict between Russia and Ukraine), and workforce and supply chain challenges continued to cause uncertainty as to the overall economic environment.

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) and stress in the commercial real estate sector, 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 December 31, 2023.

◦ A s of March 31, 2023, the "most likely" scenario forecasted Ohio unemployment between 4.15% and 4.51% during the next four quarters.

◦ As of March 31, 2024, the "most likely" scenario forecasted Ohio unemployment between 4.31% and 4.79% during the next four quarters.

In determining the appropriate weighting of scenarios at March 31, 2024, management considered the range of forecasted unemployment as well as a number of economic indicators.

The continued high level of inflation, historically low consumer confidence, rising interest rates, financial system stress related to recent bank failures, geopolitical conflict, and workforce challenges continued to cause uncertainty as to the overall economic environment.

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

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

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

◦ 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

18 unchanged sentences

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

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 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:

Qualitative adjustments amounted to $ 428,000 and $ 417,000 at March 31, 2024 and December 31, 2023, respectively.

The activity in the ACL for the three-month periods ended March 31, 2024 and March 31, 2023 is summarized in the following tables:

Three Months Ended

September 30, 2023

March 31, 2024

(In thousands) Commercial,

11 unchanged sentences

Three Months Ended

September 30, 2022

(In thousands) Commercial,

financial and

agricultural Commercial

real estate Construction

real estate Residential

real estate Consumer Leases Total

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

Charge-offs 543 — — — 1,169 36 1,748

Recoveries 110 36 20 20 884 1 1,071

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

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

Nine Months Ended

September 30, 2023

March 31, 2023

(In thousands) Commercial,

11 unchanged sentences

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

Nine Months Ended

September 30, 2022

(In thousands) Commercial,

financial and

agricultural Commercial

real estate Construction

real estate Residential

real estate Consumer Leases Total

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

Charge-offs 1,456 598 33 81 3,287 42 5,497

Recoveries 544 624 550 106 2,859 2 4,685

Net charge-offs/(recoveries) $ 912 $ ( 26 ) $ ( 517 ) $ ( 25 ) $ 428 $ 40 $ 812

(Recovery of) provision for credit losses ( 236 ) ( 4,770 ) ( 1,777 ) 3,654 4,705 — 1,576

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 September 30, 2023 and at 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 March 31, 2024 and at December 31, 2023, 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 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.

Loans individually evaluated for impairment include all internally classified commercial nonaccrual loans 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 2023 Form 10-K).

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

September 30, 2023

The composition of the ACL at March 31, 2024 and at December 31, 2023 was as follows:

March 31, 2024

(In thousands) Commercial,

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

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.

At March 31, 2024 and at December 31, 2023, respectively, Park had $ 2.0 million and $ 3.2 million in mortgage loans held for sale.

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

The contractual balance was $ 2.8 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.

The contractual balance was $ 2.0 million and $ 3.2 million at March 31, 2024 and at December 31, 2023, respectively.

The gain expected upon sale was $ 33,000 and $ 53,000 at March 31, 2024 and at December 31, 2023, respectively.

None of these loans were 90 days or more past due or on nonaccrual status at March 31, 2024 or at December 31, 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 nine-month periods ended September 30, 2023 and 2022.

(in thousands) Goodwill Other

intangible assets Total

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

Amortization — 341 341

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

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

Amortization — 334 334

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

The following table shows the activity in goodwill and other intangible assets for the three-month periods ended March 31, 2024 and 2023.

(in thousands) Goodwill Other

2 unchanged sentences

Amortization — 327 327

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

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

December 31, 2023 $ 159,595 $ 4,652 $ 164,247

Amortization — 320 320

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

March 31, 2024 $ 159,595 $ 4,332 $ 163,927

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 September 30, 2023 and at December 31, 2022.

September 30, 2023

The following table shows the balance of acquired intangible assets at March 31, 2024 and at December 31, 2023:

March 31, 2024

December 31, 2023

2 unchanged sentences

Core deposit intangible assets $ 14,456 $ 10,124 $ 14,456 $ 9,804

Trade name intangible assets 1,300 1,300 1,300 1,300

Total $ 15,756 $ 10,770 $ 15,756 $ 9,781

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

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.

Aggregate amortization expense was $ 320,000 and $ 327,000 for the three months ended March 31, 2024 and 2023, respectively.

Estimated amortization expense related to core deposit intangible assets for the remainder of 2024 and the next four years follows:

(in thousands) Total

Three months ending December 31, 2023 $ 334

Nine months ending December 31, 2024 $ 894

Note 9 – Investment in Qualified Affordable Housing

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

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

(in thousands) September 30, 2023

The table below details the balances of Park’s affordable housing tax credit investments and related unfunded commitments at March 31, 2024 and December 31, 2023.

(in thousands) March 31, 2024

December 31, 2023

3 unchanged sentences

Park expects that the current commitments will be funded between the remainder of 2024 through 2033.

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.

Park recognized amortization expense of $ 2.1 million for both the three months ended March 31, 2024 and 2023, which were included within the provision for income taxes.

Additionally, during the three months ended March 31, 2024 and 2023, Park recognized tax credits and other benefits from its affordable housing tax credit investments of $ 2.6 million and $ 2.4 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 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

The carrying amounts of foreclosed real estate properties held at March 31, 2024 and December 31, 2023 are listed below, as well as the

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

(in thousands) March 31, 2024 December 31, 2023

Commercial real estate $ 1,184 $ 983

Residential real estate 476 —

Construction real estate 14 —

Total OREO $ 1,674 $ 983

1 unchanged sentence

Residential real estate $ 2,097 $ 1,957

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 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.

At March 31, 2024 and December 31, 2023, Park had $ 1.2 million and $ 1.1 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 $ 1.96 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.

Park serviced sold mortgage loans of $ 1.91 billion at March 31, 2024, $ 1.93 billion at December 31, 2023 and $ 2.02 billion at March 31, 2023.

At March 31, 2024, $ 2.9 million of the sold mortgage loans were sold with recourse, compared to $ 2.9 million at December 31, 2023 and $ 3.2 million at March 31, 2023.

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

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.

At March 31, 2024 and December 31, 2023, management had established reserves of $ 50,000 and $ 54,000 , 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

September 30, Nine Months Ended

September 30,

(In thousands) 2024 2023

9 unchanged sentences

End of period $ 69 $ 168

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.

Servicing fees included in "Other service income" were $ 1.3 million for both the three months ended March 31, 2024 and 2023.

Note 12 - Leases

1 unchanged sentence

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.

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

Park’s leases generally

do not include termination options for either party to the lease or restrictive financial or other covenants.

Payments due under

the lease arrangements include fixed payments plus, for many of Park’s real estate leases, variable payments such as Park's

proportionate share of property taxes, insurance and common area maintenance.

Park's operating lease ROU asset and lease liability are presented in “Operating lease 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 September 30, 2023 were $ 16.3 million and $ 17.4 million, respectively.

The carrying amounts of Park's ROU asset and lease liability at March 31, 2024 were $ 15.8 million and $ 16.5 million, respectively.

At December 31, 2023, the carrying amounts of Park's ROU asset and lease liability were $ 15.7 million and $ 16.6 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 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

Other information related to operating leases for the three-month periods ended March 31, 2024 and 2023 follows:

Three Months Ended

(in thousands) March 31, 2024 March 31, 2023

Operating lease cost $ 622 $ 732

6 unchanged sentences

Reductions to ROU assets resulting from reductions to lease obligations $ ( 658 ) $ ( 777 )

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.

Park's operating leases had a weighted average remaining term of 10.0 years and 10.1 years at March 31, 2024 and at December 31, 2023, respectively.

The weighted average discount rate of Park's operating leases was 3.6 % and 3.5 % at March 31, 2024 and at December 31, 2023, respectively.

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

(in thousands) September 30, 2023

Three months ending December 31, 2023 $ 884

(in thousands) March 31, 2024

Nine months ending December 31, 2024 $ 1,759

Thereafter 9,806

2 unchanged sentences

Total lease liabilities $ 16,510

In March 2024, the Company entered into a noncancellable operating lease for an additional retail office for an initial term

of 88 months, with three five-year renewal options.

This lease is expected to commence no later than the fourth quarter of 2024, and, therefore, was not recognized as of March 31, 2024.

The fixed payments due on an undiscounted basis over the noncancellable 88-month period of the lease are $1.6 million .

The Company will assess the lease renewal options as of the lease commencement date.

Note 13 – Repurchase Agreement Borrowings

1 unchanged sentence

Repurchase agreements with customers are included in "Short-term borrowings" on the consolidated condensed balance sheets.

All repurchase agreements are subject to terms and conditions of repurchase/security agreements between Park and the client and are accounted for as secured borrowings.

All repurchase agreements are subject to terms and conditions of repurchase/security agreements between Park and the customer and are accounted for as secured borrowings.

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

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

At March 31, 2024 and at December 31, 2023, Park's repurchase agreement borrowings totaled $ 105.9 million and $ 108.2 million, respectively.

These borrowings were collateralized with U.S.

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.

Government sponsored entities' asset-backed securities with a fair value of $ 143.5 million and $ 180.8 million at March 31, 2024 and at December 31, 2023, respectively.

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

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

At March 31, 2024 and at December 31, 2023, Park had $ 647.8 million and $ 847.5 million, respectively, of available unpledged securities.

The table below shows the remaining contractual maturity of repurchase agreements by collateral pledged at March 31, 2024 and at December 31, 2023:

March 31, 2024

(in thousands) Remaining Contractual Maturity of the Agreements

6 unchanged sentences

Note 14 - Derivatives

Park uses certain derivative financial instruments (or "derivatives") to meet the needs of Park's clients while managing the interest rate risk associated with certain transactions.

Park uses certain derivative financial instruments (or "derivatives") to meet the needs of Park's customers while managing the interest rate risk associated with certain transactions.

Park does not use derivatives for speculative purposes.

4 unchanged sentences

The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements.

Borrowing Derivatives :

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 :

In conjunction with the Carolina Alliance acquisition, Park acquired interest rate swaps related to certain commercial loans.

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 $ 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.

These interest rate swaps had a notional amount totaling $ 17.0 million and $ 18.2 million at March 31, 2024 and at December 31, 2023, respectively.

All of the Company's interest rate swaps were determined to be fully effective during each of the three-month period s ended March 31, 2024 and March 31, 2023.

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 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 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.

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) income".

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

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

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

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

September 30, 2023 December 31, 2022

Summary information about Park's interest rate swaps at March 31, 2024 and at December 31, 2023 follows:

March 31, 2024 December 31, 2023

(In thousands, except weighted average data) Loan

5 unchanged sentences

Unrealized losses $ — $ —

Interest Rate Swaps

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

The following table reflects the interest rate swaps included in the consolidated condensed balance sheets at March 31, 2024 and at December 31, 2023.

(In thousands) March 31, 2024 December 31, 2023

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 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.

At March 31, 2024 and at December 31, 2023 , Park had $ 7.3 million and $ 4.0 million, respectively, of interest rate lock commitments.

The fair value of these mortgage banking derivatives was reflected by a derivative asset of $ 158,000 and $ 87,000 at March 31, 2024 and at December 31, 2023 , 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 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 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 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 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

At both March 31, 2024 and December 31, 2023 , the fair value of the swap agreement liability of $ 123,000 represented an estimate of the exposure based upon probability-weighted potential Visa litigation losses.

Note 15 – Accumulated Other Comprehensiv e Loss

Other comprehensive income (loss) components, net of tax, are shown in the following table for the three-month periods ended March 31, 2024 and 2023:

(in thousands) Changes in pension plan assets and benefit obligations Unrealized losses on debt securities AFS Total

Beginning balance at January 1, 2024 $ 1,692 $ ( 67,883 ) $ ( 66,191 )

Other comprehensive loss before reclassifications — ( 518 ) ( 518 )

Amounts reclassified from accumulated other comprehensive loss — 314 314

Net current period other comprehensive loss — ( 204 ) ( 204 )

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

Ending balance at March 31, 2024 $ 1,692 $ ( 68,087 ) $ ( 66,395 )

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

Other comprehensive income (loss) before reclassifications — 154 ( 140,704 ) ( 140,550 )

Amounts reclassified from other comprehensive loss — 52 — 52

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

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.

Other comprehensive income before reclassifications — 12,361 12,361

Net current period other comprehensive income — 12,361 12,361

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

During the three -months ended March 31, 2024, there was $ 398,000 ($ 314,000 net of tax) reclassified out of accumulated other comprehensive loss due to a net loss on the sale of debt securities.

This loss was recorded within "Loss on the sale of debt securities, net" on the consolidated condensed statements of income.

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

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 nine months ended September 30, 2023 and 2022.

The following table sets forth the computation of basic and diluted earnings per common share for the three months ended March 31, 2024 and 2023.

Three Months Ended

September 30, Nine Months Ended

September 30,

(In thousands, except common share and per common share data) 2024 2023

6 unchanged sentences

Diluted earnings per common share $ 2.17 $ 2.07

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 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 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

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

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

Other expense 74,623 3,185 77,808

Income (loss) before income taxes $ 50,881 $ ( 5,127 ) $ 45,754

Income tax expense (benefit) 10,093 ( 1,256 ) 8,837

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

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 (expense) $ 92,035 $ ( 1,207 ) $ 90,828

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

Other income 28,918 17,776 46,694

Other expense 79,070 3,833 82,903

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

Net interest income (expense) $ 283,216 $ ( 5,177 ) $ 278,039

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

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

Other expense 220,741 9,455 230,196

Income (loss) before income taxes $ 137,815 $ ( 13,952 ) $ 123,863

Income tax expense (benefit) 25,273 ( 3,644 ) 21,629

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

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

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 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.

Park awarded 59,165 PBRSUs and 54,698 PBRSUs to certain employees during the three months ended March 31, 2024 and 2023, respectively.

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

No common shares were repurchased during the three months ended March 31, 2024.

Note 17 - Share-Based Compensation

The Park National Corporation 2017 Long-Term Incentive Plan for Employees (the "2017 Employees 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.

The 2017 Employees LTIP makes equity-based awards and cash-based awards available for grant to employee participants in the form of incentive stock options, nonqualified stock options, stock appreciation rights ("SARs"), restricted stock, restricted stock units, other stock-based awards and cash-based awards.

The 2017 Employees LTIP makes equity-based awards and cash-based awards available for grant to employee participants in the form of incentive stock options, nonqualified stock options, SARs, restricted stock, restricted stock units, other stock-based awards and cash-based awards.

Under the 2017 Employees LTIP, 750,000 common shares are authorized to be delivered in connection with grants under the 2017 Employees LTIP.

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

At March 31, 2024, 240,835 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 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.

At March 31, 2024, 60,000 common shares were available for future grants under the 2017 Non-Employee Directors LTIP.

During the three months ended March 31, 2024 and 2023, the Compensation Committee of the Board of Directors of Park granted awards of PBRSUs, under the 2017 Employees LTIP, covering an aggregate of 59,165 common shares and 54,698 common shares, respectively, to certain employees of Park and its subsidiaries.

At March 31, 2024, Park reported 191,120 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 nine months ended September 30, 2023 follows:

A summary of changes in the common shares subject to nonvested PBRSUs for the three months ended March 31, 2024 follows:

Common shares subject to PBRSUs

2 unchanged sentences

Vested ( 54,981 )

Forfeited ( 4,072 )

Adjustment for performance conditions of PBRSUs (1)

Nonvested at September 30, 2023 (2)

Nonvested at March 31, 2024 (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 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:

As of March 31, 2024, an aggregate of 184,709 PBRSUs were expected to vest.

A summary of awards vested during the three months ended March 31, 2024 and 2023 follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

PBRSUs and TBRSUs vested — 7,049 62,815 55,464

PBRSUs vested 54,981 56,465

Common shares withheld to satisfy employee income tax withholding obligations 21,937 21,981

Net common shares issued 33,044 34,484

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:

Share-based compensation expense of $ 2.0 million and $ 2.3 million was recognized for the three-month periods ended March 31, 2024 and 2023, respectively.

The following table details expected additional share-based compensation expense related to PBRSUs outstanding at March 31, 2024:

(In thousands)

Three months ending December 31, 2023 $ 1,341

Nine months ending December 31, 2024 $ 4,495

Total $ 14,007

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 nine-month periods ended September 30, 2023 and 2022.

There were no Pension Plan contributions for either of the three-month periods ended March 31, 2024 or 2023.

Additionally, no contributions are expected to be made during the remainder of 2024.

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30, Affected Line Item in the Consolidated

March 31, Affected Line Item in the Consolidated

Condensed Statements of Income

5 unchanged sentences

periodic pension benefit income

Recognized prior service cost (credit) 12 ( 4 ) 36 ( 12 ) Other components of net

Recognized prior service cost 12 12 Other components of net

periodic pension benefit income

1 unchanged sentence

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 nine months ended September 30, 2023 and 2022 was as follows:

The expense for the Corporation related to the SERP Agreements for the three months ended March 31, 2024 and 2023 was as follows:

Three Months Ended

September 30, Nine Months Ended

September 30, Affected Line Item in the Consolidated

March 31, Affected Line Item in the Consolidated

Condensed Statements of Income

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

Fair Value Measurements at September 30, 2023 using:

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

Fair Value Measurements at March 31, 2024 using:

(In thousands) Level 1 Level 2 Level 3 Balance at March 31, 2024

Investment securities:

Obligations of U.S.

Government sponsored entities $ — $ 37,300 $ — $ 37,300

Obligations of states and political subdivisions $ — $ 206,526 $ — $ 206,526

11 unchanged sentences

Investment securities:

Obligations of U.S.

Government sponsored entities $ — $ 37,213 $ — $ 37,213

Obligations of states and political subdivisions $ — $ 241,184 $ — $ 241,184

8 unchanged sentences

Loan interest rate swaps — 1,069 — 1,069

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

Interest rate swaps:

The fair values of interest rate swaps are based on valuation models using observable market data as of the measurement date (Level 2).

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

Investment securities:

2 unchanged sentences

For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows (Level 3).

Fair value swap:

The fair value of the swap agreement entered into with the purchaser of the Visa Class B shares represents an internally developed estimate of the exposure based upon probability-weighted potential Visa litigation losses and is classified as Level 3.

Mortgage interest rate lock commitments:

Mortgage IRLCs are based on current secondary market pricing and are classified as Level 2.

Mortgage loans held for sale:

1 unchanged sentence

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 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 September 30, 2023 and 2022

(In thousands) Corporate debt securities Equity securities Fair value

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

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

Total (losses) / gains

Included in other income / other expense — 11 —

Included in other comprehensive income 10 — —

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 ) —

Purchases, sales, issuances and settlements, other, net

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

Mortgage interest rate lock commitments:

Mortgage IRLCs are based on current secondary market pricing and are classified as Level 2.

Interest rate swaps:

The fair values of interest rate swaps are based on valuation models using observable market data as of the measurement date (Level 2).

Fair value swap:

The following tables present a reconciliation of the beginning and ending balances of the Level 3 inputs for the three-month periods ended March 31, 2024 and 2023, for financial instruments measured on a recurring basis and classified as Level 3:

Level 3 Fair Value Measurements

Nine months ended September 30, 2023 and 2022

Three months ended March 31, 2024 and 2023

(In thousands) Corporate debt securities Equity securities Fair value

Balance at January 1, 2024 $ 6,349 $ 473 $ ( 123 )

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

Total (losses) / gains

Included in other income / other (expense) — 27 ( 175 )

Transfer into (out of) level 3 — — —

Included in other income — 22 —

Included in other comprehensive income 23 — —

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

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

Balance at March 31, 2024 $ 6,372 $ 495 $ ( 123 )

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

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

Transfer into level 3 622 — —

Total gains / (losses)

Included in other income — 10 —

Included in other comprehensive income ( 767 ) — —

Purchases, sales, issuances and settlements, other, net

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

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

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

2 unchanged sentences

When a loan is individually evaluated, it is valued at the lower of cost or fair value.

Collateral dependent loans which are individually evaluated and carried at fair value have been partially charged off or receive specific allocations of the allowance for credit losses.

Collateral dependent loans which are individually evaluated and carried at fair value have been partially charged off or receive allocations of the allowance for credit losses.

For collateral dependent loans, fair value is generally based on real estate appraisals.

2 unchanged sentences

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

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

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

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

Additionally, valuations for all collateral dependent loans are updated annually, either through independent valuations by a licensed appraiser or a verification of value ("VOV") performed by an internal licensed appraiser, in accordance with Company policy.

Additionally, valuations for all collateral dependent loans are updated annually, either through independent valuations by a licensed appraiser or a VOV

performed by an internal licensed appraiser, in accordance with Company policy.

A VOV can only be used in select circumstances and verifies that the original appraised value has not deteriorated through property inspection, consideration of market conditions, and performance of all valuation methods utilized in a prior valuation.

After the adoption of ASU 2022-02 on January 1, 2023, loans individually evaluated for impairment include all internally classified commercial nonaccrual loans.

Prior to the adoption of ASU 2022-02, loans individually evaluated for impairment included all internally classified commercial nonaccrual loans and accruing TDRs.

Loans individually evaluated for impairment include all internally classified commercial nonaccrual loans.

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

12 unchanged sentences

Management generally applies a 15 % discount to real estate appraised values which management expects will cover all disposition costs (including selling costs).

This 15 % discount is based on historical discounts to appraised values on sold OREO properties.

This 15 % discount is based on historical discounts to appraised values on sold OREO.

• Income approach appraisals typically incorporate the annual net operating income of the business divided by an appropriate capitalization rate, as determined by the appraiser.

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

At March 31, 2024 and December 31, 2023, 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 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

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

Fair Value Measurements at March 31, 2024 using:

(In thousands) Level 1 Level 2 Level 3 Balance at March 31, 2024

Individually evaluated collateral dependent loans recorded at fair value:

Commercial real estate $ — $ — $ 1,641 $ 1,641

Construction real estate — — 455 455

Residential real estate — — 176 176

1 unchanged sentence

MSRs $ — $ 950 $ — $ 950

OREO recorded at fair value:

Commercial real estate $ — $ — $ 938 $ 938

Total OREO recorded at fair value $ — $ — $ 938 $ 938

Fair Value Measurements at December 31, 2023 using:

5 unchanged sentences

MSRs $ — $ 866 $ — $ 866

The table below provides additional detail on those individually evaluated loans which are recorded at fair value as well as the remaining individually evaluated loan portfolio not included above.

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.

September 30, 2023

OREO recorded at fair value:

Commercial real estate $ — $ — $ 938 $ 938

Total OREO recorded at fair value $ — $ — $ 938 $ 938

The following table provides additional detail on those individually evaluated loans which are recorded at fair value as well as the remaining individually evaluated loan portfolio not included above.

The remaining individually evaluated loans consist of 1) loans which are not collateral dependent, 2) loans which are not secured by real estate, and 3) loans carried at cost as the fair

value of the underlying collateral or the present value of expected future cash flows on each of the loans exceeded the book value for each respective credit.

March 31, 2024

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

7 unchanged sentences

Total individually evaluated loans $ 45,215 $ 2,349 $ 4,983 $ 40,232

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

The expense from credit adjustments related to individually evaluated loans carried at fair value was $ 35,000 and $ 107,000 for the three-month periods ended March 31, 2024 and 2023, respectively.

MSRs totaled $ 14.4 million at March 31, 2024.

Of this $ 14.4 million MSR carrying balance, $ 1.0 million was recorded at fair value and included a valuation allowance of $ 0.1 million.

The remaining $ 13.4 million was recorded at cost, as the fair value exceeded cost at March 31, 2024.

At December 31, 2023, MSRs totaled $ 14.7 million.

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

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

The income r elated to MSRs carried at fair value during the three-month periods ended 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

Of this $ 14.7 million MSR carrying balance, $ 0.9 million was recorded at fair value and included a valuation allowance of $ 0.1 million.

The remaining $ 13.8 million was recorded at cost, as the fair value exceeded cost at December 31, 2023.

The income r elated to MSRs carried at fair value during the three-month periods ended March 31, 2024 and 2023 was $ 25,000 and $ 14,000 , respectively.

Total OREO held by Park at March 31, 2024 and December 31, 2023 was $ 1.7 million and $ 1.0 million, respectively.

At both March 31, 2024 and December 31, 2023 there was $ 938,000 of OREO held by Park that was carried at fair value due to fair value adjustments made subsequent to the initial OREO measurement.

There was no net (expense) income related to OREO fair value adjustments for the three months ended March 31, 2024.

The net income related to OREO fair value adjustments was $ 15,000 for the three months ended March 31, 2023.

The following tables present qualitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis at March 31, 2024 and December 31, 2023:

March 31, 2024

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

3 unchanged sentences

Income approach Capitalization rate 7.5 % - 9.5 % ( 9.0 %)

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 $ 176 Sales comparison approach Adj to comparables 1.2 % - 78.6 % ( 7.5 %)

Other real estate owned:

Commercial real estate $ 938 Sales comparison approach Adj to comparables 5.0% - 10.0% (7.5%)

Cost approach Entrepreneurial profit 5.0% 5.0%

Cost approach Accumulated depreciation 50.0% 50.0%

December 31, 2023

4 unchanged sentences

Income approach Capitalization rate 7.5 % - 9.5 % ( 8.9 %)

Residential real estate $ 182 Sales comparison approach Adj to comparables 1.2 % - 78.6 % ( 7.6 %)

Other real estate owned:

Commercial real estate $ 938 Sales comparison approach Adj to comparables 5.0% - 10.0% (7.5%)

Cost approach Entrepreneurial profit 5.0% (5.0%)

Cost approach Accumulated depreciation 50.0% (50.0%)

Residential real estate $ 200 Sales comparison approach Adj to comparables 1.9 % - 119.8 % ( 17.4 %)

Assets Measured at Net Asset Value:

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

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

At March 31, 2024 and at December 31, 2023, Park had Partnership Investments with a NAV of $ 27.0 million and $ 27.5 million, respectively.

At March 31, 2024 and at December 31, 2023, Park had $ 17.9 million and $ 18.4 million, respectively, in unfunded commitments related to these Partnership Investments.

For the three-month periods ended March 31, 2024 and 2023, Park recogniz ed expense of $ 690,000 and $ 378,000 , respectively, related to these Partnership Investments.

The fair value of certain financial instruments at March 31, 2024 and at December 31, 2023, was as follows:

March 31, 2024

Fair Value Measurements

13 unchanged sentences

Time deposits $ 663,859 $ — $ 664,032 $ — $ 664,032

Brokered deposits and Bid Ohio CDs 180,332 — 180,241 — 180,241

Other 2,461 2,461 — — 2,461

25 unchanged sentences

Time deposits $ 641,615 $ — $ 641,180 — $ 641,180

Brokered deposits and Bid Ohio CDs 164,985 165,059 165,059

Other 1,261 1,261 — — 1,261

11 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 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

September 30, 2023

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

Income from fiduciary activities

Personal trust and agency accounts $ 2,593 $ — $ 2,593

Employee benefit and retirement-related accounts 2,568 — 2,568

Investment management and investment advisory agency accounts 3,407 — 3,407

Other 532 — 532

Service charges on deposit accounts

Non-sufficient funds (NSF) fees 943 — 943

Demand deposit account (DDA) charges 1,060 — 1,060

Other 106 — 106

Other service income (1)

Credit card 719 — 719

HELOC 100 — 100

Installment 39 — 39

Real estate 1,497 — 1,497

Commercial 260 — 260

Debit card fee income 6,652 — 6,652

Bank owned life insurance income (2)

1,394 54 1,448

ATM fees 575 — 575

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

OREO valuation markup — — —

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

1,264 ( 266 ) 998

Other components of net periodic pension benefit income (2)

1,857 36 1,893

Miscellaneous (3)

2,328 1 2,329

Total other income $ 27,888 $ ( 175 ) $ 27,713

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

(2) Not within the scope of ASC 606.

(3) "Miscellaneous" income 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.

All of Park's operations are considered by management to be aggregated in one reportable segment.

The following table presents the Corporation's sources of other income by revenue stream for the three-month periods ended March 31, 2024 and March 31, 2023:

Three Months Ended

September 30, 2022

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

Income from fiduciary activities

Personal trust and agency accounts $ 2,411 $ — $ 2,411

Employee benefit and retirement-related accounts 2,353 — 2,353

Investment management and investment advisory agency accounts 3,000 — 3,000

Other 452 — 452

Service charges on deposit accounts

Non-sufficient funds (NSF) fees 1,722 — 1,722

Demand deposit account (DDA) charges 996 — 996

Other 141 — 141

Other service income (1)

Credit card 734 — 734

HELOC 103 — 103

Installment 40 — 40

Real estate 1,692 — 1,692

Commercial 384 3 387

Debit card fee income 6,514 — 6,514

Bank owned life insurance income (2)

1,133 52 1,185

ATM fees 610 — 610

Gain on sale of OREO, net — 5,607 5,607

OREO valuation markup — 12,009 12,009

Gain on equity securities, net (2)

Other components of net periodic pension benefit income (2)

2,955 72 3,027

Miscellaneous (3)

3,653 — 3,653

Total other income $ 28,918 $ 17,776 $ 46,694

(1) Of the $ 3.0 million of aggregate revenue included within "Other service income", approximately $ 1.4 million was within the scope of ASC 606, with the remaining $ 1.6 million consisting primarily of certain residential real estate loan fees which were out of scope.

(2) Not within the scope of ASC 606.

(3) "Miscellaneous" income 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

Income from fiduciary activities

Personal trust and agency accounts $ 7,668 $ — $ 7,668

Employee benefit and retirement-related accounts 7,507 — 7,507

Investment management and investment advisory agency accounts 9,842 — 9,842

Other 1,514 — 1,514

Service charges on deposit accounts

Non-sufficient funds (NSF) fees 2,864 — 2,864

Demand deposit account (DDA) charges 3,167 — 3,167

Other 360 — 360

Other service income (1)

Credit card 2,132 — 2,132

HELOC 297 — 297

Installment 123 — 123

Real estate 4,462 — 4,462

Commercial 802 135 937

Debit card fee income 19,939 — 19,939

Bank owned life insurance income (2)

3,807 158 3,965

ATM fees 1,661 — 1,661

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

OREO valuation markup 15 — 15

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

1,146 ( 528 ) 618

Other components of net periodic pension benefit income (2)

5,571 108 5,679

Miscellaneous (3)

4,367 1 4,368

Total other income $ 77,241 $ ( 126 ) $ 77,115

(1) Of the $ 8.0 million of aggregate revenue included within "Other service income", approximately $ 4.1 million was within the scope of ASC 606, with the remaining $ 3.9 million consisting primarily of certain residential real estate loan fees which were out of scope.

(2) Not within the scope of ASC 606.

(3) "Miscellaneous" income included brokerage income, safe deposit box rentals, and miscellaneous bank fees totaling $ 4.4 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

Revenue by Operating Segment (in thousands) 2024 2023

Income from fiduciary activities

9 unchanged sentences

Credit card 611 683

HELOC 297 — 297

Installment 20 49

3 unchanged sentences

Bank owned life insurance income (2)

3,356 1,378 4,734

ATM fees 496 533

Gain on sale of OREO, net 4 5,607 5,611

OREO valuation markup 30 12,009 12,039

Gain on equity securities, net (2)

Gain (loss) on sale of OREO, net 121 ( 9 )

Loss on the sale of debt securities, net (2)

Loss on equity securities, net (2)

( 687 ) ( 405 )

Other components of net periodic pension benefit income (2)

8,864 217 9,081

Miscellaneous (3)

8,177 ( 398 ) 7,779

Total other income $ 26,200 $ 24,387

(1) Of the $ 12.7 million of aggregate revenue included within "Other service income", approximately $ 4.3 million was within the scope of ASC 606, with the remaining $ 8.4 million consisting primarily of certain residential real estate loan fees which were out of scope.

(1) "Other Service Income" totaled $ 2.5 million and $ 2.7 million for the three months ended March 31, 2024 and 2023, respectively.

Of this aggregate revenue approximately $ 1.2 million and $ 1.4 million was within the scope of ASC 606, with the remaining $ 1.3 million, in each period presented, consisting primarily of certain residential real estate loan fees which were out of scope.

(2) Not within the scope of ASC 606.

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

(3) "Miscellaneous Income" included brokerage income, safe deposit box rentals, and miscellaneous bank fees totaling $ 0.9 million and $ 1.2 million for the three months ended March 31, 2024 and 2023, respectively, all of which were within the scope of ASC 606.

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

20 unchanged sentences

In determining the gain or loss on the sale, the Corporation adjusts the transaction price and related gain (loss) on sale if a significant financing component is present.

OREO valuation markup:

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

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