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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2025
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________ to __________________________

  
Commission File Number1-13006
 
PARK NATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
 
Ohio 31-1179518
(State or other jurisdiction of
incorporation or organization)		 (I.R.S. Employer Identification No.)
50 North Third Street, P.O. Box 3500Newark,Ohio43058-3500
(Address of principal executive offices) (Zip Code)
(740) 349-8451
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common shares, without par valuePRKNYSE American


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 Yes   ☒   No   ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  ☒   No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”,
“smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company    ☐
Emerging growth company☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 Yes   ☐   No   ☒

At May 1, 2025 the number of common shares, without par value, of the registrant issued and outstanding was 16,191,347.



PARK NATIONAL CORPORATION
 
CONTENTS
 Page
Glossary of Abbreviations and Acronyms
Cautionary Note Regarding Forward-Looking Statements
PART I.   FINANCIAL INFORMATION 
  
Item 1.  Financial Statements 
  
  
  
  
  
  
  
  
  
  
88 
  
  
  
  
  
  
  
  
3

Glossary of Abbreviations and Acronyms

References in this Form 10-Q to "we," "our," "us," "Company," "Corporation," or "Park" are collectively to Park National Corporation and its subsidiaries. In addition, Park has identified the following list of abbreviations and acronyms that are used in the Unaudited Consolidated Condensed Financial Statements, Notes to Unaudited Consolidated Condensed Financial Statements, and Management's Discussion and Analysis of Financial Condition and Results of Operations.

2017 Employees LTIPThe Park National Corporation 2017 Long-Term Incentive Plan for EmployeesKSOPPark's qualified retirement plan that combines an employee stock ownership plan (ESOP) with a 401(k) plan
2017 Non-Employees LTIPThe Park National Corporation 2017 Long-Term Incentive Plan for Non-Employee DirectorsLDALoss driver analysis
ACHAutomated clearing houseLGDLoss given default
ACLAllowance for credit lossesMSRsMortgage servicing rights
AFSAvailable-for-saleNAVNet asset value
ASCAccounting Standards CodificationNewDominionNewDominion Bank
ASUAccounting Standards UpdateNSFNon-sufficient funds
ATMAutomated teller machineOREOOther real estate owned
Carolina AllianceCAB Financial Corporation and its subsidiariesPark's 2024 Form 10-KThe Annual Report on Form 10-K of Park National Corporation for the fiscal year ended December 31, 2024
COVID-19Novel coronavirusPBRSUsPerformance-based restricted stock units
DCFDiscounted cash flowPCDPurchased credit deteriorated
DDADemand deposit accountPDProbability of default
EPSEarnings per common sharePNBThe Park National Bank
FASBFinancial Accounting Standards BoardPBOProjected benefit obligation
FDICFederal Deposit Insurance CorporationPTPPPre-tax, pre-provision
FFIECFederal Financial Institutions Examination CouncilRegistrantPark National Corporation
FHLBFederal Home Loan BankROURight-of-use
FRBFederal Reserve BankSARsStock appreciation rights
FTEFully taxable equivalentSECU.S. Securities and Exchange Commission
GDPGross domestic productSERPSupplemental Executive Retirement Plan
HELOCHome equity line of creditU.S.United States of America
HPIHome price indexU.S. GAAPUnited States Generally Accepted Accounting Principles
IRLCInterest rate lock commitmentVOVVerification of value





4

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements that are provided to assist in the understanding of anticipated future financial performance. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements.

Risks and uncertainties that could cause actual results to differ include, without limitation: (1) the ability to execute our business plan successfully and manage strategic initiatives; (2) the impact of current and future economic and financial market conditions, including unemployment rates, inflation, interest rates, supply-demand imbalances, and geopolitical matters; (3) factors impacting the performance of our loan portfolio, including real estate values, financial health of borrowers, and loan concentrations; (4) the effects of monetary and fiscal policies, including interest rates, money supply, and inflation; (5) changes in federal, state, or local tax laws; (6) the impact of changes in governmental policy and regulatory requirements on our operations; (7) changes in consumer spending, borrowing, and saving habits; (8) changes in the performance and creditworthiness of customers, suppliers, and counterparties; (9) increased credit risk and higher credit losses due to loan concentrations; (10) volatility in mortgage banking income due to interest rates and demand; (11) adequacy of our internal controls and risk management programs; (12) competitive pressures among financial services organizations; (13) uncertainty regarding changes in banking regulations and other regulatory requirements; (14) our ability to meet heightened supervisory requirements and expectations; (15) the impact of changes in accounting policies and practices on our financial condition; (16) the reliability and accuracy of assumptions and estimates used in applying critical accounting estimates; (17) the potential for higher future credit losses due to changes in economic assumptions; (18) the ability to anticipate and respond to technological changes and our reliance on third-party vendors; (19) operational issues related to and capital spending necessitated by the implementation of information technology systems on which we are highly dependent; (20) the ability to secure confidential information and deliver products and services through computer systems and telecommunications networks; (21) the impact of security breaches or failures in operational systems; (22) the impact of geopolitical instability and trade policies on our operations including the imposition of tariffs and retaliatory tariffs; (23) the impact of changes in credit ratings of government debt and financial stability of sovereign governments; (24) the effect of stock market price fluctuations on our asset and wealth management businesses; (25) litigation and regulatory compliance exposure; (26) availability of earnings and excess capital for dividend declarations; (27) the impact of fraud, scams, and schemes on our business; (28) the impact of natural disasters, pandemics, and other emergencies on our operations; (29) potential deterioration of the economy due to financial, political, or other shocks; (30) impact of healthcare laws and potential changes on our costs and operations; (31) the ability to grow deposits and maintain adequate deposit levels, including by mitigating the effect of unexpected deposit outflows on our financial condition; and (32) other risk factors related to the banking industry.

Forward-looking statements should be construed in the light of such risks. It is impossible to predict or identify all potential risk factors. Consequently, readers should not consider the foregoing list to be a complete set of all potential risks and uncertainties. Readers are cautioned not to place undue reliance on any forward-looking statements. Any forward looking statement in this Form 10-Q are based on current information as of the date of this Form 10-Q, and Park does not undertake, and specifically disclaims any obligation, to publicly release the results of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances whether as a result of new information, future developments or otherwise, or reflect the occurrence of unanticipated events, except to the extent required by law.
5
Table of Contents


PART I. FINANCIAL INFORMATION
Item 1.      Financial Statements

PARK NATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Condensed Balance Sheets (Unaudited)
(in thousands, except common share and per common share data)    
                
March 31,
2025		December 31, 2024
Assets:  
Cash and due from banks$154,536 $122,363 
Money market instruments83,078 38,203 
Cash and cash equivalents237,614 160,566 
Investment securities:  
Debt securities available-for-sale, at fair value (amortized cost of $1,003,318 and $1,076,281 at March 31, 2025 and December 31, 2024, respectively, and no allowance for credit losses at March 31, 2025 or at December 31, 2024)
938,239 996,624 
Other investment securities103,924 104,237 
Total investment securities1,042,163 1,100,861 
Loans7,883,735 7,817,128 
Allowance for credit losses(88,130)(87,966)
Net loans7,795,605 7,729,162 
Bank owned life insurance240,652 236,872 
Prepaid assets192,451 190,119 
Goodwill159,595 159,595 
Other intangible assets3,163 3,437 
Premises and equipment, net66,327 69,522 
Affordable housing tax credit investments63,802 66,077 
OREO119 938 
Accrued interest receivable34,752 36,280 
Operating lease ROU asset16,334 15,745 
Mortgage loan servicing rights13,760 13,918 
Other20,275 22,258 
Total assets$9,886,612 $9,805,350 

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PARK NATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Condensed Balance Sheets (Unaudited) (Continued)
(in thousands, except common share and per common share data)

March 31,
2025		December 31, 2024
Liabilities and Shareholders' Equity:  
Deposits:  
Non-interest bearing$2,637,577 $2,612,708 
Interest bearing5,564,118 5,530,818 
Total deposits8,201,695 8,143,526 
Short-term borrowings80,977 90,432 
Subordinated notes189,780 189,651 
Unfunded commitments in affordable housing tax credit investments24,909 29,677 
Operating lease liability17,660 16,505 
Allowance for credit losses on off-balance sheet commitments5,390 5,865 
Accrued interest payable5,815 7,859 
Unsettled investment commitments12,001 — 
Other69,343 77,987 
Total liabilities$8,607,570 $8,561,502 
Shareholders' equity:  
Preferred shares (No par value; 200,000 shares authorized; No shares issued)
$— $— 
Common shares (No par value; 20,000,000 shares authorized; 17,623,104 common shares issued at March 31, 2025 and at December 31, 2024)
459,529 463,706 
Retained earnings1,002,110 977,599 
Treasury shares (1,431,757 common shares at March 31, 2025 and 1,464,122 common shares at December 31, 2024)
(147,938)(151,282)
Accumulated other comprehensive loss, net of taxes(34,659)(46,175)
Total shareholders' equity1,279,042 1,243,848 
Total liabilities and shareholders’ equity$9,886,612 $9,805,350 

SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
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PARK NATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Income (Unaudited)
(in thousands, except common share and per common share data)

Three Months Ended
March 31,
 20252024
Interest and dividend income:  
Interest and fees on loans$120,648 $111,211 
Interest and dividends on:  
Debt securities - taxable7,130 11,899 
Debt securities - tax-exempt1,269 1,410 
Other interest income3,153 2,120 
Total interest and dividend income132,200 126,640 
Interest expense:  
Interest on deposits:  
Demand and savings deposits18,436 19,855 
Time deposits6,770 7,338 
Interest on borrowings:  
Short-term borrowings291 1,464 
Subordinated notes2,326 2,360 
Total interest expense27,823 31,017 
Net interest income104,377 95,623 
Provision for credit losses756 2,180 
Net interest income after provision for credit losses$103,621 $93,443 
Other income:  
Income from fiduciary activities$10,994 $10,024 
Service charges on deposit accounts2,407 2,106 
Other service income2,936 2,524 
Debit card fee income6,089 6,243 
Bank owned life insurance income1,512 2,629 
ATM fees335 496 
(Loss) gain on the sale of OREO, net(229)121 
Loss on the sale of debt securities, net— (398)
Loss on equity securities, net(862)(687)
Other components of net periodic pension benefit income2,344 2,204 
Miscellaneous220 938 
Total other income$25,746 $26,200 


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PARK NATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Income (Unaudited) (Continued)
(in thousands, except common share and per common share data)

Three Months Ended
March 31,
 20252024
Other expense:  
Salaries$36,216 $35,733 
Employee benefits10,516 11,560 
Occupancy expense3,519 3,181 
Furniture and equipment expense2,301 2,583 
Data processing fees10,529 8,808 
Professional fees and services7,307 6,817 
Marketing1,528 1,741 
Insurance1,686 1,718 
Communication1,202 1,036 
State tax expense1,186 1,110 
Amortization of intangible assets274 320 
Miscellaneous1,900 2,621 
Total other expense$78,164 $77,228 
Income before income taxes$51,203 $42,415 
Income taxes9,046 7,211 
Net income$42,157 $35,204 
Earnings per common share:
Basic$2.61 $2.18 
Diluted$2.60 $2.17 
Weighted average common shares outstanding:  
Basic16,159,342 16,116,842 
Diluted16,238,701 16,191,065 
Regular cash dividends declared per common share$1.07 $1.06 
 
SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 


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PARK NATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Comprehensive Income (Unaudited)
(in thousands)

Three Months Ended
March 31,
 20252024
Net income$42,157 $35,204 
Other comprehensive income (loss), net of tax:
Debt securities available-for-sale:
Unrealized net holding gain (loss) on debt securities available-for-sale, net of income tax effect of $3,062 and $(138) for the three months ended March 31, 2025 and 2024
11,516 (518)
Net loss realized on sale of debt securities, AFS, net of income tax effect of $84 for the three months ended March 31, 2024
— 314 
Other comprehensive income (loss)$11,516 $(204)
Comprehensive income $53,673 $35,000 
 
SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

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PARK NATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Changes in Shareholders' Equity (Unaudited)
(in thousands, except common share and per common share data)
  
Preferred
Shares		Common
Shares		Retained
Earnings		Treasury
Shares		Accumulated
Other
Comprehensive
Loss
Balance at December 31, 2024$— $463,706 $977,599 $(151,282)$(46,175)
Net income42,157 
Other comprehensive income, net of tax11,516 
Dividends on common shares at $1.07 per common share
(17,538)
Issuance of 32,365 common shares under share-based compensation awards, net of 19,468 common shares withheld to pay employee income taxes
(6,184)(108)3,344 
Share-based compensation expense2,007 
Balance at March 31, 2025$— $459,529 $1,002,110 $(147,938)$(34,659)

Preferred
Shares		Common
Shares		Retained
Earnings		Treasury
Shares		Accumulated
Other
Comprehensive
Loss
Balance at December 31, 2023$— $463,280 $903,877 $(155,673)$(66,191)
Net income35,204 
Other comprehensive loss, net of tax (204)
Dividends on common shares at $1.06 per common share
(17,287)
Issuance of 33,044 common shares under share-based compensation awards, net of 21,937 common shares withheld to pay employee income taxes
(5,701)(693)3,414 
Share-based compensation expense1,953 
Balance at March 31, 2024$— $459,532 $921,101 $(152,259)$(66,395)

SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

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PARK NATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows (Unaudited)
(in thousands)
Three Months Ended
March 31,
 20252024
Operating activities:  
Net income$42,157 $35,204 
Adjustments to reconcile net income to net cash provided by operating activities:  
Provision for credit losses756 2,180 
Accretion of loan fees and costs, net(2,291)(2,027)
Depreciation of premises and equipment2,913 3,119 
Amortization of investment securities, net345 415 
Loss on the sale of debt securities, net— 398 
Loss on equity securities, net862 687 
Loan originations to be sold in secondary market(28,224)(16,382)
Proceeds from sale of loans in secondary market29,329 17,892 
Gain on sale of loans in secondary market(458)(312)
Share-based compensation expense2,007 1,953 
Loss (gain) on the sale of OREO, net229 (121)
Bank owned life insurance income(1,512)(2,629)
Investment in qualified affordable housing tax credits amortization2,275 2,138 
Changes in assets and liabilities:
Decrease in prepaid dealer premiums1,296 173 
(Increase) decrease in other assets(1,074)1,855 
Decrease in other liabilities(10,750)(9,537)
Net cash provided by operating activities$37,860 $35,006 
Investing activities:  
Proceeds from the redemption/repurchase of FHLB stock624 4,563 
Proceeds from sale of:
Debt securities AFS— 30,797 
Equity securities1,187 — 
Proceeds from calls and maturities of:  
Debt securities AFS113,418 54,287 
Purchases of:  
Debt securities AFS(28,799)(2,100)
Equity securities(1,264)— 
FHLB stock— (225)
Net (increase) decrease in other investments(1,096)317 
Net loan originations, portfolio loans(65,674)(49,533)
Investment in qualified affordable housing tax credits(4,768)(4,094)
Proceeds from the sale of OREO709 167 
Bank owned life insurance death benefits232 3,685 
Purchases of bank owned life insurance(2,500)(2,670)
Purchases of premises and equipment(1,076)(3,142)
Net cash provided by investing activities$10,993 $32,052 
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PARK NATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows (Unaudited) (Continued)
(in thousands)
Three Months Ended
March 31,
 20252024
Financing activities:  
Net increase in deposits$193,830 $264,560 
Net increase in off-balance sheet deposits(135,661)(1,094)
Net decrease in short-term borrowings(9,455)(222,323)
Value of common shares withheld to pay employee income taxes(2,948)(2,980)
Cash dividends paid(17,571)(17,408)
Net cash provided by financing activities$28,195 $20,755 
Increase in cash and cash equivalents77,048 87,813 
Cash and cash equivalents at beginning of year160,566 218,268 
Cash and cash equivalents at end of period$237,614 $306,081 
Supplemental disclosures of cash flow information:  
Cash paid for:  
Interest$29,867 $32,383 
Non-cash items:
Loans transferred to OREO$119 $737 
ROU assets obtained in exchange for lease obligations1,069 547 
Debt securities AFS purchase commitment12,001 — 

SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

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PARK NATIONAL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Note 1 – Basis of Presentation
 
The accompanying unaudited consolidated condensed financial statements included in this report have been prepared for Park In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the results of operations for the interim periods included herein have been made. The results of operations for the three-month period ended March 31, 2025 are not necessarily indicative of the operating results to be anticipated for the year ending December 31, 2025.
 
The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with the instructions for Quarterly Reports on Form 10-Q and Article 10 of Regulation S-X of the SEC. Therefore, they 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. GAAP. These financial statements should be read in conjunction with the consolidated financial statements included in Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA in Park's 2024 Form 10-K. Certain prior period amounts have been reclassified to conform to the current period presentation.
 
Park’s significant accounting policies are described in Note 1. Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements included in Park’s 2024 Form 10-K. For interim reporting purposes, Park follows the same basic accounting policies, as updated by the information contained in this report, and considers each interim period an integral part of an annual period. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated condensed financial statements and accompanying notes. Actual results could differ materially from those estimates.

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

The following is a summary of new accounting pronouncements impacting Park's consolidated condensed financial statements:

Adoption of New Accounting Pronouncements

ASU 2024-02 - Codification Improvements - Amendments to Remove References to Concepts Statements: In March 2024, FASB issued ASU 2024-02 - Codification Improvements - Amendments to Remove References to the Concepts Statements. ASU 2024-02 contains amendments to the Codification that remove references to various Concepts Statements. In most cases the references were extraneous and not required to understand or apply the guidance. In other instances, the references were used in previous Statements to provide guidance on certain topical areas.

ASU 2024-02 is effective for public business entities for fiscal years beginning after December 15, 2024. The adoption of ASU 2024-02 did not have an impact on Park's consolidated financial statements.

Issued But Not Yet Effective Accounting Standards

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.



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ASU 2024-03 - Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): In November 2024, FASB issued ASU 2024-03 - Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). ASU 2024-03 requires disaggregated disclosure of income statement expenses for public business entities in disclosures within the footnotes to the financial statements. The disclosures will require a footnote disclosure about specific expenses to disaggregate, in a tabular presentation, each relevant expense caption on the income statement that includes any of the following natural expenses: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) deprecation, depletion and amortization recognized as part of oil and gas producing activities and other types of depletion expenses. The tabular disclosure would also include certain other expenses, as applicable.

ASU 2024-03 is effective for public business entities for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted and public business entities are required to adopt ASU 2024-03 prospectively; however, entities are permitted to apply the amendments retrospectively. The adoption of the provisions of ASU 2024-03 is not expected to have an impact on Park's consolidated financial statements, but will impact disclosures.

Note 3 – Investment Securities
 
Investment securities at March 31, 2025 and at December 31, 2024, were as follows:

Debt securities AFS (In thousands)Amortized
Cost		Gross
Unrealized
Holding 
Gains		Gross
Unrealized
Holding 
Losses		Fair Value
March 31, 2025:
Obligations of states and political subdivisions$208,311 $49 $16,922 $191,438 
U.S. Government sponsored entities' asset-backed securities573,296 95 47,213 526,178 
Collateralized loan obligations200,937 107 70 200,974 
Corporate debt securities20,774 100 1,225 19,649 
Total$1,003,318 $351 $65,430 $938,239 
 
Debt securities AFS (In thousands)Amortized
Cost		Gross
Unrealized
Holding 
Gains		Gross
Unrealized
Holding 
Losses		Fair Value
December 31, 2024:
Obligations of U.S. Government sponsored entities$250 $— $1 $249 
Obligations of states and political subdivisions203,438 88 16,643 186,883 
U.S. Government sponsored entities' asset-backed securities580,268 2 61,694 518,576 
Collateralized loan obligations271,572 288 27 271,833 
Corporate debt securities20,753 50 1,720 19,083 
Total$1,076,281 $428 $80,085 $996,624 
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Investment securities in an unrealized loss position at March 31, 2025, were as follows:

Unrealized loss position for less than 12 monthsUnrealized loss position for 12 months or longerTotal
(In thousands)Fair valueUnrealized
losses		Fair valueUnrealized
losses		Fair
value		Unrealized
losses
Debt securities AFS:
Obligations of states and political subdivisions$28,048 $655 $153,976 $16,267 $182,024 $16,922 
U.S. Government sponsored entities' asset-backed securities10,976 138 496,363 47,075 507,339 47,213 
Collateralized loan obligations131,490 69 950 1 132,440 70 
Corporate debt securities— — 16,424 1,225 16,424 1,225 
Total$170,514 $862 $667,713 $64,568 $838,227 $65,430 
 
 Investment securities in an unrealized loss position at December 31, 2024, were as follows:

 
Unrealized loss position for less than 12 monthsUnrealized loss position for 12 months or longerTotal
(In thousands)Fair valueUnrealized
losses		Fair valueUnrealized
losses		Fair
value		Unrealized
losses
Debt securities AFS:
Obligations of U.S. Government sponsored entities$249 $1 $— $— $249 $1 
Obligations of states and political subdivisions34,256 528 137,471 16,115 171,727 16,643 
U.S. Government sponsored entities' asset-backed securities6,555 249 510,846 61,445 517,401 61,694 
Collateralized loan obligations44,935 14 36,223 13 81,158 27 
Corporate debt securities— — 15,929 1,720 15,929 1,720 
Total$85,995 $792 $700,469 $79,293 $786,464 $80,085 

At March 31, 2025, Park’s debt securities portfolio consisted of $938.2 million of securities, $838.2 million of which were in an unrealized loss position with aggregate unrealized losses of $65.4 million. Of the $838.2 million of securities in an unrealized loss position, $667.7 million were in an unrealized loss position for 12 months or longer. Of the $65.4 million in unrealized losses, $47.2 million were related to Park's "U.S. Government sponsored entities' asset-backed securities" portfolios. For non-agency debt securities, Park verified that the current credit ratings remain above investment grade. 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 that changes in value are largely the result of changes in the yield curve, therefore, unrealized losses have not been recognized into net income. Management does not intend to sell, and it is not more likely than not that management would be required to sell, the securities prior to their anticipated recovery in respect of the unrealized losses. Management believes the value will recover as the securities approach maturity or market interest rates change.

There was no ACL recorded for debt securities AFS at either March 31, 2025 or December 31, 2024. Additionally, for the three months ended March 31, 2025 and 2024, there were no credit-related investment impairment losses recognized.





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The amortized cost and estimated fair value of investments in debt securities AFS at March 31, 2025, 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.

 (In thousands)Amortized
cost		Fair value
Tax equivalent yield (1)
Debt Securities AFS
Obligations of state and political subdivisions:
Due five through ten years$89,873 $85,386 3.04 %
Due over ten years118,438 106,052 3.41 %
Total (1)
$208,311 $191,438 3.25 %
U.S. Government sponsored entities' asset-backed securities$573,296 $526,178 1.96 %
Collateralized loan obligations$200,937 $200,974 6.13 %
Corporate debt securities
Due within one year$982 $988 9.67 %
Due five through ten years19,792 18,661 4.10 %
Total$20,774 $19,649 4.36 %
(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.

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, 2025.

Investment securities having a fair value of $661.5 million and $599.2 million at March 31, 2025 and December 31, 2024, respectively, were pledged to collateralize government and public fund deposits, to secure repurchase agreements and as collateral for FHLB advance borrowings.

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Note 4 – Other Investment Securities
 
Other investment securities consist of restricted stock investments in the FHLB and the FRB, and equity securities. The restricted FHLB and FRB stock investments are carried at their redemption value. Equity securities with a readily determinable fair value are carried at fair value. Equity securities without a readily determinable fair value are recorded at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions ("modified cost"). Park's portfolio of equity investments in limited partnerships which provide mezzanine funding ("Partnership Investments") are valued using the NAV practical expedient in accordance with ASC 820.

The carrying amounts of other investment securities at March 31, 2025 and December 31, 2024 were as follows:
 
(In thousands)March 31, 2025December 31, 2024
FHLB stock$7,983 $8,607 
FRB stock14,653 14,653 
Equity investments carried at fair value12,001 11,488 
Equity investments carried at modified cost (1)
18,346 19,347 
Equity investments carried at NAV50,941 50,142 
Total other investment securities$103,924 $104,237 
(1) There have been no impairments or downward adjustments made to equity investments carried at modified cost. Cumulatively, upward adjustments of $1.4 million have been recorded as a result of observable price changes. There were no adjustments recorded during the three months ended March 31, 2025 or March 31, 2024 as a result of observable price changes.

No shares of FHLB stock were purchased during the three months ended March 31, 2025. During the three months ended March 31, 2024, Park purchased 2,246 shares of FHLB stock with a book value of $225,000.

During the three months ended March 31, 2025, the FHLB repurchased 6,243 shares of FHLB stock with a book value of $624,000. 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.

No shares of FRB stock were purchased or sold during the three months ended March 31, 2025 or 2024.

During the three months ended March 31, 2025 and 2024, $(563,000) and $3,000, respectively, of (losses) gains 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, 2025 and 2024, $(299,000) and $(690,000), respectively, of losses on equity investments carried at NAV were recorded within “Loss on equity securities, net” on the Consolidated Condensed Statements of Income.

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Note 5 – Loans
 
The composition of the loan portfolio at March 31, 2025 and at December 31, 2024 was as follows:
 
March 31, 2025December 31, 2024
(In thousands)Amortized CostAmortized Cost
Commercial, financial and agricultural: (1)
Commercial, financial and agricultural (1)
$1,246,160 $1,268,110 
Overdrafts1,068 1,475 
Commercial real estate (1)
2,029,349 1,994,332 
Construction real estate:  
Commercial362,857 311,122 
Retail99,504 101,455 
Residential real estate:  
Commercial663,220 644,418 
Mortgage1,360,827 1,346,543 
HELOC209,191 203,459 
Installment6,032 6,013 
Consumer:
Consumer1,874,845 1,908,473 
Check loans1,845 1,899 
Leases28,837 29,829 
Total$7,883,735 $7,817,128 
Allowance for credit losses(88,130)(87,966)
Net loans$7,795,605 $7,729,162 
(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.

Loans are shown net of deferred origination fees, costs and unearned income of $20.0 million at March 31, 2025, and of $20.4 million at December 31, 2024, which represented a net deferred income position at both dates. At March 31, 2025 and December 31, 2024, loans included purchase accounting adjustments of $493,000 and $669,000, respectively, which represented a net deferred income position at each date. This fair market value purchase accounting adjustment is expected to be recognized into interest income on a level yield basis over the remaining expected life of the loans.

Overdrawn deposit accounts of $1.1 million and $1.5 million were reclassified to loans at March 31, 2025 and at December 31, 2024, respectively.

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Credit Quality
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, 2025 and December 31, 2024.
 
 March 31, 2025
(In thousands)Nonaccrual
Loans		Loans Past Due
90 Days
 or More
and Accruing		Total
Nonperforming
Loans
Commercial, financial and agricultural:
Commercial, financial and agricultural$22,993 $2 $22,995 
Overdrafts— — — 
Commercial real estate22,929 — 22,929 
Construction real estate:   
Commercial100 — 100 
Retail20 — 20 
Residential real estate:   
Commercial1,764 — 1,764 
Mortgage10,383 391 10,774 
HELOC815 40 855 
Installment50 — 50 
Consumer:
Consumer2,865 786 3,651 
Check loans— — — 
Leases10 — 10 
Total loans$61,929 $1,219 $63,148 
 

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 December 31, 2024
(In thousands)Nonaccrual
Loans		Loans Past Due 90 Days or More and AccruingTotal
Nonperforming
Loans
Commercial, financial and agricultural
Commercial, financial and agricultural$24,241 $— $24,241 
Overdrafts— — — 
Commercial real estate23,230 — 23,230 
Construction real estate:  
Commercial8 — 8 
Retail22 — 22 
Residential real estate:   
Commercial5,700 — 5,700 
Mortgage11,368 913 12,281 
HELOC918 15 933 
Installment31 — 31 
Consumer
Consumer2,643 826 3,469 
Check loans— — — 
Leases17 — 17 
Total loans$68,178 $1,754 $69,932 

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The following tables provide additional detail on nonaccrual loans and the related ACL, by class of loan, at March 31, 2025 and December 31, 2024:

March 31, 2025
(In thousands)Nonaccrual Loans With No ACLNonaccrual Loans With an ACLRelated ACL
Commercial, financial and agricultural:
Commercial, financial and agricultural$19,211 $3,782 $988 
Overdrafts— — — 
Commercial real estate22,139 790 68 
Construction real estate:
Commercial100 — — 
Retail— 20 1 
Residential real estate:
Commercial1,764 — — 
Mortgage— 10,383 118 
HELOC— 815 93 
Installment— 50 20 
Consumer
Consumer— 2,865 868 
Check loans— — — 
Leases10 — — 
Total loans$43,224 $18,705 $2,156 



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December 31, 2024
(In thousands)Nonaccrual Loans With No ACLNonaccrual Loans With an ACLRelated ACL
Commercial, financial and agricultural:
Commercial, financial and agricultural$18,778 $5,463 $1,261 
Overdrafts— — — 
Commercial real estate23,230 — — 
Construction real estate:
Commercial8 — — 
Retail— 22 1 
Residential real estate:
Commercial3,755 1,945 39 
Mortgage— 11,368 128 
HELOC— 918 154 
Installment— 31 1 
Consumer
Consumer— 2,643 786 
Check loans— — — 
Leases17 — — 
Total$45,788 $22,390 $2,370 

Nonaccrual commercial loans are evaluated on an individual basis and are excluded from the collective evaluation. Additionally, accruing collateral dependent commercial loans to borrowers experiencing financial difficulty are individually evaluated. Management’s general practice is to proactively charge down nonaccrual loans individually evaluated to the fair value of the underlying collateral. 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 March 31, 2025 and at December 31, 2024:

 March 31, 2025
(In thousands)Real EstateBusiness AssetsOtherTotal
Commercial, financial and agricultural
Commercial, financial and agricultural$5,535 $12,336 $18,723 $36,594 
Commercial real estate24,243 5 — 24,248 
Construction real estate:
Commercial669 — — 669 
Residential real estate:
Commercial1,938 — — 1,938 
Mortgage77 — — 77 
Leases— 10 — 10 
Total loans$32,462 $12,351 $18,723 $63,536 

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 December 31, 2024
(In thousands)Real EstateBusiness AssetsOtherTotal
Commercial, financial and agricultural
Commercial, financial and agricultural$5,583 $11,423 $22,187 $39,193 
Commercial real estate24,539 8 — 24,547 
Construction real estate:
Commercial589 — — 589 
Residential real estate:
Commercial5,898 — — 5,898 
Mortgage78 — — 78 
Leases— 17 — 17 
Total loans$36,687 $11,448 $22,187 $70,322 

Interest income on nonaccrual loans is recognized on a cash basis only when Park expects to receive the entire recorded investment in the loans. The following table presents interest income recognized on nonaccrual loans for the three-month periods ended March 31, 2025 and 2024:

Interest Income Recognized
(In thousands)Three Months Ended
March 31, 2025		Three Months Ended
March 31, 2024
Commercial, financial and agricultural:
Commercial, financial and agricultural$332 $264 
Overdrafts— — 
Commercial real estate260 255 
Construction real estate:
Commercial1 37 
Retail— — 
Residential real estate:
Commercial22 48 
Mortgage92 70 
HELOC8 5 
Installment— — 
Consumer:
Consumer45 31 
Check loans— — 
Leases— — 
Total loans$760 $710 




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The following tables present the aging of the amortized cost in past due loans at March 31, 2025 and at December 31, 2024 by class of loan:

 March 31, 2025
(In thousands)Accruing 
Loans
Past Due 
30-89 Days
Past Due 
Nonaccrual
Loans and Loans
Past Due 90 Days
or More and 
Accruing (1)
Total Past 
Due
Total
Current (2)
Total 
Amortized Cost
Commercial, financial and agricultural:
Commercial, financial and agricultural$2,075 $9,571 $11,646 $1,234,514 $1,246,160 
Overdrafts— — — 1,068 1,068 
Commercial real estate685 1,926 2,611 2,026,738 2,029,349 
Construction real estate:
Commercial— — — 362,857 362,857 
Retail245 — 245 99,259 99,504 
Residential real estate:
Commercial633 298 931 662,289 663,220 
Mortgage10,645 5,347 15,992 1,344,835 1,360,827 
HELOC133 583 716 208,475 209,191 
Installment2 22 24 6,008 6,032 
Consumer:
Consumer8,537 1,195 9,732 1,865,113 1,874,845 
Check loans5 — 5 1,840 1,845 
Leases— — — 28,837 28,837 
Total loans$22,960 $18,942 $41,902 $7,841,833 $7,883,735 
(1) Includes an aggregate of $1.2 million of loans past due 90 days or more and accruing. The remaining loans were past due nonaccrual loans.
(2) Includes an aggregate of $44.2 million of nonaccrual loans which were current with respect to contractual principal and interest payments.

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 December 31, 2024
(in thousands)Accruing 
Loans
Past Due 
30-89 Days
Past Due 
Nonaccrual
Loans and Loans Past
Due 90 Days or
More and 
Accruing (1)
Total Past 
Due
Total
Current (2)
Total 
Amortized Cost
Commercial, financial and agricultural
Commercial, financial and agricultural$1,901 $13,234 $15,135 $1,252,975 $1,268,110 
Overdrafts— — — 1,475 1,475 
Commercial real estate458 2,594 3,052 1,991,280 1,994,332 
Construction real estate:
Commercial— — — 311,122 311,122 
Retail100 22 122 101,333 101,455 
Residential real estate:
Commercial— 2,164 2,164 642,254 644,418 
Mortgage13,403 5,946 19,349 1,327,194 1,346,543 
HELOC438 620 1,058 202,401 203,459 
Installment39 22 61 5,952 6,013 
Consumer
Consumer10,309 1,195 11,504 1,896,969 1,908,473 
Check loans3 — 3 1,896 1,899 
Leases— — — 29,829 29,829 
Total loans$26,651 $25,797 $52,448 $7,764,680 $7,817,128 
(1) Includes an aggregate of $1.8 million of loans past due 90 days or more and accruing. The remaining loans were past due nonaccrual loans.
(2) Includes an aggregate of $44.1 million of nonaccrual loans which were current with respect to contractual principal and interest payments.

Credit Quality Indicators
Management utilizes past due information as a credit quality indicator across the loan portfolio. Past due information at March 31, 2025 and December 31, 2024 is included in the previous tables. The past due information is the primary credit quality indicator within the following classes of loans: (1) overdrafts in the commercial, financial and agricultural portfolio segment; (2) retail loans in the construction real estate portfolio segment; (3) mortgage loans, HELOC and installment loans in the residential real estate portfolio segment; and (4) consumer loans and check loans in the consumer portfolio segment. The primary credit indicator for commercial loans is based on an internal grading system that grades all commercial loans on a scale from 1 to 8. Credit grades are continuously monitored by the responsible loan officer and adjustments are made when appropriate. A grade of 1 indicates little or no credit risk and a grade of 8 is considered a loss. Commercial loans that are pass-rated (graded a 1 through a 4) are considered to be of acceptable credit risk. Commercial loans graded a 5 (special mention) are considered to be watch list credits and a higher PD is applied to these loans. Loans classified as special mention have potential weaknesses that require management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of Park’s credit position at some future date. Commercial loans graded a 6 (substandard), also considered watch list credits, are considered to represent higher credit risk and, as a result, a higher PD is applied to these loans. Loans classified as substandard are inadequately protected by the current sound worth and paying capacity of the obligor or the value of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that Park will sustain some loss if the 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 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. Certain 6-rated loans and all 7-rated loans are placed on nonaccrual status and included within the individually evaluated category. A commercial loan is deemed nonaccrual, and is individually evaluated, when management determines the borrower's ability to perform in accordance with the contractual loan agreement is in doubt. Any commercial loan graded an 8 (loss) is completely charged off.

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Based on the most recent analysis performed, the risk category of commercial loans by class of loans at March 31, 2025 and at December 31, 2024 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, 2025 and for the year ended December 31, 2024.

March 31, 2025Term Loans Amortized Cost Basis by Origination Year
(In thousands)20252024202320222021PriorRevolving Loans Amortized Cost BasisTotal
Commercial, financial and agricultural: Commercial, financial and agricultural (1)
Risk rating
Pass$69,958 $215,382 $138,152 $90,406 $74,341 $96,582 $494,085 $1,178,906 
Special Mention150 2,335 1,132 3,327 197 766 35,617 43,524 
Substandard1,321 976 1,081 436 1,897 5,507 9,395 20,613 
Doubtful244 226 947 209 171 222 1,098 3,117 
Total $71,673 $218,919 $141,312 $94,378 $76,606 $103,077 $540,195 $1,246,160 
Current period gross charge-offs$— $— $35 $12 $— $— $— $47 

Commercial real estate (1)
Risk rating
Pass$91,189 $334,301 $244,180 $284,337 $292,830 $692,872 $30,954 $1,970,663 
Special Mention175 2,206 3,357 12,210 2,817 12,338 916 34,019 
Substandard334 2,816 682 4,694 3,005 9,938 2,408 23,877 
Doubtful— — 790 — — — — 790 
Total$91,698 $339,323 $249,009 $301,241 $298,652 $715,148 $34,278 $2,029,349 
Current period gross charge-offs$— $— $— $— $— $— $— 

Construction real estate: Commercial
Risk rating
Pass$17,626 $188,423 $78,339 $31,825 $2,379 $5,581 $31,729 $355,902 
Special Mention— 6,265 21 — — — — 6,286 
Substandard— — 569 — — — 100 669 
Doubtful— — — — — — — — 
Total$17,626 $194,688 $78,929 $31,825 $2,379 $5,581 $31,829 $362,857 
Current period gross charge-offs$— $— $— $— $— $— $— $— 

Residential Real Estate: Commercial
Risk rating
Pass$43,157 $119,567 $107,560 $87,356 $90,098 $183,522 $21,169 $652,429 
Special Mention— 1,402 535 643 940 1,768 3,161 8,449 
Substandard— 330 88 827 320 631 146 2,342 
Doubtful— — — — — — — — 
Total$43,157 $121,299 $108,183 $88,826 $91,358 $185,921 $24,476 $663,220 
Current period gross charge-offs$— $— $— $— $— $— $— $— 
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March 31, 2025Term Loans Amortized Cost Basis by Origination Year
(In thousands)20252024202320222021PriorRevolving Loans Amortized Cost BasisTotal
Leases
Risk rating
Pass$4,558 $13,514 $5,374 $3,067 $1,021 $994 $— $28,528 
Special Mention— — 43 232 — 24 — 299 
Substandard— 10 — — — — — 10 
Doubtful— — — — — — — — 
Total$4,558 $13,524 $5,417 $3,299 $1,021 $1,018 $— $28,837 
Current period gross charge-offs$— $— $— $— $— $— $— $— 

Total Commercial Loans
Risk rating
Pass$226,488 $871,187 $573,605 $496,991 $460,669 $979,551 $577,937 $4,186,428 
Special Mention325 12,208 5,088 16,412 3,954 14,896 39,694 92,577 
Substandard1,655 4,132 2,420 5,957 5,222 16,076 12,049 47,511 
Doubtful244 226 1,737 209 171 222 1,098 3,907 
Total$228,712 $887,753 $582,850 $519,569 $470,016 $1,010,745 $630,778 $4,330,423 
Current period gross charge-offs$— $— $35 $12 $— $— $— $47 
(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.


December 31, 2024Term Loans Amortized Cost Basis by Origination Year
(In thousands)20242023202220212020PriorRevolving Loans Amortized Cost BasisTotal
Commercial, financial and agricultural: Commercial, financial and agricultural (1)
Risk rating
Pass$239,260 $150,007 $97,761 $80,956 $66,332 $53,327 $506,998 $1,194,641 
Special Mention2,709 1,222 3,819 314 818 1,467 37,447 47,796 
Substandard1,574 633 264 1,879 817 5,232 12,417 22,816 
Doubtful371 944 256 104 336 — 846 2,857 
Total $243,914 $152,806 $102,100 $83,253 $68,303 $60,026 $557,708 $1,268,110 
Current period gross charge-offs$— $104 $143 $20 $1,317 $2,872 $50 $4,506 

Commercial real estate (1)
Risk rating
Pass$329,203 $252,923 $289,622 $296,745 $276,181 $459,856 $30,203 $1,934,733 
Special Mention3,054 2,779 11,978 4,071 5,728 7,416 1,165 36,191 
Substandard2,083 1,477 3,037 3,310 2,223 7,850 2,985 22,965 
Doubtful— — 443 — — — — 443 
Total$334,340 $257,179 $305,080 $304,126 $284,132 $475,122 $34,353 $1,994,332 
Current period gross charge-offs$— $99 $— $— $— $— $— $99 
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December 31, 2024Term Loans Amortized Cost Basis by Origination Year
(In thousands)20242023202220212020PriorRevolving Loans Amortized Cost BasisTotal
Construction real estate: Commercial
Risk rating
Pass$158,403 $83,233 $32,035 $2,623 $3,014 $2,783 $22,896 $304,987 
Special Mention5,084 — 374 — — — 88 5,546 
Substandard8 581 — — — — — 589 
Doubtful— — — — — — — — 
Total$163,495 $83,814 $32,409 $2,623 $3,014 $2,783 $22,984 $311,122 
Current period gross charge-offs$— $— $— $— $— $— $— $— 

Residential Real Estate: Commercial
Risk rating
Pass$120,873 $111,577 $88,292 $92,240 $102,999 $93,918 $20,455 $630,354 
Special Mention1,403 540 661 437 831 941 3,165 7,978 
Substandard351 91 2,790 324 1,262 1,123 145 6,086 
Doubtful— — — — — — — — 
Total$122,627 $112,208 $91,743 $93,001 $105,092 $95,982 $23,765 $644,418 
Current period gross charge-offs$— $— $— $— $— $— $— $— 

Leases
Risk rating
Pass$17,537 $5,868 $3,557 $1,243 $967 $315 $— $29,487 
Special Mention— 46 251 — 28 — — 325 
Substandard17 — — — — — — 17 
Doubtful— — — — — — — — 
Total$17,554 $5,914 $3,808 $1,243 $995 $315 $— $29,829 
Current period gross charge-offs$8 $— $— $— $— $— $— $8 

Total Commercial Loans
Risk rating
Pass$865,276 $603,608 $511,267 $473,807 $449,493 $610,199 $580,552 $4,094,202 
Special Mention12,250 4,587 17,083 4,822 7,405 9,824 41,865 97,836 
Substandard4,033 2,782 6,091 5,513 4,302 14,205 15,547 52,473 
Doubtful371 944 699 104 336 — 846 3,300 
Total$881,930 $611,921 $535,140 $484,246 $461,536 $634,228 $638,810 $4,247,811 
Current period gross charge-offs$8 $203 $143 $20 $1,317 $2,872 $50 $4,613 
(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.

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Park considers the performance of the loan portfolio and its impact on the ACL. 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 and gross charge offs for the three months ended March 31, 2025 and for the year ended December 31, 2024. Nonperforming loans consisted of nonaccrual loans and loans past due 90 days or more and still accruing.

March 31, 2025Term Loans Amortized Cost Basis by Origination Year
(In thousands)20252024202320222021PriorRevolving Loans Amortized Cost BasisTotal
Commercial, financial and agricultural: Overdrafts
Performing$1,068 $— $— $— $— $— $— $1,068 
Nonperforming
— — — — — — — — 
Total $1,068 $— $— $— $— $— $— $1,068 
Current period gross charge-offs$254 $— $— $— $— $— $— $254 

Construction Real Estate: Retail
Performing$3,521 $56,087 $16,812 $8,230 $5,983 $8,392 $459 $99,484 
Nonperforming
— — — — — 20 — 20 
Total $3,521 $56,087 $16,812 $8,230 $5,983 $8,412 $459 $99,504 
Current period gross charge-offs$— $— $— $— $— $— $— $— 

Residential Real Estate: Mortgage
Performing$36,383 $196,486 $241,808 $243,137 $186,238 $446,001 $— $1,350,053 
Nonperforming
— 620 1,150 1,178 668 7,158 — 10,774 
Total $36,383 $197,106 $242,958 $244,315 $186,906 $453,159 $— $1,360,827 
Current period gross charge-offs$— $25 $— $— $— $— $25 

Residential Real Estate: HELOC
Performing$— $63 $142 $461 $349 $1,012 $206,309 $208,336 
Nonperforming
— — 81 40 13 561 160 855 
Total $— $63 $223 $501 $362 $1,573 $206,469 $209,191 
Current period gross charge-offs$— $— $— $— $— $— $— 

Residential Real Estate: Installment
Performing$344 $1,083 $1,613 $126 $— $2,816 $— $5,982 
Nonperforming
— 20 — — — 30 — 50 
Total $344 $1,103 $1,613 $126 $— $2,846 $— $6,032 
Current period gross charge-offs$— $— $— $— $— $— $— $— 

Consumer: Consumer
Performing$142,173 $566,880 $413,937 $386,629 $181,215 $174,987 $5,373 $1,871,194 
Nonperforming— 653 916 901 537 642 2 3,651 
Total $142,173 $567,533 $414,853 $387,530 $181,752 $175,629 $5,375 $1,874,845 
Current period gross charge-offs$— $513 $1,226 $866 $387 $284 $— $3,276 
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March 31, 2025Term Loans Amortized Cost Basis by Origination Year
(In thousands)20252024202320222021PriorRevolving Loans Amortized Cost BasisTotal
Consumer: Check loans
Performing$— $— $— $— $— $— $1,845 $1,845 
Nonperforming
— — — — — — — — 
Total $— $— $— $— $— $— $1,845 $1,845 
Current period gross charge-offs$— $— $— $— $— $— $3 $3 

Total Consumer Loans
Performing$183,489 $820,599 $674,312 $638,583 $373,785 $633,208 $213,986 $3,537,962 
Nonperforming
— 1,293 2,147 2,119 1,218 8,411 162 15,350 
Total $183,489 $821,892 $676,459 $640,702 $375,003 $641,619 $214,148 $3,553,312 
Current period gross charge-offs$254 $538 $1,226 $866 $387 $284 $3 $3,558 

December 31, 2024Term Loans Amortized Cost Basis by Origination Year
(In thousands)20242023202220212020PriorRevolving Loans Amortized Cost BasisTotal
Commercial, financial and agricultural: Overdrafts
Performing$1,475 $— $— $— $— $— $— $1,475 
Nonperforming
— — — — — — — — 
Total 1,475 $— $— $— $— $— $— $1,475 
Current period gross charge-offs$937 $— $— $— $— $— $— $937 

Construction Real Estate: Retail
Performing$51,109 $26,237 $8,517 $6,233 $3,571 $5,306 $460 $101,433 
Nonperforming
— — — — 22 — — 22 
Total $51,109 $26,237 $8,517 $6,233 $3,593 $5,306 $460 $101,455 
Current period gross charge-offs$— $— $— $— $— $— $— $— 

Residential Real Estate: Mortgage
Performing$194,883 $236,260 $250,132 $192,193 $157,438 $303,356 $— $1,334,262 
Nonperforming
536 721 1,324 729 1,508 7,463 — 12,281 
Total $195,419 $236,981 $251,456 $192,922 $158,946 $310,819 $— $1,346,543 
Current period gross charge-offs$— $— $— $— $— $22 $— $22 

Residential Real Estate: HELOC
Performing$13 $153 $577 $333 $56 $1,048 $200,346 $202,526 
Nonperforming
— 39 14 56 — 610 214 933 
Total $13 $192 $591 $389 $56 $1,658 $200,560 $203,459 
Current period gross charge-offs$— $— $— $— $— $9 $— $9 
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December 31, 2024Term Loans Amortized Cost Basis by Origination Year
(In thousands)20232022202120202019PriorRevolving Loans Amortized Cost BasisTotal
Residential Real Estate: Installment
Performing$1,198 $1,704 $133 $— $— $2,947 $— $5,982 
Nonperforming
— — — — 2 29 — 31 
Total $1,198 $1,704 $133 $— $2 $2,976 $— $6,013 
Current period gross charge-offs$— $— $— $— $— $— $— $— 

Consumer: Consumer
Performing$607,783 $454,403 $427,982 $204,806 $126,075 $76,707 $7,248 $1,905,004 
Nonperforming
337 1,035 928 452 310 404 3 3,469 
Total $608,120 $455,438 $428,910 $205,258 $126,385 $77,111 $7,251 $1,908,473 
Current period gross charge-offs$683 $3,532 $4,596 $2,328 $809 $743 $2 $12,693 

Consumer: Check loans
Performing$— $— $— $— $— $— $1,899 $1,899 
Nonperforming
— — — — — — — — 
Total $— $— $— $— $— $— $1,899 $1,899 
Current period gross charge-offs$— $— $— $— $— $— $60 $60 

Total Consumer Loans
Performing$856,461 $718,757 $687,341 $403,565 $287,140 $389,364 $209,953 $3,552,581 
Nonperforming
873 1,795 2,266 1,237 1,842 8,506 217 16,736 
Total $857,334 $720,552 $689,607 $404,802 $288,982 $397,870 $210,170 $3,569,317 
Current period gross charge-offs$1,620 $3,532 $4,596 $2,328 $809 $774 $62 $13,721 


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Loans and Leases Acquired with Deteriorated Credit Quality
PCD loans are individually evaluated on a quarterly basis to determine if a reserve is necessary. At March 31, 2025 and at December 31, 2024, there was no ACL on PCD loans. The carrying amount of accruing loans acquired with deteriorated credit quality at March 31, 2025 and at December 31, 2024 was $2.1 million and $2.2 million, respectively. The carrying amount of nonaccrual loans acquired with deteriorated credit quality was $546,000 and $551,000 at March 31, 2025 and at December 31, 2024, respectively.

Modifications to Borrowers Experiencing Financial Difficulty
Management identifies loans as modifications to borrowers experiencing financial difficulty when a borrower is experiencing financial difficulties and Park has altered the cash flow of the loan as part of a modification or in the loan renewal process. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of the borrower's debt in the foreseeable future without the modification. 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 an interest rate reduction.

In some cases, Park provides multiple types of modifications on one loan. Typically, one type of modification, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another modification, such as principal forgiveness, may be granted. For the loans included in the combination columns below, multiple types of modifications have been made on the same loan within the current reporting period. 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 reduction.

The starting point for the estimate of the ACL is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. As a result, the effect of most modifications made to borrowers experiencing financial difficulty is already included in the ACL and a change to the ACL is generally not recorded upon modification. When principal forgiveness is provided, the amount of forgiveness is charged off against the ACL.


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The following tables present the amortized cost basis of loans at March 31, 2025 and 2024 that were both experiencing financial difficulty and modified during the three months ended March 31, 2025 and 2024 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
March 31, 2025
(Dollars in thousands)Principal ForgivenessPayment DelayTerm ExtensionInterest Rate ReductionCombination Term Extension and Interest Rate ReductionCombination Term Extension and Payment DelayTotalPercent of Total Class of Financing Receivable
Commercial, financial and agricultural:
Commercial, financial and agricultural $— $932 $6,503 $— $150 $— $7,585 0.61 %
Overdrafts— — — — — — — — %
Commercial real estate — 6,186 799 1,478 175 1,426 10,064 0.50 %
Construction real estate:
Commercial— — — — — — — — %
Retail— — — — — 69 69 0.07 %
Residential real estate:
Commercial— 898 — — — — 898 0.14 %
Mortgage— — — — — 451 451 0.03 %
HELOC— — — — — — — — %
Installment— — 73 — — — 73 1.21 %
Consumer:
Consumer— — — 16 — — 16 — %
Check loans— — — — — — — — %
Leases— — — — — — — — %
Total$— $8,016 $7,375 $1,494 $325 $1,946 $19,156 0.24 %
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Three Months Ended
March 31, 2024
(Dollars in thousands)Principal ForgivenessPayment DelayTerm ExtensionInterest Rate ReductionCombination Term Extension and Interest Rate ReductionCombination Term Extension and Payment DelayTotalPercent of Total Class of Financing Receivable
Commercial, financial and agricultural:
Commercial, financial and agricultural $— $54 $12,144 $2 $— $— $12,200 0.96 %
Overdrafts— — — — — — — — %
Commercial real estate — 161 4,522 344 122 — 5,149 0.27 %
Construction real estate:
Commercial— — — — — — — — %
Retail— — — — — — — — %
Residential real estate:
Commercial— — 438 — 220 — 658 0.11 %
Mortgage— — 48 — — — 48 — %
HELOC— — — — — — — — %
Installment— — 57 — — — 57 0.95 %
Consumer:
Consumer— — — 8 — — 8 — %
Check loans— — — — — — — — %
Leases— — — — — — — — %
Total$— $215 $17,209 $354 $342 $— $18,120 0.24 %

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At March 31, 2025, Park had commitments to lend $2.7 million related to loans which were both experiencing financial difficulty and modified during the three months ended March 31, 2025.

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, 2025 and 2024:

Three Months Ended
March 31, 2025
(Dollars in thousands)Principal ForgivenessWeighted Average Interest Rate ReductionWeighted Average Term Extension (years)Weighted Average Payment Delay (years)
Commercial, financial and agricultural:
Commercial, financial and agricultural$— (0.35)%0.90.4
Overdrafts— — %0.00.0
Commercial real estate— (0.78)%2.60.5
Construction real estate:
Commercial— — %0.00.0
Retail— — %0.50.5
Residential real estate:
Commercial— — %0.00.5
Mortgage— — %0.40.4
HELOC— — %0.00.0
Installment— — %15.10.0
Consumer:
Consumer— (1.06)%0.00.0
Check loans— — %0.00.0
Leases— — %0.00.0
Total$— (0.75)%1.40.5

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Three Months Ended
March 31, 2024
(Dollars in thousands)Principal ForgivenessWeighted Average Interest Rate ReductionWeighted Average Term Extension (years)Weighted Average Payment Delay (years)
Commercial, financial and agricultural:
Commercial, financial and agricultural$— (0.50)%0.30.4
Overdrafts— — %0.00.0
Commercial real estate— (1.90)%3.00.4
Construction real estate:
Commercial— — %0.00.0
Retail— — %0.00.0
Residential real estate:
Commercial— (1.00)%3.00.0
Mortgage— — %7.80.0
HELOC— — %0.00.0
Installment— — %7.80.0
Consumer:
Consumer— (7.54)%0.00.0
Check loans— — %0.00.0
Leases— — %0.00.0
Total$— (1.68)%1.20.4





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Park closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of Park's modification efforts. The following table provides the performance of loans as of the period end date, of modifications made to borrowers experiencing financial difficulty during the twelve months preceding March 31, 2025:

Twelve Months Ended March 31, 2025
(Dollars in thousands)Current30-59 days past due60-89 days past due90 days or more past dueTotal
Commercial, financial and agricultural:
Commercial, financial and agricultural$17,064 $294 $— $— $17,358 
Overdrafts— — — — — 
Commercial real estate13,552 124 — — 13,676 
Construction real estate:— 
Commercial— — — — — 
Retail69 — — — 69 
Residential real estate:— 
Commercial1,299 — — — 1,299 
Mortgage1,006 53 — 78 1,137 
HELOC— — — — 
Installment336 — — — 336 
Consumer:— 
Consumer11 — — 14 25 
Check loans— — — — — 
Leases— — — — — 
Total$33,337 $471 $— $92 $33,900 

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.
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The following tables present the amortized cost basis of loans that had a payment default subsequent to modification during the three months ended March 31, 2025 and 2024 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty. For these tables, a loan is considered to be in default when it becomes 30 days contractually past due under the modified terms:

Three Months Ended
March 31, 2025
Term ExtensionInterest Rate ReductionCombination Term Extension and Interest Rate ReductionCombination Term Extension and Payment Delay
Commercial, financial and agricultural:
Commercial, financial and agricultural$29 $— $265 $— 
Overdrafts— — — — 
Commercial real estate124 — — — 
Construction real estate:
Commercial— — — — 
Retail— — — — 
Residential real estate:
Commercial— — — — 
Mortgage— 78 11 43 
HELOC— — — — 
Installment— — — — 
Consumer:
Consumer— 14 — — 
Check loans— — — — 
Leases— — — — 
Total loans$153 $92 $276 $43 



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Three Months Ended
March 31, 2024
Term ExtensionInterest Rate ReductionCombination Term Extension and Interest Rate ReductionOther
Commercial, financial and agricultural:
Commercial, financial and agricultural$3,507 $— $— $9 
Overdrafts— — — — 
Commercial real estate— — — — 
Construction real estate:
Commercial— — — — 
Retail— — — — 
Residential real estate:
Commercial— — — — 
Mortgage— — — — 
HELOC— — — — 
Installment19 — — — 
Consumer:
Consumer— — — — 
Check loans— — — — 
Leases— — — — 
Total loans$3,526 $— $— $9 

Upon the determination that a modified loan (or a portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is charged-off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the ACL is adjusted by the same amounts.

Note 6 – Allowance for Credit Losses

The ACL is an estimate of the expected credit losses on financial assets measured at amortized cost, which is measured using relevant information about past events, including historical credit loss experience on financial assets with similar risk characteristics, current conditions, and reasonable and supportable forecasts that affect the collectability of the remaining cash flows over the contractual term of the financial assets. A provision for credit losses is charged to operations based on management’s periodic evaluation of these and other pertinent factors.

Quantitative Considerations
The ACL is primarily calculated utilizing a DCF model. Key inputs and assumptions used in this model are discussed below:

•Forecast model - For each portfolio segment, a LDA was performed in order to identify appropriate loss drivers and create a regression model for use in forecasting cash flows. The LDA analysis utilized Park's own FFIEC Call Report data for the commercial, financial and agricultural and residential real estate portfolio segments. Peer data was incorporated into the analysis for the commercial real estate, construction real estate, and consumer portfolio segments. Park updated the LDA in the fourth quarter of 2024. During the COVID-19 pandemic, macroeconomic indicators showed significant deterioration, however, Park, along with most financial institutions, observed little to no meaningful increase in default activity. This can be attributed to external intervention in the form of deferral programs and government stimulus which is unlikely to reoccur in future downturns. For these reasons, management has excluded data from 2020-2022 in the LDA by using indicator variables during this time period.
•Probability of default – PD is the probability that an asset will be in default within a given time frame. Park has defined default to be when a charge-off has occurred, a loan is placed on nonaccrual, or a loan is greater than 90 days past due. 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, the LDA is utilized to estimate
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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. Whenever possible, Park utilizes its own loan-level LGDs for the reasonable and supportable forecast period. 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. This analysis is updated annually in the fourth quarter and was last updated in the fourth quarter of 2024.
•Forecast and reversion – Park has established a one-year reasonable and supportable forecast period with a one-year straight line reversion to the long-term historical average.
•Economic forecast - Park utilizes a third party to provide economic forecasts under various scenarios, which are weighted in order to reflect model risk in the current economic environment. The scenario weighting is evaluated by management on a quarterly basis.
◦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 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 March 31, 2024.
◦As of December 31, 2024, the "most likely" scenario forecasted Ohio unemployment between 4.48% and 4.60% during the next four quarters. In determining the appropriate weighting of scenarios at December 31, 2024, management considered the range of forecasted unemployment as well as a number of economic indicators. While some economic indications are showing improvement and stabilization, volatile levels of consumer confidence, higher unemployment rates, the impact of elevated inflation for several years with no immediate indications of sustained decline, the interest rate environment, 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, 2024.
◦As of March 31, 2025, the "most likely" scenario forecasted Ohio unemployment between 4.51% and 4.85% during the next four quarters. In determining the appropriate weighting of scenarios at March 31, 2025, management considered the range of forecasted unemployment as well as a number of economic indicators. While some economic indications are showing stabilization, lower levels of consumer confidence, higher unemployment rates, the impact of elevated inflation for several years with no immediate signs of sustained decline, the interest rate environment, financial system stress, geopolitical conflict, uncertainty regarding fiscal policy of the new political administration, including tariffs, and stress in the commercial real estate sector cause uncertainty 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 March 31, 2025.

Qualitative Considerations
Park reviews various internal and external factors to consider the need for any qualitative adjustments to the quantitative model. Factors considered include the following:
•The nature and volume of Park’s financial assets; the existence, growth, and effect of any concentrations of credit and the volume and severity of past due financial assets, the volume of nonaccrual assets, and the volume and severity of adversely classified or graded assets. Specifically, management considers:
◦Trends (e.g., growth, reduction) in specific categories of the loan portfolio, as well as adjustments to the types of loans offered by Park.
◦Level of and trend in loan delinquencies, troubled loans, commercial watch list loans and nonperforming loans.
◦Level of and trend in new nonaccrual loans.
◦Level of and trend in loan charge-offs and recoveries.
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•Park's lending policies and procedures, including changes in lending strategies, underwriting standards and practices for collections, charge-offs, and recoveries.
•The quality of Park’s credit review function.
•The experience, ability, and depth of Park’s lending, investment, collection, and other relevant management and staff.
•The effect of other external factors such as the regulatory, legal and technological environments; competition; geopolitical conflict; and events such as natural disasters or pandemics.
•Actual and expected changes in international, national, regional, and local economic and business conditions and developments in the markets in which Park operates that affect the collectability of financial assets.
•Where the U.S. economy is within a given credit cycle.
•The extent that there is government assistance (stimulus).

Qualitative adjustments amounted to $1.1 million and $1.2 million at March 31, 2025 and December 31, 2024, respectively. Qualitative adjustments included a $719,000 and $757,000 reserve at March 31, 2025 and December 31, 2024, respectively, related to Hurricane Helene which impacted borrowers in Park's Carolina region. This reserve considers the overall population of loans to borrowers in this area. Management will continue to evaluate potential losses as a result of Hurricane Helene as additional information becomes available.

ACL Activity
The activity in the ACL for the three-month periods ended March 31, 2025 and March 31, 2024 is summarized in the following tables:

 Three Months Ended
March 31, 2025
(In thousands)Commercial,
financial and
agricultural		Commercial
real estate		Construction
real estate		Residential
real estate		ConsumerLeasesTotal
ACL:       
Beginning balance$12,683 $19,571 $7,125 $22,355 $26,081 $151 $87,966 
Charge-offs301 — — 25 3,279 — 3,605 
Recoveries337 14 1,104 45 1,513 — 3,013 
Net (recoveries)/charge-offs$(36)$(14)$(1,104)$(20)$1,766 $— $592 
(Recovery of) provision for credit losses(1,311)253 (90)374 1,500 30 756 
Ending balance$11,408 $19,838 $8,139 $22,749 $25,815 $181 $88,130 
 
 Three Months Ended
March 31, 2024
(In thousands)Commercial,
financial and
agricultural		Commercial
real estate		Construction
real estate		Residential
real estate		ConsumerLeasesTotal
ACL:       
Beginning balance$15,496 $16,374 $5,227 $18,818 $27,713 $117 $83,745 
Charge-offs220 — — 1 3,019 — 3,240 
Recoveries171 22 914 82 1,210 — 2,399 
Net charge-offs/(recoveries)$49 $(22)$(914)$(81)$1,809 $— $841 
(Recovery of) provision for credit losses(476)785 (399)734 1,490 46 2,180 
Ending balance$14,971 $17,181 $5,742 $19,633 $27,394 $163 $85,084 

ACL Summary
Loans collectively evaluated for impairment in the following tables include all performing loans at March 31, 2025 and at December 31, 2024, 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 which are individually evaluated for impairment in accordance with U.S. GAAP. Additionally, accruing collateral dependent commercial loans to borrowers experiencing financial difficulty are individually evaluated. (See Note 1 - Summary of Significant Accounting Policies of the Notes to consolidated financial statements included in Park’s 2024 Form 10-K).


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The composition of the ACL at March 31, 2025 and at December 31, 2024 was as follows:
 
 March 31, 2025
(In thousands)Commercial,
financial and
agricultural		Commercial
real estate		Construction
real estate		Residential
real estate		ConsumerLeasesTotal
ACL:       
Ending allowance balance attributed to loans:       
Individually evaluated for impairment - nonaccrual$976$68$—$—$—$—$1,044
Individually evaluated for impairment - accrual——————
Collectively evaluated for impairment10,43219,7708,13922,74925,81518187,086
Accruing loans acquired with deteriorated credit quality———————
Total ending allowance balance$11,408$19,838$8,139$22,749$25,815$181$88,130
Loan balance:       
Individually evaluated for impairment - nonaccrual$22,915$22,930$100$1,763$—$10$47,718
Individually evaluated for impairment - accrual$13,935$— $— $— $— $— 13,935
Loans collectively evaluated for impairment1,210,3782,005,101461,6922,237,2551,876,69028,8277,819,943
Accruing loans acquired with deteriorated credit quality—1,318569252——2,139
Total ending loan balance$1,247,228$2,029,349$462,361$2,239,270$1,876,690$28,837$7,883,735
ACL as a percentage of loan balance:       
Individually evaluated for impairment - nonaccrual4.26 %0.30 %— %— %— %— %2.19 %
Individually evaluated for impairment - accrual— %— %— %— %— %— %— %
Loans collectively evaluated for impairment0.86 %0.99 %1.76 %1.02 %1.38 %0.63 %1.11 %
Accruing loans acquired with deteriorated credit quality— %— %— %— %— %— %— %
Total0.91 %0.98 %1.76 %1.02 %1.38 %0.63 %1.12 %
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 December 31, 2024
(In thousands)Commercial,
financial and
agricultural		Commercial
real estate		Construction
real estate		Residential
real estate		ConsumerLeasesTotal
ACL:       
Ending allowance balance attributed to loans:       
Individually evaluated for impairment - nonaccrual$1,259$—$—$40$—$—$1,299
Individually evaluated for impairment - accrual———————
Collectively evaluated for impairment11,42419,5717,12522,31526,08115186,667
Accruing loans acquired with deteriorated credit quality———————
Total ending allowance balance$12,683$19,571$7,125$22,355$26,081$151$87,966
Loan balance:       
Individually evaluated for impairment - nonaccrual$24,194$23,230$8$5,700$—$17$53,149
Individually evaluated for impairment - accrual15,290—————15,290
Loans collectively evaluated for impairment1,230,1011,969,785411,9882,194,4571,910,37229,8127,746,515
Accruing loans acquired with deteriorated credit quality—1,317581276——2,174
Total ending loan balance$1,269,585$1,994,332$412,577$2,200,433$1,910,372$29,829$7,817,128
ACL as a percentage of loan balance:       
Individually evaluated for impairment - nonaccrual5.20 %— %— %0.70 %— %— %2.44 %
Individually evaluated for impairment - accrual— %— %— %— %— %— %— %
Loans collectively evaluated for impairment0.93 %0.99 %1.73 %1.02 %1.37 %0.51 %1.12 %
Accruing loans acquired with deteriorated credit quality— %— %— %— %— %— %— %
Total1.00 %0.98 %1.73 %1.02 %1.37 %0.51 %1.13 %
 
Note 7 – Loans Held For Sale
 
Mortgage loans held for sale are carried at their fair value. At March 31, 2025 and at December 31, 2024, respectively, Park had $4.9 million and $5.6 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 $4.8 million and $5.5 million at March 31, 2025 and at December 31, 2024, respectively. The gain expected upon sale was $67,000 and $72,000 at March 31, 2025 and at December 31, 2024, respectively. None of these loans were 90 days or more past due or on nonaccrual status at March 31, 2025 or at December 31, 2024.

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Note 8 – Goodwill and Other Intangible Assets

The following table shows the activity in goodwill and other intangible assets for the three-month periods ended March 31, 2025 and 2024.

(in thousands)GoodwillOther
intangible assets		Total
December 31, 2023$159,595 $4,652 $164,247 
Amortization— 320 320 
March 31, 2024$159,595 $4,332 $163,927 
December 31, 2024$159,595 $3,437 $163,032 
Amortization— 274 274 
March 31, 2025$159,595 $3,163 $162,758 
   
Park evaluates goodwill for impairment during the second quarter of each year, with financial data as of the immediately prior March 31. Based on the qualitative analysis performed as of April 1, 2024, the Company determined that goodwill for Park's reporting unit, PNB, was not impaired.

Acquired Intangible Assets

The following table shows the balance of acquired intangible assets at March 31, 2025 and at December 31, 2024:

March 31, 2025
December 31, 2024
(in thousands)Gross Carrying AmountAccumulated AmortizationGross Carrying AmountAccumulated Amortization
Other intangible assets:
Core deposit intangible assets$14,456 $11,293 $14,456 $11,019 

Core deposit intangible assets are being amortized, on an accelerated basis, over a period of ten years. Aggregate amortization expense was $274,000 and $320,000 for the three months ended March 31, 2025 and 2024, respectively.

Estimated amortization expense related to core deposit intangible assets for the remainder of 2025 and the next four years follows:

(in thousands)Total
Nine months ending December 31, 2025$768 
2026887 
2027754 
2028618 
2029136 

Note 9 – Investment in Qualified Affordable Housing

Park makes certain equity investments in various limited partnerships that sponsor affordable housing projects. 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.

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The table below details the balances of Park’s affordable housing tax credit investments and related unfunded commitments at March 31, 2025 and December 31, 2024.

(in thousands)
March 31, 2025
December 31, 2024
Affordable housing tax credit investments$63,802 $66,077 
Unfunded commitments24,909 29,677 

Commitments are funded when capital calls are made by the general partner. Park expects that the current commitments will be funded between the remainder of 2025 through 2039.

Park recognized amortization expense of $2.3 million and $2.1 million for the three months ended March 31, 2025 and 2024, respectively, which were included within "Income taxes" in the consolidated condensed statements of income. Additionally, during the three months ended March 31, 2025 and 2024, Park recognized tax credits and other benefits from its affordable housing tax credit investments of $2.8 million and $2.6 million, respectively, which were included within "Income taxes" in the consolidated condensed statements of income.

Note 10 – Foreclosed and Repossessed Assets

Park typically transfers a loan to OREO at the time that Park takes deed/title to the real estate property asset. The carrying amounts of foreclosed real estate properties held at March 31, 2025 and December 31, 2024 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, 2025December 31, 2024
OREO:
Commercial real estate$— $938 
Residential real estate119 — 
Total OREO$119 $938 
Loans in process of foreclosure:
Residential real estate$2,431 $2,225 

In addition to real estate, Park may also repossess different types of collateral. At March 31, 2025 and December 31, 2024, Park had $1.3 million and $1.2 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 $1.84 billion at March 31, 2025, $1.86 billion at December 31, 2024 and $1.91 billion at March 31, 2024. At March 31, 2025, $2.4 million of the sold mortgage loans were sold with recourse, compared to $2.5 million at December 31, 2024 and $2.9 million at March 31, 2024. Management closely monitors the delinquency rates on the mortgage loans sold with recourse. At March 31, 2025 and December 31, 2024, management had established reserves of $18,000 and $50,000, 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. Park has selected the “amortization method” as permissible within U.S. GAAP, whereby the servicing rights capitalized are amortized in proportion to and over the period of estimated future servicing income with respect to the underlying loan. At the end of each reporting period, the carrying value of MSRs is assessed for impairment with a comparison to fair value. MSRs are carried at the lower of their amortized cost or fair value. The amortization of MSRs is included within "Other service income" in the consolidated condensed statements of income.

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Activity for MSRs and the related valuation allowance follows:
 
Three Months Ended
March 31,
(In thousands)20252024
MSRs:
Carrying amount, net, beginning of period$13,918 $14,656 
Additions238 143 
Amortization(398)(389)
Change in valuation allowance2 25 
Carrying amount, net, end of period$13,760 $14,435 
Valuation allowance:
Beginning of period$19 $94 
Change in valuation allowance(2)(25)
End of period$17 $69 
 
Servicing fees included in "Other service income" were $1.2 million and $1.3 million for the three months ended March 31, 2025 and 2024, respectively.

Note 12 - Leases

Park is a lessee in several noncancellable operating lease arrangements, primarily for retail branches, administrative and warehouse buildings, ATMs, and certain office equipment within its Ohio, North Carolina, South Carolina, and Kentucky markets. Certain of these leases contain renewal options for periods ranging from one 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 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 March 31, 2025 were $16.3 million and $17.7 million, respectively. At December 31, 2024, the carrying amounts of Park's ROU asset and lease liability were $15.7 million and $16.5 million, respectively. Park's operating lease expense is recorded in "Occupancy expense" on the Company's Consolidated Condensed Statements of Income.

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Other information related to operating leases for the three-month periods ended March 31, 2025 and 2024 follows:

Three Months Ended
(in thousands)March 31, 2025March 31, 2024
Lease cost
Operating lease cost$640 $622 
Sublease income— (10)
Total lease cost$640 $612 
Other information
Cash paid for amounts included in the measurement of lease liabilities:
      Operating cash flows from operating leases (1)
$73 $794 
ROU assets obtained in exchange for new operating lease liabilities$1,069 $547 
Reductions to ROU assets resulting from reductions to lease obligations$(437)$(658)
(1) Includes a tenant improvement allowance of $524,000 related to the reimbursement of leasehold expenditures for the three-month period ended March 31, 2025.

Park's operating leases had a weighted average remaining term of 9.8 years at both March 31, 2025 and December 31, 2024. The weighted average discount rate of Park's operating leases was 4.0% and 3.8% at March 31, 2025 and at December 31, 2024, respectively.

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

(in thousands)March 31, 2025
Nine months ending December 31, 2025$1,871 
20262,502 
20272,411 
20282,370 
20292,379 
Thereafter10,343 
Total undiscounted minimum lease payments$21,876 
Present value adjustment(4,216)
Total lease liabilities$17,660 


Note 13 – Repurchase Agreement Borrowings

Securities sold under agreements to repurchase ("repurchase agreements") with customers represent funds deposited by customers, generally on an overnight basis, that are collateralized by investment securities owned by Park. 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 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 March 31, 2025 and at December 31, 2024, Park's repurchase agreement borrowings totaled $81.0 million and $90.4 million, respectively. These borrowings were collateralized with U.S. Government sponsored entities' asset-backed securities with a fair value of $106.0 million and $124.1 million at March 31, 2025 and at December 31, 2024, respectively. Declines in the value of the collateral would require Park to pledge additional securities. At March 31, 2025 and at December 31, 2024, Park had $392.8 million and $440.2 million, respectively, of available unpledged securities.

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The table below shows the remaining contractual maturity of repurchase agreements by collateral pledged at March 31, 2025 and at December 31, 2024:

March 31, 2025
(in thousands)Remaining Contractual Maturity of the Agreements
Overnight and ContinuousUp to 30 days30 - 90 daysGreater than 90 daysTotal
U.S. government sponsored entities' asset-backed securities$80,977 $— $— $— $80,977 
December 31, 2024
(in thousands)Remaining Contractual Maturity of the Agreements
Overnight and ContinuousUp to 30 days30 - 90 daysGreater than 90 daysTotal
U.S. government sponsored entities' asset-backed securities$90,432 $— $— $— $90,432 

Note 14 - Derivatives

Park uses certain derivative financial instruments (or "derivatives") to meet the needs of its customers while managing the interest rate risk associated with certain transactions. Park does not use derivatives for speculative purposes. A summary of derivative financial instruments utilized by Park follows.

Interest Rate Swaps
Park utilizes interest rate swap agreements (or "interest rate swaps") as part of its asset-liability management strategy to help manage its interest rate risk position and as a means to meet the financing, interest rate and other risk management needs of qualifying commercial banking customers. The notional amount of the interest rate swaps does not represent the amount exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements.

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 $14.9 million and $15.4 million at March 31, 2025 and at December 31, 2024, respectively.

All of the Company's interest rate swaps were determined to be fully effective during each of the three-month periods ended March 31, 2025 and March 31, 2024. As such, no amount of ineffectiveness has been included in net income. Therefore, the aggregate fair value of the interest rate swaps is recorded in "Other assets" and "Other liabilities" with changes in fair value recorded in "Other comprehensive income (loss)". 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.

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Summary information about Park's interest rate swaps at March 31, 2025 and at December 31, 2024 follows:

March 31, 2025December 31, 2024
(In thousands, except weighted average data)Loan
Derivatives		Loan
Derivatives
Notional amounts$14,853 $15,445 
Weighted average pay rates4.502 %4.504 %
Weighted average receive rates4.502 %4.504 %
Weighted average maturity (years)5.35.4
Unrealized losses$— $— 

The following table reflects the interest rate swaps included in the consolidated condensed balance sheets at March 31, 2025 and at December 31, 2024.

(In thousands)March 31, 2025December 31, 2024
Notional AmountFair ValueNotional AmountFair Value
Included in "Other assets":
Loan derivatives - instruments associated with loans
 Matched interest rate swaps with borrower $— $— $— $— 
 Matched interest rate swaps with counterparty14,853 774 15,445 1,009 
   Total included in "Other assets"$14,853 $774 $15,445 $1,009 
Included in "Other liabilities":
Loan derivatives - instruments associated with loans
 Matched interest rate swaps with borrower $14,853 $(774)$15,445 $(1,009)
 Matched interest rate swaps with counterparty— — — — 
    Total included in "Other liabilities"$14,853 $(774)$15,445 $(1,009)

Mortgage Banking Derivatives
Commitments to fund mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of these mortgage loans are accounted for as free-standing derivatives. In order to hedge the change in interest rates resulting from its commitments to fund the loans, the Company enters into forward commitments for the future delivery of mortgage loans when interest rate locks are entered into. These mortgage banking derivatives are not designated as hedge relationships. The fair value of an interest rate lock is recorded at the time the commitment to fund the mortgage loan is executed and is adjusted for the expected exercise of the commitment before the loan is funded. Fair values of these mortgage banking derivatives are estimated based on changes in mortgage interest rates from the date the interest on the loan is locked. Changes in the fair values of these derivatives are included in "Other service income" in the condensed consolidated statements of income.

At March 31, 2025 and at December 31, 2024, Park had $7.3 million and $4.2 million, respectively, of interest rate lock commitments. The fair value of these mortgage banking derivatives was reflected by a derivative asset of $132,000 and $85,000 at March 31, 2025 and at December 31, 2024, respectively.

Other Derivatives
In connection with the sale of Park’s Class B Visa shares during 2009, Park entered into a swap agreement with the purchaser of the shares. The swap agreement adjusts for dilution in the conversion ratio of Class B Visa shares resulting from certain Visa litigation. At March 31, 2025 and December 31, 2024, the fair value of the swap agreement liability of $233,000 and $103,000, respectively, represented an estimate of the exposure based upon probability-weighted potential Visa litigation losses.

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Note 15 – Accumulated Other Comprehensive Loss

Other comprehensive income (loss) components, net of tax, are shown in the following table for the three-month periods ended March 31, 2025 and 2024:



(in thousands)		Changes in pension plan assets and benefit obligationsUnrealized (losses) gains on debt securities AFSTotal
Beginning balance at January 1, 2025$16,754 $(62,929)$(46,175)
Other comprehensive income before reclassifications— 11,516 11,516 
Net current period other comprehensive income— 11,516 11,516 
Ending balance at March 31, 2025$16,754 $(51,413)$(34,659)
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 March 31, 2024$1,692 $(68,087)$(66,395)

During the three-month period 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, 2025, 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 ended March 31, 2025 and 2024.
 
Three Months Ended
March 31,
(In thousands, except common share and per common share data)20252024
Numerator:
Net income$42,157 $35,204 
Denominator:
Weighted-average common shares outstanding16,159,342 16,116,842 
Effect of dilutive PBRSUs79,359 74,223 
Weighted-average common shares outstanding adjusted for the effect of dilutive PBRSUs16,238,701 16,191,065 
Earnings per common share:
Basic earnings per common share$2.61 $2.18 
Diluted earnings per common share$2.60 $2.17 

Park awarded 49,350 PBRSUs and 59,165 PBRSUs to certain employees during the three months ended March 31, 2025 and 2024, respectively.

No common shares were repurchased during the three months ended March 31, 2025 or 2024, respectively, to fund the PBRSUs or 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..

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Note 17 - Share-Based Compensation

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, 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 March 31, 2025, 175,650 common shares were available for future grants under the 2017 Employees LTIP.

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. The 2017 Non-Employee Directors LTIP makes equity-based awards and cash-based awards available for grant to non-employee director participants in the form of nonqualified stock options, SARs, restricted stock, restricted stock units, other stock-based awards, and cash-based awards. Under the 2017 Non-Employee Directors LTIP, 150,000 common shares are authorized to be delivered in connection with grants under the 2017 Non-Employee Directors LTIP. The common shares to be delivered under the 2017 Non-Employee Directors LTIP are to consist of either common shares currently held or common shares subsequently acquired by Park as treasury shares, including common shares purchased in the open market or in private transactions. At March 31, 2025, 45,000 common shares were available for future grants under the 2017 Non-Employee Directors LTIP.

During the three months ended March 31, 2025 and 2024, the Compensation Committee of the Board of Directors of Park granted awards of PBRSUs, under the 2017 Employees LTIP, covering an aggregate of 49,350 common shares and 59,165 common shares, respectively, to certain employees of Park and its subsidiaries.

At March 31, 2025, Park reported 183,537 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 three months ended March 31, 2025 follows. PBRSUs herein represent the maximum number of nonvested PBRSUs. The fair value of the PBRSUs was determined using the quoted price of Park stock on the date of grant.

Common shares subject to PBRSUsWeighted-Average Grant-Date Fair Value
Nonvested at January 1, 2024186,936 $122.68 
Granted59,165 131.30 
Vested(54,981)103.70 
Forfeited— — 
Adjustment for performance conditions of PBRSUs (1)
— — 
Nonvested at March 31, 2024191,120 $130.81 
Nonvested at January 1, 2025186,020 $131.20 
Granted49,350 170.72 
Vested(51,833)119.31 
Forfeited— — 
Adjustment for performance conditions of PBRSUs (1)
— — 
Nonvested at March 31, 2025 (2)
183,537 $145.19 
(1) The number of PBRSUs earned depends on the level of achievement with respect to certain performance criteria. Adjustment herein, if any, represents the difference between the maximum number of common shares which could be earned and the actual number earned for those PBRSUs as to which the performance period was completed.
(2) Nonvested amount herein represents the maximum number of nonvested PBRSUs. As of March 31, 2025, an aggregate of 181,892 PBRSUs were expected to vest.

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A summary of awards vested during the three months ended March 31, 2025 and 2024 follows:

Three Months Ended
March 31,
20252024
PBRSUs vested51,83354,981 
Common shares withheld to satisfy employee income tax withholding obligations19,46821,937 
Net common shares issued32,36533,044

Share-based compensation expense of $2.0 million was recognized for both the three-month periods ended March 31, 2025 and 2024, respectively.

The following table details expected additional share-based compensation expense related to PBRSUs outstanding at March 31, 2025:

(In thousands)
Nine months ending December 31, 2025$5,218 
20265,599 
20273,662 
20281,527 
2029241 
Total$16,247 

Note 18 – Benefit Plans
 
Park has a noncontributory defined benefit pension plan (the "Pension Plan") covering substantially all of its employees. The Pension Plan provides benefits based on an employee’s years of service and compensation.
 
There were no Pension Plan contributions for either of the three-month periods ended March 31, 2025 or 2024. Additionally, no contributions are expected to be made during the remainder of 2025.
 
The following table shows the components of net periodic pension benefit income:

Three Months Ended
March 31,		Affected Line Item in the Consolidated
Condensed Statements of Income
(In thousands)20252024
Service cost$1,632 $1,750 Employee benefits
Interest cost1,478 1,719 Other components of net
periodic pension benefit income
Expected return on plan assets(3,834)(3,935)Other components of net
periodic pension benefit income
Recognized prior service cost12 12 Other components of net
periodic pension benefit income
Net periodic pension benefit income$(712)$(454)

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Park has entered into Supplemental Executive Retirement Plan Agreements (the “SERP Agreements”) with certain key officers of Park and its subsidiaries which provide defined pension benefits in excess of limits imposed by federal tax law. The expense for the Corporation related to the SERP Agreements for the three months ended March 31, 2025 and 2024 was as follows:

Three Months Ended
March 31,		Affected Line Item in the Consolidated
Condensed Statements of Income
(In thousands)20252024
Service cost$194 $216 Employee benefits
Interest cost182 155 Miscellaneous expense
Total SERP expense$376 $371 

Note 19 – Fair Value
 
The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that Park uses to measure fair value are as follows:

•Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that Park has the ability to access as of the measurement date.
•Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
•Level 3: Significant unobservable inputs that reflect Park's own assumptions about the assumptions that market participants would use in pricing an asset or liability. This could include the use of internally developed models, financial forecasting and similar inputs.
 
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the balance sheet date. When possible, the Company looks to active and observable markets to price identical assets or liabilities. When identical assets and liabilities are not traded in active markets, the Company looks to observable market data for similar assets and liabilities. However, certain assets and liabilities are not traded in observable markets and Park must use other valuation methods to develop a fair value. The fair value of individually evaluated collateral dependent loans is typically based on the fair value of the underlying collateral, which is estimated through third-party appraisals in accordance with Park's valuation requirements under its commercial and real estate loan policies.

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Assets and Liabilities Measured at Fair Value on a Recurring Basis:
 
The following table presents assets and liabilities measured at fair value on a recurring basis:
 
Fair Value Measurements at March 31, 2025 using:
(In thousands)Level 1Level 2Level 3Balance at March 31, 2025
Assets    
Investment securities:    
Obligations of states and political subdivisions$— $191,438 $— $191,438 
U.S. Government sponsored entities’ asset-backed securities— 526,178 — 526,178 
Collateralized loan obligations— 200,974 — 200,974 
Corporate debt securities— 12,927 6,722 19,649 
Equity securities11,390 — 611 12,001 
Mortgage loans held for sale— 4,903 — 4,903 
Mortgage IRLCs— 132 — 132 
Loan interest rate swaps— 774 — 774 
Liabilities    
Fair value swap$— $— $233 $233 
Loan interest rate swaps— 774 — 774 
 
Fair Value Measurements at December 31, 2024 using:
(In thousands)Level 1Level 2Level 3Balance at December 31, 2024
Assets    
Investment securities:    
Obligations of U.S. Government sponsored entities$— $249 $— $249 
Obligations of states and political subdivisions— 186,883 — 186,883 
U.S. Government sponsored entities’ asset-backed securities— 518,576 — 518,576 
Collateralized loan obligations— 271,833 — 271,833 
Corporate debt securities— 12,419 6,664 19,083 
Equity securities10,885 — 603 11,488 
Mortgage loans held for sale— 5,550 — 5,550 
Mortgage IRLCs— 85 — 85 
Loan interest rate swaps— 1,009 — 1,009 
Liabilities    
Fair value swap$— $— $103 $103 
Loan interest rate swaps— 1,009 — 1,009 
 
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The following methods and assumptions were used by the Company in determining the fair value of the financial assets and financial liabilities discussed above:

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.

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).

Investment securities: Fair values for investment securities are based on quoted market prices, where available (Level 1). If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using DCF (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: Mortgage loans held for sale are carried at their fair value. Mortgage loans held for sale are estimated using market prices for similar product types and, therefore, are classified in Level 2.

The following tables present a reconciliation of the beginning and ending balances of the Level 3 inputs for the three-month periods ended March 31, 2025 and 2024, for financial instruments measured on a recurring basis and classified as Level 3:

Level 3 Fair Value Measurements
Three months ended March 31, 2025 and 2024
(In thousands)Corporate debt securitiesEquity securitiesFair value
swap
Balance at January 1, 2025$6,664 $603 $(103)
Transfer into (out of) level 3, net— — — 
Total gains / (losses)
Included in other income / other (expense)— 8 (130)
    Included in other comprehensive income58 — — 
Balance at March 31, 2025$6,722 $611 $(233)
Balance at January 1, 2024$6,349 $473 $(123)
Transfers into (out of) level 3, net— — — 
Total gains
Included in other income— 22 — 
Included in other comprehensive income23 — — 
Balance at March 31, 2024$6,372 $495 $(123)

Level 3 corporate debt securities consist of a single debt security at both March 31, 2025 and December 31, 2024 which was valued using a discounted cash flow calculation. Significant unobservable inputs include the credit spread assumption which was 3.67% at both March 31, 2025 and December 31, 2024.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis:
 
The following methods and assumptions were used by the Company in determining the fair value of assets and liabilities measured at fair value on a nonrecurring basis as described below:

Individually evaluated collateral dependent loans: 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 allocations of the allowance for credit losses. For collateral dependent loans, fair value is generally based on real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including the
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comparable sales approach and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. 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 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 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.

Loans individually evaluated for impairment include all internally classified commercial nonaccrual loans and accruing collateral dependent loans to borrowers experiencing financial difficulty.

OREO: Assets acquired through or in lieu of loan foreclosure are initially recorded at fair value less costs to sell when acquired. The carrying value of OREO is not re-measured to fair value on a recurring basis, but is subject to fair value adjustments when the carrying value exceeds the fair value, less estimated selling costs. Fair value is based on recent real estate appraisals and is updated at least annually. These appraisals may utilize a single valuation approach or a combination of approaches including the comparable sales approach and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments result in a Level 3 classification of the inputs for determining fair value.
 
Appraisals for both individually evaluated collateral dependent loans and OREO are performed by licensed appraisers. Appraisals are generally obtained to support the fair value of collateral. In general, there are three types of appraisals received by the Company: real estate appraisals, income approach appraisals, and lot development loan appraisals. These are discussed below:
 
•Real estate appraisals typically incorporate measures such as recent sales prices for comparable properties. Appraisers may make adjustments to the sales prices of the comparable properties as deemed appropriate based on the age, condition or general characteristics of the subject property. 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.

•Income approach appraisals typically incorporate the annual net operating income of the business divided by an appropriate capitalization rate, as determined by the appraiser. Management generally applies a 15% discount to income approach appraised values which management expects will cover all disposition costs (including selling costs).

•Lot development loan appraisals are typically performed using a DCF analysis. Appraisers determine an anticipated absorption period and a discount rate that takes into account an investor’s required rate of return based on recent comparable sales. Management generally applies a 6% discount to lot development appraised values, which is an additional discount above the net present value calculation included in the appraisal, to account for selling costs.

MSRs: MSRs are carried at the lower of cost or fair value. MSRs do not trade in active, open markets with readily observable prices. For example, sales of MSRs do occur, but precise terms and conditions typically are not readily available. As such, management, with the assistance of a third-party specialist, determines fair value based on the discounted value of the future cash flows estimated to be received. Significant inputs include the discount rate and assumed prepayment speeds. The calculated fair value is then compared to market values where possible to ascertain the reasonableness of the valuation in relation to current market expectations for similar products. Accordingly, MSRs are classified as Level 2.

The following tables present assets and liabilities measured at fair value on a nonrecurring basis. Individually evaluated collateral dependent loans secured by real estate are carried at fair value if they have been charged down to fair value or if a specific valuation allowance has been established. At March 31, 2025 and December 31, 2024, there were no PCD loans carried at fair value. Additionally, there were no accruing, individually evaluated, collateral-dependent 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
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value if a devaluation has been taken with respect to the property's value subsequent to the initial measurement. There were no OREO properties recorded at fair value as of March 31, 2025.

Fair Value Measurements at March 31, 2025 using:
(In thousands)Level 1Level 2Level 3Balance at March 31, 2025
Nonaccrual, individually evaluated, collateral-dependent loans recorded at fair value:    
Commercial real estate$— $— $943 $943 
Residential real estate— — 18 18 
Total nonaccrual, individually evaluated, collateral-dependent loans recorded at fair value$— $— $961 $961 
MSRs$— $356 $— $356 

Fair Value Measurements at December 31, 2024 using:
(In thousands)Level 1Level 2Level 3Balance at December 31, 2024
Nonaccrual, individually evaluated, collateral-dependent loans recorded at fair value:    
Commercial real estate$— $— $1,022 $1,022 
Residential real estate— — 1,924 1,924 
Total nonaccrual, individually evaluated, collateral-dependent loans recorded at fair value$— $— $2,946 $2,946 
MSRs$— $371 $— $371 
OREO recorded at fair value:
Commercial real estate$— $— $938 $938 
Total OREO recorded at fair value$— $— $938 $938 

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The tables below provide additional detail on those nonaccrual individually evaluated loans which are recorded at fair value as well as the remaining nonaccrual individually evaluated loan portfolio not included above. The remaining nonaccrual 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, 2025
(In thousands)Loan BalancePrior Charge-OffsSpecific Valuation AllowanceCarrying Balance
Total nonaccrual, individually evaluated, collateral-dependent loans recorded at fair value$1,029 $488 $68 $961 
Remaining nonaccrual, individually evaluated loans46,689 2,928 976 45,713 
Total nonaccrual, individually evaluated loans$47,718 $3,416 $1,044 $46,674 

December 31, 2024
(In thousands)Loan BalancePrior Charge-OffsSpecific Valuation AllowanceCarrying Balance
Total nonaccrual, individually evaluated, collateral-dependent loans recorded at fair value$2,986 $488 $40 $2,946 
Remaining nonaccrual, individually evaluated loans50,163 4,521 1,259 48,904 
Total nonaccrual, individually evaluated loans$53,149 $5,009 $1,299 $51,850 

The expense from credit adjustments related to nonaccrual individually evaluated loans carried at fair value was $68,000 and $35,000 for the three-month periods ended March 31, 2025 and 2024, respectively.

MSRs totaled $13.8 million at March 31, 2025. Of this $13.8 million MSR carrying balance, $0.4 million was recorded at fair value and included a valuation allowance of $17,000. The remaining $13.4 million was recorded at cost, as the fair value exceeded cost at March 31, 2025. At December 31, 2024, MSRs totaled $13.9 million. Of this $13.9 million MSR carrying balance, $0.4 million was recorded at fair value and included a valuation allowance of $19,000. The remaining $13.5 million was recorded at cost, as the fair value exceeded cost at December 31, 2024. The income related to MSRs carried at fair value was $2,000 and $25,000 for the three-month periods ended March 31, 2025 and 2024, respectively.

Total OREO held by Park at March 31, 2025 and December 31, 2024 was $0.1 million and $0.9 million, respectively. At March 31, 2025, there was no OREO held by Park that was carried at fair value due to fair value adjustments made subsequent to the initial OREO measurement. At December 31, 2024, 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. The net income related to OREO fair value adjustments was $39,000 for the three-month period ended March 31, 2025. There was no net (expense) income related to OREO fair value adjustments for the three-month period ended March 31, 2024.




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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, 2025 and December 31, 2024:

March 31, 2025
(In thousands)Fair ValueValuation TechniqueUnobservable Input(s)Range
(Weighted Average)
Nonaccrual, individually evaluated, collateral-dependent loans:  
Commercial real estate$943 Sales comparison approachAdj to comparables
0.0% - 30.0% (15.2%)
Income approachCapitalization rate
9.5% - 10.0% (9.6%)
Residential real estate$18 Sales comparison approachAdj to comparables
11.9% - 38.9% (25.4%)

December 31, 2024
(In thousands)Fair ValueValuation TechniqueUnobservable Input(s)Range
(Weighted Average)
Nonaccrual, individually evaluated, collateral-dependent loans:  
Commercial real estate$1,022 Sales comparison approachAdj to comparables
0.0% - 30.0% (15.2%)
Income approachCapitalization rate
9.5% - 10.0% (9.6%)
Residential real estate$1,924 Sales comparison approachAdj to comparables
4.7% - 45.5% (21.6%)
Income approachCapitalization rate
6.3% (6.3%)
Other real estate owned:
Commercial real estate$938 Sales comparison approachAdj to comparables
5.0% - 10.0% (7.5%)
Cost approachEntrepreneurial profit
5.0% (5.0%)
Cost approachAccumulated depreciation
50.0% (50.0%)



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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 March 31, 2025 and at December 31, 2024, Park had Partnership Investments with a NAV of $34.8 million and $32.6 million, respectively. At March 31, 2025 and at December 31, 2024, Park had $16.2 million and $17.6 million, respectively, in unfunded commitments related to these Partnership Investments. For the three-month periods ended March 31, 2025 and 2024, Park recognized expense of $299,000 and $690,000, respectively, related to these Partnership Investments.

Fair Value Balance Sheet:

The fair value of certain financial instruments at March 31, 2025 and at December 31, 2024, was as follows:

March 31, 2025
  Fair Value Measurements
(In thousands)Carrying valueLevel 1Level 2Level 3Total fair value
Financial assets:
Cash and money market instruments$237,614 $237,614 $— $— $237,614 
Investment securities (1)
938,239 — 931,517 6,722 938,239 
Other investment securities (2)
12,001 11,390 — 611 12,001 
Mortgage loans held for sale4,903 — 4,903 — 4,903 
Mortgage IRLCs132 — 132 — 132 
Individually evaluated loans carried at fair value961 — — 961 961 
Other loans, net7,789,609 — — 7,659,057 7,659,057 
Loans receivable, net$7,795,605 $— $5,035 $7,660,018 $7,665,053 
Financial liabilities:     
Time deposits$764,722 $— $765,367 $— $765,367 
Brokered deposits and Bid Ohio CDs45,499 — 45,488 — 45,488 
Other2,314 2,314 — — 2,314 
Deposits (excluding demand deposits)$812,535 $2,314 $810,855 $— $813,169 
Short-term borrowings$80,977 $— $80,977 $— $80,977 
Subordinated notes189,780 — 187,681 — 187,681 
Derivative financial instruments - assets:
Loan interest rate swaps$774 $— $774 $— $774 
Derivative financial instruments - liabilities:     
Fair value swap$233 $— $— $233 $233 
Loan interest rate swaps774 — 774 — 774 
(1) Includes debt securities AFS.
(2) Excludes FHLB stock and FRB stock which are carried at their respective redemption values, investment securities accounted for at modified cost as these investments do not have a readily determinable fair value, and Partnership Investments valued using the NAV practical expedient.
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December 31, 2024
  Fair Value Measurements
(In thousands)Carrying valueLevel 1Level 2Level 3Total fair value
Financial assets:
Cash and money market instruments$160,566 $160,566 $— $— $160,566 
Investment securities (1)
996,624 — 989,960 6,664 996,624 
Other investment securities (2)
11,488 10,885 — 603 11,488 
Mortgage loans held for sale5,550 — 5,550 — 5,550 
Mortgage IRLCs85 — 85 — 85 
Individually evaluated loans carried at fair value2,946 — — 2,946 2,946 
Other loans, net7,720,581 — — 7,586,111 7,586,111 
Loans receivable, net$7,729,162 $— $5,635 $7,589,057 $7,594,692 
Financial liabilities:     
Time deposits$735,297 $— $736,188 — $736,188 
Brokered deposits and Bid Ohio CDs176,486 — 176,522 — 176,522 
Other1,265 1,265 — — 1,265 
Deposits (excluding demand deposits)$913,048 $1,265 $912,710 $— $913,975 
Short-term borrowings$90,432 $— $90,432 $— $90,432 
Subordinated notes189,651 — 185,599 — 185,599 
Derivative financial instruments - assets:     
Loan interest rate swaps$1,009 $— $1,009 $— $1,009 
Derivative financial instruments - liabilities:
Fair value swap$103 $— $— $103 $103 
Loan interest rate swaps1,009 — 1,009 — 1,009 
(1) Includes debt securities AFS.
(2) Excludes FHLB stock and FRB stock which are carried at their respective redemption values, investment securities accounted for at modified cost as these investments do not have a readily determinable fair value, and Partnership Investments valued using the NAV practical expedient.

Note 20 - Segment Information

Park's chief operating decision maker is Park's Chairman and Chief Executive Officer. While the chief decision maker monitors the operating results of its lines of business, operations are managed and financial performance is evaluated on a consolidated basis. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment.

The segment is determined by the level of information provided to the chief operating decision maker, who uses such information to review performance of various components of the business, which are then aggregated if operating performance, products, and services are similar. The chief operating decision maker will evaluate the financial performance of Park's business components such as by evaluating interest income, interest expense, other revenue streams, significant expenses, and budget to actual results in assessing Park's segment and in the determination of allocation resources. The chief operating decision maker uses consolidated net income to benchmark Park against its peers. The benchmarking analysis coupled with monitoring of budget to actual results are used in assessment of performance and in establishing compensation. Loans, investments, deposits, and fiduciary income provide the revenues in the banking operation. Interest expense, provisions for credit losses, and payroll/benefits provide the significant expenses in the banking operation. All operations are domestic.

Accounting policies for Park's reportable segment are the same as described in Note 1 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements included in Park’s 2024 Form 10-K. Segment performance is
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evaluated using consolidated net income. Information reported internally for performance assessment by the chief operating decision maker follows, inclusive of reconciliations of significant segment totals to the financial statements.

Banking Segment
Three Months Ended
March 31,
(in thousands)20252024
Interest Income$132,200 $126,640 
Reconciliation of Revenue
Other revenues$25,746 $26,200 
Total consolidated revenues$157,946 $152,840 
Less:
Interest expense$27,823 $31,017 
Segment net interest income and noninterest income$130,123 $121,823 
Less:
Provision for credit losses7562,180
Salaries36,21635,733
Employee benefits10,51611,560
Occupancy expense3,5193,181
Furniture and equipment expense2,3012,583
Data processing fees10,5298,808
Professional fees and services7,3076,817
Marketing1,5281,741
Insurance1,6861,718
Communication1,2021,036
State tax expense1,1861,110
Amortization of intangible assets274320
Miscellaneous1,9002,621
Income taxes9,0467,211
Segment net income/consolidated net income$42,157 $35,204 
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Three Months Ended
March 31,
(in thousands)20252024
Other segment disclosures
Interest income132,200126,640
Interest expense27,82331,017
Depreciation2,9133,119
Amortization274320
Other significant noncash items:
Provision for credit losses7562,180
Segment assets9,886,6129,881,077
Reconciliation of assets
Total assets for reportable segments$9,886,612 9,881,077
Other assets——
Total consolidated assets$9,886,612 $9,881,077 
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Note 21 - Revenue from Contracts with Customers

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. 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, 2025 and March 31, 2024:

Three Months Ended
March 31,
Revenue by Operating Segment (in thousands)20252024
Open
   Personal trust and agency accounts$3,158 $2,954 
   Employee benefit and retirement-related accounts2,961 2,651 
   Investment management and investment advisory agency accounts4,251 3,800 
   Other624 619 
Service charges on deposit accounts
    NSF fees763 792 
    DDA charges1,475 1,208 
    Other169 106 
Other service income (1)
    Credit card677 611 
    HELOC107 82 
    Installment76 20 
    Real estate1,778 1,497 
    Commercial298 314 
Debit card fee income6,089 6,243 
Bank owned life insurance income (2)
1,512 2,629 
ATM fees335 496 
(Loss) gain on the sale of OREO, net(229)121 
Loss on the sale of debt securities, net (2)
— (398)
Loss on equity securities, net (2)
(862)(687)
Other components of net periodic pension benefit income (2)
2,344 2,204 
Miscellaneous (3)
220 938 
Total other income$25,746 $26,200 
(1) "Other Service Income" totaled $2.9 million and $2.5 million for the three months ended March 31, 2025 and 2024, respectively. Of this aggregate revenue approximately $1.4 million and $1.2 million was within the scope of ASC 606, with the remaining $1.5 million and $1.3 million consisting primarily of certain residential real estate loan fees which were out of scope for the three months ended March 31, 2025 and 2024, respectively.
(2) Not within the scope of ASC 606.
(3) "Miscellaneous Income" included brokerage income, safe deposit box rentals, gains/losses on asset sales and miscellaneous bank fees totaling $0.2 million and $0.9 million for the three months ended March 31, 2025 and 2024, respectively, all of which were within the scope of ASC 606.

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

Income from fiduciary activities (gross): Park earns fiduciary fee income and investment brokerage fees from its contracts with wealth management customers for various fiduciary and investment-related services. These fees are earned over time as the Company provides the contracted monthly and quarterly services and are generally assessed based on the market value of the trust assets.

Service charges on deposit accounts and ATM fees: The Corporation earns fees from the Corporation's deposit customers for transaction-based, account maintenance, and overdraft services. Fees for transaction-based services, which include services such as ATM use fees, stop payment charges, statement rendering fees, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Corporation fulfills the customer's request. Account maintenance fees, which relate primarily to monthly maintenance, are generally recognized at the end of the month, representing the period over which the Corporation satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer's account balance.

Other service income: Other service income includes income from (1) the sale and servicing of loans sold to the secondary market, (2) incentive income from third-party credit card issuers, and (3) loan customers for various loan-related activities and services. Income related to the sale and servicing of loans sold to the secondary market is included within "Other service income", but is not within the scope of ASC 606. Services that fall within the scope of ASC 606 are recognized as revenue when the Company satisfies the Company's performance obligation to the customer.

Debit card fee income: Park earns interchange fees from debit cardholder transactions conducted primarily through the Visa payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, net of card network fees, concurrently with the transaction processing services provided to the cardholder.

Gain or loss on sale of OREO, net: The Corporation records a gain or loss from the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of delivery of an executed deed. When Park finances the sale of OREO to the buyer, the Corporation assesses whether the buyer is committed to perform the buyer's obligation under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. 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.


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ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 
Non-U.S. GAAP Financial Measures

This Management's Discussion and Analysis of Financial Condition and Results of Operations (or "MD&A") contains non-U.S. GAAP financial measures where management believes them to be helpful in understanding Park’s results of operations or financial position. Where non-U.S. GAAP financial measures are used, the comparable U.S. GAAP financial measures, as well as the reconciliation from the comparable U.S. GAAP financial measures, can be found herein.

Items Impacting Comparability of Period Results
From time to time, revenue, expenses and/or taxes are impacted by items judged by management of Park to be outside of ordinary banking activities and/or by items that, while they may be associated with ordinary banking activities, are so unusually large that their impact is believed by management of Park at that time to be infrequent or short-term in nature. Most often, these items impacting comparability of period results are due to merger and acquisition activities and revenue and expenses related to former Vision Bank loan relationships. In other cases, they may result from management's decisions associated with significant corporate actions outside of the ordinary course of business.

Even though certain revenue and expense items are naturally subject to more volatility than others due to changes in market and economic environment conditions, as a general rule volatility alone does not result in the inclusion of an item as one impacting comparability of period results. For example, changes in the provision for/(recovery of) credit losses (aside from those related to former Vision Bank loan relationships), gains (losses) on equity securities, net, and asset valuation adjustments, reflect ordinary banking activities and are, therefore, typically excluded from consideration as items impacting comparability of period results.

Management believes the disclosure of items impacting comparability of period results provides a better understanding of Park's performance and trends and allows management to ascertain which of such items, if any, to include or exclude from an analysis of Park's performance; i.e., within the context of determining how that performance differed from expectations, as well as how, if at all, to adjust estimates of future performance taking such items into account.

Items impacting comparability of the results of particular periods are not intended to be a complete list of items that may materially impact current or future period performance.

Non-U.S. GAAP Financial Measures
Park's management uses certain non-U.S. GAAP financial measures to evaluate Park's performance. Specifically, management reviews the return on average tangible equity, the return on average tangible assets and pre-tax, pre-provision net income.

Management has included in the tables included within the "Items Impacting Comparability" section of this MD&A information relating to the annualized return on average tangible equity, the annualized return on average tangible assets and pre-tax, pre-provision net income for the three months ended March 31, 2025 and March 31, 2024. For the purpose of calculating the annualized return on average tangible equity, a non-U.S. GAAP financial measure, net income for each period is divided by average tangible equity during the period. Average tangible equity equals average shareholders' equity during the applicable period less average goodwill and other intangible assets during the applicable period. For the purpose of calculating the annualized return on average tangible assets, a non-U.S. GAAP financial measure, net income for each period is divided by average tangible assets during the period. Average tangible assets equals average assets during the applicable period less average goodwill and other intangible assets during the applicable period. For the purpose of calculating pre-tax, pre-provision net income, a non-U.S. GAAP financial measure, income taxes and the provision for credit losses are added back to net income, in each case during the applicable period.

Management believes that the disclosure of the annualized return on average tangible equity, the annualized return on average tangible assets and pre-provision net income presents additional information to the reader of the condensed consolidated financial statements, which, when read in conjunction with the condensed consolidated financial statements prepared in accordance with U.S. GAAP, assists in analyzing Park's operating performance, ensures comparability of operating performance from period to period, and facilitates comparisons with the performance of Park's peer financial holding companies and bank holding companies, while eliminating certain non-operational effects of acquisitions. In the tables included within the "Items Impacting Comparability" section of this MD&A, Park has provided a reconciliation of average tangible equity from average shareholders' equity, average tangible assets from average assets and pre-tax, pre-provision net income from net income solely for the purpose of complying with SEC Regulation G and not as an indication that the annualized return on average tangible equity, the annualized return on average tangible assets and pre-tax, pre-provision net
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income are substitutes for the annualized return on average equity, the annualized return on average assets and net income, respectively, as determined in accordance with U.S. GAAP.

FTE (fully taxable equivalent) Financial Measures
Interest income, yields, and ratios on a FTE basis are considered non-U.S. GAAP financial measures. Management believes net interest income on a FTE basis provides an insightful picture of the interest margin for comparison purposes. The FTE basis also allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The FTE basis assumes a federal corporate income tax rate of 21 percent. In the tables included within the "Items Impacting Comparability" section of this MD&A, Park has provided a reconciliation of FTE interest income solely for the purpose of complying with SEC Regulation G and not as an indication that FTE interest income, yields and ratios are substitutes for interest income, yields and ratios, as determined in accordance with U.S. GAAP.

Critical Accounting Estimates
 
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates.
 
Allowance for Credit Losses: Park believes the determination of the allowance for credit losses involves a higher degree of judgment and complexity than its other significant accounting estimates. The ACL is calculated with the objective of maintaining a reserve level believed by management to be sufficient to absorb estimated credit losses over the life of an asset or an off-balance sheet credit exposure. Management’s determination of the adequacy of the allowance for credit losses is based on periodic evaluations of past events, including historical credit loss experience on financial assets with similar risk characteristics, current conditions, and reasonable and supportable forecasts that affect the collectability of the remaining cash flows over the contractual term of the financial assets. However, this evaluation has subjective components requiring material estimates, including expected default probabilities, the expected loss given default, the amounts and timing of expected future cash flows on individually evaluated loans, and estimated losses based on historical loss experience and forecasted economic conditions. All of these factors may be susceptible to significant change. To the extent that actual results differ from management estimates, additional provisions for credit losses may be required that would adversely impact earnings in future periods.

One of the significant judgments impacting the ACL is the economic forecasts for Ohio unemployment, Ohio GDP, and Ohio HPI. These economic forecasts inform the regression model used to calculate cash flows during the reasonable and supportable forecast period. Additionally, multiple economic forecast scenarios are weighted to arrive at the quantitative reserve. Changes in the economic forecast or weighting could significantly affect the estimated credit losses which could potentially lead to materially different allowance levels from one reporting period to the next.

As noted above, in calculating the ACL, management weighs different scenarios, including a baseline (most likely) scenario and an adverse scenario. At March 31, 2025, management applied a 50% weighting to the baseline scenario and applied a 50% weighting to the adverse scenario. To create hypothetical sensitivity analyses, management calculated a quantitative allowance using a 100% weighting applied to a baseline scenario and a quantitative allowance using a 100% weighting applied to an adverse scenario. The adverse scenario assumes among other things that: (1) Worries that the Israel-Hamas ceasefire will collapse and Russia's invasion of the Ukraine will persist longer than expected. Risk grows that China may block the Taiwan Strait, causing business and consumer confidence to decline. Retaliatory tariffs reduce U.S. exports and lead to a global downturn. (2) Due to continuing concerns about rising inflation, the Federal Reserve raises federal funds rates. However, the Federal Reserve resumes easing rates as the recession persists. (3) Europe goes into a recession as increased tariffs lower exports. Populism in Europe rises, raising uncertainties about the longevity of the Euro zone and causes financial stress to highly indebted nations. These developments further lower U.S. exports and the corporate earnings of foreign subsidiaries of U.S. companies. (4) Impacts of Trump tariffs and deportations are significantly worse than expected. Tariffs will be levied on China, Canada, Mexico and Europe and tariff rates will be the same as in the baseline forecast, however, tariffs will remain at the high level throughout 2025-2026. Retaliatory tariffs reduce U.S. exports and lead to global turn-down. Tax revenues are lower than in the baseline creating a higher deficit. (5) A recession occurs in the second quarter of 2025 and lasts through the fourth quarter of 2025 resulting in real GDP declining by 2.6%, unemployment rates rising to a peak of 8.3% in the second quarter of 2026, and the stock market falling 35% from the second quarter of 2025 to the fourth quarter of 2025. The adverse scenario also forecasts Ohio unemployment for the next twelve months to range from 6.7% to 9.6%. Excluding consideration of qualitative adjustments, this sensitivity analysis would result in a hypothetical increase in Park's ACL of $28.3 million as of March 31, 2025 if only the adverse scenario was used. Excluding consideration of qualitative adjustments, a corresponding $28.3 million decrease in Park's ACL would occur in a hypothetical scenario if only the baseline (most likely) scenario was used.
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Refer to the "Credit Metrics and Provision for Credit Losses" section of this MD&A for additional discussion.

Pension Plan: The determination of Pension Plan obligations and related expenses requires the use of assumptions to estimate the amount of benefits that employees will earn while working, as well as the present value of those benefits. Annual pension income/expense is principally based on four components: (1) the value of benefits earned by employees for working during the year (service cost), (2) the increase in the liability due to the passage of time (interest cost), and (3) other gains and losses, reduced by (4) the expected return on plan assets for our Pension Plan.

Significant assumptions used to measure our annual pension expense include:

•the interest rate used to determine the present value of liabilities (discount rate);
•certain employee-related factors, such as turnover, retirement age and mortality;
•the expected return on assets in our funded Pension Plan; and
•the rate of salary increases where benefits are based on earnings.

Our assumptions reflect our historical experience and management’s best judgment regarding future expectations. Due to the significant management judgment involved, our assumptions could have a material impact on the measurement of our Pension Plan income/expense and obligation.

Comparison of Results of Operations
For the Three Months Ended March 31, 2025 and 2024
 
Summary Discussion of Results

Net income for the three months ended March 31, 2025 of $42.2 million represented a $7.0 million, or 19.8%, increase compared to $35.2 million for the three months ended March 31, 2024. Pre-tax, pre-provision net income for the three months ended March 31, 2025 of $52.0 million represented a $7.4 million, or 16.5%, increase compared to $44.6 million for the three months ended March 31, 2024. Weighted average diluted common shares outstanding were 16,238,701 for the first quarter of 2025, compared to 16,191,065 weighted average diluted common shares outstanding for the first quarter of 2024.

The following discussion provides additional information regarding Park.

Overview

The following table reflects Park's net income for the first quarters (the three months ended March 31) of 2025 and 2024, and for the years ended December 31, 2024 and 2023.

(In thousands)Q1 2025Q1 202420242023
Net interest income$104,377 $95,623 $398,019 $373,113 
Provision for credit losses 756 2,180 14,543 2,904 
Other income25,746 26,200 122,588 92,634 
Other expense78,164 77,228 321,339 309,239 
Income before income taxes$51,203 $42,415 $184,725 $153,604 
    Income tax expense9,046 7,211 33,305 26,870 
Net income$42,157 $35,204 $151,420 $126,734 

Net interest income of $104.4 million for the three months ended March 31, 2025 represented a $8.8 million, or 9.2%, increase compared to $95.6 million for the three months ended March 31, 2024. The increase was a result of a $5.6 million increase in interest income and a $3.2 million decrease in interest expense.

The $5.6 million increase in interest income was due to a $9.4 million increase in interest income on loans, partially offset by a $3.8 million decrease in investment income. The $9.4 million increase in interest income on loans was primarily the result of a $350.6 million (or 4.69%) increase in average loans, from $7.48 billion for the three months ended March 31, 2024 to $7.83 billion for the three months ended March 31, 2025, as well as an increase in the yield on loans, which increased 27 basis points to 6.26% for the three months ended March 31, 2025, compared to 5.99% for the three months ended March 31, 2024. The $3.8 million decrease in investment income was primarily the result of a $188.4 million (or 12.03%) decrease in average
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investments, including money market investments, from $1.57 billion for the three months ended March 31, 2024 to $1.38 billion for the three months ended March 31, 2025. The decrease in investment income was also due to a decrease in the yield on investments, including money market investments, which decreased 56 basis points to 3.50% for the three months ended March 31, 2025, compared to 4.06% for the three months ended March 31, 2024.

The $3.2 million decrease in interest expense was due to a $2.0 million decrease in interest expense on deposits, as well as a $1.2 million decrease in interest expense on borrowings. The decrease in interest expense on deposits was the result of a decrease in the cost of deposits of 18 basis points, from 1.94% for the three months ended March 31, 2024 to 1.76% for the three months ended March 31, 2025. This decrease was partially offset by a $149.8 million (or 2.65%) increase in average on-balance sheet interest bearing deposits from $5.64 billion for the three months ended March 31, 2024, to $5.79 billion for the three months ended March 31, 2025. The increase in on-balance sheet interest bearing deposits was due to an increase in savings accounts and time deposits, which was partially offset by decreases in transaction accounts and brokered and bid CD deposits. The decrease in interest expense on borrowings was the result of a decrease in the cost of borrowings of 31 basis points, from 4.25% for the three months ended March 31, 2024 to 3.94% for the three months ended March 31, 2025 as well as a $92.4 million (or 25.56%) decrease in average borrowings from $361.7 million for the three months ended March 31, 2024, to $269.3 million for the three months ended March 31, 2025.

The provision for credit losses of $756,000 for the three months ended March 31, 2025 represented a decrease of $1.4 million, compared to $2.2 million for the three months ended March 31, 2024. Refer to the “Credit Metrics and Provision for Credit Losses” section for additional details regarding the level of the provision for credit losses recognized in each period presented.

The table below reflects Park's total other income for the three months ended March 31, 2025 and 2024.

(Dollars in thousands)20252024$ change% change
Other income:
Income from fiduciary activities$10,994 $10,024 $970 9.7 %
Service charges on deposit accounts2,407 2,106 301 14.3 %
Other service income2,936 2,524 412 16.3 %
Debit card fee income6,089 6,243 (154)(2.5)%
Bank owned life insurance income1,512 2,629 (1,117)(42.5)%
ATM fees335 496 (161)(32.5)%
(Loss) gain on the sale of OREO, net(229)121 (350)N.M.
Loss on sale of debt securities, net— (398)398 N.M.
Loss on equity securities, net(862)(687)(175)25.5 %
Other components of net periodic benefit income2,344 2,204 140 6.4 %
Miscellaneous220 938 (718)(76.5)%
Total other income$25,746 $26,200 $(454)(1.7)%

Other income of $25.7 million for the three months ended March 31, 2025 represented a decrease of $454,000, or 1.7%, compared to $26.2 million for the three months ended March 31, 2024. The $970,000 increase in income from fiduciary activities was largely due to an increase in the market value of assets under management. The $301,000 increase in service charges on deposits was largely due to an increase in maintenance fees on deposits. The $412,000 increase in other service income was mainly due to an increase in mortgage related other service income. The $1.1 million decrease in bank owned life insurance income was primarily related to a decrease in death benefits received during the three months ended March 31, 2025. The change in loss on sale of debt securities, net was due to net losses on the sale of debt securities of $398,000 recorded during the three months ended March 31, 2024 compared to no net losses on the sale of debt securities during the three months ended March 31, 2025. The decrease in miscellaneous income was largely due to an increase in net loss on sale and disposal of assets, largely due to the impact of strategic initiatives.


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The table below reflects Park's total other expense for the three months ended March 31, 2025 and 2024.

(Dollars in thousands)20252024$ change% change
Other expense:
Salaries$36,216 $35,733 $483 1.4 %
Employee benefits10,516 11,560 (1,044)(9.0)%
Occupancy expense3,519 3,181 338 10.6 %
Furniture and equipment expense2,301 2,583 (282)(10.9)%
Data processing fees10,529 8,808 1,721 19.5 %
Professional fees and services7,307 6,817 490 7.2 %
Marketing1,528 1,741 (213)(12.2)%
Insurance1,686 1,718 (32)(1.9)%
Communication1,202 1,036 166 16.0 %
State tax expense1,186 1,110 76 6.8 %
Amortization of intangible assets274 320 (46)(14.4)%
Miscellaneous1,900 2,621 (721)(27.5)%
Total other expense$78,164 $77,228 $936 1.2 %

Total other expense of $78.2 million for the three months ended March 31, 2025 represented an increase of $936,000 compared to $77.2 million for the three months ended March 31, 2024. The increase in salaries expense was primarily related to increases in base salary expense, incentive compensation expense, and share-based compensation expense. The decrease in employee benefit expense was primarily due to a decrease in group insurance expense, partially offset by an increase in payroll tax related expense. The increase in occupancy expense was related to increases in rental of lease space expense and utilities expense. The decrease in furniture and equipment expense was primarily due to decreases in depreciation expense. The increase in data processing fees was mainly related to an increase in software related expenses, partially offset by a decrease in ATM and debit card processing expense. The increase in professional fees and services expense was primarily due to increases in legal expenses, consulting expenses, credit services expense and trust system provider expense, partially offset by decreases in other fees expense, temporary wages expense and appraisal related expense. The decrease in marketing expense was primarily due to decreases in advertising expense. The decrease in miscellaneous expense is primarily due to a decrease in expense for the allowance for unfunded credit losses and other non-loan related losses.

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The table below provides certain balance sheet information and financial ratios for Park as of or for the three months ended March 31, 2025 and 2024 and the year ended December 31, 2024.

(Dollars in thousands)March 31, 2025December 31, 2024March 31, 2024% change from 12/31/24% change from 3/31/24
Loans 7,883,735 7,817,128 7,525,005 0.85 %4.77 %
Allowance for credit losses88,130 87,966 85,084 0.19 %3.58 %
Net loans7,795,605 7,729,162 7,439,921 0.86 %4.78 %
Investment securities1,042,163 1,100,861 1,339,747 (5.33)%(22.21)%
Total assets9,886,612 9,805,350 9,881,077 0.83 %0.06 %
Total deposits8,201,695 8,143,526 8,306,032 0.71 %(1.26)%
Average assets (1)
10,045,607 9,901,264 9,863,378 1.46 %1.85 %
Efficiency ratio (2)
59.79 %61.44 %63.07 %(2.69)%(5.20)%
Return on average assets (3)
1.70 %1.53 %1.44 %11.11 %18.06 %
(1) Average assets for the three months ended March 31, 2025 and 2024 and for the year ended December 31, 2024.
(2) Efficiency ratio is calculated by dividing total other expense by the sum of fully taxable equivalent net interest income and other income. Fully taxable equivalent net interest income includes the effects of taxable equivalent adjustments using a 21% federal corporate income tax rate. The taxable equivalent adjustments were $607,000, $616,000 and $2.4 million for the three months ended March 31, 2025 and 2024 and the year ended December 31, 2024, respectively.
(3) Annualized for the three months ended March 31, 2025 and 2024.

Loans

Loans outstanding at March 31, 2025 were $7.88 billion, compared to (i) $7.82 billion at December 31, 2024, an increase of $66.6 million, and (ii) $7.53 billion at March 31, 2024, an increase of $358.7 million. The table below breaks out the change in loans outstanding, by loan type.

(Dollars in thousands)March 31, 2025December 31, 2024March 31, 2024$ change from 12/31/24% change from 12/31/24$ change from 03/31/24% change from 03/31/24
Home equity$209,657 $203,927 $177,094 $5,730 2.8 %$32,563 18.4 %
Installment1,895,950 1,927,168 1,947,215 (31,218)(1.6)%(51,265)(2.6)%
Real estate1,465,123 1,452,833 1,359,193 12,290 0.8 %105,930 7.8 %
Commercial4,311,093 4,230,399 4,038,327 80,694 1.9 %272,766 6.8 %
Other1,912 2,801 3,176 (889)(31.7)%(1,264)(39.8)%
Total loans
$7,883,735 $7,817,128 $7,525,005 $66,607 0.9 %$358,730 4.8 %

Park's allowance for credit losses was $88.1 million at March 31, 2025, compared to $88.0 million at December 31, 2024, an increase of $164,000, or 0.2%. Refer to the “Credit Metrics and Provision for Credit Losses” section for additional information regarding Park's loan portfolio and the level of provision for credit losses recognized in each period presented.

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Deposits

Total deposits at March 31, 2025 were $8.20 billion, compared to (i) $8.14 billion at December 31, 2024, an increase of $58.2 million and (ii) $8.31 billion at March 31, 2024, a decrease of $104.3 million. Total deposits including off balance sheet deposits at March 31, 2025 were $8.45 billion, compared to (i) $8.26 billion at December 31, 2024, an increase of $193.8 million and (ii) $8.31 billion at March 31, 2024, an increase of $144.2 million.

(Dollars in thousands)March 31, 2025December 31, 2024March 31, 2024$ change from 12/31/24% change from 12/31/24$ change from 03/31/24% change from 03/31/24
Non-interest bearing deposits$2,637,577 $2,612,708 $2,587,152 $24,869 1.0 %$50,425 1.9 %
Transaction accounts2,095,687 1,939,755 2,270,677 155,932 8.0 %(174,990)(7.7)%
Savings2,658,210 2,679,280 2,604,012 (21,070)(0.8)%54,198 2.1 %
Certificates of deposit764,722 735,297 663,859 29,425 4.0 %100,863 15.2 %
Brokered and bid CD deposits45,499 176,486 180,332 (130,987)(74.2)%(134,833)(74.8)%
Total deposits$8,201,695 $8,143,526 $8,306,032 $58,169 0.7 %$(104,337)(1.3)%
Off balance sheet deposits$250,847 $115,186 $2,279 135,661 117.8 %248,568 N.M.
Total deposits including off balance sheet deposits$8,452,542 $8,258,712 $8,308,311 193,830 2.3 %144,231 1.7 %

In order to manage the impact of deposit growth on its balance sheet, Park utilizes a program where certain deposit balances are transferred off balance sheet while maintaining the customer relationship. Park is able to increase or decrease the amount of deposit balances transferred off balance sheet based on its balance sheet management strategies and liquidity needs.

The table below breaks out the change in deposit balances, by deposit type, for Park.

(Dollars in thousands)March 31, 2025December 31, 2024March 31, 2024$ change from 12/31/24% change from 12/31/24$ change from 03/31/24% change from 03/31/24
Retail deposits$4,078,123 $4,035,351 $4,027,777 $42,772 1.1 %$50,346 1.2 %
Commercial deposits4,078,073 3,931,689 4,097,923 $146,384 3.7 %$(19,850)(0.5)%
Brokered and bid CD deposits45,499 176,486 180,332 $(130,987)(74.2)%$(134,833)(74.8)%
Total deposits$8,201,695 $8,143,526 $8,306,032 $58,169 0.7 %$(104,337)(1.3)%
Off balance sheet deposits250,847 115,186 2,279 $135,661 117.8 %$248,568 N.M.
Total deposits including off balance sheet deposits$8,452,542 $8,258,712 $8,308,311 $193,830 2.3 %$144,231 1.7 %
Noninterest bearing deposits to total deposits32.2 %32.1 %31.1 %

During the three months ended March 31, 2025, total deposits including off balance sheet deposits increased by $193.8 million, or 2.3%. This increase consisted of a $146.4 million increase in total commercial deposits, a $135.7 million increase in off balance sheet deposits and a $42.8 million increase in retail deposits, partially offset by a $131.0 million decrease in brokered and bid CD deposits. The majority of off balance sheet deposits are commercial and thus impact the change in commercial deposits as the deposits are moved on or off the balance sheet.
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Included in the total commercial deposits and off balance sheet deposits shown in the previous tables are public fund deposits. These balances fluctuate based on seasonality and the cycle of collection and remittance of tax funds. Public funds are also included in Bid Ohio CDs. The following table details the change in public funds held on and off Park's balance sheet.

(Dollars in thousands)March 31, 2025December 31, 2024March 31, 2024$ change from 12/31/24% change from 12/31/24$ change from 03/31/24% change from 03/31/24
Public funds included in commercial deposits$1,482,976 $1,278,325 $1,513,494 $204,651 16.0 %$(30,518)(2.0)%
Bid Ohio CDs45,499 76,497 89,996 $(30,998)(40.5)%$(44,497)(49.4)%
Total public fund deposits$1,528,475 $1,354,822 $1,603,490 $173,653 12.8 %$(75,015)(4.7)%
Cost of public fund deposits1.97 %2.36 %2.41 %
Cost of total interest bearing deposits 1.76 %1.97 %1.94 %

As of March 31, 2025, Park had approximately $1.5 billion of uninsured deposits, which was 18.2% of total deposits. Uninsured deposits of $1.5 billion included $400.2 million of deposits that were over $250,000, but were fully collateralized by Park's investment securities portfolio.

Net Interest Income

Park’s principal source of earnings is net interest income, the difference between total interest income and total interest expense. Net interest income results from average balances outstanding for interest earning assets and interest bearing liabilities in conjunction with the average rates earned and paid on them.

Comparison for the First Quarters of 2025 and 2024
 
Net interest income increased by $8.8 million, or 9.2%, to $104.4 million for the first quarter of 2025, compared to $95.6 million for the first quarter of 2024. See the discussion under the table below.
 
Three months ended 
March 31, 2025		Three months ended 
March 31, 2024
(Dollars in thousands)Average
balance		InterestTax
equivalent 
yield/cost		Average
balance		InterestTax
equivalent 
yield/cost
Loans (1)
$7,833,234 $120,918 6.26 %$7,482,650 $111,452 5.99 %
Taxable investments887,578 7,130 3.26 %1,186,510 11,899 4.03 %
Tax-exempt investments (2)
202,557 1,606 3.22 %223,533 1,785 3.21 %
Money market instruments287,016 3,153 4.46 %155,511 2,120 5.48 %
Interest earning assets$9,210,385 $132,807 5.85 %$9,048,204 $127,256 5.66 %
Interest bearing deposits$5,793,915 $25,206 1.76 %$5,644,088 $27,193 1.94 %
Short-term borrowings79,537 291 1.49 %172,493 1,464 3.41 %
Long-term debt189,717 2,326 4.97 %189,210 2,360 5.02 %
Interest bearing liabilities$6,063,169 $27,823 1.86 %$6,005,791 $31,017 2.08 %
Excess interest earning assets$3,147,216 $3,042,413 
Tax equivalent net interest income$104,984 $96,239 
Net interest spread 3.99 %3.58 %
Net interest margin 4.62 %4.28 %
(1) Loan interest income includes the effects of taxable equivalent adjustments using a 21% federal corporate income tax rate. The taxable equivalent adjustment was $270,000 for the three months ended March 31, 2025 and $241,000 for the same period of 2024.
(2) Interest income on tax-exempt investment securities includes the effects of taxable equivalent adjustments using a 21% federal corporate income tax rate. The taxable equivalent adjustment was $337,000 for the three months ended March 31, 2025 and $375,000 for the same period of 2024.
 
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Average interest earning assets for the first quarter of 2025 increased by $162.2 million, or 1.8%, to $9,210 million for the first quarter of 2025, compared to $9,048 million for the first quarter of 2024. The average yield on interest earning assets increased by 19 basis points to 5.85% for the first quarter of 2025, compared to 5.66% for the first quarter of 2024.

Loan interest income for the three months ended March 31, 2025, included $1.0 million in interest related to payments received on certain SEPH nonaccrual loan relationships. Excluding the impact of this interest, for the three months ended March 31, 2025, the average yield on total loans was 6.21%, the average yield on interest earning assets was 5.80% and the net interest margin was 4.58%.

Average interest bearing liabilities for the first quarter of 2025 increased by $57.4 million, or 1.0%, to $6,063 million, compared to $6,006 million for the first quarter of 2024. The average cost of interest bearing liabilities decreased by 22 basis points to 1.86% for the first quarter of 2025, compared to 2.08% for the first quarter of 2024.

Yield on Loans: Average loan balances increased $350.6 million, or 4.7%, to $7,833 million for the first quarter of 2025, compared to $7,483 million for the first quarter of 2024. The average yield on the loan portfolio increased by 27 basis points to 6.26% for the first quarter of 2025, compared to 5.99% for the first quarter of 2024.

The table below shows the average balance and tax equivalent yield by type of loan for the three months ended March 31, 2025 and 2024.
Three months ended 
March 31, 2025		Three months ended 
March 31, 2024
(Dollars in thousands)Average
balance		Tax
equivalent 
yield		Average
balance		Tax
equivalent 
yield
Home equity loans$206,377 7.46 %$174,894 8.55 %
Installment loans1,910,777 6.78 %1,944,321 6.17 %
Real estate loans1,453,457 5.38 %1,345,036 4.85 %
Commercial loans (1)
4,258,787 6.27 %4,014,186 6.17 %
Other3,836 8.42 %4,213 8.15 %
Total loans before allowance$7,833,234 6.26 %$7,482,650 5.99 %
(1) Commercial loan interest income includes the effects of taxable equivalent adjustments using a 21% federal corporate income tax rate. The taxable equivalent adjustment was $270,000 for the three months ended March 31, 2025 and $241,000 for the same period of 2024.

Commercial loan interest income for the three months ended March 31, 2025, included $1.0 million in interest related to payments received on certain SEPH nonaccrual loan relationships. Excluding the impact of this interest, the average tax equivalent yield on commercial loans was 6.17% for the three months ended March 31, 2025 and the average tax equivalent yield on total loans was 6.21% for the three months ended March 31, 2025.

Cost of Deposits: Average interest bearing deposit balances increased $149.8 million, or 2.7%, to $5,794 million for the first quarter of 2025, compared to $5,644 million for the first quarter of 2024. The average cost of funds on deposit balances decreased by 18 basis points to 1.76% for the first quarter of 2025, compared to 1.94% for the first quarter of 2024. The table below shows for the three months ended March 31, 2025 and 2024, the average balance and cost of funds by type of deposit.

Three months ended 
March 31, 2025		Three months ended 
March 31, 2024
(Dollars in thousands)Average
balance		Cost of fundsAverage
balance		Cost of funds
Transaction accounts$2,128,575 1.42 %$2,168,763 1.70 %
Savings deposits and clubs2,804,486 1.59 %2,632,699 1.64 %
Time deposits746,392 3.01 %658,364 3.01 %
Brokered/bid CD deposits114,462 4.39 %184,262 5.26 %
Total interest bearing deposits$5,793,915 1.76 %$5,644,088 1.94 %
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Yield on Average Interest Earning Assets: The following table shows the tax equivalent yield on average interest earning assets for the three months ended March 31, 2025 and for the years ended December 31, 2024, 2023 and 2022.

Loans (1)
Investments (2)
Money Market
Instruments		Total
2022 - year4.65 %2.66 %2.07 %4.14 %
2023 - year5.55 %3.73 %5.00 %5.18 %
2024 - year6.14 %3.74 %5.16 %5.78 %
2025 - first three months6.26 %3.25 %4.46 %5.85 %
(1) Loan interest income includes the effects of taxable equivalent adjustments using a 21% federal corporate income tax rate. The taxable equivalent adjustment was $270,000 for the three months ended March 31, 2025, and $964,000, $811,000 and $627,000 for the years ended December 31, 2024, 2023 and 2022, respectively.
(2) Interest income on tax-exempt investment securities includes the effects of taxable equivalent adjustments using a 21% federal corporate income tax rate. The taxable equivalent adjustment was $337,000 for the three months ended March 31, 2025, and $1.5 million, $2.9 million and $2.9 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Cost of Average Interest Bearing Liabilities: The following table shows the cost of funds on average interest bearing liabilities for the three months ended March 31, 2025 and for the years ended December 31, 2024, 2023 and 2022.

Interest bearing deposits Short-term borrowingsLong-term debtTotal
2022 - year0.39 %0.67 %4.69 %0.54 %
2023 - year1.52 %2.58 %4.97 %1.67 %
2024 - year1.97 %2.60 %4.98 %2.08 %
2025 - first three months1.76 %1.49 %4.97 %1.86 %

Credit Metrics and Provision for Credit Losses

The provision for credit losses is the amount subtracted from/added to the allowance for credit losses to ensure the allowance is sufficient to absorb estimated credit losses over the life of a loan. The amount of the provision for credit losses is determined by management based on relevant information about past events, including historical credit loss experience on financial assets with similar risk characteristics, current conditions, and reasonable and supportable forecasts that affect the collectability of the remaining cash flows over the contractual term of the financial assets.

The table below provides additional information on the provision for credit losses for the three-month periods ended March 31, 2025 and 2024.

Three Months Ended
March 31,
(Dollars in thousands)20252024
Allowance for credit losses:
Beginning balance$87,966 $83,745 
Charge-offs
3,605 3,240 
Recoveries3,013 2,399 
Net charge-offs 592 841 
Provision for credit losses756 2,180 
Ending balance$88,130 $85,084 
Net charge-offs as a % of average loans (annualized)0.03 %0.05 %

Net charge-offs were $592,000 or 0.03% annualized, of total average loans, for the three months ended March 31, 2025, compared to $841,000, or 0.05% annualized, of total average loans, for the three months ended March 31, 2024. Included in recoveries for the three months ended March 31, 2025 was $1.1 million in recoveries from former Vision Bank loan relationships compared to $1.0 million in recoveries for the three months ended March 31, 2024.

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The following table provides additional information related to the allowance for credit losses for Park including information related to individual reserves and general reserves, at March 31, 2025, December 31, 2024, and March 31, 2024. Park has determined that any commercial loans which have been placed on nonaccrual status are to be individually evaluated. Additionally, accruing collateral dependent commercial loans to borrowers experiencing financial difficulty are also to be individually evaluated.

(Dollars in thousands)3/31/202512/31/20243/31/2024
Total allowance for credit losses$88,130 $87,966 $85,084 
Allowance on accruing PCD loans — — — 
Reserves on individually evaluated loans - accruing— — — 
Reserves on individually evaluated loans - nonaccrual1,044 1,299 5,032 
General reserves on collectively evaluated loans$87,086 $86,667 $80,052 
Total loans$7,883,735 $7,817,128 $7,525,005 
Accruing PCD loans 2,1392,1742,454
Individually evaluated loans - accrual13,93515,290—
Individually evaluated loans - nonaccrual47,71853,14954,742
Collectively evaluated loans$7,819,943 $7,746,515 $7,467,809 
Allowance for credit losses as a % of period end loans1.12 %1.13 %1.13 %
General reserve as a % of collectively evaluated loans 1.11 %1.12 %1.07 %

The total allowance for credit losses of $88.1 million at March 31, 2025 represented a $164,000, or 0.2%, increase compared to $88.0 million at December 31, 2024. The increase was due to a $419,000 increase in general reserves, partially offset by a $255,000 decrease in individual reserves on nonaccrual loans.

The total allowance for credit losses of $88.1 million at March 31, 2025 represented a $3.0 million, or 3.6%, increase compared to $85.1 million at March 31, 2024. The increase was due to a $7.0 million increase in general reserves partially offset by a $4.0 million decrease in individual reserves on nonaccrual loans. The decrease in individual reserves at March 31, 2025 and December 31, 2024 compared to March 31, 2024 was primarily related to $4.2 million in charge-offs related to two relationships that previously carried individual reserves, partially offset by new or increasing reserves on other credits.

Nonperforming Assets: Non-performing assets include: (1) loans whose interest is accounted for on a nonaccrual basis; (2) loans which are contractually past due 90 days or more as to principal or interest payments but whose interest continues to accrue; and (3) OREO which results from taking possession of property that served as collateral for a defaulted loan.

The following table compares Park’s nonperforming assets at March 31, 2025, December 31, 2024 and March 31, 2024.
 
(In thousands)March 31, 2025December 31, 2024March 31, 2024
Nonaccrual loans$61,929 $68,178 $70,189 
Loans past due 90 days or more1,219 1,754 1,570 
Total nonperforming loans$63,148 $69,932 $71,759 
OREO119 938 1,674 
Total nonperforming assets$63,267 $70,870 $73,433 
Percentage of nonaccrual loans to total loans0.79 %0.87 %0.93 %
Percentage of nonperforming loans to total loans 0.80 %0.89 %0.95 %
Percentage of nonperforming assets to total loans 0.80 %0.91 %0.98 %
Percentage of nonperforming assets to total assets 0.64 %0.72 %0.74 %

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Nonperforming loans as of March 31, 2025 of $63.1 million represented a $6.8 million, or 9.70%, decrease from $69.9 million at December 31, 2024. The decline was mostly attributable to a reduction in nonaccrual commercial loan balances due to loan payoffs and collection efforts.

Park classifies loans as nonaccrual when a loan (1) is maintained on a cash basis because of deterioration in the financial condition of the borrower, (2) payment in full of principal or interest is not expected, or (3) principal or interest has been in default for a period of 90 days for commercial loans and 120 days for all other loans. As a result, loans may be classified as nonaccrual despite being current with their contractual terms. The following table details the delinquency status of nonaccrual loans at March 31, 2025, December 31, 2024 and March 31, 2024. Loans are classified as current if they are less than 30 days past due.

March 31, 2025December 31, 2024March 31, 2024
(In thousands)BalancePercent of Total LoansBalancePercent of Total LoansBalancePercent of Total Loans
Nonaccrual loans - current$44,207 0.56 %$44,135 0.56 %1$50,532 0.67 %
Nonaccrual loans - past due17,722 0.88 %0.23 %24,043 0.31 %19,657 0.26 %
Total nonaccrual loans$61,929 0.79 %$68,178 0.87 %$70,189 0.93 %

Credit Quality Indicators: When determining the quarterly credit loss provision, Park reviews the grades of commercial loans. These loans are graded from 1 to 8. A grade of 1 indicates little or no credit risk and a grade of 8 is considered a loss. Commercial loans that are pass-rated (graded a 1 through a 4) are considered to be of acceptable credit risk. Commercial loans graded a 5 (special mention) are considered to be watch list credits and a higher PD is applied to these loans. Commercial loans graded a 6 (substandard), also considered to be watch list credits, represent higher credit risk than those rated special mention and, as a result, a higher PD is applied to these loans. Commercial loans that are graded a 7 (doubtful) are shown as nonperforming and Park charges these loans down to their fair value by taking a partial charge-off or recording an individual reserve. Certain 6-rated loans and all 7-rated loans are placed on nonaccrual status and included within the individually evaluated category. Any commercial loan graded an 8 (loss) is completely charged off.

The following table highlights the credit trends within the commercial loan portfolio.

Commercial loans * (In thousands)March 31, 2025December 31, 2024March 31, 2024
Pass rated$4,186,930 $4,094,178 $3,945,112 
Special Mention77,844 81,090 57,934 
Substandard3,003 3,484 1,598 
Individually evaluated for impairment - accrual13,935 15,290 — 
Individually evaluated for impairment - nonaccrual
47,718 53,149 57,742 
Accruing PCD2,061 2,095 2,372 
Total$4,331,491 $4,249,286 $4,064,758 
* Commercial loans include (1) Commercial, financial and agricultural loans, (2) Commercial real estate loans, (3) Commercial related loans in the construction real estate portfolio, (4) Commercial related loans in the residential real estate portfolio and (5) Leases.

Park's watch list includes all criticized and classified commercial loans defined by Park as loans rated special mention or worse. Park had $94.8 million of accruing commercial loans included on the watch list at March 31, 2025, compared to $99.9 million at December 31, 2024, and $59.5 million at March 31, 2024. The existing conditions of these loans do not warrant classification as nonaccrual. However, these loans have shown some weakness and management performs additional analysis regarding each borrower's ability to comply with payment terms.

Park considers a loan delinquent when it reaches 30 days past due. Delinquent and accruing loans were $24.2 million, or 0.31%, of total loans at March 31, 2025, compared to $28.4 million, or 0.36% of total loans at December 31, 2024, and $21.6 million or 0.29% of total loans at March 31, 2024.

Individually Evaluated Loans: Loans that do not share risk characteristics are evaluated on an individual basis. Park has determined that any commercial loans which have been placed on nonaccrual status will be individually evaluated. Additionally, accruing collateral dependent commercial loans to borrowers experiencing financial difficulty will be individually evaluated. Individual analysis will establish a reserve for loans in scope.  Reserves on individually evaluated commercial loans
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are typically based on management’s best estimate of the fair value of collateral securing these loans. The amount ultimately charged off for these loans may be different from the reserve as the ultimate liquidation of the collateral may be for an amount different from management’s estimate.

Nonaccrual individually evaluated commercial loans were $47.7 million at March 31, 2025, a decrease of $5.4 million, compared to $53.1 million at December 31, 2024 and a decrease of $10.0 million, compared to $57.7 million at March 31, 2024. Accruing individually evaluated commercial loans were $13.9 million at March 31, 2025, compared to $15.3 million at December 31, 2024 and no accruing individually evaluated commercial loans at March 31, 2024.

At March 31, 2025 Park had taken partial charge-offs of $3.4 million related to the $47.7 million of nonaccrual individually evaluated commercial loans, compared to partial charge-offs of $5.0 million related to the $53.1 million of nonaccrual individually evaluated commercial loans at December 31, 2024.

Loans Acquired with Deteriorated Credit Quality: PCD loans are individually evaluated on a quarterly basis to determine if a reserve is necessary. At March 31, 2025 and at December 31, 2024, there was no allowance for credit losses on PCD loans. The carrying amount of accruing loans acquired with deteriorated credit quality at March 31, 2025 and at December 31, 2024 was $2.1 million and $2.2 million, respectively. The carrying amount of nonaccrual loans acquired with deteriorated credit quality at March 31, 2025 and at December 31, 2024 was $546,000 and $551,000, respectively.

Additional Considerations: As part of its quarterly allowance process, Park evaluates certain industries which are more likely to be under economic stress in the current environment. The office sector continues to face challenges as it adjusts to the new normal of work from home brought on by the pandemic. Nationally, office properties in downtown and urban business districts are seeing the most stress. As of March 31, 2025, Park had $247.4 million of loans which were fully or partially secured by non-owner-occupied office space, $245.2 million of which were accruing. This portfolio is not currently exhibiting signs of stress, but Park continues to monitor this portfolio, and others, for signs of deterioration.

Additionally, in calculating the allowance, management considered the geopolitical environment and uncertainty regarding the fiscal policy of the new political administration, including tariffs. While it is too early to assess the impact of increased tariffs on individual borrowers, management continues to weigh a baseline ("most likely" scenario) forecast with a "moderate recession" scenario in calculating the general reserve. The "moderate recession" scenario considers the impact of tariffs being higher for longer than considered in the "most likely" scenario

Other Income
 
Other income decreased by $454,000 to $25.7 million for the quarter ended March 31, 2025, compared to $26.2 million for the first quarter of 2024.

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The following table provides a summary of the changes in the components of other income:

Three months ended
March 31,
(In thousands)20252024Change
Income from fiduciary activities$10,994 $10,024 $970 
Service charges on deposit accounts2,407 2,106 301 
Other service income2,936 2,524 412 
Debit card fee income6,089 6,243 (154)
Bank owned life insurance income1,512 2,629 (1,117)
ATM fees335 496 (161)
(Loss) gain on the sale of OREO, net(229)121 (350)
Loss on the sale of debt securities, net— (398)398 
Loss on equity securities, net(862)(687)(175)
Other components of net periodic pension benefit income2,344 2,204 140 
Miscellaneous220 938 (718)
Total other income$25,746 $26,200 $(454)

Income from fiduciary activities increased by $970,000, or 9.7%, to $11.0 million for the three months ended March 31, 2025, compared to $10.0 million for the same period of 2024. The increase in income from fiduciary activities was largely due to an increase in the market value of assets under management. The average market value of assets under management for the three months ended March 31, 2025 was $8,766 million compared to $8,373 million for the same period in 2024.

Service charges on deposit accounts increased by $301,000, or 14.3%, to $2.4 million for the three months ended March 31, 2025, compared to $2.1 million for the same period of 2024. The increase was primarily due to a $329,000 increase in maintenance fees on deposit accounts.

Other service income increased by $412,000, or 16.3%, to $2.9 million for the three months ended March 31, 2025, compared to $2.5 million for the same period of 2024. The primary reason for the increase for the three months ended March 31, 2025 compared to the same period of 2024 was a $280,000 increase in income related to mortgage loans.

Bank owned life insurance income decreased by $1.1 million to $1.5 million for the three months ended March 31, 2025, compared to $2.6 million for the same period of 2024. The decrease for the three-month period ended March 31, 2025 compared to the three-month period ended March 31, 2024 was primarily due to a decrease in received death benefits.

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 during the three-month period ended March 31, 2025.

Miscellaneous income decreased $718,000, or 76.5%, to $220,000 for the three months ended March 31, 2025, compared to $938,000 for the same period in 2024. The decrease for the three-month period ended March 31, 2025 compared to the same period of 2024 was largely due to an increase in net loss on the sale and disposal of assets, largely due to the impact of strategic initiatives.

Other Expense

Other expense increased by $936,000, or 1.2%, to $78.2 million for the three months ended March 31, 2025 compared to $77.2 million for the same period of 2024.

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The following table is a summary of the changes in the components of other expense:

 Three months ended
March 31,
(In thousands)20252024Change
Salaries$36,216 $35,733 $483 
Employee benefits10,516 11,560 (1,044)
Occupancy expense3,519 3,181 338 
Furniture and equipment expense2,301 2,583 (282)
Data processing fees10,529 8,808 1,721 
Professional fees and services7,307 6,817 490 
Marketing1,528 1,741 (213)
Insurance1,686 1,718 (32)
Communication1,202 1,036 166 
State tax expense1,186 1,110 76 
Amortization of intangible assets274 320 (46)
Miscellaneous1,900 2,621 (721)
Total other expense$78,164 $77,228 $936 

Salaries increased by $483,000, or 1.4%, to $36.2 million for the three months ended March 31, 2025, compared to $35.7 million for the same period in 2024. The increase for the three months ended March 31, 2025 compared to the same period of 2024 was primarily due to an increase of $357,000 in base salaries expense.

Employee benefits decreased $1.0 million, or 9.0%, to $10.5 million for the three months ended March 31, 2025, compared to $11.6 million for the same period in 2024. The $1.0 million decrease for the three months ended March 31, 2025 compared to the same period in 2024 was primarily due to a decrease in group insurance costs of $1.7 million, partially offset by an increase in other employee benefits expense of of $465,000.

Occupancy expense increased $338,000, or 10.6%, to $3.5 million for the three months ended March 31, 2025, compared to $3.2 million for the same period in 2024. The increase for the three-month period ended March 31, 2025 compared to the same period in 2024 was primarily due to an increase in expense for the rental of leased space of $176,000 and an increase in utilities expense of $106,000.

Data processing expense increased $1.7 million, or 19.5%, to $10.5 million for the three months ended March 31, 2025 compared to $8.8 million for the same period in 2024. The increase for the three-month period ended March 31, 2025 compared to the same period in 2024 related to an increase of $2.1 million software expense, partially offset by a decline in debit card and ATM processing costs of $369,000.

Professional fees and services expense increased $490,000, or 7.2%, to $7.3 million for the three months ended March 31, 2025 compared to $6.8 million for the same period in 2024. The increase for the three-month period ended March 31, 2025 compared to the same period in 2024 primarily related to an increase of $292,000 in trust systems provider expense, a $204,000 increase in legal expense, a $191,000 increase in consulting expenses, and a $154,000 increase in credit services expense, partially offset by a $214,000 decrease in other fees expense.

The subcategory "miscellaneous" other expense includes expenses for supplies, travel and other miscellaneous expense. The subcategory miscellaneous other expense decreased $721,000, or 27.5%, to $1.9 million for the three-month period ended March 31, 2025, compared to $2.6 million for the same period in 2024. This $721,000 decrease in expense was primarily related to a decrease of $394,000 in the provision for unfunded credit losses and a $261,000 decrease in non-loan related losses.

Items Impacting Comparability (Non-U.S. GAAP)

From time to time, revenue, expenses, and/or taxes are impacted by items judged by management of Park to be outside of ordinary banking activities and/or by items that, while they may be associated with ordinary banking activities, are so unusually large that their outsized impact is believed by management of Park at that time to be infrequent or short-term in nature. Most often, these items impacting comparability of period results relate to merger and acquisition activities and revenue and expenses
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related to former Vision Bank loan relationships. In other cases, they may result from management's decisions associated with significant corporate actions outside of the ordinary course of business.

The following table details those items which management believes impact the comparability of current and prior period amounts.
THREE MONTHS ENDED
(in thousands except per common share data)March 31, 2025March 31, 2024Affected Line Item
Net interest income$104,377 $95,623 
less purchase accounting accretion related to NewDominion and Carolina Alliance acquisitions175 352 Interest and fees on loans
less interest income on former Vision Bank relationships1,019 2 Interest and fees on loans
Net interest income - adjusted$103,183 $95,269 
Provision for credit losses$756 $2,180 
less recoveries on former Vision Bank relationships(1,097)(953)Provision for credit losses
Provision for credit losses - adjusted$1,853 $3,133 
Total other income$25,746 $26,200 
less loss on sale of debt securities, net— (398)Loss on the sale of debt securities, net
less impact of strategic initiatives(914)(155)Miscellaneous
less Vision related (loss) gain on the sale of OREO, net(229)121 (Loss) gain on the sale of OREO, net
less other service income related to former Vision Bank relationships3 7 Other service income
Total other income - adjusted$26,886 $26,625 
Total other expense$78,164 $77,228 
less building demolition costs— 65 Occupancy expense
less direct expenses related to collection of payments on former Vision Bank loan relationships276 — Professional fees and services
less core deposit intangible amortization related to NewDominion and Carolina Alliance acquisitions274 320 Amortization of intangible assets
Total other expense - adjusted$77,614 $76,843 
Tax effect of adjustments to net income identified above (7)
$(126)$(104)
Net income - reported$42,157 $35,204 
Net income - adjusted (6)
$41,682 $34,811 
Diluted EPS$2.60 $2.17 
Diluted EPS- adjusted (6)
$2.57 $2.15 
Annualized return on average assets (1)(2)
1.70 %1.44 %
Annualized return on average assets- adjusted (1)(2)(6)
1.68 %1.42 %
Annualized return on average tangible assets (1)(2)(4)
1.73 %1.46 %
Annualized return on average tangible assets- adjusted (1)(2)(4)(6)
1.71 %1.44 %
Annualized return on average shareholders' equity (1)(2)
13.46 %12.23 %
Annualized return on average shareholders' equity- adjusted (1)(2)(6)
13.31 %12.09 %
Annualized return on average tangible equity (1)(2)(3)
15.44 %14.24 %
Annualized return on average tangible equity- adjusted (1)(2)(3)(6)
15.27 %14.08 %
Efficiency ratio (5)
59.79 %63.07 %
Efficiency ratio- adjusted (5)(6)
59.39 %62.72 %
Annualized net interest margin (5)
4.62 %4.28 %
Annualized net interest margin- adjusted (5)(6)
4.57 %4.26 %

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Financial Reconciliations
(1) Reported measure uses net income.
(2) Averages are for the three months ended March 31, 2025 and March 31, 2024, as appropriate.
(3) Net income for each period divided by average tangible equity during the period. Average tangible equity equals average shareholders' equity during the applicable period less average goodwill and other intangible assets during the applicable period.
RECONCILIATION TO AVERAGE SHAREHOLDERS' EQUITY OF AVERAGE TANGIBLE EQUITY:
THREE MONTHS ENDED
March 31, 2025March 31, 2024
AVERAGE SHAREHOLDERS' EQUITY$1,270,259 $1,158,184 
Less: Average goodwill and other intangible assets162,938 164,137 
AVERAGE TANGIBLE EQUITY$1,107,321 $994,047 
(4) Net income for each period divided by average tangible assets during the period. Average tangible assets equals average assets less average goodwill and other intangible assets, in each case during the applicable period.
RECONCILIATION TO AVERAGE ASSETS OF AVERAGE TANGIBLE ASSETS:
THREE MONTHS ENDED
March 31, 2025March 31, 2024
AVERAGE ASSETS$10,045,607 $9,363,378 
Less: Average goodwill and other intangible assets162,938 164,137 
AVERAGE TANGIBLE ASSETS$9,882,669 $9,199,241 
(5) Efficiency ratio is calculated by dividing total other expense by the sum of FTE net interest income and other income. The reconciliation of FTE net interest income to net interest income is shown below assuming a 21% federal corporate income tax rate. Additionally, net interest margin is calculated on a fully taxable equivalent basis by dividing FTE net interest income by average interest earning assets, in each case during the applicable period.
RECONCILIATION TO FTE NET INTEREST INCOME OF NET INTEREST INCOME
THREE MONTHS ENDED
March 31, 2025March 31, 2024
Interest income$132,200 $126,640 
FTE adjustment607 616 
FTE interest income$132,807 $127,256 
Interest expense27,823 31,017 
FTE net interest income$104,984 $96,239 
(6) Adjustments to net income for each period presented are detailed in the non-GAAP reconciliations of net interest income, provision for credit losses, total other income, and total other expense, as well as the disclosure of the "Tax effect of adjustments to net income identified above."
(7) The tax effect of adjustments to net income was calculated assuming a 21% federal corporate income tax rate.
(8) PTPP net income is calculated as net income, plus income taxes, plus the provision for credit losses, in each case during the applicable period. PTPP net income is a common industry metric utilized in capital analysis and review. PTPP is used to assess the operating performance of Park while excluding the impact of the provision for credit losses.
RECONCILIATION TO NET INCOME OF PRE-TAX, PRE-PROVISION NET INCOME
THREE MONTHS ENDED
March 31, 2025March 31, 2024
Net income$42,157 $35,204 
Plus: Income taxes9,046 7,211 
Plus: Provision for credit losses756 2,180 
Pre-tax, pre-provision net income$51,959 $44,595 

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Income Tax
 
Income tax expense was $9.0 million for the first quarter of 2025 and consisted of federal income tax expense of $8.7 million and state income tax expense of $328,000. This compares to income tax expense of $7.2 million for the first quarter of 2024, which consisted of federal income tax expense of $6.9 million and state income tax expense of $321,000. The effective income tax rate for the first quarter of 2025 was 17.7%, compared to 17.0% for the same period in 2024.

The difference between the statutory federal corporate income tax rate of 21% and Park's effective income tax rate reflects permanent tax differences, primarily consisting of tax-exempt interest income from municipal investments and loans, qualified affordable housing and historical tax credits, bank owned life insurance income, and dividends paid on the common shares held within Park's KSOP, offset by the impact of state income taxes. Park expects permanent federal income tax differences for the 2025 year will be approximately $6.4 million.

Comparison of Financial Condition
At March 31, 2025 and at December 31, 2024
 
Changes in Financial Condition
 
Total assets increased by $81.3 million during the first three months of 2025 to $9,887 million at March 31, 2025, compared to $9,805 million at December 31, 2024. This increase was primarily due to the following:

•Cash and cash equivalents increased by $77.0 million, or 48.0%, to $237.6 million at March 31, 2025, compared to $160.6 million at December 31, 2024. Money market instruments increased by $44.9 million and cash and due from banks increased by $32.1 million.
•Loans increased by $66.6 million, or 0.9%, to $7,884 million at March 31, 2025, compared to $7,817 million at December 31, 2024.
•Total investment securities decreased by $58.7 million, or 5.3%, to $1,042 million at March 31, 2025, compared to $1,101 million at December 31, 2024.

Total liabilities increased by $46.1 million, or 0.5%, during the first three months of 2025 to $8,608 million at March 31, 2025, compared to $8,562 million at December 31, 2024. This change was primarily due to the following:

•Total deposits increased by $58.2 million, or 0.7%, to $8,202 million at March 31, 2025, compared to $8,144 million at December 31, 2024.
•Unsettled investment commitments increased by $12.0 million to $12.0 million at March 31, 2025, compared to no unsettled investment commitments at December 31, 2024.
•Short-term borrowings decreased by $9.5 million, or 10.5%, to $81.0 million at March 31, 2025, compared to $90.4 million at December 31, 2024.
•Other liabilities decreased by $8.6 million, or 11.1%, to $69.3 million at March 31, 2025, compared to $78.0 million at December 31, 2024.

Total shareholders’ equity increased by $35.2 million, or 2.8%, to $1,279 million at March 31, 2025, from $1,244 million at December 31, 2024. This change was primarily due to the following:

•Retained earnings increased by $24.5 million during the period primarily as a result of net income of $42.2 million, partially offset by cash dividends on common shares of $17.5 million.
•Accumulated other comprehensive loss, net of taxes decreased by $11.5 million during the period primarily as a result of a $11.5 million unrealized net holding gain on debt securities available-for-sale, net of income tax effect.
•Treasury shares decreased by $3.3 million during the period as a result of the issuance of treasury shares under share-based compensation awards (net of common shares withheld to pay employee income taxes).
•Common shares decreased by $4.2 million during the period as a result of the issuance of treasury shares under share-based compensation awards (net of common shares withheld to pay employee income taxes), partially offset by an increase due to share-based compensation expense.

Increases or decreases in the investment securities portfolio, short-term borrowings and long-term debt are greatly dependent upon the growth in loans and deposits. The primary objective of management is to grow loan and deposit totals. To the extent that management is unable to grow loan totals at a desired growth rate, additional investment securities may be acquired. Likewise, both short-term borrowings and long-term debt are utilized to fund the growth in earning assets if the growth in deposits and cash flow from operations are not sufficient to do so.
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Liquidity

Cash provided by operating activities was $37.9 million and $35.0 million for the three months ended March 31, 2025 and 2024, respectively. Net income was the primary source of cash from operating activities for each of the three-months periods ended March 31, 2025 and 2024.

Cash provided by investing activities was $11.0 million and $32.1 million for the three months ended March 31, 2025 and 2024, respectively. Proceeds from the sale, repayment, or maturity of investment securities provide cash and purchases of investment securities use cash. Net investment securities transactions provided cash of $84.1 million for the three months ended March 31, 2025 and $87.6 million for the three months ended March 31, 2024. Another major use or source of cash in investing activities is the net increase or decrease in the loan portfolio. Cash used by the net increase in the loan portfolio was $65.7 million and $49.5 million for the three months ended March 31, 2025 and 2024, respectively.

Cash provided by financing activities was $28.2 million and $20.8 million for the three months ended March 31, 2025 and 2024, respectively. A major source of cash for financing activities is the net change in deposits. Deposits (net of off-balance sheet deposits) increased and provided $58.2 million and $263.5 million of cash for the three months ended March 31, 2025 and 2024, respectively. Another major source/use of cash from financing activities is borrowings in the form of short-term borrowings, long-term debt and subordinated notes. For the three months ended March 31, 2025, net short-term borrowings decreased and used $9.5 million in cash. For the three months ended March 31, 2024, net short-term borrowings decreased and used $222.3 million in cash. Finally, cash declined by $17.6 million and $17.4 million for the three months ended March 31, 2025 and 2024, respectively, from the payment of dividends.

Effective liquidity management ensures that the cash flow requirements of depositors and borrowers, as well as the operating cash needs of the Corporation, are met. Funds are available from a number of sources, including the capital markets, the investment securities portfolio, the core deposit base, FHLB borrowings and the capability to securitize or package loans for sale. The most easily accessible forms of liquidity, Fed Funds Sold, unpledged investment securities and available FHLB borrowing capacity, totaled $1.89 billion at March 31, 2025. The Corporation’s loan to asset ratio was 79.74% at March 31, 2025, compared to 79.72% at December 31, 2024 and 76.16% at March 31, 2024. Cash and cash equivalents were $237.6 million at March 31, 2025, compared to $160.6 million at December 31, 2024 and $306.1 million at March 31, 2024. Management believes that the present funding sources provide more than adequate liquidity for the Corporation to meet its cash flow needs.
  
Capital Resources
 
Total shareholders’ equity at March 31, 2025 was $1,279 million, or 12.9% of total assets, compared to $1,244 million, or 12.7% of total assets, at December 31, 2024 and $1,162 million, or 11.8% of total assets, at March 31, 2024.
 
Financial institution regulators have established guidelines for minimum capital ratios for banks, thrifts and bank holding companies. Park has elected not to include the net unrealized gain or loss on debt securities AFS in computing regulatory capital. Park has adopted the Basel III regulatory capital framework as approved by the federal banking agencies. Under the Basel III regulatory capital framework, in order to avoid limitations on capital distributions, including dividend payments and stock repurchases, and certain discretionary bonus payments to executive officers, Park must hold a capital conservation buffer of 2.5% above the adequately capitalized risk-based capital ratios. The amounts shown below as the adequately capitalized ratio plus capital conservation buffer include the 2.50% buffer. The Federal Reserve Board has also adopted capital requirements Park must maintain to be deemed "well capitalized" and remain a financial holding company.

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Park and PNB met each of the well capitalized ratio guidelines applicable to them at March 31, 2025. The following table indicates the capital ratios for PNB and Park at March 31, 2025 and December 31, 2024.

At March 31, 2025
 LeverageTier 1
Risk-Based		Common Equity Tier 1Total
Risk-Based
PNB10.01 %11.69 %11.69 %13.09 %
Park11.74 %13.70 %13.52 %16.85 %
Adequately capitalized ratio4.00 %6.00 %4.50 %8.00 %
Adequately capitalized ratio plus capital conservation buffer4.00 %8.50 %7.00 %10.50 %
Well capitalized ratio (PNB)5.00 %8.00 %6.50 %10.00 %
Well capitalized ratio (Park)N/A6.00 %N/A10.00 %

As of December 31, 2024
 LeverageTier 1
Risk-Based		Common Equity Tier 1Total
Risk-Based
PNB9.80 %11.44 %11.44 %12.85 %
Park11.51 %13.46 %13.28 %16.63 %
Adequately capitalized ratio4.00 %6.00 %4.50 %8.00 %
Adequately capitalized ratio plus capital conservation buffer4.00 %8.50 %7.00 %10.50 %
Well capitalized ratio (PNB)5.00 %8.00 %6.50 %10.00 %
Well capitalized ratio (Park)N/A6.00 %N/A10.00 %

Contractual Obligations and Commitments
 
In the ordinary course of operations, Park enters into certain contractual obligations. Such obligations include the funding of operations through debt issuances as well as leases for premises. See page 67 of Park’s 2024 Form 10-K (Table 32) for disclosure concerning contractual obligations and commitments at December 31, 2024. There were no significant changes in contractual obligations and commitments during the first three months of 2025.
 
Financial Instruments with Off-Balance Sheet Risk
 
PNB is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include loan commitments and standby letters of credit. The instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated financial statements.
 
The exposure to credit loss (for PNB) in the event of nonperformance by the other party to the financial instrument for loan commitments and standby letters of credit is represented by the contractual amount of those instruments. PNB uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. Since many of the loan commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan commitments to customers.
 
The total amounts of off-balance sheet financial instruments with credit risk were as follows:

(In thousands)March 31,
2025		December 31, 2024
Loan commitments$1,547,114 $1,525,435 
Standby letters of credit$36,012 $33,545 
 
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ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
Management reviews interest rate sensitivity on a quarterly basis by modeling the consolidated financial statements under various interest rate scenarios. The primary reason for these efforts is to guard Park from adverse impacts of unforeseen changes in interest rates. With the shift in deposit mix and other balance sheet composition changes, Park has experienced a moderation in earnings risk exposure to either rising or falling interest rate environments, and management views its risk profile as being relatively interest rate risk neutral. Management actively monitors changes in the sensitivity position and has ample tools to adjust exposure as needed. As a result, management expects further changes in interest rates to have a modest impact on net income.
 
On page 66 (Table 31) of Park’s 2024 Form 10-K, management reported that Park’s twelve-month cumulative rate sensitivity gap was a positive (assets exceeding liabilities) $301.6 million or 3.4% of total interest earning assets at December 31, 2024. At March 31, 2025, Park’s twelve-month cumulative rate sensitivity gap was a positive (assets exceeding liabilities) $366.2 million or 4.06% of total interest earning assets.
 
Management supplements the interest rate sensitivity gap analysis with periodic simulations of balance sheet sensitivity under various interest rate and what-if scenarios to better forecast and manage the net interest margin. Management uses a 50 basis point change in market interest rates per quarter for a total of 200 basis points per year in evaluating the impact of changing interest rates on net interest income and net income over a twelve-month horizon.
 
On page 67 of Park’s 2024 Form 10-K, management reported that at December 31, 2024, the earnings simulation model projected that net income would increase by 1.3% using a rising interest rate scenario and decrease by 1.3% using a declining interest rate scenario over the next year. At March 31, 2025, the earnings simulation model projected that net income would increase by 0.7% using a rising interest rate scenario and would decrease by 1.1% in a declining interest rate scenario. At March 31, 2025, management continues to believe that it has the tools necessary to mitigate gradual changes in interest rates (50 basis points per quarter for a total of 200 basis points per year) such that the overall impact to net income will be modest.
 
ITEM 4 – CONTROLS AND PROCEDURES
 
Evaluation of Disclosure Controls and Procedures
 
With the participation of the Chairman of the Board and Chief Executive Officer (the principal executive officer) and the Chief Financial Officer, Secretary and Treasurer (the principal financial officer) of Park, Park’s management has evaluated the effectiveness of Park’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of March 31, 2025 (the end of the quarterly period covered by this Quarterly Report on Form 10-Q). Based on that evaluation, Park’s Chairman of the Board and Chief Executive Officer and Park’s Chief Financial Officer, Secretary and Treasurer have concluded that:
 
•information required to be disclosed by Park in this Quarterly Report on Form 10-Q and the other reports that Park files or submits under the Exchange Act would be accumulated and communicated to Park’s management, including its principal executive officer and its principal financial officer, as appropriate to allow timely decisions regarding required disclosure;
•information required to be disclosed by Park in this Quarterly Report on Form 10-Q and the other reports that Park files or submits under the Exchange Act would be recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and
•Park’s disclosure controls and procedures were effective as of March 31, 2025 (the end of the quarterly period covered by this Quarterly Report on Form 10-Q).

Changes in Internal Control Over Financial Reporting

There were no changes in Park's internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during Park's fiscal quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, Park's internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1.       Legal Proceedings

    We are routinely engaged in various litigation and other legal matters that are part of, or incidental to, our ordinary course of business and we have a number of unresolved lawsuits and open matters pending resolution. While the ultimate liability with respect to these matters and claims cannot be determined at this time, we believe that losses, damages, or liabilities, if any, and other amounts relating to pending matters, individually or in the aggregate, are not likely to have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows.

Item 1A.     Risk Factors
 
There are certain risks and uncertainties in our business that could cause Park's actual results to differ materially from those anticipated. In “ITEM 1A. RISK FACTORS” of Part I of Park’s 2024 Form 10-K, we included a detailed discussion of our risk factors. All of these risk factors should be read carefully in connection with evaluating Park's business and in connection with the forward-looking statements contained in this Quarterly Report on Form 10-Q. There have been no material changes to the risk factors set forth in Park's 2024 Form 10-K. Any of the risks described in Park's 2024 Form 10-K could materially adversely affect our business, financial condition or future results and the actual outcome of matters as to which forward-looking statements are made. These are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds

(a)Not applicable
(b)Not applicable
(c)The following table provides information concerning purchases of Park’s common shares ("Common Shares") made by or on behalf of Park or any “affiliated purchaser” as defined in Rule 10b-18(a)(3) under the Exchange Act, during the three months ended March 31, 2025, as well as the maximum number of Common Shares that may be purchased under Park’s previously announced stock repurchase authorizations to fund the 2017 Employees LTIP and the 2017 Non-Employee Directors LTIP and Park's previously announced 2017 and 2019 stock repurchase authorizations:

PeriodTotal number of
Common Shares
purchased		Average price
paid per
Common
Share		Total number of Common
Shares purchased as part of
publicly announced plans
or programs		Maximum number of
Common Shares that may
yet be purchased under the
plans or programs (1)
January 1 through January 31, 2025— $— — 996,088 
February 1 through February 28, 2025— — — 996,088 
March 1 through March 31, 2025— — — 996,088 
Total— $— — 996,088 
(1)The number shown represents, as of the end of each period, the maximum number of common shares that may yet be purchased as part of Park’s publicly announced stock repurchase authorizations to fund the 2017 Employees LTIP and the 2017 Non-Employee Directors LTIP, both of which became effective on April 24, 2017; Park's stock repurchase authorization covering 500,000 common shares which was announced on January 23, 2017; and Park's stock repurchase authorization covering 500,000 common shares which was announced on January 28, 2019. Such authorizations are not subject to a fixed expiration date.
    
Purchases may be made through NYSE American, in the over-the-counter market or in privately negotiated transactions, in each case in compliance with the Ohio General Corporation Law, applicable federal and state securities laws, the rules applicable to issuers having securities listed on NYSE American, regulations promulgated by the Federal Reserve Board and all applicable laws and regulations, each as in effect at the time of each such purchase. Purchases will be made upon such terms and conditions and at such times and in such amounts as any one or more of the authorized officers of Park deem to be
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appropriate, subject to market conditions, regulatory requirements, any contractual obligations of Park and Park's subsidiaries and other factors, and in the best interest of Park and Park's shareholders. The January 23, 2017 stock repurchase authorization and the January 28, 2019 stock repurchase authorization are distinct from the stock repurchase authorizations to fund the 2017 Employees LTIP and the 2017 Non-Employee Directors LTIP.

Item 3.      Defaults Upon Senior Securities
 
Not applicable.

Item 4.      Mine Safety Disclosures
 
Not applicable.

Item 5.      Other Information
 
(a)None
(b)None
(c)During the three months (the quarterly period) ended March 31, 2025, no director and no officer of Park (as defined in Rule 16a-1(f) under the Exchange Act) of Park adopted, modified, or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of SEC Regulation S-K.

Item 6.      Exhibits

3.1
3.2
31.1
31.2
32.1
32.2
101The following information from Park National Corporation's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025 formatted in Inline XBRL (eXtensible Business Reporting Language) pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Condensed Balance Sheets as of March 31, 2025 and December 31, 2024 (unaudited); (ii) the Consolidated Condensed Statements of Income for the three months ended March 31, 2025 and 2024 (unaudited); (iii) the Consolidated Condensed Statements of Comprehensive Income for the three months ended March 31, 2025 and 2024 (unaudited); (iv) the Consolidated Condensed Statements of Changes in Shareholders’ Equity for the three months ended March 31, 2025 and 2024 (unaudited); (v) the Consolidated Condensed Statements of Cash Flows for the three months ended March 31, 2025 and 2024 (unaudited); and (vi) the Notes to Unaudited Consolidated Condensed Financial Statements (electronically submitted herewith). *
104Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document with applicable taxonomy extension information contained in Exhibit 101)
______________________________________
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* The instance document does not appear in the interactive data file because its XBRL tags are imbedded within the Inline XBRL document.

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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
  PARK NATIONAL CORPORATION
   
May 2, 2025 /s/ David L. Trautman
  David L. Trautman
  Chairman of the Board and Chief Executive Officer
  (Principal Executive Officer and Duly Authorized Officer)
   
May 2, 2025 /s/ Brady T. Burt
  Brady T. Burt
  Chief Financial Officer, Secretary and Treasurer
(Principal Financial Officer and Duly Authorized Officer)


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