Core Viewpoint - Park National (PRK) reported quarterly earnings of $2.25 per share, missing the Zacks Consensus Estimate of $2.31 per share, representing an earnings surprise of -2.60% [1] - The company posted revenues of $137.64 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 10.38% [2] Financial Performance - Earnings per share (EPS) for the same quarter last year was $2.28, indicating a slight decrease year-over-year [1] - Over the last four quarters, Park National has surpassed consensus EPS estimates three times [2] - The company has also topped consensus revenue estimates three times over the last four quarters [2] Stock Performance - Park National shares have increased approximately 25.4% since the beginning of the year, outperforming the S&P 500's gain of 21.8% [3] - The current consensus EPS estimate for the upcoming quarter is $2.27, with expected revenues of $124.49 million, and for the current fiscal year, the estimate is $9.18 on revenues of $497.26 million [7] Industry Outlook - The Banks - Midwest industry, to which Park National belongs, is currently ranked in the top 18% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5]

This quarterly report represents an earnings surprise of 19.60%. A quarter ago, it was expected that this financial services holding company would post earnings of $1.85 per share when it actually produced earnings of $2.15, delivering a surprise of 16.22%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management ...

[Executive Summary & Key Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Key%20Highlights) This section provides an overview of Park National Corporation's strong financial performance for Q2 and H1 2024, management's strategic commentary, and the declared dividend [Q2 and H1 2024 Financial Performance Overview](index=1&type=section&id=Q2%20and%20H1%202024%20Financial%20Performance%20Overview) Park National Corporation achieved strong Q2 and H1 2024 financial results, with significant increases in net income and diluted EPS, alongside growth in deposits and loans Key Financial Performance (Q2 2024 vs. Q2 2023) | Metric | Q2 2024 | Q2 2023 | Change (%) | | :-------------------------- | :------ | :------ | :--------- | | Net Income | $39.4 million | $31.6 million | 24.6% | | Net Income per Diluted Share| $2.42 | $1.94 | 24.7% | Key Financial Performance (H1 2024 vs. H1 2023) | Metric | H1 2024 | H1 2023 | Change (%) | | :-------------------------- | :------ | :------ | :--------- | | Net Income | $74.6 million | $65.3 million | 14.2% | | Net Income per Diluted Share| $4.60 | $4.01 | 14.7% | Balance Sheet & Margin Highlights (as of June 30, 2024) | Metric | Value | Change (H1 2024) | Change (12-month) | | :---------------- | :---------- | :--------------- | :---------------- | | Total Assets | $9.9 billion | N/A | N/A | | Total Deposits | N/A | +3.4% | -0.6% | | Net Interest Margin (Q2 2024) | 4.39% | N/A | N/A | | Net Interest Margin (H1 2024) | 4.33% | N/A | N/A | [Management Commentary & Strategic Outlook](index=1&type=section&id=Management%20Commentary%20%26%20Strategic%20Outlook) Management emphasized consistent financial support, resilience, customer service, and strategic focus on expense control and technology as assets approach $10 billion - Park's performance is attributed to its commitment to consistent financial support, resilience, and continuous search for new ways to serve customers, including introducing new tools for more accessible banking services[11](index=11&type=chunk) - Net interest income continues to grow, supported by a year-to-date annualized commercial loan growth of **6.4%**, reflecting a consistent lending approach regardless of economic fluctuations[12](index=12&type=chunk) - The company is pleased with growth in net income and earnings per share, demonstrating a commitment to controlling expenses and leveraging technology in preparation for crossing **$10 billion in assets**[12](index=12&type=chunk) [Dividend Declaration](index=1&type=section&id=Dividend%20Declaration) Park National Corporation's board of directors declared a quarterly cash dividend of $1.06 per common share - A quarterly cash dividend of **$1.06 per common share** was declared, payable on September 10, 2024, to shareholders of record as of August 16, 2024[1](index=1&type=chunk) [Risk Factors & Forward-Looking Statements](index=2&type=section&id=Risk%20Factors%20%26%20Forward-Looking%20Statements) This section discusses potential risks and the nature of forward-looking statements [Safe Harbor Statement](index=2&type=section&id=Safe%20Harbor%20Statement) The Safe Harbor Statement clarifies that forward-looking statements are not guarantees and are subject to various risks detailed in SEC filings, with no obligation to update - Forward-looking statements are provided to assist in understanding anticipated future financial performance but are not guarantees and are subject to numerous risks and uncertainties[13](index=13&type=chunk) - Park specifically disclaims any obligation to publicly release revisions to forward-looking statements to reflect events or circumstances after the statement date, except as required by law[37](index=37&type=chunk) - Risks and uncertainties include, but are not limited to, the ability to execute business plans, adverse changes in economic and financial market conditions, real estate values, borrower health, regulatory changes, consumer habits, litigation, credit risk, and technological changes[6](index=6&type=chunk) [Consolidated Financial Highlights](index=3&type=section&id=Consolidated%20Financial%20Highlights) This section provides an overview of the company's key financial results from income statements, balance sheets, and performance ratios [Income Statement Highlights (Quarterly)](index=3&type=section&id=Income%20Statement%20Highlights%20%28Quarterly%29) Q2 2024 showed significant year-over-year and quarter-over-quarter growth in net interest income, other income, and net income, with managed expenses Income Statement Highlights (Q2 2024 vs. Q1 2024 & Q2 2023) | Metric | Q2 2024 ($ thousand) | Q1 2024 ($ thousand) | Q2 2023 ($ thousand) | % Change (QoQ) | % Change (YoY) | | :-------------------------- | :----------- | :----------- | :----------- | :------------- | :------------- | | Net Interest Income | 97,837 | 95,623 | 91,572 | 2.3% | 6.8% | | Provision for Credit Losses | 3,113 | 2,180 | 2,492 | 42.8% | 24.9% | | Other Income | 28,794 | 26,200 | 25,015 | 9.9% | 15.1% | | Other Expense | 75,189 | 77,228 | 75,885 | (2.6)% | (0.9)% | | Income Before Income Taxes | 48,329 | 42,415 | 38,210 | 13.9% | 26.5% | | Income Taxes | 8,960 | 7,211 | 6,626 | 24.3% | 35.2% | | Net Income | 39,369 | 35,204 | 31,584 | 11.8% | 24.6% | [Income Statement Highlights (Six Months)](index=5&type=section&id=Income%20Statement%20Highlights%20%28Six%20Months%29) For the first half of 2024, the company demonstrated strong growth in net interest income, other income, and net income compared to the first half of 2023, despite a significant increase in provision for credit losses Income Statement Highlights (Six Months Ended June 30, 2024 vs. 2023) | Metric | H1 2024 ($ thousand) | H1 2023 ($ thousand) | % Change | | :-------------------------- | :----------- | :----------- | :--------- | | Net Interest Income | 193,460 | 183,770 | 5.3% | | Provision for Credit Losses | 5,293 | 2,675 | 97.9% | | Other Income | 54,994 | 49,402 | 11.3% | | Other Expense | 152,417 | 152,388 | —% | | Income Before Income Taxes | 90,744 | 78,109 | 16.2% | | Income Taxes | 16,171 | 12,792 | 26.4% | | Net Income | 74,573 | 65,317 | 14.2% | [Balance Sheet Highlights](index=4&type=section&id=Balance%20Sheet%20Highlights) As of June 30, 2024, Park National Corporation reported a slight increase in total assets, driven by loan growth, while investment securities and borrowings decreased, and total shareholders' equity saw a notable increase Balance Sheet Highlights (as of June 30, 2024 vs. March 31, 2024 & June 30, 2023) | Metric | June 30, 2024 ($ thousand) | March 31, 2024 ($ thousand) | June 30, 2023 ($ thousand) | % Change (QoQ) | % Change (YoY) | | :-------------------------- | :----------------- | :------------------ | :----------------- | :------------- | :------------- | | Investment Securities | 1,264,858 | 1,339,747 | 1,756,953 | (5.6)% | (28.0)% | | Loans | 7,664,377 | 7,525,005 | 7,208,109 | 1.9% | 6.3% | | Total Assets | 9,919,783 | 9,881,077 | 9,899,551 | 0.4% | 0.2% | | Total Deposits | 8,312,505 | 8,306,032 | 8,358,976 | 0.1% | (0.6)% | | Borrowings | 283,874 | 295,130 | 332,818 | (3.8)% | (14.7)% | | Total Shareholders' Equity | 1,183,257 | 1,161,979 | 1,088,757 | 1.8% | 8.7% | | Total Nonperforming Loans | 72,745 | 71,759 | 58,229 | 1.4% | 24.9% | | Total Nonperforming Assets | 73,955 | 73,433 | 60,496 | 0.7% | 22.2% | [Market Data & Performance Ratios (Quarterly)](index=3&type=section&id=Market%20Data%20%26%20Performance%20Ratios%20%28Quarterly%29) Quarterly performance ratios show improvements in profitability and efficiency, with diluted EPS increasing significantly year-over-year and the efficiency ratio decreasing, indicating better cost management Market Data & Performance Ratios (Q2 2024 vs. Q1 2024 & Q2 2023) | Metric | Q2 2024 | Q1 2024 | Q2 2023 | % Change (QoQ) | % Change (YoY) | | :------------------------------------ | :------ | :------ | :------ | :------------- | :------------- | | Diluted EPS | $2.42 | $2.17 | $1.94 | 11.5% | 24.7% | | Quarterly Cash Dividend per Share | $1.06 | $1.06 | $1.05 | —% | 1.0% | | Book Value per Common Share | $73.27 | $71.95 | $67.40 | 1.8% | 8.7% | | Return on Average Assets (annualized, %) | 1.61% | 1.44% | 1.28% | 11.8% | 25.8% | | Return on Average Shareholders' Equity (%)| 13.52% | 12.23% | 11.61% | 10.5% | 16.5% | | Net Interest Margin (%) | 4.39% | 4.28% | 4.07% | 2.6% | 7.9% | | Efficiency Ratio (%) | 59.09% | 63.07% | 64.58% | (6.3)% | (8.5)% | [Market Data & Performance Ratios (Six Months)](index=5&type=section&id=Market%20Data%20%26%20Performance%20Ratios%20%28Six%20Months%29) For the first half of 2024, key performance ratios improved, including return on average assets and equity, and net interest margin, while the efficiency ratio decreased, indicating enhanced operational effectiveness Market Data & Performance Ratios (Six Months Ended June 30, 2024 vs. 2023) | Metric | H1 2024 | H1 2023 | % Change | | :------------------------------------ | :------ | :------ | :--------- | | Diluted EPS | $4.60 | $4.01 | 14.7% | | Quarterly Cash Dividend Declared | $2.12 | $2.10 | 1.0% | | Return on Average Assets (annualized, %) | 1.52% | 1.32% | 15.2% | | Return on Average Shareholders' Equity (%)| 12.88% | 12.07% | 6.7% | | Net Interest Margin (%) | 4.33% | 4.07% | 6.4% | | Efficiency Ratio (%) | 61.05% | 64.84% | (5.8)% | | Net Loan Charge-offs as % of Avg Loans (%)| 0.07% | 0.03% | 133.3% | [Detailed Financial Statements](index=6&type=section&id=Detailed%20Financial%20Statements) This section provides a comprehensive presentation of the company's income statements and balance sheets, including average balances and detailed expense breakdowns [Consolidated Statements of Income (Quarterly & Six Months)](index=6&type=section&id=Consolidated%20Statements%20of%20Income%20%28Quarterly%20%26%20Six%20Months%29) The consolidated statements of income show a consistent increase in total interest income for both the three and six months ended June 30, 2024, compared to the prior year, driven by higher interest and fees on loans, with interest expense also rising, particularly on time deposits Consolidated Statements of Income (Three Months Ended June 30) | Metric | 2024 ($ thousand) | 2023 ($ thousand) | | :-------------------------- | :-------- | :-------- | | Interest and Fees on Loans | 115,318 | 96,428 | | Total Interest Income | 128,904 | 114,674 | | Interest on Deposits (Demand & Savings) | 20,370 | 18,068 | | Interest on Deposits (Time) | 7,525 | 1,966 | | Total Interest Expense | 31,067 | 23,102 | | Net Interest Income | 97,837 | 91,572 | | Provision for Credit Losses | 3,113 | 2,492 | | Other Income | 28,794 | 25,015 | | Other Expense | 75,189 | 75,885 | | Net Income | 39,369 | 31,584 | Consolidated Statements of Income (Six Months Ended June 30) | Metric | 2024 ($ thousand) | 2023 ($ thousand) | | :-------------------------- | :-------- | :-------- | | Interest and Fees on Loans | 226,529 | 188,042 | | Total Interest Income | 255,544 | 225,575 | | Interest on Deposits (Demand & Savings) | 40,225 | 32,280 | | Interest on Deposits (Time) | 14,863 | 3,313 | | Total Interest Expense | 62,084 | 41,805 | | Net Interest Income | 193,460 | 183,770 | | Provision for Credit Losses | 5,293 | 2,675 | | Other Income | 54,994 | 49,402 | | Other Expense | 152,417 | 152,388 | | Net Income | 74,573 | 65,317 | [Consolidated Statements of Income - Linked Quarters](index=9&type=section&id=Consolidated%20Statements%20of%20Income%20-%20Linked%20Quarters) Quarterly income statements show a positive trend in net income and diluted EPS from Q2 2023 through Q2 2024, with Q2 2024 net income reaching **$39.37 million** and diluted EPS at **$2.42** Consolidated Statements of Income (Linked Quarters, $ thousand except per share data) | Metric | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | | :-------------------------- | :------ | :------ | :------ | :------ | :------ | | Total Interest Income | 128,904 | 126,640 | 125,206 | 120,889 | 114,674 | | Total Interest Expense | 31,067 | 31,017 | 30,132 | 26,620 | 23,102 | | Net Interest Income | 97,837 | 95,623 | 95,074 | 94,269 | 91,572 | | Provision for Credit Losses | 3,113 | 2,180 | 1,809 | (1,580) | 2,492 | | Other Income | 28,794 | 26,200 | 15,519 | 27,713 | 25,015 | | Other Expense | 75,189 | 77,228 | 79,043 | 77,808 | 75,885 | | Net Income | 39,369 | 35,204 | 24,500 | 36,917 | 31,584 | | Net Income - Diluted (per share, $) | $2.42 | $2.17 | $1.51 | $2.28 | $1.94 | [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2024, total assets increased slightly from December 31, 2023, primarily due to growth in loans, while investment securities decreased, and total deposits and shareholders' equity also increased Consolidated Balance Sheets (as of June 30, 2024 vs. December 31, 2023) | Metric | June 30, 2024 ($ thousand) | December 31, 2023 ($ thousand) | | :-------------------------- | :----------------- | :--------------------- | | Cash and Due from Banks | 142,593 | 160,477 | | Money Market Instruments | 118,872 | 57,791 | | Investment Securities | 1,264,858 | 1,429,144 | | Loans, Net | 7,577,802 | 7,392,476 | | Total Assets | 9,919,783 | 9,836,453 | | Noninterest Bearing Deposits| 2,542,446 | 2,628,234 | | Interest Bearing Deposits | 5,770,059 | 5,414,332 | | Total Deposits | 8,312,505 | 8,042,566 | | Borrowings | 283,874 | 517,329 | | Total Liabilities | 8,736,526 | 8,691,160 | | Total Shareholders' Equity | 1,183,257 | 1,145,293 | [Consolidated Average Balance Sheets](index=8&type=section&id=Consolidated%20Average%20Balance%20Sheets) Average total assets for the three and six months ended June 30, 2024, decreased slightly compared to the prior year, primarily due to lower average investment securities, despite an increase in average loans Consolidated Average Balance Sheets (Three Months Ended June 30) | Metric | 2024 ($ thousand) | 2023 ($ thousand) | | :-------------------------- | :-------- | :-------- | | Average Investment Securities | 1,285,086 | 1,777,878 | | Average Loans | 7,587,127 | 7,132,025 | | Average Total Assets | 9,811,326 | 9,917,805 | | Average Total Deposits | 8,199,524 | 8,356,943 | | Average Total Shareholders' Equity | 1,171,347 | 1,091,016 | Consolidated Average Balance Sheets (Six Months Ended June 30) | Metric | 2024 ($ thousand) | 2023 ($ thousand) | | :-------------------------- | :-------- | :-------- | | Average Investment Securities | 1,326,807 | 1,792,199 | | Average Loans | 7,534,889 | 7,115,723 | | Average Total Assets | 9,837,352 | 9,987,953 | | Average Total Deposits | 8,206,321 | 8,401,788 | | Average Total Shareholders' Equity | 1,164,765 | 1,090,985 | [Detail of Other Income and Other Expense - Linked Quarters](index=10&type=section&id=Detail%20of%20Other%20Income%20and%20Other%20Expense%20-%20Linked%20Quarters) Other income for Q2 2024 increased quarter-over-quarter and year-over-year, primarily driven by higher income from fiduciary activities, while other expenses decreased quarter-over-quarter due to lower employee benefits and professional fees Detail of Other Income (Linked Quarters, $ thousand) | Metric | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | | :------------------------------------ | :------ | :------ | :------ | :------ | :------ | | Income from Fiduciary Activities | 10,728 | 10,024 | 8,943 | 9,100 | 8,816 | | Service Charges on Deposit Accounts | 2,214 | 2,106 | 2,054 | 2,109 | 2,041 | | Debit Card Fee Income | 6,580 | 6,243 | 6,583 | 6,652 | 6,830 | | Bank Owned Life Insurance Income | 1,565 | 2,629 | 1,373 | 1,448 | 1,332 | | Total Other Income | 28,794 | 26,200 | 15,519 | 27,713 | 25,015 | Detail of Other Expense (Linked Quarters, $ thousand) | Metric | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | | :------------------------------------ | :------ | :------ | :------ | :------ | :------ | | Salaries | 35,954 | 35,733 | 36,192 | 34,525 | 33,649 | | Employee Benefits | 9,873 | 11,560 | 10,088 | 10,822 | 10,538 | | Data Processing Fees | 9,542 | 8,808 | 9,605 | 9,700 | 9,582 | | Professional Fees and Services | 6,022 | 6,817 | 7,015 | 7,572 | 7,365 | | Total Other Expense | 75,189 | 77,228 | 79,043 | 77,808 | 75,885 | [Asset Quality Information](index=11&type=section&id=Asset%20Quality%20Information) This section provides an analysis of the company's asset quality, including allowance for credit losses, nonperforming assets, and individually evaluated commercial loans [Allowance for Credit Losses](index=11&type=section&id=Allowance%20for%20Credit%20Losses) The allowance for credit losses increased slightly at the end of Q2 2024 compared to the previous quarter and year-end 2023, reflecting an increase in net charge-offs and provision for credit losses Allowance for Credit Losses (as of June 30, 2024 vs. March 31, 2024 & Year Ended 2023) | Metric | June 30, 2024 ($ thousand) | March 31, 2024 ($ thousand) | Year Ended 2023 ($ thousand) | | :------------------------------------ | :----------------- | :------------------ | :------------------- | | Allowance for Credit Losses, Beginning| 85,084 | 83,745 | 85,379 | | Net Charge-offs | 1,622 | 841 | 4,921 | | Provision for Credit Losses | 3,113 | 2,180 | 2,904 | | Allowance for Credit Losses, End | 86,575 | 85,084 | 83,745 | | Allowance for Credit Losses as % of Loans (%) | 1.13% | 1.13% | 1.12% | [Nonperforming Assets & Ratios](index=11&type=section&id=Nonperforming%20Assets%20%26%20Ratios) Total nonperforming loans and assets increased year-over-year, with nonaccrual loans being the primary component, though the percentage of nonperforming assets to total assets remained relatively stable quarter-over-quarter Nonperforming Assets (as of June 30, 2024 vs. March 31, 2024 & Year Ended 2023) | Metric | June 30, 2024 ($ thousand) | March 31, 2024 ($ thousand) | Year Ended 2023 ($ thousand) | | :-------------------------- | :----------------- | :------------------ | :------------------- | | Nonaccrual Loans | 71,368 | 70,189 | 60,259 | | Loans Past Due 90 Days or More | 1,377 | 1,570 | 859 | | Total Nonperforming Loans | 72,745 | 71,759 | 61,118 | | Other Real Estate Owned | 1,210 | 1,674 | 983 | | Total Nonperforming Assets | 73,955 | 73,433 | 62,101 | | % of Nonperforming Loans to Loans (%) | 0.95% | 0.95% | 0.82% | | % of Nonperforming Assets to Total Assets (%) | 0.75% | 0.74% | 0.63% | [New Nonaccrual Loan Information](index=12&type=section&id=New%20Nonaccrual%20Loan%20Information) New nonaccrual loans for Q2 2024 were **$13.18 million**, a decrease from Q1 2024, with resolved nonaccrual loans also showing a slight increase, leading to a modest rise in end-of-period nonaccrual loans New Nonaccrual Loan Information (Linked Quarters, $ thousand) | Metric | Q2 2024 | Q1 2024 | Year Ended 2023 | | :-------------------------- | :------ | :------ | :-------------- | | Nonaccrual Loans, Beginning | 70,189 | 60,259 | 79,696 | | New Nonaccrual Loans | 13,180 | 19,012 | 48,280 | | Resolved Nonaccrual Loans | 12,001 | 9,082 | 67,717 | | Nonaccrual Loans, End | 71,368 | 70,189 | 60,259 | [Individually Evaluated Commercial Loan Portfolio](index=12&type=section&id=Individually%20Evaluated%20Commercial%20Loan%20Portfolio) The unpaid principal balance of individually evaluated commercial loans remained stable quarter-over-quarter, with specific reserves also showing a slight increase Individually Evaluated Commercial Loan Portfolio (Period End, $ thousand) | Metric | June 30, 2024 | March 31, 2024 | Year Ended 2023 | | :-------------------------- | :------------ | :------------- | :-------------- | | Unpaid Principal Balance | 57,184 | 57,053 | 47,564 | | Remaining Principal Balance | 54,993 | 54,742 | 45,215 | | Specific Reserves | 5,311 | 5,032 | 4,983 | | Book Value, After Specific Reserves | 49,682 | 49,710 | 40,232 | [Financial Reconciliations (Non-GAAP Measures)](index=13&type=section&id=Financial%20Reconciliations%20%28Non-GAAP%20Measures%29) This section provides reconciliations of non-GAAP financial measures, including adjusted performance metrics, tangible assets and equity, and pre-tax, pre-provision net income [Adjusted Financial Performance](index=13&type=section&id=Adjusted%20Financial%20Performance) Adjusted financial metrics for Q2 and H1 2024 show slightly lower net income and diluted EPS compared to reported figures, after accounting for specific adjustments related to acquisitions, debt securities, and strategic initiatives Adjusted Financial Performance (Q2 2024 vs. Q1 2024 & Q2 2023) | Metric | Q2 2024 | Q1 2024 | Q2 2023 | | :------------------------------------ | :------ | :------ | :------ | | Net Interest Income - Adjusted ($ thousand) | 97,561 | 95,269 | 91,395 | | Provision for Credit Losses - Adjusted ($ thousand) | 3,230 | 3,133 | 2,517 | | Other Income - Adjusted ($ thousand) | 27,982 | 26,625 | 25,015 | | Other Expense - Adjusted ($ thousand) | 74,869 | 76,908 | 75,557 | | Net Income - Adjusted ($ thousand) | 38,670 | 34,760 | 31,684 | | Diluted EPS - Adjusted | $2.38 | $2.15 | $1.95 | Adjusted Financial Performance (Six Months Ended June 30, 2024 vs. 2023) | Metric | H1 2024 | H1 2023 | | :------------------------------------ | :------ | :------ | | Net Interest Income - Adjusted ($ thousand) | 192,830 | 182,819 | | Provision for Credit Losses - Adjusted ($ thousand) | 6,363 | 3,423 | | Other Income - Adjusted ($ thousand) | 54,607 | 49,267 | | Other Expense - Adjusted ($ thousand) | 151,777 | 151,633 | | Net Income - Adjusted ($ thousand) | 73,430 | 64,465 | | Diluted EPS - Adjusted | $4.53 | $3.96 | [Adjusted Performance Ratios](index=13&type=section&id=Adjusted%20Performance%20Ratios) Adjusted performance ratios for Q2 and H1 2024 generally show slightly lower profitability metrics compared to reported figures, reflecting the impact of non-GAAP adjustments, while efficiency ratios remain strong Adjusted Performance Ratios (Q2 2024 vs. Q1 2024 & Q2 2023) | Metric | Q2 2024 | Q1 2024 | Q2 2023 | | :------------------------------------ | :------ | :------ | :------ | | Annualized Return on Average Assets, Adjusted (%) | 1.59% | 1.42% | 1.28% | | Annualized Return on Average Shareholders' Equity, Adjusted (%) | 13.28% | 12.07% | 11.65% | | Annualized Return on Average Tangible Equity, Adjusted (%) | 15.44% | 14.06% | 13.73% | | Efficiency Ratio, Adjusted (%) | 59.35% | 62.78% | 64.40% | | Annualized Net Interest Margin, Adjusted (%) | 4.38% | 4.26% | 4.06% | Adjusted Performance Ratios (Six Months Ended June 30, 2024 vs. 2023) | Metric | H1 2024 | H1 2023 | | :------------------------------------ | :------ | :------ | | Annualized Return on Average Assets, Adjusted (%) | 1.50% | 1.30% | | Annualized Return on Average Shareholders' Equity, Adjusted (%) | 12.68% | 11.92% | | Annualized Return on Average Tangible Equity, Adjusted (%) | 14.76% | 14.04% | | Efficiency Ratio, Adjusted (%) | 61.04% | 64.82% | | Annualized Net Interest Margin, Adjusted (%) | 4.32% | 4.05% | [Reconciliation of Tangible Assets and Equity](index=14&type=section&id=Reconciliation%20of%20Tangible%20Assets%20and%20Equity) Reconciliations show that tangible assets and equity are derived by subtracting goodwill and other intangible assets from total assets and shareholders' equity, providing a clearer view of the company's physical and financial capital Reconciliation of Average Assets to Average Tangible Assets ($ thousand) | Metric | Q2 2024 | Q1 2024 | Q2 2023 | H1 2024 | H1 2023 | | :------------------------------------ | :------ | :------ | :------ | :------ | :------ | | Average Assets | 9,811,326 | 9,863,378 | 9,917,805 | 9,837,352 | 9,987,953 | | Less: Average Goodwill & Other Intangible Assets | 163,816 | 164,137 | 165,129 | 163,977 | 165,292 | | Average Tangible Assets | 9,647,510 | 9,699,241 | 9,752,676 | 9,673,375 | 9,822,661 | Reconciliation of Total Assets to Tangible Assets ($ thousand) | Metric | June 30, 2024 | March 31, 2024 | June 30, 2023 | | :------------------------------------ | :------------ | :------------- | :------------ | | Total Assets | 9,919,783 | 9,881,077 | 9,899,551 | | Less: Goodwill & Other Intangible Assets | 163,607 | 163,927 | 164,915 | | Tangible Assets | 9,756,176 | 9,717,150 | 9,734,636 | Reconciliation of Total Shareholders' Equity to Tangible Equity ($ thousand) | Metric | June 30, 2024 | March 31, 2024 | June 30, 2023 | | :------------------------------------ | :------------ | :------------- | :------------ | | Total Shareholders' Equity | 1,183,257 | 1,161,979 | 1,088,757 | | Less: Goodwill & Other Intangible Assets | 163,607 | 163,927 | 164,915 | | Tangible Equity | 1,019,650 | 998,052 | 923,842 | [Reconciliation of Pre-Tax, Pre-Provision Net Income](index=15&type=section&id=Reconciliation%20of%20Pre-Tax%2C%20Pre-Provision%20Net%20Income) Pre-tax, pre-provision (PTPP) net income, a key metric for assessing operating performance, increased significantly for both the quarter and six months ended June 30, 2024, compared to the prior year Reconciliation of Pre-Tax, Pre-Provision Net Income ($ thousand) | Metric | Q2 2024 | Q1 2024 | Q2 2023 | H1 2024 | H1 2023 | | :-------------------------- | :------ | :------ | :------ | :------ | :------ | | Net Income | 39,369 | 35,204 | 31,584 | 74,573 | 65,317 | | Plus: Income Taxes | 8,960 | 7,211 | 6,626 | 16,171 | 12,792 | | Plus: Provision for Credit Losses | 3,113 | 2,180 | 2,492 | 5,293 | 2,675 | | Pre-tax, Pre-provision Net Income | 51,442 | 44,595 | 40,702 | 96,037 | 80,784 | - PTPP net income is a common industry metric used to assess operating performance by excluding the impact of the provision for credit losses[63](index=63&type=chunk) [Reconciliation of Fully Taxable Equivalent Net Interest Income](index=15&type=section&id=Reconciliation%20of%20Fully%20Taxable%20Equivalent%20Net%20Interest%20Income) The fully taxable equivalent (FTE) net interest income, which adjusts for the tax-exempt status of certain interest income, shows a higher net interest income compared to the reported figures, indicating the benefit of tax-exempt investments Reconciliation of Fully Taxable Equivalent Net Interest Income ($ thousand) | Metric | Q2 2024 | Q1 2024 | Q2 2023 | H1 2024 | H1 2023 | | :------------------------------------ | :------ | :------ | :------ | :------ | :------ | | Interest Income | 128,904 | 126,640 | 114,674 | 255,544 | 225,575 | | Fully Taxable Equivalent Adjustment | 605 | 616 | 920 | 1,221 | 1,846 | | Fully Taxable Equivalent Interest Income | 129,509 | 127,256 | 115,594 | 256,765 | 227,421 | | Interest Expense | 31,067 | 31,017 | 23,102 | 62,084 | 41,805 | | Fully Taxable Equivalent Net Interest Income | 98,442 | 96,239 | 92,492 | 194,681 | 185,616 | - The efficiency ratio is calculated by dividing total other expense by the sum of fully taxable equivalent net interest income and other income, using a **21% corporate federal income tax rate** for FTE adjustments[63](index=63&type=chunk) [Footnote Explanations](index=14&type=section&id=Footnote%20Explanations) This section provides detailed explanations for the footnotes (a) through (k) referenced throughout the financial tables, clarifying the methodologies and definitions used for various financial metrics and adjustments, including the adoption of ASU 2022-02 - Footnotes (a) through (k) provide explanations for reported measures, average calculations, tangible equity/assets definitions, efficiency ratio calculation, adjusted net income methodology, tax effect assumptions, and the definition of pre-tax, pre-provision net income[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk)[63](index=63&type=chunk) - Effective January 1, 2023, Park adopted ASU 2022-02, which eliminated the concept of troubled debt restructurings (TDRs), resulting in a decrease in total nonperforming loans and assets by **$20.1 million** and individually evaluated loans by **$11.5 million**[64](index=64&type=chunk)

Core Viewpoint - Park National Corporation reported strong financial results for the second quarter and first half of 2024, highlighting significant increases in net income and earnings per share, alongside a commitment to enhancing customer service through new banking tools [2][5]. Financial Performance - Net income for Q2 2024 was $39.4 million, a 24.6% increase from $31.6 million in Q2 2023. Earnings per diluted share rose to $2.42 from $1.94 year-over-year [2][5]. - For the first half of 2024, net income reached $74.6 million, up 14.2% from $65.3 million in the same period of 2023, with earnings per diluted share increasing to $4.60 from $4.01 [2][5]. Loan and Deposit Growth - Total loans increased by 2.5% (5.1% annualized) in the first half of 2024 and by 6.3% over the 12 months ending June 30, 2024. In Q2 2024, loans grew by 1.9% (7.4% annualized) [3]. - Total deposits rose by 3.4% (6.7% annualized) in the first half of 2024 but decreased by 0.6% over the 12 months ending June 30, 2024 [4]. Net Interest Margin - The net interest margin for Q2 2024 was 4.39%, compared to 4.28% in Q1 2024 and 4.07% in Q2 2023. For the first half of 2024, the net interest margin was 4.33%, up from 4.07% in the first half of 2023 [4][11]. Asset and Equity Position - As of June 30, 2024, Park National Corporation had total assets of $9.9 billion, with total shareholders' equity of $1.18 billion, reflecting a 1.8% increase from the previous quarter and an 8.7% increase year-over-year [5][12]. - The company reported a tangible book value per common share of $63.14, up 2.2% from the previous quarter and 10.4% year-over-year [11][12]. Dividend Declaration - The board of directors declared a quarterly cash dividend of $1.06 per common share, payable on September 10, 2024, to shareholders of record as of August 16, 2024 [1][16].

Core Insights - Park National Corporation reported a net income of $39,369 thousand for the three months ended June 30, 2024, representing an 11.8% increase compared to $31,584 thousand for the same period in 2023 [7][21] - The company’s net interest income for the same period was $97,837 thousand, up 6.8% from $91,572 thousand in the prior year [7][21] - Total assets increased to $9,919,783 thousand as of June 30, 2024, compared to $9,899,551 thousand a year earlier, reflecting a 0.2% growth [8][23] Financial Performance - For the six months ended June 30, 2024, net income was $74,573 thousand, a 14.2% increase from $65,317 thousand in 2023 [25] - The provision for credit losses for the first half of 2024 was $5,293 thousand, significantly higher than $2,675 thousand in the same period of 2023, indicating a 97.9% increase [25] - Earnings per common share (diluted) rose to $4.60 for the six months ended June 30, 2024, compared to $4.01 in 2023, marking a 14.7% increase [25] Balance Sheet Highlights - Average shareholders' equity increased to $1,183,257 thousand as of June 30, 2024, from $1,088,757 thousand a year prior, reflecting an 8.7% growth [8][23] - Total deposits reached $8,312,505 thousand, slightly up from $8,358,976 thousand in the previous year [8][23] - The company’s tangible equity was reported at $1,019,650 thousand, up from $923,842 thousand in the same period last year, indicating a 10.4% increase [23] Asset Quality - Total nonperforming loans increased to $72,745 thousand as of June 30, 2024, compared to $58,229 thousand a year earlier, reflecting a 24.9% rise [23] - The allowance for credit losses as a percentage of period-end loans was reported at 1.13%, unchanged from the previous quarter [23] - Net loan charge-offs for the first half of 2024 were $2,463 thousand, a 100.1% increase from $1,231 thousand in the same period of 2023 [25] Market Data - The market capitalization at the end of June 2024 was $2,298,723 thousand, up 4.5% from $1,652,818 thousand a year earlier [21] - The quarterly cash dividend declared per common share remained stable at $1.06, compared to $1.05 in the same period last year [21] - The book value per common share at period end was $73.27, reflecting a 1.8% increase from $67.40 a year prior [21]

Park National (PRK) shares rallied 4.6% in the last trading session to close at $161.56. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 15.1% gain over the past four weeks. Shares of Park National rallied for the seventh straight trading session and hit a 52-week high of $161.93. Encouraging inflation numbers and a rising unemployment rate are giving confidence to the Federal Reserve that prices will eventua ...

Core Points - Park National Corporation's board of directors has elected Karen Morrison and Kelly Gratz as new directors effective July 1, 2024, expanding the board to 16 members [1][2] - Both Morrison and Gratz will also join the board of The Park National Bank, Park's banking subsidiary, on the same date [1] - Gratz is the CEO of G2O with over 35 years of experience in technology, healthcare, and pharmaceuticals [2] - Morrison serves as president of the OhioHealth Foundation and has over 30 years of experience with OhioHealth [4][5] - Both directors will serve on the board's Risk Committee, with Morrison's term expiring in 2026 and Gratz's in 2027 [7] Company Overview - Park National Corporation is headquartered in Newark, Ohio, and has total assets of $9.9 billion as of March 31, 2024 [8] - The company's banking operations are conducted through its subsidiary, The Park National Bank, along with other subsidiaries including Scope Leasing, Guardian Financial Services, and SE Property Holdings [8]

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, 2024 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 Number 1-13006 PARK NATIONAL CORPORATION (Exact name of registrant as specified in its ch ...

April 19, 2024 Exhibit 99.1 Park National Corporation reports financial results for first quarter 2024 NEWARK, Ohio ‒ Park National Corporation (Park) (NYSE American: PRK) today reported financial results for the first quarter of 2024. Park's board of directors declared a quarterly cash dividend of $1.06 per common share, payable on June 10, 2024, to common shareholders of record as of May 17, 2024. "Park bankers meet customers when, where and how they wish. In doing so, we remain alert to service opportuni ...

PART I [ITEM 1. BUSINESS](index=4&type=section&id=ITEM%201.%20BUSINESS) Park National Corporation is a financial holding company providing commercial banking and trust services through its subsidiary, Park National Bank, across four states - Park National Corporation is a financial holding company whose principal business is owning and supervising its subsidiaries, with its common shares listed on NYSE American under the symbol "PRK"[12](index=12&type=chunk) - The company's banking operations are conducted through its main subsidiary, Park National Bank, which operates 96 financial service offices across Ohio, Kentucky, North Carolina, and South Carolina[33](index=33&type=chunk) - Other significant subsidiaries include SE Property Holdings, LLC (SEPH) for managing other real estate owned (OREO) and problem loans, and Scope Leasing, Inc. (Scope Aircraft Finance) for aircraft financing[36](index=36&type=chunk)[37](index=37&type=chunk) Loan Portfolio Composition as of December 31, 2023 | Loan Category | Amount (in millions) | Percentage of Total Loans | | :--- | :--- | :--- | | Commercial Loans & Leases | $3,196 | 42.7% | | Residential Real Estate & Construction | $2,335 | 31.2% | | Consumer Loans | $1,946 | 26.0% | [Human Capital](index=4&type=section&id=Human%20Capital) The company maintains a stable workforce with high retention, emphasizing professional development and employee benefits Associate Profile as of December 31, 2023 | Metric | Value | | :--- | :--- | | Total Active Associates | 1,799 | | Full-time Equivalent | 1,782 | | Gender Distribution | 68% female, 32% male | | Average Tenure | 9 years | | Voluntary Turnover (2023) | 14.9% | | Associates as Shareholders (via KSOP) | 87% | - The company emphasizes a culture of service, professional development, and belonging, offering benefits such as an employee stock ownership plan (KSOP), a defined benefit pension plan, and health insurance[16](index=16&type=chunk)[23](index=23&type=chunk)[25](index=25&type=chunk) - **35% of associates** have been with the organization for 10 years or more as of the end of 2023, reflecting strong employee retention[31](index=31&type=chunk) [Lending Activities](index=9&type=section&id=Lending%20Activities) The company manages a diversified loan portfolio with no significant industry concentrations, adhering to strict credit risk policies - At year-end 2023, the loan portfolio was diversified with no concentration to a single industry exceeding **10% of total loans**[47](index=47&type=chunk) Lending Portfolio Breakdown (December 31, 2023) | Loan Type | Amount (in millions) | % of Total Portfolio | | :--- | :--- | :--- | | Commercial Loans & Leases | $3,196 | 42.7% | | Consumer Loans | $1,946 | 26.0% | | Residential Real Estate & Construction | $2,335 | 31.2% | | **Total Loans** | **$7,477** | **100.0%** | - Specialized lending includes **$414 million** in loans to non-bank consumer finance companies and **$295 million** in aircraft financing through its subsidiary, Scope Aircraft Finance[59](index=59&type=chunk)[61](index=61&type=chunk) - The company manages credit risk through written loan policies, collateral requirements, an independent internal loan review program, and by generally limiting single-borrower exposure to **$75.0 million**, well below the regulatory limit of **$150.0 million**[48](index=48&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) [Supervision and Regulation](index=14&type=section&id=Supervision%20and%20Regulation) Park National Corporation and its subsidiaries are subject to extensive federal and state banking regulations, including capital and consumer protection rules - Park and its subsidiaries are subject to extensive regulation by multiple agencies, including the Federal Reserve Board (FRB), the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the Consumer Financial Protection Bureau (CFPB)[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk) - The company is subject to Basel III Capital Rules, which mandate minimum capital ratios, including a common equity tier 1 ratio of **4.5%** and a total capital ratio of **8.0%**, plus a capital conservation buffer of **2.5%**[110](index=110&type=chunk)[111](index=111&type=chunk)[117](index=117&type=chunk) - Dividend payments are subject to regulatory restrictions; Park National Bank must maintain its "well-capitalized" status and have a capital conservation buffer greater than **2.5%** to pay dividends without limitation[127](index=127&type=chunk) - As of December 31, 2023, approximately **$112.9 million** was available for dividends to the parent company without OCC approval[128](index=128&type=chunk) - The company is subject to various consumer protection laws, anti-money laundering regulations (including the Patriot Act and AMLA), and cybersecurity standards, which require robust compliance programs and reporting[139](index=139&type=chunk)[145](index=145&type=chunk)[157](index=157&type=chunk) [ITEM 1A. RISK FACTORS](index=27&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces diverse risks including economic volatility, operational threats like cybersecurity, regulatory changes, and specific legal compliance obligations - **Economic and Market Risks**: The company's earnings are sensitive to inflation, changes in interest rates, and economic conditions in its primary markets of Ohio, Kentucky, and the Carolinas, which could affect loan demand, repayment ability, and collateral values[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk) - **Business Operations Risks**: Significant risks include operational disruptions from cybersecurity attacks on its systems or third-party vendors, potential for credit losses if the allowance for credit losses (ACL) is insufficient, and intense competition from other financial institutions and fintech companies[177](index=177&type=chunk)[180](index=180&type=chunk)[194](index=194&type=chunk)[208](index=208&type=chunk) - **Legislative and Regulatory Risks**: The company operates in a highly regulated industry, and changes in laws, accounting standards (like CECL), or regulatory actions could adversely impact operations and financial results[225](index=225&type=chunk)[229](index=229&type=chunk) - Crossing the **$10 billion asset threshold** would subject the company to heightened regulatory requirements[237](index=237&type=chunk) - **Specific Legal Risk**: Park National Bank is subject to a DOJ Consent Order approved in March 2023, requiring a minimum investment of **$9.0 million** over five years to increase lending efforts in majority-minority census tracts in the Columbus, Ohio area[245](index=245&type=chunk)[246](index=246&type=chunk)[248](index=248&type=chunk)[249](index=249&type=chunk) - Compliance requires significant management attention and could incur unanticipated costs[249](index=249&type=chunk) [ITEM 1C. CYBERSECURITY](index=43&type=section&id=ITEM%201C.%20CYBERSECURITY) Park manages cybersecurity risks through a multi-layered defense system aligned with NIST, overseen by the Board's Risk Committee - Park's cybersecurity risk management follows the National Institute of Standards and Technology (NIST) Cyber Security Framework and other regulatory guidelines[253](index=253&type=chunk) - The Board of Directors' Risk Committee is responsible for overseeing the company's Enterprise Risk Management program, which includes cybersecurity[254](index=254&type=chunk) - The board receives quarterly reports on cybersecurity status, trends, and incidents[255](index=255&type=chunk) - The company has a third-party risk management program to evaluate and monitor vendors, particularly those with access to sensitive information[252](index=252&type=chunk) - To date, risks from cybersecurity threats have not materially affected the company's business strategy, results of operations, or financial performance[257](index=257&type=chunk) [ITEM 2. PROPERTIES](index=44&type=section&id=ITEM%202.%20PROPERTIES) Park National Bank operates 96 financial service offices across four states, with the majority being owned properties - As of the report date, Park National Bank operated **96 financial service offices** in Ohio (86), Kentucky (1), North Carolina (4), and South Carolina (5)[259](index=259&type=chunk) - Of the **96 financial service offices**, **16 are leased properties**, while the remainder are owned by the company[259](index=259&type=chunk) [ITEM 3. LEGAL PROCEEDINGS](index=44&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) The company is involved in routine litigation, with management expecting no material impact on its financial position or operations - The company is routinely involved in various litigation incidental to its business, and management does not expect the outcomes to have a material effect on its financial condition or results[263](index=263&type=chunk) PART II [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=45&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20SHAREHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) Park's common stock trades on NYSE American, demonstrating strong shareholder returns and active share repurchase programs - Park's common shares trade on the NYSE American under the symbol PRK, with **3,245 shareholders of record** at December 31, 2023[266](index=266&type=chunk) Five-Year Cumulative Total Shareholder Return | Index | 12/31/18 | 12/31/23 | 5-Year Return | | :--- | :--- | :--- | :--- | | Park National Corporation | 100.00 | 191.04 | +91.04% | | NYSE Composite Index | 100.00 | 167.12 | +67.12% | | KBW NASDAQ Bank Index | 100.00 | 131.57 | +31.57% | | S&P U.S. SmallCap Banks Index | 100.00 | 140.55 | +40.55% | - As of December 31, 2023, the company had **996,088 common shares** remaining that may be purchased under its publicly announced stock repurchase programs[271](index=271&type=chunk) [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=47&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Net income decreased in 2023 due to lower other income and higher expenses, despite net interest income growth and strong capital position Key Financial Performance (2021-2023) | (In thousands) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net interest income | $373,113 | $347,059 | $329,893 | | Provision for (recovery of) credit losses | $2,904 | $4,557 | $(11,916) | | Other income | $92,634 | $135,935 | $129,944 | | Other expense | $309,239 | $297,978 | $283,518 | | **Net income** | **$126,734** | **$148,351** | **$153,945** | - Net income decreased by **$21.6 million (14.6%)** in 2023 compared to 2022[294](index=294&type=chunk) - This was driven by a **$43.3 million decrease in other income** (largely from a **$7.9 million loss on sale of debt securities** and lower OREO-related gains) and an **$11.3 million increase in other expense**, partially offset by a **$26.1 million increase in net interest income**[297](index=297&type=chunk)[380](index=380&type=chunk)[393](index=393&type=chunk) [SOURCE OF FUNDS](index=54&type=section&id=SOURCE%20OF%20FUNDS) Total deposits decreased in 2023, while shareholders' equity and tangible equity ratios improved, reflecting a stronger capital base Deposit Composition (Year-End) | (In millions) | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Non-interest bearing checking | $2,628.2 | $3,074.3 | $(446.1) | | Interest bearing transaction accounts | $2,064.5 | $1,988.1 | $76.4 | | Savings | $2,542.0 | $2,616.6 | $(74.6) | | Time deposits | $641.6 | $554.4 | $87.2 | | Brokered deposits | $165.0 | $0.0 | $165.0 | | **Total Deposits** | **$8,042.6** | **$8,234.7** | **$(192.1)** | - Total deposits, including off-balance sheet deposits, decreased by **$386.9 million (4.6%)** during 2023, primarily due to a decrease in retail deposits and a reduction in off-balance sheet balances[318](index=318&type=chunk) - Shareholders' equity to total assets ratio increased to **11.64%** at year-end 2023 from **10.85%** at year-end 2022[327](index=327&type=chunk) - The tangible equity to tangible assets ratio also improved to **10.14%** from **9.33%**[327](index=327&type=chunk) - Accumulated other comprehensive loss improved, decreasing from a loss of **$102.4 million** at YE 2022 to a loss of **$66.2 million** at YE 2023, mainly due to a smaller unrealized net holding loss on AFS debt securities[329](index=329&type=chunk)[484](index=484&type=chunk) [INVESTMENT OF FUNDS](index=57&type=section&id=INVESTMENT%20OF%20FUNDS) Total loans increased by 4.7% in 2023, primarily driven by residential real estate, with strategic sales of AFS debt securities to enhance liquidity Loan Portfolio by Type (Year-End) | (In millions) | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Commercial, financial and agricultural | $1,295.6 | $1,300.9 | -0.4% | | Construction real estate | $305.1 | $325.4 | -6.2% | | Residential real estate | $2,029.5 | $1,796.9 | +12.9% | | Commercial real estate | $1,876.0 | $1,794.1 | +4.6% | | Consumer | $1,945.9 | $1,905.0 | +2.1% | | **Total loans** | **$7,476.2** | **$7,141.9** | **+4.7%** | - Total loans increased by **$334 million**, or **4.7%**, in 2023, driven primarily by a **$232.7 million (12.9%) increase** in residential real estate loans[336](index=336&type=chunk)[340](index=340&type=chunk) - In 2023, the company sold **$291.0 million** in AFS debt securities, realizing a net pre-tax loss of **$7.9 million** to improve liquidity and net interest margin[297](index=297&type=chunk)[348](index=348&type=chunk) - The investment portfolio is primarily composed of U.S. Government sponsored entities' asset-backed securities (**44.4%**), Collateralized Loan Obligations (**30.7%**), and obligations of states and political subdivisions (**16.9%**) as of year-end 2023[355](index=355&type=chunk) [ANALYSIS OF EARNINGS](index=60&type=section&id=ANALYSIS%20OF%20EARNINGS) Net interest income increased due to higher asset yields, but overall net income declined due to lower other income and increased operating expenses - Net interest income on a fully taxable equivalent (FTE) basis increased by **$26.2 million** to **$376.8 million** in 2023[358](index=358&type=chunk) - The FTE net interest margin expanded by **31 basis points** to **4.11%** in 2023 from **3.80%** in 2022[378](index=378&type=chunk) - The increase in net interest income was driven by a **104 basis point increase** in the average yield on interest-earning assets, which outpaced the **113 basis point increase** in the average cost of interest-bearing liabilities[360](index=360&type=chunk)[362](index=362&type=chunk) - Other income decreased significantly to **$92.6 million** in 2023 from **$135.9 million** in 2022[382](index=382&type=chunk) - The decline was primarily due to a **$7.9 million loss on the sale of debt securities** in 2023, compared to a **$5.6 million gain on OREO sales** and a **$12.0 million OREO valuation markup** in 2022[382](index=382&type=chunk) - Other expense increased by **3.8%** to **$309.2 million** in 2023, driven by higher salaries (**+$5.9 million**) and data processing fees (**+$5.0 million**)[393](index=393&type=chunk)[394](index=394&type=chunk) - The efficiency ratio deteriorated to **65.87%** in 2023 from **61.24%** in 2022, indicating a decrease in operational efficiency[406](index=406&type=chunk) [CREDIT METRICS AND PROVISION FOR (RECOVERY OF) CREDIT LOSSES](index=71&type=section&id=CREDIT%20METRICS%20AND%20PROVISION%20FOR%20(RECOVERY%20OF)%20CREDIT%20LOSSES) Credit quality remained stable with a decrease in nonperforming assets, influenced by a change in accounting standards for troubled debt restructurings Allowance for Credit Losses (ACL) Activity | (In thousands) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | ACL, beginning balance | $85,379 | $83,197 | $85,675 | | Net charge-offs (recoveries) | $4,921 | $2,375 | $(3,348) | | Provision for (recovery of) credit losses | $2,904 | $4,557 | $(11,916) | | **ACL, ending balance** | **$83,745** | **$85,379** | **$83,197** | Key Credit Ratios (Year-End) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | ACL as a % of total loans | 1.12% | 1.20% | 1.21% | | Net charge-offs as a % of average loans | 0.07% | 0.03% | (0.05)% | | Nonperforming assets to total assets | 0.63% | 1.04% | 1.11% | - Total nonperforming assets decreased significantly to **$62.1 million** at year-end 2023 from **$102.5 million** at year-end 2022[425](index=425&type=chunk)[442](index=442&type=chunk) - This was largely due to the adoption of ASU 2022-02, which eliminated the Troubled Debt Restructuring (TDR) classification, removing **$20.1 million** from nonperforming loans[445](index=445&type=chunk) [CAPITAL RESOURCES](index=77&type=section&id=CAPITAL%20RESOURCES) Both Park and its subsidiary bank exceeded all 'well-capitalized' regulatory requirements, with total shareholders' equity increasing in 2023 Regulatory Capital Ratios (as of December 31, 2023) | Ratio | Park (Parent) | PNB (Bank) | Well-Capitalized Minimum (Bank) | | :--- | :--- | :--- | :--- | | Common Equity Tier 1 | 12.79% | 10.95% | 6.50% | | Tier 1 Risk-Based | 12.97% | 10.95% | 8.00% | | Total Risk-Based | 16.19% | 12.35% | 10.00% | | Leverage | 10.74% | 9.11% | 5.00% | - Both Park National Corporation and its subsidiary bank, PNB, exceeded all "well-capitalized" regulatory requirements as of December 31, 2023[487](index=487&type=chunk)[815](index=815&type=chunk) - Total shareholders' equity increased to **$1,145.3 million** at year-end 2023 from **$1,069.2 million** at year-end 2022[479](index=479&type=chunk) - This increase was driven by net income of **$126.7 million** and a **$36.2 million increase** in other comprehensive income, partially offset by **$68.7 million** in cash dividends[481](index=481&type=chunk)[531](index=531&type=chunk) [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=83&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents the audited consolidated financial statements for 2023, including balance sheets, income statements, and notes, with an unqualified audit opinion [Consolidated Balance Sheets](index=89&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets highlight total assets, net loans, investment securities, deposits, and shareholders' equity for 2023 and 2022 Consolidated Balance Sheet Highlights (Year-End) | (In millions) | 2023 | 2022 | | :--- | :--- | :--- | | Total Assets | $9,836.5 | $9,855.0 | | Net Loans | $7,392.5 | $7,056.5 | | Total Investment Securities | $1,429.1 | $1,820.8 | | Total Deposits | $8,042.6 | $8,234.7 | | Total Shareholders' Equity | $1,145.3 | $1,069.2 | [Consolidated Statements of Income](index=91&type=section&id=Consolidated%20Statements%20of%20Income) The consolidated income statements summarize net interest income, credit loss provisions, other income/expense, net income, and diluted EPS for 2021-2023 Consolidated Income Statement Summary | (In millions, except per share data) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net Interest Income | $373.1 | $347.1 | $329.9 | | Provision for (Recovery of) Credit Losses | $2.9 | $4.6 | $(11.9) | | Total Other Income | $92.6 | $135.9 | $129.9 | | Total Other Expense | $309.2 | $298.0 | $283.5 | | **Net Income** | **$126.7** | **$148.4** | **$153.9** | | **Diluted EPS** | **$7.80** | **$9.06** | **$9.37** | [Notes to Consolidated Financial Statements](index=97&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed notes provide context on accounting policies, loan portfolio composition, allowance for credit losses, and regulatory capital compliance - The company adopted ASU 2022-02 on January 1, 2023, which eliminated the Troubled Debt Restructuring (TDR) accounting model and enhanced disclosure requirements for loan modifications to borrowers experiencing financial difficulty[610](index=610&type=chunk)[612](index=612&type=chunk) - Note 5 provides a detailed breakdown of the **$7.48 billion** loan portfolio by class, including commercial, real estate, and consumer loans[642](index=642&type=chunk) - Note 6 details the Allowance for Credit Losses (ACL), showing a decrease in the ending balance to **$83.7 million** in 2023 from **$85.4 million** in 2022[685](index=685&type=chunk) - Note 28 confirms that both the parent company (Park) and the bank (PNB) met all well-capitalized ratio guidelines at year-end 2023[815](index=815&type=chunk) PART III [ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE](index=170&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) Information on directors, executive officers, and corporate governance practices is incorporated by reference from the 2024 Proxy Statement - Information regarding directors, executive officers, corporate governance, and the audit committee is incorporated by reference from the company's definitive Proxy Statement for the 2024 Annual Meeting of Shareholders[839](index=839&type=chunk)[840](index=840&type=chunk)[848](index=848&type=chunk) [ITEM 11. EXECUTIVE COMPENSATION](index=172&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) Details on executive and director compensation are incorporated by reference from the company's 2024 definitive Proxy Statement - Information regarding executive compensation is incorporated by reference from the company's definitive Proxy Statement for the 2024 Annual Meeting[849](index=849&type=chunk) [ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS](index=173&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Information on beneficial ownership and equity compensation plans is incorporated by reference from the company's 2024 Proxy Statement - Information regarding security ownership by beneficial owners and management, and details on equity compensation plans, is incorporated by reference from the company's 2024 Proxy Statement[851](index=851&type=chunk)[852](index=852&type=chunk) [ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE](index=173&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) Details on related person transactions and director independence are incorporated by reference from the company's 2024 Proxy Statement - Information regarding certain relationships, related party transactions, and director independence is incorporated by reference from the company's 2024 Proxy Statement[853](index=853&type=chunk)[854](index=854&type=chunk) [ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES](index=173&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) Information regarding principal accountant fees and services is incorporated by reference from the company's 2024 Proxy Statement - Information regarding principal accountant fees and services is incorporated by reference from the company's 2024 Proxy Statement[855](index=855&type=chunk) PART IV [ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES](index=174&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists all financial statements, schedules, and exhibits filed with the Form 10-K, including key corporate documents - This section lists all financial statements, schedules, and exhibits filed with the Form 10-K, including key corporate documents and management compensation plans[859](index=859&type=chunk)[863](index=863&type=chunk)