Park National (PRK)2025-02-24 21:16Loan Portfolio and Lending Practices - As of December 31, 2024, Park National Bank had 2,613 million in construction and residential real estate loans, representing about 33.4% of total loans outstanding[56]. - Park National Bank's consumer loans totaled 1,719 million from indirect lending[53]. - Commercial real estate loans are capped at 85% of the purchase price or appraised value, whichever is lower, to mitigate risk[47]. - The bank's internal loan review program evaluates all commercial loan relationships equal to or greater than 314 million in loans outstanding, primarily secured by aircraft[52]. Regulatory Environment and Compliance - Park is subject to extensive regulation by federal and state agencies, which may restrict its ability to repurchase common shares or receive dividends from Park National Bank[71]. - The Economic Growth, Regulatory Relief and Consumer Protection Act eased restrictions on bank holding companies with consolidated assets of less than 250,000 per separately insured depositor, backed by the full faith and credit of the U.S. government[94]. - The FDIC has established a designated reserve ratio (DRR) of 2.0%, with the DRR reaching 1.35% on September 30, 2018, and remaining below the statutory minimum of 1.35% as of December 31, 2024[97]. - The FDIC may impose special assessments in emergency situations, and the premiums fund the Deposit Insurance Fund (DIF)[96]. - Park became a financial holding company in 2014, allowing it to affiliate with securities firms and insurance companies[81]. - The Federal Reserve Board may require a financial holding company to contribute additional capital to an undercapitalized subsidiary bank[80]. - Park National Bank's total consolidated assets must remain below 133.8 million of total shareholders' equity was available for payment to Park without OCC approval[121]. - The Federal Reserve reduced reserve requirement ratios to zero percent effective March 26, 2020, which remains in effect as of December 31, 2024[125]. - Park National Bank is required to maintain a capital conservation buffer greater than 2.5% to pay dividends[120]. - The bank's management believes it meets the "well-capitalized" requirements, including a common equity tier 1 capital ratio of at least 6.5%[115]. - The Volcker Rule limits trading activities of insured depository institutions to mitigate risks associated with short-term profits[126]. - Park National Bank adopted the CECL model on January 1, 2021, impacting regulatory capital calculations[111]. - The CBLR threshold was temporarily lowered to 8.0% for 2020, increasing to 8.5% for 2021, and returning to 9.0% on January 1, 2022[112]. - The bank's ability to pay dividends is subject to regulatory authority discretion to maintain adequate capital levels[120]. - Park National Bank is subject to the Volcker Rule, which excludes community banks with total consolidated assets of $10.0 billion or less and total trading assets and liabilities of 5.0% or less[127]. Competition and Market Dynamics - Financial technology companies (fintechs) are providing strong competition for Park's borrowers and depositors[67]. - The primary factors in competing for loans include loan terms, interest rates, and overall services provided to borrowers[66]. Community and Social Responsibility - The bank received a "satisfactory" rating in its latest Community Reinvestment Act examination, which assesses its record in meeting the credit needs of the communities it serves[141]. - On October 24, 2023, federal banking agencies issued a final rule to modernize the CRA regulations, with applicability dates set for January 1, 2026, and January 1, 2027[142]. Cybersecurity and Risk Management - The SEC adopted final rules requiring public companies to disclose material cybersecurity incidents within four business days and to report on cybersecurity risk management annually[134]. - Park National Bank has established policies to comply with the Patriot Act, which broadens anti-money laundering laws and imposes new compliance obligations[138]. - The Anti-Money Laundering Act of 2020 modernizes U.S. bank secrecy and anti-money laundering laws, requiring a risk-based approach to compliance[139]. - The bank employs a layered cybersecurity approach, utilizing encryption and multi-factor authentication to protect sensitive data[136]. - Park National Bank is required to notify federal regulators of any computer-security incidents within 36 hours of determination[133]. - The bank's incentive compensation plans are designed to avoid encouraging inappropriate risks, in line with the Dodd-Frank Act[144]. - Park has adopted a clawback policy for incentive compensation to recover payments based on erroneous financial information[149]. Environmental and Regulatory Compliance - Park National Bank's operations may be significantly affected by potential legislative and regulatory changes, which could alter the cost of doing business and competitive dynamics[153]. - Compliance with environmental regulations has not materially impacted Park's capital expenditures or earnings, with no anticipated significant costs for environmental control facilities in the current fiscal year[154]. - Park's subsidiaries mitigate environmental risk by requiring environmental site assessments for loans on commercial real estate with potential environmental concerns[155]. Fair Lending and Consumer Protection - The Fair Housing Act prohibits discrimination in housing-related lending activities, ensuring equitable access to credit[155]. - The Home Mortgage Disclosure Act mandates data collection to assess if financial institutions meet housing credit needs in their communities[155]. - The Real Estate Settlement Procedures Act requires lenders to disclose settlement costs and prohibits abusive practices that increase borrower costs[155]. - The Fair Credit Reporting Act regulates the provision of consumer information to credit agencies, impacting credit reporting practices[155]. - The Fair Debt Collection Practices Act governs the collection of consumer debts, ensuring fair practices by collection agencies[155]. - The Truth in Savings Act mandates disclosure of deposit terms to consumers, promoting transparency in banking[155]. - The Electronic Funds Transfer Act outlines customer rights and liabilities related to electronic banking services, enhancing consumer protection[155].