10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009

OR

o 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 charter)

Ohio (State or other jurisdiction of incorporation or organization)	31-1179518 (I.R.S. Employer Identification No.)
50 North Third Street, P.O. Box 3500, Newark, Ohio (Address of principal executive offices)	43058-3500 (Zip Code)

(740) 349-8451
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Shares, without par value	NYSE Amex LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. þ Yes o No

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes þ No

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. þ Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). o Yes o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer o Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). o Yes þ No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the Registrant’s most recently completed second fiscal quarter: As of June 30, 2009, the aggregate market value of the Registrant’s common shares (the only common equity of the Registrant) held by non-affiliates of the Registrant was $765,345,287 based on the closing sale price as reported on NYSE Amex LLC. For this purpose, executive officers and directors of the Registrant are considered affiliates.

Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date.

Class	Outstanding at February 12, 2010
Common Shares, without par value	14,882,770 common shares

DOCUMENTS INCORPORATED BY REFERENCE

Document	Parts Into Which Incorporated
Portions of the Registrant’s 2009 Annual Report	Parts I and II
Portions of the Registrant’s Definitive Proxy Statement for the Annual Meeting of Shareholders to be held on April 19, 2010	Part III

Exhibit Index on Page E-1

PART I

ITEM 1. BUSINESS.

General

Park National Corporation (“Park”) is a bank holding company registered under the Bank Holding Company Act of 1956, as amended (the “Bank Holding Company Act”). Although Park was a financial holding company effective in December 2007, Park ceased to be a financial holding company effective June 30, 2008 and neither Park nor any of its subsidiaries engages in any of the activities permitted for a financial holding company but not a bank holding company.

Park was incorporated under Ohio law in 1992. Park’s principal executive offices are located at 50 North Third Street, Newark, Ohio 43055, and its telephone number is (740) 349-8451. Park’s common shares, each without par value (“Common Shares”), are listed on NYSE Amex LLC (“NYSE Amex”), under the symbol “PRK.”

Park maintains an Internet Web site at www.parknationalcorp.com (this uniform resource locator, or URL, is an inactive textual reference only and is not intended to incorporate Park’s Internet Web site into this Annual Report on Form 10-K). Park makes available free of charge on or through its Internet Web site Park’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well as Park’s definitive proxy statements filed pursuant to Section 14 of the Exchange Act, as soon as reasonably practicable after Park electronically files such material with, or furnishes it to, the Securities and Exchange Commission (the “SEC”).

Park’s principal business consists of owning and supervising its subsidiaries. Although Park directs the overall policies of its subsidiaries, including lending policies and financial resources, most day-to-day affairs are managed by its subsidiaries’ respective officers.

Subsidiary Banks

Through Park’s subsidiary banks:

• The Park National Bank (“Park National Bank”), a national banking association with its main office in Newark, Ohio and financial service offices in Ashland, Athens, Butler, Champaign, Clark, Clermont, Coshocton, Crawford, Darke, Fairfield, Fayette, Franklin, Greene, Hamilton, Hocking, Holmes, Knox, Licking, Madison, Marion, Mercer, Miami, Morrow, Muskingum, Perry, Richland, Tuscarawas and Warren Counties in Ohio and Boone County in Kentucky; and

• Vision Bank (“Vision Bank”), a Florida state-chartered bank with its main office in Panama City, Florida and financial service offices in Baldwin County, Alabama and in Bay, Gulf, Leon, Okaloosa, Santa Rosa and Walton Counties in the panhandle of Florida,

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Park engages in the commercial banking and trust business. This commercial banking and trust business is primarily conducted in small and medium population Ohio communities and, since Vision Bancshares, Inc. (“Vision”) merged with and into Park in March 2007 (the “Vision Merger”), in Gulf Coast communities in Alabama and the Florida panhandle.

Vision Bank operates 18 financial service offices in Gulf Coast communities in Baldwin County, Alabama and the Florida panhandle. Vision Bank operates through two banking divisions — Vision Bank headquartered in Panama City, Florida and the Vision Bank Division of Gulf Shores, Alabama.

Park National Bank operates 127 financial service offices in Ohio and Northern Kentucky through eleven banking divisions with: (i) the Park National Division headquartered in Newark, Ohio; (ii) the Fairfield National Division headquartered in Lancaster, Ohio; (iii) The Park National Bank of Southwest Ohio & Northern Kentucky Division headquartered in Milford, Ohio; (iv) the Century National Division headquartered in Zanesville, Ohio; (v) the Second National Division headquartered in Greenville, Ohio; (vi) the Richland Trust Division headquartered in Mansfield, Ohio; (vii) the United Bank Division headquartered in Bucyrus, Ohio; (viii) the First-Knox National Division headquartered in Mount Vernon, Ohio; (ix) the Farmers & Savings Bank Division headquartered in Loudonville, Ohio; (x) the Security National Division headquartered in Springfield, Ohio; and (xi) the Unity National Division headquartered in Piqua, Ohio.

Park’s two subsidiary banks comprise Park’s reportable segments. Financial information about Park’s reportable segments is included in Note 23 of the Notes to Consolidated Financial Statements located on page 73 of Park’s 2009 Annual Report. That financial information is incorporated herein by reference.

At December 31, 2009 and as of the date of this Annual Report on Form 10-K, Park’s subsidiary banks operated 145 financial service offices and a network of 168 automated teller machines.

Consumer Finance Subsidiary

Guardian Financial Services Company (“Guardian Finance”), an Ohio consumer finance company based in Hilliard, Ohio, also operates as a separate subsidiary of Park. Guardian Finance provides consumer finance services in the central Ohio area. As of the date of this Annual Report on Form 10-K, Guardian Finance had six financial service offices spanning six counties in Ohio: Clark, Fairfield, Franklin, Licking, Montgomery and Richland. Financial information about Guardian Finance is included in the “All Other” category for purposes of the reportable segment information included in Note 23 of the Notes to Consolidated Financial Statements located on page 73 of Park’s 2009 Annual Report. This financial information is immaterial for purposes of separate disclosure.

Leasing Subsidiaries

Scope Leasing, Inc. (which does business as “Scope Aircraft Finance”), a subsidiary of Park National Bank, specializes in aircraft financing. The customers of Scope Aircraft Finance include small businesses and entrepreneurs intending to use the aircraft for business or pleasure. Scope Aircraft Finance serves customers throughout the United States of America (the “United States”) and Canada.

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A former subsidiary of Park National Bank, Park Leasing Company (“Park Leasing”), was dissolved effective on December 31, 2009 after winding down its operations. Park Leasing was formed in 2001 for the purpose of participating in an automobile leasing program with a major national insurance company. However, that program was terminated during the fourth quarter of 2004.

Ohio-Based Insurance Agency Subsidiary

Park National Bank has an insurance agency subsidiary, Park Insurance Group, Inc. (“Park Insurance Group”). Park Insurance Group was formed in 2002 and offers life insurance and other insurance products through licensed representatives who work for divisions of Park National Bank. However, Park Insurance Group’s results to date have not been material to the consolidated entity.

Title Agency Subsidiary

As of the date of this Annual Report on Form 10-K, Park National Bank held 49% of the ownership interest of Park Title Agency, LLC. (“Park Title Agency”). Park Title Agency is a traditional title agency serving the central Ohio area. Park sold 31% of the ownership interest in Park Title Agency to the other member of Park Title Agency for $200,000 in February 2009.

Vision Bank Networking

Vision Bank conducts permissible insurance and securities networking activities under the d/b/a “Vision Bancshares Financial Group.” In an agency capacity, Vision Bancshares Financial Group offers its customers fixed and variable annuities, life insurance, property and casualty insurance and investment products. The securities activities of Vision Bancshares Financial Group consist primarily of selling equity securities, municipal bonds, agency bonds, corporate bonds, mutual funds and variable rate annuities on a retail basis, through duly licensed and qualified employees and pursuant to a third-party networking agreement. Since the consummation of the Vision Merger, the results of Vision Bancshares Financial Group have not been material to the consolidated entity.

Vision Bancshares Trust I

In connection with the Vision Merger, Park entered into a First Supplemental Indenture, dated as of the effective time of the Vision Merger (the “First Supplemental Indenture”), with Vision and Wilmington Trust Company, a Delaware banking corporation, as Trustee. Under the terms of the First Supplemental Indenture, Park assumed all of the payment and performance obligations of Vision under the Junior Subordinated Indenture, dated as of December 5, 2005 (the “Indenture”), pursuant to which Vision issued $15.5 million of junior subordinated debentures to Vision Bancshares Trust I, a Delaware statutory trust (the “Vision Trust”). The junior subordinated debentures were issued by Vision in connection with the sale by the Vision Trust of $15.0 million of floating rate preferred securities to institutional investors on December 5, 2005.

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Under the terms of the First Supplemental Indenture, Park also succeeded to and was substituted for Vision with the same effect as if Park had originally been named (i) as “Depositor” in the Amended and Restated Trust Agreement of the Vision Trust, dated as of December 5, 2005 (the “Trust Agreement”), among Vision, Wilmington Trust Company, as Property Trustee and as Delaware Trustee, and the Administrative Trustees named therein and (ii) as “Guarantor” in the Guarantee Agreement, dated as of December 5, 2005 (the “Guarantee Agreement”), between Vision and Wilmington Trust Company, as Guarantee Trustee. Through these contractual obligations, Park has fully and unconditionally guaranteed all of the Vision Trust’s obligations with respect to the floating rate preferred securities.

Both the junior subordinated debentures and the floating rate preferred securities mature on December 30, 2035 (which maturity may be shortened to a date not earlier than December 30, 2010), and carry a floating interest rate per annum, reset quarterly, equal to the sum of three-month LIBOR plus 148 basis points. Payment of interest on the junior subordinated debentures, and payment of cash distributions on the floating rate preferred securities, may be deferred at any time or from time to time for a period not to exceed twenty consecutive quarters, subject to specified conditions.

Under the terms of the Indenture and the related Guarantee Agreement, Park, as successor to Vision in accordance with the First Supplemental Indenture, is prohibited, subject to limited exceptions, from declaring or paying dividends or distributions on, or redeeming, repurchasing, acquiring or making any liquidation payments with respect to, any shares of Park’s capital stock (i) if an event of default under the Indenture has occurred and continues; (ii) if Park is in default with respect to the payment of any obligations under the Guarantee Agreement; or (iii) during any period in which the payment of interest on the junior subordinated debentures by Park (and the payment of cash distributions on the floating rate preferred securities by the Vision Trust) is being deferred.

Other Subsidiaries

Park Investments, Inc., which is a subsidiary of Park National Bank, operates as an asset management company. Its operations are not significant to the consolidated entity.

The following subsidiaries operate as capital management companies: (i) Park Capital Investments, Inc. (“Park Capital”), a subsidiary of Park; (ii) Park National Capital LLC, whose members are Park Capital and Park National Bank; (iii) First-Knox National Capital LLC, whose members are Park Capital and Park National Bank (as successor by merger to The First-Knox National Bank of Mount Vernon); (iv) Security National Capital LLC, whose members are Park Capital and Park National Bank (as successor by merger to The Security National Bank and Trust Co.); and (v) Century National Capital LLC, whose members are Park Capital and Park National Bank (as successor by merger to Century National Bank). The operations of these subsidiaries are also not significant to the consolidated entity.

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Recent Developments

Participation in Capital Purchase Program Enacted as part of Troubled Assets Relief Program

On December 23, 2008, Park completed the sale to the United States Department of the Treasury (the “U.S. Treasury”) of $100.0 million of newly-issued Park non-voting preferred shares as part of the U.S. Treasury’s Capital Purchase Program (the “CPP”) enacted as part of the Troubled Assets Relief Program (“TARP”) under the Emergency Economic Stabilization Act of 2008 (the “EESA”). To finalize Park’s participation in the CPP, Park and the U.S. Treasury entered into a Letter Agreement, dated December 23, 2008 (the “Letter Agreement”), including the related Securities Purchase Agreement — Standard Terms attached thereto (the “Securities Purchase Agreement” and together with the Letter Agreement, the “UST Agreement”). Pursuant to the UST Agreement, Park issued and sold to the U.S. Treasury (i) 100,000 of Park’s Fixed Rate Cumulative Perpetual Preferred Shares, Series A, each without par value and having a liquidation preference of $1,000 per share (the “Series A Preferred Shares”), and (ii) a warrant (the “Warrant”) to purchase 227,376 Park Common Shares, at an exercise price of $65.97 per share (subject to certain anti-dilution and other adjustments), for an aggregate purchase price of $100.0 million in cash. The Warrant has a ten-year term. All of the proceeds from the sale of the Series A Preferred Shares and the Warrant by Park to the U.S. Treasury under the CPP will qualify as Tier 1 capital for regulatory purposes. The issuance and sale to the U.S. Treasury of the Series A Preferred Shares and the Warrant was a private placement exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(2) of the Securities Act. In the Securities Purchase Agreement, the U.S. Treasury has agreed not to vote any of the Common Shares it receives upon exercise of the Warrant. Any Common Shares issued by Park upon exercise of the Warrant will be issued from Common Shares held in treasury by Park.

Under standardized CPP terms, cumulative dividends on the Series A Preferred Shares will accrue on the liquidation preference at a rate of 5% per annum from December 23, 2008 to, but excluding, February 15, 2014 and at a rate of 9% per annum from and after February 14, 2014, but will be paid only if, as and when declared by Park’s Board of Directors. The Series A Preferred Shares have no maturity date and rank senior to the Park Common Shares with respect to the payment of dividends and distributions and amounts payable upon liquidation, dissolution and winding up of Park.

The American Recovery and Reinvestment Act of 2009 (the “ARRA”) passed by the United States Congress and signed by the President on February 17, 2009, provides that the U.S. Treasury, subject to consultation with the appropriate federal banking agency, must permit a TARP recipient to repay any assistance previously provided under TARP, without regard to whether the TARP recipient has replaced those funds from any other source or to any waiting period. As a result, subject to consultation with the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), the U.S. Treasury must permit Park to redeem the Series A Preferred Shares at the appropriate redemption price without regard to whether the redemption price is to be paid from proceeds of a qualified equity offering or any other source or when the redemption date occurs. If the Series A Preferred Shares were redeemed, Park would also have the right to repurchase the related Warrant for its appraised market value. If Park chose not to repurchase the Warrant, the U.S. Treasury may liquidate the Warrant. The U.S. Treasury has provided guidance, in the form of FAQs issued on February 26, 2009 and in May 2009, as to the procedures under which a TARP participant may repay any assistance received. If Park seeks to repay any assistance received under the CPP, Park will be subject to the existing supervisory procedures for approving redemption requests for capital instruments. Supervisors would weigh Park’s desire to redeem outstanding Series A Preferred Shares against the contribution of U.S. Treasury capital to Park’s overall soundness, capital adequacy and ability to lend, including confirming that Park has a comprehensive internal capital assessment process.

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The Securities Purchase Agreement contains limitations on the payment of dividends on the Common Shares from and after December 23, 2008 (including with respect to the payment of cash dividends in excess of $0.94 per share, which is the amount of the last quarterly cash dividend declared by Park prior to October 14, 2008). Park may not pay dividends on Park Common Shares (other than dividends payable solely in Common Shares) if Park is in arrears on the payment of Series A Preferred Share dividends. Prior to the earlier of (i) December 23, 2011 and (ii) the date on which the Series A Preferred Shares have been redeemed in whole or the U.S. Treasury has transferred the Series A Preferred Shares to unaffiliated third parties, Park may not declare or pay any dividend or make any distribution on the Park Common Shares other than: (i) regular quarterly dividends not exceeding $0.94 per share; and (ii) dividends payable solely in Park Common Shares. In addition, unless the Series A Preferred Shares have been transferred to unaffiliated third parties or have been redeemed in whole, until December 23, 2011, the U.S. Treasury’s consent would be required for any repurchases of (i) Common Shares or other capital stock or other equity securities of any kind of Park or (ii) any trust preferred securities issued by Park or any affiliate of Park, other than (x) repurchases of the Series A Preferred Shares, (y) purchases of junior preferred shares or Common Shares in connection with the administration of any employee benefit plan in the ordinary course of business and consistent with past practice and (z) purchases under certain other limited circumstances specified in the Securities Purchase Agreement. Further, Common Shares may not be repurchased by Park if Park is in arrears on the payment of Series A Preferred Share dividends.

In the Securities Purchase Agreement, Park adopted the U.S. Treasury’s standards for executive compensation and corporate governance for the period during which the U.S. Treasury owns any securities acquired from Park pursuant to the Securities Purchase Agreement or upon exercise of the Warrant. These standards generally apply to Park’s executive officers. The ARRA retroactively amends the executive compensation and corporate governance provisions applicable to participants in the CPP. On June 15, 2009, the U.S. Treasury established executive compensation and corporate governance standards applicable to TARP recipients, including Park, and their subsidiaries by publishing an interim final rule under 31 C.F.R. Part 30. On December 7, 2009, the U.S. Treasury published technical amendments to the interim final rule (collectively, the interim final rule published on June 15, 2009 and the amendments published on December 7, 2009 are referred to as the “Interim Final Rule”). The executive compensation and corporate governance standards established under the ARRA and the Interim Final Rule remain in effect during the period in which any obligation arising from financial assistance provided under TARP remains outstanding, excluding any period during which the U.S. Treasury holds only warrants to purchase Common Shares of Park. The ARRA and the Interim Final Rule impose limitations on Park’s executive compensation practices. Please see the discussion of the standards for executive compensation and corporate governance under the EESA, the ARRA and the Interim Final Rule in the section captioned “Supervision and Regulation of Park and its Subsidiaries — Capital Purchase Program” below. The ARRA and the Interim Final Rule also require that the Park Board of Directors adopt a Company-wide policy regarding “excessive or luxury expenditures,” which was adopted on September 4, 2009, and post this policy on its Internet Web site.

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2009 Capital Raising Activities

At-the-Market Offering

On May 27, 2009, Park and Park National Bank entered into a Distribution Agreement (the “Distribution Agreement”) with Sandler O’Neill + Partners, L.P. (the “Sales Agent”). Park could offer and sell Common Shares from time to time pursuant to the Distribution Agreement through the Sales Agent by means of ordinary brokers’ transactions on NYSE Amex at market prices, in block transactions or as otherwise agreed with the Sales Agent (the “At-the-Market Offering”).

During the period from May 27, 2009 through September 30, 2009, Park sold 288,272 Common Shares in the At-the-Market Offering through the Sales Agent. The aggregate gross proceeds from such sales were $17.5 million, and the aggregate compensation paid to the Sales Agent was $0.5 million. The aggregate net proceeds to Park from such sales were approximately $16.7 million, after deducting compensation to the Sales Agent and legal and accounting fees.

Park terminated the Distribution Agreement on January 27, 2010 and no further Common Shares will be offered or sold pursuant to the At-the-Market Offering.

Registered Direct Public Offering

On October 26, 2009, Park entered into a letter agreement with Rodman & Renshaw, LLC (the “Placement Agent”), pursuant to which the Placement Agent agreed to act as exclusive placement agent on a “reasonable best efforts” basis in connection with the sale of 500,000 Common Shares together with Series A Warrants and Series B Warrants (the Series A Warrants and the Series B Warrants are collectively referred to as the “RDPO Warrants”) in the Registered Direct Public Offering described below. Park agreed in the letter agreement to pay the Placement Agent an aggregate fee equal to 3% of the gross proceeds from the sale of the Common Shares and RDPO Warrants in the Registered Direct Public Offering, plus 3% of the aggregate gross proceeds Park receives, if any, from the exercise of the RDPO Warrants. Park also agreed to reimburse the Placement Agent for all reasonable travel and other out-of-pocket expenses incurred by the Placement Agent in connection with the Registered Direct Public Offering, including the reasonable fees and expenses of the Placement Agent’s counsel, up to a maximum of $35,000.

On October 27, 2009, Park entered into Securities Purchase Agreements with certain institutional investors, pursuant to which Park agreed to sell, in a registered direct public offering, (i) an aggregate of 500,000 Common Shares, (ii) Series A Common Share Warrants, which are exercisable on or prior to the close of business on April 30, 2010, to purchase up to an aggregate of 250,000 Common Shares (the “Series A Warrants”), and (iii) Series B Common Share Warrants, which are exercisable on or prior to the closing of business on October 30, 2010, to purchase up to an aggregate of 250,000 Common Shares (the “Series B Warrants”) for total gross proceeds of approximately $30.8 million (the “Registered Direct Public Offering”). The aggregate compensation paid to the Placement Agent was $0.9 million. The aggregate net proceeds to Park from the Registered Direct Public Offering were approximately $29.8 million, after deducting compensation to the Placement Agent and legal and accounting fees.

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The purchase price for each Common Share together with one-half of a Series A Warrant and one-half of a Series B Warrant was $61.59 (the “Per Share Purchase Price”), which was the closing price of Park’s Common Shares on October 26, 2009. The purchase price for each Common Share with no RDPO Warrants was $60.00. The purchase price for a combination of one-half of a Series A Warrant and one-half of a Series B Warrant was $1.59. Each RDPO Warrant entitles the investor to purchase one Common Share at $67.75, or 110% of the Per Share Purchase Price, subject to anti-dilution provisions that require adjustment to reflect stock dividends and splits, pro-rata distributions, certain cash dividends and certain fundamental transactions.

Sale of Common Shares to Pension Plan

On November 17, 2009, Park entered into a Subscription Agreement for Common Shares of Park National Corporation (the “Subscription Agreement”) with the Park National Corporation Defined Benefit Pension Plan (the “Subscriber”), pursuant to which the Subscriber agreed to purchase 115,800 Common Shares. The purchase price for the Common Shares was $60.45 per share, which was the closing price of the Common Shares on November 16, 2009. The aggregate proceeds to Park from the sale of Common Shares to the Subscriber pursuant to the Subscription Agreement were $7,000,110. The Common Shares were sold in reliance upon the exemptions from the Securities Act registration requirements provided by Section 4(6) of the Securities Act and Rule 506 promulgated under the Securities Act.

Sale of Subordinated Notes

On December 23, 2009, Park entered into a Subordinated Note Purchase Agreement, dated December 23, 2009 (the “Note Purchase Agreement”), with 38 purchasers (each, a “Subordinated Note Purchaser” and collectively, the “Subordinated Note Purchasers”). Each Subordinated Note Purchaser represented that such Purchaser qualifies as an “accredited investor” within the meaning of Rule 501(a) of Regulation D promulgated under the Securities Act. Under the terms of the Note Purchase Agreement, the Subordinated Note Purchasers purchased from Park an aggregate principal amount of $35,250,000 of 10% Subordinated Notes due December 23, 2019 (individually, a “Subordinated Note” and collectively, the “Subordinated Notes”). The sale to the Subordinated Note Purchasers of the Subordinated Notes was exempt from the Securities Act registration requirements pursuant to Section 4(6) of the Securities Act and Rule 506 promulgated under the Securities Act. The Subordinated Notes are intended to qualify as Tier 2 Capital under applicable rules and regulations of the Federal Reserve Board. Each Subordinated Note was purchased at a purchase price of 100% of the principal amount thereof.

The Subordinated Notes mature on December 23, 2019 and are not secured by any assets of Park or any other collateral.

Interest on the Subordinated Notes is payable, in accordance with the terms of the Note Purchase Agreement and the form of Subordinated Note, at a fixed rate of 10 percent per annum, with interest payment dates of March 31, June 30, September 30 and December 31 of each year, beginning on December 31, 2009. Interest due on the Subordinated Notes is computed on the basis of a 360-day year of twelve 30-day months.

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The Subordinated Notes may not be prepaid by Park prior to December 23, 2014. From and after December 23, 2014, Park may prepay all, or from time to time, any part of the Subordinated Notes at 100% of the principal amount (plus accrued interest) without penalty, subject to any requirement under Federal Reserve Board regulations to obtain prior approval from the Federal Reserve Board before making any prepayment.

The Note Purchase Agreement requires Park to, among other things, (i) maintain such capital as may be necessary to at all times qualify as “well-capitalized” under Federal Reserve Board regulations and (ii) restructure any portion of the Subordinated Notes that ceases to be deemed Tier 2 Capital (other than due to the limitation imposed by the Federal Reserve Board on the capital treatment of subordinated debt during the five years immediately preceding the maturity date of the Subordinated Notes).

If an event of default under the Note Purchase Agreement has occurred and is continuing, the Note Purchase Agreement restricts, among other things, Park’s ability to (i) declare or pay dividends on, make distributions with respect to, or redeem, repurchase or make any liquidation payment with respect to, any of its capital stock and (ii) make any payments of interest, principal or premium on, or repay, repurchase or redeem, any of Park’s indebtedness that ranks equally with or junior to the Subordinated Notes.

The Subordinated Notes may not be declared due and payable or otherwise accelerated unless (i) there is a petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law, or (ii) Park or any of its subsidiaries files for bankruptcy or liquidation, and then only if the holders of more than 50% of the principal amount of the Subordinated Notes at that time outstanding (the “Required Holders”) elect to do so and the Federal Reserve Board approves such acceleration, if such approval is required. In addition, if Park receives written notification from the Federal Reserve Board that the Subordinated Notes do not constitute Tier 2 Capital and thereafter any event of default occurs, the Required Holders may declare the Subordinated Notes immediately due and payable.

Summary of 2009 Capital Raising Activities

During 2009, Park sold, through the At-the-Market Offering, the Registered Direct Public Offering and the sale of Common Shares to the Subscriber, an aggregate of 904,072 Common Shares and 500,000 RDPO Warrants at a purchase price of $61.20 per average weighted share, for aggregate gross proceeds of $55.3 million and aggregate net proceeds of $53.5 million, after deducting payments to agents and legal and accounting fees. In addition, Park raised $35.25 million through the issuance of the Subordinated Notes. The aggregate gross proceeds from these capital raising activities were approximately $90.55 million and the net proceeds to Park from these capital raising activities, after deducting selling and due diligence expenses, were approximately $89 million.

Park will use the net proceeds from the 2009 capital raising activities for general corporate purposes and to help position Park to (i) redeem a portion or all of the Series A Preferred Shares and (ii) repurchase the Warrant, if and when applicable circumstances indicate that such redemption and repurchase are permitted and appropriate. When property values and problem asset ratios stabilize, Park intends to seek permission to redeem the Series A Preferred Shares and repurchase the Warrant and to cease participation in the CPP.

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Services Provided by Park’s Subsidiaries

Each of Park’s subsidiary banks and their respective divisions provide the following principal services:

• the acceptance of deposits for demand, savings and time accounts and the servicing of those accounts;

• commercial, industrial, consumer and real estate lending, including installment loans, credit cards (which, except for home-equity-based credit cards, are offered through a third party), home equity lines of credit and commercial leasing;

• trust and wealth management services;

• cash management;

• safe deposit operations;

• electronic funds transfers;

• online Internet banking with bill pay service; and

• a variety of additional banking-related services tailored to the needs of individual customers.

Park believes that the deposit mix of its subsidiary banks is such that no material portion has been obtained from a single customer and, consequently, the loss of any one customer of any subsidiary bank would not have a materially adverse effect on the business of that subsidiary bank or Park.

Guardian Finance also provides consumer finance services.

Lending Activities

Park’s subsidiary banks deal with consumers as well as with a wide cross-section of businesses and corporations located primarily in (i) the 28 Ohio counties and one Kentucky county served by the financial service offices of Park National Bank and (ii) the six Florida counties and one Alabama county serviced by the financial services offices of Vision Bank. Relatively few loans are made to borrowers outside these counties. Each subsidiary bank makes lending decisions in accordance with the written loan policy adopted by Park which is designed to maintain acceptable loan quality. Each subsidiary bank originates and retains for its own portfolio commercial and commercial real estate loans, variable rate residential real estate loans, home equity lines of credit, and installment loans. Each subsidiary bank also generates fixed rate residential real estate loans for sale to the secondary market.

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Guardian Finance originates and retains for its own portfolio consumer installment loans. Guardian Finance makes lending decisions in accordance with the written loan policy adopted and approved by the Guardian Finance Board of Directors.

There are certain risks inherent in making loans. These risks include interest rate changes over the time period in which the loans may be repaid, risks resulting from changes in the national and local economies, risks inherent in dealing with borrowers and, in the case of loans secured by collateral, risks resulting from uncertainties about the future value of the collateral.

Park has implemented two significant changes to Vision Bank’s underwriting procedures since the Vision Merger:

• Prior to the Vision Merger, Vision Bank’s underwriting did not necessarily include a thorough examination of the full scope of each borrower’s situation. Vision Bank’s underwriting was more akin to traditional project financing, narrowly focused on the merits of a particular project. Since the Vision Merger, Vision Bank’s underwriting now includes a full underwriting examination of all material aspects of the operations of the borrower (with the borrower defined as both the direct obligor and any guarantor) including:

• ancillary businesses that comprise a material portion of the borrower’s cash flow;

• contingent debt obligations;

• verification of liquidity; and

• analysis of the probability that cash flow from “gains on sale” will continue.

• The Park policies are more limiting in terms of speculative financing than the Vision Bank policy prior to the Vision Merger had been.

Additionally, commercial real estate loan limits have been implemented so that exposure to specific segments of the commercial real estate market (e.g., homebuilders, condominium projects, acquisition & development, raw land) are limited to a percentage of Park’s capital. These limits prevent Vision Bank from making certain types of commercial real estate loans.

Commercial Loans

At December 31, 2009, Park’s subsidiaries (including Scope Aircraft Finance) had approximately $1,885 million in commercial loans (commercial, financial and agricultural loans and commercial real estate loans) and commercial leases outstanding, representing approximately 41% of their total aggregate loan portfolio as of that date. Of this amount, approximately $751 million represented commercial, financial and agricultural loans, $1,131 million represented commercial real estate loans and $3 million represented commercial leases. Vision Bank had approximately $212 million in commercial loans outstanding at December 31, 2009, representing approximately 31% of Vision Bank’s aggregate loan portfolio at that date. Of this amount, approximately $70 million represented commercial, financial and agricultural loans and approximately $142 million represented commercial real estate loans.

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Commercial loans are made for a wide variety of general corporate purposes, including financing for industrial and commercial properties, financing for equipment, inventories and accounts receivable, acquisition financing and commercial leasing. The term of each commercial loan varies by its purpose. Repayment terms are structured such that commercial loans will be repaid within the economic useful life of the underlying asset. Information concerning the loan maturity distribution within the commercial loan portfolio is provided in Table 3 included in the section of Park’s 2009 Annual Report captioned “FINANCIAL REVIEW,” on page 36, and is incorporated herein by reference.

The commercial loan portfolio includes loans to a wide variety of corporations and businesses across many industrial classifications in (i) the 28 Ohio counties and one Kentucky county where Park National Bank operates and (ii) the six Florida counties and one Alabama county where Vision Bank operates. The primary industries represented by these customers include commercial real estate leasing, manufacturing, retail trade, health care and other services.

Commercial loans are evaluated for the adequacy of repayment sources at the time of approval and are regularly reviewed for any possible deterioration in the ability of the borrower to repay the loan. The credit information required generally includes, depending on the amount of money lent, fully completed financial statements, third-party prepared financial statements, two years of federal income tax returns and a current credit report. Loan terms include amortization schedules commensurate with the purpose of each loan, the source of each repayment and the risk involved. In most instances, collateral is required to provide an additional source of repayment in the event of default by a commercial borrower. The structure of the collateral package, including the type and amount of the collateral, varies from loan to loan depending on the financial strength of the borrower, the amount and terms of the loan and the collateral available to be pledged by the borrower. Most often, the collateral is inventory, machinery, accounts receivable or real estate. The guarantee of the principals is generally required on loans made to closely-held business entities.

Commercial real estate loans (“CRE loans”) include mortgage loans to developers and owners of commercial real estate. The lending policy for CRE loans is designed to address the unique risk attributes of CRE lending. The collateral for these CRE loans is the underlying commercial real estate. Each subsidiary bank generally requires that the CRE loan amount be no more than 85% of the purchase price or the appraised value of the commercial real estate securing the CRE loan, whichever is less. CRE loans made for each subsidiary bank’s portfolio generally have a variable interest rate. A CRE loan may be made with a fixed interest rate for a term generally not exceeding five years. For more information, please see Table 3 included in the section of Park’s 2009 Annual Report captioned “FINANCIAL REVIEW” on page 36, which is incorporated herein by reference.

The regulatory limit for loans made to one borrower by Park National Bank was $89.9 million at December 31, 2009. Vision Bank’s regulatory limits for loans made to one borrower were $23.6 million for a secured loan or $14.2 million for an unsecured loan, at December 31, 2009. Participations in a loan by one or both of Park’s subsidiary banks in an amount larger than $20.0 million are generally sold to third-party banks or financial institutions based on an internal Park loan policy. While Park National Bank has a loan limit of $89.9 million, total indebtedness of the largest single borrower within the commercial portfolio was $24.7 million at December 31, 2009.

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Park has a loan review program which annually evaluates substantially all (generally, about 90%) of the loans with an outstanding balance greater than $250,000. If deterioration has occurred, the lender subsidiary takes prompt action designed to increase the likelihood of payment of the loan. Upon detection of the reduced ability of a borrower to service interest and/or principal on a loan, the subsidiary may downgrade the loan and, under certain circumstances, place the loan on nonaccrual status. The subsidiary then works with the borrower to develop a payment schedule which the subsidiary anticipates will permit service of the principal and interest on the loan by the borrower. Loans which deteriorate and show the inability of a borrower to repay principal and do not meet the subsidiary’s standards are charged off. A work-out officer is available to assist each subsidiary when a credit deteriorates. Information about Park’s policy for placing loans on nonaccrual status is included under the caption “Loans” in Note 1 of the Notes to Consolidated Financial Statements located on page 56 of Park’s 2009 Annual Report, and is incorporated herein by reference.

Commercial loans are generally viewed as having a higher credit risk than consumer loans because commercial loans usually involve larger loan balances to a single borrower and are more susceptible to a risk of default during an economic downturn. Since commercial loans generally have variable interest rates, an increase in interest rates increases the debt service requirement for the borrower, and a decrease in interest rates decreases the debt service requirement for the borrower. The Park pricing strategy generally does not include low introductory or “teaser” rates. Initial rates are often priced at a premium relative to the fully-indexed rates. Park uses several indices for commercial loans. However, the national prime rate is the most common index Park uses. Credit risk for commercial loans arises from borrowers lacking the ability or willingness to pay principal or interest and, in the case of secured loans, by a shortfall in the collateral value in relation to the outstanding loan balance in the event of a default and subsequent liquidation of collateral. The underwriting of all commercial loans, regardless of type, includes cash flow analyses with rates shocked 400 basis points. In the case of commercial loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of each borrower to collect amounts due from its customers. Other collateral securing commercial loans may depreciate over time, may be difficult to appraise and may fluctuate in value based on the success of the borrower’s business. Information concerning the loan loss experience and allowance for loan losses related to the commercial, financial and agricultural loan portfolio and the commercial real estate portfolio is provided in Tables 7 and 8 included in the section of Park’s 2009 Annual Report captioned “FINANCIAL REVIEW,” on page 40, and is incorporated herein by reference.

Aircraft Financing

Scope Aircraft Finance specializes in aircraft financing. The customers of Scope Aircraft Finance include small businesses and entrepreneurs intending to use the aircraft for business or pleasure. The customers of Scope Aircraft Finance are located throughout the United States. The lending officers of Scope Aircraft Finance are experienced in the aircraft financing industry and rely upon that experience and industry guides in determining whether to grant an aircraft loan or lease. At December 31, 2009, Scope Aircraft Finance had outstanding approximately $145 million in loans primarily secured by aircraft (which are included in the commercial loan portfolio).

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Consumer Loans

At December 31, 2009, Park’s subsidiary banks, together with Guardian Finance, had outstanding consumer loans (including automobile leases and home-equity-based credit cards) in an aggregate amount of approximately $704 million, constituting approximately 15% of their aggregate total loan portfolio. These subsidiaries make installment credit available to customers and prospective customers in their primary market areas of (i) central and southern Ohio and Northern Kentucky for Park National Bank and (ii) the Gulf Coast communities in Baldwin County, Alabama and the Florida panhandle for Vision Bank.

Credit approval for consumer loans requires income sufficient to repay principal and interest due, stability of employment, an established credit record and sufficient collateral for secured loans. It is the policy of Park’s subsidiaries to adhere strictly to all laws and regulations governing consumer lending. A compliance officer is responsible for monitoring each subsidiary’s performance and advising and updating loan personnel in this area. Each subsidiary reviews its consumer loan portfolio monthly and charges off loans which do not meet Park’s standards. Information about Park’s policy for placing loans on nonaccrual status is included under the caption “Loans” in Note 1 of the Notes to Consolidated Financial Statements located on page 56 of Park’s 2009 Annual Report, and is incorporated herein by reference. Each subsidiary bank and its divisions (other than The Park National Bank of Southwest Ohio & Northern Kentucky division of Park National Bank) also offers home-equity-based credit card accounts through its consumer lending department. These accounts are administered under the same standards as other consumer loans and leases.

Consumer loans typically have shorter terms and lower balances with higher yields as compared to real estate mortgage loans, but generally carry higher risks of default. Consumer loan collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be affected by adverse personal circumstances. Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount that can be recovered on these loans. Information concerning the loan loss experience and allowance for loan losses related to the consumer loan portfolio is provided in Tables 7 and 8 included in the section of Park’s 2009 Annual Report captioned “FINANCIAL REVIEW,” on page 40, and is incorporated herein by reference.

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Residential Real Estate and Construction Loans

At December 31, 2009, Park’s subsidiary banks had outstanding approximately $2,051 million in residential real estate, home equity lines of credit and construction mortgages, representing approximately 44% of total loans outstanding. Of this amount, approximately $1,275 million represented residential real estate loans, $280 million represented home equity lines of credit and $496 million represented construction loans. Of the $496 million in construction loans, $89 million are 1-4 family residential construction loans, and the remaining $407 million are commercial land and development (“CL&D”) loans. The market area for real estate lending by the subsidiary banks is concentrated in (i) central and southern Ohio and Northern Kentucky for Park National Bank and (ii) the Gulf Coast communities in Baldwin County, Alabama and the Florida panhandle for Vision Bank. Park had approximately $20.6 million of net charge-offs resulting from construction loans ($2.0 million related to 1-4 family residential construction loans and $18.6 million related to CL&D loans) during the year ended December 31, 2009. Vision Bank accounted for approximately $17.2 million ($1.6 million related to 1-4 family residential construction loans and $15.6 million related to CL&D loans), or 84%, of this total. At December 31, 2009, Vision Bank had approximately $235 million outstanding in construction loans ($17 million of 1-4 family residential construction loans and $218 million of CL&D loans), or 47% of Park’s consolidated total at the end of 2009. In addition to construction loans, Vision Bank had approximately $180 million of residential real estate loans and $44 million of home equity lines of credit.

Credit approval for residential real estate loans requires demonstration of sufficient income to repay the principal and interest and the real estate taxes and insurance, stability of employment, an established credit record and the appropriate appraised value of the real estate securing the loan. All loans are sent through automated underwriting to determine a risk classification. All loans receiving a risk classification of caution require review by a senior lender and generally require additional documentation if the loan is approved.

Each subsidiary bank generally requires that the residential real estate loan amount be no more than 80% of the purchase price or the appraised value of the real estate securing the loan, whichever is less, unless private mortgage insurance is obtained by the borrower. Loans made for each subsidiary bank’s portfolio in this lending category are generally adjustable rate, fully amortized mortgages. The rates used are generally fully-indexed rates. Park generally does not price residential loans using low introductory “teaser” rates. Each subsidiary bank also originates fixed rate real estate loans for the secondary market. These loans are generally sold immediately after closing. All real estate loans are secured by first mortgages with evidence of title in favor of the subsidiary bank in the form of an attorney’s opinion of title or a title insurance policy. Each subsidiary bank also requires proof of hazard insurance with the subsidiary bank named as the mortgagee and as the loss payee. Independent appraisals are generally obtained for consumer real estate loans.

Home equity lines of credit are generally made as second mortgages by Park’s subsidiary banks. The maximum amount of a home equity line of credit is generally limited to 85% of the appraised value of the property less the balance of the first mortgage. For Vision Bank, this percentage can be as high as 89.9% depending on the credit score and debt-to-income ratio of the borrower. The home equity lines of credit are written with ten-year terms for Park National Bank and 25-year terms for Vision Bank. A variable interest rate is generally charged on the home equity lines of credit.

Information concerning the loan loss experience and allowance for loan losses related to the residential real estate portfolio is provided in Tables 7 and 8 included in the section of Park’s 2009 Annual Report captioned “FINANCIAL REVIEW,” on page 40, and is incorporated herein by reference.

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Construction loans include commercial construction loans as well as residential construction loans. Construction loans may be in the form of a permanent loan or a short-term construction loan, depending on the needs of the individual borrower. Generally, the permanent construction loans have a variable interest rate although a permanent construction loan may be made with a fixed interest rate for a term generally not exceeding five years. Short-term construction loans are made with variable interest rates. Information concerning the loan maturity distribution within the construction financing portfolio is provided in Table 3 included in the section of Park’s 2009 Annual Report captioned “FINANCIAL REVIEW,” on page 36, and is incorporated herein by reference.

Construction financing is generally considered to involve a higher degree of risk of loss than long-term financing on improved, occupied real estate. Risk of loss on a construction loan depends largely upon the accuracy of the initial estimate of the property’s value at completion of construction and the estimated cost (including interest) of construction. If the estimate of construction cost proves to be inaccurate, the subsidiary bank making the loan may be required to advance funds beyond the amount originally committed to permit completion of the project. If the estimate of value proves inaccurate, the subsidiary bank may be confronted, at or prior to the maturity of the loan, with a project having a value insufficient to assure full repayment, should the borrower default. In the event a default on a construction loan occurs and foreclosure follows, the subsidiary bank must take control of the project and attempt either to arrange for completion of construction or dispose of the unfinished project. Additional risk exists with respect to loans made to developers who do not have a buyer for the property, as the developer may lack funds to pay the loan if the property is not sold upon completion. Park’s subsidiary banks attempt to reduce such risks on loans to developers by requiring personal guarantees and reviewing current personal financial statements and tax returns as well as other projects undertaken by the developer. Vision Bank continues to experience high levels of loan losses on CL&D loans. For additional information concerning the loan loss experience, please see “ITEM 1A. RISK FACTORS — Changes in economic and political conditions could adversely affect our earnings, cash flows and capital, as our borrowers’ ability to repay loans and the value of the collateral causing our loans decline.” and “— Our allowance for loan losses may prove to be insufficient to absorb potential losses in our loan portfolio.” in this Annual Report on Form 10-K. Information concerning the loan loss experience and allowance for loan losses related to the construction financing portfolio is provided in Tables 7 and 8 included in the section of Park’s 2009 Annual Report captioned “FINANCIAL REVIEW,” on page 40, and is incorporated herein by reference.

Ohio-Based Insurance Agency

Park Insurance Group offers life insurance and other insurance products to its customers through licensed representatives who work for Park National Bank. Park Insurance Group’s customers include current customers of Park National Bank and other residents in the 28 Ohio counties and one Kentucky county served by Park National Bank. Park Insurance Group’s results to date have not been material to the consolidated entity.

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Title Agency

Park Title Agency is a traditional title agency serving residential and commercial customers in the central Ohio area who are seeking title insurance for purchases, construction and refinancing of real estate. Park Title Agency’s customers include current customers of Park National Bank and other residents primarily in the 28 Ohio counties and one Kentucky county served by Park National Bank.

Vision Bancshares Financial Group

Vision Bancshares Financial Group conducts permissible insurance and securities networking activities. In an agency capacity, Vision Bancshares Financial Group offers its customers fixed and variable annuities, life insurance, property and casualty insurance and investment products, through licensed representatives who work for Vision Bank. The securities activities of Vision Bancshares Financial Group consist primarily of selling equity securities, municipal bonds, agency bonds, corporate bonds, mutual funds and variable rate annuities on a retail basis, through duly licensed and qualified employees and pursuant to a third party networking agreement. Vision Bancshares Financial Group’s results since the consummation of the Vision Merger have not been material to the consolidated entity.

Competition

The financial services industry is highly competitive. Park’s subsidiaries compete with other local, regional and national service providers, including banks, savings associations, credit unions and other types of financial institutions, finance companies, insurance agencies and title agencies. Other competitors include securities dealers, brokers, mortgage bankers, investment advisors, insurance companies and financial services subsidiaries of commercial and manufacturing companies. Many of these competitors enjoy the benefits of advanced technology, fewer regulatory constraints and lower cost structures. The primary factors in competing for loans are interest rates charged and overall services provided to borrowers. The primary factors in competing for deposits are interest rates paid on deposits, account liquidity, convenience and hours of office locations and having trained and competent staff to deliver services.

Employees

As of December 31, 2009, Park and its subsidiaries had 2,024 full-time equivalent employees.

Supervision and Regulation of Park and its Subsidiaries

Park, its subsidiary banks and many of its other subsidiaries are subject to extensive regulation by federal and state agencies. The regulation of bank holding companies and their subsidiaries is intended primarily for the protection of consumers, depositors, federal deposit insurance funds and the banking system as a whole and not for the protection of shareholders. Applicable laws and regulations restrict permissible activities and investments and require actions to protect loan, deposit, brokerage, fiduciary and other customers, as well as the deposit insurance fund of the Federal Deposit Insurance Corporation (the “FDIC”). They also restrict Park’s ability to repurchase its Common Shares or to receive dividends from its bank subsidiaries and impose capital adequacy and liquidity requirements.

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Park is registered with the Federal Reserve Board as a bank holding company under the Bank Holding Company Act. As a bank holding company, Park is subject to regulation under the Bank Holding Company Act and to inspection, examination and supervision by the Federal Reserve Board. Park is also subject to the disclosure and regulatory requirements of the Securities Act and the Exchange Act, as administered by the SEC. Park’s Common Shares are listed on NYSE Amex under the trading symbol “PRK,” which subjects Park to the NYSE Amex Company Guide for listed companies. As a result of Park’s participation in the U.S. Treasury’s CPP, Park is also subject to the regulatory authority granted to the U.S. Treasury and the Special Inspector General for the Troubled Asset Relief Program under EESA and ARRA, as discussed below under the caption “Capital Purchase Program.”

Park National Bank, as a national banking association, is subject to regulation, supervision and examination primarily by the Office of the Comptroller of the Company (the “OCC”) and secondarily by the FDIC.

Vision Bank, as a Florida state-chartered bank, is subject to regulation, supervision and examination by the Florida Office of Financial Regulation and the FDIC.

Guardian Finance, as an Ohio state-chartered consumer finance company, is subject to regulation, supervision and examination by the Ohio Division of Financial Institutions.

Park Insurance Group, as an Ohio state-chartered insurance agency, and Park Title Agency, as an Ohio state-chartered title agency, are subject to regulation, supervision and examination by the Ohio Department of Insurance.

The following information describes selected federal and state statutory and regulatory provisions and is qualified in its entirety by reference to the full text of the particular statutory or regulatory provisions. These statutes and regulations are continually under review by the United States Congress and state legislatures and federal and state regulatory agencies. A change in statutes, regulations or regulatory policies applicable to Park and its subsidiaries could have a material effect on their respective businesses.

Regulation of Bank Holding Companies

As a bank holding company, Park’s activities are subject to extensive regulation by the Federal Reserve Board. Park is required to file reports with the Federal Reserve Board and such additional information as the Federal Reserve Board may require, and is subject to regular examinations by the Federal Reserve Board.

The Federal Reserve Board also has extensive enforcement authority over bank holding companies, including, among other things, the ability to:

• assess civil money penalties;

• issue cease and desist or removal orders; and

• require that a bank holding company divest subsidiaries (including its subsidiary banks).

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In general, the Federal Reserve Board may initiate enforcement actions for violations of laws and regulations and unsafe or unsound practices.

Under Federal Reserve Board policy, a bank holding company is expected to act as a source of financial strength to each subsidiary bank and to commit resources to support those subsidiary banks. Under this policy, the Federal Reserve Board may require a bank holding company to contribute additional capital to an undercapitalized subsidiary bank and may disapprove of the payment of dividends to the shareholders if the Federal Reserve Board believes the payment of such dividends would be an unsafe or unsound practice.

The Bank Holding Company Act requires the prior approval of the Federal Reserve Board in any case where a bank holding company proposes to:

• acquire direct or indirect ownership or control of more than 5% of the voting shares of any bank that is not already majority-owned by it;

• acquire all or substantially all of the assets of another bank or another financial or bank holding company; or

• merge or consolidate with any other financial or bank holding company.

The Gramm-Leach-Bliley Act of 1999 (“GLBA”) permits a qualifying bank holding company to become a financial holding company and thereby affiliate with securities firms and insurance companies and engage in other activities that are financial in nature and not otherwise permissible for a bank holding company. Although Park was a financial holding company effective in December 2007, Park ceased to be a financial holding company effective June 30, 2008, and neither Park nor any of its subsidiaries engages in any of the activities permitted for a financial holding company but not a bank holding company.

Subsidiary banks of a bank holding company are subject to certain restrictions imposed by the Federal Reserve Act on the maintenance of reserves against deposits, extensions of credit to the bank holding company or any of its subsidiaries, investments in the stock or other securities of the bank holding company or its subsidiaries and the taking of such stock or securities as collateral for loans to any borrower. Further, a bank holding company and its subsidiaries are prohibited from engaging in certain tying arrangements in connection with any extension of credit, lease or sale of property or furnishing of any services. Various consumer laws and regulations also affect the operations of these subsidiaries.

Transactions with Affiliates, Directors, Executive Officers and Shareholders

Sections 23A and 23B of the Federal Reserve Act and Federal Reserve Board Regulation W generally:

• limit the extent to which a bank or its subsidiaries may engage in “covered transactions” with any one affiliate;

• limit the extent to which a bank or its subsidiaries may engage in “covered transactions” with all affiliates; and

• require that all such transactions be on terms substantially the same, or at least as favorable to the bank or subsidiary, as those provided to a non-affiliate.

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An affiliate of a bank is any company or entity which controls, is controlled by or is under common control with the bank. The term “covered transaction” includes the making of loans to the affiliate, the purchase of assets from the affiliate, the issuance of a guarantee on behalf of the affiliate, the purchase of securities issued by the affiliate and other similar types of transactions.

A bank’s authority to extend credit to executive officers, directors and greater than 10% shareholders, as well as entities such persons control, is subject to Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O promulgated thereunder by the Federal Reserve Board. Among other things, these loans must be made on terms (including interest rates charged and collateral required) substantially the same as those offered to unaffiliated individuals or be made as part of a benefit or compensation program and on terms widely available to employees, and must not involve a greater than normal risk of repayment. In addition, the amount of loans a bank may make to these persons is based, in part, on the bank’s capital position, and specified approval procedures must be followed in making loans which exceed specified amounts.

Regulation of Nationally-Chartered Banks

As a national banking association, Park National Bank is subject to regulation under the National Banking Act and is periodically examined by the OCC. OCC regulations govern permissible activities, capital requirements, dividend limitations, investments, loans and other matters. Furthermore, Park National Bank is subject, as a member bank, to certain rules and regulations of the Federal Reserve Board, many of which restrict activities and prescribe documentation to protect consumers. Park National Bank is an insured depository institution as a member of the Deposit Insurance Fund. As a result, it is subject to regulation and deposit insurance assessments by the FDIC. In addition, the establishment of branches by Park National Bank is subject to prior approval of the OCC. The OCC has broad enforcement powers over national banks, including the power to impose fines and other civil and criminal penalties and to appoint a conservator or receiver if any of a number of conditions are met.

Regulation of Consumer Finance Companies

As a consumer finance company incorporated under Ohio law, Guardian Finance is subject to regulation and supervision by the Ohio Division of Financial Institutions. Division regulation and supervision designed to protect consumers affect the lending activities of Guardian Finance, including interest rates and certain loan terms, advertising and record retention. If grounds provided by law exist, the Ohio Division of Financial Institutions may suspend or revoke an Ohio consumer finance company’s ability to make loans.

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Regulation of Florida State-Chartered Banks

Vision Bank is organized under the laws of the State of Florida and its deposits are insured by the FDIC up to the maximum amount permitted by law. Vision Bank is subject to regulation, supervision and regular examination by the State of Florida’s Office of Financial Regulation and the FDIC. Federal and state banking laws and regulations regulate, among other things, the scope of the banking business conducted by Vision Bank, its loans and investments, reserves against deposits, mergers and acquisitions, borrowings, dividends, minimum capital requirements and the establishment and closure of branches. The relationships of Vision Bank to its executive officers, directors and affiliates are also the subject of statutory and regulatory requirements. Both the Florida Office of Financial Regulation and the FDIC have broad enforcement powers over Florida state-chartered non-member banks, including the power to terminate deposit insurance, to impose fines and other civil and criminal penalties and to appoint a conservator or receiver if any of a number of conditions are met.

Federal Deposit Insurance Corporation

The FDIC is an independent federal agency which insures the deposits, up to prescribed statutory limits, of federally-insured banks and savings associations and safeguards the safety and soundness of the financial institution industry.

Insurance Premiums

Insurance premiums for each insured depository institution are determined based upon the institution’s capital level and supervisory rating provided to the FDIC by the institution’s primary federal regulator and other information the FDIC determines to be relevant to the risk posed to the deposit insurance fund by the institution. The assessment rate determined by considering such information is then applied to the amount of the institution’s deposits to determine the institution’s insurance premium. An increase in the assessment rate could have a material adverse effect on the earnings of the affected institutions, depending on the amount of the increase.

Insurance of deposits may be terminated by the FDIC upon a finding that the insured depository institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition enacted or imposed by the institution’s regulatory agency.

Liability of Commonly Controlled Banks

Under the Federal Deposit Insurance Act, a bank is generally liable for any loss incurred, or reasonably expected to be incurred, by the FDIC in connection with (i) the default of a commonly controlled bank or (ii) any assistance provided by the FDIC to a commonly controlled bank in danger of default. “Default” means generally the appointment of a conservator or receiver. “In danger of default” means generally the existence of conditions indicating that a default is likely to occur in the absence of regulatory assistance. Thus, one of Park’s bank subsidiaries could be liable to the FDIC if the FDIC were to suffer a loss in connection with Park’s other bank subsidiary. This cross-guarantee liability for a loss at a commonly controlled institution would be subordinated in right of payment to deposit liabilities, secured obligations, any other general or senior liability, and any obligation subordinated to depositors or other general creditors, other than obligations owed to any affiliate of the insured depository institution (with certain exceptions).

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Federal Home Loan Bank

The Federal Home Loan Banks (“FHLBs”) provide credit to their members in the form of advances. Park National Bank is a member of the FHLB of Cincinnati and Vision Bank is a member of the FHLB of Atlanta. As FHLB members, Park National Bank and Vision Bank must maintain an investment in the capital stock of their respective FHLBs.

Upon the origination or renewal of a loan or advance, each FHLB is required by law to obtain and maintain a security interest in certain types of collateral. Each FHLB is required to establish standards of community investment or service that its members must maintain for continued access to long-term advances from the FHLB. The standards take into account a member’s performance under the Community Reinvestment Act and its record of lending to first-time home buyers.

Regulatory Capital

The Federal Reserve Board has adopted risk-based capital guidelines for bank holding companies and state member banks. The OCC and the FDIC have adopted risk-based capital guidelines for national banks and state non-member banks, respectively. The guidelines provide a systematic analytical framework which makes regulatory capital requirements sensitive to differences in risk profiles among banking organizations, takes off-balance sheet exposures expressly into account in evaluating capital adequacy, and minimizes disincentives to holding liquid, low-risk assets. Capital levels as measured by these standards are also used to categorize financial institutions for purposes of certain prompt corrective action regulatory provisions.

The minimum guideline for the ratio of total capital to risk-weighted assets (including certain off-balance sheet items such as standby letters of credit) is 8%. At least half of the minimum total risk-based capital ratio (4%) must be composed of common shareholders’ equity, minority interests in certain equity accounts of consolidated subsidiaries and a limited amount of qualifying preferred stock and qualified trust preferred securities, less goodwill and certain other intangible assets, including the unrealized net gains and losses, after applicable taxes, on available-for-sale securities carried at fair value (commonly known as “Tier 1” risk-based capital). The remainder of total risk-based capital (commonly known as “Tier 2” risk-based capital) may consist of certain amounts of hybrid capital instruments, mandatory convertible debt, subordinated debt, preferred stock not qualifying as Tier 1 capital, allowance for loan losses and net unrealized gains on certain available-for-sale equity securities, all subject to limitations established by the guidelines.

Under the guidelines, capital is compared to the relative risk related to the balance sheet. To derive the risk included in the balance sheet, one of four risk weights (0%, 20%, 50% and 100%) is applied to different balance sheet and off-balance sheet assets, primarily based on the relative credit risk of the counterparty. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

The Federal Reserve Board has established minimum leverage ratio guidelines for bank holding companies. The Federal Reserve Board guidelines provide for a minimum ratio of Tier 1 capital to average assets (excluding the allowance for loan losses, goodwill and certain other intangibles), or “leverage ratio,” of 3% for bank holding companies that meet certain criteria, including having the highest regulatory rating, and 4% for all other bank holding companies. The guidelines further provide that bank holding companies making acquisitions will be expected to maintain strong capital positions substantially above the minimum levels. The OCC and the FDIC have each also adopted minimum leverage ratio guidelines for national banks and for state non-member banks, respectively.

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The federal banking agencies have established a system of prompt corrective action to resolve certain of the problems of undercapitalized institutions. This system is based on five capital level categories for insured depository institutions: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” and “critically undercapitalized.”

The federal banking agencies may (or in some cases must) take certain supervisory actions depending upon a bank’s capital level. For example, the banking agencies must appoint a receiver or conservator for a bank within 90 days after it becomes “critically undercapitalized” unless the bank’s primary regulator determines, with the concurrence of the FDIC, that other action would better achieve regulatory purposes. Banking operations otherwise may be significantly affected depending on a bank’s capital category. For example, a bank that is not “well capitalized” generally is prohibited from accepting brokered deposits and offering interest rates on deposits higher than the prevailing rate in its market, and the holding company of any undercapitalized depository institution must guarantee, in part, specific aspects of the bank’s capital plan for the plan to be acceptable.

In order to be “well-capitalized,” a bank or bank holding company must have total risk-based capital of at least 10%, Tier 1 risk-based capital of at least 6% and a leverage ratio of at least 5%, and the bank or bank holding company must not be subject to any written agreement, order, capital directive or prompt corrective action directive to meet and maintain a specific capital level for any capital measure. Park’s management believes that each of its subsidiary banks as well as Park meet the ratio requirements to be deemed “well-capitalized” according to the guidelines described above. See Note 22 of the Notes to Consolidated Financial Statements located on page 72 of Park’s 2009 Annual Report, which is incorporated herein by reference.

The risk-based capital guidelines adopted by the federal banking agencies are based on the “International Convergence of Capital Measurement and Capital Standards” (Basel I), published by the Basel Committee on Banking Supervision (the “Basel Committee”) in 1988. In 2004, the Basel Committee published a new, more risk-sensitive capital adequacy framework (Basel II) for large, internationally active banking organizations. In December 2007, the federal banking agencies issued final rules making the implementation of certain parts of Basel II mandatory for any bank that has consolidated total assets of at least $250 billion (excluding certain assets) or has consolidated on-balance sheet foreign exposure of at least $10 billion, and making it voluntary for other banks.

In response to concerns regarding the complexity and cost associated with implementing the Basel II rules, in July 2008, the federal banking agencies issued a notice of proposed rulemaking that would revise the existing risk-based capital framework for banks that will not be subject to the Basel II rules. The proposed rules would allow banks other than the large Basel II banks to elect to adopt the new risk weighting methodologies set forth in the proposed rules or remain subject to the existing risk-based capital rules.

Park will not be required to implement Basel II. Until the final rules for the non-Basel II banks are adopted by the federal banking agencies, Park is unable to predict whether and when its subsidiary banks will adopt the new capital guidelines.

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Fiscal and Monetary Policies

The business and earnings of Park are affected significantly by the fiscal and monetary policies of the United States Government and its agencies. Park is particularly affected by the policies of the Federal Reserve Board, which regulates the supply of money and credit in the United States. These policies are used in varying degrees and combinations to directly affect the availability of bank loans and deposits, as well as the interest rates charged on loans and paid on deposits.

Limits on Dividends and Other Payments

There are various legal limitations on the extent to which subsidiary banks may finance or otherwise supply funds to their parent holding companies. Under applicable federal and state laws, subsidiary banks may not, subject to certain limited exceptions, make loans or extensions of credit to, or investments in the securities of, their bank holding companies. Subsidiary banks are also subject to collateral security requirements for any loan or extension of credit permitted by such exceptions.

Neither of Park’s subsidiary banks may pay dividends out of its surplus if, after paying these dividends, it would fail to meet the required minimum levels under the risk-based capital guidelines and minimum leverage ratio requirements established by the OCC and the FDIC. In addition, each subsidiary bank must have the approval of its regulatory authority if a dividend in any year would cause the total dividends for that year to exceed the sum of the subsidiary bank’s current year’s “net profits” (or net income, less dividends declared during the period based on regulatory accounting principles) and the retained net profits for the preceding two years, less required transfers to surplus. Payment of dividends by either of Park’s subsidiary banks may be restricted at any time at the discretion of its regulatory authorities, if such regulatory authorities deem such dividends to constitute unsafe and/or unsound banking practices or if necessary to maintain adequate capital.

The ability of Park to obtain funds for the payment of dividends and for other cash requirements is largely dependent on the amount of dividends which may be declared by its subsidiary banks. However, the Federal Reserve Board expects Park to serve as a source of strength to its subsidiary banks, which may require Park to retain capital for further investment in its subsidiary banks, rather than pay dividends to the Park shareholders. Payment of dividends by one of Park’s subsidiary banks may be restricted at any time at the discretion of its applicable regulatory authorities, if they deem such dividends to constitute an unsafe and/or unsound banking practice. These provisions could have the effect of limiting Park’s ability to pay dividends on its Common Shares.

At December 31, 2009, approximately $47.7 million of the total stockholders’ equity of Park National Bank was available for payment to Park without the approval of the applicable regulatory authorities. See Note 17 of the Notes to Consolidated Financial Statements located on page 69 of Park’s 2009 Annual Report.

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The Federal Reserve Board has issued a policy statement with regard to the payment of cash dividends by bank holding companies. The policy statement provides that, as a matter of prudent banking, a bank holding company should not maintain a rate of cash dividends unless its net income available to common shareholders has been sufficient to fully fund the dividends, and the prospective rate of earnings retention appears to be consistent with the bank holding company’s capital needs, asset quality, and overall financial condition. Accordingly, a bank holding company should not pay cash dividends that exceed its net income or can only be funded in ways that weaken the bank holding company’s financial health, such as by borrowing. In addition, the agreement pursuant to which the Series A Preferred Shares and the Warrant were sold by Park as part of the CPP under TARP requires regulatory approval for the payment of dividends on the Common Shares in excess of $0.94 per share per quarter, which is the amount of the last quarterly cash dividend declared by Park. For more information regarding our participation in the CPP, see the discussion above under the caption “Recent Developments — Participation in Capital Purchase Program Enacted as part of Troubled Assets Relief Program”.

Under the terms of the Indenture governing the $15.5 million of junior subordinated debentures issued by Vision to the Vision Trust and the related Guarantee Agreement, Park, as successor to Vision in accordance with the First Supplemental Indenture, is prohibited, subject to limited exceptions, from declaring or paying any dividends or distributions on any shares of its capital stock (i) if an event of default under the Indenture has occurred and continues, (ii) if Park is in default with respect to the payment of any obligations under the Guarantee Agreement or (iii) during any period in which the payment of interest on the junior subordinated debentures by Park (and the payment of cash distributions on the floating rate preferred securities of the Vision Trust) is being deferred.

Under the Note Purchase Agreement governing the Subordinated Notes issued by Park in December 2009, if an event of default has occurred and is continuing, Park’s ability to declare or pay dividends on any of its capital stock will be restricted.

The dividend rights of holders of Park Common Shares are also qualified and subject to the dividend rights of holders of Series A Preferred Shares described above under the caption “Recent Developments — Participation in Capital Purchase Program Enacted as part of Troubled Assets Relief Program” and below under the caption “Capital Purchase Program.”

Privacy Provisions of Gramm-Leach-Bliley Act

Under the GLBA, federal banking regulators were required to adopt rules that limit the ability of banks and other financial institutions to disclose non-public information about consumers to nonaffiliated third parties. These limitations require disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to a nonaffiliated third party.

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Patriot Act

In response to the terrorist events of September 11, 2001, the Uniting and Strengthening of America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “Patriot Act”) was signed into law in October 2001. The Patriot Act gives the United States Government powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing and broadened anti-money laundering requirements. Title III of the Patriot Act takes measures intended to encourage information sharing among bank regulatory agencies and law enforcement bodies. Further, certain provisions of Title III impose affirmative obligations on a broad range of financial institutions. Among other requirements, Title III and related regulations require regulated financial institutions to establish a program specifying procedures for obtaining identifying information from customers seeking to open new accounts and establish enhanced due diligence policies, procedures and controls designed to detect and report suspicious activity. Park’s subsidiary banks have established policies and procedures that are believed to be compliant with the requirements of the Patriot Act.

Corporate Governance

As mandated by the Sarbanes-Oxley Act of 2002, the SEC has adopted rules and regulations governing, among other issues, corporate governance, auditing and accounting, executive compensation and enhanced and timely disclosure of corporate information. NYSE Amex has also adopted corporate governance rules. The Board of Directors of Park has taken a series of actions to strengthen and improve Park’s already strong corporate governance practices in light of the rules of the SEC and NYSE Amex. The Board of Directors has adopted charters for the Audit Committee, the Compensation Committee, the Nominating Committee and the Risk Committee as well as a Code of Business Conduct and Ethics governing the directors, officers and associates of Park and its affiliates.

Capital Purchase Program

In response to the financial crisis affecting the banking system and financial markets, the EESA was signed into law on October 3, 2008 creating TARP. As part of TARP, the U.S. Treasury established the CPP to provide up to $250 billion of funding to eligible financial institutions through the purchase of capital stock and other financial instruments for the purpose of stabilizing and providing liquidity to the United States financial markets. In connection with the EESA, there have been numerous actions by the Federal Reserve Board, the United States Congress, the U.S. Treasury, the FDIC, the SEC and others to further the economic and banking industry stabilization efforts under the EESA. It remains unclear at this time what further legislative and regulatory measures will be implemented under the EESA or otherwise that affect Park.

The ARRA was signed into law on February 17, 2009. The ARRA includes a wide array of programs intended to stimulate the economy and provide for extensive infrastructure, energy, health and education needs. In addition, the ARRA imposes certain new executive compensation and corporate expenditure limits on all current and future recipients of funds under the CPP, including Park, as long as any obligation arising from the financial assistance provided to the recipient under the CPP remains outstanding, excluding any period during which the U.S. Treasury holds only warrants to purchase common stock of a TARP participant. The ARRA permits TARP recipients, subject to consultation with the appropriate federal banking agency, to repay to the U.S. Treasury any financial assistance received under the CPP without penalty, delay or the need to raise additional replacement capital.

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As discussed in more detail above under the caption “Recent Developments — Participation in Capital Purchase Program Enacted as part of Troubled Assets Relief Program,” Park elected to participate in the CPP. Pursuant to the CPP, on December 23, 2008, the U.S. Treasury purchased 100,000 Series A Preferred Shares from Park, as well as the Warrant to purchase 227,376 Common Shares of Park. As part of participation in the CPP, Park agreed to various requirements and restrictions imposed on all participants in the CPP. Among the terms of participation was a provision that the U.S. Treasury could change the terms of participation at any time.

The current terms of participation in the CPP include the following:

• Park must file with the SEC a registration statement under the Securities Act, registering for resale the Series A Preferred Shares or, in the event the Series A Preferred Shares are deposited with a depository at the request of the U.S. Treasury, depository shares evidencing fractional interests in the Series A Preferred Shares; the Warrant to purchase 227,376 Common Shares; and any Common Shares issuable from time to time upon exercise of the Warrant. On January 22, 2009, Park filed a Registration Statement on Form S-3 to register these securities, which Registration Statement became effective on filing.

• As long as the Series A Preferred Shares remain outstanding, unless all accrued and unpaid dividends for all past dividend periods on the Series A Preferred Shares are fully paid, Park will not be permitted to declare or pay dividends on any Common Shares, any junior preferred shares or, generally, any preferred shares ranking pari passu with the Series A Preferred Shares (other than in the case of pari passu preferred shares, dividends on a pro rata basis with the Series A Preferred Shares), nor will Park be permitted to repurchase or redeem any Common Shares or preferred shares other than the Series A Preferred Shares.

• Unless the Series A Preferred Shares have been transferred to unaffiliated third parties or redeemed in whole, until December 23, 2011, the U.S. Treasury’s approval is required for any increase in common share dividends or any share repurchases other than repurchases of the Series A Preferred Shares, repurchases of junior preferred shares or Common Shares in connection with the administration of any employee benefit plan in the ordinary course of business and consistent with past practice and purchases under certain other limited circumstances specified in the Securities Purchase Agreement with the U.S. Treasury.

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• As a recipient of government funding under the CPP, Park, together with its subsidiaries, must comply with the executive compensation and corporate governance standards established by the U.S. Treasury under the ARRA for so long as the U.S. Treasury holds any securities acquired from Park pursuant to the Securities Purchase Agreement or upon exercise of the Warrant, excluding any period during which the U.S. Treasury holds only the Warrant (the “Covered Period”). On June 15, 2009, the U.S. Treasury published executive compensation and corporate governance standards, which were amended effective December 7, 2009, applicable to TARP recipients, including Park, and their subsidiaries. The ARRA and the Interim Final Rule impose limitations on our executive compensation practices by, among other things: (i) limiting the deductibility, for U.S. federal income tax purposes, of compensation paid to any of our Senior Executive Officers (as defined in the Interim Final Rule) to $500,000 per year; (ii) prohibiting the payment or accrual of any bonus, retention award or incentive compensation to our five most highly-compensated employees, except in the form and under the limited circumstances permitted by the Interim Final Rule; (iii) prohibiting the payment of golden parachute payments (as defined in the Interim Final Rule) to our Senior Executive Officers or any of our next five most highly-compensated employees upon a departure from Park and its subsidiaries or due to a change in control of Park, except for payments for services performed or benefits accrued; (iv) requiring Park or the applicable subsidiary to “claw back” any bonus, retention award or incentive compensation paid (or under a legally binding obligation to be paid) to a Senior Executive Officer or any of our next 20 most highly-compensated employees if the payment was based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria; (v) prohibiting Park and its subsidiaries from maintaining any Employee Compensation Plan (as defined in the Interim Final Rule) that would encourage the manipulation of Park’s reported earnings to enhance the compensation of any of our employees; (vi) prohibiting Park and its subsidiaries from maintaining compensation plans and arrangements for our Senior Executive Officers that encourage our Senior Executive Officers to take unnecessary and excessive risks that threaten the value of Park; (vii) requiring Park and its subsidiaries to limit any Employee Compensation Plan that unnecessarily exposes Park to risk; (viii) prohibiting Park and its subsidiaries from providing (formally or informally) “gross-ups” to any of our Senior Executive Officers or our 20 next most highly-compensated employees; (ix) requiring that Park disclose to the U.S. Treasury and Park’s primary regulator the amount, nature and justification for offering to any of our five most highly-compensated employees any perquisites whose total value exceeds $25,000; (x) requiring that Park disclose to the U.S. Treasury and Park’s primary regulator whether Park, the Park Board of Directors or the Compensation Committee engaged a compensation consultant and the services performed by that compensation consultant and any of its affiliates; (xi) requiring that Park disclose to the U.S. Treasury the identity of our Senior Executive Officers and 20 next most highly-compensated employees, identified by name and title and ranked in descending order of annual compensation; and (xii) subjecting any bonus, retention award or other compensation paid before February 17, 2009 to our Senior Executive Officers or our 20 next most highly-compensated employees to retroactive review by the U.S. Treasury to determine whether any such payments were inconsistent with the purposes of TARP or otherwise contrary to the public interest. The ARRA and the Interim Final Rule also required that the Park Board of Directors adopt a Company-wide policy regarding “excessive or luxury expenditures,” which was adopted on September 4, 2009, and post this policy on Park’s Internet Web site. Park must also permit in its proxy statements for annual meetings of shareholders a non-binding “say on pay” shareholder vote on the compensation of executives, as disclosed pursuant to the compensation disclosure rules of the SEC.

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The U.S. Treasury has certain supervisory and oversight duties and responsibilities under the EESA, the CPP and the ARRA. Also, the Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”), which position was established pursuant to Section 121 of the EESA, has the duty, among other things, to conduct, supervise and coordinate audits and investigations of the purchase, management and sale of assets by the U.S. Treasury under TARP and the CPP, including the Series A Preferred Shares purchased from Park.

Statistical Disclosure

The statistical disclosure relating to Park and its subsidiaries required under the SEC’s Industry Guide 3, “Statistical Disclosure by Bank Holding Companies,” is included in the section of Park’s 2009 Annual Report captioned “FINANCIAL REVIEW,” on pages 30 through 47 and in Note 1 of the Notes to Consolidated Financial Statements located on pages 56 through 61 of Park’s 2009 Annual Report, Note 4 of the Notes to Consolidated Financial Statements located on pages 61 through 63 of Park’s 2009 Annual Report, Note 5 of the Notes to Consolidated Financial Statements located on page 63 of Park’s 2009 Annual Report, Note 8 of the Notes to Consolidated Financial Statements located on page 64 of Park’s 2009 Annual Report and Note 9 of the Notes to Consolidated Financial Statements located on pages 64 through 65 of Park’s 2009 Annual Report. This statistical disclosure is incorporated herein by reference.

Effect of Environmental Regulation

Compliance with federal, state and local provisions regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has not had a material effect upon the capital expenditures, earnings or competitive position of Park and its subsidiaries. Park believes the nature of the operations of its subsidiaries has little, if any, environmental impact. Park, therefore, anticipates no material capital expenditures for environmental control facilities for its current fiscal year or for the foreseeable future.

Park believes its primary exposure to environmental risk is through the lending activities of its subsidiaries. In cases where management believes environmental risk potentially exists, Park’s subsidiaries mitigate their environmental risk exposures by requiring environmental site assessments at the time of loan origination to confirm collateral quality as to commercial real estate parcels posing higher than normal potential for environmental impact, as determined by reference to present and past uses of the subject property and adjacent sites. In addition, environmental assessments are typically required prior to any foreclosure activity involving non-residential real estate collateral.

ITEM 1A. RISK FACTORS.

Cautionary Statement Regarding Forward-Looking Information

Certain statements contained in this Annual Report on Form 10-K which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, the statements specifically identified as forward-looking statements within this document. In addition, certain statements in future filings by Park with the SEC, in press releases, and in oral and written statements made by or with the approval of Park which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include: (i) projections of income or expense, earnings per share, the payment or non-payment of dividends, capital structure and other financial items; (ii) statements of plans and objectives of Park or our management or Board of Directors, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as “believes,” “anticipates,” “expects,” “intends,” “targeted” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying those statements.

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The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information so long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those discussed in the forward-looking statements. We desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve risks and uncertainties. Actual results may differ materially from those predicted by the forward-looking statements because of various factors and possible events, including those factors and events identified below. There is also the risk that Park’s management or Board of Directors incorrectly analyzes these risks and uncertainties or that the strategies Park develops to address them are unsuccessful.

Forward-looking statements speak only as of the date on which they are made, and, except as may be required by law, Park undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made to reflect unanticipated events. All subsequent written and oral forward-looking statements attributable to Park or any person acting on Park’s behalf are qualified in their entirety by the following cautionary statements.

Our business may be adversely affected by current conditions in the financial markets, the real estate market and economic conditions generally.

Negative developments in the capital markets beginning in the latter half of 2007 and continuing into 2010 produced uncertainty in the financial markets and a related economic downturn. Dramatic declines in the housing market, which resulted in decreasing home prices and increasing delinquencies and foreclosures, negatively impacted the credit performance of mortgage and construction loans and resulted in significant write-downs of asset values by financial institutions, including government-sponsored entities and major commercial and investment banks. In addition, the values of real estate collateral supporting many loans have declined and may continue to decline. The declines in the performance and value of mortgage assets started in the sub-prime market but spread to all mortgage and real estate asset classes, leveraged bank loans and nearly all other asset classes, including equity securities. These write-downs have caused many financial institutions to seek additional capital, to merge with larger and stronger institutions and, in some cases, to fail.

Concerns over the stability of the financial markets and the economy have resulted in decreased lending by some financial institutions to their customers and to each other. This market turmoil and tightening of credit has led to increased commercial and consumer delinquencies, lack of customer confidence, increased market volatility and a widespread reduction in general business activity. Competition among depository institutions for deposits has increased significantly and many financial institutions have experienced decreased access to deposits or borrowings. Also, our ability to assess the creditworthiness of customers and to estimate the losses inherent in our credit exposure is made more complex by these difficult market and economic conditions.

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Through much of 2009, the United States remained in a recession. Business activity across a wide range of industries and regions is greatly reduced and local governments and many companies are in serious difficulty due to the lack of consumer spending and the lack of liquidity in the credit markets. A worsening of current conditions would likely exacerbate the adverse effects of these difficult market and economic conditions on us, our customers and the other financial institutions in our markets. As a result, we may experience increases in foreclosures, delinquencies and customer bankruptcies, as well as more restricted access to funds.

A default by another larger financial institution could adversely affect financial markets generally.

The commercial soundness of many financial institutions may be closely interrelated as a result of relationships between the institutions. As a result, concerns about, or a default or threatened default by, one institution could lead to significant market-wide liquidity and credit problems, losses or defaults by other institutions. This is sometimes referred to as “systemic risk” and may adversely affect our business.

Current levels of market volatility are unprecedented.

The capital and credit markets experienced volatility and disruption for more than a year. The volatility and disruption reached unprecedented levels. In some cases, the markets produced downward pressure on share prices and credit availability for certain issuers without regard to those issuers’ underlying financial strength. If market disruption and volatility continue or worsen, we may experience a material adverse effect on our ability to access capital and on our business, financial condition and results of operations.

Changes in economic and political conditions could adversely affect our earnings, cash flows and capital, as our borrowers’ ability to repay loans and the value of the collateral securing our loans decline.

Our success depends, to a certain extent, upon economic and political conditions, local and national, as well as governmental fiscal and monetary policies. Conditions such as inflation, recession, unemployment, changes in interest rates, money supply and other factors beyond our control may adversely affect our asset quality, deposit levels and loan demand and, therefore, our earnings and our capital.

Our lending and deposit gathering activities are concentrated primarily in Ohio and in Gulf Coast communities in Alabama and on the Florida panhandle and our success depends on the general economic conditions of these areas, particularly given that a significant portion of our lending relates to real estate located in these regions. Real estate values in these Ohio and, more dramatically, Gulf Coast communities have been negatively impacted by the severity of the economic conditions. Additional adverse changes in regional and general economic conditions could reduce our growth rate, impair our ability to collect loans and sell collateral for loans upon foreclosure, increase loan delinquencies, increase problem assets and foreclosures, increase claims and lawsuits, decrease the demand for our products and services and decrease the value of collateral for loans, especially real estate values, which could have a material adverse effect on our financial condition, results of operations and cash flows.

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We continue to experience difficult credit conditions, especially in the Florida and Alabama markets in which we operate. Vision Bank had $28.9 million in net loan charge-offs for 2009 ($9.8 for the fourth quarter of 2009) and recorded a provision for loan losses for 2009 of $44 million ($16.0 million for the fourth quarter of 2009). Park’s nonperforming loans (defined as loans that are 90 days past due and still accruing, nonaccrual loans and renegotiated loans still accruing interest) were $248.5 million or 5.4% of loans at December 31, 2009 and $167.8 million or 3.7% of loans at December 31, 2008. At December 31, 2009, Vision Bank had nonperforming loans of $159.6 million or 23.6% of loans compared to $94.7 million or 13.7% of loans at December 31, 2008.

While we continue to generate net earnings on a consolidated basis, Vision Bank continues to generate net losses and may generate net losses in the future. Excluding the goodwill impairment charges of $55.0 million in 2008, Vision Bank had net losses of $30.1 million in 2009 and $26.2 million in 2008. Park contributed $37.0 million to the capital of Vision Bank in 2009 and $50.0 million in 2008. Given the current economic environment in Vision Bank’s market, Park has agreed to maintain the leverage ratio at Vision Bank at 10% and to maintain the total risk-based capital ratio at 14%.

It remains uncertain when the negative credit trends in our markets will reverse. As a result, Park’s future earnings, cash flows and capital continue to be susceptible to further declining credit conditions in the markets in which we operate.

Increases in FDIC insurance premiums may have a material adverse affect on our earnings.

During 2008 and 2009, there were higher levels of bank failures which dramatically increased resolution costs of the FDIC and depleted the deposit insurance fund. In order to maintain a strong funding position and restore reserve ratios of the deposit insurance fund, the FDIC voted on December 16, 2008 to increase assessment rates of insured depository institutions uniformly by 7 basis points (7 cents for every $100 of deposits), beginning with the first quarter of 2009. Additional changes, beginning April 1, 2009, were to require riskier institutions to pay a larger share of premiums by factoring in rate adjustments based on secured liabilities and unsecured debt levels.

The EESA instituted two temporary programs effective through December 31, 2009 to further insure customer deposits at FDIC-member banks: deposit accounts are now insured up to $250,000 per customer (up from $100,000) and noninterest bearing transactional accounts are fully insured (unlimited coverage). On May 20, 2009, President Obama signed into law the Helping Families Save Their Homes Act of 2009 (the “HFSTHA”) which, among other things, amended the EESA to extend the effectiveness of these temporary programs through December 31, 2013. On January 1, 2014, the standard insurance amount will return to $100,000 per depositor for all account categories except IRAs and certain other retirement accounts, which will remain at $250,000 per depositor.

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On May 22, 2009, the FDIC adopted a final rule that imposed a special assessment for the second quarter of 2009 of 5 basis points on each insured depositary institution’s assets minus its Tier 1 capital as of June 30, 2009, which was collected on September 30, 2009. The special assessment for Park was $3.1 million.

On November 12, 2009, the FDIC adopted a final rule requiring insured depository institutions to prepay their estimated quarterly risk-based assessments for the fourth quarter of 2009 and for all of 2010, 2011 and 2012. The prepaid assessments for these periods were collected on December 30, 2009, along with the regular quarterly risk-based deposit insurance assessment for the third quarter of 2009. For the fourth quarter of 2009 and for all of 2010, the prepaid assessment rate was based on each institution’s total base assessment rate in effect on September 30, 2009, modified to assume that the assessment rate in effect for the institution on September 30, 2009, was in effect for the entire third quarter of 2009. On September 29, 2009, the FDIC increased annual assessment rates uniformly by 3 basis points beginning in 2011. As a result, an institution’s total base assessment rate for purposes of estimating an institution’s assessment for 2011 and 2012 was increased by 3 basis points. Each institution’s prepaid assessment base was calculated using its third quarter 2009 assessment base, adjusted quarterly for an estimated five percent annual growth rate in the assessment base through the end of 2012. Park paid $29.7 million for the three-year prepayment in December 2009, which will be expensed over three years.

In January 2010, the FDIC issued an advance notice of proposed rule-making asking for comments on how the FDIC’s risk-based deposit insurance assessment system could be changed to include the risks of certain employee compensation as criteria in the assessment system.

We are generally unable to control the amount of premiums that we are required to pay for FDIC insurance. If there are additional financial institution failures, we may be required to pay even higher FDIC premiums than the recently increased levels. Increases in FDIC insurance premiums may materially adversely affect our results of operations and our ability to continue to pay dividends on our common shares at the current rate or at all.

Because of our participation in the Capital Purchase Program, we are subject to several restrictions, including restrictions on our ability to declare or pay dividends and repurchase our shares and restrictions on compensation paid to our executive officers and certain other most highly-compensated employees.

We participate in the CPP. For more information regarding our participation in the CPP, see the discussion under the caption “Recent Developments — Participation in Capital Purchase Program Enacted as part of Troubled Assets Relief Program” in “Item 1 — Business” of Part I of this Annual Report on Form 10-K.

To finalize Park’s participation in the CPP, Park and the U.S. Treasury entered into the Securities Purchase Agreement. Pursuant to the Securities Purchase Agreement, Park issued and sold to the U.S. Treasury (i) 100,000 Series A Preferred Shares and (ii) the Warrant, for an aggregate purchase price of $100.0 million in cash. The Securities Purchase Agreement limits our ability to declare or pay dividends on any of our shares. Specifically, we are unable to declare dividend payments on Common Shares, junior preferred shares or pari passu preferred shares if we are in arrears on the payment of dividends on the Series A Preferred Shares. Further, we are not permitted to increase dividends on our Common Shares above the amount of the last quarterly cash dividend per Common Share declared prior to October 14, 2008 ($0.94 per Common Share) without the U.S. Treasury’s approval until December 23, 2011, unless all of the Series A Preferred Shares have been redeemed or transferred by the U.S. Treasury to unaffiliated third parties. In addition, our ability to repurchase our shares is restricted. The consent of the U.S. Treasury generally is required for us to make any share repurchase (other than in connection with the administration of any employee benefit plan in the ordinary course of business and consistent with past practice and certain other limited circumstances specified in our Articles of Incorporation) until December 23, 2011, unless all of the Series A Preferred Shares have been redeemed or transferred by the U.S. Treasury to unaffiliated third parties. Further, Common Shares, junior preferred shares or pari passu preferred shares may not be repurchased if we are in arrears on the payment of Series A Preferred Share dividends.

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As a recipient of government funding under the CPP, we, together with our subsidiaries, must comply with the executive compensation and corporate governance standards imposed by the ARRA and the standards established by the Secretary of the Treasury under the ARRA (including the Interim Final Rule) for so long as the U.S. Treasury holds any securities acquired from us pursuant to the Securities Purchase Agreement or upon exercise of the Warrant, excluding any period during which the U.S. Treasury holds only the Warrant (the “Covered Period”). The ARRA and the Interim Final Rule impose limitations on our executive compensation practices by, among other things: (i) limiting the deductibility, for U.S. federal income tax purposes, of compensation paid to any of our Senior Executive Officers (as defined in the Interim Final Rule) to $500,000 per year; (ii) prohibiting the payment or accrual of any bonus, retention award or incentive compensation to our five most highly-compensated employees, except in the form and under the limited circumstances permitted by the Interim Final Rule; (iii) prohibiting the payment of golden parachute payments (as defined in the Interim Final Rule) to our Senior Executive Officers or any of our next five most highly-compensated employees upon a departure from Park and our subsidiaries or due to a change in control of Park, except for payments for services performed or benefits accrued; (iv) requiring Park or the applicable subsidiary to “claw back” any bonus, retention award or incentive compensation paid (or under a legally binding obligation to be paid) to a Senior Executive Officer or any of our next 20 most highly-compensated employees if the payment was based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria; (v) prohibiting Park and our subsidiaries from maintaining any Employee Compensation Plan (as defined in the Interim Final Rule) that would encourage the manipulation of our reported earnings to enhance the compensation of any of our employees; (vi) prohibiting Park and our subsidiaries from maintaining compensation plans and arrangements for our Senior Executive Officers that encourage our Senior Executive Officers to take unnecessary and excessive risks that threaten the value of Park; (vii) requiring Park and our subsidiaries to limit any Employee Compensation Plan that unnecessarily exposes Park to risk; (viii) prohibiting Park and our subsidiaries from providing (formally or informally) “gross-ups” to any of our Senior Executive Officers or our 20 next most highly-compensated employees; (ix) requiring that Park disclose to the U.S. Treasury and Park’s primary regulator the amount, nature and justification for offering to any of our five most highly-compensated employees any perquisites whose total value exceeds $25,000; (x) requiring that Park disclose to the U.S. Treasury and Park’s primary regulator whether Park, the Park Board of Directors or the Compensation Committee engaged a compensation consultant and the services performed by that compensation consultant and any of its affiliates; (xi) requiring that Park disclose to the U.S. Treasury the identity of our Senior Executive Officers and 20 next most highly-compensated employees, identified by name and title and ranked in descending order of annual compensation; and (xii) subjecting any bonus, retention award or other compensation paid before February 17, 2009 to our Senior Executive Officers or our 20 next most highly-compensated employees to retroactive review by the U.S. Treasury to determine whether any such payments were inconsistent with the purposes of TARP or otherwise contrary to the public interest. The ARRA and the Interim Final Rule also required that the Park Board of Directors adopt a Company-wide policy regarding “excessive or luxury expenditures,” which was adopted on September 4, 2009, and post this policy on Park’s Internet Web site.

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Restrictions on compensation may make it more difficult for us to hire or retain personnel, which might adversely affect our financial condition or results of operations.

Changes in interest rates could have a material adverse effect on our financial condition, results of operations and cash flows.

Our earnings depend substantially on our interest rate spread, which is the difference between (i) the rates we earn on loans, investment securities and other interest earning assets and (ii) the interest rates we pay on deposits and our borrowings. These rates are highly sensitive to many factors beyond our control, including general economic conditions and the policies of various governmental and regulatory authorities. While we have taken measures intended to manage the risks of operating in a changing interest rate environment, there can be no assurance that such measures will be effective in avoiding undue interest rate risk. Information pertaining to the impact changes in interest rates could have on our net income is included in Table 10 in the section of Park’s 2009 Annual Report captioned “FINANCIAL REVIEW” on page 43, is incorporated herein by reference.

Legislative or regulatory changes or actions could adversely impact us or the businesses in which we are engaged.

The financial services industry is extensively regulated. We are subject to extensive state and federal regulation, supervision and legislation that govern almost all aspects of our operations. Laws and regulations may change from time to time and are primarily intended for the protection of consumers, depositors, federal deposit insurance funds and the banking system as a whole, and not to benefit our shareholders. The impact of any changes to laws and regulations or other actions by regulatory agencies may negatively impact us or our ability to increase the value of our business. Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on the operation of an institution, the classification of assets by the institution and the adequacy of an institution’s allowance for loan losses. Additionally, actions by regulatory agencies against us could cause us to devote significant time and resources to defending our business and may lead to penalties that materially affect us and our shareholders.

In light of current conditions in the global financial markets and the global economy, regulators have increased their focus on the regulation of the financial services industry. Most recently, government has intervened on an unprecedented scale in responding to the stresses experienced in the global financial markets. Some of the measures subject us and other institutions for which they were designed to additional restrictions, oversight or costs that may have an impact on our business, results of operations or the trading price of our Common Shares.

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Proposals for legislation that could substantially intensify the regulation of the financial services industry have been introduced in the United States Congress and in state legislatures. The agencies regulating the financial services industry also frequently adopt changes to their regulations. Substantial regulatory and legislative initiatives, including a comprehensive overhaul of the regulatory system in the United States, are possible in the years ahead. We are unable to predict whether any of these initiatives will succeed, which form they will take, or whether any additional changes to statutes or regulations, including the interpretation or implementation thereof, will occur in the future. Any such action could affect us in substantial and unpredictable ways and could have a material adverse effect on our business, financial condition and results of operations. For more information regarding the regulatory environment in which we operate, see the discussion under the caption “Supervision and Regulation of Park and its Subsidiaries” in “Item 1 — Business” of Part I of this Annual Report on Form 10-K.

We extend credit to a variety of customers based on internally set standards and the judgment of our loan officers and bank division presidents. We manage the credit risk through a program of underwriting standards, the review of certain credit decisions and an on-going process of assessing the quality of the credit already extended. Our credit standards and on-going process of credit assessment might not protect us from significant credit losses.

We take credit risk by virtue of making loans and leases, extending loan commitments and letters of credit and, to a lesser degree, purchasing non-governmental securities. Our exposure to credit risk is managed through the use of consistent underwriting standards that emphasize “in-market” lending while avoiding highly leveraged transactions as well as excessive industry and other concentrations. Our credit administration function employs risk management techniques to ensure that loans and leases adhere to corporate policy and problem loans and leases are promptly identified. While these procedures are designed to provide us with the information needed to implement policy adjustments where necessary, and to take proactive corrective actions, there can be no assurance that such measures will be effective in avoiding undue credit risk.

We may elect or be compelled to seek additional capital in the future, but that capital may not be available when it is needed.

We are required by federal and state regulatory authorities to maintain adequate levels of capital to support our operations. As we experience loan losses, particularly at Vision Bank, additional capital may need to be infused. In addition, we may elect to raise additional capital to support our business or to finance acquisitions, if any, or we may otherwise elect or be required to raise additional capital. Our ability to raise additional capital, if needed, will depend on our financial performance, conditions in the capital markets, economic conditions and a number of other factors, many of which are outside our control. Accordingly, there can be no assurance that we can raise additional capital if needed or on terms acceptable to us. If we cannot raise additional capital when needed, it may have a material adverse effect on our financial condition, results of operations and prospects.

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Our allowance for loan losses may prove to be insufficient to absorb potential losses in our loan portfolio.

Lending money is a substantial part of our business. However, every loan we make carries a risk of non-payment. This risk is affected by, among other things: cash flow of the borrower and/or the project being financed; in the case of a collateralized loan, the changes and uncertainties as to the future value of the collateral; the credit history of a particular borrower; changes in economic and industry conditions; and the duration of the loan.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make significant estimates that affect the financial statements. One of our most critical estimates is the level of the allowance for loan losses. Due to the inherent nature of these estimates, we cannot provide absolute assurance that we will not be required to charge earnings for significant unexpected loan losses.

We maintain an allowance for loan losses that we believe is a reasonable estimate of known and inherent losses within the loan portfolio. We make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of loans. Through a periodic review and consideration of the loan portfolio, management determines the amount of the allowance for loan losses by considering general market conditions, credit quality of the loan portfolio, the collateral supporting the loans and performance of customers relative to their financial obligations with us. The amount of future losses is susceptible to changes in economic, operating and other conditions, including changes in interest rates, which may be beyond our control, and these losses may exceed current estimates. We cannot fully predict the amount or timing of losses or whether the loan loss allowance will be adequate in the future.

During the fourth quarter of 2009, management of Park made a change in accounting estimate (as defined under GAAP) for the calculation of the allowance for loan losses. Based on escalating losses within the Commercial Land and Development (“CL&D”) loan portfolio of Vision Bank, management of Park determined that it was necessary to segregate this portion of the portfolio for both impaired credits, as well as those CL&D loans that were still accruing at December 31, 2009. From the date Park acquired Vision Bank (March 9, 2007) through December 31, 2009, Vision Bank has had cumulative charge-offs within the CL&D portfolio of $51.3 million. Additionally, at December 31, 2009, management of Park established a specific reserve of $21.7 million related to those CL&D loans at Vision Bank that are deemed to be impaired. Vision Bank had $132.8 million of performing CL&D loans at December 31, 2009. Additionally, Park National Bank had $21.3 million of loan participations related to CL&D loans originated by Vision Bank. Management expects the loan loss provision for 2010 will be approximately $45 million to $55 million. This estimate reflects management’s expectation that: (1) future declines in collateral values will be moderate as the economy continues to improve and pricing stabilizes through 2010 and (2) new nonperforming loans, specifically new nonperforming CL&D loans at Vision Bank, will decline in 2010. As discussed under the caption “Credit Experience” in the section of our 2009 Annual Report captioned “FINANCIAL REVIEW” on pages 40 through 42, Vision Bank’s performing CL&D loan portfolio has declined significantly over the past two years. For more information on these estimates, refer to the discussion of our “Critical Accounting Policies” included in the section of our 2009 Annual Report captioned “FINANCIAL REVIEW” on pages 32 and 33. If our assumptions prove to be incorrect, our allowance for loan losses may not be sufficient to cover losses inherent in our loan portfolio, resulting in additions to the allowance. Excessive loan losses and significant additions to our allowance for loan losses could have a material adverse impact on our financial condition and results of operations.

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In addition, bank regulators periodically review our allowance for loan losses and may require us to increase our provision for loan losses or recognize further loan charge-offs. Any increase in our allowance for loan losses or loan charge-offs as required by these regulatory authorities might have a material adverse effect on our financial condition and results of operations.

We are exposed to operational risk.

Similar to any large organization, we are exposed to many types of operational risk, including reputational risk, legal and compliance risk, the risk of fraud or theft by employees or outsiders, unauthorized transactions by employees or operational errors, including clerical or record-keeping errors or those resulting from faulty or disabled computer or telecommunications systems.

Negative public opinion can result from our actual or alleged conduct in any number of activities, including lending practices, corporate governance and acquisitions, and from actions taken by governmental regulators and community organizations in response to those activities. Negative public opinion can adversely affect our ability to attract and keep customers and can expose us to potential litigation and regulatory action.

Given the volume of transactions we process, certain errors may be repeated or compounded before they are discovered and successfully rectified. Our necessary dependence upon automated systems to record and process our transaction volume may further increase the risk that technical system flaws or employee tampering or manipulation of those systems will result in losses that are difficult to detect. We may also be subject to disruptions of our operating systems arising from events that are wholly or partially beyond our control (for example, computer viruses or electrical or telecommunications outages), which may give rise to disruption of service to customers and to financial loss or liability. We are further exposed to the risk that our external vendors may be unable to fulfill their contractual obligations (or will be subject to the same risk of fraud or operational errors by their respective employees as we are) and to the risk that our (or our vendors’) business continuity and data security systems prove to be inadequate.

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We depend upon the accuracy and completeness of information about customers and counterparties.

In deciding whether to extend credit or enter into other transactions with customers and counterparties, we may rely on information provided to us by customers and counterparties, including financial statements and other financial information. We may also rely on representations of customers and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. For example, in deciding whether to extend credit to a business, we may assume that the customer’s audited financial statements conform with GAAP and present fairly, in all material respects, the financial condition, results of operations and cash flows of the customer. We may also rely on the audit report covering those financial statements. Our financial condition, results of operations and cash flows could be negatively impacted to the extent that we rely on financial statements that do not comply with GAAP or on financial statements and other financial information that are materially misleading.

Changes in accounting standards could impact reported earnings.

The accounting standard setters, including the Financial Accounting Standards Board, the SEC and other regulatory bodies, periodically change the financial accounting and reporting guidance that governs the preparation of our consolidated financial statements. These changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply new or revised guidance retroactively, resulting in the restatement of prior period financial statements.

We may be a defendant from time to time in the future in a variety of litigation and other actions, which could have a material adverse effect on our financial condition, results of operations and cash flows.

We and our subsidiaries may be involved from time to time in the future in a variety of litigation arising out of our business. The risk of litigation increases in times of increased troubled loan collection activity. Our insurance may not cover all claims that may be asserted against us, and any claims asserted against us, regardless of merit or eventual outcome, may harm our reputation. Should the ultimate judgments or settlements in any litigation exceed our insurance coverage, they could have a material adverse effect on our financial condition, results of operations and cash flows. In addition, we may not be able to obtain appropriate types or levels of insurance in the future, nor may we be able to obtain adequate replacement policies with acceptable terms, if at all.

We are a holding company and depend on our subsidiaries for dividends, distributions and other payments.

As a bank holding company, we are a legal entity separate and distinct from our subsidiaries and affiliates. Our principal source of funds to pay dividends on our Common Shares and service our debt is dividends from these subsidiaries. In the event our subsidiaries become unable to pay dividends to us, we may not be able to service our debt, pay our other obligations or pay dividends on the Series A Preferred Shares or our Common Shares. Accordingly, our inability to receive dividends from our subsidiaries could also have a material adverse effect on our business, financial condition and results of operations.

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Various federal and state statutory provisions and regulations limit the amount of dividends that our banking and other subsidiaries may pay to us without regulatory approval. Our banking subsidiaries generally may not, without prior regulatory approval, pay a dividend in an amount greater than their undivided profits. In addition, the prior approval of the OCC is required for the payment of a dividend by Park National Bank if the total of all dividends declared in a calendar year would exceed the total of its net income for the year combined with its retained net income for the two preceding years. The Federal Reserve Board and the OCC have issued policy statements that provide that insured banks and bank holding companies should generally only pay dividends out of current operating earnings. Thus, the ability of Park National Bank to pay dividends in the future is currently influenced, and could be further influenced, by bank regulatory policies and capital guidelines and may restrict our ability to declare and pay dividends.

Payment of dividends could also be subject to regulatory limitations if Park’s banking subsidiaries became “under-capitalized” for purposes of the applicable “prompt corrective action” regulations. “Under-capitalized” is currently defined as having a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 4.0%, or a core capital, or leverage, ratio of less than 4.0%. Throughout 2008 and 2009, Park’s banking subsidiaries were in compliance with all regulatory capital requirements and had sufficient capital under the “prompt corrective action” regulations to be deemed “well-capitalized.”

Vision Bank is not currently permitted to pay dividends to us and we can provide no assurances regarding if or when Vision Bank will be permitted to begin paying dividends to us again.

In addition, if any of our subsidiaries becomes insolvent, the direct creditors of that subsidiary will have a prior claim on that subsidiary’s assets. Our rights and the rights of our creditors will be subject to that prior claim, unless we are also a direct creditor of that subsidiary.

Unauthorized disclosure of sensitive or confidential client or customer information, whether through a breach of our computer systems or otherwise, could severely harm our business.

As part of our financial institution business, we collect, process and retain sensitive and confidential client and customer information on behalf of our subsidiaries and other third parties. Despite the security measures we have in place, our facilities and systems, and those of our third-party service providers, may be vulnerable to security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors or other similar events. If information security is breached, information can be lost or misappropriated, resulting in financial loss or costs to us. Any security breach involving confidential customer information, whether by us or by our vendors, could severely damage our reputation, expose us to the risks of litigation and liability or disrupt our operations and have a material adverse effect on our business.

Derivative transactions may expose us to unexpected risk and potential losses.

We are party to a number of derivative transactions. Many of these derivative instruments are individually negotiated and non-standardized, which can make exiting, transferring or settling the position difficult. We carry borrowings which contain embedded derivatives. These borrowing arrangements require that we deliver underlying securities to the counterparty as collateral. If market interest rates were to decline, we may be required to deliver more securities to the counterparty. We are dependent on the creditworthiness of the counterparties and are therefore susceptible to credit and operational risk in these situations.

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Derivative contracts and other transactions entered into with third parties are not always confirmed by the counterparties on a timely basis. While the transaction remains unconfirmed, we are subject to heightened credit and operational risk and, in the event of a default, may find it more difficult to enforce the contract. In addition, as new and more complex derivative products are created, covering a wider array of underlying credit and other instruments, disputes about the terms of the underlying contracts could arise, which could impair our ability to effectively manage our risk exposures from these products and subject us to increased costs. Any regulatory effort to create an exchange or trading platform for credit derivatives and other over-the-counter derivative contracts, or a market shift toward standardized derivatives, could reduce the risk associated with such transactions, but under certain circumstances could also limit our ability to develop derivatives that best suit the needs of our clients and ourselves and adversely affect our profitability.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2. PROPERTIES.

Park’s principal executive offices are located at 50 North Third Street, Newark, Ohio 43055.

Park National Bank

As of the date of this Annual Report on Form 10-K, Park National Bank, its divisions and its subsidiary Scope Leasing, Inc. have a total of 127 financial service offices in Ohio and one in Kentucky. Park National Bank has six financial service offices (including its main office) and its operations center in Newark in Licking County. In addition, within Ohio, Park National Bank has:

• financial service offices in Ashland, Loudonville and Perrysville in Ashland County;

• a financial service office in Athens in Athens County;

• a financial service office in West Chester in Butler County;

• financial service offices in Urbana (two offices), Mechanicsburg and North Lewisburg in Champaign County;

• financial service offices in Springfield (six offices), Enon, Medway, New Carlisle (two offices) and South Charleston in Clark County;

• financial service offices in Amelia (two offices), Cincinnati (two offices), Milford (two offices), New Richmond and Owensville in Clermont County;

• a financial service office in Coshocton in Coshocton County;

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• financial service offices in Bucyrus, Crestline and Galion in Crawford County;

• financial service offices in Greenville (five offices), Arcanum (two offices) and Versailles in Darke County;

• financial service offices in Baltimore, Pickerington (two offices) and Lancaster (eight offices) in Fairfield County;

• a financial service office in Jeffersonville in Fayette County;

• financial service offices in Canal Winchester, Columbus, Gahanna and Worthington in Franklin County;

• financial service offices in Jamestown and Xenia (two offices) in Greene County;

• a financial service office in Anderson in Hamilton County;

• a financial service office in Logan in Hocking County;

• financial service offices in Millersburg (two offices) in Holmes County;

• financial service offices in Mount Vernon (3 offices), Centerburg, Danville and Fredericktown in Knox County;

• financial service offices in Granville, Heath (two offices), Hebron, Johnstown, Kirkersville, Pataskala, Reynoldsburg (two offices) and Utica in Licking County;

• a financial service office in Plain City in Madison County;

• financial service offices in Caledonia, Marion (two offices) and Prospect in Marion County;

• a financial service office in Fort Recovery in Mercer County;

• financial service offices in Piqua (three offices), Tipp City and Troy (two offices) in Miami County;

• financial service offices in Mount Gilead (two offices) in Morrow County;

• financial service offices in Zanesville (seven offices), New Concord and Dresden in Muskingum County;

• a financial service office in New Lexington in Perry County;

• financial service offices in Bellville, Mansfield (eight offices), Butler, Lexington, Ontario and Shelby in Richland County;

• a financial service office in Newcomerstown in Tuscarawas County; and

• a financial service office in Springboro in Warren County.

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Park National Bank also has one financial service office in Florence (Boone County), Kentucky.

The financial service offices in Athens, Coshocton, Hocking, Muskingum, Perry and Tuscarawas Counties comprise the Century National Division. The financial service offices in Canal Winchester, Reynoldsburg and Fairfield County comprise the Fairfield National Division. The financial service offices in Ashland County comprise the Farmers & Savings Division. The financial service offices in Bellville in Richland County and in Holmes, Knox and Morrow Counties comprise the First-Knox National Division. The financial service offices in Butler, Clermont, Hamilton and Warren Counties in Ohio and in Boone County, Kentucky comprise The Park National Bank of Southwest Ohio & Northern Kentucky Division. The financial service offices in Richland County (except the Bellville office) comprise the Richland Trust Division. The financial service offices in Darke and Mercer Counties comprise the Second National Division. The financial service offices in Champaign, Clark, Fayette, Greene and Madison Counties comprise the Security National Division. The financial service offices in Crawford and Marion Counties comprise the United Bank Division. The financial service offices in Miami County comprise the Unity National Division. Of the financial service offices described above, 38 are leased and the remainder are owned. Park National Bank also operates 35 off-site automated teller machines.

Scope Leasing, Inc. has an office located in Columbus in Franklin County, Ohio.

Guardian Finance

As of the date of this Annual Report on Form 10-K, Guardian Finance has a total of six financial service offices, all of which are located in Ohio. Guardian Finance has its main office in Hilliard in Franklin County, a financial service office in Springfield in Clark County, a financial service office in Lancaster in Fairfield County where it leases space from the Fairfield National Bank division of Park National Bank, a financial service office in Heath in Licking County, a financial service office in Centerville in Montgomery County and a financial service office in Mansfield in Richland County where it leases space from the Richland Bank division of Park National Bank. All of Guardian Finance’s financial service offices are leased.

Vision Bank

As of the date of this Annual Report on Form 10-K, Vision Bank has a total of 18 financial service offices. Vision Bank has ten financial service offices in Florida, including:

• its main office in Panama City and two financial service offices in Panama City Beach in Bay County;

• financial service offices in Port St. Joe, Port St. Joe Beach and Wewahitchka in Gulf County;

• a loan production office in Tallahassee in Leon County;

• a financial service office in Destin in Okaloosa County;

• a financial service office in Navarre in Santa Rosa County; and

• a financial service office in Santa Rosa Beach in Walton County.

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Vision Bank has eight financial service offices in Alabama, one each in Daphne, Elberta, Fairhope, Foley, Gulf Shores, Orange Beach, Point Clear and Robertsdale in Baldwin County and one messenger office in Gulf Shores in Baldwin County, Alabama. Of Vision Bank’s 18 financial service offices, 10 are leased and the remainder are owned. Vision Bank also operates five off-site automatic teller machines.

ITEM 3. LEGAL PROCEEDINGS.

There are no pending legal proceedings to which Park or any of its subsidiaries is a party or to which any of their property is subject, except for routine legal proceedings to which Park’s subsidiary banks are parties incidental to their respective banking businesses. Park considers none of those proceedings to be material.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

There were no matters submitted to a vote of the shareholders of Park during the fourth quarter of the fiscal year ended December 31, 2009.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

The information called for in this Item 5 by Items 201(a) through 201(c) of SEC Regulation S-K is incorporated herein by reference from “Table 14 — Market and Dividend Information” and the accompanying disclosure in the section of Park’s 2009 Annual Report captioned “FINANCIAL REVIEW,” on page 47.

On November 17, 2009, Park entered into a Subscription Agreement for Common Shares of Park National Corporation (the “Subscription Agreement”) with the Park National Corporation Defined Benefit Pension Plan (the “Subscriber”), pursuant to which the Subscriber agreed to purchase 115,800 Common Shares. The purchase price for the Common Shares was $60.45 per share, which was the closing price of the Common Shares on November 16, 2009. The aggregate proceeds to Park from the sale of Common Shares to the Subscriber pursuant to the Subscription Agreement were $7,000,110. The Common Shares were sold to the Subscriber in reliance upon the exemptions from the Securities Act registration requirements provided by Section 4(6) of the Securities Act and Rule 506 promulgated under the Securities Act.

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No purchases of Park’s Common Shares were made by or on behalf of Park or any “affiliated purchaser” of Park, as defined in Rule 10b-18(a)(3) under the Exchange Act during the fiscal quarter ended December 31, 2009. The following table provides information concerning changes in the maximum number of Common Shares that may be purchased under Park’s previously announced repurchase programs as a result of the forfeiture of previously outstanding incentive stock options.

							Maximum
					Total Number of		Number of
					Common Shares		Common Shares
					Purchased as Part		that May Yet Be
	Total Number of		Average Price		of Publicly		Purchased under
	Common Shares		Paid per		Announced Plans		the Plans or
Period	Purchased		Common Share		or Programs		Programs (1)
October 1 through October 31, 2009		—		—		—		1,493,388
November 1 through November 30, 2009		—		—		—		1,486,368
December 1 through December 31, 2009		—		—		—		1,483,515
Total		—		—		—		1,483,515

(1)	The number shown represents, as of the end of each period, the maximum aggregate number of Common Shares that may yet be purchased under Park’s publicly announced stock repurchase authorization to fund the Park National Corporation 2005 and 1995 Incentive Stock Option Plans as well as Park’s publicly announced stock repurchase program.
	On July 16, 2007, Park announced that its Board of Directors had authorized management to purchase up to an aggregate of 1,000,000 additional Common Shares over the three-year period ending July 15, 2010 in open market purchases or through privately-negotiated transactions, to be held as treasury shares for general corporate purposes. At December 31, 2009, 992,174 Common Shares remained authorized for repurchase under this stock repurchase authorization. No Common Shares were purchased under this authorization in 2009 and no Common Shares have been purchased under this authorization in 2010 through the date of this Annual Report on Form 10-K.
	The Park National Corporation 2005 Incentive Stock Option Plan (the “2005 Plan”) was adopted by the Board of Directors of Park on January 18, 2005 and was approved by the Park shareholders at the Annual Meeting of Shareholders on April 18, 2005. Under the 2005 Plan, 1,500,000 Common Shares are authorized for delivery upon the exercise of incentive stock options granted under the 2005 Plan. All of the Common Shares delivered upon the exercise of incentive stock options granted under the 2005 Plan are to be treasury shares. During 2009, Park did not purchase any Common Shares to be held as treasury shares and delivered upon exercise of incentive stock options granted under the 2005 Plan. As of December 31, 2009, incentive stock options covering 254,870 Common Shares were outstanding and 1,245,130 Common Shares were available for future grants under the 2005 Plan.

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The Park National Corporation 1995 Incentive Stock Option Plan (as amended, the “1995 Plan”) was adopted April 17, 1995, and amended April 20, 1998 and April 16, 2001. Pursuant to the terms of the 1995 Plan, all of the Common Shares delivered upon exercise of incentive stock options granted under the 1995 Plan were to be treasury shares. As of December 31, 2009, there were no incentive stock options outstanding under the 1995 Plan and no further incentive stock options may be granted under the 1995 Plan.

Incentive stock options, granted under the 2005 Plan, covering an aggregate of 254,870 Common Shares were outstanding as of December 31, 2009 and 1,245,130 Common Shares were available for future grants under the 2005 Plan. With 1,008,659 Common Shares held as treasury shares for purposes of the 2005 Plan at December 31, 2009, an additional 491,341 Common Shares remained authorized for repurchase for purposes of funding the 2005 Plan.

ITEM 6. SELECTED FINANCIAL DATA.

The information called for in this Item 6 is incorporated herein by reference from “Table 12 — Consolidated Five-Year Selected Financial Data” and the accompanying disclosure in the section of Park’s 2009 Annual Report captioned “FINANCIAL REVIEW,” on page 45.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The information called for in this Item 7 is incorporated herein by reference from the section of Park’s 2009 Annual Report captioned “FINANCIAL REVIEW,” on pages 30 through 47.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As noted in Table 5 and Table 10 included in the section of Park’s 2009 Annual Report captioned “FINANCIAL REVIEW” on pages 37 and 43, respectively, Park’s tax equivalent net interest margin has remained fairly stable over each of the three fiscal years ended December 31, 2009, 2008 and 2007. Consistently, over the last several years, Park’s earnings simulation model has projected that changes in interest rates would have only a small impact on net income and the tax equivalent net interest margin. The tax equivalent net interest margin was 4.22%, 4.16% and 4.20% for each of the fiscal years ended December 31, 2009, 2008 and 2007, respectively. As noted in Note 21 of the Notes to Consolidated Financial Statements under the caption “Fair Values” on pages 70 through 72 of Park’s 2009 Annual Report, Park and its subsidiaries did not have any derivative financial instruments in 2007. However, on January 2, 2008, Park entered into a “pay fixed-receive floating” interest rate swap agreement for a notional amount of $25 million, which matures on December 28, 2012. This interest rate swap agreement was designed as a cash flow hedge against the variability of cash flows related to the Subordinated Debenture in the principal amount of $25,000,000 issued by Park National Bank on December 28, 2007. The discussion of this interest rate swap agreement included in the section of Park’s 2009 Annual Report captioned “FINANCIAL REVIEW — SOURCE OF FUNDS — Subordinated Debentures/Notes” on page 34, and in Note 19 of the Notes to Consolidated Financial Statements located on pages 69 and 70 of Park’s 2009 Annual Report and Note 21 of the Notes to Consolidated Financial Statements located on pages 70 through 72 of Park’s 2009 Annual Report is incorporated herein by reference. The discussion of interest rate sensitivity included in the section of Park’s 2009 Annual Report captioned “FINANCIAL REVIEW — CAPITAL RESOURCES — Liquidity and Interest Rate Sensitivity Management,” on pages 42 and 43, is incorporated herein by reference. In addition, the discussion of Park’s commitments, contingent liabilities and off-balance sheet arrangements included on pages 43 and 44 of Park’s 2009 Annual Report under the caption “FINANCIAL REVIEW — CONTRACTUAL OBLIGATIONS — Commitments, Contingent Liabilities, and Off-Balance Sheet Arrangements,” and in Note 18 of the Notes to Consolidated Financial Statements included on page 69 of Park’s 2009 Annual Report, is incorporated herein by reference.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The Consolidated Balance Sheets of Park and its subsidiaries at December 31, 2009 and 2008, the related Consolidated Statements of Income, of Changes in Stockholders’ Equity and of Cash Flows for the years ended December 31, 2009, 2008 and 2007, the related Notes to Consolidated Financial Statements and the Report of Independent Registered Public Accounting Firm (Crowe Horwath LLP) appearing on pages 49 through 75 of Park’s 2009 Annual Report, are incorporated herein by reference. Quarterly Financial Data provided in “Table 13 — Quarterly Financial Data” and the accompanying disclosure included in the section of Park’s 2009 Annual Report captioned “FINANCIAL REVIEW,” on pages 45 and 46, is also incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

No response required.

ITEM 9A. 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 (the principal financial officer) of Park, Park’s management has evaluated the effectiveness of Park’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the fiscal year covered by this Annual Report on Form 10-K. Based on that evaluation, Park’s Chairman of the Board and Chief Executive Officer and Park’s Chief Financial Officer have concluded that:

• information required to be disclosed by Park in this Annual Report on Form 10-K 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 principal financial officer, as appropriate to allow timely decisions regarding required disclosure;

• information required to be disclosed by Park in this Annual Report on Form 10-K 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 the end of the fiscal year covered by this Annual Report on Form 10-K.

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Management’s Annual Report on Internal Control over Financial Reporting

The “MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING” on page 48 of Park’s 2009 Annual Report is incorporated herein by reference.

Attestation Report of the Registered Public Accounting Firm

The “REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM” on page 49 of Park’s 2009 Annual Report is incorporated herein by reference.

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 December 31, 2009, that have materially affected, or are reasonably likely to materially affect, Park’s internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

No response required.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Directors, Executive Officers and Persons Nominated or Chosen to Become Directors or Executive Officers

The information required by Item 401 of SEC Regulation S-K concerning the directors of Park and the nominees for re-election as directors of Park at the Annual Meeting of Shareholders to be held on April 19, 2010 (the “2010 Annual Meeting”) is incorporated herein by reference from the disclosure to be included under the caption “PROPOSAL 1 — ELECTION OF DIRECTORS” in Park’s definitive Proxy Statement relating to the 2010 Annual Meeting to be filed pursuant to SEC Regulation 14A (“Park’s 2010 Proxy Statement”).

The information required by Item 401 of SEC Regulation S-K concerning the executive officers of Park is incorporated herein by reference from the disclosure to be included under the caption “EXECUTIVE OFFICERS” in Park’s 2010 Proxy Statement.

Compliance with Section 16(a) of the Exchange Act

The information required by Item 405 of SEC Regulation S-K is incorporated herein by reference from the disclosure to be included under the caption “BENEFICIAL OWNERSHIP OF PARK COMMON SHARES — Section 16(a) Beneficial Ownership Reporting Compliance” in Park’s 2010 Proxy Statement.

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Committee Charters; Code of Business Conduct and Ethics

Park’s Board of Directors has adopted charters for each of the Audit Committee, the Compensation Committee, the Nominating Committee and the Risk Committee.

In accordance with the requirements of Section 807 of the NYSE Amex Company Guide, the Board of Directors of Park has adopted a Code of Business Conduct and Ethics covering the directors, officers and employees of Park and its affiliates, including Park’s Chairman of the Board and Chief Executive Officer (the principal executive officer), Park’s President and Secretary, Park’s Chief Financial Officer (the principal financial officer) and Park’s Chief Accounting Officer (the principal accounting officer). Park intends to disclose the following events, if they occur, in a current report on Form 8-K within four business days following their occurrence: (A) the date and nature of any amendment to a provision of Park’s Code of Business Conduct and Ethics that (i) applies to Park’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, (ii) relates to any element of the code of ethics definition enumerated in Item 406(b) of SEC Regulation S-K, and (iii) is not a technical, administrative or other non-substantive amendment; and (B) a description of any waiver (including the nature of the waiver, the name of the person to whom the waiver was granted and the date of the waiver), including an implicit waiver, from a provision of the Code of Business Conduct and Ethics granted to Park’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions that relates to one or more of the elements of the code of ethics definition set forth in Item 406(b) of SEC Regulation S-K. In addition, Park will disclose any waivers from the provisions of the Code of Business Conduct and Ethics granted to a director or executive officer of Park in a current report on Form 8-K within four business days following their occurrence.

The text of each of the Code of Business Conduct and Ethics, the Audit Committee Charter, the Compensation Committee Charter, the Nominating Committee Charter and the Risk Committee Charter is posted on the “Governance Documents” section of the “Investor Relations” page of Park’s Internet Web site located at www.parknationalcorp.com. Interested persons may also obtain copies of the Code of Business Conduct and Ethics, the Audit Committee Charter, the Compensation Committee Charter, the Nominating Committee Charter and the Risk Committee Charter, without charge, by writing to the President of Park at Park National Corporation, 50 North Third Street, P.O. Box 3500, Newark, Ohio 43058-3500, Attention: David L. Trautman.

Procedures for Recommending Director Nominees

Information concerning the procedures by which shareholders of Park may recommend nominees to Park’s Board of Directors is incorporated herein by reference from the disclosure to be included under the caption “CORPORATE GOVERNANCE — Nominating Procedures” in Park’s 2010 Proxy Statement. These procedures have not materially changed from those described in Park’s definitive Proxy Statement for the 2009 Annual Meeting of Shareholders held on April 20, 2009.

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Audit Committee

The information required by Items 407(d)(4) and 407(d)(5) of SEC Regulation S-K is incorporated herein by reference from the disclosure to be included under the caption “BOARD OF DIRECTORS STRUCTURE AND MEETINGS — Committees of the Board — Audit Committee” in Park’s 2010 Proxy Statement.

ITEM 11. EXECUTIVE COMPENSATION.

The information required by Item 402 of SEC Regulation S-K is incorporated herein by reference from the disclosure to be included under the captions “EXECUTIVE COMPENSATION” and “DIRECTOR COMPENSATION” in Park’s 2010 Proxy Statement.

The information required by Item 407(e)(4) of SEC Regulation S-K is incorporated herein by reference from the disclosure to be included under the caption “COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION” in Park’s 2010 Proxy Statement.

The information required by Item 407(e)(5) of SEC Regulation S-K is incorporated herein by reference from the disclosure to be included under the caption “EXECUTIVE COMPENSATION — Compensation Committee Report” in Park’s 2010 Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Beneficial Ownership of Common Shares of Park

The information required by Item 403 of SEC Regulation S-K is incorporated herein by reference from the disclosure to be included under the caption “BENEFICIAL OWNERSHIP OF PARK COMMON SHARES” in Park’s 2010 Proxy Statement.

Equity Compensation Plan Information

Park has two compensation plans (excluding plans assumed by Park in the merger with Security Banc Corporation effective March 23, 2001 (the “Assumed Security Plans”)) under which Common Shares of Park are authorized for issuance to directors, officers or employees of Park and Park’s subsidiaries in exchange for consideration in the form of goods or services — the Park National Corporation 2005 Incentive Stock Option Plan (the “2005 Plan”) and the Park National Corporation Stock Plan for Non-Employee Directors of Park National Corporation and Subsidiaries (the “Directors’ Stock Plan”). In addition, Park maintains the Park National Corporation Employees Stock Ownership Plan (the “Park KSOP”), which is intended to meet the qualification requirements of Section 401(a) of the Internal Revenue Code of 1986, as amended. The 2005 Plan and the Directors’ Stock Plan have been approved by Park’s shareholders.

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The following table shows the number of Common Shares issuable upon exercise of incentive stock options (“ISOs”) granted under the 2005 Plan outstanding at December 31, 2009, the weighted-average exercise price of those ISOs and the number of Common Shares remaining available for future issuance under the 2005 Plan and the Directors’ Stock Plan at December 31, 2009, excluding Common Shares issuable upon exercise of outstanding ISOs granted under the 2005 Plan. The table does not include Common Shares subject to outstanding options granted under the Assumed Security Plans. Footnote (2) to the table sets forth the total number of Common Shares issuable upon exercise of options granted under the Assumed Security Plans which were outstanding at December 31, 2009, and the weighted-average exercise price of those options. Park cannot grant additional options under the Assumed Security Plans.

							Number of Common
							Shares remaining
							available for future
	Number of Common						issuance under equity
	Shares to be issued			Weighted-average			compensation plans
	upon exercise of			exercise price of			(excluding Common
	outstanding options,			outstanding options,			Shares reflected in
	warrants and rights			warrants and rights			column (a))
Plan category	(a)			(b)			(c)
Equity compensation plans approved by shareholders		254,870		$	97.78			1,305,530	(1)
Equity compensation plans not approved by shareholders			(2)			(2)			(2)
Total		254,870		$	97.78			1,305,530	(1)

(1)

Includes 1,245,130 Common Shares remaining available for future issuance under the 2005 Plan and 60,400 Common Shares remaining available for future issuance under the Directors’ Stock Plan.

(2)

The table does not include information for the Assumed Security Plans. A total of 22 Common Shares were issuable upon exercise of options granted under Assumed Security Plans which were outstanding at December 31, 2009. The weighted-average exercise price of all options granted under the Assumed Security Plans which were outstanding at December 31, 2009, was $92.91. Park cannot grant additional options under the Assumed Security Plans.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Certain Relationships and Related Party Transactions

The information required by Item 404 of SEC Regulation S-K is incorporated herein by reference from the disclosure to be included under the captions “CORPORATE GOVERNANCE — Transactions with Related Persons” and “COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION” in Park’s 2010 Proxy Statement.

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Director Independence

The information required by Item 407(a) of SEC Regulation S-K is incorporated herein by reference from the disclosure to be included under the caption “CORPORATE GOVERNANCE — Independence of Directors” in Park’s 2010 Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The information called for in this Item 14 is incorporated herein by reference from the disclosure to be included under the captions “AUDIT COMMITTEE MATTERS — Pre-Approval of Services Performed by Independent Registered Public Accounting Firm” and “AUDIT COMMITTEE MATTERS — Fees of Independent Registered Public Accounting Firm” in Park’s 2010 Proxy Statement.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a)(1) Financial Statements.

The consolidated financial statements (and report thereon) listed below are incorporated herein by reference from Park’s 2009 Annual Report as noted:

Report of Independent Registered Public Accounting Firm (Crowe Horwath LLP) — Incorporated by reference from page 49 of Park’s 2009 Annual Report

Consolidated Balance Sheets at December 31, 2009 and 2008 — Incorporated by reference from pages 50 and 51 of Park’s 2009 Annual Report

Consolidated Statements of Income for the years ended December 31, 2009, 2008 and 2007 — Incorporated by reference from pages 52 and 53 of Park’s 2009 Annual Report

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2009, 2008 and 2007 — Incorporated by reference from page 54 of Park’s 2009 Annual Report

Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007 — Incorporated by reference from page 55 of Park’s 2009 Annual Report

Notes to Consolidated Financial Statements — Incorporated by reference from pages 56 through 75 of Park’s 2009 Annual Report

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(a)(2)	Financial Statement Schedules.
	All schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions or are inapplicable and have been omitted.
(a)(3)	Exhibits.
	The documents listed below are filed with this Annual Report on Form 10-K as exhibits or incorporated into this Annual Report on Form 10-K by reference as noted:

Exhibit No.			Description of Exhibit
	2.1	(a)	Agreement and Plan of Merger, dated to be effective as of September 14, 2006, by and between Park National Corporation and Vision Bancshares, Inc. (the “Vision Bancshares Merger Agreement”)* (incorporated herein by reference to Annex A to the Prospectus of Park National Corporation/Proxy Statement of Vision Bancshares, Inc. dated January 9, 2007, filed on January 11, 2007 pursuant to Rule 424(b)(3) under the Securities Act of 1933, as amended (Registration No. 333-139083))
	2.1	(b)	First Amendment to Agreement and Plan of Merger, dated to be effective as of February 6, 2007, by and between Park National Corporation and Vision Bancshares, Inc. (incorporated herein by reference to Exhibit 2.1(b) to Park National Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006 (File No. 1-13006) (“Park’s 2006 Form 10-K”))
	2.2		Plan of Merger and Merger Agreement between Vision Bank (an Alabama state-chartered bank with its main office located in Gulf Shores, Alabama) and Vision Bank (a Florida state-chartered bank with its main office located in Panama City, Florida), dated July 10, 2007 (incorporated herein by reference to Exhibit 2.1 to Park National Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2007 (File No. 1-13006))
	2.3		Agreement to Merge, entered into as of May 21, 2008, by and between (a) each of (i) The Richland Trust Company, (ii) Century National Bank, (iii) The First-Knox National Bank of Mount Vernon, (iv) United Bank, National Association (also referred to as United Bank, N.A.), (v) Second National Bank, (vi) The Security National Bank and Trust Co. and (vii) The Citizens National Bank of Urbana; and (b) The Park National Bank (incorporated herein by reference to Exhibit 2.1 to Park National Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008 (File No. 1-13006))
	2.4		Credit Card Account Purchase Agreement by and between U.S. Bank National Association ND, d/b/a Elan Financial Services and The Park National Bank (also known as Park National Bank), executed on October 10, 2008 with an effective date of September 30, 2008** (incorporated herein by reference to Exhibit 2.1 to Park National Corporation’s Current Report on Form 8-K dated and filed on October 14, 2008 (File No. 1-13006))

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Exhibit No.			Description of Exhibit
	3.1	(a)	Articles of Incorporation of Park National Corporation as filed with the Ohio Secretary of State on March 24, 1992 (incorporated herein by reference to Exhibit 3(a) to Park National Corporation’s Form 8-B, filed on May 20, 1992 (File No. 0-18772) (“Park’s Form 8-B”))
	3.1	(b)	Certificate of Amendment to the Articles of Incorporation of Park National Corporation as filed with the Ohio Secretary of State on May 6, 1993 (incorporated herein by reference to Exhibit 3(b) to Park National Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 1993 (File No. 0-18772))
	3.1	(c)	Certificate of Amendment to the Articles of Incorporation of Park National Corporation as filed with the Ohio Secretary of State on April 16, 1996 (incorporated herein by reference to Exhibit 3(a) to Park National Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1996 (File No. 1-13006))
	3.1	(d)	Certificate of Amendment by Shareholders to the Articles of Incorporation of Park National Corporation as filed with the Ohio Secretary of State on April 22, 1997 (incorporated herein by reference to Exhibit 3(a)(1) to Park National Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1997 (File No. 1-13006) (“Park’s June 30, 1997 Form 10-Q”))
	3.1	(e)	Certificate of Amendment by Shareholders or Members as filed with the Secretary of State of the State of Ohio on December 18, 2008 in order to evidence the adoption by the shareholders of Park National Corporation on December 18, 2008 of an amendment to Article FOURTH of Park National Corporation’s Articles of Incorporation to authorize Park National Corporation to issue up to 200,000 preferred shares, without par value (incorporated herein by reference to Exhibit 3.1 to Park National Corporation’s Current Report on Form 8-K dated and filed December 19, 2008 (File No. 1-13006))
	3.1	(f)	Certificate of Amendment by Directors or Incorporators to Articles as filed with the Secretary of State of the State of Ohio on December 19, 2008, evidencing adoption of amendment by Board of Directors of Park National Corporation to Article FOURTH of Articles of Incorporation to establish express terms of Fixed Rate Cumulative Perpetual Preferred Shares, Series A, each without par value, of Park National Corporation (incorporated herein by reference to Exhibit 3.1 to Park National Corporation’s Current Report on Form 8-K dated and filed December 23, 2008 (File No. 1-13006) (“Park’s December 23, 2008 Form 8-K”))
	3.1	(g)	Articles of Incorporation of Park National Corporation (reflecting amendments through December 19, 2008) [for SEC reporting compliance purposes only — not filed with Ohio Secretary of State] (incorporated herein by reference to Exhibit 3.1(g) to Park National Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008 (File No. 1-13006) (“Park’s 2008 Form 10-K”))

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Exhibit No.			Description of Exhibit
	3.2	(a)	Regulations of Park National Corporation (incorporated herein by reference to Exhibit 3(b) to Park’s Form 8-B)
	3.2	(b)	Certified Resolution regarding Adoption of Amendment to Subsection 2.02(A) of the Regulations of Park National Corporation by Shareholders on April 21, 1997 (incorporated herein by reference to Exhibit 3(b)(1) to Park’s June 30, 1997 Form 10-Q)
	3.2	(c)	Certificate Regarding Adoption of Amendments to Sections 1.04 and 1.11 of Park National Corporation’s Regulations by the Shareholders on April 17, 2006 (incorporated herein by reference to Exhibit 3.1 to Park National Corporation’s Current Report on Form 8-K dated and filed on April 18, 2006 (File No. 1-13006))
	3.2	(d)	Certificate Regarding Adoption by the Shareholders of Park National Corporation on April 21, 2008 of Amendment to Regulations to Add New Section 5.10 to Article FIVE (incorporated herein by reference to Exhibit 3.2(d) to Park National Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2008 (“Park’s March 31, 2008 Form 10-Q”) (File No. 1-13006))
	3.2	(e)	Regulations of Park National Corporation (reflecting amendments through April 21, 2008) [For purposes of SEC reporting compliance only] (incorporated herein by reference to Exhibit 3.2 (e) to Park’s March 31, 2008 Form 10-Q)
	4.1	(a)	Junior Subordinated Indenture, dated as of December 5, 2005, between Vision Bancshares, Inc. and Wilmington Trust Company, as Trustee (incorporated herein by reference to Exhibit 10.16 to Vision Bancshares, Inc.’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005 (File No. 000-50719))
	4.1	(b)	First Supplemental Indenture, dated to be effective as of 6:00 p.m., Eastern Standard Time, on March 9, 2007, among Wilmington Trust Company, as Trustee; Park National Corporation; and Vision Bancshares, Inc. (incorporated herein by reference to Exhibit 4.1(b) to Park National Corporation’s Current Report on Form 8-K dated and filed March 15, 2007 (File No. 1-13006) (“Park’s March 15, 2007 Form 8-K”))
	4.2	(a)	Amended and Restated Trust Agreement, dated as of December 5, 2005, among Vision Bancshares, Inc., as Depositor; Wilmington Trust Company, as Property Trustee and as Delaware Trustee; and the Administrative Trustees named therein, in respect of Vision Bancshares Trust I (incorporated herein by reference to Exhibit 10.15 to Vision Bancshares, Inc.’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005 (File No. 000-50719))
			Note: Pursuant to the First Supplemental Indenture, dated to be effective as of 6:00 p.m., Eastern Standard Time, on March 9, 2007, among Wilmington Trust Company, as Trustee; Park National Corporation; and Vision Bancshares, Inc., Park National Corporation succeeded to and was substituted for Vision Bancshares, Inc. as “Depositor”

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Exhibit No.			Description of Exhibit
	4.2	(b)	Notice of Resignation of Administrative Trustees and Appointment of Successors, dated March 9, 2007, delivered to Wilmington Trust Company by the Resigning Administrative Trustees named therein, the Successor Administrative Trustees named therein and Park National Corporation (incorporated herein by reference to Exhibit 4.2(b) to Park’s March 15, 2007 Form 8-K)
	4.3		Guarantee Agreement, dated as of December 5, 2005, between Vision Bancshares, Inc., as Guarantor, and Wilmington Trust Company, as Guarantee Trustee, in respect of Vision Bancshares Trust I (incorporated herein by reference to Exhibit 10.17 to Vision Bancshares, Inc.’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005 (File No. 000-50719))
			Note: Pursuant to the First Supplemental Indenture, dated to be effective as of 6:00 p.m., Eastern Standard Time, on March 9, 2007, among Wilmington Trust Company, as Trustee; Park National Corporation; and Vision Bancshares, Inc., Park National Corporation succeeded to and was substituted for Vision Bancshares, Inc. as “Guarantor”
	4.4		Subordinated Debenture, dated December 28, 2007, in the principal amount of $25,000,000, issued by The Park National Bank to USB Capital Funding Corp. (incorporated herein by reference to Park National Corporation’s Current Report on Form 8-K dated and filed on January 2, 2008 (“Park’s January 2, 2008 Form 8-K”))
	4.5		Warrant to Purchase 227,376 Shares of Common Stock (Common Shares) of Park National Corporation issued to the United States Department of the Treasury on December 23, 2008 (incorporated herein by reference to Exhibit 4.1 to Park’s December 23, 2008 Form 8-K)
	4.6		Letter Agreement, dated December 23, 2008, including Securities Purchase Agreement — Standard Terms attached thereto as Exhibit A, between Park National Corporation and the United States Department of the Treasury (incorporated herein by reference to Exhibit 10.1 to Park’s December 23, 2008 Form 8-K) [NOTE: Annex A to Securities Purchase Agreement is not included therewith; filed as Exhibit 3.1 to Park’s December 23, 2008 Form 8-K and incorporated by reference at Exhibit 3.1(f) of this Annual Report on Form 10-K]
	4.7		Form of Series A / Series B Common Share Warrant (incorporated herein by reference to Exhibit 4.1 to Park National Corporation’s Current Report on Form 8-K dated and filed on October 28, 2009 (File No. 1-13006) (“Park’s October 28, 2009 Form 8-K”))
	4.8		Note Purchase Agreement, dated December 23, 2009, between Park National Corporation and 38 accredited investors (incorporated herein by reference to Exhibit 4.1 to Park National Corporation’s Current Report on Form 8-K dated and filed on December 28, 2009 (File No. 1-13006) (“Park’s December 28, 2009 Form 8-K”))
	4.9		Form of 10% Subordinated Note due December 23, 2019 (incorporated herein by reference to Exhibit 4.2 to Park’s December 28, 2009 Form 8-K)

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Exhibit No.			Description of Exhibit
	4.10		Agreement to furnish instruments and agreements defining rights of holders of long-term debt (filed herewith)
	10.1	†	Summary of Base Salaries for Executive Officers of Park National Corporation (filed herewith)
	10.2	(a)†	Split-Dollar Agreement, dated May 17, 1993, between William T. McConnell and The Park National Bank (incorporated herein by reference to Exhibit 10(f) to Park National Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 1993 (File No. 0-18772))
	10.2	(b)†	Schedule identifying Split-Dollar Agreements covering executive officers or employees of The Park National Bank or one of its divisions who are also directors or executive officers of Park National Corporation, which Split-Dollar Agreements are identical to the Split-Dollar Agreement, dated May 17, 1993, between William T. McConnell and The Park National Bank (incorporated herein by reference to Exhibit 10.3(b) to Park’s 2008 Form 10-K)
	10.3	(a)†	Description of Park National Corporation Supplemental Executive Retirement Benefits as in effect from and after February 18, 2008 (incorporated herein by reference to Exhibit 10.7(a) to Park’s 2008 Form 10-K)
	10.3	(b)†	Supplemental Executive Retirement Benefits Agreement, made as of February 18, 2008, between Park National Corporation and David L. Trautman (incorporated herein by reference to Exhibit 10.1 to Park National Corporation’s Current Report on Form 8-K dated and filed February 19, 2008 (File No. 1-13006) (“Park’s February 19, 2008 Form 8-K”))
	10.3	(c)†	Form of Amended and Restated Supplemental Executive Retirement Benefits Agreement, made as of February 18, 2008, between Park National Corporation and each of C. Daniel DeLawder, John W. Kozak and William T. McConnell (incorporated herein by reference to Exhibit 10.2 to Park’s February 19, 2008 Form 8-K)
	10.4	†	Security Banc Corporation 1998 Stock Option Plan, which was assumed by Park National Corporation (incorporated herein by reference to Exhibit 10(c) to Park National Corporation’s Registration Statement on Form S-8 filed April 23, 2001 (Registration No. 333-59378))
	10.5	†	Employment Agreement, made and entered into as of December 22, 1999, and the Amendment thereto, dated March 23, 2001, between The Security National Bank and Trust Co. (also known as Security National Bank and Trust Co.) and Harry O. Egger (incorporated herein by reference to Exhibit 10(e) to Park National Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2001 (File No. 1-13006))
	10.6	†	Park National Corporation Stock Plan for Non-Employee Directors of Park National Corporation and Subsidiaries (incorporated herein by reference to Exhibit 10 to Park National Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2004 (File No. 1-13006))

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Exhibit No.			Description of Exhibit
	10.7	†	Summary of Certain Compensation for Directors of Park National Corporation (filed herewith)
	10.8	†	Security National Bank and Trust Co. Second Amended and Restated 1988 Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.12 to Park’s 2008 Form 10-K)
	10.9	†	Park National Corporation 2005 Incentive Stock Option Plan (incorporated herein by reference to Exhibit 10.1 to Park National Corporation’s Current Report on Form 8-K dated and filed on April 20, 2005 (File No. 1-13006) (“Park’s April 20, 2005 Form 8-K”))
	10.10	†	Form of Stock Option Agreement to be used in connection with the grant of incentive stock options under the Park National Corporation 2005 Incentive Stock Option Plan (incorporated herein by reference to Exhibit 10.2 to Park’s April 20, 2005 Form 8-K)
	10.11		Subordinated Debenture Purchase Agreement, dated as of December 28, 2007, between The Park National Bank, as “Borrower,” and USB Capital Funding Corp., as “Lender” (incorporated herein by reference to Exhibit 10.1 to Park’s January 2, 2008 Form 8-K)
	10.12	(a)†	Form of Split-Dollar Agreement, made and entered into effective as of December 28, 2007, covering Non-Employee Directors of Park National Corporation (incorporated herein by reference to Exhibit 10.2(a) to Park’s January 2, 2008 Form 8-K)
	10.12	(b)†	Schedule identifying Non-Employee Directors of Park National Corporation covered by Split-Dollar Agreement, made and entered into effective as of December 28, 2007 (filed herewith)
	10.13	†	Split-Dollar Agreement, made and entered into effective as of May 19, 2008, between Park National Bank and David L. Trautman (incorporated herein by reference to Exhibit 10.1 to Park National Corporation’s Current Report on Form 8-K dated and filed on May 20, 2008 (File No. 1-13006))
	10.14	†	Park National Corporation Bonus Program adopted on December 16, 2008 (incorporated herein by reference to Exhibit 10.1 to Park National Corporation’s Current Report on Form 8-K dated and filed on December 19, 2008 (File No. 1-13006))

-58-

Exhibit No.			Description of Exhibit
	10.15	(a)†	Letter Agreement, dated July 20, 2009, between Park National Corporation and C. Daniel DeLawder (incorporated herein by reference to Exhibit 10.1 to Park National Corporation’s Current Report on Form 8-K dated and filed on July 20, 2009 (File No. 1-13006) (“Park’s July 20, 2009 Form 8-K”))
	10.15	(b)†	Letter Agreement, dated July 20, 2009, between Park National Corporation and David L. Trautman (incorporated herein by reference to Exhibit 10.2 to Park’s July 20, 2009 Form 8-K)
	10.15	(c)†	Letter Agreement, dated July 20, 2009, between Park National Corporation and John W. Kozak (incorporated herein by reference to Exhibit 10.3 to Park’s July 20, 2009 Form 8-K)
	10.16		Letter Agreement, dated October 26, 2009, by and between Park and Rodman & Renshaw, LLC (incorporated herein by reference to Exhibit 10.1 to Park’s October 28, 2009 Form 8-K)
	10.17		Form of Securities Purchase Agreement — Common Shares and Warrants (incorporated herein by reference to Exhibit 10.2 to Park’s October 28, 2009 Form 8-K)
	10.18		Form of Securities Purchase Agreement — Common Shares Only (incorporated herein by reference to Exhibit 10.3 to Park’s October 28, 2009 Form 8-K)
	10.19		Form of Securities Purchase Agreement — Warrants Only (incorporated herein by reference to Exhibit 10.4 to Park’s October 28, 2009 Form 8-K)
	10.20		Subscription Agreement for Common Shares of Park National Corporation, dated November 17, 2009, by and between Park National Corporation and the Park National Corporation Defined Benefit Pension Plan (incorporated herein by reference to Exhibit 10.1 to Park National Corporation’s Current Report on Form 8-K dated and filed on November 17, 2009 (File No. 1-13006))
	12		Computation of ratios (filed herewith)
	13		2009 Annual Report (not deemed filed except for portions thereof which are specifically incorporated by reference in this Annual Report on Form 10-K) (filed herewith)
	14		Code of Business Conduct and Ethics, as amended January 26, 2009 and updated January 30, 2009 (incorporated herein by reference to Exhibit 14 to Park’s 2008 Form 10-K)
	21		Subsidiaries of Park National Corporation (filed herewith)
	23		Consent of Crowe Horwath LLP (filed herewith)

-59-

Exhibit No.			Description of Exhibit
	24		Powers of Attorney of Directors and Executive Officers of Park National Corporation (filed herewith)
	31.1		Rule 13a-14(a)/15d-14(a) Certifications — Principal Executive Officer (filed herewith)
	31.2		Rule 13a-14(a)/15d-14(a) Certifications — Principal Financial Officer (filed herewith)
	32		Certifications Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code — Principal Executive Officer and Principal Financial Officer (filed herewith)
	99.1		Certification Pursuant to Section 111(b)(4) of the Emergency Economic Stabilization Act of 2008 and 31 CFR § 30.15 — Principal Executive Officer (filed herewith)
	99.2		Certification Pursuant to Section 111(b)(4) of the Emergency Economic Stabilization Act of 2008 and 31 CFR § 30.15 — Principal Financial Officer (filed herewith)
	99.3	(a)	Distribution Agreement, dated May 27, 2009, among Park National Corporation, The Park National Bank and Sandler O’Neill & Partners, L.P. (incorporated herein by reference to Exhibit 99.1 to Park’s Current Report on Form 8-K dated and filed May 27, 2009 (File No. 1-13006))
	99.3	(b)	Amendment to Distribution Agreement, dated as of November 25, 2009, among Park National Corporation, The Park National Bank and Sandler O’Neill & Partners, L.P. (incorporated herein by reference to Exhibit 99.1 to Park’s Current Report on Form 8-K dated and filed November 25, 2009 (File No. 1-13006))

*	The forms of employment agreements attached as Exhibits C-6 through C-12 to the Vision Bancshares Merger Agreement and the Vision Bancshares Disclosure Schedule referenced in the Vision Bancshares Merger Agreement have been omitted pursuant to Item 601(b)(2) of SEC Regulation S-K. Park National Corporation hereby undertakes to furnish supplementally a copy of the Vision Bancshares Disclosure Schedule and Exhibits C-6 through C-12 to the Vision Bancshares Merger Agreement to the SEC upon request by the SEC.
**	The schedules referenced in the Credit Card Account Purchase Agreement have been omitted pursuant to Item 601(b)(2) of SEC Regulation S-K. Park National Corporation hereby undertakes to furnish supplementally a copy of any omitted schedule to the Credit Card Account Purchase Agreement to the SEC upon request by the SEC.
†	Management contract or compensatory plan or arrangement.

-60-

(b)	Exhibits.
	The documents listed in Item 15(a)(3) are filed with this Annual Report on Form 10-K as exhibits or incorporated into this Annual Report on Form 10-K by reference.
(c)	Financial Statement Schedules.
	None.

[Remainder of page intentionally left blank; signatures on following page]

-61-

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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
Date: February 24, 2010	By:	/s/ C. Daniel DeLawder
		C. Daniel DeLawder,
		Chairman of the Board and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on the 24^th day of February, 2010.

Name	Capacity
/s/ C. Daniel DeLawder C. Daniel DeLawder	Chairman of the Board, Chief Executive Officer and Director
/s/ David L. Trautman David L. Trautman	President, Secretary and Director
/s/ John W. Kozak John W. Kozak	Chief Financial Officer
/s/ Brady T. Burt Brady T. Burt	Chief Accounting Officer
/s/ Maureen Buchwald* Maureen Buchwald	Director
/s/ James J. Cullers* James J. Cullers	Director
/s/ Harry O. Egger* Harry O. Egger	Director
/s/ F. William Englefield IV* F. William Englefield IV	Director

-62-

Name	Capacity
/s/ Stephen J. Kambeitz* Stephen J. Kambeitz	Director
/s/ William T. McConnell* William T. McConnell	Director
/s/ Timothy S. McLain* Timothy S. McLain	Director
/s/ John J. O’Neill* John J. O’Neill	Director
/s/ William A. Phillips* William A. Phillips	Director
/s/ Rick R. Taylor* Rick R. Taylor	Director
/s/ Sarah Reese Wallace* Sarah Reese Wallace	Director
/s/ Leon Zazworsky* Leon Zazworsky	Director

* The above-named directors of the Registrant sign this Annual Report on Form 10-K by C. Daniel DeLawder, their attorney-in-fact, pursuant to Powers of Attorney signed by the above-named directors, which Powers of Attorney are filed with this Annual Report on Form 10-K as exhibits, in the capacities indicated and on the 24^th day of February, 2010.

By: /s/ C. Daniel DeLawder   C. Daniel DeLawder
Chairman of the Board and
Chief Executive Officer

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PARK NATIONAL CORPORATION

Annual Report on Form 10-K

for the

Fiscal Year Ended December 31, 2009

INDEX TO EXHIBITS

Exhibit No.			Description of Exhibit
	2.1	(a)	Agreement and Plan of Merger, dated to be effective as of September 14, 2006, by and between Park National Corporation and Vision Bancshares, Inc. (the “Vision Bancshares Merger Agreement”)* (incorporated herein by reference to Annex A to the Prospectus of Park National Corporation/Proxy Statement of Vision Bancshares, Inc. dated January 9, 2007, filed on January 11, 2007 pursuant to Rule 424(b)(3) under the Securities Act of 1933, as amended (Registration No. 333-139083))
	2.1	(b)	First Amendment to Agreement and Plan of Merger, dated to be effective as of February 6, 2007, by and between Park National Corporation and Vision Bancshares, Inc. (incorporated herein by reference to Exhibit 2.1(b) to Park National Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006 (File No. 1-13006) (“Park’s 2006 Form 10-K”))
	2.2		Plan of Merger and Merger Agreement between Vision Bank (an Alabama state-chartered bank with its main office located in Gulf Shores, Alabama) and Vision Bank (a Florida state-chartered bank with its main office located in Panama City, Florida), dated July 10, 2007 (incorporated herein by reference to Exhibit 2.1 to Park National Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2007 (File No. 1-13006))
	2.3		Agreement to Merge, entered into as of May 21, 2008, by and between (a) each of (i) The Richland Trust Company, (ii) Century National Bank, (iii) The First-Knox National Bank of Mount Vernon, (iv) United Bank, National Association (also referred to as United Bank, N.A.), (v) Second National Bank, (vi) The Security National Bank and Trust Co. and (vii) The Citizens National Bank of Urbana; and (b) The Park National Bank (incorporated herein by reference to Exhibit 2.1 to Park National Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008 (File No. 1-13006))

E-1

Exhibit No.			Description of Exhibit
	2.4		Credit Card Account Purchase Agreement by and between U.S. Bank National Association ND, d/b/a Elan Financial Services and The Park National Bank (also known as Park National Bank), executed on October 10, 2008 with an effective date of September 30, 2008** (incorporated herein by reference to Exhibit 2.1 to Park National Corporation’s Current Report on Form 8-K dated and filed on October 14, 2008 (File No. 1-13006))
	3.1	(a)	Articles of Incorporation of Park National Corporation as filed with the Ohio Secretary of State on March 24, 1992 (incorporated herein by reference to Exhibit 3(a) to Park National Corporation’s Form 8-B, filed on May 20, 1992 (File No. 0-18772) (“Park’s Form 8-B”))
	3.1	(b)	Certificate of Amendment to the Articles of Incorporation of Park National Corporation as filed with the Ohio Secretary of State on May 6, 1993 (incorporated herein by reference to Exhibit 3(b) to Park National Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 1993 (File No. 0-18772))
	3.1	(c)	Certificate of Amendment to the Articles of Incorporation of Park National Corporation as filed with the Ohio Secretary of State on April 16, 1996 (incorporated herein by reference to Exhibit 3(a) to Park National Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1996 (File No. 1-13006))
	3.1	(d)	Certificate of Amendment by Shareholders to the Articles of Incorporation of Park National Corporation as filed with the Ohio Secretary of State on April 22, 1997 (incorporated herein by reference to Exhibit 3(a)(1) to Park National Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1997 (File No. 1-13006) (“Park’s June 30, 1997 Form 10-Q”))
	3.1	(e)	Certificate of Amendment by Shareholders or Members as filed with the Secretary of State of the State of Ohio on December 18, 2008 in order to evidence the adoption by the shareholders of Park National Corporation on December 18, 2008 of an amendment to Article FOURTH of Park National Corporation’s Articles of Incorporation to authorize Park National Corporation to issue up to 200,000 preferred shares, without par value (incorporated herein by reference to Exhibit 3.1 to Park National Corporation’s Current Report on Form 8-K dated and filed December 19, 2008 (File No. 1-13006))
	3.1	(f)	Certificate of Amendment by Directors or Incorporators to Articles as filed with the Secretary of State of the State of Ohio on December 19, 2008, evidencing adoption of amendment by Board of Directors of Park National Corporation to Article FOURTH of Articles of Incorporation to establish express terms of Fixed Rate Cumulative Perpetual Preferred Shares, Series A, each without par value, of Park National Corporation (incorporated herein by reference to Exhibit 3.1 to Park National Corporation’s Current Report on Form 8-K dated and filed December 23, 2008 (File No. 1-13006) (“Park’s December 23, 2008 Form 8-K”))

E-2

Exhibit No.			Description of Exhibit
	3.1	(g)	Articles of Incorporation of Park National Corporation (reflecting amendments through December 19, 2008) [for SEC reporting compliance purposes only — not filed with Ohio Secretary of State] (incorporated herein by reference to Exhibit 3.1(g) to Park National Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008 (File No. 1-13006) (“Park’s 2008 Form 10-K”))
	3.2	(a)	Regulations of Park National Corporation (incorporated herein by reference to Exhibit 3(b) to Park’s Form 8-B)
	3.2	(b)	Certified Resolution regarding Adoption of Amendment to Subsection 2.02(A) of the Regulations of Park National Corporation by Shareholders on April 21, 1997 (incorporated herein by reference to Exhibit 3(b)(1) to Park’s June 30, 1997 Form 10-Q)
	3.2	(c)	Certificate Regarding Adoption of Amendments to Sections 1.04 and 1.11 of Park National Corporation’s Regulations by the Shareholders on April 17, 2006 (incorporated herein by reference to Exhibit 3.1 to Park National Corporation’s Current Report on Form 8-K dated and filed on April 18, 2006 (File No. 1-13006))
	3.2	(d)	Certificate Regarding Adoption by the Shareholders of Park National Corporation on April 21, 2008 of Amendment to Regulations to Add New Section 5.10 to Article FIVE (incorporated herein by reference to Exhibit 3.2(d) to Park National Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2008 (“Park’s March 31, 2008 Form 10-Q”) (File No. 1-13006))
	3.2	(e)	Regulations of Park National Corporation (reflecting amendments through April 21, 2008) [For purposes of SEC reporting compliance only] (incorporated herein by reference to Exhibit 3.2 (e) to Park’s March 31, 2008 Form 10-Q)
	4.1	(a)	Junior Subordinated Indenture, dated as of December 5, 2005, between Vision Bancshares, Inc. and Wilmington Trust Company, as Trustee (incorporated herein by reference to Exhibit 10.16 to Vision Bancshares, Inc.’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005 (File No. 000-50719))
	4.1	(b)	First Supplemental Indenture, dated to be effective as of 6:00 p.m., Eastern Standard Time, on March 9, 2007, among Wilmington Trust Company, as Trustee; Park National Corporation; and Vision Bancshares, Inc. (incorporated herein by reference to Exhibit 4.1(b) to Park National Corporation’s Current Report on Form 8-K dated and filed March 15, 2007 (File No. 1-13006) (“Park’s March 15, 2007 Form 8-K”))

E-3

Exhibit No.			Description of Exhibit
	4.2	(a)	Amended and Restated Trust Agreement, dated as of December 5, 2005, among Vision Bancshares, Inc., as Depositor; Wilmington Trust Company, as Property Trustee and as Delaware Trustee; and the Administrative Trustees named therein, in respect of Vision Bancshares Trust I (incorporated herein by reference to Exhibit 10.15 to Vision Bancshares, Inc.’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005 (File No. 000-50719))
			Note: Pursuant to the First Supplemental Indenture, dated to be effective as of 6:00 p.m., Eastern Standard Time, on March 9, 2007, among Wilmington Trust Company, as Trustee; Park National Corporation; and Vision Bancshares, Inc., Park National Corporation succeeded to and was substituted for Vision Bancshares, Inc. as “Depositor”
	4.2	(b)	Notice of Resignation of Administrative Trustees and Appointment of Successors, dated March 9, 2007, delivered to Wilmington Trust Company by the Resigning Administrative Trustees named therein, the Successor Administrative Trustees named therein and Park National Corporation (incorporated herein by reference to Exhibit 4.2(b) to Park’s March 15, 2007 Form 8-K)
	4.3		Guarantee Agreement, dated as of December 5, 2005, between Vision Bancshares, Inc., as Guarantor, and Wilmington Trust Company, as Guarantee Trustee, in respect of Vision Bancshares Trust I (incorporated herein by reference to Exhibit 10.17 to Vision Bancshares, Inc.’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005 (File No. 000-50719))
			Note: Pursuant to the First Supplemental Indenture, dated to be effective as of 6:00 p.m., Eastern Standard Time, on March 9, 2007, among Wilmington Trust Company, as Trustee; Park National Corporation; and Vision Bancshares, Inc., Park National Corporation succeeded to and was substituted for Vision Bancshares, Inc. as “Guarantor”
	4.4		Subordinated Debenture, dated December 28, 2007, in the principal amount of $25,000,000, issued by The Park National Bank to USB Capital Funding Corp. (incorporated herein by reference to Park National Corporation’s Current Report on Form 8-K dated and filed on January 2, 2008 (“Park’s January 2, 2008 Form 8-K”))
	4.5		Warrant to Purchase 227,376 Shares of Common Stock (Common Shares) of Park National Corporation issued to the United States Department of the Treasury on December 23, 2008 (incorporated herein by reference to Exhibit 4.1 to Park’s December 23, 2008 Form 8-K)

E-4

Exhibit No.			Description of Exhibit
	4.6		Letter Agreement, dated December 23, 2008, including Securities Purchase Agreement — Standard Terms attached thereto as Exhibit A, between Park National Corporation and the United States Department of the Treasury (incorporated herein by reference to Exhibit 10.1 to Park’s December 23, 2008 Form 8-K) [NOTE: Annex A to Securities Purchase Agreement is not included therewith; filed as Exhibit 3.1 to Park’s December 23, 2008 Form 8-K and incorporated by reference at Exhibit 3.1(f) of this Annual Report on Form 10-K]
	4.7		Form of Series A / Series B Common Share Warrant (incorporated herein by reference to Exhibit 4.1 to Park National Corporation’s Current Report on Form 8-K dated and filed on October 28, 2009 (File No. 1-13006) (“Park’s October 28, 2009 Form 8-K”))
	4.8		Note Purchase Agreement, dated December 23, 2009, between Park National Corporation and 38 accredited investors (incorporated herein by reference to Exhibit 4.1 to Park National Corporation’s Current Report on Form 8-K dated and filed on December 28, 2009 (File No. 1-13006) (“Park’s December 28, 2009 Form 8-K”))
	4.9		Form of 10% Subordinated Note due December 23, 2019 (incorporated herein by reference to Exhibit 4.2 to Park’s December 28, 2009 Form 8-K)
	4.10		Agreement to furnish instruments and agreements defining rights of holders of long-term debt (filed herewith)
	10.1	†	Summary of Base Salaries for Executive Officers of Park National Corporation (filed herewith)
	10.2	(a)†	Split-Dollar Agreement, dated May 17, 1993, between William T. McConnell and The Park National Bank (incorporated herein by reference to Exhibit 10(f) to Park National Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 1993 (File No. 0-18772))
	10.2	(b)†	Schedule identifying Split-Dollar Agreements covering executive officers or employees of The Park National Bank or one of its divisions who are also directors or executive officers of Park National Corporation, which Split-Dollar Agreements are identical to the Split-Dollar Agreement, dated May 17, 1993, between William T. McConnell and The Park National Bank (incorporated herein by reference to Exhibit 10.3(b) to Park’s 2008 Form 10-K)
	10.3	(a)†	Description of Park National Corporation Supplemental Executive Retirement Benefits as in effect from and after February 18, 2008 (incorporated herein by reference to Exhibit 10.7(a) to Park’s 2008 Form 10-K)
	10.3	(b)†	Supplemental Executive Retirement Benefits Agreement, made as of February 18, 2008, between Park National Corporation and David L. Trautman (incorporated herein by reference to Exhibit 10.1 to Park National Corporation’s Current Report on Form 8-K dated and filed February 19, 2008 (File No. 1-13006) (“Park’s February 19, 2008 Form 8-K”))

E-5

Exhibit No.			Description of Exhibit
	10.3	(c)†	Form of Amended and Restated Supplemental Executive Retirement Benefits Agreement, made as of February 18, 2008, between Park National Corporation and each of C. Daniel DeLawder, John W. Kozak and William T. McConnell (incorporated herein by reference to Exhibit 10.2 to Park’s February 19, 2008 Form 8-K)
	10.4	†	Security Banc Corporation 1998 Stock Option Plan, which was assumed by Park National Corporation (incorporated herein by reference to Exhibit 10(c) to Park National Corporation’s Registration Statement on Form S-8 filed April 23, 2001 (Registration No. 333-59378))
	10.5	†	Employment Agreement, made and entered into as of December 22, 1999, and the Amendment thereto, dated March 23, 2001, between The Security National Bank and Trust Co. (also known as Security National Bank and Trust Co.) and Harry O. Egger (incorporated herein by reference to Exhibit 10(e) to Park National Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2001 (File No. 1-13006))
	10.6	†	Park National Corporation Stock Plan for Non-Employee Directors of Park National Corporation and Subsidiaries (incorporated herein by reference to Exhibit 10 to Park National Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2004 (File No. 1-13006))
	10.7	†	Summary of Certain Compensation for Directors of Park National Corporation (filed herewith)
	10.8	†	Security National Bank and Trust Co. Second Amended and Restated 1988 Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.12 to Park’s 2008 Form 10-K)
	10.9	†	Park National Corporation 2005 Incentive Stock Option Plan (incorporated herein by reference to Exhibit 10.1 to Park National Corporation’s Current Report on Form 8-K dated and filed on April 20, 2005 (File No. 1-13006) (“Park’s April 20, 2005 Form 8-K”))
	10.10	†	Form of Stock Option Agreement to be used in connection with the grant of incentive stock options under the Park National Corporation 2005 Incentive Stock Option Plan (incorporated herein by reference to Exhibit 10.2 to Park’s April 20, 2005 Form 8-K)
	10.11		Subordinated Debenture Purchase Agreement, dated as of December 28, 2007, between The Park National Bank, as “Borrower,” and USB Capital Funding Corp., as “Lender” (incorporated herein by reference to Exhibit 10.1 to Park’s January 2, 2008 Form 8-K)

E-6

Exhibit No.			Description of Exhibit
	10.12	(a)†	Form of Split-Dollar Agreement, made and entered into effective as of December 28, 2007, covering Non-Employee Directors of Park National Corporation (incorporated herein by reference to Exhibit 10.2(a) to Park’s January 2, 2008 Form 8-K)
	10.12	(b)†	Schedule identifying Non-Employee Directors of Park National Corporation covered by Split-Dollar Agreement, made and entered into effective as of December 28, 2007 (filed herewith)
	10.13	†	Split-Dollar Agreement, made and entered into effective as of May 19, 2008, between Park National Bank and David L. Trautman (incorporated herein by reference to Exhibit 10.1 to Park National Corporation’s Current Report on Form 8-K dated and filed on May 20, 2008 (File No. 1-13006))
	10.14	†	Park National Corporation Bonus Program adopted on December 16, 2008 (incorporated herein by reference to Exhibit 10.1 to Park National Corporation’s Current Report on Form 8-K dated and filed on December 19, 2008 (File No. 1-13006))
	10.15	(a)†	Letter Agreement, dated July 20, 2009, between Park National Corporation and C. Daniel DeLawder (incorporated herein by reference to Exhibit 10.1 to Park National Corporation’s Current Report on Form 8-K dated and filed on July 20, 2009 (File No. 1-13006) (“Park’s July 20, 2009 Form 8-K”))
	10.15	(b)†	Letter Agreement, dated July 20, 2009, between Park National Corporation and David L. Trautman (incorporated herein by reference to Exhibit 10.2 to Park’s July 20, 2009 Form 8-K)
	10.15	(c)†	Letter Agreement, dated July 20, 2009, between Park National Corporation and John W. Kozak (incorporated herein by reference to Exhibit 10.3 to Park’s July 20, 2009 Form 8-K)
	10.16		Letter Agreement, dated October 26, 2009, by and between Park and Rodman & Renshaw, LLC (incorporated herein by reference to Exhibit 10.1 to Park’s October 28, 2009 Form 8-K)
	10.17		Form of Securities Purchase Agreement — Common Shares and Warrants (incorporated herein by reference to Exhibit 10.2 to Park’s October 28, 2009 Form 8-K)
	10.18		Form of Securities Purchase Agreement — Common Shares Only (incorporated herein by reference to Exhibit 10.3 to Park’s October 28, 2009 Form 8-K)
	10.19		Form of Securities Purchase Agreement — Warrants Only (incorporated herein by reference to Exhibit 10.4 to Park’s October 28, 2009 Form 8-K)

E-7

Exhibit No.		Description of Exhibit
	10.20	Subscription Agreement for Common Shares of Park National Corporation, dated November 17, 2009, by and between Park National Corporation and the Park National Corporation Defined Benefit Pension Plan (incorporated herein by reference to Exhibit 10.1 to Park National Corporation’s Current Report on Form 8-K dated and filed on November 17, 2009 (File No. 1-13006))
	12	Computation of ratios (filed herewith)
	13	2009 Annual Report (not deemed filed except for portions thereof which are specifically incorporated by reference in this Annual Report on Form 10-K) (filed herewith)
	14	Code of Business Conduct and Ethics, as amended January 26, 2009 and updated January 30, 2009 (incorporated herein by reference to Exhibit 14 to Park’s 2008 Form 10-K)
	21	Subsidiaries of Park National Corporation (filed herewith)
	23	Consent of Crowe Horwath LLP (filed herewith)
	24	Powers of Attorney of Directors and Executive Officers of Park National Corporation (filed herewith)
	31.1	Rule 13a-14(a)/15d-14(a) Certifications — Principal Executive Officer (filed herewith)
	31.2	Rule 13a-14(a)/15d-14(a) Certifications — Principal Financial Officer (filed herewith)
	32	Certifications Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code — Principal Executive Officer and Principal Financial Officer (filed herewith)
	99.1	Certification Pursuant to Section 111(b)(4) of the Emergency Economic Stabilization Act of 2008 and 31 CFR § 30.15 — Principal Executive Officer (filed herewith)

E-8

Exhibit No.			Description of Exhibit
	99.2		Certification Pursuant to Section 111(b)(4) of the Emergency Economic Stabilization Act of 2008 and 31 CFR § 30.15 — Principal Financial Officer (filed herewith)
	99.3	(a)	Distribution Agreement, dated May 27, 2009, among Park National Corporation, The Park National Bank and Sandler O’Neill & Partners, L.P. (incorporated herein by reference to Exhibit 99.1 to Park’s Current Report on Form 8-K dated and filed May 27, 2009 (File No. 1-13006))
	99.3	(b)	Amendment to Distribution Agreement, dated as of November 25, 2009, among Park National Corporation, The Park National Bank and Sandler O’Neill & Partners, L.P. (incorporated herein by reference to Exhibit 99.1 to Park’s Current Report on Form 8-K dated and filed November 25, 2009 (File No. 1-13006))

*	The forms of employment agreements attached as Exhibits C-6 through C-12 to the Vision Bancshares Merger Agreement and the Vision Bancshares Disclosure Schedule referenced in the Vision Bancshares Merger Agreement have been omitted pursuant to Item 601(b)(2) of SEC Regulation S-K. Park National Corporation hereby undertakes to furnish supplementally a copy of the Vision Bancshares Disclosure Schedule and Exhibits C-6 through C-12 to the Vision Bancshares Merger Agreement to the SEC upon request by the SEC.
**	The schedules referenced in the Credit Card Account Purchase Agreement have been omitted pursuant to Item 601(b)(2) of SEC Regulation S-K. Park National Corporation hereby undertakes to furnish supplementally a copy of any omitted schedule to the Credit Card Account Purchase Agreement to the SEC upon request by the SEC.
†	Management contract or compensatory plan or arrangement.

E-9

EX-4.10

Exhibit 4.10

PARK NATIONAL CORPORATION
50 North Third Street
Post Office Box 3500
Newark, Ohio 43058-3500
(740) 349-8451
www.parknationalcorp.com

February 24, 2010

United States Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549

 Re: Park National Corporation
Commission File Number: 1-13006
Annual Report on Form 10-K for the Fiscal Year
Ended December 31, 2009

Ladies and Gentlemen:

Park National Corporation, an Ohio corporation (“Park”), is today filing with the Securities and Exchange Commission (the “SEC”) the Annual Report on Form 10-K of Park for the fiscal year ended December 31, 2009 (“Park’s 2009 Form 10-K”).

Neither (i) Park nor (ii) any of Park’s consolidated subsidiaries has outstanding any instrument or agreement with respect to its long-term debt under which the total amount of long-term debt authorized exceeds 10% of the total assets of Park and Park’s subsidiaries on a consolidated basis. In accordance with the provisions of Item 601(b)(4)(iii) of SEC Regulation S-K, Park hereby agrees to furnish to the SEC, upon request, a copy of each instrument or agreement defining (i) the rights of holders of long-term debt of Park or (ii) the rights of holders of long-term debt of a consolidated subsidiary of Park, in each case which is not being filed or incorporated by reference as an exhibit to Park’s 2009 Form 10-K.

Very truly yours,

PARK NATIONAL CORPORATION
 

/s/ John W. Kozak  

John W. Kozak 

Chief Financial Officer 

EX-10.1

Exhibit 10.1

Summary of Base Salaries
for
Executive Officers of Park National Corporation

On February 12, 2010, the Compensation Committee of the Board of Directors of Park National Corporation (“Park”) approved the base salaries for the fiscal year ending December 31, 2010, for each of the executive officers of Park: (a) C. Daniel DeLawder, Chairman of the Board and Chief Executive Officer of Park and The Park National Bank, a subsidiary of Park; (b) David L. Trautman, President and Secretary of Park and President of The Park National Bank; and (c) John W. Kozak, Chief Financial Officer of Park and Senior Vice President and Chief Financial Officer of The Park National Bank. Those base salaries are:

*	C. Daniel DeLawder — $773,525
*	David L. Trautman — $563,250
*	John W. Kozak — $414,455

EX-10.7

Exhibit 10.7

Summary of Certain Compensation for
Directors of Park National Corporation

Annual Retainers and Meeting Fees

Each director of Park National Corporation (“Park”) who is not an employee of Park or one of Park’s subsidiaries (a “non-employee director”) receives, on the date of the regular meeting of the Park Board of Directors held during the fourth fiscal quarter, an annual retainer in the form of 120 common shares of Park awarded under the Park National Corporation Stock Plan for Non-Employee Directors of Park National Corporation and Subsidiaries (the “Directors’ Stock Plan”).

Each non-employee director receives $1,000 for each meeting of the Park Board of Directors attended and $400 for each meeting of a committee of the Park Board of Directors attended. If the date of a meeting of the full Board of Directors is changed from that provided for by resolution of the Board and a non-employee director is not able to attend the rescheduled meeting, he or she receives the meeting fee as though he or she attended the meeting.

In addition, each member of the Executive Committee of the Park Board of Directors receives a $2,500 annual cash retainer and each member of the Audit Committee of the Park Board of Directors (other than the Chair) receives a $2,000 annual cash retainer. The Chair of the Audit Committee receives a $5,000 annual cash retainer.

Each non-employee director of Park also serves on the board of directors of The Park National Bank, the national bank subsidiary of Park (“PNB”), or on the advisory board of one of PNB’s divisions, and receives, on the date of the regular meeting of the Park Board of Directors held during the fourth fiscal quarter, an annual retainer in the form of 60 common shares of Park awarded under the Directors’ Stock Plan and, in some cases, a specified amount of cash for such service as well as fees for attendance at meetings of the board of directors of PNB or the advisory board of the applicable division of PNB (and committees of the respective boards).

In addition to the annual retainers and meeting fees discussed above, non-employee directors also receive reimbursement of all reasonable travel and other expenses of attending board and committee meetings.

C. Daniel DeLawder, William T. McConnell, William A. Phillips and David L. Trautman receive no compensation for: (a) serving as a member of the Board of Directors of Park; (b) serving as a member of the board of directors of any subsidiary of Park; (c) serving as a member of the advisory board of a division of any subsidiary of Park; or (d) serving as a member of any committee of the respective boards. In addition, since July 1, 2009, Harry O. Egger has received no meeting fees or cash retainers in connection with his service as a member of the Board of Directors of Park, his service as a member of the Advisory Board of the Security National Division of PNB or his service as a member of any committee of the respective boards.

Other Compensation

William T. McConnell is employed by PNB in a non-executive officer capacity. In such capacity, he received the amount of $33,000 during the fiscal year ended December 31, 2009 (the “2009 fiscal year). William A. Phillips is employed by the Century National Division of PNB, in a non-executive officer capacity. In such capacity, he received the amount of $33,000 during the 2009 fiscal year. Since July 1, 2009, Harry O. Egger has been employed by the Security National Division of PNB in a non-executive officer capacity. In such capacity, Mr. Egger received $16,246 for the period from July 1, 2009 through December 31, 2009. Prior to July 1, 2009, Mr. Egger received the same meeting fees and cash retainers as other non-employee directors of Park, other members of the Advisory Board of the Security National Division and other members of the committees of the respective boards on which he served.

EX-10.12.B

Exhibit 10.12(b)

Schedule identifying
Non-Employee Directors of Park National Corporation
covered by
Split-Dollar Agreements, made and entered into effective as of December 28, 2007

The following directors of Park National Corporation (“Park”) are covered by Split-Dollar Agreements (the “New Split-Dollar Agreements”) as identified below, which Split-Dollar Agreements are identical to the form of Split-Dollar Agreement, made and entered into effective as of December 28, 2007, filed as Exhibit 10.2(a) to Park’s Current Report on Form 8-K dated January 2, 2008 (File No. 1-13006):

	Subsidiary of Park which is a Party to	Date of New Split-
Name of Director	New Split-Dollar Agreement	Dollar Agreement
Maureen H. Buchwald	The Park National Bank (as successor by merger to The First-Knox National Bank of Mount Vernon)	December 28, 2007
James J. Cullers	The Park National Bank (as successor by merger to The First-Knox National Bank of Mount Vernon)	December 28, 2007
F. William Englefield IV	The Park National Bank	December 28, 2007
John J. O’Neill	The Park National Bank	December 28, 2007
Rick R. Taylor	The Park National Bank (as successor by merger to The Richland Trust Company)	December 28, 2007
Leon Zazworsky	The Park National Bank	December 28, 2007

EX-12

Exhibit 12

COMPUTATION OF RATIOS

RETURN ON AVERAGE ASSETS	Net income/Average assets
NET INTEREST MARGIN (computed on a fully taxable equivalent basis)	Fully taxable equivalent net interest income/Average earning assets
NONINTEREST EXPENSE EXCLUDING IMPAIRMENT CHARGE TO NET REVENUE (computed on a fully taxable equivalent basis) [Also referred to as EFFICIENCY RATIO BEFORE IMPAIRMENT CHARGE]	Total other expense (excluding goodwill impairment charge)/(Fully taxable equivalent net interest income plus total other income adjusted for gains or losses on sales of securities)
DIVIDEND PAYOUT RATIO	Dividends declared/Net income
AVERAGE STOCKHOLDERS’ EQUITY TO AVERAGE TOTAL ASSETS	Average stockholders’ equity/Average assets
AVERAGE COMMON STOCKHOLDERS’ EQUITY	Average stockholders’ equity less preferred stock
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS	(Stockholders’ equity less goodwill and other intangible assets and preferred stock)/(Assets less goodwill and other intangible assets)
TIER 1 CAPITAL RATIO	(Stockholders’ equity less goodwill and other intangible assets and accumulated other comprehensive income (loss) plus qualifying trust preferred securities (“Tier 1 capital”))/Risk-adjusted assets
RISK-BASED CAPITAL RATIO	(Tier 1 capital plus qualifying loan loss allowance and subordinated debt)/Risk-adjusted assets
LEVERAGE RATIO	Tier 1 capital/(Average total assets less goodwill and other intangible assets)
ALLOWANCE FOR LOAN LOSSES TO END OF YEAR LOANS	Allowance for loan losses/Gross loans net of unearned interest
NET CHARGE-OFFS TO AVERAGE LOANS	Net charge-offs/Average gross loans net of unearned interest
NONPERFORMING LOANS TO LOANS	(Nonaccrual loans plus loans past due 90 days or greater plus renegotiated loans)/Gross loans net of unearned interest
NONPERFORMING ASSETS TO LOANS	(Nonaccrual loans plus loans past due 90 days or greater plus renegotiated loans plus other real estate owned)/Gross loans net of unearned interest
NONPERFORMING ASSETS TO TOTAL ASSETS	(Nonaccrual loans plus loans past due 90 days or greater plus renegotiated loans plus other real estate owned)/Total assets

RETURN ON AVERAGE ASSETS BEFORE IMPAIRMENT CHARGE	(Net income plus goodwill impairment charge)/Average assets
RETURN ON AVERAGE COMMON EQUITY	Net income available to common shareholders/(stockholders’ equity less preferred stock)
RETURN ON AVERAGE COMMON EQUITY BEFORE IMPAIRMENT CHARGE	(Net income available to common shareholders plus goodwill impairment charge)/(stockholders’ equity less preferred stock)

Computation of Ratio of Earnings to Fixed Charges

The following table shows the ratio of earnings to fixed charges for Park National Corporation (“Park”), which includes our subsidiaries, on a consolidated basis:

	For the Year Ended December 31,
	2009		2008		2007		2006		2005
Ratio of earnings to fixed charges (1):
Excluding interest on deposits		4.20		1.77		2.12		4.36		4.61
Including interest on deposits		2.02		1.26		1.31		2.09		2.44

(1) For purposes of computing the ratios, earnings consist of income before income taxes and fixed charges. Fixed charges consist of interest on borrowings (short-tem borrowings, long-term debt and subordinated debentures and notes), including/excluding interest on deposits, and one-third of rental expense, which Park believes is representative of the interest factor.

Earnings:
Income before income taxes	$	97,135,000	$	35,719,000	$	52,677,000	$	133,077,000	$	135,424,000
Fixed Charges:
Interest on deposits	$	64,620,000	$	89,892,000	$	121,021,000	$	82,272,000	$	56,899,000
Interest on borrowings	$	29,579,000	$	45,574,000	$	46,126,000	$	39,043,000	$	36,996,000
Rent expense interest factor (1/3)	$	794,866	$	801,147	$	731,723	$	530,030	$	476,528
Total Fixed Charges:
Including interest on deposits	$	94,993,866	$	136,267,147	$	167,878,723	$	121,845,030	$	94,371,528
Excluding interest on deposits	$	30,373,866	$	46,375,147	$	46,857,723	$	39,573,030	$	37,472,528

Computation of Ratio of Earnings to Fixed Charges and Preferred Dividends

The following table shows the ratio of earnings to fixed charges and preferred dividends for Park, which includes our subsidiaries, on a consolidated basis:

	For the Year Ended December 31,
	2009		2008		2007		2006		2005
Ratio of earnings to fixed charges and preferred dividends (1):
Excluding interest on deposits		3.52		1.77		2.12		4.36		4.61
Including interest on deposits		1.94		1.26		1.31		2.09		2.44

(1) For purposes of computing the ratios, earnings consist of income before income taxes and fixed charges. Fixed charges consist of interest on borrowings (short-tem borrowings, long-term debt and subordinated debentures and notes), including/excluding interest on deposits, dividends and accretion on preferred stock and one-third of rental expense, which Park believes is representative of the interest factor.

Earnings:
Income before income taxes	$	97,135,000	$	35,719,000	$	52,677,000	$	133,077,000	$	135,424,000
Fixed Charges:
Interest on deposits	$	64,620,000	$	89,892,000	$	121,021,000	$	82,272,000	$	56,899,000
Interest on borrowings	$	29,579,000	$	45,574,000	$	46,126,000	$	39,043,000	$	36,996,000
Preferred dividends and accretion	$	8,231,429	$	202,857		N/A		N/A		N/A
Rent expense interest factor (1/3)	$	794,866	$	801,147	$	731,723	$	530,030	$	476,528
Total Fixed Charges:
Including interest on deposits	$	103,225,295	$	136,470,004	$	167,878,723	$	121,845,030	$	94,371,528
Excluding interest on deposits	$	38,605,295	$	46,578,004	$	46,857,723	$	39,573,030	$	37,472,528

EX-13

Exhibit 13

FINANCIAL REVIEW

This financial review presents management’s discussion and analysis of the financial condition and results of operations for Park National Corporation (“Park” or the “Corporation”). This discussion should be read in conjunction with the consolidated financial statements and related notes and the five-year summary of selected financial data. Management’s discussion and analysis 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 materially include, without limitation, Park’s ability to execute its business plan, deterioration in the asset value of our loan portfolio may be worse than expected, changes in general economic and financial market conditions, deterioration in credit conditions in the markets in which Park’s subsidiary banks operate, changes in interest rates, changes in the competitive environment, changes in banking regulations or other regulatory or legislative requirements affecting the respective businesses of Park and its subsidiaries, changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies, demand for loans in the respective market areas served by Park and its subsidiaries, and other risk factors relating to our industry as detailed from time to time in Park’s reports filed with the Securities and Exchange Commission (“SEC”) including those described in “Item 1A. Risk Factors” of Part I of Park’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009. Undue reliance should not be placed on the forward-looking statements, which speak only as of the date of this Annual Report. Park does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement was made, or reflect the occurrence of unanticipated events, except to the extent required by law.

ACQUISITION OF VISION BANCSHARES, INC. AND GOODWILL IMPAIRMENT CHARGES IN 2007 AND 2008

On March 9, 2007, Park acquired all of the stock and outstanding stock options of Vision Bancshares, Inc. (“Vision”) for $87.8 million in cash and 792,937 shares of Park common stock valued at $83.3 million or $105.00 per share. The goodwill recognized was $109.0 million. The fair value of the acquired assets of Vision was $686.5 million and the fair value of the liabilities assumed was $624.4 million as of March 9, 2007.

At the time of the acquisition, Vision operated two bank subsidiaries (both named Vision Bank) which became bank subsidiaries of Park on March 9, 2007. On July 20, 2007, the bank operations of the two Vision Banks were consolidated under a single charter through the merger of the Vision Bank headquartered in Gulf Shores, Alabama with and into the Vision Bank headquartered in Panama City, Florida. Vision Bank operates under a Florida banking charter and has 18 branch locations in Baldwin County, Alabama and in the panhandle of Florida. The markets that Vision Bank operates in are expected to grow faster than many of the non-metro markets in which Park’s subsidiary bank operates in Ohio. Therefore, management still expects that the acquisition of Vision will improve the future growth rate for Park’s loans and deposits. However, the acquisition of Vision had a significant negative impact on Park’s net income in 2007, 2008 and 2009.

Vision Bank began experiencing credit problems during the second half of 2007 as nonperforming loans increased from $6.5 million at June 30, 2007 to $63.5 million or 9.9% of loan balances at December 31, 2007. As a result of these credit problems at Vision Bank, Park’s management concluded that the goodwill of $109.0 million recorded at the time of acquisition was possibly impaired. A goodwill impairment analysis was completed during the fourth quarter of 2007 and the conclusion was reached that a goodwill impairment charge of $54.0 million be recorded at Vision Bank at year-end 2007 to reduce the goodwill balance to $55.0 million.

Credit problems continued to plague Vision Bank in 2008. Net loan charge-offs for Vision Bank were $5.5 million during the first quarter or an annualized 3.37% of average loans and increased to $10.8 million during the second quarter or an annualized 6.41% of average loans. Based primarily on the increased level of net loan charge-offs at Vision Bank during 2008, management determined that it would be prudent to test for additional goodwill impairment. A goodwill impairment analysis was completed during the third quarter of 2008 and the conclusion was reached that a goodwill impairment charge of $55.0 million be recorded at Vision Bank during the third quarter of 2008 to eliminate the goodwill balance pertaining to Vision Bank.

OVERVIEW

Net income was $74.2 million for 2009, compared to $13.7 million for 2008 and $22.7 million for 2007. Net income increased by $60.5 million or 441.2% in 2009 compared to 2008 and decreased by $9.0 million or 39.6% in 2008 compared to 2007. The primary reason for the large changes in net income was the change in the net loss at Vision Bank for the past three years. Vision Bank had a net loss of $30.1 million in 2009, compared to a net loss of $81.2 million in 2008 and a net loss of $60.7 million from the date of acquisition (March 9, 2007) through December 31, 2007. As previously discussed, Vision Bank recognized goodwill impairment charges of $55.0 million in 2008 and $54.0 million in 2007.

Diluted earnings per common share were $4.82, $.97 and $1.60 for 2009, 2008 and 2007, respectively. Diluted earnings per common share increased by $3.85 or 396.9% in 2009 compared to 2008 and decreased by $.63 or 39.4% in 2008 compared to 2007.

The following tables show the components of net income for 2009, 2008 and 2007. This information is provided for Park, Vision Bank and Park excluding Vision Bank.

Park — Summary Income Statements

(For the years ended December 31, 2009, 2008 and 2007)

(In thousands)	2009		2008		2007
Net interest income	$	273,491	$	255,873	$	234,677
Provision for loan losses		68,821		70,487		29,476
Other income		81,190		84,834		71,640
Other expense		188,725		179,515		170,129
Goodwill impairment charge		—		54,986		54,035
Income before taxes		97,135		35,719		52,677
Income taxes		22,943		22,011		29,970
Net income	$	74,192	$	13,708	$	22,707

Vision Bank — Summary Income Statements

(For the years ended December 31, 2009, 2008 and 2007)

(In thousands)	2009			2008			2007
Net interest income	$	25,634		$	27,065		$	23,756
Provision for loan losses		44,430			46,963			19,425
Other income (loss)		(2,047	)		3,014			3,465
Other expense		28,091			27,149			18,545
Goodwill impairment charge		—			54,986			54,035
Loss before taxes		(48,934	)		(99,019	)		(64,784	)
Income tax benefit		(18,824	)		(17,832	)		(4,103	)
Net loss	$	(30,110	)	$	(81,187	)	$	(60,681	)

Park acquired Vision Bank on March 9, 2007 and the summary income statement for 2007 includes the results from the date of acquisition through year-end 2007.

30

FINANCIAL REVIEW

Vision Bank began experiencing credit problems during the third quarter of 2007 and the credit problems continued throughout 2008 and 2009. Vision Bank’s net loan charge-offs were $28.9 million in 2009, compared to $38.5 million in 2008 and $8.6 million in 2007. As a percentage of average loans, net loan charge-offs were 4.18% in 2009, 5.69% in 2008 and an annualized 1.71% in 2007. These severe credit problems resulted in recognition of the goodwill impairment charges of $55.0 million in 2008 and $54.0 million in 2007.

Park Excluding Vision Bank — Summary Income Statements

(For the years ended December 31, 2009, 2008 and 2007)

(In thousands)	2009		2008		2007
Net interest income	$	247,857	$	228,808	$	210,921
Provision for loan losses		24,391		23,524		10,051
Other income		83,237		81,820		68,175
Other expense		160,634		152,366		151,584
Goodwill impairment charge		—		—		—
Income before taxes		146,069		134,738		117,461
Income taxes		41,767		39,843		34,073
Net income	$	104,302	$	94,895	$	83,388

Net income for Park excluding Vision Bank increased by $9.4 million or 9.9% to $104.3 million in 2009 compared to 2008 and increased by $11.5 million or 13.8% to $94.9 million in 2008 compared to 2007.

SUMMARY DISCUSSION OF OPERATING RESULTS FOR PARK

A year ago, Park’s management projected that net interest income would be $258 million to $263 million in 2009. The actual results in 2009 of $273.5 million exceeded the top of the estimated range by $10.5 million or 4.0%. This positive variance was primarily due to an improvement in the net interest rate spread (the difference between rates received for interest earning assets and the rates paid for interest bearing liabilities). The net interest rate spread improved by 12 basis points to 3.94% for 2009 from 3.82%. Management had not projected an improvement in the net interest rate spread for 2009.

Park’s management also projected a year ago that the provision for loan losses would be approximately $45 million and that the net loan charge-off ratio would be approximately 1.00% in 2009. We included the following statement with this projection: “This estimate could change significantly as circumstances for individual loans and economic conditions change.” The provision for loan losses for 2009 was $68.8 million and exceeded our estimate by $23.8 million or 52.9%. The net loan charge-off ratio for 2009 was 1.14% and exceeded our estimate by 14 basis points or 14.0%. During 2009, “circumstances for individual loans” somewhat changed at Vision Bank. Park’s management had expected a significant reduction in the loan loss provision at Vision Bank in 2009 from the 2008 loan loss provision of $47.0 million. Vision Bank had only a small reduction to $44.4 million in 2009. Vision Bank continued to experience a significant increase in problem loans in 2009. The loan loss provision for Park’s Ohio-based banking activities performed as expected in 2009 with a small increase in the loan loss provision to $24.4 million in 2009, compared to $23.5 million in 2008.

Other income for 2009 was $81.2 million and exceeded the year-ago estimated amount of $75 million by $6.2 million or 8.3%. This positive variance was primarily due to a gain from the sale of investment securities of $7.3 million in the second quarter of 2009. Management had not projected that investment securities would be sold in 2009.

A year ago, Park’s management projected that total other expense would be approximately $184 million in 2009. Total other expense was $188.7 million in 2009 and exceeded management’s estimate by $4.7 million or 2.6%. The primary reason for this variance was higher than projected FDIC insurance expense. The FDIC charged the banking industry a special assessment in 2009. Park’s FDIC special assessment was $3.3 million.

In summary, the actual results for net interest income, other income and other expense exceeded the estimated projections from a year ago by $10.5 million, $6.2 million and $4.7 million, respectively. The net positive impact on income before taxes from these variances was a positive $12.0 million in 2009. However, due to continued severe economic conditions in the markets served by Vision Bank, the provision for loan losses exceeded the estimate from a year ago by $23.8 million.

ISSUANCE OF PREFERRED STOCK AND EMERGENCY ECONOMIC STABILIZATION ACT

On October 3, 2008, Congress passed the Emergency Economic Stabilization Act of 2008 (“EESA”), which created the Troubled Asset Relief Program (“TARP”) and provided the Secretary of the Treasury with broad authority to implement certain actions to help restore stability and liquidity to U.S. markets. The Capital Purchase Program (the “CPP”) was announced by the U.S. Department of the Treasury (the “U.S. Treasury”) on October 14, 2008 as part of TARP. Pursuant to the CPP, the U.S. Treasury was authorized to purchase up to $250 billion of senior preferred shares on standardized terms from qualifying financial institutions. The purpose of the CPP was to encourage U.S. financial institutions to build capital to increase the flow of financing to U.S. businesses and consumers and to support the U.S. economy.

The CPP is voluntary and requires a participating institution to comply with a number of restrictions and provisions, including standards for executive compensation and corporate governance and limitations on share repurchases and the declaration and payment of dividends on common shares.

Eligible financial institutions could generally apply to issue preferred shares to the U.S. Treasury in aggregate amounts between 1% to 3% of the institution’s risk-weighted assets. Park was eligible to apply to the U.S. Treasury for between approximately $47 million and $141 million of funding. Park elected to apply for $100 million of funds through the CPP and its application was approved on December 1, 2008.

On December 23, 2008, Park completed the sale to the U.S. Treasury of $100 million of newly-issued Park non-voting preferred shares as part of the CPP. Park entered into a Securities Purchase Agreement and a Letter Agreement with the U.S. Treasury on December 23, 2008. Pursuant to these agreements, Park issued and sold to the U.S. Treasury (i) 100,000 of Park’s Fixed Rate Cumulative Perpetual Preferred Shares, Series A, each without par value and having a liquidation preference of $1,000 per share (the “Series A Preferred Shares”), and (ii) a warrant (the “Warrant”) to purchase 227,376 Park common shares at an exercise price of $65.97 per share, for an aggregate purchase price of $100 million. The Warrant has a ten-year term. All of the proceeds from the sale of the Series A Preferred Shares and the Warrant by Park to the U.S. Treasury under the CPP qualify as Tier 1 capital for regulatory purposes.

U.S. Generally Accepted Accounting Principles (GAAP) require management to allocate the proceeds from the issuance of the Series A Preferred Shares between the Series A Preferred Shares and related Warrant. The terms of the Series A Preferred Shares require management to pay a cumulative dividend at the rate of 5 percent per annum until February 14, 2014, and 9 percent thereafter. Management has determined that the 5 percent dividend rate is below market value; therefore, the fair value of the Series A Preferred Shares would be less than the $100 million in proceeds. Management determined that a reasonable market discount rate was 12 percent for the fair value of the Series A Preferred Shares. Management used the Black-Scholes model for calculating the fair value of the Warrant (and related common shares). The allocation between the Series A Preferred Shares and the Warrant at December 23, 2008, the date of issuance, was $95.7 million and $4.3 million, respectively. The discount on the Series A Preferred Shares of $4.3 million will be accreted through retained earnings using the level yield method over a 60-month period. GAAP requires Park to measure earnings per share with earnings available to common shareholders. Therefore, the Consolidated Statements of Income reflect a line item for “Preferred stock dividends and accretion” and a line

31

FINANCIAL REVIEW

item for “Income available to common shareholders”. The preferred stock dividends totaled $5,762,000 for 2009 and $142,000 for 2008. Included in the preferred stock dividends was the accretion of the discount on the Series A Preferred Shares. The accretion of this discount was $762,000 in 2009 and $18,000 in 2008.

Income available to common shareholders is net income minus the preferred stock dividends and accretion. Income available to common shareholders was $68.4 million for 2009 and $13.6 million for 2008.

See Note 1 and Note 25 of the Notes to Consolidated Financial Statements for additional information on the issuance of preferred stock.

DIVIDENDS ON COMMON SHARES

Park declared quarterly cash dividends on common shares in 2009 that totaled $3.76 per share. The quarterly cash dividend on common shares was $.94 per share for each quarter of 2009.

Under the terms of the Securities Purchase Agreement with the U.S. Treasury under the CPP, Park is not permitted to increase the quarterly cash dividend on its common shares above $.94 per share without seeking prior approval from the U.S. Treasury.

Cash dividends declared on common shares were $3.76 in 2009, $3.77 in 2008 and $3.73 in 2007. Park’s management expects to pay a quarterly cash dividend on its common shares of $.94 per share in 2010.

CONSOLIDATION OF OHIO BANKING CHARTERS

On July 30, 2007, Park announced a plan to review current processes and identify opportunities to improve efficiency by converting to one operating system. One outcome of this initiative (“Project EPS”) was the consolidation of the eight banking charters of Park’s Ohio-based subsidiary banks into one national bank charter, The Park National Bank (“PNB”), during the third quarter of 2008. PNB operates with eleven banking divisions. See Table 1 for a complete listing of the banking divisions.

BRANCH PURCHASE

On September 21, 2007, a banking division of PNB, the First-Knox National Bank Division (“FKND”), acquired the Millersburg, Ohio banking office (the “Millersburg branch”) of Ohio Legacy Bank, N.A. (“Ohio Legacy”). FKND acquired substantially all of the loans administered at the Millersburg branch of Ohio Legacy and assumed substantially all of the deposit liabilities relating to the deposit accounts assigned to the Millersburg branch. The fair value of the loans acquired was approximately $38.3 million and the fair value of the deposit liabilities assumed was approximately $23.5 million.

FKND paid a premium of approximately $1.7 million in connection with the purchase of the deposit liabilities. FKND recognized a loan premium adjustment of $700,000 and a certificate of deposit adjustment of $300,000, resulting in the recording of a core deposit intangible of $2.7 million. No goodwill was recognized as part of this transaction. In addition, FKND paid $900,000 for the acquisition of the branch office building that Ohio Legacy was leasing from a third party.

CRITICAL ACCOUNTING POLICIES

The significant accounting policies used in the development and presentation of Park’s consolidated financial statements are listed in Note 1 of the Notes to Consolidated Financial Statements. The accounting and reporting policies of Park conform with U.S. GAAP and general practices within the financial services industry. 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.

Park considers that the determination of the allowance for loan losses involves a higher degree of judgment and complexity than its other significant accounting policies. The allowance for loan losses is calculated with the objective of maintaining a reserve level believed by management to be sufficient to absorb probable incurred credit losses in the loan portfolio. Management’s determination of the adequacy of the allowance for loan losses is based on periodic evaluations of the loan portfolio and of current economic conditions. However, this evaluation is inherently subjective as it requires material estimates, including expected default probabilities, the loss given default, the amounts and timing of expected future cash flows on impaired loans, and estimated losses on consumer loans and residential mortgage loans based on historical loss experience and the current economic conditions. All of those factors may be susceptible to significant change. To the extent that actual results differ from management estimates, additional loan loss provisions may be required that would adversely impact earnings for future periods.

Management’s assessment of the adequacy of the allowance for loan losses considers individual impaired loans, pools of unimpaired commercial loans and pools of homogeneous loans with similar risk characteristics and other environmental risk factors. This assessment is updated on a quarterly basis. The allowance established for impaired commercial loans reflects expected losses resulting from analyses performed on each individual impaired commercial loan. The specific credit allocations are based on regular analyses of commercial, commercial real estate and construction loans where we have determined the loan to be impaired. Due to the variations in Park’s loan portfolio as well as the deteriorating credit conditions at Vision Bank, beginning with the fourth quarter of 2009, management has grouped individually impaired loans into three categories: Vision Bank impaired commercial land and development (CL&D) loans ($85.4 million), other PNB and Vision Bank impaired commercial loans ($112.0 million), and Vision Bank impaired commercial loans with balances less than $250,000 ($3.7 million). At December 31, 2009, management had specifically allocated $21.7 million, $14.5 million, and $0.5 million of the loan loss reserve to these three categories, respectively. For the years ended December 31, 2008 and 2007, management allocated $8.7 million and $3.4 million respectively, to all impaired commercial loans.

Pools of performing commercial loans and pools of homogeneous loans with similar risk characteristics are also assessed for probable losses. At December 31, 2008, a loss migration analysis was performed on accruing commercial loans, which includes commercial, financial and agricultural loans, commercial real estate loans and certain real estate construction loans. These are loans above a fixed dollar amount that are assigned an internal credit rating. During 2009, management determined that it was necessary to discontinue the migration analysis and implemented a methodology that uses an annual loss rate (“historical loss experience”), calculated based on an average of the net charge-offs during the last 24 months. Management believes the 24-month historical loss experience methodology is appropriate in the current economic environment, as it captures loss rates that are comparable to the current period being analyzed. Management also segregated Vision Bank’s accruing CL&D loan portfolio from other commercial loans, as the loss experience in the CL&D loan portfolio has far surpassed losses in other commercial loans at Park. The historical loss experience is judgmentally increased to cover approximately two years of expected losses in the commercial loan portfolio and 1.75 years of expected losses in the Vision Bank CL&D loan portfolio. Generally, residential real estate loans and consumer loans are not individually graded. The amount of loan loss reserve assigned to these loans is based on historical loss experience, judgmentally increased to cover approximately 1.25 years of expected losses. (Refer to the Credit Experience-Provision for Loan Losses section within this Financial Review for additional discussion.)

Effective January 1, 2008, management implemented the fair value hierarchy, which has the objective of maximizing the use of observable market inputs. The related accounting guidance also requires enhanced disclosures regarding the inputs used to calculate fair value. These inputs are classified as Level 1, 2, and 3. Level 3 inputs are those with significant unobservable inputs that reflect a company’s own assumptions about the market for a particular instrument. Some of the inputs could be based on internal models and cash flow analysis. At December 31, 2009, financial assets valued using Level 3 inputs for Park

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had an aggregate fair value of approximately $153.8 million. This was 10.5% of the total amount of assets measured at fair value as of the end of the year. The fair value of impaired loans was approximately $109.8 million (or 71.4%) of the total amount of Level 3 inputs. Additionally, there are $91.3 million of loans that are impaired and carried at cost, as fair value exceeds book value for each individual credit. The large majority of Park’s financial assets valued using Level 2 inputs consist of available-for-sale (“AFS”) securities. The fair value of these AFS securities is obtained largely by the use of matrix pricing, which is a mathematical technique widely used in the financial services industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities.

Management believes that the accounting for goodwill and other intangible assets also involves a higher degree of judgment than most other significant accounting policies. GAAP establishes standards for the amortization of acquired intangible assets and the impairment assessment of goodwill. Goodwill arising from business combinations represents the value attributable to unidentifiable intangible assets in the business acquired. Park’s goodwill relates to the value inherent in the banking industry and that value is dependent upon the ability of Park’s banking subsidiaries to provide quality, cost-effective banking services in a competitive marketplace. The goodwill value is supported by revenue that is in part driven by the volume of business transacted. A decrease in earnings resulting from a decline in the customer base, the inability to deliver cost-effective services over sustained periods or significant credit problems can lead to impairment of goodwill that could adversely impact earnings in future periods. GAAP requires an annual evaluation of goodwill for impairment, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The fair value of the goodwill, which resides on the books of Park’s subsidiary banks, is estimated by reviewing the past and projected operating results for the Park subsidiary banks, deposit and loan totals for the Park subsidiary banks and banking industry comparable information. Park recognized goodwill impairment charges in both 2007 and 2008 as previously discussed.

At December 31, 2009, on a consolidated basis, Park had core deposit intangibles of $9.5 million subject to amortization and $72.3 million of goodwill, which was not subject to periodic amortization. The core deposit intangibles recorded on the balance sheet of PNB totaled $2.8 million and the core deposit intangibles at Vision Bank were $6.7 million. The goodwill asset of $72.3 million is carried on the balance sheet of PNB.

ABOUT OUR BUSINESS

Through its Ohio-based banking divisions, Park is engaged in the commercial banking and trust business, generally in small to medium population Ohio communities. Vision Bank is primarily engaged in the commercial banking business throughout the panhandle of Florida and in Baldwin County, Alabama. Management believes there is a significant number of consumers and businesses which seek long-term relationships with community-based financial institutions of quality and strength. While not engaging in activities such as foreign lending, nationally syndicated loans or investment banking, Park attempts to meet the needs of its customers for commercial, real estate and consumer loans, consumer and commercial leases, and investment, fiduciary and deposit services.

Park’s subsidiaries compete for deposits and loans with other banks, savings associations, credit unions and other types of financial institutions. At December 31, 2009, Park and its Ohio-based banking divisions operated 127 offices and a network of 147 automatic teller machines in 28 Ohio counties and one county in northern Kentucky. Vision Bank operated 18 offices and a network of 21 automatic teller machines in Baldwin County, Alabama and in 6 counties in the panhandle of Florida.

A table of financial data of Park’s subsidiaries and banking divisions for 2009, 2008 and 2007 is shown below. See Note 23 of the Notes to Consolidated Financial Statements for additional information on the Corporation’s subsidiaries. Please note that the financial statements for various divisions of PNB are not maintained on a separate basis and, therefore, net income is only an estimate by management.

Table 1 — Park National Corporation Affiliate Financial Data

	2009						2008						2007
	Average			Net			Average			Net			Average			Net
(In thousands)	Assets			Income			Assets			Income			Assets			Income
Park National Bank:
Park National Division	$	1,798,814		$	26,991		$	1,839,012		$	25,445		$	1,492,652		$	24,830
Security National Division		825,481			14,316			820,571			13,001			835,801			12,439
Century National Division		650,488			11,387			711,162			12,995			720,781			11,913
First-Knox National Division		633,260			12,411			658,151			12,718			656,406			10,891
Richland Trust Division		563,776			9,954			526,989			8,946			529,175			5,915
Fairfield National Division		484,849			9,368			337,355			7,332			332,564			6,322
Park National SW & N KY Division		416,502			1,841			416,398			1,506			398,517			(69	)
Second National Division		371,079			6,926			423,062			5,752			403,114			4,847
United Bank Division		242,166			4,300			214,074			3,467			207,493			2,410
Unity National Division		182,373			2,251			190,739			2,061			192,382			1,290
Farmers & Savings Division		107,437			1,713			119,014			2,042			129,133			2,292
Vision Bank		904,897			(30,110	)		904,420			(81,187	)		698,788			(60,681	)
Parent Company, including consolidating entries		(145,591	)		2,844			(452,861	)		(370	)		(427,650	)		308
Consolidated Totals	$	7,035,531		$	74,192		$	6,708,086		$	13,708		$	6,169,156		$	22,707

SOURCE OF FUNDS

Deposits: Park’s major source of funds is provided by deposits from individuals, businesses and local government units. These deposits consist of noninterest bearing and interest bearing deposits.

Total year-end deposits increased by $426 million or 9.0% to $5,188 million at December 31, 2009. Excluding the $236 million decrease in brokered deposits, total year-end deposits increased by $662 million or 14.6% in 2009. Please see the following table for information on the growth in deposits in 2009.

Year-End Deposits

December 31,
(In thousands)	2009		2008		Change
Noninterest bearing checking	$	897,243	$	782,625	$	114,618
Interest bearing transaction accounts		1,193,845		1,204,530		(10,685	)
Savings		873,137		694,721		178,416
Brokered time deposits		—		235,766		(235,766	)
All other time deposits		2,222,537		1,842,606		379,931
Other		1,290		1,502		(212	)
Total	$	5,188,052	$	4,761,750	$	426,302

In 2009, total year-end deposits at Vision Bank increased by $52 million or 8.2% and increased by $374 million or 9.1% for Park’s Ohio-based banking operations.

Total year-end deposits increased by $323 million or 7.3% in 2008. However, $236 million of the growth in deposits came from the use of brokered deposits. Excluding the brokered deposits, total year-end deposits increased by $87 million or 2.0%. In 2008, Vision Bank’s year-end total deposits decreased by $20 million or 3.1% and the Ohio-based banking operations increased deposits by $107 million or 2.8%.

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FINANCIAL REVIEW

Average total deposits were $5,051 million in 2009 compared to $4,603 million in 2008 and $4,403 million in 2007. Average noninterest bearing deposits were $818 million in 2009 compared to $740 million in 2008 and $697 million in 2007.

Management expects that total deposits (exclusive of brokered deposits) will decrease in 2010 by 3% to 5%. The extraordinary growth in deposits in 2009 was partially due to Park’s competitors attempting to limit deposit growth by not accepting public funds deposits and by customers seeking a different local bank for their deposit business. Excluding brokered deposits, total year-end deposits increased by 14.6% in 2009, which was much stronger than the growth guidance of 1% to 2% that was provided a year ago by Park’s management.

The Federal Open Market Committee (“FOMC”) of the Federal Reserve Board decreased the federal funds rate from 4.25% at December 31, 2007 to a range of 0% to .25% at year-end 2008. The FOMC aggressively lowered the federal funds rate during 2008 as the severity of the economic recession increased. The FOMC maintained the targeted federal funds rate in the 0% to .25% range for all of 2009 as the U.S. economy gradually recovered from the severe recession. The average federal funds rate was .16% for 2009, compared to an average rate of 1.93% for 2008 and 5.02% in 2007.

The average interest rate paid on interest bearing deposits was 1.53% in 2009, compared to 2.33% in 2008 and 3.27% in 2007. The average cost of interest bearing deposits for each quarter of 2009 was 1.33% for the fourth quarter, compared to 1.48% for the third quarter, 1.59% for the second quarter and 1.73% for the first quarter.

Park’s management expects that due to the uncertainty of future economic growth following the severe economic recession, the FOMC will maintain the federal funds interest rate at approximately .25% for most of 2010. As a result, Park’s management expects a further decrease in the average interest rate paid on interest bearing deposits in 2010.

Short-Term Borrowings: Short-term borrowings consist of securities sold under agreements to repurchase, Federal Home Loan Bank advances, federal funds purchased and other borrowings. These funds are used to manage the Corporation’s liquidity needs and interest rate sensitivity risk. The average rate paid on short-term borrowings generally moves closely with changes in market interest rates for short-term investments. The average rate paid on short-term borrowings was .76% in 2009 compared to 2.38% in 2008 and 4.47% in 2007.

The average cost of short-term borrowings for each quarter of 2009 was .64% for the fourth quarter, compared to .81% for the third quarter, .77% for the second quarter and .83% for the first quarter. Management expects the average rate paid on short-term borrowings in 2010 to be similar to 2009.

Average short-term borrowings were $420 million in 2009 compared to $609 million in 2008 and $494 million in 2007. The decrease in average short-term borrowings in 2009 compared to 2008 was primarily due to the large increase in average deposit balances. The increase in average short-term borrowings in 2008 compared to 2007 was used to help fund the increase in loans and investments.

Long-Term Debt: Long-term debt primarily consists of borrowings from the Federal Home Loan Bank and repurchase agreements with investment banking firms. The average rate paid on long-term debt was 3.38% for 2009, compared to 3.72% for 2008 and 4.22% for 2007. In 2009, the average cost of long-term debt for each quarter was 3.63% for the fourth quarter, compared to 3.62% for the third quarter, 3.31% for the second quarter and 3.03% for the first quarter. (The average balance of long-term debt and the average cost of long-term debt includes the subordinated debentures discussed in the following section.) Management expects that the average rate paid on long-term debt will be approximately 3.75% in 2010.

In 2009, average long-term debt was $780 million compared to $836 million in 2008 and $569 million in 2007. Average total debt (long-term and short-term) was $1,200 million in 2009 compared to $1,445 million in 2008 and $1,063 million in 2007. Average total debt decreased by $245 million or 16.9% in 2009 compared to 2008 and increased by $382 million or 35.9% in 2008 compared to 2007. The decrease in average total debt in 2009 compared to 2008 was primarily due to the large increase in average deposits. In 2008, the large increase in average total debt was used to fund the large increase in average loans and investments.

Average long-term debt was 65% of average total debt in 2009 compared to 58% in 2008 and 54% in 2007.

Subordinated Debentures/Notes: Park assumed with the Vision acquisition $15 million of floating rate junior subordinated notes. The interest rate on these subordinated notes adjusts every quarter at 148 basis points above the three-month LIBOR interest rate. The maturity date on the junior subordinated notes is December 30, 2035 and the subordinated debenture may be prepaid after December 30, 2010. These subordinated notes qualify as Tier 1 capital under Federal Reserve Board guidelines.

Park’s Ohio-based banking subsidiary, PNB, issued a $25 million subordinated debenture on December 28, 2007. The interest rate on this subordinated debenture adjusts every quarter at 200 basis points above the three-month LIBOR interest rate. The maturity date on the subordinated debenture is December 29, 2017 and the subordinated debenture may be prepaid after December 28, 2012. On January 2, 2008, Park entered into a “pay fixed-receive floating” interest rate swap agreement for a notional amount of $25 million with a maturity date of December 28, 2012. This interest rate swap agreement was designed to hedge the cash flows pertaining to the $25 million subordinated debenture until December 28, 2012. Management converted the cash flows to a fixed interest rate of 6.01% through the use of the interest rate swap. This subordinated debenture qualifies as Tier 2 capital under the applicable regulations of the Office of the Comptroller of the Currency of the United States of America (the “OCC”) and the Federal Reserve System.

On December 23, 2009, Park issued $35.25 million of subordinated notes to 38 purchasers. The subordinated notes have a fixed annual interest rate of 10% with quarterly interest payments. The maturity date on the subordinated notes is December 23, 2019. These notes may be prepaid by Park at any time after five years. The subordinated notes qualify as Tier 2 capital under applicable rules of the Federal Reserve Board. Each subordinated note was purchased at a purchase price of 100% of the principal amount by an accredited investor.

See Note 11 of the Notes to Consolidated Financial Statements for additional information on the subordinated debentures and subordinated notes.

Sale of Common Stock: Park sold an aggregate of 904,072 common shares, out of treasury shares, during 2009 using various capital raising strategies. As part of one of these strategies, Park issued warrants for the purchase of 500,000 shares of common stock. The warrants have an exercise price of $67.75 per share. Warrants covering the purchase of an aggregate of 250,000 common shares expire on April 30, 2010 and warrants covering the purchase of the other 250,000 common shares expire on October 30, 2010.

Park sold a total of 288,272 common shares through an At-the-Market Common Stock Offering Program (“ATM”) during the second and third quarters of 2009. Gross proceeds from these sales were $17.5 million at a weighted average sales price of $60.83 per share. Net of selling and due diligence expenses, Park raised $16.7 million in equity from the ATM.

During the fourth quarter of 2009, Park sold 500,000 shares of common stock and issued the previously described warrants for the purchase of an aggregate of 500,000 shares of common stock in a registered direct offering. The gross proceeds from the sale of the common stock and warrants was $30.8 million at an average sales price of $61.59 per share. Net of selling and professional expenses, Park raised $29.8 million from this transaction.

Also during the fourth quarter of 2009, Park sold 115,800 common shares to Park’s Defined Benefit Pension Plan (the “Pension Plan”). These common shares were sold at the current market price of $60.45 per share for gross proceeds of $7.0 million. There were no expenses associated with this sale.

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FINANCIAL REVIEW

In total for 2009, Park sold 904,072 common shares and warrants covering 500,000 common shares at a weighted average price per share of $61.20 for gross proceeds of $55.3 million. Net of selling expenses and professional fees, Park raised $53.5 million of equity from these capital raising strategies in 2009.

Stockholders’ Equity: Tangible stockholders’ equity (stockholders’ equity less goodwill and other intangible assets) to tangible assets (total assets less goodwill and other intangible assets) was 9.13% at December 31, 2009 compared to 7.98% at December 31, 2008 and 6.85% at December 31, 2007.

The large increase in the ratio of tangible stockholders’ equity to tangible assets in 2008 was due to the issuance of $100 million of Park non-voting preferred shares to the U.S. Treasury on December 23, 2008. In 2009, Park’s tangible stockholders’ equity to tangible assets ratio further increased largely as a result of the sale of common stock which increased equity by $53.5 million. Excluding the $100.0 million of preferred stock, the ratio of tangible stockholders’ equity to tangible assets ratio was 7.69% at December 31, 2009 and 6.54% at December 31, 2008.

In accordance with GAAP, Park reflects any unrealized holding gain or loss on AFS securities, net of income taxes, as accumulated other comprehensive income (loss) which is part of Park’s equity. The unrealized holding gain on AFS securities, net of income taxes, was $30.1 million at year-end 2009, compared to an unrealized holding gain on AFS securities, net of income taxes, of $31.6 million at year-end 2008 and an unrealized holding gain on AFS securities, net of income taxes, of $1.0 million at year-end 2007. Long-term and short-term interest rates decreased sharply during the fourth quarter of 2008 which caused the market value of Park’s investment securities to increase and produced the large unrealized holding gain on AFS securities, net of income taxes, at year-end 2008 and year-end 2009.

In accordance with GAAP, Park adjusts accumulated other comprehensive income (loss) to recognize the net actuarial gain or loss reflected in the accounting for Park’s Pension Plan. See Note 13 of the Notes to Consolidated Financial Statements for information on the accounting for Park’s Pension Plan.

Pertaining to the Pension Plan, Park recognized a net comprehensive gain of $6.3 million in 2009, a net comprehensive loss of $(16.2) million in 2008 and a net comprehensive gain of $3.3 million in 2007. The comprehensive gain in 2009 was due to positive investment returns and contributions to the Pension Plan. The large comprehensive loss in 2008 was primarily due to the negative investment return on Pension Plan assets in 2008, as a result of the poor performance of stock investments in 2008. At year-end 2009, the balance in accumulated other income (loss) pertaining to the Pension Plan was $(13.5) million, compared to $(19.8) million at December 31, 2008 and $(3.6) million at December 31, 2007.

Park also recognized in 2008, a net comprehensive loss of $(1.3) million due to the mark-to-market of the $25 million cash flow hedge. In 2009, Park recognized $.3 million of comprehensive income on the cash flow hedge. See Note 19 of the Notes to Consolidated Financial Statements for information on the accounting for Park’s derivative instruments.

INVESTMENT OF FUNDS

Loans: Average loans were $4,594 million in 2009 compared to $4,355 million in 2008 and $4,011 million in 2007. The average yield on loans was 6.03% in 2009 compared to 6.93% in 2008 and 8.01% in 2007. The average prime lending rate in 2009 was 3.25% compared to 5.09% in 2008 and 8.05% in 2007. Approximately 63% of Park’s loan balances mature or reprice within one year (see Table 10). The yield on average loan balances for each quarter of 2009 was 5.91% for the fourth quarter, compared to 5.99% for the third quarter, 6.02% for the second quarter and 6.18% for the first quarter. Management expects that the yield on the loan portfolio will decrease modestly in 2010 compared to the average yield of 6.03% for 2009. Year-end loan balances increased by $149 million or 3.3% in 2009 compared to 2008. Park’s Ohio-based subsidiaries increased loans by $162 million or 4.3% during 2009. Vision Bank had a small decline in loans of $13 million or 1.9% during 2009.

In 2008, year-end loan balances increased by $267 million or 6.3%. During the fourth quarter of 2008, Park’s Ohio-based banking divisions sold $31 million of unsecured credit card balances. Exclusive of the sale of the credit card balances, year-end loan balances grew by $298 million or 7.0%. At Vision Bank, year-end loan balances increased by $51 million or 8.0% during 2008 to $690 million. Park’s Ohio-based subsidiaries increased loans by $216 million or 6.0% during 2008. Excluding the sale of the credit card balances, Park’s Ohio-based subsidiaries increased loans by $247 million or 6.9% in 2008.

Year-end loan balances increased by $110 million or 3.2% in 2007 exclusive of $596 million of loans that were acquired in the Vision acquisition and exclusive of the $38 million of loans that were acquired as part of the Millersburg, Ohio branch purchase. From the date of the Vision acquisition (March 9, 2007) through year-end 2007, Vision Bank increased loans by $43 million to $639 million at year-end 2007. Excluding the growth from Vision Bank, Park’s Ohio-based subsidiaries grew loans by $67 million during 2007 for a growth rate of 1.9%.

A year ago, management projected that year-end loan balances would grow between 3% to 4% in 2009. The actual loan growth of 3.3% was consistent with this guidance. Management expects that loan growth for 2010 will be slower (1% to 3%) as the demand for loans decreased in the fourth quarter of 2009.

Year-end residential real estate loans were $1,555 million, $1,560 million and $1,481 million in 2009, 2008 and 2007, respectively. Residential real estate loans decreased by $5 million or .3% in 2009 and increased by $79 million or 5.3% during 2008. In 2007, residential real estate loans increased by $43 million or 3.3% exclusive of the $138 million of loans from the Vision acquisition. Management does not expect any growth in residential real estate loans in 2010, as Park’s customers will continue to favor long-term fixed rate residential mortgage loans.

The long-term fixed rate residential mortgage loans that Park originates are sold in the secondary market and Park typically retains the servicing on these loans. The balance of sold fixed-rate residential mortgage loans increased by $149 million or 10.9% to $1,518 million at year-end 2009, compared to $1,369 million at year-end 2008 and $1,403 million at year-end 2007. Due to low long-term interest rates in 2009, the demand for fixed-rate residential mortgage loans was extraordinary. Park originated and sold $615 million of fixed-rate residential mortgage loans in 2009, compared to $161 million in 2008 and 2007. Management expects that the loan origination volume of fixed-rate mortgage loans will decrease by 50% or more in 2010, as the annualized loan origination volume for the fourth quarter of 2009 was $333 million. The balance of sold fixed-rate residential mortgage loans is expected to increase by 1% to 3% in 2010.

Year-end consumer loans were $704 million, $643 million and $593 million in 2009, 2008 and 2007, respectively. Consumer loans increased by $61 million or 9.5% in 2009 and increased by $50 million or 8.4% in 2008. In 2007, consumer loans increased by $55 million or 10.3% exclusive of the $6 million of loans acquired from the Vision acquisition. The increases in consumer loans for 2009, 2008 and 2007 were primarily due to an increase in automobile loans originated through automobile dealers in Ohio. Management expects that consumer loans will increase by 2% to 3% in 2010.

On a combined basis, year-end construction loans, commercial loans and commercial real estate loans totaled $2,377 million, $2,284 million and $2,143 million at year-end 2009, 2008 and 2007, respectively. These combined loan totals increased by $93 million or 4.1% in 2009 and increased by $141 million or 6.6% in 2008. These combined loan totals increased by $33 million or 2.0% in 2007, exclusive of the $472 million of loans acquired through the Vision acquisition and the Millersburg branch purchase. Management expects that construction loans, commercial loans and commercial real estate loans will grow by 1% to 3% in 2010.

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Year-end lease balances were $3 million, $4 million and $7 million in 2009, 2008 and 2007, respectively. Management continues to de-emphasize leasing and expects the balance to further decline in 2010.

Table 2 reports year-end loan balances by type of loan for the past five years.

Table 2 — Loans by Type

December 31,
(In thousands)	2009		2008		2007		2006		2005
Commercial, financial and agricultural	$	751,277	$	714,296	$	613,282	$	548,254	$	512,636
Real estate — construction		495,518		533,788		536,389		234,988		193,185
Real estate — residential		1,555,390		1,560,198		1,481,174		1,300,294		1,287,438
Real estate — commercial		1,130,672		1,035,725		993,101		854,869		823,354
Consumer		704,430		643,507		593,388		532,092		494,975
Leases		3,145		3,823		6,800		10,205		16,524
Total Loans	$	4,640,432	$	4,491,337	$	4,224,134	$	3,480,702	$	3,328,112

Table 3 — Selected Loan Maturity Distribution

			Over One		Over
December 31, 2009	One Year		Through		Five
(In thousands)	or Less (1)		Five Years		Years		Total
Commercial, financial and agricultural	$	355,738	$	248,780	$	146,759	$	751,277
Real estate — construction		396,829		33,325		65,364		495,518
Real estate — commercial		254,901		131,738		744,033		1,130,672
Total	$	1,007,468	$	413,843	$	956,156	$	2,377,467
Total of these selected loans due after one year with:
Fixed interest rate							$	508,111
Floating interest rate							$	861,888

(1) Nonaccrual loans of $173,525 are included within the one year or less classification above.

Investment Securities: Park’s investment securities portfolio is structured to provide liquidity and contribute to earnings. Park’s investment strategy is dynamic. As conditions change over time, Park’s overall interest rate risk, liquidity needs and potential return on the investment portfolio will change. Management regularly evaluates the securities in the investment portfolio as circumstances evolve. Circumstances that may precipitate a sale of a security would be to better manage interest rate risk, to meet liquidity needs or to improve the overall yield on the investment portfolio.

Park classifies most of its securities as AFS (see Note 4 of the Notes to Consolidated Financial Statements). These securities are carried on the books at their estimated fair value with the unrealized holding gain or loss, net of federal taxes, accounted for as accumulated other comprehensive income (loss) which is part of the Corporation’s equity. The securities that are classified as AFS are free to be sold in future periods in carrying out Park’s investment strategies.

Generally, Park classifies U.S. Government Agency collateralized mortgage obligations (“CMOs”) that it purchases as held-to-maturity. A classification of held-to-maturity means that Park has the positive intent and the ability to hold these securities until maturity. Park classifies CMOs as held-to-maturity because these securities are generally not as liquid as the U.S. Government Agency mortgage-backed securities and U.S. Government Agency notes that Park classifies as AFS. At year-end 2009, Park’s held-to-maturity securities portfolio was $507 million, compared to $428 million at year-end 2008 and $165 million at year-end 2007. Park purchased $119 million of CMOs in 2009 and purchased $270 million of CMOs in 2008. All of the mortgage-backed securities and CMOs in Park’s investment portfolio were issued by a U.S. Government Agency.

Average taxable investment securities were $1,848 million in 2009, compared to $1,756 million in 2008 and $1,531 million in 2007. The average yield on taxable securities was 4.90% in 2009, compared to 5.00% in 2008 and 5.03% in 2007. Average tax-exempt investment securities were $30 million in 2009, compared to $45 million in 2008 and $65 million in 2007. The average tax-equivalent yield on tax-exempt investment securities was 7.45% in 2009, compared to 6.90% in 2008 and 6.68% in 2007.

Year-end total investment securities (at amortized cost) were $1,817 million in 2009, $2,010 million in 2008 and $1,702 million in 2007. Management purchased investment securities totaling $469 million in 2009, $693 million in 2008 and $843 million in 2007. Proceeds from repayments and maturities of investment securities were $467 million in 2009, $310 million in 2008 and $712 million in 2007. Proceeds from sales of AFS securities were $204 million in 2009 and $81 million in 2008. Park realized net security gains of $7.3 million in 2009 and $1.1 million in 2008. Park did not sell any investment securities in 2007.

During the second quarter of 2009, Park’s management sold U.S. Government Agency mortgage-backed securities with a book value of $197 million, for proceeds of $204.3 million and a pre-tax gain of $7.3 million. These securities had a book yield of 4.70% and a weighted average remaining life of about 3 years. These mortgage-backed securities were sold at a price of approximately 103.2% of par for a give-up yield (yield expected to be received by purchaser to maturity) of approximately 3.33%. Park’s management purchased $250 million of U.S. Government Agency callable notes during the second quarter of 2009 at a weighted average yield of 4.55%. These callable notes have final maturities in 9 to 10 years and have call dates from 1 to 3 years.

During January 2010, Park’s management sold approximately $200 million of U.S. Government Agency mortgage-backed securities for settlement in March 2010 for an estimated gain of $7.3 million. These securities were sold at a price of approximately 103.5% of par for a give-up yield of approximately 3.12%. The book yield on these mortgage-backed securities is approximately 4.68%. Management expects to reinvest the proceeds from the sale of the mortgage-backed securities late in the first quarter of 2010 or in the second quarter of 2010.

At year-end 2009 and 2008, the average tax-equivalent yield on the total investment portfolio was 4.87% and 5.01%, respectively. The weighted average remaining maturity was 3.5 years at December 31, 2009 and 2.9 years at December 31, 2008. U.S. Government Agency asset-backed securities were approximately 76% of the total investment portfolio at year-end 2009 and were approximately 88% of the total investment portfolio at year-end 2008. This segment of the investment portfolio consists of 15-year mortgage-backed securities and CMOs.

The average maturity of the investment portfolio would lengthen if long-term interest rates would increase as the principal repayments from mortgage-backed securities and CMOs would be reduced and callable U.S. Government Agency notes would extend to their maturity dates. At year-end 2009, management estimated that the average maturity of the investment portfolio would lengthen to 5.3 years with a 100 basis point increase in long-term interest rates and to 5.4 years with a 200 basis point increase in long-term interest rates. Likewise, the average maturity of the investment port folio would shorten if long-term interest rates would decrease as the principal repayments from mortgage-backed securities and CMOs would increase as borrowers would refinance their mortgage loans and the callable U.S. Government Agency notes would shorten to their call dates. At year-end 2009, management estimated that the average maturity of the investment portfolio would decrease to 1.8 years with a 100 basis point decrease in long-term interest rates and to 1.3 years with a 200 basis point decrease in long-term interest rates.

The following table sets forth the carrying value of investment securities at year-end 2009, 2008 and 2007:

Table 4 — Investment Securities

December 31,
(In thousands)	2009		2008		2007
Obligations of U.S. Treasury and other U.S. Government agencies	$	347,595	$	128,688	$	203,558
Obligations of states and political subdivisions		20,123		37,188		59,052
U.S. Government asset-backed securities		1,425,361		1,822,587		1,375,005
Other securities		70,481		70,588		65,488
Total	$	1,863,560	$	2,059,051	$	1,703,103

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FINANCIAL REVIEW

Included in “Other Securities” in Table 4, are Park’s investments in Federal Home Loan Bank stock and Federal Reserve Bank stock. At December 31, 2009, Park owned $62.0 million of Federal Home Loan Bank stock and $6.9 million of Federal Reserve Bank stock. Park owned $61.9 million of Federal Home Loan Bank stock and $6.9 million of Federal Reserve Bank stock at year-end 2008. At December 31, 2007, Park owned $56.8 million of Federal Home Loan Bank stock and $6.4 million of Federal Reserve Bank stock. The fair values of these investments are the same as their amortized costs.

ANALYSIS OF EARNINGS

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. (See Table 5 for three years of history on the average balances of the balance sheet categories and the average rates earned on interest earning assets and the average rates paid on interest bearing liabilities.)

Net interest income increased by $17.6 million or 6.9% to $273.5 million for 2009 compared to an increase of $21.2 million or 9.0% to $255.9 million for 2008. The tax equivalent net yield on interest earning assets was 4.22% for 2009 compared to 4.16% for 2008 and 4.20% for 2007. The net interest rate spread (the difference between rates received for interest earning assets and the rates paid for interest bearing liabilities) was 3.94% for 2009, compared to 3.82% for 2008 and 3.68% for 2007. In 2009, the increase in net interest income was primarily due to the increase in average interest earning assets of $353 million or 5.7% and to an increase in the net interest spread to 3.94% from 3.82% in 2008. The increase in net interest income in 2008 was primarily due to the large increase in average interest earning assets of $546 million or 9.7% and an increase in the net interest spread to 3.82% from 3.68% in 2007.

The average yield on interest earning assets was 5.67% in 2009 compared to 6.37% in 2008 and 7.18% in 2007. On a quarterly basis for 2009, the average yield on earning assets was 5.51% for the fourth quarter, 5.66% for the third quarter, 5.69% for the second quarter and 5.81% for the first quarter. The FOMC of the Federal Reserve Board decreased the targeted federal funds rate from 4.25% at year-end 2007 to a range of 0% to .25% at year-end 2008. The average federal funds rate for 2009 was .16%, compared to an average rate of 1.93% in 2008 and 5.02% in 2007. Management expects that the average yield on interest earning assets will modestly decrease in 2010.

Table 5 — Distribution of Assets, Liabilities and Stockholders’ Equity

	2009								2008								2007
December 31,	Daily					Average			Daily					Average			Daily					Average
(In thousands)	Average			Interest		Rate			Average			Interest		Rate			Average			Interest		Rate
ASSETS
Interest earning assets:
Loans (1) (2)	$	4,594,436		$	276,893		6.03	%	$	4,354,520		$	301,926		6.93	%	$	4,011,307		$	321,392		8.01	%
Taxable investment securities		1,847,706			90,558		4.90	%		1,755,879			87,711		5.00	%		1,531,144			77,016		5.03	%
Tax-exempt investment securities (3)		29,597			2,205		7.45	%		45,420			3,134		6.90	%		65,061			4,346		6.68	%
Money market instruments		52,518			111		0.21	%		15,502			295		1.90	%		17,838			920		5.16	%
Total interest earning assets		6,524,257			369,767		5.67	%		6,171,321			393,066		6.37	%		5,625,350			403,674		7.18	%
Noninterest earning assets:
Allowance for probable loan losses		(103,683	)							(86,485	)							(78,256	)
Cash and due from banks		110,227								143,151								151,219
Premises and equipment, net		67,944								69,278								61,604
Other assets		436,786								410,821								409,239
TOTAL	$	7,035,531							$	6,708,086							$	6,169,156
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest bearing liabilities:
Transaction accounts	$	1,229,553		$	7,889		0.64	%	$	1,364,635		$	19,509		1.43	%	$	1,318,764		$	35,919		2.72	%
Savings deposits		805,783			2,926		0.36	%		585,505			3,124		0.53	%		553,407			3,878		0.70	%
Time deposits		2,197,055			53,805		2.45	%		1,912,640			67,259		3.52	%		1,834,060			81,224		4.43	%
Total interest bearing deposits		4,232,391			64,620		1.53	%		3,862,780			89,892		2.33	%		3,706,231			121,021		3.27	%
Short-term borrowings		419,733			3,209		0.76	%		609,219			14,469		2.38	%		494,160			22,113		4.47	%
Long-term debt (4)		780,435			26,370		3.38	%		835,522			31,105		3.72	%		568,575			24,013		4.22	%
Total interest bearing liabilities		5,432,559			94,199		1.73	%		5,307,521			135,466		2.55	%		4,768,966			167,147		3.50	%
Noninterest bearing liabilities:
Demand deposits		818,243								739,993								697,247
Other		109,415								92,607								84,185
Total noninterest bearing liabilities		927,658								832,600								781,432
Stockholders’ equity		675,314								567,965								618,758
TOTAL	$	7,035,531							$	6,708,086							$	6,169,156
Net interest earnings				$	275,568							$	257,600							$	236,527
Net interest spread							3.94	%							3.82	%							3.68	%
Net yield on interest earning assets							4.22	%							4.16	%							4.20	%

(1)	Loan income includes loan related fee income of $1,372 in 2009, $4,650 in 2008 and $5,935 in 2007. Loan income also includes the effects of taxable equivalent adjustments using a 35% tax rate in 2009, 2008 and 2007. The taxable equivalent adjustment was $1,294 in 2009, $763 in 2008 and $565 in 2007.
(2)	For the purpose of the computation, nonaccrual loans are included in the daily average loans outstanding.
(3)	Interest income on tax-exempt investment securities includes the effects of taxable equivalent adjustments using a 35% tax rate in 2009, 2008 and 2007. The taxable equivalent adjustments were $783 in 2009, $964 in 2008 and $1,285 in 2007.
(4)	Includes subordinated debenture and subordinated notes.

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FINANCIAL REVIEW

The average rate paid on interest bearing liabilities was 1.73% in 2009, compared to 2.55% in 2008 and 3.50% in 2007. On a quarterly basis for 2009, the average rate paid on interest bearing liabilities was 1.58% for the fourth quarter, 1.73% for the third quarter, 1.78% for the second quarter and 1.84% for the first quarter. Management expects that the average rate paid on interest bearing liabilities will modestly decrease in 2010.

The following table displays (for each quarter of 2009) the average balance of interest earning assets, net interest income and the tax equivalent net interest margin.

	Average Interest		Net Interest		Tax Equivalent
(In thousands)	Earning Assets		Income		Net Interest Margin
First Quarter	$	6,546,681	$	68,233		4.26	%
Second Quarter		6,528,425		67,994		4.21	%
Third Quarter		6,476,283		68,462		4.22	%
Fourth Quarter		6,546,174		68,802		4.20	%
2009	$	6,524,257	$	273,491		4.22	%

Management expects that average interest earnings assets will be approximately $6,550 million for 2010 as the expected growth in loan balances from year-end will be partially offset by a decrease in investment securities. Management expects that net interest income will be $265 to $275 million in 2010 and that the tax equivalent net interest margin will be approximately 4.15% to 4.20% in 2010. (Please see the “Summary Discussion of Operating Results for Park” section of this Financial Review for a comparison of 2009 results to management’s projections from a year ago.)

The change in interest due to both volume and rate has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.

Table 6 — Volume/Rate Variance Analysis

	Change from 2008 to 2009									Change from 2007 to 2008
(In thousands)	Volume			Rate			Total			Volume			Rate			Total
Increase (decrease) in:
Interest income:
Total loans	$	15,891		$	(40,924	)	$	(25,033	)	$	26,080		$	(45,546	)	$	(19,466	)
Taxable investments		4,600			(1,753	)		2,847			11,160			(465	)		10,695
Tax-exempt investments		(1,163	)		234			(929	)		(1,351	)		139			(1,212	)
Money market instruments		248			(432	)		(184	)		(107	)		(518	)		(625	)
Total interest income		19,576			(42,875	)		(23,299	)		35,782			(46,390	)		(10,608	)
Interest expense:
Transaction accounts	$	(1,766	)	$	(9,854	)	$	(11,620	)	$	1,204		$	(17,614	)	$	(16,410	)
Savings accounts		968			(1,166	)		(198	)		217			(971	)		(754	)
Time deposits		9,026			(22,480	)		(13,454	)		3,351			(17,316	)		(13,965	)
Short-term borrowings		(3,536	)		(7,724	)		(11,260	)		4,345			(11,989	)		(7,644	)
Long-term debt		(1,985	)		(2,750	)		(4,735	)		10,203			(3,111	)		7,092
Total interest expense		2,707			(43,974	)		(41,267	)		19,320			(51,001	)		(31,681	)
Net variance	$	16,869		$	1,099		$	17,968		$	16,462		$	4,611		$	21,073

Other Income: Total other income decreased by $3.6 million or 4.3% to $81.2 million in 2009 compared to an increase of $13.2 million or 18.4% to $84.8 million in 2008. Park’s total other income in 2008 was positively impacted by two “one-time” items totaling $14.9 million. The “one-time” positive items in 2008 were $3.1 million of revenue recognized as a result of the initial public offering of Visa, Inc. and an aggregate of $11.8 million of revenue which resulted from the sale of the unsecured credit card balances and the sale of the merchant processing business. In 2009, Park’s total other income includes a “one-time” positive item of $3.0 million from the sale of all the Class B shares of stock that Park received from the initial public offering of Visa, Inc.

The following table displays total other income for Park in 2009, 2008 and 2007.

Year Ended December 31
(In thousands)	2009		2008		2007
Income from fiduciary activities	$	12,468	$	13,937	$	14,403
Service charges on deposits		21,985		24,296		23,813
Net gains on sales of securities		7,340		1,115		—
Other service income		18,767		8,882		11,543
Other		20,630		36,604		21,881
Total other income	$	81,190	$	84,834	$	71,640

Income from fiduciary activities decreased by $1.5 million or 10.5% to $12.5 million in 2009 and decreased $466,000 or 3.2% to $13.9 million in 2008. The decrease in fiduciary fee income in 2009 and 2008 was primarily due to the poor performance of the equity markets during the past two years. Park charges fiduciary fees based on the market value of the assets being managed. The Dow Jones Industrial Average stock index annual average was 13,178 for calendar year 2007, compared to 11,244 for calendar year 2008 and 8,885 for calendar year 2009. On a positive note, the Dow Jones Industrial Average stock index at year-end 2009 was 10,428, compared to 8,776 at year-end 2008. The market value of the assets that Park manages were $3.1 billion at December 31, 2009 compared to $2.7 billion at December 31, 2008. Management expects an increase of approximately 7% in fee income from fiduciary activities in 2010.

Service charges on deposit accounts decreased by $2.3 million or 9.5% to $22.0 million in 2009 and increased by $483,000 or 2.0% to $24.3 million in 2008. The decrease in service charge income in 2009 was primarily due to a decrease in fee income from the courtesy overdraft program. Park’s customers did not use the courtesy overdraft program as frequently in 2009 and as a result this fee income decreased by $2.2 million or 12.7% in 2009 compared to 2008. Management expects that revenue from service charges on deposits in 2010 will decrease modestly from the $22.0 million in revenue in 2009.

Fee income earned from origination and sale into the secondary market of long-term fixed-rate mortgage loans is included within other non-yield related fees in the subcategory “Other service income”. Other service income increased by $9.9 million or 111.3% to $18.8 million in 2009. This large increase was due to the extraordinary volume of fixed-rate residential mortgage loans that Park originated and sold into the secondary market in 2009. The amount of fixed-rate mortgage loans originated and sold in 2009 was $615 million, compared to $161 million for both 2008 and 2007. In 2008, other service income decreased by $2.7 million or 23.1% to $8.9 million. This decrease was primarily due to a write-down of $1.6 million on the mortgage loan servicing asset during the fourth quarter of 2008. Park’s management expects that the volume of fixed-rate residential mortgage loans will decrease significantly in 2010 and as a result expects that other service income will decrease by approximately $7 million or 38% in 2010.

The subcategory of “Other” income includes fees earned from check card and ATM services, income from bank owned life insurance, fee income earned from the sale of official checks and printed checks, rental fee income from safe deposit boxes and other miscellaneous income. Total other income decreased by $16.0 million or 43.6% to $20.6 million in 2009 and increased by $14.7 million or 67.3% to $36.6 million in 2008. The large increase in this revenue in 2008 and the large decrease in 2009 was primarily due to the two “one-time” revenue items in 2008 which totaled $14.9 million. Park also had a $3.0 million positive “one-time” revenue item in 2009, but other income was reduced during the year by $6.3 million of losses recognized on the write-down or sale of real estate owned at Vision Bank. Approximately $5.0 million of these other real estate owned losses occurred in the fourth quarter of 2009. Park’s management expects that the subcategory of other income will increase by 5% in 2010 as the losses on real estate owned at Vision Bank are expected to decline modestly in 2010.

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FINANCIAL REVIEW

Park recognized net gains from the sale of investment securities of $7.3 million in 2009 and $1.1 million in 2008. No securities were sold in 2007. As previously discussed, Park expects to recognize a gain of approximately $7.3 million from the sale of securities in 2010.

A year ago, Park’s management forecast that total other income, excluding gains from the sale of securities, would be approximately $75 million for 2009. The actual performance was below our estimate by $1.1 million or 1.5% at $73.9 million. For 2010, Park’s management expects that total other income, excluding gains from the sale of securities, will be approximately $68 million.

Other Expense: Total other expense was $188.7 million in 2009, compared to $234.5 million in 2008 and $224.2 million in 2007. Total other expense includes goodwill impairment charges of $55.0 million in 2008 and $54.0 million in 2007. Excluding the goodwill impairment charges, total other expense increased by $9.2 million or 5.1% to $188.7 million in 2009 and increased by $9.4 million or 5.5% to $179.5 million in 2008.

The following table displays total other expense for Park in 2009, 2008 and 2007.

Year Ended December 31
(In thousands)	2009		2008		2007
Salaries and employee benefits	$	101,225	$	99,018	$	97,712
Goodwill impairment charge		—		54,986		54,035
Data processing fees		5,674		7,121		6,892
Fees and service charges		15,935		12,801		11,055
Net occupancy expense of bank premises		11,552		11,534		10,717
Amortization of intangibles		3,746		4,025		3,847
Furniture and equipment expense		9,734		9,756		9,259
Insurance		12,072		2,322		1,445
Marketing		3,775		4,525		4,961
Postage and telephone		6,903		7,167		6,910
State taxes		3,206		2,989		2,769
Other		14,903		18,257		14,562
Total other expense	$	188,725	$	234,501	$	224,164

Salaries and employee benefits expense increased by $2.2 million or 2.2% to $101.2 million in 2009 and increased by $1.3 million or 1.3% to $99.0 million in 2008. The increase in 2009 was primarily related to higher employee benefit costs, as Pension Plan expense increased approximately $2.8 million. Full-time equivalent employees at year-end 2009 were 2,024, compared to 2,051 at year-end 2008 and 2,066 at year-end 2007.

On July 30, 2007, Park announced Project EPS, a plan to review current processes and identify opportunities to improve efficiency by converting to one operating system in Ohio. During the third quarter of 2008, Park merged its eight Ohio banking charters into a national bank, PNB. The banking divisions of PNB have been able to reduce full-time equivalent employees as a result of Project EPS. Full-time equivalent employees for Park’s Ohio-based divisions were 1,811 at year-end 2009, compared to 1,837 at year-end 2008, 1,865 at year-end 2007 and 1,889 at year-end 2006. During 2008 and 2009, all of Park’s Ohio-based banking divisions converted to one operating system. The number of full-time equivalent employees in Ohio has declined by 78 from year-end 2006 to year-end 2009. Park’s management estimates that approximately 105 full-time equivalent positions were eliminated as a result of Project EPS. The actual reduction in full-time equivalent employees over the past three years was not quite this large due to the opening of additional branch offices.

A year ago, Park’s management projected that salaries and benefit expense would be $103.0 million for 2009. The actual performance for the year was $1.8 million or 1.7% lower than the estimate. For 2010, management is projecting salaries and employee benefits expense to increase by $0.8 million or 0.8% to $102 million for the year.

Vision Bank recorded goodwill impairment charges of $55.0 million in 2008 and $54.0 million in 2007. See Note 1 of the Notes to Consolidated Financial Statements for a discussion of the goodwill impairment charges. Vision Bank did not have any remaining goodwill at year-end 2008.

Fees and service charges increased by $3.1 million or 24.5% to $15.9 million in 2009 and increased by $1.7 million or 15.8% to $12.8 million in 2008. This subcategory of total other expense includes legal fees, management consulting fees, director fees, audit fees, regulatory examination fees and memberships in industry associations. The large increase in fees and service charges expense in 2009 was primarily due to an increase in legal fees of $1.9 million to $4.1 million and in consulting fees of $.4 million to $1.7 million. This additional expense was primarily related to an increase in problem loans in 2009. The increase in other fees and service charges expense in 2008 was primarily due to an increase in consulting fees of $.7 million to $1.3 million. This additional expense in 2008 primarily pertained to Project EPS.

Insurance expense increased by $9.8 million or 419.0% to $12.1 million in 2009 and increased by $.9 million or 60.7% to $2.3 million in 2008. The increase in insurance expense for both years was primarily due to the increase in FDIC insurance expense. In 2009, FDIC insurance expense increased by $9.5 million to $11.0 million and in 2008, FDIC insurance expense increased by $.9 million to $1.5 million.

The subcategory “Other” expense includes expenses for supplies, travel, charitable contributions, amortization of low income housing tax investments, expenses pertaining to other real estate owned and other miscellaneous expenses. The subcategory other expense decreased by $3.4 million or 18.4% to $14.9 million in 2009 and increased by $3.7 million or 25.4% to $18.3 million in 2008. The decrease in the subcategory other expense in 2009 was primarily due to a $1.9 million decrease to $2.2 million in other real estate owned expense. In 2008, the increase in other expense was primarily due to an increase of $3.4 million to $4.1 million in other real estate owned expense.

A year ago, Park’s management projected that total other expense would be approximately $184.0 million in 2009. The actual expense for the year of $188.7 million exceeded our estimate by $4.7 million or by 2.6%. This variance was primarily due to the special assessment of FDIC insurance in the second quarter of 2009, which was $3.3 million for Park. Management expects that total other expense for 2010 will be approximately $191 million, a projected increase of $2.3 million or 1.2%.

Income Taxes: Federal income tax expense was $25.4 million in 2009, compared to $24.3 million in 2008 and $30.4 million in 2007. State income tax expense was a credit for each of the past three years of $(2.5) million in 2009, $(2.3) million in 2008 and $(453,000) in 2007. Vision Bank is subject to state income tax in the states of Alabama and Florida. State income tax expense was a credit in 2009, 2008 and 2007, because Vision Bank had losses in all three years. Park and its Ohio-based subsidiaries do not pay state income tax to the state of Ohio, but pay a franchise tax based on year-end equity. The franchise tax expense is included in “state taxes” on Park’s Consolidated Statements of Income. Park’s management will investigate the merger of Vision Bank into PNB during 2010. The merger of Vision Bank into PNB will ensure that the state net operating loss carryforward will be utilized in the future in the states of Alabama and Florida.

Federal income tax expense as a percentage of income before taxes was 26.2% in 2009, compared to 68.1% in 2008 and 57.8% in 2007. The goodwill impairment charge of $55.0 million in 2008 reduced income tax expense by approximately $1 million. The goodwill impairment charge of $54.0 million in 2007 had no impact on income tax expense.

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FINANCIAL REVIEW

For 2008 and 2007, the percentage of federal income tax expense to income before taxes (adjusted for the goodwill impairment charges) was 26.8% and 28.5%, respectively. By comparison, the percentage of federal income tax expense to income before taxes was 26.2% in 2009.

A lower federal effective tax rate than the statutory rate of 35% is primarily due to tax-exempt interest income from state and municipal investments and loans, low income housing tax credits and income from bank owned life insurance.

Park’s management expects that the federal effective income tax rate for 2010 will be approximately 28% to 29%.

CREDIT EXPERIENCE

Provision for Loan Losses: The provision for loan losses is the amount added to the allowance for loan losses to absorb future loan charge-offs. The amount of the loan loss provision is determined by management after reviewing the risk characteristics of the loan portfolio, historic and current loan loss experience and current economic conditions.

The provision for loan losses was $68.8 million in 2009, $70.5 million in 2008 and $29.5 million in 2007. Net loan charge-offs were $52.2 million in 2009, $57.5 million in 2008 and $22.2 million in 2007. The ratio of net loan charge-offs to average loans was 1.14% in 2009, 1.32% in 2008 and 0.55% in 2007.

The loan loss provision for Vision Bank was $44.4 million in 2009, $47.0 million in 2008 and $19.4 million in 2007. Net loan charge-offs for Vision Bank were $28.9 million in 2009, $38.5 million in 2008 and $8.6 million in 2007. Vision Bank’s ratio of net loan charge-offs to average loans was 4.18% in 2009, 5.69% in 2008 and an annualized 1.71% in 2007.

Park’s Ohio-based subsidiaries had a combined loan loss provision of $24.4 million in 2009, $23.5 million in 2008 and $10.1 million in 2007. Net loan charge-offs for Park’s Ohio-based subsidiaries were $23.3 million in 2009, $19.0 million in 2008 and $13.6 million in 2007. The net loan charge-off ratio for Park’s Ohio-based subsidiaries was 0.60% for 2009, 0.52% for 2008 and 0.39% for 2007.

At year-end 2009, the allowance for loan losses was $116.7 million or 2.52% of total loans outstanding, compared to $100.1 million or 2.23% of total loans outstanding at year-end 2008 and $87.1 million or 2.06% of total loans outstanding at year-end 2007. In 2007, the acquired loan loss reserve for Vision, $9.3 million, was added to Park’s allowance for loan losses.

Management believes that the allowance for loan losses at year-end 2009 is adequate to absorb probable incurred credit losses in the loan portfolio. See Note 1 of the Notes to Consolidated Financial Statements and the discussion under the heading “Critical Accounting Policies” earlier in the Financial Review section for additional information on management’s evaluation of the adequacy of the allowance for loan losses.

Management expects the loan loss provision for 2010 will be approximately $45 million to $55 million. This estimate reflects management’s expectation that: (1) future declines in collateral values will be moderate as the economy continues to improve and pricing stabilizes throughout 2010 and (2) new nonperforming loans, specifically new nonperforming CL&D loans at Vision Bank, will decline in 2010. As discussed within the remainder of the credit experience section, Vision Bank’s performing CL&D loan portfolio has declined significantly over the past two years. Thus management expects new non-performers to decline in 2010. This estimated range could change significantly as circumstances for individual loans and economic conditions change.

A year ago, management projected the provision for loan losses would be $45 million in 2009 and the net loan charge-off ratio would be approximately 1.00%. As discussed throughout the remainder of this “Credit Experience” section, the primary reasons that the provision for loan losses and net charge-offs were greater than management’s projections were the credit losses and continued credit deterioration at Vision.

Table 7 — Summary of Loan Loss Experience

(In thousands)	2009			2008			2007			2006			2005
Average loans (net of unearned interest)	$	4,594,436		$	4,354,520		$	4,011,307		$	3,357,278		$	3,278,092
Allowance for loan losses:
Beginning balance		100,088			87,102			70,500			69,694			68,328
Charge-offs:
Commercial, financial and agricultural		10,047			2,953			4,170			853			3,154
Real estate — construction		21,956			34,052			7,899			718			46
Real estate — residential		11,765			12,600			5,785			1,915			1,006
Real estate — commercial		5,662			4,126			1,899			556			1,612
Consumer		9,583			9,181			8,020			6,673			7,255
Leases		9			4			3			57			316
Total charge-offs		59,022			62,916			27,776			10,772			13,389
Recoveries:
Commercial, financial and agricultural	$	1,010		$	861		$	1,011		$	842		$	2,707
Real estate — construction		1,322			137			180			—			173
Real estate — residential		1,723			1,128			718			1,017			659
Real estate — commercial		771			451			560			1,646			517
Consumer		2,001			2,807			3,035			3,198			3,214
Leases		3			31			64			150			229
Total recoveries		6,830			5,415			5,568			6,853			7,499
Net charge-offs		52,192			57,501			22,208			3,919			5,890
Provision charged to earnings		68,821			70,487			29,476			3,927			5,407
Allowance for loan losses of acquired bank		—			—			9,334			798			1,849
Ending balance	$	116,717		$	100,088		$	87,102		$	70,500		$	69,694
Ratio of net charge-offs to average loans		1.14	%		1.32	%		0.55	%		0.12	%		0.18	%
Ratio of allowance for loan losses to end of year loans, net of unearned interest		2.52	%		2.23	%		2.06	%		2.03	%		2.09	%

The following table summarizes the allocation of the allowance for loan losses for the past five years:

Table 8 — Allocation of Allowance for Loan Losses

	2009					2008					2007					2006					2005
			Percent of					Percent of					Percent of					Percent of					Percent of
December 31,			Loans Per					Loans Per					Loans Per					Loans Per					Loans Per
(In thousands)	Allowance		Category			Allowance		Category			Allowance		Category			Allowance		Category			Allowance		Category
Commercial, financial and agricultural	$	14,725		16.19	%	$	14,286		15.90	%	$	14,557		14.52	%	$	16,985		15.75	%	$	17,942		15.40	%
Real estate — construction		47,521		10.68	%		24,794		11.88	%		20,007		12.70	%		4,425		6.75	%		3,864		5.80	%
Real estate — residential		19,753		33.51	%		22,077		34.74	%		15,997		35.06	%		10,402		37.36	%		10,329		38.68	%
Real estate — commercial		23,970		24.37	%		15,498		23.06	%		15,989		23.51	%		17,097		24.56	%		16,823		24.74	%
Consumer		10,713		15.18	%		23,391		14.33	%		20,477		14.05	%		21,285		15.29	%		19,799		14.87	%
Leases		35		0.07	%		42		0.09	%		75		0.16	%		306		0.29	%		937		0.51	%
Total	$	116,717		100.00	%	$	100,088		100.00	%	$	87,102		100.00	%	$	70,500		100.00	%	$	69,694		100.00	%

As of December 31, 2009, Park had no significant concentrations of loans to borrowers engaged in the same or similar industries nor did Park have any loans to foreign governments.

Nonperforming Assets: Nonperforming loans include: 1) loans whose interest is accounted for on a nonaccrual basis; 2) renegotiated loans not currently on nonaccrual; and 3) loans which are contractually past due 90 days or more as to principal or interest payments but whose interest continues to accrue. Other real estate owned results from taking title to property used as collateral for a defaulted loan.

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FINANCIAL REVIEW

The percentage of nonperforming loans to total loans was 5.35% at year-end 2009, 3.74% at year-end 2008 and 2.57% at year-end 2007. The percentage of nonperforming assets to total loans was 6.24% at year-end 2009, 4.31% at year-end 2008 and 2.89% at year-end 2007.

Vision Bank had $159.6 million of nonperforming loans or 23.6% of its total loans at year-end 2009, compared to $94.7 million of nonperforming loans or 13.7% of its total loans at year-end 2008 and $63.5 million of nonperforming loans or 9.9% of its total loans at year-end 2007. Nonperforming assets totaled $194.8 million for Vision Bank at year-end 2009, compared to $114.4 million at year-end 2008 and $70.5 million at year-end 2007. As a percentage of year-end loans, Vision Bank’s nonperforming assets were 28.8%, 16.6% and 11.0% for 2009, 2008 and 2007, respectively.

Park’s Ohio-based subsidiaries had $88.8 million of nonperforming loans at year-end 2009, compared to $73.1 million at year-end 2008. Nonperforming loans were 2.2% and 1.9% of total loans for Park’s Ohio-based subsidiaries at year-end 2009 and 2008, respectively. Total nonperforming assets for Park’s Ohio-based subsidiaries were $94.9 million or 2.4% of total loans at year-end 2009 and $79.2 million or 2.1% of total loans at year-end 2008.

Economic conditions began deteriorating during the second half of 2007 and continued throughout 2008 and 2009. Park and many other financial institutions throughout the country experienced a sharp increase in net loan charge-offs and nonperforming loans. Financial institutions operating in Florida and Alabama (including Vision Bank) have been particularly hard hit by the severe recession as the demand for real estate and the price of real estate have sharply decreased.

Park had $277.7 million of commercial loans included on the watch list of potential problem commercial loans at December 31, 2009 compared to $243.2 million at year-end 2008 and $208.8 million at year-end 2007. Commercial loans include: (1) commercial, financial and agricultural loans, (2) commercial real estate loans, and (3) real estate construction loans. Park’s watch list includes all classified commercial loans, defined by Park as loans rated special mention or worse, less those commercial loans currently considered to be impaired. As a percentage of year-end total loans, Park’s watch list of potential problem loans was 6.0% in 2009, 5.4% in 2008 and 4.9% in 2007. The existing conditions of these loans do not warrant classification as nonaccrual. However, these loans have shown some weakness and management performs additional analyses regarding a borrower’s ability to comply with payment terms for watch list loans.

The following is a summary of the nonaccrual loans, loans past due 90 days or more and still accruing and renegotiated loans not currently on nonaccrual and other real estate owned for the last five years:

Table 9 — Nonperforming Assets

December 31,
(In thousands)	2009			2008			2007			2006			2005
Nonaccrual loans	$	233,544		$	159,512		$	101,128		$	16,004		$	14,922
Renegotiated loans		142			2,845			2,804			9,113			7,441
Loans past due 90 days or more		14,773			5,421			4,545			7,832			7,661
Total nonperforming loans		248,459			167,778			108,477			32,949			30,024
Other real estate owned		41,240			25,848			13,443			3,351			2,368
Total nonperforming assets	$	289,699		$	193,626		$	121,920		$	36,300		$	32,392
Percentage of nonperforming loans to loans		5.35	%		3.74	%		2.57	%		0.95	%		0.90	%
Percentage of nonperforming assets to loans		6.24	%		4.31	%		2.89	%		1.04	%		0.97	%
Percentage of nonperforming assets to total assets		4.11	%		2.74	%		1.88	%		0.66	%		0.60	%

Tax equivalent interest income from loans of $276.9 million for 2009 would have increased by $24.9 million if all loans had been current in accordance with their contractual terms.

Park’s allowance for loan losses includes an allocation for loans specifically identified as impaired under GAAP. At December 31, 2009, loans considered to be impaired consisted substantially of commercial loans graded as “doubtful” and placed on non-accrual status. During the fourth quarter of 2009, management made a change in accounting estimate (as defined under GAAP) for the estimation of allowance for loan losses. Based on escalating losses within the Vision Bank CL&D loan portfolio, management determined that it was necessary to segregate this portion of the portfolio for both impaired credits, as well as those CL&D loans on accrual at December 31, 2009. From the date Park acquired Vision (March 9, 2007) through December 31, 2009, Vision had cumulative charge-offs within the CL&D loan portfolio of $51.3 million. Additionally, at December 31, 2009, management established a specific reserve of $21.7 million related to those CL&D loans at Vision Bank that are deemed to be impaired. The aggregate of charge-offs since acquisition, along with the specific reserves at December 31, 2009, total $73.0 million. Total provision expense for Vision Bank since the date of acquisition through December 31, 2009 has been $110.8 million. The magnitude of the losses coming from the CL&D loan portfolio at Vision, along with the continued run-off of performing CL&D loans, led to the change in accounting estimate made by management during the fourth quarter of 2009. The following table summarizes the CL&D loan portfolio at Vision Bank:

Year Ended December 31
(In thousands)	2009		2008		2007
CL&D loans, period end	$	218,205	$	251,443	$	295,743
Impaired CL&D loans		85,417		59,731		35,548
Performing CL&D loans, period end		132,788		191,712		260,195
Specific reserve on impaired CL&D loans		21,706		3,134		1,184
Current year net charge-offs		16,233		27,705		7,399
Specific reserve plus net charge-offs		38,035		30,839		8,583

At December 31, 2009, loans considered to be impaired under GAAP totaled $201.1 million, after charge-offs of $43.4 million. At December 31, 2008, impaired loans totaled $142.9 million, after charge-offs of $30.0 million. The specific allowance for loan losses related to these impaired loans was $36.7 million at December 31, 2009 and $8.9 million at December 31, 2008. At December 31, 2009, the impaired loans and related specific reserves are summarized as follows:

December 31, 2009
(In thousands)	Principal Balance		Specific Reserve
Impaired loan type:
Vision Bank impaired CL&D loans	$	85,417	$	21,706
Other impaired commercial loans		111,981		14,453
Vision other impaired commercial less than $250,000		3,745		562
Total	$	201,143	$	36,721

The specific reserves discussed above are typically based on management’s best estimate of the fair value of collateral securing these loans or based on projected cash flows from the sale of the underlying collateral and payments from the borrowers. The amount ultimately charged-off for these loans may be different from the specific reserve as the ultimate liquidation of the collateral and/or projected cash flows may be for amounts different from management’s estimates.

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FINANCIAL REVIEW

We have listed in the table below the year-end 2008 and the quarterly and year-end 2009 information pertaining to the provision for loan losses, net loan charge-offs, nonperforming loans and the allowance for loan losses:

	Provision						Allowance
	for Loan		Net Loan		Nonperforming		for Loan
(In thousands)	Losses		Charge-Offs		Loans		Losses
Year-end 2008	$	70,487	$	57,501	$	167,778	$	100,088
March 2009	$	12,287	$	11,097	$	166,673	$	101,279
June 2009		15,856		12,330		210,998		104,804
September 2009		14,958		9,721		212,061		110,040
December 2009		25,720		19,044		248,459		116,717
Year-end 2009	$	68,821	$	52,192	$	248,459	$	116,717

When determining the quarterly loan 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 with grades of 1 to 4 (pass-rated) 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 loan loss reserve percentage is used on these loans. Commercial loans graded 6 (substandard), also considered watch list credits, are considered of higher risk and, as a result, a higher loan loss reserve percentage is used on these loans. Generally, commercial loans that are graded a 6 are considered for partial charge-off. Commercial loans that are graded a 7 (doubtful) are shown as nonperforming and Park generally charges these loans down to their fair value by taking a partial charge-off or recording a specific reserve. Any commercial loan graded an 8 (loss) is completely charged-off.

As of December 31, 2009, management had taken partial charge-offs of approximately $43.4 million ($30.2 million for Vision Bank) related to the $201.1 million of commercial loans considered to be impaired, compared to charge-offs of approximately $30 million ($22.2 million for Vision Bank) related to the $142.9 million of impaired commercial loans at December 31, 2008. Historically, Park’s management has been quick to recognize charge-offs on problem loans. However, there is a higher level of uncertainty when valuing collateral or projecting cash flows in Vision Bank’s Florida and Alabama markets due to the illiquid nature of the collateral. Park has experienced an increase in specific reserves related to many of Vision Bank’s impaired loans. In April 2009, Park engaged a third-party specialist to assist in the resolution of impaired loans at Vision Bank. Management is pleased with the success this third-party specialist experienced in the second half of 2009, as they have helped maximize the value of the impaired loans at Vision Bank. We expect to continue utilizing this third-party specialist through 2010 and thereafter, until such point in time that Vision Bank’s impaired loan portfolio shows sustained improvement.

A significant portion of Park’s allowance for loan losses is allocated to commercial loans classified as “special mention” or “substandard.” “Special mention” loans are loans that have potential weaknesses that may result in loss exposure to Park. “Substandard” loans are those that exhibit a well defined weakness, jeopardizing repayment of the loan, resulting in a higher probability that Park will suffer a loss on the loan unless the weakness is corrected. As previously discussed, during the 2009 fourth quarter, management segregated the Vision Bank CL&D loans from other commercial loans that are still accruing. The Vision CL&D loans that are still accruing at December 31, 2009 total $132.8 million. Additionally, PNB participations in Vision Bank accruing CL&D loans total $21.3 million at December 31, 2009, bringing total exposure of accruing CL&D loans originated at Vision Bank to $154.1 million. Park’s loss experience on CL&D loans for the last 24 months is an annual rate of 8.83%. Management has allocated an allowance for loan losses to the $154.1 million of accruing CL&D loans based on this historical loss experience, judgmentally increased to cover 1.75 years of expected losses, for a total reserve of $23.8 million or 15.45%. Further, we have allocated 15.45% to the $154.1 million of CL&D loans, regardless of the current loan grade, as this portion of the loan portfolio has experienced significant declines in collateral values, and thus if management determines that borrowers are unable to pay in accordance with the contractual terms of the loan agreement, significant specific reserves have typically been necessary. Park’s 24-month loss experience within the remaining commercial loan portfolio (excluding Vision Bank’s CL&D loans) has been 0.86% of the principal balance of these loans. Park’s management believes it is appropriate to cover two years worth of expected commercial losses within the other commercial loan portfolio, thus the total reserve for loan losses is $41.8 million or 1.72% of the outstanding principal balance at December 31, 2009. The overall reserve of 1.72% for other accruing commercial loans breaks down as follows: pass-rated commercial loans are reserved at 1.26%; special mention commercial loans are reserved at 4.29%; and substandard commercial loans are reserved at 12.87%. As always, management is working to address weaknesses in those loans that may result in future loss. Actual loss experience may be more or less than the amount allocated.

CAPITAL RESOURCES

Liquidity and Interest Rate Sensitivity Management: Park’s objective in managing its liquidity is to maintain the ability to continuously meet the cash flow needs of customers, such as borrowings or deposit withdrawals, while at the same time seeking higher yields from longer-term lending and investing activities.

Cash and cash equivalents decreased by $12.2 million during 2009 to $159.1 million at year-end. Cash provided by operating activities was $71.9 million in 2009, $90.7 million in 2008 and $83.2 million in 2007. Net income (adjusted for the goodwill impairment charges in 2008 and 2007) was the primary source of cash for operating activities during each year. The goodwill impairment charges of $55 million in 2008 and $54 million in 2007 did not impact cash or cash provided by operating activities.

Cash used in investing activities was $5.3 million in 2009, $635.0 million in 2008 and $360.3 million in 2007. Investment security transactions are the major use or source of cash in investing activities. Proceeds from the sale, repayment or maturity of securities provide cash and purchases of securities use cash. Net security transactions provided cash of $202.6 million in 2009 and used cash of $304.8 million in 2008 and $130.8 million in 2007. 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, including proceeds from the sale of loans, was $199.9 million in 2009, $351.3 million in 2008 and $126 million in 2007. In 2007, Park also used $38.3 million in cash to acquire the loans pertaining to the Millersburg, Ohio branch purchase and used $47.7 million of cash on a net basis for the acquisition of Vision.

Cash used in financing activities was $78.7 million in 2009. Cash provided by financing activities was $522.2 million in 2008 and $284.2 million in 2007. A major source of cash for financing activities is the net change in deposits. Cash provided by the net change in deposits was $426.3 million in 2009, $322.5 million in 2008, and $13.2 million in 2007. Another major source of cash for financing activities is short-term borrowings and long-term debt. In 2009, net short-term borrowings used $335 million in cash and net long-term borrowings used $201.2 million. In 2008, net short-term borrowings used $100.1 million in cash and net long-term borrowings provided $265.1 million in cash. The net increase in short-term borrowings provided cash of $359.2 million in 2007. Cash was used by the net decrease in long-term borrowings of $19.4 million in 2007. In 2009, $35.3 million of cash was provided by the issuance of subordinated notes and $53.5 million was provided by the issuance of common stock previously held as treasury shares. In 2008, cash of $100 million was provided from the issuance of preferred stock. In 2007, cash was also provided from the deposits of $23.5 million acquired as part of the Millersburg, Ohio branch purchase and from the $25 million in proceeds from the issuance of subordinated debt.

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FINANCIAL REVIEW

Funds are available from a number of sources, including the securities portfolio, the core deposit base, Federal Home Loan Bank borrowings and the capability to securitize or package loans for sale. The present funding sources provide more than adequate liquidity for Park to meet its cash flow needs.

The following table shows interest rate sensitivity data for five different time intervals as of December 31, 2009:

Table 10 — Interest Rate Sensitivity

	0-3			3-12			1-3			3-5			Over 5
(In thousands)	Months			Months			Years			Years			Years			Total
Interest earning assets:
Investment securities (1)	$	182,483		$	254,417		$	465,456		$	339,556		$	621,648		$	1,863,560
Money market instruments		42,289			—			—			—			—			42,289
Loans (1)		1,518,818			1,383,273			1,430,468			291,842			16,031			4,640,432
Total interest earning assets		1,743,590			1,637,690			1,895,924			631,398			637,679			6,546,281
Interest bearing liabilities:
Interest bearing transaction accounts (2)		608,849			—			584,996			—			—			1,193,845
Savings accounts (2)		228,699			—			644,438			—			—			873,137
Time deposits		601,728			1,058,822			452,771			106,769			2,447			2,222,537
Other		1,290			—			—			—			—			1,290
Total deposits		1,440,566			1,058,822			1,682,205			106,769			2,447			4,290,809
Short-term borrowings		324,219			—			—			—			—			324,219
Long-term debt		—			17,560			31,960			1,000			603,861			654,381
Subordinated debentures/ notes		15,000			—			25,000			35,250			—			75,250
Total interest bearing liabilities		1,779,785			1,076,382			1,739,165			143,019			606,308			5,344,659
Interest rate sensitivity gap		(36,195	)		561,308			156,759			488,379			31,371			1,201,622
Cumulative rate sensitivity gap		(36,195	)		525,113			681,872			1,170,251			1,201,622
Cumulative gap as a percentage of total interest earning assets		–0.55	%		8.02	%		10.42	%		17.88	%		18.36	%

(1)

Investment securities and loans that are subject to prepayment are shown in the table by the earlier of their repricing date or their expected repayment dates and not by their contractual maturity. Nonaccrual loans of $233.7 million are included within the three to twelve month maturity classification.

(2)

Management considers interest bearing transaction accounts and savings accounts to be core deposits and therefore, not as rate sensitive as other deposit accounts and borrowed money. Accordingly, only 51% of interest bearing transaction accounts and 26% of savings accounts are considered to reprice within one year. If all of the interest bearing checking accounts and savings accounts were considered to reprice within one year, the one year cumulative gap would change from a positive 8.02% to a negative 10.76%.

The interest rate sensitivity gap analysis provides a good overall picture of Park’s static interest rate risk position. Park’s policy is that the twelve month cumulative gap position should not exceed fifteen percent of interest earning assets for three consecutive quarters. At December 31, 2009, the cumulative interest earning assets maturing or repricing within twelve months were $3,381.3 million compared to the cumulative interest bearing liabilities maturing or repricing within twelve months of $2,856.2 million. For the twelve-month cumulative gap position, rate sensitive assets exceed rate sensitive liabilities by $525.1 million or 8.02% of interest earning assets.

A positive twelve month cumulative rate sensitivity gap (assets exceed liabilities) would suggest that Park’s net interest margin would decrease if interest rates were to decrease. Conversely, a positive twelve month cumulative rate sensitivity gap would suggest that Park’s net interest margin would increase if interest rates were to increase. However, the usefulness of the interest sensitivity gap analysis as a forecasting tool in projecting net interest income is limited. The gap analysis does not consider the magnitude by which assets or liabilities will reprice during a period and also contains assumptions as to the repricing of transaction and savings accounts that may not prove to be correct.

A year ago, the cumulative twelve month interest rate sensitivity gap position at year-end 2008 was a positive $162.4 million or 2.5% of interest earning assets. The percentage of interest earning assets maturing or repricing within one year was 51.7% at year-end 2009 compared to 51.8% at year-end 2008. The percentage of interest bearing liabilities maturing or repricing within one year was 53.4% at year-end 2009 compared to 58.5% at year-end 2008.

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. Park’s management uses an earnings simulation model to analyze net interest income sensitivity to movements in interest rates. This model is based on actual cash flows and repricing characteristics for balance sheet instruments and incorporates market-based assumptions regarding the impact of changing interest rates on the prepayment rate of certain assets and liabilities. This model also includes management’s projections for activity levels of various balance sheet instruments and noninterest fee income and operating expense. Assumptions based on the historical behavior of deposit rates and balances in relation to changes in interest rates are also incorporated into this earnings simulation model. These assumptions are inherently uncertain and as a result, the model cannot precisely measure net interest income and net income. Actual results will differ from simulated results due to timing, magnitude, and frequency of interest rate changes as well as changes in market conditions and management strategies.

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. At December 31, 2009, the earnings simulation model projected that net income would increase by 2.2% using a rising interest rate scenario and decrease by 0.1% using a declining interest rate scenario over the next year. At December 31, 2008, the earnings simulation model projected that net income would increase by 0.6% using a rising interest rate scenario and decrease by 3.3% using a declining interest rate scenario over the next year and at December 31, 2007, the earnings simulation model projected that net income would increase by 0.2% using a rising interest rate scenario and decrease by 0.6% using a declining interest rate scenario over the next year. Consistently, over the past several years, Park’s earnings simulation model has projected that changes in interest rates would have only a small impact on net income and the net interest margin. Park’s net interest margin has been relatively stable over the past three years at 4.22% in 2009, 4.16% in 2008, and 4.20% in 2007. A major goal of Park’s asset/liability committee is to maintain a relatively stable net interest margin regardless of the level of interest rates. Management expects that the net interest margin will be approximately 4.15% to 4.20% in 2010.

CONTRACTUAL OBLIGATIONS

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. The following table summarizes Park’s significant and determinable obligations by payment date at December 31, 2009.

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FINANCIAL REVIEW

Further discussion of the nature of each specified obligation is included in the referenced Note to the Consolidated Financial Statements or referenced Table in this Financial Review section.

Table 11 — Contractual Obligations

	Payments Due In
December 31, 2009	Table /		0-1		1-3		3-5		Over 5
(In thousands)	Note		Years		Years		Years		Years		Total
Deposits without stated maturity		8	$	2,965,515	$	—	$	—	$	—	$	2,965,515
Certificates of deposit		8		1,657,922		455,377		106,791		2,447		2,222,537
Short-term borrowings		9		324,219		—		—		—		324,219
Long-term debt		10		17,619		32,092		1,155		603,515		654,381
Subordinated debentures/ notes		11		—		—		—		75,250		75,250
Operating leases		7		1,903		2,700		1,846		2,278		8,727
Purchase obligations				814		1,623		—		—		2,437
Total contractual obligations			$	4,967,992	$	491,792	$	109,792	$	683,490	$	6,253,066

The Corporation’s operating lease obligations represent short-term and long-term lease and rental payments for facilities and equipment. Purchase obligations represent obligations under agreements to purchase goods or services that are enforceable and legally binding on the Corporation.

Commitments, Contingent Liabilities, and Off-Balance Sheet Arrangements: In order to meet the financing needs of its customers, the Corporation issues loan commitments and standby letters of credit. At December 31, 2009, the Corporation had $955.3 million of loan commitments for commercial, commercial real estate, and residential real estate loans and had $36.3 million of standby letters of credit. At December 31, 2008, the Corporation had $1,143 million of loan commitments for commercial, commercial real estate and residential real estate loans and had $25.4 million of standby letters of credit.

Commitments to extend credit for loan commitments and standby letters of credit do not necessarily represent future cash requirements. These commitments often expire without being drawn upon. However, all of the loan commitments and standby letters of credit are permitted to be drawn upon in 2010. See Note 18 of the Notes to Consolidated Financial Statements for additional information on loan commitments and standby letters of credit.

The Corporation did not have any unrecorded significant contingent liabilities at December 31, 2009.

Capital: Park’s primary means of maintaining capital adequacy is through net retained earnings. At December 31, 2009, the Corporation’s stockholders’ equity was $717.3 million, compared to $642.7 million at December 31, 2008. Stockholders’ equity at December 31, 2009 was 10.19% of total assets compared to 9.09% of total assets at December 31, 2008. During 2009, Park issued an aggregate of 904,072 common shares previously held as treasury shares, at a purchase price of $61.20 per weighted average share, for net proceeds of $53.5 million. On December 23, 2008, Park issued $100 million of cumulative perpetual preferred shares to the U.S. Treasury (see Note 25 of the Notes to Consolidated Financial Statements for a description of this transaction).

Tangible stockholders’ equity (stockholders’ equity less goodwill and other intangible assets) was $635.5 million at December 31, 2009 and was $557.1 million at December 31, 2008. At December 31, 2009, tangible stockholders’ equity was 9.13% of total tangible assets (total assets less goodwill and other intangible assets), compared to 7.98% at December 31, 2008.

Tangible common equity (tangible stockholders’ equity less $100 million of preferred stock and warrant issued to the U.S. Treasury) was $535.5 million at December 31, 2009 compared to $457.1 million at December 31, 2008. At December 31, 2009, tangible common equity was 7.69% of tangible assets, compared to 6.54% at December 31, 2008.

Net income for 2009 was $74.2 million, $13.7 million in 2008, and $22.7 million in 2007. The net income for 2008 and 2007 include goodwill impairments at Vision Bank of $55.0 million and $54.0 million, respectively. Excluding the goodwill impairment charges at Vision Bank, net income for 2008 and 2007 would be $68.7 million and $76.7 million, respectively.

Cash dividends declared were $53.6 million in 2009, $52.6 million in 2008, and $52.8 million in 2007. On a per share basis, the cash dividends declared were $3.76 per share in 2009, $3.77 per share in 2008, and $3.73 per share in 2007.

Park did not purchase any treasury stock during 2009 or 2008. In 2007, Park purchased 760,531 shares of treasury stock totaling $65.6 million at a weighted average cost of $86.21 per share. Treasury stock had a balance in stockholders’ equity of $125.3 million at December 31, 2009, $207.7 million at December 31, 2008, and $208.1 million at December 31, 2007. During 2009, Park issued 904,072 shares of common stock, which reduced the amount of treasury stock available. The issuance of these shares out of treasury stock during 2009 resulted in a reduction in treasury stock by the weighted average cost of $81.7 million and an additional $634,000 from 7,020 common shares that were issued to directors of the Board of Directors of Park and affiliates.

During 2009 and 2008, Park did not issue any new common shares (that were not already held in treasury stock, as discussed above). However, in 2009, Park recorded $1.1 million for the common stock warrants that were issued as part of the issuance of the 904,072 shares discussed above. In 2008, Park recorded $4.3 million for the common stock warrant as part of the issuance of $100 million of preferred stock (see Note 1 and Note 25 of the Notes to Consolidated Financial Statements). In 2007, Park issued 792,937 shares of common stock valued at a price of $105.00 per share for a total value of $83.3 million pursuant to the acquisition of Vision on March 9, 2007. Common stock had a balance in stockholders’ equity of $301.2 million at December 31, 2009, December 31, 2008, and December 31, 2007.

Accumulated other comprehensive income (loss) was $15.7 million at December 31, 2009 compared to $10.6 million at December 31, 2008 and ($2.6) million at December 31, 2007. Long-term interest rates declined significantly in the fourth quarter of 2007, continued declining in 2008 and remained low throughout 2009. As a result of the declining interest rate environment, the market value of Park’s investment securities increased during 2007 and continued to increase in 2008, with a slight decline in market value occurring late in 2009. Park recognized a $1.5 million other comprehensive loss on investment securities during 2009 and recognized $30.7 million of other comprehensive income on investment securities in 2008 and $16.9 million in 2007. In addition, Park recognized other comprehensive income of $6.3 million related to the change in Pension Plan assets and benefit obligations in 2009 compared to a loss of ($16.2) million in 2008 and compared to income of $3.3 million related to the Pension Plan in 2007. Finally, Park has recognized other comprehensive income of $0.3 million in 2009 due to the mark-to-market of a cash flow hedge at December 31, 2009 compared to a ($1.3) million comprehensive loss for the year ended December 31, 2008.

Financial institution regulators have established guidelines for minimum capital ratios for banks, thrifts, and bank holding companies. Park’s accumulated other comprehensive income (loss) is not included in computing regulatory capital. The minimum leverage capital ratio (defined as stockholders’ equity less intangible assets divided by tangible assets) is 4% and the well capitalized ratio is greater than or equal to 5%. Park’s leverage ratio was 9.04% at December 31, 2009 and exceeded the minimum capital required by $353 million. The minimum Tier 1 risk-based capital ratio (defined as leverage capital divided by risk-adjusted assets) is 4% and the well capitalized ratio is greater than or equal to 6%. Park’s Tier 1 risk-based capital ratio was 12.45% at December 31, 2009 and exceeded the minimum capital required by $430 million. The minimum total risk-based capital ratio (defined as leverage capital plus supplemental capital divided by risk-adjusted assets) is 8% and the well capitalized

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FINANCIAL REVIEW

ratio is greater than or equal to 10%. Park’s total risk-based capital ratio was 14.89% at December 31, 2009 and exceeded the minimum capital required by $351 million.

At December 31, 2009, Park exceeded the well capitalized regulatory guidelines for bank holding companies. Park exceeded the well capitalized leverage capital ratio of 5% by $283 million, exceeded the well capitalized Tier 1 risk-based capital ratio of 6% by $328 million and exceeded the well capitalized total risk-based capital ratio of 10% by $249 million.

The two financial institution subsidiaries of Park each met the well capitalized ratio guidelines at December 31, 2009. See Note 22 of the Notes to Consolidated Financial Statements for the capital ratios for Park and its two financial institution subsidiaries.

Effects of Inflation: Balance sheets of financial institutions typically contain assets and liabilities that are monetary in nature, and therefore, differ greatly from most commercial and industrial companies which have significant investments in premises, equipment and inventory. During periods of inflation, financial institutions that are in a net positive monetary position will experience a decline in purchasing power, which does have an impact on growth. Another significant effect on internal equity growth is other expenses, which tend to rise during periods of inflation.

Management believes the most significant impact on financial results is the Corporation’s ability to align its asset/liability management program to react to changes in interest rates.

SELECTED FINANCIAL DATA

The following table summarizes five-year financial information.

Table 12 — Consolidated Five-Year Selected Financial Data

December 31,
(Dollars in thousands, except per share data)	2009			2008			2007			2006			2005
Results of Operations:
Interest income	$	367,690		$	391,339		$	401,824		$	334,559		$	314,459
Interest expense		94,199			135,466			167,147			121,315			93,895
Net interest income		273,491			255,873			234,677			213,244			220,564
Provision for loan losses		68,821			70,487			29,476			3,927			5,407
Net interest income after provision for loan losses		204,670			185,386			205,201			209,317			215,157
Net gains on sale of securities		7,340			1,115			—			97			96
Noninterest income		73,850			83,719			71,640			64,665			59,609
Noninterest expense		188,725			234,501			224,164			141,002			139,438
Net income		74,192			13,708			22,707			94,091			95,238
Net income available to common shareholders		68,430			13,566			22,707			94,091			95,238
Per common share:
Net income per common share — basic		4.82			0.97			1.60			6.75			6.68
Net income per common share — diluted		4.82			0.97			1.60			6.74			6.64
Cash dividends declared		3.76			3.77			3.73			3.69			3.62
Average Balances:
Loans		4,594,436			4,354,520			4,011,307			3,357,278			3,278,092
Investment securities		1,877,303			1,801,299			1,596,205			1,610,639			1,851,598
Money market instruments and other		52,518			15,502			17,838			8,723			12,258
Total earning assets		6,524,257			6,171,321			5,625,350			4,976,640			5,141,948
Noninterest bearing deposits		818,243			739,993			697,247			662,077			643,032
Interest bearing deposits		4,232,391			3,862,780			3,706,231			3,162,867			3,187,033
Total deposits		5,050,634			4,602,773			4,403,478			3,824,944			3,830,065
Average Balances:
Short-term borrowings	$	419,733		$	609,219		$	494,160		$	375,332		$	291,842
Long-term debt		780,436			835,522			568,575			553,307			799,888
Stockholders’ equity		675,314			567,965			618,758			545,074			559,211
Common stockholders’ equity		579,224			565,612			618,758			545,074			559,211
Total assets		7,035,531			6,708,086			6,169,156			5,380,623			5,558,088
Ratios:
Return on average assets (x)		0.97	%		0.20	%		0.37	%		1.75	%		1.71	%
Return on average common equity (x)		11.81	%		2.40	%		3.67	%		17.26	%		17.03	%
Net interest margin (1)		4.22	%		4.16	%		4.20	%		4.33	%		4.34	%
Dividend payout ratio		78.27	%		387.79	%		232.35	%		54.65	%		54.19	%
Average stockholders’ equity to average total assets		9.60	%		8.47	%		10.03	%		10.13	%		10.06	%
Leverage capital		9.04	%		8.36	%		7.10	%		9.96	%		9.27	%
Tier 1 capital		12.45	%		11.69	%		10.16	%		14.72	%		14.17	%
Risk-based capital		14.89	%		13.47	%		11.97	%		15.98	%		15.43	%

(1)	Computed on a fully taxable equivalent basis
(x)	Reported measure uses net income available to stockholders.

The following table is a summary of selected quarterly results of operations for the years ended December 31, 2009 and 2008. Certain quarterly amounts have been reclassified to conform to the year-end financial statement presentation.

Table 13 — Quarterly Financial Data

	Three Months Ended
(Dollars in thousands, except per share data)	March 31		June 30		Sept. 30		Dec. 31
2009:
Interest income	$	93,365	$	92,092	$	91,868	$	90,365
Interest expense		25,132		24,098		23,406		21,563
Net interest income		68,233		67,994		68,462		68,802
Provision for loan losses		12,287		15,856		14,958		25,720
Gain on sale of securities		—		7,340		—		—
Income before income taxes		29,294		29,084		25,617		13,140
Net income		21,390		21,307		19,199		12,296
Net income available to common shareholders		19,950		19,866		17,759		10,855
Per common share data:
Net income per common share — basic (x)		1.43		1.42		1.25		0.74
Net income per common share — diluted (x)		1.43		1.42		1.25		0.74
Weighted-average common stock outstanding — basic		13,971,720		14,001,608		14,193,411		14,658,601
Weighted-average common stock equivalent — diluted		13,971,720		14,001,608		14,193,411		14,658,601

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FINANCIAL REVIEW

Table 13 — Quarterly Financial Data continued

	Three Months Ended
(Dollars in thousands, except per share data)	March 31		June 30		Sept. 30			Dec. 31
2008:
Interest income	$	100,468	$	98,201	$	97,947		$	94,723
Interest expense		38,984		33,875		32,719			29,888
Net interest income		61,484		64,326		65,228			64,835
Provision for loan losses		7,394		14,569		15,906			32,618
Gain (loss) on sale of securities		309		587		—			219
Income (loss) before income taxes		32,161		24,454		(33,069	)		12,173
Net income (loss)		22,978		18,191		(38,412	)		10,951
Net income (loss) available to common shareholders		22,978		18,191		(38,412	)		10,809
Per common share data:
Net income (loss) per common share — basic (x)		1.65		1.30		(2.75	)		0.77
Net income (loss) per common share — diluted (x)		1.65		1.30		(2.75	)		0.77
Weighted-average common stock outstanding — basic		13,964,572		13,964,561		13,964,549			13,967,194
Weighted-average common stock equivalent — diluted		13,964,572		13,964,561		13,964,549			13,967,650

(x) Reported measure uses net income available to common shareholders.

Non-GAAP Financial Measures: Park’s management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate Park’s performance. Specifically, management reviews (i) net income available to common shareholders before impairment charge, (ii) net income available to common shareholders before impairment charge per common share-diluted, (iii) return on average assets before impairment charge, and (iv) return on average common equity before impairment charge, (collectively, the “adjusted performance metrics”) and has included in this annual report information relating to the adjusted performance metrics for the twelve-month period ended December 31, 2008. Management believes the adjusted performance metrics present a more reasonable view of Park’s operating performance and ensures comparability of operating performance from period to period while eliminating the one-time non-recurring impairment charges. Park has provided reconciliations of the GAAP measures to the adjusted performance metrics solely for the purpose of complying with SEC Regulation G and not as an indication that the adjusted performance metrics are a substitute for other measures determined by GAAP.

The following table displays net income available to common shareholders and related performance metrics after excluding the 2007 and 2008 goodwill impairment charges related to the Vision Bank acquisition.

December 31,
(Dollars in thousands, except per share data)	2009			2008			2007			2006			2005
Results of Operations:
Net income available to common shareholders excluding impairment charge (a)	$	68,430		$	68,552		$	76,742		$	94,091		$	95,238
Per common share:
Net income per common share excluding impairment charge — diluted (a)		4.82			4.91			5.40			6.74			6.64
Ratios:
Return on average assets excluding impairment charge (a)(b)		0.97	%		1.02	%		1.24	%		1.75	%		1.71	%
Return on average common equity excluding impairment charge (a)(b)		11.81	%		12.12	%		12.40	%		17.26	%		17.03	%
Noninterest expense excluding impairment charge to net revenue (1)		54.01	%		52.59	%		55.21	%		50.35	%		49.32	%

(1)	Computed on a fully taxable equivalent basis.
(a)	Net income for the year has been adjusted for the impairment charge to goodwill. Net income before impairment charge equals net income for the year plus the impairment charge to goodwill of $54,986 and $54,035 for 2008 and 2007, respectively.
(b)	Reported measure uses net income available to common shareholders.

The following table displays net income available to common shareholders and related performance metrics for each quarter in 2008 after excluding the Vision Bank goodwill impairment charges during the third quarter of 2008.

	Three Months Ended
(Dollars in thousands, except per share data)	March 31		June 30		Sept. 30		Dec. 31
2008:
Net income available to common shareholders excluding impairment charge (a)	$	22,978	$	18,191	$	16,574	$	10,809
Per common share:
Net income per common share excluding impairment charge — diluted (a)(x)		1.65		1.30		1.19		0.77

(x)	Reported measure uses net income available to shareholders.
(a)	Net income for the third quarter 2008 has been adjusted for the impairment charge to goodwill. Net income excluding the impairment charge equals net income for the period plus the impairment charge to goodwill of $54,986.

The Corporation’s common stock (symbol: PRK) is traded on the NYSE Amex. At December 31, 2009, the Corporation had 4,616 stockholders of record. The following table sets forth the high, low and closing sale prices of, and dividends declared on the common stock for each quarterly period for the years ended December 31, 2009 and 2008, as reported by NYSE Amex since October 1, 2008 and by its predecessors, the NYSE Alternext and the American Stock Exchange LLC prior thereto.

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FINANCIAL REVIEW

Table 14 — Market and Dividend Information

							Cash
							Dividend
					Last		Declared
	High		Low		Price		Per Share
2009:
First Quarter	$	70.10	$	39.90	$	55.75	$	0.94
Second Quarter		70.00		53.88		56.48		0.94
Third Quarter		66.59		54.01		58.34		0.94
Fourth Quarter		62.55		56.35		58.88		0.94
2008:
First Quarter	$	74.87	$	56.80	$	70.85	$	0.94
Second Quarter		78.65		53.90		53.90		0.94
Third Quarter		82.50		44.87		78.00		0.94
Fourth Quarter		80.00		53.55		71.75		0.95

PERFORMANCE GRAPH

Table 15 compares the total return performance for Park common shares with the NYSE Amex Composite Index, the NASDAQ Bank Stocks Index and the SNL Financial Bank and Thrift Index for the five-year period from December 31, 2004 to December 31, 2009. The NYSE Amex Composite Index is a market capitalization-weighted index of the stocks listed on NYSE Amex. The NASDAQ Bank Stocks Index is comprised of all depository institutions, holding companies and other investment companies that are traded on The NASDAQ Global Select and Global Markets. Park considers a number of bank holding companies traded on The NASDAQ National Market to be within its peer group. The SNL Financial Bank and Thrift Index is comprised of all publicly traded bank and thrift stocks researched by SNL Financial.

The NYSE Amex Financial Stocks Index includes the stocks of banks, thrifts, finance companies and securities broker-dealers. Park believes that The NASDAQ Bank Stocks Index and the SNL Financial Bank and Thrift Index are more appropriate industry indices for Park to use for the five-year total return performance comparison.

Table 15 — Total Return Performance

The total return performance for Park’s common shares has underperformed the total return performance of the NYSE Amex Composite Index in the five-year comparison as indicated in Table 15, but outperformed both the NASDAQ Bank Stocks Index and the SNL Bank and Thrift Index for the same five-year period. The annual compound total return on Park’s common shares for the past five years was a negative 11.3%. By comparison, the annual compound total returns for the past five years on the NYSE Amex Composite Index, the NASDAQ Bank Stocks Index and the SNL Bank and Thrift Index were positive 7.4%, negative 12.5% and negative 12.5%, respectively.

47

MANAGEMENT’S REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING

To the Board of Directors and Stockholders
Park National Corporation

The management of Park National Corporation (the “Corporation”) is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Corporation’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. The Corporation’s internal control over financial reporting includes those policies and procedures that:

a.)	pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Corporation and its consolidated subsidiaries;
b.)	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Corporation and its consolidated subsidiaries are being made only in accordance with authorizations of management and directors of the Corporation; and
c.)	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of the Corporation and its consolidated subsidiaries that could have a material effect on the financial statements.

The Corporation’s internal control over financial reporting as it relates to the financial statements is evaluated for effectiveness by management and tested for reliability through a program of internal audits. Actions are taken to correct potential deficiencies as they are identified.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluations of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Accordingly, even an effective system of internal control over financial reporting will provide only reasonable assurance with respect to financial statement preparation.

With the participation of our Chairman of the Board and Chief Executive Officer, our President and our Chief Financial Officer, management evaluated the effectiveness of the Corporation’s internal control over financial reporting as of December 31, 2009, the end of the Corporation’s fiscal year. In making this assessment, management used the criteria set forth for effective internal control over financial reporting by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.

Based on our assessment under the criteria described in the proceeding paragraph, management concluded that the Corporation maintained effective internal control over financial reporting as of December 31, 2009.

The Corporation’s independent registered public accounting firm, Crowe Horwath LLP, has audited the Corporation’s 2009 and 2008 consolidated financial statements included in this Annual Report and the Corporation’s internal control over financial reporting as of December 31, 2009, and has issued their Report of Independent Registered Public Accounting Firm, which appears in this Annual Report.

C. Daniel DeLawder	David L. Trautman	John W. Kozak
Chairman and Chief Executive Officer	President	Chief Financial Officer

February 24, 2010

48

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders
Park National Corporation
Newark, Ohio

We have audited the accompanying consolidated balance sheets of Park National Corporation as of December 31, 2009 and 2008 and the related consolidated statements of income, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2009. We also have audited Park National Corporation’s internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Park National Corporation’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Park National Corporation as of December 31, 2009 and 2008, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, Park National Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control – Integrated Framework issued by the COSO.

Columbus, Ohio
February 24, 2010

49

CONSOLIDATED BALANCE SHEETS

PARK NATIONAL CORPORATION AND SUBSIDIARIES
at December 31, 2009 and 2008 (In thousands, except share and per share data)

ASSETS	2009			2008
Cash and due from banks	$	116,802		$	150,298
Money market instruments		42,289			20,964
Cash and cash equivalents		159,091			171,262
Investment securities:
Securities available-for-sale, at fair value (amortized cost of $1,241,381 and $1,513,223 at December 31, 2009 and 2008, respectively)		1,287,727			1,561,896
Securities held-to-maturity, at amortized cost (fair value of $523,450 and $433,435 at December 31, 2009 and 2008, respectively)		506,914			428,350
Other investment securities		68,919			68,805
Total investment securities		1,863,560			2,059,051
Total loans		4,640,432			4,491,337
Allowance for loan losses		(116,717	)		(100,088	)
Net loans		4,523,715			4,391,249
Other assets:
Bank owned life insurance		137,133			132,916
Goodwill		72,334			72,334
Other intangibles		9,465			13,211
Premises and equipment, net		69,091			68,553
Accrued interest receivable		24,354			27,930
Other real estate owned		41,240			25,848
Mortgage loan servicing rights		10,780			8,306
Other		129,566			100,060
Total other assets		493,963			449,158
Total assets	$	7,040,329		$	7,070,720

The accompanying notes are an integral part of the financial statements.

50

CONSOLIDATED BALANCE SHEETS (CONTINUED)

PARK NATIONAL CORPORATION AND SUBSIDIARIES
at December 31, 2009 and 2008 (In thousands, except share and per share data)

LIABILITIES AND STOCKHOLDERS’ EQUITY	2009			2008
Deposits:
Noninterest bearing	$	897,243		$	782,625
Interest bearing		4,290,809			3,979,125
Total deposits		5,188,052			4,761,750
Short-term borrowings		324,219			659,196
Long-term debt		654,381			855,558
Subordinated debentures		75,250			40,000
Total borrowings		1,053,850			1,554,754
Other liabilities:
Accrued interest payable		9,330			11,335
Other		71,833			100,218
Total other liabilities		81,163			111,553
Total liabilities		6,323,065			6,428,057
COMMITMENTS AND CONTINGENCIES
Stockholders’ equity:
Preferred stock (200,000 shares authorized; 100,000 shares issued with $1,000 per share liquidation preference)		96,483			95,721
Common stock, no par value (20,000,000 shares authorized; 16,151,112 shares issued in 2009 and 16,151,151 issued in 2008)		301,208			301,210
Common stock warrants		5,361			4,297
Accumulated other comprehensive income, net		15,661			10,596
Retained earnings		423,872			438,504
Less: Treasury stock (1,268,332 shares in 2009 and 2,179,424 shares in 2008)		(125,321	)		(207,665	)
Total stockholders’ equity		717,264			642,663
Total liabilities and stockholders’ equity	$	7,040,329		$	7,070,720

The accompanying notes are an integral part of the financial statements.

51

CONSOLIDATED STATEMENTS OF INCOME

PARK NATIONAL CORPORATION AND SUBSIDIARIES
for the years ended December 31, 2009, 2008 and 2007 (In thousands, except per share data)

	2009		2008		2007
Interest and dividend income:
Interest and fees on loans	$	275,599	$	301,163	$	320,827
Interest and dividends on:
Obligations of U.S. Government, its agencies and other securities		90,558		87,711		77,016
Obligations of states and political subdivisions		1,417		2,171		3,061
Other interest income		116		294		920
Total interest and dividend income		367,690		391,339		401,824
Interest expense:
Interest on deposits:
Demand and savings deposits		10,815		22,633		39,797
Time deposits		53,805		67,259		81,224
Interest on short-term borrowings		3,209		14,469		22,113
Interest on long-term debt		26,370		31,105		24,013
Total interest expense		94,199		135,466		167,147
Net interest income		273,491		255,873		234,677
Provision for loan losses		68,821		70,487		29,476
Net interest income after provision for loan losses		204,670		185,386		205,201
Other income:
Income from fiduciary activities		12,468		13,937		14,403
Service charges on deposit accounts		21,985		24,296		23,813
Net gains on sales of securities		7,340		1,115		—
Other service income		18,767		8,882		11,543
Check fee income		9,339		8,695		7,200
Bank owned life insurance income		5,050		5,102		4,228
Net gain on sale of credit card portfolio		—		7,618		—
Income from sale of merchant processing		—		4,200		—
Other		6,241		10,989		10,453
Total other income	$	81,190	$	84,834	$	71,640

The accompanying notes are an integral part of the financial statements.

52

CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)

PARK NATIONAL CORPORATION AND SUBSIDIARIES
for the years ended December 31, 2009, 2008 and 2007 (In thousands, except per share data)

	2009		2008		2007
Other expense:
Salaries and employee benefits	$	101,225	$	99,018	$	97,712
Goodwill impairment charge		—		54,986		54,035
Data processing fees		5,674		7,121		6,892
Fees and service charges		15,935		12,801		11,055
Net occupancy expense of bank premises		11,552		11,534		10,717
Amortization of intangibles		3,746		4,025		3,847
Furniture and equipment expense		9,734		9,756		9,259
Insurance		12,072		2,322		1,445
Marketing		3,775		4,525		4,961
Postage and telephone		6,903		7,167		6,910
State taxes		3,206		2,989		2,769
Other		14,903		18,257		14,562
Total other expense		188,725		234,501		224,164
Income before income taxes		97,135		35,719		52,677
Income taxes		22,943		22,011		29,970
Net income	$	74,192	$	13,708	$	22,707
Preferred stock dividends and accretion		5,762		142		—
Income available to common shareholders	$	68,430	$	13,566	$	22,707
Earnings per common share:
Basic	$	4.82	$	0.97	$	1.60
Diluted	$	4.82	$	0.97	$	1.60

The accompanying notes are an integral part of the financial statements.

53

CONSOLIDATED STATEMENTS OF
CHANGES IN STOCKHOLDERS’ EQUITY

PARK NATIONAL CORPORATION AND SUBSIDIARIES
for the years ended December 31, 2009, 2008 and 2007 (In thousands, except share and per share data)

																		Accumulated
	Preferred Stock					Common Stock												Other
	Shares					Shares						Retained			Treasury			Comprehensive						Comprehensive
	Outstanding		Amount			Outstanding			Amount			Earnings			Stock			Income (Loss)			Total			Income
Balance, January 1, 2007		—	$	—			13,921,529		$	217,067		$	519,563		$	(143,371	)	$	(22,820	)	$	570,439
Net income							—			—			22,707			—			—			22,707		$	22,707
Other comprehensive income, net of tax:
Change in funded status of pension plan, net of income taxes of $1,759																			3,266			3,266			3,266
Unrealized net holding gain on securities available-for-sale, net of income taxes of $9,125																			16,946			16,946			16,946
Total comprehensive income																								$	42,919
Cash dividends, $3.73 per share							—			—			(52,759	)		—			—			(52,759	)
Cash payment for fractional shares in dividend reinvestment plan							(60	)		(5	)		—			—			—			(5	)
Stock options granted							—			893			—			—			—			893
Treasury stock purchased							(760,531	)		—			—			(65,568	)		—			(65,568	)
Treasury stock reissued for stock options exercised and other grants							10,701			—			—			835			—			835
Shares issued for Vision Bancshares, Inc. purchase							792,937			83,258			—			—			—			83,258
Balance, December 31, 2007		—	$	—			13,964,576		$	301,213		$	489,511		$	(208,104	)	$	(2,608	)	$	580,012
Net income													13,708			—			—			13,708		$	13,708
Other comprehensive income (loss), net of tax:
Change in funded status of pension plan, net of income taxes of $(8,735)																			(16,223	)		(16,223	)		(16,223	)
Unrealized net holding loss on cash flow hedge, net of income taxes of $(678)																			(1,259	)		(1,259	)		(1,259	)
Unrealized net holding gain on securities available-for-sale, net of income taxes of $16,522																			30,686			30,686			30,686
Total comprehensive income																								$	26,912
Cash dividends, $3.77 per share							—			—			(52,608	)		—			—			(52,608	)
Cash payment for fractional shares in dividend reinvestment plan							(49	)		(3	)		—			—			—			(3	)
Cumulative effect of new accounting pronouncement pertaining to endorsement split-dollar life insurance													(11,634	)								(11,634	)
SFAS No. 158 measurement date adjustment, net of taxes of $(178)													(331	)								(331	)
Preferred stock issued		100,000		100,000																		100,000
Discount on preferred stock issued				(4,297	)																	(4,297	)
Accretion of discount on preferred stock				18									(18	)								—
Common stock warrant issued							—			4,297												4,297
Preferred stock dividends													(124	)								(124	)
Treasury stock reissued for director grants							7,200									439						439
Balance, December 31, 2008		100,000	$	95,721			13,971,727		$	305,507		$	438,504		$	(207,665	)	$	10,596		$	642,663
Net income							—			—			74,192			—			—			74,192		$	74,192
Other comprehensive income (loss), net of tax:
Change in funded status of pension plan, net of income taxes of $3,383																			6,283			6,283			6,283
Unrealized net holding gain on cash flow hedge, net of income taxes of $159																			295			295			295
Unrealized net holding (loss) on securities available-for-sale, net of income taxes of $(815)																			(1,513	)		(1,513	)		(1,513	)
Total comprehensive income																								$	79,257
Cash dividends, $3.76 per share							—			—			(53,563	)		—			—			(53,563	)
Cash payment for fractional shares in dividend reinvestment plan							(39	)		(2	)		—			—			—			(2	)
Reissuance of common stock from treasury shares held							904,072			—			(29,299	)		81,710			—			52,411
Accretion of discount on preferred stock				762									(762	)								—
Common stock warrant issued							—			1,064												1,064
Preferred stock dividends													(5,000	)								(5,000	)
Treasury stock reissued for director grants							7,020						(200	)		634						434
Balance, December 31, 2009		100,000	$	96,483			14,882,780		$	306,569		$	423,872		$	(125,321	)	$	15,661		$	717,264

The accompanying notes are an integral part of the financial statements.

54

CONSOLIDATED STATEMENTS OF CASH FLOWS

PARK NATIONAL CORPORATION AND SUBSIDIARIES
for the years ended December 31, 2009, 2008 and 2007 (In thousands)

	2009			2008			2007
Operating activities:
Net income	$	74,192		$	13,708		$	22,707
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		68,821			70,487			29,476
Amortization of loan fees and costs, net		(1,378	)		(4,650	)		(5,935	)
Provision for depreciation		7,473			7,517			6,480
Other than temporary impairment on investment securities		613			980			—
Goodwill impairment charge		—			54,986			54,035
Amortization of intangible assets		3,746			4,025			3,847
Accretion of investment securities		(2,682	)		(1,592	)		(3,009	)
Gain on sale of credit card portfolio		—			(7,618	)		—
Deferred income tax (benefit)		(8,932	)		(1,590	)		(7,839	)
Realized net investment security (gains)		(7,340	)		(1,115	)		—
Stock based compensation expense		—			—			893
Stock dividends on Federal Home Loan Bank stock		—			(2,269	)		—
Changes in assets and liabilities:
Increase in other assets		(31,987	)		(42,409	)		(11,980	)
(Decrease) increase in other liabilities		(30,622	)		239			(5,492	)
Net cash provided by operating activities		71,904			90,699			83,183
Investing activities:
Proceeds from sales of available-for-sale securities		204,304			80,894			—
Proceeds from maturities of securities:
Held-to-maturity		40,105			7,116			11,063
Available-for-sale		426,841			303,160			700,582
Purchase of securities:
Held-to-maturity		(118,667	)		(270,045	)		—
Available-for-sale		(349,895	)		(422,512	)		(842,598	)
Proceeds from sale of credit card portfolio		—			38,841			—
Net (increase) decrease in other investments		(114	)		(3,371	)		180
Net loan originations, excluding loan sales		(814,981	)		(512,752	)		(287,425	)
Proceeds from sale of loans		615,072			161,475			161,420
Proceeds from loans purchased with branch office		—			—			(38,348	)
Cash (paid) for acquisition, net		—			—			(47,686	)
Purchases of bank owned life insurance, net		—			(8,401	)		—
Purchases of premises and equipment, net		(8,011	)		(9,436	)		(16,331	)
Premises and equipment acquired in branch acquisitions		—			—			(1,150	)
Net cash used in investing activities		(5,346	)		(635,031	)		(360,293	)
Financing activities:
Net increase in deposits		426,302			322,511			13,198
Deposits purchased with branch office		—			—			23,466
Net (decrease) increase in short-term borrowings		(334,977	)		(100,122	)		359,213
Issuance of preferred stock		—			100,000			—
Issuance (purchase) of treasury stock, net		53,909			439			(64,733	)
Proceeds from issuance of subordinated notes		35,250			—			25,000
Proceeds from long-term debt		60,100			690,100			378,100
Repayment of long-term debt		(261,278	)		(424,951	)		(397,460	)
Cash dividends paid		(58,035	)		(65,781	)		(52,533	)
Net cash (used in) provided by financing activities		(78,729	)		522,196			284,251
(Decrease) increase in cash and cash equivalents		(12,171	)		(22,136	)		7,141
Cash and cash equivalents at beginning of year		171,262			193,398			186,257
Cash and cash equivalents at end of year	$	159,091		$	171,262		$	193,398
Supplemental disclosure:
Summary of business acquisition:
Fair value of assets acquired	$	—		$	—		$	686,512
Cash paid for the purchase of financial institutions		—			—			(87,843	)
Stock issued for the purchase of financial institutions		—			—			(83,258	)
Fair value of liabilities assumed		—			—			(624,432	)
Goodwill recognized	$	—		$	—		$	(109,021	)

The accompanying notes are an integral part of the financial statements.

55

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies followed in the preparation of the consolidated financial statements:

Principles of Consolidation

The consolidated financial statements include the accounts of Park National Corporation (“Park”, the “Company” or the “Corporation”) and all of its subsidiaries. Material intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Management has identified the allowance for loan losses and accounting for goodwill as significant estimates.

Reclassifications

Certain prior year amounts have been reclassified to conform with the current year presentation.

Subsequent Events

The Company has evaluated subsequent events for recognition or disclosure through February 24, 2010, which is the date that the Company’s financial statements were issued.

Investment Securities

Investment securities are classified upon acquisition into one of three categories: held-to-maturity, available-for-sale, or trading (see Note 4 of these Notes to Consolidated Financial Statements).

Held-to-maturity securities are those securities that the Corporation has the positive intent and ability to hold to maturity and are recorded at amortized cost. Available-for-sale securities are those securities that would be available to be sold in the future in response to the Corporation’s liquidity needs, changes in market interest rates, and asset-liability management strategies, among others. Available-for-sale securities are reported at fair value, with unrealized holding gains and losses excluded from earnings but included in other comprehensive income, net of applicable taxes. The Corporation did not hold any trading securities during any period presented.

Available-for-sale and held-to-maturity securities are evaluated quarterly for potential other-than-temporary impairment. Management considers the facts of each security including the nature of the security, the amount and duration of the loss, credit quality of the issuer, the expectations for that security’s performance and Park’s intent and ability to hold the security until recovery. Declines in equity securities that are considered to be other-than-temporary are recorded as a charge to earnings in the Consolidated Statements of Income. Declines in debt securities that are considered to be other-than-temporary are separated into (1) the amount of the total impairment related to credit loss and (2) the amount of the total impairment related to all other factors. The amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings. The amount of the total impairment related to all other factors is recognized in other comprehensive income.

Other investment securities (as shown on the Consolidated Balance Sheet) consist of stock investments in the Federal Home Loan Bank and the Federal Reserve Bank.

Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage-backed securities where prepayments are anticipated.

Gains and losses realized on the sale of investment securities are recorded on the trade date and determined using the specific identification basis.

Federal Home Loan Bank (FHLB) Stock

Park’s two separately chartered banks are members of the FHLB system. Members are required to own a certain amount of stock based on their level of borrowings and other factors and may invest in additional amounts. FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on the ultimate recovery of the par value. Both cash and stock dividends are reported as income.

Bank Owned Life Insurance

Park has purchased life insurance policies on directors and certain key officers. Bank owned life insurance is recorded at its cash surrender value (or the amount that can be realized).

Mortgage Loans Held for Sale

Mortgage loans held for sale are carried at their fair value as of December 31, 2009 and at the lower of cost or fair value at December 31, 2008. Due to the significant increase in mortgage originations through the first half of 2009, and to better match the change in fair value of commitments to sell these loans, Park elected the fair value option of accounting for mortgage loans held for sale that were originated after January 1, 2009. Mortgage loans held for sale were $9.6 million at December 31, 2009 and 2008. These amounts are included in loans on the Consolidated Balance Sheet. The impact of adopting the fair value option for mortgage loans held for sale added $0.1 million to other service income for the year ended December 31, 2009.

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. Fair values of these mortgage derivatives are estimated based on changes in mortgage interest rates from the date the interest on the loan is locked. The Company enters into forward commitments for the future delivery of mortgage loans when interest rate locks are entered into, in order to hedge the change in interest rates resulting from its commitments to fund the loans. Changes in the fair values of these derivatives are included in net gains on sales of loans.

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff, are reported at their outstanding principal balances adjusted for any charge-offs, any deferred fees or costs on originated loans, and any unamortized premiums or discounts on purchased loans. Interest income is reported on the interest method and includes amortization of net deferred loan fees and costs over the loan term. Generally, commercial loans are placed on nonaccrual status at 90 days past due and consumer and residential mortgage loans are placed on nonaccrual status at 120 days past due. Interest on these loans is considered a loss, unless the loan is well-secured and in the process of collection. Commercial loans placed on nonaccrual status are considered impaired (See Note 5 of these Notes to Consolidated Financial Statements). For loans which are on nonaccrual status, it is Park’s policy to reverse interest previously accrued on the loan against interest income. Interest on such loans is thereafter recorded on a cash basis and is included in earnings only when actually received in cash.

The delinquency status of a loan is based on contractual terms and not on how recently payments have been received. Loans are removed from nonaccrual status when loan payments have been received to cure the delinquency status and the loan is deemed to be well-secured by management.

Allowance for Loan Losses

The allowance for loan losses is that amount believed adequate to absorb probable incurred credit losses in the loan portfolio based on management’s evaluation of various factors. The determination of the allowance requires significant estimates, including the timing and amounts of expected cash flows on impaired loans, consideration of current economic conditions,

56

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

and historical loss experience pertaining to pools of homogeneous loans, all of which may be susceptible to change. The allowance is increased through a provision for loan losses that is charged to earnings based on management’s quarterly evaluation of the factors previously mentioned and is reduced by charge-offs, net of recoveries.

The allowance for loan losses includes both (1) an estimate of loss based on historical loss experience within both commercial and consumer loan categories with similar characteristics (“statistical allocation”) and (2) an estimate of loss based on an impairment analysis of each commercial loan that is considered to be impaired (“specific allocation”).

In calculating the allowance for loan losses, management believes it is appropriate to utilize historical loss rates that are comparative to the current period being analyzed. For the historical loss factor at December 31, 2009, the Company annualized actual losses (net charge-offs) experienced during 2008 and 2009 within the commercial and consumer loan categories. For these purposes, consumer loans include residential real estate loans. Considering the unprecedented economic conditions over the past 24 months, we believe it is reasonable to use actual losses for 2008 and 2009 in our determination of the December 31, 2009 historical loss factor. The loss factor applied to Park’s consumer portfolio includes the annualized two year historical loss factor, plus an additional judgmental reserve, increasing the total allowance for loan loss coverage in the consumer portfolio to approximately 1.25 years of historical loss. The loss factor applied to Park’s commercial portfolio includes the annualized two year historical loss factor, plus an additional judgmental reserve, increasing the total allowance for loan loss coverage in the commercial portfolio to approximately two years of historical loss. Park’s commercial loans are individually risk graded. If loan downgrades occur, the probability of default increases, and accordingly, management allocates a higher percentage reserve to those accruing commercial loans graded special mention and substandard. At December 31, 2008, much of the loss factors applied to the Company’s commercial and consumer loss categories consisted of subjective adjustments due to the Company’s limited recent loan loss history.

U.S. generally accepted accounting principles (“GAAP”) require a specific allocation to be established as a component of the allowance for loan losses for certain loans when it is probable that all amounts due pursuant to the contractual terms of the loan will not be collected, and the recorded investment in the loan exceeds fair value. Fair value is measured using either the present value of expected future cash flows based upon the initial effective interest rate on the loan, the observable market price of the loan or the fair value of the collateral, if the loan is collateral dependent.

Income Recognition

Income earned by the Corporation and its subsidiaries is recognized on the accrual basis of accounting, except for nonaccrual loans, as previously discussed, and late charges on loans which are recognized as income when they are collected.

Premises and Equipment

Premises and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is generally provided on the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of the remaining lease period or the estimated useful lives of the improvements. Upon the sale or other disposal of an asset, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is recognized. Maintenance and repairs are charged to expense as incurred while renewals and improvements that extend the useful life of an asset are capitalized. Premises and equipment is evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

The range of depreciable lives over which premises and equipment are being depreciated are:

Buildings	5 to 50 Years
Equipment, furniture and fixtures	3 to 20 Years
Leasehold improvements	1 to 10 Years

Buildings that are currently placed in service are depreciated over 30 years. Equipment, furniture and fixtures that are currently placed in service are depreciated over 3 to 12 years. Leasehold improvements are depreciated over the lives of the related leases which range from 1 to 10 years.

Other Real Estate Owned

Other real estate owned is recorded at the lower of cost or fair market value (which is the estimated net realizable value) and consists of property acquired through foreclosure and real estate held for sale. Subsequent to acquisition, write-downs to other real estate owned result if carrying values exceed fair value less estimated costs to sell. These write-downs are expensed within “other income”. Costs relating to development and improvement of such properties are capitalized (not in excess of fair value less estimated costs to sell) and costs relating to holding the properties are charged to expense.

Mortgage Loan Servicing Rights

When Park sells mortgage loans with servicing rights retained, servicing rights are recorded at fair value, with the income statement effect recorded in gains on sale of loans. Capitalized servicing rights are amortized in proportion to and over the period of estimated future servicing income of the underlying loan. Capitalized mortgage servicing rights totaled $10.8 million at December 31, 2009 and $8.3 million at December 31, 2008, which was also the fair value of servicing rights at December 31, 2009 and 2008. The fair value of mortgage servicing rights is determined by discounting estimated future cash flows from the servicing assets, using market discount rates and expected future prepayment rates. In order to calculate fair value, the sold loan portfolio is stratified into homogenous pools of like categories. (See Note 20 of these Notes to Consolidated Financial Statements.)

Mortgage servicing rights are assessed for impairment periodically, based on fair value, with any impairment recognized through a valuation allowance. Fees received for servicing mortgage loans owned by investors are based on a percentage of the outstanding monthly principal balance of such loans and are included in income as loan payments are received. The cost of servicing loans is charged to expense as incurred.

Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price over net identifiable tangible and intangible assets acquired in a purchase business combination. Other intangible assets represent purchased assets that have no physical property but represent some future economic benefit to their owner and are capable of being sold or exchanged on their own or in combination with a related asset or liability.

Goodwill and indefinite-lived intangible assets are not amortized to expense, but are subject to annual impairment tests, or more frequently if events or changes in circumstances indicate that the asset might be impaired. Intangible assets with definitive useful lives (such as core deposit intangibles) are amortized to expense over their estimated useful lives.

Management considers several factors when performing the annual impairment tests on goodwill. The factors considered include the operating results for the particular Park segment for the past year and the operating results budgeted for the current year (including multi-year projections), the purchase prices being paid for financial institutions in the markets served by the Park segment, the deposit and loan totals of the Park segment and the economic conditions in the markets served by the Park segment.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table reflects the activity in goodwill and other intangible assets for the years 2009, 2008 and 2007. (See Note 2 of these Notes to Consolidated Financial Statements for details on the acquisition of Vision Bancshares, Inc. (“Vision”), and the recognition of impairment charges in 2008 and 2007 to Vision Bank’s goodwill.)

				Core Deposit
(In thousands)	Goodwill			Intangibles			Total
January 1, 2007	$	72,334		$	5,669		$	78,003
Vision Acquisition		109,021			12,720			121,741
Millersburg Branch Acquisition		—			2,694			2,694
Amortization		—			(3,847	)		(3,847	)
Impairment of Vision Goodwill		(54,035	)		—			(54,035	)
December 31, 2007	$	127,320		$	17,236		$	144,556
Amortization		—			(4,025	)		(4,025	)
Impairment of Vision Goodwill		(54,986	)		—			(54,986	)
December 31, 2008	$	72,334		$	13,211		$	85,545
Amortization		—			(3,746	)		(3,746	)
December 31, 2009	$	72,334		$	9,465		$	81,799

GAAP requires a company to perform an impairment test on goodwill annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired, by comparing the fair value of such goodwill to its recorded or carrying amount. If the carrying amount of the goodwill exceeds the fair value, an impairment charge must be recorded in an amount equal to the excess.

Park typically evaluates goodwill for impairment during the first quarter of each year. A determination was made during the first quarter of 2009 that goodwill for Park’s Ohio-based bank (The Park National Bank) was not impaired.

During the fourth quarter of 2007, Park’s management determined that the goodwill from the Vision acquisition on March 9, 2007 could possibly be impaired due to the significant deterioration in the credit condition of Vision Bank. Nonperforming loans at Vision Bank increased from $26.3 million at September 30, 2007 to $63.5 million at December 31, 2007, or 9.9% of year-end loan balances. Net loan charge-offs were $6.4 million for the fourth quarter or an annualized 3.99% of average loan balances. Management determined, due to severe credit conditions, that a valuation of the fair value of Vision Bank should be computed to determine if the goodwill of $109.0 million was impaired as of December 31, 2007.

At December 31, 2007, management calculated the estimated fair value of Vision Bank to be $123.0 million, based on four equally weighted tests: (i) on-going earnings multiplied by a price to earnings multiple; (ii) tangible book multiplied by a price to tangible book ratio; (iii) core deposit premium added to tangible book; and (iv) discounted future cash flows. Once it is determined that the fair value is materially less than the carrying value, GAAP requires a company to calculate the implied fair value of goodwill and compare it to the carrying amount of goodwill. The amount of the excess of the carrying amount of goodwill over the implied amount of goodwill is the amount of the impairment loss, which was calculated as $54.0 million by Park management. After the impairment charge, the new carrying amount of goodwill resulting from the Vision acquisition was $55.0 million at December 31, 2007.

The balance of goodwill was $127.3 million at December 31, 2007 and was located at four subsidiary banks of Park. The subsidiary banks were Vision Bank ($55.0 million), The Park National Bank ($39.0 million), Century National Bank ($25.8 million) and The Security National Bank and Trust Co. ($7.5 million).

Based primarily on the increased level of net loan charge-offs at Vision Bank, management determined that it was appropriate to test for goodwill impairment during the third quarter of 2008. Park continued to experience credit deterioration in Vision Bank’s market place during the third quarter of 2008. The fair value of Vision was estimated by using the average of three measurement methods. These included application of various metrics from bank sale transactions for institutions comparable to Vision Bank, including application of a market-derived multiple of tangible book value and estimations of the present value of future cash flows. Park’s management reviewed the valuation of Vision Bank with Park’s Board of Directors and concluded that Vision Bank should recognize an impairment charge and write down the remaining goodwill ($55.0 million), resulting in a goodwill balance of zero with respect to the Vision Bank reporting unit.

Goodwill and other intangible assets (as shown on the Consolidated Balance Sheet) totaled $81.8 million at December 31, 2009 and $85.5 million at December 31, 2008.

The core deposit intangibles are being amortized to expense principally on the straight-line method, over periods ranging from six to ten years. The amortization period for the Vision acquisition is six years. Core deposit intangible amortization expense was $3.7 million in 2009, $4.0 million in 2008 and $3.8 million in 2007.

The accumulated amortization of core deposit intangibles was $12.7 million as of December 31, 2009 and $8.9 million at December 31, 2008. The expected core deposit intangible amortization expense for each of the next five years is as follows:

(In thousands)
2010	$	3,422
2011		2,677
2012		2,677
2013		689
2014		—
Total	$	9,465

Consolidated Statement of Cash Flows

Cash and cash equivalents include cash and cash items, amounts due from banks and money market instruments. Generally money market instruments are purchased and sold for one-day periods.

Net cash provided by operating activities reflects cash payments as follows:

December 31,
(Dollars in thousands)	2009		2008		2007
Interest paid on deposits and other borrowings	$	96,204	$	139,256	$	167,154
Income taxes paid	$	30,660	$	28,365	$	39,115

Loss Contingencies and Guarantees

Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated.

Income Taxes

The Corporation accounts for income taxes using the asset and liability approach. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. To the extent that Park does not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is recorded. All positive and negative evidence is reviewed when determining how much of a valuation allowance is recognized on a quarterly basis. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

An uncertain tax position is recognized as a benefit only if it is “more-likely-than-not” that the tax position would be sustained in a tax examination being presumed to occur. The benefit recognized for a tax position that meets the “more-likely-than-not” criteria is measured based on the largest benefit that is more than 50 percent likely to be realized, taking into consideration the amounts and probabilities of the outcome upon settlement. For tax positions not meeting the “more-likely-than-not” test, no tax benefit is recorded.

Preferred Stock

On December 23, 2008, Park issued $100 million of Senior Preferred Shares to the U.S. Department of Treasury (the “Treasury”) under the Capital Purchase Program (CPP), consisting of 100,000 shares, each with a liquidation

58

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

preference of $1,000 per share. In addition, on December 23, 2008, Park issued a warrant to the Treasury to purchase 227,376 common shares. These preferred shares and related warrant are considered permanent equity for accounting purposes. GAAP requires management to allocate the proceeds from the issuance of the preferred stock between the preferred stock and related warrant. The terms of the preferred shares require management to pay a cumulative dividend at the rate of 5 percent per annum until February 14, 2014 and 9 percent thereafter. Management determined that the 5 percent dividend rate is below market value; therefore, the fair value of the preferred shares would be less than the $100 million in proceeds. Management determined that a reasonable market discount rate is 12 percent for the fair value of preferred shares. Management used the Black-Scholes model for calculating the fair value of the warrant (and related common shares). The allocation between the preferred shares and warrant at December 23, 2008, the date of issuance, was $95.7 million and $4.3 million, respectively. The discount on the preferred shares of $4.3 million is being accreted through retained earnings over a 60 month period.

Treasury Stock

The purchase of Park’s common stock is recorded at cost. At the date of retirement or subsequent reissuance, the treasury stock account is reduced by the weighted average cost of the common shares retired or reissued.

Comprehensive Income

Comprehensive income consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses on securities available for sale, changes in the funded status of the Company’s Defined Benefit Pension Plan, and the unrealized net holding gains and losses on the cash flow hedge, which are also recognized as separate components of equity.

Stock Based Compensation

Compensation cost is recognized for stock options and stock awards issued to employees and directors, based on the fair value of these awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of Park’s common stock at the date of grant is used for stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period. Park did not grant any stock options during 2009 or 2008, but granted 90,000 stock options in 2007. Additionally, all stock options granted in 2007 vested that year. No stock options vested in 2009 or 2008. Park granted 7,020, 7,200 and 7,140 shares of common stock to its directors in 2009, 2008 and 2007, respectively.

Derivative Instruments

At the inception of a derivative contract, the Company designates the derivative as one of three types based on the Company’s intentions and belief as to likely effectiveness as a hedge. These three types are (1) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value hedge”), (2) a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”), or (3) an instrument with no hedging designation (“stand-alone derivative”). For a fair value hedge, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged item, are recognized in current earnings as fair values change. For a cash flow hedge, the gain or loss on the derivative is reported in other comprehensive income and is reclassified into earnings in the same periods during which the hedged transaction affects earnings. For both types of hedges, changes in the fair value of derivatives that are not highly effective in hedging the changes in fair value or expected cash flows of the hedged item are recognized immediately in current earnings. Changes in the fair value of derivatives that do not qualify for hedge accounting are reported currently in earnings, as noninterest income.

The Company formally documents the relationship between derivatives and hedged items, as well as the risk-management objective and the strategy for undertaking hedge transactions at the inception of the hedging relationship. This documentation includes linking fair value or cash flow hedges to specific assets and liabilities on the Consolidated Balance Sheet or to specific firm commitments or forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivative instruments that are used are highly effective in offsetting changes in fair values or cash flows of the hedged items. The Company discontinues hedge accounting when it determines that the derivative is no longer effective in offsetting changes in the fair value or cash flows of the hedged item, the derivative is settled or terminates, a hedged forecasted transaction is no longer probable, a hedged firm commitment is no longer firm, or treatment of the derivative as a hedge is no longer appropriate or intended.

When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded as noninterest income. When a fair value hedge is discontinued, the hedged asset or liability is no longer adjusted for changes in fair value and the existing basis adjustment is amortized or accreted over the remaining life of the asset or liability. When a cash flow hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or losses that were accumulated in other comprehensive income are amortized into earnings over the same periods which the hedged transactions will affect earnings.

Fair Value Measurement

Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 21 of these Notes to Consolidated Financial Statements. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates.

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales, when control over the assets has been relinquished. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Retirement Plans

Pension expense is the net of service and interest cost, return on plan assets and amortization of gains and losses not immediately recognized. Employee 401(k) plan expense is the amount of matching contributions. Deferred compensation and supplemental retirement plan expense allocates the benefits over years of service.

Earnings Per Common Share

Basic earnings per common share is net income available to common stockholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock options, warrants and convertible securities. Earnings and dividends per common share are restated for any stock splits and stock dividends through the date of issuance of the financial statements.

Adoption of New Accounting Standards in 2009

Accounting for Business Combinations: Park adopted new guidance impacting Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 805, Business Combinations (SFAS 141(R), “Business Combinations”), on January 1, 2009. This guidance was issued with the objective to improve the comparability of information that a company provides in its financial statements related to a business combination. This new guidance establishes principles and requirements for how the acquirer: (i) recognizes and measures in its financial statements the identifiable assets

59

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; (ii) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and (iii) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This new guidance does not apply to combinations between entities under common control. The Company’s adoption of the new guidance had no impact on Park’s financial statements and applies prospectively to business combinations for which the acquisition date is on or after January 1, 2009.

Noncontrolling Interests in Consolidated Financial Statements: Park adopted new guidance impacting FASB ASC 810-10, Consolidation (SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements”), on January 1, 2009. A noncontrolling interest, also known as a “minority interest,” is the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. This guidance was issued with the objective to improve upon the consistency of financial information that a company provides in its consolidated financial statements. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The Company’s adoption of the new guidance did not have a material impact on Park’s consolidated financial statements.

Disclosures about Derivative Instruments and Hedging Activities: Park adopted new guidance impacting FASB ASC 815-10, Derivatives and Hedging (SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities”), on January 1, 2009. This guidance requires enhanced disclosures about an entity’s derivative and hedging activities and therefore should improve the transparency of financial reporting, and is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company’s adoption of the new guidance did not have a material impact on Park’s consolidated financial statements.

Subsequent Events: Park adopted FASB ASC 855, Subsequent Events (SFAS No. 165, “Subsequent Events”), on June 30, 2009. This guidance establishes general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. Companies should disclose the date through which subsequent events have been evaluated and whether that date is the date the financial statements were issued or the date the financial statements were available to be issued. Companies are required to reflect in their financial statements the effects of subsequent events that provide additional evidence about conditions at the balance-sheet date (recognized subsequent events). Companies are also prohibited from reflecting in their financial statements the effects of subsequent events that provide evidence about conditions that arose after the balance-sheet date (nonrecognized subsequent events), but requires information about those events to be disclosed if the financial statements would otherwise be misleading. The Company’s adoption of this guidance did not have a material impact on Park’s consolidated financial statements.

Interim Disclosures about Fair Value of Financial Instruments: Park adopted new guidance impacting FASB ASC 825-10-50, Financial Instruments (FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments”), effective June 30, 2009. This guidance amended existing GAAP to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. The Company’s adoption of the new guidance impacts quarterly disclosures, but did not have an impact on Park’s December 31, 2009 consolidated financial statements.

Recognition and Presentation of Other-Than-Temporary Impairments: In April 2009, the FASB issued new guidance impacting FASB ASC 320-10, Investments — Debt and Equity Securities (FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments”). This guidance amends the other-than-temporary impairment guidance in GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. This guidance does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. The Company’s adoption of the new guidance did not have a material impact on Park’s consolidated financial statements as Park has not experienced other-than-temporary impairment within its debt securities portfolio.

Employer’s Disclosures about Postretirement Benefit Plan Assets: In December 2008, the FASB issued new guidance impacting FASB ASC 715-20, Defined Benefit Plan — General (FSP No. 132(R)-1, “Employer’s Disclosures about Postretirement Benefit Plan Assets”). This guidance addresses an employer’s disclosures about plan assets of a defined benefit pension or other post-retirement plan. These additional disclosures include disclosure of investment policies and fair value disclosures of plan assets, including fair value hierarchy. The guidance also includes a technical amendment that requires a nonpublic entity to disclose net periodic benefit cost for each annual period for which a statement of income is presented. This new guidance is effective for fiscal years ending after December 15, 2009. Upon initial application, provisions are not required for earlier periods that are presented for comparative purposes. The new disclosures have been presented in the notes to the consolidated financial statements.

Fair Value Measurements: In April 2009, the FASB issued new guidance impacting FASB ASC 820-10, Fair Value Measurements and Disclosures -Overall (FSP No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset and Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”). This guidance emphasizes that the objective of a fair value measurement does not change even when market activity for the asset or liability has decreased significantly. Fair value is the price that would be received for an asset sold or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. When observable transactions or quoted prices are not considered orderly, then little, if any, weight should be assigned to the indication of the asset or liability’s fair value. Adjustments to those transactions or prices would be needed to determine the appropriate fair value. The new guidance, which was applied prospectively, was effective for interim and annual reporting periods ending after June 15, 2009. The Company’s adoption of the new guidance did not have a material impact on Park’s consolidated financial statements.

Measuring Liabilities at Fair Value: In August 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-05, Measuring Liabilities at Fair Value (ASC 820). This update provides amendments to ASC 820 for the fair value measurement of liabilities by clarifying that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using a valuation technique that uses the quoted price of the identical liability when traded as an asset, quoted prices for similar liabilities or similar liabilities when traded as assets, or that is consistent with the principles of ASC 820. The amendments in this guidance also clarify that both a quoted price for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements. The guidance was effective for the first reporting period (including interim periods) beginning after issuance. The Company’s adoption of the new guidance did not have a material impact on Park’s consolidated financial statements.

Recently issued but not yet Effective Accounting Pronouncements Accounting for Transfers of Financial Assets: In June 2009, FASB issued new guidance impacting FASB ASC 810, Consolidation (SFAS No. 166, “Accounting for Transfers of Financial Assets-an amendment of FASB Statement No. 140”). This removes the concept of a qualifying special-purpose entity from existing GAAP and removes the exception from applying FASB ASC 810-10, Consolidation (FASB Interpretation No. 46 (revised December 2003)

60

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidation of Variable Interest Entities) to qualifying special purpose entities. The objective of this new guidance is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement in transferred financial assets. The new guidance will be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. The Company’s adoption of the new guidance is expected to have an immaterial impact on the consolidated financial statements.

Amendments to FASB Interpretation No. 46(R): In June 2009, FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R).” The objective of this new guidance is to amend certain requirements of FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, to improve financial reporting by enterprises involved with variable interest entities and to provide more relevant and reliable information to users of financial statements. This guidance will be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. The Company’s adoption of the new guidance is expected to have an immaterial impact on the consolidated financial statements.

2. ORGANIZATION AND ACQUISITIONS

Park National Corporation is a multi-bank holding company headquartered in Newark, Ohio. Through its banking subsidiaries, The Park National Bank (PNB) and Vision Bank (VB), Park is engaged in a general commercial banking and trust business, primarily in Ohio, Baldwin County, Alabama and the panhandle of Florida. A wholly-owned subsidiary of Park, Guardian Finance Company (GFC) began operating in May 1999. GFC is a consumer finance company located in Central Ohio. PNB operates through eleven banking divisions with the Park National Division headquartered in Newark, Ohio, the Fairfield National Division headquartered in Lancaster, Ohio, The Park National Bank of Southwest Ohio & Northern Kentucky Division headquartered in Milford, Ohio, the First-Knox National Division headquartered in Mount Vernon, Ohio, the Farmers and Savings Division headquartered in Loudonville, Ohio, the Security National Division headquartered in Springfield, Ohio, the Unity National Division headquartered in Piqua, Ohio, the Richland Bank Division headquartered in Mansfield, Ohio, the Century National Division headquartered in Zanesville, Ohio, the United Bank Division headquartered in Bucyrus, Ohio and the Second National Division headquartered in Greenville, Ohio. VB operates through two banking divisions with the Vision Bank Florida Division headquartered in Panama City, Florida and the Vision Bank Alabama Division headquartered in Gulf Shores, Alabama. All of the Ohio-based banking divisions provide the following principal services: the acceptance of deposits for demand, savings and time accounts; commercial, industrial, consumer and real estate lending, including installment loans, credit cards, home equity lines of credit, commercial leasing; trust services; cash management; safe deposit operations; electronic funds transfers and a variety of additional banking-related services. VB, with its two banking divisions, provides the services mentioned above, with the exception of commercial leasing. See Note 23 of these Notes to Consolidated Financial Statements for financial information on the Corporation’s operating segments.

On March 9, 2007, Park acquired all of the stock and outstanding stock options of Vision Bancshares, Inc. for $87.8 million in cash and 792,937 shares of Park common stock valued at $83.3 million or $105.00 per share. The goodwill recognized as a result of this acquisition was $109.0 million. Management expects that the acquisition of Vision will improve the future growth rate for Park’s loans, deposits and net income. The fair value of the acquired assets of Vision was $686.5 million and the fair value of the liabilities assumed was $624.4 million at March 9, 2007. During the fourth quarter of 2007, Park recognized a $54.0 million impairment charge to the Vision goodwill. In addition, Park recognized an additional impairment charge to the remaining Vision goodwill of $55.0 million during the third quarter of 2008. The goodwill impairment charge of $55.0 million in 2008 reduced income tax expense by approximately $1 million. The goodwill impairment charge of $54.0 million in 2007 had no impact on income tax expense.

At the time of the acquisition, Vision operated two bank subsidiaries (both named Vision Bank) which became bank subsidiaries of Park on March 9, 2007. On July 20, 2007, the bank operations of the two Vision Banks were consolidated under a single charter through the merger of the Vision Bank headquartered in Gulf Shores, Alabama with and into the Vision Bank headquartered in Panama City, Florida. Vision Bank operates under a Florida banking charter and has 18 branch locations in Baldwin County, Alabama and in the Florida panhandle.

On September 21, 2007, a national bank subsidiary of Park, The First-Knox National Bank of Mount Vernon (“First-Knox”), acquired the Millersburg, Ohio banking office (the “Millersburg branch”) of Ohio Legacy Bank, N.A. (“Ohio Legacy”). First-Knox acquired substantially all of the loans administered at the Millersburg branch of Ohio Legacy and assumed substantially all of the deposit liabilities relating to the deposit accounts assigned to the Millersburg branch. The fair value of loans acquired was approximately $38 million and deposit liabilities acquired were approximately $23 million. First-Knox paid a premium of approximately $1.7 million in connection with the purchase of the deposit liabilities. First-Knox recognized a loan premium adjustment of $700,000 and a certificate of deposit adjustment of $300,000, resulting in a total increase to core deposit intangibles of $2.7 million. No goodwill was recognized as part of this transaction. In addition, First-Knox paid $900,000 for the acquisition of the branch office building that Ohio Legacy was leasing from a third party.

3. RESTRICTIONS ON CASH AND DUE FROM BANKS

The Corporation’s two bank subsidiaries are required to maintain average reserve balances with the Federal Reserve Bank. The average required reserve balance was approximately $31.9 million at December 31, 2009 and $29.4 million at December 31, 2008. No other compensating balance arrangements were in existence at December 31, 2009.

4. INVESTMENT SECURITIES

The amortized cost and fair value of investment securities are shown in the following table. Management evaluates the investment securities on a quarterly basis for other-than-temporary impairment.

During 2009, management determined that Park’s unrealized losses in the stocks of several financial institutions were other-than-temporarily impaired due to the duration and severity of the losses. Therefore, Park recognized impairment losses of $0.6 million during the twelve months ended December 31, 2009, which is recorded in “other expenses” within the Consolidated Statements of Income. Park recognized impairment losses of $1.0 million for the year ended December 31, 2008 on certain of these equity investments in financial institutions. Since these are equity securities, no amounts were recognized in other comprehensive income at the time of the impairment recognition.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Investment securities at December 31, 2009 were as follows:

			Gross		Gross
			Unrealized		Unrealized
	Amortized		Holding		Holding		Estimated
(In thousands)	Cost		Gains		Losses		Fair Value
2009:
Securities Available-for-Sale
Obligations of U.S. Treasury and other U.S. Government agencies	$	349,899	$	389	$	2,693	$	347,595
Obligations of states and political subdivisions		15,189		493		15		15,667
U.S. Government agencies’ asset-backed securities		875,331		47,572		—		922,903
Other equity securities		962		656		56		1,562
Total	$	1,241,381	$	49,110	$	2,764	$	1,287,727
2009:
Securities Held-to-Maturity
Obligations of states and political subdivisions	$	4,456	$	25	$	—	$	4,481
U.S. Government agencies’ asset-backed securities		502,458		16,512		1		518,969
Total	$	506,914	$	16,537	$	1	$	523,450

Park’s U.S. Government Agency asset-backed securities consist of 15-year mortgage-backed securities and collateralized mortgage obligations (CMOs). At December 31, 2009, the amortized cost of Park’s AFS and held-to-maturity mortgage-backed securities was $868.3 million and $0.2 million, respectively. At December 31, 2009, the amortized cost of Park’s AFS and held-to-maturity CMOs was $7.0 million and $502.3 million, respectively.

Other investment securities (as shown on the Consolidated Balance Sheet) consist of stock investments in the Federal Home Loan Bank and the Federal Reserve Bank. Park owned $62.0 million of Federal Home Loan Bank stock and $6.9 million of Federal Reserve stock at December 31, 2009. Park owned $61.9 million of Federal Home Loan Bank stock and $6.9 million of Federal Reserve Bank stock at December 31, 2008.

Management does not believe any individual unrealized loss as of December 31, 2009 or December 31, 2008, represents an other-than-temporary impairment. The unrealized losses on debt securities are primarily the result of interest rate changes. These conditions will not prohibit Park from receiving its contractual principal and interest payments on these debt securities. The fair value of these debt securities is expected to recover as payments are received on these securities and they approach maturity.

Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.

The following table provides detail on investment securities with unrealized losses aggregated by investment category and length of time the individual securities have been in a continuous loss position at December 31, 2009:

	Less than 12 Months				12 Months or Longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(In thousands)	Value		Losses		Value		Losses		Value		Losses
2009:
Securities Available-for-Sale
Obligations of states and political subdivisions	$	257,206	$	2,693	$	—	$	—	$	257,206	$	2,693
U.S. Government agencies’ asset-backed securities		295		15		—		—		295		15
Other equity securities		—		—		202		56		202		56
Total	$	257,501	$	2,708	$	202	$	56	$	257,703	$	2,764
2009:
Securities Held-to-Maturity
U.S. Government agencies’ asset-backed securities	$	50	$	1	$	—	$	—	$	50	$	1

Investment securities at December 31, 2008 were as follows:

			Gross		Gross
			Unrealized		Unrealized
	Amortized		Holding		Holding		Estimated
(In thousands)	Cost		Gains		Losses		Fair Value
2008:
Securities Available-for-Sale
Obligations of U.S. Treasury and other U.S. Government agencies	$	127,628	$	1,060	$	—	$	128,688
Obligations of states and political subdivisions		26,424		503		33		26,894
U.S. Government agencies’ asset-backed securities		1,357,710		47,050		229		1,404,531
Other equity securities		1,461		428		106		1,783
Total	$	1,513,223	$	49,041	$	368	$	1,561,896
2008:
Securities Held-to-Maturity
Obligations of states and political subdivisions	$	10,294	$	79	$	—	$	10,373
U.S. Government agencies’ asset-backed securities		418,056		5,035		29		423,062
Total	$	428,350	$	5,114	$	29	$	433,435

The following table provides detail on investment securities with unrealized losses aggregated by investment category and length of time the individual securities have been in a continuous loss position at December 31, 2008:

	Less than 12 Months				12 Months or Longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(In thousands)	Value		Losses		Value		Losses		Value		Losses
2008:
Securities Available-for-Sale
Obligations of states and political subdivisions	$	1,135	$	1	$	278	$	32	$	1,413	$	33
U.S. Government agencies’ asset-backed securities		703		6		6,850		223		7,553		229
Other equity securities		17		14		314		92		331		106
Total	$	1,855	$	21	$	7,442	$	347	$	9,297	$	368
2008:
Securities Held-to-Maturity
U.S. Government agencies’ asset-backed securities	$	156	$	1	$	42,863	$	28	$	43,019	$	29

The amortized cost and estimated fair value of investments in debt securities at December 31, 2009, are shown in the following table by contractual maturity or the expected call date, except for asset-backed securities, which are shown as a single total, due to the unpredictability of the timing in principal repayments.

	Amortized		Estimated
(In thousands)	Cost		Fair Value
Securities Available-for-Sale
U.S. Treasury and agencies’ notes:
Due within one year	$	90,000	$	90,389
Due five through ten years*		259,899		257,206
Total	$	349,899	$	347,595
Obligations of states and political subdivisions:
Due within one year	$	10,280	$	10,519
Due one through five years		4,599		4,853
Due over ten years		310		295
Total	$	15,189	$	15,667
U.S. Government agencies’ asset-backed securities:
Total	$	875,331	$	922,903

62

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Amortized		Estimated
(In thousands)	Cost		Fair Value
Securities Held-to-Maturity
Obligations of states and political subdivisions:
Due within one year
Total	$	4,456	$	4,481
U.S. Government agencies’ asset-backed securities:
Total	$	502,458	$	518,969

* Includes callable notes with call dates of 3 months to two years. Management’s current expectation is that these securities could extend to the maturity date, although this expectation could change depending on future changes in the interest rate environment.

Investment securities having a book value of $1,720 million and $1,751 million at December 31, 2009 and 2008, respectively, were pledged to collateralize government and trust department deposits in accordance with federal and state requirements and to secure repurchase agreements sold, and as collateral for Federal Home Loan Bank (FHLB) advance borrowings.

At December 31, 2009, $952 million was pledged for government and trust department deposits, $658 million was pledged to secure repurchase agreements and $110 million was pledged as collateral for FHLB advance borrowings. At December 31, 2008, $939 million was pledged for government and trust department deposits, $664 million was pledged to secure repurchase agreements and $148 million was pledged as collateral for FHLB advance borrowings.

At December 31, 2009, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of shareholders’ equity.

During 2009, Park realized a pre-tax gain of $7.3 million from the sale of $204.3 million of U.S. Government Agency mortgage-backed securities. The book yield on the sold securities was 4.70%. The proceeds from the sale of these investment securities were generally reinvested in U.S. Government Agency issued callable notes. The tax expense related to the net securities gains was $2.57 million for 2009.

During 2008, Park sold $140 million of U.S. Government Agency securities, realizing a pre-tax gain of $1.1 million. These securities were callable during 2008 and were sold with a give up yield of approximately 3.63%. The proceeds from the sale of these investment securities were generally reinvested in U.S. Government Agency 15-year mortgage-backed securities. The tax expense related to the net securities gains was $390 thousand for 2008. No gross losses were realized in 2009 or 2008.

5. LOANS

The composition of the loan portfolio is as follows:

December 31
(In thousands)	2009		2008
Commercial, financial and agricultural	$	751,277	$	714,296
Real estate:
Construction		495,518		533,788
Residential		1,555,390		1,560,198
Commercial		1,130,672		1,035,725
Consumer, net		704,430		643,507
Leases, net		3,145		3,823
Total loans	$	4,640,432	$	4,491,337

Loans are shown net of deferred origination fees, costs and unearned income of $6.3 million at December 31, 2009 and $6.0 million at December 31, 2008.

Overdrawn deposit accounts of $3.3 million and $3.6 million have been reclassified to loans at December 31, 2009 and 2008, respectively.

Under the Corporation’s credit policies and practices, all nonaccrual and restructured commercial, financial, agricultural, construction and commercial real estate loans meet the definition of impaired loans. Additionally, certain consumer loans, residential real estate loans, and lease financing receivables are classified as nonaccrual and are thus included within total nonperforming loans. The majority of the loans deemed impaired were evaluated using the fair value of the collateral as the measurement method.

Nonperforming loans are summarized as follows:

December 31
(In thousands)	2009		2008
Impaired loans:
Nonaccrual	$	201,001	$	138,498
Restructured		142		2,845
Total impaired loans		201,143		141,343
Other nonaccrual loans		32,543		21,014
Total nonaccrual and restructured loans	$	233,686	$	162,357
Loans past due 90 days or more and accruing		14,773		5,421
Total nonperforming loans	$	248,459	$	167,778

Management’s general practice is to proactively charge down impaired loans to the fair value of the underlying collateral. The allowance for loan losses includes specific reserves related to impaired loans at December 31, 2009 and 2008, of $36.7 million and $8.9 million, respectively, related to loans with principal balances of $123.7 million and $64.5 million. The increase in specific reserves in 2009 is primarily related to commercial land and development (CL&D) loans at Vision Bank. The collateral values related to these loans have declined significantly in the current market environment. Management believes it is appropriate to specifically reserve for these declines and continue to evaluate charge-offs in the future as the outcome with respect to the CL&D loans becomes more apparent. In April 2009, Park engaged a third-party specialist to assist in the resolution of impaired loans at Vision Bank. Management is pleased with the success this third-party specialist experienced in the second half of 2009, as they have helped maximize the value of the impaired loans at Vision Bank.

The average balance of impaired loans was $184.7 million, $130.6 million and $51.1 million for 2009, 2008 and 2007, respectively.

Interest income on impaired loans is recognized on a cash basis after all past due and current principal payments have been made. For the year ended December 31, 2009, the Corporation recognized a net reversal to interest income of $1.3 million, consisting of $1.8 million in interest recognized at PNB and $3.1 million in interest reversed at Vision, on loans that were impaired as of the end of the year. For the year ended December 31, 2008, the Corporation recognized $0.9 million in interest income, consisting of $2.8 million in interest recognized at PNB and $1.9 million in interest reversed at Vision. For the year ended December 31, 2007, the Corporation recognized $0.4 million in interest income, consisting of $1.3 million in interest recognized at PNB and $0.9 million in interest reversed at Vision.

Management transfers ownership of a loan to other real estate owned at the time that Park takes the title of the asset. At December 31, 2009 and 2008, Park had $41.2 million and $25.8 million, respectively, of other real estate owned. Other real estate owned at Vision Bank has increased from $19.7 million at December 31, 2008 to $35.2 million at December 31, 2009.

Certain of the Corporation’s executive officers and directors are loan customers of the Corporation’s two banking subsidiaries. As of December 31, 2009 and 2008, loans and lines of credit aggregating approximately $56.8 million and $59.1 million, respectively, were outstanding to such parties. During 2009, $27.9 million of new loans were made to these executive officers and directors and repayments totaled $9.5 million. New loans and repayments for 2008 were $17.4 million and $3.4 million, respectively. Additionally, during 2009, $20.8 million in loans were removed from the aggregate amount reported due to the resignation of certain directors.

63

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. ALLOWANCE FOR LOAN LOSSES

Activity in the allowance for loan losses is summarized as follows:

(In thousands)	2009			2008			2007
Balance, January 1	$	100,088		$	87,102		$	70,500
Allowance for loan losses of acquired banks		—			—			9,334
Provision for loan losses		68,821			70,487			29,476
Losses charged to the reserve		(59,022	)		(62,916	)		(27,776	)
Recoveries		6,830			5,415			5,568
Balance, December 31	$	116,717		$	100,088		$	87,102

The composition of the allowance for loan losses at December 31, 2009 and 2008 were as follows:

December 31, 2009	Outstanding		Allowance
(In thousands)	Loan Balance		for Loan Losses
Performing loans and statistical allocation	$	4,439,289	$	79,996
Impaired loans and specific allocation		201,143		36,721
Total loans and allowance for loan losses	$	4,640,432	$	116,717
Allowance as a percentage of total loans				2.52	%

December 31, 2008	Outstanding		Allowance
(In thousands)	Loan Balance		for Loan Losses
Performing loans and statistical allocation	$	4,348,395	$	91,213
Impaired loans and specific allocation		142,942		8,875
Total loans and allowance for loan losses	$	4,491,337	$	100,088
Allowance as a percentage of total loans				2.23	%

Performing loan balances above include all performing loans at December 31, 2009 and 2008, as well as nonperforming consumer loans. Nonperforming consumer loans are not typically evaluated for impairment, but receive a portion of the statistical allocation of the allowance for loan losses. Impaired loan balances above include all impaired commercial loans at December 31, 2009 and 2008, which are evaluated for impairment in accordance with GAAP (see Note 1 of these Notes to Consolidated Financial Statements).

Included in performing loans at December 31, 2008 was $67.2 million of CL&D loans at Vision Bank that became impaired during 2009. Park recorded charge-offs of $6.8 million in 2009 related to these CL&D loans that became impaired during 2009. Additionally, at December 31, 2009, Park had established a specific allocation of $19.0 million for those CL&D loans that became impaired during 2009. The performing CL&D loans were $132.8 million, $191.7 million and $260.2 million at December 31, 2009, 2008 and 2007, respectively. Generally, Park discontinued origination of new CL&D loans during 2008. Given the run-off nature of the CL&D loan portfolio, management believes the risk of loss and uncertainty within this portfolio declined during 2009.

As a result of the changes in the loan portfolio discussed above, along with management’s utilization of historical loss rates that are comparative to the current period being analyzed, management believes the $11.2 million reduction in the statistical allocation from $91.2 million at December 31, 2008 to $80.0 million at December 31, 2009, is appropriate.

7. PREMISES AND EQUIPMENT

The major categories of premises and equipment and accumulated depreciation are summarized as follows:

December 31
(In thousands)	2009			2008
Land	$	23,257		$	21,799
Buildings		75,583			74,106
Equipment, furniture and fixtures		56,822			52,574
Leasehold improvements		6,080			5,553
Total	$	161,742			154,032
Less accumulated depreciation and amortization		(92,651	)		(85,479	)
Premises and equipment, net	$	69,091		$	68,553

Depreciation and amortization expense amounted to $7.5 million, $7.5 million and $6.5 million for the three years ended December 31, 2009, 2008 and 2007, respectively.

The Corporation and its subsidiaries lease certain premises and equipment accounted for as operating leases. The following is a schedule of the future minimum rental payments required for the next five years under such leases with initial terms in excess of one year:

(In thousands)
2010	$	1,903
2011		1,636
2012		1,064
2013		971
2014		875
Thereafter		2,278
Total	$	8,727

Rent expense was $2.8 million, $2.8 million and $2.7 million, for the three years ended December 31, 2009, 2008 and 2007, respectively.

8. DEPOSITS

At December 31, 2009 and 2008, noninterest bearing and interest bearing deposits were as follows:

December 31
(In thousands)	2009		2008
Noninterest bearing	$	897,243	$	782,625
Interest bearing		4,290,809		3,979,125
Total	$	5,188,052	$	4,761,750

At December 31, 2009, the maturities of time deposits were as follows:

(In thousands)
2010	$	1,657,922
2011		313,051
2012		142,326
2013		48,719
2014		58,072
After 5 years		2,447
Total	$	2,222,537

Maturities of time deposits of $100,000 and over as of December 31, 2009 were:

December 31
(In thousands)
3 months or less	$	338,152
Over 3 months through 6 months		255,585
Over 6 months through 12 months		252,494
Over 12 months		182,814
Total	$	1,029,045

At December 31, 2009, Park had approximately $27.7 million of deposits received from executive officers, directors, and their related interests.

9. SHORT-TERM BORROWINGS

Short-term borrowings were as follows:

December 31
(In thousands)	2009		2008
Securities sold under agreements to repurchase and federal funds purchased	$	294,219	$	284,196
Federal Home Loan Bank advances		30,000		375,000
Total short-term borrowings	$	324,219	$	659,196

64

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The outstanding balances for all short-term borrowings as of December 31, 2009, 2008 and 2007 and the weighted-average interest rates as of and paid during each of the years then ended were as follows:

	Repurchase						Demand
	Agreements			Federal			Notes
	and Federal			Home Loan			Due U.S.
	Funds			Bank			Treasury
(In thousands)	Purchased			Advances			and Other
2009:
Ending balance	$	294,219		$	30,000		$	—
Highest month-end balance		303,972			442,000			—
Average daily balance		281,941			137,792			—
Weighted-average interest rate:
As of year-end		0.49	%		0.49	%		—
Paid during the year		0.82	%		0.66	%		—
2008:
Ending balance	$	284,196		$	375,000		$	—
Highest month-end balance		294,226			572,000			30,414
Average daily balance		256,877			336,561			12,008
Weighted-average interest rate:
As of year-end		1.12	%		0.71	%		0.00	%
Paid during the year		1.81	%		2.80	%		3.43	%
2007:
Ending balance	$	253,289		$	502,000		$	4,029
Highest month-end balance		259,065			502,000			8,058
Average daily balance		230,651			260,140			3,369
Weighted-average interest rate:
As of year-end		3.27	%		4.42	%		3.59	%
Paid during the year		3.67	%		5.19	%		4.78	%

At December 31, 2009, 2008 and 2007, Federal Home Loan Bank (FHLB) advances were collateralized by investment securities owned by the Corporation’s subsidiary banks and by various loans pledged under a blanket agreement by the Corporation’s subsidiary banks.

See Note 4 of these Notes to Consolidated Financial Statements for the amount of investment securities that are pledged. At December 31, 2009, $1,959 million of commercial real estate and residential mortgage loans were pledged under a blanket agreement to the FHLB by Park’s subsidiary banks. At December 31, 2008, $1,992 million of commercial real estate and residential mortgage loans were pledged under a blanket agreement to the FHLB by Park’s subsidiary banks.

Note 4 states that $658 million and $664 million of securities were pledged to secure repurchase agreements as of December 31, 2009 and 2008, respectively. Park’s repurchase agreements in short-term borrowings consist of customer accounts and securities which are pledged on an individual security basis. Park’s repurchase agreements with a third-party financial institution are classified in long-term debt. See Note 10 of these Notes to Consolidated Financial Statements.

10. LONG-TERM DEBT

Long-term debt is listed below:

	2009					2008
December 31	Outstanding		Average			Outstanding		Average
(In thousands)	Balance		Rate			Balance		Rate
Total Federal Home Loan Bank advances by year of maturity:
2009	$	—		—		$	6,208		3.79	%
2010		17,560		5.68	%		217,442		1.09	%
2011		16,460		1.99	%		1,442		4.00	%
2012		15,500		2.09	%		488		3.87	%
2013		500		4.03	%		485		4.03	%
2014		500		4.23	%		485		4.23	%
Thereafter		302,371		3.02	%		302,464		3.02	%
Total	$	352,891		3.05	%	$	529,014		2.24	%
Total broker repurchase agreements by year of maturity:
2009	$	—		—		$	25,000		3.79	%
After 2014		300,000		4.04	%		300,000		4.04	%
Total	$	300,000		4.04	%	$	325,000		4.02	%
Other borrowings by year of maturity:
2009	$	—		—		$	54		7.97	%
2010		59		7.97	%		59		7.97	%
2011		63		7.97	%		63		7.97	%
2012		69		7.97	%		69		7.97	%
2013		74		7.97	%		74		7.97	%
2014		81		7.97	%		81		7.97	%
Thereafter		1,144		7.97	%		1,144		7.97	%
Total	$	1,490		7.97	%	$	1,544		7.97	%
Total combined long-term debt by year of maturity:
2009	$	—		—		$	31,262		3.80	%
2010		17,619		5.69	%		217,501		1.09	%
2011		16,523		2.01	%		1,505		4.17	%
2012		15,569		2.12	%		557		4.38	%
2013		574		4.54	%		559		4.55	%
2014		581		4.75	%		566		4.77	%
Thereafter		603,515		3.54	%		603,608		3.54	%
Total	$	654,381		3.52	%	$	855,558		2.93	%

Other borrowings consist of a capital lease obligation of $1.5 million, pertaining to an arrangement that was part of the acquisition of Vision on March 9, 2007 and its associated minimum lease payments.

Park had approximately $603.5 million of long-term debt at December 31, 2009 with a contractual maturity longer than five years. However, approximately $600 million of this debt is callable by the issuer in 2010.

At December 31, 2009 and 2008, Federal Home Loan Bank (FHLB) advances were collateralized by investment securities owned by the Corporation’s subsidiary banks and by various loans pledged under a blanket agreement by the Corporation’s subsidiary banks.

See Note 4 of these Notes to Consolidated Financial Statements for the amount of investment securities that are pledged. See Note 9 of these Notes to Consolidated Financial Statements for the amount of commercial real estate and residential mortgage loans that are pledged to the FHLB.

11. SUBORDINATED DEBENTURES

As part of the acquisition of Vision on March 9, 2007, Park became the successor to Vision under (i) the Amended and Restated Trust Agreement of Vision Bancshares Trust I (the “Trust”), dated as of December 5, 2005, (ii) the Junior Subordinated Indenture, dated as of December 5, 2005, and (iii) the Guarantee Agreement, also dated as of December 5, 2005.

On December 1, 2005, Vision formed a wholly-owned Delaware statutory business trust, Vision Bancshares Trust I (“Trust I”), which issued $15.0 million of the Trust’s floating rate preferred securities (the “Trust Preferred Securities”) to institutional investors. These Trust Preferred Securities qualify as Tier I capital under Federal Reserve Board guidelines. All of the common securities of Trust I are owned by Park. The proceeds from the issuance of the common securities and the Trust Preferred Securities were used by Trust I to purchase $15.5 million of junior subordinated notes, which carry a floating rate based on a three-month LIBOR plus 148 basis points. The debentures represent the sole asset of Trust I. The Trust Preferred Securities accrue and pay distributions at a floating rate of three-month LIBOR plus 148 basis points per annum. The Trust Preferred Securities are mandatorily redeemable upon maturity of the notes in December 2035, or upon earlier redemption as provided in the notes. Park has the right to redeem the notes purchased by Trust I in whole or in part, on or after December 30, 2010. As specified in the indenture, if the notes are redeemed prior to maturity, the redemption price will be the principal amount, plus any unpaid accrued interest.

In accordance with GAAP, Trust I is not consolidated with Park’s financial statements, but rather the subordinated notes are reflected as a liability.

65

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On December 28, 2007, one of Park’s wholly-owned subsidiary banks, The Park National Bank (“PNB”), entered into a Subordinated Debenture Purchase Agreement with USB Capital Funding Corp. Under the terms of the Purchase Agreement, USB Capital Funding Corp. purchased from PNB a Subordinated Debenture dated December 28, 2007, in the principal amount of $25 million, which matures on December 29, 2017. The Subordinated Debenture is intended to qualify as Tier 2 capital under the applicable regulations of the Office of the Comptroller of the Currency of the United States of America (the “OCC”). The Subordinated Debenture accrues and pays interest at a floating rate of three-month LIBOR plus 200 basis points. The Subordinated Debenture may not be prepaid in any amount prior to December 28, 2012; however, subsequent to this date, PNB may prepay, without penalty, all or a portion of the principal amount outstanding in a minimum amount of $5 million or any larger multiple of $5 million. The three-month LIBOR rate was 0.25% at December 31, 2009. On January 2, 2008, Park entered into an interest rate swap transaction, which was designated as a cash flow hedge against the variability of cash flows related to the Subordinated Debenture of $25 million (see Note 19 of these Notes to Consolidated Financial Statements).

On December 23, 2009, Park entered into a Note Purchase Agreement, dated December 23, 2009, with 38 purchasers (the “Purchasers”). Under the terms of the Note Purchase Agreement, the Purchasers purchased from Park an aggregate principal amount of $35.25 million of 10% Subordinated Notes due December 23, 2019 (the “Notes”). The Notes are intended to qualify as Tier 2 Capital under applicable rules and regulations of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”). The Notes may not be prepaid in any amount prior to December 23, 2014, however, subsequent to this date, Park may prepay, without penalty, all or a portion of the principal amount outstanding. Of the $35.25 million in Subordinated Notes, $14.05 million were purchased by related parties.

12. STOCK OPTION PLANS

The Park National Corporation 2005 Incentive Stock Option Plan (the “2005 Plan”) was adopted by the Board of Directors of Park on January 18, 2005, and was approved by the shareholders at the Annual Meeting of Shareholders on April 18, 2005. Under the 2005 Plan, 1,500,000 common shares are authorized for delivery upon the exercise of incentive stock options. All of the common shares delivered upon the exercise of incentive stock options granted under the 2005 Plan are to be treasury shares. At December 31, 2009, 1,245,130 common shares were available for future grants under the 2005 Plan. Under the terms of the 2005 Plan, incentive stock options may be granted at a price not less than the fair market value at the date of the grant, and for an option term of up to five years. No additional incentive stock options may be granted under the 2005 Plan after January 17, 2015.

The Park National Corporation 1995 Incentive Stock Option Plan (the “1995 Plan”) was adopted April 17, 1995 and amended April 20, 1998 and April 16, 2001. Pursuant to the terms of the 1995 Plan, all of the common shares delivered upon exercise of incentive stock options were to be treasury shares. No further incentive stock options may be granted under the 1995 Plan.

The fair value of each incentive stock option granted is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions noted in the table below. Expected volatilities are based on historical volatilities of Park’s common stock. The Corporation uses historical data to estimate option exercise behavior. The expected term of incentive stock options granted is based on historical data and represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the incentive stock options is based on the U.S. Treasury yield curve in effect at the time of the grant.

The fair value of incentive stock options granted was determined using the following weighted-average assumptions as of the grant date. Park did not grant any options in 2009 or 2008.

	2009		2008		2007
Risk-free interest rate		—		—		3.99	%
Expected term (years)		—		—		5.0
Expected stock price volatility		—		—		19.5	%
Dividend yield		—		—		4.00	%

The activity in Park’s stock option plan is listed in the following table for 2009:

			Weighted Average
	Number		Exercise Price per Share
January 1, 2009		452,419	$	102.33
Granted		—		—
Exercised		—		—
Forfeited/Expired		197,527		108.19
December 31, 2009		254,892	$	97.78
Exercisable at year end				254,892
Weighted-average remaining contractual life			1.25 years
Aggregate intrinsic value			$	0

Information related to Park’s stock option plans for the past three years is listed in the following table for 2009:

(In thousands)	2009		2008		2007
Intrinsic value of options exercised	$	—	$	—	$	47
Cash received from option exercises		—		—		296
Tax benefit realized from option exercises		—		—		—
Weighted-average fair value of options granted per share	$	—	$	—	$	9.92

Total compensation cost that has been charged against income pertaining to the above plans was $893,000 for 2007. No expense was recognized for 2009 or 2008. The 90,000 options granted in 2007 vested immediately upon grant.

13. BENEFIT PLANS

The Corporation has a noncontributory Defined Benefit Pension Plan (the “Pension Plan”) covering substantially all of the employees of the Corporation and its subsidiaries. The plan provides benefits based on an employee’s years of service and compensation.

The Corporation’s funding policy is to contribute annually an amount that can be deducted for federal income tax purposes using a different actuarial cost method and different assumptions from those used for financial reporting purposes. Management did not make a contribution to the Pension Plan in 2008; however, management made a $20 million contribution in January 2009, which was deductible on the 2008 tax return and as such is reflected as part of the deferred tax liabilities at December 31, 2008. In addition, management made a $10 million contribution in November 2009, which will be deductible on the 2009 tax return and as such is reflected as part of deferred tax liabilities at December 31, 2009. See Note 14 of these Notes to Consolidated Financial Statements. Park does not expect to make any contributions to the Pension Plan in 2010.

Using an accrual measurement date of December 31, 2009 and 2008, plan assets and benefit obligation activity for the Pension Plan are listed below:

(In thousands)	2009			2008
Change in fair value of plan assets
Fair value at beginning of measurement period	$	38,506		$	60,116
Actual return on plan assets		11,689			(16,863	)
Company contributions		30,000			0
Benefits paid		(4,380	)		(4,747	)
Fair value at end of measurement period	$	75,815		$	38,506

66

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands)	2009			2008
Change in benefit obligation
Projected benefit obligation at beginning of measurement period	$	57,804		$	51,914
Service cost		3,813			4,313
Interest cost		3,432			3,946
Actuarial (gain) or loss		(327	)		2,378
Benefits paid		(4,380	)		(4,747	)
Projected benefit obligation at the end of measurement period	$	60,342		$	57,804
Funded status at end of year (assets less benefit obligation)	$	15,473		$	(19,298	)

The asset allocation for the Pension Plan as of the measurement date, by asset category, is as follows:

				Percentage of Plan Assets
Asset Category	Target Allocation			2009			2008
Equity securities		50% – 100	%		83	%		79	%
Fixed income and cash equivalents	remaining balance				17	%		21	%
Total		—			100	%		100	%

The investment policy, as established by the Retirement Plan Committee, is to invest assets per the target allocation stated above. Assets will be reallocated periodically based on the investment strategy of the Retirement Plan Committee. The investment policy is reviewed periodically.

The expected long-term rate of return on plan assets was 7.75% in 2009 and 2008. This return was based on the expected return of each of the asset categories, weighted based on the median of the target allocation for each class.

The accumulated benefit obligation for the Pension Plan was $52.6 million and $49.5 million at December 31, 2009 and 2008, respectively.

On November 17, 2009, the Park Pension Plan completed the purchase of 115,800 common shares of Park for $7.0 million or $60.45 per share. At December 31, 2009, the fair value of the 115,800 shares held by the plan was $6.8 million, or $58.88 per share.

The weighted average assumptions used to determine benefit obligations at December 31, 2009 and December 31, 2008 were as follows:

	2009			2008
Discount rate		6.00	%		6.00	%
Rate of compensation increase		3.00	%		3.00	%

The estimated future pension benefit payments reflecting expected future service for the next ten years are shown below in thousands:

2010	$	1,252
2011		1,500
2012		1,884
2013		2,280
2014		2,694
2015 – 2019		20,538
Total	$	30,148

The following table shows ending balances of accumulated other comprehensive income (loss) at December 31, 2009 and 2008.

(In thousands)	2009			2008
Prior service cost	$	(115	)	$	(149	)
Net actuarial loss		(20,654	)		(30,286	)
Total		(20,769	)		(30,435	)
Deferred taxes		7,269			10,652
Accumulated other comprehensive (loss)	$	(13,500	)	$	(19,783	)

Using an actuarial measurement date of December 31 for 2009 and 2008 and September 30 for 2007, components of net periodic benefit cost and other amounts recognized in other comprehensive income were as follows:

(In thousands)	2009			2008			2007
Components of net periodic benefit cost and other amounts recognized in Other Comprehensive Income
Service cost	$	(3,813	)	$	(3,451	)	$	(3,238	)
Interest cost		(3,432	)		(3,157	)		(3,104	)
Expected return on plan assets		4,487			4,608			4,263
Amortization of prior service cost		(34	)		(34	)		(34	)
Recognized net actuarial loss		(2,041	)		—			(551	)
Net periodic benefit cost	$	(4,833	)	$	(2,034	)	$	(2,664	)
Change to net actuarial gain/(loss) for the period	$	7,591		$	(25,000	)	$	4,440
Amortization of prior service cost		34			42			34
Amortization of net loss		2,041			—			551
Total recognized in other comprehensive income/(loss)		9,666			(24,958	)		5,025
Total recognized in net benefit cost and other comprehensive income/(loss)	$	4,833		$	(26,992	)	$	2,361

The estimated prior service costs for the Pension Plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is $22 thousand. The estimated net actuarial (loss) expected to be recognized in the next fiscal year is $(1.1) million.

The weighted average assumptions used to determine net periodic benefit cost for the years ended December 31, 2009 and 2008, are listed below:

	2009			2008
Discount rate		6.00	%		6.25	%
Rate of compensation increase		3.00	%		3.00	%
Expected long-term return on plan assets		7.75	%		7.75	%

Management believes the 7.75% expected long-term rate of return is an appropriate assumption given historical performance of the S&P 500 Index, which management believes is a good indicator of future performance of Pension Plan assets.

The Pension Plan maintains cash in a Park National Bank savings account, with a balance of $1.96 million at December 31, 2009.

GAAP defines fair value as the price that would be received by Park for an asset or paid by Park to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date, using the most advantageous market for the asset or liability. The fair values of equity securities, consisting of mutual fund investments and common stock held by the Pension Plan and the fixed income and cash equivalents, are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs). The market value of Pension Plan assets at December 31, 2009 was $75.8 million. At December 31, 2009, $63.0 million of investments in the Pension Plan are categorized as Level 1 inputs; $12.8 million of plan investments in corporate and U.S. government agency bonds are categorized as Level 2 inputs, as fair value is based on quoted market prices of comparable instruments; and no investments are categorized as Level 3 inputs.

The Corporation has a voluntary salary deferral plan covering substantially all of the employees of the Corporation and its subsidiaries. Eligible employees may contribute a portion of their compensation subject to a maximum statutory limitation. The Corporation provides a matching contribution established annually by the Corporation. Contribution expense for the Corporation was $1.5 million, $2.0 million and $1.9 million for 2009, 2008 and 2007, respectively.

The Corporation has a Supplemental Executive Retirement Plan (SERP) covering certain key officers of the Corporation and its subsidiaries with defined pension benefits in excess of limits imposed by federal tax law. At December 31, 2009 and 2008, the accrued benefit cost for the SERP totaled $7.4 million and $7.6 million, respectively. The expense for the Corporation was $0.5 million, $0.6 million and $0.7 million for 2009, 2008, and 2007, respectively.

67

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14. INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Corporation’s deferred tax assets and liabilities are as follows:

December 31
(in thousands)	2009		2008
Deferred tax assets:
Allowance for loan losses	$	42,236	$	35,929
Accumulated other comprehensive loss — interest rate swap		519		678
Accumulated other comprehensive loss — pension plan		7,269		10,652
Intangible assets		2,756		3,357
Deferred compensation		4,348		4,539
OREO devaluations		2,380		18
State net operating loss carryforwards		1,725		1,071
Other		5,273		4,604
Total deferred tax assets	$	66,506	$	60,848
Deferred tax liabilities:
Accumulated other comprehensive income — unrealized gains on securities	$	16,221	$	17,036
Deferred investment income		10,201		11,168
Pension plan		12,664		10,875
Mortgage servicing rights		3,773		2,907
Purchase accounting adjustments		3,228		4,493
Other		1,285		1,440
Total deferred tax liabilities	$	47,372	$	47,919
Net deferred tax assets	$	19,134	$	12,929

Park has determined that it is not required to establish a valuation allowance against deferred tax assets in accordance with GAAP since it is more likely than not that the deferred tax assets will be fully realized in future periods.

The components of the provision for federal and state income taxes are shown below:

December 31
(in thousands)	2009			2008			2007
Currently payable
Federal	$	32,148		$	23,645		$	37,692
State		(273	)		(44	)		117
Deferred
Federal		(6,745	)		697			(7,269	)
State		(2,187	)		(2,287	)		(570	)
Total	$	22,943		$	22,011		$	29,970

The following is a reconciliation of federal income tax expense to the amount computed at the statutory rate of 35% for the years ended December 31, 2009, 2008 and 2007.

December 31	2009			2008			2007
Statutory federal corporate tax rate		35.0	%		35.0	%		35.0	%
Changes in rates resulting from:
Tax-exempt interest income, net of disallowed interest		(1.3	)%		(3.5	)%		(2.6	)%
Bank owned life insurance		(1.8	)%		(5.0	)%		(2.8	)%
Tax credits (low income housing)		(4.8	)%		(11.7	)%		(7.5	)%
Goodwill impairment		—			50.7	%		35.9	%
State income tax expense, net of federal benefit		(1.6	)%		(4.2	)%		(.6	)%
Other		(1.9	)%		.3	%		(.5	)%
Effective tax rate		23.6	%		61.6	%		56.9	%

Park and its Ohio-based subsidiaries do not pay state income tax to the state of Ohio, but pay a franchise tax based on their year-end equity. The franchise tax expense is included in the state tax expense and is shown in “state taxes” on Park’s Consolidated Statements of Income. Vision Bank is subject to state income tax, in the states of Alabama and Florida. State income tax benefit for Vision Bank is included in “income taxes” on Park’s Consolidated Statements of Income. Vision Bank’s 2009 state income tax benefit was $2.46 million.

Unrecognized Tax Benefits

The following is a reconciliation of the beginning and ending amount of unrecognized tax benefits.

(In thousands)	2009			2008			2007
January 1 Balance	$	783		$	828		$	713
Additions based on tax positions related to the current year		64			102			250
Additions for tax positions of prior years		—			18			17
Reductions for tax positions of prior years		(189	)		(15	)		(24	)
Reductions due to the statute of limitations		(63	)		(150	)		(128	)
December 31 Balance	$	595		$	783		$	828

The amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in the future periods at December 31, 2009, 2008 and 2007 was $504,000, $704,000 and $711,000, respectively. Park does not expect the total amount of unrecognized tax benefits to significantly increase or decrease during the next year.

The (income)/expense related to interest and penalties recorded in the Consolidated Statements of Income for the years ended December 31, 2009, 2008 and 2007 was $(18,000), $16,000 and $(3,000), respectively. The amount accrued for interest and penalties at December 31, 2009, 2008 and 2007 was $71,000, $89,000 and $73,000, respectively.

Park and its subsidiaries are subject to U.S. federal income tax. Some of Park’s subsidiaries are subject to state income tax in the following states: Alabama, Florida, California, Kentucky, New Jersey and Pennsylvania. Park is no longer subject to examination by federal or state taxing authorities for the tax year 2005 and the years prior.

The 2006 and 2007 federal income tax returns of Vision Bancshares, Inc. are currently under examination by the Internal Revenue Service. A preliminary settlement has been agreed upon and is awaiting final approval by the Service. All tax and interest relating to the examination has been accrued under ASC 740-10, unrecognized tax benefits.

15. OTHER COMPREHENSIVE INCOME (LOSS)

Other comprehensive income (loss) components and related taxes are shown in the following table for the years ended December 31, 2009, 2008 and 2007.

Year ended December 31	Before-Tax			Tax			Net-of-Tax
(In thousands)	Amount			Expense			Amount
2009:
Unrealized gains on available-for-sale securities	$	5,012		$	1,754		$	3,258
Reclassification adjustment for gains realized in net income		(7,340	)		(2,569	)		(4,771	)
Unrealized net holding gain on cash flow hedge		454			159			295
Changes in pension plan assets and benefit obligations recognized in Other Comprehensive Income		9,666			3,383			6,283
Other comprehensive income	$	7,792		$	2,727		$	5,065
2008:
Unrealized gains on available-for-sale securities	$	48,324		$	16,913		$	31,411
Reclassification adjustment for gains realized in net income		(1,115	)		(390	)		(725	)
Unrealized net holding loss on cash flow hedge		(1,937	)		(678	)		(1,259	)
Changes in pension plan assets and benefit obligations recognized in Other Comprehensive Income		(24,958	)		(8,735	)		(16,223	)
Other comprehensive income	$	20,314		$	7,110		$	13,204

68

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31	Before-Tax		Tax		Net-of-Tax
(In thousands)	Amount		Expense		Amount
2007:
Unrealized gains on available-for-sale securities	$	26,071	$	9,125	$	16,946
Changes in pension plan assets and benefit obligations recognized in Other Comprehensive Income		5,025		1,759		3,266
Other comprehensive income	$	31,096	$	10,884	$	20,212

The ending balance of each component of accumulated other comprehensive income was as follows as of December 31:

(In thousands)	2009			2008
Pension benefit adjustments	$	(13,500	)	$	(19,783	)
Unrealized net holding loss on cash flow hedge		(964	)		(1,259	)
Unrealized net holding gains on A-F-S Securities		30,125			31,638
Total accumulated other comprehensive income	$	15,661		$	10,596

16. EARNINGS PER COMMON SHARE

GAAP requires the reporting of basic and diluted earnings per common share. Basic earnings per common share excludes any dilutive effects of options, warrants and convertible securities.

The following table sets forth the computation of basic and diluted earnings per common share:

Year ended December 31
(in thousands, except per share data)	2009		2008		2007
Numerator:
Net income available to common shareholders	$	68,430	$	13,566	$	22,707
Denominator:
Basic earnings per common share:
Weighted-average shares		14,206,335		13,965,219		14,212,805
Effect of dilutive securities — stock options and warrants		—		114		4,678
Diluted earnings per common share:
Adjusted weighted-average shares and assumed conversions		14,206,335		13,965,333		14,217,483
Earnings per common share:
Basic earnings per common share	$	4.82	$	0.97	$	1.60
Diluted earnings per common share	$	4.82	$	0.97	$	1.60

For the years ended December 31, 2009 and 2008, options to purchase a weighted average of 350,608 and 500,765 common shares, respectively, were outstanding under Park’s stock option plans. A warrant to purchase 227,376 common shares was outstanding at both December 31, 2009 and 2008 as a result of Park’s participation in the CPP. In addition, warrants to purchase an aggregate of 500,000 common shares were outstanding at December 31, 2009 as a result of the issuance of common stock and warrants which closed on October 30, 2009. The common shares represented by the options and the warrants at December 31, 2009 and 2008, totaling a weighted average of 662,915 and 505,749, respectively, were not included in the computation of diluted earnings per common share because the respective exercise prices exceeded the market value of the underlying common shares such that their inclusion would have had an anti-dilutive effect.

17. DIVIDEND RESTRICTIONS

Bank regulators limit the amount of dividends a subsidiary bank can declare in any calendar year without obtaining prior approval. At December 31, 2009, approximately $47.7 million of the total stockholders’ equity of The Park National Bank was available for the payment of dividends to the Corporation, without approval by the applicable regulatory authorities. Vision Bank is currently not permitted to pay dividends to the Corporation.

18. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND FINANCIAL INSTRUMENTS WITH CONCENTRATIONS OF CREDIT RISK

The Corporation is 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 financial statements.

The Corporation’s exposure to credit loss 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. The Corporation 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:

December 31
(in thousands)	2009		2008
Loan commitments	$	955,257	$	1,143,280
Standby letters of credit		36,340		25,353

The loan commitments are generally for variable rates of interest.

The Corporation grants retail, commercial and commercial real estate loans to customers primarily located in Ohio, Baldwin County, Alabama and the panhandle of Florida. The Corporation evaluates each customer’s credit-worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Corporation upon extension of credit, is based on management’s credit evaluation of the customer. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, and income-producing commercial properties.

Although the Corporation has a diversified loan portfolio, a substantial portion of the borrowers’ ability to honor their contracts is dependent upon the economic conditions in each borrower’s geographic location and industry.

19. DERIVATIVE INSTRUMENTS

GAAP establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. As required by GAAP, the Company records all derivatives on the Consolidated Balance Sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivatives and the resulting designation. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivatives is initially reported in other comprehensive income (outside of earnings) and subsequently reclassified into earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivatives is recognized directly in earnings. The Company assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged item or transaction.

During the first quarter of 2008, the Company executed an interest rate swap to hedge a $25 million floating-rate subordinated debenture that was entered into by Park National Bank during the fourth quarter of 2007. The Company’s objective in using this derivative was to add stability to interest expense and to manage its exposure to interest rate risk. Our interest rate swap involves the

69

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

receipt of variable-rate amounts in exchange for fixed-rate payments over the life of the agreement without exchange of the underlying principal amount, and has been designated as a cash flow hedge.

As of December 31, 2009 and 2008, no derivatives were designated as fair value hedges or hedges of net investments in foreign operations. Additionally, the Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as hedges.

At December 31, 2009 and 2008, the derivative’s fair value of $(1.5) million and $(1.9) million, respectively, was included in other liabilities. No hedge ineffectiveness on the cash flow hedge was recognized during the twelve months ended December 31, 2009 or 2008. At December 31, 2009, the variable rate on the $25 million subordinated debenture was 2.25% (LIBOR plus 200 basis points) and Park was paying 6.01% (4.01% fixed rate on the interest rate swap plus 200 basis points).

For the twelve months ended December 31, 2009 and 2008, the change in the fair value of the derivative designated as a cash flow hedge reported in other comprehensive income (loss) was $295 thousand (net of taxes of $159 thousand) and $(1.3) million (net of taxes of $(678) thousand), respectively. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.

In connection with the sale of Park’s Class B Visa shares, 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 December 31, 2009, the fair value of the swap liability of $0.5 million is an estimate of the exposure based upon probability-weighted potential Visa litigation losses.

20. LOAN SERVICING

Park serviced sold mortgage loans of $1,518 million at December 31, 2009 compared to $1,369 million at December 31, 2008, and $1,403 million at December 31, 2007. At December 31, 2009, $53 million of the sold mortgage loans were sold with recourse compared to $65 million at December 31, 2008. Management closely monitors the delinquency rates on the mortgage loans sold with recourse. At December 31, 2009, management determined that no liability was deemed necessary for these loans.

Park capitalized $5.5 million in mortgage servicing rights in 2009, $1.5 million in 2008 and $1.6 million in 2007. Park’s amortization of mortgage servicing rights was $4.0 million in 2009 and $1.7 million in both 2008 and 2007. The amortization of mortgage loan servicing rights is included within “Other Service Income”. Generally, mortgage servicing rights are capitalized and amortized on an individual sold loan basis. When a sold mortgage loan is paid off, the related mortgage servicing rights are fully amortized.

Activity for mortgage servicing rights and the related valuation allowance follows:

December 31
(In thousands)	2009			2008
Servicing rights:
Beginning of year	$	8,306		$	10,204
Additions		5,480			1,481
Amortized to expense		(4,077	)		(1,734	)
Change in valuation allowance		1,071			(1,645	)
End of year	$	10,780		$	8,306
Valuation allowance:
Beginning of year	$	1,645		$	—
(Reductions)/Additions expensed		(1,071	)		1,645
End of year	$	574		$	1,645

21. FAIR VALUES

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 the entity has the ability to access as of the measurement date.

• Level 2: Level 1 inputs for assets or liabilities that are not actively traded. Also consists of an observable market price for a similar asset or liability. This includes the use of “matrix pricing” used to value debt securities absent the exclusive use of quoted prices.

• Level 3: Consists of unobservable inputs that are used to measure fair value when observable market inputs are not available. This could include the use of internally developed models, financial forecasting, etc.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability 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 impaired loans is based on the fair value of the underlying collateral, which is estimated through third party appraisals or internal estimates of collateral values.

Assets and Liabilities Measured on a Recurring Basis:

The following table presents financial assets and liabilities measured on a recurring basis:

Fair Value Measurements at December 31, 2009 Using:

									Balance at
(In thousands)	(Level 1)		(Level 2)			(Level 3)			12/31/09
ASSETS
Investment Securities
Obligations of U.S. Treasury and Other U.S. Government sponsored entities	$	—	$	347,595		$	—		$	347,595
Obligations of states and political subdivisions		—		12,916			2,751			15,667
U.S. Government sponsored entities’ asset-backed securities		—		922,903			—			922,903
Equity securities		1,562		—			—			1,562
Mortgage loans held for sale		—		9,551			—			9,551
Mortgage IRLCs		—		214			—			214
LIABILITIES
Interest rate swap	$	—	$	(1,483	)	$	—		$	(1,483	)
Fair value swap		—		—			(500	)		(500	)

Fair Value Measurements at December 31, 2008 Using:

								Balance at
(In thousands)	(Level 1)		(Level 2)			(Level 3)		12/31/08
ASSETS
Investment Securities
Obligations of U.S. Treasury and Other U.S. Government sponsored entities	$	—	$	128,688		$	—	$	128,688
Obligations of states and political subdivisions		—		24,189			2,705		26,894
U.S. Government sponsored entities’ asset-backed securities		—		1,404,531			—		1,404,531
Equity securities		1,783		—			—		1,783
LIABILITIES
Interest rate swap	$	—	$	(1,937	)	$	—	$	(1,937	)

70

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Investment securities: Fair values for investment securities are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments. The Fair Value Measurements table on the previous page excludes Park’s Federal Home Loan Bank stock and Federal Reserve Bank stock, which are carried at the redemption value, as it is not practicable to calculate their fair values. For securities where quoted prices or market prices of similar securities are not available, which include municipal securities, fair values are calculated using discounted cash flows.

Interest rate swaps: The fair value of interest rate swaps represents the estimated amount Park would pay or receive to terminate the agreements, considering current interest rates and the current creditworthiness of the counterparties.

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.

Interest Rate Lock Commitments (IRLCs): 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 as of December 31, 2009 and at the lower of cost or fair value at December 31, 2008. On January 1, 2009, Park elected the fair value option of accounting for mortgage loans held for sale. Mortgage loans held for sale are estimated using security prices for similar product types, and therefore, are classified in Level 2.

The table below is a reconciliation of the beginning and ending balances of the Level 3 inputs for the years ended December 31, 2009 and 2008, for financial instruments measured on a recurring basis and classified as Level 3:

Level 3 Fair Value Measurements

Year ended December 31	A-F-S			Fair Value
(in thousands)	Securities			Swap
Beginning Balance at December 31, 2008	$	2,705		$	—
Total gains/(losses)
Included in earnings		—			—
Included in Other Comprehensive Income		46			—
Fair value swap		—			(500	)
Balance at December 31, 2009	$	2,751		$	(500	)
Balance at December 31, 2007	$	2,969		$	—
Total gains/(losses)
Included in earnings		—			—
Included in Other Comprehensive Income		(264	)		—
Balance at December 31, 2008	$	2,705		$	—

The following table presents financial assets and liabilities measured on a nonrecurring basis:

Fair Value Measurements at December 31, 2009 Using:

							Balance at
(In thousands)	(Level 1)		(Level 2)		(Level 3)		12/31/09
Impaired loans	$	—	$	—	$	109,818	$	109,818
Mortgage servicing rights		—		10,780		—		10,780
Other real estate owned		—		—		41,240		41,240

Fair Value Measurements at December 31, 2008 Using:

							Balance at
(In thousands)	(Level 1)		(Level 2)		(Level 3)		12/31/08
Impaired loans	$	—	$	—	$	75,942	$	75,942
Mortgage servicing rights		—		8,306		—		8,306
Other real estate owned		—		—		25,848		25,848

Impaired loans, which are usually measured for impairment using the fair value of collateral, had a carrying amount of $201.1 million at December 31, 2009, after a partial charge-off of $43.4 million. In addition, these loans have a specific valuation allowance of $36.7 million. Of the $201.1 million impaired loan portfolio, $109.8 million were carried at fair value, as a result of the aforementioned charge-offs and specific valuation allowance. The remaining $91.3 million of impaired loans are carried at cost, as the fair value exceeds the book value for each individual credit. At December 31, 2008, impaired loans had a carrying amount of $142.9 million. Of these, $75.9 million were carried at fair value, as a result of partial charge-offs of $30.0 million and a specific valuation allowance of $8.9 million. The impact of changes in the specific valuation allowance for the year ended December 31, 2009 was $27.9 million.

Mortgage servicing rights (MSRs), which are carried at lower of cost or fair value, were recorded at a fair value of $10.8 million, including a valuation allowance of $0.6 million, at December 31, 2009. 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. Accordingly, MSRs are classified Level 2. At December 31, 2008, MSRs were recorded at a fair value of $8.3 million, including a valuation allowance of $1.6 million.

Other real estate owned (OREO) is recorded at fair value based on property appraisals, less estimated selling costs, at the date of transfer. 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. At December 31, 2009 and 2008, the estimated fair value of OREO, less estimated selling costs amounted to $41.2 million and $25.8 million, respectively. The financial impact of OREO valuation adjustments for the year ended December 31, 2009 was $6.8 million.

The following methods and assumptions were used by the Corporation in estimating its fair value disclosures for assets and liabilities not discussed above:

Cash and cash equivalents: The carrying amounts reported in the Consolidated Balance Sheet for cash and short-term instruments approximate those assets’ fair values.

Interest bearing deposits with other banks: The carrying amounts reported in the Consolidated Balance Sheet for interest bearing deposits with other banks approximate those assets’ fair values.

Loans receivable: For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. The fair values for certain mortgage loans (e.g., one-to-four family residential) are based on quoted market prices of similar loans sold in conjunction with securitization transactions, adjusted for differences in loan characteristics. The fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality.

Off-balance sheet instruments: Fair values for the Corporation’s loan commitments and standby letters of credit are based on the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The carrying amount and fair value are not material.

Deposit liabilities: The fair values disclosed for demand deposits (e.g., interest and non-interest checking, savings, and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). The carrying amounts for variable-rate, fixed-term certificates of deposit approximate their fair values at the reporting date. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities of time deposits.

Short-term borrowings: The carrying amounts of federal funds purchased, borrowings under repurchase agreements and other short-term borrowings approximate their fair values.

Long-term debt: Fair values for long-term debt are estimated using a discounted cash flow calculation that applies interest rates currently being offered on long-term debt to a schedule of monthly maturities.

Subordinated debentures/notes: Fair values for subordinated debentures and notes are estimated using a discounted cash flow calculation that applies

71

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

interest rate spreads currently being offered on similar debt structures to a schedule of monthly maturities.

The fair value of financial instruments at December 31, 2009 and December 31, 2008, was as follows:

	2009				2008
December 31,	Carrying		Fair		Carrying		Fair
(In thousands)	Amount		Value		Amount		Value
Financial assets:
Cash and money market instruments	$	159,091	$	159,091	$	171,262	$	171,262
Investment securities		1,794,641		1,811,177		1,990,246		1,995,331
Accrued interest receivable		24,354		24,354		27,930		27,930
Mortgage loans held for sale		9,551		9,551		9,603		9,603
Impaired loans carried at fair value		109,818		109,818		75,942		75,942
Other loans		4,404,346		4,411,526		4,305,704		4,324,829
Loans receivable, net	$	4,523,715	$	4,530,895	$	4,391,249	$	4,410,374
Financial liabilities:
Noninterest bearing checking	$	897,243	$	897,243	$	782,625	$	782,625
Interest bearing transaction accounts		1,193,845		1,193,845		1,204,530		1,204,530
Savings		873,137		873,137		694,721		694,721
Time deposits		2,222,537		2,234,599		2,078,372		2,084,732
Other		1,290		1,290		1,502		1,502
Total deposits	$	5,188,052	$	5,200,114	$	4,761,750	$	4,768,110
Short-term borrowings		324,219		324,219		659,196		659,196
Long-term debt		654,381		703,699		855,558		939,210
Subordinated debentures/ notes		75,250		64,262		40,000		30,855
Accrued interest payable		9,330		9,330		11,335		11,335
Derivative financial instruments:
Interest rate swap	$	1,483	$	1,483	$	1,937	$	1,937
Fair value swap		500		500		—		—

22. CAPITAL RATIOS

At December 31, 2009 and 2008, the Corporation and each of its two separately chartered banks had Tier 1, total risk-based capital and leverage ratios which were well above both the required minimum levels of 4.00%, 8.00% and 4.00%, respectively, and the well-capitalized levels of 6.00%, 10.00% and 5.00%, respectively.

The following table indicates the capital ratios for Park and each subsidiary at December 31, 2009 and December 31, 2008.

	2009									2008
	Tier 1			Total						Tier 1			Total
	Risk-			Risk-						Risk-			Risk-
	Based			Based			Leverage			Based			Based			Leverage
Park National Bank		8.81	%		10.89	%		6.27	%		8.63	%		10.89	%		5.94	%
Vision Bank		13.15	%		14.46	%		10.77	%		11.60	%		12.86	%		9.74	%
Park		12.45	%		14.89	%		9.04	%		11.69	%		13.47	%		8.36	%

Failure to meet the minimum requirements above could cause the Federal Reserve Board to take action. Park’s bank subsidiaries are also subject to these capital requirements by their primary regulators. As of December 31, 2009 and 2008, Park and its banking subsidiaries were well-capitalized and met all capital requirements to which each was subject. There are no conditions or events since the most recent regulatory report filings, by PNB or Vision Bank (“VB”), that management believes have changed the risk categories for either of the two banks. Park management has agreed to maintain Vision Bank’s total risk-based capital at 14.00% and the leverage ratio at 10.00%.

The following table reflects various measures of capital for Park and each of PNB and VB:

						To Be Adequately Capitalized					To Be Well Capitalized
(In thousands)	Actual Amount		Ratio			Amount		Ratio			Amount		Ratio
At December 31, 2009:
Total risk-based capital (to risk-weighted assets)
PNB	$	473,694		10.89	%	$	348,013		8.00	%	$	435,016		10.00	%
VB		103,819		14.46	%		57,454		8.00	%		71,817		10.00	%
Park		758,291		14.89	%		407,366		8.00	%		509,207		10.00	%
Tier 1 risk-based capital (to risk-weighted assets)
PNB	$	383,296		8.81	%	$	174,006		4.00	%	$	261,010		6.00	%
VB		94,408		13.15	%		28,727		4.00	%		43,090		6.00	%
Park		633,726		12.45	%		203,683		4.00	%		305,524		6.00	%
Leverage ratio (to average total assets)
PNB	$	383,296		6.27	%	$	244,368		4.00	%	$	305,460		5.00	%
VB		94,408		10.77	%		35,054		4.00	%		43,818		5.00	%
Park		633,726		9.04	%		280,286		4.00	%		350,357		5.00	%
At December 31, 2008:
Total risk-based capital (to risk-weighted assets)
PNB	$	442,247		10.89	%	$	324,818		8.00	%	$	406,022		10.00	%
VB		94,670		12.86	%		58,897		8.00	%		73,622		10.00	%
Park		646,132		13.47	%		383,650		8.00	%		479,562		10.00	%
Tier 1 risk-based capital (to risk-weighted assets)
PNB	$	350,344		8.63	%	$	162,409		4.00	%	$	243,613		6.00	%
VB		85,397		11.60	%		29,449		4.00	%		44,173		6.00	%
Park		560,691		11.69	%		191,825		4.00	%		287,737		6.00	%
Leverage ratio (to average total assets)
PNB	$	350,344		5.94	%	$	235,878		4.00	%	$	294,848		5.00	%
VB		85,397		9.74	%		35,057		4.00	%		43,821		5.00	%
Park		560,691		8.36	%		268,244		4.00	%		335,304		5.00	%

72

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

23. SEGMENT INFORMATION

The Corporation is a multi-bank holding company headquartered in Newark, Ohio. The operating segments for the Corporation are its two chartered bank subsidiaries, The Park National Bank (headquartered in Newark, Ohio) and Vision Bank (headquartered in Panama City, Florida) (“VB”). Guardian Finance Company (“GFC”) is a consumer finance company and is excluded from PNB for segment reporting purposes. GFC is included within the presentation of “All Other” in the segment reporting tables that follow. During the third quarter of 2008, Park combined the eight separately chartered Ohio-based bank subsidiaries into one national bank charter, that of The Park National Bank. Prior to the charter mergers that were consummated in the third quarter of 2008, Park considered each of its nine chartered bank subsidiaries as a separate segment for financial reporting purposes. GAAP requires management to disclose information about the different types of business activities in which a company engages and also information on the different economic environments in which a company operates, so that the users of the financial statements can better understand a company’s performance, better understand the potential for future cash flows, and make more informed judgments about the company as a whole. The change to two operating segments is in line with GAAP as there are: (i) two separate and distinct geographic markets in which Park operates, (ii) discrete financial information is available for each operating segment and (iii) the segments are aligned with internal reporting to Park’s Chief Executive Officer, who is the chief operating decision maker. The financial information for the year ended December 31, 2007 has been reclassified to be consistent with the presentation of the financial information for the twelve months ended December 31, 2009 and 2008.

Operating Results for the year ended December 31, 2009
(In thousands)	PNB		VB			All Other			Total
Net interest income	$	236,107	$	25,634		$	11,750		$	273,491
Provision for loan losses		22,339		44,430			2,052			68,821
Other income		82,770		(2,047	)		467			81,190
Depreciation and amortization		6,142		1,309			22			7,473
Other expense		141,906		26,782			12,564			181,252
Income (loss) before taxes		148,490		(48,934	)		(2,421	)		97,135
Income taxes (benefit)		47,032		(18,824	)		(5,265	)		22,943
Net income (loss)	$	101,458	$	(30,110	)	$	2,844		$	74,192
Balances at December 31, 2009:
Assets	$	6,182,257	$	897,981		$	(39,909	)	$	7,040,329
Loans		3,950,599		677,018			12,815			4,640,432
Deposits		4,670,113		688,900		$	(170,961	)		5,188,052

Operating Results for the year ended December 31, 2008
(In thousands)	PNB		VB			All Other			Total
Net interest income	$	219,843	$	27,065		$	8,965		$	255,873
Provision for loan losses		21,512		46,963			2,012			70,487
Other income		81,310		3,014			510			84,834
Depreciation and amortization		6,128		1,360			29			7,517
Goodwill impairment charge		—		54,986			—			54,986
Other expense		131,167		25,789			15,042			171,998
Income (loss) before taxes		142,346		(99,019	)		(7,608	)		35,719
Income taxes (benefit)		47,081		(17,832	)		(7,238	)		22,011
Net income (loss)	$	95,265	$	(81,187	)	$	(370	)	$	13,708
Balances at December 31, 2008:
Assets	$	6,243,365	$	917,041		$	(89,686	)	$	7,070,720
Loans		3,790,867		690,472			9,998			4,491,337
Deposits		4,210,439		636,635			(85,324	)		4,761,750

Operating Results for the year ended December 31, 2007
(In thousands)	PNB		VB			All Other			Total
Net interest income	$	201,555	$	23,756		$	9,366		$	234,677
Provision for loan losses		7,966		19,425			2,085			29,476
Other income		67,482		3,465			693			71,640
Depreciation and amortization		5,392		1,024			64			6,480
Goodwill impairment charge		—		54,035			—			54,035
Other expense		131,907		17,521			14,221			163,649
Income (loss) before taxes		123,772		(64,784	)		(6,311	)		52,677
Income taxes (benefit)		40,692		(4,103	)		(6,619	)		29,970
Net income (loss)	$	83,080	$	(60,681	)	$	308		$	22,707
Balances at December 31, 2007:
Assets	$	5,655,022	$	855,794		$	(9,714	)	$	6,501,102
Loans		3,574,894		639,097			10,143			4,224,134
Deposits		3,820,917		656,768			(38,446	)		4,439,239

Reconciliation of financial information for the reportable segments to the Corporation’s consolidated totals:

	Net Interest		Depreciation		Other		Income
(In thousands)	Income		Expense		Expense		Taxes			Assets			Deposits
2009:
Totals for reportable segments	$	261,741	$	7,451	$	168,688	$	28,208		$	7,080,238		$	5,359,013
Elimination of intersegment items		—		—		—		—			(114,214	)		(170,961	)
Parent Co. and GFC totals — not eliminated		11,750		22		12,564		(5,265	)		74,305			—
Totals	$	273,491	$	7,473	$	181,252	$	22,943		$	7,040,329		$	5,188,052
2008:
Totals for reportable segments	$	246,908	$	7,488	$	211,942	$	29,249		$	7,160,406		$	4,847,074
Elimination of intersegment items		—		—		—		—			(186,809	)		(85,324	)
Parent Co. and GFC totals — not eliminated		8,965		29		15,042		(7,238	)		97,123			—
Totals	$	255,873	$	7,517	$	226,984	$	22,011		$	7,070,720		$	4,761,750
2007:
Totals for reportable segments	$	225,311	$	6,416	$	203,463	$	36,589		$	6,510,816		$	4,477,685
Elimination of intersegment items		—		—		—		—			(108,602	)		(38,446	)
Parent Co. and GFC totals — not eliminated		9,366		39		14,221		(6,619	)		98,888			—
Other items		—		25		—		—			—			—
Totals	$	234,677	$	6,480	$	217,684	$	29,970		$	6,501,102		$	4,439,239

24. PARENT COMPANY STATEMENTS

The Parent Company statements should be read in conjunction with the consolidated financial statements and the information set forth below.

Investments in subsidiaries are accounted for using the equity method of accounting.

The effective tax rate for the Parent Company is substantially less than the statutory rate due principally to tax-exempt dividends from subsidiaries.

Cash represents noninterest bearing deposits with a bank subsidiary.

Net cash provided by operating activities reflects cash payments (received from subsidiaries) for income taxes of $5.22 million, $8.23 million and $6.67 million in 2009, 2008 and 2007, respectively.

73

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2009 and 2008, stockholders’ equity reflected in the Parent Company balance sheet includes $125.0 million and $126.2 million, respectively, of undistributed earnings of the Corporation’s subsidiaries which are restricted from transfer as dividends to the Corporation.

Balance Sheets
December 31, 2009 and 2008

(In thousands)	2009		2008
Assets:
Cash	$	155,908	$	80,343
Investment in subsidiaries		587,309		547,308
Debentures receivable from subsidiary banks		7,500		7,500
Other investments		1,288		1,064
Other assets		76,821		58,054
Total assets	$	828,826	$	694,269
Liabilities:
Dividends payable	$	651	$	123
Subordinated notes		50,250		15,000
Other liabilities		60,661		36,483
Total liabilities		111,562		51,606
Total stockholders’ equity		717,264		642,663
Total liabilities and stockholders’ equity	$	828,826	$	694,269

Statements of Income
for the years ended December 31, 2009, 2008 and 2007

(In thousands)	2009			2008			2007
Income:
Dividends from subsidiaries	$	75,000		$	93,850		$	65,564
Interest and dividends		4,715			3,639			3,828
Other		489			575			673
Total income		80,204			98,064			70,065
Expense:
Other, net		10,322			14,158			12,032
Total expense		10,322			14,158			12,032
Income before federal taxes and equity in undistributed (losses) of subsidiaries		69,882			83,906			58,033
Federal income tax benefit		6,210			8,057			7,055
Income before equity in undistributed (losses) of subsidiaries		76,092			91,963			65,088
Equity in undistributed (losses) of subsidiaries		(1,900	)		(78,255	)		(42,381	)
Net income	$	74,192		$	13,708		$	22,707

Statements of Cash Flows
for the years ended December 31, 2009, 2008 and 2007

(In thousands)	2009			2008			2007
Operating activities:
Net income	$	74,192		$	13,708		$	22,707
Adjustments to reconcile net income to net cash provided by operating activities:
Undistributed losses of subsidiaries		1,900			78,255			42,381
Other than temporary impairment charge, investments		140			774			—
(Gain) on sale of assets		—			—			(18	)
Stock based compensation expense		—			—			893
(Increase) decrease in other assets		(18,854	)		4,508			(6,227	)
Increase in other liabilities		24,178			2,042			1,774
Net cash provided by operating activities		81,556			99,287			61,510
Investing activities:
Cash paid for acquisition, net		—			—			(85,600	)
(Purchase) of investment securities		(113	)		(158	)		(400	)
Capital contribution to subsidiary		(37,000	)		(76,000	)		(6,700	)
Cash received for sale of premises		—			—			48
Repayment of debentures receivable from subsidiaries		—			—			20,000
Net cash (used in) investing activities		(37,113	)		(76,158	)		(72,652	)
Financing activities:
Cash dividends paid	$	(58,035	)	$	(65,781	)	$	(52,533	)
Proceeds from issuance of common stock and warrants		53,909			4,736			—
Proceeds from issuance of subordinated notes		35,250			—			—
Cash payment for fractional shares		(2	)		(3	)		(5	)
Proceeds from issuance of preferred stock		—			95,721			—
Purchase of treasury stock, net		—			—			(64,733	)
Net cash provided by (used in) financing activities		31,122			34,673			(117,271	)
Increase (decrease) in cash		75,565			57,802			(128,413	)
Cash at beginning of year		80,343			22,541			150,954
Cash at end of year	$	155,908		$	80,343		$	22,541

25. PARTICIPATION IN THE U.S. TREASURY CAPITAL PURCHASE PROGRAM

On December 23, 2008, Park issued $100 million of cumulative perpetual preferred shares, with a liquidation preference of $1,000 per share (the “Senior Preferred Shares”). The Senior Preferred Shares constitute Tier 1 capital and rank senior to Park’s common shares. The Senior Preferred Shares pay cumulative dividends at a rate of 5% per annum through February 14, 2014 and will reset to a rate of 9% per annum thereafter. For the year ended December 31, 2009, Park recognized a charge to retained earnings of $5.8 million, representing the preferred stock dividend and accretion of the discount on the preferred stock, associated with its participation in the CPP.

As part of its participation in the CPP, Park also issued a warrant to the U.S. Treasury to purchase 227,376 common shares having an exercise price of $65.97, which is equal to 15% of the aggregate amount of the Senior Preferred Shares purchased by the U.S. Treasury. The initial exercise price for the warrant and the market price for determining the number of common shares subject to the warrant were determined by reference to the market price of the common shares on the date the Company’s application for participation in the Capital Purchase Program was approved by the United States Department of the Treasury (calculated on a 20-day trailing average). The warrant has a term of 10 years.

A company that participates in the CPP must adopt certain standards for compensation and corporate governance, established under the American Recovery and Reinvestment Act of 2009 (the “ARRA”), which amended and replaced the executive compensation provisions of the Emergency Economic Stabilization Act of 2008 (“EESA”) in their entirety, and the Interim Final Rule promulgated by the Secretary of the U.S. Treasury under 31 C.F.R. Part 30 (collectively, the “Troubled Asset Relief Program (TARP) Compensation Standards”). In addition, Park’s ability to declare or pay dividends on or repurchase its common shares is partially restricted as a result of its participation in the CPP.

74

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

26. SALE OF COMMON SHARES AND ISSUANCE OF COMMON STOCK WARRANTS

On May 27, 2009, Park announced that it had entered into a distribution agreement with the investment banking firm of Sandler O’Neill & Partners, L.P. (“Sandler O’Neill”). Under this distribution agreement, Park could offer and sell common shares having aggregate sales proceeds of up to $70 million from time to time through Sandler O’Neill as sales agent, provided that the aggregate number of common shares offered and sold under offerings conducted pursuant to this distribution agreement could not exceed 1,050,000 common shares. For the year ended December 31, 2009, Park sold 288,272 common shares, out of treasury shares, at a weighted average sales price of $60.83, with sales proceeds of $17.5 million. Net proceeds for the common shares sold during 2009 were $16.7 million, net of selling expenses. On January 27, 2010, Park terminated the distribution agreement with Sandler O’Neill.

In addition, on October 30, 2009, Park sold, in a registered direct public offering, 500,000 common shares, out of treasury shares, for gross proceeds of $30.8 million. In addition to the common shares, Park also issued:

• Series A Common Share Warrants, which are exercisable within six months of the closing date, to purchase up to an aggregate of 250,000 common shares at an exercise price of $67.75.

• Series B Common Share Warrants, which are exercisable within twelve months of the closing date, to purchase up to an aggregate of 250,000 common shares at an exercise price of $67.75.

Net proceeds (net of all selling and legal expenses) from the October 30, 2009 sale of 500,000 Common Shares and Warrants were $29.8 million. Through December 31, 2009 there were no exercises of the Series A /Series B Common Share Warrants issued in the registered direct public offering.

Finally, on November 17, 2009, Park sold 115,800 common shares, out of treasury shares, to the Park National Corporation Defined Benefit Pension Plan, for gross proceeds of $7.0 million, at $60.45 per share.

75

EX-21

Exhibit 21

SUBSIDIARIES OF PARK NATIONAL CORPORATION

Name of Subsidiary	Jurisdiction of Incorporation or Formation
The Park National Bank (“PNB”)	United States (federally-chartered national banking association)
•     Park Investments, Inc. (NOTE: is a wholly-owned subsidiary of PNB)	Delaware
•     Scope Leasing, Inc. (NOTE: is a wholly-owned subsidiary of PNB) [Also does business under “Scope Aircraft Finance”]	Ohio
•     Park Insurance Group, Inc. (NOTE: is a wholly-owned subsidiary of PNB)	Ohio
•     Park Title Agency, LLC. (NOTE: PNB holds 49% of ownership interest and other member, which is not a subsidiary of Park National Corporation, holds 51% of ownership interest)	Ohio
•     The following are the divisions of PNB:
*    Fairfield National	n/a
*    The Park National Bank of Southwest Ohio & Northern Kentucky	n/a
*    Century National	n/a
*    Second National	n/a
*    Richland Trust	n/a
*    United Bank	n/a
*    First-Knox National	n/a
*    Farmers and Savings	n/a
*    Security National	n/a
*    Unity National	n/a

Name of Subsidiary	Jurisdiction of Incorporation or Formation
Guardian Financial Services Company [Also does business under “Guardian Finance Company”]	Ohio
Park Capital Investments, Inc. (“Park Capital”)	Delaware
•     Park National Capital LLC (NOTE: members are Park Capital and PNB)	Delaware
•     Security National Capital LLC (NOTE: members are Park Capital and PNB)	Delaware
•     First-Knox National Capital LLC (NOTE: members are Park Capital and PNB)	Delaware
•     Century National Capital LLC (NOTE: members are Park Capital and PNB)	Delaware
Vision Bank	Florida
•     The following are the divisions of Vision Bank:
*     Vision Bank Division of Gulf Shores, Alabama	n/a
*     Vision Bancshares Financial Group	n/a
Vision Bancshares Trust I (NOTE: Park holds all of the common securities as successor Depositor; floating rate preferred securities are held by institutional investors)	Delaware

- 2 -

EX-23

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration Statements of Park National Corporation:

Form S-8 No. 33-92060
Form S-8 No. 333-52653
Form S-8 No. 333-59360
Form S-8 No. 333-59378
Form S-8 No. 333-91178
Form S-8 No. 333-115136
Form S-8 No. 333-126875
Form S-3 No. 333-156887
Form S-3 No. 333-159454

of our report dated February 24, 2010, with respect to the consolidated financial statements of Park National Corporation and the effectiveness of internal control over financial reporting, which report is incorporated by reference from Park National Corporation’s 2009 Annual Report to Shareholders in this Annual Report on Form 10-K of Park National Corporation for the fiscal year ended December 31, 2009.

/s/ Crowe Horwath LLP  

Crowe Horwath LLP 

Columbus, Ohio
February 24, 2010

EX-24

Exhibit 24

POWER OF ATTORNEY

The undersigned officer and director of Park National Corporation, an Ohio corporation (the “Corporation”), which anticipates filing with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, hereby constitutes and appoints David L. Trautman and John W. Kozak, and each of them, with full power of substitution and resubstitution, as attorney-in-fact and agent to execute, deliver and file, in his name and on his behalf, in any and all capacities, such Annual Report on Form 10-K and any and all amendments thereto, and any and all applications or documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as he could do if personally present. The undersigned hereby ratifies and confirms all that each said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 17^th day of February, 2010.

/s/ C. Daniel DeLawder  

C. Daniel DeLawder 

POWER OF ATTORNEY

The undersigned officer and director of Park National Corporation, an Ohio corporation (the “Corporation”), which anticipates filing with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, hereby constitutes and appoints C. Daniel DeLawder and John W. Kozak, and each of them, with full power of substitution and resubstitution, as attorney-in-fact and agent to execute, deliver and file, in his name and on his behalf, in any and all capacities, such Annual Report on Form 10-K and any and all amendments thereto, and any and all applications or documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as he could do if personally present. The undersigned hereby ratifies and confirms all that each said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 17^th day of February, 2010.

/s/ David L. Trautman  

David L. Trautman 

POWER OF ATTORNEY

The undersigned officer of Park National Corporation, an Ohio corporation (the “Corporation”), which anticipates filing with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, hereby constitutes and appoints C. Daniel DeLawder and David L. Trautman, and each of them, with full power of substitution and resubstitution, as attorney-in-fact and agent to execute, deliver and file, in his name and on his behalf, in any and all capacities, such Annual Report on Form 10-K and any and all amendments thereto, and any and all applications or documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as he could do if personally present. The undersigned hereby ratifies and confirms all that each said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 17^th day of February, 2010.

/s/ John W. Kozak  

John W. Kozak 

POWER OF ATTORNEY

The undersigned officer of Park National Corporation, an Ohio corporation (the “Corporation”), which anticipates filing with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, hereby constitutes and appoints C. Daniel DeLawder, David L. Trautman and John W. Kozak, and each of them, with full power of substitution and resubstitution, as attorney-in-fact and agent to execute, deliver and file, in his name and on his behalf, in any and all capacities, such Annual Report on Form 10-K and any and all amendments thereto, and any and all applications or documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as he could do if personally present. The undersigned hereby ratifies and confirms all that each said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 17^th day of February, 2010.

/s/ Brady T. Burt  

Brady T. Burt 

POWER OF ATTORNEY

The undersigned director of Park National Corporation, an Ohio corporation (the “Corporation”), which anticipates filing with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, hereby constitutes and appoints C. Daniel DeLawder, David L. Trautman and John W. Kozak, and each of them, with full power of substitution and resubstitution, as attorney-in-fact and agent to execute, deliver and file, in her name and on her behalf, in any and all capacities, such Annual Report on Form 10-K and any and all amendments thereto, and any and all applications or documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as she could do if personally present. The undersigned hereby ratifies and confirms all that each said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 17^th day of February, 2010.

/s/ Maureen Buchwald  

Maureen Buchwald 

POWER OF ATTORNEY

The undersigned director of Park National Corporation, an Ohio corporation (the “Corporation”), which anticipates filing with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, hereby constitutes and appoints C. Daniel DeLawder, David L. Trautman and John W. Kozak, and each of them, with full power of substitution and resubstitution, as attorney-in-fact and agent to execute, deliver and file, in his name and on his behalf, in any and all capacities, such Annual Report on Form 10-K and any and all amendments thereto, and any and all applications or documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as he could do if personally present. The undersigned hereby ratifies and confirms all that each said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 17^th day of February, 2010.

/s/ James J. Cullers  

James J. Cullers 

POWER OF ATTORNEY

The undersigned director of Park National Corporation, an Ohio corporation (the “Corporation”), which anticipates filing with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, hereby constitutes and appoints C. Daniel DeLawder, David L. Trautman and John W. Kozak, and each of them, with full power of substitution and resubstitution, as attorney-in-fact and agent to execute, deliver and file, in his name and on his behalf, in any and all capacities, such Annual Report on Form 10-K and any and all amendments thereto, and any and all applications or documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as he could do if personally present. The undersigned hereby ratifies and confirms all that each said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 19^th day of February, 2010.

/s/ Harry O. Egger  

Harry O. Egger 

POWER OF ATTORNEY

The undersigned director of Park National Corporation, an Ohio corporation (the “Corporation”), which anticipates filing with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, hereby constitutes and appoints C. Daniel DeLawder, David L. Trautman and John W. Kozak, and each of them, with full power of substitution and resubstitution, as attorney-in-fact and agent to execute, deliver and file, in his name and on his behalf, in any and all capacities, such Annual Report on Form 10-K and any and all amendments thereto, and any and all applications or documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as he could do if personally present. The undersigned hereby ratifies and confirms all that each said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 17^th day of February, 2010.

/s/ F. William Englefield IV  

F. William Englefield IV 

POWER OF ATTORNEY

The undersigned director of Park National Corporation, an Ohio corporation (the “Corporation”), which anticipates filing with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, hereby constitutes and appoints C. Daniel DeLawder, David L. Trautman and John W. Kozak, and each of them, with full power of substitution and resubstitution, as attorney-in-fact and agent to execute, deliver and file, in his name and on his behalf, in any and all capacities, such Annual Report on Form 10-K and any and all amendments thereto, and any and all applications or documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as he could do if personally present. The undersigned hereby ratifies and confirms all that each said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 23rd day of February, 2010.

/s/ Stephen J. Kambeitz  

Stephen J. Kambeitz 

POWER OF ATTORNEY

The undersigned director of Park National Corporation, an Ohio corporation (the “Corporation”), which anticipates filing with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, hereby constitutes and appoints C. Daniel DeLawder, David L. Trautman and John W. Kozak, and each of them, with full power of substitution and resubstitution, as attorney-in-fact and agent to execute, deliver and file, in his name and on his behalf, in any and all capacities, such Annual Report on Form 10-K and any and all amendments thereto, and any and all applications or documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as he could do if personally present. The undersigned hereby ratifies and confirms all that each said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 15^th day of February, 2010.

/s/ William T. McConnell  

William T. McConnell 

POWER OF ATTORNEY

The undersigned director of Park National Corporation, an Ohio corporation (the “Corporation”), which anticipates filing with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, hereby constitutes and appoints C. Daniel DeLawder, David L. Trautman and John W. Kozak, and each of them, with full power of substitution and resubstitution, as attorney-in-fact and agent to execute, deliver and file, in his name and on his behalf, in any and all capacities, such Annual Report on Form 10-K and any and all amendments thereto, and any and all applications or documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as he could do if personally present. The undersigned hereby ratifies and confirms all that each said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 11^th day of February, 2010.

/s/ Timothy S. McLain  

Timothy S. McLain 

POWER OF ATTORNEY

The undersigned director of Park National Corporation, an Ohio corporation (the “Corporation”), which anticipates filing with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, hereby constitutes and appoints C. Daniel DeLawder, David L. Trautman and John W. Kozak, and each of them, with full power of substitution and resubstitution, as attorney-in-fact and agent to execute, deliver and file, in his name and on his behalf, in any and all capacities, such Annual Report on Form 10-K and any and all amendments thereto, and any and all applications or documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as he could do if personally present. The undersigned hereby ratifies and confirms all that each said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 22^nd day of February, 2010.

/s/ John J. O’Neill  

John J. O’Neill 

POWER OF ATTORNEY

The undersigned director of Park National Corporation, an Ohio corporation (the “Corporation”), which anticipates filing with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, hereby constitutes and appoints C. Daniel DeLawder, David L. Trautman and John W. Kozak, and each of them, with full power of substitution and resubstitution, as attorney-in-fact and agent to execute, deliver and file, in his name and on his behalf, in any and all capacities, such Annual Report on Form 10-K and any and all amendments thereto, and any and all applications or documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as he could do if personally present. The undersigned hereby ratifies and confirms all that each said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 17^th day of February, 2010.

/s/ William A. Phillips  

William A. Phillips 

POWER OF ATTORNEY

The undersigned director of Park National Corporation, an Ohio corporation (the “Corporation”), which anticipates filing with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, hereby constitutes and appoints C. Daniel DeLawder, David L. Trautman and John W. Kozak, and each of them, with full power of substitution and resubstitution, as attorney-in-fact and agent to execute, deliver and file, in his name and on his behalf, in any and all capacities, such Annual Report on Form 10-K and any and all amendments thereto, and any and all applications or documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as he could do if personally present. The undersigned hereby ratifies and confirms all that each said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 11^th day of February, 2010.

/s/ Rick R. Taylor  

Rick R. Taylor 

POWER OF ATTORNEY

The undersigned director of Park National Corporation, an Ohio corporation (the “Corporation”), which anticipates filing with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, hereby constitutes and appoints C. Daniel DeLawder, David L. Trautman and John W. Kozak, and each of them, with full power of substitution and resubstitution, as attorney-in-fact and agent to execute, deliver and file, in her name and on her behalf, in any and all capacities, such Annual Report on Form 10-K and any and all amendments thereto, and any and all applications or documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as she could do if personally present. The undersigned hereby ratifies and confirms all that each said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 17^th day of February, 2010.

/s/ Sarah Reese Wallace  

Sarah Reese Wallace 

POWER OF ATTORNEY

The undersigned director of Park National Corporation, an Ohio corporation (the “Corporation”), which anticipates filing with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, the Annual Report of the Corporation on Form 10-K for the fiscal year ended December 31, 2009, hereby constitutes and appoints C. Daniel DeLawder, David L. Trautman and John W. Kozak, and each of them, with full power of substitution and resubstitution, as attorney-in-fact and agent to execute, deliver and file, in his name and on his behalf, in any and all capacities, such Annual Report on Form 10-K and any and all amendments thereto, and any and all applications or documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report on Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in the premises, as fully to all intents and purposes as he could do if personally present. The undersigned hereby ratifies and confirms all that each said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 16^th day of February, 2010.

/s/ Leon Zazworsky  

Leon Zazworsky 

EX-31.1

Exhibit 31.1

Rule 13a-14(a)/15d-14(a) Certifications
[Principal Executive Officer]

CERTIFICATIONS

I, C. Daniel DeLawder, certify that:

1. I have reviewed this Annual Report on Form 10-K for the fiscal year ended December 31, 2009 of Park National Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 24, 2010	By:	/s/ C. Daniel DeLawder
		Printed Name:	C. Daniel DeLawder
		Title: Chairman of the Board and           Chief Executive Officer

2

EX-31.2

Exhibit 31.2

Rule 13a-14(a)/15d-14(a) Certifications
[Principal Financial Officer]

CERTIFICATIONS

I, John W. Kozak, certify that:

1. I have reviewed this Annual Report on Form 10-K for the fiscal year ended December 31, 2009 of Park National Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 24, 2010	By:	/s/ John W. Kozak
		Printed Name:	John W. Kozak
		Title: Chief Financial Officer

2

EX-32

Exhibit 32

CERTIFICATIONS PURSUANT TO
SECTION 1350 OF CHAPTER 63 OF
TITLE 18 OF THE UNITED STATES CODE*

In connection with the Annual Report of Park National Corporation (the “Corporation”) on Form 10-K for the fiscal year ended December 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned C. Daniel DeLawder, Chairman of the Board and Chief Executive Officer of the Corporation, and John W. Kozak, Chief Financial Officer of the Corporation, certify, pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Corporation and its subsidiaries.

/s/ C. Daniel DeLawder	/s/ John W. Kozak
C. Daniel DeLawder	John W. Kozak
Chairman of the Board and Chief Executive Officer (Principal Executive Officer)	Chief Financial Officer (Principal Financial Officer)
Dated: February 24, 2010	Dated: February 24, 2010

* These certifications are being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section. These certifications shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Corporation specifically incorporates these certifications by reference.

EX-99.1

Exhibit 99.1

CERTIFICATION PURSUANT TO SECTION 111(b)(4)
OF THE EMERGENCY ECONOMIC STABILIZATION
ACT OF 2008 AND 31 CFR § 30.15

[PRINCIPAL EXECUTIVE OFFICER]

CERTIFICATION

I, C. Daniel DeLawder, Chairman of the Board and Chief Executive Officer of Park National Corporation (“Park”), certify, based on my knowledge, that:

(i) The compensation committee of Park has discussed, reviewed, and evaluated with senior risk officers, as defined in the regulations and guidance established under Section 111 of the Emergency Economic Stabilization Act of 2008 (“EESA”), at least every six months during the period beginning on the later of September 14, 2009, or ninety days after the closing date of the agreement between Park and the U.S. Department of the Treasury (“Treasury”) and ending with the last day of Park’s fiscal year containing that date (the “Applicable Period”), the senior executive officer (SEO) compensation plans and employee compensation plans, each as defined in the regulations and guidance established under Section 111 of EESA, and the risks these plans pose to Park;

(ii) The compensation committee of Park has identified and limited during the Applicable Period any features in the SEO compensation plans that could lead SEOs, as defined in the regulations and guidance established under Section 111 of EESA, to take unnecessary and excessive risks that could threaten the value of Park, and during that same Applicable Period has identified any features of the employee compensation plans that pose risks to Park and has limited those features to ensure that Park is not unnecessarily exposed to risks;

(iii) The compensation committee of Park has reviewed, at least every six months during the Applicable Period, the terms of each employee compensation plan and identified any features of the plan that could encourage the manipulation of reported earnings of Park to enhance the compensation of an employee, and has limited any such features;

(iv) The compensation committee of Park will certify to the reviews of the SEO compensation plans and employee compensation plans required under paragraphs (i) and (iii) above;

(v) The compensation committee of Park will provide a narrative description of how it limited during any part of the most recently completed fiscal year that included a TARP period, as defined in the regulations and guidance established under Section 111 of EESA, the features in:

(A) SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of Park;

(B) Employee compensation plans that unnecessarily expose Park to risks; and

(C) Employee compensation plans that could encourage the manipulation of reported earnings of Park to enhance the compensation of an employee;

(vi) Park has required that bonus payments, as defined in the regulations and guidance established under Section 111 of EESA, of the SEOs and twenty next most highly compensated employees, as defined in the regulations and guidance established under Section 111 of EESA, be subject to a recovery or “clawback” provision during any part of the most recently completed fiscal year that was a TARP period if the bonus payments were based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria;

(vii) Park has prohibited any golden parachute payment, as defined in the regulations and guidance established under Section 111 of EESA, to a SEO or any of the next five most highly compensated employees during the period beginning on the later of the closing date of the agreement between Park and Treasury or June 15, 2009 and ending with the last day of Park’s fiscal year containing that date;

(viii) Park has limited bonus payments to its applicable employees in accordance with Section 111 of EESA and the regulations and guidance established thereunder during the period beginning on the later of the closing date of the agreement between Park and Treasury or June 15, 2009 and ending with the last day of Park’s fiscal year containing that date;

(ix) The board of directors of Park has established an excessive or luxury expenditures policy, as defined in the regulations and guidance established under Section 111 of EESA, by the later of September 14, 2009, or ninety days after the closing date of the agreement between Park and Treasury; this policy has been provided to Treasury and its primary regulatory agency; Park and its employees have complied with this policy during the Applicable Period; and any expenses that, pursuant to this policy, required approval of the board of directors, a committee of the board of directors, an SEO, or an executive officer with a similar level of responsibility, were properly approved;

(x) Park will permit a non-binding shareholder resolution in compliance with any applicable Federal securities rules and regulations on the disclosures provided under the Federal securities laws related to SEO compensation paid or accrued during the period beginning on the later of the closing date of the agreement between Park and Treasury or June 15, 2009 and ending with the last day of Park’s fiscal year containing that date;

(xi) Park will disclose the amount, nature, and justification for the offering during the period beginning on the later of the closing date of the agreement between Park and Treasury or June 15, 2009 and ending with the last day of Park’s fiscal year containing that date of any perquisites, as defined in the regulations and guidance established under Section 111 of EESA, whose total value exceeds $25,000 for any employee who is subject to the bonus payment limitations identified in paragraph (viii);

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(xii) Park will disclose whether Park, the board of directors of Park, or the compensation committee of Park has engaged during the period beginning on the later of the closing date of the agreement between Park and Treasury or June 15, 2009 and ending with the last day of Park’s fiscal year containing that date, a compensation consultant; and the services the compensation consultant or any affiliate of the compensation consultant provided during this period;

(xiii) Park has prohibited the payment of any gross-ups, as defined in the regulations and guidance established under Section 111 of EESA, to the SEOs and the next twenty most highly compensated employees during the period beginning on the later of the closing date of the agreement between Park and Treasury or June 15, 2009 and ending with the last day of Park’s fiscal year containing that date;

(xiv) Park has substantially complied with all other requirements related to employee compensation that are provided in the agreement between Park and Treasury, including any amendments;

(xv) Park has submitted to Treasury a complete and accurate list of the SEOs and the twenty next most highly compensated employees for the current fiscal year and the most recently completed fiscal year, with the non-SEOs ranked in descending order of level of annual compensation, and with the name, title and employer of each SEO and most highly compensated employee identified; and

(xvi) I understand that a knowing and willful false or fraudulent statement made in connection with this certification may be punished by fine, imprisonment, or both. (See, for example, 18 USC 1001).

Date: February 24, 2010	/s/ C. Daniel DeLawder
	C. Daniel DeLawder
	Chairman of the Board and Chief Executive Officer of Park National Corporation

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EX-99.2

Exhibit 99.2

CERTIFICATION PURSUANT TO SECTION 111(b)(4)
OF THE EMERGENCY ECONOMIC STABILIZATION
ACT OF 2008 AND 31 CFR § 30.15

[PRINCIPAL FINANCIAL OFFICER]

CERTIFICATION

I, John W. Kozak, Chief Financial Officer of Park National Corporation (“Park”), certify, based on my knowledge, that:

(i) The compensation committee of Park has discussed, reviewed, and evaluated with senior risk officers, as defined in the regulations and guidance established under Section 111 of the Emergency Economic Stabilization Act of 2008 (“EESA”), at least every six months during the period beginning on the later of September 14, 2009, or ninety days after the closing date of the agreement between Park and the U.S. Department of the Treasury (“Treasury”) and ending with the last day of Park’s fiscal year containing that date (the “Applicable Period”), the senior executive officer (SEO) compensation plans and employee compensation plans, each as defined in the regulations and guidance established under Section 111 of EESA, and the risks these plans pose to Park;

(ii) The compensation committee of Park has identified and limited during the Applicable Period any features in the SEO compensation plans that could lead SEOs, as defined in the regulations and guidance established under Section 111 of EESA, to take unnecessary and excessive risks that could threaten the value of Park, and during that same Applicable Period has identified any features of the employee compensation plans that pose risks to Park and has limited those features to ensure that Park is not unnecessarily exposed to risks;

(iii) The compensation committee of Park has reviewed, at least every six months during the Applicable Period, the terms of each employee compensation plan and identified any features of the plan that could encourage the manipulation of reported earnings of Park to enhance the compensation of an employee, and has limited any such features;

(iv) The compensation committee of Park will certify to the reviews of the SEO compensation plans and employee compensation plans required under paragraphs (i) and (iii) above;

(v) The compensation committee of Park will provide a narrative description of how it limited during any part of the most recently completed fiscal year that included a TARP period, as defined in the regulations and guidance established under Section 111 of EESA, the features in:

(A) SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of Park;

(B) Employee compensation plans that unnecessarily expose Park to risks; and

(C) Employee compensation plans that could encourage the manipulation of reported earnings of Park to enhance the compensation of an employee;

(vi) Park has required that bonus payments, as defined in the regulations and guidance established under Section 111 of EESA, of the SEOs and twenty next most highly compensated employees, as defined in the regulations and guidance established under Section 111 of EESA, be subject to a recovery or “clawback” provision during any part of the most recently completed fiscal year that was a TARP period if the bonus payments were based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria;

(vii) Park has prohibited any golden parachute payment, as defined in the regulations and guidance established under Section 111 of EESA, to a SEO or any of the next five most highly compensated employees during the period beginning on the later of the closing date of the agreement between Park and Treasury or June 15, 2009 and ending with the last day of Park’s fiscal year containing that date;

(viii) Park has limited bonus payments to its applicable employees in accordance with Section 111 of EESA and the regulations and guidance established thereunder during the period beginning on the later of the closing date of the agreement between Park and Treasury or June 15, 2009 and ending with the last day of Park’s fiscal year containing that date;

(ix) The board of directors of Park has established an excessive or luxury expenditures policy, as defined in the regulations and guidance established under Section 111 of EESA, by the later of September 14, 2009, or ninety days after the closing date of the agreement between Park and Treasury; this policy has been provided to Treasury and its primary regulatory agency; Park and its employees have complied with this policy during the Applicable Period; and any expenses that, pursuant to this policy, required approval of the board of directors, a committee of the board of directors, an SEO, or an executive officer with a similar level of responsibility, were properly approved;

(x) Park will permit a non-binding shareholder resolution in compliance with any applicable Federal securities rules and regulations on the disclosures provided under the Federal securities laws related to SEO compensation paid or accrued during the period beginning on the later of the closing date of the agreement between Park and Treasury or June 15, 2009 and ending with the last day of Park’s fiscal year containing that date;

(xi) Park will disclose the amount, nature, and justification for the offering during the period beginning on the later of the closing date of the agreement between Park and Treasury or June 15, 2009 and ending with the last day of Park’s fiscal year containing that date of any perquisites, as defined in the regulations and guidance established under Section 111 of EESA, whose total value exceeds $25,000 for any employee who is subject to the bonus payment limitations identified in paragraph (viii);

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(xii) Park will disclose whether Park, the board of directors of Park, or the compensation committee of Park has engaged during the period beginning on the later of the closing date of the agreement between Park and Treasury or June 15, 2009 and ending with the last day of Park’s fiscal year containing that date, a compensation consultant; and the services the compensation consultant or any affiliate of the compensation consultant provided during this period;

(xiii) Park has prohibited the payment of any gross-ups, as defined in the regulations and guidance established under Section 111 of EESA, to the SEOs and the next twenty most highly compensated employees during the period beginning on the later of the closing date of the agreement between Park and Treasury or June 15, 2009 and ending with the last day of Park’s fiscal year containing that date;

(xiv) Park has substantially complied with all other requirements related to employee compensation that are provided in the agreement between Park and Treasury, including any amendments;

(xv) Park has submitted to Treasury a complete and accurate list of the SEOs and the twenty next most highly compensated employees for the current fiscal year and the most recently completed fiscal year, with the non-SEOs ranked in descending order of level of annual compensation, and with the name, title and employer of each SEO and most highly compensated employee identified; and

(xvi) I understand that a knowing and willful false or fraudulent statement made in connection with this certification may be punished by fine, imprisonment, or both. (See, for example, 18 USC 1001).

Date: February 24, 2010	/s/ John W. Kozak
	John W. Kozak
	Chief Financial Officer of Park National Corporation

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