8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) October 26, 2020

PARK NATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

Ohio	1-13006	31-1179518
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

50 North Third Street,	P.O. Box 3500,	Newark,	Ohio	43058-3500
(Address of principal executive offices) (Zip Code)

(740)	349-8451
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common shares, without par value	PRK	NYSE American

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

    Emerging growth company   ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Item 2.02 - Results of Operations and Financial Condition.

On October 26, 2020, Park National Corporation (“Park”) issued a news release (the “Financial Results News Release”) announcing financial results for the three and nine months ended September 30, 2020. A copy of the Financial Results News Release is included as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference herein.

Non-GAAP Financial Measures

Item 7.01 of this Current Report on Form 8-K as well as the Financial Results News Release contain non-GAAP (generally accepted accounting principles) financial measures where management believes it to be helpful in understanding Park’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable U.S. GAAP financial measures, as well as the reconciliation to the comparable U.S. GAAP financial measures, can be found in the Financial Results News Release.

Items Impacting Comparability of Period Results

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

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

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

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

Non-GAAP Ratios

Park's management uses certain non-GAAP financial measures to evaluate Park's performance. Specifically, management reviews the return on average tangible equity, the return on average tangible assets, the tangible equity to tangible assets ratio and the tangible book value per share.

Management has included in the Financial Results News Release information relating to the annualized return on average tangible equity, the annualized return on average tangible assets, the tangible equity to tangible assets ratio and the tangible book value per share for the three and nine months ended and at September 30, 2020, June 30, 2020, and September 30, 2019. For purposes of calculating the annualized return on average tangible equity, a non-GAAP financial measure, net income for each period is divided by average tangible equity during the period. Average tangible equity equals average shareholders' equity during the applicable period less average goodwill and other intangible assets during the applicable period. For the purpose of calculating the annualized return on average tangible assets, a non-GAAP financial measure, net income for each period is divided by average tangible assets during the period. Average tangible assets equals average assets during the applicable period less average goodwill and other intangible assets during the applicable period. For the purpose of calculating the tangible equity to tangible assets ratio, a non-GAAP financial measure, tangible equity is divided by tangible assets. Tangible equity equals total shareholders' equity less goodwill and other intangible assets, in each case at period end. Tangible assets equals total assets less goodwill and other intangible assets, in each case at period end. For the purpose of calculating the tangible book value per share, a non-GAAP financial measure, tangible equity is divided by the number of common shares outstanding, in each case at period end.

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Management believes that the disclosure of the annualized return on average tangible equity, the annualized return on average tangible assets, the tangible equity to tangible assets ratio and the tangible book value per share presents additional information to the reader of the consolidated financial statements, which, when read in conjunction with the consolidated financial statements prepared in accordance with U.S. GAAP, assists in analyzing Park's operating performance, ensures comparability of operating performance from period to period, and facilitates comparisons with the performance of Park's peer financial holding companies and bank holding companies, while eliminating certain non-operational effects of acquisitions. In the Financial Results News Release, Park has provided a reconciliation of average tangible equity to average shareholders' equity, average tangible assets to average assets, tangible equity to total shareholders' equity and tangible assets to total assets solely for the purpose of complying with SEC Regulation G and not as an indication that the annualized return on average tangible equity, the annualized return on average tangible assets, the tangible equity to tangible assets ratio and the tangible book value per share are substitutes for the annualized return on average equity, the annualized return on average assets, the total shareholders' equity to total assets ratio and the book value per share, respectively, as determined in accordance with U.S. GAAP.

FTE (fully taxable equivalent) Ratios

Interest income, yields, and ratios on a FTE basis are considered non-GAAP financial measures. Management believes net interest income on a FTE basis provides an insightful picture of the interest margin for comparison purposes. The FTE basis also allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The FTE basis assumes a corporate federal statutory tax rate of 21 percent. In the Financial Results News Release, Park has provided a reconciliation of FTE interest income solely for the purpose of complying with SEC Regulation G and not as an indication that FTE interest income, yields and ratios are substitutes for interest income, yields and ratios, as determined in accordance with U.S. GAAP.

Paycheck Protection Program ("PPP") Loans

Park originated $543.1 million in loans as part of the PPP. These loans are not typical of Park's loan portfolio in that they are part of a specific government program to support businesses during the COVID-19 pandemic and are 100% guaranteed by the Small Business Administration ("SBA"). As such, management considers growth in the loan portfolio excluding PPP loans, the total allowance for loan losses on originated loans to total originated loans ratio (excluding PPP loans), and general reserve as a % of total originated loans (excluding acquisitions) less impaired commercial loans (excluding PPP loans) in addition to the related U.S. GAAP metrics which are not adjusted for PPP loans.

Item 7.01 - Regulation FD Disclosure

COVID-19 Considerations

Banking has been identified by federal and state governmental authorities to be an essential service and Park is fully committed to continue serving our customers and communities through the COVID-19 public health crisis. For those in our communities experiencing a financial hardship, Park has offered various methods of support including loan modifications, payment deferral programs, participation in the CARES Act Paycheck Protection Program ("PPP") and various other case by case accommodations. Park has implemented various physical distancing guidelines to help protect associates, such as allowing associates to work from home, where practical, while maintaining customer service via our online banking services, mobile app, and ATMs, by keeping drive-thru lanes open to serve customers, maintaining selective branch office openings, and offering other banking services by appointment when necessary.

During the first nine months of 2020, Park provided calamity pay and special one-time bonuses to certain associates. The cost of the calamity pay and special bonuses amounted to $0.8 million and $2.9 million for the three month and nine month periods ended September 30, 2020, respectively, and is included within salaries expense.

Paycheck Protection Program: Through September 30, 2020, Park had approved and funded 4,439 loans totaling $543.1 million under the PPP. These PPP loans had an average principal balance of $122,000. Of the $543.1 million in PPP loans, 21 loans totaling $68.2 million had a principal balance that was greater than $2 million. For its assistance in making and retaining these loans, Park has received an aggregate of $20.2 million in fees from the SBA, of which $6.6 million were recognized during the nine months ended September 30, 2020. Park funded the PPP loans with excess on-balance sheet liquidity.

As of October 23, 2020, Park has submitted approximately 927 repayment requests on behalf of borrowers under the PPP to the SBA and has received $10.0 million in payments from the SBA.

Loan Modifications: During the nine months ended September 30, 2020, Park had modified 4,810 consumer loans, with an aggregate balance of $111 million, and modified 1,386 commercial loans, with an aggregate balance of $584 million, in each case related to a hardship caused by the COVID-19 pandemic and responses thereto. Park is working with borrowers and

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providing modifications in the form of either interest only deferral or principal and interest deferral, in each case, for initial periods of up to 90 days. As necessary, Park is making available a second 90 day interest only deferral or principal and interest deferral bringing the total potential deferral period to six months. Modifications are structured in a manner to best address each individual customer's current situation. A majority of these modifications are excluded from TDR classification under Section 4013 of the CARES Act or under applicable interagency guidance of the federal banking regulators. Modified loans will be considered current and will continue to accrue interest during the deferral period.

Detail of COVID-19 modifications on Park's loan portfolios during the nine months ended September 30, 2020 follows:

(Dollars in thousands)	September 30, 2020 Total Balance		September 30, 2020 Balance Modified		Percent Modified
Commercial	$	4,197,427	$	583,701	13.9	%
Home equity	194,445		3,594		1.8	%
Installment	1,633,730		47,760		2.9	%
Real estate	1,232,196		57,388		4.7	%
Guardian Financial Service Company ("GFSC")	14,843		2,267		15.3	%
Other	5,905		—		—	%
Total Loans	$	7,278,546	$	694,710	9.5	%

Of the $694.7 million of COVID-19 modifications during the nine months ended September 30, 2020, $3.9 million were currently greater than 30 days past due in accordance with the modified terms.

Detail of COVID-19 modifications on selected commercial loan portfolios during the nine months ended September 30, 2020 follows:

(Dollars in thousands)	September 30, 2020 Total Balance		September 30, 2020 Balance Modified		Percent Modified
Non-bank consumer finance companies	$	266,187	$	—	—	%
Hotel and accommodations	211,888		160,677		75.8	%
Restaurants and food service	48,347		11,028		22.8	%
Arts and recreation	46,648		16,963		36.4	%
Healthcare and social assistance	250,402		37,282		14.9	%
Strip shopping centers	236,575		71,613		30.3	%
Other real estate rental and leasing	1,139,821		163,711		14.4	%
PPP loans	542,761		—		—	%
Other loans	1,454,798		122,427		8.4	%
Total commercial loans	$	4,197,427	$	583,701	13.9	%

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Many of the initial interest only deferrals or principal and interest deferrals were for an initial period of three months. Park has received requests for additional deferrals. Loans which have had multiple COVID-19 modifications through September 30, 2020 are detailed below.

(Dollars in thousands)	September 30, 2020 Balance - Multiple Modifications		Weighted Average Risk Grade
Hotel and accommodations	$	62,676	4.97
Restaurants and food service	1,140		4.20
Arts and recreation	4,085		4.29
Strip shopping centers	1,889		4.00
Other real estate rental and leasing	6,990		5.19
Other loans	18,638		5.03
Total commercial loans	$	95,418	4.94
Home equity	$	298	N.A.
Installment	5,746		N.A.
Real estate	14,281		N.A.
GFSC	1,062		N.A.
Other	—		N.A.
Total loans	$	116,805	N.A.

Park considers a loan out of deferral when the first regular payment is due and that payment is subsequently made. The table below details the current status of loans with COVID-19 deferrals.

(Dollars in thousands)	September 30, 2020 Balance - Out of Deferral		September 30, 2020 Balance - In Deferral		Percent in Deferral as a Percent of Total Deferred		Percent in Deferral as a Percent of Total Loans
Hotel and accommodations	$	109,648	$	51,029	31.8	%	24.1	%
Restaurants and food service	10,041		987		8.9	%	2.0	%
Arts and recreation	12,844		4,119		24.3	%	8.8	%
Healthcare and social assistance	37,104		178		0.5	%	0.1	%
Strip shopping centers	69,724		1,889		2.6	%	0.8	%
Other real estate rental and leasing	156,143		7,568		4.6	%	0.7	%
Other loans	102,082		20,345		16.6	%	1.4	%
Total commercial loans	$	497,586	$	86,115	14.8	%	2.1	%
Home equity	$	3,287	$	307	8.5	%	0.2	%
Installment	44,636		3,124		6.5	%	0.2	%
Real estate	48,788		8,600		15.0	%	0.7	%
GFSC	2,121		146		6.4	%	1.0	%
Total loans	$	596,418	$	98,292	14.1	%	1.4	%

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Financial Results by Segment

The table below reflects the net income (loss) by segment for the first, second and third quarters of 2020, for the first nine months of each of 2020 and 2019 and for the years ended December 31, 2019 and 2018. Park's segments include The Park National Bank ("PNB"), GFSC and "All Other" which primarily consists of Park as the "Parent Company" and SE Property Holdings, LLC ("SEPH"). SEPH is a non-bank subsidiary of Park, holding former Vision Bank other real estate owned ("OREO") property and non-performing loans.

Net income (loss) by segment
(In thousands)	Q3 2020		Q2 2020		Q1 2020		Nine months YTD 2020		Nine months YTD 2019		2019		2018
PNB	$	32,888	$	30,750	$	25,908	$	89,546	$	87,022	$	113,600	$	109,472
GFSC	332		323		112		767		653		762		521
All Other	(2,374)		(1,568)		(3,648)		(7,590)		(8,911)		(11,662)		394
Total Park	$	30,846	$	29,505	$	22,372	$	82,723	$	78,764	$	102,700	$	110,387

Net income for the nine months ended September 30, 2020 of $82.7 million represented a $4.0 million, or 5.0%, increase compared to $78.8 million for the nine months ended September 30, 2019. Net income for each of the three and nine months ended September 30, 2020 and the three and nine months September 30, 2019 included several items of income and expense that impact comparability of period results. These items are detailed in the "Financial Reconciliations" section within the Financial Results News Release.

The following discussion provides additional information regarding the two segments that make up Park's ongoing operations, followed by additional information regarding All Other, which consists of the Parent Company and SEPH.

The Park National Bank (PNB)

The table below reflects PNB's net income for the first, second and third quarters of 2020, for the first nine months of each 2020 and 2019 and for the years ended December 31, 2019 and 2018.

(In thousands)	Q3 2020		Q2 2020		Q1 2020		Nine months YTD 2020		Nine months YTD 2019		2019		2018
Net interest income	$	83,795	$	79,891	$	75,214	$	238,900	$	217,355	$	293,130	$	258,547
Provision for loan losses	13,839		12,883		5,534		32,256		6,563		8,356		7,569
Other income	35,430		31,009		23,481		89,920		68,224		92,392		88,981
Other expense	65,590		60,703		61,368		187,661		172,931		237,433		206,843
Income before income taxes	$	39,796	$	37,314	$	31,793	$	108,903	$	106,085	$	139,733	$	133,116
Income tax expense	6,908		6,564		5,885		19,357		19,063		26,133		23,644
Net income	$	32,888	$	30,750	$	25,908	$	89,546	$	87,022	$	113,600	$	109,472

Net interest income of $238.9 million for the nine months ended September 30, 2020 represented a $21.5 million, or 9.9%, increase compared to $217.4 million for the nine months ended September 30, 2019. The increase was a result of a $23.9 million decrease in interest expense, partially offset by a $2.4 million decrease in interest income.

The $2.4 million decrease in interest income was primarily due to a $7.6 million decrease in investment income, partially offset by a $5.2 million increase in interest income on loans.The decrease in investment income was partially the result of a $190.2 million decrease in average investments from $1.38 billion for the nine months ended September 30, 2019 to $1.19 billion for the nine months ended September 30, 2020. The decrease in investment income was also the result of a decrease in the yield on investments, which decreased 16 basis points to 2.62% for the nine months ended September 30, 2020, compared to 2.78% for the nine months ended September 30, 2019. The increase in interest income on loans was partially the result of a $774.0 million increase in average loans from $6.11 billion for the nine months ended September 30, 2019, to $6.89 billion for the nine months ended September 30, 2020. The increase in average loans was partially offset by the decrease in the yield on loans, which

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decreased 49 basis points to 4.66% for the nine months ended September 30, 2020, compared to 5.15% for the nine months ended September 30, 2019. Interest income was impacted by the acquisition of CAB Financial Corporation, the parent of Carolina Alliance Bank ("Carolina Alliance") on April 1, 2019. The Carolina Alliance Bank Division contributed an aggregate of $22.7 million to interest income at PNB during the nine months ended September 30, 2020, compared to $16.9 million for the nine months ended September 30, 2019.

The $23.9 million decrease in interest expense was primarily due to an $19.4 million decrease in interest expense on deposits as well as a $4.5 million decrease in interest expense on borrowings. The decrease in interest expense on deposits was the result of a decrease in the cost of deposits of 56 basis points from 1.03% for the nine months ended September 30, 2019 to 0.47% for the nine months ended September 30, 2020. This was partially offset by a $383.5 million increase in average interest-bearing deposits from $4.96 billion for the nine months ended September 30, 2019, to $5.35 billion for the nine months ended September 30, 2020. Interest expense was impacted by the acquisition of Carolina Alliance. The Carolina Alliance Bank Division contributed an aggregate of $2.6 million to interest expense at PNB during both the nine months ended September 30, 2020 and 2019. The decrease in interest expense on borrowings was partially the result of a $180.1 million decrease in average borrowings from $580.3 million for the nine months ended September 30, 2019, to $400.1 million for the nine months ended September 30, 2020. The cost of borrowings also decreased by 57 basis points, from 2.10% for the nine months ended September 30, 2019 to 1.53% for the nine months ended September 30, 2020.

The provision for loan losses of $32.3 million for the nine months ended September 30, 2020 represented an increase of $25.7 million, compared to $6.6 million for the nine months ended September 30, 2019. Refer to the “Credit Metrics and Provision for (Recovery of) Loan Losses” section for additional details regarding the level of the provision for (recovery of) loan losses recognized in each period presented above.

Other income of $89.9 million for the nine months ended September 30, 2020 represented an increase of $21.7 million, or 31.8%, compared to $68.2 million for the nine months ended September 30, 2019. The $21.7 million increase was primarily related to a $14.4 million increase in other service income, which was primarily due to an increase in fee income from mortgage loan originations and investor rate locks; a $3.7 million increase in gain on sale of debt securities; a $2.4 million increase in other components of net periodic benefit income; a $1.5 million increase in debit card fee income; a $927,000 increase in gain (loss) on sale of OREO, net; a $741,000 increase in income from fiduciary activities; and a $376,000 increase in miscellaneous income, primarily related to an increase in operating lease income. These increases were partially offset by a $1.8 million decrease in service charges on deposits and a $728,000 decrease in gains (losses) from capital investments. Other income was impacted by the acquisition of Carolina Alliance. The Carolina Alliance Bank Division contributed an aggregate of $6.2 million to other income at PNB during the nine months ended September 30, 2020 and $2.5 million during the nine months ended September 30, 2019.

A summary of mortgage originations for the nine months ended September 30, 2020 and 2019 follows. Of total mortgage originations shown below for 2020, refinances comprised 48.1% in the first quarter of 2020, 67.8% in the second quarter of 2020, 68.5% in the third quarter of 2020 and 64.6% for the nine months ended September 30, 2020. Of total mortgage

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originations shown below for 2019, refinances comprised 32.5% in the first quarter of 2019, 29.7% in the second quarter of 2019, 41.3% in the third quarter of 2019 and 35.2% for the nine months ended September 30, 2019.

(In thousands)	Q1 2020		Q2 2020		Q3 2020		Nine months YTD 2020
Mortgage Origination Volume
Sold	$	85,030	$	248,339	$	355,755	$	689,124
Portfolio	56,018		64,351		61,227		$	181,596
Construction	33,109		33,754		40,560		$	107,423
Service released	3,794		2,362		2,275		$	8,431
Total mortgage originations	$	177,951	$	348,806	$	459,817	$	986,574
	Q1 2019		Q2 2019		Q3 2019		Nine months YTD 2019
Mortgage Origination Volume
Sold	$	30,011	$	54,802	$	83,867	$	168,680
Portfolio	31,492		59,613		69,351		160,456
Construction	20,481		22,245		21,280		64,006
Service released	4,407		22,818		28,408		55,633
Total mortgage originations	$	86,391	$	159,478	$	202,906	$	448,775

The table below reflects PNB's other expense for the nine months ended September 30, 2020 and 2019.

(In thousands)	Nine months YTD 2020		Nine months YTD 2019		change		% change
Other expense:
Salaries	$	86,736	$	80,447	$	6,289	7.8	%
Employee benefits	29,113		27,258		1,855		6.8	%
Occupancy expense	10,395		9,264		1,131		12.2	%
Furniture and equipment expense	13,834		12,686		1,148		9.0	%
Data processing fees	8,338		7,868		470		6.0	%
Professional fees and services	16,961		15,160		1,801		11.9	%
Marketing	4,073		4,246		(173)		(4.1)	%
Insurance	4,090		2,343		1,747		74.6	%
Communication	2,894		3,953		(1,059)		(26.8)	%
State tax expense	2,792		2,213		579		26.2	%
Amortization of intangible assets	1,738		1,732		6		0.3	%
Miscellaneous	6,697		5,761		936		16.2	%
Total other expense	$	187,661	$	172,931	$	14,730	8.5	%

Other expense of $187.7 million for the nine months ended September 30, 2020 represented an increase of $14.7 million, or 8.5%, compared to $172.9 million for the nine months ended September 30, 2019. The increase in salaries expense was primarily related to increases in base salary expense, additional compensation incentives, including COVID-19 special one-time bonuses, and officer incentive compensation expense. The increase in employee benefits expense was primarily related to increased pension plan expense, payroll tax expense and defined contribution plan expense, partially offset by a decrease in group insurance costs. The increase in occupancy expense was primarily the result of increased depreciation on premises and a write-down in the right-of-use lease asset related to branches that closed September 30, 2020. The increase in furniture and

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equipment expense was primarily related to increased expenses related to repairs and maintenance on equipment, which also included software maintenance and costs, as well as increased depreciation on furniture and equipment. The increase in data processing fees was related to increased mortgage processing costs, debit card processing costs and other data processing costs. Excluding the impact of the Carolina Alliance Bank Division, data processing fees increased $1.0 million, or 14.3%. The increase in professional fees and services was primarily related to increased title, appraisal and credit costs, increases in management and consulting fees, as well as increased insured cash sweep (ICS) fees, partially offset by a $312,000 decrease in temporary wage expense. The increase in insurance expense was primarily due to a $1.1 million assessment credit which had been utilized for the FDIC expense for the nine months ended September 30, 2019 (and not repeated in 2020), as well as an increase in the assessment base for the nine months ended September 30, 2020, compared to the same period of 2019. The decrease in communications expense was primarily related to a change in statement mailing and production costs, which resulted in lower direct postage expense, but an increase in supply expense which is included in miscellaneous expense. The additional increase in miscellaneous expense was primarily related to a $1.8 million prepayment penalty on FHLB borrowings of $50 million repaid during the nine months ended September 30, 2020, partially offset by a decrease in training and travel related expenses as well as decreased non loan related losses.

Other expense was impacted by the acquisition of Carolina Alliance. Of the $187.7 million of total other expense for the nine months ended September 30, 2020, the Carolina Alliance Bank Division's total other expense was $14.4 million. Of the $172.9 million of total other expense for the nine months ended September 30, 2019, the Carolina Alliance Bank Division's total other expense was $11.4 million.

The table below reflects PNB's other expense less the impact of Carolina Alliance Bank Division for the nine months ended September 30, 2020 and 2019. This table is provided to provide insight into changes in Park's expenses excluding the impact of acquisitions.

(In thousands)	Nine months YTD 2020		Nine months YTD 2019		change		% change
Other expense:
Salaries	$	80,171	$	75,368	$	4,803	6.4	%
Employee benefits	27,134		26,212		922		3.5	%
Occupancy expense	9,218		8,434		784		9.3	%
Furniture and equipment expense	13,230		12,239		991		8.1	%
Data processing fees	8,054		7,047		1,007		14.3	%
Professional fees and services	16,243		14,518		1,725		11.9	%
Marketing	3,938		4,011		(73)		(1.8)	%
Insurance	3,632		2,162		1,470		68.0	%
Communication	2,791		3,845		(1,054)		(27.4)	%
State tax expense	2,789		2,213		576		26.0	%
Amortization of intangible assets	903		906		(3)		(0.3)	%
Miscellaneous	5,186		4,568		618		13.5	%
Total other expense	$	173,289	$	161,523	$	11,766	7.3	%

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The table below provides certain balance sheet information and financial ratios for PNB as of or for the nine months ended September 30, 2020 and 2019 and as of or for the twelve months ended December 31, 2019.

(In thousands)	September 30, 2020			December 31, 2019			September 30, 2019			% change from 12/31/19		% change from 09/30/19
Loans	$	7,263,380		$	6,481,644		$	6,382,673		12.06	%	13.80	%
Allowance for loan losses	85,249			54,692			53,865			55.87	%	58.26	%
Net loans	7,178,131			6,426,952			6,328,808			11.69	%	13.42	%
Investment securities	1,088,149			1,271,817			1,321,018			(14.44)	%	(17.63)	%
Total assets	9,195,911			8,521,537			8,673,919			7.91	%	6.02	%
Total deposits	7,725,562			7,125,111			7,234,450			8.43	%	6.79	%
Average assets (1)	9,171,998			8,425,536			8,353,174			8.86	%	9.80	%
Efficiency ratio (2)	56.70		%	61.12		%	60.09		%	(7.23)	%	(5.64)	%
Return on average assets (3)	1.30		%	1.35		%	1.39		%	(3.70)	%	(6.47)	%

(1) Average assets for the nine months ended September 30, 2020 and 2019 and for the year ended December 31, 2019.

(2) Calculated utilizing fully taxable equivalent net interest income which includes the effects of taxable equivalent adjustments using a 21% federal corporate income tax rate. The taxable equivalent adjustments were $2.2 million for both the nine months ended September 30, 2020 and 2019, and $3.0 million for the year ended December 31, 2019.

(3) Annualized for the nine months ended September 30, 2020 and 2019.

Loans outstanding at September 30, 2020 were $7.26 billion, compared to $6.48 billion at December 31, 2019, an increase of $781.7 million, or 12.1%. Loans outstanding at September 30, 2020 were $7.26 billion, compared to $6.38 billion at September 30, 2019, an increase of $880.7 million, or 13.8%. Excluding $542.8 million of PPP loans, loans outstanding were $6.72 billion at September 30, 2020, compared to $6.48 billion at December 31, 2019, an increase of $239.0 million, or 3.7%, and reflected an increase of $337.9 million, or 5.3%, compared to $6.38 billion at September 30, 2019. The table below breaks out the change in loans outstanding, by loan type.

(In thousands)	September 30, 2020		December 31, 2019		September 30, 2019		change from 12/31/19		% change from 12/31/19		change from 9/30/19		% change from 9/30/19
Home equity	$	194,445	$	224,857	$	231,112	$	(30,412)	(13.5)	%	$	(36,667)	(15.9)	%
Installment	1,633,730		1,431,197		1,411,475		202,533		14.2	%	222,255		15.7	%
Real estate	1,232,196		1,275,154		1,269,594		(42,958)		(3.4)	%	(37,398)		(2.9)	%
Commercial (excluding PPP)	3,654,342		3,545,467		3,466,201		108,875		3.1	%	188,141		5.4	%
PPP loans	542,761		—		—		542,761		N.M.		542,761		N.M.
Other	5,906		4,969		4,291		937		18.9	%	1,615		37.6	%
Total loans	$	7,263,380	$	6,481,644	$	6,382,673	$	781,736	12.1	%	$	880,707	13.8	%

PNB's allowance for loan losses increased by $30.6 million, or 55.9%, to $85.2 million at September 30, 2020, compared to $54.7 million at December 31, 2019. Net charge-offs were $1.7 million, or 0.03% of total average loans (annualized), for the nine months ended September 30, 2020 and were $2.7 million, or 0.04% of total average loans, for the twelve months ended December 31, 2019. Refer to the “Credit Metrics and Provision for (Recovery of) Loan Losses” section for additional information regarding PNB's loan portfolio and the level of provision for (recovery of) loan losses recognized in each period presented.

Total deposits at September 30, 2020 were $7.73 billion, compared to $7.13 billion at December 31, 2019, an increase of $600.5 million, or 8.4%. Total deposits at September 30, 2020 were $7.73 billion, compared to $7.23 billion at September 30, 2019, an increase of $491.1 million, or 6.8%. During the three months ended September 30, 2020, Park made the decision to participate in a one-way sell (OWS) program in order to manage the balance sheet. At September 30, 2020, Park had $773.3 million in OWS insured cash sweep deposits which were off-balance sheet. Total deposits would have increased 19.3%

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compared to December 31, 2019 and 17.5% compared to September 30, 2019, had the $773.3 million remained on the balance sheet. The table below breaks out the change in deposit balances, by deposit type.

(In thousands)	September 30, 2020		December 31, 2019		September 30, 2019		change from 12/31/19		% change from 12/31/19		change from 9/30/19		% change from 9/30/19
Non-interest bearing deposits	$	2,831,767	$	2,036,359	$	2,011,587	$	795,408	39.1	%	$	820,180	40.8	%
Transaction accounts	1,365,783		1,628,741		1,736,605		(262,958)		(16.1)	%	(370,822)		(21.4)	%
Savings	2,596,811		2,320,880		2,358,893		275,931		11.9	%	237,918		10.1	%
Certificates of deposits	931,201		1,139,131		1,127,365		(207,930)		(18.3)	%	(196,164)		(17.4)	%
Total deposits	$	7,725,562	$	7,125,111	$	7,234,450	$	600,451	8.4	%	$	491,112	6.8	%

Guardian Financial Services Company (GFSC)

The table below reflects GFSC's net income for the first, second and third quarters of 2020, the first nine months of each of 2020 and 2019 and for the years ended December 31, 2019 and 2018. During the first quarter of 2020, Park made the decision to no longer seek new loans through the GFSC subsidiary.

(In thousands)	Q3 2020		Q2 2020		Q1 2020		Nine months YTD 2020		Nine months YTD 2019		2019		2018
Net interest income	$	893	$	1,025	$	1,152	$	3,070	$	3,786	$	5,013	$	5,048
Provision for loan losses	34		27		277		338		458		754		1,328
Other income	60		62		32		154		142		170		187
Other expense	499		651		765		1,915		2,638		3,478		3,245
Income before income taxes	$	420	$	409	$	142	$	971	$	832	$	951	$	662
Income tax expense	88		86		30		204		179		189		141
Net income	$	332	$	323	$	112	$	767	$	653	$	762	$	521

The table below provides certain balance sheet information and financial ratios for GFSC as of or for the nine months ended September 30, 2020 and 2019 and as of or for the twelve months ended December 31, 2019.

(In thousands)	September 30, 2020			December 31, 2019			September 30, 2019			% change from 12/31/19		% change from 09/30/19
Loans	$	16,589		$	28,143		$	27,964		(41.05)	%	(40.68)	%
Allowance for loan losses	1,789			1,987			1,988			(9.96)	%	(10.01)	%
Net loans	14,800			26,156			25,976			(43.42)	%	(43.02)	%
Total assets	16,045			27,593			27,481			(41.85)	%	(41.61)	%
Average assets (1)	23,011			29,119			29,713			(20.98)	%	(22.56)	%
Return on average assets (2)	4.45		%	2.62		%	2.94		%	69.85	%	51.36	%

(1) Average assets for the nine months ended September 30, 2020 and 2019 and for the year ended December 31, 2019.

(2) Annualized for the nine months ended September 30, 2020 and 2019.

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All Other

The table below reflects All Other net (loss) income for the first, second and third quarters of 2020, for the first nine months of each of 2020 and 2019 and for the years ended December 31, 2019 and 2018.

(In thousands)	Q3 2020		Q2 2020		Q1 2020		Nine month YTD 2020		Nine months YTD 2019		2019		2018
Net interest (expense) income	$	(848)	$	270	$	(83)	$	(661)	$	(413)	$	(406)	$	3,303
Recovery of loan losses	(37)		(686)		(658)		(1,381)		(637)		(2,939)		(952)
Other income (loss)	1,068		(107)		(1,027)		(66)		4,603		4,631		11,933
Other expense	3,770		3,445		4,143		11,358		17,188		23,077		18,667
Net loss before income tax benefit	$	(3,513)	$	(2,596)	$	(4,595)	$	(10,704)	$	(12,361)	$	(15,913)	$	(2,479)
Income tax benefit	(1,139)		(1,028)		(947)		(3,114)		(3,450)		(4,251)		(2,873)
Net (loss) income	$	(2,374)	$	(1,568)	$	(3,648)	$	(7,590)	$	(8,911)	$	(11,662)	$	394

The net interest (expense) income for All Other included, for all periods presented, interest income on subordinated debt investments in PNB, which were eliminated in the consolidated Park National Corporation totals, as well as interest income on SEPH impaired loan relationships. The net interest (expense) income for All Other included for the three and nine months ended September 30, 2020 interest expense on $175.0 million aggregate principal amount of 4.50% Fixed-to-Floating Rate Subordinated Notes due 2030 issued in August 2020.

Net interest (expense) income reflected net interest expense of $661,000 for the nine months ended September 30, 2020, compared to net interest expense of $413,000 for the nine months ended September 30, 2019. The change was largely the result of an increase in borrowing interest expense, partially offset by an increase in loan interest income related to payment collections at SEPH.

SEPH had net recoveries of $1.4 million for the nine months ended September 30, 2020, compared to net recoveries of $637,000 for the nine months ended September 30, 2019.

All Other had an other loss of $66,000 for the nine months ended September 30, 2020, compared to other income of $4.6 million for the nine months ended September 30, 2019. The change was largely due to a $4.4 million decrease in income related to partnership investments, which went from a $4.2 million gain for the nine months ended September 30, 2019 to a $203,000 loss for the nine months ended September 30, 2020, and a $818,000 decrease in gain (loss) on equity securities, net, which went from a $159,000 gain for the nine months ended September 30, 2019 to a $659,000 loss for the nine months ended September 30, 2020.

All Other had other expense of $11.4 million for the nine months ended September 30, 2020, compared to $17.2 million for the nine months ended September 30, 2019. The decrease was largely due to a $6.4 million decrease in merger related expenses related to the NewDominion and Carolina Alliance acquisitions.

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Park National Corporation

The table below reflects Park's consolidated net income for the first, second and third quarters of 2020, for the first nine months of each of 2020 and 2019 and for the years ended December 31, 2019 and 2018.

(In thousands)	Q3 2020		Q2 2020		Q1 2020		Nine months YTD 2020		Nine months YTD 2019		2019		2018
Net interest income	$	83,840	$	81,186	$	76,283	$	241,309	$	220,728	$	297,737	$	266,898
Provision for loan losses	13,836		12,224		5,153		31,213		6,384		6,171		7,945
Other income	36,558		30,964		22,486		90,008		72,969		97,193		101,101
Other expense	69,859		64,799		66,276		200,934		192,757		263,988		228,755
Income before income taxes	$	36,703	$	35,127	$	27,340	$	99,170	$	94,556	$	124,771	$	131,299
Income tax expense	5,857		5,622		4,968		16,447		15,792		22,071		20,912
Net income	$	30,846	$	29,505	$	22,372	$	82,723	$	78,764	$	102,700	$	110,387

Credit Metrics and Provision for (Recovery of) Loan Losses

Section 4014 of the CARES Act provided financial institutions with optional temporary relief from having to comply with the Financial Accounting Standards Board Accounting Standards Update 2016-13 ("Measurement of Credit Losses on Financial Instruments") including the current expected credit loss ("CECL") methodology for estimating the allowance for credit losses. This temporary relief will expire on the earlier of the date on which the national emergency concerning COVID-19 terminates or December 31, 2020, with adoption being effective retrospectively as of January 1, 2020.

Park elected to delay the implementation of CECL following the approval of the CARES Act. The CECL standard requires financial institutions to calculate an allowance utilizing a reasonable and supportable forecast period which Park had established as a one-year period. Much is still unknown about the economic impact of COVID-19 including the duration of the pandemic, the duration and impact of future government programs that may be established as a result of the pandemic, and the resiliency of the U.S. economy, making any forecast subject to large fluctuations in the coming months. In this unprecedented situation, Park believes that adopting the CECL model in the first quarter of 2020 would have added an unnecessary level of subjectivity and volatility to the calculation of the allowance for credit losses.

On a consolidated basis, Park reported a provision for loan losses for the nine months ended September 30, 2020 of $31.2 million, compared to $6.4 million for the nine months ended September 30, 2019. The table below shows a breakdown of the provision for (recovery of) loan losses by reportable segment.

(In thousands)	Q3 2020		Q2 2020		Q1 2020		Nine months YTD 2020		Nine months YTD 2019		2019		2018
PNB	$	13,839	$	12,883	$	5,534	$	32,256	$	6,563	$	8,356	$	7,569
GFSC	34		27		277		338		458		$	754	1,328
All Other	(37)		(686)		(658)		(1,381)		(637)		(2,939)		(952)
Total Park	$	13,836	$	12,224	$	5,153	$	31,213	$	6,384	$	6,171	$	7,945

PNB had net charge-offs of $1.7 million, GFSC had net charge-offs of $536,000, and All Other had net recoveries of $1.4 million for the nine months ended September 30, 2020, resulting in net charge-offs of $854,000 for Park, on a consolidated basis. PNB had net charge-offs of $1.8 million, GFSC had net charge-offs of $916,000, and All Other had net recoveries of $637,000 for the nine months ended September 30, 2019, resulting in net charge-offs of $2.0 million for Park, on a consolidated basis.

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The table below provides additional information related to specific reserves and general reserves for Park as of September 30, 2020, December 31, 2019, and September 30, 2019.

(In thousands)	9/30/2020			12/31/2019			9/30/2019
Total allowance for loan losses	$	87,038		$	56,679		$	55,853
Allowance on purchased credit impaired ("PCI") loans	103			268			—
Allowance on purchased loans	371			—			—
Specific reserve	8,666			5,230			3,083
General reserve on originated loans	$	77,898		$	51,181		$	52,770
Total loans	$	7,278,546		$	6,501,404		$	6,403,647
PCI loans (1)	11,877			14,331			20,486
Purchased loans	393,752			548,436			604,399
Impaired commercial loans	116,138			77,459			74,424
Originated loans excluding impaired commercial loans	$	6,756,779		$	5,861,178		$	5,704,338
Total allowance for loan losses to total loans ratio	1.20		%	0.87		%	0.87		%
Total allowance for loan losses on originated loans to total originated loans ratio	1.26		%	0.95		%	0.97		%
Total allowance for loan losses on originated loans to total originated loans ratio (excluding PPP loans) (2)	1.36		%	N.A.			N.A.
General reserve as a % of total originated loans less impaired commercial loans	1.15		%	0.87		%	0.93		%
General reserve as a % of total originated loans less impaired commercial loans (excluding PPP loans) (2)	1.24		%	N.A.			N.A.

(1) Excludes PCI loans which are individually evaluated for impairment due to additional credit deterioration post acquisition. These loans had a balance of $0, $5,000, and $11,000 at September 30, 2020, December 31, 2019, and September 30, 2019, respectively.

(2) Excludes $542.8 million of PPP loans and $543,000 in related allowance at September 30, 2020. No PPP loans were outstanding at December 31, 2019 or September 30, 2019.

The allowance for loan losses of $87.0 million at September 30, 2020 represented a $30.4 million, or 53.6%, increase compared to $56.7 million at December 31, 2019. This increase was largely the result of a $26.7 million increase in general reserves on originated total loans and a $3.4 million increase in specific reserves. As of September 30, 2020, a $371,000 allowance had been established for performing acquired loans and a $103,000 allowance had been established for PCI loans. In addition to the established allowance related to acquired loans, as of September 30, 2020, these loans have a remaining purchase accounting discount of $8.1 million. The $26.7 million increase in general reserves was the result of the estimated increase in incurred losses as a result of the impact of the COVID-19 pandemic. This estimate was established based on consideration of Park's existing environmental loss factors, modification programs Park has put in place, and balances of high risk portfolios such as hotel and accommodations, restaurants and food service and strip shopping centers. Much is still unknown about the long-term economic impact of the COVID-19 pandemic and management will continue to evaluate this estimate of incurred losses as new information becomes available.

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SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Park cautions that any forward-looking statements contained in this Current Report on Form 8-K or made by management of Park 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:

•the ever-changing effects of the novel coronavirus (COVID-19) pandemic - - the duration, extent and severity of which are impossible to predict, including the possibility of further resurgence in the spread of COVID-19 - - on economies (local, national and international) and markets, and on our customers, counterparties, employees and third-party service providers, as well as the effects of various responses of governmental and nongovernmental authorities to the COVID-19 pandemic, including public health actions directed toward the containment of the COVID-19 pandemic, and the implementation of fiscal stimulus packages;

•the impact of future governmental and regulatory actions upon our participation in and execution of government programs related to the COVID-19 pandemic;

•Park's ability to execute our business plan successfully and within the expected timeframe as well as our ability to manage strategic initiatives in light of the impact of the COVID-19 pandemic and the various responses to the COVID-19 pandemic;

•general economic and financial market conditions, specifically in the real estate markets and the credit markets, either nationally or in the states in which Park and our subsidiaries do business, may experience a weaker recovery than anticipated, in addition to the continuing impact of the COVID-19 pandemic on our customers’ operations and financial condition, either of which may result in adverse impacts on the demand for loan, deposit and other financial services, delinquencies, defaults and counterparties' inability to meet credit and other obligations and the possible impairment of collectability of loans;

•factors that can impact the performance of our loan portfolio, including real estate values and liquidity in our primary market areas, the financial health of our commercial borrowers and the success of construction projects that we finance, including any loans acquired in acquisition transactions;

•the effect of monetary and other fiscal policies (including the impact of money supply and interest rate policies of the Federal Reserve Board) as well as disruption in the liquidity and functioning of U.S. financial markets, as a result of the COVID-19 pandemic and government policies implemented in response thereto, may adversely impact prepayment penalty income, mortgage banking income, income from fiduciary activities, the value of securities, deposits and other financial instruments, in addition to the loan demand and the performance of our loan portfolio, and the interest rate sensitivity of our consolidated balance sheet as well as reduce interest margins;

•changes in consumer spending, borrowing and saving habits, whether due to changes in retail distribution strategies, consumer preferences and behavior, changes in business and economic conditions (including as a result of the COVID-19 pandemic and reactions thereto), legislative and regulatory initiatives (including those undertaken in response to the COVID-19 pandemic), or other factors may be different than anticipated;

•changes in unemployment levels in the states in which Park and our subsidiaries do business may be different than anticipated due to the continuing impact of the COVID-19 pandemic;

•changes in customers', suppliers', and other counterparties' performance and creditworthiness may be different than anticipated due to the continuing impact of the COVID-19 pandemic;

•the adequacy of our internal controls and risk management program in the event of changes in the market, economic, operational (including those which may result from more of our associates working remotely), asset/liability repricing, legal, compliance, strategic, cybersecurity, liquidity, credit and interest rate risks associated with Park's business;

•competitive pressures among financial services organizations could increase significantly, including product and pricing pressures (which could in turn impact our credit spreads), changes to third-party relationships and revenues, changes in the manner of providing services, customer acquisition and retention pressures, and our ability to attract, develop and retain qualified banking professionals;

•uncertainty regarding the nature, timing, cost and effect of changes in banking regulations or other regulatory or legislative requirements affecting the respective businesses of Park and our subsidiaries, including major reform of the regulatory oversight structure of the financial services industry and changes in laws and regulations concerning taxes, FDIC insurance premium levels, pensions, bankruptcy, consumer protection, rent regulation and housing, financial accounting and reporting, environmental protection, insurance, bank products and services, bank and bank holding company capital and liquidity standards, fiduciary standards, securities and other aspects of the financial services industry, specifically the reforms provided for in the Coronavirus Aid, Relief and Economic Security (CARES) Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and the Basel III regulatory capital reforms, as well as regulations already adopted and which may be adopted in the future by the relevant regulatory agencies, including the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve Board, to implement the provisions of the CARES Act, the provisions of the Dodd-Frank Act, and the Basel III regulatory capital reforms;

•the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board (the "FASB"), the SEC, the Public Company Accounting Oversight Board and other regulatory agencies, including the extent to which the new current expected credit loss ("CECL") accounting standard issued by the FASB in June 2016 and in accordance with the CARES Act, the adoption of which can be deferred by Park (with retrospective application as of January 1, 2020) until the earlier of: (1) the interim reporting period during which the national emergency concerning the COVID-19 outbreak terminates; or (2) December 31, 2020, may adversely affect Park's reported financial condition or results of operations;

15

•Park's assumptions and estimates used in applying critical accounting policies and modeling, including under the CECL model, when adopted by Park, which may prove unreliable, inaccurate or not predictive of actual results;

•significant changes in the tax laws, which may adversely affect the fair values of net deferred tax assets and obligations of state and political subdivisions held in Park's investment securities portfolio;

•the impact of Park's ability to anticipate and respond to technological changes on Park's ability to respond to customer needs and meet competitive demands;

•operational issues stemming from and/or capital spending necessitated by the potential need to adapt to industry changes in information technology systems on which Park and our subsidiaries are highly dependent;

•the ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks;

•a failure in or breach of Park's operational or security systems or infrastructure, or those of our third-party vendors and other service providers, resulting in failures or disruptions in customer account management, general ledger, deposit, loan, or other systems, including as a result of cyber attacks;

•the existence or exacerbation of general geopolitical instability and uncertainty as well as the effect of trade policies (including the impact of potential or imposed tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements, trade wars and other changes in trade regulations and changes in the relationship of the U.S. and its global trading partners);

•uncertainty regarding changes to the U.S. presidential administration and Congress and the impact thereof on the regulatory landscape, capital markets, and the response to and management of the COVID-19 pandemic;

•the impact on financial markets and the economy of any changes in the credit ratings of the U.S. Treasury obligations and other U.S. government - backed debt, as well as issues surrounding the levels of U.S., European and Asian government debt and concerns regarding the growth rates and financial stability of certain sovereign governments, supranationals and financial institutions in Europe and Asia and the risk they may face difficulties servicing their sovereign debt;

•the uncertainty surrounding the actions to be taken to implement the referendum by United Kingdom voters to exit the European Union;

•our litigation and regulatory compliance exposure, including the costs and effects of any adverse developments in legal proceedings or other claims and the costs and effects of unfavorable resolution of regulatory and other governmental examinations or other inquiries;

•continued availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends;

•the impact on Park's business, personnel, facilities or systems of losses related to acts of fraud, scams and schemes of third parties;

•the impact of widespread natural and other disasters, pandemics (including the COVID-19 pandemic), dislocations, regional or national protests and civil unrest, terrorist activities or international hostilities on the economy and financial markets generally and on us or our counterparties specifically;

•any of the foregoing factors, or other cascading effects of the COVID-19 pandemic that are not currently foreseeable, could materially affect our business, including our customers' willingness to conduct banking transactions and their ability to pay on existing obligations;

•the effect of healthcare laws in the U.S. and potential changes for such laws, especially in light of the COVID-19 pandemic, which may increase our healthcare and other costs and negatively impact our operations and financial results;

•risk and uncertainties associated with Park's entry into new geographic markets with our recent acquisitions, including expected revenue synergies and cost savings from recent acquisitions not being fully realized or realized within the expected time frame;

•the discontinuation of the London Inter-Bank Offered Rate (LIBOR) and other reference rates which may result in increased expenses and litigation, and adversely impact the effectiveness of hedging strategies;

•and other risk factors relating to the banking industry as detailed from time to time in Park's reports filed with the 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, 2019 and in "Item 1A. Risk Factors" of Part II of Park's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020.

Park does not undertake, and specifically disclaims any obligation, to publicly release the results of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances 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.

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Item 8.01 - Other Events

Declaration of Cash Dividend

As reported in the Financial Results News Release, on October 26, 2020, the Park Board of Directors (the "Park Board") declared a $1.02 per common share quarterly cash dividend in respect of Park's common shares. These cash dividends are payable on December 10, 2020 to common shareholders of record as of the close of business on November 20, 2020. A copy of the Financial Results News Release is included as Exhibit 99.1 and the portion thereof addressing the declaration of the cash dividend by the Park Board is incorporated by reference herein.

Item 9.01 - Financial Statements and Exhibits.

(a)Not applicable

(b)Not applicable

(c)Not applicable

(d)Exhibits. The following exhibits are included with this Current Report on Form 8-K:

Exhibit No.        Description

99.1    News Release issued by Park National Corporation on October 26, 2020 addressing financial results for the three and nine months ended September 30, 2020 and declaration of quarterly cash dividend

104    Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document)

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PARK NATIONAL CORPORATION
Dated: October 26, 2020	By:	/s/ Brady T. Burt
		Brady T. Burt
		Chief Financial Officer, Secretary and Treasurer

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EX-99.1

October 26, 2020Exhibit 99.1

Park National Corporation reports financial results

for third quarter and first nine months of 2020

NEWARK, Ohio - Park National Corporation (Park) (NYSE American: PRK) today reported financial results for the third quarter and first nine months of 2020 (three and nine months ended September 30, 2020). Park's board of directors declared a quarterly cash dividend of $1.02 per common share, payable on December 10, 2020 to common shareholders of record as of November 20, 2020.

Park’s net income for the third quarter of 2020 was $30.8 million, a 1.0 percent decrease from $31.1 million for the third quarter of 2019. Third quarter 2020 net income per diluted common share was $1.88, compared to $1.89 in the third quarter of 2019. Park's net income for the first nine months of 2020 was $82.7 million, a 5.0 percent increase from $78.8 million for the first nine months of 2019. Net income per diluted common share was $5.04 for the first nine months of 2020, compared to $4.84 for the first nine months of 2019.

Park's community-banking subsidiary, The Park National Bank, reported net income of $32.9 million for the third quarter of 2020, a 6.3 percent increase compared to $30.9 million for the same period of 2019. The bank reported net income of $89.5 million for the first nine months of 2020, compared to $87.0 million for the first nine months of 2019.

“Our results through the spring and summer reflect the unwavering dedication our associates have to supporting customers in the most reliable and compassionate ways. Our service style has always included easy, direct access to local bankers, quick responses, and flexibility to fit unique situations. The excellent loan growth this year is absolutely connected to our bankers’ reputation for answering phones and providing solutions – even on evenings and weekends,” Park Chief Executive Office David Trautman explained.

“As our communities adapted to pandemic conditions, local businesses needed swift access to funds as they adjusted and persevered. Families needed fair financing for vehicles and recreational equipment, and many needed guidance about low mortgage rates. Everyone needed and deserves service in the quickest, safest way possible. We are extremely proud of and grateful for our associates, in every corner of our organization, who continue to dedicate themselves to serving our communities and neighbors.”

Headquartered in Newark, Ohio, Park National Corporation has $9.2 billion in total assets (as of September 30, 2020). Park's banking operations are conducted through its subsidiary The Park National Bank. Other Park subsidiaries are Scope Leasing, Inc. (d.b.a. Scope Aircraft Finance), Guardian Financial Services Company (d.b.a. Guardian Finance Company) and SE Property Holdings, LLC.

Complete financial tables are listed below.

Category: Earnings

Media contact: Bethany Lewis, 740.349.0421, bethany.lewis@parknationalbank.com

Investor contact: Brady Burt, 740.322.6844, brady.burt@parknationalbank.com

Park National Corporation, 50 N. Third Street, Newark, Ohio 43055

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Park cautions that any forward-looking statements contained in this Current Report on Form 8-K or made by management of Park 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 National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com

•the ever-changing effects of the novel coronavirus (COVID-19) pandemic - - the duration, extent and severity of which are impossible to predict, including the possibility of further resurgence in the spread of COVID-19 - - on economies (local, national and international) and markets, and on our customers, counterparties, employees and third-party service providers, as well as the effects of various responses of governmental and nongovernmental authorities to the COVID-19 pandemic, including public health actions directed toward the containment of the COVID-19 pandemic, and the implementation of fiscal stimulus packages;

•the impact of future governmental and regulatory actions upon our participation in and execution of government programs related to the COVID-19 pandemic;

•Park's ability to execute our business plan successfully and within the expected timeframe as well as our ability to manage strategic initiatives in light of the impact of the COVID-19 pandemic and the various responses to the COVID-19 pandemic;

•general economic and financial market conditions, specifically in the real estate markets and the credit markets, either nationally or in the states in which Park and our subsidiaries do business, may experience a weaker recovery than anticipated, in addition to the continuing impact of the COVID-19 pandemic on our customers’ operations and financial condition, either of which may result in adverse impacts on the demand for loan, deposit and other financial services, delinquencies, defaults and counterparties' inability to meet credit and other obligations and the possible impairment of collectability of loans;

•factors that can impact the performance of our loan portfolio, including real estate values and liquidity in our primary market areas, the financial health of our commercial borrowers and the success of construction projects that we finance, including any loans acquired in acquisition transactions;

•the effect of monetary and other fiscal policies (including the impact of money supply and interest rate policies of the Federal Reserve Board) as well as disruption in the liquidity and functioning of U.S. financial markets, as a result of the COVID-19 pandemic and government policies implemented in response thereto, may adversely impact prepayment penalty income, mortgage banking income, income from fiduciary activities, the value of securities, deposits and other financial instruments, in addition to the loan demand and the performance of our loan portfolio, and the interest rate sensitivity of our consolidated balance sheet as well as reduce interest margins;

•changes in consumer spending, borrowing and saving habits, whether due to changes in retail distribution strategies, consumer preferences and behavior, changes in business and economic conditions (including as a result of the COVID-19 pandemic and reactions thereto), legislative and regulatory initiatives (including those undertaken in response to the COVID-19 pandemic), or other factors may be different than anticipated;

•changes in unemployment levels in the states in which Park and our subsidiaries do business may be different than anticipated due to the continuing impact of the COVID-19 pandemic;

•changes in customers', suppliers', and other counterparties' performance and creditworthiness may be different than anticipated due to the continuing impact of the COVID-19 pandemic;

•the adequacy of our internal controls and risk management program in the event of changes in the market, economic, operational (including those which may result from more of our associates working remotely), asset/liability repricing, legal, compliance, strategic, cybersecurity, liquidity, credit and interest rate risks associated with Park's business;

•competitive pressures among financial services organizations could increase significantly, including product and pricing pressures (which could in turn impact our credit spreads), changes to third-party relationships and revenues, changes in the manner of providing services, customer acquisition and retention pressures, and our ability to attract, develop and retain qualified banking professionals;

•uncertainty regarding the nature, timing, cost and effect of changes in banking regulations or other regulatory or legislative requirements affecting the respective businesses of Park and our subsidiaries, including major reform of the regulatory oversight structure of the financial services industry and changes in laws and regulations concerning taxes, FDIC insurance premium levels, pensions, bankruptcy, consumer protection, rent regulation and housing, financial accounting and reporting, environmental protection, insurance, bank products and services, bank and bank holding company capital and liquidity standards, fiduciary standards, securities and other aspects of the financial services industry, specifically the reforms provided for in the Coronavirus Aid, Relief and Economic Security (CARES) Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and the Basel III regulatory capital reforms, as well as regulations already adopted and which may be adopted in the future by the relevant regulatory agencies, including the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve Board, to implement the provisions of the CARES Act, the provisions of the Dodd-Frank Act, and the Basel III regulatory capital reforms;

•the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board (the "FASB"), the SEC, the Public Company Accounting Oversight Board and other regulatory agencies, including the extent to which the new current expected credit loss ("CECL") accounting standard issued by the FASB in June 2016 and in accordance with the CARES Act, the adoption of which can be deferred by Park (with retrospective application as of January 1, 2020) until the earlier of: (1) the interim reporting period during which the national emergency concerning the COVID-19 outbreak terminates; or (2) December 31, 2020, may adversely affect Park's reported financial condition or results of operations;

•Park's assumptions and estimates used in applying critical accounting policies and modeling, including under the CECL model, when adopted by Park, which may prove unreliable, inaccurate or not predictive of actual results;

•significant changes in the tax laws, which may adversely affect the fair values of net deferred tax assets and obligations of state and political subdivisions held in Park's investment securities portfolio;

•the impact of Park's ability to anticipate and respond to technological changes on Park's ability to respond to customer needs and meet competitive demands;

•operational issues stemming from and/or capital spending necessitated by the potential need to adapt to industry changes in information technology systems on which Park and our subsidiaries are highly dependent;

•the ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks;

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com

•a failure in or breach of Park's operational or security systems or infrastructure, or those of our third-party vendors and other service providers, resulting in failures or disruptions in customer account management, general ledger, deposit, loan, or other systems, including as a result of cyber attacks;

•the existence or exacerbation of general geopolitical instability and uncertainty as well as the effect of trade policies (including the impact of potential or imposed tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements, trade wars and other changes in trade regulations and changes in the relationship of the U.S. and its global trading partners);

•uncertainty regarding changes to the U.S. presidential administration and Congress and the impact thereof on the regulatory landscape, capital markets, and the response to and management of the COVID-19 pandemic;

•the impact on financial markets and the economy of any changes in the credit ratings of the U.S. Treasury obligations and other U.S. government - backed debt, as well as issues surrounding the levels of U.S., European and Asian government debt and concerns regarding the growth rates and financial stability of certain sovereign governments, supranationals and financial institutions in Europe and Asia and the risk they may face difficulties servicing their sovereign debt;

•the uncertainty surrounding the actions to be taken to implement the referendum by United Kingdom voters to exit the European Union;

•our litigation and regulatory compliance exposure, including the costs and effects of any adverse developments in legal proceedings or other claims and the costs and effects of unfavorable resolution of regulatory and other governmental examinations or other inquiries;

•continued availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends;

•the impact on Park's business, personnel, facilities or systems of losses related to acts of fraud, scams and schemes of third parties;

•the impact of widespread natural and other disasters, pandemics (including the COVID-19 pandemic), dislocations, regional or national protests and civil unrest, terrorist activities or international hostilities on the economy and financial markets generally and on us or our counterparties specifically;

•any of the foregoing factors, or other cascading effects of the COVID-19 pandemic that are not currently foreseeable, could materially affect our business, including our customers' willingness to conduct banking transactions and their ability to pay on existing obligations;

•the effect of healthcare laws in the U.S. and potential changes for such laws, especially in light of the COVID-19 pandemic, which may increase our healthcare and other costs and negatively impact our operations and financial results;

•risk and uncertainties associated with Park's entry into new geographic markets with our recent acquisitions, including expected revenue synergies and cost savings from recent acquisitions not being fully realized or realized within the expected time frame;

•the discontinuation of the London Inter-Bank Offered Rate (LIBOR) and other reference rates which may result in increased expenses and litigation, and adversely impact the effectiveness of hedging strategies;

•and other risk factors relating to the banking industry as detailed from time to time in Park's reports filed with the 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, 2019 and in "Item 1A. Risk Factors" of Part II of Park's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020.

Park does not undertake, and specifically disclaims any obligation, to publicly release the results of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances 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.

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com

PARK NATIONAL CORPORATION
Financial Highlights
As of or for the three months ended September 30, 2020, June 30, 2020, and September 30, 2019
	2020			2020			2019			Percent change vs.
(in thousands, except share and per share data)	3rd QTR			2nd QTR			3rd QTR			2Q '20		3Q '19
INCOME STATEMENT:
Net interest income	$	83,840		$	81,186		$	77,101		3.3	%	8.7	%
Provision for loan losses	13,836			12,224			1,967			13.2	%	603.4	%
Other income	36,558			30,964			28,136			18.1	%	29.9	%
Other expense	69,859			64,799			65,738			7.8	%	6.3	%
Income before income taxes	$	36,703		$	35,127		$	37,532		4.5	%	(2.2)	%
Income taxes	5,857			5,622			6,386			4.2	%	(8.3)	%
Net income	$	30,846		$	29,505		$	31,146		4.5	%	(1.0)	%
MARKET DATA:
Earnings per common share - basic (a)	$	1.89		$	1.81		$	1.90		4.4	%	(0.5)	%
Earnings per common share - diluted (a)	1.88			1.80			1.89			4.4	%	(0.5)	%
Cash dividends declared per common share	1.02			1.02			1.01			—	%	1.0	%
Book value per common share at period end	62.39			61.46			58.54			1.5	%	6.6	%
Market price per common share at period end	81.96			70.38			94.81			16.5	%	(13.6)	%
Market capitalization at period end	1,336,011			1,146,942			1,548,527			16.5	%	(13.7)	%
Weighted average common shares - basic (b)	16,300,720			16,296,427			16,382,798			—	%	(0.5)	%
Weighted average common shares - diluted (b)	16,393,792			16,375,434			16,475,741			0.1	%	(0.5)	%
Common shares outstanding at period end	16,300,763			16,296,425			16,332,951			—	%	(0.2)	%
PERFORMANCE RATIOS: (annualized)
Return on average assets (a)(b)	1.28		%	1.26		%	1.41		%	1.6	%	(9.2)	%
Return on average shareholders' equity (a)(b)	12.03		%	11.89		%	13.07		%	1.2	%	(8.0)	%
Yield on loans	4.54		%	4.63		%	5.25		%	(1.9)	%	(13.5)	%
Yield on investment securities	2.35		%	2.76		%	2.72		%	(14.9)	%	(13.6)	%
Yield on money market instruments	0.11		%	0.10		%	2.43		%	10.0	%	(95.5)	%
Yield on interest earning assets	4.12		%	4.14		%	4.73		%	(0.5)	%	(12.9)	%
Cost of interest bearing deposits	0.26		%	0.36		%	1.08		%	(27.8)	%	(75.9)	%
Cost of borrowings	1.63		%	1.33		%	2.25		%	22.6	%	(27.6)	%
Cost of paying interest bearing liabilities	0.39		%	0.43		%	1.19		%	(9.3)	%	(67.2)	%
Net interest margin (g)	3.85		%	3.84		%	3.86		%	0.3	%	(0.3)	%
Efficiency ratio (g)	57.69		%	57.41		%	62.03		%	0.5	%	(7.0)	%
OTHER RATIOS (NON-GAAP):
Tangible book value per share (d)	$	52.00		$	51.04		$	47.92		1.9	%	8.5	%
Note: Explanations for footnotes (a) - (k) are included at the end of the financial tables in the "Financial Reconciliations" section.

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com

PARK NATIONAL CORPORATION
Financial Highlights (continued)
As of or for the three months ended September 30, 2020, June 30, 2020, and September 30, 2019
										Percent change vs.
(in thousands, except ratios)	September 30, 2020			June 30, 2020			September 30, 2019			2Q '20		3Q '19
BALANCE SHEET:
Investment securities	$	1,097,598		$	1,153,186		$	1,328,930		(4.8)	%	(17.4)	%
Loans	7,278,546			7,204,445			6,403,647			1.0	%	13.7	%
Allowance for loan losses	87,038			73,476			55,853			18.5	%	55.8	%
Goodwill and other intangible assets	169,380			169,905			173,489			(0.3)	%	(2.4)	%
Other real estate owned (OREO)	836			1,356			3,779			(38.3)	%	(77.9)	%
Total assets	9,240,006			9,712,994			8,723,610			(4.9)	%	5.9	%
Total deposits	7,475,829			8,161,900			7,168,259			(8.4)	%	4.3	%
Borrowings	643,103			444,410			498,338			44.7	%	29.0	%
Total shareholders' equity	1,016,996			1,001,594			956,140			1.5	%	6.4	%
Tangible equity (d)	847,616			831,689			782,651			1.9	%	8.3	%
Total nonperforming loans	148,442			126,044			111,184			17.8	%	33.5	%
Total nonperforming assets	152,670			130,999			118,561			16.5	%	28.8	%
ASSET QUALITY RATIOS:
Loans as a % of period end total assets	78.77		%	74.17		%	73.41		%	6.2	%	7.3	%
Total nonperforming loans as a % of period end loans	2.04		%	1.75		%	1.74		%	16.6	%	17.2	%
Total nonperforming assets as a % of period end loans + OREO + other nonperforming assets	2.10		%	1.82		%	1.85		%	15.4	%	13.5	%
Allowance for loan losses as a % of period end loans	1.20		%	1.02		%	0.87		%	17.6	%	37.9	%
Net loan charge-offs	$	274		$	251		$	117		9.2	%	134.2	%
Annualized net loan charge-offs as a % of average loans (b)	0.02		%	0.01		%	0.01		%	100.0	%	100.0	%
CAPITAL & LIQUIDITY:
Total shareholders' equity / Period end total assets	11.01		%	10.31		%	10.96		%	6.8	%	0.5	%
Tangible equity (d) / Tangible assets (f)	9.34		%	8.72		%	9.15		%	7.1	%	2.1	%
Average shareholders' equity / Average assets (b)	10.67		%	10.61		%	10.76		%	0.6	%	(0.8)	%
Average shareholders' equity / Average loans (b)	14.08		%	14.30		%	14.83		%	(1.5)	%	(5.1)	%
Average loans / Average deposits (b)	92.02		%	88.59		%	88.63		%	3.9	%	3.8	%
Note: Explanations for footnotes (a) - (k) are included at the end of the financial tables in the "Financial Reconciliations" section.

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com

PARK NATIONAL CORPORATION
Financial Highlights
Nine months ended September 30, 2020 and September 30, 2019
	2020			2019
(in thousands, except share and per share data and ratios)	Nine months ended September 30			Nine months ended September 30			Percent change vs '19
INCOME STATEMENT:
Net interest income	$	241,309		$	220,728		9.3	%
Provision for loan losses	31,213			6,384			388.9	%
Other income	90,008			72,969			23.4	%
Other expense	200,934			192,757			4.2	%
Income before income taxes	$	99,170		$	94,556		4.9	%
Income taxes	16,447			15,792			4.1	%
Net income	$	82,723		$	78,764		5.0	%
MARKET DATA:
Earnings per common share - basic (a)	$	5.07		$	4.86		4.3	%
Earnings per common share - diluted (a)	5.04			4.84			4.1	%
Cash dividends declared per common share	3.26			3.23			0.9	%
Weighted average common shares - basic (b)	16,300,250			16,198,294			0.6	%
Weighted average common shares - diluted (b)	16,398,350			16,287,695			0.7	%
PERFORMANCE RATIOS: (annualized)
Return on average assets (a)(b)	1.20		%	1.25		%	(4.0)	%
Return on average shareholders' equity (a)(b)	11.05		%	11.61		%	(4.8)	%
Yield on loans	4.72		%	5.21		%	(9.4)	%
Yield on investment securities	2.62		%	2.77		%	(5.4)	%
Yield on money market instruments	0.31		%	2.53		%	(87.7)	%
Yield on interest earning assets	4.27		%	4.72		%	(9.5)	%
Cost of interest bearing deposits	0.47		%	1.03		%	(54.4)	%
Cost of borrowings	1.66		%	2.13		%	(22.1)	%
Cost of paying interest bearing liabilities	0.57		%	1.15		%	(50.4)	%
Net interest margin (g)	3.88		%	3.88		%	—	%
Efficiency ratio (g)	60.26		%	65.14		%	(7.5)	%
ASSET QUALITY RATIOS:
Net loan charge-offs	$	854		$	2,043		(58.2)	%
Annualized net loan charge-offs as a % of average loans (b)	0.02		%	0.04		%	(50.0)	%
CAPITAL & LIQUIDITY:
Average shareholders' equity / Average assets (b)	10.85		%	10.80		%	0.5	%
Average shareholders' equity / Average loans (b)	14.49		%	14.79		%	(2.0)	%
Average loans / Average deposits (b)	90.19		%	90.10		%	0.1	%
Note: Explanations for footnotes (a) - (k) are included at the end of the financial tables in the "Financial Reconciliations" section.

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com

PARK NATIONAL CORPORATION
Consolidated Statements of Income
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands, except share and per share data)	2020		2019		2020		2019
Interest income:
Interest and fees on loans	$	82,617	$	84,213	$	243,459	$	238,687
Interest on:
Obligations of U.S. Government, its agencies
and other securities - taxable	4,841		6,326		15,398		20,240
Obligations of states and political subdivisions - tax-exempt	2,045		2,225		6,396		6,750
Other interest income	63		1,825		667		2,994
Total interest income	89,566		94,589		265,920		268,671
Interest expense:
Interest on deposits:
Demand and savings deposits	803		9,649		8,652		25,553
Time deposits	2,662		4,694		10,293		12,828
Interest on borrowings	2,261		3,145		5,666		9,562
Total interest expense	5,726		17,488		24,611		47,943
Net interest income	83,840		77,101		241,309		220,728
Provision for loan losses	13,836		1,967		31,213		6,384
Net interest income after provision for loan losses	70,004		75,134		210,096		214,344
Other income	36,558		28,136		90,008		72,969
Other expense	69,859		65,738		200,934		192,757
Income before income taxes	36,703		37,532		99,170		94,556
Income taxes	5,857		6,386		16,447		15,792
Net income	$	30,846	$	31,146	$	82,723	$	78,764
Per common share:
Net income - basic	$	1.89	$	1.90	$	5.07	$	4.86
Net income - diluted	$	1.88	$	1.89	$	5.04	$	4.84
Weighted average shares - basic	16,300,720		16,382,798		16,300,250		16,198,294
Weighted average shares - diluted	16,393,792		16,475,741		16,398,350		16,287,695
Cash dividends declared	$	1.02	$	1.01	$	3.26	$	3.23

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com

PARK NATIONAL CORPORATION
Consolidated Balance Sheets
(in thousands, except share data)	September 30, 2020		December 31, 2019
Assets
Cash and due from banks	$	110,774	$	135,567
Money market instruments	135,935		24,389
Investment securities	1,097,598		1,279,507
Loans	7,278,546		6,501,404
Allowance for loan losses	(87,038)		(56,679)
Loans, net	7,191,508		6,444,725
Bank premises and equipment, net	85,287		73,322
Goodwill and other intangible assets	169,380		171,118
Other real estate owned	836		4,029
Other assets	448,688		425,720
Total assets	$	9,240,006	$	8,558,377
Liabilities and Shareholders' Equity
Deposits:
Noninterest bearing	$	2,579,335	$	1,959,935
Interest bearing	4,896,494		5,092,677
Total deposits	7,475,829		7,052,612
Borrowings	643,103		438,157
Other liabilities	104,078		98,594
Total liabilities	$	8,223,010	$	7,589,363
Shareholders' Equity:
Preferred shares (200,000 shares authorized; no shares outstanding at September 30, 2020 and December 31, 2019)	$	—	$	—
Common shares (No par value; 20,000,000 shares authorized; 17,623,179 shares issued at September 30, 2020 and 17,623,199 shares issued at December 31, 2019)	458,440		459,389
Accumulated other comprehensive income (loss), net of taxes	14,200		(9,589)
Retained earnings	676,465		646,847
Treasury shares (1,322,416 shares at September 30, 2020 and 1,276,757 shares at December 31, 2019)	(132,109)		(127,633)
Total shareholders' equity	$	1,016,996	$	969,014
Total liabilities and shareholders' equity	$	9,240,006	$	8,558,377

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com

PARK NATIONAL CORPORATION
Consolidated Average Balance Sheets
	Three Months Ended				Nine Months Ended
	Sept 30				Sept 30
(in thousands)	2020		2019		2020		2019
Assets
Cash and due from banks	$	121,973	$	147,156	$	129,436	$	130,799
Money market instruments	223,563		298,441		286,909		158,395
Investment securities	1,330,520		1,339,292		1,264,381		1,380,629
Loans	7,247,021		6,371,323		6,904,900		6,133,386
Allowance for loan losses	(74,718)		(54,867)		(64,942)		(53,711)
Loans, net	7,172,303		6,316,456		6,839,958		6,079,675
Bank premises and equipment, net	83,609		73,077		79,557		68,437
Goodwill and other intangible assets	169,726		174,027		170,311		153,182
Other real estate owned	1,299		3,845		2,616		4,132
Other assets	454,689		433,398		443,327		426,438
Total assets	$	9,557,682	$	8,785,692	$	9,216,495	$	8,401,687
Liabilities and Shareholders' Equity
Deposits:
Noninterest bearing	$	2,565,417	$	1,901,024	$	2,306,355	$	1,840,153
Interest bearing	5,309,718		5,287,851		5,350,009		4,967,106
Total deposits	7,875,135		7,188,875		7,656,364		6,807,259
Borrowings	552,452		553,595		455,127		599,223
Other liabilities	109,856		98,077		104,763		87,984
Total liabilities	$	8,537,443	$	7,840,547	$	8,216,254	$	7,494,466
Shareholders' Equity:
Preferred shares	$	—	$	—	$	—	$	—
Common shares	457,571		457,029		457,953		424,213
Accumulated other comprehensive income (loss), net of taxes	15,400		(26,010)		8,712		(36,383)
Retained earnings	679,519		638,639		665,808		628,463
Treasury shares	(132,251)		(124,513)		(132,232)		(109,072)
Total shareholders' equity	$	1,020,239	$	945,145	$	1,000,241	$	907,221
Total liabilities and shareholders' equity	$	9,557,682	$	8,785,692	$	9,216,495	$	8,401,687

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com

PARK NATIONAL CORPORATION
Consolidated Statements of Income - Linked Quarters
	2020		2020		2020		2019		2019
(in thousands, except per share data)	3rd QTR		2nd QTR		1st QTR		4th QTR		3rd QTR
Interest income:
Interest and fees on loans	$	82,617	$	80,155	$	80,687	$	82,698	$	84,213
Interest on:
Obligations of U.S. Government, its agencies and other securities - taxable	4,841		5,026		5,531		5,973		6,326
Obligations of states and political subdivisions - tax-exempt	2,045		2,151		2,200		2,205		2,225
Other interest income	63		113		491		953		1,825
Total interest income	89,566		87,445		88,909		91,829		94,589
Interest expense:
Interest on deposits:
Demand and savings deposits	803		1,507		6,342		7,795		9,649
Time deposits	2,662		3,346		4,285		4,666		4,694
Interest on borrowings	2,261		1,406		1,999		2,359		3,145
Total interest expense	5,726		6,259		12,626		14,820		17,488
Net interest income	83,840		81,186		76,283		77,009		77,101
Provision for (recovery of) loan losses	13,836		12,224		5,153		(213)		1,967
Net interest income after provision for (recovery of) loan losses	70,004		68,962		71,130		77,222		75,134
Other income	36,558		30,964		22,486		24,224		28,136
Other expense	69,859		64,799		66,276		71,231		65,738
Income before income taxes	36,703		35,127		27,340		30,215		37,532
Income taxes	5,857		5,622		4,968		6,279		6,386
Net income	$	30,846	$	29,505	$	22,372	$	23,936	$	31,146
Per common share:
Net income - basic	$	1.89	$	1.81	$	1.37	$	1.46	$	1.90
Net income - diluted	$	1.88	$	1.80	$	1.36	$	1.45	$	1.89

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com

PARK NATIONAL CORPORATION
Detail of other income and other expense - Linked Quarters
	2020		2020		2020		2019		2019
(in thousands)	3rd QTR		2nd QTR		1st QTR		4th QTR		3rd QTR
Other income:
Income from fiduciary activities	$	7,335	$	6,793	$	7,113	$	7,268	$	6,842
Service charges on deposit accounts	2,118		1,676		2,528		2,757		2,864
Other service income	13,047		8,758		3,766		4,382		4,260
Debit card fee income	5,853		5,560		4,960		5,341		5,313
Bank owned life insurance income	1,192		1,179		1,248		1,158		1,107
ATM fees	491		438		412		446		482
Gain (loss) on the sale of OREO, net	569		841		(196)		2		(53)
Net (loss) gain on the sale of investment securities	(27)		3,313		—		—		186
Gain (loss) on equity securities, net	1,201		(977)		(973)		(191)		3,335
Other components of net periodic benefit income	1,988		1,988		1,988		1,183		1,183
Miscellaneous	2,791		1,395		1,640		1,878		2,617
Total other income	$	36,558	$	30,964	$	22,486	$	24,224	$	28,136
Other expense:
Salaries	$	31,632	$	30,699	$	28,429	$	30,903	$	30,713
Employee benefits	10,676		9,080		10,043		8,973		10,389
Occupancy expense	3,835		3,256		3,480		3,355		3,226
Furniture and equipment expense	4,687		4,850		4,319		4,319		4,177
Data processing fees	3,275		2,577		2,492		2,777		2,935
Professional fees and services	7,977		6,901		7,066		10,503		6,702
Marketing	1,454		1,136		1,486		1,468		1,604
Insurance	1,541		1,477		1,550		317		276
Communication	958		874		1,155		1,256		1,387
State tax expense	1,125		1,116		1,145		1,024		746
Amortization of intangible assets	525		607		606		623		741
Miscellaneous	2,174		2,226		4,505		5,713		2,842
Total other expense	$	69,859	$	64,799	$	66,276	$	71,231	$	65,738

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com

PARK NATIONAL CORPORATION
Asset Quality Information
										Year ended December 31,
(in thousands, except ratios)	September 30, 2020			June 30, 2020			March 31, 2020			2019			2018			2017			2016
Allowance for loan losses:
Allowance for loan losses, beginning of period	$	73,476		$	61,503		$	56,679		$	51,512		$	49,988		$	50,624		$	56,494
Charge-offs	1,529			2,130			2,685			11,177			13,552			19,403			20,799
Recoveries	1,255			1,879			2,356			10,173			7,131			10,210			20,030
Net charge-offs	274			251			329			1,004			6,421			9,193			769
Provision for (recovery of) loan losses	13,836			12,224			5,153			6,171			7,945			8,557			(5,101)
Allowance for loan losses, end of period	$	87,038		$	73,476		$	61,503		$	56,679		$	51,512		$	49,988		$	50,624
General reserve trends:
Allowance for loan losses, end of period	$	87,038		$	73,476		$	61,503		$	56,679		$	51,512		$	49,988		$	50,624
Allowance on purchased credit impaired ("PCI") loans	103			106			119			268			—			—			—
Allowance on purchased loans	371			25			—			—			—			—			—
Specific reserves	8,666			5,808			5,531			5,230			2,273			684			548
General reserves on originated loans	$	77,898		$	67,537		$	55,853		$	51,181		$	49,239		$	49,304		$	50,076
Total loans	$	7,278,546		$	7,204,445		$	6,522,519		$	6,501,404		$	5,692,132		$	5,372,483		$	5,271,857
PCI loans	11,877			12,569			13,765			14,331			3,943			—			—
Purchased loans	393,752			440,803			489,843			548,436			225,029			—			—
Impaired commercial loans	116,138			91,724			85,646			77,459			48,135			56,545			70,415
Originated loans excluding impaired commercial loans	$	6,756,779		$	6,659,349		$	5,933,265		$	5,861,178		$	5,415,025		$	5,315,938		$	5,201,442
Asset Quality Ratios:
Net charge-offs as a % of average loans (annualized)	0.02		%	0.01		%	0.02		%	0.02		%	0.12		%	0.17		%	0.02		%
Allowance for loan losses as a % of period end loans	1.20		%	1.02		%	0.94		%	0.87		%	0.90		%	0.93		%	0.96		%
Allowance for loan losses on originated loans as % of originated total loans (excluding PPP loans) (k)	1.36		%	1.17		%	N.A.			N.A.			N.A.			N.A.			N.A.
General reserve as a % of originated total loans less impaired commercial loans	1.15		%	1.01		%	0.94		%	0.87		%	0.91		%	0.93		%	0.96		%
General reserves as a % of originated total loans less impaired commercial loans (excluding PPP loans) (k)	1.24		%	1.10		%	N.A.			N.A.			N.A.			N.A.			N.A.
Nonperforming assets:
Nonaccrual loans	$	123,050		$	100,406		$	90,354		$	90,080		$	67,954		$	72,056		$	87,822
Accruing troubled debt restructurings	23,774			23,948			27,168			21,215			15,173			20,111			18,175
Loans past due 90 days or more	1,618			1,690			1,789			2,658			2,243			1,792			2,086
Total nonperforming loans	$	148,442		$	126,044		$	119,311		$	113,953		$	85,370		$	93,959		$	108,083
Other real estate owned - Park National Bank	242			427			2,671			3,100			2,788			6,524			6,025
Other real estate owned - SEPH	594			929			929			929			1,515			7,666			7,901
Other nonperforming assets - Park National Bank	3,392			3,599			3,599			3,599			3,464			4,849			—
Total nonperforming assets	$	152,670		$	130,999		$	126,510		$	121,581		$	93,137		$	112,998		$	122,009
Percentage of nonaccrual loans to period end loans	1.69		%	1.39		%	1.39		%	1.39		%	1.19		%	1.34		%	1.67		%
Percentage of nonperforming loans to period end loans	2.04		%	1.75		%	1.83		%	1.75		%	1.50		%	1.75		%	2.05		%
Percentage of nonperforming assets to period end loans	2.10		%	1.82		%	1.94		%	1.87		%	1.64		%	2.10		%	2.31		%
Percentage of nonperforming assets to period end total assets	1.65		%	1.35		%	1.45		%	1.42		%	1.19		%	1.50		%	1.63		%
Note: Explanations for footnotes (a) - (k) are included at the end of the financial tables in the "Financial Reconciliations" section.

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com

PARK NATIONAL CORPORATION
Asset Quality Information (continued)
							Year ended December 31,
(in thousands, except ratios)	September 30, 2020		June 30, 2020		March 31, 2020		2019		2018		2017		2016
New nonaccrual loan information:
Nonaccrual loans, beginning of period	$	100,406	$	90,354	$	90,080	$	67,954	$	72,056	$	87,822	$	95,887
New nonaccrual loans	38,631		21,995		21,651		81,009		76,611		58,753		74,786
Resolved nonaccrual loans	15,987		11,943		21,377		58,883		80,713		74,519		82,851
Nonaccrual loans, end of period	$	123,050	$	100,406	$	90,354	$	90,080	$	67,954	$	72,056	$	87,822
Impaired commercial loan portfolio information (period end):
Unpaid principal balance	$	116,701	$	92,374	$	86,379	$	78,178	$	59,381	$	66,585	$	95,358
Prior charge-offs	563		650		733		719		11,246		10,040		24,943
Remaining principal balance	116,138		91,724		85,646		77,459		48,135		56,545		70,415
Specific reserves	8,666		5,808		5,531		5,230		2,273		684		548
Book value, after specific reserves	$	107,472	$	85,916	$	80,115	$	72,229	$	45,862	$	55,861	$	69,867

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com

PARK NATIONAL CORPORATION
Financial Reconciliations
NON-GAAP RECONCILIATIONS
	THREE MONTHS ENDED									NINE MONTHS ENDED
(in thousands, except share and per share data)	September 30, 2020			June 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019
Net interest income	$	83,840		$	81,186		$	77,101		$	241,309		$	220,728
less purchase accounting accretion related to NewDominion and Carolina Alliance acquisitions	1,071			1,301			1,967			3,750			3,839
less interest income on former Vision Bank relationships	8			266			—			351			7
Net interest income - adjusted	$	82,761		$	79,619		$	75,134		$	237,208		$	216,882
Provision for loan losses	$	13,836		$	12,224		$	1,967		$	31,213		$	6,384
less recoveries on former Vision Bank relationships	(37)			(685)			(575)			(1,486)			(740)
Provision for loan losses - adjusted	$	13,873		$	12,909		$	2,542		$	32,699		$	7,124
Other income	$	36,558		$	30,964		$	28,136		$	90,008		$	72,969
less net gain (loss) on sale of former Vision Bank OREO properties	371			837			—			1,208			(139)
less rebranding initiative related expenses	—			(274)			—			(274)			—
less net (loss) gain on the sale of debt securities in the ordinary course of business	(27)			3,313			186			3,286			(421)
Other income - adjusted	$	36,214		$	27,088		$	27,950		$	85,788		$	73,529
Other expense	$	69,859		$	64,799		$	65,738		$	200,934		$	192,757
less merger-related expenses related to NewDominion and Carolina Alliance acquisitions	163			214			658			620			6,992
less core deposit intangible amortization related to NewDominion and Carolina Alliance acquisitions	525			607			741			1,738			1,732
less FDIC assessment credit	—			—			(1,057)			—			(1,057)
less management and consulting expenses related to collection of payments on former Vision Bank loan relationships	232			—			—			232			—
less FHLB prepayment penalty	—			—			120			1,793			120
less rebranding initiative related expenses	429			138			139			837			341
less COVID-19 related expenses (j)	744			1,878			—			2,884			—
Other expense - adjusted	$	67,766		$	61,962		$	65,137		$	192,830		$	184,629
Tax effect of adjustments to net income identified above (i)	$	133		$	(691)		$	(447)		$	(358)		$	861
Net income - reported	$	30,846		$	29,505		$	31,146		$	82,723		$	78,764
Net income - adjusted	$	31,346		$	26,905		$	29,446		$	81,378		$	82,005
Diluted EPS	$	1.88		$	1.80		$	1.89		$	5.04		$	4.84
Diluted EPS, adjusted (h)	$	1.91		$	1.64		$	1.79		$	4.96		$	5.03
Annualized return on average assets (a)(b)	1.28		%	1.26		%	1.41		%	1.20		%	1.25		%
Annualized return on average assets, adjusted (a)(b)(h)	1.30		%	1.15		%	1.33		%	1.18		%	1.30		%
Annualized return on average tangible assets (a)(b)(e)	1.31		%	1.28		%	1.43		%	1.22		%	1.28		%
Annualized return on average tangible assets, adjusted (a)(b)(e)(h)	1.33		%	1.17		%	1.36		%	1.20		%	1.33		%
Annualized return on average shareholders' equity (a)(b)	12.03		%	11.89		%	13.07		%	11.05		%	11.61		%
Annualized return on average shareholders' equity, adjusted (a)(b)(h)	12.22		%	10.84		%	12.37		%	10.87		%	12.09		%
Annualized return on average tangible equity (a)(b)(c)	14.43		%	14.33		%	16.02		%	13.31		%	13.97		%
Annualized return on average tangible equity, adjusted (a)(b)(c)(h)	14.66		%	13.07		%	15.16		%	13.10		%	14.54		%
Efficiency ratio (g)	57.69		%	57.41		%	62.03		%	60.26		%	65.14		%
Efficiency ratio, adjusted (g)(h)	56.62		%	57.68		%	62.74		%	59.30		%	63.09		%
Annualized net interest margin (g)	3.85		%	3.84		%	3.86		%	3.88		%	3.88		%
Annualized net interest margin, adjusted (g)(h)	3.80		%	3.77		%	3.76		%	3.81		%	3.81		%

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com

PARK NATIONAL CORPORATION
Financial Reconciliations (continued)
(a) Reported measure uses net income
(b) Averages are for the three months ended September 30, 2020, June 30, 2020, and September 30, 2019 and the nine months ended September 30, 2020 and September 30, 2019.
(c) Net income for each period divided by average tangible equity during the period. Average tangible equity equals average shareholders' equity during the applicable period less average goodwill and other intangible assets during the applicable period.
RECONCILIATION OF AVERAGE SHAREHOLDERS' EQUITY TO AVERAGE TANGIBLE EQUITY:
	THREE MONTHS ENDED						NINE MONTHS ENDED
	September 30, 2020		June 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
AVERAGE SHAREHOLDERS' EQUITY	$	1,020,239	$	998,288	$	945,145	$	1,000,241	$	907,221
Less: Average goodwill and other intangible assets	169,726		170,303		174,027		170,311		153,182
AVERAGE TANGIBLE EQUITY	$	850,513	$	827,985	$	771,118	$	829,930	$	754,039
(d) Tangible equity divided by common shares outstanding at period end. Tangible equity equals total shareholders' equity less goodwill and other intangible assets, in each case at the end of the period.
RECONCILIATION OF TOTAL SHAREHOLDERS' EQUITY TO TANGIBLE EQUITY:
	September 30, 2020		June 30, 2020		September 30, 2019
TOTAL SHAREHOLDERS' EQUITY	$	1,016,996	$	1,001,594	$	956,140
Less: Goodwill and other intangible assets	169,380		169,905		173,489
TANGIBLE EQUITY	$	847,616	$	831,689	$	782,651
(e) Net income for each period divided by average tangible assets during the period. Average tangible assets equals average assets less average goodwill and other intangible assets, in each case during the applicable period.
RECONCILIATION OF AVERAGE ASSETS TO AVERAGE TANGIBLE ASSETS
	THREE MONTHS ENDED						NINE MONTHS ENDED
	September 30, 2020		June 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
AVERAGE ASSETS	$	9,557,682	$	9,408,265	$	8,785,692	$	9,216,495	$	8,401,687
Less: Average goodwill and other intangible assets	169,726		170,303		174,027		170,311		153,182
AVERAGE TANGIBLE ASSETS	$	9,387,956	$	9,237,962	$	8,611,665	$	9,046,184	$	8,248,505
(f) Tangible equity divided by tangible assets. Tangible assets equals total assets less goodwill and other intangible assets, in each case at the end of the period.
RECONCILIATION OF TOTAL ASSETS TO TANGIBLE ASSETS:
	September 30, 2020		June 30, 2020		September 30, 2019
TOTAL ASSETS	$	9,240,006	$	9,712,994	$	8,723,610
Less: Goodwill and other intangible assets	169,380		169,905		173,489
TANGIBLE ASSETS	$	9,070,626	$	9,543,089	$	8,550,121
(g) Efficiency ratio is calculated by dividing total other expense by the sum of fully taxable equivalent net interest income and other income. Fully taxable equivalent net interest income reconciliation is shown assuming a 21% corporate federal income tax rate. Additionally, net interest margin is calculated on a fully taxable equivalent basis by dividing fully taxable equivalent net interest income by average interest earning assets.
RECONCILIATION OF FULLY TAXABLE EQUIVALENT NET INTEREST INCOME TO NET INTEREST INCOME
	THREE MONTHS ENDED						NINE MONTHS ENDED
	September 30, 2020		June 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Interest income	$	89,566	$	87,445	$	94,589	$	265,920	$	268,671
Fully taxable equivalent adjustment	706		723		744		2,154		2,230
Fully taxable equivalent interest income	$	90,272	$	88,168	$	95,333	$	268,074	$	270,901
Interest expense	5,726		6,259		17,488		24,611		47,943
Fully taxable equivalent net interest income	$	84,546	$	81,909	$	77,845	$	243,463	$	222,958
(h) Adjustments to net income for each period presented are detailed in the non-GAAP reconciliations of net interest income, provision for loan losses, other income and other expense above.
(i) The tax effect of adjustments to net income was calculated assuming a 21% corporate federal income tax rate.
(j) COVID-19 related expenses include calamity pay and special one-time bonuses to certain associates.
(k) Excludes $542.8 million and $543.1 million of PPP loans at September 30, 2020 and June 30, 2020, respectively.

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com

XML

DEI Document	Oct. 26, 2020
Document Information [Line Items]
City Area Code	(740)
Entity Registrant Name	PARK NATIONAL CORPORATION
Entity Address, Address Line One	50 North Third Street,
Entity Address, Address Line Two	P.O. Box 3500,
Entity Address, City or Town	Newark,
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	43058-3500
Entity Incorporation, State or Country Code	OH
Document Period End Date	Oct. 26, 2020
Document Type	8-K
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common shares, without par value
Trading Symbol	PRK
Entity Emerging Growth Company	false
Amendment Flag	false
Document Fiscal Year Focus
Document Fiscal Period Focus
Entity Central Index Key	0000805676
Security Exchange Name	NYSEAMER
Entity File Number	1-13006
Entity Tax Identification Number	31-1179518
Local Phone Number	349-8451