Fair Value

12 Months Ended

Dec. 31, 2024

Fair Value Disclosures [Abstract]

Fair Values

Fair Value

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

•Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that Park has the ability to access as of the measurement date.

•Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

•Level 3: Significant unobservable inputs that reflect Park's own assumptions about the assumptions that market participants would use in pricing an asset or liability. This could include the use of internally developed models, financial forecasting and similar inputs.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the balance sheet

date. When possible, the Company looks to active and observable markets to price identical assets or liabilities. When identical assets and liabilities are not traded in active markets, the Company looks to observable market data for similar assets and liabilities. However, certain assets and liabilities are not traded in observable markets and Park must use other valuation methods to develop a fair value. The fair value of individually evaluated collateral dependent loans is typically based on the fair value of the underlying collateral, which is estimated through third-party appraisals in accordance with Park's valuation requirements under its commercial and real estate loan policies.

Assets and Liabilities Measured at Fair Value on a Recurring Basis:

The following tables present assets and liabilities measured at fair value on a recurring basis:

 

Fair Value Measurements at December 31, 2024 using:
(In thousands)	Level 1		Level 2		Level 3		Balance at December 31, 2024
Assets
Investment securities:
Obligations of U.S. Government sponsored entities	$	—	$	249	$	—	$	249
Obligations of states and political subdivisions	—		186,883		—		186,883
U.S. Government sponsored entities’ asset-backed securities	—		518,576		—		518,576
Collateralized loan obligations	—		271,833		—		271,833
Corporate debt securities	—		12,419		6,664		19,083
Equity securities	10,885		—		603		11,488
Mortgage loans held for sale	—		5,550		—		5,550
Mortgage IRLCs	—		85		—		85
Loan interest rate swaps	—		1,009		—		1,009
Liabilities
Fair value swap	$	—	$	—	$	103	$	103
Loan interest rate swaps	—		1,009		—		1,009

Fair Value Measurements at December 31, 2023 using:
(In thousands)	Level 1		Level 2		Level 3		Balance at December 31, 2023
Assets
Investment securities:
Obligations of states and political subdivisions	$	—	$	241,184	$	—	$	241,184
U.S. Government sponsored entities’ asset-backed securities	—		635,475		—		635,475
Collateralized loan obligations	—		438,286		—		438,286
Corporate debt securities	—		11,548		6,349		17,897
Equity securities	1,616		—		473		2,089
Mortgage loans held for sale	—		3,235		—		3,235
Mortgage IRLCs	—		87		—		87
Loan interest rate swaps	—		1,069		—		1,069
Liabilities
Fair value swap	$	—	$	—	$	123	$	123
Loan interest rate swaps	—		1,069		—		1,069

The following methods and assumptions were used by the Company in determining the fair value of the financial assets and financial liabilities discussed above:

Fair value swap: The fair value of the swap agreement entered into with the purchaser of the Visa Class B shares represents an internally developed estimate of the exposure based upon probability-weighted potential Visa litigation losses and is classified as Level 3.

Interest rate swaps:  The fair values of interest rate swaps are based on valuation models using observable market data as of the measurement date (Level 2).

Investment securities: Fair values for investment securities are based on quoted market prices, where available (Level 1). If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using DCF (Level 3).

Mortgage interest rate lock commitments: Mortgage IRLCs are based on current secondary market pricing and are classified as Level 2.

Mortgage loans held for sale: Mortgage loans held for sale are carried at their fair value. Mortgage loans held for sale are estimated using market prices for similar product types and, therefore, are classified in Level 2.

The following tables present a reconciliation of the beginning and ending balances of the Level 3 inputs for the years ended December 31, 2024 and 2023, for financial instruments measured on a recurring basis and classified as Level 3:

 

Level 3 Fair Value Measurements
(In thousands)	Corporate debt securities		Equity securities		Fair value swap
Balance at January 1, 2024	$	6,349	$	473	$	(123)
Transfers into (out of) level 3, net	—		—		—
Total gains / (losses)
Included in other income / other (expense)	—		130		(500)
Included in other comprehensive income	315		—		—
Purchases, sales, issuances and settlements, other, net	—		—		520
Balance at December 31, 2024	$	6,664	$	603	$	(103)
Balance at January 1, 2023	$	7,000	$	439	$	(243)
Transfers into level 3	11		—		—
Total gains / (losses)
Included in other income / other (expense)	—		34		(175)
Included in other comprehensive income	(662)		—		—
Purchases, sales, issuances and settlements, other, net	—		—		295
Balance at December 31, 2023	$	6,349	$	473	$	(123)

Level 3 corporate debt securities consist of a single debt security at both December 31, 2024 and 2023 which was valued using a discounted cash flow calculation. Significant unobservable inputs include the credit spread assumption which was 3.67% and 3.84% at December 31, 2024 and 2023, respectively.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis:

The following methods and assumptions were used by the Company in determining the fair value of assets and liabilities measured at fair value on a nonrecurring basis as described below:

Individually evaluated collateral dependent loans: When a loan is individually evaluated, it is valued at the lower of cost or fair value. Collateral dependent loans which are individually evaluated and carried at fair value have been partially charged off or receive allocations of the allowance for credit losses. For collateral dependent loans, fair value is generally based on real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including the comparable sales approach and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments result in a Level 3 classification of the inputs for determining fair value. Collateral is then adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the customer and the customer’s business, resulting in a Level 3 fair value classification. Individually evaluated loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly. Additionally, valuations for all collateral dependent loans are updated annually, either through independent valuations by a licensed appraiser or a VOV performed by an internal licensed appraiser, in accordance with Company policy. A VOV can only be used in select circumstances and verifies that the original appraised value has not deteriorated through property inspection, consideration of market conditions, and performance of all valuation methods utilized in a prior valuation.

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

OREO: Assets acquired through or in lieu of loan foreclosure are initially recorded at fair value less costs to sell when acquired. The carrying value of OREO is not re-measured to fair value on a recurring basis, but is subject to fair value adjustments when the carrying value exceeds the fair value, less estimated selling costs. Fair value is based on recent real estate appraisals and is updated at least annually. These appraisals may utilize a single valuation approach or a combination of approaches including the comparable sales approach and the income approach. Adjustments are routinely made in the appraisal

process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments result in a Level 3 classification of the inputs for determining fair value.

Appraisals for both individually evaluated collateral dependent loans and OREO are performed by licensed appraisers. Appraisals are generally obtained to support the fair value of collateral. In general, there are three types of appraisals received by the Company: real estate appraisals, income approach appraisals, and lot development loan appraisals. These are discussed below:

•Real estate appraisals typically incorporate measures such as recent sales prices for comparable properties. Appraisers may make adjustments to the sales prices of the comparable properties as deemed appropriate based on the age, condition or general characteristics of the subject property. Management generally applies a 15% discount to real estate appraised values which management expects will cover all disposition costs (including selling costs). This 15% discount is based on historical discounts to appraised values on sold OREO.

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

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

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

The following tables present assets and liabilities measured at fair value on a nonrecurring basis. Individually evaluated collateral dependent loans secured by real estate are carried at fair value if they have been charged down to fair value or if a specific valuation allowance has been established. As of December 31, 2024 and 2023, there were no PCD loans carried at fair value. Additionally, there were no accruing individually evaluated collateral dependent loans carried at fair value. A new cost basis is established at the time a property is initially recorded in OREO. OREO properties are carried at fair value if a devaluation has been taken with respect to the property's value subsequent to the initial measurement.

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

Fair Value Measurements at December 31, 2023 Using:
(In thousands)	Level 1		Level 2		Level 3		Balance at December 31, 2023
Nonaccrual individually evaluated collateral dependent loans recorded at fair value:
Commercial real estate	$	—	$	—	$	2,315	$	2,315
Residential real estate	—		—		182		182
Total nonaccrual individually evaluated collateral dependent loans recorded at fair value	$	—	$	—	$	2,497	$	2,497
MSRs	$	—	$	866	$	—	$	866
OREO recorded at fair value:
Commercial real estate	$	—	$	—	$	938	$	938
Total OREO recorded at fair value	$	—	$	—	$	938	$	938

The tables below provide additional detail on those nonaccrual individually evaluated loans which are recorded at fair value as well as the remaining nonaccrual individually evaluated loan portfolio not included above. The remaining nonaccrual individually evaluated loans consist of 1) loans which are not collateral dependent, 2) loans which are not secured by real estate, and 3) loans carried at cost as the fair value of the underlying collateral or the present value of expected future cash flows on each of the loans exceeded the book value for each respective credit.

	December 31, 2024
(In thousands)	Loan Balance		Prior Charge-Offs		Specific Valuation Allowance		Carrying Balance
Total nonaccrual individually evaluated collateral dependent loans recorded at fair value	$	2,986	$	488	$	40	$	2,946
Remaining nonaccrual individually evaluated loans	50,163		4,521		1,259		48,904
Total nonaccrual individually evaluated loans	$	53,149	$	5,009	$	1,299	$	51,850

	December 31, 2023
(In thousands)	Recorded Investment		Prior Charge-Offs		Specific Valuation Allowance		Carrying Balance
Total nonaccrual individually evaluated collateral dependent loans recorded at fair value	$	2,499	$	2,048	$	2	$	2,497
Remaining nonaccrual individually evaluated loans	42,716		301		4,981		37,735
Total nonaccrual individually evaluated loans	$	45,215	$	2,349	$	4,983	$	40,232

The expense from credit adjustments related to nonaccrual individually evaluated loans carried at fair value for the years ended December 31, 2024, 2023 and 2022 was $0.2 million, $1.0 million, and $0.9 million, respectively.

MSRs totaled $13.9 million at December 31, 2024. Of this $13.9 million MSR carrying balance, $0.4 million was recorded at fair value and included a valuation allowance of $19,000. The remaining $13.5 million was recorded at cost, as the fair value exceeded cost at December 31, 2024. At December 31, 2023, MSRs totaled $14.7 million. Of this $14.7 million MSR carrying balance, $0.9 million was recorded at fair value and included a valuation allowance of $0.1 million. The remaining $13.8 million was recorded at cost, as the fair value exceeded cost at December 31, 2023. The income related to MSRs carried at fair value for the years ended December 31, 2024, 2023 and 2022 was $0.1 million, $0.1 million and $1.4 million, respectively.

Total OREO held by Park at December 31, 2024 and 2023 was $0.9 million and $1.0 million, respectively. At both December 31, 2024 and 2023, there was $938,000 of OREO held by Park that was carried at fair value due to fair value adjustments made subsequent to the initial OREO measurement. The net income (expense) related to OREO fair value

adjustments was $30,000, $(0.4) million and $11.3 million for the years ended December 31, 2024, 2023 and 2022, respectively.

The following tables present quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2024 and December 31, 2023:

December 31, 2024
(In thousands)	Fair Value		Valuation Technique	Unobservable Input(s)	Range (Weighted Average)
Nonaccrual individually evaluated collateral dependent loans:
Commercial real estate	$	1,022	Sales comparison approach	Adj to comparables	0.0% - 30.0% (15.2%)
			Income approach	Capitalization rate	9.5% - 10.0% (9.6%)
Residential real estate	$	1,924	Sales comparison approach	Adj to comparables	4.7% - 45.5% (21.6%)
			Income approach	Capitalization rate	6.3% (6.3%)
Other real estate owned:
Commercial real estate	$	938	Sales comparison approach	Adj to comparables	5.0% - 10.0% (7.5%)
			Cost approach	Entrepreneurial profit	5.0% (5.0%)
			Cost approach	Accumulated depreciation	50.0% (50.0%)

December 31, 2023
(In thousands)	Fair Value		Valuation Technique	Unobservable Input(s)	Range (Weighted Average)
Nonaccrual individually evaluated collateral dependent loans:
Commercial real estate	$	2,315	Sales comparison approach	Adj to comparables	0.2% - 89.0% (21.2%)
			Income approach	Capitalization rate	7.5% - 9.5% (8.9%)
Residential real estate	$	182	Sales comparison approach	Adj to comparables	1.2% - 78.6% (7.6%)
Other real estate owned:
Commercial real estate	$	938	Sales comparison approach	Adj to comparables	5.0% - 10.0% (7.5%)
			Cost approach	Entrepreneurial profit	5.0% (5.0%)
			Cost approach	Accumulated depreciation	50.0% (50.0%)

Assets Measured at Net Asset Value:

Park's portfolio of Partnership Investments are valued using the NAV practical expedient in accordance with ASC 820.

At December 31, 2024 and December 31, 2023, Park had Partnership Investments with a NAV of $32.6 million and $27.5 million, respectively. At December 31, 2024 and December 31, 2023, Park had $17.6 million and $18.4 million in unfunded

commitments related to these Partnership Investments. For the years ended December 31, 2024, 2023 and 2022, Park recognized income of $0.5 million, $0.4 million and $2.4 million, respectively, related to these Partnership Investments.

The fair value of certain financial instruments at December 31, 2024 and December 31, 2023 was as follows:

	December 31, 2024
			Fair Value Measurements
(In thousands)	Carrying value		Level 1		Level 2		Level 3		Total fair value
Financial assets:
Cash and money market instruments	$	160,566	$	160,566	$	—	$	—	$	160,566
Investment securities (1)	996,624		—		989,960		6,664		996,624
Other investment securities (2)	11,488		10,885		—		603		11,488
Mortgage loans held for sale	5,550		—		5,550		—		5,550
Mortgage IRLCs	85		—		85		—		85
Individually evaluated loans carried at fair value	2,946		—		—		2,946		2,946
Other loans, net	7,720,581		—		—		7,586,111		7,586,111
Loans receivable, net	$	7,729,162	$	—	$	5,635	$	7,589,057	$	7,594,692
Financial liabilities:
Time deposits	$	735,297	$	—	$	736,188	$	—	$	736,188
Brokered deposits and Bid Ohio CDs	176,486		—		176,522		—		176,522
Other	1,265		1,265		—		—		1,265
Deposits (excluding demand deposits)	$	913,048	$	1,265	$	912,710	$	—	$	913,975
Short-term borrowings	$	90,432	$	—	$	90,432	$	—	$	90,432
Subordinated notes	189,651		—		185,599		—		185,599
Derivative financial instruments - assets:
Loan interest rate swaps	$	1,009	$	—	$	1,009	$	—	$	1,009
Derivative financial instruments - liabilities:
Fair value swap	$	103	$	—	$	—	$	103	$	103
Loan interest rate swaps	1,009		—		1,009		—		1,009

(1) Includes debt securities AFS.

(2) Excludes FHLB stock and FRB stock which are carried at their respective redemption values, investment securities accounted for at modified cost as these investments do not have a readily determinable fair value, and Partnership Investments valued using the NAV practical expedient.

	December 31, 2023
			Fair Value Measurements
(In thousands)	Carrying value		Level 1		Level 2		Level 3		Total fair value
Financial assets:
Cash and money market instruments	$	218,268	$	218,268	$	—	$	—	$	218,268
Investment securities (1)	1,332,842		—		1,326,493		6,349		1,332,842
Other investment securities (2)	2,089		1,616		—		473		2,089
Mortgage loans held for sale	3,235		—		3,235		—		3,235
Mortgage IRLCs	87		—		87		—		87
Individually evaluated loans carried at fair value	2,497		—		—		2,497		2,497
Other loans, net	7,386,657		—		—		7,200,851		7,200,851
Loans receivable, net	$	7,392,476	$	—	$	3,322	$	7,203,348	$	7,206,670
Financial liabilities:
Time deposits	$	641,615	$	—	$	641,180	$	—	$	641,180
Brokered deposits and Bid Ohio CDs	164,985		—		165,059		—		165,059
Other	1,261		1,261		—		—		1,261
Deposits (excluding demand deposits)	$	807,861	$	1,261	$	806,239	$	—	$	807,500
Short-term borrowings	$	328,182	$	—	$	328,182	$	—	$	328,182
Subordinated notes	189,147		—		172,059		—		172,059
Derivative financial instruments - assets:
Loan interest rate swaps	$	1,069	$	—	$	1,069	$	—	$	1,069
Derivative financial instruments - liabilities:
Fair value swap	$	123	$	—	$	—	$	123	$	123
Loan interest rate swaps	1,069		—		1,069		—		1,069

(1) Includes debt securities AFS.

(2) Excludes FHLB stock and FRB stock which are carried at their respective redemption values, investment securities accounted for at modified cost as these investments do not have a readily determinable fair value, and Partnership Investments valued using the NAV practical expedient.