Park National Corp. Annual Report 2014

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FY2014 Annual Report · Park National Corp.

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PARKNATIO NAL

C O R P O R A T I O N

2014 ANNUAL REPORT

PARK NATIONAL CORPORATION
Post Office Box 3500
Newark, Ohio 43058-3500
740.349.8451
ParkNationalCorp.com

PARKNATIONAL

C O R P O R A T I O N

FAIRFIELD
NATIONAL
BANK

DIVISION OF THE PARK NATIONAL BANK

GUARDIAN

FINANCE C OMPANY

PARK

NATIONAL BANK

Lucas

Fulton

Ottawa

Williams

Defiance

Henry

Wood

Sandusky

Erie

Lorain

Cuyahoga

Lake

Geauga

ula

Trumbull

Paulding

Putnam

Hancock

Seneca

Huron

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Allen

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Mercer

Auglaize

Hardin

Marion

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Medina

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Stark

Columbiana

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Delaware

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Coshocton

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Franklin

Licking

Clark
G

Guernsey

Belmont

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Noble

Monroe

Greene

Fayette

Fairfield Perry

Morgan

Ross

Hocking

Washington

Vinton

Athens

Darke

Logan

Shelby

Miami

Champaign

Mont
gomery

Preble

Butler

Clinton

Hamilton

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o
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C

Highland

Pike

Meigs

Brown

Adams

Scioto

Gallia

wrence

Century National Bank

Fairfield National Bank

Farmers Bank

First-Knox National Bank

The Park National Bank

Park National Bank

Southwest Ohio & Northern Kentucky

Richland Bank

Second National Bank

Security National Bank

United Bank

Unity National Bank

Scope Aircraft Finance

Guardian Finance Company

PNC_AR2014_final 2/18/15 7:55 AM Page 1

T A B L E O F C O N T E N T S

To Our Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Shareholders’ Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Park National Corporation Directors & Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Directors and Officers of Affiliates:

Century National Bank Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Fairfield National Bank Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Farmers and Savings Bank Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

First-Knox National Bank Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

The Park National Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Park National Bank of Southwest Ohio & Northern Kentucky Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Richland Bank Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Second National Bank Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Security National Bank Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

United Bank Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Unity National Bank Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Guardian Finance Company & Scope Aircraft Finance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Management’s Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Management’s Report on Internal Control Over Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Financial Statements:

Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Consolidated Statements of Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Consolidated Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Consolidated Statements of Changes in Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

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T O O U R S H A R E H O L D E R S

Often annual report letters begin with a collection of words
designed to divert the reader’s attention away from the most
critical question any shareholder has: “How did my company
do last year?” We’ve tried to avoid this detour in earlier letters
and will not take it this year either.

How did we do?
We like numbers. We have an extended list that we track, but our
favorites are in the table below.

Favorite Number

Net Income (000’s)

Return on Equity (ROE)

Return on Assets (ROA)

Net Interest Margin (NIM)

Efficiency Ratio

2014

$84,090

12.32%

1.22%

3.55%

64.77%

2013

$77,227

11.96%

1.15%

3.61%

63.78%

2012

$75,205

11.41%

1.11%

3.83%

57.07%

Our Annual Report details other numbers which contribute to
those above. A determined reader can immerse themselves in
these pools of data, and we encourage you to do so. If you want to
deepen your knowledge and impress your friends at parties, google
DuPont Model and you can learn how to deconstruct ROE into
ROA, leverage ratio, etc. It’s illuminating and can be done for
any company. But if you want the Twitter length summary of
our company’s performance, the numbers above tell the story.

We like to see the first four numbers increase every year. And
the first three numbers—Net Income, ROE and ROA—have
increased over the past three years. NIM (larger number is better)
has decreased and the Efficiency Ratio (smaller number is better)
has increased. We talk below about how the numbers were
produced.

How did we do what we did?
We have three main operating segments in Park National
Corporation (Park): Park National Bank (PNB), Guardian Finance
(GFSC) and SE Property Holdings, LLC (SEPH). To understand how
we generated our favorite numbers above, let’s review how these
segments have performed over the past three years:

Net Income (loss) by segment

(In thousands)

PNB

GFSC

Parent Company

Ongoing operations

SEPH

Total Park

Preferred dividends and accretion

2014

2013

2012

$83,040

$75,594

$87,106

1,175

(5,050)

79,165

4,925

84,090

—

2,888

(1,397)

77,085

3,550

195

90,851

142

(12,221)

77,227

—

78,630

(3,425)

Net income available to common shareholders

$84,090

$77,227

$75,205

PNB supplies the most horsepower to our Park engine. Details on
how PNB, GFSC and the Parent Company produced the numbers
above are in our Annual Report. We want to highlight SEPH here,
for the reader can see that it turned a $12.2 million net loss in
2012 to $4.9 million in net income in 2014. SEPH is the entity
that holds legacy assets following the sale of Vision Bank in 2012.
SEPH’s mission has been to maximize the value of these assets,
balancing urgency, persistence and resolve. The SEPH team—
Brett Baumeister, Bryan Campolo, Jennifer Corbitt, and Frank
Wagner—has done a marvelous job. The decline in Non-
Performing Assets (NPAs) described below is due in large
measure to their fine work.

The smaller NPA number, the better. NPAs decline one of two
ways—they are charged off (not so good), or they are recovered
and turned into performing assets (our preferred method).
Here’s what happened to our NPAs over the past five years:

(In thousands)

2014

2013

2012

2011

2010

Non-performing loans

$119,288

$155,640

$188,306

$227,202

$292,858

Other real estate owned

22,605

34,636

35,718

42,272

41,709

Total NPAs

$141,893

$190,276

$224,024

$269,474

$334,567

Improvements of this magnitude don’t just happen. They are
logical outcomes derived from sustained effort, persistence and
an unrelenting focus on maximizing the value of these troubled
situations. We applaud all those who contributed to this
remarkable effort.

What are we doing to thrive in 2015 and beyond?
If you’ve read anything about banking in the last several years,
you will be familiar with the following:
(cid:0) Regulatory/compliance burdens
(cid:0) Shrinking margins
(cid:0) Irrational competition
(cid:0) Cyber attacks
(cid:0) Teenage music

Perhaps the last one is a bit over the top...but assemble
bankers (or those who advise them) in a room, and you’re
likely to hear about one or more of these topics. Obstacles,
headwinds, potholes...all seemingly conspiring to end our
way of life as we know it.

Focusing on this stuff reminds us of learning to snow ski through
tree-filled glades. When you start, you focus on the trees. Oddly
enough, you hit a lot of trees. This goes on until you’re too sore
to continue or you figure out if you focus on the open spaces
between the trees, that’s where you will ski.

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T O O U R S H A R E H O L D E R S

Focusing on all of our industry’s usual speed-bumps and the new
ones that emerge annually drains our energy and isn’t much fun.
It also guarantees we won’t focus on the open spaces of our
world—specifically, serving our customers and communities.

Here’s a list of the things that will help us focus on open spaces
this year:

Best and brightest: We have many associates who have worked
nowhere else. They could, as these dedicated women and men
operate at the top of their game and are in high demand. We also
have added new talent and we are humbled that they chose to join
us. They tell us they come here because they like our overwhelming
focus on what’s best for the customer. They say they want to serve
customers, not flog them with the product of the month. Whether
you speak to a seasoned veteran, or a new colleague, you will find
us interested in you first...and then your financial affairs.

Technology: In the past five years, we have invested $25 million
to improve our technological infrastructure and meet customers
wherever they choose to connect with us...over the teller counter,
online or via mobile phone or tablet. We will continue to invest in
technology this year. Excellent technology, coupled with competent,
compassionate bankers, produces happy customers.

Process Improvement: We abhor waste of any kind. If we can
do something with fewer steps, fewer clicks, fewer calls, we’re
all for it. We have informally conducted process improvement for
years. We are now addressing the topic more systematically, adding
associates with specific expertise in process improvement to help
us operate as efficiently as possible. We expect simpler, more
scalable processes that will free us to serve our customers better.

Strategic Plan: Last fall, your Board of Directors approved a new
Strategic Plan. Here’s how we introduced it to our associates:

To Our Park colleagues...
In 1989, we crafted our first strategic plan. In it we articulated
a mission and identified principles that we believed were
foundation pieces of a vibrant, successful organization...
then, and for years to come.

What you have before you is our 2014 Strategic Plan. It
reasserts our core mission, amplifies our principles and
defines our operating model and key strategies. While it is
rich with timeless ideals, it is also a practical document, one
to which we can and should turn for guidance in completing
our daily tasks.

We hope this Strategic Plan will fuel our long conversation
about how to achieve and maintain excellence in all we do.
As the Plan states, at some point the conversation ends. Then
we must act to the best of our abilities and see where our
efforts take us. Then we will reassess, reflect and act again.
Repeating this pattern should yield the fine results we seek.

We know the goal—excellence, in service and
execution...and we have great faith that you will help
us get there.

We are what we repeatedly do. Excellence then, is not
an act, but a habit. –Aristotle

Two things to point out: One, the only word that is emphasized
(by underline) is “act”. Plans without action are merely wishes.
We will act. Two, we are not above channeling Aristotle or any
other philosophers when their advice is timeless. The quest for
excellence is timeless too.

Mergers/Acquisitions (M&A): Our first affiliate outside Licking
County joined us in 1985. Since then, we added nine banks in Ohio
and two specialty finance groups to our Park family. We told them
that if they joined us, they would find new colleagues dedicated to
the same core principles of excellence which guided them, a wider
array of products/services, and deeper pockets that allow them to
lend more to their top customers, give more to their communities
and invest in the technology required to keep pace in today’s
accelerating world. All would report that we did not disappoint.
We look forward to finding new partners who wish the same.

Who are we going to miss and why?

Effective with the Annual Meeting of
shareholders in April 2014, Rev. Dr.
Charles W. Noble, Sr. and John J. “Jack”
O’Neill completed their service as directors
of both Park and PNB. Rev. Noble served as
director of PNB for over 26 years and joined
the Park board in 2013. Mr. O’Neill served
the PNB board for over 50 years and was
a charter member of the Park board when
Park was formed in 1987. Through our most
challenging times, Rev. Noble’s profound
faith and Mr. O’Neill’s unwavering support
were great balms to management.

Effective directors advise, challenge
and counsel management. Here, they also
supply community leadership. On all levels,
Charles Noble, Sr. and Jack O’Neill were
among the best.

Charles W. Noble, Sr.

John J. O’Neill

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T O O U R S H A R E H O L D E R S

Sadly, Mr. O’Neill passed away on November 16, 2014. Jack
was an icon in our Licking County community, in the industrial
development business in Ohio and nationally, and a vital supporter
of our community. A friend of many, he left an extraordinary legacy
in his children and their families, as well as the company he
founded—Southgate Corporation. He is missed.

Bill has been with Park more than 55 years. He joined PNB fresh
out of graduate school in 1960. Everett D. Reese and John W. Alford
singled Bill out as their best hire of all time, and his career is a
testament to their belief. Bill successfully led our state and national
bank trade associations, countless community organizations, and
served as Park’s chief executive officer for 17 years.

Another wave of sad news came when,
on December 1, 2014, Harry Egger passed
forward (Harry’s minister provided an
eloquent message during the celebration of
life services for Harry, and is particularly fond
of the concept of passing “forward” rather
than “away”), after a courageous but
unsuccessful battle with cancer.

Harry Egger

Harry built a superb bank headquartered in Springfield, Ohio
that joined the Park organization in 2001. We spent nearly 15 years
together, during which he served as vice chair of Park’s board of
directors in addition to maintaining his role as chairman of our
Security National Bank Division.

Harry was a key mentor for us. He coupled keen intellect with
childlike curiosity to great effect. His observations on credit,
strategy, acquisitions and investments illuminated pitfalls others
missed and enhanced every internal debate we held. He was
deliberate, thoughtful and nearly always seemed to ask one or
two questions that others had not considered when trying to
make the best decision. We miss his wise counsel, diplomatic
candor and friendship.

Harry had a long and distinguished career as a banker in
Springfield, and those of us fortunate enough to have been able
to work with him and know him, continue to feel the void created
by his loss. A true professional and dedicated friend, when Dan
DeLawder and Bill Fralick visited with Harry two weeks prior to
his death, Harry asked, as always, “Anything I can do to help you?”
He was simply extraordinary. We wish his wife Linda and family
the very best.

In January your board of directors appointed James R. DeRoberts
to fill Mr. Egger’s unexpired term. Mr. DeRoberts was appointed to
the PNB board as well. He is a partner in the firm of Gardiner Allen
DeRoberts Insurance and brings to Park extensive knowledge of
community banking in Ohio as well as the insurance industry.
We welcome Jim as our newest director.

William T. McConnell
Our predecessor, Bill McConnell, informed our board that he does
not wish to stand for re-election upon the expiration of his term at
this year’s Annual Meeting. The board regretfully accepted his letter
of resignation which reflects his retirement effective April 27, 2015.

Dan on Bill:
Bill’s leadership crafted the model that has come to be known as
Park National. He led our first effort to cause a bank from outside
of Licking County to join us, a unique approach in Ohio that today
includes a collection of 11 community banking divisions operating
under the umbrella we call PNB.

Bill assures us he will continue to support us in all ways
possible, and we’ll hold him to it. He taught us countless
lessons and while we’ve never measured up to his level, we
have been the beneficiaries of his wisdom and enthusiasm for
community banking. It has been an honor and privilege for both
of us to be so positively influenced by him and most important, to
be counted as friends of Bill McConnell. We wish Bill the very best.

David on Bill:
Bill McConnell offered me a job when no one else would.
“We hope everyone else was wrong,” he said, with what I came
to know as that impish twinkle in his eye that signaled he was
pulling my leg.

Bill was effortlessly brilliant. He was equally comfortable
discussing asset/liability management, parenting, OSU football,
DuPont analyses or his favorite author, P.G. Wodehouse. Bill was
genuinely interested in all things and all people around him and
was a champion of diversity in leadership. There is not enough
space to describe how he influenced me, much less all those
he’s touched in this organization and this community.

Unmatched, unparalleled, unequaled...Bill McConnell.

Things we think about
Throughout history, pundits have claimed that economic cycles are
dead. Whatever conditions are at the time...pre-depression, post-
depression, post-war, go-go years, etc., someone suggests that the
then-current conditions will persist. Today’s version comes in the
form of the “new normal”. That is, new normal devotees suggest
that interest rates will remain persistently low, the economy will
tread water rather than leap forward and the governmental grid
will remain locked. We think about this and remember that the
first lesson of history is that few learn from history. At some point,
interest rates will increase, the economy will flourish again and
elected government officials will figure out they serve at the
pleasure of voters whose patience extends only so far. In short,
cycles are undefeated, but their duration and amplitude are rarely
predicted accurately.

PNC_AR2014_final 2/18/15 7:55 AM Page 5

T O O U R S H A R E H O L D E R S

We know about cycles. One benefit of having many colleagues with
decades of tenure is that we don’t have to explain cycles to each
other—we’ve lived and worked through several doozies. We have
found that combining top-notch employees with strong earnings
and strong capital insulates us during each cycle’s depths and
elevates us during peaks. You can see from the stock performance
graph below what the market thought of us through a cycle or two.

Whatever the environment, we like our chances.

Final Words
If you are currently a customer, we thank you and are grateful for
your business. Please tell/text/tweet 10 of your good friends about
how much better their lives would be if they followed your example
in choosing a bank. If you are not a customer, we ask that you
consider us an alternative to your current arrangements. You will
find what our customers enjoy—eager, competent bankers who
are devoted to serving their customers and their communities like
no other.

250

225

200

175

150

125

100

e
u
a
V
x
e
d
n
I

12/31/09

12/31/10

12/31/11

12/31/12

12/31/13

12/31/14

PERIOD ENDING

Index

12/31/09

12/31/10

12/31/11

12/31/12

12/31/13

12/31/14

Park National Corporation

NYSE MKT Composite

NASDAQ Bank Stocks

100.00

SNL Financial Bank and Thrift

100.00

131.05

125.60

114.16

111.64

124.99

133.49

102.17

86.81

131.31

142.32

121.26

116.57

181.78

151.80

171.86

159.61

198.55

157.50

180.31

178.18

C. Daniel DeLawder
Chairman of the Board

David L. Trautman
Chief Executive Officer and President

PNC_AR2014_final 2/18/15 7:55 AM Page 6

F I N A N C I A L H I G H L I G H T S

(In thousands, except per share data)

2014

2013

Earnings:

Total interest income

Total interest expense

Net interest income

Net income

Per Share:

Net income – basic

Net income – diluted

Cash dividends declared

Common book value (end of period)

At Year-End:
Total assets

Deposits

Loans

Investment securities

Total borrowings

Total shareholders’ equity

Ratios:

Return on average equity

Return on average assets

Efficiency ratio

$ 265,143

$ 262,947

40,099

225,044

84,090

5.46

3.76

45.39

$7,003,256

5,128,000

4,829,682

1,500,788

1,108,582

698,598

12.32%

1.22%

64.77%

41,922

221,025

77,227

5.01

3.76

42.29

$6,638,347

4,789,994

4,620,505

1,424,234

1,132,820

651,747

11.96%

1.15%

63.78%

Percent
Change

0.84%

–4.35%

1.82%

8.89%

8.98%

—

7.33%

5.50%

7.06%

4.53%

5.38%

–2.14%

7.19%

3.01%

6.09%

1.55%

PNC_AR2014_final 2/18/15 7:55 AM Page 7

S H A R E H O L D E R S ’

I N F O R M A T I O N

STOCK LISTING:

NYSE MKT Symbol – PRK
CUSIP #700658107

GENERAL SHAREHOLDER INQUIRIES:

Park National Corporation
Brady T. Burt, Secretary
50 North Third Street
Post Office Box 3500
Newark, Ohio 43058-3500
740/349-3927

DIVIDEND REINVESTMENT PLAN:

The Corporation offers a plan whereby participating shareholders can purchase additional
Park National Corporation common shares through automatic reinvestment of their regular
quarterly cash dividends. All commissions and fees connected with the purchase and
safekeeping of the common shares are paid by the Corporation. Details of the plan and
an enrollment card can be obtained by contacting the Corporation’s Stock Transfer Agent
and Registrar as indicated below.

DIRECT DEPOSIT OF DIVIDENDS:

The Corporation’s shareholders may have their dividend payments directly deposited into
their checking, savings or money market account. This direct deposit of dividends is free for
all share holders. If you have any questions or need an enrollment form, please contact the
Corporation’s Stock Transfer Agent and Registrar as indicated below.

STOCK TRANSFER AGENT AND REGISTRAR:

The Park National Bank Shareholder Services
located at First-Knox National Bank,
Division of The Park National Bank
Post Office Box 1270
One South Main Street
Mount Vernon, Ohio 43050-1270
740/399-5208, 800/837-5266 Ext. 5208
shareholderservices@firstknox.com

FORM 10-K:

All forms filed by the Corporation with the SEC (including our Form 10-K for 2014) are
available on our website by clicking on the “SEC Filing” section and then the “Documents/
SEC Filings” section of the “Investor Relations” page. These forms may also be obtained,
without charge, by contacting the Secretary as indicated above.

INTERNET ADDRESS:

www.parknationalcorp.com

E-MAIL:

Brady T. Burt
bburt@parknationalbank.com

PARKNATIONAL
PARKNATIONAL

C O R P O R A T I O N
C O R P O R A T I O N

Total Financial Service Centers: 123
Total Financial Service Centers: 123
Total ATMs: 141
Total ATMs: 141
Website: ParkNationalCorp.com
Website: ParkNationalCorp.com
Asset Size: $7 billion
Asset Size: $7 billion
Headquarters: Newark, Ohio
Headquarters: Newark, Ohio
NYSE MKT: PRK
NYSE MKT: PRK

Offices: 15 ATMs: 14

Website: CenturyNationalBank.com

Phone: 740.454.2521 or 800.321.7061

Chairman: Thomas M. Lyall

President: Patrick L. Nash

Counties Served: Athens, Coshocton,

Hocking, Muskingum, Perry, Tuscarawas

Donna M. Alvarado
Donna M. Alvarado
President
President
AGUILA International
AGUILA International

Maureen H. Buchwald
Maureen H. Buchwald
Owner
Owner
Glen Hill Orchards, Ltd.
Glen Hill Orchards, Ltd.

Brady T. Burt
Brady T. Burt
Chief Financial Officer
Chief Financial Officer
Park National Corporation
Park National Corporation

C. Daniel DeLawder
C. Daniel DeLawder
Chairman
Chairman
Park National Corporation
Park National Corporation

F.W. Englefield, IV
F.W. Englefield, IV
President
President
Englefield, Inc.
Englefield, Inc.

Stephen J. Kambeitz
Stephen J. Kambeitz
President and CFO
President and CFO
R.C. Olmstead, Inc.
R.C. Olmstead, Inc.

William T. McConnell
William T. McConnell
Retired, Chairman of the
Retired, Chairman of the
Executive Committee
Executive Committee
Park National Corporation
Park National Corporation

Timothy S. McLain
Timothy S. McLain
Vice President
Vice President
McLain, Hill, Rugg &
McLain, Hill, Rugg &
Associates, Inc.
Associates, Inc.

Robert E. O’Neill
Robert E. O’Neill
President
President
Southgate Corporation
Southgate Corporation

Rick R. Taylor
Rick R. Taylor
President
President
Jay Industries, Inc.
Jay Industries, Inc.

David L. Trautman
David L. Trautman
President
President
Park National Corporation
Park National Corporation

Lee Zazworsky
Lee Zazworsky
President
President
Mid State Systems, Inc.
Mid State Systems, Inc.

Officer Listing
Officer Listing
Chairman
Chairman
C. Daniel DeLawder
C. Daniel DeLawder

President
President
David L. Trautman
David L. Trautman

Chief Financial Officer
Chief Financial Officer
Brady T. Burt
Brady T. Burt

James R. DeRoberts joined the board effective February 16, 2015.
James R. DeRoberts joined the board effective February 16, 2015.
Brady T. Burt is the Chief Financial Officer and not a member of the board of directors.
Brady T. Burt is the Chief Financial Officer and not a member of the board of directors.
8

Zanesville, Ohio 43702-1515

740.455.7305

740.454.8505

Zanesville - East*

80 Sunrise Center Drive

Zanesville - North Military*

990 Military Road

Zanesville, Ohio 43701-6601

Zanesville, Ohio 43701-1387

Zanesville - Kroger*

3387 Maple Avenue

Zanesville - South*

2127 Maysville Avenue

Zanesville, Ohio 43701-1338

Zanesville, Ohio 43701-5748

740.455.7326

740.455.7301

Zanesville - Lending Center*

Zanesville - South Maysville*

505 Market Street

Zanesville, Ohio 43701-3610

740.454.6892

Zanesville - North*

1201 Brandywine Boulevard

Zanesville, Ohio 43701-1086

740.455.7285

2810 Maysville Pike

Zanesville, Ohio 43701-8577

740.455.3169

*Includes Automated Teller Machine

Main Office - Zanesville

14 South Fifth Street

Post Office Box 1515

740.454.2521

Athens*

898 East State Street

Athens, Ohio 45701-2115

740.593.7756

Coshocton*

100 Downtowner Plaza

Coshocton, Ohio 43812-1921

740.623.0114

Dresden*

91 West Dave Longaberger Avenue

Dresden, Ohio 43821-9726

740.754.2265

Logan*

61 North Market Street

Logan, Ohio 43138-1272

740.385.5621

New Concord*

1 West Main Street

New Concord, Ohio 43762-1218

740.826.7676

New Lexington*

206 North Main Street

New Lexington, Ohio 43764-1263

740.342.4103

Newcomerstown*

220 East State Street

Newcomerstown, Ohio 43832-1451

740.498.4103

Tuscarawas

County

Coshocton

County

Coshocton

Newcomerstown

Dresden

New Concord

Zanesville [8]

Muskingum

County

Perry

County

New

Lexington

Logan

Hocking

County

Athens

County

PARKNATIONAL

C O R P O R A T I O N

Total Financial Service Centers: 123

Total ATMs: 141

Website: ParkNationalCorp.com

Asset Size: $7 billion

Headquarters: Newark, Ohio

NYSE MKT: PRK

Offices: 15 ATMs: 14

Website: CenturyNationalBank.com

Phone: 740.454.2521 or 800.321.7061

Chairman: Thomas M. Lyall

President: Patrick L. Nash

Counties Served: Athens, Coshocton,
Hocking, Muskingum, Perry, Tuscarawas

Donna M. Alvarado

President

Maureen H. Buchwald

Owner

AGUILA International

Glen Hill Orchards, Ltd.

Brady T. Burt

Chief Financial Officer

Park National Corporation

C. Daniel DeLawder

Chairman

Park National Corporation

F.W. Englefield, IV

President

Englefield, Inc.

Stephen J. Kambeitz

President and CFO

R.C. Olmstead, Inc.

William T. McConnell

Retired, Chairman of the

Executive Committee

Park National Corporation

Timothy S. McLain

Vice President

McLain, Hill, Rugg &

Associates, Inc.

Robert E. O’Neill

President

Southgate Corporation

Rick R. Taylor

President

Jay Industries, Inc.

David L. Trautman

President

Lee Zazworsky

President

Park National Corporation

Mid State Systems, Inc.

Officer Listing

Chairman

C. Daniel DeLawder

President

David L. Trautman

Chief Financial Officer

Brady T. Burt

James R. DeRoberts joined the board effective February 16, 2015.

Brady T. Burt is the Chief Financial Officer and not a member of the board of directors.

Main Office - Zanesville
14 South Fifth Street
Post Office Box 1515
Zanesville, Ohio 43702-1515
740.454.2521

Athens*
898 East State Street
Athens, Ohio 45701-2115
740.593.7756

Coshocton*
100 Downtowner Plaza
Coshocton, Ohio 43812-1921
740.623.0114

Dresden*
91 West Dave Longaberger Avenue
Dresden, Ohio 43821-9726
740.754.2265

Logan*
61 North Market Street
Logan, Ohio 43138-1272
740.385.5621

New Concord*
1 West Main Street
New Concord, Ohio 43762-1218
740.826.7676

New Lexington*
206 North Main Street
New Lexington, Ohio 43764-1263
740.342.4103

Newcomerstown*
220 East State Street
Newcomerstown, Ohio 43832-1451
740.498.4103

Zanesville - North Military*
990 Military Road
Zanesville, Ohio 43701-1387
740.454.8505

Zanesville - South*
2127 Maysville Avenue
Zanesville, Ohio 43701-5748
740.455.7301

Zanesville - South Maysville*
2810 Maysville Pike
Zanesville, Ohio 43701-8577
740.455.3169

*Includes Automated Teller Machine

Tuscarawas
County

Coshocton
County

Coshocton

Newcomerstown

Dresden

New Concord

Zanesville [8]

Muskingum
County

Zanesville - East*
80 Sunrise Center Drive
Zanesville, Ohio 43701-6601
740.455.7305

Zanesville - Kroger*
3387 Maple Avenue
Zanesville, Ohio 43701-1338
740.455.7326

Zanesville - Lending Center*
505 Market Street
Zanesville, Ohio 43701-3610
740.454.6892

Zanesville - North*
1201 Brandywine Boulevard
Zanesville, Ohio 43701-1086
740.455.7285

Perry
County

New
Lexington

Logan

Hocking
County

Athens

Athens
County

Lancaster - Memorial Drive*

1280 North Memorial Drive

Lancaster, Ohio 43130

740.653.1422

Lancaster - West Fair*

1001 West Fair Avenue

Lancaster, Ohio 43130

740.653.1199

Pickerington - Kroger*

1045 Hill Road North

Pickerington, Ohio 43147

614.759.1522

Reynoldsburg - Slate Ridge*

1988 Baltimore-Reynoldsburg Road

(Route 256)

614.868.1988

Canal Winchester, Ohio 43110

Reynoldsburg, Ohio 43068

FAIRFIELD

NATIONAL

BANK

DIVISION OF THE PARK NATIONAL BANK

Main Office - Lancaster*

143 West Main Street

Post Office Box 607

Lancaster, Ohio 43130-0607

740.653.7242

Main Office Drive-Thru*

150 West Wheeling Street

Lancaster, Ohio 43130-3707

740.653.7242

Baltimore*

1301 West Market Street

Baltimore, Ohio 43105-1044

740.862.4104

Canal Winchester - Kroger*

6095 Gender Road

614.920.2454

Lancaster - East Main*

1001 East Main Street

Lancaster, Ohio 43130

740.653.5598

Lancaster - East Main Street - Kroger*

1141 East Main Street

Post Office Box 607

Lancaster, Ohio 43130-0607

740.653.9375

Lancaster - Meijer*

2900 Columbus-Lancaster Road

Post Office Box 607

Lancaster, Ohio 43130-0607

740.687.1000

Offices: 10 ATMs: 14

Website: FairfieldNationalBank.com

Phone: 740.653.7242 or 800.324.7353

President: Stephen G. Wells

Counties Served: Fairfield, Franklin

Off-Site ATM Locations

Lancaster - Fairfield Medical Center (2)

401 North Ewing Street

Lancaster - Ohio University - Lancaster

1570 Granville Pike

*Includes Automated Teller Machine

Franklin

County

Reynoldsburg

Pickerington

Canal Winchester

Baltimore

Fairfield

County

Lancaster [6]

Robert D. Goodrich, II
Retired, Wendy’s Management
Group, Inc.

Thomas M. Lyall
Chairman, Century
National Bank

Thomas L. Sieber
Retired, Genesis HealthCare
System

Patrick L. Hennessey
P&D Transportation, Inc.

Henry C. Littick, II
Southeastern Ohio
Broadcasting Systems, Inc.

Timothy S. McLain, CPA
McLain, Hill, Rugg and
Associates, Inc.

Patrick L. Nash
President, Century
National Bank

Dr. Anne C. Steele
Muskingum University

Dr. Robert J. Thompson
Neurological Associates of
Southeastern Ohio, Inc.

Vice Presidents
Joseph P. Allen
Robert W. Bigrigg
Derek A. Boothe
Theresa M. Gilligan
Brian E. Hall
Janice A. Hutchison
Jeffrey C. Jordan
Brian G. Kaufman
Bruce D. Kolopajlo
Mark A. Longstreth
Rebecca R. Porteus
Thomas N. Sulens

Assistant Vice Presidents
Ann M. Gildow
Stephen A. Haren
Susan A. Lasure
Karen D. Lowe
Martin L. Merryman
Jodi C. Pagath
Amy M. Pinson
Terri L. Sidwell
Cynthia J. Snider
Jennifer L. Thompson

Banking Officers
Noelle K. Jarrett
Paula L. Meadows
William J. Murphy*

Administrative Officers
Molly J. Allen
Jana R. Brandon
Jessica L. Cranz
Lynn M. Garrison
Amber M. Gibson
Sandra D. Jones
Alaina J. Joseph
Jeremy A. Morrow
Saundra W. Pritchard
Emila S. Smith
Beth A. Stillwell
Susan L. Summers
Elaine L. White
Jason L. Wilhelm

*Trust Officer

Advisory Board

Michael L. Bennett
Second Capital Consulting, LLC

Ronald A. Bucci
Stoneware Properties and
General Graphics Promotional
Products, LLC

Clinton W. Cameron
Cameron Drilling

Ward D. Coffman, III
Coffman Law Offices

Officer Listing

Chairman
Thomas M. Lyall

President
Patrick L. Nash

Senior Vice Presidents
James C. Blythe
Barbara A. Gibbs
Jody D. Spencer*
Michael F. Whiteman

Advisory Board

Products, LLC

Clinton W. Cameron

Cameron Drilling

Ward D. Coffman, III

Coffman Law Offices

Officer Listing

Chairman

Thomas M. Lyall

President

Patrick L. Nash

Senior Vice Presidents

James C. Blythe

Barbara A. Gibbs

Jody D. Spencer*

Michael F. Whiteman

Michael L. Bennett

Robert D. Goodrich, II

Thomas M. Lyall

Thomas L. Sieber

Second Capital Consulting, LLC

Retired, Wendy’s Management

Chairman, Century

Retired, Genesis HealthCare

Group, Inc.

National Bank

System

Ronald A. Bucci

Stoneware Properties and

Patrick L. Hennessey

General Graphics Promotional

P&D Transportation, Inc.

Henry C. Littick, II

Southeastern Ohio

Broadcasting Systems, Inc.

Timothy S. McLain, CPA

McLain, Hill, Rugg and

Associates, Inc.

Patrick L. Nash

President, Century

National Bank

Dr. Anne C. Steele

Muskingum University

Dr. Robert J. Thompson

Neurological Associates of

Southeastern Ohio, Inc.

Vice Presidents

Joseph P. Allen

Robert W. Bigrigg

Derek A. Boothe

Theresa M. Gilligan

Brian E. Hall

Janice A. Hutchison

Jeffrey C. Jordan

Brian G. Kaufman

Bruce D. Kolopajlo

Mark A. Longstreth

Rebecca R. Porteus

Thomas N. Sulens

Assistant Vice Presidents

Administrative Officers

Ann M. Gildow

Stephen A. Haren

Susan A. Lasure

Karen D. Lowe

Martin L. Merryman

Jodi C. Pagath

Amy M. Pinson

Terri L. Sidwell

Cynthia J. Snider

Jennifer L. Thompson

Banking Officers

Noelle K. Jarrett

Paula L. Meadows

William J. Murphy*

Molly J. Allen

Jana R. Brandon

Jessica L. Cranz

Lynn M. Garrison

Amber M. Gibson

Sandra D. Jones

Alaina J. Joseph

Jeremy A. Morrow

Saundra W. Pritchard

Emila S. Smith

Beth A. Stillwell

Susan L. Summers

Elaine L. White

Jason L. Wilhelm

*Trust Officer

FAIRFIELD
NATIONAL
BANK

DIVISION OF THE PARK NATIONAL BANK

Main Office - Lancaster*
143 West Main Street
Post Office Box 607
Lancaster, Ohio 43130-0607
740.653.7242

Main Office Drive-Thru*
150 West Wheeling Street
Lancaster, Ohio 43130-3707
740.653.7242

Baltimore*
1301 West Market Street
Baltimore, Ohio 43105-1044
740.862.4104

Canal Winchester - Kroger*
6095 Gender Road
Canal Winchester, Ohio 43110
614.920.2454

Lancaster - East Main*
1001 East Main Street
Lancaster, Ohio 43130
740.653.5598

Lancaster - East Main Street - Kroger*
1141 East Main Street
Post Office Box 607
Lancaster, Ohio 43130-0607
740.653.9375

Lancaster - Meijer*
2900 Columbus-Lancaster Road
Post Office Box 607
Lancaster, Ohio 43130-0607
740.687.1000

Offices: 10 ATMs: 14

Website: FairfieldNationalBank.com

Phone: 740.653.7242 or 800.324.7353

President: Stephen G. Wells

Counties Served: Fairfield, Franklin

Off-Site ATM Locations
Lancaster - Fairfield Medical Center (2)
401 North Ewing Street

Lancaster - Ohio University - Lancaster
1570 Granville Pike

*Includes Automated Teller Machine

Lancaster - Memorial Drive*
1280 North Memorial Drive
Lancaster, Ohio 43130
740.653.1422

Lancaster - West Fair*
1001 West Fair Avenue
Lancaster, Ohio 43130
740.653.1199

Pickerington - Kroger*
1045 Hill Road North
Pickerington, Ohio 43147
614.759.1522

Reynoldsburg - Slate Ridge*
1988 Baltimore-Reynoldsburg Road
(Route 256)
Reynoldsburg, Ohio 43068
614.868.1988

Franklin
County

Reynoldsburg

Pickerington

Canal Winchester

Baltimore

Fairfield
County

Lancaster [6]

FAIRFIELD
NATIONAL
BANK

DIVISION OF THE PARK NATIONAL BANK

Advisory Board

Charles P. Bird, Ph.D.
Retired, Ohio University

Leonard F. Gorsuch
Fairfield Homes, Inc.

Jonathan W. Nusbaum, M.D.
Retired, Surgeon

Stephen G. Wells
President, Fairfield
National Bank

Eleanor V. Hood
The Lancaster Festival

S. Alan Risch
Risch Drug Stores, Inc.

James McLain, II
McLain, Hill, Rugg and
Associates, Inc.

Paul Van Camp
P.V.C. Limited

Assistant Vice Presidents
Molly S. Bates
Jamey L. Binkley
Michael D. Mitchell
Trudy M. Reeb
Kim I. Sheldon
Heather N. Wiley

Banking Officers
Grace R. Cline
Andrew J. Connell
Daniel J. Fawcett

Edward J. Gurile, III
Melissa J. McMullen
Cynthia A. Moore
Sean P. Murnane
Tiffany J. Ruckman
Jason A. Saul
Brenda S. Shamblin
Luann K. Snyder
Allison G. Spangler
Tina L. Taley

Administrative Officers
Vincent E. Carpico
Eric W. Croft
Jessica L. Seipel
Laura Wright

*Trust Officer

Dean DeRolph
Kumler Collision and
Automotive

Jennifer Johns Friel
Midwest Fabricating
Company

Officer Listing

President
Stephen G. Wells

Senior Vice President
Timothy D. Hall

Vice Presidents
Daniel R. Bates
Scott A. Reed
Laura F. Tussing*

Offices: 3 ATMs: 4

Website: FarmersandSavings.com

Phone: 419.994.4115 or 855.345.0899

President: Brian R. Hinkle

County Served: Ashland

Off-Site ATM Location

Loudonville - Stake’s Short Stop

3052 State Route 3

*Includes Automated Teller Machine

Ashland

County

Ashland

Perrysville

Loudonville

Main Office - Loudonville*

120 North Water Street

Post Office Box 179

Loudonville, Ohio 44842-0179

419.994.4115

Ashland*

1161 East Main Street

Ashland, Ohio 44805-2831

419.281.1590

Perrysville*

112 North Bridge Street

Post Office Box 156

Perrysville, Ohio 44864-0156

419.938.5622

Advisory Board

Patricia A. Byerly

Retired, Byerly-Lindsey

Funeral Home

Brian R. Hinkle

President, Farmers and

Savings Bank

Chris D. Tuttle

Amish Oak Furniture

Company, Inc.

Gordon E. Yance

Chairman of the Board,

First-Knox National Bank Division

Timothy R. Cowen

Cowen Truck Line, Inc.

Roger E. Stitzlein

Loudonville Farmers Equity

Officer Listing

President

Brian R. Hinkle

Vice Presidents

Sharon E. Blubaugh

Assistant Vice President

Gregory A. Henley

Banking Officer

Todd A. Geren

FAIRFIELD

NATIONAL

BANK

DIVISION OF THE PARK NATIONAL BANK

Advisory Board

Dean DeRolph

Kumler Collision and

Automotive

Jennifer Johns Friel

Midwest Fabricating

Company

Officer Listing

President

Stephen G. Wells

Senior Vice President

Timothy D. Hall

Vice Presidents

Daniel R. Bates

Scott A. Reed

Laura F. Tussing*

Charles P. Bird, Ph.D.

Retired, Ohio University

Leonard F. Gorsuch

Fairfield Homes, Inc.

Jonathan W. Nusbaum, M.D.

Stephen G. Wells

Retired, Surgeon

President, Fairfield

National Bank

Eleanor V. Hood

The Lancaster Festival

S. Alan Risch

Risch Drug Stores, Inc.

James McLain, II

McLain, Hill, Rugg and

Associates, Inc.

Paul Van Camp

P.V.C. Limited

Assistant Vice Presidents

Molly S. Bates

Jamey L. Binkley

Michael D. Mitchell

Trudy M. Reeb

Kim I. Sheldon

Heather N. Wiley

Banking Officers

Grace R. Cline

Andrew J. Connell

Daniel J. Fawcett

Edward J. Gurile, III

Melissa J. McMullen

Cynthia A. Moore

Sean P. Murnane

Tiffany J. Ruckman

Jason A. Saul

Brenda S. Shamblin

Luann K. Snyder

Allison G. Spangler

Tina L. Taley

Administrative Officers

Vincent E. Carpico

Eric W. Croft

Jessica L. Seipel

Laura Wright

*Trust Officer

Offices: 3 ATMs: 4

Website: FarmersandSavings.com

Phone: 419.994.4115 or 855.345.0899

President: Brian R. Hinkle

County Served: Ashland

Off-Site ATM Location
Loudonville - Stake’s Short Stop
3052 State Route 3

*Includes Automated Teller Machine

Ashland
County

Ashland

Perrysville

Loudonville

Main Office - Loudonville*
120 North Water Street
Post Office Box 179
Loudonville, Ohio 44842-0179
419.994.4115

Ashland*
1161 East Main Street
Ashland, Ohio 44805-2831
419.281.1590

Perrysville*
112 North Bridge Street
Post Office Box 156
Perrysville, Ohio 44864-0156
419.938.5622

Advisory Board

Patricia A. Byerly
Retired, Byerly-Lindsey
Funeral Home

Brian R. Hinkle
President, Farmers and
Savings Bank

Chris D. Tuttle
Amish Oak Furniture
Company, Inc.

Gordon E. Yance
Chairman of the Board,
First-Knox National Bank Division

Timothy R. Cowen
Cowen Truck Line, Inc.

Roger E. Stitzlein
Loudonville Farmers Equity

Officer Listing

President
Brian R. Hinkle

Vice Presidents
Sharon E. Blubaugh

Assistant Vice President
Gregory A. Henley

Banking Officer
Todd A. Geren

Offices: 9 ATMs: 17

Website: FirstKnox.com

Phone: 740.399.5500 or 800.837.5266

President: Vickie A. Sant

Counties Served: Holmes, Knox, Morrow,
Richland

Mount Vernon - Coshocton Avenue*
810 Coshocton Avenue
Mount Vernon, Ohio 43050-1922
740.397.5551

Mount Vernon - Operations Center
105 West Vine Street
Post Office Box 1270
Mount Vernon, Ohio 43050-1270
740.399.5500

Mount Gilead - Morrow County Hospital
651 West Marion Road

Advisory Board

Mount Vernon - Colonial City Lanes
110 Mount Vernon Avenue

Mount Vernon - COTC - Ariel Hall
236 South Main Street

Mount Vernon - Knox Community Hospital
1330 Coshocton Road

William B. Levering

Levering Management, Inc.

Mark R. Ramser

Off-Site ATM Locations
Fredericktown - Fast Freddies
89 South Main Street

Mount Vernon
11 West Vine Street

Gambier - Kenyon College Bookstore
106 Gaskin Avenue

*Includes Automated Teller Machine

Howard - Apple Valley
21973 Coshocton Road

Millersburg - BAGS
88 East Jackson Street

Richland
County

Mount Gilead

Morrow
County

Bellville

Fredericktown

Danville

Mount Vernon [3]

Centerburg

Knox
County

Holmes
County

Millersburg

Maureen H. Buchwald

Glen Hill Orchards, Ltd.

Daniel L. Mathie

Vickie A. Sant

Roger E. Stitzlein

Critchfield, Critchfield &

President, First-Knox

Loudonville Farmers Equity

Johnston, Ltd.

National Bank

Ronald J. Hawk

Danville Feed and Supply, Inc.

Noel C. Parrish

NOE, Inc.

R. Daniel Snyder

Retired Director, Snyder

Funeral Homes, Inc.

Gordon E. Yance

Chairman, Retired President,

First-Knox National Bank Division

Ohio Cumberland Gas Co.

Officer Listing

Senior Vice Presidents

Chairman

Gordon E. Yance

President

Vickie A. Sant

Cheri L. Butcher*

Julie A. Leonard

Mark P. Leonard

Vice Presidents

Robert E. Boss

Cynthia L. Higgs

James W. Hobson

Jerry D. Simon

Joan M. Stout

Todd P. Vermilya

Assistant Vice Presidents

Heather A. Brayshaw

Banking Officers

Nicholas R. Blanchard

Administrative Officers

Phyllis D. Colopy

Rachelle E. Dallas

Deborah S. Dove

Wendi M. Fowler*

Debra E. Holiday

R. Edward Kline

James S. Meyer

Levi D. Curry

Lance E. Dill

Todd M. Hawkins

David E. Humphrey

Mary A. Loyd

Sherry L. Snyder

Nicole S. Au

Gabriel J. Aufrance

Deborah J. Daniels

Robin L. DePolo

Krystal E. Drye

Kassandra L. Hoeflich

Cynthia K. Hogle

Jeffrey A. Kinney

Darrell E. Lee

Douglas R. McCann

Paulina S. McQuigg

Fawn J. Mollenkopf

Tiffany D. Stefano

*Trust Officer

Main Office - Mount Vernon
One South Main Street
Post Office Box 1270
Mount Vernon, Ohio 43050-1270
740.399.5500

Bellville*
154 Main Street
Bellville, Ohio 44813-1237
419.886.3711

Centerburg*
35 West Main Street
Post Office Box F
Centerburg, Ohio 43011-0870
740.625.6136

Danville*
4 South Market Street
Post Office Box 29
Danville, Ohio 43014-0029
740.599.6686

Fredericktown*
137 North Main Street
Fredericktown, Ohio 43019-1109
740.694.2035

Millersburg*
225 North Clay Street
Millersburg, Ohio 44654-1101
330.674.2610

Mount Gilead
504 West High Street
Mount Gilead, Ohio 43338-1212
419.946.9010

Mount Vernon - Blackjack Road*
8641 Blackjack Road
Mount Vernon, Ohio 43050-9485
740.399.5260

Offices: 9 ATMs: 17

Website: FirstKnox.com

Phone: 740.399.5500 or 800.837.5266

President: Vickie A. Sant

Counties Served: Holmes, Knox, Morrow,

Richland

740.399.5500

Bellville*

154 Main Street

Bellville, Ohio 44813-1237

419.886.3711

Centerburg*

35 West Main Street

Post Office Box F

Centerburg, Ohio 43011-0870

740.625.6136

Danville*

4 South Market Street

Post Office Box 29

Danville, Ohio 43014-0029

740.599.6686

Fredericktown*

137 North Main Street

Fredericktown, Ohio 43019-1109

740.694.2035

Millersburg*

225 North Clay Street

Millersburg, Ohio 44654-1101

330.674.2610

Mount Gilead

504 West High Street

Mount Gilead, Ohio 43338-1212

419.946.9010

Mount Vernon - Blackjack Road*

8641 Blackjack Road

Mount Vernon, Ohio 43050-9485

740.399.5260

Off-Site ATM Locations

Fredericktown - Fast Freddies

89 South Main Street

Mount Vernon

11 West Vine Street

Gambier - Kenyon College Bookstore

106 Gaskin Avenue

*Includes Automated Teller Machine

Howard - Apple Valley

21973 Coshocton Road

Millersburg - BAGS

88 East Jackson Street

Richland

County

Mount Gilead

Morrow

County

Bellville

Fredericktown

Danville

Mount Vernon [3]

Centerburg

Knox

County

Holmes

County

Millersburg

Main Office - Mount Vernon

Mount Vernon - Coshocton Avenue*

Mount Gilead - Morrow County Hospital

One South Main Street

Post Office Box 1270

810 Coshocton Avenue

Mount Vernon, Ohio 43050-1922

Mount Vernon, Ohio 43050-1270

740.397.5551

651 West Marion Road

Advisory Board

Mount Vernon - Operations Center

105 West Vine Street

Post Office Box 1270

Mount Vernon, Ohio 43050-1270

740.399.5500

Mount Vernon - Colonial City Lanes

110 Mount Vernon Avenue

Maureen H. Buchwald
Glen Hill Orchards, Ltd.

Mount Vernon - COTC - Ariel Hall

236 South Main Street

Ronald J. Hawk
Danville Feed and Supply, Inc.

Mount Vernon - Knox Community Hospital

1330 Coshocton Road

William B. Levering
Levering Management, Inc.

Daniel L. Mathie
Critchfield, Critchfield &
Johnston, Ltd.

Vickie A. Sant
President, First-Knox
National Bank

Noel C. Parrish
NOE, Inc.

Mark R. Ramser
Ohio Cumberland Gas Co.

R. Daniel Snyder
Retired Director, Snyder
Funeral Homes, Inc.

Roger E. Stitzlein
Loudonville Farmers Equity

Gordon E. Yance
Chairman, Retired President,
First-Knox National Bank Division

Assistant Vice Presidents
Heather A. Brayshaw
Phyllis D. Colopy
Rachelle E. Dallas
Deborah S. Dove
Wendi M. Fowler*
Debra E. Holiday
R. Edward Kline
James S. Meyer

Banking Officers
Nicholas R. Blanchard
Levi D. Curry
Lance E. Dill
Todd M. Hawkins
David E. Humphrey
Mary A. Loyd
Sherry L. Snyder

Officer Listing

Chairman
Gordon E. Yance

President
Vickie A. Sant

Senior Vice Presidents
Cheri L. Butcher*
Julie A. Leonard
Mark P. Leonard

Vice Presidents
Robert E. Boss
Cynthia L. Higgs
James W. Hobson
Jerry D. Simon
Joan M. Stout
Todd P. Vermilya

Administrative Officers
Nicole S. Au
Gabriel J. Aufrance
Deborah J. Daniels
Robin L. DePolo
Krystal E. Drye
Kassandra L. Hoeflich
Cynthia K. Hogle
Jeffrey A. Kinney
Darrell E. Lee
Douglas R. McCann
Paulina S. McQuigg
Fawn J. Mollenkopf
Tiffany D. Stefano

*Trust Officer

PARK

NATIONAL BANK

Offices: 18 ATMs: 23

Website: ParkNationalBank.com

Phone: 740.349.8451 or 888.545.4762

Chairman: C. Daniel DeLawder

President: David L. Trautman

Counties Served: Franklin, Licking

PARK

NATIONAL BANK

Board of Directors

Main Office - Newark*
50 North Third Street
Post Office Box 3500
Newark, Ohio 43058-3500
740.349.8451

Columbus
140 East Town Street, Suite 1400
Columbus, Ohio 43215
614.228.0063

Gahanna - Kroger*
1365 Stoneridge Drive
Gahanna, Ohio 43230
614.475.5213

Granville*
119 East Broadway
Granville, Ohio 43023
740.587.0238

Heath - Southgate*
567 Hebron Road
Heath, Ohio 43056
740.522.3176

Heath - 30th Street*
800 South 30th Street
Heath, Ohio 43056
740.522.5693

Hebron*
103 East Main Street
Post Office Box 268
Hebron, Ohio 43025
740.928.2691

Johnstown*
60 West Coshocton Street
Post Office Box 446
Johnstown, Ohio 43031
740.967.1831

Kirkersville
177 East Main Street
Post Office Box 38
Kirkersville, Ohio 43033
740.927.2301

Newark - Deo Drive - Kroger*
245 Deo Drive, Suite A
Newark, Ohio 43058
740.349.3946

Newark - Dugway*
1495 Granville Road
Newark, Ohio 43055
740.349.3947

Newark - Eastland*
1008 East Main Street
Newark, Ohio 43055
740.349.3942

Newark - McMillen*
1633 West Main Street
Newark, Ohio 43055
740.349.3944

Newark - 21st Street*
990 North 21st Street
Newark, Ohio 43055
740.349.3943

Pataskala - Kroger**
350 East Broad Street
Pataskala, Ohio 43062
740.927.8113

Reynoldsburg - Kroger*
8460 East Main Street
Reynoldsburg, Ohio 43068
614.861.7074

Utica*
33 South Main Street
Post Office Box 486
Utica, Ohio 43080
740.892.3841

Franklin
County

Worthington*
7140 North High Street
Worthington, Ohio 43085
614.841.0123

Operations Centers
21 South First Street
and 22 South First Street
Newark, Ohio 43055
740.349.8633

Off-Site ATM Locations
Granville - Denison University
Slayter Hall

Granville - Kendal at Granville
2158 Columbus Road

Hebron - Kroger
600 East Main Street

Newark - Licking Memorial Hospital
1320 West Main Street

Newark - OSU-N/COTC Campus
1179 University Drive

Reynoldsburg - Kroger
6962 East Main Street

*Includes Automated Teller Machine

**Includes Automated Teller Machine
Drive-up and Inside

Worthington

Gahanna

Utica

Johnstown

Licking
County

Granville

Pataskala

Newark [6]

Heath [2]

Columbus

Reynoldsburg

Hebron

Kirkersville

Donna M. Alvarado

AGUILA International

Stephen J. Kambietz

R.C. Olmstead, Inc.

Robert E. O’Neill

Southgate Corporation

David L. Trautman

President, Park National Bank

C. Daniel DeLawder

William T. McConnell

Chairman, Park National Bank

Retired, Park National Bank

J. Gilbert Reese

Director Emeritus

Lee Zazworsky

Mid State Systems, Inc.

F.W. Englefield, IV

Englefield, Inc.

Officer Listing

Chairman

C. Daniel DeLawder

President

David L. Trautman

Teresa M. Kroll*

Craig M. Larson

Kelly M. Maloney

Carl H. Mayer

Lydia E. Miller

Jason L. Painley

Senior Vice Presidents

Gregory M. Rhoads

Adrienne M. Brokaw

Karen K. Rice

Brady T. Burt

Thomas J. Button

Scott R. Robertson

David J. Rohde

Thomas M. Cummiskey*

Ralph H. Root, III

Timothy J. Lehman

Alan C. Rothweiler

Laura B. Lewis

Matthew R. Miller

Cheryl L. Snyder

Paul E. Turner

Jeffrey A. Wilson

Vice Presidents

Linda K. Ampadu

Alice M. Browning

James M. Buskirk*

Bryan M. Campolo

Peter G. Cassanos

Cynthia H. Crane

Kathleen O. Crowley

Lori L. Drake

April R. Dusthimer

Kelly A. Edds

Jill S. Evans

Joan L. Franks

John S. Gard*

Jeffrey C. Gluntz

Scott C. Green

Frederick G. Hadley

Linda M. Harris

Damon P. Howarth*

Daniel L. Hunt

Eric M. Sideri

Robert G. Springer

Julie L. Strohacker*

Peggy W. Tidwell

Sandra S. Travis

Erin E. Tschanen

Berkley C. Tuggle, Jr.

Daniel H. Turben

Stanley A. Uchida

John B. Uible*

Monte J. VanDeusen

Bradden E. Waltz

Barbara A. Wilson

Christa D. Wright

J. Bradley Zellar*

Eric M. Baker*

Renee L. Baker

Brent A. Barnes

Gail A. Blizzard

Sharon L. Bolen

Jill A. Brewer

Beverly A. Clark*

Christine S. Schneider

Steven J. Klein

Michael R. Shannon

Andrew H. Knoesel

Kimberly G. McDonough

Denise A. Miller**

Amber L. Cummins*

Brian J. Elder

Amanda K. Evans

Catherine J. Evans

Jennifer S. Favand

Brenda M. Frakes

Jerrod F. Gambs

David W. Hardy*

Louise A. Harvey

Teresa A. Hennessy

Chris R. Hiner

Cynthia L. Kissel

Candy J. Lehman

Bethany B. Lewis

Daniel K. Maloney

Julia E. McCormack

Ronald C. McLeish

Jennifer L. Morehead

Cynthia A. Neely

Steven E. Ritzer

Mareion A. Royster*

Melinda S. Smith

John A. Stevens

Lisa E. Stranger

Lori B. Tabler

Angie D. Treadway

Scott A. VanHorn

Jenny L. Ward

Carol S. Whetstone*

D. Bradley Wilkins

Rose M. Wilson

Banking Officers

Kathy L. Allen

Corey S. Alton

Lindsay M. Alton

Michelle L. Arnold

Thomas E. Ballard

Stephen E. Buchanan

Brad G. Chance

Jennifer G. Corbitt

Jacqueline L. Davis

Michael D. Dudgeon

Aaron T. Dunifon

Andrew J. Fackler

Kathryn S. Firestone

Ellen P. Hempleman

Candy L. Holbrook

Cynthia R. Hollis

Amber L. Keirns

Diane M. Oberfield*

Karen L. Pavone

Sherri L. Pembrook

Michelle A. Rood

Leda J. Rutledge

Ruth Y. Sawyer

Charles F. Schultz

Barry H. Winters

Ryan D. Wood

Stephanie J. Allen

Jessica J. Altman

Larry M. Bailey

Kim K. Ballman

Jennifer F. Bobb**

Renae M. Buchanan

Jill E. Burnworth

Erica L. Chance

Beth A. Cook

Nathan T. Cook

Scott D. Dorn

Teresa K. Faris

Allen S. Fish

Adrienne L. Fisher

Andrea J. Ford

Bradley D. Gard

Paul J. Gassman

Tracy A. Grimm

Darcy D. Grossett

Asher D. Hunter

Timothy A. Keith

Lisa A. Keller

Diann M. Langwasser

Abigail C. Leibold

Aaron B. Mueller

Angela J. Muncie

Kathy K. Myers**

Rodger D. Orr

Scott D. Parks

Jeffrey A. Pillow

Lauren M. Preidis**

Rhonda L. Rodgers

Alice M. Schlaegel

Jessica L. Schorger

Stephanie M. Tanner

Michelle M. Tipton

Ginger R. Varner

*Trust Officer

**Assistant Trust Officer

Jennifer L. Shanaberg

Lacie M. Priest

Alton P. Thompson

Mark D. Ridenbaugh

Administrative Officers

Melissa N. Spain

Assistant Vice Presidents

Megan C. Warman*

PARK

NATIONAL BANK

Offices: 18 ATMs: 23

Website: ParkNationalBank.com

Phone: 740.349.8451 or 888.545.4762

Chairman: C. Daniel DeLawder

President: David L. Trautman

Counties Served: Franklin, Licking

PARK

NATIONAL BANK

Board of Directors

Newark - Deo Drive - Kroger*

Worthington*

Donna M. Alvarado
AGUILA International

Stephen J. Kambietz
R.C. Olmstead, Inc.

Robert E. O’Neill
Southgate Corporation

David L. Trautman
President, Park National Bank

C. Daniel DeLawder
Chairman, Park National Bank

William T. McConnell
Retired, Park National Bank

J. Gilbert Reese
Director Emeritus

Lee Zazworsky
Mid State Systems, Inc.

F.W. Englefield, IV
Englefield, Inc.

Officer Listing

Chairman
C. Daniel DeLawder

President
David L. Trautman

Senior Vice Presidents
Adrienne M. Brokaw
Brady T. Burt
Thomas J. Button
Thomas M. Cummiskey*
Timothy J. Lehman
Laura B. Lewis
Matthew R. Miller
Cheryl L. Snyder
Paul E. Turner
Jeffrey A. Wilson

Vice Presidents
Linda K. Ampadu
Alice M. Browning
James M. Buskirk*
Bryan M. Campolo
Peter G. Cassanos
Cynthia H. Crane
Kathleen O. Crowley
Lori L. Drake
April R. Dusthimer
Kelly A. Edds
Jill S. Evans
Joan L. Franks
John S. Gard*
Jeffrey C. Gluntz
Scott C. Green
Frederick G. Hadley
Linda M. Harris
Damon P. Howarth*
Daniel L. Hunt

Teresa M. Kroll*
Craig M. Larson
Kelly M. Maloney
Carl H. Mayer
Lydia E. Miller
Jason L. Painley
Gregory M. Rhoads
Karen K. Rice
Scott R. Robertson
David J. Rohde
Ralph H. Root, III
Alan C. Rothweiler
Christine S. Schneider
Michael R. Shannon
Eric M. Sideri
Robert G. Springer
Julie L. Strohacker*
Peggy W. Tidwell
Sandra S. Travis
Erin E. Tschanen
Berkley C. Tuggle, Jr.
Daniel H. Turben
Stanley A. Uchida
John B. Uible*
Monte J. VanDeusen
Bradden E. Waltz
Barbara A. Wilson
Christa D. Wright
J. Bradley Zellar*

Assistant Vice Presidents
Eric M. Baker*
Renee L. Baker
Brent A. Barnes
Gail A. Blizzard
Sharon L. Bolen
Jill A. Brewer
Beverly A. Clark*

Amber L. Cummins*
Brian J. Elder
Amanda K. Evans
Catherine J. Evans
Jennifer S. Favand
Brenda M. Frakes
Jerrod F. Gambs
David W. Hardy*
Louise A. Harvey
Teresa A. Hennessy
Chris R. Hiner
Cynthia L. Kissel
Steven J. Klein
Andrew H. Knoesel
Candy J. Lehman
Bethany B. Lewis
Daniel K. Maloney
Julia E. McCormack
Ronald C. McLeish
Jennifer L. Morehead
Cynthia A. Neely
Steven E. Ritzer
Mareion A. Royster*
Melinda S. Smith
John A. Stevens
Lisa E. Stranger
Lori B. Tabler
Angie D. Treadway
Scott A. VanHorn
Jenny L. Ward
Megan C. Warman*
Carol S. Whetstone*
D. Bradley Wilkins
Rose M. Wilson

Banking Officers
Kathy L. Allen
Corey S. Alton

Lindsay M. Alton
Michelle L. Arnold
Thomas E. Ballard
Stephen E. Buchanan
Brad G. Chance
Jennifer G. Corbitt
Jacqueline L. Davis
Michael D. Dudgeon
Aaron T. Dunifon
Andrew J. Fackler
Kathryn S. Firestone
Ellen P. Hempleman
Candy L. Holbrook
Cynthia R. Hollis
Amber L. Keirns
Kimberly G. McDonough
Diane M. Oberfield*
Karen L. Pavone
Sherri L. Pembrook
Michelle A. Rood
Leda J. Rutledge
Ruth Y. Sawyer
Charles F. Schultz
Jennifer L. Shanaberg
Alton P. Thompson
Barry H. Winters
Ryan D. Wood

Administrative Officers
Stephanie J. Allen
Jessica J. Altman
Larry M. Bailey
Kim K. Ballman
Jennifer F. Bobb**
Renae M. Buchanan
Jill E. Burnworth
Erica L. Chance
Beth A. Cook

Nathan T. Cook
Scott D. Dorn
Teresa K. Faris
Allen S. Fish
Adrienne L. Fisher
Andrea J. Ford
Bradley D. Gard
Paul J. Gassman
Tracy A. Grimm
Darcy D. Grossett
Asher D. Hunter
Timothy A. Keith
Lisa A. Keller
Diann M. Langwasser
Abigail C. Leibold
Denise A. Miller**
Aaron B. Mueller
Angela J. Muncie
Kathy K. Myers**
Rodger D. Orr
Scott D. Parks
Jeffrey A. Pillow
Lauren M. Preidis**
Lacie M. Priest
Mark D. Ridenbaugh
Rhonda L. Rodgers
Alice M. Schlaegel
Jessica L. Schorger
Melissa N. Spain
Stephanie M. Tanner
Michelle M. Tipton
Ginger R. Varner

*Trust Officer
**Assistant Trust Officer

245 Deo Drive, Suite A

Newark, Ohio 43058

740.349.3946

Newark - Dugway*

1495 Granville Road

Newark, Ohio 43055

740.349.3947

Newark - Eastland*

1008 East Main Street

Newark, Ohio 43055

740.349.3942

Newark - McMillen*

1633 West Main Street

Newark, Ohio 43055

740.349.3944

Newark - 21st Street*

990 North 21st Street

Newark, Ohio 43055

740.349.3943

Pataskala - Kroger**

350 East Broad Street

Pataskala, Ohio 43062

740.927.8113

Reynoldsburg - Kroger*

8460 East Main Street

Reynoldsburg, Ohio 43068

614.861.7074

Utica*

33 South Main Street

Post Office Box 486

Utica, Ohio 43080

740.892.3841

Main Office - Newark*

50 North Third Street

Post Office Box 3500

Newark, Ohio 43058-3500

740.349.8451

Columbus

140 East Town Street, Suite 1400

Columbus, Ohio 43215

614.228.0063

Gahanna - Kroger*

1365 Stoneridge Drive

Gahanna, Ohio 43230

614.475.5213

Granville*

119 East Broadway

Granville, Ohio 43023

740.587.0238

Heath - Southgate*

567 Hebron Road

Heath, Ohio 43056

740.522.3176

Heath - 30th Street*

800 South 30th Street

Heath, Ohio 43056

740.522.5693

Hebron*

103 East Main Street

Post Office Box 268

Hebron, Ohio 43025

740.928.2691

Johnstown*

60 West Coshocton Street

Post Office Box 446

Johnstown, Ohio 43031

740.967.1831

Kirkersville

177 East Main Street

Post Office Box 38

Kirkersville, Ohio 43033

740.927.2301

7140 North High Street

Worthington, Ohio 43085

614.841.0123

Operations Centers

21 South First Street

and 22 South First Street

Newark, Ohio 43055

740.349.8633

Off-Site ATM Locations

Granville - Denison University

Slayter Hall

Granville - Kendal at Granville

2158 Columbus Road

Hebron - Kroger

600 East Main Street

Newark - Licking Memorial Hospital

1320 West Main Street

Newark - OSU-N/COTC Campus

1179 University Drive

Reynoldsburg - Kroger

6962 East Main Street

*Includes Automated Teller Machine

**Includes Automated Teller Machine

Drive-up and Inside

Worthington

Gahanna

Utica

Johnstown

Licking

County

Granville

Pataskala

Newark [6]

Heath [2]

Franklin

County

Columbus

Reynoldsburg

Hebron

Kirkersville

Offices: 8 ATMs: 8

Website: BankWithPark.com

Phone: 513.576.0600 or 888.474.7275

President: David J. Gooch

Counties Served: Butler, Clermont,
Hamilton

Offices: 12 ATMs: 13

Website: RichlandBank.com

Phone: 419.525.8700 or 800.525.8702

President: John A. Brown

County Served: Richland

Milford*
25 Main Street
Milford, Ohio 45150
513.831.4400

New Richmond*
100 Western Avenue
New Richmond, Ohio 45157
513.553.3131

Owensville*
5100 State Route 132
Owensville, Ohio 45160
513.732.2131

West Chester*
8366 Princeton-Glendale Road
West Chester, Ohio 45069
513.346.2000

*Includes Automated Teller Machine

Mansfield - Madison - Kroger*

Off-Site ATM Locations

Mansfield, Ohio 44901-0355

419.589.7481

Mansfield - Ashland University School

of Nursing

1020 South Trimble Road

*Includes Automated Teller Machine

Butler
County

West Chester

Hamilton
County

Milford

Lexington, Ohio 44904-1300

419.747.4821

Eastgate

Anderson

Owensville

Amelia [2]
Clermont
County

New Richmond

David J. Gooch
President,
Park National Bank of Southwest
Ohio and Northern Kentucky

Martin J. Grunder, Jr.
Grunder Landscaping Co.

Richard W. Holmes
Retired,
PricewaterhouseCoopers, LLP

Thomas E. Niehaus
Vorys Advisors LLC

Larry H. Maxey
Synchronic Business Solutions

Chris S. Smith
Clermont County Convention
& Visitors Bureau

Mansfield - Lexington Avenue - Kroger*

155 Mansfield Avenue

Main Office - Mansfield*

3 North Main Street

Post Office Box 355

419.525.8700

Butler*

85 Main Street

Butler, Ohio 44822-9618

419.883.3291

Lexington*

276 East Main Street

419.884.1054

Mansfield - Ashland Road*

797 Ashland Road

Mansfield, Ohio 44905-2075

419.589.6321

Mansfield - Cook Road*

460 West Cook Road

Mansfield, Ohio 44907-2395

419.756.3696

1500 Lexington Avenue

Mansfield, Ohio 44907-2632

419.756.3587

1060 Ashland Road

Mansfield, Ohio 44905-8797

Mansfield - Marion Avenue*

50 Marion Avenue

Mansfield, Ohio 44903-2302

419.524.3310

Mansfield - Springmill*

889 North Trimble Road

Mansfield, Ohio 44906-2009

Mansfield - West Park*

1255 Park Avenue West

Mansfield, Ohio 44906-2810

419.529.5822

Ontario*

325 North Lexington-Springmill Road

Ontario, Ohio 44906-1218

419.529.4112

Shelby - Mansfield Avenue*

Shelby, Ohio 44875-1832

419.347.3111

Richland

County

Shelby

Ontario

Mansfield [8]

Lexington

Butler

Main Office - Eastgate*
4550 Eastgate Boulevard
Cincinnati, Ohio 45245
513.753.0900

Amelia - Main Street*
5 West Main Street
Amelia, Ohio 45102
513.753.5700

Amelia - Ohio Pike*
1187 Ohio Pike
Amelia, Ohio 45102
513.753.7283

Anderson*
1075 Nimitzview Drive
Cincinnati, Ohio 45230
513.232.9599

Advisory Board

Thomas J. Button
Senior Vice President
Park National Bank

Daniel L. Earley
Chairman, Retired President,
Park National Bank of Southwest
Ohio and Northern Kentucky

Officer Listing

President
David J. Gooch

Senior Vice Presidents
Edward L. Brady
Jennifer K. Fischer
William M. Schumacker*
Adam T. Stypula

Vice Presidents
Jay F. Berliner
18

Jason D. Hughes
William L. Jennewein*
Timothy A. Kemper
Louis J. Prabell
Ginger L. Vining
Joseph A. Wagner

Assistant Vice Presidents
Matthew M. Bauer
Matthew D. Colwell
Ed K. Cunningham
Kim J. Cunningham

Lee G. Davis
Sam J. DeBonis
James E. Hyson
William K. Wright

Banking Officers
Jana M. Beal
Stephanie D. Fahrnbach
Rachel L. Swisshelm
Jason O. Verhoff
Cyndy H. Wright

Administrative Officers
James P. Beck
Michelle R. Hamilton
Michael W. Miller
April Prather
Michelle M. Sandlin
Danielle N. Thiel

*Trust Officer

Offices: 8 ATMs: 8

Website: BankWithPark.com

Phone: 513.576.0600 or 888.474.7275

President: David J. Gooch

Counties Served: Butler, Clermont,

Hamilton

*Includes Automated Teller Machine

Butler

County

West Chester

Hamilton

County

Milford

Eastgate

Anderson

Owensville

Amelia [2]

Clermont

County

New Richmond

Milford*

25 Main Street

Milford, Ohio 45150

513.831.4400

New Richmond*

100 Western Avenue

New Richmond, Ohio 45157

513.553.3131

Owensville*

5100 State Route 132

Owensville, Ohio 45160

513.732.2131

West Chester*

8366 Princeton-Glendale Road

West Chester, Ohio 45069

513.346.2000

Offices: 12 ATMs: 13

Website: RichlandBank.com

Phone: 419.525.8700 or 800.525.8702

President: John A. Brown

County Served: Richland

Main Office - Mansfield*
3 North Main Street
Post Office Box 355
Mansfield, Ohio 44901-0355
419.525.8700

Butler*
85 Main Street
Butler, Ohio 44822-9618
419.883.3291

Lexington*
276 East Main Street
Lexington, Ohio 44904-1300
419.884.1054

Mansfield - Ashland Road*
797 Ashland Road
Mansfield, Ohio 44905-2075
419.589.6321

Mansfield - Cook Road*
460 West Cook Road
Mansfield, Ohio 44907-2395
419.756.3696

Mansfield - Lexington Avenue - Kroger*
1500 Lexington Avenue
Mansfield, Ohio 44907-2632
419.756.3587

Mansfield - Madison - Kroger*
1060 Ashland Road
Mansfield, Ohio 44905-8797
419.589.7481

Mansfield - Marion Avenue*
50 Marion Avenue
Mansfield, Ohio 44903-2302
419.524.3310

Mansfield - Springmill*
889 North Trimble Road
Mansfield, Ohio 44906-2009
419.747.4821

Mansfield - West Park*
1255 Park Avenue West
Mansfield, Ohio 44906-2810
419.529.5822

Ontario*
325 North Lexington-Springmill Road
Ontario, Ohio 44906-1218
419.529.4112

Shelby - Mansfield Avenue*
155 Mansfield Avenue
Shelby, Ohio 44875-1832
419.347.3111

Off-Site ATM Locations
Mansfield - Ashland University School
of Nursing
1020 South Trimble Road

*Includes Automated Teller Machine

Richland
County

Shelby

Ontario

Mansfield [8]

Lexington

Butler

Main Office - Eastgate*

4550 Eastgate Boulevard

Cincinnati, Ohio 45245

513.753.0900

Amelia - Main Street*

5 West Main Street

Amelia, Ohio 45102

513.753.5700

Amelia - Ohio Pike*

1187 Ohio Pike

Amelia, Ohio 45102

513.753.7283

Anderson*

1075 Nimitzview Drive

Cincinnati, Ohio 45230

513.232.9599

Advisory Board

Thomas J. Button

Senior Vice President

Park National Bank

Daniel L. Earley

Ohio and Northern Kentucky

Officer Listing

President

David J. Gooch

Senior Vice Presidents

Edward L. Brady

Jennifer K. Fischer

William M. Schumacker*

Adam T. Stypula

Vice Presidents

Jay F. Berliner

David J. Gooch

President,

Richard W. Holmes

Retired,

Thomas E. Niehaus

Vorys Advisors LLC

Park National Bank of Southwest

PricewaterhouseCoopers, LLP

Ohio and Northern Kentucky

Chris S. Smith

Larry H. Maxey

Clermont County Convention

Chairman, Retired President,

Martin J. Grunder, Jr.

Synchronic Business Solutions

& Visitors Bureau

Park National Bank of Southwest

Grunder Landscaping Co.

Jason D. Hughes

William L. Jennewein*

Timothy A. Kemper

Louis J. Prabell

Ginger L. Vining

Joseph A. Wagner

Assistant Vice Presidents

Matthew M. Bauer

Matthew D. Colwell

Ed K. Cunningham

Kim J. Cunningham

Lee G. Davis

Sam J. DeBonis

James E. Hyson

William K. Wright

Banking Officers

Jana M. Beal

Stephanie D. Fahrnbach

Rachel L. Swisshelm

Jason O. Verhoff

Cyndy H. Wright

Administrative Officers

James P. Beck

Michelle R. Hamilton

Michael W. Miller

April Prather

Michelle M. Sandlin

Danielle N. Thiel

*Trust Officer

Advisory Board

Ronald L. Adams
Retired, DAI Emulsions, Inc.

Michael L. Chambers
J&B Acoustical

Mark Breitinger
Milark Industries

John A. Brown
President, Richland Bank

Benjamin A. Goldman
Retired, Superior Building
Services

Timothy J. Lehman
Chairman of the Board,
Richland Bank Division
Senior Vice President,
Park National Bank

Grant E. Milliron
Milliron Industries

Shirley Monica
S.S.M., Inc.

Linda H. Smith
Ashwood, LLC

Rick R. Taylor
Jay Industries, Inc.

Officer Listing

President
John A. Brown

Executive Vice President
Frank W. Wagner, II

Senior Vice President
Donald R. Harris, Jr.

Vice Presidents
Charla A. Irvin*
Michael A. Jefferson
George T. Keffalas
Rebecca J. Toomey

Susan A. Fanello
Barbara A. Miller
Jeffrey A. Parton
Sheryl L. Smith
Linda M. Whited

Assistant Vice Presidents
Edward A. Brauchler
Jimmy D. Burton
John Q. Cleland
Edward E. Duffey

Banking Officers
Carol L. Davis
Beth K. Malaska
Barbara L. Schopp-Miller

Administrative Officers
Lisa S. Clingan
Jessica L. Gribben
Clayton J. Herold
Janis L. Hoover
Tyler A. Krummel*
Kristie L. Massa
Ryan D. Smith
Deborah A. Sweet

*Trust Officer

Offices: 9 ATMs: 7

Website: SecondNational.com

Phone: 937.548.2122 or 855.548.2122

President: John E. Swallow

Counties Served: Darke, Mercer

Versailles*

101 West Main Street

Versailles, Ohio 45380

937.526.3287

*Includes Automated Teller Machine

Mercer

County

Celina

Fort Recovery

Darke

County

Versailles

Greenville [5]

Arcanum

Greenville - North*

1302 Wagner Avenue

Greenville, Ohio 45331

937.548.5068

Greenville - South

Located inside the Brethren

Retirement Community

750 Chestnut Street

Greenville, Ohio 45331

937.548.5435

Greenville - Third and Walnut*

175 East Third Street

Greenville, Ohio 45331

937.547.2555

Greenville - Walmart*

1501 Wagner Avenue

Greenville, Ohio 45331

937.548.4563

Main Office - Greenville

499 South Broadway

Post Office Box 130

Greenville, Ohio 45331

937.548.2122

Arcanum*

603 North Main Street

Arcanum, Ohio 45304

937.692.5191

Celina*

800 North Main Street

Celina, Ohio 45822

419.268.0049

Fort Recovery*

117 North Wayne Street

Ft. Recovery, Ohio 45846

419.375.4101

Advisory Board

Officer Listing

President

John E. Swallow

Executive Vice President

Steven C. Badgett

Vice Presidents

C. Russell Badgett

D. Todd Durham*

Joy D. Greer

Tyeis Baker-Baumann

Rebsco, Inc.

Philip M. Fullenkamp

Celina Insurance Group

Wesley M. Jetter

Ft. Recovery Industries

Wayne G. Deschambeau

Wayne HealthCare

Jeffrey E. Hittle

Hittle Buick GMC, Inc.

Marvin J. Stammen

Retired President,

Second National Bank

John E. Swallow

President, Second

National Bank

Thomas J. Lawson

Eric J. McKee

Daniel G. Schmitz

Brian A. Wagner

Assistant Vice Presidents

Kimberly A. Baker

Gerald O. Beatty

Alexa J. Clark

Debby J. Folkerth

Michael R. Henry*

Vicki L. Neff

Cynthia J. Riffle

Shane D. Stonebraker

Banking Officers

Zachary L. Newbauer

Stephen C. Schulte

Administrative Officers

Antonia T. Baker

Melanie A. Smith

*Trust Officer

Advisory Board

Ronald L. Adams

Michael L. Chambers

Retired, DAI Emulsions, Inc.

J&B Acoustical

Mark Breitinger

Milark Industries

John A. Brown

President, Richland Bank

Benjamin A. Goldman

Retired, Superior Building

Services

Timothy J. Lehman

Chairman of the Board,

Richland Bank Division

Senior Vice President,

Park National Bank

Grant E. Milliron

Milliron Industries

Shirley Monica

S.S.M., Inc.

Linda H. Smith

Ashwood, LLC

Rick R. Taylor

Jay Industries, Inc.

Officer Listing

President

John A. Brown

Executive Vice President

Frank W. Wagner, II

Vice Presidents

Charla A. Irvin*

Michael A. Jefferson

George T. Keffalas

Rebecca J. Toomey

Susan A. Fanello

Barbara A. Miller

Jeffrey A. Parton

Sheryl L. Smith

Linda M. Whited

Senior Vice President

Donald R. Harris, Jr.

Assistant Vice Presidents

Edward A. Brauchler

Jimmy D. Burton

John Q. Cleland

Edward E. Duffey

Banking Officers

Carol L. Davis

Beth K. Malaska

Barbara L. Schopp-Miller

Administrative Officers

Lisa S. Clingan

Jessica L. Gribben

Clayton J. Herold

Janis L. Hoover

Tyler A. Krummel*

Kristie L. Massa

Ryan D. Smith

Deborah A. Sweet

*Trust Officer

Offices: 9 ATMs: 7

Website: SecondNational.com

Phone: 937.548.2122 or 855.548.2122

President: John E. Swallow

Counties Served: Darke, Mercer

Versailles*
101 West Main Street
Versailles, Ohio 45380
937.526.3287

*Includes Automated Teller Machine

Mercer
County

Celina

Fort Recovery

Darke
County

Versailles

Greenville [5]

Arcanum

Main Office - Greenville
499 South Broadway
Post Office Box 130
Greenville, Ohio 45331
937.548.2122

Arcanum*
603 North Main Street
Arcanum, Ohio 45304
937.692.5191

Celina*
800 North Main Street
Celina, Ohio 45822
419.268.0049

Fort Recovery*
117 North Wayne Street
Ft. Recovery, Ohio 45846
419.375.4101

Advisory Board

Greenville - North*
1302 Wagner Avenue
Greenville, Ohio 45331
937.548.5068

Greenville - South
Located inside the Brethren
Retirement Community
750 Chestnut Street
Greenville, Ohio 45331
937.548.5435

Greenville - Third and Walnut*
175 East Third Street
Greenville, Ohio 45331
937.547.2555

Greenville - Walmart*
1501 Wagner Avenue
Greenville, Ohio 45331
937.548.4563

Tyeis Baker-Baumann
Rebsco, Inc.

Philip M. Fullenkamp
Celina Insurance Group

Wesley M. Jetter
Ft. Recovery Industries

Wayne G. Deschambeau
Wayne HealthCare

Jeffrey E. Hittle
Hittle Buick GMC, Inc.

Marvin J. Stammen
Retired President,
Second National Bank

John E. Swallow
President, Second
National Bank

Officer Listing

President
John E. Swallow

Executive Vice President
Steven C. Badgett

Vice Presidents
C. Russell Badgett
D. Todd Durham*
Joy D. Greer

Thomas J. Lawson
Eric J. McKee
Daniel G. Schmitz
Brian A. Wagner

Assistant Vice Presidents
Kimberly A. Baker
Gerald O. Beatty
Alexa J. Clark
Debby J. Folkerth

Michael R. Henry*
Vicki L. Neff
Cynthia J. Riffle
Shane D. Stonebraker

Banking Officers
Zachary L. Newbauer
Stephen C. Schulte

Administrative Officers
Antonia T. Baker
Melanie A. Smith

*Trust Officer

Offices: 21 ATMs: 28

Website: SecurityNationalBank.com

Phone: 937.324.6800 or 800.836.1557

President: William C. Fralick

Counties Served: Champaign, Clark,
Fayette, Greene, Madison, Warren

Off-Site ATM Locations
Plain City - Shell Gas Station
440 South Jefferson Avenue

Springfield
2051 North Bechtle Avenue

Springfield - Clark State
Community College
570 East Leffel Lane

Springfield - Regional Medical Center
222 West North Street

Springfield - Wittenberg University -
Student Center
738 Woodlawn Avenue

Springfield - Wittenberg University -
HPER Center
250 Bill Edwards Drive

Urbana - Champaign County
Community Center
1512 South US Highway 68

Yellow Springs - Young’s Jersey Dairy
6880 Springfield-Xenia Road

*Includes Automated Teller Machine

North
Lewisburg

Champaign
County
Urbana [2]

Mechanicsburg

Plain City

New Carlisle

Park Layne

Medway

Enon

Greene
County

Northridge

Springfield [5]
Clark
County
South
Charleston

Madison
County

Xenia [2]

Jamestown

Jeffersonville

Springboro

Warren
County

Fayette
County

Springboro*
720 Gardner Road
Springboro, Ohio 45066
937.748.6700

Springfield - Derr Road - Kroger*
2989 Derr Road
Springfield, Ohio 45503
937.342.9411

Springfield - East Main*
2730 East Main Street
Springfield, Ohio 45503
937.325.0351

Springfield - North Limestone*
1756 North Limestone Street
Springfield, Ohio 45503
937.390.3688

Springfield - Northridge*
1600 Moorefield Road
Springfield, Ohio 45503
937.390.3088

Springfield - Western*
920 West Main Street
Springfield, Ohio 45504
937.322.0152

Urbana*
1 Monument Square
Urbana, Ohio 43078
937.653.1226

Urbana - Scioto Street*
828 Scioto Street
Urbana, Ohio 43078
937.653.1290

Xenia Downtown*
161 East Main Street
Xenia, Ohio 45385
937.372.9211

Xenia Plaza*
82 North Allison Avenue
Xenia, Ohio 45385
937.372.9214

Main Office - Springfield*
40 South Limestone Street
Springfield, Ohio 45502
937.324.6800

Enon*
3680 Marion Drive
Enon, Ohio 45323
937.864.7318

Jamestown*
82 West Washington Street
Jamestown, Ohio 45335
937.675.7311

Jeffersonville*
2 South Main Street
Jeffersonville, Ohio 43128
740.426.6384

Mechanicsburg*
2 South Main Street
Mechanicsburg, Ohio 43044
937.834.3387

Medway*
130 West Main Street
Medway, Ohio 45341
937.849.1393

New Carlisle*
201 North Main Street
New Carlisle, Ohio 45344
937.845.3811

New Carlisle - Park Layne*
2035 South Dayton-Lakeview Road
New Carlisle, Ohio 45344
937.849.1331

North Lewisburg*
8 West Maple Street
North Lewisburg, Ohio 43060
937.747.2911

Plain City
105 West Main Street
Plain City, Ohio 43064
614.873.5521

South Charleston*
102 South Chillicothe Street
South Charleston, Ohio 45368
937.462.8368

Advisory Board

R. Andrew Bell

Alicia Hupp

John McKinnon

Brower Insurance Agency, LLC

Sweet Manufacturing

Clark Schaffer Hackett & Co.

Chester L. Walthall

Heat-Treating, Inc.

Rick D. Cole

Colepak, Inc.

William C. Fralick

President, Security

National Bank

Company

Larry E. Kaffenbarger

Kaffenbarger Truck

Equipment Company

Thomas P. Loftis

Midland Properties, Inc.

Scott D. Michael

Michael Farms, Inc.

Robert A. Warren

Hauck Bros., Inc.

Dr. Karen E. Rafinski

Clark State Community

College

Officer Listing

President

William C. Fralick

Executive Vice President

Jeffrey A. Darding

Senior Vice Presidents

Thomas A. Goodfellow

Andrew J. Irick

Vice Presidents

Timothy L. Bunnell

Connie P. Craig

Margaret L. Foley*

Thomas B. Keehner

James A. Kreckman*

James E. Leathley

Patrick K. Rastatter

David A. Snyder

Michael B. Warnecke

Darlene S. Williams

Assistant Vice Presidents

Sharon K. Boysel

Rachel M. Brewer*

Margaret A. Chapman

Mary M. Demaree

Catherine L. Hill*

Sarah E. Lemon

Andrew S. Peyton

Mark B. Robertson

Gary J. Seitz

Victoria L. Sparks

Jeffrey S. Williams

Terri L. Wyatt*

Banking Officers

Teresa L. Belliveau*

Jeffrey S. Williams

Administrative Officers

Jacqueline Folck

Margaret A. Horstman

Joanna S. Jaques

Benjamin L. Kitchen

Mark D. Klingler

Dawn Poole

Rita A. Riley

Mary T. Vallery

*Trust Officer

Offices: 21 ATMs: 28

Website: SecurityNationalBank.com

Phone: 937.324.6800 or 800.836.1557

President: William C. Fralick

Counties Served: Champaign, Clark,

Fayette, Greene, Madison, Warren

Main Office - Springfield*

40 South Limestone Street

Springfield, Ohio 45502

937.324.6800

Enon*

3680 Marion Drive

Enon, Ohio 45323

937.864.7318

Jamestown*

82 West Washington Street

Jamestown, Ohio 45335

937.675.7311

Jeffersonville*

2 South Main Street

Jeffersonville, Ohio 43128

740.426.6384

Mechanicsburg*

2 South Main Street

Mechanicsburg, Ohio 43044

937.834.3387

Medway*

130 West Main Street

Medway, Ohio 45341

937.849.1393

New Carlisle*

201 North Main Street

New Carlisle, Ohio 45344

937.845.3811

New Carlisle - Park Layne*

2035 South Dayton-Lakeview Road

New Carlisle, Ohio 45344

937.849.1331

North Lewisburg*

8 West Maple Street

North Lewisburg, Ohio 43060

937.747.2911

Plain City

105 West Main Street

Plain City, Ohio 43064

614.873.5521

South Charleston*

102 South Chillicothe Street

South Charleston, Ohio 45368

937.462.8368

Springfield - Derr Road - Kroger*

Springboro*

720 Gardner Road

Springboro, Ohio 45066

937.748.6700

2989 Derr Road

Springfield, Ohio 45503

937.342.9411

Springfield - East Main*

2730 East Main Street

Springfield, Ohio 45503

937.325.0351

Springfield - North Limestone*

1756 North Limestone Street

Springfield, Ohio 45503

937.390.3688

Springfield - Northridge*

1600 Moorefield Road

Springfield, Ohio 45503

937.390.3088

Springfield - Western*

920 West Main Street

Springfield, Ohio 45504

937.322.0152

Urbana*

1 Monument Square

Urbana, Ohio 43078

937.653.1226

Urbana - Scioto Street*

828 Scioto Street

Urbana, Ohio 43078

937.653.1290

Xenia Downtown*

161 East Main Street

Xenia, Ohio 45385

937.372.9211

Xenia Plaza*

82 North Allison Avenue

Xenia, Ohio 45385

937.372.9214

Off-Site ATM Locations

Plain City - Shell Gas Station

440 South Jefferson Avenue

Springfield

2051 North Bechtle Avenue

Springfield - Clark State

Community College

570 East Leffel Lane

Springfield - Regional Medical Center

222 West North Street

Springfield - Wittenberg University -

Student Center

738 Woodlawn Avenue

Springfield - Wittenberg University -

HPER Center

250 Bill Edwards Drive

Urbana - Champaign County

Community Center

1512 South US Highway 68

Yellow Springs - Young’s Jersey Dairy

6880 Springfield-Xenia Road

*Includes Automated Teller Machine

Champaign

Lewisburg

North

County

Urbana [2]

Mechanicsburg

Northridge

Plain City

New Carlisle

Park Layne

Medway

Enon

Greene

County

Springfield [5]

Clark

County

South

Charleston

Madison

County

Xenia [2]

Jamestown

Jeffersonville

Fayette

County

Springboro

Warren

County

Advisory Board

R. Andrew Bell
Brower Insurance Agency, LLC

Rick D. Cole
Colepak, Inc.

William C. Fralick
President, Security
National Bank

Officer Listing

President
William C. Fralick

Executive Vice President
Jeffrey A. Darding

Senior Vice Presidents
Thomas A. Goodfellow
Andrew J. Irick

Vice Presidents
Timothy L. Bunnell
Connie P. Craig
Margaret L. Foley*

Alicia Hupp
Sweet Manufacturing
Company

Larry E. Kaffenbarger
Kaffenbarger Truck
Equipment Company

Thomas P. Loftis
Midland Properties, Inc.

John McKinnon
Clark Schaffer Hackett & Co.

Chester L. Walthall
Heat-Treating, Inc.

Scott D. Michael
Michael Farms, Inc.

Robert A. Warren
Hauck Bros., Inc.

Dr. Karen E. Rafinski
Clark State Community
College

Thomas B. Keehner
James A. Kreckman*
James E. Leathley
Patrick K. Rastatter
David A. Snyder
Michael B. Warnecke
Darlene S. Williams

Assistant Vice Presidents
Sharon K. Boysel
Rachel M. Brewer*
Margaret A. Chapman
Mary M. Demaree
Catherine L. Hill*

Sarah E. Lemon
Andrew S. Peyton
Mark B. Robertson
Gary J. Seitz
Victoria L. Sparks
Jeffrey S. Williams
Terri L. Wyatt*

Banking Officers
Teresa L. Belliveau*
Jeffrey S. Williams

Administrative Officers
Jacqueline Folck
Margaret A. Horstman
Joanna S. Jaques
Benjamin L. Kitchen
Mark D. Klingler
Dawn Poole
Rita A. Riley
Mary T. Vallery

*Trust Officer

Main Office - Bucyrus*
401 South Sandusky Avenue
Post Office Box 568
Bucyrus, Ohio 44820
419.562.3040

Caledonia*
140 East Marion Street
Caledonia, Ohio 43314
419.845.2721

Crestline*
245 North Seltzer Street
Post Office Box 186
Crestline, Ohio 44827-0186
419.683.1010

Galion*
8 Public Square
Galion, Ohio 44833
419.468.2231

Marion - Barks Road*
129 Barks Road East
Marion, Ohio 43302
740.383.3355

Prospect*
105 North Main Street
Prospect, Ohio 43342
740.494.2131

Offices: 6 ATMs: 7

Website: UnitedBankOhio.com

Phone: 419.562.3040 or 800.448.9010

President: Donald R. Stone

Counties Served: Crawford, Marion

Offices: 5 ATMs: 6

Website: UnityNationalBk.com

Phone: 937.615.1042 or 800.778.3342

President: Brett A. Baumeister

County Served: Miami

Off-Site ATM Location
Bucyrus - East Pointe Shopping Center
211 Stetzer Road South

Off-Site ATM Location

Troy - Upper Valley Medical Center

3130 North Dixie Highway

*Includes Automated Teller Machine

Administrative Office - Piqua

Tipp City*

*Includes Automated Teller Machine

Crawford
County

Bucyrus

Crestline

Galion

Marion
County

Caledonia

Marion

Prospect

Main Office - Piqua*

215 North Wayne Street

Piqua, Ohio 45356

937.615.1042

212 North Main Street

Post Office Box 913

Piqua, Ohio 45356

937.773.0752

Piqua - Sunset*

1603 Covington Avenue

Piqua, Ohio 45356

937.778.4617

Piqua - Walmart*

1300 East Ash Street

Piqua, Ohio 45356

937.773.9000

1176 West Main Street

Tipp City, Ohio 45371

937.667.4888

Troy*

1314 West Main Street

Troy, Ohio 45373

937.339.6626

Miami

County

Piqua [3]

Troy

Tipp City

Advisory Board

Lois J. Fisher
Lois J. Fisher & Assoc.

Kenneth A. Parr, Jr.
Parr Insurance Agency, Inc.

Michele McElligott
Certified Public Accountant,
Avita Health System

Douglas M. Schilling
Schilling Graphics, Inc.

Officer Listing

President
Donald R. Stone

Vice President
Scott E. Bennett

Senior Vice President
Anne S. Cole

Donald R. Stone
President,
United Bank, N.A.

Douglas Wilson
Owner, Doug’s Toggery and
Realtor, Craig A. Miley Realty
& Auction, Ltd.

Dr. Richard N. Adams

Representative of Ohio

General Assembly

Michael C. Bardo

Retired, Hartzell

Industries, Inc.

Tamara Baird-Ganley

Baird Funeral Home

Brett A. Baumeister

President, Unity National Bank

Thomas E. Dysinger

Dysinger & Patry, LLC

Timothy Johnston

Self-employed Consultant

Dr. Douglas D. Hulme

W. Samuel Robinson

Oakview Veterinary Hospital

Murray, Wells, Wendeln &

Robinson CPAs, Inc.

Banking Officers
Jennifer J. Kuns
David J. Lauthers
J. Stephen McDonald
Kriste A. Slagle

Administrative Officer
James A. DeSimone
Shawneeta D. Shuff

Assistant Vice Presidents

Dean F. Brewer

Douglas R. Eakin

Lisa L. Feeser

Scott E. Rasor

Banking Officers

Mary E. Clevenger

Kyle M. Cooper

Kenneth S. Magoteaux

Administrative Officers

Vicki L. Burke*

Melinda M. Curtis

Krista K. Leece

Kathleen M. Sherman

*Trust Officer

Advisory Board

Officer Listing

President

Brett A. Baumeister

Vice Presidents

G. Dwayne Cooper

Nathan E. Counts

John E. Frigge

Offices: 6 ATMs: 7

Website: UnitedBankOhio.com

Phone: 419.562.3040 or 800.448.9010

President: Donald R. Stone

Counties Served: Crawford, Marion

Off-Site ATM Location

Bucyrus - East Pointe Shopping Center

211 Stetzer Road South

*Includes Automated Teller Machine

Crawford

County

Bucyrus

Crestline

Galion

Marion

County

Caledonia

Marion

Prospect

Main Office - Piqua*
215 North Wayne Street
Piqua, Ohio 45356
937.615.1042

Administrative Office - Piqua
212 North Main Street
Post Office Box 913
Piqua, Ohio 45356
937.773.0752

Piqua - Sunset*
1603 Covington Avenue
Piqua, Ohio 45356
937.778.4617

Piqua - Walmart*
1300 East Ash Street
Piqua, Ohio 45356
937.773.9000

Tipp City*
1176 West Main Street
Tipp City, Ohio 45371
937.667.4888

Troy*
1314 West Main Street
Troy, Ohio 45373
937.339.6626

Offices: 5 ATMs: 6

Website: UnityNationalBk.com

Phone: 937.615.1042 or 800.778.3342

President: Brett A. Baumeister

County Served: Miami

Off-Site ATM Location
Troy - Upper Valley Medical Center
3130 North Dixie Highway

*Includes Automated Teller Machine

Miami
County

Piqua [3]

Troy

Tipp City

Kenneth A. Parr, Jr.

Donald R. Stone

Douglas Wilson

Parr Insurance Agency, Inc.

President,

United Bank, N.A.

Owner, Doug’s Toggery and

Realtor, Craig A. Miley Realty

& Auction, Ltd.

Dr. Richard N. Adams
Representative of Ohio
General Assembly

Michael C. Bardo
Retired, Hartzell
Industries, Inc.

Tamara Baird-Ganley
Baird Funeral Home

Brett A. Baumeister
President, Unity National Bank

Thomas E. Dysinger
Dysinger & Patry, LLC

Timothy Johnston
Self-employed Consultant

Dr. Douglas D. Hulme
Oakview Veterinary Hospital

W. Samuel Robinson
Murray, Wells, Wendeln &
Robinson CPAs, Inc.

Advisory Board

Banking Officers

Jennifer J. Kuns

David J. Lauthers

J. Stephen McDonald

Kriste A. Slagle

Administrative Officer

James A. DeSimone

Shawneeta D. Shuff

Officer Listing

President
Brett A. Baumeister

Vice Presidents
G. Dwayne Cooper
Nathan E. Counts
John E. Frigge

Assistant Vice Presidents
Dean F. Brewer
Douglas R. Eakin
Lisa L. Feeser
Scott E. Rasor

Banking Officers
Mary E. Clevenger
Kyle M. Cooper
Kenneth S. Magoteaux

Administrative Officers
Vicki L. Burke*
Melinda M. Curtis
Krista K. Leece
Kathleen M. Sherman

*Trust Officer

Main Office - Bucyrus*

401 South Sandusky Avenue

Post Office Box 568

Bucyrus, Ohio 44820

419.562.3040

Caledonia*

140 East Marion Street

Caledonia, Ohio 43314

419.845.2721

Crestline*

245 North Seltzer Street

Post Office Box 186

Crestline, Ohio 44827-0186

419.683.1010

Galion*

8 Public Square

Galion, Ohio 44833

419.468.2231

Marion - Barks Road*

129 Barks Road East

Marion, Ohio 43302

740.383.3355

Prospect*

105 North Main Street

Prospect, Ohio 43342

740.494.2131

Advisory Board

Lois J. Fisher

Lois J. Fisher & Assoc.

Michele McElligott

Certified Public Accountant,

Douglas M. Schilling

Schilling Graphics, Inc.

Avita Health System

Officer Listing

President

Donald R. Stone

Vice President

Scott E. Bennett

Senior Vice President

Anne S. Cole

GUARDIAN

FINANCE C OMPANY

Home Office - Hilliard
3812 Fishinger Boulevard
Hilliard, Ohio 43026
877.277.0345

Lancaster
137 West Main Street
Lancaster, Ohio 43130
740.654.6959

Centerville
687 Lyons Road
Centerville, Ohio 45459
937.434.2773

Mansfield1
3 North Main Street, Suite 302
Mansfield, Ohio 44902
419.525.4006

Springfield
1017 North Bechtle Avenue
Springfield, Ohio 45504
937.323.1011

1Mansfield Office closed
2/04/15

Heath
619 Hebron Road
Heath, Ohio 43056
740.788.8766

Officer Listing

Chairman
Earl W. Osborne

President
Matthew R. Marsh

Springfield

Clark
County

Montgomery
County

Centerville

Assistant Vice President
Patrick A. Borges
April D. Storie

Administrative Officers
Charles L. Harris
Valerie J. Morgan
Mary E. Parsell

Richland
County

Mansfield

Licking
County

Heath

Fairfield
County

Lancaster

Franklin
County

Hilliard

Franklin
County

Columbus

Columbus
140 East Town Street, Suite 1400
Columbus, Ohio 43215
614.221.5773

Officer Listing

President
Robert N. Kent, Jr.

Executive Vice President
Charles W. Sauter

Banking Officer
Michael J. Smith
Linda M. Staubach

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M A N A G E M E N T ’ S D I S C U S S I O N & A N A L Y S I S

Management’s discussion and analysis addresses the financial condition and
results of operations for Park National Corporation and our subsidiaries
(unless the context otherwise requires, collectively, “Park” or the “Corp -
oration”). This discussion should be read in conjunction with the consolidated
financial statements and related notes and the five-year summary of selected
financial data. Management’s discussion and analysis contains forward-looking
statements that are provided to assist in the understanding of anticipated future
financial performance. Forward-looking statements provide current expec -
tations or forecasts of future events and are not guarantees of future
per formance. The forward-looking statements are based on management’s
expectations and are subject to a number of risks and uncertainties. Although
management believes that the expectations reflected in such forward-looking
statements are reasonable, actual results may differ materially from those
expressed or implied in such statements. Risks and uncertainties that could
cause actual results to differ materially include, without limitation: Park’s ability
to execute our business plan successfully and within the expected timeframe;
general economic and financial market conditions, and the uneven spread of
positive impacts of the recovery on the economy, 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 be worse or slower than expected which
could adversely impact the demand for loan, deposit and other financial serv-
ices as well as loan delinquencies and defaults; changes in interest rates and
prices may adversely impact the value of securities, loans, deposits and other
financial instruments and the interest rate sensitivity of our consolidated
balance sheet; changes in consumer spending, borrowing and saving habits;
changes in unemployment; changes in customers’, suppliers’ and other
counterparties’ performance and creditworthiness; asset/liability repricing
risks and liquidity risks; our liquidity requirements could be adversely affected
by changes to regulations governing bank capital and liquidity standards as well
as by changes in our assets and liabilities; competitive factors among financial
services organizations could increase significantly, including product and
pricing pressures, changes to third-party relationships and our ability to attract,
develop and retain qualified bank professionals; clients could pursue alterna-
tives to bank deposits, causing us to lose a relatively inexpensive source of
funding; the nature, timing and effect of changes in banking regulations or
other regulatory or legislative requirements affecting the respective businesses
of Park and our subsidiaries, including changes in laws and regulations con-
cerning taxes, accounting, banking, securities and other aspects of the financial
services industry, specifically the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (the “Dodd-Frank Act”), as well as future regulations
which will be adopted by the relevant regulatory agencies, including the
Consumer Financial Protection Bureau, to implement the Dodd-Frank Act’s
provisions, the Budget Control Act of 2011, the American Taxpayer Relief Act
of 2012 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 Securities and Exchange Commission (the
“SEC”), the Public Company Accounting Oversight Board and other regulatory
agencies, and the accuracy of our assumptions and estimates used to prepare
our financial statements; the effect of trade, monetary, fiscal and other govern-
mental policies of the U.S. federal government, including interest rate policies
of the Federal Reserve; disruption in the liquidity and other functioning of U.S.
financial markets; 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. and
European government debt and concerns regarding the credit worthiness of
certain sovereign governments, supranationals and financial institutions in
Europe; unfavorable resolution of legal proceedings or other claims and reg -
ulatory and other governmental examinations or other inquiries; the adequacy
of our risk management program; a failure in or breach of our operational or
security systems or infrastructure, or those of our third-party vendors and other
service providers, including as a result of cyber attacks; demand for loans in the
respective market areas served by Park and our subsidiaries; 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, 2014. 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.

OVERVIEW

Financial Results by Segment

The table below reflects the net income (loss) by segment for the fiscal
years ended December 31, 2014, 2013, and 2012. Park’s operating segments
include The Park National Bank (“PNB”), Guardian Financial Services Company
(“GFSC”) and SE Property Holdings, LLC (“SEPH”). Additionally, our parent
company is presented below.

Table 1 – Net Income (Loss) by Segment

(In thousands)

PNB
GFSC
Parent Company

Ongoing operations

SEPH

Total Park

2014

$83,040
1,175
(5,050)

$79,165

4,925

$84,090

Preferred dividends and accretion
—
Net income available to common shareholders $84,090

2013

$75,594
2,888
(1,397)

$77,085

142

$77,227

—

$77,227

2012

$87,106
3,550
195

$90,851

(12,221)

$78,630

3,425

$75,205

The category “Parent Company” above excludes the results for SEPH, an
entity which is winding down commensurate with the disposition of its
problem assets. Management considers the “Ongoing operations” results,
which excludes the results of SEPH, to be reflective of the business of Park
and our subsidiaries on a going forward basis. The discussion below provides
some additional information regarding the segments that make up the
“Ongoing operations”, followed by additional information regarding SEPH.

The Park National Bank (PNB)

The table below reflects PNB’s net income for the fiscal years ended December
31, 2014, 2013 and 2012.

Table 2 – PNB Summary Income Statement

(In thousands)

Net interest income
Provision for loan losses
Other income
Other expense

Income before income taxes
Federal income taxes

Net income

2014

$218,641
3,517
69,384
171,365

$113,143
30,103

$ 83,040

2013

$210,781
14,039
70,841
165,665

$101,918
26,324

$ 75,594

2012

$221,758
16,678
70,739
156,516

$119,303
32,197

$ 87,106

PNB’s results for the fiscal year ended December 31, 2014 included income
and expense related to participations in legacy Vision Bank (“Vision”) assets.
For the fiscal year ended December 31, 2014, there were net recoveries of
$6.2 million, gains with respect to the sale of other real estate owned (“OREO”)
of $1.2 million, and expenses of $2.0 million related to participations in legacy
Vision assets. For the fiscal year ended December 31, 2013, there were net
recoveries of $0.6 million, and expenses of $1.6 million related to partici -
pations in legacy Vision assets. For the fiscal year ended December 31, 2012,
there were net charge-offs of $3.5 million related to participations in legacy
Vision assets.

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M A N A G E M E N T ’ S D I S C U S S I O N & A N A L Y S I S

The table below provides certain balance sheet information and financial ratios
for PNB as of and for the fiscal years ended December 31, 2014 and December
31, 2013.

Park Parent Company

The table below reflects the Park Parent Company net income (loss) for the
fiscal years ended December 31, 2014, 2013, and 2012.

Table 3 – PNB Balance Sheet Information

Table 6 – Park Parent Company Income Statement

(In thousands)

Loans
Allowance for loan losses
Net loans
Investment securities
Total assets
Average assets
Return on average assets

December 31,
2014

December 31,
2013

% Change
from 12/31/13

$4,781,761
52,000
4,729,761
1,498,444
6,912,443
6,792,672
1.22%

$4,559,406
56,888
4,502,518
1,421,937
6,524,098
6,576,420
1.15%

4.88%
(8.59)%
5.05%
5.38%
5.95%
3.29%
6.09%

(In thousands)

Net interest income (expense)
Provision for loan losses
Other income
Other expense

Loss before income taxes
Federal income tax benefit

Net income (loss)

2014

$(2,012)
—
175
8,000

$(9,837)
(4,787)

$(5,050)

2013

$ 2,828
—
469
7,520

$(4,223)
(2,826)

$(1,397)

2012

$ 4,742
—
233
6,585

$(1,610)
(1,805)

$ 195

Loans outstanding at December 31, 2014 of $4.78 billion represented
an increase of $222 million, or 4.88%, compared to the loans outstanding
of $4.56 billion at December 31, 2013. The $222 million increase in loans
experienced at PNB in 2014 was related to growth in PNB’s retained residential
mortgage loan portfolio of approximately $48 million, in the consumer loan
portfolio of approximately $167 million, and in the commercial loan portfolio
of approximately $7 million, which was net of $12.7 million of commercial
loans sold in the fourth quarter of 2014.

PNB’s allowance for loan losses decreased by $4.9 million, or 8.59%, to
$52.0 million at December 31, 2014, compared to $56.9 million at December
31, 2013. Net charge-offs were $8.4 million, or charge-offs of 0.18% of total
average loans, for the fiscal year ended December 31, 2014. Refer to the
“CREDIT EXPERIENCE — (Recovery of) Provision for Loan Losses” section for
additional information regarding the credit metrics of PNB’s loan portfolio.

Guardian Financial Services Company (GFSC)

The table below reflects GFSC’s net income for the fiscal years ended December
31, 2014, 2013, and 2012.

Table 4 – GFSC Summary Income Statement

(In thousands)

Net interest income
Provision for loan losses
Other income (loss)
Other expense

Income before income taxes
Federal income taxes

Net income

2014

$7,457
1,544
(1)
4,103

$1,809
634

$1,175

2013

$8,741
1,175
11
3,133

$4,444
1,556

$2,888

2012

$9,156
859
—
2,835

$5,462
1,912

$3,550

The table below provides certain balance sheet information and financial ratios
for GFSC as of and for the fiscal years ended December 31, 2014 and December
31, 2013.

Table 5 – GFSC Balance Sheet Information

(In thousands)

Loans
Allowance for loan losses
Net loans
Total assets
Average assets
Return on average assets

December 31,
2014

December 31,
2013

% Change
from 12/31/13

$40,645
2,352
38,293
40,308
43,038
2.73%

$47,228
2,581
44,647
47,115
49,481
5.84%

(13.94)%
(8.87)%
(14.23)%
(14.45)%
(13.02)%
(53.25)%

The net interest income (expense) for Park’s parent company includes
interest income on loans to SEPH and on subordinated debt investments in
PNB, which are eliminated in the consolidated Park National Corporation totals.
Additionally, net interest income (expense) includes interest expense related to
the $35.25 million and $30.00 million of subordinated notes issued by Park to
accredited investors on December 23, 2009 and April 20, 2012, respectively.
Park paid in full the $35.25 million outstanding principal amount of the 10%
Subordinated Notes due December 23, 2019, plus accrued interest, on
December 24, 2014, the earliest redemption date allowable under the
related note purchase agreement dated December 23, 2009.

SEPH

The table below reflects SEPH’s net income (loss) for the fiscal years ended
December 31, 2014, 2013 and 2012. SEPH holds the remaining assets and
liabilities of those retained by Vision subsequent to the sale of the Vision
business on February 16, 2012. Prior to holding the remaining Vision
assets, SEPH held OREO assets that had been transferred from Vision to
SEPH. This segment represents a run-off portfolio of the legacy Vision assets.

Table 7 – SEPH Summary Income Statement

(In thousands)

Net interest income (expense)
(Recovery of) provision for loan losses
Other income (loss)
Gain on sale of Vision business
Other expense

Income (loss) before income taxes
Federal income taxes (benefit)

Net income (loss)
Net income (loss) excluding gain
on sale of Vision business

2014

$ 958
(12,394)
5,991
—
11,766

$ 7,577
2,652

$ 4,925

2013

$ (1,325)
(11,799)
1,956
—
12,211

219
77

142

2012

(341)
17,882
(736)
22,167
22,032

$(18,824)
(6,603)

$(12,221)

$(26,630)

SEPH’s financial results for the fiscal year ended December 31, 2014 included
net recoveries of $12.4 million. The net recoveries during 2014 consisted of
charge-offs of $1.1 million, offset by recoveries of $13.5 million. Other income
for the fiscal year ended December 31, 2014 at SEPH of $6.0 million was
largely related to net gains on the sale of OREO of $3.3 million and non-yield
loan fee income of $1.3 million, offset by OREO devaluations of $831,000.
Additionally, other income for the fiscal year ended December 31, 2014
included a $2.2 million gain on the sale of SEPH loans held for sale in the
fourth quarter of 2014. SEPH sold $5.8 million of commercial loans which
had been moved to held for sale as of September 30, 2014.

On February 16, 2012, when Vision merged with and into SEPH, the loans then
held by Vision were transferred to SEPH by operation of law at their fair value
and no allowance for loan loss is carried at SEPH. The loans included in both
the performing and nonperforming portfolios have been charged down to their
fair value. The table below provides additional information for SEPH regarding
charge-offs as a percentage of the unpaid principal balance, as of December
31, 2014.

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M A N A G E M E N T ’ S D I S C U S S I O N & A N A L Y S I S

Table 8 – SEPH Retained Vision Loan Portfolio

(In thousands)

Nonperforming loans
Performing loans –
retained by SEPH

Unpaid
Principal
Balance

$43,901

Aggregate
Charge-offs

$20,888

Net Book
Balance

$23,013

1,035

943

Total SEPH loan exposure

$44,936

$20,980

$23,956

Charge-off
Percentage

47.58%

8.89%

46.69%

The table below provides an overview of SEPH loans and OREO, representing
the legacy Vision assets. This information is provided as of December 31, 2014,
2013, and 2012, showing the decline in legacy Vision assets at SEPH over the
last two years.

Table 9 – SEPH Legacy Assets

On April 25, 2012, Park repurchased the 100,000 Series A Preferred Shares for
total consideration of $101.0 million, including accrued and unpaid dividends
of $1.0 million. In addition to the accrued and unpaid dividends of $1.0
million, the charge to retained earnings, resulting from the repurchase of
the Series A Preferred Shares, was $1.6 million on April 25, 2012.

On May 2, 2012, Park repurchased the Warrant from the U.S. Treasury for
consideration of $2.8 million, or $12.50 per Park common share.

The dividends and accretion on the Series A Preferred Shares totaled $3.4
million for 2012. The accretion of the discount was $1.9 million in 2012.
Income available to common shareholders is net income minus the preferred
share dividends and accretion. Income available to common shareholders was
$84.1 million for 2014, $77.2 million for 2013, and $75.2 million for 2012.

SEPH
12/31/14

$23,013
11,918

SEPH
12/31/13

$36,108
23,224

SEPH
12/31/12

$55,292
21,003

Change
from
12/31/13

$(13,095)
(11,306)

Change
from
12/31/12

$(32,279)
(9,085)

DIVIDENDS ON COMMON SHARES
Cash dividends declared on common shares were $3.76 in 2014, 2013 and
2012. The quarterly cash dividend on common shares was $0.94 per share
for each quarter of 2014, 2013 and 2012.

(In thousands)

Nonperforming loans
OREO

Total nonperforming

assets
Performing loans
Total SEPH –

Legacy Vision assets

$34,931
943

$59,332
1,907

$76,295
3,886

$(24,401)
(964)

$(41,364)
(2,943)

$35,874

$61,239

$80,181

$(25,365)

$(44,307)

In addition to the SEPH assets listed above, PNB participations in legacy Vision
assets totaled $11.5 million, $12.3 million and $19.2 million at December 31,
2014, 2013 and 2012, respectively.

Park National Corporation

The table below reflects Park’s net income for the fiscal years ended December
31, 2014, 2013 and 2012.

Table 10 – Park Summary Income Statement

(In thousands)

Net interest income
(Recovery of) provision for loan losses
Other income
Gain on sale of Vision business
Other expense

Income before income taxes
Federal income taxes

Net income

Net income excluding gain

on sale of Vision business

2014

$225,044
(7,333)
75,549
—
195,234

$112,692
28,602

$ 84,090

2013

$221,025
3,415
73,277
—
188,529

$102,358
25,131

$ 77,227

2012

$235,315
35,419
70,236
22,167
187,968

$104,331
25,701

$ 78,630

$ 84,090

$ 77,227

$ 64,221

ISSUANCE OF PREFERRED SHARES AND
EMERGENCY ECONOMIC STABILIZATION ACT
On October 3, 2008, Congress passed the Emergency Economic Stabilization
Act of 2008 (“EESA”), which created the Troubled Asset Relief Program
(“TARP”) and provided the Secretary of the Treasury with broad authority
to implement certain actions to help restore stability and liquidity to U.S.
markets. The Capital Purchase Program (the “CPP”) was announced by the
U.S. Department of the Treasury (the “U.S. Treasury”) on October 14, 2008
as part of TARP.

On December 23, 2008, as part of Park’s participation in the CPP, Park
completed the sale to the U.S. Treasury of (i) 100,000 of Park’s Fixed Rate
Cumulative Perpetual Preferred Shares, Series A, each without par value and
having a liquidation preference of $1,000 per share (the “Series A Preferred
Shares”), and (ii) a warrant (the “Warrant”) to purchase 227,376 Park
common shares at an exercise price of $65.97 per share, for an aggregate
purchase price of $100 million. All of the proceeds from the sale of the Series
A Preferred Shares and the Warrant by Park to the U.S. Treasury qualified as
Tier 1 capital for regulatory purposes.

CRITICAL ACCOUNTING POLICIES
The significant accounting policies used in the development and presentation
of Park’s consolidated financial statements are listed in Note 1 of the Notes
to Consolidated Financial Statements. The accounting and reporting policies
of Park conform with U.S. generally accepted accounting principles (“GAAP”)
and general practices within the financial services industry. The preparation
of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and the accompanying notes. Actual results could differ from
those estimates.

Allowance for Loan and Lease Losses (“ALLL”): The determination of the
ALLL involves a higher degree of judgment and complexity than Park’s other
significant accounting policies. The ALLL is calculated with the objective of
maintaining a reserve level believed by management to be sufficient to absorb
probable, incurred credit losses in the loan portfolio. Management’s determi -
nation of the adequacy of the ALLL is based on periodic evaluations of the
loan portfolio and of current economic conditions. However, this evaluation
is inherently subjective as it requires material estimates, including expected
default probabilities, the loss given default, the amounts and timing of expected
future cash flows on impaired loans, and estimated losses based on historical
loss experience and current economic conditions. All of these factors may be
susceptible to significant change. To the extent that actual results differ from
management estimates, additional loan loss provisions may be required that
would adversely impact earnings for future periods. Refer to the “CREDIT
EXPERIENCE – (Recovery of) Provision for Loan Losses” section for additional
discussion.

Other Real Estate Owned (“OREO”): OREO, property acquired through
foreclosure, is recorded at estimated fair value less anticipated selling costs
(net realizable value). If the net realizable value is below the carrying value
of the loan on the date of transfer of the OREO, the difference is charged off
against the ALLL. Subsequent declines in value (OREO devaluations) are
reported as adjustments to the carrying amount of OREO and are expensed
within other income. Gains or losses not previously recognized, resulting
from the sale of OREO, are recognized within other income on the date of
sale. At December 31, 2014, OREO totaled $22.6 million, a decrease of
34.7%, compared to $34.6 million at December 31, 2013.

Fair Value: In accordance with GAAP, management utilizes the fair value
hierarchy, which has the objective of maximizing the use of observable market
inputs. The accounting guidance also requires disclosures regarding the inputs
used to calculate fair value. These inputs are classified as Level 1, 2, and 3.
Level 3 inputs are those with significant unobservable inputs that reflect a
company’s own assumptions about the market for a particular instrument.
Some of the inputs could be based on internal models and/or cash flow

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M A N A G E M E N T ’ S D I S C U S S I O N & A N A L Y S I S

analyses. The large majority of Park’s financial assets valued using Level 2
inputs consists of available-for-sale (“AFS”) securities. The fair value of these
AFS securities is obtained largely by the use of matrix pricing, which is a math -
ematical technique widely used in the financial services industry to value debt
securities without relying exclusively on quoted market prices for the specific
securities but rather by relying on the securities’ relationship to other bench-
mark quoted securities.

Goodwill and Other Intangible Assets: The accounting for goodwill and
other intangible assets also involves a higher degree of judgment than most
other significant accounting policies. GAAP establishes standards for the
amortization of acquired intangible assets and the impairment assessment of
goodwill. Goodwill arising from business combinations represents the value
attributable to unidentifiable intangible assets in the business acquired. Park’s
goodwill relates to the value inherent in the banking industry and that value is
dependent upon the ability of PNB, Park’s bank subsidiary, to provide quality,
cost-effective banking services in a competitive marketplace. The goodwill value
is supported by revenue that is in part driven by the volume of business trans-
acted. A decrease in earnings resulting from a decline in the customer base, the
inability to deliver cost-effective services over sustained periods or significant
credit problems can lead to impairment of goodwill that could adversely impact
earnings in future periods. Under GAAP, goodwill is no longer amortized but is
subject to an annual evaluation for impairment, or more frequently if events or
changes in circumstances indicate that the asset might be impaired by assessing
qualitative factors to determine whether it is more likely than not that the fair
value of a reporting unit is less than its carrying amount. If after assessing these
events or circumstances, it is concluded that it is more likely than not that the
fair value of a reporting unit is less than its carrying amount, then the perform-
ance of the second step of the impairment test is required. If the carrying
amount of the goodwill exceeds the fair value, an impairment charge must
be recorded in an amount equal to the excess. At December 31, 2014, on
a consolidated basis, Park had $72.3 million of goodwill.

Pension Plan: The determination of pension plan obligations and related
expenses requires the use of assumptions to estimate the amount of benefits
that employees earn while working, as well as the present value of those
benefits. Annual pension expense is principally based on four components:
(1) the value of benefits earned by employees for working during the year
(service cost), (2) the increase in the liability due to the passage of time
(interest cost), and (3) other gains and losses, reduced by (4) the expected
return on plan assets for our pension plan.

Significant assumptions used to measure our annual pension expense include:

(cid:0) the interest rate used to determine the present value of liabilities (discount

rate);

(cid:0) certain employee-related factors, such as turnover, retirement age and

mortality;

(cid:0) the expected return on assets in our funded plans; and
(cid:0) for pension expense, the rate of salary increases for plans where benefits

are based on earnings.

Our assumptions reflect our historical experience and management’s best
judgment regarding future expectations. Due to the significant management
judgment involved, our assumptions could have a material impact on the
measurement of our pension plan expense and obligation.

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

Park’s subsidiaries compete for deposits and loans with other banks,
savings associations, credit unions and other types of financial institutions.
At December 31, 2014, Park operated 124 financial service offices (including
those of PNB, Scope Aircraft, Park Title Agency, GFSC and SEPH) and a network
of 141 automated teller machines in 28 Ohio counties.

A summary of financial data, average loans and average deposits, for Park’s
bank subsidiaries and their divisions for 2014, 2013 and 2012 is shown in
Table 11. See Note 25 of the Notes to Consolidated Financial Statements for
additional financial information for the Corporation’s operating segments.
Please note that the financial statements for the divisions of PNB are not
prepared on a separate basis and, therefore, net income is not included
in the summary financial data below.

Table 11 – Park Affiliate Financial Data

(In thousands)

Park National Bank:
Park National
Bank Division
Security National
Bank Division

First-Knox National
Bank Division

Century National
Bank Division
Richland
Bank Division

Fairfield National
Bank Division

Second National
Bank Division
Park National SW &
N KY Bank Division

United Bank,
N.A. Division

Unity National
Bank Division
Farmers
Bank Division
Scope Aircraft
Finance

SEPH/Vision Bank

GFSC

Parent Company,

other

Consolidated
Totals

2014

2013

2012

Average
Loans

Average
Deposits

Average
Loans

Average
Deposits

Average
Loans

Average
Deposits

$1,383,686

$1,426,645

$1,348,466

$1,355,805

$1,286,751

$1,354,196

454,680

774,716

432,259

780,525

412,388

767,560

571,519

563,275

540,452

538,142

513,976

507,237

638,314

493,449

618,144

482,002

604,382

480,536

242,788

451,304

240,692

444,364

248,421

439,420

255,280

401,255

251,567

398,260

245,064

394,239

355,379

317,208

323,880

308,970

302,185

290,870

363,735

208,784

324,386

216,134

291,297

218,407

92,427

190,082

85,761

193,823

92,258

196,841

174,950

162,074

160,123

153,814

147,956

149,537

108,397

89,328

100,189

84,802

95,661

75,684

178,194

31,836

43,165

—

6,610

182,794

47,625

49,687

8,172

175,019

133,306

48,987

67,737

8,524

(177,053)

(67,185)

(191,244)

(105,098)

(186,990)

(115,400)

$4,717,297

$5,017,553

$4,514,781

$4,859,740

$4,410,661

$4,835,397

SOURCE OF FUNDS
Deposits: Park’s major source of funds is deposits from individuals,
businesses and local government entities. These deposits consist of non-
interest bearing and interest bearing deposits.

Average total deposits were $5,018 million in 2014, compared to $4,860
million in 2013, and $4,835 million in 2012. Table 12 provides a summary of
deposit balances as of December 31, 2014 and 2013, along with the change
over the past year.

Table 12 – Year-End Deposits

December 31,
(In thousands)

Non-interest bearing checking
Interest bearing transaction

accounts

Savings
All other time deposits
Other

2014

2013

$1,269,296

$1,193,553

1,122,079
1,325,445
1,409,911
1,269

1,145,525
1,124,994
1,324,659
1,263

Change

$ 75,743

(23,446)
200,451
85,252
6

Total

$5,128,000

$4,789,994

$338,006

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The average interest rate paid on interest bearing deposits was 0.29% in 2014,
compared to 0.35% in 2013, and 0.49% in 2012. The average cost of interest
bearing deposits for each quarter of 2014 was 0.32% for the fourth quarter,
0.27% for the third quarter, 0.27% for the second quarter and 0.29% for the
first quarter. The increase to 0.32% in the fourth quarter was largely due to
the addition of $200 million of brokered deposits which settled in September
2014 and have an effective rate of 1.77%.

Short-Term Borrowings: Short-term borrowings consist of securities sold
under agreements to repurchase, Federal Home Loan Bank advances, federal
funds purchased and other borrowings. These funds are used to manage the
Corporation’s liquidity needs and interest rate sensitivity risk. The average rate
paid on short-term borrowings generally moves closely with changes in market
interest rates for short-term investments. The average rate paid on short-term
borrowings was 0.20% in 2014, compared to 0.22% in 2013, and 0.26% in
2012. The year-end balance for short-term borrowings was $277 million at
December 31, 2014, compared to $242 million at December 31, 2013, and
$344 million at December 31, 2012.

Long-Term Debt: Long-term debt primarily consists of borrowings from the
Federal Home Loan Bank and repurchase agreements with investment banking
firms. The average balance of long-term debt and the average cost of long-term
debt include the subordinated notes discussed in the following section. In 2014,
average long-term debt was $868 million, compared to $871 million in 2013,
and $908 million in 2012. Average total debt (long-term and short-term) was
$1,131 million in 2014, compared to $1,124 million in 2013, and $1,166
million in 2012. Average total debt increased by $7 million or 0.6% in 2014
compared to 2013, and decreased by $42 million or 3.6% in 2013 compared
to 2012. Average long-term debt was 77% of average total debt in 2014 and
2013, compared to 78% in 2012.

On November 30, 2012, Park’s bank subsidiary, PNB, restructured $300 million
of fixed rate repurchase agreement borrowings with a third-party investment
banking firm. The restructuring reduced the weighted-average interest rate paid
on the debt from 4.04% to 1.75% and extended the weighted-average maturity
from 4.4 years to 5.0 years. A $25 million prepayment penalty was paid by PNB
to the third-party investment banking firm as part of the restructuring which will
be amortized over the five-year remaining term of the restructured borrowing.
The effective rate on the restructured borrowing is 3.40%, including the impact
of the prepayment penalty amortization.

The average interest rate paid on long-term debt was 3.29% for 2014,
compared to 3.26% for 2013, and 3.45% for 2012.

Subordinated Notes: Park assumed, with the 2007 acquisition of Vision’s
parent holding company, $15.5 million of floating rate junior subordinated
notes. The $15.5 million of junior subordinated notes were purchased by Vision
Bancshares Trust I (“Trust I”) following the issuance of Trust I’s $15.0 million
of floating rate preferred securities. The interest rate on these junior subordi-
nated notes adjusts every quarter at 148 basis points above the three-month
LIBOR interest rate. The maturity date for the junior subordinated notes is
December 30, 2035 and the junior subordinated notes may be prepaid after
December 30, 2010. These junior subordinated notes qualify as Tier 1 capital
under current Federal Reserve Board guidelines.

On December 23, 2009, Park issued an aggregate principal amount of $35.25
million of subordinated notes to 38 purchasers. These subordinated notes
had a fixed annual interest rate of 10% with quarterly interest payments. The
maturity date of these subordinated notes was December 23, 2019 and the
subordinated notes were eligible to be prepaid after December 23, 2014.
The subordinated notes qualified as Tier 2 capital under applicable Federal
Reserve Board guidelines. Each subordinated note was purchased at a purchase
price of 100% of the principal amount by an accredited investor. Park paid in
full the $35.25 million outstanding principal amount, plus accrued interest, on
December 24, 2014, the earliest redemption date allowable under the related
note purchase agreement.

On April 20, 2012, Park issued an aggregate principal amount of $30.0 million
of subordinated notes to 56 purchasers. These subordinated notes have a fixed
annual interest rate of 7% with quarterly interest payments. The maturity date
of these subordinated notes is April 20, 2022 and the subordinated notes are
eligible to be prepaid after April 20, 2017. The subordinated notes qualify as
Tier 2 capital under applicable Federal Reserve Board guidelines. Each sub -
ordinated note was purchased at a purchase price of 100% of the principal
amount by an accredited investor.

See Note 14 of the Notes to Consolidated Financial Statements for additional
information about the subordinated notes.

Shareholders’ Equity: The ratio of tangible shareholders’ equity [ share -
holders’ equity ($698.6 million) less goodwill ($72.3 million)] to tangible
assets [total assets ($7,003 million) less goodwill ($72.3 million)] was 9.04%
at December 31, 2014, compared to 8.82% at December 31, 2013, and 8.79%
at December 31, 2012.

In accordance with GAAP, Park reflects any unrealized holding gain or loss on
AFS securities, change in the funded status of Park’s pension plan or unrealized
net holding gain/loss on cash flow hedge, net of income taxes, as accumulated
other comprehensive income (loss) which is part of Park’s shareholders’
equity.

The unrealized net holding gain, net of income taxes, on AFS securities was
$1.3 million at year-end 2014, compared to the unrealized net holding loss, net
of income taxes, of $29.8 million at year-end 2013, and unrealized net holding
gain, net of income taxes, of $9.6 million at year-end 2012. The unrealized net
holding gain at December 31, 2014 was the result of decreases in long-term
interest rates during the year.

In accordance with GAAP, Park adjusts accumulated other comprehensive
income (loss) to recognize the net actuarial gain or loss reflected in the funding
status of Park’s pension plan. See Note 16 of the Notes to Consolidated Financial
Statements for information on the accounting for Park’s pension plan.

Pertaining to the funding status of the pension plan, Park recognized a net
comprehensive loss of $9.3 million in 2014, net comprehensive income
of $21.5 million in 2013 and a net comprehensive loss of $6.2 million in
2012. The net comprehensive loss in 2014 was due to changes in actuarial
assumptions, primarily a decrease in the discount rate from 5.30% at
December 31, 2013 to 4.42% at December 31, 2014. The actuarial loss more
than offset the positive investment returns with respect to the pension plan’s
assets in 2014. The net comprehensive income in 2013 was due to positive
investment returns in 2013 and changes in actuarial assumptions, primarily an
increase in the discount rate from 4.47% at December 31, 2012 to 5.30% at
December 31, 2013. The net comprehensive loss in 2012 was due to changes
in actuarial assumptions, primarily a change in the discount rate. The actuarial
loss more than offset the positive investment returns with respect to the pension
plan’s assets in 2012. At year-end 2014, the balance in accumulated other com-
prehensive loss pertaining to the pension plan was $(14.9) million, compared
to $(5.6) million at December 31, 2013, and $(27.1) million at December 31,
2012.

Park also recognized net comprehensive income with respect to the unrealized
net holding gain of $0.6 million for the year ended December 31, 2012, due to
the mark-to-market of the $25 million (notional amount) cash flow hedge that
expired on December 28, 2012.

INVESTMENT OF FUNDS
Loans: Average loans were $4,717 million in 2014, compared to $4,515
million in 2013, and $4,411 million in 2012. The average yield on loans was
4.84% in 2014, compared to 5.02% in 2013, and 5.35% in 2012. The average
prime lending rate was 3.25% in each of 2014, 2013 and 2012. Approximately
50% of Park’s loan balances mature or reprice within one year (see Table 34).
The yield on average loan balances for each quarter of 2014 was 4.83% for the
fourth quarter, 4.80% for the third quarter, 4.91% for the second quarter and
4.84% for the first quarter.

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At December 31, 2014, loan balances were $4,830 million, compared to
$4,621 million at year-end 2013, an increase of $209 million or 4.5%. The
loan growth of $209 million in 2014 was largely due to increases in loans
of $222 million at PNB, offset by declines at GFSC and SEPH.

Year-end residential real estate loans were $1,851 million, $1,800 million, and
$1,713 million in 2014, 2013, and 2012, respectively. Residential real estate
loans increased by $51 million or 2.8% in 2014, and $87 million or 5.1% in
2013. The increases in 2013 and 2014 were primarily due to management’s
decision to continue to retain certain of the 15-year, fixed-rate mortgage loans
originated during each year. The balance of 15-year, fixed-rate mortgage loans
was $471 million at December 31, 2012, and had a weighted-average interest
rate of 3.62%. At December 31, 2013, the 15-year, fixed-rate mortgage loan
portfolio increased by $141 million to $612 million and had a weighted-average
interest rate of 3.50%. At December 31, 2014, the 15-year, fixed-rate mortgage
loan portfolio increased by $27 million to $639 million and had a weighted-
average interest rate of 3.50%.

The long-term, fixed-rate residential mortgage loans that Park originates are
generally sold in the secondary market and Park typically retains servicing on
these loans. During 2010, Park began to retain on our balance sheet certain of
the 15-year, fixed-rate residential mortgage loans that it originated. The balance
of sold fixed-rate residential mortgage loans, in which Park has maintained the
servicing rights, was $1,264 million at year-end 2014, compared to $1,326
million at year-end 2013 and $1,311 million at year-end 2012.

Year-end consumer loans were $893 million, $724 million, and $652 million in
2014, 2013 and 2012, respectively. Consumer loans increased by $169 million
or 23.3% in 2014 and increased by $72 million or 11.0% in 2013. The increase
in consumer loans in 2014 and 2013 was primarily due to an increase in auto-
mobile lending in Ohio.

On a combined basis, year-end commercial, financial and agricultural loans,
construction real estate loans and commercial real estate loans totaled $2,082
million, $2,094 million, and $2,082 million for 2014, 2013 and 2012, respec-
tively. These combined loan totals decreased by $12 million or 0.6% in 2014
and increased by $12 million or 0.6% in 2013. The decrease in 2014 was pri-
marily due to the fact that the increase in commercial, financial and agricultural
loans of $31.1 million was more than offset by decreases in construction real
estate and commercial real estate of $312,000 and $42.6 million, respectively.
The increase in 2013 was primarily due to increases in commercial real estate
loans of $20.2 million and commercial, financial and agricultural loans of $1.5
million, partially offset by a decline in construction real estate loans of $9.4
million.

Table 13 reports year-end loan balances by type of loan for the past five years.

Table 13 – Loans by Type

December 31,
(In thousands)
Commercial, financial
and agricultural

Construction
real estate

Residential

real estate
Commercial
real estate

Consumer
Leases

Total loans

2014

2013

2012

2011

2010

$ 856,535

$ 825,432

$ 823,927

$ 743,797

$ 737,902

155,804

156,116

165,528

217,546

406,480

1,851,375

1,799,547

1,713,645

1,628,618

1,692,209

1,069,637
893,160
3,171
$4,829,682

1,112,273
723,733
3,404
$4,620,505

1,092,164
651,930
3,128
$4,450,322

1,108,574
616,505
2,059
$4,317,099

1,226,616
666,871
2,607
$4,732,685

Table 14 – Selected Loan Maturity Distribution

December 31, 2014
(In thousands)
Commercial, financial
and agricultural

Construction real estate
Commercial real estate

Total

Total of these selected loans due

after one year with:
Fixed interest rate
Floating interest rate

One Year
or Less (1)

$363,707
50,558
54,437

Over One
Through
Five Years

Over
Five
Years

Total

$347,979
18,256
106,911

$ 144,849
86,990
908,289

$ 856,535
155,804
1,069,637

$468,702

$473,146

$1,140,128

$2,081,976

$306,931
166,215

$ 167,379
972,749

$ 474,310
1,138,964

(1) Nonaccrual loans of $47.4 million are included within the one year or less classification above.

Investment Securities: Park’s investment securities portfolio is structured to
minimize credit risk, provide liquidity and contribute to earnings. As conditions
change over time, Park’s overall interest rate risk, liquidity needs and potential
return on the investment portfolio will change. Management regularly evaluates
the securities in the investment portfolio as circumstances evolve. Circum -
stances that could result in the sale of a security include: to better manage
interest rate risk; to meet liquidity needs; or to improve the overall yield in
the investment portfolio.

Park classifies the majority of our securities as AFS (see Note 6 of the Notes to
Consolidated Financial Statements). These securities are carried on the books
at their estimated fair value with the unrealized holding gain or loss, net of
federal taxes, accounted for as accumulated other comprehensive income
(loss). The securities that are classified as AFS are free to be sold in future
periods in carrying out Park’s investment strategies.

Park classifies certain types of U.S. Government sponsored entity collateralized
mortgage obligations (“CMOs”) that we purchase as held-to-maturity. A classifi-
cation of held-to-maturity means that Park has the positive intent and the ability
to hold these securities until maturity. These CMOs are classified as held-to-
maturity because they are generally not as liquid as the other U.S. Government
sponsored entities’ asset-backed securities that Park classifies as AFS. At year-
end 2014, Park’s held-to-maturity securities portfolio was $141 million,
compared to $182 million at year-end 2013, and $401 million at year-end
2012. All of the CMOs, mortgage-backed securities, and callable notes in Park’s
investment portfolio were issued by a U.S. Government sponsored entity.

Average taxable investment securities were $1,433 million in 2014, compared
to $1,377 million in 2013 and $1,610 million in 2012. The average yield on
taxable investment securities was 2.58% in 2014, compared to 2.67% in 2013
and 3.14% in 2012. Average tax-exempt investment securities were $65,000 in
2014, compared to $1.0 million in 2013 and $3.1 million in 2012. The average
tax-equivalent yield on tax-exempt investment securities was 6.97% in 2014,
compared to 7.07% in 2013 and 7.03% in 2012.

Total investment securities (at amortized cost) were $1,499 million at
December 31, 2014, compared to $1,470 million and $1,567 million at
December 31, 2013 and December 31, 2012, respectively. Management
purchased investment securities totaling $352 million in 2014, $583 million
in 2013 and $1,227 million in 2012. Proceeds from repayments and maturities
of investment securities were $140 million in 2014, $605 million in 2013 and
$1,348 million in 2012.

Proceeds from sales of investment securities were $173.1 million in 2014.
Park sold investment securities with a book value of $187,000 for a gain of
$22,000. Additionally, investment securities with a book value of $174.1 million
were sold at a loss of $1.2 million. Proceeds from sales of investment securities
were $75 million in 2013. These securities were sold at book value; thus, there
was no gain or loss recognized. There were no sales of investment securities in
2012.

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At year-end 2014, 2013 and 2012, the average tax-equivalent yield on the total
investment portfolio was 2.47%, 2.53%, and 2.76%, respectively. The weighted
average remaining maturity of the total investment portfolio was 5.2 years
at December 31, 2014, 6.5 years at December 31, 2013, and 2.1 years at
December 31, 2012. Obligations of the U.S. Treasury and other U.S. Govern -
ment sponsored entities and U.S. Government sponsored entities’ asset-backed
securities were approximately 96.0% of the total investment portfolio at year-
end 2014, approximately 95.2% of the total investment portfolio at year-end
2013, and approximately 95.7% of the total investment portfolio at year-end
2012.

The average maturity of the investment portfolio would lengthen if long-term
interest rates were to increase as the principal repayments from mortgage-
backed securities and CMOs would be reduced and callable U.S. Government
sponsored entity notes would extend to their maturity dates. At year-end 2014,
management estimated that the average maturity of the investment portfolio
would lengthen to 5.7 years with a 100 basis point increase in long-term inter-
est rates and to 5.8 years with a 200 basis point increase in long-term interest
rates. Likewise, the average maturity of the investment portfolio would shorten
if long-term interest rates were to decrease as the principal repayments from
mortgage-backed securities and CMOs would increase as borrowers would
refinance their mortgage loans and the callable U.S. Government sponsored
entity notes would shorten to their call dates. At year-end 2014, management
estimated that the average maturity of the investment portfolio would decrease
to 1.8 years with a 100 basis point decrease in long-term interest rates and to
1.5 years with a 200 basis point decrease in long-term interest rates.

Table 15 sets forth the carrying value of investment securities, as well as the
percentage held within each category at year-end 2014, 2013 and 2012:

Table 16 – Distribution of Assets, Liabilities and Shareholders’ Equity

Table 15 – Investment Securities

December 31,
(In thousands)

Obligations of U.S. Treasury and other
U.S. Government sponsored entities

Obligations of states and political subdivisions
U.S. Government asset-backed securities
Federal Home Loan Bank stock
Federal Reserve Bank stock
Equities

Total

Investments by category as a percentage

of total investment securities
Obligations of U.S. Treasury and other
U.S. Government sponsored entities

Obligations of states and political subdivisions
U.S. Government asset-backed securities
Federal Home Loan Bank stock
Federal Reserve Bank stock
Equities

Total

N.M. – Not meaningful

2014

2013

2012

$ 538,064
—
901,715
50,086
8,225
2,698

$ 525,136
240
830,292
59,031
6,876
2,659

$ 695,727
1,573
816,322
59,031
6,876
2,222

$1,500,788

$1,424,234

$1,581,751

35.9%
—%
60.1%
3.3%
0.5%
0.2%

36.9%
N.M.
58.3%
4.1%
0.5%
0.2%

44.0%
0.1%
51.7%
3.7%
0.4%
0.1%

100.0%

ANALYSIS OF EARNINGS
Park’s principal source of earnings is net interest income, the difference
between total interest income and total interest expense. Net interest income
results from average balances outstanding for interest earning assets and
interest bearing liabilities in conjunction with the average rates earned and
paid on them. (See Table 16 for three years of history on the average balances
of the balance sheet categories as well as the average rates earned on interest
earning assets and the average rates paid on interest bearing liabilities.)

December 31,
(In thousands)

ASSETS
Interest earning assets:

Loans (1) (2)
Taxable investment securities
Tax-exempt investment securities (3)
Money market instruments

Total interest earning assets

Non-interest earning assets:
Allowance for loan losses
Cash and due from banks
Premises and equipment, net
Other assets
TOTAL

LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest bearing liabilities:
Transaction accounts
Savings deposits
Time deposits

Total interest bearing deposits

Short-term borrowings
Long-term debt (4)

Total interest bearing liabilities

Non-interest bearing liabilities:

Demand deposits
Other

Total non-interest bearing liabilities

Shareholders’ equity

TOTAL

Daily
Average

2014

Interest

Average
Rate

Daily
Average

2013

Interest

Average
Rate

Daily
Average

2012

Interest

Average
Rate

$226,816
36,686
69
678
264,249

5.02%
2.66%
7.07%
0.25%
4.29%

927
846
11,235
13,008

544
28,370
41,922

0.07%
0.08%
0.81%
0.35%

0.22%
3.26%
0.86%

$228,487
36,981
5
515
265,988

4.84%
2.58%
6.97%
0.25%
4.19%

825
852
9,323
11,000

517
28,582
40,099

0.06%
0.07%
0.71%
0.29%

0.20%
3.29%
0.81%

$4,717,297
1,432,627
65
204,874
6,354,863

(58,917)
112,113
55,407
431,842
$6,895,308

$1,291,310
1,216,750
1,312,868
3,820,928

263,270
867,615
4,951,813

1,196,625
64,415

1,261,040

682,455

$6,895,308

$4,514,781
1,376,913
974
272,851
6,165,519

(56,860)
110,796
56,303
427,215
$6,702,973

$1,251,305
1,098,860
1,392,196
3,742,361

253,123
870,538
4,866,022

1,117,379
74,039

1,191,418

645,533

$6,702,973

$236,184
50,549
217
408
287,358

5.35%
3.14%
7.03%
0.25%
4.64%

$ 1,411
1,072
15,921
18,404

678
31,338
50,420

0.11%
0.11%
1.03%
0.49%

0.26%
3.45%
1.02%

$4,410,661
1,610,044
3,087
166,319
6,190,111

(61,995)
119,410
54,917
464,363
$6,766,806

$1,239,417
1,006,321
1,540,863
3,786,601

258,661
907,704
4,952,966

1,048,796
75,312

1,124,108

689,732

$6,766,806

Tax equivalent net interest income
Net interest spread
Net yield on interest earning assets (net interest margin)

$225,889

$222,327

$236,938

3.38%
3.55%

3.43%
3.61%

3.62%
3.83%

(1) Loan income includes loan related fee income of $1.3 million in 2014, $1.9 million in 2013, and $3.1 million in 2012. Loan income also includes the effects of taxable equivalent adjustments using a 35%

tax rate in 2014, 2013, and 2012. The taxable equivalent adjustment was $843,000 in 2014, $1.3 million in 2013, and $1.5 million in 2012.

(2) For the purpose of the computation, nonaccrual loans are included in the daily average loans outstanding.

(3)

Interest income on tax-exempt investment securities includes the effects of taxable equivalent adjustments using a 35% tax rate in 2014, 2013 and 2012. The taxable equivalent adjustments were $2,000
in 2014, $24,000 in 2013, and $77,000 in 2012.

(4)

Includes subordinated notes.

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Net interest income increased by $4.0 million, or 1.8%, to $225.0 million for
2014, compared to a decrease of $14.3 million, or 6.1%, to $221.0 million
for 2013. The tax equivalent net yield on interest earning assets (net interest
margin) was 3.55% for 2014, compared to 3.61% for 2013 and 3.83% for
2012. The net interest rate spread (the difference between rates received for
interest earning assets and the rates paid for interest bearing liabilities) was
3.38% for 2014, compared to 3.43% for 2013 and 3.62% for 2012. The
increase in net interest income in 2014 was primarily due to the increase in
average interest earning assets of $189 million, to $6,355 million, or 3.1%.
The decrease in net interest income in 2013 was due to the decline in the net
interest spread to 3.43%, while total interest earning assets only declined by
approximately $25 million.

The average yield on interest earning assets was 4.19% in 2014, compared to
4.29% in 2013 and 4.64% in 2012. On a quarterly basis for 2014, the average
yield on interest earning assets was 4.11% for the fourth quarter, 4.17% for the
third quarter, 4.28% for the second quarter, and 4.20% for the first quarter.

The average rate paid on interest bearing liabilities was 0.81% in 2014, com-
pared to 0.86% in 2013 and 1.02% in 2012. On a quarterly basis for 2014,
the average rate paid on interest bearing liabilities was 0.82% for the fourth
quarter, 0.79% for the third quarter, 0.81% for the second quarter, and 0.82%
for the first quarter.

The following table displays (for each quarter of 2014) the average balance of
interest earning assets, the net interest income and the tax equivalent net inter-
est income and net interest margin.

Table 17 – Quarterly Net Interest Margin

(In thousands)

First Quarter
Second Quarter
Third Quarter
Fourth Quarter

2014

Average
Interest
Earning Assets

$6,238,321
6,244,100
6,360,829
6,572,463

$6,354,863

Net
Interest
Income

$ 54,480
56,561
56,709
57,294

$225,044

Tax Equivalent
Net Interest
Income

Tax Equivalent
Net Interest
Margin

$ 54,703
56,783
56,918
57,485

$225,889

3.56%
3.65%
3.55%
3.47%

3.55%

In the following table, the change in tax equivalent interest due to both volume
and rate has been allocated to volume and rate changes in proportion to the
relationship of the absolute dollar amounts of the change in each.

Table 18 – Volume/Rate Variance Analysis

Change from 2013 to 2014

Change from 2012 to 2013

(In thousands)

Volume

Rate

Total

Volume

Rate

Total

Increase (decrease) in:
Interest income:

Total loans

$ 9,961

$(8,290)

$1,671

$ 5,464 $(14,832) $ (9,368)

Taxable investments
Tax-exempt investments
Money market
instruments

Total interest
income

Interest expense:

1,433
(63)

(1,138)
(1)

295
(64)

(6,744)
(149)

(7,119)
1

(13,863)
(148)

(163)

—

(163)

270

—

270

11,168

(9,429)

1,739

(1,159)

(21,950)

(23,109)

Transaction accounts
Savings accounts
Time deposits
Short-term borrowings
Long-term debt

27
104
(604)
23
(83)

$ (129)
(98)
(1,308)
(50)
295

$ (102)
6
(1,912)
(27)
212

13 $
95
(1,458)
(16)
(1,266)

(497) $
(321)
(3,228)
(118)
(1,702)

(484)
(226)
(4,686)
(134)
(2,968)

Total interest
expense

(533)

(1,290)

(1,823)

(2,632)

(5,866)

(8,498)

Net variance

$11,701

$(8,139)

$3,562

$ 1,473 $(16,084) $(14,611)

Other Income: Other income was $75.5 million in 2014, compared to $73.3
million in 2013, and $92.4 million in 2012. Other income in 2012 included
$22.2 million related to the gain on sale of the Vision business. Excluding this
gain, other income was $70.2 million in 2012. The $2.2 million increase in
other income to $75.5 million in 2014, compared to $73.3 million in 2013
was primarily due to a $2.0 million increase in income from fiduciary activities,

a $2.4 million increase in the gain on the sale of OREO, net, and $1.9 million
of income from the gain on the sale of commercial loans held for sale, offset
by a $2.5 million decrease in other service income, a $1.2 million loss on
sale of investment securities, and an $893,000 decrease in service charges
on deposits. The increase in other income to $73.3 million in 2013, compared
to $70.2 million excluding the gain on the sale of the Vision business in 2012
was primarily due to a $1.2 million increase in income from fiduciary activities
and a $3.7 million decline in OREO devaluations, offset by a $1.3 million
decline in the gain on the sale of OREO, net.

The following table displays total other income for Park in 2014, 2013
and 2012.

Table 19 – Other Income

Year Ended December 31,
(In thousands)

Income from fiduciary activities
Service charges on deposits
Gain on sale of Vision business
Other service income
Checkcard fee income
Bank owned life insurance income
ATM fees
Gain on the sale of OREO, net
OREO devaluations
Gain on the sale of commercial

loans held for sale

Loss on sale of investment securities
Miscellaneous

2014

$19,150

15,423

—

10,459

13,570

4,861
2,467
5,503
(2,406)

1,867
(1,158)
5,813

2013

$17,133

16,316

—

12,913

12,955

5,041
2,632
3,110
(3,180)

—
—
6,357

2012

$15,947

16,704

22,167

13,631

12,541

4,754
2,359
4,414
(6,872)

—
—
6,758

Total other income

$75,549

$73,277

$92,403

The following table breaks out the change in total other income for the year
ended December 31, 2014, compared to the year ended December 31, 2013,
and for the year ended December 31, 2013 compared to the year ended
December 31, 2012 between Park’s Ohio-based operations and SEPH.

Table 20 – Other Income Breakout

Change from 2013 to 2014

Change from 2012 to 2013

Ohio-based
Operations

SEPH

Total

Ohio-based
Operations

SEPH

Total

$ 2,017

$ — $ 2,017

$ 1,189

(3) $ 1,186

(893)

—

(893)

(234)

(154)

(388)

—
(3,726)
615

(180)
(165)

1,642
1,011

—
1,272
—

—
—

—
(2,454)
615

(180)
(165)

— (22,167)
(98)
(118)

(620)
532

(22,167)
(718)
414

305
282

(18)
(9)

287
273

751
(237)

2,393
774

(655)
(1,282)

(649)
4,974

(1,304)
3,692

(329)

2,196

1,867

—

(In thousands)
Income from fiduciary

activities
Service charges
on deposits
Gain on sale of

Vision business
Other service income
Checkcard fee income
Bank owned life

insurance income

ATM fees
Gain on the sale
of OREO, net
OREO devaluations
(Loss) gain on sale of
commercial loans
held for sale
Loss on sale of

investment securities

Miscellaneous

Total other income

(1,158)
(597)
$(1,763)

— (1,158)
(544)
53
$ 2,272
$4,035

—
832

—
—
(401)
(1,233)
$ 349 $(19,475) $(19,126)

Income from fiduciary activities increased by $2.0 million, or 11.8%, to
$19.2 million in 2014, compared to an increase of $1.2 million, or 7.4%,
to $17.1 million in 2013. The increases in fiduciary fee income in 2014 and
2013 were primarily due to improvements in the equity markets and also due
to an increase in the total account balances serviced by PNB’s Trust Department.
PNB charges fiduciary fees largely based on the market value of the assets being
managed. The average market value of the trust assets that PNB managed was
$4.26 billion at December 31, 2014, compared to $3.86 billion at December
31, 2013, and $3.52 billion at December 31, 2012.

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Service charges on deposit accounts decreased by $893,000, or 5.5%, to
$15.4 million in 2014, compared to a decrease of $388,000, or 2.3%, to
$16.3 million in 2013. The declines in 2014 and 2013 were related to declines
in service charges on deposits within Park’s Ohio-based operations, largely as
a result of a decrease in fee income from overdraft charges and other non-
sufficient funds (NSF) charges. Park’s customers did not use our courtesy
overdraft program as frequently in 2013 and 2014.

As previously discussed, on February 16, 2012, Park completed the sale of
the Vision business for a purchase price of $27.9 million. As a result of the
transaction, Park recorded a pre-tax gain of $22.2 million (after actual
expenses directly related to the transaction). This gain on sale was recognized
at Vision prior to the merger of Vision (as constituted after the sale) with and
into SEPH.

Fee income earned from origination and sale into the secondary market
of long-term, fixed-rate mortgage loans is included within other non-yield
related fees in the subcategory “Other service income”. Other service income
decreased $2.5 million, or 19%, to $10.5 million in 2014, and decreased
$718,000, or 5.3%, to $12.9 million in 2013. The decrease during 2014
consisted of a $3.7 million decrease at PNB offset by a $1.2 million increase
at SEPH due to the recovery of fees and expenses. The decrease in other service
income in 2014 and 2013 at PNB was primarily due to a corresponding
decrease in the amount of mortgage loans originated.

Checkcard fee income, which is generated from debit card transactions,
increased $615,000, or 4.7%, to $13.6 million in 2014, compared to
$13.0 million in 2013, and $12.5 million in 2012. The increases in 2014
and 2013 were attributable to continued increases in the volume of debit
card transactions.

Gain on the sale of OREO, net, totaled $5.5 million in 2014, an increase of $2.4
million, compared to $3.1 million in 2013. The table below provides details on
the OREO sales at PNB and SEPH in 2014 and 2013.

Table 21 – Sales of OREO

(In thousands)

2014:
PNB
PNB participations
in Vision assets

SEPH

Total

2013:
PNB
PNB participations
in Vision assets

SEPH

Total

OREO
Properties
Sold

Book
Balance of
OREO Sold

Net
Proceeds of
OREO Sold

1
114

205

111

—
104

215

$ 7,271

1,826
13,258

$22,355

$ 9,527

—
10,369

$19,896

$ 8,191

3,085
16,522

$27,798

$10,161

—
12,882

$23,043

Gain on
Sale (1)

$ 920

1,259
3,264

$5,443

$ 634

—
2,513

$3,147

(1) The gain on sale amounts above excludes any deferred gains on sale.

OREO devaluations, which result from declines in the fair value (less
anticipated selling costs) of property acquired through foreclosure, totaled
$2.4 million in 2014, a decrease of $774,000, or 24.3%, compared to $3.2
million in 2013. Of the $2.4 million in OREO devaluations in 2014, $1.6
million were related to devaluations at PNB.

Gain on sale of commercial loans held for sale was $1.9 million in 2014.
PNB sold $12.7 million of commercial loans held for sale, which resulted
in a $328,000 loss on sale. SEPH sold $6.4 million of commercial loans
held for sale, which resulted in a $2.2 million gain on sale.

Other Expense: Other expense was $195.2 million in 2014, compared
to $188.5 million in 2013, and $188.0 million in 2012. Other expense
increased by $6.7 million, or 3.6% in 2014, and increased by $561,000,
or 0.3%, in 2013. The following table displays total other expense for
Park for 2014, 2013 and 2012.

Table 22 – Other Expense

Year Ended December 31,
(In thousands)

Salaries and employee benefits
Data processing fees
Professional fees and services
Net occupancy expense of bank premises
Furniture and equipment expense
Insurance
Marketing
Postage and telephone
Intangible amortization expense
State taxes
Loan put provision
OREO expense
Amortization of investment in qualified

affordable housing projects

Miscellaneous

Total other expense

2014

$101,968
4,712
29,580
10,006
11,571
5,723
4,371
5,268
—
2,290
—
2,063

7,724
9,958

2013

$100,298
4,174
27,865
9,804
11,249
5,205
3,790
5,790
337
3,702
—
2,731

7,014
6,570

2012

$ 95,977
3,916
24,267
9,444
10,788
5,780
3,474
5,983
2,172
3,786
3,299
4,011

6,841
8,230

$195,234

$188,529

$187,968

Full-time equivalent employees

1,801

1,836

1,826

The following table breaks out the change in other expense for the year ended
December 31, 2014, compared to the year ended December 31, 2013, and for
the year ended December 31, 2013 compared to the year ended December 31,
2012 in each of Park’s Ohio-based operations and SEPH.

Table 23 – Other Expense Breakout

(In thousands)

Salaries and

employee benefits
Data processing fees
Professional fees
and services
Net occupancy

expense of bank
premises
Furniture and

equipment expense

Insurance
Marketing
Postage and telephone
Intangible amortization

expense
State taxes
Loan put provision
OREO expense
Amortization of investment
in qualified affordable
housing projects

Miscellaneous

Total other
expense

Change from 2013 to 2014

Change from 2012 to 2013

Ohio-based
Operations

SEPH

Total

Ohio-based
Operations

SEPH

Total

$ 1,625
538

45
—

$ 1,670
538

$ 6,710
500

$(2,389)
(242)

$ 4,321
258

598

1,117

1,715

5,027

(1,429)

3,598

206

334
508
581
(521)

(337)
(1,451)
—
(684)

(4)

202

676

(316)

360

(12)
10
—
(1)

—
39
—
16

322
518
581
(522)

(337)
(1,412)
—
(668)

529
(433)
338
(57)

(68)
(142)
(22)
(136)

(1,615)
(220)
(36)
(48)
— (3,299)
(871)

(409)

461
(575)
316
(193)

(1,835)
(84)
(3,299)
(1,280)

710
5,043

—
(1,655)

710
3,388

173
(2,415)

—
755

173
(1,660)

$ 7,150

$ (445)

$ 6,705

$10,383

$(9,822)

$ 561

Salaries and employee benefits expense increased $1.7 million, or 1.7%, to
$102.0 million in 2014 and increased by $4.3 million, or 4.5%, to $100.3
million in 2013. The increase in 2014 was primarily due to increases of
$992,000 in salary expense, $3.4 million in group medical insurance, and
$1.2 million in other employee benefits, offset by a $4.1 million decrease
in retirement benefit expense. The increase in 2013 was primarily due to
increases of $2.6 million in salary expense, $1.5 million in group medical
insurance, and $831,000 in retirement benefit expense. Park had 1,801
full-time equivalent employees at year-end 2014, compared to 1,836 full-time
equivalent employees at year-end 2013, and 1,826 at year-end 2012.

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Professional fees and services increased $1.7 million, or 6.2%, to $29.6
million in 2014, and increased by $3.6 million, or 14.8%, to $27.9 million in
2013. This subcategory of total other expense includes legal fees, management
consulting fees, director fees, audit fees, regulatory examination fees and mem-
berships in industry associations. The increase in professional fees and services
expense in each of 2013 and 2014 was primarily due to increases in legal and
consulting fees at both PNB and SEPH, although SEPH realized a modest decline
in 2013 from the level in 2012.

State taxes decreased by $1.4 million, or 38.1%, to $2.3 million in 2014,
compared to $3.7 million in 2013. The decrease was due to the reversal of
an accrual previously established for the 2012 and 2013 state tax years which
are now concluded.

As part of the transaction between Vision and Centennial, Park agreed to allow
Centennial to “put back” up to $7.5 million aggregate principal amount of
loans, which were originally included within the loans sold in the transaction.
The loan put option expired on August 16, 2012, 180 days after the closing of
the transaction. In total, Centennial put back 44 loans, totaling approximately
$7.5 million. Upon repurchase, Park was required to charge each of the
repurchased loans down to its then current fair value. Park recognized
$3.3 million of loan put provision expense in 2012 to establish a liability
account that was utilized to cover write downs on the 44 loans repurchased
from Centennial.

The subcategory “Miscellaneous” other expense includes expenses for
supplies, travel, charitable contributions, and other miscellaneous expense.
The subcategory miscellaneous other expense increased by $3.4 million, or
51.6%, to $10.0 million in 2014, and decreased by $1.7 million, or 20.2%, to
$6.6 million in 2013. The $3.4 million increase in 2014 was primarily due to a
charitable contribution and a contract termination fee. The $1.7 million decline
in 2013 was largely due to the reversal of a $1.5 million liability for potential
credit loss exposure related to certain off-balance sheet arrangements in the
Ohio-based operations, which had previously been established in 2012.

Income Taxes: Federal income tax expense was $28.6 million in 2014,
compared to $25.1 million in 2013, and $25.7 million in 2012. Federal
income tax expense as a percentage of income before taxes was 25.4% in
2014, 24.6% in 2013, and 24.6% in 2012. The difference between the statutory
federal income tax rate of 35% and Park’s effective tax rate reflects the perma-
nent tax differences, primarily consisting of tax-exempt interest income from
municipal investments and loans, low income housing tax credits, bank owned
life insurance income, and dividends paid on common shares held within
Park’s salary deferral plan. Park’s permanent tax differences for 2014 were
approximately $10.6 million.

CREDIT EXPERIENCE
(Recovery of) Provision for Loan Losses: The (recovery of) provision for
loan losses is the amount added to the allowance for loan losses to ensure the
allowance is sufficient to absorb probable, incurred credit losses. The amount
of the (recovery of) provision for loan losses is determined by management
after reviewing the risk characteristics of the loan portfolio, historic and
current loan loss experience and current economic conditions.

The (recovery of) provision for loan losses for Park was ($7.3) million in
2014, $3.4 million in 2013 and $35.4 million in 2012. Net loan (recoveries)
charge-offs were ($2.2) million in 2014, ($516,000) in 2013, and $48.3
million in 2012. Net loan charge-offs for the year ended December 31, 2012
included the charge-off of $12.1 million related to the retained Vision loans
to bring the retained Vision loan portfolio to fair value prior to the merger
of Vision with and into SEPH on February 16, 2012. The ratio of net loan
(recoveries) charge-offs to average loans was (0.05%) in 2014, (0.01%)
in 2013, and 1.10% in 2012.

Park’s Ohio-based subsidiaries, PNB and GFSC, are the only subsidiaries that
carry an ALLL balance. The table below provides additional information on the
provision for loan losses and the ALLL for Park’s Ohio-based subsidiaries for
2014, 2013 and 2012.

Table 24 – Park’s Ohio-based Subsidiaries ALLL Information

(In thousands)

ALLL, beginning balance
Charge-offs:

Ohio-based subsidiaries loans
PNB participations in Vision loans

Total charge-offs

Recoveries:

Ohio-based subsidiaries loans
PNB participations in Vision loans

Total recoveries

Net charge-offs

Provision for (recovery of) loan losses:

Ohio-based subsidiaries loans
PNB participations in Vision loans
Total provision for loan losses

ALLL, ending balance

Average loans, Ohio-based subsidiaries
Total net charge-offs as a percentage of

average loans

Total net charge-offs as

a percentage of average loans
— excluding PNB participations
in Vison loans

2014

2013

2012

59,468

55,537

57,706

22,988
667

23,655

(6,613)
(6,865)

(13,478)

10,177

11,259
(6,198)

5,061

16,809
131

16,940

(4,942)
(715)

(5,657)

11,283

16,095
(881)

15,214

21,786
3,549

25,335

(5,618)
(10)

(5,628)

19,707

14,170
3,368

17,538

$
54,352
$4,685,461

$
59,468
$4,467,156

$
55,537
$4,277,355

0.22%

0.25%

0.46%

0.35%

0.25%

0.38%

SEPH, as a non-bank subsidiary of Park, does not carry an ALLL balance, but
recognizes a provision for loan losses when a charge-off is taken and recog-
nizes a recovery of loan losses when a recovery is received. The (recovery of)
provision for loan losses for SEPH was ($12.4) million for 2014 and ($11.8)
million for 2013. The provision for loan losses, including those provisions
recorded at Vision prior to the February 16, 2012 merger of Vision with and
into SEPH, was $17.9 million in 2012. The net recoveries in 2014 consisted
of charge-offs of $1.1 million and recoveries of $13.5 million, and the net
recoveries in 2013 consisted of charge-offs of $2.2 million and recoveries
of $14.0 million.

On February 16, 2012, when Vision merged with and into SEPH, the loans
which had been retained by Vision were transferred by operation of law at
their fair value and no allowance for loan loss has been or will be carried at
SEPH. The table below provides additional information regarding charge-offs
as a percentage of unpaid principal balance, as of December 31, 2014.

Table 25 – SEPH Retained Vision Loan Portfolio
Charge-offs as a percentage of unpaid principal balance

December 31, 2014
(In thousands)

Unpaid
Principal Balance

Charge-
offs

Net Book
Balance

Charge-off
Percentage

Nonperforming loans –
retained by SEPH
Performing loans –
retained by SEPH

$43,901

$20,888

$23,013

47.58%

Total SEPH loan exposure

$44,936

$20,980

$23,956

1,035

943

8.89%

46.69%

Generally, management obtains updated appraisal information for non -
performing loans annually. As new appraisal information is received,
management performs an evaluation of the appraisal and applies a
discount for anticipated disposition costs to determine the net realizable
value of the collateral, which is compared to the outstanding principal
balance to determine if additional write-downs are necessary.

At year-end 2014, the allowance for loan losses was $54.4 million, or 1.13%
of total loans outstanding, compared to $59.5 million, or 1.29%, of total loans
outstanding at year-end 2013, and $55.5 million, or 1.25%, of total loans out-
standing at year-end 2012. The table below provides additional information
related to specific reserves on impaired commercial loans and general reserves
for all other loans in Park’s portfolio at December 31, 2014, 2013 and 2012.

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2014

2013

2012

The table below provides a summary of Park’s loan loss experience over the
past five years:

54,352

$ 59,468

$ 55,537

Table 28 – Summary of Loan Loss Experience

Table 26 – Park General Reserve Trends

Year Ended December 31,
(In thousands)

Allowance for loan losses, end of period

Specific reserves

General reserves

Total loans

Impaired commercial loans

Non-impaired loans

Allowance for loan losses as a percentage

of year-end loans

General reserves as a percentage

of non-impaired loans

3,660

10,451

8,276

50,692

$ 49,017

$ 47,261

$4,829,682

$4,620,505

$4,450,322

73,676

112,304

137,238

$4,756,006

$4,508,201

$4,313,084

1.13%

1.29%

1.25%

1.07%

1.09%

1.10%

General reserves increased $1.7 million, or 3.4%, to $50.7 million at
December 31, 2014, compared to $49.0 million at December 31, 2013.
The increase in general reserves was primarily due to a $3.9 million increase
in general reserves in the consumer loan portfolio, as this portfolio of loans
experienced significant growth in 2014. Offsetting the general reserve increase
in the consumer loan portfolio was a $2.2 million decline in general reserves
in the commercial loan portfolio due to the improving credit trends for Park’s
Ohio-based operations (PNB and GFSC) commercial loan portfolio. The follow-
ing table shows the improving credit trends in Park’s Ohio-based operations
commercial loan portfolio.

Table 27 – Park Ohio Commercial Credit Trends

Year Ended December 31,
(In thousands)

2014

2013

2012

Commercial loans*

Pass rated
Special mention
Substandard
Impaired

Total

$2,360,689
15,946
3,553
51,323

$2,311,914
26,361
2,687
77,038

$2,225,702
49,275
16,843
89,365

$2,431,511

$2,418,000

$2,381,185

*Commercial loans include: (1) Commercial, financial and agricultural loans, (2) Commercial
real estate loans, (3) Commercial related loans in the construction real estate portfolio and
(4) Commercial related loans in the residential real estate portfolio.

Delinquent and accruing loan trends for Park’s Ohio-based operations have
also improved over the past 24 months. Delinquent and accruing loans were
$33.0 million, or 0.69% of total loans at December 31, 2014, compared to
$32.0 million, or 0.70% of total loans at December 31, 2013, and $39.6
million, or 0.90% of total loans at December 31, 2012.

Impaired commercial loans for Park’s Ohio-based operations were $51.3
million as of December 31, 2014, a reduction from the balances of impaired
commercial loans of $77.0 million and $89.4 million at December 31, 2013
and 2012, respectively. The $51.3 million of impaired commercial loans at
December 31, 2014 included $3.6 million of loans modified in a troubled debt
restructuring which are currently on accrual status and performing in accor-
dance with the restructured terms. Impaired commercial loans are individually
evaluated for impairment and specific reserves are established to cover any
probable, incurred losses for those loans that have not been charged down to
the net realizable value of the underlying collateral or to the net present value
of expected cash flows.

Management believes that the allowance for loan losses at year-end 2014
is adequate to absorb probable, incurred credit losses in the loan portfolio.
See Note 1 of the Notes to Consolidated Financial Statements and the dis cussion
under the heading “CRITICAL ACCOUNTING POLICIES” earlier in this
Management’s Discussion and Analysis for additional information on
management’s evaluation of the adequacy of the allowance for loan losses.

(In thousands)

2014

2013

2012

2011

2010

Average loans

(net of unearned
interest)
Allowance for
loan losses:

Beginning balance
Charge-offs:

Commercial, financial
and agricultural

Real estate –
construction

Real estate –
residential
Real estate –
commercial

Consumer
Leases

$4,717,297 $4,514,781 $4,410,661 $4,713,511 $4,642,478

59,468

55,537

68,444

143,575

116,717

3,779

6,160

26,847

18,350

8,484

1,316

1,791

9,985

64,166

23,308

3,944

3,207

8,607

20,691

18,401

8,003
7,738
—

1,832
6,163
—

10,454
5,375
—

23,063
7,612
—

7,748
8,373
—

Total charge-offs $

24,780 $

19,153 $

61,268 $ 133,882 $ 66,314

Recoveries:

Commercial, financial
and agricultural

Real estate –

construction

Real estate –
residential
Real estate –
commercial

Consumer
Leases

Total recoveries

Net (recoveries)
charge-offs

(Recovery) provision

included in earnings

Transfer of loans
at fair value

Allowance for loan
losses acquired
(transferred) related
to Vision

1,003 $

1,314 $

1,066 $ 1,402 $

1,237

12,572

9,378

2,979

1,463

813

2,985

6,000

5,559

1,719

1,429

7,759
2,671
7

726
2,249
2

783
2,555
—

1,825
2,385
4

26,997 $

19,669 $ 12,942 $ 8,798 $

850
1,763
—

6,092

(2,217) $

(516) $ 48,326 $ 125,084 $ 60,222

(7,333)

3,415

35,419

63,272

87,080

—

(219)

—

(13,100)

—

Ending balance

54,352 $

59,468 $ 55,537 $ 68,444 $ 143,575

Ratio of net (recoveries)

charge-offs to average
loans

Ratio of allowance for
loan losses to end
of year loans

(0.05)%

(0.01)%

1.10%

2.65%

1.30%

1.13%

1.29%

1.25%

1.59%

3.03%

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

Table 29 – Allocation of Allowance for Loan Losses

December 31,

2014

2013

2012

2011

2010

Percent of
Loans Per
(In thousands) Allowance Category Allowance Category Allowance Category Allowance Category

Percent of
Loans Per

Percent of
Loans Per
Allowance Category

Commercial,
financial
and
agricultural
Real estate –
construction
Real estate –
residential
Real estate –
commercial

Consumer
Leases

$10,719

17.73% $14,218

17.87% $15,635

18.51% $16,950

17.23% $ 11,555

15.59%

8,652

3.23%

6,855

3.38%

6,841

3.72%

14,433

5.04%

70,462

8.59%

14,772

38.33%

14,251

38.95%

14,759

38.51%

15,692

37.72%

30,259

35.75%

8,808
11,401

22.15%
18.49%
— 0.07%

15,899
8,245

24.07%
15.66%
— 0.07%

11,736
6,566

24.54%
14.65%
— 0.07%

15,539
5,830

25.68%
14.28%
— 0.05%

24,369
6,925
5

25.92%
14.09%
0.06%

Total

$54,352 100.00% $59,468 100.00% $55,537 100.00% $68,444 100.00% $143,575 100.00%

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As of December 31, 2014, Park had no significant concentrations of loans to
borrowers engaged in the same or similar industries nor did Park have any
loans to foreign governments.

Nonperforming Assets: Nonperforming loans include: 1) loans whose
interest is accounted for on a nonaccrual basis; 2) troubled debt restructurings
(TDRs) on accrual status; and 3) loans which are contractually past due 90
days or more as to principal or interest payments, where interest continues
to accrue. Prior to Park’s adoption of Accounting Standards Update (ASU)
2011-02, Park classified all TDRs as nonaccrual loans. With the adoption of
ASU 2011-02, management determined it was appropriate to return certain
TDRs to accrual status. Specifically, if the restructured note has been current
for a period of at least six months and management expects the borrower will
remain current throughout the renegotiated contract, the loan may be returned
to accrual status. OREO results from taking possession of property that served
as collateral for a defaulted loan.

The following is a summary of Park’s nonaccrual loans, accruing TDRs, loans
past due 90 days or more and still accruing and OREO for the last five years:

Table 30 – Park Nonperforming Assets

December 31,
(In thousands)

Nonaccrual loans
Accruing TDRs
Loans past due 90 days
or more and accruing

Total nonperforming

loans

OREO – PNB

OREO – Vision

OREO – SEPH

Total nonperforming

assets

Percentage of

nonperforming loans
to total loans
Percentage of

nonperforming assets
to total loans
Percentage of

nonperforming assets
to total assets

2014

2013

2012

2011

2010

$100,393
16,254

$135,216
18,747

$155,536
29,800

$195,106
28,607

$289,268
—

2,641

1,677

2,970

3,489

3,590

$119,288

$155,640

$188,306

$227,202

$292,858

10,687

11,412

14,715

13,240

8,385

—

33,324

11,918

23,224

21,003

29,032

—

$141,893

$190,276

$224,024

$269,474

$334,567

2.47%

3.37%

4.23%

5.26%

6.19%

2.94%

4.12%

5.03%

6.24%

7.07%

2.03%

2.87%

3.37%

3.86%

4.59%

SEPH and Vision nonperforming assets for the last five years were as follows:

Table 31 – SEPH/Vision Nonperforming Assets

December 31,
(In thousands)

Nonaccrual loans
Accruing TDRs
Loans past due 90 days
or more and accruing

2014

2013

2012

2011

2010

$22,916
97

$36,108
—

$55,292
—

$ 98,993
2,265

$171,453
—

—

122

364

Total nonperforming loans

$23,013

$36,108

$55,292

$101,380

$171,817

OREO – SEPH
OREO – Vision

11,918
—

23,224
—

21,003
—

29,032
—

—
33,324

Total nonperforming assets

$34,931

$59,332

$76,295

$130,412

$205,141

Percentage of

nonperforming loans
to total loans
Percentage of

nonperforming assets
to total loans
Percentage of

nonperforming assets
to total assets

N.M. – Not meaningful

N.M.

26.82%

N.M.

32.02%

N.M.

25.90%

Nonperforming assets for Park, excluding SEPH/Vision, for the last five years
were as follows:

Table 32 – Park Excluding SEPH/Vision Nonperforming Assets

December 31,
(In thousands)

Nonaccrual loans
Accruing TDRs
Loans past due 90 days
or more and accruing

Total nonperforming

loans

OREO – PNB

Total nonperforming

assets

Percentage of

nonperforming loans
to total loans
Percentage of

nonperforming assets
to total loans
Percentage of

nonperforming assets
to total assets

2014

2013

2012

2011

2010

$ 77,477
16,157

$ 99,108
18,747

$100,244
29,800

$ 96,113
26,342

$117,815
—

2,641

1,677

2,970

3,367

3,226

$ 96,275

$119,532

$133,014

$125,822

$121,041

10,687

11,412

14,715

13,240

8,385

$106,962

$130,944

$147,729

$139,062

$129,426

2.00%

2.61%

3.03%

3.00%

2.96%

2.23%

2.86%

3.36%

3.32%

3.16%

1.55%

2.00%

2.26%

2.21%

1.99%

Park had $19.5 million of commercial loans included on the watch list
at December 31, 2014, compared to $29.0 million of commercial loans
at year-end 2013 and $68.3 million of commercial loans at year-end 2012.
Commercial loans include: (1) commercial, financial and agricultural loans;
(2) commercial real estate loans; (3) certain real estate construction loans;
and (4) certain residential real estate loans. Park’s watch list includes all
criticized and classified commercial loans, defined by Park as loans rated
special mention or worse, less those commercial loans currently considered
to be impaired. As a percentage of year-end total commercial loans, Park’s
watch list of potential problem commercial loans was 0.8% in 2014, 1.2% in
2013, and 2.8% in 2012. The existing conditions of these loans do not warrant
classification as nonaccrual. However, these loans have shown some weakness
and management performs additional analyses regarding a borrower’s ability
to comply with payment terms for watch list loans.

Park’s allowance for loan losses includes an allocation for loans specifically
identified as impaired under GAAP. At December 31, 2014, loans considered
to be impaired consisted substantially of commercial loans graded as “sub -
standard” or “doubtful” and placed on non-accrual status. Specific reserves
on impaired commercial loans are typically based on management’s best esti-
mate of the fair value of collateral securing these loans. The amount ultimately
charged off for these loans may be different from the specific reserve as the
ultimate liquidation of the collateral may be for amounts different from
management’s estimates.

When determining the quarterly and annual loan loss provision, Park
reviews the grades of commercial loans. These loans are graded from
1 to 8. A grade of 1 indicates little or no credit risk and a grade of 8 is
considered a loss. Commercial loans that are pass-rated are considered
to be of acceptable credit risk. Commercial loans graded a 5 (special mention)
are considered to be watch list credits and a higher loan loss reserve percent-
age is allocated to these loans. Commercial loans graded 6 (substandard),
also considered watch list credits, are considered to represent higher credit
risk and, as a result, a higher loan loss reserve percentage is allocated to
these loans. Generally, commercial loans that are graded a 6 are considered
for partial charge-off or have been charged down to the net realizable value
of the underlying collateral. Commercial loans that are graded a 7 (doubtful)
are shown as nonperforming and Park charges these loans down to their fair
value by taking a partial charge-off or recording a specific reserve. Any com-
mercial loan graded an 8 (loss) is completely charged off.

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M A N A G E M E N T ’ S D I S C U S S I O N & A N A L Y S I S

Generally, consumer loans are not individually graded. Consumer loans include:
(1) mortgage and installment loans included in the construction real estate
segment of the loan portfolio; (2) mortgage, home equity lines of credit
(HELOC), and installment loans included in the residential real estate
segment of the loan portfolio; and (3) all loans included in the consumer
segment of the loan portfolio. The amount of loan loss reserve assigned to
these loans is based on historical loss experience over the past 72 months.
Management generally considers a one-year coverage period (the “Historical
Loss Factor”) appropriate because the probable loss on any given loan in the
consumer loan pool should ordinarily become apparent in that time frame.
However, management may incorporate adjustments to the Historical Loss
Factor as circumstances warrant additional reserves (e.g., increased loan
delinquencies, improving or deteriorating economic conditions, changes
in lending management and underwriting standards, etc.). At December 31,
2014, the coverage level within the consumer portfolio was approximately
1.98 years.

The judgmental increases discussed above incorporate management’s
evaluation of the impact of environmental qualitative factors which pose
additional risks and assignment of a component of the allowance for loan
losses in consideration of these factors. Such environmental factors include:
national and local economic trends and conditions; experience, ability
and depth of lending management and staff; effects of any changes in lending
policies and procedures; and levels of, and trends in, consumer bankruptcies,
delinquencies, impaired loans and charge-offs and recoveries. The deter -
mination of this component of the allowance for loan losses requires
considerable management judgment. Management is working to address
weaknesses in those loans that may result in future loss. Actual loss
experience may be more or less than the amount allocated.

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

Cash and cash equivalents increased by $90.7 million during 2014 to $237.7
million at year-end. Cash provided by operating activities was $122.7 million
in 2014, $145.8 million in 2013, and $138.8 million in 2012. Net income
was the primary source of cash from operating activities during each year.

Cash used in investing activities was $280.6 million in 2014, $137.1 million
in 2013 and $228.3 million in 2012. Investment security transactions are the
major use or source of cash in investing activities. Proceeds from the sale,
repayment or maturity of securities provide cash and purchases of securities
use cash. Net security transactions used cash of $29.7 million in 2014, provided
cash of $96.9 million in 2013, and provided cash of $122.3 million in 2012.
Another major use or source of cash in investing activities is the net increase
or decrease in the loan portfolio. Cash used by the net increase in the loan
portfolio was $234.0 million in 2014, $212.3 million in 2013, and $186.7
million in 2012.

As of December 31, 2014, management had taken partial charge-offs of
approximately $32.5 million related to the $73.7 million of commercial
loans considered to be impaired, compared to charge-offs of approximately
$63.3 million related to the $112.3 million of impaired commercial loans at
December 31, 2013. The table below provides additional information related
to Park’s impaired commercial loans at December 31, 2014, including those
impaired commercial loans at PNB, PNB participations in impaired Vision
loans and those impaired Vision commercial loans retained at SEPH.

Table 33 – Park Impaired Commercial Loans

December 31, 2014
(In thousands)

PNB
PNB participations
in Vision loans

SEPH

Unpaid
Principal
Balance
(UPB)

Prior
Charge-
offs

Total
Impaired
Loans

Specific
Reserve

Carrying
Balance

Carrying
Balance
as a
% of UPB

$ 48,399

$ 5,435

$42,964

$3,660

$39,304

81.21%

15,054
42,703

6,695
20,350

8,359
22,353

—
—

8,359
22,353

55.53%
52.35%

Total Park

$106,156

$32,480

$73,676

$3,660

$70,016

65.96%

A significant portion of Park’s allowance for loan losses is allocated to
commercial loans. “Special mention” loans are loans that have potential
weaknesses that may result in loss exposure to Park. “Substandard” loans are
those that exhibit a well-defined weakness, jeopardizing repayment of the loans,
resulting in a higher probability that Park will suffer a loss on the loans unless
the weakness is corrected. Park’s annualized 72-month loss experience, defined
as charge-offs plus changes in specific reserves, within the commercial loan
portfolio has been 0.60% of the principal balance of these loans. This annual-
ized 72-month loss experience includes only the performance of the PNB loan
portfolio and excludes the impact of PNB participations in Vision loans. The
allowance for loan losses related to performing commercial loans was $29.3
million or 1.23% of the outstanding principal balance of other accruing
commercial loans at December 31, 2014.

The overall reserve of 1.23% for other accruing commercial loans breaks down
as follows: pass-rated commercial loans are reserved at 1.18%; special mention
commercial loans are reserved at 5.83%; and substandard commercial loans
are reserved at 10.60%. The reserve levels for pass-rated, special mention and
substandard commercial loans in excess of the annualized 72-month loss expe-
rience of 0.60% are due to the following factors which management reviews on
a quarterly or annual basis:

(cid:0) Loss Emergence Period Factor: Annually during the fourth quarter,
management calculates the loss emergence period for each commercial
loan segment. This loss emergence period is calculated based upon the
average period of time it takes a credit to move from pass-rated to non -
accrual. If the loss emergence period for any commercial loan segment is
greater than one year, management applies additional general reserves to
all performing loans within that segment of the commercial loan portfolio.

(cid:0) Loss Migration Factor: Park’s commercial loans are individually risk
graded. If loan downgrades occur, the probability of default increases,
and accordingly, management allocates a higher percentage reserve to
those accruing commercial loans graded special mention and substan-
dard. Annually, management calculates a loss migration factor for each
commercial loan segment for special mention and substandard credits
based on a review of losses over the period of time a loan takes to
migrate from pass to nonaccrual.

(cid:0) Environmental Loss Factor: Management has identified certain

macroeconomic factors that trend in accordance with losses in Park’s
commercial loan portfolio. These macroeconomic factors are reviewed
quarterly and the adjustments made to the environmental loss factor
impacting each segment in the performing commercial loan portfolio
correlate to changes in the macroeconomic environment.

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Cash provided by financing activities was $248.5 million in 2014, cash used in
financing activities was $62.9 million in 2013, and cash provided by financing
activities was $133.4 million in 2012. A major source of cash for financing
activities is the net change in deposits. Deposits increased and provided $338.0
million of cash in 2014, $74.0 million of cash in 2013 and $250.9 million of
cash in 2012. Of the $338.0 million deposit increase in 2014, $200 million
was related to the settlement of brokered deposits in September 2014. Another
major source of cash for financing activities is short-term borrowings and long-
term debt. In 2014, net short-term borrowings increased and provided $35.0
million in cash, and net long-term borrowings decreased and used $64.2
million in cash. In 2013, net short-term borrowings decreased and used
$102.1 million in cash, and net long-term borrowings increased and provided
$24.0 million in cash. In 2012, net short-term borrowings increased and pro-
vided $80.6 million in cash, and net long-term borrowings decreased and used
$65.1 million in cash. Additionally, in 2012, cash declined by $100.0 million
from the repurchase of the Series A Preferred Shares and $2.8 million from the
repurchase of the Warrant, both from the U.S. Treasury. Finally, cash declined
by $57.9 million in 2014 and 2013, and $60.2 million in 2012, from the
payment of cash dividends.

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

The following table shows interest rate sensitivity data for five different time
intervals as of December 31, 2014:

Table 34 – Interest Rate Sensitivity

(In thousands)

Interest earning

assets:
Investment

securities (1)
Money market
instruments

Loans (1)

Total interest
earning
assets

Interest bearing
liabilities:
Interest bearing
transaction
accounts (2)

Savings

accounts (2)
Time deposits
Other

Total deposits

0-3
Months

3-12
Months

1-3
Years

3-5
Years

Over 5
Years

Total

87,326 $ 103,929 $ 214,806 $165,405 $ 927,387 $1,498,853

104,188

—
1,226,840 1,167,698

—
1,518,430

—
640,904

— 104,188
4,829,682

275,810

1,418,354 1,271,627

1,733,236

806,309

1,203,197

6,432,723

$ 584,271 $

— $ 537,808 $ — $ — $1,122,079

398,755
344,236
—
1,327,262

— 926,690
398,757
—
1,863,255

480,146
1,269
481,415

—
186,270
—
186,270

— 1,325,445
1,409,911
502
1,269
—
3,858,704
502

Table 34 – Interest Rate Sensitivity (continued)

0-3
Months

3-12
Months

1-3
Years

3-5
Years

Over 5
Years

Total

$ 276,980 $
23,503

— $ — $ — $ — $ 276,980
786,602

176,161

365,106

200,383

21,449

15,000

—

30,000

—

45,000

1,642,745

502,864

2,258,361

386,653

176,663

4,967,286

(In thousands)
Short-term

borrowings
Long-term debt
Subordinated

notes

Total interest
bearing
liabilities

Interest rate

sensitivity gap

(224,391)

768,763

(525,125)

419,656

1,026,534

1,465,437

Cumulative rate
sensitivity gap
Cumulative gap as
a percentage of
total interest
earning assets

(224,391)

544,372

19,247

438,903

1,465,437

(3.49)%

8.46%

0.30%

6.82%

22.78%

(1)

Investment securities and loans that are subject to prepayment are shown in the table by the
earlier of their re-pricing date or their expected repayment date and not by their contractual
maturity date. Nonaccrual loans of $100.4 million are included within the three to twelve
month maturity category.

(2) Management considers interest bearing transaction accounts and savings accounts to be
core deposits and, therefore, not as rate sensitive as other deposit accounts and borrowed
money. Accordingly, only 52% of interest bearing transaction accounts and 30% of savings
accounts are considered to re-price within one year. If all of the interest bearing transaction
accounts and savings accounts were considered to re-price within one year, the one-year
cumulative gap would change from a positive 8.46% to a negative 14.30%.

The interest rate sensitivity gap analysis provides an overall picture of Park’s
static interest rate risk position. At December 31, 2014, the cumulative interest
earning assets maturing or repricing within twelve months were $2,690 million
compared to the cumulative interest bearing liabilities maturing or repricing
within twelve months of $2,146 million. For the twelve-month cumulative gap
position, rate sensitive assets exceeded rate sensitive liabilities by $544 million
or 8.46% of interest earning assets.

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

The cumulative twelve-month interest rate sensitivity gap position at year-end
2013 was a positive $367 million or 6.05% of total interest earning assets. The
percentage of interest earning assets maturing or repricing within one year was
41.8% at year-end 2014, compared to 41.5% at year-end 2013. The percentage
of interest bearing liabilities maturing or repricing within one year was 43.2%
at year-end 2014, compared to 45.4% at year-end 2013.

Management supplements the interest rate sensitivity gap analysis with periodic
simulations of balance sheet sensitivity under various interest rate and what-if
scenarios to better forecast and manage the net interest margin. Park’s man -
agement uses an earnings simulation model to analyze net interest income
sensitivity to movements in interest rates. This model is based on actual cash
flows and repricing characteristics for balance sheet instruments and incor -
porates market-based assumptions regarding the impact of changing interest
rates on the prepayment rate of certain assets and liabilities. This model also
includes management’s projections for activity levels of various balance sheet
instruments and non-interest fee income and operating expense. Assumptions
based on the historical behavior of deposit rates and balances in relation to
changes in interest rates are also incorporated into this earnings simulation
model. These assumptions are inherently uncertain and, as a result, the model

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M A N A G E M E N T ’ S D I S C U S S I O N & A N A L Y S I S

cannot precisely measure net interest income and net income. Actual results
will differ from simulated results due to the timing, magnitude and frequency of
interest rate changes as well as changes in market conditions and management
strategies.

Management uses a 50 basis point change in market interest rates per quarter
for a total of 200 basis points per year in evaluating the impact of changing
interest rates on net interest income and net income over a twelve-month
horizon. At December 31, 2014, the earnings simulation model projected that
net income would increase by 1.3% using a rising interest rate scenario and
decrease by 7.1% using a declining interest rate scenario over the next year.
At December 31, 2013, the earnings simulation model projected that net
income would decrease by 1.4% using a rising interest rate scenario and
decrease by 10.3% using a declining interest rate scenario over the following
year. At December 31, 2012, the earnings simulation model projected that
net income would increase by 1.1% using a rising interest rate scenario and
decrease by 6.6% using a declining interest rate scenario over the following
year. Consistently, over the past several years, Park’s earnings simulation model
has projected that changes in interest rates would have only a small impact on
net income and the net interest margin. Park’s net interest margin was 3.55% in
2014, 3.61% in 2013 and 3.83% in 2012. A major goal of Park’s asset/liability
committee is to maintain a relatively stable net interest margin regardless of the
level of interest rates.

CONTRACTUAL OBLIGATIONS
In the ordinary course of operations, Park enters into certain contractual
obligations. Such obligations include the funding of operations through debt
issuances as well as leases for premises. The following table summarizes Park’s
significant and determinable obligations by payment date at December 31,
2014.

Further discussion of the nature of each specified obligation is included in
the referenced Note to the Consolidated Financial Statements.

Table 35 – Contractual Obligations

December 31, 2014

Payments Due In

(In thousands)

Note

0–1
Years

1–3
Years

3– 5
Years

Over 5
Years

Total

Deposits without
stated maturity

Certificates of deposit

Short-term borrowings

Long-term debt

Subordinated notes

Operating leases

Defined benefit pension

plan

Purchase obligations

Total contractual
obligations

$3,718,088 $

— $

— $3,718,088

823,230

399,886

186,293

276,980

—

502

—

51,000

377,000

200,382

176,161

—

— 45,000

1,143

1,314

815

252

6,282

3,884

13,138

14,880

46,850

—

1,409,911

276,980

804,543

45,000

3,524

81,150

3,884

$4,880,607 $791,338

$402,370 $268,765

$6,343,080

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

Commitments, Contingent Liabilities, and Off-Balance Sheet
Arrangements: In order to meet the financing needs of our customers,
the Corporation issues loan commitments and standby letters of credit. At
December 31, 2014, the Corporation had $885.1 million of loan commitments
for commercial, commercial real estate, and residential real estate loans and
had $12.5 million of standby letters of credit. At December 31, 2013, the
Corporation had $821.8 million of loan commitments for commercial,
commercial real estate, and residential real estate loans and had $20.6
million of standby letters of credit.

Commitments to extend credit under loan commitments and standby letters
of credit do not necessarily represent future cash requirements. These
commitments often expire without being drawn upon. However, all of the
loan commitments and standby letters of credit were permitted to be drawn
upon in 2014. See Note 21 of the Notes to Consolidated Financial Statements
for additional information on loan commitments and standby letters of credit.

The Corporation did not have any unrecorded significant contingent liabilities
at December 31, 2014.

Capital: Park’s primary means of maintaining capital adequacy is through
retained earnings. At December 31, 2014, the Corporation’s total shareholders’
equity was $698.6 million, compared to $651.7 million at December 31, 2013.
Total shareholders’ equity at December 31, 2014 was 9.98% of total assets,
compared to 9.82% of total assets at December 31, 2013.

Tangible shareholders’ equity [total shareholders’ equity ($698.6 million)
less goodwill and other intangible assets ($72.3 million)] was $626.3 million
at December 31, 2014 and was $579.4 million at December 31, 2013. At
December 31, 2014, tangible shareholders’ equity was 9.04% of total tangible
assets [total assets ($7,003 million) less goodwill and other intangible assets
($72.3 million)], compared to 8.82% at December 31, 2013.

Net income was $84.1 million in 2014, $77.2 million in 2013 and $78.6 million
in 2012.

Preferred share dividends paid as a result of Park’s participation in the CPP
were $1.6 million in 2012. Accretion of the discount on the Series A Preferred
Shares was $1,854,000 in 2012. As mentioned previously, Park repurchased
the Series A Preferred Shares on April 25, 2012. Income available to common
shareholders is net income less the preferred share dividends and accretion.
Income available to common shareholders was $84.1 million in 2014, $77.2
million in 2013, and $75.2 million in 2012.

Cash dividends declared for common shares were $57.9 million in each of
2014, 2013, and 2012. On a per share basis, the cash dividends declared were
$3.76 per share in each of 2014, 2013 and 2012.

Park repurchased 29,700 common shares for treasury in 2014, repurchased
10,550 common shares for treasury in 2013, and did not purchase any treasury
shares during 2012. Common shares held in treasury had a balance of $77.4
million at December 31, 2014, $76.1 million at December 31, 2013, and $76.4
million at December 31, 2012. During 2014, the value of common shares held
in treasury was reduced by $1.0 million as a result of the issuance of an aggre-
gate of 10,200 common shares to directors of Park and to the directors of
Park’s bank subsidiary PNB (and its divisions), and increased by $2.4 million
due to the repurchase of 29,700 common shares for treasury. During 2013,
the value of common shares held in treasury was reduced by $1.1 million as
a result of the issuance of an aggregate of 10,550 common shares to directors
of Park and to the directors of Park’s bank subsidiary PNB (and its divisions),
and increased by $0.8 million due to the repurchase of 10,550 common shares
held in treasury. During 2012, the value of common shares held in treasury
was reduced by $632,000 as a result of the issuance of an aggregate of 6,120
common shares to directors of Park and to the directors of Park’s bank
subsidiary PNB (and its divisions).

Park did not issue any new common shares (that it had not already held as
treasury shares in any of 2014, 2013 or 2012). Common shares had a balance
of $303.1 million at December 31, 2014, and $302.7 million at each of
December 31, 2013 and 2012.

PNC_AR2014_final 2/18/15 7:56 AM Page 23

M A N A G E M E N T ’ S D I S C U S S I O N & A N A L Y S I S

SELECTED FINANCIAL DATA

Table 36 – Consolidated Five-Year Selected Financial Data

December 31,
(Dollars in thousands,
except per share data)

Results of operations:

Interest income
Interest expense
Net interest income
(Recovery of)

provision for loan
losses

Net interest income
after (recovery of)
provision for
loan losses
Gain on sale of

Vision business (1)
Non-interest income
Non-interest expense
Net income
Net income available

to common
shareholders
Per common share:

Net income per common

share – basic

Net income per common

share – diluted

Cash dividends declared

Average balances:

Loans
Investment securities
Money market

instruments and other

Total earning

assets

Non-interest bearing

deposits

Interest bearing

deposits

2014

2013

2012

2011

2010

$ 265,143 $ 262,947 $ 285,735 $ 331,880 $ 345,517
71,473
274,044

41,922
221,025

50,420
235,315

40,099
225,044

58,646
273,234

(7,333)

3,415

35,419

63,272

87,080

232,377

217,610

199,896

209,962

186,964

—
75,549
195,234
84,090

—
73,277
188,529
77,227

22,167
70,236
187,968
78,630

—
94,910
188,317
82,140

—
74,880
187,107
58,101

84,090

77,227

75,205

76,284

52,294

5.46

5.46
3.76

5.01

5.01
3.76

4.88

4.88
3.76

4.95

4.95
3.76

3.45

3.45
3.76

4,717,297
1,432,692

4,514,781
1,377,887

4,410,661
1,613,131

4,713,511
1,848,880

4,642,478
1,746,356

204,874

272,851

166,319

78,593

93,009

6,354,863

6,165,519

6,190,111

6,640,984

6,481,843

1,196,625

1,117,379

1,048,796

999,085

907,514

3,820,928

3,742,361

3,786,601

4,193,404

4,274,501

Total deposits

5,017,553

4,859,740

4,835,397

5,192,489

5,182,015

Short-term borrowings
Long-term debt
Shareholders’ equity
Common shareholders’

equity
Total assets

Ratios:

Return on average

assets (x)

$263,270 $ 253,123 $ 258,661 $ 297,537 $ 300,939
725,356
907,704
867,615
746,510
689,732
682,455

881,921
743,873

870,538
645,533

682,455
6,895,308

645,533
6,702,973

658,855
6,766,806

646,169
7,206,171

649,637
7,042,705

1.22%

1.15%

1.11%

1.06%

0.74%

Return on average

common equity (x)
Net interest margin (2)
Efficiency ratio (2)
Dividend payout ratio (3)
Average shareholders’
equity to average
total assets
Leverage capital
Tier 1 capital
Risk-based capital

12.32%
3.55%
64.77%
68.91%

9.90%
9.25%
13.39%
15.14%

11.96%
3.61%
63.78%
75.04%

9.63%
9.48%
13.27%
15.91%

11.41%
3.83%
57.07%
73.68%

10.19%
9.17%
13.12%
15.77%

11.81%
4.14%
55.18%
70.50%

10.32%
9.81%
14.15%
16.65%

8.05%
4.26%
55.18%
109.14%

10.60%
9.54%
13.24%
15.71%

(1) The Vision business was sold on February 16, 2012 for a gain on sale of $22.2 million.

(2) Computed on a fully taxable equivalent basis.

(3) Cash dividends paid divided by net income.

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

Accumulated other comprehensive loss (net) was $13.6 million at December
31, 2014, compared to $35.4 million at December 31, 2013, and $17.5 million
at December 31, 2012. During the 2012 year, the change in net unrealized
holding gain (loss) on securities available for sale, net of tax, was a loss of $3.1
million and Park did not realize any after-tax gains, resulting in an unrealized
gain on securities available for sale of $9.6 million at December 31, 2012.
During the 2013 year, the change in net unrealized holding gain (loss) on
securities available for sale, net of tax, was a loss of $39.4 million and Park
did not realize any after-tax gains, resulting in an unrealized loss on securities
available for sale of $29.8 million at December 31, 2013. During the 2014 year,
the change in net unrealized holding gain (loss) on securities available for
sale, net of tax, was a gain of $31.1 million. In addition, Park recognized other
compre hensive gain of $0.6 million in 2012 due to the mark-to-market of a
cash flow hedge at December 31, 2012. Finally, Park recognized other com -
prehensive loss of $9.3 million, net of tax, related to the change in pension
plan assets and benefit obligations in 2014, compared to a gain of $21.5
million, net of tax, in 2013, and a loss of $6.2 million, net of tax, in 2012.

Financial institution regulators have established guidelines for minimum capital
ratios for banks, thrifts and bank holding companies. Park’s accumulated other
comprehensive income (loss) is not included in computing regulatory capital.
The minimum leverage capital ratio (defined as shareholders’ equity less intan-
gible assets divided by tangible assets) at December 31, 2014 was 4%. Park’s
leverage capital ratio was 9.25% at December 31, 2014 and exceeded the
minimum capital required by $371 million. The minimum Tier 1 risk-based
capital ratio (defined as leverage capital divided by risk-adjusted assets) at
December 31, 2014 was 4%. Park’s Tier 1 risk-based capital ratio was 13.39%
at December 31, 2014 and exceeded the minimum capital required by $459
million. The minimum total risk-based capital ratio (defined as leverage
capital plus supplemental capital divided by risk-adjusted assets) at December
31, 2014 was 8%. Park’s total risk-based capital ratio was 15.14% at December
31, 2014 and exceeded the minimum capital required by $349 million.

PNB, the only financial institution subsidiary of Park, met the well capitalized
ratio guidelines at December 31, 2014. See Note 24 of the Notes to
Consolidated Financial Statements for the capital ratios for Park and PNB.

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

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

PNC_AR2014_final 2/18/15 7:56 AM Page 24

M A N A G E M E N T ’ S D I S C U S S I O N & A N A L Y S I S

The following table is a summary of selected quarterly results of operations for
the years ended December 31, 2014 and 2013.

Table 37 – Quarterly Financial Data

(Dollars in thousands,
except share data)

March 31

Three Months Ended
Sept. 30
June 30

Dec. 31

2014:

Interest income
Interest expense
Net interest income
(Recovery of) provision for

loan losses

Income before
income taxes

Net income

Per common share data:

Net income per common

share – basic

Net income per common

share – diluted

Weighted-average common
shares outstanding – basic
Weighted-average common
shares equivalent – diluted

2013:

Interest income
Interest expense
Net interest income
Provision for (recovery of)

loan losses
Income before
income taxes

Net income
Per common share data:

Net income per common

share – basic

Net income per common

share – diluted

Weighted-average common
shares outstanding – basic
Weighted-average common
shares equivalent – diluted

$64,342

$66,363

$66,622

$67,816

9,862

54,480

9,802

56,561

9,913

56,709

10,522

57,294

(2,225)

(1,260)

4,501

(8,349)

25,655

19,619

29,296

21,827

24,701

18,303

33,040

24,341

1.27

1.42

1.19

1.58

15,401,105

15,392,435

15,392,421

15,393,924

15,414,897

15,412,167

15,413,664

15,414,433

$66,192
10,739
55,453

$65,279
10,567
54,712

$65,410
10,450
54,960

$66,066
10,166
55,900

329

673

2,498

(85)

27,831
20,710

26,767
20,034

25,143
19,029

22,617
17,454

1.34

1.30

1.23

1.13

15,411,990

15,411,981

15,411,972

15,413,517

15,411,990

15,411,981

15,411,972

15,413,517

The Corporation’s common shares (symbol: PRK) are traded on NYSE MKT LLC.
At December 31, 2014, the Corporation had 3,922 shareholders of record. The
following table sets forth the high, low and closing sale prices of, and dividends
declared on the common shares for each quarterly period for the years ended
December 31, 2014 and 2013, as reported by NYSE MKT LLC.

Table 38 – Market and Dividend Information

2014:

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

2013:

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

High

Low

Last
Price

$ 86.78

$ 75.06

$ 76.89

83.32

79.77

89.84

70.51

72.87

74.00

77.20

75.42

88.48

$ 70.31

$ 64.79

$ 69.79

72.00

81.49

86.00

66.00

68.89

76.53

68.79

79.08

85.07

Cash
Dividend
Declared
Per Share

$0.94

0.94

$0.94

0.94

PERFORMANCE GRAPH
Table 39 compares the total return performance for Park common shares with
the NYSE MKT Composite Index, the NASDAQ Bank Stocks Index and the SNL
Financial Bank and Thrift Index for the five-year period from December 31,
2009 to December 31, 2014. The NYSE MKT Composite Index is a market
capitalization-weighted index of the stocks listed on NYSE MKT. The NASDAQ
Bank Stocks Index is comprised of all depository institutions, holding com -
panies and other investment companies that are traded on The NASDAQ
Global Select and Global Markets. Park considers a number of bank holding
companies traded on The NASDAQ Global Select Market to be within our peer
group. The SNL Financial Bank and Thrift Index is comprised of all publicly-
traded bank and thrift stocks researched by SNL Financial.

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

250

225

200

175

e
u
a
V
x
e
d
n
I

150

125

100

12/31/09

12/31/10

12/31/11

12/31/12

12/31/13

12/31/14

Table 39 – Total Return Performance

PERIOD ENDING

Index

12/31/09

12/31/10

12/31/11

12/31/12

12/31/13

12/31/14

Park National Corporation

NYSE MKT Composite

NASDAQ Bank Stocks

100.00

SNL Financial Bank and Thrift

100.00

131.05

125.60

114.16

111.64

124.99

133.49

102.17

86.81

131.31

142.32

121.26

116.57

181.78

151.80

171.86

159.61

198.55

157.50

180.31

178.18

The total return for Park’s common shares has outperformed the total return of
the NASDAQ Bank Stocks Index and the SNL Financial Bank and Thrift Index for
the five-year period indicated in Table 39. The annual compound total return on
Park’s common shares for the past five years was a positive 14.7%. By compari-
son, the annual compound total returns for the past five years on the NYSE MKT
Composite Index, the NASDAQ Bank Stocks Index and the SNL Financial Bank
and Thrift Index were a positive 9.5%, a positive 12.5% and a positive 12.2%,
respectively.

PNC_AR2014_final 2/18/15 7:56 AM Page 25

M A N A G E M E N T ’ S R E P O R T O N

I N T E R N A L C O N T R O L

O V E R F I N A N C I A L R E P O R T I N G

To the Board of Directors and Shareholders
Park National Corporation

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

a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions

and dispositions of the assets of the Corporation and its consolidated subsidiaries;

b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial

statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures
of the Corporation and its consolidated subsidiaries are being made only in accordance with authorizations of
management and directors of the Corporation; and

c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or

disposition of the assets of the Corporation and its consolidated subsidiaries that could have a material effect
on the financial statements.

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

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

With the participation of our Chairman of the Board, our Chief Executive Officer and President and our Chief Financial
Officer, management evaluated the effectiveness of the Corporation’s internal control over financial reporting as of
December 31, 2014, the end of the Corporation’s fiscal year. In making this assessment, management used the criteria
set forth for effective internal control over financial reporting by the Committee of Sponsoring Organizations of the
Treadway Commission’s (COSO) 1992 Internal Control – Integrated Framework.

Based on our assessment under the criteria described in the preceding paragraph, management concluded that the
Corporation maintained effective internal control over financial reporting as of December 31, 2014.

The Corporation’s independent registered public accounting firm, Crowe Horwath LLP, has audited the Corporation’s
2014 and 2013 consolidated financial statements included in this Annual Report and the Corporation’s internal control
over financial reporting as of December 31, 2014, and has issued their Report of Independent Registered Public
Accounting Firm, which appears in this Annual Report.

David L. Trautman
Chief Executive Officer and President

Brady T. Burt
Chief Financial Officer, Secretary and Treasurer

C. Daniel DeLawder
Chairman of the Board

February 24, 2015

PNC_AR2014_final 2/18/15 7:56 AM Page 26

R E P O R T O F

I N D E P E N D E N T

R E G I S T E R E D P U B L I C A C C O U N T I N G F I R M

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

We have audited the accompanying consolidated balance sheets of Park National Corporation as of December 31, 2014 and
2013 and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows
for each of the three years in the period ended December 31, 2014. We also have audited Park National Corporation’s internal
control over financial reporting as of December 31, 2014, based on criteria established in the 1992 Internal Control –
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Park
National Corporation’s management is responsible for these financial statements, for maintaining effective internal control
over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion
on these financial statements and an opinion on the company’s internal control over financial reporting based on our audits.

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

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

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of Park National Corporation as of December 31, 2014 and 2013, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2014, in conformity with accounting principles generally accepted
in the United States of America. Also in our opinion, Park National Corporation maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2014, based on criteria established in the 1992 Internal Control –
Integrated Framework issued by the COSO.

Crowe Horwath LLP

Columbus, Ohio
February 24, 2015

PNC_AR2014_final 2/18/15 7:56 AM Page 27

C O N S O L I D A T E D B A L A N C E S H E E T S

PARK NATIONAL CORPORATION AND SUBSIDIARIES
at December 31, 2014 and 2013 (In thousands, except share and per share data)

ASSETS

Cash and due from banks

Money market instruments

Cash and cash equivalents

Investment securities:

Securities available-for-sale, at fair value (amortized cost of $1,299,980

and $1,222,143 at December 31, 2014 and 2013, respectively)

Securities held-to-maturity, at amortized cost (fair value of $143,490
and $187,402 at December 31, 2014 and 2013, respectively)

Other investment securities

Total investment securities

Total loans

Allowance for loan losses

Net loans

Other assets:

Bank owned life insurance

Goodwill

Premises and equipment, net

Accrued interest receivable

Other real estate owned

Mortgage loan servicing rights

Other

Total other assets

Total assets

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

2014

$ 133,511

104,188

237,699

1,301,915

140,562

58,311

1,500,788

4,829,682

(54,352)

4,775,330

171,928

72,334

55,479

17,677

22,605

8,613

140,803

489,439

2013

$ 129,078

17,952

147,030

1,176,266

182,061

65,907

1,424,234

4,620,505

(59,468)

4,561,037

169,284

72,334

55,278

18,335

34,636

9,013

147,166

506,046

$7,003,256

$6,638,347

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C O N S O L I D A T E D B A L A N C E S H E E T S

(CONTINUED)

PARK NATIONAL CORPORATION AND SUBSIDIARIES
at December 31, 2014 and 2013 (In thousands, except share and per share data)

LIABILITIES AND SHAREHOLDERS’ EQUITY

Deposits:

Non-interest bearing

Interest bearing

Total deposits

Short-term borrowings

Long-term debt

Subordinated notes

Total borrowings

Other liabilities:

Accrued interest payable

Other

Total other liabilities

Total liabilities

COMMITMENTS AND CONTINGENCIES

Shareholders’ equity:

Preferred shares (200,000 shares authorized; no shares outstanding

at December 31, 2014 and 2013)

Common shares, no par value (20,000,000 shares authorized;

16,150,888 and 16,150,941 shares issued at
December 31, 2014 and 2013, respectively)

Accumulated other comprehensive loss, net

Retained earnings

Less: Treasury shares (758,489 and 738,989 shares
at December 31, 2014 and 2013, respectively)

Total shareholders’ equity

2014

$1,269,296

3,858,704

5,128,000

276,980

786,602

45,000

1,108,582

2,551

65,525

68,076

6,304,658

—

303,104

(13,608)

486,541

(77,439)

698,598

2013

$1,193,553

3,596,441

4,789,994

242,029

810,541

80,250

1,132,820

2,901

60,885

63,786

5,986,600

—

302,651

(35,419)

460,643

(76,128)

651,747

Total liabilities and shareholders’ equity

$7,003,256

$6,638,347

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

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C O N S O L I D A T E D S T A T E M E N T S O F

I N C O M E

PARK NATIONAL CORPORATION AND SUBSIDIARIES
for the years ended December 31, 2014, 2013 and 2012 (In thousands, except per share data)

Interest and dividend income:
Interest and fees on loans

Interest and dividends on:

Obligations of U.S. Government, its agencies

and other securities

Obligations of states and political subdivisions

Other interest income

Total interest and dividend income

Interest expense:

Interest on deposits:

Demand and savings deposits

Time deposits

Interest on short-term borrowings

Interest on long-term debt

Total interest expense

Net interest income

(Recovery of) Provision for loan losses

Net interest income after (recovery of)

provision for loan losses

Other income:

Income from fiduciary activities

Service charges on deposit accounts

Other service income

Checkcard fee income

Bank owned life insurance income

ATM fees

Gain on sale of OREO, net

OREO devaluations

Gain on sale of loans held for sale

Gain on sale of Vision Bank business

Loss on sale of investment securities

Miscellaneous

Total other income

2014

2013

2012

$227,644

$225,538

$234,638

36,981

515

265,143

1,677

9,323

517

28,582

40,099

225,044

(7,333)

232,377

19,150

15,423

10,459

13,570

4,861

2,467

5,503

(2,406)

1,867

—

(1,158)

5,813

$ 75,549

36,686

678

262,947

1,773

11,235

544

28,370

41,922

221,025

3,415

217,610

17,133

16,316

12,913

12,955

5,041

2,632

3,110

(3,180)

—

6,357

$ 73,277

50,549

140

408

285,735

2,483

15,921

678

31,338

50,420

235,315

35,419

199,896

15,947

16,704

13,631

12,541

4,754

2,359

4,414

(6,872)

—

22,167

—

6,758

$ 92,403

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

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C O N S O L I D A T E D S T A T E M E N T S O F

I N C O M E

(CONTINUED)

PARK NATIONAL CORPORATION AND SUBSIDIARIES
for the years ended December 31, 2014, 2013 and 2012 (In thousands, except per share data)

Other expense:

Salaries and employee benefits

Data processing fees

Professional fees and services

Net occupancy expense of bank premises

Amortization of intangibles

Furniture and equipment expense

Insurance

Marketing

Postage and telephone

State taxes

Loan put provision

OREO expense

Amortization of investment in qualified

affordable housing projects

Miscellaneous

Total other expense

Income before income taxes

Federal income taxes

Net income

Preferred share dividends and accretion

Income available to common shareholders

Earnings per common share:

Basic

Diluted

2014

2013

2012

$101,968

$100,298

$ 95,977

4,712

29,580

10,006

—

11,571

5,723

4,371

5,268

2,290

—

2,063

7,724

9,958

195,234

112,692

28,602

$ 84,090

—

$ 84,090

$5.46

4,174

27,865

9,804

337

11,249

5,205

3,790

5,790

3,702

—

2,731

7,014

6,570

188,529

102,358

25,131

$ 77,227

—

$ 77,227

$5.01

3,916

24,267

9,444

2,172

10,788

5,780

3,474

5,983

3,786

3,299

4,011

6,841

8,230

187,968

104,331

25,701

$ 78,630

3,425

$ 75,205

$4.88

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

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C O N S O L I D A T E D S T A T E M E N T S O F

C O M P R E H E N S I V E

I N C O M E

PARK NATIONAL CORPORATION AND SUBSIDIARIES
for the years ended December 31, 2014, 2013 and 2012 (In thousands)

Net income

Other comprehensive income (loss), net of tax:

Defined benefit pension plan:

Amortization of net loss and prior service costs,
net of income taxes of $7, $953 and $605 for
the years ended December 31, 2014, 2013 and
2012, respectively

Unrealized net actuarial (loss) gain, net of income taxes

of $(4,997), $10,643 and $(3,933) for the years ended
December 31, 2014, 2013 and 2012, respectively

Change in funded status of pension plan, net of income taxes

Unrealized net holding gain on cash flow hedge, net of

income taxes of $296 for the year ended December 31, 2012

Securities available-for-sale:

Net loss realized on sale of securities, net of income taxes

of $405 for the year ended December 31, 2014

Other than temporary impairment realized on securities,
net of income taxes of $6 and $19 for the years ended
December 31, 2013 and 2012, respectively

Change in unrealized securities holding gain (loss), net of income
taxes of $16,329, $(21,242) and $(1,664) for the years ended
December 31, 2014, 2013 and 2012, respectively

Unrealized net holding (loss) on securities available-for-sale,

net of income taxes

Other comprehensive income (loss)

Comprehensive income

2014

$ 84,090

2013

$ 77,227

2012

$78,630

(9,279)

(9,267)

—

753

—

30,325

31,078

$ 21,811

$105,901

1,770

19,766

21,536

—

(39,448)

(39,437)

$(17,901)

$ 59,326

1,123

(7,303)

(6,180)

550

—

(3,092)

(3,057)

$ (8,687)

$69,943

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

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C O N S O L I D A T E D S T A T E M E N T S O F

C H A N G E S

I N S H A R E H O L D E R S ’

E Q U I T Y

PARK NATIONAL CORPORATION AND SUBSIDIARIES
for the years ended December 31, 2014, 2013 and 2012 (In thousands, except share and per share data)

Preferred Shares

Common Shares

Balance, January 1, 2012

Net income
Other comprehensive loss, net of tax
Cash dividends, $3.76 per share
Cash payment for fractional shares
in dividend reinvestment plan
Common share warrants redeemed
Preferred shares redeemed
Accretion of discount on preferred shares
Preferred share dividends
Treasury shares reissued for director grants

Shares
Outstanding

100,000

Amount

$ 98,146

(100,000)

(100,000)
1,854

Accumulated
Other
Comprehensive
Income (Loss)

Total

Shares
Outstanding

Amount

Retained
Earnings

Treasury
Shares

15,405,912

$305,499

$424,557

$ (77,007)

$ (8,831)

$742,364

—

(34)

6,120

—

(2)
(2,843)

78,630

(57,932)

—

(1,854)
(1,571)
(225)

—

632

—
(8,687)
—

—

78,630
(8,687)
(57,932)

(2)
(2,843)
(100,000)
—
(1,571)
407

Balance, December 31, 2012

—

15,411,998

$302,654

$441,605

$ (76,375)

$ (17,518)

$650,366

Net income
Other comprehensive loss, net of tax
Cash dividends, $3.76 per share
Cash payment for fractional shares
in dividend reinvestment plan

Treasury shares repurchased
Treasury shares reissued for director grants

—

(46)
(10,550)
10,550

—

(3)

77,227

(57,949)

—

(240)

—
(17,901)
—

—

—
(843)
1,090

77,227
(17,901)
(57,949)

(3)
(843)
850

Balance, December 31, 2013

—

15,411,952

$302,651

$460,643

$ (76,128)

$ (35,419)

$651,747

Net income
Other comprehensive income, net of tax
Cash dividends, $3.76 per share
Cash payment for fractional shares
in dividend reinvestment plan
Share based compensation expense
Treasury shares repurchased
Treasury shares reissued for director grants

—

(53)

(29,700)
10,200

—

(5)
458

84,090

(57,949)

—

(243)

—

(2,355)
1,044

—
21,811
—

—

84,090
21,811
(57,949)

(5)
458
(2,355)
801

Balance, December 31, 2014

—

15,392,399

$303,104

$486,541

$ (77,439)

$ (13,608)

$698,598

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

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C O N S O L I D A T E D S T A T E M E N T S

O F C A S H F L O W S

PARK NATIONAL CORPORATION AND SUBSIDIARIES
for the years ended December 31, 2014, 2013 and 2012 (In thousands)

Operating activities:

Net income

Adjustments to reconcile net income to net cash

provided by operating activities:

(Recovery of) provision for loan losses

Loan put provision

Amortization of loan fees and costs, net

Provision for depreciation

Other than temporary impairment on investment securities

Amortization of intangible assets

Accretion of investment securities

Amortization of prepayment penalty on long-term debt

Deferred income tax

Realized net investment security losses

Share-based compensation expense

Loan originations to be sold in secondary market

Proceeds from sale of loans in secondary market

Gain on sale of loans in secondary market

Proceeds from sale of loans held for sale

Gain on sale of loans held for sale

OREO devaluations

Gain on sale of OREO, net

Proceeds from the sale of OREO

Bank owned life insurance income

Changes in assets and liabilities:

(Increase) Decrease in other assets

Decrease in other liabilities

Net cash provided by operating activities

2014

2013

2012

$ 84,090

$ 77,227

$ 78,630

(7,333)

—

4,160

7,243

—

(213)

5,031

1,563

1,158

1,259

(136,125)

135,209

(2,682)

20,966

(1,867)

2,406

(5,503)

27,798

(4,861)

(23,200)

13,629

122,728

3,415

—

3,611

7,315

337

(33)

4,835

(2,456)

—

850

(317,534)

345,704

(4,093)

—

3,180

(3,110)

23,043

(5,041)

6,818

1,676

145,761

35,419

3,299

2,119

6,954

2,172

(239)

—

12,717

—

407

(442,890)

434,489

(5,807)

—

6,872

(4,414)

26,988

(4,754)

(14,171)

954

138,799

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

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C O N S O L I D A T E D S T A T E M E N T S

O F C A S H F L O W S

(CONTINUED)

PARK NATIONAL CORPORATION AND SUBSIDIARIES
for the years ended December 31, 2014, 2013 and 2012 (In thousands)

Investing activities:

Proceeds from redemption of Federal Home Loan Bank stock

Proceeds from sales of securities

Proceeds from calls and maturities of securities:

Held-to-maturity

Available-for-sale

Purchase of securities:
Held-to-maturity

Available-for-sale

Net (increase) decrease in other investments

Net loan originations, portfolio loans

Sales of assets/liabilities related to Vision Bank

Investments in qualified affordable housing projects

Purchases of bank owned life insurance, net

Purchases of premises and equipment, net

Net cash used in investing activities

Financing activities:

Net increase in deposits

Net increase (decrease) in short-term borrowings

Proceeds from issuance of subordinated notes

Proceeds from long-term debt

Repayment of subordinated notes

Repayment of long-term debt

Cash payment for repurchase of common share warrant

from U.S. Treasury

Repurchase of preferred shares from U.S. Treasury

Repurchase of treasury shares

Cash dividends paid

Net cash provided by (used in) financing activities

Increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Cash paid for:
Interest

Income taxes

Non cash items:

Loans transferred to OREO

Loans transferred to held for sale

2014

$ 8,946

173,123

41,436

99,092

—

(350,934)

(1,350)

(234,017)

—

(9,417)

—

(7,444)

(280,565)

338,006

34,951

—

125,000

(35,250)

(153,970)

—

(2,355)

(57,876)

248,506

90,669

147,030

$ 237,699

$ 40,449

$ 27,810

$ 12,780

$ 21,985

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

2013

—

75,000

219,329

385,259

—

(582,728)

—

(212,311)

—

(8,222)

(4,600)

(8,842)

(137,115)

73,962

(102,139)

—

75,000

—

(50,952)

—

(843)

(57,949)

(62,921)

(54,275)

201,305

$ 147,030

$ 42,481

$ 20,000

$ 22,144

—

2012

—

681,513

666,431

(262,679)

(964,704)

1,697

(186,740)

(144,436)

(9,964)

(2,500)

(6,964)

(228,346)

250,918

80,574

30,000

300,000

(25,000)

(340,129)

(2,843)

(100,000)

—

(60,154)

133,366

43,819

157,486

$ 201,305

$ 51,877

7,000

$ 23,634

—

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N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed in
the preparation of the consolidated financial statements:

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

Use of Estimates
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles (“GAAP”) requires management to make
estimates and assumptions that affect the amounts reported in the consolidated
financial statements and accompanying notes. Actual results could differ from
those estimates. Management has identified the allowance for loan losses,
accounting for Other Real Estate Owned (“OREO”), fair value accounting,
accounting for goodwill and accounting for pension plan and other post
retirement benefits as significant estimates.

Reclassifications
Certain prior year amounts have been reclassified to conform with the current
year presentation. Reclassifications had no effect on prior year net income or
shareholders’ equity.

Restrictions on Cash and Due from Banks
The Corporation’s national bank subsidiary is required to maintain average
reserve balances with the Federal Reserve Bank. The average required reserve
balance was approximately $40.3 million at December 31, 2014 and $48.0
million at December 31, 2013. No other compensating balance arrangements
were in existence at December 31, 2014.

Investment Securities
Investment securities are classified upon acquisition into one of three
categories: held-to-maturity (HTM), available-for-sale (AFS), or trading
(see Note 6 of these Notes to Consolidated Financial Statements).

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

AFS and HTM securities are evaluated quarterly for potential other-than-
temporary impairment. Management considers the facts related to each
security including the nature of the security, the amount and duration of the
loss, the credit quality of the issuer, the expectations for that security’s perform-
ance and whether Park intends to sell, or it is more likely than not that Park will
be required to sell, a security in an unrealized loss position before recovery of
its amortized cost basis. Declines in the value of equity securities that are con-
sidered to be other-than-temporary are recorded as a charge to earnings in the
Consolidated Statements of Income. Declines in the value of debt securities that
are considered to be other-than-temporary are separated into (1) the amount
of the total impairment related to credit loss and (2) the amount of the total
impairment related to all other factors. The amount of the total other-than-
temporary impairment related to the credit loss is recognized in earnings.
The amount of the total other-than-temporary impairment related to all other
factors is recognized in other comprehensive income.

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

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

Federal Home Loan Bank (FHLB) and Federal Reserve Bank (FRB) Stock
Park’s national bank subsidiary, The Park National Bank (PNB) is a member
of the FHLB. Additionally, PNB is a member of the FRB. Members are required
to own a certain amount of stock based on their level of borrowings and other
factors and may invest in additional amounts. FHLB stock and FRB stock are
classified as restricted securities and are carried at their redemption value
within other investment securities on the Consolidated Balance Sheets. Both
cash and stock dividends are reported as income.

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

Loans Held for Sale
Generally, loans held for sale are carried at the lower of cost or fair value.
Park has elected the fair value option for mortgage loans held for sale, which
are carried at their fair value.

Mortgage Banking Derivatives
Commitments to fund mortgage loans (interest rate locks) to be sold into the
secondary market and forward commitments for the future delivery of these
mortgage loans are accounted for as free standing derivatives. The fair values
of these mortgage derivatives are estimated based on changes in mortgage
interest rates from the date the interest rate on the loan is locked. The Company
enters into forward commitments for the future delivery of mortgage loans
when interest rate locks are entered into, in order to hedge the change in
interest rates resulting from its commitments to fund the loans. Changes in
the fair values of these derivatives are included in net gains on sale of loans.

Loans
Loans that management has the intent and ability to hold for the foreseeable
future or until maturity or payoff, are reported at their outstanding principal
balances adjusted for any charge-offs, any deferred fees or costs on originated
loans, and any unamortized premiums or discounts on purchased loans.
Interest income is reported on the interest method and includes amortization
of net deferred loan origination fees and costs over the loan term. Commercial
loans include: (1) commercial, financial and agricultural loans; (2) commer-
cial real estate loans; (3) those commercial loans in the real estate construction
loan segment; and (4) those commercial loans in the residential real estate
loan segment. Consumer loans include: (1) mortgage and installment loans
included in the real estate construction segment; (2) mortgage, home equity
lines of credit (HELOC), and installment loans included in the residential real
estate segment; and (3) all loans included in the consumer segment.

Generally, commercial loans are placed on nonaccrual status at 90 days past
due and consumer and residential mortgage loans are placed on nonaccrual
status at 120 days past due. Accrued interest on these loans is considered
a loss, unless the loan is well-secured and in the process of collection.
Commercial loans placed on nonaccrual status are considered impaired
(see Note 7 of these Notes to Consolidated Financial Statements). For loans
which are on nonaccrual status, it is Park’s policy to reverse interest previously
accrued on the loans against interest income. Interest on such loans may be
recorded on a cash basis and be included in earnings only when cash is actually
received. Park’s charge-off policy for commercial loans requires management
to establish a specific reserve or record a charge-off as soon as it is apparent
that the borrower is troubled and there is, or likely will be, a collateral shortfall
related to the estimated value of the collateral securing the loan. The Company’s
charge-off policy for consumer loans is dependent on the class of the loan.
Residential mortgage loans, HELOCs, and consumer loans secured by residen-
tial real estate are typically charged down to the value of the collateral, less
estimated selling costs, at 180 days past due. The charge-off policy for other

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N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

consumer loans, primarily installment loans, requires a monthly review of
delinquent loans and a complete charge-off for any account that reaches 120
days past due.

The delinquency status of a loan is based on contractual terms and not on how
recently payments have been received. Loans may be removed from nonaccrual
status when loan payments have been received to cure the delinquency status,
the borrower has demonstrated the ability to maintain current payment status in
accordance with the loan agreement and the loan is deemed to be well-secured
by management.

A description of each segment of the loan portfolio, along with the risk charac-
teristics of each segment, is included below:

Commercial, financial and agricultural: Commercial, financial and
agricultural loans are made for a wide variety of general corporate purposes,
including financing for commercial and industrial businesses, financing for
equipment, inventories and accounts receivable, acquisition financing and
commercial leasing. The term of each commercial loan varies by its purpose.
Repayment terms are structured such that commercial loans will be repaid
within the economic useful life of the underlying asset. The commercial loan
portfolio includes loans to a wide variety of corporations and businesses across
many industrial classifications in the 28 Ohio counties where PNB operates.
The primary industries represented by these customers include manufacturing,
retail trade, health care and other services.

Commercial real estate: Commercial real estate (“CRE”) loans include
mortgage loans to developers and owners of commercial real estate. The
lending policy for CRE loans is designed to address the unique risk attributes
of CRE lending. The collateral for these CRE loans is the underlying commercial
real estate.

Construction real estate: The Company defines construction loans as both
commercial construction loans and residential construction loans where the
loan proceeds are used exclusively for the improvement of real estate as to
which the Company holds a mortgage. Construction loans may be in the form
of a permanent loan or short-term construction loan, depending on the needs
of the individual borrower. Construction financing is generally considered to
involve a higher degree of risk of loss than long-term financing on improved,
occupied real estate. Risk of loss on a construction loan depends largely upon
the accuracy of the initial estimate of the property’s value at completion of
construction and the estimated cost (including interest) of construction. If
the estimate of construction cost proves to be inaccurate, the PNB division
making the loan may be required to advance funds beyond the amount origi-
nally committed to permit completion of the project. If the estimate of value
proves inaccurate, the PNB division may be confronted, at or prior to the
maturity of the loan, with a project having a value insufficient to assure full
repayment, should the borrower default. In the event that a default on a
construction loan occurs and foreclosure follows, the PNB division must
take control of the project and attempt to either arrange for completion of
construction or dispose of the unfinished project. Additional risk exists with
respect to loans made to developers who do not have a buyer for the property,
as the developer may lack funds to pay the loan if the property is not sold upon
completion. PNB and its divisions attempt to reduce such risks on loans to
developers by requiring personal guarantees and reviewing current personal
financial statements and tax returns as well as other projects undertaken by
the developer.

Residential real estate: The Company defines residential real estate loans
as first mortgages on individuals’ primary residences or second mortgages
of individuals’ primary residences in the form of HELOCs or installment loans.
Credit approval for residential real estate loans requires demonstration of suffi-
cient income to repay the principal and interest and the real estate taxes and
insurance, stability of employment, an established credit record and an
appraised value of the real estate securing the loan.

Consumer: The Company originates direct and indirect consumer loans,
primarily automobile loans and home equity based credit cards to customers
in its primary market areas. Credit approval for consumer loans requires
income sufficient to repay principal and interest due, stability of employment,
an established credit record and sufficient collateral for secured loans.
Consumer loans typically have shorter terms and lower balances with higher
yields as compared to real estate mortgage loans, but generally carry higher
risks of default. Consumer loan collections are dependent on the borrower’s
financial stability, and thus are more likely to be affected by adverse personal
circumstances.

Allowance for Loan Losses
The allowance for loan losses is that amount believed adequate to absorb
probable incurred credit losses in the loan portfolio based on management’s
evaluation of various factors. The determination of the allowance requires
significant estimates, including the timing and amounts of expected cash flows
on impaired loans, consideration of current economic conditions, and histori-
cal loss experience pertaining to pools of homogeneous loans, all of which may
be susceptible to change. The allowance is increased through a provision for
loan losses that is charged to earnings based on management’s quarterly eval -
uation of the factors previously mentioned and is reduced by charge-offs, net
of recoveries.

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

In calculating the allowance for loan losses, management believes it is appro-
priate to utilize historical loss rates that are comparable to the current period
being analyzed, giving consideration to losses experienced over a full cycle. For
the historical loss factor at December 31, 2014, the Company utilized an annual
loss rate (“historical loss experience”), calculated based on an average of the
net charge-offs and the annual change in specific reserves for impaired com-
mercial loans, experienced during 2009 through 2014 within the individual
segments of the commercial and consumer loan categories. Management
believes the 72-month historical loss experience methodology is appropriate
in the current economic environment, as it captures loss rates consistent with
current expectations based on current economic conditions. The loss factor
applied to Park’s consumer portfolio as of December 31, 2014 was based on
the historical loss experience over the past 72 months, plus an additional
judgmental reserve, increasing the total allowance for loan loss coverage in
the consumer portfolio to approximately 1.98 years of historical loss. The
consumer loan portfolio loss coverage ratio was 1.68 years at December
31, 2013. The loss factor applied to Park’s commercial portfolio as of
December 31, 2014 was based on the historical loss experience over the past
72 months, plus additional reserves for consideration of (1) a loss emergence
period factor, (2) a loss migration factor and (3) a judgmental or environmen-
tal loss factor. These additional reserves increased the total allowance for loan
loss coverage in the commercial portfolio to approximately 2.28 years of his -
torical loss at December 31, 2014. The commercial loan portfolio loss coverage
ratio was 2.42 years at December 31, 2013. Park’s commercial loans are indi-
vidually risk graded. If loan downgrades occur, the probability of default
increases and accordingly management allocates a higher percentage reserve
to those accruing commercial loans graded special mention and substandard.

The judgmental increases discussed above incorporate management’s evalu -
ation of the impact of environmental qualitative factors which pose additional
risks and assign a component of the allowance for loan losses in consideration
of these factors. Such environmental factors include: national and local
economic trends and conditions; experience, ability and depth of lending
management and staff; effects of any changes in lending policies and proce-
dures; and levels of, and trends in, consumer bankruptcies, delinquencies,
impaired loans and charge-offs and recoveries.

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GAAP requires a specific allocation to be established as a component of the
allowance for loan losses for certain loans when it is probable that all amounts
due pursuant to the contractual terms of the loans will not be collected, and
the recorded investment in the loans exceeds their measure of impairment.
Management considers the following related to commercial loans when
determining if a loan should be considered impaired: (1) current debt service
coverage levels of the borrowing entity; (2) payment history over the most
recent 12-month period; (3) other signs of deterioration in the borrower’s
financial situation, such as changes in credit scores; and (4) consideration of
global cash flows of financially sound guarantors that have previously supported
loan payments. The recorded investment is the carrying balance of the loan,
plus accrued interest receivable, both as of the end of the year. Impairment is
measured using either the present value of expected future cash flows based
upon the initial effective interest rate on the loan, the observable market price
of the loan, or the fair value of the collateral. If a loan is considered to be
collateral dependent, the fair value of collateral, less estimated selling costs,
is used to measure impairment.

Troubled Debt Restructuring (TDRs)
Management classifies loans as TDRs when a borrower is experiencing financial
difficulty and Park has granted a concession. In order to determine whether a
borrower is experiencing financial difficulty, an evaluation is performed of the
probability that the borrower will be in payment default on any of the bor-
rower’s debt in the foreseeable future without the modification. This evaluation
is performed under the Company’s internal underwriting policy. Management’s
policy is to modify loans by extending the term or by granting a temporary
or permanent contractual interest rate below the market rate, not by forgiving
debt. TDRs are separately identified for impairment disclosures and are meas-
ured at the present value of estimated future cash flows using the loan’s effective
rate at inception. If a TDR is considered to be a collateral dependent loan, the
loan is reported, net, at the fair value of the collateral.

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

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

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

Buildings
Equipment, furniture and fixtures
Leasehold improvements

30 Years
3 to 12 Years
1 to 10 Years

Other Real Estate Owned (OREO)
OREO is initially recorded at fair value less anticipated selling costs (net
realizable value), establishing a new cost basis, and consists of property
acquired through foreclosure and real estate held for sale. If the net realizable
value is below the carrying value of the loan at the date of transfer, the differ-
ence is charged to the allowance for loan losses. These assets are subsequently
accounted for at the lower of cost or fair value less costs to sell. Subsequent
changes in the value of real estate are classified as OREO valuation adjustments,
are reported as adjustments to the carrying amount of OREO and are recorded
within “Other income”. In certain circumstances where management believes
the devaluation may not be permanent in nature, Park utilizes a valuation
allowance to record OREO devaluations, which is also expensed through “Other
income”. Costs relating to development and improvement of such properties
are capitalized (not in excess of fair value less estimated costs to sell) and costs
relating to holding the properties are charged to “Other expense”.

Mortgage Loan Servicing Rights (MSR)
When Park sells mortgage loans with servicing rights retained, servicing rights
are recorded at an amount not to exceed fair value with the income statement
effect recorded in “Other service income”. Capitalized servicing rights are
amortized in proportion to and over the period of the estimated future servicing
income of the underlying loan and is included within “Other service income”.

Mortgage servicing rights are assessed for impairment periodically, based on
fair value, with any impairment recognized through a valuation allowance. The
fair value of mortgage servicing rights is determined by discounting estimated
future cash flows from the servicing assets, using market discount rates and
expected future prepayment rates. In order to calculate fair value, the sold loan
portfolio is stratified into homogeneous pools of like categories. (See Note 22
of these Notes to Consolidated Financial Statements.)

Fees received for servicing mortgage loans owned by investors are based on a
percentage of the outstanding monthly principal balance of such loans and are
included in income as loan payments are received. The cost of servicing loans
is charged to expense as incurred.

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

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

Management considers several factors when performing the annual impairment
tests on goodwill. The factors considered include the operating results for the
particular Park segment for the past year and the operating results budgeted for
the current year (including multi-year projections), the deposit and loan totals
of the Park segment and the economic conditions in the markets served by
the Park segment. At December 31, 2014, the goodwill remaining on Park’s
Consolidated Balance Sheet consisted entirely of goodwill at PNB. (See Note
25 of these Notes to Consolidated Financial Statements for operating segment
results.)

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GAAP requires a company to perform an impairment test on goodwill annually,
or more frequently if events or changes in circumstances indicate that the asset
might be impaired, by assessing qualitative factors to determine whether the
existence of events or circumstances leads to a determination that it is more
likely than not that the fair value of a reporting unit is less than its carrying
amount. If after assessing these events or circumstances, it is concluded that it
is not more likely than not that the fair value of a reporting unit is less than its
carrying amount, then performing the two-step impairment test is unnecessary.
If the carrying amount of the goodwill exceeds the fair value, an impairment
charge must be recorded in an amount equal to the excess.

Park evaluates goodwill for impairment on April 1 of each year, with financial
data as of March 31. Based on the analysis performed as of April 1, 2014, the
Company determined that goodwill for Park’s national bank subsidiary (PNB)
was not impaired. There have been no subsequent circumstances or events
triggering an additional evaluation.

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

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

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

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

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

Comprehensive Income
Comprehensive income consists of net income and other comprehensive
income (loss). Other comprehensive income (loss) includes unrealized gains
and losses on securities available for sale, changes in the funded status of the
Company’s Defined Benefit Pension Plan, and the unrealized net holding gains
and losses on the cash flow hedge that matured on December 28, 2012, which
are also recognized as separate components of equity.

Share-Based Compensation
Compensation cost is recognized for restricted stock units and stock awards
issued to employees and directors, based on the fair value of these awards
at the date of grant. The market price of Park’s common shares at the date
of grant is used to estimate the fair value of restricted stock units and stock
awards. Compensation cost is recognized over the required service period,
generally defined as the vesting period. (See Note 15 of these Notes to
Consolidated Financial Statements.)

Loan Commitments and Related Financial Instruments
Financial instruments include off-balance sheet credit instruments, such as
commitments to make loans and commercial letters of credit, issued to meet
customer financing needs. The face amount for these items represents the
exposure to loss, before considering customer collateral or ability to repay.
Such financial instruments are recorded when they are funded.

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

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

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

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Fair Value Measurement
Fair values of financial instruments are estimated using relevant market infor-
mation and other assumptions, as more fully disclosed in Note 23 of these Notes
to Consolidated Financial Statements. Fair value estimates involve uncertainties
and matters of significant judgment regarding interest rates, credit risk, prepay-
ments, and other factors, especially in the absence of broad markets for
particular items. Changes in assumptions or in market conditions could signifi-
cantly affect the estimates.

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

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

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

Operating Segments
The Corporation is a financial holding company headquartered in Newark,
Ohio. The operating segments for the Corporation are its chartered national
bank subsidiary, The Park National Bank (“PNB”) (headquartered in Newark,
Ohio), SE Property Holdings, LLC (“SEPH”), and Guardian Financial Services
Company (“GFSC”).

2. ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS
ASU 2013-11 – Income Taxes (Topic 740): Presentation of an
Unrecognized Tax Benefit When a Net Operating Loss Carryforward,
a Similar Tax Loss, or a Tax Credit Carryforward Exists: The ASU
requires that an unrecognized tax benefit, or a portion of an unrecognized tax
benefit, be presented in the financial statements as a reduction to a deferred
tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit
carryforward. However, if a net operating loss carryforward, a similar tax loss,
or a tax credit carryforward is not available at the reporting date under the tax
law of the applicable jurisdiction to settle any additional income taxes that
would result from the disallowance of a tax position or the tax law of the appli-
cable jurisdiction does not require the entity to use, and the entity does not
intend to use, the deferred tax asset for such purpose, the unrecognized tax
benefit should be presented in the financial statements as a liability and should
not be combined with deferred tax assets. The amendments are effective for
fiscal years, and interim periods within those years, beginning after December
15, 2013. The adoption of this guidance effective January 1, 2014 did not have
an impact on Park’s consolidated statements.

ASU 2014-01 – Investments—Equity Method and Joint Ventures
(Topic 323): Accounting for Investments in Qualified Affordable
Housing Projects (a consensus of the FASB Emerging Issues Task
Force): In January 2014, FASB issued Accounting Standards Update 2014-01,
Equity Method and Joint Ventures (Topic 323): Accounting for Investments
in Qualified Affordable Housing Projects (a consensus of the FASB Emerging
Issues Task Force). The ASU permits reporting entities to make an accounting
policy election to account for their investments in qualified affordable housing
projects using the proportional amortization method if certain conditions are
met. Under the proportional amortization method, an entity amortizes the initial
cost of the investment in proportion to the tax credits and other tax benefits
received and recognizes the net investment performance in the income state-
ment as a component of income tax expense. Additionally, a reporting entity
should disclose information that enables users of its financial statement to
understand the nature of its investments in qualified affordable housing proj-
ects, and the effect of the measurement of its investments in qualified affordable
housing projects and the related tax credits on its financial position and results
of operations. The new guidance is effective for annual periods, and interim
reporting periods within those annual periods, beginning after December 15,
2014. The adoption of this guidance will not have a material impact on Park’s
consolidated financial statements, but may impact the presentation of Park’s
investments in qualified affordable housing projects. Finally, the adoption of
this guidance will require additional disclosures.

ASU 2014-04 – Receivables—Troubled Debt Restructurings by
Creditors (Subtopic 310-40): Reclassification of Residential Real
Estate Collateralized Consumer Mortgage Loans upon Foreclosure
(a consensus of the FASB Emerging Issues Task Force): In January 2014,
FASB issued Accounting Standards Update 2014-04, Receivables—Troubled
Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of
Residential Real Estate Collateralized Consumer Mortgage Loans upon
Foreclosure (a consensus of the FASB Emerging Issues Task Force). The ASU
clarifies when an in substance repossession or foreclosure occurs and a credi-
tor is considered to have received physical possession of real estate property
collateralizing a consumer mortgage loan. Specifically, the new ASU requires
a creditor to reclassify a collateralized consumer mortgage loan to real estate
property upon obtaining legal title to the real estate collateral, or the borrower
voluntarily conveying all interest in the real estate property to the lender to
satisfy the loan through a deed in lieu of foreclosure or similar legal agreement.
Additional disclosures are required detailing the amount of foreclosed residen-
tial real estate property held by the creditor and the recorded investment in
consumer mortgages collateralized by real estate property that are in the
process of foreclosure. The new guidance is effective for annual periods,
and interim reporting periods within those annual periods, beginning after
December 15, 2014. The adoption of this guidance will not have a material
impact on Park’s consolidated financial statements, but will result in additional
disclosures.

ASU 2014-09 – Revenue from Contracts with Customers (Topic 606):
In May 2014, FASB issued Accounting Standards Update 2014-09, Revenue
from Contracts with Customers (Topic 606). The ASU creates a new topic,
Topic 606, to provide guidance on revenue recognition for entities that enter
into contracts with customers to transfer goods or services or enter into con-
tracts for the transfer of nonfinancial assets. The core principle of the guidance
is that an entity should recognize revenue to depict the transfer of promised
goods or services to customers in an amount that reflects the consideration to
which the entity expects to be entitled in exchange for those goods or services.
Additional disclosures are required to provide quantitative and qualitative infor-
mation regarding the nature, amount, timing, and uncertainty of revenue and
cash flows arising from contracts with customers. The new guidance is effective
for annual reporting periods, and interim reporting periods within those annual
periods, beginning after December 15, 2016. Early adoption is not permitted.
Management is currently evaluating the impact of the adoption of this guidance
on Park’s consolidated financial statements.

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ASU 2014-11 – Transfers and Servicing (Topic 860): Repurchase-
to-Maturity Transactions, Repurchase Financings, and Disclosures:
In June 2014, FASB issued Accounting Standards Update 2014-11, Transfers
and Servicing (Topic 860): Repurchase-to-Maturity Transactions,
Repurchase Financings, and Disclosures. The amendments in this ASU
change the accounting for repurchase-to-maturity transactions and linked
repurchase financings to secured borrowing accounting, which is consistent
with the accounting for other repurchase agreements. The amendments also
require two new disclosures. The first disclosure requires an entity to disclose
information on transfers accounted for as sales in transactions that are eco-
nomically similar to repurchase agreements. The second disclosure provides
increased transparency about the types of collateral pledged in repurchase
agreements and similar transactions accounted for as secured borrowings.
The accounting changes are effective for annual periods, and interim reporting
periods within those annual periods, beginning after December 15, 2014.
The disclosure for certain transactions accounted for as a sale is required to
be presented for interim and annual periods beginning after December 15,
2014, with all other disclosure requirements required to be presented for
annual periods beginning after December 15, 2014, and for interim periods
beginning after March 15, 2015. The adoption of this guidance will not have
a material impact on Park’s consolidated financial statements, but will result
in additional disclosures.

3. ORGANIZATION
Park National Corporation is a financial holding company headquartered in
Newark, Ohio. Through its national bank subsidiary, PNB, Park is engaged
in a general commercial banking and trust business, primarily in Ohio. PNB
operates through eleven banking divisions with the Park National Bank Division
headquartered in Newark, Ohio, the Fairfield National Bank Division head -
quartered in Lancaster, Ohio, The Park National Bank of Southwest Ohio &
Northern Kentucky Division headquartered in Cincinnati, Ohio, the First-Knox
National Bank Division headquartered in Mount Vernon, Ohio, the Farmers
Bank Division headquartered in Loudonville, Ohio, the Security National Bank
Division headquartered in Springfield, Ohio, the Unity National Bank Division
headquartered in Piqua, Ohio, the Richland Bank Division headquartered
in Mansfield, Ohio, the Century National Bank Division headquartered in
Zanesville, Ohio, the United Bank, N.A. Division headquartered in Bucyrus,
Ohio and the Second National Bank Division headquartered in Greenville,
Ohio. A wholly-owned subsidiary of Park, Guardian Financial Services
Company (“GFSC”) is a consumer finance company located in Central Ohio.

Through February 16, 2012, Park operated a second banking subsidiary,
Vision Bank (“Vision”), which was engaged in a general commercial banking
business, primarily in Baldwin County, Alabama and the panhandle of Florida.
Vision operated through two banking divisions with the Vision Bank Florida
Division headquartered in Panama City, Florida and the Vision Bank Alabama
Division headquartered in Gulf Shores, Alabama. Promptly following the sale
of the Vision business to Centennial, Vision surrendered its Florida banking
charter to the Florida Office of Financial Regulation and became a non-bank
Florida corporation. The Florida Corporation merged with and into a wholly-
owned, non-bank subsidiary of Park, SEPH, with SEPH being the surviving
entity. SEPH holds the remaining assets and liabilities retained by Vision sub -
sequent to the sale. SEPH also holds OREO that had previously been transferred
to SEPH from Vision. SEPH’s assets consist primarily of performing and nonper-
forming loans and OREO. This segment represents a run off portfolio of the
legacy Vision assets.

All of the Ohio-based banking divisions provide the following principal services:
the acceptance of deposits for demand, savings and time accounts; commercial,
industrial, consumer and real estate lending, including installment loans, credit
cards, home equity lines of credit; trust services; cash management; safe deposit
operations; electronic funds transfers and a variety of additional banking-
related services. Vision, with its two banking divisions, through February 16,
2012, provided the services mentioned above. See Note 25 of these Notes to
Consolidated Financial Statements for financial information on the
Corporation’s operating segments.

4. SALE OF VISION BANK BUSINESS
On February 16, 2012, Park and its wholly-owned subsidiary, Vision,
completed their sale of substantially all of the performing loans, operating
assets and liabilities associated with Vision to Centennial Bank (“Centennial”),
an Arkansas state-chartered bank which is a wholly-owned subsidiary of Home
BancShares, Inc. (“Home”), an Arkansas corporation, as contemplated by the
previously announced Purchase and Assumption Agreement by and between
Park, Vision, Home and Centennial, dated as of November 16, 2011, as
amended by the First Amendment to Purchase and Assumption Agreement,
dated as of January 25, 2012, and the Second Amendment to Purchase and
Assumption Agreement, dated as of April 30, 2012 (collectively, the “Vision
Purchase Agreement”) for a purchase price of $27.9 million.

Subsequent to the transactions contemplated by the Vision Purchase Agreement,
Vision was left with approximately $22 million of performing loans (including
mortgage loans held for sale) and non-performing loans with a fair value of
$88 million. Park recorded a pre-tax gain, net of expenses directly related
to the sale, of approximately $22.2 million, resulting from the transactions
contemplated by the Vision Purchase Agreement. The pre-tax gain, net of
expense is summarized in the table below:

(In thousands)

Premium paid
One-time gains
Loss on sale of fixed assets
Employment and severance agreements
Other one-time charges, including estimates

Pre-tax gain

$27,913
298
(2,434)
(1,610)
(2,000)

$22,167

As part of the transaction between Vision and Centennial, Park agreed to allow
Centennial to “put back” up to $7.5 million aggregate principal amount of
loans, which were originally included within the loans sold in the transaction.
The loan put option expired on August 16, 2012, 180 days after the closing
of the transaction, which was February 16, 2012. Prior to August 16, 2012,
Centennial notified Park of Centennial’s intent to put back approximately $7.5
million aggregate principal amount of loans. During 2012, Centennial put back
44 loans, totaling approximately $7.5 million. These 44 loans were recorded
on the books at a fair value of $4.2 million. The difference of $3.3 million was
written off against the loan put liability that had previously been established in
the first half of 2012.

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5. GOODWILL
The following table reflects the activity in goodwill and other intangible assets
for the years ended December 31, 2014, 2013 and 2012.

(In thousands)

January 1, 2012

Amortization

December 31, 2012

Amortization

December 31, 2013

Amortization

December 31, 2014

Goodwill

$ 72,334

Core Deposit
Intangibles

Total

$ 2,509

$ 74,843

—

(2,172)

$ 72,334

$ 337

$ 72,671

—

$ 72,334

—

$ 72,334

(337)

$ —
—

$ —

$ 72,334
—

$ 72,334

The core deposit intangibles were amortized to expense principally on the
straight-line method, over a period of six years. The amortization period for
the core deposit intangibles related to Vision Bank was accelerated in the
first quarter of 2012 due to the pending sale of the Vision Bank business to
Centennial Bank. Core deposit intangibles were fully amortized at December 31,
2013, and thus there was no amortization expense in 2014. Core deposit intan-
gible amortization expense was $337,000 in 2013 and $2.2 million in 2012.

6. INVESTMENT SECURITIES
The amortized cost and fair value of investment securities are shown in the
following table. Management performs a quarterly evaluation of investment
securities for any other-than-temporary impairment. During 2014, there were
no investment securities deemed to be other-than-temporarily impaired. During
2013 and 2012, Park recognized other-than-temporary impairment charges of
$17,000 and $54,000, respectively, related to an equity investment in a financial
institution.

Investment securities at December 31, 2014 and December 31, 2013 were
as follows:

Gross
Unrealized/
Unrecognized
Holding
Gains

Gross
Unrealized/
Unrecognized
Holding
Losses

Amortized
Cost

Estimated
Fair Value

$ 546,886

$ 8,833

$ 538,064

751,974
1,120

13,421
1,578

4,242
—

761,153
2,698

$1,299,980

$15,010

$13,075

$1,301,915

$ 140,562

$ 3,088

160

$ 143,490

$ 570,632

$ —

$45,496

$ 525,136

650,391
1,120

8,070
1,539

9,990
—

648,471
2,659

$1,222,143

$ 9,609

$55,486

$1,176,266

240

$ —

241

(In thousands)

2014:

Securities Available-for-Sale

Obligations of U.S.

Treasury and other
U.S. Government
sponsored entities

U.S. Government

sponsored entities’
asset-backed securities

Other equity securities

Total

2014:

Securities Held-to-Maturity

U.S. Government

sponsored entities’
asset-backed securities

Total

2013:

Securities Available-for-Sale

Obligations of U.S.

Treasury and other
U.S. Government
sponsored entities

U.S. Government

sponsored entities’
asset-backed securities

Other equity securities

Total

2013:

Securities Held-to-Maturity
Obligations of states and
political subdivisions

U.S. Government

sponsored entities’
asset-backed securities

Total

$ 182,061

$ 5,383

181,821

5,382

187,161

$ 187,402

Park’s U.S. Government sponsored entities’ asset-backed securities consisted
of 15-year mortgage-backed securities and collateralized mortgage obligations
(CMOs). At December 31, 2014, the amortized cost of Park’s available-for-sale
mortgage-backed securities was $387.1 million and there were no held-to-
maturity mortgage-backed securities within Park’s investment portfolio. At
December 31, 2014, the amortized cost of Park’s available-for-sale and held-
to-maturity CMOs was $364.9 million and $140.6 million, respectively.

The following table provides detail on investment securities with unrealized
losses aggregated by investment category and length of time the individual
securities had been in a continuous loss position at December 31, 2014
and December 31, 2013:

Less than 12 Months

12 Months or Longer

Total

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

$119,913

$388,140

$ 8,746

$508,053

$ 8,833

(In thousands)

2014:

Securities
Available-for-Sale

Obligations of U.S.

Treasury and other
U.S. Government
sponsored entities

U.S. Government

sponsored entities’
asset-backed
securities

Total

$193,189

73,276

136

223

170,430

4,106

243,706

4,242

$558,570

$12,852

$751,759

$13,075

2014:

Securities
Held-to-Maturity

U.S. Government

sponsored entities’
asset-backed
securities

2013:

Securities
Available-for-Sale

Obligations of U.S.

Treasury and other
U.S. Government
sponsored entities

U.S. Government

sponsored entities’
asset-backed
securities

$ 8,032

148

$ 2,714

$ 10,746

160

$377,626

$29,256

$147,510

$16,240

$525,136

$45,496

404,035

8,917

21,572

1,073

425,607

9,990

Total

$781,661

$38,173

$169,082

$17,313

$950,743

$55,486

2013:

Securities
Held-to-Maturity

U.S. Government

sponsored entities’
asset-backed
securities

$ 5,781

— $ — $ 5,781

Management does not believe any individual unrealized loss as of December 31,
2014 or 2013 represented an other-than-temporary impairment. The unrealized
losses on debt securities are primarily the result of interest rate changes. These
conditions will not prohibit Park from receiving its contractual principal and
interest payments on these debt securities. The fair value of these debt securities
is expected to recover as payments are received on these securities and they
approach maturity. Should the impairment of any of these securities become
other-than-temporary, the cost basis of the investment will be reduced and the
resulting loss recognized in net income in the period the other-than-temporary
impairment is identified.

Other investment securities (as shown on the Consolidated Balance Sheets)
consist of stock investments in the FHLB and the FRB. These restricted stock
investments are carried at their redemption value. Park owned $50.1 million
and $59.0 million of FHLB stock and $8.2 million and $6.9 million of FRB
stock at December 31, 2014 and December 31, 2013, respectively.

During 2014, the FHLB elected to redeem 89,460 shares of FHLB stock
for $8.9 million. There was no gain or loss resulting from this transaction.
Additionally, during 2014, Park purchased 27,000 shares of FRB stock in
order to maintain required stock levels. The FRB stock was purchased for
a $1.4 million subscription price.

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The amortized cost and estimated fair value of investments in debt securities at
December 31, 2014, are shown in the following table by contractual maturity or
the expected call date, except for asset-backed securities, which are shown as
a single total, due to the unpredictability of the timing in principal repayments.

(In thousands)

Securities Available-for-Sale
U.S. Treasury and other U.S. Government

sponsored entities’ notes:

Due one through five years

Due five through ten years

Total

U.S. Government sponsored entities’

asset-backed securities

Securities Held-to-Maturity
U.S. Government sponsored entities’

asset-backed securities

Amortized
Cost

Estimated
Fair Value

$ 30,000

516,886

$546,886

$ 30,011

508,053

$538,064

$751,974

$761,153

Weighted
Average
Yield

2.10%

2.35%

2.34%

2.36%

$140,562

$143,490

3.58%

Approximately $546.9 million of Park’s securities shown in the above table as
U.S. Treasury and other U.S. Government sponsored entities’ notes are callable
notes. These callable securities have a final maturity of 5 to 8 years. Of the
$546.9 million reported at December 31, 2014, $30.0 million were expected
to be called and are shown in the table at their expected call date.

Investment securities having an amortized cost of $1,205 million and $1,321
million at December 31, 2014 and 2013, respectively, were pledged to collater-
alize government and trust department deposits in accordance with federal and
state requirements, to secure repurchase agreements sold and as collateral for
FHLB advance borrowings.

At December 31, 2014, $513 million was pledged for government and trust
department deposits, $664 million was pledged to secure repurchase agree-
ments and $28 million was pledged as collateral for FHLB advance borrowings.
At December 31, 2013, $639 million was pledged for government and trust
department deposits, $648 million was pledged to secure repurchase agree-
ments and $34 million was pledged as collateral for FHLB advance borrowings.

At December 31, 2014, there were no holdings of securities of any one issuer,
other than the U.S. Government and its agencies, in an amount greater than
10% of shareholders’ equity.

During 2014, Park sold investment securities with a book value of $187,000
at a gain of $22,000. Additionally, Park sold investment securities with a book
value of $174.1 million at a loss of $1.2 million. During 2013, Park sold $75.0
million of securities at book value for no gain. During 2012, Park had no sales
of investment securities.

7. LOANS
The composition of the loan portfolio, by class of loan, as of December 31,
2014 and December 31, 2013 was as follows:

(In thousands)

2014:

Commercial, financial and agricultural*
Commercial real estate*
Construction real estate:
SEPH commercial land
and development*
Remaining commercial
Mortgage
Installment

Residential real estate:

Commercial
Mortgage
HELOC
Installment

Consumer
Leases

Total loans

Loan
Balance

Accrued
Interest
Receivable

$ 856,535
1,069,637

$ 3,218
3,546

2,195
115,139
31,148
7,322

417,612
1,189,709
216,915
27,139
893,160
3,171

—
300
72
23

1,038
1,548
803
97
2,967
17

Recorded
Investment

$ 859,753
1,073,183

2,195
115,439
31,220
7,345

418,650
1,191,257
217,718
27,236
896,127
3,188

$4,829,682

$13,629

$4,843,311

(In thousands)

2013:

Commercial, financial and agricultural*
Commercial real estate*
Construction real estate:
SEPH commercial land
and development*
Remaining commercial
Mortgage
Installment

Residential real estate:

Commercial
Mortgage
HELOC
Installment

Consumer
Leases

Total loans

Loan
Balance

Accrued
Interest
Receivable

$ 825,432
1,112,273

$ 3,079
3,765

5,846
110,842
31,882
7,546

407,387
1,144,754
213,565
33,841
723,733
3,404

2
263
96
26

904
1,559
870
132
2,775
23

Recorded
Investment

$ 828,511
1,116,038

5,848
111,105
31,978
7,572

408,291
1,146,313
214,435
33,973
726,508
3,427

$4,620,505

$13,494

$4,633,999

*Included within commercial, financial and agricultural loans, commercial real estate loans, and
SEPH commercial land and development loans were an immaterial amount of consumer loans
that were not broken out by class.

Loans are shown net of deferred origination fees, costs and unearned income
of $9.4 million at December 31, 2014 and $7.3 million at December 31, 2013,
which represented a net deferred income position in both years.

Overdrawn deposit accounts of $2.3 million and $3.3 million have been
reclassified to loans at December 31, 2014 and 2013, respectively.

Credit Quality
The following table presents the recorded investment in nonaccrual loans,
accruing troubled debt restructurings, and loans past due 90 days or more
and still accruing by class of loan as of December 31, 2014 and December
31, 2013:

(In thousands)

2014:

Commercial, financial
and agricultural

Commercial real estate
Construction real estate:
SEPH commercial land
and development
Remaining commercial
Mortgage
Installment

Residential real estate:

Commercial
Mortgage
HELOC
Installment

Consumer

Total loans

2013:

Commercial, financial
and agricultural

Commercial real estate
Construction real estate:
SEPH commercial land
and development
Remaining commercial
Mortgage
Installment

Residential real estate:

Commercial
Mortgage
HELOC
Installment

Consumer

Total loans

Loans Past Due
90 Days
or More

Accruing
Troubled Debt
Restructurings and Accruing

Total
Nonperforming
Loans

Nonaccrual
Loans

$ 18,826
19,299

297
2,690

$ 229
—

$ 19,352
21,989

2,078
5,558
59
115

24,336
21,869
1,879
1,743
4,631

—
51
94
125

594
10,349
630
779
723

—
—
9
—

—
1,329
9
—
1,133

2,078
5,609
162
240

24,930
33,547
2,518
2,522
6,487

$100,393

$16,332

$2,709

$119,434

$ 20,633
39,588

107
2,234

4,777
10,476
87
39

32,495
20,564
2,129
965
3,463

—
306
97
192

913
11,708
751
885
1,616

80
2

—
—
—
—

—
549
—
80
1,016

$ 20,820
41,824

4,777
10,782
184
231

33,408
32,821
2,880
1,930
6,095

$135,216

$18,809

$1,727

$155,752

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The following table presents loans individually evaluated for impairment by
class of loan as of December 31, 2014 and December 31, 2013.

(In thousands)

2014:

With no related allowance recorded

Commercial, financial
and agricultural

Commercial real estate
Construction real estate:
SEPH commercial

land and development

Remaining commercial

Residential real estate:

Commercial

Consumer

With an allowance recorded

Commercial, financial
and agricultural

Commercial real estate
Construction real estate:
Remaining commercial

Residential real estate:

With no related allowance recorded

Commercial, financial
and agricultural

Commercial real estate
Construction real estate:
SEPH commercial

land and development

Remaining commercial

Residential real estate:

Commercial

Consumer

With an allowance recorded

Commercial, financial
and agricultural

Commercial real estate
Construction real estate:
Remaining commercial

Residential real estate:

Commercial

Consumer

Total

Unpaid
Principal
Balance

Recorded
Investment

Allowance for
Loan Losses
Allocated

$ 30,601
27,923

$ 17,883
20,696

$ —
—

11,026
1,427

25,822
—

1,251
1,310

5,218

1,578
—

2,078
391

23,352
—

1,223
1,293

5,218

1,578
—

—
—

981
262

1,812

605
—

$106,156

$73,712

$ 3,660

$ 22,429
56,870

$ 12,885
34,149

$ —
—

23,722
8,429

36,709
799

12,616
7,966

3,909

2,129
—

4,777
6,872

31,461
799

7,842
7,673

3,910

1,947
—

—
—

3,268
5,496

1,132

555
—

$175,578

$112,315

$10,451

Management’s general practice is to proactively charge down loans
individually evaluated for impairment to the fair value of the underlying
collateral. At December 31, 2014 and December 31, 2013, there were
$32.4 million and $58.1 million, respectively, of partial charge-offs on loans
individually evaluated for impairment with no related allowance recorded
and $45,000 and $5.2 million, respectively, of partial charge-offs on loans
individually evaluated for impairment that also had a specific reserve allocated.

The allowance for loan losses included specific reserves related to loans
individually evaluated for impairment at December 31, 2014 and 2013,
of $3.7 million and $10.5 million, respectively. These loans with specific
reserves had a recorded investment of $9.3 million and $21.4 million as
of December 31, 2014 and 2013, respectively.

$116,725

$73,712

$43,013

$ 20,740
41,822

$ 20,727
41,822

13
—

Commercial

Consumer

Total

2013:

The following table provides additional information regarding those nonaccrual
and accruing troubled debt restructured loans that are individually evaluated
for impairment and those collectively evaluated for impairment as of
December 31, 2014 and December 31, 2013.

(In thousands)

2014:

Commercial, financial and agricultural
Commercial real estate
Construction real estate:
SEPH commercial

land and development

Remaining commercial
Mortgage
Installment

Residential real estate:

Commercial
Mortgage
HELOC
Installment

Consumer

Total loans

2013:

Commercial, financial and agricultural
Commercial real estate
Construction real estate:
SEPH commercial

land and development

Remaining commercial
Mortgage
Installment

Residential real estate:

Commercial
Mortgage
HELOC
Installment

Consumer

Total loans

Nonaccrual
and Accruing
Troubled Debt
Restructurings

Loans
Individually
Evaluated for
Impairment

Loans
Collectively
Evaluated for
Impairment

$ 19,123
21,989

$19,106
21,989

17
—

2,078
5,609
153
240

24,930
32,218
2,509
2,522
5,354

2,078
5,609
—
—

24,930
—
—
—
—

—
—
153
240

—
32,218
2,509
2,522
5,354

4,777
10,782
184
231

33,408
32,272
2,880
1,850
5,079

4,777
10,782
—
—

33,408
—
—
—
799

—
—
184
231

—
32,272
2,880
1,850
4,280

$154,025

$112,315

$41,710

All of the loans individually evaluated for impairment were evaluated using the
fair value of the collateral or the present value of expected future cash flows as
the measurement method.

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Interest income on loans individually evaluated for impairment is recognized
on a cash basis only when Park expects to receive the entire recorded invest-
ment of the loan. The following tables present the average recorded investment
and interest income recognized subsequent to impairment on loans individually
evaluated for impairment as of and for the years ended December 31, 2014,
2013, and 2012:

(In thousands)

Recorded
Investment
as of
December 31, 2014

Commercial, financial and agricultural
Commercial real estate
Construction real estate:
SEPH commercial land
and development
Remaining commercial

Residential real estate:

Commercial

Consumer
Total

$ 19,106
21,989

2,078
5,609

24,930
—

$ 73,712

(In thousands)

Recorded
Investment
as of
December 31, 2013

Commercial, financial and agricultural
Commercial real estate
Construction real estate:
SEPH commercial land
and development
Remaining commercial

Residential real estate:

Commercial

Consumer
Total

$ 20,727
41,822

4,777
10,782

33,408
799

Year ended December 31, 2014

Average
Recorded
Investment

$ 19,518
31,945

3,658
8,784

28,306
403

$ 92,614

Interest
Income
Recognized

$ 360
1,027

146
61

1,084
—

$2,678

Year ended December 31, 2013

Average
Recorded
Investment

$ 20,523
41,426

Interest
Income
Recognized

$ 412
1,151

8,723
17,829

34,972
616

—
616

461
—

$112,315

$124,089

$2,640

(In thousands)

Recorded
Investment
as of
December 31, 2012

Commercial, financial and agricultural
Commercial real estate
Construction real estate:
SEPH commercial land
and development
Remaining commercial

Residential real estate:

Commercial

Consumer
Total

$ 22,587
44,278

13,260
21,574

35,622
18
$137,339

Year ended December 31, 2012

Average
Recorded
Investment

$ 35,305
44,541

17,277
27,774

39,248
19
$164,164

Interest
Income
Recognized

$ 529
968

—
818

497
1
$2,813

The following tables present the aging of the recorded investment in past due
loans as of December 31, 2014 and December 31, 2013 by class of loan.

Past Due
Nonaccrual
Loans and Loans
Past Due 90
Days or More
and Accruing*

Accruing
Loans
Past Due
30–89 Days

Total
Past Due

Total
Current

Total
Recorded
Investment

(In thousands)

December 31, 2014:

Commercial, financial
and agricultural

Commercial real estate
Construction real estate:
SEPH commercial land
and development
Remaining commercial
Mortgage
Installment

Residential real estate:

Commercial
Mortgage
HELOC
Installment

Consumer
Leases

Total loans

$ 6,482
808

$ 7,508
8,288

$ 13,990 $ 845,763
1,064,087

9,096

$ 859,753
1,073,183

—
166
39
21

250
11,146
262
596
11,304
—
$31,074

2,068
77
68
25

19,592
10,637
387
464
3,818
—
$52,932

2,068
243
107
46

127
115,196
31,113
7,299

2,195
115,439
31,220
7,345

19,842
21,783
649
1,060
15,122
—

398,808
1,169,474
217,069
26,176
881,005
3,188
$ 84,006 $4,759,305

418,650
1,191,257
217,718
27,236
896,127
3,188
$4,843,311

*Includes $2.7 million of loans past due 90 days or more and accruing. The remaining are past due,
nonaccrual loans.

Past Due
Nonaccrual
Loans and Loans
Past Due 90
Days or More
and Accruing*

Accruing
Loans
Past Due
30–89 Days

Total
Past Due

Total
Current

Total
Recorded
Investment

(In thousands)

December 31, 2013:

Commercial, financial
and agricultural

Commercial real estate
Construction real estate:
SEPH commercial land
and development
Remaining commercial
Mortgage
Installment

Residential real estate:

Commercial
Mortgage
HELOC
Installment

Consumer
Leases

Total loans

$ 1,233
2,168

$13,275
18,274

$ 14,508 $ 814,003
1,095,596

20,442

$ 828,511
1,116,038

—
—
264
207

900
13,633
571
696
12,143
—
$31,815

4,242
3,463
75
14

5,659
11,829
402
436
3,941
—
$61,610

4,242
3,463
339
221

1,606
107,642
31,639
7,351

5,848
111,105
31,978
7,572

6,559
25,462
973
1,132
16,084
—

401,732
1,120,851
213,462
32,841
710,424
3,427
$ 93,425 $4,540,574

408,291
1,146,313
214,435
33,973
726,508
3,427
$4,633,999

*Includes $1.7 million of loans past due 90 days or more and accruing. The remaining are past due,
nonaccrual loans.

Credit Quality Indicators
Management utilizes past due information as a credit quality indicator across
the loan portfolio. Past due information as of December 31, 2014 and 2013
is included in the tables above. The past due information is the primary credit
quality indicator within the following classes of loans: (1) mortgage loans
and installment loans in the construction real estate segment; (2) mortgage
loans, HELOC and installment loans in the residential real estate segment;
and (3) consumer loans. The primary credit indicator for commercial loans
is based on an internal grading system that grades all commercial loans on a
scale from 1 to 8. Credit grades are continuously monitored by the responsible
loan officer and adjustments are made when appropriate. A grade of 1 indicates
little or no credit risk and a grade of 8 is considered a loss. Commercial loans
that are pass-rated are considered to be of acceptable credit risk. Commercial
loans graded a 5 (special mention) are considered to be watch list credits and
a higher loan loss reserve per centage is allocated to these loans. Loans classi-
fied as special mention have potential weaknesses that require management’s
close attention. If left uncorrected, these potential weaknesses may result in
deterioration of the repayment prospects for the loan or of the institution’s
credit position at some future date. Commercial loans graded 6 (substandard),
also considered watch list credits, are considered to represent higher credit
risk and, as a result, a higher loan loss reserve percentage is allocated to these
loans. Loans classified as substandard are inadequately protected by the current
sound worth and paying capacity of the obligor or the value of the collateral
pledged, if any. Loans so classified have a well defined weakness or weaknesses
that jeopardize the liquidation of the debt. They are characterized by the distinct
possibility that Park will sustain some loss if the deficiencies are not corrected.
Commercial loans that are graded a 7 (doubtful) are shown as nonaccrual and
Park generally charges these loans down to their fair value by taking a partial
charge-off or recording a specific reserve. Loans classified as doubtful have
all the weaknesses inherent in those classified as substandard with the added
characteristic that the weaknesses make collection or liquidation in full, on the
basis of currently existing facts, conditions, and values, highly questionable and
improbable. Certain 6-rated loans and all 7-rated loans are included within
the impaired category. A loan is deemed impaired when management deter-
mines the borrower’s ability to perform in accordance with the contractual
loan agreement is in doubt. Any commercial loan graded an 8 (loss) is
completely charged off.

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N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

The tables below present the recorded investment by loan grade at
December 31, 2014 and December 31, 2013 for all commercial loans:

(In thousands)

5 Rated

6 Rated

Impaired

Pass
Rated

Recorded
Investment

December 31, 2014:

Commercial, financial
and agricultural*

Commercial real estate*
Construction real estate:
SEPH commercial land
and development*
Remaining commercial

Residential real estate:

Commercial

Leases

Total commercial

loans

December 31, 2013:

Commercial, financial
and agricultural*

Commercial real estate*
Construction real estate:
SEPH commercial land
and development*
Remaining commercial

Residential real estate:

Commercial

Leases

Total commercial

loans

$ 1,874
8,448

$1,201
1,712

$ 19,123
21,989

$ 837,555
1,041,034

$ 859,753
1,073,183

—
3,349

2,581
—

—
57

598
—

2,078
5,609

24,930
—

117
106,424

390,541
3,188

2,195
115,439

418,650
3,188

$16,252

$3,568

$ 73,729

$2,378,859

$2,472,408

$ 6,055
11,591

$ 532
1,525

$ 20,740
41,822

$ 801,184
1,061,100

$ 828,511
1,116,038

354
6,858

5,033
—

—
244

397
—

4,777
10,782

33,408
—

717
93,221

369,453
3,427

5,848
111,105

408,291
3,427

$29,891

$2,698

$111,529

$2,329,102

$2,473,220

*Included within commercial, financial and agricultural loans, commercial real estate loans, and
SEPH commercial land and development loans was an immaterial amount of consumer loans that
were not broken out by class.

Troubled Debt Restructuring (TDRs)
Management classifies loans as TDRs when a borrower is experiencing
financial difficulties and Park has granted a concession to the borrower as
part of a modification or in the loan renewal process. In order to determine
whether a borrower is experiencing financial difficulty, an evaluation is per-
formed of the probability that the borrower will be in payment default on
any of the borrower’s debt in the foreseeable future without the modification.
This evaluation is performed in accordance with the Company’s internal
under writing policy. Management’s policy is to modify loans by extending
the term or by granting a temporary or permanent contractual interest rate
below the market rate, not by forgiving debt. Certain loans which were modified
during the years ended December 31, 2014 and December 31, 2013 did not
meet the definition of a TDR as the modification was a delay in a payment that
was considered to be insignificant. Management considers a forbearance period
of up to three months or a delay in payment of up to 30 days to be insignificant.
TDRs may be classified as accruing if the borrower has been current for a
period of at least six months with respect to loan payments and management
expects that the borrower will be able to continue to make payments in accor-
dance with the terms of the restructured note. Management reviews all accruing
TDRs quarterly to ensure payments continue to be made in accordance with the
modified terms.

Management reviews renewals/modifications of loans previously identified
as TDRs to consider if it is appropriate to remove the TDR classification. If
the borrower is no longer experiencing financial difficulty and the renewal/
modification does not contain a concessionary interest rate or other con -
cessionary terms, management considers the potential removal of the TDR
classification. If deemed appropriate, the TDR classification is removed as the
borrower has complied with the terms of the loan at the date of the renewal/
modification and there was a reasonable expectation that the borrower would
continue to comply with the terms of the loan subsequent to the date of the
renewal/modification. The majority of these TDRs were originally considered
restructurings in a prior year as a result of a renewal/modification with an
interest rate that was not commensurate with the risk of the underlying loan
at the time of the renewal/modification. During the years ended December 31,
2014 and 2013, Park removed the TDR classification on $2.5 million and $7.7
million, respectively, of loans that met the requirements discussed above.

At December 31, 2014 and 2013, there were $47.5 million and $76.3 million,
respectively, of TDRs included in the nonaccrual loan totals. At December 31,
2014 and 2013, $15.7 million and $50.6 million of these nonaccrual TDRs
were performing in accordance with the terms of the restructured note. As
of December 31, 2014 and 2013, there were $16.3 million and $18.8 million,
respectively, of TDRs included in accruing loan totals. Management will con-
tinue to review the restructured loans and may determine it appropriate to
move certain nonaccrual TDRs to accrual status in the future.

At December 31, 2014 and 2013, Park had commitments to lend $1.4
million and $4.0 million, respectively, of additional funds to borrowers
whose outstanding loan terms had been modified in a TDR.

The specific reserve related to TDRs at December 31, 2014 and 2013 was
$2.4 million and $7.5 million, respectively. Modifications made in 2013 and
2014 were largely the result of renewals, extending the maturity date of the
loan, at terms consistent with the original note. These modifications were
deemed to be TDRs primarily due to Park’s conclusion that the borrower
would likely not have qualified for similar terms through another lender.
Many of the modifications deemed to be TDRs were previously identified as
impaired loans, and thus were also previously evaluated for impairment under
ASC 310. Additional specific reserves of $0.7 million were recorded during the
year ended December 31, 2014, as a result of TDRs identified in the 2014 year.
Additional specific reserves of $1.1 million were recorded during the year
ended December 31, 2013 as a result of TDRs identified in the 2013 year.

The terms of certain other loans were modified during the years ended
December 31, 2014 and 2013 that did not meet the definition of a TDR.
Modified/renewed substandard commercial loans which did not meet the
definition of a TDR had a total recorded investment as of December 31, 2014
and 2013 of $987,000 and $878,000, respectively. The renewal/modification
of these loans: (1) involved a renewal/modification of the terms of a loan to
a borrower who was not experiencing financial difficulties, (2) resulted in
a delay in a payment that was considered to be insignificant, or (3) resulted in
Park obtaining additional collateral or guarantees that improved the likelihood
of the ultimate collection of the loan such that the modification was deemed to
be at market terms. Modified consumer loans which did not meet the definition
of a TDR had a total recorded investment as of December 31, 2014 and 2013
of $19.9 million and $24.2 million, respectively. Many of these loans were to
borrowers who were not experiencing financial difficulties but who were
looking to reduce their cost of funds.

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N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

The following tables detail the number of contracts modified as TDRs during the
years ended December 31, 2014 and 2013 as well as the recorded investment
of these contracts at December 31, 2014 and 2013. The recorded investment
pre- and post-modification is generally the same due to the fact that Park does
not typically provide for forgiveness of principal.

(In thousands)

Year ended December 31, 2014:

Number of
Contracts

Accruing

Nonaccrual

Recorded
Investment

Commercial, financial
and agricultural

Commercial real estate
Construction real estate:
SEPH commercial land
and development
Remaining commercial
Mortgage
Installment

Residential real estate:

Commercial
Mortgage
HELOC
Installment

Consumer

Total loans

Year ended December 31, 2013:

Commercial, financial
and agricultural

Commercial real estate
Construction real estate:
SEPH commercial land
and development
Remaining commercial
Mortgage
Installment

Residential real estate:

Commercial
Mortgage
HELOC
Installment

Consumer

Total loans

30
11

—
2
—
2

9
46
10
10
330

450

34
22

—
3
—
4

15
62
16
13
327

496

$ 292
1,184

431
1,254

723
2,438

—
—
—
—

—
32
85
109
244

—
206
—
56

866
2,325
241
12
1,058

—
206
—
56

866
2,357
326
121
1,302

$1,946

$ 6,449

$ 8,395

7
—

—
—
—
26

—
1,967
175
113
805

$ 1,334
8,563

$ 1,341
8,563

—
98
—
25

2,552
2,278
—
179
345

—
98
—
51

2,552
4,245
175
292
1,150

$3,093

$15,374

$18,467

Of those loans which were modified and determined to be a TDR during the
year ended December 31, 2014, $0.7 million were on nonaccrual status as
of December 31, 2013. Of those loans which were modified and determined
to be a TDR during the year ended December 31, 2013, $5.5 million were
on nonaccrual status as of December 31, 2012.

The following table presents the recorded investment in financing receivables
which were modified as TDRs within the previous 12 months and for which
there was a payment default during the year ended December 31, 2014
and December 31, 2013. For this table, a loan is considered to be in default
when it becomes 30 days contractually past due under modified terms. The
additional allowance for loan loss resulting from the defaults on TDR loans
was immaterial.

(In thousands)

Commercial, financial
and agricultural

Commercial real estate
Construction real estate:
SEPH commercial land
and development
Remaining commercial
Mortgage
Installment

Residential real estate:

Commercial
Mortgage
HELOC
Installment

Consumer
Leases

Total loans

Year ended
December 31, 2014

Year ended
December 31, 2013

Number of
Contracts

Recorded
Investment

Number of
Contracts

Recorded
Investment

4
1

—
—
—
—

1
14
2
2
62
—

$ 206
302

—
—
—
—

3
810
160
12
516
—

11
11

—
—
—
1

4
26
—
5
74
—

$ 771
2,839

—
—
—
10

1,683
1,533
—
72
471
—

$2,009

132

$7,379

Of the $2.0 million in modified TDRs which defaulted during the year ended
December 31, 2014, $314,000 were accruing loans and $1.7 million were
nonaccrual loans. Of the $7.4 million in modified TDRs which defaulted during
the year ended December 31, 2013, $397,000 were accruing loans and $7.0
million were nonaccrual loans.

Management transfers a loan to OREO at the time that Park takes deed/title of
the asset. At December 31, 2014 and 2013, Park had $22.6 million and $34.6
million, respectively, of OREO.

Certain of the Corporation’s executive officers, directors and related entities
of directors are loan customers of PNB. As of December 31, 2014 and 2013,
credit exposure aggregating approximately $45.7 million and $49.7 million,
respectively, was outstanding to such parties. Of this total exposure, approxi-
mately $36.0 million and $37.7 million were outstanding at December 31,
2014 and 2013, respectively, with the remaining balance representing available
credit. During 2014, new loans and advances on existing loans were made to
these executive officers, directors and related entities totaling $6.0 million and
$6.4 million, respectively. These extensions of credit were offset by payments
of $14.1 million. During 2013, new loans and advances on existing loans were
$547,000 and $11.9 million, respectively. These extensions of credit were offset
by payments of $10.0 million.

8. ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is that amount management believes is adequate
to absorb probable incurred credit losses in the loan portfolio based on man-
agement’s evaluation of various factors including overall growth in the loan
portfolio, an analysis of individual loans, prior and current loss experience,
and current economic conditions. A provision for loan losses is charged to
operations based on management’s periodic evaluation of these and other
pertinent factors as discussed within Note 1 of these Notes to Consolidated
Financial Statements.

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N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

Management updates historical losses annually in the fourth quarter, or more
frequently as deemed appropriate.

With the inclusion of 2013 net charge-off information, management concluded
that it was no longer appropriate to calculate the historical loss average with an
even allocation across the five-year period. Rather than apply a 20% allocation
to each year in the calculation of the historical annualized loss factor, manage-
ment determined that it was appropriate to more heavily weight those years with
higher losses in the historical loss calculation, given the continued uncertainty

in the current economic environment. Specifically, rather than applying equal
percentages to each year in the historical loss calculation, management applied
more weight to the 2009 through 2011 period compared to the 2012 and 2013
periods.

With the inclusion of 2014 net charge-off information in the fourth quarter of
2014, management extended the historical loss period to six years. Due to the
same factors that management considered in 2013, management applied more
weight to the 2009 through 2011 periods compared to the 2012 through 2014
periods.

The activity in the allowance for loan losses for the years ended December 31, 2014, 2013 and 2012 is summarized in the following tables.

(In thousands)

December 31, 2014

Allowance for credit losses:

Beginning balance
Charge-offs
Recoveries

Net charge-offs (recoveries)

(Recovery) Provision

Ending balance

December 31, 2013

Allowance for credit losses:

Beginning balance
Charge-offs
Recoveries

Net charge-offs (recoveries)

Provision (Recovery)

Ending balance

December 31, 2012

Allowance for credit losses:

Beginning balance
Charge-offs
Recoveries

Net charge-offs

Provision (Recovery)

Ending balance

Commercial,
Financial and
Agricultural

Commercial
Real Estate

Construction
Real Estate

Residential
Real Estate

Consumer

Leases

Total

$14,218
3,779
(1,003)

2,776

(723)

$10,719

$15,635
6,160
(1,314)

4,846

3,429

$14,218

$16,950
26,847
(1,066)

25,781

24,466

$15,635

$15,899
8,003
(7,759)

244

(6,847)

$ 8,808

$11,736
1,832
(726)

1,106

5,269

$15,899

$15,539
10,454
(783)

9,671

5,868

$11,736

$ 6,855
1,316
(12,572)

(11,256)

(9,459)

$ 8,652

$ 6,841
1,791
(9,378)

(7,587)

(7,573)

$ 6,855

$ 14,433
9,985
(2,979)

7,006

(586)

$ 6,841

$14,251
3,944
(2,985)

959

1,480

$14,772

$14,759
3,207
(6,000)

(2,793)

(3,301)

$14,251

$15,692
8,607
(5,559)

3,048

2,115

$14,759

$ 8,245
7,738
(2,671)

5,067

8,223

$11,401

$ 6,566
6,163
(2,249)

3,914

5,593

$ 8,245

$ 5,830
5,375
(2,555)

2,820

3,556

$ 6,566

$ —
—
(7)

(7)

$ —

$ —
—
(2)

(2)

$ —

$ —
—
—

—

$ —

$ 59,468
24,780
(26,997)

(2,217)

(7,333)

$ 54,352

$ 55,537
19,153
(19,669)

(516)

3,415

$ 59,468

$ 68,444
61,268
(12,942)

48,326

35,419

$ 55,537

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N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

Loans collectively evaluated for impairment in the following tables include all
performing loans at December 31, 2014 and 2013, as well as nonperforming
loans internally classified as consumer loans. Nonperforming consumer loans
are not typically individually evaluated for impairment, but receive a portion of
the statistical allocation of the allowance for loan losses. Loans individually eval-

uated for impairment include all impaired loans internally classified as
commercial loans at December 31, 2014 and 2013, which are evaluated
for impairment in accordance with GAAP (see Note 1 of these Notes to
Consolidated Financial Statements).

The composition of the allowance for loan losses at December 31, 2014 and 2013 was as follows:

(In thousands)

December 31, 2014

Allowance for loan losses:

Ending allowance balance attributed to loans

Individually evaluated for impairment
Collectively evaluated for impairment

Total ending allowance balance

Loan balance:

Loans individually evaluated for impairment
Loans collectively evaluated for impairment

Total ending loan balance

Allowance for loan losses as a percentage of

loan balance:

Loans individually evaluated for impairment
Loans collectively evaluated for impairment

Total ending loan balance

Recorded investment:

Loans individually evaluated for impairment
Loans collectively evaluated for impairment

Total ending loan balance

December 31, 2013

Allowance for loan losses:

Ending allowance balance attributed to loans

Individually evaluated for impairment
Collectively evaluated for impairment

Total ending allowance balance

Loan balance:

Loans individually evaluated for impairment
Loans collectively evaluated for impairment

Total ending loan balance

Allowance for loan losses as a percentage of

loan balance:

Loans individually evaluated for impairment
Loans collectively evaluated for impairment

Total ending loan balance

Recorded investment:

Loans individually evaluated for impairment
Loans collectively evaluated for impairment

Total ending loan balance

Commercial,
Financial and
Agricultural

Commercial
Real Estate

Construction
Real Estate

Residential
Real Estate

Consumer

Leases

Total

$ 981
9,738

$ 10,719

$ 19,103
837,432

$856,535

5.14%
1.16%

1.25%

$ 19,106
840,647

$859,753

$ 3,268
10,950

$ 14,218

$ 20,724
804,708

$825,432

15.77%
1.36%

1.72%

$ 20,727
807,784

$828,511

262
8,546

8,808

21,978
1,047,659

$1,069,637

1.19%
0.82%

0.82%

21,989
1,051,194

$1,073,183

5,496
10,403

15,899

41,816
1,070,457

$1,112,273

13.14%
0.97%

1.43%

41,822
1,074,216

$1,116,038

$ 1,812
6,840

$ 8,652

$ 7,690
148,114

$155,804

23.56%
4.62%

5.55%

$ 7,687
148,512

$156,199

$ 1,132
5,723

$ 6,855

$ 15,559
140,557

$156,116

7.28%
4.07%

4.39%

$ 15,559
140,944

$156,503

605
14,167

$ 14,772

24,905
1,826,470

$1,851,375

2.43%
0.78%

0.80%

24,930
1,829,931

$1,854,861

555
13,696

$ 14,251

33,406
1,766,141

$1,799,547

1.66%
0.78%

0.79%

$ 33,408
1,769,604

$1,803,012

—
11,401

$ 11,401

$
—
893,160

$893,160

—
1.28%

1.28%

$
—
896,127

$896,127

—
8,245

$ 8,245

799
722,934

$723,733

—
1.14%

1.14%

799
725,709

$726,508

$ —
—

$ —

$ —
3,171

$3,171

—
—

—

$ —
3,188

$3,188

$ —
—

$ —

$ —
3,404

$3,404

—
—

—

$ —
3,427

$3,427

3,660
50,692

54,352

73,676
4,756,006

$4,829,682

4.97%
1.07%

1.13%

73,712
4,769,599

$4,843,311

10,451
49,017

59,468

$ 112,304
4,508,201

$4,620,505

9.31%
1.09%

1.29%

$ 112,315
4,521,684

$4,633,999

9. LOANS HELD FOR SALE
Mortgage loans held for sale are carried at their fair value. Mortgage loans held
for sale were $5.3 million and $1.7 million at December 31, 2014 and 2013,
respectively. These amounts are included in loans on the Consolidated Balance
Sheets and in the residential real estate loan segments in Note 7 and Note 8. The
contractual balance was $5.2 million and $1.6 million at December 31, 2014
and 2013, respectively. The gain expected upon sale was $80,000 and $28,000
at December 31, 2014 and 2013, respectively. None of these loans were 90 days
or more past due or on nonaccrual status as of December 31, 2014 or 2013.

During 2014, Park transferred certain commercial loans held for investment,
with a book balance of $22.0 million, to the loans held for sale portfolio, and
subsequently completed the sale of these commercial loans held for sale,
recognizing a net gain on sale of $1.9 million.

10. PREMISES AND EQUIPMENT
The major categories of premises and equipment and accumulated
depreciation are summarized as follows:

December 31 (In thousands)

Land
Buildings
Equipment, furniture and fixtures
Leasehold improvements

Total

Less accumulated depreciation

Premises and equipment, net

2014

$ 17,836
71,002
42,139
3,439

$134,416

2013

$ 17,657
70,183
36,937
3,903

$128,680

(78,937)

(73,402)

$ 55,479

$ 55,278

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N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

Depreciation expense amounted to $7.2 million, $7.3 million and $7.0 million
for the years ended December 31, 2014, 2013 and 2012, respectively.

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

(In thousands)

2015
2016
2017
2018
2019
Thereafter

Total

$1,143
755
559
448
367
252

$3,524

Rent expense for Park was $1.7 million, $1.8 million and $1.9 million, for the
years ended December 31, 2014, 2013 and 2012, respectively.

11. DEPOSITS
At December 31, 2014 and 2013, non-interest bearing and interest bearing
deposits were as follows:

December 31 (In thousands)

Non-interest bearing
Interest bearing

Total

2014

$1,269,296
3,858,704

$5,128,000

2013

$1,193,553
3,596,441

$4,789,994

At December 31, 2014, the maturities of time deposits were as follows:

(In thousands)

2015
2016
2017
2018
2019
After 5 years

Total

$ 823,230
254,565
145,321
42,160
144,133
502

$1,409,911

At December 31, 2014 and 2013, respectively, Park had approximately $21.9
million and $18.4 million of deposits received from executive officers, directors
and their related entities.

Maturities of time deposits over $100,000 and $250,000 as of December 31,
2014 were:

December 31 (In thousands)

3 months or less
Over 3 months through 6 months
Over 6 months through 12 months
Over 12 months

Total

12. SHORT-TERM BORROWINGS
Short-term borrowings were as follows:

Over
$100,000

$210,386
93,168
132,344
323,295

$759,193

Over
$250,000

$ 18,927
11,954
10,470
223,892

$265,243

December 31 (In thousands)

2014

2013

Securities sold under agreements to repurchase

and federal funds purchased
Federal Home Loan Bank advances

Total short-term borrowings

$276,980
—

$276,980

$242,029
—

$242,029

The outstanding balances for all short-term borrowings as of December 31,
2014 and 2013 and the weighted-average interest rates as of and paid during
each of the years then ended were as follows:

(In thousands)

2014:

Ending balance
Highest month-end balance
Average daily balance
Weighted-average interest rate:

As of year-end
Paid during the year

2013:

Ending balance
Highest month-end balance
Average daily balance
Weighted-average interest rate:

As of year-end
Paid during the year

Repurchase
Agreements
and Federal
Funds
Purchased

$276,980
307,025
262,709

0.18%
0.19%

$242,029
280,863
251,868

0.19%
0.21%

FHLB
Advances

$ —
—
561

—
0.10%

$ —
—
1,255

—
0.41%

During 2013 and 2014, outstanding FHLB advances were collateralized
by investment securities owned by the Corporation’s bank subsidiary and by
various loans pledged under a blanket agreement by the Corporation’s bank
subsidiary.

See Note 6 of these Notes to Consolidated Financial Statements for the amount
of investment securities that are pledged. At December 31, 2014 and 2013,
$2,038 million and $2,072 million, respectively, of commercial real estate
and residential mortgage loans were pledged under a blanket agreement to
the FHLB by Park’s bank subsidiary.

Note 6 states that $664 million and $648 million of securities were pledged
to secure repurchase agreements as of December 31, 2014 and 2013,
respectively. Park’s repurchase agreements in short-term borrowings consist
of customer accounts and securities which are pledged on an individual
security basis. Park’s repurchase agreements with a third-party financial
institution are classified as long-term debt. See Note 13 of these Notes to
Consolidated Financial Statements.

13. LONG-TERM DEBT
Long-term debt is listed below:

December 31

(In thousands)

2014

2013

Outstanding
Balance

Average
Rate

Outstanding
Balance

Average
Rate

Total Federal Home Loan Bank advances

by year of maturity:

2014
2015
2016
2017
2018
2019
Thereafter
Total

—
51,000
26,000
51,000
125,049
75,333
176,161
$504,543

—
2.00%
0.92%
1.28%
2.11%
1.97%
3.16%
2.30%

$100,500
51,000
26,000
51,000
125,062
25,415
151,330
$530,307

1.51%
2.00%
0.92%
3.37%
2.11%
1.94%
3.33%
2.39%

Total broker repurchase agreements

by year of maturity:

2017

Total

$300,000
$300,000

1.75%
1.75%

$300,000
$300,000

1.75%
1.75%

Total combined long-term debt

by year of maturity:

2014
2015
2016
2017
2018
2019
Thereafter
Total

—
51,000
26,000
351,000
125,049
75,333
176,161
$804,543

Prepayment penalty

(17,941)

—
2.00%
0.92%
1.68%
2.11%
1.97%
3.16%
2.09%

—

Total long-term debt

$786,602

2.89%

$100,500
51,000
26,000
351,000
125,062
25,415
151,330
$830,307

(19,766)

$810,541

1.51%
2.00%
0.92%
1.99%
2.11%
1.94%
3.33%
2.16%

—

2.79%

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On November 30, 2012, Park restructured $300 million in repurchase agree-
ments at a rate of 1.75%. As part of this restructuring, Park paid a prepayment
penalty of $25 million. The penalty is being amortized as an adjustment to inter-
est expense over the remaining term of the repurchase agreements using the
effective interest method, resulting in an effective interest rate of 3.55%. Of the
$25 million prepayment penalty, $14.8 million remained to be amortized as of
December 31, 2014. The remaining amortization will be $5.0 million in 2015,
$5.1 million in 2016 and $4.7 million in 2017.

On November 21, 2014, Park restructured $50 million in FHLB advances at
a rate of 1.25%. As part of this restructuring, Park paid a prepayment penalty
of $3.2 million. The penalty is being amortized as an adjustment to interest
expense over the remaining term of the advances using the effective interest
method, resulting in an effective interest rate of 3.52%. Of the $3.2 million
prepayment penalty, $3.1 million remained to be amortized as of December
31, 2014. The remaining amortization will be $1.0 million in 2015, $1.1
million in 2016, and $1.0 million in 2017.

Park had approximately $176.2 million of long-term debt at December 31,
2014 with a contractual maturity longer than five years. However, approximately
$150 million of this debt is callable by the issuer in 2015.

At December 31, 2014 and 2013, FHLB advances were collateralized by invest-
ment securities owned by PNB’s banking divisions and by various loans pledged
under a blanket agreement by PNB’s banking divisions.

See Note 6 of these Notes to Consolidated Financial Statements for the
amount of investment securities that were pledged. See Note 12 of these Notes
to Consolidated Financial Statements for the amount of commercial real estate
and residential mortgage loans that were pledged to the FHLB at December 31,
2014 and December 31, 2013.

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

On December 1, 2005, Vision Parent formed a wholly-owned Delaware
statutory business trust, Vision Bancshares Trust I (“Trust I”), which issued
$15.0 million of Trust I’s floating rate preferred securities (the “Trust Preferred
Securities”) to institutional investors. These Trust Preferred Securities qualify as
Tier I capital under FRB guidelines. All of the common securities of Trust I are
owned by Park. The proceeds from the issuance of the common securities and
the Trust Preferred Securities were used by Trust I to purchase $15.5 million of
junior subordinated notes, which carry a floating rate based on a three-month
LIBOR plus 148 basis points. The debentures represent the sole asset of Trust I.
The Trust Preferred Securities accrue and pay distributions at a floating rate of
three-month LIBOR plus 148 basis points per annum. The Trust Preferred
Securities are mandatorily redeemable upon maturity of the notes in December
2035, or upon earlier redemption as provided in the notes. Park has the right
to redeem the notes purchased by Trust I in whole or in part, on or after
December 30, 2010. As specified in the indenture, if the notes are redeemed
prior to maturity, the redemption price will be the principal amount, plus any
unpaid accrued interest. In accordance with GAAP, Trust I is not consolidated
with Park’s financial statements, but rather the subordinated notes are reflected
as a liability.

On December 23, 2009, Park entered into a Note Purchase Agreement, dated
December 23, 2009, with 38 purchasers (the “2009 Purchasers”). Under the
terms of the Note Purchase Agreement, the 2009 Purchasers purchased from
Park an aggregate principal amount of $35.25 million of 10% Subordinated
Notes due December 23, 2019 (the “2009 Notes”). The 2009 Notes were
intended to qualify as Tier 2 capital under applicable rules and regulations
of the FRB. The 2009 Notes could not be prepaid in any amount prior to
December 23, 2014; however, subsequent to that date, Park could prepay,
without penalty, all or a portion of the principal amount outstanding. Of the
$35.25 million in 2009 Notes, $14.05 million were purchased by related
parties. The 2009 Notes were prepaid in full on December 24, 2014.

On April 20, 2012, Park entered into a Note Purchase Agreement, dated
April 20, 2012 (the “2012 Purchase Agreement”), with 56 purchasers (the
“2012 Purchasers”). Under the terms of the 2012 Purchase Agreement, the
2012 Purchasers purchased from Park an aggregate principal amount of $30
million of 7% Subordinated Notes due April 20, 2022 (the “2012 Notes”). The
2012 Notes are intended to qualify as Tier 2 capital under applicable rules and
regulations of the FRB. Each 2012 Note was purchased at a purchase price of
100% of the principal amount thereof. The 2012 Notes may not be prepaid by
Park prior to April 20, 2017. From and after April 20, 2017, Park may prepay
all, or from time to time, any part of the 2012 Notes at 100% of the principal
amount (plus accrued interest) without penalty, subject to any requirement
under FRB regulations to obtain prior approval from the FRB before making
any prepayment.

15. SHARE-BASED COMPENSATION
The Park National Corporation 2005 Incentive Stock Option Plan (the “2005
Plan”) was adopted by the Board of Directors of Park on January 18, 2005,
and was approved by Park’s shareholders at the Annual Meeting of
Shareholders on April 18, 2005. Under the 2005 Plan, 1,500,000 common
shares were authorized for delivery upon the exercise of incentive stock
options. All of the common shares delivered upon the exercise of incentive
stock options granted under the 2005 Plan were to be treasury shares. The
2005 Plan was terminated on April 22, 2013 and no common shares were
delivered thereunder.

The Park National Corporation 2013 Long-Term Incentive Plan (the “2013
Incentive Plan”) was adopted by the Board of Directors of Park on January
28, 2013 and was approved by Park’s shareholders at the Annual Meeting of
Shareholders on April 22, 2013. The 2013 Incentive Plan replaces the 2005
Plan and Park’s Stock Plan for Non-Employee Directors of Park National
Corporation and Subsidiaries (the “Directors’ Stock Plan”) which were termi-
nated immediately following the approval of the 2013 Incentive Plan. The 2013
Incentive Plan makes equity-based awards and cash-based awards available for
grant to participants in the form of incentive stock options, nonqualified stock
options, stock appreciations rights, restricted common shares, restricted stock
awards that may be settled in common shares, cash or a combination of the
two, unrestricted common shares and cash-based awards. Under the 2013
Incentive Plan, 600,000 common shares are authorized to be granted. The
common shares to be issued and delivered under the 2013 Incentive Plan
may consist of either common shares currently held or common shares sub -
sequently acquired by Park as treasury shares, including common shares
purchased in the open market or in private transactions. No awards may be
made under the 2013 Incentive Plan after April 22, 2023. At December 31,
2014, 557,275 common shares were available for future grants under the
2013 Incentive Plan.

During 2014 and 2013, Park granted 10,200 and 10,550 common shares,
respectively, to directors under the 2013 Incentive Plan. The common shares
granted to directors were not subjected to a vesting period and resulted in
expense of $801,000 and $850,000 in 2014 and 2013, respectively, which
is included in Professional fees and services on the Consolidated Income
Statement.

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On January 24, 2014, the Compensation Committee of the Board of Directors
of Park granted awards of 21,975 performance-based restricted stock units
(“PBRSUs”) to certain employees of Park, which grants were effective on
January 24, 2014. The number of PBRSUs earned or settled will depend on
certain performance conditions and are also subject to service-based vesting.
Share-based compensation expense of $458,000 was recognized in 2014
related to awards to employees. Park expects to recognize additional share-
based compensation expense of approximately $1.2 million through the first
quarter of 2018 related to these PBRSUs. No share-based compensation
expense was recognized in 2013 or 2012 as there were no outstanding
awards held by employees.

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

The Corporation generally contributes annually an amount that can be deducted
for federal income tax purposes using a different actuarial cost method and
different assumptions from those used for financial reporting purposes. In
January 2013, management contributed $12.6 million, of which $11.0 million
was deductible on the 2012 tax return and $1.6 million was deductible on
the 2013 tax return. See Note 17 of these Notes to Consolidated Financial
Statements. There was no pension contribution in 2014 and there is no
contribution expected in 2015.

Using an accrual measurement date of December 31, 2014 and 2013, plan
assets and benefit obligation activity for the Pension Plan are listed below:

(In thousands)

2014

2013

Change in fair value of plan assets

Fair value at beginning of measurement period
Actual return on plan assets
Company contributions
Benefits paid

Fair value at end of measurement period

Change in benefit obligation

Projected benefit obligation at beginning of

measurement period

Service cost
Interest cost
Actuarial (gains) loss
Benefits paid

Projected benefit obligation at the

end of measurement period

Funded status at end of year

$152,739
15,511
—
(7,652)

$160,598

$ 89,179
4,331
4,577
18,893
(7,652)

$117,768
31,518
12,638
(9,185)

$152,739

$ 97,653
4,817
4,223
(8,329)
(9,185)

$109,328

$ 89,179

(fair value of plan assets less benefit obligation)

$ 51,270

$ 63,560

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

Asset Category

Target Allocation

Equity securities
Fixed income and cash equivalents

50% – 100%
remaining balance

Total

—

2014

85%
15%

100%

2013

83%
17%

100%

Percentage of Plan Assets

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

The expected long-term rate of return on plan assets used to measure the
benefit obligation was 7.25% as of December 31, 2014 and 2013. This return
was based on the expected return of each of the asset categories, weighted
based on the median of the target allocation for each class.

The accumulated benefit obligation for the Pension Plan was $92.0 million
and $75.9 million at December 31, 2014 and 2013, respectively.

On November 17, 2009, the Park Pension Plan completed the purchase of
115,800 common shares of Park for $7.0 million or $60.45 per share. At
December 31, 2014 and 2013, the fair value of the 115,800 common shares
held by the Pension Plan was $10.2 million, or $88.48 per share and $9.9
million, or $85.07 per share, respectively.

The weighted average assumptions used to determine benefit obligations at
December 31, 2014, 2013 and 2012 were as follows:

Discount rate
Rate of compensation increase

Under age 30
Ages 30–39
Ages 40 and over

2014

4.42%

10.00%
6.00%
3.00%

2013

5.30%

10.00%
6.00%
3.00%

2012

4.47%
3.00%

The estimated future pension benefit payments reflecting expected future
service for the next ten years are shown below (in thousands):

2015
2016
2017
2018
2019
2020 – 2024

Total

$ 6,282
6,236
6,902
7,081
7,799
46,850

$81,150

The following table shows ending balances of accumulated other
comprehensive loss at December 31, 2014 and 2013.

(In thousands)

Prior service cost
Net actuarial loss

Total

Deferred taxes

Accumulated other comprehensive loss

2014

(15)
(22,855)

(22,870)

8,005

$(14,865)

2013

$
(34)
(8,579)

(8,613)

3,015

$(5,598)

Using an actuarial measurement date of December 31 for 2014, 2013 and
2012, components of net periodic benefit cost and other amounts recognized
in other comprehensive (loss) income were as follows:

(In thousands)

2014

2013

2012

Components of net periodic benefit cost
and other amounts recognized in
other comprehensive (loss) income
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost
Recognized net actuarial loss

Net periodic benefit income (cost)

Change to net actuarial (loss) gain

for the period

Amortization of prior service cost
Amortization of net loss

Total recognized in other

comprehensive (loss) income

Total recognized in net benefit cost

$ (4,331)
(4,577)
10,869
(19)
—

$ 1,942

$(14,276)
19
—

$ (4,817)
(4,223)
9,536
(20)
(2,703)

$ (2,227)

$30,409
20
2,703

$ (4,271)
(4,048)
8,742
(20)
(1,708)

$ (1,305)

$(11,236)
20
1,708

(14,257)

33,132

(9,508)

and other comprehensive (loss) income $(12,315)

$30,905

$(10,813)

The estimated prior service costs for the Pension Plan that will be amortized
from accumulated other comprehensive loss into net periodic benefit cost over
the next fiscal year is $15,000. The estimated net actuarial loss expected to
be recognized in the next fiscal year is $637,000.

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The weighted average assumptions used to determine net periodic benefit cost
for the years ended December 31, 2014, 2013 and 2012 are listed below:

Discount rate
Rate of compensation increase

Under age 30
Ages 30 – 39
Ages 40 and over

Expected long-term return on plan assets

2014

5.30%

10.00%
6.00%
3.00%
7.25%

2013

4.47%

10.00%
6.00%
3.00%
7.50%

2012

5.18%
3.00%

7.75%

The Pension Plan maintains cash in a PNB savings account. The Pension Plan
cash balance was $1.9 million at December 31, 2014.

GAAP defines fair value as the price that would be received by Park for an asset
or paid by Park to transfer a liability (an exit price) in an orderly transaction
between market participants on the measurement date, using the most advan -
tageous market for the asset or liability. The fair values of equity securities,
consisting of mutual fund investments and common stock (U.S. large cap) held
by the Pension Plan and the fixed income and cash equivalents, are determined
by obtaining quoted prices on nationally recognized securities exchanges (Level
1 inputs). The fair value of Pension Plan assets at December 31, 2014 was
$160.6 million. At December 31, 2014, $141.1 million of equity investments
and cash in the Pension Plan were categorized as Level 1 inputs; $19.5 million
of plan investments in corporate (U.S. large cap) and U.S. Government spon-
sored entity bonds were categorized as Level 2 inputs, as fair value was based
on quoted market prices of comparable instruments; and no investments were
categorized as Level 3 inputs. The fair value of Pension Plan assets was $152.7
million at December 31, 2013. At December 31, 2013, $128.7 million of
investments in the Pension Plan were categorized as Level 1 inputs; $24.0
million were categorized as Level 2; and no investments were categorized
as Level 3.

The Corporation has a voluntary salary deferral plan covering substantially
all of the employees of the Corporation and its subsidiaries. Eligible employees
may contribute a portion of their compensation subject to a maximum statutory
limitation. The Corporation provides a matching contribution established
annually by the Corporation. Contribution expense for the Corporation was
$1.1 million, $1.1 million, and $1.0 million for 2014, 2013 and 2012,
respectively.

The Corporation has a Supplemental Executive Retirement Plan (SERP)
covering certain key officers of the Corporation and its subsidiaries with
defined pension benefits in excess of limits imposed by federal tax law. The
accrued benefit cost for the SERP totaled $7.6 million and $6.8 million for
2014 and 2013, respectively. The expense for the Corporation was $0.2
million for 2014, $0.2 million for 2013 and $0.3 million for 2012.

17. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant compo-
nents of the Corporation’s deferred tax assets and liabilities are as follows:

December 31 (in thousands)

2014

2013

Deferred tax assets:

Allowance for loan losses
Accumulated other comprehensive loss –

Pension Plan

Accumulated other comprehensive loss –

Unrealized losses on securities

Intangible assets
Deferred compensation
OREO devaluations
Partnership adjustments
Net deferred loan fees
Other

$19,023

$20,814

8,005

—
543
3,820
3,984
4,725
933
3,795

3,015

16,057
673
3,611
5,287
3,793
282
3,423

Total deferred tax assets

$44,828

$56,955

December 31 (in thousands)

2014

2013

Deferred tax liabilities:

Accumulated other comprehensive

income – unrealized gains on securities

Deferred investment income
Pension Plan
Mortgage servicing rights
Other

Total deferred tax liabilities

Net deferred tax assets

677
10,199
25,949
3,015
804

$40,644

$ 4,184

$ —
10,199
25,261
3,154
850

$39,464

$17,491

Park performs an analysis to determine if a valuation allowance against
deferred tax assets is required in accordance with GAAP. Management has
determined that it is not required to establish a valuation allowance against
the December 31, 2014 or 2013 deferred tax assets in accordance with GAAP
since it is more likely than not that the deferred tax assets will be fully utilized
in future periods.

The components of the provision for federal income taxes are shown below:

December 31 (In thousands)

2014

2013

2012

Currently payable

Federal

Deferred
Federal

Total

$27,039

$27,587

$12,984

1,563

$28,602

(2,456)

$25,131

12,717

$25,701

The following is a reconciliation of income tax expense to the amount
computed at the statutory rate of 35% for the years ended December 31,
2014, 2013 and 2012.

Statutory federal corporate tax rate
Changes in rates resulting from:

Tax-exempt interest income, net of

disallowed interest

Bank owned life insurance
Tax credits (low income housing)
Other

Effective tax rate

2014

35.0%

(0.5)%
(1.5)%
(6.3)%
(1.3)%

25.4%

2013

35.0%

(0.8)%
(1.7)%
(6.6)%
(1.3)%

24.6%

2012

35.0%

(0.9)%
(1.6)%
(6.1)%
(1.8)%

24.6%

Park and its subsidiaries do not pay state income tax to the state of Ohio, but
pay a franchise tax based on equity. The franchise tax expense is included in
the state tax expense and is shown in “State taxes” on Park’s Consolidated
Statements of Income.

Unrecognized Tax Benefits
The following is a reconciliation of the beginning and ending amount of
unrecognized tax benefits.

(In thousands)

January 1 Balance

Additions based on tax

positions related to the
current year

Additions for tax positions

of prior years

Reductions for tax positions

of prior years
Reductions due to

statute of limitations

December 31 Balance

2014

$518

—

(76)

$532

2013

$517

—

(77)

$518

2012

$485

—

(67)

$517

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The amount of unrecognized tax benefits that, if recognized, would favorably
affect the effective income tax rate in the future periods at December 31, 2014,
2013 and 2012 was $$413,000, $403,000 and $404,000, respectively. Park
does not expect the total amount of unrecognized tax benefits to significantly
increase or decrease during the next year.

The (income)/expense related to interest and penalties recorded on unrecog-
nized tax benefits in the Consolidated Statements of Income for the years ended
December 31, 2013 and 2012 was $(500) and $4,500, respectively. There
was no expense related to interest and penalties for the year ending 2014.
The amount accrued for interest and penalties at December 31, 2014, 2013
and 2012 was $67,000, $67,000 and $67,500, respectively.

Park and its subsidiaries are subject to U.S. federal income tax and income
tax in various state jurisdictions. The Corporation is subject to routine audits
of tax returns by the Internal Revenue Service and states in which we conduct
business. No material adjustments have been made on closed federal and
state tax audits. All tax years ending prior to December 31, 2011 are closed
to examination by the federal and state taxing authorities.

18. OTHER COMPREHENSIVE INCOME (LOSS)
Other comprehensive income (loss) components, net of tax, are shown in the
following table for the years ended December 31, 2014, 2013 and 2012.

Changes in
Pension Plan
Assets and
Benefit
Obligations

Unrealized
Gains and
Losses on
Available-for-
Sale Securities

Unrealized Net
Holding Loss
on Cash
Flow Hedge

Total

$ (5,598)

$(29,821)

$ —

$(35,419)

(9,279)

30,325

—

21,046

753

(9,267)

31,078

—

765

21,811

$(14,865)

$ 1,257

$ —

$(13,608)

The following table provides information concerning amounts reclassified
out of accumulated other comprehensive income (loss) for the years ended
December 31, 2014 and 2013:

December 31
(In thousands)

Amortization of defined
benefit pension items
Amortization of prior
service cost
Amortization of net loss

Total income before

income taxes

Federal income taxes

Net of tax

Unrealized gains and losses on
available for sale securities

Loss on sale of
investment securities
Other than temporary
impairment

Total income before

income taxes

Federal income taxes

Net of tax

Amount Reclassified
from Accumulated
Other Comprehensive
Income (Loss)

2014

2013

Affected Line Item
in the Consolidated
Statement of Income

19
—

20
2,703

Salaries and employee benefits
Salaries and employee benefits

$2,723

Total income before income taxes

953

Federal income taxes

$1,770

Net of tax

$1,158

$ —

Loss on sale of
investment securities

—

$1,158

405

$ 753

Miscellaneous expense

Total income before income taxes

Federal income taxes

Net of tax

19. EARNINGS PER COMMON SHARE
GAAP requires the reporting of basic and diluted earnings per common share.
Basic earnings per common share excludes any dilutive effects of restricted
stock units, warrants and convertible securities.

The following table sets forth the computation of basic and diluted earnings
per common share:

Year ended December 31
(in thousands, except share data)

Numerator:

Net income available to
common shareholders

Denominator:

Basic earnings per common share:

Weighted-average shares

2014

2013

2012

$84,090

$77,227

$75,205

15,394,971

15,412,365

15,407,078

$(27,134)

$ 9,616

$ —

$(17,518)

Effect of dilutive securities – restricted

stock units and warrants

18,861

—

1,063

19,766

(39,448)

—

(19,682)

1,770

—

1,781

21,536

(39,437)

—

(17,901)

$ (5,598)

$(29,821)

$ —

$(35,419)

$(20,954)

$ 12,673

$ (550)

$ (8,831)

(6,180)

(3,057)

550

(8,687)

$(27,134)

$ 9,616

$ —

$(17,518)

Diluted earnings per common share:
Adjusted weighted-average shares
and assumed conversions

Earnings per common share:

Basic earnings per common share
Diluted earnings per common share

15,413,832

15,412,365

15,408,141

$5.46
$5.46

$5.01
$5.01

$4.88
$4.88

On January 24, 2014, Park awarded 21,975 performance-based restricted stock
units (“PBRSUs”) to certain employees. The PBRSUs vest based on service and
performance conditions. The dilutive effect of the PBRSUs was the addition of
18,861 common shares for the year ended December 31, 2014.

A warrant to purchase 227,376 common shares was outstanding at
December 31, 2011 as a result of Park’s participation in the U.S. Treasury
Capital Purchase Program (“CPP”). Park repurchased the CPP warrant on May
2, 2012. The warrant to purchase 227,376 common shares issued under the
CPP were included in the computation of diluted earnings per common share
for the year ended December 31, 2012 as the dilutive effect of this warrant was
1,063 common shares for the twelve month period ended December 31, 2012.
The exercise price of the CPP warrant to purchase 227,376 common shares
was $65.97.

Year ended
December 31
(In thousands)
Beginning balance at
December 31, 2013
Other comprehensive
gain (loss) before
reclassifications
Amounts reclassified
from accumulated
other comprehensive
income

Net current period

other comprehensive
income (loss)

Ending balance at

December 31, 2014

Beginning balance at
December 31, 2012
Other comprehensive
gain (loss) before
reclassifications
Amounts reclassified
from accumulated
other comprehensive
income

Net current period

other comprehensive
income (loss)

Ending balance at

December 31, 2013

Beginning balance at
December 31, 2011

Net current period

other comprehensive
income (loss)

Ending balance at

December 31, 2012

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All options under Park’s 2005 Plan had expired by December 31, 2012.
The common shares represented by the options for the twelve months ended
December 31, 2012, totaling 63,308, were not included in the computation of
diluted earnings per common share because the exercise price exceeded the
fair value of the underlying common shares such that their inclusion would
have had an anti-dilutive effect.

20. DIVIDEND RESTRICTIONS
Bank regulators limit the amount of dividends a subsidiary bank can declare
in any calendar year without obtaining prior approval. At December 31, 2014,
approximately $86.7 million of the total shareholders’ equity of PNB was avail-
able for the payment of dividends to the Corporation, without approval by the
applicable regulatory authorities.

21. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
AND FINANCIAL INSTRUMENTS WITH CONCENTRATIONS OF
CREDIT RISK

The Corporation is party to financial instruments with off-balance sheet risk
in the normal course of business to meet the financing needs of its customers.
These financial instruments include loan commitments and standby letters of
credit. The instruments involve, to varying degrees, elements of credit and inter-
est rate risk in excess of the amount recognized in the consolidated financial
statements.

The Corporation’s exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for loan commitments and standby letters
of credit is represented by the contractual amount of those instruments. The
Corporation uses the same credit policies in making commitments and condi-
tional obligations as it does for on-balance sheet instruments. Since many of the
loan commitments may expire without being drawn upon, the total commitment
amount does not necessarily represent future cash requirements. The credit
risk involved in issuing letters of credit is essentially the same as that involved
in extending loan commitments to customers.

The total amounts of off-balance sheet financial instruments with credit risk
were as follows:

December 31 (In thousands)

Loan commitments

Standby letters of credit

2014

$885,052

12,473

2013

$821,795

20,590

The loan commitments are generally for variable rates of interest.

The Corporation grants retail, commercial and commercial real estate loans
to customers primarily located in Ohio. The Corporation evaluates each cus-
tomer’s creditworthiness on a case-by-case basis. The amount of collateral
obtained, if deemed necessary by the Corporation upon extension of credit, is
based on management’s credit evaluation of the customer. Collateral held varies
but may include accounts receivable, inventory, property, plant and equipment,
and income-producing commercial properties.

Although the Corporation has a diversified loan portfolio, a substantial portion
of the borrowers’ ability to honor their contracts is dependent upon the eco-
nomic conditions in each borrower’s geographic location and industry.

22. LOAN SERVICING
Park serviced sold mortgage loans of $1,265 million at December 31, 2014,
compared to $1,326 million at December 31, 2013 and $1,311 million at
December 31, 2012. At December 31, 2014, $7.0 million of the sold mortgage
loans were sold with recourse compared to $10.7 million at December 31,
2013. Management closely monitors the delinquency rates on the mortgage
loans sold with recourse. As of December 31, 2014 and 2013, management
had established a reserve of $379,000 and $1.0 million, respectively, to
account for future loan repurchases.

The amortization of mortgage loan servicing rights is included within “Other
service income”. Generally, mortgage servicing rights are capitalized and
amortized on an individual sold loan basis. When a sold mortgage loan
is paid off, the related mortgage servicing rights are fully amortized.

Activity for mortgage servicing rights and the related valuation allowance
follows:

December 31 (In thousands)

2014

2013

2012

Mortgage servicing rights:

Carrying amount, net, beginning of year
Additions
Amortization
Change in valuation allowance

Carrying amount, net, end of year

Valuation allowance:
Beginning of year
Change in valuation allowance

End of year

$ 9,013
1,026
(1,631)
205

$ 8,613

$ 1,031
(205)

$ 826

$ 7,763
2,436
(2,479)
1,293

$ 9,013

$ 2,324
(1,293)

$ 1,031

$ 9,301
3,399
(3,634)
(1,303)

$ 7,763

$ 1,021
1,303

$ 2,324

The fair value of mortgage servicing rights was $9.1 million and $9.5 million at
December 31, 2014 and 2013, respectively. The fair value of mortgage servicing
rights at December 31, 2014 was established using a discount rate of 10% and
constant prepayment speeds ranging from 5.7% to 22.3%. The fair value of
mortgage servicing rights at December 31, 2013 was established using a dis-
count rate of 10% and constant prepayment speeds ranging from 6.6% to
22.5%.

Servicing fees included in other service income were $3.5 million, $3.6 million
and $3.6 million for the years ended December 31, 2014, 2013 and 2012,
respectively.

23. 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:
(cid:0) 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.

(cid:0) Level 2: Level 1 inputs for assets or liabilities that are not actively traded.
Also consists of an observable market price for a similar asset or liability.
This includes the use of “matrix pricing” to value debt securities absent
the exclusive use of quoted prices.

(cid:0) Level 3: Consists of unobservable inputs that are used to measure fair

value when observable market inputs are not available. This could include
the use of internally developed models, financial forecasting and similar
inputs.

Fair value is defined as the price that would be received to sell an asset or
paid to transfer a liability between market participants at the balance sheet date.
When possible, the Company looks to active and observable markets to price
identical assets or liabilities. When identical assets and liabilities are not traded
in active markets, the Company looks to observable market data for similar
assets and liabilities. However, certain assets and liabilities are not traded in
observable markets and Park must use other valuation methods to develop
a fair value. The fair value of impaired loans is typically based on the fair value
of the underlying collateral, which is estimated through third-party appraisals
or internal estimates of collateral values in accordance with Park’s valuation
requirements per its commercial and real estate loan policies.

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Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table presents assets and liabilities measured at fair value on
a recurring basis:

The table below is a reconciliation of the beginning and ending balances of the
Level 3 inputs for the years ended December 31, 2014 and 2013, for financial
instruments measured on a recurring basis and classified as Level 3:

Level 3 Fair Value Measurements

(In thousands)

Balance at January 1, 2014

Total gains (losses)

Included in earnings – realized
Included in earnings – unrealized
Included in other comprehensive income
Purchases, sales, issuances and settlements,

other, net

Re-evaluation of fair value swap

Balance at December 31, 2014

Balance at January 1, 2013

Total gains (losses)

Included in earnings – realized
Included in earnings – unrealized
Included in other comprehensive income
Purchases, sales, issuances and settlements,

other, net

Re-evaluation of fair value swap

Balance at December 31, 2013

Equity
Securities

$759

Fair Value
Swap

$(135)

—
—
17

—
—

$776

$780

(17)
—
(4)

—
—

—
—
—

—
(91)

$(226)

$(135)

—
—
—

—
—

$759

$(135)

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 described below.

Impaired Loans: At the time a loan is considered impaired, it is valued at
the lower of cost or fair value. Impaired loans carried at fair value have been
partially charged-off or receive specific allocations of the allowance for loan
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 comparable sales and the income
approach. Adjustments are routinely made in the appraisal process by the inde-
pendent 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 client and client’s business, resulting in a Level 3 fair value classification.
Impaired loans are evaluated on a quarterly basis for additional impairment
and adjusted accordingly. Additionally, updated valuations are obtained annually
for all impaired loans in accordance with Company policy.

Other Real Estate Owned (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.

Fair Value Measurements at December 31, 2014 Using:

(In thousands)

Level 1

Level 2

Level 3

Balance at
12/31/14

ASSETS

Investment Securities
Obligations of U.S.
Treasury and
other U.S.
Government
sponsored
entities

U.S. Government

sponsored entities’
asset-backed
securities
Equity securities
Mortgage loans
held for sale
Mortgage IRLCs

LIABILITIES

$ —

$538,064

$ —

$538,064

—
1,922

—
—

761,153
—

5,264
70

—
776

—
—

761,153
2,698

5,264
70

Fair value swap

$ —

—

$226

226

Fair Value Measurements at December 31, 2013 Using:

(In thousands)

Level 1

Level 2

Level 3

Balance at
12/31/13

ASSETS

Investment Securities
Obligations of U.S.
Treasury and
other U.S.
Government
sponsored
entities

U.S. Government

sponsored entities’
asset-backed
securities
Equity securities
Mortgage loans
held for sale
Mortgage IRLCs

LIABILITIES

$ —

$525,136

$ —

$525,136

—
1,900

—
—

648,471
—

1,666
61

—
759

—
—

648,471
2,659

1,666
61

Fair value swap

$ —

—

$135

135

There were no transfers between Level 1 and Level 2 during 2014 or 2013.
Management’s policy is to transfer assets or liabilities from one level to another
when the methodology to obtain the fair value changes such that there are more
or fewer unobservable inputs as of the end of the reporting period.

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

Investment securities: Fair values for investment securities are based on
quoted market prices, where available. If quoted market prices are not avail-
able, fair values are based on quoted market prices of comparable instruments.
The Fair Value Measurements tables exclude Park’s FHLB stock and FRB stock.
These assets are carried at their respective redemption values, as it is not prac-
ticable to calculate their fair values. For securities where quoted prices or
market prices of similar securities are not available, which include municipal
securities, fair values are calculated using discounted cash flows.

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.

Mortgage Interest Rate Lock Commitments (IRLCs): IRLCs are based on
current secondary market pricing and are classified as Level 2.

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

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Appraisals for both collateral dependent impaired 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, real
estate appraisals, income approach appraisals and lot development loan
appraisals, received by the Company. These are discussed below:

(cid:0) 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% is based on historical discounts
to appraised values on sold OREO properties.

(cid:0) Income approach appraisals typically incorporate the annual net operat-
ing 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).
(cid:0) 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 utilized. 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. Collateral dependent impaired loans are carried at fair
value if they have been charged down to fair value or if a specific valuation
allowance has been established. 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 to the property’s value subsequent to the initial
measurement.

The following table presents assets and liabilities measured at fair value on a
nonrecurring basis:

Fair Value Measurements at December 31, 2014 Using:

(In thousands)

Level 1

Level 2

Level 3

Balance at
12/31/14

Impaired loans:

$ —

$ 8,481

Commercial real estate
Construction real estate:
SEPH commercial land
and development

—
Remaining commercial —
—

Residential real estate

—
—
—

2,078
3,483
2,921

Total impaired loans

$ —

$16,963

Mortgage servicing

rights

$ —

$ 2,928

$ —

$ 2,928

Other real estate owned:
Commercial real estate
—
Construction real estate —
—
Residential real estate

Total other

—
—
—

1,470
6,473
2,369

real estate owned

$ —

$10,312

Fair Value Measurements at December 31, 2013 Using:

(In thousands)

Level 1

Level 2

Level 3

Balance at
12/31/13

Impaired loans:

$ —

$21,100

Commercial real estate
Construction real estate:
SEPH commercial land
and development

—
Remaining commercial —
—

Residential real estate

—
—
—

4,777
3,788
4,154

Total impaired loans

$ —

$33,819

Mortgage servicing

rights

$ —

$ 2,259

$ —

$ 2,259

Other real estate owned:
Commercial real estate
—
Construction real estate —
—
Residential real estate

Total other

—
—
—

4,119
11,041
3,366

real estate owned

$ —

$18,526

The table below provides additional detail on those impaired loans which are
recorded at fair value as well as the remaining impaired loan portfolio not
included above. The remaining impaired loans consist of loans which are not
collateral dependent as well as 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.

(In thousands)

Year ended December 31, 2014

Impaired loans recorded

at fair value

Remaining impaired loans

Total impaired loans

Year ended December 31, 2013

Impaired loans recorded

at fair value

Remaining impaired loans

Total impaired loans

Recorded
Investment

Prior
Charge-offs

Specific
Valuation
Allowance

Carrying
Balance

$ 19,643
54,069

$ 73,712

$ 41,002
71,313

$112,315

$19,731
12,749

$32,480

$48,952
14,320

$63,272

$ 2,680
980

$ 3,660

$ 7,183
3,268

$10,451

$ 16,963
53,089

$ 70,052

$ 33,819
68,045

$101,864

The expense of credit adjustments related to impaired loans carried at fair value
for the years ended December 31, 2014, 2013 and 2012 was $3.0 million, $8.1
million, and $16.0 million, respectively.

MSRs totaled $8.6 million at December 31, 2014. Of this $8.6 million MSR
carrying balance, $2.9 million was recorded at fair value and included a val -
uation allowance of $0.8 million. The remaining $5.7 million was recorded
at cost, as the fair value exceeded cost at December 31, 2014. At December
31, 2013, MSRs totaled $9.0 million. Of this $9.0 million MSR carrying balance,
$2.3 million was recorded at fair value and included a valuation allowance of
$1.0 million. The remaining $6.7 million was recorded at cost, as the fair value
exceeded cost at December 31, 2013. Income (Expense) related to MSRs
carried at fair value for the years ended December 31, 2014, 2013 and 2012
was $0.2 million, $1.3 million and $(1.3) million, respectively.

Total OREO held by Park at December 31, 2014 and 2013 was $22.6 million
and $34.6 million, respectively. Approximately 46% and 53% of OREO held
by Park at December 31, 2014 and 2013, respectively, was carried at fair
value due to fair value adjustments made subsequent to the initial OREO
measurement. At December 31, 2014 and 2013, OREO held at fair value,
less estimated selling costs, amounted to $10.3 million and $18.5 million,
respectively. The net expense related to OREO fair value adjustments was
$2.4 million, $3.2 million and $6.9 million for the years ended December
31, 2014, 2013 and 2012, respectively.

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The following tables present qualitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at
December 31, 2014 and December 31, 2013:

(In thousands)

December 31, 2014
Impaired loans:

Commercial real estate

Construction real estate:

SEPH commercial land and development

Remaining commercial

Residential real estate

Other real estate owned:
Commercial real estate

Construction real estate

Residential real estate

December 31, 2013
Impaired loans:

Commercial real estate

Construction real estate:

SEPH commercial land and development

Remaining commercial

Residential real estate

Other real estate owned:
Commercial real estate

Construction real estate

Residential real estate

Fair Value

Valuation Technique

Unobservable Input(s)

Range (Weighted Average)

$8,481

2,078

3,483

2,921

1,470

6,473

2,369

$21,100

4,777

3,788

4,154

4,119

11,041

3,366

Sales comparison approach
Income approach
Cost approach

Sales comparison approach
Bulk sale approach

Sales comparison approach
Income approach

Sales comparison approach
Income approach
Cost approach

Sales comparison approach
Bulk sale approach

Sales comparison approach
Income approach

Sales comparison approach
Income approach
Cost approach

Sales comparison approach
Bulk sale approach

Sales comparison approach
Income approach

Sales comparison approach
Income approach
Cost approach

Sales comparison approach
Bulk sale approach

Sales comparison approach
Income approach

Adj to comparables
Capitalization rate
Accumulated depreciation

Adj to comparables
Discount rate

Adj to comparables
Capitalization rate

Adj to comparables
Capitalization rate
Accumulated depreciation

Adj to comparables
Discount rate

Adj to comparables
Capitalization rate

Adj to comparables
Capitalization rate
Accumulated depreciation

Adj to comparables
Discount rate

Adj to comparables
Capitalization rate

Adj to comparables
Capitalization rate
Accumulated depreciation

Adj to comparables
Discount rate

Adj to comparables
Capitalization rate

0.0% – 84.0% (38.8%)
8.0% – 9.5% (9.4%)
23.0% (23.0%)

5.0% – 35.0% (17.5%)
10.8% (10.8%)

0.2% – 76.0% (45.4%)
10.0% – 22.0% (16.5%)

0.0% –120.6% (11.1%)
7.9% – 10.0% (8.0%)

0.0% – 87.0% (30.5%)
8.4% – 10.0% (9.4%)
60.0% – 95.0% (77.5%)

0.0% – 82.9% (27.1%)
15% (15%)

0.0% – 38.3% (10.1%)
6.8% – 7.8% (7.6%)

0.0% – 109.0% (22.8%)
8.0% – 12.5% (9.1%)
11.7% – 65.0% (37.1%)

0.0% – 96.0% (13.9%)
11.0% – 20.0% (14.9%)

0.0% – 40.0% (22.4%)
11.0% – 20.0% (18.0%)

0.0% – 121.8% (14.9%)
7.8% – 10.0% (8.4%)

0.0% – 140.0% (17.7%)
8.0% – 11.5% (9.6%)
60.0% – 95.0% (80.0%)

0.0% – 484.0% (36.2%)
13.0% – 14.0% (13.6%)

0.0% – 273.0% (19.2%)
5.4% – 7.8% (7.4%)

The following methods and assumptions were used by the Corporation in
estimating its fair value disclosures for assets and liabilities not discussed
above:

Cash and cash equivalents: The carrying amounts reported in the
Consolidated Balance Sheets for cash and short-term instruments
approximate those assets’ fair values.

Loans receivable: For variable-rate loans that reprice frequently and with
no significant change in credit risk, fair values are based on carrying values.
The fair values for certain mortgage loans (e.g., one-to-four family residential)
are based on quoted market prices of similar loans sold in conjunction with
securitization transactions, adjusted for differences in loan characteristics.
The fair values for other loans are estimated using discounted cash flow analy-
ses, based upon interest rates currently being offered for loans with similar
terms to borrowers of similar credit quality. The methods utilized to estimate
fair value do not necessarily represent an exit price.

Off-balance sheet instruments: Fair values for the Corporation’s loan com-
mitments and standby letters of credit are based on the fees currently charged
to enter into similar agreements, taking into account the remaining terms of the
agreements and the counterparties’ credit standing. The carrying amount and
fair value are not material.

Deposit liabilities: The fair values disclosed for demand deposits (e.g.,
interest and non-interest checking, savings, and money market accounts) are,
by definition, equal to the amount payable on demand at the reporting date
(i.e., their carrying amounts). The carrying amounts for variable-rate, fixed-
term certificates of deposit approximate their fair values at the reporting date.
Fair values for fixed-rate certificates of deposit are estimated using a discounted
cash flow calculation that applies interest rates currently being offered on
certificates to a schedule of aggregated expected monthly maturities of time
deposits.

Short-term borrowings: The carrying amounts of federal funds purchased,
borrowings under repurchase agreements and other short-term borrowings
approximate their fair values.

Long-term debt: Fair values for long-term debt are estimated using a
discounted cash flow calculation that applies interest rates currently being
offered on long-term debt to a schedule of monthly maturities.

Subordinated notes: Fair values for subordinated notes are estimated using
a discounted cash flow calculation that applies interest rate spreads currently
being offered on similar debt structures to a schedule of monthly maturities.

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The fair value of financial instruments at December 31, 2014 and December 31, 2013, was as follows:

Fair Value Measurements at December 31, 2014:

Level 1

Level 2

Level 3

(In thousands)

Financial assets:

Cash and money market instruments
Investment securities
Accrued interest receivable – securities
Accrued interest receivable – loans
Mortgage loans held for sale
Impaired loans carried at fair value
Mortgage IRLCs
Other loans

Loans receivable, net

Financial liabilities:

Non-interest bearing checking accounts
Interest bearing transaction accounts
Savings accounts
Time deposits
Other

Total deposits

Short-term borrowings
Long-term debt
Subordinated notes
Accrued interest payable – deposits
Accrued interest payable – debt /borrowings

Derivative financial instruments:

Fair value swap

Fair Value Measurements at December 31, 2013:

(In thousands)

Financial assets:

Loans receivable, net

Financial liabilities:

Non-interest bearing checking accounts
Interest bearing transaction accounts
Savings accounts
Time deposits
Other

Total deposits

Short-term borrowings
Long-term debt
Subordinated notes
Accrued interest payable – deposits
Accrued interest payable – debt /borrowings

Derivative financial instruments:

Fair value swap

Carrying
Value

$ 237,699
1,442,477
4,048
13,629
5,264
16,963
70
4,753,033

$4,775,330

$1,269,296
1,122,079
1,325,445
1,409,911
1,269

$5,128,000

$ 276,980
786,602
45,000
1,125
1,426

226

Carrying
Value

$ 147,030
1,358,327
4,840
13,495
1,666
33,819
61
4,525,491

$4,561,037

$1,193,553
1,145,525
1,124,994
1,324,659
1,263

$4,789,994

$ 242,029
810,541
80,250
1,366
1,535

135

$ 237,699
1,922
—
—
—
—
—
—

—

$1,269,296
1,122,079
1,325,445
—
1,269

$3,718,089

—
—
—
14
3

—

$ 147,030
1,900
—
—
—
—
—
—

—

$1,193,553
1,145,525
1,124,994
—
1,263

$3,465,335

—
—
—
16
4

—

226

Level 1

Level 2

Level 3

$
—
1,442,708
4,048
—
5,264
—
70
—

5,334

—
—
—
1,422,885
—

$1,422,885

$ 276,980
827,500
42,995
1,111
1,423

—
775
—
13,629
—
16,963
—
4,757,461

$4,774,424

—
—
—
—
—

—

—
—
—
—
—

—
$
1,361,009
4,840
—
1,666
—
61
—

1,727

—
—
—
1,331,129
—

$1,331,129

$ 242,029
860,963
83,140
1,350
1,531

—
759
—
13,495
—
33,819
—
4,531,680

$4,565,499

—
—
—
—
—

—

—
—
—
—
—

Total
Fair Value

$ 237,699
1,445,405
4,048
13,629
5,264
16,963
70
4,757,461

$4,779,758

$1,269,296
1,122,079
1,325,445
1,422,885
1,269

$5,140,974

$ 276,980
827,500
42,995
1,125
1,426

Total
Fair Value

$ 147,030
1,363,668
4,840
13,495
1,666
33,819
61
4,531,680

$4,567,226

$1,193,553
1,145,525
1,124,994
1,331,129
1,263

$4,796,464

$ 242,029
860,963
83,140
1,366
1,535

—

135

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24. CAPITAL RATIOS
At December 31, 2014 and 2013, the Corporation and PNB had Tier 1,
total risk-based capital and leverage ratios which were well above the
required minimum levels of 4.00%, 8.00% and 4.00%.

The following table indicates the capital ratios for Park and PNB at
December 31, 2014 and December 31, 2013.

2014

Total
Risk-
Based

Tier 1
Risk-
Based

Leverage

2013

Total
Risk-
Based

Park National Bank

10.13% 11.74% 6.96%

10.01% 11.78%

Park

13.39% 15.14% 9.25%

13.27% 15.91%

Leverage

7.10%

9.48%

Failure to meet the minimum requirements above could cause the FRB to take
action. PNB is also subject to the capital requirements of its primary regulator,
the OCC. As of December 31, 2014 and 2013, Park and PNB were well-capital-
ized and met all capital requirements to which each was then subject. There are
no conditions or events since PNB’s most recent regulatory report filings, that
management believes have changed the risk categories for PNB.

The following table reflects various measures of capital for Park and PNB:

(In thousands)

Actual Amount

Ratio

To Be Adequately Capitalized
Ratio
Amount

To Be Well Capitalized

Amount

Ratio

At December 31, 2014:
Total risk-based capital

(to risk-weighted assets)

PNB
Park

Tier 1 risk-based capital

(to risk-weighted assets)

PNB
Park
Leverage ratio

(to average total assets)

PNB
Park

At December 31, 2013:
Total risk-based capital

(to risk-weighted assets)

PNB
Park

Tier 1 risk-based capital

(to risk-weighted assets)

PNB
Park
Leverage ratio

(to average total assets)

PNB
Park

$563,188
739,517

$485,943
654,339

$545,144
754,605

$463,015
629,410

11.74%
15.14%

10.13%
13.39%

6.96%
9.25%

11.78%
15.91%

10.01%
13.27%

7.10%
9.48%

$383,634
390,822

$191,817
195,411

$279,210
282,992

$370,198
379,446

$185,099
189,723

$261,025
265,633

8.00%
8.00%

4.00%
4.00%

8.00%
8.00%

4.00%
4.00%

$479,542
N/A

$287,725
N/A

$349,013
N/A

$462,747
N/A

$277,648
N/A

$326,281
N/A

10.00%
N/A

6.00%
N/A

5.00%
N/A

10.00%
N/A

6.00%
N/A

5.00%
N/A

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25. SEGMENT INFORMATION
The Corporation is a financial holding company headquartered in Newark,
Ohio. The operating segments for the Corporation are its chartered national
bank subsidiary, PNB (headquartered in Newark, Ohio), SEPH and GFSC.

GAAP requires management to disclose information about the different types
of business activities in which a company engages and also information on the
different economic environments in which a company operates, so that the

users of the financial statements can better understand a company’s perform-
ance, better understand the potential for future cash flows, and make more
informed judgments about the company as a whole. Park’s current operating
segments are in line with GAAP as: (i) discrete financial information is available
for each operating segment and (ii) the segments are aligned with internal
reporting to Park’s Chief Executive Officer and President, who is the chief
operating decision maker.

Operating results for the year ended December 31, 2014 (In thousands)

Net interest income (loss)
Provision for (recovery of) loan losses
Other income (loss)
Other expense

Income (loss) before taxes
Income taxes (benefit)

Net income (loss)

Balances at December 31, 2014:
Assets
Loans
Deposits

PNB

$ 218,641
3,517
69,384
171,365

113,143
30,103

83,040

$6,912,443
4,781,761
5,222,766

Operating results for the year ended December 31, 2013 (In thousands)

Net interest income (loss)
Provision for (recovery of) loan losses
Other income
Other expense

Income (loss) before taxes
Income taxes (benefit)
Net income (loss)

Balances at December 31, 2013:
Assets
Loans
Deposits

PNB

$ 210,781
14,039
70,841
165,665

101,918
26,324
75,594

$6,524,098
4,559,406
4,896,405

Operating results for the year ended December 31, 2012 (In thousands)

Net interest income (loss)
Provision for loan losses
Other income
Other expense

Income (loss) before taxes
Income taxes (benefit)
Net income (loss)

Balances at December 31, 2012:
Assets
Loans
Deposits

PNB

$ 221,758
16,678
70,739
156,516

119,303
32,197
87,106

$6,502,579
4,369,173
4,814,107

GFSC

$ 7,457
1,544
(1)
4,103

1,809
634

$ 1,175

$ 40,308
40,645
5,883

GFSC

$ 8,741
1,175
11
3,133

4,444
1,556
$ 2,888

$ 47,115
47,228
7,159

GFSC

$ 9,156
859
—
2,835

5,462
1,912
$ 3,550

$ 49,926
50,082
8,358

SEPH

958
(12,394)
5,991
11,766

7,577
2,652

$ 4,925

$ 43,762
23,956
—

SEPH

$ (1,325)
(11,799)
1,956
12,211

219
77
142

$ 72,781
38,014
—

SEPH

(341)
17,882
21,431
22,032

(18,824)
(6,603)
$ (12,221)

$104,428
59,178
—

All Other

$ (2,012)
—
175
8,000

(9,837)
(4,787)

$ (5,050)

$ 6,743
(16,680)
(100,649)

All Other

2,828
—
469
7,520

(4,223)
(2,826)
$ (1,397)

$ (5,647)
(24,143)
(113,570)

All Other

4,742
—
233
6,585

(1,610)
(1,805)
$ 195

$ (14,130)
(28,111)
(106,433)

Total

$ 225,044
(7,333)
75,549
195,234

112,692
28,602

84,090

$7,003,256
4,829,682
5,128,000

Total

$ 221,025
3,415
73,277
188,529

102,358
25,131
77,227

$6,638,347
4,620,505
4,789,994

Total

$ 235,315
35,419
92,403
187,968

104,331
25,701
78,630

$6,642,803
4,450,322
4,716,032

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The following is a reconciliation of financial information for the reportable
segments to the Corporation’s consolidated totals:

Statements of Income
for the years ended December 31, 2014, 2013 and 2012

$230,573

$6,954 $174,429 $27,506 $6,656,933 $4,822,465

Other comprehensive income (loss) (1)

21,811

Comprehensive income

105,901

—

(35,639)

(106,433)

(1) See Consolidated Statements of Comprehensive Income for other comprehensive income detail.

(In thousands)

2014:

Totals for reportable

segments

Elimination of

Net Interest Depreciation

Income

Expense

Other
Expense

Income
Taxes

Assets

Deposits

$227,056

$7,243 $179,991 $33,389 $6,996,513 $5,228,649

intersegment items

3,708

Parent Co. totals –
not eliminated

(5,720)

—

(18,556)

(100,649)

8,000

(4,787)

25,299

—

Totals

2013:

Totals for reportable

segments

Elimination of

$225,044

$7,243 $187,991 $28,602 $7,003,256 $5,128,000

$218,197

$7,315 $173,694 $27,957 $6,643,994 $4,903,564

intersegment items

8,659

Parent Co. totals –
not eliminated

(5,831)

—

(30,369)

(113,570)

7,520

(2,826)

24,722

—

$221,025

$7,315 $181,214 $25,131 $6,638,347 $4,789,994

Totals

2012:

Totals for reportable

segments

Elimination of

intersegment items

8,558

Parent Co. totals –
not eliminated

(3,816)

—

6,585

(1,805)

21,509

—

Totals

$235,315

$6,954 $181,014 $25,701 $6,642,803 $4,716,032

26. PARENT COMPANY STATEMENTS
The Parent Company statements should be read in conjunction with the con -
solidated financial statements and the information set forth below. Investments
in subsidiaries are accounted for using the equity method of accounting. The
effective tax rate for the Parent Company is substantially less than the statutory
rate due principally to tax-exempt dividends from subsidiaries.

Cash represents non-interest bearing deposits with PNB. Net cash provided
by operating activities reflects cash payments (received from subsidiaries)
for income taxes of $5.81 million, $2.54 million and $4.54 million in 2014,
2013 and 2012, respectively.

At December 31, 2014 and 2013, shareholders’ equity reflected in the
Parent Company balance sheet includes $197.9 million and $196.0 million,
respectively, of undistributed earnings of the Corporation’s subsidiaries which
are restricted from transfer as dividends to the Corporation.

Balance Sheets
December 31, 2014 and 2013

(In thousands)

Assets:
Cash

Investment in subsidiaries

Debentures receivable from PNB

Other investments

Other assets

Total assets

Liabilities:

Subordinated notes

Other liabilities

Total liabilities

Total shareholders’ equity

2014

$ 98,671

601,912

25,000

2,344

23,260

$751,187

45,000

7,589

52,589

698,598

Total liabilities and shareholders’ equity

$751,187

2013

$106,942

582,992

25,000

2,297

21,984

$739,215

80,250

7,218

87,468

651,747

$739,215

(In thousands)

Income:

Dividends from subsidiaries

Interest and dividends

Other

Total income

Expense:

Other, net

Total expense

Income before federal taxes and
equity in undistributed income
(losses) of subsidiaries

Federal income tax benefit

Income before equity in
undistributed income
(losses) of subsidiaries

Equity in undistributed income

(losses) of subsidiaries

Net income

2014

2013

2012

$60,000

$15,000

$ 197,000

3,708

262

63,970

13,807

50,163
4,787

8,659

531

24,190

13,413

10,777
2,826

10,027

232

207,259

11,869

195,390
1,806

54,950

13,603

197,196

29,140

$84,090

63,624

$77,227

(17,901)

59,326

(118,566)

$ 78,630

(8,687)

69,943

Statements of Cash Flows
for the years ended December 31, 2014, 2013 and 2012

(In thousands)

Operating activities:

Net income

2014

2013

2012

$ 84,090

$ 77,227

$ 78,630

Adjustments to reconcile net income to

net cash provided by operating activities:
Undistributed (income) losses of subsidiaries

Compensation expense for issuance
of treasury stock to directors

Share-based compensation expense

(Decrease) increase in other assets

Increase (decrease) in other liabilities

Net cash provided by
operating activities

Investing activities:

Capital contribution in subsidiary
Purchase of debentures receivable

from subsidiaries

Repayment of investment in

and advances to subsidiaries

Net cash provided by (used in)

investing activities

Financing activities:
Cash dividends paid

Payment to repurchase

warrants

Payment to repurchase
preferred shares

Repayment of subordinated notes

Repurchase of treasury shares

Proceeds from issuance of
subordinated notes

Cash payment for fractional shares

Net cash used in

financing activities

(Decrease) increase in cash

Cash at beginning of year

(29,140)

(63,624)

118,566

801

458

(1,292)

298

850

—

(2,215)

(2,187)

407

—

5,748

1,724

55,215

10,051

205,075

—

(45,000)

—

(115,000)

32,000

101,960

52,000

32,000

56,960

(108,000)

(57,876)

(57,949)

(60,154)

—

(35,250)

(2,355)

—

(5)

(95,486)

(8,271)

106,942

—

(843)

—

(3)

(2,843)

(100,000)

—

30,000

(2)

(58,795)

(132,999)

8,216

98,726

(35,924)

134,650

Cash at end of year

$ 98,671

$106,942

$ 98,726

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27. PARTICIPATION IN THE U.S. TREASURY
CAPITAL PURCHASE PROGRAM (CPP)

On December 23, 2008, Park issued $100 million of Fixed Rate Cumulative
Perpetual Preferred Shares, Series A, with a liquidation preference of $1,000
per share (the “Series A Preferred Shares”), associated with Park’s participa-
tion in the CPP. As part of its participation in the CPP, Park also issued a warrant
to the U.S. Treasury to purchase 227,376 common shares (the “Warrant”).

On April 25, 2012, Park entered into a Letter Agreement with the U.S. Treasury
pursuant to which Park repurchased the 100,000 Series A Preferred Shares for
a purchase price of $100 million plus a pro rata accrued and unpaid dividend.
Total consideration of $101.0 million included accrued and unpaid dividends
of $1.0 million. In addition to the accrued and unpaid dividends of $1.0
million, the charge to retained earnings, resulting from the repurchase of
the Series A Preferred Shares, was $1.6 million on April 25, 2012.

On May 2, 2012, Park entered into a Letter Agreement pursuant to which Park
repurchased from the U.S. Treasury the Warrant to purchase 227,376 Park
common shares in full for consideration of $2.8 million, or $12.50 per Park
common share.

PNC_AR2014_final 2/18/15 7:56 AM Page 63

N O T E S

PNC_AR2014_final 2/18/15 7:56 AM Page 64

N O T E S

PNC_AR2014_final 2/18/15 7:56 AM Page 65

N O T E S

PARKNAT IONAL

C O R P O R A T I O N

2014

ANNUAL REPORT

PARKNAT IONAL

C O R P O R A T I O N

PARK NATIONAL CORPORATION
Post Office Box 3500
Newark, Ohio 43058-3500
740.349.8451
ParkNationalCorp.com

2014

ANNUAL REPORT