Park National Corp. Annual Report 2015

FY2015 Annual Report · Park National Corp.

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PARKNATIONA L
C OR P OR A T I ON 2015 ANNUAL

REPORT

PARK NATIONAL CORPORATION
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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Auglaize

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Columbiana

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Delaware

Knox

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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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_AR2015_10 2/17/16 3:27 PM 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

PNC_AR2015_11 2/19/16 10:34 AM Page 2

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

Writing last year’s letter was more fun than writing this one,
because we made more money in 2014 than we did in 2015. You
will see below that we did not increase our net income year over
year, but we are encouraged by the improvement in our efficiency
ratio—a metric that informs our strategic thinking and execution.

Things we did in 2015
Debit card conversion: In October, we converted roughly
180,000 debit card accounts from one processor to another.
The neat thing is we picked up operational efficiency while
positioning ourselves to improve our customers’ experience.

Favorite Numbers
Readers of last year’s letter recall that we track an extended list
of numbers; these are our favorites:

Favorite Number

Net Income (000’s)

Return on Equity (ROE)

Return on Assets (ROA)

Net Interest Margin (NIM)

Efficiency Ratio

2015

$81,012

11.40%

1.11%

3.39%

60.98%

2014

$83,957

12.34%

1.22%

3.55%

62.21%

2013

$76,869

11.84%

1.16%

3.61%

61.40%

Electronic banking surge: Many of our customers enjoy the
warmth and personal service they receive in our branches. Others
appreciate the convenience of conducting banking through their
phone, our websites and our mobile apps. Most engage us by
some blend of all four. But the trends in electronic banking are
unmistakable—in the industry and in our shop. In the past 12
months our digital log-ins have increased 7.4% and in the past 24
months, they have increased 30.4%. We now have over 1.3 million
digital interactions each month.

We like to see the first four numbers increase every year. Alas,
they did not. As mentioned, the Efficiency Ratio (smaller number
is better) did improve. We have invested countless hours in
process improvement, improved execution and efficient revenue
generation. The improvement in our efficiency ratio suggests our
efforts are beginning to take hold.

Building on the digital momentum, we introduced our Business
Mobile Banking app in the fourth quarter of 2015. We have seen
a steady increase in the number of business customers using the
application. By using mobile banking to deposit checks and actively
manage their accounts, our customers are embracing the ability to
bank anytime, anywhere.

Strategic Plan: Many, if not most, companies develop strategic
plans. We are no different; we completed a refresh of ours late in
2014. Where we may differ from some others is that our strategic
plan has not been relegated to a coffee table in our executive suite.
One, we don’t have any executive suites or coffee tables. Two,
we have used our strategic plan to inform how we allocate our
talent, attention and financial resources. That is, the challenge is
not to develop a list of worthy activities. The challenge is to select
only those activities that will enhance our customers’ experiences
with us, ensure our colleagues have the finest tools available to
help customers and produce excellent financial results. We wrote
last year that we had to act on our strategic plan...and we are.

Customer Research results: Our marketing colleagues
conducted a study of our customers’ habits, beliefs and practices.
The goal was to determine whether what we believe we are
providing—unmatched personal attention and valued advice,
products and services—is what customers are experiencing.
The results were remarkable. Our customers like us and value
what we offer. Now we just need to tell our story to more people.

How did we do what we did?
We have three main operating segments in Park National
Corporation (PRK) -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 (000’s)

(In thousands)

2015

2014

2013

PNB

GFSC

Parent Company

Ongoing operations

SEPH

$84,345

$82,907

$75,236

1,423

1,175

(4,549)

(5,050)

81,219

(207)

79,032

4,925

2,888

(1,397)

76,727

142

Total Park Net Income

$81,012

$83,957

$76,869

If PRK is an eight-cylinder engine, PNB represents roughly nine of
the eight pistons. As noted above, the eight-cylinder engine (PRK)
didn’t do as well as last year. But PNB’s nine pistons improved by
roughly $1.4 million, and ongoing operations has improved each
of the past two years.

Our Annual Report offers more detail on all our financial results.

PNC_AR2015_10 2/17/16 3:27 PM Page 3

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

Rookwood office: On December 7, 2015, our Park National
Bank of Southwest Ohio and Northern Kentucky Division (PSW)
opened its newest office just off I-71 five minutes north of
downtown Cincinnati in the Rookwood Exchange building on
Edwards Road in the Norwood/Rookwood area. It is a full-service
office, modeled off our downtown Columbus, Ohio office that
specializes in serving the financial needs of small and privately-held
businesses. On January 27, 2016, PSW welcomed over 300 people
to the office’s open house. They and we are excited about their
prospects.

Contact management: Last year your Board of Directors
approved a significant investment in a new Customer Relationship
Management (CRM) system. CRM systems are sort of like Strategic
Plans. Everyone gets whipped up about them, then after the
introductory party is over, most go back to what they were
doing. We won’t. We have a culture that breeds business
development. The new CRM tool will help us increase business
development—by contacting customers and prospects
as often as they wish (but not so often that we become a pest)
and recording how we can help and when.

New office in Wooster: Due to increased traction and demand in
Wayne County, our First-Knox National Bank Division (First-Knox)
opened a full-service office in May at 2148-G Eagle Pass in Wooster,
Ohio. Vickie Sant, president of First Knox, and Bob Boss, area
executive for Holmes and Knox Counties, anticipate great things
from our new office and we believe them.

Lending center in New Philadelphia: In August, our Century
National Bank Division (Century) opened a lending center in New
Philadelphia at 1255 Monroe Avenue in the Monroe Plaza. The
office will help accelerate Century’s business in Tuscarawas County
by improving access to local lenders who know and live in the
area. Pat Nash, president of Century, and Becky Porteus, Coshocton
and Tuscarawas County leader, and their colleagues are eager to
deepen their involvement in the Dover/New Philadelphia
community.

Things we’re thinking about for 2016
Regulations: They’re still here...and not diminishing. We are
“ok” with this, for we know that our competitors operate in the
same environment. Many will continue; however, some will
conclude that the game has become too complex. While the game
may be complex, we have the talent, the energy and the conviction
to operate firmly within the guardrails.

Customer experience: We constantly assess how we can improve
our customers’ experiences with us—whether in person, on the
phone or through Internet/mobile apps (we have not begun
thinking about banking by telepathy—yet). Our overriding goal
is to ensure that however customers decide to engage us, they feel
confident and valued. The tools may change, but our interest in
excellent customer service is unwavering.

Growth: Bill McConnell taught us to focus on results, not activity.
All that we do must first pass that test; thus, we consider all
prospects—whether they be potential deposit, loan or wealth
management clients—within that context. We are pleased to
report we added customers in all categories. We are grateful to
all our colleagues, for our success has been, and always will be,
a team effort.

Mergers/Acquisitions (M&A): As we write this, two of our
Ohio competitors have just announced they are merging. We
wish them well. We have spoken with a number of potential
acquisition candidates, and don’t intend to back off this pace.
But we will remain disciplined and patient. We don’t have to
do anything in this area. We will, at some point—when the
time and circumstances are right.

Culture: In a March 22, 2011 Harvard Business Review article,
Nilofer Merchant wrote, “Culture will trump strategy, every time”.
We agree with her. We also believe that a company nears its
maximum potential if it is guided by a solid strategic plan (we
think ours is), which is animated by people operating within a
rich culture of service and performance (we’ve worked on this
for decades, and continue the journey daily).

We ask these questions as we think about our culture:
■ “What’s best for the customer?”
■ “How can we improve our service?”
■ “How do we improve shareholder return?”
■ “How can we improve our processes?”
■ “How can we help our colleagues grow and flourish?”

Like a good garden or a productive field, a company’s culture
needs to be nurtured, and we spend a good deal of time thinking
how we can preserve ours while adapting to the world as it
changes.

PNC_AR2015_11 2/19/16 10:34 AM Page 4

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

New Friends
One of our highest duties is to attract brilliant board members.
Here are our newest three:

James R. DeRoberts

Jim is well known in Ohio community banking circles, providing
risk management and insurance advice and products to community
banks for more than 30 years. In addition, he and some colleagues
started The Arlington Bank (in Columbus, Ohio), so he knows
banking literally inside and out. He brings wisdom and practical
experience in all phases of banking to his board role.

Alicia Sweet Hupp

Alicia is President, Chief Executive and Chair of the Board of
Sweet Manufacturing in Springfield, Ohio. The firm manufactures
a variety of agricultural commodity and industrial material handling
and moving equipment. You can find Sweet® equipment in more
than 55 countries covering six continents all around the world.
The company has won numerous awards for exporting excellence.
Having served on our Security National Bank Division advisory
board, Alicia brings valuable insights into our affiliates plus
wisdom gained from conducting business around the world.

Julia A. Sloat

Julia (she asks that we call her Julie) is Senior Vice President
and Treasurer of American Electric Power Company, Inc., where
she has worked for 16 years. A native of Bolivar, Ohio, Julie grew
up knowing the value of community and she quickly grasped
our unique banking model. In addition, in her professional
experiences she has operated at the highest levels of financial
and strategic sophistication.

We reflect on what adding these three to our existing all-star Board
roster means. Each of our Board members has a life, and full-time
employment. They are sought after from many sources...but each
has decided to devote a portion of their personal and professional
time and talent to advancing this organization and supporting those
of us who have the privilege of leading it. Pretty cool...and very
humbling.

Who we will miss and why:

William T. McConnell

We told you in last year’s letter that Bill
was going to retire effective April 27, 2015.
We silently hoped that he might reverse his
decision, but he didn’t.

Bill is still with us, just not at the corporation.
What we think of Bill hasn’t changed since last
year and never will, so we won’t repeat last
years’ comments. But in a characteristic rookie mistake, your CEO
forgot to include his picture—an oversight now corrected.

Bill McConnell

Paul Van Camp

Paul served as member of Fairfield National
Bank Division’s (Fairfield) advisory board
from April 10, 1990 until he passed away
on September 18, 2015. Paul was well known
for his love of business and the enjoyment
he derived from it. During his time with
the Fairfield Advisory Board, Paul was
instrumental in Fairfield’s success. He regularly
provided counsel, direction, referrals and candid feedback
to the Fairfield’s leaders. He was tough, but fair; demanding
yet understanding. Paul made us better.

Paul Van Camp

Affiliate Accolades
We think of our bank divisions as affiliates. These affiliates are
staffed by bright, capable people who live, serve and work in their
communities. Here’s a partial list of accolades they and/or their
associates received last year:

Richland Bank Division: Mansfield News Journal Best of
Mid-Ohio – “Best Financial Institution of Mid-Ohio” and “Best
Local Bank of Mid-Ohio”

Security National Bank Division: Greater Springfield Chamber
of Commerce – “2015 Big Business of the Year”

Fairfield National Bank Division: Vice President and Trust
Officer Laura Tussing received the Young Professional of the Year
from the Fairfield County Chamber of Commerce

PNC_AR2015_10 2/17/16 3:27 PM Page 5

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

Unity National Bank Division: Piqua Area United Way – “Award
of Excellence”

Park National Bank of Southwest Ohio and Northern
Kentucky Division: Clermont Chamber of Commerce –
“Corporate Citizen of the Year”; Greater Cincinnati USA Chamber –
“Community Citizen of the Year” Runner-Up

First Knox National Bank Division: “Governor’s Award for Arts
in Ohio” for their support of the Arts in Knox County

Second National Bank Division: Daily Advocate – “Best
Bank,” “Best Mortgage Lender,” “Best Investment Services,” and
“Best Tellers” in Darke County

United Bank Division: Retail leader Jennifer Kuns was
recognized as Professional of the Year by the Galion/Crestline
Chamber of Commerce

Park National Bank Division: Ohio Statewide Development
Corporation – Community Bank of the Year; Ohio Association of
Community Colleges – Outstanding Business Partnership of the
Year; Columbus Business First-Education category – Corporate
Caring Award; Columbus CEO magazine – Best Commercial
Mortgage Lender Award; Columbus Business First – #1
Community Bank based in Central Ohio; The Advocate/Gannett
– Best Bank as voted by its readers; King Arts Complex – Dream
Award-Corporation

Final thoughts
Each day, we remind ourselves to be grateful...and humble.
We are standing on the shoulders of giants, leaders who have
put us in position to thrive. Now the job is ours. We live in a free
country; we work with excellent colleagues; we serve customers
and communities that value what we do...and the best is all ahead.

Final Quote
We think a lot about service. The following quote from Nobel
laureate Rabindranath Tagore captures our position well:

I Slept and Dreamt
That Life was Joy
I Awoke, and Saw
That Life was Service
I Acted, and Behold
Service was Joy.

We find great joy in serving. Please let us serve you, and anyone
you care to send our way.

C. Daniel DeLawder
Chairman of the Board

David L. Trautman
Chief Executive Officer and President

PNC_AR2015_10 2/17/16 3:27 PM 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)

2015

2014

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

$ 265,074

$ 265,143

37,442

227,632

81,012

5.27

5.26

3.76

46.53

$7,311,354

5,347,642

5,068,085

1,643,879

1,177,347

713,355

11.40%

1.11%

60.98%

40,099

225,044

83,957

5.45

3.76

45.25

$7,001,199

5,128,000

4,829,682

1,500,788

1,108,582

696,541

12.34%

1.22%

62.21%

Percent
Change

–0.03%

–6.63%

1.15%

–3.51%

–3.30%

–3.49%

—

2.83%

4.43%

4.28%

4.94%

9.53%

6.20%

2.41%

–7.62%

–9.02%

–1.98%

PNC_AR2015_10 2/17/16 3:27 PM 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 2015) 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

Total Financial Service Centers: 122

Total ATMs: 141

Website: ParkNationalCorp.com

Asset Size: $7.3 billion

Headquarters: Newark, Ohio
Total Financial Service Centers: 122
NYSE MKT: PRK
Total ATMs: 141
Total Financial Service Centers: 122
Website: ParkNationalCorp.com
Total ATMs: 141
Asset Size: $7.3 billion
Website: ParkNationalCorp.com
Headquarters: Newark, Ohio
Asset Size: $7.3 billion
NYSE MKT: PRK
Headquarters: Newark, Ohio

NYSE MKT: PRK

PARKNATIONAL
PARKNATIONAL
PARKNATIONAL

C O R P O R A T I O N

Donna M. Alvarado
President
AGUILA International

Maureen H. Buchwald
Owner
Glen Hill Orchards, Ltd.

Brady T. Burt
Chief Financial Officer
Park National Corporation

C. Daniel DeLawder
Chairman
Park National Corporation

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

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

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

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

James R. DeRoberts
Partner
Gardiner, Allen,
DeRoberts Insurance

James R. DeRoberts
Partner
Gardiner, Allen,
James R. DeRoberts
DeRoberts Insurance
Partner
Gardiner, Allen,
DeRoberts Insurance

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

Alicia Sweet Hupp
President and CEO
Sweet Manufacturing
Company

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

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

Robert E. O’Neill
President
Southgate Corporation

91 West Dave Longaberger Avenue

Zanesville, Ohio 43701-3610

Dresden, Ohio 43821-9726

740.454.6892

Robert E. O’Neill
William T. McConnell
President
Director Emeritus
Southgate Corporation
Robert E. O’Neill
President
J. Gilbert Reese
Southgate Corporation
Director Emeritus

William T. McConnell
Director Emeritus

William T. McConnell
J. Gilbert Reese
Director Emeritus
Director Emeritus

J. Gilbert Reese
Director Emeritus

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

Julia A. Sloat
Treasurer
American Electric
Power

Alicia Sweet Hupp
President and CEO
Sweet Manufacturing
Alicia Sweet Hupp
Company
President and CEO
Sweet Manufacturing
Company

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

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

Rick R. Taylor
President
Jay Industries, Inc.

David L. Trautman
President
Park National Corporation

Leon Zazworsky
President
Mid State Systems, Inc.

Rick R. Taylor
President
President
David L. Trautman
Jay Industries, Inc.
Rick R. Taylor
President
Jay Industries, Inc.

Officer Listing
Julia A. Sloat
Chairman
Treasurer
C. Daniel DeLawder
American Electric
Julia A. Sloat
Power
Treasurer
American Electric
Officer Listing
Power
Brady T. Burt is the Chief Financial Officer and not a member of the board of directors.
Chairman
Officer Listing
C. Daniel DeLawder
Chairman
Chief Financial Officer
Brady T. Burt is the Chief Financial Officer and not a member of the board of directors.
Brady T. Burt
C. Daniel DeLawder

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

Chief Financial Officer
Brady T. Burt

President
David L. Trautman

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

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

Offices: 16 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

Zanesville, Ohio 43702-1515

740.498.4103

740.455.7301

Newcomerstown*

220 East State Street

Zanesville - South*

2127 Maysville Avenue

Newcomerstown, Ohio 43832-1451

Zanesville, Ohio 43701-5748

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*

740.754.2265

Logan*

61 North Market Street

Logan, Ohio 43138-1272

740.385.5621

New Concord*

1 West Main Street

740.826.7676

New Lexington*

206 North Main Street

New Lexington, Ohio 43764-1263

740.342.4103

New Philadelphia Lending Center

1255 Monroe Avenue

New Philadelphia, Ohio 44663-4139

330.681.7000

New Concord, Ohio 43762-1218

740.454.8505

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 - North*

1201 Brandywine Boulevard

Zanesville, Ohio 43701-1086

740.455.7285

Zanesville - North Military*

990 Military Road

Zanesville, Ohio 43701-1387

Zanesville - South Maysville*

2810 Maysville Pike

Zanesville, Ohio 43701-8577

740.455.3169

*Includes Automated Teller Machine

New Philadelphia

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

PARKNATIONAL

C O R P O R A T I O N

Total Financial Service Centers: 122

Total ATMs: 141

Website: ParkNationalCorp.com

Asset Size: $7.3 billion

Headquarters: Newark, Ohio

Total Financial Service Centers: 122

NYSE MKT: PRK

Total ATMs: 141

Total Financial Service Centers: 122

Website: ParkNationalCorp.com

Total ATMs: 141

Asset Size: $7.3 billion

Website: ParkNationalCorp.com

Headquarters: Newark, Ohio

Asset Size: $7.3 billion

NYSE MKT: PRK

Headquarters: Newark, Ohio

NYSE MKT: PRK

Donna M. Alvarado

Maureen H. Buchwald

Brady T. Burt

C. Daniel DeLawder

James R. DeRoberts

President

Owner

Chief Financial Officer

Chairman

Partner

AGUILA International

Glen Hill Orchards, Ltd.

Park National Corporation

Gardiner, Allen,

Donna M. Alvarado

Maureen H. Buchwald

Brady T. Burt

C. Daniel DeLawder

James R. DeRoberts

AGUILA International

Donna M. Alvarado

Glen Hill Orchards, Ltd.

Maureen H. Buchwald

Park National Corporation

Brady T. Burt

Park National Corporation

C. Daniel DeLawder

Owner

Chief Financial Officer

Chairman

Owner

Chief Financial Officer

Chairman

President

AGUILA International

Glen Hill Orchards, Ltd.

Park National Corporation

Gardiner, Allen,

F.W. Englefield, IV

President

Alicia Sweet Hupp

President and CEO

Englefield, Inc.

Sweet Manufacturing

Stephen J. Kambeitz

Timothy S. McLain

Robert E. O’Neill

President and CFO

R.C. Olmstead, Inc.

Vice President

President

McLain, Hill, Rugg &

Southgate Corporation

Company

Associates, Inc.

F.W. Englefield, IV

President

Englefield, Inc.

F.W. Englefield, IV

President

Englefield, Inc.

Alicia Sweet Hupp

President and CEO

Sweet Manufacturing

Alicia Sweet Hupp

Company

President and CEO

Sweet Manufacturing

Company

Stephen J. Kambeitz

Timothy S. McLain

President and CFO

R.C. Olmstead, Inc.

Stephen J. Kambeitz

President and CFO

R.C. Olmstead, Inc.

Vice President

McLain, Hill, Rugg &

Timothy S. McLain

Associates, Inc.

Vice President

McLain, Hill, Rugg &

Associates, Inc.

American Electric

Jay Industries, Inc.

Park National Corporation

Mid State Systems, Inc.

Rick R. Taylor

President

David L. Trautman

Leon Zazworsky

President

Julia A. Sloat

Treasurer

Power

Officer Listing

Julia A. Sloat

Chairman

Treasurer

C. Daniel DeLawder

American Electric

Julia A. Sloat

Power

Treasurer

American Electric

Officer Listing

Power

Chairman

Officer Listing

C. Daniel DeLawder

Chairman

C. Daniel DeLawder

Rick R. Taylor

President

David L. Trautman

Leon Zazworsky

President

Chief Financial Officer

President

Jay Industries, Inc.

David L. Trautman

Rick R. Taylor

Park National Corporation

David L. Trautman

Brady T. Burt

Mid State Systems, Inc.

Leon Zazworsky

President

Jay Industries, Inc.

Park National Corporation

Mid State Systems, Inc.

President

David L. Trautman

President

David L. Trautman

Chief Financial Officer

Brady T. Burt

Chief Financial Officer

Brady T. Burt

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

DeRoberts Insurance

Partner

Gardiner, Allen,

James R. DeRoberts

DeRoberts Insurance

Partner

DeRoberts Insurance

Robert E. O’Neill

William T. McConnell

President

Director Emeritus

Southgate Corporation

Robert E. O’Neill

President

J. Gilbert Reese

Southgate Corporation

Director Emeritus

William T. McConnell

Director Emeritus

William T. McConnell

J. Gilbert Reese

Director Emeritus

J. Gilbert Reese

Director Emeritus

Offices: 16 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

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

New Philadelphia Lending Center
1255 Monroe Avenue
New Philadelphia, Ohio 44663-4139
330.681.7000

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

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

New Philadelphia

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

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

Perry
County

New
Lexington

Logan

Hocking
County

Athens

Athens
County

Advisory Board

Michael L. Bennett
Second Capital Consulting, LLC

Patrick L. Hennessey
P&D Transportation, Inc.

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

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

Clinton W. Cameron
Cameron Drilling Company

Ward D. Coffman, III
Coffman Law Offices

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

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

Thomas M. Lyall
Chairman, Century
National Bank

Patrick L. Nash
President, Century
National Bank

Dr. Anne C. Steele
Muskingum University

Julie A. Brown and Scott D.
Eickelberger joined the board
effective February 16, 2016.

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

Vice Presidents
Joseph P. Allen
Robert W. Bigrigg
Derek A. Boothe
Theresa M. Gilligan

Jeffrey C. Jordan
Brian G. Kaufman
Bruce D. Kolopajlo
Rebecca R. Porteus
Thomas N. Sulens

Assistant Vice Presidents
Ann M. Gildow
Stephen A. Haren
Susan A. Lasure
Paula L. Meadows
Martin L. Merryman
William J. Murphy*
Jodi C. Pagath
Amy M. Pinson
Terri L. Sidwell
Cynthia J. Snider

Victoria M. Thomas
Jennifer L. Thompson

Banking Officers
Darin S. Alexander
Jessica L. Cranz
Susan T. Edwards
Lynn M. Garrison
Noelle K. Jarrett
Alaina J. Joseph
Jeremy A. Morrow
William E. Rinehart
Paula J. Stewart
Susan L. Summers

Administrative Officers
Molly J. Allen
Jana R. Brandon
John D. DalPonte
Sonya R. Denny
Amber M. Gibson
Sandra D. Jones
Saundra W. Pritchard
Christy S. Robinson
Gary R. Russell II
Kandy M. Sampsel
Emila S. Smith
Beth A. Stillwell
Elaine L. White
Jason L. Wilhelm

*Trust Officer

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]

FAIRFIELD
NATIONAL
BANK

DIVISION OF THE PARK NATIONAL BANK

Offices: 10 ATMs: 14

Website: FairfieldNationalBank.com

Phone: 740.653.7242 or 800.324.7353

President: Stephen G. Wells

Counties Served: Fairfield, Franklin

Advisory Board

Michael L. Bennett

Patrick L. Hennessey

Second Capital Consulting, LLC

P&D Transportation, Inc.

Timothy S. McLain, CPA

McLain, Hill, Rugg and

Associates, Inc.

Dr. Robert J. Thompson

Neurological Associates of

Southeastern Ohio, Inc.

Clinton W. Cameron

Cameron Drilling Company

Henry C. Littick, II

Southeastern Ohio

Broadcasting Systems, Inc.

Thomas M. Lyall

Chairman, Century

National Bank

Patrick L. Nash

President, Century

National Bank

Dr. Anne C. Steele

Muskingum University

Julie A. Brown and Scott D.

Eickelberger joined the board

effective February 16, 2016.

Ward D. Coffman, III

Coffman Law Offices

Robert D. Goodrich, II

Retired, Wendy’s Management

Group, Inc.

Victoria M. Thomas

Jennifer L. Thompson

Administrative Officers

Senior Vice Presidents

Assistant Vice Presidents

Officer Listing

Chairman

Thomas M. Lyall

President

Patrick L. Nash

James C. Blythe

Barbara A. Gibbs

Jody D. Spencer*

Michael F. Whiteman

Vice Presidents

Joseph P. Allen

Robert W. Bigrigg

Derek A. Boothe

Theresa M. Gilligan

Jeffrey C. Jordan

Brian G. Kaufman

Bruce D. Kolopajlo

Rebecca R. Porteus

Thomas N. Sulens

Ann M. Gildow

Stephen A. Haren

Susan A. Lasure

Paula L. Meadows

Martin L. Merryman

William J. Murphy*

Jodi C. Pagath

Amy M. Pinson

Terri L. Sidwell

Cynthia J. Snider

Banking Officers

Darin S. Alexander

Jessica L. Cranz

Susan T. Edwards

Lynn M. Garrison

Noelle K. Jarrett

Alaina J. Joseph

Jeremy A. Morrow

William E. Rinehart

Paula J. Stewart

Susan L. Summers

Molly J. Allen

Jana R. Brandon

John D. DalPonte

Sonya R. Denny

Amber M. Gibson

Sandra D. Jones

Saundra W. Pritchard

Christy S. Robinson

Gary R. Russell II

Kandy M. Sampsel

Emila S. Smith

Beth A. Stillwell

Elaine L. White

Jason L. Wilhelm

*Trust Officer

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

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

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*

Eleanor V. Hood
The Lancaster Festival

S. Alan Risch
Risch Drug Stores, Inc.

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

Assistant Vice Presidents
Molly S. Bates
Jamey L. Binkley
Michael D. Mitchell*
Trudy M. Reeb
Jason A. Saul
Kim I. Sheldon
Luann K. Snyder*

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
Brenda S. Shamblin
Allison G. Spangler*
Tina L. Taley

Administrative Officers
Vincent E. Carpico
Eric W. Croft
Lori A. McElfresh
Katherine A. Smiley

*Trust Officer

Off-Site ATM Location

Loudonville - Stake’s Short Stop

3052 State Route 3

*Includes Automated Teller Machine

Offices: 3 ATMs: 4

Website: FarmersandSavings.com

Phone: 419.994.4115 or 855.345.0899

President: Brian R. Hinkle

County Served: Ashland

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

Officer Listing

President

Brian R. Hinkle

Vice President

Sharon E. Blubaugh

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

Assistant Vice President

Gregory A. Henley

Banking Officer

Todd A. Geren

Administrative Officer

Brenda S. Mitchell

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 L. McLain, II

McLain, Hill, Rugg and

Associates, Inc.

Assistant Vice Presidents

Molly S. Bates

Jamey L. Binkley

Michael D. Mitchell*

Trudy M. Reeb

Jason A. Saul

Kim I. Sheldon

Luann K. Snyder*

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

Brenda S. Shamblin

Allison G. Spangler*

Tina L. Taley

Administrative Officers

Vincent E. Carpico

Eric W. Croft

Lori A. McElfresh

Katherine A. Smiley

*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 President
Sharon E. Blubaugh

Assistant Vice President
Gregory A. Henley

Banking Officer
Todd A. Geren

Administrative Officer
Brenda S. Mitchell

Offices: 10 ATMs: 18

Website: FirstKnox.com

Phone: 740.399.5500 or 800.837.5266

President: Vickie A. Sant

Counties Served: Holmes, Knox, Morrow,
Richland, Wayne

Mount Gilead - Morrow County Hospital
651 West Marion Road

Advisory Board

Mount Vernon - Colonial City Lanes
110 Mount Vernon Avenue

Maureen H. Buchwald

Glen Hill Orchards, Ltd.

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

Mount Vernon - COTC - Ariel Hall
236 South Main Street

William B. Levering

Mark R. Ramser

Levering Management, Inc.

Ohio Cumberland Gas Co.

Roger E. Stitzlein

Loudonville Farmers Equity

Mount Vernon - Knox Community Hospital
1330 Coshocton Road

Mount Vernon
11 West Vine Street

Daniel L. Mathie

Vickie A. Sant

Critchfield, Critchfield &

President, First-Knox

Johnston, Ltd.

National Bank

*Includes Automated Teller Machine

Officer Listing

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

Wooster
2148 Eagle Pass, Suite G
Wooster, Ohio 44691-5357
740.399.5500

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

Gambier - Kenyon College Bookstore
106 Gaskin Avenue

Howard - Apple Valley
21973 Coshocton Road

Millersburg - BAGS
88 East Jackson Street

Richland
County

Wayne
County

Wooster

Mount Gilead

Morrow
County

Bellville

Fredericktown

Danville

Mount Vernon [3]

Centerburg

Knox
County

Holmes
County

Millersburg

Assistant Vice Presidents

Timothy H. Bahler

Heather A. Brayshaw

Phyllis D. Colopy

Rachelle E. Dallas

Deborah S. Dove

Wendi M. Fowler*

Todd M. Hawkins*

Debra E. Holiday

R. Edward Kline

Mary A. Loyd

James S. Meyer

Banking Officers

Gabriel J. Aufrance

Nicholas R. Blanchard

Levi D. Curry

Lance E. Dill

Kassandra L. Hoeflich

David E. Humphrey

Darrell E. Lee

Sherry L. Snyder

Steven A. Waers

Senior Vice Presidents

Chairman

Gordon E. Yance

President

Vickie A. Sant

Robert E. Boss

Cheri L. Butcher*

Julie A. Leonard

Vice Presidents

Cynthia L. Higgs

James W. Hobson

Jerry D. Simon

Joan M. Stout

Todd P. Vermilya

Administrative Officers

Nicole S. Au

Katherine M. Bartlebaugh**

Deborah J. Daniels

Krystal E. Drye

Laurie P. Gallwitz

Cynthia K. Hogle

Jeffrey A. Kinney

Matia M. Mathews

Paul J. Mayville

Douglas R. McCann

Paulina S. McQuigg

Fawn J. Mollenkopf

Tiffany D. Stefano

*Trust Officer

**Assistant 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: 10 ATMs: 18

Website: FirstKnox.com

Phone: 740.399.5500 or 800.837.5266

President: Vickie A. Sant

Counties Served: Holmes, Knox, Morrow,

Richland, Wayne

740.399.5500

Bellville*

154 Main Street

Bellville, Ohio 44813-1237

419.886.3711

Centerburg*

35 West Main Street

Post Office Box F

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

Gambier - Kenyon College Bookstore

106 Gaskin Avenue

Howard - Apple Valley

21973 Coshocton Road

Millersburg - BAGS

88 East Jackson Street

Richland

County

Wayne

County

Wooster

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.

Noel C. Parrish
NOE, Inc.

Mount Vernon - COTC - Ariel Hall

236 South Main Street

William B. Levering
Levering Management, Inc.

Mark R. Ramser
Ohio Cumberland Gas Co.

Mount Vernon - Knox Community Hospital

1330 Coshocton Road

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

Vickie A. Sant
President, First-Knox
National Bank

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

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

Roger E. Stitzlein
Loudonville Farmers Equity

Centerburg, Ohio 43011-0870

740.399.5500

Wooster

2148 Eagle Pass, Suite G

Wooster, Ohio 44691-5357

Mount Vernon

11 West Vine Street

*Includes Automated Teller Machine

Officer Listing

Assistant Vice Presidents
Timothy H. Bahler
Heather A. Brayshaw
Phyllis D. Colopy
Rachelle E. Dallas
Deborah S. Dove
Wendi M. Fowler*
Todd M. Hawkins*
Debra E. Holiday
R. Edward Kline
Mary A. Loyd
James S. Meyer

Banking Officers
Gabriel J. Aufrance
Nicholas R. Blanchard
Levi D. Curry
Lance E. Dill
Kassandra L. Hoeflich
David E. Humphrey
Darrell E. Lee
Sherry L. Snyder
Steven A. Waers

Chairman
Gordon E. Yance

President
Vickie A. Sant

Senior Vice Presidents
Robert E. Boss
Cheri L. Butcher*
Julie A. Leonard

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

Administrative Officers
Nicole S. Au
Katherine M. Bartlebaugh**
Deborah J. Daniels
Krystal E. Drye
Laurie P. Gallwitz
Cynthia K. Hogle
Jeffrey A. Kinney
Matia M. Mathews
Paul J. Mayville
Douglas R. McCann
Paulina S. McQuigg
Fawn J. Mollenkopf
Tiffany D. Stefano

*Trust Officer
**Assistant Trust Officer

PARK

NATIONAL BANK

Offices: 16 ATMs: 22

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

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

Newark - Operations Centers
21 South First Street
22 South First Street
51 North Third 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

Timothy J. Lehman

Jennifer L. Morehead

Johnstown

Utica

Licking
County

Granville

Pataskala

Newark [6]

Heath [2]

Hebron

Worthington

Gahanna

Franklin
County

Columbus

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

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

Worthington*
7140 North High Street
Worthington, Ohio 43085
614.841.0123

Donna M. Alvarado

AGUILA International

F.W. Englefield, IV

Englefield, Inc.

Robert E. O’Neill

Southgate Corporation

David L. Trautman

President, Park National Bank

C. Daniel DeLawder

Stephen J. Kambietz

Chairman, Park National Bank

R.C. Olmstead, Inc.

J. Gilbert Reese

Director Emeritus

Leon Zazworsky

Mid State Systems, Inc.

James R. DeRoberts

William T. McConnell

Julia A. Sloat

Gardiner, Allen, DeRoberts

Director Emeritus

American Electric Power

Insurance

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*

Laura B. Lewis

Matthew R. Miller

Cheryl L. Snyder

Paul E. Turner

Jeffrey A. Wilson

Vice Presidents

Linda K. Ampadu

Edward L. Brady

Jill A. Brewer

Alice M. Browning

James M. Buskirk*

Bryan M. Campolo

Peter G. Cassanos

Cynthia L. Crane

Kathleen O. Crowley

Jaqueline L. Davis

Lori T. Drake

April R. Dusthimer

Kelly A. Edds

Brian J. Elder

Jill S. Evans

Joan L. Franks

Sandra L. Furterer

Jerrod F. Gambs

John S. Gard*

Jeffrey C. Gluntz

Scott C. Green

Frederick G. Hadley

Linda M. Harris

Christopher R. Hiner

Damon P. Howarth*

Daniel L. Hunt

Andrew H. Knoesel

Teresa M. Kroll*

Craig M. Larson

Mark A. Longstreth

Kelly M. Maloney

Carl H. Mayer

Lydia E. Miller

Cynthia A. Neely

Jason L. Painley

Kathy A. Patton

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 A. Tidwell

Sandra S. Travis

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*

Teresa A. Hennessy

Allen S. Fish

Eric M. Baker*

Renee L. Baker

Brent A. Barnes

Gail A. Blizzard

Sharon L. Bolen

Stephen E. Buchanan

Beverly A. Clark*

Jennifer G. Corbitt

Amber L. Cummins*

Aaron T. Dunifon

Amanda K. Evans

Catherine J. Evans

Andrew J. Fackler

Jennifer S. Favand

Brenda M. Frakes

David W. Hardy*

Louise A. Harvey

Cynthia L. Kissel

Steven J. Klein

Candy J. Lehman

Bethany B. Lewis

Daniel K. Maloney

Julia E. McCormack

William L. Nelson

Karen L. Pavone

Tracey E. Ramsey

Steven E. Ritzer

Mareion A. Royster*

Jennifer L. Shanaberg

James O. Spichiger

John A. Stevens

Lisa E. Stranger

Lori B. Tabler

Alton P. Thompson

Angie D. Treadway

Scott A. VanHorn

Ginger R. Varner

D. Bradley Wilkins

John C. Wolters

Ryan D. Wood

Banking Officers

Ellen P. Akey

Kathy L. Allen

Stephanie J. Allen

Jessica J. Altman

Lindsay M. Alton

Michelle L. Arnold

Thomas E. Ballard

Brad G. Chance

Erica L. Chance

Tara L. Craaybeek

Michael D. Dudgeon

Kathryn S. Firestone

Adrienne L. Fisher

Abigail C. Hobbs

Candy L. Holbrook

Cynthia R. Hollis

Amber L. Keirns

Kathy K. Myers*

Diane M. Oberfield*

Sherri L. Pembrook

Lacie M. Priest

Paul P. Ragias

Michelle A. Rood

Jessica L. Royster

Leda J. Rutledge

Ruth Y. Sawyer

Charles F. Schultz

Rose M. Wilson

Barry H. Winters

Kimberly K. Ballmann

Andrea N. Bardsley

Jennifer F. Bobb**

Renae M. Buchanan

Jill E. Burnworth

Belinda L. Cole

Emily L. Cook

Nathan T. Cook

Regina B. Cullison

Teresa K. Faris

Jamie G. Fillippi**

Maxwell M. Fischer

Andrea J. Ford

Jordan E. Green

Darcy D. Grossett

Adam S. Hoar**

Asher D. Hunter

Timothy A. Keith

Lisa A. Keller

Lauren M. Kellett**

Diann M. Langwasser

Shane R. Layne

Jessica M. McPeek

Denise A. Miller**

Aaron B. Mueller

Rodger D. Orr

Scott D. Parks

Jeffrey A. Pillow

Joyce A. Reaser

Abigail R. Rehbeck**

Zachary A. Reuscher

Jessica L. Schorger

Melissa N. Spain

Michelle M. Tipton

Laura S. Wright

David S. Zambo

Kimberly G. McDonough

April D. Milby

Assistant Vice Presidents

Jenny L. Ward

Corey S. Alton

Kevin J. Andrew

Megan C. Warman*

Heather N. Wiley

Administrative Officers

Brandon M. Akey

Robert S. Allison

Jack E. Arthur

*Trust Officer

**Assistant Trust Officer

PARK

NATIONAL BANK

Offices: 16 ATMs: 22

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

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

Newark - Operations Centers

*Includes Automated Teller Machine

**Includes Automated Teller Machine

Drive-up and Inside

Johnstown

Utica

Licking

County

Granville

Pataskala

Newark [6]

Heath [2]

Hebron

Worthington

Gahanna

Franklin

County

Columbus

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

21 South First Street

22 South First Street

51 North Third Street

Newark, Ohio 43055

740.349.8633

Pataskala - Kroger**

350 East Broad Street

Pataskala, Ohio 43062

740.927.8113

Utica*

33 South Main Street

Post Office Box 486

Utica, Ohio 43080

740.892.3841

Worthington*

7140 North High Street

Worthington, Ohio 43085

614.841.0123

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

Newark - Deo Drive - Kroger*

245 Deo Drive, Suite A

Newark, Ohio 43058

740.349.3946

Donna M. Alvarado
AGUILA International

F.W. Englefield, IV
Englefield, Inc.

Robert E. O’Neill
Southgate Corporation

David L. Trautman
President, Park National Bank

C. Daniel DeLawder
Chairman, Park National Bank

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

J. Gilbert Reese
Director Emeritus

Leon Zazworsky
Mid State Systems, Inc.

William T. McConnell
Director Emeritus

Julia A. Sloat
American Electric Power

James R. DeRoberts
Gardiner, Allen, DeRoberts
Insurance

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
Edward L. Brady
Jill A. Brewer
Alice M. Browning
James M. Buskirk*
Bryan M. Campolo
Peter G. Cassanos
Cynthia L. Crane
Kathleen O. Crowley
Jaqueline L. Davis
Lori T. Drake
April R. Dusthimer
Kelly A. Edds
Brian J. Elder
Jill S. Evans
Joan L. Franks
Sandra L. Furterer
Jerrod F. Gambs
John S. Gard*
Jeffrey C. Gluntz
Scott C. Green
Frederick G. Hadley

Linda M. Harris
Christopher R. Hiner
Damon P. Howarth*
Daniel L. Hunt
Andrew H. Knoesel
Teresa M. Kroll*
Craig M. Larson
Mark A. Longstreth
Kelly M. Maloney
Carl H. Mayer
Lydia E. Miller
Jennifer L. Morehead
Cynthia A. Neely
Jason L. Painley
Kathy A. Patton
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 A. Tidwell
Sandra S. Travis
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
Corey S. Alton
Kevin J. Andrew

Eric M. Baker*
Renee L. Baker
Brent A. Barnes
Gail A. Blizzard
Sharon L. Bolen
Stephen E. Buchanan
Beverly A. Clark*
Jennifer G. Corbitt
Amber L. Cummins*
Aaron T. Dunifon
Amanda K. Evans
Catherine J. Evans
Andrew J. Fackler
Jennifer S. Favand
Brenda M. Frakes
David W. Hardy*
Louise A. Harvey
Teresa A. Hennessy
Cynthia L. Kissel
Steven J. Klein
Candy J. Lehman
Bethany B. Lewis
Daniel K. Maloney
Julia E. McCormack
William L. Nelson
Karen L. Pavone
Tracey E. Ramsey
Steven E. Ritzer
Mareion A. Royster*
Jennifer L. Shanaberg
James O. Spichiger
John A. Stevens
Lisa E. Stranger
Lori B. Tabler
Alton P. Thompson
Angie D. Treadway
Scott A. VanHorn
Ginger R. Varner
Jenny L. Ward
Megan C. Warman*
Heather N. Wiley

D. Bradley Wilkins
John C. Wolters
Ryan D. Wood

Banking Officers
Ellen P. Akey
Kathy L. Allen
Stephanie J. Allen
Jessica J. Altman
Lindsay M. Alton
Michelle L. Arnold
Thomas E. Ballard
Brad G. Chance
Erica L. Chance
Tara L. Craaybeek
Michael D. Dudgeon
Kathryn S. Firestone
Allen S. Fish
Adrienne L. Fisher
Abigail C. Hobbs
Candy L. Holbrook
Cynthia R. Hollis
Amber L. Keirns
Kimberly G. McDonough
Kathy K. Myers*
Diane M. Oberfield*
Sherri L. Pembrook
Lacie M. Priest
Paul P. Ragias
Michelle A. Rood
Jessica L. Royster
Leda J. Rutledge
Ruth Y. Sawyer
Charles F. Schultz
Rose M. Wilson
Barry H. Winters

Administrative Officers
Brandon M. Akey
Robert S. Allison
Jack E. Arthur

Kimberly K. Ballmann
Andrea N. Bardsley
Jennifer F. Bobb**
Renae M. Buchanan
Jill E. Burnworth
Belinda L. Cole
Emily L. Cook
Nathan T. Cook
Regina B. Cullison
Teresa K. Faris
Jamie G. Fillippi**
Maxwell M. Fischer
Andrea J. Ford
Jordan E. Green
Darcy D. Grossett
Adam S. Hoar**
Asher D. Hunter
Timothy A. Keith
Lisa A. Keller
Lauren M. Kellett**
Diann M. Langwasser
Shane R. Layne
Jessica M. McPeek
April D. Milby
Denise A. Miller**
Aaron B. Mueller
Rodger D. Orr
Scott D. Parks
Jeffrey A. Pillow
Joyce A. Reaser
Abigail R. Rehbeck**
Zachary A. Reuscher
Jessica L. Schorger
Melissa N. Spain
Michelle M. Tipton
Laura S. Wright
David S. Zambo

*Trust Officer
**Assistant Trust Officer

Offices: 9 ATMs: 9

Website: BankWithPark.com

Phone: 513.576.0600 or 888.474.7275

President: David J. Gooch

Counties Served: Butler, Clermont,
Hamilton

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

Rookwood*
3825 Edwards Road, Suite 520
Cincinnati, Ohio 45209
513.718.6040

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

*Includes Automated Teller Machine

Butler
County

West Chester

Hamilton
County

Milford

Rookwood

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

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

Sam J. DeBonis
James E. Hyson
William K. Wright

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

Administrative Officers
James P. Beck
Michael S. Dumbauld
April M. Prather
Michelle M. Sandlin
Kevin M. Shellberg
Danielle N. Thiel

*Trust Officer

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
Jennifer K. Fischer
William M. Schumacker*
Adam T. Stypula

Vice Presidents
Jay F. Berliner
Jason D. Hughes
18

Offices: 12 ATMs: 12

Website: RichlandBank.com

Phone: 419.525.8700 or 800.525.8702

President: John A. Brown

County Served: Richland

Mansfield - Madison - Kroger*

*Includes Automated Teller Machine

Mansfield, Ohio 44901-0355

419.589.7481

Lexington, Ohio 44904-1300

419.747.4821

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

Mansfield - Lexington Avenue - Kroger*

155 Mansfield Avenue

Richland

County

Shelby

Ontario

Mansfield [8]

Lexington

Butler

Offices: 9 ATMs: 9

Website: BankWithPark.com

Phone: 513.576.0600 or 888.474.7275

President: David J. Gooch

Counties Served: Butler, Clermont,

Hamilton

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

Rookwood*

3825 Edwards Road, Suite 520

Cincinnati, Ohio 45209

513.718.6040

West Chester*

8366 Princeton-Glendale Road

West Chester, Ohio 45069

513.346.2000

*Includes Automated Teller Machine

Butler

County

West Chester

Hamilton

County

Rookwood

Eastgate

Anderson

Owensville

Milford

Amelia [2]

Clermont

County

New Richmond

Offices: 12 ATMs: 12

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

*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

Jennifer K. Fischer

William M. Schumacker*

Adam T. Stypula

Vice Presidents

Jay F. Berliner

Jason D. Hughes

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

Larry H. Maxey

Chairman, Retired President,

Martin J. Grunder, Jr.

Synchronic Business Solutions

Park National Bank of Southwest

Grunder Landscaping Co.

William L. Jennewein*

Timothy A. Kemper

Louis J. Prabell

Ginger L. Vining

Joseph A. Wagner

Matthew M. Bauer

Matthew D. Colwell

Ed K. Cunningham

Kim J. Cunningham

Sam J. DeBonis

James E. Hyson

William K. Wright

Banking Officers

Jana M. Beal

Michelle R. Hamilton

Rachel L. Swisshelm

Jason O. Verhoff

Cyndy H. Wright

Assistant Vice Presidents

Stephanie D. Fahrnbach

Administrative Officers

James P. Beck

Michael S. Dumbauld

April M. Prather

Michelle M. Sandlin

Kevin M. Shellberg

Danielle N. Thiel

*Trust Officer

Advisory Board

Mark Breitinger
Milark Industries, Inc.

Michael L. Chambers
J&B Acoustical, Inc.

John A. Brown
President, Richland Bank

Benjamin A. Goldman
Retired, Superior Building
Services

Timothy J. Lehman
Senior Vice President,
Park National Bank

Jeffrey S. Monica
McDonald’s

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*
George T. Keffalas
Rebecca J. Toomey

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
Susan A. Fanello
Ralph J. Kelsay

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

Administrative Officers
Lisa S. Clingan
Clayton J. Herold
Janis L. Hoover
Nathan D. Irwin
Kristie L. Massa
Christopher A. Nadler**
Ryan D. Smith
Deborah A. Sweet

*Trust Officer
**Assistant Trust Officer

Offices: 8 ATMs: 7

Website: SecondNational.com

Phone: 937.548.2122 or 855.548.2122

President: John E. Swallow

Counties Served: Darke, Mercer

Greenville - Third and Walnut*

Greenville - North*

1302 Wagner Avenue

Greenville, Ohio 45331

937.548.5068

175 East Third Street

Greenville, Ohio 45331

937.547.2555

Greenville - Walmart*

1501 Wagner Avenue

Greenville, Ohio 45331

937.548.4563

Versailles*

101 West Main Street

Versailles, Ohio 45380

937.526.3287

*Includes Automated Teller Machine

Mercer

County

Celina

Fort Recovery

Darke

County

Versailles

Greenville [4]

Arcanum

Wayne G. Deschambeau

Wayne HealthCare

Jeffrey E. Hittle

Hittle Buick GMC, Inc.

Philip M. Fullenkamp

Celina Insurance Group

Wesley M. Jetter

Ft. Recovery Industries

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

Vicki L. Neff

Shane D. Stonebraker

Banking Officers

Zachary L. Newbauer

Stephen C. Schulte

Administrative Officers

Antonia T. Baker**

Melanie A. Smith

*Trust Officer

**Assistant Trust Officer

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

Steven C. Badgett

Executive Vice President,

Second National Bank

Tyeis Baker-Baumann

Rebsco, Inc.

Officer Listing

President

John E. Swallow

Executive Vice President

Steven C. Badgett

Vice Presidents

C. Russell Badgett

D. Todd Durham*

Joy D. Greer

Advisory Board

Mark Breitinger

Milark Industries, Inc.

Michael L. Chambers

J&B Acoustical, Inc.

John A. Brown

President, Richland Bank

Benjamin A. Goldman

Retired, Superior Building

Services

Timothy J. Lehman

Senior Vice President,

Park National Bank

Jeffrey S. Monica

McDonald’s

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*

George T. Keffalas

Rebecca J. Toomey

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

Susan A. Fanello

Ralph J. Kelsay

Banking Officers

Carol L. Davis

Beth K. Malaska

Barbara L. Schopp-Miller

Administrative Officers

Lisa S. Clingan

Clayton J. Herold

Janis L. Hoover

Nathan D. Irwin

Kristie L. Massa

Christopher A. Nadler**

Ryan D. Smith

Deborah A. Sweet

*Trust Officer

**Assistant Trust Officer

Offices: 8 ATMs: 7

Website: SecondNational.com

Phone: 937.548.2122 or 855.548.2122

President: John E. Swallow

Counties Served: Darke, Mercer

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

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

Versailles*
101 West Main Street
Versailles, Ohio 45380
937.526.3287

*Includes Automated Teller Machine

Mercer
County

Celina

Fort Recovery

Darke
County

Versailles

Greenville [4]

Arcanum

Wayne G. Deschambeau
Wayne HealthCare

Jeffrey E. Hittle
Hittle Buick GMC, Inc.

Philip M. Fullenkamp
Celina Insurance Group

Wesley M. Jetter
Ft. Recovery Industries

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

Vicki L. Neff
Shane D. Stonebraker

Banking Officers
Zachary L. Newbauer
Stephen C. Schulte

Administrative Officers
Antonia T. Baker**
Melanie A. Smith

*Trust Officer
**Assistant Trust Officer

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

Steven C. Badgett
Executive Vice President,
Second National Bank

Tyeis Baker-Baumann
Rebsco, Inc.

Officer Listing

President
John E. Swallow

Executive Vice President
Steven C. Badgett

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

Offices: 21 ATMs: 28

Website: SecurityNationalBank.com

Phone: 937.324.6800 or 800.836.1557

President: William C. Fralick

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

Main Office - Springfield*
Main Office - Springfield*
40 South Limestone Street
40 South Limestone Street
Springfield, Ohio 45502
Springfield, Ohio 45502
937.324.6800
937.324.6800
Enon*
Enon*
3680 Marion Drive
3680 Marion Drive
Enon, Ohio 45323
Enon, Ohio 45323
937.864.7318
937.864.7318

Jamestown*
Jamestown*
82 West Washington Street
82 West Washington Street
Jamestown, Ohio 45335
Jamestown, Ohio 45335
937.675.7311
937.675.7311

Jeffersonville*
2 South Main Street
Jeffersonville, Ohio 43128
740.426.6384

Jeffersonville*1
2 South Main Street
Jeffersonville, Ohio 43128
740.426.6384

Mechanicsburg*
2 South Main Street
Mechanicsburg, Ohio 43044
937.834.3387

Mechanicsburg*
2 South Main Street
Mechanicsburg, Ohio 43044
937.834.3387
Medway*
Medway*
130 West Main Street
130 West Main Street
Medway, Ohio 45341
Medway, Ohio 45341
937.849.1393
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*
South Charleston*
102 South Chillicothe Street
102 South Chillicothe Street
South Charleston, Ohio 45368
South Charleston, Ohio 45368
937.462.8368
937.462.8368

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

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

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

Springfield - Western*
Springfield - Western*
920 West Main Street
920 West Main Street
Springfield, Ohio 45504
Springfield, Ohio 45504
937.322.0152
937.322.0152
Urbana*
Urbana*
1 Monument Square
1 Monument Square
Urbana, Ohio 43078
Urbana, Ohio 43078
937.653.1226
937.653.1226

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

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

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

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

Springfield
2051 North Bechtle Avenue

Springfield
2051 North Bechtle Avenue
Springfield - Clark State
Springfield - Clark State
Community College
Community College
570 East Leffel Lane
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
1Jeffersonville Office closed 1/22/16

*Includes Automated Teller Machine

North
North
Lewisburg
Lewisburg

Champaign
Champaign
County
County
Urbana [2]
Urbana [2]

Mechanicsburg
Mechanicsburg

Plain City
Plain City

New Carlisle
New Carlisle

Park Layne
Park Layne

Medway
Medway

Enon
Enon

Greene
Greene
County
County

Northridge
Northridge

Springfield [5]
Springfield [5]
Clark
Clark
County
County
South
South
Charleston
Charleston

Madison
Madison
County
County

Xenia [2]
Xenia [2]

Jamestown
Jamestown

Jeffersonville

Springboro
Springboro

Warren
Warren
County
County

Fayette
County

Advisory Board

R. Andrew Bell

Marsh & McLennan

Agency

Rick D. Cole

Colepak, Inc.

William C. Fralick

President, Security

National Bank

Alicia Sweet Hupp

Sweet Manufacturing

Company

Larry E. Kaffenbarger

Kaffenbarger Truck

Equipment Company

Thomas P. Loftis

Midland Properties, Inc.

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

Denise N. Antrobus

Sharon K. Boysel

Rachel M. Brewer*

Margaret A. Chapman

Mary M. Demaree

John McKinnon

Chester L. Walthall

Clark Schaffer Hackett & Co.

Walthall Holding Co. Inc.

Scott D. Michael

Michael Farms, Inc.

Robert A. Warren

Hauck Bros., Inc.

Dr. Karen E. Rafinski

The Registry

Catherine L. Hill*

Andrew S. Peyton

Gary J. Seitz

Victoria L. Sparks

Banking Officers

Teresa L. Belliveau*

Benjamin L. Kitchen

Jeffrey S. Williams

Administrative Officers

Jacqueline S. Folck

Jason G. Hill

Joanna S. Jaques

Mark D. Klingler

Dawn R. 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*

Jeffersonville*1

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

1Jeffersonville Office closed 1/22/16

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
Marsh & McLennan
Agency

Rick D. Cole
Colepak, Inc.

William C. Fralick
President, Security
National Bank

Alicia Sweet Hupp
Sweet Manufacturing
Company

Larry E. Kaffenbarger
Kaffenbarger Truck
Equipment Company

Thomas P. Loftis
Midland Properties, Inc.

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
Denise N. Antrobus
Sharon K. Boysel
Rachel M. Brewer*
Margaret A. Chapman
Mary M. Demaree

John McKinnon
Clark Schaffer Hackett & Co.

Chester L. Walthall
Walthall Holding Co. Inc.

Scott D. Michael
Michael Farms, Inc.

Robert A. Warren
Hauck Bros., Inc.

Dr. Karen E. Rafinski
The Registry

Catherine L. Hill*
Andrew S. Peyton
Gary J. Seitz
Victoria L. Sparks

Banking Officers
Teresa L. Belliveau*
Benjamin L. Kitchen
Jeffrey S. Williams

Administrative Officers
Jacqueline S. Folck
Jason G. Hill
Joanna S. Jaques
Mark D. Klingler
Dawn R. 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 800.589.3040

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 M. McElligott
Certified Public Accountant,
Avita Health System

Douglas M. Schilling
Schilling Graphics, Inc.

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

Retired, Representative of

Ohio General Assembly

Michael C. Bardo

Retired, Hartzell

Industries, Inc.

Rick M. Heinl

Repacorp, Inc.

Timothy Johnston

Retired, Consultant

Tamara L. Baird-Ganley

Baird Funeral Home

Brett A. Baumeister

President, Unity National Bank

Dr. Douglas D. Hulme

W. Samuel Robinson

Oakview Veterinary Hospital

Murray, Wells, Wendeln &

Robinson CPAs, Inc.

Officer Listing

President
Donald R. Stone

Senior Vice President
Anne S. Cole

Vice Presidents
Scott E. Bennett
John T. Herring

Banking Officers
David J. Lauthers
J. Stephen McDonald

Administrative Officers
James A. DeSimone
Shawneeta D. Shuff

Assistant Vice President
Jennifer J. Kuns

Assistant Vice Presidents

Dean F. Brewer

Kyle M. Cooper

Douglas R. Eakin

Banking Officers

Mary E. Clevenger

Kenneth S. Magoteaux

Administrative Officers

Vicki L. Burke**

Angela L. Schultz

Kathleen M. Sherman

**Assistant Trust Officer

Advisory Board

Officer Listing

President

Brett A. Baumeister

Vice Presidents

G. Dwayne Cooper

Nathan E. Counts

Lisa L. Feeser

Scott E. Rasor

Offices: 6 ATMs: 7

Website: UnitedBankOhio.com

Phone: 419.562.3040 or 800.589.3040

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
Retired, Representative of
Ohio General Assembly

Michael C. Bardo
Retired, Hartzell
Industries, Inc.

Rick M. Heinl
Repacorp, Inc.

Timothy Johnston
Retired, Consultant

Tamara L. Baird-Ganley
Baird Funeral Home

Brett A. Baumeister
President, Unity National Bank

Dr. Douglas D. Hulme
Oakview Veterinary Hospital

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

Advisory Board

Vice Presidents

Scott E. Bennett

John T. Herring

Banking Officers

David J. Lauthers

J. Stephen McDonald

Administrative Officers

James A. DeSimone

Shawneeta D. Shuff

Assistant Vice President

Jennifer J. Kuns

Officer Listing

President
Brett A. Baumeister

Vice Presidents
G. Dwayne Cooper
Nathan E. Counts
Lisa L. Feeser
Scott E. Rasor

Assistant Vice Presidents
Dean F. Brewer
Kyle M. Cooper
Douglas R. Eakin

Banking Officers
Mary E. Clevenger
Kenneth S. Magoteaux

Administrative Officers
Vicki L. Burke**
Angela L. Schultz
Kathleen M. Sherman

**Assistant 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 M. McElligott

Certified Public Accountant,

Douglas M. Schilling

Schilling Graphics, Inc.

Avita Health System

Officer Listing

President

Donald R. Stone

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

Springfield
1017 North Bechtle Avenue
Springfield, Ohio 45504
937.323.1011

Springfield

Clark
County

Franklin
County

Hilliard

Licking
County

Heath

Fairfield
County

Lancaster

Montgomery
County

Centerville

Assistant Vice Presidents
Patrick A. Borges
April D. Storie

Banking Officer
Mary E. Parsell

Administrative Officers
Charles L. Harris
Valerie J. Morgan
Misty A. Tipple

Franklin
County

Columbus

Heath
619 Hebron Road
Heath, Ohio 43056
740.788.8766

Officer Listing

President and CEO
Matthew R. Marsh

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

Assistant Vice President
Pamela J. Cooksey

Banking Officers
Michael J. Smith
Linda M. Staubach

PNC_AR2015_10 2/17/16 3:27 PM Page 8

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
“Corporation”). This discussion should be read in conjunction with
the consolidated financial statements and related notes and the five-year
summary of selected financial data. Management’s discussion and analysis
contains forward-looking statements that are provided to assist in the under-
standing of anticipated future financial performance. Forward-looking
statements provide current expectations or forecasts of future events and are
not guarantees of future performance. The forward-looking statements are
based on management’s expectations and are subject to a number of risks
and uncertainties. Although management believes that the expectations reflected
in such forward-looking statements are reasonable, actual results may differ
materially from those expressed or implied in such statements. Risks and
uncertainties that could cause actual results to differ materially include,
without limitation: Park’s ability to execute our business plan successfully
and within the expected timeframe; general economic and financial market
conditions, specifically in the real estate markets and the credit markets, either
nationally or in the states in which Park and our subsidiaries do business, may
experience a slowing or reversal of the recent economic expansion in addition
to continuing residual effects of recessionary conditions and an uneven spread
of positive impacts of recovery, on the economy and our counterparties, includ-
ing adverse impacts on the demand for loan, deposit and other financial
services, delinquencies, defaults and counterparties’ ability to meet credit and
other obligations; changes in interest rates and prices may adversely impact the
value of securities, loans, deposits and other financial instruments and the inter-
est rate sensitivity of our consolidated balance sheet as well as reduce interest
margins; changes in consumer spending, borrowing and saving habits, whether
due to changing business and economic conditions, legislative and regulatory
initiatives or other factors; 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 and bank
holding company 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 quali-
fied bank professionals; clients could pursue alternatives 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 major reform of the regulatory oversight structure of the financial
services industry and changes in laws and regulations concerning taxes, pen-
sions, bankruptcy, consumer protection, accounting, banking, securities and
other aspects of the financial services industry, specifically the reforms provided
in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
(the “Dodd-Frank Act”), as well as regulations already adopted or which may
be adopted in the future 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 money supply and
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., European and Asian government debt and concerns regarding the cred-
itworthiness of certain sovereign governments, supranationals and financial

institutions in Europe and Asia; unfavorable resolution of legal proceedings
or other claims and regulatory and other governmental examinations or other
inquiries; the adequacy of our risk management program; the ability to secure
confidential information and deliver products and services through the use of
computer systems and telecommunications networks; a failure in or breach of
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 sub-
sidiaries; 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, 2015. 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, 2015, 2014, and 2013. Park’s segments include
The Park National Bank (“PNB”), Guardian Financial Services Company
(“GFSC”), SE Property Holdings, LLC (“SEPH”) and all other which primarily
consists of Park as the “Parent Company.”

Table 1 – Net Income (Loss) by Segment

(In thousands)

PNB
GFSC
Parent Company

Ongoing operations

SEPH

Total Park

2015

$84,345
1,423
(4,549)

$81,219
(207)
$81,012

2014

$82,907
1,175
(5,050)

$79,032
4,925
$83,957

2013

$75,236
2,888
(1,397)

$76,727
142
$76,869

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 exclude
the results of SEPH, to reflect the business of Park and our subsidiaries going
forward. 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, 2015, 2014 and 2013.

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

2015

$220,879
7,665
75,188
167,476

$120,926
36,581

$ 84,345

2014

$218,641
3,517
69,384
163,641

$120,867
37,960

$ 82,907

2013

$210,781
14,039
70,841
158,651

$108,932
33,696

$ 75,236

Net interest income of $220.9 million for the fiscal year ended December 31,
2015 represented a $2.3 million or 1.0% increase, compared to $218.6 million
for the fiscal year ended December 31, 2014. The increase was primarily due
to a $206 million increase in average loans, offset by a 13 basis point decline
in the yield on loans.

PNC_AR2015_10 2/17/16 3:27 PM Page 9

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 provision for loan losses of $7.7 million for the fiscal year ended December
31, 2015 represented an increase of $4.2 million, compared to $3.5 million
for the fiscal year ended December 31, 2014. The increase reflected the
increase in loan balances as well as a small increase in specific reserves.
Refer to the “CREDIT EXPERIENCE: Provision for (Recovery of) Loan Losses”
section for additional details regarding the level of the provision for loan
losses recognized in each period presented.

Other income of $75.2 million for the fiscal year ended December 31, 2015
represented a $5.8 million or 8.4% increase, compared to $69.4 million for the
fiscal year ended December 31, 2014. The $5.8 million increase was primarily
related to income of $1.3 million related to proceeds from the death benefits
paid from bank owned life insurance policies, a $992,000 increase in check
card income, a $2.0 million increase in other service income primarily related
to mortgage loan originations, and a $1.0 million increase in income from
fiduciary activities.

Other expense of $167.5 million for the fiscal year ended December 31, 2015
represented an increase of $3.9 million or 2.3%, compared to $163.6 million
for the fiscal year ended December 31, 2014. The $3.9 million increase was
primarily related to an increase of $4.7 million related to salaries expense as
well as a contract termination fee and a borrowing prepayment penalty that
together resulted in aggregate additional expense of $1.1 million, offset by a
$1.5 million decrease in contributions and a $964,000 decrease in fees and
services.

PNB results for the fiscal years ended December 31, 2015, 2014, and 2013
included income and expense related to participations in legacy Vision Bank
(“Vision”) assets. The impact of these participations on particular items within
PNB’s income and expense is detailed in the table below:

Table 3 – PNB Adjusted for Vision Participations

The PNB loan portfolio increased during the 2015 year. Loans outstanding
at December 31, 2015 were $5.03 billion, compared to $4.78 billion at
December 31, 2014, an increase of $247 million or 5.2%. PNB experienced
growth across all loan categories: mortgage loan growth of $27 million (2.2%);
commercial loan growth of $143 million (5.9%); and consumer loan growth
of $77 million (6.9%).

PNB’s allowance for loan losses increased by $2.5 million, or 4.72%, to $54.5
million at December 31, 2015, compared to $52.0 million at December 31,
2014. Net charge-offs were $5.2 million, or 0.11% of total average loans,
for the year ended December 31, 2015. Refer to the “CREDIT EXPERIENCE:
Provision for (Recovery of) Loan Losses” section for additional information
regarding PNB’s loan portfolio and the level of provision for loan losses
recognized in each period presented.

PNB’s return on average assets decreased by 5 basis points to 1.17% for the
fiscal year ended December 31, 2015, compared to 1.22% for the fiscal year
ended December 31, 2014. This decrease was primarily due to an increase in
the average balance of Federal Funds sold which yielded a lower rate of return
as well as a decrease in the weighted average interest rate on loans. PNB had
a $138.1 million, or 67.4%, increase in average Fed Funds Sold which had an
average balance of $343.0 million and yielded 0.26% for the fiscal year ended
December 31, 2015, and had an average balance of $204.9 million and yielded
0.25% for the fiscal year ended December 31, 2014. Additionally, the yield on
loans decreased from 4.67% for the fiscal year ended December 31, 2014, to
4.54% for the fiscal year ended December 31, 2015.

Guardian Financial Services Company (GFSC)

The table below reflects GFSC’s net income for the fiscal years ended December
31, 2015, 2014, and 2013.

2015

2014

2013

Table 5 – 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

2015

$6,588
1,415
2
2,984

$2,191
768

$1,423

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

The table below provides certain balance sheet information and financial ratios
for GFSC as of December 31, 2015 and 2014.

Table 6 – GFSC Balance Sheet Information

(In thousands)

Loans
Allowance for loan losses
Net loans
Total assets
Average assets(1)
Return on average assets

December 31,
2015

December 31,
2014

% Change
from 12/31/14

$35,469
2,041
33,428
35,793
37,675
3.78%

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

(12.73)%
(13.22)%
(12.70)%
(11.20)%
(12.46)%
38.46%

(1) Average assets for the fiscal years ended December 31, 2015 and 2014, respectively.

PNB
as

(In thousands)

Reported Adjustments(1) Adjusted

Net interest
income
Provision for

(recovery of)
loan losses
Other income
Other expense

Income before
income taxes
Federal income
tax expense
(benefit)

Net income

(loss)

$220,879

$ 241

$220,638

$218,641

$ 309

$218,332

$210,781

$ 171

$210,610

7,665
75,188
167,476

$(1,453)
1,225
700

9,118
73,963
166,776

3,517
69,384
163,641

(6,198)
1,256
2,032

9,715
68,128
161,609

14,039
70,841
158,651

(584)
155
1,600

14,623
70,686
157,051

$120,926

$ 2,219

$118,707

$120,867

$ 5,731

$115,136

$108,932

$ (690)

$109,622

36,581

671

35,910

37,960

1,800

36,160

33,696

(213)

33,909

$ 84,345

$ 1,548

$ 82,797

$ 82,907

$ 3,931

$ 78,976

$ 75,236

$ (477)

$ 75,713

(1) Adjustments consist of the impact on the particular items reported in PNB’s income statement

of PNB participations in legacy Vision assets.

The impact of Vision Bank participations includes: interest income, net
recoveries from loans previously charged off, net gains on the sale of OREO
(included in “other income”), other OREO income and gains on the sale of
loans and other expenses.

The table below provides certain balance sheet information and financial ratios
for PNB as of December 31, 2015 and 2014.

Table 4 – PNB Balance Sheet Information

(In thousands)

Loans
Allowance for loan losses
Net loans
Investment securities
Total assets
Average assets(1)
Return on average assets

December 31,
2015

December 31,
2014

% Change
from 12/31/14

$5,029,072
54,453
4,974,619
1,641,539
7,229,764
7,219,898
1.17%

$4,781,761
52,000
4,729,761
1,498,444
6,910,386
6,790,615
1.22%

5.17%
4.72%
5.18%
9.55%
4.62%
6.32%
(4.10)%

(1) Average assets for the fiscal years ended December 31, 2015 and 2014, respectively.

PNC_AR2015_10 2/17/16 3:27 PM Page 10

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

Park Parent Company

The table below reflects the Park Parent Company net loss for the fiscal years
ended December 31, 2015, 2014, and 2013.

Legacy Vision assets at SEPH totaled $26.3 million as of December 31, 2015.
In addition to these SEPH assets, PNB participations in legacy Vision assets
totaled $9.8 million at December 31, 2015.

Table 7 – Park Parent Company Income Statement

Park National Corporation

(In thousands)

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

Loss before income tax benefit
Federal income tax benefit

Net loss

2015

$ 239
—
513
9,972

$(9,220)
(4,671)

$(4,549)

2014

$(2,012)
—
175
8,000

$(9,837)
(4,787)

$(5,050)

2013

$ 2,828
—
469
7,520

$(4,223)
(2,826)

$(1,397)

The net interest income (expense) for Park’s parent company included
interest income on loans to SEPH and on subordinated debt investments in
PNB, which were eliminated in the consolidated Park National Corporation
totals. Additionally, net interest income (expense) included interest expense
related to the $30.00 million of subordinated notes issued by Park to accredited
investors on April 20, 2012. Results for the fiscal years ended December 31,
2014 and 2013 included the items previously discussed and interest expense
related to the $35.25 million of subordinated notes issued by Park to accredited
investors on December 23, 2009. Park paid off 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 allow-
able under the related note purchase agreement dated December 23, 2009.

Other expense of $10.0 million for the fiscal year ended December 31, 2015
represented a $2.0 million or 24.7% increase, compared to $8.0 million for the
fiscal year ended December 31, 2014. The $2.0 million increase was primarily
related to an increase of $708,000 related to benefits expense, an increase of
$522,000 related to state taxes and a $346,000 impairment charge related to
a capital investment.

SE Property Holdings, LLC (“SEPH”)

The table below reflects SEPH’s net income (loss) for the fiscal years ended
December 31, 2015, 2014, and 2013. SEPH holds the remaining assets and
liabilities 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 were transferred from Vision to SEPH. This segment repre-
sents a run-off portfolio of the legacy Vision assets.

Table 8 – SEPH Summary Income Statement

(In thousands)

Net interest (expense) income
Recovery of loan losses
Other income
Other expense

(Loss) income before income taxes
Federal income tax (benefit) expense

Net (loss) income

2015

(74)
(4,090)
1,848
6,182

$ (318)
(111)

$ (207)

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

SEPH’s financial results for the fiscal year ended December 31, 2015 included
net recoveries of $4.1 million. The net recoveries during 2015 consisted of
charge-offs of $127,000, offset by recoveries of $4.2 million from loans
previously charged off. Other income for the fiscal year ended December 31,
2015 at SEPH of $1.8 million was largely related to net gains on the sale of
loans of $722,000, net gains on sale of OREO and other OREO income of
$1.2 million, and non-yield loan fee income of $301,000, offset by OREO
devaluations of $352,000. The $5.6 million decline in other expense for the
fiscal year ended December 31, 2015 compared to the same period of 2014
was primarily the result of declines in: legal fees of $4.1 million; management
and consulting fees of $971,000; and other OREO expense of $190,000, offset
by a $814,000 increase in expense related to reserves established for potential
mortgage loan repurchases.

The table below reflects the Park’s net income for the fiscal years ended
December 31, 2015, 2014, and 2013.

Table 9 – Park Summary Income Statement

(In thousands)

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

Income before income taxes
Federal income taxes

Net income

2015

$227,632
4,990
77,551
186,614

$113,579
32,567

$ 81,012

2014

$225,044
(7,333)
75,549
187,510

$120,416
36,459

$ 83,957

2013

$221,025
3,415
73,277
181,515

$109,372
32,503

$ 76,869

DIVIDENDS ON COMMON SHARES
Cash dividends declared on Park’s common shares were $3.76 in 2015, 2014
and 2013. The quarterly cash dividend on Park’s common shares was $0.94
per share for each quarter of 2015, 2014 and 2013.

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 determ -
ination 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 – Provision for (Recovery of) 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, 2015, OREO totaled $18.7 million, a decrease of
17.3%, compared to $22.6 million at December 31, 2014.

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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 analy-
ses. The large majority of Park’s financial assets valued using Level 2 inputs
consist of available-for-sale (“AFS”) securities. The fair value of these AFS
securities is obtained largely by the use of matrix pricing, which is a 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: The accounting for goodwill also involves a higher degree of
judgment than most other significant accounting policies. GAAP establishes
standards for 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 transacted. A decrease in earnings
resulting from a decline in the customer base, the inability to deliver cost-
effective services over sustained periods or significant credit problems can
lead to impairment of goodwill that could adversely impact earnings in future
periods. 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 performance 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, 2015, on a consolidated basis,
Park had $72.3 million of goodwill, all of which is recorded at PNB.

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:

■ the interest rate used to determine the present value of liabilities (discount

rate);

■ certain employee-related factors, such as turnover, retirement age and

mortality;

■ the expected return on assets in our funded plans; and
■ the rate of salary increases

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 are a significant number of con-
sumers 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, 2015, Park operated 122 financial service offices (including
those of PNB, Scope Leasing, Inc. (“Scope Aircraft Finance”), and GFSC and
a network of 141 automated teller machines in 28 Ohio counties. Park also
operated one office for Park Title Agency LLC and one office for SEPH, each
located in Newark, Ohio.

A summary of average loans and average deposits for Park’s subsidiaries,
including its bank subsidiary, PNB, and PNB’s divisions and subsidiary Scope
Aircraft Finance for 2015, 2014 and 2013 is shown in Table 10. See Note 27
of the Notes to Consolidated Financial Statements for additional financial infor-
mation 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 10 – 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

2015

2014

2013

Average
Loans

Average
Deposits

Average
Loans

Average
Deposits

Average
Loans

Average
Deposits

$1,465,586

$1,473,906

$1,383,686

$1,426,645

$1,348,466

$1,355,805

462,681

802,061

454,680

774,716

432,259

780,525

591,948

632,810

571,519

563,275

540,452

538,142

655,682

556,543

638,314

493,449

618,144

482,002

240,622

483,673

242,788

451,304

240,692

444,364

260,281

406,940

255,280

401,255

251,567

398,260

374,385

337,181

355,379

317,208

323,880

308,970

384,788

210,066

363,735

208,784

324,386

216,134

103,301

198,162

92,427

190,082

85,761

193,823

180,034

172,658

174,950

162,074

160,123

153,814

123,875

96,782

108,397

89,328

100,189

84,802

198,475

17,910

37,686

465

—

5,595

178,194

31,836

43,165

—

6,610

182,794

47,625

49,687

8,172

(187,675)

89,982

(177,053)

(67,185)

(191,244)

(105,098)

$4,909,579

$5,466,824

$4,717,297

$5,017,553

$4,514,781

$4,859,740

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.

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Average total deposits were $5,467 million in 2015, compared to $5,018
million in 2014, and $4,860 million in 2013. Table 11 provides a summary
of deposit balances as of December 31, 2015 and 2014, along with the change
over the past year.

Table 11 – Year-End Deposits

December 31,
(In thousands)

Non-interest bearing checking
Interest bearing transaction

accounts

Savings
All other time deposits
Other

2015

2014

$1,404,032

$1,269,296

1,107,200
1,544,708
1,290,412
1,290

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

Total

$5,347,642

$5,128,000

Change

$134,736

(14,879)
219,263
(119,499)
21

$219,642

The average interest rate paid on interest bearing deposits was 0.30% in 2015,
compared to 0.29% in 2014, and 0.35% in 2013. The average cost of interest
bearing deposits for each quarter of 2015 was 0.29% for the fourth quarter,
0.29% for the third quarter, 0.30% for the second quarter and 0.31% for the
first quarter.

Maturities of time deposits over $100,000 as of December 31, 2015 and 2014
were:

Table 12 – Maturities of Time Deposits

December 31 (In thousands)

3 months or less
Over 3 months through 6 months
Over 6 months through 12 months
Over 12 months

Total

Over $100,000

2015

$197,871
96,132
117,249
97,242

$508,494

2014

$210,386
93,168
132,344
122,709

$558,607

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 0.18% in 2015, compared to 0.20% in 2014, and 0.22% in
2013. The year-end balance for short-term borrowings was $394 million at
December 31, 2015, compared to $277 million at December 31, 2014, and
$242 million at December 31, 2013.

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 2015,
average long-term debt was $793 million, compared to $868 million in 2014,
and $871 million in 2013. The average interest rate paid on long-term debt was
3.10% for 2015, compared to 3.29% for 2014, and 3.26% for 2013. Average
total debt (long-term and short-term) was $1,052 million in 2015, compared
to $1,131 million in 2014, and $1,124 million in 2013. Average total debt
decreased by $79 million or 7.0% in 2015 compared to 2014, and increased
by $7 million or 0.6% in 2014 compared to 2013. Average long-term debt was
75% of average total debt in 2015, compared to 77% of average total debt in
2014 and 2013.

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 subordi-
nated note was purchased at a purchase price of 100% of the principal amount
by an accredited investor.

See Note 16 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 ($713.4 million) less goodwill ($72.3 million)] to tangible
assets [total assets ($7,311 million) less goodwill ($72.3 million)] was 8.86%
at December 31, 2015, compared to 9.04% at December 31, 2014, and 8.82%
at December 31, 2013.

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

The unrealized net holding loss, net of income taxes, on AFS securities was
$292,000 at year-end 2015, compared to the unrealized net holding gain, net of
income taxes, of $1.3 million at year-end 2014, and compared to the unrealized
net holding loss, net of income taxes, of $29.8 million at year-end 2013. 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 18 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 $0.5 million in 2015, a net comprehensive loss of $9.3
million in 2014, and net comprehensive income of $21.5 million in 2013. The
net comprehensive loss in 2015 was due to changes in actuarial assumptions
combined with lower investment returns on pension plan assets. The net com-
prehensive 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 comprehen-
sive 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. At year-
end 2015, the balance in accumulated other comprehensive loss pertaining to
the pension plan was $(15.4) million, compared to $(14.9) million at
December 31, 2014, and $(5.6) million at December 31, 2013.

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INVESTMENT OF FUNDS
Loans: Average loans were $4,910 million in 2015, compared to $4,717
million in 2014, and $4,515 million in 2013. The average yield on loans was
4.66% in 2015, compared to 4.84% in 2014 and 5.02% in 2013. Approximately
49% of Park’s loan balances mature or reprice within one year (see Table 35).
The yield on average loan balances for each quarter of 2015 was 4.63% for the
fourth quarter, 4.65% for the third quarter, and 4.68% for each of the second
and first quarters.

At December 31, 2015, loan balances were $5,068 million, compared to
$4,830 million at year-end 2014, an increase of $238 million or 4.9%. The
loan growth of $238 million in 2015 was largely due to increases in loans of
$247 million at PNB, offset by declines at GFSC and SEPH.

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

2015

2014

2013

2012

2011

$ 955,727

$ 856,535

$ 825,432

$ 823,927

$ 743,797

173,345

155,804

156,116

165,528

217,546

1,855,443

1,851,375

1,799,547

1,713,645

1,628,618

1,113,603
967,111
2,856

1,069,637
893,160
3,171

1,112,273
723,733
3,404

1,092,164
651,930
3,128

1,108,574
616,505
2,059

Total loans

$5,068,085

$4,829,682

$4,620,505

$4,450,322

$4,317,099

Loan growth was experienced across each of the major loan types in 2015.

On a combined basis, year-end commercial, financial and agricultural loans,
construction real estate loans and commercial real estate loans increased by
$161 million or 7.7% in 2015 and decreased by $12 million or 0.6% in 2014.
The increase in 2015 was due to increases in commercial, financial and agri-
cultural loans of $99.2 million, commercial real estate loans of $44.0 million
and an increase of $17.5 million in construction real estate loans. The decrease
in 2014 was primarily 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.

Consumer loans increased by $74 million or 8.3% in 2015 and increased by
$169 million or 23.3% in 2014. The increase in consumer loans in each of
2015 and 2014 was primarily due to an increase in automobile lending in Ohio.

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. The balance of sold fixed-rate residential mortgage loans, in which
Park has maintained the servicing rights, was $1,273 million at year-end 2015,
compared to $1,264 million at year-end 2014, and $1,326 million at year-end
2013.

Table 14 – Selected Loan Maturity Distribution

December 31, 2015
(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)

$ 74,400
38,592
48,535

Over One
Through
Five Years

Over
Five
Years

Total

$438,752
38,528
106,830

$ 442,575
96,225
958,238

$ 955,727
173,345
1,113,603

$161,527

$584,110

$1,497,038

$2,242,675

$312,822
271,288

$ 406,084
1,090,954

$ 718,906
1,362,242

(1) Nonaccrual loans of $44.0 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 con -
ditions change over time, Park’s overall interest rate risk, liquidity needs and
potential return on the investment portfolio will change. Management regularly
evaluates the securities in the investment portfolio as circumstances evolve.
Circumstances that 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 5 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 (“HTM”).
In addition, starting in 2015, Park began to purchase tax-exempt municipal
securities, also classified as HTM. These securities are classified as HTM
because they are generally not as liquid as the investment securities that Park
classifies as AFS. A classification of HTM means that Park has the positive intent
and the ability to hold these securities until maturity. At year-end 2015, Park’s
HTM securities portfolio was $149 million, compared to $141 million at year-
end 2014, and $182 million at year-end 2013. Included in the HTM securities
portfolio as of December 31, 2015 are $48.2 million of tax-exempt municipal
securities. All of the CMOs, mortgage-backed securities, and callable notes in
Park’s investment portfolio were issued by U.S. Government sponsored entities.

Average taxable investment securities were $1,472 million in 2015, compared
to $1,433 million in 2014, and $1,377 million in 2013. The average yield on
taxable investment securities was 2.45% in 2015, compared to 2.58% in 2014,
and 2.66% in 2013. Average tax-exempt investment securities were $5.9 million
in 2015, compared to $65,000 in 2014, and $1.0 million in 2013. The average
tax-equivalent yield on tax-exempt investment securities was 4.72% in 2015,
compared to 6.97% in 2014, and 7.07% in 2013.

Total investment securities (at amortized cost) were $1,644 million at
December 31, 2015, compared to $1,499 million at December 31, 2014,
and $1,470 million at December 31, 2013. Management purchased investment
securities totaling $506 million in 2015, $352 million in 2014, and $583
million in 2013. Proceeds from repayments and maturities of investment
securities were $357 million in 2015, $140 million in 2014, and $605
million in 2013.

Proceeds from sales of investment securities were $3.1 million in 2015. These
investment securities had a book value of $3.1 million and resulted in a gain
on sale of $88,000. Proceeds from sales of investment securities were $173.1
million in 2014. Of the investment securities sold in 2014, a small portion with
a book value of $187,000 was sold for a gain of $22,000. The remaining invest-
ment securities sold in 2014, 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.

At year-end 2015, 2014, and 2013, the average tax-equivalent yield on the
total investment portfolio was 2.28%, 2.47% and 2.53%, respectively. The
weighted average remaining maturity of the total investment portfolio was
4.8 years at December 31, 2015, 5.2 years at December 31, 2014, and 6.5
years at December 31, 2013. Obligations of the U.S. Treasury and other U.S.
Government sponsored entities and U.S. Government sponsored entities’ asset-
backed securities were approximately 93.3% of the total investment portfolio
at year-end 2015, approximately 96.0% of the total investment portfolio at
year-end 2014, and approximately 95.2% of the total investment portfolio
at year-end 2013.

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The average maturity of the investment portfolio would lengthen if long-term
interest rates were to increase as principal repayments from mortgage-backed
securities and CMOs would decline and callable U.S. Government sponsored
entity notes would extend to their maturity dates. At year-end 2015, manage-
ment estimated that the average maturity of the investment portfolio would
lengthen to 5.0 years with a 100 basis point increase in long-term interest rates
and to 5.2 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 2015, management
estimated that the average maturity of the investment portfolio would decrease
to 2.2 years with a 100 basis point decrease in long-term interest rates and to
1.7 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 2015, 2014 and 2013:

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

2015

2014

2013

$ 522,063
48,190
1,012,605
50,086
8,225
2,710

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

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

$1,643,879

$1,500,788

$1,424,234

31.8%
2.9%
61.6%
3.0%
0.5%
0.2%

35.9%
—%
60.1%
3.3%
0.5%
0.2%

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

100.0%

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

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

2015

Interest

Average
Rate

Daily
Average

2014

Interest

Average
Rate

Daily
Average

2013

Interest

Average
Rate

$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%

$228,746
36,026
279
888

265,939

4.66%
2.45%
4.72%
0.26%

3.95%

816
1,413
10,125

12,354

469
24,619

37,442

0.06%
0.09%
0.75%

0.30%

0.18%
3.10%

0.72%

$4,909,579
1,472,285
5,923
342,997

6,730,784

(56,947)
117,286
58,377
456,960

$7,306,460

$1,257,681
1,544,316
1,353,199

4,155,196

258,717
793,469

5,207,382

1,311,628
77,123

1,388,751

710,327

$7,306,460

$4,717,297
1,432,627
65
204,874

6,354,863

(58,917)
112,113
55,407
429,836

$6,893,302

$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

680,449

$6,893,302

$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%

$4,514,781
1,376,913
974
272,851

6,165,519

(56,860)
110,796
56,303
425,291

$6,701,049

$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

643,609

$6,701,049

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

$228,497

$225,889

$222,327

3.23%
3.39%

3.38%
3.55%

3.43%
3.61%

(1) Loan income includes net loan related fee income and origination costs (expense) of ($1.0 million) in 2015, $1.3 million in 2014, and $1.9 million in 2013. Loan income also includes the effects of taxable

equivalent adjustments using a 35% tax rate in 2015, 2014 and 2013. The taxable equivalent adjustment was $767,000 in 2015, $843,000 in 2014, and $1.3 million in 2013.

(2) For the purpose of the computation for loans, 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 2015, 2014 and 2013. The taxable equivalent adjustments were
$98,000 in 2015, $2,000 in 2014, and $24,000 in 2013.

(4)

Includes subordinated notes.

PNC_AR2015_10 2/17/16 3:27 PM Page 15

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

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.)

The following table displays (for each quarter of 2015) the average balance
of interest earning assets, the net interest income and the tax equivalent net
interest income and net interest margin.

Table 17 – Quarterly Net Interest Margin

(In thousands)

First Quarter
Second Quarter
Third Quarter
Fourth Quarter

2015

Average
Interest
Earning Assets

$6,636,498
6,689,497
6,828,647
6,765,996

$6,730,784

Net
Interest
Income

$ 55,535
56,515
57,715
57,867

$227,632

Tax Equivalent
Net Interest
Income

Tax Equivalent
Net Interest
Margin

$ 55,696
56,685
57,935
58,181

$228,497

3.40%
3.40%
3.37%
3.41%

3.39%

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 2014 to 2015

Change from 2013 to 2014

(In thousands)

Volume

Rate

Total

Volume

Rate

Total

Increase (decrease) in:
Interest income:

Total loans

$ 9,016

$ (8,757) $ 259

$ 9,961

$(8,290)

$1,671

Taxable investments
Tax-exempt investments
Money market
instruments

982
276

352

(1,937)
(2)

(955)
274

1,433
(63)

(1,138)
(1)

295
(64)

373

(163)

—

(163)

Total interest
income

Interest expense:

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

Total interest
expense

10,626

(10,675)

(49)

11,168

(9,429)

1,739

(9) $ — $

273
283
(7)
(2,365)

289
519
(41)
(1,599)

(9)
562
802
(48)
(3,964)

27
104
(604)
23
(83)

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

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

(1,825)

(832)

(2,657)

(533)

(1,290)

(1,823)

Net variance

$12,451

$ (9,843) $ 2,608

$11,701

$(8,139)

$3,562

Other Income: Other income was $77.6 million in 2015, compared to $75.5
million in 2014, and $73.3 million in 2013.

The following table displays total other income for Park in 2015, 2014 and
2013.

Table 19 – Other Income

Year Ended December 31,
(In thousands)

Income from fiduciary activities

Service charges on deposits

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

Gain (loss) on sale of investment securities

Miscellaneous

Total other income

2015

2014

2013

$20,195

$19,150

$17,133

14,751

11,438

14,561

5,783

2,428

1,604

15,423

10,459

13,570

4,861

2,467

5,503

16,316

12,913

12,955

5,041

2,632

3,110

(1,592)

(2,406)

(3,180)

756

7,539

1,867

(1,158)

5,813

—

6,357

$77,551

$75,549

$73,277

The following table breaks out the change in total other income for the year
ended December 31, 2015 compared to the year ended December 31, 2014,
and for the year ended December 31, 2014 compared to the year ended
December 31, 2013 between Park’s Ohio-based operations and SEPH.

Table 20 – Other Income Breakout

(In thousands)
Income from fiduciary

activities
Service charges
on deposits

Other service income
Checkcard fee income
Bank owned life

insurance income

ATM fees
Gain on the sale
of OREO, net
OREO devaluations
Gain on sale of

commercial loans
held for sale

Gain (loss) on sale of

investment securities

Miscellaneous

Change from 2014 to 2015

Change from 2013 to 2014

Ohio-based
Operations

SEPH

Total

Ohio-based
Operations

SEPH

Total

$ 1,045

$ — $ 1,045

$ 2,017

$ — $ 2,017

(672)
2,011
991

922
(39)

—
(1,032)
—

—
—

(672)
979
991

922
(39)

(1,220)
335

(2,679)
479

(3,899)
814

(893)
(3,726)
615

(180)
(165)

1,642
1,011

—
1,272
—

—
—

(893)
(2,454)
615

(180)
(165)

751
(237)

2,393
774

363

(1,474)

(1,111)

(329)

2,196

1,867

1,246
1,163

—
563

1,246
1,726

(1,158)
(597)

— (1,158)
(544)
53

Total other income

$ 6,145

$(4,143)

$ 2,002

$(1,763)

$4,035

$ 2,272

Income from fiduciary activities increased by $1.0 million in 2015, or 5.5%,
to $20.2 million in 2015, compared to $19.2 million in 2014. The $19.2
million in 2014 was an increase of $2.0 million, or 11.8%, compared to
$17.1 million in 2013. The increases in fiduciary fee income in 2015 and
2014 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 managed by PNB was
$4.38 billion in 2015, compared to $4.26 billion in 2014, and $3.86 billion
in 2013.

Service charges on deposit accounts decreased by $672,000, or 4.4%, to $14.8
million in 2015, compared to $15.4 million in 2014. The $15.4 million in 2014
was a decrease of $893,000, or 5.5%, compared to $16.3 million in 2013.
The declines in 2015 and 2014 were related to declines in service charges
on deposits within Park’s Ohio-based operations, largely as a result of a decline
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 2014 and 2015.

Fee income earned from origination and sale into the secondary market of
long-term, fixed-rate mortgage loans is included within “Other service income”.
Other service income increased by $979,000, or 9.4%, to $11.4 million in
2015, compared to $10.5 million in 2014. The $10.5 million in 2014 was a
decrease of $2.5 million, or 19%, compared to $12.9 million in 2013. The
increase at PNB during 2015 was primarily due to a corresponding increase
in the amount of mortgage loans originated. The decline of $1.0 million at SEPH
in 2015 is due to a decline in the recovery of fees in 2015. 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. The decrease in other service
income in 2014 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 $991,000, or 7.3%, to $14.6 million in 2015, compared to
$13.6 million in 2014. The $13.6 million in 2014 was an increase of
$615,000, or 4.7%, compared to $13.0 million in 2013. The increases
in 2015 and 2014 were attributable to continued increases in the volume
of debit card transactions.

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Bank owned life insurance income increased by $922,000, or 19.0%, to $5.8
million in 2015, compared to $4.9 million in 2014. The increase was primarily
related to $1.3 million of income from death benefits paid on policies during
2015, compared to $383,000 of income from death benefits paid on policies
in 2014.

Gain on the sale of OREO, net, totaled $1.6 million in 2015, a decrease of
$3.9 million, compared to $5.5 million in 2014. The $5.5 million in 2014 was
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 2015, 2014 and 2013.

Other miscellaneous income increased by $1.7 million, or 29.7%, to $7.5
million in 2015, compared to $5.8 million in 2014. The increase in 2015 was
primarily due to $1.2 million in income from the operation of OREO properties.

Table 21 – Sales of OREO

(In thousands)

2015:
PNB
PNB participations
in Vision assets

SEPH

Total

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

Gain on
Sale(1)

3
20

1
114

205

111

—
104

215

$ 6,853

521
8,158

$15,532

$ 7,271

1,826
13,258

$22,355

$ 9,527

—
10,369

$19,896

$ 7,332

$ 479

984
8,742

463
584

$17,058

$1,526

$ 8,191

3,085
16,522

$27,798

$10,161

—
12,882

$23,043

$ 920

1,259
3,264

$5,443

$ 634

—
2,513

$3,147

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

OREO devaluations, which result from declines in the fair value (less antici-
pated selling costs) of property acquired through foreclosure, totaled $1.6
million in 2015, a decrease of $814,000, or 33.8%, compared to $2.4 million
in 2014. The $2.4 million in 2014 was a decrease of $774,000, or 24.3%
compared to $3.2 million in 2013. Of the $1.6 million in OREO devaluations
in 2015, $1.2 million were related to devaluations at PNB, of the $2.4 million
in OREO devaluations in 2014, $1.6 million were related to PNB, and of the
$3.2 million in OREO devaluations in 2013, $2.6 million were related to PNB.
The decline in OREO devaluations is consistent with the trend of lower OREO
balances across the Park organization, which totaled $18.7 million, $22.6
million and $34.6 million at December 31, 2015, 2014 and 2013, respectively.

Gain on the sale of commercial loans held for sale was $756,000 for 2015.
This was related to certain commercial loans, which had a book balance
of $144,000, that were sold in the first quarter of 2015. Gain on sale of com-
mercial loans held for sale was $1.9 million in 2014. PNB sold $12.7 million
of commercial loans held for sale in 2014, which resulted in a $328,000 loss
on sale. SEPH sold $6.4 million of commercial loans held for sale in 2014,
which resulted in a $2.2 million gain on sale.

Other Expense: Other expense was $186.6 million in 2015, compared to
$187.5 million in 2014, and $181.5 million in 2013. Other expense decreased
by $896,000, or 0.5% in 2015, and increased by $6.0 million, or 3.3% in
2014. The following table displays total other expense for Park for 2015,
2014 and 2013.

Table 22 – Other Expense

Year Ended December 31,
(In thousands)

Salaries
Employee benefits
Data processing fees
Professional fees and services
Net occupancy expense of bank premises
Furniture and equipment expense
Insurance
Marketing
Postage and telephone
State taxes
OREO expense
Miscellaneous

2015

$ 86,189
21,296
5,037
23,452
9,686
11,806
5,629
3,983
5,130
3,566
1,446
9,394

2014

$ 81,977
19,991
4,712
29,580
10,006
11,571
5,723
4,371
5,268
2,290
2,063
9,958

2013

$ 80,985
19,313
4,174
27,865
9,804
11,249
5,205
3,790
5,790
3,702
2,731
6,907

Total other expense

$186,614

$187,510

$181,515

Full-time equivalent employees

1,793

1,801

1,836

The following table breaks out the change in other expense for the year ended
December 31, 2015, compared to the year ended December 31, 2014, and for
the year ended December 31, 2014 compared to the year ended December 31,
2013 in each of Park’s Ohio-based operations and SEPH.

Table 23 – Other Expense Breakout

Change from 2014 to 2015

Change from 2013 to 2014

(In thousands)

Ohio-based
Operations

SEPH

Total

Ohio-based
Operations

SEPH

Total

Salaries

$ 4,556

$ (344)

$ 4,212

$ 1,195

$ (203)

$ 992

Employee benefits
Data processing fees
Professional fees
and services
Net occupancy

expense of bank
premises
Furniture and

equipment expense

Insurance
Marketing
Postage and telephone
State taxes
OREO expense
Miscellaneous

Total other
expense

1,510
325

(205)
—

1,305
325

(780)

(5,348)

(6,128)

430
538

598

248
—

678
538

1,117

1,715

(320)

—

(320)

206

(4)

202

236
(88)
(388)
(135)
1,351
(428)
(1,151)

(1)
(6)
—
(3)
(75)
(189)
587

235
(94)
(388)
(138)
1,276
(617)
(564)

334
508
581
(521)
(1,451)
(684)
4,706

(12)
10
—
(1)
39
16
(1,655)

322
518
581
(522)
(1,412)
(668)
3,051

$ 4,688

$(5,584)

$ (896)

$ 6,440

$ (445)

$ 5,995

Salaries expense increased $4.2 million, or 5.1%, to $86.2 million in 2015,
and increased by $1.0 million, or 1.2%, to $82.0 million in 2014. The increase
in 2015 was due to an increase in salaries of $2.8 million, an increase in incen-
tive compensation of $848,000, and an increase in share-based compensation
expense related to the Park 2013 Long-Term Incentive Plan of $407,000
compared to 2014. While total full-time equivalent employees did not increase
in 2015, Park has experienced an increase in higher paid positions. The
increase in 2014 was primarily due to an increase of $992,000 in salary
expense. Park had 1,793 full-time equivalent employees at year-end 2015,
compared to 1,801 full-time equivalent employees at year-end 2014, and
1,836 full-time equivalent employees at year-end 2013.

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Employee benefits expense increased $1.3 million, or 6.5%, to $21.3 million
in 2015, and increased by $678,000, or 3.5%, to $20.0 million in 2014.
The increase in 2015 was due to a $1.3 million increase in pension and
salary deferral plan expense, compared to 2014. The increase in 2014 was
primarily due to increases of $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.

Professional fees and services decreased $6.1 million, or 20.7%, to $23.5
million in 2015, compared to $29.6 million in 2014. The $29.6 million in
2014 was an increase of $1.7 million, or 6.2%, compared 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
memberships in industry associations. The decrease in professional fees and
services expense in 2015 was largely related to declines in legal expenses
associated with PNB participations in Vision loans and other loan relationships
at SEPH. The increase in professional fees and services expense in 2014 was
primarily due to increases in legal and consulting fees at both PNB and SEPH.

OREO expense declined $617,000, or 29.9%, to $1.4 million in 2015,
compared to $2.1 million in 2014. The $2.1 million in 2014 was a decline
of $668,000, or 24.5%, compared to $2.7 million in 2013. The decline in
OREO expense was consistent with the trend of lower OREO balances across
the Park organization, which totaled $18.7 million, $22.6 million and $34.6
million at December 31, 2015, 2014 and 2013, respectively.

The subcategory “Miscellaneous” other expense includes expenses for
supplies, travel, charitable contributions, and other miscellaneous expense.
The subcategory miscellaneous other expense decreased by $564,000, or 5.7%,
to $9.4 million in 2015, compared to $10.0 million in 2014. The $10.0 million
in 2014 was an increase of $3.1 million, or 44.2%, compared to the $6.9
million in 2013. The $3.1 million increase in 2014 was primarily due to
a charitable contribution and a contract termination fee.

Income Taxes: Federal income tax expense was $32.6 million in 2015,
compared to $36.5 million in 2014, and $32.5 million in 2013. Federal
income tax expense as a percentage of income before taxes was 28.7% in
2015, 30.3% in 2014, and 29.7% in 2013. The difference between the statutory
federal income tax rate of 35% and Park’s effective tax rate reflects permanent
tax differences, primarily consisting of tax-exempt interest income from
municipal investments and loans, qualified affordable housing and historical
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 2015 were approximately $7.2 million compared to $5.7 million for 2014.

CREDIT EXPERIENCE
Provision for (Recovery of) Loan Losses: The provision for (recovery of)
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 provision for (recovery of) 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 table below provides additional information on the provision for loan
losses and the ALLL for Park for 2015, 2014 and 2013.

Table 24 – ALLL Information, Park

(In thousands)

ALLL, beginning balance

Charge-offs

Recoveries

Net charge-offs (recoveries)

Provision for (recovery of) loan losses

2015

2014

2013

54,352

59,468

55,537

14,290

(11,442)
2,848

4,990

24,780

(26,997)
(2,217)

(7,333)

19,153

(19,669)
(516)

3,415

ALLL, ending balance

56,494

54,352

59,468

Average loans

$4,909,579

$4,717,297

$4,514,781

Net charge-offs as a percentage of

average loans

0.06%

(0.05)%

(0.01)%

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
2015, 2014 and 2013.

Table 25 – ALLL Information, Park’s Ohio-based Subsidiaries

(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
Net charge-offs as a percentage of

average loans

Net charge-offs as a percentage of
average loans — excluding PNB
participations in Vison loans

2015

2014

2013

$ 54,352

59,468

55,537

14,143
20

14,163

(5,770)
(1,455)

(7,225)
6,938

22,988
667

23,655

(6,613)
(6,865)

(13,478)
10,177

16,809
131

16,940

(4,942)
(715)

(5,657)
11,283

10,515
(1,435)
9,080
56,494
$
$4,891,670

11,259
(6,198)
5,061
54,352
$
$4,685,461

16,095
(881)
15,214
59,468
$
$4,467,156

0.14%

0.22%

0.25%

0.17%

0.35%

0.25%

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
recognizes a recovery of loan losses when a recovery is received.

Table 26 – ALLL Information, SEPH

(In thousands)

ALLL, beginning balance

Charge-offs

Recoveries

Net recoveries

Recovery of loan losses

ALLL, ending balance

Average loans

Net recoveries as
a percentage of
average loans

2015

2014

2013

$ —

127

(4,217)
(4,090)

(4,090)

$ —

$17,910

1,125

(13,519)
(12,394)

(12,394)

$ —

$ 31,836

2,213

(14,012)
(11,799)

(11,799)

$ —

$ 47,625

(22.84)%

(38.93)%

(24.77)%

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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 28 – Summary of Loan Loss Experience (continued)

(In thousands)

2015

2014

2013

2012

2011

Net charge-offs
(recoveries)

Provision (recovery)

included in earnings

Transfer of loans
at fair value

Allowance for loan

losses transferred
to held for sale

2,848 $

(2,217) $

(516) $

48,326 $ 125,084

4,990

(7,333)

3,415

35,419

63,272

—

(219)

—

(13,100)

Ending balance

56,494 $

54,352 $

59,468 $

55,537 $

68,444

Ratio of net charge-offs

(recoveries) to
average loans

Ratio of allowance for
loan losses to end
of year loans

0.06%

(0.05)%

(0.01)%

1.10%

2.65%

1.11%

1.13%

1.29%

1.25%

1.59%

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,

2015

2014

2013

2012

2011

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

$13,731

18.86% $10,719

17.73% $14,218

17.87% $15,635

18.51% $16,950

17.23%

8,416

3.42%

8,652

3.23%

6,855

3.38%

6,841

3.72%

14,433

5.04%

13,569

36.61%

14,772

38.33%

14,251

38.95%

14,759

38.51%

15,692

37.72%

9,248
11,530

21.97%
19.08%
— 0.06%

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%

Total

$56,494 100.00% $54,352 100.00% $59,468 100.00% $55,537 100.00% $68,444 100.00%

As of December 31, 2015, Park had no concentrations of loans exceeding 10%
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. Park’s management continues to evaluate TDRs to determine those
that may be appropriate to return to accrual status. Specifically, if the restruc-
tured 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. Nonperforming assets include non-
performing loans and OREO. OREO results from taking possession of property
that served as collateral for a defaulted loan.

Generally, management obtains updated appraisal information for non -
performing loans and OREO 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 2015, the allowance for loan losses was $56.5 million, or 1.11%
of total loans outstanding, compared to $54.4 million, or 1.13% of total loans
outstanding at year-end 2014, and $59.5 million, or 1.29% of total loans out-
standing at year-end 2013. 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, 2015, 2014 and 2013.

Table 27 – Park General Reserve Trends

Year Ended December 31,
(In thousands)

2015

2014

2013

Allowance for loan losses, end of period

56,494

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

4,191

52,303

54,352

$ 59,468

3,660

10,451

50,692

$ 49,017

$5,068,085

$4,829,682

$4,620,505

80,599

73,676

112,304

$4,987,486

$4,756,006

$4,508,201

1.11%

1.13%

1.29%

1.05%

1.07%

1.09%

General reserves increased $1.6 million, or 3.2%, to $52.3 million at December
31, 2015, compared to $50.7 million at December 31, 2014. The increase in
general reserves was due to a $2.1 million increase in general reserves in the
commercial loan portfolio, as this portfolio of loans experienced significant
growth in 2015, offset by a $0.5 million decline in general reserves in the
consumer loan portfolio.

Management believes that the allowance for loan losses at year-end 2015
is adequate to absorb probable, incurred credit losses in the loan portfolio.
See Note 1 of the Notes to Consolidated Financial Statements and the discussion
under the heading “CRITICAL ACCOUNTING POLICIES” earlier in this
Management’s Discussion and Analysis for additional information on
management’s evaluation of the adequacy of the allowance for loan losses.

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

Table 28 – Summary of Loan Loss Experience

(In thousands)

2015

2014

2013

2012

2011

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

$4,909,579 $4,717,297 $4,514,781 $4,410,661 $4,713,511

54,352

59,468

55,537

68,444

143,575

2,478

3,779

6,160

26,847

18,350

470

1,316

1,791

9,985

64,166

2,352

3,944

3,207

8,607

20,691

348
8,642
—

8,003
7,738
—

1,832
6,163
—

10,454
5,375
—

23,063
7,612
—

Total charge-offs $

14,290 $

24,780 $

19,153 $

61,268 $ 133,882

Recoveries:

Commercial, financial
and agricultural

Real estate –

construction

Real estate –
residential
Real estate –
commercial

Consumer
Leases

1,373 $

1,003 $

1,314 $

1,066 $

1,402

2,092

12,572

9,378

2,979

1,463

2,438

2,985

6,000

5,559

1,719

2,241
3,295
3

7,759
2,671
7

726
2,249
2

783
2,555
—

Total recoveries

11,442 $

26,997 $

19,669 $

12,942 $

1,825
2,385
4

8,798

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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 – 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

2015

2014

2013

2012

2011

$ 95,887
24,979

$100,393
16,254

$135,216
18,747

$155,536
29,800

$195,106
28,607

1,921

2,641

1,677

2,970

3,489

$122,787

$119,288

$155,640

$188,306

$227,202

7,456
11,195

10,687
11,918

11,412
23,224

14,715
21,003

13,240
29,032

$141,438

$141,893

$190,276

$224,024

$269,474

2.42%

2.47%

3.37%

4.23%

5.26%

2.79%

2.94%

4.12%

5.03%

6.24%

1.93%

2.03%

2.87%

3.37%

3.86%

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

Table 31 – SEPH Nonperforming Assets

December 31,
(In thousands)

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

2015

2014

2013

2012

2011

$14,419
—

$22,916
97

$36,108
—

$55,292
—

$ 98,993
2,265

—

122

Total nonperforming loans

$14,419

$23,013

$36,108

$55,292

$101,380

OREO – SEPH

11,195

11,918

23,224

21,003

29,032

Total nonperforming assets

$25,614

$34,931

$59,332

$76,295

$130,412

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.

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

Table 32 – Park Excluding SEPH 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(1)

Percentage of

nonperforming loans
to total loans
Percentage of

nonperforming assets
to total loans
Percentage of

nonperforming assets
to total assets

2015

2014

2013

2012

2011

$ 81,468
24,979

$ 77,477
16,157

$ 99,108
18,747

$100,244
29,800

$ 96,113
26,342

1,921

2,641

1,677

2,970

3,367

$108,368

$ 96,275

$119,532

$133,014

$125,822

7,456

10,687

11,412

14,715

13,240

$115,824

$106,962

$130,944

$147,729

$139,062

2.14%

2.00%

2.61%

3.03%

3.00%

2.29%

2.23%

2.86%

3.36%

3.32%

1.60%

1.55%

2.00%

2.26%

2.21%

(1)

Includes PNB participations in loans originated by Vision and related OREO totaling $9.8 million,
$11.5 million, $12.3 million, $19.0 million and $25.9 million for the years ended December 31,
2015, 2014, 2013, 2012 and 2011, respectively.

Park’s allowance for loan losses includes an allocation for loans specifically
identified as impaired under GAAP. At December 31, 2015, 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
estimate 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 percentage 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 commercial loan graded an 8 (loss) is
completely charged off.

The following table highlights the credit trends within the commercial loan
portfolio of Park’s Ohio-based operations.

Table 33 – Park Ohio Commercial Credit Trends

Year Ended December 31,
(In thousands)

2015

2014

2013

Commercial loans*

Pass rated
Special mention
Substandard
Impaired

Total

$2,493,518
24,223
4,268
66,232

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

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

$2,588,241

$2,431,511

$2,418,000

*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
improved over the past 24 months. Delinquent and accruing loans were $25.7
million, or 0.51% of total loans at December 31, 2015, compared to $33.0
million, or 0.69% of total loans at December 31, 2014, and $32.0 million,
or 0.70% of total loans at December 31, 2013.

Impaired commercial loans for Park’s Ohio-based operations were $66.2
million as of December 31, 2015, an increase of $14.9 million, compared
to $51.3 million as of December 31, 2014. The $66.2 million of impaired
commercial loans at December 31, 2015 included $12.4 million of loans
modified in a troubled debt restructuring which are currently on accrual
status and performing in accordance with the restructured terms, up from
$3.6 million at December 31, 2014. The increase in 2015 was not due to an
overall deterioration of credit quality, rather the increase was primarily due to
a $6.2 million loan relationship that moved to nonaccrual status and a $7.9
million loan relationship that was deemed to be a TDR and is currently on
accrual status. Impaired commercial loans were $77.0 million at December
31, 2013. 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.

Park had $28.5 million of non-impaired commercial loans included on the
watch list at December 31, 2015, compared to $19.5 million of non-impaired
commercial loans at year-end 2014, and $29.0 million of non-impaired com-

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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

mercial loans at year-end 2013. 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 commer-
cial loans, Park’s watch list of potential problem commercial loans was 1.1% in
2015, 0.8% in 2014, and 1.2% in 2013. 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 each
borrower’s ability to comply with payment terms for watch list loans.

As of December 31, 2015, management had taken partial charge-offs of
approximately $28.7 million related to the $80.6 million of commercial loans
considered to be impaired, compared to charge-offs of approximately $32.5
million related to the $73.7 million of impaired commercial loans at December
31, 2014. The table below provides additional information related to Park’s
impaired commercial loans at December 31, 2015, including those impaired
commercial loans at PNB, PNB participations in impaired Vision loans and
those impaired Vision commercial loans retained at SEPH.

Table 34 – Park Impaired Commercial Loans

December 31, 2015
(In thousands)

PNB
PNB participations
in Vision loans

SEPH

Unpaid
Principal
Balance
(UPB)

Prior
Charge-
offs

Total
Impaired
Loans

$ 66,376

$ 5,285

$61,091

Carrying
Balance
as a
% of UPB

Carrying
Balance

$56,900

85.72%

Specific
Reserve

$4,191

9,495
33,433

4,354
19,066

5,141
14,367

—
—

5,141
14,367

54.14%
42.97%

Total Park

$109,304

$28,705

$80,599

$4,191

$76,408

69.90%

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 84-month loss experience, defined
as charge-offs plus changes in specific reserves, within the commercial loan
portfolio has been 0.50% of the principal balance of these loans. This annual-
ized 84-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 $31.7
million or 1.26% of the outstanding principal balance of other accruing
commercial loans at December 31, 2015.

The overall reserve of 1.26% for other accruing commercial loans breaks down
as follows: pass-rated commercial loans are reserved at 1.21%; special mention
commercial loans are reserved at 5.24%; and substandard commercial loans
are reserved at 6.07%. The reserve levels for pass-rated, special mention and
substandard commercial loans in excess of the annualized 84-month loss
experience of 0.50% are due to the following factors which management
reviews on a quarterly or annual basis:

■ 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.

■ 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.

■ 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.

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 84 months. Management generally
considers a one-year coverage period (the “Historical Loss Factor”) appropri-
ate 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 under-
writing standards, etc.). At December 31, 2015, the coverage level within the
consumer portfolio was approximately 1.99 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, delinquen-
cies, impaired loans, and charge-offs and recoveries. The determination 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 decreased by $88.2 million during 2015 to $149.5
million at year end. Cash provided by operating activities was $88.7 million in
2015, $71.7 million in 2014, and $121.3 million in 2013. Net income was the
primary source of cash from operating activities during each year.

Cash used in investing activities was $395.5 million in 2015, $229.6 million
in 2014 and $112.6 million in 2013. 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 $145.2 million in 2015, used
cash of $29.7 million in 2014, and provided cash of $96.9 million in 2013.
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 $247.9 million in 2015, $234.0 million in 2014, and $212.3
million in 2013.

Cash provided by financing activities was $218.5 million in 2015, $248.5
million in 2014, and cash used in financing activities was $62.9 million in
2013. A major source of cash for financing activities is the net change in
deposits. Deposits increased and provided $219.6 million of cash in 2015,
$338.0 million of cash in 2014, and $74.0 million of cash in 2013. 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.

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In 2015, net short-term borrowings increased and provided $117.3 million in
cash, and net long-term borrowings decreased and used $54.5 million in cash.
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. Finally, cash declined by $57.8 million in 2015, and $57.9 million in
2014 and 2013, 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 our cash flow needs.

The following table shows interest rate sensitivity data for five different time
intervals as of December 31, 2015:

Table 35 – Interest Rate Sensitivity

0-3
Months

3-12
Months

1-3
Years

3-5
Years

Over 5
Years

Total

93,652 $ 121,436 $ 427,060 $241,070 $ 761,109 $1,644,327

30,047

—
1,319,775 1,186,140

—
1,781,602

—
615,429

—
165,139

30,047
5,068,085

1,443,474 1,307,576

2,208,662

856,499

926,248

6,742,459

$ 547,871 $

— $ 559,330 $ — $ — $1,107,201

569,349
314,415
—
1,431,635

— 975,358
276,096
—
1,810,784

502,381
1,290
503,671

—
197,089
—
197,089

— 1,544,707
1,290,412
431
1,290
—
3,943,610
431

$ 394,242 $

—

— $ — $ — $ — $ 394,242
738,105
— 488,105

150,000

100,000

15,000

—

30,000

—

45,000

1,840,877

503,671

2,328,889

297,089

150,431

5,120,957

(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

Short-term

borrowings
Long-term debt
Subordinated

notes

Total interest
bearing
liabilities

Interest rate

sensitivity gap

(397,403)

803,905

(120,227)

559,410

775,817

1,621,502

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

(397,403)

406,502

286,275

845,685

1,621,502

(5.89)%

6.03%

4.25% 12.54%

24.05%

(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 $95.9 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 49% of interest bearing transaction accounts and 37% 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 6.03% to a negative 16.73%.

The interest rate sensitivity gap analysis provides an overall picture of Park’s
static interest rate risk position. At December 31, 2015, the cumulative interest
earning assets maturing or repricing within twelve months were $2,751 million
compared to the cumulative interest bearing liabilities maturing or repricing
within twelve months of $2,345 million. For the twelve-month cumulative gap
position, rate sensitive assets exceeded rate sensitive liabilities by $407 million
or 6.03% 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
2014 was a positive $544 million or 8.46% of total interest earning assets. The
percentage of interest earning assets maturing or repricing within one year was
40.8% at year-end 2015, compared to 41.8% at year-end 2014. The percentage
of interest bearing liabilities maturing or repricing within one year was 45.8%
at year-end 2015, compared to 43.2% at year-end 2014.

Management supplements the interest rate sensitivity gap analysis with
periodic simulations of balance sheet sensitivity under various interest rate
and what-if scenarios to better forecast and manage the net interest margin.
Park’s management uses an earnings simulation model to analyze net interest
income sensitivity to movements in interest rates. This model is based on actual
cash flows and repricing characteristics for balance sheet instruments and
incorporates market-based assumptions regarding the impact of changing
interest rates on the prepayment rate of certain assets and liabilities. This
model also includes management’s projections for activity levels of various
balance sheet instruments and 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 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, 2015, the earnings simulation model projected that
net income would decrease by 0.4% using a rising interest rate scenario and
decrease by 10.9% using a declining interest rate scenario over the next year.
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 following
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. 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 3.39%
in 2015, 3.55% in 2014 and 3.61% in 2013.

PNC_AR2015_10 2/17/16 3:27 PM Page 22

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

CONTRACTUAL OBLIGATIONS
In the ordinary course of operations, Park enters into certain contractual
obligations. The following table summarizes Park’s significant and determinable
obligations by payment date at December 31, 2015.

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

Table 36 – Contractual Obligations

December 31, 2015

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(1)

Purchase obligations

Total contractual
obligations

$4,057,230 $

— $

— $4,057,230

814,387

278,505

197,089

394,242

—

431

—

— 500,000

100,000

150,000

—

— 45,000

1,475

2,380

1,413

520

5,010

2,421

11,121

14,097

45,831

—

1,290,412

394,242

750,000

45,000

5,788

76,059

2,421

$5,274,765 $792,006

$312,599 $241,782

$6,621,152

(1) Pension payments reflect 10 years of payments, through 2025.

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, 2015, the Corporation had $888.4 million of loan commitments
for commercial, commercial real estate, and residential real estate loans and
had $12.3 million of standby letters of credit. At December 31, 2014, the
Corporation had $869.8 million of loan commitments for commercial,
commercial real estate, and residential real estate loans and had $12.5
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 2015. See Note 23 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, 2015.

Capital: Park’s primary means of maintaining capital adequacy is through
retained earnings. At December 31, 2015, the Corporation’s total shareholders’
equity was $713.4 million, compared to $696.5 million at December 31, 2014.
Total shareholders’ equity at December 31, 2015 was 9.76% of total assets,
compared to 9.95% of total assets at December 31, 2014.

Tangible shareholders’ equity [total shareholders’ equity ($713.4 million) less
goodwill ($72.3 million)] was $641.0 million at December 31, 2015 and was
$624.2 million at December 31, 2014. At December 31, 2015, tangible share-
holders’ equity was 8.86% of total tangible assets [total assets ($7,311 million)
less goodwill ($72.3 million)], compared to 9.01% at December 31, 2014.

Net income was $81.0 million in 2015, $84.0 million in 2014 and $76.9 million
in 2013.

Cash dividends declared for Park’s common shares were $57.9 million in each
of 2015, 2014 and 2013. On a per share basis, the cash dividends declared
were $3.76 per share in each of 2015, 2014 and 2013.

Park repurchased 71,700, 29,700, and 10,550 common shares for treasury
in 2015, 2014, and 2013, respectively. Common shares held in treasury had
a balance of $82.5 million at December 31, 2015, $77.4 million at December
31, 2014, and $76.1 million at December 31, 2013. During 2015, the value of
common shares held in treasury was reduced by $1.0 million as a result of the
issuance of an aggregate of 10,150 common shares to directors of Park and to
the directors of Park’s bank subsidiary PNB (and its divisions), and increased
by $6.1 million due to the repurchase of 71,700 common shares for treasury.
During 2014, the value of common shares held in treasury was reduced by
$1.0 million as a result of the issuance of an aggregate 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.

Park did not issue any new common shares, that it had not already held as
treasury shares, in any of 2015, 2014 or 2013. Common shares had a balance
of $304.0 million, $303.1 million, and $302.7 million at December 31, 2015,
2014, and 2013, respectively.

Accumulated other comprehensive loss (net) was $15.6 million at December
31, 2015, compared to $13.6 million at December 31, 2014, and $35.4 million
at December 31, 2013. 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. During
the 2015 year, the change in net unrealized holding gain (loss) on securities
available for sale, net of tax, was a loss of $1.5 million. Finally, Park recognized
an other comprehensive loss of $486,000, net of tax, related to the change in
pension plan assets and benefit obligations in 2015, compared to a loss of $9.3
million, net of tax, in 2014, and a gain of $21.5 million, net of tax, in 2013.

Financial institution regulators have established guidelines for minimum
capital ratios for banks, thrifts and bank holding companies. The net
unrealized gain or loss on available-for-sale securities is not included in
computing regulatory capital. During the first quarter of 2015, Park adopted the
new Basel III regulatory capital framework as approved by the federal banking
agencies. The adoption of this new framework modified the calculation of the
various capital ratios, added a new ratio, common equity tier 1, and revised the
adequately and well capitalized thresholds. Additionally, under the new rule, in
order to avoid limitations on capital distributions, including dividend payments,
Park must hold a capital conservation buffer above the adequately capitalized
risk-based capital ratios. The capital conservation buffer is being phased in
from 0.0% for 2015 to 2.50% by 2019. Park’s leverage capital ratio was 9.22%
at December 31, 2015 and exceeded the minimum capital required by $380
million. The minimum Tier 1 risk-based capital ratio (defined as leverage
capital divided by risk-adjusted assets) at December 31, 2015 was 6%. Park’s
Tier 1 risk-based capital ratio was 12.82% at December 31, 2015 and exceeded
the minimum capital required by $357 million. The minimum total risk-based
capital ratio (defined as leverage capital plus supplemental capital divided by
risk-adjusted assets) at December 31, 2015 was 8%. Park’s total risk-based
capital ratio was 14.49% at December 31, 2015 and exceeded the minimum
capital required by $340 million. Park’s common equity tier 1 capital ratio
was 12.54% at December 31, 2015 and exceeded the minumum capital
required by $421 million.

PNC_AR2015_10 2/17/16 3:27 PM 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

PNB, the only financial institution subsidiary of Park, met the well capitalized
ratio guidelines at December 31, 2015. See Note 26 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 invest-
ments 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.

SELECTED FINANCIAL DATA

Table 37 – Consolidated Five-Year Selected Financial Data

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

2015

2014

2013

2012

2011

$ 265,074 $ 265,143 $ 262,947 $ 285,735 $ 331,880
58,646
273,234

50,420
235,315

41,922
221,025

40,099
225,044

37,442
227,632

Table 37 – Consolidated Five-Year Selected Financial Data (continued)

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

Ratios:

Return on average

assets(x)

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

2015

2014

2013

2012

2011

1.11%

1.22%

1.15%

1.11%

1.06%

11.40%
3.39%
60.98%
71.51%

12.34%
3.55%
62.21%
69.02%

11.94%
3.61%
61.40%
75.39%

11.42%
3.83%
55.00%
73.82%

11.85%
4.14%
49.02%
70.43%

9.72%

9.87%

9.60%

10.17%

10.30%

12.54%
9.22%
12.82%
14.49%

N/A
9.25%
13.39%
15.14%

N/A
9.48%
13.27%
15.91%

N/A
9.17%
13.12%
15.77%

N/A
9.81%
14.15%
16.65%

(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.

The following table is a summary of selected quarterly results of operations for
the years ended December 31, 2015 and 2014.

Table 38 – Quarterly Financial Data

4,990

(7,333)

3,415

35,419

63,272

(Dollars in thousands,
except share data)

March 31

Three Months Ended
Sept. 30
June 30

Dec. 31

Results of operations:

Interest income
Interest expense
Net interest income
Provision for

(recovery of)
loan losses

Net interest income
after provision for
(recovery of)
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

222,642

232,377

217,610

199,896

209,962

—
77,551
186,614
81,012

—
75,549
187,510
83,957

—
73,277
181,515
76,869

22,167
70,236
181,127
78,480

—
94,910
181,426
82,222

81,012

83,957

76,869

75,055

76,366

5.27

5.26
3.76

5.45

5.45
3.76

4.99

4.99
3.76

4.87

4.87
3.76

4.96

4.96
3.76

$4,909,579 $4,717,297 $4,514,781 $4,410,661 $4,713,511
1,848,880
1,377,887
1,478,208

1,613,131

1,432,692

instruments and other

342,997

204,874

272,851

166,319

78,593

Total earning

assets

Non-interest bearing

deposits

Interest bearing

deposits

6,730,784

6,354,863

6,165,519

6,190,111

6,640,984

1,311,628

1,196,625

1,117,379

1,048,796

999,085

4,155,196

3,820,928

3,742,361

3,786,601

4,193,404

Total deposits

5,466,824

5,017,553

4,859,740

4,835,397

5,192,489

Short-term borrowings $ 258,717 $ 263,270 $ 253,123 $ 258,661 $ 297,537
881,921
867,615
Long-term debt
Shareholders’ equity
742,013
680,449
Common shareholders’

870,538
643,609

907,704
688,166

793,469
710,327

equity
Total assets

710,327
7,306,460

680,449
6,893,302

643,609
6,701,049

657,289
6,765,240

644,309
7,204,311

2015:

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

2014:

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

$65,018

$65,804

$67,087

$67,165

9,483

55,535

9,289

56,515

9,372

57,715

9,298

57,867

1,632

1,612

2,404

(658)

27,056

19,044

29,427

21,039

28,073

20,040

29,023

20,889

1.24

1.23

1.37

1.30

1.36

15,379,170

15,370,882

15,361,087

15,345,986

15,421,928

15,407,881

15,401,808

15,384,451

$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)

27,574

19,577

31,251

21,810

26,632

18,269

34,959

24,301

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

PNC_AR2015_10 2/17/16 3:27 PM 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

Park’s common shares (symbol: PRK) are traded on NYSE MKT LLC. At
December 31, 2015, Park had 3,781 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, 2015 and 2014, as reported by NYSE MKT LLC.

Table 39 – Market and Dividend Information

2015:

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

2014:

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

High

Low

Last
Price

$ 88.39

$ 79.46

$ 85.56

90.00

90.92

99.68

81.01

80.15

84.27

87.37

90.22

90.48

$ 86.78

$ 75.06

$ 76.89

83.32

79.77

89.84

70.51

72.87

74.00

77.20

75.42

88.48

Cash
Dividend
Declared
Per Share

e
u
a
V
x
e
d
n
I

$0.94

0.94

$0.94

0.94

175

160

145

130

115

100

12/31/10

12/31/11

12/31/12

12/31/13

12/31/14

12/31/15

Table 40 – Total Return Performance

PERIOD ENDING

Index

12/31/10

12/31/11

12/31/12

12/31/13

12/31/14

12/31/15

Park National Corporation

NYSE MKT Composite

NASDAQ Bank Stocks

100.00

SNL Financial Bank and Thrift

100.00

95.37

106.29

89.50

77.76

100.19

113.32

106.23

104.42

138.71

120.86

150.55

142.97

151.50

125.41

157.95

159.60

161.72

113.68

171.92

162.83

PERFORMANCE GRAPH
Table 40 compares the total return performance for Park’s 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,
2010 to December 31, 2015. 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.

The annual compound total return on Park’s common shares for the past five
years was a positive 10.1%. By comparison, 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
2.6%, a positive 11.4% and a positive 10.2%, respectively.

PNC_AR2015_10 2/17/16 3:27 PM 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, 2015, 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) 2013 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, 2015.

The Corporation’s independent registered public accounting firm, Crowe Horwath LLP, has audited the Corporation’s
2015 and 2014 consolidated financial statements included in this Annual Report and the Corporation’s internal control
over financial reporting as of December 31, 2015, 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 18, 2016

PNC_AR2015_10 2/17/16 3:27 PM 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, 2015 and
2014 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, 2015. We also have audited Park National Corporation’s internal
control over financial reporting as of December 31, 2015, based on criteria established in the 2013 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, 2015 and 2014, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2015, 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, 2015, based on criteria established in the 2013 Internal Control –
Integrated Framework issued by the COSO.

Crowe Horwath LLP

Columbus, Ohio
February 18, 2016

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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

PARK NATIONAL CORPORATION AND SUBSIDIARIES
at December 31, 2015 and 2014 (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 $1,436,714

and $1,299,980 at December 31, 2015 and 2014, respectively)

Securities held-to-maturity, at amortized cost (fair value of $151,428
and $143,490 at December 31, 2015 and 2014, respectively)

Other investment securities

Total investment securities

Total loans

Allowance for loan losses

Net loans

Other assets:

Bank owned life insurance

Prepaid assets

Goodwill

Premises and equipment, net

Affordable housing tax credit investments

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.

2015

$ 119,412

30,047

149,459

1,436,266

149,302

58,311

1,643,879

5,068,085

(56,494)

5,011,591

181,684

80,635

72,334

59,493

51,247

18,675

18,651

9,008

14,698

506,425

$7,311,354

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

75,190

72,334

55,479

48,911

17,677

22,605

8,613

14,645

487,382

$7,001,199

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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, 2015 and 2014 (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

Unfunded commitments in affordable housing tax credit investments

Other

Total other liabilities

Total liabilities

COMMITMENTS AND CONTINGENCIES

Shareholders’ equity:

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

at December 31, 2015 and 2014)

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

16,150,854 and 16,150,888 shares issued at
December 31, 2015 and 2014, respectively)

Accumulated other comprehensive loss, net

Retained earnings

Less: Treasury shares (820,039 and 758,489 shares
at December 31, 2015 and 2014, respectively)

Total shareholders’ equity

2015

$1,404,032

3,943,610

5,347,642

394,242

738,105

45,000

1,177,347

2,338

20,311

50,361

73,010

6,597,999

—

303,966

(15,643)

507,505

(82,473)

713,355

2014

$1,269,296

3,858,704

5,128,000

276,980

786,602

45,000

1,108,582

2,551

16,629

48,896

68,076

6,304,658

—

303,104

(13,608)

484,484

(77,439)

696,541

Total liabilities and shareholders’ equity

$7,311,354

$7,001,199

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, 2015, 2014 and 2013 (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

Provision for (recovery of) loan losses

Net interest income after provision for

(recovery of) 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 valuation adjustments

Gain on commercial loans held for sale

Gain (loss) on sale of investment securities

Miscellaneous

Total other income

2015

2014

2013

$227,979

$227,644

$225,538

36,025

182

888

265,074

2,229

10,125

469

24,619

37,442

227,632

4,990

222,642

20,195

14,751

11,438

14,561

5,783

2,428

1,604

(1,592)

756

7,539

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

$ 77,551

$ 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

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, 2015, 2014 and 2013 (In thousands, except per share data)

Other expense:

Salaries

Employee benefits

Data processing fees

Professional fees and services

Occupancy expense

Furniture and equipment expense

Insurance

Marketing

Communication

State tax expense

OREO expense

Miscellaneous

Total other expense

Income before income taxes

Federal income taxes

Net income

Earnings per common share:

Basic

Diluted

2015

2014

2013

$ 86,189

$ 81,977

$ 80,985

21,296

5,037

23,452

9,686

11,806

5,629

3,983

5,130

3,566

1,446

9,394

186,614

113,579

32,567

$ 81,012

$5.27

$5.26

19,991

4,712

29,580

10,006

11,571

5,723

4,371

5,268

2,290

2,063

9,958

187,510

120,416

36,459

$ 83,957

$5.45

19,313

4,174

27,865

9,804

11,249

5,205

3,790

5,790

3,702

2,731

6,907

181,515

109,372

32,503

$ 76,869

$4.99

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, 2015, 2014 and 2013 (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 $228, $7 and $953 for
the years ended December 31, 2015, 2014 and
2013, respectively

Unrealized net actuarial (loss) gain, net of income taxes
of $(490), $(4,997) and $10,643 for the years ended
December 31, 2015, 2014 and 2013, respectively

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

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 for the year ended
December 31, 2013

Change in unrealized securities holding (loss) gain, net of income
taxes of $(834), $16,329 and $(21,242) for the years ended
December 31, 2015, 2014 and 2013, respectively

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

net of income taxes

Other comprehensive (loss) income

Comprehensive income

2015

$81,012

2014

$ 83,957

2013

$ 76,869

424

(910)

(486)

—

(1,549)

$ (2,035)

$78,977

(9,279)

(9,267)

753

—

30,325

31,078

$ 21,811

$105,768

1,770

19,766

21,536

—

(39,448)

(39,437)

$(17,901)

$ 58,968

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, 2015, 2014 and 2013 (In thousands, except share and per share data)

Preferred Shares

Common Shares

Amount

—

Shares
Outstanding

Amount

15,411,998

$302,654

Retained
Earnings

$441,605

Accumulated
Other
Comprehensive
(Loss) Income

Treasury
Shares

Total

$ (76,375)

$ (17,518)

$650,366

Shares
Outstanding

Balance, January 1, 2013, as previously presented

—

Cumulative effect of change in accounting

principle for affordable housing
tax credits, net of tax

—

(1,566)

—

(1,566)

Balance, January 1, 2013, as adjusted

—

15,411,998

$302,654

$440,039

$ (76,375)

$ (17,518)

$648,800

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)

76,869

(57,949)

—

(240)

—

—
(843)
1,090

—
(17,901)
—

—

76,869
(17,901)
(57,949)

(3)
(843)
850

Balance, December 31, 2013

—

15,411,952

$302,651

$458,719

$ (76,128)

$ (35,419)

$649,823

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

83,957

(57,949)

—

(243)

—

(2,355)
1,044

—
21,811
—

—

83,957
21,811
(57,949)

(5)
458
(2,355)
801

Balance, December 31, 2014

—

15,392,399

$303,104

$484,484

$ (77,439)

$ (13,608)

$696,541

Net income
Other comprehensive loss, 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

—

(34)

(71,700)
10,150

—

(3)
865

81,012

(57,930)

—

(61)

—

(6,058)
1,024

—
(2,035)
—

—

81,012
(2,035)
(57,930)

(3)
865
(6,058)
963

Balance, December 31, 2015

—

15,330,815

$303,966

$507,505

$ (82,473)

$ (15,643)

$713,355

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, 2015, 2014 and 2013 (In thousands)

Operating activities:

Net income

Adjustments to reconcile net income to net cash

provided by operating activities:

Provision for (recovery of) loan losses

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, net

Amortization of prepayment penalty on long-term debt

Deferred income tax

Realized net investment security (gains) 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

Gain on sale of commercial loans held for sale

OREO valuation adjustments

Gain on sale of OREO, net

Bank owned life insurance income

Changes in assets and liabilities:

(Increase) Decrease in other assets

Decrease (Increase) in other liabilities

Net cash provided by operating activities

2015

2014

2013

$ 81,012

$ 83,957

$ 76,869

4,990

6,440

7,347

—

(226)

6,047

(250)

(88)

1,828

(220,800)

222,785

(4,027)

(756)

1,592

(1,604)

(5,783)

(10,978)

1,173

88,702

(7,333)

4,160

7,243

—

(213)

5,031

2,528

1,158

1,259

(136,125)

135,209

(2,682)

(1,867)

2,406

(5,503)

(4,861)

(18,313)

5,689

71,743

3,415

3,611

7,315

337

(33)

4,835

(1,932)

—

850

(317,534)

345,704

(4,093)

—

3,180

(3,110)

(5,041)

12,222

(5,324)

121,288

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, 2015, 2014 and 2013 (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 in other investments

Net loan originations, portfolio loans

Proceeds from sale of commercial loans held for sale

Proceeds from the sale of OREO

Life insurance death benefits

Investment 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 long-term debt

Repayment of subordinated notes

Repayment of long-term debt

Repurchase of treasury shares

Cash dividends paid

Net cash provided by (used in) financing activities

(Decrease) increase 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

Transfers from loans to commercial loans held for sale

New commitments in affordable housing tax credit investments

2015

—

3,144

36,393

321,146

(48,226)

(457,617)

—

(247,882)

900

17,058

6,340

(5,318)

(10,045)

(11,361)

(395,468)

219,642

117,262

25,000

—

(79,544)

(6,058)

(57,776)

218,526

(88,240)

237,699

$ 149,459

$ 37,655

$ 26,140

$ 13,447

$ 144

9,000

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

2014

8,946

173,123

41,436

99,092

—

(350,934)

(1,350)

(234,017)

20,966

27,798

2,221

(9,417)

—

(7,444)

(229,580)

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

8,000

2013

—

75,000

219,329

385,259

—

(582,728)

—

(212,311)

—

23,043

1,430

(8,222)

(4,600)

(8,842)

(112,642)

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

—

7,000

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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. Additionally, prior period financial statements reflect the
retrospective application of Accounting Standards Update (“ASU”) 2014-01,
Investments—Equity Method and Joint Ventures (Topic 323): Accounting
for Investments in Qualified Affordable Housing Projects.

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 $44.2 million at December 31, 2015 and $40.3
million at December 31, 2014. No other compensating balance arrangements
were in existence at December 31, 2015.

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 5 – Investment Securities).

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 (loss), 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 performance
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 (loss), net
of tax.

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.
Impairment is evaluated based on the ultimate recovery of par value.
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. Commercial loans placed on nonaccrual status
are considered impaired (see Note 6 –Loans). For loans which are on non -
accrual 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 bor-
rower is troubled and there is, or likely will be, a collateral shortfall related to

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

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

In calculating the allowance for loan losses, management believes it is
appropriate to utilize historical loss rates that are comparable to the current
period being analyzed, giving consideration to losses experienced over a full
cycle. For the historical loss factor at December 31, 2015, 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 commercial loans, experienced during 2009 through 2015 within
the individual segments of the commercial and consumer loan categories.
Management believes the 84-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, 2015
was based on the historical loss experience over the past 84 months, plus an
additional judgmental reserve, increasing the total allowance for loan loss
coverage in the consumer portfolio to approximately 1.99 years of historical
loss. The consumer loan portfolio loss coverage ratio was 1.98 years at
December 31, 2014. The loss factor applied to Park’s commercial portfolio
as of December 31, 2015 was based on the historical loss experience over
the past 84 months, plus additional reserves for consideration of (1) a loss
emergence period factor, (2) a loss migration factor and (3) a judgmental
or environmental loss factor. These additional reserves increased the total
allowance for loan loss coverage in the commercial portfolio to approximately
2.52 years of historical loss at December 31, 2015. The commercial loan
portfolio loss coverage ratio was 2.28 years at December 31, 2014. Park’s
commercial loans are individually risk graded. If loan downgrades occur, the
probability of default increases and accordingly management allocates a higher
percentage reserve to those accruing commercial loans graded special mention
and substandard.

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The judgmental increases discussed above incorporate management’s
evaluation 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
procedures; and levels of, and trends in, consumer bankruptcies, delinquen-
cies, impaired loans and charge-offs and recoveries.

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, or the fair value of the col -
lateral. 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. A court’s discharge of a borrower’s debt in a Chapter 7 bankruptcy is
considered a concession when the borrower does not reaffirm the discharged
debt. TDRs are separately identified for impairment disclosures and are
measured 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 carried at cost, less accumulated depreciation and amortization.
Depreciation is generally provided on the straight-line method over the
estimated useful lives of the related assets. Leasehold improvements are
amortized over the shorter of the remaining lease period or the estimated
useful lives of the improvements. Upon the sale or other disposal of an asset,
the cost and related accumulated depreciation are removed from the accounts
and the resulting gain or loss is recognized. Maintenance and repairs are
charged to expense as incurred while renewals and improvements that extend
the useful life of an asset are capitalized. Premises and equipment 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
Management transfers a loan to OREO at the time that Park takes deed/title of
the asset. 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 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 are 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 24 – Loan Servicing.)

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
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, 2015, the goodwill remaining on Park’s
Consolidated Balance Sheet consisted entirely of goodwill at PNB. (See Note
27 – Segment Information 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, 2015, 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, and changes in the funded status
of the Company’s defined benefit pension plan, 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 and is recorded in “Salaries” expense.
(See Note 17 – Share-Based Compensation.)

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.

Fair Value Measurement
Fair values of financial instruments are estimated using relevant market
information and other assumptions, as more fully disclosed in Note 25 –
Fair Value. Fair value estimates involve uncertainties and matters of significant
judgment regarding interest rates, credit risk, prepayments, and other factors,
especially in the absence of broad markets for particular items. Changes in
assumptions or in market conditions could significantly affect the estimates.

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

Retirement Plans
Pension expense is the net of service and interest cost, return on plan assets
and amortization of gains and losses not immediately recognized. Employee
KSOP plan expense is the amount of matching contributions to Park’s employ-
ees stock ownership plan. Deferred com pensation and supplemental retirement
plan expense allocates the benefits over years of service. (See Note 18 – Benefit
Plans.)

Earnings Per Common Share
Basic earnings per common share is net income available to common
shareholders 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 divi-
dends per common share are restated for any stock splits and stock dividends
through the date of issuance of the consolidated financial statements. (See Note
21 – Earnings Per Common Share.)

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, PNB (headquartered in Newark, Ohio), SE Property Holdings,
LLC (“SEPH”), and Guardian Financial Services Company (“GFSC”).

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2. ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS
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, the Financial Accounting Standards Board (the
“FASB”) issued ASU 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 statement as a component of
income tax expense. Additionally, a reporting entity should disclose information
that enables users of its financial statements to understand the nature of its
investments in qualified affordable housing projects, 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 became effective for annual periods, and interim reporting
periods within those annual periods, beginning after December 15, 2014. Park
adopted this guidance in the first quarter of 2015. The guidance was applied
retrospectively to all prior periods presented. The adoption resulted in adjust-
ments to reduce beginning retained earnings, other assets and the prior periods
consolidated statements of income. See Note 11 – Investment in Qualified
Affordable Housing for further details.

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 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). This new ASU clarifies when an in
substance repossession or foreclosure occurs and a creditor is considered to
have received physical possession of real estate property collateralizing a con-
sumer 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 residential 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 as of January 1, 2015 did not have a material impact on Park's
consolidated financial statements, but resulted in additional disclosures. See
Note 9 – Other Real Estate Owned.

ASU 2014-09 – Revenue from Contracts with Customers (Topic 606):
In May 2014, the FASB issued ASU 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 cus-
tomers to transfer goods or services or enter into contracts 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 cus-
tomers 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 information 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, 2017. Management is currently evaluating the impact of the
adoption of this guidance on Park's consolidated financial statements.

ASU 2014-11 – Transfers and Servicing (Topic 860): Repurchase-
to-Maturity Transactions, Repurchase Financings, and Disclosures:
In June 2014, the FASB issued ASU 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 economically similar
to repurchase agreements. The second disclosure provides increased trans-
parency 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 as of January 1, 2015 did not have an
impact on Park’s consolidated financial statements, but resulted in additional
disclosures. See Note 13 – Repurchase Agreement Borrowings.

ASU 2015-02 – Consolidation (Topic 810): Amendments to the
Consolidation Analysis: In February 2015, the FASB issued ASU 2015-02,
Consolidation (Topic 810): Amendments to the Consolidation Analysis.
The ASU amends the current consolidation guidance and affects both the
variable interest entity and voting interest entity consolidation models. The
new guidance is effective for annual reporting periods and interim reporting
periods within those annual periods, beginning after December 15, 2015. Early
adoption is permitted. Management is currently evaluating the impact of the
adoption of this guidance on Park’s consolidated financial statements.

ASU 2016-01 – Financial Instruments—Overall (Subtopic 825-10):
Recognition and Measurement of Financial Assets and Financial
Liabilities. In January 2016, the FASB issued ASU 2016-01, Financial
Instruments—Overall (Subtopic 825-10): Recognition and Measurement
of Financial Assets and Financial Liabilities. Changes to the current GAAP
model primarily affects the accounting for equity investments, financial
liabilities under the fair value option, and the presentation and disclosure
requirements for financial instruments. In addition, the ASU clarifies guidance
related to the valuation allowance assessment when recognizing deferred tax
assets resulting from unrealized losses on available-for-sale securities. The new
guidance is effective for annual reporting period and interim reporting periods
within those annual periods, beginning after December 15, 2017. Management
is currently evaluating the impact of the adoption of this guidance on Park’s
consolidated financial statements.

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,

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Investment securities at December 31, 2015 and December 31, 2014 were
as follows:

(In thousands)

2015:

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

2015:

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

U.S. Government

sponsored entities’
asset-backed securities

Total

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

Gross
Unrealized/
Unrecognized
Holding
Gains

Gross
Unrealized/
Unrecognized
Holding
Losses

Amortized
Cost

Estimated
Fair Value

$ 527,605

$ —

$ 5,542

$ 522,063

907,989
1,120

8,776
1,590

5,272
—

911,493
2,710

$1,436,714

$10,366

$10,814

$1,436,266

48,190

734

$ —

48,924

101,112

1,526

$ 149,302

$ 2,260

134

102,504

$ 151,428

$ 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

$ 140,562

$ 3,088

160

$ 143,490

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, 2015, the amortized cost of Park’s available-for-sale
mortgage-backed securities was $569.0 million and there were no held-
to-maturity mortgage-backed securities within Park’s investment portfolio.
At December 31, 2015, the amortized cost of Park’s available-for-sale and
held-to-maturity CMOs was $339.0 million and $101.1 million, respectively.

Ohio and the Second National Bank Division headquartered in Greenville,
Ohio. A wholly-owned subsidiary of Park, 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 Bank (a wholly-owned subsidiary of
HomeBanc Shares, Inc.), Vision surrendered its Florida banking charter to
the Florida Office of Financial Regulation and became a non-bank Florida
corporation. Vision (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
subsequent to the sale. SEPH also holds OREO that had previously been trans-
ferred to SEPH from Vision. SEPH’s assets consist primarily of performing and
nonperforming 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 manage-
ment; safe deposit operations; electronic funds transfers and a variety of
additional banking-related services. See Note 27 – Segment Information
for financial information on the Corporation’s operating segments.

4. GOODWILL
The following table reflects the activity in goodwill and other intangible assets
for the years ended December 31, 2015, 2014 and 2013.

(In thousands)

January 1, 2013
Amortization
December 31, 2013
Amortization
December 31, 2014
Amortization

December 31, 2015

Goodwill
$ 72,334
—
$ 72,334
—
$ 72,334
—

$ 72,334

Core Deposit
Intangibles
$ 337
(337)
$ —
—

$ —
—

$ —

Total
$ 72,671
(337)
$ 72,334
—

$ 72,334
—

$ 72,334

The core deposit intangibles were amortized to expense principally on the
straight-line method, over a period of six years. Core deposit intangibles were
fully amortized at December 31, 2013, and thus there was no amortization
expense in 2014 or 2015. Core deposit intangible amortization expense was
$337,000 in 2013.

5. 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 2015 and 2014,
there were no investment securities deemed to be other-than-temporarily
impaired. During 2013, Park recognized other-than-temporary impairment
charges of $17,000, related to an equity investment in a financial institution.

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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, 2015
and December 31, 2014:

The amortized cost and estimated fair value of investments in debt securities at
December 31, 2015, are shown in the following table by contractual maturity
except for asset-backed securities, which are shown as a single total, due to
the unpredictability of the timing in principal repayments.

Amortized
Cost

Estimated
Fair Value

Tax
Equivalent
Yield

(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

$220,000

307,605

$527,605

$219,135

302,928

$522,063

U.S. Government sponsored entities’

asset-backed securities

$907,989

$911,493

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

Due greater than ten years

Total

$ 48,190

$ 48,924

U.S. Government sponsored entities’

asset-backed securities

$101,112

$102,504

1.29%

2.40%

1.94%

2.23%

4.65%

3.42%

Approximately $527.6 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 1 to 7 years. The
remaining weighted average life of the investment portfolio is 4.8 years.

Investment securities having an amortized cost of $1,072 million and $1,205
million at December 31, 2015 and 2014, 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, 2015, $429 million was pledged for government and trust
department deposits, $622 million was pledged to secure repurchase agree-
ments and $21 million was pledged 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, 2015, 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 2015, Park sold certain HFS investment securities with a book value
of $3.1 million at a gain of $88,000. These securities had been paid down to
97.8% of the principal outstanding at acquisition. 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.

$2,117

$195,090

$ 3,425

$ 522,063

$ 5,542

Total

Less than 12 Months

12 Months or Longer

Total

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

(In thousands)

2015:

Securities
Available-for-Sale

Obligations of U.S.

Treasury and other
U.S. Government
sponsored entities $326,973

U.S. Government

sponsored entities’
asset-backed
securities

384,169

2,776

114,543

2,496

498,712

5,272

Total

$711,142

$4,893

$309,633

$ 5,921

$1,020,775

$10,814

2015:

Securities
Held-to-Maturity

U.S. Government

sponsored entities’
asset-backed
securities

2014:

Securities
Available-for-Sale

Obligations of U.S.

$ 5,656

$ 7,792

124

13,448

134

Treasury and other
U.S. Government
sponsored entities $119,913

$388,140

$ 8,746

$ 508,053

$ 8,833

U.S. Government

sponsored entities’
asset-backed
securities

73,276

136

170,430

4,106

243,706

4,242

Total

$193,189

$ 223

$558,570

$12,852

$ 751,759

$13,075

2014:

Securities
Held-to-Maturity

U.S. Government

sponsored entities’
asset-backed
securities

$ 8,032

$ 148

$ 2,714

10,746

160

Management does not believe any individual unrealized loss as of December 31,
2015 or 2014 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
of FHLB stock and $8.2 million of FRB stock at both December 31, 2015 and
December 31, 2014, respectively.

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6. LOANS
The composition of the loan portfolio, by class of loan, as of December 31,
2015 and December 31, 2014 was as follows:

(In thousands)

2015:

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

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

$ 955,727
1,113,603

$ 3,437
4,009

2,044
128,046
36,722
6,533

410,571
1,210,819
211,415
22,638
967,111
2,856

—
321
75
21

1,014
1,469
769
78
3,032
14

Recorded
Investment

$ 959,164
1,117,612

2,044
128,367
36,797
6,554

411,585
1,212,288
212,184
22,716
970,143
2,870

$5,068,085

$14,239

$5,082,324

$ 856,535
1,069,637

$ 3,218
3,546

$ 859,753
1,073,183

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

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

*Included within commercial, financial and agricultural loans and commercial real estate loans is
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 $10.4 million at December 31, 2015 and $9.4 million at December 31,
2014, which represented a net deferred income position in both years.

Overdrawn deposit accounts of $1.7 million and $2.3 million have been
reclassified to loans at December 31, 2015 and 2014, respectively, and are
included in the commercial, financial and agricultural loan class above.

Credit Quality
The following table presents the recorded investment in nonaccrual loans,
accruing troubled debt restructurings (“TDRs”), and loans past due 90 days
or more and still accruing by class of loan as of December 31, 2015 and
December 31, 2014:

(In thousands)

2015:

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

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

Loans Past Due
90 Days
or More

Accruing
Troubled Debt
Restructurings and Accruing

Total
Nonperforming
Loans

Nonaccrual
Loans

$ 21,676
15,268

$ 8,947
2,757

$ —
—

$ 30,623
18,025

2,044
4,162
7
64

25,063
20,378
1,749
1,657
3,819

—
514
110
114

261
10,143
873
635
734

—
—
—
—

—
851
27
4
1,093

2,044
4,676
117
178

25,324
31,372
2,649
2,296
5,646

$ 95,887

$25,088

$1,975

$122,950

$ 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

The following table provides additional information regarding those nonaccrual
and accruing TDR loans that are individually evaluated for impairment and
those collectively evaluated for impairment as of December 31, 2015 and
December 31, 2014.

(In thousands)

2015:

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

$ 30,623
18,025

$30,595
18,025

28
—

2,044
4,676
117
178

25,324
30,521
2,622
2,292
4,553

2,044
4,676
—
—

25,324
—
—
—
—

—
—
117
178

—
30,521
2,622
2,292
4,553

$120,975

$80,664

$40,311

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(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

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

$116,725

$73,712

$43,013

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.

The following table presents loans individually evaluated for impairment by
class of loan as of December 31, 2015 and December 31, 2014.

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, 2015 and December 31, 2014, there were $24.2 million and
$32.4 million, respectively, of partial charge-offs on loans individually evaluated
for impairment with no related allowance recorded and $4.5 million and
$45,000, 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, 2015 and 2014, of
$4.2 million and $3.7 million, respectively. These loans with specific reserves
had a recorded investment of $19.9 million and $9.3 million as of December
31, 2015 and 2014, respectively.

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, 2015,
2014, and 2013:

Unpaid
Principal
Balance

Recorded
Investment

Allowance for
Loan Losses
Allocated

$ 32,583
15,138

$18,763
14,916

$ —
—

10,834
2,506

23,798

16,155
3,195

3,145

1,951

$109,305

2,044
1,531

23,480

11,832
3,109

3,145

1,844

$80,664

—
—

—

1,904
381

1,356

550

$ 4,191

(In thousands)

Recorded
Investment
as of
December 31, 2015

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

Residential real estate:

Commercial

Consumer

Total

$ 30,595
18,025

2,044
4,676

25,324
—

$ 80,664

(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

$ 30,601
27,923

$17,883
20,696

$ —
—

(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

11,026
1,427

25,822

1,251
1,310

5,218

1,578

$106,156

2,078
391

23,352

1,223
1,293

5,218

1,578

$73,712

—
—

—

981
262

1,812

605

$ 3,660

$ 20,727
41,822

4,777
10,782

33,408
799

$112,315

$124,089

$2,640

Year ended December 31, 2015

Average
Recorded
Investment

$ 20,179
17,883

2,066
5,666

24,968
—

$ 70,762

Interest
Income
Recognized

$ 340
550

21
26

1,026
—

$1,963

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
—

(In thousands)

2015:

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

With an allowance recorded

Commercial, financial
and agricultural

Commercial real estate
Construction real estate:
Remaining commercial

Residential real estate:

Commercial

Total

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

With an allowance recorded
Commercial, financial
and agricultural

Commercial real estate
Construction real estate:
Remaining commercial

Residential real estate:

Commercial

Total

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The following tables present the aging of the recorded investment in past due
loans as of December 31, 2015 and December 31, 2014 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, 2015:

Commercial, financial
and agricultural

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

Residential real estate:

670
142

—
165
63
200

Commercial
Mortgage
HELOC
Installment

Consumer
Leases

325
10,569
487
426
11,458
—

$ 7,536
530

$ 8,206 $ 950,958
1,116,940

672

$ 959,164
1,117,612

2,044
84
7
46

19,521
8,735
186
318
3,376
—

2,044
249
70
246

19,846
19,304
673
744
14,834
—

—
128,118
36,727
6,308

391,739
1,192,984
211,511
21,972
955,309
2,870

2,044
128,367
36,797
6,554

411,585
1,212,288
212,184
22,716
970,143
2,870

Total loans

$24,505

$42,383

$66,888 $5,015,436

$5,082,324

Park’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 allo-
cated 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 character-
ized 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 liquida-
tion 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 man-
agement determines 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.

The tables below present the recorded investment by loan grade at December
31, 2015 and December 31, 2014 for all commercial loans:

*Includes $2.0 million of loans past due 90 days or more and accruing. The remaining are past due,
nonaccrual loans.

(In thousands)

5 Rated

6 Rated

Impaired

Pass
Rated

Recorded
Investment

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

$ 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
—

2,068
77
68
25

19,592
10,637
387
464
3,818
—

2,068
243
107
46

19,842
21,783
649
1,060
15,122
—

127
115,196
31,113
7,299

398,808
1,169,474
217,069
26,176
881,005
3,188

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

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

Total loans

$31,074

$52,932

$84,006 $4,759,305

$4,843,311

*Includes $2.7 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, 2015 and 2014
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 (graded a 1 through a 4) are considered to be of acceptable
credit risk. Commercial loans graded a 5 (special mention) are considered to
be watch list credits and a higher loan loss reserve percentage is allocated to
these loans. Loans classified as special mention have potential weaknesses that
require management’s close attention. If left uncorrected, these potential weak-
nesses may result in deterioration of the repayment prospects for the loan or of

December 31, 2015:

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, 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

$ 4,392
14,880

$ 347
3,417

$ 30,623
18,025

$ 923,802
1,081,290

$ 959,164
1,117,612

—
2,151

3,280
—

—
122

386
—

2,044
4,676

25,324
—

—
121,418

382,595
2,870

2,044
128,367

411,585
2,870

$24,703

$4,272

$ 80,692

$2,511,975

$2,621,642

$ 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

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

Troubled Debt Restructuring
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
performed 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. A court’s discharge of a borrower’s debt in
a Chapter 7 bankruptcy is considered a concession when the borrower does
not reaffirm the discharged debt. Certain loans which were modified during
the years ended December 31, 2015 and December 31, 2014 did not meet the
definition of a TDR as the modification was a delay in a payment that was con-
sidered to be insignificant. Management considers a forbearance period of up

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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 accordance 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 conces-
sionary 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 consid-
ered 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,
2015 and 2014, Park removed the TDR classification on $1.2 million and $2.5
million, respectively, of loans that met the requirements discussed above.

At December 31, 2015 and 2014, there were $41.1 million and $47.5 million,
respectively, of TDRs included in the nonaccrual loan totals. At December 31,
2015 and 2014, $19.1 million and $15.7 million, respectively, of these non -
accrual TDRs were performing in accordance with the terms of the restructured
note. As of December 31, 2015 and 2014, there were $25.1 million and $16.3
million, respectively, of TDRs included in accruing loan totals. Management will
continue to review the restructured loans and may determine it appropriate to
move certain nonaccrual TDRs to accrual status in the future.

At December 31, 2015 and 2014, Park had commitments to lend $2.3 million
and $1.4 million, respectively, of additional funds to borrowers whose outstand-
ing loan terms had been modified in a TDR.

The specific reserve related to TDRs at December 31, 2015 and 2014 was $2.3
million and $2.4 million, respectively. Modifications made in 2014 and 2015
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 modifi -
cations 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 $1.3 million were recorded during the year
ended December 31, 2015, as a result of TDRs identified in the 2015 year.
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, 2015 and 2014 that did not meet the definition of a TDR.
Modified substandard commercial loans which did not meet the definition of
a TDR had a total recorded investment as of December 31, 2015 and 2014 of
$116,000 and $987,000, 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, 2015 and 2014 of $16.5
million and $19.9 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.

The following tables detail the number of contracts modified as TDRs during the
years ended December 31, 2015, 2014 and 2013 as well as the recorded invest-
ment of these contracts at December 31, 2015, 2014 and 2013. The recorded
investment pre- and post-modification is generally the same due to the fact that
Park does not typically forgive principal.

(In thousands)

Year ended December 31, 2015:

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, 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

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

39
14

—
2
1
—

11
39
26
9
283

424

30
11

—
2
—
2

9
46
10
10
330

450

34
22

—
3
—
4

15
62
16
13
327

496

$ 8,948
637

$ 3,640
3,523

$12,588
4,160

—
513
19
—

—
1,132
315
—
202

—
—
—
—

1,185
2,122
45
155
888

—
513
19
—

1,185
3,254
360
155
1,090

$11,766

$11,558

$23,324

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, 2015, $0.8 million were on nonaccrual status as
of December 31, 2014. 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.

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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, 2015,
December 31, 2014 and December 31, 2013. For this table, a loan is consid-
ered 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.

Year ended
December 31, 2015

Year ended
December 31, 2014

Year ended
December 31, 2013

Number of Recorded
Investment
Contracts

(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

3
12
1
2
47
—

1
1

1
626

—
—
—
—

1,005
682
5
101
434
—

$2,854

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 $2.9 million in modified TDRs which defaulted during the year ended
December 31, 2015, $44,000 were accruing loans and $2.8 million were

nonaccrual loans. 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.

Certain of the Corporation’s executive officers, directors and related entities
of directors are loan customers of PNB. As of December 31, 2015 and 2014,
credit exposure aggregating approximately $47.0 million and $45.7 million,
respectively, was outstanding to such parties. Of this total exposure, approxi-
mately $36.0 million was outstanding at each of December 31, 2015 and 2014,
with the remaining balance representing available credit. During 2015, new
loans and advances on existing loans were made to these executive officers,
directors and related entities totaling $5.8 million and $7.1 million, respec-
tively. These extensions of credit were offset by payments of $12.9 million.
During 2014, new loans and advances on existing loans were $6.0 million
and $6.4 million, respectively. These extensions of credit were offset by
payments of $14.1 million.

7. 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 – Summary of Significant
Accounting Policies.

The activity in the allowance for loan losses for the years ended December 31, 2015, 2014, and 2013 is summarized in the following tables.

(In thousands)

December 31, 2015

Allowance for credit losses:

Beginning balance
Charge-offs
Recoveries

Net charge-offs (recoveries)

Provision (Recovery)

Ending balance

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

Commercial,
Financial and
Agricultural

Commercial
Real Estate

Construction
Real Estate

Residential
Real Estate

Consumer

Leases

Total

$10,719
2,478
(1,373)

1,105

4,080

$13,694

$14,218
3,779
(1,003)

2,776

(723)

$10,719

$15,635
6,160
(1,314)

4,846

3,429

$14,218

$ 8,808
348
(2,241)

(1,893)

(1,504)

$ 9,197

$15,899
8,003
(7,759)

244

(6,847)

$ 8,808

$11,736
1,832
(726)

1,106

5,269

$15,899

$ 8,652
470
(2,092)

(1,622)

(1,710)

$ 8,564

$ 6,855
1,316
(12,572)

(11,256)

(9,459)

$ 8,652

$ 6,841
1,791
(9,378)

(7,587)

(7,573)

$ 6,855

$14,772
2,352
(2,438)

(86)

(1,344)

$13,514

$14,251
3,944
(2,985)

959

1,480

$14,772

$14,759
3,207
(6,000)

(2,793)

(3,301)

$14,251

$11,401
8,642
(3,295)

5,347

5,470

$11,524

$ 8,245
7,738
(2,671)

5,067

8,223

$11,401

$ 6,566
6,163
(2,249)

3,914

5,593

$ 8,245

$ —
—
(3)

(3)

(2)

$ 1

$ —
—
(7)

(7)

$ —

$ —
—
(2)

(2)

$ —

$ 54,352
14,290
(11,442)

2,848

4,990

$ 56,494

$ 59,468
24,780
(26,997)

(2,217)

(7,333)

$ 54,352

$ 55,537
19,153
(19,669)

(516)

3,415

$ 59,468

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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 periods compared to the 2012 and
2013 periods.

Management continued to extend the historical loss period to six years in 2014
and seven years in 2015. Due to the same factors that management considered
in 2013, management has continued to apply more weight to the 2009 through
2011 periods compared to the 2012 through 2015 periods.

Loans collectively evaluated for impairment in the following tables include all
performing loans at December 31, 2015 and 2014, 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
evaluated for impairment include all impaired loans internally classified as
commercial loans at December 31, 2015 and 2014, which are evaluated for
impairment in accordance with GAAP (see Note 1 – Summary of Significant
Accounting Policies).

The composition of the allowance for loan losses at December 31, 2015 and 2014 was as follows:

(In thousands)

December 31, 2015

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

Recorded investment:

Loans individually evaluated for impairment
Loans collectively evaluated for impairment

Total ending recorded investment

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

Recorded investment:

Loans individually evaluated for impairment
Loans collectively evaluated for impairment

Total ending recorded investment

Commercial,
Financial and
Agricultural

Commercial
Real Estate

Construction
Real Estate

Residential
Real Estate

Consumer

Leases

Total

$ 1,904
11,790

$ 13,694

$ 30,545
925,182

$955,727

6.23%
1.27%

1.43%

$ 30,595
928,569

$959,164

$ 981
9,738

$ 10,719

$ 19,103
837,432

$856,535

5.14%
1.16%

1.25%

$ 19,106
840,647

$859,753

381
8,816

9,197

18,015
1,095,588

$1,113,603

2.11%
0.80%

0.83%

18,025
1,099,587

$1,117,612

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

$ 1,356
7,208

$ 8,564

$ 6,716
166,629

$173,345

20.19%
4.33%

4.94%

$ 6,720
167,042

$173,762

$ 1,812
6,840

$ 8,652

$ 7,690
148,114

$155,804

23.56%
4.62%

5.55%

$ 7,687
148,512

$156,199

550
12,964

$ 13,514

$ 25,323
1,830,120

$1,855,443

2.17%
0.71%

0.73%

25,324
1,833,449

$1,858,773

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

—
11,524

$ 11,524

$
—
967,111

$967,111

—
1.19%

1.19%

—
$
970,143

$970,143

—
11,401

$ 11,401

—
$
893,160

$893,160

—
1.28%

1.28%

$
—
896,127

$896,127

$ —
1

$ —
2,856

$2,856

—
0.04%

0.04%

$ —
2,870

$2,870

$ —
—

$ —

$ —
3,171

$3,171

—
—

—

$ —
3,188

$3,188

4,191
52,303

56,494

$
80,599
4,987,486

$5,068,085

5.20%
1.05%

1.11%

80,664
$
5,001,660

$5,082,324

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

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8. LOANS HELD FOR SALE
Mortgage loans held for sale are carried at their fair value. Mortgage loans held
for sale were $7.3 million and $5.3 million at December 31, 2015 and 2014,
respectively. These amounts are included in loans on the Consolidated Balance
Sheets and in the residential real estate loan segments in Note 6 – Loans and
Note 7 – Allowance for Loan Losses. The contractual balance was $7.2 million
and $5.2 million at December 31, 2015 and 2014, respectively. The gain
expected upon sale was $95,000 and $80,000 at December 31, 2015 and 2014,
respectively. None of these loans were 90 days or more past due or on nonac-
crual status as of December 31, 2015 or 2014.

During 2015, Park transferred to held for sale and sold certain commercial
loans previously held for investment with a book balance of $144,000, and
recognized a gain of $756,000. During 2014, Park transferred certain com -
mercial 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.

9. OTHER REAL ESTATE OWNED
The carrying amount of foreclosed properties held at December 31, 2015 and
December 31, 2014 are listed below, as well as the recorded investment of
loans secured by residential real estate properties for which formal foreclosure
proceedings were in process at those dates.

December 31 (In thousands)

2015

2014

OREO:

Commercial real estate
Construction real estate
Residential real estate

Total OREO

Loans in process of foreclosure:

Residential real estate

$ 8,333
7,259
3,059

$18,651

$ 6,352
11,281
4,972

$22,605

$ 2,021

$ 2,807

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

2015

$ 19,123
74,525
47,839
3,878

$145,365

2014

$ 17,836
71,002
42,139
3,439

$134,416

(85,872)

(78,937)

$ 59,493

$ 55,479

11. INVESTMENT IN QUALIFIED AFFORDABLE HOUSING
Park makes certain equity investments in various limited partnerships that
sponsor affordable housing projects. The purpose of these investments is
to achieve a satisfactory return on capital, help create affordable housing
opportunities, and assist the Company to achieve our goals associated with
the Community Reinvestment Act.

Previously, these investments were accounted for under the cost method of
accounting with amortization of the investment being recorded in other expense
and tax benefits recognized in the provision for income taxes. During the first
quarter of 2015, Park adopted ASU 2014-01, Accounting for Investments in
Qualified Affordable Housing Projects, and elected the proportional amortiza-
tion method with amortization expense and tax benefits recognized through the
provision for income taxes. This ASU is required to be applied retrospectively to
all periods presented. As a result of these changes, Park recorded a cumulative-
effect adjustment to beginning retained earnings.

The following table summarizes the impact of retrospective application to the
balance sheet and income statement for all prior periods presented:

December 31 (In thousands)

2014

Total assets

As previously reported
As reported under the new guidance

Retained earnings

As previously reported
As reported under the new guidance

Total equity

As previously reported
As reported under the new guidance
12 months ended
December 31 (In thousands)

Total other expense

As previously reported
As reported under the new guidance

Income tax expense

As previously reported
As reported under the new guidance

Net income

As previously reported
As reported under the new guidance

$7,003,256
7,001,199

$ 486,541
484,484

$ 698,598
696,541

2014

$ 195,234
187,510

28,602
36,459

84,090
83,957

2013

$188,529
181,515

25,131
32,503

77,227
76,869

The table below details the balances of Park’s affordable housing tax credit
investments and related unfunded commitments as of December 31, 2015
and 2014.

December 31 (In thousands)

Affordable housing tax credit investments
Unfunded commitments

2015

$51,247
20,311

2014

$48,911
16,629

Depreciation expense amounted to $7.3 million, $7.2 million and $7.3 million
for the years ended December 31, 2015, 2014 and 2013, 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:

During the years ended December 31, 2015 and 2014, Park recognized
amortization expense of $6.7 million and $6.9 million, respectively, which was
included within the provision for income taxes. For the years ended December
31, 2015 and 2014, Park recognized tax credits and other benefits from its
affordable housing tax credit investments of $8.9 million and $8.8 million,
respectively.

(In thousands)

2016
2017
2018
2019
2020
Thereafter

Total

$1,475
1,276
1,104
1,019
394
520

$5,788

Rent expense for Park was $1.7 million, $1.7 million and $1.8 million, for the
years ended December 31, 2015, 2014 and 2013, respectively.

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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

12. DEPOSITS
At December 31, 2015 and 2014, non-interest bearing and interest bearing
deposits were as follows:

December 31 (In thousands)

Non-interest bearing
Interest bearing

Total

2015

$1,404,032
3,943,610

$5,347,642

2014

$1,269,296
3,858,704

$5,128,000

At December 31, 2015, the maturities of time deposits were as follows:

(In thousands)

2016
2017
2018
2019
2020
After 5 years

Total

$814,387
221,761
56,744
145,027
52,062
431

$1,290,412

At December 31, 2015 and 2014, respectively, Park had approximately $21.6
million and $21.9 million of deposits received from executive officers, directors
and their related entities.

Time deposits that exceed the FDIC Insurance limit of $250,000 at December
31, 2015 and 2014 were $49.7 million and $64.7 million, respectively.

13. REPURCHASE AGREEMENT BORROWINGS
Securities sold under agreements to repurchase (“repurchase agreements”)
with customers represent funds deposited by customers, generally on an
overnight basis, that are collateralized by investment securities owned by Park.
Repurchase agreements with customers are included in short-term borrowings
on the consolidated balance sheets. Park’s repurchase agreements with a third-
party financial institution are classified as long-term debt on the Consolidated
Balance Sheets.

All repurchase agreements are subject to terms and conditions of repurchase/
security agreements between Park and the client and are accounted for as
secured borrowings. Park’s repurchase agreements reflected in short-term
borrowings consist of customer accounts and securities which are pledged
on an individual security basis.

At December 31, 2015 and December 31, 2014, Park’s repurchase
agreement borrowings totaled $554 million and $577 million, respectively.
At both December 31, 2015 and December 31, 2014, $300 million of Park’s
repurchase agreement borrowings were classified as long-term debt with the
remaining amount being classified as short-term debt on the Consolidated
Balance Sheets. These borrowings were collateralized with U.S. government
and agency securities with a carrying value of $622 million and $664 million
at December 31, 2015 and December 31, 2014, respectively. Declines in the
value of the collateral would require Park to pledge additional securities. As
of December 31, 2015 and December 31, 2014, Park had $585 million and
$347 million, respectively, of available unpledged securities.

The following table presents the carrying value of Park’s repurchase agreements
by remaining contractual maturity at December 31, 2015 and December 31,
2014:

Remaining Contractual Maturity of the Agreements

Overnight
and
Continuous

Up to
30 Days

30–90
Days

Greater
than
90 Days

Total

$247,618

$2,239

$ —

$304,385

$554,242

$268,427

$ 164

$4,940

$303,449

$576,980

(In thousands)

December 31, 2015:

U.S. government and
agency securities

December 31, 2014:

U.S. government and
agency securities

See Note 14 – Short-Term Borrowings for additional information related to
repurchase agreements classified as short-term borrowings. See Note 15 –
Long-Term Debt for additional information related to repurchase agreements
classified as long-term debt.

14. SHORT-TERM BORROWINGS
Short-term borrowings were as follows:

December 31 (In thousands)

Securities sold under agreements to repurchase
Federal Home Loan Bank advances

Total short-term borrowings

2015

$254,242
140,000

$394,242

2014

$276,980
—

$276,980

The outstanding balances for all short-term borrowings as of December 31,
2015 and 2014 and the weighted-average interest rates as of and paid during
each of the years then ended were as follows:

(In thousands)

2015:

Ending balance
Highest month-end balance
Average daily balance
Weighted-average interest rate:

As of year-end
Paid during the year

2014:

Ending balance
Highest month-end balance
Average daily balance
Weighted-average interest rate:

As of year-end
Paid during the year

Repurchase
Agreements

FHLB
Advances

$254,242
278,324
257,622

0.17%
0.18%

$276,980
307,025
262,709

0.18%
0.19%

$140,000
140,000
1,096

0.56%
0.59%

—
—
561

—
0.10%

During 2014 and 2015, 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. At December 31 2015 and 2014, $21 million and $28 million,
respectively, of investment securities were pledged as collateral for FHLB
advances. At December 31, 2015 and 2014, $1,985 million and $2,038 million,
respectively, of commercial real estate and residential mortgage loans were
pledged under a blanket agreement to the FHLB by Park’s bank subsidiary.
See Note 13 – Repurchase Agreement Borrowings for information related
to investment securities collateralizing repurchase agreements.

15. LONG-TERM DEBT
Long-term debt is listed below:

December 31,

(In thousands)

2015

2014

Outstanding
Balance

Average
Rate

Outstanding
Balance

Average
Rate

Total Federal Home Loan Bank advances

by year of maturity:

2015
2016
2017
2018
2019
2020
Thereafter

Total

—
—
50,000
150,000
75,000
25,000
150,000

$450,000

—
—
1.25%
2.04%
1.96%
2.14%
3.32%

2.37%

51,000
26,000
51,000
125,049
75,333
25,462
150,699

$504,543

2.00%
0.92%
1.28%
2.11%
1.97%
2.19%
3.33%

2.30%

Total broker repurchase agreements

by year of maturity:

2017

Total

$300,000

1.75%

$300,000

1.75%

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December 31,

(In thousands)

2015

2014

Outstanding
Balance

Average
Rate

Outstanding
Balance

Average
Rate

Total combined long-term debt

by year of maturity:

2015
2016
2017
2018
2019
2020
Thereafter

Total

Prepayment penalty

Total long-term debt

—
—
350,000
150,000
75,000
25,000
150,000

$750,000

(11,895)

$738,105

—
—
1.68%
2.04%
1.96%
2.14%
3.32%

2.12%

—

2.16%

51,000
26,000
351,000
125,049
75,333
25,462
150,699

$804,543

(17,941)

$786,602

2.00%
0.92%
1.68%
2.11%
1.97%
2.19%
3.33%

2.09%

—

2.89%

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
interest 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, $9.8 million remained to be amortized
as of December 31, 2015. The remaining amortization will be $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, $2.1 million remained to be amortized as of December
31, 2015. The remaining amortization will be $1.1 million in 2016 and $1.0
million in 2017.

On March 30, 2015, Park prepaid $54.5 million of FHLB advances, with a
weighted average rate of 1.59%, resulting in a prepayment penalty of $532,000.

Park had approximately $150.0 million of long-term debt at December 31,
2015 with a contractual maturity longer than five years. However, all of this
debt is callable by the issuer in 2016.

At December 31, 2015 and 2014, 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. At December 31, 2015
and 2014, $21 million and $28 million, respectively, of investment securities
were pledged as collateral for FHLB advances. At December 31, 2015 and
2014, $1,985 million and $2,038 million, respectively, of commercial real
estate and residential mortgage loans were pledged under a blanket agreement
to the FHLB by Park’s bank subsidiary. See Note 13 – Repurchase Agreement
Borrowings for information related to investment securities collateralizing
repurchasing agreements.

16. 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 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,
together with accrued interest.

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.

17. SHARE-BASED COMPENSATION

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 makes equity-based
awards and cash-based awards available for grant to participants in the form of
incentive stock options, nonqualified stock options, stock appreciation rights,
restricted common shares, restricted stock unit 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 issued and delivered in connection with
grants under the 2013 Incentive Plan. The common shares to be issued and
delivered under the 2013 Incentive Plan may consist of either common shares
currently held or common shares subsequently 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, 2015, 524,100 common shares were available for
future grants under the 2013 Incentive Plan.

During 2015, 2014, and 2013, Park granted 10,150, 10,200, and 10,550
common shares, respectively, to directors of Park and to directors of Park’s
bank subsidiary PNB (and its divisions) under the 2013 Incentive Plan. The
common shares granted to directors were not subjected to a vesting period

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and resulted in expense of $963,000, $801,000, and $850,000 in 2015, 2014,
and 2013, respectively, which is included in Professional fees and services on
the Consolidated Income Statement.

On January 24, 2014, the Compensation Committee of the Board of Directors of
Park granted awards of an aggregate of 21,975 performance-based restricted
stock units (“PBRSUs”) to certain employees of Park, which grants were effec-
tive on January 24, 2014. On December 16, 2014, the Compensation Committee
of the Board of Directors of Park granted awards of an aggregate of 23,025
PBRSUs to certain employees of Park, which grants were effective on January
2, 2015. The number of PBRSUs earned or settled will depend on certain
performance conditions and are also subject to service-based vesting. None
of the PBRSUs have vested as of December 31, 2015. As of December 31,
2015, 200 PBRSUs have been forfeited.

Share-based compensation expense of $865,000 and $458,000 was recognized
for the years ended December 31, 2015 and 2014, respectively, related to
PBRSU awards to employees. Park expects to recognize additional share-based
compensation expense of approximately $734,000 through the first quarter
of 2018 related to PBRSUs granted in 2014 and approximately $1.2 million
through the first quarter of 2019 related to PBRSUs granted in 2015. No share-
based compensation expense was recognized in 2013 as there were no
outstanding awards held by employees.

18. 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.

There were no pension contributions in 2014 or 2015 and there is no
contribution expected in 2016.

Using an accrual measurement date of December 31, 2015 and 2014, plan
assets and benefit obligation activity for the Pension Plan are listed below:

(In thousands)

2015

2014

Change in fair value of plan assets

Fair value at beginning of measurement period
Actual return on plan assets
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

$160,598
(58)
(7,042)

$153,498

$109,328
5,368
4,695
(10,104)
(7,042)

$152,739
15,511
(7,652)

$160,598

$ 89,179
4,331
4,577
18,893
(7,652)

$102,245

$109,328

(fair value of plan assets less benefit obligation)

$ 51,253

$ 51,270

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

—

2015

85%
15%

100%

2014

85%
15%

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, 2015 and 2014. 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 $86.1 million
and $92.0 million at December 31, 2015 and 2014, 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, 2015 and 2014, the fair value of the 115,800 common shares
held by the Pension Plan was $10.5 million, or $90.48 per share and $10.2
million, or $88.48 per share, respectively.

The weighted average assumptions used to determine benefit obligations at
December 31, 2015, 2014 and 2013 were as follows:

Discount rate
Rate of compensation increase

Under age 30
Ages 30–39
Ages 40 and over

2015

4.88%

10.00%
6.00%
3.00%

2014

4.42%

10.00%
6.00%
3.00%

2013

5.30%

10.00%
6.00%
3.00%

The estimated future pension benefit payments reflecting expected future
service for the next ten years are shown below (in thousands):

2016
2017
2018
2019
2020
2021 – 2025

Total

$ 5,010
5,321
5,800
6,780
7,317
45,831

$76,059

The following table shows ending balances of accumulated other
comprehensive loss at December 31, 2015 and 2014.

(In thousands)

Prior service cost
Net actuarial loss

Total

Deferred taxes

2015

$ —
(23,618)

(23,618)

8,267

2014

(15)
(22,855)

(22,870)

8,005

Accumulated other comprehensive loss

$(15,351)

$(14,865)

Using an actuarial measurement date of December 31 for 2015, 2014 and
2013, components of net periodic benefit cost and other amounts recognized
in other comprehensive (loss) income were as follows:

(In thousands)

2015

2014

2013

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

$(5,368)
(4,695)
11,420
(15)
(637)

$ 705

$(1,400)
15
637

$ (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

(748)

(14,257)

33,132

and other comprehensive (loss) income

(43)

$(12,315)

$30,905

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There are no estimated prior service costs for the Pension Plan to be amortized
from accumulated other comprehensive loss into net periodic benefit cost over
the next fiscal year. The estimated net actuarial loss expected to be recognized
in the next fiscal year is $773,000.

The weighted average assumptions used to determine net periodic benefit cost
for the years ended December 31, 2015, 2014 and 2013 are listed below:

19. 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 com -
ponents of the Corporation’s deferred tax assets and liabilities are as follows:

December 31 (in thousands)

2015

2014

Discount rate
Rate of compensation increase

Under age 30
Ages 30 – 39
Ages 40 and over

Expected long-term return on plan assets

2015

4.42%

10.00%
6.00%
3.00%
7.25%

2014

5.30%

10.00%
6.00%
3.00%
7.25%

2013

4.47%

10.00%
6.00%
3.00%
7.50%

The Pension Plan maintains cash in a PNB savings account. The Pension Plan
cash balance was $0.7 million at December 31, 2015.

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 trans -
action between market participants on the measurement date, using the
most advantageous market for the asset or liability. The fair values of equity
securities, consisting of mutual fund investments and common stock (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, 2015 was $153.5 million. At December 31, 2015, $135.0 million of equity
investments and cash in the Pension Plan were categorized as Level 1 inputs;
$18.5 million of plan investments in corporate (U.S. large cap) and U.S.
Government sponsored 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 $160.6 million at December 31, 2014. At December 31, 2014,
$141.1 million of investments in the Pension Plan were categorized as Level 1
inputs; $19.5 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 $1.2
million, $1.1 million, and $1.1 million for 2015, 2014 and 2013, respectively.

The Corporation has entered into Supplemental Executive Retirement
Benefits Agreements (the “SERP Agreements”) with certain key officers of
the Corporation and its subsidiaries which provide defined pension benefits
in excess of limits imposed by federal tax law. The accrued benefit cost for
the SERP Agreements totaled $8.0 million and $7.6 million for 2015 and
2014, respectively. The expense for the Corporation was $1.1 million for
2015, $1.5 million for 2014 and $28,000 for 2013.

Deferred tax assets:

Allowance for loan losses
Accumulated other comprehensive loss –

Pension Plan

Accumulated other comprehensive loss –

unrealized losses on securities

Deferred compensation
OREO valuation adjustments
Net deferred loan fees
Deferred contract bonus
Other

Total deferred tax assets

Deferred tax liabilities:

Accumulated other comprehensive

income – unrealized gains on securities

Deferred investment income
Pension plan
Mortgage servicing rights
Partnership adjustments
Other

Total deferred tax liabilities

Net deferred tax asset (liability)

$19,773

$19,023

8,266

157
3,908
2,418
1,204
1,031
4,171

8,005

—
3,820
3,984
933
—
4,338

$40,928

$40,103

$ —
10,199
26,205
3,153
560
872

$40,989

(61)

677
10,199
25,949
3,015
865
804

$41,509

$ (1,406)

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, 2015 or 2014 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)

2015

2014

2013

Currently payable

Federal

Deferred
Federal

Total

$32,817

$33,931

$34,435

(250)

2,528

(1,932)

$32,567

$36,459

$32,503

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,
2015, 2014 and 2013.

Statutory federal corporate tax rate
Changes in rates resulting from:

Tax-exempt interest income, net of

disallowed interest

Bank owned life insurance
Investments in qualified

affordable housing projects,
net of tax benefits

Other tax credits
KSOP dividend deduction
Other

Effective tax rate

2015

35.0%

(0.5)%
(1.8)%

(1.9)%
(0.9)%
(1.0)%
(0.2)%

28.7%

2014

35.0%

(0.5)%
(1.4)%

(1.6)%
—
(1.0)%
(0.2)%

30.3%

2013

35.0%

(0.8)%
(1.6)%

(1.7)%
—
(1.1)%
(0.1)%

29.7%

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.

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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

2015

$532

—

(70)

$558

2014

$518

—

(76)

$532

2013

$517

—

(77)

$518

The amount of unrecognized tax benefits that, if recognized, would favorably
affect the effective income tax rate in the future periods at December 31, 2015,
2014 and 2013 was $432,000, $413,000 and $403,000, 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, 2015 and 2013 was $2,000 and $(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, 2015, 2014 and
2013 was $69,000, $67,000 and $67,000, 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, 2012 are closed to
examination by the federal and state taxing authorities.

20. OTHER COMPREHENSIVE INCOME (LOSS)
Other comprehensive income (loss) components, net of tax, are shown in the
following table for the years ended December 31, 2015, 2014 and 2013.

Year ended
December 31
(In thousands)

Beginning balance at
December 31, 2012
Other comprehensive
gain (loss) before
reclassifications
Amounts reclassified
from accumulated
other comprehensive
loss

Net current period

other comprehensive
income (loss)

Ending balance at

December 31, 2013

Changes in
Pension Plan
Assets and
Benefit
Obligations

Unrealized
Gains and
Losses on
Available-for-
Sale Securities

Total

$(27,134)

$ 9,616

$(17,518)

19,766

(39,448)

(19,682)

1,770

21,536

1,781

(39,437)

(17,901)

$ (5,598)

$(29,821)

$(35,419)

The following table provides information concerning amounts reclassified
out of accumulated other comprehensive loss for the years ended December
31, 2015, 2014 and 2013:

Amount Reclassified
from Accumulated
Other Comprehensive
Income (Loss)
2014

2013

2015

Affected Line Item
in the Consolidated
Statement of Income

$ 15
637

$652

228

$424

19
—

20
2,703

Employee benefits
Employee benefits

$2,723

Total income before income taxes

953

Federal income taxes

$1,770

Net of tax

$ — $1,158

Gain (loss) on sale of
$ — investment securities

—

17 Miscellaneous expense

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

(910)

424

(486)

$(15,351)

$ (5,598)

Changes in
Pension Plan
Assets and
Benefit
Obligations

Unrealized
Gains and
Losses on
Available-for-
Sale Securities

Total

$(14,865)

$ 1,257

$(13,608)

(1,549)

(2,459)

$ — $1,158

Federal income taxes

—

405

Net of tax

$ — $ 753

Total income before income taxes

Federal income taxes

Net of tax

21. 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.

—

424

The following table sets forth the computation of basic and diluted earnings
per common share:

(1,549)

(2,035)

(292)

$(15,643)

Year ended December 31
(in thousands, except share data)

Numerator:

Net income available to
common shareholders

2015

2014

2013

$81,012

$83,957

$76,869

$(29,821)

$(35,419)

Denominator:

(9,279)

30,325

21,046

753

765

(9,267)

$(14,865)

31,078

21,811

$ 1,257

$(13,608)

Basic earnings per common share:
Weighted-average common
shares outstanding

Effect of dilutive securities –

performance based restricted
stock units

Diluted earnings per common share:
Adjusted weighted-average shares
and assumed vesting

Earnings per common share:

Basic earnings per common share
Diluted earnings per common share

15,364,281

15,394,971

15,412,365

40,459

18,861

—

15,404,740

15,413,832

15,412,365

$5.27
$5.26

$5.45
$5.45

$4.99
$4.99

Year ended
December 31
(In thousands)

Beginning balance at
December 31, 2014
Other comprehensive

(loss) before
reclassifications
Amounts reclassified
from accumulated
other comprehensive
loss

Net current period

other comprehensive
(loss)

Ending balance at

December 31, 2015

Beginning balance at
December 31, 2013
Other comprehensive
(loss) gain before
reclassifications
Amounts reclassified
from accumulated
other comprehensive
loss

Net current period

other comprehensive
(loss) income

Ending balance at

December 31, 2014

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Park awarded 23,025 and 21,975 PBRSUs to certain employees during the
years ended December 31, 2015 and 2014, respectively. The PBRSUs vest based
on service and performance conditions. The dilutive effect of the PBRSUs was
the addition of 40,459 and 18,861 common shares for the years ended
December 31, 2015 and 2014, respectively.

During the years ended December 31, 2015 and 2014, Park repurchased
71,700 and 29,700 common shares, respectively, to fund the PBRSUs and
common shares awarded to directors of Park and to directors of Park’s
subsidiary PNB (and its divisions).

22. 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, 2015,
approximately $107.5 million of the total shareholders’ equity of PNB was
available for the payment of dividends to the Corporation, without approval
by the applicable regulatory authorities.

23. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
AND FINANCIAL INSTRUMENTS WITH CONCENTRATIONS OF
CREDIT RISK

The Corporation is party to financial instruments with off-balance sheet risk
in the normal course of business to meet the financing needs of its customers.
These financial instruments include loan commitments and standby letters
of credit. The instruments involve, to varying degrees, elements of credit
and interest rate risk in excess of the amount recognized in the 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
conditional obligations as it does for on-balance sheet instruments. Since
many of the loan commitments may expire without being drawn upon, the total
commitment amount does not necessarily represent future cash requirements.
The credit risk involved in issuing letters of credit is essentially the same as that
involved in extending loan commitments to customers.

The total amounts of off-balance sheet financial instruments with credit risk
were as follows:

December 31 (In thousands)

Loan commitments

Standby letters of credit

2015

$888,411

12,326

2014

$869,793

12,473

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
customer’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 economic conditions in each borrower’s geographic location and industry.

24. LOAN SERVICING
Park serviced sold mortgage loans of $1,276 million at December 31, 2015,
compared to $1,265 million at December 31, 2014 and $1,326 million at
December 31, 2013. At December 31, 2015, $5.4 million of the sold mortgage
loans were sold with recourse compared to $7.0 million at December 31,
2014. Management closely monitors the delinquency rates on the mortgage
loans sold with recourse. As of December 31, 2015 and 2014, management
had established a reserve of $454,000 and $379,000, 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)

2015

2014

2013

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

$8,613
1,748
(1,637)
284

$9,008

$ 826
(284)

$ 542

$ 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

The fair value of mortgage servicing rights was $9.6 million and $9.1 million at
December 31, 2015 and 2014, respectively. The fair value of mortgage servicing
rights at December 31, 2015 was established using a discount rate of 10% and
constant prepayment speeds ranging from 6.3% to 22.0%. 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%.

Servicing fees included in other service income were $3.4 million, $3.5 million
and $3.6 million for the years ended December 31, 2015, 2014 and 2013,
respectively.

25. FAIR VALUE
The fair value hierarchy requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value.
The three levels of inputs that Park uses to measure fair value are as follows:
■ Level 1: Quoted prices (unadjusted) for identical assets or liabilities in
active markets that Park has the ability to access as of the measurement
date.

■ Level 2: 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.

■ 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.

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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.

The table below is a reconciliation of the beginning and ending balances of the
Level 3 inputs for the years ended December 31, 2015 and 2014, for financial
instruments measured on a recurring basis and classified as Level 3:

Level 3 Fair Value Measurements

(In thousands)

Balance at January 1, 2015

Total gains (losses)

Included in earnings – realized
Included in earnings – unrealized
Included in other comprehensive loss

Purchases, sales, issuances and settlements,

other, net

Re-evaluation of fair value swap

Balance at December 31, 2015

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

Equity
Securities

$776

Fair Value
Swap

$(226)

—
—
(7)

—
—

$769

$759

—
—
17

—
—

—
—
—

—
—

$(226)

$(135)

—
—
—

—
(91)

$776

$(226)

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.

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.

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:

Fair Value Measurements at December 31, 2015 Using:

(In thousands)

Level 1

Level 2

Level 3

Balance at
12/31/15

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

$ —

$522,063

$ —

$522,063

—
1,941

—
—

911,493
—

7,306
165

—
769

—
—

911,493
2,710

7,306
165

$226

226

Balance at
12/31/14

Fair value swap

—
Fair Value Measurements at December 31, 2014 Using:

$ —

(In thousands)

Level 1

Level 2

Level 3

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

There were no transfers between Level 1 and Level 2 during 2015 or 2014.
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.
For securities where quoted prices or market prices of similar securities are
not available, fair values are calculated using discounted cash flows.

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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.

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:

■ 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.

■ Income approach appraisals typically incorporate the annual net

operating income of the business divided by an appropriate capitalization
rate, as determined by the appraiser. Management generally applies a 15%
discount to income approach appraised values which management
expects will cover all disposition costs (including selling costs).
■ Lot development loan appraisals are typically performed using a

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

MSRs: MSRs are carried at the lower of cost or fair value. MSRs do not trade in
active, open markets with readily observable prices. For example, sales of MSRs
do occur, but precise terms and conditions typically are not readily available.
As such, management, with the assistance of a third-party specialist, determines
fair value based on the discounted value of the future cash flows estimated to be
received. Significant inputs include the discount rate and assumed prepayment
speeds 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, 2015 Using:

(In thousands)

Level 1

Level 2

Level 3

Balance at
12/31/15

Impaired loans:

$ —

$ 3,698

Commercial real estate
Construction real estate:
SEPH commercial land
and development

—
Remaining commercial —
—

Residential real estate

—
—
—

2,044
1,872
1,882

Total impaired loans

$ —

$ 9,496

Mortgage servicing

rights

$ —

$ 1,867

$ —

$ 1,867

Other real estate owned:
Commercial real estate
—
Construction real estate —
—
Residential real estate

Total other

—
—
—

2,796
3,387
2,332

real estate owned

$ —

$ 8,515

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

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, 2015

Impaired loans recorded

at fair value

Remaining impaired loans

Total impaired loans

Year ended December 31, 2014

Impaired loans recorded

at fair value

Remaining impaired loans

Total impaired loans

Recorded
Investment

Prior
Charge-offs

Specific
Valuation
Allowance

Carrying
Balance

$ 11,783
68,881

$ 80,664

$ 19,643
54,069

$ 73,712

$10,512
18,193

$28,705

$19,731
12,749

$32,480

$ 2,287
1,904

$ 4,191

$ 2,680
980

$ 3,660

$ 9,496
66,977

$ 76,473

$ 16,963
53,089

$ 70,052

The expense of credit adjustments related to impaired loans carried at fair value
for the years ended December 31, 2015, 2014 and 2013 was $2.1 million, $3.0
million, and $8.1 million, respectively.

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MSRs totaled $9.0 million at December 31, 2015. Of this $9.0 million MSR
carrying balance, $1.9 million was recorded at fair value and included a
valuation allowance of $0.5 million. The remaining $7.1 million was recorded
at cost, as the fair value exceeded cost at December 31, 2015. At December 31,
2014, MSRs totaled $8.6 million. Of this $8.6 million MSR carrying balance,
$2.9 million was recorded at fair value and included a valuation allowance of
$0.8 million. The remaining $5.7 million was recorded at cost, as the fair value
exceeded cost at December 31, 2014. Income related to MSRs carried at fair
value for the years ended December 31, 2015, 2014 and 2013 was $0.3
million, $0.2 million and $1.3 million, respectively.

Total OREO held by Park at December 31, 2015 and 2014 was $18.7 million
and $22.6 million, respectively. Approximately 46% of OREO held by Park at
December 31, 2015 and 2014 was carried at fair value due to fair value adjust-
ments made subsequent to the initial OREO measurement. At December 31,
2015 and 2014, OREO held at fair value, less estimated selling costs, amounted
to $8.5 million and $10.3 million, respectively. The net expense related to
OREO fair value adjustments was $1.6 million, $2.4 million and $3.2 million
for the years ended December 31, 2015, 2014 and 2013, respectively.

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, 2015 and December 31, 2014:

(In thousands)

December 31, 2015
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, 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

Fair Value

Valuation Technique

Unobservable Input(s)

Range (Weighted Average)

$3,698

2,044

1,872

1,882

2,796

3,387

2,332

$8,481

2,078

3,483

2,921

1,470

6,473

2,369

Sales comparison approach
Income approach
Cost approach

Sales comparison approach
Bulk sale approach

Sales comparison approach
Income approach
Cost approach

Sales comparison approach
Income approach

Sales comparison approach
Bulk sale approach

Sales comparison 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
Accumulated depreciation

Adj to comparables
Capitalization rate

Adj to comparables
Discount rate

Adj to comparables

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% – 45.9% (20.3%)
7.0% – 13.3% (9.5%)
50.0% (50.0%)

5.0% – 40.0% (22.1%)
10.7% (10.7%)

0.0% – 25.3% (1.0%)
10.0% – 10.7% (10.0%)

0.0% – 96.7% (12.5%)
3.8% – 10.1% (9.1%)
33.3% – 50.0% (43.4%)

2.0% – 71.0% (26.9%)
9.5% (9.5%)

0.0% – 85.0% (24.3%)
15.0% (15.0%)

0.1% – 61.8% (23.0%)

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%)
15.0% (15.0%)

0.0% – 38.3% (10.1%)
6.8% – 7.8% (7.6%)

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.

FHLB stock and FRB stock: These assets are carried at their respective
redemption values as it is not practical to calculate their fair values.

Loans receivable: For variable-rate loans that reprice frequently and with
no significant change in credit risk, fair values are based on carrying values.
The fair values for certain mortgage loans (e.g., one-to-four family residential)

are based on quoted market prices of similar loans sold in conjunction with
securitization transactions, adjusted for differences in loan characteristics.
The fair values for other loans are estimated using discounted cash flow
analyses, 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
commitments and standby letters of credit are based on the fees currently
charged to enter into similar agreements, taking into account the remaining
terms of the agreements and the counterparties’ credit standing. The carrying
amount and fair value are not material.

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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.

The fair value of financial instruments at December 31, 2015 and December 31, 2014, was as follows:

Fair Value Measurements at December 31, 2015:

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, 2014:

(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

$ 149,459
1,585,568
4,436
14,239
7,306
9,496
165
4,994,624

$5,011,591

$1,404,032
1,107,200
1,544,708
1,290,412
1,290

$5,347,642

$ 394,242
738,105
45,000
987
1,351

226

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

$ 149,459
1,941
—
—
—
—
—
—

—

$1,404,032
1,107,200
1,544,708
—
1,290

$4,057,230

—
—
—
66
4

—

$ 237,699
1,922
—
—
—
—
—
—

—

$1,269,296
1,122,079
1,325,445
—
1,269

$3,718,089

—
—
—
14
3

—

226

Level 1

Level 2

Level 3

$
—
1,584,984
4,436
—
7,306
—
165
—

7,471

—
—
—
1,295,329
—

$1,295,329

$ 394,242
771,420
41,596
921
1,347

—
769
—
14,239
—
9,496
—
4,997,318

$5,006,814

—
—
—
—
—

—

—
—
—
—
—

$
—
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

—
—
—
—
—

—

—
—
—
—
—

Total
Fair Value

$ 149,459
1,587,694
4,436
14,239
7,306
9,496
165
4,997,318

$5,014,285

$1,404,032
1,107,200
1,544,708
1,295,329
1,290

$5,352,559

$ 394,242
771,420
41,596
987
1,351

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

—

226

PNC_AR2015_10 2/17/16 3:27 PM Page 59

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

26. CAPITAL RATIOS
Financial institution regulators have established guidelines for minimum capital
ratios for banks, thrifts and bank holding companies. During the first quarter of
2015, Park adopted the new Basel III reg ulatory capital framework as approved
by the federal banking agencies. The adoption of this new framework modified
the calculation of the various capital ratios, added a new ratio, common equity
tier 1, and revised the adequately and well capitalized thresholds. Additionally,
under the new rule, in order to avoid limitations on capital distributions,
including dividend payments, Park must hold a capital conservation buffer
above the adequately capitalized risk-based capital ratios. The capital con -
servation buffer is being phased in from 0.0% for 2015 to 2.50% by 2019.
The amounts shown below as the adequately capitalized ratio plus capital
conservation buffer includes the fully phased-in 2.50% buffer.

PNB met each of the well capitalized ratio guidelines at December 31, 2015.
The following table indicates the capital ratios for PNB and Park at December
31, 2015 and 2014.

Leverage

Tier 1
Risk-Based

Common
Equity Tier 1

Total
Risk-Based

As of December 31, 2015:
The Park National Bank
Park National Corporation
Adequately capitalized

ratio

Adequately capitalized
ratio plus capital
conservation buffer
Well capitalized ratio

(PNB only)

As of December 31, 2014:
The Park National Bank
Park National Corporation
Adequately capitalized

ratio

Well capitalized ratio

(PNB only)

7.06%
9.22%

4.00%

5.00%

6.96%
9.25%

4.00%

5.00%

9.83%
12.82%

6.00%

8.50%

8.00%

10.13%
13.39%

4.00%

6.00%

9.83%
12.54%

11.37%
14.49%

4.50%

8.00%

7.00%

6.50%

N/A
N/A

N/A

10.50%

10.00%

11.74%
15.14%

8.00%

10.00%

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, 2015 and 2014, 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, 2015:
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

Common equity Tier 1

(to risk-weighted assets)

PNB
Park

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

Common equity Tier 1

(to risk-weighted assets)

PNB
Park

$588,467
758,988

$508,763
671,664

$508,763
656,664

$563,188
739,517

$485,943
654,339

N/A
N/A

11.37%
14.49%

9.83%
12.82%

7.06%
9.22%

9.83%
12.54%

11.74%
15.14%

10.13%
13.39%

6.96%
9.25%

N/A
N/A

$414,079
419,080

$310,560
314,310

$288,147
291,449

$232,920
235,732

$383,634
390,822

$191,817
195,411

$279,210
282,992

N/A
N/A

8.00%
8.00%

6.00%
6.00%

4.00%
4.00%

4.50%
4.50%

8.00%
8.00%

4.00%
4.00%

N/A
N/A

$517,599
N/A

$414,079
N/A

$360,183
N/A

$336,439
N/A

$479,542
N/A

$287,725
N/A

$349,013
N/A

N/A
N/A

10.00%
N/A

8.00%
N/A

5.00%
N/A

6.50%
N/A

10.00%
N/A

6.00%
N/A

5.00%
N/A

N/A
N/A

PNC_AR2015_10 2/17/16 3:27 PM Page 60

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

27. 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, 2015 (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, 2015:
Assets
Loans
Deposits

PNB

$ 220,879
7,665
75,188
167,476

120,926
36,581

84,345

$7,229,764
5,029,072
5,447,293

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
163,641

120,867
37,960
82,907

$6,910,386
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
158,651

108,932
33,696
75,236

$6,522,174
4,559,406
4,896,405

GFSC

$ 6,588
1,415
2
2,984

2,191
768

$ 1,423

$ 35,793
35,469
4,627

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

SEPH

(74)
(4,090)
1,848
6,182

(318)
(111)

(207)

$ 33,541
15,153
—

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
—

All Other

239
—
513
9,972

(9,220)
(4,671)

$ (4,549)

$ 12,256
(11,609)
(104,278)

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)

Total

$ 227,632
4,990
77,551
186,614

113,579
32,567

81,012

$7,311,354
5,068,085
5,347,642

Total

$ 225,044
(7,333)
75,549
187,510

120,416
36,459
83,957

$7,001,199
4,829,682
5,128,000

Total

$ 221,025
3,415
73,277
181,515

109,372
32,503
76,869

$6,636,423
4,620,505
4,789,994

PNC_AR2015_10 2/17/16 3:27 PM Page 61

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 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, 2015, 2014 and 2013

(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
of subsidiaries

Federal income tax benefit

Income before equity in
undistributed income
of subsidiaries

Equity in undistributed income

of subsidiaries

Net income

Other comprehensive (loss) income(1)

Comprehensive income

2015

2014

2013

$60,000

$ 15,000

2,561

560

63,121

12,341

50,780

4,671

3,708

262

63,970

13,807

50,163

4,787

8,659

531

24,190

13,413

10,777

2,826

55,451

54,950

13,603

25,561

$81,012

(2,035)

78,977

29,007

$83,957

21,811

105,768

63,266

$ 76,869

(17,901)

58,968

(1) See Consolidated Statements of Comprehensive Income for other comprehensive income (loss)

detail.

Statements of Cash Flows
for the years ended December 31, 2015, 2014 and 2013

(In thousands)

Operating activities:

Net income

2015

2014

2013

$ 81,012

$ 83,957

$ 76,869

Adjustments to reconcile net income to

net cash provided by operating activities:

Undistributed income of subsidiaries
Compensation expense for issuance
of treasury stock to directors

Share-based compensation expense

Decrease in other assets

Increase (decrease) in other liabilities

Net cash provided by
operating activities

Investing activities:

Capital contribution in subsidiary
Repayment of investments in

and advances to subsidiaries

Net cash provided by
investing activities

Financing activities:
Cash dividends paid

Repayment of subordinated notes

Repurchase of treasury shares

Cash payment for fractional shares

Net cash used in

financing activities

Increase (decrease) in cash

Cash at beginning of year

(25,561)

(29,007)

(63,266)

963

865

(182)

485

801

458

(1,292)

298

850

—

(2,215)

(2,187)

57,582

55,215

10,051

—

(45,000)

10,000

32,000

101,960

10,000

32,000

56,960

(57,776)

—

(6,058)

(3)

(63,837)

3,745

98,671

(57,876)

(35,250)

(2,355)

(5)

(95,486)

(8,271)

106,942

(57,949)

—

(843)

(3)

(58,795)

8,216

98,726

Cash at end of year

$102,416

$ 98,671

$106,942

(In thousands)

2015:

Totals for reportable

segments

Elimination of

Net Interest Depreciation

Income

Expense

Other
Expense

Income
Taxes

Assets

Deposits

$227,393

$7,347 $169,295 $37,238 $7,299,098 $5,451,920

intersegment items

2,561

Parent Co. totals –
not eliminated

(2,322)

—

(13,557)

(104,278)

9,972

(4,671)

25,813

—

Totals

2014:

Totals for reportable

segments

Elimination of

$227,632

$7,347 $179,267 $32,567 $7,311,354 $5,347,642

$227,056

$7,243 $172,267 $41,246 $6,994,456 $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 $180,267 $36,459 $7,001,199 $5,128,000

$218,197

$7,315 $166,680 $35,329 $6,642,070 $4,903,564

intersegment items

8,659

Parent Co. totals –
not eliminated

(5,831)

—

(30,369)

(113,570)

7,520

(2,826)

24,722

—

Totals

$221,025

$7,315 $174,200 $32,503 $6,636,423 $4,789,994

28. PARENT COMPANY STATEMENTS
The Parent Company statements should be read in conjunction with the
consolidated financial statements and the information set forth below.
Investments in subsidiaries are accounted for using the equity method of
accounting. The effective tax rate for the Parent Company is substantially
less than the statutory rate due principally to tax-exempt dividends from
subsidiaries.

Cash represents non-interest bearing deposits with PNB. Net cash provided
by operating activities reflects cash payments (received from subsidiaries) for
income taxes of $4.13 million, $5.81 million and $2.54 million in 2015, 2014
and 2013, respectively.

At December 31, 2015 and 2014, shareholders’ equity reflected in the
Parent Company balance sheet includes $199.4 million and $196.5 million,
respectively, of undistributed earnings of the Corporation’s subsidiaries which
are restricted from transfer as dividends to the Corporation.

Balance Sheets
December 31, 2015 and 2014

(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

2015

$102,416

613,383

25,000

2,341

23,443

$766,583

45,000
8,228

53,228

713,355

Total liabilities and shareholders’ equity

$766,583

2014

$ 98,671

599,855

25,000

2,344

23,260

$749,130

45,000
7,589

52,589

696,541

$749,130

PARKNATIONA L
C OR P OR A T I ON 2015 ANNUAL

REPORT

PARK NATIONAL CORPORATION

PARKNATIONA L
C OR P OR A T I ON 2015 ANNUAL

REPORT

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