PRK Park National Corp /Oh/ - 10-K

ITEM 1A. RISK FACTORS.

Economic, Political and Market Risks

Inflation may have an adverse impact on our business and on our customers.

Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. From 2021 to 2023, there was a significant rise in inflation, and the Federal Reserve Board raised certain benchmark interest rates in an effort to combat it. Inflation and rapid increases in interest rates may lead to a decline in the trading value of previously issued government securities with interest rates below current market interest rates. In addition, inflation generally increases the cost of goods and services we use in our business operations, which increases our noninterest expenses. Furthermore, our customers are also affected by inflation and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability to repay their loans with us.

Changes in economic and political conditions could adversely affect our earnings and capital through declines in deposits, quality of investment securities, loan demand, our borrowers’ ability to repay loans, and the value of the collateral securing our loans.

Our success depends, to a certain extent, upon local and national economic and political conditions, as well as governmental fiscal and monetary policies. Conditions such as inflation, recession, unemployment, changes in interest rates, fiscal and monetary policy, an increasing U.S. federal government budget deficit, the failure of the U.S federal government to raise the federal debt ceiling, slowing gross domestic product, tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements, trade wars, and other factors beyond our control may adversely affect our deposit levels and composition, the quality of our assets including investment securities available for purchase and the demand for loans, which, in turn, may adversely affect our earnings and capital. Recent political developments, such as military conflicts in Ukraine, the Middle East, and Venezuela have resulted in substantial changes in economic and political conditions for the U.S. and the remainder of the world. In addition, disruptions in U.S. and global financial markets and changes in oil production in the Middle East affect the economy and stock prices in the U.S., which can affect our earnings and our capital, as well as the ability of our customers to repay loans. Because we have a significant number of real estate loans, decreases in real estate values could adversely affect the value of property used as collateral and our ability to sell the collateral upon foreclosure. Adverse changes in the economy, including those resulting from pandemics, rising inflation, and increases in interest rates, may also have a negative effect on the ability of our borrowers to make timely repayments of their loans, which would have an adverse impact on our earnings and cash flows.

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

Our earnings and cash flows depend substantially on our interest rate spread, which is the difference between: (i) the rates we earn on loans, investment securities and other interest earning assets; and (ii) the interest rates we pay on deposits and our borrowings. These rates are highly sensitive to many factors beyond our control, including general economic conditions and the policies of various governmental and regulatory authorities and, in particular, the Federal Reserve Board. Changes in monetary policy influence the origination of loans, the prepayment speed of loans, the purchase of investments, the generation of deposits and rates of interest received and paid. If market interest rates rise, Park will have competitive pressure to increase the rates that Park pays on deposits, which could result in a decrease of Park's net interest income. If market rates decline, Park could experience fixed-rate loan prepayments and higher investment portfolio cash flows, resulting in a lower yield on earning assets. Park's earnings can also be impacted by the spread between short-term and long-term market interest rates.

While we have taken measures intended to manage the risks of operating in a changing interest rate environment, there can be no assurance that such measures will be effective in avoiding undue interest rate risk, especially in light of the continued economic effects of sustained inflation. Information pertaining to the impact changes in interest rates could have on our net income is included in "Table 32 - Interest Rate Sensitivity" in "ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" of this Annual Report on Form 10-K, and is incorporated herein by reference.

Changes in the general economic conditions and real estate valuations in our primary market areas could adversely impact results of operations, financial condition and cash flows.

Our lending and deposit gathering activities are concentrated primarily in Ohio, Kentucky, North Carolina, South Carolina and, as of February 1, 2026, Tennessee. Our success depends on the general economic conditions of our primary market areas, particularly given that a significant portion of our lending relates to real estate located in these regions. Adverse

changes in the regional and general economic conditions could reduce our growth rate, impair our ability to collect payments on loans, increase loan delinquencies, increase problem assets and foreclosures, increase claims and lawsuits, increase devaluations recognized within our OREO portfolio, decrease the demand for our products and services and decrease the value of collateral for loans, especially real estate values, which could have a material adverse effect on our financial condition, results of operations and cash flows.

Business Operations Risks

We are exposed to operational risk.

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

We may be subject to disruptions of our operating systems arising from events that are wholly or partially beyond our control, which may include, for example, computer viruses, cybersecurity attacks including cybersecurity attacks on third-party vendors, spikes in transaction volume and/or customer activity, electrical or telecommunications outages, or natural disasters. We could be adversely affected by operating systems disruptions if new or upgraded business management systems are defective, not installed properly or not properly integrated into existing operating systems. Although we have programs in place related to business continuity, disaster recovery and information security to maintain the confidentiality, integrity and availability of our operating systems, business applications and customer information, such disruptions may give rise to interruptions in service to customers, loss of data privacy, and loss or liability to us.

Any failure or interruption in our operating or information systems, or any security or data breach, could cause reputational damage, jeopardize the confidentiality of customer information, result in a loss of customer business, subject us to regulatory intervention or expose us to civil litigation and financial loss or liability, any of which could have a material adverse effect on us.

Negative public opinion can result from our actual or alleged conduct in any number of activities, including lending practices, corporate governance and acquisitions, social media and other marketing activities, and the implementation of environmental, social, and governance practices, and from actions taken by governmental regulators and community organizations in response to any of the foregoing. Negative public opinion could adversely affect our ability to attract and keep customers, could expose us to potential litigation or regulatory action, and could have a material adverse effect on the price of our common shares or result in heightened volatility.

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

Our business could be adversely affected by third-party service providers, data breaches and cyber-attacks.

We face the risk of operational disruption, failure or capacity constraints due to our dependency on third-party vendors for components of our business infrastructure. While we have selected these third-party vendors through our vendor management process, we do not control their operations. As such, our business and operations could be adversely affected in the event these third-party vendors are unable to perform their various responsibilities and we are unable to timely and cost-effectively identify acceptable substitute providers.

Regulatory guidance adopted by federal bank regulatory agencies addressing how banks select, engage and manage their third-party relationships could affect the circumstances and conditions under which we work with third-party service providers and the costs of managing such relationships.

Our assets at risk for cybersecurity attacks include financial assets and non-public information belonging to customers. We use several third-party vendors who have access to our assets via electronic media. Certain cybersecurity risks arise due to this access, including cybersecurity espionage, blackmail, ransom, malware, and theft. We employ many preventive and

detective controls to protect our assets, and we provide mandatory recurring information security training to all employees. To date, we have not experienced any material losses relating to cybersecurity attacks or other information security breaches, but there can be no assurance that we will not suffer such attacks or attempted breaches, or incur resulting losses in the future. Our risk and exposure to these matters remains heightened due to, among other factors, the evolving nature of these threats, our plans to continue to implement or expand Internet and mobile banking to meet customer demand, and the current economic and political environment. As cybersecurity and other data security threats continue to evolve, we may be required to expend significant additional resources to continue to modify and enhance our protective measures or to investigate and remediate any security vulnerabilities.

Failures or material breaches in security of our systems, or those of third-party service providers, may have a material adverse effect on our results of operations and financial condition and the price of our common shares.

We collect, process and store sensitive consumer data by utilizing computer systems and telecommunications networks operated by both us and third-party service providers. Our dependence upon automated systems to record and process our transactions poses the risk that technical system flaws, employee errors, tampering or manipulation of those systems, or attacks by third parties will result in losses and may be difficult to detect. We have security and backup and recovery systems in place, as well as a business continuity plan, to ensure the computer systems will not become inoperable, to the extent possible. We also routinely review documentation of such controls and backups related to third-party service providers. Our inability to use or access these information systems at critical points in time could unfavorably impact the timeliness and efficiency of our business operations. In recent years, several banks have experienced denial of service attacks in which individuals or organizations flood the bank's website with extraordinarily high volumes of traffic, with the goal and effect of disrupting the ability of the bank to process transactions. Other businesses have been victims of ransomware attacks in which the business becomes unable to access its own information and is presented with a demand to pay a ransom in order to once again have access to its information. We could be adversely affected if one of our employees or a third-party service provider causes a significant operational break-down or failure, either as a result of human error or where the individual purposefully sabotages or fraudulently manipulates our operations or systems. We may not be able to prevent employee or third-party errors or misconduct, and the precautions we take to detect this type of activity might prove ineffective. We are further exposed to the risk that the third-party service providers may be unable to fulfill their contractual obligations (or will be subject to the same risks that we are). These disruptions may interfere with service to our customers, cause additional regulatory scrutiny and result in a financial loss or liability. We are also at risk of the impact of natural disasters, terrorism and international hostilities on our systems or for the effects of outages or other failures involving power or communications systems operated by others.

In addition, there have been instances where financial institutions have been victims of fraudulent activity in which criminals pose as customers to initiate wire and automated clearinghouse transactions out of customer accounts. Although we have policies and procedures in place to verify the authenticity of our customers, we cannot assure that such policies and procedures will prevent all fraudulent transfers.

We have implemented security controls to prevent unauthorized access to our computer systems, and we require that our third-party service providers maintain similar controls. However, Park's management cannot be certain that these measures will be successful. A security breach of the computer systems and loss of confidential information, such as customer account numbers and related information, could result in a loss of customers’ confidence and, thus, loss of business. We could also lose revenue if competitors gain access to confidential information about our business operations and use it to compete with us. While we maintain specific "cybersecurity" insurance coverage, which would apply in the event of various breach scenarios, the amount of coverage may not be adequate in any particular case. Furthermore, because cybersecurity threat scenarios are inherently difficult to predict and can take many forms, some breaches may not be covered under our cybersecurity insurance coverage.

Further, we may be affected by data breaches at retailers and other third parties who participate in data interchanges with us and our customers that involve the theft of customer credit and debit card data, which may include the theft of our debit card PIN numbers and commercial card information used to make purchases at such retailers and other third parties. Such data breaches could result in us incurring significant expenses to reissue debit cards and cover losses, which could result in a material adverse effect on our results of operations.

All of the types of cybersecurity incidents discussed above could result in damage to our reputation, loss of customer business, increased costs of incentives to customers or business partners in order to maintain their relationships, litigation, increased regulatory scrutiny and potential enforcement actions, repairs of system damage, increased investments in cybersecurity (such as obtaining additional technology, making organizational changes, deploying additional personnel, training personnel and engaging consultants), increased insurance premiums, and loss of investor confidence and a reduction in the price

of our common shares, all of which could result in financial loss and material adverse effects on our results of operations and financial condition.

We extend credit to a variety of customers based on certain internal standards and the judgment of our loan officers. Our credit standards and on-going process of credit assessment might not protect us from significant credit losses.

We take credit risk by virtue of making loans and leases, extending loan commitments and letters of credit and, to a lesser degree, purchasing municipal bonds and purchasing collateralized loan obligations. Our exposure to credit risk is managed through the use of consistent underwriting standards that emphasize “in-market” lending while avoiding highly leveraged transactions as well as excessive industry and other concentrations. Our loans to non-bank consumer finance companies are made nationally and present different risks than our "in-market" lending due to the variability of cash flows that support the asset-based loans. Our credit administration function employs risk management techniques to ensure that loans and leases adhere to corporate policy and problem loans and leases are promptly identified. While these procedures are designed to provide us with the information needed to implement policy adjustments where necessary, and to take proactive corrective actions, there can be no assurance that such measures will be effective in avoiding undue credit risk.

Our business and financial results are subject to risks associated with the creditworthiness of our customers and counterparties.

Credit risk is inherent in the financial services business and results from, among other factors, extending credit to customers, purchasing non-governmental securities, and entering into certain guarantee contracts. Credit risk is one of the most significant risks to our business, particularly given the high percentage of our assets represented directly and indirectly by loans and the importance of lending to our overall business. As discussed in the immediately preceding risk factor, many factors impact credit risk, and we manage this by periodically assessing and monitoring the creditworthiness of our customers and by diversifying our loan portfolio.

A borrower's ability to repay a loan can be adversely affected by individual factors, such as business performance, job losses or health issues. A weak or deteriorating economy and changes in the U.S. or global markets and changes in interest rates also could adversely impact the ability of our borrowers to repay outstanding loans. Any decrease in our borrowers' ability to repay loans would result in higher levels of nonperforming loans, net charge-offs and provision for credit losses.

Financial services institutions are interrelated as a result of trading, clearing and other relationships. We have exposure to many different industries and counterparties, and we routinely execute transactions with counterparties in the financial services industry. Many of these transactions expose us to credit risk in the event of default of our counterparty or client.

Despite maintaining a diversified portfolio, our operations may result in concentrated credit exposure to a particular person, entity, industry or counterparty. Events adversely affecting specific customers, industries, or markets, a decrease in the credit quality of a customer base, or an adverse change in the risk profile of a market, industry, or group of customers could adversely affect our results of operations.

Our credit risk may be exacerbated when collateral held by us to secure obligations to us cannot be realized upon by us or is liquidated at prices that are not sufficient to recover the full amount of the loan.

The provision for credit losses fluctuates as a result of changes in charge-offs, economic forecasts and other assumptions. If we were to experience higher levels of provision for credit losses, it could result in lower levels of net income.

Our expansion into Kentucky, North Carolina, South Carolina, and, as of February 1, 2026, Tennessee may also expose Park to additional geographic risk.

Our allowance for credit losses may prove to be insufficient to absorb the expected, lifetime losses in our loan portfolio.

We maintain an allowance for credit losses that we believe is a reasonable estimate of the expected losses within the CECL model, based on management’s quarterly analysis of our loan portfolio. The determination of the allowance for credit losses requires management to make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of real estate and other assets serving as collateral for the repayment of loans. Additional information regarding our allowance for credit losses methodology and the sensitivity of the estimates can be found in the discussion of “CRITICAL ACCOUNTING POLICIES” included in “ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS” of this Annual Report on Form 10-K.

Our estimation of future credit losses is susceptible to changes in economic, operating and other conditions, including changes in regulations and interest rates, which may be beyond our control, and the losses may exceed current estimates. We cannot be assured of the amount or timing of losses, nor whether the allowance for credit losses will be adequate in the future.

If our assumptions prove to be incorrect, our allowance for credit losses may not be sufficient to cover the expected losses from our loan portfolio, resulting in the need for additions to the allowance for credit losses which could have a material adverse impact on our financial condition and results of operations. In addition, bank regulators periodically review our allowance for credit losses as part of their examination process and may require management to increase the allowance or recognize further loan charge-offs based on judgments different than those of management.

The accounting guidance under ASU 2016-13 “Financial Instruments – Credit Losses," requires banks to utilize the CECL model and record, at the time of origination, credit losses expected throughout the life of financial assets measured at amortized cost, including loan receivables, HTM debt securities and reinsurance receivables, and off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees and other similar instruments) and net investments in leases recognized by a lessor. Under the CECL model, we are required to use historical information, current conditions and reasonable and supportable forecasts to estimate the expected credit losses. If the methodologies and assumptions we use in the CECL model prove to be incorrect, or inadequate, the allowance for credit losses may not be sufficient, resulting in the need for additional provisions for credit losses to be recorded, which could have a material adverse impact on our financial condition and results of operations.

The CECL model uses a life-of-loan time horizon over which we are required to estimate future credit losses, which could result in volatility in future provisions for credit losses. We may also experience a higher or more volatile provision for credit losses due to higher levels of nonperforming loans and net charge-offs if commercial and consumer customers are unable to make scheduled loan payments.

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

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

We may be required to repurchase loans we have sold or to indemnify loan purchasers under the terms of the sale agreements, which could adversely affect our liquidity, results of operations and financial condition.

When we sell a mortgage loan, we may agree to repurchase or substitute a mortgage loan if we are later found to have breached any representation or warranty we made about the loan or if the borrower is later found to have committed fraud in connection with the origination of the loan. While we have underwriting policies and procedures designed to avoid breaches of representations and warranties we have made and borrower fraud, there can be no assurance that no breach or fraud will ever occur. Required repurchases, substitutions or indemnifications could have an adverse effect on our liquidity, results of operations and financial condition.

We are subject to environmental liability risk associated with lending activities.

A significant portion of our loan portfolio is secured by real property. During the ordinary course of business, we foreclose on and take title to properties securing certain loans. In doing so, there is a risk that hazardous or toxic substances could be found on these properties. If hazardous or toxic substances are found, we may be liable for remediation costs, as well as for personal injury and property damage. Environmental laws and evolving regulation may require us to incur substantial expenses and may materially reduce the affected property’s value or limit our ability to use or sell the affected property. In addition, future laws and regulations or more stringent interpretations or enforcement policies with respect to existing laws or regulations may increase our exposure to environmental liability. Environmental reviews of real property before initiating foreclosure actions may not be sufficient to detect all potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on our business, financial condition and results of operations.

Noncompliance with the BSA and other anti-money laundering statutes and regulations could cause us to experience a material financial loss.

The BSA and the Patriot Act contain anti-money laundering and financial transparency provisions intended to detect and prevent the use of the U.S. financial system for money laundering and terrorist financing activities. The BSA, as amended by the Patriot Act and the AMLA, requires depository institutions and their holding companies to undertake activities including maintaining an anti-money laundering program, verifying the identity of clients, monitoring for and reporting suspicious transactions, reporting on cash transactions exceeding specified thresholds, and responding to requests for information by regulatory authorities and law enforcement agencies. Financial Crimes Enforcement Network (also known as FinCEN), a unit of the U.S. Treasury Department that administers the BSA, is authorized to impose significant civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement efforts with the federal bank regulatory agencies, as well as the U.S. Department of Justice, the U.S. Drug Enforcement Administration, and the U.S. Internal Revenue Service. The AMLA is intended to be a comprehensive reform and modernization to U.S. bank secrecy and anti-money laundering laws. Among other things, it codifies a risk-based approach to anti-money laundering compliance for financial institutions; requires the development of standards for evaluating technology and internal processes for BSA compliance; and expands enforcement-related and investigation-related authority, including increasing available sanctions for certain BSA violations and instituting BSA whistleblower incentives and protections.

There is also increased scrutiny of compliance with the rules enforced by OFAC. If our policies, procedures and systems are deemed deficient, or if the policies, procedures and systems of the financial institutions that we have already acquired or may acquire in the future are deficient, we may be subject to liability, including fines and regulatory actions such as restrictions on our ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain planned business activities, including acquisition plans, which could negatively impact our business, financial condition and results of operations. Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us.

For a more complete discussion of the BSA, the Patriot Act and the AMLA as well as OFAC, see the section captioned "Supervision and Regulation of Park and Park's Subsidiaries" in "ITEM 1. BUSINESS" of this Annual Report on Form 10-K.

We operate in a highly competitive environment, in terms of the products and services we offer and the geographic markets in which we conduct business, as well as in our labor markets where we compete for talented employees. Competition could adversely impact our customer acquisition, growth and retention, as well as our credit spreads and product pricing, causing us to lose market share and deposits and revenues.

We are subject to intense competition from various financial institutions as well as from non-bank entities that engage in many similar activities without being subject to bank regulatory supervision and restrictions. This competition is described in " ITEM 1. BUSINESS" of this Annual Report on Form 10-K under the caption "Competition." Competition in our industry could intensify as a result of the increasing consolidation of financial services companies, in connection with current market conditions, or otherwise. Consumers may also move money out of bank deposits in favor of other investments, including digital or cryptocurrency. Customers have increasingly used bill payment services that do not utilize banks, and these trends may result in losses of deposits and fee income.

The principal bases for competition are pricing (including the interest rates charged on loans or paid on interest bearing deposits), product structure, the range of products and services offered, and the quality of customer service (including convenience and responsiveness to customer needs and concerns). Digital or cryptocurrencies, blockchain, and other “fintech” technologies are designed to enhance transactional security and have the potential to disrupt the financial industry, change the way banks do business, and reduce the need for banks as financial deposit-keepers and intermediaries. The ability to access and use technology is an increasingly important competitive factor in the financial services industry, and it is a critically important component to customer satisfaction as it affects our ability to deliver the right products and services.

Another increasingly competitive factor in the financial services industry is the competition to attract and retain talented associates across many of our business and support areas. This competition leads to increased expenses in many business areas and can also cause us to not pursue certain business opportunities.

A failure to adequately address the competitive pressures we face could make it harder for us to attract and retain customers across our businesses. On the other hand, meeting these competitive pressures could require us to incur significant additional expense, to reevaluate the number of branches through which we serve our customers, or to accept risk beyond what we would otherwise view as desirable under the circumstances. In addition, in our interest rate sensitive businesses, pressures to increase rates on deposits or decrease rates on loans could reduce our net interest margin with a resulting negative impact on our net interest income.

We may not be able to adapt to technological change.

The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers while reducing costs. Our future success depends, in part, upon our ability to address customer needs by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in our operations. This could include the development, implementation, and adaptation of digital or cryptocurrency, blockchain, and other “fintech” technology. We may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers. Failure to successfully keep pace with technological changes affecting the financial services industry could negatively affect our growth, revenue and net income.

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

We are required by federal and state regulatory authorities to maintain adequate levels of capital to support our operations. Federal bank regulatory agencies have adopted extensive changes to their capital requirements, including raising required amounts and eliminating the inclusion of certain instruments from the calculation of capital. If we experience significant loan losses, additional capital may need to be infused. In addition, we may elect to raise additional capital to support our business or to finance acquisitions, if any, or we may otherwise elect or be required to raise additional capital. Our ability to raise additional capital, if needed, will depend on our financial performance, conditions in the capital markets, economic conditions and a number of other factors, many of which are outside our control. Accordingly, there can be no assurance that we will be able to raise additional capital if needed or that the terms of available capital will be acceptable to us. If we cannot raise additional capital when needed, it may have a material adverse effect on our financial condition, results of operations and prospects.

In addition, debt offerings could potentially have important consequences to us and our debt and equity investors, including:

• requiring a substantial portion of our cash flow from operations to make interest payments;

• making it more difficult to satisfy debt service and other obligations;

• increasing the risk of a future credit ratings downgrade of our debt, which could increase future debt costs and limit the future availability of debt financing;

• increasing our vulnerability to general adverse economic and industry conditions;

• reducing the cash flow available to fund capital expenditures and other corporate purposes and to grow our business;

• limiting our flexibility in planning for, or reacting to, changes in our business and the industry;

• placing us at a competitive disadvantage relative to our competitors that may not be as highly leveraged with debt; and

• limiting our ability to borrow additional funds as needed or take advantage of business opportunities as they arise, pay cash dividends or repurchase securities.

We continue to evaluate these risks on an ongoing basis.

Our ability to pay dividends on our common shares is limited.

Although we have paid a dividend on our common shares every quarter since becoming a public company, our Board of Directors reviews the dividend on a quarterly basis and establishes the dividend rate based on our financial condition, results of operations, capital and other regulatory requirements, and other factors that they deem relevant. As a financial holding company, we are a legal entity separate and distinct from our subsidiaries and affiliates. Our principal source of funds to pay dividends on our common shares and service our debt is dividends from our subsidiaries. In the event our subsidiaries become unable to pay dividends to us, we may not be able to service our debt, pay our other obligations or pay dividends on our common shares. Accordingly, our inability to receive dividends from our subsidiaries could also have a material adverse effect on our business, financial condition and results of operations.

Various federal and state statutory provisions and regulations limit the amount of dividends that Park National Bank and our other subsidiaries may pay to us without regulatory approval. In addition, the Federal Reserve Board and the OCC have issued policy statements that provide that insured banks as well as financial holding companies and other bank holding companies should generally only pay dividends out of current operating earnings. Thus, the ability of Park National Bank to pay dividends in the future is currently influenced, and could be further influenced, by bank regulatory policies and capital guidelines and may restrict our ability to declare and pay dividends to our shareholders.

Payment of dividends could also be subject to regulatory limitations if Park National Bank were to become “undercapitalized” for purposes of the applicable “prompt corrective action” regulations. Throughout 2025 and 2026 to date, Park National Bank has been in compliance with all regulatory capital requirements and had sufficient capital under the “prompt corrective action” regulations to be deemed “well-capitalized.” There are also restrictions on the ability of Park National Bank to pay dividends if it does not hold the applicable capital conservation buffer.

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

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

We are currently party to a limited number of derivative transactions. However, some of these derivative instruments are individually negotiated and non-standardized, which can make exiting, transferring or settling the position difficult. We are dependent on the creditworthiness of the counterparties and are therefore susceptible to credit and operational risk in these situations.

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

Legislative, Regulatory and Accounting Change Risks

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

The financial services industry is extensively regulated. We are subject to extensive state and federal regulation, supervision and legislation that govern almost all aspects of our operations. Laws and regulations may change from time to time and are primarily intended for the protection of consumers, depositors, borrowers, the DIF and the banking system as a whole, and not to benefit our shareholders. Regulations affecting banks and financial services businesses are undergoing continuous change and management cannot predict the effect of these changes. While such changes are generally intended to lessen the regulatory burden on financial institutions, the impact of any changes to laws and regulations or other actions by regulatory agencies may negatively impact us or our ability to increase the value of our business. Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on the operation of a financial institution, the classification of assets held by a financial institution, the adequacy of a financial institution’s allowance for credit losses and the ability to complete acquisitions. Additionally, actions by regulatory agencies against us could cause us to devote significant time and resources to defending our business and may lead to penalties that materially affect us and our shareholders. Even the reduction of regulatory restrictions could have an adverse effect on us and our shareholders if such lessening of restrictions increases competition within our industry or our market area.

In light of conditions in the global financial markets and the global economy that occurred in the last two decades, regulators have, at times, increased their focus on the regulation of the financial services industry. The current administration has pursued a regulatory reform agenda that is significantly different than the prior administration, including a lessening of certain regulatory burdens and enforcement priorities for the federal banking agencies. This evolving regulatory and supervisory environment creates uncertainty about the timing and scope of future laws, regulations, policies and priorities. Further, it is possible that future administrations may have a different view of regulatory reform and supervision of the financial services industry. Increased rules or regulations promulgated by federal bank regulatory agencies in the future may subject us, and other financial institutions to which such laws and regulations apply, to additional restrictions, oversight and costs that may have an impact on our business, results of operations or the trading price of our common shares.

Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks.

Financial institutions are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their environmental, social and governance ("ESG") practices and disclosure. Investor advocacy groups, investment funds and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions and human rights. Increased ESG-related compliance costs for us as well as among our third-party suppliers, vendors and various other parties within our supply chain could result in increases to our overall operational costs. Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners, access to capital, and the price of our Common Shares.

Deposit insurance premiums assessed on Park National Bank may increase and have a negative effect on Park’s results of operations.

We have limited ability to control the amount of premiums we are required to pay for FDIC insurance. The DIF is funded by fees assessed on insured depository institutions. If the costs of future bank failures increase, deposit insurance premiums may also increase. The FDIC has adopted rules revising the FDIC's assessments in a manner benefiting banks with assets totaling less than $10 billion. With the acquisition of First Citizen's on February 1, 2026, Park National Bank will become subject to the FDIC’s large bank pricing methodology, which may result in a different, and potentially higher, assessment rate. There can be no assurance, however, that assessments will not be changed in the future. Federal deposit insurance is described in more detail in the section captioned "Supervision and Regulation of Park and Park's Subsidiaries – Federal Deposit Insurance" in "ITEM 1. BUSINESS" of this Annual Report on Form 10-K.

Changes in accounting standards, policies, estimates or procedures could impact our reported financial condition or results of operations.

The entities responsible for setting accounting standards, including the FASB, the SEC and other regulatory bodies, periodically change the financial accounting and reporting guidance that governs the preparation of our consolidated financial statements. Changes in accounting standards can be hard to predict and could materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply new or revised guidance retroactively, resulting in the restatement of prior period financial statements. The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make significant estimates that affect the financial statements. Due to the inherent nature of these estimates, actual results may vary materially from management’s estimates.

Additional information regarding Park’s critical accounting policies and the sensitivity of estimates can be found in our discussion of “CRITICAL ACCOUNTING POLICIES” in "ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" of this Annual Report on Form 10-K.

Our accounting estimates and risk management processes rely on analytical and forecasting models.

The processes we use to estimate our credit losses and to measure the fair value of financial instruments, as well as the processes used to estimate the effects of changing interest rates and other market measures on our financial condition and results of operations, depends upon the use of analytical and, in some cases, forecasting models. These models reflect assumptions that may not be accurate, particularly in times of market stress or other unforeseen circumstances. Even if these assumptions are adequate, the models may prove to be inadequate or inaccurate because of other flaws in their design or their implementation. If the models we use for interest rate risk and asset-liability management are inadequate, we may incur increased or unexpected losses upon changes in market interest rates or other market measures. If the model we use for determining our expected credit losses is inadequate, the allowance for credit losses may not be sufficient to support charge-offs. If the models we use to measure the fair value of financial instruments are inadequate, the fair value of such financial instruments may fluctuate unexpectedly or may not accurately reflect what we could realize upon sale or settlement of such financial instruments. Any such failure in our analytical or forecasting models could have a material adverse effect on our business, financial condition and results of operations.

Strategic Risks

Future expansion may adversely affect our financial condition and results of operations as well as dilute the interests of our shareholders and negatively affect the price of our common shares.

We have completed various acquisitions of other financial institutions and branches and assets of other financial institutions in the past, including our recent acquisition of First Citizens and its banking subsidiary, First Citizens National Bank, on February 1, 2026. We may acquire other financial institutions, or branches or assets of other financial institutions, in the future. We may also open new branches and enter into new lines of business or offer new products or services. Any such expansion of our business will involve a number of expenses and risks, which may include:

• the time and expense associated with identifying and evaluating potential expansions;

• the potential inaccuracy of estimates and judgments used to evaluate credit, operations, management and market risk with respect to target financial institutions;

• potential exposure to unknown or contingent liabilities of the target financial institution;

• exposure to potential asset quality issues of the target financial institution;

• the time and costs of evaluating new markets, hiring local management and opening new offices, and the delay between commencing these activities and the generation of profits from the expansion;

• our financing of the expansion;

• the diversion of management’s attention to the negotiation of a transaction and the integration of the operations and personnel of the combining businesses;

• risks associated with entry into unfamiliar markets;

• the introduction of new products and services into our existing business;

• the incurrence and possible impairment of goodwill associated with an acquisition and possible adverse short-term effects on our results of operations;

• the risk of loss of key employees and customers;

• the risk associated with differing company cultures; and

• difficulty in receiving appropriate regulatory approval for any proposed transaction.

We may incur substantial costs to expand, and such expansion may not result in the levels of profits we expect. Integration efforts for any future acquisitions may not be successful. We may issue equity securities in connection with acquisitions, which could dilute the economic and voting interests of our existing shareholders.

Any merger or acquisition opportunity that we decide to pursue will ultimately be subject to regulatory approval or other closing conditions. We may expend substantial time and resources pursing potential acquisitions which may not be consummated because regulatory approval or other closing conditions are not satisfied.

Combining Park and First Citizens may be more difficult, costly or time-consuming than expected, we may fail to realize the anticipated benefits and cost savings of the merger.

The success of the merger with First Citizens will depend, in part, on our ability to realize the anticipated cost savings from combining the businesses of Park and First Citizens. To realize the anticipated benefits and cost savings from the merger, we must successfully integrate and combine their businesses in a manner that permits those cost savings to be realized. If we are not able to successfully achieve these objectives, the anticipated benefits of the merger may not be realized fully or at all, or may take longer to realize than expected. In addition, the actual cost savings and anticipated benefits of the merger could be less than anticipated, and integration may result in additional unforeseen expenses.

It is possible that the integration process could result in the loss of key employees, the disruption of our ongoing business or inconsistencies in standards, controls, procedures and policies that adversely affect the companies’ ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits and cost savings of the merger. Integration efforts may also divert management attention and resources. These integration matters could have an adverse effect on us during this transition period and for an undetermined period after the merger’s completion.

Changes in retail distribution strategies and consumer behavior may adversely impact our investments in our financial service office premises and equipment and other assets and may lead to increased expenditures to change our retail distribution channel.

We have significant investments in financial service office premises and equipment for our financial service office network, including, as of December 31, 2025, 87 financial service offices as well as our retail work force and other financial service office banking assets. Advances in technology such as e-commerce, telephone, internet and mobile banking, and in-branch self-service technologies including automatic teller machines and other equipment, as well as changing customer preferences for these other methods of accessing our products and services, could affect the value of our financial service office network or other retail distribution assets and may cause us to change our retail distribution strategy, close and/or sell certain financial service offices and restructure or reduce our remaining financial service offices and work force. Further advances in technology and/or changes in customer preferences including those related to social media, digital or cryptocurrency, blockchain, and other “fintech” technologies could result in additional changes in our retail distribution strategy and/or financial service office network. These actions could lead to losses on these assets or could adversely impact the carrying value of other long-lived assets and may lead to increased expenditures to renovate and reconfigure remaining financial service offices or to otherwise reform our retail distribution channel.

General Risk Factors

If our total consolidated assets exceed $10.0 billion, we will become subject to additional regulations.

As of December 31, 2025, Park had total consolidated assets of $9.8 billion. With the February 1, 2026 acquisition of First Citizens, Park expects that the total consolidated assets of Park will exceed $10.0 billion at December 31, 2026, subjecting Park and Park National Bank to heightened regulatory requirements stemming largely from the Dodd-Frank Act. These requirements include, but are not limited to, the following: (i) supervision, examination and enforcement by the CFPB with respect to federal consumer financial protection laws; (ii) a modified methodology and scorecard for calculating FDIC insurance assessments and, depending on the result of Park National Bank’s performance under the scorecard, potentially higher assessment rates; (iii) limitations on interchange transaction fees for debit card transactions; (iv) heightened compliance standards under the Volcker Rule; (v) enhanced supervision by the OCC and the Federal Reserve Board; and (vi) no longer being eligible to elect to be subject to the CBLR. The imposition of these regulatory requirements and increased supervision, may require the additional commitment of financial resources to regulatory compliance and may increase Park National Bank’s cost of operations and provide greater limitations on the products and services that can be offered.

Compliance with these additional ongoing requirements may necessitate additional personnel, the design and implementation of additional internal controls, or the incurrence of other significant expenses, any of which could have a significant adverse effect on our business, financial condition, or results of operations. Our regulators may also consider our preparation for compliance with these regulatory requirements in the course of examining our operations generally or when considering any request from us or Park National Bank.

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

We may be involved from time to time in a variety of litigation arising out of our business. The risk of litigation increases in times of increased troubled loan collection activity. Our insurance may not cover all claims that may be asserted against us, and any claims asserted against us, regardless of merit or eventual outcome, may harm our reputation. Should the ultimate judgments or settlements in any litigation exceed our insurance coverage, they could have a material adverse effect on our financial condition, results of operations and cash flows. In addition, we may not be able to obtain appropriate types or levels of insurance in the future or obtain adequate replacement policies with acceptable terms.

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

Many financial institutions and their related operations are closely intertwined, and the soundness of such financial institutions may, to some degree, be interdependent. As a result, concerns about, or a default or threatened default by, one financial institution could lead to significant market-wide liquidity and credit problems and/or losses or defaults by other financial institutions. This “systemic risk” may adversely affect our business.

We are at risk of increased losses from fraud.

Criminals are committing fraud at an increasing rate and are using more sophisticated techniques. In some cases, these individuals are part of larger criminal rings, which allow them to be more effective. Such fraudulent activity has taken many forms, ranging from wire fraud, debit card fraud, check fraud, mechanical devices attached to ATM machines, social engineering and phishing attacks to obtain personal information, or impersonation of clients through the use of falsified or stolen credentials. Additionally, an individual or business entity may properly identify itself, yet seek to establish a business relationship for the purpose of perpetrating fraud. An emerging type of fraud even involves the creation of synthetic identification in which fraudsters "create" individuals for the purpose of perpetrating fraud. In addition to fraud committed directly against us, we may suffer losses as a result of fraudulent activity committed against third parties. Increased deployment of technologies, such as chip card technology, defray and reduce certain aspects of fraud; however, criminals are turning to other sources to steal personally identifiable information, such as unaffiliated healthcare providers and government entities, in order to impersonate consumers and thereby commit fraud.

Changes in tax laws could adversely affect our performance.

We are subject to extensive federal, state and local taxes, including income, excise, sales/use, payroll, franchise, withholding and ad valorem taxes. Changes to our taxes could have a material adverse effect on our results of operations, fair values of net deferred tax assets and obligations of states and political subdivisions held in our investment securities portfolio. In addition, our customers are subject to a wide variety of federal, state and local taxes. Changes in taxes paid by our customers may adversely affect their ability to purchase homes or consumer products, which could adversely affect their demand for our loans and deposit products. In addition, such negative effects on our customers could result in defaults on the loans we have made and decrease the value of mortgage-backed securities in which we have invested.

Adverse changes in the financial markets may adversely impact our results of operations.

While we generally invest in securities issued by U.S. government agencies and sponsored entities and domestic state and local governments with limited credit risk, certain investment securities we hold possess higher credit risk since they represent beneficial interests in structured investments collateralized by residential mortgages, debt obligations and other similar asset-backed assets. Even securities issued by U.S. governmental agencies and sponsored entities may entail risk depending on political and economic changes. Regardless of the level of credit risk, all investment securities are subject to changes in market value due to changing interest rates, implied credit spreads and credit ratings.

Park National Bank is subject to additional requirements and restrictions imposed by the U.S. Department of Justice (the “DOJ”) in the DOJ Consent Order approved by the U.S. District Court for the Southern District of Ohio, Eastern Division.

Park National Bank (“Park”) is subject to a Consent Order with the U.S. Department of Justice (“DOJ”), approved on March 2, 2023, by the U.S. District Court for the Southern District of Ohio. This Consent Order resolved allegations regarding Park’s mortgage lending practices within the Columbus, Ohio Metropolitan Statistical Area ("Columbus Lending Area"). Park is in full compliance with all obligations to date and intends to fully comply with the remaining terms of the Consent Order through its expiration in 2028.

Under the terms of the Consent Order, Park committed to the following over a five-year period: an investment of at least $7.75 million to increase credit opportunities in majority-black and Hispanic census tracts within the Columbus Lending Area; a minimum of $500,000 for community development partnerships and $750,000 for advertising and consumer education; and to maintain one new full-service branch, one mortgage loan production office, and four specialized mortgage lenders focused on community lending.

While Park remains on track to meet these requirements, ongoing compliance requires management attention and the allocation of resources, which may impact financial performance or necessitate changes to business operations and risk management practices.

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

NON-U.S. GAAP FINANCIAL MEASURES

Management's discussion and analysis contains non-U.S. GAAP financial measures where management believes it to be helpful in understanding Park’s results of operations or financial position. Where non-U.S. GAAP financial measures are used, the comparable U.S. GAAP financial measures, as well as the reconciliation from the comparable U.S. GAAP financial measures, can be found herein.

Items Impacting Comparability of Period Results

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

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

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

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

Non-U.S. GAAP Financial Measures

Park's management uses certain non-U.S. GAAP financial measures to evaluate Park's performance. Specifically, management reviews the return on average tangible equity, the return on average tangible assets, the tangible equity to tangible assets ratio, and pre-tax, pre-provision net income ("PTPP").

Management has included in this Management's Discussion and Analysis of Financial Condition and Results of Operation, information relating to the return on average tangible equity, the return on average tangible assets, the tangible equity to tangible assets ratio, and pre-tax, pre-provision net income for the years ended December 31, 2025, December 31, 2024, and December 31, 2023. For the purpose of calculating the return on average tangible equity, a non-U.S. GAAP financial measure, net income for each period is divided by average tangible equity during the period. Average tangible equity equals average shareholders' equity during the applicable period less average goodwill and other intangible assets during the applicable period. For the purpose of calculating the return on average tangible assets, a non-U.S. GAAP financial measure, net income for each period is divided by average tangible assets during the period. Average tangible assets equals average assets during the applicable period less average goodwill and other intangible assets during the applicable period. For the purpose of calculating the tangible equity to tangible assets ratio, a non-U.S. GAAP financial measure, tangible equity is divided by tangible assets. Tangible equity equals total shareholders' equity less goodwill and other intangible assets, in each case at period end. Tangible assets equal total assets less goodwill and other intangible assets, in each case at period end. For the purpose of calculating pre-tax, pre-provision net income, a non-U.S. GAAP financial measure, income taxes and the provision for credit losses are added back to net income, in each case during the applicable period.

Management believes that the disclosure of the return on average tangible equity, the return on average tangible assets, the tangible equity to tangible assets ratio, and pre-tax, pre-provision net income presents additional information to the reader of the consolidated financial statements, which, when read in conjunction with the consolidated financial statements prepared in accordance with U.S. GAAP, assists in analyzing Park's operating performance, ensures comparability of operating performance from period to period, and facilitates comparisons with the performance of Park's peer financial holding

companies and bank holding companies, while eliminating certain non-operational effects of acquisitions. In the tables included within the "ANALYSIS OF EARNINGS - Items Impacting Comparability" section of this Management's Discussion and Analysis of Financial Condition and Results of Operations, Park has provided a reconciliation of average tangible equity from average shareholders' equity, average tangible assets from average assets, tangible equity from total shareholders' equity, tangible assets from total assets, and pre-tax, pre-provision net income from net income solely for the purpose of complying with SEC Regulation G and not as an indication that the return on average tangible equity, the return on average tangible assets, the tangible equity to tangible assets ratio, and pre-tax, pre-provision net income are substitutes for the return on average equity, the return on average assets, the total shareholders' equity to total assets ratio, and net income, respectively, as determined in accordance with U.S. GAAP

FTE (fully taxable equivalent) Financial Measures

Interest income, yields, and ratios on a FTE basis are considered non-U.S. GAAP financial measures. Management believes net interest income on a FTE basis provides an insightful picture of the interest margin for comparison purposes. The FTE basis also allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The FTE basis assumes a corporate federal statutory tax rate of 21%. In the tables included within the "ANALYSIS OF EARNINGS - Net Interest Income" section of this Management's Discussion and Analysis of Financial Condition and Results of Operations, Park has provided detail of FTE interest income solely for the purpose of complying with SEC Regulation G and not as an indication that FTE interest income, yields and ratios are substitutes for interest income, yields and ratios, as determined in accordance with U.S. GAAP.

OVERVIEW

The table below reflects Park's net income for the years ended December 31, 2025, 2024 and 2023.

Table 1 - Summary Income Statement

(In thousands)

Net interest income

Provision for credit losses

Other income

Other expense

Income before income taxes

Income tax expense

Net income

Pre-tax, pre-provision net income (1)

(1) PTPP net income is calculated as net income, plus income taxes, plus the provision for credit losses, in each case during the applicable period.

Net income for the year ended December 31, 2025 of $180.1 million represented a $28.7 million, or 18.9% increase compared to $151.4 million for the year ended December 31, 2024. Net income for the year ended December 31, 2024 of $151.4 million represented a $24.7 million, or 19.5%, increase compared to $126.7 million for the year ended December 31, 2023.

Pre-tax, pre-provision net income (non-U.S. GAAP) for the year ended December 31, 2025 of $232.8 million represented a $33.5 million, or 16.8%, increase compared to $199.3 million for the year ended December 31, 2024. Pre-tax, pre-provision net income (non-U.S. GAAP) for the year ended December 31, 2024 of $199.3 million represented a $42.8 million, or 27.3%, increase compared to $156.5 million for the year ended December 31, 2023.

Net income for each of the years ended December 31, 2025, 2024 and 2023, included several items of income and expense that impacted comparability of period results. These items are detailed in the "ANALYSIS OF EARNINGS - Items Impacting Comparability" section of this Management's Discussion and Analysis of Financial Condition and Results of Operations.

DIVIDENDS ON COMMON SHARES

Cash dividends declared on Park's common shares were $5.53 in 2025, $4.74 in 2024 and $4.20 in 2023. Dividends declared as a percentage of net income was 50%, 51% and 54% for 2025, 2024 and 2023, respectively. Park has historically targeted a dividend payout ratio of 50% each year.

The quarterly cash dividend on Park's common shares was $1.07 per share for the first, second, third and fourth quarters of 2025. Additionally, in the fourth quarter of 2025 there was a special cash dividend of $1.25 per share. The quarterly cash dividend on Park's common shares was $1.06 per share for the first, second, third, and fourth quarters of 2024. Additionally, in fourth quarter of 2024 there was a special cash dividend of $0.50 per share. The quarterly cash dividend on Park's common shares was $1.05 per share for each of the quarters of 2023 and there was no special dividend in 2023.

Please see the discussion of limitations on Park's ability to pay dividends in the section captioned "Supervision and Regulation of Park and its Subsidiaries – Limits on Dividends and Other Payments" in "ITEM 1. BUSINESS" of this Annual Report on Form 10-K.

CRITICAL ACCOUNTING ESTIMATES

The significant accounting estimates used in the development and presentation of Park’s consolidated financial statements are listed in "Note 1 - Summary of Significant Accounting Policies" of the Notes to Consolidated Financial Statements included in "ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA."  The accounting and reporting estimates of Park conform with U.S. GAAP and general practices within the financial services industry.  The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes.  Actual results could differ from those estimates.

Allowance for Credit Losses: Park believes the determination of the allowance for credit losses involves a higher degree of judgment and complexity than its other significant accounting policies. The allowance for credit losses is calculated with the objective of maintaining a reserve level believed by management to be sufficient to absorb estimated credit losses over the life of an asset or an off-balance sheet credit exposure. Management’s determination of the adequacy of the allowance for credit losses is based on periodic evaluations of past events, including historical credit loss experience on financial assets with similar risk characteristics, current conditions, and reasonable and supportable forecasts that affect the collectability of the remaining cash flows over the contractual term of the financial assets. However, this evaluation has subjective components requiring material estimates, including expected default probabilities, the expected loss given default, the amounts and timing of expected future cash flows on individually evaluated loans, and estimated losses based on historical loss experience and forecasted economic conditions. All of these factors may be susceptible to significant change. To the extent that actual results differ from management estimates, additional provisions for credit losses may be required that would adversely impact earnings in future periods.

One of the significant judgments impacting the ACL estimate is the economic forecasts for Ohio unemployment, Ohio GDP, and Ohio HPI. These economic forecasts inform the regression model used to calculate cash flows during the reasonable and supportable forecast period. Additionally, multiple economic forecast scenarios are weighted to arrive at the quantitative reserve. Changes in the economic forecast or weighting could significantly affect the estimated credit losses which could potentially lead to materially different allowance levels from one reporting period to the next.

As noted above, in calculating the ACL, management weighs different scenarios, including a baseline (most likely) scenario and an adverse scenario. At December 31, 2025, management applied a 50% weighting to the baseline scenario and applied a 50% weighting to the adverse scenario. To create hypothetical sensitivity analyses, management calculated a quantitative allowance using a 100% weighting applied to a baseline scenario and a quantitative allowance using a 100% weighting applied to an adverse scenario. The adverse scenario assumes among other things that: (1) Worries that the Israel-Hamas conflict will widen and Russia’s invasion of the Ukraine will persist longer than expected. Risk grows that China may block the Taiwan Strait, causing business and consumer confidence to decline. Retaliatory tariffs reduce US exports and lead to a global downturn. (2) The combination of a recession and rising inflation causes the Federal Reserve to lower federal funds rates in Q1 2026 but only slightly below baseline for a couple of quarters. As a recession persists and inflation subsides, the Federal Reserve subsequently reduces the federal funds rate more significantly. (3) Europe goes into a recession as increased tariffs lower exports. Populism in Europe rises, raising uncertainties about longevity of the Euro zone and causes financial stress to highly indebted nations, especially Italy. These developments further lower US exports and corporate earnings of foreign subsidiaries of US companies. (4) Impacts of tariffs and deportations are significantly worse than expected. Tariff rate rises from about 19% and it remains there through the end of 2028. Retaliatory tariffs reduce US exports and lead to global turndown. Tax revenues are lower than in the baseline creating a higher deficit and concerns about national debt level raise uncertainty about the course of tax policy. Full extensions of the Tax Cuts and Jobs Act personal provisions are passed as well as increased state/local tax deductions, certain business tax provisions, and other tax credits/deductions do not expire. Growth in Medicaid funding is reduced and foreign aid funding remains capped. Defense and immigration spending will continue to rise. (5) Recession Q1 2026 and lasts through Q3 2026 and real GDP declines by 2.6%. Unemployment rate rises to a peak of 8.4% Q1 2027. Stock market falls 35% from Q1 2026 to Q3 2026. Excluding consideration of qualitative adjustments, this sensitivity analysis would result in a hypothetical increase in Park's ACL of $30.0 million as of December 31, 2025 if only the

adverse scenario was used. Excluding consideration of qualitative adjustments, a corresponding $30.0 million decrease in Park's ACL would occur in a hypothetical scenario if only the baseline (most likely) scenario was used.

Refer to the “CREDIT METRICS AND PROVISION FOR CREDIT LOSSES” section within this "ITEM 7: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" for additional discussion.

Pension Plan: The determination of pension plan obligations and related expenses requires the use of assumptions to estimate the amount of benefits that employees will earn while working, as well as the present value of those benefits. Annual pension income/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. During the year ended December 31, 2024, Park exceeded the pension settlement threshold established in ASC 715-30 and recognized in income a pro-rata portion of the unamortized gain in accumulated other comprehensive loss (pension settlement gain).

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 pension plan; and

• the rate of salary increases where benefits are based on earnings.

The most significant of these assumptions is the discount rate and the expected return on assets. The discount rate utilized for the December 31, 2025 calculation was 5.95% and the expected return on plan assets was 6.92%. This compares to the discount rate utilized for the December 31, 2024 calculation of 5.89% and the expected return on plan assets of 6.92%. Presented below is the estimated impact on Park's projected benefit obligation ("PBO") and 2025 pension expense assuming changes in the significant assumptions.

Table 2 - Pension Sensitivity

Discount Rate

Expected Return on Plan Assets

(In thousands)

- 25 BPS

+25 BPS

- 50 BPS

+50 BPS

Change in PBO

Change in Pension Expense

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 income/expense and obligation.

ABOUT OUR BUSINESS

Through our national bank subsidiary, PNB, Park is engaged in a general commercial banking and trust and wealth management business, primarily in Ohio, Kentucky, North Carolina, South Carolina, and, as of February 1, 2026, Tennessee, with the exception of nationwide aircraft loans and nationwide asset-based lending to consumer finance companies. Management believes there are a significant number of consumers and businesses that 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, 2025, Park operated 87 financial service offices (including those of PNB and Scope Leasing, Inc. ("Scope Aircraft Finance")) and a network of 107 automated teller machines in 24 Ohio counties, five North Carolina counties, four South Carolina counties and one Kentucky county. SEPH operated one administrative office, located in Newark, Ohio.

SOURCE OF FUNDS

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

Average total deposits were $8,462 million in 2025, compared to $8,260 million in 2024 and compared to $8,360 million in 2023. The average interest rate paid on interest bearing deposits was 1.71% in 2025, 1.97% in 2024 and 1.52% in 2023. The average cost of interest bearing deposits for each quarter of 2025 was 1.61% for the fourth quarter, 1.74% for the third quarter, 1.73% for the second quarter and 1.76% for the first quarter.

The table below provides a summary of deposit balances as of December 31, 2025 and 2024, along with the change over the past year.

Table 3 - Year-End Deposits

December 31 (In thousands)

Change

Non-interest bearing checking

Interest bearing transaction accounts

Savings

Time deposits

Brokered deposits and Bid Ohio CDs

Total

Off balance sheet deposits

Total deposits including off balance sheet deposits

During the years ended December 31, 2025 and 2024, Park decided to continue participation in a program to transfer deposits off-balance sheet in order to manage growth of the balance sheet. Park is able to increase or decrease the amount of deposit balances transferred off balance sheet based on its balance sheet management strategies and liquidity needs. At December 31, 2025 and December 31, 2024, Park had $105.3 million and $115.2 million, respectively, in off balance sheet deposits.

The table below breaks out the change in deposit balances, by deposit type, for Park.

Table 4 - Retail and Commercial Deposits

December 31 (In thousands)

Retail deposits

Commercial deposits

Brokered and bid CD deposits

Total deposits

Off balance sheet deposits

Total deposits including off balance sheet deposits

$ change from prior period end

% change from prior period end

Noninterest bearing deposits to total deposits

During the year ended December 31, 2025, total deposits including off balance sheet deposits increased by $90.3 million, or 1.1%. This increase consisted of a $213.2 million increase in total commercial deposits and a $46.5 million increase in retail deposits, partially offset by a $159.5 million decrease in brokered and bid CD deposits and a $9.9 million decrease in off balance sheet deposits. The majority of off balance sheet deposits are commercial and thus impact the change in commercial deposits as the deposits are moved on or off the balance sheet.

Included in the total commercial deposits and off balance sheet deposits shown in the previous table are public fund deposits. These balances fluctuate based on seasonality and the cycle of collection and remittance of tax funds. Public funds include Bid

Ohio CDs. The following table details the change in public fund deposits held on and off Park's balance sheet.

Table 5 - Public Fund Deposits

(Dollars in thousands)

Public funds included in commercial deposits

Bid Ohio CDs

Total public fund deposits

$ change from prior period end

% change from prior period end

Cost of public fund deposits

Cost of total interest bearing deposits

As of December 31, 2025, Park had approximately $1.5 billion of uninsured deposits, which was 18.5% of total deposits. Uninsured deposits of $1.5 billion included $382.6 million of deposits that were over $250,000, but were fully collateralized by Park's investment securities portfolio. As of December 31, 2024, Park had approximately $1.4 billion of uninsured deposits, which was 17.6% of total deposits. Uninsured deposits of $1.4 billion included $395.4 million of deposits that were over $250,000, but were fully collateralized by Park's investment securities portfolio. The uninsured amounts, those in excess of the $250,000 FDIC insurance limit, are estimates based on the methodologies used for the Corporation's regulatory reporting requirements.

The following table provides a summary of the portion of the Corporation's time deposits, by account, that are in excess of the FDIC insurance limit of $250,000, by remaining time until maturity, as of December 31, 2025:

Table 6 - Maturities of Time Deposits in Excess of FDIC Insurance Limit

December 31 (In thousands)

3 months or less

Over 3 months through 6 months

Over 6 months through 12 months

Over 12 months

Total

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 1.45% in 2025, compared to 2.60% in 2024 and 2.58% in 2023. The year-end balance for short-term borrowings was $82 million at December 31, 2025, compared to $90 million at December 31, 2024 and $328 million at December 31, 2023.

Subordinated Notes: Park assumed, with the 2007 acquisition of Vision Bank'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 subordinated notes adjusted every quarter at 174 basis points above the three-month CME Term SOFR.  The maturity date for the junior subordinated notes was December 30, 2035, and, since December 30, 2010, Park has had the right to prepay the junior subordinated notes, without penalty. On September 30, 2025, Park redeemed in full, $15.0 million in Trust Preferred Securities at a redemption price in cash equal to 100% of the principal amount of the Trust Preferred Securities, plus accrued and unpaid interest.

On August 20, 2020, Park completed the issuance and sale of $175 million aggregate principal amount of its 4.50% Fixed-to-Floating Rate Subordinated Notes due 2030 (the "Subordinated Notes"). Beginning on September 1, 2025, Park had the right to redeem the Subordinated Notes, in whole or in part. On September 1, 2025, Park redeemed in full, $175 million outstanding of the Subordinated Notes at a redemption price in cash equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest.

The repayments were made using available cash on hand and did not involve any refinancing or issuance of new debt.

As of December 31, 2025, Park has no subordinated debt outstanding. At December 31, 2024, the Subordinated Notes, net of unamortized issuance costs, totaled $189.7 million and qualified as Tier 2 capital for Park under the Federal Reserve Board capital adequacy rules.

In 2025, the average balance of subordinated notes was $128 million, compared to $189 million in 2024 and $189 million in 2023. The average interest rate paid on subordinated notes was 4.91% in 2025, compared to 4.98% in 2024 and 4.97% in 2023.

See "Note 17 - Subordinated Notes" of the Notes to Consolidated Financial Statements included in "ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA" of this Annual Report on Form 10-K for additional information about the Subordinated Notes.

Total Debt: Average total debt (subordinated notes and short-term) was $208 million in 2025, compared to $310 million in 2024 and $372 million in 2023. Average total debt decreased by $101.6 million, or 32.8% in 2025 compared to 2024 and decreased $62.0 million, or 16.7% in 2024 compared to 2023. Average long term subordinated notes were 61% of average total debt in 2025, compared to 61% of average total debt in 2024 and 51% of average total debt in 2023.

Shareholders' Equity: The ratio of total shareholders' equity to total assets was 13.80% at December 31, 2025, compared to 12.69% at December 31, 2024 and 11.64% at December 31, 2023. The non-GAAP ratio of tangible shareholders’ equity [shareholders' equity ($1,352.8 million) less goodwill ($159.6 million) and other intangible assets ($2.4 million)] to tangible assets [total assets ($9,805.0 million) less goodwill ($159.6 million) and other intangible assets ($2.4 million)] was 12.35% at December 31, 2025, compared to 11.21% at December 31, 2024 and 10.14% at December 31, 2023.

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

The unrealized net holding loss, net of income taxes, on AFS debt securities was $32.3 million at year-end 2025, compared to an unrealized net holding loss, net of income taxes, of $62.9 million at year-end 2024 and an unrealized net holding loss, net of income taxes, $67.9 million at year-end 2023. The unrealized net holding loss on AFS debt securities at December 31, 2025 was impacted by the realization of $1.8 million in losses, net of income taxes, during the year ended December 31, 2025 as the result of the sale of $79.1 million in AFS debt securities. The unrealized net holding loss on AFS debt securities at December 31, 2024 was impacted by the realization of $415,000 in losses, net of income taxes, during the year ended December 31, 2024 as the result of the sale of $44.6 million in AFS debt securities. The unrealized net holding loss on AFS debt securities at December 31, 2023 was impacted by the realization of $6.2 million in losses, net of income taxes, during the year ended December 31, 2023 as the result of the sale of $291.0 million in AFS debt securities.

In accordance with U.S. GAAP, Park adjusts accumulated other comprehensive (loss) income to recognize the net actuarial gain or loss and prior service cost reflected in the funding status of Park’s pension plan.  See "Note 20 - Benefit Plans" of the Notes to Consolidated Financial Statements included in "ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA" of this Annual Report on Form 10-K for additional information on the accounting for Park’s pension plan. At year-end 2025, the balance in accumulated other comprehensive loss pertaining to the pension plan was unrealized income of $19.6 million, compared to unrealized income of $16.8 million at December 31, 2024 and compared to unrealized income of $1.7 million at December 31, 2023.

The net other comprehensive income in 2025 was largely due to a $3.6 million ($2.8 million, net of taxes) net actuarial gain. The gain was due to asset returns greater than expected and an increase in the discount rate, partially offset by assumption updates fo r a change in the mortality table for lump sum distributions, reflecting updates for the 2025 assumption study, demographic losses and an increase in the interest credit rate.

The net other comprehensive income in 2024 was largely due to a $25.2 million ($19.9 million, net of taxes) net unrealized actuarial gain, partially offset by a $6.1 million ($4.9 million, net of taxes) realized pension settlement gain. The unrealized gain was due to asset returns greater than expected, an increase in the discount rate and assumption updates fo r a change in the mortality table for lump sum distributions, reflecting updates for the 2024 assumption study, partially offset by demographic losses and an increase in the interest credit rate. The realized pension settlement gain was recognized as a result of a combination of lump sum payouts as well as the purchase of a nonparticipating annuity contract which will provide ongoing benefits to vested participants.

The net other comprehensive income in 2023 was largely due to a $10.5 million ($8.3 million, net of taxes) net actuarial gain. The gain was due to asset returns greater than expected, partially offset by the impact of demographic losses driven by salary increases greater than assumed and a decrease in the discount rate.

INVESTMENT OF FUNDS

Loans:   Average loans were $7,924 million in 2025, compared to $7,627 million in 2024 and $7,222 million in 2023. The average yield on loans was 6.33% in 2025, compared to 6.14% in 2024 and 5.55% in 2023. Approximately 46% of Park’s loan balances mature or reprice within one year (see Table 32).  The average yield on loans for each quarter of 2025 was 6.34% for the fourth quarter, 6.34% for the third quarter, 6.37% for the second quarter and 6.26% for the first quarter.

Loan interest income for 2025, 2024, and 2023 included $2.0 million, $54,000 and $631,000, respectively, related to payments received on certain SEPH nonaccrual loan relationships, some of which are participated with PNB. In addition, loan interest income included $668,000, $1.2 million and $633,000, respectively, of the accretion of loan purchase accounting adjustments related to the acquisitions of NewDominion and Carolina Alliance. Loan interest income for 2023 included interest and fee income related to PPP loans of $69,000.

Excluding the impact of the purchase accounting accretion, SEPH income, and PPP income, the average yield on loans was 6.29%, 6.13% and 5.53%, for the years ended December 31, 2025, 2024, and 2023. Excluding the impact of the purchase accounting accretion, SEPH income, and PPP income, the average yield on loans was 6.33% for the fourth quarter of 2025, 6.33% for the third quarter of 2025, 6.32% for the second quarter of 2025, and 6.21% for the first quarter of 2025.

At December 31, 2025, loan balances were $8,051 million compared to $7,817 million at year-end 2024, an increase of $234 million, or 3.0%. At December 31, 2024, loan balances were $7,817 million, compared to $7,476 million at year-end 2023, an increase of $341 million, or 4.6%.

The table below reports year-end loan balances by type of loan for the past three years.

Table 7  -  Loans by Type

December 31 (In thousands)

Commercial, financial and agricultural

Construction real estate

Residential real estate

Commercial real estate

Consumer

Leases

Total loans

On a combined basis, year-end commercial, financial and agricultural loans, construction real estate loans and commercial real estate loans increased by $143.7 million, or 3.9%, in 2025. The increase in 2025 was due to an increase in commercial real estate loans of $214.3 million, which were partially offset by an decrease in commercial, financial and agricultural loans of $57.4 million and a decrease in construction real estate loans of $13.2 million. On a combined basis, year-end commercial, financial and agricultural loans, construction real estate loans and commercial real estate loans increased by $199.8 million, or 5.7%, in 2024. The increase in 2024 was due to an increase in commercial real estate loans of $118.3 million and an increase in construction real estate loans of $107.5 million, which were partially offset by a decrease in commercial, financial and agricultural loans of $26.1 million.

Consumer loans decreased by $87.1 million, or 4.6% in 2025 and decreased by $35.6 million, or 1.8% in 2024. The change in consumer loans in 2025 and 2024 was primarily due to decreases in automobile lending in Ohio due to strategic balance sheet management.

Residential real estate loans increased by $174.9 million, or 8.0% in 2025 and increased by $170.9 million, or 8.4% in 2024. The increase in 2025 was due to an increase in commercial loans secured by residential real estate of $108.3 million, an increase in home equity loans secured by residential real estate of $37.6 million and an increase in mortgage loans secured by residential real estate of $29.1 million. The increase in 2024 was due to an increase in mortgage loans secured by residential

real estate of $106.7 million, an increase in commercial loans secured by residential real estate of $35.0 million and an increase in home equity loans secured by residential real estate of $29.1 million.

Leases increased by $2.5 million to $32.4 million in 2025 and increased by $5.8 million to $29.8 million in 2024.

The table below summarizes the distribution of maturities for loan segments as of December 31, 2025:

Table 8 - Loan Maturity Distribution

One Year or Less (1)

Over One Through Five Years

Over Five Through Fifteen Years

Over

Fifteen

Years

Total

December 31, 2025

(In thousands)

Commercial, financial and agricultural

Construction real estate

Residential real estate

Commercial real estate

Consumer

Leases

Total loans and leases

(1) Nonaccrual loans of $66.5 million   are included within the one year or less classification above.

The table below summarizes the composition of the loan portfolio by fixed and adjustable rate as of December 31, 2025 that are contractually due after December 31, 2026:

Table 9 - Amounts Due After One Year

(In thousands)

Fixed

Adjustable

Total

Commercial, financial and agricultural

Construction real estate

Residential real estate

Commercial real estate

Consumer

Leases

Total loans and leases

Investment Securities: Park’s investment securities portfolio is structured to minimize credit risk, provide liquidity and contribute to earnings. As conditions change over time, Park’s overall interest rate risk, liquidity needs and potential return on the investment portfolio will change.  Management regularly evaluates the securities in the investment portfolio as circumstances evolve.  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 net interest margin.

AFS debt securities are carried on the books at their estimated fair value with the unrealized holding gain or loss, net of income taxes, accounted for as accumulated other comprehensive (loss) income. The debt securities that are classified as AFS are free to be sold in future periods in carrying out Park’s investment strategies.

Beginning in 2021, Park began investing in the AAA and AA rated tranches of Collateralized Loan Obligations ("CLOs"). CLOs had a fair value as of December 31, 2025 of $56.1 million. Management closely monitors the credit status of these securities. At December 31, 2025, the market value of overcollateralization was greater than 125% for each CLO. The market value of overcollateralization is a measure of the underlying collateral value of the instrument relative to our specific tranche position, and our AAA or AA rated senior tranches are supported by subordinate tranches.

Average taxable debt investment securities were $785 million in 2025, compared to $1,082 million in 2024 and $1,387 million in 2023. The average yield on taxable debt investment securities was 3.02% in 2025 compared to 3.86% in 2024 and 3.81% in 2023. Average tax-exempt debt investment securities were $218 million in 2025 compared to $219 million in 2024 and $400 million in 2023. The average tax-equivalent yield on tax-exempt debt investment securities was 3.36% in 2025, compared to 3.19% in 2024 and 3.47% in 2023.

Total debt securities (at amortized cost) were $730 million at December 31, 2025, compared to $1,076 million at December 31, 2024 and $1,419 million at December 31, 2023. Management purchased debt securities totaling $88 million in 2025, $3 million in 2024 and $4 million in 2023. Proceeds from repayments, redemptions and maturities of debt securities were $355 million in 2025, $300 million in 2024 and $145 million in 2023.

During 2025, Park sold certain AFS debt securities with a book value of $79.1 million at a gross loss of $2.3 million. During 2024, Park sold certain AFS debt securities with a book value of $42.3 million at a gross loss of $553,000 and sold certain AFS debt securities with a book value of $2.3 million for a gross gain of $27,000. During 2023, Park sold certain AFS debt securities with a book value of $291.0 million at a gross loss of $7.9 million.

For the years ended December 31, 2025, 2024, and 2023, the average tax-equivalent yield on the total investment portfolio was 3.10%, 3.74% and 3.73%, respectively.  The weighted average remaining maturity of the total investment portfolio was 4.9 years at December 31, 2025, 4.7 years at December 31, 2024 and 4.8 years at December 31, 2023. Obligations of U.S. Government sponsored entities and U.S. Government sponsored entities' asset-backed securities were approximately 49.9% of the total investment portfolio at year-end 2025, 47.1% of the total investment portfolio at year-end 2024 and 44.4% of the total investment portfolio at year-end 2023.

Other investment securities (as shown on Park's Consolidated Balance Sheets) consist of restricted stock investments in the FHLB and the FRB and equity securities which include equity investments in other financial institutions and equity investments in limited partnerships which provide mezzanine funding.  Total other investment securities were $113 million at December 31, 2025, $104 million at December 31, 2024 and $96 million at December 31, 2023. There were $494,000 in FHLB stock purchases in 2025, $9.2 million in FHLB stock purchases in 2024 and $18.2 million in FHLB stock purchases in 2023. Proceeds from the redemption/repurchase of FHLB stock were $1.1 million in 2025, compared to $18.4 million in 2024, and $11.7 million in 2023. No shares of FRB stock were purchased or sold in any of the years ended December 31, 2025, 2024, or 2023. Management purchased equity securities totaling $5.8 million in 2025, $10.2 million in 2024 and $2.2 million in 2023. During the years ended December 31, 2025, 2024, and 2023, Park entered into partnership agreements with commitments totaling $157,000, $2.5 million and $2.7 million, respectively. Funding of limited partnerships totaled $8.1 million, $7.5 million and $5.6 million during the years ended December 31, 2025, 2024, and 2023, respectively.

"Gain on equity securities, net" on Park's Consolidated Statements of Income were $4.7 million, $3.1 million and $971,000 for the years ended December 31, 2025, 2024 and 2023, respectively. These gains on equity securities were made up of gains (losses) on equity investments carried at fair value or modified cost as well as gains (losses) on equity investments carried at modified cost and gains (losses) on partnership investments carried at NAV.

For the years ended December 31, 2025, 2024 and 2023, $3.5 million, $2.6 million and $600,000, respectively, of gains on equity investments carried at fair value or modified cost were recorded within "Gain on equity securities, net" on Park's Consolidated Statements of Income.

For the years ended December 31, 2025, 2024 and 2023, $1.2 million, $468,000 and $371,000, respectively, of gains on equity investments carried at NAV were recorded within "Gain on equity securities, net" on Park's Consolidated Statements of Income.

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 decrease and callable securities would price to their maturity dates.  At year-end 2025, management estimated that the average maturity of the investment portfolio would lengthen to 5.4 years with a 100 basis point increase in long-term interest rates and would lengthen to 5.7 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 and callable securities would price to their call dates. At year-end 2025, management estimated that the average maturity of the investment portfolio would decrease to 4.3 years with a 100 basis point decrease in long-term interest rates and to 4.2 years with a 200 basis point decrease in long-term interest rates.

The table below sets forth the carrying value of investment securities, as well as the percentage held within each category at year-end 2025, 2024 and 2023:

Table 10  -  Investment Securities

December 31 (In thousands)

Obligations of U.S. Government sponsored entities

Obligations of states and political subdivisions

U.S. Government sponsored entities' asset-backed securities

Collateralized loan obligations

Corporate debt securities

FHLB stock

FRB stock

Equities

Total

Investments by category as a percentage of total investment securities

Obligations of U.S. Government sponsored entities

Obligations of states and political subdivisions

U.S. Government sponsored entities' asset-backed securities

Collateralized loan obligations

Corporate debt securities

FHLB stock

FRB stock

Equities

Total

The carrying value of investments in debt securities at December 31, 2025, is shown in the following table by contractual maturity, except for asset-backed securities and collateralized loan obligations, which are shown as a single total, due to the unpredictability of the timing in principal repayments. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

Table 11 - Investment Maturity Distribution

One Year or under

Over One Through Five Years

Over Five Through Ten Years

Over

Ten

Years

Total

December 31, 2025

(In thousands)

Corporate debt securities

Obligations of states and political subdivisions

Total

U.S. Government sponsored entities' asset-backed securities

Collateralized loan obligations

ANALYSIS OF EARNINGS

Net Interest Income: 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 the table below 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.)

Table 12 - Distribution of Assets, Liabilities and Shareholders' Equity

December 31,

(In thousands)

Daily

Average

Interest

Average

Rate

Daily

Average

Interest

Average

Rate

Daily

Average

Interest

Average

Rate

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 credit 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

Brokered/bid CD deposits

Total interest bearing deposits

Repurchase agreements

Other short-term borrowings

Subordinated notes

Total interest bearing liabilities

Non-interest bearing liabilities:

Demand deposits

Other

Total non-interest bearing liabilities

Shareholders' equity

TOTAL

Tax equivalent net interest income

Net interest spread

Net yield on interest earning assets (net interest margin)

(1) Loan income includes net loan-related origination fee (expense) income, purchase accounting accretion and origination expense in the aggregate amount of $(11.1) million in 2025, $(11.6) million in 2024 and $(12.1) million in 2023.  Loan income also includes the effects of taxable equivalent adjustments

using a 21% federal corporate income tax rate in 2025, 2024 and 2023. The taxable equivalent adjustments were $1.1 million in 2025, $964,000 in 2024 and $811,000 in 2023.

(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 21% federal corporate income tax rate in 2025, 2024 and 2023. The taxable equivalent adjustments were $1.5 million in 2025, $1.5 million in 2024 and $2.9 million in 2023.

Average interest earning assets for 2025 increased $185 million, or 2.0% to $9,271 million, compared to $9,086 million for 2024. The increase was largely due to a $297 million increase in average loans and a $186 million increase in average money markets, partially offset by a $299 million decrease in average investment securities. Average interest earning assets for 2024 decreased $86 million, or 0.9% to $9,086 million, compared to $9,172 million for 2023. The average yield on interest earning assets increased by 12 basis points to 5.90% for 2025, compared to 5.78% for 2024 and 5.18% for 2023.

Loan interest income for 2025, 2024, and 2023 included $2.0 million, $54,000 and $631,000, respectively, related to payments received on certain SEPH nonaccrual loan relationships, some of which are participated with PNB. In addition, loan interest income included $668,000, $1.2 million and $633,000, respectively, of the accretion of loan purchase accounting adjustments related to the acquisitions of NewDominion and Carolina Alliance. Loan interest income for 2023 included interest and fee income related to PPP loans of $69,000. Excluding the impact of the purchase accounting accretion, SEPH income, and PPP income, the average yield on loans was 6.29%, 6.13% and 5.53%, for the years ended December 31, 2025, 2024, and 2023. Excluding the impact of the purchase accounting accretion, SEPH income, and PPP income, the average yield on earning assets was 5.87%, 5.77% and 5.17%, for the years ended December 31, 2025, 2024, and 2023, respectively, and the net interest margin was 4.72%, 4.39% and 4.09%, for the years ended December 31, 2025, 2024, and 2023, respectively.

Average interest bearing liabilities for 2025 increased by $36 million, or 0.6%, to $6,042 million, compared to $6,006 million for 2024. Average interest bearing liabilities for 2024 increased by $88 million, or 1.5%, to $6,006 million, compared to $5,918 million for 2023. The average cost of interest bearing liabilities decreased by 31 basis points to 1.77% for 2025, compared to 2.08% for 2024 and 1.67% for 2023.

The table below shows for the years ended December 31, 2025, 2024, and 2023, the average balance and tax equivalent yield by type of loan.

Table 13 - Average Loans and Tax Equivalent Yield

Year Ended December 31,

(Dollars in thousands)

Average

balance

Tax

equivalent

yield

Average

balance

Tax

equivalent

yield

Average

balance

Tax

equivalent

yield

Home equity

Installment loans

Real estate loans

Commercial loans (1)

Other

Total loans and leases before allowance for credit losses

(1) Commercial loan interest income includes the effects of taxable equivalent adjustments using a 21% federal corporate income tax rate in 2025, 2024 and 2023. The taxable equivalent adjustments were $1.1 million in 2025, $964,000 in 2024 and $811,000 in 2023.

Loan interest income for 2025, 2024 and 2023 included $2.0 million, $54,000 and $631,000, respectively, related to payments received on certain SEPH nonaccrual loan relationships, some of which are participated with PNB, as well as $668,000, $1.2 million and $633,000 of purchase accounting accretion for 2025, 2024 and 2023, respectively. Interest income for 2023 included interest and fee income related to PPP loans of $69,000. Below is a summary of the impact of these items on the tax equivalent yield of loans.

• The amount of interest related to purchase accounting accretion included in home equity loan interest income for 2025, 2024 and 2023 was $73,000, $184,000 and $79,000, respectively. Excluding the impact of these items, the average tax equivalent yield on home equity loans was 7.29%, 8.23% and 8.11%, respectively.

• The amount of interest related to purchase accounting accretion included in real estate loan interest income for 2024 and 2023 was $80,000 and $4,000, respectively. Excluding the impact of these items, the average tax equivalent yield on real estate loans was 5.07% and 4.38%, respectively. There was no purchase accounting accretion included in real estate loan interest income for 2025.

• The amount of interest related to PPP income, SEPH nonaccrual loan relationships and purchase accounting accretion included in commercial loan interest income for 2025, 2024 and 2023 was $2.0 million, $935,000 and $1.2 million, respectively. Excluding the impact of these items, the average tax equivalent yield on commercial loans was 6.23%, 6.23% and 5.80%, for 2025, 2024 and 2023, respectively.

• Excluding the impact of interest related to PPP income, SEPH nonaccrual loan relationships and purchase accounting accretion, the average tax equivalent yield on total loans and leases was 6.29%, 6.13% and 5.53%, for 2025, 2024 and 2023, respectively.

The table below shows for the years ended December 31, 2025, 2024, and 2023, the average balance and cost of funds by type of deposit.

Table 14 - Average Deposits and Cost of Funds

Year Ended December 31,

(Dollars in thousands)

Average

balance

Cost of funds

Average

balance

Cost of funds

Average

balance

Cost of funds

Transaction accounts

Savings deposits and clubs

Time deposits

Brokered/bid CD deposits

Total interest bearing deposits

The following table displays (for each quarter of 2025) the average balance of interest earning assets, the net interest income and the tax equivalent net interest income and net interest margin.

Table 15  - Quarterly Net Interest Margin

(In thousands)

Average Interest Earning Assets

Net Interest Income

Tax Equivalent Net Interest Income

Tax Equivalent Net Interest Margin

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

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 16 - Volume/Rate Variance Analysis

Change from 2024 to 2025

Change from 2023 to 2024

(In thousands)

Volume

Rate

Total

Volume

Rate

Total

Increase (decrease) in:

Interest income:

Total loans

Taxable investments

Tax-exempt investments

Money market instruments

Total interest income

Interest expense:

Transaction accounts

Savings accounts

Time deposits and brokered/bid CD deposits

Short-term borrowings

Subordinated notes

Total interest expense

Net variance

Other Income:   Other income was $119.9 million for 2025, compared to $122.6 million for 2024 and $92.6 million for 2023.

The following table displays total other income for Park in 2025, 2024 and 2023.

Table 17 - Other Income

Year Ended December 31,

(In thousands)

Income from fiduciary activities

Service charges on deposit accounts

Other service income

Debit card fee income

Bank owned life insurance income

ATM fees

Pension settlement gain

Loss on sale of debt securities, net

Gain on equity securities, net

Other components of net periodic benefit income

Miscellaneous

Total other income

Income from fiduciary activities increased by $3.3 million, or 7.7%, to $45.8 million in 2025, compared to $42.5 million in 2024. The $42.5 million in 2024 was an increase of $7.0 million, or 19.8%, compared to $35.5 million in 2023. The majority of fiduciary fees are calculated on a lag, based on the market value of the assets under management. The average market value of the wealth management assets managed by PNB was $9.07 billion in 2025, compared to $8.58 billion in 2024 and $7.69 billion in 2023. The increase in fiduciary fee income in 2025 was largely due to an increase in the market value of assets under management. The increase in fiduciary fee income in 2024 was largely due to an increase in the market value of assets under management as well as updates to the fee structure.

Service charges on deposit accounts increased $1.1 million, or 11.7%, to $10.1 million in 2025, compared to $9.0 million in 2024. The $9.0 million in 2024 was an increase of $556,000, or 6.6%, compared to $8.4 million in 2023. The increases in 2025 and 2024 were related to increases in service charges on demand deposit accounts, partially offset by decreases in non-sufficient funds (NSF) fee income.

Other service income increased $2.7 million, or 23.3%, to $14.5 million in 2025, compared to $11.7 million in 2024. The $11.7 million in 2024 was an increase of $1.4 million, or 14.0%, compared to $10.3 million in 2023. The increase in 2025 compared to 2024 was primarily due to an increase in other service income related to mortgage loan originations and commercial related other service income, including a $957,000 increase in fee income related to mortgage loan originations to be sold in the secondary market, a $578,000 increase in mortgage servicing rights income and a $458,000 increase in commercial related other service income. The increase in 2024 compared to 2023 was primarily due to an increase in other service income related to mortgage loan originations, including a $950,000 increase in fee income related to mortgage loan originations to be sold in the secondary market and a $400,000 increase in mortgage servicing rights income. Park has experienced increases in mortgage loan origination volume resulting in increases in other service income. A summary of mortgage loan originations for the years ended December 31, 2025, 2024 and 2023 as follows.

Table 18 - Mortgage Loan Origination Volume

Year Ended December 31,

(In thousands)

Sold

Portfolio

Construction

Service released

Total mortgage loan originations

Refinances as a % of Total Mortgage Loan Originations

Debit card fee income, which is generated from debit card transactions, decreased $80,000, or 0.3%, to $25.8 million in 2025, compared to $25.9 million in 2024. The $25.9 million in 2024 was a decrease of $649,000, or 2.4%, compared to $26.5 million in 2023. The decreases in 2025 and 2024 were attributable to a decrease in the average blended interchange rate per transaction, which is influenced by various factors, including the average spend per transaction. This decrease was partially offset by continued increases in both the volume of debit card transactions and increases in total sales dollars of debit card transactions. Debit card transaction volume increased 0.99% in 2025 from 2024 and increased 1.3% in 2024 from 2023. Total sales dollars of debit card transactions increased 3.2% in 2025 from 2024 and increased 1.4% in 2024 from 2023. Park continues to focus on deposit offerings that provide incentives for our customers to use their debit card.

Bank owned life insurance income decreased $1.2 million, or 14.9%, to $6.6 million in 2025 compared to $7.8 million in 2024. The $7.8 million in 2024 was an increase of $2.4 million, or 45.6%, compared to $5.3 million in 2023. The decrease in 2025 and the increase in 2024 was related to death benefit income of $463,000 recognized in 2025, compared to $2.0 million recognized in 2024 and $325,000 recognized in 2023.

During 2024, Park recognized a $6.1 million pension settlement gain due to a combination of lump sum payouts as well as the purchase of a nonparticipating annuity contract which will provide ongoing benefits to vested participants. There was no pension settlement gain recognized during 2025 or 2023.

During 2025, Park sold certain AFS debt securities with a book value of $79.1 million at a gross loss of $2.3 million. During 2024, Park sold certain AFS debt securities with a book value of $42.3 million at a gross loss of $553,000 and sold certain AFS debt securities with a book value of $2.3 million for a gross gain of $27,000. During 2023, Park sold certain AFS debt securities with a book value of $291.0 million at a gross loss of $7.9 million.

During the years ended December 31, 2025, 2024 and 2023, $3.5 million, $2.6 million and $600,000, respectively, of gains on equity investments carried at fair value or modified cost were recorded within "Gain on equity securities, net". For the years ended December 31, 2025, 2024 and 2023, $1.2 million, $468,000 and $371,000, respectively, of gains on equity investments carried at NAV were recorded within "Gain on equity securities, net".

Other components of net periodic pension benefit income increased $113,000, or 1.2%, to $9.4 million in 2025, compared to $9.3 million in 2024. The $9.3 million in 2024 was an increase of $1.7 million, or 22.3%, compared to $7.6 million in 2023. The increase in 2025 was largely due to a decrease in interest cost, partially offset by a decrease in the expected return on plan assets. The increase in 2024 was largely due to an increase in the expected return on plan assets.

Miscellaneous income decreased by $1.9 million, or 32.6%, to $4.0 million in 2025, compared to $5.9 million in 2024. The $5.9 million in 2024 was an increase of $2.2 million, or 59.3%, compared to $3.7 million in 2023. The decrease in 2025 was primarily due to a decrease in net gains on the sale and disposal of assets, largely due to the impact of strategic initiatives, and an increase in the loss on sale of repossessed assets. The increase in 2024 was primarily due to an increase in the net gain on the sale of assets, an increase in filing fee income, an increase in net gains on the sale of repossessed assets and a decrease in OREO devaluations, partially offset by a decline in miscellaneous income that was received in 2023 as the result of an investment fund liquidation.

Other Expense: Other expense was $324.4 million in 2025, compared to $321.3 million in 2024 and $309.2 million in 2023. Other expense increased by $3.0 million, or 0.9% in 2025 compared to 2024 and increased by $12.1 million, or 3.9% in 2024 compared to 2023. The following table displays total other expense for Park for 2025, 2024 and 2023.

Table 19 - Other Expense

Year Ended December 31,

(In thousands)

Salaries

Employee benefits

Occupancy expense

Furniture and equipment expense

Data processing fees

Professional fees and services

Marketing

Insurance

Communication

State tax expense

Amortization of intangible assets

Foundation contributions

Miscellaneous

Total other expense

Full-time equivalent employees

Salaries expense increased by $5.4 million, or 3.7% to $152.7 million in 2025, compared to $147.3 million in 2024. The $147.3 million in 2024 was an increase of $8.1 million, or 5.8%, compared to $139.2 million in 2023. The increase in 2025 was due to an increase of $3.2 million in salaries expense, a $1.5 million increase in officer incentive compensation expense and a $1.1 million increase in share-based compensation expenses related to PBRSU awards granted under the 2017 Employee LTIP, partially offset by a $336,000 decrease in additional compensation expense. The increase in 2024 was due to an increase in salaries expense of $4.9 million, a $2.6 million increase in officer incentive compensation expense, and a $1.2 million increase in additional compensation expense, partially offset by a $340,000 decrease in share-based compensation expenses related to PBRSU and TBRSU awards granted under the 2017 Employee LTIP and a $288,000 decrease in the vacation expense accrual.

Park had 1,694 full-time equivalent employees at year-end 2025, compared to 1,725 full-time equivalent employees at year-end 2024 and compared to 1,782 full-time equivalent employees at year-end 2023.

Employee benefits expense decreased by $1.4 million, or 3.3%, to $40.4 million for 2025, compared to $41.7 million for 2024. The $41.7 million for 2024 was a decrease of $540,000, or 1.3%, compared to $42.3 million in 2023. The decrease in 2025 was due to a $1.4 million decrease in group insurance costs, a $408,000 decrease in supplemental retirement plan expense and a $390,000 decrease in pension plan expense, partially offset by a $254,000 increase in payroll tax expense and a $291,000 increase in KSOP match expense. The decrease in 2024 was due to a $1.9 million decrease in group insurance costs, partially offset by a $680,000 increase in pension plan expense, a $310,000 increase in the KSOP match and a $175,000 increase in payroll tax expense.

Occupancy expense increased by $563,000, or 4.4%, to $13.4 million in 2025, compared to $12.8 million in 2024. The $12.8 million in 2024 was a decrease of $298,000, or 2.3%, compared to $13.1 million in 2023. The $563,000 increase in 2025 was primarily due to increased expense for the rental of leased space and increased depreciation and amortization expense, partially offset by decreased maintenance and repairs expense. The $298,000 decrease in 2024 was primarily due to decreased expense for the rental of leased space and decreased utilities expense, partially offset by increases in maintenance and repairs expense, which included expenses related to a building demolition.

Furniture and equipment expense decreased $1.2 million, or 12.2%, to $8.8 million in 2025, compared to $10.0 million in 2024. The $10.0 million in 2024 was a decrease of $2.3 million, or 18.4%, compared to $12.2 million in 2023. The decrease in 2025 was primarily related to decreased depreciation expense. The decrease in 2024 was primarily related to decreased depreciation expense and decreased expenses related to repairs on maintenance and equipment.

Data processing fees increased by $4.7 million, or 11.6%, to $45.3 million, compared to $40.6 million in 2024. The $40.6 million in 2024 was an increase of $2.9 million, or 7.8%, compared to $37.6 million in 2023. The increase in 2025 was primarily related to an increase in software expenses of $5.7 million, partially offset by a decrease in debit card processing costs of $1.0 million. The increase in 2024 primarily related to an increase in software expenses of $5.9 million, partially offset by a decrease in debit card processing costs of $3.0 million.

Professional fees and services increased $306,000, or 1.0%, to $31.5 million in 2025, compared to $31.1 million in 2024. The $31.1 million in 2024 was an increase of $2.0 million, or 6.8%, compared to $29.2 million in 2023. This subcategory of total other expense includes legal fees, management consulting fees, directors' fees, audit fees, regulatory examination fees and memberships in industry associations. The $306,000 increase in 2025 was related to increases in management consulting fees, temporary wages and legal expense, partially offset by decreases in directors fees, other fees and recruiting fees. The $2.0 million increase in 2024 related to increases in management consulting fees, credit services expense, IntraFi insured deposit fees, temporary wages and recruiting fees, partially offset by decreases in legal fees and other fees.

Marketing expense decreased by $244,000, or $3.9%, to $6.1 million in 2025, compared to $6.3 million in 2024. The $6.3 million in 2024 was an increase of $847,000, or 15.5%, compared to $5.5 million in 2023. The $244,000 decrease in 2025 was primarily due to decreases in organization dues, special events and customer entertainment expense. The $847,000 increase in 2024 was primarily due to an increase in advertising expense.

Insurance expense decreased by $380,000, or 5.6%, to $6.4 million, compared to $6.7 million in 2024. The $6.7 million in 2024 was a decrease of $905,000, or 11.8%, compared to $7.6 million in 2023. The decreases in 2025 and 2024 were related to decreases in FDIC assessment expense.

The subcategory "Miscellaneous" other expense includes expenses for supplies, travel, and other miscellaneous expense. The subcategory Miscellaneous other expense decreased by $4.4 million, or 34.0%, to $8.5 million in 2025 compared to $12.9 million in 2024. The $12.9 million in 2024 was an increase of $1.7 million, or 14.6%, compared to $11.3 million in 2023. The decrease in 2025 was related to decreases in fraud and other non loan related losses, provision for unfunded credit losses and other miscellaneous expenses. The increase in 2024 was related to increases in fraud and other non loan related losses as well as an increase in the provision for unfunded credit losses.

Efficiency Ratio: The following table details the calculation of the efficiency ratio for the years ended December 31, 2025, 2024, and 2023.

Table 20 - Efficiency ratio (1)

Year Ended December 31,

(In thousands)

Net interest income

Add: Tax equivalent adjustment (2)

Net interest income - Fully tax equivalent

Total other income

Total other expense

Efficiency ratio

(1) Calculated by dividing "Total other expense" by the sum of fully-tax equivalent net interest income and "Total other income."

(2) The tax equivalent adjustment to net interest income was calculated assuming a 21% corporate federal income tax rate for 2025, 2024 and 2023.

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

The following table details those items which management believes impacts the comparability of current and prior period amounts.

Table 21 - Items impacting comparability

Year Ended December 31,

(In thousands, except share and per share data)

Affected Line Item

Net interest income

less purchase accounting accretion related to NewDominion and Carolina Alliance acquisitions

Interest and fees on loans

less interest income on former Vision Bank relationships

Interest and fees on loans

Net interest income - adjusted

Provision for credit losses

less recoveries on former Vision Bank relationships

Provision for credit losses

Provision for credit losses - adjusted

Total other income

less pension settlement gain

Pension settlement gain

less impact of strategic initiatives

Miscellaneous income

less Vision related OREO valuation adjustments, net

Miscellaneous income

less other service income related to former Vision Bank relationships

Other service income

less loss on the sale of debt securities, net

Loss on the sale of debt securities, net

Total other income - adjusted

Table 21 - Items impacting comparability (continued)

Year Ended December 31,

(In thousands, except share and per share data)

Affected Line Item

Total other expense

less core deposit intangible amortization related to NewDominion and Carolina Alliance acquisitions

Amortization of intangible assets

less building demolition costs

Occupancy expense

less restructuring costs

Salaries expense

less merger related expenses related to First Citizens acquisition

Professional fees and services

less merger related expenses related to First Citizens acquisition

Miscellaneous expense

less Foundation contributions

Foundation contributions

less direct expenses related to collection of payments on former Vision Bank loan relationships

Professional fees and services

Total other expense - adjusted

Tax effect of adjustments to net income identified above (7)

Net income - reported

Net income - adjusted (6)

Diluted earnings per common share (1)

Diluted earnings per common share, adjusted (1)(6)

Return on average assets (1)(2)

Return on average assets, adjusted (1)(2)(6)

Return on average tangible assets (1)(2)(4)

Return on average tangible assets, adjusted (1)(2)(4)(6)

Return on average shareholders' equity (1)(2)

Return on average shareholders' equity, adjusted (1)(2)(6)

Return on average tangible equity (1)(2)(3)

Return on average tangible equity, adjusted (1)(2)(3)(6)

Efficiency ratio (5)

Efficiency ratio, adjusted (5)(6)

Net interest margin (5)

Net interest margin, adjusted (5)(6)

Table 21 - Items impacting comparability (continued)

Financial Reconciliations

(1) Reported measure uses net income.

(2) Averages are for the years ended December 31, 2025, December 31, 2024 and December 31, 2023, as appropriate.

(3) Net income for each period divided by average tangible equity during the period. Average tangible equity equals average shareholders' equity during the applicable period less average goodwill and other intangible assets during the applicable period.

RECONCILIATION OF AVERAGE SHAREHOLDERS' EQUITY TO AVERAGE TANGIBLE EQUITY:

Year Ended December 31,

AVERAGE SHAREHOLDERS' EQUITY

Less: Average goodwill and other intangible assets

AVERAGE TANGIBLE EQUITY

(4) Net income for each period divided by average tangible assets during the period. Average tangible assets equal average assets less average goodwill and other intangible assets, in each case during the applicable period.

RECONCILIATION OF AVERAGE ASSETS TO AVERAGE TANGIBLE ASSETS

Year Ended December 31,

AVERAGE ASSETS

Less: Average goodwill and other intangible assets

AVERAGE TANGIBLE ASSETS

(5) Efficiency ratio is calculated by dividing total other expense by the sum of FTE net interest income and other income. The FTE net interest income reconciliation is shown assuming a 21% corporate federal income tax rate. Additionally, net interest margin is calculated on a fully taxable equivalent basis by dividing FTE net interest income by average interest earning assets, in each case during the applicable period.

RECONCILIATION OF FULLY TAXABLE EQUIVALENT NET INTEREST INCOME TO NET INTEREST INCOME

Year Ended December 31,

Interest income

FTE adjustment

FTE interest income

Interest expense

FTE net interest income

(6) Adjustments to net income for each period presented are detailed in the non-GAAP reconciliations of net interest income, provision for credit losses, other income, other expense and tax effect of adjustments to net income.

(7) The tax effect of adjustments to net income was calculated assuming a 21% federal corporate income tax rate.

OTHER RECONCILIATIONS

The following reconciliations are not utilized in Table 21 - Items impacting comparability, but provide reconciliations for values referenced elsewhere within Management's Discussion and Analysis of Financial Condition and Results of Operations.

(8) Tangible equity equals total shareholders' equity less goodwill and other intangible assets, in each case at the end of the period.

RECONCILIATION OF TOTAL SHAREHOLDERS' EQUITY TO TANGIBLE EQUITY:

Year Ended December 31,

TOTAL SHAREHOLDERS' EQUITY

Less: Goodwill and other intangible assets

TANGIBLE EQUITY

Table 21 - Items impacting comparability (continued)

(9) Tangible assets equal total assets less goodwill and other intangible assets, in each case at the end of the period.

RECONCILIATION OF TOTAL ASSETS TO TANGIBLE ASSETS:

Year Ended December 31,

TOTAL ASSETS

Less: Goodwill and other intangible assets

TANGIBLE ASSETS

(10) Pre-tax, pre-provision ("PTPP") net income is calculated as net income, plus income taxes, plus the provision for credit losses, in each case during the applicable period. PTPP net income is a common industry metric utilized in capital analysis and review. PTPP is used to assess the operating performance of Park while excluding the impact of the provision for credit losses.

RECONCILIATION OF PRE-TAX, PRE-PROVISION NET INCOME

Year Ended December 31,

Net income

Plus: Income taxes

Plus: Provision for credit losses

Pre-tax, pre-provision net income

Income Taxes:

Income tax expense was $41.3 million in 2025 and consisted of federal income tax expense of $39.1 million and state income tax expense of $2.2 million. Income tax expense was $33.3 million in 2024 and consisted of federal income tax expense of $31.8 million and state income tax expense of $1.5 million. Income tax expense was $26.9 million in 2023 and consisted of federal income tax expense of $25.7 million and state income tax expense of $1.2 million. The effective income tax rate was 18.6% in 2025, 18.0% in 2024 and 17.5% in 2023.

The difference between the statutory federal corporate income tax rate of 21% and Park’s effective tax rate reflected 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, offset by the impact of state income taxes. Park's permanent federal tax differences were approximately $7.4 million in 2025, compared to $7.0 million in 2024 and $6.6 million in 2023. Park expects permanent federal tax differences for 2026 will be approximately $6. 3 million.

CREDIT METRICS AND PROVISION FOR CREDIT LOSSES

The provision for credit losses is the amount added to/subtracted from the allowance for credit losses to ensure the allowance is sufficient to absorb estimated credit losses over the life of a loan. The amount of the provision for credit losses is determined by management based on relevant information about past events, including historical credit loss experience on financial assets with similar risk characteristics, current conditions, and reasonable and supportable forecasts that affect the collectability of the remaining cash flows over the contractual term of the financial assets.

The adoption of ASU 2022-02 on January 1, 2023 resulted in a $383,000 increase to the allowance for credit losses. A cumulative effect adjustment resulting in a $303,000 decrease to retained earnings and an $80,000 increase to deferred tax assets was also recorded. Additionally, as a result of the adoption of this ASU and elimination of the concept of TDRs, total nonperforming loans decreased by $20.1 million effective January 1, 2023 and individually evaluated loans decreased by $11.5 million effective January 1, 2023.

The table below provides additional information on the provision for credits losses and the ACL for 2025, 2024 and 2023.

Table 22 - ACL Activity

(In thousands)

ACL, beginning balance

Cumulative change in accounting principle; adoption of ASU 2022-02

Charge-offs

Recoveries

Net charge-offs

Provision for credit losses:

ACL, ending balance

Average loans

Net charge-offs as a percentage of average loans

For the year ended December 31, 2025, gross income of $5.9 million would have been recognized on loans that were nonaccrual as of December 31, 2025 had these loans been current in accordance with their original terms. Interest income on nonaccrual loans may be recorded on a cash basis and be included in income only when Park expects to receive the entire recorded investment of the loan. Of the $5.9 million that would have been recognized, approximately $4.1 million was included in interest income for the year ended December 31, 2025 as a result of payments made.

At year-end 2025, the allowance for credit losses was $93.0 million, or 1.15%, of total loans outstanding, compared to $88.0 million, or 1.13%, of total loans outstanding at year-end 2024, and $83.7 million, or 1.12% of total loans outstanding at year-end 2023.

The following table provides additional information related to the allowance for credit losses for Park, including information related to individual reserves and collective reserves, at December 31, 2025, December 31, 2024 and December 31, 2023. Park has determined that any commercial loans which have been placed on nonaccrual status are to be individually evaluated. Additionally, accruing collateral dependent commercial loans to borrowers experiencing financial difficulty are also to be individually evaluated and a review of classified credits is performed to identify any additional loans which do not share similar risk characteristics and are to be individually evaluated.

Table 23- Allowance for Credit Losses Summary

(Dollars in thousands)

Total allowance for credit losses

Allowance on accruing PCD loans

Reserves on individually evaluated loans - accruing

Reserves on individually evaluated loans - nonaccrual

General reserves on collectively evaluated loans

Total loans

Accruing PCD loans

Individually evaluated loans - accrual

Individually evaluated loans - nonaccrual

Collectively evaluated loans

Allowance for credit losses as a % of period end loans

General reserve as a % of collectively evaluated loans

The allowance for credit losses of $93.0 million at December 31, 2025 represented a $5.0 million, or 5.7%, increase compared to $88.0 million at December 31, 2024. The increase was due to a $5.6 million increase in general reserves, partially offset by a $560,000 decrease in individual reserves on nonaccrual loans. The $5.6 million increase in general reserves takes into account changing economic forecasts and prepayment and curtailment speeds, while balancing the risks associated with other economic factors. Additionally, the $5.6 million increase in general reserves included a $2.3 million additional qualitative reserve related to several special purpose mortgage loan programs to assist borrowers in attaining home ownership. As of December 31, 2025, the loans in these special purpose mortgage loan programs totaled $234.2 million. Delinquency rates within these special purpose mortgage loan programs have become higher than those of Park's traditional 30-year mortgage portfolio loans. These special purpose mortgage loan programs require very little, if any, down payment, and the loan-to-value on these loans are generally at 90% or above. For these reasons, management expects that the PD and LGD related to loans within these programs will be higher than that of Park's standard 30-year portfolio loans and established a qualitative factor related to the increased risk of loss on mortgage loans within these programs. Management will continue to evaluate this portfolio as additional information becomes available.

The allowance for credit losses of $88.0 million at December 31, 2024 represented a $4.2 million, or 5.0%, increase compared to $83.7 million at December 31, 2023. The increase was due to a $7.9 million increase in general reserves and a $3.7 million decrease in individual reserves on nonaccrual loans. The $7.9 million increase in general reserves took into account changing economic forecasts and prepayment and curtailment speeds, while balancing the risks associated with other economic factors. Additionally, the $7.9 million increase in general reserves included a $757,000 additional reserve related to Hurricane Helene which impacted borrowers in Park's Carolina region. The decrease in individual reserves at December 31, 2024 compared to December 31, 2023 was primarily related to $4.2 million in charge-offs related to two relationships that previously carried individual reserves, partially offset by new or increasing reserves on other credits.

The composition of the ACL at December 31, 2025 and December 31, 2024 was as follows:

Table 24 - ACL Composition

December 31, 2025

(In thousands)

Commercial,

financial and

agricultural

Commercial

real estate

Construction

real estate

Residential

real estate

Consumer

Leases

Total

ACL:

Ending allowance balance attributed to loans:

Individually evaluated for impairment - nonaccrual

Individually evaluated for impairment - accrual

Collectively evaluated for impairment

Accruing acquired with deteriorated credit quality

Total ending allowance balance

Loan balance:

Individually evaluated for impairment - nonaccrual

Individually evaluated for impairment - accrual

Loans collectively evaluated for impairment

Accruing loans acquired with deteriorated credit quality

Total ending loan balance

ACL as a percentage of loan balance:

Individually evaluated for impairment - nonaccrual

Individually evaluated for impairment - accrual

Loans collectively evaluated for impairment

Accruing loans acquired with deteriorated credit quality

Total

Table 24 - ACL Composition (continued)

December 31, 2024

(In thousands)

Commercial,

financial and

agricultural

Commercial

real estate

Construction

real estate

Residential

real estate

Consumer

Leases

Total

ACL:

Ending allowance balance attributed to loans:

Individually evaluated for impairment - nonaccrual

Individually evaluated for impairment - accrual

Collectively evaluated for impairment

Accruing acquired with deteriorated credit quality

Total ending allowance balance

Loan balance:

Individually evaluated for impairment - nonaccrual

Individually evaluated for impairment - accrual

Loans collectively evaluated for impairment

Accruing loans acquired with deteriorated credit quality

Total ending loan balance

ACL as a percentage of loan balance:

Individually evaluated for impairment - nonaccrual

Individually evaluated for impairment - accrual

Loans collectively evaluated for impairment

Accruing loans acquired with deteriorated credit quality

Total

Management believes that the allowance for credit losses at year-end 2025 is adequate to absorb estimated life of loan credit losses in the loan portfolio. See "Note 1 - Summary of Significant Accounting Policies" of the Notes to Consolidated Financial Statements included in "ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA" of this Annual Report on Form 10-K, and the discussion under the heading “CRITICAL ACCOUNTING POLICIES” earlier in this Management's Discussion and Analysis of Financial Condition and Results of Operations, for additional information on management’s evaluation of the adequacy of the allowance for credit losses.

ACL Detail by Loan Type: The following tables breakdown the allowance for credit losses and components by loan type.

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

Table 25  -  Summary of Loan Credit Loss Experience

(In thousands)

Average loans

Allowance for credit losses:

Beginning balance

Adoption of ASU 2022-02

Charge-offs:

Commercial, financial and agricultural

Construction real estate

Residential real estate

Commercial real estate

Consumer

Leases

Total charge-offs

Recoveries:

Commercial financial, and agricultural

Construction real estate

Residential real estate

Commercial real estate

Consumer

Leases

Total recoveries

Net charge-offs

Provision included in net income

Ending balance

Ratio of net charge-offs to average loans

Ratio of allowance for credit losses to end of year loans

The follow table presents net-charge offs (recoveries), average loans outstanding, and net charge-offs (recoveries) as a percentage of average loans, by type of loan over the past three years:

Table 26- Net Charge-Offs (Recoveries) to Average Loans

Year Ended December 31,

(Dollars in thousands)

Net Charge-offs (Recoveries)

Average Loans

Net Charge-offs (Recoveries) as a % of Average Loans

Net Charge-offs (Recoveries)

Average Loans

Net Charge-offs (Recoveries) as a % of Average Loans

Net Charge-offs (Recoveries)

Average Loans

Net Charge-offs (Recoveries) as a % of Average Loans

Commercial, financial, and agricultural

Construction real estate

Residential real estate

Commercial real estate

Consumer

Leases

Total

The following table summarizes Park's allocation of the allowance for credit losses for the past three years:

Table 27- Allocation of Allowance for Credit Losses

December 31,

(In thousands)

Allowance

Percent of Loans Per Category

Allowance

Percent of Loans Per Category

Allowance

Percent of Loans Per Category

Commercial, financial, and agricultural

Construction real estate

Residential real estate

Commercial real estate

Consumer

Leases

Total

Nonperforming Assets: Non-performing assets include: (1) loans whose interest is accounted for on a nonaccrual basis; (2) loans which are contractually past due 90 days or more as to principal or interest payments but whose interest continues to accrue; and (3) OREO which results from taking possession of property that served as collateral for a defaulted loan.

Generally, management obtains updated appraisal information for nonperforming 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.

The following is a summary of Park’s nonperforming assets at the end of the last three years:

Table 28 - Nonperforming Assets

December 31,

(In thousands)

Nonaccrual loans

Loans past due 90 days or more and accruing

Total nonperforming loans

OREO

Total nonperforming assets

Percentage of nonperforming loans to total loans

Percentage of nonperforming assets to total loans

Percentage of nonperforming assets to total assets

Percentage of nonaccrual loans to total loans

Allowance for credit losses to nonaccrual loans

Park classifies loans as nonaccrual when 1) a loan is maintained on a cash basis because of deterioration in the financial condition of the borrower, 2) payment in full of principal or interest is not expected, or 3) principal or interest has been in default for a period of 90 days for commercial loans and 120 days for all other loans. As a result, loans may be classified as nonaccrual despite being current with their contractual terms. The following table details the delinquency status of nonaccrual loans at December 31, 2025, 2024, and 2023. Loans are classified as current if they are less than 30 days past due.

Table 29 - Delinquency Status of Nonaccrual Loans

December 31, 2025

December 31, 2024

December 31, 2023

(Dollars in thousands)

Balance

Percent of Total Loans

Balance

Percent of Total Loans

Balance

Percent of Total Loans

Nonaccrual loans - current

Nonaccrual loans - past due

Total nonaccrual loans

Credit Quality Indicators: When determining the quarterly credit 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 (graded an 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 PD is applied to these loans. Commercial loans graded a 6 (substandard), also considered to be watch list credits, represent higher credit risk than those rated special mention and, as a result, a higher PD is applied to these loans. 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 an individual reserve. Certain 6-rated loans and all 7-rated loans are placed on nonaccrual status and included within the individually evaluated category. Any commercial loan graded an 8 (loss) is completely charged off.

The following table highlights the credit trends within the commercial loan portfolio.

Table 30- Commercial Credit Trends

Commercial loans * (In thousands)

December 31, 2025

December 31, 2024

December 31, 2023

Pass rated

Special Mention

Substandard

Individually evaluated for impairment - accrual

Individually evaluated for impairment - nonaccrual

Accruing PCD

Total

*Commercial loans include: (1) commercial, financial and agricultural loans; (2) commercial real estate loans; (3) commercial related loans in the construction portfolio; (4) commercial related loans in the residential real estate portfolio; and (5) leases.

Park’s watch list includes all criticized and classified commercial loans, defined by Park as loans rated special mention or worse. Park had $74.1 million of accruing commercial loans included on the watch list at December 31, 2025, compared to $99.9 million at December 31, 2024, and $60.7 million at December 31, 2023. The existing conditions of these loans do not warrant classification as nonaccrual. However, these loans have shown some weakness and management performs additional analysis regarding each borrower's ability to comply with payment terms.

Park considers a loan delinquent when it reaches 30 days past due. Delinquent and accruing loans were $31.4 million, or 0.39% of total loans at December 31, 2025, compared to $28.4 million, or 0.36% of total loans at December 31, 2024, and $23.5 million, or 0.31% of total loans at December 31, 2023.

Individually Evaluated Loans: Loans that do not share risk characteristics are evaluated on an individual basis and are excluded from the collective evaluation. Park has determined that any commercial loans which have been placed on nonaccrual status are to be individually evaluated. Additionally, accruing collateral dependent commercial loans to borrowers experiencing financial difficulty are to be individually evaluated and a review of classified credits is performed to identify any additional loans which do not share similar risk characteristics and are to be individually evaluated. Individual analysis establishes an individual reserve for loans in scope.  Reserves on individually evaluated commercial loans are typically based on management’s best estimate of the fair value of collateral securing these loans, adjusted for selling costs as appropriate. The amount ultimately charged off for these loans may be different from the reserve as the ultimate liquidation of the collateral may be for an amount different from management’s estimate.

Nonaccrual individually evaluated commercial loans were $46.9 million at December 31, 2025, a decrease of $6.2 million, compared to $53.1 million at December 31, 2024 and an increase of $1.7 million, compared to $45.2 million at December 31, 2023. Accruing individually evaluated commercial loans were $18.4 million at December 31, 2025, compared to $15.3 million at December 31, 2024, and compared to no accruing individually evaluated commercial loans at December 31, 2023.

At December 31, 2025, Park had taken partial charge-offs of $4.7 million related to the $46.9 million of the nonaccrual individually evaluated commercial loans, compared to partial charge-offs of $5.0 million related to the $53.1 million of nonaccrual individually evaluated commercial loans at December 31, 2024 and compared to partial charge-offs of $2.3 million related to the $45.2 million of nonaccrual individually evaluated commercial loans at December 31, 2023.

The table below provides additional information related to Park's nonaccrual individually evaluated commercial loans at December 31, 2025, 2024, and 2023.

Table 31 - Nonaccrual individually Evaluated Commercial Loans

Years ended December 31,

(In thousands)

Unpaid principal balance

Prior charge-offs

Remaining principal balance

Reserves

Book value, after reserves

Loans Acquired with Deteriorated Credit Quality: PCD loans are individually evaluated on a quarterly basis to determine if a specific reserve is necessary. At December 31, 2025, December 31, 2024 and December 31, 2023, there was no allowance for credit losses on PCD loans. The carrying amount of accruing loans acquired with deteriorated credit quality at December 31, 2025, 2024, and 2023 was $2.0 million, $2.2 million, and $2.8 million, respectively. The carrying amount of nonaccrual loans acquired with deteriorated credit quality was $510,000, $551,000 and $534,000 at December 31, 2025, 2024, and 2023, respectively.

Additional Considerations: As part of its quarterly allowance process, Park evaluates certain industries which are more likely to be under economic stress in the current environment.

The office sector continues to face challenges from adjustments companies have made as a result of the pandemic. Nationally, office properties in downtown and urban business districts are seeing the most stress . As of December 31, 2025, Park had $323.2 million of loans which were fully or partially secured by non-owner-occupied office space, $320.8 million of which were accruing. This portfolio is not currently exhibiting signs of stress, but Park continues to monitor this portfolio for signs of deterioration.

The non‑bank consumer finance sector has come under pressure as elevated interest rates and broader economic challenges, including inflation, have increased financial strain on consumer borrowers. As of December 31, 2025, Park’s outstanding loans to non‑bank consumer finance companies totaled $274.1 million, of which $25.4 million were categorized as accruing watch list credits and $2.1 million were nonaccrual loans. Watch list and nonaccrual loans within this portfolio are in differing stages of liquidation, and Park expects the associated loan balances to decline as these liquidation processes continue to be executed. Park maintains heightened oversight of this portfolio and continues to monitor it for any indications of deterioration that could adversely affect credit quality.

Additionally, in calculating the allowance, management considered the geopolitical environment and uncertainty regarding the fiscal policy of the current political administration, including tariffs. While it is too early to assess the impact of increased tariffs on individual borrowers, management continues to weigh a baseline ("most likely" scenario) forecast with a "moderate recession" scenario in calculating the general reserve. The "moderate recession" scenario considers the impact of tariffs being higher for longer than considered in the "most likely" scenario.

CAPITAL RESOURCES

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

Cash and cash equivalents increased by $72.9 million during 2025 to $233.5 million at year end. Cash provided by operating activities was $198.3 million in 2025, $178.8 million in 2024 and $151.1 million in 2023. Net income was the primary source of cash provided by operating activities during each year.

Cash provided by investing activities was $86.2 million in 2025, cash used in investing activities was $19.1 million in 2024, and cash provided by investing activities was $63.5 million in 2023. Investment securities transactions and loan originations/repayments are the major uses or sources of cash in investing activities.  Proceeds from the sale, repayment or maturity of investment securities provide cash and purchases of investment securities use cash.  Net investment securities transactions provided cash of $339.1 million in 2025, provided cash of $338.5 million in 2024 and provided cash of $418.9 million in

2023. Cash used by the net increase in the loan portfolio was $233.1 million in 2025, $341.5 million in 2024 and $330.4 million in 2023.

Cash used in financing activities was $211.5 million in 2025, $217.4 million in 2024 and $186.1 million in 2023. A major source of cash provided by or used in financing activities is the net change in deposits.  Deposits increased and provided $100.2 million of cash in 2025 and $101.0 million of cash in 2024 and decreased and used $192.1 million of cash in 2023. These changes in deposits included a decrease in off-balance sheet deposits of $9.9 million in 2025, an increase in off-balance sheet deposits of $114.0 million in 2024 and a decrease in off-balance sheet deposits of $194.8 million in 2023. Other major sources of cash from financing activities are short-term borrowings. Net short-term borrowings decreased and used $8.7 million in cash in 2025 and $237.8 million in cash in 2024 and increased and provided $100.8 million in cash in 2023. Cash of $190.0 million was used in the repayment of subordinated notes in 2025. No cash was used in the repayment of subordinated notes in 2024 or 2023. Cash used in the repurchase of common shares was $20.1 million in 2025 and $23.0 million in 2023. No common shares were repurchased in 2024. Finally, cash declined by $89.9 million in 2025, $77.5 million in 2024 and $69.0 million in 2023, from the payment of cash dividends.

Effective liquidity management ensures that the cash flow requirements of depositors and borrowers, as well as the operating cash needs of the Corporation, are met. Funds are available from a number of sources, including the capital markets, the investment securities portfolio, the core deposit base, FHLB 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 in the short- and long-term.

The following table shows interest rate sensitivity data for five different time intervals as of December 31, 2025:

Table 32  -  Interest Rate Sensitivity

Over 5

(In thousands)

Months

Months

Years

Years

Years

Total

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 and brokered/bid CD deposits

Other

Total deposits

Short-term borrowings

Total interest bearing liabilities

Interest rate sensitivity gap

Cumulative rate sensitivity gap

Cumulative gap as a

percentage of total

interest earning assets

(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 $66.5 million are included within the over five year 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 60.6% of interest bearing transaction accounts and 54.4% 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 5.43% to a negative 17.64%.

The interest rate sensitivity gap analysis provides an overall picture of Park’s static interest rate risk position. At December 31, 2025, the cumulative interest earning assets maturing or repricing within twelve months were $3,986 million compared to the cumulative interest bearing liabilities maturing or repricing within twelve months of $3,501 million.  For the twelve-month cumulative interest rate sensitivity gap position, rate sensitive assets exceeded rate sensitive liabilities by $485 million or 5.4% of interest earning assets.  At December 31, 2024, the cumulative interest earning assets maturing or repricing within twelve months were $3,955 million compared to the cumulative interest bearing liabilities maturing or repricing within twelve months of $3,653 million.  For the twelve-month cumulative interest rate sensitivity gap position, rate sensitive assets exceeded rate sensitive liabilities by $302 million or 3.4% of interest earning assets. The percentage of interest bearing liabilities maturing or repricing within one year was 61.7% at year-end 2025, compared to 62.9% at year-end 2024.

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.  While the gap analysis does take into consideration both contractual repayments and expected prepayments of various assets, it does not consider the magnitude, specific timing, or frequency by which assets or liabilities will reprice during a period and also contains assumptions as to the repricing of interest bearing transaction accounts and savings accounts that may not prove to be correct.

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, 2025, the earnings simulation model projected that net income would increase by 1.69% using a rising interest rate scenario and decrease by 2.11% using a declining interest rate scenario over the next year. At December 31, 2024, the earnings simulation model projected that net income would increase by 1.25% using a rising interest rate scenario and decrease by 1.34% using a declining interest rate scenario over the next year. At December 31, 2023, the earnings simulation model projected that net income would increase by 1.52% using a rising interest rate scenario and decrease by 1.92% using a declining interest rate scenario over the next year. Park’s net interest margin was 4.75% in 2025, 4.41% in 2024 and 4.11% in 2023.

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, 2025.

Further discussion of the nature of each specified obligation is included in the referenced Note to the Consolidated Financial Statements included in "ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA" of this Annual Report on Form 10-K.

Table 33 - Contractual Obligations (1)

December 31, 2025

Payments Due In

Over 5

(In thousands)

Note

Years

Years

Years

Years

Total

Deposits without stated maturity

Certificates of deposit

Short-term borrowings

Operating leases

Defined benefit pension plan (2)

Supplemental Executive Retirement Plan agreements

Total contractual obligations

(1) Amounts do not include associated interest payments.

(2) Pension payments reflect 10 years of payments, through 2035.

As of December 31, 2025, Park had $25.6 million in unfunded commitments related to investments in qualified affordable housing projects which are not included in "Table 32 - Contractual Obligations" above. Commitments are funded when capital calls are made by the general partner. Park expects that the current commitments will be funded between 2026 and 2039.

As of December 31, 2025, Park had $12.6 million in unfunded commitments related to certain equity investments which are not included in "Table 33 - Contractual Obligations" above. Commitments are funded when capital calls are made by the general partner.

The Corporation’s operating lease obligations represent short-term and long-term lease and rental payments for facilities and equipment.

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, 2025, the Corporation had $1.6 billion of loan commitments and had $66.1 million of standby letters of credit. At December 31, 2024, the Corporation had $1.5 billion of loan commitments and had $33.5 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 2025. See "Note 25 - Financial Instruments with Off-Balance Sheet Risk and Financial Instruments with Concentration of Credit Risk" of the Notes to Consolidated Financial Statements included in "ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA" in this Annual Report on Form 10-K, for additional information on loan commitments and standby letters of credit.

The Corporation did not have any unrecorded significant contingent liabilities at December 31, 2025.

Capital : Park’s primary means of maintaining capital adequacy is through retained earnings.  At December 31, 2025, the Corporation’s total shareholders’ equity was $1,352.8 million, compared to $1,243.8 million at December 31, 2024.  Total shareholders’ equity at December 31, 2025 was 13.80% of total assets, compared to 12.69% of total assets at December 31, 2024.

Tangible equity (non-U.S. GAAP) was $1,190.8 at December 31, 2025, and was $1,080.8 million at December 31, 2024. At December 31, 2025, tangible equity (non-U.S. GAAP) was 12.35% of tangible assets compared to 11.21% of tangible assets at December 31, 2024. A reconciliation of total shareholders' equity to tangible equity and total assets to tangible assets is included in Table 21.

Net income was $180.1 million in 2025, $151.4 million in 2024 and $126.7 million in 2023.

Cash dividends declared for Park's common shares were $90.1 million in 2025, $77.4 million in 2024 and $68.7 million in 2023. On a per share basis, the cash dividends declared were $5.53 per common share in 2025, $4.74 per common share in 2024 and $4.20 per common share in 2023.

The table below shows the repurchases and issuances of common shares and treasury shares for 2023 through 2025.

Table 34

(In thousands, except share data)

Treasury Shares

Number of Common Shares

Balance at January 1, 2023

Treasury shares repurchased

Treasury shares reissued for share-based compensation awards

Treasury shares reissued for director grants

Balance at December 31, 2023

Treasury shares repurchased

Treasury shares reissued for share-based compensation awards

Treasury shares reissued for director grants

Balance at December 31, 2024

Treasury shares repurchased

Treasury shares reissued for share-based compensation awards

Treasury shares reissued for director grants

Balance at December 31, 2025

Park did not issue any new common shares, which had not already been held as treasury shares, in 2025, 2024 or 2023. Common shares (including treasury shares) had a balance of $465.0 million, $463.7 million and $463.3 million at December 31, 2025, 2024, and 2023, respectively.

Accumulated other comprehensive (loss) income, net reflected a loss of $12.7 million, $46.2 million and $66.2 million at December 31, 2025, 2024, and 2023, respectively. During 2025, the change in net unrealized holding (loss) gain on AFS debt securities, net of income tax, was a gain of $30.6 million, which included a $1.8 million, net of income tax, realized loss on the sale of debt securities. During 2024, the change in net unrealized holding (loss) gain on AFS debt securities, net of income tax, was a gain of $5.0 million, which included a $415,000, net of income tax, realized loss on the sale of debt securities. During 2023, the change in net unrealized holding (loss) gain on AFS debt securities, net of income tax, was a gain of $27.8 million, which included a $6.2 million, net of income tax, realized loss on the sale of debt securities. Additionally, Park recognized an other comprehensive gain of $2.9 million, net of income tax, related to the change in pension plan assets and benefit obligations in 2025, compared to a $15.1 million gain in 2024, which included $4.9 million, net of income tax, related to a realized pension settlement gain. Park recognized an other comprehensive gain of $8.4 million, net of income tax, related to the change in pension plan assets and benefit obligations in 2023.

Financial institution regulators have established guidelines for minimum capital ratios for banks, thrifts and bank holding companies. Park has elected not to include the net unrealized gain or loss on debt securities AFS in computing regulatory capital. Park has adopted the Basel III regulatory capital framework as approved by the federal banking agencies. Under the Basel III regulatory capital framework, in order to avoid limitations on capital distributions, including dividend payments and stock repurchases, and certain discretionary bonus payments to executive officers, Park must hold a capital conservation buffer of 2.5% above the adequately capitalized risk-based capital ratios. The amounts shown below as the adequately capitalized ratio plus capital conservation buffer include the 2.50% buffer. The Federal Reserve Board has also adopted capital requirements Park must maintain to be deemed "well capitalized" and remain a financial holding company.

Park and PNB met each of the well-capitalized ratio guidelines applicable to them at December 31, 2025. The following table indicates the capital ratios for PNB and Park at December 31, 2025 and December 31, 2024.

Table 35 - PNB and Park Capital Ratios

As of December 31, 2025

Leverage

Tier 1

Risk-Based

Common Equity Tier 1

Total

Risk-Based

PNB

Park

Adequately capitalized ratio

Adequately capitalized ratio plus capital conservation buffer

Well-capitalized ratio - PNB

Well-capitalized ratio - Park

As of December 31, 2024

Leverage

Tier 1

Risk-Based

Common Equity Tier 1

Total

Risk-Based

PNB

Park

Adequately capitalized ratio

Adequately capitalized ratio plus capital conservation buffer

Well-capitalized ratio - PNB

Well-capitalized ratio - Park

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

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