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.
