PRK Park National Corp

Park National Corporation (Park) (NYSE American: PRK) today reported financial results for the second quarter and first half of 2021 (three and six months ended June 30, 2021). Park's board of directors declared a quarterly cash dividend of $1.03 per common share, payable on September 10, 2021 to common shareholders of record as of August 20, 2021.

Park’s net income for the second quarter of 2021 was $39.1 million, a 32.6 percent increase from $29.5 million for the second quarter of 2020. Second quarter 2021 net income per diluted common share was $2.38, compared to $1.80 in the second quarter of 2020. Park's net income for the first half of 2021 was $82.0 million, a 58.0 percent increase from $51.9 million for the first half of 2020. Net income per diluted common share was $4.98 for the first half of 2021, compared to $3.16 for the first half of 2020. Various governmental programs and economic conditions continue to affect performance reports throughout the financial industry.

“Our positive results reflect the dedication of our associates, who’ve been unwavering in serving our clients throughout the ups and downs of the past year. From lending to digital services to philanthropic support – we do not take lightly the trust our communities place in Park National Bank,” Park Chairman David Trautman said. “We remain focused on delivering on our promises to local families and businesses.”

Park's community-banking subsidiary, The Park National Bank, reported net income of $40.9 million for the second quarter of 2021, a 33.0 percent increase compared to $30.8 million for the same period of 2020. Park National Bank reported net income of $86.0 million for the first half of 2021, compared to $56.7 million for the first half of 2020. Park National Bank's mortgage origination volume for the first half of 2021 was $561 million; whereas, it was $527 million for the first half of 2020.

Park’s board also recognized the retirement of C. Daniel DeLawder, thanking him for his 50 years of service and leadership with the Park National organization. DeLawder, a former chairman and chief executive officer for Park, retired from employment on June 30, 2021. He will remain on the boards of directors for the Park National Corporation and Park National Bank; and will continue to serve as chair of the executive committee for the corporation and chair of Park National Bank’s trust committee until his term expires in 2023.

Headquartered in Newark, Ohio, Park National Corporation has $9.9 billion in total assets (as of June 30, 2021). Park's banking operations are conducted through its subsidiary The Park National Bank. Other Park subsidiaries are Scope Leasing, Inc. (d.b.a. Scope Aircraft Finance), Guardian Financial Services Company (d.b.a. Guardian Finance Company) and SE Property Holdings, LLC.

Complete financial tables are listed below.

Category: EarningsMedia contact: Bethany Lewis, 740.349.0421, bethany.lewis@parknationalbank.comInvestor contact: Brady Burt, 740.322.6844, brady.burt@parknationalbank.comPark National Corporation, 50 N. Third Street, Newark, Ohio 43055

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995Park cautions that any forward-looking statements contained in this news release or made by management of Park are provided to assist in the understanding of anticipated future financial performance. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements.

Risks and uncertainties that could cause actual results to differ materially include, without limitation:

• the ever-changing effects of the novel coronavirus (COVID-19) pandemic - - the duration, extent and severity of which are impossible to predict, including the possibility of further resurgence in the spread of COVID-19 - - on economies (local, national and international) and markets, and on our customers, counterparties, employees and third-party service providers, as well as the effects of various responses of governmental and nongovernmental authorities to the COVID-19 pandemic, including public health actions directed toward the containment of the COVID-19 pandemic (such as quarantines, shut downs and other restrictions on travel and commercial, social or other activities), the development, availability and effectiveness of vaccines, and the implementation of fiscal stimulus packages;
• the impact of future governmental and regulatory actions upon our participation in and execution of government programs related to the COVID-19 pandemic;
• Park's ability to execute our business plan successfully and within the expected timeframe as well as our ability to manage strategic initiatives in light of the impact of the COVID-19 pandemic and the various responses to the COVID-19 pandemic;
• general economic and financial market conditions, specifically in the real estate markets and the credit markets, either nationally or in the states in which Park and our subsidiaries do business, may experience a weaker recovery than anticipated, in addition to the continuing impact of the COVID-19 pandemic on our customers’ operations and financial condition, either of which may result in adverse impacts on the demand for loan, deposit and other financial services, delinquencies, defaults and counterparties' inability to meet credit and other obligations and the possible impairment of collectability of loans;
• factors that can impact the performance of our loan portfolio, including real estate values and liquidity in our primary market areas, the financial health of our commercial borrowers and the success of construction projects that we finance, including any loans acquired in acquisition transactions;
• the effect of monetary and other fiscal policies (including the impact of money supply and interest rate policies of the Federal Reserve Board) as well as disruption in the liquidity and functioning of U.S. financial markets, as a result of the COVID-19 pandemic and government policies implemented in response thereto, may adversely impact prepayment penalty income, mortgage banking income, income from fiduciary activities, the value of securities, deposits and other financial instruments, in addition to the loan demand and the performance of our loan portfolio, and the interest rate sensitivity of our consolidated balance sheet as well as reduce interest margins;
• changes in the federal, state, or local tax laws may negatively impact our financial performance. On March 31, 2021, President Biden unveiled his infrastructure plan, which includes a proposal to increase the federal corporate tax rate from 21% to 28% as part of a package of tax reforms to help fund the spending proposals in the plan. The Biden plan is in the early stages of the legislative process, which is expected to proceed this year due to the Democratic Party's majority in both houses of Congress. If adopted as proposed, the increase of the corporate tax rate would adversely affect our results of operations in future periods.
• changes in consumer spending, borrowing and saving habits, whether due to changes in retail distribution strategies, consumer preferences and behavior, changes in business and economic conditions (including as a result of the COVID-19 pandemic and reactions thereto), legislative and regulatory initiatives (including those undertaken in response to the COVID-19 pandemic), or other factors may be different than anticipated;
• changes in unemployment levels in the states in which Park and our subsidiaries do business may be different than anticipated due to the continuing impact of the COVID-19 pandemic;
• changes in customers', suppliers', and other counterparties' performance and creditworthiness may be different than anticipated due to the continuing impact of and the various responses to the COVID-19 pandemic;
• Park may have more credit risk and higher credit losses to the extent there are loan concentrations by location or industry of borrowers or collateral;
• the volatility from quarter to quarter of mortgage banking income, whether due to interest rates, demand, the fair value of mortgage loans, or other factors;
• the adequacy of our internal controls and risk management program in the event of changes in the market, economic, operational (including those which may result from more of our associates working remotely), asset/liability repricing, legal, compliance, strategic, cybersecurity, liquidity, credit and interest rate risks associated with Park's business;
• competitive pressures among financial services organizations could increase significantly, including product and pricing pressures (which could in turn impact our credit spreads), changes to third-party relationships and revenues, changes in the manner of providing services, customer acquisition and retention pressures, and our ability to attract, develop and retain qualified banking professionals;
• uncertainty regarding the nature, timing, cost and effect of changes in banking regulations or other regulatory or legislative requirements affecting the respective businesses of Park and our subsidiaries, including major reform of the regulatory oversight structure of the financial services industry and changes in laws and regulations concerning taxes, FDIC insurance premium levels, pensions, bankruptcy, consumer protection, rent regulation and housing, financial accounting and reporting, environmental protection, insurance, bank products and services, bank and bank holding company capital and liquidity standards, fiduciary standards, securities and other aspects of the financial services industry, specifically the reforms provided for in the Coronavirus Aid, Relief and Economic Security (CARES) Act and the follow-up legislation in the Consolidated Appropriations Act, 2021, the American Rescue Plan Act of 2021, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and the Basel III regulatory capital reforms, as well as regulations already adopted and which may be adopted in the future by the relevant regulatory agencies, including the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve Board, to implement the provisions of the CARES Act and the follow-up legislation in the Consolidated Appropriations Act, 2021, the provisions of the American Rescue Plan Act of 2021, the provisions of the Dodd-Frank Act, and the Basel III regulatory capital reforms;
• the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board (the "FASB"), the SEC, the Public Company Accounting Oversight Board and other regulatory agencies, may adversely affect Park's reported financial condition or results of operations;
• Park's assumptions and estimates used in applying critical accounting policies and modeling, including under the CECL model, which may prove unreliable, inaccurate or not predictive of actual results;
• significant changes in the tax laws, which may adversely affect the fair values of net deferred tax assets and obligations of state and political subdivisions held in Park's investment securities portfolio;
• the impact of Park's ability to anticipate and respond to technological changes on Park's ability to respond to customer needs and meet competitive demands;
• operational issues stemming from and/or capital spending necessitated by the potential need to adapt to industry changes in information technology systems on which Park and our subsidiaries are highly dependent;
• the ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks, including those of Park's third-party vendors and other service providers, which may prove inadequate, and could adversely affect customer confidence in Park and/or result in Park incurring a financial loss;
• a failure in or breach of Park's operational or security systems or infrastructure, or those of our third-party vendors and other service providers, resulting in failures or disruptions in customer account management, general ledger, deposit, loan, or other systems, including as a result of cyber attacks;
• the existence or exacerbation of general geopolitical instability and uncertainty as well as the effect of trade policies (including the impact of potential or imposed tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements, trade wars and other changes in trade regulations and changes in the relationship of the U.S. and its global trading partners);
• uncertainty regarding the impact of changes to the U.S. presidential administration and Congress on the regulatory landscape, capital markets, elevated U.S. government debt, potential changes in tax legislation that may increase tax rates and the response to and management of the COVID-19 pandemic;
• the impact on financial markets and the economy of any changes in the credit ratings of the U.S. Treasury obligations and other U.S. government-backed debt, as well as issues surrounding the levels of U.S., European and Asian government debt and concerns regarding the growth rates and financial stability of certain sovereign governments, supranationals and financial institutions in Europe and Asia and the risk they may face difficulties servicing their sovereign debt;
• our litigation and regulatory compliance exposure, including the costs and effects of any adverse developments in legal proceedings or other claims and the costs and effects of unfavorable resolution of regulatory and other governmental examinations or other inquiries;
• continued availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends;
• the impact on Park's business, personnel, facilities or systems of losses related to acts of fraud, scams and schemes of third parties;
• the impact of widespread natural and other disasters, pandemics (including the COVID-19 pandemic), dislocations, regional or national protests and civil unrest (including any resulting branch closures or damages), military or terrorist activities or international hostilities on the economy and financial markets generally and on us or our counterparties specifically;
• any of the foregoing factors, or other cascading effects of the COVID-19 pandemic that are not currently foreseeable, could materially affect our business, including our customers' willingness to conduct banking transactions and their ability to pay on existing obligations;
• the effect of healthcare laws in the U.S. and potential changes for such laws, especially in light of the COVID-19 pandemic, which may increase our healthcare and other costs and negatively impact our operations and financial results;
• risk and uncertainties associated with Park's entry into new geographic markets with our recent acquisitions, including expected revenue synergies and cost savings from recent acquisitions not being fully realized or realized within the expected time frame;
• the discontinuation of the London Inter-Bank Offered Rate (LIBOR) and other reference rates which may result in increased expenses and litigation, and adversely impact the effectiveness of hedging strategies;
• and other risk factors relating to the banking industry as detailed from time to time in Park's reports filed with the SEC including those described in "Item 1A. Risk Factors" of Part I of Park's Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

Park does not undertake, and specifically disclaims any obligation, to publicly release the results of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement was made, or reflect the occurrence of unanticipated events, except to the extent required by law.

PARK NATIONAL CORPORATION
Financial Highlights
As of or for the three months ended June 30, 2021, March 31, 2021, and June 30, 2020
	2021				2021				2020					Percent change vs.
(in thousands, except share and per share data)	2nd QTR				1st QTR				2nd QTR					1Q '21			2Q '20
INCOME STATEMENT:
Net interest income	$	83,851			$	80,734			$	81,186				3.9		%	3.3		%
(Recovery of) provision for credit losses (l)	(4,040		)		(4,855		)		12,224					(16.8	)	%	N.M
Other income	31,238				34,089				30,964					(8.4	)	%	0.9		%
Other expense	71,400				67,865				64,799					5.2		%	10.2		%
Income before income taxes	$	47,729			$	51,813			$	35,127				(7.9	)	%	35.9		%
Income taxes	8,597				8,982				5,622					(4.3	)	%	52.9		%
Net income	$	39,132			$	42,831			$	29,505				(8.6	)	%	32.6		%
MARKET DATA:
Earnings per common share - basic (a)	$	2.39			$	2.63			$	1.81				(9.1	)	%	32.0		%
Earnings per common share - diluted (a)	2.38				2.61				1.80					(8.8	)	%	32.2		%
Cash dividends declared per common share	1.03				1.23				1.02					(16.3	)	%	1.0		%
Book value per common share at period end	65.44				63.74				61.46					2.7		%	6.5		%
Market price per common share at period end	117.42				129.30				70.38					(9.2	)	%	66.8		%
Market capitalization at period end	1,918,733				2,112,238				1,146,942					(9.2	)	%	67.3		%
Weighted average common shares - basic (b)	16,340,690				16,314,987				16,296,427					0.2		%	0.3		%
Weighted average common shares - diluted (b)	16,472,800				16,439,920				16,375,434					0.2		%	0.6		%
Common shares outstanding at period end	16,340,772				16,335,951				16,296,425					—		%	0.3		%
PERFORMANCE RATIOS: (annualized)
Return on average assets (a)(b)	1.59			%	1.81			%	1.26			%		(12.2	)	%	26.2		%
Return on average shareholders' equity (a)(b)	14.81			%	16.63			%	11.89			%		(10.9	)	%	24.6		%
Yield on loans	4.60			%	4.48			%	4.63			%		2.7		%	(0.6	)	%
Yield on investment securities	2.31			%	2.53			%	2.76			%		(8.7	)	%	(16.3	)	%
Yield on money market instruments	0.10			%	0.11			%	0.10			%		(9.1	)	%	—		%
Yield on interest earning assets	3.93			%	3.96			%	4.14			%		(0.8	)	%	(5.1	)	%
Cost of interest bearing deposits	0.13			%	0.16			%	0.36			%		(18.8	)	%	(63.9	)	%
Cost of borrowings	1.91			%	1.86			%	1.33			%		2.7		%	43.6		%
Cost of paying interest bearing liabilities	0.29			%	0.32			%	0.43			%		(9.4	)	%	(32.6	)	%
Net interest margin (g)	3.74			%	3.76			%	3.84			%		(0.5	)	%	(2.6	)	%
Efficiency ratio (g)	61.65			%	58.74			%	57.41			%		5.0		%	7.4		%
OTHER RATIOS (NON-GAAP):
Tangible book value per share (d)	$	55.17			$	53.43			$	51.04				3.3		%	8.1		%
Note: Explanations for footnotes (a) - (l) are included at the end of the financial tables in the "Financial Reconciliations" section.
PARK NATIONAL CORPORATION
Financial Highlights (continued)
As of or for the three months ended June 30, 2021, March 31, 2021, and June 30, 2020
														Percent change vs.
(in thousands, except ratios)	June 30, 2021				March 31, 2021				June 30, 2020					1Q '21			2Q '20
BALANCE SHEET:
Investment securities	$	1,461,916			$	1,176,240			$	1,153,186				24.3		%	26.8		%
Loans	7,035,646				7,168,745				7,204,445					(1.9	)	%	(2.3	)	%
Allowance for credit losses (l)	83,577				86,886				73,476					(3.8	)	%	13.7		%
Goodwill and other intangible assets	167,897				168,376				169,905					(0.3	)	%	(1.2	)	%
Other real estate owned (OREO)	813				844				1,356					(3.7	)	%	(40.0	)	%
Total assets	9,947,994				9,914,069				9,712,994					0.3		%	2.4		%
Total deposits	8,214,624				8,236,199				8,161,900					(0.3	)	%	0.6		%
Borrowings	501,350				523,266				444,410					(4.2	)	%	12.8		%
Total shareholders' equity	1,069,392				1,041,271				1,001,594					2.7		%	6.8		%
Tangible equity (d)	901,495				872,895				831,689					3.3		%	8.4		%
Total nonperforming loans	114,695				130,327				126,044					(12.0	)	%	(9.0	)	%
Total nonperforming assets	118,672				134,335				130,999					(11.7	)	%	(9.4	)	%
ASSET QUALITY RATIOS:
Loans as a % of period end total assets	70.72			%	72.31			%	74.17			%		(2.2	)	%	(4.7	)	%
Total nonperforming loans as a % of period end loans	1.63			%	1.82			%	1.75			%		(10.4	)	%	(6.9	)	%
Total nonperforming assets as a % of period end loans + OREO + other nonperforming assets	1.69			%	1.87			%	1.82			%		(9.6	)	%	(7.1	)	%
Allowance for credit losses as a % of period end loans	1.19			%	1.21			%	1.02			%		(1.7	)	%	16.7		%
Net loan (recoveries) charge-offs	$	(731	)		$	24			$	251				N.M			N.M
Annualized net loan (recoveries) charge-offs as a % of average loans (b)	(0.04		)	%	—			%	0.01			%		N.M			N.M
CAPITAL & LIQUIDITY:
Total shareholders' equity / Period end total assets	10.75			%	10.50			%	10.31			%		2.4		%	4.3		%
Tangible equity (d) / Tangible assets (f)	9.22			%	8.96			%	8.72			%		2.9		%	5.7		%
Average shareholders' equity / Average assets (b)	10.74			%	10.87			%	10.61			%		(1.2	)	%	1.2		%
Average shareholders' equity / Average loans (b)	14.94			%	14.63			%	14.30			%		2.1		%	4.5		%
Average loans / Average deposits (b)	86.49			%	90.12			%	88.59			%		(4.0	)	%	(2.4	)	%
Note: Explanations for footnotes (a) - (l) are included at the end of the financial tables in the "Financial Reconciliations" section.

PARK NATIONAL CORPORATION
Financial Highlights
Six months ended June 30, 2021 and June 30, 2020
	2021				2020
(in thousands, except share and per share data)	Six months ended June 30				Six months ended June 30					Percent change vs '20
INCOME STATEMENT:
Net interest income	$	164,585			$	157,469				4.5		%
(Recovery of) provision for credit losses (l)	(8,895		)		17,377					N.M
Other income	65,327				53,450					22.2		%
Other expense	139,265				131,075					6.2		%
Income before income taxes	$	99,542			$	62,467				59.4		%
Income taxes	17,579				10,590					66.0		%
Net income	$	81,963			$	51,877				58.0		%
MARKET DATA:
Earnings per common share - basic (a)	$	5.02			$	3.18				57.9		%
Earnings per common share - diluted (a)	4.98				3.16					57.6		%
Cash dividends declared per common share	2.26				2.24					0.9		%
Weighted average common shares - basic (b)	16,327,838				16,300,015					0.2		%
Weighted average common shares - diluted (b)	16,455,673				16,400,657					0.3		%
PERFORMANCE RATIOS: (annualized)
Return on average assets (a)(b)	1.70			%	1.15			%		47.8		%
Return on average shareholders' equity (a)(b)	15.71			%	10.54			%		49.1		%
Yield on loans	4.54			%	4.81			%		(5.6	)	%
Yield on investment securities	2.41			%	2.76			%		(12.7	)	%
Yield on money market instruments	0.10			%	0.38			%		(73.7	)	%
Yield on interest earning assets	3.95			%	4.35			%		(9.2	)	%
Cost of interest bearing deposits	0.14			%	0.58			%		(75.9	)	%
Cost of borrowings	1.89			%	1.69			%		11.8		%
Cost of paying interest bearing liabilities	0.30			%	0.66			%		(54.5	)	%
Net interest margin (g)	3.75			%	3.89			%		(3.6	)	%
Efficiency ratio (g)	60.20			%	61.72			%		(2.5	)	%
ASSET QUALITY RATIOS
Net loan (recoveries) charge-offs	$	(707	)		$	580				N.M.
Net loan (recoveries) charge-offs as a % of average loans (b)	(0.02		)	%	0.02			%		N.M.
CAPITAL & LIQUIDITY
Average shareholders' equity / Average assets (b)	10.80			%	10.95			%		(1.4	)	%
Average shareholders' equity / Average loans (b)	14.79			%	14.71			%		0.5		%
Average loans / Average deposits (b)	88.26			%	89.21			%		(1.1	)	%
Note: Explanations for footnotes (a) - (l) are included at the end of the financial tables in the "Financial Reconciliations" section.

PARK NATIONAL CORPORATION
Consolidated Statements of Income
		Three Months Ended									Six Months Ended
		June 30,									June 30,
(in thousands, except share and per share data)		2021					2020				2021					2020
Interest income:
Interest and fees on loans		$	81,176				$	80,155			$	159,913				$	160,842
Interest on:
Obligations of U.S. Government, its agencies
and other securities - taxable		4,600					5,026				8,856					10,557
Obligations of states and political subdivisions - tax-exempt		2,032					2,151				4,069					4,351
Other interest income		186					113				329					604
Total interest income		87,994					87,445				173,167					176,354
Interest expense:
Interest on deposits:
Demand and savings deposits		401					1,507				787					7,849
Time deposits		1,285					3,346				2,869					7,631
Interest on borrowings		2,457					1,406				4,926					3,405
Total interest expense		4,143					6,259				8,582					18,885
Net interest income		83,851					81,186				164,585					157,469
(Recovery of) provision for credit losses (l)		(4,040		)			12,224				(8,895		)			17,377
Net interest income after (recovery of) provision for credit losses		87,891					68,962				173,480					140,092
Other income		31,238					30,964				65,327					53,450
Other expense		71,400					64,799				139,265					131,075
Income before income taxes		47,729					35,127				99,542					62,467
Income taxes		8,597					5,622				17,579					10,590
Net income		$	39,132				$	29,505			$	81,963				$	51,877
Per common share:
Net income - basic		$	2.39				$	1.81			$	5.02				$	3.18
Net income - diluted		$	2.38				$	1.80			$	4.98				$	3.16
Weighted average shares - basic		16,340,690					16,296,427				16,327,838					16,300,015
Weighted average shares - diluted		16,472,800					16,375,434				16,455,673					16,400,657
Cash dividends declared		$	1.03				$	1.02			$	2.26				$	2.24

PARK NATIONAL CORPORATION
Consolidated Balance Sheets
(in thousands, except share data)	June 30, 2021				December 31, 2020
Assets
Cash and due from banks	$	134,182			$	155,596
Money market instruments	673,242				214,878
Investment securities	1,461,916				1,124,806
Loans	7,035,646				7,177,785
Allowance for credit losses (l)	(83,577		)		(85,675		)
Loans, net	6,952,069				7,092,110
Bank premises and equipment, net	89,570				88,660
Goodwill and other intangible assets	167,897				168,855
Other real estate owned	813				1,431
Other assets	468,305				432,685
Total assets	$	9,947,994			$	9,279,021
Liabilities and Shareholders' Equity
Deposits:
Noninterest bearing	$	2,876,110			$	2,727,100
Interest bearing	5,338,514				4,845,258
Total deposits	8,214,624				7,572,358
Borrowings	501,350				562,504
Other liabilities	162,628				103,903
Total liabilities	$	8,878,602			$	8,238,765
Shareholders' Equity:
Preferred shares (200,000 shares authorized; no shares outstanding at June 30, 2021 and December 31, 2020)	$	—			$	—
Common shares (No par value; 20,000,000 shares authorized; 17,623,143 shares issued at June 30, 2021 and 17,623,163 shares issued at December 31, 2020)	459,276				460,687
Accumulated other comprehensive (loss) income, net of taxes	(2,930		)		5,571
Retained earnings	741,155				704,764
Treasury shares (1,282,371 shares at June 30, 2021 and 1,308,966 shares at December 31, 2020)	(128,109		)		(130,766		)
Total shareholders' equity	$	1,069,392			$	1,040,256
Total liabilities and shareholders' equity	$	9,947,994			$	9,279,021

PARK NATIONAL CORPORATION
Consolidated Average Balance Sheets
	Three Months Ended									Six Months Ended
	June 30,									June 30,
(in thousands)	2021				2020					2021				2020
Assets
Cash and due from banks	$	131,397			$	134,386				$	139,784			$	133,208
Money market instruments	720,238				461,055					637,531				318,930
Investment securities	1,307,037				1,197,445					1,234,178				1,230,948
Loans	7,094,099				6,981,783					7,116,353				6,731,960
Allowance for credit losses (l)	(87,083		)		(62,387		)			(88,511		)		(60,001		)
Loans, net	7,007,016				6,919,396					7,027,842				6,671,959
Bank premises and equipment, net	90,269				80,096					90,006				77,509
Goodwill and other intangible assets	168,211				170,303					168,449				170,606
Other real estate owned	822				2,765					1,016				3,282
Other assets	447,088				442,819					444,221				437,585
Total assets	$	9,872,078			$	9,408,265				$	9,743,027			$	9,044,027
Liabilities and Shareholders' Equity
Deposits:
Noninterest bearing	$	2,940,602			$	2,400,809				$	2,866,909			$	2,175,400
Interest bearing	5,261,608				5,480,366					5,195,848				5,370,376
Total deposits	8,202,210				7,881,175					8,062,757				7,545,776
Borrowings	514,855				425,349					526,715				405,930
Other liabilities	95,064				103,453					101,332				102,189
Total liabilities	$	8,812,129			$	8,409,977				$	8,690,804			$	8,053,895
Shareholders' Equity:
Preferred shares	$	—			$	—				$	—			$	—
Common shares	457,949				456,830					459,327				458,146
Accumulated other comprehensive (loss) income, net of taxes	(4,876		)		10,756					(1,865		)		5,331
Retained earnings	734,993				663,290					724,183				658,877
Treasury shares	(128,117		)		(132,588		)			(129,422		)		(132,222		)
Total shareholders' equity	$	1,059,949			$	998,288				$	1,052,223			$	990,132
Total liabilities and shareholders' equity	$	9,872,078			$	9,408,265				$	9,743,027			$	9,044,027

PARK NATIONAL CORPORATION
Consolidated Statements of Income - Linked Quarters
	2021				2021				2020				2020			2020
(in thousands, except per share data)	2nd QTR				1st QTR				4th QTR				3rd QTR			2nd QTR
Interest income:
Interest and fees on loans	$	81,176			$	78,737			$	85,268			$	82,617		$	80,155
Interest on:
Obligations of U.S. Government, its agencies and other securities - taxable	4,600				4,256				4,420				4,841			5,026
Obligations of states and political subdivisions - tax-exempt	2,032				2,037				2,040				2,045			2,151
Other interest income	186				143				72				63			113
Total interest income	87,994				85,173				91,800				89,566			87,445
Interest expense:
Interest on deposits:
Demand and savings deposits	401				386				490				803			1,507
Time deposits	1,285				1,584				1,893				2,662			3,346
Interest on borrowings	2,457				2,469				3,096				2,261			1,406
Total interest expense	4,143				4,439				5,479				5,726			6,259
Net interest income	83,851				80,734				86,321				83,840			81,186
(Recovery of) provision for credit losses (l)	(4,040		)		(4,855		)		(19,159		)		13,836			12,224
Net interest income after (recovery of) provision for credit losses	87,891				85,589				105,480				70,004			68,962
Other income	31,238				34,089				35,656				36,558			30,964
Other expense	71,400				67,865				85,661				69,859			64,799
Income before income taxes	47,729				51,813				55,475				36,703			35,127
Income taxes	8,597				8,982				10,275				5,857			5,622
Net income	$	39,132			$	42,831			$	45,200			$	30,846		$	29,505
Per common share:
Net income - basic	$	2.39			$	2.63			$	2.77			$	1.89		$	1.81
Net income - diluted	$	2.38			$	2.61			$	2.75			$	1.88		$	1.80

PARK NATIONAL CORPORATION
Detail of other income and other expense - Linked Quarters
	2021			2021				2020				2020				2020
(in thousands)	2nd QTR			1st QTR				4th QTR				3rd QTR				2nd QTR
Other income:
Income from fiduciary activities	$	8,569		$	8,173			$	7,632			$	7,335			$	6,793
Service charges on deposit accounts	2,032			2,054				2,123				2,118				1,676
Other service income	7,159			9,617				12,040				13,047				8,758
Debit card fee income	6,758			6,086				5,787				5,853				5,560
Bank owned life insurance income	1,149			1,165				1,170				1,192				1,179
ATM fees	655			530				432				491				438
Gain (loss) on the sale of OREO, net	4			(33		)		(7		)		569				841
Net (loss) gain on the sale of debt securities	—			—				—				(27		)		3,313
Gain (loss) on equity securities, net	467			1,810				2,931				1,201				(977		)
Other components of net periodic benefit income	2,038			2,038				1,988				1,988				1,988
Miscellaneous	2,407			2,649				1,560				2,791				1,395
Total other income	$	31,238		$	34,089			$	35,656			$	36,558			$	30,964
Other expense:
Salaries	$	30,303		$	29,896			$	37,280			$	31,632			$	30,699
Employee benefits	10,056			10,201				7,316				10,676				9,080
Occupancy expense	3,027			3,640				3,231				3,835				3,256
Furniture and equipment expense	2,756			2,610				4,949				4,687				4,850
Data processing fees	7,150			7,712				3,315				3,275				2,577
Professional fees and services	6,973			5,664				9,359				7,977				6,901
Marketing	1,290			1,491				1,752				1,454				1,136
Insurance	1,276			1,691				1,855				1,541				1,477
Communication	770			1,122				1,097				958				874
State tax expense	1,103			1,108				605				1,125				1,116
Amortization of intangible assets	479			479				525				525				607
FHLB prepayment penalty	—			—				8,736				—				—
Foundation contributions	4,000			—				3,000				—				—
Miscellaneous	2,217			2,251				2,641				2,174				2,226
Total other expense	$	71,400		$	67,865			$	85,661			$	69,859			$	64,799

PARK NATIONAL CORPORATION
Asset Quality Information
									Year ended December 31,
(in thousands, except ratios)	June 30, 2021				March 31, 2021				2020				2019				2018				2017
Allowance for credit losses:
Allowance for credit losses, beginning of period	$	86,886			$	85,675			$	56,679			$	51,512			$	49,988			$	50,624
Cumulative change in accounting principle; adoption of ASU 2016-13	—				6,090				—				—				—				—
Charge-offs	1,070				1,701				10,304				11,177				13,552				19,403
Recoveries	1,801				1,677				27,246				10,173				7,131				10,210
Net (recoveries) charge-offs	(731		)		24				(16,942		)		1,004				6,421				9,193
(Recovery of) provision for credit losses	(4,040		)		(4,855		)		12,054				6,171				7,945				8,557
Allowance for credit losses, end of period	$	83,577			$	86,886			$	85,675			$	56,679			$	51,512			$	49,988
General reserve trends:
Allowance for credit losses, end of period	$	83,577			$	86,886			$	85,675			$	56,679			$	51,512			$	49,988
Allowance on purchased credit deteriorated ("PCD") loans (purchased credit impaired ("PCI") loans for years 2020 and prior)	—				—				167				268				—				—
Allowance on purchased loans excluded from the general reserve	—				—				678				—				—				—
Specific reserves on individually evaluated loans	3,915				4,962				5,434				5,230				2,273				684
General reserves on collectively evaluated loans	$	79,662			$	81,924			$	79,396			$	51,181			$	49,239			$	49,304
Total loans	$	7,035,646			$	7,168,745			$	7,177,785			$	6,501,404			$	5,692,132			$	5,372,483
PCD loans (PCI loans for years 2020 and prior)	10,007				10,284				11,153				14,331				3,943				—
Purchased loans excluded from collectively evaluated loans	—				—				360,056				548,436				225,029				—
Individually evaluated loans	86,874				100,407				108,407				77,459				48,135				56,545
Collectively evaluated loans	$	6,938,765			$	7,058,054			$	6,698,169			$	5,861,178			$	5,415,025			$	5,315,938
Asset Quality Ratios:
Net (recoveries) charge-offs as a % of average loans (annualized)	(0.04		)	%	—			%	(0.24		)	%	0.02			%	0.12			%	0.17		%
Allowance for credit losses as a % of period end loans	1.19			%	1.21			%	1.19			%	0.87			%	0.90			%	0.93		%
Allowance for credit losses as a % of period end loans (excluding PPP loans) (k)	1.23			%	1.28			%	1.25			%	N.A.				N.A.				N.A.
General reserve as a % of collectively evaluated loans	1.15			%	1.16			%	1.19			%	0.87			%	0.91			%	0.93		%
General reserves as a % of collectively evaluated loans (excluding PPP loans) (k)	1.19			%	1.22			%	1.24			%	N.A.				N.A.				N.A.
Nonperforming assets:
Nonaccrual loans	$	96,760			$	114,708			$	117,368			$	90,080			$	67,954			$	72,056
Accruing troubled debt restructurings	17,420				14,817				20,788				21,215				15,173				20,111
Loans past due 90 days or more	515				802				1,458				2,658				2,243				1,792
Total nonperforming loans	$	114,695			$	130,327			$	139,614			$	113,953			$	85,370			$	93,959
Other real estate owned - Park National Bank	219				250				837				3,100				2,788				6,524
Other real estate owned - SEPH	594				594				594				929				1,515				7,666
Other nonperforming assets - Park National Bank	3,164				3,164				3,164				3,599				3,464				4,849
Total nonperforming assets	$	118,672			$	134,335			$	144,209			$	121,581			$	93,137			$	112,998
Percentage of nonaccrual loans to period end loans	1.38			%	1.60			%	1.64			%	1.39			%	1.19			%	1.34		%
Percentage of nonperforming loans to period end loans	1.63			%	1.82			%	1.95			%	1.75			%	1.50			%	1.75		%
Percentage of nonperforming assets to period end loans	1.69			%	1.87			%	2.01			%	1.87			%	1.64			%	2.10		%
Percentage of nonperforming assets to period end total assets	1.19			%	1.35			%	1.55			%	1.42			%	1.19			%	1.50		%
Note: Explanations for footnotes (a) - (l) are included at the end of the financial tables in the "Financial Reconciliations" section.

PARK NATIONAL CORPORATION
Asset Quality Information (continued)
							Year ended December 31,
(in thousands, except ratios)	June 30, 2021			March 31, 2021			2020			2019			2018			2017
New nonaccrual loan information:
Nonaccrual loans, beginning of period	$	114,708		$	117,368		$	90,080		$	67,954		$	72,056		$	87,822
New nonaccrual loans	11,342			12,540			103,386			81,009			76,611			58,753
Resolved nonaccrual loans	29,290			15,200			76,098			58,883			80,713			74,519
Nonaccrual loans, end of period	$	96,760		$	114,708		$	117,368		$	90,080		$	67,954		$	72,056
Impaired commercial loan portfolio information (period end):
Unpaid principal balance	$	87,502		$	100,996		$	109,062		$	78,178		$	59,381		$	66,585
Prior charge-offs	628			589			655			719			11,246			10,040
Remaining principal balance	86,874			100,407			108,407			77,459			48,135			56,545
Specific reserves	3,915			4,962			5,434			5,230			2,273			684
Book value, after specific reserves	$	82,959		$	95,445		$	102,973		$	72,229		$	45,862		$	55,861

PARK NATIONAL CORPORATION
Financial Reconciliations
NON-GAAP RECONCILIATIONS
	THREE MONTHS ENDED													SIX MONTHS ENDED
(in thousands, except share and per share data)	June 30, 2021				March 31, 2021				June 30, 2020					June 30, 2021				June 30, 2020
Net interest income	$	83,851			$	80,734			$	81,186				$	164,585			$	157,469
less purchase accounting accretion related to NewDominion and Carolina Alliance acquisitions	806				1,131				1,301					1,937				2,679
less interest income on former Vision Bank relationships	2,838				105				266					2,943				343
Net interest income - adjusted	$	80,207			$	79,498			$	79,619				$	159,705			$	154,447
(Recovery of) provision for credit losses	$	(4,040	)		$	(4,855	)		$	12,224				$	(8,895	)		$	17,377
less recoveries on former Vision Bank relationships	(152		)		(257		)		(685		)			(409		)		(1,449		)
(Recovery of) provision for credit losses - adjusted	$	(3,888	)		$	(4,598	)		$	12,909				$	(8,486	)		$	18,826
Other income	$	31,238			$	34,089			$	30,964				$	65,327			$	53,450
less net gain on sale of former Vision Bank OREO properties	—				—				837					—				837
less other service income related to former Vision Bank relationships	3				58				52					61				52
less rebranding initiative related expenses	—				—				(274		)			—				(274		)
less net gain on the sale of debt securities in the ordinary course of business	—				—				3,313					—				3,313
Other income - adjusted	$	31,235			$	34,031			$	27,036				$	65,266			$	49,522
Other expense	$	71,400			$	67,865			$	64,799				$	139,265			$	131,075
less merger-related expenses related to NewDominion and Carolina Alliance acquisitions	4				12				214					16				457
less core deposit intangible amortization related to NewDominion and Carolina Alliance acquisitions	479				479				607					958				1,213
less direct expenses related to collection of payments on former Vision Bank loan relationships	300				107				—					407				—
less FHLB prepayment penalty	—				—				—					—				1,793
less rebranding initiative related expenses	342				955				138					1,297				408
less Foundation contribution	4,000				—				—					4,000				—
less severance and restructuring charges	46				108				248					154				336
less COVID-19 related expenses (j)	670				865				1,919					1,535				2,181
Other expense - adjusted	$	65,559			$	65,339			$	61,673				$	130,898			$	124,687
Tax effect of adjustments to net income identified above (i)	$	429			$	205			$	(641	)			$	634			$	(422	)
Net income - reported	$	39,132			$	42,831			$	29,505				$	81,963			$	51,877
Net income - adjusted (h)	$	40,745			$	43,601			$	27,092				$	84,346			$	50,288
Diluted EPS	$	2.38			$	2.61			$	1.80				$	4.98			$	3.16
Diluted EPS, adjusted (h)	$	2.47			$	2.65			$	1.65				$	5.13			$	3.07
Annualized return on average assets (a)(b)	1.59			%	1.81			%	1.26			%		1.70			%	1.15			%
Annualized return on average assets, adjusted (a)(b)(h)	1.66			%	1.84			%	1.16			%		1.75			%	1.12			%
Annualized return on average tangible assets (a)(b)(e)	1.62			%	1.84			%	1.28			%		1.73			%	1.18			%
Annualized return on average tangible assets, adjusted (a)(b)(e)(h)	1.68			%	1.87			%	1.18			%		1.78			%	1.14			%
Annualized return on average shareholders' equity (a)(b)	14.81			%	16.63			%	11.89			%		15.71			%	10.54			%
Annualized return on average shareholders' equity, adjusted (a)(b)(h)	15.42			%	16.93			%	10.92			%		16.16			%	10.21			%
Annualized return on average tangible equity (a)(b)(c)	17.60			%	19.84			%	14.33			%		18.70			%	12.73			%
Annualized return on average tangible equity, adjusted (a)(b)(c)(h)	18.33			%	20.19			%	13.16			%		19.25			%	12.34			%
Efficiency ratio (g)	61.65			%	58.74			%	57.41			%		60.20			%	61.72			%
Efficiency ratio, adjusted (g)(h)	58.45			%	57.19			%	57.44			%		57.82			%	60.70			%
Annualized net interest margin (g)	3.74			%	3.76			%	3.84			%		3.75			%	3.89			%
Annualized net interest margin, adjusted (g)(h)	3.58			%	3.70			%	3.77			%		3.64			%	3.81			%
Note: Explanations for footnotes (a) - (l) are included at the end of the financial tables in the "Financial Reconciliations" section.

PARK NATIONAL CORPORATION
Financial Reconciliations (continued)
(a) Reported measure uses net income
(b) Averages are for the three months ended June 30, 2021, March 31, 2021, and June 30, 2020 and the six months ended June 30, 2021 and June 30, 2020, as appropriate
(c) 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:
	THREE MONTHS ENDED										SIX MONTHS ENDED
	June 30, 2021			March 31, 2021			June 30, 2020				June 30, 2021			June 30, 2020
AVERAGE SHAREHOLDERS' EQUITY	$	1,059,949		$	1,044,412		$	998,288			$	1,052,223		$	990,132
Less: Average goodwill and other intangible assets	168,211			168,690			170,303				168,449			170,606
AVERAGE TANGIBLE EQUITY	$	891,738		$	875,722		$	827,985			$	883,774		$	819,526
(d) Tangible equity divided by common shares outstanding at period end. 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:
	June 30, 2021			March 31, 2021			June 30, 2020
TOTAL SHAREHOLDERS' EQUITY	$	1,069,392		$	1,041,271		$	1,001,594
Less: Goodwill and other intangible assets	167,897			168,376			169,905
TANGIBLE EQUITY	$	901,495		$	872,895		$	831,689
(e) 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
	THREE MONTHS ENDED										SIX MONTHS ENDED
	June 30, 2021			March 31, 2021			June 30, 2020				June 30, 2021			June 30, 2020
AVERAGE ASSETS	$	9,872,078		$	9,612,542		$	9,408,265			$	9,743,027		$	9,044,027
Less: Average goodwill and other intangible assets	168,211			168,690			170,303				168,449			170,606
AVERAGE TANGIBLE ASSETS	$	9,703,867		$	9,443,852		$	9,237,962			$	9,574,578		$	8,873,421
(f) Tangible equity divided by tangible assets. 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:
	June 30, 2021			March 31, 2021			June 30, 2020
TOTAL ASSETS	$	9,947,994		$	9,914,069		$	9,712,994
Less: Goodwill and other intangible assets	167,897			168,376			169,905
TANGIBLE ASSETS	$	9,780,097		$	9,745,693		$	9,543,089
(g) Efficiency ratio is calculated by dividing total other expense by the sum of fully taxable equivalent net interest income and other income. Fully taxable equivalent 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 fully taxable equivalent net interest income by average interest earning assets.
RECONCILIATION OF FULLY TAXABLE EQUIVALENT NET INTEREST INCOME TO NET INTEREST INCOME
	THREE MONTHS ENDED										SIX MONTHS ENDED
	June 30, 2021			March 31, 2021			June 30, 2020				June 30, 2021			June 30, 2020
Interest income	$	87,994		$	85,173		$	87,445			$	173,167		$	176,354
Fully taxable equivalent adjustment	718			714			723				1,432			1,448
Fully taxable equivalent interest income	$	88,712		$	85,887		$	88,168			$	174,599		$	177,802
Interest expense	4,143			4,439			6,259				8,582			18,885
Fully taxable equivalent net interest income	$	84,569		$	81,448		$	81,909			$	166,017		$	158,917
(h) Adjustments to net income for each period presented are detailed in the non-GAAP reconciliations of net interest income, (recovery of) provision for credit losses, other income and other expense.
(i) The tax effect of adjustments to net income was calculated assuming a 21% corporate federal income tax rate.
(j) COVID-19 related expenses include calamity pay and special one-time bonuses to certain associates.
(k) Excludes $248.9 million, $387.0 million and $331.6 million of PPP loans at June 30, 2021, March 31, 2021 and December 31, 2020, respectively.
(l) Park adopted ASU 2016-13 effective January 1, 2021. The allowance for credit losses at June 30, 2021 and March 31, 2021 and the related (recovery of) provision for credit losses for the three months ended June 30, 2021 and March 31, 2021 and the six months ended June 30, 2021 were calculated utilizing this new guidance.