PARK NATIONAL CORP OH

Previous wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements as that term is used in the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements are provided to assist in the understanding of anticipated future financial performance. Forward-looking statements provide current expectations, estimates, 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.

Current wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements as that term is used in the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements are provided to assist in the understanding of anticipated future financial performance. Forward-looking statements provide current expectations, estimates, or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management’s current expectations, estimates, and projections concerning future results or events, and are subject to a number of risks and uncertainties. These statements are often identified because they are not limited to historical fact or by the use of forward-looking words or phrases such as “expects,” “anticipates,” “envisions,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions. 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, as a result of various risk factors. See Item 1A. Risk Factors” in Part I of Park's 2023 Form 10-K, as the same may be updated from time to time in our subsequent filings with the SEC, for more information regarding those risk factors.

Previous wording

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), (losses) gains 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.

Current wording

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 (recovery of) 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.

Previous wording

Management has included in the tables included within the "Items Impacting Comparability" section of this MD&A information relating to the annualized return on average tangible equity, the annualized return on average tangible assets and pre-tax, pre-provision net income for the three months ended and at June 30, 2024 and June 30, 2023 and for the six months ended June 30, 2024 and June 30, 2023. For the purpose of calculating the annualized 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 annualized 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 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.

Current wording

Management has included in the tables included within the "Items Impacting Comparability" section of this MD&A information relating to the annualized return on average tangible equity, the annualized return on average tangible assets and pre-tax, pre-provision net income for the three months ended September 30, 2024 and September 30, 2023 and for the nine months ended September 30, 2024 and September 30, 2023. For the purpose of calculating the annualized 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 annualized 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 pre-tax, pre-provision net income, a non-U.S. GAAP financial measure, income taxes and the provision for (recovery of) credit losses are added back to net income, in each case during the applicable period.

Previous wording

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.

Current wording

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 estimates. The ACL 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.

Previous wording

As noted above, in calculating the ACL, management weighs different scenarios, including a baseline (most likely) scenario and an adverse scenario. At June 30, 2024, 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) tensions with China and Taiwan increase, China briefly interrupts trade through the Taiwan Strait, the Russian invasion lasts longer than expected, and the Hamas-Israel conflict will lead to a wider conflict; (2) the FRB keeps the fed funds rate at the terminal range of 5.25-5.50% through the second quarter of 2024 and, as a downturn persists, the FRB begins to lower rates; (3) Europe goes into a recession. Populism in Europe rises, raising uncertainties about the longevity of the Euro and causes financial stress to highly indebted nations; (4) the U.S. election in November 2024 results in a democratic President and a divided House of Representatives and Senate that will allow for policy status quo to endure. Political divide will be intense, causing business and consumer sentiment to decline sharply; (5) concerns about bank failures raise fears of further collapse in the banking industry, reducing consumer confidence and causing banks to tighten lending standards; (6) a recession occurs in the third quarter of 2024 and lasts through the first quarter of 2025 resulting in real GDP declining by 2.6%, unemployment rates rising to a peak of 8.0% in the third quarter of 2025, and the stock market falling 35% from the third quarter of 2024 to the first quarter of 2025. The adverse scenario also forecasts Ohio unemployment for the next twelve months to range from 6.4% to 9.1%. Excluding consideration of qualitative adjustments, this sensitivity analysis would result in a hypothetical increase in Park's ACL of $24.8 million as of June 30, 2024 if only the adverse scenario was used. Excluding consideration of qualitative adjustments, a corresponding $24.8 million decrease in Park's ACL would occur in a hypothetical scenario if only the baseline (most likely) scenario was used.

Current wording

As noted above, in calculating the ACL, management weighs different scenarios, including a baseline (most likely) scenario and an adverse scenario. At September 30, 2024, 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) tensions with China and Taiwan increase, China briefly interrupts trade through the Taiwan Strait, the Russian invasion lasts longer than expected, and the Hamas-Israel conflict will lead to a wider conflict; (2) the FRB begins to lower rates, but at a faster pace than the baseline scenario; (3) Europe goes into a recession. Populism in Europe rises, raising uncertainties about the longevity of the Euro and causes financial stress to highly indebted nations; (4) the U.S. election in November 2024 results in a democratic President and a divided House of Representatives and Senate that will allow for policy status quo to endure. Political divide will be intense, causing business and consumer sentiment to decline sharply; (5) concerns about bank failures raise fears of further collapse in the banking industry, reducing consumer confidence and causing banks to tighten lending standards; (6) a recession occurs in the fourth quarter of 2024 and lasts through the second quarter of 2025 resulting in real GDP declining by 2.6%, unemployment rates rising to a peak of 8.3% in the fourth quarter of 2025, and the stock market falling 35% from the fourth quarter of 2024 to the second quarter of 2025. The adverse scenario also forecasts Ohio unemployment for the next twelve months to range from 6.9% to 9.5%. Excluding consideration of qualitative adjustments, this sensitivity analysis would result in a hypothetical increase in Park's ACL of $26.1 million as of September 30, 2024 if only the adverse scenario was used. Excluding consideration of qualitative adjustments, a corresponding $26.1 million decrease in Park's ACL would occur in a hypothetical scenario if only the baseline (most likely) scenario was used.

Previous wording

Refer to the "Credit Metrics and Provision for Credit Losses" section of this MD&A for additional discussion.

Current wording

Refer to the "Credit Metrics and Provision for (Recovery of) Credit Losses" section of this MD&A for additional discussion.

Previous wording

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 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.

Current wording

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 three months and the nine months ended September 30, 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).

Previous wording

Net income for the three months ended June 30, 2024 of $39.4 million represented a $7.8 million, or 24.6%, increase compared to $31.6 million for the three months ended June 30, 2023. Pre-tax, pre-provision net income for the three months ended June 30, 2024 of $51.4 million represented a $10.7 million, or 26.4%, increase compared to $40.7 million for the three months ended June 30, 2023. Weighted average diluted common shares outstanding were 16,239,617 for the second quarter of 2024, compared to 16,240,600 weighted average diluted common shares outstanding for the second quarter of 2023.

Current wording

Net income for the three months ended September 30, 2024 of $38.2 million represented a $1.3 million, or 3.5%, increase compared to $36.9 million for the three months ended September 30, 2023. Pre-tax, pre-provision net income for the three months ended September 30, 2024 of $52.0 million represented a $7.8 million, or 17.6%, increase compared to $44.2 million for the three months ended September 30, 2023. Weighted average diluted common shares outstanding were 16,264,393 for the third quarter of 2024, compared to 16,217,880 weighted average diluted common shares outstanding for the third quarter of 2023.

Previous wording

Net income for the six months ended June 30, 2024 of $74.6 million represented a $9.3 million, or 14.2%, increase compared to $65.3 million for the six months ended June 30, 2023. Pre-tax, pre-provision net income for the six months ended June 30, 2024 of $96.0 million represented a $15.2 million, or 18.9%, increase compared to $80.8 million for the six months ended June 30, 2023. Weighted average diluted common shares outstanding were 16,215,342 for the first half of 2024, compared to 16,282,693 weighted average diluted common shares outstanding for the first half of 2023.

Current wording

Net income for the nine months ended September 30, 2024 of $112.8 million represented a $10.6 million, or 10.3%, increase compared to $102.2 million for the nine months ended September 30, 2023. Pre-tax, pre-provision net income for the nine months ended September 30, 2024 of $148.0 million represented a $23.0 million, or 18.4%, increase compared to $125.0 million for the nine months ended September 30, 2023. Weighted average diluted common shares outstanding were 16,231,766 for the first nine months of 2024, compared to 16,261,109 weighted average diluted common shares outstanding for the first nine months of 2023.

Previous wording

The following table reflects the net income and financial ratios for the first and second quarters of 2024, for the first half of 2024 and 2023 (the six months ended June 30) and for the years ended December 31, 2023 and 2022.

Current wording

The following table reflects the net income for the first, second and third quarters of 2024, for the first nine months of 2024 and 2023 (the nine months ended September 30) and for the year ended December 31, 2023.

Previous wording

Net interest income of $193.5 million for the six months ended June 30, 2024 represented a $9.7 million, or 5.3%, increase compared to $183.8 million for the six months ended June 30, 2023. The increase was a result of a $30.0 million increase in interest income, partially offset by a $20.3 million increase in interest expense.

Current wording

Net interest income of $294.6 million for the nine months ended September 30, 2024 represented a $16.5 million, or 5.9%, increase compared to $278.0 million for the nine months ended September 30, 2023. The increase was a result of a $42.9 million increase in interest income, partially offset by a $26.4 million increase in interest expense.

Previous wording

The $30.0 million increase in interest income was due to a $38.5 million increase in interest income on loans, partially offset by a $8.5 million decrease in investment income. The $38.5 million increase in interest income on loans was primarily the result of a $419.2 million (or 5.89%) increase in average loans, from $7.12 billion for the six months ended June 30, 2023 to $7.53 billion for the six months ended June 30, 2024, as well as an increase in the yield on loans, which increased 72 basis points to 6.06% for the six months ended June 30, 2024, compared to 5.34% for the six months ended June 30, 2023. The $8.5 million decrease in investment income was primarily the result of a $581.1 million (or 28.0%) decrease in average investments, including money market investments, from $2.08 billion for the six months ended June 30, 2023 to $1.50 billion for the six months ended June 30, 2024. The decrease in average investments was partially offset by an increase in the yield on investments, including money market investments, which increased 21 basis points to 4.00% for the six months ended June 30, 2024, compared to 3.79% for the six months ended June 30, 2023.

Current wording

The $42.9 million increase in interest income was due to a $55.4 million increase in interest income on loans, partially offset by a $12.5 million decrease in investment income. The $55.4 million increase in interest income on loans was primarily the result of a $417.0 million (or 5.82%) increase in average loans, from $7.17 billion for the nine months ended September 30, 2023 to $7.58 billion for the nine months ended September 30, 2024, as well as an increase in the yield on loans, which increased 68 basis points to 6.12% for the nine months ended September 30, 2024, compared to 5.44% for the nine months ended September 30, 2023. The $12.5 million decrease in investment income was primarily the result of a $550.6 million (or 27.23%) decrease in average investments, including money market investments, from $2.02 billion for the nine months ended September 30, 2023 to $1.47 billion for the nine months ended September 30, 2024. The decrease in average investments was partially offset by an increase in the yield on investments, including money market investments, which increased 17 basis points to 3.97% for the nine months ended September 30, 2024, compared to 3.80% for the nine months ended September 30, 2023.

Previous wording

The $20.3 million increase in interest expense was due to a $19.5 million increase in interest expense on deposits, as well as a $0.8 million increase in interest expense on borrowings. The increase in interest expense on deposits was the result of a $142.4 million (or 2.59%) increase in average on-balance sheet interest bearing deposits from $5.49 billion for the six months ended June 30, 2023, to $5.64 billion for the six months ended June 30, 2024, as well as an increase in the cost of deposits of 66 basis points, from 1.31% for the six months ended June 30, 2023 to 1.97% for the six months ended June 30, 2024. The increase in on-balance sheet interest bearing deposits was due to an increase in brokered deposits, bid CD deposits and time deposits, which was partially offset by decreases in savings accounts and transaction accounts.

Current wording

The $26.4 million increase in interest expense was due to a $26.2 million increase in interest expense on deposits, as well as a $0.2 million increase in interest expense on borrowings. The increase in interest expense on deposits was the result of a $138.2 million (or 2.49%) increase in average on-balance sheet interest bearing deposits from $5.54 billion for the nine months ended September 30, 2023, to $5.68 billion for the nine months ended September 30, 2024, as well as an increase in the cost of deposits of 58 basis points, from 1.42% for the nine months ended September 30, 2023 to 2.00% for the nine months ended

Previous wording

The provision for credit losses of $5.3 million for the six months ended June 30, 2024 represented an increase of $2.6 million, compared to $2.7 million for the six months ended June 30, 2023. Refer to the “Credit Metrics and Provision for Credit Losses” section for additional details regarding the level of the provision for credit losses recognized in each period presented.

Current wording

The provision for credit losses of $10.6 million for the nine months ended September 30, 2024 represented an increase of $9.5 million, compared to $1.1 million for the nine months ended September 30, 2023. Refer to the “Credit Metrics and Provision for Credit Losses” section for additional details regarding the level of the provision for credit losses recognized in each period presented.

Previous wording

The table below reflects Park's total other income for the six months ended June 30, 2024 and 2023.

Current wording

The table below reflects Park's total other income for the nine months ended September 30, 2024 and 2023.

Previous wording

Other income of $55.0 million for the six months ended June 30, 2024 represented an increase of $5.6 million, or 11.3%, compared to $49.4 million for the six months ended June 30, 2023. The $3.3 million increase in income from fiduciary activity was largely due to an increase in the market value of assets under management as well as updates to the fee structure. The $464,000 decrease in debit card fee income was partially due to a decrease in the average blended interchange rate per transaction, which is influenced by various factors, including the average spend per transaction. The $1.7 million increase in bank owned life insurance income was primarily related to an increase in death benefits received during the six months ended June 30, 2024. The change in loss on sale of debt securities, net was due to net losses on the sale of debt securities of $398,000 recorded during the six months ended June 30, 2024. No loss on sale of debt securities, net was recorded during the six months ended June 30, 2023. The $622,000 increase in other components of net periodic benefit income was largely due to an increase in the expected return on plan assets, and was partially offset by an increase in interest cost. The increase in miscellaneous income was largely due to an increase in net gain on sale of assets.

Current wording

Other income of $91.5 million for the nine months ended September 30, 2024 represented an increase of $14.4 million, or 18.7%, compared to $77.1 million for the nine months ended September 30, 2023. The $4.8 million increase in income from fiduciary activities was largely due to an increase in the market value of assets under management as well as updates to the fee structure. The $515,000 increase in other service income was mainly due to an increase in mortgage related other service income. The $577,000 decrease in debit card fee income was partially due to a decrease in the average blended interchange rate per transaction, which is influenced by various factors, including the average spend per transaction. The $2.3 million increase in bank owned life insurance income was primarily related to an increase in death benefits received during the nine months ended September 30, 2024. The change in pension settlement gain was due to a $5.8 million pension settlement gain, which was related to a combination of lump sum payouts as well as the purchase of a nonparticipating annuity contract that will provide ongoing benefits to vested and retired participants. The change in loss on sale of debt securities, net was due to net losses on the sale of debt securities of $398,000 recorded during the nine months ended September 30, 2024. No loss on sale of debt securities, net was recorded during the nine months ended September 30, 2023. The $610,000 increase in the gain on equity securities, net, was due to a $1.2 million increase in the gain on equity securities carried at fair value, partially offset by a $608,000 decrease in the gain on equity securities carried at NAV. The $933,000 increase in other components of net periodic benefit income was largely due to an increase in the expected return on plan assets, and was partially offset by an increase in interest cost. The increase in miscellaneous income was largely due to an increase in net gain on sale of assets.

Previous wording

The table below reflects Park's total other expense for the six months ended June 30, 2024 and 2023.

Current wording

The table below reflects Park's total other expense for the nine months ended September 30, 2024 and 2023.

Previous wording

Total other expense of $152.4 million for the six months ended June 30, 2024 represented an increase of $29,000 compared to $152.4 million for the six months ended June 30, 2023. The increase in salaries expense was primarily related to increases in base salary expense and officer incentive compensation expense, partially offset by decreases in share-based compensation expense and additional compensation expense. The decrease in occupancy expense was primarily due to decreases in lease expense and utilities expense. The decrease in furniture and equipment expense was primarily due to decreases in depreciation expense and maintenance and repairs expense. The decrease in professional fees and services expense was primarily due to decreases in legal expenses, consulting expenses and other fees expense, partially offset by increases in credit services expense and IntraFi deposit fee expense.

Current wording

Total other expense of $238.1 million for the nine months ended September 30, 2024 represented an increase of $7.9 million compared to $230.2 million for the nine months ended September 30, 2023. The increase in salaries expense was primarily related to increases in base salary expense and additional incentive compensation expense, that included a $1.7 million accrual for a one-time incentive payment, partially offset by a decrease in share-based compensation expense. The decrease in employee benefit expense was primarily due to a decrease in group insurance expense, partially offset by an increase in retirement expense. The decrease in furniture and equipment expense was primarily due to decreases in depreciation expense and maintenance and repairs expense. The increase in data processing fees was mainly related to an increase in software related expenses, partially offset by a decrease in ATM and debit card processing expense. The decrease in professional fees and services expense was primarily due to decreases in legal expenses, consulting expenses and other fees expense, partially offset by increases in credit services expense, audit fee expense and IntraFi deposit fee expense. The increase in marketing expense was primarily due to increases in advertising expense. The decrease in insurance expense was primarily due to decreases in FDIC insurance expense. The increase in foundation contributions was the result of a $2.0 million contribution made during the nine months ended September 30, 2024, with no contribution being made during the nine months ended September 30, 2023. The increase in miscellaneous expense is primarily due to an increase in expense for the allowance for unfunded credit losses.

Previous wording

The table below provides certain balance sheet information and financial ratios for Park as of or for the six months ended June 30, 2024 and 2023 and the year ended December 31, 2023.

Current wording

The table below provides certain balance sheet information and financial ratios for Park as of or for the nine months ended September 30, 2024 and 2023 and the year ended December 31, 2023.

Previous wording

(2) 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 includes the effects of taxable equivalent adjustments using a 21% federal corporate income tax rate. The taxable equivalent adjustments were $1.2 million and $1.8 million for the six months ended June 30, 2024 and 2023 and $3.7 million for the year ended December 31, 2023.

Current wording

(2) 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 includes the effects of taxable equivalent adjustments using a 21% federal corporate income tax rate. The taxable equivalent adjustments were $1.8 million and $2.9 million for the nine months ended September 30, 2024 and 2023 and $3.7 million for the year ended December 31, 2023.

Previous wording

Loans outstanding at June 30, 2024 were $7.66 billion, compared to (i) $7.48 billion at December 31, 2023, an increase of $188.2 million, and (ii) $7.21 billion at June 30, 2023, an increase of $456.3 million. The table below breaks out the change in loans outstanding, by loan type.

Current wording

Loans outstanding at September 30, 2024 were $7.73 billion, compared to (i) $7.48 billion at December 31, 2023, an increase of $254.8 million, and (ii) $7.35 billion at September 30, 2023, an increase of $381.2 million. The table below breaks out the change in loans outstanding, by loan type.

Previous wording

Park's allowance for credit losses was $86.6 million at June 30, 2024, compared to $83.7 million at December 31, 2023, an increase of $2.8 million, or 3.4%. Refer to the “Credit Metrics and Provision for Credit Losses” section for additional information regarding Park's loan portfolio and the level of provision for credit losses recognized in each period presented.

Current wording

Park's allowance for credit losses was $87.2 million at September 30, 2024, compared to $83.7 million at December 31, 2023, an increase of $3.5 million, or 4.2%. Refer to the “Credit Metrics and Provision for Credit Losses” section for additional information regarding Park's loan portfolio and the level of provision for credit losses recognized in each period presented.

Previous wording

Total deposits at June 30, 2024 were $8.31 billion, compared to (i) $8.04 billion at December 31, 2023, an increase of $269.9 million and (ii) $8.36 billion at June 30, 2023, a decrease of $46.5 million.

Current wording

Total deposits at September 30, 2024 were $8.21 billion, compared to (i) $8.04 billion at December 31, 2023, an increase of $172.1 million and (ii) $8.24 billion at September 30, 2023, a decrease of $30.1 million.

Previous wording

Park's deposits grew during the COVID pandemic and declined toward pre-pandemic levels throughout 2022 and 2023. In order to manage the impact of this growth on its balance sheet, Park utilized a program where certain deposit balances are transferred off balance sheet while maintaining the customer relationship. 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. The balance of deposits transferred off balance sheet has declined as deposit balances declined toward pre-pandemic levels.

Current wording

Park's deposits grew during the COVID pandemic and declined toward pre-pandemic levels throughout 2022 and 2023. In order to manage the impact of this growth on its balance sheet, Park utilized a program where certain deposit balances were transferred off balance sheet while maintaining the customer relationship. 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. The balance of deposits transferred off balance sheet has declined as overall deposit balances declined toward pre-pandemic levels.

Previous wording

During the six months ended June 30, 2024, total deposits including off balance sheet deposits increased by $268.8 million, or 3.3%. This increase consisted of a $370.4 million increase in total commercial deposits and a $11.2 million increase in brokered and bid CD deposits, partially offset by a $111.6 million decrease in total retail deposits and a $1.2 million decrease in off balance sheet deposits. The majority of off balance sheet deposits were commercial and thus impact the increase in commercial deposits as the deposits are moved back onto the balance sheet.

Current wording

During the nine months ended September 30, 2024, total deposits including off balance sheet deposits increased by $170.9 million, or 2.1%. This increase consisted of a $382.9 million increase in total commercial deposits, partially offset by a $136.8 million decrease in total retail deposits, a $74.0 million decrease in brokered and bid CD deposits and a $1.2 million decrease in off balance sheet deposits. The majority of off balance sheet deposits were commercial and thus impact the increase in commercial deposits as the deposits are moved back onto the balance sheet.

Previous wording

At June 30, 2024, total deposits, including off balance sheet deposits, decreased by $47.2 million, or 0.6%, to $8.31 billion compared to $8.36 billion at June 30, 2023. This decrease consisted of a $167.7 million decrease in total retail deposits and a $55.0 million decrease in total commercial deposits, partially offset by a $176.2 million increase in brokered and bid CD deposits.

Current wording

At September 30, 2024, total deposits including off balance sheet deposits decreased by $30.8 million, or 0.4%, to $8.21 billion compared to $8.25 billion at September 30, 2023. This decrease consisted of a $167.3 million decrease in total retail deposits, partially offset by a $46.2 million increase in total commercial deposits and $91.0 million increase in brokered and bid CD deposits.

Previous wording

As of June 30, 2024, Park had approximately $1.4 billion of uninsured deposits, which was 16.9% of total deposits. Uninsured deposits of $1.4 billion included $455.0 million of deposits that were over $250,000 but were fully collateralized by Park's investment securities portfolio.

Current wording

As of September 30, 2024, Park had approximately $1.4 billion of uninsured deposits, which was 16.9% of total deposits. Uninsured deposits of $1.4 billion included $412.9 million of deposits that were over $250,000, but were fully collateralized by Park's investment securities portfolio.

Previous wording

Comparison for the Second Quarters of 2024 and 2023

Current wording

Comparison for the Third Quarters of 2024 and 2023

Previous wording

Net interest income increased by $6.3 million, or 6.8%, to $97.8 million for the second quarter of 2024, compared to $91.6 million for the second quarter of 2023. See the discussion under the table below.

Current wording

Net interest income increased by $6.8 million, or 7.3%, to $101.1 million for the third quarter of 2024, compared to $94.3 million for the third quarter of 2023. See the discussion under the table below.

Previous wording

Average interest earning assets for the second quarter of 2024 decreased by $105.4 million, or 1.2%, to $9,017 million for the second quarter of 2024, compared to $9,122 million for the second quarter of 2023. The average yield on interest earning assets increased by 70 basis points to 5.78% for the second quarter of 2024, compared to 5.08% for the second quarter of 2023.

Current wording

Average interest earning assets for the third quarter of 2024 decreased by $77.7 million, or 0.8%, to $9,101 million for the third quarter of 2024, compared to $9,178 million for the third quarter of 2023. The average yield on interest earning assets increased by 61 basis points to 5.88% for the third quarter of 2024, compared to 5.27% for the third quarter of 2023.

Previous wording

Average interest bearing liabilities for the second quarter of 2024 increased by $83.3 million, or 1.4%, to $5,940 million, compared to $5,856 million for the second quarter of 2023. The average cost of interest bearing liabilities increased by 52 basis points to 2.10% for the second quarter of 2024, compared to 1.58% for the second quarter of 2023.

Current wording

Average interest bearing liabilities for the third quarter of 2024 increased by $64.0 million, or 1.1%, to $6,052 million, compared to $5,988 million for the third quarter of 2023. The average cost of interest bearing liabilities increased by 39 basis points to 2.15% for the third quarter of 2024, compared to 1.76% for the third quarter of 2023.

Previous wording

Yield on Loans: Average loan balances increased $455.1 million, or 6.4%, to $7,587 million for the second quarter of 2024, compared to $7,132 million for the second quarter of 2023. The average yield on the loan portfolio increased by 70 basis points to 6.13% for the second quarter of 2024, compared to 5.43% for the second quarter of 2023.

Current wording

Yield on Loans: Average loan balances increased $413.2 million, or 5.7%, to $7,681 million for the third quarter of 2024, compared to $7,267 million for the third quarter of 2023. The average yield on the loan portfolio increased by 59 basis points to 6.24% for the third quarter of 2024, compared to 5.65% for the third quarter of 2023.

Previous wording

Cost of Deposits: Average interest bearing deposit balances increased $117.6 million, or 2.1%, to $5,627 million for the second quarter of 2024, compared to $5,509 million for the second quarter of 2023. The average cost of funds on deposit balances increased by 53 basis points to 1.99% for the second quarter of 2024, compared to 1.46% for the second quarter of 2023. The table below shows for the three months ended June 30, 2024 and 2023, the average balance and cost of funds by type of deposit.

Current wording

Cost of Deposits: Average interest bearing deposit balances increased $130.5 million, or 2.3%, to $5,765 million for the third quarter of 2024, compared to $5,635 million for the third quarter of 2023. The average cost of funds on deposit balances increased by 43 basis points to 2.06% for the third quarter of 2024, compared to 1.63% for the third quarter of 2023. The table below shows for the three months ended September 30, 2024 and 2023, the average balance and cost of funds by type of deposit.

Previous wording

Net interest income increased by $9.7 million, or 5.3%, to $193.5 million for the first half of 2024, compared to $183.8 million for the first half of 2023. See the discussion under the table below.

Current wording

Net interest income increased by $16.5 million, or 5.9%, to $294.6 million for the first nine months of 2024, compared to $278.0 million for the first nine months of 2023. See the discussion under the table below.

Previous wording

Average interest earning assets for the first half of 2024 decreased by $161.9 million, or 1.8%, to $9,033 million for the first half of 2024, compared to $9,194 million for the first half of 2023. The average yield on interest earning assets increased by 73 basis points to 5.72% for the first half of 2024, compared to 4.99% for the first half of 2023.

Current wording

Average interest earning assets for the first nine months of 2024 decreased by $133.6 million, or 1.5%, to $9,055 million for the first nine months of 2024, compared to $9,189 million for the first nine months of 2023. The average yield on interest earning assets increased by 69 basis points to 5.77% for the first nine months of 2024, compared to 5.08% for the first nine months of 2023.

Previous wording

Average interest bearing liabilities for the first half of 2024 increased by $109.7 million, or 1.9%, to $5,973 million, compared to $5,863 million for the first half of 2023. The average cost of interest bearing liabilities increased by 65 basis points to 2.09% for the first half of 2024, compared to 1.44% for the first half of 2023.

Current wording

Average interest bearing liabilities for the first nine months of 2024 increased by $94.2 million, or 1.6%, to $5,999 million, compared to $5,905 million for the first nine months of 2023. The average cost of interest bearing liabilities increased by 56 basis points to 2.11% for the first nine months of 2024, compared to 1.55% for the first nine months of 2023.

Previous wording

Yield on Loans: Average loan balances increased $419.2 million, or 5.9%, to $7,535 million for the first half of 2024, compared to $7,116 million for the first half of 2023. The average yield on the loan portfolio increased by 72 basis points to 6.06% for the first half of 2024, compared to 5.34% for the first half of 2023.

Current wording

Yield on Loans: Average loan balances increased $417.0 million, or 5.8%, to $7,584 million for the first nine months of 2024, compared to $7,167 million for the first nine months of 2023. The average yield on the loan portfolio increased by 68 basis points to 6.12% for the first nine months of 2024, compared to 5.44% for the first nine months of 2023.

Previous wording

The table below shows the average balance and tax equivalent yield by type of loan for the six months ended June 30, 2024 and 2023.

Current wording

The table below shows the average balance and tax equivalent yield by type of loan for the nine months ended September 30, 2024 and 2023.

Previous wording

Cost of Deposits: Average interest bearing deposit balances increased $142.4 million, or 2.6%, to $5,635 million for the first half of 2024, compared to $5,493 million for the first half of 2023. The average cost of funds on deposit balances increased by 66 basis points to 1.97% for the first half of 2024, compared to 1.31% for the first half of 2023. The table below shows for the six months ended June 30, 2024 and 2023, the average balance and cost of funds by type of deposit.

Current wording

Cost of Deposits: Average interest bearing deposit balances increased $138.2 million, or 2.5%, to $5,679 million for the first nine months of 2024, compared to $5,541 million for the first nine months of 2023. The average cost of funds on deposit balances increased by 58 basis points to 2.00% for the first nine months of 2024, compared to 1.42% for the first nine months of 2023. The table below shows for the nine months ended September 30, 2024 and 2023, the average balance and cost of funds by type of deposit.

Previous wording

Yield on Average Interest Earning Assets: The following table shows the tax equivalent yield on average interest earning assets for the six months ended June 30, 2024 and for the years ended December 31, 2023, 2022 and 2021.

Current wording

Yield on Average Interest Earning Assets: The following table shows the tax equivalent yield on average interest earning assets for the nine months ended September 30, 2024 and for the years ended December 31, 2023, 2022 and 2021.