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Benefit Plan
 12 Months Ended
Dec. 31, 2021
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract]  
Benefit Plans Benefit Plans
The Corporation has a noncontributory Defined Benefit Pension Plan (the “Pension Plan”) covering substantially all of the employees of Park National Corporation and its subsidiaries. The Pension Plan provides benefits based on an employee’s years of service and compensation.

There was no pension contribution in 2021 or 2020 and there is no contribution expected to be made in 2022.
 
Using accrual measurement dates of December 31, 2021 and 2020, plan assets and benefit obligation activity for the Pension Plan are listed below:

(In thousands)20212020
Change in fair value of plan assets
Fair value at beginning of measurement period$230,442 $210,623 
Actual return on plan assets48,138 27,800 
Benefits paid(15,107)(7,981)
Fair value at end of measurement period$263,473 $230,442 
Change in benefit obligation
Projected benefit obligation at beginning of measurement period$184,410 $154,419 
Service cost9,916 8,319 
Interest cost5,359 5,283 
Actuarial loss (1,614)24,370 
Benefits paid(15,107)(7,981)
Projected benefit obligation at the end of measurement period$182,964 $184,410 
Funded status at end of year (fair value of plan assets less benefit obligation)$80,509 $46,032 
 
The decrease in the projected benefit obligation ("PBO") from $184.4 million as of December 31, 2020 to $183.0 million as of December 31, 2021, was largely the result of an increase in the discount rate from 3.00% to 3.23%. The decrease in the PBO was partially offset by changes due to mortality assumption updates and demographic losses driven by salary increases greater than assumed.

The asset allocation for the Pension Plan as of each measurement date, by asset category, was as follows:
 
Percentage of Plan Assets
Asset categoryTarget Allocation20212020
Equity securities50% - 100%82 %84 %
Fixed income and cash equivalentsremaining balance18 %16 %
Total100 %100 %
 
The investment policy, as established by the Retirement Plan Committee, is to invest assets according to the target allocation stated above. Assets will be reallocated periodically based on the investment strategy of the Retirement Plan Committee. The investment policy is reviewed periodically.

The expected long-term rate of return on plan assets used to measure the benefit obligation was 6.92% and 7.00% at December 31, 2021 and December 31, 2020, respectively. This return was based on the expected long-term return of each of the asset categories, weighted based on the median of the target allocation for each class.

The accumulated benefit obligation for the Pension Plan was $146.2 million and $149.5 million at December 31, 2021 and 2020, respectively.
 
On November 17, 2009, the Park Pension Plan completed the purchase of 115,800 common shares of Park for $7.0 million or $60.45 per share. At December 31, 2021 and 2020, the fair value of the 115,800 common shares held by the Pension Plan was $15.9 million, or $137.31 per share and $12.2 million, or $105.01 per share, respectively.
 
The weighted average assumptions used to determine benefit obligations at December 31, 2021, 2020 and 2019 were as follows:
 
202120202019
Discount rate3.23 %3.00 %3.53 %
Rate of compensation increase
Under age 308.25 %8.25 %10.00 %
Ages 30-396.00 %6.00 %6.00 %
Ages 40-495.00 %5.00 %4.00 %
Ages 50-544.25 %4.25 %3.00 %
Ages 55-593.75 %3.75 %3.00 %
Ages 60-643.50 %3.50 %3.00 %
Ages 65 and over3.25 %3.25 %3.00 %

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

2022$12,775 
202311,500 
202412,102 
202512,405 
202612,360 
2027-203161,702 
Total$122,844 
 
The following table shows ending balances of accumulated other comprehensive loss at December 31, 2021 and 2020.
 
(In thousands)20212020
Prior service credit$137 $152 
Net actuarial loss(7,469)(43,723)
Total(7,332)(43,571)
Deferred taxes1,540 9,150 
Accumulated other comprehensive loss$(5,792)$(34,421)
Using actuarial measurement dates of December 31 for 2021, 2020 and 2019, components of net periodic benefit income and other amounts recognized in other comprehensive income (loss) were as follows:
 
(In thousands)202120202019Affected Line Item in the Consolidated Statements of Income
Components of net periodic benefit income (loss) and other amounts recognized in other comprehensive income (loss)
Service cost$(9,916)$(8,319)$(5,873)Employee benefits
Interest cost(5,359)(5,283)(5,491)Other components of net periodic benefit income
Expected return on plan assets15,731 14,410 12,105 Other components of net periodic benefit income
Recognized net actuarial loss and prior service credit(2,220)(1,175)(1,882)Other components of net periodic benefit income
Net periodic benefit loss$(1,764)$(367)$(1,141)
Net actuarial gain (loss) and prior service credit$34,019 $(10,981)$1,913 
Amortization of net loss2,220 1,175 1,882 
Total recognized in other comprehensive income (loss)36,239 (9,806)3,795 
Total recognized in net benefit income (loss) and other comprehensive income (loss)$34,475 $(10,173)$2,654 
 
The weighted average assumptions used to determine net periodic benefit loss for the years ended December 31, 2021, 2020 and 2019 are listed below:
 
202120202019
Discount rate3.00 %3.53 %4.60 %
Rate of compensation increase
     Under age 308.25 %10.00 %10.00 %
     Ages 30-396.00 %6.00 %6.00 %
     Ages 40-495.00 %4.00 %4.00 %
  Ages 50-54 4.25 %3.00 %3.00 %
Ages 55-593.75 %3.00 %3.00 %
Ages 60-64 3.50 %3.00 %3.00 %
Ages 65 and over 3.25 %3.00 %3.00 %
Expected long-term return on plan assets7.00 %7.00 %7.00 %
 
U.S. GAAP defines fair value as the price that would be received by Park for an asset or paid by Park to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date, using the most advantageous market for the asset or liability. The fair values of equity securities, consisting of mutual fund investments and common stock held by the Pension Plan, are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs). Additionally, due to their short-term nature, the fair value of interest bearing demand deposits is determined by reference to their face value (Level 1 inputs). Interest bearing time deposits, United States Government agency obligations and corporate bonds are valued by the trustee based on yields available on comparable securities of issuers with similar credit ratings as of the end of the year (Level 2 inputs). No investments were categorized as Level 3 inputs.
The fair value of the plan assets at December 31, 2021 and December 31, 2020, by asset class, is as follows.
Fair Value MeasurementsFair Value Measurements
at December 31, 2021, Usingat December 31, 2020, Using
(In thousands)(Level 1)(Level 2)(Level 1)(Level 2)
Interest-bearing account$3,222 $4,731 $2,785 $4,837 
Mutual funds60,987 — 54,461 — 
U.S. Government agency obligations— 15,254 — 5,530 
Corporate bonds— 16,815 — 24,986 
Common stocks162,464 — 137,843 — 
$226,673 $36,800 $195,089 $35,353 

Salary Deferral Plan

The Corporation has a voluntary salary deferral plan (the Corporation's Employees Stock Ownership Plan) covering substantially all of the employees of the Corporation and its subsidiaries. Eligible employees may contribute a portion of their compensation subject to a maximum statutory limitation. The Corporation provides a matching contribution established annually by the Corporation. Contribution expense for the Corporation was $4.3 million, $4.2 million, and $3.9 million for 2021, 2020 and 2019, respectively.

Supplemental Executive Retirement Plan

The Corporation has entered into Supplemental Executive Retirement Plan Agreements (the "SERP Agreements") with certain key officers of Park National Corporation and its subsidiaries which provide defined pension benefits in excess of limits imposed by federal income tax law. The accrued benefit cost for the SERP Agreements totaled $13.4 million and $12.3 million for 2021 and 2020, respectively, and is recorded within "Other liabilities" on the Consolidated Balance Sheets . The expense for the Corporation was as follows:

(In thousands)202120202019Affected Line Item in the Consolidated
Statements of Income
Service cost$1,345 $1,680 $816 Employee benefits
Interest cost510 403 484 Miscellaneous expense
Total SERP expense$1,855 $2,083 $1,300