8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)  January 24, 2011

Park National Corporation

(Exact name of registrant as specified in its charter)

Ohio	1-13006	31-1179518
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

50 North Third Street, P.O. Box 3500, Newark, Ohio	43058-3500
(Address of principal executive offices)	(Zip Code)

(740) 349-8451

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 – Results of Operations and Financial Condition

On January 24, 2011, Park National Corporation (“Park”) issued a news release (the “Financial Results News Release”) announcing financial results for the three months and year ended December 31, 2010.  A copy of this Financial Results News Release is included as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference herein.

Park’s management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate Park’s performance. Specifically, management reviews return on average tangible common equity, return on average tangible assets, tangible common equity to tangible assets and tangible common book value per common share.  Management has included in the Financial Results News Release information relating to the return on average tangible common equity, return on average tangible assets, tangible common equity to tangible assets and tangible common book value per common share for the three and twelve month periods ended December 31, 2010 and 2009.  For purposes of calculating the return on average tangible common equity, a non-GAAP financial measure, net income available to common shareholders for each period is divided by average tangible common equity during the period. Average tangible common equity equals average stockholders’ equity during the applicable period less (i) average goodwill and other intangible assets during the applicable period and (ii) average preferred stock during the applicable period. For the purpose of calculating the return on average tangible assets, a non-GAAP financial measure, net income available to common shareholders 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 tangible common equity to tangible assets, a non-GAAP financial measure, tangible common equity is divided by tangible assets.  Tangible common equity equals stockholders’ equity less preferred stock and goodwill and intangible assets.  Tangible assets equals total assets less goodwill and intangible assets.  For the purpose of calculating tangible common book value per common share, a non-GAAP financial measure, tangible common equity is divided by common shares outstanding at period end.  Management believes that the disclosure of return on average tangible common equity, return on average tangible assets, tangible common equity to tangible assets and tangible common book value per common share presents additional information to the reader of the consolidated financial statements, which, when read in conjunction with the consolidated financial statements prepared in accordance with GAAP, assists in analyzing Park’s operating performance and ensures comparability of operating performance from period to period while eliminating certain non-operational effects of acquisitions and, in the case of return on average common equity and tangible common book value per common share, the impact of preferred stock.  In the Financial Results News Release, Park has provided a reconciliation of average tangible common equity to average stockholders’ equity, average tangible assets to average assets, tangible common equity to stockholders’ equity and tangible assets to total assets solely for the purpose of complying with SEC Regulation G and not as an indication that return on average tangible common equity, return on average tangible assets, tangible common equity to tangible assets and tangible common book value per common share are substitutes for return on average equity, return on average assets, common equity to assets and common book value per common share, respectively, as determined by GAAP.

2

Item 7.01 — Regulation FD Disclosure

The following is a discussion of the actual financial results for the three months and year ended December 31, 2010, and a comparison of these results to the guidance previously provided within the Form 10-Q for the quarterly period ended September 30, 2010 (the “September 30, 2010 Form 10-Q”) as well as a comparison of these results to the original projection included in the Annual Report to Shareholders for the fiscal year ended December 31, 2009 (the “2009 Annual Report”). Finally, the following paragraphs also discuss the projected results for the year ending December 31, 2011.

Net Interest Income:

For the fourth quarter of 2010, net interest income was $68.5 million and for the year ended December 31, 2010, net interest income was $274.0 million.  On page 38 of the 2009 Annual Report, management projected that net interest income would be between $265 million and $275 million. In the September 30, 2010 Form 10-Q, management projected that net interest income would be in the high end of the range of $265 million to $275 million for 2010.  Net interest income for the year ended December 31, 2010 was in line with management expectations.  For the year ended December 31, 2010, loans increased by $92.3 million, or 2.0 percent, which was in line with Management's projection in the 2009 Annual Report of 1% to 3%.  For the year ending December 31, 2011, management expects net interest income to be between $268 million and $278 million.

Provision for Loan Losses:

For the three months ended December 31, 2010, the provision for loan losses was $20.4 million and net loan charge-offs were $16.5 million. For the year ended December 31, 2010, the provision for loan losses was $64.9 million and net loan charge-offs were $60.2 million.  On page 40 of the 2009 Annual Report, management projected that the provision for loan losses would be between $45 million and $55 million. In the September 30, 2010 Form 10-Q, management projected that the provision for loan losses would be approximately $55 million to $60 million in 2010.  The actual results for 2010 exceeded the top end of the range by $4.9 million.  Several factors contributed to this, including the increase in nonaccrual loans, declines in collateral values for certain loans that are collateral dependent, as well as the potential impact from the Gulf of Mexico oil spill. Park and Vision Bank management continue to work very closely with those borrowers who could be impacted by the oil spill, assisting them through the claims process and assessing their continued ability to repay contractual principal and interest.  During 2010, nonaccrual loans increased by $55.7 million, primarily due to loans which were deemed troubled debt restructurings and therefore placed on nonaccrual status. For the year ended December 31, 2011, management expects the provision for loan losses will be approximately $47 million to $57 million.

Other Income:

For the fourth quarter of 2010, total other income was $14.7 million and for the year ended December 31, 2010, total other income was $65.6 million, excluding in each case gains from the sale of securities.  On page 39 of the 2009 Annual Report, management projected that total other income (excluding gains from the sale of securities) would be $68 million for 2010.  In the September 30, 2010 Form 10-Q, management reiterated the same guidance as provided in the 2009 Annual Report.  Total other income for the year ended December 31, 2010 was $2.4 million below the latest projection, mainly as a result of devaluations of other real estate owned. For the year ending December 31, 2011, management expects other income to be within a range of $63 million to $67 million.

3

Gain on Sale of Securities:

On page 39 of the 2009 Annual Report, management projected that a pre-tax gain of $7.3 million would be recognized from the sale of $200 million of securities during the first quarter of 2010. During the first quarter of 2010, Park actually sold $201 million of investment securities for a pre-tax gain of $8.3 million.  During the second quarter of 2010, Park sold $56.8 million of investment securities for a pre-tax gain of $3.5 million.  Additionally, there was a small gain of $45,000 in the fourth quarter of 2010 from the sale of investment securities.  In total, Park had $11.9 million of pre-tax gains from the sale of investment securities for the year ended December 31, 2010.  Management does not currently expect any gains or losses on the sale of investment securities during 2011, although at December 31, 2010, Park had a net unrealized gain of $23.3 million in available for sale securities.

Other Expense:

Total other expense was $46.5 million for the three months ended December 31, 2010 and was $187.1 million for the year ended December 31, 2010.  On page 39 of the 2009 Annual Report, management projected that total other expense would be $191 million for 2010.  In the September 30, 2010 Form 10-Q, management projected that total other expense would be between $188 million and $190 million for 2010.  Total other expense for the year ended December 31, 2010 was $0.9 million less than the low end of the range from the latest projection. Management expects total other expense to be approximately $183 million to $187 million for 2011.

4

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This Current Report on Form 8-K, including Exhibit 99.1 included within this Current Report, contains forward-looking statements that 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. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. 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: deterioration in the asset value of Park’s loan portfolio may be worse than expected due to a number of factors, such as adverse changes in economic conditions that impair the ability of borrowers to repay their loans, the underlying value of the collateral could prove less valuable than assumed and cash flows may be worse than expected; Park’s ability to execute its business plan successfully and within the expected timeframe; general economic and financial market conditions, and weakening in the economy, specifically, the real estate market and credit market, either nationally or in the states in which Park and its subsidiaries do business, may be worse than expected which could decrease the demand for loan, deposit and other financial services and increase loan delinquencies and defaults; the effects of the Gulf of Mexico oil spill; changes in market rates and prices may adversely impact the value of securities, loans, deposits and other financial instruments and the interest rate sensitivity of our consolidated balance sheet; changes in consumer spending, borrowing and saving habits; our liquidity requirements could be adversely affected by changes in our assets and liabilities; competitive factors among financial institutions increase significantly, including product and pricing pressures and our ability to attract, develop and retain qualified bank professionals; the nature, timing and effect of changes in banking regulations or other regulatory or legislative requirements affecting the respective businesses of Park and its subsidiaries, including changes in laws and regulations concerning taxes, accounting, banking, securities and other aspects of the financial services industry, specifically the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; the effect of fiscal and governmental policies of the United States federal government; demand for loans in the respective market areas served by Park and its subsidiaries, and other risk factors relating to the banking industry as detailed from time to time in Park’s reports filed with the Securities and Exchange Commission 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, 2009 and in "Item 1A. Risk Factors" of Part II of Park's Quarterly Report on Form 10-Q for the quarterly periods ended March 31, 2010, June 30, 2010, and September 30, 2010.  Undue reliance should not be placed on the forward-looking statements, which speak only as of the date of this Current Report on Form 8-K. Park does not undertake, and specifically disclaims any obligation, to publicly release the result 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 is made, or reflect the occurrence of unanticipated events, except to the extent required by law.

Item 8.01 – Other Events

Declaration of Cash Dividend

As reported in the Financial Results News Release, on January 24, 2010, Park's Board of Directors declared a $0.94 per share quarterly cash dividend in respect of Park’s common shares.  The dividend is payable on March 10, 2011 to common shareholders of record as of the close of business on February 25, 2011.  A copy of the Financial Results News Release is included as Exhibit 99.1 and the portion thereof addressing the declaration of the cash dividend by Park’s Board of Directors is incorporated by reference herein.

Notification of Date of 2011 Annual Meeting of Shareholders

Park’s Board of Directors took action to set the date of Park’s 2011 Annual Meeting of Shareholders, which will be held on April 18, 2011.  The record date for determining the common shareholders entitled to receive notice of and vote at the 2011 Annual Meeting of Shareholders was also set by Park’s Board of Directors to be the close of business on February 25, 2011.

5

Item 9.01 – Financial Statements and Exhibits.

(a) Not applicable

(b) Not applicable

(c) Not applicable

(d) Exhibits. The following exhibit is included with this Current Report on Form 8-K:

Exhibit No.	Description
99.1	News Release issued by Park National Corporation on January 24, 2011 addressing financial results for the three months and year ended December 31, 2010.

[Remainder of page intentionally left blank;

signature on following page.]

 

6

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PARK NATIONAL CORPORATION
Dated: January 24, 2011	By:	/s/ John W. Kozak
		John W. Kozak
		Chief Financial Officer

7

 

INDEX TO EXHIBITS

Current Report on Form 8-K

Dated January 24, 2011

Park National Corporation

Exhibit No.	Description
99.1	News Release issued by Park National Corporation on January 24, 2011 addressing financial results for the three months and year ended December 31, 2010.

8

EX-99.1

  N e w s R e l e a s e

January 24, 2011 Exhibit 99.1

Park National Corporation Reports Fourth Quarter

and Year End 2010 Financial Results

Board Continues Quarterly Cash Dividend of $0.94 per Common Share

NEWARK, Ohio – Park National Corporation (NYSE Amex: PRK) (Park) today reported financial results for the three months ended December 31, 2010 and the year ended December 31, 2010. Park's Board of Directors also today declared a $0.94 per common share quarterly cash dividend, payable on March 10, 2011 to common shareholders of record on February 25, 2011.

Park's net income was $74.2 million for each of the years ended December 31, 2010 and 2009. Net income for the 2010 fourth quarter was $12.7 million, a slight increase from $12.3 million earned in the same period in 2009.

The issuance of common shares over the last four quarters resulted in a decline in net income per diluted common share compared to last year. Net income per diluted common share for the 2010 year was $4.51, a 6.4 percent decline from the $4.82 reported in 2009. Net income per diluted common share for the 2010 fourth quarter was $0.73, a 1.4 percent decline from $0.74 in the fourth quarter of 2009.

Ohio-Based Operations

Park, excluding Vision Bank (Park's Ohio-based operations), reported net income of $103.5 million for the 2010 year, compared to 2009 net income of $104.3 million. This performance resulted in return on assets of 1.58 percent and 1.61 percent for Park's Ohio-based operations in 2010 and 2009, respectively. Additionally, Park's two Ohio-based subsidiaries, The Park National Bank and Guardian Financial Services Company, generated record earnings in the 2010 year. 

Loan growth for Park's Ohio-based operations was $128.7 million, or 3.2 percent, during 2010. Nonperforming loans for Park's Ohio-based operations increased by $32.2 million in 2010, ending the year at $121.0 million, or 2.96 percent of period-end loans. Of the $32.2 million increase in nonperforming loans, $26.7 million was due to loans purchased from Vision Bank subsequent to Park's 2007 acquisition. Without these loan purchases, Park's Ohio-based operations would have experienced a $5.5 million increase in nonperforming loans in 2010.

"We are very pleased with our results in Ohio. Interest rates for 15- and 30-year home loans during 2010, combined with our local servicing, were especially appealing," said Park Chairman C. Daniel DeLawder. "More than 20 percent of the home loans we refinanced in Ohio last year were for clients whose original loan was from another lender. It remains a very attractive time to borrow money. We have it to lend and we continue to welcome opportunities to lend to individuals and businesses alike."

Credit Quality

In 2010, Park continued to proactively increase its allowance for loan losses, providing additional reserves for future losses in the loan portfolio. At December 31, 2010, the allowance for loan losses was $121.4 million, a 4.0 percent increase compared to $116.7 million at December 31, 2009. Nonperforming loans ended the 2010 year at $292.9 million, or 6.19 percent of period-end loans, compared to $248.5 million, or 5.35 percent of period-end loans in 2009.

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com

  N e w s R e l e a s e

Park's loan loss provision for the 2010 year was $64.9 million, compared to $68.8 million in 2009. Park's Ohio-based operations had a loan loss provision of $25.7 million in 2010, compared to $24.4 million in 2009. Park subsidiary Vision Bank had a loan loss provision of $39.2 million in 2010, compared to $44.4 million in 2009. Net loan charge-offs at Park for the 2010 year were $60.2 million, or 1.30 percent of average loans outstanding, compared to $52.2 million or 1.14 percent of average loans in 2009.

Capital Raising Activities

Capital-raising activities over the past seven quarters increased common shares outstanding by 1,413,256 or 10.1 percent, generating a net total of approximately $87 million. For the 2010 year, Park issued 509,184 common shares at a weighted average price per share of $67.99, for gross proceeds of $34.6 million. The weighted average price per share of $67.99 represents a multiple of 1.6 times the December 31, 2009 common book value per share of $41.71. After all expenses, Park raised an additional $33.5 million of common equity from the sale of these common shares in 2010.

Other Information

During 2010, Park realized a pre-tax gain of $11.9 million from the sale of investment securities. Park's 2009 results included a pre-tax gain of $7.3 million from the sale of investment securities.

Headquartered in Newark, Ohio, Park National Corporation has $7.3 billion in total assets (as of December 31, 2010). Park consists of 13 community bank divisions and two specialty finance companies. Park's Ohio-based banking operations are conducted through Park subsidiary The Park National Bank and its divisions which include Fairfield National Bank Division, Richland Bank Division, Century National Bank Division, First-Knox National Bank Division, Farmers & Savings Bank Division, United Bank Division, Second National Bank Division, Security National Bank Division, Unity National Bank Division and The Park National Bank of Southwest Ohio & Northern Kentucky Division. Park's other banking subsidiary is Vision Bank (headquartered in Panama City, Florida), and its Vision Bank Division (of Gulf Shores, Alabama). Park also includes Scope Leasing, Inc. (d.b.a. Scope Aircraft Finance) and Guardian Financial Services Company (d.b.a. Guardian Finance Company).

Media contacts: Bethany Lewis, 740.349.0421, blewis@parknationalbank.com or John Kozak, 740.349.3792

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This news release contains forward-looking statements that 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: deterioration in the asset value of Park's loan portfolio may be worse than expected due to a number of factors, such as adverse changes in economic conditions that impair the ability of borrowers to repay their loans, the underlying value of the collateral could prove less valuable than assumed and cash flows may be worse than expected; Park's ability to execute its business plan successfully and within the expected timeframe; general economic and financial market conditions, and weakening in the economy, specifically, the real estate market and credit market, either nationally or in the states in which Park and its subsidiaries do business, may be worse than expected which could decrease the demand for loan, deposit and other financial services and increase loan delinquencies and defaults; the effects of the Gulf of Mexico oil spill; changes in market rates and prices may adversely impact the value of securities, loans, deposits and other financial instruments and the interest rate sensitivity of our consolidated balance sheet; changes in consumer spending, borrowing and saving habits; our liquidity requirements could be adversely affected by changes in our assets and liabilities; competitive factors among financial institutions increase significantly, including product and pricing pressures and our ability to attract, develop and retain qualified bank professionals; the nature, timing and effect of changes in banking regulations or other regulatory or legislative requirements affecting the respective businesses of Park and its subsidiaries, including changes in laws and regulations concerning taxes, accounting, banking, securities and other aspects of the financial services industry, specifically the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; the effect of fiscal and governmental policies of the United States federal government; demand for loans in the respective market areas served by Park and its subsidiaries, and other risk factors relating to the banking industry as detailed from time to time in Park's reports filed with the Securities and Exchange Commission 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, 2009 and in "Item 1A. Risk Factors" of Part II of Park's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2010. Undue reliance should not be placed on the forward-looking statements, which speak only as of the date hereof. Park does not undertake, and specifically disclaims any obligation, to publicly release the result 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 is made, or reflect the occurrence of unanticipated events, except to the extent required by law.

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com

PARK NATIONAL CORPORATION

Financial Highlights

Three months ended December 31, 2010, September 30, 2010, and December 31, 2009

	2010						2009			Percent change vs.
(in thousands, except share and per share data)	4th QTR			3rd QTR			4th QTR			3Q '10			4Q '09
INCOME STATEMENT:
Net interest income	$	68,498		$	69,445		$	68,802			-1.4	%		-0.4	%
Provision for loan losses		20,448			14,654			25,720			39.5	%		-20.5	%
Other income		14,745			17,530			16,718			-15.9	%		-11.8	%
Gain on sale of securities		45			-			-			N/A			N/A
Total other expense		46,520			45,696			46,660			1.8	%		-0.3	%
Income before income taxes	$	16,320		$	26,625		$	13,140			-38.7	%		24.2	%
Income taxes		3,625			7,048			844			-48.6	%		329.5	%
Net income	$	12,695		$	19,577		$	12,296			-35.2	%		3.2	%
Preferred stock dividends and accretion		1,452			1,452			1,441			0.0	%		0.8	%
Net income available to common shareholders	$	11,243		$	18,125		$	10,855			-38.0	%		3.6	%
MARKET DATA:
Earnings per common share - basic (b)	$	0.73		$	1.19		$	0.74			-38.7	%		-1.4	%
Earnings per common share - diluted (b)		0.73			1.19			0.74			-38.7	%		-1.4	%
Cash dividends per common share		0.94			0.94			0.94			0.0	%		0.0	%
Common book value per common share at period end		42.12			43.10			41.71			-2.3	%		1.0	%
Stock price per common share at period end		72.67			64.04			58.88			13.5	%		23.4	%
Market capitalization at period end		1,119,041			979,956			876,298			14.2	%		27.7	%
Weighted average common shares - basic (a)		15,340,427			15,272,720			14,658,601			0.4	%		4.7	%
Weighted average common shares - diluted (a)		15,352,600			15,272,720			14,658,601			0.5	%		4.7	%
Common shares outstanding at period end		15,398,934			15,302,244			14,882,780			0.6	%		3.5	%
PERFORMANCE RATIOS:
Annualized return on average assets (a)(b)		0.64	%		1.02	%		0.61	%		-37.3	%		4.9	%
Annualized return on average common equity (a)(b)		6.72	%		10.90	%		6.94	%		-38.3	%		-3.2	%
Yield on loans		5.73	%		5.76	%		5.91	%		-0.5	%		-3.0	%
Yield on investments		3.87	%		4.26	%		4.53	%		-9.2	%		-14.6	%
Yield on earning assets		5.23	%		5.34	%		5.51	%		-2.1	%		-5.1	%
Cost of interest bearing deposits		0.82	%		0.91	%		1.33	%		-9.9	%		-38.3	%
Cost of borrowings		2.76	%		2.91	%		2.68	%		-5.2	%		3.0	%
Cost of paying liabilities		1.21	%		1.29	%		1.58	%		-6.2	%		-23.4	%
Net interest margin (annualized)		4.25	%		4.28	%		4.20	%		-0.7	%		1.2	%
Efficiency ratio (g)		55.52	%		52.21	%		54.24	%		6.3	%		2.4	%
OTHER RATIOS (NON GAAP):
Annualized return on average tangible assets (a)(b)(e)		0.64	%		1.03	%		0.62	%		-37.9	%		3.2	%
Annualized return on average tangible common equity (a)(b)(c)		7.63	%		12.39	%		8.00	%		-38.4	%		-4.6	%
Tangible common book value per common share (d)	$	37.03		$	37.93		$	36.22			-2.4	%		2.2	%

PARK NATIONAL CORPORATION

Financial Highlights (continued)

Three months ended December 31, 2010, September 30, 2010, and December 31, 2009

										Percent change vs.
BALANCE SHEET:	December 31, 2010			September 30, 2010			December 31, 2009			3Q '10			4Q '09
Investment securities	$	2,039,791		$	1,896,969		$	1,863,560			7.5	%		9.5	%
Loans		4,732,685			4,656,902			4,640,432			1.6	%		2.0	%
Allowance for loan losses		121,397			117,405			116,717			3.4	%		4.0	%
Goodwill and other intangibles		78,377			79,199			81,799			-1.0	%		-4.2	%
Other real estate owned		44,325			52,837			41,240			-16.1	%		7.5	%
Total assets		7,298,377			7,090,456			7,040,329			2.9	%		3.7	%
Total deposits		5,095,420			5,100,030			5,188,052			-0.1	%		-1.8	%
Borrowings		1,375,652			1,003,624			1,053,850			37.1	%		30.5	%
Stockholders' equity		745,824			756,627			717,264			-1.4	%		4.0	%
Common equity		648,534			659,539			620,781			-1.7	%		4.5	%
Tangible common equity (d)		570,157			580,340			538,982			-1.8	%		5.8	%
Nonperforming loans		289,268			237,194			233,686			22.0	%		23.8	%
Nonperforming assets		333,593			290,031			274,926			15.0	%		21.3	%
Past due 90 day loans and still accruing		3,590			10,700			14,773			-66.4	%		-75.7	%
ASSET QUALITY RATIOS:
Loans as a % of period end assets		64.85	%		65.68	%		65.91	%		-1.3	%		-1.6	%
Nonperforming loans as a % of period end loans		6.11	%		5.09	%		5.04	%		20.0	%		21.2	%
Past due 90 day loans as a % of period end loans		0.08	%		0.23	%		0.32	%		-65.2	%		-75.0	%
Nonperforming assets / Period end loans + OREO		6.98	%		6.16	%		5.87	%		13.3	%		18.9	%
Allowance for loan losses as a % of period end loans		2.57	%		2.52	%		2.52	%		2.0	%		2.0	%
Net loan charge-offs	$	16,456		$	17,925		$	19,044			-8.2	%		-13.6	%
Annualized net loan charge-offs as a % of average loans (a)		1.39	%		1.53	%		1.63	%		-9.2	%		-14.7	%
CAPITAL & LIQUIDITY:
Total equity / Period end assets		10.22	%		10.67	%		10.19	%		-4.2	%		0.3	%
Common equity / Period end assets		8.89	%		9.30	%		8.82	%		-4.4	%		0.8	%
Tangible common equity (d) / Tangible assets (f)		7.90	%		8.28	%		7.75	%		-4.6	%		1.9	%
Average equity / Average assets (a)		10.84	%		10.73	%		10.14	%		1.0	%		6.9	%
Average equity / Average loans (a)		16.20	%		16.27	%		15.49	%		-0.4	%		4.6	%
Average loans / Average deposits (a)		91.68	%		89.64	%		88.65	%		2.3	%		3.4	%

PARK NATIONAL CORPORATION

Financial Highlights (continued)

Twelve months ended December 31, 2010 and 2009

	December 31,			December 31,			Percent
(in thousands, except share and per share data)	2010			2009			change
INCOME STATEMENT:
Net interest income	$	274,044		$	273,491			0.2	%
Provision for loan losses		64,902			68,821			-5.7	%
Other income		65,632			73,850			-11.1	%
Gain on sale of securities		11,864			7,340			61.6	%
Total other expense		187,107			188,725			-0.9	%
Income before income taxes	$	99,531		$	97,135			2.5	%
Income taxes		25,314			22,943			10.3	%
Net income	$	74,217		$	74,192			0.0	%
Preferred stock dividends and accretion		5,807			5,762			0.8	%
Net income available to common shareholders	$	68,410		$	68,430			0.0	%
MARKET DATA:
Earnings per common share - basic (b)	$	4.51		$	4.82			-6.4	%
Earnings per common share - diluted (b)		4.51			4.82			-6.4	%
Cash dividends per common share		3.76			3.76			0.0	%
Weighted average common shares - basic (a)		15,152,692			14,206,335			6.7	%
Weighted average common shares - diluted (a)		15,155,735			14,206,335			6.7	%
PERFORMANCE RATIOS:
Return on average assets (a)(b)		0.97	%		0.97	%		0.0	%
Return on average common equity (a)(b)		10.53	%		11.81	%		-10.8	%
Yield on loans		5.80	%		6.03	%		-3.8	%
Yield on investments		4.25	%		4.81	%		-11.6	%
Yield on earning assets		5.36	%		5.67	%		-5.5	%
Cost of interest bearing deposits		0.98	%		1.53	%		-35.9	%
Cost of borrowings		2.88	%		2.46	%		17.1	%
Cost of paying liabilities		1.35	%		1.73	%		-22.0	%
Net interest margin		4.26	%		4.22	%		0.9	%
Efficiency ratio (g)		54.75	%		54.01	%		1.4	%
ASSET QUALITY RATIOS:
Net loan charge-offs	$	60,222		$	52,192			15.4	%
Annualized net loan charge-offs as a % of average loans (a)		1.30	%		1.14	%		14.0	%
CAPITAL AND LIQUIDITY:
Average equity / Average assets (a)		10.60	%		9.60	%		10.4	%
Average equity / Average loans (a)		16.08	%		14.70	%		9.4	%
Average loans / Average deposits (a)		89.59	%		90.97	%		-1.5	%
OTHER RATIOS (NON GAAP):
Return on average tangible assets (a)(b)(e)		0.98	%		0.98	%		0.0	%
Return on average tangible common equity (a)(b)(c)		12.01	%		13.81	%		-13.0	%

PARK NATIONAL CORPORATION

Financial Highlights (continued)

(a) Averages are for the quarters ended December 31, 2010, September 30, 2010, and December 31, 2009, and the twelve-month periods ended December 31, 2010 and December 31, 2009.

(b) Reported measure uses net income available to common shareholders.

(c) Net income available to common shareholders for each period divided by average tangible common equity during the period.  Average tangible common equity equals average stockholders' equity during the applicable period less (i) average preferred stock during the applicable period and (ii) average goodwill and other intangibles during the applicable period.

RECONCILIATION OF AVERAGE STOCKHOLDERS' EQUITY TO AVERAGE TANGIBLE COMMON EQUITY:

	THREE MONTHS ENDED						TWELVE MONTHS ENDED
	December 31, 2010		September 30, 2010		December 31, 2009		December 31, 2010		December 31, 2009
AVERAGE STOCKHOLDERS' EQUITY	$	760,556	$	756,939	$	717,268	$	746,555	$	675,314
Less:  Average preferred stock		97,174		96,972		96,374		96,873		96,090
Average goodwill and other intangibles		78,823		79,651		82,322		80,072		83,722
AVERAGE TANGIBLE COMMON EQUITY	$	584,559	$	580,316	$	538,572	$	569,610	$	495,502

(d) Tangible common equity equals ending stockholders' equity less preferred stock and goodwill and other intangibles, in each case at the end of the period.

RECONCILIATION OF STOCKHOLDERS' EQUITY TO TANGIBLE COMMON EQUITY:

	December 31, 2010		September 30, 2010		December 31, 2009
STOCKHOLDERS' EQUITY	$	745,824	$	756,627	$	717,264
Less: Preferred stock		97,290		97,088		96,483
Goodwill and other intangibles		78,377		79,199		81,799
TANGIBLE COMMON EQUITY	$	570,157	$	580,340	$	538,982

(e) Net income available to common shareholders for each period divided by average tangible assets during the period.  Average tangible assets equals average assets less average goodwill and other intangibles.

RECONCILIATION OF AVERAGE ASSETS TO AVERAGE TANGIBLE ASSETS:

	THREE MONTHS ENDED						TWELVE MONTHS ENDED
	December 31, 2010		September 30, 2010		December 31, 2009		December 31, 2010		December 31, 2009
AVERAGE ASSETS	$	7,013,852	$	7,052,789	$	7,076,494	$	7,042,750	$	7,035,531
Less:  Average goodwill and other intangibles		78,823		79,651		82,322		80,072		83,722
AVERAGE TANGIBLE ASSETS	$	6,935,029	$	6,973,138	$	6,994,172	$	6,962,678	$	6,951,809

(f) Tangible common equity divided by tangible assets. Tangible assets equals total assets less goodwill and other intangibles.

RECONCILIATION OF TOTAL ASSETS TO TANGIBLE ASSETS:

	December 31, 2010		September 30, 2010		December 31, 2009
TOTAL ASSETS	$	7,298,377	$	7,090,456	$	7,040,329
Less: Goodwill and other intangibles		78,377		79,199		81,799
TANGIBLE ASSETS	$	7,220,000	$	7,011,257	$	6,958,530

PARK NATIONAL CORPORATION

Financial Highlights (continued)

(g) Efficiency ratio is calculated by taking total other expense divided by the sum of fully taxable equivalent net interest income and other income. Fully taxable equivalent net interest income reconciliation is shown below assuming a 35% tax rate. Additionally, net interest margin is calculated on a fully taxable equivalent basis.

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

	THREE MONTHS ENDED						TWELVE MONTHS ENDED
	December 31, 2010		September 30, 2010		December 31, 2009		December 31, 2010		December 31, 2009
Interest income	$	84,391	$	86,682	$	90,365	$	345,517	$	367,690
Fully taxable equivalent adjustment		540		553		505		2,047		2,082
Fully taxable equivalent interest income	$	84,931	$	87,235	$	90,870	$	347,564	$	369,772
Interest expense		15,893		17,237		21,563		71,473		94,199
Fully taxable equivalent net interest income	$	69,038	$	69,998	$	69,307	$	276,091	$	275,573

PARK NATIONAL CORPORATION

Consolidated Statements of Income

	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
(in thousands, except share and per share data)	2010		2009		2010		2009
Interest income:
Interest and fees on loans	$	67,405	$	68,676	$	267,692	$	275,599
Interest on:
Obligations of U.S. Government, its agencies
and other securities		16,768		21,325		76,839		90,558
Obligations of states and political subdivisions		173		286		786		1,417
Other interest income		45		78		200		116
Total interest income		84,391		90,365		345,517		367,690
Interest expense:
Interest on deposits:
Demand and savings deposits		1,133		2,333		5,753		10,815
Time deposits		7,512		12,269		36,212		53,805
Interest on borrowings		7,248		6,961		29,508		29,579
Total interest expense		15,893		21,563		71,473		94,199
Net interest income		68,498		68,802		274,044		273,491
Provision for loan losses		20,448		25,720		64,902		68,821
Net interest income after provision for loan losses		48,050		43,082		209,142		204,670
Other income		14,745		16,718		65,632		73,850
Gain on sale of securities		45		-		11,864		7,340
Other expense:
Salaries and employee benefits		24,631		24,815		98,315		101,225
Occupancy expense		2,760		2,740		11,510		11,552
Furniture and equipment expense		2,615		2,395		10,435		9,734
Other expense		16,514		16,710		66,847		66,214
Total other expense		46,520		46,660		187,107		188,725
Income before income taxes		16,320		13,140		99,531		97,135
Income taxes		3,625		844		25,314		22,943
Net income	$	12,695	$	12,296	$	74,217	$	74,192
Preferred stock dividends and accretion		1,452		1,441		5,807		5,762
Net income available to common shareholders	$	11,243	$	10,855	$	68,410	$	68,430
Per Common Share:
Net income  - basic	$	0.73	$	0.74	$	4.51	$	4.82
Net income  - diluted	$	0.73	$	0.74	$	4.51	$	4.82
Weighted average shares - basic		15,340,427		14,658,601		15,152,692		14,206,335
Weighted average shares - diluted		15,352,600		14,658,601		15,155,735		14,206,335

PARK NATIONAL CORPORATION

Consolidated Balance Sheets

(in thousands, except share data)	December 31, 2010			Dec. 31, 2009
Assets
Cash and due from banks	$	109,058		$	116,802
Money market instruments		24,722			42,289
Investment securities		2,039,791			1,863,560
Loans		4,732,685			4,640,432
Allowance for loan losses		121,397			116,717
Loans, net		4,611,288			4,523,715
Bank premises and equipment, net		69,567			69,091
Goodwill and other intangibles		78,377			81,799
Other real estate owned		44,325			41,240
Other assets		321,249			301,833
Total assets	$	7,298,377		$	7,040,329
Liabilities and Stockholders' Equity
Deposits:
Noninterest bearing	$	937,719		$	897,243
Interest bearing		4,157,701			4,290,809
Total deposits		5,095,420			5,188,052
Borrowings		1,375,652			1,053,850
Other liabilities		81,481			81,163
Total liabilities	$	6,552,553		$	6,323,065
Stockholders' Equity:
Preferred Stock (200,000 shares authorized in 2010 and 2009; 100,000 shares issued in 2010 and 2009)	$	97,290		$	96,483
Common stock (No par value; 20,000,000 shares authorized in 2010 and 2009;  16,151,062 shares issued at December 31, 2010, and 16,151,112 at December 31, 2009)		301,205			301,208
Common stock warrants		4,472			5,361
Accumulated other comprehensive income, net of taxes		(1,868	)		15,661
Retained earnings		422,458			423,872
Treasury stock (752,128 shares at December 31, 2010, and 1,268,332 at December 31, 2009)		(77,733	)		(125,321	)
Total stockholders' equity	$	745,824		$	717,264
Total liabilities and stockholders' equity	$	7,298,377		$	7,040,329

PARK NATIONAL CORPORATION

Consolidated Average Balance Sheets

	Three Months Ended						Twelve Months Ended
	December 30,						December 30,
(in thousands)	2010			2009			2010			2009
Assets
Cash and due from banks	$	119,982		$	105,000		$	116,961		$	110,227
Money market instruments		84,379			132,479			93,009			52,518
Investment securities		1,707,321			1,848,142			1,792,786			1,930,151
Loans		4,695,257			4,631,230			4,642,478			4,594,436
Allowance for loan losses		118,101			109,211			119,639			103,683
Loans, net		4,577,156			4,522,019			4,522,839			4,490,753
Bank premises and equipment, net		70,299			68,234			69,839			67,944
Goodwill and other intangibles		78,823			82,322			80,072			83,722
Other real estate owned		53,424			44,420			47,407			38,523
Other assets		322,468			273,878			319,837			261,693
Total assets	$	7,013,852		$	7,076,494		$	7,042,750		$	7,035,531
Liabilities and Stockholders' Equity
Deposits:
Noninterest bearing	$	959,685		$	856,093		$	907,514		$	818,243
Interest bearing		4,161,547			4,368,336			4,274,501			4,232,391
Total deposits		5,121,232			5,224,429			5,182,015			5,050,634
Borrowings		1,041,920			1,029,529			1,026,295			1,200,168
Other liabilities		90,144			105,268			87,885			109,415
Total liabilities	$	6,253,296		$	6,359,226		$	6,296,195		$	6,360,217
Stockholders' Equity:
Preferred stock	$	97,174		$	96,374		$	96,873		$	96,090
Common stock		301,317			301,208			301,244			301,208
Common stock warrants		4,405			5,037			4,822			4,484
Accumulated other comprehensive income, net of taxes		11,169			21,786			15,478			13,534
Retained earnings		430,578			438,367			429,023			446,326
Treasury stock		(84,087	)		(145,504	)		(100,885	)		(186,328	)
Total stockholders' equity	$	760,556		$	717,268		$	746,555		$	675,314
Total liabilities and stockholders' equity	$	7,013,852		$	7,076,494		$	7,042,750		$	7,035,531

PARK NATIONAL CORPORATION

Consolidated Statements of Income - Linked Quarters

	2010		2010		2010		2010		2009
(in thousands, except per share data)	4th QTR		3rd QTR		2nd QTR		1st QTR		4th QTR
Interest income:
Interest and fees on loans	$	67,405	$	67,123	$	66,723	$	66,441	$	68,676
Interest on:
Obligations of U.S. Government, its agencies and other securities		16,768		19,333		20,263		20,475		21,325
Obligations of states and political subdivisions		173		192		204		217		286
Other interest income		45		34		52		69		78
Total interest income		84,391		86,682		87,242		87,202		90,365
Interest expense:
Interest on deposits:
Demand and savings deposits		1,133		1,263		1,582		1,775		2,333
Time deposits		7,512		8,532		9,518		10,650		12,269
Interest on borrowings		7,248		7,442		7,421		7,397		6,961
Total interest expense		15,893		17,237		18,521		19,822		21,563
Net interest income		68,498		69,445		68,721		67,380		68,802
Provision for loan losses		20,448		14,654		13,250		16,550		25,720
Net interest income after provision for loan losses		48,050		54,791		55,471		50,830		43,082
Other income		14,745		17,530		16,647		16,710		16,718
Gain on sale of securities		45		-		3,515		8,304		-
Other expense:
Salaries and employee benefits		24,631		24,500		24,013		25,171		24,815
Occupancy expense		2,760		2,840		2,793		3,117		2,740
Furniture and equipment expense		2,615		2,624		2,564		2,632		2,395
Other expense		16,514		15,732		17,631		16,970		16,710
Total other expense		46,520		45,696		47,001		47,890		46,660
Income before income taxes		16,320		26,625		28,632		27,954		13,140
Income taxes		3,625		7,048		7,466		7,175		844
Net income	$	12,695	$	19,577	$	21,166	$	20,779	$	12,296
Preferred stock dividends and accretion		1,452		1,452		1,451		1,452		1,441
Net income available to common shareholders	$	11,243	$	18,125	$	19,715	$	19,327	$	10,855
Per Common Share:
Net income  - basic	$	0.73	$	1.19	$	1.30	$	1.30	$	0.74
Net income  - diluted	$	0.73	$	1.19	$	1.30	$	1.30	$	0.74

PARK NATIONAL CORPORATION

Detail of other income and other expense - Linked Quarters

	2010			2010		2010		2010		2009
(in thousands)	4th QTR			3rd QTR		2nd QTR		1st QTR		4th QTR
Other income:
Income from fiduciary activities	$	3,609		$	3,314	$	3,528	$	3,422	$	3,397
Service charges on deposits		4,853			5,026		5,092		4,746		5,604
Other service income		3,449			3,909		3,476		2,982		3,588
Checkcard fee income		3,068			2,900		2,765		2,444		2,488
Bank owned life insurance income		1,195			1,313		1,254		1,216		1,329
Other		(1,429	)		1,068		532		1,900		312
Total other income	$	14,745		$	17,530	$	16,647	$	16,710	$	16,718
Other expense:
Salaries and employee benefits	$	24,631		$	24,500	$	24,013	$	25,171	$	24,815
Net occupancy expense		2,760			2,840		2,793		3,117		2,740
Furniture and equipment expense		2,615			2,624		2,564		2,632		2,395
Data processing fees		1,339			1,403		1,394		1,593		1,544
Professional fees and services		5,341			4,477		5,299		4,856		5,385
Amortization of intangibles		822			822		842		936		937
Marketing		968			840		946		902		943
Insurance		2,136			2,316		2,333		2,198		2,376
Communication		1,536			1,696		1,647		1,769		1,720
State taxes		622			865		838		845		424
Other		3,750			3,313		4,332		3,871		3,381
Total other expense	$	46,520		$	45,696	$	47,001	$	47,890	$	46,660

PARK NATIONAL CORPORATION

Asset Quality Information

	Year ended December 31,
(in thousands, except ratios)	2010			2009			2008			2007
Allowance for loan losses:
Allowance for loan losses, beginning of period	$	116,717		$	100,088		$	87,102		$	70,500
Charge-offs		66,314			59,022			62,916			27,776
Recoveries		6,092			6,830			5,415			5,568
Net charge-offs		60,222			52,192			57,501			22,208
Provision for loan losses		64,902			68,821			70,487			29,476
Allowance for loan losses of acquired bank		-			-			-			9,334
Allowance for loan losses, end of period	$	121,397		$	116,717		$	100,088		$	87,102
General reserve trends:
Allowance for loan losses, end of period	$	121,397		$	116,717		$	100,088		$	87,102
Specific reserves		43,459			36,721			8,875			3,492
General reserves	$	77,938		$	79,996		$	91,213		$	83,610
Total loans	$	4,732,685		$	4,640,432		$	4,491,337		$	4,224,134
Impaired commercial loans		250,933			201,143			141,343			90,081
Non-impaired loans	$	4,481,752		$	4,439,289		$	4,349,994		$	4,134,053
Asset Quality Ratios:
Net charge-offs as a % of average loans		1.30	%		1.14	%		1.32	%		0.55	%
Allowance for loan losses as a % of period end loans		2.57	%		2.52	%		2.23	%		2.06	%
General reserves as a % of non-impaired loans		1.74	%		1.80	%		2.10	%		2.02	%
Nonperforming Assets - Park National Corporation:
Nonaccrual loans	$	289,268		$	233,544		$	159,512		$	101,128
Renegotiated loans		-			142			2,845			2,804
Loans past due 90 days or more		3,590			14,773			5,421			4,545
Total nonperforming loans	$	292,858		$	248,459		$	167,778		$	108,477
Other real estate owned - Ohio-based operations		8,385			6,037			6,149			6,369
Other real estate owned - Vision Bank		35,940			35,203			19,699			7,074
Total nonperforming assets	$	337,183		$	289,699		$	193,626		$	121,920
Percentage of nonperforming loans to period end loans		6.19	%		5.35	%		3.74	%		2.57	%
Percentage of nonperforming assets to period end loans		7.12	%		6.24	%		4.31	%		2.89	%
Percentage of nonperforming assets to period end assets		4.62	%		4.11	%		2.74	%		1.88	%

PARK NATIONAL CORPORATION

Asset Quality Information

	Year ended December 31,
(in thousands, except ratios)	2010			2009			2008			2007
Nonperforming Assets - Ohio-based operations:
Nonaccrual loans	$	117,815		$	85,197		$	68,306		$	38,113
Renegotiated loans		-			142			-			2,804
Loans past due 90 days or more		3,226			3,496			4,777			4,088
Total nonperforming loans	$	121,041		$	88,835		$	73,083		$	45,005
Other real estate owned		8,385			6,037			6,149			6,369
Total nonperforming assets	$	129,426		$	94,872		$	79,232		$	51,374
Percentage of nonperforming loans to period end loans		2.96	%		2.24	%		1.92	%		1.26	%
Percentage of nonperforming assets to period end loans		3.16	%		2.39	%		2.08	%		1.43	%
Percentage of nonperforming assets to period end assets		1.99	%		1.54	%		1.29	%		0.91	%
Nonperforming Assets - Vision Bank:
Nonaccrual loans	$	171,453		$	148,347		$	91,206		$	63,015
Renegotiated loans		-			-			2,845			-
Loans past due 90 days or more		364			11,277			644			457
Total nonperforming loans	$	171,817		$	159,624		$	94,695		$	63,472
Other real estate owned		35,940			35,203			19,699			7,074
Total nonperforming assets	$	207,757		$	194,827		$	114,394		$	70,546
Percentage of nonperforming loans to period end loans		26.82	%		23.58	%		13.71	%		9.93	%
Percentage of nonperforming assets to period end loans		32.43	%		28.78	%		16.57	%		11.04	%
Percentage of nonperforming assets to period end assets		25.71	%		21.70	%		12.47	%		8.24	%
New nonaccrual loan information:
Nonaccrual loans, beginning of period	$	233,544		$	159,512		$	101,128		$	16,004
New nonaccrual loans - Ohio-based operations		85,081			57,641			58,161			44,620
New nonaccrual loans - Vision Bank		90,094			126,540			83,588			69,100
Resolved nonaccrual loans		119,451			110,149			83,365			28,596
Nonaccrual loans, end of period	$	289,268		$	233,544		$	159,512		$	101,128
Impaired Commercial Loan Portfolio Information (period end):
Unpaid principal balance	$	304,534		$	245,092		$	171,310		$	100,307
Prior charge-offs		53,601			43,949			29,967			10,226
Remaining principal balance		250,933			201,143			141,343			90,081
Specific reserves		43,459			36,721			8,875			3,492
Book value, after specific reserve	$	207,474		$	164,422		$	132,468		$	86,589
Vision Bank Commercial Land & Development (CL&D) Loan Portfolio Information:
CL&D loans, period end	$	170,989		$	218,205		$	251,443		$	295,743
Performing CL&D loans, period end		84,498			132,788			191,712			260,195
Impaired CL&D loans, period end		86,491			85,417			59,731			35,548
Specific reserve on impaired CL&D loans		23,585			21,706			3,134			1,184
Book value of impaired CL&D loans, after specific reserve	$	62,906		$	63,711		$	56,597		$	34,364
Cumulative prior charge-offs on impaired Vision Bank CL&D loans, period end	$	28,652		$	24,931		$	18,839		$	7,399