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)   February 7, 2012

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 February 7, 2012, Park National Corporation (“Park”) issued a news release (the “Financial Results News Release”) announcing financial results for the three months (fourth quarter) and the year ended December 31, 2011. 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, 2011 and 2010. For purposes of calculating the return on average tangible common equity, a non-GAAP financial measure, net income (loss) 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 (loss) 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 at the date of measurement. Tangible assets equals total assets less goodwill and intangible assets at the measurement date. 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.

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The following is a discussion of the actual financial results for the three months and year ended December 31, 2011, compared to the results for the three months and year ended December 31, 2010. The detailed information pertaining to the restated financial statements included in “Item 8.01 – Other Events” of this Current Report on Form 8-K is incorporated herein by reference. The following paragraphs also discuss the projected results for the year ending December 31, 2012.

The table below reflects the results for Park for the fiscal year ended December 31, 2011, the results for the fiscal year ended December 31, 2010 as restated, the results for the fiscal year ended December 31, 2010 as originally filed, and the projected results for the fiscal year ending December 31, 2012.

(in thousands)	2011		2010 Restated			2010 As Previously Filed			2012 Projected
Net interest income	$	273,234	$	274,044		$	274,044			$240,000 - $250,000
Provision for loan losses		59,272		87,080			64,902			20,000 – 27,000
Other income		66,081		63,016			65,632			62,000 – 66,000
Gain on sale of securities		28,829		11,864			11,864			-
Gain from Vision Bank sale		—		—			—			18,000 – 20,000
Other expense		188,317		187,107			187,107			170,000 – 175,000
Income before taxes	$	120,555	$	74,737		$	99,531			$130,000 - $134,000
State taxes		6,088		(1,161	)		(1,161	)		-
Federal income taxes		29,727		17,797			26,475			35,000 – 36,500
Net income	$	84,740	$	58,101		$	74,217			$95,000 - $97,500
Net income excluding gains *	$	66,001	$	50,389		$	66,505			$83,300 - $84,500

* The line item “Net income excluding gains” excludes gains from the sale of securities from the results for the fiscal years ended December 31, 2010 and 2011 and excludes the anticipated gains from the sale of Vision Bank from the projected results for the fiscal year ending December 31, 2012.

Net Interest Income:

Net interest income for the fourth quarter of 2011 was $66.3 million, compared to $68.5 million for the same period in the prior year. Net interest income for the year ended December 31, 2011 was $273.2 million, compared to $274.0 million for the 2010 year. For the year ending December 31, 2012, management expects net interest income to be between $240 million and $250 million. The Purchase and Assumption Agreement (the “Purchase Agreement”) with Home BancShares, Inc. (“Home”) and its wholly-owned subsidiary, Centennial Bank, an Arkansas state-chartered bank (“Centennial”), to sell substantially all of the operating assets and liabilities associated with Vision Bank to Centennial for a purchase price of $27.9 million, is expected to be consummated in the first quarter of 2012. The primary reason for the decline in the projected net interest income for 2012 is the sale of approximately $370 million of performing loans from Vision Bank to Centennial.

Provision for Loan Losses:

Provision for loan losses for the fourth quarter of 2011 was $16.2 million, compared to $42.6 million for the fourth quarter of 2010. For the year ended December 31, 2011, provision for loan losses was $59.3 million, compared to $87.1 million for the 2010 year. The restatement of the results for the fiscal year ended December 31, 2010, detailed above and in the Current Report on Form 8-K filed by Park on January 31, 2012 (the “January 31, 2012 Form 8-K”), increased the provision for loan losses by $22.2 million in 2010, all of which impacted the fourth quarter of 2010. For the year ending December 31, 2012, management expects the provision for loan losses will be between $20 million and $27 million. The significant decline in the projected 2012 provision for loan losses is primarily due to improvements in the credit quality of Park’s loan portfolio, including the decline in new nonaccrual loans, the decline in delinquent loans and the continued improvement in the economy.

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Other Income:

Other income was $17.9 million for the fourth quarter of 2011, compared to $12.1 million for the same period in 2010. For the year ended December 31, 2011, other income was $66.1 million, compared to $63.0 million for the 2010 year. The restatement, detailed above and in the January 31, 2012 Form 8-K, resulted in a decrease in other income in the amount of $2.6 million in 2010 due to devaluations of other real estate owned (“OREO”), all of which impacted the fourth quarter of 2010. For the year ending December 31, 2012, management expects other income will be between $62 million and $66 million.

Gain on Sale of Securities:

The table below provides quarterly information regarding gains on the sale of investment securities for the years ended December 31, 2011 and 2010.

Park National Corporation
Gain on Sale of Investment Securities
(in thousands)	2011		2010
First quarter	$	6,635	$	8,304
Second quarter		15,362		3,515
Third quarter		3,465		-
Fourth quarter		3,367		45
Total	$	28,829	$	11,864

Management does not currently expect any gains or losses on the sale of investment securities during 2012, although management does expect to recognize a gain of $18 million to $20 million from the sale of Vision Bank during the first quarter of 2012.

Other Expense:

Other expense totaled $49.4 million for the fourth quarter of 2011, compared to $46.5 million for the same period in 2010 and $45.6 million for the third quarter in 2011. The increase from the third quarter of 2011 of $3.8 million was primarily made up of the timing of insurance costs (increase of $0.9 million) and the acceleration of core deposit intangible amortization resulting from the pending transaction under the Purchase Agreement (increase of $0.9 million). For the year ended December 31, 2011, other expense was $188.3 million, compared to $187.1 million for the 2010 year. For the year ending December 31, 2012, management expects other expense will be between $170 million and $175 million.

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State and Federal Income Taxes:

Federal income taxes were $29.7 million (24.7% effective tax rate) for the year ended December 31, 2011, compared to $17.8 million (23.8% effective tax rate) for the 2010 year. For the year ending December 31, 2012, management expects the effective federal income tax rate will be between 26% and 28%.

Park recognized $6.1 million in state tax expense during 2011, which was the charge necessary to write-off the previously reported state operating loss carryforward asset at Vision Bank. Prior to the execution of the Purchase Agreement with Centennial, management of Park believed that a merger of Vision Bank into The Park National Bank (the national bank subsidiary of Park) would enable Park to fully utilize the state net operating loss carryforward asset recorded at Vision Bank. The structure of the transactions contemplated by the Purchase Agreement will not allow either the buyer or the seller to benefit from the previously recorded net operating loss carryforward asset at Vision Bank to offset future taxable income; therefore, this asset was written-off by Vision Bank at December 31, 2011.

Park National Corporation Balance Sheet:

The table below reflects the balance sheet for Park as of December 31, 2011, December 31, 2010 (as restated), December 31, 2010 (as originally filed), and projected as of December 31, 2012.

(in thousands)	2011			2010 Restated			2010 As Previously Filed			2012 Projected
Assets
Cash and cash equivalents	$	160,265		$	133,780		$	133,780		$	150,000
Investment Securities		1,708,473			2,039,791			2,039,791			1,795,000
Loans		4,317,099			4,732,685			4,732,685			4,440,197
Allowance for Loan Losses		(64,444	)		(143,575	)		(121,397	)		(52,260	)
Net Loans		4,252,655			4,589,110			4,611,288			4,387,937
Other Real Estate Owned		42,272			41,709			44,325			39,000
Other Assets		433,862			477,871			469,193			458,063
Assets held for sale		377,318			–			–			–
Total Assets	$	6,974,845		$	7,282,261		$	7,298,377		$	6,830,000
Liabilities and Equity
Deposits	$	4,465,114		$	5,095,420		$	5,095,420		$	4,550,000
Borrowings		1,162,026			1,375,652			1,375,652			1,510,000
Other liabilities		66,555			81,481			81,481			74,000
Liabilities held for sale		536,186			–			–			–
Total Liabilities	$	6,229,881		$	6,552,553		$	6,552,553		$	6,134,000
Equity	$	744,964		$	729,708		$	745,824		$	696,000

The decline in loans by the end of 2012, as projected, is due to the sale, as contemplated in the Purchase Agreement to which Vision Bank and Centennial are parties, of approximately $370 million in loans, as stated above. Park expects modest loan growth in Ohio, of approximately 2% to 3%. In addition, the decline in deposits projected at December 31, 2012 is due to the assumption of approximately $533 million in deposits by Centennial, as contemplated in the Purchase Agreement.

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Item 8.01 – Other Events

Restatement of previously issued financial statements

In the January 31, 2012 Form 8-K, Park announced that on January 27, 2012, management, after consultation with Crowe Horwath LLP, Park’s independent registered public accounting firm, determined that (i) Park’s previously issued audited consolidated financial statements incorporated by reference in Park’s Annual Report on Form 10-K for the year ended December 31, 2010, filed on February 28, 2011, and (ii) Park’s unaudited condensed consolidated financial statements included in Park’s Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2011, June 30, 2011, and September 30, 2011 should be restated.

The accounting treatment giving rise to the restatement was the inclusion of estimated future cash flows supporting the allowance for loan losses related to certain impaired commercial loans. For the year ended December 31, 2010, as part of Park’s process to measure impairment on certain impaired commercial loans at Vision Bank, management had relied on expected future cash flows from guarantors, as to whom we were in litigation.Management determined that reliance on expected future cash flows, which may require protracted litigation to actually be received, is inappropriate given the difficulty in obtaining objective verifiable evidence supporting a conclusion as to the amount and timing of the expected cash flows. GAAP requires that our assumptions be “reasonable and supportable” and the facts and circumstances around the existence of protracted litigation make this assumption more difficult to support.

The restatement also reflects certain OREO devaluations and additional loan loss provisions that are not related to guarantor support. These expense items are related to valuation issues identified at December 31, 2010, where Vision Bank management utilized (i) the work of a third-party contractor, which was not a licensed appraiser, when calculating the fair value of collateral for certain impaired loans and the fair value of certain OREO held by Vision Bank, and management did not have sufficient documentation to support the estimates of this third-party contractor, and (ii) internal estimates of collateral value when calculating specific reserves for certain impaired loans when, at times, such internal estimates were outdated. The impact is to reverse provisions for loan losses and OREO devaluations originally recorded during 2011 and recognize these provisions for loan losses and OREO devaluations in the restated audited consolidated financial statements for the year ended December 31, 2010.

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

Park cautions that any forward-looking statements contained in this Current Report on Form 8-K or made by management of Park are provided to assist in the understanding of anticipated future financial performance. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management's expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include, without limitation: 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 sell OREO properties at prices as favorable as anticipated; 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; changes in interest 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 “Dodd-Frank Act”), as well as future regulations which will be adopted by the relevant regulatory agencies, including the Consumer Financial Protection Bureau, to implement the Dodd-Frank Act’s provisions; the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board, the SEC, the Public Company Accounting Oversight Board and other regulatory agencies, and the accuracy of our assumptions and estimates used to prepare our financial statements; the effect of fiscal and governmental policies of the United States federal government; adequacy of our risk management program; a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors and other service providers, including as a result of cyber attacks; demand for loans in the respective market areas served by Park and its subsidiaries; closing of the transactions with Home BancShares, Inc. and Centennial Bank contemplated by the Purchase and Assumption Agreement dated November 16, 2011, which is dependent on the receipt of regulatory and other approvals and the satisfaction of specified conditions for closing, the timing of which cannot be predicted at this point; 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, 2010 and in “Item 1A. Risk Factors” of Part II of Park’s Quarterly Report on Form 10-Q for the period ended September 30, 2011. 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.

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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 February 7, 2012 addressing operating results for the three months (fourth quarter) and year ended December 31, 2011

[Remainder of page intentionally left blank;

signature on following page.]

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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: February 7, 2012	By:	/s/ John W. Kozak
		John W. Kozak
		Chief Financial Officer

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INDEX TO EXHIBITS

Current Report on Form 8-K

Dated February 7, 2012

Park National Corporation

Exhibit No.	Description
99.1	News Release issued by Park National Corporation on February 7, 2012 addressing operating results for the three months (fourth quarter) and year ended December 31, 2011.

10

EX-99.1

-

February 7, 2012 Exhibit 99.1

Park National Corporation Reports Fourth Quarter

and Year End 2011 Financial Results

NEWARK, Ohio – Park National Corporation (NYSE Amex: PRK) (Park) today announced financial results for the three months (fourth quarter) and year ended December 31, 2011. The financial statements include the effect of a restatement of previous reported results due to a change in the timing for the recognition of losses at Park’s Florida-based subsidiary Vision Bank. Park also reported a historical high in net income for The Park National Bank, Park’s subsidiary that consists of 11 community banking divisions in Ohio.

On January 31, 2012, Park filed a Current Report on Form 8-K with the Securities and Exchange Commission describing Park’s plan to restate the results for the year ended December 31, 2010 and each quarterly period in 2011. The restatements included recognition of loan loss provisions and other real estate owned devaluations at Vision Bank in 2010 instead of 2011. The result was a reduction in 2010 net income of $16.1 million, or $1.06 per diluted common share, all affecting the fourth quarter of 2010. The reduction to 2010 net income is fully offset by an increase to net income during 2011.

Park previously announced net income for the year ended December 31, 2010 of $74.2 million, or $4.51 per diluted common share and net income for the nine months ended September 30, 2011 of $60.0 million, or $3.61 per diluted common share. All amounts discussed in the remainder of this news release represent the restated results for 2010 and 2011.

Park's net income was $84.7 million for the year ended December 31, 2011 (2011 year) and its net income was $58.1 million for the same period in 2010. Net income for the fourth quarter of 2011 was $13.2 million, compared to a loss of $3.4 million for the same period in 2010.

Net income per diluted common share for the 2011 year was $5.12, compared to $3.45 per diluted common share for the same period in 2010. Net income (loss) per diluted common share for the 2011 fourth quarter was $0.76, compared to $(0.32) per diluted common share in the fourth quarter of 2010.

Ohio Operational Results

Excluding Vision Bank, Park reported net income of $104.7 million for the 2011 year, compared to $103.5 million for the same period in 2010. This performance resulted in return on average assets of 1.62 percent and 1.58 percent for Park’s Ohio operations in 2011 and 2010, respectively. Additionally, Park's two Ohio-based subsidiaries, The Park National Bank and Guardian Financial Services Company, reported record annual net incomes of $106.9 million and $2.7 million, respectively, for 2011.

“Ohio’s results continue to be exceptional. Our successful community banks in Ohio represent the great majority of our organization, and we look forward to continuing our tradition of service excellence coupled with consistent performance in 2012,” said Park Chairman C. Daniel DeLawder. “The pending sale of the Vision Bank operations, which we expect to conclude in the first quarter of 2012, allows us to concentrate fully on our operations in Ohio and our powerful earnings engine as we move forward.”

Park National Corporation

50 N. Third Street, Newark, Ohio 43055

www.parknationalcorp.com

Credit Quality

Park significantly reduced non-performing assets during 2011. At December 31, 2011, non-performing assets were $272.6 million, or 3.91 percent of total assets, compared to $334.6 million or 4.59 percent of total assets at December 31, 2010. Vision Bank reduced non-performing loans by approximately $70 million during 2011, accounting for most of this large decline.

Sale of Investment Securities

During 2011, Park realized a pre-tax gain of $28.8 million from the sale of approximately $581 million of investment securities. During 2010, Park realized a pre-tax gain of $11.9 million from the sale of approximately $448 million of investment securities.

Headquartered in Newark, Ohio, Park National Corporation has $7.0 billion in total assets (as of December 31, 2011). 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, The Park National Bank of Southwest Ohio & Northern Kentucky Division and Scope Leasing, Inc. (d.b.a. Scope Aircraft Finance). 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 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

Park cautions that any forward-looking statements contained in this news release or made by management of Park are provided to assist in the understanding of anticipated future financial performance. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management's expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include, without limitation: 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 sell OREO properties at prices as favorable as anticipated; 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; changes in interest 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 “Dodd-Frank Act”), as well as future regulations which will be adopted by the relevant regulatory agencies, including the Consumer Financial Protection Bureau, to implement the Dodd-Frank Act’s provisions; the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board, the SEC, the Public Company Accounting Oversight Board and other regulatory agencies, and the accuracy of our assumptions and estimates used to prepare our financial statements; the effect of fiscal and governmental policies of the United States federal government; adequacy of our risk management program; a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors and other service providers, including as a result of cyber attacks; demand for loans in the respective market areas served by Park and its subsidiaries; closing of the transactions with Home BancShares, Inc. and Centennial Bank contemplated by the Purchase and Assumption Agreement dated November 16, 2011, which is dependent on the receipt of regulatory and other approvals and the satisfaction of specified conditions for closing, the timing of which cannot be predicted at this point; 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, 2010 and in “Item 1A. Risk Factors” of Part II of Park’s Quarterly Report on Form 10-Q for the period ended September 30, 2011. 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, 2011, September 30, 2011, and December 31, 2010

	2011						2010			Percent change vs.
(in thousands, except share and per share data)	4th QTR			3rd QTR			4th QTR			3Q '11			4Q '10
				(Restated)			(Restated)
INCOME STATEMENT:
Net interest income	$	66,279		$	67,620		$	68,498			-2.0	%		-3.2	%
Provision for loan losses		16,218			16,438			42,626			-1.3	%		-62.0	%
Other income		17,885			18,027			12,129			-0.8	%		47.5	%
Gain on sale of securities		3,367			3,465			45			-2.8	%		N.M
Total other expense		49,365			45,599			46,520			8.3	%		6.1	%
Income (loss) before income taxes	$	21,948		$	27,075		$	(8,474	)		-18.9	%		N.M
Federal income taxes		2,651			6,694			(5,053	)		-60.4	%		-152.5	%
State income taxes		6,088			-			-			N.M			N.M
Net income (loss)	$	13,209		$	20,381		$	(3,421	)		-35.2	%		N.M
Preferred stock dividends and accretion		1,464			1,464			1,452			0.0	%		0.8	%
Net income (loss) available to common shareholders	$	11,745		$	18,917		$	(4,873	)		-37.9	%		N.M
MARKET DATA:
Earnings (loss) per common share - basic (b)	$	0.76		$	1.23		$	(0.32	)		-38.2	%		N.M
Earnings (loss) per common share - diluted (b)		0.76			1.23			(0.32	)		-38.2	%		N.M
Cash dividends per common share		0.94			0.94			0.94			0.0	%		0.0	%
Common book value per common share at period end		41.99			42.67			41.07			-1.6	%		2.2	%
Stock price per common share at period end		65.06			52.88			72.67			23.0	%		-10.5	%
Market capitalization at period end		1,002,309			814,294			1,119,041			23.1	%		-10.4	%
Weighted average common shares - basic (a)		15,403,861			15,398,909			15,340,427			0.0	%		0.4	%
Weighted average common shares - diluted (a)		15,403,861			15,398,909			15,352,600			0.0	%		0.3	%
Common shares outstanding at period end		15,405,912			15,398,904			15,398,934			0.0	%		0.0	%
PERFORMANCE RATIOS: (annualized)
Return on average assets (a)(b)		0.66	%		1.04	%		-0.28	%		-36.5	%		N.M
Return on average common equity (a)(b)		7.10	%		11.51	%		-2.92	%		-38.3	%		N.M
Yield on loans		5.59	%		5.59	%		5.73	%		0.0	%		-2.4	%
Yield on investments		3.23	%		3.40	%		3.87	%		-5.0	%		-16.5	%
Yield on earning assets		4.93	%		4.95	%		5.23	%		-0.4	%		-5.7	%
Cost of interest bearing deposits		0.60	%		0.63	%		0.82	%		-4.8	%		-26.8	%
Cost of borrowings		2.68	%		2.69	%		2.76	%		-0.4	%		-2.9	%
Cost of paying liabilities		1.07	%		1.07	%		1.21	%		0.0	%		-11.6	%
Net interest margin		4.08	%		4.09	%		4.25	%		-0.2	%		-4.0	%
Efficiency ratio (g)		58.34	%		52.95	%		57.31	%		10.2	%		1.8	%
OTHER RATIOS (NON GAAP):
Annualized return on average tangible assets (a)(b)(e)		0.66	%		1.05	%		-0.28	%		-37.1	%		N.M
Annualized return on average tangible common equity (a)(b)(c)		8.03	%		13.05	%		-3.31	%		-38.5	%		N.M
Tangible common book value per common share (d)	$	37.13		$	37.71		$	35.98			-1.5	%		3.2	%

PARK NATIONAL CORPORATION

Financial Highlights (continued)

Three months ended December 31, 2011, September 30, 2011, and December 31, 2010

										Percent change vs.
	December 31, 2011			September 30, 2011			December 31, 2010			3Q '11			4Q '10
					(Restated)			(Restated)
BALANCE SHEET:
Investment securities	$	1,708,473		$	1,708,631		$	2,039,791			0.0	%		-16.2	%
Loans		4,317,099			4,680,575			4,732,685			-7.8	%		-8.8	%
Allowance for loan losses		64,444			107,310			143,576			-39.9	%		-55.1	%
Goodwill and other intangibles		74,843			76,370			78,377			-2.0	%		-4.5	%
Other real estate owned		42,272			46,911			41,709			-9.9	%		1.3	%
Assets held for sale		379,683			0			0			N.M			N.M
Total assets		6,974,845			7,095,097			7,282,261			-1.7	%		-4.2	%
Total deposits		4,465,114			5,089,187			5,095,420			-12.3	%		-12.4	%
Borrowings		1,162,026			1,142,043			1,375,652			1.7	%		-15.5	%
Liabilities held for sale		536,186			0			0			N.M			N.M
Stockholders' equity		744,964			755,052			729,708			-1.3	%		2.1	%
Common equity		646,818			657,120			632,418			-1.6	%		2.3	%
Tangible common equity (d)		571,975			580,750			554,041			-1.5	%		3.2	%
Nonperforming loans		224,575			229,814			289,268			-2.3	%		-22.4	%
Nonperforming assets		266,847			276,725			330,977			-3.6	%		-19.4	%
Past due 90 day loans and still accruing		3,489			2,162			3,590			61.4	%		-2.8	%
ASSET QUALITY RATIOS:
Loans as a % of period end assets		61.90	%		65.97	%		64.99	%		-6.2	%		-4.8	%
Nonperforming loans as a % of period end loans		5.20	%		4.91	%		6.11	%		5.9	%		-14.9	%
Past due 90 day loans as a % of period end loans		0.08	%		0.05	%		0.08	%		60.0	%		0.0	%
Nonperforming assets / Period end loans + OREO		6.12	%		5.85	%		6.93	%		4.6	%		-11.7	%
Allowance for loan losses as a % of period end loans		1.49	%		2.29	%		3.03	%		-34.9	%		-50.8	%
Net loan charge-offs	$	45,764		$	29,302		$	16,456			56.2	%		178.1	%
Annualized net loan charge-offs as a % of average loans (a)		3.88	%		2.48	%		1.39	%		56.5	%		179.1	%
CAPITAL & LIQUIDITY:
Total equity / Period end assets		10.68	%		10.64	%		10.02	%		0.4	%		6.6	%
Common equity / Period end assets		9.27	%		9.26	%		8.68	%		0.1	%		6.8	%
Tangible common equity (d) / Tangible assets (f)		8.29	%		8.27	%		7.69	%		0.2	%		7.8	%
Average equity / Average assets (a)		10.63	%		10.42	%		10.84	%		2.0	%		-1.9	%
Average equity / Average loans (a)		16.13	%		15.98	%		16.19	%		0.9	%		-0.4	%
Average loans / Average deposits (a)		91.96	%		90.32	%		91.68	%		1.8	%		0.3	%

PARK NATIONAL CORPORATION

Financial Highlights (continued)

Twelve months ended December 31, 2011 and 2010

	December 31,			December 31,			Percent
(in thousands, except share and per share data)	2011			2010			change
					(Restated)
INCOME STATEMENT:
Net interest income	$	273,234		$	274,044			-0.3	%
Provision for loan losses		59,272			87,080			-31.9	%
Other income		66,081			63,016			4.9	%
Gain on sale of securities		28,829			11,864			143.0	%
Total other expense		188,317			187,107			0.6	%
Income before income taxes	$	120,555		$	74,737			61.3	%
Federal income taxes	$	29,727		$	17,797			67.0	%
State income taxes		6,088			(1,161	)		N.M
Net income	$	84,740		$	58,101			45.8	%
Preferred stock dividends and accretion		5,856			5,807			0.8	%
Net income available to common shareholders	$	78,884		$	52,294			50.8	%
MARKET DATA:
Earnings per commmon share - basic (b)	$	5.12		$	3.45			48.4	%
Earnings per common share - diluted (b)	$	5.12		$	3.45			48.4	%
Cash dividends per common share		3.76			3.76			0.0	%
Weighted average common shares - basic (a)		15,400,155			15,152,692			1.6	%
Weighted average common shares - diluted (a)		15,401,446			15,155,735			1.6	%
PERFORMANCE RATIOS:
Return on average assets (a)(b)		1.09	%		0.74	%		47.3	%
Return on average common equity (a)(b)		12.21	%		8.05	%		51.7	%
Yield on loans		5.61	%		5.80	%		-3.3	%
Yield on investments		3.61	%		4.25	%		-15.1	%
Yield on earning assets		5.03	%		5.36	%		-6.2	%
Cost of interest bearing deposits		0.66	%		0.98	%		-32.7	%
Cost of borrowings		2.63	%		2.88	%		-8.7	%
Cost of paying liabilities		1.09	%		1.35	%		-19.3	%
Net interest margin		4.14	%		4.26	%		-2.8	%
Efficiency ratio (g)		55.18	%		55.18	%		0.0	%
ASSET QUALITY RATIOS:
Net loan charge-offs	$	125,084		$	60,222			107.7	%
Net loan charge-offs as a % of average loans (a)		2.65	%		1.30	%		103.8	%
CAPITAL AND LIQUIDITY:
Average equity / Average assets (a)		10.32	%		10.60	%		-2.6	%
Average equity / Average loans (a)		15.78	%		16.08	%		-1.9	%
Average loans / Average deposits (a)		90.78	%		89.59	%		1.3	%
OTHER RATIOS (NON GAAP):
Return on average tangible assets (a)(b)(e)		1.11	%		0.75	%		48.0	%
Return on average tangible common equity (a)(b)(c)		13.86	%		9.18	%		51.0	%

N.M. - Not meaningful 

PARK NATIONAL CORPORATION

Financial Highlights (continued)

a) Averages are for the quarters ended December 31, 2011, September 30, 2011, and December 31, 2010, and the twelve-month periods ended December 31, 2011 and December 31, 2010.

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

(c) Net income (loss) 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, 2011		September 30, 2011		December 31, 2010		December 31, 2011		December 31, 2010
AVERAGE STOCKHOLDERS' EQUITY	$	754,196	$	749,609	$	760,381	$	743,873	$	746,510
Less:  Average preferred stock		98,023		97,808		97,174		97,704		96,873
Average goodwill and other intangibles		76,041		76,734		78,823		77,055		80,072
AVERAGE TANGIBLE COMMON EQUITY	$	580,132	$	575,067	$	584,384	$	569,114	$	569,565

(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, 2011		September 30, 2011		December 31, 2010
STOCKHOLDERS' EQUITY	$	744,964	$	755,052	$	729,708
Less: Preferred stock		98,146		97,932		97,290
Goodwill and other intangibles		74,843		76,370		78,377
TANGIBLE COMMON EQUITY	$	571,975	$	580,750	$	554,041

(e) Net income (loss) 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, 2011		September 30, 2011		December 31, 2010		December 31, 2011		December 31, 2010
AVERAGE ASSETS	$	7,092,465	$	7,190,842	$	7,013,677	$	7,206,171	$	7,042,705
Less:  Average goodwill and other intangibles		76,041		76,734		78,823		77,055		80,072
AVERAGE TANGIBLE ASSETS	$	7,016,424	$	7,114,108	$	6,934,854	$	7,129,116	$	6,962,633

(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, 2011		September 30, 2011		December 31, 2010
TOTAL ASSETS	$	6,974,845	$	7,095,097	$	7,282,261
Less: Goodwill and other intangibles		74,843		76,370		78,377
TANGIBLE ASSETS	$	6,900,002	$	7,018,727	$	7,203,884

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, 2011		September 30, 2011		December 31, 2010		December 31, 2011		December 31, 2010
Interest income	$	80,231	$	82,065	$	84,391	$	331,880	$	345,517
Fully taxable equivalent adjustment		456		474		540		1,938		2,047
Fully taxable equivalent interest income	$	80,687	$	82,539	$	84,931	$	333,818	$	347,564
Interest expense		13,952		14,445		15,893		58,646		71,473
Fully taxable equivalent net interest income	$	66,735	$	68,094	$	69,038	$	275,172	$	276,091

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)	2011		2010			2011		2010
			(Restated)					(Restated)
Interest income:
Interest and fees on loans	$	65,497	$	67,405		$	262,458	$	267,692
Interest on:
Obligations of U.S. Government, its agencies
and other securities		14,571		16,768			68,873		76,839
Obligations of states and political subdivisions		61		173			371		786
Other interest income		102		45			178		200
Total interest income		80,231		84,391			331,880		345,517
Interest expense:
Interest on deposits:
Demand and savings deposits		894		1,133			3,812		5,753
Time deposits		5,247		7,512			23,842		36,212
Interest on borrowings		7,811		7,248			30,992		29,508
Total interest expense		13,952		15,893			58,646		71,473
Net interest income		66,279		68,498			273,234		274,044
Provision for loan losses		16,218		42,627			59,272		87,080
Net interest income after provision for loan losses		50,061		25,871			213,962		186,964
Other income		17,885		12,129			66,081		63,016
Gain on sale of securities		3,367		45			28,829		11,864
Other expense:
Salaries and employee benefits		25,952		24,631			102,068		98,315
Occupancy expense		2,866		2,760			11,295		11,510
Furniture and equipment expense		2,643		2,615			10,773		10,435
Other expense		17,904		16,514			64,181		66,847
Total other expense		49,365		46,520			188,317		187,107
Income (loss) before income taxes		21,948		(8,475	)		120,555		74,737
Income taxes		8,739		(5,053	)		35,815		16,636
Net income (loss)	$	13,209	$	(3,422	)	$	84,740	$	58,101
Preferred stock dividends and accretion		1,464		1,452			5,856		5,807
Net income (loss) available to common shareholders	$	11,745	$	(4,874	)	$	78,884	$	52,294
Per Common Share:
Net income (loss) - basic	$	0.76	$	(0.32	)	$	5.12	$	3.45
Net income (loss) - diluted	$	0.76	$	(0.32	)	$	5.12	$	3.45
Weighted average shares - basic		15,403,861		15,340,427			15,400,155		15,152,692
Weighted average shares - diluted		15,403,861		15,352,600			15,401,446		15,155,735

PARK NATIONAL CORPORATION

Consolidated Balance Sheets

(in thousands, except share data)	December 31, 2011			December 31, 2010
				(Restated)
Assets
Cash and due from banks	$	140,549		$	109,058
Money market instruments		19,716			24,722
Investment securities		1,708,473			2,039,791
Loans		4,317,099			4,732,685
Allowance for loan losses		64,444			143,576
Loans, net		4,252,655			4,589,109
Bank premises and equipment, net		53,741			69,567
Goodwill and other intangibles		74,843			78,377
Other real estate owned		42,272			41,709
Other assets		302,913			329,928
Assets held for sale		379,683			-
Total assets	$	6,974,845		$	7,282,261
Liabilities and Stockholders' Equity
Deposits:
Noninterest bearing	$	995,733		$	937,719
Interest bearing		3,469,381			4,157,701
Total deposits		4,465,114			5,095,420
Borrowings		1,162,026			1,375,652
Other liabilities		66,555			81,481
Liabilities held for sale		536,186			-
Total liabilities	$	6,229,881		$	6,552,553
Stockholders' Equity:
Preferred Stock (200,000 shares authorized in 2011 and 2010;
100,000 shares issued in 2011 and 2010)	$	98,146		$	97,290
Common stock (No par value; 20,000,000 shares authorized
in 2011 and 2010;  16,151,021 shares issued at December 31, 2011,
and 16,151,062 at December 31, 2010)		301,202			301,204
Common stock warrants		4,297			4,473
Accumulated other comprehensive loss, net of taxes		(8,831	)		(1,868	)
Retained earnings		427,157			406,342
Treasury stock (745,109 shares at December 31, 2011,
and 752,128 shares at December 31, 2010)		(77,007	)		(77,733	)
Total stockholders' equity	$	744,964		$	729,708
Total liabilities and stockholders' equity	$	6,974,845		$	7,282,261

PARK NATIONAL CORPORATION

Consolidated Average Balance Sheets

	Three Months Ended						Twelve Months Ended
	December 30,						December 30,
(in thousands)	2011			2010			2011			2010
				(Restated)						(Restated)
Assets
Cash and due from banks	$	126,234		$	119,982		$	124,649		$	116,961
Money market instruments		163,804			84,379			78,593			93,009
Investment securities		1,668,827			1,707,321			1,868,343			1,792,786
Loans		4,676,229			4,695,257			4,713,511			4,642,478
Allowance for loan losses		98,887			118,342			128,512			119,700
Loans, net		4,577,342			4,576,915			4,584,999			4,522,778
Bank premises and equipment, net		69,054			70,299			69,507			69,839
Goodwill and other intangibles		76,041			78,823			77,055			80,072
Other real estate owned		43,226			53,395			44,815			47,400
Other assets		367,937			322,563			358,210			319,860
Total assets	$	7,092,465		$	7,013,677		$	7,206,171		$	7,042,705
Liabilities and Stockholders' Equity
Deposits:
Noninterest bearing	$	1,047,491		$	959,685		$	999,085			907,514
Interest bearing		4,037,485			4,161,547			4,193,404			4,274,501
Total deposits		5,084,976			5,121,232			5,192,489			5,182,015
Borrowings		1,155,566			1,041,920			1,179,458			1,026,295
Other liabilities		97,727			90,144			90,351			87,885
Total liabilities	$	6,338,269		$	6,253,296		$	6,462,298		$	6,296,195
Stockholders' Equity:
Preferred stock	$	98,023		$	97,174		$	97,704		$	96,873
Common stock		301,203			301,317			301,203			301,244
Common stock warrants		4,382			4,405			4,429			4,822
Accumulated other comprehensive income (loss), net of taxes		(3,127	)		11,169			(4,201	)		15,478
Retained earnings		430,935			430,403			422,341			428,978
Treasury stock		(77,220	)		(84,087	)		(77,603	)		(100,885	)
Total stockholders' equity	$	754,196		$	760,381		$	743,873		$	746,510
Total liabilities and stockholders' equity	$	7,092,465		$	7,013,677		$	7,206,171		$	7,042,705

PARK NATIONAL CORPORATION

Consolidated Statements of Income - Linked Quarters

	2011		2011		2011		2011		2010
(in thousands, except per share data)	4th QTR		3rd QTR		2nd QTR		1st QTR		4th QTR
				(Restated)		(Restated)		(Restated)		(Restated)
Interest income:
Interest and fees on loans	$	65,497	$	65,645	$	65,862	$	65,454	$	67,405
Interest on:
Obligations of U.S. Government, its agencies
and other securities		14,571		16,289		18,960		19,053		16,768
Obligations of states and political subdivisions		61		69		92		149		173
Other interest income		102		62		8		6		45
Total interest income		80,231		82,065		84,922		84,662		84,391
Interest expense:
Interest on deposits:
Demand and savings deposits		894		976		951		991		1,133
Time deposits		5,247		5,661		6,200		6,734		7,512
Interest on borrowings		7,811		7,808		7,749		7,624		7,248
Total interest expense		13,952		14,445		14,900		15,349		15,893
Net interest income		66,279		67,620		70,022		69,313		68,498
Provision for loan losses		16,218		16,438		12,516		14,100		42,627
Net interest income after provision for loan losses		50,061		51,182		57,506		55,213		25,871
Other income		17,885		18,027		15,139		15,030		12,129
Gain on sale of securities		3,367		3,465		15,362		6,635		45
Other expense:
Salaries and employee benefits		25,952		25,799		25,253		25,064		24,631
Occupancy expense		2,866		2,665		2,764		3,000		2,760
Furniture and equipment expense		2,643		2,688		2,785		2,657		2,615
Other expense		17,904		14,447		16,205		15,625		16,514
Total other expense		49,365		45,599		47,007		46,346		46,520
Income (loss) before income taxes		21,948		27,075		41,000		30,532		(8,475	)
Income taxes		8,739		6,694		12,046		8,336		(5,053	)
Net income (loss)	$	13,209	$	20,381	$	28,954	$	22,196	$	(3,422	)
Preferred stock dividends and accretion		1,464		1,464		1,464		1,464		1,452
Net income (loss) available to common shareholders	$	11,745	$	18,917	$	27,490	$	20,732	$	(4,874	)
Per Common Share:
Net income (loss) - basic	$	0.76	$	1.23	$	1.79	$	1.35	$	(0.32	)
Net income (loss) - diluted	$	0.76	$	1.23	$	1.79	$	1.35	$	(0.32	)

PARK NATIONAL CORPORATION

Detail of other income and other expense - Linked Quarters

	2011			2011			2011			2011			2010
(in thousands)	4th QTR			3rd QTR			2nd QTR			1st QTR			4th QTR
				(Restated)			(Restated)			(Restated)			(Restated)
Other income:
Income from fiduciary activities	$	3,699		$	3,615		$	3,929		$	3,722		$	3,609
Service charges on deposits		4,643			4,894			4,525			4,245			4,853
Other service income		2,484			3,087			2,734			2,301			3,449
Checkcard fee income		3,115			3,154			3,251			2,976			3,068
Bank owned life insurance income		1,403			1,229			1,228			1,229			1,195
ATM fees		641			726			682			654			655
OREO devaluations		(1,742	)		(588	)		(3,354	)		(2,535	)		(8,587	)
Other		3,642			1,910			2,144			2,438			3,887
Total other income	$	17,885		$	18,027		$	15,139		$	15,030		$	12,129
Other expense:
Salaries and employee benefits	$	25,952		$	25,799		$	25,253		$	25,064		$	24,631
Net occupancy expense		2,866			2,665			2,764			3,000			2,760
Furniture and equipment expense		2,643			2,688			2,785			2,657			2,615
Data processing fees		1,393			1,184			1,135			1,253			1,339
Professional fees and services		5,920			5,005			5,320			4,874			5,341
Amortization of intangibles		1,528			669			669			669			822
Marketing		852			764			728			623			968
Insurance		1,526			681			2,345			2,269			2,136
Communication		1,544			1,475			1,485			1,556			1,536
Other		5,141			4,669			4,523			4,381			4,372
Total other expense	$	49,365		$	45,599		$	47,007		$	46,346		$	46,520

PARK NATIONAL CORPORATION

Asset Quality Information

	Year ended December 31,
(in thousands, except ratios)	2011			2010			2009			2008
					(Restated)
Allowance for loan losses:
Allowance for loan losses, beginning of period	$	143,575		$	116,717		$	100,088		$	87,102
Transfer of loans at fair value		(219	)
Transfer of allowance to held for sale		(13,100	)
Charge-offs		133,882			66,314			59,022			62,916
Recoveries		8,798			6,092			6,830			5,415
Net charge-offs		125,084			60,222			52,192			57,501
Provision for loan losses		59,272			87,080			68,821			70,487
Allowance for loan losses, end of period	$	64,444		$	143,575		$	116,717		$	100,088
General reserve trends:
Allowance for loan losses, end of period	$	64,444		$	143,575		$	116,717		$	100,088
Specific reserves		11,935			66,904			36,721			8,875
General reserves	$	52,509		$	76,671		$	79,996		$	91,213
Total loans	$	4,317,099		$	4,732,685		$	4,640,432		$	4,491,337
Impaired commercial loans		187,938			250,933			201,143			141,343
Non-impaired loans	$	4,129,161		$	4,481,752		$	4,439,289		$	4,349,994
Asset Quality Ratios:
Net charge-offs as a % of average loans		2.65	%		1.30	%		1.14	%		1.32	%
Allowance for loan losses as a % of period end loans		1.49	%		3.03	%		2.52	%		2.23	%
General reserves as a % of non-impaired loans		1.27	%		1.71	%		1.80	%		2.10	%
Nonperforming Assets - Park National Corporation:
Nonaccrual loans	$	190,652		$	289,268		$	233,544		$	159,512
Accruing renegotiated loans		33,923			-			142			2,845
Loans past due 90 days or more		3,489			3,590			14,773			5,421
Total nonperforming loans	$	228,064		$	292,858		$	248,459		$	167,778
Other real estate owned - Park National Bank		13,240			8,385			6,037			6,149
Other real estate owned - Parent Company		29,032			-			-			-
Other real estate owned - Vision Bank		-			33,324			35,203			19,699
Total nonperforming assets	$	270,336		$	334,567		$	289,699		$	193,626
Percentage of nonperforming loans to period end loans		5.28	%		6.19	%		5.35	%		3.74	%
Percentage of nonperforming assets to period end loans		6.26	%		7.07	%		6.24	%		4.31	%
Percentage of nonperforming assets to period end assets		3.88	%		4.59	%		4.11	%		2.74	%

PARK NATIONAL CORPORATION

Asset Quality Information

	Year ended December 31,
(in thousands, except ratios)	2011			2010			2009			2008
					(Restated)
Nonperforming Assets - Ohio-based operations:
Nonaccrual loans	$	96,113		$	117,815		$	85,197		$	68,306
Accruing renegotiated loans		26,342			-			142			-
Loans past due 90 days or more		3,367			3,226			3,496			4,777
Total nonperforming loans	$	125,822		$	121,041		$	88,835		$	73,083
Other real estate owned - Park National Bank		13,240			8,385			6,037			6,149
Other real estate owned - Parent Company		29,032			-			-			-
Total nonperforming assets	$	168,094		$	129,426		$	94,872		$	79,232
Percentage of nonperforming loans to period end loans		3.00	%		2.96	%		2.24	%		1.92	%
Percentage of nonperforming assets to period end loans		4.01	%		3.16	%		2.39	%		2.08	%
Percentage of nonperforming assets to period end assets		2.64	%		1.99	%		1.54	%		1.29	%
Nonperforming Assets - Vision Bank (retained portfolio):
Nonaccrual loans	$	94,539		$	171,453		$	148,347		$	91,206
Accruing renegotiated loans		3,157			-			-			2,845
Loans past due 90 days or more		122			364			11,277			644
Total nonperforming loans	$	97,818		$	171,817		$	159,624		$	94,695
Other real estate owned		-			33,324			35,203			19,699
Total nonperforming assets	$	97,818		$	205,141		$	194,827		$	114,394
Percentage of nonperforming loans to period end loans		82.53	%		26.82	%		23.58	%		13.71	%
Percentage of nonperforming assets to period end loans		82.53	%		32.02	%		28.78	%		16.57	%
Percentage of nonperforming assets to period end assets		37.33	%		25.90	%		21.70	%		12.47	%
New nonaccrual loan information:
Nonaccrual loans, beginning of period	$	289,268		$	233,544		$	159,512		$	101,128
New nonaccrual loans - Ohio-based operations		78,316			85,081			57,641			58,161
New nonaccrual loans - Vision Bank		41,388			90,094			126,540			83,588
Resolved nonaccrual loans		218,320			119,451			110,149			83,365
Nonaccrual loans, end of period	$	190,652		$	289,268		$	233,544		$	159,512
Impaired Commercial Loan Portfolio Information (period end):
Unpaid principal balance	$	291,771		$	304,534		$	245,092		$	171,310
Prior charge-offs		103,833			53,601			43,949			29,967
Remaining principal balance		187,938			250,933			201,143			141,343
Specific reserves		11,935			66,904			36,721			8,875
Book value, after specific reserve	$	176,003		$	184,029		$	164,422		$	132,468