KBRA Affirms Ratings for Park National Corporation

KBRA affirms the senior unsecured debt rating of BBB+, the subordinated debt rating of BBB, and the short-term debt rating of K2 for Newark, Ohio-based Park National Corporation (NYSE: PRK) ("Park National" or "the company"). In addition, KBRA affirms the deposit and senior unsecured debt ratings of A-, the subordinated debt rating of BBB+, and the short-term deposit and debt ratings of K2 for the bank subsidiary, The Park National Bank ("the bank"). The Outlook for all long-term ratings is Stable.

Key Credit Considerations

The ratings are supported by the company’s consistently strong financial performance through various interest rate and credit cycles, including a 5 and a half-year average ROA of approximately 1.55% with 2Q25 at 1.92%. Park's strong profitability stems from its solid deposit franchise, primarily comprised of core customer deposits and a solid market share position (#8) in the state of Ohio. Additionally, deposits are comprised of a high percentage of NIB accounts (32% of total deposits), contributing to a relatively low deposit beta throughout the current interest rate cycle. The company’s conservative balance sheet structuring, which is primarily funded by the core deposit base with a loan-to-deposit ratio at 96%, has helped to keep funding costs down, and an asset sensitive balance sheet has supported solid loan yields helping to maintain durable NIM over time. PRK also holds significant off balance sheet liquidity, as the company has strategically stayed below the $10 billion in asset threshold, which can be drawn upon if needed to fund growth. Noninterest income also plays a key role in the company’s stable earnings profile with approximately 20%-25% of total revenue generated by stable, non-spread revenue sources with PRK’s trust and wealth management components becoming a more significant component of the overall mix. Although Park National’s NPA level is above the peer median, this is primarily a function of management’s conservative risk rating philosophy and the company's willingness to work with borrowers; adjusted reserve coverage appears adequate, and loan loss content remains low. PRK’s conservative approach to capital management is also viewed favorably by KBRA (13.6% CET1 ratio as of 2Q25); capital levels have been augmented in recent years with muted balance sheet growth and are expected to provide adequate loss absorbing capacity if credit quality were to deteriorate unexpectedly.

Rating Sensitivities

Greater geographic diversity as well as a successful track record operating as a bank over $10 billion in assets while maintaining strong earnings and consistently conservative credit quality could result in positive rating momentum over time. Ratings could become pressured if there were a material deterioration in earnings or credit quality or a considerable reduction in capital ratios to below peer levels.

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Methodologies