PARK NATIONAL CORP /OH/PRK
PARK NATIONAL CORP /OH/ Income Taxes Disclosure
Income Taxes
Park's pre-tax income for the year ended December 31, 2025 was as follows:
| (In thousands) | 2025 | |||||||
| Domestic | $ | 221,323 | ||||||
| Foreign | — | |||||||
| Total pre-tax income | $ | 221,323 | ||||||
The components of the provision for federal income taxes are shown below:
| December 31, (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Current tax expense (benefit) | ||||||||||||||||||||
Federal | $ | 31,984 | $ | 23,905 | $ | 18,118 | ||||||||||||||
State | 2,285 | 1,360 | 1,190 | |||||||||||||||||
| Amortization of qualified affordable housing projects and historic tax credits | 8,519 | 8,449 | 8,265 | |||||||||||||||||
| Deferred tax expense (benefit) | ||||||||||||||||||||
Federal | $ | (1,439) | $ | (517) | $ | (708) | ||||||||||||||
State | (99) | 108 | 5 | |||||||||||||||||
| Total income tax expense (benefit) | ||||||||||||||||||||
Federal | $ | 39,064 | $ | 31,837 | $ | 25,675 | ||||||||||||||
State | 2,186 | 1,468 | 1,195 | |||||||||||||||||
| Total | $ | 41,250 | $ | 33,305 | $ | 26,870 | ||||||||||||||
Income taxes paid for the year ended December 31, 2025 were as follows:
| (In thousands) | 2025 | |||||||
| Federal | $ | 33,580 | ||||||
State (1) | 2,463 | |||||||
| Total | $ | 36,043 | ||||||
(1) There were no payments made to an individual jurisdiction that exceeded 5% of the Company's total income taxes paid during the year ended December 31, 2025.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Corporation’s
deferred tax assets and liabilities are as follows:
| December 31 (In thousands) | 2025 | 2024 | ||||||||||||
| Deferred tax assets: | ||||||||||||||
| Allowance for credit losses | $ | 20,351 | $ | 19,144 | ||||||||||
| Allowance for unfunded credit losses | 1,142 | 1,288 | ||||||||||||
| Accumulated other comprehensive loss – Unrealized losses on debt securities AFS | 8,598 | 16,728 | ||||||||||||
| Deferred compensation | 7,370 | 6,811 | ||||||||||||
| Net deferred loan fees | — | 581 | ||||||||||||
| Nonvested equity-based compensation | 3,431 | 3,130 | ||||||||||||
| Net operating loss ("NOL") carryforward | 2,163 | 2,173 | ||||||||||||
| Fixed assets | 2,389 | 1,728 | ||||||||||||
| Operating lease liability | 3,736 | 3,592 | ||||||||||||
| Other | 1,036 | 1,009 | ||||||||||||
| Total deferred tax assets before valuation allowance | $ | 50,216 | $ | 56,184 | ||||||||||
| Valuation allowance | (672) | (562) | ||||||||||||
| Total deferred tax assets | $ | 49,544 | $ | 55,622 | ||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Accumulated other comprehensive gain – Pension Plan | $ | 5,211 | $ | 4,453 | ||||||||||
| Deferred investment income | — | 1,226 | ||||||||||||
| Net deferred loan fees | 266 | — | ||||||||||||
| Pension Plan | 22,527 | 21,776 | ||||||||||||
| MSRs | 2,999 | 3,030 | ||||||||||||
| Partnership adjustments | 950 | 1,080 | ||||||||||||
| Purchase accounting adjustments | 712 | 791 | ||||||||||||
| Operating lease right-of-use asset | 3,426 | 3,427 | ||||||||||||
| Lessor adjustments | 2,535 | 2,287 | ||||||||||||
| Other | 1,916 | 1,199 | ||||||||||||
| Total deferred tax liabilities | $ | 40,542 | $ | 39,269 | ||||||||||
| Net deferred tax asset | $ | 9,002 | $ | 16,353 | ||||||||||
As of December 31, 2025 and 2024, Park had a net deferred tax asset balance related to federal NOL carryforwards of approximately $1.5 million and $1.6 million, respectively, which expire at various dates from 2030-2035. Park also had a net deferred tax asset balance related to state NOL carryforwards of approximately $0.9 million and $0.6 million at December 31, 2025 and 2024, respectively, which expire at various dates from 2030-2040.
Park performs an analysis to determine if a valuation allowance against deferred tax assets is required in accordance with U.S. GAAP. At December 31, 2025, management determined that it was required to establish a $0.7 million state tax valuation allowance against certain deferred tax assets generated by one of its non-bank subsidiaries since it was not more likely than not that the deferred tax assets would be fully utilized in future periods. A valuation allowance of $0.6 million was required for the year ended December 31, 2024.
The following is a reconciliation of income tax expense to the amount computed at the statutory federal corporate income tax rate of 21% for the year ended December 31, 2025.
| 2025 | ||||||||||||||
| (Dollars in thousands) | Amount | Percent | ||||||||||||
| Statutory federal corporate income tax rate | $ | 46,478 | 21.0 | % | ||||||||||
| Changes in rates resulting from: | ||||||||||||||
| Tax credits: | ||||||||||||||
| Investments in qualified affordable housing projects, net of tax benefits | (2,241) | (1.1) | % | |||||||||||
| Nontaxable or nondeductible items: | ||||||||||||||
| Tax exempt interest income, net of disallowed interest | (2,056) | (0.9) | % | |||||||||||
| Bank owned life insurance | (1,388) | (0.6) | % | |||||||||||
| KSOP dividend deduction | (1,096) | (0.5) | % | |||||||||||
| Other nontaxable or nondeductible items | 9 | — | % | |||||||||||
| Other reconciling items: | ||||||||||||||
| Compensation-related items | (158) | (0.1) | % | |||||||||||
| Change in tax laws or rates enacted during the period | — | — | % | |||||||||||
| Changes in unrecognized tax benefits | (25) | — | % | |||||||||||
State income taxes, net of federal benefit (1) | 1,727 | 0.8 | % | |||||||||||
| Total | $ | 41,250 | 18.6 | % | ||||||||||
(1) State tax in North Carolina, South Carolina, Kentucky, and California make up the majority (greater than 50%) of the tax effect in this category.
The following is a reconciliation of income tax expense to the amount computed at the statutory federal corporate income tax rate of 21% for the years ended December 31, 2024 and 2023.
| 2024 | 2023 | |||||||||||||
| Statutory federal corporate income tax rate | 21.0 | % | 21.0 | % | ||||||||||
| Changes in rates resulting from: | ||||||||||||||
| Tax exempt interest income, net of disallowed interest | (1.0) | % | (1.9) | % | ||||||||||
| Bank owned life insurance | (0.9) | % | (0.7) | % | ||||||||||
| Investments in qualified affordable housing projects, net of tax benefits | (1.0) | % | (1.0) | % | ||||||||||
| KSOP dividend deduction | (0.5) | % | (0.6) | % | ||||||||||
| Other | 0.4 | % | 0.7 | % | ||||||||||
| Effective Tax Rate | 18.0 | % | 17.5 | % | ||||||||||
Park National Corporation and its subsidiaries do not pay state income tax to the state of Ohio, but pay a franchise tax based on equity. The franchise tax expense is included in "State tax expense" on Park’s Consolidated Statements of Income. Park is also subject to state income tax in various states, including North Carolina and South Carolina. State income tax expense is included in “Income taxes” on Park’s Consolidated Statements of Income. Park’s state income tax expense was $2.2 million, $1.5 million and $1.2 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Unrecognized Tax Benefits
The following is a reconciliation of the beginning and ending amount of unrecognized tax benefits.
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| January 1 Balance | $ | 98 | $ | 145 | $ | 69 | ||||||||||||||
| Additions based on tax positions related to the current year | 2 | 5 | 47 | |||||||||||||||||
| Additions for tax positions of prior years | — | — | 52 | |||||||||||||||||
| Reductions for tax positions of prior years | — | (28) | — | |||||||||||||||||
| Reductions due to statute of limitations | (34) | (24) | (23) | |||||||||||||||||
| December 31 Balance | $ | 66 | $ | 98 | $ | 145 | ||||||||||||||
The amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in the future periods at December 31, 2025, 2024 and 2023 was $60,000, $87,000 and $123,000, respectively. Park does not expect the total amount of unrecognized tax benefits to significantly increase or decrease during 2026.
The income (expense) related to interest and penalties recorded on unrecognized tax benefits in the Consolidated Statements of Income for the years ended December 31, 2025, 2024, and 2023 was $2,000, $(1,500), and $(1,500), respectively. The amount accrued for interest and penalties at December 31, 2025, 2024 and 2023 was $10,500, $12,500 and $11,000, respectively.
Park National Corporation and its subsidiaries are subject to U.S. federal income tax and income tax in various state jurisdictions. The Corporation is subject to routine audits of tax returns by the Internal Revenue Service and states in which we conduct business. No material adjustments have been made on closed federal and state tax audits. Generally, all tax years ended prior to December 31, 2022 are closed to examination by federal and state taxing authorities.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 23, 2026 | Showing above |
| 2024 | Feb 24, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 21, 2017 | |
| 2015 | Feb 18, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.