Management's discussion and analysis 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: the ever-changing effects of the
novel coronavirus (COVID-19) pandemic - - the duration, extent and severity of
which are impossible to predict - - on economies (local, national and
international) and markets, and on our customers, counterparties, employees and
third-party service providers, as well as the effects of various responses of
governmental and nongovernmental authorities to the COVID-19 pandemic, including
actions directed toward the containment of the COVID-19 pandemic and stimulus
packages; Park's ability to execute our business plan successfully and within
the expected timeframe as well as Park's ability to manage strategic
initiatives; general economic and financial market conditions, specifically in
the real estate markets and the credit markets, either nationally or in the
states in which Park and our subsidiaries do business, may experience a slowing
in addition to continuing residual effects of prior recessionary conditions,
resulting in adverse impacts on the demand for loan, deposit and other financial
services, delinquencies, defaults and counterparties' inability to meet credit
and other obligations and the possible impairment of collectability of loans;
higher default rates on loans made to our customers due to the COVID-19 pandemic
and its impact on our customers' operations and financial condition; changes in
interest rates and prices as well as disruption in the liquidity and functioning
of U.S. financial markets, as a result of the COVID-19 pandemic and reactions
thereto, may adversely impact prepayment penalty income, mortgage banking
income, income from fiduciary activities, the value of securities, loans,
deposits and other financial instruments and the interest rate sensitivity of
our consolidated balance sheet as well as reduce interest margins and impact
loan demand; changes in consumer spending, borrowing and saving habits, whether
due to changes in retail distribution strategies, consumer preferences and
behavior, changes in business and economic conditions (including as a result of
the COVID-19 pandemic and reactions thereto), legislative and regulatory
initiatives (including those undertaken in response to the COVID-19 pandemic),
or other factors may be different than anticipated; changes in unemployment may
be different than anticipated in light of the impacts of the COVID-19 pandemic;
changes in customers', suppliers', and other counterparties' performance and
creditworthiness may be different than anticipated in light of the impacts of
the COVID-19 pandemic; the adequacy of our internal controls and risk management
program in the event of changes in the market, economic, operational (including
those which may result from more of our associates working remotely),
asset/liability repricing, legal, compliance, strategic, cybersecurity,
liquidity, credit and interest rate risks associated with Park's business;
disruption in the liquidity and other functioning of U.S. financial markets; our
liquidity requirements could be adversely affected by changes to regulations
governing bank and bank holding company capital and liquidity standards as well
as by changes in our assets and liabilities; competitive pressures among
financial services organizations could increase significantly, including product
and pricing pressures (which could in turn impact our credit spreads), customer
acquisition and retention, changes to third-party relationships and revenues,
changes in the manner of providing services, customer acquisition and retention
pressures, and our ability to attract, develop and retain qualified banking
professionals; customers could pursue alternatives to bank deposits, causing us
to lose a relatively inexpensive source of funding; uncertainty regarding the
nature, timing, cost and effect of changes in banking regulations or other
regulatory or legislative requirements affecting the respective businesses of
Park and our subsidiaries, including major reform of the regulatory oversight
structure of the financial services industry and changes in laws and regulations
concerning taxes, FDIC insurance premium levels, pensions, bankruptcy, consumer
protection, rent regulation and housing, financial accounting and reporting,
environmental protection, insurance, bank products and services, bank capital
and liquidity standards, fiduciary standards, securities and other aspects of
the financial services industry, specifically the reforms provided for in the
Coronavirus Aid, Relief and Economic Security (CARES) Act, the Dodd-Frank Wall
Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act") and the
Basel III regulatory capital reforms, as well as regulations already adopted and
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which may be adopted in the future by the relevant regulatory agencies,
including the Consumer Financial Protection Bureau, the Office of the
Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the
Federal Reserve Board, to implement the provisions of the CARES Act, the
provisions of the Dodd-Frank Act, and the Basel III regulatory capital reforms;
the effect of changes in accounting policies and practices, as may be adopted by
the Financial Accounting Standards Board (the "FASB"), the SEC, the Public
Company Accounting Oversight Board and other regulatory agencies, including the
extent to which the new current expected credit loss ("CECL") accounting
standard issued by the FASB in June 2016 and in accordance with the CARES Act,
the adoption of which can be deferred by Park (with retrospective application as
of January 1, 2020) until the earlier of: (1) the interim reporting period
during which the national emergency concerning the COVID-19 outbreak declared by
the President on March 15, 2020 terminates; or (2) December 31, 2020, may
adversely affect Park's reported financial condition or results of operations;
Park's assumptions and estimates used in applying critical accounting policies
and modeling, including under the CECL model, when adopted by Park, which may
prove unreliable, inaccurate or not predictive of actual results; significant
changes in the tax laws, which may adversely affect the fair values of net
deferred tax assets and obligations of state and political subdivisions held in
Park's investment securities portfolio; the impact of our ability to anticipate
and respond to technological changes on our ability to respond to customer needs
and meet competitive demands; operational issues stemming from and/or capital
spending necessitated by the potential need to adapt to industry changes in
information technology systems on which Park and our subsidiaries are highly
dependent; the ability to secure confidential information and deliver products
and services through the use of computer systems and telecommunications
networks; a failure in or breach of our operational or security systems or
infrastructure, or those of our third-party vendors and other service providers,
resulting in failures or disruptions in customer account management, general
ledger, deposit, loan, or other systems, including as a result of cyber attacks;
the existence or exacerbation of general geopolitical instability and
uncertainty; the effect of trade policies (including the impact of potential or
imposed tariffs, a U.S. withdrawal from or significant renegotiation of trade
agreements, trade wars and other changes in trade regulations and changes in the
relationship of the U.S. and its global trading partners), monetary and other
fiscal policies (including the impact of money supply and interest rate policies
of the Federal Reserve Board) and other governmental policies of the U.S.
federal government, including those implemented in response to the COVID-19
pandemic; unexpected changes in interest rates or disruptions in the financial
markets related to COVID-19 or responses to the related health crisis; the
impact on financial markets and the economy of any changes in the credit ratings
of the U.S. Treasury obligations and other U.S. government - backed debt, as
well as issues surrounding the levels of U.S., European and Asian government
debt and concerns regarding the creditworthiness of certain sovereign
governments, supranationals and financial institutions in Europe and Asia; the
uncertainty surrounding the actions to be taken to implement the referendum by
United Kingdom voters to exit the European Union; our litigation and regulatory
compliance exposure, including the costs and effects of any adverse developments
in legal proceedings or other claims and the costs and effects of unfavorable
resolution of regulatory and other governmental examinations or other inquiries;
continued availability of earnings and excess capital sufficient for the lawful
and prudent declaration of dividends; the impact on Park's business, personnel,
facilities or systems of losses related to acts of fraud, scams and schemes of
third parties; the impact of widespread natural and other disasters, pandemics
(including the COVID-19 pandemic), dislocations, civil unrest, terrorist
activities or international hostilities on the economy and financial markets
generally and on us or our counterparties specifically; any of the foregoing
factors, or other cascading effects of the COVID-19 pandemic that are not
currently foreseeable, could materially affect our business, including our
customers' willingness to conduct banking transactions and their ability to pay
on existing obligations; the effect of healthcare laws in the U.S. and potential
changes for such laws, especially in light of the COVID-19 pandemic, which may
increase our healthcare and other costs and negatively impact our operations and
financial results; risk and uncertainties associated with Park's entry into new
geographic markets with its recent acquisitions, including expected revenue
synergies and cost savings from recent acquisitions not being fully realized or
realized within the expected time frame; the discontinuation of the London
Inter-Bank Offered Rate (LIBOR) and other reference rates which may result in
increased expenses and litigation, and adversely impact the effectiveness of
hedging strategies; and other risk factors relating to the banking industry as
detailed from time to time in Park's reports filed with the SEC 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, 2019 and "Item 1A. Risk Factors" of
Part II of this Quarterly Report on Form 10-Q. Park does not undertake, and
specifically disclaims any obligation, to publicly release the results 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 was made, or reflect the occurrence of unanticipated events, except to
the extent required by law.
Non-GAAP Financial Measures
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