8-K: Park National to Acquire First Citizens Bancshares

Park National Corporation announced a definitive merger agreement to acquire First Citizens Bancshares, Inc. in an all-stock transaction valued at approximately $317.3 million, expanding its presence into Tennessee.

Summary

• Park National Corporation (Park) will acquire First Citizens Bancshares, Inc. (FIZN) in an all-stock transaction.
• Each FIZN common stock share will convert into 0.52 shares of Park common stock.
• Based on Park's October 24, 2025 closing price of $159.54, the implied FIZN per share price is $82.96, totaling approximately $317.3 million.
• The transaction values FIZN at 168% of tangible book value per share and 13.5 times trailing twelve months earnings per share.
• The merger is expected to be approximately 15% accretive to 2026 earnings per share and slightly accretive to tangible book value per share, excluding certain merger-related charges and with cost savings fully phased in.
• FIZN shareholders are expected to own approximately 11% of the combined company's outstanding shares.
• The combined company will have pro forma total assets of $12.5 billion, deposits of $10.5 billion, and loans of $9.6 billion as of September 30, 2025.
• Park's net income for Q3 2025 increased 23.4% to $47.2 million from $38.2 million in Q3 2024.
• Net income for the first nine months of 2025 increased 21.8% to $137.4 million from $112.8 million in the same period of 2024.
• Total loans increased 3.4% for the 12-month period ended September 30, 2025.
• Total deposits increased 1.4% for the 12-month period ended September 30, 2025, or 3.2% including off-balance sheet deposits.
• Provision for credit losses decreased to $7.6 million for the nine months ended September 30, 2025, from $10.6 million in the prior year.
• Nonperforming loans increased to $90.6 million at September 30, 2025, from $71.5 million at September 30, 2024.

Sentiment

Score: 8

Explanation: The filing announces a strategic acquisition with strong financial projections (EPS and TBV accretion), solidifies market expansion, and reports robust quarterly and year-to-date earnings growth for Park National. The declaration of a special dividend further underscores positive financial health. While there's an increase in nonperforming loans, the overall outlook and strategic move are highly positive.

Positives

• Park's net income for Q3 2025 increased 23.4% to $47.2 million, and for the first nine months of 2025, it increased 21.8% to $137.4 million.
• The merger is anticipated to be approximately 15% accretive to 2026 earnings per share and slightly accretive to tangible book value per share.
• The acquisition provides greater lending capacity and potential to broaden financial service offerings for First Citizens' customers.
• The merger expands Park's presence into attractive Tennessee markets, aligning with its long-term growth strategy.
• First Citizens has demonstrated compelling loan growth (7.6% compounded annual growth rate over 10 years) and consistent deposit growth (5.4% compounded annual growth rate over 10 years).
• First Citizens holds approximately $600 million in excess deposits, which Park expects to utilize for loan growth in the combined franchise.
• First Citizens boasts pristine credit quality, with an average net charge-off to average loans of 0.06% over the last 10 years.
• Park's total loans increased 3.4% for the 12-month period ended September 30, 2025.
• Park's total deposits increased 3.2% (including off-balance sheet deposits) for the 12-month period ended September 30, 2025.
• Park's provision for credit losses decreased to $7.6 million for the nine months ended September 30, 2025, from $10.6 million for the same period in 2024.
• Park's board declared a quarterly cash dividend of $1.07 per common share and a special one-time dividend of $1.25 per common share.

Negatives

• Park's total other income decreased by 3.3% to $88.5 million for the nine months ended September 30, 2025, compared to $91.5 million for the same period in 2024.
• Investment income decreased by $7.8 million due to a decrease in average investments and a 50 basis point decrease in yield.
• Bank owned life insurance income decreased by $1.4 million.
• Miscellaneous income decreased by $1.1 million.
• Nonperforming loans for Park increased to $90.6 million at September 30, 2025, from $71.5 million at September 30, 2024, representing a 26.6% increase.
• The office sector continues to face challenges from adjustments companies have made as a result of the pandemic, though Park's portfolio is not currently exhibiting signs of stress.

Risks

• Ability to execute business plan successfully and manage strategic initiatives.
• Impact of current and future economic and financial market conditions, including unemployment rates, inflation, interest rates, supply-demand imbalances, and geopolitical matters.
• Factors impacting the performance of the loan portfolio, including real estate values, financial health of borrowers, and loan concentrations.
• Effects of monetary and fiscal policies, including interest rates, money supply, and inflation.
• Changes in federal, state, or local tax laws.
• Impact of changes in governmental policy and regulatory requirements on operations.
• Changes in consumer spending, borrowing, and saving habits.
• Changes in the performance and creditworthiness of customers, suppliers, and counterparties.
• Increased credit risk and higher credit losses due to loan concentrations.
• Volatility in mortgage banking income due to interest rates and demand.
• Adequacy of internal controls and risk management programs.
• Competitive pressures among financial services organizations.
• Uncertainty regarding changes in banking regulations and other regulatory requirements.
• Ability to meet heightened supervisory requirements and expectations.
• Impact of changes in accounting policies and practices on financial condition.
• Reliability and accuracy of assumptions and estimates used in applying critical accounting estimates.
• Potential for higher future credit losses due to changes in economic assumptions.
• Ability to anticipate and respond to technological changes and reliance on third-party vendors.
• Operational issues related to and capital spending necessitated by the implementation of information technology systems on which the company is highly dependent.
• Ability to secure confidential information and deliver products and services through computer systems and telecommunications networks.
• Impact of security breaches or failures in operational systems.
• Impact of geopolitical instability and trade policies on operations, including the imposition of tariffs and retaliatory tariffs.
• Impact of changes in credit ratings of government debt and financial stability of sovereign governments.
• Effect of stock market price fluctuations on asset and wealth management businesses.
• Litigation and regulatory compliance exposure.
• Availability of earnings and excess capital for dividend declarations.
• Impact of fraud, scams, and schemes on the business.
• Impact of natural disasters, pandemics, and other emergencies on operations.
• Potential deterioration of the economy due to financial, political, or other shocks.
• Impact of healthcare laws and potential changes on costs and operations.
• Ability to grow deposits and maintain adequate deposit levels, including by mitigating the effect of unexpected deposit outflows on financial condition.
• Other risk factors related to the banking industry.
• The possibility that shareholders of First Citizens may not approve the Merger Agreement.
• The risk that a condition to closing of the Merger may not be satisfied, that either party may terminate the Merger Agreement or that the closing of the Merger might be delayed or not occur at all.
• Potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the Merger.
• The diversion of management time on transaction-related issues.
• The ultimate timing, outcome and results of integrating the operations of First Citizens into those of Park.
• The effects of the Merger on Park's future financial condition, results of operations, strategy and plans.
• Regulatory approvals for the transaction, and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the proposed transaction.
• The possibility that the integration of the two companies may be more difficult, time-consuming or costly than expected.
• The impact of purchase accounting with respect to the proposed transaction, or any change in the assumptions used regarding the assets acquired and liabilities assumed to determine their fair value and credit marks.
• The possibility that the proposed transaction may be more expensive or take longer to complete than anticipated, including as a result of unexpected factors or events.
• A material adverse change in the financial condition of Park or First Citizens.
• Changes in Park's share price before closing.
• Risks relating to the potential dilutive effect of shares of Park's common stock to be issued in the proposed transaction.
• First Citizens anticipates divesting a subsidiary prior to closing of merger with Park.

Future Outlook

The merger is expected to close in the first quarter of 2026, subject to customary closing conditions, regulatory approvals, and First Citizens' shareholder approval. The transaction is anticipated to be approximately 15% accretive to 2026 earnings per share and slightly accretive to tangible book value per share, excluding certain merger-related charges and with cost savings fully phased in. Park expects to cross $10 billion in assets organically in Q1 2026, and this partnership accelerates that momentum.

Management Comments

• David L. Trautman (Park CEO and Chairman): "Our performance is sustained by the strength of our team and the faith our customers place in us to be there for them when, where and how they think best. As we enter the final quarter of 2025, we remain focused on deepening relationships with our customers and communities and on delivering consistent, long-term results for our stakeholders."
• Matthew R. Miller (Park President): "Our third quarter results reflect the continued momentum we've built across the organization. With a disciplined approach to expense management, a focus on relationship-driven banking and an unwavering commitment to execution, we deliver measurable value for our customers, communities and shareholders. The dedication of our bankers combined with their passion for service and excellence is the foundation of our success."
• Jeff Agee (First Citizens Chairman and CEO): "Partnering with Park is a natural and strategic step forward for our bank—one that reflects our commitment to our teammates, customers, communities, and shareholders. Together, we're building a stronger, more impactful organization that will enhance our customers' experience, create meaningful opportunities for our teammates and extend our ability to serve more communities. Park's values and culture are deeply aligned with ours, and we believe this partnership is the right move for our future."
• David Trautman (Park Chairman and CEO): "We're delighted to welcome the exceptional bankers at First Citizens to the Park team. We look forward to serving alongside them as we help more customers and communities flourish."
• Matthew R. Miller (Park President): "We've long seen Tennessee as a compelling market and were intentional about waiting for the right opportunity to expand. This partnership is the right fit at the right time. It aligns with our long-term growth strategy and positions us to serve more people in meaningful ways. Our teams share core values, a strong cultural alignment and a genuine commitment to serving others."

Industry Context

The merger represents a strategic expansion for Park National into the attractive Tennessee market, aligning with broader trends of regional bank consolidation to achieve greater scale, lending capacity, and diversified service offerings. Park's proactive M&A strategy, including previous expansions in the Carolinas and Kentucky, positions it to capture growth in new markets. The transaction also helps Park manage the financial impacts of crossing the $10 billion asset threshold, a significant regulatory and operational milestone for banks.

Comparison to Industry Standards

• The transaction values FIZN at a price to tangible book value per share of 168%, which is a common metric for bank acquisitions.
• The price to trailing twelve months earnings per share of 13.5x for FIZN is within typical ranges for bank M&A, though specific comparable deals are not listed.
• The pay-to-trade ratio of 76% suggests a reasonable premium paid relative to Park's own valuation.
• First Citizens' average net charge-off to average loans of 0.06% over the last 10 years indicates pristine credit quality, which is better than many industry peers.
• The combined company's pro forma capital ratios (TCE/TA 11%, CET1 13%, Total Risk-Based Capital 14%) indicate a well-capitalized institution, generally above regulatory minimums and competitive within the banking sector.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders (FIZN): Will receive 0.52 shares of Park common stock for each FIZN share, representing an implied value of $82.96 per share. Expected to comprise approximately 11% of the combined company.
• Shareholders (Park): Expected to benefit from EPS and tangible book value accretion, strategic market expansion, and increased scale.
• Employees (FIZN): Jeff Agee will lead the new Tennessee Region. Continuing employees will receive no less favorable base salary/wage and incentive compensation opportunities for 12 months, and substantially similar welfare/retirement/vacation/severance benefits. Severance provided for those terminated without cause.
• Customers (FIZN): Will gain greater lending capacity and potential to broaden financial service offerings.
• Communities (FIZN): Park will continue First Citizens' strong legacy of community support through local partnerships, investment, and engagement, and maintain philanthropic commitments.
• Regulatory Authorities: The merger is subject to approvals from the Federal Reserve Board and OCC.

Next Steps

• First Citizens' shareholders to approve the Merger.
• Obtain necessary regulatory approvals from the Federal Reserve Board and the Office of the Comptroller of the Currency.
• File the S-4 registration statement with the SEC and have it declared effective.
• File certificates of merger with Ohio and Tennessee Secretaries of State.
• Complete the Bank Merger of First Citizens National Bank into The Park National Bank.
• Integrate the operations of First Citizens into Park (anticipated Q3 2026).
• Park to add one FIZN director to its Board of Directors.
• Jeff Agee to lead the new Tennessee Region of Park National Bank.
• FIZN anticipates divesting a subsidiary prior to closing.

Key Dates

Recommendation

The acquisition of First Citizens Bancshares is a highly strategic move for Park National, expanding its footprint into attractive, high-growth Tennessee markets. The transaction is projected to be accretive to EPS and tangible book value, indicating a financially sound deal. Park's strong Q3 and YTD 2025 financial results, including significant net income growth, solid loan and deposit expansion, and a decrease in credit loss provision, demonstrate robust standalone performance. The declaration of a special dividend further signals confidence and commitment to shareholder returns. While nonperforming loans increased, the overall financial health and strategic rationale for the merger present a compelling investment opportunity for long-term growth and enhanced shareholder value.

Keywords

Bank Merger, Financial Services, Acquisition, Banking Industry, Regional Bank, SEC Filing, Earnings Report, Financial Performance, Loan Growth, Deposit Growth, Shareholder Value, Corporate Governance, Risk Management, Strategic Expansion, Tennessee Market, Ohio Banking, First Citizens Bancshares, Park National Corporation