425: Park National to Acquire First Citizens in All-Stock Deal

Park National Corporation announced a definitive merger agreement to acquire First Citizens Bancshares, Inc. in an all-stock transaction, alongside strong Q3 and YTD 2025 financial results.

Summary

• Park National Corporation (Park) will acquire First Citizens Bancshares, Inc. (First Citizens) in an all-stock merger, with Park as the surviving corporation.
• Immediately following the parent merger, First Citizens National Bank will merge into The Park National Bank.
• The boards of directors of both companies have unanimously approved the merger, which is expected to close in the first quarter of 2026.
• First Citizens shareholders will receive 0.52 shares of Park common stock for each share of First Citizens common stock.
• Based on Park's October 24, 2025 closing price of $159.54, the implied First Citizens per share price is $82.96, valuing the transaction at approximately $317.3 million.
• The transaction values First Citizens at 168% of tangible book value per share and 13.5 times trailing twelve months earnings per share.
• First Citizens shareholders are expected to own approximately 11% of the combined company's outstanding shares.
• The merger is anticipated to be approximately 15% accretive to 2026 earnings per share (excluding certain merger-related charges and with cost savings fully phased in) and slightly accretive to tangible book value per share.
• Park reported Q3 2025 net income of $47.2 million, a 23.4% increase from $38.2 million in Q3 2024.
• Diluted earnings per common share for Q3 2025 were $2.92, up from $2.35 in Q3 2024.
• Year-to-date (YTD) September 30, 2025, net income was $137.4 million, a 21.8% increase from $112.8 million in the same period of 2024.
• YTD September 30, 2025, diluted earnings per common share were $8.48, up from $6.95 in the same period of 2024.
• Total loans increased 3.4% to $7.99 billion for the 12-month period ended September 30, 2025.
• Total deposits increased 1.4% to $8.33 billion for the 12-month period ended September 30, 2025, or 3.2% including off-balance sheet deposits.
• 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, payable December 10, 2025, to shareholders of record on November 21, 2025.

Sentiment

Score: 8

Explanation: The filing presents strong financial performance for Park National Corporation, with significant increases in net income, EPS, and improved efficiency. The announced merger with First Citizens Bancshares is strategically sound, expanding into a growing market, and is projected to be accretive to EPS and tangible book value. While there are some increases in non-performing assets, the overall financial health and strategic direction are very positive.

Positives

• Net income for Q3 2025 increased by 23.4% to $47.2 million compared to Q3 2024.
• Diluted EPS for Q3 2025 increased by 24.3% to $2.92 compared to Q3 2024.
• YTD September 30, 2025, net income increased by 21.8% to $137.4 million compared to the same period in 2024.
• YTD September 30, 2025, diluted EPS increased by 22.0% to $8.48 compared to the same period in 2024.
• Pre-tax, pre-provision net income for Q3 2025 increased by 19.6% to $62.1 million compared to Q3 2024.
• Total loans increased by 3.4% to $7.99 billion for the 12-month period ended September 30, 2025.
• Total deposits increased by 1.4% to $8.33 billion for the 12-month period ended September 30, 2025 (3.2% including off-balance sheet deposits).
• Net interest income for the nine months ended September 30, 2025, increased by 10.1% to $324.4 million.
• Provision for credit losses decreased by $3.0 million to $7.6 million for the nine months ended September 30, 2025, compared to the same period in 2024.
• Net loan charge-offs decreased by 45.9% to $3.8 million for the nine months ended September 30, 2025, compared to the same period in 2024.
• Efficiency ratio improved to 57.03% for the nine months ended September 30, 2025, from 61.38% in the same period of 2024.
• Return on average assets increased to 1.82% for the nine months ended September 30, 2025, from 1.53% in the same period of 2024.
• The merger is expected to be approximately 15% accretive to 2026 EPS and slightly accretive to tangible book value per share.
• Significant cost savings of 30% of First Citizens' noninterest expense base are anticipated.
• The acquisition expands Park's presence into the attractive Tennessee market, aligning with its long-term growth strategy.
• First Citizens' CEO and Chairman, Jeff Agee, will lead the new Tennessee Region of Park National Bank, ensuring local leadership continuity.

Negatives

• Other income decreased by 3.3% to $88.5 million for the nine months ended September 30, 2025, compared to the same period in 2024, primarily due to a decrease in bank owned life insurance income and the absence of a pension settlement gain present in 2024.
• Investment securities decreased by 24.8% to $926.9 million at September 30, 2025, compared to $1.23 billion at September 30, 2024.
• Yield on investment securities decreased by 18.7% to 3.04% in Q3 2025 compared to Q3 2024.
• Yield on money market instruments decreased by 17.5% to 4.44% in Q3 2025 compared to Q3 2024.
• Total nonperforming loans increased by 26.6% to $90.6 million at September 30, 2025, compared to $71.5 million at September 30, 2024.
• Total nonperforming assets increased by 25.5% to $91.2 million at September 30, 2025, compared to $72.7 million at September 30, 2024.

Risks

• Ability to successfully execute the business plan 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, particularly in the office sector ($286.1 million in non-owner-occupied office space loans).
• 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.
• 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 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 mitigating unexpected deposit outflows.
• The possibility that First Citizens shareholders 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 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.

Future Outlook

The merger is expected to close in the first quarter of 2026 and be approximately 15% accretive to 2026 earnings per share and slightly accretive to tangible book value per share. Park anticipates realizing 30% of First Citizens' noninterest expense base in cost savings, with 50% realized in 2026 and 100% thereafter. Park expects to utilize First Citizens' approximately $600 million in excess deposits for loan growth in the combined franchise. The company plans to continue its expansion strategy into higher-growth, demographically attractive markets like Tennessee.

Management Comments

• "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." David L. Trautman, Park CEO and Chairman.
• "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." David L. Trautman, Park CEO and Chairman.
• "Our third quarter results reflect the continued momentum we’ve built across the organization." Matthew R. Miller, Park President.
• "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." Matthew R. Miller, Park President.
• "The dedication of our bankers combined with their passion for service and excellence is the foundation of our success." Matthew R. Miller, Park President.
• "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." Jeff Agee, First Citizens Chairman and CEO.
• "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." Jeff Agee, First Citizens Chairman and CEO.
• "Park’s values and culture are deeply aligned with ours, and we believe this partnership is the right move for our future." Jeff Agee, First Citizens Chairman and CEO.
• "We’re delighted to welcome the exceptional bankers at First Citizens to the Park team." David Trautman, Park Chairman and CEO.
• "We look forward to serving alongside them as we help more customers and communities flourish." David Trautman, Park Chairman and CEO.
• "We’ve long seen Tennessee as a compelling market and we’re intentional about waiting for the right opportunity to expand." Park President Matthew R. Miller.
• "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." Park President Matthew R. Miller.
• "Our teams share core values, a strong cultural alignment and a genuine commitment to serving others." Park President Matthew R. Miller.

Industry Context

This acquisition represents a strategic expansion for Park National Corporation into the Tennessee market, which management identifies as a 'compelling market' with projected household income and population growth exceeding Park's core Ohio market. The merger aligns with broader industry trends of regional bank consolidation to achieve greater scale, enhance lending capacity, and diversify service offerings. The combined entity will have pro forma total assets of $12.5 billion, positioning it as a larger regional player with over 100 branches across Ohio, Kentucky, the Carolinas, and Tennessee. This move allows Park to leverage First Citizens' established presence and strong deposit market share in key Tennessee MSAs, while offering First Citizens' customers access to a broader range of financial services.

Comparison to Industry Standards

• Park National Corporation has a strong market position, with a Top Five Market Share in approximately 80% of the MSAs it serves, including #1 market share in 5 MSAs and Top 5 market share in 15 MSAs.
• First Citizens Bancshares, Inc. holds a #1 deposit market share in its headquarter MSA of Dyersburg, TN, and is ranked 5th in deposits among Tennessee community banks.
• The combined entity will cross the $10 billion asset threshold, a significant benchmark in the banking industry, which Park has been preparing for over five years.
• First Citizens has demonstrated compelling loan growth with a 7.6% compounded annual growth rate over the past 10 years and consistent deposit growth at 5.4% over the same period, indicating a healthy underlying business prior to the merger.
• First Citizens' pristine credit quality, with an average net charge-off to average loans of 0.06% over the last 10 years, suggests a well-managed loan portfolio compared to industry averages.
• The pay-to-trade ratio of 76% for the acquisition is considered attractive, calculated as the transaction tangible book value multiple divided by Park's standalone tangible book value multiple, indicating a favorable valuation for the acquiring company.

Management Changes

Corporate Governance

Related Party Transactions

• No material related party transactions disclosed beyond ordinary course loans compliant with Regulation O and depository relationships in compliance with applicable law.

Stakeholder Impact

• Shareholders (Park): Expected to benefit from EPS and tangible book value accretion, strategic market expansion, and increased scale.
• Shareholders (First Citizens): Will receive Park common stock, benefiting from the combined entity's growth and the premium paid for their shares.
• Employees (First Citizens): Opportunities for career growth within a larger organization, with First Citizens' CEO leading the new Tennessee Region. Severance benefits are outlined for certain terminated employees.
• Customers (First Citizens): Will gain access to greater lending capacity and a broader range of financial services not currently available through First Citizens.
• Communities (First Citizens' footprint): Park National Bank commits to continuing First Citizens' strong legacy of community support through local partnerships, investment, and engagement, maintaining philanthropic commitments.

Next Steps

• First Citizens' shareholders to approve the Merger Agreement.
• Obtain necessary regulatory approvals from the Federal Reserve Board, OCC, and state banking/insurance authorities.
• File Registration Statement on Form S-4 with the SEC and await its effectiveness.
• Mail Proxy Statement to First Citizens' shareholders.
• Complete the merger in the first quarter of 2026.
• Integrate First Citizens' operations into Park National Bank in Q3 2026.
• Park's Board of Directors to appoint one First Citizens director to its board as of the Effective Time.
• First Citizens (or its affiliate) to take actions to terminate the First Citizens National Bank 401(k) Plan and Company ESOP prior to the Effective Time.
• Company to establish and fund a Rabbi Trust for Supplemental Executive Retirement Plans (SERPs) prior to the Closing Date.

Key Dates

Recommendation

The filing presents a compelling case for a 'strong buy' recommendation. Park National Corporation demonstrates robust standalone financial performance with significant year-over-year growth in net income and EPS, improved efficiency, and healthy loan and deposit growth. The strategic acquisition of First Citizens Bancshares is highly accretive to EPS and tangible book value, expanding Park's footprint into attractive, high-growth markets like Tennessee. The all-stock nature of the deal preserves capital, and the anticipated cost synergies are substantial. While there's a slight increase in non-performing assets, the overall financial health, strategic rationale, and projected benefits of the merger position the combined entity for strong future performance, making it an attractive investment.

Keywords

Bank Merger, Financial Results, Acquisition, Banking Industry, SEC Filing, Earnings, Deposits, Loans, EPS, Dividends, Ohio, Tennessee, Regional Bank, Financial Services, Corporate Governance, Risk Management