PARK NATIONAL CORP /OH/ (PRK) stock intrinsic value fair value estimate & owner earnings analysis

Park National is a 118-year-old community bank headquartered in Newark, Ohio. At the end of 2025 it ran 87 offices, 76 of them in Ohio, with smaller footholds in northern Kentucky and the Carolinas, plus two specialty lending lines: Scope Aircraft Finance and a national portfolio of loans to consumer finance companies. On February 1, 2026 it bought First Citizens Bancshares of Dyersburg, Tennessee, for 1,988,131 new shares valued at $324.1 million, adding $2.6 billion of assets, $1.6 billion of loans and $2.2 billion of deposits. That took total assets to $12.7 billion and diluted shares to about 18.1 million. The business earns the spread between what it pays local depositors and what it earns on loans, plus trust, wealth and service fees. What makes it unusually profitable is cheap, sticky funding: a large share of deposits pay little or nothing, which let the bank keep earning through the 2023 deposit-cost spike when many peers struggled. Earnings per share rose from $5.59 in 2016 to $11.11 in 2025, with dips in 2017 (a one-time tax-law charge), 2019 (merger costs) and 2023 ($7.80, when deposit costs rose fastest and the bank sold securities at a loss). For a bank, owner earnings are simply net income to common shareholders: deposits and borrowings are the raw material, interest is an operating cost, and stock compensation is already expensed. No debt is subtracted, because the funding is already paid for inside earnings. We measure earning power over 2021 to 2025, the years since the bank reached its current size, which include both the low-rate era and the deposit-cost squeeze. The middle year of that window is $9.32 a share, well below 2025's $11.11. We deliberately do not start from 2025: it rode an unusually wide lending margin of 4.75%, and earnings jumped 19% that year, a pace we do not carry forward. The first half of 2026 earned $5.64 a share, including the new Tennessee bank and its merger costs, versus $5.56 a year earlier; the acquisition so far looks roughly neutral per share, not a source of growth. Two known costs are built into every case. Because Park now exceeds $10 billion of assets, federal limits on debit card interchange fees will apply, and the bank becomes subject to direct consumer-protection examination. Debit card fees were $25.8 million in 2025; we assume the cap removes roughly 60% of the combined bank's interchange income from mid-2027, about $0.70 a share a year after tax. We also hold back enough earnings each year to keep tangible equity near 10% of tangible assets as the balance sheet grows, and count only what is left over as cash to owners. Tangible book value was about $79 a share at June 30, 2026, roughly $10 a share more than that requirement, and we count that surplus at face value. Base case ($167 a share): earnings start at $9.32 and grow 3% a year, below the bank's record. Loans grew about 4.8% a year from 2016 to 2025 and deposits about 4.5%, but part of that came from the three acquisitions, so we credit only the organic pace a century-old Ohio deposit franchise has demonstrated. Credit costs rise for two years in the middle of the decade, about $2 a share each year, the kind of normal mild downturn a bank this size sees. We credit no future acquisitions and no margin expansion. The far years assume the deposit franchise keeps earning its last level without further growth. Bear case ($115 a share): earnings settle back to the 2023 trough of $7.80 and stay flat for five years, the outcome if deposit costs reprice upward again and the Tennessee integration adds nothing. Into that we place a full credit cycle modeled on 2008 to 2011, when Park itself took years of heavy losses on its Vision Bank subsidiary: extra loan losses of about $5.50, $6.50 and $5.20 a share over three years, roughly 4% of today's loan book in total, falling hardest on the consumer finance portfolio, commercial real estate and aircraft loans. Earnings stay positive in every year, so the bank would not need to raise equity, though the dividend would likely be cut for a time. Afterward the bank grows just 1.5% a year. This case is still worth more than tangible book because the franchise kept earning money through the last severe cycle and its low-cost deposit base keeps producing a spread that a pile of equity alone would not. Bull case ($229 a share): earnings start nearer the recent run rate, at $10.50, grow 4.5% a year for a decade, matching the bank's balance-sheet growth since 2016, and then 3% for another decade before levelling off. This credits the Southern markets continuing to gather deposits and the Tennessee bank being folded in smoothly, but no new acquisitions. What would make this wrong: the specialty books are the least familiar parts of the bank, and a deeper loss there than in 2008 to 2011 would push value below the bear case. Park's history of buying distant banks cuts both ways: the 2007 Vision Bank purchase cost shareholders years of earnings. And if the 2025 margin proves permanent, the base case is too low. Our previous estimates were built on a different basis and are not comparable. Margin-of-safety price. We are fairly sure of the earnings level: it comes from five years that span both cheap and expensive money, and the bank has not lost money in that time. The worst plausible outcome is a severe credit cycle hitting the consumer finance and aircraft books while deposit costs rise; tangible equity of about 11.5% of assets and positive earnings through our bear case suggest the bank would survive that intact, with no controlling owner or single-customer dependence. If we are wrong about margins and credit together, the shares are worth roughly $115. The bank pays $4.40 a share a year in regular dividends, and the price assumes a three-to-five-year holding period. The margin-of-safety price is $95 a share. At that price the dividend is already a high single-digit share of a 20% annual target; the price sits only modestly above tangible book of $79, so most of the price is backed by tangible capital; a return to base-case value in about three years implies more than 20% a year counting dividends; and in the bear case the business would still be worth more than that price. Above $95, the target depends on the base case arriving on schedule, which the analysis does not count on.