UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 30, 2008


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number:1-13006

Park National Corporation

(Exact name of registrant as specified in its charter)


Ohio		31-1179518

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

50 North Third Street, Newark, Ohio 43055

(Address of principal executive offices) (Zip Code)

(740) 349-8451

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filerþ	Accelerated filero	Non-accelerated filero	~~Smaller reporting company~~o
		(Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o Noþ

~~13,964,550~~13,964,533 Common shares, no par value per share, outstanding at ~~July~~October 31, 2008.

~~Page 1 of 49~~

PARK NATIONAL CORPORATION

Consolidated Condensed Balance Sheets (Unaudited)

(dollars in thousands)


	June 30,			December 31,			September 30,			December 31,
	2008			2007			2008			2007

Assets:
Cash and due from banks	$	184,259		$	183,165		$	161,591		$	183,165

Money market instruments		10,325			10,232			22,378			10,232

Cash and cash equivalents		194,584			193,397			183,969			193,397

Interest bearing deposits		1			1			1			1

Securities available-for-sale, at fair value (amortized cost of $1,562,770 and $1,473,052 at June 30, 2008 and December 31, 2007)		1,556,609			1,474,517

Securities held-to-maturity, at amortized cost (fair value approximates $234,655 and $161,414 at June 30, 2008 and December 31, 2007)		238,192			165,421
Securities available-for-sale, at fair value (amortized cost of $1,503,575 and $1,473,052 at September 30, 2008 and December 31, 2007)								1,502,362			1,474,517
Securities held-to-maturity, at amortized cost (fair value approximates $232,410 and $161,414 at September 30, 2008 and December 31, 2007)								236,298			165,421

Other investment securities		67,556			63,165			68,804			63,165


Loans		4,366,029			4,224,134			4,466,671			4,224,134

Allowance for loan losses		86,045			87,102			89,195			87,102

Net loans		4,279,984			4,137,032			4,377,476			4,137,032


Bank premises and equipment, net		70,074			66,634			69,562			66,634

Bank owned life insurance		129,980			119,472			131,248			119,472

Goodwill and other intangible assets		142,543			144,556			86,551			144,556

Other assets		140,710			136,907			143,462			136,907


Total assets	$	6,820,233		$	6,501,102		$	6,799,733		$	6,501,102


Liabilities and Stockholders’ Equity:
Deposits:
Noninterest bearing	$	764,405		$	695,466		$	725,859		$	695,466

Interest bearing		3,767,469			3,743,773			4,048,650			3,743,773

Total deposits		4,531,874			4,439,239			4,774,509			4,439,239


Short-term borrowings		722,460			759,318			580,306			759,318

Long-term debt		875,715			590,409			784,440			590,409

Subordinated Debentures		40,000			40,000

Subordinated debentures								40,000			40,000
Other liabilities		72,071			92,124			90,793			92,124

Total liabilities		6,242,120			5,921,090			6,270,048			5,921,090


COMMITMENTS AND CONTINGENCIES

Stockholders’ Equity:
Common stock (No par value; 20,000,000 shares authorized; 16,151,177 shares issued at 2008 and 16,151,200 shares issued at 2007)		301,212			301,213

Common stock (No par value; 20,000,000 shares authorized; 16,151,162 shares issued at 2008 and 16,151,200 shares issued at 2007)								301,211			301,213
Retained earnings		492,507			489,511			440,968			489,511

Treasury stock (2,186,624 shares at 2008 and 2,186,624 shares at 2007)		(208,104	)		(208,104	)		(208,104	)		(208,104	)

Accumulated other comprehensive (loss), net of taxes		(7,502	)		(2,608	)		(4,390	)		(2,608	)

Total stockholders’ equity		578,113			580,012			529,685			580,012


Total liabilities and stockholders’ equity	$	6,820,233		$	6,501,102		$	6,799,733		$	6,501,102

PARK NATIONAL CORPORATION

Consolidated Condensed Statements of Income (Unaudited)

(dollars in thousands, except per share data)


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,					June 30,						September 30,				September 30,
	2008		2007		2008		2007		2008		2007		2008		2007

Interest and dividends income:

Interest and dividend income:

Interest and fees on loans	$	74,932	$	83,479	$	153,942	$	154,661	$	75,167	$	83,964	$	229,109	$	238,625


Interest and dividends on:
Obligations of U.S. Government, its agencies and other securities		22,629		18,278		43,334		36,825		22,204		18,826		65,538		55,651

Obligations of states and political subdivisions		565		782		1,219		1,595		488		754		1,707		2,349


Other interest income		75		286		174		580		88		222		262		802

Total interest and dividends income		98,201		102,825		198,669		193,661
Total interest and dividend income										97,947		103,766		296,616		297,427


Interest expense:

Interest on deposits:
Demand and savings deposits		5,335		10,530		12,693		18,627		5,573		11,309		18,266		29,936

Time deposits		16,618		21,228		35,817		38,809		15,527		21,440		51,344		60,249


Interest on borrowings:
Short-term borrowings		4,082		4,254		8,832		8,172		3,265		6,479		12,097		14,651

Long-term debt		7,840		6,403		15,517		12,745		8,354		5,122		23,871		17,867


Total interest expense		33,875		42,415		72,859		78,353		32,719		44,350		105,578		122,703


Net interest income		64,326		60,410		125,810		115,308		65,228		59,416		191,038		174,724


Provision for loan losses		14,569		2,881		21,963		5,086		15,906		5,793		37,869		10,879


Net interest income after provision for loan losses		49,757		57,529		103,847		110,222		49,322		53,623		153,169		163,845


Other income:
Income from fiduciary activities		3,710		3,571		7,283		7,075	$	3,356	$	3,614	$	10,639	$	10,689

Service charges on deposit accounts		6,067		5,947		11,851		10,794		6,434		6,544		18,285		17,338

Other service income		2,861		2,763		5,938		5,268		2,361		3,231		8,299		8,665

Other		5,905		6,181		14,510		11,499		4,937		5,671		19,447		17,004

Total other income		18,543		18,462		39,582		34,636		17,088		19,060		56,670		53,696


Gain on sale of securities		587		—		896		—		—		—		896		—

PARK NATIONAL CORPORATION

Consolidated Condensed Statements of Income (Unaudited)

(Continued)

(dollars in thousands, except per share data)

Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007

Other expense:

Salaries and employee benefits $ 24,486 $ 24,735 $ 49,157 $ 47,796

Occupancy expense 2,883 2,794 5,908 5,354

Furniture and equipment expense 2,576 2,381 4,893 4,557

Other expense 14,488 12,570 27,752 24,082

Total other expense 44,433 42,480 87,710 81,789

Income before income taxes 24,454 33,511 56,615 63,069

Income taxes 6,263 10,001 15,446 18,496

Net income $ 18,191 $ 23,510 $ 41,169 $ 44,573

Per Share:

Net income:
Basic $ 1.30 $ 1.62 $ 2.95 $ 3.11

Diluted $ 1.30 $ 1.62 $ 2.95 $ 3.11

Weighted average
Basic 13,964,561 14,506,926 13,964,567 14,314,129

Diluted 13,964,561 14,507,895 13,964,567 14,323,206

Cash dividends declared $ 0.94 $ 0.93 $ 1.88 $ 1.86


	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2008			2007		2008		2007


Other expense:

Salaries and employee benefits	$	25,105		$	24,980	$	74,262	$	72,776
Occupancy expense		2,850			2,700		8,758		8,054
Furniture and equipment expense		2,412			2,407		7,305		6,964
Goodwill impairment charge		54,986			0		54,986		0
Other expense		14,126			12,730		41,878		36,812

Total other expense		99,479			42,817		187,189		124,606


Income (loss) before income taxes		(33,069	)		29,866		23,546		92,935


Income taxes		5,343			8,562		20,789		27,058


Net income (loss)		($38,412	)	$	21,304	$	2,757	$	65,877

Per Share:



Net income (loss):
Basic		($2.75	)	$	1.50	$	0.20	$	4.62

Diluted		($2.75	)	$	1.50	$	0.20	$	4.61


Weighted average shares
Basic		13,964,549			14,193,019		13,964,561		14,273,759

Diluted		13,964,549			14,193,019		13,964,561		14,279,810


Cash dividends declared	$	0.94		$	0.93	$	2.82	$	2.79

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5-5-

PARK NATIONAL CORPORATION

Consolidated Condensed Statements of Changes in Stockholders’ Equity (Unaudited)

(dollars in thousands, except share data)


										Accumulated															Accumulated
							Treasury			Other												Treasury			Other
	Common			Retained			Stock			Comprehensive			Comprehensive			Common			Retained			Stock			Comprehensive			Comprehensive
Six Months ended June 30, 2008 and 2007	Stock			Earnings			at Cost			Income (loss)			Income
Nine Months ended September 30, 2008 and 2007																Stock			Earnings			at Cost			Income (loss)			Income

BALANCE AT DECEMBER 31, 2006	$	217,067		$	519,563			($143,371	)		($22,820	)				$	217,067		$	519,563			($143,371	)		($22,820	)

Net Income					44,573								$	44,573						65,877								$	65,877

Other comprehensive income (loss), net of tax:
Unrealized net holding (loss) on securities available-for-sale, net of taxes ($4,906)											(9,113	)		(9,113	)
Unrealized net holding gain on securities available-for-sale, net of taxes $1,548																										2,875			2,875

Total comprehensive income													$	35,460														$	68,752

Cash dividends on common stock at $1.86 per share					(26,483	)
Cash dividends on common stock at $2.79 per share																				(39,586	)
Cash payment for fractional shares in dividend reinvestment plan																	(4	)
Treasury stock purchased — 620,531 shares																							(54,817	)
Treasury stock reissued for stock options — 3,561 shares																							296
Shares issued for Vision Bancshares purchase — 792,937 shares																	83,258

Cash payment for fractional shares in dividend reinvestment plan		(3	)

Treasury stock purchased - 397,931 shares								(35,576	)

Treasury stock reissued for stock options - 3,561 shares								296

Shares issued for Vision Bancshares purchase - 792,937 shares		83,258

BALANCE AT JUNE 30, 2007	$	300,322		$	537,653			($178,651	)		($31,933	)
BALANCE AT SEPTEMBER 30, 2007																$	300,321		$	545,854			($197,892	)		($19,945	)


BALANCE AT DECEMBER 31, 2007	$	301,213		$	489,511			($208,104	)		($ 2,608	)				$	301,213		$	489,511			($208,104	)		($2,608	)

Net Income					41,169								$	41,169						2,757								$	2,757

Other comprehensive income (loss), net of tax:
Unrealized net holding gain on cash flow hedge, net of taxes $34											63			63

Unrealized net holding (loss) on securities available-for-sale, net of taxes ($2,669)											(4,957	)		(4,957	)
Unrealized net holding loss on on cash flow hedge, net of taxes ($23)																										(42	)		(42	)
Unrealized net holding (loss) on securities available-for-sale, net of taxes ($937)																										(1,740	)		(1,740	)

Total comprehensive income													$	36,275														$	975

Cash dividends on common stock at $1.88 per share					(26,208	)

Cash dividends on common stock at $2.82 per share																				(39,335	)
Cash payment for fractional shares in dividend reinvestment plan		(1	)														(2	)

Postretirement benefit pertaining to endorsement split-dollar life insurance					(11,634	)														(11,634	)

FAS 158 measurement date adjustment, net of taxes ($178)					(331	)														(331	)

BALANCE AT JUNE 30, 2008	$	301,212		$	492,507			($208,104	)		($ 7,502	)
BALANCE AT SEPTEMBER 30, 2008																$	301,211		$	440,968			($208,104	)		($4,390	)

PARK NATIONAL CORPORATION

Consolidated Condensed Statements of Cash Flows (Unaudited)

(dollars in thousands)


							Nine Months Ended
	Six Months Ended						September 30,
	June 30,						2008			2007
	2008			2007

Operating activities:

Net income	$	41,169		$	44,573		$	2,757		$	65,877


Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, accretion and amortization		(278	)		(1,455	)

Depreciation, (accretion) and amortization, net								263			(2,154	)
Provision for loan losses		21,963			5,086			37,869			10,879

Other than temporary impairment on investment securities		439			—			774			—

Stock dividends on Federal Home Loan Bank stock		(1,485	)		—			(2,269	)		—

Realized net investment security gains		(896	)		—

Goodwill impairment charge								54,986			—
Amortization of core deposit intangibles		2,013			1,721			3,019			2,759

Realized investment security gains								(896	)		—

Changes in assets and liabilities:
Increase in other assets		(3,866	)		(7,086	)		(9,617	)		(7,639	)

Decrease in other liabilities		(18,453	)		(21,782	)
Increase (decrease) in other liabilities								166			(13,138	)


Net cash provided from operating activities		40,606			21,057
Net cash provided by operating activities								87,052			56,584


Investing activities:

Proceeds from sales of available-for-sale securities		80,896			—

Proceeds from sales of:
Available-for-sale securities								80,894			—
Proceeds from maturity of:
Available-for-sale securities		186,348			431,649			245,560			646,918

Held-to-maturity securities		3,935			5,741			5,829			9,852

Purchases of:
Available-for-sale securities		(355,612	)		(404,007	)		(355,612	)		(841,746	)

Held-to-maturity securities		(76,705	)		—			(76,705	)		—

Net increase in other investments		(2,906	)		—			(3,370	)		—

Net increase in loans		(161,759	)		(51,485	)		(274,177	)		(66,742	)

Cash paid for acquisition, net		—			(44,993	)

Loans acquired — Ohio Legacy Bank, N.A. Branch								—			(38,348	)
Cash paid for branch acquisition, Ohio Legacy Bank, N.A.								—			(2,693	)
Cash paid for bank acquisition, Vision Bancshares, Inc.								—			(44,993	)
Purchases of bank owned life insurance, net		(8,107	)		—			(8,107	)		—

Purchases of premises and equipment, net		(7,210	)		(11,806	)		(8,571	)		(14,461	)
Premises and equipment acquired — Ohio Legacy Bank, N.A. Branch								—			(1,150	)


Net cash used by investing activities		(341,120	)		(74,901	)
Net cash used in investing activities								(394,259	)		(353,363	)

PARK NATIONAL CORPORATION
Consolidated Condensed Statements of Cash Flows (Unaudited)
(Continued)

(dollars in thousands)


							Nine Months Ended
	Six Months Ended						September 30,
	June 30,						2008			2007
	2008			2007

Financing activities:

Net increase in deposits	$	92,635		$	137,820		$	335,270		$	109,131

Deposits acquired, Ohio Legacy Bank, N.A. Branch								—			23,466
Net (decrease) increase in short-term borrowings		(36,858	)		72,615			(179,012	)		311,018

Proceeds from exercise of stock options		—			296			—			296

Purchase of treasury stock		—			(35,576	)		—			(54,817	)

Cash payment for fractional shares in dividend reinvestment plan		(1	)		(3	)		(2	)		(4	)

Long-term debt issued		290,000			75,100			390,100			225,100

Repayment of long-term debt		(4,694	)		(159,469	)		(196,069	)		(284,671	)

Cash dividends paid		(39,381	)		(39,430	)		(52,508	)		(52,533	)


Net cash provided from financing activities		301,701			51,353
Net cash provided by financing activities								297,779			276,986


Increase (decrease) in cash and cash equivalents		1,187			(2,491	)
Decrease in cash and cash equivalents								(9,428	)		(19,793	)


Cash and cash equivalents at beginning of year		193,397			186,256			193,397			186,256


Cash and cash equivalents at end of period	$	194,584		$	183,765		$	183,969		$	166,463


Supplemental disclosures of cash flow information:

Cash paid for:
Interest	$	74,210		$	77,860		$	108,315		$	122,739


Income taxes	$	19,800		$	21,551		$	25,220		$	29,655


Summary of business acquisition:
Fair value of assets acquired		—		$	686,512

Cash paid for purchase of Vision Bancshares		—			(87,843	)

Stock issued for purchase of Vision Bancshares		—			(83,258	)

Fair value of liabilities assumed		—			(624,432	)
Summary of business acquisitions:
Fair value of assets acquired — Vision Bancshares, Inc.								—		$	686,512
Cash paid for purchase — Vision Bancshares, Inc.								—			(87,843	)
Stock issued for purchase — Vision Bancshares, Inc.								—			(83,258	)
Fair value of liabilities assumed — Vision Bancshares, Inc.								—			(624,432	)

Goodwill recognized		—		($	109,021	)		—			($109,021	)

PARK NATIONAL CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

For the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2008 and 2007.

Note 1 —Basis of Presentation

The consolidated financial statements included in this report have been prepared by Park National Corporation (the “Registrant”, “Corporation”, “Company”, or “Park”) without audit. In the opinion of management, all adjustments (consisting solely of normal recurring accruals) necessary for a fair presentation of results of operations for the interim periods included herein have been made. The results of operations for the ~~quarter~~three months and ~~six~~nine months ended ~~June~~September 30, 2008 are not necessarily indicative of the operating results to be anticipated for the fiscal year ending December 31, 2008.

The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with the instructions for Form 10-Q and, therefore, do not include all information and footnotes necessary for a fair presentation of the condensed balance sheets, condensed statements of income, condensed statements of changes in stockholders’ equity and condensed statements of cash flows in conformity with U.S. generally accepted accounting principles. These financial statements should be read in conjunction with the consolidated financial statements incorporated by reference in the Annual Report on Form 10-K of Park for the fiscal year ended December 31, 2007 from Park’s 2007 Annual Report to Shareholders.

Park’s significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements included in Park’s 2007 Annual Report to Shareholders. For interim reporting purposes, Park follows the same basic accounting policies and considers each interim period as an integral part of an annual period.

Note 2 —Acquisitions and Intangible Assets

~~On March 9, 2007, Park acquired all~~Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets (as amended)” requires goodwill to be tested for impairment on an annual basis, or more frequently if circumstances indicate that an asset might be impaired, by comparing the fair value of such goodwill to its recorded or carrying amount. If the carrying amount of the ~~stock~~goodwill exceeds the fair value, an impairment charge must be recorded in an amount equal to the excess. Based primarily on the increased level of net loan charge-offs at Vision Bank during the second quarter of 2008, management determined that it would be prudent to test for goodwill impairment during the third quarter of 2008. Park continued to experience credit deterioration in Vision Bank’s market place during the third quarter of 2008.

The fair value of Vision was estimated by using the average of three measurement methods. These included application of various metrics from bank sale transactions for institutions comparable to Vision Bank, including application of a market-derived multiple of tangible value and ~~outstanding stock options~~estimations of the present value of future cash flows. Park’s management reviewed the valuation of the fair value of Vision Bank with Park’s Board of Directors and concluded that Vision Bank should recognize an impairment charge and write down the remaining value of the goodwill previously recorded as a result of the merger of Vision Bancshares, Inc. ~~for $87.8 million~~(“Vision”) into Park ($55.0 million), resulting in ~~cash and 792,937 shares~~goodwill with a balance of Park common stock valued at $83.3 million or $105.00 per share. The goodwill recognized as a result of this acquisition was $109.0 million. Substantially, none of the goodwill is tax deductible. Management continues to expect that the acquisitionzero in respect of Vision will improve the future growth rate for Park’s loans and deposits. The fair value of the acquired assets of Vision was $686.5 million and the fair value of the liabilities assumed was $624.4 million at March 9, 2007.

During the first six months of 2008, loans at Vision Bank have grown by $41 million to $680 million at June 30, 2008. For the twelve months ended June 30, 2008, Vision Bank had loan growth of $64 million or 10.4%, while the Ohio-based banks had loan growth of $177 million or 5.0% for the same period.

Additional information pertaining to Park’s acquisitions made during 2007 is discussed in Note 2 of the Notes to Consolidated Financial Statements included in Park’s 2007 Annual Report to Shareholders.

~~The following table shows the activity in goodwill and core deposit intangibles during the first six months of 2008.~~

Core Deposit
(In Thousands) Goodwill Intangibles Total
December 31, 2007 $ 127,320 $ 17,236 $ 144,556
Amortization — <2,013> <2,013>
June 30, 2008 $ 127,320 $ 15,223 $ 142,543
Bank.

-9-

The core deposit intangibles are being amortized to expense principally on the straight-line method, over periods ranging from six to ten years. The amortization period for the Vision Bank and the Millersburg branch purchase core deposit intangibles is six years. Management expects that the core deposit amortization expense will be $1.0 million for each of the third and fourth quarters of 2008.

~~Core deposit amortization expense is projected to be as follows for each of the following years:~~

Annual
(In Thousands) Amortization
2008 $ 4,025
2009 $ 3,746
2010 $ 3,422
2011 $ 2,677
2012 $ 2,677
Total $ 16,547

~~Goodwill is evaluated on an annual basis for impairment and otherwise when circumstances warrant.~~ During the fourth quarter of 2007, Park’s management had determined that the goodwill from the Vision ~~Bank~~ acquisition on March 9, 2007 could possibly be impaired due to the significant deterioration in the credit condition of Vision Bank. Nonperforming loans at Vision Bank increased from $26.3 million at September 30, 2007 to $63.5 million at December 31, 2007 or 9.9% of year-end loan balances. Net loan charge-offs were $6.4 million for the fourth quarter of 2007 or an annualized 3.99% of average loan balances. Management determined that due to these severe credit conditions, a valuation of the fair value of Vision Bank was required to be computed to determine if the then recorded goodwill of $109.0 million was impaired. Management determined that an impairment charge of $54.0 million was ~~appropriate; therefore,~~appropriate as of December 31, 2007.

Additional information pertaining to Park’s acquisitions made during 2007 is disclosed in Note 2 of the ~~current carrying value of~~Notes to Consolidated Financial Statements included in Park’s 2007 Annual Report to Shareholders.

The following table shows the activity in goodwill ~~resulting from the Vision acquisition is $55.0 million at June 30, 2008.~~

~~Statement of Financial Accounting Standards (“SFAS”) No. 142 , “Goodwill~~ and Other Intangible Assets (as amended)” requires goodwill to be tested for impairment on an annual basis, or more frequently if circumstances indicate that an asset might be impaired. Based on the increased level of net loan charge-offs at Vision Bankcore deposit intangibles during the first ~~six~~nine months of ~~2008, management has determined that it would be prudent to test for goodwill impairment during the third quarter of~~ 2008.


			Core Deposit
(In Thousands)	Goodwill		Intangibles		Total
December 31, 2007	$	127,320	$	17,236	$	144,556
Amortization		—		<3,019>		<3,019>
Impairment Charge		<54,986>		—		<54,986>
September 30, 2008	$	72,334	$	14,217	$	86,551

For the first ~~six~~nine months of 2008, Vision Bank experienced ~~$16.3~~$25.2 million ofin net loan charge-offs, or an annualized ~~4.92%~~5.01% of average loans. For the ~~second~~third quarter of 2008, the net loan charge-offs for Vision Bank were ~~$10.8~~$8.9 million, or an annualized ~~6.41%~~5.18% of average loans. The loan loss provision atfor Vision Bank was ~~$16.3~~$11.5 million and ~~$11.5~~$27.7 million for the ~~six~~three month and ~~three-month~~nine month periods ended ~~June~~September 30, 2008, respectively. See ~~Note 16 —Contingencies~~the disclosure under “Provision for Loan Losses” within “Item 2 —Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more details of the ~~Notes~~loan loss experience for Vision Bank and Park.

The core deposit intangibles are being amortized to ~~Consolidated Condensed Financial Statements in this Form 10-Q~~expense principally on the straight-line method, over periods ranging from six to ten years. The amortization period for ~~more information pertaining to~~ the Vision ~~Bank impairment testing.~~acquisition and the Millersburg branch purchase core deposit intangibles is six years. Management expects that the core deposit intangibles amortization expense will be $1.0 million for the fourth quarter of 2008.

Core deposit intangibles amortization expense is projected to be as follows for each of the following years:


	Annual
(In Thousands)	Amortization
2008	$	4,025
2009	$	3,746
2010	$	3,422
2011	$	2,677
2012	$	2,677

Total	$	16,547

Goodwill for the Ohio-based ~~banks~~divisions was evaluated during the first quarter of 2008, and no impairment charge was necessary.

-10-

The following table shows the activity in the allowance for loan losses for the three and ~~six~~nine months ended ~~June~~September 30, 2008 and 2007.


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
(In Thousands)	2008			2007			2008			2007			2008			2007			2008			2007
Average Loans	$	4,311,989		$	4,094,719		$	4,270,706		$	3,864,224		$	4,409,188		$	4,115,617		$	4,317,204		$	3,948,942

Allowance for Loan Losses:
Beginning Balance	$	85,848		$	79,839		$	87,102		$	70,500		$	86,045		$	79,905		$	87,102		$	70,500

Charge-Offs:
Commercial, Financial and Agricultural		804			998			1,225			2,115			825			1,152			2,050			3,267
Real Estate – Construction		9,683			193			12,294			249
Real Estate – Residential		2,066			1,050			5,665			2,011
Real Estate – Commercial		1,081			318			2,181			371
Real Estate — Construction														7,630			2,267			19,924			2,516
Real Estate — Residential														2,326			1,093			7,991			3,104
Real Estate — Commercial														630			768			2,811			1,139
Consumer		2,410			1,733			4,680			3,510			2,516			1,770			7,196			5,280
Lease Financing		4			—			4			—			—			—			4			—

Total Charge-Offs		16,048			4,292			26,049			8,256			13,927			7,050			39,976			15,306


Recoveries:
Commercial, Financial and Agricultural		193			382			409			696			203			167			612			863
Real Estate – Construction		50			8			50			8
Real Estate – Residential		216			119			280			264
Real Estate – Commercial		285			15			302			265
Real Estate — Construction														12			—			62			8
Real Estate — Residential														268			314			548			578
Real Estate — Commercial														48			220			350			485
Consumer		922			937			1,972			1,971			639			470			2,611			2,441
Lease Financing		10			16			16			37			1			27			17			64

Total Recoveries		1,676			1,477			3,029			3,241			1,171			1,198			4,200			4,439



Net Charge-Offs		14,372			2,815			23,020			5,015			12,756			5,852			35,776			10,867


Provision for Loan Losses		14,569			2,881			21,963			5,086			15,906			5,793			37,869			10,879
Allowance for Loan Losses of Acquired Banks		—			—			—			9,334			—			—			—			9,334

Ending Balance	$	86,045		$	79,905		$	86,045		$	79,905		$	89,195		$	79,846		$	89,195		$	79,846


Annualized Ratio of Net Charge-Offs to Average Loans		1.34	%		.28	%		1.08	%		.26	%		1.15	%		.56	%		1.11	%		.37	%
Ratio of Allowance for Loan Losses to End of Period Loans		1.97	%		1.94	%		1.97	%		1.94	%		2.00	%		1.91	%		2.00	%		1.91	%

Note 4 —Earnings (Loss) Per Share

The following table sets forth the computation of basic and diluted earnings (loss) per share for the three and ~~six~~nine months ended ~~June~~September 30, 2008 and 2007.

(Dollars in Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Numerator:
Net Income $ 18,191 $ 23,510 $ 41,169 $ 44,573
Denominator:
Denominator for Basic Earnings Per Share (Weighted Average Shares Outstanding) 13,964,561 14,506,926 13,964,567 14,314,129
Effect of Dilutive Securities — 969 — 9,077
Denominator for Diluted Earnings Per Share (Weighted Average Shares Outstanding Adjusted for the Dilutive Securities) 13,964,561 14,507,895 13,964,567 14,323,206
Earnings per Share:
Basic Earnings Per Share $ 1.30 $ 1.62 $ 2.95 $ 3.11
Diluted Earnings Per Share $ 1.30 $ 1.62 $ 2.95 $ 3.11
(Dollars in Thousands, Except Per Share Data)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2008		2007		2008		2007
Numerator:
Net Income (Loss)		<$38,412>	$	21,304	$	2,757	$	65,877
Denominator:
Denominator for Basic Earnings (Loss) Per Share (Weighted Average Shares Outstanding)		13,964,549		14,193,019		13,964,561		14,273,759
Effect of Dilutive Securities		—		—		—		6,051
Denominator for Diluted Earnings (Loss)Per Share (Weighted Average Shares Outstanding Adjusted for the Dilutive Securities)		13,964,549		14,193,019		13,964,561		14,279,810
Earnings (Loss) Per Share:
Basic Earnings (Loss) Per Share		<$2.75>	$	1.50	$	0.20	$	4.62
Diluted Earnings (Loss) Per Share		<$2.75>	$	1.50	$	0.20	$	4.61

For the three month and ~~six~~nine month periods ended ~~June~~September 30, 2008, options to purchase ~~539,255 and 534,567~~a weighted average ~~shares of~~474,608 and 519,082 common ~~stock,~~shares, respectively, were outstanding but not included in the computation of diluted earnings (loss) per share because the respective option exercise prices exceeded the market value of the underlying common shares such that their inclusion would have had an anti-dilutive effect. For the three month and ~~six~~nine month periods ended ~~June~~September 30, 2007, options to purchase ~~485,222~~538,015 and ~~465,640 weighted average~~482,780 common shares, ~~of common stock,~~ respectively, were outstanding but not included in the computation of diluted net income per share due to their having the same anti-dilutive effect as those disclosed for the three and ~~six~~nine months ended ~~June~~September 30, 2008.

Note 5 —Segment Information

The Corporation is a multi-bank holding company headquartered in Newark, Ohio. The operating segments for the Corporation are its ~~financial institution subsidiaries. The Corporation’s financial institution~~two chartered bank subsidiaries, ~~are~~ The Park National Bank (PNB), The Richland Trust Company (RTC), Century National Bank (CNB), The First-Knox National Bank of Mount Vernon (FKNB), United Bank, N.A. (UB), Second National Bank (SNB), The Security National Bank and Trust Co. (SEC), The Citizens National Bank of Urbana (CIT)(headquartered in Newark, Ohio) and Vision Bank ~~(VIS)~~(headquartered in Panama City, Florida) (“VIS”). During the third quarter of 2008, Park combined the eight separately chartered Ohio-based bank subsidiaries into one national bank charter, that of The Park National Bank (“PNB”). Prior to the charter mergers that were consummated in the third quarter of 2008, Park considered each of its nine chartered bank subsidiaries as a separate segment for financial reporting purposes. SFAS No. 131 “Disclosures about Segments of an Enterprise and Related Information (as amended)” requires management to disclose information about the different types of business activities in which a company engages and also information on the different economic environments in which a company operates, so that the users of the financial statements can better understand a company’s performance, better understand the potential for future cash flows, and make more informed judgments about the company as a whole. The change to two operating segments is in line with SFAS No. 131 as there are: (i) two separate and distinct geographic markets in which Park operates, (ii) the key operational functions of the two segments are primarily kept separate and distinct and (iii) the segments are aligned with the internal reporting to Park’s senior management. The financial information for the three and nine months ended September 30, 2007 has been reclassified to be consistent with the presentation of the financial information for the three and nine months ended September 30, 2008.

-12-

Operating Results for the Three Months Ended September 30, 2008
(In Thousands)


	PNB		VIS		All Other		Total
Net Interest Income	$	56,096	$	6,928	$	2,204	$	65,228
Provision for Loan Losses		3,988		11,474		444		15,906
Other Income		16,940		48		100		17,088
Goodwill Impairment		—		54,986		—		54,986
Other Expense		34,575		6,383		3,535		44,493
Net Income (Loss)		23,099		<61,682>		171		<38,412>

Balances at September 30, 2008
Assets	$	5,966,890	$	870,148		<$37,305>	$	6,799,733

Operating Results for the Three Months Ended September 30, 2007
(In Thousands)


	PNB		VIS		All Other		Total
Net Interest Income	$	49,550	$	7,743	$	2,123	$	59,416
Provision for Loan Losses		2,873		2,420		500		5,793
Other Income		17,740		1,121		199		19,060
Other Expense		33,545		6,189		3,083		42,817
Net Income		20,779		176		349		21,304

Balances at September 30, 2007
Assets	$	5,593,416	$	890,566	$	27,154	$	6,511,136

Operating Results for the Nine Months Ended September 30, 2008
(In Thousands)


	PNB		VIS		All Other		Total
Net Interest Income	$	163,672	$	20,609	$	6,757	$	191,038
Provision for Loan Losses		8,752		27,729		1,388		37,869
Other Income and Gain on Sale of Securities		54,983		2,172		411		57,566
Goodwill Impairment		—		54,986		—		54,986
Other Expense		101,810		19,821		10,572		132,203
Net Income (Loss)	$	72,276		<$70,216>	$	697	$	2,757

Operating Results for the Nine Months Ended September 30, 2007
(In Thousands)


	PNB		VIS		All Other		Total
Net Interest Income	$	149,500	$	18,078	$	7,146	$	174,724
Provision for Loan Losses		7,289		2,505		1,085		10,879
Other Income		50 825		2,377		494		53,696
Other Expense		101,565		13,301		9,740		124,606
Net Income	$	61,503	$	2,917	$	1,457	$	65,877

-13-

Operating Results for the Three Months Ended June 30, 2008 Balances at
(In Thousands) June 30, 2008
Other Income
and
Net Interest Provision for Gain on Sale Other Net Income
Income Loan Losses of Securities Expense (Loss) Assets
PNB $ 20,893 $ 1,270 $ 7,481 $ 12,975 $ 9,664 $ 2,376,663
RTC 4,822 310 1,550 2,591 2,281 525,341
CNB 6,910 100 2,402 4,010 3,429 740,083
FKNB 8,288 340 2,095 4,674 3,531 818,564
UB 1,977 <50> 680 1,378 895 216,698
SNB 3,661 320 630 1,935 1,395 451,601
SEC 7,305 380 2,352 4,881 2,986 808,203
CIT 1,267 — 429 961 501 142,559
VIS 6,835 11,455 1,042 7,310 <6,702> 932,221
All Other 2,368 444 469 3,718 211 <191,700>

TOTAL $ 64,326 $ 14,569 $ 19,130 $ 44,433 $ 18,191 $ 6,820,233

Operating Results for the Three Months Ended June 30, 2007 Balances at
(In Thousands) June 30, 2007
Net Interest Provision for Other
Income Loan Losses Other Income Expense Net Income Assets
PNB $ 17,952 $ 631 $ 6,777 $ 13,566 $ 7,754 $ 2,061,662
RTC 4,242 480 1,357 2,789 1,538 548,206
CNB 6,434 355 3,035 4,089 3,316 705,514
FKNB 7,423 265 1,929 4,499 3,031 758,088
UB 1,900 5 594 1,577 621 205,909
SNB 3,074 35 687 1,881 1,278 394,412
SEC 7,471 685 2,518 5,007 2,925 796,344
CIT 1,269 <15> 415 1,049 441 148,291
VIS 8,260 85 990 5,707 2,161 833,446
All Other 2,385 355 160 2,316 445 <208,306>

TOTAL $ 60,410 $ 2,881 $ 18,462 $ 42,480 $ 23,510 $ 6,243,566

~~-14-~~

Operating Results for the Six Months Ended June 30, 2008
(In Thousands)
Other Income
and
Net Interest Provision for Gain on Sale Other Net
Income Loan Losses of Securities Expense Income/<Loss>
PNB $ 40,344 $ 2,034 $ 16,640 $ 25,683 $ 19,570
RTC 9,450 385 3,190 5,203 4,635
CNB 13,599 150 4,586 8,054 6,588
FKNB 16,415 915 4,824 9,309 7,250
UB 3,892 <50> 1,369 2,811 1,684
SNB 7,102 610 1,351 3,888 2,713
SEC 14,296 720 5,249 10,294 5,837
CIT 2,478 — 834 1,993 900
VIS 13,681 16,255 2,124 13,438 <8,534>
All Other 4,553 944 311 7,037 526

TOTAL $ 125,810 $ 21,963 $ 40,478 $ 87,710 $ 41,169

Operating Results for the Six Months Ended June 30, 2007
(In Thousands)
Net Interest Provision for Other
Income Loan Losses Other Income Expense Net Income
PNB $ 36,088 $ 1,251 $ 13,648 $ 25,435 $ 15,549
RTC 8,518 900 2,580 5,656 3,005
CNB 12,647 795 4,986 8,294 5,657
FKNB 15,136 520 3,833 9,134 6,152
UB 3,771 25 1,182 3,255 1,143
SNB 6,145 75 1,286 3,932 2,383
SEC 15,067 825 4,761 10,207 5,982
CIT 2,578 25 809 2,107 853
VIS 10,335 85 1,256 7,112 2,741
All Other 5,023 585 295 6,657 1,108

TOTAL $ 115,308 $ 5,086 $ 34,636 $ 81,789 $ 44,573

~~-15-~~

The operating results of the Parent Company and Guardian Financial Services Company (GFC) in the ~~“all other” row~~“All Other” column are used to reconcile the segment totals to the consolidated condensed statements of income for the periods ended ~~June~~September 30, 2008 and 2007. The reconciling amounts for consolidated total assets for both of the periods ended ~~June~~September 30, 2008 and 2007 consist of the elimination of intersegment borrowings, and the assets of the Parent Company and GFC which are not eliminated. The results for Vision Bank for the ~~six~~nine months ended ~~June~~September 30, 2007 are from the acquisition date of March 9, 2007 through ~~June~~September 30, 2007.

Note 76 —Stock Option Plans

Park did not grant any stock options during the first ~~six~~nine months of 2008 or the first ~~six~~nine months of 2007. Additionally, no stock options became vested during the first ~~six~~nine months of 2008 or 2007.

The following table summarizes stock option activity during the first ~~half~~nine months of 2008.


			Weighted				Weighted
			Average Exercise				Average Exercise
	Stock Options		Price Per Share		Stock Options		Price Per Share
Outstanding at December 31, 2007		615,191	$	100.63		615,191	$	100.63
Granted		—		—		—		—
Exercised		—		—		—		—
Forfeited/Expired		138,601		92.80		142,565	$	93.15

Outstanding at June 30, 2008		476,590	$	102.90
Outstanding at September 30, 2008						472,626	$	102.88

~~In its evaluation of investment securities for any other-than-temporary impairment as of June 30, 2008, management followed~~Management follows the principles inof Staff Accounting Bulletin No. 59 (“SAB No. 59”). when performing the quarterly evaluation of investment securities for any other-than-temporary impairment. During the second quarter of 2008, Management determined that Park’s unrealized loss in the stock of National City Corporation (NYSE:NCC) was other-than-temporary due to the duration and severity of the loss. Therefore, Park recognized an impairment loss of $439,000 during the second quarter of 2008. During the third quarter 2008, as a result of Management’s quarterly evaluation of investment securities for any other-than-temporary impairment, Management determined that impairment charges of $335,000 were necessary and were recorded in the results for the third quarter 2008. These charges were made up of an additional $62,000 for the stock held in National City Corporation, $98,000 for the stock held in Huntington Bancshares Incorporated (NASDAQ:HBAN), and $175,000 for Fifth Third Bancorp (NASDAQ:FITB). For the nine month period ended September 30, 2008, Park has recorded a total of $774,000, which is ~~included~~recorded in “other expenses” within the Consolidated Condensed Statements of ~~Income for the three and six months ended June 30, 2008. This~~Income. These impairment ~~loss represents~~losses represent the difference between the investment’s cost and fair value on ~~June~~September 30, 2008.


(In Thousands)	(In Thousands)									(In Thousands)
				Gross		Gross							Gross		Gross
June 30, 2008				Unrealized		Unrealized		Estimated Fair
September 30, 2008													Unrealized		Unrealized			Estimated
Securities Available-for-Sale		Amortized Cost		Holding Gains		Holding Losses		Value			Amortized Cost		Holding Gains		Holding Losses			Fair Value
Obligations of U.S. Treasury and Other U.S. Government Sponsored Entities		$	127,834	$	1,520	<$	123>	$	129,231		$	127,732	$	628		<$336	>	$	128,024
Obligation of States and Political Subdivisions			31,233		493		<29>		31,697			30,470		373		<64	>		30,779
U.S. Government Sponsored Entities’ Asset-Backed Securities and Other Asset-Backed Securities			1,401,702		5,062		<13,046>		1,393,718			1,343,707		5,648		<7,726	>		1,341,629
Equity Securities			2,001		365		<403>		1,963			1,666		442		<178	>		1,930

Total		$	1,562,770	$	7,440	<$	13,601>	$	1,556,609		$	1,503,575	$	7,091		<$8,304	>	$	1,502,362


				Gross		Gross							Gross		Gross
June 30, 2008				Unrecognized		Unrecognized		Estimated
September 30, 2008													Unrecognized		Unrecognized			Estimated
Securities Held-to-Maturity		Amortized Cost		Holding Gains		Holding Losses		Fair Value			Amortized Cost		Holding Gains		Holding Losses			Fair Value

Obligations of States and Political Subdivisions		$	11,681	$	97	$	—	$	11,778		$	11,572	$	72	$	—		$	11,644
U.S. Government Sponsored Entities’ Asset-Backed Securities and Other Asset-Backed Securities			226,511		1		<3,635>		222,877			224,726		1		<3,961	>		220,766

Total		$	238,192	$	98	<$	3,635>	$	234,655		$	236,298	$	73		<$3,961	>	$	232,410




(In Thousands)

				Gross		Gross
December 31, 2007				Unrealized		Unrealized		Estimated
Securities Available-for-Sale		Amortized Cost		Holding Gains		Holding Losses		Fair Value
Obligations of U.S. Treasury and Other U.S. Government Sponsored Entities		$	200,996	$	2,562	$	—	$	203,558
Obligation of States and Political Subdivisions			44,805		716		<20>		45,501
U.S. Government Sponsored Entities’ Asset-Backed Securities and Other Asset-Backed Securities			1,224,958		6,292		<8,115>		1,223,135
Equity Securities			2,293		420		<390>		2,323

Total		$	1,473,052	$	9,990	<$	8,525>	$	1,474,517


				Gross		Gross
December 31, 2007				Unrecognized		Unrecognized		Estimated
Securities Held-to-Maturity		Amortized Cost		Holding Gains		Holding Losses		Fair Value
Obligations of States and Political Subdivisions		$	13,551	$	127	$	—	$	13,678
U.S. Government Sponsored Entities’ Asset-Backed Securities and Other Asset-Backed Securities			151,870		2		<4,136>		147,736

Total		$	165,421	$	129	<$	4,136>	$	161,414

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans –— an amendment of FASB Statements No. 87, 88, 106 and 132R.” This statement requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multi-employer plan) as an asset or liability in its balance sheet, beginning with fiscal year-end December 31, 2006, and to recognize changes in the funded status in the year in which the changes occur through comprehensive income beginning in 2007. Additionally, defined benefit plan assets and obligations are to be measured as of the date of the employer’s fiscal year-end, starting in 2008. Park had a pension asset and liability valuation performed as of September 30, 2007, and as a result of the SFAS No. 158 measurement date provisions, Park was required to adjust retained earnings for three-fifteenths (20%) of the estimated expense for 2008. Therefore, Park charged approximately $0.3 million to retained earnings on January 1, 2008 (net of taxes) to reflect the expense pertaining to three months of pension plan expense.

Note 1211 —Recent Accounting Pronouncements

In July 2006, the Emerging Issues Task Force (“EITF”) of the FASB issued a draft abstract for EITF Issue No. 06-04, “Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements” (“EITF Issue No. 06-04”). The EITF reached a consensus that for an endorsement split-dollar life insurance arrangement within the scope of this Issue, an employer should recognize a liability for future benefits in accordance with SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions”. The EITF concluded that a liability for the benefit obligation under SFAS No. 106 has not been settled through the purchase of an endorsement type life insurance policy. In September 2006, FASB agreed to ratify the consensus reached in EITF Issue No. 06-04. This new accounting standard was effective for Park beginning January 1, 2008.

At ~~June~~September 30, 2008, Park and its subsidiary banks owned ~~$130.0~~$131.2 million of bank owned life insurance policies. These life insurance policies are generally subject to endorsement split-dollar life insurance arrangements. These arrangements were designed to provide a pre-and postretirement benefit for senior officers and directors of Park and its subsidiary banks. Park’s management has completed its evaluation of the impact of the adoption of EITF Issue No. 06-4 on Park’s consolidated financial statements. On January 1, 2008, Park charged approximately $11.6 million to retained earnings and recorded a corresponding liability for the same amount.

Fair Value Measurements

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities”. SFAS No. 159 gives entities the option to measure eligible financial assets and financial liabilities at fair value on an instrument by instrument basis, that are otherwise not permitted to be accounted for at fair value under other accounting standards. The fair value option permits companies to choose to measure eligible items at fair value at specified election dates. Subsequent changes in fair value must be reported in earnings. SFAS No. 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company did not elect the fair value option for any financial assets or financial liabilities as of January 1, 2008 or during the first nine months of 2008.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in U.S. generally accepted accounting principles and expands disclosures about fair value measurements. This Statement establishes a fair value hierarchy about the assumptions used to measure fair value and clarifies assumptions about risk and the effect of a restriction on the sale or use of an asset. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. Management believes that the impact of adoption resulted in enhanced footnote disclosures; however, the adoption did not materially impact the Consolidated Balance Sheets, the Consolidated Statements of Income, the Consolidated Statements of Changes in Stockholders’ Equity, or the Consolidated Statements of Cash Flows. (See Note ~~15 –~~14 —Fair Value of the Notes to Consolidated Condensed Financial Statements).

~~- 20 -~~-18-

At the February 12, 2008 FASB meeting, the FSAB decided to defer the effective date of SFAS ~~No .157~~No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). SFAS No. 157 is effective for ~~certain non-financial~~these nonfinancial assets and liabilities for fiscal years beginning after November 15, 2008. Non-financial assets and liabilities may include (but are not limited to): (i) ~~non-financial~~nonfinancial assets and liabilities initially measured at fair value in a business combination, but not measured at fair value in subsequent periods, (ii) reporting units measured at fair value in the first step of a goodwill impairment test as described in SFAS No. 142, and (iii) ~~non-financial~~nonfinancial assets and liabilities measured at fair value in the second step of a goodwill impairment test as described in SFAS No. 142.

~~Accounting for Written Loan Commitments Recorded at Fair Value~~

On ~~November 5, 2007,~~October 10, 2008, the ~~SEC~~FASB issued FASB Staff ~~Accounting Bulletin~~Position (“~~SAB”~~FSP”) ~~No. 109, “Written Loan Commitments Recorded at~~157-3, “Determining the Fair Value ~~through Earnings” (“SAB 109”)~~of a Financial Asset When the Market for that Asset is Not Active”. ~~Previously, SAB 105, “Application of Accounting Principles~~This FSP does not change existing GAAP, but seeks to ~~Loan Commitments”, stated that~~clarify how to consider various inputs in ~~measuring the~~determining fair value under current market conditions consistent with the principles of ~~a derivative loan commitment, a company should not incorporate the expected net future cash flows related~~SFAS 157. The FSP provides an example on how to ~~the associated servicing of the loan. SAB 109 supercedes SAB 105 and indicates that the expected net future cash flows related to the associated servicing of the loan should be included in measuring~~calculate fair value when there is not an active market for ~~all written loan commitments~~ that ~~are accounted~~financial asset. Key concepts addressed include distressed sales, the use of 3^rd party pricing information, use of internal assumptions, and others. FSP 157-3 was effective upon issuance and therefore it applies to Park’s consolidated financial statement for ~~at fair value through earnings. SAB 105 also indicated that internally-developed intangible assets should not be recorded as part of~~ the ~~fair value of a derivative loan commitment,~~three month and ~~SAB 109 retains that view. SAB 109 is effective for derivative loan commitments issued or modified in fiscal quarters beginning after December 15, 2007.~~nine month periods ended September 30, 2008. The ~~impact of~~ adoption of ~~SAB 109 was not material.~~FSP 157-3 had no material impact on these financial statements.

Accounting for Business Combinations

On December 4, 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (“SFAS No. 141(R)”), with the objective to improve the comparability of information that a company provides in its financial statements related to a business combination and its effects. SFAS No. 141(R) establishes principles and requirements for how the acquirer (i) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree, (ii) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase, and (iii) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. ~~141 (R)~~141(R) does not apply to combinations between entities under common control. SFAS No. ~~141 (R)~~141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.

Note 1312 —Derivative Instruments

SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS No. 133”), as amended and interpreted, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. As required by SFAS No. 133, the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

~~- 21 -~~-19-

For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (outside of earnings) and subsequently reclassified into earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. The Company assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged item or transaction.

During the first quarter of 2008, the Company executed aan interest rate swap to hedge a $25 million floating-rate subordinated note that was entered into by Park during the fourth quarter of 2007. The Company’s objective in using this derivative is to add stability to interest expense and to manage its exposure to interest rate risk. Our interest rate swap involves the receipt of variable-rate amounts in exchange for fixed-rate payments over the life of the agreement without exchange of the underlying principal amount, and has been designated as a cash flow hedge.

As of ~~June~~September 30, 2008, no derivatives were designated as fair value hedges or hedges of net investments in foreign operations. Additionally, the Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as hedges.

At ~~June~~September 30, 2008, the derivative’s fair value of ~~$97,000~~<$65,000> was included in other ~~assets.~~liabilities. No hedge ineffectiveness on the cash flow hedge was recognized during the quarter. At ~~June~~September 30, 2008, the variable rate on the $25 million subordinated note was ~~4.80%~~6.05% (LIBOR plus 200 basis points) and Park was paying 6.01% (4.01% fixed rate on the interest rate swap plus 200 basis points).

For the ~~six~~nine months ended ~~June~~September 30, 2008, the change in the fair value of the derivative designated as a cash flow hedge reported in other comprehensive income was ~~$63,000~~<$42,000> (net of taxes of ~~$34,000)~~<$23,000>). Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.

Note 1413 —Guarantees

Pursuant to the requirements of FASB Interpretation 45 (“FIN 45”), Park recorded a contingent legal liability of $.9 million during the fourth quarter of 2007. This was a result of an announcement Visa made in the fourth quarter of 2007 that it was establishing litigation reserves for the settlement of a lawsuit and for additional potential settlements with other parties. Park recorded the contingent legal liability based on Visa’s announcements and Park’s membership interest in Visa. Visa had a successful initial public offering (“IPO”) during the first quarter of 2008. Visa used a portion of the IPO proceeds to fund an escrow account that will be used to pay contingent legal settlements. As a result of the IPO, Park was able to reverse the entire contingent legal liability and recognize as income $.9 million during the first quarter of 2008. This was reflected in other income within the unaudited consolidated condensed statement of income for the ~~six~~nine months ended ~~June~~September 30, 2008.

At the time of the IPO, Park held 132,876 Class B Common Shares of Visa. During the first quarter of 2008, Visa redeemed 51,373 of these shares and paid Park $2.2 million, which was recognized in other income within the unaudited consolidated condensed statement of income for the ~~six~~nine months ended ~~June~~September 30, 2008. The unredeemed shares are recorded at their original cost basis of zero.

~~- 22 -~~-20-

Note 1514 —Fair Value

SFAS No. 157 establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. SFAS No. 157 describes three levels of inputs that Park uses to measure fair value:

	§•		Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

	§•		Level 2: Level 1 inputs for assets or liabilities that are not actively traded. Also consists of an observable market price for a similar asset or liability. This includes the use of “matrix pricing” used to value debt securities absent the exclusive use of quoted prices.

	§•		Level 3: Consists of unobservable inputs that are used to measure fair value when observable market inputs are not available. This could include the use of internally developed models, financial forecasting, etc.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability between market participants at the balance sheet date. When possible, the Company looks to active and observable markets to price identical assets or liabilities. When identical assets and liabilities are not traded in active markets, the Company looks to observable market data for similar assets and liabilities. However, certain assets and liabilities are not traded in observable markets and Park must use other valuation methods to develop a fair value. The fair value of impaired loans is based on the fair value of the underlying collateral, which is estimated through third party appraisals or internal estimates of collateral values.

Assets and Liabilities Measured on a Recurring Basis:

The following table presents financial assets and liabilities measured on a recurring basis:

Fair Value Measurements at Reporting Date Using
(In Thousands)
Quoted Prices in
Active Markets For Significant Other Significant
Identical Assets Observable Inputs Unobservable Inputs
Description 06/30/08 (Level 1) (Level 2) (Level 3)
Available-for-Sale Securities $ 1,556,609 $ 1,964 $ 1,551,804 $ 2,841
Fair Value Measurements at Reporting Date Using
(In Thousands)

Quoted Prices in

��

Active Markets For

Significant Other

Significant

Identical Assets

Observable Inputs

Unobservable Inputs

Description

09/30/08

(Level 1)

(Level 2)

(Level 3)

Available-for-Sale Securities

1,502,362

1,930

1,497,608

2,824

The table below is a reconciliation of the beginning and ending balances of the Level 3 inputs:

Fair Value Measurements at Reporting Date Using
Significant Unobservable Inputs (Level 3)
(In Thousands) AFS Securities
Beginning Balance, at January 1, 2008 $ 2,969
Total Unrealized (Losses)/Gains Included in Other Comprehensive Income <128>

Ending Balance $ 2,841

Fair Value Measurements at Reporting Date Using
Significant Unobservable Inputs (Level 3)


(In Thousands)	AFS Securities
Beginning Balance, at January 1, 2008	$	2,969
Total Unrealized (Losses)/Gains Included in Other Comprehensive Income		<145>

Ending Balance	$	2,824

~~-23-~~-21-

Assets and Liabilities Measured on a Nonrecurring Basis:

The following table presents financial assets and liabilities measured on a nonrecurring basis:

Fair Value Measurements at Reporting Date Using
(In Thousands)
Quoted Prices in
Active Markets For Significant Other Significant
Identical Assets Observable Inputs Unobservable Inputs
Description 06/30/08 (Level 1) (Level 2) (Level 3)
SFAS No. 114 Impaired Loans $ 52,349 — — $ 52,349
Fair Value Measurements at Reporting Date Using
(In Thousands)

Quoted Prices in

Active Markets For

Significant Other

Significant

Identical Assets

Observable Inputs

Unobservable Inputs

Description

09/30/08

(Level 1)

(Level 2)

(Level 3)

SFAS No. 114 Impaired Loans

55,328

—

55,328

Impaired loans, which are usually measured for impairment using the fair value of the collateral, had a carrying amount of ~~$90.6~~$106.0 million. Of these, ~~$52.3~~$55.3 million were carried asat fair value, as a result of partial charge-offs of ~~$19.6~~$21.8 million and a specific valuation allowance of ~~$3.2~~$4.5 million. The specific valuation allowance for those loans has ~~decreased~~increased from ~~$4.8 million at March 31, 2008 to~~ $3.2 million at June 30, 2008 to $4.5 million at September 30, 2008.

Note 15 —Subsequent Events

On October 10, 2008, Park’s Ohio-based banking subsidiary, The Park National Bank (“PNB”), executed agreements to sell its unsecured credit card portfolio (with the exception of certain specified ineligible accounts) and its merchant card processing business to U.S. Bank National Association ND, d/b/a Elan Financial Services (“Elan”) and Elavon Inc. (“Elavon”), respectively. Both Elan and Elavon are wholly-owned subsidiaries of U.S. Bancorp. As of September 30, 2008, the unsecured credit card portfolio had a balance of approximately $30 million, the transaction had a total sale price of $39.3 million and Park expects to recognize approximately $8 million in other income (as a pre-tax gain resulting from the sale of the credit card portfolio) during the fourth quarter of 2008. Park expects to recognize income of approximately $4.2 million in the fourth quarter of 2008 from the sale of the merchant card processing business.

Note 16 —~~Contingencies~~Evaluation of Participation in the U.S. Treasury Capital Purchase Program

~~Management believes that~~On October 3, 2008, Congress passed the ~~likelihood~~Emergency Economic Stabilization Act of ~~an impairment~~2008 (EESA), which creates the Troubled Asset Relief Program (“TARP”) and provides the U.S. Secretary of the Treasury with broad authority to implement certain actions to help restore stability and liquidity to U.S. markets. The Capital Purchase Program (the “CPP”) was announced by the U.S. Treasury on October 14, 2008 as part of TARP. Pursuant to the ~~value~~CPP, the U.S. Treasury will purchase up to $250 billion of ~~goodwill~~senior preferred shares on standardized terms from qualifying financial institutions. The purpose of the ~~Vision Bank acquisition~~CPP is ~~“reasonably possible”, as defined~~to encourage U.S. financial institutions to build capital to increase the flow of financing to U.S. businesses and consumers and to support the U.S. economy.

The CPP is voluntary and requires a participating institution to comply with a number of restrictions and provisions, including standards for executive compensation and corporate governance and limitations on share repurchases and the declaration and payment of dividends on common shares. In order to participate in ~~SFAS No. 5, “Accounting for Contingencies (as amended)”, as of June~~the CPP an application must be submitted before 5:00 p.m. (EST) on November 14, 2008. If a financial institution submits an application by the deadline and receives a preliminary approval to participate in the CPP, the financial institution would then have 30 ~~2008. However, as of~~days from the date of ~~this Form 10-Q, Management is unable~~the preliminary approval to ~~derive a reasonable estimate of a range of loss (impairment), if any exists. As discussed in Note 2 —Acquisitions~~satisfy all requirements for participation and ~~Intangible Assets~~to complete the issuance of the Notes to Consolidated Condensed Financial Statements in this Form 10-Q, a goodwill impairment test will be performed during the third quarter of 2008. Management expects to gain more information pertainingsenior preferred shares to the ~~credit conditions of the Florida markets, which should assist in such calculation. See Note 2 —Acquisitions and Intangible Assets~~ ~~of the Notes to Consolidated Condensed Financial Statements in this Form 10-Q for more background information on the deteriorating credit conditions at Vision Bank.~~U.S. Treasury.

~~-24-~~-22-

Eligible financial institutions can generally apply to issue senior preferred shares to the U.S. Treasury in aggregate amounts between 1% to 3% of the institution’s risk-weighted assets. In the case of Park, this would permit Park to apply for an investment by the U.S. Treasury of between approximately $47 million and $141 million.

If Park participates in the CPP, the U.S. Treasury would purchase from Park cumulative perpetual preferred shares, with a liquidation preference of at least $1,000 per share (the “Senior Preferred Shares”). The Senior Preferred Shares would constitute Tier 1 capital and rank senior to Park’s common shares. The Senior Preferred Shares would pay cumulative dividends at a rate of 5% per annum for the first five years and will reset to a rate of 9% per annum after five years.

Financial institutions participating in the CPP must also issue warrants to the U.S. Treasury to purchase a number of common shares having a market price equal to 15% of the aggregate amount of the Senior Preferred Shares purchased by the U.S. Treasury. The initial exercise price for the warrants and the market price for determining the number of common shares subject to the warrants will be determined by reference to the market price of the common shares on the date of the investment by the U.S. Treasury in the Senior Preferred Shares (calculated on a 20-day trailing average). The warrants will have a term of 10 years. The Company is evaluating whether to apply for participation in the CPP.

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ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

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. ~~Risk~~Risks and uncertainties that could cause actual results to differ materially include, without limitation: governmental intervention in the U.S. financial system; changes in consumer spending, borrowing and savings habits; deterioration in the asset value of Vision Bank’s loan portfolio may be worse than expected; Park’s ability to execute its business plan successfully and within the expected timeframe; Park’s ability to successfully integrate acquisitions into Park’s operations; Park’s ability to achieve the anticipated cost savings and revenue synergies from acquisitions; general economic and financial market conditions, specifically the real estate market, either national or in the ~~state~~states in which Park and its subsidiaries do business, are less favorable than expected; Park’s ability to convert its Ohio-based ~~community banking subsidiaries and~~ divisions to one operating ~~system and combine their charters;~~system; deterioration in credit conditions in the markets in which Park’s subsidiary banks operate; changes in the interest rate environment reduce net interest margins; competitive pressures among financial institutions increase significantly; changes in banking regulations or other regulatory or legislative requirements affecting the respective businesses of Park and its subsidiaries; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies; the effect of critical accounting policies and judgments; demand for loans in the respective market areas served by Park and its subsidiaries, and other risk factors relating to the banking industry as detailed from time to time in Park’s reports filed with the Securities and Exchange Commission 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, 2007 and in “Item 1A. Risk Factors” of Part II of this Quarterly Report on Form 10-Q. Undue reliance should not be placed on the forward-looking statements, which speak only as of the date ~~hereof.~~of this Quarterly Report on Form 10-Q. Park does not undertake, and specifically disclaims any obligation, to publicly release the result 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 is made, or reflect the occurrence of unanticipated events, except to the extent required by law.

Critical Accounting Policies

Note 1 of the Notes to Consolidated Financial Statements included in Park’s 2007 Annual Report to Shareholders lists significant accounting policies used in the development and presentation of Park’s consolidated financial statements. The accounting and reporting policies of Park conform with U.S. generally accepted accounting principles and general practices within the financial services industry. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates.

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Park considers that the determination of the allowance for loan losses involves a higher degree of ~~judgement~~judgment and complexity than its other significant accounting policies. The allowance for loan losses is calculated with the objective of maintaining a reserve level believed by management to be sufficient to absorb probable incurred credit losses in the loan portfolio. Management’s determination of the adequacy of the allowance for loan losses is based on periodic evaluations of the loan portfolio and of current economic conditions. However, this evaluation is inherently subjective as it requires material estimates, including expected default probabilities, loss given default, the amounts and timing of expected future cash flows on impaired loans and estimated losses on consumer loans and residential mortgage loans based on historical loss experience and the current economic conditions. All of those factors may be susceptible to significant change. To the extent that actual results differ from management estimates, additional loan loss provisions may be required that would adversely impact earnings for future periods.

~~-25-~~

Management’s assessment of the adequacy of the allowance for loan losses considers individual impaired loans, pools of homogeneous loans with similar risk characteristics and other environmental risk factors. This assessment is updated on a quarterly basis. The allowance established for individual impaired loans reflects expected losses resulting from analyses developed through specific credit allocations for individual loans. The specific credit allocations are based on regular analyses of commercial, commercial real estate and construction loans where the internal credit rating is at or below a predetermined classification. These analyses involve a high degree of ~~judgement~~judgment in estimating the amount of loss associated with specific impaired loans.

Pools of homogeneous loans with similar risk characteristics are also assessed for probable losses. A loss migration analysis is performed on certain commercial, commercial real estate and construction loans. These are loans above a fixed dollar amount that are assigned an internal credit rating. Generally, residential real estate loans and consumer loans are not individually graded. The amount of loan loss reserve assigned to these loans is dependent on their net charge-off history.

Management also evaluates the impact of environmental factors which pose additional risks. Such environmental factors include: national and local economic trends and conditions; experience, ability, and depth of lending management and staff; effects of any changes in lending policies and procedures; levels of, and trends in, consumer bankruptcies, delinquencies, impaired loans and charge-offs and recoveries. The determination of this component of the allowance for loan losses requires considerable management judgement.

Park’s recent adoption of SFAS No. 157 (See Note 1514 —Fair Value of the Notes to Consolidated Condensed Financial Statements in this Form Quarterly Report 10-Q) on January 1, 2008 required management to establish a fair value hierarchy, which has the objective of maximizing the use of observable market inputs. SFAS No. 157 also requires enhanced disclosures regarding the inputs used to calculate fair value. These are classified as Level 1, 2, and 3. Level 3 inputs are those with significant unobservable inputs that reflect a company’s own assumptions about the market for a particular instrument. Some of ~~this~~the inputs could be based on internal models and cash flow analysis. At ~~June~~September 30, 2008, the Level 3 inputs for Park had an aggregate fair value of approximately ~~$55.2~~$58.2 million. This was ~~3.43%~~3.7% of the total amount of assets measured at fair value as of the end of the ~~second~~third quarter. The fair value of impaired loans was approximately ~~$52~~$55.3 million (or 95%) of the total amount of Level 3 inputs. The large majority of Park’s Level 2 inputs consist of available for sale (“AFS”) securities. The fair value of these AFS securities is obtained largely by the use of matrix pricing, which is a mathematical technique widely used in the financial services industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities.

-25-

Management believes that the accounting for goodwill and other intangible assets also involves a higher degree of ~~judgement~~judgment than most other significant accounting policies. SFAS No. 142, “Accounting for Goodwill and Other Intangible Assets (as amended)” establishes standards for the amortization of acquired intangible assets and the impairment assessment of goodwill. Goodwill arising from business combinations represents the value attributable to unidentifiable intangible assets in the business acquired. Park’s goodwill relates to the value inherent in the banking industry and that value is dependent upon the ability of Park’s banking subsidiaries to provide quality, cost-effective banking services in a competitive marketplace. The goodwill value is supported by revenue that is in part driven by the volume of business transacted. A decrease in earnings resulting from a decline in the customer base, the inability to deliver cost-effective services over sustained periods or significant credit problems can lead to impairment of goodwill that could adversely impact earnings in future periods. SFAS No. 142 requires an annual evaluation of goodwill for impairment, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The fair value of the goodwill, which resides on the books of Park’s subsidiary banks, is estimated by reviewing the past and projected operating results for the Park subsidiary banks and the banking industry comparable information.

~~-26-~~

During the ~~fourth quarter of 2007,~~three months ended September 30, 2008, Park’s management determined that the credit conditions at Vision Bank had ~~significant credit problems~~further deteriorated and ~~concluded~~ that an impairment analysis ~~needed to be done on~~of the goodwill balance at Vision ~~Bank.~~Bank was required. As a result of this impairment analysis, Vision Bank recorded a goodwill impairment charge of $55.0 million during the third quarter of 2008, which eliminated the goodwill asset at Vision Bank. Previously, Vision Bank recorded a goodwill impairment charge of $54.0 million during the fourth quarter of ~~2007. This impairment charge~~2007 which had reduced the goodwill balance carried on the books of Vision Bank to $55.0 million from the original goodwill asset of $109.0 million.

At ~~June~~September 30, 2008, on a consolidated basis Park had core deposit intangibles of ~~$15.2~~$14.2 million subject to amortization and ~~$127.3~~$72.3 million of goodwill, which was not subject to periodic amortization. During the third quarter of 2008, the banking charters for seven of Park’s Ohio-based subsidiary banks were merged into one remaining Ohio-based subsidiary bank, The Park National Bank, which is headquartered in Newark, Ohio. At September 30, 2008, the core deposit ~~intangibles~~intangible asset recorded on the balance ~~sheets~~sheet of ~~Park’s Ohio-based banks totaled $5.3~~The Park National Bank was $4.86 million and the core deposit ~~intangibles at Vision Bank were $9.9 million. The goodwill assets carried on the balance sheets of Park’s Ohio-based banks totaled $72.3 million and the goodwill balance~~intangible asset at Vision Bank was ~~$55.0~~$9.36 million. The goodwill asset recorded at The Park National Bank was $72.3 million at September 30, 2008. During the first quarter of 2008, Park’s management evaluated the goodwill for Park’s Ohio-based banks for impairment and concluded that the fair value of the goodwill for Park’s Ohio-based banks exceeded the carrying value of $72.3 million and accordingly was not impaired. An impairment analysis was not performed on the goodwill at Vision Bank during the first quarter of 2008 because the impairment analysis was completed for Vision Bank at year-end 2007. Park’s management will review the goodwill at Vision Bank for impairment during the third quarter of 2008. See NotesPlease see Note 2 —Acquisitions and Intangible Assets ~~and 16 —Contingencies~~ of the Notes to Consolidated Condensed Financial Statements in this Quarterly Report on Form 10-Q for ~~more~~additional information on ~~Park’s impairment analysis for Vision Bank.~~intangible assets.

Comparison of Results of Operations
For the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2008 and 2007

Summary Discussion of Results

Net income for the ~~three~~nine months ended ~~June~~September 30, 2008 decreased by ~~$5.3~~$63.1 million or ~~22.6%~~95.8% to ~~$18.2~~$2.8 million compared to net income of ~~$23.5~~$65.9 million for the ~~second quarter~~first three quarters of 2007. ~~This~~The primary reason for the large decrease in ~~quarterly~~ net income was ~~primarily due~~the net loss of $70.2 million at Vision Bank for the first nine months of 2008 compared to ~~the large increase in the provision for loan losses~~net income of ~~$11.7 million. For the three months ended June 30, 2008, the provision for loan losses was $14.6 million compared to~~ $2.9 million for the same ~~quarter~~period in 2007. As previously discussed, Vision Bank recognized a goodwill impairment charge of $55.0 million during the third quarter of 2008. Diluted earnings per share decreased by ~~$.32 or 19.8%~~95.7% to ~~$1.30~~$.20 for the ~~second quarter~~first three quarters of 2008 compared to ~~$1.62 for the second quarter of 2007.~~

Net income for the six months ended June 30, 2008 decreased by $3.4 million or 7.6% to $41.2 million compared to net income of $44.6 million for the first six months of 2007. The provision for loan losses increased by $16.9 million to $22.0 million for the first half of 2008 compared to $5.1 million for the first half of 2007. Diluted earnings per share decreased by $.16 or 5.1% to $2.95 for the first six months of 2008 compared to $3.11 for the first half of 2007.

The large increase in the provision for loan losses for both the three and six month periods ended June 30, 2008 compared to the same periods in 2007 was primarily due to large increases in net loan charge-offs at Park’s affiliate bank, Vision Bank, which is headquartered in Panama City, Florida. Vision Bank had net loan charge-offs of $10.8 million for the second quarter of 2008 and $16.3 million for the first half of 2008. By comparison, Vision Bank had net loan recoveries of approximately $50,000 for both the second quarter of 2007 and the first half of 2007.

The annualized net income to average asset ratio (ROA) was 1.08% for the second quarter of 2008 compared to 1.51% for the second quarter of 2007. The annualized net income to average equity ratio (ROE) was 12.57% for the second quarter of 2008 compared to 14.73% for the second quarter of 2007.

~~For the six months ended June 30, 2008, the ROA was 1.25% and the ROE was 14.28% compared to 1.51% and 14.66%, respectively,~~$4.61 for the same period in 2007.

~~-27-~~-26-

Park’s management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate Park’s performance. Specifically, management reviews return on average tangible realized equity (ROTRE) and has included in this Quarterly Report on Form 10-Q information relating to ROTRE forExcluding the ~~three and six month periods ended June 30, 2008 and 2007. For purposes of calculating the non-GAAP financial measure of ROTRE, annualized~~$55.0 million goodwill impairment charge, net income for ~~each period is divided by average tangible realized equity during~~ the period. Average tangible realized equity equals average stockholders’ equity during the applicable period less (i) average goodwill and other intangible assets during the period and (ii) average accumulated other comprehensive income (loss), netfirst three quarters of ~~taxes, during the period. Management believes that ROTRE presents a meaningful view of Park’s operating performance and ensures comparability of operating performance from period~~2008 was $57.8 million compared to ~~period while eliminating certain non-operational effects of acquisitions and amounts recorded to accumulated other comprehensive income (loss).~~

~~Reconciliation of average stockholders’ equity to average tangible realized equity:~~

Three Months Ended Six Months Ended
June 30, June 30,
(In Thousands) 2008 2007 2008 2007
Average Stockholders’ Equity $ 582,015 $ 640,302 $ 579,961 $ 613,153
Less: Avg. Goodwill and Other Intangible Assets <143,117> <198,665> <143,618> <153,973>
Plus: Avg. Accumulated Other Comprehensive (Income) Loss, Net of Taxes <3,354> 22,023 <5,330> 22,414

Average Tangible Realized Equity $ 435,544 $ 463,660 $ 431,013 $ 481,594

~~The ROTRE was 16.80% and 19.21%~~$65.9 million for the ~~three and six month periods~~first nine months of 2007, a decrease of $8.1 million or 12.3%. The provision for loan losses was $37.9 million for the nine months ended ~~June~~September 30, 2008 compared to ~~20.34% and 18.66%, respectively,~~$10.9 million for the same ~~periods~~period in 2007.

~~The reconciliation is provided~~ Net loan charge-offs were $35.8 million for the ~~purpose~~first nine months of ~~complying with SEC Regulation G~~2008 compared to $10.9 million for the same period in 2007. The increase in the loan loss provision and ~~not as~~the related net loan charge-offs in 2008 was primarily due to worsening credit conditions at Vision Bank.

As a result of the $55.0 million goodwill impairment charge, Park had a net loss of $38.4 million and a diluted net loss per share of $2.75 for the three months ended September 30, 2008 compared to net income of $21.3 million and diluted earnings per share of $1.50 for the third quarter of 2007. Vision Bank had a net loss of $61.7 million for the three months ended September 30, 2008 compared to net income of $176,000 for the third quarter of 2007.

Excluding the $55.0 million goodwill impairment charge, net income for the three months ended September 30, 2008 was $16.6 million compared to $21.3 million for the same period in 2007, a decrease of $4.7 million or 22.2%. The primary reason for the decrease in net income was an ~~indication that return on average tangible realized equity is a substitute~~increase in the loan loss provision to $15.9 million for ~~return on average equity as determined~~the third quarter of 2008 compared to $5.8 million for the third quarter of 2007. Net loan charge-offs were $12.8 million for the three months ended September 30, 2008 and $5.9 million for the same period in ~~accordance with GAAP.~~2007. This deterioration in credit quality was largely focused at Vision Bank.

The following tables compare the components of net income for the three and ~~six~~nine month periods ended ~~June~~September 30, 2008 with the components of net income for the three and ~~six~~nine month periods ended ~~June~~September 30, 2007. The summary income statements are for Park, Vision Bank and Park Excluding Vision ~~Bank.~~Bank (“Ohio-based divisions).

Park-Summary Income Statement
(In Thousands)
Three Months Ended Six Months Ended
June 30, June 30,
Percent Percent
2008 2007 Change 2008 2007 Change
Net Interest Income $ 64,326 $ 60,410 6.5 % $ 125,810 $ 115,308 9.1 %
Provision for Loan Losses 14,569 2,881 405.7 % 21,963 5,086 331.8 %
Other Income 18,543 18,462 .4 % 39,582 34,636 14.3 %
Gain on Sale of Securities 587 — — 896 — —
Other Expense 44,433 42,480 4.6 % 87,710 81,789 7.2 %

Income Before Taxes $ 24,454 $ 33,511 <27.0%> $ 56,615 $ 63,069 <10.2%>
Income Taxes 6,263 10,001 <37.4%> 15,446 18,496 <16.5%>

Net Income $ 18,191 $ 23,510 <22.6%> $ 41,169 $ 44,573 <7.6%>

Park — Summary Income Statement


	Three Months Ended							Nine Months Ended
	September 30,							September 30,
(In Thousands)	2008		2007		Percent Change			2008		2007		Percent Change
Net Interest Income	$	65,228	$	59,416		9.8	%	$	191,038	$	174,724		9.3	%
Provision for Loan Losses		15,906		5,793		174.6	%		37,869		10,879		248.1	%
Other Income		17,088		19,060		<10.3%>			56,670		53,696		5.5	%
Gain on Sale of Securities		—		—		—			896		—		—
Goodwill Impairment Charge		54,986		—		—			54,986		—		—
Other Expense		44,493		42,817		3.9	%		132,203		124,606		6.1	%

Income (Loss) Before Taxes		<$33,069	$	29,866		<210.7%>		$	23,546	$	92,935		<74.7%>
Income Taxes		5,343		8,562		<37.6%>			20,789		27,058		<23.2%>

Net Income (Loss)		<$38,412>	$	21,304		<280.3%>		$	2,757	$	65,877		<95.8%>

~~-28-~~-27-

Park acquired Vision Bancshares Inc. on March 9, 2007 and accordingly the operating results for Vision Bank in 2007 only include the revenue and expense from the date of acquisition.

Vision Bank — Summary Income Statement
~~(In Thousands)~~


	Three Months Ended										Six Months Ended										Three Months Ended							Nine Months Ended
	June 30,										June 30,										September 30,							September 30,
							Percent											Percent
	2008			2007			Change				2008				2007			Change
(In Thousands)																					2008		2007		Percent Change			2008		2007		Percent Change
Net Interest Income	$	6,835		$	8,260		<17.2%>				$	13,681			$	10,335			32.4	%	$	6,928	$	7,743		<10.5%>		$	20,609	$	18,078		14.0	%
Provision for Loan Losses		11,455			85			13376.5	%			16,255				85			19023.5	%		11,474		2,420		374.1	%		27,729		2,505		1,006.9	%
Other Income		804			990		<18.8%>					1,886				1,256			50.1	%		48		1,121		<95.7%>			1,934		2,377		<18.6%>
Gain on Sale of Securities		238			—			—				238				—		—				—		—		—			238		—		—
Goodwill Impairment Charge																						54,986		—		—			54,986		—		—
Other Expense		7,310			5,707			28.1	%			13,438				7,112			88.9	%		6,383		6,189		3.1	%		19,821		13,301		49.0	%

Income Before Taxes	<$		$	3,458		<414.9%>				<$			$	4,394			<416.1%>
Income (Loss) Before Taxes																						<$65,867>	$	255		<25,930.2%>			<$79,755>	$	4,649		<1,815.5%>
Income Taxes	<4,186>				1,297		<422.8%>				<5,354>					1,653		<424.0%>				<4,185>		79		<5,397.5%>			<9,539>		1,732		<650.8%>

Net Income	<$		$	2,161		<410.1%>				<$			$	2,741			<411.4%>
Net Income (Loss)																						<$61,682>	$	176		<35,146.6%>			<$70,216>	$	2,917		<2,507.1%>

Vision Bank has continued to have significant credit problems during 2008. Net ~~loans~~loan charge-offs for the ~~second quarter~~first nine months of 2008 were ~~$10.8~~$25.2 million or an annualized ~~6.41% of average loans and for the first six months of 2008 net loan charge-offs were $16.3 million or an annualized 4.92%~~5.01% of average loans. ~~The large decrease in net~~At September 30, 2008, Vision Bank had nonaccrual loans of $76.5 million or 11.2% of loan balances. Additionally, Vision Bank had $13.5 million of other real estate owned at the end of the quarter. These severe credit problems negatively impact several items on the income statement for Vision Bank. Net interest income ~~for Vision Bank of 17.2% for the second quarter of 2008 compared to 2007 was primarily due to~~is negatively impacted by the large amount of nonaccrual loans, the provision for loan losses is directly impacted by the large amount of ~~$58.3 million at June 30, 2008. Generally, no interest~~net loan charge-offs, other income was ~~recognized on these loans~~reduced by $900,000 during the ~~second~~third quarter by losses from the sale of ~~2008.~~

Net income for Park excluding Vision Bank increased by ~~$7.9~~$10.0 million or ~~18.8%~~15.9% for the first ~~six~~nine months of 2008 compared to the first ~~half~~three quarters of 2007. This increase was primarily due to the ~~$7.2~~$13.8 million or ~~6.8%~~8.8% increase in net interest income and the ~~$4.3~~$3.4 million or ~~12.9%~~6.7% increase in other income. This increase in other income was largely due to the completion of the Visa initial public offering in 2008.

Park’s Ohio-based ~~banks~~divisions recognized $3.1 million of other income during the first quarter of 2008 as a result of the Visa initial public offering. The Ohio-based ~~banks~~divisions received $2.2 million in cash from Visa and also recognized $.9 million in income due to the elimination of the contingent liability reserve for Visa litigation claims, which was established during the fourth quarter of ~~2007(see~~2007 (see Note 1413 —Guarantees of the Notes to Consolidated Condensed Financial Statements in this Quarterly Report on Form 10-Q).

Net Interest Income Comparison for the ~~Second~~Third Quarter of 2008 and 2007

Net interest income (the difference between total interest income and total interest expense) is Park’s principal source of earnings, making up approximately ~~77.1%~~79.2% of total revenue for the ~~second~~third quarter of 2008 and ~~76.6%~~75.7% of total revenue for the ~~second~~third quarter of 2007. Net interest income increased by ~~$3.9~~$5.8 million or ~~6.5%~~9.8% to ~~$64.3~~$65.2 million for the ~~second~~third quarter of 2008 compared to ~~$60.4~~$59.4 million for the ~~second~~third quarter of 2007.

The following table compares the average balance sheet and tax equivalent yield on interest earning assets and the cost of interest bearing liabilities for the ~~second~~third quarter of 2008 with the same quarter in 2007.

Three Months Ended June 30,
2008 2007
Average Tax Average Tax
(In Thousands) Balance Equivalent % Balance Equivalent %
Loans $ 4,311,989 7.01 % $ 4,094,719 8.19 %
Taxable Investments 1,814,270 5.02 % 1,472,540 4.98 %
Tax Exempt Investments 48,264 6.92 % 66,943 6.61 %
Money Market Instruments 14,695 2.06 % 20,497 5.36 %

Interest Earning Assets $ 6,189,218 6.40 % $ 5,654,699 7.33 %

Interest Bearing Deposits $ 3,767,366 2.34 % $ 3,815,458 3.34 %
Short-Term Borrowings 737,128 2.23 % 375,335 4.55 %
Long-Term Debt 833,073 3.79 % 599,667 4.28 %

Interest Bearing Liabilities $ 5,337,567 2.55 % $ 4,790,460 3.55 %
Excess Interest Earning Assets $ 851,651 $ 864,239
Net Interest Spread 3.85 % 3.78 %
Net Interest Margin 4.20 % 4.32 %
Three Months Ended September 30,


	2008					2007
	Average		Tax			Average		Tax
(In Thousands)	Balance		Equivalent %			Balance		Equivalent %
Loans	$	4,409,188		6.80	%	$	4,115,617		8.11	%
Taxable Investments		1,782,413		4.96	%		1,499,233		4.98	%
Tax Exempt Investments		42,312		6.64	%		63,689		6.69	%
Money Market Instruments		17,970		1.93	%		16,800		5.23	%

Interest Earning Assets	$	6,251,883		6.25	%	$	5,695,339		7.26	%

Interest Bearing Deposits	$	3,873,958		2.17	%	$	3,837,602		3.39	%
Short-Term Borrowings		610,617		2.13	%		545,844		4.71	%
Long-Term Debt		904,289		3.68	%		474,025		4.29	%

Interest Bearing Liabilities	$	5,388,864		2.42	%	$	4,857,471		3.62	%
Excess Interest Earning Assets	$	869,019				$	837,868
Net Interest Spread				3.83	%				3.64	%
Net Interest Margin				4.17	%				4.17	%

Average interest earning assets for the ~~second~~third quarter of 2008 increased by ~~$535~~$557 million or ~~9.5%~~9.8% to ~~$6,189~~$6,252 million compared to ~~$5,655~~$5,695 million for the ~~second~~third quarter of 2007. The average yield on interest earning assets decreased by 93101 basis points to ~~6.40%~~6.25% for the ~~second~~third quarter of 2008 compared to ~~7.33%~~7.26% for the same period in 2007.

Average interest bearing liabilities for the ~~second~~third quarter of 2008 increased by ~~$547~~$532 million or ~~11.4%~~10.9% to ~~$5,338~~$5,389 million compared to ~~$4,790~~$4,857 million for the ~~second~~third quarter of 2007. The average cost of interest bearing liabilities decreased by ~~100~~120 basis points to ~~2.55%~~2.42% for the ~~second~~third quarter of 2008 compared to ~~3.55%~~3.62% for the same period in 2007.

~~-30-~~-29-

Interest Rates

The Federal Open Market Committee (“FOMC”) of the Federal Reserve aggressively lowered the targeted federal funds rate during the first quarter of 2008 by 200 basis points from 4.25% to 2.25%. The FOMC furthered reduced the federal funds rate by 25 basis points to 2.00% in April 2008. The average targeted federal funds rate was ~~2.09%~~2.00% for the ~~second~~third quarter of 2008 and ~~2.63%~~2.43% for the first ~~six~~nine months of 2008 compared to an average targeted federal funds rate of ~~5.25%~~5.18% for ~~both~~ the ~~three~~third quarter of 2007 and ~~six month periods ended June 30,~~5.23% for the first nine months of 2007.

The average prime lending rate was ~~5.08%~~5.00% for the ~~second~~third quarter of 2008 and ~~5.65%~~5.43% for the first ~~six~~nine months of 2008 compared to an average prime lending rate of ~~8.25%~~8.18% for ~~both~~ the ~~three~~third quarter of 2007 and ~~six month periods ended June 30,~~5.23% for the first nine months of 2007.

On October 8, 2008, the FOMC further decreased the targeted federal funds rate from 2.00% to 1.50% and the prime lending rate decreased from 5.00% to 4.50%. Additionally, on October 29, 2008, the FOMC further cut the targeted federal funds rate to 1.00% from 1.50% and the prime lending rate decreased to 4.00% from 4.50%. Management expects that the interest rates on loans, investments, deposits and borrowings will continue to decrease in the fourth quarter of 2008.

Discussion of Loans, Investments, Deposits and Borrowings

Average loan balances increased by ~~$217~~$293.6 million or ~~5.3%~~7.1% to ~~$4,312~~$4,409 million for the three months ended ~~June~~September 30, 2008 compared to ~~$4,095~~$4,116 million for the same period in 2007. The average yield on the loan portfolio decreased by ~~118~~131 basis points to ~~7.01%~~6.80% for the ~~second~~third quarter of 2008 compared to ~~8.19%~~8.11% for the ~~second~~third quarter of 2007.

Total loans outstanding at ~~June~~September 30, 2008 were ~~$4,366~~$4,467 million compared to ~~$4,125~~$4,175 million at ~~June~~September 30, 2007, an increase of ~~$241~~$292 million or ~~5.8%~~7.0%. Vision Bank produced an increase in loans of ~~$64~~$68 million or ~~10.4%~~10.9% and Park’s Ohio-based ~~banks~~divisions increased loans by ~~$177~~$224 million or ~~5.0%~~6.3% for the twelve months ended ~~June~~September 30, 2008.

For the three months ended ~~June~~September 30, 2008, total loans outstanding increased by ~~$113~~$101 million or ~~2.6%~~2.3%. During the ~~second~~third quarter of 2008, Park’s Ohio-based ~~banks~~divisions increased loans by ~~$99~~$97 million or ~~2.7%~~2.6% and Vision Bank increased loans by ~~$14~~$4 million or ~~2.1%~~.6%. Park’s management noticed an increase in demand for loans at Park’s Ohio-based banks during the second quarter of 2008. This increase in demand is primarily due to the large regional bank competitors reducing their lending activities in the state of Ohio. Management expects ~~similar~~ loan growth to be at a slower pace for the ~~third~~fourth quarter of 2008. In Park’s 2007 Annual Report, management projected that loans would grow by 2% to 3% during 2008. With the increased loan demand, management now projects loan growth of 5%6% to 7%8% for 2008.

The average balance of taxable investment securities increased by ~~$342~~$283 million or ~~23.2%~~18.9% to ~~$1,814~~$1,782 million for the three months ended ~~June~~September 30, 2008 compared to ~~$1,472~~$1,499 million for the ~~second~~third quarter of 2007. The average yield on taxable investment securities was ~~5.02%~~4.96% for the ~~second~~third quarter of 2008 compared to 4.98% for the ~~second~~third quarter of 2007.

The average balance of tax exempt investment securities decreased by ~~$19~~$21 million or ~~27.9%~~33.6% to ~~$48~~$42 million for the ~~second~~third quarter of ~~2008 compared to $67 million for the second quarter of 2007.~~2008. The tax equivalent yield on tax exempt investment securities was ~~6.92%~~6.64% for the ~~second~~third quarter of 2008 compared to ~~6.61%~~6.69% for the ~~second~~third quarter of 2007.

Park’s management purchased $432 million of taxable investment securities during the first six months of 2008. No additional securities were purchased during the third quarter of 2008. These securities were all U.S. Government Sponsored Entity, mortgage-backed securities, collateralized mortgage obligations or notes. These securities were purchased at a weighted average yield of 4.95% with an average life of 3.6 years. Most of the purchased securities were seasoned 15 year mortgage-backed securities with a weighted average maturity of about 12 years. On an amortized cost basis, the total investment portfolio increased by ~~$167~~$107 million during the first ~~half~~nine months of 2008 to ~~$1,869~~$1,809 million at ~~June~~September 30, 2008.

~~-31-~~-30-

At ~~June~~September 30, 2008, the tax equivalent yield on the total investment portfolio was ~~5.01%~~5.02% and the average maturity was ~~3.9~~3.8 years. U.S. Government Sponsored Entities’ asset-backed securities comprised approximately ~~90.5%~~90.3% of the total investment portfolio at the end of the ~~second~~third quarter of 2008. This segment of the investment portfolio consists of fifteen-year mortgage-backed securities and fifteen-year collateralized mortgage obligations.

The average maturity of the investment portfolio would lengthen if long-term interest rates would increase as the principal repayments from mortgage-backed securities and collateralized mortgage obligations would be reduced. Management estimates that the average maturity of the investment portfolio would lengthen to ~~5.0~~4.7 years with a 100 basis point increase in long-term interest rates and to ~~5.3~~5.1 years with a 200 basis point increase in long-term interest rates. Conversely, management estimates that repayments would increase and that the average maturity of the investment portfolio would decrease to ~~3.8~~2.8 years and ~~2.3~~1.4 years respectively, with a 100 basis point and 200 basis point decrease in long-term rates.

Park’s management projects that purchases of investment securities will be ~~small~~limited during the ~~second half~~fourth quarter of 2008. The maturities and repayments from the investment portfolio are expected to be used to help fund the ~~increased~~anticipated continued strong demand for loans.

Average interest bearing deposit account balances ~~decreased~~increased by ~~$48~~$36 million or ~~1.3%~~.9% to ~~$3,767~~$3,874 million for the three months ended ~~June~~September 30, 2008 compared to ~~$3,815~~$3,838 million for the ~~second~~third quarter of 2007. The average interest rate paid on interest bearing deposits decreased by ~~100~~122 basis points to ~~2.34%~~2.17% for the ~~second~~third quarter of 2008 compared to ~~3.34%~~3.39% for the ~~second~~third quarter of 2007.

At ~~June~~September 30, 2008, total deposit balances were ~~$4,532~~$4,775 million compared to $4,439 million at December 31, 2007 and ~~$4,540~~$4,535 million at ~~June~~September 30, 2007. Noninterest bearing deposit balances were ~~$764~~$726 million at ~~June~~September 30, 2008, compared to $695 million at December 31, 2007 and ~~$706~~$693 million at ~~June~~September 30, 2007. Total deposit balances have increased by $335.3 million or 7.6% in 2008, but $191 million of this growth was due to the use of brokered deposits. In Park’s 2007 Annual Report, management projected that deposit balances would increase by 1% to 2% during 2008. Park’s management continues to expect modest deposit growth of 1% to 2% during ~~2008.~~2008, excluding brokered deposits.

Average total borrowings increased by ~~$595~~$495 million to ~~$1,570~~$1,515 million for the ~~second~~third quarter of 2008 compared to ~~$975~~$1,020 million for the ~~second~~third quarter of 2007. The large increase in average borrowings of ~~$595~~$495 million or ~~61.0%~~48.5% was needed to fund the increase in interest earning assets of ~~$535~~$557 million. The average interest rate paid on total borrowings was 3.05% for the ~~second~~third quarter of 2008 compared to ~~4.38%~~4.51% for the ~~second~~third quarter of 2007.

The net interest spread (the difference between the tax equivalent yield on interest earning assets and the cost of interest bearing liabilities) increased by 719 basis points to ~~3.85%~~3.83% for the three months ended ~~June~~September 30, 2008 compared to ~~3.78%~~3.64% for the ~~second~~third quarter of 2007. However despite the increase in the net interest spread, the net interest margin (the annualized tax equivalent net interest income divided by average interest earning assets) ~~decreased by 12 basis points to 4.20%~~was 4.17% for both the ~~second~~third quarter of 2008 ~~compared to 4.32% for~~and the ~~second~~third quarter of 2007. ~~The decrease in the net interest margin was primarily due to a decrease in the average tax equivalent yield on interest earning assets.~~ The average tax equivalent yield on interest earning assets decreased by 93101 basis points to ~~6.40%~~6.25% for the ~~second~~third quarter of 2008 compared to ~~7.33%~~7.26% for the ~~second~~third quarter of ~~2007. The~~2007 and the average excess interest earning assets of ~~$852~~$863 million in 2008 contributed interest income at the lower interest rate of ~~6.40%~~6.25% in 2008.

~~-32-~~-31-

Net Interest Comparison for the First ~~Half~~Nine Months of 2008 and 2007

Net interest income increased by ~~$10.5~~$16.3 million or ~~9.1%~~9.3% to ~~$125.8~~$191.0 million for the first ~~six~~nine months of 2008 compared to ~~$115.3~~$174.7 million for the first ~~half~~three quarters of 2007. This large increase in net interest income for 2008 compared to 2007 was partially due to the acquisition of Vision Bank. Park acquired Vision Bank on March 9, 2007 and as a result net interest income for 2007 does not include the results from Vision Bank for a full ~~six~~nine months. Vision Bank generated net interest income of ~~$13.7~~$20.6 million for the first ~~half~~nine months of 2008 compared to ~~$10.3~~$18.1 million for the same period in 2007, an increase of ~~32.4%~~14.0%. Excluding Vision Bank, net interest income increased by ~~$7.15~~$13.8 million or ~~6.8%~~8.8% to ~~$112.1~~$170.4 million for the first ~~half~~nine months of 2008 compared to ~~$105.0~~$156.6 million for the first ~~half~~three quarters of 2007. The following table compares the average balance and the annualized tax equivalent yield/cost for interest earning assets and interest bearing liabilities for the ~~six~~nine months ended ~~June~~September 30, 2008 with the same period in 2007.

Six Months Ended June 30,
2008 2007
Average Tax Average Tax
(In Thousands) Balance Equivalent % Balance Equivalent %
Loans $ 4,270,706 7.26 % $ 3,864,224 8.09 %
Taxable Investments 1,730,316 5.04 % 1,482,535 5.01 %
Tax Exempt Investments 52,250 6.82 % 67,787 6.69 %
Money Market Instruments 13,098 2.68 % 21,939 5.33 %

Interest Earning Assets $ 6,066,370 6.60 % $ 5,436,485 7.22 %

Interest Bearing Deposits $ 3,767,713 2.59 % $ 3,597,186 3.22 %
Short-Term Borrowings 654,538 2.71 % 366,242 4.50 %
Long-Term Debt 802,364 3.89 % 603,182 4.26 %

Interest Bearing Liabilities $ 5,224,615 2.80 % $ 4,566,610 3.46 %
Excess Interest Earning Assets $ 841,755 $ 869,875
Net Interest Spread 3.80 % 3.76 %
Net Interest Margin 4.19 % 4.31 %
Nine Months Ended September 30,


	2008					2007
	Average		Tax			Average		Tax
(In Thousands)	Balance		Equivalent %			Balance		Equivalent %
Loans	$	4,317,204		7.11	%	$	3,948,942		8.09	%
Taxable Investments		1,747,809		5.01	%		1,488,163		5.00	%
Tax Exempt Investments		48,913		6.77	%		66,405		6.69	%
Money Market Instruments		14,734		2.37	%		20,207		5.30	%

Interest Earning Assets	$	6,128,660		6.48	%	$	5,523,717		7.23	%

Interest Bearing Deposits	$	3,803,387		2.44	%	$	3,678,205		3.28	%
Short-Term Borrowings		639,791		2.53	%		426,768		4.59	%
Long-Term Debt		836,587		3.81	%		559,656		4.27	%

Interest Bearing Liabilities	$	5,279,765		2.67	%	$	4,664,629		3.52	%
Excess Interest Earning Assets	$	848,895				$	859,088
Net Interest Spread				3.81	%				3.72	%
Net Interest Margin				4.18	%				4.26	%

Average interest earning assets increased by ~~$630~~$605 million or ~~11.6%~~11.0% to ~~$6,066~~$6,129 million for the first ~~six~~nine months of 2008 compared to ~~$5,436~~$5,524 million for the same period in 2007. The average yield on interest earning assets was ~~6.60%~~6.48% for the first ~~half~~nine months of 2008 compared to ~~7.22%~~7.23% for the first ~~half~~three quarters of 2007.

Average loans increased by ~~$406~~$368 million or ~~10.5%~~9.3% to ~~$4,271~~$4,317 million for the first ~~six~~nine months of 2008 compared to ~~$3,864~~$3,949 million for the first ~~half~~three quarters of 2007. The average yield on loans was ~~7.26%~~7.11% for the first ~~half~~nine months of 2008 compared to 8.09% for the ~~first half of~~same period in 2007.

Average investment securities, including money market instruments, were ~~$1,796~~$1,811 million for the first ~~six~~nine months of 2008 compared to ~~$1,572~~$1,575 million for the same period in 2007. The average yield on taxable investment securities was ~~5.04% for the first half of 2008 and~~ 5.01% for the first ~~half~~nine months of 2008 and 5.00% for the first three quarters of 2007 and the average tax equivalent yield on tax exempt securities was ~~6.82%~~6.77% in 2008 and 6.69% in 2007.

Average interest bearing liabilities increased by ~~$658~~$615 million or ~~14.4%~~13.2% to ~~$5,225~~$5,280 million for the first ~~six~~nine months of 2008 compared to ~~$4,567~~$4,665 million for the same period in 2007. The average cost of interest bearing liabilities was ~~2.80%~~2.67% for the first ~~half~~nine months of 2008 compared to ~~3.46%~~3.52% for the first ~~six~~nine months of 2007.

-32-

Average total borrowings were ~~$1,457~~$1,476 million for the first ~~half~~nine months of 2008 compared to ~~$969~~$986 million for the first half of 2007. This increase of ~~$488~~$490 million in average total borrowings was needed to help fund the increase in average interest earning assets of ~~$630~~$605 million for the first ~~six~~nine months of 2008 compared to the same period in 2007.

The average interest rate paid on total borrowings was ~~3.36%~~3.25% for the first ~~half~~nine months of 2008 compared to ~~4.35%~~4.41% for the first ~~half~~three quarters of 2007.

The net interest spread increased by 49 basis points to ~~3.80%~~3.81% for the first ~~half~~nine months of 2008 compared to ~~3.76%~~3.72% for the first ~~half~~three quarters of 2007. However, the net interest margin decreased by 128 basis points to ~~4.19%~~4.18% for the first ~~half~~nine months of 2008 compared to ~~4.31%~~4.26% for the ~~first half of~~same period in 2007. The decrease in the net interest margin was primarily due to a decrease in the average tax equivalent yield on interest earning assets. The average tax equivalent yield on interest earning assets decreased by 6275 basis points to ~~6.60%~~6.48% for the first ~~half~~nine months of 2008 compared to ~~7.22%~~7.23% for the first ~~half~~nine months of 2007. The average excess interest earning assets of ~~$842~~$849 million in 2008 contributed interest income at the lower interest rate of ~~6.60%~~6.48% in 2008.

Guidance on Net Interest Income for 2008

Management provided guidance in Park’s 2007 Annual Report that net interest income for 2008 would be approximately $240 to $242 million, the tax equivalent net interest margin would be approximately 4.10% and the average interest earning assets for the year would be approximately $5,900 million.

The actual results for the ~~second quarter of 2008 and the~~ first ~~half~~nine months of 2008 were better than management’s guidance. Net interest income for the first ~~six~~nine months of 2008 was ~~$125.8~~$191.0 million, which annualized would be about ~~$252~~$255 million for 2008. The tax equivalent net interest margin was ~~4.19%~~4.18% and average interest earning assets were ~~$6,066~~$6,129 million for the first ~~six~~nine months of 2008.

The most recent projection by management indicates that net interest income will be ~~$252~~$253 to ~~$254~~$255 million for 2008. The tax equivalent net interest margin is forecasted to be approximately 4.17% for 2008 and average interest earning assets are projected to be approximately ~~$6,140~~$6,143 million for 2008.

On October 10, 2008, Park sold its unsecured credit card portfolio of approximately $30 million and expects to record a pre-tax gain of about $8 million in the fourth quarter. The sale of the unsecured credit card portfolio is expected to reduce Park’s net interest margin in the fourth quarter of 2008 by 3 to 5 basis points.

Provision for Loan Losses

The provision for loan losses increased by ~~$11.7~~$10.1 million to ~~$14.6~~$15.9 million for the ~~second~~third quarter of 2008 compared to ~~$2.9~~$5.8 million for the same quarter in 2007. Net loan charge-offs were ~~$14.4~~$12.8 million or an annualized ~~1.34%~~1.15% of average loans for the three months ended ~~June~~September 30, 2008, compared to ~~$2.8~~$5.9 million or ~~.28%~~.56% annualized for the same period in 2007.

For the first ~~six~~nine months of 2008, the provision for loan losses increased by ~~$16.9~~$27.0 million to ~~$22.0~~$37.9 million compared to ~~$5.1~~$10.9 million for the first ~~two~~three quarters of 2007. Net loan charge-offs were ~~$23.0~~$35.8 million for the ~~two~~three quarters ended ~~June~~September 30, 2008, or ~~1.08%~~1.11% of average loans on an annualized basis, compared to ~~$5.0~~$10.9 million or ~~.26%~~.37% of average loans annualized for the same period in 2007.

-33-

For the first ~~six~~nine months of 2008, the Ohio-based ~~banks~~divisions had a loan loss provision of ~~$5.7~~$10.1 million compared to ~~$5.0~~$8.4 million for the same period in 2007. Net loan charge-offs for the Ohio-based ~~banks~~divisions were ~~$6.7~~$10.6 million for the first ~~two~~three quarters of 2008, or ~~.37%~~.39% of average loans annualized. Vision Bank had net loan charge-offs for the first ~~six~~nine months of 2008 of ~~$16.3~~$25.2 million, or ~~4.92%~~5.01% of average loans annualized.

Park’s annualized net loan charge-off ratio for the past five years has been .55% for 2007, .12% for 2006, .18% for 2005, .28% for 2004, and .43% for 2003. Park’s Ohio-based banks had a net loan charge-off ratio of .39% of average loans annualized for the year ended December 31, 2007 and Vision Bank had a net loan charge-off ratio of 1.71% for the same period.

Nonperforming loans, defined as loans that are 90 days past due, nonaccrual and renegotiated loans were ~~$113.5~~$132.3 million or ~~2.60%~~2.96% of loans at ~~June~~September 30, 2008, compared to $108.5 million or 2.57% of loans at December 31, 2007 and ~~$42.4~~$66.2 million or ~~1.03%~~1.58% of loans at ~~June~~September 30, 2007. ~~Park’s~~The Ohio-based ~~banks~~divisions had nonperforming loans of ~~$53.9~~$53.0 million or ~~1.46%~~1.40% of loans at ~~June~~September 30, 2008, ~~$45~~$45.0 million or 1.26% of loans at December 31, 2007 and ~~$35.9~~$39.9 million or ~~1.02%~~1.12% of loans at ~~June~~September 30, 2007. Nonperforming loans for Vision Bank were ~~$59.5~~$79.3 million or ~~8.76%~~11.6% of loans at ~~June~~September 30, 2008, $63.5 million or ~~9.86%~~9.93% of loans at December 31, 2007 and ~~$6.5~~$26.3 million or ~~1.06%~~4.3% of loans at ~~June~~September 30, 2007. Management continues to write down non-performing loans on a timely basis. As of ~~June~~September 30, 2008, partial charge-offs of ~~$3.3~~$3.2 million and ~~$16.3~~$18.5 million have been taken on these loans for ~~the~~ Ohio-based ~~banks~~divisions and Vision Bank, respectively.

Other real estate owned was ~~$19.6~~$19.8 million at ~~June~~September 30, 2008, compared to $13.4 million at December 31, 2007 and ~~$7.2~~$8.1 million at ~~June~~September 30, 2007. At ~~June~~September 30, 2008, Vision Bank had other real estate owned of ~~$12.8~~$13.5 million compared to $7.1 million at December 31, 2007 and ~~$2.5~~$2.4 million at ~~June~~September 30, 2007. Management expects that other real estate owned at Vision Bank will increase in the ~~third and~~ fourth ~~quarters~~quarter as Vision Bank management continues to work through their non-performing loans.

The reserve for loan losses as a percentage of outstanding loans was ~~1.97%~~2.00% at ~~June~~September 30, 2008, 2.06% at December 31, 2007 and ~~1.94%~~1.91% at ~~June~~September 30, 2007. Vision Bank had a reserve for loan losses as a percentage of outstanding loans of ~~2.96%~~3.32% at ~~June~~September 30, 2008 compared to 3.15% at December 31, 2007.

Management provided guidance in Park’s 2007 Annual Report that the loan loss provision for 2008 would be $20 to $25 million and that the annualized net loan charge-off ratio would be approximately .45% to .55%. ~~Based~~Within each of the previous Quarterly Reports on ~~the results for the first quarter of~~Form 10-Q filed by Park during 2008, Management has updated the guidance ~~in the Form 10-Q for the period ended March 31, 2008, indicating that~~on the expected loan loss provision and the net loan charge-off ratio for the twelve months ending December 31, 2008. This was a result of the increased net loan charge-offs for Vision Bank during the first and second quarters of 2008. Within the Quarterly Report on Form 10-Q for the six months ended June 30, 2008. Management disclosed that the provision for loan losses for the twelve months ended December 31, 2008 ~~would~~was expected to be between ~~$25~~$50 to ~~$30~~$60 million and that the ~~annualized~~ net loan charge-off percentage for 2008 would be between ~~.55%~~1.15% to ~~.70%~~1.40%. The actual results for the second quarter of 2008 were worse than anticipated with a loan loss provision of $14.6 million, net loan charge-offs of $14.4 million or 1.34% of average loans annualized. While non-performing loans only increased by $2.1 million during the second quarter, from $111.3 million at March 31, 2008 to $113.5 million at June 30, 2008, the higher than expected level of net loan charge-offs at Vision Bank for the second quarter related primarily to credits already identified as nonperforming at March 31, 2008. These additional charge-offs for Vision Bank were a result of receiving updated appraisals for the underlying collateral, held primarily in Vision’s Florida markets. The most current ~~projection~~projections by ~~Park’s management indicates that~~Park Management are consistent with the ~~loan loss provision for 2008 will be $50 to $60 million and that~~guidance provided within the ~~annualized net loan charge-off percentage for 2008 will be 1.15% to 1.40%. This projection assumes that the charge-off percentages~~Quarterly Report on Form 10-Q for the ~~Ohio-based banks and Vision Bank remain fairly consistent from the second quarter of 2008 for the third and fourth quarters of~~six months ended June 30, 2008.

~~-35-~~-34-

Total other income for the three months ended September 30, 2008 decreased by $2.0 million, or 10.3%, to $17.1 million compared to $19.1 million for the same period in 2007. For the three quarters ended ~~June 30, 2008 and 2007 was $18.5 million and for the six months ended June~~September 30, 2008, total other income increased by ~~$5.0~~$3.0 million, or ~~14.3%~~5.5%, to ~~$39.6~~$56.7 million compared to ~~$34.6~~$53.7 million for the same period in 2007. The decrease in total other income for the quarter ended September 30, 2008 was primarily due to a combination of a $.9 million reduction in other service income and a $.7 million reduction in the “other” category. The reduction in other service income was due mainly to a reduction in mortgage originations during the quarter, compared to the same period in 2007. The primary reason for the $.7 million decrease in the “Other” category for the third quarter of 2008 as compared to the same period in 2007 was the net losses on other real estate owned, of approximately $900,000 during the third quarter. Vision Bank had losses on the sale of other real estate owned of approximately $900,000 during the third quarter of 2008.

The following table breaks out the change in total other income between Park’s Ohio-based ~~operations~~divisions and Vision Bank.

Changes in Other Income
(In Thousands)
Three Months Ended Six Months Ended
June 30, 2008 June 30, 2008
Ohio-Based Ohio-Based
Other Other Vision
Income Vision Bank Total Income Bank Total
Income from Fiduciary Activities $ 135 $ 4 $ 139 $ 199 $ 9 $ 208
Service Charges on Deposits 31 89 120 500 557 1,057
Other Service Income 53 45 98 283 387 670
Other 49 <325> <276> 3,335 <324> 3,011

$ 268 <$187> $ 81 $ 4,317 $ 629 $ 4,946

Changes in Other Income
(In Thousands)

Three Months Ended

Nine Months Ended

September 30, 2008

Ohio-Based

Vision

Other Income

Vision Bank

Total

Other Income

Bank

Total

Income from Fiduciary Activities

<$261>

<$258>

<$62>

<$50>

Service Charges on Deposits

<183>

<110>

318

629

947

Other Service Income

<480>

<390>

<870>

<197>

<169>

<366>

Other

<759>

<734>

3,358

<915>

2,443

<$899>

<$1,073>

<$1,972>

3,417

<$443>

2,974

Management provided guidance in Park’s 2007 Annual Report that total other income would be between $75.9 million and $77.4 million for 2008. Based on the most recent projections, Management ~~continues to believe~~believes that total other income, ~~for 2008~~before the one-time fees earned from the sale of the credit card portfolio and merchant processing assets of approximately $12 million, will be between $73 million and $75 million for 2008. The net losses from the sales of other real estate owned during the third quarter of 2008, of approximately ~~$76 million.~~$900,000, have been a factor in this reduction from the original projection.

Gain (Loss) on Sale of Securities

During the second quarter of 2008, Park realized a gain of $587,000 from the sale of $55 million of U.S. Governmental Agency securities. These securities had an interest rate of 6.03% and were callable during the third quarter of 2008. The securities were sold with a give up yield of approximately 3.10% to the call date. For the first ~~six~~nine months of 2008, Park has sold $80 million of U.S. Governmental Agency securities, for total gains year to date of $896,000. These securities were callable in 2008 and were sold with a give up yield of approximately 3.10%. The proceeds from the sale of the investment securities were generally reinvested in U.S. Governmental Agency, 15 year mortgage-backed securities.

Total Other Expense

Total other ~~expense~~expenses increased by ~~$1.9~~$56.7 million, or ~~4.60%~~132.3% to ~~$44.4~~$99.5 million for the quarter ended ~~June~~September 30, 2008 ~~from $42.5~~compared to $42.8 million for the comparable period in 2007. Without the goodwill impairment charge related to the acquisition of Vision Bank, other expense increased by $1.7 million, or 3.9% to $44.5 million for the third quarter of 2008, compared to the same period in 2007. ~~Total~~For the first nine months of 2008, total other expense increased by ~~$5.9~~$62.6 million, or ~~7.24%~~50.2% to ~~$87.7~~$187.2 million from $124.6 million for the same period in 2007. Without the goodwill impairment charge, total other expense for the first ~~six~~nine months of 2008 ~~compared~~increased by $7.6 million, or 6.1% to ~~$81.8~~$132.2 million from $124.6 million for the same period in 2007. Total other expense for Vision Bank without the goodwill impairment charge increased by ~~$1.6 million~~$194,000 and ~~$6.3~~$6.5 million for the three and ~~six~~nine month periods ended ~~June~~September 30, 2008 ~~respectively,~~as compared to the same periods in 2007. ~~The~~Total other expense for the Ohio-based ~~banks had an increase of $350,000~~divisions increased by $1.5 million and ~~a decrease of $400,000~~$1.1 million for the three and ~~six~~nine month periods ended ~~June~~September 30, ~~2008, respectively, compared to the same periods in 2007.~~2008.

~~-37-~~-36-

The following table is a summary of the changes in the components of total other expense.


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
(In Thousands)	2008		2007		Change		2008		2007		Change		2008		2007		Change		2008		2007		Change
Salaries and Employee Benefits	$	24,486	$	24,735		<$249>	$	49,157	$	47,796	$	1,361	$	25,105	$	24,980	$	125	$	74,262	$	72,776	$	1,486
Net Occupancy Expense		2,883		2,794		89		5,908		5,354		554		2,850		2,700		150		8,758		8,054		704
Furniture and Equipment Expense		2,576		2,381		195		4,893		4,557		336		2,412		2,407		5		7,305		6,964		341
Data Processing Fees		1,895		1,724		171		3,651		3,064		587		1,785		1,838		<53>		5,436		4,902		534
Professional Fees and Service Charges		2,837		2,666		171		5,689		5,173		516
Professional Fees and Services														3,078		2,545		533		8,767		7,718		1,049
Amortization of Intangibles		1,007		1,037		<30>		2,013		1,722		291		1,008		1,037		<29>		3,021		2,759		262
Marketing		1,130		1,324		<194>		2,128		2,477		<349>		1,179		1,273		<94>		3,307		3,750		<443>
Insurance		423		334		89		860		670		190		878		377		501		1,738		1,047		691
Postage and Telephone		1,811		1,727		84		3,696		3,364		332		1,769		1,773		<4>		5,465		5,137		328
State Taxes		705		719		<14>		1,469		1,453		16		758		703		55		2,227		2,156		71
Goodwill Impairment Charge														54,986		—		54,986		54,986		—		54,986
Other		4,680		3,039		1,641		8,246		6,159		2,087		3,671		3,184		487		11,917		9,343		2,574

Total Other Expense	$	44,433	$	42,480	$	1,953	$	87,710	$	81,789	$	5,921	$	99,479	$	42,817	$	56,662	$	187,189	$	124,606	$	62,583

Park’s management continues to focus on controlling expenses during 2008. The number of full-time equivalent employees for Park was ~~2,069~~2,060 at ~~June~~September 30, 2008 compared to ~~2,076~~2,071 at ~~June~~September 30, 2007, which is a decrease of 711 FTE. Vision Bank had an increase in full-time equivalent employees of 2611 to ~~211~~207 at ~~June~~September 30, 2008 compared to ~~185~~196 at ~~June~~September 30, 2007. Vision Bank added employees to their loan administration area and new branches during the last twelve months. Park’s Ohio-based ~~banks~~divisions had a decrease in full time equivalent employees of 3322 employees or ~~1.75%~~1.2% to ~~1,858~~1,853 at ~~June~~September 30, 2008 from ~~1,891~~1,875 at ~~June~~September 30, 2007. Ohio-based banks opened three offices during the last twelve-months, with a total of 18 full-time equivalent employees. Without these new offices, Park’s Ohio-based banks would have had a decrease of 51 full-time equivalent employees. This decrease infor the Ohio-based ~~banks~~divisions is a result of management’s continued efforts of improving efficiency. ~~Management is working on consolidating Park’s eight Ohio-based banks into one common operating system.~~ All of Park’s Ohio-based ~~bank charters will be~~subsidiary banks were merged into the lead bank, The Park National Bank, during the third quarter of 2008. ~~This process of merging~~Management continues to work on consolidating Park’s Ohio-based divisions into one common operating system (known as Project EPS), which is expected to be completed during the second half of 2009.

~~The subcategory “other”~~Professional fees and services increased by $437,000 and $830,000 for the ~~Ohio-based banks increased by $511,000 for the second quarter of~~three and nine months ended September 30, 2008 compared to the same ~~period~~periods last year, for the Ohio-based divisions. This was primarily due to increased expenditures incurred related to project EPS.

The subcategory “insurance” for Vision Bank has increased by $309,000 and $526,000 for the three and nine months ended September 30, 2008, compared to the same periods in 2007, due to a modification in the ~~other-than-temporary~~manner to which FDIC assessments were recorded in the general ledger. In addition, Vision Bank has experienced an increase in their assessment rates from the FDIC.

The sub-category “other” for the Ohio-based divisions increased by $347,000 during the quarter and $1.1 million during the nine months ended September 30, 2008, primarily due to “other-than-temporary” impairment ~~on investment securities~~charges of ~~$439,000.~~$335,000 and $774,000, respectively. See Note 8 —Investment Securities of the Notes to Consolidated Condensed Financial Statements.

The subcategory “other” for Vision Bank increased by ~~$1.1~~$1.5 million for the ~~second quarter~~nine months ended September 30, 2008 compared to the same period in 2007 primarily due to a $930,000 write-down of one property included within “other real estate owned” assets, based on an updated appraisal, obtained in the ordinary course of business.

Management provided guidance in Park’s 2007 Annual Report that total other expense would be approximately $177 million for 2008. Management continues to believe that this estimate is accurate.

Income Tax

Federal income tax expense was ~~$6.8~~$5.9 million for the ~~second~~third quarter of 2008 and state income tax expense was a credit of <$~~548,000>~~547,000>. For the first ~~six~~nine months of 2008, federal income tax was ~~$16.1~~$22.0 million and state income tax was a credit of <$~~700,000>~~1.2 million>. Vision Bank is subject to state income tax in the states of Alabama and Florida. State tax was a credit for both the three and ~~six~~nine month periods ended ~~June~~September 30, 2008 because Vision Bank had losses for those periods. Park and its Ohio-based ~~subsidiary banks~~divisions do not pay state income tax to the state of Ohio, but pay a franchise tax based on year-end equity. The franchise tax is included in “state taxes” as part of total other expense on Park’s Consolidated Condensed Statements of Income.

Federal income tax expense was ~~$9.8~~$8.6 million for the ~~second~~third quarter of 2007 and state income tax for the same period was ~~$159,000.~~$5,700. For the first ~~six~~nine months of 2007, federal income tax was ~~$18.3~~$26.9 million and state income taxes were ~~$197,000.~~$203,000.

-38-

~~The~~

Substantially all of the $55 million impairment charge to goodwill from Vision Bank was not tax deductible and therefore should be excluded when comparing effective tax rates from period to period. Excluding the impairment charge to goodwill, the federal effective income tax ratio ~~(federal income taxes divided by income before taxes) was 27.9%~~would have been 26.9% for the ~~second quarter of~~three months ended September 30, 2008 ~~compared~~compare to ~~29.4%~~28.7% for the ~~second quarter of~~same period in 2007. ~~For~~Excluding the ~~first six months of 2008,~~impairment charge to goodwill, the federal effective tax rate ~~was 28.5%~~would have been 28.1% for the first nine months of 2008 compared to ~~29.0%~~28.9% for the same period in 2007. A lower effective federal income tax rate than the statutory rate of 35% is primarily due to tax-exempt interest income from state and municipal investments and loans, low income housing tax credits and income from bank owned life insurance.

Management provided guidance in Park’s 2007 Annual Report that the federal effective income tax rate for 2008 will be approximately 29.4%. ~~Due~~Management updated this guidance within the Quarterly Report for the Form 10-Q for the six months ended June 30, 2008, with an updated projection of 28.5% for 2008. The adjustment to the ~~large~~projected federal effective income tax rate for the twelve months ended December 31, 2008 was due to loan loss ~~provision during~~provisions exceeding expected levels. Excluding the ~~second quarter of 2008 and the projected large loan loss provision for the second half of 2008, management now believes that~~impairment charge to goodwill, Management projects the federal effective income tax rate ~~for 2008 will~~to be consistent with the prior projection at approximately 28.5%.

~~-39-~~

Comparison of Financial Condition
At ~~June~~September 30, 2008 and December 31, 2007

Changes in Financial Condition and Liquidity

Total assets increased by ~~$319~~$299 million, or ~~4.9%~~4.6% to ~~$6,820~~$6,800 million at ~~June~~September 30, 2008 compared to $6,501 million at December 31, 2007. Approximately ~~$159~~$100 million of this increase iswas due to investment securities purchases (net) and approximately ~~$142~~$243 million of the increase was due to the increase in loans for the first ~~six~~nine months of the year. These increases to assets were offset by the non-cash reduction to goodwill and other intangibles of approximately $55 million.

Total investment securities (including interest bearing deposits) increased by ~~$159~~$104 million to ~~$1,862~~$1,807 million at ~~June~~September 30, 2008 from $1,703 million at December 31, 2007. During the first ~~six~~nine months of 2008, management purchased $432 million of investment securities. These consist of U.S. Government Agencies yielding approximately 4.95%. Management expects that the investment securities portfolio will decrease as a result of pay-downs in the ~~third and~~ fourth ~~quarters~~quarter of 2008.

Loan balances increased by approximately ~~$142~~$243 million to ~~$4,366~~$4,467 million at ~~June~~September 30, 2008 from $4,224 million at December 31, 2007. The Ohio-based ~~banks~~divisions had loan growth of ~~$101~~$198 million for the first ~~six~~nine months of 2008 and Vision Bank experienced loan growth of ~~$41~~$45 million for the same period.

Total liabilities increased by ~~$321~~$349 million during the first ~~six~~nine months of 2008 to ~~$6,242~~$6,270 million from $5,921 million at December 31, 2007. ~~Total borrowings increased by $248 million during the first six months, primarily to fund the increases in both the investment portfolio and loans.~~

Total deposits increased by ~~$93~~$336 million to ~~$4,532~~$4,775 million at ~~June~~September 30, 2008 from $4,439 million at December 31, 2007. Deposits at the Ohio-based ~~banks~~divisions increased by ~~$121~~$355 million to ~~$3,903~~$4,137 million at ~~June~~September 30, 2008 from $3,782 million at December 31, 2007. Vision Bank deposits decreased by ~~$28~~$19 million during the first ~~six~~nine months of 2008 to ~~$629~~$638 million from $657 million at December 31, 2007. The primary reasons for the large increase in deposits at the Ohio-based affiliates during the first nine months of 2008 are net new money in the CDARS program of $68 million, net new brokered certificates of deposit of $191 million, and $103 million in new money transferred in from the Trust Department of PNB.

Total borrowings only increased by $15 million during the first nine months of 2008 to $1,405 million from $1,390 million at December 31, 2007.

-39-

Total stockholders’ equity decreased by ~~$2.0~~$50 million to ~~$578~~$530 million at ~~June~~September 30, 2008 from $580 million at December 31, 2007. Retained earnings ~~increased~~have decreased by $3$48.5 million during the ~~six~~nine months ended ~~June~~September 30, 2008 due to: (i) the net income of ~~$41.2~~$2.8 million, which was more than offset by (ii) the declaration of dividends of ~~$26.2~~$39.4 million, (iii) $11.6 million booked as a reduction to retained earnings ~~for~~in connection with the adoption of EITF 06-04 (see Note 1211 —Recent Accounting Pronouncements to the Notes to Consolidated Condensed Financial Statements in this Quarterly Report on Form 10-Q), and (iv) recording an adjustment of $0.3 million to retained earnings due to the measurement date provisions of SFAS No. 158 ~~for $.3 million.~~. Accumulated other comprehensive (loss) increased by ~~$4.9~~$1.8 million to ($~~7.5)~~4.4) million at ~~June~~September 30, 2008. This increase was due to the unrealized net holding losses on available for sale securities of ~~$5.0~~$1.7 million, net of taxes, during the ~~six month period, which was partially offset by a reduction consisting of the $60,000 adjustment to record~~nine months ended September 30, 2008 and the unrealized net holding ~~gain,~~loss on cash flow hedge of $42,000, net of ~~taxes, for cash flow hedges.~~taxes.

~~The~~Using net income before the non-cash goodwill impairment charge, the dividend payout ratio for the first ~~six~~nine months of 2008 was ~~63.7%~~68.1% and is expected to be between 65% and 75% for the entire twelve months ended December 31, 2008.

The increase or decrease in the investment securities portfolio and short-term borrowings and long-term debt is greatly dependent upon the growth in loans and deposits. The primary objective of management is to grow loan and deposit totals. To the extent that management is unable to grow loan totals at a desired growth rate, additional investment securities may be acquired. Likewise, both short-term borrowings and long-term debt are utilized to fund the growth in earning assets if the growth in deposits and cash flow from operations isare not sufficient to do so.

~~-40-~~

Effective liquidity management ensures that the cash flow requirements of depositors and borrowers, as well as the operating cash needs of the Corporation, are met. Funds are available from a number of sources, including the securities portfolio, the core deposit base, Federal Home Loan Bank borrowings, and the capability to securitize or package loans for sale. The Corporation’s loan to asset ratio was ~~64.0%~~65.7% at ~~June~~September 30, 2008 compared to 65.0% at December 31, 2007 and ~~66.1%~~64.1% at ~~June~~September 30, 2007. Cash and cash equivalents were ~~$194.6~~$184.0 million at ~~June~~September 30, 2008 compared to $193.4 million at December 31, 2007 and ~~$183.8~~$166.5 million at ~~June~~September 30, 2007. The present funding sources provide more than adequate liquidity for the Corporation to meet its cash flow needs.

As of June 30, 2008, Vision Bank had over $30 million in deposits as a result of the Certificate of Deposit Account Registry Service (“CDARS”). In addition to this program, Management has also issued $10 million in brokered CD’s during the second quarter of 2008. The use of both CDARS and brokered CD’s will be used as needed by management based on funding needs.

Capital Resources

Stockholders’ equity at ~~June~~September 30, 2008 was ~~$578~~$530 million or ~~8.48%~~7.79% of total assets compared to $580 million or 8.92% of total assets at December 31, 2007 and ~~$627.4~~$628 million or ~~10.05%~~9.70% of total assets at ~~June~~September 30, 2007.

The $55 million impairment charge to goodwill from Vision Bank did not impact regulatory capital, as goodwill is excluded from equity for regulatory capital purposes.

Financial institution regulators have established guidelines for minimum capital ratios for banks, thrifts, and bank holding companies. The net unrealized gain or loss on available-for-sale securities is generally not included in computing regulatory capital. The minimum leverage capital ratio (defined as stockholders’ equity less intangible assets divided by tangible assets) is 4% and the well capitalized ratio is greater than or equal to 5%. Park’s leverage ratio was ~~6.91%~~6.87% at ~~June~~September 30, 2008 and 7.10% at December 31, 2007. The minimum Tier 1 risk-based capital ratio (defined as leverage capital divided by risk-adjusted assets) is 4% and the well capitalized ratio is greater than or equal to 6%. Park’s Tier 1 risk-based capital ratio was ~~9.91%~~9.80% at ~~June~~September 30, 2008 and 10.16% at December 31, 2007. The minimum total risk-based capital ratio (defined as leverage capital plus supplemental capital divided by risk-adjusted assets) is 8% and the well capitalized ratio is greater than or equal to 10%. Park’s total risk-based capital ratio was ~~11.71%~~11.59% at ~~June~~September 30, 2008 and 11.97% December 31, 2007.

-40-

Contractual Obligations and Commitments

In the ordinary course of operations, Park enters into certain contractual obligations. Such obligations include the funding of operations through debt issuances as well as leases for premises. See page 32 of Park’s 2007 Annual Report to Shareholders (Table 12) for disclosure concerning contractual obligations and commitments at December 31, 2007. There were no significant changes in contractual obligations and commitments during the first ~~six~~nine months of 2008.

Financial Instruments with Off-Balance Sheet Risk

All of the ~~subsidiary~~affiliate banks of Park are party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of their respective customers. These financial instruments include loan commitments and standby letters of credit. The instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the financial statements.

The exposure to credit loss (for the subsidiary banks of Park) in the event of nonperformance by the other party to the financial instrument for loan commitments and standby letters of credit is represented by the contractual amount of those instruments. Park ~~(and all~~and each of its subsidiary ~~banks) uses~~banks use the same credit policies in making commitments and conditional obligations as ~~it does~~they do for on-balance sheet instruments. Since many of the loan commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extended loan commitments to customers.

The total amounts of off-balance sheet financial instruments with credit risk were as follows:


(In Thousands)	June 30, 2008		December 31, 2007		September 30, 2008		December 31, 2007
Loan Commitments	$	958,421	$	995,775	$	1,005,610	$	995,775
Unused Credit Card lines		131,932		132,242		131,836		132,242
Standby Letters of Credit		29,387		30,009		26,441		30,009

ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Management reviews interest rate sensitivity on a bi-monthly basis by modeling the financial statements under various interest rate scenarios. The primary reason for these efforts is to guard Park from adverse impacts of unforeseen changes in interest rates. Management continues to believe that further changes in interest rates will have a small impact on net income, consistent with the disclosure on pages 31 and 32 of Park’s 2007 Annual Report to Shareholders, which is incorporated by reference into Park’s 2007 Form 10-K.

On page 31 (Table 11) of Park’s 2007 Annual Report to Shareholders, management reported that Park’s twelve month cumulative rate sensitivity gap was a positive (assets exceeding liabilities) $178 million or 3.0% of interest earning assets at December 31, 2007. At ~~June~~September 30, 2008, Park’s twelve month cumulative rate sensitivity gap ~~decreased to a negative (liabilities~~positive (assets exceeding ~~assets) $43~~liabilities) $113 million or ~~.69%~~1.79% of interest earning assets. ~~The most significant factor contributing to this change in the~~Park’s twelve-month cumulative rate sensitivity gap ~~was the purchase of $432 million in investment securities during the first six months of the year, which were funded with shorter-term borrowings.~~continues to be relatively balanced and stable.

Management supplements the interest rate sensitivity gap analysis with periodic simulations of balance sheet sensitivity under various interest rate and what-if scenarios to better forecast and manage the net interest margin. Management uses a 50 basis point change in market interest rates per quarter for a total of 200 basis points per year in evaluating the impact of changing interest rates on net interest income and net income over a twelve month horizon.

On page 32 of Park’s 2007 Annual Report to Shareholders, management reported that at December 31, 2007, the earnings simulation model projected that net income would increase by 0.2% using a rising interest rate scenario and decrease by 0.6% using a declining interest rate scenario over the next year. At ~~June~~September 30, 2008, the earnings simulation model projected that net income would increase by ~~0.1%~~1.1% using a rising interest rate scenario and ~~remain unchanged~~decrease by 1.2% using a declining interest rate scenario. At ~~June~~September 30, 2008, management continues to believe that gradual changes in interest rates (50 basis points per quarter for a total of 200 basis points per year) will have a small impact on net income.

~~-43-~~-42-

ITEM 4 — CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

With the participation of the Chairman of the Board and Chief Executive Officer (the principal executive officer) and the Chief Financial Officer (the principal financial officer) of Park, Park’s management has evaluated the effectiveness of Park’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the quarterly period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, Park’s Chairman of the Board and Chief Executive Officer and Park’s Chief Financial Officer have concluded that:

information required to be disclosed by Park in this Quarterly Report on Form 10-Q and other reports that Park files or submits under the Exchange Act would be accumulated and communicated to Park’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure;

information required to be disclosed by Park in this Quarterly Report on Form 10-Q and the other reports that Park files or submits under the Exchange Act would be recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and

Park’s disclosure controls and procedures were effective as of the end of the quarterly period covered by this Quarterly Report on
Form 10-Q.

Changes in Internal Control Over Financial Reporting

There were no changes in Park’s internal control over financial reporting (as defined in Rule 13a — 15(f) under the Exchange Act) that occurred during Park’s fiscal quarter ended ~~June~~September 30, 2008, that have materially affected, or are reasonably likely to materially affect, Park’s internal control over financial reporting.

~~-44-~~-43-

PARK NATIONAL CORPORATION

PART II — OTHER INFORMATION

Item 1.Legal Proceedings

There are no pending legal proceedings to which Park or any of its subsidiaries is a party or to which any of their property is subject, except for routine legal proceedings to which Park’s subsidiary banks are parties incidental to their respective banking business. Park considers none of those proceedings to be material.

Item 1A.Risk Factors

There are certain risks and uncertainties in our business that could cause our actual results to differ materially from those anticipated. In “ITEM 1A. RISK FACTORS” of Part I of Park’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007 (the “2007 Form 10-K”), we included a detailed discussion of our risk factors. The following information updates certain of our risk factors and should be read in conjunction with the risk factors disclosed in the 2007 Form 10-K. These risk factors should be read carefully in connection with evaluating our business and in connection with the forward-looking statements contained in this Quarterly Report on Form 10-Q. Any of the risks described below or in the 2007 Form 10-K could materially adversely affect our business, financial condition or future results and the actual outcome of matters as to which forward-looking statements are made. These are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Changes in economic and political conditions could adversely affect our earnings, as our borrowers’ ability to repay loans and the value of the collateral securing our loans decline.

Our success depends, to a certain extent, upon economic and political conditions, local and national, as well as governmental monetary policies. Conditions such as inflation, recession, unemployment, changes in interest rates, money supply and other factors beyond our control may adversely affect our asset quality, deposit levels and loan demand and, therefore, our earnings. Because we have a significant amount of real estate loans, decreases in real estate values could adversely affect the value of property used as collateral. Adverse changes in the economy may also have a negative effect on the ability of our borrowers to make timely repayments of their loans, which would have an adverse impact on our earnings. The substantial majority of the loans made by our subsidiaries are to individuals and businesses in Ohio or in Gulf Coast communities in Alabama and the Florida panhandle. Consequently, a significant continued decline in the economy in Ohio or in Gulf Coast communities in Alabama or the panhandle of Florida could have a materially adverse effect on our financial condition and results of operations.

~~-45-~~-44-

As disclosed earlier within this Form 10-Q, we continue to experience difficult credit conditions in the ~~Ohio and~~ Florida markets in which we operate. ~~Net loan charge-offs were 1.08% and 0.26% of average loans on an annualized basis for~~For the first ~~six~~nine months of 2008, ~~and 2007, respectively.~~Vision Bank has experienced $25.2 million in net loan charge-offs, or an annualized 5.01% of average loans. For the ~~second~~third quarter of 2008, ~~net loan charge-offs on an annualized basis were 1.34% of average loans, compared to 0.28% for~~ the ~~same period in 2007. Net~~net loan charge-offs for Vision Bank were ~~$16.3~~$8.9 million, or an annualized 5.18% of average loans. The loan loss provision for Vision Bank was $27.7 million and $11.5 million for the ~~first six months of~~nine and three month periods ended September 30, 2008, ~~or 4.92% of average loans on an annualized basis.~~respectively. Nonperforming loans, defined as loans that are 90 days past due, nonaccrual and renegotiated loans, were $132.3 million or 2.96% of loans at September 30, 2008, $113.5 million or 2.60% of loans at June 30, 2008, $111.3 million or 2.62% of loans at March 31, 2008, $108.5 million or 2.57% of loans at December 31, 2007, and ~~$42.4~~$37.8 million or ~~1.03%~~1.07% of loans at ~~June 30,~~September 31, 2007. At ~~June~~September 30, 2008 Vision Bank had non-performing loans of $79.3 million or 11.6% of loans compared to $59.5 million ~~of non-performing loans.~~at June 30, 2008. It isremains uncertain when the negative credit trends in our markets ~~(and nationally)~~ will reverse. As a result, Park’s future earnings ~~are~~continue to be susceptible to further declining credit conditions in the markets in which we operate.

U.S. and international credit markets and economic conditions as well as the governmental response to those markets and conditions could adversely affect our liquidity and financial condition.

The global and U.S. economies are experiencing significantly reduced business activity as a result of, among other factors, disruptions in the financial system during the past year. Dramatic declines in the housing market during the past year, with falling home prices and increasing foreclosures and unemployment, have resulted in significant write-downs of asset values by financial institutions, including government-sponsored entities and major commercial and investment banks. These write-downs, initially of mortgage-backed securities but spreading to credit default swaps and other derivative securities have caused many financial institutions to seek additional capital, to merge with larger and stronger institutions and, in some cases, to fail.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

	(a.)		~~(a.)~~ Not applicable

	(b.)		~~(b.)~~ Not applicable

	(c.)		~~(c.)~~ No purchases of Park’s common shares were made by or on behalf of Park or any “affiliated purchaser” as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as amended, during the three months ended ~~June~~September 30, 2008. The following table provides information concerning changes in the maximum number of common shares that may be purchased under Park’s previously announced repurchase programs as a result of the forfeiture of previously outstanding incentive stock options:


			~~Average Price~~		Total Number of Common		Maximum Number of
	Total Number of		~~Paid Per~~Average Price		Shares Purchased as Part of		Common Shares that May
	Common Shares		~~Common~~Paid Per		Publicly Announced Plans		Yet be Purchased Under the
Period	Purchased		Common Share		or Programs		Plans or ~~Programs(1)~~Programs (1)
~~April~~July 1 thru ~~April 30, 2008~~		—		—		—		~~1,797,352~~
~~May 1 thru~~ ~~May~~July 31, ~~2008~~		—		—		—		~~1,797,352~~
~~June 1 thru~~ ~~June 30,~~ 2008		—		—		—		1,675,546
August 1 thru August 31, 2008		—		—		—		1,674,547
September 1 thru September 30, 2008		—		—		—		1,673,948

Total		—		—		—		~~1,675,546~~1,673,948


(1)		The number shown represents, as of the end of each period, the maximum aggregate number of common shares that may yet be purchased as part of Park’s publicly announced stock repurchase authorization to fund the Park National Corporation 2005 and 1995 Incentive Stock Option Plans as well as Park’s publicly announced stock repurchase program.

		On July 16, 2007, Park announced that its Board of Directors authorized management to purchase up to an aggregate of 1 million common shares over the three-year period ending July 15, 2010 in open market purchases or through privately negotiated transactions, to be held as treasury shares for general corporate purposes. During 2007, Park purchased 7,826 common shares under this authorization. At June 30, 2008, 992,174 common shares remained authorized for repurchase under this stock repurchase authorization. No treasury shares have been purchased in 2008.

On July 16, 2007, Park announced that its Board of Directors authorized management to purchase up to an aggregate of 1 million common shares over the three-year period ending July 15, 2010 in open market purchases or through privately negotiated transactions, to be held as treasury shares for general corporate purposes. During 2007, Park purchased 7,826 common shares under this authorization. At September 30, 2008, 992,174 common shares remained authorized for repurchase under this stock repurchase authorization. No treasury shares have been purchased in 2008.

~~-46-~~-45-


		The Park National Corporation 2005 Incentive Stock Option Plan (the “2005 Plan”) was adopted by the Board of Directors of Park on January 18, 2005 and was approved by the Park shareholders at the Annual Meeting of Shareholders on April 18, 2005. Under the 2005 Plan, 1,500,000 common shares are authorized for delivery upon the exercise of incentive stock options granted under the 2005 Plan. All of the common shares delivered upon the exercise of incentive stock options granted under the 2005 Plan are to be treasury shares. As of June 30, 2008, incentive stock options covering 284,537 common shares were outstanding and 1,215,463 common shares were available for future grants.

		The Park National Corporation 1995 Incentive Stock Option Plan (the “1995 Plan”) was adopted April 17, 1995, and amended April 20, 1998 and April 16, 2001. Pursuant to the terms of the 1995 Plan, all of the common shares delivered upon exercise of incentive stock options granted under the 1995 Plan are to be treasury shares. No further incentive stock options may be granted under the 1995 Plan. As of June 30, 2008, incentive stock options covering 180,388 common shares were outstanding.

		Incentive stock options, granted under both the 2005 Plan and the 1995 Plan, covering 464,925 common shares were outstanding as of June 30, 2008 and 1,215,463 common shares were available for future grants. With 997,016 common shares held as treasury shares for purposes of the 2005 Plan and 1995 Plan at June 30, 2008, an additional 683,372 common shares remain authorized for repurchase for purposes of funding the 2005 Plan and 1995 Plan.

The Park National Corporation 2005 Incentive Stock Option Plan (the “2005 Plan”) was adopted by the Board of Directors of Park on January 18, 2005 and was approved by the Park shareholders at the Annual Meeting of Shareholders on April 18, 2005. Under the 2005 Plan, 1,500,000 common shares are authorized for delivery upon the exercise of incentive stock options granted under the 2005 Plan. All of the common shares delivered upon the exercise of incentive stock options granted under the 2005 Plan are to be treasury shares. As of September 30, 2008, incentive stock options covering 282,171 common shares were outstanding and 1,217,829 common shares were available for future grants.

The Park National Corporation 1995 Incentive Stock Option Plan (the “1995 Plan”) was adopted April 17, 1995, and amended April 20, 1998 and April 16, 2001. Pursuant to the terms of the 1995 Plan, all of the common shares delivered upon exercise of incentive stock options granted under the 1995 Plan are to be treasury shares. No further incentive stock options may be granted under the 1995 Plan. As of September 30, 2008, incentive stock options covering 178,790 common shares were outstanding.

Incentive stock options, granted under both the 2005 Plan and the 1995 Plan, covering 460,961 common shares were outstanding as of September 30, 2008 and 1,217,829 common shares were available for future grants. With 997,016 common shares held as treasury shares for purposes of the 2005 Plan and 1995 Plan at September 30, 2008, an additional 681,774 common shares remain authorized for repurchase for purposes of funding the 2005 Plan and 1995 Plan.

Item 3.Defaults Upon Senior Securities

Not applicable.

Item 4.Submission of Matters to a Vote of Security Holders

Not applicable.

Item 5.Other Information

(a), (b) Not applicable

Item 6.Exhibits

Exhibits


~~Exhibits~~2.1		Agreement to Merge, entered into as of May 21, 2008, by and between (a) each of (i) The Richland Trust Company, (ii) Century National Bank, (iii) The First-Knox National Bank of Mount Vernon, (iv) United Bank, National Association (also referred to as United Bank, N.A.), (v) Second National Bank, (vi) The Security National Bank and Trust Co. and (vii) The Citizens National Bank of Urbana; and (b) The Park National Bank

2.2		Credit Card Account Purchase Agreement by and between U.S. Bank National Association ND, d/b/a Elan Financial Services and The Park National Bank (also known as Park National Bank), executed on October 10, 2008 with an effective date of September 30, 2008¹ (incorporated herein by reference to Exhibit 2.1 to Park National Corporation’s Current Report on Form 8-K dated and filed on October 14, 2008 (File No. 1-13006))


¹		The schedules referenced in the Credit Card Account Purchase Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Park National Corporation hereby agrees to furnish supplementally a copy of any such omitted schedule to the Credit Card Account Purchase Agreement to the Securities and Exchange Commission upon its request.

-46-


~~Exhibits~~

3.1(d)		Certificate of Amendment by Shareholders to the Articles of Incorporation of Park National Corporation as filed with the Ohio Secretary of State on April 22, 1997 (incorporated herein by reference to Exhibit 3(a)(1) to Park National Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1997 (File No. 1-13006) (“Park’s June 30, 1997 Form 10-Q”))

3.1(e)		Articles of Incorporation of Park National Corporation (reflecting amendments through April 22, 1997) [for SEC reporting compliance purposes only — not filed with Ohio Secretary of State] (incorporated herein by reference to Exhibit 3(a)(2) to Park’s June 30, 1997 Form 10-Q)

3.2(a)		Regulations of Park National Corporation (incorporated herein by reference to Exhibit 3(b) to Park’s Form 8-B)

3.2(b)		Certified Resolution regarding Adoption of Amendment to Subsection 2.02(A) of the Regulations of Park National Corporation by Shareholders on April 21, 1997 (incorporated herein by reference to Exhibit 3(b)(1) to Park’s June 30, 1997 Form 10-Q)

3.2(c)		Certificate Regarding Adoption of Amendments to Sections 1.04 and 1.11 of Park National Corporation’s Regulations by the Shareholders on April 17, 2006 (incorporated herein by reference to Exhibit 3.1 to Park National Corporation’s Current Report on Form 8-K dated and filed on April 18, 2006 (File No. 1-13006))

3.2(d)		Certificate Regarding Adoption by the Shareholders of Park National Corporation on April 21, 2008 of Amendment to Regulations to Add New Section 5.10 to Article Five (incorporated herein by reference to Exhibit 3.2 (d) to Park National Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2008 (File No. 1-13006) (“Park’s March 31, 2008 Form 10-Q”))

3.2(e)		Regulations of Park National Corporation (reflecting amendments through April 21, 2008) [For purposes of SEC reporting compliance only] (incorporated herein by reference to Exhibit 3.2 (e) to Park’s March 31, 2008 Form 10-Q)

-47-


	Page
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements		~~3-24~~
		3-23
Consolidated Condensed Balance Sheets as of ~~June~~September 30, 2008 and December 31, 2007 (unaudited)		3

Consolidated Condensed Statements of Income for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2008 and 2007 (unaudited)		~~4-5~~
		4-5
Consolidated Condensed Statements of Changes in Stockholders’ Equity for the ~~Six~~Nine Months Ended ~~June~~September 30, 2008 and 2007 (unaudited)		6

Consolidated Condensed Statements of Cash Flows for the ~~Six~~Nine Months Ended ~~June~~September 30, 2008 and 2007 (unaudited)		7-8

Notes to Consolidated Condensed Financial Statements		~~9-24~~
		9-23
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		~~25-42~~
		24-41
Item 3. Quantitative and Qualitative Disclosures About Market Risk		43
		42
Item 4. Controls and Procedures		4443

PART II. OTHER INFORMATION		~~45-49~~
		44-49
Item 1. Legal Proceedings		45
		44
Item 1A. Risk Factors		~~45-46~~
		44-45
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		~~46-47~~
		45-46
Item 3. Defaults Upon Senior Securities		47
		46
Item 4. Submission of Matters to a Vote of Security Holders		47
		46
Item 5. Other Information		47
		46
Item 6. Exhibits		~~47-48~~
		46-48
SIGNATURES		49
EX-2.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2


	June 30,		December 31,		September 30,		December 31,
(In Thousands)	2008		2007		2008		2007
Commercial, Financial and Agricultural	$	660,223	$	613,282	$	697,637	$	613,282
Real Estate:
Construction		549,421		536,389		544,823		536,389
Residential		1,518,450		1,481,174		1,536,229		1,481,174
Commercial		1,012,818		993,101		1,032,512		993,101
Consumer		620,521		593,388		651,384		593,388
Leases		4,596		6,800		4,086		6,800

Total Loans	$	4,366,029	$	4,224,134	$	4,466,671	$	4,224,134


	June 30,			Dec. 31,			June 30,			September 30,			June 30,			Dec. 31,			September 30,
Nonperforming Assets	2008			2007			2007			2008			2008			2007			2007
	(Dollars in Thousands)
Nonaccrual Loans	$	105,992		$	101,128		$	35,333		$	126,336		$	105,992		$	101,128		$	58,031
Renegotiated Loans		1,686			2,804			3,421			1,575			1,686			2,804			3,413
Loans Past Due 90 Days or More		5,795			4,545			3,645			4,388			5,795			4,545			4,734

Total Nonperforming Loans	$	113,473		$	108,477		$	42,399		$	132,299		$	113,473		$	108,477		$	66,178


Other Real Estate Owned		19,620			13,443			7,181			19,750			19,620			13,443			8,065

Total Nonperforming Assets	$	133,093		$	121,920		$	49,580		$	152,049		$	133,093		$	121,920		$	74,243


Percentage of Nonperforming Loans to Loans		2.60	%		2.57	%		1.03	%		2.96	%		2.60	%		2.57	%		1.58	%
Percentage of Nonperforming Assets to Loans plus Other Real Estate Owned		3.03	%		2.88	%		1.20	%		3.39	%		3.03	%		2.88	%		1.78	%
Percentage of Nonperforming Assets to Total Assets		1.95	%		1.88	%		.79	%		2.24	%		1.95	%		1.88	%		1.14	%


				Tier I			Total
	Leverage			Risk-Based			Risk-Based
Park National Bank		5.26	%		7.83	%		10.60	%
Richland Trust Company		5.73	%		11.82	%		13.08	%
Century National Bank		6.08	%		9.21	%		10.81	%
First-Knox National Bank		5.39	%		7.87	%		10.35	%
Second National Bank		5.36	%		8.60	%		10.75	%
United Bank, N.A.		6.49	%		11.81	%		13.07	%
Security National Bank		6.33	%		9.68	%		11.11	%
Citizens National Bank		6.94	%		14.25	%		15.50	%
Vision Bank		9.34	%		11.21	%		12.47	%
Park National Corporation		6.91	%		9.91	%		11.71	%
Minimum Capital Ratio		4.00	%		4.00	%		8.00	%
Well Capitalized Ratio		5.00	%		6.00	%		10.00	%


Operating Results for the Three Months Ended June 30, 2008											Balances at
(In Thousands)											June 30, 2008
					Other Income
					and
	Net Interest		Provision for		Gain on Sale		Other		Net Income
	Income		Loan Losses		of Securities		Expense		(Loss)		Assets
PNB	$	20,893	$	1,270	$	7,481	$	12,975	$	9,664	$	2,376,663
RTC		4,822		310		1,550		2,591		2,281		525,341
CNB		6,910		100		2,402		4,010		3,429		740,083
FKNB		8,288		340		2,095		4,674		3,531		818,564
UB		1,977		<50>		680		1,378		895		216,698
SNB		3,661		320		630		1,935		1,395		451,601
SEC		7,305		380		2,352		4,881		2,986		808,203
CIT		1,267		—		429		961		501		142,559
VIS		6,835		11,455		1,042		7,310		<6,702>		932,221
All Other		2,368		444		469		3,718		211		<191,700>

TOTAL	$	64,326	$	14,569	$	19,130	$	44,433	$	18,191	$	6,820,233


Fair Value Measurements at Reporting Date Using
Significant Unobservable Inputs (Level 3)
(In Thousands)	AFS Securities
Beginning Balance, at January 1, 2008	$	2,969
Total Unrealized (Losses)/Gains Included in Other Comprehensive Income		<128>

Ending Balance	$	2,841


Park-Summary Income Statement
(In Thousands)
	Three Months Ended							Six Months Ended
	June 30,							June 30,
					Percent							Percent
	2008		2007		Change			2008		2007		Change
Net Interest Income	$	64,326	$	60,410		6.5	%	$	125,810	$	115,308		9.1	%
Provision for Loan Losses		14,569		2,881		405.7	%		21,963		5,086		331.8	%
Other Income		18,543		18,462		.4	%		39,582		34,636		14.3	%
Gain on Sale of Securities		587		—		—			896		—	—
Other Expense		44,433		42,480		4.6	%		87,710		81,789		7.2	%

Income Before Taxes	$	24,454	$	33,511	<27.0%>			$	56,615	$	63,069	<10.2%>
Income Taxes		6,263		10,001	<37.4%>				15,446		18,496	<16.5%>

Net Income	$	18,191	$	23,510	<22.6%>			$	41,169	$	44,573	<7.6%>


Three Months Ended June 30,
	2008					2007
	Average		Tax			Average		Tax
(In Thousands)	Balance		Equivalent %			Balance		Equivalent %
Loans	$	4,311,989		7.01	%	$	4,094,719		8.19	%
Taxable Investments		1,814,270		5.02	%		1,472,540		4.98	%
Tax Exempt Investments		48,264		6.92	%		66,943		6.61	%
Money Market Instruments		14,695		2.06	%		20,497		5.36	%

Interest Earning Assets	$	6,189,218		6.40	%	$	5,654,699		7.33	%

Interest Bearing Deposits	$	3,767,366		2.34	%	$	3,815,458		3.34	%
Short-Term Borrowings		737,128		2.23	%		375,335		4.55	%
Long-Term Debt		833,073		3.79	%		599,667		4.28	%

Interest Bearing Liabilities	$	5,337,567		2.55	%	$	4,790,460		3.55	%
Excess Interest Earning Assets	$	851,651				$	864,239
Net Interest Spread				3.85	%				3.78	%
Net Interest Margin				4.20	%				4.32	%


Six Months Ended June 30,
	2008					2007
	Average		Tax			Average		Tax
(In Thousands)	Balance		Equivalent %			Balance		Equivalent %
Loans	$	4,270,706		7.26	%	$	3,864,224		8.09	%
Taxable Investments		1,730,316		5.04	%		1,482,535		5.01	%
Tax Exempt Investments		52,250		6.82	%		67,787		6.69	%
Money Market Instruments		13,098		2.68	%		21,939		5.33	%

Interest Earning Assets	$	6,066,370		6.60	%	$	5,436,485		7.22	%

Interest Bearing Deposits	$	3,767,713		2.59	%	$	3,597,186		3.22	%
Short-Term Borrowings		654,538		2.71	%		366,242		4.50	%
Long-Term Debt		802,364		3.89	%		603,182		4.26	%

Interest Bearing Liabilities	$	5,224,615		2.80	%	$	4,566,610		3.46	%
Excess Interest Earning Assets	$	841,755				$	869,875
Net Interest Spread				3.80	%				3.76	%
Net Interest Margin				4.19	%				4.31	%


Changes in Other Income
(In Thousands)
	Three Months Ended						Six Months Ended
	June 30, 2008						June 30, 2008
	Ohio-Based						Ohio-Based
	Other						Other		Vision
	Income		Vision Bank		Total		Income		Bank		Total
Income from Fiduciary Activities	$	135	$	4	$	139	$	199	$	9	$	208
Service Charges on Deposits		31		89		120		500		557		1,057
Other Service Income		53		45		98		283		387		670
Other		49		<325>		<276>		3,335		<324>		3,011

	$	268		<$187>	$	81	$	4,317	$	629	$	4,946


3.1(a)		Articles of Incorporation of Park National Corporation as filed with the Ohio Secretary of State on March 24, 1992 (incorporated herein by reference to Exhibit 3(a) to Park National Corporation’s Form 8-B, filed on May 20, 1992 (File No. 0-18772) (“Park’s Form 8-B”))

3.1(b)		Certificate of Amendment to the Articles of Incorporation of Park National Corporation as filed with the Ohio Secretary of State on May 6, 1993 (incorporated herein by reference to Exhibit 3(b) to Park National Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 1993 (File No. 0-18772))

3.1(c)		Certificate of Amendment to the Articles of Incorporation of Park National Corporation as filed with the Ohio Secretary of State on April 16, 1996 (incorporated herein by reference to Exhibit 3(a) to Park National Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1996 (File No. 1-13006))


~~10.1~~		Split-Dollar Agreement, made and entered into effective as of May 19, 2008, between The Park National Bank and David L. Trautman (incorporated herein by reference to Exhibit 10.1 to Park National Corporation’s Current Report on Form 8-K dated and filed on May 20, 2008. (File No. 1-13006))

31.1		Rule 13a — 14(a) / 15d — 14(a) Certification (Principal Executive Officer)

31.2		Rule 13a — 14(a) / 15d — 14(a) Certification (Principal Financial Officer)

32.1		Section 1350 Certification (Principal Executive Officer)

32.2		Section 1350 Certification (Principal Financial Officer)


	PARK NATIONAL CORPORATION
DATE: November 4, 2008	BY:	/s/ C. Daniel DeLawder

~~DATE:~~ ~~August 4, 2008~~		~~BY: /s/~~ C. Daniel DeLawder ~~C. Daniel DeLawder~~
		Chairman of the Board and Chief Executive Officer


~~DATE:~~ ~~August 4, 2008~~
DATE: November 4, 2008	BY: ~~/s/~~	/s/ John W. Kozak
		John W. Kozak
		Chief Financial Officer