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Benefit Plan | 12 Months Ended
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Dec. 31, 2022
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] |
Benefit Plans | Benefit Plans The Corporation has a noncontributory Defined Benefit Pension Plan (the “Pension Plan”) covering substantially all of the employees of Park National Corporation and its subsidiaries. The Pension Plan provides benefits based on an employee’s years of service and compensation. There was no pension contribution in 2022 or 2021 and no contribution is expected to be made in 2023. Using accrual measurement dates of December 31, 2022 and 2021, plan assets and benefit obligation activity for the Pension Plan are listed below:
(In thousands) |  | 2022 |  | 2021
Change in fair value of plan assets |  |  |  |
Fair value at beginning of measurement period |  | $ | 263,473 |  |  | $ | 230,442 |
Actual return on plan assets |  | (37,319) |  |  | 48,138 |
Benefits paid |  | (17,016) |  |  | (15,107) |
Fair value at end of measurement period |  | $ | 209,138 |  |  | $ | 263,473 |
Change in benefit obligation |  |  |  |
Projected benefit obligation at beginning of measurement period |  | $ | 182,964 |  |  | $ | 184,410 |
Service cost |  | 9,749 |  |  | 9,916 |
Interest cost |  | 5,705 |  |  | 5,359 |
Plan amendments |  | 558 |  |  | — |
Actuarial loss |  | (54,566) |  |  | (1,614) |
Benefits paid |  | (17,016) |  |  | (15,107) |
Projected benefit obligation at the end of measurement period |  | $ | 127,394 |  |  | $ | 182,964 |
Funded status at end of year (fair value of plan assets less benefit obligation) |  | $ | 81,744 |  |  | $ | 80,509 |
The decrease in the projected benefit obligation ("PBO") from $183.0 million as of December 31, 2021 to $127.4 million as of December 31, 2022, was the result of an increase in the discount rate from 3.23% to 5.32% and assumption updates for IRS mortality tables, partially offset by demographic losses driven by termination experience, salary increases greater than assumed, and the impact of plan amendments. The asset allocation for the Pension Plan as of each measurement date, by asset category, was as follows:
|  |  |  | Percentage of Plan Assets
Asset category |  | Target Allocation |  | 2022 |  | 2021
Equity securities |  | 50% - 100% |  | 84 | % |  | 82 | %
Fixed income and cash equivalents |  | remaining balance |  | 16 | % |  | 18 | %
Total |  |  |  | 100 | % |  | 100 | %
The investment policy, as established by the Retirement Plan Committee, is to invest assets according to the target allocation stated above. Assets will be reallocated periodically based on the investment strategy of the Retirement Plan Committee. The investment policy is reviewed periodically. The expected long-term rate of return on plan assets used to measure the benefit obligation was 6.92% at both December 31, 2022 and December 31, 2021. This return was based on the expected long-term return of each of the asset categories, weighted based on the median of the target allocation for each class. The accumulated benefit obligation for the Pension Plan was $106.3 million and $146.2 million at December 31, 2022 and 2021, respectively. On November 17, 2009, the Park Pension Plan completed the purchase of 115,800 common shares of Park for $7.0 million or $60.45 per share. At December 31, 2022 and 2021, the fair value of the 115,800 common shares held by the Pension Plan was $16.3 million, or $140.75 per share and $15.9 million, or $137.31 per share, respectively. The weighted average assumptions used to determine benefit obligations at December 31, 2022, 2021 and 2020 were as follows:
|  | 2022 |  | 2021 |  | 2020
Discount rate |  | 5.32 | % |  | 3.23 | % |  | 3.00 | %
Rate of compensation increase |  |  |  |  |  |
Under age 30 |  | 8.25 | % |  | 8.25 | % |  | 8.25 | %
Ages 30-39 |  | 6.00 | % |  | 6.00 | % |  | 6.00 | %
Ages 40-49 |  | 5.00 | % |  | 5.00 | % |  | 5.00 | %
Ages 50-54 |  | 4.25 | % |  | 4.25 | % |  | 4.25 | %
Ages 55-59 |  | 3.75 | % |  | 3.75 | % |  | 3.75 | %
Ages 60-64 |  | 3.50 | % |  | 3.50 | % |  | 3.50 | %
Ages 65 and over |  | 3.25 | % |  | 3.25 | % |  | 3.25 | %
Interest crediting rate |  | 4.07 | % |  | N/A |  | N/A
The estimated future pension benefit payments reflecting expected future service for the next ten years are shown below (in thousands):
2023 | $ | 9,684 |
2024 | 9,769 |
2025 | 10,143 |
2026 | 10,111 |
2027 | 11,053 |
2028-2032 | 51,388 |
Total | $ | 102,148 |
The following table shows ending balances of accumulated other comprehensive loss at December 31, 2022 and 2021.
(In thousands) |  | 2022 |  | 2021
Prior service (cost) credit |  | $ | (436) |  |  | $ | 137 |
Net actuarial loss |  | (8,020) |  |  | (7,469) |
Total |  | (8,456) |  |  | (7,332) |
Deferred taxes |  | 1,776 |  |  | 1,540 |
Accumulated other comprehensive loss |  | $ | (6,680) |  |  | $ | (5,792) |
Using actuarial measurement dates of December 31 for 2022, 2021 and 2020, components of net periodic benefit income and other amounts recognized in other comprehensive (loss) income were as follows:
(In thousands) |  | 2022 |  | 2021 |  | 2020 | Affected Line Item in the Consolidated Statements of Income
Components of net periodic benefit income (loss) and other amounts recognized in other comprehensive (loss) income
Service cost |  | $ | (9,749) |  |  | $ | (9,916) |  |  | $ | (8,319) |  | Employee benefits
Interest cost |  | (5,705) |  |  | (5,359) |  |  | (5,283) |  | Other components of net periodic benefit income
Expected return on plan assets |  | 17,798 |  |  | 15,731 |  |  | 14,410 |  | Other components of net periodic benefit income
Recognized net actuarial loss and prior service cost |  | 15 |  |  | (2,220) |  |  | (1,175) |  | Other components of net periodic benefit income
Net periodic benefit income (loss) |  | $ | 2,359 |  |  | $ | (1,764) |  |  | $ | (367) |  |
Net actuarial (loss) gain and prior service credit |  | $ | (1,109) |  |  | $ | 34,019 |  |  | $ | (10,981) |  |
Amortization of net (gain) loss |  | (15) |  |  | 2,220 |  |  | 1,175 |  |
Total recognized in other comprehensive (loss) income |  | (1,124) |  |  | 36,239 |  |  | (9,806) |  |
Total recognized in net benefit income (loss) and other comprehensive income (loss) |  | $ | 1,235 |  |  | $ | 34,475 |  |  | $ | (10,173) |  |
The weighted average assumptions used to determine net periodic benefit income (loss) for the years ended December 31, 2022, 2021 and 2020 are listed below:
|  | 2022 |  | 2021 |  | 2020
Discount rate |  | 3.23 | % |  | 3.00 | % |  | 3.53 | %
Rate of compensation increase |  |  |  |  |  |
Under age 30 |  | 8.25 | % |  | 8.25 | % |  | 10.00 | %
Ages 30-39 |  | 6.00 | % |  | 6.00 | % |  | 6.00 | %
Ages 40-49 |  | 5.00 | % |  | 5.00 | % |  | 4.00 | %
Ages 50-54 |  | 4.25 | % |  | 4.25 | % |  | 3.00 | %
Ages 55-59 |  | 3.75 | % |  | 3.75 | % |  | 3.00 | %
Ages 60-64 |  | 3.50 | % |  | 3.50 | % |  | 3.00 | %
Ages 65 and over |  | 3.25 | % |  | 3.25 | % |  | 3.00 | %
Expected long-term return on plan assets |  | 6.92 | % |  | 7.00 | % |  | 7.00 | %
U.S. GAAP defines fair value as the price that would be received by Park for an asset or paid by Park to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date, using the most advantageous market for the asset or liability. The fair values of equity securities, consisting of mutual fund investments and common stock held by the Pension Plan, are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs). Additionally, due to their short-term nature, the fair value of interest bearing demand deposits is determined by reference to their face value (Level 1 inputs). Interest bearing time deposits, United States Government agency obligations and corporate bonds are valued by the trustee based on yields available on comparable securities of issuers with similar credit ratings as of the end of the year (Level 2 inputs). No investments were categorized as Level 3 inputs. The fair value of the plan assets at December 31, 2022 and December 31, 2021, by asset class, is as follows.
| Fair Value Measurements | Fair Value Measurements
| at December 31, 2022, Using | at December 31, 2021, Using
(In thousands) | (Level 1) | (Level 2) | (Level 1) | (Level 2)
Interest-bearing account | $ | 1,959 |  | $ | 3,910 |  | $ | 3,222 |  | $ | 4,731 |
Mutual funds | 46,093 |  | — |  | 60,987 |  | — |
U.S. Government agency obligations | — |  | 12,513 |  | — |  | 15,254 |
Corporate bonds | — |  | 12,562 |  | — |  | 16,815 |
Common stocks | 132,101 |  | — |  | 162,464 |  | — |
Total | $ | 180,153 |  | $ | 28,985 |  | $ | 226,673 |  | $ | 36,800 |
Salary Deferral Plan The Corporation has a voluntary salary deferral plan (the Corporation's Employees Stock Ownership Plan) covering substantially all of the employees of the Corporation and its subsidiaries. Eligible employees may contribute a portion of their compensation subject to a maximum statutory limitation. The Corporation provides a matching contribution established annually by the Corporation. Contribution expense for the Corporation was $4.6 million, $4.3 million, and $4.2 million for 2022, 2021 and 2020, respectively. Supplemental Executive Retirement Plan The Corporation has entered into Supplemental Executive Retirement Plan Agreements (the "SERP Agreements") with certain key officers of Park National Corporation and its subsidiaries which provide defined pension benefits in excess of limits imposed by federal income tax law. The accrued benefit cost for the SERP Agreements totaled $14.2 million and $13.4 million for 2022 and 2021, respectively, and is recorded within "Other liabilities" on the Consolidated Balance Sheet. The expense for the Corporation was as follows:
(In thousands) |  | 2022 |  | 2021 |  | 2020 |  | Affected Line Item in the Consolidated Statements of Income
Service cost |  | $ | 1,091 |  |  | $ | 1,345 |  |  | $ | 1,680 |  |  | Employee benefits
Interest cost |  | 564 |  |  | 510 |  |  | 403 |  |  | Miscellaneous expense
Total SERP expense |  | $ | 1,655 |  |  | $ | 1,855 |  |  | $ | 2,083 |  |  |

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