Filed pursuant to Rule 424(b)(3)

Registration No. 333-138028

 

Anderson Bank Company
1075 Nimitzview Drive
Cincinnati, Ohio 45230
(513) 232-9599

 

 

 

 

 

Notice of Special Meeting of Shareholders
To Be Held on December 14, 2006

 

 

 

 

 

To the Shareholders of Anderson Bank Company:

 

Notice is hereby given that a special meeting of the shareholders of Anderson Bank Company will be held on December 14, 2006 at 3:00 p.m., Eastern Time, at the main office of Anderson Bank Company, 1075 Nimitzview Drive, Cincinnati, Ohio 45230, for the purpose of considering and voting on the following matters:

 

1. A proposal to adopt the Second Amended and Restated Agreement and Plan of Merger, dated to be effective as of August 14, 2006, by and among Park National Corporation, The Park National Bank and Anderson Bank Company, and to approve the merger of Anderson Bank Company with and into The Park National Bank; and

 

2. A proposal to approve the adjournment of the special meeting, if necessary, to solicit additional proxies, in the event there are not sufficient votes at the time of the special meeting to adopt the Second Amended and Restated Agreement and Plan of Merger and approve the merger; and

 

3. Any other business which properly comes before the special meeting or any adjournment or postponement of the special meeting. The Board of Directors is unaware of any other business to be transacted at the special meeting.

 

Holders of record of Anderson Bank Company common shares at the close of business on November 6, 2006, the record date, are entitled to notice of and to vote at the special meeting and any adjournment or postponement of the special meeting.

 

A prospectus/proxy statement and proxy card for the special meeting are enclosed.

 

Your vote is very important, regardless of the number of Anderson Bank Company common shares you own. Please vote as soon as possible to make sure that your common shares are represented at the special meeting. To vote your common shares, you may complete and return the enclosed proxy card. If you are a holder of record, you also may cast your vote in person at the special meeting.

 

The Anderson Bank Company Board of Directors recommends that you vote “FOR” the adoption of the Second Amended and Restated Agreement and Plan of Merger and approval of the merger.

 

By Order of the Board of Directors,

 

 

James R. Gudmens

President and Chief Executive Officer

 

Cincinnati, Ohio
November 14, 2006

 

Park National Corporation (“Park”), The Park National Bank (“PNB”) and Anderson Bank Company (“Anderson”) have entered into a Second Amended and Restated Agreement and Plan of Merger, dated to be effective as of August 14, 2006 (the “merger agreement”), which provides for the merger of Anderson with and into PNB. We cannot complete the merger unless the holders of at least two-thirds of the issued and outstanding Anderson common shares adopt the merger agreement and approve the merger. The Board of Directors of Anderson has called a special meeting of shareholders to vote on the adoption of the merger agreement and approval of the merger. The date, time and place of the special meeting are as follows:

 

December 14, 2006 at 3:00 p.m., Eastern Time

Anderson Bank Company

1075 Nimitzview Drive

Cincinnati, Ohio 45230

 

Subject to adjustment for cash paid in lieu of fractional shares in accordance with the terms of the merger agreement, the shareholders of Anderson will receive aggregate consideration consisting of (i) 86,137 Park common shares and (ii) $9,054,343 less the sum of the exercise prices of all Anderson common shares subject to outstanding Anderson stock options which have not been exercised in full prior to the deadline set forth in the merger agreement. We anticipate that all outstanding Anderson stock options will be exercised in full prior to the deadline, in which case the aggregate cash consideration to be received by Anderson shareholders in the merger would be $9,054,343 (subject to adjustment for cash paid in lieu of fractional shares).

 

Anderson shareholders will be entitled to elect to receive, in exchange for each Anderson common share that they own, either (i) Park common shares, (ii) cash, or (iii) a combination of Park common shares and cash. The exact number of Park common shares and exact amount of cash to be received in exchange for each Anderson common share will be calculated using formulas set forth in the merger agreement and described in this prospectus/proxy statement. See “The Merger Agreement — Conversion of Anderson common shares” beginning on page 35 of this prospectus/proxy statement. The elections of Anderson shareholders will be subject to allocation procedures, however, to ensure that the aggregate consideration received by Anderson shareholders in the merger consists of the number of Park common shares and the amount of cash described above. As a result, there is no assurance that you will receive the form of consideration that you elect to receive.

 

The Park common shares are listed on the American Stock Exchange LLC (“AMEX”) under the symbol “PRK.” On November 6, 2006, the last practicable trading day for which information was available prior to the date of this prospectus/proxy statement, the closing price of the Park common shares as reported on AMEX was $100.79 per share.

 

An investment in the common shares of Park involves certain risks. For a discussion of these risks, see “Risk Factors” beginning on page 9 of this prospectus/proxy statement.

 

Whether or not you plan to attend the Anderson special meeting, please complete, sign and return the enclosed proxy card in the enclosed postage-paid envelope. Not voting will have the same effect as voting against the adoption of the merger agreement and approval of the merger. We urge you to read carefully this prospectus/proxy statement, which contains a detailed description of the merger, the merger agreement and related matters.

 

The securities to be issued under this prospectus/proxy statement are not savings accounts, deposit accounts or other obligations of any bank or savings association and are not insured by the Federal Deposit Insurance Corporation, the Deposit Insurance Fund or any other federal or state governmental agency. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Park common shares to be issued in the merger or determined if this prospectus/proxy statement is truthful or complete. Any representation to the contrary is a criminal offense.

 

This prospectus/proxy statement is dated November 13, 2006, and is being first mailed to Anderson shareholders on or about November 14, 2006.

Additional Information

 

This prospectus/proxy statement incorporates important business and financial information about Park from other documents that Park has filed with or furnished to the Securities and Exchange Commission but that have not been included in or delivered with this prospectus/proxy statement. You may obtain these documents, without charge, by writing or calling Park at:

 

Park National Corporation

50 North Third Street

Newark, Ohio 43055

Attention: John W. Kozak

(740) 349-8451

 

In order to ensure timely delivery of documents, any requests for documents should be made no later than five business days before the December 14, 2006 special meeting of the shareholders of Anderson. Accordingly, requests should be received by Park no later than December 7, 2006.

 

See “Incorporation by Reference” on page 12 and “Where You Can Find More Information” on page 56 for more information about the documents referred to in this prospectus/proxy statement.

TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary

	•	all Park common shares;
	•	all cash; or
	•	a mixture of cash and Park common shares.

	•	A proposal to adopt the Second Amended and Restated Agreement and Plan of Merger, dated to be effective as of August 14, 2006, by and among Park, PNB and Anderson, and to approve the merger of Anderson with and into PNB; and
	•	A proposal to approve the adjournment of the special meeting, if necessary, to solicit additional proxies, in the event there are not sufficient votes at the time of the special meeting to adopt the Second Amended and Restated Agreement and Plan of Merger and approve the merger; and
	•	Any other business which properly comes before the special meeting or any adjournment or postponement of the special meeting. The Board of Directors is unaware of any other business to be transacted at the special meeting.

	•	James R. Gudmens, President and Chief Executive Officer of Anderson, has a Change in Control Agreement with Anderson entitling him to a lump sum payment of $100,000 upon a change of control of Anderson. The merger of Anderson with and into PNB as contemplated by the merger agreement would constitute a “change of control” under the terms of Mr. Gudmen’s Change in Control Agreement. Mr. Gudmens plans to retire upon the closing of the merger.
	•	Park has agreed to purchase directors’ and officers’ liability insurance for the directors and officers of Anderson for a period of three years after the merger. Park also has agreed to indemnify the directors, officers and employees of Anderson for certain actions or omissions in the course of their duties as directors, officers and employees of Anderson occurring prior to the merger, including, without limitation, the transactions contemplated by the merger agreement.

 

In addition to other information in this prospectus/proxy statement or incorporated in this prospectus/proxy statement by reference, you should carefully consider the risk factors discussed in “Item 1A. Risk Factors” of Part I of Park’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005, incorporated by reference into this prospectus/proxy statement, which could materially affect Park’s business, financial condition or future results, as well as the following factors:

 

Fluctuation in the market price of the Park common shares will affect the value of the consideration that you receive in the merger.

 

Subject to adjustment for cash paid in lieu of fractional shares in accordance with the terms of the merger agreement, the shareholders of Anderson will receive aggregate consideration consisting of (i) 86,137 Park common shares and (ii) $9,054,343 less the sum of the exercise prices of all Anderson common shares subject to outstanding Anderson stock options which have not been exercised in full prior to the deadline set forth in the merger agreement. Because the aggregate merger consideration will not be adjusted in the event of any increase or decrease in the price of the Park common shares, the total value of the merger consideration received by Anderson shareholders in the merger will vary with fluctuations in the value of the Park common shares.

 

The information presented in the following table reflects (a) the last reported sale prices for the Park common shares on August 11, 2006, the last trading day preceding our public announcement of the merger, and on November 6, 2006, the last practicable trading day for which information was available prior to the date of this prospectus/proxy statement, (b) the total value of the merger consideration based on these sale prices and (c) the value of the merger consideration per Anderson common share based on these sale prices.

 

 

 

 

Pursuant to applicable federal and state law, Anderson shareholders will be permitted to exercise dissenters’ rights for a period of 30 days following the closing date of the merger. See “Dissenters’ Rights” beginning on page 19 of this prospectus/proxy statement. The merger consideration to be received by each Anderson shareholder cannot be determined or paid until after the expiration of this 30-day period and, as a result, you will not receive your merger consideration until more than 30 days after the closing date of the merger. The market price of the Park common shares may fall during the post-closing period prior to the date that you actually receive your merger consideration. During this period, you will not be able to sell any of the Park common shares that you may be entitled to receive in the merger to avoid losses resulting from any decline in the market price of the Park common shares.

 

On the date the merger closes, the market price of the Park common shares may be higher or lower than the market price on the date the merger agreement was signed, on the date this prospectus/proxy statement was mailed to you, or on the date of the Anderson special meeting. Therefore, you cannot be assured of receiving any specific value of consideration in the merger.

You may receive a form of consideration different from the form of consideration you elect.

 

Although you will have an opportunity to elect the form of consideration you wish to receive in the merger, your election will be subject to the allocation procedures described in this prospectus/proxy statement to ensure that, subject to adjustment for cash paid in lieu of fractional shares, the aggregate consideration received by Anderson shareholders in the merger consists of (i) 86,137 Park common shares and (ii) $9,054,343 less the sum of the exercise prices of all Anderson common shares subject to outstanding Anderson stock options which have not been exercised in full prior to the deadline set forth in the merger agreement. If you elect to receive all cash and the available cash is oversubscribed, then you may receive a portion of the merger consideration in the form of Park common shares. If you elect to receive all Park common shares and the available Park common shares are oversubscribed, then you may receive a portion of the merger consideration in cash. If you elect to receive a combination of cash and Park common shares and either the available Park common shares or the available cash is oversubscribed, you may not receive the specific combination of cash and Park common shares that you request.

 

Park and PNB could experience difficulties in managing their growth and effectively integrating Anderson and Vision.

 

Park and PNB may not be able to achieve fully the strategic objectives and operating efficiencies in the merger. The costs or difficulties relating to the integration of Anderson with PNB may be greater than expected or the costs savings or any revenue synergies of the combined entities may be lower or take longer to realize than expected. Inherent uncertainties exist in integrating the operations of any acquired entity. In addition, the markets and industries in which Park, PNB and Anderson operate are highly competitive. PNB may lose its customers or the customers of Anderson as a result of the merger. PNB may also lose key personnel, either from itself or from Anderson, as a result of the merger. These factors could contribute to Park and PNB not fully achieving the expected benefits from the merger. Similarly, Park’s proposed acquisition of Vision involves the same risks described herein.

 

The termination fee may discourage other companies from trying to acquire Anderson even if the other acquisition could offer higher immediate value to Anderson shareholders.

 

Pursuant to the merger agreement, Anderson has agreed to pay Park a termination fee of $600,000, if (a) the merger agreement is terminated by Anderson because its Board of Directors has authorized the execution of a definitive written agreement concerning a “superior proposal,” or (b) the merger agreement is terminated by Anderson or Park for certain specified reasons and, within 12 months after the termination of the merger agreement, Anderson consummates or enters into an agreement relating to a previously-announced acquisition proposal. This termination fee could have the effect of discouraging other companies from trying to acquire Anderson, even if the other acquisition could offer higher immediate value to Anderson shareholders.

 

The fairness opinion obtained by Anderson from its financial advisor will not reflect changes in circumstances prior to the merger.

 

Professional Bank Services, Inc., the financial advisor to Anderson, delivered a fairness opinion to the Board of Directors of Anderson on August 11, 2006, which fairness opinion has been updated as of the date of this prospectus/proxy statement. The fairness opinion states that, as of the date of the opinion, the merger consideration set forth in the merger agreement was fair and equitable from a financial perspective to the Anderson shareholders. The fairness opinion does not reflect changes that may occur or may have occurred after the date of this prospectus/proxy statement, including changes to the operation and prospects of Park or Anderson, changes in general market and economic conditions, or other factors. Any such changes, or other factors on which the fairness opinion is based, may alter the relative value of Park and Anderson.

 

Some directors and officers of Anderson have potential conflicts of interest in the merger.

 

Some of the directors and officers of Anderson have interests in the merger that are different from, or in addition to, their interests as shareholders of Anderson. For example, James R. Gudmens, President and

Chief Executive Officer of Anderson, has a Change in Control Agreement with Anderson entitling him to a lump sum payment of $100,000 upon a change of control of Anderson. In addition, Park has agreed to purchase directors’ and officers’ liability insurance for the directors and officers of Anderson for a period of three years after the merger. These and certain other additional interests of Anderson’s directors and executive officers may cause these persons to view the proposed merger differently than you view it. See “The Proposed Merger (Proposal One) — Interests of Anderson directors and officers in the merger” beginning on page 30 of this prospectus/proxy statement.

 

Anderson’s shareholders will not control Park’s future operations.

 

Following the merger, Anderson shareholders in the aggregate will become the owners of less than 1% of the approximately 13.9 million outstanding Park common shares after the merger. As a result, former Anderson shareholders will not have a significant impact on the election of directors or on whether future proposals submitted to a vote of Park shareholders are approved or rejected.

 

Changes in interest rates could have a material adverse effect on Park’s financial condition and results of operations.

 

Park’s earnings depend substantially on interest rate spread, which is the difference between (i) the rates Park earns on loans, investment securities and other interest earning assets and (ii) the interest rates Park pays on deposits and borrowings. These rates are highly sensitive to many factors beyond Park’s control, including general economic conditions and the policies of various governmental and regulatory authorities. While Park has taken measures intended to manage the risks of operating in a changing interest rate environment, there can be no assurance that such measures will be effective in avoiding undue interest rate risk.

 

Certain statements contained in this prospectus/proxy statement which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, the statements specifically identified as forward-looking statements within this prospectus/proxy statement. In addition, certain statements in future filings by Park with the Securities and Exchange Commission, in press releases, and in oral and written statements made by or with the approval of Park which are not statements of historical fact constitute forward-looking statements within the Private Securities Litigation Reform Act. Examples of forward-looking statements include: (i) projections of income or expense, earnings per share, the payment or non-payment of dividends, capital structure and other financial items; (ii) statements of plans and objectives of Park or its Board of Directors or management, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as “believes”, “anticipates”, “expects”, “intends”, “targeted”, and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying those statements.

 

The Private Securities Litigation Reform Act provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information so long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying the important factors that could cause actual results to differ materially from those discussed in the forward-looking statements. We desire to take advantage of the “safe harbor” provisions of that Act.

 

Forward-looking statements involve risks and uncertainties. Actual results may differ materially from those predicted by the forward-looking statements because of various factors and possible events, including those factors specifically identified as “Risk Factors” in this prospectus/proxy statement and in the documents incorporated by reference into this prospectus/proxy statement. There is also the risk that Park’s Board of Directors or management incorrectly analyzes these risks and forces, or that the strategies Park develops to address them are unsuccessful.

 

Forward-looking statements speak only as of the date on which they are made, and, except as may be required by law, Park undertakes no obligation to update any forward-looking statement to reflect events or circumstances

after the date on which the statement is made to reflect unanticipated events. All subsequent written and oral forward-looking statements attributable to Park or any person acting on its behalf are qualified in their entirety by the cautionary statements set forth in this prospectus/proxy statement and in the documents incorporated by reference into this prospectus/proxy statement.

 

The Securities and Exchange Commission allows Park to “incorporate by reference” into this prospectus/proxy statement. This means that Park can disclose important information to you by referring you to another document separately filed with or furnished to the Securities and Exchange Commission. The information incorporated by reference is deemed to be part of this prospectus/proxy statement, except for any information superseded by information contained in this prospectus/proxy statement or in later-filed documents incorporated by reference in this prospectus/proxy statement. You should read the information relating to Park contained in this prospectus/proxy statement and the information in the documents incorporated by reference.

 

Anderson is not required to make filings with the Securities and Exchange Commission and, therefore, does not similarly incorporate information or documents into this prospectus/proxy statement.

 

This prospectus/proxy statement incorporates by reference the documents listed below that Park has previously filed with or furnished to the Securities and Exchange Commission and any future filings made by it with the Securities and Exchange Commission before the special meeting of shareholders to be held on December 14, 2006, under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended.

 

 

This prospectus/proxy statement incorporates by reference important business and financial information that is not included or delivered with it. You can request a free copy of any or all of these documents, including exhibits that are specifically incorporated by reference into these documents, by writing to or calling the individual set forth below at the following address or telephone number:

 

Park National Corporation

50 North Third Street

Newark, Ohio 43055

Attention: John W. Kozak

(740) 349-8451

 

In order to ensure timely delivery of documents, any requests for documents should be made no later than five business days before the December 14, 2006 special meeting of the shareholders of Anderson. Accordingly, requests should be received by Park no later than December 7, 2006.

 

You may also obtain copies of the documents from the Securities and Exchange Commission through its website. See “Where You Can Find More Information” on page 56.

Following the merger, Park will continue to be regulated by the information, reporting and proxy statement requirements of the Securities Exchange Act of 1934, as amended.

 

Park has supplied all information contained or incorporated by reference in this prospectus/proxy statement relating to Park, and Anderson has supplied all information contained in this prospectus/proxy statement relating to Anderson.

 

You should rely only on the information which is contained in this prospectus/proxy statement or to which we have referred in this prospectus/proxy statement. We have not authorized anyone to provide you with information that is different.

 

Park common shares are listed on AMEX under the symbol “PRK.” Anderson common shares have never been traded on an exchange or quoted in the automated quotation system of a registered securities association. There exists no established public trading market for Anderson common shares.

 

The information presented in the following table reflects the last reported sale prices for Park common shares on August 11, 2006, the last trading day preceding our public announcement of the merger, and on November 6, 2006, the last practicable trading day for which information was available prior to the date of this prospectus/proxy statement. No assurance can be given as to what the market price of Park common shares will be if and when the merger is consummated.

 

We have calculated the Anderson Bank Company Equivalent Per Share Price by multiplying the last reported sale price of Park common shares on the dates indicated by the relevant stock exchange ratios calculated in accordance with the terms of the merger agreement. We have assumed, for purposes of this calculation, that all outstanding Anderson stock options will be exercised in full prior to the deadline set forth in the merger agreement. The applicable formulas and other assumptions used in calculating the relevant stock exchange ratios are described under the heading “The Merger Agreement — Conversion of Anderson common shares” beginning on page 35 of this prospectus/proxy statement.

 

Park National Corporation and Anderson Bank Company
Comparative Market Value

 

 

The following table sets forth selected consolidated historical data of Park for the periods and at the dates indicated. This data has been derived in part from and should be read together with the audited consolidated financial statements and notes thereto incorporated by reference in Park’s Annual Report on Form 10-K for the year ended December 31, 2005, which is incorporated herein by reference. Financial data at September 30, 2005 and 2006, and for the nine months ended September 30, 2005 and 2006, are derived from unaudited financial data included in Park’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2006, which is incorporated herein by reference. See “Incorporation by Reference” on page 12 and “Where You Can Find More Information” on page 56. Park believes that the interim financial data reflect all adjustments (consisting solely of normal recurring accruals) necessary for a fair presentation of results of operations for those periods and financial position at those dates. The results of operations for the nine-month period ended September 30, 2006 are not necessarily indicative of the operating results to be anticipated for the fiscal year ending December 31, 2006.

 

 

 

 

 

The following table sets forth selected historical data of Anderson for the periods and at the dates indicated. This data has been derived in part from and should be read together with the audited financial statements and notes thereto of Anderson for the year ended December 31, 2005. See “Where You Can Find More Information” on page 56. Financial data at September 30, 2005 and 2006, and for the nine months ended September 30, 2005 and 2006, are derived from unaudited financial data of Anderson. Anderson believes that the interim financial data reflect all adjustments (consisting solely of normal recurring accruals) necessary for a fair presentation of results of operations for those periods and financial position at those dates. The results of operations for the nine-month period ended September 30, 2006 are not necessarily indicative of the operating results to be anticipated for the fiscal year ending December 31, 2006.

 

 

 

This prospectus/proxy statement is being provided to you in connection with the solicitation of proxies by the Anderson Board of Directors for use at the special meeting of shareholders to be held on December 14, 2006 at 3:00 p.m., Eastern Time, at the main office of Anderson, 1075 Nimitzview Drive, Cincinnati, Ohio 45230, including any adjournments or reschedulings of that special meeting. At the special meeting, the shareholders of Anderson will be asked to consider and vote upon the following matters:

 

 

The Board of Directors of Anderson has unanimously approved the merger agreement and the merger and recommends a vote “FOR” the adoption of the merger agreement and approval of the merger.

 

The Board of Directors of Anderson has fixed the close of business on November 6, 2006 as the record date for determining the Anderson shareholders who are entitled to notice of and to vote at the special meeting of shareholders. Only holders of Anderson common shares who are holders at the close of business on the record date will be entitled to notice of and to vote at the special meeting.

As of the close of business on November 6, 2006, there were 533,550 Anderson common shares issued and outstanding and entitled to vote at the special meeting. The Anderson common shares were held of record by approximately 160 shareholders. Each Anderson common share entitles the holder to one vote on all matters properly presented at the special meeting.

 

Under provisions of federal law applicable to mergers of state banks into national banks (12 U.S.C. Section 215a), the adoption of the merger agreement and approval of the merger requires the affirmative vote of the holders of at least two-thirds of the Anderson common shares outstanding and entitled to vote at the Anderson special meeting. The affirmative vote of the holders of a majority of the Anderson common shares represented, in person or by proxy, at the special meeting is required to adjourn the special meeting to solicit additional proxies.

 

As of November 6, 2006, directors and executive officers of Anderson and their respective affiliates beneficially owned an aggregate of 163,168 Anderson common shares, excluding outstanding stock options, amounting to 30.6% of the outstanding Anderson common shares as of the record date. As of the date of this prospectus/proxy statement, neither Park nor PNB nor any of their respective directors, executive officers or affiliates beneficially owned any Anderson common shares.

 

A quorum, consisting of the holders of a majority of the outstanding Anderson common shares, must be present in person or by proxy at the Anderson special meeting before any action, other than the adjournment of the special meeting, can be taken. A properly executed proxy card marked “abstain” will not be voted on the adoption of the merger agreement and approval of the merger but will count toward determining whether a quorum is present. Brokers who hold Anderson common shares in “street name” for the beneficial owners cannot vote these Anderson common shares on the adoption of the merger agreement and approval of the merger without specific instructions from the beneficial owners. Because the adoption of the merger agreement and approval of the merger requires the affirmative vote of the holders of two-thirds of the Anderson common shares outstanding and entitled to vote at the special meeting, an abstention or, if your shares are held in “street name,” your failure to instruct your broker how to vote, will have the same effect as a vote against the adoption of the merger agreement and approval of the merger.

 

A proxy card for use at the special meeting accompanies each copy of this prospectus/proxy statement mailed to Anderson shareholders. Your proxy is solicited by the Board of Directors of Anderson. Whether or not you attend the special meeting, the Anderson Board of Directors urges you to return the enclosed proxy card. If you return your properly executed proxy card prior to the special meeting and do not revoke it prior to its use, the Anderson common shares represented by that proxy card will be voted at the special meeting or, if appropriate, at any adjournment of the special meeting. The Anderson common shares will be voted as specified on the proxy card or, in the absence of specific instructions to the contrary, will be voted “FOR” the adoption of the merger agreement and approval of the merger and, if necessary, “FOR” the approval of the adjournment of the special meeting to solicit additional proxies.

 

If you have returned a properly executed proxy card, you may revoke it at any time before a vote is taken at the special meeting by:

 

 

Your attendance at the special meeting will not, by itself, revoke your proxy.

 

If you are an Anderson shareholder whose common shares are not registered in your own name, you will need additional documentation from your record holder in order to vote your Anderson common shares in person at the special meeting.

We do not expect any matter other than the adoption of the merger agreement and approval of the merger and, if necessary, the approval of the adjournment of the special meeting to solicit additional proxies, to be brought before the Anderson special meeting. If any other matters are properly brought before the special meeting for consideration, Anderson common shares represented by properly executed proxy cards will be voted, to the extent permitted under applicable law, in the discretion of the persons named in the proxy card in accordance with their best judgment.

 

Anderson will bear its own cost of solicitation of proxies, except that Anderson, on the one hand, and Park and PNB, on the other, have agreed to share equally the costs (excluding the fees and disbursements of legal counsel, financial advisors and accountants) incurred in connection with preparing (including copying, printing and distributing) this prospectus/proxy statement. Proxies may be solicited by mail and may also be solicited, for no additional compensation, by directors, officers and employees of Anderson. Anderson will also pay the standard charges and expenses of brokerage houses, voting trustees, banks, associations and other custodians, nominees and fiduciaries, who are record holders of Anderson common shares not beneficially owned by them, for forwarding the proxy materials to, and obtaining proxies from, the beneficial owners of Anderson common shares entitled to vote at the special meeting.

 

A properly executed proxy card marked “abstain” will not be voted on the adoption of the merger agreement and approval of the merger but will count toward determining whether a quorum is present. Brokers who hold Anderson common shares in “street name” for the beneficial owners of such Anderson common shares cannot vote these Anderson common shares on the adoption of the merger agreement and approval of the merger without specific instructions from the beneficial owners. Because the adoption of the merger agreement and approval of the merger requires the affirmative vote of the holders of at least two-thirds of the Anderson common shares outstanding and entitled to vote at the special meeting, an abstention or, if your Anderson common shares are held in “street name,” your failure to instruct your broker how to vote, will have the same effect as a vote “Against” the adoption of the merger agreement and approval of the merger.

 

The following is a summary of the steps that you must take if you wish to exercise dissenters’ rights with respect to the merger. This description is not complete. You should read the provisions of 12 U.S.C. Section 215a(b) through (d) and Sections 1115.19 and 1701.85 of the Ohio Revised Code, which are set forth in Annex C to this prospectus/proxy statement, for a more complete discussion of the procedures. If you fail to take any one of the required steps set forth in these provisions, your dissenters’ rights may be terminated. If you are considering dissenting, you should consult your own legal advisor.

 

To exercise dissenters’ rights, you must:

 

 

All written notices and requests should be sent to Anderson Bank Company, 1075 Nimitzview Drive, Cincinnati, Ohio 45230, Attention: James R. Gudmens.

 

If you properly exercise dissenters’ rights pursuant to 12 U.S.C. Section 215a(b), the “fair cash value” of your Anderson common shares will be determined in accordance with Sections 1115.19 and 1701.85 of the Ohio Revised Code. The “fair cash value” is the amount that a willing seller, under no compulsion to sell, would be willing to accept, and that a willing buyer, under no compulsion to purchase, would be willing to pay. Fair cash value is determined as of the day before the special meeting, excluding any appreciation or depreciation in market value of

your Anderson common shares resulting from the merger. The fair cash value of your Anderson common shares may be higher, the same as, or lower than the market value of Anderson common shares on the date of the merger. In no event will the fair cash value be in excess of the amount specified in the dissenting shareholder’s request for payment of the fair cash value.

 

If you do not reach an agreement as to the fair cash value of your Anderson common shares with PNB, as successor by merger to Anderson, you must file a complaint with the Court of Common Pleas of Hamilton County, Ohio, for a determination of the fair cash value of the dissenting shares within three months after service of your written request to Anderson for payment of the fair cash value. The court will then determine the fair cash value per share, and the costs of the proceeding, including reasonable compensation to appraisers, will be assessed as the court considers equitable in accordance with Sections 1115.19 and 1701.85 of the Ohio Revised Code.

 

Your right to receive the fair cash value of your dissenting shares will terminate if:

 

 

Subject to the terms and conditions set forth in the merger agreement, if the holders of at least two-thirds of the Anderson common shares vote to adopt the merger agreement and approve the merger, the proposed acquisition of Anderson by Park will be accomplished through the merger of Anderson with and into PNB.

 

Park.  Park is a bank holding company headquartered in Newark, Ohio. Park and its subsidiaries consist of 12 community banking divisions and two specialty finance companies, all based in Ohio. Park operates 136 offices across 29 Ohio counties and one Kentucky county through the following organizations: The Park National Bank, The Park National Bank of Southwest Ohio & Northern Kentucky Division, Fairfield National Division, The Richland Trust Company, Century National Bank, The First-Knox National Bank of Mount Vernon, Farmers and Savings Division, United Bank, N.A., Second National Bank, The Security National Bank and Trust Co., Unity National Division, The Citizens National Bank of Urbana, Scope Leasing, Inc., and Guardian Financial Services Company.

 

At September 30, 2006, Park had total assets of $5.39 billion, total loans, net of unearned income, of $3.39 billion, total deposits of $3.89 billion and total shareholders’ equity of $558.21 million. Park’s common shares are listed on AMEX under the symbol “PRK.”

 

Recent Developments

 

On September 14, 2006, Park entered into a definitive agreement and plan of merger with Vision Bancshares, Inc. (“Vision”) providing for the merger of Vision with and into Park. Vision is headquartered in Panama City, Florida and had total assets of $697 million at September 30, 2006. Vision operates two community banks, both named Vision Bank. One is headquartered in Gulf Shores, Alabama and the other in Panama City, Florida. At September 30, 2006, the two Vision Bank affiliates had $595 million in deposits and $552 million in loans.

 

Under the terms of the Vision merger agreement, the shareholders of Vision will receive either $25.00 in cash or 0.2475 Park common shares for each share of Vision common stock. The Vision shareholders have the option of receiving cash or Park common shares for their shares of Vision common stock (or any combination thereof), subject to the election and allocation procedures in the Vision merger agreement. However, Park has reserved the right to allocate the Vision shareholder elections on a pro-rata basis so that 50% of the total Vision shares of common stock outstanding at the time of the Vision merger are converted into the right to receive cash and 50% are converted into the right to receive Park common shares. As of September 14, 2006, Vision had 6,066,624 shares of common stock outstanding and outstanding stock options covering an aggregate of 884,834 shares of common stock with a weighted average exercise price of $8.09 per share. Each outstanding stock option (that is not exercised) granted under one of Vision’s equity-based compensation plans will be cancelled and extinguished and converted into the right to receive an amount of cash equal to the product of (a) $25.00 minus the exercise price of the stock option, multiplied by (b) the number of Vision shares of common stock subject to the unexercised portion of the stock option.

 

Assuming that none of the Vision stock options outstanding as of September 14, 2006 are exercised, the shareholders of Vision would receive aggregate consideration consisting of approximately (i) $75.83 million in cash and (ii) 750,745 Park common shares, and the holders of Vision stock options would receive aggregate cash consideration of approximately $14.96 million.

 

The Vision merger transaction is anticipated to be completed during the first quarter of 2007, and is subject to the satisfaction of customary conditions in the Vision merger agreement and the approval of appropriate regulatory authorities and of the shareholders of Vision.

 

PNB.  PNB is a national banking association with its main office located in Newark, Ohio. PNB has financial services offices in Butler, Clermont, Delaware, Fairfield, Franklin, Hamilton, Licking and Montgomery Counties in Ohio and one office in Florence, Kentucky. PNB operates through three banking divisions — the Park National

Division headquartered in Newark, Ohio; the Fairfield National Division headquartered in Lancaster, Ohio; and The Park National Bank of Southwest Ohio & Northern Kentucky Division headquartered in Milford, Ohio.

 

Scope Leasing, Inc., a subsidiary of PNB, specializes in aircraft financing. Scope Leasing, Inc.’s customers include small businesses and entrepreneurs intending to use the aircraft for business or pleasure.

 

Following the merger, Anderson’s two offices will become part of The Park National Bank of Southwest Ohio & Northern Kentucky Division, which currently has 11 offices, several throughout Clermont County, Ohio as well as offices in downtown Cincinnati, West Chester and Dayton, Ohio, and Florence, Kentucky.

 

Anderson.  Anderson is an Ohio state-chartered commercial bank with its main office located in Anderson township on the east side of Cincinnati. Anderson also operates an office in Amelia, Ohio. Anderson offers a variety of deposit and loan accounts for personal and business customers.

 

At September 30, 2006, Anderson had total assets of $70.39 million, total loans, net of unearned income, of $55.24 million, total deposits of $62.36 million and total shareholders’ equity of $7.51 million.

 

Background of the Merger

 

The Anderson Board of Directors regularly discusses with Anderson management the bank’s financial performance and prospects and also considers the bank’s strategy and future outlook. Issues such as competitive developments and succession planning are addressed as part of these discussions.

 

In recent years, there has been, and there continues to be, substantial consolidation in the United States banking and financial services industry. This trend is necessarily of concern to smaller financial institutions like Anderson because larger entities that emerge from consolidation may acquire substantial competitive advantages. Anderson has been dedicated to the goal of providing superior banking services and, in analyzing strategic alternatives, has always sought to ensure that the alternative being considered can reasonably be expected to result in improved services as well as enhanced shareholder value.

 

At its January 18, 2006 meeting, the Anderson Board of Directors decided to explore the bank’s strategic alternatives and authorized the President of Anderson to obtain proposals from both PBS, located in Louisville, Kentucky, and another bank consulting firm located in Toledo, Ohio. Anderson retained PBS in February 2006.

 

On January 27, 2006, two members of Anderson’s Board of Directors met with the former chief executive officer of a southwestern Ohio financial institution that had been acquired by Park in 2005. The Anderson directors inquired about the acquisition process and whether the former chief executive officer thought that Park might have an interest in acquiring Anderson. As a result of this meeting, on February 22, 2006, the two Anderson directors met with C. Daniel DeLawder, Chairman of the Board and Chief Executive Officer of Park, and David L. Trautman, President and Secretary of Park, to discuss whether Park had any interest in acquiring Anderson.

 

On March 10, 2006, the President of Anderson and its Board of Directors met with a representative of PBS who presented a strategic assessment relating to Anderson’s strategic alternatives, including the potential value that Anderson shareholders might reasonably expect to receive in an acquisition of Anderson by a larger financial institution.

 

On March 10, 2006, the two Anderson directors reported to the rest of the directors and the Anderson President about their January and February meetings to determine if Park had any interest in acquiring Anderson.

 

On April 14, 2006, Anderson and Park entered into a confidentiality agreement.

 

On April 19, 2006, the Anderson President and its Board of Directors met with Messrs. DeLawder and Trautman to gauge the interests of each of the parties in exploring an acquisition of Anderson by Park. The parties discussed their businesses and exchanged information about the same.

 

On May 31, 2006, the Chairman of Anderson’s Board of Directors received, by telephone call, a non-binding indication of interest from Park regarding a proposed acquisition of Anderson by Park for $27.00 in cash for each Anderson common share, subject to due diligence and the negotiation of a definitive agreement. On June 8, 2006,

certain members of Anderson’s Board of Directors and a PBS representative met with a Park representative to discuss this overture.

 

As a result of that meeting, on June 13, 2006, Park increased its non-binding indication of interest to $30.00 in cash per Anderson common share, subject to due diligence and the negotiation of a definitive agreement. On June 14, 2006, on behalf of Anderson, PBS representatives discussed Park’s offer with Park and suggested that a higher acquisition value was warranted and that Park should consider including Park common shares as part of the potential acquisition consideration.

 

On June 20, 2006, Park management contacted PBS and indicated that Park was willing to increase its indication of interest to include 86,137 Park common shares and $8,543,500 in cash.

 

On June 21, 2006, a PBS representative met with the President of Anderson and its Board of Directors to discuss the merits of Park’s non-binding indication of interest, PBS’ valuation analysis of Anderson and various other potential strategic alternatives available to Anderson, including remaining independent as well as pursuing other possible strategic partners. At the conclusion of this meeting, Anderson’s Board of Directors determined to continue negotiations with Park for the potential sale of Anderson. PBS’ representative spoke with Park’s management on June 27, 2006, and agreed to an acquisition price of 86,137 Park common shares and $9,054,343 in cash (reflecting all outstanding Anderson stock options being exercised in full prior to the effective time of the merger), subject to due diligence as well as the successful negotiation of a definitive agreement.

 

From July 13 through July 15, 2006, Park representatives conducted due diligence of Anderson. From July 19 through July 21, 2006, PBS performed a limited scope due diligence review of Park.

 

From mid-July until August 11, 2006, the parties negotiated the terms and conditions of the definitive merger agreement. On July 20, 2006, a member of Frost Brown Todd LLC advised the President of Anderson and certain of its directors regarding certain legal matters related to the proposed transaction, including the fiduciary obligations of Anderson’s directors in connection with their consideration of the proposed merger agreement. The Frost Brown Todd LLC member also presented information about the proposed merger agreement, including key terms relating to structure, covenants and representations and warranties as well as the regulatory and shareholder approvals required to complete the merger. At that same meeting, the directors reviewed the proposed merger agreement and asked questions concerning its provisions and the merger.

 

On August 11, 2006, the Anderson Board of Directors met with a Frost Brown Todd LLC member and a PBS representative. The Frost Brown Todd LLC member advised the board of certain revisions to the previous draft of the merger agreement that the directors had reviewed and reviewed the entire merger agreement with the Anderson Board of Directors. Following the Frost Brown Todd LLC presentation, the PBS representative delivered a financial analysis of the transaction and then orally advised the Anderson Board of Directors of its opinion that, as of August 11, 2006, and based upon the assumptions made, procedures followed, matters considered and limitation of the review undertaken by PBS, all as set forth in its written opinion, the merger consideration to be paid by Park in the merger was fair and equitable, from a financial perspective, to the Anderson shareholders. Following the PBS presentation, directors addressed questions to the Anderson President, the member of Frost Brown Todd LLC and the representative of PBS. Following a period of discussion and responses to director questions, upon motion duly made and seconded, the Anderson Board of Directors unanimously approved the merger agreement and the transactions contemplated by the merger agreement.

 

The Anderson Board of Directors’ reasons for the merger

 

By unanimous vote, the Anderson Board of Directors, at a meeting held on August 11, 2006, determined that the merger agreement and the transactions contemplated by the merger agreement were advisable and in the best interests of the Anderson shareholders and approved the merger agreement and the transactions contemplated by the merger agreement, including the merger. In reaching this decision, the Anderson Board of Directors consulted with Anderson’s management and its financial and legal advisors and considered a variety of factors, including the material factors described below. In light of the number and variety of factors considered in connection with its evaluation of the transaction, the Anderson Board of Directors did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative weights to the specific factors that it considered in reaching its

determination. The Anderson Board of Directors viewed its position as being based on all of the information available and the factors presented to and considered by it. In addition, individual directors may have given different weights to different factors. This explanation of Anderson’s reasons for the proposed merger and other information presented in this section contain forward-looking statements and, therefore, should be read in light of the factors discussed under “Forward-Looking Statements” on page 11 of this prospectus/proxy statement.

 

The Anderson Board of Directors considered the following factors:

 

 

 

The Anderson Board of Directors weighed the potential benefits, advantages and opportunities of the merger and the risks of not pursuing a transaction with Park against the risks and challenges inherent in the proposed merger. The Anderson Board of Directors realized that there can be no assurance about future results, including results expected or considered in the factors listed above. However, the Anderson Board of Directors concluded that the potential benefits outweighed the risks of completing the merger transaction with Park.

 

After taking into account these and other factors, the Anderson Board of Directors unanimously determined that the merger agreement and the transactions contemplated by the merger agreement were advisable and in the best interests of Anderson shareholders and approved the merger agreement and the other transactions contemplated by the merger agreement, including the merger.

 

Park’s and PNB’s reasons for the merger

 

Park and PNB believe the merger will benefit Park’s shareholders because the merger will enable PNB to expand its presence in the markets currently served by Anderson, strengthen the competitive position of the combined organization and generate cost savings and enhance other opportunities for Park and PNB.

 

PBS was engaged by Anderson to advise Anderson’s Board of Directors as to the fairness of the consideration, from a financial perspective, to be paid by Park in the merger, as set forth and further defined in the merger agreement.

 

PBS is a bank consulting firm with offices located throughout the United States. As part of its investment banking business, PBS is regularly engaged in reviewing the fairness of financial institution acquisition transactions from a financial perspective and in the valuation of financial institutions and other businesses and their securities in connection with mergers, acquisitions, estate settlements, and other transactions. Neither PBS nor any of its affiliates has a material financial interest in Anderson or Park. PBS was selected to advise Anderson’s Board of Directors based upon its familiarity with Ohio financial institutions and its knowledge of the banking industry as a whole.

 

PBS performed certain analyses described herein and presented the range of values for Anderson, resulting from such analyses, to the Board of Directors of Anderson in connection with its advice as to the fairness of the consideration to be paid by Park.

 

A fairness opinion of PBS was delivered to the Board of Directors of Anderson on August 11, 2006 at a special meeting of the Board of Directors and has been updated as of the date of this prospectus/proxy statement. A copy of the fairness opinion, which includes a summary of the assumptions made and information analyzed in deriving the fairness opinion, is attached as Annex B to this prospectus/proxy statement and should be read in its entirety.

 

In arriving at its fairness opinion, PBS reviewed certain publicly available business and financial information relating to Anderson and Park. PBS considered certain financial and stock market data of Anderson and Park, compared that data with similar data for certain publicly-held bank holding companies and considered the financial terms of certain other comparable bank transactions that had recently been effected. PBS also considered such other information, financial studies, analyses and investigations and financial, economic and market criteria that it deemed relevant. In connection with its review, PBS did not independently verify the foregoing information and relied on such information as being complete and accurate in all material respects. Financial forecasts prepared by PBS were based on assumptions believed by PBS to be reasonable and to reflect currently available information. PBS did not make an independent evaluation or appraisal of the assets of Anderson or Park.

 

In connection with preparing its fairness opinion, PBS performed a limited scope due diligence review of Park, which included an on-site visit to Park by PBS personnel on July 19 through July 21, 2006, and the review and analysis of various management and financial data of Park. The review included all Forms 10-Q, 10-K, 8-K and forms DEF 14A (definitive proxy statements) for 2003, 2004, 2005 and year-to-date 2006 filed by Park with the

Securities and Exchange Commission; year-end 2003, 2004 and 2005 audited annual reports of Park; certain 2005 and year-to-date 2006 Park Board of Directors reports and Committee reports; Park’s December 31, 2005 and March 31, 2006 Federal Reserve FY- 9 Consolidated Report of Condition and Income; Park’s most recent Uniform Holding Company Performance Report; Park’s current consolidated listing of investment portfolio holdings with book and market values; Park’s current consolidated month-end delinquency and non-accrual reports; Park’s current and historical consolidated analysis of the allowance for loan and lease losses; Park’s current consolidated internal loan reports; Park’s consolidated problem loan listing with classifications; and various other current internal financial and operating reports prepared by Park.

 

PBS reviewed and analyzed the historical performance of Anderson, including Anderson’s December 31, 2003, 2004 and 2005 audited annual reports; Anderson’s December 31, 2004, June 30, 2005, September 30, 2005, December 31, 2005 and March 31, 2006 Consolidated Reports of Condition and Income; Anderson’s Uniform Bank Performance Reports as of December 31, 2005 and March 31, 2006; Anderson’s June 30, 2006 internal financial statements; Anderson’s 2006 operating budget; and various internal asset quality, interest rate sensitivity, liquidity, deposit and loan portfolio reports prepared by Anderson. PBS reviewed and tabulated statistical data regarding the loan portfolio, securities portfolio and other performance ratios and statistics. Financial projections were prepared and analyzed as well as other financial studies, analyses and investigations as deemed relevant for the purposes of the fairness opinion. In reviewing the aforementioned information, PBS took into account its assessment of general market and financial conditions, its experience in other similar transactions, and its knowledge of the banking industry generally.

 

In connection with rendering the fairness opinion and preparing its written and oral presentation to Anderson’s Board of Directors, PBS performed a variety of financial analyses, including those summarized herein. This summary does not purport to be a complete description of the analyses performed by PBS in this regard. The preparation of a fairness opinion involves various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, such an opinion is not readily susceptible to summary description. Accordingly, notwithstanding the separate factors summarized below, PBS believes that its analyses must be considered as a whole and that selecting portions of its analyses and the factors considered by it, without considering all analyses and factors, could create an incomplete view of the evaluation process underlying its opinion. In performing its analyses, PBS made numerous assumptions with respect to industry performance, business and economic conditions and other matters, many of which are beyond Anderson’s or Park’s control. The analyses performed by PBS are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by such analyses. In addition, analyses relating to the values of businesses do not purport to be appraisals or to reflect the process by which businesses actually may be sold.

 

In the proposed merger, Anderson shareholders will receive an aggregate of (a) 86,137 Park common shares (the “Stock Consideration”) and (b) $9,054,343 less the sum of the exercise prices of all Anderson common shares subject to outstanding stock options which have not been exercised in full prior to the deadline set forth in the merger agreement (the “Cash Consideration”) for all Anderson common shares outstanding, subject to adjustment for cash paid in lieu of fractional shares, as further described in the merger agreement. Under the terms of the merger agreement, Anderson shareholders may elect to receive all cash, all Park common shares or a combination of cash and Park common shares, subject to adjustment if either the Cash Consideration or Stock Consideration is oversubscribed. The per share cash value to be received by Anderson’s shareholders will be determined by (i) multiplying the Stock Consideration by the average closing price of the Park common shares, as reported on AMEX, over the ten consecutive trading day period ending on the third business day prior to the effective time of the merger (the “Park Measuring Price”) plus (ii) the Cash Consideration divided by (iii) the number of Anderson common shares issued and outstanding as of the effective time of the merger (the “Per Share Consideration”). The market value, as of the effective time of the merger, of the per share stock consideration to be received by Anderson’s shareholders will be determined by dividing the Per Share Consideration by the Park Measuring Price to obtain the stock exchange ratio and then multiplying the stock exchange ratio by the market price of the Park common shares as of the effective time of the merger.

In performing its various analyses, PBS utilized the following financial inputs for Anderson:

 

ANDERSON FINANCIAL INPUTS

 

 

Based on the closing price of Park’s common shares, as reported on AMEX on August 4, 2006, the total consideration to be received by Anderson’s shareholders would equal $17,817,060, which represents a multiple of Anderson’s June 30, 2006 common equity, adjusted for the exercise of Anderson’s remaining stock options outstanding, of 2.39X, a multiple of Anderson’s June 30, 2006 tangible equity, adjusted for the exercise of Anderson’s remaining stock options outstanding, of 2.50X, and a multiple of Anderson’s June 30, 2006 last twelve month (“LTM”) net income of 23.23X. In addition, based on the closing price of Park’s common shares, as reported on AMEX on August 4, 2006, the proposed consideration to be received by Anderson’s shareholders would represent 28.61% of Anderson’s June 30, 2006 total deposits and a 21.73% premium over Anderson’s June 30, 2006 adjusted tangible equity as a percentage of Anderson’s June 30, 2006 core deposits.

 

Acquisition Comparison Analysis:  In performing this analysis, PBS reviewed the 337 bank transactions in the states of Iowa, Illinois, Indiana, Kansas, Kentucky, Michigan, Minnesota, Missouri, North Dakota, Nebraska, Ohio, South Dakota and Wisconsin (collectively, the “Midwest”) since June 30, 2001 for which financial information is available (the “Comparable Group”). The purpose of the analysis was to obtain an evaluation range for Anderson based on these Comparable Group bank acquisition transactions. Median multiples of book value, earnings, deposits and the premium paid over the sellers’ tangible equity as a percentage of the acquired institutions’ core deposits implied by the Comparable Group transactions were utilized in obtaining a range for the acquisition value of Anderson. In addition to reviewing recent Comparable Group bank transactions, PBS performed separate comparable analyses for acquisitions of banks which, like Anderson, had an equity to asset ratio between 9.0% and 13.0%, had a return on average equity (“ROAE”) between 9.00% and 13.00%, had total assets between $50 and $100 million, transactions where the selling institution was located in Ohio, transactions where the currency received by the selling institution consisted of both cash and the buyer’s common stock and transactions which have been announced since January 1, 2006. Median values for the 337 Comparable Group acquisitions expressed as multiples of book value and last twelve month earnings equaled 1.68 and 19.23, respectively, and median premiums on deposits and franchise premiums over core deposits equaled 19.70% and 9.04%, respectively. The following tables demonstrate the median multiples of book value and earnings, as well as the median percentage of transaction value over seller’s total deposits and premium paid over the seller’s tangible equity as a percentage of the acquired institution’s core deposits for the Comparable Group transaction categories.

 

ACQUISITION PRICING FOR COMPARABLE GROUP TRANSACTIONS

 

MEDIAN MULTIPLES

 

ACQUISITION PRICING FOR COMPARABLE GROUP TRANSACTIONS

 

MEDIAN PERCENTILES

 

 

COMPARABLE GROUP TRANSACTIONS

 

PROPOSED TRANSACTION PERCENTILE RANKINGS

 

 

COMPARABLE GROUP TRANSACTIONS

 

PROPOSED TRANSACTION PERCENTILE RANKINGS

 

 

Transaction Value Method:  PBS reviewed the price(s) at which Anderson common shares have exchanged hands between a willing buyer and seller in order to determine a current market value for the Anderson common shares based on a limited number of transactions. Since January 1, 2006, 13,698 Anderson common shares have

traded with the most recent trading activity occurring on April 19, 2006 at a sale price of $12.75 per Anderson common share.

 

Adjusted Net Asset Value Analysis:  PBS reviewed Anderson’s balance sheet data to determine the amount of material adjustments required to the shareholders’ equity of Anderson based on differences between the market value of Anderson’s assets and their value reflected on Anderson’s financial statements. PBS determined that two adjustments were warranted. PBS subtracted Anderson’s existing goodwill of $331,000. In addition, PBS reflected a value of Anderson’s June 30, 2006 core deposits of approximately $1,695,000. The aggregate adjusted net asset value of Anderson was determined to be $8,832,000, or $16.06 per adjusted Anderson common share.

 

Discounted Earnings Analysis:  A dividend discount analysis was performed by PBS pursuant to which a range of values of Anderson was determined by adding (i) the present value of estimated future dividend streams that Anderson could generate over a five-year period and (ii) the present value of the “terminal value” of Anderson’s earnings at the end of the fifth year. The “terminal value” of Anderson’s earnings at the end of the five-year period was determined by applying a multiple of 19.27 times the projected terminal year’s earnings. The 19.27 multiple represents the median price paid as a multiple of earnings for all Comparable Group bank transactions effected in the State of Ohio.

 

Projected dividend streams and the terminal value were discounted to present values using a discount rate of 12%. This rate reflects assumptions regarding the required rate of return of holders or buyers of Anderson common shares. The aggregate value of Anderson, determined by adding the present value of the total cash flows, was $12,382,000, or $22.52 per adjusted Anderson common share. In addition, using the five-year projection as a base, a twenty-year projection was prepared assuming an annual growth rate in assets of 6.0% throughout the analysis. Return on assets was projected to increase to 1.30% by year seven and remain constant at this level for the remainder of the analysis. It was assumed that Anderson would begin paying common dividends in year six at a rate equal to 75% of net income throughout the analysis. This long-term projection resulted in an aggregate value of $10,267,000, or $18.67 per adjusted Anderson common share.

 

Pro Forma Merger Analysis:  PBS compared the historical performance of Anderson to that of Park and other regional bank holding companies. This analysis included, among other things, a comparison of profitability, asset quality and capital measures. In addition, the contribution of Anderson and Park to the income statement and balance sheet of the pro forma combined organization was analyzed in relation to the pro forma ownership position of Anderson’s shareholders in the combined organization.

 

The fairness opinion is directed only to the question of whether the consideration to be received by Anderson’s shareholders under the merger agreement is fair and equitable from a financial perspective and does not constitute a recommendation to any Anderson shareholder to vote in favor of the adoption of the merger agreement and approval of the merger. No limitations were imposed on PBS regarding the scope of its investigation or otherwise by Anderson.

 

Based on the results of the various analyses described above, PBS concluded that the consideration to be received by Anderson’s shareholders under the merger agreement was fair and equitable from a financial perspective to the shareholders of Anderson.

 

Based on the closing price of Park’s common shares on August 11, 2006 of $100.60 per share, PBS and its wholly-owned subsidiary, Investment Bank Services, Inc. (“IBS”), would receive total fees of approximately $103,599 for all services performed in connection with the sale of Anderson and the rendering of the fairness opinion. In addition, Anderson has agreed to indemnify PBS and IBS and their respective directors, officers and employees from liability in connection with the transaction, and to hold PBS and IBS harmless from any losses, actions, claims, damages, expenses or liabilities related to any of PBS’ or IBS’ acts or decisions made in good faith and in the best interest of Anderson.

 

Park has submitted an application to the Federal Reserve Bank of Cleveland, pursuant to authority delegated by the Board of Governors of the Federal Reserve System, seeking approval of the acquisition of Anderson, which application was approved on October 31, 2006. In addition, PNB and Anderson have submitted an application to the

Office of the Comptroller of the Currency seeking approval of the merger of Anderson with and into PNB, which application was approved as of November 2, 2006. The approvals by the Federal Reserve Bank of Cleveland and the Office of the Comptroller of the Currency are subject to compliance by Park, PNB and Anderson with certain representations, commitments and covenants. In addition, the merger may not be consummated for 15 days after the date of each approval, during which time the United States Department of Justice may bring an action challenging the merger on antitrust grounds.

 

Some of the directors and officers of Anderson have interests in the merger that are different from, or in addition to, their interests as shareholders of Anderson.

 

Change of Control Agreement

 

James R. Gudmens, President and Chief Executive Officer of Anderson, has a Change in Control Agreement with Anderson entitling him to a lump sum payment of $100,000 upon a change in control of Anderson. For purposes of the Change in Control Agreement, a “change of control” is deemed to occur if (a) Anderson is merged or consolidated with or acquired by another corporation and, as a result, less than 75% of the outstanding voting securities of the surviving, resulting or acquiring corporation are owned in the aggregate by the former shareholders of Anderson as existed immediately prior to the merger, consolidation or acquisition, or (b) Anderson sells substantially all of its assets to another corporation that is not a wholly-owned subsidiary. The merger of Anderson with and into PNB as contemplated by the merger agreement would constitute a “change of control” under the terms of Mr. Gudmen’s Change in Control Agreement. Mr. Gudmens plans to retire upon the closing of the merger.

 

Indemnification

 

Subject to the terms and conditions set forth in the merger agreement, Park has agreed that following the closing of the merger, it will indemnify, defend and hold harmless each present and former director, officer and employee of Anderson against all costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages or liabilities incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of actions or omissions or alleged actions or omissions in the course of the person’s duties as a director, officer or employee of Anderson occurring on or prior to the effective date of the merger, including, without limitation, the transactions contemplated by the merger agreement, to the fullest extent that Anderson is permitted to indemnify (and advance expenses to) its directors, officers and employees under Ohio law and consistent with the provisions of the articles of incorporation and regulations of Anderson as in effect on the date of the merger agreement.

 

Directors’ and Officers’ Insurance

 

For a period of three years from the closing of the merger, Park has agreed to use its reasonable best efforts to procure directors’ and officers’ liability insurance that serves to reimburse the present and former officers and directors of Anderson with respect to claims against them arising from facts or events that occurred before the closing of the merger. However, Park is not required to expend, on an annual basis, more than 200% of the amount expended by Anderson to maintain or procure its current directors’ and officers’ liability policy.

 

General

 

The obligation of Park and Anderson to consummate the merger is conditioned on the receipt by Park and Anderson of an opinion of Park’s counsel, Vorys, Sater, Seymour and Pease LLP, dated as of the effective date of the merger, to the effect that the merger constitutes a “reorganization” within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of the Code. The opinion is based on the Code, the applicable Treasury Department regulations (the “Treasury Regulations”), judicial authorities, and current administrative rulings and practices as in effect on the date of the opinion, all of which are subject to change, possibly with retroactive effect, and to differing interpretations. Opinions of counsel are not binding upon the Internal Revenue Service (“IRS”) or the courts,

either of which could take a contrary position. No rulings have been, or will be, sought from the IRS in connection with the merger. The opinion of Vorys, Sater, Seymour and Pease LLP will rely on certain assumptions that customarily are made with respect to transactions of this kind, and on certain representations and covenants, including those contained in officers’ certificates of Park and Anderson, which representations and covenants Vorys, Sater, Seymour and Pease LLP will assume to be true, correct, and complete. If any such assumption, representation, or covenant is inaccurate, the opinion could be adversely affected. In addition, the opinion assumes that any Anderson shareholder that asserts dissenters’ rights will receive, pursuant to statutory procedures, an amount per such dissenting Anderson common share that does not exceed the value of the consideration per Anderson common share to be received pursuant to the merger. The opinion of Vorys, Sater, Seymour and Pease LLP set forth as an exhibit to the registration statement of which this prospectus/proxy statement is a part, as well as the assumptions, representations, and covenants described above, support the following discussion of the anticipated federal income tax consequences of the merger to the Anderson shareholders.

 

This description of anticipated federal income tax consequences of the merger assumes that the merger will be consummated in accordance with the terms and provisions of the merger agreement. This description does not address, among other matters, the tax consequences to an Anderson shareholder who holds Anderson common shares other than as a capital asset for federal income tax purposes. The description also does not address all of the tax consequences that may be relevant to Anderson shareholders in light of their particular tax circumstances, including, without limitation, shareholders that are: (i) persons who hold Anderson common shares as part of a straddle, hedge, conversion, or other risk-reduction transaction; (ii) broker-dealers; (iii) shareholders who have a functional currency other than the U.S. dollar; (iv) tax-exempt shareholders; (v) foreign persons; (vi) insurance companies; (vii) financial institutions; (viii) persons that acquired Anderson common shares pursuant to the exercise of compensatory stock options or otherwise as compensation; (ix) tax-exempt entities; (x) retirement plans; (xi) persons who receive Park common shares other than in exchange for Anderson common shares; or (xii) pass-through entities and investors in those entities. In addition, this description does not address the tax consequences to the holders of options to acquire Anderson common shares. Anderson shareholders with special particular tax circumstances or who are subject to special tax treatment are strongly urged to consult with their tax advisors regarding their individual tax consequences. Furthermore, the discussion does not address any alternative minimum tax or any foreign, state, or local tax consequences of the merger.

 

Reorganization Treatment

 

The merger will be a reorganization within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of the Code, and Park, PNB, and Anderson each will be a “party to the reorganization” within the meaning of Section 368(b) of the Code.

 

Tax Consequences to Park, PNB, and Anderson

 

No Gain or Loss.  No gain or loss will be recognized by Park, PNB, or Anderson as a result of the merger.

 

Tax Basis.  The tax basis of the assets of Anderson in the hands of PNB will be the same as the tax basis of such assets in the hands of Anderson immediately prior to the merger.

 

Holding Period.  The holding period of the assets of Anderson to be received by PNB will include the period during which such assets were held by Anderson.

 

Tax Consequences to Anderson Shareholders Who Receive Only Cash

 

An Anderson shareholder who receives only cash in exchange for such shareholder’s Anderson common shares (as a result of such shareholder’s dissent to the merger or election to receive the cash consideration for all of such shareholder’s Anderson common shares) will recognize gain or loss as if such shareholder had received such cash as a distribution in redemption of such shareholder’s Anderson common shares, subject to the provisions and limitations of Section 302 of the Code. The gain or loss will be long-term capital gain or loss if the Anderson common shares surrendered in the merger were held as capital assets for a period exceeding one year as of the time of the exchange.

Tax Consequences to Anderson Shareholders Who Receive Only Park Common Shares, Except for Cash in Lieu of Fractional Shares

 

An Anderson shareholder who receives only Park common shares in exchange for such shareholder’s Anderson common shares (not including any cash received in lieu of fractional Park common shares) will not recognize any gain or loss on the receipt of such Park common shares.

 

Tax Consequences to Anderson Shareholders Who Receive Cash (Other than Cash in Lieu of Fractional Shares) and Park Common Shares

 

An Anderson shareholder who receives cash (other than cash in lieu of fractional shares) and Park common shares in exchange for Anderson common shares will recognize gain, but not loss, in an amount not to exceed the amount of cash received (excluding cash received in lieu of fractional Park common shares). For this purpose, an Anderson shareholder generally must calculate gain or loss separately for each identifiable block of Anderson common shares exchanged by the shareholder in the merger, and a loss realized on one block of Anderson common shares may not be used by the shareholder to offset a gain realized on another block of its Anderson common shares. An Anderson shareholder will be permitted to elect which of the shareholder’s Anderson common shares are converted into and become Park common shares and which of the shareholder’s Anderson common shares are exchanged for cash (subject to reallocation pursuant to procedures specified in Section 2.01(c) (viii) and (ix) of the merger agreement). Shareholders should consult their tax advisors regarding the manner in which cash and Park common shares should be allocated among their Anderson common shares and the specific federal income tax consequences thereof.

 

For purposes of determining the character of the gain recognized on account of the cash received by an Anderson shareholder, such Anderson shareholder will be treated as having received only Park common shares in exchange for such shareholder’s Anderson common shares, and as having immediately redeemed a portion of such Park common shares for the cash received (excluding cash received in lieu of fractional Park common shares). Unless the redemption is treated as a dividend under the principles of Section 302(d) of the Code (to the extent of such shareholder’s ratable share of the undistributed earnings and profits of Anderson), the gain will be capital gain if the Anderson common shares are held by such shareholder as a capital asset at the time of the merger.

 

Cash in Lieu of Fractional Shares

 

An Anderson shareholder who receives cash in lieu of fractional Park common shares will recognize gain or loss as if such fractional Park common shares were distributed as part of the merger and then redeemed by Park, subject to the provisions and limitations of Section 302 of the Code.

 

Tax Basis

 

The aggregate tax basis of the Park common shares received by an Anderson shareholder in the merger (including fractional shares, if any, deemed to be issued and redeemed by Park) generally will be equal to the aggregate tax basis of the Anderson common shares surrendered in the merger, reduced by the amount of cash received by the shareholder in the merger (other than cash in lieu of fractional shares), and increased by the amount of gain recognized by the shareholder in the merger (including any portion of the gain that is treated as a dividend, but excluding any gain or loss resulting from the deemed issuance and redemption of fractional shares).

 

Holding Period

 

The holding period of the Park common shares received by an Anderson shareholder will include the holding period of the Anderson common shares surrendered in exchange therefor in the merger, provided that the Anderson common shares were held as a capital asset at the time of the merger.

 

Reporting Requirements

 

Anderson shareholders owning at least one percent (by vote or value) of the total outstanding Anderson common shares, immediately before the merger, are required to file a statement with their U.S. federal income tax

returns setting forth their tax basis in the Anderson common shares exchanged in the merger, as well as the fair market value of the Park common shares and the amount of any cash received in the merger. In addition, all Anderson shareholders will be required to retain permanent records relating to the amount, basis, and fair market value of all property transferred in the merger, and relevant facts regarding any liabilities assumed or extinguished as part of the merger.

 

Backup Withholding

 

Under certain circumstances, cash payments made to an Anderson shareholder pursuant to the merger may be subject to backup withholding at a rate of 28%. There is no withholding for a shareholder who provides the exchange agent with such shareholder’s correct U.S. federal taxpayer identification number and who certifies that no loss of exemption from backup withholding has occurred on IRS Form W-9 or its substitute. Certain categories of Anderson shareholders, such as corporations and some foreign individuals, are not subject to backup withholding. In order for a foreign individual to qualify as an exempt recipient, such individual must generally provide the exchange agent with a completed IRS Form W-8BEN or its substitute. Any amounts withheld from an Anderson shareholder under the backup withholding rules are not an additional tax. Rather, any such amounts will be allowed as a credit or refund against such shareholder’s U.S. federal income tax liability provided that the shareholder furnishes to the IRS all required information.

 

The discussion of federal income taxes is included in this prospectus/proxy statement for general information only. Each Anderson shareholder should consult his, her or its own tax advisor regarding the specific tax consequences to the shareholder of the merger, including the application and effect of state, local, and foreign income and other tax laws.

 

Park will account for the merger using the purchase method of accounting. Under the purchase method, Park will record, at fair value, the acquired assets and assumed liabilities (including deposit liabilities) of Anderson. To the extent the total purchase price exceeds the fair value of tangible and identifiable intangible assets acquired over the liabilities assumed, Park will record goodwill.

 

Park common shares to be issued in connection with the merger will be authorized for listing on AMEX under the symbol “PRK.”

 

No restrictions on the sale or other transfer of the Park common shares issued pursuant to the merger will be imposed solely as a result of the merger, except for restrictions on the transfer of Park common shares issued to any Anderson shareholder who may be deemed to be an “affiliate” of Anderson for purposes of Rule 145 under the Securities Act of 1933, as amended. The term “affiliate” is defined in Rule 144 under the Securities Act and generally includes executive officers, directors, and shareholders beneficially owning 10% or more of the outstanding Anderson common shares.

 

Anderson affiliates may resell the Park common shares they receive in the merger only (a) in compliance with Rule 145 or another applicable exemption from the registration requirements under the Securities Act, or (b) pursuant to an effective registration statement under the Securities Act covering their Park common shares. Rule 145, as currently in effect, restricts the manner in which affiliates may resell shares and also restricts the number of shares that affiliates, and others with whom they might act in concert, may sell within any three-month period. The merger agreement requires Anderson to cause persons who could be considered to be “affiliates” to enter into an agreement with Park stating that these “affiliates” will not sell, transfer, or otherwise dispose of any Park common shares they acquire in the merger except in compliance with the Securities Act and the rules and regulations under the Securities Act. Sales of Park common shares by affiliates of Park are subject to similar transfer restrictions.

 

Under the merger agreement, Anderson is not allowed to make, declare, pay or set aside for payment any dividend or distribution to Anderson shareholders. Following completion of the merger, former Anderson shareholders receiving Park common shares as part of the merger consideration will receive dividends, if any, declared by Park in their capacity as Park shareholders.

 

All employees of Anderson as of the date of the merger agreement who are actively employed as of the effective date of the merger, other than James R. Gudmens, will be offered the opportunity to continue as an at-will employee of PNB. Anderson employees continuing to be employed by PNB following the merger will continue to participate in the Anderson employee benefit plans until, with respect to each Anderson employee benefit plan, the employees transition to and, subject to applicable eligibility requirements, are able to participate in the employee benefit plans of PNB and the Anderson employee benefit plans are terminated. Anderson employees continuing to be employed by PNB following the merger will receive credit for service at Anderson for eligibility and vesting purposes, but not for benefit calculation purposes, under employee benefit plans of PNB and will not be subject to any exclusion or penalty for pre-existing conditions that were covered under the Anderson employee benefit plans immediately prior to the merger, or to any waiting period relating to coverage, except as otherwise required by law.

 

Additionally, any employee of Anderson, including Mr. Gudmens, who is not retained by PNB following the merger will be paid by Park for all unused vacation and sick time consistent with the terms of Anderson’s vacation and sick time policies and will be entitled to elect so-called “COBRA” benefits in accordance with and subject to the requirements of Section 4980B(f) of the Code.

 

The following is a description of the material terms of the merger agreement. A complete copy of the merger agreement is attached as Annex A to this prospectus/proxy statement and is incorporated into this prospectus/proxy statement by reference. We encourage you to read the merger agreement carefully, as it is the legal document that governs the merger.

 

The merger agreement contains representations and warranties of Anderson, on the one hand, and Park and PNB, on the other. The assertions embodied in those representations and warranties are qualified by information in confidential disclosure schedules that the parties delivered in connection with the execution of the merger agreement. In addition, certain representations and warranties were made as of a specific date, may be subject to a contractual standard of materiality different from those generally applicable to shareholders, or may have been used for purposes of allocating risk between the respective parties rather than establishing matters as facts. Accordingly, you should not rely on the representations and warranties as characterizations of the actual state of facts, or for any other purpose, at the time they were made or otherwise.

 

Pursuant to the terms and subject to the conditions of the merger agreement, Anderson will merge with and into PNB, with PNB surviving the merger and continuing as a national banking association.

 

Unless we otherwise agree in writing, we plan to cause a certificate of merger in respect of the merger to be executed and delivered to the Ohio Superintendent of Financial Institutions, for filing with the Ohio Secretary of State, as soon as practicable after all of the conditions described in the merger agreement have been satisfied or waived. The merger will become effective upon the filing of the certificate of merger with the Ohio Secretary of State, or at a later time that we agree to in writing and specify in the certificate of merger.

 

We currently anticipate closing the transactions contemplated by the merger agreement and filing the certificate of merger on or about December 18, 2006.

 

At the effective time of the merger, each outstanding Anderson common share, other than those as to which the holders have properly exercised dissenters’ rights, will be converted into the right to receive either Park common shares, cash, or a combination of Park common shares and cash. Subject to adjustment for cash paid in lieu of fractional shares in accordance with the terms of the merger agreement, the shareholders of Anderson will receive aggregate consideration consisting of (i) 86,137 Park common shares and (ii) $9,054,343 less the sum of the exercise prices of all Anderson common shares subject to outstanding Anderson stock options which have not been exercised in full prior to the deadline set forth in the merger agreement (the “Cash Consideration”). We anticipate that all outstanding Anderson stock options will be exercised in full prior to the deadline, in which case the aggregate Cash Consideration to be received by Anderson shareholders in the merger would be $9,054,343 (subject to adjustment for cash paid in lieu of fractional shares).

 

Subject to adjustment for cash paid in lieu of fractional shares, the exact number of Park common shares and exact amount of cash that will be received in exchange for each Anderson common share will depend upon the average closing price of the Park common shares, as reported on AMEX, over the ten consecutive trading day period ending on the third business day prior to the effective time of the merger (the “Park Measuring Price”). The amount of cash that will be received in exchange for each Anderson common share will be an amount equal to the sum of (a) the Cash Consideration plus (b) 86,137 multiplied by the Park Measuring Price, divided by the number of Anderson common shares issued and outstanding as of the effective time of the merger (the “Per Share Consideration”). The number of Park common shares that will be received in exchange for each Anderson common share will be based on a ratio (the “Stock Exchange Ratio”) determined by dividing the Per Share Consideration by the Park Measuring Price.

 

The following table shows what the Per Share Consideration and the Stock Exchange Ratio would be if the Park Measuring Price was equal to (a) $100.60, the last reported sale price for Park common shares on August 11, 2006, the last trading day preceding our public announcement of the merger, and (b) $100.79, the last reported sale price for Park common shares on November 6, 2006, the last practicable trading day for which information was available prior to the date of this prospectus/proxy statement. For purposes of this table, it is assumed that (i) all outstanding Anderson stock options will have been exercised in full prior to the deadline, in which case the Cash Consideration would be $9,054,343 and there would be 549,800 Anderson common shares outstanding immediately prior to the effective time of the merger, and (ii) none of the Anderson shareholders will have exercised dissenters’ rights.

 

 

Park will not issue fractional Park common shares, or certificates or scrip representing fractional Park common shares, in the merger. Instead, Park will pay to each holder of Anderson common shares who would otherwise be entitled to a fractional Park common shares (after taking into account all Anderson share certificates surrendered by such holder) an amount in cash, without interest, equal to the product of the fractional Park common share multiplied by the Park Measuring Price.

 

On the effective date of the merger, if you are a holder of Anderson common shares, you will no longer have any rights as a holder of those Anderson common shares. If you receive Park common shares in the merger, however, you will, upon proper surrender of your Anderson common share certificates, have the rights of a holder of Park common shares. For a comparison of the rights you have as a holder of Anderson common shares to the rights you would have as a holder of Park common shares, see “Description of Park Common Shares and Comparison of Certain Rights of Park and Anderson Shareholders” beginning on page 45 of this prospectus/proxy statement.

 

Subject to the allocation procedures described in the next section, each Anderson shareholder will have the right to elect to receive with respect to his or her Anderson common shares, either (a) all cash, (b) all Park common shares, or (c) a mixture of cash and Park common shares.

All Cash Election.  A shareholder who makes the all cash election will receive cash, in an amount equal to the Per Share Consideration, for each Anderson common share owned, subject to the allocation procedures described below.

 

All Stock Election.  A shareholder who makes the all stock election will receive Park common shares, based upon the Stock Exchange Ratio, for each Anderson common share owned, subject to the allocation procedures described below and subject to the payment of cash in lieu of the issuance of fractional Park common shares.

 

Mixed Election.  A shareholder who makes the mixed cash/stock election will receive cash, in an amount equal to the Per Share Consideration, for the whole number of Anderson common shares the shareholder elects to exchange for cash and Park common shares, based upon the Stock Exchange Ratio, for the whole number of Anderson common shares the shareholder elects to exchange for Park common shares, subject to the allocation procedures described below and subject to the payment of cash in lieu of the issuance of fractional Park common shares.

 

Non-Electing Shares.  Anderson shareholders who do not make an election as to the form of consideration they wish to receive, and shareholders who do not make a valid election, will be deemed to have made a “non-election.” Anderson shareholders who are deemed to have made a non-election will receive all cash, all Park common shares or a mixture of cash and Park common shares as determined by Park or, at Park’s direction, by the exchange agent at the rates described above, subject to the payment of cash in lieu of the issuance of fractional Park common shares.

 

Election Form.  In accordance with the merger agreement, prior to the special meeting, an Election Form/Letter of Transmittal will be mailed to Anderson shareholders. The Election Form/Letter of Transmittal will allow each Anderson shareholder to make the all cash election, the all stock election, the mixed cash/stock election, or to indicate that he or she makes no election. The Election Form/Letter of Transmittal also will allow each Anderson shareholder to designate specifically which of the shareholder’s Anderson common shares are to be exchanged for Park common shares. Anderson shareholders who wish to elect the type of merger consideration they will receive in the merger should carefully review and follow the instructions set forth in the instructions to the Election Form/Letter of Transmittal. Anderson common shares for which the shareholder has not made a valid election prior to the election deadline will be deemed non-electing shares.

 

The deadline for submitting an Election Form/Letter of Transmittal will be the second trading day prior to the effective time of the merger. An election will be considered to have been validly made by a holder of Anderson common shares only if the exchange agent receives an Election Form/Letter of Transmittal properly completed and executed by the holder, accompanied by a certificate or certificates representing the Anderson common shares as to which the election is being made, duly endorsed in blank or otherwise in form acceptable for transfer on the books of Anderson, or containing an appropriate guaranty of delivery from a member of a national securities exchange, a member of the National Association of Securities Dealers, or a commercial bank or trust company in the United States. The Election Form/Letter of Transmittal will specify that delivery of certificates will be effected, and risk of loss and title to the certificates will pass, only upon proper delivery of the certificates to the exchange agent.

 

The Election Form/Letter of Transmittal will be mailed to each Anderson shareholder who is a holder of record as of the close of business on the November 6, 2006 record date of the Anderson special meeting. An Election Form/Letter of Transmittal will also be made available to any person who becomes a holder of Anderson common shares subsequent to November 6, 2006, and up to and until 5:00 p.m., Eastern Time, on the business day prior to the election deadline.

 

Any holder of Anderson common shares may, at any time prior to the election deadline, revoke the holder’s election and either (a) submit a new Election Form/Letter of Transmittal in accordance with the procedures described above or (b) withdraw the certificate or certificates representing the holder’s Anderson common shares deposited with the exchange agent by providing written notice that is received by the exchange agent by 5:00 p.m., Eastern Time, on the business day prior to the election deadline. Elections may also be revoked if the merger agreement is terminated.

 

Subject to adjustment for cash paid in lieu of fractional shares, the merger agreement requires the aggregate consideration received by Anderson shareholders in the merger to consist of (i) 86,137 Park common shares and (ii) $9,054,343 less the sum of the exercise prices of all Anderson common shares subject to outstanding Anderson stock options which have not been exercised in full prior to the deadline set forth in the merger agreement. If the elections by Anderson shareholders result in an oversubscription of cash or Park common shares, the allocation procedures described below will be used to allocate the available cash and Park common shares among the Anderson shareholders to preserve the required amounts of cash and stock consideration, except that Anderson shareholders who held 100 or fewer Anderson common shares of record as of August 14, 2006 and who make the all cash election will not be required to have any of their Anderson common shares converted into Park common shares.

 

Reduction of Anderson Common Shares Deposited for Cash.  The available cash consideration will be considered to be oversubscribed if the product of (a) the Per Share Consideration multiplied by (b) the sum of the number of Anderson common shares deposited with the exchange agent at the election deadline for cash pursuant to the all cash election and the mixed election and not withdrawn (including Anderson common shares which are deemed to be non-electing shares and which are allocated to be converted into cash) plus the number of dissenting Anderson common shares is greater than the Cash Consideration. If the available cash consideration is oversubscribed, Park will reallocate or cause the exchange agent to reallocate a sufficient number of Anderson common shares deposited for cash to Anderson common shares deposited for Park common shares so that the sum of the total number of Anderson common shares on deposit for cash following such reallocation plus the number of dissenting Anderson common shares multiplied by the Per Share Consideration equals the Cash Consideration. This reallocation will take into account any specific designations by Anderson shareholders as to which of their Anderson common shares are to be exchanged for Park common shares. The exchange agent will first reallocate non-electing shares, if any, which had been designated by the exchange agent to be converted into cash. If necessary, the exchange agent will then reallocate Anderson common shares deposited for cash pursuant to the all cash election and the mixed election on a pro rata basis in relation to the total number of Anderson common shares deposited for cash pursuant to the all cash election and the mixed election (excluding any Anderson common shares deposited pursuant to the all cash election by Anderson shareholders with 100 or fewer Anderson common shares of record as of August 14, 2006) so that the sum of the total number of Anderson common shares on deposit for cash following such reallocation plus the number of dissenting Anderson common shares multiplied by the Per Share Consideration equals the Cash Consideration. Notice will be provided promptly to each Anderson shareholder whose Anderson common shares are reallocated from Anderson common shares on deposit for cash to Anderson common shares on deposit for Park common shares.

 

Increase of Anderson Common Shares Deposited for Cash.  The available stock consideration will be considered to be oversubscribed if the product of (a) the Per Share Consideration multiplied by (b) the sum of the number of Anderson common shares deposited with the exchange agent at the election deadline for cash pursuant to the all cash election and the mixed election and not withdrawn (including Anderson common shares which are deemed to be non-electing shares and which are allocated to be converted into cash) plus the number of dissenting Anderson common shares is less than the Cash Consideration. If the available stock consideration is oversubscribed, Park will reallocate or cause the exchange agent to reallocate a sufficient number of Anderson common shares deposited for Park common shares to Anderson common shares deposited for cash so that the sum of the total number of Anderson common shares on deposit for cash following such reallocation plus the number of dissenting Anderson common shares multiplied by the Per Share Consideration equals the Cash Consideration. This reallocation will take into account any specific designations by Anderson shareholders as to which of their Anderson common shares are to be exchanged for Park common shares. The exchange agent will first reallocate non-electing shares, if any, which had been designated by the exchange agent to be converted into Park common shares. If necessary, the exchange agent will then reallocate Anderson common shares deposited for Park common shares pursuant to the all stock election and the mixed election on a pro rata basis in relation to the total number of Anderson common shares deposited for Park common shares pursuant to the all stock election and the mixed election so that the sum of the total number of Anderson common shares on deposit for cash following such reallocation plus the number of dissenting Anderson common shares multiplied by the Per Share Consideration equals the Cash Consideration. Notice will be provided promptly to each Anderson shareholder whose Anderson

common shares are reallocated from Anderson common shares on deposit for Park common shares to Anderson common shares on deposit for cash.

 

Because the federal income tax consequences of receiving all Park common shares, all cash, or a mixture of Park common shares and cash will differ, Anderson shareholders are urged to read carefully the information set forth under the heading “The Proposed Merger (Proposal One) — Material federal income tax consequences” and to consult their own tax advisors for a full understanding of the merger’s tax consequences to them.

 

Within three business days after the effective time of the merger, the exchange agent will mail to each holder of record of a certificate which represented Anderson common shares prior to the merger, but which was not deposited with the exchange agent prior to the merger (or which was deposited with the exchange agent and subsequently withdrawn), a Letter of Transmittal and instructions for surrendering Anderson common share certificates in exchange for the merger consideration. The Letter of Transmittal will specify that delivery of the Anderson common share certificates will be effected, and risk of loss and title to the certificates will pass, only upon proper delivery of the certificates to the exchange agent.

 

Upon the surrender of an Anderson common share certificate for cancellation to the exchange agent, together with a duly executed Letter of Transmittal, after the effective time of the merger, the holder of such Anderson common share certificate will receive within five business days of the later of (i) the expiration of the period during which holders of Anderson common shares may seek relief as dissenting shareholders or (ii) the surrender of such Anderson common share certificate, (a) a new certificate representing the number of whole Park common shares that the holder has the right to receive under the merger agreement, and/or (b) a check in an amount equal to the sum of the cash to be paid to the holder as part of the merger consideration, any cash to be paid in lieu of any fractional Park common share to which the holder is entitled under the merger agreement and any cash to be paid in respect of any dividends or distributions to which the holder may be entitled with respect to his or her Park common shares. The surrendered Anderson common share certificate(s) will be canceled.

 

If you own Anderson common shares, the transfer of which has not been registered in the transfer records of Anderson, you may nevertheless exchange these Anderson common shares for Park common shares if you provide the exchange agent with the certificate representing your Anderson common shares, along with all documents required by Park to evidence and effect the transfer and to evidence that any applicable stock transfer taxes have been paid.

 

Until surrendered, each Anderson common share certificate will be deemed at any time after the effective time of the merger to represent only the right to receive, upon surrender of such certificate, a Park common share certificate and/or a check in an amount equal to the sum of the cash to be paid to the holder as part of the merger consideration, any cash to be paid in lieu of any fractional Park common shares to which the holder is entitled under the merger agreement and any cash to be paid in respect of any dividends or distributions to which the holder may be entitled with respect to his or her Park common shares.

 

You will not be entitled to payment of any dividends or other distributions with respect to Park common shares until you have followed the procedures described above for surrendering your Anderson common share certificate(s). After properly surrendering your Anderson common shares certificate(s) in exchange for Park common shares, you will be entitled to receive any dividends or other distributions with respect to such Park common shares with a record date occurring on or after the effective time of the merger. You will not be entitled to the payment of any interest on such dividends or distributions.

 

If any Anderson common share certificate has been lost, stolen or destroyed, the exchange agent will deliver the consideration properly payable under the merger agreement with respect to the Anderson common shares represented by the certificate upon receipt of an appropriate affidavit by the person claiming that the certificate has been lost, stolen or destroyed and, if required by Park, the posting by such person of a bond in an amount reasonably determined by Park as indemnity against any claim that may be made against Park with respect to the certificate.

 

Under the merger agreement, each Anderson stock option that is outstanding and not exercised in full prior to the deadline set forth in the merger agreement will be cancelled and cease to entitle the holder to any rights or claims with respect to such Anderson stock option.

 

The respective obligations of Park, PNB and Anderson to complete the merger are subject to the satisfaction of the following conditions:

 

 

In addition, Anderson will not be required to complete the merger unless the following conditions are satisfied:

 

 

Park and PNB will not be required to complete the merger unless the following conditions are also satisfied:

 

 

 

Park and PNB, on the one hand, or Anderson, on the other, could waive some of these conditions, unless the waiver is prohibited by law.

 

Park and Anderson have each made representations and warranties in the merger agreement relating to:

 

 

In addition, Anderson has made representations and warranties in the merger agreement relating to:

 

 

 

The representations and warranties in the merger agreement will not survive the closing of the merger.

 

From August 14, 2006 until the closing of the merger, unless Park otherwise consents in writing, Anderson must conduct its business in the ordinary and usual course consistent with past practice, use its reasonable efforts to preserve intact its present business organization and assets, and use its reasonable efforts to preserve its relationships with customers, suppliers, employees and business associates. During the same period, Anderson has agreed not to take any of the following actions without the prior written consent of Park:

 

 

 

 

From August 14, 2006 until the closing of the merger, Anderson also has agreed not to take any of the following actions:

 

 

In addition, from August 14, 2006 until the closing of the merger, Park has agreed not to, and to cause its subsidiaries not to, take any of the following actions without the prior written consent of Anderson:

 

 

 

 

Park, PNB and Anderson are each required to bear their own expenses incurred in connection with the merger agreement and the transactions contemplated by the merger agreement, including, without limitation, fees and disbursements of legal counsel, financial advisors and accountants, except that the costs (excluding the fees and disbursements of legal counsel, financial advisors and accountants) incurred in connection with preparing (including copying, printing and distributing) this prospectus/proxy statement will be shared equally by Park and PNB, on one hand, and Anderson, on the other.

 

The parties may mutually agree to terminate the merger agreement and abandon the merger at any time before the merger is effective, whether before or after shareholder approval, if the respective boards of directors of Anderson, Park and PNB so determine by vote of a majority of their respective boards of directors.

 

In addition, either Park and PNB, on the one hand, or Anderson, on the other, acting alone may terminate the merger agreement and abandon the merger at any time before the merger is effective, whether before or after shareholder approval, if:

 

 

Anderson, acting alone, may terminate the merger agreement and abandon the merger at any time prior to the adoption of the merger agreement and approval of the merger by its shareholders, if its Board of Directors authorizes the execution of a definitive written agreement concerning a transaction that constitutes a “superior proposal,” as defined in the merger agreement, provided that Anderson has provided at least five business days prior notice of such superior proposal to Park and has satisfied certain other conditions set forth in the merger agreement.

 

Park, acting alone, may terminate the merger agreement if the Anderson Board of Directors:

 

 

Anderson must pay to Park a termination fee of $600,000 if the merger agreement is terminated upon the occurrence of specified events. Anderson must pay the termination fee if:

 

 

In addition to the termination fee, if (a) an acquisition proposal has been made known to the Anderson shareholders or publicly announced, (b) the merger agreement is subsequently terminated by Park because the merger has not been completed on or before February 28, 2007 as a result of knowing action or inaction of Anderson and (c) within 6 months following the termination of the merger agreement, Anderson enters into an agreement with the person making the acquisition proposal, Anderson must pay Park’s documented out-of-pocket expenses and fees, up to $250,000, and Park will be entitled to pursue recovery of any additional amounts available to it at law or in equity, provided that such additional amounts, together with the documented out-of-pocket expenses and fees, may not exceed $600,000 in the aggregate.

 

Anderson agreed to these termination fee and expense reimbursement arrangements in order to induce Park to enter into the merger agreement.

 

The merger agreement may be amended, at any time before or after the Anderson shareholders adopt the merger agreement and approve the merger, by an agreement in writing signed by Park, PNB and Anderson. However, after the Anderson special meeting, the merger agreement may not be amended if it would violate the applicable provisions of Titles 11 and 17 of the Ohio Revised Code, the laws of the United States applicable to national banking associations or the federal securities laws.

 

Anderson shareholders who receive Park common shares as consideration in the merger will become shareholders of Park at the effective time of the merger. Park is an Ohio corporation and a bank holding company registered under the Bank Holding Company Act of 1956, as amended; while Anderson is an Ohio state-chartered bank. Although the rights of the holders of Park common shares and those of holders of Anderson common shares are similar in many respects, there are some differences. These differences relate to differences between the provisions of Ohio law governing corporations and the provisions of Ohio law governing state-chartered banks, as well as differences between provisions of the Park articles of incorporation and regulations and the Anderson articles of incorporation and regulations.

 

Set forth below is a description of the Park common shares and the Anderson common shares, including a summary of the material differences and similarities between the rights of Park shareholders and the rights of

Anderson shareholders. This description is not intended to be a complete statement of the differences affecting the rights of Anderson shareholders, but rather describes the more significant differences affecting the rights of Anderson shareholders and certain important similarities. This description is qualified in its entirety by reference to the relevant provisions of Ohio law and the articles of incorporation and regulations of each of Anderson and Park.

 

Park.  Park’s authorized capital stock consists of 20,000,000 common shares, without par value. As of November 6, 2006, 13,828,469 Park common shares were outstanding, and an additional 690,295 Park common shares were reserved for issuance upon the exercise of outstanding Park stock options. Park common shares are listed on AMEX under the symbol “PRK.”

 

Anderson.  Anderson’s authorized capital stock consists of 550,000 common shares, with a par value of $4.00 per share. As of November 6, 2006, 533,550 Anderson common shares were outstanding, and an additional 16,050 Anderson common shares were reserved for issuance upon the exercise of outstanding Anderson stock options. There exists no established public trading market for Anderson common shares.

 

If shareholders are entitled to preemptive rights, a corporation offering its shares for cash must provide those shareholders with the opportunity to purchase the offered shares in proportion to their current holdings at a fixed price before the corporation may offer the shares for sale to the public. Under Ohio law as currently enacted, shareholders do not have preemptive rights unless the corporation’s articles of incorporation provide otherwise. However, at the time the articles of incorporation of Anderson and Park were adopted, Ohio law stated that shareholders had preemptive rights unless the corporation’s articles of incorporation provided otherwise.

 

Park.  Shareholders of Park have preemptive rights unless the Park common shares offered or sold are (1) treasury shares; (2) issued as a share dividend or distribution; (3) offered or sold in connection with any merger or consolidation to which Park is a party or any acquisition of or investment in, another corporation, partnership, proprietorship or other business entity or its assets by Park, whether directly or indirectly, by any means; (4) offered or sold pursuant to the terms of a stock option plan or employee benefit, compensation or incentive plan which has been approved by the holders of three-fourths of the issued and outstanding shares of Park; or (5) released from preemptive rights by the affirmative vote or written consent of holders of two-thirds of the shares entitled to preemptive rights.

 

Anderson.  The articles of incorporation of Anderson provide that the shareholders of Anderson do not have preemptive rights.

 

Park.  Each Park common share entitles the holder thereof to share ratably in Park’s net assets legally available for distribution to shareholders in the event of Park’s liquidation, dissolution or winding up, after payment in full of all amounts required to be paid to creditors or provision for such payment.

 

Anderson.  Each Anderson common share entitles the holder thereof to share ratably in Anderson’s net assets legally available for distribution to shareholders in the event of Anderson’s liquidation, dissolution or winding up, after payment in full of all amounts required to be paid to creditors or provision for such payment.

 

Neither the holders of Park common shares nor the holders of Anderson common shares have subscription or conversion rights, and there are no mandatory redemption provisions applicable to the Park common shares or the Anderson common shares. The Park common shares to be issued in exchange for Anderson common shares in the merger, when issued in accordance with the terms of the merger agreement, will be validly issued, fully paid and non-assessable.

 

Park.  As an Ohio corporation, Park may, in the discretion of its board of directors, generally pay dividends to its shareholders out of surplus, however created, but must notify the shareholders if a dividend is paid out of capital surplus. The ability of Park to obtain funds for the payment of dividends and for other cash requirements largely depends on the amount of dividends which may be declared and paid by its subsidiaries. In addition, the Federal Reserve Board expects Park to serve as a source of strength to its subsidiary banks, which may require it to retain capital for further investments in its subsidiary banks, rather than for dividends for its shareholders.

 

Anderson.  In certain instances, the approval of the Ohio Division of Financial Institutions (the “Division”) must be obtained before a dividend may be declared and paid by Anderson. The approval of the Division is required if a dividend in any year would cause the total dividends for that year to exceed the sum of Anderson’s current year’s net income and the retained net income for the preceding two years, less required transfers to surplus. Payment of dividends by Anderson may be restricted at any time at the discretion of the regulatory authorities if they deem such dividends to constitute an unsafe and/or unsound banking practice or if necessary to maintain adequate capital for Anderson.

 

Under Ohio law, a corporation’s articles of incorporation or regulations determine the number of directors, but, in most circumstances, the number may not be less than three unless the corporation has less than three shareholders. Unless the articles of incorporation or regulations provide otherwise, the shareholders may fix or change the number of directors at a shareholder meeting called for the purpose of electing directors by the affirmative vote of a majority of the shares represented at the meeting and entitled to vote.

 

Pursuant to Section 1105.01 of the Ohio Revised Code, the board of directors of an Ohio bank must consist of not less than five directors.

 

Park.  The Park regulations provide for a board of directors consisting of not less than five and not more than 16 directors. The board of directors may not increase the number of directors to a number which exceeds by more than two the number of directors last elected by shareholders. The number of Park directors was last fixed at 14 directors and currently consists of 12 directors. Pursuant to the agreement and plan of merger entered into between Park and Vision on September 14, 2006, Park has agreed to take all actions necessary to cause J. Daniel Sizemore, Chairman of the Board and Chief Executive Officer of Vision, to become a director of Park upon the closing of the merger of Vision with and into Park.

 

Anderson.  The Anderson articles of incorporation provided for a board of directors consisting initially of nine directors. In addition to the authority given to Anderson’s shareholders to fix or change the number of directors, the shareholders may authorize the Anderson board of directors to fix or change the number of directors upon the affirmative vote of two-thirds of the directors, provided that the Anderson board of directors may not increase the number of directors to more than 15 nor reduce the number of directors to less than nine and may not change the number of directors by more than two from the last number fixed by the shareholders. On April 28, 2005, Anderson’s shareholders approved a proposal to fix the number of directors at six. Consistent with Ohio law, which requires that each class of directors consist of at least three directors, the six directors have been divided into two classes of three directors each. However, as discussed below under “Classification of the board of directors,” the Anderson articles of incorporation provide for the board of directors to be divided into three classes consisting of three directors each. The Anderson articles of incorporation have not been amended to reflect the effect of the reduction in the number of directors on the number of classes.

 

Under Ohio law, a corporation’s articles of incorporation or regulations may provide for the classification of directors into either two or three classes so long as (a) each class consists of at least three directors and (b) no director serves a term of office greater than three years.

 

Park.  Park’s regulations provide for the board of directors to be divided into three classes, with the term of office of one class expiring each year.

Anderson.  Anderson’s articles of incorporation provide for the board of directors to be divided into three classes, with the term of office of one class expiring each year.

 

Park.  Under the Park regulations, either the board of directors or any shareholder entitled to vote in the election of directors may nominate a candidate for election to the board of directors. Shareholder nominations must be made in writing and must be received by the president of Park not less than 14 days and not more than 50 days prior to the shareholder meeting at which directors are to be elected. If, however, notice of the meeting is mailed or disclosed to shareholders less than 21 days before the meeting date, shareholder nominations must be received by the close of business on the 7^th day after notice is mailed. A shareholder’s notice to Park nominating a director must set forth: