What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-09 compared with 2023-05-10 · 167 added, 82 removed, 700 unchanged (26% of the section changed)

10 unchanged sentences

Investment securities available for sale, at fair value 8,422 9,366

Investment securities held to maturity (fair value of $ 7,966 at March 31,

Investment securities held to maturity (fair value of $ 7,828 at June 30,

2023 and $ 7,805 at December 31, 2022)

20 unchanged sentences

186,150 83,150

FRB advances 10,000 —

Subordinated debentures

6 unchanged sentences

Preferred stock, 1,000,000 shares authorized, $ 1,000 liquidation value Series B non-cumulative convertible;

445 shares outstanding at March 31, 2023 and December 31, 2022

445 shares outstanding at June 30, 2023 and December 31, 2022

Common stock, $ 0.10 par value;

authorized 15,000,000 shares;

12,231,193 shares and 12,225,097 shares at March 31, 2023 and December 31, 2022, respectively

12,231,193 shares and 12,225,097 shares at June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 136,447 136,201

1 unchanged sentence

Accumulated other comprehensive loss ( 510 ) ( 526 )

Treasury stock, 284,522 shares at March 31, 2023 and Dec.

Treasury stock, 284,522 shares at June 30, 2023 and Dec.

31, 2022, at cost

8 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

2023 2022 2023 2022

Interest income:

12 unchanged sentences

Service fees on deposit accounts 931 1,313 2,146 2,629

Gain on sale of SBA loans — 22 — 22

Other loan fees 241 441 419 716

29 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

2023 2022 2023 2022

Net income $ 8,130 $ 10,738 $ 19,260 $ 20,829

Unrealized gain (loss) on investment securities:

Unrealized gain (loss) on investment securities 82 ( 584 )

Tax impact on unrealized (gain) loss ( 21 ) 151

Total unrealized gain (loss) on investment securities 61 ( 433 )

Unrealized (loss) gain on investment securities ( 61 ) ( 99 ) 22 ( 683 )

Tax impact on unrealized loss (gain) 16 25 ( 6 ) 176

Total unrealized (loss) gain on investment securities ( 45 ) ( 74 ) 16 ( 507 )

Comprehensive income attributable to the Company $ 8,085 $ 10,664 $ 19,276 $ 20,322

4 unchanged sentences

(Dollars in thousands except share data)

Periods, ended June 30, 2023

Stock Shares of Common

4 unchanged sentences

Three Months Ended

Balance, December 31, 2021 $ 445 12,182,081 $ 1,218 $ 135,451 $ 98,017 $ 245 $ ( 3,015 ) $ 232,361

Balance, March 31, 2023 $ 445 12,231,193 $ 1,223 $ 136,341 $ 138,577 $ ( 465 ) $ ( 3,015 ) $ 273,106

Net income — — — — 8,130 — — 8,130

Common stock options exercised — 15,938 2 112 — — — 114

Other comprehensive loss — — — — — ( 45 ) — ( 45 )

4 unchanged sentences

— — — — ( 2,150 ) — — ( 2,150 )

Balance, March 31, 2022 $ 445 12,198,019 $ 1,220 $ 135,623 $ 106,194 $ ( 188 ) $ ( 3,015 ) $ 240,279

Three Months Ended

Balance, June 30, 2023

$ 445 12,231,193 $ 1,223 $ 136,447 $ 144,550 $ ( 510 ) $ ( 3,015 ) $ 279,140

Six Months Ended

Balance, December 31, 2022 $ 445 12,225,097 $ 1,223 $ 136,201 $ 131,706 $ ( 526 ) $ ( 3,015 ) $ 266,034

8 unchanged sentences

— — — — ( 4,300 ) — — ( 4,300 )

Balance, June 30, 2023

$ 445 12,231,193 $ 1,223 $ 136,447 $ 144,550 $ ( 510 ) $ ( 3,015 ) $ 279,140

(1) Dividends per share of $ 15.00 and $ 30.00 , respectively, were declared on series B preferred stock for the three and six months ended June 30, 2023.

(2) Dividends per share of $ 0.18 and $ 0.36 , respectively, were declared on common stock outstanding for the three and six months ended June 30, 2023.

See accompanying notes to consolidated financial statements

Parke Bancorp, Inc.

and Subsidiaries

CONSOLIDATED STATEMENTS OF EQUITY

(Dollars in thousands except share data)

Periods, ended June 30, 2022

Stock Shares of Common Stock issued Common

Stock Additional

Earnings Accumulated

Other Comprehensive (Loss) Income Treasury

Stock Total Shareholders' Equity

Three Months Ended

Balance, March 31, 2022 $ 445 12,198,019 $ 1,220 $ 135,623 $ 106,194 $ ( 188 ) $ ( 3,015 ) $ 240,279

(1) Dividends per share of $ 15.0 were declared on series B preferred stock for the three months ended March 31, 2023 and 2022, respectively.

(2) Dividends per share of $ 0.18 and $ 0.16 , respectively, were declared on common stock outstanding for the three months ended March 31, 2023 and 2022.

Net income — — — — 10,738 — — 10,738

Common stock options exercised — 1,464 — 11 — — — 11

Other comprehensive loss — — — — — ( 74 ) — ( 74 )

Stock compensation expense — — — 75 — — — 75

Dividend on preferred stock ( 1)

— — — — ( 7 ) — — ( 7 )

Dividend on common stock (2)

— — — — ( 1,905 ) — — ( 1,905 )

Balance, June 30, 2022 $ 445 12,199,483 $ 1,220 $ 135,709 $ 115,020 $ ( 262 ) $ ( 3,015 ) $ 249,117

Six Months Ended

Balance, December 31, 2021 $ 445 12,182,081 $ 1,218 $ 135,451 $ 98,017 $ 245 $ ( 3,015 ) $ 232,361

Net income — — — — 20,829 — — 20,829

Common stock options exercised — 17,402 2 123 — — — 125

Other comprehensive loss — — — — — ( 507 ) — ( 507 )

Stock compensation expense — — — 135 — — — 135

Dividend on preferred stock (1)

— — — — ( 14 ) — — ( 14 )

Dividend on common stock (2)

— — — — ( 3,812 ) — — ( 3,812 )

Balance, June 30, 2022 $ 445 12,199,483 $ 1,220 $ 135,709 $ 115,020 $ ( 262 ) $ ( 3,015 ) $ 249,117

(1) Dividends per share of $ 15.00 and $ 30.00 , respectively, were declared on series B preferred stock for the three and six months ended June 30, 2022.

(2) Dividends per share of $ 0.16 and $ 0.32 , respectively, were declared on common stock outstanding for the three and six months ended June 30, 2022.

See accompanying notes to consolidated financial statements

3 unchanged sentences

(Dollars in thousands)

For the Three Months Ended

For the Six Months Ended

Cash Flows from Operating Activities:

4 unchanged sentences

Increase in value of bank owned life insurance ( 290 ) ( 279 )

Gain on sale of SBA loans — ( 22 )

SBA loans originated for sale — ( 261 )

Proceeds from sale of SBA loans originated for sale — 283

Net gain on sale of OREO and valuation adjustments — ( 328 )

2 unchanged sentences

Net changes in:

Decrease (increase) in accrued interest receivable and other assets 195 ( 2,443 )

Increase in accrued interest payable and other accrued liabilities 1,638 981

(Increase) decrease in accrued interest receivable and other assets ( 2,911 ) 1,677

Increase (decrease) in accrued interest payable and other accrued liabilities 186 ( 808 )

Net cash provided by operating activities 14,716 21,903

5 unchanged sentences

Proceeds from sale of OREO, net — 1,887

Redemptions of restricted stock 855 —

Purchases of restricted stock ( 5,803 ) ( 82 )

3 unchanged sentences

Proceeds from exercise of stock options 33 125

Decrease in FHLBNY and short-term borrowings ( 30,000 ) —

Increase in FHLBNY and short-term borrowings 112,000 —

Increase in FHLBNY short-term borrowings 103,000 —

Increase in Federal Reserve short-term borrowings 10,000 —

Net decrease in noninterest-bearing deposits ( 81,554 ) ( 100,511 )

3 unchanged sentences

Cash and Cash Equivalents, January 1, 182,150 596,553

Cash and Cash Equivalents, March 31, $ 145,974 $ 503,829

Cash and Cash Equivalents, June 30, $ 137,497 $ 393,241

Supplemental Disclosure of Cash Flow Information:

23 unchanged sentences

The accompanying interim financial statements should be read in conjunction with the annual financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

The accompanying interim financial statements for the three months ended March 31, 2023 and 2022 are unaudited.

The accompanying interim financial statements for the three and six months ended June 30, 2023 and 2022 are unaudited.

The balance sheet as of December 31, 2022, was derived from the audited financial statements.

In the opinion of management, these financial statements include all normal and recurring adjustments necessary for a fair statement of the results for such interim periods.

Results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results for the full year or any other period.

Results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results for the full year or any other period.

Use of Estimates:

1 unchanged sentence

Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change in the near term include the allowance for loan losses, the valuation of deferred income taxes, and the carrying value of other real estate owned ("OREO").

Material estimates that are particularly susceptible to significant change in the near term include the allowance for credit losses, the valuation of deferred income taxes, and the carrying value of other real estate owned ("OREO").

Allowance for Credit Losses on Loans and Leases

61 unchanged sentences

Under the guidance, modifications of contracts due to reference rate reform will not require contract remeasurement or reassessment of a previous accounting determination.

For hedge accounting, modification of critical terms of the hedge due to changes in reference rate reform will not affect hedge accounting or dedesignate the hedging relationship.

For hedge accounting, modification of critical terms of the hedge due to changes in reference rate reform will not affect hedge accounting or de-designate the hedging relationship.

The guidance also provides specific expedients for fair value hedges, cash flow hedges, and excluded components.

Further, the guidance provides a none-time election to sell or transfer held to maturity debt 46 securities that are affected by the reference rate change.

Further, the guidance provides a one-time election to sell or transfer held to maturity debt securities that are affected by the reference rate change.

The guidance is effective upon issuance through December 31, 2022.

30 unchanged sentences

INVESTMENT SECURITIES

The following is a summary of the Company's investments in available for sale and held to maturity securities as of March 31, 2023 and December 31, 2022:

As of March 31, 2023 Amortized

The following is a summary of the Company's investments in available for sale and held to maturity securities as of June 30, 2023 and December 31, 2022:

As of June 30, 2023 Amortized

losses Fair value

19 unchanged sentences

Total held to maturity $ 9,378 $ 56 $ 1,629 $ 7,805

The amortized cost and fair value of debt securities classified as available for sale and held to maturity, by contractual maturity as of March 31, 2023 are as follows:

The amortized cost and fair value of debt securities classified as available for sale and held to maturity, by contractual maturity as of June 30, 2023 are as follows:

(Dollars in thousands)

12 unchanged sentences

Expected maturities may differ from contractual maturities because the issuers of certain debt securities do have the right to call or prepay their obligations without any penalty.

The Company did not sell any securities during the three months ended March 31, 2023.

The following tables show the gross unrealized losses and fair value of the Company's investments for which an allowance for credit losses has not been recorded, which are aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2023 and December 31, 2022:

As of March 31, 2023 Less Than 12 Months 12 Months or Greater Total

The Company did not sell any securities during the three and six months ended June 30, 2023.

As of June 30, 2023 Less Than 12 Months 12 Months or Greater Total

Description of Securities Fair

23 unchanged sentences

Total held to maturity $ — $ — $ 6,403 $ 1,629 $ 6,403 $ 1,629

The Company’s unrealized loss for the debt securities is comprised of 8 securities in the less than 12 months loss position and 16 securities in the 12 months or greater loss position at March 31, 2023.

The Company’s unrealized loss for the debt securities is comprised of 11 securities in the less than 12 months loss position and 15 securities in the 12 months or greater loss position at June 30, 2023.

The mortgage-backed securities that had unrealized losses were issued or guaranteed by the US government or US government sponsored entities.

1 unchanged sentence

The states and political subdivisions securities that had unrealized losses were issued by a school district, and the loss is attributed to changes in interest rates and not due to credit losses.

Because the Company does not intend to sell the securities and it is not more likely than not that the Company will be required to sell these investments before recovery of their amortized cost basis, the Company does not consider the unrealized loss in these securities to be credit losses at March 31, 2023.

LOANS AND ALLOWANCE FOR CREDIT LOSSES ON LOANS

At March 31, 2023 and December 31, 2022, the Company had $ 1.76 billion and $ 1.75 billion, respectively, in loans receivable outstanding.

Outstanding balances include a total net increase of $ 2.2 million and $ 1.9 million at March 31, 2023 and December 31, 2022, respectively, for net deferred loan costs, and unamortized discounts.

The portfolio segments of loans receivable at March 31, 2023 and December 31, 2022, consist of the following:

March 31, 2023 December 31, 2022

Amount Amount

At June 30, 2023 and December 31, 2022, the Company had $ 1.79 billion and $ 1.75 billion, respectively, in loans receivable outstanding.

Outstanding balances include a total net increase of $ 1.9 million and $ 1.9 million at June 30, 2023 and December 31, 2022, respectively, for net deferred loan costs, and unamortized discounts.

The portfolio segments of loans receivable at June 30, 2023 and December 31, 2022, consist of the following:

June 30, 2023 December 31, 2022

(Dollars in thousands)

11 unchanged sentences

Total loan receivable, net of allowance for credit losses on loans $ 1,754,031 $ 1,719,614

An age analysis of past due loans by class at March 31, 2023 and December 31, 2022 is as follows:

March 31, 2023 30-59

An age analysis of past due loans by class at June 30, 2023 and December 31, 2022 is as follows:

June 30, 2023 30-59

Days Total Past

30 unchanged sentences

The following table provides the amortized cost of loans on nonaccrual status:

March 31, 2023

June 30, 2023

(amounts in thousands) Nonaccrual with no ACL Nonaccrual with ACL Total Nonaccrual Loans Past Due Over 90 Days Still Accruing Total Nonperforming

57 unchanged sentences

The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life.

At March 31, 2023, the allowance for credit losses on off-balance sheet credit exposures was $ 760.0 thousand.

At June 30, 2023, the allowance for credit losses on off-balance sheet credit exposures was $ 760.0 thousand.

The following tables present the information regarding the allowance for credit losses and associated loan data by portfolio segment under the CECL model in accordance with ASC 326:

2 unchanged sentences

Allowance for credit losses (Dollars in thousands)

Three months ended March 31, 2023

Three months ended June 30, 2023

March 31, 2023 $ 738 $ 3,599 $ 1,876 $ 8,076 $ 7,806 $ 8,070 $ 1,238 $ 104 $ 31,507

Charge-offs — — — — — — — — —

Recoveries 8 — — — — — — — 8

Provisions (benefits) ( 156 ) 379 ( 7 ) 722 ( 96 ) ( 330 ) ( 6 ) ( 6 ) 500

Ending Balance at June 30, 2023

$ 590 $ 3,978 $ 1,869 $ 8,798 $ 7,710 $ 7,740 $ 1,232 $ 98 $ 32,015

Allowance for credit losses

Six months ended June 30, 2023

December 31, 2022 $ 390 $ 2,581 $ 2,298 $ 9,709 $ 6,076 $ 9,381 $ 1,347 $ 63 $ 31,845

3 unchanged sentences

Provisions (benefits) 22 ( 502 ) ( 260 ) 40 ( 148 ) ( 847 ) 13 ( 18 ) ( 1,700 )

Ending Balance at March 31, 2023

Ending Balance at June 30, 2023

$ 590 $ 3,978 $ 1,869 $ 8,798 $ 7,710 $ 7,740 $ 1,232 $ 98 $ 32,015

During the quarter, the credit provisions to the Construction, Commercial Non-owner Occupied, and Residential 1-4 Family Investment segments were largely driven by declines or slowdowns to growth within the portfolio that lowered the loan exposure and also caused changes to the qualitative factors related to loan volume within the portfolio segments.

The credit provision to the Commercial Owner Occupied segment was largely driven by a reduction in other assets especially mentioned ("OAEM") loans during the quarter, partially offset by increase in loan volume.

During the quarter, the increase to provision for the Construction segment was due to an increase in the portfolio balance, while the increase in provision to the Commercial Non-owner Occupied segment was driven by an increase to the specific reserve.

The credit provision during the quarter to the Commercial and Industrial and Residential 1-4 Family Investment segments were largely driven by declines or slowdowns to growth within the portfolio that lowered the loan exposure and also caused changes to the qualitative factors related to loan volume within the portfolio segments.

For the six months ended June 30, 2023, the credit provision to the Construction, Commercial Owner Occupied, Residential 1 to 4 Family, and Residential 1 to 4 Family Investment segments was largely driven by declines or slowdowns to growth within the portfolio that lowered loan exposure and also caused changes to the qualitative factors related to loan volume within the portfolio segments, partially offset by increases in balances in the Construction and Residential 1 - 4 Family Investment segments.

The following tables present the information regarding the allowance for loan losses and associated loan data by portfolio segment under the incurred loss model:

2 unchanged sentences

Allowance for loan losses (Dollars in thousands)

Three months ended March 31, 2022

Three months ended June 30, 2022

March 31, 2022 $ 509 $ 2,197 $ 3,012 $ 7,253 $ 7,477 $ 8,005 $ 1,415 $ 113 $ 29,981

Charge-offs — — — — — — — — —

Recoveries 2 100 2 — 13 — — — 117

Provisions (benefits) 40 ( 95 ) ( 272 ) 296 ( 199 ) 915 ( 317 ) ( 18 ) 350

Ending Balance at June 30, 2022 $ 551 $ 2,202 $ 2,742 $ 7,549 $ 7,291 $ 8,920 $ 1,098 $ 95 $ 30,448

Allowance for loan losses

Six months ended June 30, 2022

December 31, 2021 $ 417 $ 2,662 $ 2,997 $ 7,476 $ 7,045 $ 7,925 $ 1,215 $ 108 $ 29,845

2 unchanged sentences

Provisions (benefits) 126 ( 560 ) ( 260 ) 73 112 995 ( 123 ) ( 13 ) 350

Ending Balance at March 31, 2022 $ 509 $ 2,197 $ 3,012 $ 7,253 $ 7,477 $ 8,005 $ 1,415 $ 113 $ 29,981

Ending Balance at June 30, 2022 $ 551 $ 2,202 $ 2,742 $ 7,549 $ 7,291 $ 8,920 $ 1,098 $ 95 $ 30,448

Allowance for loan losses

1 unchanged sentence

Collectively evaluated for impairment 551 2,202 2,738 7,429 7,269 8,920 1,098 95 30,302

Ending Balance at March 31, 2022 $ 509 $ 2,197 $ 3,012 $ 7,253 $ 7,477 $ 8,005 $ 1,415 $ 113 $ 29,981

Ending Balance at June 30, 2022 $ 551 $ 2,202 $ 2,742 $ 7,549 $ 7,291 $ 8,920 $ 1,098 $ 95 $ 30,448

Individually evaluated for impairment $ 158 $ 1,139 $ 2,364 $ 5,363 $ 490 $ — $ — $ — $ 9,514

Collectively evaluated for impairment 35,581 145,667 126,418 319,772 392,281 433,733 77,797 7,370 1,538,619

Ending Balance at March 31, 2022 $ 38,825 $ 136,010 $ 132,275 $ 316,253 $ 396,274 $ 383,608 $ 84,970 $ 7,624 $ 1,495,839

The increase in the allowance for loan loss balance for the residential 1 to 4 family portfolio segment for the three months ended March 31, 2022 is mainly due to loan growth.

The increase in the allowance for loan loss balance for the residential multifamily portfolio segment is mainly due to increases in qualitative factors, namely economic conditions.

The decrease in the allowance for loan loss balance for the construction portfolio segment for the three months ended March 31, 2022 is due to the decrease in loan balance.

Ending Balance at June 30, 2022 $ 35,739 $ 146,806 $ 128,782 $ 325,135 $ 392,771 $ 433,733 $ 77,797 $ 7,370 $ 1,548,133

For the quarter, the increase to provision in the Commercial Non-owner Occupied and Residential 1 to 4 Family Investment segments were largely driven by increases to growth within the portfolio that increased the loan exposure and also caused changes to the qualitative factors related to loan volume within the portfolio segments.

The credit provisions to the Commercial Owner Occupied, Residential 1 to 4 Family, and Residential Multifamily segments were largely driven by declines or slowdowns to growth within the portfolio that lowered the loan exposure and also caused changes to the qualitative factors related to loan volume within the portfolio segments.

For the year to date, the increase to provision in the Commercial and Industrial, Residential 1 to 4 Family, and 1 to 4 Family Investment Segments were largely driven by increases to growth within the portfolio that increased the loan exposure and also caused changes to the qualitative factors related to loan volume within the portfolio segments.

The credit provisions to the Construction, Commercial Owner Occupied, and Residential Multifamily segments were largely driven by declines or slowdowns to growth within the portfolio that lowered the loan exposure and also caused changes to the qualitative factors related to loan volume within the portfolio segments, slightly offset by an increase in the national and local economic qualitative factor driven by deteriorating economic conditions during the second quarter of 2022.

Collateral-Dependent Loans

The following table presents the collateral-dependent loans by portfolio segment and collateral type at March 31, 2023:

The following table presents the collateral-dependent loans by portfolio segment and collateral type at June 30, 2023:

(amounts in thousands) Real Estate Business Assets Other

35 unchanged sentences

Borrowers in this category require constant monitoring, are considered work-out loans and present the potential for future loss to the Bank.

The following tables provide an analysis of loans by portfolio segment based on the credit quality indicators used to determine the allowance for credit losses, as of March 31, 2023 under the current expected credit loss model.

The following tables provide an analysis of loans by portfolio segment based on the credit quality indicators used to determine the allowance for credit losses, as of June 30, 2023 under the current expected credit loss model.

(Dollars in thousands) Term Loans Amortized Cost Basis by Origination Year Revolving Loans at Amortized Cost Basis

As of March 31, 2023 2023 2022 2021 2020 Prior Total

As of June 30, 2023

2023 2022 2021 2020 Prior Total

Commercial and Industrial

46 unchanged sentences

Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ —

As of June 30, 2023, the Company was in the process of foreclosing on $ 3.6 million in loans, consisting of one commercial and industrial loan, two commercial - owner occupied loans, and two commercial - non-owner occupied loans.

An analysis of the credit risk profile by internally assigned grades under the incurred loss model as of December 31, 2022 is as follows:

11 unchanged sentences

Total $ 1,732,156 $ 3,027 $ 16,276 $ — $ 1,751,459

There were no loans modified to borrowers with financial difficulty during the quarter ended March 31, 2023.

Modifications to Borrowers Experiencing Financial Difficulty

Occasionally, the Company modifies loans to borrowers in financial distress by providing term extensions, interest rate reductions, or other forbearance modifications.

In some cases, Parke provides multiple types of concessions on the same loan.

The following table shows the amortized cost basis at the end of the reporting period of the loans modified to borrowers experiencing financial difficulty, disaggregated by class of financing receivable and type of concession granted.

Loan Modifications Made to Borrowers Experiencing Financial Difficulty

June 30, 2023

(Dollars in thousands) Term Extension More-Than-Insignificant Payment Delay Interest Rate Reduction Other Total % of Total Loan Category

Commercial – Non-owner Occupied $ — $ — $ — $ 15,584 $ 15,584 4.1 %

Total $ — $ — $ — $ 15,584 $ 15,584

As of June 30, 2023, Parke had no commitments to lend additional amounts to the borrowers included in the previous table.

The following table describes the financial effect of the modifications made to borrowers experiencing financial difficulty as of June 30, 2023:

Commercial – Non-owner Occupied Forbearance agreement made on two loans to the same borrower whereby the Company will receive all principal and interest due by the original maturity date and where the Company will not foreclose as long as payments are made as per the terms of the agreement.

Upon the Company's determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off.

Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

There were no loans that had a payment default during the period and were modified in the 12 months before default to borrowers experiencing financial difficulty.

The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

The following table depicts the performance of loans that have been modified in the last 12 months (in thousands):

June 30, 2023

Current 30-89 Days Past Due Greater than 90 Days Past Due Total

Commercial – Non-owner Occupied $ 15,584 $ — $ — $ 15,584

Total $ 15,584 $ — $ — $ 15,584

EARNINGS PER SHARE (“EPS”)

The following tables set forth the calculation of basic and diluted EPS for the three-month periods ended March 31, 2023 and 2022.

Three months ended March 31,

The following tables set forth the calculation of basic and diluted EPS for the three and six-month periods ended June 30, 2023 and 2022.

Three months ended June 30, Six months ended June 30,

2023 2022 2023 2022

(Dollars in thousands except share and per share data)

36 unchanged sentences

As part of the Company’s overall valuation process, management evaluates these third-party methodologies to ensure that they are representative of exit prices in the Company’s principal markets.

Securities in Level 2 include mortgage-backed securities, corporate debt obligations, and collateralized mortgage-backed securities.

Securities in Level 2 include mortgage-backed securities, and corporate debt obligations.

The table below presents the balances of assets and liabilities measured at fair value on a recurring basis.

2 unchanged sentences

Available for Sale Securities

As of March 31, 2023

As of June 30, 2023

Corporate debt obligations $ — $ 500 $ — $ 500

5 unchanged sentences

Total $ — $ 9,366 $ — $ 9,366

For the three months ended March 31, 2023, there were no transfers between the levels within the fair value hierarchy.

There were no level 3 assets or liabilities held during the three months ended March 31, 2023 and 2022.

For the six months ended June 30, 2023, there were no transfers between the levels within the fair value hierarchy.

There were no level 3 assets or liabilities held during the three and six months ended June 30, 2023 and 2022.

Fair Value on a Non-recurring Basis:

2 unchanged sentences

(Dollars in thousands)

As of March 31, 2023

As of June 30, 2023

Collateral-dependent loans $ — $ — $ 1,091 $ 1,091

3 unchanged sentences

OREO — — 1,550 1,550

All collateral-dependent impaired loans have an independent third-party full appraisal to determine the NRV based on the fair value of the underlying collateral, less cost to sell (a range of 5 % to 10 %) and other costs, such as unpaid real estate taxes, that have been identified, or the present value of discounted cash flows in the case of certain impaired loans that are not collateral dependent.

The appraisal will be based on an "as-is" valuation and will follow a reasonable valuation method that addresses the direct sales comparison, income, and cost approaches to market value, reconciles those approaches, and explains the elimination of each approach not used.

Appraisals are updated every 12 months or sooner if we have identified possible further deterioration in value.

Collateral-dependent loans are those loans that are accounted for under ASC 326, Financial Instruments - Credit Losses ("ASC 326"), in which the Bank has measured impairment generally based on the fair value of the loan’s collateral.

Fair value is generally determined based upon independent third-party appraisals of the properties that collateralize the loans.

These assets are generally classified as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.

OREO consists of real estate properties that are recorded at fair value based upon current appraised value, or agreements of sale, less estimated disposition costs using level 3 inputs.

4 unchanged sentences

For certain financial assets and liabilities, carrying value approximates fair value due to the nature of the financial instrument.

These instruments include cash and cash equivalents, accrued interest receivable, bank owned life insurance, restricted stock, demand and other non-maturity deposits and accrued interest payable, and they are considered to be level 1 measurements.

The following table summarizes the carrying amounts and fair values for financial instruments that are not carried at fair value at March 31, 2023 and December 31, 2022:

March 31, 2023 Carrying Amount Fair Value

These instruments include cash and cash equivalents, accrued interest receivable, bank owned life insurance, Federal Home Loan Bank of New York ("FHLBNY") restricted stock, demand and other non-maturity deposits and accrued interest payable, and they are considered to be level 1 measurements.

The following table summarizes the carrying amounts and fair values for financial instruments that are not carried at fair value at June 30, 2023 and December 31, 2022:

June 30, 2023 Carrying Amount Fair Value

Total Level 1 Level 2 Level 3

29 unchanged sentences

Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

Commitments to fund fixed-rate loans were immaterial at March 31, 2023.

Commitments to fund fixed-rate loans were immaterial at June 30, 2023.

Variable-rate commitments are generally issued for less than one year and carry market rates of interest.

1 unchanged sentence

Management believes that off-balance sheet risk is not material to the results of operations or financial condition.

As of March 31, 2023 and December 31, 2022, unused commitments to extend credit amounted to approximately $ 133.9 million and $ 159.0 million, respectively.

At March 31, 2023, the allowance for credit losses on off-balance sheet credit exposures was $ 760.0 thousand.

As of June 30, 2023 and December 31, 2022, unused commitments to extend credit amounted to approximately $ 124.9 million and $ 159.0 million, respectively.

At June 30, 2023, the allowance for credit losses on off-balance sheet credit exposures was $ 760.0 thousand.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party.

The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities

to customers.

As of March 31, 2023 and December 31, 2022, standby letters of credit with customers were $ 1.5 million and $ 1.5 million, respectively.

On December 30, 2022, the Bank entered into an agreement with the FHLBNY for a Municipal Letter of Credit ("MLOC") of $ 50.0 million.

The MLOC is used to pledge against public deposits and expires on April 4, 2023.

There were no outstanding borrowings on the letter of credit as of March 31, 2023.

The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

As of June 30, 2023 and December 31, 2022, standby letters of credit with customers were $ 1.5 million and $ 1.5 million, respectively.

On April 5, 2023, the Bank entered into an agreement with the FHLBNY for a Municipal Letter of Credit ("MLOC") of $ 50.0 million.

The MLOC is used to pledge against public deposits and expires on July 5, 2023.

There were no outstanding borrowings on the letter of credit as of June 30, 2023.

The Company also has entered into an employment contract with the President of the Company, which provides for continued payment of certain employment salary and benefits prior to the expiration date of the agreement and in the event of a change in control, as defined.

4 unchanged sentences

A financial institution that provides services to cannabis-related businesses can comply with Bank Secrecy Act (“BSA”) disclosure standards by following the FinCEN guidelines.

We maintain stringent written policies and procedures related to the acceptance of such businesses and to the monitoring and maintenance of such business accounts.

We maintain stringent written policies and procedures related to the acceptance of such businesses and to the monitoring and maintenance of such

business accounts.

We conduct a significant due diligence review of the cannabis business before the business is accepted, including confirmation that the business is properly licensed by the applicable state.

3 unchanged sentences

Any change in the Federal government’s enforcement position, could cause us to immediately cease providing banking services to the cannabis industry.

At March 31, 2023 and December 31, 2022, deposit balances from cannabis customers were approximately $ 123.5 million and $ 177.3 million, or 8.4 % and 11.3 % of total deposits, respectively, with three customers accounting for 48.3 % and 36.9 % of the total at March 31, 2023 and December 31, 2022.

At March 31, 2023 and December 31, 2022, there were cannabis-related loans in the amounts of $ 18.8 million and $ 3.8 million, respectively.

At June 30, 2023 and December 31, 2022, deposit balances from cannabis customers were approximately $ 111.6 million and $ 177.3 million, or 7.7 % and 11.3 % of total deposits, respectively, with three customers accounting for 49.2 % and 36.9 % of the total at June 30, 2023 and December 31, 2022.

At June 30, 2023 and December 31, 2022, there were cannabis-related loans in the amounts of $ 19.5 million and $ 3.8 million, respectively.

Armored Car Matter

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements