What changed in this filing

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Item 1. Financial Statements

2024-05-08 compared with 2023-11-08 · 143 added, 280 removed, 578 unchanged (42% of the section changed)

4 unchanged sentences

(Dollars in thousands except per share data)

September 30,

2024 December 31,

4 unchanged sentences

Investment securities available for sale, at fair value 6,640 7,095

Investment securities held to maturity (fair value of $ 7,285 at September 30,

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

Investment securities held to maturity, net of allowance for credit losses of $ 0 at March 31, 2024 and December 31, 2023 (fair value of $ 7,685 at March 31, 2024 and $ 7,892 at December 31, 2023)

Total investment securities 15,911 16,387

27 unchanged sentences

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

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

375 shares outstanding at March 31, 2024 and December 31, 2023

Common stock, $ 0.10 par value;

authorized 15,000,000 shares;

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

12,247,343 shares and 12,240,821 shares at March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 136,801 136,700

1 unchanged sentence

Accumulated other comprehensive loss ( 430 ) ( 404 )

Treasury stock, 284,522 shares at September 30, 2023 and December 31, 2022, at cost

Treasury stock, 284,522 shares at March 31, 2024 and December 31, 2023, at cost

( 3,015 ) ( 3,015 )

7 unchanged sentences

For the Three Months Ended

September 30, For the Nine Months Ended

September 30,

2023 2022 2023 2022

Interest income:

12 unchanged sentences

Service fees on deposit accounts 379 1,215

Gain on sale of SBA loans — 76 — 98

Other loan fees 238 178

Bank owned life insurance income 160 143

Net gain on sale and valuation adjustment of OREO 38 — 38 328

Other 285 246

26 unchanged sentences

For the Three Months Ended

September 30, For the Nine Months Ended

September 30,

2023 2022 2023 2022

Net income attributable to the Company $ 6,151 $ 11,130

Unrealized loss on investment securities ( 179 ) ( 478 ) ( 157 ) ( 1,161 )

Tax impact on unrealized loss 46 123 40 299

Total unrealized loss on investment securities ( 133 ) ( 355 ) ( 117 ) ( 862 )

Unrealized (loss) gain on investment securities ( 35 ) 82

Tax impact on unrealized loss (gain) 9 ( 21 )

Total unrealized (loss) gain on investment securities ( 26 ) 61

Comprehensive income attributable to the Company $ 6,125 $ 11,191

4 unchanged sentences

(Dollars in thousands except share data)

Periods, ended September 30, 2023

Three-months ended March 31, 2024 and 2023

Shares of Preferred Stock Outstanding Preferred

Stock Shares of Common

4 unchanged sentences

Three Months Ended

Balance, June 30, 2023 $ 445 12,231,193 $ 1,223 $ 136,447 $ 144,550 $ ( 510 ) $ ( 3,015 ) $ 279,140

Net income — — — — 1,029 — — 1,029

Other comprehensive loss — — — — — ( 133 ) — ( 133 )

Stock compensation expense — — — 100 — — — 100

Dividend on preferred stock (1)

— — — — ( 7 ) — — ( 7 )

Dividend on common stock (2)

— — — — ( 2,150 ) — — ( 2,150 )

Balance, September 30, 2023

$ 445 12,231,193 $ 1,223 $ 136,547 $ 143,422 $ ( 643 ) $ ( 3,015 ) $ 277,979

Nine Months Ended

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

2 unchanged sentences

Common stock options exercised — — 6,096 — 33 — — — 33

Other comprehensive loss — — — — — ( 117 ) — ( 117 )

Other comprehensive income — — — — — — 61 — 61

Stock compensation expense — — — — 107 — — — 107

Dividend on preferred stock (1)

Dividend on preferred stock ($ 15.00 per share)

— — — — — ( 7 ) — — ( 7 )

Dividend on common stock (2)

Dividend on common stock ($ 0.18 per share)

— — — — — ( 2,150 ) — — ( 2,150 )

Balance, September 30, 2023

Balance, March 31, 2023

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

(1) Dividends per share of $ 15.00 and $ 45.00 , respectively, were declared on series B preferred stock for the three and nine months ended September 30, 2023.

(2) Dividends per share of $ 0.18 and $ 0.54 , respectively, were declared on common stock outstanding for the three and nine months ended September 30, 2023.

See accompanying notes to the unaudited consolidated financial statements

Parke Bancorp, Inc.

and Subsidiaries

CONSOLIDATED STATEMENTS OF EQUITY

(Dollars in thousands except share data)

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

Net income — — — — 10,540 — — 10,540

Common stock options exercised — 7,614 1 59 — — — 60

Other comprehensive loss — — — — — ( 355 ) — ( 355 )

Stock compensation expense — — — 117 — — — 117

Dividend on preferred stock ( 1)

— — — — ( 7 ) — — ( 7 )

Dividend on common stock (2)

— — — — ( 2,144 ) — — ( 2,144 )

Balance, September 30, 2022 $ 445 12,207,097 $ 1,221 $ 135,885 $ 123,409 $ ( 617 ) $ ( 3,015 ) $ 257,328

Nine Months Ended

Balance, December 31, 2023 375 $ 375 12,240,821 $ 1,224 $ 136,700 $ 149,437 $ ( 404 ) $ ( 3,015 ) $ 284,317

3 unchanged sentences

Stock compensation expense — — — — 46 — — — 46

Dividend on preferred stock (1)

Dividend on preferred stock ($ 15.00 per share)

— — — — — ( 6 ) — — ( 6 )

Dividend on common stock (2)

Dividend on common stock ($ 0.18 per share)

— — — — — ( 2,152 ) — — ( 2,152 )

Balance, September 30, 2022 $ 445 12,207,097 $ 1,221 $ 135,885 $ 123,409 $ ( 617 ) $ ( 3,015 ) $ 257,328

(1) Dividends per share of $ 15.00 and $ 45.00 , respectively, were declared on series B preferred stock for the three and nine months ended September 30, 2022.

(2) Dividends per share of $ 0.18 and $ 0.50 , respectively, were declared on common stock outstanding for the three and nine months ended September 30, 2022.

Balance, March 31, 2024

375 $ 375 12,247,343 $ 1,225 $ 136,801 $ 153,430 $ ( 430 ) $ ( 3,015 ) $ 288,386

See accompanying notes to the unaudited consolidated financial statements

3 unchanged sentences

(Dollars in thousands)

For the Nine Months Ended

September 30,

For the Three Months Ended

Cash Flows from Operating Activities:

2 unchanged sentences

Depreciation and amortization 143 31

(Recovery of) provision for credit losses ( 1,600 ) 950

Provision for (recovery of) credit losses 204 ( 2,400 )

Increase in value of bank owned life insurance ( 160 ) ( 143 )

Gain on sale of SBA loans — ( 98 )

SBA loans originated for sale — ( 1,723 )

Proceeds from sale of SBA loans originated for sale — 1,821

Net gain on sale of OREO and valuation adjustments ( 38 ) ( 328 )

Net accretion of purchase premiums and discounts on securities ( 11 ) ( 9 )

1 unchanged sentence

Net changes in:

(Increase) decrease in accrued interest receivable and other assets ( 5,738 ) 226

Decrease in accrued interest receivable and other assets 1,836 195

Increase in accrued interest payable and other accrued liabilities 141 1,638

3 unchanged sentences

Repayments and maturities of investment securities held to maturity 37 34

Net increase in loans ( 48,671 ) ( 196,324 )

Sales (purchases) of bank premises and equipment 116 ( 88 )

Proceeds from sale of OREO, net 161 1,887

Net decrease (increase) in loans 1,820 ( 11,356 )

(Purchases) sales of bank premises and equipment ( 18 ) 133

Redemptions of restricted stock 3,600 —

Purchases of restricted stock ( 2,262 ) ( 3,690 )

Net cash used in investing activities ( 47,956 ) ( 191,623 )

Net cash provided by (used in) investing activities 3,592 ( 14,414 )

Cash Flows from Financing Activities:

1 unchanged sentence

Proceeds from exercise of stock options 56 33

Increase in FHLBNY long-term borrowings 20,000 —

Net increase (decrease) in FHLBNY short-term borrowings 8,000 ( 5,000 )

Decrease in FHLBNY long-term borrowings ( 75,000 ) —

Net increase in FHLBNY short-term borrowings 45,000 82,000

Net decrease in noninterest-bearing deposits ( 35,801 ) ( 75,418 )

3 unchanged sentences

Cash and Cash Equivalents, January 1, 180,376 182,150

Cash and Cash Equivalents, September 30, $ 126,740 $ 193,344

Cash and Cash Equivalents, March 31, $ 171,093 $ 145,974

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, 2023.

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

The accompanying interim financial statements for the three months ended March 31, 2024 and 2023 are unaudited.

The balance sheet as of December 31, 2023, 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 and nine months ended September 30, 2023 are not necessarily indicative of the results for the full year or any other period.

Results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results for the full year or any other period.

Use of Estimates:

2 unchanged sentences

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

The allowance for credit losses on loans and leases is a valuation account that is deducted from the loan or lease’s amortized cost basis to present the net amount expected to be collected on the loans and leases.

Loans and leases deemed to be uncollectible are charged against the allowance for credit losses on loans and leases, and subsequent recoveries, if any, are credited to the allowance for credit losses on loans and leases.

Changes to the allowance for credit losses on loans and leases are recorded through the provision for credit losses.

The allowance for credit losses on loans and leases is maintained at a level considered appropriate to absorb expected credit losses over the expected life of the portfolio as of the reporting date.

The allowance for credit losses on loans and leases is measured on a collective (pool) basis when similar risk characteristics exist.

Parke's loan portfolio segments include commercial and industrial, construction, commercial - owner occupied, commercial - non-owner occupied, residential - 1 to 4 family, residential - 1 to 4 family investment, residential - multifamily, and consumer.

Loans that do not share similar risk characteristics are evaluated on an individual basis.

Loans evaluated individually are not also included in the collective evaluation.

For individually assessed loans, see related details in the Individually Assessed Loans section below.

The allowance for credit losses on collectively assessed loans and leases is measured over the expected life of the loan or lease using a vintage loss rate approach, which will then be supplemented with qualitative factors.

The vintage loss rate approach creates pools of loans (made up of individual loans) based on the loan segmentation.

The loan pools are aggregated by origination year.

Charge-offs, net of recoveries, are allocated by the year of charge-off to each loan pool.

An average life is prescribed to a pool of loans that were originated in a particular year.

The actual charge-offs as a percent of total loans are calculated for each historical year, and projected for future years for each year within the average life time horizon.

The sum of the actual charge-offs and projected charge-offs are divided by the average amortized origination amount for each respective year.

Those charge-off percentages are added together to obtain an aggregated vintage loss percentage which is then multiplied by the outstanding loan balances to obtain a reserve requirement.

Parke runs the Current Expected Credit Loss ("CECL") impairment models on a quarterly basis and qualitatively adjusts model results for risk factors that are not considered within the model but which are relevant in assessing the expected credit losses within the loan and lease pools.

Management generally considers the following qualitative factors:

•Volume and severity of past-due loans, non-accrual loans and classified loans;

•Lending policies and procedures, including underwriting standards and historically based loss/collection, charge-off and recovery practices;

• National and economic conditions that may have an impact on credit quality;

•Nature and volume of the portfolio;

•Existence and effect of any credit concentrations and changes in the level of such concentrations;

•The value of the underlying collateral for loans that are not collateral dependent;

•Changes in the quality of the loan review system;

•Experience, ability and depth of lending management and staff

Parke has elected to not estimate an allowance for credit losses on accrued interest receivable, as it already has a policy in place to reverse or write-off accrued interest, through interest income, in a timely manner.

Allowance for Credit Losses on Lending-Related Commitments

Parke estimates expected credit losses over the contractual period in which it is exposed to credit risk on contractual obligations to extend credit, unless the obligation is unconditionally cancellable by the Company.

The allowance for credit losses on lending-related commitments is recorded in other liabilities in the consolidated balance sheet and is recorded as a provision for credit losses in the consolidated income statement.

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 their estimated lives.

The lifetime loss rates for off-balance sheet credit exposures are calculated in the same manner as on-balance sheet credit exposures, using the same model and economic forecasts, adjusted for the estimated likelihood that funding will occur.

Individually Assessed Loans and Leases

ASC 326 provides that a loan or lease is measured individually if it does not share similar risk characteristics with other financial assets.

For Parke, loans and leases which are identified to be individually assessed under CECL typically are those that are on non-accrual at the reporting date, and include collateral dependent loans.

Collateral Dependent Loans

Parke considers a loan to be collateral dependent when foreclosure of the underlying collateral is probable.

Parke has also elected to apply the practical expedient to measure expected credit losses of a collateral dependent asset using the fair value of the collateral, less any estimated costs to sell, when foreclosure is not probable but repayment of the loan is expected to be provided substantially through the operation or sale of the collateral, and the borrower is experiencing financial difficulty.

Allowance for Credit Losses on Held to Maturity Securities

We follow Accounting Standards Codification (ASC) 326-20, Financial Instruments - Credit Loss - Measured at Amortized Cost, to measure expected credit losses on held-to-maturity debt securities on a collective basis by security investment grade.

The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts.

The Company classifies the held-to-maturity debt securities into the following major security types:

residential mortgage backed, and state and political subdivisions.

These securities are highly rated with a history of no credit losses, and are assigned ratings based on the most recent data from ratings agencies depending on the availability of data for the security.

Credit ratings of held-to-maturity debt securities, which are a significant input in calculating the expected credit loss, are reviewed on a quarterly basis.

Based on the credit ratings of our held-to-maturity securities and our historical experience including no losses, we have determined that an allowance for credit loss on the held-to-maturity portfolio is not required

Accrued interest receivable on held-to-maturity debt securities is excluded from the estimate of credit losses and is included in Accrued interest receivable on the Consolidated Statements of Financial Condition.

Allowance for Credit Losses on Available for Sale Securities

We follow ASC 326-30, Financial Instruments - Credit Loss - Available-for-Sale Debt Securities, which provides guidance related to the recognition of and expanded disclosure requirements for expected credit losses on available-for-sale debt securities.

For available-for-sale debt securities in an unrealized loss position, the Company first evaluates whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis.

If either criteria is met, the security's amortized cost basis is reduced to fair value and recognized as a reduction to non-interest income in the Consolidated Statements of Income.

For debt securities available-for-sale which the Company does not intend to sell, or it is not likely the security would be required to be sold before recovery, we evaluate whether a decline in fair value has resulted from credit losses or other adverse factors, such as a change in the security's credit rating.

In assessing whether a credit loss exists, the Company compares the present value of cash flows expected to be collected from the security with the amortized cost basis of the security.

If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance is recorded, limited to the fair value of the security.

Recently Issued Accounting Pronouncements:

13 unchanged sentences

The Company does not expect the application of this guidance to have a material impact on the Consolidated Financial Statements.

Accounting Pronouncements Adopted in 2023

In June 2016, the Financial Accounting Standard Board (FASB) issued accounting standards update ("ASU") 2016-13, Financial Instruments-Credit Losses.

ASU 2016-13 (Topic 326) , replaces the incurred loss impairment methodology in current GAAP with a CECL methodology and requires consideration of a broader range of information to determine credit loss estimates.

Financial assets measured at amortized cost will be presented at the net amount expected to be collected by using an allowance for credit losses.

The ASU was amended in some aspects by subsequent Accounting Standards Updates.

This guidance became effective on January 1, 2023 for the Company.

Results and disclosures for reporting periods beginning after January 1, 2023 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP.

The Company adopted this guidance, and subsequent related updates, using the modified retrospective approach for all financial assets measured at amortized cost, including loans and held-to-maturity debt securities, and unfunded commitments.

On January 1, 2023, the Company recorded a cumulative effect decrease to retained earnings of $ 2.1 million, net of tax, of which $ 1.9 million related to loans, and $ 960.0 thousand related to unfunded commitments.

There were no such charges for securities held by the Company at the date of adoption.

The following table illustrates the impact of adopting ASC 326:

(Amounts in thousands) January 1, 2023

Assets Pre-adoption Adoption Impact As Reported

Commercial and Industrial $ 390 $ 168 $ 558

Construction 2,581 1,899 4,480

Commercial - Owner Occupied 2,298 ( 171 ) 2,127

Commercial - Non-owner Occupied 9,709 ( 951 ) 8,758

Residential - 1 to 4 Family 6,076 1,782 7,858

Residential - 1 to 4 Family Investment 9,381 ( 794 ) 8,587

Residential - Multifamily 1,347 ( 128 ) 1,219

Consumer 63 53 116

Total ACL on loans 31,845 1,858 33,703

Deferred Tax Assets 9,184 716 9,900

ACL for unfunded commitments — 960 960

Retained Earnings $ 131,706 $ ( 2,102 ) $ 129,604

INVESTMENT SECURITIES

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

As of September 30, 2023 Amortized

The following is a summary of the Company's investments in available for sale and held to maturity securities as of March 31, 2024 and December 31, 2023:

As of March 31, 2024 Amortized

losses Fair value

11 unchanged sentences

Available for sale:

Corporate debt obligations $ 500 $ — $ — $ 500

Residential mortgage-backed securities $ 7,639 $ 3 $ 547 $ 7,095

4 unchanged sentences

Total held to maturity $ 9,292 $ 38 $ 1,438 $ 7,892

The amortized cost and fair value of debt securities classified as available for sale and held to maturity, by contractual maturity as of September 30, 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 March 31, 2024 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 and nine months ended September 30, 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 September 30, 2023 and December 31, 2022:

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

The Company did not sell any securities during the three months ended March 31, 2024.

The following tables show the gross unrealized losses and fair value of the Company's available for sale 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, 2024 and December 31, 2023:

As of March 31, 2024 Less Than 12 Months 12 Months or Greater Total

Description of Securities Fair

6 unchanged sentences

Total available for sale $ 80 $ — $ 6,439 $ 580 $ 6,519 $ 580

Held to maturity:

Residential mortgage-backed securities $ — $ — $ 4,061 $ 1,388 $ 4,061 $ 1,388

States and political subdivisions — — 3,224 646 3,224 646

Total held to maturity $ — $ — $ 7,285 $ 2,034 $ 7,285 $ 2,034

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

7 unchanged sentences

Total available for sale $ 25 $ — $ 6,870 $ 547 $ 6,895 $ 547

Held to maturity:

Residential mortgage-backed securities $ — $ — $ 4,460 $ 1,096 $ 4,460 $ 1,096

States and political subdivisions — — 1,943 533 1,943 533

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

The Company’s unrealized loss for the debt securities is comprised of 16 securities in the less than 12 months loss position and 19 securities in the 12 months or greater loss position at September 30, 2023.

The Company’s unrealized loss for the debt securities is comprised of 8 securities in the less than 12 months loss position and 20 securities in the 12 months or greater loss position at March 31, 2024.

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 September 30, 2023.

LOANS AND ALLOWANCE FOR CREDIT LOSSES ON LOANS

At September 30, 2023 and December 31, 2022, the Company had $ 1.80 billion and $ 1.75 billion, respectively, in loans receivable outstanding.

Outstanding balances include $ 2.2 million and $ 1.9 million at September 30, 2023 and December 31, 2022, respectively, for net deferred loan costs, and unamortized discounts.

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

September 30, 2023 December 31, 2022

At March 31, 2024 and December 31, 2023, the Company had $ 1.79 billion and $ 1.79 billion, respectively, in loans receivable outstanding.

Outstanding balances include $ 2.4 million and $ 2.7 million at March 31, 2024 and December 31, 2023, respectively, for net deferred loan costs, and unamortized discounts.

The portfolio segments of loans receivable at March 31, 2024 and December 31, 2023, consist of the following:

March 31, 2024 December 31, 2023

(Dollars in thousands)

11 unchanged sentences

Total loan receivable, net of allowance for credit losses on loans $ 1,753,624 $ 1,755,209

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

September 30, 2023 30-59

An age analysis of past due loans by class at March 31, 2024 and December 31, 2023 is as follows:

March 31, 2024 30-59

Days Total Past

30 unchanged sentences

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

September 30, 2023

March 31, 2024

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

9 unchanged sentences

December 31, 2023

(amounts in thousands) Total Nonaccrual Loans Past Due Over 90 Days Still Accruing

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

Commercial and Industrial $ 277 $ 435 $ 712 $ — $ 712

45 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 September 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:

At March 31, 2024 and December 31, 2023, the allowance for credit losses on off-balance sheet credit exposures was $ 938.0 thousand and $ 499 thousand, respectively.

The following tables present the information regarding the allowance for credit losses for the three months ended March 31, 2024 and 2023:

Real Estate Mortgage

Commercial and Industrial Construction Commercial Owner Occupied Commercial Non-owner Occupied Residential 1 to 4 Family Residential 1 to 4 Family Investment Residential Multifamily Consumer Total

Allowance for credit losses (Dollars in thousands)

Three months ended September 30, 2023

June 30, 2023 $ 590 $ 3,978 $ 1,869 $ 8,798 $ 7,710 $ 7,740 $ 1,232 $ 98 $ 32,015

Charge-offs — — — — — — — — —

Recoveries 4 — — — — — — — 4

Provisions (benefits) ( 79 ) ( 833 ) ( 153 ) ( 276 ) 1,164 489 25 ( 37 ) 300

Ending Balance at September 30, 2023

$ 515 $ 3,145 $ 1,716 $ 8,522 $ 8,874 $ 8,229 $ 1,257 $ 61 $ 32,319

Allowance for credit losses

Nine months ended September 30, 2023

(Dollars in thousands)

Three months ended March 31, 2024

December 31, 2023 $ 926 $ 3,347 $ 1,795 $ 7,108 $ 9,061 $ 8,783 $ 1,049 $ 62 $ 32,131

Impact of adoption ASC 326 168 1,899 ( 171 ) ( 951 ) 1,782 ( 794 ) ( 128 ) 53 1,858

Charge-offs — — — — — — — — —

1 unchanged sentence

Provisions (benefits) 112 ( 314 ) ( 104 ) ( 1,722 ) 274 813 698 8 ( 235 )

Ending Balance at September 30, 2023

Ending Balance at March 31, 2024

$ 1,060 $ 3,033 $ 1,691 $ 5,386 $ 9,335 $ 9,596 $ 1,747 $ 70 $ 31,918

During the quarter, the increase to the Residential 1 to 4 Family and Residential 1 to 4 Family Investment portfolio's was due to an increase in the portfolio balances as well as an increase in the qualitative factor for the Residential 1 to 4 Family Residential portfolio driven by an increase in delinquent loan balances.

The credit provision during the quarter to the Construction segment was mainly due to a decrease in the portfolio balance.

For the nine months ended September 30, 2023, the increase to the provision for the Residential 1 to 4 Family portfolio was mainly driven by an increase in the qualitative factor due to an increase in delinquent loan balances.

The credit provision to the Construction 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 an increase in the balance of the Residential 1 - 4 Family Investment segment.

The credit provision for the Commercial Owner Occupied portfolio is attributed to a decrease in the historical vintage reserve rate.

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

During the quarter, the increase to the Residential Multifamily portfolio was due to an increase in the portfolio balance that increased the loan exposure and also caused changes to the qualitative factors related to concentration levels within the portfolio segments.

The increase to the Residential 1 to 4 Family Investment portfolio is driven by changes to the qualitative factors related to concentration levels within the portfolio segments.

The provision benefit during the quarter to the Commercial Non-owner Occupied segment was mainly due to a decrease in the problem loan balance as well as a decrease in the portfolio balance.

Real Estate Mortgage

Commercial and Industrial Construction Commercial Owner Occupied Commercial Non-owner Occupied Residential 1 to 4 Family Residential 1 to 4 Family Investment Residential Multifamily Consumer Total

Allowance for loan losses (Dollars in thousands)

Three months ended September 30, 2022

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

Charge-offs — — — — ( 66 ) — — — ( 66 )

Recoveries 3 — 4 — — — — — 7

Provisions (benefits) ( 137 ) 653 ( 140 ) 368 ( 424 ) 203 92 ( 15 ) 600

Ending Balance at September 30, 2022 $ 417 $ 2,855 $ 2,606 $ 7,917 $ 6,801 $ 9,123 $ 1,190 $ 80 $ 30,989

Allowance for loan losses

Nine months ended September 30, 2022

(Dollars in thousands)

Three months ended March 31, 2023

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

Impact of adoption of ASC 326 168 1,899 ( 171 ) ( 951 ) 1,782 ( 795 ) ( 128 ) 53 $ 1,857

Charge-offs — — — — — — — — —

1 unchanged sentence

Provisions (benefits) 177 ( 881 ) ( 253 ) ( 682 ) ( 52 ) ( 516 ) 19 ( 12 ) ( 2,200 )

Ending Balance at September 30, 2022 $ 417 $ 2,855 $ 2,606 $ 7,917 $ 6,801 $ 9,123 $ 1,190 $ 80 $ 30,989

Allowance for loan losses

Individually evaluated for impairment $ — $ — $ 4 $ 125 $ 20 $ — $ — $ — $ 149

Collectively evaluated for impairment 417 2,855 2,602 7,792 6,781 9,123 1,190 80 30,840

Ending Balance at September 30, 2022 $ 417 $ 2,855 $ 2,606 $ 7,917 $ 6,801 $ 9,123 $ 1,190 $ 80 $ 30,989

Individually evaluated for impairment $ — $ 1,139 $ 1,177 $ 19,655 $ 420 $ — $ — $ 70 $ 22,461

Collectively evaluated for impairment 29,407 192,972 128,929 327,888 431,646 460,922 78,162 6,970 1,656,896

Ending Balance at September 30, 2022 $ 29,407 $ 194,111 $ 130,106 $ 347,543 $ 432,066 $ 460,922 $ 78,162 $ 7,040 $ 1,679,357

The increase in the allowance for loan loss balance for the nine months ended September 30, 2022 in the residential 1 to 4 family investment and commercial non-owner occupied portfolio segments was primarily attributable to loan growth.

The decrease in the allowance for loan loss balance in the commercial owner occupied portfolio segment for the nine months ended September 30, 2022 was due to decreases in non-performing balances.

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

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 an increase in loan volume.

Collateral-Dependent Loans

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

The following table presents the collateral-dependent loans by portfolio segment and collateral type at March 31, 2024:

(amounts in thousands) Real Estate Business Assets Other

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Total $ 6,966 $ — $ —

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

(amounts in thousands) Real Estate Business Assets Other

Commercial and Industrial $ 712 $ — $ —

Construction 1,091 — —

Commercial - Owner Occupied 1,117 — —

Commercial - Non-owner Occupied 3,107 — —

Residential - 1 to 4 Family 1,211 — —

Residential - 1 to 4 Family Investment — — —

Residential - Multifamily — — —

Consumer — — —

Total $ 7,238 $ — $ —

Credit Quality Indicators :

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Other Assets Especially Mentioned (OAEM) :

Financial condition is such that assets in this category have a potential weakness or pose unwarranted financial risk to the Bank even though the asset value is not currently impaired.

Financial condition is such that assets in this category have a potential weakness or pose unwarranted financial risk to the Bank even though the asset value is not currently individually evaluated.

The asset does not currently warrant adverse classification but if not corrected could weaken and could create future increased risk exposure.

8 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 September 30, 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 March 31, 2024.

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

As of September 30, 2023

As of March 31, 2024

2024 2023 2022 2021 2020 Prior Total

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

As of September 30, 2023, the Company was in the process of foreclosing on $ 2.8 million in loans, consisting of 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:

At December 31, 2022 Pass OAEM Substandard Doubtful Total

(Dollars in thousands)

As of March 31, 2024, the Company was in the process of foreclosing on $ 6.4 million in loans, consisting of 12 residential 1 to 4 family loans with a principal balance of $ 2.0 million, two commercial - owner occupied loans with a principal balance of $ 1.1 million, and three commercial - non-owner occupied loans with a principal balance of $ 3.3 million.

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 December 31, 2023.

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

As of December 31, 2023

2023 2022 2021 2020 2019 Prior Total

Commercial and Industrial

Construction 191,266 — 1,091 — 192,357

Real Estate Mortgage:

Pass $ 4,724 $ 1,269 $ 87 $ 759 $ 598 $ 7,154 $ 20,148 $ 34,739

OAEM — — — — — — — —

Substandard — 435 — — — — 277 712

Doubtful — — — — — — — —

$ 4,724 $ 1,704 $ 87 $ 759 $ 598 $ 7,154 $ 20,425 $ 35,451

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

Pass $ 323 $ 3,335 $ 4,499 $ 195 $ — $ — $ 148,113 $ 156,465

OAEM — — — — — — — —

Substandard — — — — — 1,091 — 1,091

Doubtful — — — — — — — —

$ 323 $ 3,335 $ 4,499 $ 195 $ — $ 1,091 $ 148,113 $ 157,556

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

Commercial – Owner Occupied

Pass $ 19,842 $ 36,030 $ 21,536 $ 7,104 $ 8,346 $ 45,249 $ 2,518 $ 140,625

OAEM — — — — — — — —

Substandard — — — — — 1,117 — 1,117

Doubtful — — — — — — — —

$ 19,842 $ 36,030 $ 21,536 $ 7,104 $ 8,346 $ 46,366 $ 2,518 $ 141,742

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

Commercial – Non-owner Occupied

Pass $ 19,123 $ 93,805 $ 37,002 $ 33,316 $ 54,484 $ 112,471 $ 1,180 $ 351,381

OAEM — — — — — 15,421 — 15,421

Substandard — — — 250 2,586 271 — 3,107

Doubtful — — — — — — — —

$ 19,123 $ 93,805 $ 37,002 $ 33,566 $ 57,070 $ 128,163 $ 1,180 $ 369,909

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

Residential – 1 to 4 Family

Performing $ 58,358 $ 117,044 $ 61,580 $ 33,037 $ 25,623 $ 148,124 $ 4,705 $ 448,471

Nonperforming 155 — — 285 771 — — 1,211

$ 58,513 $ 117,044 $ 61,580 $ 33,322 $ 26,394 $ 148,124 $ 4,705 $ 449,682

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

Residential – 1 to 4 Family Investment

Performing $ 87,734 $ 138,884 $ 116,487 $ 50,119 $ 54,576 $ 76,367 $ — $ 524,167

Nonperforming — — — — — — — —

$ 87,734 $ 138,884 $ 116,487 $ 50,119 $ 54,576 $ 76,367 $ — $ 524,167

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

Residential – Multifamily

Consumer 6,661 — 70 — 6,731

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

Pass $ 2,292 $ 23,030 $ 27,006 $ 12,159 $ 9,989 $ 28,848 $ — $ 103,324

OAEM — — — — — — — $ —

Substandard — — — — — — — $ —

Doubtful — — — — — — — —

$ 2,292 $ 23,030 $ 27,006 $ 12,159 $ 9,989 $ 28,848 $ — $ 103,324

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

Performing $ — $ — $ — $ — $ — $ 5,493 $ 16 $ 5,509

Nonperforming — — — — — — — —

$ — $ — $ — $ — $ — $ 5,493 $ 16 $ 5,509

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

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

September 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 $ — $ — $ — $ 15,346 $ 15,346 4.0 %

Total $ — $ — $ — $ 15,346 $ 15,346

As of September 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 September 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):

September 30, 2023

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

Commercial – Non-owner Occupied $ 15,346 $ — $ — $ 15,346

Total $ 15,346 $ — $ — $ 15,346

At March 31, 2024, the Company did not make any modifications to borrowers experiencing financial difficulty.

EARNINGS PER SHARE (“EPS”)

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

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

The following tables set forth the calculation of basic and diluted EPS for the three-month periods ended March 31, 2024 and 2023.

Three months ended March 31,

(Dollars in thousands except share and per share data)

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Available for Sale Securities

As of September 30, 2023

As of March 31, 2024

Residential mortgage-backed securities $ — $ 6,640 $ — $ 6,640

1 unchanged sentence

As of December 31, 2023

Corporate debt obligations $ — $ 500 $ — $ 500

Residential mortgage-backed securities — 7,095 — 7,095

Total $ — $ 7,095 $ — $ 7,095

For the nine months ended September 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 nine months ended September 30, 2023 and 2022.

For the three months ended March 31, 2024, 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, 2024 and 2023.

Fair Value on a Non-recurring Basis:

2 unchanged sentences

(Dollars in thousands)

As of September 30, 2023

As of March 31, 2024

Collateral-dependent loans $ — $ — $ 1,546 $ 1,546

4 unchanged sentences

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.

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.

6 unchanged sentences

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 September 30, 2023 and December 31, 2022:

September 30, 2023 Carrying Amount Fair Value

The following table summarizes the carrying amounts and fair values for financial instruments that are not carried at fair value at March 31, 2024 and December 31, 2023:

March 31, 2024 Carrying Amount Fair Value

Total Level 1 Level 2 Level 3

20 unchanged sentences

The contract or notional amounts of these instruments reflect the extent of the Company’s involvement in these particular classes of financial instruments.

The Company’s exposure to the maximum possible credit risk in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments.

contractual or notional amount of those instruments.

The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

6 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 September 30, 2023.

Commitments to fund fixed-rate loans were immaterial at March 31, 2024.

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

Such instruments are not likely to be affected by annual rate caps triggered by rising interest rates.

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

As of September 30, 2023 and December 31, 2022, unused commitments to extend credit amounted to approximately $ 113.7 million and $ 159.0 million, respectively.

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

As of March 31, 2024 and December 31, 2023, unused commitments to extend credit amounted to approximately $ 112.8 million and $ 93.8 million, respectively.

At March 31, 2024 and December 31, 2023, the allowance for credit losses on off-balance sheet credit exposures was $ 938.0 thousand and $ 499 thousand, respectively.

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

On July 6, 2023 and September 29, 2023, the Bank entered into agreements with the FHLBNY for a Municipal Letter of Credit ("MLOC") of $ 50.0 million and $ 10.0 million, respectively.

The MLOC's are used to pledge against public deposits and both MLOC's expire on October 5, 2023.

There were no outstanding borrowings on the letters of credit as of September 30, 2023.

As of March 31, 2024 and December 31, 2023, standby letters of credit with customers were $ 1.5 million and $ 1.5 million, respectively.

On March 20, 2024, the Bank entered into an agreement with the FHLBNY for a Municipal Letter of Credit ("MLOC") of $ 60.0 million.

The MLOC is used to pledge against public deposits and the MLOC expires on June 25, 2024.

There were no outstanding borrowings on the letters of credit as of March 31, 2024.

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 September 30, 2023 and December 31, 2022, deposit balances from cannabis customers were approximately $ 93.9 million and $ 177.3 million, or 6.1 % and 11.3 % of total deposits, respectively, with three customers accounting for 56.0 % and 36.9 % of the total at September 30, 2023 and December 31, 2022.

At September 30, 2023 and December 31, 2022, there were cannabis-related loans in the amounts of $ 26.7 million and $ 3.8 million, respectively.

At March 31, 2024 and December 31, 2023, deposit balances from cannabis customers were approximately $ 107.4 million and $ 96.7 million, or 6.9 % and 6.2 % of total deposits, respectively, with three customers accounting for 51.9 % and 60.6 % of the total at March 31, 2024 and December 31, 2023.

At March 31, 2024 and December 31, 2023, there were cannabis-related loans in the amounts of $ 29.5 million and $ 27.1 million, respectively.

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