What changed in this filing

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Item 1. Financial Statements

2024-08-07 compared with 2024-05-08 · 159 added, 94 removed, 627 unchanged (29% of the section changed)

10 unchanged sentences

Investment securities available for sale, at fair value 6,258 7,095

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)

Investment securities held to maturity, net of allowance for credit losses of $ 0 at June 30, 2024 and December 31, 2023 (fair value of $ 7,564 at June 30, 2024 and $ 7,892 at December 31, 2023)

Total investment securities 15,509 16,387

27 unchanged sentences

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

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

325 shares and 375 shares outstanding at June 30, 2024 and December 31, 2023, respectively

Common stock, $ 0.10 par value;

authorized 15,000,000 shares;

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

12,254,220 shares and 12,240,821 shares at June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 136,946 136,700

1 unchanged sentence

Accumulated other comprehensive loss ( 406 ) ( 404 )

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

Treasury stock, 284,522 shares at June 30, 2024 and December 31, 2023, at cost

( 3,015 ) ( 3,015 )

7 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

2024 2023 2024 2023

Interest income:

12 unchanged sentences

Service fees on deposit accounts 359 931 738 2,146

Gain on sale of SBA loans 25 — 25 —

Other loan fees 163 241 402 419

28 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

2024 2023 2024 2023

Net income attributable to the Company $ 6,455 $ 8,130 $ 12,606 $ 19,260

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

Unrealized gain (loss) on investment securities 32 ( 61 ) ( 3 ) 22

Tax impact on unrealized (gain) loss ( 8 ) 16 1 ( 6 )

Total unrealized gain (loss) on investment securities 24 ( 45 ) ( 2 ) 16

Comprehensive income attributable to the Company $ 6,479 $ 8,085 $ 12,604 $ 19,276

4 unchanged sentences

(Dollars in thousands except share data)

Three-months ended March 31, 2024 and 2023

Periods ended June 30, 2024

Shares of Preferred Stock Outstanding Preferred

2 unchanged sentences

Stock Additional

Other Comprehensive Loss Treasury

Other Comprehensive Income (Loss) Treasury

Stock Total Shareholders' Equity

Three Months Ended

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

Cumulative effect of adoption of ASU 2016-13 — — — — — ( 2,102 ) — — ( 2,102 )

Balance, March 31, 2024 375 $ 375 12,247,343 $ 1,225 $ 136,801 $ 153,430 $ ( 430 ) $ ( 3,015 ) $ 288,386

Net income — — — — — 6,455 — — 6,455

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

Preferred stock shares conversion ( 50 ) ( 50 ) 6,877 — 49 — — — ( 1 )

Other comprehensive income — — — — — — 24 — 24

4 unchanged sentences

— — — — — ( 2,155 ) — — ( 2,155 )

Balance, March 31, 2023

Balance, June 30, 2024

325 $ 325 12,254,220 $ 1,225 $ 136,946 $ 157,725 $ ( 406 ) $ ( 3,015 ) $ 292,800

Three Months Ended

Six Months Ended

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

1 unchanged sentence

Common stock options exercised — — 6,522 1 55 — — — 56

Preferred stock shares conversion ( 50 ) ( 50 ) 6,877 — 49 — — — ( 1 )

Other comprehensive loss — — — — — — ( 2 ) — ( 2 )

4 unchanged sentences

— — — — — ( 4,307 ) — — ( 4,307 )

Balance, June 30, 2024

325 $ 325 12,254,220 $ 1,225 $ 136,946 $ 157,725 $ ( 406 ) $ ( 3,015 ) $ 292,800

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 June 30, 2023

Shares of Preferred Stock Outstanding Preferred

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

Net income — — — — — 8,130 — — 8,130

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

Stock compensation expense — — — — 106 — — — 106

Dividend on preferred stock ($ 15.00 per share)

— — — — — ( 7 ) — — ( 7 )

Dividend on common stock ($ 0.18 per share)

— — — — — ( 2,150 ) — — ( 2,150 )

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

Six Months Ended

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

Cumulative effect of adoption of ASU 2016-3 — — — — — ( 2,102 ) — — ( 2,102 )

Net income — — — — — 19,260 — — 19,260

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

Other comprehensive income — — — — — — 16 — 16

Stock compensation expense — — — — 213 — — — 213

Dividend on preferred stock ($ 30.00 per share)

— — — — — ( 14 ) — — ( 14 )

Dividend on common stock ($ 0.36 per share)

— — — — — ( 4,300 ) — — ( 4,300 )

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

See accompanying notes to the unaudited 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 ( 322 ) ( 290 )

Gain on sale of SBA loans ( 25 ) —

SBA loans originated for sale ( 300 ) —

Proceeds from sale of SBA loans originated for sale 325 —

Net accretion of purchase premiums and discounts on securities ( 22 ) ( 17 )

1 unchanged sentence

Net changes in:

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

Decrease (increase) in accrued interest receivable and other assets 2,824 ( 2,911 )

Increase in accrued interest payable and other accrued liabilities 1,048 186

3 unchanged sentences

Repayments and maturities of investment securities held to maturity 73 72

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

Net increase in loans ( 17,796 ) ( 34,698 )

(Purchases) sales of bank premises and equipment ( 53 ) 129

1 unchanged sentence

Purchases of restricted stock ( 5,946 ) ( 5,803 )

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

Net cash used in investing activities ( 19,298 ) ( 38,492 )

Cash Flows from Financing Activities:

1 unchanged sentence

Proceeds from exercise of stock options 56 33

Conversion of Series B preferred stock ( 1 ) —

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

Net increase in FHLBNY short-term borrowings 125,000 103,000

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

Net decrease in noninterest-bearing deposits ( 33,428 ) ( 81,554 )

Net increase (decrease) in interest-bearing deposits 46,678 ( 36,769 )

Net decrease in interest-bearing deposits ( 22,958 ) ( 48,042 )

Net cash used in financing activities ( 10,649 ) ( 20,877 )

1 unchanged sentence

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

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

Cash and Cash Equivalents, June 30, $ 167,678 $ 137,497

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 months ended March 31, 2024 and 2023 are unaudited.

The accompanying interim financial statements for the three and six months ended June 30, 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 months ended March 31, 2024 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, 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").

Recently Issued Accounting Pronouncements:

In March 2020, the FASB issued ASU No.

2020.-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

The amendments provide optional guidance to entities for a limited period of time to ease the transition in accounting for and recognizing the effects of reference rate reform on financial reporting.

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 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 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.

In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848, which extends the sunset (or expiration) date of Accounting Standards Codification (ASC) Topic 848 to December 31, 2024.

This gives reporting entities two additional years to apply the accounting relief provided under ASC Topic 848 for matters related to reference rate reform.

ASU 2022-06 is effective for all reporting entities immediately upon issuance and must be applied on a prospective basis.

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

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, 2024 and December 31, 2023:

As of March 31, 2024 Amortized

The following is a summary of the Company's investments in available for sale and held to maturity securities as of June 30, 2024 and December 31, 2023:

As of June 30, 2024 Amortized

losses Fair value

17 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 March 31, 2024 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, 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 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

The Company did not sell any securities during the three and six months ended June 30, 2024 or 2023.

As of June 30, 2024 Less Than 12 Months 12 Months or Greater Total

Description of Securities Fair

15 unchanged sentences

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

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.

On at least a quarterly basis, we review all debt securities that are in an unrealized loss position for a credit loss.

An investment security is deemed impaired if the fair value of the investment is less than its amortized cost.

Amortized cost includes adjustments (if any) made to the cost basis of an investment for accretion, amortization, and previous other-than-temporary impairments.

For individual debt securities classified as available for sale, we determine whether a decline in fair value below the amortized cost has resulted from a credit loss or other factors.

If the decline in fair value is due to credit, we will record the portion of the impairment loss relating to credit through an allowance for credit losses.

Impairment that has not been recorded through an allowance for credit losses is recorded through other comprehensive income, net of applicable taxes.

The Company’s unrealized loss for the debt securities classified as available for sale is comprised of 11 securities in the less than 12 months loss position and 16 securities in the 12 months or greater loss position at June 30, 2024.

These securities are

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

The unrealized losses associated with those mortgage-backed securities are generally driven by changes in interest rates and are not due to credit losses given the explicit or implicit guarantees provided by the U.S.

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, 2024.

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.

LOANS AND ALLOWANCE FOR CREDIT LOSSES ON LOANS

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

At June 30, 2024 and December 31, 2023, the Company had $ 1.81 billion and $ 1.79 billion, respectively, in loans receivable outstanding.

Outstanding balances include $ 2.1 million and $ 2.7 million at June 30, 2024 and December 31, 2023, respectively, for net deferred loan costs, and unamortized discounts.

The portfolio segments of loans receivable at June 30, 2024 and December 31, 2023, consist of the following:

June 30, 2024 December 31, 2023

(Dollars in thousands)

11 unchanged sentences

Total loan receivable, net of allowance for credit losses on loans $ 1,772,716 $ 1,755,209

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

An age analysis of past due loans by class at June 30, 2024 and December 31, 2023 is as follows:

June 30, 2024 30-59

Days Total Past

30 unchanged sentences

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

March 31, 2024

June 30, 2024

(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, 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:

At June 30, 2024 and December 31, 2023, the allowance for credit losses on off-balance sheet credit exposures was $ 896.0 thousand and $ 499.0 thousand, respectively, on exposures totaling $ 177.7 million and $ 133.7 million, respectively.

The following tables present the information regarding the allowance for credit losses for the three and six months ended June 30, 2024 and 2023:

Real Estate Mortgage

1 unchanged sentence

(Dollars in thousands)

Three months ended March 31, 2024

Three months ended June 30, 2024

March 31, 2024 $ 1,060 $ 3,033 $ 1,691 $ 5,386 $ 9,335 $ 9,596 $ 1,747 $ 70 $ 31,918

Charge-offs — — — — — — — ( 21 ) ( 21 )

Recoveries 2 — 1 — — — — — 3

Provisions (benefits) 6 959 ( 156 ) 28 ( 265 ) 87 ( 144 ) 10 525

Ending Balance at June 30, 2024

$ 1,068 $ 3,992 $ 1,536 $ 5,414 $ 9,070 $ 9,683 $ 1,603 $ 59 $ 32,425

Allowance for credit losses

Six months ended June 30, 2024

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

2 unchanged sentences

Provisions (benefits) 118 645 ( 260 ) ( 1,694 ) 9 900 554 18 290

Ending Balance at March 31, 2024

Ending Balance at June 30, 2024

$ 1,068 $ 3,992 $ 1,536 $ 5,414 $ 9,070 $ 9,683 $ 1,603 $ 59 $ 32,425

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.

During the quarter, the increase to the Construction 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 decrease to the Commercial Owner Occupied, Residential 1 to 4 Family, and the Residential Multifamily portfolios is driven by changes to the qualitative factors related to concentration levels within the portfolio segments.

For the year to date, the increase in the Construction and Residential Multifamily portfolios was due to increases in the portfolio balances that increased the loan exposure and also caused changes to the qualitative factors related to concentration levels within the portfolio segments.

The increase in the Residential 1 to 4 Family Investment portfolio was due to increase to the qualitative factors related to concentration and problem loan levels within the portfolio segments.

The decrease to the Commercial Owner Occupied and Commercial Non-owner Occupied portfolios was due to decreases in the portfolio balances that decreased the loan exposure and also caused changes to the qualitative factors related to concentration levels within the portfolio segments.

Real Estate Mortgage

1 unchanged sentence

(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

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

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

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

Charge-offs — — — — — — — — —

1 unchanged sentence

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

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.

Ending Balance at September 30, 2022 $ 590 $ 3,978 $ 1,869 $ 8,798 $ 7,710 $ 7,740 $ 1,232 $ 98 $ 32,015

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.

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.

Collateral-Dependent Loans

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

The following table presents the collateral-dependent loans by portfolio segment and collateral type at June 30, 2024:

(amounts in thousands) Real Estate Business Assets Other

46 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, 2024.

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, 2024.

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

As of March 31, 2024

As of June 30, 2024

2024 2023 2022 2021 2020 Prior Total

47 unchanged sentences

Current period gross charge-offs $ — $ — $ — $ — $ — $ 21 $ — $ 21

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.

As of June 30, 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 $ 1.9 million, two commercial - owner occupied loans with a principal balance of $ 1.1 million, and eight 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.

51 unchanged sentences

Modifications to Borrowers Experiencing Financial Difficulty

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

At June 30, 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-month periods ended March 31, 2024 and 2023.

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, 2024 and 2023.

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

2024 2023 2024 2023

(Dollars in thousands except share and per share data)

13 unchanged sentences

Diluted earnings per common share $ 0.53 $ 0.67 $ 1.04 $ 1.59

As of June 30, 2024 and December 31, 2023, there were 312,630 and 330,536 weighted average option shares outstanding, respectively, that were not included in the computation of diluted EPS because these shares were anti-dilutive.

Fair Value Measurements

21 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, and corporate debt obligations.

Securities in Level 2 are mortgage-backed securities.

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, 2024

As of June 30, 2024

Residential mortgage-backed securities $ — $ 6,258 $ — $ 6,258

3 unchanged sentences

Total $ — $ 7,095 $ — $ 7,095

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.

For the six months ended June 30, 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 and six months ended June 30, 2024 and 2023.

Fair Value on a Non-recurring Basis:

2 unchanged sentences

(Dollars in thousands)

As of March 31, 2024

As of June 30, 2024

Collateral-dependent loans $ — $ — $ 2,181 $ 2,181

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 March 31, 2024 and December 31, 2023:

March 31, 2024 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 June 30, 2024 and December 31, 2023:

June 30, 2024 Carrying Amount Fair Value

Total Level 1 Level 2 Level 3

19 unchanged sentences

These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance sheet.

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.

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 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 March 31, 2024.

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

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.

As of June 30, 2024 and December 31, 2023, unused commitments to extend credit amounted to approximately $ 114.8 million and $ 93.8 million, respectively.

At June 30, 2024 and December 31, 2023, the allowance for credit losses on off-balance sheet credit exposures was $ 896.0 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 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.

As of June 30, 2024 and December 31, 2023, standby letters of credit with customers were $ 0.6 million and $ 1.5 million, respectively.

On June 26, 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 September 25, 2024.

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

10 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, 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.

At June 30, 2024 and December 31, 2023, deposit balances from cannabis customers were approximately $ 142.5 million and $ 96.7 million, or 9.5 % and 6.2 % of total deposits, respectively, with three customers accounting for 66.1 % and 60.6 % of the total at June 30, 2024 and December 31, 2023.

At June 30, 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