PARKE BANCORP, INC. 10-K

Item 8. Financial Statements and Supplementary Data. 34 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Parke Bancorp, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Parke Bancorp, Inc. and subsidiaries (the “Company”) as of December 31, 2025 and 2024; the related consolidated statements of income, comprehensive income, equity, and cash flows for the years then ended; and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated March 11, 2026, expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent, with respect to the Company, in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the Audit Committee and that: (1) relate to accounts or disclosures that are material to the financial statements; and (2) involve our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter, in any way, our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 35 Table of Contents Allowance for Credit Losses (ACL) – Qualitative Adjustments Description of the Matter The Company’s loan portfolio totaled $2.0 billion as of December 31, 2025, and the associated ACL was $34.6 million. As discussed in Notes 1 and 4 to the financial statements, the calculation of the ACL requires significant judgment about the expected future losses, which is based on a base loss projection determined through a historical vintage loss rate analysis, which is then adjusted for current qualitative conditions and reasonable and supportable forecasts. Management applies these qualitative adjustments to the base loss projection to reflect changes in the current and forecasted environment, both internal and external, that are different from the conditions that existed during the historical loss calculation period. The qualitative adjustments include analysis of items related to economic conditions, credit quality indicators within the loan portfolio, and other internal and external factors. We identified these qualitative adjustments within the ACL as critical audit matters because they involve a high degree of subjectivity. While the determination of these qualitative adjustments includes analysis of observable data over the historical loss period, the judgments required to assess the directionality and magnitude of adjustments is highly subjective. Auditing these complex judgments and assumptions involved especially challenging auditor judgment due to the nature of audit evidence and the nature and extent of effort required to address these matters. How We Addressed the Matter in Our Audit The primary procedures we performed to address this critical audit matter included: – Testing the design, implementation, and operating effectiveness of internal controls over the calculation of the allowance for credit losses, including the qualitative factor adjustments. – Testing the completeness and accuracy of the significant data points that management uses in their evaluation of the qualitative adjustments. – Testing the anchoring calculation that management completes to properly align the magnitude of the adjustments with the Company's historical loss data. – Evaluating the directional consistency and reasonableness of management's conclusions regarding basis points applied (whether positive or negative) based on the trends identified in the underlying data. – Testing the mathematical accuracy of the application of the qualitative adjustments to the loan segments within the ACL calculation. We have served as the Company’s auditor since 2022. /s/ S.R. Snodgrass, P.C. Cranberry Township, Pennsylvania March 11, 2026 36 Table of Contents Parke Bancorp, Inc. and Subsidiaries Consolidated Balance Sheets December 31, 2025 and 2024 (Dollars in thousands except per share data) December 31, December 31, 2025 2024 Assets Cash and due from banks $ 7,738 $ 4,624 Interest earning deposits with banks 149,125 216,903 Cash and cash equivalents 156,863 221,527 Investment securities available for sale, at fair value 4,746 5,551 Investment securities held to maturity, net of allowance for credit losses of $ 0 at December 31, 2025 and 2024 (fair value of $ 7,487 at December 31, 2025 and $ 7,492 at December 31, 2024) 8,777 9,209 Total investment securities 13,523 14,760 Loans, net of unearned income 2,035,227 1,868,153 Less: Allowance for credit losses ( 34,649 ) ( 32,573 ) Net loans 2,000,578 1,835,580 Accrued interest receivable 11,257 9,659 Premises and equipment, net 5,506 5,316 Restricted stock 8,085 8,619 Bank owned life insurance (BOLI) 35,320 29,070 Deferred tax asset 10,719 9,113 Other real estate owned (OREO) 2,862 1,562 Other assets 4,723 7,030 Total Assets $ 2,249,436 $ 2,142,236 Liabilities and Shareholders' Equity Liabilities Deposits Noninterest-bearing deposits $ 196,506 $ 184,037 Interest-bearing deposits 1,562,163 1,447,013 Total deposits 1,758,669 1,631,050 FHLBNY borrowings 130,000 145,000 Subordinated debentures 13,403 43,300 Accrued interest payable 4,575 7,968 Accrued expenses and other liabilities 18,271 14,845 Total liabilities 1,924,918 1,842,163 Shareholders' Equity Preferred stock, 1,000,000 shares authorized, $ 1,000 liquidation value Series B non-cumulative convertible; 325 shares outstanding at December 31, 2025 and 2024, respectively 325 325 Common stock, $ 0.10 par value; authorized 15,000,000 shares; Issued: 12,425,768 shares and 12,313,489 shares at December 31, 2025 and 2024, respectively 1,243 1,231 Additional paid-in capital 139,268 137,784 Retained earnings 197,671 168,347 Accumulated other comprehensive loss ( 200 ) ( 337 ) Treasury stock, 784,522 shares and 484,522 shares at December 31, 2025 and 2024, respectively, at cost ( 13,789 ) ( 7,277 ) Total shareholders’ equity 324,518 300,073 Total liabilities and shareholders' equity $ 2,249,436 $ 2,142,236 See accompanying notes to consolidated financial statements 37 Table of Contents Parke Bancorp, Inc. and Subsidiaries Consolidated Statements of Income Years Ended December 31, 2025 and 2024 (Dollars in thousands except per share data) December 31, 2025 December 31, 2024 Interest income: Interest and fees on loans $ 135,189 $ 117,834 Interest and dividends on investments 921 1,042 Interest on deposits with banks 6,567 6,237 Total interest income 142,677 125,113 Interest expense: Interest on deposits 59,848 57,312 Interest on borrowings 6,371 9,093 Total interest expense 66,219 66,405 Net interest income 76,458 58,708 Provision for credit losses 2,484 728 Net interest income after provision for credit losses 73,974 57,980 Non-interest income Service fees on deposit accounts 1,232 1,387 Other loan fees 676 849 Bank owned life insurance income 740 655 Other 759 1,410 Total non-interest income 3,407 4,301 Non-interest expense Compensation and benefits 13,314 12,768 Professional services 3,428 2,730 Occupancy and equipment 2,760 2,598 Data processing 1,544 1,366 FDIC insurance and other assessments 1,449 1,306 OREO expense 649 835 Other operating expense 4,830 4,381 Total non-interest expense 27,974 25,984 Income before income tax expense 49,407 36,297 Income tax expense 11,632 8,785 Net income attributable to Company 37,775 27,512 Less: Preferred stock dividend ( 20 ) ( 20 ) Net income available to common shareholders $ 37,755 $ 27,492 Earnings per common share Basic $ 3.20 $ 2.30 Diluted $ 3.16 $ 2.27 Weighted average common shares outstanding Basic $ 11,794,531 $ 11,954,483 Diluted $ 11,966,541 $ 12,139,451 See accompanying notes to consolidated financial statements 38 Table of Contents Parke Bancorp, Inc. and Subsidiaries Consolidated Statements of Comprehensive Income Years Ended December 31, 2025 and 2024 For the Year ended December 31, 2025 2024 (Dollars in thousands) Net income attributable to the Company $ 37,775 $ 27,512 Unrealized gains on investment securities, net of reclassification into income: Unrealized gains on available for sale securities 185 90 Tax impact on unrealized gain ( 48 ) ( 23 ) Total other comprehensive gain 137 67 Comprehensive income attributable to the Company $ 37,912 $ 27,579 See accompanying notes to consolidated financial statements 39 Table of Contents Parke Bancorp, Inc. and Subsidiaries Consolidated Statements of Equity Years Ended December 31, 2025 and 2024 (Dollars in thousands except share data) Accumulated Shares of Shares of Additional Other Preferred Stock Preferred Common Stock Common Paid-In Retained Comprehensive Treasury Total Outstanding Stock issued Stock Capital Earnings Income (Loss) Stock Equity Balance, December 31, 2023 375 $ 375 12,240,821 $ 1,224 $ 136,700 $ 149,437 $ ( 404 ) $ ( 3,015 ) $ 284,317 Net income attributable to Company — — — — — 27,512 — — 27,512 Stock compensation issued/exercised — — 65,791 7 699 — — — 706 Preferred stock shares conversion ( 50 ) ( 50 ) 6,877 — 49 — — — ( 1 ) Treasury stock purchase ( 200,000 shares) — — — — — — — ( 4,262 ) ( 4,262 ) Other comprehensive gain — — — — — — 67 — 67 Stock compensation expense — — — — 336 — — — 336 Dividend on preferred stock ($ 60.00 per share) — — — — — ( 20 ) — — ( 20 ) Dividend on common stock ($ 0.72 per share) — — — — — ( 8,582 ) — — ( 8,582 ) Balance, December 31, 2024 325 $ 325 12,313,489 $ 1,231 $ 137,784 $ 168,347 $ ( 337 ) $ ( 7,277 ) $ 300,073 Net income attributable to Company — — — — — 37,775 — — 37,775 Stock compensation issued/exercised — — 112,279 12 1,191 — — — 1,203 Treasury stock purchase ( 300,000 shares) — — — — — — — ( 6,483 ) ( 6,483 ) Excise tax payment on stock repurchase — — — — — — — ( 29 ) ( 29 ) Other comprehensive gain — — — — — — 137 — 137 Stock compensation expense — — — — 293 — — — 293 Dividend on preferred stock ($ 60.00 per share) — — — — — ( 20 ) — — ( 20 ) Dividend on common stock ($ 0.72 per share) — — — — — ( 8,431 ) — — ( 8,431 ) Balance, December 31, 2025 325 $ 325 12,425,768 $ 1,243 $ 139,268 $ 197,671 $ ( 200 ) $ ( 13,789 ) $ 324,518 See accompanying notes to consolidated financial statements 40 Table of Contents Parke Bancorp, Inc. and Subsidiaries Consolidated Statements of Cash Flows Years Ended December 31, 2025 and 2024 (Dollars in thousands) 2025 2024 Cash Flows from Operating Activities Net income attributable to Company $ 37,775 $ 27,512 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 508 571 Provision for credit losses 2,484 728 Increase in value of bank-owned life insurance ( 740 ) ( 655 ) Gain on sale of SBA loans — ( 23 ) SBA loans originated for sale — ( 300 ) Proceeds from sale of SBA loans originated for sale — 323 OREO writeoff 147 — Net accretion of purchase premiums and discounts on securities ( 43 ) ( 45 ) Stock based compensation 293 336 (Increase) decrease in deferred income tax ( 1,654 ) 126 Net changes in: Decrease in accrued interest receivable and other assets 709 2,385 Increase in accrued interest payable and other accrued liabilities 72 4,200 Net cash provided by operating activities 39,551 35,158 Cash Flows from Investing Activities Repayments and maturities of investment securities available for sale 1,472 1,614 Repayments and maturities of investment securities held to maturity 493 148 Purchase of investment securities ( 500 ) — Bank-owned life insurance additional purchase ( 5,510 ) — Net increase in loans ( 168,968 ) ( 80,731 ) Purchases of bank premises and equipment ( 595 ) ( 119 ) Redemptions of restricted stock 16,438 7,213 Purchases of restricted stock ( 15,904 ) ( 8,196 ) Net cash used in investing activities ( 173,074 ) ( 80,071 ) Cash Flows from Financing Activities Cash dividends ( 8,451 ) ( 8,602 ) Proceeds from exercise of stock options 1,203 706 Treasury stock purchase ( 6,483 ) ( 4,262 ) Conversion of Series B preferred stock — ( 1 ) Excise tax payment on purchase of treasury stock ( 29 ) — Repayment of sub debt ( 30,000 ) — Increase in FHLBNY short-term borrowings 5,000 95,000 Decrease in FHLBNY long-term borrowings ( 20,000 ) ( 75,000 ) Net increase (decrease) in noninterest-bearing deposits 12,469 ( 48,152 ) Net increase in interest-bearing deposits 115,150 126,375 Net cash provided by financing activities 68,859 86,064 (Decrease) increase in cash and cash equivalents ( 64,664 ) 41,151 Cash and Cash Equivalents, January 1, 221,527 180,376 Cash and Cash Equivalents, December 31, $ 156,863 $ 221,527 Supplemental Disclosure of Cash Flow Information: Interest paid $ 69,612 $ 62,583 Federal income taxes paid $ 7,600 $ 3,960 State taxes paid $ 832 $ 582 Non-cash Investing and Financing Items Loans transferred to OREO $ 1,448 $ — Accrued dividends payable $ 2,093 $ 2,141 See accompanying notes to consolidated financial statements 41 Table of Contents Note 1. Description of Business and Summary of Significant Accounting Policies Business: Parke Bancorp, Inc. (the “Company, we, us, our”) is a bank holding company headquartered in Sewell, New Jersey. Through subsidiaries, the Company provides individuals, corporations and other businesses, and institutions with commercial and retail banking services, principally loans and deposits. The Company was incorporated in January 2005 under the laws of the State of New Jersey for the sole purpose of becoming the holding company of Parke Bank (the "Bank"). The Bank is a commercial bank, which was incorporated on August 25, 1998, and commenced operations on January 28, 1999. The Bank is chartered by the New Jersey Department of Banking and Insurance and its deposits are insured by the Federal Deposit Insurance Corporation. The Bank maintains seven branch offices with its principal office at 601 Delsea Drive, Sewell, New Jersey, and additional branch office locations; 631 Tilton Road, Northfield, New Jersey, 567 Egg Harbor Road, Washington Township, New Jersey, 67 East Jimmie Leeds Road, Galloway Township, New Jersey, 1150 Haddon Avenue, Collingswood, New Jersey, 1610 Spruce Street, Philadelphia, Pennsylvania, and 1032 Arch Street, Philadelphia, Pennsylvania. Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with GAAP. We have reclassified certain prior year amounts to conform to the 2025 presentation, which did not have a material impact on our consolidated financial condition or results of operations. The accounting policies that materially affect the determination of financial position, results of operations and cash flows are summarized below. Principles of Consolidation : The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Parke Bank. Parke Capital Trust I, Parke Capital Trust II and Parke Capital Trust III are wholly-owned subsidiaries but are not consolidated because they do not meet the requirements for consolidation under applicable accounting guidance. All material inter-company balances and transactions have been eliminated. Cash and cash equivalents : Consists of cash and due from banks, and interest-bearing deposits and other-short term investments, all of which, if applicable, have stated maturities of three months or less when acquired. Investment Securities : Debt securities are recorded on a trade-date basis. We classify debt securities as held to maturity if we have the positive intent and ability to hold the securities to maturity. We report securities held to maturity on our consolidated balance sheets at carrying value, which generally equals amortized cost. Amortized cost reflects historical cost adjusted for amortization of premiums, accretion of discounts and any previously recorded impairments. Debt securities not classified as held to maturity or trading are designated as securities available for sale ("AFS") and carried at fair value with unrealized gains and losses, net of income taxes, reflected in accumulated other comprehensive income (loss). We did not have any securities classified as trading securities during 2025 or 2024 . Interest on debt securities, including amortization of premiums and accretion of discounts, is included in interest income. Premiums and discounts are amortized or accreted to interest income at a constant effective yield over the contractual lives of the securities. Realized gains and losses from the sales of debt securities are determined on a specific security basis. These securities gains/(losses) are included in other noninterest income. Restricted Stock : Restricted stock includes investments in the common stock of the FHLBNY and the Atlantic Central Bankers Bank for which no readily available market exists and, accordingly, is carried at cost. The stocks have no quoted market value and are subject to redemption restrictions. Management reviews these stocks for credit loss based on the ultimate recoverability of the cost basis in the stock. The stocks’ values are determined by the ultimate recoverability of the par value rather than by recognizing temporary declines. Management considers such criteria as the significance of the decline in net assets, if any, the length of time this situation has persisted and the financial performance of the issuers. In addition, management considers any commitments by the FHLBNY to make payments required by law or regulation, the impact of legislative and regulatory changes on the customer base of the FHLBNY and the liquidity position of the FHLBNY. 42 Table of Contents Loans : We classify loans as held for investment or held for sale based on our investment strategy and management’s intent and ability with regard to the loans which may change over time. The accounting and measurement framework for loans differs depending on the loan classification. Loans that we have the ability and intent to hold for the foreseeable future or until maturity or pay-off are classified as held for investment. Loans classified as held for investment are reported at their amortized cost, which is the outstanding principal balance, adjusted for any unearned income, unamortized deferred fees and costs, unamortized premiums and discounts and charge-offs. Interest income on the loans is recognized as earned based on contractual interest rates applied to daily principal amounts outstanding. Loan origination fees, direct loan origination costs, and loan premiums and discounts are deferred and accreted or amortized into net interest income using the constant effective yield method, over the contractual life of the loan. Loans originated with the intent to sell or for which we do not have the ability and intent to hold for the foreseeable future are classified as held for sale. Interest on these loans is recognized on an accrual basis. These loans are recorded at the lower of cost or fair value. Our Small Business Administration ("SBA") loans that management has the intention to sell are designated as held for sale and are reported at fair value. Fair value represents the face value of the guaranteed portion of SBA loans pending settlement. Loan origination fees and direct loan origination costs are deferred until the loan is sold and are recognized as part of the total gain or loss on sale. We calculate the gross gain or loss on loan sales as the difference between the proceeds received and the carrying value of the loans sold. Loan Fees : Loan fees and direct costs associated with loan originations are netted and deferred. The deferred amount is recognized as an adjustment to loan interest over the term of the related loan using the interest method. Prepayment penalties on loans are recognized in loan interest. Loan brokerage fees represent commissions earned for facilitating loans between borrowers and other companies and is recorded as other loan fee income. Non-accrual Loans : Loans are placed on non-accrual status when, in management's opinion, the borrower may be unable to meet contractual payment obligations as they become due, as well as when a loan is 90 days past due, unless the loan is well secured and in the process of collection, as required by regulatory provisions. Loans may be placed on non-accrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Allowance for Credit Losses on Loans and Leases : The allowance for credit losses represents management’s estimate of expected losses inherent in the Company’s lending activities excluding loans accounted for under fair value. The allowance for credit losses is maintained through charges to the provision for credit losses in the Consolidated Statements of Income as expected losses are estimated. Loans or portions thereof that are determined to be uncollectible are charged against the allowance, and subsequent recoveries, if any, are credited to the allowance. The Company performs periodic reviews of its loan and lease portfolios to identify credit risks and to assess the overall collectability of those portfolios. The Company's allowance for credit losses includes a general component and an asset-specific component for collateral-dependent loans. To determine the asset-specific component of the allowance, the loans are evaluated individually based on the fair value of the underlying collateral. The Company generally measures the asset-specific allowance as the difference between the net realizable value of loan collateral and the recorded investment of a loan. The general component of the allowance evaluates the impairments of pools of the loan portfolio collectively. It incorporates a historical valuation allowance and qualitative allowance. The historical valuation utilizes a vintage loss rate approach utilizing a third party software model. The vintage loss rate approach creates pools of loans based on the segments defined by management, and consists of 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. 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. 43 Table of Contents The qualitative allowance component is based on general economic conditions and other qualitative risk factors both internal and external to the Company. It is generally determined by evaluating, among other things: (i) the experience, ability and effectiveness of the Bank's lending management and staff; (ii) the effectiveness of the Bank's lending policies, procedures and internal controls; (iii) volume and severity of loan credit quality; (iv) nature and volume of portfolio and term of loans (v) the composition and concentrations of credit; (vi) the effectiveness of the internal loan review system;(vii) national and local economic trends and conditions, and industry conditions; and (viii) the valuation of loan collateral assessed by regional home valuation indexes. Management evaluates the degree of risk that each one of these components has on the quality of the loan portfolio on a quarterly basis. Each component is determined to have either a high, high-moderate, moderate, low-moderate or low degree of risk. The results are then input into a "general allocation matrix" to determine an appropriate general valuation allowance. The Company has elected to exclude accrued interest receivable from the measurement of the ACL. When a loan is placed on non-accrual status, any outstanding accrued interest is generally reversed against interest income. Accrued interest receivable, including loan and investment security, at December 31, 2025 and 2024 was $ 11.3 million and $ 9.7 million, respectively. The process of determining the level of the allowance for credit losses requires a high degree of estimate and judgment. It is reasonably possible that actual outcomes may differ from our estimates. 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 : 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 the Current Expected Credit Loss ("CECL") model 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 : Parke measures 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 44 Table of Contents 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. At December 31, 2025 and 2024 , accrued interest receivable on held-to-maturity debt securities was $ 11.9 thousand and $ 12.7 thousand, respectively. Allowance for Credit Losses on Available for Sale 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. Accrued interest receivable on available-for-sale securities is excluded from the estimate of credit losses and is included in Accrued interest receivable on the Consolidated Statements of Financial Condition. At December 31, 2025 and 2024 , accrued interest receivable on available-for-sale securities was $ 22.8 thousand and $ 13.9 thousand, respectively. Charge-Offs : We charge off loans as a reduction to the allowance for credit losses when we determine the loan is uncollectible and record subsequent recoveries of previously charged off amounts as an increase to the allowance for credit losses. Concentration of Credit Risk : The Company’s loans are generally to customers in Southern New Jersey, the Philadelphia area of Pennsylvania, and New York, New York. Loans to general building contractors, general merchandise stores, restaurants, motels, warehouse space, and real estate ventures (including construction loans) constitute a majority of commercial loans. The concentrations of credit by type of loan are set forth in Note 4. Generally, loans are collateralized by assets of the borrower and are expected to be repaid from the borrower’s cash flow or proceeds from the sale of selected assets of the borrower. Other Real Estate Owned ( “ OREO ” ) : Real estate acquired through foreclosure or other proceedings is carried at the lower of cost or estimated fair value, less estimated costs to sell. When a property is acquired, the excess of the loan balance over the estimated fair value is charged to the allowance for credit losses. Costs of improving OREO are capitalized to the extent that the carrying value does not exceed its fair value less estimated selling costs. Subsequent valuation adjustments, declines, if any, are recognized as a charge against current earnings. Holding costs are charged to expense. Gains and losses on sales are recognized in non-interest income as they occur. Bank-owned life insurance ( “ BOLI ” ): Policies insure the lives of officers and team members of the Company and name the Company as beneficiary. Non-interest income is generated tax free (subject to certain limitations) from the increase in value of the policies’ underlying investments made by the insurance company. Cash proceeds received from the settlement of the BOLI policies are generally tax-free and can be used to partially offset costs associated with employee compensation and benefit programs. Bank Premises and Equipment : Bank premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed and charged to expense using the straight-line method over the estimated useful lives of the assets, generally three years for computers and software, five to ten years for equipment and forty years for buildings. Leasehold improvements are amortized to expense over the shorter of the term of the respective lease or the estimated useful life of the improvements. 45 Table of Contents Lease : Lease classification is determined at inception for all lease transactions with an initial term greater than one year. Operating leases are included as right-of-use (“ROU”) assets within other assets, and operating lease liabilities are classified as other liabilities on our consolidated balance sheets. Our operating lease expense is included in occupancy and equipment within non-interest expense in our consolidated statements of income. Stock-Based Compensation : Stock-based compensation expense is based on the grant date fair value, which is estimated using a Black-Scholes option pricing model. The fair value of restricted stock grants is equal to the fair market value of our common stock on the date of grant. We generally recognize compensation expense on a straight-line basis over the award’s requisite service period based on the fair value of the award at grant date. Stock-based compensation expense is included in compensation and benefits in the consolidated statements of income. Revenue recognition : Our revenue includes net interest income on financial instruments and non-interest income. Interest income and fees on loans, investment securities, and other financial instruments are recognized based on the contractual provisions of the underlying arrangements according to applicable accounting guidance. Deposit-related-fee-based revenue within the scope of ASC Topic 606 - Revenue from Contracts with Customers (Topic 606 ) is included in non-interest income in our consolidated statements of income. Our deposit-related-fee-based revenues are recognized when or as those services are transferred to the customer and are generally recognized either immediately upon the completion of our service or over time as we perform services. Any services performed over time generally require that we render services each period and therefore we measure our progress in completing these services based upon the passage of time. Deposit-related fees are recognized over the period in which the related service is provided. Service charges on deposit accounts are earned on depository accounts for customers and include fees for account and overdraft services. Account services include fees for event-driven services and fees for periodic account maintenance activities. Our obligation for event-driven services is satisfied at the time of the event when the service is delivered, while our obligation for maintenance services is satisfied over the course of each month. Our obligation for overdraft services is satisfied at the time of the overdraft. Income Taxes : We recognize the current and deferred tax consequences of all transactions that have been recognized in the financial statements using the provisions of the enacted tax laws. Current income tax expense represents our estimated taxes to be paid or refunded for the current period. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Thus, at the enactment date, deferred taxes are remeasured and the change is recognized in income tax expense. The recognition of deferred tax assets requires an assessment to determine the realization of such assets. Realization refers to the incremental benefit achieved through the reduction in future taxes payable or refunds receivable. We establish a valuation allowance for tax assets when it is more likely than not that they will not be realized, based upon all available evidence. Realization of deferred tax assets is dependent on generating sufficient taxable income in the future. When tax returns are filed, it is highly certain that some positions taken will be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that ultimately would be sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more-likely-than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. The evaluation of a tax position taken is considered by itself and not offset or aggregated with other positions. Tax positions that meet the more likely than not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized tax benefits would be recognized in income tax expense on the income statement. 46 Table of Contents The Company did not recognize any interest or penalties related to income tax during the years ended December 31, 2025 and 2024 , respectively. The Company does not have an accrual for uncertain tax positions as of December 31, 2025 and 2024 , as deductions taken and benefits accrued are based on widely understood administrative practices and procedures and are based on clear and unambiguous tax law. All years after 2022 are open under the original federal statute of limitations. For state tax returns, the Company is subject to income tax examinations by local tax authorities for years 2022 and after, except for the State of New Jersey which is still subject to income tax examinations for years 2021 and after. Fair value : Fair value, also referred to as an exit price, is defined as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The fair value accounting guidance provides a three -level fair value hierarchy for classifying financial instruments. This hierarchy is based on whether the inputs to the valuation techniques used to measure fair value are observable or unobservable. Fair value measurement of a financial asset or liability is assigned to a level based on the lowest level of any input that is significant to the fair value measurement in its entirety. The accounting guidance for fair value requires that we maximize the use of observable inputs and minimize the use of unobservable inputs in determining fair value. Use of Estimates : The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Our most significant estimates pertain to our allowances for credit losses, fair value measurements, individually evaluated loans, the carrying value of OREO, and the valuation of deferred income taxes. Actual results may differ from the estimates and the differences may be material to the consolidated financial statements. Segment Reporting : The Company operates one reportable segment of business, “community banking”. Through its community banking segment, the Company provides a broad range of retail and community banking services. The accounting policies of the community banking segment are the same as those described in the summary of significant accounting policies. The Company's chief operating decision maker ("CODM") is the President, Chief Executive Officer and Director, who decides how to allocate resources based on net income that also is reported on the income statement as consolidated net income. The measure of segment assets is reported on the balance sheet as total consolidated assets. 47 Table of Contents The following table presents segment profit and significant expenses. Community Banking Segment (Dollars in thousands) December 31, 2025 December 31, 2024 Total interest income $ 142,677 $ 125,113 Total interest expense 66,219 66,405 Provision for credit losses 2,484 728 Net interest income after provision for credit losses 73,974 57,980 Total non-interest income 3,407 4,301 Total non-interest expense 27,974 25,984 Income before income tax expense 49,407 36,297 Income tax expense 11,632 8,785 Net income attributable to the Company $ 37,775 $ 27,512 Reconciliation of profit or loss Adjustments and reconciling items — — Consolidated net income $ 37,775 $ 27,512 Other Comprehensive Income : Comprehensive income consists of net income and other gains and losses affecting shareholders' equity that, under GAAP, are excluded from net income, including unrealized gains and losses on available for sale securities. For the years ended December 31, 2025 and 2024 , we did not reclassify any amounts from accumulated other comprehensive income to income. The following table provides the components of other comprehensive income, reclassifications to net income and the related tax effect for the years ended December 31, 2025 and 2024 : Year ended December 31, 2025 2024 (Dollars in thousands) Investment securities: Net unrealized gain $ 185 $ 90 Tax effect related to the unrealized gain ( 48 ) ( 23 ) Accumulated other comprehensive income $ 137 $ 67 48 Table of Contents Earnings Per Common Share : Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per common share considers common stock equivalents (when dilutive) outstanding during the period such as options outstanding and convertible preferred stock using the treasury stock and if-converted methods. To the extent that stock equivalents are anti-dilutive, they have been excluded from the earnings per share calculation. Earnings per common share have been computed based on the following for the years ended December 31, 2025 and 2024 : 2025 2024 (Dollars in thousands, except per share data) Basic earnings per common share Net income available to common shareholders $ 37,755 $ 27,492 Basic weighted-average common shares outstanding 11,794,531 11,954,483 Basic earnings per common share $ 3.20 $ 2.30 Diluted earnings per common share Net income available to common shareholders $ 37,755 $ 27,492 Dividend on Preferred Series B 20 20 Net income attributable to diluted common shares $ 37,775 $ 27,512 Basic weighted-average common shares outstanding 11,794,531 11,954,483 Dilutive potential common shares 172,010 184,968 Total diluted weighted-average common shares outstanding 11,966,541 12,139,451 Diluted earnings per common share $ 3.16 $ 2.27 For the years ended December 31, 2025 and 2024 , there were 251,409 and 283,441 weighted average option shares outstanding, respectively, that were not included in the computation of diluted EPS because these shares were anti-dilutive. Statement of Cash Flows : Cash and cash equivalents include cash and due from financial institutions and federal funds sold. For the purposes of the statement of cash flows, changes in loans and deposits are shown on a net basis. Accounting Pronouncements Adopted in 2025 ASU No. 2023 - 09, Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures: During the year ended December 31, 2025, the Company adopted ASU 2023 - 09, Income Taxes (Topic 740 ): "Improvements to Income Tax Disclosures". The amendments further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025. Early adoption is permitted and should be applied either prospectively or retrospectively. The implementation of this guidance did not have a material impact on the Consolidated Financial Statements. 49 Table of Contents Note 2. Cash and Due from Banks The Company maintains various deposit accounts with other banks to meet normal funds transaction requirements, to satisfy deposit reserve requirements, and to compensate other banks for certain correspondent services. Management is responsible for assessing the credit risk of its correspondent banks. At December 31, 2025 and 2024 , the vast majority of the Company's cash deposits with other banks were due from the Federal Reserve Bank of Philadelphia and the Federal Home Loan Bank of New York. Note 3. Investment Securities The following is a summary of the Company's investments in available for sale and held to maturity securities as of December 31, 2025 and 2024 : Gross Gross Amortized unrealized unrealized Fair Credit As of December 31, 2025 cost gains losses value Losses (Dollars in thousands) Available for sale: Residential mortgage-backed securities $ 4,515 $ 10 $ 279 $ 4,246 $ — Corporate debt obligations 500 — — 500 — Total available for sale $ 5,015 $ 10 $ 279 $ 4,746 $ — Held to maturity: States and political subdivisions $ 4,024 $ — $ 345 $ 3,679 $ — Residential mortgage-backed securities 4,753 — 945 3,808 — Total held to maturity $ 8,777 $ — $ 1,290 $ 7,487 $ — Gross Gross Amortized unrealized unrealized Fair Credit As of December 31, 2024 cost gains losses value Losses (Dollars in thousands) Available for sale: Residential mortgage-backed securities $ 6,005 $ 2 $ 456 $ 5,551 $ — Total available for sale $ 6,005 $ 2 $ 456 $ 5,551 $ — Held to maturity: States and political subdivisions $ 3,953 $ 3 $ 515 $ 3,441 $ — Residential mortgage-backed securities 5,256 — 1,205 4,051 — Total held to maturity $ 9,209 $ 3 $ 1,720 $ 7,492 $ — 50 Table of Contents The amortized cost and fair value of debt securities classified as available for sale and held to maturity, by contractual maturity as of December 31, 2025 , are as follows: Amortized Fair Cost Value (Dollars in thousands) Available for sale: Due within one year $ 9 $ 9 Due after one year through five years 1,726 1,628 Due after five years through ten years 1,328 1,271 Due after ten years 1,952 1,838 Total available for sale $ 5,015 $ 4,746 Held to maturity: Due within one year $ — $ — Due after one year through five years 1,553 1,546 Due after five years through ten years 2,471 2,133 Due after ten years 4,753 3,808 Total held to maturity $ 8,777 $ 7,487 Expected maturities may differ from contractual maturities because the issuers of certain debt securities have the right to call or prepay their obligations without any penalty. During the year ended December 31, 2025 and 2024 , the Company did not sell any investment securities. The following tables show the gross unrealized losses and fair value of the Company's available for sale securities which are aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2025 and December 31, 2024 . As of December 31, 2025 Less Than 12 Months 12 Months or Greater Total Fair Unrealized Fair Unrealized Fair Unrealized Description of Securities Value Losses Value Losses Value Losses (Dollars in thousands) Available for sale: Residential mortgage-backed securities $ 46 $ — $ 3,816 $ 279 $ 3,862 $ 279 Total available for sale $ 46 $ — $ 3,816 $ 279 $ 3,862 $ 279 51 Table of Contents As of December 31, 2024 Less Than 12 Months 12 Months or Greater Total Fair Unrealized Fair Unrealized Fair Unrealized Description of Securities Value Losses Value Losses Value Losses (Dollars in thousands) Available for sale: Residential mortgage-backed securities $ 80 $ 1 $ 4,973 $ 455 $ 5,053 $ 456 Total available for sale $ 80 $ 1 $ 4,973 $ 455 $ 5,053 $ 456 The Company’s unrealized loss for the available for sale securities is comprised of 2 securities in the less than 12 months loss position and 12 securities in the 12 months or greater loss position at December 31, 2025 . The mortgage-backed securities that had unrealized losses were issued or guaranteed by the US government or government sponsored entities. The unrealized losses associated with those mortgage-backed securities are generally driven by changes in interest rates and not due to credit losses given the explicit or implicit guarantees provided by the U.S. government. 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 a credit loss at December 31, 2025 . Impairment of Debt Securities 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. Please refer to Note 1 - Description of Business and Summary of Significant Accounting Policies for a detailed description of our accounting policy for the impairment of securities. Note 4. Loans Receivable and Allowance for Credit Losses Loans Receivable As of December 31, 2025 , the Company had $ 2.04 billion in loans receivable outstanding. Outstanding balances include $ 0.03 million and $ 1.8 million at December 31, 2025 and 2024 , respectively, for net deferred loan costs, and unamortized discounts. 52 Table of Contents The portfolios of loans receivable at December 31, 2025 , and December 31, 2024 , consist of the following, by portfolio segment: December 31, 2025 December 31, 2024 (Dollars in thousands) Commercial and Industrial $ 38,672 $ 35,381 Construction 212,307 149,346 Real Estate Mortgage: Commercial – Owner Occupied 182,529 160,441 Commercial – Non-owner Occupied 478,295 371,298 Residential – 1 to 4 Family 451,463 447,880 Residential - 1 to 4 Family Investment 494,228 524,167 Residential – Multifamily 173,611 174,756 Consumer 4,122 4,884 Total Loan receivable 2,035,227 1,868,153 Allowance for credit losses on loans ( 34,649 ) ( 32,573 ) Total loan receivable, net of allowance for credit losses on loans $ 2,000,578 $ 1,835,580 An age analysis of past due loans by class at December 31, 2025 and December 31, 2024 as follows: 30-59 60-89 Greater Days Past Days Past than 90 Total Past Total December 31, 2025 Due Due Days Due Current Loans (Dollars in thousands) Commercial and Industrial $ — $ — $ 688 $ 688 $ 37,984 $ 38,672 Construction — — 1,091 1,091 211,216 212,307 Real Estate Mortgage: Commercial – Owner Occupied — — 400 400 182,129 182,529 Commercial – Non-owner Occupied — 1,122 3,668 4,790 473,505 478,295 Residential – 1 to 4 Family — 1,434 2,965 4,399 447,064 451,463 Residential - 1 to 4 Family Investment — 896 1,840 2,736 491,492 494,228 Residential – Multifamily — — — — 173,611 173,611 Consumer — 32 141 173 3,949 4,122 Total Loans $ — $ 3,484 $ 10,793 $ 14,277 $ 2,020,950 $ 2,035,227 53 Table of Contents 30-59 60-89 Greater Days Past Days Past than 90 Total Past December 31, 2024 Due Due Days Due Current Total Loans (Dollars in thousands) Commercial and Industrial $ — $ — $ 684 $ 684 $ 34,697 $ 35,381 Construction — — 1,091 1,091 148,255 149,346 Real Estate Mortgage: Commercial – Owner Occupied — — 400 400 160,041 160,441 Commercial – Non-owner Occupied — — 5,485 5,485 365,813 371,298 Residential – 1 to 4 Family 223 362 2,883 3,468 444,412 447,880 Residential - 1 to 4 Family Investment — 454 1,609 2,063 522,104 524,167 Residential – Multifamily — — — — 174,756 174,756 Consumer 34 — — 34 4,850 4,884 Total Loans $ 257 $ 816 $ 12,152 $ 13,225 $ 1,854,928 $ 1,868,153 The following table provides the amortized cost of loans on nonaccrual status: December 31, 2025 Loans Past Due Nonaccrual Nonaccrual Total Over 90 Days Total (amounts in thousands) with no ACL with ACL Nonaccrual Still Accruing Nonperforming Commercial and Industrial $ — $ 688 $ 688 $ — $ 688 Construction 1,091 — 1,091 — 1,091 Commercial - Owner Occupied 400 — 400 — 400 Commercial - Non-owner Occupied 1,109 2,559 3,668 — 3,668 Residential - 1 to 4 Family 2,965 — 2,965 — 2,965 Residential - 1 to 4 Family Investment 1,840 — 1,840 — 1,840 Residential - Multifamily — — — — — Consumer 141 — 141 — 141 Total $ 7,546 $ 3,247 $ 10,793 $ — $ 10,793 December 31, 2024 Loans Past Due Nonaccrual Nonaccrual Total Over 90 Days Total (amounts in thousands) with no ACL with ACL Nonaccrual Still Accruing Nonperforming Commercial and Industrial $ — $ 684 $ 684 $ — $ 684 Construction 1,091 — 1,091 — 1,091 Commercial - Owner Occupied 400 — 400 — 400 Commercial - Non-owner Occupied 1,389 3,806 5,195 290 5,485 Residential - 1 to 4 Family 2,048 746 2,794 89 2,883 Residential - 1 to 4 Family Investment 1,609 — 1,609 — 1,609 Residential - Multifamily — — — — — Consumer — — — — — Total $ 6,537 $ 5,236 $ 11,773 $ 379 $ 12,152 54 Table of Contents Allowance For Credit Losses (ACL) We maintain the ACL at a level that we believe to be appropriate to absorb estimated credit losses in the loan portfolios as of the balance sheet date. The following tables present the information regarding the allowance for credit losses and associated loan data by portfolio segment under the CECL model: Twelve Months Ended December 31, 2025 As of December 31, 2025 Real Estate Mortgage Commercial Commercial Residential Commercial Owner Non-owner Residential 1 to 4 Family Residential (Dollars in thousands) and Industrial Construction Occupied Occupied 1 to 4 Family Investment Multifamily Consumer Total December 31, 2024 $ 1,097 $ 3,037 $ 1,871 $ 6,300 $ 9,166 $ 8,832 $ 2,203 $ 67 $ 32,573 Charge-offs — — — ( 202 ) ( 250 ) — — — ( 452 ) Recoveries 5 — — — — — — — 5 Provisions (benefits) ( 94 ) 995 368 3,563 ( 711 ) ( 1,231 ) ( 358 ) ( 9 ) 2,523 Ending Balance December 31, 2025 $ 1,008 $ 4,032 $ 2,239 $ 9,661 $ 8,205 $ 7,601 $ 1,845 $ 58 $ 34,649 The increase in allowance for credit losses for construction is primarily due to an increase in the loan balance during the year, partially offset by a decrease in the vintage loss factor due to amortization of prior year losses. The increase in the commercial owner occupied is primarily due to an increase in the loan balance during the year, as well as an increase in the qualitative factor due to an increase in the problem loan balance. The increase in the commercial non-owner occupied is primarily due to an increase in the loan balance during the year, which increased qualitative concentration levels. The decrease in residential 1 to 4 family is due to a decrease in the qualitative factor due to a decrease in the concentration level of the portfolio. The decrease in residential 1 to 4 family investment is primarily due to a decrease in the loan balance, as well as a decrease in the qualitative loss factor due to a decease in the concentration level of the portfolio. Twelve Months Ended December 31, 2024 As of December 31, 2024 Real Estate Mortgage Commercial Commercial Residential Commercial Owner Non-owner Residential 1 to 4 Family Residential (Dollars in thousands) and Industrial Construction Occupied Occupied 1 to 4 Family Investment Multifamily Consumer Total December 31, 2023 $ 926 $ 3,347 $ 1,795 $ 7,108 $ 9,061 $ 8,783 $ 1,049 $ 62 $ 32,131 Charge-offs — — — — — — — ( 21 ) ( 21 ) Recoveries 28 — 1 — — — — 74 103 Provisions 143 ( 310 ) 75 ( 808 ) 105 49 1,154 ( 48 ) 360 Ending Balance December 31, 2024 $ 1,097 $ 3,037 $ 1,871 $ 6,300 $ 9,166 $ 8,832 $ 2,203 $ 67 $ 32,573 The increase in allowance for credit losses for residential multifamily is primarily due to an increase in the loan balance during the year, as well as an increase in the qualitative factor due to the increased volume of the portfolio. The decrease in construction is due to a decrease in the loan balance during the year, as well as a decrease in the qualitative factor due to the decrease in volume, as well as a decrease in the vintage loss factor due to amortization of prior year losses. The decrease in commercial non-owner occupied is due to a decrease in the qualitative factor due to a reduction in the problem loan balance, and a decrease in the vintage loss factor due to the amortization of prior year losses. 55 Table of Contents Collateral-Dependent Loans The following table presents the collateral-dependent loans by portfolio segment and collateral type at December 31, 2025 : (amounts in thousands) Real Estate Business Assets Other Commercial and Industrial $ 688 $ — $ — Construction 1,091 — — Commercial - Owner Occupied 400 — — Commercial - Non-owner Occupied 3,668 — — Residential - 1 to 4 Family 2,965 — — Residential - 1 to 4 Family Investment 1,840 — — Residential - Multifamily — — — Consumer 141 — — Total $ 10,793 $ — $ — Credit Quality Indicators : As part of the on-going monitoring of the credit quality of the Company's loan portfolio, management tracks certain credit quality indicators including trends related to the risk grades of loans, the level of classified loans, net charge-offs, nonperforming loans (see details above) and the general economic conditions in the region. The Company utilizes a risk grading matrix to assign a risk grade to each of its loans. Loans are graded on a scale of 1 to 7. Grades 1 through 4 are considered “Pass”. A description of the general characteristics of the seven risk grades is as follows: 1. Good : Borrower exhibits the strongest overall financial condition and represents the most creditworthy profile. 2. Satisfactory (A) : Borrower reflects a well-balanced financial condition, demonstrates a high level of creditworthiness and typically will have a strong banking relationship with the Bank. 3. Satisfactory (B) : Borrower exhibits a balanced financial condition and does not expose the Bank to more than a normal or average overall amount of risk. Loans are considered fully collectable. 4. Watch List : Borrower reflects a fair financial condition, but there exists an overall greater than average risk. Risk is deemed acceptable by virtue of increased monitoring and control over borrowings. Probability of timely repayment is present. 5. 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 individually evaluated. The asset does not currently warrant adverse classification but if not corrected could weaken and could create future increased risk exposure. Includes loans that require an increased degree of monitoring or servicing as a result of internal or external changes. 6. Substandard : This classification represents more severe cases of #5 (OAEM) characteristics that require increased monitoring. Assets are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Assets are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral. Asset has a well-defined weakness or weaknesses that impairs the ability to repay debt and jeopardizes the timely liquidation or realization of the collateral at the asset’s net book value. 7. Doubtful : Assets which have all the weaknesses inherent in those assets classified #6 (Substandard) but the risks are more severe relative to financial deterioration in capital and/or asset value; accounting/evaluation techniques may be questionable and the overall possibility for collection in full is highly improbable. Borrowers in this category require constant monitoring, are considered work-out loans and present the potential for future loss to the Bank. 56 Table of Contents 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, 2025 and 2024 . (Dollars in thousands) Term Loans Amortized Cost Basis by Origination Year Revolving Loans at As of December 31, 2025 2025 2024 2023 2022 2021 Prior Amortized Cost Basis Total Commercial and Industrial Pass $ 4,990 $ 879 $ 3,313 $ 305 $ 2 $ 5,778 $ 22,717 $ 37,984 OAEM — — — — — — — — Substandard — — — 411 — — 277 688 Doubtful — — — — — — — — $ 4,990 $ 879 $ 3,313 $ 716 $ 2 $ 5,778 $ 22,994 $ 38,672 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Construction Pass $ 1,001 $ 325 $ 307 $ 1,396 $ — $ 193 $ 207,994 $ 211,216 OAEM — — — — — — — — Substandard — — — — — 1,091 — 1,091 Doubtful — — — — — — — — $ 1,001 $ 325 $ 307 $ 1,396 $ — $ 1,284 $ 207,994 $ 212,307 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Commercial – Owner Occupied Pass $ 32,560 $ 23,259 $ 32,471 $ 34,016 $ 11,545 $ 46,025 $ 2,253 $ 182,129 OAEM — — — — — — — — Substandard — — — — — 400 — 400 Doubtful — — — — — — — — $ 32,560 $ 23,259 $ 32,471 $ 34,016 $ 11,545 $ 46,425 $ 2,253 $ 182,529 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Commercial – Non-owner Occupied Pass $ 109,092 $ 50,669 $ 14,659 $ 102,688 $ 29,279 $ 150,007 $ 4,794 $ 461,188 OAEM — — — — — 2,176 — 2,176 Substandard — — — 370 — 14,561 — 14,931 Doubtful — — — — — — — — $ 109,092 $ 50,669 $ 14,659 $ 103,058 $ 29,279 $ 166,744 $ 4,794 $ 478,295 Current period gross charge-offs $ — $ — $ — $ — $ — $ 202 $ — $ 202 Residential – 1 to 4 Family Performing $ 59,089 $ 43,287 $ 47,018 $ 95,574 $ 49,503 $ 148,408 $ 5,619 $ 448,498 Nonperforming — — 841 733 — 1,391 — 2,965 $ 59,089 $ 43,287 $ 47,859 $ 96,307 $ 49,503 $ 149,799 $ 5,619 $ 451,463 Current period gross charge-offs $ — $ — $ 47 $ — $ — $ 203 $ — $ 250 Residential – 1 to 4 Family Investment Performing $ 39,340 $ 52,575 $ 70,258 $ 114,208 $ 90,734 $ 125,273 $ — $ 492,388 Nonperforming — — 985 525 — 330 — 1,840 $ 39,340 $ 52,575 $ 71,243 $ 114,733 $ 90,734 $ 125,603 $ — $ 494,228 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Residential – Multifamily Pass $ 27,456 $ 13,952 $ 4,812 $ 63,789 $ 31,067 $ 32,535 $ — $ 173,611 OAEM — — — — — — — — Substandard — — — — — — — — Doubtful — — — — — — — — $ 27,456 $ 13,952 $ 4,812 $ 63,789 $ 31,067 $ 32,535 $ — $ 173,611 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Consumer Performing $ — $ 226 $ — $ — $ — $ 3,746 $ 9 $ 3,981 Nonperforming — — — — — 141 — 141 $ — $ 226 $ — $ — $ — $ 3,887 $ 9 $ 4,122 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Total Loan Receivable $ 273,528 $ 185,172 $ 174,664 $ 414,015 $ 212,130 $ 532,055 $ 243,663 $ 2,035,227 57 Table of Contents (Dollars in thousands) Term Loans Amortized Cost Basis by Origination Year Revolving Loans at As of December 31, 2024 2024 2023 2022 2021 2020 Prior Amortized Cost Basis Total Commercial and Industrial Pass $ 1,351 $ 4,231 $ 654 $ 6 $ 658 $ 6,213 $ 21,584 $ 34,697 OAEM — — — — — — — — Substandard — — 407 — — — 277 684 Doubtful — — — — — — — — $ 1,351 $ 4,231 $ 1,061 $ 6 $ 658 $ 6,213 $ 21,861 $ 35,381 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Construction Pass $ — $ 315 $ 1,800 $ — $ 193 $ — $ 145,947 $ 148,255 OAEM — — — — — — — — Substandard — — — — — 1,091 — 1,091 Doubtful — — — — — — — — $ — $ 315 $ 1,800 $ — $ 193 $ 1,091 $ 145,947 $ 149,346 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Commercial – Owner Occupied Pass $ 21,893 $ 33,293 $ 34,831 $ 11,942 $ 6,705 $ 48,946 $ 2,431 $ 160,041 OAEM — — — — — — — — Substandard — — — — — 400 — 400 Doubtful — — — — — — — — $ 21,893 $ 33,293 $ 34,831 $ 11,942 $ 6,705 $ 49,346 $ 2,431 $ 160,441 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Commercial – Non-owner Occupied Pass $ 38,697 $ 15,635 $ 75,261 $ 31,460 $ 23,780 $ 153,027 $ 16,494 $ 354,354 OAEM — — — — — 11,459 — 11,459 Substandard — — — — 249 4,946 290 5,485 Doubtful — — — — — — — — $ 38,697 $ 15,635 $ 75,261 $ 31,460 $ 24,029 $ 169,432 $ 16,784 $ 371,298 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Residential – 1 to 4 Family Performing $ 48,704 $ 53,018 $ 108,691 $ 56,027 $ 29,580 $ 145,467 $ 3,510 $ 444,997 Nonperforming — 644 375 — 602 1,262 — 2,883 $ 48,704 $ 53,662 $ 109,066 $ 56,027 $ 30,182 $ 146,729 $ 3,510 $ 447,880 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Residential – 1 to 4 Family Investment Performing $ 58,772 $ 79,266 $ 127,600 $ 103,343 $ 44,301 $ 109,276 $ — $ 522,558 Nonperforming — 995 614 — — — — 1,609 $ 58,772 $ 80,261 $ 128,214 $ 103,343 $ 44,301 $ 109,276 $ — $ 524,167 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Residential – Multifamily Pass $ 6,770 $ 4,942 $ 92,918 $ 25,410 $ 9,150 $ 35,566 $ — $ 174,756 OAEM — — — — — — — — Substandard — — — — — — — — Doubtful — — — — — — — — $ 6,770 $ 4,942 $ 92,918 $ 25,410 $ 9,150 $ 35,566 $ — $ 174,756 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Consumer Performing $ 246 $ — $ — $ — $ — $ 4,627 $ 11 $ 4,884 Nonperforming — — — — — — — — $ 246 $ — $ — $ — $ — $ 4,627 $ 11 $ 4,884 Current period gross charge-offs $ — $ — $ — $ — $ — $ 21 $ — $ 21 Total Loan Receivable $ 176,434 $ 192,338 $ 443,151 $ 228,189 $ 115,219 $ 522,571 $ 190,251 $ 1,868,153 58 Table of Contents Modifications to Borrowers Experiencing Financial Difficulty At December 31, 2025 and 2024 , the Company did not make any modifications to borrowers experiencing financial difficulty. At December 31, 2025 and 2024 , there was $ 5.5 million and $ 4.9 million, respectively, of residential real estate loans where the Company was actively pursuing foreclosure. Loans to Related Parties : In the normal course of business, the Company has granted loans to its executive officers, directors and their affiliates (related parties). All loans to related parties were made in the ordinary course of business. An analysis of the activity of such related party loans for 2025 is as follows: 2025 2024 (Dollars in thousands) Balance, beginning of year $ 561 $ 696 Advances 151 375 Less: repayments ( 307 ) ( 510 ) Balance, end of year $ 405 $ 561 Pledged Loans: At December 31, 2025 and 2024 , approximately $ 611.8 million and $ 740.5 million, respectively, of unpaid principal balance of loans were pledged to the FHLBNY on borrowings (Note 7 ). This pledge consists of a blanket lien on residential mortgages and certain qualifying commercial real estate loans. At December 31, 2025 there were $ 391.3 million and approximately $ 361.0 million of unpaid principal balance of loans pledged to the FRB on borrowings. Concentrations of Credit : Most of the Company's lending activity occurs within the areas of southern New Jersey, southeastern Pennsylvania, and New York, New York, as well as other markets. We maintain discipline in our lending with a focus on portfolio diversification. In our underwriting process, we have limits on loans to one borrower, one industry as well as product concentrations. Our loan portfolio consists of residential, commercial real estate loans, construction loans, commercial and industry loans as well as consumer loans. Note 5. OREO Other real estate owned (OREO) at December 31, 2025 and 2024 was $ 2.9 million, compared to $ 1.6 million at December 31, 2024. The real estate owned at December 31, 2025 , consisted of three properties. During the years ended December 31, 2025 , the Company did not dispose of any OREO properties. The Company wrote down $ 147.3 thousand OREO property during 2025 , compared to $ 0 during 2024 . Operating expenses related to OREO, net of related income, for 2025 and 2024 , were $ 649.0 thousand and $ 835.0 thousand, respectively. An analysis of OREO activity for the years ended December 31, 2025 and 2024 is as follows: For the Year Ended December 31, 2025 2024 (Dollars in thousands) Balance at beginning of period $ 1,562 $ 1,550 Real estate acquired in settlement of loans 1,447 — Capital improvements to existing OREO properties — 12 Sales of OREO, net — — Valuation adjustments ( 147 ) — Balance at end of period $ 2,862 $ 1,562 59 Table of Contents Note 6. Deposits Deposits at December 31, 2025 and 2024 , consisted of the following: 2025 2024 (Dollars in thousands) Noninterest-bearing demand $ 196,506 $ 184,037 NOWs 109,861 60,499 Money market deposits 745,918 615,444 Savings deposits 44,551 55,912 Time deposits over $250,000 104,033 136,360 Other time deposits 381,659 368,092 Brokered time deposits 176,141 210,706 Total deposits $ 1,758,669 $ 1,631,050 Scheduled maturities of certificates of deposit at December 31, 2025 are as follows: Years Ending December 31, (Dollars in thousands) 2026 $ 643,300 2027 12,308 2028 440 2029 1,206 2030 4,579 Total $ 661,833 The following table is a summary of interest expense on deposits by category: 2025 2024 (Dollars in thousands) NOWs $ 546 $ 618 Money market deposits 32,970 27,812 Savings deposits 537 750 Time deposits 20,784 19,099 Brokered time deposits 5,011 9,033 Total $ 59,848 $ 57,312 60 Table of Contents Note 7. Borrowings An analysis of borrowings at December 31, 2025 and 2024 is as follows: 2025 2024 Weighted Weighted Average Average Maturity Date or Range Amount Rate Amount Rate (Dollars in thousands) Borrowed funds: Federal Home Loan Bank advances Less than one year $ 130,000 4.17 % $ 125,000 4.83 % One to three years — 0.00 % 20,000 4.67 % Total $ 130,000 $ 145,000 Subordinated debentures, capital trusts November 2035 $ 5,155 5.80 % $ 5,155 6.44 % November 2035 5,155 5.80 % 5,155 6.44 % September 2037 3,093 5.48 % 3,093 6.12 % Total $ 13,403 $ 13,403 Subordinated debentures notes, net July 15, 2030 $ — 0.00 % $ 29,897 6.50 % At December 31, 2025 , the Company had a $ 611.8 million line of credit from the FHLBNY, of which $ 130.0 million, as detailed above, was outstanding, $ 75.0 million was a letter of credit to secure public deposits, and $ 406.8 million was unused. At December 31, 2025 , the Company had a $ 391.3 million line of credit from the FRB, with no balances outstanding. Subordinated Debentures – Capital Trusts : On August 23, 2005, Parke Capital Trust I, a Delaware statutory business trust and a wholly-owned subsidiary of the Company, issued $ 5,000,000 of variable rate capital trust pass-through securities to investors. The variable interest rate re-prices quarterly at the three -month SOFR plus a spread adjustment of 0.26161 % plus 1.66 % and was 5.80 % at December 31, 2025 . Parke Capital Trust I purchased $ 5,155,000 of variable rate junior subordinated deferrable interest debentures from the Company. The debentures are the sole asset of the Trust. The terms of the junior subordinated debentures are the same as the terms of the capital securities. The Company has also fully and unconditionally guaranteed the obligations of the Trust under the capital securities. The capital securities are redeemable by the Company on or after November 23, 2010, at par. The capital securities must be redeemed upon final maturity of the subordinated debentures on November 23, 2035. Proceeds of approximately $ 4.2 million were contributed to paid-in capital at the Bank. The remaining $ 955,000 was retained at the Company for future use. On August 23, 2005, Parke Capital Trust II, a Delaware statutory business trust and a wholly-owned subsidiary of the Company, issued $ 5,000,000 of fixed/variable rate capital trust pass-through securities to investors. Currently, the interest rate is variable at 5.80 %. The variable interest rate re-prices quarterly at the three -month SOFR plus a spread adjustment of 0.26161 % plus 1.66 % beginning November 23, 2010. Parke Capital Trust II purchased $ 5,155,000 of variable rate junior subordinated deferrable interest debentures from the Company. The debentures are the sole asset of the Trust. The terms of the junior subordinated debentures are the same as the terms of the capital securities. The Company has also fully and unconditionally guaranteed the obligations of the Trust under the capital securities. The capital securities are redeemable by the Company on or after November 23, 2010, at par. The capital securities must be redeemed upon final maturity of the subordinated debentures on November 23, 2035. Proceeds of approximately $ 4.2 million were contributed to paid-in capital at the Bank. The remaining $ 955,000 was retained at the Company for future use. 61 Table of Contents On June 21, 2007, Parke Capital Trust III, a Delaware statutory business trust and a wholly-owned subsidiary of the Company, issued $ 3,000,000 of variable rate capital trust pass-through securities to investors. The variable interest rate re-prices quarterly at the three -month SOFR plus a spread adjustment of 0.26161 % plus 1.50 % and was 5.48 % at December 31, 2025 . Parke Capital Trust III purchased $ 3,093,000 of variable rate junior subordinated deferrable interest debentures from the Company. The debentures are the sole asset of the Trust. The terms of the junior subordinated debentures are the same as the terms of the capital securities. The Company has also fully and unconditionally guaranteed the obligations of the Trust under the capital securities. The capital securities are redeemable by the Company on or after December 15, 2012, at par. The capital securities must be redeemed upon final maturity of the subordinated debentures on September 15, 2037. The proceeds were contributed to paid-in capital at the Bank. Subordinated Debentures – Notes : On July 15, 2020, the Company issued and sold $ 30 million in aggregate principal amount of its 6.50 % Fixed-to-Floating Rate Subordinated Notes due 2030 (the “Notes”) to certain qualified institutional buyers and accredited investors (the “Purchasers”). The Notes were offered and sold by the Company to eligible purchasers in a private offering in reliance on the exemption from the registration requirements of Section 4 (a)( 2 ) of the Securities Act of 1933, as amended (the “Securities Act”), and the provisions of Regulation D promulgated thereunder (the “Private Placement”). The Company intends to use the net proceeds from the offering for general corporate purposes. The Notes have a ten -year term and, from and including the date of issuance to but excluding July 15, 2025, will bear interest at a fixed annual rate of 6.50 %, payable semi-annually in arrears. From and including July 15, 2025 to but excluding the maturity date or earlier redemption date, the interest rate shall reset quarterly to an interest rate per annum equal to the then-current three -month SOFR (provided, that in the event the three -month SOFR is less than zero, the three -month SOFR will be deemed to be zero ) plus 644 basis points, payable quarterly in arrears. The Notes are redeemable, in whole or in part, at the Company’s option, on any scheduled interest payment date on or after July 15, 2025, and at any time upon the occurrence of certain events. Any redemption of the Notes will be subject to prior regulatory approval to the extent required. There were approximately $ 948,000 in costs associated with the issuance of this debt. On July 15, 2025, the Company fully redeemed the 6.5 % Fixed to Floating Rate Notes (the “Subordinated Debt”) at a redemption price of 100 % of the principal amount thereof, or $ 30 million, including the interest accrued on such principal amount up to the redemption date. After the redemption, the outstanding principal balance on the Subordinated Debt has been reduced to zero . Note 8. Premises and Equipment A summary of the cost and accumulated depreciation and amortization of Company premises and equipment as of December 31, 2025 and 2024 is as follows: 2025 2024 (Dollars in thousands) Land $ 1,044 $ 1,044 Building and improvements 7,208 7,284 Furniture and equipment 4,727 4,056 Total premises and equipment 12,979 12,384 Less: accumulated depreciation and amortization ( 7,473 ) ( 7,068 ) Premises and equipment, net $ 5,506 $ 5,316 Depreciation and amortization expense was $ 435,000 and $ 382,000 in 2025 and 2024 , respectively. 62 Table of Contents Note 9. Leases We lease three retail branches, a loan office, and a parcel of land for a retail branch location. These leases generally have remaining terms of 10 years or less except the land lease, which has a remaining lease term of eighty years. Some of the leases may include options to renew the leases. The exercise of lease renewal is at our sole discretion. Our right-of-use assets and lease liabilities for operating leases are included in other assets and other liabilities on our consolidated balance sheets. We use the interest rate implicit in the lease or incremental borrowing rate in determining the present value of lease payments. At December 31, 2025 , we had future minimum lease payments of $ 27.1 million and imputed interest of $ 24.7 million and lease liability of $ 2.4 million. The weighted average remaining lease term was 46.7 years and weighted average discount rate was 7.23 % at December 31, 2025 , respectively. Our operating lease expense is included in occupancy expenses within non-interest expense, and our sublease income is included in other non-interest income, in our consolidated statements of income. Total operating lease expense consists of operating lease cost, which is recognized on a straight-line basis over the lease term, and variable lease cost, which is recognized based on actual amounts incurred. The components of the Company's ongoing operating lease cost were as follows: Twelve Months Ended (Dollars in thousands) 2025 2024 Lease Cost $ 469 $ 409 Sublease income ( 225 ) ( 219 ) Net lease cost $ 244 $ 190 The following table presents information about our operating leases during the year ended December 31, 2025 . Dollars in thousands 2025 Lease right of use assets (ROU) $ 2,387 Lease liabilities $ 2,387 Cash paid for amounts included in the measurement of lease liabilities was $ 353.6 thousand and $ 348.8 thousand during the years ended December 31, 2025 and 2024, respectively. The following table presents future undiscounted cash flows on our operating leases: Years Ended December 31, (Dollars in thousands) 2026 $ 315 2027 283 2028 288 2029 306 2030 312 Thereafter 25,560 Total undiscounted lease payments $ 27,064 Impact of present value discount $ ( 24,678 ) 63 Table of Contents Note 10. Shareholders ’ Equity Common Stock Dividend : The Company paid a $ 0.18 per share dividend each quarter of 2025 , and 2024 , respectively. During the year ended December 31, 2025 , the Company paid a total of $ 8.4 million in common stock cash dividends. During the year ended December 31, 2024 , the Company paid a total of $ 8.6 million in common stock cash dividends. The timing and amount of future dividends will be within the discretion of the Board of Directors and will depend on the consolidated earnings, financial condition, liquidity, and capital requirements of the Company and its subsidiaries, applicable governmental regulations and policies, and other factors deemed relevant by the Board. Treasury Stock : During the years ended December 31, 2025 and 2024, the Company repurchased 300,000 shares and 200,000 shares of its outstanding common stock for $ 6.5 million and $ 4.3 million at an average price of $ 21.58 and $ 21.28 per share, respectively. Stock Options : The 2020 Equity Incentive Plan (the “2020 Plan”) became effective after shareholder approval in 2020. In addition, the Company also has the 2015 Equity Incentive Plan (the “2015 Plan”). No future awards are being granted under the 2015 Plan. The 2020 Plan will terminate on the tenth anniversary of its effective date, after which no awards may be granted. Collectively, the 2015 Plan and the 2020 Plan are referred to as Stock Option Plans. Under the 2020 Plan, the Company may grant options to purchase up to 935,000 shares of Company's common stock and award up to 55,000 of restricted stock. At December 31, 2025 , there were 426,500 shares remaining for future option grants, and 207 shares remaining for future restricted stock awards under the plan. During the year ended December 31, 2025 , 48,275 restricted stock awards of commons stock were awarded, and had a grant date price of $ 20.80 , which was the ending stock price for the Company on the date of the grant. The restricted stock awards granted vest over a five -year service period, with 20 % of the awards vesting on each anniversary of the date of grant. The Company did not grant any options during the year ended December 31, 2025. Compensation expense for stock options and restricted stock awards was $ 292.8 thousand, and $ 335.8 thousand at December 31, 2025 and 2024 , respectively. A summary of stock options at December 31, 2025 was as follows: Year Ended December 31, 2025 Weighted Average Stock Options: Shares Exercise Price Outstanding at beginning of period 613,826 $ 16.33 Granted — $ — Exercised ( 110,578 ) $ 10.87 Forfeited ( 4,392 ) $ 19.35 Outstanding at end of period 498,856 $ 17.51 Exercisable at end of period 437,842 $ 17.02 The total amount of compensation cost remaining to be recognized relating to unvested employees and directors option grants as of December 31, 2025 was $ 0.3 million. The weighted-average period over which the expense is expected to be recognized is 1.0 year. At December 31, 2025 , the intrinsic value of options exercisable and all options outstanding was approximately $ 3.5 million and $ 3.8 million, respectively. The aggregate intrinsic value of options exercised in 2025 was $ 1.3 million. The aggregate intrinsic value of options exercised in 2024 was $ 675.1 thousand. 64 Table of Contents Under the 2020 Plan, the Company was authorized to issue 55,000 shares of restricted stock upon the grant of awards. All restricted stocks vests over five years. The table below presents the status of the restricted stock units at December 31, 2025 , and the changes during the year ended December 31, 2025 . Weighted Average Restricted Grant-Date Stock Units Fair Value Outstanding and unvested at December 31, 2024 1,968 19.33 Granted 48,275 20.80 Vested ( 1,305 ) 18.41 Outstanding and unvested at December 31, 2025 48,938 20.80 The Company recognized $ 74,209 and $ 34,005 compensation costs of the restricted shares during year 2025 and 2024 . The total amount of restricted stock expense remaining to be recognized is $ 0.8 million at December 31, 2025 . Preferred Stock : In December of 2013, the Company completed a private placement of newly designated 6 % Non-Cumulative Perpetual Convertible Preferred Stock, Series B, with a liquidation preference of $ 1,000 per share. The Company sold 20,000 shares in the placement for gross proceeds of $ 20.0 million. Each share of Series B Preferred Stock is convertible, at the option of the holder into approximately 137.6 shares of Common Stock at December 31, 2025 . There were 325 shares of Series B Preferred Stock outstanding at December 31, 2025 . Upon full conversion of the outstanding shares of the Series B Preferred Stock, the Company will issue approximately 44,720 shares of Common Stock assuming that the conversion rate does not change. The conversion rate and the total number of shares to be issued would be adjusted for future stock dividends, stock splits and other corporate actions. The conversion rate was set using a conversion price for the common stock of $ 10.64 , which was approximately 20 % over the closing price of the Common Stock on October 10, 2013, the day the Series B Preferred Stock was priced. During 2025 , there were no conversions of preferred stock. During 2024 , preferred stockholders converted 50 shares of preferred shares into 6,877 shares of common stock, respectively. The Company has recorded dividends on preferred stock in the approximate amount of $ 19,500 and $ 20,250 for the years ended December 31, 2025 and 2024 , respectively. The Company paid quarterly cash dividends of $ 15 per share on the preferred stock for year 2025 and 2024 . The preferred stock qualifies for and is accounted for as equity securities and is included in the Company’s Tier I capital since issued. 65 Table of Contents Note 11. Income Taxes Income tax expense for 2025 and 2024 consisted of the following: 2025 2024 (Dollars in thousands) Current tax expense: Federal $ 10,499 $ 7,265 State 2,787 1,394 13,286 8,659 Deferred tax (benefit)/expense ( 1,654 ) 126 Income tax expense $ 11,632 $ 8,785 The components of the net deferred tax asset at December 31, 2025 and 2024 were as follows: 2025 2024 (Dollars in thousands) Deferred tax assets: Allowance for credit losses $ 8,535 $ 7,197 Supplemental Executive Retirement Plan ("SERP") 1,555 1,522 Deferred Loan Fees 1,461 1,411 Non-accrued interest 135 44 Non-qualified stock options and restricted stock 442 376 Write-down on partnership investment ( 29 ) 130 Unrealized loss on securities 69 117 Lease liability 2,387 2,212 Other 255 269 14,810 13,278 Valuation allowance ( 29 ) ( 130 ) Total gross deferred tax assets 14,781 13,148 Deferred tax liabilities: Depreciation — ( 58 ) Partnership income — ( 54 ) Right of use asset ( 2,387 ) ( 2,212 ) Deferred loan costs ( 1,675 ) ( 1,711 ) Total gross deferred tax liabilities ( 4,062 ) ( 4,035 ) Net deferred tax asset $ 10,719 $ 9,113 66 Table of Contents A reconciliation of the Company’s effective income tax rate with the statutory federal rate for 2025 and 2024 is as follows: 2025 Effective Tax Rate 2024 Effective Tax Rate (Dollars in thousands) At Federal statutory rate $ 10,375 21.00 % $ 7,622 21.00 % Adjustments resulting from: State income taxes, net of Federal tax benefit 1,515 3.07 % 1,776 4.89 % Tax exempt income ( 20 ) ( 0.04 )% ( 20 ) ( 0.05 )% BOLI ( 155 ) ( 0.31 )% ( 138 ) ( 0.38 )% Stock compensation ( 53 ) ( 0.11 )% ( 26 ) ( 0.07 )% Nondeductible expenses 2 0.00 % 2 0.00 % Nondeductible executive compensation 42 ( 0.09 )% 32 ( 0.09 )% Other ( 74 ) 0.15 % ( 463 ) ( 1.28 )% $ 11,632 23.54 % $ 8,785 24.20 % Management has evaluated the Company’s tax positions and concluded that the Company has taken no uncertain tax positions that require adjustments to the financial statements. With few exceptions, the Company is no longer subject to income tax examinations by federal and local tax authorities for years before 2022, and by the State of New Jersey for years before 2021. The Company is still subject to examination for 2022 and after. The Company recorded income tax expense of 11.6 million on income before taxes of $ 49.4 million on for the year ended December 31, 2025 , resulting in an effective tax rate of 23.5 %, compared to income tax expense of $ 8.8 million on income before taxes of $ 36.3 million for the same period of 2024 , resulting in an effective tax rate of 24.2 %. The Company pays the majority of its state taxes to the state of New Jersey. Note 12. Retirement Plans The Company has a Supplemental Executive Retirement Plan (“SERP”) covering certain members of management. The net SERP pension cost was approximately $ 155.3 thousand in 2025 and $ 197.1 thousand in 2024 . The unfunded benefit obligation, which was included in other liabilities, was approximately $ 6.3 million at December 31, 2025 and $ 6.4 million at December 31, 2024 . The benefit obligation at December 31, 2025 and December 31, 2024 was calculated as follows: 2025 2024 (Dollars in thousands) Benefit obligation, January 1 $ 6,397 $ 6,439 Service cost/(benefit) ( 183 ) ( 146 ) Interest cost 339 343 Benefits paid ( 239 ) ( 239 ) Accrued liability at December 31 $ 6,314 $ 6,397 The net SERP pension cost for 2025 and benefit for 2024 was calculated as follows: 2025 2024 (Dollars in thousands) Service cost $ ( 183 ) $ ( 146 ) Interest cost 339 343 $ 156 $ 197 67 Table of Contents The service cost for 2025 and 2024 are included in the compensation cost in the income statement. The discount rate used in determining the actuarial present value of the projected benefit obligation was 5.5 % for 2025 and 2024 . Annual benefit payments are estimated at $ 534,146 for 2026, $ 829,246 for 2027, $ 829,246 for 2028, $ 829,246 for 2029, $ 829,246 for 2030 and $ 4.5 million thereafter. The Company has a 401 (k) Plan covering substantially all employees. Under the Plan, the Company is required to contribute 3 % of all qualifying employees’ eligible salary to the Plan. The Plan expense in 2025 was $ 264.4 thousand and $ 250.2 thousand in 2024 . Note 13. Regulatory Matters Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can result in regulatory action. Under the Basel III rules, the Company must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer is 2.50%. The Bank made a one -time election to opt-out the net unrealized gain or loss on available for sale securities in computing regulatory capital. At December 31, 2025 , the Bank was considered “well capitalized" under the regulatory framework for prompt corrective action. Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At year-end 2025 and 2024 the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution's category. Community Bank Leverage Ratio The Economic Growth, Regulatory Relief and Consumer Protection Act (“EGRRCPA”), enacted in May 2018, introduced an optional simplified measure of capital adequacy for qualifying community banking organizations with total consolidated assets of less than $10 billion by instructing the federal banking regulators to establish a single “Community Bank Leverage Ratio” of tangible equity capital divided by average consolidated assets (“CBLR”) of between 8 and 10 percent. Under the statute, any qualifying depository institution or holding company that maintains a leverage ratio exceeding the CBLR will be considered to satisfy the generally applicable leverage and risk-based regulatory capital requirements. Under final regulations adopted by the federal banking agencies under the EGRRCPA, a community banking organization may opt into the CBLR framework if it has a Tier 1 leverage ratio of at least 9%, less than $10 billion in total consolidated assets, and limited amounts of off-balance-sheet exposures and trading assets and liabilities. A qualifying community banking organization that opts into the CBLR framework will not be required to report or calculate compliance with risk-based capital requirements and will also be considered to have met the well-capitalized ratio requirements under the prompt corrective action regulations. We have elected to use the CBLR framework and is presented as of December 31, 2025 . 68 Table of Contents The Company and Bank's regulatory capital as of December 31, 2025 and 2024 , is presented in the following table. As of December 31, 2025 Actual For Capital Adequacy Purpose* Company Amount Ratio Amount Ratio (Dollars in thousands except ratios) Total risk-based capital $ 358,387 21.76 % $ 131,788 8.00 % Tier 1 risk-based capital 337,795 20.51 % 98,841 6.00 % Tier 1 leverage 337,795 15.69 % 86,090 4.00 % Tier 1 common equity 324,392 19.69 % 74,131 4.50 % Parke Bank Community Bank Leverage Ratio 335,985 15.61 % 193,666 9.00 % As of December 31, 2024 Actual For Capital Adequacy Purpose* Company Amount Ratio Amount Ratio (Dollars in thousands except ratios) Total risk-based capital $ 362,000 24.44 % $ 118,478 8.00 % Tier 1 risk-based capital 313,488 21.17 % 88,859 6.00 % Tier 1 leverage 313,488 15.00 % 83,604 4.00 % Tier 1 common equity 300,085 20.26 % 66,644 4.50 % Parke Bank Community Bank Leverage Ratio 342,282 16.38 % 188,072 9.00 % * Combination of both community bank leverage approach and the regular rule of capital adequacy. Note 14. Commitments and Contingencies The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. 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 Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. The Company evaluates each customer’s credit-worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary upon extension of credit, is based on management’s credit evaluation. Collateral held varies but may include accounts receivable; inventory; property, plant and equipment and income-producing commercial properties. 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 December 31, 2025 . 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 December 31, 2025 and 2024 , unused commitments to extend credit amounted to approximately $ 158.3 million and $ 122.5 million, 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 December 31, 2025 and 2024 , standby letters of credit with customers were $ 0.6 million and $ 0.6 million, respectively. 69 Table of Contents At December 31, 2025 and December 31, 2024 , the allowance for credit losses of unfunded lending commitments was $ 0.8 million and $ 0.9 million, respectively. A provision recovery for unfunded lending commitments of $ 0.1 million was recognized during the year ended December 31, 2025 , while there was $ 0.4 million provision expense recognized during the year ended December 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. The Company has also entered into Change-in-Control Severance Agreements with certain officers which provide for the payment of severance in certain circumstances following a change in control. We provide banking services to customers that are licensed by various States to do business in the cannabis industry as growers, processors and dispensaries. Cannabis businesses are legal in these States, although it is not legal at the federal level. The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) published guidelines in 2014 for financial institutions servicing state legal cannabis businesses. 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 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. Throughout the relationship, we continue monitoring the business, including site visits, to ensure that the business continues to meet our stringent requirements, including maintenance of required licenses and periodic financial reviews of the business. While we believe we are operating in compliance with the FinCEN guidelines, there can be no assurance that federal enforcement guidelines will not change. Federal prosecutors have significant discretion and there can be no assurance that the federal prosecutors will not choose to strictly enforce the federal laws governing cannabis. Any change in the Federal government’s enforcement position, could cause us to immediately cease providing banking services to the cannabis industry. At December 31, 2025 and 2024 , deposit balances from cannabis customers were approximately $ 61.9 million and $ 151.9 million, or 3.5 % and 9.3 % of total deposits, respectively, with two customers accounting for 30.7 % and 59.4 % of the total at December 31, 2025 and 2024 . At December 31, 2025 and 2024 , there were cannabis-related loans in the amounts of $ 47.0 million and $ 43.4 million, respectively. Absecon Gardens Condominium Association v. Parke Bank Matter Absecon Gardens Condominium Association v. Parke Bank, One Mechanic Street, et al, Superior Court of New Jersey, Law Division, Atlantic County, Docket No. ATL-L- 2321 - 21. The Company is the successor to the interests of the developer of the Absecon Gardens Condominium project in Absecon NJ. Some of the unit owners have suggested that the Company is responsible for contributions and/or repair for alleged damages purportedly relating to construction. The owners filed a Complaint, alleging that the damages total approximately $ 1.7 million. The matter is in discovery so it is difficult to determine whether that amount accurately reflects the claimed damages, or whether the Company is in any way culpable for the damages. At this time it is too early to predict whether an unfavorable outcome will result. The Company is vigorously defending this matter. See "Note 15. Commitments and Contingencies" in the Notes to the Consolidated Financial Statements. 70 Table of Contents Mori Restaurant LLC v. Parke Bank Matter On May 20, 2014, Parke Bank (the "Bank") loaned Voorhees Diner Corporation ("VDC") the original principal sum of $ 1.0 million for purposes of tenant fit out, and operation, of the Voorhees Diner situated at 320 Route 73, Voorhees, New Jersey 08043. VDC leased the Diner property under that certain Lease with Mori Restaurant LLC ("Mori") dated May 20, 2014. In connection with the loan from the Bank and as security therefor, VDC pledged its leasehold interest to the Bank. On March 6, 2015, the loan was modified, and the principal amount of the loan was increased to $ 1.4 million. On January 8, 2020, the Bank declared VDC in default of its loan obligations. Judgment was entered against VDC and in favor of the Bank, and the court appointed Alan I. Gould, Esquire, as the Receiver for the Voorhees Diner Corporation. Mr. Gould subsequently caused VDC's leasehold interest in the Diner property to be sold at sheriffs sale. The Bank's REO subsidiary, 320 Route 73 LLC, was the successful bidder and took title thereto. Mori Restaurant has filed counterclaims against 320 Route 73 LLC and the Bank for rent allegedly accruing due during the period that the Receiver was in possession of the premises. As to all of Mori Restaurant’s claims, the Bank defendants’ primary, but not exclusive, defense in this matter is that, pursuant to that certain Fee Owner Consent executed by and between Mori Restaurant and the Bank, in November 2014, the lease between VDC and Mori Restaurant was terminated as a matter of law and neither the Bank nor 320 Route 73 LLC have liability to Mori Restaurant under the lease or otherwise. In August 2024, Parke Bank filed an amended complaint asserting claims against Mori for breach of the Assignment of Leases and default under the mortgage loan documents. Mori sought summary judgement on, among other things, its claims for possession of the diner and against the Bank's affirmative claims. The court determined that the Lease remained binding on 320 Route 73 LLC and that 320 Route 73 LLC was liable to Mori for rent under the Lease during its period of possession. The court also ruled that Mori was entitled to repossess the diner. The court did not determine damages and reserved all damages issues for trial, which is scheduled for early 2026. In November 2025, Mori repossessed the diner. The Bank denies liability beyond the court's rulings to date and will continue to vigorously defend this matter. In the normal course of business, there are outstanding various contingent liabilities such as claims and legal action, which are not reflected in the financial statements. In the opinion of management, no material losses are anticipated as a result of these actions or claims. Other than the foregoing, neither the Company nor the Bank are involved in any other pending legal proceedings, other than routine legal matters occurring in the ordinary course of business, which in the aggregate involve amounts which are believed by management to be immaterial to the consolidated financial condition or results of operations of the Company. Note 15. Fair Value Fair Value Measurements The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. In accordance with the Fair Value Measurements and Disclosures (Topic 820 ) of FASB Accounting Standards Codification, the fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company's various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Fair value is a market-based measurement, not an entity-specific measurement. The fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions. In accordance with this guidance, the Company groups its assets and liabilities carried at fair value in three levels as follows: Level 1 Input: 1 ) Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2 Inputs: 1 ) Quoted prices for similar assets or liabilities in active markets. 2 ) Quoted prices for identical or similar assets or liabilities in markets that are not active. 3 ) Inputs other than quoted prices that are observable, either directly or indirectly, for the term of the asset or liability (e.g., interest rates, yield curves, credit risks, prepayment speeds or volatilities) or “market corroborated inputs.” 71 Table of Contents Level 3 Inputs: 1 ) Prices or valuation techniques that require inputs that are both unobservable (i.e. supported by little or no market activity) and that are significant to the fair value of the assets or liabilities. 2 ) These assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. Fair Value on a Recurring Basis : The following is a description of the Company’s valuation methodologies for assets carried at fair value on a recurring basis. These methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes that its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting measurement date. Investments in Available for Sale Securities: Where quoted prices are available in an active market, securities or other assets are classified in Level 1 of the valuation hierarchy. If quoted market prices are not available for the specific security, then fair values are provided by independent third -party valuation services. These valuation services estimate fair values using pricing models and other accepted valuation methodologies, such as quotes for similar securities and observable yield curves and spreads. 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. The table below presents the balances of assets and liabilities measured at fair value on a recurring basis at December 31, 2025 and 2024 . Financial Assets Level 1 Level 2 Level 3 Total (Dollars in thousands) Investment securities available for sale As of December 31, 2025 Corporate debt obligations $ — $ 500 $ — $ 500 Residential mortgage-backed securities — 4,246 — 4,246 Total $ — $ 4,746 $ — $ 4,746 As of December 31, 2024 Residential mortgage-backed securities $ — $ 5,551 $ — $ 5,551 Total $ — $ 5,551 $ — $ 5,551 For the year ended December 31, 2025 , there were no transfers between the levels within the fair value hierarchy. There were no level 3 assets or liabilities held for the year ended at December 31, 2025 and December 31, 2024 . 72 Table of Contents Fair Value on a Non-Recurring Basis : Certain assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). Financial Assets Level 1 Level 2 Level 3 Total (Dollars in thousands) As of December 31, 2025 Collateral dependent loans $ — $ — $ 2,672 $ 2,672 OREO $ — $ — $ 2,862 $ 2,862 As of December 31, 2024 Collateral dependent loans $ — $ — $ 5,189 $ 5,189 OREO $ — $ — $ 1,562 $ 1,562 All collateral dependent individually evaluated 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. 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. OREO consists of real estate properties which are recorded at fair value. All properties have an independent third -party full appraisal to determine the fair value, less cost to sell (a range of 5 % to 10 %) and other costs, such as unpaid real estate taxes, that have been identified. 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. 73 Table of Contents The following table summarizes the carrying amounts and fair values for financial instruments at December 31, 2025 and December 31, 2024 : December 31, 2025 Carrying Fair Value Amount Total Level 1 Level 2 Level 3 (Dollars in thousands) Financial Assets: Cash and cash equivalents $ 156,863 $ 156,863 $ 156,863 $ — $ — Investment securities AFS 4,746 4,746 — 4,746 — Investment securities HTM 8,777 7,487 — 7,487 — Restricted stock 8,085 8,085 — — 8,085 Loans, net 2,000,578 2,020,810 — 2,010,017 10,793 Accrued interest receivable 11,257 11,257 — 11,257 — Financial Liabilities: Non-time deposits $ 1,096,836 $ 1,096,836 $ 1,096,836 $ — $ — Time deposits 661,833 662,947 — 662,947 — Borrowings 143,403 145,748 — 145,748 — Accrued interest payable 4,575 4,575 — 4,575 — December 31, 2024 Carrying Fair Value Amount Total Level 1 Level 2 Level 3 (Dollars in thousands) Financial Assets: Cash and cash equivalents $ 221,527 $ 221,527 $ 221,527 $ — $ — Investment securities AFS 5,551 5,551 — 5,551 — Investment securities HTM 9,209 7,492 — 7,492 — Restricted stock 8,619 8,619 — — 8,619 Loans, net 1,835,580 1,834,007 — 1,822,203 11,804 Accrued interest receivable 9,659 9,659 — 9,659 — Financial Liabilities: Non-time deposits $ 915,892 $ 915,892 $ 915,892 $ — $ — Time deposits 715,158 716,904 — 716,904 — Borrowings 188,300 189,621 — 189,621 — Accrued interest payable 7,968 7,968 — 7,968 — 74 Table of Contents Note 16. Parent Company Only Financial Statements Condensed financial information of the parent company only is presented in the following two tables: Balance Sheets December 31, 2025 2024 (Dollars in thousands) Assets: Cash $ 3,896 $ 4,147 Investments in subsidiaries 336,188 342,348 Total assets $ 340,084 $ 346,495 Liabilities and Equity: Subordinated debentures $ 13,403 $ 43,300 Other liabilities 2,163 3,122 Equity 324,518 300,073 Total liabilities and equity $ 340,084 $ 346,495 Statements of Income Years ended December 31, 2025 2024 (Dollars in thousands) Income: Dividends from bank subsidiary $ 46,601 $ 15,389 Total income 46,601 15,389 Expense: Interest on subordinated debentures $ 1,958 $ 3,080 Salary 160 160 Other expenses 118 118 Total expenses 2,236 3,358 Net Income 44,365 12,031 Equity in undistributed income of subsidiaries ( 6,590 ) 15,481 Net income 37,775 27,512 Preferred stock dividend and discount accretion ( 20 ) ( 20 ) Net income available to common shareholders $ 37,755 $ 27,492 Total comprehensive income $ 37,912 $ 27,579 75 Table of Contents Statements of Cash Flows Years ended December 31, 2025 2024 (Dollars in thousands) Cash Flows from Operating Activities Net income $ 37,775 $ 27,512 Adjustments to reconcile net income to net cash provided by operating activities: Equity in undistributed earnings of subsidiaries 6,590 ( 15,481 ) Repayment of subordinate debt ( 30,000 ) — Amortization of subordinate debt issuance costs 103 190 Changes in Decrease in accrued interest payable and other accrued liabilities ( 959 ) ( 27 ) Net cash provided by operating activities 13,509 12,194 Cash Flows from Financing Activities Purchase of treasury stock ( 6,483 ) ( 4,262 ) Excise tax payment on stock repurchase ( 29 ) — Proceeds from exercise of stock options 1,203 706 Payment of dividend on preferred stock and common stock ( 8,451 ) ( 8,602 ) Net cash used in financing activities ( 13,760 ) ( 12,158 ) (Decrease) increase in cash and cash equivalents ( 251 ) 36 Cash and Cash Equivalents, January 1, 4,147 4,111 Cash and Cash Equivalents, December 31, $ 3,896 $ 4,147 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None