PARKE BANCORP, INC. 10-Q

ITEM 1. LEGAL PROCEEDINGS 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. ATLL-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. A Court ordered remediation was performed in June 2026, however a settlement was not able to be negotiated. The court will determine next steps. At this time it is too early to predict whether an unfavorable outcome will result. As such, no accrual for losses has been recorded for this item based on internal evaluation under ASC 450. The Company is vigorously defending this matter. 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. In November 2025, Mori repossessed the diner. The court did not determine damages and reserved all damages issues for trial, which is scheduled for September 2026. The Bank denies liability beyond the court's rulings to date and will continue to vigorously defend this matter. As such, no accrual for losses has been recorded for this item based on internal evaluation under ASC 450. 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, there were no material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of its subsidiaries is a party or of which any of their property is the subject. 34 Table of Contents ITEM 1A. RISK FACTORS Not applicable. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS (a) Unregistered Sales of Equity Securities. Not Applicable. (b) Use of Proceeds. Not Applicable. (c) There were no repurchases of securities during the quarter ended June 30, 2026. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. MINE SAFETY DISCLOSURES Not applicable.