Overview

Parke Bancorp, Inc. (the “Company”) is a bank holding company headquartered in New Jersey. Through its subsidiary, Parke Bank (the “Bank”), the Company provides personal and business financial services to individuals and small to mid-sized businesses primarily in New Jersey, Pennsylvania, and New York.

The Company focuses on long-term management, with a goal of growing customers, loans, deposits, and revenue while improving profitability, managing risk, expenses, and capital. The majority of the Company’s revenue and income is generated through the Bank.

As of December 31, 2024, the Company had total assets of $2.14 billion, total liabilities of $1.84 billion, and total shareholders’ equity of $300.1 million. Net income available to common shareholders for 2024 was $27.5 million, a decrease of 3.3% from the previous year.

Financial Performance

Net Income The Company recorded net income available to common shareholders of $27.5 million, or $2.30 per basic common share and $2.27 per diluted common share, for the year ended December 31, 2024. This represents a decrease of $0.9 million, or 3.3%, compared to the previous year.

Net Interest Income Net interest income decreased by $5.5 million, or 8.6%, to $58.7 million for the year ended 2024. This was primarily due to an increase in interest expense of $17.9 million, partially offset by an increase in interest income of $12.4 million.

Interest income increased by $12.4 million, or 11.0%, to $125.1 million, primarily due to an increase in interest and fees on loans of $11.8 million, or 11.1%. This was driven by higher average outstanding loan balances and higher market interest rates.

Interest expense increased by $17.9 million, or 36.9%, to $66.4 million. This was primarily due to an increase in market interest rates on deposit accounts, as well as a change in the deposit mix, with a decrease in non-interest bearing demand balances and an increase in interest-bearing deposit balances.

Provision for Credit Losses The Company recorded a provision for credit losses of $0.7 million in 2024, compared to a recovery of $2.1 million in 2023. The increase in the provision was primarily due to an increase in outstanding loan balances, partially offset by a decrease in loss rates.

Non-Interest Income Non-interest income decreased by $2.4 million, or 35.7%, to $4.3 million in 2024. This was primarily due to a decrease in fee income related to cannabis-related business deposit fees and other loan fees.

Non-Interest Expense Non-interest expense decreased by $9.3 million, or 26.3%, to $26.0 million in 2024. This was primarily driven by a decrease in other operating expense of $10.1 million, partially offset by increases in compensation and benefits and professional services.

Financial Condition

Assets Total assets increased by $118.7 million, or 5.9%, to $2.14 billion at December 31, 2024. This was primarily due to increases in cash and cash equivalents and total loans outstanding.

Cash and cash equivalents increased by $41.2 million, or 22.8%, to $221.5 million, mainly due to an increase in deposits and borrowings, partially offset by an increase in loans.

Total loans outstanding increased by $80.8 million, or 4.5%, primarily due to increases in residential multi-family loans and commercial owner-occupied loans, partially offset by a decrease in construction loans.

Liabilities Total liabilities increased by $103.0 million, or 5.9%, to $1.84 billion at December 31, 2024. This was primarily due to an increase in deposits.

Total deposits increased by $78.2 million, or 5.0%, to $1.63 billion, driven by increases in time deposits and money market deposits, partially offset by decreases in non-interest bearing demand deposits and savings deposits. Deposits from the cannabis industry increased to $151.9 million, up from $96.7 million the previous year.

Total borrowings increased by $20.2 million, or 12.0%, to $188.3 million, primarily due to an increase in FHLBNY advances.

Equity Total shareholders’ equity increased by $15.8 million, or 5.5%, to $300.1 million at December 31, 2024. This was primarily due to the retention of earnings, partially offset by cash dividends paid and share repurchases.

Liquidity and Capital Adequacy

The Company’s primary source of funding has been deposits, supplemented by other operations, financing arrangements, and investment securities. The Company seeks to rely primarily on core deposits from customers to provide stable and cost-effective sources of funding to support loan growth.

The Company also utilizes brokered deposits as an additional funding source, including through the IntraFi network and other broker relationships. The Company maintains secured borrowing lines with the FHLBNY and the Federal Reserve Bank to further enhance its liquidity position.

As of December 31, 2024, the Company and the Bank exceeded all applicable regulatory capital requirements and were considered well-capitalized. The Company’s risk-based tier 1 capital ratio was 21.2% at the end of 2024.

Interest Rate Sensitivity

The Company actively manages its interest rate sensitivity to ensure the steady growth of net interest income, its primary earnings component. The Company measures its interest rate sensitivity, or “gap,” which is the dollar difference between assets and liabilities that are subject to interest-rate pricing within a given time period.

The Company endeavors to structure its balance sheet so that repricing opportunities exist for both assets and liabilities in roughly equivalent amounts at approximately the same time intervals, in order to lessen the impact of interest rate movements.

Outlook

The Company’s business operations are subject to various risks and uncertainties that could materially affect its operating results, including changes to the U.S. economic condition, market interest rates, the Federal Reserve’s monetary policy, government policies, and actions of regulatory agencies.

The Company will continue to focus on the fundamentals of growing customers, loans, deposits, and revenue, while improving profitability, managing risk, expenses, and capital, and investing for the future. The Company’s approach is concentrated on organically growing and deepening client relationships across its businesses that meet its risk/return measures.