Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Throughout this report, "Parke Bancorp" and "the Company" refer to Parke Bancorp Inc., and its consolidated subsidiaries. The Company is collectively referred to as "we", "us" or "our". Parke Bank is referred to as the "Bank".

The Company may from time to time make written or oral "forward-looking statements" including statements contained in this Report and in other communications by the Company which are made in good faith pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, such as statements of the Company's plans, objectives, expectations, estimates and intentions, involve risks and uncertainties and are subject to change based on various important factors (some of which are beyond the Company's control). The following factors, among others, could cause the Company's financial performance to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements: the strength of the United States economy in general and the strength of the local economies in which the Company conducts operations; the effects of, and changes in, trade, tariff, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System (the "Federal Reserve"), inflation, interest rate, market and monetary fluctuations; the potential adverse effects of the consent orders and any additional regulatory restrictions that may be imposed by banking regulators; the timely development of, and acceptance of, new products and services of the Company and the perceived overall value of these products and services by users, including the features, pricing and quality compared to competitors' products and services; the impact of changes in financial services laws and regulations (including laws concerning taxes, banking, securities and insurance); the effect of any change in federal government enforcement of federal laws affecting the cannabis industry; technological changes; acquisitions; changes in consumer spending and saving habits; and the success of the Company at managing the risks involved in the foregoing.

Financial institutions can be affected by changing conditions in the real estate and financial markets. The effects of geopolitical instability, including the conflicts between the U.S./Israel and Iran, Russia and Ukraine, and Israel and Hezbollah/Hamas, foreign currency exchange volatility, volatility in global capital markets, inflationary pressures, higher tariffs, and higher interest rates may meaningfully impact loan production, income levels, and the measurement of certain significant estimates such as the allowance for credit losses. Moreover, in a period of economic contraction, we may experience elevated levels of credit losses, reduced interest income, impairment of financial assets, diminished access to capital markets and other funding sources, and reduced demand for our products and services. Volatility in the housing markets, real estate values and unemployment levels results in significant write-downs of asset values by financial institutions. Our lending relationships are primarily with small to mid-sized businesses and individual consumers residing in and around southern New Jersey, Philadelphia, Pennsylvania, New York, New York, and South Carolina. We focus our lending efforts primarily in three lending areas: residential mortgage loans, commercial mortgage loans, and construction loans. As a result of this geographic concentration, a significant broad-based deterioration in economic conditions in these areas could have a material adverse impact on the quality of our loan portfolio, results of operations and future growth potential.

Our operations are subject to risks and uncertainties surrounding our exposure to changes in the interest rate environment. Earnings and liquidity depends largely on our interest rates. Interest rates are highly sensitive to many factors beyond our control, including competition, general economic conditions, geopolitical tensions and monetary, trade, tariff, and fiscal policies of various governmental and regulatory authorities, including the Federal Reserve. Conditions such as inflation, deflation, recession, unemployment and other factors beyond our control may also affect interest rates. The nature and timing of any changes in interest rates or general economic conditions and their effect on us cannot be controlled and are difficult to predict. If the rate of interest we pay on our interest-bearing liabilities increases more than the rate of interest we receive on our interest-earning assets, our net interest income, and therefore our earnings, could contract and be materially adversely affected. Our earnings could also be materially adversely affected if the rates on interest-earning assets fall more quickly than those on our interest-bearing liabilities. Changes in interest rates could also create competitive pressures, which could impact our liquidity position.

Changes in interest rates also can affect our ability to originate loans, our ability to obtain and retain deposits, and the value of interest-earning assets, and the ability to realize gains from the sale of such assets, which could all negatively impact shareholders' equity and regulatory capital.

The Company cautions that the foregoing list of important factors is not exclusive. The Company also cautions readers not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date on which they are given. The Company is not obligated to publicly revise or update these forward-looking statements to reflect events or circumstances that arise after any such date.

Overview

The following discussion provides information about our results of operations, financial condition, liquidity and asset quality. We intend that this information facilitates your understanding and assessment of significant changes and trends related to our financial condition and results of operations. You should read this section in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

We are a bank holding company and are headquartered in Washington Township, New Jersey. Through the Bank, we provide personal and business financial services to individuals and small to mid-sized businesses primarily in New Jersey and Pennsylvania. The Bank has branches in Galloway Township, Northfield, Washington Township, Collingswood, New Jersey and Philadelphia, Pennsylvania, and a loan office in Philadelphia, Pennsylvania. The vast majority of our revenue and income is currently generated through the Bank.

We manage our Company for the long term. We are focused on the fundamentals of growing customers, loans, deposits and revenue and improving profitability, while investing for the future and managing risk, expenses and capital. We continue to invest in our products, markets and brand, and embrace our commitments to our customers, shareholders, employees and the communities where we do business. Our approach is concentrated on organically growing and deepening client relationships across our businesses that meet our risk/return measures.

We focus on small to mid-sized business and retail customers and offer a range of loan products, deposits services, and other financial products through our retail branches and other channels. The Company's results of operations are dependent primarily on its net interest income, which is the difference between the interest income earned on its interest earning-assets and the interest expense paid on its interest-bearing liabilities. In our operations, we have three major lines of lending: residential real estate mortgage, commercial real estate mortgage, and construction lending. Our interest income is primarily generated from our lending and investment activities. Our deposit products include checking, savings, money market accounts, and certificates of deposit. The majority of our deposit accounts are obtained through our retail banking business, which provides us with low cost funding to grow our lending efforts. The Company also generates income from loan and deposit fees and other non-interest related activities. The Company's non-interest expense primarily consists of employee compensation, administration, and other operating expenses.

At September 30, 2026, we had total assets of $2.33 billion, and total equity of $356.1 million. Net income available to common shareholders for the three and nine months ended September 30, 2026 was $12.2 million, and $36.2 million, respectively.

Results of Operations

Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025

Net Income: Our net income available to common shareholders for the three months ended September 30, 2026 increased $1.5 million, or 14.5%, to $12.2 million, compared to $10.6 million for the three months ended September 30, 2025. Earnings per share were $1.04 per basic common share and $1.02 per diluted common share for the three months ended September 30, 2026, compared to $0.90 per basic common share and $0.89 per diluted common share for the same period last year. The increase was primarily due to an increase in net interest income and a decrease in non-interest expense, partially offset by an increase in the provision for credit losses.

Net Interest Income: Our net interest income was $23.0 million for the third quarter of 2026 compared to $20.2 million for the third quarter of 2025, an increase of $2.9 million, or 14.2%. Net interest income increased during the three months ended September 30, 2026, primarily due to an increase in interest and fees on loans, and a decrease in interest expense on deposits, partially offset by an increase in interest on borrowings. Interest income increased $2.2 million, or 5.9%, during the three months ended September 30, 2026 as compared to the same period in the prior year. The increase in interest income was primarily due to an increase of $2.1 million in interest and fees on loans, due to higher loan balances and market interest rates. The increase in net interest income was also due to a decrease in interest expense on deposits during the three months ended September 30, 2026 of $1.4 million, or 9.3%, primarily due to a decrease in interest rates. Interest expense on borrowings increased during the three months ended September 30, 2026, by $0.7 million, or 76.2%, as compared to the same period in the prior year, due to an increase in Federal Home Loan Bank of New York ("FHLBNY") borrowings outstanding.

Provision for credit losses: For the three months ended September 30, 2026, the provision for credit losses was $1.0 million, compared to a provision for credit losses of $0.4 million for the three months ended September 30, 2025, an increase of $0.6 million. The increase in the provision for credit losses for the three months ended September 30, 2026, was due to an increase in loan balances during the three months ended September 30, 2026, as compared to an increase in loan balances during the same period in 2025.

Non-interest Income: Our non-interest income was $1.0 million for the three months ended September 30, 2026, an increase of $0.1 million, or 14.2%, compared to $0.9 million for the three months ended September 30, 2025. The increase is primarily attributable to an increase in bank owned life insurance ("BOLI") income, and an increase in loan fees, partially offset by a decrease in service fees on deposit accounts, compared to the same period in 2025.

Non-interest Expense: Our non-interest expense decreased $0.4 million, or 5.4%, for the three months ended September 30, 2026, from the three months ended September 30, 2025, to $6.8 million. The decrease was primarily driven by a decrease in professional services expense of $1.0 million, partially offset by an increase in compensation and benefits of $0.2 million, and an increase in OREO expense of $0.3 million. The decrease in professional services expense was primarily due to a $0.3 million transfer of OREO related legal fees to OREO expense, and a $0.6 million decrease in other professional fees attributed to changes in a previous contractual arrangement that resulted in a reduction to the overall contract cost.

Income Tax: Income tax expense was $4.1 million on income before taxes of $16.3 million for the three months ended September 30, 2026, resulting in an effective tax rate of 25.1%, compared to income tax expense of $2.9 million on income before taxes of $13.5 million for the same period of 2025, resulting in an effective tax rate of 21.2%.

Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

Net Income: Our net income available to common shareholders for the nine months ended September 30, 2026 increased $9.6 million, or 35.8%, to $36.2 million, compared to $26.7 million for the nine months ended September 30, 2025. Earnings per share were $3.09 per basic common share and $3.04 per diluted common share for the nine months ended September 30, 2026, compared to $2.26 per basic common share and $2.23 per diluted common share for the same period last year. The increase was primarily due to an increase in net interest income, and an increase in non-interest income, partially offset by an increase in non-interest expense, and an increase in income tax expense.

Net Interest Income: Our net interest income was $68.2 million for the nine months ended September 30, 2026 compared to $54.6 million for the nine months ended September 30, 2025, an increase of $13.5 million, or 24.8%. Net interest income increased during the nine months ended September 30, 2026, primarily due to an increase in interest and fees on loans, and a decrease in interest expense on deposits and borrowings, partially offset by a decrease in interest on deposits with banks. Interest income increased $8.7 million, or 8.2%, during the nine months ended September 30, 2026 as compared to the same period in the prior year. The increase in interest income was primarily due to an increase of $10.7 million in interest and fees on loans, due to higher loan balances and market interest rates. Interest from deposits with banks decreased $2.0 million during the nine months ended September 30, 2026 as compared to the same period in the prior year, primarily due to lower average cash balances held at the Federal Reserve Bank ("FRB") and lower interest earning rates. The increase in net interest income was also due to a decrease in interest expense on deposits during the nine months ended September 30, 2026 of $4.6 million, or 10.0%, primarily due to a decrease in interest rates, partially offset by an increase in balances outstanding. Interest expense on borrowings decreased during the nine months ended September 30, 2026, by $0.3 million, or 5.2%, as compared to the same period in the prior year, due to a decrease in interest rates paid on borrowings, partially offset by an increase in average borrowings during the period.

Provision for credit losses: For the nine months ended September 30, 2026, the provision for credit losses was $1.8 million, compared to a provision for credit losses of $1.9 million for the nine months ended September 30, 2025, a decrease of $0.1 million. The provision for credit losses for the nine months ended September 30, 2026, is driven by the increase in the gross loan balance of $60.9 million, partially offset by the charge off $1.0 million.

Non-interest Income: Our non-interest income was $2.7 million for the nine months ended September 30, 2026, an increase of $0.2 million, compared to $2.5 million for the nine months ended September 30, 2025. The increase is primarily attributable to an increase in bank owned life insurance ("BOLI") income, compared to the same period in 2025.

Non-interest Expense: Our non-interest expense increased $0.5 million, or 2.6%, for the nine months ended September 30, 2026, from the nine months ended September 30, 2025, to $20.9 million. The increase in non-interest expense was primarily due to an increase in compensation and benefits of $0.9 million, and an increase in other operating expense of $0.5 million, partially offset by a decrease in professional services expense of $1.1 million, and a decrease in data processing expense of $0.3 million, compared to the nine months ended September 30, 2025. The increase in compensation and benefits is primarily due to the increase in staff levels, and annual wage growth. The increase in other operating expense is primarily due to an increase in travel expense, miscellaneous loan expenses, and miscellaneous operating expenses. The decrease in professional services expense is primarily due to a $0.6 million decrease in legal fees, and a $0.4 million decrease in other professional fees attributed to lower BSA related consulting expense. The decrease in data processing expense is primarily due to lower core banking system expense.

Income Tax: Income tax expense was $11.9 million on income before taxes of $48.1 million for the nine months ended September 30, 2026, resulting in an effective tax rate of 24.7%, compared to income tax expense of $8.1 million on income before taxes of $34.8 million for the same period of 2025, resulting in an effective tax rate of 23.3%.

Net Interest Income

Net interest income is the interest earned on investment securities, loans and other interest-earning assets minus the interest paid on deposits, short-term borrowings and long-term debt. The net interest margin is the average yield of net interest income on average earning assets. Net interest income and the net interest margin in any one period can be significantly affected by a variety of factors including the mix and overall size of our earning assets portfolio and the cost of funding those assets.

The following tables present the average daily balances of assets, liabilities and equity and the respective interest earned or paid on interest-earning assets and interest-bearing liabilities, as well as average annualized rates, for the periods indicated.

		For the Three Months Ended September 30,
		2026												2025
						Interest												Interest
		Average				Income/				Yield/				Average				Income/				Yield/
		Balance				Expense				Cost				Balance				Expense				Cost
		(Dollars in thousands)
Assets
Loans*		$	2,055,334			$	37,036				7.15	%		$	1,941,937			$	34,910				7.13	%
Investment securities**			23,576				259				4.36	%			18,988				218				4.55	%
Interest bearing deposits			148,957				1,374				3.66	%			128,496				1,381				4.26	%
Total interest-earning assets			2,227,867				38,669				6.89	%			2,089,421				36,509				6.93	%
Other assets			83,965												66,182
Allowance for credit losses			(34,773	)											(33,840	)
Total assets		$	2,277,059											$	2,121,763
Liabilities and Shareholders' Equity
Interest bearing deposits:
Checking		$	109,168			$	669				2.43	%		$	50,144			$	84				0.67	%
Money markets			787,625				7,448				3.75	%			845,767				9,095				4.27	%
Savings			41,933				115				1.08	%			48,936				128				1.04	%
Time deposits			428,767				3,891				3.60	%			492,628				5,100				4.11	%
Brokered certificates of deposit			181,745				1,828				3.99	%			91,657				978				4.23	%
Total interest-bearing deposits			1,549,238				13,951				3.57	%			1,529,132				15,385				3.99	%
Borrowings			163,729				1,691				4.10	%			76,119				960				5.00	%
Total interest-bearing liabilities			1,712,967				15,642				3.63	%			1,605,251				16,345				4.04	%
Non-interest bearing deposits			191,732												182,116
Other liabilities			19,031												19,601
Total non-interest bearing liabilities			210,763												201,717
Equity			353,329												314,795
Total liabilities and shareholders' equity		$	2,277,059											$	2,121,763
Net interest income						$	23,027											$	20,164
Interest rate spread											3.26	%											2.89	%
Net interest margin											4.10	%											3.83	%

*

The average balance of loans includes loans on nonaccrual.

**

Includes balances of FHLBNY and ACBB stock.

		For the Nine Months Ended September 30,
		2026												2025
						Interest												Interest
		Average				Income/				Yield/				Average				Income/				Yield/
		Balance				Expense				Cost				Balance				Expense				Cost
		(Dollars in thousands)
Assets
Loans*		$	2,046,753			$	109,884				7.18	%		$	1,903,776			$	99,142				6.96	%
Investment securities**			22,698				718				4.23	%			21,024				738				4.69	%
Interest bearing deposits			128,120				3,458				3.61	%			169,864				5,499				4.33	%
Total interest-earning assets			2,197,571				114,060				6.94	%			2,094,664				105,379				6.73	%
Other assets			79,113												65,322
Allowance for credit losses			(34,882	)											(33,238	)
Total assets		$	2,241,802											$	2,126,748
Liabilities and Shareholders' Equity
Interest bearing deposits:
Checking		$	101,164			$	1,558				2.06	%		$	56,500			$	344				0.81	%
Money markets			777,850				21,752				3.74	%			764,632				25,060				4.38	%
Savings			43,786				354				1.08	%			51,929				415				1.07	%
Time deposits			451,917				12,574				3.72	%			492,384				15,917				4.32	%
Brokered certificates of deposit			165,819				4,878				3.93	%			121,609				3,962				4.36	%
Total interest-bearing deposits			1,540,536				41,116				3.57	%			1,487,054				45,698				4.11	%
Borrowings			155,780				4,776				4.10	%			130,156				5,039				5.18	%
Total interest-bearing liabilities			1,696,316				45,892				3.62	%			1,617,210				50,737				4.19	%
Non-interest bearing deposits			182,894												179,924
Other liabilities			19,776												19,436
Total non-interest bearing liabilities			202,670												199,360
Equity			342,816												310,178
Total liabilities and shareholders' equity		$	2,241,802											$	2,126,748
Net interest income						$	68,168											$	54,642
Interest rate spread											3.32	%											2.54	%
Net interest margin											4.15	%											3.49	%

*

The average balance of loans includes loans on nonaccrual.

**

Includes balances of FHLBNY and ACBB stock.

Financial Condition

General

At September 30, 2026, the Company's total assets were $2.33 billion, an increase of $83.2 million, or 3.70%, from December 31, 2025. The increase in total assets was primarily attributable to an increase in cash and cash equivalents of $11.8 million, and an increase in net loans of $60.1 million. Cash and cash equivalents increased $11.8 million, or 7.5%, primarily due to an increase in brokered deposits of $34.6 million, and an increase in FHLBNY borrowings of $35.0 million, partially offset by the increase in net loans of $60.1 million.

Total liabilities were $1.98 billion at September 30, 2026. This represented a $51.5 million, or 2.7%, increase, from $1.92 billion at December 31, 2025. The increase in total liabilities was primarily due to an increase in deposits of $18.1 million, or 1.0%, and an increase in FHLBNY borrowings of $35.0 million, or 26.9%, to $165.0 million at September 30, 2026.

Total equity was $356.1 million and $324.5 million at September 30, 2026 and December 31, 2025, respectively, an increase of $31.6 million from December 31, 2025. The increase was primarily due to the retention of earnings, partially offset by the payment of $6.9 million of cash dividends.

The following table presents certain key condensed balance sheet data as of September 30, 2026 and December 31, 2025:

		September 30,				December 31,
		2026				2025				Change				% Change
		(Dollars in thousands)
Cash and cash equivalents		$	168,657			$	156,863			$	11,794				7.5	%
Investment securities			13,826				13,523				303				2.2	%
Loans, net of unearned income			2,096,082				2,035,227				60,855				3.0	%
Allowance for credit losses			(35,438	)			(34,649	)			(789	)			2.3	%
Total assets			2,332,598				2,249,436				83,162				3.7	%
Total deposits			1,776,795				1,758,669				18,126				1.0	%
FHLBNY borrowings			165,000				130,000				35,000				26.9	%
Subordinated debt			13,403				13,403				-				0.0	%
Total liabilities			1,976,461				1,924,918				51,543				2.7	%
Total equity			356,137				324,518				31,619				9.7	%
Total liabilities and equity			2,332,598				2,249,436				83,162				3.7	%

Cash and cash equivalents

Cash and cash equivalents increased $11.8 million to $168.7 million at September 30, 2026 from $156.9 million at December 31, 2025, an increase of 7.5%. The increase was primarily due to an increase in deposits, and an increase in FHLBNY borrowings, partially offset by an increase in gross loans.

Investment securities

Total investment securities increased to $13.8 million at September 30, 2026, from $13.5 million at December 31, 2025, an increase of $0.3 million or 2.2%. The increase was attributed to the purchase of a $1.5 million security for CRA purposes, partially offset by normal pay downs of securities. For detailed information on the composition and maturity distribution of our investment portfolio, see NOTE 3 - Investment Securities in the notes to the unaudited consolidated financial statements.

Loans

Our lending relationships are primarily with small to mid-sized businesses and individual consumers residing in and around Southern New Jersey and Philadelphia, Pennsylvania. We have also expanded our lending footprint in other areas, including New York and most recently South Carolina. We focus our lending efforts primarily in three lending areas: residential mortgage loans, commercial mortgage loans, and construction loans.

We originate residential mortgage loans with adjustable and fixed-rates that are secured by 1- 4 family and multifamily residential properties. These loans are generally underwritten under terms, conditions and documentation acceptable to the secondary mortgage market. A substantial majority of such loans can be pledged for potential borrowings.

We originate commercial real estate loans that are secured by commercial real estate properties that are owner and non-owner occupied real estate properties. These loans are typically larger in dollar size and are primarily secured by office buildings, retail buildings, warehouses and general purpose business space. The commercial mortgage loans generally have maturities of twenty years, but re-price within five years.

The construction loans we originate provide real estate acquisition, development and construction funds to individuals and real estate developers. The loans are secured by the properties under development. The construction loan funds are disbursed periodically at pre-specified stages of completion.

We also originate commercial and industrial loans, which provide liquidity to businesses in the form of lines of credit and may be secured by accounts receivable, inventory, equipment or other assets. In addition, we have a consumer loan portfolio which provides loans to individual borrowers.

Loans receivable: Loans receivable increased to $2.10 billion at September 30, 2026, from $2.04 billion at December 31, 2025, an increase of $60.9 million, or 3.0%. The increase was primarily due to increases in the residential - multifamily, commercial - non-owner occupied, construction, and commercial - owner occupied loan portfolios, partially offset by decreases in the residential - 1 to 4 family, and the residential - 1 to 4 family investment loan portfolios. Loans receivable as of September 30, 2026 and December 31, 2025, consisted of the following:

		September 30, 2026								December 31, 2025
						Percentage of								Percentage of
						Loans to total								Loans to total
		Amount				Loans				Amount				Loans				$ Change				% Change
		(Dollars in thousands)
Commercial and Industrial		$	39,916				1.9	%		$	38,672				1.9	%		$	1,244				3.2	%
Construction			231,322				11.0	%			212,307				10.4	%			19,015				9.0	%
Real Estate Mortgage:
Commercial - Owner Occupied			193,199				9.2	%			182,529				9.0	%			10,670				5.8	%
Commercial - Non-owner Occupied			505,299				24.1	%			478,295				23.5	%			27,004				5.6	%
Residential - 1 to 4 Family			419,557				20.0	%			451,463				22.2	%			(31,906	)			(7.1	)%
Residential - 1 to 4 Family Investment			459,015				21.9	%			494,228				24.3	%			(35,213	)			(7.1	)%
Residential - Multifamily			244,280				11.7	%			173,611				8.5	%			70,669				40.7	%
Consumer			3,494				0.2	%			4,122				0.2	%			(628	)			(15.2	)%
Total Loans		$	2,096,082				100.0	%		$	2,035,227				100.0	%		$	60,855				3.0	%

Other Real Estate Owned

At September 30, 2026, other real estate owned increased to $7.2 million from $2.9 million at December 31, 2025, an increase of $4.4 million, or 153.1%. The increase was primarily due to the repossession of a single family home for $3.9 million that was collateral for an existing OREO property. Additionally, one residential loan for $0.5 million was foreclosed and transferred to OREO.

Deposits

At September 30, 2026, total deposits increased to $1.78 billion from $1.76 billion at December 31, 2025, an increase of $18.1 million, or 1.0%. The increase in deposits was primarily due to an increase in money market deposits of $87.1 million, of which $13.0 million were brokered deposits, and an increase in checking of $15.6 million, of which $28.6 million was brokered and partially offset by a decrease in non-brokered checking deposits of $13.0 million, partially offset by a decrease in time deposits of $78.8 million.

		September 30,				December 31,
		2026				2025				$ Change				% Change
		(Dollars in thousands)
Noninterest-bearing		$	194,556			$	196,506			$	(1,950	)			(1.0	)%
Interest-bearing
Checking			125,430				109,861				15,569				14.2	%
Savings			40,675				44,551				(3,876	)			(8.7	)%
Money market			833,055				745,918				87,137				11.7	%
Time deposits			583,079				661,833				(78,754	)			(11.9	)%
Total deposits		$	1,776,795			$	1,758,669			$	18,126				1.0	%
Estimated uninsured deposits		$	742,126			$	728,398			$	13,728				1.9	%
Total brokered deposits		$	252,234			$	215,329			$	36,905				17.1	%

Borrowings

Total borrowings were $178.4 million at September 30, 2026 and $143.4 million at December 31, 2025. The increase in borrowings during 2026 is due to an increase of $35.0 million in FHLBNY advances. At September 30, 2026, all of the outstanding FHLBNY advances had short-term maturities.

Equity

Total equity increased to $356.1 million at September 30, 2026 from $324.5 million at December 31, 2025, an increase of $31.6 million, or 9.7%, primarily due to the retention of earnings from the period, partially offset by the payment of $6.9 million of cash dividends.

Liquidity and Capital Resources

Liquidity is a measure of our ability to generate cash to support asset growth, meet deposit withdrawals, satisfy other contractual obligations, and otherwise operate on an ongoing basis. At September 30, 2026, our cash position was $168.7 million. We invest cash that is in excess of our immediate operating needs primarily in our interest-bearing account at the Federal Reserve.

Our primary source of funding has been deposits. Funds from other operations, financing arrangements, investment securities available-for-sale also provide significant sources of funding. The Company seeks to rely primarily on core deposits from customers to provide stable and cost-effective sources of funding to support loan growth. We focus on customer service which we believe has resulted in a history of customer loyalty. Stability, low cost and customer loyalty comprise key characteristics of core deposits.

We also use brokered deposits as a funding source. The Bank primarily utilizes brokered relationships with Piper Sandler, and Stonecastle. As of September 30, 2026, the Company had $178.6 million of brokered deposits resulting from these relationships. For an additional source of brokered liquidity, the Bank joined the IntraFi Financial Network. IntraFi provides the Bank an additional source of external funds through their weekly CDARS^® settlement process, as well as their ICS^® money market product. As of September 30, 2026, the Company had $73.7 million sourced from IntraFi. While deposit accounts comprise the vast majority of our funding needs, we maintain secured borrowing lines with the FHLBNY and the Federal Reserve Bank ("FRB"). As of September 30, 2026, the Company had lines of credit with the FHLBNY of $661.0 million, of which $165.0 million was outstanding, and an additional $105.0 million from a letter of credit for securing public funds, of which zero was outstanding as of September 30, 2026. The remaining borrowing capacity was $391.0 million at September 30, 2026. As of September 30, 2026, the Company had a borrowing capacity through the FRB discount window of $368.3 million. There were no borrowings outstanding from the FRB as of September 30, 2026. Our diversity of funding capacity results in the Bank's ability to cover 125.4% of estimated uninsured deposits at September 30, 2026.

We had outstanding loan commitments of $246.9 million at September 30, 2026. Our loan commitments are normally originated with the full amount of collateral. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The funding requirements for such commitments occur on a measured basis over time and would be funded by normal deposit growth.

The following is a discussion of our cash flows for the nine months ended September 30, 2026 and 2025.

Cash provided by operating activities was $32.1 million during the nine months ended September 30, 2026, compared to $25.1 million for the same period in the prior year. The increase in operating cash flow was primarily due to the increase in net income, partially offset by the increase in accrued interest receivable and other assets and the decrease in accrued interest payable and other accrued liabilities.

Cash used in investing activities was $68.6 million during the nine months ended September 30, 2026, compared to cash used in investing activities of $91.6 million in the same period last year. The decrease in cash used in the investing activities during the nine months ended September 30, 2026, was primarily due to the decrease in cash outflow from the origination of loans, the decrease in the purchase of bank owned life insurance policies, and the decrease in the net purchase of FHLBNY restricted stock.

Cash provided by financing activities was $48.3 million during the nine months ended September 30, 2026, compared to $4.3 million in the same period last year. The increase in cash provided by financing activities during the nine months ended September 30, 2026, was primarily due to an increase in FHLBNY borrowings, and the repayment of subordinated debt in the prior year, partially offset by a decrease in the growth of interest-bearing deposits.

Capital Adequacy

We utilize a comprehensive process for assessing the Company's overall capital adequacy. We actively review our capital strategies in light of current and anticipated business risks, future growth opportunities, industry standards, and compliance with regulatory requirements. The assessment of overall capital adequacy depends on a variety of factors, including asset quality, liquidity, earnings stability, competitive forces, economic conditions, and strength of management. Our objective is to maintain capital at an amount commensurate with our risk profile and risk tolerance objectives, and to meet both regulatory and market expectations. We primarily manage our capital through the retention of earnings. We also use other means to manage our capital. Total equity increased $31.6 million at September 30, 2026, from December 31, 2025, primarily from the Company's net income of $36.2 million for the period, net of common and preferred stock dividends of $6.9 million.

Banks and bank holding companies are subject to various regulatory capital requirements administered by federal banking agencies. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank and the Company must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items, as calculated under the regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Prompt corrective action provisions are not applicable to bank holding companies. Failure to meet minimum capital requirements can result in regulatory actions.

Under the capital rules issued by the Federal banking agencies, the Company and the Bank elected to exclude the effects of certain Accumulated Other Comprehensive Income ("AOCI") items from its regulatory capital calculation. At September 30, 2026, the Bank and the Company were both considered "well capitalized".

The following table presents the tier 1 regulatory capital leverage ratios of the Company and the Bank at September 30, 2026:

		Amount				Ratio				Amount				Ratio
		(Dollars in thousands except ratios)
		Company								Parke Bank
Tier 1 leverage		$	369,518				16.23	%		$	368,263				16.17	%

Critical Accounting Policies

The Company's accounting policies are more fully described in Note 1 of the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025. As disclosed in Note 1, the preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ significantly from those estimates. The Company believes that the following discussion addresses the Company's most critical accounting policies, which are those that are most important to the portrayal of the Company's financial condition and results of operations and require management's most difficult, subjective and complex judgments.

Allowance for Credit Losses: Our allowances for credit losses represents management's best estimate of probable losses inherent in our investment and loan portfolios, excluding those loans accounted for under fair value. Our process for determining the allowance for credit losses is discussed in Note 1 to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Our determination of the allowance for credit losses is based on periodic evaluations of the loan and lease portfolios and other relevant factors, broken down into vintage based on year of origination. These critical estimates include significant use of our own historical data and other qualitative, and quantitative data. These evaluations are inherently subjective, as they require material estimates and may be susceptible to significant change. Our allowance for credit losses is comprised of two components, a specific allowance and a general calculation. A specific allowance is calculated for loans and leases that do not share similar risk characteristics with other financial assets, and include collateral dependent loans. A loan is considered to be collateral dependent when foreclosure of the underlying collateral is probable. Parke has 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. The general based component covers loans and leases on which there are expected credit losses that are not yet individually identifiable. The allowance calculation and determination process is dependent on the use of key assumptions. Key reserve assumptions and estimation processes react to and are influenced by observed changes in loan portfolio performance experience, the financial strength of the borrower, projected industry outlook, and economic conditions.

The process of determining the level of the allowance for credit losses requires a high degree of judgment. To the extent actual outcomes differ from our estimates, additional provision for loan and lease losses may be required that would reduce future earnings.