PARKE BANCORP, INC.
For the period ended Dec 31, 2025. Filed Mar 11, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 11, 2026
PKBK$32.62+0.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-12.
0001315399-25-000025
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-11.
0001437749-26-007748
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 80 previous paragraphs and 81 current paragraphs.
50 unchanged; 27 reworded; 4 added; 3 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 6 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (4)
Current report
(3) Includes restricted stock and related dividend income.
Current report
Non-interest income decreased by $0.9 million to $3.4 million during the year ended December 31, 2025 compared to 2024, primarily due to a decrease in other income as a result of a decrease in one-time insurance payments and settlements received in 2024.
Current report
At December 31, 2025, the Company’s total assets were $2.25 billion, an increase of $107.2 million or 5.0%, from December 31, 2024. The increase in total assets was primarily attributable to an increase in gross loans outstanding, and an increase in banked owned life insurance ("BOLI"), partially offset by a decrease in cash and cash equivalents. Gross loans increased $167.1 million, to $2.04 billion at December 31, 2025 primarily due to an increase in the CRE non-owner occupied loan portfolio of $107.0 million, an increase in the construction portfolio loan balance of $63.0 million, and an increase in the CRE owner occupied loan portfolio balance of $22.1 million, partially offset by a decrease in the residential 1 - 4 family investment portfolio balance of $29.9 million. BOLI increased $6.3 million at December 31, 2025, primarily due to the purchase of additional insurance policies. The increase in assets was partially offset by a decrease in cash and cash equivalents of $64.7 million, or 29.2%, from December 31, 2024.
Current report
Loans receivable increased to $2.04 billion at December 31, 2025, from $1.87 billion at December 31, 2024. The increase was primarily due to an increase in the CRE non-owner occupied loan portfolio of $107.0 million, an increase in the construction portfolio loan balance of $63.0 million, and an increase in the CRE owner occupied loan portfolio balance of $22.1 million, partially offset by a decrease in the residential 1 - 4 family investment portfolio balance of $29.9 million.
Removed paragraphs (3)
Previous report
Non-interest income decreased by $2.4 million to $4.3 million during the year ended December 31, 2024 compared to 2023, primarily due to a decrease in fee income related to cannabis related business deposit fees and other loan fees.
Previous report
At December 31, 2024, the Company’s total assets were $2.14 billion, an increase of $118.7 million or 5.9%, from December 31, 2023. The increase in total assets was primarily attributable to an increase in cash and cash equivalents and total loans outstanding. Cash and cash equivalents increased $41.2 million, to $221.5 million at December 31, 2024. Total loans outstanding increased $80.8 million at December 31, 2024, primarily due to an increase in residential multi-family loans of $71.4 million, and commercial owner-occupied loans of $18.7 million, partially offset by a decrease in construction loans of $8.2 million.
Previous report
Loans receivable increased to $1.87 billion at December 31, 2024, from $1.79 billion at December 31, 2023. The increase was primarily due to an increase in residential multi-family loans of $71.4 million, and commercial owner-occupied loans of $18.7 million, partially offset by a decrease in construction loans of $8.2 million.
Reworded paragraphs (27)
Previous wording
As of December 31, 2024, we 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. In 2024, net income available to common shareholders decreased 3.3% over the previous year primarily due to a decrease in net interest income, an increase in the provision for credit losses, and a decrease in non-interest income, partially offset by a decrease in non-interest expense. At December 31, 2024, total assets increased 5.9% and total equity increased 5.5%, compared to December 31, 2023. Our risk based tier 1 capital ratio was 21.2% at December 31, 2024. In addition, during the fiscal year ended December 31, 2024 we returned $8.6 million of capital to our common shareholders through cash dividends, and we repurchased 200,000 common stock shares at a total cost of $4.3 million.
Current wording
As of December 31, 2025, we had total assets of $2.25 billion, total liabilities of $1.92 billion, and total shareholders' equity of $324.5 million. Net income available to common shareholders for the year ended December 31, 2025 was $37.8 million. In 2025, net income available to common shareholders increased 37.3% over the previous year primarily due to an increase in net interest income, partially offset by an increase in the provision for credit losses, a decrease in non-interest income, and an increase in non-interest expense. At December 31, 2025, total assets increased 5.0% and total equity increased 8.1%, compared to December 31, 2024. Our risk based tier 1 capital ratio was 20.5% at December 31, 2025. In addition, during the fiscal year ended December 31, 2025 we returned $8.4 million of capital to our common shareholders through cash dividends, and we repurchased 300,000 common stock shares at a total cost of $6.5 million.
Previous wording
Our business operations are subject to risks and uncertainties that could materially affect our operating results. The extent of such impact will depend on future developments, which are highly uncertain. There continues to be various other risks and uncertainties that could impact the Company’s businesses and future results, such as changes to the U.S. economic condition, market interest rates, the Federal Reserve Board's monetary policy, other government policies, and actions of regulatory agencies.
Current wording
Our business operations are subject to risks and uncertainties that could materially affect our operating results. The extent of such impact will depend on future developments, which are highly uncertain. There continues to be various other risks and uncertainties that could impact the Company’s businesses and future results, such as changes to the economic conditions in the United States, market interest rates, the Federal Reserve's monetary policy, other government policies, and actions of regulatory agencies. Please refer to "Forward-Looking Statements" above for further information about risks and uncertainties that could affect our operating results.
Previous wording
We 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, compared to $28.4 million, or $2.38 per basic common share and $2.35 per diluted common share, for the year ended December 31, 2023, a decrease of $0.9 million or 3.3%.
Current wording
We recorded net income available to common shareholders of $37.8 million or $3.20 per basic common share and $3.16 per diluted common share, for the year ended December 31, 2025, compared to $27.5 million, or $2.30 per basic common share and $2.27 per diluted common share, for the year ended December 31, 2024, an increase of $10.3 million or 37.3%.
Previous wording
Net interest income decreased $5.5 million, or 8.6%, to $58.7 million for the year ended 2024 compared to $64.2 million for the year ended 2023. The decrease in net interest income 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 for 2024 increased to $125.1 million, an increase of $12.4 million, or 11.0%, from $112.7 million for 2023, primarily due to an increase in interest and fees on loans of $11.8 million, or 11.1%. Interest and fees on loans increased during the year ended December 31, 2024, due to higher average outstanding loan balances and higher market interest rates. Interest expense increased to $66.4 million for 2024, from $48.5 million for 2023, an increase of $17.9 million, or 36.9%. The increase in interest expense was primarily due to an increase in market interest rates on deposit accounts at the Bank, as well as a change in the deposit mix. In addition, a decrease in non-interest bearing demand balances and an increase in interest-bearing deposit balances contributed to the increase in interest expense during the 2024 fiscal year..
Current wording
Net interest income increased $17.8 million, or 30.2%, to $76.5 million for the year ended December 31, 2025 compared to $58.7 million for the year ended December 31, 2024. The increase in net interest income was primarily due to an increase in interest income of $17.6 million, and a decrease in interest expense of $0.2 million. Interest income for 2025 increased to $142.7 million, an increase of $17.6 million, or 14.0%, from $125.1 million for 2024, primarily due to an increase in interest and fees on loans of $17.4 million, or 14.7%. Interest and fees on loans increased during the year ended December 31, 2025, due to higher average outstanding loan balances and higher market interest rates. Interest expense decreased to $66.2 million for 2025, from $66.4 million for 2024, a decrease of $0.2 million, or 0.3%. The decrease in interest expense was primarily due to a decrease interest on borrowings, a decrease in borrowing levels and a decrease in market interest rates. The decrease was partially offset by an increase in interest expense on deposits during the year ended December 31, 2025, due to a change in the deposit mix.
Previous wording
(1) Interest income includes $3.6 million and $3.8 million of net fee income for the years ended 2024 and 2023, respectively.
Current wording
(1) Interest income includes $4.4 million and $3.6 million of net fee income for the years ended December 31, 2025 and 2024, respectively.
Previous wording
Our provision for credit losses in each period is driven by net charge-offs and changes to the allowance for credit losses. We recorded a provision for credit losses of $0.7 million and a recovery for credit losses of $2.1 million in 2024 and 2023, respectively. The provision (recovery) for credit losses as a percentage of interest income was 0.58% and 1.82% in 2024 and 2023, respectively.
Current wording
Our provision for credit losses in each period is driven by net charge-offs and changes to the allowance for credit losses. We recorded a provision for credit losses of $2.5 million and $0.7 million in 2025 and 2024, respectively. The provision for credit losses as a percentage of interest income was 1.74% and 0.58% in 2025 and 2024, respectively.
Previous wording
Our provision for credit losses increased by $2.8 million in 2024 compared to 2023 primarily as a result of an increase in outstanding loan balances, partially offset by a decrease in loss rates. Additionally, the provision for unfunded commitments contributed to $369.0 thousand of the increase. For more information about our provision and allowance for credit losses and our loss experience, see “Risk Management and Asset Quality-Allowance for Credit Losses” and NOTE 4. Loans and Allowance for Credit Losses in the Notes to the Consolidated Financial Statements.
Current wording
Our provision for credit losses increased by $1.8 million in 2025 compared to 2024 primarily as a result of an increase in outstanding loan balances, partially offset by a decrease in loss rates. Additionally, the provision for unfunded commitments decreased slightly at December 31, 2025, from the prior year. For more information about our provision and allowance for credit losses and our loss experience, see “Risk Management and Asset Quality-Allowance for Credit Losses” and NOTE 4. Loans and Allowance for Credit Losses in the Notes to the Consolidated Financial Statements.
Previous wording
The fee income for the year ended December 31, 2024 from the commercial deposit accounts of depositors who do business in the cannabis industry totaled $1.1 million and is included in service fees on deposit accounts in the accompanying consolidated statements of income. Such deposit fee income totaled $3.4 million during the year ended December 31, 2023. Please refer to Note 15. Commitments and Contingencies in the Notes to the Consolidated Financial Statements for our banking services to customers who do business in the cannabis industry.
Current wording
The fee income for the year ended December 31, 2025 from the commercial deposit accounts of depositors who do business in the cannabis industry totaled $0.9 million and is included in service fees on deposit accounts in the accompanying consolidated statements of income. Such deposit fee income totaled $1.0 million during the year ended December 31, 2024. Please refer to Note 15. Commitments and Contingencies in the Notes to the Consolidated Financial Statements for our banking services to customers who do business in the cannabis industry.
Previous wording
The following table displays the components of non-interest expense for 2024 and 2023.
Current wording
The following table displays the components of non-interest expense for the years ended December 31, 2025 and 2024.
Previous wording
Non-interest expense decreased $9.3 million to $26.0 million for the year ended December 31, 2024, from $35.3 million for 2023 primarily due to a decrease in other operating expense of $10.1 million, partially offset by an increase in compensation and benefits of $0.4 million, and an increase in professional services of $0.4 million. The decrease in other operating expense was primarily driven from the recognition of a one-time contingent loss during 2023 of $9.5 million. The increase in compensation and benefits during the year ended December 31, 2024, was primarily due to a $0.4 million increase in salaries, and a $0.2 million decrease in deferred loan origination costs attributable to a reduction in the number of loans originated, partially offset by a $0.2 million decrease in SERP expense. The increase in professional fees of $0.4 million was primarily due to a $0.7 million increase in consulting fees attributed to our Bank Secrecy Act compliance, partially offset by a decrease of $0.3 million decrease in legal expense.
Current wording
Non-interest expense increased $2.0 million to $28.0 million for the year ended December 31, 2025, from $26.0 million for 2024 primarily due to an increase in professional services of $0.7 million, an increase in compensation and benefits expense of $0.5 million, and an increase in other operating expense of $0.5 million, partially offset by a decrease in OREO expense of $0.2 million. The increase in professional services during the year ended December 31, 2025, was primarily due to a $0.6 million increase in legal fees. The increase in compensation and benefits expense was primarily due to an increase in salaries of $0.4 million, and a $0.1 million decrease in deferred loan origination costs attributable to a reduction in the number of loans originated.
Previous wording
Income tax expense decreased $0.4 million to $8.8 million on income before taxes of $36.3 million for 2024, compared to income tax expense of $9.2 million on income before taxes of $37.7 million for 2023. The effective income tax rates for 2024 and 2023 were 24.2% and 24.5%, respectively.
Current wording
Income tax expense increased $2.8 million to $11.6 million on income before taxes of $49.4 million for 2025, compared to income tax expense of $8.8 million on income before taxes of $36.3 million for 2024. The effective income tax rates for 2025 and 2024 were 23.5% and 24.2%, respectively.
Previous wording
Total liabilities were $1.84 billion at December 31, 2024. This represented a $103.0 million, or 5.9%, increase from $1.74 billion at December 31, 2023. The increase in total liabilities was primarily due to an increase in deposits. Total deposits increased $78.2 million, or 5.0%, to $1.63 billion at December 31, 2024, from $1.55 billion at December 31, 2023. Deposits from the cannabis industries increased to $151.9 million at December 31, 2024, from $96.7 million at December 31, 2023. Total borrowings were $188.3 million at December 31, 2024, an increase of $20.2 million, compared to December 31, 2023, primarily due to an increase in FHLB advances of $20.0 million.
Current wording
Total liabilities were $1.92 billion at December 31, 2025. This represented a $82.8 million, or 4.5%, increase from $1.84 billion at December 31, 2024. The increase in total liabilities was primarily due to an increase in deposits, partially offset by a decrease in borrowings. Total deposits increased $127.6 million, or 7.8%, to $1.76 billion at December 31, 2025, from $1.63 billion at December 31, 2024. Deposits from the cannabis industries decreased to $61.9 million at December 31, 2025, from $151.9 million at December 31, 2024. Total borrowings were $143.4 million at December 31, 2025, a decrease of $44.9 million, compared to December 31, 2024, primarily due to the repayment of $30.0 million of subordinated debt, and a decrease in FHLB advances of $15.0 million.
Previous wording
Total equity was $300.1 million and $284.3 million at December 31, 2024 and December 31, 2023, respectively, an increase of $15.8 million from December 31, 2023.
Current wording
Total equity was $324.5 million and $300.1 million at December 31, 2025 and December 31, 2024, respectively, an increase of $24.4 million from December 31, 2024.
Previous wording
Cash and cash equivalents increased $41.2 million to $221.5 million at December 31, 2024, from $180.4 million at December 31, 2023, an increase of 22.8%. The increase was mainly due to an increase in deposits and borrowings, partially offset by an increase in loans.
Current wording
Cash and cash equivalents decreased $64.7 million to $156.9 million at December 31, 2025, from $221.5 million at December 31, 2024, a decrease of 29.2%. The decrease was mainly due to an increase in loans, and a decrease in borrowings, partially offset by an increase in deposits.
Previous wording
Total investment securities decreased to $14.8 million at December 31, 2024, from $16.4 million at December 31, 2023, a decrease of $1.6 million or 9.9%. The decrease was primarily due to pay downs of $1.8 million, partially offset by a $0.1 million valuation increase.
Current wording
Total investment securities decreased to $13.5 million at December 31, 2025, from $14.8 million at December 31, 2024, a decrease of $1.2 million or 8.4%. The decrease was primarily due to pay downs of $1.7 million, partially offset by the purchase of a $0.5 million corporate security.
Previous wording
Allowance for credit losses increased $0.4 million, to $32.6 million, or 1.38%, at December 31, 2024, from $32.1 million at December 31, 2023. The increase was primarily due to an increase in the portfolio balance, partially offset by a decrease in historical loss rates.
Current wording
Allowance for credit losses increased $2.1 million, to $34.6 million, or 6.4%, at December 31, 2025, from $32.6 million at December 31, 2024. The increase was primarily due to an increase in the portfolio balance, and an increase in specific reserves for individually evaluated loans, partially offset by a decrease in historical loss rates.
Previous wording
At December 31, 2024, the Bank’s total deposits increased to $1.63 billion from $1.55 billion at December 31, 2023, an increase of $78.2 million, or 5.0%. The increase in deposits was primarily attributed to an increase in time deposits of $108.1 million, and money market deposits of $48.4 million, partially offset by a decrease in non-interest bearing demand deposits of $48.2 million, and savings deposits of $27.6 million. Deposits from the cannabis businesses increased to $151.9 million at December 31, 2024, from $96.7 million at December 31, 2023, an increase of $55.2 million.
Current wording
At December 31, 2025, the Bank’s total deposits increased to $1.76 billion from $1.63 billion at December 31, 2024, an increase of $127.6 million, or 7.8%. The increase in deposits was primarily attributed to an increase in money market deposits of $130.5 million, interest checking deposits of $49.4 million, and non-interest checking of $12.5 million, partially offset by a decrease in brokered time deposits of $41.9 million, time deposits of $11.4 million, and savings deposits of $11.4 million. Brokered interest checking deposits, included in the above balances, increased $45.0 million at December 31, 2025, from zero at December 31, 2024.
Previous wording
At December 31, 2024, total borrowings increased $20.2 million to $188.3 million at December 31, 2024, from $168.1 million at December 31, 2023. The increase in borrowings was primarily due to an increase in FHLBNY advances of $20.0 million.
Current wording
At December 31, 2025, total borrowings decreased $44.9 million to $143.4 million, from $188.3 million at December 31, 2024. The decrease in borrowings was primarily due to the repayment of $30.0 million of subordinated debt, and a decrease in FHLB advances of $15.0 million.
Previous wording
Total shareholders’ equity increased to $300.1 million at December 31, 2024, from $284.3 million at December 31, 2023, an increase of $15.8 million or 5.5%. The increase in total shareholders' equity was primarily due to the retention of earnings from the period, partially offset by the recognition of $8.6 million of cash dividend, and repurchases of shares of the Company's common stock in the amount of $4.3 million during the year ended December 31, 2024.
Current wording
Total shareholders’ equity increased to $324.5 million at December 31, 2025, from $300.1 million at December 31, 2024, an increase of $24.4 million or 8.1%. The increase in total shareholders' equity was primarily due to the retention of earnings from the period, partially offset by the recognition of $8.5 million of cash dividends, and repurchases of shares of the Company's common stock in the amount of $6.5 million during the year ended December 31, 2025.
Previous wording
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 December 31, 2024, our cash position was $221.5 million. We invest cash that is in excess of our immediate operating needs primarily in our interest-bearing account at the Federal Reserve.
Current wording
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 December 31, 2025, our cash position was $156.9 million. We invest cash that is in excess of our immediate operating needs primarily in our interest-bearing account at the Federal Reserve.
Previous wording
We also use brokered deposits as a funding source. The Bank joined the IntraFi network to secure an additional alternative funding source. 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 December 31, 2024, the Company has $13.5 million of brokered deposits from IntraFi. Additionally, we have access to other brokered deposit funding sources that we utilize as a source of additional liquidity. In addition to IntraFi, we utilize Wells Fargo, Piper Sandler, and Stonecastle to obtain brokered deposits, and as of December 31, 2024, the Company had $202.2 million sourced from these broker relationships. 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"). During 2024, the Company reallocated a portion of its eligible collateral from the FHLBNY to the FRB discount window in order to diversify its borrowing capabilities. At December 31, 2024, the Company had a $740.5 million line of credit from the FHLBNY, of which $145.0 million was outstanding, $50.0 million was a letter of credit to secure public deposits, and $545.5 million was unused. As of December 31, 2024, the Company had a borrowing capacity through the FRB discount window of $252.0 million. There were no outstanding balances with the FRB as of December 31, 2024.
Current wording
We also use brokered deposits as a funding source. The Bank joined the IntraFi network to secure an additional alternative funding source. 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 December 31, 2025, the Company has $56.6 million of brokered deposits from IntraFi. Additionally, we have access to other brokered deposit funding sources that we utilize as a source of additional liquidity. In addition to IntraFi, we utilize Piper Sandler, Wells Fargo, and Stonecastle to obtain brokered deposits, and as of December 31, 2025, the Company had $158.7 million sourced from these broker relationships. 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"). At December 31, 2025, the Company had a $611.8 million line of credit from the FHLBNY, of which $130.0 million was outstanding, $75.0 million was a letter of credit to secure public deposits, and $406.8 million was unused. As of December 31, 2025, the Company had a borrowing capacity through the FRB discount window of $391.3 million. There were no outstanding balances with the FRB as of December 31, 2025.
Previous wording
Our investment portfolio primarily consists of mortgage-backed available for sale securities issued by US government agency and government sponsored entities. These available for sale securities are readily marketable and are available to meet our additional liquidity needs. At December 31, 2024, the Company's investment securities portfolio classified as available for sale was $5.6 million.
Current wording
Our investment portfolio primarily consists of mortgage-backed available for sale securities issued by US government agency and government sponsored entities. These available for sale securities are readily marketable and are available to meet our additional liquidity needs. At December 31, 2025, the Company's investment securities portfolio classified as available for sale was $4.7 million.
Previous wording
We had unused loan commitments of $122.5 million at December 31, 2024. Our loan commitments are normally originated with the full amount of collateral. Such commitments have historically been drawn at only a fraction of the total commitment. 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.
Current wording
We had unused loan commitments of $158.3 million at December 31, 2025. Our loan commitments are normally originated with the full amount of collateral. Such commitments have historically been drawn at only a fraction of the total commitment. 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.
Previous wording
Commitments to extend credit, or net unfunded loan commitments, represent arrangements to lend funds or provide liquidity subject to specified contractual conditions. These commitments generally have fixed expiration dates, may require payment of a fee, and contain termination clauses in the event the customer’s credit quality deteriorates. At December 31, 2024 and December 31, 2023, unused commitments to extend credit amounted to approximately $122.5 million and $93.8 million, respectively. Commitments to fund fixed-rate loans were immaterial at December 31, 2024. Variable-rate commitments are generally issued for less than one year and carry market rates of interest. Such instruments are not likely to be affected by annual rate caps triggered by rising interest rates. Management believes that off-balance sheet risk is not material to the results of operations or financial condition of the Company.
Current wording
Commitments to extend credit, or net unfunded loan commitments, represent arrangements to lend funds or provide liquidity subject to specified contractual conditions. These commitments generally have fixed expiration dates, may require payment of a fee, and contain termination clauses in the event the customer’s credit quality deteriorates. At December 31, 2025 and December 31, 2024, unused commitments to extend credit amounted to approximately $158.3 million and $122.5 million, respectively. 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 of the Company.
Previous wording
Standby letters of credit are conditional commitments issued by the Bank 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. At December 31, 2024 and December 31, 2023, standby letters of credit with customers were $0.6 million and $1.5 million, respectively.
Current wording
Standby letters of credit are conditional commitments issued by the Bank 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. At December 31, 2025 and December 31, 2024, standby letters of credit with customers were $0.6 million.
Previous wording
The Company’s accounting policies are more fully described in Note 1 - Description of Business and Summary of Significant Accounting Policiesin the Consolidated Financial Statements. As disclosed in Note 1, the preparation of financial statements in conformity with generally accepted accounting principles in the United States ("GAAP") 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.
Current wording
The Company’s accounting policies are more fully described in Note 1 - Description of Business and Summary of Significant Accounting Policies in the Consolidated Financial Statements. As disclosed in Note 1, the preparation of financial statements in conformity with generally accepted accounting principles in the United States ("GAAP") 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.
Previous wording
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. One key assumption in the vintage model is the underlying prepayment speeds, which is derived by the average loan life within the various pools. To provide a sensitivity of the impact to the ACL estimate, management adjusted the average lives of the vintage pools, by both increasing and decreasing the prepayment speeds by 20%, which provided an estimated range of impact between $0.9 million for a lower prepayment speed and $(1.2) million for a higher prepayment speed. This range was deemed immaterial to the overall ACL reserve balance.
Current wording
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. One key assumption in the vintage model is the underlying prepayment speeds, which is derived by the average loan life within the various pools. To provide a sensitivity of the impact to the ACL estimate, management adjusted the average lives of the vintage pools, by both increasing and decreasing the prepayment speeds by 20%, which provided an estimated range of impact between $0.9 million for a lower prepayment speed and $(1.7) million for a higher prepayment speed. This range was deemed immaterial to the overall ACL reserve balance.