0001437749-26-007748
SEC filingParke Bancorp reported strong financial performance for FY 2025, with net income available to common shareholders increasing 37.3% to $37.8 million from $27.5 million in FY 2024. This growth was primarily driven by a 30.2% increase in net interest income to $76.5 million, resulting from higher interest and fees on loans ($135.2M, up 14.7%) and a slight decrease in interest expense ($66.2M, down 0.3%). Total assets grew 5.0% to $2.25 billion, with loans increasing 8.9% to $2.04 billion and deposits rising 7.8% to $1.76 billion. The company maintained strong capital ratios, with a Tier 1 risk-based capital ratio of 20.51% and a Community Bank Leverage Ratio of 15.61%, both exceeding regulatory requirements. The bank continued to face regulatory oversight from 2020 consent orders related to BSA/AML compliance but remained well-capitalized.
Parke Bancorp delivered strong financial results for FY 2025, with net income available to common shareholders increasing 37.3% to $37.8 million ($3.20 per basic share) from $27.5 million ($2.30 per basic share) in FY 2024. The primary driver was a 30.2% increase in net interest income to $76.5 million, resulting from higher interest and fees on loans ($135.2M, up 14.7% from $117.8M) and a slight decrease in interest expense ($66.2M, down 0.3% from $66.4M). Total interest income grew 14.0% to $142.7 million. Non-interest income decreased 20.8% to $3.4 million, primarily due to lower other income. Non-interest expense increased 7.7% to $28.0 million, mainly from higher professional services and compensation costs. The provision for credit losses increased to $2.5 million from $0.7 million in 2024.
Interest income growth was driven by higher average loan balances and increased market interest rates. Interest and fees on loans represented 94.7% of total interest income at $135.2 million. Interest on deposits with banks contributed $6.6 million, while interest and dividends on investments added $0.9 million. The net interest margin improved to 3.64% from 3.00% in 2024, reflecting better asset yields and funding mix. Non-interest income declined to $3.4 million, with service fees on deposit accounts at $1.2 million, other loan fees at $0.7 million, bank owned life insurance income at $0.7 million, and other income at $0.8 million. The company generated $0.9 million in fee income from cannabis-related deposit accounts.
Net interest margin expanded significantly to 3.64% from 3.00% in 2024, driven by higher yields on earning assets (6.79% vs 6.39%) and better funding costs (4.09% vs 4.45%). The interest rate spread improved to 2.70% from 1.94%. Gross margin (net interest income/total interest income) improved to 53.6% from 46.9%. Operating margin (income before tax/total revenue) was 33.8%. The effective income tax rate decreased to 23.5% from 24.2%. Return on average assets improved, while efficiency metrics showed some pressure from increased non-interest expenses, particularly professional services which rose 25.6% to $3.4 million.
Operating cash flow was $39.6 million, primarily from net income of $37.8 million adjusted for non-cash items. Investing activities used $173.1 million, mainly for net loan growth of $169.0 million and bank-owned life insurance purchases of $5.5 million. Financing activities provided $68.9 million, driven by deposit growth of $127.6 million, partially offset by debt repayments. Total assets increased 5.0% to $2.25 billion, with loans growing 8.9% to $2.04 billion. Deposits increased 7.8% to $1.76 billion, while borrowings decreased 23.8% to $143.4 million. Shareholders' equity grew 8.1% to $324.5 million. The allowance for credit losses increased to $34.6 million (1.70% of loans), with non-performing loans at $10.8 million (0.53% of loans).
The company faces ongoing regulatory oversight from 2020 consent orders related to BSA/AML compliance, which continue to result in additional compliance expenses. Cannabis-related banking remains a risk area due to federal illegality, though deposits from this sector decreased significantly to $61.9 million (3.5% of total) from $151.9 million (9.3%). Management noted competitive pressures in lending and deposit gathering, with most competitors having greater financial resources. The company continues to focus on organic growth in its core markets of New Jersey, Pennsylvania, and New York, with particular emphasis on commercial real estate, construction, and residential lending. Capital management remains a priority, with $8.4 million returned to shareholders through dividends and $6.5 million through share repurchases in 2025. The bank maintains strong capital ratios well above regulatory minimums.