Parke Bancorp, Inc. ($PKBK)

[Audio Gap] assess the impact of changes made in the company's executive compensation program in response to shareholder votes on executive compensation. We also noted that we incur costs to have an additional item on the agenda. In the interest of saving costs, the Board recommends the nonbinding vote on executive compensation occur once every 3 years. The vote will now be taken on Proposal 4. You may vote for 1, 2 or 3 years or abstain. Remember, if you have already voted by proxy, you do not need to vote today unless you want to change your vote. In order to vote today, please press the Vote Now button on our meeting web page and follow the directions. [Voting]

At this time, while the online voting is underway, we will take questions from meeting participants regarding Proposal 4 through our meeting web page.

If you have a question, please click on the Question button and send in your question electronically. We will now give everyone opportunity to vote and submit any questions.

Seeing that everyone has had an opportunity to vote, I declare the polls closed on Proposal 4. While the Inspector of Elections is counting the votes, our President and Chief Executive Officer; Mr. Vito S. Pantilione will report on the affairs of the company for the fiscal year ended December 31, 2025.

Thank you, Mr. Chairman, and good morning, and welcome to our Annual Shareholder Meeting. 2025 was a pretty good year for Parke Bank, and we're going to talk a little bit about some of the highlights. I'm also going to discuss our first quarter financials for 2026 and and what we see for our company down the road in the near future. I know many of you already know our senior management team, but there are some new people in attendance today. Welcome. So I want to take a couple of minutes to introduce our team who played a very important role in our bank's financial performance in 2025. I'm going to start off with Ralph and we call him Guy Gallo. Guy is our Executive Vice President and our Chief Operating Officer. Guy has many responsibilities and that includes IT, asset quality, human resources, internal audit and our retail branches. And just in case if that isn't enough, Guy is also our liaison with our banking regulators. And boy, that's a full-time job by itself, with the ever-changing regulatory environment. I'm going to touch base on that in a few minutes. Next is D Calvelo. She has been an integral part of our company since we were in formation in 1998. D's Senior Vice President and our Chief Administrative Officer. D does a great job in his position because D started working when the bank first opened, she has worked or run every department in the bank, that may be accounting. And D is also responsible for our construction lending department, our loan administration department and as our Chief Administrative Officer. D works with other members of our senior management team making sure that we have a cohesive and collective effort in managing the bank investing issues when they arise. Included is working with our BSA and that stands for the Bank Secrecy Act, department and addressing the many challenges of the BSA regulatory environment. Next up is Nick Pantilione. Nick is the Senior Vice President and our Chief Lending Officer. Nick spearheaded our strong loan growth in 2025, and Nick continues to build our lending staff, not only in our region, but also developing our loan production office in South Carolina. In fact, I just read today that South Carolina was again the #1 state for the most people moving into the state in the country. Nick is responsible to work with our lenders to ensure that they are active in the market, identify any challenges that they may be facing with competition and monitoring their loan production. Nick individually has the largest book of loan business in the bank. And Nick also heads up our marketing department, and that's very important in generating deposits.and deposits are very important in supporting our loan growth. Jonathan Hill is next. John is a Senior Vice President and our Chief Financial Officer. John has been with us as CFO for a little over 2 years, and he and the staff have implemented many improvements supporting accounting and financial reporting as well as financial operations and strategy. John's leadership was critical in establishing our liquidity management plan as well as the enhancement of our forecasting and budgeting processes, and this is very important for our company. Financial reporting is constantly changing, and that's not only audit and regulatory requirements, but also SEC reporting requirements. And John and his staff do a great job on staying on top of these changes and making sure we are accurate and compliant. Next is Ralph Maladies. Ralph is a Senior Vice President and our Chief Risk Officer. As I reported last year, Ralph stepped up and became our BSA officer when our then BSA Officer left the bank unexpectedly. BSA continues to be a very important focus of the banking regulators and Parke Bank. So in addition to his Chief Risk Officer of responsibilities, Ralph works with our BSA staff and our BSA consultants to make sure that we have the policies and procedures in place and that our employees are following those procedures, to ensure that we have a strong and effective BSA platform that's in compliance with all regulatory requirements. BSA department is the largest department in our bank. And next is James, and we call him JB, Meadows. JB is a Senior Vice President and our Chief Credit Officer. JB has been in this position for about 2 years, and he's really doing a great job in enhancing our credit department's ability to promptly analyze and evaluate, not only new loans being generated by our lending staff but also conducting an internal review of our existing loan portfolio. JB is also responsible for our bank's credit policies, proposing changes where necessary.and making sure that our policies are being followed. JB was a prominent loan officer in the region, and that includes being a loan officer with Parke Bank for a period of time or being promoted to our Chief Credit Officer position. JB maintains a strong relationship for this loan contacts and introduces them to our lending officers who work with them processing new loan requests, and that's very important in supporting our loan growth. And last, but certainly not least, is Linda Kaiser, Linda is the Senior Vice President and our Corporate Secretary. Linda is semiretired, but continues to be responsible for our bank and Bank Corp. Board meetings.or that includes all the various filing and reporting responsibilities to go along with that position. And she's also responsible for taking the minutes for these meetings. Bank and Bancorp minutes are very complex and important. Regulatory requirements are very explicit on the level of robust minutes that are required. So we're lucky that Linda continues to take that responsibility. She does a really great job. And Linda also works with on various bank issues, including participating in senior management meetings and as always, [indiscernible] me out of jams that I always seem to be getting into. 2025 was a pretty interesting year. Our new President, Donald Trump, was sworn in for the second time. This time as the 47th President of our country. President immediately began signing executive orders covering all areas of the country and the world. Many of these orders reverse by administration's directives, and that includes opening the renewed development and production of oil and natural gas. And there was also a refocus of the banking regulatory agencies back to the safety and soundness of banks and not the ancillary areas that have previously put undue pressure, requirements and expenses on banks. And that's especially community banks. Margin pressure and deposit competition continued to be a challenge in the banking industry in 2025. And once again, that includes community banks. Cybersecurity is always going to be a critical risk to all industries, and that includes banks. AI expands into more and more businesses, and that includes Parke Bank. We are in the process of installing an AI program to help streamline and expedite processing of BSA requirements. And we are cautiously optimistic that we're going to see this program meet our expectations and reduce costs, but we can't lose sight of the risks that go with Al. The economy in 2025 experienced slow, although stable growth -- excuse me, as relating to credit demand. There are a lot of conflicting opinions on where the Fed should be with interest rates in 2025 and unfortunately, that continues in 2026 and not only adds to the difficulty of forecasting and bank product pricing. Regulatory burden was again a concern for community banks in '25, although it didn't rank as high as previous years, and that's because the administrative directives, and regulatory statements indicate that the examination process will return to the primary responsibility of safety and soundness, which I just mentioned as well as streamlining the examination process. Boy, we can only hope. So when you take a look at Parke Bank in '25, our total assets grew 5%, $2.25 billion, and this growth was primarily supported by an 8.9% growth in loans, and that went to $2.04 billion and 7.8% growth in deposits to $1.8 billion. Net growth in deposits helped support our loan growth. Very important number to our company and to our shareholders is the bank's net income, and that grew 37.3%, $37.8 million in 2025, and that's up from $27.5 million in 2024. Earnings per comp share was $3.20 and per diluted common share of $3.16 in 2025. Our return on average assets improved to 1.77% and that's up from 1.38%. And our return on average common equity improved to 12.07%, and that's up from 9.36%. And once again, my favorite ratio is the efficiency ratio. Our efficiency ratio was 35.03%, and that's a 15% improvement from 41.24% in 2024. The reason this ratio is my favorite is because it measures the level of efficiency and cost controls that a bank operates. And Parke Bank continues to have one of the best efficiency ratios in the community banking industry. And you've got to keep in mind that the lower the ratio, the better for this efficiency ratio. Shareholder equity increased $324.5 million, an increase -- an 8% increase from 2024. Capital remains key in banking, and we are at a Tier 1 leverage ratio of 15.61% as of December 31, 2025. That's a little less than 16.38% in 2024, and that's due to the repayment of our sub debt, and that's saving us a considerable amount of interest expense. Our Tier 1 leverage ratio is more than triple the regulatory definition of a well-capitalized bank, and that's 5%. We continue to focus on asset quality and a volatile economy, but we maintain an allowance credit losses of 1.7%, that's just a little less than 1.74%, 2024. Let's take a minute to look at our first quarter results for 2026, and we're going to compare these numbers for the first quarter of 2025. So assets increased [ 0.3% ] to $2.21 billion. Total gross loans increased 8.3% to [ $2.04 ] billion. And deposits experienced a little slower growth, evidencing fierce competition for deposits. Deposits grew 1.9% from the first quarter of 2025, to $1.7 billion in the first quarter of 2026. We're very pleased to report that our net income grew 52.3% from the first quarter of 2025, to the first quarter of 2026 to $11.8 million. And this growth in our net income was partially supported by the increased yield on our growing loan portfolio, and that's combined with continued tight control of expenses. Efficiency ratio of 31.39% in the first quarter of 2026. That's better than the 37.51% in the first quarter of 2025. Return on average assets improved 48% to [ 0.19% ], and our return on average equity improved 39.7% to 14.47%. Our net interest margin improved 29.9% to 4.17%. 2026, it started out with a lot of concerns over the interest rate battle. And if the Federal Reserve with lower rates before the new Fed Chairman, Kevin Warsh, I'm not sure I'm pronouncing that right, is confirmed and take all I think, that's just starting now, for the confirmation hearings. Warsh comes in with a lot of experience, including previously being a Fed Governor. It's also considered a moderate, how quick to overreact in raising or lowering interest rates. Clearly, the direction of interest rates is a major concern for the economy and certainly for the banking industry. And in my opinion, the important factor is consistency. No major rate swings either way. As the Russia-Ukraine war continues and, in some instances, worsened, United States and Israel made a preemptive strike on Iran [indiscernible] And that's what they named it. And it's been a major offensive with the United States and Israel bombing more than 10,000 military sites in Iran. This conflict has so many ramifications and certainly not the least of which is our men and women put in harm's way, protecting our country. Rising oil and gas prices are also a made problem. And this is made worse by Iran attempting and in some instances, succeeding to close the Strait of Hormuz, closed, it's open. It depends on what day it is. And that's a major oil and natural gas waterway were over 1/5 of the world's supply as through it. And boy, that's make inflation a challenge once again. And this affects consumers' wallet. And consumers' wallets account for 2/3 of the U.S. economy with reduced spending being a real possibility. And these risks could be greatly reduced if this is a short conflict and nobody knows if it's -- how sure it's going to be. I read an interesting article in a PC BB daily banking industry newsletter, say that fast 3 times, they discussed the massive use of GPS systems in this country, going up to take an exit ramp, and it's closed. And that com-Maddening voice comes on and says, recalculating. The destination is the same, but you will need to get there by a different route. And banking, gross profitability, safety and soundness is the destination, but you may need to recalculate and take different routes to get to your goals due to the changes in the economy and the market. Parke Bank is structured to be nimble and be able to move quickly and take different routes as the market changes. Our strong capital, earnings and tight control of expenses [indiscernible] our ability to navigate Parke Bank to possible challenging times. As well, though, is a being able to take advantage of opportunities in the market if and when they may occur. I want to again thank everyone for taking time out of their busy schedules to join us this morning. Our Board, management and staff are committed to continue working hard to support your trust an investment in Parke Bank. In fact, some of you may have already seen in our press release today, I'm happy to report that our Board of Directors approved an increase to our quarterly cash dividend to $0.20 per share takes effect in the second quarter 2026. I'm just going to check to see if we have any questions that we need to [indiscernible]. Well, we only had one question, and that was in regard to cash dividends. So we already addressed that. So thanks again. Chairman?

Thanks, Vito. The Inspector of Election has completed the count I will now read the report. Report of the Inspector of Elections confirms that a quorum has -- is and has been in attendance at this meeting for all purposes. Report shows that to [indiscernible], Dr. Edward Infantolino and Elizabeth A. Milavsky have been elected to serve for a 3-year term expiring in 2029 and until their successors are qualified and elected. The report also shows that more than a majority of the shares present have voted in favor of Proposal 2: ratification of the appointment of S.R. Snodgrass, P.C. as the company's independent auditor for the fiscal year ending December 31, 2026. And Proposal 3, the advisory nonbinding proposal regarding our executive compensation. The report also shows that a plurality of votes cast regarding Proposal 4, were voted in favor of holding advisory votes on executive compensation every year. The report of the Inspector of Elections has been accepted and approved and will be attached to the minutes of the meeting. There being no further business to come before the meeting, a motion to adjourn is in order. Mr. [indiscernible] has moved that the meeting be adjourned. Mr. Dobson has seconded the motion. Those in favor signify by saying "Aye." those oppose, say "No". The motion is carried and the meeting is adjourned. Thank you for attending online. We look forward to seeing you next year.

This concludes the meeting. You may now disconnect.