PARKE BANCORP, INC.PKBK

PARKE BANCORP, INC. Income Taxes Disclosure

10-KFiled Mar 12, 20252 min read
Income Taxes
Income tax expense for 2024 and 2023 consisted of the following:
 20242023
 (Dollars in thousands)
Current tax expense:  
Federal$7,265 $6,886 
State1,394 2,336 
 8,659 9,222 
Deferred tax expense/(benefit)126 6 
Income tax expense$8,785 $9,228 
The components of the net deferred tax asset at December 31, 2024 and 2023 were as follows:
 20242023
 (Dollars in thousands)
Deferred tax assets:  
Allowance for credit losses$7,197 $7,575 
Supplemental Executive Retirement Plan ("SERP")1,522 1,636 
Deferred Loan Fees1,411 1,322 
Non-accrued interest44 58 
Non-qualified stock options and restricted stock376 318 
Write-down on partnership investment130 138 
Unrealized loss on securities117 140 
Lease liability2,212 2,455 
PPP Deferred Loan Fees— 1 
Other269 210 
 13,278 13,853 
  Valuation allowance(130)(138)
Total gross deferred tax assets13,148 13,715 
Deferred tax liabilities:
Depreciation(58)(71)
Partnership income(54)(58)
Right of use asset(2,212)(2,455)
Deferred loan costs(1,711)(1,869)
Total gross deferred tax liabilities(4,035)(4,453)
Net deferred tax asset$9,113 $9,262 

A reconciliation of the Company’s effective income tax rate with the statutory federal rate for 2024 and 2023 is as follows:
 20242023
 (Dollars in thousands)
At Federal statutory rate$7,622 $7,915 
Adjustments resulting from:  
State income taxes, net of Federal tax benefit1,776 1,557 
Tax exempt income(20)(20)
BOLI(138)(155)
Stock compensation(26)(8)
Nondeductible expenses2 1 
Nondeductible executive compensation32 84 
Other(463)(146)
 $8,785 $9,228 

Management has evaluated the Company’s tax positions and concluded that the Company has taken no uncertain tax positions that require adjustments to the financial statements. With few exceptions, the Company is no longer subject to income tax examinations by federal and local tax authorities for years before 2021, and by the State of New Jersey for years before 2020. The Company is still subject to examination for 2021 and after.
The Company recorded income tax expense of $8.8 million on income before taxes of $36.3 million on for the year ended December 31, 2024, resulting in an effective tax rate of 24.2%, compared to income tax expense of $9.2 million on income before taxes of $37.7 million for the same period of 2023, resulting in an effective tax rate of 24.5%.

About Income Taxes Disclosures

The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.

Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.

Other Available Disclosures

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