Highlights:
|
|
|
|
|
|
|
Net
Income:
|
|
$8.1
million
|
|
|
|
|
Revenue:
|
|
$28.9 million for Q2
2023
|
|
|
|
|
Total
Assets:
|
|
$1.98 billion,
decreased 0.1% over December 31, 2022
|
|
|
|
|
Total
Loans:
|
|
$1.79 billion,
increased 2.0% over December 31, 2022
|
|
|
|
|
Total
Deposits:
|
|
$1.45 billion,
decreased 8.2% over December 31, 2022
|
|
|
|
|
WASHINGTON TOWNSHIP, N.J., July 26,
2023 /PRNewswire/ -- Parke Bancorp, Inc. ("Parke
Bancorp" or the "Company") (NASDAQ: "PKBK"), the parent company of
Parke Bank, announced its operating
results for the three and six months ended June 30, 2023.
Highlights for the three and six months ended June 30,
2023:
- Net income available to common shareholders was $8.1 million, or $0.68 per basic common share and $0.67 per diluted common share, for the three
months ended June 30, 2023, a
decrease of $2.6 million, or 24.3%,
compared to net income available to common shareholders of
$10.7 million, or $0.90 per basic common share and $0.88 per diluted common share, for the same
quarter in 2022. The decrease was primarily driven by lower net
interest income, lower non-interest income, and higher non-interest
expense.
- Net interest income decreased 11.7% to $15.9 million for the three months ended
June 30, 2023, compared to
$18.0 million for the same period in
2022.
- Provision for credit losses was $500.0
thousand for the three months ended June 30, 2023, compared to a provision for credit
losses of $350.0 thousand for the
same period in 2022.
- Non-interest income decreased $918.0
thousand, or 36.5%, to $1.6
million for the three months ended June 30, 2023, compared to $2.5 million for the same period in 2022.
- Non-interest expense increased $661.0
thousand, or 11.6%, to $6.4
million for the three months ended June 30, 2023, compared to $5.7 million for the same period in 2022.
- Net income available to common shareholders was $19.2 million, or $1.61 per basic common share and $1.59 per diluted common share, for the six
months ended June 30, 2023, a
decrease of $1.6 million, or 7.5%,
compared to net income available to common shareholders of
$20.8 million, or $1.75 per basic common share and $1.71 per diluted common share, for the same
period in 2022. The decrease is primarily driven by lower net
interest income, lower non-interest income, and higher non-interest
expense, partially offset by lower provision for credit
losses.
- Net interest income decreased 5.9% to $33.0 million for the six months ended
June 30, 2023, compared to
$35.1 million for the same period in
2022.
- Non-interest income decreased $1.2
million, or 26.4%, to $3.4
million for the six months ended June
30, 2023, compared to $4.6
million for the same period in 2022.
- Non-interest expense increased 15.3% to $13.1 million for the six months ended
June 30, 2023, compared to
$11.4 million for the same period in
2022.
The following is a recap of the significant items that impacted
the three and six months ended June 30, 2023:
Interest income increased $6.8
million for the second quarter of 2023 compared to the same
period in 2022, primarily due to an increase in interest and fees
on loans of $6.3 million to
$25.8 million, a 32.4% increase,
primarily driven by an increase in average outstanding loan
balances and higher market interest rates. Additionally,
interest earned on average deposits held at the Federal Reserve
Bank ("FRB") increased by $412.0
thousand to $1.3 million
during the three months ended June 30, 2023, due to higher
interest rates paid on such deposits. For the six months
ended June 30, 2023, interest income increased $13.1 million from the same period in 2022,
primarily due to an increase in interest and fees on loans of
$11.7 million to $50.3 million, a 30.1% increase, primarily driven
by an increase in average outstanding loan balances and higher
market interest rates. Additionally, interest earned on
average deposits held at the FRB increased $1.4 million to $2.5
million during the six months ended June 30, 2023, due
to higher interest rates paid on such deposits.
Interest expense increased $8.9
million, or 350.4%, to $11.4
million for the three months ended June 30, 2023,
compared to the same period in 2022, primarily due to higher market
interest rates, combined with changes in the mix of deposits and
increased borrowings. For the six months ended June 30,
2023, interest expense increased $15.2
million, or 300.1%, to $20.3
million, primarily due to the same factors that drove the
three month change.
The provision for credit losses was $500.0 thousand for the three months ended
June 30, 2023, compared to $350.0
thousand for the same period in 2022. For the six
months ended June 30, 2023, the provision for credit losses
decreased $1.9 million, compared to
an increase of $350.0 thousand for
the same period in 2022. The provision credit for the six
months ended June 30, 2023 was
primarily related to decreases in loss factors related to the
construction, commercial owner occupied, and residential 1 to 4
family investment portfolios from December
31, 2022, partially offset by increases in outstanding
balance.
Non-interest income decreased $918.0
thousand, or 36.5%, for the three months ended June 30,
2023 compared to the same period in 2022, primarily as a result of
a decrease in service fees on deposit accounts of $382.0 thousand, a decrease in the gain on sale
of OREO of $281.0 thousand, and a
decrease in loan fees of $200.0
thousand. The decrease in service fees on deposit
accounts was primarily attributable to a decrease in service fees
from deposit accounts related to our cannabis related
businesses. For the six months ended June 30, 2023,
non-interest income decreased $1.2 million, or 26.4%, compared to the same
period in 2022, to $3.4
million. The decrease was primarily driven by a
$483.0 thousand decrease in service
fees on deposit accounts, a decrease in gain on sale of OREO of
$328.0 thousand, and a $297.0 thousand decrease in loan fees.
Non-interest expense increased $661.0
thousand, or 11.5%, for the three months ended June 30,
2023 compared to the same period in 2022, primarily driven by an
increase in compensation and benefits of $482.0 thousand and an increase in OREO expense
of $141.0 thousand. The
increase in compensation and benefits was due to an increase in
salary expense of $100.0 thousand,
and a reduction in deferred loan origination costs of $403.0 thousand due to a reduction in the number
of loans originated during the quarter. The increase in OREO
expense is mainly due to increases in legal, utilities, and real
estate taxes related to our OREO portfolio. For the six
months ended June 30, 2023, non-interest expense increased
$1.7 million, or 15.3%, to
$13.1 million, compared to the same
period in 2022. The increase in non-interest expense was
primarily driven by an increase in compensation and benefits of
$1.4 million, and an increase in OREO
expense of $281.0 thousand. The
increase in compensation and benefits was primarily due to an
increase in salary expense of $682.0
thousand, a reduction in deferred loan origination costs of
$554.0 thousand due to a decrease in
the number of loans originated, and an increase in payroll taxes of
$80.0 thousand. The increase in
OREO expense is mainly due to increases in legal, utilities, and
real estate taxes related to our OREO portfolio.
Income tax expense decreased $1.2
million for the second quarter of 2023 compared to the same
period in 2022. For the six months ended June 30, 2023
income tax expense decreased $1.2
million, compared to the same period in 2022. The
effective tax rate for the three and six months ended June 30,
2023 was 23.2% and 23.5%, respectively, compared to 25.6% and 25.4%
for the same periods in 2022.
June 30, 2023 discussion of financial
condition
- Total assets were flat at $1.98
billion at June 30, 2023 as
compared to December 31, 2022.
- Cash and cash equivalents totaled $137.5
million at June 30, 2023, as
compared to $182.2 million at
December 31, 2022. The decrease in
cash and cash equivalents was due to a decrease in deposits, as
well as an increase in loans receivable, partially offset by an
increase in FHLBNY and FRB borrowings.
- The investment securities portfolio decreased to $17.8 million at June 30,
2023, from $18.7 million at
December 31, 2022, a decrease of
$986.0 thousand, or 5.3%, primarily
due to pay downs of securities, and partially offset by an increase
in security valuations.
- Gross loans increased to $1.79
billion at June 30, 2023, from
$1.75 billion at December 31, 2022, an increase of $34.6 million or 2.0%.
- Nonperforming loans at June 30,
2023 increased to $19.5
million, representing 1.09% of total loans, an increase of
$3.2 million, or 19.6%, from
$16.3 million of nonperforming loans
at December 31, 2022. The increase in
nonperforming loans was primarily due to the modification of two
commercial real estate loans where unpaid interest and fees were
capitalized to the loans principal balance, as well as the addition
of two commercial real estate loans that became nonperforming
during the quarter. OREO at June 30,
2023 was $1.7 million,
compared to $1.6 million at
December 31, 2022. Nonperforming
assets (consisting of nonperforming loans and OREO) represented
1.07% and 0.90% of total assets at June 30,
2023 and December 31, 2022,
respectively. Loans past due 30 to 89 days were $1.7 million at June 30,
2023, an increase of $1.5
million from December 31,
2022.
- The allowance for credit losses was $32.0 million at June 30,
2023, as compared to $31.8
million at December 31, 2022.
The ratio of the allowance for credit losses to total loans was
1.79% and 1.82% at June 30, 2023 and
at December 31, 2022, respectively.
The ratio of allowance for credit losses to non-performing loans
was 164.6% at June 30, 2023, compared
to 195.7%, at December 31, 2022.
- Other assets increased $8.7
million during the six months ended June 30, 2023, to $39.0
million at June 30, 2023 from
$30.3 million at December 31, 2022, primarily driven by an
increase of $4.9 million in
restricted FHLBNY stock as a result of the increase in associated
borrowings, and a $4.6 million
increase in prepaid taxes.
- Total deposits were $1.45 billion
at June 30, 2023, down from
$1.58 billion at December 31, 2022, a decrease of $129.6 million or 8.2% compared to December 31, 2022. The decrease in deposits was
attributed to a decrease in non-interest demand deposits of
$81.6 million, a decrease in savings
deposits of $59.6 million, and a
decrease in NOW accounts of $16.5
million, partially offset by an increase in time deposits of
$16.6 million, and an increase in
money market balances of $11.4
million.
- Total borrowings increased $113.1
million during the six months ended June 30, 2023, to $239.2
million at June 30, 2023 from
$126.1 million at December 31, 2022, driven by $103.0 million in FHLBNY term borrowings and
$10.0 million in FRB borrowings.
- Total equity increased to $279.1
million at June 30, 2023, up
from $266.0 million at December 31, 2022, an increase of $13.1 million, or 4.9%, primarily due to the
retention of earnings, partially offset by the payment of
$4.3 million of cash dividends.
Tangible book value per common share at June
30, 2023 was $23.33, compared
to $22.24 at December 31, 2022.
CEO outlook and commentary
Vito S. Pantilione, President and
Chief Executive Officer of Parke Bancorp, Inc. and Parke Bank, provided the following
statement:
"Many challenges continue to face the economy and the banking
industry. Although it has been reported that inflation has
slowed, it still has not reached the Federal Reserve Board target
level of 2%. Comments have been made that most likely
additional interest rate increases will be required in 2023. The
community banking industry is still facing intense competition for
deposits, which has caused an increase in interest expense. The
uncertainty in the economy supports a level of caution in
generating new loans, evidenced by the relatively slow growth in
our loan portfolio in 2023. In my experience, what I have
seen is that this level of interest rate increases have had an
adverse effect on the real estate industry. There are some
real estate markets that have begun to see lower values, while
others have shown surprising strength. Once again forecasts
are mixed with some stating a soft landing with the current
economic challenges and others believing that the real estate
market is facing declining values. There does not appear to
be a clear direction of the real estate market, which supports
continued caution in generating new loans."
"The battle for deposits continues to increase our interest
expense, which although somewhat offset by the increased yield of
our loan portfolio, has an adverse effect on our net interest
income. We have substantial on and off balance sheet
liquidity which supports addressing these challenges."
"Our asset quality remains strong with little change from
December 31, 2022, as we maintain
strong credit loan reserves through the newly implemented CECL
methodology. We continue to generate net income, increasing
the equity and tangible book value for our shareholders of our
bank. Parke Bank is committed
to controlling expenses while identifying opportunities in the
market, and supporting the continued strength of our Company and
Parke Bank."
Forward Looking Statement Disclaimer
This release may contain forward-looking statements. Such
forward-looking statements are subject to risks and uncertainties
which may cause actual results to differ materially from those
currently anticipated due to a number of factors; our ability to
maintain a strong capital base, strong earning and strict cost
controls; our ability to generate strong revenues with increased
interest income and net interest income;; our ability to continue
the financial strength and growth of our Company and Parke Bank; our ability to continue to increase
shareholders' equity, maintain strong reserves and good credit
quality; our ability to ensure our Company continues to have strong
loan loss reserves; our ability to ensure that our loan loss
provision is well positioned for the future; our ability to face
current challenges in the market; our ability to be well positioned
to take advantage of opportunities; our ability to continue to
reduce our nonperforming loans and delinquencies and the expenses
associated with them; our ability to realize a high recovery rate
on disposition of troubled assets; our ability to continue to pay a
dividend in the future; our ability to enhance shareholder value in
the future; our ability to continue growing our Company, our
earnings and shareholders' equity; and our ability to continue to
grow our loan portfolio; the possibility of additional corrective
actions or limitations on the operations of the Company. and
Parke Bank being imposed by banking
regulators, therefore, readers should not place undue reliance on
any forward-looking statements. The Company does not undertake, and
specifically disclaims, any obligations to publicly release the
results of any revisions that may be made to any forward-looking
statements to reflect the occurrence of anticipated or
unanticipated events or circumstances after the date of such
circumstance.
(PKBK-ER)
Financial Supplement:
Table 1: Condensed
Consolidated Balance Sheets (Unaudited)
|
|
Parke Bancorp, Inc. and
Subsidiaries
|
Condensed Consolidated
Balance Sheets
|
|
|
June 30,
|
|
December 31,
|
|
2023
|
|
2022
|
|
(Dollars in
thousands)
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$
137,497
|
|
$
182,150
|
Investment
securities
|
17,758
|
|
18,744
|
Loans, net of unearned
income
|
1,786,046
|
|
1,751,459
|
Less: Allowance for
credit losses
|
(32,015)
|
|
(31,845)
|
Net loans
|
1,754,031
|
|
1,719,615
|
Premises and equipment,
net
|
5,749
|
|
5,958
|
Bank owned life
insurance (BOLI)
|
28,435
|
|
28,145
|
Other assets
|
38,996
|
|
30,303
|
Total
assets
|
$
1,982,466
|
|
$
1,984,915
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
|
Non-interest bearing
deposits
|
$
270,992
|
|
$
352,546
|
Interest bearing
deposits
|
1,175,393
|
|
1,223,436
|
FHLBNY
borrowings
|
186,150
|
|
83,150
|
FRB Advances
|
10,000
|
|
—
|
Subordinated
debentures
|
43,016
|
|
42,921
|
Other
liabilities
|
17,775
|
|
16,828
|
Total
liabilities
|
1,703,326
|
|
1,718,881
|
|
|
|
|
Total shareholders'
equity
|
279,140
|
|
266,034
|
Total
equity
|
279,140
|
|
266,034
|
|
|
|
|
Total
liabilities and equity
|
$
1,982,466
|
|
$
1,984,915
|
Table 2: Consolidated
Income Statements (Unaudited)
|
|
|
|
|
|
|
|
|
For the three months
ended June 30,
|
|
For the six months
ended June 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(Dollars in thousands,
except per share data)
|
Interest
income:
|
|
|
|
|
|
|
|
Interest and fees on
loans
|
$
25,763
|
|
$
19,458
|
|
$
50,307
|
|
$
38,657
|
Interest and dividends
on investments
|
227
|
|
182
|
|
437
|
|
371
|
Interest on deposits
with banks
|
1,277
|
|
865
|
|
2,547
|
|
1,114
|
Total interest
income
|
27,267
|
|
20,505
|
|
53,291
|
|
40,142
|
Interest
expense:
|
|
|
|
|
|
|
|
Interest on
deposits
|
9,079
|
|
1,809
|
|
16,661
|
|
3,650
|
Interest on
borrowings
|
2,321
|
|
722
|
|
3,615
|
|
1,418
|
Total interest
expense
|
11,400
|
|
2,531
|
|
20,276
|
|
5,068
|
Net interest
income
|
15,867
|
|
17,974
|
|
33,015
|
|
35,074
|
(Recovery of) provision
for credit losses
|
500
|
|
350
|
|
(1,900)
|
|
350
|
Net interest income
after provision for credit losses
|
15,367
|
|
17,624
|
|
34,915
|
|
34,724
|
Non-interest
income
|
|
|
|
|
|
|
|
Service fees on
deposit accounts
|
931
|
|
1,313
|
|
2,146
|
|
2,629
|
Gain on sale of SBA
loans
|
—
|
|
22
|
|
—
|
|
22
|
Other loan
fees
|
241
|
|
441
|
|
419
|
|
716
|
Bank owned life
insurance income
|
147
|
|
141
|
|
290
|
|
280
|
Net gain on sale and
valuation adjustment of OREO
|
—
|
|
281
|
|
—
|
|
328
|
Other
|
277
|
|
316
|
|
523
|
|
615
|
Total non-interest
income
|
1,596
|
|
2,514
|
|
3,378
|
|
4,590
|
Non-interest
expense
|
|
|
|
|
|
|
|
Compensation and
benefits
|
2,940
|
|
2,458
|
|
6,581
|
|
5,145
|
Professional
services
|
494
|
|
541
|
|
1,087
|
|
1,092
|
Occupancy and
equipment
|
645
|
|
624
|
|
1,290
|
|
1,270
|
Data
processing
|
367
|
|
313
|
|
668
|
|
637
|
FDIC insurance and
other assessments
|
347
|
|
259
|
|
573
|
|
546
|
OREO
expense
|
198
|
|
56
|
|
370
|
|
90
|
Other operating
expense
|
1,381
|
|
1,460
|
|
2,562
|
|
2,610
|
Total non-interest
expense
|
6,372
|
|
5,711
|
|
13,131
|
|
11,390
|
Income before income
tax expense
|
10,591
|
|
14,427
|
|
25,162
|
|
27,924
|
Income tax
expense
|
2,461
|
|
3,689
|
|
5,902
|
|
7,095
|
Net income attributable
to Company
|
8,130
|
|
10,738
|
|
19,260
|
|
20,829
|
Less: Preferred stock
dividend
|
(7)
|
|
(7)
|
|
(14)
|
|
(14)
|
Net income available to
common shareholders
|
$
8,123
|
|
$
10,731
|
|
$
19,246
|
|
$
20,815
|
Earnings per common
share
|
|
|
|
|
|
|
|
Basic
|
$
0.68
|
|
$
0.90
|
|
$
1.61
|
|
$
1.75
|
Diluted
|
$
0.67
|
|
$
0.88
|
|
$
1.59
|
|
$
1.71
|
Weighted average common
shares outstanding
|
|
|
|
|
|
|
|
Basic
|
11,945,424
|
|
11,914,454
|
|
11,944,794
|
|
11,909,892
|
Diluted
|
12,119,004
|
|
12,185,252
|
|
12,139,899
|
|
12,182,786
|
Table 3: Operating
Ratios
|
|
|
Three months
ended
|
|
Six months
ended
|
|
June 30,
|
|
June 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Return on average
assets
|
1.67 %
|
|
2.13 %
|
|
1.99 %
|
|
2.05 %
|
Return on average
common equity
|
11.74 %
|
|
17.54 %
|
|
14.15 %
|
|
17.39 %
|
Interest rate
spread
|
2.45 %
|
|
3.34 %
|
|
2.66 %
|
|
3.22 %
|
Net interest
margin
|
3.34 %
|
|
3.61 %
|
|
3.49 %
|
|
3.49 %
|
Efficiency
ratio*
|
36.49 %
|
|
27.87 %
|
|
36.08 %
|
|
28.72 %
|
*
Efficiency ratio is calculated using non-interest expense
divided by the sum of net interest income and non-interest
income.
|
Table 4: Asset Quality
Data
|
|
|
June 30,
|
|
December 31,
|
|
2023
|
|
2022
|
|
(Amounts in thousands
except ratio data)
|
Allowance for credit
losses on loans
|
$
32,015
|
|
$
31,845
|
Allowance for credit
losses to total loans
|
1.79 %
|
|
1.82 %
|
Allowance for credit
losses to non-accrual loans
|
164.55 %
|
|
195.66 %
|
Non-accrual
loans
|
$
19,456
|
|
$
16,276
|
OREO
|
$
1,673
|
|
$
1,550
|
View original
content:https://www.prnewswire.com/news-releases/parke-bancorp-inc-announces-second-quarter-2023-earnings-301885339.html
SOURCE Parke Bancorp, Inc.