Highlights:
|
|
|
|
|
|
|
|
Net
Income:
|
|
$8.2 million for Q4
2023
|
Revenue:
|
|
$31.8 million for Q4
2023
|
Total
Assets:
|
|
$2.02 billion,
increased 1.9% from December 31, 2022
|
Total
Loans:
|
|
$1.79 billion,
increased 2.0% from December 31, 2022
|
Total
Deposits:
|
|
$1.55 billion,
decreased 1.5% from December 31, 2022
|
|
|
WASHINGTON TOWNSHIP, N.J., Jan. 24,
2024 Parke Bancorp, Inc. ("Parke Bancorp" or
the "Company") (NASDAQ: "PKBK"), the parent company of Parke Bank (the "Bank"), announced its operating
results for the quarter ended December 31,
2023.
Highlights for the fourth quarter and year ended
December 31, 2023:
- Net income available to common shareholders was $8.2 million, or $0.68 per basic common share and $0.67 per diluted common share, for the three
months ended December 31, 2023, a
decrease of $2.3 million, or 21.8%,
compared to net income available to common shareholders of
$10.4 million, or $0.88 per basic common share and $0.86 per diluted common share, for the same
quarter in 2022. The decrease is primarily driven by lower net
interest income, partially offset by a decrease in the provision
for credit losses.
- Net interest income decreased 18.0% to $15.5 million for the three months ended
December 31, 2023, compared to
$18.9 million for the same period in
2022.
- Provision for credit losses was a recovery of $0.5 million for the three months ended
December 31, 2023, compared to a
provision of $0.9 million for the
same period in 2022.
- Non-interest income decreased $0.3
million, or 18.0%, to $1.5
million for the three months ended December 31, 2023, compared to $1.8 million for the same period in 2022.
- Non-interest expense increased $0.1
million, or 2.2%, to $6.3
million for the three months ended December 31, 2023, compared to $6.2 million for the same period in 2022.
- Net income available to common shareholders was $28.4 million, or $2.38 per basic common share and $2.35 per diluted common share, for the fiscal
year ended December 31, 2023, a
decrease of $13.4 million, or 32.0%,
compared to net income available to common shareholders of
$41.8 million, or $3.51 per basic common share and $3.44 per diluted common share, for the fiscal
year ended December 31, 2022. The
decrease was primarily due to a $11.4
million increase in non-interest expenses resulting from the
one-time recognition of a $9.5
million contingent loss previously disclosed by the Company
in the third quarter as well as an increase in compensation and
benefits expense, lower net interest income, and lower non-interest
income, partially offset by lower provision for credit losses.
- Net interest income decreased 12.4% to $64.2 million for the fiscal year ended
December 31, 2023, compared to
$73.3 million for the same period in
2022.
- Provision for credit losses decreased $3.9 million to a recovery of $2.1 million for the fiscal year ended
December 31, 2023, compared to a
provision of $1.8 million for the
same period in 2022.
- Non-interest expense increased $11.4
million, or 48.0%, to $35.3
million, for the fiscal year ended December 31, 2023, compared to $23.8 million for the same period in 2022. The
increase in non-interest expense in 2023 was primarily due to the
recognition of the $9.5 million
contingent loss referred to above.
The following is a recap of the significant items that impacted
the fourth quarter of 2023 and the year ended
December 31, 2023:
Interest income increased $5.3
million for the fourth quarter of 2023 compared to the same
period in 2022, primarily due to an increase in interest and fees
on loans of $5.1 million to
$28.5 million, due to higher average
outstanding loan balances and higher interest rates.
Additionally, interest earned on average deposits held at the
Federal Reserve Bank ("FRB") increased to $1.5 million from $1.4
million, due to higher interest rates paid on such
deposits. For the year ended December 31, 2023, interest
income increased $25.2 million from
the same period in 2022, primarily driven by an increase in
interest and fees on loans of $23.2
million, due to higher average outstanding loan balances and
higher interest rates, as well as an increase in interest earned on
average deposits held at the FRB of $1.8
million.
Interest expense increased $8.7
million for the three months ended December 31, 2023,
compared to the same period in 2022, primarily due to higher market
interest rates, as well as a change in the deposit mix with a
reduction in non-interest bearing demand deposits and an increase
in brokered deposits. For the year ended December 31,
2023, interest expense increased $34.3
million, primarily due to higher market interest rates, as
well as a change in the deposit mix with a reduction in
non-interest bearing demand deposits and an increase in brokered
deposits.
The provision for credit losses decreased $1.3 million for the three months ended
December 31, 2023, compared to the same period in 2022, as a
result of a decrease in vintage loss rates partially offset by an
increase in outstanding loan balances. For the year ended
December 31, 2023, the provision for credit losses decreased
$3.9 million from the same period in
2022 due to a decrease in vintage loss rates and a change in the
loan portfolio mix, partially offset by an increase in outstanding
loan balances.
Non-interest income decreased $0.3
million for the three months ended December 31, 2023
compared to the same period in 2022, primarily as a result of a
decrease in service fees on deposit accounts of $0.4 million, partially offset by an increase in
income on Bank Owned Life Insurance of $0.1
million. For the year ended December 31, 2023,
non-interest income decreased $1.7 million, primarily driven by a decrease
in service fees on deposit accounts of $1.1
million, a decrease in loan fees of $0.5 million, and a decrease in the net gain on
OREO of $0.3 million, partially
offset by an increase in Bank Owned Life Insurance Income of
$0.2 million. The decrease in
service fees on deposit accounts was primarily attributable to a
decline in fees from our cannabis related businesses deposit
accounts.
Non-interest expense increased $0.1
million for the three months ended December 31, 2023
compared to the same period in 2022, primarily driven by an
increase in OREO expense of $0.1
million. For the twelve months ended December 31,
2023, non-interest expense increased $11.4
million, mainly due to a $9.1
million increase in other operating expenses resulting from
the recognition of the previously mentioned $9.5 million contingent loss, an increase in
compensation and benefits of $1.5
million, an increase in OREO expense of $0.4 million, an increase in FDIC insurance
and other assessments of $0.2
million, and an increase in data processing of $0.1 million. The increase in compensation
and benefits was primarily due to a $0.5 increase in salaries, and a $0.9 million decrease in deferred loan
origination costs, attributable to a reduction in the number of
loans originated.
Income tax expense decreased $0.3
million for the fourth quarter of 2022 and decreased
$5.0 million for the quarter and
fiscal year ended December 31, 2023, respectively, compared to
the same periods in 2022. The effective tax rate for the fourth
quarter of 2023 and the year ended December 31, 2023 was 26.8%
and 24.5%, respectively, compared to 23.8% and 25.4% for the same
periods in 2022.
December 31, 2023 discussion of financial
condition
- Total assets increased to $2.02
billion at December 31, 2023,
from $1.98 billion at December 31, 2022, an increase of $38.6 million, or 1.9%.
- Cash and cash equivalents totaled $180.4
million at December 31, 2023,
as compared to $182.2 million at
December 31, 2022.
- The investment securities portfolio decreased to $16.4 million at December
31, 2023, from $18.7 million
at December 31, 2022, a decrease of
$2.4 million, or 12.6%, primarily due
to pay downs of securities.
- Gross loans increased to $1.79
billion at December 31, 2023,
from $1.75 billion at December 31, 2022, an increase of $35.9 million or 2.0%. The increase in loans was
primarily due to an increase in residential 1 to 4 family
investment portfolio of $41.8
million; commercial owner occupied of $16.4 million; commercial non-owner occupied of
$12.2 million, and residential 1 to 4
family of $11.1 million, partially
offset by a decrease in construction other of $27.8 million.
- Nonperforming loans at December 31,
2023 decreased to $7.3
million, representing 0.41% of total loans, a decrease of
$9.0 million, from $16.3 million of nonperforming loans at
December 31, 2022. The decrease was
driven by two commercial real estate non-owner occupied loans that
migrated to performing status during the year. OREO at December 31, 2023 was $1.6
million, which was unchanged from $1.6 million at December
31, 2022. Nonperforming assets (consisting of nonperforming
loans and OREO) represented 0.44% and 0.90% of total assets at
December 31, 2023 and December 31, 2022, respectively. Loans past due
30 to 89 days were $3.9 million at
December 31, 2023, an increase of
$3.5 million from December 31, 2022.
- The allowance for credit losses was $32.1 million at December
31, 2023, as compared to $31.8
million at December 31, 2022.
The ratio of the allowance for credit losses to total loans was
1.80% and 1.82% at December 31, 2023
and at December 31, 2022,
respectively. The ratio of allowance for credit losses to
non-performing loans was 442.5% at December
31, 2023, compared to 195.7%, at December 31, 2022.
- Total deposits were $1.55 billion
at December 31, 2023, down from
$1.58 billion at December 31, 2022, a decrease of $23.2 million or 1.5% compared to December 31, 2022. The decrease in deposits was
attributed to a decrease in non-interest demand deposits of
$120.4 million, savings deposits of
$105.1 million, and interest checking
of $20.1 million, partially offset by
an increase in money market and time deposit balances of
$222.4 million. Brokered deposits,
included in the above balances, increased $82.7 million, to $223.4
million at December 31, 2023,
from $140.8 million at December 31, 2022. Deposits from our cannabis
related businesses decreased $80.7
million to $96.7 million at
December 31, 2023, compared to
$177.3 million at December 31, 2022, due to increased competition
for such deposits, and consolidation within the cannabis
industry.
- Total borrowings increased $42.0
million during the twelve months ended December 31, 2023, to $168.1 million at December
31, 2023 from $126.1 million
at December 31, 2022, driven by an
increase of $41.9 million in Federal
Home Loan Bank of New York
("FHLBNY") advances.
- Total equity increased to $284.3
million at December 31, 2023,
up from $266.0 million at
December 31, 2022, an increase of
$18.3 million, or 6.9%, primarily due
to the retention of earnings, partially offset by the payment of
$8.6 million of cash dividends.
CEO outlook and commentary
Vito S. Pantilione, President and
Chief Executive Officer of Parke Bancorp, Inc. and Parke Bank, provided the following
statement:
"2023 was a challenging year for the country, our region and the
banking industry. Inflation remained high, although some relief was
experienced in the 4th quarter and interest rates
remained high after an unprecedented 550 basis point increase over
the last 18 months. There were also bank failures in 2023.
World military conflicts continue to grow creating concern for the
many innocent lives being lost and the uncertainty of the effect
these wars are having on the world economy, including the United States. The concern over the future
of our economy is growing, which some interpret as being confirmed
by Fed statements indicating the possibility of lowering interest
rates in 2024."
"The challenges in 2023 were compounded for our Company with the
booking of a $9.5 million contingent
loss. We previously reported the $9.5
million theft by one of our armored car courier companies
and, are aggressively pursuing multiple avenues of restitution,
including existing insurance policies."
"Maintaining deposits remained challenging in 2023, triggering
higher rates and the offering of special deposit programs. This
caused a substantial increase in our interest expense as rates
continued to climb. If interest rates do moderate in 2024, we
anticipate seeing a lower cost of funding and stronger deposits.
Loan growth was less than projected, again due to higher interest
rates and difficulties in the real estate industry. It became more
difficult to qualify new loan requests with the higher debt
service. Increased rents did not keep pace with the rising debt
service cost. We have, however, seen an increase in loan activity
in the beginning of 2024 due to the anticipated interest rate
cuts."
"Although 2023 had many challenges as mentioned above, our
Company generated a Return On Average Assets of 1.45% and a Return
On Average Equity over 10%. The probability of a volatile, and
potentially worsening, economy and market still exists. We continue
to be well structured to face these challenges with strong capital,
strong asset quality and strong reserves. This enables our company
to move forward with a focus on growth and continued profitability,
although with caution. The Board and Management of our company are
committed to supporting the confidence and investment of our
shareholders."
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 strong capital, strong asset quality and strong reserves;
our ability to recover or partially offset any losses resulting
from loss of stored or missing cash; 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, good credit quality;
our ability to be well structured to face challenging economic
conditions; our ability to ensure that our loan loss provision is
well positioned for the future; 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 Parke Bancorp, Inc. and
Parke Bank being imposed by banking
regulators, therefore, readers should not place undue reliance on
any forward-looking statements. Parke Bancorp, Inc. 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
|
|
|
December 31,
|
|
December 31,
|
|
2023
|
|
2022
|
|
(Dollars in
thousands)
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$
180,376
|
|
$
182,150
|
Investment
securities
|
16,387
|
|
18,744
|
Loans, net of unearned
income
|
1,787,340
|
|
1,751,459
|
Less: Allowance for
credit losses
|
(32,131)
|
|
(31,845)
|
Net loans
|
1,755,209
|
|
1,719,614
|
Premises and equipment,
net
|
5,579
|
|
5,958
|
Bank owned life
insurance (BOLI)
|
28,415
|
|
28,145
|
Other assets
|
37,534
|
|
30,304
|
Total
assets
|
$
2,023,500
|
|
$
1,984,915
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
|
Non-interest bearing
deposits
|
$
232,189
|
|
$
352,546
|
Interest bearing
deposits
|
1,320,638
|
|
1,223,436
|
FHLBNY
borrowings
|
125,000
|
|
83,150
|
Subordinated
debentures
|
43,111
|
|
42,921
|
Other
liabilities
|
18,245
|
|
16,828
|
Total
liabilities
|
1,739,183
|
|
1,718,881
|
|
|
|
|
Total shareholders'
equity
|
284,317
|
|
266,034
|
Total
equity
|
284,317
|
|
266,034
|
|
|
|
|
Total
liabilities and equity
|
$
2,023,500
|
|
$
1,984,915
|
Table 2: Consolidated
Income Statements (Unaudited)
|
|
|
|
|
|
|
|
|
For the three months
ended
December 31,
|
|
For the twelve months
ended December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(Dollars in thousands,
except share data)
|
Interest
income:
|
|
|
|
|
|
|
|
Interest and fees on
loans
|
$
28,459
|
|
$
23,389
|
|
$ 106,061
|
|
$
82,900
|
Interest and dividends
on investments
|
303
|
|
207
|
|
1,048
|
|
772
|
Interest on deposits
with banks
|
1,537
|
|
1,407
|
|
5,595
|
|
3,811
|
Total interest
income
|
30,299
|
|
25,003
|
|
112,704
|
|
87,483
|
Interest
expense:
|
|
|
|
|
|
|
|
Interest on
deposits
|
13,214
|
|
5,178
|
|
41,259
|
|
11,071
|
Interest on
borrowings
|
1,570
|
|
909
|
|
7,231
|
|
3,085
|
Total interest
expense
|
14,784
|
|
6,087
|
|
48,490
|
|
14,156
|
Net interest
income
|
15,515
|
|
18,916
|
|
64,214
|
|
73,327
|
(Recovery of) provision
for credit losses
|
(451)
|
|
850
|
|
(2,051)
|
|
1,800
|
Net interest income
after (recovery of) provision for credit losses
|
15,966
|
|
18,066
|
|
66,265
|
|
71,527
|
Non-interest
income
|
|
|
|
|
|
|
|
Service fees on
deposit accounts
|
724
|
|
1,165
|
|
3,872
|
|
4,927
|
Gain on sale of SBA
loans
|
—
|
|
—
|
|
—
|
|
98
|
Other loan
fees
|
239
|
|
241
|
|
851
|
|
1,379
|
Bank owned life
insurance income
|
294
|
|
144
|
|
737
|
|
568
|
Net gain on sale and
valuation adjustment of OREO
|
—
|
|
—
|
|
38
|
|
328
|
Other
|
223
|
|
255
|
|
1,194
|
|
1,082
|
Total non-interest
income
|
1,480
|
|
1,805
|
|
6,692
|
|
8,382
|
Non-interest
expense
|
|
|
|
|
|
|
|
Compensation and
benefits
|
2,925
|
|
2,871
|
|
12,340
|
|
10,835
|
Professional
services
|
583
|
|
579
|
|
2,328
|
|
2,249
|
Occupancy and
equipment
|
666
|
|
631
|
|
2,604
|
|
2,522
|
Data
processing
|
348
|
|
308
|
|
1,385
|
|
1,293
|
FDIC insurance and
other assessments
|
332
|
|
239
|
|
1,292
|
|
1,050
|
OREO
expense
|
229
|
|
89
|
|
839
|
|
493
|
Other operating
expense
|
1,204
|
|
1,434
|
|
14,479
|
|
5,391
|
Total non-interest
expense
|
6,287
|
|
6,151
|
|
35,267
|
|
23,833
|
Income before income
tax expense
|
11,159
|
|
13,720
|
|
37,690
|
|
56,076
|
Income tax
expense
|
2,986
|
|
3,266
|
|
9,228
|
|
14,253
|
Net income attributable
to Company
|
8,173
|
|
10,454
|
|
28,462
|
|
41,823
|
Less: Preferred stock
dividend
|
(6)
|
|
(7)
|
|
(26)
|
|
(27)
|
Net income available to
common shareholders
|
$
8,167
|
|
$
10,447
|
|
$
28,436
|
|
$
41,796
|
Earnings per common
share
|
|
|
|
|
|
|
|
Basic
|
$
0.68
|
|
$
0.88
|
|
$
2.38
|
|
$
3.51
|
Diluted
|
$
0.67
|
|
$
0.86
|
|
$
2.35
|
|
$
3.44
|
Weighted average common
shares outstanding
|
|
|
|
|
|
|
|
Basic
|
11,947,530
|
|
11,934,021
|
|
11,945,740
|
|
11,918,319
|
Diluted
|
12,133,511
|
|
12,166,044
|
|
12,137,052
|
|
12,175,440
|
Table 3: Operating
Ratios
|
|
|
Three months
ended
|
|
Twelve months
ended
|
|
December 31,
|
|
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Return on average
assets
|
1.64 %
|
|
2.13 %
|
|
1.45 %
|
|
2.10 %
|
Return on average
common equity
|
11.50 %
|
|
15.77 %
|
|
10.21 %
|
|
16.72 %
|
Interest rate
spread
|
2.17 %
|
|
3.33 %
|
|
2.42 %
|
|
3.08 %
|
Net interest
margin
|
3.17 %
|
|
3.91 %
|
|
3.34 %
|
|
3.77 %
|
Efficiency
ratio*
|
36.99 %
|
|
29.68 %
|
|
48.34 %
|
|
29.17 %
|
|
* 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
|
|
|
December 31,
|
|
December 31,
|
|
2023
|
|
2022
|
|
(Amounts in thousands
except ratio data)
|
Allowance for credit
losses
|
$
32,131
|
|
$
31,845
|
Allowance for credit
losses to total loans
|
1.80 %
|
|
1.82 %
|
Allowance for credit
losses to non-accrual loans
|
442.51 %
|
|
195.66 %
|
Non-accrual
loans
|
$
7,261
|
|
$
16,276
|
OREO
|
$
1,550
|
|
$
1,550
|
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SOURCE Parke Bancorp, Inc.