PARKE BANCORP, INC. ANNOUNCES FIRST QUARTER 2024 EARNINGS

Highlights:

Net Income:

$6.1 million for Q1 2024

Revenue:

$30.5 million for Q1 2024

Total Assets: 

$2.01 billion,  decreased 0.7% from December 31, 2023

Total Loans: 

$1.79 billion,  decreased 0.1% over December 31, 2023

Total Deposits:

$1.56 billion,  increased 0.7% from December 31, 2023

WASHINGTON TOWNSHIP, N.J., April 19, 2024 /PRNewswire/ — Parke Bancorp, Inc. (“Parke Bancorp” or the “Company”) (NASDAQ: “PKBK”), the parent company of Parke Bank, announced its operating results for the quarter ended March 31, 2024.

Highlights for the three months ended March 31, 2024:

Net income available to common shareholders was $6.1 million, or $0.51 per basic common share and $0.51 per diluted common share, for the three months ended March 31, 2024, a decrease of $5.0 million, or 44.8%, compared to net income available to common shareholders of $11.1 million, or $0.93 per basic common share and $0.92 per diluted common share, for the three months ended March 31, 2023. The decrease was primarily due to lower net interest income, an increase in the provision for credit losses, and lower non-interest income.
Net interest income decreased 18.0% to $14.1 million for the three months ended March 31, 2024, compared to $17.1 million for the same period in 2023.
Provision for credit losses was $0.2 million for the three months ended March 31, 2024, compared to a recovery for credit losses of $2.4 million for the same period in 2023.
Non-interest income decreased $0.7 million, or 40.4%, to $1.1 million for the three months ended March 31, 2024, compared to $1.8 million for the same period in 2023.
Non-interest expense decreased $0.2 million, or 3.3%, to $6.5 million for the three months ended March 31, 2024, compared to $6.8 million for the same period in 2023.

The following is a recap of the significant items that impacted the three months ended March 31, 2024:

Interest income increased $3.5 million for the first quarter of 2024 compared to the same period in 2023, primarily due to an increase in interest and fees on loans of $3.5 million to $28.1 million, a 14.4% increase, primarily driven by an increase in average outstanding loan balances and higher market interest rates.  This was partially offset by a decrease in interest earned on average deposits held at the Federal Reserve Bank (“FRB”) of $0.1 million during the three months ended March 31, 2024, due to lower average balances being held on such deposits. 

Interest expense increased $6.5 million, or 73.8%, to $15.4 million for the three months ended March 31, 2024, compared to the same period in 2023, primarily due to higher market interest rates, combined with changes in the mix of deposits and borrowings. 

The provision for credit losses was $0.2 million for the three months ended March 31, 2024, compared to a recovery of $2.4 million for the same period in 2023.  The provision recovery for the three months ended March 31, 2024, was driven by a decrease in the construction loan portfolio post CECL implementation that resulted in the provision recovery, while the increase in provision expense during the three months ended March 31, 2024, was due to a change in the mix of the loan portfolio resulting in an increase in the qualitative loss factors, mainly attributed to the residential 1 – 4 family investment and multi-family loan portfolios.

Non-interest income decreased $0.7 million, or 40.4%, for the three months ended March 31, 2024 compared to the same period in 2023, primarily as a result of a decrease in service fees on deposit accounts of $0.8 million, partially offset by an increase in other loan fees $0.1 million. 

Non-interest expense decreased $0.2 million, or 3.3%, for the three months ended March 31, 2024, compared to the same period in 2023, primarily driven by a decrease in compensation and benefits of $0.4 million, and a decrease in professional service fees of $0.1 million, partially offset by an increase in OREO expense of $0.2 million, and an increase in FDIC insurance assessments of $0.1 million.

Income tax expense decreased $1.2 million for the three months ended March 31, 2024 compared to the same period in 2023.  The effective tax rate for the three months ended March 31, 2024 was 26.6%, compared to 23.6% for the same period in 2023.

March 31, 2024 discussion of financial condition

Total assets decreased to $2.01 billion at March 31, 2024, from $2.02 billion at December 31, 2023, a decrease of $14.4 million, or 0.71%, primarily due to a decrease in cash and cash equivalents, net loans, and other assets.
Cash and cash equivalents totaled $171.1 million at March 31, 2024, as compared to $180.4 million at December 31, 2023. The decrease in cash and cash equivalents was primarily due to a decrease in borrowings, partially offset by an increase in deposits.
The investment securities portfolio decreased to $15.9 million at March 31, 2024, from $16.4 million at December 31, 2023, a decrease of $0.5 million, or 2.9%, primarily due to pay downs of securities.
Gross loans decreased $1.8 million or 0.1%, to $1.79 billion at March 31, 2024.
Nonperforming loans at March 31, 2024 decreased to $7.0 million, representing 0.39% of total loans, a decrease of $0.3 million, or 3.8%, from $7.3 million of nonperforming loans at December 31, 2023. Other Real Estate Owned (“OREO”) at March 31, 2024 was $1.6 million, unchanged from December 31, 2023. Nonperforming assets (consisting of nonperforming loans and OREO) represented 0.42% and 0.44% of total assets at March 31, 2024 and December 31, 2023, respectively. Loans past due 30 to 89 days were $1.1 million at March 31, 2024, an increase of $0.9 million from December 31, 2023.
The allowance for credit losses was $31.9 million at March 31, 2024, as compared to $32.1 million at December 31, 2023. The ratio of the allowance for credit losses to total loans was 1.79% and 1.80% at March 31, 2024 and at December 31, 2023, respectively. The ratio of allowance for credit losses to non-performing loans was 456.8% at March 31, 2024, compared to 442.5%, at December 31, 2023.
Other assets decreased $2.1 million during the three months ended March 31, 2024, to $8.4 million at March 31, 2024 from $10.5 million at December 31, 2023, primarily driven by a decrease of $2.0 million in prepaid taxes.
Total deposits were $1.56 billion at March 31, 2024, up from $1.55 billion at December 31, 2023, an increase of $10.9 million or 0.7% compared to December 31, 2023. The increase in deposits was attributed to an increase in money market deposits of $77.0 million, and an increase in interest demand deposits of $4.3 million, partially offset by a decrease in non-interest demand deposits of $35.8 million, a decrease in time deposits of $23.3 million, and a decrease in savings deposits of $11.4 million.
Total borrowings decreased $30.0 million during the three months ended March 31, 2024, to $138.2 million at March 31, 2024 from $168.1 million at December 31, 2023, driven by $30.0 million of FHLBNY term borrowing maturities.
Total equity increased to $288.4 million at March 31, 2024, up from $284.3 million at December 31, 2023, an increase of $4.1 million, or 1.4%, primarily due to the retention of earnings, partially offset by the payment of $2.2 million of cash dividends. Tangible book value per common share at March 31, 2024 was $24.08, compared to $23.75 at December 31, 2023.

CEO outlook and commentary

Vito S. Pantilione, President and Chief Executive Officer of Parke Bancorp, Inc. and Parke Bank, provided the following statement:

“Economic turmoil and interest rate confusion continued in the first quarter of 2024. Subsequent to previous Fed comments indicating lowering interest rates in 2024, based on their belief that inflation was coming under control, reports came out indicating inflation is still higher than expected. It now appears that the Feds will need to push back their projected rate cuts. Increased funding costs continued to outpace the increase in the loan portfolio yield in the 1st quarter, reducing net interest income. Slow loan growth continued in the 1st quarter of 2024 as it was difficult to qualify new projects due to higher debt service caused by higher interest rates. However, we are seeing more activity in potential borrowers adjusting to the higher interest rates and beginning to pursue financing. We believe that there is potential to increase the rate of growth of our loan portfolio, although caution is still warranted.”

“Continued tight control of our expenses combined with an anticipated improved net interest margin supports projected profitability. The market turmoil dictates continued strength of our Allowance for Credit Losses, which is 1.79%. We are well structured with strong capital and reserves, allowing us to continue to be aware of opportunities in the market, and if positive, move forward while maintaining a safe and sound 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 react quickly to any increase in loan delinquencies; 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 increase the rate of growth of our loan portfolio; our ability to continue to improve net interest margin; 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

March 31,

December 31,

2024

2023

 (Dollars in thousands)

Assets

Cash and cash equivalents

$                  171,093

$                  180,376

Investment securities

15,911

16,387

Loans, net of unearned income

1,785,542

1,787,340

Less: Allowance for credit losses

(31,918)

(32,131)

Net loans

1,753,624

1,755,210

Premises and equipment, net

5,501

5,579

Bank owned life insurance (BOLI)

28,575

28,415

Other assets

34,369

37,534

   Total assets

$               2,009,073

$               2,023,500

Liabilities and Equity

Non-interest bearing deposits

$                  196,388

$                  232,189

Interest bearing deposits

1,367,316

1,320,638

FHLBNY borrowings

95,000

125,000

Subordinated debentures

43,158

43,111

Other liabilities

18,825

18,245

   Total liabilities

1,720,687

1,739,183

Total shareholders’ equity

288,386

284,317

   Total equity

288,386

284,317

   Total liabilities and equity

$               2,009,073

$               2,023,500

Table 2: Consolidated Income Statements (Unaudited)

For the three months ended
March 31,

2024

2023

(Dollars in thousands,
except per share data)

Interest income:

Interest and fees on loans

$         28,083

$       24,545

Interest and dividends on investments

249

210

Interest on deposits with banks

1,145

1,269

Total interest income

29,477

26,024

Interest expense:

Interest on deposits

13,457

7,582

Interest on borrowings

1,966

1,293

Total interest expense

15,423

8,875

Net interest income

14,054

17,149

Provision for (recovery of) credit losses

204

(2,400)

Net interest income after provision for (recovery of) credit losses

13,850

19,549

Non-interest income

Service fees on deposit accounts

379

1,215

Other loan fees

238

178

Bank owned life insurance income

160

143

Other

285

246

Total non-interest income

1,062

1,782

Non-interest expense

Compensation and benefits

3,218

3,641

Professional services

445

593

Occupancy and equipment

641

644

Data processing

366

301

FDIC insurance and other assessments

331

225

OREO expense

353

172

Other operating expense

1,181

1,185

Total non-interest expense

6,535

6,761

Income before income tax expense

8,377

14,570

Income tax expense

2,226

3,440

Net income attributable to Company

6,151

11,130

Less: Preferred stock dividend

(6)

(7)

Net income available to common shareholders

$           6,145

$       11,123

Earnings per common share

Basic

$              0.51

$           0.93

Diluted

$              0.51

$           0.92

Weighted average common shares outstanding

Basic

11,958,776

11,944,163

Diluted

12,165,772

12,160,793

Table 3: Operating Ratios

Three months ended

March 31,

2024

2023

Return on average assets

1.27 %

2.31 %

Return on average common equity

8.60 %

16.65 %

Interest rate spread

2.24 %

2.87 %

Net interest margin

3.21 %

3.65 %

Efficiency ratio*

43.23 %

35.71 %

*    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

March 31,

December 31,

2024

2023

(Amounts in thousands except ratio data)

Allowance for credit losses on loans

$                31,918

$                32,131

Allowance for credit losses to total loans

1.79 %

1.80 %

Allowance for credit losses to non-accrual loans

456.75 %

442.51 %

Non-accrual loans

$                   6,988

$                   7,261

OREO

$                   1,550

$                   1,550

SOURCE Parke Bancorp, Inc.


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