Document
Parke Bancorp, Inc.
601 Delsea Drive,
Washington Township, NJ 08080
Contact:
Vito S. Pantilione, President and CEO
Jonathan D. Hill, Senior Vice President and CFO
(856) 256-2500
PARKE BANCORP, INC. ANNOUNCES THIRD QUARTER 2024 EARNINGS
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| Highlights: |
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| Net Income: |
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$7.5 million for Q3 2024, increased 16.3% over Q2 2024 |
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| Revenue: |
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$33.0 million for Q3 2024, increased 5.2% over Q2 2024 |
| Total Assets: |
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$2.07 billion, increased 2.1% over December 31, 2023 |
| Total Loans: |
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$1.84 billion, increased 2.9% over December 31, 2023 |
| Total Deposits: |
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$1.56 billion, increased 0.4% from December 31, 2023 |
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WASHINGTON TOWNSHIP, NJ, October 18, 2024 - Parke Bancorp, Inc. (“Parke Bancorp” or the "Company") (NASDAQ: “PKBK”), the parent company of Parke Bank, announced its operating results for the three and nine months ended September 30, 2024.
Highlights for the three and nine months ended September 30, 2024:
•Net income available to common shareholders was $7.5 million, or $0.63 per basic common share and $0.62 per diluted common share, for the three months ended September 30, 2024, an increase of $6.5 million, or 634.1%, compared to net income available to common shareholders of $1.0 million, or $0.09 per basic common share and $0.08 per diluted common share, for the three months ended September 30, 2023. The increase was primarily due to the non-recurring $9.5 million contingent loss disclosed in Q3 2023, partially offset by a $1.0 million decrease in net interest income, a $0.9 million decrease in non-interest income, and a $0.4 million decrease in provision for credit losses.
•Net interest income decreased $1.0 million, or 6.1%, to $14.7 million for the three months ended September 30, 2024, compared to $15.7 million for the same period in 2023.
•The Company recorded a credit to provision for credit losses of $0.1 million for the three months ended September 30, 2024, compared to a provision for credit losses of $0.3 million for the same period in 2023.
•Non-interest income decreased $0.9 million, or 50.9%, to $0.9 million for the three months ended September 30, 2024, compared to $1.8 million for the same period in 2023.
•Non-interest expense decreased $9.5 million, or 59.8%, to $6.4 million for the three months ended September 30, 2024, compared to $15.8 million for the same period in 2023.
•Net income available to common shareholders was $20.1 million, or $1.68 per basic common share and $1.66 per diluted common share, for the nine months ended September 30, 2024, a decrease of $0.2 million, or 0.8%, compared to net income available to common shareholders of $20.3 million, or $1.70 per basic common share and $1.67 per diluted common share, for the same period in 2023. The decrease is primarily due to a decrease in net interest income, an increase in provision for credit losses, and a decrease in non-interest income, partially offset by a decrease in non-interest expense.
•Net interest income decreased $5.6 million, or 11.5%, to $43.1 million for the nine months ended September 30, 2024, compared to $48.7 million for the same period in 2023.
•The provision for credit losses increased $2.1 million, or 134.1%, to $0.5 million for the nine months ended September 30, 2024, compared to a recovery of provision for credit losses of $1.6 million for the same period in 2023.
•Non-interest income decreased $2.1 million, or 39.3%, to $3.2 million for the nine months ended September 30, 2024, compared to $5.2 million for the same period in 2023.
•Non-interest expense decreased $9.8 million, or 34.0%, to $19.1 million for the nine months ended September 30, 2024, compared to $29.0 million for the same period in 2023.
The following is a recap of the significant items that impacted the three and nine months ended September 30, 2024:
Interest income increased $3.0 million for the third quarter of 2024 compared to the same period in 2023, primarily due to an increase in interest and fees on loans of $2.9 million, or 10.5%, to $30.2 million, primarily driven by higher market interest rates and higher average portfolio balance. Also, interest earned on average deposits held at the Federal Reserve Bank ("FRB") increased $0.2 million during the three months ended September 30, 2024, due to higher average balances being held on deposit. For the nine months ended September 30, 2024, interest income increased $9.4 million from the same period in 2023, primarily due to an increase in interest and fees on loans of $9.4 million, or 12.1%, to $87.0 million, primarily driven by an increase in average outstanding loan balances, and higher market interest rates.
Interest expense increased $4.0 million, or 29.5%, to $17.4 million for the three months ended September 30, 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. For the nine months ended September 30, 2024, interest expense increased $15.0 million, or 44.5%, to $48.7 million, primarily due to higher market interest rates, combined with changes in the mix of deposits and borrowings.
The Company booked a recovery of the provision for credit losses of $0.1 million for the three months ended September 30, 2024, compared to a provision of $0.3 million for the same period in 2023. The credit to provision expense for the three months ended September 30, 2024, was primarily driven by a decrease in the 1 - 4 family investment property loan portfolio qualitative factor rate from the quarter ended June 30, 2024. The provision for credit losses for the nine months ended September 30, 2024, increased $2.1 million, or 134.1%, to $0.5 million, compared to a recovery of $1.6 million for the same period in 2023. The increase was primarily driven by an increase in the outstanding loan balance of $52.6 million from the balance at December 31, 2023, specifically in the construction 1 - 4 family, and multi-family loan portfolios. The provision recovery of $1.6 million during the same period in 2023 was primarily related to decreases in loss factors related to the construction, commercial owner occupied loan portfolios, and residential 1 to 4 family investment property loan portfolio.
Non-interest income decreased $0.9 million, or 50.9%, for the three months ended September 30, 2024 compared to the same period in 2023, primarily as a result of a decrease in service fees on deposit accounts of $0.7 million and a decrease in other income of $0.2 million. For the nine months ended September 30, 2024, non-interest income decreased $2.1 million, or 39.3%, to $3.2 million, compared to the same period in 2023. The decrease was primarily driven by a decrease in service fees on deposit accounts of $2.1 million.
Non-interest expense decreased $9.5 million, or 59.8%, for the three months ended September 30, 2024, compared to the same period in 2023, primarily due to a $9.5 million loss contingency recorded in the third quarter of 2023. For the nine months ended September 30, 2024, non-interest expense decreased $9.8 million, or 34.0%, to $19.1 million, compared to the same period in 2023, due to the same item driving the quarter-to-date change.
Income tax expense increased $1.6 million for the three months ended September 30, 2024 compared to the same period in 2023. For the nine months ended September 30, 2024, income tax expense decreased $0.2 million, compared to the same period in 2023. The effective tax rate for the three and nine months ended September 30, 2024 were 20.1% and 24.3%, respectively, compared to 24.8% and 23.5% for the same periods in 2023.
September 30, 2024 discussion of financial condition
•Total assets increased to $2.07 billion at September 30, 2024, from $2.02 billion at December 31, 2023, an increase of $41.9 million, or 2.07%, primarily due to an increase in net loans, partially offset by a decrease in cash and cash equivalents.
•Cash and cash equivalents totaled $172.4 million at September 30, 2024, as compared to $180.4 million at December 31, 2023. The decrease in cash and cash equivalents was primarily due to an increase in loan balance, partially offset by an increase in deposits and borrowings.
•The investment securities portfolio decreased to $15.3 million at September 30, 2024, from $16.4 million at December 31, 2023, a decrease of $1.1 million, or 6.8%, primarily due to pay downs of securities.
•Gross loans increased $52.6 million or 2.9%, to $1.84 billion at September 30, 2024.
•Nonperforming loans at September 30, 2024 increased to $12.2 million, representing 0.66% of total loans, an increase of $4.9 million, or 68.0%, from $7.3 million of nonperforming loans at December 31, 2023. OREO at September 30, 2024 was $1.6 million, unchanged from December 31, 2023. Nonperforming assets (consisting of nonperforming loans and OREO) represented 0.67% and 0.44% of total assets at September 30, 2024 and December 31, 2023, respectively. Loans past due 30 to 89 days were $1.2 million at September 30, 2024, an increase of $0.9 million from December 31, 2023.
•The allowance for credit losses was $32.3 million at September 30, 2024, as compared to $32.1 million at December 31, 2023. The ratio of the allowance for credit losses to total loans was 1.76% at September 30, 2024, and 1.80% at December 31, 2023. The ratio of allowance for credit losses to non-performing loans was 264.9% at September 30, 2024, compared to 442.5%, at December 31, 2023.
•Total deposits were $1.56 billion at September 30, 2024, up from $1.55 billion at December 31, 2023, an increase of $6.1 million or 0.4% compared to December 31, 2023. The increase in deposits was primarily driven by an increase in brokered time deposits of $48.4 million and an increase in time deposits of $21.4 million, partially offset by a decrease in non-interest demand deposits and savings deposits of $33.7 million and $25.5 million, respectively.
•Total borrowings increased $20.1 million during the nine months ended September 30, 2024, to $188.3 million at September 30, 2024 from $168.1 million at December 31, 2023, primarily due to $20.0 million of new FHLBNY term borrowings.
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•Total equity increased to $296.5 million at September 30, 2024, up from $284.3 million at December 31, 2023, an increase of $12.1 million, or 4.3%, primarily due to the retention of earnings, partially offset by the payment of $6.4 million of cash dividends. Book value per common share at September 30, 2024 was $24.92, 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:
"After much speculation and conflicting projections by many economists and other experts, in September 2024 the Federal Reserve reduced interest rates by 50 basis points. In its statement, the Federal Reserve indicated its belief that inflation is going in the right direction and that employment growth is under control. The Federal Reserve further stated that additional rate cuts are possible in the remainder of 2024 and 2025. However, increased geopolitical conflicts with Israel, Iran, Russia, and Ukraine could trigger additional pressure on, among other things, oil prices and could instigate an increase in inflation. Perhaps most importantly, however, we should note the terrible price being paid by the people living in these warring countries. Another concern is that the United States may be drawn into a wider war in the Middle East."
"As reported last quarter, we are seeing an increase in loan activity. Residential construction projects continue to be surprisingly stable and growing. We are also exploring new markets to support growth in our loan portfolio, as well as adding new, experienced commercial loan officers in our lending markets."
"Asset quality and non-interest expense continue to be a primary focus for our bank. While lending is inherently risky, we mitigate that risk with strong loan underwriting and Allowance for Credit Losses. It remains difficult to predict the future, but we are committed to working hard, maintaining tight controls on our non-interest expenses, and continuing to monitor opportunities that may arise in the market." Table 1: Condensed Consolidated Balance Sheets (Unaudited)
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 loan portfolio; our ability to continue to increase shareholders’ equity, maintain strong loan underwriting and allowance for credit losses; 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; 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:
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| Parke Bancorp, Inc. and Subsidiaries |
| Condensed Consolidated Balance Sheets |
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September 30, |
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December 31, |
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2024 |
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2023 |
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(Dollars in thousands) |
| Assets |
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| Cash and cash equivalents |
$ |
172,449 |
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$ |
180,376 |
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| Investment securities |
15,269 |
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16,387 |
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| Loans, net of unearned income |
1,839,929 |
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1,787,340 |
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| Less: Allowance for credit losses |
(32,318) |
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(32,131) |
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| Net loans |
1,807,611 |
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1,755,210 |
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| Premises and equipment, net |
5,365 |
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5,579 |
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| Bank owned life insurance (BOLI) |
28,904 |
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28,415 |
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| Other assets |
35,811 |
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37,534 |
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| Total assets |
$ |
2,065,409 |
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$ |
2,023,500 |
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| Liabilities and Equity |
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| Non-interest bearing deposits |
$ |
198,499 |
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$ |
232,189 |
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| Interest bearing deposits |
1,360,384 |
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1,320,638 |
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| FHLBNY borrowings |
145,000 |
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125,000 |
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| Subordinated debentures |
43,253 |
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43,111 |
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| Other liabilities |
21,813 |
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18,245 |
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| Total liabilities |
1,768,949 |
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1,739,183 |
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| Total shareholders’ equity |
296,460 |
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284,317 |
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| Total liabilities and equity |
$ |
2,065,409 |
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$ |
2,023,500 |
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| Table 2: Consolidated Income Statements (Unaudited) |
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For the three months ended September 30, |
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For the nine months ended September 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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(Dollars in thousands, except per share data) |
| Interest income: |
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| Interest and fees on loans |
$ |
30,161 |
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$ |
27,294 |
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$ |
86,976 |
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$ |
77,602 |
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| Interest and dividends on investments |
265 |
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308 |
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761 |
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|
745 |
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| Interest on deposits with banks |
1,696 |
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1,512 |
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4,050 |
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4,059 |
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| Total interest income |
32,122 |
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29,114 |
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91,787 |
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82,406 |
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| Interest expense: |
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| Interest on deposits |
14,983 |
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11,385 |
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42,123 |
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28,046 |
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| Interest on borrowings |
2,416 |
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2,046 |
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6,575 |
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5,661 |
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| Total interest expense |
17,399 |
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13,431 |
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48,698 |
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33,707 |
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| Net interest income |
14,723 |
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15,683 |
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43,089 |
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48,699 |
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| Provision for (recovery of) credit losses |
(141) |
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300 |
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546 |
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(1,600) |
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| Net interest income after provision for (recovery of) credit losses |
14,864 |
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15,383 |
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42,543 |
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50,299 |
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| Non-interest income |
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| Service fees on deposit accounts |
321 |
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1,003 |
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1,059 |
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3,149 |
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| Gain on sale of SBA loans |
(2) |
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— |
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23 |
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— |
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| Other loan fees |
217 |
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192 |
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619 |
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611 |
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| Bank owned life insurance income |
166 |
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153 |
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488 |
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443 |
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| Other |
199 |
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449 |
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974 |
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972 |
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| Total non-interest income |
901 |
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1,835 |
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3,163 |
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5,213 |
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| Non-interest expense |
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| Compensation and benefits |
3,178 |
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2,834 |
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9,466 |
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9,414 |
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| Professional services |
645 |
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659 |
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1,641 |
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1,746 |
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| Occupancy and equipment |
630 |
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649 |
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1,943 |
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1,938 |
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| Data processing |
348 |
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368 |
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978 |
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1,037 |
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| FDIC insurance and other assessments |
319 |
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388 |
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973 |
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960 |
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| OREO expense |
187 |
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240 |
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776 |
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610 |
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| Other operating expense |
1,058 |
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10,711 |
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3,358 |
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13,276 |
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| Total non-interest expense |
6,365 |
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15,849 |
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19,135 |
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28,981 |
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| Income before income tax expense |
9,400 |
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1,369 |
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26,571 |
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26,531 |
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| Income tax expense |
1,892 |
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340 |
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6,457 |
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6,242 |
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| Net income attributable to Company |
7,508 |
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1,029 |
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20,114 |
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20,289 |
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| Less: Preferred stock dividend |
(5) |
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(7) |
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(16) |
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(20) |
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| Net income available to common shareholders |
$ |
7,503 |
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$ |
1,022 |
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$ |
20,098 |
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$ |
20,269 |
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| Earnings per common share |
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| Basic |
$ |
0.63 |
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$ |
0.09 |
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$ |
1.68 |
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$ |
1.70 |
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| Diluted |
$ |
0.62 |
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$ |
0.08 |
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$ |
1.66 |
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$ |
1.67 |
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| Weighted average common shares outstanding |
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| Basic |
11,959,546 |
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11,945,844 |
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11,960,173 |
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11,945,144 |
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| Diluted |
12,153,393 |
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12,131,825 |
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12,134,828 |
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12,137,208 |
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Table 3: Operating Ratios (unaudited)
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Three months ended |
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Nine months ended |
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September 30, |
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September 30, |
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2024 |
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2023 |
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2024 |
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2023 |
| Return on average assets |
1.49 |
% |
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0.21 |
% |
|
1.37 |
% |
|
1.38 |
% |
| Return on average common equity |
10.08 |
% |
|
1.43 |
% |
|
9.20 |
% |
|
9.77 |
% |
| Interest rate spread |
1.88 |
% |
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2.24 |
% |
|
1.91 |
% |
|
2.51 |
% |
| Net interest margin |
2.97 |
% |
|
3.21 |
% |
|
2.99 |
% |
|
3.40 |
% |
| Efficiency ratio* |
40.74 |
% |
|
90.47 |
% |
|
41.37 |
% |
|
53.76 |
% |
* 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 (unaudited)
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September 30, |
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December 31, |
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2024 |
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2023 |
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(Amounts in thousands except ratio data) |
| Allowance for credit losses on loans |
$ |
32,318 |
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$ |
32,131 |
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| Allowance for credit losses to total loans |
1.76 |
% |
|
1.80 |
% |
| Allowance for credit losses to non-accrual loans |
264.88 |
% |
|
442.51 |
% |
| Non-accrual loans |
$ |
12,201 |
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$ |
7,261 |
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| OREO |
$ |
1,562 |
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$ |
1,550 |
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