Highlights:
|
|
|
|
|
|
|
|
Net
Income:
|
|
$1.0 million for Q3
2023
|
Revenue:
|
|
$30.9 million for Q3
2023, increased 6.92% over Q2 2023
|
Total
Assets:
|
|
$1.98 billion,
decreased 0.1% from December 31, 2022
|
Total
Loans:
|
|
$1.80 billion,
increased 2.8% over December 31, 2022
|
Total
Deposits:
|
|
$1.53 billion,
decreased 2.7% from December 31, 2022
|
WASHINGTON TOWNSHIP, N.J., Oct. 25,
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 nine months ended September 30,
2023.
Highlights for the three and nine months ended
September 30, 2023:
- Net income available to common shareholders was $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, a
decrease of $9.5 million, or 90.3%,
compared to net income available to common shareholders of
$10.5 million, or $0.88 per basic common share and $0.87 per diluted common share, for the three
months ended September 30, 2022. The
decrease was primarily due to a $9.3
million increase in other operating expenses resulting from
the recognition of a $9.5 million
contingent loss related to cash that was stolen from a third-party
armored car carrier facility that was used by the Company, and
lower net interest income, partially offset by lower provision for
credit losses.
- When adjusted for the $9.5
million contingent loss recognition (tax effected
$7.3 million), net income available
to common shareholders would have been $8.3
million, or $0.70 per basic
common share and $0.68 per diluted
common share, for the three months ended September 30, 2023. Adjusted net income available
to common shareholders and adjusted earnings per share are non-GAAP
financial measures. Please refer to the table at the end of this
release which reconciles net income available to common
shareholders and earnings per share to adjusted net income
available to common shareholders and adjusted earnings per
share.
- Net interest income decreased 18.7% to $15.7 million for the three months ended
September 30, 2023, compared to
$19.3 million for the same period in
2022.
- Provision for credit losses was $0.3
million for the three months ended September 30, 2023, compared to a provision for
credit losses of $0.6 million for the
same period in 2022.
- Non-interest income decreased $0.2
million, or 9.5%, to $1.8
million for the three months ended September 30, 2023, compared to $2.0 million for the same period in 2022.
- Non-interest expense increased $9.6
million, or 151.9%, to $15.8
million for the three months ended September 30, 2023, compared to $6.3 million for the same period in 2022,
primarily driven by the $9.5 million
contingent loss recognition related to cash that was stolen from a
third-party armored car carrier facility that was used by the
Company.
- Net income available to common shareholders was $20.3 million, or $1.70 per basic common share and $1.67 per diluted common share, for the nine
months ended September 30, 2023, a
decrease of $11.1 million, or 35.3%,
compared to net income available to common shareholders of
$31.3 million, or $2.63 per basic common share and $2.58 per diluted common share, for the same
period in 2022. The decrease was primarily due to a $9.3 million increase in other operating expenses
resulting from the previously mentioned contingent loss
recognition, and lower net interest income, partially offset by
lower provision for credit losses.
- When adjusted for the $9.5
million contingent loss recognition (tax effected
$7.3 million) net income available to
common shareholders would have been $27.6
million, or $2.31 per basic
common share and $2.27 per diluted
common share, for the nine months ended September 30, 2023. Adjusted net income available
to common shareholders and adjusted earnings per share are non-GAAP
financial measures. Please refer to the table at the end of this
release which reconciles net income available to common
shareholders and earnings per share to adjusted net income
available to common shareholders and adjusted earnings per
share.
- Net interest income decreased 10.5% to $48.7 million for the nine months ended
September 30, 2023, compared to
$54.4 million for the same period in
2022.
- Non-interest income decreased $1.4
million, or 20.7%, to $5.2
million for the nine months ended September 30, 2023, compared to $6.6 million for the same period in 2022.
- Non-interest expense increased 63.9% to $29.0 million for the nine months ended
September 30, 2023, compared to
$17.7 million for the same period in
2022.
The following is a recap of the significant items that impacted
the three and nine months ended September 30, 2023:
Interest income increased $6.8
million for the third quarter of 2023 compared to the same
period in 2022, primarily due to an increase in interest and fees
on loans of $6.4 million to
$27.3 million, a 30.9% 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 $0.2
million to $1.5 million during
the three months ended September 30, 2023, due to higher
interest rates paid on such deposits. For the nine months
ended September 30, 2023, interest income increased
$19.9 million from the same period in
2022, primarily due to an increase in interest and fees on loans of
$18.1 million to $77.6 million, a 30.4% increase, resulting from
the same factors that drove the three month change.
Interest expense increased $10.4
million, or 341.5%, to $13.4
million for the three months ended September 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 nine months ended
September 30, 2023, interest expense increased $25.6 million, or 317.7%, to $33.7 million, primarily due to the same factors
that drove the three month change.
The provision for credit losses was $0.3
million for the three months ended September 30, 2023,
compared to $0.6 million for the same
period in 2022. For the nine months ended September 30,
2023, the recovery of credit losses improved $1.6 million, compared to the provision of
$1.0 million for the same period in
2022. The provision credit for the nine months ended
September 30, 2023 was primarily
related to decreases in loss factors related to the 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 $0.2
million, or 9.6%, for the three months ended
September 30, 2023 compared to the same period in 2022,
primarily as a result of a decrease in loan fees of $0.2 million, and a decrease in service fees on
deposit accounts of $0.1 million,
partially offset by a gain in other income of $0.2 million. For the nine months ended
September 30, 2023, non-interest income decreased $1.4 million, or 20.7%, compared to the same
period in 2022, to $5.2
million. The decrease was primarily driven by a
$0.6 million decrease in service fees
on deposit accounts, a $0.5 million
decrease in loan fees, and a decrease in gain on sale of OREO of
$0.3 million.
Non-interest expense increased $9.6
million, or 151.9%, for the three months ended
September 30, 2023 compared to the same period in 2022,
primarily driven by the recognition of a $9.5 million contingent loss related to cash that
was stolen from a third-party armored car carrier facility that was
used by the Company. The recognition of the loss during the quarter
was driven by the completion of an outside forensic accountant's
report confirming the loss. For the nine months ended
September 30, 2023, non-interest expense increased
$11.3 million, or 63.9%, to
$29.0 million, compared to the same
period in 2022. The increase in non-interest expense for the
nine months ended September 30, 2023,
was primarily driven by the $9.5
million write off discussed above, as well as an increase in
compensation and benefits of $1.5
million, and an increase in OREO expense of $0.2 million. For the nine months ended
September 30, 2023, the increase in
compensation and benefits was primarily due to an increase in
salary expense of $0.4 million, and a
reduction in deferred loan origination costs of $0.8 million due to a decrease in the number of
loans originated. The increase in OREO expense for that same
period is mainly due to increases in legal, utilities, and real
estate taxes related to our OREO portfolio.
Income tax expense decreased $3.6
million for the three months ended September 30, 2023 compared to the same period in
2022. For the nine months ended September 30, 2023
income tax expense decreased $4.7
million, compared to the same period in 2022. The
effective tax rate for the three and nine months ended
September 30, 2023 was 24.8% and 23.5%, respectively, compared
to 27.0% and 25.9% for the same periods in 2022.
September 30, 2023 discussion of financial
condition
- Total assets were flat at $1.98
billion at September 30, 2023
as compared to December 31, 2022.
- Cash and cash equivalents totaled $126.7
million at September 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, an
increase in loans receivable, and the write off of stolen cash that
was held at the armored car service, partially offset by an
increase in FHLBNY borrowings.
- The investment securities portfolio decreased to $16.6 million at September
30, 2023, from $18.7 million
at December 31, 2022, a decrease of
$2.2 million, or 11.5%, primarily due
to pay downs of securities.
- Gross loans increased to $1.80
billion at September 30, 2023,
from $1.75 billion at December 31, 2022, an increase of $48.6 million or 2.8%.
- Nonperforming loans at September 30,
2023 increased to $20.3
million, representing 1.13% of total loans, an increase of
$4.1 million, or 25.1%, 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 three commercial real estate loans that became nonperforming
during the nine months ended September 30,
2023. OREO at September 30,
2023 was $1.6 million,
unchanged from December 31, 2022.
Nonperforming assets (consisting of nonperforming loans and OREO)
represented 1.10% and 0.90% of total assets at September 30, 2023 and December 31, 2022, respectively. Loans past due
30 to 89 days were $4.5 million at
September 30, 2023, an increase of
$4.3 million from December 31, 2022.
- The allowance for credit losses was $32.3 million at September
30, 2023, as compared to $31.8
million at December 31, 2022.
The ratio of the allowance for credit losses to total loans was
1.80% and 1.82% at September 30, 2023
and at December 31, 2022,
respectively. The ratio of allowance for credit losses to
non-performing loans was 158.8% at September
30, 2023, compared to 195.7%, at December 31, 2022.
- Other assets increased $8.1
million during the nine months ended September 30, 2023, to $38.4 million at September
30, 2023 from $30.3 million at
December 31, 2022, primarily driven
by an increase of $1.6 million in
restricted FHLBNY stock as a result of the increase in associated
borrowings, and a $7.2 million
increase in prepaid taxes.
- Total deposits were $1.53 billion
at September 30, 2023, down from
$1.58 billion at December 31, 2022, a decrease of $43.0 million or 2.7% compared to December 31, 2022. The decrease in deposits was
attributed to a decrease in non-interest demand deposits of
$121.4 million, and a decrease in
savings deposits of $92.3 million,
partially offset by an increase in interest checking deposits of
$28.2 million, an increase in money
market balances of $117.8 million,
and an increase in time deposit balances of $24.8 million.
- Total borrowings increased $28.1
million during the nine months ended September 30, 2023, to $154.2 million at September 30, 2023 from $126.1 million at December
31, 2022, driven by $28.0
million in FHLBNY term borrowings.
- Total equity increased to $278.0
million at September 30, 2023,
up from $266.0 million at
December 31, 2022, an increase of
$11.9 million, or 4.5%, primarily due
to the retention of earnings, partially offset by the payment of
$6.5 million of cash dividends and a
$2.1 million charge to equity
resulting from the adoption of ASC 326. Tangible book value per
common share at September 30, 2023
was $23.23, 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:
"We previously reported a suspected $9.5
million theft by one of the cash couriers utilized by our
bank. We contracted with an outside accounting firm to provide
forensic accounting services to confirm the amount stolen. The
report was recently completed confirming the $9.5 million theft. Based on that report, we are
able to book the loss this quarter. The final report also provides
us with the necessary documentation to pursue possible sources for
recovery, including insurance policies. We are aggressively
pursuing these sources and will book any recovery when received.
Although this theft is painful and was unexpected, we are fortunate
to have the financial strength and earnings to absorb the
loss. The strength of our company is evidenced by a Return on
Average Assets of 1.38% and a Return on Average Equity of close to
10%, including this one time charge off."
"The continued challenges in the market and the economy worsened
with the start of the war in Israel. The loss of life and the atrocities of
the attack have generated outrage worldwide. The conflict continues
to widen and threatens to include other bad players that could
cause oil prices to increase significantly. These many
factors combined have again brought the possibility of a recession
to the forefront of many economic experts. Our loan portfolio
has grown in 2023, although cautiously. We continue to maintain
strong loan loss reserves as reflected by our allowance for credit
losses to total loans of 1.8% at September
30, 2023"
"Industry and economic challenges will continue and may even
worsen in the near term. It is the time for caution, while also
watching for possible opportunities in the market. We continue to
closely monitor any changes in the performance of our loan
portfolio and are well structured to quickly react to any increase
in delinquencies. Our primary focus remains operating a safe and
sound bank while generating a good return for our shareholders.
This includes maintaining tight controls of our expenses and being
in a strong position to take advantage of any opportunity that may
appear in the market."
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 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
|
|
|
September
30,
|
|
December 31,
|
|
2023
|
|
2022
|
|
(Dollars in
thousands)
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$
126,740
|
|
$
182,150
|
Investment
securities
|
16,590
|
|
18,744
|
Loans, net of unearned
income
|
1,800,023
|
|
1,751,459
|
Less: Allowance for
credit losses
|
(32,319)
|
|
(31,845)
|
Net loans
|
1,767,704
|
|
1,719,615
|
Premises and equipment,
net
|
5,665
|
|
5,958
|
Bank owned life
insurance (BOLI)
|
28,587
|
|
28,145
|
Other assets
|
38,386
|
|
30,303
|
Total
assets
|
$
1,983,672
|
|
$
1,984,915
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
|
Non-interest bearing
deposits
|
$
231,116
|
|
$
352,546
|
Interest bearing
deposits
|
1,301,865
|
|
1,223,436
|
FHLBNY
borrowings
|
111,150
|
|
83,150
|
Subordinated
debentures
|
43,063
|
|
42,921
|
Other
liabilities
|
18,499
|
|
16,828
|
Total
liabilities
|
1,705,693
|
|
1,718,881
|
|
|
|
|
Total shareholders'
equity
|
277,979
|
|
266,034
|
Total
equity
|
277,979
|
|
266,034
|
|
|
|
|
Total
liabilities and equity
|
$
1,983,672
|
|
$
1,984,915
|
Table 2: Consolidated
Income Statements (Unaudited)
|
|
|
|
|
|
|
|
|
For the three months
ended
September 30,
|
|
For the nine months
ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(Dollars in thousands,
except per share data)
|
Interest
income:
|
|
|
|
|
|
|
|
Interest and fees on
loans
|
$
27,294
|
|
$
20,854
|
|
$
77,602
|
|
$
59,511
|
Interest and dividends
on investments
|
308
|
|
194
|
|
745
|
|
565
|
Interest on deposits
with banks
|
1,512
|
|
1,290
|
|
4,059
|
|
2,404
|
Total interest
income
|
29,114
|
|
22,338
|
|
82,406
|
|
62,480
|
Interest
expense:
|
|
|
|
|
|
|
|
Interest on
deposits
|
11,385
|
|
2,284
|
|
28,046
|
|
5,893
|
Interest on
borrowings
|
2,046
|
|
758
|
|
5,661
|
|
2,176
|
Total interest
expense
|
13,431
|
|
3,042
|
|
33,707
|
|
8,069
|
Net interest
income
|
15,683
|
|
19,296
|
|
48,699
|
|
54,411
|
(Recovery of) provision
for credit losses
|
300
|
|
600
|
|
(1,600)
|
|
950
|
Net interest income
after provision for credit losses
|
15,383
|
|
18,696
|
|
50,299
|
|
53,461
|
Non-interest
income
|
|
|
|
|
|
|
|
Service fees on
deposit accounts
|
1,003
|
|
1,133
|
|
3,149
|
|
3,762
|
Gain on sale of SBA
loans
|
—
|
|
76
|
|
—
|
|
98
|
Other loan
fees
|
192
|
|
422
|
|
611
|
|
1,138
|
Bank owned life
insurance income
|
153
|
|
144
|
|
443
|
|
424
|
Net gain on sale and
valuation adjustment of OREO
|
38
|
|
—
|
|
38
|
|
328
|
Other
|
449
|
|
253
|
|
972
|
|
827
|
Total non-interest
income
|
1,835
|
|
2,028
|
|
5,213
|
|
6,577
|
Non-interest
expense
|
|
|
|
|
|
|
|
Compensation and
benefits
|
2,834
|
|
2,819
|
|
9,414
|
|
7,964
|
Professional
services
|
659
|
|
578
|
|
1,746
|
|
1,670
|
Occupancy and
equipment
|
649
|
|
621
|
|
1,938
|
|
1,891
|
Data
processing
|
368
|
|
348
|
|
1,037
|
|
985
|
FDIC insurance and
other assessments
|
388
|
|
265
|
|
960
|
|
811
|
OREO
expense
|
240
|
|
314
|
|
610
|
|
404
|
Other operating
expense
|
10,711
|
|
1,347
|
|
13,276
|
|
3,957
|
Total non-interest
expense
|
15,849
|
|
6,292
|
|
28,981
|
|
17,682
|
Income before income
tax expense
|
1,369
|
|
14,432
|
|
26,531
|
|
42,356
|
Income tax
expense
|
340
|
|
3,892
|
|
6,242
|
|
10,987
|
Net income attributable
to Company
|
1,029
|
|
10,540
|
|
20,289
|
|
31,369
|
Less: Preferred stock
dividend
|
(7)
|
|
(7)
|
|
(20)
|
|
(20)
|
Net income available to
common shareholders
|
$
1,022
|
|
$
10,533
|
|
$
20,269
|
|
$
31,349
|
Earnings per common
share
|
|
|
|
|
|
|
|
Basic
|
$
0.09
|
|
$
0.88
|
|
$
1.70
|
|
$
2.63
|
Diluted
|
$
0.08
|
|
$
0.87
|
|
$
1.67
|
|
$
2.58
|
Weighted average common
shares outstanding
|
|
|
|
|
|
|
|
Basic
|
11,945,844
|
|
11,919,472
|
|
11,945,144
|
|
11,913,085
|
Diluted
|
12,131,825
|
|
12,170,144
|
|
12,137,208
|
|
12,178,572
|
Table 3: Operating
Ratios
|
|
Three months
ended
|
|
Nine months
ended
|
|
September
30,
|
|
September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Return on average
assets
|
0.21 %
|
|
2.16 %
|
|
1.38 %
|
|
2.09 %
|
Return on average
common equity
|
1.43 %
|
|
16.44 %
|
|
9.77 %
|
|
17.06 %
|
Interest rate
spread
|
2.24 %
|
|
3.67 %
|
|
2.51 %
|
|
3.37 %
|
Net interest
margin
|
3.21 %
|
|
4.00 %
|
|
3.40 %
|
|
3.66 %
|
Efficiency
ratio*
|
90.47 %
|
|
29.51 %
|
|
53.76 %
|
|
28.99 %
|
|
|
|
|
|
|
|
|
*
|
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
|
|
|
|
|
September
30,
|
|
December 31,
|
|
2023
|
|
2022
|
|
(Amounts in thousands
except ratio data)
|
Allowance for credit
losses on loans
|
$
32,319
|
|
$
31,845
|
Allowance for credit
losses to total loans
|
1.80 %
|
|
1.82 %
|
Allowance for credit
losses to non-accrual loans
|
158.82 %
|
|
195.66 %
|
Non-accrual
loans
|
$
20,349
|
|
$
16,276
|
OREO
|
$
1,550
|
|
$
1,550
|
Non-GAAP Measures
This release references adjusted
pre-tax income and adjusted earnings per basic common share which
are non-GAAP financial measures. The following table reconciles
pre-tax income and earnings per basic common share to adjusted
pre-tax income and adjusted earnings per basic common share.
Reconciliation of GAAP
to Non-GAAP Financial Measures
|
|
|
|
|
|
(Dollars in thousands,
except per share data)
|
|
|
|
|
Adjusted Pre-tax
Income
|
|
Q3
2023
|
|
YTD
2023
|
GAAP net income
available to common shareholders
|
|
$
1,022
|
|
$
20,269
|
Reconciling
items:
|
|
|
|
|
Recognition of loss
contingency
|
|
9,517
|
|
9,517
|
Tax expense
|
|
(2,215)
|
|
(2,215)
|
Adjusted net income
available to common shareholders
|
|
$
8,324
|
|
$
27,571
|
|
|
|
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
September 30,
2023
|
|
September 30,
2023
|
GAAP Earnings per Basic
Common Share
|
|
$
0.09
|
|
$
1.70
|
After tax recognition
of loss contingency
|
|
7,302
|
|
7,302
|
Basic weighted average
shares of common
|
|
11,945,844
|
|
11,945,144
|
Adjustment to Basic
Common Share
|
|
0.61
|
|
0.61
|
Adjusted Earnings per
Basic Common Share
|
|
$
0.70
|
|
$
2.31
|
|
|
|
|
|
GAAP Earnings per
Diluted Common Share
|
|
$
0.08
|
|
$
1.67
|
After tax recognition
of loss contingency
|
|
7,302
|
|
7,302
|
Diluted weighted
average shares of common
|
|
12,131,825
|
|
12,137,208
|
Adjustment to Diluted
Common Share
|
|
0.60
|
|
0.60
|
Adjusted Earnings per
Diluted Common Share
|
|
$
0.68
|
|
$
2.27
|
View original
content:https://www.prnewswire.com/news-releases/parke-bancorp-inc-announces-third-quarter-2023-earnings-301967845.html
SOURCE Parke Bancorp, Inc.