WASHINGTON TOWNSHIP, N.J.,
July 27, 2020 /PRNewswire/ --
Highlights:
|
|
|
|
|
|
|
|
Net
Income:
|
|
$6.5
million, Q2 2020 result also reflected a $2.0 million loan
loss
provision
|
Revenue:
|
|
$21.4 million,
increased 3.8% Q2 2020 over Q2 2019
|
Total
Assets:
|
|
$1.94
billion, increased 15.2% over December 31,
2019
|
Total
Loans:
|
|
$1.54
billion, increased 8.7% over December 31,
2019
|
Total
Deposits:
|
|
$1.51
billion, increased 12.6% over December 31,
2019
|
|
|
|
Parke Bancorp, Inc. ("Parke Bancorp") (NASDAQ: "PKBK"), the
parent company of Parke Bank,
announced its operating results for three and six months ended
June 30, 2020.
Highlights for three and six months ended June 30, 2020:
- Net income available to common shareholders was $6.5 million, or $0.55 per basic common share and $0.55 per diluted common share for the second
quarter of 2020, decreased $926,000,
or 12.4%, compared to net income available to common shareholders
of $7.5 million, or $0.63 per basic common share and $0.62 per diluted common share for the same
quarter in 2019. The decrease is primarily driven by a higher
provision for loan loss as economic uncertainty continues.
- Net interest income increased 4.2% to $14.9 million for the second quarter of 2020,
compared to $14.3 million for the
same quarter of 2019.
- Net income available to common shareholders decreased
$782,000 or 5.4%, to $13.7 million or $1.16 per basic common share and $1.15 per diluted common share for the year to
date period ended June 30, 2020, compared to net income
available to common shareholders of $14.5
million, or $1.23 per basic
common share and $1.21 per diluted
common share for the year to date period ended June 30,
2019.
- Net interest income increased 8.5% to $30.1 million for the year to date period ended
June 30, 2020, compared to $27.7
million for the same period in 2019.
The following is a recap of the significant items that impacted
the three and six months ended June 30,
2020 period:
Interest income increased $619,000
and $3.8 million for the second
quarter of 2020 and year to date June 30, 2020 periods,
respectively, compared to the same periods in 2019, primarily due
to higher interest income generated from higher average loan
volumes and partially offset by the income impact of lower interest
rates on average loans and a decrease in interest income from
deposits in Federal Reserve Bank. The Federal Reserve Board has
reduced rates in response to the COVID-19 pandemic. Also
contributing to the increase in interest income for the second
quarter was a $251,000 increase in
interest and fees on loans from the SBA Paycheck Protection Program
loans ("SBA PPP Loans").
Interest expense increased $19,000, almost unchanged for the second quarter
of 2020, compared to the same period in 2019, primarily reflecting
the cost offset on changes in interest expense due from increased
average volumes and decreased interest rates on deposits and other
borrowings. For the year to date period ended June 30, 2020,
interest expense increased $1.5
million, compared to the same period in 2019, primarily due
to higher volumes of deposits and other borrowings, partially
offset by decreases in interest expense due to reductions in market
interest rates.
The provision for loan losses increased $1.6 million to $2.0
million for the second quarter of 2020, compared to the same
period in 2019. For year to date period ended June 30, 2020,
the provision for loan losses increased $2.2
million to $3.4 million,
compared to year to date period ended June 30, 2019. The
increase in the provision was primarily due to an increase in
qualitative factors as economic uncertainty continues as a result
of COVID-19 on our borrowers as of June 30, 2020.
For the second quarter of 2020, non-interest income increased
$160,000, compared to the same period
of 2019, with the increase primarily attributable to a decrease in
net loss on sale of OREO, partially offset by decrease in other
loan fees. For the year to date June 30, 2020 period,
non-interest income increased $229,000, primarily due to increased fee income
from deposit accounts and a decreased net loss on sale of OREO,
partially offset by a decrease in other loan fees and a decrease in
the gain on sale of SBA loans.
Non-interest expense increased $345,000 and $1.1
million for the second quarter 2020 and the year to date
period ended June 30, 2020, compared to the same periods of
2019, primarily due to an increase in compensation, data processing
cost, and FDIC insurance assessment. The increases in non-interest
expenses mainly reflect the growth of the business.
Income tax expense decreased $170,000 for the second quarter of 2020, and
increased $68,000 for the year to
date periods ended June 30, 2020,
compared to the same periods in 2019. The effective tax rates for
second quarter of 2020 and for the year to date June 30, 2020
were 25.8% and 24.6%, compared to 25.8% and 24.5% for the same
periods in 2019.
June 30, 2020 discussion of
financial condition
- Total assets increased to $1.94
billion at June 30, 2020, from $1.68 billion at December
31, 2019, an increase of $254.7
million or 15.2% primarily due to an increase in loans,
particularly $78.0 million
increase in SBA PPP loans, and an increase in cash deposits
with the Federal Reserve Bank.
- Cash and cash equivalents totaled $320.9
million at June 30, 2020, as compared to $191.6 million at December
31, 2019.
- The investment securities portfolio decreased to $25.6 million at June 30, 2020, from
$27.8 million at December 31, 2019, a decrease of $2.2 million, or 7.9%, primarily due to pay downs
of securities.
- Gross loans increased to $1.54
billion at June 30, 2020, from $1.42 billion at December
31, 2019, an increase of $123.5
million or 8.7%. Gross loans included SBA PPP loans and
loans from our deferment and relief programs, which are intended to
provide an appropriate level of financial relief for the
individuals and businesses experiencing hardship as a result of the
COVID-19 pandemic.
- Nonperforming loans at June 30, 2020 increased
to $10.0 million, representing 0.65% of total loans, an
increase of $4.7 million, or 87.2%,
from $5.3 million of nonperforming
loans at December 31, 2019. OREO at
June 30, 2020 was $3.8 million,
a decrease of $955,000 compared to
$4.7 million at December 31, 2019, primarily due to sale of OREO
assets. Nonperforming assets (consisting of nonperforming loans and
OREO) represented 0.71% and 0.60% of total assets at June 30,
2020 and December 31, 2019,
respectively. Loans past due 30 to 89 days were $804,000 at June 30, 2020, a decrease of
$1.2 million from December 31, 2019.
- The allowance for loan losses was $25.2
million at June 30, 2020, as compared to $21.8 million at December
31, 2019. The ratio of the allowance for loan losses to
total loans was 1.63% and 1.54% at June 30, 2020 and at
December 31, 2019, respectively. The
ratio of allowance for loan losses to non-performing loans was
252.0% at June 30, 2020, compared to 407.8%, at
December 31, 2019.
- Total deposits were $1.51 billion
at June 30, 2020, up from $1.34
billion at December 31, 2019,
an increase of $169.3 million or
12.6% compared to December 31, 2019.
Deposit growth was primarily due to an increase in non-interest
bearing demand deposits and increase in other non-time
deposits.
- Total borrowings were $220.9
million at June 30, 2020, an increased $72.9 million, compared to December 31, 2019, primarily due to increase in
advances from the Federal Reserve Bank for the SBA PPP loans.
- Total equity increased to $189.7
million at June 30, 2020, up from $179.4 million at December
31, 2019, an increase of $10.3
million, or 5.8%, primarily due to the retention of
earnings.
CEO outlook and commentary
Vito S. Pantilione, President and
Chief Executive Officer of Parke Bancorp, Inc. and Parke Bank, provided the following
statement:
"The country and the world continue to face unprecedented
uncertainty and economic decline due to the COVID-19 pandemic. Many
hoped that we would see an improvement in the COVID-19 cases being
reported but so far that hasn't happened. The business community,
especially restaurants, hotels and retail centers have been hardest
hit by the pandemic with the many restrictions placed on those
industries. We remain focused on supporting our employees,
customers and communities during these difficult times.
Our company continues to generate strong revenues with increased
interest income and net interest income. Parke Bancorp's net income
decreased due to an increase in our loan loss provision, which was
done to ensure we are well positioned as the COVID-19 pandemic
continues and we may face challenging conditions in our loan
portfolio.
Although not reflected in our June
30th numbers, on July 15,
2020, we successfully issued and sold $30 million of Subordinated Notes, further
supporting the financial strength of our Company while not diluting
our shareholders. Parke Bank has
always exceeded the regulatory guidelines for a well-capitalized
bank and the additional capital further strengthens our equity
position."
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
continue to generate strong net earnings; 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, 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.
In addition, the COVID-19 pandemic is having an adverse
impact on the Company, its customers and the communities it serves.
Given its ongoing and dynamic nature, it is difficult to predict
the full impact of the COVID-19 outbreak on our business. The
extent of such impact will depend on future developments, which are
highly uncertain, including when the coronavirus can be controlled
and abated and when and how the economy may be reopened. As the
result of the COVID-19 pandemic and the related adverse local and
national economic consequences, we could be subject to any of the
following risks, any of which could have a material, adverse effect
on our business, financial condition, liquidity, and results of
operations: the demand for our products and services may decline,
making it difficult to grow assets and income; if the economy is
unable to substantially reopen, and high levels of unemployment
continue for an extended period of time, loan delinquencies,
problem assets, and foreclosures may increase, resulting in
increased charges and reduced income; collateral for loans,
especially real estate, may decline in value, which could cause
loan losses to increase; our allowance for loan losses may increase
if borrowers experience financial difficulties, which will
adversely affect our net income; the net worth and liquidity of
loan guarantors may decline, impairing their ability to honor
commitments to us; as the result of the decline in the Federal
Reserve Board's target federal funds rate to near 0%, the yield on
our assets may decline to a greater extent than the decline in our
cost of interest-bearing liabilities, reducing our net interest
margin and spread and reducing net income; due to a decline in our
stock price or other factors, goodwill may become impaired and be
required to be written down; and our cyber security risks are
increased as the result of an increase in the number of employees
working remotely.
Financial
Supplement:
|
|
Table 1: Condensed
Consolidated Balance Sheets (Unaudited)
|
|
Parke Bancorp, Inc.
and Subsidiaries
|
Consolidated Balance
Sheets
|
|
|
June 30,
|
|
December
31,
|
|
2020
|
|
2019
|
|
(Amounts in
thousands, except share data)
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$
|
320,923
|
|
|
$
|
191,607
|
|
Investment
securities
|
25,587
|
|
|
27,780
|
|
Loans held for
sale
|
193
|
|
|
190
|
|
Loans, net of
unearned income
|
1,544,233
|
|
|
1,420,749
|
|
Less: Allowance for
loan losses
|
(25,228)
|
|
|
(21,811)
|
|
Net loans
|
1,519,005
|
|
|
1,398,938
|
|
Premises and
equipment, net
|
6,908
|
|
|
6,946
|
|
Bank owned life
insurance (BOLI)
|
26,703
|
|
|
26,410
|
|
Other
assets
|
36,565
|
|
|
29,289
|
|
Total
assets
|
$
|
1,935,884
|
|
|
$
|
1,681,160
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Noninterest-bearing
deposits
|
$
|
356,350
|
|
|
$
|
259,269
|
|
Interest-bearing
deposits
|
1,152,211
|
|
|
1,079,950
|
|
FHLBNY
borrowings
|
134,650
|
|
|
134,650
|
|
Other
borrowings
|
72,896
|
|
|
—
|
|
Subordinated
debentures
|
13,403
|
|
|
13,403
|
|
Other
liabilities
|
16,633
|
|
|
14,464
|
|
Total
liabilities
|
$
|
1,746,143
|
|
|
$
|
1,501,736
|
|
|
|
|
|
Total shareholders'
equity
|
$
|
188,257
|
|
|
$
|
177,605
|
|
Noncontrolling
interest in consolidated subsidiaries
|
1,484
|
|
|
1,819
|
|
Total
equity
|
$
|
189,741
|
|
|
$
|
179,424
|
|
|
|
|
|
Total liabilities and
equity
|
$
|
1,935,884
|
|
|
$
|
1,681,160
|
|
Table 2: Consolidated
Income Statements (Unaudited)
|
|
|
For three months
ended June 30,
|
|
For six months ended
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(Amounts in thousands
except share data)
|
Interest
income:
|
|
|
|
|
|
|
|
Interest and fees on
loans
|
$
|
20,139
|
|
|
$
|
18,523
|
|
|
$
|
40,467
|
|
|
$
|
35,964
|
|
Interest and dividends
on investments
|
259
|
|
|
290
|
|
|
537
|
|
|
605
|
|
Interest on federal
funds sold and deposits with banks
|
45
|
|
|
1,011
|
|
|
996
|
|
|
1,612
|
|
Total interest
income
|
20,443
|
|
|
19,824
|
|
|
42,000
|
|
|
38,181
|
|
Interest
expense:
|
|
|
|
|
|
|
|
Interest on
deposits
|
4,759
|
|
|
4,520
|
|
|
10,210
|
|
|
8,483
|
|
Interest on
borrowings
|
793
|
|
|
1,013
|
|
|
1,700
|
|
|
1,975
|
|
Total interest
expense
|
5,552
|
|
|
5,533
|
|
|
11,910
|
|
|
10,458
|
|
Net interest
income
|
14,891
|
|
|
14,291
|
|
|
30,090
|
|
|
27,723
|
|
Provision for loan
credit losses
|
2,000
|
|
|
450
|
|
|
3,396
|
|
|
1,150
|
|
Net interest income
after provision for loan losses
|
12,891
|
|
|
13,841
|
|
|
26,694
|
|
|
26,573
|
|
Non-interest
income
|
|
|
|
|
|
|
|
Gain on sale of SBA
loans
|
—
|
|
|
—
|
|
|
—
|
|
|
40
|
|
Other loan
fees
|
165
|
|
|
285
|
|
|
406
|
|
|
476
|
|
Bank owned life
insurance income
|
147
|
|
|
150
|
|
|
293
|
|
|
297
|
|
Service fees on
deposit accounts
|
514
|
|
|
487
|
|
|
1,082
|
|
|
868
|
|
Net loss on sale of
OREO
|
(21)
|
|
|
(343)
|
|
|
(153)
|
|
|
(343)
|
|
Other
|
121
|
|
|
187
|
|
|
286
|
|
|
347
|
|
Total non-interest
income
|
926
|
|
|
766
|
|
|
1,914
|
|
|
1,685
|
|
Non-interest
expense
|
|
|
|
|
|
|
|
Compensation and
benefits
|
2,689
|
|
|
2,319
|
|
|
5,234
|
|
|
4,460
|
|
Professional
services
|
396
|
|
|
521
|
|
|
751
|
|
|
912
|
|
Occupancy and
equipment
|
518
|
|
|
473
|
|
|
998
|
|
|
944
|
|
Data
processing
|
308
|
|
|
250
|
|
|
625
|
|
|
468
|
|
FDIC insurance and
other assessments
|
153
|
|
|
34
|
|
|
294
|
|
|
61
|
|
OREO
expense
|
67
|
|
|
117
|
|
|
178
|
|
|
192
|
|
Other operating
expense
|
731
|
|
|
803
|
|
|
1,651
|
|
|
1,640
|
|
Total non-interest
expense
|
4,862
|
|
|
4,517
|
|
|
9,731
|
|
|
8,677
|
|
Income before income
tax expense
|
8,955
|
|
|
10,090
|
|
|
18,877
|
|
|
19,581
|
|
Income tax
expense
|
2,311
|
|
|
2,481
|
|
|
4,865
|
|
|
4,797
|
|
Net income
attributable to Company and noncontrolling
interest
|
6,644
|
|
|
7,609
|
|
|
14,012
|
|
|
14,784
|
|
Less: Net income
attributable to noncontrolling interest
|
(103)
|
|
|
(141)
|
|
|
(259)
|
|
|
(255)
|
|
Net income
attributable to Company
|
6,541
|
|
|
7,468
|
|
|
13,753
|
|
|
14,529
|
|
Less: Preferred stock
dividend
|
(7)
|
|
|
(8)
|
|
|
(15)
|
|
|
(9)
|
|
Net income available
to common shareholders
|
$
|
6,534
|
|
|
$
|
7,460
|
|
|
$
|
13,738
|
|
|
$
|
14,520
|
|
Earnings per common
share
|
|
|
|
|
|
|
|
Basic
|
$
|
0.55
|
|
|
$
|
0.63
|
|
|
$
|
1.16
|
|
|
$
|
1.23
|
|
Diluted
|
$
|
0.55
|
|
|
$
|
0.62
|
|
|
$
|
1.15
|
|
|
$
|
1.21
|
|
Weighted average
common shares outstanding
|
|
|
|
|
|
|
|
Basic
|
11,849,118
|
|
|
11,837,378
|
|
|
11,849,041
|
|
|
11,828,432
|
|
Diluted
|
11,977,597
|
|
|
12,010,759
|
|
|
11,992,899
|
|
|
12,007,086
|
|
Table 3: Operating
Ratios
|
|
|
Three months
ended
|
|
Six months
ended
|
|
June 30,
|
|
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Return on average
assets
|
1.45
|
%
|
|
1.99
|
%
|
|
1.54
|
%
|
|
1.99
|
%
|
Return on average
common equity
|
14.04
|
%
|
|
18.32
|
%
|
|
14.97
|
%
|
|
18.29
|
%
|
Interest rate
spread
|
2.88
|
%
|
|
3.09
|
%
|
|
2.93
|
%
|
|
3.16
|
%
|
Net interest
margin
|
3.32
|
%
|
|
3.80
|
%
|
|
3.38
|
%
|
|
3.83
|
%
|
Efficiency
ratio
|
30.74
|
%
|
|
30.00
|
%
|
|
30.41
|
%
|
|
29.51
|
%
|
|
* Return on the
average assets is calculated using net income attributable to
Company and noncontrolling interest dividing average
assets
|
Table 4: Asset
Quality Data
|
|
June 30,
|
|
December
31,
|
|
2020
|
|
2019
|
|
(Amounts in thousands
except ratio data)
|
Allowance for loan
losses
|
$
|
25,228
|
|
|
$
|
21,811
|
|
Allowance for loan
losses to total loans
|
1.63
|
%
|
|
1.54
|
%
|
Allowance for loan
losses to non-accrual loans
|
251.98
|
%
|
|
407.83
|
%
|
Non-accrual
loans
|
$
|
10,012
|
|
|
$
|
5,348
|
|
OREO
|
$
|
3,772
|
|
|
$
|
4,727
|
|
View original
content:http://www.prnewswire.com/news-releases/parke-bancorp-inc-announces-second-quarter-2020-earnings-301100446.html
SOURCE Parke Bancorp, Inc.