PARKE BANCORP, INC. ANNOUNCES SECOND QUARTER 2024 EARNINGS
Highlights: |
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Net Income: |
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Revenue: |
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Total Assets: |
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Total Loans: |
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Total Deposits: |
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Highlights for the three and six months ended
- Net income available to common shareholders was
$6.5 million , or$0.54 per basic common share and$0.53 per diluted common share, for the three months endedJune 30, 2024 , a decrease of$1.7 million , or 20.6%, compared to net income available to common shareholders of$8.1 million , or$0.68 per basic common share and$0.67 per diluted common share, for the three months endedJune 30, 2023 . The decrease was primarily due to higher interest expense and lower non-interest income. - Net interest income decreased
$1.6 million , or 9.8%, to$14.3 million for the three months endedJune 30, 2024 , compared to$15.9 million for the same period in 2023. - Provision for credit losses was
$0.5 million for the three months endedJune 30, 2024 , compared to a provision for credit losses of$0.5 million for the same period in 2023. - Non-interest income decreased
$0.4 million , or 24.7%, to$1.2 million for the three months endedJune 30, 2024 , compared to$1.6 million for the same period in 2023. - Non-interest expense decreased
$0.2 million , or 2.2%, to$6.2 million for the three months endedJune 30, 2024 , compared to$6.4 million for the same period in 2023. - Net income available to common shareholders was
$12.6 million , or$1.05 per basic common share and$1.04 per diluted common share, for the six months endedJune 30, 2024 , a decrease of$6.7 million , or 34.6%, compared to net income available to common shareholders of$19.2 million , or$1.61 per basic common share and$1.59 per diluted common share, for the same period in 2023. The decrease is primarily due to increased interest expense on deposits, an increase in the provision for credit losses, and a decrease in non-interest income. - Net interest income decreased
$4.6 million , or 14.1%, to$28.4 million for the six months endedJune 30, 2024 , compared to$33.0 million for the same period in 2023. - The provision for credit losses increased
$2.6 million , or 136.2%, to$0.7 million for the six months endedJune 30, 2024 , compared to a recovery of provision for credit losses of$1.9 million for the same period in 2023. - Non-interest income decreased
$1.1 million , or 33.0%, to$2.3 million for the six months endedJune 30, 2024 , compared to$3.4 million for the same period in 2023.
The following is a recap of the significant items that impacted the three and six months ended
Interest income increased
Interest expense increased
The provision for credit losses was
Non-interest income decreased
Non-interest expense decreased
Income tax expense decreased
- Total assets increased to
$2.03 billion atJune 30, 2024 , from$2.02 billion atDecember 31, 2023 , an increase of$3.6 million , or 0.18%, primarily due to an increase in net loans, partially offset by a decrease in cash and cash equivalents. - Cash and cash equivalents totaled
$167.7 million atJune 30, 2024 , as compared to$180.4 million atDecember 31, 2023 . The decrease in cash and cash equivalents was primarily due to a decrease in deposits, and an increase in loan balance, partially offset by an increase in borrowings. - The investment securities portfolio decreased to
$15.5 million atJune 30, 2024 , from$16.4 million atDecember 31, 2023 , a decrease of$0.9 million , or 5.4%, primarily due to pay downs of securities. - Gross loans increased
$17.8 million or 1.0%, to$1.8 billion atJune 30, 2024 . - Nonperforming loans at
June 30, 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 atDecember 31, 2023 . OREO atJune 30, 2024 was$1.6 million , unchanged fromDecember 31, 2023 . Nonperforming assets (consisting of nonperforming loans and OREO) represented 0.42% and 0.44% of total assets atJune 30, 2024 andDecember 31, 2023 , respectively. Loans past due 30 to 89 days were$5.1 million atJune 30, 2024 , an increase of$4.9 million fromDecember 31, 2023 , and increased mainly due to one commercial non-occupied loan with a principal balance of$3.8 million which became delinquent during the quarter endedJune 30, 2024 . - The allowance for credit losses was
$32.4 million atJune 30, 2024 , as compared to$32.1 million atDecember 31, 2023 . The ratio of the allowance for credit losses to total loans was 1.80% atJune 30, 2024 and atDecember 31, 2023 . The ratio of allowance for credit losses to non-performing loans was 464.3% atJune 30, 2024 , compared to 442.5%, atDecember 31, 2023 . - Total deposits were
$1.50 billion atJune 30, 2024 , down from$1.55 billion atDecember 31, 2023 , a decrease of$56.4 million or 3.6% compared toDecember 31, 2023 . The decrease in deposits was primarily driven by a decrease in non-interest demand deposits of$33.4 million , a decrease in savings deposits of$16.4 million , and a decrease in time deposits of$44.7 million , partially offset by an increase in money market deposits of$42.8 million . - Total borrowings increased
$50.1 million during the six months endedJune 30, 2024 , to$218.2 million atJune 30, 2024 from$168.1 million atDecember 31, 2023 , primarily due to$50.0 million of FHLBNY term borrowings. - Total equity increased to
$292.8 million atJune 30, 2024 , up from$284.3 million atDecember 31, 2023 , an increase of$8.5 million , or 3.0%, primarily due to the retention of earnings, partially offset by the payment of$4.3 million of cash dividends. Tangible book value per common share atJune 30, 2024 was$24.46 , compared to$23.75 atDecember 31, 2023 .
CEO outlook and commentary
"The continued surprising strength in the economy has caused the current interest rate environment to remain 'higher for longer' which puts continued pressure on banks in the battle for deposits and the cost of funding. The increased cost of funding continues to outpace the yield of our loan portfolio, negatively affecting our Net Interest Income. Some people still believe that interest rates will be lowered in 2024, by possibly 25 to 50 basis points instead of the initial belief that rates will be reduced 150 basis points in 2024. The upcoming presidential election combined with the continued wars in
"We remain focused on controlling our expenses while supporting a strong Allowance for Credit Losses at 1.8%, which provides the foundation of generating a quality return to our investors."
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 reserves and good credit quality; our ability to provide a quality return to our investors; 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
(PKBK-ER)
Financial Supplement:
Table 1: Condensed Consolidated Balance Sheets (Unaudited) |
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Condensed Consolidated Balance Sheets |
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2024 |
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2023 |
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(Dollars in thousands) |
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Assets |
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Cash and cash equivalents |
$ 167,678 |
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$ 180,376 |
Investment securities |
15,509 |
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16,387 |
Loans, net of unearned income |
1,805,141 |
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1,787,340 |
Less: Allowance for credit losses |
(32,425) |
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(32,131) |
Net loans |
1,772,716 |
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1,755,210 |
Premises and equipment, net |
5,441 |
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5,579 |
Bank owned life insurance (BOLI) |
28,738 |
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28,415 |
Other assets |
37,056 |
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37,534 |
Total assets |
$ 2,027,138 |
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$ 2,023,500 |
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Liabilities and Equity |
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Non-interest bearing deposits |
$ 198,761 |
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$ 232,189 |
Interest bearing deposits |
1,297,680 |
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1,320,638 |
FHLBNY borrowings |
175,000 |
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125,000 |
Subordinated debentures |
43,206 |
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43,111 |
Other liabilities |
19,691 |
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18,245 |
Total liabilities |
1,734,338 |
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1,739,183 |
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Total shareholders' equity |
292,800 |
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284,317 |
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Total liabilities and equity |
$ 2,027,138 |
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$ 2,023,500 |
Table 2: Consolidated Income Statements (Unaudited) |
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For the three months |
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For the six months |
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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) |
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Interest income: |
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Interest and fees on loans |
$ 28,732 |
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$ 25,763 |
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$ 56,815 |
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$ 50,307 |
Interest and dividends on investments |
248 |
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227 |
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497 |
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437 |
Interest on deposits with banks |
1,209 |
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1,277 |
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2,354 |
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2,547 |
Total interest income |
30,189 |
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27,267 |
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59,666 |
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53,291 |
Interest expense: |
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Interest on deposits |
13,684 |
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9,079 |
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27,141 |
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16,661 |
Interest on borrowings |
2,193 |
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2,321 |
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4,159 |
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3,615 |
Total interest expense |
15,877 |
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11,400 |
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31,300 |
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20,276 |
Net interest income |
14,312 |
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15,867 |
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28,366 |
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33,015 |
Provision for (recovery of) credit losses |
483 |
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500 |
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687 |
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(1,900) |
Net interest income after provision for (recovery of) credit losses |
13,829 |
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15,367 |
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27,679 |
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34,915 |
Non-interest income |
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Service fees on deposit accounts |
359 |
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931 |
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738 |
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2,146 |
Gain on sale of SBA loans |
25 |
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— |
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25 |
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— |
Other loan fees |
163 |
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241 |
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402 |
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419 |
Bank owned life insurance income |
162 |
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147 |
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322 |
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290 |
Other |
492 |
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277 |
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776 |
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523 |
Total non-interest income |
1,201 |
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1,596 |
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2,263 |
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3,378 |
Non-interest expense |
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Compensation and benefits |
3,070 |
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2,940 |
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6,289 |
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6,581 |
Professional services |
551 |
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494 |
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996 |
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1,087 |
Occupancy and equipment |
672 |
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645 |
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1,313 |
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1,290 |
Data processing |
264 |
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367 |
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629 |
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668 |
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322 |
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347 |
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653 |
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573 |
OREO expense |
236 |
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198 |
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589 |
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370 |
Other operating expense |
1,120 |
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1,381 |
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2,301 |
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2,562 |
Total non-interest expense |
6,235 |
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6,372 |
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12,770 |
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13,131 |
Income before income tax expense |
8,795 |
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10,591 |
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17,172 |
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25,162 |
Income tax expense |
2,340 |
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2,461 |
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4,566 |
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5,902 |
Net income attributable to Company |
6,455 |
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8,130 |
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12,606 |
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19,260 |
Less: Preferred stock dividend |
(5) |
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(7) |
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(11) |
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(14) |
Net income available to common shareholders |
$ 6,450 |
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$ 8,123 |
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$ 12,595 |
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$ 19,246 |
Earnings per common share |
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Basic |
$ 0.54 |
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$ 0.68 |
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$ 1.05 |
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$ 1.61 |
Diluted |
$ 0.53 |
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$ 0.67 |
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$ 1.04 |
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$ 1.59 |
Weighted average common shares outstanding |
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Basic |
11,958,776 |
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11,945,424 |
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11,960,487 |
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11,944,794 |
Diluted |
12,119,359 |
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12,119,004 |
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12,125,546 |
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12,139,899 |
Table 3: Operating Ratios (unaudited) |
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Three months ended |
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Six months ended |
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2024 |
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2023 |
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2024 |
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2023 |
Return on average assets |
1.34 % |
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1.67 % |
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1.31 % |
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1.99 % |
Return on average common equity |
8.88 % |
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11.74 % |
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8.72 % |
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14.15 % |
Interest rate spread |
1.95 % |
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2.45 % |
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1.92 % |
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2.66 % |
Net interest margin |
3.03 % |
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3.34 % |
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3.00 % |
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3.49 % |
Efficiency ratio* |
40.19 % |
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36.49 % |
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41.69 % |
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36.08 % |
* 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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2024 |
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2023 |
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(Amounts in thousands except ratio data) |
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Allowance for credit losses on loans |
$ 32,425 |
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$ 32,131 |
Allowance for credit losses to total loans |
1.80 % |
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1.80 % |
Allowance for credit losses to non-accrual loans |
464.34 % |
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442.51 % |
Non-accrual loans |
$ 6,983 |
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$ 7,261 |
OREO |
$ 1,558 |
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$ 1,550 |
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