WASHINGTON TOWNSHIP, N.J., Jan. 22, 2020 /PRNewswire/ --
Highlights: | |
Net Income for the year: | $29.8 million, increased 22.3% over 2018 |
Total Assets: | $1.68 billion, increased 14.6% over 2018 |
Total Loans: | $1.42 billion, increased 14.4% over 2018 |
Total Deposits: | $1.34 billion, increased 13.1% over 2018 |
Parke Bancorp, Inc. ("Parke Bancorp") (NASDAQ: "PKBK"), the parent company of Parke Bank, announced its operating results for the quarter and year ended December 31, 2019.
Highlights for the fourth quarter and year ended December 31, 2019:
- Net income available to common shareholders increased $0.7 million, or 10.7%, to $7.5 million, or $0.70 per basic common share and $0.69 per diluted common share for the fourth quarter of 2019, compared to net income available to common shareholders of $6.8 million, or $0.65 per basic common share and $0.63 per diluted common share for the same quarter in 2018.
- Net interest income increased 11.1% to $14.7 million for the fourth quarter of 2019, compared to $13.2 million for the same quarter of 2018.
- Net income available to common shareholders increased $5.4 million or 22.3%, to $29.8 million or $2.77 per basic common share and $2.73 per diluted common share for the year ended December 31, 2019, compared to net income available to common shareholders of $24.4 million, or $2.53 per basic common share and $2.28 per diluted common share for the year ended December 31, 2018.
- Net interest income increased 18.3% to $56.9 million for the year ended December 31, 2019, compared to $48.1 million for the same period in 2018.
The following is a recap of the significant items that impacted the fourth quarter and the year ended December 31, 2019 period:
Interest income increased $3.5 million and $17.7 million for the fourth quarter and year ended December 31, 2019 periods, respectively, compared to the same periods in 2018 primarily due to higher loan volumes and higher yields on loans. In addition, a $1.8 million increase in interest income from federal funds sold and deposits with banks also contributed to the increase in interest income for 2019. Interest expense increased $2.0 million and $8.9 million for the fourth quarter of 2019 and the year ended December 31, 2019, respectively, compared to the same periods in 2018, primarily due to higher deposit volumes and interest rates.
The provision for loan and lease losses increased $50,000 for the fourth quarter of 2019 and increased $900,000 for the year ended December 31, 2019 compared to the same periods in 2018. The increase in the provision was primarily due to increased loan volumes.
For the fourth quarter of 2019 and the year ended December 31, 2019, non-interest income increased $59,000 and $432,000, respectively, compared to the same periods of 2018, with the increase primarily attributable to increased fee income from deposit accounts and decreased net losses on sale of OREO, partially offset by decrease in gains on the sale of SBA loans and decrease in income from loan fees.
Non-interest expense increased $338,000 and $1.7 million for the fourth quarter and the year ended December 31, 2019, respectively, compared to the same periods of 2018, primarily due to an increase in compensation, professional services, data processing cost, partially offset by decrease in deposits insurance assessment fees. The increases in non-interest expenses for the quarter and the year mainly reflect the growth of the business.
Income tax expense increased $433,000 for the fourth quarter of 2019, and increased $1.4 million for the year ended December 31, 2019, compared to the same periods in 2018. The effective tax rates for the quarter and year ended December 31, 2019 were 24.2% and 24.4%, respectively, compared to 22.4% and 25.1% for the same periods in 2018.
December 31, 2019 discussion of financial condition
- Total assets increased to $1.68 billion at December 31, 2019, from $1.47 billion at December 31, 2018, an increase of $213.8 million or 14.6% primarily due to increase in loans and increase in cash deposits with the Federal Reserve Bank.
- Cash and cash equivalents totaled $191.6 million at December 31, 2019 as compared to $154.5 million at December 31, 2018.
- The investment securities portfolio decreased to $27.8 million at December 31, 2019, from $32.4 million at December 31, 2018, a decrease of $4.6 million or 14.2% primarily due to payoffs of securities.
- Gross loans increased to $1.42 billion at December 31, 2019, from $1.24 billion at December 31, 2018, an increase of $179.4 million or 14.4%.
- Nonperforming loans at December 31, 2019 increased to $5.3 million, representing 0.38% of total loans, an increase of $2.3 million, or 74.5%, from $3.1 million of nonperforming loans at December 31, 2018. OREO at December 31, 2019 was $4.7 million, a decrease of $397,000 compared to $5.1 million at December 31, 2018 primarily due to sale and valuation adjustments of OREO assets, and partially offset by the loan transferred into OREO. Nonperforming assets (consisting of nonperforming loans and OREO) represented 0.6% of total assets at December 31, 2019 and December 31, 2018, respectively. Loans past due 30 to 89 days were $2.0 million at December 31, 2019, an increase of $1.7 million from December 31, 2018.
- The allowance for loan losses was $21.8 million at December 31, 2019, as compared to $19.1 million at December 31, 2018. The ratio of the allowance for loan losses to total loans was 1.54% at December 31, 2019 and at December 31, 2018. The ratio of allowance for loan losses to non-performing loans was 407.8% at December 31, 2019, compared to 622.3%, at December 31, 2018.
- Total deposits were $1.34 billion at December 31, 2019, up from $1.18 billion at December 31, 2018, an increase of $155.3 million or 13.1% compared to December 31, 2018. Deposits growth was primarily due to an increase in time deposits.
- Total borrowings were $148.1 million at December 31, 2019 as compared to $118.1 million at December 31, 2018. The increase in borrowings was primarily due to the increase in advances from FHLBNY.
- Total equity increased to $179.4 million at December 31, 2019, up from $155.0 million at December 31, 2018, an increase of $24.4 million or 15.8% primarily due to the retention of earnings.
CEO outlook and commentary
Vito S. Pantilione, President and Chief Executive Officer of Parke Bancorp and Parke Bank, provided the following statement:
2019 was a great year for Parke Bancorp and our shareholders. We generated record earnings of close to $30.0 million. Our company's assets grew over 15% with the continued strength of our loan portfolio growth. The growth of our deposit base kept pace with our loan portfolio expansion, growing over 13%. The financial strength of the Company was supported by close to a 16% growth in our total equity. Management and staff continue to work hard and efficiently keeping our very important cost efficiency ratio below 30%, one of the best in the banking industry.
The economy remained strong in 2019 with unemployment continuing at record lows while inflation remains under control and GDP growth. This was accomplished while the global economy falters, again providing confidence in the strength of the United States economy. 2020, although an election year which could pose uncertainty, looks like it could be another good year. The strength of the economy appears to have supported the Feds putting on hold any additional interest rate adjustments at the end of 2019, with no indication of any planned increases. Our company is again well positioned to take advantage of market opportunities with strong earnings, strong equity and an expanding market share.
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 take advantage of opportunities in the improving economy and banking environment; 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 and support our profitability; our ability to prudently expand our operations in our market and in new markets; our ability to tightly control expenses; 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.
Financial Supplement:
Table 1: Condensed Balance Sheet (Unaudited)
Parke Bancorp, Inc. and Subsidiaries | |||||||
Consolidated Balance Sheets | |||||||
December 31, | December 31, | ||||||
2019 | 2018 | ||||||
(Amounts in thousands, except share data) | |||||||
Assets | |||||||
Cash and cash equivalents | $ | 191,607 | $ | 154,471 | |||
Investment securities | 27,780 | 32,391 | |||||
Loans held for sale | 190 | 419 | |||||
Loans, net of unearned income | 1,420,749 | 1,241,157 | |||||
Less: Allowance for loan losses | (21,811) | (19,075) | |||||
Net loans | 1,398,938 | 1,222,082 | |||||
Premises and equipment, net | 6,946 | 6,783 | |||||
Bank owned life insurance (BOLI) | 26,410 | 25,809 | |||||
Other assets | 29,289 | 25,443 | |||||
Total assets | $ | 1,681,160 | $ | 1,467,398 | |||
Liabilities | |||||||
Noninterest-bearing deposits | $ | 259,269 | $ | 360,329 | |||
Interest-bearing deposits | 1,079,950 | 823,544 | |||||
FHLBNY borrowings | 134,650 | 104,650 | |||||
Subordinated debentures | 13,403 | 13,403 | |||||
Other liabilities | 14,464 | 10,476 | |||||
Total liabilities | $ | 1,501,736 | $ | 1,312,402 | |||
Total shareholders' equity | 177,605 | 153,557 | |||||
Noncontrolling interest in consolidated subsidiaries | 1,819 | 1,439 | |||||
Total equity | 179,424 | 154,996 | |||||
Total liabilities and shareholders' equity | $ | 1,681,160 | $ | 1,467,398 | |||
Table 2: Consolidated Income Statement (Unaudited)
For three months ended | For the year ended | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(Amounts in thousands except share data) | |||||||||||||||
Interest income: | |||||||||||||||
Interest and fees on loans | 20,095 | 16,546 | 75,172 | 59,139 | |||||||||||
Interest and dividends on investments | 272 | 328 | 1,161 | 1,342 | |||||||||||
Interest on federal funds sold and deposits with banks | 574 | 595 | 3,207 | 1,393 | |||||||||||
Total interest income | 20,941 | 17,469 | 79,540 | 61,874 | |||||||||||
Interest expense: | |||||||||||||||
Interest on deposits | 5,289 | 3,447 | 18,687 | 11,071 | |||||||||||
Interest on borrowings | 981 | 818 | 3,968 | 2,700 | |||||||||||
Total interest expense | 6,270 | 4,265 | 22,655 | 13,771 | |||||||||||
Net interest income | 14,671 | 13,204 | 56,885 | 48,103 | |||||||||||
Provision for loan losses | 650 | 600 | 2,700 | 1,800 | |||||||||||
Net interest income after provision for loan losses | 14,021 | 12,604 | 54,185 | 46,303 | |||||||||||
Noninterest income: | |||||||||||||||
Gain on sale of SBA loans | — | 151 | 116 | 378 | |||||||||||
Loan fees | 243 | 284 | 982 | 1,121 | |||||||||||
Bank owned life insurance income | 151 | 155 | 601 | 613 | |||||||||||
Service fees on deposit accounts | 524 | 377 | 1,921 | 1,482 | |||||||||||
Net loss on sale and valuation adjustments of OREO | (99) | (331) | (246) | (690) | |||||||||||
Other | 45 | 169 | 465 | 503 | |||||||||||
Total noninterest income | 864 | 805 | 3,839 | 3,407 | |||||||||||
Noninterest expense: | |||||||||||||||
Compensation and benefits | 2,493 | 2,296 | 9,188 | 8,251 | |||||||||||
Professional services | 451 | 369 | 1,946 | 1,419 | |||||||||||
Occupancy and equipment | 436 | 391 | 1,793 | 1,675 | |||||||||||
Data processing | 316 | 231 | 1,046 | 835 | |||||||||||
FDIC insurance and other assessments | (14) | 129 | 56 | 420 | |||||||||||
OREO expense | 113 | 131 | 415 | 611 | |||||||||||
Other operating expense | 1,015 | 925 | 3,508 | 3,084 | |||||||||||
Total noninterest expense | 4,810 | 4,472 | 17,952 | 16,295 | |||||||||||
Income before income tax expense | 10,075 | 8,937 | 40,072 | 33,415 | |||||||||||
Income tax expense | 2,437 | 2,004 | 9,785 | 8,377 | |||||||||||
Net income attributable to Company and noncontrolling interest | 7,638 | 6,933 | 30,287 | 25,038 | |||||||||||
Less: Net income attributable to noncontrolling interest | (90) | (106) | (446) | (214) | |||||||||||
Net income attributable to Company | 7,548 | 6,827 | 29,841 | 24,824 | |||||||||||
Less: Preferred stock dividend and discount accretion | (8) | (17) | (24) | (446) | |||||||||||
Net income available to common shareholders | $ | 7,540 | $ | 6,810 | $ | 29,817 | $ | 24,378 | |||||||
Earnings per common share: | |||||||||||||||
Basic | $ | 0.70 | $ | 0.65 | $ | 2.77 | $ | 2.53 | |||||||
Diluted | $ | 0.69 | $ | 0.63 | $ | 2.73 | $ | 2.28 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 10,771,089 | 10,458,554 | 10,761,906 | 9,629,467 | |||||||||||
Diluted | 10,923,988 | 10,906,729 | 10,919,166 | 10,911,344 | |||||||||||
Table 3: Operating Ratios
Three months ended | For the year ended | ||||||||||
December 31, | December 31, | ||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||
Return on average assets | 1.87 | % | 1.98 | % | 1.94 | % | 1.98 | % | |||
Return on average common equity | 17.05 | % | 18.16 | % | 17.93 | % | 17.99 | % | |||
Interest rate spread | 3.13 | % | 3.35 | % | 3.09 | % | 3.54 | % | |||
Net interest margin | 3.69 | % | 3.88 | % | 3.75 | % | 3.92 | % | |||
Efficiency ratio | 30.96 | % | 31.92 | % | 29.56 | % | 31.63 | % | |||
* Return on the average assets is calculated using net income attributable to Company and noncontrolling interest dividing average assets | |||||||||||
Table 4: Asset Quality Data
December 31, | December 31, | ||||||
2019 | 2018 | ||||||
(Amounts in thousands except ratio data) | |||||||
Allowance for loan losses | $ | 21,811 | $ | 19,075 | |||
Allowance for loan losses to total loans | 1.54 | % | 1.54 | % | |||
Allowance for loan losses to non-accrual loans | 407.8 | % | 622.3 | % | |||
Non-accrual loans | $ | 5,348 | $ | 3,065 | |||
OREO | $ | 4,727 | $ | 5,124 | |||
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SOURCE Parke Bancorp, Inc.
