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Parke Bancorp, Inc. Announces Second Quarter 2018 Earnings

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Parke Bancorp, Inc. Announces Second Quarter 2018 Earnings

PR Newswire

WASHINGTON TOWNSHIP, N.J., July 19, 2018 /PRNewswire/ -- Parke Bancorp, Inc. ("Parke Bancorp") (NASDAQ: "PKBK"), the parent company of Parke Bank, announced its operating results for the quarter ended June 30, 2018.

Highlights for the second quarter and year-to-date June 2018:

  • Net income available to common shareholders increased $2.5 million or 74.7% to $5.9 million, or $0.66 per basic common share and $0.56 per diluted common share for the second quarter of 2018, compared to net income available to common shareholders of $3.4 million, or $0.41 per basic common share and $0.34 per diluted common share for the same period in 2017.
           
  • Net interest income increased 18.3% to $11.6 million for the second quarter 2018, compared to $9.8 million for the same quarter 2017.
             
  • Net income available to common shareholders for the first half of 2018 was $11.5 million or $1.28 per basic common share and $1.09 per diluted common share, compared to $6.6 million, or $0.79 per basic common share and $0.66 per diluted common share, for the six months ended June 30, 2017, an increase in net income of $4.9 million or 74.7%.
  • Net interest income increased 18.7% to $22.6 million for the first half of 2018, compared to $19.1 million for the same period in 2017.

The following is a recap of the significant items that impacted the second quarter and the first six months of 2018. Interest income increased $3.1 million and $5.5 million for the second quarter and first six months of 2018, respectively, compared to the same periods in 2017 primarily due to higher loan volumes and a higher yield on loans. Interest expense increased $1.3 million and $2.0 million for the second quarter and first six months of 2018 compared to the same periods in 2017, primarily due to higher deposit volumes and rates. The provision for loan losses decreased $800,000 for the second quarter and $900,000 for the first six months of 2018 compared to the same periods of 2017, primarily due to improving credit quality. For the second quarter of 2018, non-interest income increased $58,000 primarily attributable to increased fee income from loan and deposits accounts, partially offset by the increase in expense related to the sale of Other Real Estate Owned ("OREO") during the period. For the six month ended June 30, 2018, non-interest income increased $531,000 primarily due to increased fee income from loan and deposit accounts as well as a $130,000 increase in the gain on the sale of SBA loans. Non-interest expense increased $433,000 for the second quarter and $639,000 for the first six months of 2018 compared to the same periods of 2017, primarily due to an increase in compensation and occupancy costs reflecting the growth of the business. Income tax expense decreased $228,000 for the quarter and $397,000 for the first six months of 2018 due to a lower tax rates compared to the same periods of last year due to the Tax Cuts and Jobs Act enacted in December 2017. The effective tax rates for the quarter and first six months of 2018 were 23.9% and 24.0%, respectively compared to 36.9% and 36.8% for the same periods in 2017.

June 2018 discussion of financial data

  • Total assets increased to $1.29 billion at June 30, 2018, from $1.14 billion at December 31, 2017, an increase of $152.2 million or 13.4%.
         
  • Cash and cash equivalents totaled $110.2 million at June 30, 2018 as compared to $42.1 million at December 31, 2017. The $68.1 million increase was primarily due to the increase in deposits.
           
  • The investment securities portfolio decreased to $35.3 million at June 30, 2018, from $40.3 million at December 31, 2017, a decrease of $4.9 million or 12.3% primarily due to the payoffs of certain securities.
             
  • Gross loans increased to $1.10 billion at June 30, 2018, from $1.01 billion at December 31, 2017, an increase of $89.5 million or 8.85%.
       
  • Nonperforming loans decreased to $3.2 million, representing 0.29% of total loans, a decrease of $1.3 million, or 28.8%, from $4.5 million of nonperforming loans at December 31, 2017. OREO at June 30, 2018 was $6.2 million, a decrease of 15.0% compared to $7.2 million at December 31, 2017 primarily due to the sale and write-down of OREO assets. Nonperforming assets (consisting of nonperforming loans and OREO represented 0.7% of total assets at June 30, 2018, as compared to 1.0% of total assets at December 31, 2017. Loans past due 30 to 89 days were $616,000 at June 30, 2018, an increase of $172,000 from December 31, 2017.
       
  • The allowance for loan losses was $17.3 million at June 30, 2018, as compared to $16.5 million at December 31, 2017. The ratio of the allowance for loan losses to total loans was 1.57% at June 30, 2018, and 1.63% at December 31, 2017. The ratio of allowance for loan losses to non-performing loans improved to 535.4% at June 30, 2018, compared to 364.7%, at December 31, 2017.
         
  • Total deposits were $1.02 billion at June 30, 2018, up from $866.4 million at December 31, 2017, an increase of $151.5 million or 17.5% compared to December 31, 2017. The deposit growth was driven primarily by the Bank's efforts to expand its small- and mid-sized commercial customer base and also by the Bank's deposit promotions.
       
  • Total borrowings were $118.1 million at June 30, 2018, a decrease of $10.0 million or 7.8% from December 31, 2017.
     
  • Total shareholders' equity increased to $143.4 million at June 30, 2018, from $134.8 million at December 31, 2017, an increase of $8.6 million or 6.4% 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:

"The economy continues to be strong both nationally and regionally. Unemployment is down to record lows while inflation remains in check. Parke Bank continues to be well positioned for growth in assets and profitability. Our investment in expanding our lending team and footprint has resulted in strong growth of our loan portfolio and interest income. Net income available to common shareholders increased 75% from the 2nd quarter 2017 to 2nd quarter 2018. We also have developed new deposit products that have generated an increase in our non-interest income. Equally important, we continue to improve our asset quality as non-performing loans decreased to $3.2 million at June 30, 2018. All of these factors have combined with our diligent control of our expenses to produce our strong 2nd quarter and year to date results."

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



June 30,


December 31,


2018


2017


 (Amounts in thousands, except share data)

Assets




Cash and cash equivalents

110,211



42,113


Investment securities

35,321



40,259


Loans held for sale

1,839



1,541


Loans, net of unearned income

1,101,243



1,011,717


Less: Allowance for loan and lease losses

(17,273)



(16,533)


Net loans and leases

1,083,970



995,184


Premises and equipment, net

6,964



7,025


Bank owned life insurance (BOLI)

25,499



25,196


Other assets

25,831



26,134


Total assets

1,289,635



1,137,452






Liabilities








Noninterest-bearing deposits

210,669



124,356


Interest-bearing deposits

807,227



742,027


Federal Home Loan Bank borrowings

104,650



114,650


Subordinated debentures

13,403



13,403


Other liabilities

9,044



8,236


Total liabilities

1,144,993



1,002,672






Total shareholders' equity

143,401



134,780


Noncontrolling interest in consolidated subsidiaries

1,241




Total equity

144,642



134,780






Total liabilities and shareholders' equity

1,289,635



1,137,452


 

Table 2: Consolidated Income Statement (Unaudited)


For the Three Months Ended
 June 30,


For the Six Months Ended
 June 30,


2018


2017


2018


2017


(in thousands except share data)

Interest income:








Interest and fees on loans

$

14,243



$

11,356



$

27,256



$

22,006


Interest and dividends on investments

332



351



681



725


Interest on federal funds sold and cash equivalents

305



63



448



135


Total interest income

14,880



11,770



28,385



22,866


Interest expense:








Interest on deposits

2,620



1,547



4,573



3,012


Interest on borrowings

665



420



1,196



795


Total interest expense

3,285



1,967



5,769



3,807


Net interest income

11,595



9,803



22,616



19,059


Provision for loan losses

200



1,000



600



1,500


Net interest income after provision for loan losses

11,395



8,803



22,016



17,559


Noninterest income:








Gain on sale of SBA loans

36



84



214



84


Loan fees

409



175



560



241


Gain on Bank Owned Life Insurance

153



163



303



323


Service fees on deposit accounts

399



99



685



187


Loss on sale and write-down of real estate owned

(509)



(389)



(509)



(395)


Other

161



459



265



547


Total noninterest income

649



591



1,518



987


Noninterest expense:








Compensation and benefits

1,953



1,692



3,907



3,593


Professional services

418



382



792



747


Occupancy and equipment

419



326



840



669


Data processing

194



186



391



368


FDIC insurance

92



71



169



142


OREO expense

165



146



334



303


Other operating expense

753



758



1,456



1,428


Total noninterest expense

3,994



3,561



7,889



7,250


Income before income tax expense

8,050



5,833



15,645



11,296


Income tax expense

1,923



2,151



3,758



4,155


Net income attributable to Company and noncontrolling interest

6,127



3,682



11,887



7,141


Net income attributable to noncontrolling interest

16



17



16



18


Net income attributable to Company

6,111



3,699



11,871



7,159


Preferred stock dividend and discount accretion

168



297



407



596


Net income available to common shareholders

$

5,943



$

3,402



$

11,464



$

6,563


Earnings per common share:








Basic

$

0.66



$

0.41



$

1.28



$

0.79


Diluted

$

0.56



$

0.34



$

1.09



$

0.66


Weighted average shares outstanding:








Basic

9,044,159



8,335,041



8,933,820



8,328,093


Diluted

10,909,130



10,913,227



10,909,294



10,901,965


 

Table 3: Operating Ratios


Three months ended


Six months ended


June 30,


June 30,


2018


2017


2018


2017

Return on average assets

1.99

%


1.44

%


2.01

%


1.42

%

Return on average common equity

18.49

%


12.13

%


18.37

%


11.94

%

Interest rate spread

3.60

%


3.84

%


3.69

%


3.82

%

Net interest margin

3.92

%


4.00

%


3.97

%


3.97

%

Efficiency ratio

32.62

%


34.26

%


32.69

%


36.17

%

 

Table 4: Asset Quality Data


June 30,


December 31,


2018


2017


(Amounts in thousands except ratio data)

Allowance for loan losses

$

17,273



$

16,533


Allowance for loan losses to total loans

1.57

%


1.63

%

Allowance for loan losses to non-accrual loans

535.4

%


364.7

%

Non-accrual loans

3,226



4,534


OREO

6,158



7,248


 

Cision View original content:http://www.prnewswire.com/news-releases/parke-bancorp-inc-announces-second-quarter-2018-earnings-300683998.html

SOURCE Parke Bancorp, Inc.

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