Finance

Parke Bancorp Reports Financial Performance for First Quarter 2024, Highlighting Challenges and Strategic Planning

WASHINGTON TOWNSHIP, N.J., April 19, 2024 /PRNewswire/ -- Parke Bancorp, Inc. (NASDAQ: "PKBK"), the parent company of Parke Bank, has unveiled its operational results for the quarter ending March 31, 2024, unfolding a scenario shaped by economic fluctuations and strategic adjustments.

Executive Financial Summary

Steady Performance Amid Market Unpredictability

Parke Bancorp has disclosed net income available to common shareholders at $6.1 million, or $0.51 per basic and diluted common share for Q1 2024. This figure represents a substantial decline of $5.0 million, or 44.8%, when compared to the net income of $11.1 million, or $0.93 per basic and $0.92 per diluted common share, during the same period in 2023. The downswing in net income primarily reflects lower net interest income, an uptick in provision for credit losses, and reduced non-interest income.

Revenue Dynamics

The revenue for Parke Bancorp reached $30.5 million in Q1 2024. However, the bank witnessed an 18.0% reduction in net interest income, which amounted to $14.1 million compared to $17.1 million from the preceding year. Cumulatively, these statistics portray a challenging climate for net earnings despite robust financing operations and asset management efforts.

Balancing Assets and Deposits

While total assets marginally dipped by 0.7% to $2.01 billion from December 31, 2023, the bank encountered a 0.1% contraction in total loans, now at $1.79 billion. On the brighter side, total deposits experienced a 0.7% increase, climbing to $1.56 billion.

Detailed Financial Outcomes for Q1 2024

The first quarter presented a nuanced financial portrait, featuring declines in certain areas balanced by growth in others.

Net Interest Income and Expenses

Interest and fees on loans boosted interest income by $3.5 million, a result of increased average outstanding loan balances and higher market rates. This was, however, offset by a $0.1 million dip in interest earned on deposits held at the Federal Reserve Bank, due to reduced average balances.

Contrarily, interest expense saw a dramatic surge of 73.8% to $15.4 million, attributable to heightened market interest rates alongside a shift in the mix of deposits and borrowings.

Credit Losses and Non-interest Income

The bank handled provisions for credit losses at $0.2 million for Q1 2024, contrasting a $2.4 million recovery in 2023. Driven by a shift in the loan portfolio mix, the change indicated increased qualitative loss factors, particularly in the residential and multi-family loan portfolios.

Non-interest income fell by $0.7 million, or 40.4%, primarily due to a decrease in service fees on deposit accounts. This loss was partially buffered by an incremental rise in other loan fees.

Reduced Non-interest Expenses

In a positive turn, non-interest expenses receded by 3.3% to $6.5 million, thanks to cuts in compensation, benefits, and professional service fees. Nevertheless, this moderation was partly countered by increased OREO expense and FDIC insurance assessments.

Taxation and Profitability

Income tax expenses were lessened by $1.2 million compared to the prior year’s equivalent quarter, and the effective tax rate climbed to 26.6% from 23.6%.

A Closer Look at the Financial Condition

Parke Bancorp experienced a modest decline in total assets, with notable reductions in cash and cash equivalents, net loans, and other assets. Investment securities and borrowings also decreased, while equity showed a slight rise primarily through retained earnings.

Asset Quality and Credit Losses

Nonperforming loans shrank to $7.0 million or 0.39% of total loans, and OREO stayed static at $1.6 million. The allowance for credit losses stood at $31.9 million, corresponding to 1.79% of total loans.

CEO’s Perspective

Vito S. Pantilione, President and CEO of Parke Bancorp, reflected on the quarter's complexities, citing economic turmoil, interest rate confusion, and slow loan growth as major hurdles. He emphasized the importance of prudent expense management and the promise of a better net interest margin in enhancing future profitability. Ensuring a substantial allowance for credit losses was highlighted as crucial for maintaining financial resilience.

Forward-Looking Statement Disclaimer

The release contains forward-looking statements that are subject to uncertainties, potentially causing actual results to differ materially from current expectations. Factors include the company's ability to sustain a strong capital base, generate revenues, maintain steady growth and solid reserves, and leverage market opportunities while adhering to regulatory requirements. These forward-looking statements depend on numerous variables, hence caution should be exercised in relying on these predictions.

Financial Supplements and Operational Data

Operating ratios for the quarter showed that while return on average assets and common equity decreased significantly, the efficiency ratio rose, indicating higher relative operational costs. The bank's asset quality data demonstrated a solid allowance for credit losses and a commitment to reducing nonperforming loans.

The full details of financial performance, including condensed consolidated balance sheets and income statements, are provided in Tables 1 and 2, along with operational ratios and asset quality data in Tables 3 and 4.

View full financial tables

Parke Bancorp's operational results for Q1 2024 disclose the intricacies of navigating an unpredictable economic landscape. Despite a decrease in net income and certain headwinds, the institution stands firm on its financial bedrock, poised to capitalize on market opportunities and upholding its commitment to stakeholders.

About Parke Bancorp, Inc.

Parke Bancorp, Inc. is the esteemed holding company for Parke Bank, a full-service commercial bank that prides itself on local decision-making and personalized service. Parke Bank maintains a broad spectrum of commercial and consumer banking services and has built a reputation for supporting the communities it serves.

For additional information, please visit Parke Bank's official website at www.parkebank.com.