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Parke Bancorp(PKBK) - 2024 Q2 - Quarterly Report
PKBKParke Bancorp(PKBK)2024-08-07 20:17

Financial Performance - Net income available to common shareholders for Q2 2024 decreased by 20.6% to 6.5millioncomparedto6.5 million compared to 8.1 million in Q2 2023[83] - Net income for the six months ended June 30, 2024, decreased by 34.6% to 12.6million,drivenbyhigherinterestexpenseandcreditlossprovisions[87]−NetinterestincomeforQ22024decreasedby9.812.6 million, driven by higher interest expense and credit loss provisions[87] - Net interest income for Q2 2024 decreased by 9.8% to 14.3 million, primarily due to a 4.5millionincreaseininterestexpense[84]−NetinterestincomeforthesixmonthsendedJune30,2024,decreasedby14.14.5 million increase in interest expense[84] - Net interest income for the six months ended June 30, 2024, decreased by 14.1% to 28.4 million, despite a 6.4millionincreaseininterestincome[88]−NetinterestincomeforthesixmonthsendedJune30,2024,was6.4 million increase in interest income[88] - Net interest income for the six months ended June 30, 2024, was 28.4 million, compared to 33.0millioninthesameperiodin2023,reflectingadeclineininterestratespreadfrom2.6633.0 million in the same period in 2023, reflecting a decline in interest rate spread from 2.66% to 1.92%[95] Interest Income and Expense - Interest income increased by 10.7% to 2.9 million in Q2 2024, driven by higher loan balances and market interest rates[84] - Interest-bearing deposits yielded 4.24% in 2024, up from 2.82% in 2023, driven by higher rates on money market deposits (4.88% vs. 3.63%) and brokered certificates of deposit (5.49% vs. 4.74%)[95] - Total interest-earning assets yielded 6.31% in 2024, up from 5.64% in 2023, driven by higher yields on loans (6.39% vs. 5.74%) and investment securities (4.29% vs. 3.28%)[95] Non-Interest Income and Expense - Non-interest income decreased by 0.4millionto0.4 million to 1.2 million in Q2 2024, mainly due to a 0.6milliondecreaseindepositaccountservicefees[85]−Non−interestincomeforthesixmonthsendedJune30,2024,decreasedby33.00.6 million decrease in deposit account service fees[85] - Non-interest income for the six months ended June 30, 2024, decreased by 33.0% to 2.3 million, primarily due to a 1.4milliondecreaseindepositaccountservicefees[90]−Non−interestexpensedecreasedby2.11.4 million decrease in deposit account service fees[90] - Non-interest expense decreased by 2.1% to 6.2 million in Q2 2024, primarily due to reductions in other operating and data processing expenses[86] Assets and Liabilities - Total assets as of June 30, 2024, were 2.03billion,withtotalequityof2.03 billion, with total equity of 292.8 million[82] - Total assets increased by 3.6million(0.23.6 million (0.2%) to 2.03 billion at June 30, 2024, driven by a 17.8millionincreaseinloansanda17.8 million increase in loans and a 2.3 million increase in restricted stock, partially offset by a 12.7milliondecreaseincashandcashequivalents[96]−Loansreceivableincreasedby12.7 million decrease in cash and cash equivalents[96] - Loans receivable increased by 17.8 million (1.0%) to 1.805billion,primarilyduetogrowthintheconstructionandmulti−familyportfolios,partiallyoffsetbyadecreaseintheCREnon−owneroccupiedportfolio[96]−Loansreceivableincreasedto1.805 billion, primarily due to growth in the construction and multi-family portfolios, partially offset by a decrease in the CRE non-owner occupied portfolio[96] - Loans receivable increased to 1.81 billion at June 30, 2024, from 1.79billionatDecember31,2023,anincreaseof1.79 billion at December 31, 2023, an increase of 17.8 million, or 1.0%[103] - Total deposits decreased by 56.4million(3.656.4 million (3.6%) to 1.50 billion, driven by declines in non-interest demand deposits (33.4million),savingsdeposits(33.4 million), savings deposits (16.4 million), and time deposits (44.7million),partiallyoffsetbya44.7 million), partially offset by a 42.8 million increase in money market deposits[97] - Total deposits decreased to 1.50billionatJune30,2024,from1.50 billion at June 30, 2024, from 1.55 billion at December 31, 2023, a decrease of 56.4million,or3.656.4 million, or 3.6%[104] - FHLBNY borrowings increased by 50.0 million (40.0%) to 218.2million,contributingtotheoverallincreaseintotalliabilities[97]−Totalborrowingsincreasedto218.2 million, contributing to the overall increase in total liabilities[97] - Total borrowings increased to 218.2 million at June 30, 2024, from 168.1millionatDecember31,2023,duetoa168.1 million at December 31, 2023, due to a 50.0 million increase in FHLBNY advances[106] - Cash and cash equivalents decreased by 12.7million(7.012.7 million (7.0%) to 167.7 million, primarily due to increased loan activity and decreased deposits, partially offset by higher borrowings[99] - Total investment securities decreased to 15.5millionatJune30,2024,from15.5 million at June 30, 2024, from 16.4 million at December 31, 2023, a decrease of 0.9millionor5.40.9 million or 5.4%[100] Equity and Capital - Total equity increased by 8.5 million (3.0%) to 292.8million,primarilyduetoretainedearnings,partiallyoffsetby292.8 million, primarily due to retained earnings, partially offset by 4.3 million in cash dividends[98] - Total equity increased to 292.8millionatJune30,2024,from292.8 million at June 30, 2024, from 284.3 million at December 31, 2023, an increase of 8.5million,or3.08.5 million, or 3.0%[107] - The Company and the Bank were both considered "well capitalized" under regulatory capital requirements at June 30, 2024[115] - Tier 1 leverage ratio for the company is 15.86% with an amount of 306,283 thousand, compared to Parke Bank's 17.35% with 334,969thousand[118]CreditLossesandProvisions−ProvisionforcreditlossesforthesixmonthsendedJune30,2024,was334,969 thousand[118] Credit Losses and Provisions - Provision for credit losses for the six months ended June 30, 2024, was 0.7 million, compared to a recovery of 1.9millioninthesameperiodof2023[89]−Theallowanceforcreditlossesincreasedby1.9 million in the same period of 2023[89] - The allowance for credit losses increased by 294,000 (0.9%) to 32.4million,reflectingadjustmentsinloanportfolios[98]−Thecompany′sallowanceforcreditlossesisinfluencedbyloanportfolioperformance,borrowerfinancialstrength,industryoutlook,andeconomicconditions[119]CashFlow−Cashprovidedbyoperatingactivitieswas32.4 million, reflecting adjustments in loan portfolios[98] - The company's allowance for credit losses is influenced by loan portfolio performance, borrower financial strength, industry outlook, and economic conditions[119] Cash Flow - Cash provided by operating activities was 17.2 million in the six months ended June 30, 2024, compared to 14.7millionforthesameperiodintheprioryear[110]−Cashusedininvestingactivitieswas14.7 million for the same period in the prior year[110] - Cash used in investing activities was 19.3 million in the six months ended June 30, 2024, compared to 38.5millioninthesameperiodlastyear[111]−Cashusedinfinancingactivitieswas38.5 million in the same period last year[111] - Cash used in financing activities was 10.6 million in the six months ended June 30, 2024, compared to 20.9millioninthesameperiodlastyear[111]LegalandRegulatoryMatters−Thecompanyfacesalegalclaimofapproximately20.9 million in the same period last year[111] Legal and Regulatory Matters - The company faces a legal claim of approximately 1.7 million related to alleged construction damages in the Absecon Gardens Condominium project[122] - The company is defending against a lawsuit involving a 1.4millionloandefaultandcounterclaimsforrentfromMoriRestaurantLLC[123]−ThecompanydeniesliabilityintheMoriRestaurantLLClawsuitandintendstovigorouslydefendagainsttheclaims[124]InternalControlsandProcedures−Thecompany′sdisclosurecontrolsandproceduresareeffective,asconfirmedbytheCEOandCFO[120]−Nomaterialchangesinthecompany′sinternalcontroloverfinancialreportingoccurredduringthelastfiscalquarter[121]LoanCommitments−TheCompanyhadoutstandingloancommitmentsof1.4 million loan default and counterclaims for rent from Mori Restaurant LLC[123] - The company denies liability in the Mori Restaurant LLC lawsuit and intends to vigorously defend against the claims[124] Internal Controls and Procedures - The company's disclosure controls and procedures are effective, as confirmed by the CEO and CFO[120] - No material changes in the company's internal control over financial reporting occurred during the last fiscal quarter[121] Loan Commitments - The Company had outstanding loan commitments of 114.8 million at June 30, 2024[110]