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Parke Bancorp(PKBK) - 2023 Q4 - Annual Report
PKBKParke Bancorp(PKBK)2024-03-13 20:38

Financial Performance - Net income available to common shareholders for 2023 was 28.4million,adecreaseof32.028.4 million, a decrease of 32.0% compared to 2022, primarily due to a 11.4 million increase in non-interest expenses[152] - Net interest income decreased by 9.1million(12.49.1 million (12.4%) to 64.2 million in 2023, driven by a 34.3millionincreaseininterestexpense,partiallyoffsetbya34.3 million increase in interest expense, partially offset by a 25.2 million increase in interest income[155] - Non-interest income decreased by 1.7million(20.21.7 million (20.2%) to 6.7 million in 2023, primarily due to lower fee income from commercial deposit accounts and other loan fees[166] - Fee income from commercial deposit accounts in the cannabis industry totaled 3.4millionin2023,downfrom3.4 million in 2023, down from 4.4 million in 2022[167] - Income tax expense decreased by 5.0millionto5.0 million to 9.2 million in 2023, with an effective tax rate of 24.5%, down from 25.4% in 2022[170] Balance Sheet and Capital - Total assets as of December 31, 2023, were 2.02billion,withtotalliabilitiesof2.02 billion, with total liabilities of 1.74 billion and total shareholders' equity of 284.3million[152]−Totalassetsincreasedby284.3 million[152] - Total assets increased by 38.6 million (1.9%) to 2.02billionin2023,drivenbya2.02 billion in 2023, driven by a 35.9 million increase in total loans outstanding[171] - Total liabilities increased by 20.3million(1.220.3 million (1.2%) to 1.74 billion in 2023, primarily due to a 42.0millionincreaseinborrowings,partiallyoffsetbya42.0 million increase in borrowings, partially offset by a 23.2 million decrease in deposits[172] - Total equity increased by 18.3million(6.918.3 million (6.9%) to 284.3 million in 2023, primarily due to retained earnings, partially offset by 8.6millionincashdividends[181]−Therisk−basedtier1capitalratiowas20.88.6 million in cash dividends[181] - The risk-based tier 1 capital ratio was 20.8% as of December 31, 2023[152] Loans and Deposits - Loans receivable increased by 35.9 million (2.0%) to 1.79billionin2023,drivenbyincreasesinresidentialandcommercialloans,partiallyoffsetbya1.79 billion in 2023, driven by increases in residential and commercial loans, partially offset by a 34.8 million decrease in construction loans[176] - Total deposits decreased by 23.2million(1.523.2 million (1.5%) to 1.55 billion in 2023, with cannabis-related deposits dropping by 80.6millionto80.6 million to 96.7 million due to increased competition and industry consolidation[179] - Borrowings increased by 42.0millionto42.0 million to 168.1 million in 2023, primarily due to a 41.9millionincreaseinFHLBNYadvances[180]−Unusedcommitmentstoextendcreditdecreasedfrom41.9 million increase in FHLBNY advances[180] - Unused commitments to extend credit decreased from 159.0 million in 2022 to 93.8millionin2023[197]−Standbylettersofcreditremainedstableat93.8 million in 2023[197] - Standby letters of credit remained stable at 1.5 million in both 2022 and 2023[198] Interest and Credit - Interest income on loans increased by 23.2million(27.923.2 million (27.9%) to 106.1 million in 2023, driven by higher average outstanding loan balances and market interest rates[155] - Interest expense increased by 34.3million(242.534.3 million (242.5%) to 48.5 million in 2023, primarily due to higher market interest rates on deposit accounts and changes in the deposit mix[155] - The provision for credit losses decreased by 3.9millionin2023,witharecoveryof3.9 million in 2023, with a recovery of 2.1 million compared to a provision of 1.8millionin2022[162]−Thecompany′sallowanceforcreditlossesisbasedonperiodicevaluationsoftheloanandleaseportfolios,usinghistoricaldataandqualitativefactors[205]−Theallowanceforcreditlossesincludesaspecificallowanceforcollateral−dependentloansandageneralallowanceforloanswithexpectedcreditlosses[206]CashandInvestments−Thecompany′scashpositionwas1.8 million in 2022[162] - The company's allowance for credit losses is based on periodic evaluations of the loan and lease portfolios, using historical data and qualitative factors[205] - The allowance for credit losses includes a specific allowance for collateral-dependent loans and a general allowance for loans with expected credit losses[206] Cash and Investments - The company's cash position was 180.4 million at the end of 2023, with a 944.4millionlineofcreditfromFHLBNY,ofwhich944.4 million line of credit from FHLBNY, of which 125.0 million was outstanding[182][184] - The company's investment securities portfolio classified as available for sale was 7.1millionattheendof2023,primarilyconsistingofmortgage−backedsecurities[185]−Totalinterest−earningassetsasofDecember31,2023,amountedto7.1 million at the end of 2023, primarily consisting of mortgage-backed securities[185] - Total interest-earning assets as of December 31, 2023, amounted to 1,969,639 thousand, with loans constituting the largest portion at 1,777,414thousand[193]RiskandSensitivity−Theratioofrate−sensitiveassetstorate−sensitiveliabilitieswas132.31,777,414 thousand[193] Risk and Sensitivity - The ratio of rate-sensitive assets to rate-sensitive liabilities was 132.3% as of December 31, 2023[193] - Cumulative interest sensitivity gap to total assets was 23.8% as of December 31, 2023[193] - The company manages credit risk in commitments to lend by limiting total commitments and applying consistent credit standards[195] - Inflation primarily affects non-interest expenses, such as employee compensation and occupancy costs[202] - The company's financial statements are prepared in accordance with GAAP, without adjusting for inflation[200] Dividends and Shareholder Returns - The company returned 8.6 million of capital to common shareholders through dividends in 2023[152] Non-Interest Expenses - Non-interest expense increased by 11.4millionto11.4 million to 35.3 million in 2023, primarily due to a 9.1millionincreaseinotheroperatingexpenses,includingaone−time9.1 million increase in other operating expenses, including a one-time 9.5 million contingent loss related to stolen cash[169]