Parke Bancorp(PKBK) - 2024 Q2 - Quarterly Report

Financial Performance - Net income available to common shareholders for Q2 2024 decreased by 20.6% to $6.5 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 $12.6 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 $4.5 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 $6.4 million increase in interest income[88] - Net interest income for the six months ended June 30, 2024, was $28.4 million, compared to $33.0 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 $0.4 million to $1.2 million in Q2 2024, mainly due to a $0.6 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 $1.4 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 $2.03 billion, with total equity of $292.8 million[82] - Total assets increased by $3.6 million (0.2%) to $2.03 billion at June 30, 2024, driven by a $17.8 million increase in loans and a $2.3 million increase in restricted stock, partially offset by a $12.7 million decrease in cash and cash equivalents[96] - Loans receivable increased by $17.8 million (1.0%) to $1.805 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 $1.79 billion at December 31, 2023, an increase of $17.8 million, or 1.0%[103] - Total deposits decreased by $56.4 million (3.6%) to $1.50 billion, driven by declines in non-interest demand deposits ($33.4 million), savings deposits ($16.4 million), and time deposits ($44.7 million), partially offset by a $42.8 million increase in money market deposits[97] - Total deposits decreased to $1.50 billion at June 30, 2024, from $1.55 billion at December 31, 2023, a decrease of $56.4 million, or 3.6%[104] - FHLBNY borrowings increased by $50.0 million (40.0%) to $218.2 million, contributing to the overall increase in total liabilities[97] - Total borrowings increased to $218.2 million at June 30, 2024, from $168.1 million at December 31, 2023, due to a $50.0 million increase in FHLBNY advances[106] - Cash and cash equivalents decreased by $12.7 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 $15.5 million at June 30, 2024, from $16.4 million at December 31, 2023, a decrease of $0.9 million or 5.4%[100] Equity and Capital - Total equity increased by $8.5 million (3.0%) to $292.8 million, primarily due to retained earnings, partially offset by $4.3 million in cash dividends[98] - Total equity increased to $292.8 million at June 30, 2024, from $284.3 million at December 31, 2023, an increase of $8.5 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 $334,969 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 $1.9 million in the same period of 2023[89] - The allowance for credit losses increased by $294,000 (0.9%) to $32.4 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 $14.7 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 $38.5 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 $20.9 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 $1.4 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]