Parke Bancorp(PKBK) - 2024 Q4 - Annual Results

Financial Performance Summary A comprehensive overview of Parke Bancorp's financial results for the fourth quarter and full fiscal year 2024 Q4 2024 Performance Parke Bancorp's Q4 2024 net income decreased by 9.5% to $7.4 million, driven by higher credit loss provisions and expenses Q4 2024 vs Q4 2023 Key Financials | Metric | Q4 2024 | Q4 2023 | Change | | :--- | :--- | :--- | :--- | | Net Income to Common Shareholders | $7.4 million | $8.2 million | -9.5% | | Diluted EPS | $0.61 | $0.67 | -9.0% | | Net Interest Income | $15.6 million | $15.5 million | +0.7% | - The decrease in net income was primarily attributed to three factors: an increased provision for credit losses, a 23.1% decrease in non-interest income, and a 9.0% increase in non-interest expense[2][3] Full Year 2024 Performance Full year 2024 net income decreased by 3.3% to $27.5 million, impacted by lower net interest income and higher credit loss provisions Full Year 2024 vs Full Year 2023 Key Financials | Metric | FY 2024 | FY 2023 | Change | | :--- | :--- | :--- | :--- | | Net Income to Common Shareholders | $27.5 million | $28.4 million | -3.3% | | Diluted EPS | $2.27 | $2.35 | -3.4% | | Net Interest Income | $58.7 million | $64.2 million | -8.6% | - The primary drivers for the full-year net income decrease were lower net interest income, an increased provision for credit losses, and reduced non-interest income[4] - A significant factor offsetting the decline was a $9.3 million (26.3%) decrease in non-interest expense, mainly because 2023's results included a one-time $9.5 million contingent loss[9] Analysis of Financial Results Detailed analysis of key financial components including net interest income, credit losses, and non-interest items Net Interest Income Full-year net interest income declined by 8.6% to $58.7 million due to higher interest expenses outpacing income growth - Full-year interest income rose by $12.4 million, primarily due to an $11.8 million increase in interest and fees on loans from higher average balances and rates[5] - Full-year interest expense surged by $17.9 million, attributed to higher market interest rates and a change in deposit mix, with a reduction in non-interest bearing deposits and an increase in interest-bearing ones[6] Provision for Credit Losses Full-year provision for credit losses increased by $2.8 million to $0.7 million, driven by higher loan balances - For the full year, the provision for credit losses increased by $2.8 million compared to the prior year, mainly due to higher outstanding loan balances[7][9] Non-Interest Income & Expense Non-interest income decreased by 35.7% to $4.3 million, while non-interest expense fell by 26.3% due to a prior-year one-time loss - Full-year non-interest income decreased by $2.4 million, primarily driven by a $2.5 million drop in service fees on deposit accounts, which was attributed to a decrease in fees from cannabis-related business accounts[8][9] - Full-year non-interest expense decreased by $9.3 million, largely due to the recognition of a one-time $9.5 million contingent loss in 2023[9][11] Income Tax Expense Full-year income tax expense decreased by $0.4 million, with the effective tax rate slightly lower at 24.2% Effective Tax Rate Comparison | Period | 2024 | 2023 | | :--- | :--- | :--- | | Q4 | 23.9% | 26.8% | | Full Year | 24.2% | 24.5% | Financial Condition (Balance Sheet Analysis) An overview of the company's balance sheet, focusing on assets, asset quality, liabilities, and equity Assets Total assets grew by 5.9% to $2.14 billion, driven by a 4.5% increase in gross loans to $1.87 billion Asset Growth (Year-End 2024 vs 2023) | Metric | Dec 31, 2024 | Dec 31, 2023 | Change | | :--- | :--- | :--- | :--- | | Total Assets | $2.14 billion | $2.02 billion | +5.9% | | Gross Loans | $1.87 billion | $1.79 billion | +4.5% | | Cash & Cash Equivalents | $221.5 million | $180.4 million | +22.8% | - Loan growth was driven by a $71.5 million increase in the multi-family portfolio and an $18.2 million increase in the CRE owner-occupied portfolio, partially offset by a $17.9 million decrease in the construction portfolio[13] Asset Quality Asset quality deteriorated with nonperforming loans increasing to $11.8 million, though past due loans decreased - Nonperforming loans increased to $11.8 million (0.63% of total loans) at year-end 2024, up from $7.3 million at year-end 2023[13] Allowance for Credit Losses Ratios | Ratio | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Allowance / Total Loans | 1.74% | 1.80% | | Allowance / Non-performing Loans | 276.5% | 442.5% | - Loans past due 30 to 89 days decreased by $2.5 million from December 31, 2023[13] Liabilities & Equity Total deposits grew by 5.0% to $1.63 billion, and total equity increased by 5.5% to $300.1 million - Total deposits increased by $78.2 million (5.0%), with growth in brokered time deposits and money market accounts offsetting a $48.2 million decrease in non-interest bearing demand deposits[13] - Deposits from cannabis-related businesses increased by $55.2 million to $151.9 million at year-end 2024[13] - Total equity grew by $15.8 million to $300.1 million, driven by retained earnings, partially offset by $8.6 million in cash dividends and $4.3 million in common stock repurchases[16] CEO Outlook and Commentary The CEO highlighted strong earnings, tight expense control, and solid asset quality, positioning the bank for cautious growth - The CEO noted that higher interest expenses negatively affected net interest income but was pleased with strong overall earnings in 2024[14] - The company maintained tight expense controls, improving its efficiency ratio to nearly 41%, and kept a strong focus on asset quality with a credit loss reserve of 1.74%[14] - With total equity exceeding $300 million, the bank is positioned to cautiously explore new business opportunities, noting optimism in the business and real estate industries, especially new home construction[14] Financial Supplement Supplementary financial tables providing detailed balance sheet, income statement, operating ratios, and asset quality data Condensed Consolidated Balance Sheets Snapshot of the company's financial position, detailing assets, liabilities, and equity as of year-end 2024 and 2023 Condensed Consolidated Balance Sheets (in thousands) | | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $221,527 | $180,376 | | Net loans | $1,835,580 | $1,755,208 | | Total assets | $2,142,236 | $2,023,500 | | Liabilities and Equity | | | | Total deposits | $1,631,050 | $1,552,827 | | Total liabilities | $1,842,163 | $1,739,183 | | Total shareholders' equity | $300,073 | $284,317 | | Total liabilities and shareholders' equity | $2,142,236 | $2,023,500 | Consolidated Income Statements Detailed revenues, expenses, net income, and EPS for Q4 and full year periods ending December 31, 2024 and 2023 Consolidated Income Statements Highlights (in thousands) | | Three Months Ended Dec 31 | Twelve Months Ended Dec 31 | | :--- | :--- | :--- | | | 2024 | 2023 | 2024 | 2023 | | Net interest income | $15,619 | $15,515 | $58,708 | $64,214 | | Provision for (recovery of) credit losses | $182 | $(451) | $728 | $(2,051) | | Total non-interest income | $1,138 | $1,480 | $4,301 | $6,692 | | Total non-interest expense | $6,850 | $6,287 | $25,984 | $35,267 | | Net income available to common shareholders | $7,393 | $8,167 | $27,492 | $28,436 | Operating Ratios Key performance metrics measuring profitability and efficiency for Q4 and full year periods ending December 31, 2024 and 2023 Key Operating Ratios | | Three Months Ended Dec 31 | Twelve Months Ended Dec 31 | | :--- | :--- | :--- | | | 2024 | 2023 | 2024 | 2023 | | Return on average assets | 1.41% | 1.64% | 1.38% | 1.45% | | Return on average common equity | 9.82% | 11.50% | 9.36% | 10.21% | | Net interest margin | 3.02% | 3.17% | 3.00% | 3.34% | | Efficiency ratio | 40.88% | 36.99% | 41.24% | 48.34% | Asset Quality Data Data on asset quality, including allowance for credit losses and non-accrual loans, as of year-end 2024 and 2023 Asset Quality Data (in thousands) | | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Allowance for credit losses | $32,573 | $32,132 | | Allowance for credit losses to total loans | 1.74% | 1.80% | | Non-accrual loans | $11,782 | $7,261 |