Parke Bancorp(PKBK) - 2023 Q1 - Quarterly Report

Financial Performance - Net income available to common shareholders for Q1 2023 increased by $1.0 million, or 10.3%, to $11.1 million compared to $10.1 million in Q1 2022[104] - Earnings per share for Q1 2023 were $0.93 per basic share and $0.92 per diluted share, up from $0.85 and $0.83 respectively in Q1 2022[104] - Non-interest income for Q1 2023 was $1.8 million, a decrease of $293.0 thousand compared to $2.1 million in Q1 2022, primarily due to lower service fees[107] - Non-interest expense increased by $1.1 million to $6.8 million in Q1 2023, driven by higher compensation and OREO expenses[108] - Income tax expense for Q1 2023 was $3.4 million, resulting in an effective tax rate of 23.6%, down from 25.2% in Q1 2022[109] - Cash provided by operating activities increased to $10.5 million for the three months ended March 31, 2023, compared to $8.7 million for the same period in 2022[135] Assets and Liabilities - Total assets as of March 31, 2023, were $1.96 billion, with total equity of $273.1 million[103] - Total assets decreased by $20.7 million, or 1.0%, to $1.96 billion as of March 31, 2023, primarily due to a decrease in cash and cash equivalents[115] - Total liabilities decreased by $27.7 million, or 1.6%, to $1.69 billion, mainly driven by a $112.2 million, or 7.1%, decrease in total deposits[116] - Total equity increased by $7.1 million, or 2.7%, to $273.1 million, primarily due to retained earnings[117] - Total deposits decreased to $1.46 billion, a decline of $112.2 million, or 7.1%, attributed to reductions in non-interest bearing demand deposits and savings[126] - Cash and cash equivalents decreased by $36.2 million, or 19.9%, to $146.0 million, primarily due to cash withdrawals from deposits[118] Loans and Credit - Loans receivable increased to $1.76 billion, up $11.2 million from December 31, 2022, with notable increases in commercial real estate owner-occupied and residential 1-4 family portfolios[125] - The allowance for credit losses was $31.5 million at March 31, 2023, down from $31.8 million at December 31, 2022, with a ratio of 1.79% to total loans[150] - Delinquent loans totaled $16.7 million, or 0.9% of total loans, as of March 31, 2023, reflecting a slight increase from the previous quarter[155] - Loans 30 to 89 days delinquent totaled $579.0 thousand, an increase of $354.0 thousand from December 31, 2022[155] - The Company recorded a credit loss recovery of $2.4 million during the three months ended March 31, 2023, compared to zero in the same period of 2022[152] Interest Income and Expenses - Net interest income remained flat at $17.1 million for Q1 2023, with interest income increasing by $6.4 million due to higher loan balances and interest rates[105] - The net interest income for the three months ended March 31, 2023, was $17.149 million, compared to $17.100 million for the same period in 2022[115] - The interest rate spread decreased to 2.87% from 3.15% year-over-year, while the net interest margin increased to 3.65% from 3.41%[115] - The Federal Reserve raised the target federal funds rate by a total of 4.50% in 2022, with an additional increase of 0.25% in Q1 2023, impacting interest income and expenses[95] Legal Matters - The company is involved in a legal matter where damages are claimed to total approximately $1.7 million related to the Absecon Gardens Condominium project, currently in early discovery stages[167] - The company's management believes that no material losses are anticipated from various contingent liabilities and legal actions[168] Regulatory Changes - The company adopted the Current Expected Credit Loss (CECL) model effective January 1, 2023, implementing new and modified controls over financial reporting[166]