Parke Bancorp(PKBK) - 2023 Q2 - Quarterly Report

Financial Performance - Net income available to common shareholders for Q2 2023 decreased by $2.6 million, or 24.3%, to $8.1 million compared to $10.7 million in Q2 2022[120] - For the six months ended June 30, 2023, net income available to common shareholders decreased by $1.6 million, or 7.5%, to $19.2 million[127] - Non-interest income for Q2 2023 was $1.6 million, a decrease of $918.0 thousand, or 36.7%, compared to $2.5 million in Q2 2022[124] - Non-interest income for the six months ended June 30, 2023, was $3.4 million, a decrease of $1.2 million, or 26.4%, compared to $4.6 million for the same period last year[131] - Net interest income for Q2 2023 was $15.9 million, a decrease of $2.1 million, or 11.7%, from $18.0 million in Q2 2022[122] - Net interest income for the six months ended June 30, 2023, was $33.0 million, compared to $35.1 million for the same period in 2022[139] Assets and Liabilities - Total assets as of June 30, 2023, were $1.98 billion, with total equity of $279.1 million[119] - Total assets decreased by $2.4 million, or 0.1%, to $1.98 billion at June 30, 2023, primarily due to a $44.7 million decrease in cash and cash equivalents[141] - Total liabilities decreased by $15.6 million, or 0.9%, to $1.70 billion at June 30, 2023, mainly due to a $129.6 million decrease in total deposits[142] - Total equity increased by $13.1 million to $279.1 million at June 30, 2023, primarily due to retained earnings[143] - Total deposits decreased to $1.45 billion at June 30, 2023, from $1.58 billion at December 31, 2022, a decrease of $129.6 million, or 8.2%[154] - Total borrowings increased to $239.2 million at June 30, 2023, from $126.1 million at December 31, 2022, an increase of 89.5%[154] Income and Expenses - Interest income increased by $6.8 million, or 33.0%, in Q2 2023, primarily due to a $6.3 million increase in interest and fees on loans[122] - Interest expense surged by $8.9 million, or 350.5%, in Q2 2023, driven by rising market interest rates[122] - Non-interest expense increased by $661.0 thousand, or 11.5%, to $6.4 million in Q2 2023[125] - Non-interest expense increased by $1.7 million to $13.1 million for the six months ended June 30, 2023, primarily due to a $1.4 million increase in compensation and benefits[132] - Cash provided by operating activities was $14.7 million for the six months ended June 30, 2023, compared to $21.9 million for the same period in the prior year, a decrease of 33%[162] - Cash used in investing activities decreased to $38.5 million for the six months ended June 30, 2023, from $59.4 million in the same period last year, a decrease of 35.5%[163] Loans and Deposits - Loans increased by $34.6 million at June 30, 2023, primarily due to increases in CRE owner-occupied and residential 1-4 family investment loans[141] - Loans receivable increased to $1.79 billion at June 30, 2023, from $1.75 billion at December 31, 2022, representing an increase of 1.4%[152] - Non-interest bearing demand deposits decreased by $81.6 million, or 23.1%, to $271.0 million at June 30, 2023[155] - Cash and cash equivalents decreased by 24.5% to $137.5 million at June 30, 2023, from $182.2 million at December 31, 2022[145] Taxation - Income tax expense was $5.9 million on income before taxes of $25.2 million for the six months ended June 30, 2023, resulting in an effective tax rate of 23.5%[133] - The effective tax rate improved from 25.4% in 2022 to 23.5% in 2023[133] Legal Matters - The company is involved in a legal matter with potential damages claimed at approximately $1.7 million, currently in early discovery stages[179] - Management believes no material losses are anticipated from various contingent liabilities and legal actions[180] - There are no other material pending legal proceedings beyond ordinary routine litigation[181] Valuation and Fair Value - The fair value of available for sale securities is determined by independent third-party valuation services[175] - The company has a small amount of SBA loans recorded at fair value, representing the face value of the guaranteed portion pending settlement[175] - OREO is recorded at fair value based on independent third-party appraisals, updated every 12 months or sooner if value deterioration is identified[175] - The company maintains tax accruals based on an evaluation of the risks and merits of tax treatment, which is inherently an estimate[176] - Tax positions that meet the recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely to be realized[177] Management and Governance - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are effective[178] - The Company and the Bank were both considered "well capitalized" as of June 30, 2023[168]