Parke Bancorp(PKBK) - 2020 Q4 - Annual Report

Financial Performance - Net income available to common shareholders decreased by 4.8% to $28.4 million for 2020, down from $29.8 million in 2019[152] - Net interest income rose by 10.1% to $62.6 million in 2020, compared to $56.9 million in 2019, driven by loan portfolio growth[153] - Non-interest income increased by $344,000 to $4.2 million in 2020, primarily due to an increase in fee income from commercial deposit accounts[161] - Total non-interest expense rose by $2.3 million to $20.3 million in 2020, primarily due to increased compensation and benefits[163] - The effective income tax rate increased to 25.7% in 2020 from 24.4% in 2019[164] - Net interest income for the three months ended December 31, 2020, was $17.115 million, an increase from $15.440 million for the previous quarter, reflecting a growth of about 10.8%[212] - Net income for the three months ended December 31, 2020, was $8.132 million, up from $6.543 million in the previous quarter, representing an increase of about 24.3%[212] - Basic net income per common share for the three months ended December 31, 2020, was $0.69, compared to $0.55 for the previous quarter, marking an increase of approximately 25.5%[212] Asset and Liability Management - Total assets increased by 23.6% to $2.08 billion as of December 31, 2020, compared to the previous year[149] - Total liabilities rose by $374.0 million, or 24.9%, to $1.88 billion, driven mainly by an increase in total deposits, which grew by $253.2 million, or 18.9%, to $1.59 billion[166] - Total equity increased by $23.2 million to $202.6 million, reflecting a retention of earnings during the period[167] - Cash and cash equivalents surged by $267.0 million, or 139.3%, to $458.6 million, largely due to deposits from the medical-use cannabis businesses[170] - Loans, net of unearned income, increased to $1.57 billion, up from $1.42 billion, driven by the growth of the commercial loan portfolio related to the Paycheck Protection Program[172] - Total borrowings increased by $119.2 million to $267.2 million, primarily due to the Federal Reserve's Paycheck Protection Program Liquidity Facility[175] Loan Loss Provisions - Provision for loan losses increased to $7.6 million in 2020, up from $2.7 million in 2019, reflecting economic uncertainties related to COVID-19[158] - The allowance for loan losses rose by $7.9 million, or 36.2%, to $29.7 million, influenced by economic conditions related to the COVID-19 pandemic[173] - Provision for loan losses for the three months ended December 31, 2020, was $1.850 million, compared to $2.400 million in the prior quarter, showing a reduction of approximately 22.9%[212] - The allowance for loan and lease losses is based on periodic evaluations and is subject to significant estimates, which may change based on loan portfolio performance and economic conditions[204] Capital Position - The risk-based tier 1 capital ratio was 17.0% at December 31, 2020, indicating a strong capital position[149] - The ratio of rate-sensitive assets to rate-sensitive liabilities was 140.9% as of December 31, 2020, indicating a strong position in managing interest rate sensitivity[190] Market and Economic Conditions - The net interest margin decreased to 3.31% in 2020 from 3.75% in 2019, influenced by changes in interest rates and asset composition[155] - Total deposits from the medical-use cannabis industries increased to $259.4 million, up from $129.2 million, reflecting a significant growth in this sector[166] - The company maintains that off-balance sheet risk is not material to its financial condition or results of operations[195] - The fair value of available-for-sale securities is provided by independent third-party valuation services, ensuring accurate market-based measurements[207] - The implementation of the Current Expected Credit Loss (CECL) standard may require the company to increase its allowance for loan losses significantly after December 15, 2022[210] Commitments and Credit - The Company had unused loan commitments of $144.6 million at December 31, 2020, with expectations that many will expire without being drawn upon[182] - As of December 31, 2020, unused commitments to extend credit amounted to approximately $144.6 million, down from $205.1 million as of December 31, 2019, representing a decrease of about 29.4%[195] - Standby letters of credit with customers decreased to $1.7 million at December 31, 2020, from $20.8 million at December 31, 2019, indicating a decline of approximately 91.8%[196]