Parke Bancorp, Inc. Announces Third Quarter 2019 Earnings

WASHINGTON TOWNSHIP, N.J., Oct. 23, 2019 /PRNewswire/ -- Parke Bancorp, Inc. ("Parke Bancorp") (NASDAQ: "PKBK"), the parent company of Parke Bank, announced its operating results for the quarter and year to date periods ended September 30, 2019.

Highlights for the third quarter and year to date September 30, 2019:

• Net income available to common shareholders increased $1.7 million, or 27.1%, to $7.8 million, or $0.72 per basic common share and $0.71 per diluted common share for the third quarter of 2019, compared to net income available to common shareholders of $6.1 million, or $0.60 per basic common share and $0.56 per diluted common share for the same quarter in 2018.

• Net interest income increased 18.0% to $14.5 million for the third quarter of 2019, compared to $12.3 million for the same quarter of 2018.

• Net income available to common shareholders increased $4.7 million or 26.8%, to $22.3 million or $2.07 per basic common share and $2.04 per diluted common share for the year to date September 30, 2019, compared to net income available to common shareholders of $17.6 million, or $1.88 per basic common share and $1.65 per diluted common share for the year to date September 30, 2018.

• Net interest income increased 21.0% to $42.2 million for the year to date September 30, 2019, compared to $34.9 million for the same period in 2018.

The following is a recap of the significant items that impacted the third quarter and the year to date September 30, 2019 period:

Interest income increased $4.4 million and $14.2 million for the third quarter and year to date September 30, 2019 periods, respectively, compared to the same periods in 2018 primarily due to higher loan volumes and higher yields on loans. Also contributing were $676,000 and $1.8 million increases in interest income for the third quarter and the year to date September 30, 2019, respectively, from federal funds sold and deposits with banks. Interest expense increased $2.2 million and $6.9 million for the third quarter of 2019 and the year to date September 30, 2019, respectively, compared to the same periods in 2018, primarily due to higher deposit volumes and interest rates.

The provision for loan and lease losses increased $300,000 for the third quarter of 2019 and increased $850,000 for the year to date September 30, 2019 compared to the same periods in 2018. The increase in the provision was primarily due to increased loan volumes.

For the third quarter of 2019, non-interest income increased $201,000 compared to the same period of 2018. The increase was primarily attributable to increased fee income from deposit accounts and increase in the gain on sale of SBA loans. For the year to date September 30, 2019 period, non-interest income increased $373,000, primarily due to increased fee income from deposit accounts and a decreased net loss on sale of OREO, partially offset by a decrease in the gain on sale of SBA loans and a decrease in loan fees.

Non-interest expense increased $531,000 and $1.3 million for the third quarter and the year to date September 30, 2019, respectively, compared to the same periods of 2018, primarily due to an increase in compensation, professional service, and data processing cost reflecting the growth of the business.

Income tax expense decreased $64,000 for the third quarter of 2019, and increased $1.0 million for the year to date September 30, 2019, compared to the same periods in 2018. The effective tax rate for both the quarter and year to date September 30, 2019 was 24.5%, compared to 29.6% and 26.0% for the same periods in 2018.

September 30, 2019 discussion of financial condition

• Total assets increased to $1.60 billion at September 30, 2019, from $1.47 billion at December 31, 2018, an increase of $131.1 million or 8.9% primarily due to an increase in loans.

• Cash and cash equivalents totaled $151.7 million at September 30, 2019 as compared to $154.5 million at December 31, 2018.

• The investment securities portfolio decreased to $29.3 million at September 30, 2019, from $32.4 million at December 31, 2018, a decrease of $3.1 million or 9.6% primarily due to the payoffs of securities.

• Gross loans increased to $1.38 billion at September 30, 2019, from $1.24 billion at December 31, 2018, an increase of $134.8 million or 10.9%.

• Nonperforming loans at September 30, 2019 increased to $5.7 million, representing 0.42% of total loans, an increase of $2.7 million, or 86.6%, from $3.1 million of nonperforming loans at December 31, 2018. OREO at September 30, 2019 was $5.8 million, an increase of $725,000 compared to $5.1 million at December 31, 2018 primarily due to loans transferred into OREO, and partially offset by the sale and valuation adjustment of OREO assets. Nonperforming assets (consisting of nonperforming loans and OREO) represented 0.7% of total assets at September 30, 2019, as compared to 0.6% of total assets at December 31, 2018. Loans past due 30 to 89 days were $66,000 at September 30, 2019, a decrease of $231,000 from December 31, 2018.

• The allowance for loan losses was $21.1 million at September 30, 2019, as compared to $19.1 million at December 31, 2018. The ratio of the allowance for loan losses to total loans was 1.54% at September 30, 2019 and at December 31, 2018. The ratio of allowance for loan losses to non-performing loans was 369.7% at September 30, 2019, compared to 622.3%, at December 31, 2018.

• Total deposits were $1.29 billion at September 30, 2019, up from $1.18 billion at December 31, 2018, an increase of $109.2 million or 9.2% compared to December 31, 2018. Deposits growth was primarily due to an increase in time deposits.

• Total borrowings were $118.1 million at September 30, 2019, unchanged from December 31, 2018.

• Total equity increased to $173.5 million at September 30, 2019, up from $155.0 million at December 31, 2018, an increase of $18.5 million or 12.0% primarily due to the retention of earnings.

CEO outlook and commentary

Vito S. Pantilione, President and Chief Executive Officer of Parke Bancorp and Parke Bank, provided the following statement:

"At the end of the second quarter of 2019, we discussed how the Federal Reserve Board was backing off interest rate increases due to the slowing global economy. Here we are in the third quarter of 2019 and the Federal Reserve Board has lowered interest rates 50 basis points and there is a general consensus that at least an additional 25 basis point reduction will be made prior to year end. The volatility in interest rates makes it difficult to strategically identify the future economy as it affects the banking industry. We are proud that the Company generates strong earnings as we continue to enjoy increased asset, loan and deposit growth. Our assets increased 8.9% from the 2018 year end to $1.6 billion and loans grew 10.9% from the year ended 2018 to $1.4 billion at September 30, 2019. Our deposits grew 9.2% from the year ended 2018 to $1.3 billion at September 30, 2019. These factors, combined with our consistent tight control of our expenses, supported a 27.1% increase in net income from the third quarter of 2018 as compared to the third quarter of 2019. Our 2019 year to date income grew 26.8% to $22.3 million compared to the same period in 2018. We are also proud that Parke Bank was named to the Sandler O'Neill 2019 Bank & Thrift SM-All Stars, for the second year in a row. This award is given to the top 30 small cap banks in the country."

This release may contain forward-looking statements. Such forward-looking statements are subject to risks and uncertainties which may cause actual results to differ materially from those currently anticipated due to a number of factors; our ability to continue to generate strong net earnings; our ability to continue to reduce our nonperforming loans and delinquencies and the expenses associated with them; our ability to realize a high recovery rate on disposition of troubled assets; our ability to take advantage of opportunities in the improving economy and banking environment; our ability to continue to pay a dividend in the future; our ability to enhance shareholder value in the future; our ability to continue growing our Company and support our profitability; our ability to prudently expand our operations in our market and in new markets; our ability to tightly control expenses;

 and our ability to continue to grow our loan portfolio, therefore, readers should not place undue reliance on any forward-looking statements. Parke Bancorp, Inc. does not undertake, and specifically disclaims, any obligations to publicly release the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such circumstance.

Financial Supplement:

Table 1: Condensed Balance Sheet (Unaudited)

Table 2: Consolidated Income Statement (Unaudited)

Table 3: Operating Ratios

Table 4: Asset Quality Data

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SOURCE Parke Bancorp, Inc.