Parke Bancorp, Inc. (NASDAQ:PKBK): A Resilient Community Bank Delivering Consistent Performance

Published on September 24, 2024 | Ticker: PKBK

Parke Bancorp, Inc. (NASDAQ:PKBK) is a bank holding company headquartered in Washington Township, New Jersey, providing personal and business financial services to individuals and small to mid-sized businesses primarily in New Jersey and Pennsylvania. Through its subsidiary, Parke Bank, the company has established a strong presence in the region, with seven branch locations and a loan office.

Financials

Parke Bancorp's financial performance has been consistently strong, with the company reporting annual net income of $28.5 million, annual revenue of $118.6 million, and annual operating cash flow of $23.0 million in its most recent fiscal year. This solid financial foundation has enabled the company to navigate the challenges of the current economic environment and continue delivering value to its shareholders.

In the first quarter of 2024, Parke Bancorp reported net income available to common shareholders of $6.1 million, or $0.51 per basic and diluted common share. This represents a decrease of 44.8% compared to the same period in the prior year, primarily due to lower net interest income, an increase in provision for credit losses, and a decrease in non-interest income.

Net interest income for the first quarter of 2024 was $14.1 million, a decrease of 18.1% from the same period in 2023. This decline was driven by an increase in interest expense on deposits and borrowings, partially offset by an increase in interest and fees on loans. The company's net interest margin decreased to 2.97% in the first quarter of 2024, compared to 3.65% in the same period of the prior year.

The provision for credit losses in the first quarter of 2024 was $0.2 million, compared to a recovery of $2.4 million in the same period of 2023. The increase in provision expense was due to changes in the mix of the loan portfolio, which resulted in an increase in the qualitative loss factors, primarily attributed to the residential 1-4 family investment and multi-family loan portfolios.

Non-interest income decreased by $0.7 million, or 39.4%, to $1.1 million in the first quarter of 2024, primarily due to a decrease in service fees on deposit accounts. Non-interest expense decreased by $0.2 million, or 3.4%, to $6.5 million, driven by a decrease in compensation and benefits and professional services, partially offset by an increase in OREO expense and FDIC insurance.

Balance Sheet and Asset Quality

Parke Bancorp's balance sheet remains strong, with total assets of $2.01 billion and total equity of $288.4 million as of March 31, 2024. The company's loan portfolio totaled $1.79 billion, with the largest concentrations in residential 1-4 family investment (29.3%), commercial non-owner occupied real estate (20.2%), and residential 1-4 family (25.1%) loans.

The company's asset quality metrics remain stable, with nonperforming loans totaling $7.0 million, or 0.39% of total loans, as of March 31, 2024. The allowance for credit losses stood at $31.9 million, or 1.79% of total loans, providing a solid cushion against potential credit losses.

Capital Position

Parke Bancorp's capital position is also strong, with a tier 1 leverage ratio of 15.54% at the holding company level and 17.05% at the bank level as of March 31, 2024, well above the regulatory requirements for a "well-capitalized" institution.

Liquidity

The company's liquidity position remains robust, with cash and cash equivalents of $171.1 million and additional borrowing capacity of $805.4 million from the Federal Home Loan Bank of New York as of March 31, 2024. This ample liquidity provides Parke Bancorp with the flexibility to support its lending activities and meet its financial obligations.

Outlook

Looking ahead, Parke Bancorp has not provided any specific guidance or outlook for the remainder of 2024. However, the company's diversified loan portfolio, strong credit quality, and well-capitalized position suggest that it is well-positioned to navigate the current economic environment and continue delivering consistent performance to its shareholders.

Conclusion

Parke Bancorp, Inc. is a well-managed community bank that has demonstrated its ability to generate consistent financial results and maintain a strong balance sheet. The company's focus on serving the needs of small to mid-sized businesses and individual consumers in its local markets has been a key driver of its success. With its solid capital position, ample liquidity, and disciplined risk management practices, Parke Bancorp is poised to continue delivering value to its shareholders in the years to come.

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