UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) July 27, 2020

 

 

PARKE BANCORP, INC.

(Exact name of registrant as specified in its charter)

 

 

 

New Jersey   0-51338   65-1241959

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

601 Delsea Drive, Washington Township, New Jersey   08080
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (856) 256-2500

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

 

Trading

Symbol(s)

 

Name of Each Exchange

on Which Registered

Common Stock, Par Value $0.10 per share   PKBK   The Nasdaq Stock Market, LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


PARKE BANCORP, INC.

INFORMATION TO BE INCLUDED IN THE REPORT

Section 2 – Financial Information

 

Item 2.02

Results of Operations and Financial Condition.

On July 27, 2020, Parke Bancorp, Inc. (the “Registrant”) issued a press release to report earnings for the quarter June 30, 2020. A copy of the press release is furnished with this report as exhibit 99 hereto and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.

Section 9 – Financial Statements and Exhibits

 

Item 9.01

Exhibits.

 

  (d)

Exhibits:

 

Exhibit 99 – Press Release, dated July 27, 2020


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

    PARKE BANCORP, INC.
Date: July 27, 2020     By:  

/s/ John F. Hawkins

     

John F. Hawkins

Executive Vice President and Chief Financial Officer

(Duly Authorized Representative)

EX-99

Exhibit 99

 

LOGO

Parke Bancorp, Inc.

601 Delsea Drive,

Washington Township, NJ 08080

Contact:

Vito S. Pantilione, President and CEO

John F. Hawkins, Executive Vice President and CFO

(856) 256-2500

 

 

 

PARKE BANCORP, INC. ANNOUNCES SECOND QUARTER 2020 EARNINGS

 

Highlights:   
Net Income:    $6.5 million, Q2 2020 result also reflected a $2.0 million loan loss provision
Revenue:    $21.4 million, increased 3.8% Q2 2020 over Q2 2019
Total Assets:    $1.94 billion, increased 15.2% over December 31, 2019
Total Loans:    $1.54 billion, increased 8.7% over December 31, 2019
Total Deposits:    $1.51 billion, increased 12.6% over December 31, 2019

 

 

 

WASHINGTON TOWNSHIP, NJ, July 27, 2020 - Parke Bancorp, Inc. (“Parke Bancorp”) (NASDAQ: “PKBK”), the parent company of Parke Bank, announced its operating results for three and six months ended June 30, 2020.

Highlights for three and six months ended June 30, 2020:

 

Net income available to common shareholders was $6.5 million, or $0.55 per basic common share and $0.55 per diluted common share for the second quarter of 2020, decreased $926,000, or 12.4%, compared to net income available to common shareholders of $7.5 million, or $0.63 per basic common share and $0.62 per diluted common share for the same quarter in 2019. The decrease is primarily driven by a higher provision for loan loss as economic uncertainty continues.

 

Net interest income increased 4.2% to $14.9 million for the second quarter of 2020, compared to $14.3 million for the same quarter of 2019.

 

Net income available to common shareholders decreased $782,000 or 5.4%, to $13.7 million or $1.16 per basic common share and $1.15 per diluted common share for the year to date period ended June 30, 2020, compared to net income available to common shareholders of $14.5 million, or $1.23 per basic common share and $1.21 per diluted common share for the year to date period ended June 30, 2019.

 

Net interest income increased 8.5% to $30.1 million for the year to date period ended June 30, 2020, compared to $27.7 million for the same period in 2019.

 


The following is a recap of the significant items that impacted the three and six months ended June 30, 2020 period:

Interest income increased $619,000 and $3.8 million for the second quarter of 2020 and year to date June 30, 2020 periods, respectively, compared to the same periods in 2019, primarily due to higher interest income generated from higher average loan volumes and partially offset by the income impact of lower interest rates on average loans and a decrease in interest income from deposits in Federal Reserve Bank. The Federal Reserve Board has reduced rates in response to the Covid-19 pandemic. Also contributing to the increase in interest income for the second quarter was a $251,000 increase in interest and fees on loans from the SBA Paycheck Protection Program loans (“SBA PPP Loans”).

Interest expense increased $19,000, almost unchanged for the second quarter of 2020, compared to the same period in 2019, primarily reflecting the cost offset on changes in interest expense due from increased average volumes and decreased interest rates on deposits and other borrowings. For the year to date period ended June 30, 2020, interest expense increased $1.5 million, compared to the same period in 2019, primarily due to higher volumes of deposits and other borrowings, partially offset by decreases in interest expense due to reductions in market interest rates.

The provision for loan losses increased $1.6 million to $2.0 million for the second quarter of 2020, compared to the same period in 2019. For year to date period ended June 30, 2020, the provision for loan losses increased $2.2 million to $3.4 million, compared to year to date period ended June 30, 2019. The increase in the provision was primarily due to an increase in qualitative factors as economic uncertainty continues as a result of COVID-19 on our borrowers as of June 30, 2020.

For the second quarter of 2020, non-interest income increased $160,000, compared to the same period of 2019, with the increase primarily attributable to a decrease in net loss on sale of OREO, partially offset by decrease in other loan fees. For the year to date June 30, 2020 period, non-interest income increased $229,000, primarily due to increased fee income from deposit accounts and a decreased net loss on sale of OREO, partially offset by a decrease in other loan fees and a decrease in the gain on sale of SBA loans.

Non-interest expense increased $345,000 and $1.1 million for the second quarter 2020 and the year to date period ended June 30, 2020, compared to the same periods of 2019, primarily due to an increase in compensation, data processing cost, and FDIC insurance assessment. The increases in non-interest expenses mainly reflect the growth of the business.

Income tax expense decreased $170,000 for the second quarter of 2020, and increased $68,000 for the year to date periods ended June 30, 2020, compared to the same periods in 2019. The effective tax rates for second quarter of 2020 and for the year to date June 30, 2020 were 25.8% and 24.6%, compared to 25.8% and 24.5% for the same periods in 2019.

June 30, 2020 discussion of financial condition

 

Total assets increased to $1.94 billion at June 30, 2020, from $1.68 billion at December 31, 2019, an increase of $254.7 million or 15.2% primarily due to an increase in loans, particularly $78.0 million increase in SBA PPP loans, and an increase in cash deposits with the Federal Reserve Bank.

 

Cash and cash equivalents totaled $320.9 million at June 30, 2020, as compared to $191.6 million at December 31, 2019.

 

The investment securities portfolio decreased to $25.6 million at June 30, 2020, from $27.8 million at December 31, 2019, a decrease of $2.2 million, or 7.9%, primarily due to pay downs of securities.

 

Gross loans increased to $1.54 billion at June 30, 2020, from $1.42 billion at December 31, 2019, an increase of $123.5 million or 8.7%. Gross loans included SBA PPP loans and loans from our deferment and relief programs, which are intended to provide an appropriate level of financial relief for the individuals and businesses experiencing hardship as a result of the COVID-19 pandemic.


Nonperforming loans at June 30, 2020 increased to $10.0 million, representing 0.65% of total loans, an increase of $4.7 million, or 87.2%, from $5.3 million of nonperforming loans at December 31, 2019. OREO at June 30, 2020 was $3.8 million, a decrease of $955,000 compared to $4.7 million at December 31, 2019, primarily due to sale of OREO assets. Nonperforming assets (consisting of nonperforming loans and OREO) represented 0.71% and 0.60% of total assets at June 30, 2020 and December 31, 2019, respectively. Loans past due 30 to 89 days were $804,000 at June 30, 2020, a decrease of $1.2 million from December 31, 2019.

 

The allowance for loan losses was $25.2 million at June 30, 2020, as compared to $21.8 million at December 31, 2019. The ratio of the allowance for loan losses to total loans was 1.63% and 1.54% at June 30, 2020 and at December 31, 2019, respectively. The ratio of allowance for loan losses to non-performing loans was 252.0% at June 30, 2020, compared to 407.8%, at December 31, 2019.

 

Total deposits were $1.51 billion at June 30, 2020, up from $1.34 billion at December 31, 2019, an increase of $169.3 million or 12.6% compared to December 31, 2019. Deposit growth was primarily due to an increase in non-interest bearing demand deposits and increase in other non-time deposits.

 

Total borrowings were $220.9 million at June 30, 2020, an increased $72.9 million, compared to December 31, 2019, primarily due to increase in advances from the Federal Reserve Bank for the SBA PPP loans.

 

Total equity increased to $189.7 million at June 30, 2020, up from $179.4 million at December 31, 2019, an increase of $10.3 million, or 5.8%, primarily due to the retention of earnings.

CEO outlook and commentary

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

“The country and the world continue to face unprecedented uncertainty and economic decline due to the COVID-19 pandemic. Many hoped that we would see an improvement in the COVID-19 cases being reported but so far that hasn’t happened. The business community, especially restaurants, hotels and retail centers have been hardest hit by the pandemic with the many restrictions placed on those industries. We remain focused on supporting our employees, customers and communities during these difficult times.

Our company continues to generate strong revenues with increased interest income and net interest income. Parke Bancorp’s net income decreased due to an increase in our loan loss provision, which was done to ensure we are well positioned as the Covid-19 pandemic continues and we may face challenging conditions in our loan portfolio.

Although not reflected in our June 30th numbers, on July 15, 2020, we successfully issued and sold $30 million of Subordinated Notes, further supporting the financial strength of our Company while not diluting our shareholders. Parke Bank has always exceeded the regulatory guidelines for a well-capitalized bank and the additional capital further strengthens our equity position.”

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


continue to pay a dividend in the future; our ability to enhance shareholder value in the future; our ability to continue growing our Company, our earnings and shareholders’ equity; 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.

In addition, the COVID-19 pandemic is having an adverse impact on the Company, its customers and the communities it serves. Given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and how the economy may be reopened. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations: the demand for our products and services may decline, making it difficult to grow assets and income; if the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; our allowance for loan losses may increase if borrowers experience financial difficulties, which will adversely affect our net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; as the result of the decline in the Federal Reserve Board’s target federal funds rate to near 0%, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income; due to a decline in our stock price or other factors, goodwill may become impaired and be required to be written down; and our cyber security risks are increased as the result of an increase in the number of employees working remotely.


Financial Supplement:

Table 1: Condensed Consolidated Balance Sheets (Unaudited)

Parke Bancorp, Inc. and Subsidiaries

Consolidated Balance Sheets

 

     June 30,     December 31,  
     2020     2019  
     (Amounts in thousands, except share data)  
Assets     

Cash and cash equivalents

   $ 320,923   $ 191,607

Investment securities

     25,587     27,780

Loans held for sale

     193     190

Loans, net of unearned income

     1,544,233     1,420,749

Less: Allowance for loan losses

     (25,228     (21,811
  

 

 

   

 

 

 

Net loans

     1,519,005     1,398,938

Premises and equipment, net

     6,908     6,946

Bank owned life insurance (BOLI)

     26,703     26,410

Other assets

     36,565     29,289
  

 

 

   

 

 

 

Total assets

   $ 1,935,884   $ 1,681,160
  

 

 

   

 

 

 
Liabilities     

Noninterest-bearing deposits

   $ 356,350   $ 259,269

Interest-bearing deposits

     1,152,211     1,079,950

FHLBNY borrowings

     134,650     134,650

Other borrowings

     72,896     —    

Subordinated debentures

     13,403     13,403

Other liabilities

     16,633     14,464
  

 

 

   

 

 

 

Total liabilities

   $ 1,746,143   $ 1,501,736
  

 

 

   

 

 

 

Total shareholders’ equity

   $ 188,257   $ 177,605

Noncontrolling interest in consolidated subsidiaries

     1,484     1,819
  

 

 

   

 

 

 

Total equity

   $ 189,741   $ 179,424
  

 

 

   

 

 

 

Total liabilities and equity

   $ 1,935,884   $ 1,681,160
  

 

 

   

 

 

 


Table 2: Consolidated Income Statements (Unaudited)

 

     For three months ended June 30,     For six months ended June 30,  
     2020     2019     2020     2019  
     (Amounts in thousands except share data)  

Interest income:

        

Interest and fees on loans

   $ 20,139   $ 18,523   $ 40,467   $ 35,964

Interest and dividends on investments

     259     290     537     605

Interest on federal funds sold and deposits with banks

     45     1,011     996     1,612
  

 

 

   

 

 

   

 

 

   

 

 

 

Total interest income

     20,443     19,824     42,000     38,181
  

 

 

   

 

 

   

 

 

   

 

 

 

Interest expense:

        

Interest on deposits

     4,759     4,520     10,210     8,483

Interest on borrowings

     793     1,013     1,700     1,975
  

 

 

   

 

 

   

 

 

   

 

 

 

Total interest expense

     5,552     5,533     11,910     10,458
  

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

     14,891     14,291     30,090     27,723

Provision for loan credit losses

     2,000     450     3,396     1,150
  

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income after provision for loan losses

     12,891     13,841     26,694     26,573
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-interest income

        

Gain on sale of SBA loans

     —         —         —         40

Other loan fees

     165     285     406     476

Bank owned life insurance income

     147     150     293     297

Service fees on deposit accounts

     514     487     1,082     868

Net loss on sale of OREO

     (21     (343     (153     (343

Other

     121     187     286     347
  

 

 

   

 

 

   

 

 

   

 

 

 

Total non-interest income

     926     766     1,914     1,685
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-interest expense

        

Compensation and benefits

     2,689     2,319     5,234     4,460

Professional services

     396     521     751     912

Occupancy and equipment

     518     473     998     944

Data processing

     308     250     625     468

FDIC insurance and other assessments

     153     34     294     61

OREO expense

     67     117     178     192

Other operating expense

     731     803     1,651     1,640
  

 

 

   

 

 

   

 

 

   

 

 

 

Total non-interest expense

     4,862     4,517     9,731     8,677
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax expense

     8,955     10,090     18,877     19,581

Income tax expense

     2,311     2,481     4,865     4,797
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Company and noncontrolling interest

     6,644     7,609     14,012     14,784

Less: Net income attributable to noncontrolling interest

     (103     (141     (259     (255
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Company

     6,541     7,468     13,753     14,529

Less: Preferred stock dividend

     (7     (8     (15     (9
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income available to common shareholders

   $ 6,534   $ 7,460   $ 13,738   $ 14,520
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per common share

        

Basic

   $ 0.55   $ 0.63   $ 1.16   $ 1.23
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.55   $ 0.62   $ 1.15   $ 1.21
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding

        

Basic

     11,849,118     11,837,378     11,849,041     11,828,432

Diluted

     11,977,597     12,010,759     11,992,899     12,007,086


Table 3: Operating Ratios

 

     Three months ended     Six months ended  
     June 30,     June 30,  
     2020     2019     2020     2019  

Return on average assets

     1.45     1.99     1.54     1.99

Return on average common equity

     14.04     18.32     14.97     18.29

Interest rate spread

     2.88     3.09     2.93     3.16

Net interest margin

     3.32     3.80     3.38     3.83

Efficiency ratio

     30.74     30.00     30.41     29.51

 

*

Return on the average assets is calculated using net income attributable to Company and noncontrolling interest dividing average assets

Table 4: Asset Quality Data

 

     June 30,     December 31,  
     2020     2019  
     (Amounts in thousands except ratio data)  

Allowance for loan losses

   $ 25,228   $ 21,811

Allowance for loan losses to total loans

     1.63     1.54

Allowance for loan losses to non-accrual loans

     251.98     407.83

Non-accrual loans

   $ 10,012   $ 5,348

OREO

   $ 3,772   $ 4,727