8-K
false 0001315399 0001315399 2020-10-22 2020-10-22

 

 

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) October 22, 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 October 22, 2020, Parke Bancorp, Inc. issued a press release to report earnings for the three and nine months ended September 30, 2020. A copy of the press release is furnished with this Current Report as Exhibit 99.1 hereto and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

Section 9 – Financial Statements and Exhibits

 

Item 9.01

Exhibits.

 

Exhibit
No.

  

Description

99.1    Press Release dated October 22, 2020.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document).


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:October 22, 2020     By:  

/s/ John F. Hawkins

     

John F. Hawkins

Executive Vice President and

Chief Financial Officer

(Duly Authorized Representative)

EX-99.1

Exhibit 99.1

 

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 THIRD QUARTER 2020 EARNINGS

 

Highlights:

  

Net Income:

  

$6.5 million, Q3 results also reflected a $2.4 million loss provision

Revenue:

  

$21.6 million for Q3 2020

Total Assets:

  

$2.08 billion, increased 23.5% over December 31, 2019

Total Loans:

  

$1.57 billion, increased 10.8% over December 31, 2019

Total Deposits:

  

$1.60 billion, increased 19.2% over December 31, 2019

 

 

 

WASHINGTON TOWNSHIP, NJ, October 22, 2020 - Parke Bancorp, Inc. (“Parke Bancorp”) (NASDAQ: “PKBK”), the parent company of Parke Bank, announced its operating results for three and nine months ended September 30, 2020.

Highlights for three and nine months ended September 30, 2020:

 

   

Net income available to common shareholders was $6.5 million, or $0.55 per basic common share and per diluted common share for the third quarter of 2020, decreased $1.2 million, or 15.7%, compared to net income available to common shareholders of $7.8 million, or $0.65 per basic common share and 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 6.5% to $15.4 million for the third quarter of 2020, compared to $14.5 million for the same quarter of 2019.

 

   

Net income available to common shareholders decreased $2.0 million or 9.0%, to $20.3 million or $1.71 per basic common share and $1.69 per diluted common share for the year to date period ended September 30, 2020, compared to net income available to common shareholders of $22.3 million, or $1.88 per basic common share and $1.86 per diluted common share for the year to date period ended September 30, 2019.

 

   

Net interest income increased 7.9% to $45.5 million for the year to date period ended September 30, 2020, compared to $42.2 million for the same period in 2019.


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

Interest income increased $455,000 and $4.3 million for the third quarter of 2020 and year to date September 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 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 third quarter was a $516,000 increase in interest and fees on loans from the SBA Paycheck Protection Program loans (“SBA PPP Loans”).

Interest expense decreased $494,000 for the third quarter of 2020, compared to the same period in 2019, primarily due to the lower interest rates on deposits and other borrowings, and partially offset by the increased interest expenses due to increased average volumes of interest bearing liabilities. For the year to date period ended September 30, 2020, interest expense increased $1.0 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 $1.5 million to $2.4 million for the third quarter of 2020, compared to the same period in 2019. For year to date period ended September 30, 2020, the provision for loan losses increased $3.7 million to $5.8 million, compared to year to date period ended September 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 September 30, 2020.

For the third quarter of 2020 and year to date September 30, 2020 periods, non-interest income decreased $549,000 and $320,000, respectively, compared to the same periods of 2019, primarily attributable to increase in net loss on sale of other real estate owned (“OREO”) and decrease in other loan fees.

Non-interest expense increased $367,000 and $1.4 million for the third quarter 2020 and the year to date period ended September 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 $245,000 for the third quarter of 2020, and decreased $177,000 for the year to date periods ended September 30, 2020, compared to the same periods in 2019. The effective tax rates for third quarter and year to date September 30, 2020 and 2019 were 25.8% and 24.5%.

September 30, 2020 discussion of financial condition

 

   

Total assets increased to $2.08 billion at September 30, 2020, from $1.68 billion at December 31, 2019, an increase of $395.1 million or 23.5% primarily due to an increase in cash deposits with the Federal Reserve Bank, and an increase in loans, particularly $95.1 million increase in SBA PPP loans.

 

   

Cash and cash equivalents totaled $442.7 million at September 30, 2020, as compared to $191.6 million at December 31, 2019.

 

   

The investment securities portfolio decreased to $23.3 million at September 30, 2020, from $27.8 million at December 31, 2019, a decrease of $4.5 million, or 16.1%, primarily due to pay downs of securities.

 

   

Gross loans increased to $1.57 billion at September 30, 2020, from $1.42 billion at December 31, 2019, an increase of $153.9 million or 10.8%. 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. Also, majority of our deferred COVID-19 loans at previous quarter end were no longer in deferral status at September 30, 2020.


   

Nonperforming loans at September 30, 2020 increased to $9.5 million, representing 0.60% of total loans, an increase of $4.1 million, or 76.8%, from $5.3 million of nonperforming loans at December 31, 2019. OREO at September 30, 2020 was $567,000, a decrease of $4.2 million 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 0.48% and 0.60% of total assets at September 30, 2020 and December 31, 2019, respectively. Loans past due 30 to 89 days were $934,000 at September 30, 2020, a decrease of $1.1 million from December 31, 2019.

 

   

The allowance for loan losses was $27.6 million at September 30, 2020, as compared to $21.8 million at December 31, 2019. The ratio of the allowance for loan losses to total loans was 1.75% and 1.54% at September 30, 2020 and at December 31, 2019, respectively. The ratio of allowance for loan losses to non-performing loans was 291.7% at September 30, 2020, compared to 407.8%, at December 31, 2019.

 

   

Total deposits were $1.60 billion at September 30, 2020, up from $1.34 billion at December 31, 2019, an increase of $257.3 million or 19.2% 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 $270.9 million at September 30, 2020, an increase of $122.9 million, compared to December 31, 2019, primarily due to $93.8 million increase in advances from the Federal Reserve Bank for the SBA PPP loans and the issuance on July 15, 2020 of $30.0 million subordinated notes due 2030 (the “Notes”).

 

   

Total equity increased to $194.4 million at September 30, 2020, up from $179.4 million at December 31, 2019, an increase of $15.0 million, or 8.4%, 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 economy remains in a precarious position due to the continued pandemic. Although the unemployment rate remains high, it is slowly improving along with some improvement in the economy. We are beginning to see more loan activity and we are pleased that most loans with payment deferrals caused by COVID-19 are back to making their full monthly payments. Excluding the SBA PPP loans, loan growth has been flat in 2020 due to the pandemic. The Bank’s earnings continue to be strong, although reduced due to the increase in our loan loss provision. These are very uncertain times and we continue to carefully monitor the market of various high-risk loan sectors that have been most affected by the COVID-19 pandemic. It is important that we take the necessary steps to protect against the potential of future loan losses. Another important part of our financial performance is the continued growth of our Interest Income and our Net Interest Income, supporting the strength of our core earnings. Our the asset quality has improved as OREO was reduced by approximately $4 million to $567,000 as of September 30, 2020. Our loans past due 30 to 89 days also decreased by $1.1 million from December 31, 2019.

There are many challenges facing the Country, the banking industry and Parke Bank. The pandemic continues to restrict business operations, with many businesses closing their doors permanently. There are reports that the COVID-19 fall surge has begun. We remain diligent in maintaining COVID-19 safeguards that help protect our customers, employees and families. Our Country remains resilient to the many challenges that we face. We have not only survived but have succeeded when facing these challenges and COVID-19 won’t be any different. Parke Bank has a strong capital base, strong earnings, a committed Board and staff and strict cost controls. These factors will help enable us to work through these many challenges and be well positioned for the future”


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 maintain a strong capital base, strong earning and strict cost controls; our ability to generate strong revenues with increased interest income and net interest income; our ability to ensure our Company and our loan loss provision is well positioned for the future as the COVID-19 pandemic continues; 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; the possibility of additional corrective actions or limitations on the operations of Parke Bancorp and Parke Bank being imposed by banking regulators, 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, 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

 

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

Cash and cash equivalents

   $ 442,722   $ 191,607

Investment securities

     23,311     27,780

Loans held for sale

     198     190

Loans, net of unearned income

     1,574,611     1,420,749

Less: Allowance for loan losses

     (27,588     (21,811
  

 

 

   

 

 

 

Net loans

     1,547,023     1,398,938

Premises and equipment, net

     6,815     6,946

Bank owned life insurance (BOLI)

     26,853     26,410

Other assets

     29,377     29,289
  

 

 

   

 

 

 

Total assets

   $ 2,076,299   $ 1,681,160
  

 

 

   

 

 

 
Liabilities     

Noninterest-bearing deposits

   $ 421,837   $ 259,269

Interest-bearing deposits

     1,174,664     1,079,950

FHLBNY borrowings

     134,650     134,650

FRB advances

     93,801     —    

Subordinated debentures

     42,495     13,403

Other liabilities

     14,441     14,464
  

 

 

   

 

 

 

Total liabilities

     1,881,888     1,501,736
  

 

 

   

 

 

 

Total shareholders’ equity

     192,827     177,605

Noncontrolling interest in consolidated subsidiaries

     1,584     1,819
  

 

 

   

 

 

 

Total equity

     194,411     179,424
  

 

 

   

 

 

 

Total liabilities and equity

   $ 2,076,299   $ 1,681,160
  

 

 

   

 

 

 


Table 2: Consolidated Income Statements (Unaudited)

 

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

Interest income:

        

Interest and fees on loans

   $ 20,521   $ 19,113   $ 60,988   $ 55,077

Interest and dividends on investments

     260     284     797     889

Interest on federal funds sold and deposits with banks

     92     1,021     1,088     2,633
  

 

 

   

 

 

   

 

 

   

 

 

 

Total interest income

     20,873     20,418     62,873     58,599
  

 

 

   

 

 

   

 

 

   

 

 

 

Interest expense:

        

Interest on deposits

     4,165     4,915     14,375     13,398

Interest on borrowings

     1,268     1,012     2,968     2,987
  

 

 

   

 

 

   

 

 

   

 

 

 

Total interest expense

     5,433     5,927     17,343     16,385
  

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

     15,440     14,491     45,530     42,214

Provision for loan credit losses

     2,400     900     5,796     2,050
  

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income after provision for loan losses

     13,040     13,591     39,734     40,164
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-interest income

        

Gain on sale of SBA loans

     —         76     —         116

Other loan fees

     206     263     612     739

Bank owned life insurance income

     150     153     443     450

Service fees on deposit accounts

     520     529     1,602     1,397

Net gain or loss on sale and valuation adjustment of OREO

     (195     196     (348     (147

Other

     60     73     346     420
  

 

 

   

 

 

   

 

 

   

 

 

 

Total non-interest income

     741     1,290     2,655     2,975
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-interest expense

        

Compensation and benefits

     2,440     2,235     7,674     6,695

Professional services

     400     583     1,151     1,495

Occupancy and equipment

     531     413     1,529     1,357

Data processing

     344     262     969     730

FDIC insurance and other assessments

     287     9     581     70

OREO expense

     80     110     258     302

Other operating expense

     750     853     2,401     2,493
  

 

 

   

 

 

   

 

 

   

 

 

 

Total non-interest expense

     4,832     4,465     14,563     13,142
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax expense

     8,949     10,416     27,826     29,997

Income tax expense

     2,306     2,551     7,171     7,348
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Company and noncontrolling interest

     6,643     7,865     20,655     22,649

Less: Net income attributable to noncontrolling interest

     (100     (101     (359     (356
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Company

     6,543     7,764     20,296     22,293

Less: Preferred stock dividend

     (7     (8     (22     (16
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income available to common shareholders

   $ 6,536   $ 7,756   $ 20,274   $ 22,277
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per common share

        

Basic

   $ 0.55   $ 0.65   $ 1.71   $ 1.88
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.55   $ 0.65   $ 1.69   $ 1.86
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding

        

Basic

     11,850,882     11,847,010     11,849,659     11,834,692

Diluted

     11,975,094     12,013,670     11,986,964     12,009,302


Table 3: Operating Ratios

 

     Three months ended     Nine months ended  
     September 30,     September 30,  
     2020     2019     2020     2019  

Return on average assets

     1.32     1.94     1.46     1.96

Return on average common equity

     13.55     18.16     14.48     18.24

Interest rate spread

     2.73     2.95     2.86     3.09

Net interest margin

     3.14     3.67     3.29     3.77

Efficiency ratio

     29.86     28.29     30.22     29.08

 

*

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

Table 4: Asset Quality Data

 

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

Allowance for loan losses

   $ 27,588   $ 21,811

Allowance for loan losses to total loans

     1.75     1.54

Allowance for loan losses to non-accrual loans

     291.72     407.83

Non-accrual loans

   $ 9,457   $ 5,348

OREO

   $ 567   $ 4,727
v3.20.2
Document and Entity Information
Oct. 22, 2020
Cover [Abstract]  
Amendment Flag false
Entity Central Index Key 0001315399
Document Type 8-K
Document Period End Date Oct. 22, 2020
Entity Registrant Name PARKE BANCORP, INC.
Entity Incorporation State Country Code NJ
Entity File Number 0-51338
Entity Tax Identification Number 65-1241959
Entity Address, Address Line One 601 Delsea Drive
Entity Address, City or Town Washington Township
Entity Address, State or Province NJ
Entity Address, Postal Zip Code 08080
City Area Code (856)
Local Phone Number 256-2500
Written Communications false
Soliciting Material false
Pre Commencement Tender Offer false
Pre Commencement Issuer Tender Offer false
Security 12b Title Common Stock, Par Value $0.10 per share
Trading Symbol PKBK
Security Exchange Name NASDAQ
Entity Emerging Growth Company false