Parke Bancorp Inc. Reports Operating Results (10-Q)

Author's Avatar
Aug 14, 2012
Parke Bancorp Inc. (PKBK, Financial) filed Quarterly Report for the period ended 2012-06-30.

Parke Bancorp, Inc. has a market cap of $27.5 million; its shares were traded at around $5.06 with a P/E ratio of 5 and P/S ratio of 0.6. Parke Bancorp, Inc. had an annual average earning growth of 6.5% over the past 5 years.

Highlight of Business Operations:

OREO at June 30, 2012 was $26.7 million, compared to $19.4 million at December 31, 2011, the largest being a condominium development valued at $12.7 million. This property was sold in 2010 but does not qualify for a sales treatment under GAAP.

Non-interest Income: Non-interest income was $1.6 million for the six months ended June 30, 2012, compared to $3.6 million for the same period last year. There was a $1.8 million decrease in gain on sale of SBA loans as compared to the same period in 2011. The 2011 gain was higher due to a change in the SBA sales agreement; warranty language was removed from the sales agreement and Parke Bancorp was no longer required to defer the recognition of the gain for 90 days. The gain recorded in the 2011period represented loans sold during the 2011 period as well as previously deferred gains of $1.4 million from the quarter ended December 31, 2010. In addition, the Company recorded a loss on OREO of $625,000 during the six month period ended June 30, 2012 as compared to a gain of $52,000 in the corresponding period in 2011.

Income Taxes: The Company recorded income tax expense of $1.5 million, on income before taxes of $5.4 million for the six months ended June 30, 2012, resulting in an effective tax rate of 28.2%, compared to income tax expense of $3.4 million on income before taxes of $8.6 million for the same period of 2011, resulting in an effective tax rate of 40.2%. The decrease in income tax expense is due to lower earnings and the change to an alternative tax methodology for bank owned life insurance (“BOLI”) income whereby it is treated on a tax free basis.

Income Taxes: The Company recorded income tax expense of $257,000, on income before taxes of $2.2 million for the three months ended June 30, 2012, resulting in an effective tax rate of 11.4%, compared to income tax expense of $1.6 million on income before taxes of $3.9 million for the same period of 2011, resulting in an effective tax rate of 40.3%. The decrease in income tax expense is due to lower earnings and the change to an alternative tax methodology for BOLI income whereby it is treated on a tax free basis.

Liquidity: Liquidity describes the ability to meet the financial obligations that arise out of the ordinary course of business. Liquidity addresses the Company's ability to meet deposit withdrawals on demand or at contractual maturity, to repay borrowings as they mature, and to fund current and planned expenditures. Liquidity is derived from increased repayment and income from interest-earning assets. The loan to deposit ratio was 91.8% and 98.5% at June 30, 2012 and December 31, 2011, respectively. Funds received from new and existing depositors provided a large source of liquidity for the six month period ended June 30, 2012. The Company seeks to rely primarily on core deposits from customers to provide stable and cost-effective sources of funding to support loan growth. The Company also seeks to augment such deposits with longer term and higher yielding certificates of deposit. To the extent that retail deposits are not adequate to fund customer loan demand, liquidity needs can be met in the short-term funds market. As of June 30, 2012, the Company had a short term line of credit with Atlantic Central Bankers Bank for $3.0 million. There were no outstanding borrowings on this line at June 30, 2012. Longer term funding can be obtained through advances from the FHLB. As of June 30, 2012, the Company maintained lines of credit with the FHLB of $109.4 million, of which $25.6 million was outstanding at June 30, 2012.

Read the The complete Report