Parke Bancorp Inc. Reports Operating Results (10-Q)
Parke Bancorp's wholly-owned subsidiary Parke Bank is a New Jersey-chartered commercial bank. The Bank provides full-service banking to individuals and small to mid- size businesses in Gloucester Atlantic and Cape May counties in New Jersey as well as the Philadelphia area. Parke Bancorp Inc. has a market cap of $26.1 million; its shares were traded at around $6.48 with a P/E ratio of 5.7 and P/S ratio of 0.7. Highlight of Business Operations: Net Income. For the quarter ended March 31, 2009, net income totaled $1.5 million, compared to $1.3 million for the quarter ended March 31, 2008. Net income available to common shareholders, which includes the impact of dividends and accretion of discount on preferred stock, was $1.4 million for the three months ended March 31, 2009. Earnings per share presented are calculated on net income available to common shareholders. Diluted earnings per share for the three months ended March 31, 2009 totaled $0.34, compared to $0.31 per share for the same period of 2008. Prior period earnings per share information has been adjusted for the 15% stock dividend paid in the second quarter of 2008.
Net interest income for the three months ended March 31, 2009 totaled $5.2 million, an increase of 31.6% over $3.9 million for the three months ended March 31, 2008. Interest income of $9.8 million increased $885,000, or 10.0%, from the comparable quarter of 2008 due to an increase in average interest-earning assets of $121.7 million, or 25.6%, that was partially offset by a decline in the yield on average interest-earning assets. The average yield on earning assets fell 88 basis points to 6.64% for the first quarter of 2009 from 7.52% for the first quarter of 2008. The Federal Reserve’s targeted fed funds rate of 0 to 0.25% was at historic lows in the first quarter of 2009. That range compares to the average fed funds rate of 3.18% in the first quarter of 2008. The Company’s practice of setting floors on commercial and real estate loans has protected the net interest margin from decline.
For the quarter ended March 31, 2009, interest expense of $4.6 million decreased by $358,000, or 7.2%, from $5.0 million for the quarter ended March 31, 2008. In order to fund the Company’s asset growth, Management successfully implemented deposit account promotions and reduced its reliance on debt. Average interest-bearing liabilities grew $136.7 million, or 31.9%, in the first quarter of 2009 to $564.6 million from $427.9 million for the comparable 2008 period. The average rate paid on interest-bearing liabilities dropped 136 basis points to 3.30% for the three months ended March 31, 2009 from 4.66% for the same period of 2008.
Non-interest Income. Non-interest income for the quarter ended March 31, 2009 was $171,000 compared to $284,000 in income from the comparable quarter of 2008. The $113,000 decrease was attributable to a $159,000 loss on the sale of one of the OREO properties, which was partially offset by an increase of $144,000 in other miscellaneous income, the majority of which was the reimbursement of prior period legal fees.
Non-interest Expense. Noninterest expense of $2.1 million for the current quarter increased by $328 thousand or 19.0%, above the prior years’ comparable quarter of $1.7 million. The change was associated with increased staffing costs related to annual merit raises and higher cost fringe benefits of $138,000, increased legal expense of $68,000 resulting in part from SEC and U.S. Treasury Department filings related to the EESA capital program and an increase in shares tax in the State of Pennsylvania of $71,000.
Income Taxes. The Company recorded income tax expense of $994,000, on income before taxes of $2.5 million for the three months ended March 31, 2009, resulting in an effective tax rate of 39.4%, compared to income tax expense of $832,000 on income before taxes of $2.1 million for the same period of 2007, resulting in an effective tax rate of 39.0%.
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