Parke Bancorp, the parent company of Parke Bank, announced its operating results for the fourth quarter ended December 31, 2022.
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Interest income increased $5.4 million for the fourth quarter of 2022 compared to the same period in 2021, primarily due to an increase in interest and fees on loans of $4.2 million to $23.4 million due to higher average outstanding loan balances and higher interest rates.
Additionally, interest earned on average deposits held at the Federal Reserve Bank ("FRB") increased to $1.4 million from $224 thousand, due to higher interest rates paid on such deposits.
For the year ended December 31, 2022, interest income increased $5.4 million from the same period in 2021, primarily driven by an increase in interest earned on average deposits held at the FRB of $3.1 million and an increase in interest and fees on loans of $2.3 million due to higher average outstanding loan balances and higher interest rates.
Interest expense increased $3.3 million for the three months ended December 31, 2022, compared to the same period in 2021, primarily due to higher interest rates. For the year ended December 31, 2022, interest expense increased $1.2 million, primarily due to higher interest rates.
The provision for loan losses increased $850 thousand for the three months ended December 31, 2022, compared to the same period in 2021, as a result of an increase in loan balances.
For the year ended December 31, 2022, the provision for loans losses increased $1.3 million from the same period in 2021 due to an increase in loan balances.
Non-interest income decreased $469 thousand for the three months ended December 31, 2022 compared to the same period in 2021, primarily as a result of a decrease in service fees on deposit accounts of $323 thousand and a decrease in loan fees of $107 thousand.
For the year ended December 31, 2022, non-interest income decreased $417 thousand, primarily driven by a decrease in service fees on deposit accounts of $735 thousand, partially offset by a gain on the sale of OREO of $268 thousand.
The decrease in service fees on deposit accounts was primarily attributable to a decrease in service fees from deposit accounts related to our cannabis related businesses.
Non-interest expense increased $565 thousand for the three months ended December 31, 2022 compared to the same period in 2021, primarily driven by an increase in compensation and benefits of $501 thousand, and an increase in other operating expense of $491 thousand, partially offset by a decrease in professional services expense of $406 thousand.
For the twelve months ended December 31, 2022, non-interest expense increased $1.3 million, mainly due to an increase in other operating expense of $1.4 million, an increase in compensation and benefits of $1.1 million, and an increase in OREO expense of $206 thousand, partially offset by a decrease in professional services expense of $1.5 million.
The increase in other operating expense was primarily driven by a $793 thousand increase in Pennsylvania shares tax, a $172 thousand increase in director fees, and a $321 thousand increase in other loan expense. The increase in compensation and benefits was primarily due to a $425 thousand increase in salaries, and a $597 thousand increase in pension cost.
The decrease in professional services expense was mainly due to the prior year remediation efforts related to our Bank Secrecy Act (BSA) compliance.
Income tax expense decreased $87 thousand for the fourth quarter of 2022 and increased $316 thousand for the quarter and fiscal year ended December 31, 2022, respectively, compared to the same periods in 2021.
The effective tax rate for the fourth quarter of 2022 and the year ended December 31, 2022 was 23.8% and 25.4%, respectively, compared to 25.0% and 25.4% for the same periods in 2021. ■