To Our Shareholders:
Last year we stated how great it is to be able to announce record earnings for our Company for 2018. It is even better when you can make that announcement two years in a row, as we again generated record earnings in 2019. We generated net income of $29.8 million dollars in 2019, a 22.3% increase over our 2018’s earnings. Our financial performance supported a 1.94% return on average assets and a 17.93% return on average equity, these ratios place Parke Bancorp Inc. with the top performers in our peer group. Our total assets grew 15% to $1.7 billion dollars. The strong growth in our total assets and our interest income was driven by the growth of our loan portfolio, which grew 14% to $1.42 billion. We are in the most competitive market in the country for deposits. Deposits are critical to funding our loan portfolio. Although new deposits are expensive, our deposit base grew 13% in 2019 to $1.34 billion. One of the many challenges of achieving strong growth is maintaining the discipline to control expenses. We are pleased that our cost efficiency ratio, which is below 30%, continues to be one of the best in the banking industry. Another critical factor in the financial strength of a bank is capital. Our Company’s total equity increased by $24.4 million in 2019 to $179.4 million, a growth rate of 16%. Parke Bank’s capital position continues to be in excess of the Federal Banking Guidelines for a well-capitalized bank.
As Parke Bank continues to grow, we have carefully expanded our lending footprint. We have loan officers that generate loans in Central New Jersey, Brooklyn and the Bronx. We have hired outside consultants to assist our credit evaluations in these markets. Our primary lending area continues to be South Jersey, Philadelphia and the counties surrounding Philadelphia in Pennsylvania. The strength of the economy and the real estate market in 2019 generated many opportunities.
Growing deposits in our region is a challenge. Our region is the most competitive, highest cost, region in the country. Philadelphia has become a hot market with the strength of the real estate market in addition to new banks entering the Philadelphia market. We have instituted many new digital products that provide the same online conveniences as any other bank. You can now open a new account online, transfer funds and initiate wire transfers. Immediate debit card availability has also been instituted for the convenience of our customers. We were also successful with a new marketing campaign that included billboards and television commercials. The personal service we provide to our customers visiting our branches combined with these online products, marketing campaign and excellent service supported the 13% growth in our deposit base.
The Company’s Board of Directors and Senior Management maintains its’ focus on the importance of enhancing shareholder value. We increased our cash dividends from 14 cents per quarter to 16 cents per quarter in 2019 and recently we declared a stock dividend of 10%. We continue to work hard to generate strong earnings while maintaining a strong capital position, which enhances our bank’s book value.
2020 started very strong, driven by a good economy and continued record-breaking low unemployment. Further support was provided by low interest rates and new trade deals that were established with some of this Country’s trading partners. Unfortunately, a new threat is facing the world, including the United States that is having a major effect on the market, the coronavirus. An outbreak in China has spread to many countries including Italy, Iran, South Korea and the United States. The potential for a pandemic exists. World markets have plunged, including the United States markets. The market value of our stock has also been negatively affected. No one knows how long it will take to halt the spread of this disease, which when accomplished will reopen many of the markets that are now closed due to this threat. It is my hope and belief that a solution to this threat will be found and the world will recover. In fact, it has been reported that new testing and possible vaccines for the virus are being fast tracked for approval by the FDA. Unfortunately, no one knows when the solution will be found.
Parke Bancorp enjoys a strong capital position and is well positioned to withstand this new threat to the economy. We carefully monitor the changes in the market, and we are properly structured to continue building a strong financial institution that our shareholders expect and what we demand of ourselves.
C.R. “Chuck” Pennoni
Vito S. Pantilione
President and Chief Executive Officer
The Federal Deposit Insurance Corporation (FDIC) has permanently increased deposit insurance on all accounts to $250,000 per depositor.