Parkway Acquisition Corp. Announces Fourth Quarter 2020 Results
Parkway Acquisition Corp. (PKKW) reported fourth-quarter 2020 earnings with net income of $1.7 million, matching the previous year's performance. However, annual net income dropped to $5.9 million, down from $7.2 million in 2019. The return on average assets and equity decreased to 0.79% and 7.92%, respectively. Key drivers included an increase in noninterest income and SBA-PPP loans totaling $81.9 million. Total deposits rose to $755.5 million, reflecting strong growth attributed to government stimulus. Despite a declining net interest margin of 3.95%, management remains optimistic about future growth despite ongoing challenges.
- Net income for Q4 2020 was stable at $1.7 million.
- Total deposits increased by $144.3 million from the previous year.
- SBA-PPP loans contributed $1.7 million in fees.
- Noninterest income grew by $382 thousand year-over-year.
- Annual net income declined from $7.2 million in 2019 to $5.9 million in 2020.
- Return on average assets and equity decreased compared to the previous year.
- Net interest margin compressed to 3.95%, down from 4.40% a year ago.
- Total noninterest expenses increased by $1.8 million primarily due to branch expansions.
FLOYD, Va. and INDEPENDENCE, Va., Feb. 17, 2021 /PRNewswire/ -- Parkway Acquisition Corp. ("Parkway" or the "Company") (OTC QX: PKKW) – the holding company for Skyline National Bank ("Skyline" or the "Bank") – announced fourth quarter 2020 earnings.
Net income for the three months ended December 31, 2020 was
Blake Edwards, President and CEO, commented "We are pleased with our results for 2020 despite the challenging environment we have been in and continue to face in the near term. To say 2020 was a challenging year is obviously an understatement. Throughout our industry net interest margins were negatively impacted due to swift reductions in short term interest rates late in the first quarter of 2020. Noninterest income was also pressured as the pandemic response restrained economic activity and transaction volumes. Fortunately, our tremendous work in originating Small Business Administration Paycheck Protection Program ("SBA-PPP") loans and increases in mortgage origination fees helped to offset at least a part of these negative impacts. SBA-PPP and other government stimulus plans also contributed to strong deposit growth for the year. Approximately
Edwards concluded, "Margin compression will continue to impact earnings as the Federal Reserve maintains its' accommodative, near-zero interest rate policy, however we will remain focused on asset quality, cost containment, and building on the solid balance sheet growth that we experienced last year. We continue to believe we are well positioned for growth and success in the future despite the short-term impacts of COVID-19."
Highlights
- Net income in 2020 reflected fees earned from SBA-PPP loans originated totaling
$1.7 million , as well as a year-over-year increase in noninterest income of$382 thousand , which included higher revenues from secondary market mortgage originations as well as increased gains from sales of securities. 2020 noninterest expenses also increased by$1.8 million from 2019 primarily due to additional overhead cost from branch expansions. - Net interest margin ("NIM") was
3.95% for the fourth quarter 2020, compared to3.75% in the third quarter of 2020, and4.40% in the fourth quarter of 2019. The NIM compression is a reflection of the exceptionally low interest rate environment as well as continual competitive pressure on loan rates. - Net loans were
$659.2 million at December 31, 2020, down2.04% when compared to September 30, 2020 and up16.37% compared to December 31, 2019. The year over year increase primarily reflects the addition of$81.9 million in SBA-PPP loans, as well as organic growth of$44.6 million . The net loan decrease during the quarter was a result of SBA-PPP paydowns of$29.3 million outpacing organic growth of$15.4 million . - Total deposits were
$755.5 million at December 31, 2020, an increase of$41.5 million from$714.0 million at September 30, 2020, and an increase of$144.3 million from$611.2 million at December 31, 2019. The increase reflects core deposit growth (noninterest and interest-bearing demand, savings and money market accounts) primarily attributed to organic growth from the SBA-PPP loan program, government economic stimulus funds, as well as growth from recent branch expansions into North Carolina markets. - Total stockholders' equity was
$85.1 million at December 31, 2020 compared to$81.4 million at December 31, 2019. Book value per share rose to$14.08 per share from$13.27 the prior year. - The Company's board of directors has also authorized the extension of the share repurchase program through January 19, 2023 which authorizes the Company to buy back up to 350,000 shares. There remains 182,500 shares available in the plan to repurchase as conditions deem favorable in privately negotiated transactions or open market purchases.
Coronavirus (COVID-19) Response
- The Bank has shifted its branch lobby operations throughout the year as case count data was received on an ongoing basis. It is continuing to serve its customers primarily through drive-thru, online banking, and in-person when requested, with hopes to reopen lobby doors to the public in early 2021.
- The Bank began receiving requests for loan deferments on March 23, 2020. During 2020, the Bank approved approximately 250 requests for loan payment deferment of approximately
$64.9 million in loans. As of December 31, 2020, 18 loans with total outstanding balances of$9.0 million remained in deferment status. - The Bank participated in the SBA-PPP and originated loans totaling
$81.9 million . As of December 31, 2020,$29.3 million in SBA-PPP loan balances had been forgiven or paid off. Contractual interest earned on SBA-PPP loans totaled$527 thousand , while net fees recognized totaled$1.7 million . Gross SBA-PPP loans totaling$52.5 million with net deferred fees of$1.4 million remained on the balance sheet at December 31, 2020. - The Bank is participating in the next round of SBA-PPP loans and has received approval on approximately
$20.0 million in funding to date in 2021.
Balance Sheet Review
Total assets were
Total loans were
Asset quality has remained strong with a ratio of nonperforming loans to total loans of
Total deposits were
Stockholders' equity increased to
Operational Results for the quarter and year ended December 31, 2020
Total interest income increased by
Interest expense increased by
Net interest income was
Our net interest margin remained strong, at a rate of
There was a provision for loan losses of
Total noninterest income was
Total noninterest expenses for the three month and twelve month periods ended December 31, 2020 increased compared with the same periods in 2019, reflecting additional costs associated with branching activities into new North Carolina markets. Salary and benefit costs increased by
In total, income before taxes decreased by
Forward-looking statements
This release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934 as amended. These include statements as to expectations regarding future financial performance and any other statements regarding future results or expectations. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Company, are generally identified by the use of words such as "believe," "expect," "intend," "anticipate," "estimate," or "project" or similar expressions. Our ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors which could have a material adverse effect on the operations and future prospects of the combined company and its subsidiaries include, but are not limited to: changes in interest rates, general economic conditions; the effects of the COVID-19 pandemic, including the Company's credit quality and business operations, as well as its impact on general economic and financial market conditions; the effect of changes in banking, tax and other laws and regulations and interpretations or guidance thereunder; monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality and composition of the loan and securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in the combined company's market area; the implementation of new technologies; the ability to develop and maintain secure and reliable electronic systems; and accounting principles, policies, and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or clarify these forward–looking statements, whether as a result of new information, future events or otherwise.
(See Attached Financial Statements for quarter ending December 31, 2020)
Parkway Acquisition Corp. Condensed Consolidated Balance Sheets December 31, 2020; September 30, 2020; December 31, 2019 | |||||||||||||
December 31, | September 30, | December 31, | |||||||||||
(dollars in thousands except share amounts) | 2020 | 2020 | 2019 | ||||||||||
(Unaudited) | (Unaudited) | (Audited) | |||||||||||
Assets | |||||||||||||
Cash and due from banks | $ 10,009 | $ 9,638 | $ 8,388 | ||||||||||
Interest-bearing deposits with banks | 84,863 | 36,106 | 34,861 | ||||||||||
Federal funds sold | 817 | 888 | 1,138 | ||||||||||
Investment securities available for sale | 33,507 | 30,411 | 32,881 | ||||||||||
Restricted equity securities | 2,416 | 2,416 | 2,394 | ||||||||||
Loans | 664,095 | 677,737 | 570,353 | ||||||||||
Allowance for loan losses | (4,900) | (4,794) | (3,893) | ||||||||||
Net loans | 659,195 | 672,943 | 566,460 | ||||||||||
Cash value of life insurance | 18,304 | 18,179 | 17,855 | ||||||||||
Properties and equipment, net | 26,591 | 26,835 | 23,437 | ||||||||||
Accrued interest receivable | 2,355 | 2,665 | 2,072 | ||||||||||
Core deposit intangible | 2,359 | 2,522 | 3,070 | ||||||||||
Goodwill | 3,257 | 3,257 | 3,257 | ||||||||||
Deferred tax assets, net | 1,019 | 1,454 | 985 | ||||||||||
Other assets | 10,695 | 9,650 | 9,492 | ||||||||||
Total assets | $ 855,387 | $ 816,964 | $ 706,290 | ||||||||||
Liabilities | |||||||||||||
Deposits | |||||||||||||
Noninterest-bearing | $ 231,852 | $ 221,026 | $ 165,900 | ||||||||||
Interest-bearing | 523,676 | 492,990 | 445,311 | ||||||||||
Total deposits | 755,528 | 714,016 | 611,211 | ||||||||||
Borrowings | 10,000 | 15,375 | 10,000 | ||||||||||
Accrued interest payable | 124 | 212 | 132 | ||||||||||
Other liabilities | 4,629 | 3,686 | 3,519 | ||||||||||
Total liabilities | 770,281 | 733,289 | 624,862 | ||||||||||
Stockholders' Equity | |||||||||||||
Common stock and surplus | 39,740 | 39,885 | 40,752 | ||||||||||
Retained earnings | 45,887 | 44,206 | 41,600 | ||||||||||
Accumulated other comprehensive loss | (521) | (416) | (924) | ||||||||||
Total stockholders' equity | 85,106 | 83,675 | 81,428 | ||||||||||
Total liabilities and stockholders' equity | $ 855,387 | $ 816,964 | $ 706,290 | ||||||||||
Book value per share | $ 14.08 | $ 13.81 | $ 13.27 | ||||||||||
Tangible book value per share | $ 13.15 | $ 12.85 | $ 12.24 | ||||||||||
Asset Quality Indicators | |||||||||||||
Nonperforming assets to total assets | |||||||||||||
Nonperforming loans to total loans | |||||||||||||
Allowance for loan losses to total loans | |||||||||||||
Allowance for loan losses to nonperforming loans | |||||||||||||
Parkway Acquisition Corp. Condensed Consolidated Statement of Operations | |||||||||
Three Months Ended | Year Ended | ||||||||
December 31, | September 30, | December 31, | December 31, | ||||||
(dollars in thousands except share amounts) | 2020 | 2020 | 2019 | 2020 | 2019 | ||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |||||
Interest income | |||||||||
Loans and fees on loans | $ 8,280 | $ 7,631 | $ 7,465 | $ 30,770 | $ 29,177 | ||||
Interest-bearing deposits in banks | 38 | 23 | 143 | 214 | 288 | ||||
Federal funds sold | - | - | 8 | 3 | 249 | ||||
Interest on securities | 150 | 154 | 198 | 630 | 967 | ||||
Dividends | 47 | 12 | 49 | 127 | 121 | ||||
8,515 | 7,820 | 7,863 | 31,744 | 30,802 | |||||
Interest expense | |||||||||
Deposits | 839 | 848 | 812 | 3,347 | 2,852 | ||||
Interest on borrowings | 22 | 26 | 14 | 93 | 17 | ||||
861 | 874 | 826 | 3,440 | 2,869 | |||||
Net interest income | 7,654 | 6,946 | 7,037 | 28,304 | 27,933 | ||||
Provision for loan losses | 162 | 291 | (10) | 1,189 | 655 | ||||
Net interest income after | |||||||||
provision for loan losses | 7,492 | 6,655 | 7,047 | 27,115 | 27,278 | ||||
Noninterest income | |||||||||
Service charges on deposit accounts | 397 | 354 | 468 | 1,441 | 1,652 | ||||
Other service charges and fees | 543 | 562 | 480 | 2,115 | 2,004 | ||||
Net realized gains on securities | - | 103 | 4 | 315 | 49 | ||||
Mortgage origination fees | 154 | 185 | 160 | 720 | 459 | ||||
Increase in cash value of life insurance | 125 | 108 | 118 | 449 | 442 | ||||
Other income | 52 | 85 | 80 | 257 | 309 | ||||
1,271 | 1,397 | 1,310 | 5,297 | 4,915 | |||||
Noninterest expenses | |||||||||
Salaries and employee benefits | 3,952 | 3,590 | 3,520 | 14,603 | 13,245 | ||||
Occupancy and equipment | 830 | 852 | 756 | 3,240 | 2,953 | ||||
Foreclosed asset expense, net | - | 2 | 1 | 2 | 3 | ||||
Data processing expense | 432 | 450 | 414 | 1,765 | 1,546 | ||||
FDIC Assessments | 98 | 60 | (5) | 233 | 50 | ||||
Advertising | 201 | 192 | 162 | 683 | 603 | ||||
Bank franchise tax | 140 | 133 | 105 | 505 | 438 | ||||
Director fees | 151 | 79 | 151 | 361 | 356 | ||||
Professional fees | 87 | 128 | 187 | 462 | 667 | ||||
Telephone expense | 86 | 101 | 89 | 370 | 371 | ||||
Core deposit intangible amortization | 163 | 163 | 192 | 711 | 822 | ||||
Other expense | 531 | 529 | 623 | 2,163 | 2,204 | ||||
6,671 | 6,279 | 6,195 | 25,098 | 23,258 | |||||
Net income before income taxes | 2,092 | 1,773 | 2,162 | 7,314 | 8,935 | ||||
Income tax expense | 411 | 358 | 441 | 1,445 | 1,780 | ||||
Net income | $ 1,681 | $ 1,415 | $ 1,721 | $ 5,869 | $ 7,155 | ||||
Net income per share | $ 0.28 | $ 0.23 | $ 0.28 | $ 0.97 | $ 1.16 | ||||
Weighted average shares outstanding | 6,054,579 | 6,060,775 | 6,143,253 | 6,075,819 | 6,184,133 | ||||
Dividends declared per share | $ 0.00 | $ 0.13 | $ 0.00 | $ 0.26 | $ 0.24 | ||||
For more information contact:
Blake Edwards, President & CEO – 276-773-2811
Lori Vaught, EVP & CFO – 276-773-2811
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SOURCE Parkway Acquisition Corp.
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