Parke Bancorp, Inc. (PKBK): Business Model Canvas [11-2024 Updated]

Understanding the business model of Parke Bancorp, Inc. (PKBK) reveals how this community-focused bank effectively serves its clientele while navigating a competitive landscape. With a strong emphasis on personalized banking and a commitment to local businesses, Parke Bancorp has crafted a comprehensive approach that encompasses key partnerships, value propositions, and revenue streams. Dive into the details below to discover how this bank positions itself in the market and drives sustainable growth.

Parke Bancorp, Inc. (PKBK) - Business Model: Key Partnerships

Local businesses for loan services

Parke Bancorp collaborates with local businesses to provide tailored loan services. As of September 30, 2024, the total loans receivable amounted to $1.84 billion, representing a 2.9% increase from the previous year. This growth is reflective of the bank's focus on small to mid-sized enterprises within its service regions, particularly in Southern New Jersey and Philadelphia.

Real estate developers for construction loans

Partnerships with real estate developers are critical for Parke Bancorp's construction loan offerings. The bank's construction loan portfolio stood at $176.5 million as of September 30, 2024, representing 9.6% of total loans. This marks a 12.0% increase from the previous year, highlighting the bank's active role in financing real estate development projects.

Financial institutions for brokered deposits

Parke Bancorp utilizes brokered deposits as a significant funding source. As of September 30, 2024, total brokered deposits were $198.7 million, a decrease of 11.1% from the previous year. This decrease was primarily influenced by shifts in the overall deposit mix and market conditions. The bank has established relationships with various financial institutions, including Wells Fargo and Piper Sandler, to enhance its liquidity.

Compliance and legal advisors for cannabis banking

Given the unique challenges of cannabis-related banking, Parke Bancorp engages compliance and legal advisors to navigate regulatory frameworks. Non-interest income from commercial deposit accounts related to the cannabis industry was $0.8 million for the nine months ended September 30, 2024, down from $2.9 million in the same period in 2023. This decline reflects the complexities and risks involved in servicing this sector.

Partnership Type	Financial Metrics	Notes
Local Businesses	Total Loans: $1.84 billion (as of Sept 30, 2024)	2.9% increase YoY
Real Estate Developers	Construction Loans: $176.5 million	9.6% of total loans; 12.0% increase YoY
Financial Institutions	Brokered Deposits: $198.7 million	11.1% decrease YoY
Cannabis Banking Advisors	Non-Interest Income: $0.8 million	From cannabis-related commercial accounts

Parke Bancorp, Inc. (PKBK) - Business Model: Key Activities

Origination of commercial and residential loans

As of September 30, 2024, Parke Bancorp had total loans receivable of $1.84 billion, reflecting an increase of $52.6 million, or 2.9%, from $1.79 billion at December 31, 2023. The composition of loans includes:

Loan Type	September 30, 2024 (in thousands)	Percentage of Total Loans	December 31, 2023 (in thousands)	Change ($ thousands)	% Change
Commercial and Industrial	$34,812	1.9%	$35,451	$(639)	(1.8%)
Construction	$176,534	9.6%	$157,556	$18,978	12.0%
Real Estate Mortgage - Owner Occupied	$150,209	8.2%	$141,742	$8,467	6.0%
Real Estate Mortgage - Non-owner Occupied	$365,563	19.9%	$369,909	$(4,346)	(1.2%)
Residential - 1 to 4 Family	$452,723	24.6%	$449,682	$3,041	0.7%
Residential - 1 to 4 Family Investment	$517,777	28.1%	$524,167	$(6,390)	(1.2%)
Residential - Multifamily	$137,282	7.5%	$103,324	$33,958	32.9%
Consumer	$5,029	0.3%	$5,509	$(480)	(8.7%)
Total Loans	$1,839,929	100.0%	$1,787,340	$52,589	2.9%

Management of deposit accounts

As of September 30, 2024, total deposits at Parke Bancorp amounted to $1.56 billion, an increase of $6.1 million, or 0.4%, from $1.55 billion at December 31, 2023. The breakdown of deposits is as follows:

Deposit Type	September 30, 2024 (in thousands)	December 31, 2023 (in thousands)	Change ($ thousands)	% Change
Noninterest-bearing	$198,499	$232,189	$(33,690)	(14.5%)
Interest-bearing Checking	$58,397	$63,017	$(4,620)	(7.3%)
Savings	$57,980	$83,470	$(25,490)	(30.5%)
Money Market	$567,098	$567,080	$18	—%
Time Deposits	$676,909	$607,071	$69,838	11.5%
Total Deposits	$1,558,883	$1,552,827	$6,056	0.4%

Risk assessment and credit evaluation

Parke Bancorp employs rigorous risk assessment and credit evaluation processes. As of September 30, 2024, the allowance for credit losses on loans was $32.3 million, representing an increase from $32.1 million at December 31, 2023. The provision for credit losses for the nine months ended September 30, 2024, was $0.5 million, compared to a recovery of $1.6 million for the same period in 2023. The increase in the provision was attributed to higher outstanding loan balances, specifically in the construction and multifamily loan portfolios.

Compliance with banking regulations

Parke Bancorp adheres to stringent banking regulations as part of its operational framework. As of September 30, 2024, the total equity was $296.5 million, up from $284.3 million at December 31, 2023, reflecting a retention of earnings despite the payment of $6.4 million in cash dividends and $2.0 million in stock repurchases. The bank maintains compliance with capital requirements set forth by regulatory bodies, ensuring stability and resilience in its financial operations.

Parke Bancorp, Inc. (PKBK) - Business Model: Key Resources

Capital base from deposits and borrowings

As of September 30, 2024, Parke Bancorp reported total deposits of $1.56 billion, a slight increase of $6.1 million or 0.4% from the previous year. The composition of deposits included:

Type of Deposit	Amount ($ thousands)	Change ($ thousands)	% Change
Noninterest-bearing	198,499	(33,690)	(14.5)
Interest-bearing Checking	58,397	(4,620)	(7.3)
Savings	57,980	(25,490)	(30.5)
Money Market	567,098	18	—
Time Deposits	676,909	69,838	11.5
Total Deposits	1,558,883	6,056	0.4

The growth in deposits was driven primarily by an increase in brokered time deposits, which rose by $48.4 million, alongside a $21.4 million increase in time deposits. However, this was partially offset by decreases in non-interest demand deposits and savings deposits totaling $33.7 million and $25.5 million, respectively .

Loan portfolio exceeding $1.84 billion

Parke Bancorp's loan portfolio reached $1.84 billion as of September 30, 2024, marking an increase of $52.6 million or 2.9% from the previous year. The breakdown of the loan portfolio is as follows:

Loan Type	Amount ($ thousands)	Percentage of Total Loans
Commercial and Industrial	34,812	1.9
Construction	176,534	9.6
Commercial – Owner Occupied	150,209	8.2
Commercial – Non-owner Occupied	365,563	19.9
Residential – 1 to 4 Family	452,723	24.6
Residential – 1 to 4 Family Investment	517,777	28.1
Residential – Multifamily	137,282	7.5
Consumer	5,029	0.3
Total Loans	1,839,929	100.0

The increase was primarily attributed to growth in the construction, commercial real estate owner-occupied, and residential multifamily loan portfolios .

Experienced banking staff and management

Parke Bancorp emphasizes its human resources as a key asset, with a management team possessing extensive experience in the banking sector. The company focuses on developing strong relationships with small to mid-sized businesses and retail customers, providing a range of financial services. The commitment to customer service fosters loyalty and stability, critical for sustaining its operations .

Technology for banking operations and customer service

The company invests in technology to enhance banking operations and customer service. This includes adopting digital banking solutions that improve customer engagement and streamline operations. As of September 30, 2024, the total equity of Parke Bancorp was reported at $296.5 million, reflecting a 4.3% increase from the previous year.

Parke Bancorp, Inc. (PKBK) - Business Model: Value Propositions

Competitive loan products tailored for small to mid-sized businesses

Parke Bancorp focuses on providing tailored loan products for small to mid-sized businesses, which is evident in their loan portfolio. As of September 30, 2024, the total loans receivable amounted to $1.84 billion, reflecting an increase of $52.6 million, or 2.9%, from December 31, 2023. The loan segments include:

Loan Type	Amount ($ thousands)	Percentage of Total Loans
Commercial and Industrial	34,812	1.9%
Construction	176,534	9.6%
Commercial – Owner Occupied	150,209	8.2%
Commercial – Non-owner Occupied	365,563	19.9%
Residential – 1 to 4 Family	452,723	24.6%
Residential – 1 to 4 Family Investment	517,777	28.1%
Residential – Multifamily	137,282	7.5%
Consumer	5,029	0.3%

Specialized services for cannabis-related businesses

Parke Bancorp has established itself as a key player in the cannabis banking sector. As of September 30, 2024, deposit balances from cannabis customers were approximately $116.5 million, representing 7.5% of total deposits. The bank also reported cannabis-related loans totaling $38.7 million, up from $27.1 million at the end of the previous year. This specialization allows Parke Bancorp to cater to a growing market while managing regulatory risks effectively.

Strong community focus and customer relationships

Parke Bancorp emphasizes a strong community focus, which is reflected in its customer loyalty and service. The bank's total equity increased from $284.3 million at December 31, 2023, to $296.5 million by September 30, 2024, showcasing a retention of earnings and a commitment to community investment. The bank's operational strategy includes prioritizing customer service to foster long-term relationships, which is critical in retaining core deposits and enhancing customer satisfaction.

Reliable banking services with local expertise

Parke Bancorp's local expertise allows it to offer reliable banking services, particularly in Southern New Jersey and Philadelphia. As of September 30, 2024, the bank's total assets were $2.07 billion, marking a 2.1% increase from the previous year. The bank's focus on providing competitive interest rates and personalized service enhances its value proposition to both individual and business customers.

Parke Bancorp, Inc. (PKBK) - Business Model: Customer Relationships

Personalized banking services through local branches

Parke Bancorp focuses on providing personalized banking services through its network of local branches. As of September 30, 2024, the company reported total deposits of $1.56 billion, reflecting a modest increase of $6.1 million or 0.4% from the previous year. The bank emphasizes customer service, which has resulted in a history of customer loyalty and retention. The majority of deposit accounts are obtained through the retail banking business, which provides low-cost funding to support lending efforts.

Ongoing communication and support for loan customers

Parke Bancorp maintains ongoing communication and support for its loan customers. The company reported a total loan receivable of $1.84 billion as of September 30, 2024, which increased by $52.6 million or 2.9% from the previous year. The increase in loans was primarily attributed to growth in the construction, commercial real estate owner-occupied, and multifamily residential loan portfolios. The provision for credit losses was recorded at $0.5 million for the nine months ended September 30, 2024.

Community engagement initiatives

Parke Bancorp actively engages in community initiatives. The bank's commitment to community involvement is reflected in its support for various local programs and initiatives aimed at enhancing financial literacy and supporting local businesses. This engagement has fostered stronger relationships with the community, which in turn has contributed to customer loyalty and retention.

Educational resources on financial literacy

The bank provides educational resources on financial literacy to its customers. This includes workshops and materials designed to help customers better understand their financial options and make informed decisions. The focus on financial literacy aligns with the bank's strategy to empower customers and strengthen relationships, ultimately leading to enhanced customer satisfaction and retention.

Metric	Value (as of September 30, 2024)
Total Deposits	$1.56 billion
Total Loans Receivable	$1.84 billion
Provision for Credit Losses	$0.5 million
Net Interest Income	$43.1 million (decreased 11.5% YoY)
Net Income Available to Common Shareholders	$20.1 million

Parke Bancorp, Inc. (PKBK) - Business Model: Channels

Physical bank branches in local communities

Parke Bancorp operates a network of physical bank branches primarily located in Southern New Jersey and nearby regions. As of September 30, 2024, the bank had total assets of $2.07 billion, with total deposits reported at $1.56 billion. The bank's physical presence supports its goal of fostering strong relationships with local customers, providing personalized service and community engagement.

Online banking platform for customer convenience

Parke Bancorp offers a robust online banking platform that facilitates various banking transactions, including fund transfers, bill payments, and account management. The online platform is designed to enhance customer experience by providing 24/7 access to banking services. As of the latest reports, the bank has seen a significant increase in online transactions, reflecting a growing trend towards digital banking solutions among its customer base.

Mobile banking application for easy access

The mobile banking application of Parke Bancorp allows customers to manage their accounts conveniently from their smartphones. This application supports features such as mobile check deposits, balance inquiries, and transaction history reviews. The bank's commitment to mobile banking is evident as it aims to cater to the increasing demand for mobile solutions among its customers, enhancing accessibility and user engagement.

Direct sales through loan officers

Parke Bancorp employs a team of loan officers who engage directly with customers for loan products including residential mortgages, commercial loans, and construction financing. As of September 30, 2024, total loans outstanding were reported at $1.84 billion. The bank's strategy includes fostering personal relationships through direct sales efforts, which are crucial for understanding customer needs and tailoring financial solutions accordingly.

Channel	Key Features	Financial Impact (as of September 30, 2024)
Physical Bank Branches	Local presence, personalized service	Total Deposits: $1.56 billion
Online Banking	24/7 access, fund transfers, bill payments	Increased online transactions
Mobile Banking	Mobile check deposits, account management	Growing user engagement
Direct Sales via Loan Officers	Personalized loan solutions	Total Loans: $1.84 billion

Parke Bancorp, Inc. (PKBK) - Business Model: Customer Segments

Small to mid-sized businesses seeking loans

Parke Bancorp focuses on providing loans to small to mid-sized businesses, primarily in Southern New Jersey, Philadelphia, New York, and South Carolina. As of September 30, 2024, the total loans to this segment amounted to approximately $34.8 million, representing 1.9% of the total loan portfolio. The company has seen growth in this area, with commercial and industrial loans reflecting a slight decrease of 1.8% from the previous year. The demand for liquidity among these businesses drives the bank's lending strategies.

Retail customers for banking services

Parke Bancorp offers various banking services tailored to retail customers, including checking, savings, and money market accounts. As of September 30, 2024, the bank reported total deposits of $1.56 billion, with significant contributions from retail customers. Non-interest-bearing deposits decreased by 14.5%, while interest-bearing deposits showed a mixed trend, with time deposits increasing by 11.5%. The retail banking segment accounts for a substantial portion of the bank's funding, facilitating lending operations and other financial services.

Real estate developers and investors

Real estate lending is a crucial aspect of Parke Bancorp's business model, targeting developers and investors. As of September 30, 2024, total real estate mortgage loans (commercial and residential) accounted for approximately 57.9% of the total loan portfolio, with commercial non-owner occupied loans at $365.6 million and residential 1 to 4 family investment loans at $517.8 million. The bank has strategically increased its lending to real estate developers, with the multifamily segment showing a notable growth of 32.9% year-over-year.

Cannabis industry businesses operating legally at the state level

Parke Bancorp serves clients in the cannabis industry, which is legally operating within the state. The bank's non-interest income from this sector decreased significantly, from $2.9 million in the previous year to $0.8 million as of September 30, 2024, reflecting challenges in this burgeoning market. Despite the regulatory complexities, the bank remains committed to supporting cannabis-related businesses, contributing to its diversified customer base.

Customer Segment	Loan Amount (in millions)	Percentage of Total Loans	Notable Trends
Small to mid-sized businesses	$34.8	1.9%	Slight decrease of 1.8% year-over-year
Retail customers	$1.56 billion (total deposits)	N/A	Time deposits increased by 11.5%
Real estate developers	$1.06 billion (total real estate loans)	57.9%	Multifamily loans up 32.9% year-over-year
Cannabis industry businesses	$0.8	N/A	Significant decrease in non-interest income

Parke Bancorp, Inc. (PKBK) - Business Model: Cost Structure

Employee salaries and benefits

The total non-interest expense for Parke Bancorp for the nine months ended September 30, 2024, was $19.1 million, which represents a significant decrease from $29.0 million for the same period in 2023. This reduction can be attributed to a non-recurring loss of $9.5 million recorded in 2023. Employee compensation forms a substantial part of this expense, contributing to fixed costs that are essential for maintaining operations and customer service.

Interest expenses on deposits and borrowings

For the nine months ended September 30, 2024, Parke Bancorp reported interest expenses of $48.7 million, up from $33.7 million in the same period in 2023, reflecting a 44.5% increase. The breakdown is as follows:

Type	Amount (in millions)	Change (in millions)	% Change
Interest on deposits	$42.1	$14.1	50.2%
Interest on borrowings	$6.6	$0.9	16.2%

This increase in interest expenses is primarily due to a rise in market interest rates and changes in the deposit mix, which has a direct impact on the overall cost structure of the bank.

Operational costs for maintaining branches

The operational costs associated with maintaining branches are encompassed within the non-interest expenses. These include costs related to branch staff, utilities, and maintenance. While specific figures for branch operational costs are not detailed separately, they are a significant component of the overall non-interest expense of $19.1 million for the nine months ended September 30, 2024, compared to $29.0 million in the prior year.

Compliance and legal costs associated with regulations

Compliance costs are an essential consideration for financial institutions like Parke Bancorp. They include expenses related to regulatory compliance, legal fees, and other associated costs. While exact figures for compliance and legal costs are not specified, they form part of the broader non-interest expenses. These costs have been managed effectively, contributing to the overall reduction in non-interest expenses from $29.0 million in 2023 to $19.1 million in 2024.

Parke Bancorp, Inc. (PKBK) - Business Model: Revenue Streams

Interest income from loans and mortgages

For the nine months ended September 30, 2024, Parke Bancorp reported a total interest income of $91.8 million, an increase of 11.4% from $82.4 million for the same period in 2023. This increase was primarily driven by interest and fees on loans, which rose by $9.4 million due to higher market interest rates and increased loan balances.

As of September 30, 2024, the total loans receivable amounted to $1.84 billion, compared to $1.79 billion at December 31, 2023, representing a growth of $52.6 million or 2.9%.

Fees from deposit accounts and services

Non-interest income for the nine months ended September 30, 2024, totaled $3.2 million, reflecting a decrease of $2.0 million, or 39.3%, compared to $5.2 million during the same period in 2023. The decline was largely due to a $2.1 million decrease in service fees on deposit accounts, primarily from commercial deposit accounts associated with the cannabis-related industry.

Deposit Account Type	September 30, 2024 (in thousands)	December 31, 2023 (in thousands)	$ Change	% Change
Noninterest-bearing	198,499	232,189	(33,690)	(14.5)
Interest-bearing Checking	58,397	63,017	(4,620)	(7.3)
Savings	57,980	83,470	(25,490)	(30.5)
Time Deposits	676,909	607,071	69,838	11.5
Total Deposits	1,558,883	1,552,827	6,056	0.4

Non-interest income from loan origination fees

Loan origination fees constitute a significant component of Parke Bancorp's non-interest income. However, specific figures for loan origination fees separately are not disclosed. Overall non-interest income for the nine months ended September 30, 2024 was reported at $3.2 million, a decrease from the previous year.

Gains from the sale of loans and investment securities

During the nine-month period ending September 30, 2024, Parke Bancorp experienced a total net interest income of $43.1 million, reflecting a decrease of 11.5% from the previous year. The company reported a provision for credit losses of $0.5 million, which contrasts with a recovery of $1.6 million noted in the same period of 2023.

Additionally, the total assets of Parke Bancorp at September 30, 2024, were reported at $2.07 billion, with total equity of $296.5 million.

Updated on 16 Nov 2024

Resources:

1. Parke Bancorp, Inc. (PKBK) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Parke Bancorp, Inc. (PKBK)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Parke Bancorp, Inc. (PKBK)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.