Parke Bancorp, Inc. (PKBK): SWOT Analysis [11-2024 Updated]
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Parke Bancorp, Inc. (PKBK) Bundle
As of 2024, Parke Bancorp, Inc. (PKBK) stands at a pivotal point, showcasing a strong financial condition with significant net income growth and robust asset management. However, challenges such as a decline in net interest income and increased credit loss provisions highlight the need for strategic planning. In this blog post, we will delve into a comprehensive SWOT analysis, exploring the strengths, weaknesses, opportunities, and threats that shape Parke Bancorp's competitive landscape and future prospects.
Parke Bancorp, Inc. (PKBK) - SWOT Analysis: Strengths
Strong financial condition with a significant increase in net income available to common shareholders, reaching $7.5 million in Q3 2024.
The net income available to common shareholders for the third quarter of 2024 increased by $6.5 million, or 634.1%, to $7.5 million, compared to $1.0 million for the same period last year. Earnings per share were $0.63 per basic common share and $0.62 per diluted common share for Q3 2024, compared to $0.09 per basic common share and $0.08 per diluted common share for Q3 2023.
Robust asset growth, with total assets of $2.07 billion as of September 30, 2024, indicating effective management of resources.
As of September 30, 2024, Parke Bancorp reported total assets of $2.07 billion, reflecting an increase of $41.9 million, or 2.1%, from $2.03 billion at December 31, 2023.
Diverse lending portfolio focused on residential mortgages, commercial real estate, and construction loans, which mitigates risk.
The company maintains a diverse lending portfolio comprising various loan types. As of September 30, 2024, the breakdown of loans receivable was as follows:
| Loan Type | Amount (in 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% |
Increased interest income due to higher loan balances and market interest rates, boosting overall profitability.
For the three months ended September 30, 2024, interest income increased by $3.0 million, or 10.3%, to $32.1 million, driven by an increase of $2.9 million in interest and fees on loans.
Access to various funding sources, including brokered deposits and lines of credit from the FHLBNY, enhancing liquidity.
As of September 30, 2024, Parke Bancorp had total borrowings of $188.3 million, primarily due to an increase of $20.0 million in FHLBNY advances. The company also maintained lines of credit with the FHLBNY totaling $930.5 million, of which $145.0 million was outstanding.
Strong customer loyalty and stable core deposits, which are essential for funding growth.
Total deposits increased to $1.56 billion as of September 30, 2024, reflecting an increase of $6.1 million, or 0.4%, from $1.55 billion at December 31, 2023. The composition of deposits included:
| Type of Deposit | Amount (in thousands) | Change (%) |
|---|---|---|
| Noninterest-bearing | $198,499 | (14.5%) |
| Interest-bearing Checking | $58,397 | (7.3%) |
| Interest-bearing Savings | $57,980 | (30.5%) |
| Money Market | $567,098 | (—%) |
| Time Deposits | $676,909 | 11.5% |
| Total Deposits | $1,558,883 | 0.4% |
Parke Bancorp, Inc. (PKBK) - SWOT Analysis: Weaknesses
Decline in net interest income by 11.5% year-over-year
Parke Bancorp reported a decrease in net interest income of $5.6 million, or 11.5%, to $43.1 million for the nine months ended September 30, 2024, compared to $48.7 million for the same period last year . This decline reflects ongoing pressure on earnings amid rising interest rates, with interest expense increasing by $15 million, or 44.5%, primarily driven by higher rates on deposits .
Increased provision for credit losses
For the nine months ended September 30, 2024, the provision for credit losses increased to $0.5 million, compared to a recovery of $1.6 million during the same period in 2023 . This increase signals potential risks in the loan portfolio, attributed to a rise in outstanding loans of $52.6 million .
High reliance on brokered deposits
As of September 30, 2024, Parke Bancorp exhibited a significant reliance on brokered deposits, which increased by $48.4 million . These deposits can be more expensive and less stable than core deposits, posing challenges to the bank's funding strategy .
Decrease in non-interest bearing and savings deposits
At September 30, 2024, non-interest bearing deposits decreased by $33.7 million, or 14.5%, totaling $198.5 million . Additionally, savings deposits fell by $25.5 million, or 30.5%, indicating challenges in maintaining customer funds .
| Financial Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Net Interest Income | $43.1 million | $48.7 million | -11.5% |
| Provision for Credit Losses | $0.5 million | Recovery of $1.6 million | N/A |
| Brokered Deposits Increase | $48.4 million | N/A | N/A |
| Non-Interest Bearing Deposits | $198.5 million | $232.2 million | -14.5% |
| Savings Deposits | $57.9 million | $83.5 million | -30.5% |
Parke Bancorp, Inc. (PKBK) - SWOT Analysis: Opportunities
Expanding lending activities in the growing market segments, particularly in multifamily and construction loans, which have shown robust growth.
As of September 30, 2024, Parke Bancorp's total loans increased to $1.84 billion, a rise of $52.6 million, or 2.9%, from December 31, 2023. Notably, the construction loan portfolio grew by $18.978 million, representing a 12.0% increase, and the residential multifamily loans surged by $33.958 million, amounting to a 32.9% increase.
Potential for increasing interest rates to enhance net interest margins if managed effectively.
Net interest income for the nine months ended September 30, 2024, was $43.1 million, down from $48.7 million for the same period in 2023, a decrease of 11.5%. However, interest income increased by $9.4 million to $91.8 million, or 11.4%, driven by higher interest rates and outstanding loan balances. The interest expense also increased by 44.5% to $48.7 million, indicating room for improved net interest margins if managed properly.
Opportunity to enhance digital banking services, attracting younger customers and increasing overall market share.
In an increasingly digital banking environment, enhancing digital services can attract younger demographics. As of September 30, 2024, Parke Bancorp had a total equity of $296.5 million, up from $284.3 million, which provides a solid financial base for investing in digital transformation.
Expansion into new geographic markets to diversify the customer base and reduce concentration risks.
Parke Bancorp has already begun expanding its lending footprint beyond Southern New Jersey and Philadelphia into areas such as New York and South Carolina. This strategic expansion positions the bank to tap into new customer bases and mitigate concentration risks.
| Loan Type | September 30, 2024 (in $ thousands) | December 31, 2023 (in $ thousands) | Change ($ thousands) | Percentage Change |
|---|---|---|---|---|
| Commercial and Industrial | 34,812 | 35,451 | (639) | (1.8)% |
| Construction | 176,534 | 157,556 | 18,978 | 12.0% |
| Residential – Multifamily | 137,282 | 103,324 | 33,958 | 32.9% |
| Total Loans | 1,839,929 | 1,787,340 | 52,589 | 2.9% |
Parke Bancorp, Inc. (PKBK) - SWOT Analysis: Threats
Economic uncertainties, including inflation and geopolitical tensions, which could adversely impact loan demand and credit quality.
As of September 30, 2024, Parke Bancorp reported total assets of $2.07 billion, which reflects a 2.1% increase from $2.03 billion at December 31, 2023 . The economic landscape is characterized by rising inflation rates, which reached 3.7% in 2024. Such economic pressures could lead to decreased consumer spending and a subsequent decline in loan demand. Additionally, geopolitical tensions could further strain economic stability, potentially impacting credit quality as borrowers may face increased financial pressures.
Intense competition in the banking sector, particularly from fintech companies offering innovative financial products.
The banking sector has seen significant disruption from fintech companies. These firms leverage technology to offer lower fees and faster services, attracting a younger demographic. As of September 30, 2024, Parke Bancorp's net interest income decreased by $5.6 million, or 11.5%, to $43.1 million for the nine months ended September 30, 2024, compared to $48.7 million for the same period last year . This decline can be attributed to competitive pressures and the need to adjust interest rates to remain attractive to depositors while still managing profit margins.
Regulatory changes that could impose additional compliance costs or restrictions on operations, particularly in the cannabis banking sector.
Parke Bancorp has exposure to the cannabis banking sector, which is subject to evolving regulations. As of September 30, 2024, the bank’s non-interest income was reported at $3.2 million, down from $5.2 million in the same period last year, largely due to a decrease in service fees from cannabis-related accounts, which dropped from $2.9 million to $0.8 million. Regulatory changes could further limit service offerings or increase compliance costs, impacting overall profitability.
Fluctuations in the housing market and real estate values that may impact the quality of the loan portfolio.
As of September 30, 2024, Parke Bancorp's loan portfolio totaled $1.84 billion, with significant exposure to real estate loans . The bank's residential 1 to 4 family loans and investments account for approximately 52.7% of the total loan portfolio. Fluctuations in the housing market, such as declining home prices or rising interest rates, could adversely affect borrowers' ability to repay loans, leading to increased defaults and a deterioration in asset quality. The allowance for credit losses was reported at $32.3 million, indicating potential risks associated with loan defaults .
| Metric | Value (September 30, 2024) | Value (December 31, 2023) | Change (%) |
|---|---|---|---|
| Total Assets | $2.07 billion | $2.03 billion | +2.1% |
| Net Interest Income | $43.1 million | $48.7 million | -11.5% |
| Non-Interest Income | $3.2 million | $5.2 million | -39.3% |
| Allowance for Credit Losses | $32.3 million | $32.1 million | +0.6% |
| Total Loans | $1.84 billion | $1.79 billion | +2.9% |
In conclusion, Parke Bancorp, Inc. (PKBK) stands at a pivotal juncture, leveraging its strong financial condition and diverse lending portfolio to navigate through current market challenges. While the company faces pressures from declining net interest income and increased competition, it has significant opportunities to expand its lending activities and enhance digital banking services. The strategic focus on these areas, coupled with a keen awareness of potential threats, positions Parke Bancorp for sustainable growth and resilience in the evolving financial landscape.
Updated on 16 Nov 2024
Resources:
- 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.
- 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.