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Parke Bancorp ($PKBK): A Strong Community Bank With An Attractive Valuation

|Includes: Parke Bancorp, Inc. (PKBK)

Parke Bancorp ($PKBK) is a holding company that operates Parke Bank. Established in 1999, it currently runs 5 branches, 4 of which are in New Jersey and one of which is in Pennsylvania. Parke has about $820M in assets and a market cap of 66.85M.

Although Parke currently has a dividend rate of 1.8%, which is nothing to brag about, it has other characteristics that make it quite attractive.

Parke has a price to earnings of 7.3 which is quite low, about half of it's peers, and a return on equity of 11.77 which is quite high, about double its peers. In addition, Parke trades at $11.16 per share which is below it's book value of $13.48.

Parke has not yet grown through acquisitions, however, this has not impacted earnings which have been growing since 2009.

The following are Parke's earnings since 2009:

  1st Q

2nd Q

3rd Q 4th Q Year
2009 0.23 0.16 0.25 0.25 0.89
2010 0.26 0.29 0.26 0.25 1.06
2011 0.34 0.31 0.22 0.17 1.04
2012 0.26 0.27 0.23 0.26 1.02
2013 0.32 0.29


0.51 1.42
2014 0.29 0.31 0.40 N/A N/A

The above earnings are impressive for several reasons. First, the bank suffered no losses during the last recession. Second, Parke's earnings have grown quite considerably since 2009. This is all organic growth as it has not grown through acquisitions as of yet. Third, Parke's earnings are steady and consistent which shows stability.

Although Parke is not my favourite community bank, it certainly exemplifies the characteristics of a strong community bank. If this bank is attractive to me (and possibly you) then it would be even more attractive to one of it's community/regional peers looking to expand.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.