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is a personalized service-type bank that focuses on the needs of small, mid-sized and
professional business for all banking and loan needs
Since commencing operations in January 1999, ParkeBank has reached total assets in excess of $100 million in less than four years, reflecting a significant increase in loans and deposits. ParkeBank makes the collective effort to continuously provide quality products and services to meet the financial needs of their small businesses, professional and individual customers alike. Their drive to provide the best customer service has always and will remain their key strategy. The company continually strives to maintain its reputation in providing old-fashioned courtesy and personal attention.
ParkeBank always has the diversified needs of their customers in mind. They a full service financial institution dedicated to total satisfaction. ParkeBanks role is to promote a positive image of community banking with an emphasis on providing customized products, personalized service and the ability to identify with each of their customers and their needs.
CEOCFOinterviews: Mr. Pantilione, please give us a brief history of ParkeBank.
Mr. Pantilione: ParkeBank opened in January of 1999. In January 1998, I invited people in the area that I thought would be a very good diversified group and we had a get-together in Philadelphia to talk about what we believe a good quality bank should be. With a core group of twelve people as founding directors, we started the process and obtained the approval to open our doors in about twelve months, which at that time was a very quick process. We opened in Washington Township, which is where our main office is located. We are a personalized service-type bank; I know that is a term that everyone uses, but we really look to have a personal touch, and I think it has shown up in our numbers. I owned a mortgage banking company before I opened the bank and brought that book of business here. We were profitable in about thirteen months.
CEOCFOinterviews: Why was there a need for a new bank?
Mr. Pantilione: The need for a new bank was so obvious in this area because during the 90s, mergers were sucking up all the little banks. The major bank in this area was The Bank of Gloucester County and they were bought by FULTON Bank. Even though they kept their name, it certainly changed the philosophy in banking. That opened the door to have a small bank come back into the community and be at a level where we can serve the small, mid-size and professional business person, and respond to their banking and especially their loan needs. That is what drives our bank; we are a strong, asset-driven bank.
CEOCFOinterviews: Will you tell us about the economy in your area?
Mr. Pantilione: We have a unique location. Our market stretches from Philadelphia, PA to Cape May, NJ and if you look at the economic trends of this area, Gloucester County, is one of the highest and fastest growing counties in the state of New Jersey. Washington Township, which is where we are located, has 45,000 people, and again, one of the fastest growing communities. People who live in Washington Township commute to work to either Philadelphia or down the shore, because the Atlantic City Expressway has two exits in Washington Township. We also have an office in Northfield, which is in Atlantic County, right outside of Atlantic City that further supports our efforts down the shore. We have a second branch in Washington Township that we just recently opened and we are negotiating to open a loan production office in Philadelphia. We are going to stretch from Philadelphia to the shore, and then we are going to strategically fill in from there, so I think we are going to have the strength of the market.
CEOCFOinterviews: What does ParkeBank provide that is not available at other banks?
Mr. Pantilione: What I would like to think that we are doing differently is the personal service. There was a nice article, which was written about us in Philadelphia Business Journal, about deals on wheels. I believe that we should go to our customers. If we are just sitting in our offices, then we are not doing our jobs to the best of our ability. When somebody calls us for a loan, we want to get out there, hopefully the same day, meet with them, look at their facility and understand their needs. We will give them the expectation of response; here is how we can look at your deal, and here are the parameters, is that acceptable? We also have a board that is extremely flexible, and they are all entrepreneurial and self-made people. When we have a loan to approve, they will meet to approve it; there is no scheduled loan committee. Our response time is incredible! I think people know that they can come to us and be treated properly, and get a great response.
CEOCFOinterviews: Do you tend to be more flexible than other banks in your lending policy?
Mr. Pantilione: I do not think we are more flexible, but more creative. If what a customer presents does not fit, we look for other assets and income streams that they might be able to use to make the transaction work. Our job is to be creative to see if there are other ways to enhance the credit of the deal so that we can approve the loan. If we cannot do it, it is just as important to respond quickly and inform them that we cannot handle their financing needs. I think that is just as important for a customer, so that they are not sitting there for four or five weeks waiting for us to respond, if in fact we are not able to give them the loan.
CEOCFOinterviews: Do you focus on any particular small to mid-size businesses?
Mr. Pantilione: One of the things about our small community bank that is a little different than what you see in the area is that we do a lot of construction lending; close to 30% of our loan portfolio is construction loans. That goes from the spot-lot house for an owner building their own home, to a builder that might be building a spec house, to a residential subdivision with 50 or 60 lots, to a 55,000 square ft. refrigerated warehouse, to a 30,000 square ft. food distribution plant. We do many different types of construction loans. I have been doing construction lending for thirty years, and we have someone here that has been doing it longer than me. I think we are good at that and we understand the construction industry. I built houses long ago, so I understand the problems builders have with contractors and the need to get cash out to them. We built up a nice book of business for construction loans.
CEOCFOinterviews: How do you reach new customers?
Mr. Pantilione: We have been very fortunate. We have a small marketing budget, so we target that budget to the retail banking end of the operation: the deposits, special programs for CDs and things like that. As far as the money-making end of it, which are our loans, it is really just the relationships that the officers and the directors have. If you service someone in the proper manner, they will tell someone else because they are business people. They say if you are having a problem, go talk to ParkeBank. For example, we just took on an excellent client who was having difficulty with a large bank. They were going from this committee to that committee and the client was getting frustrated. An accounting firm in their area knew of ParkeBank as being familiar with the construction industry, so they called us. He met with the owner the next day, they laid out their needs for construction equipment financing and hopefully this Thursday we get it approved and will close it in a week. If you respond properly, your reputation gets out there and spreads.
CEOCFOinterviews: What other products are your loan customers enjoying, and what do you need to provide for an ongoing relationship?
Mr. Pantilione: In todays environment you have to provide virtually everything. Once we get them here, we have to provide all the products such as creative checking accounts and competitive CD rates that all of our competitors offer. When it comes to the large banks, they might have a sophisticated cash-management program that we may not be able to offer today. But with todays technology, small banks can offer products that can compete, and we have to make sure that everything we have here is competitive. You do not want to give your customer the opportunity of meeting someone else because of a specific need that we cannot fill. That is why we try to make sure that we have diversified products.
CEOCFOinterviews: You had a public offering last November, how has that changed or enhanced ParkeBank?
Mr. Pantilione: Our public offering was an interesting experience. We had an excellent underwriter and they did a great job for us and guided us through the process. They recognized that we are looking to grow the bank and sustain that growth over the next few years. We think there are going to be opportunities to merge with or buy a bank that might benefit from our growth and profitability. In order to accomplish that, we felt we needed to be a public company. We needed to have stock that traded and we would never grow the bank by sacrificing our financial strength. We are not going to leverage the bank at five or six percent of capital; we want to have a strong financial base. Because of that success and being profitable since our thirteenth month, we became attractive and were approached by a few different companies to take us public. We selected Advest, Inc., in November and had a very successful offering. Our stock is moving very well and I think it has given us an opportunity to increase the financial strength of the bank by giving us better access to capital. I also think we are going to be a more attractive suitor to smaller banks, because they can join us and have a stock that has a level of liquidity.
CEOCFOinterviews: What do you see as the biggest challenges ahead?
Mr. Pantilione: I think there are a few different challenges that have been around for a long time and they just seem to get bigger. The first one is always regulatory challenges because regulations change quickly and you have to be able to respond to it and make sure that you can comply with the regulatory environment. The biggest challenge that we will always have is our competition, and we question who we will compete against for the products that make us money and that changes constantly. Most recently it was the non-bank banks like Merrill Lynch who were out there offering incredible programs to buy stock and have money market accounts that really drained money out of the banking system. They also have become active in making loans. Some of that money has come back and the market is suffering a little bit. The ability to attract deposits at a reasonable cost is a big hurdle for a small bank and that will always be one of the most difficult challenges that we have to work at everyday because the competition in that area is very great. Another challenge will be maintaining our focus as we continue to grow, so that we do not change what has made it work so far, which is the personal touch and the prompt response to loan requests. We do not want to become this big machine like some other banks, and take six weeks to respond to loan requests. I think that is a discipline that we have to maintain.
CEOCFOinterviews: How is the bank involved in the community?
Mr. Pantilione: The community involvement is one of the most critical aspects of any new company or bank. We are fortunate that we have local directors and everyone on the board is involved in many community functions and are supportive in area charitable groups. We are involved in schools, universities and business colleges. We are very active in giving back to the community and supporting the community. We win on that, and through the relationships with the colleges, we get the opportunity to hand pick interns who may end up as valuable employees of the bank."
CEOCFOinterviews: Who is it that is most interested in your mortgage loan rates?
Mr. Pantilione: The mortgage loans and home equity loans are products that we need to offer so that our customers do not have to go somewhere else for them. We are not a big residential mortgage lender. We do not have the fixed expense of a staff that is needed to provide a network of mortgage products and loans in our area. We have good internal products, the service of our people, and an affiliation with a nationwide mortgage lender that we can go directly in under our applications, and give our customers very competitive rates. We make sure that we can service our people without them having to go elsewhere.
CEOCFOinterviews: How will you decide on which way to take the company in your growth strategy?
Mr. Pantilione: What we have is a bank driven by loan or asset growth, so we do not have a need to open branches on every corner. When we have a concentration of loan customers in a specific area, we want to strategically locate a branch in that area to take advantage of deposits. That is how we started out in Northfield where we had a loan production office for two years. We opened up a full service branch and in less than a year, that branch is close to thirty-five million dollars in deposits. We started off by having a good portfolio of loans from area businesses, so that when we opened a branch, our loan customers came over to us as deposit customers. There was not the usual lag time of obtaining profitability with a branch. That branch was profitable in six months and now it enjoys the lowest cost of funds that we have in any of the three branches. As we increase our concentration of loans in an area, we are going to look for an opportunity to open a branch there.
CEOCFOinterviews: Are you concerned that when interest rates change, that part of your business will fade out a bit?
Mr. Pantilione: There is no doubt that interest rates have an affect on business volume. Right now you see the interest rates inching up a bit and it may pull down the residential market to some degree, but the banks focus is on its strength, so if the interest rates go up on the cost of funds, the interest rates on loans will also go up. There will always be a period where there will be compression on your margin. When your loan growth outstrips your deposit velocity, you have to go to other sources for your money and that would include borrowing money from The Federal Home Loan Bank, or brokerage CDs, which historically are going to carry a little higher cost for deposits.
CEOCFOinterviews: In closing, what should investors see when looking at ParkeBank?
Mr. Pantilione: I think that the one thing investors would not see by just looking at the financial make-up of the bank is that we have a board of directors that is different than any I have sat on. It is made up of our customer base; these are the same types of people that we are servicing and I think that makes a huge difference. About fifty percent of the loans that we bring in, someone knows the business and understands it. That means so much, and when you deal with someone that understands your business, that is unique. If you look at our financials, historically, I think you will see bank that has performed at the top of its peer group. If you look at our history, there is strong growth and earnings. We operate just like any other business, our product just happens to be money.
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