First Half of 2023 Shareholder Newsletter
Letter from the CEO
Dear Shareholders,I hope your 2023 is off to a good start. I am excited to report that we continue to execute our long-term growth plan while enjoying positive results through the first six months of this year.As always, thank you for your continued support and partnership. Should you have questions or comments, please contact our team.
Sincerely,
James C. Wagner
Chief Executive Officer | Parkside Financial Bank & Trust
First Half of 2023 | Highlights
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- In the first half of 2023, our investment in people continued with the addition of 10 new personnel. This is a slightly slower pace of additions compared to last year, yet still above trend as we continue to build our selling and support capabilities. As mentioned in previous communications, these investments are expected to yield significant bottom-line benefits beginning late next year and beyond.
- Company revenue of $20 million for the first six months of 2023 is an increase of $3.8 million, or 23%, compared to the same period in 2022. Strong loan growth resulted in a $3.5 million increase in net interest income.
- We expect revenue growth to continue accelerating because of the growth-oriented investments we are making. Starting in 2024, overhead growth should slow, resulting in future operating efficiencies and improved bottom-line results.
- Our 2023 stock buyback was well received, with 27,000 shares tendered, an oversubscription of 7,000 shares. Most of the extra shares were subsequently sold in the secondary market at the same $37 per share price.
- In the first half of 2023, our investment in people continued with the addition of 10 new personnel. This is a slightly slower pace of additions compared to last year, yet still above trend as we continue to build our selling and support capabilities. As mentioned in previous communications, these investments are expected to yield significant bottom-line benefits beginning late next year and beyond.
The banking turmoil from March has mostly dissipated. In the middle of the turmoil, we added over $100 million in wholesale on-balance-sheet liquidity as a precaution. These deposits cannot be withdrawn from the bank under any circumstance. This will have a slight negative impact on our financial results, but we believe it was the prudent thing to do. With extra liquidity, ample reserves and strong capital, we are prepared for any eventuality.
Commercial Bank Performance
Our banking business continues to grow steadily. We concluded the quarter with solid results that surpassed our expectations.
Loan growth remains robust with $687 million in total loans as of June 30th, reflecting year-to-date loan growth of $56 million and a $124 million increase from June of last year. We are experiencing well diversified loan growth in Denver, St. Louis, and our New Hampshire Search Fund team and across different industries and asset classes. The extra capacity created with new lender additions in the last couple of years is augmenting the growth generated by our pre-existing lending teams.
The higher interest rate environment is resulting in increased competition for deposits. Banks are now competing with non-bank deposit alternatives for the first time in over a decade. All community banks are experiencing deposit pricing pressure, including Parkside. Client deposits totaled $594 million as of June 30th, a decrease of $143 million, or 19%, from year end. We average about 15% in seasonal client deposit runoff in the first half of every year. This year, the decrease was slightly higher due to the increased competition.
Trust & Family Office Division
Our Trust & Family Office (TFO) division continues to develop nicely with a record high $1.9 billion in managed assets as of June 30th. Total TFO revenue of $4.1 million in the first six months of 2023 reflects an increase of 8% compared to the same period in 2022.
We experienced record new business growth this year with $1 million in new annualized revenue as of June 30th. That’s more new business than we generated in any full year since opening in 2008. Due to the new business, existing client growth, and a slight tailwind from the markets, we expect double digit revenue increases for the foreseeable future.
Several relationship manager additions from 2022 have, or will soon, come off former employment contracts and are expected to contribute to ongoing rapid growth in late 2023 and beyond. In anticipation of this rapid growth, we continue adding support personnel to ensure the client experience remains top notch.
Conclusion
I am pleased with our performance in the first half of 2023. We are experiencing the positive top-line outcomes of our growth-oriented investments. While it may take some time to fully realize the bottom-line benefits of these investments, I firmly believe that we are on the right path.
We will continue to capitalize on our strengths, navigate challenges with resilience, and continually strive for excellence as we progress into the second half of the year. We appreciate your continued support and partnership.
Our Growing Team
We continue to expand our team!
Parkside most recently welcomed these exceptional employees in Q1 and Q2 2023:
| Senior Vice President | Director of Search Fund & Sponsor Finance | |
|---|---|
| Vice President | Senior Relationship Manager of Search Fund & Sponsor Finance | |
|
Matt Harlow
|
Vice President | Trust & Family Office Analyst Manager |
|
Dalton Hoffarth
|
Systems Support |
|
Kyle Hylla
|
Commercial Credit Analyst |
|
Julie Kehlenbrink
|
Customer Service Representative II |
|
Maurice Murray
|
Bank Operations Specialist |
|
Caroline Reynolds
|
Commercial Credit Analyst |
|
Jacob Stewart
|
Trust & Family Office Operations Specialist |
Financial Information
Investments are not insured by the FDIC or any federal government agency, provide no bank guarantee, are not a deposit and may lose value. *The Company is aware of the following recent transactions in the Company’s stock. No assurances can be given that such information reflects all transactions in the Company’s stock during the period or that such transactions accurately and completely reflect the value of the Company’s stock. Such information is provided for convenience and should not be relied upon. The Company does not make a market in or otherwise trade in its stock. However, the Company can assist in the settlement of transactions in its stock between buyers and sellers who have independently negotiated the terms of their transactions.