Second Half of 2024 Shareholder Newsletter
Letter from the CEO
Dear Shareholders,I am pleased to share that 2024 was an outstanding year for Parkside.
Following the completion of our $25 million, over-subscribed stock offering in June, we have continued to build momentum within both our Banking division and our Trust and Family Office division.
Our annual performance and outlook remain consistent with the information we shared with you during the offering. The year 2024 represented the beginning of our "payoff" years after making significant investments in people, infrastructure, and technology over the last three years. We are starting to see meaningful progress on all fronts and expect earnings growth to continue in 2025 in accordance with our longer-term plan.
A few financial highlights are as follows:
- Net income of $8.2 million exceeded budget by $1.1 million and increased by $2.2 million, or 37%, over 2023.
- Operating income (pre-tax income adjusted for nonrecurring items) of $16.9 million was $1.8 million more than budget and increased by $4.2 million, or 33%, over 2023.
- Loan growth was slightly off in the second half of 2024. We saw two components to this trend: a $44 million decline in outstanding lines of credit, which was a bit unusual for us, and a general market slowdown that began in late summer. We believe both items may have been a function of interest rate uncertainty and the Presidential election, as we have seen a substantial increase in our lending pipeline in early 2025. With some clarity on these market factors, we also expect line of credit usage to normalize as our clients expand business operations.
- We experienced a single loan relationship charge-off of $3.4 million; however, our Banking division's strong core earnings allowed us to absorb this loss through increased provisions for loan losses, while maintaining a robust reserve as a percentage of total loans of 1.74% at December 31, 2024.
- Client deposits increased by $52 million, or 7%, in 2024, growing to $766 million as of December 31, 2024, likely the result of many of our clients maintaining additional liquidity ahead of the election.
- Basic earnings per share increased by $0.40, or 21%, to $2.35 per share in 2024.
On a separate note, you should have recently received a letter from our Investor Relations team announcing the implementation of My Private Shares, our new online service that allows buyers and sellers of Parkside Financial, Inc. to communicate with one another regarding potential stock transactions. We also plan to utilize this service to disseminate financial and other information in the future. If you have not done so already, please provide your preferred email address to our Investor Relations team so they can help you get started. As a reminder, My Private Shares replaced our previous system, Banclist.
I look forward to seeing you at our annual shareholders' meeting. Like last year, we will host the meeting at the Donald Danforth Plant Science Center on Thursday, May 22nd, beginning at 4:30 p.m. Please look for our upcoming invitation and make plans to join us.
Should you have questions or comments, please contact me or any member of our outstanding Parkside team.
Thank you for your support!Sincerely,James C. Wagner
Chief Executive Officer | Parkside Financial Bank & Trust
Second Half of 2024 | Highlights
Total assets were $1.1 billion as of December 31, 2024, an increase of $167 million, or 18%, over 2023. The increase in assets was driven by loan growth of $27 million and increased cash and cash equivalents driven by substantial growth in deposits, partially offset by a $23 million decrease in our investment securities portfolio.
Our revenue continues to grow, a direct result of the investments we have made in people and technology:
Our revenue continues to grow, a direct result of the investments we have made in people and technology:
- Banking division – Revenue exceeded budget by $1.5 million and increased $5.8 million, or 17%, to $40.3 million compared to $34.5 million in 2023.
- Trust & Family Office division – Although approximately 4% below budget, revenue increased $2.0 million, or 23%, to $11.0 million compared to $9.0 million in 2023.
For 2025, we are projecting revenue, operating income, and net income to increase to all-time highs of $57 million, $19 million, and $10 million, respectively. These projections remain consistent with our expected growth plans and the information published in our stock offering materials.
Parkside Financial Bank & Trust’s capital levels remain strong. The total risk-based capital ratio was 13.5% as of December 31, 2024, well above the 10.0% FDIC requirement to be considered well capitalized. Similarly, the leverage ratio was 10.5% as of December 31, 2024, far exceeding the 5.0% FDIC requirement.
Parkside Financial Bank & Trust’s capital levels remain strong. The total risk-based capital ratio was 13.5% as of December 31, 2024, well above the 10.0% FDIC requirement to be considered well capitalized. Similarly, the leverage ratio was 10.5% as of December 31, 2024, far exceeding the 5.0% FDIC requirement.
Banking Division
Total outstanding loans were $779 million as of December 31, 2024, reflecting loan growth of $27 million, or 4%, over 2023. We originated $283 million of loans in 2024, consistent with our 2023 origination level; however, we experienced a $44 million, or 21%, decline in lines of credit usage and a $64 million, or 121%, increase in loan payoffs in 2024, thereby contributing to lower-than-budgeted loan balances at December 31, 2024.
Early indications in 2025 reflect a robust loan pipeline, with more than $50 million of commitments approved but not yet closed, and more than $100 million in loan opportunities currently under review by our lending teams. We expect to see continued, meaningful loan growth in 2025.
We also continued to see outstanding growth in client deposits, which were $766 million as of December 31, 2024, up $52 million, or 7%, from 2023. Our Banking division is continuing to create opportunities to expand our business relationships through enhanced technology and new product offerings, particularly in our Treasury Management product suite. We saw a 16% increase in banking fee income in 2024 resulting from our increased client deposits.
Net income for the Banking division was $10.5 million, representing an increase of $1.9 million, or 22%, over 2023.
Early indications in 2025 reflect a robust loan pipeline, with more than $50 million of commitments approved but not yet closed, and more than $100 million in loan opportunities currently under review by our lending teams. We expect to see continued, meaningful loan growth in 2025.
We also continued to see outstanding growth in client deposits, which were $766 million as of December 31, 2024, up $52 million, or 7%, from 2023. Our Banking division is continuing to create opportunities to expand our business relationships through enhanced technology and new product offerings, particularly in our Treasury Management product suite. We saw a 16% increase in banking fee income in 2024 resulting from our increased client deposits.
Net income for the Banking division was $10.5 million, representing an increase of $1.9 million, or 22%, over 2023.
Trust & Family Office Division
Our Trust & Family Office (TFO) division continues to successfully grow managed assets, which reached $2.6 billion as of December 31, 2024, representing a $441 million, or 20%, increase over 2023. This growth is commensurate with the expansion of our team, including the buildout of our Denver team, new products being offered, and the deployment of technology that is expected to bring efficiency and enhanced client service.
The TFO division’s 23% revenue growth in 2024 allowed the division to decrease its losses for 2024 by more than $526 thousand to a net loss of $1.2 million. Continuing this revenue growth trajectory into 2025 and capitalizing on planned process improvements and recently implemented technological capabilities should position our TFO division to materially reduce net losses and return to profitability late in 2025.
The TFO division’s 23% revenue growth in 2024 allowed the division to decrease its losses for 2024 by more than $526 thousand to a net loss of $1.2 million. Continuing this revenue growth trajectory into 2025 and capitalizing on planned process improvements and recently implemented technological capabilities should position our TFO division to materially reduce net losses and return to profitability late in 2025.
In Closing
We are extremely pleased with our 2024 results. With our experienced teams fully in place, we are poised for rapid, effective, and efficient implementation of our growth plan in 2025 and beyond. As we have previously discussed, these growth plans are intended to continue to build shareholder value, allowing us to increase our annual dividend per share and expand our annual stock repurchase plan.
We sincerely appreciate your ongoing commitment and support of Parkside!
Our Growing Team
We are thrilled to continue expanding our team!
Parkside most recently welcomed these exceptional employees in Q3 and Q4 2024:
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Erin Bowman
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Trust & Family Office Senior Analyst |
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Christie Thomas
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Bank 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.