2022 ANNUAL REPORT
LETTER FROM THE CHAIRMAN
DEAR FELLOW STOCKHOLDERS,
2022 was another strong year for your company thanks to the dedication and hard work of our employees. It was a year in which we not only posted solid financial returns, but we also made great strides toward building future value and strengthening our brand as a tech-savvy specialty bank with a national footprint.
Although net income was less than last year’s record earnings, our financial returns were among the top-performing banks in the industry. The decrease in net income, as compared to 2021, was anticipated for several reasons. In 2021, we had historically low deposit rates funding our lending activities. Additionally, as you may recall from earlier communications, the Bank made a substantial provision to the allowance for loan losses in 2020 in light of the pandemic and shutdowns of the economy. However, due to lower-thanexpected borrower credit issues in 2020 and 2021, the bank was able to avoid additional contributions to the allowance in 2021, supporting enhanced earnings that year.
In 2022, we also continued to make strategic franchise investments in digital platforms, enhancing websites, improving the regulatory and risk management infrastructure, upgrading cybersecurity, implementing process improvements and adding technology advancements to enhance workplace productivity.
Our niche consumer lending model continued to drive us forward with strong, quality loan originations in our powersports lending divisions, FreedomRoad Financial and Performance Finance.
In addition, we had strong results from our specialty collector car lending program. The Bank also took advantage of the capital markets in 2022 by purchasing two consumer loan portfolios in the home equity and solar lending space.
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Our executive team also formed a new strategic partnership in 2022 with one of the largest farm credit co-ops in the United States, which we expect to generate substantial fee income and other growth opportunities over the next several years.
scenarios facing the banking system in this uncertain economic environment. While we fully expect our earnings outlook over the next several quarters to be suppressed due to the historic, rapid increases in deposit pricing, our projected profits will continue to support strong capital levels and a top-tier reserve profile.
Our strategic investments in the franchise are designed to support our unique business model and meet an everincreasing level of client services. In 2023, we are focused on developing more diverse financial services that go far beyond the traditional offerings of a local community bank. Our new digital platforms compare favorably to, and in many cases surpass, those of the well-known large national banks that are considered to have best-inclass digital banking solutions.
I’m personally inspired by our employees, who are highly engaged and are motivated to serve the needs of our customers, strategic partnerships and communities. Their performance over the course of the year has been impressive, and I am proud to be the leader of this team.
The new online and mobile banking platforms allow our customers to bank when and where they want with us. And with the new digital account opening platform, we are able to effectively and efficiently upsell and cross-sell our large national loan-only customer base other banking products for the first time.
Looking Ahead
As a forward-thinking organization, we are financially well-positioned and nimble to manage through a range of potential
The opportunity is tremendous, as we currently have nearly 100,000 active accounts that we will begin to cross-sell select deposit accounts that can be opened online within minutes.
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In addition, we have campaigns planned to offer our digital platforms and deposit products to our strategic partners’ customer bases, driving a more diverse mix of retail deposits in the future.
Although demand has softened to some degree compared to the robust demand fueled by COVID-19 the past two years, we fully expect to drive high-yielding, high-quality consumer loan originations throughout 2023. Powersports loans and specialty collector car loans will continue to power loan growth this year.
to loans, commercial deposits and treasury banking services. We view this relationship as a low-risk/high-growth opportunity for years to come.
In addition, these originations are expected to result in nearly 3,000 new customers each month that our digital team can crosssell and upsell the new digital platform, deposit products and other financial services.
Our strategic capital investments this year will include a new multi-channel loan origination system, which will be imperative for continued long-term success in our powersports business. The market is demanding more automation and new channels to increase capabilities and efficiencies for both direct and indirect lending. We plan to launch an industry-leading platform by year-end 2023. The new system will include prequalification engines that will integrate into Original Equipment Manufacturer (OEM) marketplaces and websites. We will also have the functionality to integrate directly with dealer websites and each of our proprietary websites.
In 2023, we plan to expand our relationship with our large farm credit co-op partner and other agtech companies affiliated with our farm credit co-op partner. Our expanded relationship will drive additional fee income and offer other growth opportunities related
We will offer expanded technology for customers via our websites, providing the ability to shop for powersports products and then receive a prequalification and instant offers. We will offer new Dealer Portals for dealers to submit applications
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and gain relevant information on past and future business. This new technology will add a “cool factor” that will also provide us additional marketing opportunities within our dealer relationships. We will also be integrating other best-in-class technology to expand auto-decisioning, fraud detection, pre-fill capabilities by cell phone, e-sign and QR code functionality. The new functionality should put our powersports business lines above all of our competitors!
Key benefits of the Salesforce CRM tool include a comprehensive view of each customer to enhance customer service, cross-sell opportunities, boost productivity and lower costs by automating business processes, thereby reducing manual activities considerably. Additionally, this will offer us the ability to connect and share data with business partners and to offer personalized and automated marketing journeys to drive new business.
In Conclusion
Other key technology enhancements planned this year include expanding our Salesforce/Customer Relationship Management (CRM) solutions. Building a technology culture is the cornerstone of success for a modern financial institution. As today’s customer increasingly uses a wide variety of digital channels to connect and transact with their banks, it is essential to provide a seamless experience across all channels.
While we are entering a more uncertain economic environment in 2023, we are confident that we have the right team and foundation to continue to expand and drive value in our franchise. We will continue to be good stewards of our capital, with a rigorous and disciplined approach to risk and expense management.
We have a dynamic organization that is positioned for growth and diversification going forward. We have extraordinary employees, a committed management team and highly engaged directors. All of us are fully aligned with shareholders as we deliver on our commitment to driving shareholder value.
On behalf of the Board of Directors, management team and employees, thank you for your investment and continued support.
Sincerely,
Darin Campbell Chairman, President & Chief Executive Officer“expect,” “anticipate,” “estimate,” “project” and similar expressions identify forward-looking statements. The Company’s and the Bank’s ability to predict results or the effect of future plans or strategies or qualitative or quantitative changes is inherently uncertain. Actual results may differ materially from stated expectations. Specific factors include, but are not limited to, changes in general market interest rates, changes in general economic conditions and those specific to the Company’s and the Bank’s market area, legislative/regulatory changes, monetary and fiscal policies of the U.S. Treasury and the Federal Reserve, changes in the quality or composition of the Bank’s loan portfolio, demand for loan products, changes in deposit flows, real estate values, and competition and other economic, competitive, governmental, regulatory and technological factors affecting the Bank’s operations, pricing, products and services. The Company and the Bank disclaim any obligation to update any such factors or to publicly announce the results of any revisions to any forward-looking statements contained in this release to reflect future events or developments. The Company and the Bank make certain periodic filings to certain regulators containing various financial information, copies of which are available from the Bank without charge.
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This document contains certain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which are made pursuant to the “safe harbor” provisions of such Act. These forward-looking statements describe future plans or strategies and may include the Company’s and the Bank’s expectations of future results. The words “believe,”
PREMIER RESULTS
Book Value per Outstanding Share 2022
The book value per outstanding share at December 31, 2022 ended at $50.54 and was $45.18 on a fully diluted basis when including outstanding stock-based compensation shares. Adjusted book value per outstanding share, excluding the unrealized losses on securities,* would be $53.94 and $48.21 on a fully diluted basis. The Company’s balance sheet is structured with a higher loan-to-deposit ratio and much smaller investment portfolio than many banks, which results in less of an effect on capital from changes in fair value of the investment portfolio.
Cash Dividends 2022
The Company declared cash dividends in 2022 of eighty cents ($0.80) per common share, compared to twenty cents ($0.20) per common share declared in 2021.
Total Assets 2022
Total assets for 2022 totaled $1.427 billion, up $226 million over year-end 2021. We grew our loan portfolio by 22.0%, supported by robust and broad-based consumer lending. Deposit balances increased by $233.5 million, or 23.3%, from the prior year, as we continued to acquire new deposit customers throughout the Chicago metropolitan area.
*Adjusted book value per share excludes the accumulated other comprehensive loss component within Stockholders, Equity on the Balance Sheet.
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2022 VS. 2021 FINANCIALS
BALANCE SHEETS
Assets 2022 2021 Cash and cash equivalents $ 121,845,089 $ 116,536,612 Investments 99,703,206 96,113,046 Loans, net 1,160,787,204 951,287,254 Bank-owned life insurance 12,997,444 12,680,356 Other assets 31,741,276 24,179,299 Total Assets $ 1,427,074,219 $ 1,200,796,567 Liabilities and Stockholders’ Equity Deposits $ 1,225,386,295 $ 994,057,949 Notes payable 44,500,000 57,700,000 Other liabilities 17,906,008 14,510,993 Total Liabilities $ 1,287,792,303 $ 1,066,268,942 Stockholders’ Equity $ 139,281,916 $ 134,527,625 Total Liabilities and Stockholders’ Equity $ 1,427,074,219 $ 1,200,796,567 INCOME STATEMENTS 2022 2021 Interest income on loans $ 67,066,902 $ 64,454,874 Interest income on investments and other 4,247,352 1,871,103 Total Interest Income $ 71,314,254 $ 66,325,977 Interest expense on deposits 9,554,978 5,840,556 Interest expense on debt 1,133,942 1,519,705 Total Interest Expense $ 10,688,920 $ 7,360,261 Net Interest Income $ 60,625,334 $ 58,965,716 Provision for loan losses 5,220,000 325,000 Non-interest income 2,122,431 3,044,165 Non-interest expense 35,934,377 29,996,559 Income Before Taxes $ 21,593,388 $ 31,688,322 Income tax expense 5,091,291 6,940,268 Net Income $ 16,502,097 $ 24,748,054
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BOARD OF DIRECTORS
Darin Campbell
Chairman of the Board, President & CEO
Bancorp Financial, Inc., Evergreen Bank Group
Fred B. Barbara
President & Owner, Barbara Holdings, LLC
Norman J. Beles
President & Owner, Belcorp Financial Services, Inc.
Thomas P. FitzGibbon, Jr.*
Independent Bank Consultant
Philip M. Kayman*
Attorney in Private Practice
William Pacella
President & Owner, Pacella Trucking Express, Inc.
Dan Phelps*
Consultant, Retired Executive of Northern Trust Corporation
Joe Rizza
President & Owner, Joe Rizza Auto and Finance Groups
Michael F. Spaniak*
General Counsel, Bancorp Financial, Inc., Evergreen Bank Group
Jeffrey Voss*
Independent Bank Consultant, Artisan Advisors, LLC
Jill D. Voss*
Chief Financial Officer, Bancorp Financial, Inc., Evergreen Bank Group
*Evergreen Bank Group director only
EVERGREEN BANK GROUP EXECUTIVE OFFICERS
Darin Campbell
President & CEO
Tom Collins
Managing Director, FreedomRoad Financial & Performance Finance
Bruno Costa
Executive Vice President, IT & Operations
Mary Henthorn
Executive Vice President, Commercial Lending & Administration
Dan Inendino
Executive Vice President, Digital Banking
Paul Leake
Executive Vice President, Consumer Lending
Jim McGrath
Executive Vice President, Commercial Banking
Michael F. Spaniak
General Counsel
Jill D. Voss
Chief Financial Officer
EVERGREEN BANK GROUP
BRANCH LOCATIONS
OAK BROOK BRANCH / EXECUTIVE OFFICES
1515 W. 22nd Street, Suite 100W
Oak Brook, IL 60523 (630) 413-9580
EVERGREEN PARK BRANCH
3842 W. 95th Street
Evergreen Park, IL 60805 (708) 229-1010
HINSDALE BRANCH
1 Grant Square, Suite 100
Hinsdale, IL 60521 (630) 590-4800
www.evergreenbankgroup.com
FREEDOMROAD FINANCIAL & PERFORMANCE FINANCE
Reno Loan Production Office
10509 Professional Circle, Suite 100
Reno, NV 89521
www.freedomroadfinancial.com
www.goperformancefinance.com