October 2014 Customer Letter

October, 2014

This past August we marked the six-year anniversary of our opening.  Looking back, as I do each year, I appreciate more and more all of what has been accomplished during a turbulent economic period.  Our “eye is still on the ball”.  We have another year under our belt and continue on a successful path.  I continue to be happy, proud and thankful for our achievements and for you our customers and other important relationships. 

The bank continues to exceed our financial targets and equally as important, we continue to meet and exceed our client service expectations.  We have a superior team and a solid plan so I expect good results to continue.

Financial results for the second and third quarters show Spring Bank on target with our goals for growth and ahead of target on profitability.  Our Income Before Taxes through nine months exceeds $2,500,000, which matches our full year results for 2013.  I am confident that we will meet our expectations for the fourth quarter.  Results should meet our targets and allow us to finish the year far ahead of 2013.  In turn, our positive results continue to strengthen our balance sheet and capital position.  Our ability to meet our client’s credit needs continues to increase over time.

Issues on My Mind

Spring Bank, as well as our customers, continues to operate in an economic climate marked by uncertainty and increasing regulation.

“The Fed should make a clear commitment to stable money to reduce the swings in interest rates and inflation.  Instead, it champions and flaunts unstable money.  This encourages momentum trading and the growth of derivatives.  Meanwhile, layers of financial regulation make Washington bigger and more powerful but don’t fix the underlying problems.” 

This quote from noted economist and former presidential administration official, David Malpass, addresses two issues that I concur with. First, I believe the Fed should focus on maintaining a stable dollar and use greater restraint in using interest rates to influence economic activity.  Second, the avalanche of new regulations (on an already heavily regulated industry) is bad for the consumer, bad for the economy and do nothing to achieve the “too big to fail” goal.  For example, the ABA recently reported that researchers at the American Action Forum examined the effects of the Dodd-Frank legislation.  They found that it has thus far resulted in 398 new regulations imposing $21.8 billion in costs and 60.7 million hours of paperwork.  They also noted tighter mortgage and consumer credit conditions than what usually occur in the years after a recession.  This burden exists while the last 25% of the law has yet to be implemented.  The rule of unintended consequences is in play, i.e. (1) the consumer will have fewer choices and will pay more for bank services and credit, and (2) the result will be fewer and larger banks serving the needs of our country.

Being a “young” bank, we have been able to set a strategy and nimbly react to a changing regulatory environment without the burden of “legacy” operations, multiple locations and business practices that have required radical change.  We never expected the road to be an easy one.  We will stay true to providing outstanding service and attention to our clients which should allow us to carve out a profitable niche in our market.

Celebrating Business Successes

This approach is one reason we were honored by the Milwaukee Business Journal in 2013 as a Fastest Growing Firm honoree.  This awards program recognizes those fast-growing, mid-size companies that are outperforming the competition and this year Spring Bank became the program’s exclusive bank sponsor, a role we’ll continue in 2015. We welcome the opportunity to celebrate business success, not just the awards but the smart decisions honorees made to get to this point. Successful growing businesses are proactively planning for the future; they’re anticipating opportunities while also preparing for bumps in the road. These businesses clearly identify the resources they need to support growth whether capacity or personnel, and of course financial. Successful businesses are not complacent. They challenge systems and check assumptions.  Growing businesses also surround themselves with a strong team including bankers.

We’re honored to be part of the team for many great businesses including Anodyne Coffee Roasting Co. which just opened a café inside the Milwaukee Public Market.  You can read more about it here:

http://onmilwaukee.com/dining/articles/anodyneopening.html.   Another client, Belair Restaurants, recently opened another Belair restaurant on Downer Avenue.  This is their third Belair location and it is off to a very successful beginning.

I also invite you again to visit our web site www.springbankwi.com and click the Customer Experience tab. We’ve added four new conversations with a few of our customers who share their perspectives on banking and business.

We are a privately held business, just like our clients.  We are familiar with the same challenges that face our clients.  I think that provides Spring Bank a unique insight and assists us in listening and understanding the needs of other privately held businesses.  We may be growing, but we will never outgrow our commitment to providing the attention to our clients that they individually deserve.

Regards,

 

David L. Schuelke

President/CEO