Within six months, Hyde Park Savings Bank will have changed its focus to such an extent that its new president and CEO, William M. Parent, describes it as a 140-year-old de novo bank.
A whole crew of experienced bank professionals has newly arrived at the bank or was on their way as this issue went to press. Parent himself is one of them, having arrived in July of last year to help the bank’s board realign its focus. While he has spent his entire career working with financial services companies, Parent also has experience in the private equity business investing in growth companies in non-financial middle market businesses like convenience stores, pet products and a pizza chain. “Banking is very similar to the retail sector where the most successful management teams focus on providing great customer service and innovative products when and where customers want them. The additions to our management team complement a strong base of capabilities that has been successfully operating the bank historically and will allow us to expand our product offers to compete with a wide range of service providers.”
The bank is transforming from a deposit-taking franchise that invested the majority of its deposits into investment securities, to a more diversified community bank with a broad-based lending program, including commercial real estate, commercial and industrial, small business, residential mortgage and consumer lending.
The timing couldn’t be better. Its pre-existing investment securities-driven model has provided Hyde Park with the capital it needs to expand its base. With over $140 million in equity capital at its disposal, it’s spearheading a multimillion-dollar construction initiative at two of its six branches, investing $3.5 million in its main office on River Street in Hyde Park to be completed in early spring, and opening a new branch on Truman Highway in Hyde Park within weeks. These investments, along with other branch investments to follow, will help provide a consistent customer experience. The bank will also invest significantly in its website and online capability to create a seamless connection between the branch network and online capabilities.
Another focus is residential lending, which already has its own team. The bank has recently partnered with William Raveis to do indirect lending. Parent expects to expand the breadth of its direct origination capability, as well as indirect correspondent lending. As an example, Hyde Park Savings is now offering a new 30 year fixed rate jumbo loan product to the marketplace.
Of its approximately $910 million balance sheet, about $200 million is comprised of residential loans, with the vast majority of the remaining assets in the investment portfolio. The Bank is focusing on building up its low loan to deposit ratio – in a disciplined way, from a credit and interest rate risk standpoint – but it has significant capacity to add lending exposure to its balance sheet, Parent says. The bank is hiring a senior credit officer, and expects to have its risk-management team in place prior to hiring a loan origination team in the spring.
“We’ve been fortunate that the institution historically has been very disciplined and we have the benefit of essentially no legacy credit issues,” he says. The bank’s noncurrent loan ratio was 0.80 percent to total loans, compared to the Massachusetts average of 1.74 percent as of the end of September 2010.
Hyde Park Savings Bank had a strong financial performance in 2010, driven by gains from repositioning its portfolio, but also due to strong operating performance. It continues to be very profitable on a day to day basis, Parent says. The combination of this profitability and its strong capital position allows the bank to make significant investments in people, systems and facilities to move the organization forward and build out the capabilities necessary for an enduring community bank.
