Letter From Our President

10/03/2008

The last month has seen unprecedented turmoil in the financial markets. The general public is concerned for the safety of their assets as the stability of many global and domestic financial institutions continues to deteriorate. I want to thank you for the confidence that you have placed in FineMark National Bank & Trust. I also would like to share with you some key financial information for FineMark as well as let you know the actions we have taken to earn and, hopefully, retain your trust.

Banks and other financial service providers experience difficulties when their loan portfolios contain an inordinate percentage of bad loans, otherwise known as nonperforming assets. I am pleased to inform you that FineMark maintains a very high quality loan portfolio. We have zero nonperforming assets.

FineMark has experienced a significant increase in deposits in this “flight-to-safety” environment. Again, we appreciate your trust. We have provided clients with suggestions regarding methods used to obtain maximum protection for their deposits.

Our capital is another important factor in the strength and stability of FineMark. An important measure of a bank’s capital is its Tier I Leverage Ratio. The ratio is calculated using the bank’s capital as the numerator and the average total assets as the denominator. Federal regulations require that banks maintain a Tier I Leverage Ratio of at least 6%. FineMark is very well capitalized with a Tier I Leverage Ratio of 36.18% or six times the required amount.

FineMark’s own investment portfolio is comprised exclusively of AAA rated bonds, predominately agencies of the Federal Government. We believe the bank’s investment portfolio is of the highest quality.

We have conservatively managed our clients’ trust and investment portfolios during these uncertain times. Enumerated below are strategic actions taken to protect, preserve, and enhance our clients’ wealth.

  1. We sold Auction Rate Preferred Securities during September 2007.
  2. Additionally, we reduced holdings of financial stocks to well below market sector weightings during October 2007.
  3. Through our credit quality review process we identified and sold several finance related bond issues in January 2008. 
  4. We recommended that all taxable money market funds be moved into government money market funds to increase safety in March 2008.
  5. Although we philosophically are not “market timers”, we have recommended that our clients hold greater than normal money market balances. 

We believe that these actions have reduced the market risks for our clients and have been additive to performance during this difficult period.

On behalf of our directors and colleagues, I assure you that we are focused on serving your best interests with a commitment to adhere to safe and sound banking principles.

Regards,

Joseph R. Catti
President and CEO