Lettter From Our President

08/02/2010

Dear Shareholder:

On behalf of the Board of Directors and the management team of FineMark National Bank & Trust, I am pleased to report on the bank’s performance during the calendar quarter ending June 30, 2010.

Second Quarter Financial Highlights

FineMark reached two milestones during the quarter by reporting a net profit and exceeding $300 million in total bank assets. Revenues for the second quarter of 2010 totaled $2.8 million which represents an 87% increase over the second quarter of 2009. Non-interest expenses for the quarter totaled $2.1 million which represents a 19% increase over the second quarter of 2009. FineMark had a second quarter net income before taxes of $449,279 compared to a second quarter 2009 net loss before taxes of $462,910.

FineMark increased deposits significantly by ending the quarter at $223 million, up by $22 million from March 31, 2010. The bank’s loan portfolio increased by $18 million for the quarter resulting in total loans outstanding in the amount of $148 million. The bank had no nonperforming assets and no charge-offs during the quarter. As of June 30th, the loan loss reserve was 2.16% of total loans outstanding or $3.2 million which we believe to be a conservative posture in this continuing weak economic environment.

Bank assets grew to $303 million as of June 30, 2010. At this same point in time the bank’s securities portfolio grew to $124 million, an increase of $10 million during the quarter.

Investment, brokerage and trust assets increased to $363 million during the quarter. Investment, brokerage and trust management revenues totaled $536,000 for the quarter, which was a 111% increase over the second quarter of 2009.

FineMark is very well capitalized with a Tier I Capital Ratio of 9.28%. We believe that the bank’s well capitalized position coupled with its high quality loan portfolio and highly rated securities portfolio translates into a strong, conservative balance sheet.

 First Six Months Financial Highlights

FineMark achieved profitability for the first six months of this year. Revenues through June 30, 2010 totaled $4.6 million representing an 80% increase over the first six months of 2009 while expenses increased by 34%, resulting in positive operating leverage. Net income before taxes equaled $60 thousand compared to a net loss of $946 thousand during the first six months of 2009.

 In an effort to preserve capital and manage interest rate risk, we have been repositioning the bank’s investment portfolio resulting in gains from security sales of $636,000 for the six months ending June 30, 2010. Our strong loan growth resulted in a loan loss provision expense of $65,000 greater than the budgeted amount of $258,000. Excluding securities gains and including the higher loan loss provision, the bank’s core businesses generated a net loss before taxes of $576,000 which is on target with the budget for the first six months of operations. The bank experienced an operating profit in the month of May and is expected to maintain profitability from operations going forward.

Business Highlights

 We are excited about FineMark’s momentum. The bank achieved $100 million in total assets in September 2008, $200 million in October 2009, and over $300 million in June 2010. We believe our high-touch service and relationship oriented approach positions the company for continued long-term growth and profitability.

Thanks to each of you for your commitment to the success of FineMark National Bank & Trust. As always, please contact me if you have comments or suggestions. Your input is critical to our success.

Kind Regards,
Joseph R. Catti
President and Chief Executive Officer