Read FineMark’s 1st Quarter Shareholder’s Letter from the President, Joseph R. Catti.
Dear Shareholder:
On behalf of the Board of Directors, the executive management team, and all of the dedicated associates of FineMark National Bank & Trust, I am pleased to report on the bank’s performance for the first quarter ending March 31, 2017.
First Quarter Financial Highlights
FineMark’s assets totaled $1.4 billion as of March 31, 2017 compared to $1.2 billion for the same period last year. This represents a 17 percent increase in assets. Pre-tax operating income totaled $2.54 million for the first quarter, compared to $2.37 million for the same quarter last year. This increase was largely due to higher net interest income and noninterest income excluding gains. Operating expenses continue to rise in conjunction with the bank’s substantial growth rates. Seven associates were hired in the fourth quarter of 2016. We expect to see better leveraging of our operating income over the next several quarters.
Please refer to abbreviated financial statement here.
NET INTEREST INCOME
Net interest income totaled $9.6 million for the quarter, 17 percent higher than $8.2 million for the first quarter 2016. Net loans increased by 28 percent to over $1 billion compared to $816.5 million at March 31, 2016. The growth in net interest income is attributed to our continued increase in loan growth.
The bank’s net interest margin decreased to 2.95 percent from 2.98 percent year-over-year. This slight decrease resulted mostly from the continued low interest rate environment.
Deposits grew to $1.16 billion compared to $992 million as of March 31, 2016. The deposit growth is a result of the unparalleled, high touch personal service we provide our clients.
NONINTEREST INCOME
Noninterest income, predominantly generated from asset management and trust fees, increased 6.7 percent to $3.7 million in the first quarter, compared to $3.5 million in the first quarter of 2016. Investment and trust assets under management and administration grew to $2.5 billion as of March 31, 2017, compared to $2 billion at the same time last year. The continued increase in asset management and trust revenues is a result of our continued commitment to expand existing relationships and develop new ones.
NONINTEREST EXPENSE
First quarter noninterest expense totaled $10 million, approximately 22 percent higher than the $8.2 million in the first quarter last year. As referenced above, the increase is primarily attributed to the costs associated with hiring additional associates needed to support the bank’s continued expansion and growth.
CREDIT QUALITY
The bank is fully committed to high credit standards. The overall credit quality remains strong with low levels of classified loans relative to capital and total assets. Classified loans total $6.1 million, which represents 4.2 percent of total capital and reserves. This figure is significantly better than the industry average of 18.3 percent.
The allowance for loan loss reserve was $11.8 million or 1.1 percent of the total loans outstanding as of March 31, 2017. Management continues to believe this level of reserve is sufficient to support the bank’s loan portfolio risk.
CAPITAL
The bank’s tier 1 capital ratio was 8.82 percent as of March 31, 2017, compared with 8.89 percent for the first quarter 2016. All bank capital ratios continue to be in excess of regulatory requirements for “well-capitalized” banks. Additionally, FineMark Holdings has over $11.5 million of capital to support future growth.
FIRST QUARTER 2017 COMPANY HIGHLIGHTS:
HALE S. IRWIN JOINS FINEMARK HOLDINGS, INC. BOARD OF DIRECTORS
Hall of Fame golfer, Hale S. Irwin, was appointed to FineMark Holdings, Inc. Board of Directors in January. Mr. Irwin has 20 PGA wins, is a three-time U.S. Open winner, and has played on five Ryder Cup teams. He is active with the Phoenix Chapter of the First Tee, the Wounded Warrior’s program, and other foundations that support our US Military personnel. Mr. Irwin has also raised over $15 million for St. Louis Children’s Hospital through 25 years of hosting the Hale Irwin St. Louis Children’s Hospital Golf Benefit.
10-YEAR ANNIVERSARY
On February 16, 2017, FineMark National Bank & Trust celebrated its 10-year anniversary! A reception for more than 500 clients and associates was held at the Riverwalk office.
HABITAT FOR HUMANITY
FineMark National Bank & Trust’s Naples office sponsored a home for Habitat for Humanity through a community contribution tax program. In exchange for money to fund the construction and numerous volunteers to build the house, the bank receives an equal amount of money in corporate tax credits. FineMark has sponsored five homes through the same program in Lee County.
5-STAR RATING
FineMark National Bank & Trust has been awarded a 5-Star Superior Rating for the past 24 consecutive quarters. The nation’s leading independent bank rating and research firm, Bauer Financial, rates banks on a scale from zero to five. Ratings are based on capital ratios, profitability trends, levels of delinquent loans, charge-offs, repossessed assets, liquidity and other historical data.
We thank you for supporting our vision: To make a positive impact on the families, individuals, and communities we serve while being good stewards of FineMark’s resources. Your support and commitment is instrumental to the bank’s continued success.
Kind regards,
Joseph R. Catti
President & CEO
Click to download a PDF version of the 1st Quarter Shareholder’s Letter.
