FineMark Holdings, Inc. Reports Third Quarter 2023 Earnings

FORT MYERS, FL / ACCESSWIRE / October 17, 2023 / FineMark Holdings, Inc. (the "Holding Company") (OTCQX:FNBT), the parent company of FineMark National Bank & Trust (the "Bank"; collectively, "FineMark"), today reported revenues of $45.5 million and net revenues of $20.5 million for the third quarter ended September 30, 2023, compared to $32.1 million and $25.9 million, respectively, in the third quarter of 2022. Net income was $729 thousand, or $0.06 per diluted share, compared with net income of $5.4 million, or $0.45 per diluted share, for the same period a year ago.

Joseph R. Catti, Chairman & Chief Executive Officer:

I would like to begin by extending our heartfelt condolences to the families of those killed and taken hostage by terrorists in Israel and Gaza in recent days. Our thoughts and prayers are with the people of the Middle East as this deadly war with terrorist group Hamas intensifies.

Against a backdrop of uncertainty in our global markets, renewed concerns around inflation and worries of a ‘higher for longer' interest rate outlook, our associates continue to meet challenges and prudently manage our resources as we maintain our focus on the individuals and families we serve. Our clients know they can depend on FineMark to deliver exceptional service and innovative solutions. It is gratifying to lead an organization that continually seeks to deliver unparalleled and proactive service and we are grateful for the confidence our clients place in us.

As important as service and innovation are to our business, our focus on financial stability provides our clients with the confidence that we will be here for future generations. Our conservative credit culture combined with our high levels of liquidity and robust capital have positioned FineMark to succeed in a variety of economic environments.

While we are pleased with the growth in client relationships, loans, assets under management and administration, our financial results continue to be impacted by the Federal Reserve's monetary policies. Interest expense has increased sharply over the last 18 months due to higher deposit costs and the use of certain higher-cost sources of funding. We are cautiously optimistic that the pace of increases in interest expense should begin to slow over the coming months which, when combined with increasing yields on our loan and securities portfolio, should result in improving financial performance.

Highlights from the Third Quarter:

• Interest income increased 50% in the third quarter 2023 to $36.4 million, compared to total interest income of $24.2 million for the same quarter 2022.
• Net loans increased 15.6% from the third quarter of 2022 and credit quality remains excellent.
• Assets under management grew 18.6% from the third quarter of 2022, resulting in a 23.7% increase in Trust fees.

Net Interest Income & Margin

For the third quarter of 2023, FineMark's net interest income totaled $11.3 million, representing a 37% decrease compared to Q3 of 2022. This decline is attributable to the impact of the Fed's rapid action to reduce inflation which has resulted in interest expense increasing more quickly than interest income. The Bank's net interest margin decreased to 1.21% in Q3 2023, down from 2.16% for the same period in 2022.

Non-Interest Income

As of September 30, 2023, FineMark's assets under management and administration totaled $6.4 billion, reflecting an 18.6% increase from $5.4 billion on September 30, 2022. This increase in assets under management resulted in investment management and trust fees increasing 25% year-over-year.

Non-Interest Expense

Non-interest expense for the quarter ended September 30, 2023, rose to $19.5 million, marking a 5% increase from $18.7 million in the third quarter of 2022. While salary and employee benefits remained relatively stable, occupancy expense increased due to the opening of our newest locations in Naples and Jupiter, Florida. Additionally, a 2 basis point increase in deposit insurance rates resulted in a $353,000 increase in expenses from Q3 2022.

Balance Sheet Highlights

Despite the rising interest rate environment, loan production remained strong for the quarter at $164 million, compared to $177 million for the same quarter last year. Total loans ended the quarter at $2.5 billion, compared to $2.1 billion at September 30, 2022. Deposits decreased to $2.78 billion as of September 30, 2023, down 5% from $2.92 billion on September 30, 2022 primarily from the transfer of client deposits to purchase higher yielding treasuries.

Credit Quality

FineMark maintains its commitment to high credit standards through a tailored and relationship-centered approach to lending. Our loan decisions are based on a comprehensive understanding of each borrower's needs and unique financial situation, resulting in minimal loan defaults spanning various economic conditions.

As of September 30, 2023, non-performing loans amounted to $2.1 million, representing 0.09% of total loans. This marks an increase from $692 thousand or 0.03% of total loans in the third quarter of 2022. The rise can be attributed to the default of one loan. We do not expect any losses associated with existing non-accrual loans. The current allowance for credit losses stands at $24.3 million, equivalent to 0.98% of gross loans.

Capital

FineMark's capital ratios continue to exceed regulatory requirements for "well-capitalized" banks. On September 30, 2023, FineMark's Tier 1 leverage ratio, on a consolidated basis, stood at 8.71% after adding the unrealized loss to average assets (denominator), while the total risk-based capital ratio was 17.96%. Additionally, the tangible equity to assets ratio was 8.92% after deducting the net unrealized loss from Tier 1 capital to average assets. Rising interest rates in the past year and a half led to a net unrealized loss of $71 million on the Bank's investment portfolio. This is a direct result of the rapid increase in rates rather than a reflection of bond credit quality. Given the short duration of the portfolio of 2.6 years, these losses will continue to decline as bonds mature.

CONTACT:

Ryan Roberts
Investor Relations
239-461-3850
investorrelations@finemarkbank.com
8695 College Pkwy Suite 100
Fort Myers, FL 33919

website: www.finemarkbank.com

Background

FineMark Holdings, Inc. is the parent company of FineMark National Bank & Trust. Founded in 2007, FineMark National Bank & Trust is a nationally chartered bank, headquartered in Florida. Through its offices located in Florida, Arizona and South Carolina, FineMark offers a full range of financial services, including personal and business banking, lending services, trust, and investment services. The Corporation's common stock trades on the OTCQX under the symbol FNBT. Investor information is available on the Corporation's website at www.finemarkbank.com .

Forward-Looking Statements

This press release contains statements that are "forward-looking statements." You can identify forward-looking statements by the use of the words "believe," "expect," "anticipate," "intend," "estimate," "assume," "outlook," "will," "should," and other expressions that predict or indicate future events and trends, and which do not relate to historical matters. You should not rely on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors, some of which are beyond our control. These risks, uncertainties, and other factors may cause our actual results, performance or achievements to be materially different from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements.

Some of the factors that might cause these differences include: weakness in national, regional or international economic conditions or conditions affecting the banking or financial services industries or financial capital markets; volatility in national and international financial markets; reductions in net interest income resulting from interest rate volatility as well as changes in the balance and mix of loans and deposits; reductions in the market value or outflows of assets under administration; changes in the value of securities and other assets; reductions in loan demand; changes in loan collectability, default and charge-off rates; changes in the size and nature of our competition; changes in legislation or regulation and accounting principles, policies and guidelines; occurrences of cyber-attacks, hacking and identity theft; natural disasters; and changes in the assumptions used in making such forward-looking statements. You should carefully review all of these factors, and you should be aware that there might be other factors that could cause these differences.

These forward-looking statements were based on information, plans and estimates at the date of this report. We assume no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

FINEMARK HOLDINGS, INC. AND SUBSIDIARIES
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FINEMARK HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings (Unaudited)
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FineMark Holdings, Inc.
Consolidated Financial Highlights
Third Quarter 2023
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SOURCE: FineMark Holdings, Inc.