FineMark Holdings, Inc. Reports Fourth Quarter 2021 Earnings

Rhea-AI Summary

FineMark Holdings, Inc. (OTCQX: FNBT) reported a fourth quarter 2021 net income of $7.0 million, an increase of 11% from $6.3 million in the same quarter of 2020. Per-share earnings decreased to $0.59 due to the issuance of 2.5 million new shares.

For the full year 2021, net income rose 14% to a record $25.0 million. Key growth drivers included an 8% increase in loans, net of allowance, and a 23% increase in total deposits, totaling $2.7 billion.

Positive

• Net income for 2021 reached a record $25.0 million, a 14% increase over 2020.
• Fourth quarter loans increased by 8%, reaching $2 billion.
• Total deposits rose by 23% year-over-year, totaling $2.7 billion.
• Net interest income for 2021 was $64.7 million, a growth of 11% compared to 2020.
• Trust fees surged by 28% to $26.6 million for the year.

Negative

• Per-share earnings decreased by $0.10 in Q4 2021 compared to Q4 2020 due to increased shares outstanding.
• Net interest margin dropped to 2.24%, down from 2.45% in 2020.
• Non-interest expenses increased by 30% in Q4 year-over-year, primarily from higher personnel costs.

FORT MYERS, FL / ACCESSWIRE / January 18, 2022 / FineMark Holdings, Inc. (the "Holding Company"; OTCQX:FNBT), the parent company of FineMark National Bank & Trust (the "Bank"; collectively, "FineMark"), today announced fourth quarter 2021 net income of $7.0 million. This compares to $6.3 million for the fourth quarter of 2020. Per-share earnings were $0.59 per diluted share, a $0.10 decrease compared to the fourth quarter of 2020, which reflects the issuance of 2.5 million new shares in 2021. For the full year 2021, FineMark announced net income of $25.0 million (or $2.39 per diluted share), a 14% increase over the $22.0 million (or $2.42 per diluted share) in 2020.

We attribute FineMark's growth to the quality and dedication of our associates and their commitment to provide outstanding service. Net income for 2021 was a record high, and fourth quarter net income was just shy of hitting another record. For both the quarter and the year, growth in the loan portfolio and trust assets under management were key drivers of these results.

As with many businesses around the Country, we continue to be challenged by the pandemic and are mindful of our associates' and clients' safety. While our preference is to meet with our clients in person, our investment in technology allows us to engage virtually with our clients. Our hope remains that pandemic-related issues will wane as we progress into the new year.

Highlights of the fourth quarter of 2021 on a year-over-year basis include:

• Net income increased 11% to $7.0 million.
• Loans, net of allowance, increased 8% to $2 billion.
• Total deposits increased 23% to $2.7 billion.
• Net interest income increased 12% to $17.2 million.
• Cost of funds decreased 15% to $3.3 million.
• Trust fees increased 26% to $7.0 million.
• Assets under management and administration increased 22% to $6.2 billion (including $181 million from new and expanded relationships, a 51% increase year-over-year).

Highlights for the entire year of 2021 include:

• Net income increased 14% to a record $25.0 million.
• Net interest income increased 11% to $64.7 million.
• Diluted earnings per share was $2.39 versus $2.42 in 2020, a minimal decline given the greater number of shares outstanding
  (11,603,781 as of 12-31-21 compared to 8,955,427 as of 12-31-20).
• Net interest margin was 2.24%, down from 2.45% as yields available on earning assets declined from 3.23% to 2.74%.
• Cost of funds was 0.53% (down from 0.81% in 2020).
• Trust fees increased by 28% to $26.6 million.

Net Interest Income and margin

For the fourth quarter of 2021, FineMark's net interest income totaled $17.2 million, up 12% from the fourth quarter of 2020. The increase in interest income was largely attributable to the investment portfolio which increased by 50% year-over-year, and interest income generated from the 8% net growth in the loan portfolio. In addition, two interest rate swaps were terminated, reducing our interest expense by $45,000 per month. Also, in the fourth quarter, two Federal Home Loan Bank advances, totaling $20 million, were prepaid. Despite the upfront cost, interest expense was reduced by $27,000 per month. For the entire year, FineMark's net interest income totaled $64.7 million, up 11% from 2020.

With short-term rates near zero throughout 2021, the Bank achieved a net interest margin of 2.24% in the fourth quarter, compared to 2.36% in the fourth quarter of 2020. A decline in yield generated from earning assets was partly offset by a decrease in the cost of funds for the quarter from .62% to .46%, in 2021. For the year, net interest margin of 2.24% was down from 2.45% in 2020. Yields are expected to increase as the Federal Reserve has signaled it will likely raise short-term interest rates in 2022. We continue to seek ways to manage the impact that rising interest rates could place on net interest income. In addition, in the fourth quarter, we strategically invested over $91 million in securities to improve net interest income. This investment will generate more income than holding those funds in cash. Finally, we have engaged a third-party consultant to provide tactical and strategic initiatives with respect to our balance sheet structure and overall asset-liability management.

Non-interest Income

FineMark's trust and investment business continues to grow at significant rates, resulting in desired revenue diversification. As of December 31, 2021, assets under management and administration totaled $6.2 billion, an 8% increase from the previous quarter and a 22% increase from year-end 2020. Trust fees increased to $26.6 million for the year, a 28% increase over 2020.

More than 50% of this growth was the result of satisfied clients expanding their relationships with FineMark, as well as our associates developing new client relationships. In addition, growth was aided by strong equity market returns in 2021.

Net asset inflows in the fourth quarter of 2021 totaled $181 million, a 48% increase versus the previous quarter. For the year, net asset inflows were $583 million, a 39% increase compared to 2020. This growth is a testament to the exceptional level of expertise, service and comprehensive advice provided by our team.

Non-interest Expense

As FineMark grows, additional expenses are incurred to maintain our high service levels. Non-interest expense increased 30% in the fourth quarter year-over-year, and 17% for the full year, to $62.2 million. The increases were primarily due to higher personnel costs. In 2021, we hired 29 associates (net), and several programs were initiated in a very tight labor market to proactively reward and help retain the associates who are crucial to our continued success. To offset these initiatives, we purchased an additional $15 million of bank-owned life insurance, which generates an attractive tax-free yield. FineMark's efficiency ratio, which measures non-interest expense as a percent of revenues, increased to 66.6% in 2021, compared to 61.27% in 2020; however, this level remains in line with our targets.

Credit Quality

FineMark's loan portfolio (net of allowances) grew by $146 million in 2021. This 8% net increase masks extremely strong gross-loan production of over $912 million as many clients took advantage of favorable conditions to reduce debt during the year, and $70 million in Paycheck Protection Program loans were repaid in 2021.

As always, the Bank remains committed to maintaining its high credit standards through our relationship-based approach to lending. Loan decisions are always based on an in-depth understanding of each borrower's needs, the relationship and financial situation. As a result, the Bank has experienced minimal defaults on loans through a variety of market cycles. At the end of 2021, nonperforming loans were just $729,000 or 0.04% of total loans, a decrease from the already low rate of 0.07% at year-end 2020. As of December 31, 2021, the bank's allowance for loan loss reserve was $20.2 million (1.01% of total loans outstanding) and includes $750 thousand held as a precaution due to the pandemic. Management believes this reserve is sufficient to support the Bank's loan portfolio risk.

FineMark's management team is pleased with the credit quality of the Bank's loan portfolio and will continue to closely monitor economic conditions to determine whether additional provisions should be made. We believe our commitment to maintaining strong relationships, understanding our clients' individual circumstances, and working proactively to deliver comprehensive solutions, continues to serve our shareholders well.

Capital

All capital ratios continue to exceed regulatory requirements for "well-capitalized" banks. As of December 31, 2021, FineMark's tier 1 leverage ratio on a consolidated basis was 9.73%, and the total risk-based capital ratio was 20.64%. ROAE declined relative to 2020 due to the issuance of 2.5 million shares in 2021: increasing shareholders' equity by $80 million or 37%.

FINEMARK HOLDINGS, INC. ON THE OTCQX EXCHANGE

Shares of FineMark Holdings, Inc. (OTCQX: FNBT), the parent company of FineMark National Bank & Trust, are traded on the OTCQX exchange. Operated by the OTC Markets Group, the OTCQX allows investors to trade privately held stock through their preferred broker. During 2021, FineMark's shares traded in a range of $23.65 to $36.00 at an average volume of 1,759 shares per trading day. The shares closed the year trading at $33.60, a 44% increase compared to the end of 2020, for a price-to-tangible book value multiple of 1.28.

EXPANSION UPDATE

Our newest full-service location in Jupiter, Florida, is slated to open in March, followed shortly thereafter by our second Naples location in the heart of the historic downtown area. In addition, the buildout continues of our flagship location in Fort Myers, Florida. Tenants will occupy approximately half of the built-out second floor, generating rental income, and the Bank will use the remaining space to support our continued growth.

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. FineMark offers a full range of financial services, including personal and business banking, lending services, trust and investment services through its offices located in Florida, Arizona and South Carolina. 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 .

CONTACT:

Ryan Roberts, Investor Relations
12681 Creekside Lane
Fort Myers, FL 33919
239-461-3850
investorrelations@finemarkbank.com

FINEMARK HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
($ in thousands, except share amounts)

		December 31,				December 31,
Assets		2021				2020
		(Unaudited)
Cash and due from banks		$	261,751				227,921
Debt securities available for sale			898,711				589,233
Debt securities held to maturity			79,517				64,908
Loans, net of allowance for loan losses of $20,283 in 2021 and $20,782 in 2020			1,996,362				1,850,293
Federal Home Loan Bank stock			11,326				16,155
Federal Reserve Bank stock			5,481				4,397
Premises and equipment, net			42,287				41,303
Operating lease right-of-use assets			11,207				7,674
Accrued interest receivable			7,215				7,604
Deferred tax asset			4,916				-
Bank-owned life insurance			50,862				34,963
Other assets			7,563				6,965
Total assets		$	3,377,198				2,851,416
Liabilities and Shareholders' Equity
Liabilities:
Noninterest-bearing demand deposits			521,459				352,281
Savings, NOW and money-market deposits			2,151,635				1,788,441
Time deposits			61,026				84,232
Total deposits			2,734,120				2,224,954
Official checks			9,420				5,883
Other borrowings			1,873				5,612
Federal Home Loan Bank advances			264,016				334,271
Operating lease liabilities			11,311				7,849
Subordinated debt			40,919				50,712
Deferred tax liability			-				202
Other liabilities			10,477				10,876
Total liabilities			3,072,136				2,640,359
Shareholders' equity:
Common stock, $.01 par value; 50,000,000 shares authorized,
11,603,781 and 8,955,427 shares issued and outstanding in 2021 and 2020			116				90
Additional paid-in capital			205,907				122,629
Retained earnings			105,147				80,120
Accumulated other comprehensive (loss) income			(6,108	)			8,218
Total shareholders' equity			305,062				211,057
Total liabilities and shareholders' equity		$	3,377,198				2,851,416
Book Value per Share			26.29				23.57

FINEMARK HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
($ in thousands, except per share amounts)

			Three Months Ended								Twelve Months Ended
			December 31,								December 31,
			2021				2020				2021				2020
Interest income:			(Unaudited)				(Unaudited)				(Unaudited)
Loans			$	17,494				16,265			$	68,073				63,678
Debt securities				2,777				2,664				10,181				11,377
Dividends on Federal Home Loan Bank stock				124				138				484				670
Other				44				36				201				185
Total interest income				20,439				19,103				78,939				75,910
Interest expense:
Deposits				976				1,142				4,317				7,867
Federal Home Loan Bank advances				1,767				2,095				7,427				7,957
Subordinated debt				541				554				2,506				1,912
Total interest expense				3,284				3,791				14,250				17,736
Net interest income				17,155				15,312				64,689				58,174
Provision for loan losses				18				610				31				4,986
Net interest income after provision for loan losses				17,137				14,702				64,658				53,188
Noninterest income:
Trust fees				7,030				5,591				26,638				20,880
Income from bank-owned life insurance				281				210				899				845
Income from solar farms				68				71				318				312
Gain on sale of debt securities available for sale				-				584				902				5,712
Loss on extinguishment of debt				(244	)			(160	)			(1,199	)			(160	)
Gain on termination of swap agreement				1,212				-				1,212				-
Other fees and service charges				333				241				1,169				865
Total noninterest income				8,680				6,537				29,939				28,454
Noninterest expenses:
Salaries and employee benefits				11,190				8,098				38,894				31,835
Occupancy				1,833				1,310				6,535				5,825
Information systems				1,647				1,410				6,318				5,241
Professional fees				402				520				1,761				1,568
Marketing and business development				321				293				1,563				1,507
Regulatory assessments				428				391				1,599				1,393
Other				1,340				1,142				5,538				5,704
Total noninterest expense				17,161				13,164				62,208				53,073
Earnings before income taxes				8,656				8,075				32,389				28,569
Income taxes				1,653				1,789				7,362				6,613
Net earnings			$	7,003				6,286			$	25,027				21,956
Weighted average common shares outstanding - basic				11,587				8,942				10,318				8,925
Weighted average common shares outstanding - diluted				11,751				9,087				10,483				9,082
Per share information: Basic earnings per common share			$	0.60				0.70			$	2.43				2.46
Diluted earnings per common share			$	0.59				0.69			$	2.39				2.42

FineMark Holdings, Inc.
Consolidated Financial Highlights
Fourth Quarter 2021
Unaudited

$ in thousands except for share data		4th Qtr 2021			3rd Qtr 2021			2nd Qtr 2021			1st Qtr 2021			4th Qtr 2020			2021			2020
$ Earnings
Net Interest Income		$	17,155			16,496			15,640			15,398			15,312			64,689			58,174
Provision for loan loss		$	18			(834	)		540			307			610			31			4,986
Non-interest Income		$	7,712			7,617			7,234			6,461			6,113			29,024			22,902
Gain on sale of securities available for sale		$	-			-			243			659			584			902			5,712
Loss on extinguishment of debt		$	(244	)		-			(400	)		(555	)		(160	)		(1,199	)		(160	)
Gain on termination of swap		$	1,212			-			-			-			-			1,212			-
Non-interest Expense		$	17,161			15,599			15,078			14,370			13,164			62,208			53,073
Earnings before income taxes		$	8,656			9,348			7,099			7,286			8,075			32,389			28,569
Taxes		$	1,653			2,292			1,703			1,714			1,789			7,362			6,613
Net Income		$	7,003			7,056			5,396			5,572			6,286			25,027			21,956
Basic earnings per share		$	0.60			0.62			0.59			0.62			0.70			2.43			2.46
Diluted earnings per share		$	0.59			0.61			0.58			0.61			0.69			2.39			2.42
Performance Ratios
Return on average assets*			0.88	%		0.92	%		0.74	%		0.78	%		0.93	%		0.83	%		0.89	%
Return on risk weighted assets*			1.55	%		1.56	%		1.28	%		1.37	%		1.60	%		1.39	%		1.49	%
Return on average equity*			9.22	%		9.39	%		9.89	%		10.48	%		12.12	%		9.66	%		11.20	%
Yield on earning assets*			2.67	%		2.71	%		2.79	%		2.81	%		2.95	%		2.74	%		3.23	%
Cost of funds*			0.46	%		0.51	%		0.57	%		0.58	%		0.62	%		0.53	%		0.81	%
Net Interest Margin*			2.24	%		2.24	%		2.24	%		2.25	%		2.36	%		2.24	%		2.45	%
Efficiency ratio			69.70	%		64.69	%		66.37	%		65.43	%		60.24	%		66.59	%		61.27	%
Capital
Tier 1 leverage capital ratio			9.73	%		9.88	%		9.27	%		7.37	%		7.48	%		9.73	%		7.48	%
Common equity risk-based capital ratio			17.24	%		16.80	%		15.96	%		12.91	%		12.94	%		17.24	%		12.94	%
Tier 1 risk-based capital ratio			17.24	%		16.80	%		15.96	%		12.91	%		12.94	%		17.24	%		12.94	%
Total risk-based capital ratio			20.64	%		20.22	%		19.68	%		17.36	%		17.52	%		20.64	%		17.52	%
Book value per share		$	26.29		$	26.32		$	25.20		$	23.20		$	23.57		$	26.29		$	23.57
Tangible book value per share		$	26.29		$	26.32		$	25.20		$	23.20		$	23.57		$	26.29		$	23.57
Asset Quality
Net charge-offs (recoveries)		$	541			(4	)		(1	)		(6	)		37			530			42
Net charge-offs (recoveries) to average total loans			0.03	%		-0.00	%		-0.00	%		-0.00	%		0.00	%		0.03	%		0.00	%
Allowance for loan losses		$	20,283			20,806			21,636			21,095			20,782			20,283			20,782
Allowance to total loans			1.01	%		1.03	%		1.10	%		1.10	%		1.11	%		1.01	%		1.11	%
Nonperforming loans		$	729			928			2,001			1,599			1,279			729			1,279
Other real estate owned		$	-			-			-			-			-			-			-
Nonperforming loans to total loans			0.04	%		0.05	%		0.10	%		0.08	%		0.07	%		0.04	%		0.07	%
Nonperforming assets to total assets			0.02	%		0.03	%		0.07	%		0.06	%		0.04	%		0.02	%		0.04	%
Loan Composition (% of Total Gross Loans)
1-4 Family			51.8	%		52.0	%		53.6	%		52.4	%		53.1	%		51.7	%		53.1	%
Commercial Loans			10.2	%		11.0	%		11.2	%		13.1	%		13.4	%		10.2	%		13.4	%
Commercial Real Estate			21.7	%		21.0	%		21.1	%		19.5	%		18.9	%		21.7	%		18.9	%
Construction Loans			8.3	%		8.2	%		6.7	%		7.7	%		7.6	%		8.3	%		7.6	%
Other Loans			8.0	%		7.8	%		7.4	%		7.3	%		7.0	%		8.0	%		7.0	%
End of Period Balances
Total Assets		$	3,377,198			3,083,569			2,982,969			2,874,148			2,851,416			3,377,198			2,851,416
Investments		$	978,228			887,244			720,893			668,823			654,141			978,228			654,141
Loans, net of allowance		$	1,996,362			2,002,778			1,945,541			1,889,770			1,850,293			1,996,362			1,850,293
Total Deposits		$	2,734,120			2,429,920			2,358,263			2,297,031			2,224,954			2,734,120			2,224,954
Other borrowings		$	1,873			3,456			5,790			12,144			5,612			1,873			5,612
Subordinated Debt		$	40,919			40,898			40,876			50,737			50,712			40,919			50,712
FHLB Advances		$	264,016			284,080			284,144			284,207			334,271			264,016			334,271
Total Shareholders Equity		$	305,062			304,782			271,005			210,400			211,057			305,062			211,057
Wealth Management
Trust fees		$	7,030			7,012			6,628			5,968			5,591			26,638			20,880
Assets Under Administration
Balance at beginning of period		$	5,739,551			5,688,110			5,304,562			5,091,408			4,622,464			5,091,408			4,472,585
Net investment appreciation (depreciation) & income		$	279,391			(71,467	)		242,924			75,199			349,016			526,048			198,346
Net client asset flows		$	181,465			122,908			140,623			137,955			119,928			582,951			420,477
Balance at end of period		$	6,200,406			5,739,551			5,688,110			5,304,562			5,091,408			6,200,406			5,091,408
Percentage of AUA that are managed			88	%		88	%		89	%		89	%		89	%		88	%		89	%
Stock Valuation
Closing Market Price (OTCQX)		$	33.60			34.00			33.00			30.00			23.41		$	33.60		$	23.41
Multiple of Tangible Book Value			1.28			1.29			1.31			1.29			0.99		$	1.28		$	0.99

*annualized

SOURCE: FineMark Holdings, Inc.

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https://www.accesswire.com/684368/FineMark-Holdings-Inc-Reports-Fourth-Quarter-2021-Earnings

FAQ

What was the net income for FineMark Holdings for Q4 2021?

FineMark Holdings reported a net income of $7.0 million for Q4 2021.

How did the earnings per share change for FineMark Holdings in Q4 2021?

Earnings per share decreased to $0.59 in Q4 2021, down $0.10 from the previous year.

What was FineMark Holdings' total deposit amount at the end of 2021?

Total deposits for FineMark Holdings increased to $2.7 billion at the end of 2021.

What drove the growth in FineMark Holdings' net income for 2021?

The growth in net income was driven by an increase in loans and trust assets under management.

What are the key financial highlights for FineMark Holdings in 2021?

Key highlights include a 14% increase in net income to $25.0 million and a 12% increase in net interest income.