SECOND QUARTER FINANCIAL HIGHLIGHTS
FineMark's net income for the second quarter increased 11.3% on a year-over-year basis, reflecting continued growth in our loan portfolio and trust business. While the loan portfolio expanded by 13%, net interest income increased only 4%, reflecting the continued ultra-low interest rate environment. Assets under management and administration increased 30% or
As of
Quarterly pre-tax operating income was
Major categories affecting second quarter 2021 performance on a year-over-year basis:
- Cost of funds decreased 20 basis points to 0.57%.
-
Trust and investment fees increased 35% to
$6.6 million , representing 29% of total revenue. -
Assets under management and administration increased 30% to
$5.7 billion , including$141 million of additional investments from new and existing clients. -
Loans (net of allowances) increased 13% to
$1.95 billion , reflecting strong new loan demand net of paydowns. -
Deposits increased 23% to
$2.4 billion , even after adjusting for$100 million in deposits that were moved off the balance sheet in the first quarter of 2021.[SW1] -
Net interest income increased 4% to
$15.6 million , despite a decrease in net interest margin as yields declined.
Return on average assets was 0.74% (down from 0.80%); return on risk-weighted assets was 1.28% (versus 1.34%); and return on average equity was 9.89% (versus 10.16%). Declines were due to a change in balance sheet composition, a higher asset base, higher non-interest expense to support growth, a higher equity capital base, and lower realized gains on securities.
COVID-19 UPDATE
As the
Loan-loss Reserves and Forbearance: No new COVID-related provisions were made for loan losses in the second quarter and we are continuing to evaluate the appropriateness of the Bank's
Paycheck Protection Program (PPP): As of
NET INTEREST INCOME AND MARGIN
Inflation has been in the news a great deal recently. While we believe the recent surge is likely to be transitory, FineMark's earnings would likely hold up well even if inflation were to persist longer than expected, as rising-rate environments tend to increase loan rates and benefit banks' net interest margins. The
Average cost of funds declined to 0.57% in the second quarter of 2021, versus 0.58% in the first quarter and 0.77% in the second quarter of 2020. Yield on earning assets also declined slightly to 2.79% versus 2.81% in the first quarter. As a result, the Bank's net interest margin decreased by 1 basis point in the second quarter, to 2.24% versus 2.25%. Going forward, interest expense will benefit from having prepaid
NON-INTEREST INCOME
Non-interest income growth continues to benefit from strong performance in our trust and investment business. Fee income from the trust business now represents 29% of revenues and acts as a stabilizer to the Bank's net interest income, which is interest rate sensitive. As of
The
FineMark realized gains of
NON-INTEREST EXPENSES
As FineMark's loan portfolio, deposit base, and trust business continue to grow, operating overhead also increases to maintain our high level of client service. Non-interest expenses in the second quarter totaled
CREDIT QUALITY
FineMark's asset quality remains strong. The Bank had
The allowance for loan losses at the end of the second quarter was slightly below
Management is pleased with the credit quality of the Bank's loan portfolio; as always, we monitor conditions of both the economy and our individual borrowers to determine whether additional provisions should be made. Our commitment to knowing our clients-and working with them proactively to achieve solutions as needed-continues to serve our shareholders well. As the Bank is on the verge of exceeding
CAPITAL AND LIQUIDITY
FineMark's capital ratios continue to exceed regulatory requirements for 'well-capitalized' banks. As of
HEADQUARTERS UPDATE AND EXPANSION PLANS
We are comfortably settled into our new home office in
CLOSING REMARKS
As always, we appreciate your loyalty, trust, and faith in FineMark and our associates. We continue to be deeply grateful for the exceptional dedication our team of associates show to the Bank, our clients, and our communities every day. Our ability to achieve the results reported here stems from our relationship-based approach and our dedication to providing creative solutions that meet our clients' needs. We believe that our commitment to achieving balanced, diversified growth through our lending and trust businesses will serve our shareholders well. We recognize that many parts of the world are still battling the pandemic and we are grateful to hold an optimistic outlook that strong economic growth will continue for the remainder of the year.
Kind regards,
Chairman & CEO
Background
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 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.
For more information on
Consolidated Balance Sheets | ||||||||
($ in thousands, except share amounts) | ||||||||
Assets | 2021 | 2020 | ||||||
(Unaudited) | ||||||||
Cash and due from banks | 227,921 | |||||||
Debt securities available for sale | 654,974 | 589,233 | ||||||
Debt securities held to maturity | 65,919 | 64,908 | ||||||
Loans, net of allowance for loan losses of | ||||||||
and | 1,945,541 | 1,850,293 | ||||||
12,082 | 16,155 | |||||||
5,016 | 4,397 | |||||||
Premises and equipment, net | 42,305 | 41,303 | ||||||
Operating lease right-of-use assets | 7,289 | 7,674 | ||||||
Accrued interest receivable | 7,193 | 7,604 | ||||||
Deferred tax asset | 2,212 | - | ||||||
Bank-owned life insurance | 35,360 | 34,963 | ||||||
Other assets | 7,959 | 6,965 | ||||||
Total assets | 2,851,416 | |||||||
Liabilities and Shareholders' Equity | ||||||||
Liabilities: | ||||||||
Noninterest-bearing demand deposits | 448,097 | 352,281 | ||||||
Savings, NOW and money-market deposits | 1,845,800 | 1,788,441 | ||||||
Time deposits | 64,366 | 84,232 | ||||||
Total deposits | 2,358,263 | 2,224,954 | ||||||
Official checks | 7,762 | 5,883 | ||||||
Other borrowings | 5,790 | 5,612 | ||||||
284,144 | 334,271 | |||||||
Operating lease liabilities | 7,444 | 7,849 | ||||||
Subordinated debt | 40,876 | 50,712 | ||||||
Deferred tax liability | - | 202 | ||||||
Other liabilities | 7,685 | 10,876 | ||||||
Total liabilities | 2,711,964 | 2,640,359 | ||||||
Shareholders' equity: | ||||||||
Common stock, | ||||||||
10,754,549 and 8,955,427 shares issued and outstanding in 2021 and 2020 | 108 | 90 | ||||||
Additional paid-in capital | 178,155 | 122,629 | ||||||
Retained earnings | 91,088 | 80,120 | ||||||
Accumulated other comprehensive income | 1,654 | 8,218 | ||||||
Total shareholders' equity | 271,005 | 211,057 | ||||||
Total liabilities and shareholders' equity | 2,851,416 | |||||||
Book Value per Share | 25.20 | 23.57 |
Consolidated Statements of Earnings (Unaudited) | ||||||||||||||
($ in thousands, except per share amounts) | ||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||
Interest income: | ||||||||||||||
Loans | 15,640 | 31,409 | ||||||||||||
Debt securities | 2,398 | 3,035 | 4,866 | 5,896 | ||||||||||
Dividends on | 114 | 188 | 279 | 373 | ||||||||||
Other | 101 | 456 | 218 | 594 | ||||||||||
Total interest income | 19,473 | 19,319 | 38,698 | 38,272 | ||||||||||
Interest expense: | ||||||||||||||
Deposits | 1,023 | 1,732 | 2,064 | 5,701 | ||||||||||
2,078 | 2,102 | 4,172 | 4,008 | |||||||||||
Subordinated debt | 732 | 453 | 1,424 | 906 | ||||||||||
Total interest expense | 3,833 | 4,287 | 7,660 | 10,615 | ||||||||||
Net interest income | 15,640 | 15,032 | 31,038 | 27,657 | ||||||||||
Provision for loan losses | 540 | 2,563 | 847 | 3,746 | ||||||||||
Net interest income after provision for loan losses | 15,100 | 12,469 | 30,191 | 23,911 | ||||||||||
Noninterest income: | ||||||||||||||
Trust fees | 6,628 | 4,897 | 12,596 | 9,952 | ||||||||||
Income from bank-owned life insurance | 200 | 210 | 397 | 422 | ||||||||||
Income from solar farms | 97 | 92 | 161 | 155 | ||||||||||
Gain on sale of debt securities available for sale | 243 | 1,371 | 902 | 4,062 | ||||||||||
Loss on extinguishment of debt | (400) | - | (955) | - | ||||||||||
Other fees and service charges | 309 | 142 | 541 | 402 | ||||||||||
Total noninterest income | 7,077 | 6,712 | 13,642 | 14,993 | ||||||||||
Noninterest expenses: | ||||||||||||||
Salaries and employee benefits | 9,336 | 7,435 | 18,240 | 15,424 | ||||||||||
Occupancy | 1,506 | 1,487 | 3,035 | 2,918 | ||||||||||
Information systems | 1,548 | 1,313 | 3,086 | 2,521 | ||||||||||
Professional fees | 446 | 369 | 872 | 719 | ||||||||||
Marketing and business development | 492 | 266 | 677 | 760 | ||||||||||
Regulatory assessments | 395 | 314 | 788 | 617 | ||||||||||
Other | 1,355 | 1,630 | 2,750 | 2,881 | ||||||||||
Total noninterest expense | 15,078 | 12,814 | 29,448 | 25,840 | ||||||||||
Earnings before income taxes | 7,099 | 6,367 | 14,385 | 13,064 | ||||||||||
Income taxes | 1,703 | 1,520 | 3,417 | 3,130 | ||||||||||
Net earnings | 4,847 | 9,934 | ||||||||||||
Weighted average common shares outstanding - basic | 9,162 | 8,922 | 9,093 | 8,912 | ||||||||||
Weighted average common shares outstanding - diluted | 9,331 | 9,067 | 9,265 | 9,045 |
Consolidated Financial Highlights Fourth Quarter 2020 Unaudited | ||||||||||||||||||||||||||||
Full Year | ||||||||||||||||||||||||||||
$ in thousands except for share data | 4th Qtr 2020 | 3rd Qtr 2020 | 2nd Qtr 2020 | 1st Qtr 2020 | 4th Qtr 2019 | 2020 | 2019 | |||||||||||||||||||||
$ Earnings | ||||||||||||||||||||||||||||
Net Interest Income | $ | 15,312 | $ | 15,205 | $ | 15,032 | $ | 12,625 | $ | 12,126 | $ | 58,174 | $ | 46,044 | ||||||||||||||
Provision for loan loss | $ | 610 | $ | 630 | $ | 2,563 | $ | 1,183 | $ | 429 | $ | 4,986 | $ | 1,488 | ||||||||||||||
Non-interest Income | $ | 6,113 | $ | 5,858 | $ | 5,341 | $ | 5,590 | $ | 5,629 | $ | 22,900 | $ | 20,999 | ||||||||||||||
Gain on sale of debt securities available for sale | $ | 584 | $ | 1,066 | $ | 1,371 | $ | 2,691 | $ | 233 | $ | 5,712 | $ | 1,560 | ||||||||||||||
Debt extinguishment gains | $ | (160 | ) | $ | - | $ | - | $ | - | $ | 414 | $ | (160 | ) | $ | 685 | ||||||||||||
Non-interest Expense | $ | 13,164 | $ | 14,069 | $ | 12,814 | $ | 13,026 | $ | 12,490 | $ | 53,072 | $ | 47,891 | ||||||||||||||
Earnings before income taxes | $ | 8,075 | $ | 7,430 | $ | 6,368 | $ | 6,696 | $ | 5,483 | $ | 28,570 | $ | 19,909 | ||||||||||||||
Taxes | $ | 1,789 | $ | 1,694 | $ | 1,520 | $ | 1,610 | $ | 1,162 | $ | 6,613 | $ | 4,702 | ||||||||||||||
Net Income | $ | 6,286 | $ | 5,736 | $ | 4,847 | $ | 5,087 | $ | 4,321 | $ | 21,956 | $ | 15,207 | ||||||||||||||
Basic earnings per share | $ | 0.70 | $ | 0.65 | $ | 0.54 | $ | 0.57 | $ | 0.49 | $ | 2.46 | $ | 1.72 | ||||||||||||||
Diluted earnings per share | $ | 0.69 | $ | 0.63 | $ | 0.54 | $ | 0.56 | $ | 0.49 | $ | 2.42 | $ | 1.69 | ||||||||||||||
Performance Ratios | ||||||||||||||||||||||||||||
Return on average assets* | 0.93 | % | 0.90 | % | 0.80 | % | 0.92 | % | 0.82 | % | 0.89 | % | 0.76 | % | ||||||||||||||
Return on risk weighted assets* | 1.60 | % | 1.54 | % | 1.34 | % | 1.46 | % | 1.32 | % | 1.49 | % | 1.22 | % | ||||||||||||||
Return on average equity* | 12.12 | % | 11.35 | % | 10.16 | % | 11.11 | % | 9.72 | % | 11.20 | % | 8.97 | % | ||||||||||||||
Yield on earning assets* | 2.95 | % | 3.13 | % | 3.32 | % | 3.59 | % | 3.74 | % | 3.23 | % | 3.82 | % | ||||||||||||||
Cost of funds* | 0.62 | % | 0.67 | % | 0.77 | % | 1.26 | % | 1.40 | % | 0.81 | % | 1.46 | % | ||||||||||||||
Net Interest Margin* | 2.36 | % | 2.50 | % | 2.58 | % | 2.39 | % | 2.41 | % | 2.45 | % | 2.43 | % | ||||||||||||||
Efficiency ratio | 60.24 | % | 63.58 | % | 58.92 | % | 62.31 | % | 67.87 | % | 61.27 | % | 69.12 | % | ||||||||||||||
Capital | ||||||||||||||||||||||||||||
Tier 1 leverage capital ratio | 7.48 | % | 7.71 | % | 7.89 | % | 8.35 | % | 8.51 | % | 7.48 | % | 8.51 | % | ||||||||||||||
Common equity risk-based capital ratio | 12.94 | % | 13.20 | % | 13.15 | % | 14.10 | % | 13.70 | % | 12.94 | % | 13.70 | % | ||||||||||||||
Tier 1 risk-based capital ratio | 12.94 | % | 13.20 | % | 13.15 | % | 14.10 | % | 13.70 | % | 12.94 | % | 13.70 | % | ||||||||||||||
Total risk-based capital ratio | 17.52 | % | 16.57 | % | 16.56 | % | 17.67 | % | 17.18 | % | 17.52 | % | 17.18 | % | ||||||||||||||
Book value per share | $ | 23.57 | $ | 23.01 | $ | 22.08 | $ | 20.74 | $ | 20.15 | $ | 23.57 | $ | 20.15 | ||||||||||||||
Tangible book value per share | $ | 23.57 | $ | 23.01 | $ | 22.08 | $ | 20.74 | $ | 20.15 | $ | 23.57 | $ | 20.15 | ||||||||||||||
Asset Quality | ||||||||||||||||||||||||||||
Net charge-offs (recoveries) | $ | 37 | $ | 3 | $ | 9 | $ | (7 | ) | $ | (10 | ) | $ | 42 | $ | 116 | ||||||||||||
Net charge-offs (recoveries) to average total loans | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.01 | % | ||||||||||||||
Allowance for loan losses | $ | 20,782 | $ | 20,209 | $ | 19,582 | $ | 17,028 | $ | 15,838 | $ | 20,782 | $ | 15,838 | ||||||||||||||
Allowance to total loans | 1.11 | % | 1.12 | % | 1.12 | % | 1.06 | % | 1.04 | % | 1.11 | % | 1.04 | % | ||||||||||||||
Nonperforming loans | $ | 1,279 | $ | 1,098 | $ | 1,560 | $ | 1,184 | $ | 1,798 | $ | 1,279 | $ | 1,798 | ||||||||||||||
Other real estate owned | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||
Nonperforming loans to total loans | 0.07 | % | 0.06 | % | 0.09 | % | 0.07 | % | 0.12 | % | 0.07 | % | 0.12 | % | ||||||||||||||
Nonperforming assets to total assets | 0.04 | % | 0.04 | % | 0.06 | % | 0.05 | % | 0.08 | % | 0.04 | % | 0.08 | % | ||||||||||||||
Loan Composition (% of Total Gross Loans) | ||||||||||||||||||||||||||||
1-4 Family | 53.1 | % | 53.3 | % | 52.8 | % | 55.9 | % | 57.3 | % | 53.1 | % | 57.3 | % | ||||||||||||||
Commercial Loans | 13.5 | % | 14.9 | % | 15.3 | % | 10.9 | % | 10.0 | % | 13.5 | % | 10.0 | % | ||||||||||||||
18.9 | % | 19.4 | % | 19.9 | % | 21.0 | % | 20.9 | % | 18.9 | % | 20.9 | % | |||||||||||||||
Construction Loans | 7.6 | % | 6.8 | % | 6.7 | % | 6.6 | % | 6.1 | % | 7.6 | % | 6.1 | % | ||||||||||||||
Other Loans | 7.0 | % | 5.5 | % | 5.3 | % | 5.6 | % | 5.7 | % | 7.0 | % | 5.7 | % | ||||||||||||||
End of Period Balances | ||||||||||||||||||||||||||||
Assets | $ | 2,851,416 | $ | 2,606,789 | $ | 2,520,831 | $ | 2,464,677 | $ | 2,168,975 | $ | 2,851,416 | $ | 2,168,975 | ||||||||||||||
Debt securities | $ | 654,141 | $ | 619,016 | $ | 618,569 | $ | 577,917 | $ | 505,170 | $ | 654,141 | $ | 505,170 | ||||||||||||||
Loans, net of allowance | $ | 1,850,293 | $ | 1,789,905 | $ | 1,727,853 | $ | 1,584,767 | $ | 1,512,466 | $ | 1,850,293 | $ | 1,512,466 | ||||||||||||||
Deposits | $ | 2,224,954 | $ | 1,978,922 | $ | 1,919,966 | $ | 1,824,174 | $ | 1,670,419 | $ | 2,224,954 | $ | 1,670,419 | ||||||||||||||
Other borrowings | $ | 5,612 | $ | 14,920 | $ | 9,121 | $ | 112,527 | $ | 2,390 | $ | 5,612 | $ | 2,390 | ||||||||||||||
Subordinated Debt | $ | 50,712 | $ | 29,622 | $ | 29,610 | $ | 29,598 | $ | 29,586 | $ | 50,712 | $ | 29,586 | ||||||||||||||
FHLB Advances | $ | 334,271 | $ | 354,334 | $ | 314,396 | $ | 294,458 | $ | 264,520 | $ | 334,271 | $ | 264,520 | ||||||||||||||
Shareholders Equity | $ | 211,057 | $ | 205,627 | $ | 197,174 | $ | 185,119 | $ | 178,453 | $ | 211,057 | $ | 178,453 | ||||||||||||||
Trust and Investment | ||||||||||||||||||||||||||||
Fee Income | $ | 5,591 | $ | 5,337 | $ | 4,897 | $ | 5,055 | $ | 5,023 | $ | 20,879 | $ | 18,614 | ||||||||||||||
Balance at beginning of period | $ | 4,622,464 | $ | 4,382,810 | $ | 3,932,309 | $ | 4,472,585 | $ | 4,175,715 | $ | 4,472,585 | $ | 3,391,455 | ||||||||||||||
Net investment appreciation (depreciation) & income | $ | 349,016 | $ | 166,182 | $ | 389,677 | $ | (706,530 | ) | $ | 180,466 | $ | 198,345 | $ | 535,238 | |||||||||||||
Net client asset flows | $ | 119,928 | $ | 73,472 | $ | 60,824 | $ | 166,253 | $ | 116,404 | $ | 420,477 | $ | 545,892 | ||||||||||||||
Balance at end of period | $ | 5,091,408 | $ | 4,622,464 | $ | 4,382,810 | $ | 3,932,309 | $ | 4,472,585 | $ | 5,091,408 | $ | 4,472,585 | ||||||||||||||
Percentage of AUA that are managed | 89 | % | 90 | % | 89 | % | 88 | % | 88 | % | 89 | % | 88 | % | ||||||||||||||
Stock Valuation | ||||||||||||||||||||||||||||
Closing Market Price (OTCQX) | $ | 23.41 | $ | 19.85 | $ | 21.60 | $ | 21.00 | $ | 25.10 | $ | 23.41 | $ | 25.10 | ||||||||||||||
Multiple of Tangible Book Value | 0.99 | 0.86 | 0.98 | 1.01 | 1.25 | 0.99 | 1.25 | |||||||||||||||||||||
*annualized | ||||||||||||||||||||||||||||
CONTACT:
239-461-5984
investorrelations@finemarkbank.com
SOURCE:
View source version on accesswire.com:
https://www.accesswire.com/656042/FineMark-Holdings-Inc-Reports-Second-Quarter-2021-Earnings
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