FineMark : Q2 2022 Reviewed Condensed Consolidated Financial Statements

FINEMARK HOLDINGS, INC.

Condensed Consolidated Financial Statements

At June 30, 2022 and the three and six month periods ended June 30, 2022 and 2021 (Reviewed) and at December 31, 2021 (Audited)

Independent Auditor's Review Report

The Board of Directors and Stockholders

FineMark Holdings, Inc.

Fort Myers, Florida

Results of Review of Interim Financial Information

We have reviewed the accompanying condensed consolidated financial statements of FineMark Holdings, Inc. and Subsidiaries (the "Company"), which comprise the condensed consolidated balance sheet at June 30, 2022, and the related condensed consolidated statements of earnings, comprehensive (loss) income, shareholders' equity for the three and six months ended June 30, 2022 and 2021 and cash flows for the six months ended June 30, 2022 and 2021, and the related notes to the condensed consolidated financial statements.

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying condensed interim financial information for it to be in accordance with accounting principles generally accepted in the United States of America.

Basis for Review Results

We conducted our reviews in accordance with auditing standards generally accepted in the United States of America ("GAAS") applicable to reviews of interim financial information. A review of condensed interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. A review of condensed interim financial information is substantially less in scope than an audit conducted in accordance with GAAS, the objective of which is an expression of an opinion regarding the financial information as a whole, and accordingly, we do not express such an opinion. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our review. We believe that the results of the review procedures provide a reasonable basis for our conclusion.

Responsibilities of Management for the Interim Financial Information

Management is responsible for the preparation and fair presentation of the condensed interim financial information in accordance with accounting principles generally accepted in the United States of America and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of interim financial information that is free from material misstatement, whether due to fraud or error.

The Board of Directors and Stockholders

FineMark Holdings, Inc.

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Report on Condensed Balance Sheet as of December 31, 2021

We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet as of December 31, 2021, and the related consolidated statements of income, changes in shareholders' equity, and cash flows for the year then ended (not presented herein); and we expressed an unmodified audit opinion on those audited consolidated financial statements in our report dated February 24, 2022. In our opinion, the accompanying condensed consolidated balance sheet of the Company and subsidiaries as of December 31, 2021, is consistent, in all material respects, with the audited consolidated financial statements from which it has been derived.

HACKER, JOHNSON & SMITH PA

Fort Lauderdale, Florida

August 15, 2022

FINEMARK HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

($ in thousands, except share amounts)

		June 30,		December 31,
Assets		2022	2021
	(Unaudited)
Cash and due from banks	$	67,291	261,751
Debt securities available for sale		1,073,314	898,711
Debt securities held to maturity (fair value of $82,631 in 2022 and $79,973 in 2021)		91,135	79,517
Loans, net of allowance for loan losses of $21,605 in 2022 and $20,283 in 2021		2,115,137	1,996,362
Federal Home Loan Bank stock		10,687	11,326
Federal Reserve Bank stock		6,111	5,481
Premises and equipment, net		40,426	42,287
Operating lease right-of-use assets		11,278	11,207
Accrued interest receivable		8,843	7,215
Deferred tax asset		24,135	4,916
Bank-owned life insurance		71,874	50,862
Other assets		7,610	7,563
Total assets	$	3,527,841	3,377,198
Liabilities and Shareholders' Equity
Liabilities:
Noninterest-bearing demand deposits		647,220	521,459
Savings, NOW and money-market deposits		2,265,152	2,151,635
Time deposits		39,284	61,026
Total deposits		2,951,656	2,734,120
Official checks		6,572	9,420
Other borrowings		2,543	1,873
Federal Home Loan Bank advances		240,000	264,016
Operating lease liabilities		11,386	11,311
Subordinated debt		40,961	40,919
Other liabilities		7,923	10,477
Total liabilities		3,261,041	3,072,136
Shareholders' equity:
Common stock, $.01 par value 50,000,000 shares authorized,
11,738,237 and 11,603,781 shares issued and outstanding in 2022 and 2021		117	116
Additional paid-in capital		208,530	205,907
Retained earnings		118,996	105,147
Accumulated other comprehensive loss		(60,843)	(6,108)
Total shareholders' equity		266,800	305,062
Total liabilities and shareholders' equity	$	3,527,841		3,377,198

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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FINEMARK HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings (Unaudited)

($ in thousands, except per share amounts)
		Three Months Ended		Six Months Ended
		June 30,			June 30,
		2022			2021	2022			2021
Interest income:
Loans	$	18,145			16,860	35,177			33,335
Debt securities		3,762			2,398	7,272			4,866
Dividends on Federal Home Loan Bank stock		100			114	217			279
Other		94			101	146			218
Total interest income		22,101			19,473	42,812			38,698
Interest expense:
Deposits		1,784			1,023	2,775			2,064
Federal Home Loan Bank advances		1,389			2,078	3,029			4,172
Subordinated debt		542			732		1,083			1,424
Total interest expense		3,715			3,833	6,887			7,660
Net interest income		18,386			15,640	35,925			31,038
Provision for loan losses		836			540		1,285			847
Net interest income after provision for loan losses		17,550			15,100	34,640			30,191
Noninterest income:
Trust fees		6,752			6,628	13,750			12,596
Income from bank-owned life insurance		399			200	1,013			397
Income from solar farms		96			97	170			161
Gain on sale of debt securities available for sale		-			243	-			902
Gain (loss) on extinguishment of debt		1,226			(400)	1,844			(955)
Other fees and service charges		401			309	906			541
Total noninterest income		8,874			7,077	17,683			13,642
Noninterest expenses:
Salaries and employee benefits		11,386			9,336	21,887			18,240
Occupancy		1,991			1,506	3,899			3,035
Information systems		1,574			1,548	3,096			3,086
Professional fees		592			446	1,152			872
Marketing and business development		559			492	1,252			677
Regulatory assessments		439			395	895			788
Other		1,159			1,355		2,519			2,750
Total noninterest expense		17,700			15,078	34,700			29,448
Earnings before income taxes		8,724			7,099	17,623			14,385
Income taxes		1,747			1,703	3,774			3,417
Net earnings	$	6,977			5,396	13,849			10,968
Weighted average common shares outstanding - basic (in thousands)		11,740			9,162	11,698			9,093
Weighted average common shares outstanding - diluted (in thousands)		11,923			9,331	11,874			9,265
Per share information: Basic earnings per common share	$	0.59			0.59		1.18			1.21
Diluted earnings per common share	$	0.59			0.58	1.17			1.18

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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