December - Mercantil Servicios Financieros

Transcription

2012
Annual
Report
C ONTENTS
Profile
3
Administration
4
Financial Highlights and Key Ratios
5
Board of Directors Report
7
Economic Environment
11
Management Discussion and Analysis
Financial Condition and Results of Operations
17
Business Segments Review
25
Business-Support Segments Review
34
Enterprise Risk Management
39
Compliance
45
Corporate Governance
46
Social Responsibility
55
Banking Centers, Subsidiaries
and Affiliates
58
Adrián Pujol
Acrylic on linen
112 x 154 cm
Playa de Caruao, undated
Profile
Founded in 1979, Mercantil Commercebank
is a global banking organization internationally recognized in the financial services industry.
The Bank’s primary market is South Florida. In addition to its main office in Coral Gables,
Florida, which is home to an affluent multicultural population and is the U.S. headquarters for
many multinational companies, the Bank operates 15 South Florida banking centers, with
other locations strategically positioned in targeted markets including two offices in Houston, Texas - including one opened in early 2013 - and one office in New York City’s Midtown
Manhattan. Through U.S. bank holding companies, Mercantil Commercebank is beneficially
owned by Mercantil Servicios Financieros, a financial services organization based in Venezuela
that also operates subsidiaries and representative offices in Curaçao, Grand Cayman, Panama,
Mexico, Colombia, Peru, Brazil, Hong Kong and Switzerland.
Mercantil Commercebank provides individuals and businesses, U.S. domestic and international needing U.S. banking services, with a large portfolio of deposit, wealth management
and credit solutions. A variety of banking services are available through traditional channels,
such as banking centers and a network of ATMs, as well as via a secure website and telephone
banking. The Bank’s investment, trust and estate planning offerings are provided by subsidiaries, Mercantil Commercebank Investment Services, Inc. and Mercantil Commercebank
Trust Company, N.A.
With over $8 billion in owned and managed assets, the Bank has grown to serve over 100,000
customers. According to the proprietary Federal Deposit Insurance Corporation’s June 30,
2012 data, Mercantil Commercebank was the deposit market share leader in Coral Gables,
Florida, where there were 52 bank branches holding over $14.3 billion in deposits. Mercantil
Commercebank also ranked as the third largest bank headquartered in Florida in terms of
total assets and one of the Top 14 banks in Florida, as measured by deposit market share.
American Banker, a respected trade publication and authority on banking trends, lists
Mercantil Commercebank’s holding company among the Top 150 Bank Holding Companies in
the U.S., as measured by total deposits and total assets.
Mercantil Commercebank’s mission is to be recognized as the financial institution of choice
and a superior provider of quality financial products and services in the markets it serves by
continually assessing the needs of clients and aligning business plans to provide the products and services that create value and long-term customer satisfaction.
3
Mercantil
Administration
Board of Directors
Executive Committee
Gustavo Vollmer A.
Chairman
Millar Wilson
President and CEO
Millar Wilson
President and CEO
Gustavo Vollmer A.
Director & Member of the
Executive Committee
Jonathan Coles
Frederick C. Copeland, Jr.
Rosa M. Costantino
Global Private Banking and
Wealth Management Manager
Pamella J. Dana
Thomas E. Krayenbuehl
Salvador López de Azúa
Alfonso Figueredo
Global Chief Financial Officer
Fernando Figueredo M.
Global Chief Risk Officer
Gustavo A. Marturet
Luis A. Romero M.
José Antonio Villamil
J. Guillermo Villar
Alejandro González Sosa
Global Executive Coordination Manager
Philip R. Henríquez
Global Corporate and Investment
Banking Manager
Armando Leirós R.
Global Operations and
Technology Manager
Nerio Rosales Rengifo
Global Personal and Commercial
Banking Manager
Ivan E. Trujillo
Corporate Secretary
Julio V. Peña
Alternate Corporate Secretary
* Mr. Brian O’Neill was a member of the
Board of Directors until January 2008.
4
Annual
12
Financial Highlights
and Key Ratios
december 31
december 31
december 31
december 31
december 31
2012
2011
2010
2009
2008
$ 6,819.7
2,065.4
4,371.4
5,365.5
180.4
457.3
718.8
$ 6,635.7
2,089.8
4,104.8
4,938.1
491.8
487.3
682.1
$ 6,478.1
2,261.0
3,697.5
4,715.3
649.3
429.8
658.4
$ 5,991.0
2,294.1
3,247.9
4,399.6
694.1
201.8
654.5
$ 6,023.8
2,542.3
3,034.8
4,360.8
868.6
151.8
559.5
$
$
$
(Dollars in millions)
Consolidated Balance Sheets
Total assets
Securities available for sale
Loans, net
Deposits
Securities sold under agreements to repurchase
Advances from the Federal Home Loan Bank
Stockholder’s equity
Consolidated Statements of Operations
(for the 12 months ended)
$
Net interest income
Provision for loan losses
Net interest income after provision for loan losses
Securities and derivative instruments gains, net
Non-interest income (includes securities gains)
Non-interest expense
Net income (loss)
158.1
24.1
134.0
11.1
59.0
142.6
31.8
$
151.1
49.8
101.3
10.8
66.0
141.8
16.2
143.5
72.7
70.8
26.0
71.2
140.1
1.2
160.6
132.1
28.5
35.0
68.9
136.3
(25.7)
188.7
77.0
111.7
1.6
34.4
143.7
2.5
Profitability Indicators (%)
Net interest income / average total assets
Net income (loss) / average total assets (ROA)
Net income (loss) / average stockholder’s equity (ROE)
2.33
0.47
4.55
2.23
0.24
2.42
2.23
0.02
0.19
2.64
(0.42)
(4.23)
3.05
0.04
0.49
17.30
16.04
9.78
17.19
15.93
9.20
18.13
16.87
9.20
22.05
20.78
10.44
16.74
15.48
8.93
1.43
1.94
78.03
1.52
3.83
5.76
27.93
1.61
5.26
8.26
19.04
1.57
7.36
12.46
18.50
2.31
3.96
7.04
33.20
2.34
2.10
65.67
2.10
65.31
2.18
65.27
2.24
59.39
2.32
64.41
2.74
3.77
5.00
3.82
3.82
40.07
41.92
46.55
48.34
52.79
78.72
71.59
69.48
66.13
57.99
81.47
96.50
122.65
83.12
96.00
129.01
78.41
95.47
131.16
73.82
95.11
129.51
69.59
95.93
132.51
17
1
785
17
1
765
17
1
754.5
17
1
782
16
1
879
Capital Adequacy Indicators (%)
Total risk-based capital / risk-weighted assets
Tier 1 capital / risk-weighted assets
Tier 1 capital / total assets (period-end leverage)
Asset Quality Indicators (%)
Non-performing assets / total assets
Non-accrual loans / gross loans
Allowance for loan losses / non-accrual loans
Allowance for loan losses / gross loans
Efficiency Indicators (%)
Non-interest expense / average total assets
Non-interest expense / net interest income + non-interest income
Liquidity Indicators (%)
Cash and cash equivalents / deposits
Cash and cash equivalents + interest earning deposits with banks,
with maturities in excess of 90 days + investment securities / deposits
+ securities sold under agreements to repurchase
Core deposits / Net loans + securities available for sale
+ other real estate owned
Other Indicators (%)
Loans, net / deposits
Interest-earnings assets / total assets
Interest-earnings assets / deposits
Banking Distribution Network
Banking centers
Loan production offices
Number of employees (FTE)
The audited consolidated financial statements and their accompanying notes are included in this report.
5
Mercantil
Adrián Pujol
Acrylic on canvas
150 x 205 cm
Playa Majagual, 1987
Board of
Directors Report
Coral Gables, Florida, March 2013
To Our Valued Stockholders and Customers:
Mercantil Commercebank’s financial performance continued to strengthen in 2012. Net
income nearly doubled from the prior year. Improved asset quality, stronger loan origination
and effective expense controls were the significant drivers behind this continued performance
improvement.
2012 net profit was $31.8 million, a $15.6 million or 96 percent increase over the prior year.
Non-accruing loans decreased by 64 percent, from $240.4 million to $86.2 million. At the end
of 2012, non-performing loans as a percentage of total loans were 1.9 percent, a significant
improvement from the 5.8 percent reported at the close of the prior year. During the 12-month
period, the need to provision for potential loan losses declined significantly as credit quality
improved; loan loss provisions totaled $24.1 million in 2012, compared to $49.8 million in 2011.
Total assets increased by $184 million to $6.8 billion and total deposits continued to trend
higher. The Bank reported its seventh consecutive year of deposit growth. During 2012, total
deposits increased from $4.9 billion to $5.4 billion. Historically and again in 2012, core deposits comprised the majority of the deposit portfolio. Net interest income was $158.1 million
for the year, higher than the previous year despite continued pressure on the net interest
margin as a result of the low interest rate environment.
At the close of 2012, return on assets was 0.5 percent, a significant improvement from the
0.2 percent reported for the prior year. Total capital increased by $36.7 million to $718.8 million,
and the Tier 1 Capital Ratio was 16 percent, slightly higher than the ratio reported the prior
year.
The attraction of new business and successful retention of existing relationships from
targeted market segments contributed to profitability. In addition to the growth in deposits,
loans reached $4.4 billion, an increase of 6.5 percent over 2011, including a 16.5 percent net
increase in commercial and industrial loans.
The Bank’s investment services and trust subsidiaries continued to grow at a steady pace.
Combined assets under management in Mercantil Commercebank Investment Services and
Mercantil Commercebank Trust Company increased from $1.6 billion to $1.9 billion. 2012 was
7
Mercantil
a milestone year for Mercantil Commercebank Investment Services. The subsidiary was established 10 years ago to assist customers in managing their wealth and providing them with
solutions to help them achieve their short- and long-term goals. Today, Mercantil Commercebank
Investment Services has grown to become the investment firm for more than 2,700
customers.
The Mercantil Commercebank strategic plan and its business model are focused on the customer and on delivering an experience that creates brand recognition and customer loyalty.
This model has proven successful for more than 30 years. We recognize that opportunities for
continued growth and increased profitability come from our existing customer base. This is
why we have re-focused our attention and heightened employee awareness of the importance of customer service. Throughout all areas of the Bank, we have raised our standards
related to how we respond to and interact with our customers.
Mercantil Commercebank’s team of professionals is also focused on originating new business.
In January 2013, we created a team of experienced bankers to staff a second banking center
location in Houston, Texas. Already a successful market for us, the population in the greater
Houston area is growing faster than the U.S. as a whole, affording opportunities for growing
our existing business. The region’s strength in the oil and gas sector also allows us to leverage
our global banking experience in this business.
We will continue to evaluate opportunities to expand our distribution system and open new
banking centers in the markets where we have the highest potential to provide more convenient access to our customers. In nearly every Florida neighborhood where there is a Mercantil
Commercebank banking center, our market ranking is among the top five when compared to
other Florida-based institutions.1 We are the third largest Florida-based bank, as reported by
the FDIC.1
The investment in and development of our human capital is also critical to our success. We
have programs in place to identify employees’ career aspirations and align these goals with
their skill sets and needs of the organization. We encourage all employees to take ownership
of their careers and employment experience with Mercantil Commercebank. In 2012, nearly
20 percent of our employees celebrated significant milestone anniversaries in their years of
service at the Bank. We also support their involvement in professional associations, community activities and charitable organizations. Through their contribution of time and talent,
the communities we serve are enriched.
8
Annual
12
Every year, Mercantil Commercebank supports a variety of events, projects and programs
that enrich the lives of our neighbors, customers and employees. We are particularly passionate about preserving the arts and culture in our communities, supporting symphonies and
music education, historic restoration programs, and programs for South Florida’s youth. One
such program, Zoolens SM, gives middle school students the opportunity to explore wildlife at
Zoo Miami through a photography contest. In 2012, nearly 300 entries were received from
students participating in Zoolens.
Our outlook for 2013 is positive. We see signs of an improving economic environment in
several of the segments in which we serve customers, and are well-positioned to capture business that will contribute to our growth and profitability. Our expectations are high, and we
recognize that a great deal of work will be required to reach our goals. We are excited about
the challenges ahead. We are grateful to our employees, shareholders and customers for their
ongoing support as we continue to move Mercantil Commercebank forward.
Best regards,
Gustavo Vollmer A., Chairman
Millar Wilson, President & CEO
Jonathan Coles
Pamella J. Dana
Thomas E. Krayenbuehl
Gustavo A. Marturet
Luis A. Romero M.
José Antonio Villamil
J. Guillermo Villar
1 Source: FDIC Deposit Market Share Report, June 30, 2012
9
Mercantil
Adrián Pujol
Acrylic on linen
75 x 155 cm
Atardecer en la bahía de Pampatar, 1989
Economic
Environment
Global
The global economy slowed significantly in 2012. This was caused in large part by the recession
in Europe due to financial, fiscal and competitive imbalances, especially in the euro zone; the
slowdown in China and Brazil; and moderate growth in the United States. Growth rates for
output and global trade fell and capital flows to developing countries shrank and became
more volatile. Preliminary data from the World Bank indicates that global GDP growth in 2012
was around 2.3 percent, which represents a slowdown with respect to the 3 percent global
growth rate reported in 2011. The expansion within the circle of mature economies was only
1.3 percent, essentially the result of strong fiscal adjustments undertaken by several
governments, high unemployment and weaker consumer and business confidence. In the
euro zone in particular, the sovereign debt crisis and the programs of fiscal consolidation
heavily affected consumer and business confidence, which in turn considerably affected GDP
growth, which is estimated to have been a negative 0.1 percent in 2012.
Among emerging markets, the midyear weakness in economic activity that was prevalent
across the leading countries in Asia continued its course. Most of the weakness can be
attributed to a slump in exports. However, fiscal measures boosting public infrastructure
investment, an easing in monetary policy as well as an upturn in exports helped stabilize
growth in China during 2012, and real GDP growth was close to the government’s annual
target of 7.5 percent. In Latin America, economic growth held up quite well despite weak
external support from commodity prices. Thus, while region-wide growth is on track to slow
to 3.1 percent in 2012 from 4.3 percent in the prior year, this is largely due to the
underperformance of Brazil, which accounts for about 45 percent of regional GDP. The GDP
of the leading Latin American giant grew by a meager 1 percent over the prior year.
11
Mercantil
United States
By contrast, U.S. expansion has remained on track with growth in GDP reaching 2.2 percent
for full-year 2012, higher than the rate of 1.7 percent the prior year. Although the effects of
Hurricane Sandy turned out to be less damaging to the economy than had been expected,
doubts remain regarding ongoing discussions on a possible broader fiscal adjustment that
looks particularly inopportune. Despite this improved growth performance, the U.S. economy
closed 2012 on a pessimistic note as consumer confidence trended lower in December, and
fiscal spending fell dramatically in the fourth quarter. Amid all the current volatility of
indicators and the uncertainty about final fiscal measures, the nascent recovery in the housing
market has been an unambiguously positive factor for growth. The U.S. stock market, while
not always a perfect indicator, also pointed to stronger growth driven in part by the increase
in financial markets liquidity and strong growth in corporate profits. The stock market surged
more than 6 percent in 2012 and recently reached the highest levels since the beginning of the
most recent recession, indicating continued optimism regarding corporate profits.
Financial Markets
Financial markets were generally positive in 2012. The S&P 500 index increased 13.4 percent,
bond markets continued to experience strong money inflows, and major European markets
outperformed U.S. stock markets. U.S. interest rates continued to move lower with the U.S.
10-Year Treasury recording the lowest yield ever at 1.39 percent. The Federal Reserve Bank
(FRB) kept its 0.25 benchmark interest rate unchanged and announced Quantitative Easing
Number 3 (QE3) in September 2012, whereby the FRB began purchasing $40 billion per
month in mortgage-backed securities in addition to monthly purchases of $45 billion of U.S.
Treasury securities. The FRB expects to keep rates low for the foreseeable future and has
stated that it will continue quantitative easing activities until the U.S. unemployment rate
drops to 6.5 percent.
As a result of the FRB’s low interest rate policy and ongoing monetary programs, mortgage
rates fell to historic lows which economists consider to have contributed to an increase in
buyer demand, increasing property values and lower inventories. In addition, many of the
indicators followed by economists, including building starts and residential and non-residential building permits, showed improvement over the prior year. However, the real estate
market remains well below where it was before the start of the most recent recession.
U.S. Interest Rates
December 31, 2012
4.0%
FED Funds
3.5%
U.S. 10-Year Treasury
3.0%
U.S. 2-Year Treasury
2.5%
2.0%
1.5%
1.0%
0.5%
Jan. 2011
Feb. 2011
Mar. 2011
Apr. 2011
May. 2011
Jun. 2011
Jul. 2011
Aug. 2011
Sept. 2011
Oct. 2011
Nov. 2011
Dec. 2011
Jan. 2012
Feb. 2012
Mar. 2012
Apr. 2012
May. 2012
Jun. 2012
Jul. 2012
Aug. 2012
Sept. 2012
Oct. 2012
Nov. 2012
Dec. 2012
0.0%
12
Annual
12
Growth and Consumption
During 2012, the U.S. economy appears to have successfully navigated the adjustment from
a recovery driven primarily by economic stimulus and private consumption to one driven by
private business and residential investment. Indeed, powering last year's increase in total
output was an 11.9 percent increase in residential investment and a 7.9 percent increase in
business investment. Personal consumption also grew at a firm 1.9 percent, while growth in
government spending decreased 1.7 percent. The recovery of consumption spending was very
much related to the behavior of personal income and consumption loans. Among households,
the much-needed process of “deleveraging” continued throughout 2012 and the ratio resulting
from dividing outstanding household debt by disposable household income fell further, more
because of the rise in disposable income than due to any meaningful reduction in outstanding
debt. This ratio fell from a peak of 129.3 percent in September 2007 to 107.7 percent in
September 2012, a drop of 21.6 percent.
Labor Market Trends
The latest data suggest that recovery of the U.S. labor market has proceeded more rapidly
than previously expected. Jobless claims fell once again to lows in December, an encouraging
sign. According to the U.S. Bureau of Labor Statistics, the unemployment rate declined to 7.8
percent in December from 8.6 percent one year prior. The drop in the unemployment rate was
still based on sub-par growth in the labor force, which is comprised of people who are working
or looking for work, with the participation rate falling by 0.2 percentage points to 63.6 percent.
It is important to point out, however, that the situation is expected to gradually improve as
economic growth continues, corporate profits continue their recovery and the financial
burden of households improves.
Non-Farm Payroll Employment
Growth
Trend
Source: U.S. Bureau of Labor Statistics
13
Mercantil
Dec. 2012
Sept. 2012
Jun. 2012
Mar. 2012
Dec. 2011
Jun. 2011
Sept. 2011
Mar. 2011
Dec. 2010
Sept. 2010
Jun. 2010
Mar. 2010
Dec. 2009
Sept. 2009
Jun. 2009
Mar. 2009
450
375
300
225
150
75
0
-75
-150
-225
-300
-375
-450
-525
-600
-675
-750
-825
-900
Jan. 2009
Thousands
1/2009 to 12/2012
Business Climate
The National Federation of Independent Business indicated that its November Index of Small
Business Optimism fell to 87.5 from 93.1 in October. It is important to note that roughly 24
million small businesses exist in the U.S., creating 80 percent of all new jobs. In the larger
industrial sector, production rose a moderate 0.3 percent in December following a revised
1 percent November jump. For the year, industrial output rose 3.7 percent following a 4.1
percent jump in 2011. The capacity utilization rate ticked up to 78.8 percent in December and
for the year the utilization rate was roughly unchanged at 78.7 percent.
The U.S. Real Estate Market
The U.S. housing market ended 2012 on a fairly solid note, with sales of both existing and new
homes improving, inventories declining and builder optimism posting several increases. Low
mortgage rates, an improving job market and some reported easing in mortgage underwriting
standards has raised hopes that the momentum will carry over into 2013. The National
Association of Realtors reported that December sales of existing homes jumped 12.8 percent
over the prior year. New home sales increased 8.8 percent to a 369,000-unit pace during the
month of December. The seasonally adjusted Case-Shiller 20-City Home Price Index increased
5.5 percent over the prior November, the fastest increase since September 2006, and existing
inventories dropped 8.5 percent to a preliminary 1.82 million units from 1.99 million units in
the prior month. This was the fourth consecutive month that existing home inventory declined
and the lowest it has been since January 2001.
Domestic Prices
Given the amount of slack that remained in the U.S. economy, inflation was not a major
problem in 2012. The Consumer Price Index (CPI) rose 1.7 percent, roughly half the 2011 fullyear increase. Moreover, the December CPI was unchanged following a marginal November
decline. Excluding food and energy prices, the CPI ticked higher by 0.1 percent in December,
pulling the year-over-year advance down to 1.9 percent compared to a 2.2 percent rise in 2011.
Energy prices fell 1.5 percent month to month in December, and reported a small increase of
0.5 percent compared to a 15.2 percent rise in 2011.
14
Annual
12
Inflation Rate in the United States
(CPI Monthly % Change)
1.50%
1.00%
0.00%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.50%
-0.50%
-1.00%
-1.50%
Jul. 2012
Oct. 2012
Jan. 2012
Apr. 2012
Jul. 2011
Oct. 2011
Jan. 2011
Apr. 2011
Jul. 2010
Oct. 2010
Jan. 2010
Apr. 2010
Jul. 2009
Oct. 2009
Jan. 2009
Apr. 2009
Jul. 2008
Oct. 2008
Jan. 2008
Apr. 2008
Jul. 2007
Oct. 2007
Jan. 2007
Apr. 2007
-2.00%
Rate
Trend
Source: U.S. Bureau of Labor Statistics
Monetary and Fiscal Policy
In general, monetary policy during 2012 was aligned to sustain the stimulus to aggregate
demand in the U.S. economy. Thus, the FRB continued its strong response to the environment
by aggressively expanding bank reserves, engaging in another round of quantitative easing
and announcing further asset purchases until a substantial improvement in labor market is
achieved. In particular, the FRB focused its attention on the mortgage market, purchasing
$40 billion per month in mortgage-backed securities. The purchases helped reduce the spread
of mortgage rates over 10-year treasuries and brought the level of rates to historic lows. In
December, the FRB made its conditional commitment to low interest rates even more explicit,
announcing a specific target for the Fed Funds Rate tied to unemployment rate performance.
On the fiscal front, the tailwinds that fiscal policy provided to economic growth during the
Great Recession and the first few years of the recovery have shifted direction. A large number
of spending cuts came into effect at the end of 2012 and, as a result, growth in domestic final
sales was impacted in the fourth quarter by a 6.6 percent decline in government spending,
down 1.7 percent from the prior year. Outlays were lowered by a 22.2 percent decline in
defense spending, 5 percent lower than the prior year.
15
Mercantil
Adrián Pujol
Acrylic on linen
147 x 202 cm
El Lajao (Choroni), undated
Management Discussion
and Analysis
Financial Condition and
Results of Operations
The following management discussion and analysis (MD&A) is intended to assist readers in
understanding the consolidated financial condition and results of operations of the Bank as
of December 31, 2012 and for the year then ended. This discussion should be read in
conjunction with the audited consolidated financial statements, accompanying footnotes and
other supplemental financial data included in this annual report.
Consolidated Financial Statements
The Bank prepares its consolidated financial statements in accordance with accounting
principles generally accepted in the United States of America. These consolidated financial
statements include the accounts of the Bank and its wholly-owned subsidiaries. In this section,
we review the main variations of the summary consolidated balance sheets and statements of
operations at the close of 2012 with respect to the amounts presented at the close of 2011.
Consolidated Results of Operations Review
The following table is a condensed version of the Bank’s consolidated statements of
operations for the years 2012 and 2011.
Summary of Consolidated
Statements of Operations
12 months ended
(in millions except percentages)
Net Interest Income Before Provision
Net Interest Income Before Provision
for Loan Losses
Interest income
Interest expense
december 31
december 31
2012
2011
$
158.1
184.1
26.0
$
151.1
181.2
30.1
increase / (decrease)
$
$
%
7.0
2.9
(4.1)
4.6
1.6
(13.6)
24.1
49.8
(25.7)
(51.6)
134.0
101.3
32.7
32.3
59.0
66.0
(7.0)
(10.6)
Non-Interest Expense
Salaries and employee benefits
Other operating
142.6
80.5
62.1
141.8
78.4
63.4
0.8
2.1
(1.3)
0.6
2.7
(2.1)
Net Income before Income Tax
Income tax
50.4
18.6
25.5
9.3
24.9
9.3
97.6
100.0
Net Income
31.8
16.2
15.6
96.3
Provision for Loan Losses
Net interest income after provision
for loan losses
Non-Interest Income
17
Mercantil
Net Income
Net income of $31.8 million in 2012 represents a significant improvement from the net income
of $16.2 million in 2011. The main driver contributing to this result was a significant decrease
in the provision for loan losses, which improved from $49.8 million in 2011 to $24.1 million in
2012, a decrease of $25.7 million or 51.6 percent. There was also an improvement in the Bank’s
net interest income before provisions for loan losses, which increased by $7 million in 2012 or
4.6 percent over 2011, as well as a decrease of $4.1 million or 13.6 percent in interest expense.
These positive results were offset by a $7 million decrease in non-interest income and a
$9.3 increase in income tax expense.
Net Interest Income
Net interest income before provision for loan losses increased $7 million, or 4.6 percent, to
$158.1 million in 2012, from $151.1 million in 2011. The higher net interest income in 2012 was
primarily due to the net effect of an increase in average interest-earning assets of $107 million
which lead to higher interest income during the year, and the continuation of a shift in
customer deposits from more expensive time deposits and repo accounts into demand
deposits, money market and saving accounts. The average interest-bearing time deposits and
repo accounts decreased a total of $180.1 million while average demand deposits, money
market and saving accounts increased a total of $106.2 million in 2012 which contributed to
lower interest expense during the year. These changes resulted in an improvement in the
Bank’s net interest margin which increased to 2.42 percent in 2012 from 2.35 percent in 2011.
These relatively low net interest margin levels reflect the prolonged low-interest rate
environment prevailing in the U.S. since late in 2008.
Provision for Loan Losses
The provision for loan losses totaled $24.1 million in 2012, a decrease of 51.6 percent from
$49.8 million in 2011. In 2012, the Bank charged off a net $24 million primarily associated with
real estate loans, compared to net charge-offs of $41.7 million in 2011. This resulted from
improving credit quality across all the Bank’s loan portfolio segments and accelerated efforts
for the disposition of existing impaired loans.
Improving credit quality across the Bank’s loan portfolios is the result of new loans originated
under strict underwriting guidelines, along with significant disposition of existing impaired
nonaccrual loans through upgrades, note sales, short sales and collateral repossession
activities. These efforts contributed to a significant decrease in loans with potential credit
weaknesses. These results drove the substantial decrease in the reserves needed to cover
losses identified in the loan portfolio as well as continued improvements in the ratio of nonperforming loans to total loans. This ratio was 1.9 percent at the close of 2012, compared to
5.8 percent at the close of 2011.
Non-interest Income
In 2012, total non-interest income decreased by $7 million, or 10.6 percent. The main factor
leading to this result was lower brokerage fees in 2012, which decreased $4.8 million or 28.7
percent, compared to the prior year. Rental and other income from other real estate owned,
deposit fees and service fees, data processing and other non-interest income from related
parties and others decreased by a combined $3.3 million or 9.5 percent compared to 2011.
These decreases were partially offset by a combined increase in securities and derivative
instruments gains and greater fees on loan and trade financing servicing fees of $1.1 million
or 7.5 percent compared to 2011.
18
Annual
12
The decrease in brokerage fees relates to the impact of lower volume of customer investment
transactions in 2012, compared to prior year levels. Rental and other income from other real
estate owned decreased as a result of the Bank’s disposition activities which continued during
the year. These activities resulted a reduction of 19.9 percent in the other real estate owned
portfolio compared to the prior year.
Non-interest Expense
Total non-interest expense increased slightly by $0.8 million, or 0.6 percent, during the year.
Higher salaries and employee benefits contributed $2.1 million to the increase, and other
operating expenses include $3.4 million related to the early extinguishment of Federal Home
Loan Bank (FHLB) advances during the year. These increases were offset primarily by these
factors:
− Net loss from valuations write-downs, net of gains on sale, and operating expenses
associated with the Bank’s other real estate owned, decreased a total of $5.1 million,
or 17.4 percent, as result of significant disposition activities that continued during
the year and relatively stable property valuations.
− Occupancy and equipment decreased by $1.8 million, or 11 percent.
Income Taxes
In 2012, the Bank recorded an income tax expense of $18.6 million, compared to $9.3 million
the prior year. This change is mainly associated with higher taxable income during 2012
compared to the prior year.
Consolidated Financial Condition Review
The following table is a condensed version of the Bank’s Consolidated Balance Sheets at the
close of the years 2012 and 2011.
Summary of
Consolidated Balance Sheets
(in millions except percentages)
december 31
december 31
2012
2011
Total Assets
Cash and cash equivalents
Securities
Loans, net
Other assets
$ 6,819.7
147.2
2,118.7
4,371.4
182.4
$ 6,635.7
186.3
2,142.2
4,104.8
202.4
Total Liabilities
Total deposits
Securities sold under agreements to repurchase
Other liabilities
$ 6,100.9
5,365.5
180.4
457.3
97.7
$ 5,953.6
4,938.1
491.8
487.3
36.4
Total Stockholder’s Equity
$
$
718.8
682.1
increase / (decrease)
$
$
$
$
%
184.0
(39.1)
(23.5)
266.6
(20.0)
2.8
(21.0)
(1.1)
6.5
(9.9)
147.3
427.4
(311.4)
(30.0)
61.3
2.5
8.7
(63.3)
(6.2)
168.4
36.7
5.4
19
Mercantil
Total Assets
Total assets closed the year 2012 at $6.8 billion, an increase of $184 million, or 2.8 percent,
compared to the prior year. The net loan portfolio, which closed the year at $4.4 billion, or
64.1 percent of total assets, grew by 6.5 percent over the prior year. The investment securities
portfolio of $2.1 billion at the end of 2012, or 31.1 percent of total assets, decreased by 1.1
percent compared to the prior year. Cash and cash equivalents decreased by $39.1 million, or
21 percent, compared to 2011.
Cash and Cash Equivalents
The Bank maintains high liquidity levels as part of its asset-liability management strategies.
A significant element of those strategies includes holding liquid assets in the form of cash
and cash equivalents, primarily interest-earning deposits with the Federal Reserve Bank. At
the close of 2012, cash and cash equivalents were $147.2 million, 2.2 percent of total assets, a
decrease of 21 percent compared to the close of 2011.
Investment Securities
The investment portfolio, which represents approximately 31.1 percent of total assets and
Investment Securities Portfolio
includes securities owned at fair value, available for sale securities and stock held of the
December 31, 2012
Federal Reserve Bank and the Federal Home Loan Bank, is composed of high-quality debt
instruments issued by U.S. Government Agencies and the U.S. Treasury (50.4 percent), U.S.
Government Sponsored Enterprises (40.3 percent), Corporate Securities and Foreign
Sovereign Debt (7.2 percent) and other instruments (2.1 percent). The composition of the
investment securities portfolio at December 31, 2012 is illustrated in the chart on the left.
The Bank manages its investment portfolio with strategies designed to provide an optimum
combination of profitability, liquidity, and credit and market risks. The investment portfolio’s
liquidity, market and credit risks are managed on a continuous basis by the Bank’s Treasury
Unit under the supervision of Risk Management.
U.S. Government Agencies
and U.S. Treasuries
50.4%
Loans, net
U.S. Government Sponsored
Enterprise Debt Securities 40.3%
The net loan portfolio reached $4.4 billion at the close of 2012, growing $266.6 million, or 6.5
Corporate Securities
and Foreign Sovereign Debt
7.2%
percent, compared to the prior year. This growth was driven by net increases in the loan
Other Instruments
2.1%
portfolios handled by the Bank’s Personal and Commercial and International Corporate
Banking business units. Despite the growth in the loan portfolio, the allowance for loan losses
experienced a slight decrease of $0.2 million, or 0.2 percent with respect to 2011 principally
due to the significant improvement in loan quality.
The Bank focused on finding an adequate mix of credit exposures, on stabilizing and further
diversifying its concentration to the real estate sector, and on disposing of loans that
deteriorated during the last recession. This strategy has resulted in a larger commercial loan
20
Annual
12
portfolio, which represented 45 percent of total loans at the close of 2012, compared to 41
percent in 2011, a smaller portfolio of loans to financial institutions, and a decrease of the
concentration of loans in the Real Estate sector which represented 34 percent of gross loans
in 2012, compared to 35 percent in 2011. The Real Estate loan portfolio represented 22 percent
of total assets at the close of 2012, unchanged from the prior year.
An important strategy to mitigate credit risk in the Bank’s loans portfolio is diversification.
Diversification is managed through policies that limit exposure to individual or related
debtors, collateral and economic activity of the debtors. The Bank’s loans portfolio, and one
of its most important sectors, Real Estate, at December 31, 2012 was well diversified in terms
of economic activity and collateral as demonstrated in the following chart:
Loan Portfolio
December 31, 2012
Real Estate
34%
Financial Institutions
20%
Non-Owner Occupied
13%
Owner Occupied
9%
Multi-Family Residential
Land Development and
Construction Loans
Single-Family Residential
6%
Commercial and Industrial 45%
Consumer and Other Loans 1%
2%
4%
Other Assets
Other assets decreased by $20 million, or 9.9 percent. This decrease is primarily the result of:
− $10.3 million decrease in deferred tax assets, net, mainly the effect of lower
temporary differences associated with dividend income and interest income
on nonaccrual loans, combined with higher temporary differences associated
with net unrealized gains on securities available for sale.
− $4.1 million net reduction in other assets, resulting principally from the amortization
of FDIC assessments prepaid in prior years.
− $2.9 million decrease in Bank premises and equipment, driven by depreciation
expense of $6.8 million, offset by net purchases during the year.
− $2.7 million net decrease in other real estate owned, which included $36.6 million
in new repossessions, sales of $37.4 million and a net loss of $2 million from
valuation adjustments and sales.
21
Mercantil
Liabilities
Deposits and Securities Sold under Agreements to Repurchase
Deposits and securities sold under agreements to repurchase (repo accounts, including
customers’ overnight sweep repo accounts) reached an all-time high of $5.5 billion at the close
of 2012, representing an increase of $116 million from 2011. This positive change was primarily
driven by the growth achieved in core deposits during 2012, offset by a decline in non-core
deposit balances and repo accounts.
Core deposits, comprised of non-interest and interest bearing demand deposits, money
market, savings and time deposit accounts with balances at or below FDIC insurance limits,
grew $495.9 million, or 10.8 percent in 2012. Non-core deposits, essentially time deposits
with balances above FDIC insurance limits, decreased $67.7 million, or 18.9 percent during the
year. Repo accounts decreased $311.4 million, a 63.3 percent decrease compared to the prior
year.
The increase in core deposits is the result of enhanced collaboration between business units
to enrich existing relationships, and leveraging those relationships to building new ones. Noninterest bearing demand deposit accounts represented 17.4 percent of total deposits at the
close of 2012, a slight reduction compared to 19 percent in 2011. At the same time, total time
deposits decreased to 11.8 percent of total deposits in 2012, compared to 16 percent in 2011.
This trend, along with the impact of the protracted low interest rate environment, contributed
to a decline in interest expense during the year.
The following charts depict the composition of the Bank’s deposits at December 31, 2012
and 2011:
2012 Deposits
22
2011 Deposits
Savings & Money Market 33%
Savings & Money Market 33%
NOW
38%
NOW
32%
DDA
17%
DDA
19%
Time
12%
Time
16%
Annual
12
The Federal Home Loan Bank (FHLB) offers its member institutions fixed or variable rate
secured lines of credit based on the institution’s condition and creditworthiness. The Bank,
as a member of the FHLB, utilizes short- to long-term fixed and variable-rate advances as one
of its tools to manage balance sheet interest rate sensitivity risk. Advances from the FHLB
closed the year at $457.3 million, a decrease of $30 million, or 6.2 percent compared to 2011.
57 percent of the total advances at the close of 2012 mature in 2013.
At December 31, 2012 the Bank had a credit line of approximately $1.4 billion, with an unused
borrowing capacity of approximately $907 million.
Stockholder’s Equity
Stockholder’s equity grew by $36.7 million or 5.4 percent during the year. Net income of $31.8
million and other comprehensive income of $4.9 million, primarily the after-tax net unrealized
fair value gains in the available for sale investment portfolio, were the contributing factors for
this increase in shareholder’s equity.
Tier One Risk-Based Capital as a percentage of Risk-Weighted Assets increased to 16.04
percent in 2012 from 15.93 percent the prior year. Total Risk-Based Capital to Risk-Weighted
Assets increased to 17.3 percent in 2012 from 17.2 percent in 2011. The increase in these ratios
occurred due to an increase in eligible capital driven mainly by net income during the year,
offset by growth in Total Risk-Weighted Assets of approximately $327.4 million, or 8.5 percent,
mainly as a result of growth in the loan portfolio.
23
Mercantil
Adrián Pujol
Acrylic on canvas
89 x 429.5 cm
Calabozo desde las lomitas, 1996
Business Segments Review
Personal and Commercial Banking
Personal and Commercial Banking (PAC) delivers the Bank’s core services and products offerings. Targeting the needs of individuals and businesses, these services include checking
and savings accounts, residential and commercial mortgages, secured and unsecured loans
and lines of credit, and credit cards. Treasury management services complement the mix of
products delivered through PAC and help businesses monitor banking transactions and
manage their cash flow. Through PAC, customers are also introduced to delivery channels
that make banking more convenient, including online banking, telephone banking and an
ATM network. The Personal and Commercial Banking function is segmented into two divisions. Domestic Personal and Commercial Banking (DPAC) serves U.S. domestic customers.
International Personal and Commercial Banking (IPAC) serves international customers with
U.S. banking needs.
Domestic Personal and Commercial Banking
Mercantil Commercebank’s position as one of the largest Florida-based banks in South
Florida is complemented by a solid market presence in Houston and New York City. In the
market service areas of the Bank’s 18 branch locations, Mercantil Commercebank is ranked
among the Top 5 Florida-based banks as measured by FDIC deposits. As reported by the
FDIC, Mercantil Commercebank was ranked number one in five South Florida markets at
June 30, 2012. This includes the market leadership position in Coral Gables, which is home
to the corporate headquarters of many multinational businesses.
25
Mercantil
Domestic Retail Banking
Domestic Retail Banking optimizes revenue opportunities generated through the Bank’s
branch distribution channel. The traffic patterns, population trends and business environment are continually analyzed to optimize returns. The recent opening of the Bank’s second
location in Houston leverages Mercantil Commercebank’s global banking expertise in a
market that is dense with businesses that are within the segments serviced by Retail Banking.
This location is positioned in a commercial district that is also within close proximity to
residential neighborhoods. The mix of commercial and personal business is expected to
contribute to the growth of the new banking center. In Florida, the banking center in the
Village of Pinecrest in South Florida was relocated to a nearby location with upgraded
facilities and increased visibility.
Rooted in traditional bank safety and soundness principles, the branch business model is
focused around disciplines that make the identification of customer needs and the service
experience that results from practices, processes and decisions. Frequent surveys are used
to measure customer satisfaction. In 2012, 95 percent of customers surveyed highly rated
their overall satisfaction with the service they received from branch staff.
During the year, strategies were put in place to increase new business originations in consumer and business lending activities. These strategies resulted in continued overall growth
in the Domestic Retail Banking loan portfolio by 9 percent to reach $241 million. Deposits
for the unit also showed significant growth, increasing by 23 percent to $811 million.
Domestic Retail Banking will continue to rely on standardized sales disciplines to drive
growth. These practices include goal setting, call planning and the daily monitoring of
progress. Involvement in local communities and business associations will increase Mercantil
Commercebank brand recognition and support the development of leads, as well as referral
sources. The ongoing evolution of the service experience remains a key priority for 2013 to
retain customers, expand business with existing customers and create an unprecedented
brand reputation to attract new customers.
Domestic Commercial Banking
Mercantil Commercebank’s global reach combined with our bankers’ knowledge and the
delivery of an exceptional service experience creates a significant point of differentiation
in the commercial banking environments and international business centers the Bank
serves. Emerging from a year of economic challenges and soft demand for commercial loans
from large businesses, strategic focus was placed on monitoring the portfolio for quality,
allocating resources and improving infrastructure to prepare for the anticipated increase in
loan demand and future portfolio growth during 2012.
26
Annual
12
Several significant operational improvements were implemented in 2012. Staff was aligned
to create commercial relationship teams poised to anticipate the needs of clients. As a result,
the Bank experienced a high level of customer retention despite increased competition
from other financial institutions seeking to trigger refinancing transactions. Additionally,
foundations were strengthened to build greater synergies between Domestic Retail Banking and Domestic Commercial Banking, aimed at increasing opportunities and exceeding
customer service expectations.
Middle Market Banking is a key growth area within the Domestic Commercial Banking unit.
Targeting companies with annual revenues in excess of $30 million, Middle Market Banking
had a very active year with continued portfolio growth.
The loan approval process was also streamlined to be more competitive while complying
with credit policies revamped during the prior year. During 2012, Domestic Commercial
Banking grew its loan portfolio by 16 percent to $1,327 million. The diversity of loan products,
including specialized expertise in supply chain financing, export/import financing and
asset-based lending, is expected to fuel this momentum as the unit targets new customers.
In 2013, we will continue to focus on commercial banking partnerships with the retail banking centers, including more joint calling efforts and a referral campaign to identify and establish new relationships. Working capital financing, owner-occupied real estate loans and
loans to small businesses, offered through U.S. Small Business Administration (SBA) programs, are expected to drive new business. Given the Mercantil Commercebank footprint
in South Florida, Houston and New York City, trade finance will also remain a strategically
important business expertise.
Commercial Real Estate
Mercantil Commercebank has a specialized team of bankers dedicated to serving the commercial real estate borrowing needs of customers, including developers and investors. During
2012, the unit was expanded with seasoned bankers who have in recent years gained valuable experience in the Bank’s Special Assets Department managing workouts for problem
loans backed by commercial property.
The Commercial Real Estate markets within the Mercantil Commercebank footprint improved
throughout 2012. The rebound was evident by the sight of more construction cranes and
the deployment of capital by some of the largest institutional and private funds, both
domestic and international. As overall economic conditions improved and the interest rate
27
Mercantil
environment remained low, the demand for commercial real estate financing steadily
increased throughout the year. This rebound significantly manifested itself in the Bank’s
markets of New York City, Houston and Miami. A stronger market environment combined
with the expertise of our group of seasoned bankers contributed to growth in the portfolio
of commercial mortgage loans from $222 million at year-end 2011 to $448 million at the
close of 2012. This achievement was complemented by improved portfolio quality as measured by a significant reduction in loans being migrated to the Special Assets Unit.
In the year ahead, New York and Houston are expected to be active and desirable commercial
real estate markets due to the forecasted sustainability of their economies and anticipated
increase in loan demand. Southeast Florida is also expected to continue its upward
momentum. Strategies to maximize opportunities across the footprint include a focus on
developing new business, closely monitoring market conditions to remain in a competitive
position and strictly adhering to credit policy guidelines while pursuing projected growth.
International Personal and Commercial Banking
International Personal and Commercial Banking (IPAC) serves the U.S. banking needs of
personal and commercial customers domiciled abroad, primarily offering deposit products
and secured loans. The seamless delivery of global banking solutions continues to be an
important point of differentiation for Mercantil Commercebank. This competitive advantage is derived from deep insight into the cultural and socio-economic factors affecting foreign-based customers. The IPAC relationship banking model provides this market segment
in the Mercantil Commercebank footprint with access to a full range of products and services
delivered by specialized international banking professionals.
During 2012, IPAC’s total deposits increased 2 percent compared to the previous year. Total
loans increased 36.4 percent in that same period.
Personal Banking International
Personal Banking International (PBI) uses a segmentation model based on account balances,
transaction profiles and customers’ long-term financial goals to assign the best-suited
primary banker to serve the needs of the customer. This banker becomes the single point
of contact for access to all of the Bank’s business units and full array of product offerings.
To ensure high levels of service and a satisfying banking experience, the primary banker is
supported by professionals who help manage the relationship and handle many of the
customer’s day-to-day transactional needs.
In 2012, PBI continued to partner with other business units, including the investment
and trust subsidiaries to increase cross-sell activity and service a larger portion of each
customer’s financial portfolio.
28
Annual
12
For 2013, PBI will remain focused on needs-based selling and better service experience to
support increasing customer satisfaction, convenience, retention, and expansion goals.
Commercial Banking International
In 2012, the strategic priority for Commercial Banking International (CBI) was to build the
customer base and deposit portfolio by providing superior service and products, as well as
efficient online tools customers need to compete in a changing global economic environment. This goal was accomplished through a focused effort to train personnel to increase
their product knowledge and heighten their service delivery to retain existing customers.
New business was originated through referrals from within the Bank and a strong network
of trade associations.
For 2013, CBI will continue to build its loan and deposit customer base by providing superior services and products, leveraging on existing relationships and maximizing efficient
delivery channels including optimizing customers’ utilization of our online tools.
International Corporate Banking
The International Corporate Banking (ICB) division serves financial institutions and corporations in the U.S. and Latin America with over $250 million in annual sales, which most
notably includes oil and gas industry firms.
During 2012, ICB maintained its focus on growing and strengthening the stability of its loan
portfolio by diversifying its exposure in Latin America. At year-end, loans grew by 4.4 percent,
or $89 million, to $2.1 billion compared to $2 billion at the close of 2011.
Within the improving Latin American markets, ICB implemented strategies to increase lending,
utilizing various loan programs to maximize cross-border and diversification opportunities.
In the U.S., the unit focused on increasing business in Houston, which continues to outperform other regions in the country. An expanded Corporate Lending team, in partnership
with a strong Retail Banking group, is in place to attract and serve the complete financial
needs of larger corporate clients in the market, primarily in the mining, manufacturing,
wholesale trade and real estate sectors.
29
Mercantil
In 2013, ICB expects to continue building stronger relationships in all geographic areas
served, to enhance client profitability and to diversify risk in responsible alignment with
credit risk policies.
Private Banking
Working in synergy with the Bank’s investment advisory and trust subsidiaries, as well as
with the Bank’s other business units, Private Banking serves the needs of high-net worth
customers. The division integrates banking, asset management, asset protection, and estate
planning services into one combined product offering which is delivered by highly qualified
and responsive professionals.
In 2012, worldwide growth was slack, and the low interest rate environment in the United
States impacted Private Banking in two key ways. First, deposits decreased 13 percent to
$376 million as customers sought other higher-earning assets such as those offered in partnership with Mercantil Commercebank Investment Services and Mercantil Commercebank
Trust Company. Second, short-term and residential loans remained the unit’s preferred
products as rates remained historically low. Nevertheless, loans grew modestly by 2 percent
to $57 million.
During the year, Private Banking completed the implementation of its new service model,
in order to support growth in loans and deposits in 2013. The new model will serve to create
stronger customer relationships, capture incremental business and attract new customers
through existing customer referrals and brand recognition.
Subsidiary Activities
The Bank teams with its two main operating subsidiaries, Mercantil Commercebank Investment Services, Inc. (MCIS), and Mercantil Commercebank Trust Company, N.A. (MCTC) to
provide a broad spectrum of financial products and services to its customers. With a team
of highly qualified professionals, the subsidiaries provide brokerage, investment advisory
and trust and estate planning services tailored to meet the individual needs of each
investor.
30
Annual
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Mercantil Commercebank Investment Services, Inc.
2012 marked the 10th anniversary for Mercantil Commercebank Investment Services, Inc.
(MCIS), the Bank’s subsidiary broker-dealer and investment advisor that provides a wide
range of investment solutions and expert investment advice. MCIS is registered with the
Securities and Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority (FINRA). Customer assets are protected through the Securities Investor
Protection Corporation (SIPC) and remain in custody with Pershing, LLC, a subsidiary of The
Bank of New York Mellon.
Economic growth in the U.S., albeit below-potential, due in part to the highly volatile conditions in international markets, translated into strong rallies in capital markets for bonds
and stocks. This growth, along with a slower than expected increase in new customers’
investable capital, impacted the size of MCIS’ assets under management at the close of the
year. These assets grew to $1.5 billion at year end, a 20 percent increase over the prior year.
In addition to expanding MCIS’ team of investment consultants via internal reallocations,
technology and process improvements were implemented to enhance efficiencies. These
improvements are expected to maximize the investment functions, by improving consultant
productivity, and managing relationships more efficiently according to their profitability.
MCIS posted $12.4 million, or 6 percent higher revenues than in 2011 mainly on advisory
and management fees and brokerage commissions, which were fully offset by related
increases in operating expenses as net income remained unchanged at $3.5 million.
Heading into 2013, a key objective will be to enhance the productivity of our expanded team.
As relationships mature, some client needs can become more or less complex. MCIS collaborates with other business lines to transition those relationships to the segments best suited
to serving the client’s needs.
A significant area for growth centers on increasing awareness of investment services among
Mercantil Commercebank’s team of bankers so that they are able to recognize and refer
opportunities. In addition, MCIS continued investing in the development of new valueadded investment products expected to enhance revenue-generating opportunities and
strengthen customer relationships.
31
Mercantil
Mercantil Commercebank Trust Company, N.A.
Mercantil Commercebank Trust Company, N.A. (MCTC), a national trust bank with fiduciary
powers, is regulated and supervised by the U.S. Office of the Comptroller of the Currency
and offers fiduciary and financial management services to high net worth individuals
throughout the United States, Latin America, the Caribbean and Europe. MCTC specializes
in providing a wide array of trust and estate planning products and services to help clients
and their families build and preserve their assets and achieve wealth management objectives.
In 2012, the slight economic growth in the United States coupled with new client acquisition
helped to grow assets under management by 19 percent to $381 million and generated $2.3
million in revenues. This upward trend is expected to continue throughout 2013 as global
economies improve and internal restructuring heightens the focus on bringing in new
clients and expanding existing relationships.
MCTC reinforces its multi-disciplinary approach of collaborating with the Bank’s other business
lines to strategically identify customer relationships that would benefit from trust offerings.
Recent changes in the Private Banking relationship management model are expected to
positively impact the inflow of referrals to MCTC while deepening customer relationships
within the organization. While initiatives are in place to increase the client base and expand
assets, controllable cost containment will remain a priority as MCTC plans for investments
in enhanced core systems and other capabilities.
Treasury
Asset and Liability Management
Mercantil Commercebank’s Treasury unit is responsible for managing interest rate and
liquidity risk for the Bank’s balance sheet. Additionally, Treasury manages credit risk in the
Bank’s investment portfolio and supports Bank-wide initiatives for increasing non-investment portfolio profitability. Treasury follows the composition of the balance sheet and, in
partnership with the Finance Committee, tracks all financial transactions executed by the
Bank and reports their effect on the financial margin. This process has the goal of enhancing
overall returns for the Bank while keeping the management of liquidity and interest rate
costs within approved limits.
32
Annual
12
During 2012, many of the government refinancing assistance programs, such as the Home
Affordable Refinance Program (HARP), in conjunction with historically low market rates resulting from the FRB’s low interest rate policy, placed downward pressure on the yield of the
investment portfolio due to increased refinancing activity and reinvestment of principal at
low market rates.
To neutralize increased prepayment risk, Treasury continued its diversification strategy to
reduce the investment portfolio’s exposure to changes in interest rates and to decrease
principal prepayment risk in the investment securities portfolio that is backed by underlying mortgages. Two types of investments were added to the portfolio to mitigate this: reverse mortgage-backed securities and agency commercial mortgage-backed securities. Both
offer principal prepayment protection features. Treasury added these positions following approved investment programs outlining specific limits on exposures considering their risks.
As of December 31, 2012 the yield on the portfolio was 2.37 percent and the effective duration was 2.23.
Treasury managed the investment securities portfolio to achieve limited credit risk. Secu-
The Bank’s Investment Portfolio
December 31, 2012
Dollars in Millions
$1,200
Dec-11
$1,050
Dec-12
$900
Average for 2012
$750
$600
$450
$300
$150
Other Investments
Short–Term
Investments
Government
Sponsored
Enterprises
U.S. Agencies
Guaranteed
0
rities issued or guaranteed by the U.S. government comprised the majority of the portfolio.
Throughout 2012, Treasury worked proactively to optimize cash positions to enhance profitability while complying with ALCO limits. At the end of 2012, the cash position at the FRB
was $125 million. Active risk management of the investment portfolio, combined with
predominantly lower interest rates, resulted in $11 million in realized gains on sales.
33
Mercantil
Overall, the Bank ended the year with a strong liquidity position. In addition, the balance
sheet ended the year with an asset sensitive position, with a total asset duration of 1.21 and
a total liability duration of .88.
Treasury supported the growth of the loan portfolio through the execution of the Syndicated Loan Program. The total portfolio actively managed by Treasury under this program
ended 2012 at approximately $318 million, providing an average yield of three months Libor
plus 200 bps. Treasury was also active in managing wholesale funding throughout the year,
ending 2012 at $642 million with an average cost of 1.83 percent.
Business-Support Segments Review
Operations and Technology
Continuous process improvements, technological upgrades and streamlined workflows are
delivering enhanced convenience and service to our customers. These activities, which are
expected to continue contributing to lowered operating costs and improved efficiencies,
included new loan underwriting and operations processes implemented in 2012. These new
processes increased accuracy and decreased re-work in these areas, on average, by half. In
addition to lowering operating costs, the new processes also provide customers with more
expedited loan decisions and funding.
Residential mortgage customers now receive enhanced monthly statements including pertinent information to help them manage their mortgage, including year-to-date interest and
taxes paid, as well as escrow balance and other relevant mortgage data.
A new Business Online Banking enrollment process has been simplified while retaining the
integrity of security controls. Similarly, the Personal Online Banking service now provides
customers with added control, security and access to account information, transaction history,
status of pending transactions, account activity downloads, and the ability to set up one-time
and recurring domestic and international wire transfers, among other conveniences.
34
Annual
12
Our telecommunications team upgraded all branch communication systems with increased
functionalities to better serve customers and new capabilities to ensure the reliability of
telecommunications in the event of disasters.
During the year, Visa® Zero Liability was introduced to give customers added confidence
when using their debit cards. The feature removes customer liability for fraudulent transactions for all consumer and business debit card POS transactions, including PIN POS
transactions using non-Visa® networks. Provisional credit is processed quickly, significantly
benefitting business debit cardholders who previously received credit only if money from a
fraudulent charge was recovered through chargeback rights.
The Bank continued investing significant resources in bringing its customer service platforms
in line with technological trends intended to enhance the experience of banking with Mercantil
Commercebank and remain competitive in the marketplace. These investments are expected
to result in new tools and resources that leverage on existing technologies to bring customers
closer to their account information and open new and efficient transaction channels.
Human Resources
At the close of 2012, the Bank relied on 785 professionals to serve our internal and external
customers amid the rapidly changing and evolving global financial industry. Resources were
again allocated to strengthen the staff’s role in carrying out the Bank’s integrated business
model and its strategic vision, to provide career development opportunities, to attract and
retain talent, to fairly compensate employees and to build an even more positive working
environment.
Learning and Development
Learning and Development continued to focus on guiding and developing employees’ capabilities to achieve the Bank's business objectives, while helping individuals pursue their career
aspirations. Initiatives were directed in three main areas: Leadership Development, Relationship
Development, and Customer Service.
35
Mercantil
The team worked closely with leaders across all business units to strengthen the Bank’s Trust
Index as reported by the Great Place to Work® Institute in the prior year's organizational
climate survey. According to 85 percent of employees who responded in 2012, the Bank
achieved significant improvement in the dimensions of Vision and overall satisfaction
(Gestalt.) Other variables significantly improving included Collaboration, Work Environment
and Work-Life Balance. To support this positive trend, we renewed our commitment to Leadership Development by implementing a process-oriented leadership approach. Leadership:
Great Leaders, Great Teams, Great Results™ provided our management team with new tools
to inspire trust, define clear and compelling purposes, align systems of success and release
the talents and energy of a winning team to help our organization achieve its most critical
priorities. The program begins with an assessment of the leader’s current capabilities against
the four imperatives of Great Leaders, taking into account their own evaluation and feedback
collected from their immediate supervisor, peers and subordinates. Participants received
electronic tools, videos, expert interviews, and other resources to support them on the job.
A collaborative effort between Domestic Retail Banking, Commercial Lending and Credit
enhanced the Bank’s Relationship Development Process to further cultivate long-term relationships with business owners. Branch Sales and Service Managers and Commercial Lending
Officers learned new tools to facilitate the acquisition and expansion of customer relationships
focusing on the business owner’s business strategy, plan, objectives and operations.
A Customer Service Orientation Competency initiative was launched. It consists of six levels,
each one detailing specific behaviors employees must exhibit in customer interactions with
the goal of optimizing the customer experience. Following an initial assessment, each
employee was assigned a development plan comprised of formal and informal learning and
on-the-job activities to help them master each competency level and progress to the next
level, climbing toward their highest customer service potential.
Compensation and Administration
The Compensation Department continuously reviews and evolves the Bank’s compensation
philosophy by identifying corporate goals and objectives and considering our competitiveness
in attracting and retaining employees. In 2012, the Compensation Department continued the
CompTalk initiative as a strategy to increase communication via departmental presentations,
corporate communications and one-on-one management sessions, and share information
with our employees about a variety of topics related to our philosophy and their individual
compensation. An in-depth, organization-wide analysis was performed to assure competitive
positioning with the external market, targeting compensation for key positions to be between
the 50th and 75th percentile. New compensation structures were developed and implemented for
specific business units within Mercantil Commercebank and MCIS, creating a dynamic blend
of fixed pay and variable compensation programs.
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In line with the HR strategy of attracting, engaging and retaining top talent, in 2012 the team
implemented a distinguished merit increase payout, rewarding top-performing employees
with above-average raises. The Compensation Department also initiated the first phase of
design of a Long-Term Incentive Program by identifying industry-specific best practices and
trends. This project will continue throughout 2013 to encourage and reward superior longterm performance.
Benefits
Benefits continued to operate the Healthy New Beginnings Program that was introduced in
2008 to promote healthy living and educate employees on ways to improve their health and
wellness, and the health and overall wellness of their family members. A monthly communication was created to share important information on a variety of health topics such as diabetes, smoking cessation, breast cancer and more, with the goal of helping employees help
themselves and in turn, help the Bank keep future health-related expenses low and employee
productivity high. Employees also received Benefits communications regarding medical plan
products that provide employees with health-related services at reduced prices.
The Bank’s attractive retirement benefits remain unchanged, at a time when other businesses
of all sizes and across industries have reduced retirement-related benefits to lower expenses
and improve the bottom line.
Employee Relations and Staffing
Talent acquisition continues to be a Bank-wide strategic priority. The Employee Relations and
Staffing team implemented a defined employment process that began in 2011, to highlight all
activities associated with hiring well-qualified talent, from the time the need is determined
to the time the employee joins the organization. This process includes identifying defined
core competencies, internal evaluation assessment tools and an effective interviewing and selection closed-loop feedback system between the hiring manager and the interviewing team.
The streamlined, automated hiring process has continued to produce positive results in terms
of human capital investment, as well as cost efficiencies.
In 2012, the Bank added 18 new professionals to support success in its business development
and relationship retention efforts, to support the opening of the new banking center in Houston,
Texas and to handle the workload associated with heightened financial industry reporting
requirements.
37
Mercantil
Adrián Pujol
Acrylic on linen
65 x 155 cm
Crepúsculo en la bahía de Pampatar, 1989
Enterprise Risk Management
Enterprise Risk Management (ERM) at Mercantil Commercebank is a company-wide process
that embraces the core principles of the Basel Accord and Institute of International Finance
(IIF) Best Practices Principles to assess, manage and mitigate risks, and seize opportunities
that will support the achievement of the Bank’s vision, goals and objectives. The ERM
program’s mission is to maximize shareholder value through a state-of-the-art risk
management process that monitors compliance with Risk Appetite parameters; strengthens
the business decision making process; enhances the risk-adjusted return on capital; and
provides a foundation for the Bank’s capital allocation process. ERM employs a framework of
qualitative and quantitative risk management processes involving collaborative working
relationships with the business units to identify, measure, control, and monitor risks.
ERM is executed through four departments: Credit Risk Management, Loan Review, Market
Risk Management and Operational Risk Management. These departments report to the Chief
Risk Officer of the Bank, the Global Risk Manager of Mercantil Servicios Financieros and the
Board Risk Committee.
During 2012, the Risk structure was strengthened and the ERM framework was revamped to
consolidate all risk aspects of the organization into an aggregate risk profile.
Credit Risk Management
Credit risk is the risk of loss arising from obligor or counterparty default. Through lending and
investment transactions, the Bank is exposed to credit risk, which is measured, managed, and
mitigated through a credit risk management process at both the individual transaction and
portfolio level. The role of Credit Risk Management (CRM) is to supervise all of these control
functions, guide the overall credit exposure within the parameters approved by the Board of
Directors, and optimize the risk-adjusted return to the Bank.
During 2012, CRM implemented enhancements to the methodology for calculating the Bank’s
Allowance for Loan Losses (ALL). These enhancements included revisions to the definition of
loan default and improvements to the framework used for the determination of qualitative
adjustments. Management believes that these enhancements provide a more robust and
consistent process for the determination of the ALL.
Loan Review methodologies were revised to improve the process of early identification of
potential asset quality deterioration. The changes included updates to asset quality ratios,
benchmarks and credit administration factors.
Finally, efforts continue to refine the management of concentration risk through the
elaboration of limits addressing collateral concentration and industry exposures.
39
Mercantil
Credit Risk Exposure
At the end of December 2012, credit risk exposure continued to reflect a balanced
composition, with 45 percent of the total exposure in the commercial sector, 34 percent in the
real estate sector, and 20 percent in the loans to depository institutions. The real estate sector
is comprised mostly of exposures to domestic borrowers and diversified by product type. The
commercial and bank sectors are well diversified geographically among the U.S., Brazil, Chile,
Mexico, Peru, Venezuela, and other countries. The country exposure to Venezuelan debtors
includes approximately $69 million in mortgages on properties situated in the U.S.
Credit Risk Exposure
December 2012
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
Peru
Consumer loans
and overdrafts
Loans to
depository institutions
and acceptances
Commercial Loans
USA
Real Estate Loans
0%
Brazil
Chile
Mexico
Venezuela
Other Countries
Non-Accrual Loans
as Percentage of Total Loan Portfolio
Asset Quality Highlights
The quality of the loan portfolio improved in 2012 as a direct consequence of an aggressive
strategy to reduce problem loans and grow the loan portfolio in key markets and products.
Non-accruing loans as a percentage of total loans decreased from 5.8 percent in December
2011 to 1.9 percent in December 2012. As a percentage of total assets, non-performing assets,
which also includes repossessed properties, decreased from 3.8 percent at the close of 2011
to 1.4 percent at the end of 2012.
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
2011
2012
Throughout 2012, the Bank performed comprehensive credit assessments of the loan portfolio
to ascertain accuracy of risk ratings. These reviews led to, among other actions, the risk rating
downgrades and upgrades of credits, revaluations of collateral, charge-offs of amounts
deemed uncollectible, and further additions to the ALL. As a result of these efforts,
management considers that the ALL of $67 million as of December 31, 2012 provides adequate
coverage for the level of risk existing in the loan portfolio.
Non-Performing Assets
as Percentage of Total Assets
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
2011
2012
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Market Risk Management
The Market Risk Management (MRM) unit operates as an independent monitor of Treasury
activities and is responsible for identifying, measuring, monitoring and controlling risks
related to adverse market condition, mainly interest rate and liquidity risks.
Over the past year, MRM continued to focus on strengthening risk analytics and testing
modeling fundamentals, including enhanced reports for Asset/Liability Management in order
to control risk more effectively and contribute to MRM’s comprehensive assessment
processes.
During 2012, MRM continued with the implementation of a new Asset/Liability Management
system. In 2013, while the new forecasting tool continues to undergo refinement, MRM plans
to begin running the application in parallel with existing models, with full roll-out planned by
the end of the year.
Asset and Liability Management and Interest Rate Risk
MRM closely monitors interest rates and other exposures to the Balance Sheet and provides
to the Asset and Liability Committee (ALCO) a series of reports used to set and achieve
re-pricing gap targets, as well as support strategic decisions pertaining to asset allocation,
funding sources, product pricing, and investment options. Reports and controls were devised
to measure the impact from changes in credit spreads, interest rate volatility, and other risks.
During 2012, Mercantil Commercebank’s Balance Sheet continued to show an asset sensitive
position with more assets than liabilities re-pricing in one year. There was also an average
difference between the effective duration of assets and liabilities of 0.44, lower than the prior
year and a reflection of a balanced match. The main driver for this decline was the lower
duration of the loan portfolio due to a trend towards more floating rate commercial loans.
Increased asset sensitivity is observed in the one year re-pricing gap of 24.5 percent as a
percentage of total assets, compared to the 15 percent experienced a year ago.
Duration & 1 Year Gap Analysis
Effective Duration
- Years
1 year repricing
gap/total assets
30%
2.5
25%
2.0
20%
1.5
15%
1.0
10%
5%
0
0%
Dec 08
Jan 09
Feb 09
Mar 09
Apr 09
May 09
Jun 09
Jul 09
Aug 09
Sep 09
Oct 09
Nov 09
Dec 09
Jan 10
Feb 10
Mar 10
Apr 10
May 10
Jun 10
Jul 10
Aug 10
Sep 10
Oct 10
Nov 10
Dec 10
Jan 11
Feb 11
Mar 11
Apr 11
May 11
Jun 11
Jul 11
Aug 11
Sep 11
Oct 11
Nov 11
Dec 11
Jan 12
Feb 12
Mar 12
Apr 12
May 12
Jun 12
Jul 12
Aug 12
Sep 12
Oct 12
Nov 12
Dec 12
0.5
1 Year Repricing Gap
Effective Duration Assets
Effective Duration Liabilities
41
Mercantil
Liquidity Risk
The Bank’s liquidity position continued to be sound, effectively managed and absent of
significant risk. The unit continued to actively monitor results of liquidity stress tests as part
of the Contingency Funding Plan. Those results indicated an excess liquidity averaging
$660 million during 2012.
Operational Risk Management
Continuing with Management’s commitment to strengthen its control and monitoring
functions, the Bank engaged the services of an independent firm to benchmark the maturity
of the Bank’s Information Security Program against international security standards and
industry best practices. The results of this analysis indicated that the Bank’s Information
Security processes are effective and operate at a level of maturity that is considered strong
within the financial services industry.
Also in 2012, the Bank launched its First Annual Cyber Security Awareness Month Campaign
and continued to strengthen its security and monitoring protocols of its core environment and
new banking channels.
The Bank’s operational risk exposure and losses for 2012, classified by Basel risk categories,
were as follows:
Operational Risk Key Indicators
2012 Exposure by Risk Categories and Frequency
Number
of Events
Exposure
1,200
1,000
$20,000
800
$15,000
600
$10,000
400
$5,000
200
$0
Exposure
Events
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Annual
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Internal Fraud
External Fraud
Execution Delivery
& Process Management
Employment Practices
& Workplace Safety
Damage to
Physical Assets
Clients, Products &
Business Practices
0
Business Disruption
& System Failures
Dollars in Thousands
$25,000
Operational Risk
2012 Estimated Losses
External Fraud
Execution Delivery &
Process Management
Internal Fraud
Business Disruption
and System Failures
88.47%
11.38%
0.11%
0.03%
Business Continuity Planning
Mercantil Commercebank is committed to ensuring preparedness for any business continuity
challenge with a robust Business Continuity Program that is agile enough to meet the everchanging demands of the industry while adhering to the industry’s best practices and
complying with the FFIEC Guidelines.
During 2012, Management approved the performance of a full scale Regional Recovery
Strategy Preparedness Test. The objective of this test was to ensure Mercantil Commercebank
can continue to service its customers in the event that a Regional Disaster impacts South
Florida. The test was successful in meeting its objective. Over 100 employees participated in
the test which included the transfer of all critical systems to the back-up location and the setup of Mobile Recovery Units. The Mobile Recovery Units were equipped with the technology
and applications needed by each department to be able to carry out business critical
functions. This is the first time the organization has embarked on a Business Continuity and
Disaster Recovery test of this magnitude and speaks to the Bank's commitment to ensure we
are always ready to serve our customers’ needs.
43
Mercantil
Adrián Pujol
Acrylic on canvas
143 x 535 cm
Caracas desde el Alto Hatillo, 1988
Compliance
The Compliance Department works to mitigate the Bank’s exposure to regulatory sanctions
and fines, consumer litigation, damage to its reputation, and loss of charter by developing
and implementing programs created to comply with federal and state laws and internal
policies and procedures.
The programs created by the Compliance Department protect customers’ interests in various
aspects of a banking relationship, most notably through safeguarding their deposits and
promoting competitive banking services. In addition, the Compliance Department assures
that customers are provided with meaningful disclosure of deposit and credit terms; that
borrowers are aware of costs and commitments in financial contracts; that consumers are
provided with equal treatment and equal access to credit; and that the Bank’s practices
promote financial privacy and prevent abusive practices during credit transactions, debt
collection, and reporting of credit histories.
In 2011, the Consumer Financial Protection Bureau (CFPB) began operations. Created by the
U.S. Congress’ Dodd-Frank Act as part of reform of the U.S. financial system, the CFPB is a
new, independent regulatory authority whose mission is to protect the public by formulating
and revising federal consumer protection laws. The CFPB will promote financial education for
consumers; supervise banks; enforce consumer financial laws; and study information to better
understand consumers, financial service providers and consumer financial markets.
In 2012, the CFPB issued a number of new regulations which reform bank products, practices
and servicing of home mortgage loans. For example, new rules target home mortgages by:
establishing new appraisal requirements to stem abusive and frequent refinancings; requiring
the underwriting of mortgage loans in a manner to assure an applicant has the ability to repay
the loan for the entire mortgage period; prohibiting certain types of fees and penalties and
capping interest rates; and prohibiting risky loan features. New rules also target the servicing
of home loans, including creating new protections for loans that are delinquent or in
foreclosure. Finally, revised disclosure requirements require more information regarding the
fees and terms of a home mortgage loan during the application process to provide an
applicant with more transparency and plain language information.
In addition, new regulations were issued to require the disclosures for remittances, including
wire transfers. Prior to sending a transfer overseas, customers will be provided with
information regarding all fees and taxes to be charged as well as the currency exchange rate.
Such information provides the customer with information to comparison shop for remittance
services as well as information about the total amount of funds the foreign beneficiary will
receive in the foreign currency. In addition, the new regulation provides for consumer
protection rights for remittance transfers so that banks respond to and resolve errors
promptly and in writing.
The Compliance Department continues to take a proactive role in all aspects of the Bank’s
operations to assure that a strong compliance culture is in place to protect the Bank’s
customers, shareholders and employees.
45
Mercantil
Corporate Governance
Stockholders’ Meeting
The Stockholders’ Meeting is the Bank’s highest decision-making body. The Stockholders meet
annually for the election of directors, approval of the audited financial statements, appointment of the Bank’s external auditors, and other business that may properly come before the
meeting. Additional meetings of Stockholders may be called for any purpose, at any time, as
provided by the articles of association and bylaws of the Bank. A majority of votes in accordance with applicable laws, the articles of association, and the bylaws, adopts the decisions
of the meeting of Stockholders.
Board of Directors
Except as expressly limited by law, all corporate powers are exercised by, or under the authority of, the Board of Directors, which is comprised of 11 Directors. It normally meets eight times
per year and may convene special meetings as needed. In addition to oversight of the Bank’s
business affairs, the Board of Directors is responsible for: the approval of the Bank’s strategic objectives and corporate policies; the appointment and removal of members of the Board
committees, other committees, and corporate officers, and the definition of their duties; the
authorization of the amount, frequency, and form of payment of dividends; as well as any
other activities not expressly prohibited by law or reserved by the Stockholders.
Executive Committee
The Bank has an Executive Committee that is comprised of a minimum of three and a maximum of nine members, which must include the Chief Executive Officer, the President, and
the Global Executive Coordination Manager. The Executive Committee meets weekly and special
meetings may be convened as necessary. The Executive Committee is the primary vehicle for
providing strategic guidance for the Bank and building alignment among senior management
around key cross-functional business and operational issues, in line with Board decisions and
recommendations. It supports the Board in the establishment and management of the Bank’s
operational policies and processes, approves procedures that govern the Bank’s operations,
and oversees and provides guidance on routine management issues. The Executive Committee also ensures overall compliance with fiduciary responsibilities, including compliance with
laws, regulations and ethical principles.
Chairperson of the Board
The Chairperson presides at all meetings of the Stockholders and the Board of Directors,
supervises the carrying out of the policies adopted or approved by the Board of Directors,
has general executive powers, as well as the specific powers conferred by the bylaws, and
also has such further powers and duties as from time to time may be conferred or assigned
by the Board of Directors.
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President and Chief Executive Officer
The President and Chief Executive Officer is selected by the Board of Directors from among
its members, and has the responsibility for the general management of the business and
affairs of the Bank, subject to the direction of the Board of Directors and the Executive Committee. In the absence of the Chairperson, the President and Chief Executive Officer presides
at any meeting of the Stockholders, the Board of Directors, or the Executive Committee. The
President and Chief Executive Officer also acts as the Chief Operating Officer of the Bank, has
overall responsibility for the supervision of its operations, and also has any and all other powers
and duties conferred by the bylaws or by the Board of Directors.
Board Audit Committee
Members:
The Board Audit Committee is charged by the Board of Directors with oversight of all aspects
Jonathan Coles,
Chairman
of the Bank’s monitoring, reporting, control, and audit functions in order to ensure the safety
Thomas E. Krayenbuehl,
Vice Chairman
and soundness of the Bank, as well as compliance with applicable legal, ethical, and regula-
and remuneration of the Bank’s external auditors, approval of any additional work to be per-
tory requirements. The Committee is also responsible for the approval of the engagement
formed by the external auditors, and for the oversight of the Bank’s compliance function. The
Pamella J. Dana
Committee is comprised of five Board members who are independent of the management of
Luis A. Romero M.
the Bank and its related entities, and who are free of any relationship, which in the opinion
of the Board, may be construed as a conflict of interest. The Committee meets eight times
during the year and at least once annually in executive session with internal and external
auditors. The Committee may also hold special meetings as necessary.
Board Risk Committee
Members:
The Board Risk Committee supports the Board in the identification, measurement, and
José Antonio Villamil,
Chairman
monitoring of risks including, but not limited to, asset quality, interest rate, market and
operations risks, and recommends limits and mitigants for the risks. The Committee consists
Salvador López de Azúa,
Vice Chairman
of six members and meets a minimum of four times per year. The Committee may also hold
Gustavo A. Marturet
special meetings as necessary.
J. Guillermo Villar
Board of Directors
Gustavo Vollmer A.
Millar Wilson
Gustavo Vollmer A.
Chairman and Director
Graduated with a Bachelor of Arts Major in Economics from Duke University. Earned a
Postgraduate in Economic Development from Cambridge University, and a PED in Business
Administration IMEDE, Switzerland. Chairman of the Board of Directors of Mercantil
Commercebank, N.A. and Mercantil Commercebank Holding Corporation. Chairman and
President of Mercantil Servicios Financieros and Mercantil, C.A. Banco Universal. President
of Fundación Mercantil. Former President and Member of the Board of Directors of Instituto
de Estudios Superiores de Administración (IESA). Member of the Development Council of
Universidad Católica Andrés Bello. Member of the World President’s Organization (WPO).
Former President International of Young President’s Organization (YPO). Member of The
Group of Fifty (G-50) and Former Founding President, Partnership for a Drug-free Venezuela.
Founding Co-Chairman and Member of US-Venezuelan Business Council (CEVEU). Past
Member of the Latin America Advisory Committee of the NYSE (New York Stock Exchange).
47
Mercantil
Millar Wilson
President and CEO
Graduated in Business and Administrative Studies from Bradford University, England (1973).
Graduate of Harvard Business School Management Development Program (1992). Has been
with Mercantil for 35 years and is currently President and CEO of Mercantil Commercebank
and Mercantil Commercebank Florida Bancorp. Also serves as Country Manager of Mercantil
in the United States. Chairman of the Boards of Mercantil Commercebank Investment Services,
Mercantil Commercebank Trust Company and Mercantil Bank & Trust (Cayman). Executive
President of Mercantil Bank (Curaçao) and Mercantil Bank (Panama). Member of the Executive Committees of Mercantil Commercebank, Mercantil Servicios Financieros and Mercantil
Banco Universal. Member of the Board of Directors of the Federal Reserve Bank of Atlanta’s
Miami Branch. Member of the Board of Directors of Enterprise Florida, Inc. Former Chairman
of the Board of the American Red Cross Greater Miami and The Keys (2001-2002) and
Director and Treasurer of the Miami-Dade College Foundation (1999-2004).
Jonathan Coles
Graduated from Yale University (1968). Holds a Master of Business Administration (MBA)
from Venezuela’s Instituto de Estudios Superiores de Administración (IESA) (1970). Director
of Mercantil Servicios Financieros, Mercantil Banco Universal, Mercantil Commercebank
Florida Bancorp and Mercantil Commercebank. Former President and Dean of IESA (Instituto
de EstudiosSuperiores de Administración), CEO and Chairman of the Board of Directors of
Mavesa, S.A., and former Minister of Agriculture of Venezuela and Director of the Central
Bank of Venezuela (BCV).
Graduated with a Master of Business Administration (MBA) degree from Columbia University.
Earned a Bachelor of Arts degree from Bowdoin College, Brunswick, Maine. Chairman, President
and CEO of Far East National Bank, Los Angeles (May to December 2009). Member of the
Board of Directors and Chairman of the Executive and Compliance Committees of Far East National Bank (September 2004 to December 2009.) President and CEO of Aetna International,
Inc. (1995-2001). Former Chairman, President, and CEO of Fleet Bank, N.A., the Connecticut
subsidiary of Fleet Financial 1993 to 1995. Former President and CEO of Citibank Canada. Former Chairman of the Board of the Taiwan Greater China Fund. Active in the community, and
was Chairman of the 1995 Greater Hartford United Way campaign and has served on the
Board of Directors of Connecticut Public Television (Chairman 1997, 1998), the Connecticut
Business and Industry Association, the Greater Hartford Chamber of Commerce, the Capitol
Region Growth Council (Chairman 1996, 1997), the Old State House and the Connecticut Historical Society. Was member of the organizing committee of the 1995 Special Olympics World
Games and served on the Board of Regents of the University of Hartford and as a Trustee of
the Hartford Art School. Currently is Chairman of the Board of Connecticut Landmarks, a
Trustee of the Wadsworth Atheneum, Hartford, Connecticut, is on the Board of Directors of
the Coastal Maine Botanical Gardens, and is Director of Mercantil Commercebank Florida
Bancorp and Mercantil Commercebank.
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Pamella J. Dana, Ph.D
Graduated with a Ph.D. in International Development and Economics from the University of
Southern California. Earned a Masters in Administration, Planning, and Policy from Harvard
University. Earned a Bachelor of Arts in Sociology/Social Work from California State University
Chico. Director of Mercantil Commercebank Florida Bancorp and Mercantil Commercebank.
Vice Chair, Scripps Florida Funding Corporation Board. Trustee, University of West Florida.
Trustee, Florida Chamber of Commerce Foundation. Voting Member, U.S. Gulf of Mexico
Fisheries Management Council. Director, Florida Sports Foundation Board. Member,
International Economic Development Council. Since 2007, has served as senior strategic
advisor for the Florida Institute for Human & Machine Cognition. Directed the Florida Office
of Tourism, Trade, and Economic Development (1999-2007) under Governor Jeb Bush. Served
as Florida’s legislatively mandated chief protocol officer (2000-2007) with direct
responsibility for the State’s global trade and export programs, international affairs,
diplomatic protocol, consular corps activities and military/Pentagon interface. Served as
assistant and deputy secretary of the California Trade and Commerce Agency (1995-1999).
Over 30 years of successful senior economic, business, and university leadership,
policymaking and public affairs.
Thomas E. Krayenbuehl, Ph.D
Graduated with a Doctorate Degree in Law from University of Zurich, Switzerland. Chairman
of Mercantil Bank (Schweiz.) AG, Director of Mercantil Commercebank Florida Bancorp, Mercantil Commercebank N.A. and Chairman of BPI (Suisse) SA, an asset management company,
in Geneva. Retired in 1999 from Union Bank of Switzerland (UBS) as Managing Director after
23 years of service. Has been a Member of the Board of the Swiss-Indian Chamber of Commerce and the Latin American Chamber of Commerce, both in Zurich, as well as President of
the Friends of the Zurich Art Museum.
Majored in Economics in the University of Puerto Rico and completed multiple executivelevel professional development programs at Citibank and IBM. Currently Managing Partner
of Praxxis, LLC and Director of Mercantil Commercebank Florida Bancorp, and Mercantil Commercebank. Served as Vice President of Citibank N.A. (1981-1995). Headed the Marketing organization of Citibank FSB in Chicago and spearheaded the bank’s thrust into the consumer
markets of the U.S. Midwest. Organized Citibank’s Consumer Bank in Venezuela in 1989 and
led the business to exceed all corporate profitability and performance benchmarks during his
tenure. Joined IBM Corporation as the executive in charge of the company’s relationships
with Latin America’s largest banks (1995). Formed Southcross Associates LLC (1998), a firm
that eventually merged into Praxxis, LLC, a consulting organization that specializes in the
financial services sector and advises clients in the United States, Latin America and Europe.
Held senior positions in major U.S. advertising agencies prior to 25-year banking career.
49
Mercantil
Gustavo Antonio Marturet Machado
Graduated with a Degree in Civil Engineering from Universidad Central de Venezuela (1962).
Member of the Boards of Directors of Mercantil Servicios Financieros and Mercantil Banco
Universal, of which he was President until March 31, 2011. Chairman of the Boards of Directors
of Mercantil Commercebank Florida Bancorp and Mercantil Commercebank N.A. President
of the Venezuelan American Chamber of Commerce and Industry (Venamcham) (2012-2013).
Member of the Chairman’s Advisory Council of the Council of the Americas. President of the
John Paul II Foundation for Ecclesiastical Education (FESE). Former President and Executive
President of Mercantil Servicios Financieros and Mercantil Banco Universal. Former President
of Fundación Mercantil and Former Member of: Board of Mercantil Merinvest, Mercantil
Seguros and Mercantil Bank (Schweiz) AG. Has served in Mercantil’s top management for
more than 33 years. Former President of the Venezuelan Bankers Association (ABV), of the
National Banking Council (CBN), of the Council of Venezuelan American Entrepreneurs
(CEVEU), of the Colombian Venezuelan Economic Integration Chamber (CAVECOL). Former
Member of the Board of Directors of the Institute of International Finance, Inc. (IIF)
Washington D.C., of the Advisory Council of the Central Bank of Venezuela (BCV), of the
Andean Development Corporation (CAF), and of various associations related with the
financial and production sector.
Luis A. Romero M.
Electrical Engineer graduated from the Universidad Metropolitana, Venezuela. Earned a Master
of Business Administration (MBA) from Babson College, and PMD and CEP from Harvard University. Director of Mercantil Servicios Financieros, Mercantil Seguros, Mercantil Commercebank Florida Bancorp, and Mercantil Commercebank. Member of the Council of the
Venezuelan American Business Council (CEVEU). Director of International Briquettes Holding
(IBH), and Director of Caurimare, S.A. and Desarrollos e Inversiones, S.A. Former Directors of
Mercantil Banco Universal. Former Corporate Director of Strategic Planning of Siderúrgica
Venezolana, SIVENSA, S.A.
Jose Antonio Villamil
Earned bachelor and advanced degrees in Economics from Louisiana State University (LSU),
where he also completed coursework for the PhD degree. Awarded doctoral degree from
Florida International University in Economics (hc), for “distinguished contributions to the
Nation in the field of economics” (1991). Has served as a Presidential appointee in the capacity
of U.S. Undersecretary of Commerce for Economic Affairs, and is the founder of a successful
economic consulting practice, The Washington Economics Group, Inc. (WEG). Dean of the
School of Business of St. Thomas University in Miami (since August 2008) while continuing
to serve as Principal Advisor to the clients of WEG. A recent member of the President’s Advisory
Committee on Trade Policy and Negotiations in Washington, DC. Immediate past Chairman
of the Governor’s Council of Economic Advisors of Florida, and directed the Tourism, Trade,
and Economic Development activities of the State (1999-2000) in the Office of Governor Jeb
Bush. Current Director of Mercantil Commercebank Florida Bancorp, and Mercantil Commercebank, the Spanish Broadcasting System (NASDAQ), Pan-American Life Insurance Group
(PALIG) and Enterprise Florida, the State’s principal economic development organization.
Recently appointed by the U.S. Secretary of Commerce to serve in the Florida District Export
Council. Active in professional and community affairs and current Chairman of the Economic
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Annual
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Roundtable of the Beacon Council, Miami-Dade County’s official economic development
organization. Senior Research Fellow of Florida TaxWatch, an established fiscal and policy
research organization of the State. Over 30 years of successful experience as a senior business
economist, and as a public official of both the Federal and State of Florida governments.
J. Guillermo Villar
Graduated with a Master’s Degree in Economics from Vanderbilt University. Began banking
career with Chase in 1967, participating in the Executive Credit Program for the Caribbean
area, which he later directed, and went on to manage the areas of corporate and real estate
lending in Puerto Rico. Joined Mercantil in Venezuela in 1974 to head the formation and management of a Chase-Mercantil joint venture financial leasing company. Held various senior
management positions with Mercantil in Venezuela and the United States, including the
position of Group CFO , President and CEO of Mercantil Commercebank, and Managing
Director of other international banks of Mercantil. Served on the boards of various trade,
community and charitable organizations, and during career has been a university professor
in topics related to banking and finance. Retired in 2009 and presently focuses on personal
interests related to investments and farming, and serves on the Board of Directors of Mercantil
Commercebank, Mercantil Commercebank Holding Corporation and Mercantil Commercebank
Florida Bancorp.
Executive Management
Millar Wilson
President & Chief Executive Officer
See resume in Board of Directors
Gustavo Vollmer A.
Chairman & Member of the Executive Committee
See resume in Board of Directors
Alejandro González Sosa
Member of the Executive Committee
Graduated with a degree in Chemical Engineering from Universidad Metropolitana in Caracas, Venezuela and a Master of Business Administration (MBA) from Babson College in Massachusetts. Global Executive Coordination Manager of Mercantil Commercebank N.A and
Executive President of Mercantil Servicios Financieros, C.A. Member of the Executive Committees of Mercantil Commercebank Holding Corporation, Mercantil Commercebank Florida
Bancorp, Mercantil Commercebank N.A., Mercantil Servicios Financieros C.A. and Mercantil
C.A. Banco Universal. Member of the Board of Directors of Mercantil Commercebank Holding Corporation, Mercantil Commercebank Florida Bancorp, Mercantil Servicios Financieros
C.A., Mercantil C.A. Banco Universal, Mercantil Merinvest, C.A., Fundación Mercantil and
Venezuelan American Chamber of Commerce and Industry (Venamcham). Global Executive
Coordination Manager of Mercantil, C.A. Banco Universal and Chairman of the Supervisory
Board of Mercantil Bank Curazao N.V. and Mercantil Bank Panamá, S.A. Former Executive
President of Mercantil C.A. Banco Universal, former President of Interbank C.A., Banco
Universal, Mercantil Merinvest, C.A. and Mercantil Merinvest, Casa de Bolsa, C.A., former
51
Mercantil
Chairman of the Board of Directors of Todo1 Services, Inc. and former Director of the Venezuelan
National Banking Council (CBN), Venezuelan Banking Association (ABV), Swiss-Venezuelan
Chamber of Commerce and Industry in Venezuela, Venezuelan Council for Investment
Promotion (CONAPRI), Educrédito, A.C., Mercantil Bank (Curacao), N.V., Mercantil Bank
(Panamá), S.A., Mercantil Seguros, C.A. y Mercantil Merinvest, Casa de Bolsa, C.A.
Nerio Rosales Rengifo
Graduated from Universidad Católica Andrés Bello, Venezuela, in Economics, with 37 years of
experience at Mercantil. Completed the Advanced Management Program (PAG) at the Instituto de Estudios Superiores de Administración (IESA). Executive President of Mercantil Banco
Universal, Global Personal and Commercial Banking Manager of Mercantil Servicios
Financieros and Mercantil Banco Universal, and member of the Executive Committee of
Mercantil Servicios Financieros, Mercantil Banco Universal, Mercantil Commercebank Florida
Bancorp, and Mercantil Commercebank. Director of Mercantil Servicios Financieros, Mercantil
Banco Universal, Mercantil Commercebank Florida Bancorp and Mercantil Seguros.
Armando Leirós R.
Economist graduated from Universidad Católica Andrés Bello, Venezuela. Professional experience includes 38 years at Mercantil. Currently serves as the Global Operations and Technology Manager of Mercantil Banco Universal and Mercantil Servicios Financieros, and
member of the Executive Committees of Mercantil Servicios Financieros, Mercantil Banco
Universal, Mercantil Commercebank Florida Bancorp, and Mercantil Commercebank. Director
of Mercantil Servicios Financieros, Mercantil Banco Universal, and Mercantil Commercebank
Florida Bancorp. Former Director of Todo1 Services. Has held various positions at Mercantil
Servicios Financieros, C.A., including: Manager of Corporate Banking, Manager of Corporate
and Institutional Banking, Chief Executive Officer of Arrendadora Mercantil, C.A. and Banco
de Inversión Mercantil, C.A., Director of Fondo Mercantil, Banco Hipotecario Mercantil and
Mercantil Seguros.
Philip R. Henríquez
Graduated with a Master of Business Administration (MBA) from Columbia University, New
York (1991) and Economist graduated from Universidad Católica Andrés Bello, Venezuela
(1986). Global Manager of Corporate and Investment Banking of Mercantil Servicios
Financieros and Mercantil Banco Universal; Executive President of Mercantil Merinvest and
Member of the Executive Committees of Mercantil Servicios Financieros, Mercantil Banco
Universal, and Mercantil Commercebank, N.A. Former President of Citibank, N.A. in
Venezuela, and Citigroup Country Officer in Venezuela (2000-2004). Executive Vice President of Global Wholesale Banking, member of the Board of Directors of Banco VenezuelaGrupo Santander, and President of Valores Santander Casa de Bolsa (1997-2000). Country
Treasurer (1993-1997) and Derivatives Desk Head (1991-1993) at Citibank N.A. Venezuela.
Corporate Bank Manager at Banco Exterior - Venezuela (1986-1989). Member of the Board of
Directors of the Venezuelan Council for Investment Promotion (CONAPRI). Former member
of the Board of Directors of the Venezuelan Association of Executives – AVE (1998-2011), the
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Annual
12
National Banking Council of Venezuela (2001-2004), the Venezuelan American Chamber of
Commerce and Industry (Venamcham) (2001-2004), the Caracas Stock Exchange (1998-2000),
the National Art Gallery of Venezuela (2001-2003), the Venezuelan Institute of Finance
Executives (IVEF) (1998-2007) and the Venezuelan Diabetes Foundation (2001-2008).
Rosa M. Costantino
Graduated with a degree in Economics from the Universidad Central de Venezuela. Joined
Mercantil in 1979 and has held senior positions in treasury, finance, and retail banking.
Currently Manager of Global Private Banking and Wealth Management and a member of the
Executive Committees of Mercantil Servicios Financieros, Mercantil Banco Universal, Mercantil Commercebank Florida Bancorp, and Mercantil Commercebank. Director of Mercantil
Commercebank Florida Bancorp, Mercantil Commercebank Investment Services, Mercantil
Commercebank Trust Company, and Mercantil Bank (Schweiz).
Alfonso Figueredo
Graduated with a degree in Accounting (1983) and a Master of Business Administration (MBA)
from Universidad Católica Andrés Bello (UCAB), Caracas, Venezuela. 25 years of service at
Mercantil. Currently Global Chief Financial Officer of Mercantil Servicios Financieros. Director
of Mercantil Commercebank Florida Bancorp. Member of the Executive Committee of
Mercantil Servicios Financieros, Mercantil Banco Universal, Mercantil Commercebank Florida
Bancorp, and Mercantil Commercebank. Worked for seven years at Espiñeira, Sheldon y
Asociados (PriceWaterhouseCoopers) prior to his banking career. Former President of the
Venezuelan Banking Association’s Comptrollers Committee.
Fernando Figueredo M.
Graduated with a Law degree from the Universidad Católica Andrés Bello in Caracas,
Venezuela. Earned a Master of Business Administration (MBA) degree with a dual specialization in Finance and Marketing from Columbia University, New York. Currently serves as Global
Risk Officer of Mercantil Servicios Financieros and serves on the Board of Directors of several
companies within the group. Member of the Executive Committees of Mercantil Commercebank and Mercantil Banco Universal. Formerly held the positions of Credit Risk Manager and
Operational Risk Manager of the Corporate and Investment Bank of Mercantil Servicios
Financieros. Served as head of Financial Institutions at Citibank, N.A., Venezuela prior to
joining Mercantil Servicios Financieros, managing the areas of business segment transactional clients and corporate customer attention. Previously manager within the Oil and Gas in
the Santander Group (Banco Venezuela) and worked in the Corporate Finance Division of
Santander Investment in Venezuela.
53
Mercantil
Adrián Pujol
Acrylic on canvas
63 x 207 cm
El Muachamacán
(El tepuy Huachamacary), 1995
Social Responsibility
For the last 30 years, Mercantil Commercebank has maintained a strong identity as a caring
corporate citizen through its charitable giving, community education initiatives and employee
volunteerism. During 2012, the Bank continued this long-standing tradition, supporting
dozens of important causes and organizations that serve a variety of diverse populations.
Fostering Community Development through
Affordable Housing and Economic Development
The Bank continued its active partnership with Neighborhood Housing Services of South
Florida (NHSSF). In 2010, NHSSF assumed the lead position in a seven-member consortium
that was awarded $89.3 million as part of Housing and Urban Development’s (HUD) Neighborhood Stabilization Program (NSP2). The Consortium’s mandate is to purchase foreclosed
properties in certain geographies within Miami-Dade County, rehab them and sell them to
individuals whose income does not exceed 120 percent of the area median income. The Bank
also continued its long-term relationship with the fair housing organization, Housing Opportunities Project for Excellence (HOPE), as well as its partnerships with other organizations
that share the mission of promoting community development by providing economic development support to low- and moderate-income individuals or by supporting affordable housing.
In support of our communities’ efforts to foster economic development, the Bank participated in a Pilot Program supporting Acción USA in the New York region. In its first six months,
the Program conducted more than 30 one-on-one certified financial counseling sessions with
low- and moderate-income clients of Acción USA who are seeking capital to fund a new or
expanding business. Our bankers continued their leadership and participation in local chambers of commerce, offering financial tools and services and hosting local networking events.
On a statewide level, the Bank worked closely with Enterprise Florida Inc., a public-private
partnership devoted to statewide economic development, investing in programs and activities to attract new businesses, boost Florida's business climate and ensure the state’s global
competitiveness.
Community Development partners included:
• Acción USA
• Broward Housing Solutions
• Carrfour Supportive Housing
• Florida Community Loan Fund
• Habitat for Humanity of South Florida
• Housing Opportunities Project for Excellence (HOPE)
• Little Haiti Housing Association (nka HDCDC)
• Mexican Institute of Greater Houston
• Miami Beach CDC
• Neighborhood Centers
• Neighborhood Housing Services of South Florida
• West Broward CDC
55
Mercantil
Financial Literacy & Education
The New York Banking Center team continued its partnership with the Bowery Mission with
financial literacy classes for the formerly homeless women and low-income families who are
served by this organization. The Bank partners with several local community development
corporations to conduct educational workshops for first time homebuyers, foreclosure mitigation and credit repair. In South Florida, the Bank continued its support of the Entrepreneurial Institute at Barry University, whose program reaches out to low- and moderate-income
entrepreneurs who are interested in starting or expanding a small business. The Bank continued its support of the successful pilot program that offers soon-to-be released incarcerated
women the opportunity to learn about owning a business or how to be a good employee.
More than 55 women have graduated from this program with the knowledge and confidence
that self-sufficiency is obtainable.
Financial Literacy and Education partners included:
• Avenue CDC
• Catalyst Miami
• Centro Campesio Farmworker Center
• Greater Houston Partnership
• LEAP
• New York Neighborhood Housing Services
• South Florida Community Development Coalition
• The Bowery Mission
• The Bridges at Lake Worth
• The Entrepreneurial Institute at Barry University
Charitable and Community Endeavors
The South Florida team made a difference during the 37 th annual telethon for La Liga Contra
el Cancer, a Miami-based nonprofit that provides ongoing free medical care to cancer patients. Employees also collected food for Florida’s largest food bank, collected toys for abused,
neglected and abandoned children and painted and landscaped homes during NeighborWorks
America Work Week. In 2012, the Bank strengthened its ongoing commitment to Florida
International University with its support of The Center for Leadership at the Chapman Graduate
School of Business. Through it's sponsorship of The Leadership Lectures, an annual series that
is open to the public and features engaging presentations by world-class, accomplished and
influential leaders with expertise ranging from business and philanthropy to public service
and academic research, the Bank is an active supporter of leadership research, development
and training that is equipping leaders with the skills to transform their communities.
Charitable Endeavors partners included:
• Agape Network
• American Red Cross
• Feeding South Florida
• Florida International University (FIU) - Center for Leadership
• La Liga Contra el Cancer
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Annual
12
• Little Sisters of the Assumption
• Senior Housing Crime Prevention Foundation
• South Florida Urban Ministries
• Sunrise Community
• The Missionaries of Charity
• Women in Distress
Making a Difference in the Lives
of Children and Young People
Once again, employee participation in the March of Dimes annual March for Babies contributed over $30,000 to support research and education programs to prevent birth defects
in South Florida and Houston. To benefit the Voices for Children Foundation, an organization
that ensures abused children in Miami-Dade County have a court-appointed Guardian Ad
Litem, the Bank was Presenting Sponsor for the 2012 Strike Out Child Abuse Bowling Event
and collected hundreds of toys during the Holiday Toy Drive. The Bank also began a new philanthropic relationship with Centro Mater, which provides critical child care services, food and
protection for children up to age 12 in South Florida's previously underserved neighborhoods
where immigrants who suffer from socio-economic disadvantages have historically
concentrated.
Community partners included:
• Centro Mater
• Charlee Homes for Children
• CREW
• March of Dimes
• Miami Bridge
• Ossining Children’s Center
• Voices for Children
Arts and Cultural Legacies
The Mercantil Commercebank ZoolensSM Photography Project, launched in 2010 with Zoo
Miami and the Zoological Society of Florida to instill an understanding of the world’s wildlife
and appreciation for the photographic arts, enjoyed a third successful year. In 2012, the
program was further expanded to include all middle school students in Miami-Dade County
Public Schools. In late fall, nearly 300 middle school students entered their photographs
taken at Zoo Miami. Their best shots were critiqued by a panel of prominent judges who
awarded prizes at a ceremony held at the Bank’s headquarters.
Arts and Culture Legacies partners included:
• Miami Symphony Orchestra
• Museum of Fine Arts Houston
• The Juilliard School
• Zoo Miami
57
Mercantil
Banking Centers,
Subsidiaries and Affiliates
Mercantil Commercebank
Banking Centers
FLORIDA
Miami-Dade
Aventura
3001 Aventura Boulevard
Aventura, FL 33180
(305) 521-4900
Biscayne
11900 Biscayne Boulevard
Miami, FL 33181
(305) 892-6171
Palm Beach
Affiliates
Providing support to the international activities
of Mercantil Commercebank
Lantana Road-West
6272 Lantana Road
Lake Worth, FL 33463
(561) 515-1340
NEW YORK
Manhattan
11 East 51st Street
New York, NY 10022
(212) 891-7777
TEXAS
Coral Gables
220 Alhambra Circle
Coral Gables, FL 33134
(305) 460-8701
Downtown Houston
717 Texas Avenue, Suite 100
Houston, Texas 77002
(713) 571-8010
Coral Way
7171 Coral Way, Suite 101
Miami, FL 33155
(786) 437-3100
FM 1960 West
12145 FM 1960 West
Houston, Texas 77065
(713) 331-4300
Doral
3105 N.W. 107 Avenue
Doral, FL 33172
(305) 629-1244
Loan Production Office
Galloway
8726 N.W. 26 Street
Doral, FL 33172
(786) 437-7530
Hialeah East
1601 East 4th Avenue
Hialeah, FL 33010
(305) 885-9302
Hialeah Gardens
11701 W. Okeechobee Road
Hialeah Gardens, FL 33018
(305) 826-2022
Kendall
11631 North Kendall Drive
Miami, FL 33176
(305) 274-1850
Pinecrest
9350 South Dixie Highway
Suite 100
Miami, FL 33156
(305) 909-2600
Tamiami
13650 S.W. 131 Street
Miami, FL 33186
(305) 506-2000
Broward
Parkland
8017 N. University Drive
Parkland, FL 33067
(954) 282-5004
Pompano
1000 South Powerline Road
Pompano Beach, FL 33069
(954) 978-6113
Weston
2630 Weston Road
Weston, FL 33331
(954) 349-3711
Weston
2500 Weston Road, Suite 401
Weston, FL 33331
(954) 903-5700
Financial Service
Subsidiaries
Investment Services, Inc.
220 Alhambra Circle, Penthouse
Tel: (305) 460-8599
Fax: (305) 460-8598
www.mercantilcis.com
Trust Company, N.A.
220 Alhambra Circle, 11th Floor
Tel: (305) 441-5555
Fax: (305) 441-5560
www.mercantilctc.com
Representative Offices of
Colombia
Av. 82, N° 12-18, Piso 8, Suite 805
Edificio Interbolsa, La Cabrera
Bogotá, D.C., Colombia
Tel.: (571) 623-7737/7254
Fax: (571) 623-7286
mvillamizar@mercantilcb.com
Mexico
Eugenio Sue N° 58, Colonia Polanco
Chapultepec, Delegación Miguel Hidalgo
C.P. 11560, México, D.F.
Tel: (52-55) 5282-1224
Fax: (52-55) 5282-1041
mercvenmex@prodigy.net.mx
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Annual
12
Banks
Financial Service Subsidiaries
Curaçao
MERCANTIL BANK
CURAÇAO N.V.
Abraham Mendez Chumaceiro
Boulevar 1
Willemstad, Curaçao
Netherlands Antilles
Tel: (5999) 432-5000
Fax: (5999) 461-1974
fgirigori@mercantilcu.com
Mercantil Merinvest, C.A.
Avenida Andrés Bello, No. 1
Edificio Mercantil, Piso 24
Caracas 1050, Venezuela
Tel: (58-212) 503-2700
Fax: (58-212) 503-2757
Grand Cayman
MERCANTIL BANK & TRUST,
LIMITED
Harbour Place, 4th floor
103 South Church Street
P.O. Box 1034
Grand Cayman, KY1-1102
Cayman Islands
Tel: (1-345) 949-8455
Fax: (1-345) 949-8499
Panama
MERCANTIL BANK (PANAMA)
Torre de las Américas, Planta Baja
Local N° 8-A. Punta Pacífica
P.O. Box 0819-05811 Panamá
República de Panamá
Tel: (507) 282-7000
Fax: (507) 282-7040
asubero@mercantilbankpanama.com
Switzerland
MERCANTIL BANK (SCHWEIZ), A.G.
Talackerstrasse 42, CH-8001
Zurich, Switzerland
P.O. Box 9758
CH-8036, Zurich, Switzerland
Tel: (41-43) 344-4555 master
Fax: (41-43) 344-4550
www.mercantilsuiza.com
Venezuela
MERCANTIL, C.A. BANCO UNIVERSAL
Avenida Andrés Bello, N° 1
Edificio Mercantil
Tel: (58-212) 503-1111
Télex: 27002/27003 BMERVC
Apartado Postal 789,
Caracas 1010-A
Venezuela
mercan24@bancomercantil.com
www.bancomercantil.com
Centro de Atención Mercantil (CAM):
Tel: 0-500-600-2424/0-500-503-2424
(58-212) 600-2424
(58-212) 503-2424
Mercantil Seguros, C.A.
Av. Libertador con calle Isaías
“Látigo” Chávez,
Edificio Mercantil Seguros, Chacao
Tel: (58-212) 276-2000
Fax: (58-212) 276-2001
www.segurosmercantil.com
Representative Offices of
Mercantil Banco Universal
Brazil
Av. Paulista, N° 1842, 3° andar CJ. 37
Edif. Cetenco Plaza, Torre Norte-Cep
01310-200
Sao Paulo SP, Brazil
Tel: (55-11) 3285-4647/3284-0206
Fax: (55-11) 3289-5854
mercansp@uol.com.br
Colombia
Av. 82, N° 12-18, Piso 8, Suite 805
Edificio Interbolsa, La Cabrera
Bogotá, D.C., Colombia
Tel: (571) 635-0035, Ext. 0
Fax: (571) 623-7701
Mexico
Eugenio Sue N° 58, Colonia Polanco
Chapultepec, Delegación Miguel Hidalgo
C.P. 11560, México, D.F.
Tel: (52-55) 5282-1224
Fax: (52-55) 5282-1041
mercvenmex@prodigy.net.mx
Peru
Av. Canaval y Moreyra N° 452,
Edificio Standard Chartered,
Piso 15, San Isidro
Lima 27, Peru
Tel: (51-1) 442-5100 Ext. 273
Fax: (51-1) 442-5100 Ext. 237
rafael.alcazar@rebaza-alcazar.com
U.S. - New York
11 East 51st Street
New York, NY 10022
Tel: (212) 891-7400
Fax: (212) 891-7419
ljordan@bancomercantilny.com
In this report, Mercantil Commercebank pays tribute to one of the most brilliant
Venezuelan landscape painters – Adrián Pujol. His large-scale works capture the
kaleidoscope of Venezuela’s geography in a unique and incomparable style distinctive of
this exceptional artist. The works found in the 2012 Annual Report are a part of the
Pujol studied at the Institute of Applied Arts and Crafts in Palma de
Mallorca, Spain (1968), Artstudio (Palma de Mallorca, 1969-1973),
College of Fine Arts of Saint Elizabeth of Hungary (Cadiz, Spain, 19691973), St. George Fine Arts Academy (Barcelona, Spain, 1970-1973), and
at the Graphic Studies Institute (CEGRA, for its Spanish acronym, in
Palma de Mallorca, Spain, 1948
Adrián Pujol
Mercantil Collection.
Caracas, 1977). In 1974, he settled in Caracas where he continues to live
and work. He has participated in several solo exhibitions at the Mendoza
Salon (Caracas, 1977, 1978, 1980, 1981, 1983, 1985, 1987, 1989, 1990,
1992, and 1998), Garcés Velázquez Gallery (Bogota, 1979), Office Gallery
(Medellin, 1980), Ipostel Salon (Caracas, 1981), Municipal Graphic Arts
Museum (Maracaibo, 1982), Seven-Seven Gallery (Caracas, 1985),
Francisco Narváez Museum (Porlamar, 1990), for the Federal District
Government (Caracas, 1991), Costa Gallery (Palma de Mallorca, 1991),
D’Museo Gallery (Caracas, 1993), Cecilia de Torres Gallery (New York,
1994), Itag Gallery (Caracas, 1994), National Art Gallery (Anthology Expo,
Caracas 1995), Imagen Gallery (Porlamar, 1995), MG Art III Gallery
(Caracas, 1996), Corp Group Foundation (Caracas, 2001), and
Contemporary Art Gallery Lourdes Chumacero (Mexico City, 2004).
Pujol’s works can be found across the globe in both public and private
collections and have received numerous awards and recognition.
Adrián Pujol
Mercantil Collection
Caracas desde el Alto Hatillo, 1988
Ocaso en Macanao, 1995
Playa Vallecito IV, 1988
Acrylic on canvas
143 x 535 cm
Acrylic on canvas
57.5 x 201 cm
Acrylic on canvas
147 x 209.2 cm
Amazonia II, 1988
Playa Las Cocuizas, 1988
Santa Fe - La Cocuiza, 1986
Acrylic on canvas
210 x 147 cm
Acrylic on canvas
146 x 206 cm
Acrylic on canvas
105.5 x 202 cm
Camino a Sabas Nieves, 1999
La Cruz de Santa Teresa, 1995
Acrylic on canvas
128.5 x 148.5 cm
Acrylic on canvas
105.2 x 175.2 cm
Los Hicacos I, 1988
Acrylic on canvas
147 x 420.5 cm
La Bahía de Mochima (por la tarde), 1986
Macanao y las T. de M. Guevara, 1995
Calabozo desde las lomitas, 1996
Acrylic on canvas
129 x 204 cm
Acrylic on canvas
74.3 x 203 cm
Acrylic on canvas
89 x 429.5 cm
La memoria, Playa Colorada, 1989
Playa Estebita amaneciendo, 1988
Atardecer en la bahía de Pampatar, 1989
Acrylic on canvas
85 x 213 cm
Acrylic on canvas
147.3 x 235.5 cm
Acrylic on canvas
75 x 155 cm
Playa Chaguaramos, Loero, Paria, 1995
Sombra de cocoteros en playa la Cocuiza, 1988
Aquatint on paper
26.3 x 46.3 cm
Acrylic on canvas
145 x 205 cm
Caracas de noche I, 1999
Crepúsculo en la bahía de Pampatar, 1989
Acrylic on canvas
65 x 155 cm
Playa Majagual, 1987
Acrylic on canvas
79 x 138 cm
Árbol en playa vallecito, 1988
Playa Medina, 1995
Aquatint on paper
25 x 40 cm
Camino a Pallares, 1998
Acrylic on canvas
147 x 172 cm
Acrylic on canvas
150 x 205 cm
El Lajao (Choroni), undated
Acrylic on canvas
141 x 127 cm
El Muachamacán
(El tepuy Huachamacary), 1995
El Ávila desde Altamira II, 1994
Acrylic on canvas
63 x 207 cm
Acrylic on canvas
130 x 176.5 cm
Acrylic on canvas
147 x 202 cm
Playa de Caruao, undated
Playa Medina 2, 1996
Caracas desde El Estanque, 1999
Aquatint on paper
24 x 40 cm
Acrylic on canvas
128 x 206 cm
General Production: Corporate Communications Management
Artwork Photography: Mercantil Collection / Walter Otto / Vieri Tomaselli
Graphic Design: Arte Impreso H.M., C.A. • Graphic Montage: Cruz Design Agency, Inc.
Printing: March 2013.
Acrylic on canvas
112 x 154 cm

December - Mercantil Servicios Financieros

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