1 About Bank Leumi USA

3 Chairman’s and CEO’s Letter

3 Financial Highlights

5 U.S. and International Commercial Banking

8 U.S. and International Private Banking

9 Leumi Investment Services Inc.

10 The U.S. Economy in 2012

11 The Israeli Economy in 2012

12 Management Analysis

14 Consolidated Statements of Financial Condition

15 Consolidated Statements of Income

16 Board of Directors and Management

18 Leumi Group Listing

20 Governance

contents

1

About Bank Leumi USA

Bank Leumi USA, operating in the U.S. for over half

a century, is an FDIC-insured, full service commercial

bank that provides financial services to middle market

firms and international businesses through offices in

New York, California, Florida, Illinois, a representative

office in Israel, and an offshore office in the

Cayman Islands.

We serve importers and exporters, manufacturers,

distributors, and retailers in diverse industries such as

diamond and jewelry, textile and apparel, healthcare,

real estate, and technology.

Bank Leumi USA offers U.S. and international private

banking services, as well as a full range of securities

and insurance products through its brokerage

subsidiary, Leumi Investment Services Inc.

Bank Leumi USA is the largest subsidiary of the Leumi

Group, Israel’s leading banking group, with total assets

of $101 billion and shareholders’ equity of $6.7 billion.

Bank Leumi le-Israel B.M. is recognized as a significant

force in international finance. The Leumi Group serves

clients around the world through more than 300

branches and offices across 17 countries in major

world financial centers as well as a broad network of

correspondent banks.

Our Mission

We strive to deliver premier products and financial

services to our clients by leveraging the expertise of

our diverse employee workforce, the strength of the

Leumi Group, and the traditional values where banking

relationships span generations.

Our goal is to be the primary provider of sophisticated

financial products and services that our individual and

corporate clients desire.

We aim to offer time-honored and innovative banking

products and services that meet the ever-changing

expectations of the financial services industry.

The Leumi Group

Since Leumi’s establishment in 1902, the Leumi

Group has been characterized as a driving force

behind Israel’s economic and industrial development,

catapulting the young State from a desert economy

with few residents to a center for a variety of industries

such as high-technology, research and development,

medicine, bio-technology and more.

Bank Leumi has a long tradition of employing only the

highest economic and business standards and today

serves as an important gateway for investors and

businesses in Israel and worldwide.

Bank Leumi USA. Let us tie it all together with you.

about us

2

“The future is ours and we must position Bank

Leumi USA to be our clients’ primary financial

institution, as we improve our product and services

platform, and develop a competitive advantage.”

— Itzhak Eyal President & Chief Executive Officer

“The Leumi Group stands committed to

support Bank Leumi USA’s strategic initiatives

announced in 2012, which will pave the way for

growth and greater financial results.”

— David Brodet Chairman of the Board

from the Chairman and CEO

3

Dear shareholders, clients, and friends:

Our results in 2012 are a reflection of a less volatile economic environment combined with continued, record

low interest rates. In 2012, Bank Leumi USA’s Balance Sheet and Capital and Liquidity remained strong. We

committed to a significant capital investment over the next three to five years that will improve our future growth,

profitability and operating efficiency.

In 2013, we are implementing several strategic initiatives designed to focus on our commercial banking strength

and the proven talent of our private banking business. As always, we strive to deliver the highest level of service

to our loyal clients and welcome new relationships.

New Chairman of the Board

In July, Leumi Group Chairman, David Brodet, was also elected as Chairman of Bank Leumi USA. Mr. Brodet has

served in the Israeli Government as the Director General of the Finance Ministry, State Budget Director, Senior

Deputy Director General of the Ministry of Industry and Trade and Head of the Economic Planning Authority.

Mr. Brodet is a lecturer at the Hebrew University of Jerusalem (School of Business Administration), Ben Gurion

University and the National Security College. Mr. Brodet holds a B.A. in Economics and Political Science and an

M.A. in Economics, from the Hebrew University of Jerusalem. Mr. Brodet is replacing Steve Lavin, who has been a

member of BLUSA’s board for seven years and who continues to serve as a Board Member.

Management Changes

Bank Leumi USA welcomed new professionals in 2012 and each of these individuals brings immediate experience

and knowledge to the bank and our clients. Most notably, Hilla Eran-Zick joined us from our parent bank in Israel

as the Deputy CEO and Head of Commercial Banking here in the U.S., replacing Shmulik Arbel, who returned to

Bank Leumi in Israel. In October, our Board Member of 29 years, Jim Greene, retired. He was a professional who

possessed a wealth of experience, was called upon for his counsel, and who served as Chair of several board

committees. We gratefully thank Jim Greene and wish him only the best.

With Gratitude

We express our thanks to Bank Leumi USA

clients for their continued business and for

allowing us to serve their financial needs.

We thank our employees for their continued

professionalism, commitment to the bank, and

dedication to their work and our clients. Bank

Leumi USA prospers in large part due to

their talent and loyalty. We thank the Board

of Directors for their direction and prudence,

and we thank our parent company and

shareholders for their continued support.

Wishing you financial success in 2013.

David Brodet

Chairman of the Board

Itzhak Eyal

President & Chief Executive Officer

Chairman’s and CEO’s Letter

Financial Highlights(in thousands of dollars) 2012 2011

Total Assets $5,365,312 $5,678,346 *

Total Loans 3,759,032 3,884,592

Total Deposits 4,546,493 4,855,410

Shareholders’ Equity 540,501 514,883 *

Earnings

Before Tax 38,305 29,705

After Tax 24,531 20,086

Return on Equity 5.20% 4.53% *

*Includes the impact of an immaterial adjustment to assets and equity related to a reduction of deferred tax assets.

4

commercial banking

5

commercial banking

You’re in business. It’s our business to bring you the

best in commercial banking.

Whether you do business around the block or around

the world – Bank Leumi USA offers services to carry

your business into the future.

Our skilled, knowledgeable, and professional

commercial banking teams, strategically located

throughout the U.S., draw on years of proven industry

experience. Our relationship managers are experts in

each industry we serve. We understand the nuances

that best serve our clients, help close deals, and

increase business returns.

We have a deep understanding of the business

environment and the challenges and constraints facing

Israeli firms conducting business in the U.S. Our

representative office in Israel serves as a conduit in

introducing Israeli companies to the U.S. markets.

INDUSTRIESIndustry Specific Expertise…

Textile & Apparel

Succeeding in the fast-paced textile and apparel

industry takes in-depth knowledge, commitment,

and speed. We have served the textile and apparel

industry for nearly 60 years in the U.S.; our expertise

and access to resources enable us to offer products

and services that never go out of style. Our experience

is vast and enables true supply chain management for

converters, importers, manufacturers, wholesalers, and

retail clients.

Commercial Real Estate

Our real estate clients range from the middle market

to well-established Israeli developers and investors

with U.S. operations. We finance projects for

repositioning or future development of multi-family

residential properties, shopping centers, office and

multi-functional properties.

Technology

Leumi is the only Israeli-related banking group

operating in Silicon Valley. Our office in Silicon Valley

is regarded as a market leader in serving the Israeli

technology, environmental, and life sciences markets.

High tech companies are also serviced on the east

coast through our Israeli Desk in New York.

Healthcare

Our experts are here to lend a hand to the senior

care and assisted living industry by helping healthcare

providers develop new facilities and services. We offer

property finance, cash management services, capital

and growth opportunities as well as working capital

lines of credit. We are a valued partner with an earned

reputation for industry expertise.

Diamond & Jewelry

From our U.S. headquarters in New York City’s

diamond district to Leumi’s diamond exchange

branch in Ramat Gan, Israel, from California and

Florida, to Europe and the Far East, we have close

access to the global diamond industry, from producer

to consumer, from rough to retail.

U.S. & International Commercial Banking

SPECIALIzED BANkING SERvICES

Trade Finance

Bank Leumi USA is your partner for international

banking and serves as an expert advisor and facilitator

for transactions across national borders. We offer a full

range of trade finance products, such as standard and

specialized Standby and Commercial Letters of Credit,

Bankers’ Acceptances, and Documentary Collections,

for both importers and exporters.

Israeli Desk

Our English and Hebrew speaking Israeli Desk,

headquartered in New York City, is a unique resource

that serves the credit and asset management needs

of our corporate clients and their ties with Israel.

We assist and facilitate Israeli-related entities doing

business within the U.S. or U.S. companies trading

with Israel.

Syndicated Loans

With our extensive correspondent relationships

throughout the U.S., Bank Leumi USA is expert at

arranging syndicated loans, and can do so for U.S.

companies with greater needs for capital, Israeli

entities acquiring U.S. companies, and also for U.S.

entities acquiring Israeli companies.

Equipment Financing

Through our wholly owned subsidiary, Bank Leumi

Leasing Corporation (BLLC) – Bank Leumi USA

originates & arranges equipment financing for middle-

market and investment grade clients. We maintain

an active syndication desk participating in third party

leasing transactions. We offer term loans, capital

leases, rent discounting, vendor programs, finance

leases, equipment loans, portfolio acquisitions, rent-

discounting programs, and synthetic lease structures.

CASH MANAGEMENT SERvICES

Bank Leumi USA delivers sophisticated, efficient

cash management and deposit services directly to

clients, anywhere anytime. These services provide

accurate, up-to-date financial information and enable

clients to accelerate turnover of receivables into

cash, put unused funds to work, and continually

raise productivity. The result is improved cash flow,

convenient access to account information, and more

effective control of treasury operations.

Leumi Online

Our online cash management banking service allows

clients to monitor and manage their bank accounts

from any location and at any time. Leumi Online

offers detailed account information at your fingertips,

such as, monthly and quarterly statements, account

summaries, foreign currency holdings and pending

future transactions.

Leumi Deposit Direct

Through this web-based service, corporate clients, no

matter their location, can scan their checks directly to

their Bank Leumi USA accounts. Clients benefit with

improved cash flow and management control.

Leumi Global Link

Our web-based communications link connects

customers directly to our International Trade Finance

system. Clients may apply for Letters of Credit,

view current and historical balances, collection

transactions, acceptances, customer advices, and

more. This valuable tool enables customers to facilitate

transactions with speed, accuracy, and efficiency.

6

7

private banking

For over half a century in the United States, Bank

Leumi USA has worked hard to build and maintain

superior long-term relationships with our clients

throughout the U.S. and abroad.

Tailored investment strategies for U.S. and International Private Banking clients…

Bank Leumi USA proudly offers an extensive range

of products and services that provide our U.S. and

international clients with the tools they require to

ensure that their financial objectives are met. Our

private banking team is objective and prudent in

assessing opportunities and assisting clients to realize

their financial goals. Our commitment to personal,

strong relationships with our clients enables us to

satisfy all of their financial objectives – for today,

and the future.

We make your goals our own. Let us tie it all together with you.

Our offices are located in key financial centers

in New York, California, Florida, Illinois, and a

representative office in Israel, providing our clients

with access to private bankers who strive to know

our clients individually and speak their language.

Personal attention to each client is significant in

how we measure success with our clients.

Rooted in tradition, constantly innovating, always here for you.

As the largest subsidiary of the Leumi Group, Bank

Leumi USA draws on the international expertise of a

network of professionals around the world who have

a deep understanding of capital markets, and global

private banking services and can help clients navigate

through the global financial environment.

For more than 110 years, Leumi has provided in-depth

banking services that uniquely qualify us to assist our

U.S. and International Private Banking clients with all of

their financial planning needs.

U.S. & International Private Banking

8

9

Creating Wealth Management Strategies…

Bank Leumi USA’s wholly owned brokerage firm

subsidiary, Leumi Investment Services Inc. (LISI),

provides a full range of securities and insurance

products through licensed representatives in New York,

Florida, California and Illinois.

LISI offers tailored investment portfolios to our U.S.

and international private banking clients. Our advisory

services include mutual fund asset allocation and

separate account manager programs customized to

meet client objectives. For investors who prefer making

their own investment decisions, our commissions

for the purchase and sale of individual securities are

highly competitive. We also provide clients with access

to a wide range of global fixed income securities,

including government, corporate and municipal bonds.

Additionally, clients can select from a wide variety of

mutual funds and exchange traded funds, ranging from

conservative to aggressive growth.

Our licensed representatives assist clients with financial

and estate planning based on the client’s specific

requirements, including intergenerational transfers,

charitable trusts, and succession planning. We offer a

number of insurance program options for addressing

estate and business planning needs, including buy/

sell agreements and key person insurance, as

well as qualified and nonqualified retirement plan

programs. LISI also offers a selection of fixed and

variable annuities that allow clients to deposit money

periodically and accumulate tax-deferred earnings.

For our non-U.S. clients, LISI makes available universal

investment plans with long-term growth potential

through a trust formed on our clients’ behalf.

Private banking clients can also take advantage of

innovative investment products, such as principal

protected investments linked to various market indices

and currencies (capital guarantee subject to issuer risk).

Leumi Investment Services Inc.

LISI is a member of FINRA / SIPC.

PRODUCTS OFFERED THROUGH LISI:

NOT FDIC INSURED / NO BANK GUARANTEE / MAY LOSE VALUE

10

At the onset of 2012, risks to the U.S. and global

economy abounded. Some questioned the

viability of the Euro currency and worried about

weakness in China and Emerging Markets. High U.S.

unemployment, lagging consumer spending and huge

federal budget deficits were on the mind of most

others. In the end, however, betting on doomsday

outcomes was expensive because 2012 turned out

to be much less disastrous then many feared.

High unemployment led the Bernanke Fed into

repeated rounds of unconventional accommodation.

The lengthening of the Feds portfolio of treasury

securities (Operation Twist) was extended to year-end

at a pace of $45 billion per month. In September they

extended the low rate commitment to mid-2015. They

also announced an unprecedented “open ended” QE3

where they plan to purchase $40 billion monthly of U.S.

Agency mortgages until unemployment falls to 6.5%.

Looking back on 2012, a major conclusion is that

Central Banks were key in providing liquidity, avoiding

catastrophe and restoring calm. This can be seen

in ten-year treasury yields which moved down from

2.40% in March to a record low of 1.40% in July

following weaker data and Fed purchases. Into

year-end, yields moved higher on the uncertainties

surrounding “fiscal cliff” budget negotiations, but they

ended the year at 1.75% compared to 1.90% one

year earlier. The reduction in the ten-year rate was

a key goal of Fed policy towards invigorating a

housing market that had declined for six years. As

2012 progressed it was evident that the Fed was

succeeding in this important objective as housing

construction, sales and prices all moved higher.

As housing stabilized, confidence improved, personal

expenditures increased, business accumulated

inventory and unemployment fell to 7.9% from 8.5%

one year earlier. Relatively stable energy prices were

also helpful in supporting consumer spending while

increased U.S. energy production is helping the U.S.

to become less dependent on foreign sources.

The low rate environment challenged investors to

generate returns. Clearly the equity markets benefited

with the Dow gaining 7.0% and the S&P 500 posting

a stronger than forecast gain of 13.4%. In early 2013,

equities are already up 6.0-7.0% as of mid-February.

Low U.S. rates and less tension in Europe led to a

modestly lower dollar against the single Euro currency

while attempts by the Bank of Japan to spur their

economy led to a sharp 13% U.S. dollar rise versus

the yen. The broader USD Index ended the year at

79.8 or just 0.5% lower from year-end 2011.

The re-election of President Obama and a split

Congress led to a down-to-the-wire confrontation

over the “fiscal cliff”. In the end, a compromise was

reached that raised taxes but did little to cut spending.

Automatic spending cuts, set to take effect in January,

were postponed until March and became embroiled

in the political debate over the debt ceiling, more

taxes and entitlement spending cuts. The outcome

of this debate could affect the U.S. credit rating and

will play an important part in economic and market

performance in 2013.

On a year-over-year basis, GDP rose 2.2% in 2012

and is expected to perform about the same in 2013.

Front loaded “fiscal cliff” tax increases should keep

growth below 1.5% in the first half of 2013 followed

by 2.5% growth in the second half. Supporting

growth in the second half will be a smaller fiscal drag

from the federal government while state and local

government expenditures grow due to improving

housing fundamentals. The unemployment rate

should gradually decline towards 7.5%.

Inflation is not seen as a problem with the CPI

expected to rise about 1.7%, the same as in 2012.

With inflation in check and unemployment above the

Fed’s 6.5% target, there seems little in the way to

derail the Fed from continuing its $85 billion monthly

QE program in 2013. As such, official short term rates

should remain anchored near zero.

The U.S. Economy in 2012

11

Economic Growth

Israel’s Gross Domestic Product (GDP) grew by 3.3%,

in 2012 (the growth rate is in real terms) compared

to 4.6% in 2011. The slowdown of economic activity

expansion of the Israeli economy took place in

almost all sectors: slower export growth, weaker

private consumption demand and a major slowdown

of investments in non-residential capital such as

machinery and equipment.

Despite the slowdown of economic expansion in

2012, Israel, an OECD member, has continued to

maintain its growth gap well over the OECD average.

The outpacing Israel compared to the OECD has been

clearly been evident since 2004.

The Sovereign Credit Rating

Following the ongoing improvement in the state of

the Israeli economy in previous years, the country’s

credit rating was increased by the various credit rating

agencies in late 2007 and in early 2008. In September

2011 Israel’s credit rating was further increased to A+

by Standard and Poor’s.

Fiscal Policy

In 2012 the deficit was 4.2% of GDP, compared to a

target of 2.0% of GDP. The deviation of the deficit from

its target is attributed to the weakening of state tax

revenues and excessive spending. Israel’s fiscal path

is subject to an explicit feedback rule with a target

of a government debt to GDP ratio of 60% of GDP,

according to the Maastricht accord of the EMU.

The Exchange Rate, Inflation and Monetary Policy

The exchange rate of the shekel depreciated during

2012 to NIS 3.86: US$1 on average from NIS 3.58:

US$1 on average in 2011. The weakening of the

shekel seems to have been related to a small current

account deficit that took place temporarily during part

of the year and also the outflow of foreign portfolio

investments from Israel’s government bond market.

The depreciation was not of a large magnitude and it

is likely to be beneficial for Israel’s export sector.

The consumer price index rose 1.6% in 2012, which is

within the official price stability target of 1-3%. A look

at the primary components of the CPI change shows

that the housing item is still a major contributor to

inflation, though its dominance has declined compared

to previous years.

Performance of Tel-Aviv Stock Exchange Traded Shares

The negative trend that prevailed during the second

half of 2011 in the Israeli stock market continued

during the first half of 2012. Since August 2012

and through the end of the year, the Tel-Aviv stock

indexes have risen. This recovery of the Tel-Aviv market

seems to be related to further interest cuts by the

central bank, a decline in geopolitical uncertainty and

an improvement in the market perception of global

economic risks that have subsided.

During 2012, the Israeli TA-25 index of blue chip

shares rose by 13.0%, and the TA-100 index of the

most actively traded shares rose by 11.0%. In 2012,

the index of small cap stocks experienced larger

rises than that of the TA-25 index. The sectors that

experienced relatively high price increases in 2012

compared to the average (the TA-100) included

high-tech, the banks, insurance and real-estate and

construction. This is in contrast to the developments in

2011. Sectors that posted declines in 2012 included

telecomm, trade and services and investment and

holding companies.

The Israeli Economy in 2012

Management Analysis

Net Income for the year was $24.5 million, compared

to $20.1 million in 2011. The increase in net income

results can be attributed to ongoing commercial

banking business, gains from the sales of securities

and a decrease in provision for loan losses. Assets as

of December 31, 2012 were $5.4 billion compared

to $5.7 billion in 2011. The bank’s loan portfolio

decreased by $126 million in 2012. The provision for

loan losses was $6.8 million in December 31, 2012,

compared to $8.8 million in December 31, 2011.

Assets under management narrowly decreased in

2012 to $8.5 billion from $8.7 billion in 2011.

As of December 31, 2012, Bank Leumi USA had $5.4

billion in total assets and a capital base of $541 million

in shareholders’ equity. All capital ratios continue to be

strong and exceed regulatory requirements. The bank

enjoys favorable liquidity, with cash placements and

marketable securities representing 26% of total assets

as of December 31, 2012.

12

$1,030Real Estate

$237Diamond &

Jewelry

$300Textile & Apparel

$57Individuals

$306Holding

Companies

$215Wholesale & Import

$228Financing Industry

$190Manufacturing

$387Services, Professional& Health

$144Retail

$183Steel & Mining

$81Entertainment

$412Miscellaneous

LOANS BY INDUSTRY (in millions) As of December 31, 2012

11

4,85

5,41

0

NET INCOME(in thousands)

TOTALLOANS(in thousands)

TOTALDEPOSITS(in thousands)

TOTALSECURITIES(in thousands)

TOTALASSETS(in thousands)

SHAREHOLDERS’EQUITY(in thousands)

RETURNON EQUITY

12

3,75

9,03

2

11

3,88

4,59

2

12

4,54

6,49

3

12

698,

012

11

679,

150

NONINTERESTINCOME(in thousands)

NONINTERESTEXPENSE(in thousands)

ASSETS UNDERMANAGEMENT(in thousands)

12

49,4

00

11

42,9

70

CAPITAL RATIOS

11*

13.2

3%

10.4

5%

8.80

%

12

14.4

7%

11.5

6%

9.32

%

Leverage Capital

Tier 1 Capital

Total Capital

11

8,65

9,37

5

12 1112

8,48

1,02

7

136,

988

137,

393

11

20,0

86

12

24,5

31

11*

5,67

8,34

6

12

5,36

5,31

2

11*

514,

883

12

540,

501

11*

4.53

%

125.

20%

2012 *Includes the impact of an immaterial adjustment to assets and equity related to a reduction of deferred tax assets.

Financial Highlights of 2012

Shareholders’ Equity – Total equity increased to

$541 million as of December 31, 2012 from $515

million as of December 31, 2011.

Return on Equity – Return on equity was 5.20%.

Total Loans – As the bank continues to implement its

strategic initiatives and focus on key industries, its loan

portfolio composition resulted in a slight decrease year

over year.

Total Deposits – Although total deposits declined

in 2012, demand deposit account balances grew by

22.2% during 2012 to $1,083 million.

Credit Quality – The allowance for credit losses

totaled $54 million at year-end 2012, representing

1.43% of total loans and is 0.66 times the level of

non-accrual loans. Non-accrual loans at year-end

2012 were $81 million compared to $86 million at

year-end 2011.

Non-interest Income – In 2012, total non-interest

income grew to $49 million, a 14% increase from the

2011 total of $43 million, mainly due to gains on sales

of securities.

Net Interest Income – Net interest for 2012 was

$133 million compared to $132.5 million in 2011.

Interest expenses as a percentage of total interest

income remained 19.3% of total interest income

in 2012.

Capital Strength – Total shareholders’ equity at

December 31, 2012 was $541 million, representing

10.07% of year-end assets. This favorably compares

with total shareholders’ equity at December 31, 2011

of $515 million, representing 9.07% of year-end

assets. At year-end 2012, Bank Leumi USA’s Tier 1

capital ratio was 11.56%, its total capital ratio was

14.47% and its leverage ratio was 9.32%. All capital

ratios continue to be strong and exceed regulatory

requirements.

13

11

4,85

5,41

0

NET INCOME(in thousands)

TOTALLOANS(in thousands)

TOTALDEPOSITS(in thousands)

TOTALSECURITIES(in thousands)

TOTALASSETS(in thousands)

SHAREHOLDERS’EQUITY(in thousands)

RETURNON EQUITY

12

3,75

9,03

2

113,

884,

592

12

4,54

6,49

3

12

698,

012

11

679,

150

NONINTERESTINCOME(in thousands)

NONINTERESTEXPENSE(in thousands)

ASSETS UNDERMANAGEMENT(in thousands)

12

49,4

00

11

42,9

70

CAPITAL RATIOS

11*

13.2

3%

10.4

5%

8.80

%

12

14.4

7%

11.5

6%

9.32

%

Leverage Capital

Tier 1 Capital

Total Capital

11

8,65

9,37

5

12 1112

8,48

1,02

7

136,

988

137,

393

11

20,0

86

12

24,5

31

11*

5,67

8,34

6

12

5,36

5,31

2

11*

514,

883

12

540,

501

11*

4.53

%

12

5.20

%

11

4,85

5,41

0

NET INCOME(in thousands)

TOTALLOANS(in thousands)

TOTALDEPOSITS(in thousands)

TOTALSECURITIES(in thousands)

TOTALASSETS(in thousands)

SHAREHOLDERS’EQUITY(in thousands)

RETURNON EQUITY

123,

759,

032

11

3,88

4,59

2

12

4,54

6,49

3

12

698,

012

11

679,

150

NONINTERESTINCOME(in thousands)

NONINTERESTEXPENSE(in thousands)

ASSETS UNDERMANAGEMENT(in thousands)

12

49,4

00

11

42,9

70

CAPITAL RATIOS

11*

13.2

3%

10.4

5%

8.80

%

12

14.4

7%

11.5

6%

9.32

%

Leverage Capital

Tier 1 Capital

Total Capital

11

8,65

9,37

5

12 1112

8,48

1,02

7

136,

988

137,

393

11

20,0

86

12

24,5

31

11*

5,67

8,34

6

12

5,36

5,31

2

11*

514,

883

12

540,

501

11*

4.53

%

12

5.20

%11

4,85

5,41

0

NET INCOME(in thousands)

TOTALLOANS(in thousands)

TOTALDEPOSITS(in thousands)

TOTALSECURITIES(in thousands)

TOTALASSETS(in thousands)

SHAREHOLDERS’EQUITY(in thousands)

RETURNON EQUITY

12

3,75

9,03

2

11

3,88

4,59

2

12

4,54

6,49

3

12

698,

012

11

679,

150

NONINTERESTINCOME(in thousands)

NONINTERESTEXPENSE(in thousands)

ASSETS UNDERMANAGEMENT(in thousands)

12

49,4

00

11

42,9

70

CAPITAL RATIOS

11*

13.2

3%

10.4

5%

8.80

%

12

14.4

7%

11.5

6%

9.32

%

Leverage Capital

Tier 1 Capital

Total Capital

11

8,65

9,37

5

12 1112

8,48

1,02

7

136,

988

137,

393

11

20,0

86

12

24,5

31

11*

5,67

8,34

6

12

5,36

5,31

2

11*

514,

883

12

540,

501

11*

4.53

%

12

5.20

%

*Includes the impact of an immaterial adjustment to assets and equity related to a reduction of deferred tax assets.

Years Ended December 31 (dollar amounts in thousands) 2012 2011

Assets

Cash and due from banks $ 683,069 $ 868,675

Time deposits with banks 4,201 4,401

Available for sale securities 540,853 652,953

Trading securities 157,159 26,197

Loans, net 3,705,460 3,826,691

Bank premises and equipment 21,535 16,176

Other assets 253,035 283,253 *

Total Assets $ 5,365,312 $ 5,678,346

Liabilities and Shareholders’ Equity

Non-interest bearing deposits $ 1,082,650 $ 886,447

Interest-bearing deposits 3,463,843 3,968,963

Total Deposit $ 4,546,493 $ 4,855,410

Borrowing from federal home loan bank 55,000 55,000

Securities sold under repurchase agreements 15,000 15,000

Long-term debt 90,000 90,000

Other liabilities 118,318 148,053

Total Liabilities $ 4,824,811 $ 5,163,463

Shareholders’ Equity

Capital stock – $10 par value:

Authorized, 15,000,000 shares

Outstanding, 12,939,107 shares $ 129,391 $ 129,391

Additional paid-in capital 150,668 150,668

Retained earnings 280,332 255,801 *

Accumulated other comprehensive loss (19,890) (20,977)

Total Shareholders’ Equity $ 540,501 $ 514,883

Total Liabilities and Shareholders’ Equity $ 5,365,312 $ 5,678,346

*Includes the impact of an immaterial adjustment to assets and equity related to a reduction of deferred tax assets.

Consolidated Statements of Financial Condition

14

statements

Consolidated Statements of Income

15

Years Ended December 31 (dollar amounts in thousands) 2012 2011

Interest Income

Interest on loans $ 151,217 $ 147,288

Interest on securities 11,815 17,936

Interest on time deposits with banks 1,998 984

Total Interest Income $ 165,030 $ 166,208

Interest Expense

Interest on deposits $ 28,284 $ 26,647

Interest – other 3,678 7,043

Total Interest Expense $ 31,962 $ 33,690

Net interest Income 133,068 132,518

Less provision for loan losses 6,770 8,795

Net interest income after provision for loan losses $ 126,298 $ 123,723

Non-interest Income

Commissions $ 23,383 $ 23,460

Fees 9,390 9,786

Cash surrender value of bank owned life insurance 1,927 2,602

Gain on trading derivatives, net (3,481) 1,071

Gain (loss) on available-for-sale securities, net 7,828 1,091

Other, net 10,353 4,960

Total non-interest income $ 49,400 $ 42,970

Non-interest Expense

Salaries $ 52,676 $ 50,895

Employee benefits 21,246 18,743

Occupancy 13,233 13,973

Professional services 14,414 14,509

Equipment 9,818 9,633

Data processing 7,719 8,058

Other 18,287 21,177

Total non-interest expense $ 137,393 $ 136,988

Income before income taxes $ 38,305 $ 29,705

Income tax expense 13,774 9,619

Net Income $ 24,531 $ 20,086

Other Comprehensive Gain (loss):

Unrealized actuarial gains (losses) on pension and other post-retirement benefits, net of tax $ 1,423 $ (5,783)

Unrealized (losses) gains on securities 336 1,856

Comprehensive Income $ 25,618 $ 16,159

Board of Directors and Management

16

Board of Directors

David BrodetChairman of the BoardBank Leumi USALeumi Group

Itzhak EyalPresident and Chief Executive OfficerBank Leumi USA

Robert M. ButcherBusiness Consultant& Chairman of the RiskManagement CommitteeBank Leumi USA

Theodore P. GlueckPresidentEastwood Associates, Inc.& Chairman of theExecutive CommitteeBank Leumi USA

Malcolm HoenleinExecutive Vice ChairmanConference of Presidents of Major Jewish Organizations

Gail HoffmanTreasurerColumbia University

Donald S. HowardBusiness Consultant& Chairman of the Audit and Investment CommitteesBank Leumi USA

Steven Lavin, Esq.Lavin & Waldon, P.C.

Robert K. LiftonChairman and CEOMedis Technologies Ltd

Avner MendelsonHead of Strategy and International Operations DivisionBank Leumi le-Israel

Zeev NahariBusiness ConsultantFormer CFO and Deputy CEO of Leumi Group

Michael UrkowitzBusiness ConsultantFormer Executive Vice PresidentChase Manhattan and Chairman of the Compliance & Information Technology CommitteesBank Leumi USA

Senior Management

Itzhak EyalPresident andChief Executive Officer

Hilla Eran-ZickSenior Executive Vice President & Deputy Chief Executive Officer

Nisan BlumExecutive Vice PresidentChief Internal Auditor

Dafna DothanExecutive Vice PresidentChief Risk Officer

Michael FeganExecutive Vice PresidentChief Operations andTechnology Officer

Chaim FromowitzExecutive Vice PresidentHead of Private Banking

Robert R. GiordanoExecutive Vice PresidentChief Investment Officer

John P. McGannExecutive Vice PresidentHead of Human Resources

Jeremiah T. Murnane IIIExecutive Vice PresidentChief Compliance Officer

John SanfratelloExecutive Vice PresidentController

Steven CaligorFirst Senior Vice PresidentNew York Commercial Banking

Wendi G. GlassmanFirst Senior Vice PresidentGeneral CounselCorporate Secretary

Michaela KleinFirst Senior Vice PresidentChief Credit Risk OfficerRisk Management

Joseph A. SciarilloFirst Senior Vice PresidentReal Estate Lending

Management

Commercial Banking

U.S. Lending

Steven CaligorFirst Senior Vice PresidentPresidentBank Leumi Leasing Corporation

Christopher GreggSenior Vice PresidentNew York Real Estate Lending

Eric HalpernSenior Vice PresidentMiddle Market Lending

John KoenigsbergSenior Vice PresidentMiddle Market Lending

Ignatius MarottaSenior Vice PresidentMiddle Market Lending

Noam KatzVice PresidentCorporate Finance

Compliance

Frank VecchioneFirst Vice PresidentDeputy Chief Compliance Officer

Gloria Creese-AshFirst Vice PresidentBSA Officer

Controller’s Group

Liam HughesFirst Vice PresidentAccounting & Taxation

Peter CalabreseFirst Vice PresidentFinancial Reporting

Diamond & Jewelry Lending Branch Banking

Shlomo MosseriFirst Senior Vice PresidentDiamond & Jewelry LendingBranch Banking

17

Human Resources

Lourdes ProdigalidadVice PresidentBenefits, Compensation& Recruiting

Information Technology & Operations

Christopher WalshFirst Vice PresidentInformation Security Officer

Carol FinanVice PresidentOperations

Lillian OrtizVice PresidentMoney Transfer

Tom WuenschVice PresidentAdministrative Services

Internal Audit

Greg StefanatosFirst Vice PresidentDeputy Head

International Banking

Eitan SapirSenior Vice PresidentInternational Lending

Shula SlagterSenior Vice PresidentTrade Finance

Manashe BassousFirst Vice PresidentCollections

Robert ReichVice PresidentLetters of Credit

Legal

Donald BittkerSenior Vice PresidentDeputy General Counsel

Private Banking

Nancy EidenFirst Vice PresidentPresidentLeumi Investment Services Inc.

Steven SchieffelinFirst Senior Vice PresidentU.S. Private Banking

Alex KleinFirst Senior Vice PresidentInternational Private Banking

Teddy HeichmanSenior Vice PresidentInternational Private Banking

Dan HoffmanSenior Vice PresidentInternational Private BankingOperations

Project Management Office

Yair GrossmanSenior Vice PresidentHead of PMO

Regional Offices

New York

Denis ByrneFirst Vice PresidentManager579 Fifth Avenue

California

Ofer KorenFirst Senior Vice PresidentRegional Manager

Yael CohenFirst Vice PresidentManagerEncino

Cynthia GatesFirst Vice PresidentOperations

Vardit Jan EngelFirst Vice PresidentManagerLos Angeles

Michal MironFirst Vice PresidentBranch Manager& Private Banking

Dan LevinsonVice PresidentManagerPalo Alto

Florida

Akiva SegalFirst Senior Vice PresidentRegional Manager

Richard OleszewskiSenior Vice PresidentSenior Lending Officer

Mazal YehezkelyFirst Vice PresidentPrivate Banking

Diana McPheeVice PresidentOperations

Illinois

Boaz BlumovitzFirst Senior Vice PresidentRegional Manager

Paul LetourneauSenior Vice PresidentSenior Lending Officer

Marc PershanFirst Vice PresidentPrivate Banking

Maria GonzalezVice PresidentOperations

Risk Management

Christopher MillerSenior Vice PresidentCredit Administration

Avi SpectorFirst Vice PresidentOperational Risk Management

Paul TineFirst Vice PresidentLoan Review

Richard CowellVice PresidentEnterprise Risk Management

Michele GerkinVice PresidentCredit Risk Review

Treasury

Daniel BernzweigSenior Vice PresidentDeputy Treasurer

Israel Bank Leumi le-Israel B.M.Tel Aviv

Headquarters24–32 Yehuda Halevi StreetTel Aviv 65546Tel: 972.3.514.8111Fax: 972.3.514.8656www.bankleumi.com

Leumi International & Private Banking Division35 Yehuda Halevi StreetTel Aviv 65546Tel: 972.3.514.3313Fax: 972.3.514.9602E-mail: private@bll.co.il

Leumi International Private Banking Centers

Tel AvivDizengoff Top Tower, 17th Floor55 Dizengoff StreetTel Aviv 64332Tel: 972.3.621.7333Fax: 972.3.621.7355French & German speakers

Dizengoff Top Tower, 23rd Floor55 Dizengoff StreetTel Aviv 64332Tel: 972.3.621.7444Fax: 972.3.621.7455/6English, Spanish & Russian speakers

Jerusalem19 King David StreetJerusalem 94101Tel: 972.2.620.1811Fax: 972.2.624.0431

Leumi Foreign Residents & Tourist Centers

Tel AvivJerusalemHaifaNetanyaHerzliya PituachBat YamAshdodEilat

Leumi SubsidiariesLeumi Partners Ltd.5 Azrieli Center (Square Tower),36th FloorTel Aviv 67025Tel: 972.3.514.1212Fax: 972.3.514.1275

Bank Leumi le-Israel Trust Company Ltd.8 Rothschild BoulevardTel Aviv 66881Tel: 972.3.517.0777Fax: 972.3.517.0770

United States of America Bank Leumi le-Israel B.M.New York Agency

New York Regional Office562 Fifth Avenue, 2nd FloorNew York, NY 10036Tel: 1.212.626.1355

Bank Leumi USA

New YorkHeadquarters579 Fifth AvenueNew York, NY 10017Tel: 1.917.542.2343 1.800.892.5430E-mail: contactus@leumiusa.comwww.leumiusa.com

International Private Banking564 Fifth Avenue, 3rd FloorNew York, NY 10036Tel: 1.212.626.1001

Bank Leumi Leasing Corporation562 Fifth Avenue, 8th FloorNew York, NY 10036Tel: 1.212.626.1230

Leumi Investment Services Inc.562 Fifth Avenue, 7th FloorNew York, NY 10036Tel: 1.212.407.4345

FloridaAventuraOne Turnberry Place, Suite 50019495 Biscayne BoulevardAventura, FL 33180Tel: 1.305.918.6960

International Private BankingOne Turnberry Place, Suite 50019495 Biscayne BoulevardAventura, FL 33180Tel: 1.305.918.6960

CaliforniaBeverly Hills8383 Wilshire Boulevard, Suite 400Beverly Hills, CA 90211Tel: 1.323.966.4700

Los Angeles600 Wilshire Boulevard, Suite 1500Los Angeles, CA 90017Tel: 1.213.452.8600

Encino16530 Ventura BoulevardEncino, CA 91436Tel: 1.818.379.2700

Silicon Valley2000 University Avenue, Suite 605Palo Alto, CA 94303Tel: 1.650.289.2400

IllinoisChicagoOne N. LaSalle Street, Suite 200Chicago, IL 60602Tel: 1.312.419.4040

Cayman IslandsGrand CaymanBritish West Indiesc/o Bank Leumi USAInternational Customer Service564 Fifth Avenue, 2nd FloorNew York, NY 10036Tel: 1.212.626.1001

IsraelHerzliya PituachAckerstein Towers11 Hamenofim StreetP.O. Box 2148Herzliya Pituach, Israel 46120Tel: 972.9.971.5632Fax: 972.9.971.5601Representative Office in Israel

North, Central, and South America

Canada Bank Leumi le-Israel B.M.Ontario

Toronto5140 Yonge Street, Suite 2220Toronto, Ontario M2N 6K1Tel: 1.416.594.0681Fax: 1.416.594.0801E-mail: blltor@bellnet.ca

Québec

Montréal1 Westmount Square, Suite 400Montréal, Québec H3Z 2P9Tel: 1.514.931.4457Fax: 1.514.931.5240E-mail: bllmtl@bellnet.ca

Bank Leumi le-Israel B.M. Financial Comanies

Cayman Islands

Bank Leumi le-Israel B.M.George Town BranchBritish West Indies

Curaçao Leumi International Investments N.V.Mailing Address for CaymanIslands and Curaçao:c/o Bank Leumi (Luxembourg) S.A.6D, Route de TrèvesL-2633 Senningerberg,LuxembourgTel: 352.346.390Fax: 352.346.396

Leumi Group Listing

18

19

Uruguay Leumi (Latin America) S.A.MontevideoEdificio World Trade CenterLuis A. de Herrera 1248Torre A, Piso 10, MontevideoTel: 598.2.628.5838Fax: 598.2.622.9033E-mail: recepcion@leumi.com.uywww.leumi.com.uy

Punta del EsteAvenida Gorlero, Calle 28Edif. Torre de las AméricasLocal 006, Punta del EsteTel: 598.42.444.303Fax: 598.42.444.492E-mail: punta@leumi.com.uy

Panama Bank Leumi le-Israel B.M.Panama CityCalle Manuel Maria Icaza No. 10Edificio Grobman,Apartado 0819-05593Panama City, Rep. de PanamaTel: 507.263.9377Fax: 507.269.2674E-mail: info@leumipa.comwww.leumi.com.pa

Venezuela Bank Leumi le-Israel B.M.CaracasCentro San Ignacio, Torre Kepler, Piso 4Av. Blandin, La CastellanaCaracas 1060Tel: 58.212. 201.8589Fax: 58.212.263.7744E-mail: bllccs1000@cantv.net

Mexico Bank Leumi le-Israel B.M.Mexico CityFuente de Pirámides 1-305Lomas de Tecamachalco53950 Naucalpan,Edo. de MéxicoTel: 52.555.294.6155Fax: 52.555.294.4000E-mail: bllmexico@prodigy.net.mx

Chile Bank Leumi le-Israel B.M.SantiagoTorre del BosqueAv. El Bosque Norte 0177Of. 604, Las Condes, SantiagoTel: 56.2.332.0140Fax: 56.2.332.0144E-mail: info@leumichile.cl

Europe

United Kingdom Bank Leumi (UK) plcLondon20 Stratford PlaceLondon W1C 1BGTel: 44.20.7907.8000Fax: 44.20.7907.8001E-mail: info@bankleumi.co.ukwww.bankleumi.co.uk

North of England RepresentativeMr. Steve Cooper5 Carrwood ParkSelby Road, LeedsWest Yorkshire LS15 4LGTel: 44.7771.522.907E-mail: scooper@bankleumi.co.uk

Leumi ABL LimitedPacific House, 126 Dyke Road,BrightonEast Sussex BN1 3TETel: 44.1273.716.200Fax: 44.1273.716.210www.leumiabl.co.uk

Channel Islands SubsidiariesBank Leumi (Jersey) LimitedP.O. Box 510, 2 Hill StreetSt. Helier, Jersey JE4 5TRChannel IslandsTel: 44.1534.702.525Fax: 44.1534.617.446E-mail: info@leumijersey.comwww.leumijersey.com

Leumi Overseas Trust Corporation Ltd.P.O. Box 510, 2 Hill StreetSt. Helier, Jersey JE4 5TRChannel IslandsTel: 44.1534.702.500Fax: 44.1534.702.570E-mail: info@leumijersey.comwww.leumijersey.com

Switzerland Leumi Private Bank Ltd.Zürich Head OfficeDianastrasse 5, CH-8022 Zurich Tel: 41.58.207.9111Fax: 41.58.207.9100E-mail: infozh@leumi.chwww.leumi.ch

Geneva1 rue de la Tour-de-I’IleCH-1211GenevaTel: 41.58.207.3555Fax: 41.58.207.3318E-mail: infoge@leumi.ch

LuganoViale Giuseppe Cattori 12CH-6900 Paradiso/TI LuganoTel: 41.58.207.4200Fax: 41.58.207.4235

Representative Office in IsraelBeit Nolton, 14 Shenkar StreetP.O.B. 2134, Herzliya Pituach46120Tel: 972.9.955.9571Fax: 972.9.955.0662E-mail: afichman@leumi.ch

France Bank Leumi le-Israel B.M.Paris31 rue François 1er75008 ParisTel: 33.1.5367.9140Fax: 33.1.5367.9144E-mail: contact@leumirep.fr

Luxembourg Bank Leumi (Luxembourg) S.A.6D, Route de TrèvesL-2633 Senningerberg,LuxembourgTel: 352.346.390Fax: 352.346.396 E-mail: bleulux@pt.lu www.bankleumi.lu

Romania Bank Leumi Romania S.A.BucharestB-dul Aviatorilor nr. 45, Sector 1BucharestTel: 40.21.206.7075Fax: 40.21.206.7050E-mail: office@leumi.rowww.leumi.ro

Germany Bank Leumi le-Israel B.M.BerlinTauentzienstrasse 7 b/c10789 BerlinTel: 49.30.2579.8804Fax: 49.30.2579.8080E-mail: leumi.rep@berlin.de

FrankfurtWöhlerstrasse 5, 60323Frankfurt a.M.Tel: 49.69.288.031Fax: 49.69.288.061E-mail: bank_leumi@freenet.de

Australia, Asia and Africa

AustraliaMelbourneNovell Building Level 5,574 St. Kilda Rd.P.O. Box 6807Melbourne 3004 VICTel: 61.3.9529.2022Fax: 61.3.9529.2077E-mail: office@bllau.com

Hong KongCentral Building, Room 617Queens Road and Pedder StreetHong KongTel: 852.2524.0320E-mail: office@bllau.com

South AfricaJohannesburgc/o Fluxmans Inc.11 Biermann AvenueRosebank 2196, JohannesburgTel: 27.11.328.1700Fax: 27.11.328.1859E-mail: cstrime@fluxmans.com

The Board of Directors of Bank Leumi USA has

adopted and adheres to corporate governance

practices that it believes are sound, compliant with

applicable law and represent best practices. Bank

Leumi USA is not a public company; however,

following enactment of the Sarbanes-Oxley Act

of 2002, the Board and management enhanced

bank policies and procedures to meet many of the

standards set by the Act and its implementing rules.

The Board of Directors consists of twelve members,

nine of whom are independent of management of

the bank under applicable law. In 2012, the Board

of Directors appointed Steven Lavin, a director

independent of management, as lead director. In

his capacity as lead director, Mr. Lavin has additional

corporate governance responsibilities. Shareholders

and other interested parties may communicate with

the lead director or the non-management directors

as a group by sending communications to the

principal office of Bank Leumi USA in care of the

Corporate Secretary.

In July 2012, the Board of Directors reorganized its

committee structure. As of July, 2012, the Board of

Directors has five standing committees: Executive,

Audit, Compliance, Risk Management and Investment

and Loan. In addition, the Executive Committee

has two subcommittees: Strategy and Information

Technology. In 2012, the Executive Committee

met four times, the Audit Committee five times,

the Compliance Committee four times, the Risk

Management and Investment Committee four times

and the Loan Committee twenty-two times. The

Information Technology subcommittee met six times

and the Strategy Committee met three times. The

Board of Directors met eight times.

The Audit Committee has four members. The Board

has determined they are (1) “outside directors,”

(2) have banking or related financial management

expertise, and (3) are financially literate, as required

by applicable FDIC rules and regulations. The Audit

Committee members are Robert M. Butcher, Donald S.

Howard, Steven Lavin, and Michael Urkowitz. At least

one of the members, Mr. Donald S. Howard, qualifies

as an “audit committee financial expert” under SEC

criteria. Among his many professional achievements,

Mr. Howard previously served as the chief financial

officer of Salomon Inc.

The Audit Committee operates pursuant to a charter,

last approved in July 2012. The charter gives the

Audit Committee the authority and responsibility for

the appointment, retention, compensation and

oversight of the bank’s independent auditors. The

Committee pre-approves all audit and non-audit

services to be performed by the independent auditors.

The Audit Committee appointed Ernst & Young LLP

as the independent auditors of the bank after

reviewing the firm’s performance and independence

from management.

The bank has a Code of Ethics, last approved by the

Board of Directors in May 2012. It is applicable to

all directors, officers and employees. It is a code of

conduct that expresses the bank’s commitment to

promoting (1) honest and ethical conduct; (2) full, fair,

accurate and timely reporting, (3) compliance with all

applicable laws, rules and regulations by all directors,

officers and employees of the bank; and (4) the prompt

internal reporting of violations of the Code of Ethics

in accordance with procedures set forth in the Code

of Ethics. The Code of Ethics may be viewed on the

bank’s website at www.leumiusa.com.

Governance

20