Financial Institutions, Inc. (the “Company”) (Nasdaq:FISI), the
parent company of Five Star Bank (the “Bank”), today reported
financial results for the quarter ended September 30, 2015.
The Company’s financial results since August 1, 2014 include the
results of operations of Scott Danahy Naylon (“SDN”), an insurance
agency the Company acquired in August 2014.
Third Quarter 2015 Highlights:
- Net income available to common shareholders was $8.0 million or
$0.56 per diluted share, compared to $6.8 million or $0.49 per
share in the same quarter last year
- Net interest income grew to $24.1 million despite continued net
interest margin pressure
- Provision for loan losses for the third quarter of 2015
decreased by 41% from the second quarter and was 63% lower than the
same period of 2014, while maintaining a coverage ratio of 311% at
September 30, 2015
- Quarterly cash dividend of $0.20 per common share represented a
3.20% dividend yield as of September 30, 2015 and a return of 36%
of third quarter net income to common shareholders
- Balance sheet and credit quality strengthened:
- Loans totaled $2.04 billion, up by $27.0 million from June 30,
2015 and up $128.4 million from a year ago
- Average interest-earning assets of $3.09 billion, up $99.4
million or 3% from June 30, 2015
- Total deposits of $2.75 billion increased by 4% from June 30,
2015 and 8% from a year ago
- Non-performing assets decreased 19% from the second quarter of
2015
- Tangible book value per share increased to $14.81 at September
30, 2015, up 6% from June 30, 2015
The Company’s President and Chief Executive Officer Martin K.
Birmingham stated, “Our third quarter performance reflects our
successful execution of strategic priorities for growth through
diversification, expense control and credit quality
management. Our earnings per share are up 14% compared to the
third quarter of last year, despite ongoing margin compression, and
steady loan growth led to new quarterly record levels for average
interest earning assets and total loans.”
Mr. Birmingham continued, “We have focused our marketing efforts
on expanding our presence in Rochester and Buffalo while continuing
to provide value to our longstanding customer base in the markets
where we have historically operated. This focus has led to
growth in commercial business loans and commercial mortgages, each
reaching record levels. As a Small Business Administration
(“SBA”) lender in Western New York, the Bank approved approximately
$14 million in SBA loans through the end of September, which is
nearly 50% higher than in the same period of 2014, reflecting our
commitment to devote resources to Small Business lending to take
advantage of opportunities in the marketplace and gain market
share. We believe that the additional loan officers we hired
earlier in the year, as well as increased spending on targeted
marketing, are bearing considerable fruit.
“We are excited about our growth prospects as we expand in the
Rochester area with the November opening of our City Gate branch, a
new bank branch concept offering enhanced customer interaction, and
as we move forward with the preparations to open a new branch in
Brighton for which we recently received regulatory
approvals.
“We have made considerable investments to enhance our presence
in the largest markets in our region where we are seeking to
increase our market share and to expand our suite of diversified
financial services. Given the opportunities available to us
and the progress we have made thus far, we believe the Company is
well positioned to continue growing for the foreseeable
future.”
Kevin B. Klotzbach, the Company’s Executive Vice President and
Chief Financial Officer, commented, “While we reported impressive
growth in key operating metrics, we are also pleased with our
expense control and credit quality management.
“We have improved credit quality while at the same time growing
total loans. Non-performing loans decreased $2.2 million or 21%
compared to June 30, 2015, primarily due to the third quarter
payoff of a $2.5 million commercial credit relationship. The
Company’s provision for loan losses decreased by 41% from the
second quarter and was 63% lower than the third quarter of last
year. We remain well capitalized and have the ability to
further increase our loan originations because of the improvement
in our capital ratios from the end of the second quarter.
“Our improved operating performance driven by revenue growth and
expense management, a strengthened balance sheet, and an unrealized
gain on investment securities in the third quarter culminated in a
6% increase in tangible common book value per share at September
30, 2015 as compared to June 30, 2015. We are pleased that
our focused growth and our disciplined expense and credit quality
management practices are fortifying our position in the market and
adding value for our shareholders.”
Third Quarter 2015 Results:
Net income for the third quarter 2015 was $8.3 million, compared
to $6.6 million for the second quarter 2015, and $7.2 million for
the third quarter 2014. Earnings per diluted common share for
the third quarter 2015 was $0.56, compared with $0.44 for the
second quarter 2015 and $0.49 for the third quarter 2014.
Net Interest Income and Net Interest Margin
Net interest income was $24.1 million in the third quarter 2015,
compared to $23.4 million in the second quarter 2015 and $23.3
million in the third quarter 2014. When comparing the third
quarter 2015 to the second quarter 2015, average earning assets
increased $99.4 million, including increases of $61.3 million and
$38.2 million in loans and investment securities,
respectively. Average earning assets in the third quarter
2015 compared to the same quarter in 2014 were up $335.5 million,
led by a $213.8 million increase in investment securities and a
$121.7 million increase in loans. The growth in earning assets was
offset by decreases in net interest margin. Third quarter
2015 net interest margin was 3.20%, a decrease of 4 basis points
from 3.24% reported in the second quarter 2015 and a 26 basis point
decrease from 3.46% reported in the third quarter 2014.
Noninterest Income
Noninterest income was $7.0 million for the third quarter 2015
compared to $6.5 million for the second quarter 2015 and $7.3
million in the third quarter 2014. Included in third quarter
2015 and 2014 noninterest income are gains realized from the sale
of investment securities of $286 thousand and $515 thousand,
respectively. Exclusive of those gains, noninterest income
was $6.7 million for the third quarter 2015 compared to $6.5
million for the second quarter 2015 and $6.7 million in the third
quarter 2014.
The main factors contributing to the higher noninterest income
during the third quarter 2015 compared to the second quarter 2015
were increases in insurance income and investments in limited
partnerships, partially offset by amortization of a historic tax
investment in a community-based project. Insurance income
increased $208 thousand during the third quarter 2015, largely due
to the variability in commissions associated with the timing of
revenues. Income from the Company’s investments in limited
partnerships, which are primarily small business investment
companies, increased $281 thousand during the third quarter
2015. The income from these equity method investments
fluctuates based on the performance of the underlying
investments. During the third quarter 2015 the Company
recognized $390 thousand of amortization of a historic tax
investment as contra-income, included in noninterest income, with
an offsetting tax benefit that reduced income tax expense.
Exclusive of the investment securities gains and the tax credit
investment amortization described above, noninterest income
increased by $363 thousand to $7.1 million for third quarter 2015
compared to $6.7 million for third quarter 2014. Insurance
income and investments in limited partnerships increased by $343
thousand and $149 thousand, respectively, partially offset by a
$240 thousand decrease in service charges on deposits due primarily
to lower overdraft fees.
Noninterest Expense
Noninterest expense was $19.3 million for the third quarter 2015
compared to $19.2 million for the second quarter 2015 and $18.0
million in the third quarter 2014. When comparing the third
quarter 2015 to the third quarter 2014, the $1.3 million increase
in noninterest expense was primarily the result of higher salaries
and employee benefits expense, occupancy and equipment expense and
other noninterest expense. Salaries and employee benefits
expense increased $553 thousand from the third quarter 2014,
primarily reflecting the hiring of additional personnel associated
with the Company’s expansion initiatives and higher pension
expense. Occupancy and equipment expense increased $286
thousand from the third quarter 2014 primarily due to higher
contractual service and depreciation expense.
Income Tax Expense
Income tax expense was $2.7 million for the third quarter 2015
compared to $2.8 million in the second quarter 2015 and $3.4
million in the third quarter 2014. As a result of the
historic tax credits discussed above, the effective tax rate was
24.8% for the third quarter of 2015, compared with an effective tax
rate of 29.5% for the second quarter of 2015 and 31.9% in the third
quarter 2014.
Balance Sheet and Capital Management
Total assets were $3.36 billion at September 30, 2015,
consistent with June 30, 2015 and up $302.3 million from $3.06
billion at September 30, 2014.
Total loans were $2.04 billion at September 30, 2015, up $27.0
million from June 30, 2015 and up $128.4 million from September 30,
2014. The increase in loans was attributable to organic
growth in commercial and home equity loans. Commercial loans
increased to $846.4 million at September 30, 2015, up $17.0 million
from June 30, 2015 and up $101.8 million from September 30,
2014. Home equity loans increased to $408.6 million at
September 30, 2015, up $9.8 million from June 30, 2015 and up $25.9
million from September 30, 2014.
Total investment securities were $1.07 billion at September 30,
2015, down $25.3 million from the end of the prior quarter and up
$196.7 million compared with September 30, 2014.
Approximately $165 million in available for sale securities were
transferred at fair value to held to maturity during the third
quarter 2015 as a means of mitigating the fair value fluctuations
in the available for sale portfolio and reducing the volatility of
tangible common equity.
Total deposits were $2.75 billion at September 30, 2015, an
increase of $97.3 million from June 30, 2015 and an increase of
$214.7 million from September 30, 2014. The increase during
the third quarter of 2015 was due in part to seasonal inflows of
municipal deposits, while the year-over-year increase was primarily
due to successful business development efforts. Public
deposit balances represented 27% of total deposits at September 30,
2015, compared to 26% at June 30, 2015 and 28% at September 30,
2014.
Short-term borrowings were $241.4 million at September 30, 2015,
down $109.2 million from June 30, 2015 and up $25.4 million from
September 30, 2014. Short-term borrowings are typically
utilized to manage the seasonality of municipal deposits.
Long-term borrowings, net of issuance costs, were $39.0 million
at September 30, 2015 and June 30, 2015. There were no
long-term borrowings outstanding at September 30, 2014. On
April 15, 2015, the Company completed the sale of $40 million in
aggregate principal amount of 6.00% fixed to floating rate
subordinated notes due 2030 (the “Subordinated Notes”). The
Subordinated Notes qualify as Tier 2 capital for regulatory
purposes. The net proceeds from this offering were intended
for general corporate purposes, including but not limited to,
contribution of capital to the Bank to support both organic growth
as well as opportunistic acquisitions.
Shareholders’ equity was $295.4 million at September 30, 2015,
compared with $284.4 million at June 30, 2015 and $277.8 million at
September 30, 2014. Common book value per share was $19.60 at
September 30, 2015, an increase of $0.77 or 4% from $18.83 at June
30, 2015 and $1.12 or 6% from $18.48 at September 30, 2014.
Tangible common book value per share, a non-GAAP measure, was
$14.81 at September 30, 2015, compared to $14.03 at June 30, 2015
and $13.59 at September 30, 2014.
During the third quarter 2015, the Company declared a common
stock dividend of $0.20 per common share, consistent with the prior
quarter and up by 5%, or $0.01 per share, from the third quarter of
2014. The third quarter 2015 dividend returned 36% of the
quarter’s net income to common shareholders.
The Company’s leverage ratio was 7.29% at September 30, 2015,
compared to 7.31% at June 30, 2015 and 7.34% at September 30,
2014. The decrease in the leverage ratio was due to an
increase in average quarterly assets. During the second
quarter of 2015, the Company contributed $34.0 million of net
proceeds from the Subordinated Notes offering to the Bank as
additional paid-in capital. The Bank’s leverage ratio and
total risk-based capital ratio were 8.01% and 12.72%, respectively,
at September 30, 2015.
Credit Quality
Non-performing loans at September 30, 2015 decreased $2.2
million compared to June 30, 2015, primarily due to improvements in
the commercial and residential real estate portfolios, partially
offset by increases in non-performing home equity and indirect
consumer loans. The decrease in commercial non-performing
loans was primarily driven by the third quarter 2015 payoff of a
$2.5 million commercial credit relationship consisting of
commercial business and commercial mortgage loans. Prior to
the payoff, the relationship was classified as nonaccrual and had a
specific reserve totaling $1.1 million. The ratio of
non-performing loans to total loans was 0.42% at September 30, 2015
compared with 0.53% at June 30, 2015 and 0.43% at September 30,
2014.
The provision for loans losses for the third quarter 2015 was
$754 thousand, a decrease of $534 thousand from the prior quarter
and $1.3 million from the third quarter 2014. The decrease in
the provision for loan losses reflects the reversal of the $1.1
million specific reserve related to the previously mentioned
non-performing $2.5 million commercial credit relationship that
paid off during the third quarter 2015. Net charge-offs were
$1.8 million during the third quarter 2015, an $820 thousand
increase compared to the prior quarter and a $138 thousand decrease
from the third quarter 2014. The ratio of annualized net
charge-offs to total average loans was 0.35% during the current
quarter, compared to 0.20% during the prior quarter and 0.40%
during the third quarter 2014.
The ratio of allowance for loans losses to total loans was 1.30%
at September 30, 2015, compared with 1.37% at June 30, 2015 and
1.43% at September 30, 2014. The ratio of the allowance for
loan losses to total loans declined in both comparisons, reflecting
overall improvement in credit quality. The ratio of allowance
for loans losses to non-performing loans was 311% at September 30,
2015, compared with 257% at June 30, 2015 and 333% at September 30,
2014.
About Financial Institutions,
Inc.
Financial Institutions, Inc. provides
diversified financial services through its subsidiaries, Five Star
Bank and Scott Danahy Naylon. Five Star Bank provides a wide
range of consumer and commercial banking services to individuals,
municipalities and businesses through a network of over 50 offices
and more than 60 ATMs throughout Western and Central New York
State. Scott Danahy Naylon provides a broad range of
insurance services to personal and business clients across 44
states. Financial Institutions, Inc. and its subsidiaries
employ approximately 650 individuals. The Company’s stock is
listed on the Nasdaq Global Select Market under the symbol FISI and
is a member of the NASDAQ OMX ABA Community Bank Index.
Additional information is available at the Company’s website:
www.fiiwarsaw.com.
Non-GAAP Financial
Information
This news release contains financial
information, such as tangible common equity, determined by methods
other than in accordance with U.S. generally accepted accounting
principles ("GAAP"). The Company believes that non-GAAP
financial measures provide a meaningful comparison of the
underlying operational performance of the Company, and facilitate
investors' assessments of its business and performance trends. In
addition, the Company believes the exclusion of these non-operating
items enables management to perform a more effective evaluation and
comparison of the Company's results and to assess performance in
relation to the company's ongoing operations. These disclosures
should not be viewed as a substitute for financial measures
determined in accordance with GAAP, nor are they necessarily
comparable to non-GAAP performance measures that may be presented
by other companies. Where non-GAAP disclosures are used in this
news release, the comparable GAAP financial measure, as well as the
reconciliation to the comparable GAAP financial measure, can be
found in Appendix A to this document.
Safe Harbor Statement
This press release may contain forward-looking
statements as defined by federal securities laws. These
statements may address issues that involve significant risks,
uncertainties, estimates and assumptions made by management.
Actual results could differ materially from current beliefs or
projections. There are a number of important factors that could
affect the Company’s forward-looking statements, which include its
ability to implement its strategic plan, its ability to redeploy
investment assets into loan assets, whether it experiences greater
credit losses than expected, breaches of its third party
information systems, the attitudes and preferences of its
customers, its ability to successfully integrate and profitably
operate acquired businesses such as the acquisition of SDN, the
competitive environment, fluctuations in the fair value of
securities in its investment portfolio, changes in the regulatory
environment and general economic and credit market conditions
nationally and regionally. For more information about these
factors and other factors that could affect the Company’s
forward-looking statements, please see the Company’s Annual Report
on Form 10-K and its Quarterly Reports on Form 10-Q on file with
the SEC. All of these factors should be carefully reviewed, and
readers should not place undue reliance on these forward-looking
statements. Except as required by law, the Company undertakes
no obligation to revise these statements following the date of this
press release.
FINANCIAL INSTITUTIONS, INC.Selected
Financial Information (Unaudited)(Amounts in thousands,
except per share amounts)
|
2015 |
|
2014 |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
SELECTED
BALANCE SHEET DATA: |
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
$ |
51,334 |
|
|
|
52,554 |
|
|
135,972 |
|
58,151 |
|
|
87,582 |
|
Investment
securities: |
|
|
|
|
|
|
|
|
|
Available for sale |
|
577,509 |
|
|
|
772,639 |
|
|
639,275 |
|
622,494 |
|
|
585,479 |
|
Held-to-maturity |
|
490,638 |
|
|
|
320,820 |
|
|
306,255 |
|
294,438 |
|
|
285,967 |
|
Total investment securities |
|
1,068,147 |
|
|
|
1,093,459 |
|
|
945,530 |
|
916,932 |
|
|
871,446 |
|
Loans held for
sale |
|
1,568 |
|
|
|
448 |
|
|
656 |
|
755 |
|
|
1,029 |
|
Loans: |
|
|
|
|
|
|
|
|
|
Commercial business |
|
297,876 |
|
|
|
292,791 |
|
|
277,464 |
|
267,409 |
|
|
275,107 |
|
Commercial mortgage |
|
548,529 |
|
|
|
536,590 |
|
|
479,226 |
|
475,092 |
|
|
469,485 |
|
Residential mortgage |
|
96,279 |
|
|
|
95,162 |
|
|
97,717 |
|
100,101 |
|
|
103,044 |
|
Home equity |
|
408,634 |
|
|
|
398,854 |
|
|
386,961 |
|
386,615 |
|
|
382,703 |
|
Consumer indirect |
|
665,714 |
|
|
|
666,550 |
|
|
662,213 |
|
661,673 |
|
|
656,215 |
|
Other consumer |
|
19,204 |
|
|
|
19,326 |
|
|
19,373 |
|
21,112 |
|
|
21,291 |
|
Total loans |
|
2,036,236 |
|
|
|
2,009,273 |
|
|
1,922,954 |
|
1,912,002 |
|
|
1,907,845 |
|
Allowance for loan losses |
|
26,455 |
|
|
|
27,500 |
|
|
27,191 |
|
27,637 |
|
|
27,244 |
|
Total loans, net |
|
2,009,781 |
|
|
|
1,981,773 |
|
|
1,895,763 |
|
1,884,365 |
|
|
1,880,601 |
|
Total interest-earning
assets (1) (2) |
|
3,097,315 |
|
|
|
3,104,631 |
|
|
2,860,605 |
|
2,826,488 |
|
|
2,780,940 |
|
Goodwill and other
intangible assets, net |
|
67,925 |
|
|
|
68,158 |
|
|
68,396 |
|
68,639 |
|
|
68,887 |
|
Total assets |
|
3,357,608 |
|
|
|
3,359,459 |
|
|
3,197,077 |
|
3,089,521 |
|
|
3,055,304 |
|
Deposits: |
|
|
|
|
|
|
|
|
|
Noninterest-bearing demand |
|
623,296 |
|
|
|
602,143 |
|
|
559,646 |
|
571,260 |
|
|
571,549 |
|
Interest-bearing demand |
|
563,731 |
|
|
|
530,861 |
|
|
611,104 |
|
490,190 |
|
|
530,783 |
|
Savings and money market |
|
942,673 |
|
|
|
910,215 |
|
|
922,093 |
|
795,835 |
|
|
805,522 |
|
Certificates of deposit |
|
623,800 |
|
|
|
613,019 |
|
|
611,852 |
|
593,242 |
|
|
630,970 |
|
Total deposits |
|
2,753,500 |
|
|
|
2,656,238 |
|
|
2,704,695 |
|
2,450,527 |
|
|
2,538,824 |
|
Short-term
borrowings |
|
241,400 |
|
|
|
350,600 |
|
|
175,573 |
|
334,804 |
|
|
215,967 |
|
Long-term borrowings,
net |
|
38,972 |
|
|
|
38,955 |
|
|
- |
|
- |
|
|
- |
|
Total interest-bearing
liabilities |
|
2,410,576 |
|
|
|
2,443,650 |
|
|
2,320,622 |
|
2,214,071 |
|
|
2,183,242 |
|
Shareholders’
equity |
|
295,434 |
|
|
|
284,435 |
|
|
286,689 |
|
279,532 |
|
|
277,758 |
|
Common shareholders’
equity (3) |
|
278,094 |
|
|
|
267,095 |
|
|
269,349 |
|
262,192 |
|
|
260,418 |
|
Tangible common equity
(4) |
|
210,169 |
|
|
|
198,937 |
|
|
200,953 |
|
193,553 |
|
|
191,531 |
|
Unrealized gain (loss)
on investment securities, net of tax |
$ |
5,270 |
|
|
|
(924 |
) |
|
5,241 |
|
1,933 |
|
|
(374 |
) |
|
|
|
|
|
|
|
|
|
|
Common shares
outstanding |
|
14,189 |
|
|
|
14,184 |
|
|
14,167 |
|
14,118 |
|
|
14,094 |
|
Treasury shares |
|
209 |
|
|
|
214 |
|
|
231 |
|
280 |
|
|
304 |
|
CAPITAL RATIOS
AND PER SHARE DATA: |
|
|
|
|
|
|
|
|
|
Leverage ratio (5) |
|
7.29 |
% |
|
|
7.31 |
|
|
7.53 |
|
7.35 |
|
|
7.34 |
|
Common equity Tier 1
ratio (5) |
|
9.74 |
% |
|
|
9.50 |
|
|
9.66 |
|
n/a |
|
|
n/a |
|
Tier 1 risk-based
capital (5) |
|
10.49 |
% |
|
|
10.25 |
|
|
10.45 |
|
10.47 |
|
|
10.44 |
|
Total risk-based
capital (5) |
|
13.37 |
% |
|
|
13.17 |
|
|
11.69 |
|
11.72 |
|
|
11.69 |
|
Common equity to
assets |
|
8.28 |
% |
|
|
7.95 |
|
|
8.42 |
|
8.49 |
|
|
8.52 |
|
Tangible common equity
to tangible assets (4) |
|
6.39 |
% |
|
|
6.04 |
|
|
6.42 |
|
6.41 |
|
|
6.41 |
|
|
|
|
|
|
|
|
|
|
|
Common book value per
share |
$ |
19.60 |
|
|
|
18.83 |
|
|
19.01 |
|
18.57 |
|
|
18.48 |
|
Tangible common book
value per share (4) |
|
14.81 |
|
|
|
14.03 |
|
|
14.18 |
|
13.71 |
|
|
13.59 |
|
________(1)
Includes investment securities at adjusted amortized cost and
non-performing investment
securities.(2) Includes
nonaccrual loans.(3) Excludes
preferred shareholders’
equity.(4) See Appendix A –
Non-GAAP to GAAP Reconciliation for the computation of this
Non-GAAP measure.(5) 2015
ratios calculated under Basel III rules, which became effective
January 1, 2015.
FINANCIAL INSTITUTIONS, INC.Selected
Financial Information (Unaudited)(Amounts in thousands,
except per share amounts)
|
Nine months ended |
|
2015 |
|
2014 |
|
September 30, |
|
Third |
|
Second |
|
First |
|
Fourth |
|
Third |
|
|
2015 |
|
|
2014 |
|
Quarter |
|
Quarter |
|
Quarter |
|
Quarter |
|
Quarter |
SELECTED INCOME
STATEMENT DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
$ |
77,963 |
|
|
75,071 |
|
|
27,007 |
|
|
25,959 |
|
24,997 |
|
|
25,984 |
|
|
25,129 |
Interest expense |
|
7,281 |
|
|
5,435 |
|
|
2,876 |
|
|
2,555 |
|
1,850 |
|
|
1,846 |
|
|
1,871 |
Net interest income |
|
70,682 |
|
|
69,636 |
|
|
24,131 |
|
|
23,404 |
|
23,147 |
|
|
24,138 |
|
|
23,258 |
Provision for loan
losses |
|
4,783 |
|
|
5,879 |
|
|
754 |
|
|
1,288 |
|
2,741 |
|
|
1,910 |
|
|
2,015 |
Net interest income after
provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
for loan losses |
|
65,899 |
|
|
63,757 |
|
|
23,377 |
|
|
22,116 |
|
20,406 |
|
|
22,228 |
|
|
21,243 |
Noninterest
income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposits |
|
5,880 |
|
|
6,768 |
|
|
2,037 |
|
|
1,964 |
|
1,879 |
|
|
2,186 |
|
|
2,277 |
Insurance income |
|
3,930 |
|
|
979 |
|
|
1,265 |
|
|
1,057 |
|
1,608 |
|
|
1,420 |
|
|
922 |
ATM and debit card |
|
3,773 |
|
|
3,694 |
|
|
1,297 |
|
|
1,283 |
|
1,193 |
|
|
1,269 |
|
|
1,263 |
Investment advisory |
|
1,551 |
|
|
1,647 |
|
|
523 |
|
|
541 |
|
487 |
|
|
491 |
|
|
524 |
Company owned life insurance |
|
1,448 |
|
|
1,249 |
|
|
488 |
|
|
493 |
|
467 |
|
|
504 |
|
|
421 |
Investments in limited
partnerships |
|
865 |
|
|
894 |
|
|
336 |
|
|
55 |
|
474 |
|
|
209 |
|
|
187 |
Loan servicing |
|
416 |
|
|
450 |
|
|
153 |
|
|
96 |
|
167 |
|
|
118 |
|
|
120 |
Net gain on sale of loans held for
sale |
|
161 |
|
|
231 |
|
|
53 |
|
|
39 |
|
69 |
|
|
82 |
|
|
76 |
Net gain on investment
securities |
|
1,348 |
|
|
1,777 |
|
|
286 |
|
|
- |
|
1,062 |
|
|
264 |
|
|
515 |
Net gain on sale of other
assets |
|
20 |
|
|
61 |
|
|
- |
|
|
16 |
|
4 |
|
|
8 |
|
|
72 |
Amortization of tax credit
investment |
|
(390 |
) |
|
- |
|
|
(390 |
) |
|
- |
|
- |
|
|
(2,323 |
) |
|
- |
Other |
|
2,755 |
|
|
2,445 |
|
|
957 |
|
|
911 |
|
887 |
|
|
927 |
|
|
884 |
Total noninterest income |
|
21,757 |
|
|
20,195 |
|
|
7,005 |
|
|
6,455 |
|
8,297 |
|
|
5,155 |
|
|
7,261 |
Noninterest
expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
31,107 |
|
|
28,044 |
|
|
10,278 |
|
|
10,606 |
|
10,223 |
|
|
10,551 |
|
|
9,725 |
Occupancy and equipment |
|
10,491 |
|
|
9,505 |
|
|
3,417 |
|
|
3,375 |
|
3,699 |
|
|
3,324 |
|
|
3,131 |
Professional services |
|
2,898 |
|
|
3,332 |
|
|
1,064 |
|
|
866 |
|
968 |
|
|
1,428 |
|
|
976 |
Computer and data processing |
|
2,291 |
|
|
2,225 |
|
|
779 |
|
|
810 |
|
702 |
|
|
791 |
|
|
725 |
Supplies and postage |
|
1,611 |
|
|
1,554 |
|
|
540 |
|
|
508 |
|
563 |
|
|
499 |
|
|
507 |
FDIC assessments |
|
1,277 |
|
|
1,200 |
|
|
444 |
|
|
415 |
|
418 |
|
|
392 |
|
|
390 |
Advertising and promotions |
|
789 |
|
|
609 |
|
|
312 |
|
|
238 |
|
239 |
|
|
196 |
|
|
216 |
Other |
|
7,101 |
|
|
6,507 |
|
|
2,484 |
|
|
2,418 |
|
2,199 |
|
|
2,198 |
|
|
2,285 |
Total noninterest expense |
|
57,565 |
|
|
52,976 |
|
|
19,318 |
|
|
19,236 |
|
19,011 |
|
|
19,379 |
|
|
17,955 |
Income before income taxes |
|
30,091 |
|
|
30,976 |
|
|
11,064 |
|
|
9,335 |
|
9,692 |
|
|
8,004 |
|
|
10,549 |
Income tax expense |
|
8,389 |
|
|
9,541 |
|
|
2,748 |
|
|
2,750 |
|
2,891 |
|
|
84 |
|
|
3,365 |
Net income |
|
21,702 |
|
|
21,435 |
|
|
8,316 |
|
|
6,585 |
|
6,801 |
|
|
7,920 |
|
|
7,184 |
Preferred stock
dividends |
|
1,097 |
|
|
1,097 |
|
|
366 |
|
|
366 |
|
365 |
|
|
365 |
|
|
366 |
Net income available to
common shareholders |
$ |
20,605 |
|
|
20,338 |
|
|
7,950 |
|
|
6,219 |
|
6,436 |
|
|
7,555 |
|
|
6,818 |
FINANCIAL
RATIOS AND STOCK DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share –
basic |
$ |
1.46 |
|
|
1.47 |
|
|
0.56 |
|
|
0.44 |
|
0.46 |
|
|
0.54 |
|
|
0.49 |
Earnings per share –
diluted |
$ |
1.46 |
|
|
1.46 |
|
|
0.56 |
|
|
0.44 |
|
0.46 |
|
|
0.54 |
|
|
0.49 |
Cash dividends declared
on common stock |
$ |
0.60 |
|
|
0.57 |
|
|
0.20 |
|
|
0.20 |
|
0.20 |
|
|
0.20 |
|
|
0.19 |
Common dividend payout
ratio (1) |
|
41.10 |
% |
|
38.78 |
|
|
35.71 |
|
|
45.45 |
|
43.48 |
|
|
37.04 |
|
|
38.78 |
Dividend yield
(annualized) |
|
3.24 |
% |
|
3.39 |
|
|
3.20 |
|
|
3.23 |
|
3.54 |
|
|
3.15 |
|
|
3.35 |
Return on average
assets |
|
0.90 |
% |
|
0.96 |
|
|
0.99 |
|
|
0.81 |
|
0.89 |
|
|
1.03 |
|
|
0.95 |
Return on average
equity |
|
10.10 |
% |
|
10.70 |
|
|
11.41 |
|
|
9.19 |
|
9.68 |
|
|
11.07 |
|
|
10.41 |
Return on average
common equity (2) |
|
10.21 |
% |
|
10.85 |
|
|
11.60 |
|
|
9.24 |
|
9.75 |
|
|
11.25 |
|
|
10.55 |
Efficiency ratio
(3) |
|
60.56 |
% |
|
58.24 |
|
|
59.46 |
|
|
62.00 |
|
60.27 |
|
|
59.58 |
|
|
57.65 |
Stock price (Nasdaq:
FISI): |
|
|
|
|
|
|
|
|
|
|
|
|
|
High |
$ |
25.50 |
|
|
25.69 |
|
|
25.21 |
|
|
25.50 |
|
25.38 |
|
|
27.02 |
|
|
24.94 |
Low |
$ |
21.67 |
|
|
19.72 |
|
|
23.54 |
|
|
22.50 |
|
21.67 |
|
|
22.45 |
|
|
21.71 |
Close |
$ |
24.78 |
|
|
22.48 |
|
|
24.78 |
|
|
24.84 |
|
22.93 |
|
|
25.15 |
|
|
22.48 |
________(1)
Common dividend payout ratio equals dividends declared during the
period divided by earnings per share for the equivalent
period.(2) Annualized net
income available to common shareholders divided by average common
equity.(3) Efficiency ratio
equals noninterest expense less other real estate expense and
amortization of intangible assets as a percentage of net revenue,
defined as the sum of tax-equivalent net interest income and
noninterest income before net gains on investment securities and
amortization of tax credit investment.
FINANCIAL INSTITUTIONS, INC.Selected
Financial Information (Unaudited)(Amounts in
thousands)
|
Nine months ended |
|
2015 |
|
2014 |
|
September 30, |
|
Third |
|
Second |
|
First |
|
Fourth |
|
Third |
|
|
2015 |
|
|
2014 |
|
Quarter |
|
Quarter |
|
Quarter |
|
Quarter |
|
Quarter |
SELECTED
AVERAGE BALANCES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal funds sold and
interest-earning deposits |
$ |
50 |
|
|
153 |
|
- |
|
26 |
|
124 |
|
- |
|
51 |
Investment securities
(1) |
|
1,002,361 |
|
|
877,923 |
|
1,067,815 |
|
1,029,640 |
|
907,871 |
|
876,932 |
|
854,030 |
Loans (2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business |
|
282,307 |
|
|
271,190 |
|
297,216 |
|
284,535 |
|
264,814 |
|
265,979 |
|
273,239 |
Commercial mortgage |
|
511,545 |
|
|
473,263 |
|
545,875 |
|
509,317 |
|
478,705 |
|
473,694 |
|
473,168 |
Residential mortgage |
|
97,496 |
|
|
109,030 |
|
96,776 |
|
96,474 |
|
99,264 |
|
101,982 |
|
105,255 |
Home equity |
|
392,909 |
|
|
351,212 |
|
402,368 |
|
390,135 |
|
386,046 |
|
384,138 |
|
377,360 |
Consumer indirect |
|
663,286 |
|
|
648,901 |
|
663,884 |
|
664,222 |
|
661,727 |
|
658,337 |
|
653,192 |
Other consumer |
|
19,084 |
|
|
21,251 |
|
18,680 |
|
18,848 |
|
19,736 |
|
20,630 |
|
20,847 |
Total loans |
|
1,966,627 |
|
|
1,874,847 |
|
2,024,799 |
|
1,963,531 |
|
1,910,292 |
|
1,904,760 |
|
1,903,061 |
Total interest-earning
assets |
|
2,969,038 |
|
|
2,752,923 |
|
3,092,614 |
|
2,993,197 |
|
2,818,287 |
|
2,781,692 |
|
2,757,142 |
Goodwill and other
intangible assets, net |
|
68,288 |
|
|
53,085 |
|
68,050 |
|
68,294 |
|
68,527 |
|
68,771 |
|
59,306 |
Total assets |
|
3,241,646 |
|
|
2,975,094 |
|
3,343,802 |
|
3,263,111 |
|
3,115,516 |
|
3,052,499 |
|
2,985,920 |
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand |
|
543,045 |
|
|
502,170 |
|
516,448 |
|
561,570 |
|
551,503 |
|
511,749 |
|
486,311 |
Savings and money market |
|
891,039 |
|
|
770,008 |
|
903,491 |
|
929,701 |
|
839,218 |
|
824,661 |
|
758,306 |
Certificates of deposit |
|
612,637 |
|
|
627,550 |
|
619,459 |
|
616,145 |
|
602,115 |
|
614,654 |
|
634,400 |
Short-term borrowings |
|
269,415 |
|
|
253,017 |
|
329,050 |
|
226,577 |
|
251,768 |
|
232,935 |
|
259,995 |
Long-term borrowings, net |
|
24,148 |
|
|
- |
|
38,962 |
|
33,053 |
|
- |
|
- |
|
- |
Total interest-bearing
liabilities |
|
2,340,284 |
|
|
2,152,745 |
|
2,407,410 |
|
2,367,046 |
|
2,244,604 |
|
2,183,999 |
|
2,139,012 |
Noninterest-bearing
demand deposits |
|
592,564 |
|
|
539,693 |
|
625,131 |
|
587,396 |
|
564,500 |
|
564,336 |
|
556,485 |
Total deposits |
|
2,639,285 |
|
|
2,439,421 |
|
2,664,529 |
|
2,694,812 |
|
2,557,336 |
|
2,515,400 |
|
2,435,502 |
Total liabilities |
|
2,954,451 |
|
|
2,707,241 |
|
3,054,573 |
|
2,975,762 |
|
2,830,557 |
|
2,768,693 |
|
2,712,274 |
Shareholders’
equity |
|
287,195 |
|
|
267,853 |
|
289,229 |
|
287,349 |
|
284,959 |
|
283,806 |
|
273,646 |
Common equity (3) |
|
269,855 |
|
|
250,512 |
|
271,889 |
|
270,009 |
|
267,619 |
|
266,466 |
|
256,306 |
Tangible common equity
(4) |
$ |
201,567 |
|
|
197,427 |
|
203,839 |
|
201,715 |
|
199,092 |
|
197,695 |
|
197,000 |
Common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
14,076 |
|
|
13,840 |
|
14,087 |
|
14,078 |
|
14,063 |
|
14,049 |
|
13,953 |
Diluted |
|
14,124 |
|
|
13,890 |
|
14,139 |
|
14,121 |
|
14,113 |
|
14,112 |
|
14,007 |
SELECTED
AVERAGE YIELDS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Tax equivalent
basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal funds sold and
interest-earning deposits |
|
0.30 |
% |
|
0.10 |
|
- |
|
0.39 |
|
0.19 |
|
- |
|
0.28 |
Investment
securities |
|
2.46 |
% |
|
2.43 |
|
2.46 |
|
2.44 |
|
2.47 |
|
2.48 |
|
2.43 |
Loans |
|
4.20 |
% |
|
4.36 |
|
4.16 |
|
4.18 |
|
4.27 |
|
4.44 |
|
4.31 |
Total interest-earning
assets |
|
3.61 |
% |
|
3.75 |
|
3.57 |
|
3.58 |
|
3.69 |
|
3.82 |
|
3.73 |
Interest-bearing
demand |
|
0.14 |
% |
|
0.12 |
|
0.15 |
|
0.14 |
|
0.11 |
|
0.11 |
|
0.12 |
Savings and money
market |
|
0.12 |
% |
|
0.12 |
|
0.14 |
|
0.12 |
|
0.10 |
|
0.11 |
|
0.12 |
Certificates of
deposit |
|
0.87 |
% |
|
0.76 |
|
0.89 |
|
0.87 |
|
0.84 |
|
0.82 |
|
0.78 |
Short-term
borrowings |
|
0.39 |
% |
|
0.37 |
|
0.41 |
|
0.38 |
|
0.37 |
|
0.36 |
|
0.37 |
Long-term borrowings,
net |
|
6.25 |
% |
|
- |
|
6.34 |
|
6.23 |
|
- |
|
- |
|
- |
Total interest-bearing
liabilities |
|
0.42 |
% |
|
0.34 |
|
0.47 |
|
0.43 |
|
0.33 |
|
0.34 |
|
0.35 |
Net interest rate
spread |
|
3.19 |
% |
|
3.41 |
|
3.10 |
|
3.15 |
|
3.36 |
|
3.48 |
|
3.38 |
Net interest rate
margin |
|
3.28 |
% |
|
3.48 |
|
3.20 |
|
3.24 |
|
3.43 |
|
3.56 |
|
3.46 |
________(1)
Includes investment securities at adjusted amortized
cost.(2) Includes nonaccrual
loans.(3) Excludes preferred
shareholders’ equity.(4) See
Appendix A – Non-GAAP to GAAP Reconciliation for the computation of
this Non-GAAP measure.
FINANCIAL INSTITUTIONS, INC.Selected
Financial Information (Unaudited)(Amounts in
thousands)
|
2015 |
|
2014 |
|
Third |
|
Second |
|
First |
|
Fourth |
|
Third |
|
Quarter |
|
Quarter |
|
Quarter |
|
Quarter |
|
Quarter |
ASSET QUALITY
DATA: |
|
|
|
|
|
|
|
|
|
Allowance for
Loan Losses |
|
|
|
|
|
|
|
|
|
Beginning balance |
$ |
27,500 |
|
|
|
27,191 |
|
|
27,637 |
|
|
27,244 |
|
|
27,166 |
Net loan charge-offs
(recoveries): |
|
|
|
|
|
|
|
|
|
Commercial business |
|
68 |
|
|
|
(73 |
) |
|
1,093 |
|
|
(15 |
) |
|
44 |
Commercial mortgage |
|
12 |
|
|
|
194 |
|
|
520 |
|
|
(57 |
) |
|
66 |
Residential mortgage |
|
3 |
|
|
|
9 |
|
|
22 |
|
|
22 |
|
|
11 |
Home equity |
|
64 |
|
|
|
145 |
|
|
74 |
|
|
(4 |
) |
|
66 |
Consumer indirect |
|
1,475 |
|
|
|
645 |
|
|
1,317 |
|
|
1,420 |
|
|
1,577 |
Other consumer |
|
177 |
|
|
|
59 |
|
|
161 |
|
|
151 |
|
|
173 |
Total net charge-offs |
|
1,799 |
|
|
|
979 |
|
|
3,187 |
|
|
1,517 |
|
|
1,937 |
Provision for loan
losses |
|
754 |
|
|
|
1,288 |
|
|
2,741 |
|
|
1,910 |
|
|
2,015 |
Ending balance |
$ |
26,455 |
|
|
|
27,500 |
|
|
27,191 |
|
|
27,637 |
|
|
27,244 |
|
|
|
|
|
|
|
|
|
|
Net charge-offs
(recoveries) to average loans (annualized): |
|
|
|
|
|
|
|
|
|
Commercial business |
|
0.09 |
% |
|
|
-0.10 |
|
|
1.67 |
|
|
-0.02 |
|
|
0.06 |
Commercial mortgage |
|
0.01 |
% |
|
|
0.15 |
|
|
0.44 |
|
|
-0.05 |
|
|
0.06 |
Residential mortgage |
|
0.01 |
% |
|
|
0.04 |
|
|
0.09 |
|
|
0.09 |
|
|
0.04 |
Home equity |
|
0.06 |
% |
|
|
0.15 |
|
|
0.08 |
|
|
0.00 |
|
|
0.07 |
Consumer indirect |
|
0.88 |
% |
|
|
0.39 |
|
|
0.81 |
|
|
0.86 |
|
|
0.96 |
Other consumer |
|
3.76 |
% |
|
|
1.26 |
|
|
3.31 |
|
|
2.90 |
|
|
3.29 |
Total loans |
|
0.35 |
% |
|
|
0.20 |
|
|
0.68 |
|
|
0.32 |
|
|
0.40 |
|
|
|
|
|
|
|
|
|
|
Supplemental
information (1) |
|
|
|
|
|
|
|
|
|
Non-performing
loans: |
|
|
|
|
|
|
|
|
|
Commercial business |
$ |
3,064 |
|
|
|
4,643 |
|
|
4,587 |
|
|
4,288 |
|
|
3,258 |
Commercial mortgage |
|
1,802 |
|
|
|
3,070 |
|
|
3,411 |
|
|
3,020 |
|
|
2,460 |
Residential mortgage |
|
1,523 |
|
|
|
1,628 |
|
|
1,361 |
|
|
1,194 |
|
|
656 |
Home equity |
|
792 |
|
|
|
619 |
|
|
672 |
|
|
463 |
|
|
464 |
Consumer indirect |
|
1,292 |
|
|
|
728 |
|
|
994 |
|
|
1,169 |
|
|
1,300 |
Other consumer |
|
20 |
|
|
|
20 |
|
|
47 |
|
|
19 |
|
|
46 |
Total non-performing loans |
|
8,493 |
|
|
|
10,708 |
|
|
11,072 |
|
|
10,153 |
|
|
8,184 |
Foreclosed assets |
|
286 |
|
|
|
165 |
|
|
139 |
|
|
194 |
|
|
509 |
Total non-performing assets |
$ |
8,779 |
|
|
|
10,873 |
|
|
11,211 |
|
|
10,347 |
|
|
8,693 |
|
|
|
|
|
|
|
|
|
|
Total non-performing
loans to total loans |
|
0.42 |
% |
|
|
0.53 |
|
|
0.58 |
|
|
0.53 |
|
|
0.43 |
Total non-performing
assets to total assets |
|
0.26 |
% |
|
|
0.32 |
|
|
0.35 |
|
|
0.33 |
|
|
0.28 |
Allowance for loan
losses to total loans |
|
1.30 |
% |
|
|
1.37 |
|
|
1.41 |
|
|
1.45 |
|
|
1.43 |
Allowance for loan
losses to non-performing loans |
|
311 |
% |
|
|
257 |
|
|
246 |
|
|
272 |
|
|
333 |
________(1)
At period end.
FINANCIAL INSTITUTIONS, INC.Appendix A
- Non-GAAP to GAAP Reconciliation (Unaudited)(In
thousands, except per share amounts)
|
Nine months ended |
|
2015 |
|
2014 |
|
September 30, |
|
Third |
|
Second |
|
First |
|
Fourth |
|
Third |
|
2015 |
|
2014 |
|
Quarter |
|
Quarter |
|
Quarter |
|
Quarter |
|
Quarter |
Ending tangible
assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
|
|
$ |
3,357,608 |
|
|
3,359,459 |
|
3,197,077 |
|
3,089,521 |
|
3,055,304 |
Less: Goodwill
and other intangible assets, net |
|
|
|
|
|
67,925 |
|
|
68,158 |
|
68,396 |
|
68,639 |
|
68,887 |
Tangible assets
(non-GAAP) |
|
|
|
|
$ |
3,289,683 |
|
|
3,291,301 |
|
3,128,681 |
|
3,020,882 |
|
2,986,417 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending tangible
common equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shareholders’
equity |
|
|
|
|
$ |
278,094 |
|
|
267,095 |
|
269,349 |
|
262,192 |
|
260,418 |
Less: Goodwill
and other intangible assets, net |
|
|
|
|
|
67,925 |
|
|
68,158 |
|
68,396 |
|
68,639 |
|
68,887 |
Tangible common equity
(non-GAAP) |
|
|
|
|
$ |
210,169 |
|
|
198,937 |
|
200,953 |
|
193,553 |
|
191,531 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible
common equity to tangible assets (non-GAAP) (1) |
|
|
|
|
6.39 |
% |
|
6.04 |
|
6.42 |
|
6.41 |
|
6.41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares
outstanding |
|
|
|
|
|
14,189 |
|
|
14,184 |
|
14,167 |
|
14,118 |
|
14,094 |
Tangible
common book value per share (non-GAAP) (2) |
|
|
|
$ |
14.81 |
|
|
14.03 |
|
14.18 |
|
13.71 |
|
13.59 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average tangible common equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
common equity |
$ |
269,855 |
|
|
250,512 |
|
|
271,889 |
|
|
270,009 |
|
267,619 |
|
266,466 |
|
256,306 |
Average
goodwill and other intangible assets, net |
|
68,288 |
|
|
53,085 |
|
|
68,050 |
|
|
68,294 |
|
68,527 |
|
68,771 |
|
59,306 |
Average
tangible common equity (non-GAAP) |
$ |
201,567 |
|
|
197,427 |
|
|
203,839 |
|
|
201,715 |
|
199,092 |
|
197,695 |
|
197,000 |
________(1)
Tangible common equity divided by tangible
assets.(2) Tangible common
equity divided by common shares outstanding.
For additional information contact:
Kevin B. Klotzbach
Chief Financial Officer & Treasurer
Phone: 585.786.1130
Email: KBKlotzbach@five-starbank.com
Jordan Darrow
Darrow Associates
Phone: 631.367.1866
Email: jdarrow@darrowir.com
Financial Institutions (NASDAQ:FISI)
Historical Stock Chart
From Mar 2024 to Apr 2024
Financial Institutions (NASDAQ:FISI)
Historical Stock Chart
From Apr 2023 to Apr 2024