Highlights 66% Total Shareholder Return
Over Three Years
Financial Institutions, Inc. (Nasdaq:FISI), the parent company of
Five Star Bank, Scott Danahy Naylon and Courier Capital, today
announced that it has filed definitive proxy materials with the
Securities and Exchange Commission ("SEC") in connection with its
upcoming 2016 Annual Meeting of Shareholders to be held on June 3,
2016 at 10:00 a.m., local time, at the Company’s corporate
headquarters in Warsaw, New York. Financial Institutions
shareholders of record as of April 11, 2016 are eligible to vote at
the Annual Meeting.
The Board of Directors has also sent a letter to
shareholders, accompanied by a BLUE proxy card,
detailing the significant success that Financial Institutions has
experienced executing against its three-year strategic plan. Over
the past three years, Financial Institutions has returned over $32
million to shareholders through dividends and delivered total
shareholder returns in excess of 66%. The letter urges shareholders
to vote FOR the election of all four of the
Board’s highly-qualified and very experienced nominees,
Martin Birmingham, Samuel Gullo, Kim VanGelder and
James Wyckoff. Our Board believes that its
nominees bring strong commitment to the success of FISI and the
knowledge, experience and community ties necessary to ensure that
the FISI is best positioned to continue executing against its
strategic plan and deliver outstanding shareholder
returns.
Shareholders are strongly urged to promptly vote
the BLUE proxy card or voting
instruction form by Internet, telephone or mail by following the
instructions provided. The Board also urges shareholders to discard
any white proxy card or voting instruction form that they may
receive from Clover Partners L.P. or other participants in its
solicitation.
The full text of the letter follows:
PROTECT YOUR INVESTMENT
VOTE THE ENCLOSED BLUE PROXY CARD
TODAY!
April 20, 2016
Dear Fellow Shareholder
–
Enclosed you will find Financial Institutions, Inc.’s proxy
materials for the 2016 Annual Meeting of Shareholders to be held on
Friday, June 3, 2016, at 10:00 a.m., local time, at our Corporate
Headquarters in Warsaw, New York. Please vote
TODAY by telephone, Internet or by signing, dating
and returning the enclosed BLUE proxy card in the
postage-paid envelope provided and VOTE FOR ALL
four of your Board of Directors’ highly-qualified and very
experienced nominees to ensure that we continue our success at
delivering shareholder value. Your Board and management – who
collectively own approximately 5.5% of FISI equity – believe that
we are delivering on our strategic plan which has resulted
in total shareholder returns over the last three years of over 66%,
outperforming both the S&P 500 and KBW Nasdaq Regional Bank
Index.1 We believe that voting FOR
ALL four of your Board’s nominees will help ensure
that we are best positioned to continue to execute on our strategic
plan and deliver outstanding shareholder
returns.
You may soon receive proxy solicitation materials from Clover
Partners L.P., an investment firm based in Dallas, Texas, which
began accumulating its current position in FISI by buying and
selling FISI stock less than nine months ago. Clover Partners
has nominated two candidates for election to the Board of Directors
at the Annual Meeting and has publicly called for an immediate sale
of FISI. We strongly urge you to discard any white proxy card
or voting instruction form you may receive from Clover
Partners. Even a WITHHOLD vote with respect to Clover
Partners’ nominees on its white proxy card will cancel any proxy
previously given to FISI.
We believe that FISI has a significant opportunity for continued
growth and do not believe that an immediate sale of FISI is in the
best interest of shareholders. We also believe that Clover
Partners’ nominees do not have the necessary experience and skill
sets to advance our strategic plan. Further, we believe that
they are being proposed as directors solely to advance Clover
Partners’ short-term agenda to seek the immediate sale of
FISI. Please vote your BLUE proxy card TODAY to
ensure that we are best positioned to continue to execute on our
strategic plan and deliver outstanding returns for shareholders
through exceptional service provided to our customers in Western
New York.
SUCCESSFULLY EXECUTING ON OUR STRATEGIC
GROWTH PLAN
Our rolling three-year strategic plan is working. Over the
past three years, the Board and management have improved the
financial performance of FISI, outperformed the market and our peer
group on stock price, and delivered consistent dividend
growth. Over the last three years, we:
- Delivered total shareholder returns of
66%
- Returned approximately $32 million to shareholders
through dividends
- Increased dividends by 45%
- Grew net income by $4.9 million, a 21%
increase
- Grew total loans, deposits and assets by over
20%
- Increased focus on commercial lending resulting in 21%
growth in commercial business loans and 37% growth in commercial
mortgages
- Decreased nonperforming loans by 52%
FISI has driven significantly better shareholder returns
than its proxy peers2:
A PDF accompanying this release is available
athttp://www.globenewswire.com/NewsRoom/AttachmentNg/f73f83a9-8897-4150-ab10-7217a90513bb
Your Board and management team are confident that our strategy
will continue to work and produce great results. We have
maintained our diligent focus on growing our core banking
franchise, which continues to add value for shareholders. At
the same time, FISI, with oversight from the Board, made the
strategic decision to diversify our income streams beyond net
interest income, by increasing the proportion of non-interest
income from fees and commissions, in order to generate more
balanced income growth. FISI has advanced its ability to
benefit from a more diversified revenue stream beyond general
interest income on loans and other interest-earning assets.
By executing on our strategic plan, we have been able to
invest in the future while continuing to deliver results
for shareholders.
Immediate Sale of FISI Not in Best
Interest of Shareholders
Despite the important progress that we are making in executing
on our strategic three-year plan, Clover Partners insists that an
immediate sale should be pursued. Clover Partners typically invests
in poor performing companies who fail to create shareholder value;
however, we do not meet Clover Partners’ typical company profile. A
typical Clover Partners activist target manages its expenses
poorly, averaging a poor efficiency ratio of nearly 80%, while we
currently have an efficiency ratio of 62% despite investing in two
new income generating platforms in the past two
years.3 Given FISI’s strong performance of 13.2%
return on average tangible common equity compared to an average of
4.2% for Clover Partners’ recent activist targets, it is not clear
to us why Clover Partners is seeking an immediate sale of
FISI.
Your Board and management are confident that large institutional
and private shareholders support our strategic direction and do not
agree with Clover Partners’ short-term view of FISI. Richard
Humphrey, who represents over 6% ownership in FISI, recently
expressed his support for our strategic plan:
|
“This letter follows our recent conversations and is intended to
reiterate our support for Financial Institutions, Inc. to continue
its current strategy, which we believe has delivered great value
for both shareholders and the community…We have been impressed by
the progress that has been made during the last three years on
improving the operational performance of the bank which has led to
increased value for shareholders through both stock price and
increased dividends.” – Richard Humphrey; 3/22/16 |
|
In line with our Board’s commitment to create value for our
shareholders, which remains the highest priority for FISI, we
regularly evaluate a broad range of strategies to enhance value for
all FISI shareholders. However, we do not believe that an immediate
sale of FISI is in the best interest of shareholders.
Clover Partners’ Nominees Would Not Bring
New or Relevant Experience, Skills or Competencies
to the Board
On April 1, 2016, Clover Partners provided us with notice of its
intention to nominate two director candidates for election to the
Board: 32-year-old Johnny Guerry, a Managing Partner at Clover
Partners, and 61-year-old Terry Philen, Chief Financial Officer of
Custom Extrusions Holdings, LLC, a privately-held aluminum
processing company. We question Clover Partners’ choice of
nominees to replace highly-qualified, experienced and valued
members of your Board. We do not believe that either of
Clover Partners’ proposed nominees would bring to the Board any
relevant experience, skills or competencies not already present
among the current Board members and its newest nominee. We also do
not believe that either of Clover Partners’ nominees would help
advance our strategic plan to drive the creation of long-term
shareholder value.
This public nomination of two director candidates follows an
earlier private request for Board representation by Mr. Guerry at
the end of January 2016. The Board’s Nominating &
Governance Committee (“Committee”) underwent a thorough evaluation
process on par with the evaluation process that all of our director
nominees undergo, including:
- Reviewing background materials on Mr. Guerry, his professional
history and affiliations
- Conducting an in-person interview between Mr. Guerry and
members of the Committee
- Contacting third-party references provided by Mr. Guerry
- Engaging in other standard and appropriate diligence
procedures
Importantly, FISI reached out to selected Hampden Bancorp board
members – the only public company and the only bank where Mr.
Guerry has served as a director, and, notably, his board
service was limited to less than six months.
Notably, none of the Hampden Bancorp Board members responded to our
request for a discussion.
In ultimately recommending against adding Mr. Guerry to the
Board, the Committee considered that Mr. Guerry has:
- Very limited public company or bank board
experience – served on only one board for less than six
months
- No operating company experience
- No understanding of the community banking market in
Western New York
- No ties to Western New York – Mr. Guerry is
based in Texas
- No strategic view for how to create shareholder value
at FISI outside of an immediate sale of FISI
We believe that Mr. Philen similarly lacks the credentials and
competencies to serve as a value-additive member of your
Board. Similarly, Mr. Philen has:
- Very limited public company board experience –
served less than two years on the board of a hotel company
- No experience serving on the board of directors of a
bank
- No recent or relevant banking experience –
worked for a small Texas bank over 22 years ago
- No ties to Western New York – Mr. Philen, like
Mr. Guerry, is based in Texas
This lack of relevant or recent banking experience as well as
very limited public company board and no bank board experience,
coupled with our belief that Mr. Philen has no understanding of the
community banking market in Western New York and shares with Mr.
Guerry the same narrowly-focused strategy for FISI – a sale –
affirms our belief that Mr. Philen, like Mr. Guerry, is not a
suitable candidate for our Board.
Understanding what our customers in Western New York
expect from FISI, coupled with the critical role that FISI plays in
the community, are two qualities that we believe are paramount to
serving on your Board. Notably, Clover Partners’ nominees do
not have an understanding of the community banking market in
Western New York, business connections in this region or ties to
the community, which are important resources that help us to
generate business. We take our commitment to the customers and
communities that we serve very seriously and have made it a
priority to develop your Board with this commitment in mind. We do
not believe that Mr. Guerry nor Mr. Philen share this
commitment.
FISI Board is Highly Qualified and
Aligned with ALL Shareholders
Your Board is comprised of eleven highly-qualified and very
experienced directors, ten of whom are independent and all of whom
are actively engaged in overseeing initiatives for enhancing
shareholder value. There is a broad and diverse set of skills and
experiences represented on your Board, including in the areas of
banking, strategic planning, economic development, corporate
governance, legal, accounting, finance, economics, real estate,
investment management, marketing, mergers and acquisitions, risk
management and capital allocation. Additionally, each of the
members of your Board has ties to the communities that we serve,
which supports our community banking culture and serves as a source
for generating business. With an aggregate ownership
of over 5.5% of FISI’s equity, your entire Board and management are
aligned with – and invested in – the future success of
FISI.
We consistently evaluate opportunities to recruit new
independent and highly-qualified directors who have perspectives,
insights, experiences, competencies and relationships that expand
and complement the skills sets currently included on your Board and
advance FISI’s ability to deliver value to shareholders.
Three new independent directors – Kim VanGelder, Andrew
Dorn, Jr. and Robert Glaser – have been nominated to the Board over
the last two years, underscoring our efforts to refresh our Board
with talented, experienced and diverse
professionals. At the end of February 2016, FISI
nominated Ms. VanGelder, a highly-regarded information technology
executive with substantial and relevant cybersecurity expertise,
for election to your Board. Ms. VanGelder currently serves as
the chief information officer and senior vice president of Eastman
Kodak Company in Rochester, New York. If elected, Ms. VanGelder
would be an independent director and, in addition to having strong
ties to Western New York and extensive public company leadership
experience, would bring over 30 years of business and technology
experience, including experience developing and executing critical
information technology and cybersecurity strategies to deliver
business results.
We believe that our four highly-qualified and very experienced
director nominees for election to your Board at the Annual Meeting
– Martin Birmingham, Samuel Gullo, Kim VanGelder
and James Wyckoff – have the integrity, knowledge,
investor perspective, breadth of relevant and diverse experiences,
relationships, and commitment to the long-term success of FISI
necessary to enable FISI to continue executing on its strategic
initiatives.
PROTECT YOUR INVESTMENT!
YOUR VOTE IS IMPORTANT FOR THE FUTURE OF
FISI
Your vote at the upcoming Annual Meeting is important in shaping
our future, no matter how many shares you own. We are asking for
your support by voting the BLUE proxy card to
VOTE FOR ALL four highly-qualified and very
experienced nominees and ensure that FISI continues its successful
long-term plan to build long-term shareholder value. Whether
or not you plan to attend the Annual Meeting, we urge you to sign,
return and date the enclosed BLUE proxy card today
in the postage-paid envelope provided. If you are voting by
phone or Internet, please follow the instructions on the enclosed
BLUE proxy card. Please vote each and every
BLUE proxy card or voting instruction form you
receive since you may hold multiple accounts.
We also urge you to discard any white proxy card or voting
instruction form that you may receive from Clover Partners. Even a
WITHHOLD vote with respect to Clover Partners’ nominees on its
white proxy card or voting instruction form will cancel any proxy
or voting instruction form previously given to FISI.
We ask you to VOTE the BLUE proxy card today in favor of
your Board’s four highly-qualified and very experienced nominees,
who will be committed to executing on a strategic plan that has
delivered increased growth, increased profitability, and achieved a
66% increase in total shareholder returns.
On behalf of your Board of Directors, we thank you for your
continued support. We look forward to communicating further with
you in the coming weeks.
Sincerely,
Board of Directors of Financial Institutions, Inc.
About Financial Institutions,
Inc.
Financial Institutions, Inc. provides diversified financial
services through its subsidiaries, Five Star Bank, Scott Danahy
Naylon and Courier Capital. 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. Courier Capital provides customized investment
management, investment consulting and retirement plan services to
individuals, businesses, institutions, foundations and retirement
plans. Financial Institutions, Inc. and its subsidiaries employ
approximately 700 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.
Safe Harbor Statement This press
release may contain forward-looking statements as defined by
Section 21E of the Securities Exchange Act of 1934, as amended, and
is subject to the safe harbors created by such laws. These
forward-looking statements can generally be identified as such by
the context of the statements, including words such as “believe,”
“expect,” “anticipate,” “plan,” “may,” “would,” “intend,”
“estimate,” “guidance” and other similar expressions, whether in
the negative or affirmative. Similarly, statements that describe
the objectives, plans or goals of Financial Institutions, Inc.
(“FISI”) are forward-looking. Such forward-looking statements
include, but are not limited to, statements regarding the
anticipated proxy contest by Clover Partners, L.P. and the other
participants in its solicitation, FISI’s ability to continue to
execute on and implement its strategic growth plan, FISI’s
opportunities for continued growth, FISI’s initiatives to improve
its financial and operational performance and increase its growth
and profitability, FISI’s future stock price and dividend growth,
FISI’s future returns to shareholders, FISI’s ability to continue
to strengthen its balance sheet and grow its core business, FISI’s
ability to continue to strengthen its regulatory compliance
procedures, FISI’s ability to continue to profitably grow its
commercial lending business, FISI’s ability to enhance its
competitive position through diversified income streams, FISI’s
ability to leverage its client base to offer its clients additional
fee-based products, FISI’s future returns from its existing
fee-based platforms and the effect of those platforms on overall
shareholder value, FISI’s ability to continue to maintain expense
discipline, FISI’s plans to continue to return cash to its
shareholders through cash dividends and future increases that may
be made thereto, FISI’s actions taken or contemplated to enhance
its long-term prospects and create and return value for its
shareholders, FISI’s future operational and financial performance,
FISI’s future growth and profitability, the effect that the
election of FISI’s nominees to the FISI Board will have on FISI’s
execution of its long-term plan and long-term shareholder value,
and the future effect of FISI’s strategic growth plan on FISI’s
growth, profitability and total shareholder returns. Such
forward-looking statements are not guarantees of future operational
or financial performance and are based on current expectations,
estimates, forecasts and projections and management’s current
beliefs and assumptions, all of which involve a number of
significant risks and uncertainties, any one or more of which could
cause actual results to differ materially from those described in
FISI’s forward-looking statements. There are a number of important
risks and uncertainties that could cause FISI’s actual events or
results to differ materially from those indicated or implied by
such forward-looking statements, including, but not limited to:
FISI’s ability to implement its strategic plan, FISI’s ability to
redeploy investment assets into loan assets, whether FISI
experiences greater credit losses than expected, whether FISI
experiences breaches of its, or third party, information systems,
the attitudes and preferences of FISI’s customers, FISI’s ability
to successfully integrate and profitably operate SDN and Courier
Capital, the competitive environment, fluctuations in the fair
value of securities in its investment portfolio, changes in the
regulatory environment and FISI’s compliance with regulatory
requirements, changes in interest rates, general economic and
credit market conditions nationally and regionally, and the actions
of activist investors, including the amount of related costs
incurred by FISI and the disruption caused to FISI’s business
activities by these actions. Consequently, all forward-looking
statements made herein are qualified by these cautionary statements
and the cautionary language in FISI’s Annual Report on Form 10-K,
its Quarterly Reports on Form 10-Q and other documents filed with
the SEC. Except as required by law, FISI undertakes no
obligation to revise these statements, whether to reflect new
information or the occurrence of unanticipated events or otherwise,
following the date of this press release.
Important Additional Information And Where To Find
ItFinancial Institutions, Inc. (“FISI”) its directors and
certain of its executive officers are deemed to be participants in
the solicitation of proxies from FISI’s shareholders in connection
with the matters to be considered at FISI’s 2016 Annual Meeting of
Shareholders. On April 19, 2016, FISI filed a definitive proxy
statement and accompanying definitive
BLUE proxy card with the Securities and
Exchange Commission (“SEC”) in connection with the solicitation of
proxies from FISI’s shareholders in connection with the matters to
be considered at FISI’s 2016 Annual Meeting of Shareholders.
Information regarding the names of FISI's directors and executive
officers and their respective interests in FISI by security
holdings or otherwise can be found in such definitive proxy
statement, including the schedules and appendices thereto.
INVESTORS AND SHAREHOLDERS ARE STRONGLY ENCOURAGED TO READ ANY SUCH
PROXY STATEMENT AND THE ACCOMPANYING BLUE PROXY
CARD AND OTHER DOCUMENTS FILED BY FINANCIAL INSTITUTIONS WITH THE
SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE AS
THEY WILL CONTAIN IMPORTANT INFORMATION. Shareholders may obtain
the definitive proxy statement, any amendments or supplements to
the proxy statement, the accompanying BLUE proxy
card, and other documents filed by FISI with the SEC for no charge
at the SEC’s website at www.sec.gov. Copies will also be available
at no charge at the Investor Relations section of FISI’s corporate
website at www.fiiwarsaw.com, by writing to FISI’s Corporate
Secretary at Financial Institutions, Inc., 220 Liberty Street,
Warsaw, New York 14569, or by calling FISI’s Corporate Secretary at
(585) 786-1100.
DisclaimerFinancial Institutions, Inc. has
neither sought nor obtained the consent from any third party to use
any statements or information contained in this press release that
have been obtained or derived from statements made or published by
such third parties. Any such statements or information should not
be viewed as indicating the support of such third parties for the
views expressed herein.
1 All calculations are based on three-year period ending
December 31, 2015 unless otherwise specified.
2 Peer group, as disclosed in the proxy statement for the
2016 Annual Meeting, includes: 1st Source Corp., Arrow Financial
Corp., Berkshire Hills Bancorp Inc., Brookline Bancorp Inc., Camden
National Corp., Chemung Financial Corp., City Holding Co., CNB
Financial Corp., Enterprise Bancorp Inc., First Busey Corp., First
Commonwealth Financial, First Community Bancshares Inc, First
Financial Corp., First Merchants Corp., First Mid-Illinois
Bancshares, Horizon Bancorp, Lakeland Bancorp, MainSource Financial
Group, Merchants Bancshares Inc., Meridian Bancorp Inc., MidWestOne
Financial Grp Inc., NBT Bancorp Inc., Peoples Bancorp Inc.,
Pinnacle Financial Partners, S&T Bancorp Inc., Tompkins
Financial Corporation, TowneBank, Washington Trust Bancorp
Inc. Excludes members of our proxy statement “Regional Peer
Group” that were acquired during 2015.
3 Includes campaigns since January 1, 2012 where Clover
Partners has made specific public demands.
For additional information:
Investors:
Kevin B. Klotzbach
Executive Vice President, 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
News Media:
Brandonne Rankin
McDougall Communications
Phone: 585.313.3683
Email: brankin@mcdougallpr.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