UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 30, 2020
Financial Institutions, Inc.
(Exact Name of Registrant as Specified in Its Charter)
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New York |
0-26481 |
16-0816610 |
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(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
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220 Liberty Street Warsaw, New York |
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14569 |
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(Address of Principal Executive Offices) |
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(Zip Code) |
Registrant’s Telephone Number, Including Area Code: (585) 786-1100
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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Common stock, par value $0.01 per share |
FISI |
Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On January 30, 2020, Financial Institutions, Inc. (the “Company”) issued a press release to report financial results for the fourth quarter and full year ended December 31, 2019. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Item 7.01 Regulation FD Disclosure.
The Company published an investor presentation with data for the fourth quarter and full year ended December 31, 2019. The presentation is available on the Company’s website at www.fiiwarsaw.com under “News & Events/Presentations”. Investors should note that the Company announces material information in SEC filings and press releases. Based on guidance from the Securities and Exchange Commission, the Company may also use the Investor Relations section of its corporate website, www.fiiwarsaw.com, to communicate with investors about the Company. It is possible that the information posted there could be deemed to be material information. The information on the Company’s website is not incorporated by reference into this Current Report on Form 8-K.
This information is furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (“Exchange Act”), as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, of the Exchange Act, whether made before or after the date of this report, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
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Exhibit Number |
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Description |
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Location |
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99.1 |
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Press Release issued by Financial Institutions, Inc. on January 30, 2020 |
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Filed herewith |
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Financial Institutions, Inc. |
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Date: January 30, 2020 |
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By: |
/s/ Justin K. Bigham |
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Executive Vice President, Chief Financial Officer |
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Exhibit 99.1
Financial Institutions, Inc.
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NEWS RELEASE |
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For Immediate Release |
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FINANCIAL INSTITUTIONS, INC. ANNOUNCES FOURTH QUARTER AND FULL YEAR 2019 RESULTS
WARSAW, N.Y., January 30, 2020 – Financial Institutions, Inc. (Nasdaq:FISI) (the “Company”), parent company of Five Star Bank (the “Bank”), SDN Insurance Agency, LLC (“SDN”), Courier Capital, LLC (“Courier Capital”) and HNP Capital, LLC (“HNP Capital”), today reported financial and operational results for the fourth quarter and year ended December 31, 2019.
Results for the Quarter
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Net income was $13.1 million compared to $7.5 million in 2018. After preferred dividends, net income available to common shareholders was $12.7 million, or $0.79 per diluted share, compared to $7.1 million, or $0.45 per diluted share, in 2018. |
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Results for the fourth quarter of 2019 were positively impacted by a reduction in income tax expense of approximately $2.7 million for federal and state tax benefits related to tax credit investments placed in service during the quarter. These tax credit investments also generated a net loss of $528 thousand, recorded in noninterest income, reducing the net positive impact in the quarter to $2.2 million. Results for the fourth quarter of 2018 were negatively impacted by a $2.4 million non-cash goodwill impairment charge related to the Company’s insurance subsidiary and $667 thousand of non-recurring expense incurred in connection with employee retirements and severance. |
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Pre-tax pre-provision income(1) was $16.1 million compared to $13.6 million in 2018. |
Results for the Year
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Net income was $48.9 million compared to $39.5 million in 2018. After preferred dividends, net income available to common shareholders was $47.4 million, or $2.96 per diluted share, compared to $38.1 million, or $2.39 per diluted share, in 2018. |
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Results for 2019 were positively impacted by $2.2 million due to the tax credit investments described above and negatively impacted by approximately $600 thousand of income tax expense recognized in the third quarter related to an adjustment to a provisional amount recorded in 2017. Results for 2018 were negatively impacted by the $2.4 million non-cash goodwill impairment charge described above and approximately $1.7 million of expenses related to employee retirements and severance, higher contingent incentive compensation related to our wealth management subsidiary and the payment of one-time awards to employees not covered by certain incentive programs. |
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Pre-tax pre-provision income was $67.5 million compared to $58.5 million in 2018. |
Fourth Quarter Highlights (as compared to fourth quarter 2018 unless otherwise noted):
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Diluted earnings per share of $0.79 was $0.34, or 75.6%, higher than 2018 |
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Pre-tax pre-provision income increased $2.5 million to $16.1 million |
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Net interest margin (“NIM”) expanded to 3.33% from 3.21% |
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Return on average assets (“ROA”) increased to 1.21% from 0.70% |
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Common equity to assets ratio at quarter-end was 9.62% ‒ an increase of four basis points during the quarter and an increase of 83 basis points from December 31, 2018 |
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Tangible common equity to tangible assets(1), or TCE ratio, was 8.05% at quarter-end ‒ an increase of six basis points during the quarter and an increase of 90 basis points from December 31, 2018 |
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Strategy to downscale the consumer indirect portfolio continued |
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Portfolio decreased 7.6% from December 31, 2018 |
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Portfolio comprised 26.4% of total loan portfolio at December 31, 2019, compared to 29.8% at December 31, 2018 |
President and Chief Executive Officer Martin K. Birmingham stated, “We are pleased to report strong results in the fourth quarter, capping a solid year of performance for the Company. 2019 was a year of accomplishment with record-breaking net income and strengthening capital ratios. Our efforts to reposition the balance sheet through the rotation of securities into loans and reducing the size of our consumer indirect portfolio were successful and contributed to improved profitability. We also continued to invest in our
Page 1
customers, communities and associates. Community engagement was highlighted by volunteer activities, financial investments and product offerings, including the expansion of our program to provide debt and equity financing for affordable and special needs housing in our markets.
“We also took steps to position our organization for the future and look forward to the 2020 launch of two new major initiatives. The first relates to the execution of our enterprise standardization program. We have been working with proven advisers who specialize in implementing standardization-based improvements and have identified opportunities to improve Company operations, deliver enhanced customer experience, and improve operational efficiency while enhancing customer and employee experiences.
“The second is Five Star Bank Digital Banking. We are proud of our commitment to provide education, advice and solutions to improve our customers' financial well-being, and we believe this new platform will allow us to significantly improve the user experience across all devices and offer many new features. This is an important step in the development of our omni channel distribution platform, enhancing capabilities across retail and commercial loan, deposit and cash management services.”
Chief Financial Officer Justin K. Bigham added, “We generated positive operating leverage in the quarter and for the year. NIM was 3.33% for the quarter, an increase of four basis points from the linked quarter. This expansion was primarily the result of the Company’s balance sheet repositioning, as loans became a higher percentage of earning assets, combined with the impact of commercial prepayments received during the quarter. The TCE ratio also increased by six basis points in the quarter, from 7.99% to 8.05%.”
Net Interest Income and Net Interest Margin
Net interest income was $33.2 million for the quarter, $690 thousand higher than the third quarter of 2019 and $1.1 million higher than the fourth quarter of 2018.
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Average interest-earning assets for the quarter were $3.99 billion, $34.8 million higher than the third quarter of 2019, primarily due to organic loan growth. Average interest-earning assets are relatively unchanged from the fourth quarter of 2018 because commercial business, commercial mortgage and residential real estate loan growth was offset by lower investment securities and consumer indirect loan portfolios as a result of the Company’s balance sheet repositioning strategy. |
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Fourth quarter 2019 NIM was 3.33%, four basis points higher than the third quarter of 2019 and twelve basis points higher than the fourth quarter of 2018. NIM was positively impacted by the repositioning of the Company’s balance sheet. We benefitted from a change in interest-earning asset mix as loans became a larger percentage of the overall earning asset portfolio. |
Net interest income was $129.9 million for the year, $7.0 million higher than 2018. The increase was the result of an $81.9 million, or 2.1%, increase in average interest-earnings assets for the year combined with a ten basis point increase in NIM, to 3.28% from 3.18%.
Noninterest Income
Noninterest income was $9.7 million for the quarter compared to $12.4 million in the third quarter of 2019 and $9.3 million in the fourth quarter of 2018.
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Insurance income was $558 thousand lower than the third quarter of 2019 and $131 thousand lower than the fourth quarter of 2018 primarily due to the loss of commercial accounts. |
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A net loss on investment securities of $44 thousand was recognized in the quarter compared to a net gain of $1.6 million in the third quarter of 2019 and a net loss of $39 thousand in the fourth quarter of 2018. The Company took advantage of a market opportunity in the third quarter and sold $65 million of investment securities. Proceeds of $65 million were reinvested in investment securities with intermediate durations. |
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A net loss on tax credit investments of $528 thousand was recognized in the quarter related to the tax credit investments described above. This loss includes the amortization of the tax credit investments, partially offset by New York investment tax credits that are refundable and recorded in noninterest income. |
Noninterest income was $40.4 million for the year, $3.9 million higher than 2018.
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ATM and debit card charges of $6.8 million were $627 thousand higher than 2018, primarily due to an increase in consumer debit card activity. |
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Investment advisory fees were $1.1 million higher than 2018. The increase was the result of the combination of strong equity market returns domestically and internationally, the full year impact of the June 1, 2018 acquisition of HNP Capital and new business development. |
Page 2
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Income from derivative instruments, net was $1.3 million higher in 2019 due to an increase in interest rate swap transactions. |
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Net gain on investment securities was $1.7 million in 2019 compared to a net loss of $127 thousand in 2018 as a result of the sale of securities previously described. |
Noninterest Expense
Noninterest expense was $26.8 million in the quarter compared to $25.9 million in the third quarter of 2019 and $27.8 million in the fourth quarter of 2018.
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Professional services expense of $1.8 million was $278 thousand higher than the third quarter of 2019 and $1.0 million higher than the fourth quarter of 2018. The increase was primarily related to the timing of fees for consulting and advisory projects. Expenses related to the Company’s future improvements initiative totaled $510 thousand in the fourth quarter of 2019 and $298 thousand in the third quarter of 2019, with no expenses incurred in the fourth quarter of 2018. |
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FDIC assessments were zero in the quarter compared to $7 thousand in the third quarter of 2019 and $489 thousand in the fourth quarter of 2018. In 2018, the FDIC minimum reserve ratio of 1.35% of estimated insured deposits was exceeded, resulting in credits to institutions for assessments that contributed to growth in the reserve ratio. Credits are applicable to regular assessments for quarters in which the reserve ratio is at least 1.38%. The Bank received credits against its regular assessment of $439 thousand and $482 thousand in the fourth and third quarters of 2019, respectively. A credit of $70 thousand is available for future periods. |
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Advertising and promotions expense of $1.2 million was $481 thousand higher than the third quarter of 2019 and $291 thousand higher than the fourth quarter of 2018 as a result of the timing of expenses related to the Five Star Bank branding campaign. |
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A $2.4 million non-cash goodwill impairment charge related to the acquisition of SDN was recognized in the fourth quarter of 2018. No impairment charges were recognized in 2019. |
Noninterest expense was $102.8 million for the year, $2.0 million higher than 2018.
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Professional services expense of $5.4 million was $1.5 million higher than the previous year, primarily as a result of fees for consulting and advisory projects previously described. Expenses related to the future improvements initiative totaled $1.0 million in 2019. |
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FDIC assessments for the year were $970 thousand lower than 2018 due to the credits previously described. |
Income Taxes
Income tax expense was $312 thousand for the quarter compared to $4.3 million for the third quarter of 2019 and $2.2 million for the fourth quarter of 2018. The following factors impacted expense:
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During the fourth quarter of 2019, the Company recognized federal and state tax benefits related to tax credit investments placed in service during the quarter, resulting in an income tax expense reduction of approximately $2.7 million. |
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During the third quarter of 2019, the Company made an adjustment to the provisional amount included in its consolidated financial statements for the year ended December 31, 2017, resulting in expense of approximately $600 thousand. |
The effective tax rate was 2.3% for the fourth quarter compared to 25.0% for the third quarter of 2019 and 22.7% for the fourth quarter of 2018. In addition to the factors described above, the Company’s effective tax rates differ from statutory rates primarily because of interest income from tax-exempt securities and earnings on company owned life insurance.
Income tax expense was $10.6 million for the year, $553 thousand higher than 2018. The effective tax rate for 2019 was 17.8% compared to 20.2% for 2018.
Balance Sheet and Capital Management
Total assets were $4.38 billion at December 31, 2019, up $51.4 million from September 30, 2019, and up $72.5 million from December 31, 2018.
Investment securities were $776.9 million at December 31, 2019, relatively unchanged from September 30, 2019, and down $115.3 million from December 31, 2018. The decrease from year-end 2018 was primarily the result of the redeployment of assets from investment securities into loans to improve the earning asset mix.
Total loans were $3.22 billion at December 31, 2019, up $64.6 million, or 2.0%, from September 30, 2019, and up $134.4 million, or 4.4%, from December 31, 2018.
Page 3
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Commercial business loans totaled $572.0 million, down $2.4 million, or 0.4%, from September 30, 2019, and up $14.2 million, or 2.5%, from December 31, 2018. |
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Commercial mortgage loans totaled $1.11 billion, up $70.8 million, or 6.8%, from September 30, 2019, and up $148.1 million, or 15.5%, from December 31, 2018. |
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Residential real estate loans totaled $572.4 million, up $13.7 million, or 2.5%, from September 30, 2019, and up $48.2 million, or 9.2%, from December 31, 2018. |
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Consumer indirect loans totaled $850.1 million, down $13.6 million, or 1.6%, from September 30, 2019, and down $69.9 million, or 7.6%, from December 31, 2018. |
Total deposits were $3.56 billion at December 31, 2019, $30.5 million lower than September 30, 2019, and $188.8 million higher than December 31, 2018. The decrease from September 30, 2019, was primarily due to public deposit seasonality, partially offset by growth in the brokered deposit portfolio. Deposit growth from December 31, 2018, was driven by growth in the non-public (excluding certificates of deposits), public, brokered and reciprocal deposit portfolios. Public deposit balances represented 24% of total deposits at December 31, 2019, compared to 28% of total deposits at September 30, 2019, and 25% at December 31, 2018.
Short-term borrowings were $275.5 million at December 31, 2019, an increase of $64.1 million from September 30, 2019, and a decrease of $194.0 million from December 31, 2018. Short-term borrowings are typically utilized to manage the seasonality of public deposits.
Shareholders’ equity was $438.9 million at December 31, 2019, compared to $432.6 million at September 30, 2019, and $396.3 million at December 31, 2018. Common book value per share was $26.35 at December 31, 2019, an increase of $0.39 or 1.5% from $25.96 at September 30, 2019, and an increase of $2.56 or 10.8% from $23.79 at December 31, 2018. Tangible common book value per share(1) was $21.66 at December 31, 2019, an increase of $0.40 or 1.9% from $21.26 at September 30, 2019, and an increase of $2.65 or 13.9% from $19.01 at December 31, 2018.
During the fourth quarter of 2019, the Company declared a common stock dividend of $0.25 per common share. The dividend returned 31% of fourth quarter net income to common shareholders.
The Company’s regulatory capital ratios at December 31, 2019, compared to the prior quarter and prior year:
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Leverage Ratio was 9.00%, compared to 8.86% and 8.16% at September 30, 2019, and December 31, 2018, respectively. |
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Common Equity Tier 1 Capital Ratio was 10.31%, compared to 10.06% and 9.70% at September 30, 2019, and December 31, 2018, respectively. |
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Tier 1 Capital Ratio was 10.80%, compared to 10.55% and 10.21% at September 30, 2019, and December 31, 2018, respectively. |
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Total Risk-Based Capital Ratio was 12.77%, compared to 12.57% and 12.38% at September 30, 2019, and December 31, 2018, respectively. |
Credit Quality
Non-performing loans were $8.6 million at December 31, 2019, compared to $9.8 million at September 30, 2019, and $7.1 million at December 31, 2018.
The quarterly provision for loan losses was $2.7 million compared to $1.8 million in the third quarter of 2019 and $3.9 million in the fourth quarter of 2018. Quarterly provision for loan losses varies based primarily on loan growth, charge-offs, collateral values and qualitative factors.
Net charge-offs were $3.8 million in the quarter, $771 thousand lower than the third quarter of 2019 and $86 thousand lower than the fourth quarter of 2018. The ratio of annualized net charge-offs to total average loans was 0.48% in the quarter, 0.58% in the third quarter of 2019 and 0.51% in the fourth quarter of 2018.
The Company has remained strategically focused on the importance of credit discipline, allocating what we believe are the necessary resources to credit and risk management functions as the loan portfolio has grown. The total non-performing loans to total loans ratio was 0.27% at December 31, 2019, compared to 0.31% at September 30, 2019 and 0.23% at December 31, 2018. The ratio of allowance for loan losses to non-performing loans was 353% at December 31, 2019, compared to 324% at September 30, 2019, and 475% at December 31, 2018.
Conference Call
The Company will host an earnings conference call and audio webcast on January 31, 2020, at 8:30 a.m. Eastern Time. The call will be hosted by Martin K. Birmingham, President and Chief Executive Officer, and Justin K. Bigham, Chief Financial Officer. The live webcast will be available in listen-only mode on the Company’s website at www.fiiwarsaw.com. Within the United States, listeners may also access the call by dialing 1-888-346-9290 and requesting the Financial Institutions, Inc. call. The webcast replay will be available on the Company’s website for at least 30 days.
Page 4
About Financial Institutions, Inc.
Financial Institutions, Inc. provides diversified financial services through its subsidiaries Five Star Bank, SDN, Courier Capital and HNP Capital. Five Star Bank provides a wide range of consumer and commercial banking and lending services to individuals, municipalities and businesses through a network of more than 50 offices throughout Western and Central New York State. SDN provides a broad range of insurance services to personal and business clients. Courier Capital and HNP Capital provide 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. Additional information is available at www.fiiwarsaw.com.
Non-GAAP Financial Information
In addition to results presented in accordance with U.S. generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures. A reconciliation of these non-GAAP measures to GAAP measures is included in Appendix A to this document.
The Company believes that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, performance trends and financial position. Our management uses these measures for internal planning and forecasting purposes and we believe that our presentation and discussion, together with the accompanying reconciliations, allows investors, security analysts and other interested parties to view our performance and the factors and trends affecting our business in a manner similar to management. These non-GAAP measures should not be considered a substitute for GAAP measures and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure to evaluate the Company. Non-GAAP financial measures have inherent limitations, are not uniformly applied and are not audited. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.
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, that involve significant risks and uncertainties. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “estimate,” “forecast,” “target,” “preliminary,” or “range.” Statements herein are based on certain assumptions and analyses by the Company and factors it believes are appropriate in the circumstances. Actual results could differ materially from those contained in or implied by such statements for a variety of reasons including, but not limited to: the Company’s ability to implement its strategic plan, whether the Company experiences greater credit losses than expected, whether the Company experiences breaches of its, or third party, information systems, the attitudes and preferences of the Company’s customers, the Company’s ability to successfully integrate and profitably operate SDN, Courier Capital, HNP Capital and other acquisitions, the competitive environment, fluctuations in the fair value of securities in its investment portfolio, changes in the regulatory environment and the Company’s compliance with regulatory requirements, changes in interest rates, and general economic and credit market conditions nationally and regionally. Consequently, all forward-looking statements made herein are qualified by these cautionary statements and the cautionary language in the Company’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, the Company undertakes no obligation to revise these statements following the date of this press release.
(1) See Appendix A — Reconciliation to Non-GAAP Financial Measures for the computation of this Non-GAAP measure.
*****
For additional information contact:
Shelly J. Doran
Director of Investor and External Relations
585-627-1362
sjdoran@five-starbank.com
Page 5
FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share amounts)
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2019 |
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2018 |
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December 31, |
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September 30, |
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June 30, |
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March 31, |
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December 31, |
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SELECTED BALANCE SHEET DATA: |
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Cash and cash equivalents |
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$ |
112,947 |
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$ |
136,815 |
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$ |
108,988 |
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$ |
79,786 |
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$ |
102,755 |
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Investment securities: |
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Available for sale |
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417,917 |
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395,441 |
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406,509 |
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427,545 |
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445,677 |
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Held-to-maturity |
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359,000 |
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386,305 |
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398,610 |
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438,984 |
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446,581 |
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Total investment securities |
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776,917 |
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781,746 |
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805,119 |
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866,529 |
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892,258 |
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Loans held for sale |
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4,224 |
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6,398 |
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2,045 |
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2,069 |
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2,868 |
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Loans: |
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Commercial business |
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572,040 |
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574,455 |
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594,923 |
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553,745 |
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557,861 |
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Commercial mortgage |
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1,106,283 |
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1,035,450 |
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1,010,071 |
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993,259 |
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958,194 |
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Residential real estate loans |
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572,350 |
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558,656 |
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546,031 |
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534,691 |
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524,155 |
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Residential real estate lines |
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104,118 |
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107,615 |
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108,006 |
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108,623 |
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109,718 |
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Consumer indirect |
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850,052 |
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863,614 |
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876,116 |
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902,762 |
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919,917 |
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Other consumer |
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16,144 |
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16,630 |
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16,537 |
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16,099 |
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16,753 |
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Total loans |
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3,220,987 |
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3,156,420 |
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3,151,684 |
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3,109,179 |
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3,086,598 |
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Allowance for loan losses |
|
|
30,482 |
|
|
|
31,668 |
|
|
|
34,434 |
|
|
|
33,327 |
|
|
|
33,914 |
|
|
Total loans, net |
|
|
3,190,505 |
|
|
|
3,124,752 |
|
|
|
3,117,250 |
|
|
|
3,075,852 |
|
|
|
3,052,684 |
|
|
Total interest-earning assets |
|
|
4,058,107 |
|
|
|
3,979,493 |
|
|
|
4,007,797 |
|
|
|
4,009,496 |
|
|
|
4,031,151 |
|
|
Goodwill and other intangible assets, net |
|
|
74,923 |
|
|
|
75,225 |
|
|
|
75,534 |
|
|
|
75,850 |
|
|
|
76,173 |
|
|
Total assets |
|
|
4,384,178 |
|
|
|
4,332,737 |
|
|
|
4,313,945 |
|
|
|
4,302,541 |
|
|
|
4,311,698 |
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing demand |
|
|
707,752 |
|
|
|
755,296 |
|
|
|
719,150 |
|
|
|
732,631 |
|
|
|
755,460 |
|
|
Interest-bearing demand |
|
|
627,842 |
|
|
|
707,153 |
|
|
|
677,846 |
|
|
|
707,430 |
|
|
|
622,482 |
|
|
Savings and money market |
|
|
1,039,892 |
|
|
|
1,011,873 |
|
|
|
966,509 |
|
|
|
1,016,666 |
|
|
|
968,897 |
|
|
Time deposits |
|
|
1,180,189 |
|
|
|
1,111,892 |
|
|
|
1,108,484 |
|
|
|
1,052,110 |
|
|
|
1,020,068 |
|
|
Total deposits |
|
|
3,555,675 |
|
|
|
3,586,214 |
|
|
|
3,471,989 |
|
|
|
3,508,837 |
|
|
|
3,366,907 |
|
|
Short-term borrowings |
|
|
275,500 |
|
|
|
211,400 |
|
|
|
308,500 |
|
|
|
287,300 |
|
|
|
469,500 |
|
|
Long-term borrowings, net |
|
|
39,273 |
|
|
|
39,255 |
|
|
|
39,237 |
|
|
|
39,220 |
|
|
|
39,202 |
|
|
Total interest-bearing liabilities |
|
|
3,162,696 |
|
|
|
3,081,573 |
|
|
|
3,100,576 |
|
|
|
3,102,726 |
|
|
|
3,120,149 |
|
|
Shareholders’ equity |
|
|
438,947 |
|
|
|
432,617 |
|
|
|
422,354 |
|
|
|
408,253 |
|
|
|
396,293 |
|
|
Common shareholders’ equity |
|
|
421,619 |
|
|
|
415,289 |
|
|
|
405,026 |
|
|
|
390,925 |
|
|
|
378,965 |
|
|
Tangible common equity (1) |
|
|
346,696 |
|
|
|
340,064 |
|
|
|
329,492 |
|
|
|
315,075 |
|
|
|
302,792 |
|
|
Accumulated other comprehensive loss |
|
$ |
(14,513 |
) |
|
$ |
(11,734 |
) |
|
$ |
(13,160 |
) |
|
$ |
(18,554 |
) |
|
$ |
(21,281 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding |
|
|
16,003 |
|
|
|
15,997 |
|
|
|
15,995 |
|
|
|
15,941 |
|
|
|
15,929 |
|
|
Treasury shares |
|
|
97 |
|
|
|
103 |
|
|
|
105 |
|
|
|
115 |
|
|
|
127 |
|
|
CAPITAL RATIOS AND PER SHARE DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leverage ratio |
|
|
9.00 |
% |
|
|
8.86 |
% |
|
|
8.55 |
% |
|
|
8.36 |
% |
|
|
8.16 |
% |
|
Common equity Tier 1 capital ratio |
|
|
10.31 |
% |
|
|
10.06 |
% |
|
|
9.95 |
% |
|
|
9.87 |
% |
|
|
9.70 |
% |
|
Tier 1 capital ratio |
|
|
10.80 |
% |
|
|
10.55 |
% |
|
|
10.45 |
% |
|
|
10.37 |
% |
|
|
10.21 |
% |
|
Total risk-based capital ratio |
|
|
12.77 |
% |
|
|
12.57 |
% |
|
|
12.57 |
% |
|
|
12.50 |
% |
|
|
12.38 |
% |
|
Common equity to assets |
|
|
9.62 |
% |
|
|
9.58 |
% |
|
|
9.39 |
% |
|
|
9.09 |
% |
|
|
8.79 |
% |
|
Tangible common equity to tangible assets (1) |
|
|
8.05 |
% |
|
|
7.99 |
% |
|
|
7.77 |
% |
|
|
7.45 |
% |
|
|
7.15 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common book value per share |
|
$ |
26.35 |
|
|
$ |
25.96 |
|
|
$ |
25.32 |
|
|
$ |
24.52 |
|
|
$ |
23.79 |
|
|
Tangible common book value per share (1) |
|
$ |
21.66 |
|
|
$ |
21.26 |
|
|
$ |
20.60 |
|
|
$ |
19.77 |
|
|
$ |
19.01 |
|
(1) See Appendix A — Reconciliation to Non-GAAP Financial Measures for the computation of this Non-GAAP measure.
Page 6
FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share amounts)
|
|
|
Year Ended |
|
|
2019 |
|
|
2018 |
|
|||||||||||||||||||
|
|
|
December 31, |
|
|
Fourth |
|
|
Third |
|
|
Second |
|
|
First |
|
|
Fourth |
|
||||||||||
|
|
|
2019 |
|
|
2018 |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|||||||
|
SELECTED INCOME STATEMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
$ |
168,800 |
|
|
$ |
152,732 |
|
|
$ |
42,179 |
|
|
$ |
42,459 |
|
|
$ |
42,648 |
|
|
$ |
41,514 |
|
|
$ |
41,125 |
|
|
Interest expense |
|
|
38,888 |
|
|
|
29,868 |
|
|
|
9,006 |
|
|
|
9,976 |
|
|
|
10,184 |
|
|
|
9,722 |
|
|
|
9,096 |
|
|
Net interest income |
|
|
129,912 |
|
|
|
122,864 |
|
|
|
33,173 |
|
|
|
32,483 |
|
|
|
32,464 |
|
|
|
31,792 |
|
|
|
32,029 |
|
|
Provision for loan losses |
|
|
8,044 |
|
|
|
8,934 |
|
|
|
2,653 |
|
|
|
1,844 |
|
|
|
2,354 |
|
|
|
1,193 |
|
|
|
3,884 |
|
|
Net interest income after provision for loan losses |
|
|
121,868 |
|
|
|
113,930 |
|
|
|
30,520 |
|
|
|
30,639 |
|
|
|
30,110 |
|
|
|
30,599 |
|
|
|
28,145 |
|
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposits |
|
|
7,241 |
|
|
|
7,120 |
|
|
|
1,880 |
|
|
|
1,925 |
|
|
|
1,756 |
|
|
|
1,680 |
|
|
|
1,866 |
|
|
Insurance income |
|
|
4,570 |
|
|
|
4,930 |
|
|
|
881 |
|
|
|
1,439 |
|
|
|
872 |
|
|
|
1,378 |
|
|
|
1,012 |
|
|
ATM and debit card |
|
|
6,779 |
|
|
|
6,152 |
|
|
|
1,796 |
|
|
|
1,801 |
|
|
|
1,739 |
|
|
|
1,443 |
|
|
|
1,643 |
|
|
Investment advisory |
|
|
9,187 |
|
|
|
8,123 |
|
|
|
2,375 |
|
|
|
2,269 |
|
|
|
2,327 |
|
|
|
2,216 |
|
|
|
2,189 |
|
|
Company owned life insurance |
|
|
1,758 |
|
|
|
1,793 |
|
|
|
465 |
|
|
|
459 |
|
|
|
424 |
|
|
|
410 |
|
|
|
460 |
|
|
Investments in limited partnerships |
|
|
352 |
|
|
|
1,203 |
|
|
|
(140 |
) |
|
|
116 |
|
|
|
144 |
|
|
|
232 |
|
|
|
184 |
|
|
Loan servicing |
|
|
432 |
|
|
|
441 |
|
|
|
116 |
|
|
|
102 |
|
|
|
104 |
|
|
|
110 |
|
|
|
122 |
|
|
Income (loss) from derivative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
instruments, net |
|
|
2,274 |
|
|
|
972 |
|
|
|
1,261 |
|
|
|
890 |
|
|
|
(45 |
) |
|
|
168 |
|
|
|
289 |
|
|
Net gain on sale of loans held for sale |
|
|
1,352 |
|
|
|
796 |
|
|
|
324 |
|
|
|
439 |
|
|
|
407 |
|
|
|
182 |
|
|
|
266 |
|
|
Net (loss) gain on investment securities |
|
|
1,677 |
|
|
|
(127 |
) |
|
|
(44 |
) |
|
|
1,608 |
|
|
|
166 |
|
|
|
(53 |
) |
|
|
(39 |
) |
|
Net gain (loss) on other assets |
|
|
29 |
|
|
|
50 |
|
|
|
(27 |
) |
|
|
(2 |
) |
|
|
9 |
|
|
|
49 |
|
|
|
1 |
|
|
Net loss on tax credit investments |
|
|
(528 |
) |
|
|
- |
|
|
|
(528 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Other |
|
|
5,258 |
|
|
|
5,025 |
|
|
|
1,308 |
|
|
|
1,315 |
|
|
|
1,330 |
|
|
|
1,305 |
|
|
|
1,355 |
|
|
Total noninterest income |
|
|
40,381 |
|
|
|
36,478 |
|
|
|
9,667 |
|
|
|
12,361 |
|
|
|
9,233 |
|
|
|
9,120 |
|
|
|
9,348 |
|
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
56,330 |
|
|
|
54,643 |
|
|
|
14,669 |
|
|
|
14,411 |
|
|
|
13,249 |
|
|
|
14,001 |
|
|
|
14,373 |
|
|
Occupancy and equipment |
|
|
18,266 |
|
|
|
17,338 |
|
|
|
4,704 |
|
|
|
4,650 |
|
|
|
4,326 |
|
|
|
4,586 |
|
|
|
4,427 |
|
|
Professional services |
|
|
5,424 |
|
|
|
3,912 |
|
|
|
1,806 |
|
|
|
1,528 |
|
|
|
932 |
|
|
|
1,158 |
|
|
|
780 |
|
|
Computer and data processing |
|
|
5,269 |
|
|
|
5,122 |
|
|
|
1,318 |
|
|
|
1,378 |
|
|
|
1,350 |
|
|
|
1,223 |
|
|
|
1,238 |
|
|
Supplies and postage |
|
|
2,036 |
|
|
|
2,032 |
|
|
|
482 |
|
|
|
522 |
|
|
|
498 |
|
|
|
534 |
|
|
|
487 |
|
|
FDIC assessments |
|
|
1,005 |
|
|
|
1,975 |
|
|
|
- |
|
|
|
7 |
|
|
|
486 |
|
|
|
512 |
|
|
|
489 |
|
|
Advertising and promotions |
|
|
3,577 |
|
|
|
3,582 |
|
|
|
1,226 |
|
|
|
745 |
|
|
|
1,086 |
|
|
|
520 |
|
|
|
935 |
|
|
Amortization of intangibles |
|
|
1,250 |
|
|
|
1,257 |
|
|
|
302 |
|
|
|
309 |
|
|
|
316 |
|
|
|
323 |
|
|
|
330 |
|
|
Goodwill impairment |
|
|
- |
|
|
|
2,350 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,350 |
|
|
Other |
|
|
9,671 |
|
|
|
8,665 |
|
|
|
2,261 |
|
|
|
2,336 |
|
|
|
2,760 |
|
|
|
2,314 |
|
|
|
2,394 |
|
|
Total noninterest expense |
|
|
102,828 |
|
|
|
100,876 |
|
|
|
26,768 |
|
|
|
25,886 |
|
|
|
25,003 |
|
|
|
25,171 |
|
|
|
27,803 |
|
|
Income before income taxes |
|
|
59,421 |
|
|
|
49,532 |
|
|
|
13,419 |
|
|
|
17,114 |
|
|
|
14,340 |
|
|
|
14,548 |
|
|
|
9,690 |
|
|
Income tax expense |
|
|
10,559 |
|
|
|
10,006 |
|
|
|
312 |
|
|
|
4,281 |
|
|
|
2,939 |
|
|
|
3,027 |
|
|
|
2,199 |
|
|
Net income |
|
|
48,862 |
|
|
|
39,526 |
|
|
|
13,107 |
|
|
|
12,833 |
|
|
|
11,401 |
|
|
|
11,521 |
|
|
|
7,491 |
|
|
Preferred stock dividends |
|
|
1,461 |
|
|
|
1,461 |
|
|
|
365 |
|
|
|
365 |
|
|
|
366 |
|
|
|
365 |
|
|
|
365 |
|
|
Net income available to common |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shareholders |
|
$ |
47,401 |
|
|
$ |
38,065 |
|
|
$ |
12,742 |
|
|
$ |
12,468 |
|
|
$ |
11,035 |
|
|
$ |
11,156 |
|
|
$ |
7,126 |
|
|
FINANCIAL RATIOS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share – basic |
|
$ |
2.97 |
|
|
$ |
2.39 |
|
|
$ |
0.80 |
|
|
$ |
0.78 |
|
|
$ |
0.69 |
|
|
$ |
0.70 |
|
|
$ |
0.45 |
|
|
Earnings per share – diluted |
|
$ |
2.96 |
|
|
$ |
2.39 |
|
|
$ |
0.79 |
|
|
$ |
0.78 |
|
|
$ |
0.69 |
|
|
$ |
0.70 |
|
|
$ |
0.45 |
|
|
Cash dividends declared on common stock |
|
$ |
1.00 |
|
|
$ |
0.96 |
|
|
$ |
0.25 |
|
|
$ |
0.25 |
|
|
$ |
0.25 |
|
|
$ |
0.25 |
|
|
$ |
0.24 |
|
|
Common dividend payout ratio |
|
|
33.67 |
% |
|
|
40.17 |
% |
|
|
31.25 |
% |
|
|
32.05 |
% |
|
|
36.23 |
% |
|
|
35.71 |
% |
|
|
53.33 |
% |
|
Dividend yield (annualized) |
|
|
3.12 |
% |
|
|
3.74 |
% |
|
|
3.09 |
% |
|
|
3.29 |
% |
|
|
3.44 |
% |
|
|
3.73 |
% |
|
|
3.70 |
% |
|
Return on average assets |
|
|
1.14 |
% |
|
|
0.95 |
% |
|
|
1.21 |
% |
|
|
1.19 |
% |
|
|
1.06 |
% |
|
|
1.09 |
% |
|
|
0.70 |
% |
|
Return on average equity |
|
|
11.61 |
% |
|
|
10.18 |
% |
|
|
11.88 |
% |
|
|
11.86 |
% |
|
|
11.01 |
% |
|
|
11.65 |
% |
|
|
7.50 |
% |
|
Return on average common equity |
|
|
11.74 |
% |
|
|
10.26 |
% |
|
|
12.02 |
% |
|
|
12.00 |
% |
|
|
11.12 |
% |
|
|
11.79 |
% |
|
|
7.46 |
% |
|
Return on average tangible common |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
equity (1) |
|
|
14.45 |
% |
|
|
12.95 |
% |
|
|
14.64 |
% |
|
|
14.69 |
% |
|
|
13.73 |
% |
|
|
14.71 |
% |
|
|
9.40 |
% |
|
Efficiency ratio (2) |
|
|
60.59 |
% |
|
|
62.73 |
% |
|
|
62.05 |
% |
|
|
59.52 |
% |
|
|
59.79 |
% |
|
|
60.99 |
% |
|
|
66.64 |
% |
|
Effective tax rate |
|
|
17.8 |
% |
|
|
20.2 |
% |
|
|
2.3 |
% |
|
|
25.0 |
% |
|
|
20.5 |
% |
|
|
20.8 |
% |
|
|
22.7 |
% |
|
|
(1) |
See Appendix A – Reconciliation to Non-GAAP Financial Measures for the computation of this Non-GAAP measure. |
|
|
(2) |
The efficiency ratio is calculated by dividing noninterest expense by net revenue, i.e., the sum of net interest income (fully taxable equivalent) and noninterest income before net gains on investment securities. This is a banking industry measure not required by GAAP. |
Page 7
FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands)
|
|
|
Year Ended |
|
|
2019 |
|
|
2018 |
|
|||||||||||||||||||
|
|
|
December 31, |
|
|
Fourth |
|
|
Third |
|
|
Second |
|
|
First |
|
|
Fourth |
|
||||||||||
|
|
|
2019 |
|
|
2018 |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|||||||
|
SELECTED AVERAGE BALANCES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal funds sold and interest- earning deposits |
|
$ |
22,023 |
|
|
$ |
24,906 |
|
|
$ |
32,494 |
|
|
$ |
19,370 |
|
|
$ |
18,145 |
|
|
$ |
17,955 |
|
|
$ |
25,411 |
|
|
Investment securities (1) |
|
|
822,744 |
|
|
|
984,553 |
|
|
|
774,520 |
|
|
|
785,595 |
|
|
|
845,624 |
|
|
|
886,878 |
|
|
|
937,907 |
|
|
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business |
|
|
569,941 |
|
|
|
498,552 |
|
|
|
567,998 |
|
|
|
586,293 |
|
|
|
577,884 |
|
|
|
547,182 |
|
|
|
539,622 |
|
|
Commercial mortgage |
|
|
1,021,220 |
|
|
|
876,484 |
|
|
|
1,073,527 |
|
|
|
1,021,931 |
|
|
|
1,010,544 |
|
|
|
977,818 |
|
|
|
944,476 |
|
|
Residential real estate loans |
|
|
547,505 |
|
|
|
492,165 |
|
|
|
566,256 |
|
|
|
553,382 |
|
|
|
540,390 |
|
|
|
529,522 |
|
|
|
515,539 |
|
|
Residential real estate lines |
|
|
107,654 |
|
|
|
112,872 |
|
|
|
106,011 |
|
|
|
107,290 |
|
|
|
107,826 |
|
|
|
109,529 |
|
|
|
110,236 |
|
|
Consumer indirect |
|
|
882,056 |
|
|
|
901,066 |
|
|
|
856,823 |
|
|
|
868,927 |
|
|
|
891,967 |
|
|
|
911,252 |
|
|
|
914,636 |
|
|
Other consumer |
|
|
16,047 |
|
|
|
16,682 |
|
|
|
16,100 |
|
|
|
16,141 |
|
|
|
15,721 |
|
|
|
16,226 |
|
|
|
16,671 |
|
|
Total loans |
|
|
3,144,423 |
|
|
|
2,897,821 |
|
|
|
3,186,715 |
|
|
|
3,153,964 |
|
|
|
3,144,332 |
|
|
|
3,091,529 |
|
|
|
3,041,180 |
|
|
Total interest-earning assets |
|
|
3,989,190 |
|
|
|
3,907,280 |
|
|
|
3,993,729 |
|
|
|
3,958,929 |
|
|
|
4,008,101 |
|
|
|
3,996,362 |
|
|
|
4,004,498 |
|
|
Goodwill and other intangible assets, net |
|
|
75,557 |
|
|
|
76,990 |
|
|
|
75,093 |
|
|
|
75,401 |
|
|
|
75,711 |
|
|
|
76,033 |
|
|
|
78,314 |
|
|
Total assets |
|
|
4,285,825 |
|
|
|
4,171,972 |
|
|
|
4,299,342 |
|
|
|
4,260,810 |
|
|
|
4,300,254 |
|
|
|
4,282,991 |
|
|
|
4,268,809 |
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand |
|
|
655,534 |
|
|
|
665,255 |
|
|
|
660,738 |
|
|
|
632,540 |
|
|
|
660,747 |
|
|
|
668,448 |
|
|
|
669,491 |
|
|
Savings and money market |
|
|
983,447 |
|
|
|
1,008,665 |
|
|
|
1,014,434 |
|
|
|
956,410 |
|
|
|
996,878 |
|
|
|
965,829 |
|
|
|
1,011,427 |
|
|
Time deposits |
|
|
1,098,440 |
|
|
|
936,157 |
|
|
|
1,120,823 |
|
|
|
1,099,212 |
|
|
|
1,096,544 |
|
|
|
1,076,687 |
|
|
|
1,032,632 |
|
|
Short-term borrowings |
|
|
309,893 |
|
|
|
394,679 |
|
|
|
241,557 |
|
|
|
328,952 |
|
|
|
323,461 |
|
|
|
346,546 |
|
|
|
355,439 |
|
|
Long-term borrowings, net |
|
|
39,235 |
|
|
|
39,165 |
|
|
|
39,262 |
|
|
|
39,244 |
|
|
|
39,227 |
|
|
|
39,209 |
|
|
|
39,191 |
|
|
Total interest-bearing liabilities |
|
|
3,086,549 |
|
|
|
3,043,921 |
|
|
|
3,076,814 |
|
|
|
3,056,358 |
|
|
|
3,116,857 |
|
|
|
3,096,719 |
|
|
|
3,108,180 |
|
|
Noninterest-bearing demand deposits |
|
|
721,133 |
|
|
|
713,152 |
|
|
|
725,590 |
|
|
|
717,473 |
|
|
|
714,205 |
|
|
|
727,321 |
|
|
|
733,717 |
|
|
Total deposits |
|
|
3,458,554 |
|
|
|
3,323,229 |
|
|
|
3,521,585 |
|
|
|
3,405,635 |
|
|
|
3,468,374 |
|
|
|
3,438,285 |
|
|
|
3,447,267 |
|
|
Total liabilities |
|
|
3,864,808 |
|
|
|
3,783,621 |
|
|
|
3,861,542 |
|
|
|
3,831,409 |
|
|
|
3,884,843 |
|
|
|
3,882,033 |
|
|
|
3,872,545 |
|
|
Shareholders’ equity |
|
|
421,017 |
|
|
|
388,351 |
|
|
|
437,800 |
|
|
|
429,401 |
|
|
|
415,411 |
|
|
|
400,958 |
|
|
|
396,264 |
|
|
Common equity |
|
|
403,689 |
|
|
|
371,023 |
|
|
|
420,472 |
|
|
|
412,073 |
|
|
|
398,083 |
|
|
|
383,630 |
|
|
|
378,936 |
|
|
Tangible common equity (2) |
|
$ |
328,132 |
|
|
$ |
294,033 |
|
|
$ |
345,379 |
|
|
$ |
336,672 |
|
|
$ |
322,372 |
|
|
$ |
307,597 |
|
|
$ |
300,622 |
|
|
Common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
15,972 |
|
|
|
15,910 |
|
|
|
15,995 |
|
|
|
15,991 |
|
|
|
15,970 |
|
|
|
15,930 |
|
|
|
15,922 |
|
|
Diluted |
|
|
16,031 |
|
|
|
15,956 |
|
|
|
16,072 |
|
|
|
16,056 |
|
|
|
16,015 |
|
|
|
15,978 |
|
|
|
15,971 |
|
|
SELECTED AVERAGE YIELDS: (Tax equivalent basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities |
|
|
2.39 |
% |
|
|
2.33 |
% |
|
|
2.40 |
% |
|
|
2.40 |
% |
|
|
2.38 |
% |
|
|
2.37 |
% |
|
|
2.33 |
% |
|
Loans |
|
|
4.77 |
% |
|
|
4.51 |
% |
|
|
4.70 |
% |
|
|
4.77 |
% |
|
|
4.82 |
% |
|
|
4.77 |
% |
|
|
4.68 |
% |
|
Total interest-earning assets |
|
|
4.26 |
% |
|
|
3.94 |
% |
|
|
4.22 |
% |
|
|
4.29 |
% |
|
|
4.29 |
% |
|
|
4.23 |
% |
|
|
4.11 |
% |
|
Interest-bearing demand |
|
|
0.21 |
% |
|
|
0.16 |
% |
|
|
0.21 |
% |
|
|
0.22 |
% |
|
|
0.21 |
% |
|
|
0.20 |
% |
|
|
0.20 |
% |
|
Savings and money market |
|
|
0.44 |
% |
|
|
0.29 |
% |
|
|
0.48 |
% |
|
|
0.44 |
% |
|
|
0.44 |
% |
|
|
0.41 |
% |
|
|
0.38 |
% |
|
Time deposits |
|
|
2.07 |
% |
|
|
1.61 |
% |
|
|
1.94 |
% |
|
|
2.12 |
% |
|
|
2.17 |
% |
|
|
2.06 |
% |
|
|
1.88 |
% |
|
Short-term borrowings |
|
|
2.56 |
% |
|
|
2.11 |
% |
|
|
2.21 |
% |
|
|
2.51 |
% |
|
|
2.71 |
% |
|
|
2.70 |
% |
|
|
2.56 |
% |
|
Long-term borrowings, net |
|
|
6.30 |
% |
|
|
6.31 |
% |
|
|
6.29 |
% |
|
|
6.30 |
% |
|
|
6.30 |
% |
|
|
6.30 |
% |
|
|
6.30 |
% |
|
Total interest-bearing liabilities |
|
|
1.26 |
% |
|
|
0.98 |
% |
|
|
1.16 |
% |
|
|
1.30 |
% |
|
|
1.31 |
% |
|
|
1.27 |
% |
|
|
1.16 |
% |
|
Net interest rate spread |
|
|
3.00 |
% |
|
|
2.96 |
% |
|
|
3.06 |
% |
|
|
2.99 |
% |
|
|
2.98 |
% |
|
|
2.96 |
% |
|
|
2.95 |
% |
|
Net interest margin |
|
|
3.28 |
% |
|
|
3.18 |
% |
|
|
3.33 |
% |
|
|
3.29 |
% |
|
|
3.28 |
% |
|
|
3.24 |
% |
|
|
3.21 |
% |
|
|
(1) |
Includes investment securities at adjusted amortized cost. |
|
|
(2) |
See Appendix A – Reconciliation to Non-GAAP Financial Measures for the computation of this Non-GAAP measure. |
Page 8
FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands)
|
|
|
Year Ended |
|
|
2019 |
|
|
2018 |
|
|||||||||||||||||||
|
|
|
December 31, |
|
|
Fourth |
|
|
Third |
|
|
Second |
|
|
First |
|
|
Fourth |
|
||||||||||
|
|
|
2019 |
|
|
2018 |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|||||||
|
ASSET QUALITY DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan Losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
$ |
33,914 |
|
|
$ |
34,672 |
|
|
$ |
31,668 |
|
|
$ |
34,434 |
|
|
$ |
33,327 |
|
|
$ |
33,914 |
|
|
$ |
33,955 |
|
|
Net loan charge-offs (recoveries): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business |
|
|
1,989 |
|
|
|
1,810 |
|
|
|
1,942 |
|
|
|
10 |
|
|
|
10 |
|
|
|
27 |
|
|
|
1,135 |
|
|
Commercial mortgage |
|
|
2,980 |
|
|
|
1,007 |
|
|
|
- |
|
|
|
2,994 |
|
|
|
3 |
|
|
|
(17 |
) |
|
|
901 |
|
|
Residential real estate loans |
|
|
297 |
|
|
|
(64 |
) |
|
|
156 |
|
|
|
40 |
|
|
|
76 |
|
|
|
25 |
|
|
|
23 |
|
|
Residential real estate lines |
|
|
7 |
|
|
|
122 |
|
|
|
3 |
|
|
|
7 |
|
|
|
(1 |
) |
|
|
(2 |
) |
|
|
15 |
|
|
Consumer indirect |
|
|
5,420 |
|
|
|
5,826 |
|
|
|
1,523 |
|
|
|
1,317 |
|
|
|
1,022 |
|
|
|
1,558 |
|
|
|
1,599 |
|
|
Other consumer |
|
|
783 |
|
|
|
991 |
|
|
|
215 |
|
|
|
242 |
|
|
|
137 |
|
|
|
189 |
|
|
|
252 |
|
|
Total net charge-offs |
|
|
11,476 |
|
|
|
9,692 |
|
|
|
3,839 |
|
|
|
4,610 |
|
|
|
1,247 |
|
|
|
1,780 |
|
|
|
3,925 |
|
|
Provision for loan losses |
|
|
8,044 |
|
|
|
8,934 |
|
|
|
2,653 |
|
|
|
1,844 |
|
|
|
2,354 |
|
|
|
1,193 |
|
|
|
3,884 |
|
|
Ending balance |
|
$ |
30,482 |
|
|
$ |
33,914 |
|
|
$ |
30,482 |
|
|
$ |
31,668 |
|
|
$ |
34,434 |
|
|
$ |
33,327 |
|
|
$ |
33,914 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs (recoveries) to average loans (annualized): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business |
|
|
0.35 |
% |
|
|
0.36 |
% |
|
|
1.36 |
% |
|
|
0.01 |
% |
|
|
0.01 |
% |
|
|
0.02 |
% |
|
|
0.83 |
% |
|
Commercial mortgage |
|
|
0.29 |
% |
|
|
0.11 |
% |
|
|
0.00 |
% |
|
|
1.16 |
% |
|
|
0.00 |
% |
|
|
-0.01 |
% |
|
|
0.38 |
% |
|
Residential real estate loans |
|
|
0.05 |
% |
|
|
-0.01 |
% |
|
|
0.11 |
% |
|
|
0.03 |
% |
|
|
0.06 |
% |
|
|
0.02 |
% |
|
|
0.02 |
% |
|
Residential real estate lines |
|
|
0.01 |
% |
|
|
0.11 |
% |
|
|
0.01 |
% |
|
|
0.03 |
% |
|
|
-0.01 |
% |
|
|
-0.01 |
% |
|
|
0.05 |
% |
|
Consumer indirect |
|
|
0.61 |
% |
|
|
0.65 |
% |
|
|
0.71 |
% |
|
|
0.60 |
% |
|
|
0.46 |
% |
|
|
0.69 |
% |
|
|
0.69 |
% |
|
Other consumer |
|
|
4.88 |
% |
|
|
5.94 |
% |
|
|
5.30 |
% |
|
|
5.93 |
% |
|
|
3.51 |
% |
|
|
4.73 |
% |
|
|
6.00 |
% |
|
Total loans |
|
|
0.37 |
% |
|
|
0.33 |
% |
|
|
0.48 |
% |
|
|
0.58 |
% |
|
|
0.16 |
% |
|
|
0.23 |
% |
|
|
0.51 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business |
|
$ |
1,177 |
|
|
$ |
912 |
|
|
$ |
1,177 |
|
|
$ |
2,884 |
|
|
$ |
638 |
|
|
$ |
594 |
|
|
$ |
912 |
|
|
Commercial mortgage |
|
|
3,146 |
|
|
|
1,586 |
|
|
|
3,146 |
|
|
|
2,867 |
|
|
|
6,836 |
|
|
|
909 |
|
|
|
1,586 |
|
|
Residential real estate loans |
|
|
2,484 |
|
|
|
2,391 |
|
|
|
2,484 |
|
|
|
2,526 |
|
|
|
2,283 |
|
|
|
2,225 |
|
|
|
2,391 |
|
|
Residential real estate lines |
|
|
102 |
|
|
|
255 |
|
|
|
102 |
|
|
|
182 |
|
|
|
282 |
|
|
|
252 |
|
|
|
255 |
|
|
Consumer indirect |
|
|
1,725 |
|
|
|
1,989 |
|
|
|
1,725 |
|
|
|
1,326 |
|
|
|
1,399 |
|
|
|
1,822 |
|
|
|
1,989 |
|
|
Other consumer |
|
|
6 |
|
|
|
8 |
|
|
|
6 |
|
|
|
3 |
|
|
|
25 |
|
|
|
2 |
|
|
|
8 |
|
|
Total non-performing loans |
|
|
8,640 |
|
|
|
7,141 |
|
|
|
8,640 |
|
|
|
9,788 |
|
|
|
11,463 |
|
|
|
5,804 |
|
|
|
7,141 |
|
|
Foreclosed assets |
|
|
468 |
|
|
|
230 |
|
|
|
468 |
|
|
|
91 |
|
|
|
37 |
|
|
|
41 |
|
|
|
230 |
|
|
Total non-performing assets |
|
$ |
9,108 |
|
|
$ |
7,371 |
|
|
$ |
9,108 |
|
|
$ |
9,879 |
|
|
$ |
11,500 |
|
|
$ |
5,845 |
|
|
$ |
7,371 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-performing loans to total loans |
|
|
0.27 |
% |
|
|
0.23 |
% |
|
|
0.27 |
% |
|
|
0.31 |
% |
|
|
0.36 |
% |
|
|
0.19 |
% |
|
|
0.23 |
% |
|
Total non-performing assets to total assets |
|
|
0.21 |
% |
|
|
0.17 |
% |
|
|
0.21 |
% |
|
|
0.23 |
% |
|
|
0.27 |
% |
|
|
0.14 |
% |
|
|
0.17 |
% |
|
Allowance for loan losses to total loans |
|
|
0.95 |
% |
|
|
1.10 |
% |
|
|
0.95 |
% |
|
|
1.00 |
% |
|
|
1.09 |
% |
|
|
1.07 |
% |
|
|
1.10 |
% |
|
Allowance for loan losses to non-performing loans |
|
|
353 |
% |
|
|
475 |
% |
|
|
353 |
% |
|
|
324 |
% |
|
|
300 |
% |
|
|
574 |
% |
|
|
475 |
% |
|
|
(1) |
At period end. |
Page 9
FINANCIAL INSTITUTIONS, INC.
Appendix A — Reconciliation to Non-GAAP Financial Measures (Unaudited)
(In thousands, except per share amounts)
|
|
|
Year Ended |
|
|
2019 |
|
|
2018 |
|
|||||||||||||||||||
|
|
|
December 31, |
|
|
Fourth |
|
|
Third |
|
|
Second |
|
|
First |
|
|
Fourth |
|
||||||||||
|
|
|
2019 |
|
|
2018 |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|||||||
|
Ending tangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
|
|
|
|
|
|
|
$ |
4,384,178 |
|
|
$ |
4,332,737 |
|
|
$ |
4,313,945 |
|
|
$ |
4,302,541 |
|
|
$ |
4,311,698 |
|
|
Less: Goodwill and other intangible assets, net |
|
|
|
|
|
|
|
|
|
|
74,923 |
|
|
|
75,225 |
|
|
|
75,534 |
|
|
|
75,850 |
|
|
|
76,173 |
|
|
Tangible assets |
|
|
|
|
|
|
|
|
|
$ |
4,309,255 |
|
|
$ |
4,257,512 |
|
|
$ |
4,238,411 |
|
|
$ |
4,226,691 |
|
|
$ |
4,235,525 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending tangible common equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shareholders’ equity |
|
|
|
|
|
|
|
|
|
$ |
421,619 |
|
|
$ |
415,289 |
|
|
$ |
405,026 |
|
|
$ |
390,925 |
|
|
$ |
378,965 |
|
|
Less: Goodwill and other intangible assets, net |
|
|
|
|
|
|
|
|
|
|
74,923 |
|
|
|
75,225 |
|
|
|
75,534 |
|
|
|
75,850 |
|
|
|
76,173 |
|
|
Tangible common equity |
|
|
|
|
|
|
|
|
|
$ |
346,696 |
|
|
$ |
340,064 |
|
|
$ |
329,492 |
|
|
$ |
315,075 |
|
|
$ |
302,792 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity to tangible assets (1) |
|
|
|
|
|
|
|
|
|
|
8.05 |
% |
|
|
7.99 |
% |
|
|
7.77 |
% |
|
|
7.45 |
% |
|
|
7.15 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding |
|
|
|
|
|
|
|
|
|
|
16,003 |
|
|
|
15,997 |
|
|
|
15,995 |
|
|
|
15,941 |
|
|
|
15,929 |
|
|
Tangible common book value per share (2) |
|
|
|
|
|
|
|
|
|
$ |
21.66 |
|
|
$ |
21.26 |
|
|
$ |
20.60 |
|
|
$ |
19.77 |
|
|
$ |
19.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average tangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets |
|
$ |
4,285,825 |
|
|
$ |
4,171,972 |
|
|
$ |
4,299,342 |
|
|
$ |
4,260,810 |
|
|
$ |
4,300,254 |
|
|
$ |
4,282,991 |
|
|
$ |
4,268,809 |
|
|
Less: Average goodwill and other intangible assets, net |
|
|
75,557 |
|
|
|
76,990 |
|
|
|
75,093 |
|
|
|
75,401 |
|
|
|
75,711 |
|
|
|
76,033 |
|
|
|
78,314 |
|
|
Average tangible assets |
|
$ |
4,210,268 |
|
|
$ |
4,094,982 |
|
|
$ |
4,224,249 |
|
|
$ |
4,185,409 |
|
|
$ |
4,224,543 |
|
|
$ |
4,206,958 |
|
|
$ |
4,190,495 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average tangible common equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common equity |
|
$ |
403,689 |
|
|
$ |
371,023 |
|
|
$ |
420,472 |
|
|
$ |
412,073 |
|
|
$ |
398,083 |
|
|
$ |
383,630 |
|
|
$ |
378,936 |
|
|
Less: Average goodwill and other intangible assets, net |
|
|
75,557 |
|
|
|
76,990 |
|
|
|
75,093 |
|
|
|
75,401 |
|
|
|
75,711 |
|
|
|
76,033 |
|
|
|
78,314 |
|
|
Average tangible common equity |
|
$ |
328,132 |
|
|
$ |
294,033 |
|
|
$ |
345,379 |
|
|
$ |
336,672 |
|
|
$ |
322,372 |
|
|
$ |
307,597 |
|
|
$ |
300,622 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common shareholders |
|
$ |
47,401 |
|
|
$ |
38,065 |
|
|
$ |
12,742 |
|
|
$ |
12,468 |
|
|
$ |
11,035 |
|
|
$ |
11,156 |
|
|
$ |
7,126 |
|
|
Return on average tangible common equity (3) |
|
|
14.45 |
% |
|
|
12.95 |
% |
|
|
14.64 |
% |
|
|
14.69 |
% |
|
|
13.73 |
% |
|
|
14.71 |
% |
|
|
9.40 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax pre-provision income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
48,862 |
|
|
$ |
39,526 |
|
|
$ |
13,107 |
|
|
$ |
12,833 |
|
|
$ |
11,401 |
|
|
$ |
11,521 |
|
|
$ |
7,491 |
|
|
Add: Income tax expense |
|
|
10,559 |
|
|
|
10,006 |
|
|
|
312 |
|
|
|
4,281 |
|
|
|
2,939 |
|
|
|
3,027 |
|
|
|
2,199 |
|
|
Add: Provision for loan losses |
|
|
8,044 |
|
|
|
8,934 |
|
|
|
2,653 |
|
|
|
1,844 |
|
|
|
2,354 |
|
|
|
1,193 |
|
|
|
3,884 |
|
|
Pre-tax pre-provision income |
|
$ |
67,465 |
|
|
$ |
58,466 |
|
|
$ |
16,072 |
|
|
$ |
18,958 |
|
|
$ |
16,694 |
|
|
$ |
15,741 |
|
|
$ |
13,574 |
|
|
|
(1) |
Tangible common equity divided by tangible assets. |
|
|
(2) |
Tangible common equity divided by common shares outstanding. |
|
|
(3) |
Net income available to common shareholders (annualized) divided by average tangible common equity. |
Page 10