Financial Institutions, Inc. (Nasdaq:FISI) (the “Company” “we” or
“us”), 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 second quarter ended June 30, 2020.
Net income for the quarter was
$11.1 million compared to $11.4 million for the second quarter
of 2019. After preferred dividends, net income available to common
shareholders was $10.8 million for the quarter, or $0.67 per
diluted share, compared to $11.0 million, or $0.69 per diluted
share, for the second quarter of 2019.
Pre-tax pre-provision income(1) was $17.3
million for the quarter compared to $16.7 million for the second
quarter of 2019.
President and Chief Executive Officer Martin K.
Birmingham stated, “In our new normal of working together yet
apart, we have delivered uninterrupted critical banking services to
our customers. We implemented an array of actions for consumers and
businesses, helping 1,700 small businesses and 18,000 small
business employees through the Small Business Administration
Payroll Protection Program (“PPP”) and thousands of consumers
through our COVID-19 CARES relief efforts. This was accomplished
with 65 percent of our associates working from home or at remote
sites.
“We could not have accomplished this without a
dedicated workforce. I thank all our associates for their continued
commitment to our company, our customers, our communities and each
other. They have worked diligently to deliver quality care to our
customers in a challenging environment — adapting to new working
environments and demonstrating our organization’s ability to
efficiently operate in a fast-changing world.
“To provide enhanced digital capabilities during
a time when many customers are hesitant or unable to visit a
branch, we moved forward with the launch of our new digital banking
platform. Now more than ever, consumers and businesses need the
ability to do their banking anywhere and anytime and have access to
a comprehensive overview of their finances in one convenient
location. Five Star Bank Digital Banking represents a major upgrade
from the previous platform, leveraging the latest technology to
provide new features and financial tools that significantly enhance
the digital banking experience for businesses and individuals. This
platform was successfully rolled out during the second quarter.
“We also developed a re-entry plan. Our approach
will be unique to each of our offices to keep customers and
associates safe, the Bank resilient, support the community and
remain responsive to direction from New York State and the Centers
for Disease Control. We have proven during the pandemic that we are
flexible, can work remotely and have the resiliency and redundancy
to maintain services, and we will continue all of this as we move
forward. We fully expect and are committed to maintaining remote
access for the foreseeable future, and that will result in a less
dense workplace and flexibility should the situation turn negative
again. We were thoughtful going in at the start of this pandemic
and are being thoughtful as we proceed.
“I am pleased that we were able to deliver
strong net income and pre-tax pre-provision income in the quarter,
despite headwinds. Our diversified revenue contributed to this
outcome, as well as our efforts in helping existing and new
customers obtain nearly $270 million of PPP loans in the quarter.
The stability of our markets is also a strength for us in these
challenging times.
“We believe our loan loss reserves, combined
with strong levels of capital and liquidity, position us well to
continue to deliver services to our customers in these
unprecedented times. However, much uncertainty remains because of
COVID-19 and the future impact it may have on the economy. We will
pay close attention to conditions across our markets, the United
States and the global economy to address any deterioration
promptly.”
Digital Banking
During the second quarter of 2020, Five Star
Bank completed the multi-phase launch of a new online and mobile
platform — Five Star Bank Digital Banking. The new platform
provides a single dashboard to make payments and deposits, transfer
and send money, create budgets, set financial goals and easily
integrate external investment, loan and other transactional
accounts. Consumers can access a comprehensive financial tool to do
all their banking from home, and business owners and employees who
may be working remotely can also access powerful financial tools to
assist with daily finances.
Enterprise Standardization
Program
The Company’s enterprise standardization program
is focused on improving operational efficiency and enhancing future
profitability. On July 17, 2020, in connection with the program,
Five Star Bank announced changes to adapt to a full-service branch
model to streamline retail branches to better align with shifting
customer needs and preferences. The transformation will result in
six branch closures and a reduction in staffing.
The announcement was the result of a nine-month
comprehensive assessment of all lines of business and functional
areas, conducted in partnership with a leading process improvement
organization. The data-driven analysis identified, among other
things, overlapping service areas, automation opportunities and
streamlining of processes and operations that would enhance
customer experiences and facilitate the long-term sustainability of
current and future branches.
The announced consolidations represent about ten
percent of the branch network and impact approximately six percent
of the total workforce. Where possible, those impacted were offered
alternative roles or the opportunity to apply for open positions in
other areas of the company. Separated associates will receive a
comprehensive severance package based on tenure.
The enterprise standardization program has only
partially concluded as we continue to evaluate activities and
functions across the organization, focusing on ways to improve
operational efficiency while enhancing the employee and customer
experience.
Net Interest Income and Net Interest
Margin
Net interest income was $34.2 million for the
quarter, an increase of $1.1 million from the first quarter of 2020
and $1.7 million higher than the second quarter of 2019.
- Average interest-earning assets for
the quarter were $4.27 billion, $219.5 million higher than the
first quarter of 2020 and $265.5 million higher than the second
quarter of 2019. The increase was the result of loan growth, driven
by PPP loans which had an average balance of $176.7 million for the
quarter.
- Net interest margin was 3.23%,
eight basis points lower than the first quarter of 2020 and five
basis points lower than the second quarter of 2019. The decline was
primarily the result of lower yields on PPP loans, which negatively
impacted the earning-assets yield by approximately six basis
points.
Noninterest Income
Noninterest income was $9.8 million for the
quarter compared to $10.0 million in the first quarter of 2020 and
$9.2 million in the second quarter of 2019.
- Service charges on deposits of $480
thousand was $1.1 million lower than the first quarter of 2020 and
$1.3 million lower than the second quarter of 2019. The decreases
are the result of the Company’s COVID-19 relief initiatives of
waiving or eliminating fees, implemented on March 23, 2020.
- Insurance income of $819 thousand
was $530 thousand lower than the first quarter of 2020, primarily
due to contingent revenue received in the first quarter each year.
Insurance income was $53 thousand lower than the second quarter of
2019.
- Investment advisory fees of $2.3
million was $5 thousand higher than the first quarter of 2020 and
$76 thousand lower than the second quarter of 2019. The decrease
from the second quarter of 2019 was primarily the result of market
volatility.
- Investments in limited partnerships generated a loss of $244
thousand in the quarter compared to income of $213 thousand in the
first quarter of 2020 and income of $144 thousand in the second
quarter of 2019. The Company has made several investments in
limited partnerships, primarily small business investment
companies, and accounts for these investments under the equity
method. Income from these investments fluctuates based on the
maturity and performance of the underlying investments.
- Income from derivative instruments,
net was $1.9 million compared to $746 thousand in the first quarter
of 2020 and a loss of $45 thousand in the second quarter of 2019.
The increase as compared to both periods was primarily the result
of an increase in the number and value of interest rate swap
transactions executed.
- A net gain on investment securities
of $674 thousand was recognized in the quarter compared to a net
gain of $221 thousand in the first quarter of 2020 and a net gain
of $166 thousand in the second quarter of 2019. The net gain in the
current quarter is attributable to the management of premium risk,
largely achieved through the sale of $25.9 million of fixed rate
mortgage backed securities with higher expected prepayment speeds.
Proceeds were reinvested in current coupon bonds, with lower
anticipated prepayment behavior.
Noninterest Expense
Noninterest expense was $26.7 million in
the quarter compared to $27.7 million in the first quarter of 2020
and $25.0 million in the second quarter of 2019.
- Salaries and employee benefits
expense of $15.1 million was relatively unchanged from the first
quarter of 2020 and $1.8 million higher than the second quarter of
2019. The increase from the prior year period is primarily the
result of incentive compensation including producer incentives and
commissions (approximately $530 thousand); a full quarter impact of
annual merit increases (approximately $400 thousand); COVID-related
incremental pay to front-line retail associates (approximately $310
thousand); expenses related to the departure of a senior officer
(approximately $325 thousand) and higher medical expenses
(approximately $200 thousand).
- Professional services expense of
$1.6 million was $572 thousand lower than the first quarter of 2020
and $648 thousand higher than the second quarter of 2019 primarily
due to the timing of audit fees and fees for consulting and
advisory projects, including fees related to the Bank’s derivative
instruments program. Expenses related to the Company’s improvement
initiatives totaled $353 thousand in the second quarter of 2020,
$599 thousand in the first quarter of 2020 and $130 thousand in the
second quarter of 2019.
- FDIC assessments were $539 thousand
in the quarter compared to $372 in the first quarter of 2020 and
$486 thousand in the second quarter of 2019. In 2018, the FDIC
minimum reserve ratio was exceeded, resulting in credits. A credit
of $70 thousand was used in the first quarter of 2020.
- Advertising and promotions expense
of $545 thousand was relatively unchanged from the first quarter of
2020 and $541 thousand lower than the second quarter of 2019.
Advertising activity was reduced in March 2020 when the COVID-19
pandemic impacted operations in Western New York.
- Other expense of $2.1 million was
$288 lower than the first quarter of 2020 and $695 thousand lower
than the second quarter of 2019 primarily because of lower
education, travel and business development expenses as a result of
stay-at-home orders, combined with lower expenses incurred in
connection with indirect consumer lending activity, which was
significantly lower in the second quarter of 2020.
Income Taxes
Income tax expense was $2.4 million for the
quarter compared to $322 thousand for the first quarter of 2020 and
$2.9 million for the second quarter of 2019. The effective tax rate
was 18.0% for the quarter compared to 22.2% for the first quarter
of 2020 and 20.5% for the second quarter of 2019. The Company’s
effective tax rates differ from statutory rates because of interest
income from tax-exempt securities, earnings on company owned life
insurance and the impact of tax credit investments.
Balance Sheet and Capital
Management
Total assets were $4.68 billion at June 30,
2020, up $209.2 million from March 31, 2020, and up
$367.0 million from June 30, 2019.
Investment securities were $779.3 million at
June 30, 2020, down $11.8 million from March 31, 2020, and down
$25.8 million from June 30, 2019. The Company’s 2020 investment
strategy has been to reinvest cash flow from the portfolio;
however, the Bank experienced notable municipal maturities and a
slight increase in prepayment behavior during the quarter which
limited full reinvestment, resulting in a decline in total
investment securities during the quarter. The remaining decrease
from June 30, 2019, was primarily the result of the redeployment of
assets from investment securities into loans to improve the
interest-earning asset mix.
Total loans were $3.49 billion at June 30,
2020, up $248.6 million, or 7.7%, from March 31, 2020, and up
$334.1 million, or 10.6%, from June 30, 2019. Second quarter
closings of PPP loans totaled $268.5 million. The loans carry a 1%
interest rate and the Company recorded net PPP loan origination
fees of approximately $7.7 million which are being amortized over a
24-month period.
- Commercial business loans totaled $818.7 million, up $229.8
million, or 39.0%, from March 31, 2020, and up $223.8 million, or
37.6%, from June 30, 2019. Increases were driven by PPP loans; at
June 30, 2020, the PPP loan balance was $261.5 million, net of
deferred fees. The increase from March 31, 2020 was partially
offset by a decrease in commercial lines of credit that experienced
draws late in the first quarter, at the onset of the U.S. COVID-19
pandemic.
- Commercial mortgage loans totaled $1.14 billion, up $33.0
million, or 3.0%, from March 31, 2020, and up $130.3 million, or
12.9%, from June 30, 2019.
- Residential real estate loans totaled $585.0 million, up $5.2
million, or 0.9%, from March 31, 2020, and up $39.0 million,
or 7.1%, from June 30, 2019.
- Consumer indirect loans totaled $828.1 million, down
$15.6 million, or 1.8%, from March 31, 2020 and down $48.0
million, or 5.5%, from June 30, 2019.
Total deposits were $3.99 billion at June
30, 2020, $206.8 million higher than March 31, 2020, and
$522.0 million higher than June 30, 2019. The increase from
March 31, 2020, was driven by growth in non-public demand and
savings, partially offset by a decrease in public deposits due to
the seasonality of municipal deposits. Growth in non-public
deposits was in part attributable to PPP loan proceeds received by
customers. The increase from June 30, 2019 was driven by growth in
non-public deposits and the reciprocal deposit portfolio. Public
deposit balances represented 23% of total deposits at June 30,
2020, compared to 27% of total deposits at March 31, 2020, and 26%
at June 30, 2019.
Short-term borrowings were $105.3 million
at June 30, 2020, a decrease of $4.2 million from March 31, 2020
and a decrease of $203.2 million from June 30, 2019. The lower
level of short-term borrowings at June 30, 2020, is attributable to
growth in non-public deposits, reducing the need to utilize
short-term borrowings as a funding source. Short-term borrowings
and brokered deposits have historically been utilized to manage the
seasonality of public deposits, which reached a seasonal low point
during the second quarter. In February 2020, the Company entered a
long-term brokered sweep arrangement as a stable alternative
borrowing source to diversify the wholesale borrowing base.
Shareholders’ equity was $448.0 million at
June 30, 2020, compared to $439.4 million at March 31, 2020, and
$422.4 million at June 30, 2019. Common book value per share
was $26.86 at June 30, 2020, an increase of $0.51 or 1.9% from
$26.35 at March 31, 2020, and an increase of $1.54 or 6.1% from
$25.32 at June 30, 2019. Tangible common book value per share(1)
was $22.22 at June 30, 2020, an increase of $0.53 or 2.4% from
$21.69 at March 31, 2020, and an increase of $1.62 or 7.9% from
$20.60 at June 30, 2019.
During the second quarter of 2020, the Company
declared a common stock dividend of $0.26 per common share. The
dividend returned 39% of second quarter net income to common
shareholders.
The Company’s regulatory capital ratios at June
30, 2020, compared to the prior quarter and prior year:
- Leverage Ratio was 8.49%, compared
to 8.78% and 8.55% at March 31, 2020, and June 30, 2019,
respectively.
- Common Equity Tier 1 Capital Ratio
was 10.27%, compared to 10.05% and 9.95% at March 31, 2020, and
June 30, 2019, respectively.
- Tier 1 Capital Ratio was 10.76%,
compared to 10.53% and 10.45% at March 31, 2020, and June 30, 2019,
respectively.
- Total Risk-Based Capital Ratio was
12.83%, compared to 12.54% and 12.57% at March 31, 2020, and June
30, 2019, respectively.
Credit Quality
Non-performing loans were $13.2 million at June
30, 2020, compared to $12.4 million at March 31, 2020, and
$11.5 million at June 30, 2019. Net charge-offs were $786
thousand in the quarter, $9.4 million lower than the first quarter
of 2020 and $461 thousand lower than the second quarter of 2019.
The decrease from the first quarter of 2020 is primarily
attributable to one commercial credit that was partially
charged-off during the first quarter of 2020. The borrower’s
business was related to the hospitality industry and the charge-off
was precipitated by the impact of COVID-19. The ratio of annualized
net charge-offs to total average loans was 0.09% in the quarter,
1.27% in the first quarter of 2020 and 0.16% in the second quarter
of 2019.
The Company adopted CECL effective January 1,
2020, which resulted in an increase to the allowance for credit
losses - loans of $9.6 million and established a reserve for
unfunded commitments of $2.1 million, for a total pre-tax
cumulative effect adjustment of $11.7 million.
At June 30, 2020, the allowance for credit
losses - loans to total loans ratio was 1.33% compared to 1.34% at
March 31, 2020, and 1.09% at June 30, 2019. The PPP loans are fully
guaranteed by the Small Business Administration. Excluding PPP
loans, the allowance for credit losses – loans to total loans ratio
was 1.44% at June 30, 2020. The provision for credit losses was
$3.7 million in the quarter compared to $13.9 million in the first
quarter of 2020 and $2.4 million in the second quarter of 2019.
Higher provisioning in 2020 reflects higher charge-offs in the
first quarter of 2020 and deterioration in the economic environment
as a result of the impact of COVID-19, which adversely impacted our
unemployment forecast, the designated loss driver for our CECL
model.
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 0.38% at June 30, 2020, unchanged
from March 31, 2020, and two basis points higher than 0.36% at June
30, 2019. The ratio of allowance for credit losses on loans to
non-performing loans was 351% at June 30, 2020, compared to 350% at
March 31, 2020, and 300% at June 30, 2019.
Conference Call
The Company will host an earnings conference
call and audio webcast on July 30, 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.
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 650 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 impact
of the COVID-19 pandemic on the Company’s customers, business, and
results of operations as well as the economy in Western New York
and the United States, 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. DoranDirector of Investor and External
Relations585-627-1362sjdoran@five-starbank.com
FINANCIAL INSTITUTIONS, INC. Selected Financial
Information (Unaudited) (Amounts in thousands, except per
share amounts)
|
|
2020 |
|
|
2019 |
|
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
September 30, |
|
|
June 30, |
|
SELECTED BALANCE SHEET DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
119,610 |
|
|
$ |
152,168 |
|
|
$ |
112,947 |
|
|
$ |
136,815 |
|
|
$ |
108,988 |
|
Investment securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for sale |
|
|
469,413 |
|
|
|
444,845 |
|
|
|
417,917 |
|
|
|
395,441 |
|
|
|
406,509 |
|
Held-to-maturity, net |
|
|
309,872 |
|
|
|
346,239 |
|
|
|
359,000 |
|
|
|
386,305 |
|
|
|
398,610 |
|
Total investment securities |
|
|
779,285 |
|
|
|
791,084 |
|
|
|
776,917 |
|
|
|
781,746 |
|
|
|
805,119 |
|
Loans held for sale |
|
|
6,654 |
|
|
|
3,822 |
|
|
|
4,224 |
|
|
|
6,398 |
|
|
|
2,045 |
|
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business |
|
|
818,691 |
|
|
|
588,868 |
|
|
|
572,040 |
|
|
|
574,455 |
|
|
|
594,923 |
|
Commercial mortgage |
|
|
1,140,326 |
|
|
|
1,107,376 |
|
|
|
1,106,283 |
|
|
|
1,035,450 |
|
|
|
1,010,071 |
|
Residential real estate loans |
|
|
585,035 |
|
|
|
579,800 |
|
|
|
572,350 |
|
|
|
558,656 |
|
|
|
546,031 |
|
Residential real estate lines |
|
|
97,427 |
|
|
|
102,113 |
|
|
|
104,118 |
|
|
|
107,615 |
|
|
|
108,006 |
|
Consumer indirect |
|
|
828,105 |
|
|
|
843,668 |
|
|
|
850,052 |
|
|
|
863,614 |
|
|
|
876,116 |
|
Other consumer |
|
|
16,237 |
|
|
|
15,402 |
|
|
|
16,144 |
|
|
|
16,630 |
|
|
|
16,537 |
|
Total loans |
|
|
3,485,821 |
|
|
|
3,237,227 |
|
|
|
3,220,987 |
|
|
|
3,156,420 |
|
|
|
3,151,684 |
|
Allowance for credit losses - loans |
|
|
46,316 |
|
|
|
43,356 |
|
|
|
30,482 |
|
|
|
31,668 |
|
|
|
34,434 |
|
Total loans, net |
|
|
3,439,505 |
|
|
|
3,193,871 |
|
|
|
3,190,505 |
|
|
|
3,124,752 |
|
|
|
3,117,250 |
|
Total interest-earning assets |
|
|
4,314,490 |
|
|
|
4,116,688 |
|
|
|
4,058,107 |
|
|
|
3,979,493 |
|
|
|
4,007,797 |
|
Goodwill and other intangible assets, net |
|
|
74,342 |
|
|
|
74,629 |
|
|
|
74,923 |
|
|
|
75,225 |
|
|
|
75,534 |
|
Total assets |
|
|
4,680,930 |
|
|
|
4,471,768 |
|
|
|
4,384,178 |
|
|
|
4,332,737 |
|
|
|
4,313,945 |
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing demand |
|
|
1,008,958 |
|
|
|
732,917 |
|
|
|
707,752 |
|
|
|
755,296 |
|
|
|
719,150 |
|
Interest-bearing demand |
|
|
727,676 |
|
|
|
724,670 |
|
|
|
627,842 |
|
|
|
707,153 |
|
|
|
677,846 |
|
Savings and money market |
|
|
1,368,805 |
|
|
|
1,270,253 |
|
|
|
1,039,892 |
|
|
|
1,011,873 |
|
|
|
966,509 |
|
Time deposits |
|
|
888,569 |
|
|
|
1,059,345 |
|
|
|
1,180,189 |
|
|
|
1,111,892 |
|
|
|
1,108,484 |
|
Total deposits |
|
|
3,994,008 |
|
|
|
3,787,185 |
|
|
|
3,555,675 |
|
|
|
3,586,214 |
|
|
|
3,471,989 |
|
Short-term borrowings |
|
|
105,300 |
|
|
|
109,500 |
|
|
|
275,500 |
|
|
|
211,400 |
|
|
|
308,500 |
|
Long-term borrowings, net |
|
|
39,308 |
|
|
|
39,291 |
|
|
|
39,273 |
|
|
|
39,255 |
|
|
|
39,237 |
|
Total interest-bearing liabilities |
|
|
3,129,658 |
|
|
|
3,203,059 |
|
|
|
3,162,696 |
|
|
|
3,081,573 |
|
|
|
3,100,576 |
|
Shareholders’ equity |
|
|
448,045 |
|
|
|
439,393 |
|
|
|
438,947 |
|
|
|
432,617 |
|
|
|
422,354 |
|
Common shareholders’ equity |
|
|
430,717 |
|
|
|
422,065 |
|
|
|
421,619 |
|
|
|
415,289 |
|
|
|
405,026 |
|
Tangible common equity (1) |
|
|
356,375 |
|
|
|
347,436 |
|
|
|
346,696 |
|
|
|
340,064 |
|
|
|
329,492 |
|
Accumulated other comprehensive loss |
|
$ |
(496 |
) |
|
$ |
(2,082 |
) |
|
$ |
(14,513 |
) |
|
$ |
(11,734 |
) |
|
$ |
(13,160 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding |
|
|
16,038 |
|
|
|
16,020 |
|
|
|
16,003 |
|
|
|
15,997 |
|
|
|
15,995 |
|
Treasury shares |
|
|
62 |
|
|
|
80 |
|
|
|
97 |
|
|
|
103 |
|
|
|
105 |
|
CAPITAL RATIOS AND PER SHARE DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leverage ratio |
|
|
8.49 |
% |
|
|
8.78 |
% |
|
|
9.00 |
% |
|
|
8.86 |
% |
|
|
8.55 |
% |
Common equity Tier 1 capital ratio |
|
|
10.27 |
% |
|
|
10.05 |
% |
|
|
10.31 |
% |
|
|
10.06 |
% |
|
|
9.95 |
% |
Tier 1 capital ratio |
|
|
10.76 |
% |
|
|
10.53 |
% |
|
|
10.80 |
% |
|
|
10.55 |
% |
|
|
10.45 |
% |
Total risk-based capital ratio |
|
|
12.83 |
% |
|
|
12.54 |
% |
|
|
12.77 |
% |
|
|
12.57 |
% |
|
|
12.57 |
% |
Common equity to assets |
|
|
9.20 |
% |
|
|
9.44 |
% |
|
|
9.62 |
% |
|
|
9.58 |
% |
|
|
9.39 |
% |
Tangible common equity to tangible assets (1) |
|
|
7.74 |
% |
|
|
7.90 |
% |
|
|
8.05 |
% |
|
|
7.99 |
% |
|
|
7.77 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common book value per share |
|
$ |
26.86 |
|
|
$ |
26.35 |
|
|
$ |
26.35 |
|
|
$ |
25.96 |
|
|
$ |
25.32 |
|
Tangible common book value per share (1) |
|
$ |
22.22 |
|
|
$ |
21.69 |
|
|
$ |
21.66 |
|
|
$ |
21.26 |
|
|
$ |
20.60 |
|
(1) See Appendix A — Reconciliation to Non-GAAP Financial
Measures for the computation of this Non-GAAP measure.
FINANCIAL INSTITUTIONS, INC. Selected Financial
Information (Unaudited) (Amounts in thousands, except per
share amounts)
|
|
Six Months
Ended |
|
|
2020 |
|
|
2019 |
|
|
|
June 30, |
|
|
Second |
|
|
First |
|
|
Fourth |
|
|
Third |
|
|
Second |
|
|
|
2020 |
|
|
2019 |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
SELECTED INCOME STATEMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
$ |
81,412 |
|
|
$ |
84,162 |
|
|
$ |
39,759 |
|
|
$ |
41,653 |
|
|
$ |
42,179 |
|
|
$ |
42,459 |
|
|
$ |
42,648 |
|
Interest expense |
|
|
14,107 |
|
|
|
19,906 |
|
|
|
5,578 |
|
|
|
8,529 |
|
|
|
9,006 |
|
|
|
9,976 |
|
|
|
10,184 |
|
Net interest income |
|
|
67,305 |
|
|
|
64,256 |
|
|
|
34,181 |
|
|
|
33,124 |
|
|
|
33,173 |
|
|
|
32,483 |
|
|
|
32,464 |
|
Provision for credit losses |
|
|
17,661 |
|
|
|
3,547 |
|
|
|
3,746 |
|
|
|
13,915 |
|
|
|
2,653 |
|
|
|
1,844 |
|
|
|
2,354 |
|
Net interest income after provision for credit losses |
|
|
49,644 |
|
|
|
60,709 |
|
|
|
30,435 |
|
|
|
19,209 |
|
|
|
30,520 |
|
|
|
30,639 |
|
|
|
30,110 |
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposits |
|
|
2,067 |
|
|
|
3,436 |
|
|
|
480 |
|
|
|
1,587 |
|
|
|
1,880 |
|
|
|
1,925 |
|
|
|
1,756 |
|
Insurance income |
|
|
2,168 |
|
|
|
2,250 |
|
|
|
819 |
|
|
|
1,349 |
|
|
|
881 |
|
|
|
1,439 |
|
|
|
872 |
|
ATM and debit card |
|
|
3,378 |
|
|
|
3,182 |
|
|
|
1,776 |
|
|
|
1,602 |
|
|
|
1,796 |
|
|
|
1,801 |
|
|
|
1,739 |
|
Investment advisory |
|
|
4,497 |
|
|
|
4,543 |
|
|
|
2,251 |
|
|
|
2,246 |
|
|
|
2,375 |
|
|
|
2,269 |
|
|
|
2,327 |
|
Company owned life insurance |
|
|
927 |
|
|
|
834 |
|
|
|
462 |
|
|
|
465 |
|
|
|
465 |
|
|
|
459 |
|
|
|
424 |
|
Investments in limited partnerships |
|
|
(31 |
) |
|
|
376 |
|
|
|
(244 |
) |
|
|
213 |
|
|
|
(140 |
) |
|
|
116 |
|
|
|
144 |
|
Loan servicing |
|
|
57 |
|
|
|
214 |
|
|
|
50 |
|
|
|
7 |
|
|
|
116 |
|
|
|
102 |
|
|
|
104 |
|
Income (loss) from derivative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
instruments, net |
|
|
2,686 |
|
|
|
123 |
|
|
|
1,940 |
|
|
|
746 |
|
|
|
1,261 |
|
|
|
890 |
|
|
|
(45 |
) |
Net gain on sale of loans held for sale |
|
|
1,035 |
|
|
|
589 |
|
|
|
731 |
|
|
|
304 |
|
|
|
324 |
|
|
|
439 |
|
|
|
407 |
|
Net gain (loss) on investment securities |
|
|
895 |
|
|
|
113 |
|
|
|
674 |
|
|
|
221 |
|
|
|
(44 |
) |
|
|
1,608 |
|
|
|
166 |
|
Net gain (loss) on other assets |
|
|
63 |
|
|
|
58 |
|
|
|
(1 |
) |
|
|
64 |
|
|
|
(27 |
) |
|
|
(2 |
) |
|
|
9 |
|
Net loss on tax credit investments |
|
|
(80 |
) |
|
|
- |
|
|
|
(40 |
) |
|
|
(40 |
) |
|
|
(528 |
) |
|
|
- |
|
|
|
- |
|
Other |
|
|
2,132 |
|
|
|
2,635 |
|
|
|
934 |
|
|
|
1,198 |
|
|
|
1,308 |
|
|
|
1,315 |
|
|
|
1,330 |
|
Total noninterest income |
|
|
19,794 |
|
|
|
18,353 |
|
|
|
9,832 |
|
|
|
9,962 |
|
|
|
9,667 |
|
|
|
12,361 |
|
|
|
9,233 |
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
30,088 |
|
|
|
27,250 |
|
|
|
15,074 |
|
|
|
15,014 |
|
|
|
14,669 |
|
|
|
14,411 |
|
|
|
13,249 |
|
Occupancy and equipment (1) |
|
|
7,144 |
|
|
|
6,725 |
|
|
|
3,388 |
|
|
|
3,756 |
|
|
|
3,446 |
|
|
|
3,381 |
|
|
|
3,252 |
|
Professional services |
|
|
3,732 |
|
|
|
2,090 |
|
|
|
1,580 |
|
|
|
2,152 |
|
|
|
1,806 |
|
|
|
1,528 |
|
|
|
932 |
|
Computer and data processing (1) |
|
|
5,372 |
|
|
|
4,760 |
|
|
|
2,699 |
|
|
|
2,673 |
|
|
|
2,576 |
|
|
|
2,647 |
|
|
|
2,424 |
|
Supplies and postage |
|
|
1,070 |
|
|
|
1,032 |
|
|
|
517 |
|
|
|
553 |
|
|
|
482 |
|
|
|
522 |
|
|
|
498 |
|
FDIC assessments |
|
|
911 |
|
|
|
998 |
|
|
|
539 |
|
|
|
372 |
|
|
|
- |
|
|
|
7 |
|
|
|
486 |
|
Advertising and promotions |
|
|
1,100 |
|
|
|
1,606 |
|
|
|
545 |
|
|
|
555 |
|
|
|
1,226 |
|
|
|
745 |
|
|
|
1,086 |
|
Amortization of intangibles |
|
|
581 |
|
|
|
639 |
|
|
|
287 |
|
|
|
294 |
|
|
|
302 |
|
|
|
309 |
|
|
|
316 |
|
Other |
|
|
4,418 |
|
|
|
5,074 |
|
|
|
2,065 |
|
|
|
2,353 |
|
|
|
2,261 |
|
|
|
2,336 |
|
|
|
2,760 |
|
Total noninterest expense |
|
|
54,416 |
|
|
|
50,174 |
|
|
|
26,694 |
|
|
|
27,722 |
|
|
|
26,768 |
|
|
|
25,886 |
|
|
|
25,003 |
|
Income before income taxes |
|
|
15,022 |
|
|
|
28,888 |
|
|
|
13,573 |
|
|
|
1,449 |
|
|
|
13,419 |
|
|
|
17,114 |
|
|
|
14,340 |
|
Income tax expense |
|
|
2,763 |
|
|
|
5,966 |
|
|
|
2,441 |
|
|
|
322 |
|
|
|
312 |
|
|
|
4,281 |
|
|
|
2,939 |
|
Net income |
|
|
12,259 |
|
|
|
22,922 |
|
|
|
11,132 |
|
|
|
1,127 |
|
|
|
13,107 |
|
|
|
12,833 |
|
|
|
11,401 |
|
Preferred stock dividends |
|
|
731 |
|
|
|
731 |
|
|
|
366 |
|
|
|
365 |
|
|
|
365 |
|
|
|
365 |
|
|
|
366 |
|
Net income available to common |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shareholders |
|
$ |
11,528 |
|
|
$ |
22,191 |
|
|
$ |
10,766 |
|
|
$ |
762 |
|
|
$ |
12,742 |
|
|
$ |
12,468 |
|
|
$ |
11,035 |
|
FINANCIAL RATIOS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share – basic |
|
$ |
0.72 |
|
|
$ |
1.39 |
|
|
$ |
0.67 |
|
|
$ |
0.05 |
|
|
$ |
0.80 |
|
|
$ |
0.78 |
|
|
$ |
0.69 |
|
Earnings per share – diluted |
|
$ |
0.72 |
|
|
$ |
1.39 |
|
|
$ |
0.67 |
|
|
$ |
0.05 |
|
|
$ |
0.79 |
|
|
$ |
0.78 |
|
|
$ |
0.69 |
|
Cash dividends declared on common stock |
|
$ |
0.52 |
|
|
$ |
0.50 |
|
|
$ |
0.26 |
|
|
$ |
0.26 |
|
|
$ |
0.25 |
|
|
$ |
0.25 |
|
|
$ |
0.25 |
|
Common dividend payout ratio |
|
|
72.22 |
% |
|
|
35.97 |
% |
|
|
38.81 |
% |
|
|
520.00 |
% |
|
|
31.25 |
% |
|
|
32.05 |
% |
|
|
36.23 |
% |
Dividend yield (annualized) |
|
|
5.62 |
% |
|
|
3.46 |
% |
|
|
5.60 |
% |
|
|
5.76 |
% |
|
|
3.09 |
% |
|
|
3.29 |
% |
|
|
3.44 |
% |
Return on average assets |
|
|
0.55 |
% |
|
|
1.08 |
% |
|
|
0.97 |
% |
|
|
0.10 |
% |
|
|
1.21 |
% |
|
|
1.19 |
% |
|
|
1.06 |
% |
Return on average equity |
|
|
5.56 |
% |
|
|
11.32 |
% |
|
|
10.05 |
% |
|
|
1.03 |
% |
|
|
11.88 |
% |
|
|
11.86 |
% |
|
|
11.01 |
% |
Return on average common equity |
|
|
5.44 |
% |
|
|
11.45 |
% |
|
|
10.11 |
% |
|
|
0.72 |
% |
|
|
12.02 |
% |
|
|
12.00 |
% |
|
|
11.12 |
% |
Return on average tangible common |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
equity (2) |
|
|
6.60 |
% |
|
|
14.21 |
% |
|
|
12.25 |
% |
|
|
0.88 |
% |
|
|
14.64 |
% |
|
|
14.69 |
% |
|
|
13.73 |
% |
Efficiency ratio (3) |
|
|
62.78 |
% |
|
|
60.39 |
% |
|
|
61.26 |
% |
|
|
64.31 |
% |
|
|
62.05 |
% |
|
|
59.52 |
% |
|
|
59.79 |
% |
Effective tax rate |
|
|
18.4 |
% |
|
|
20.7 |
% |
|
|
18.0 |
% |
|
|
22.2 |
% |
|
|
2.3 |
% |
|
|
25.0 |
% |
|
|
20.5 |
% |
|
1) |
Beginning in the first quarter of 2020, software service contracts
and software amortization are classified as computer and data
processing expense. Previously, they were included in occupancy and
equipment expense. Prior periods have been reclassified to conform
to the current presentation. |
|
(2) |
See Appendix A –
Reconciliation to Non-GAAP Financial Measures for the computation
of this Non-GAAP measure. |
|
(3) |
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. |
FINANCIAL INSTITUTIONS, INC. Selected Financial
Information (Unaudited)(Amounts in thousands)
|
|
Six Months
Ended |
|
|
2020 |
|
|
2019 |
|
|
|
June 30, |
|
|
Second |
|
|
First |
|
|
Fourth |
|
|
Third |
|
|
Second |
|
|
|
2020 |
|
|
2019 |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
SELECTED AVERAGE BALANCES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal funds sold and interest- earning deposits |
|
$ |
75,761 |
|
|
$ |
18,050 |
|
|
$ |
92,214 |
|
|
$ |
59,309 |
|
|
$ |
32,494 |
|
|
$ |
19,370 |
|
|
$ |
18,145 |
|
Investment securities (1) |
|
|
773,265 |
|
|
|
866,138 |
|
|
|
766,636 |
|
|
|
779,894 |
|
|
|
774,520 |
|
|
|
785,595 |
|
|
|
845,624 |
|
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business |
|
|
664,237 |
|
|
|
562,618 |
|
|
|
757,588 |
|
|
|
570,886 |
|
|
|
567,998 |
|
|
|
586,293 |
|
|
|
577,884 |
|
Commercial mortgage |
|
|
1,117,247 |
|
|
|
994,271 |
|
|
|
1,133,832 |
|
|
|
1,100,660 |
|
|
|
1,073,527 |
|
|
|
1,021,931 |
|
|
|
1,010,544 |
|
Residential real estate loans |
|
|
580,029 |
|
|
|
534,986 |
|
|
|
581,651 |
|
|
|
578,407 |
|
|
|
566,256 |
|
|
|
553,382 |
|
|
|
540,390 |
|
Residential real estate lines |
|
|
101,111 |
|
|
|
108,673 |
|
|
|
99,543 |
|
|
|
102,680 |
|
|
|
106,011 |
|
|
|
107,290 |
|
|
|
107,826 |
|
Consumer indirect |
|
|
836,915 |
|
|
|
901,556 |
|
|
|
827,030 |
|
|
|
846,800 |
|
|
|
856,823 |
|
|
|
868,927 |
|
|
|
891,967 |
|
Other consumer |
|
|
15,310 |
|
|
|
15,972 |
|
|
|
15,155 |
|
|
|
15,466 |
|
|
|
16,100 |
|
|
|
16,141 |
|
|
|
15,721 |
|
Total loans |
|
|
3,314,849 |
|
|
|
3,118,076 |
|
|
|
3,414,799 |
|
|
|
3,214,899 |
|
|
|
3,186,715 |
|
|
|
3,153,964 |
|
|
|
3,144,332 |
|
Total interest-earning assets |
|
|
4,163,875 |
|
|
|
4,002,264 |
|
|
|
4,273,649 |
|
|
|
4,054,102 |
|
|
|
3,993,729 |
|
|
|
3,958,929 |
|
|
|
4,008,101 |
|
Goodwill and other intangible assets, net |
|
|
74,651 |
|
|
|
75,871 |
|
|
|
74,504 |
|
|
|
74,797 |
|
|
|
75,093 |
|
|
|
75,401 |
|
|
|
75,711 |
|
Total assets |
|
|
4,500,243 |
|
|
|
4,291,670 |
|
|
|
4,624,360 |
|
|
|
4,376,125 |
|
|
|
4,299,342 |
|
|
|
4,260,810 |
|
|
|
4,300,254 |
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand |
|
|
689,917 |
|
|
|
664,577 |
|
|
|
712,300 |
|
|
|
667,533 |
|
|
|
660,738 |
|
|
|
632,540 |
|
|
|
660,747 |
|
Savings and money market |
|
|
1,236,630 |
|
|
|
981,439 |
|
|
|
1,329,632 |
|
|
|
1,143,628 |
|
|
|
1,014,434 |
|
|
|
956,410 |
|
|
|
996,878 |
|
Time deposits |
|
|
1,050,784 |
|
|
|
1,086,670 |
|
|
|
984,832 |
|
|
|
1,116,736 |
|
|
|
1,120,823 |
|
|
|
1,099,212 |
|
|
|
1,096,544 |
|
Short-term borrowings |
|
|
140,049 |
|
|
|
334,939 |
|
|
|
110,272 |
|
|
|
169,827 |
|
|
|
241,557 |
|
|
|
328,952 |
|
|
|
323,461 |
|
Long-term borrowings, net |
|
|
39,288 |
|
|
|
39,218 |
|
|
|
39,297 |
|
|
|
39,279 |
|
|
|
39,262 |
|
|
|
39,244 |
|
|
|
39,227 |
|
Total interest-bearing liabilities |
|
|
3,156,668 |
|
|
|
3,106,843 |
|
|
|
3,176,333 |
|
|
|
3,137,003 |
|
|
|
3,076,814 |
|
|
|
3,056,358 |
|
|
|
3,116,857 |
|
Noninterest-bearing demand deposits |
|
|
817,106 |
|
|
|
720,727 |
|
|
|
912,238 |
|
|
|
721,975 |
|
|
|
725,590 |
|
|
|
717,473 |
|
|
|
714,205 |
|
Total deposits |
|
|
3,794,437 |
|
|
|
3,453,413 |
|
|
|
3,939,002 |
|
|
|
3,649,872 |
|
|
|
3,521,585 |
|
|
|
3,405,635 |
|
|
|
3,468,374 |
|
Total liabilities |
|
|
4,056,915 |
|
|
|
3,883,446 |
|
|
|
4,178,921 |
|
|
|
3,934,909 |
|
|
|
3,861,542 |
|
|
|
3,831,409 |
|
|
|
3,884,843 |
|
Shareholders’ equity |
|
|
443,328 |
|
|
|
408,224 |
|
|
|
445,439 |
|
|
|
441,216 |
|
|
|
437,800 |
|
|
|
429,401 |
|
|
|
415,411 |
|
Common equity |
|
|
426,000 |
|
|
|
390,896 |
|
|
|
428,111 |
|
|
|
423,888 |
|
|
|
420,472 |
|
|
|
412,073 |
|
|
|
398,083 |
|
Tangible common equity (2) |
|
$ |
351,349 |
|
|
$ |
315,025 |
|
|
$ |
353,607 |
|
|
$ |
349,091 |
|
|
$ |
345,379 |
|
|
$ |
336,672 |
|
|
$ |
322,372 |
|
Common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
16,012 |
|
|
|
15,950 |
|
|
|
16,018 |
|
|
|
16,006 |
|
|
|
15,995 |
|
|
|
15,991 |
|
|
|
15,970 |
|
Diluted |
|
|
16,058 |
|
|
|
15,997 |
|
|
|
16,047 |
|
|
|
16,069 |
|
|
|
16,072 |
|
|
|
16,056 |
|
|
|
16,015 |
|
SELECTED AVERAGE YIELDS:(Tax
equivalent basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities |
|
|
2.48 |
% |
|
|
2.38 |
% |
|
|
2.49 |
% |
|
|
2.48 |
% |
|
|
2.40 |
% |
|
|
2.40 |
% |
|
|
2.38 |
% |
Loans |
|
|
4.37 |
% |
|
|
4.80 |
% |
|
|
4.14 |
% |
|
|
4.61 |
% |
|
|
4.70 |
% |
|
|
4.77 |
% |
|
|
4.82 |
% |
Total interest-earning assets |
|
|
3.95 |
% |
|
|
4.26 |
% |
|
|
3.76 |
% |
|
|
4.15 |
% |
|
|
4.22 |
% |
|
|
4.29 |
% |
|
|
4.29 |
% |
Interest-bearing demand |
|
|
0.17 |
% |
|
|
0.21 |
% |
|
|
0.14 |
% |
|
|
0.21 |
% |
|
|
0.21 |
% |
|
|
0.22 |
% |
|
|
0.21 |
% |
Savings and money market |
|
|
0.43 |
% |
|
|
0.43 |
% |
|
|
0.31 |
% |
|
|
0.56 |
% |
|
|
0.48 |
% |
|
|
0.44 |
% |
|
|
0.44 |
% |
Time deposits |
|
|
1.62 |
% |
|
|
2.12 |
% |
|
|
1.39 |
% |
|
|
1.83 |
% |
|
|
1.94 |
% |
|
|
2.12 |
% |
|
|
2.17 |
% |
Short-term borrowings |
|
|
1.69 |
% |
|
|
2.71 |
% |
|
|
1.03 |
% |
|
|
2.11 |
% |
|
|
2.21 |
% |
|
|
2.51 |
% |
|
|
2.71 |
% |
Long-term borrowings, net |
|
|
6.29 |
% |
|
|
6.30 |
% |
|
|
6.29 |
% |
|
|
6.29 |
% |
|
|
6.29 |
% |
|
|
6.30 |
% |
|
|
6.30 |
% |
Total interest-bearing liabilities |
|
|
0.90 |
% |
|
|
1.29 |
% |
|
|
0.71 |
% |
|
|
1.09 |
% |
|
|
1.16 |
% |
|
|
1.30 |
% |
|
|
1.31 |
% |
Net interest rate spread |
|
|
3.05 |
% |
|
|
2.97 |
% |
|
|
3.05 |
% |
|
|
3.06 |
% |
|
|
3.06 |
% |
|
|
2.99 |
% |
|
|
2.98 |
% |
Net interest margin |
|
|
3.27 |
% |
|
|
3.26 |
% |
|
|
3.23 |
% |
|
|
3.31 |
% |
|
|
3.33 |
% |
|
|
3.29 |
% |
|
|
3.28 |
% |
|
(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. |
FINANCIAL INSTITUTIONS, INC. Selected Financial
Information (Unaudited) (Amounts in thousands)
|
|
Six Months
Ended |
|
|
2020 |
|
|
2019 |
|
|
|
June 30, |
|
|
Second |
|
|
First |
|
|
Fourth |
|
|
Third |
|
|
Second |
|
|
|
2020 |
|
|
2019 |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
ASSET QUALITY DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Credit Losses - Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance, prior to adoption of CECL |
|
$ |
30,482 |
|
|
$ |
33,914 |
|
|
$ |
43,356 |
|
|
$ |
30,482 |
|
|
$ |
31,668 |
|
|
$ |
34,434 |
|
|
$ |
33,327 |
|
Impact of adopting CECL |
|
|
9,594 |
|
|
|
- |
|
|
|
- |
|
|
|
9,594 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Beginning balance, after adoption of CECL |
|
|
40,076 |
|
|
|
33,914 |
|
|
|
43,356 |
|
|
|
40,076 |
|
|
|
31,668 |
|
|
|
34,434 |
|
|
|
33,327 |
|
Net loan charge-offs (recoveries): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business |
|
|
6,725 |
|
|
|
37 |
|
|
|
(1,458 |
) |
|
|
8,183 |
|
|
|
1,942 |
|
|
|
10 |
|
|
|
10 |
|
Commercial mortgage |
|
|
1,072 |
|
|
|
(14 |
) |
|
|
1,072 |
|
|
|
- |
|
|
|
- |
|
|
|
2,994 |
|
|
|
3 |
|
Residential real estate loans |
|
|
82 |
|
|
|
101 |
|
|
|
(6 |
) |
|
|
88 |
|
|
|
156 |
|
|
|
40 |
|
|
|
76 |
|
Residential real estate lines |
|
|
(3 |
) |
|
|
(3 |
) |
|
|
- |
|
|
|
(3 |
) |
|
|
3 |
|
|
|
7 |
|
|
|
(1 |
) |
Consumer indirect |
|
|
2,931 |
|
|
|
2,580 |
|
|
|
1,175 |
|
|
|
1,756 |
|
|
|
1,523 |
|
|
|
1,317 |
|
|
|
1,022 |
|
Other consumer |
|
|
122 |
|
|
|
326 |
|
|
|
3 |
|
|
|
119 |
|
|
|
215 |
|
|
|
242 |
|
|
|
137 |
|
Total net charge-offs |
|
|
10,929 |
|
|
|
3,027 |
|
|
|
786 |
|
|
|
10,143 |
|
|
|
3,839 |
|
|
|
4,610 |
|
|
|
1,247 |
|
Provision for credit losses - loans |
|
|
17,169 |
|
|
|
3,547 |
|
|
|
3,746 |
|
|
|
13,423 |
|
|
|
2,653 |
|
|
|
1,844 |
|
|
|
2,354 |
|
Ending balance |
|
$ |
46,316 |
|
|
$ |
34,434 |
|
|
$ |
46,316 |
|
|
$ |
43,356 |
|
|
$ |
30,482 |
|
|
$ |
31,668 |
|
|
$ |
34,434 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs (recoveries) to average loans
(annualized): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business |
|
|
2.04 |
% |
|
|
0.01 |
% |
|
|
-0.77 |
% |
|
|
5.77 |
% |
|
|
1.36 |
% |
|
|
0.01 |
% |
|
|
0.01 |
% |
Commercial mortgage |
|
|
0.19 |
% |
|
|
0.00 |
% |
|
|
0.38 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
|
|
1.16 |
% |
|
|
0.00 |
% |
Residential real estate loans |
|
|
0.03 |
% |
|
|
0.04 |
% |
|
|
0.00 |
% |
|
|
0.06 |
% |
|
|
0.11 |
% |
|
|
0.03 |
% |
|
|
0.06 |
% |
Residential real estate lines |
|
|
-0.01 |
% |
|
|
-0.01 |
% |
|
|
0.00 |
% |
|
|
-0.01 |
% |
|
|
0.01 |
% |
|
|
0.03 |
% |
|
|
-0.01 |
% |
Consumer indirect |
|
|
0.70 |
% |
|
|
0.58 |
% |
|
|
0.57 |
% |
|
|
0.83 |
% |
|
|
0.71 |
% |
|
|
0.60 |
% |
|
|
0.46 |
% |
Other consumer |
|
|
1.60 |
% |
|
|
4.12 |
% |
|
|
0.08 |
% |
|
|
3.09 |
% |
|
|
5.30 |
% |
|
|
5.93 |
% |
|
|
3.51 |
% |
Total loans |
|
|
0.66 |
% |
|
|
0.20 |
% |
|
|
0.09 |
% |
|
|
1.27 |
% |
|
|
0.48 |
% |
|
|
0.58 |
% |
|
|
0.16 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business |
|
$ |
4,918 |
|
|
$ |
638 |
|
|
$ |
4,918 |
|
|
$ |
5,507 |
|
|
$ |
1,177 |
|
|
$ |
2,884 |
|
|
$ |
638 |
|
Commercial mortgage |
|
|
4,140 |
|
|
|
6,836 |
|
|
|
4,140 |
|
|
|
2,984 |
|
|
|
3,146 |
|
|
|
2,867 |
|
|
|
6,836 |
|
Residential real estate loans |
|
|
2,992 |
|
|
|
2,283 |
|
|
|
2,992 |
|
|
|
1,971 |
|
|
|
2,484 |
|
|
|
2,526 |
|
|
|
2,283 |
|
Residential real estate lines |
|
|
177 |
|
|
|
282 |
|
|
|
177 |
|
|
|
143 |
|
|
|
102 |
|
|
|
182 |
|
|
|
282 |
|
Consumer indirect |
|
|
868 |
|
|
|
1,399 |
|
|
|
868 |
|
|
|
1,777 |
|
|
|
1,725 |
|
|
|
1,326 |
|
|
|
1,399 |
|
Other consumer |
|
|
87 |
|
|
|
25 |
|
|
|
87 |
|
|
|
2 |
|
|
|
6 |
|
|
|
3 |
|
|
|
25 |
|
Total non-performing loans |
|
|
13,182 |
|
|
|
11,463 |
|
|
|
13,182 |
|
|
|
12,384 |
|
|
|
8,640 |
|
|
|
9,788 |
|
|
|
11,463 |
|
Foreclosed assets |
|
|
679 |
|
|
|
37 |
|
|
|
679 |
|
|
|
749 |
|
|
|
468 |
|
|
|
91 |
|
|
|
37 |
|
Total non-performing assets |
|
$ |
13,861 |
|
|
$ |
11,500 |
|
|
$ |
13,861 |
|
|
$ |
13,133 |
|
|
$ |
9,108 |
|
|
$ |
9,879 |
|
|
$ |
11,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-performing loans to total loans |
|
|
0.38 |
% |
|
|
0.36 |
% |
|
|
0.38 |
% |
|
|
0.38 |
% |
|
|
0.27 |
% |
|
|
0.31 |
% |
|
|
0.36 |
% |
Total non-performing assets to total assets |
|
|
0.30 |
% |
|
|
0.27 |
% |
|
|
0.30 |
% |
|
|
0.29 |
% |
|
|
0.21 |
% |
|
|
0.23 |
% |
|
|
0.27 |
% |
Allowance for credit losses - loans to total loans |
|
|
1.33 |
% |
|
|
1.09 |
% |
|
|
1.33 |
% |
|
|
1.34 |
% |
|
|
0.95 |
% |
|
|
1.00 |
% |
|
|
1.09 |
% |
Allowance for credit losses - loans to non-performing
loans |
|
|
351 |
% |
|
|
300 |
% |
|
|
351 |
% |
|
|
350 |
% |
|
|
353 |
% |
|
|
324 |
% |
|
|
300 |
% |
(1)
At period end.
FINANCIAL INSTITUTIONS, INC. Appendix A —
Reconciliation to Non-GAAP Financial Measures (Unaudited)
(In thousands, except per share amounts)
|
|
Six Months
Ended |
|
|
2020 |
|
|
2019 |
|
|
|
June 30, |
|
|
Second |
|
|
First |
|
|
Fourth |
|
|
Third |
|
|
Second |
|
|
|
2020 |
|
|
2019 |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
Ending tangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
|
|
|
|
|
|
|
$ |
4,680,930 |
|
|
$ |
4,471,768 |
|
|
$ |
4,384,178 |
|
|
$ |
4,332,737 |
|
|
$ |
4,313,945 |
|
Less: Goodwill and other intangible assets, net |
|
|
|
|
|
|
|
|
|
|
74,342 |
|
|
|
74,629 |
|
|
|
74,923 |
|
|
|
75,225 |
|
|
|
75,534 |
|
Tangible assets |
|
|
|
|
|
|
|
|
|
$ |
4,606,588 |
|
|
$ |
4,397,139 |
|
|
$ |
4,309,255 |
|
|
$ |
4,257,512 |
|
|
$ |
4,238,411 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending tangible common equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shareholders’ equity |
|
|
|
|
|
|
|
|
|
$ |
430,717 |
|
|
$ |
422,065 |
|
|
$ |
421,619 |
|
|
$ |
415,289 |
|
|
$ |
405,026 |
|
Less: Goodwill and other intangible assets, net |
|
|
|
|
|
|
|
|
|
|
74,342 |
|
|
|
74,629 |
|
|
|
74,923 |
|
|
|
75,225 |
|
|
|
75,534 |
|
Tangible common equity |
|
|
|
|
|
|
|
|
|
$ |
356,375 |
|
|
$ |
347,436 |
|
|
$ |
346,696 |
|
|
$ |
340,064 |
|
|
$ |
329,492 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity to tangible assets (1) |
|
|
|
|
|
|
|
|
|
|
7.74 |
% |
|
|
7.90 |
% |
|
|
8.05 |
% |
|
|
7.99 |
% |
|
|
7.77 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding |
|
|
|
|
|
|
|
|
|
|
16,038 |
|
|
|
16,020 |
|
|
|
16,003 |
|
|
|
15,997 |
|
|
|
15,995 |
|
Tangible common book value per share (2) |
|
|
|
|
|
|
|
|
|
$ |
22.22 |
|
|
$ |
21.69 |
|
|
$ |
21.66 |
|
|
$ |
21.26 |
|
|
$ |
20.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average tangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets |
|
$ |
4,500,243 |
|
|
$ |
4,291,670 |
|
|
$ |
4,624,360 |
|
|
$ |
4,376,125 |
|
|
$ |
4,299,342 |
|
|
$ |
4,260,810 |
|
|
$ |
4,300,254 |
|
Less: Average goodwill and other intangible assets,
net |
|
|
74,651 |
|
|
|
75,871 |
|
|
|
74,504 |
|
|
|
74,797 |
|
|
|
75,093 |
|
|
|
75,401 |
|
|
|
75,711 |
|
Average tangible assets |
|
$ |
4,425,592 |
|
|
$ |
4,215,799 |
|
|
$ |
4,549,856 |
|
|
$ |
4,301,328 |
|
|
$ |
4,224,249 |
|
|
$ |
4,185,409 |
|
|
$ |
4,224,543 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average tangible common equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common equity |
|
$ |
426,000 |
|
|
$ |
390,896 |
|
|
$ |
428,111 |
|
|
$ |
423,888 |
|
|
$ |
420,472 |
|
|
$ |
412,073 |
|
|
$ |
398,083 |
|
Less: Average goodwill and other intangible assets,
net |
|
|
74,651 |
|
|
|
75,871 |
|
|
|
74,504 |
|
|
|
74,797 |
|
|
|
75,093 |
|
|
|
75,401 |
|
|
|
75,711 |
|
Average tangible common equity |
|
$ |
351,349 |
|
|
$ |
315,025 |
|
|
$ |
353,607 |
|
|
$ |
349,091 |
|
|
$ |
345,379 |
|
|
$ |
336,672 |
|
|
$ |
322,372 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common shareholders |
|
$ |
11,528 |
|
|
$ |
22,191 |
|
|
$ |
10,766 |
|
|
$ |
762 |
|
|
$ |
12,742 |
|
|
$ |
12,468 |
|
|
$ |
11,035 |
|
Return on average tangible common equity (3) |
|
|
6.60 |
% |
|
|
14.21 |
% |
|
|
12.25 |
% |
|
|
0.88 |
% |
|
|
14.64 |
% |
|
|
14.69 |
% |
|
|
13.73 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax pre-provision income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
12,259 |
|
|
$ |
22,922 |
|
|
$ |
11,132 |
|
|
$ |
1,127 |
|
|
$ |
13,107 |
|
|
$ |
12,833 |
|
|
$ |
11,401 |
|
Add: Income tax expense |
|
|
2,763 |
|
|
|
5,966 |
|
|
|
2,441 |
|
|
|
322 |
|
|
|
312 |
|
|
|
4,281 |
|
|
|
2,939 |
|
Add: Provision for credit losses |
|
|
17,661 |
|
|
|
3,547 |
|
|
|
3,746 |
|
|
|
13,915 |
|
|
|
2,653 |
|
|
|
1,844 |
|
|
|
2,354 |
|
Pre-tax pre-provision income |
|
$ |
32,683 |
|
|
$ |
32,435 |
|
|
$ |
17,319 |
|
|
$ |
15,364 |
|
|
$ |
16,072 |
|
|
$ |
18,958 |
|
|
$ |
16,694 |
|
|
(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. |
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