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 third quarter ended September 30, 2020.
Net income for the quarter was
$12.3 million compared to $12.8 million for the third quarter
of 2019. After preferred dividends, net income available to common
shareholders was $11.9 million for the quarter, or $0.74 per
diluted share, compared to $12.5 million, or $0.78 per diluted
share, for the third quarter of 2019.
Pre-tax pre-provision income(1) was the highest
in Company history at $19.2 million for the quarter, an increase of
$283 thousand from the third quarter of 2019.
Third quarter 2020 net income and pre-tax
pre-provision income reflect approximately $1.6 million of
non-recurring expenses related to the previously announced closure
of six bank branches and a staffing reduction.
President and Chief Executive Officer Martin K.
Birmingham stated, “The past seven months have tested us, and I am
proud to say that my teammates have responded extraordinarily well
in continuing to deliver positive results for our customers,
communities and shareholders. We generated record pre-tax
pre-provision income in the quarter, driven by growth in net
interest income, our diversified revenue streams and disciplined
expense management.
“We continue to prudently lend and experienced
5.4% growth in our commercial mortgage portfolio, 2.0% growth in
residential real estate loans and 1.5% growth in consumer indirect
loans. Relationship managers are working closely with customers to
assist with their needs and to ensure that we understand trends in
our markets across all operating sectors. We continue to benefit
from a stable Western New York economy and experienced low net
charge-offs in the second and third quarters of 2020. Consistent
with our cautiously optimistic outlook, we did increase the
allowance for credit losses - loans to total loans ratio by five
basis points.
“Re-entry plans are being implemented and we
continue to monitor external COVID-19 indicators in our footprint
to help guide decisions on future re-entry or closure to keep
customers and associates safe. Additional associates are now
working in our corporate offices; however, we expect to maintain
occupancy levels in these locations at approximately 50% for the
foreseeable future.
“I want to thank our associates for their
tireless work to help our customers and communities impacted by
COVID-19. Despite significant uncertainty and challenges, they
continue to adapt and find innovative ways to work more efficiently
and effectively. I am incredibly proud of our organization.”
Chief Financial Officer Justin K. Bigham added,
“Net interest margin remained relatively constant at 3.22%, down
one basis point from the linked quarter, despite a heightened
Federal Reserve interest-earning cash balance and the full quarter
impact of low-yielding Payroll Protection Program loans.
“We continue to focus on expense discipline.
Third quarter expenses include non-recurring severance and real
estate related restructuring charges of approximately $1.6 million
in connection with the July announcement of branch closures and
staffing reductions. Excluding these non-recurring expenses, the
efficiency ratio for the quarter was just under 57%.
“Subsequent to quarter-end, we took advantage of
the low interest rate environment and issued $35 million of 10-year
fixed-to-floating rate subordinated notes. While we were confident
that we had appropriate capital levels to effectively run our
business, we determined that it would be prudent to access the debt
markets at favorable rates to add capital for use in serving our
customers, taking advantage of growth opportunities, and
strengthening the Bank’s capital ratios. We also deemed it wise to
add capital given uncertainty around long-term impacts of the
global pandemic.”
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 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 July announcement included the consolidation
of eleven branches into five, resulting in six branch closings and
a reduction in staffing. The consolidations represent about ten
percent of the branch network and impacted approximately six
percent of the Company’s total workforce. These actions resulted in
one-time expenses related to severance and real estate related
charges of approximately $1.6 million in the third quarter of
2020. Expense savings of $2.6 million are anticipated on an
annualized basis.
In early October, the Company announced the
planned closure of one additional branch in January 2021. This
location was not included in the branch consolidations announced in
July, as alternative options were being considered and
consolidation was not possible given its significant distance from
other Five Star Bank branches. This closure is expected to result
in one-time expenses related to severance costs and real estate
related charges of approximately $130 thousand in the fourth
quarter of 2020. Expected expense savings are anticipated at $340
thousand on an annualized basis.
The enterprise standardization program is not
yet complete 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.
Subordinated Note Issuance
On October 7, 2020, the Company completed a
private placement of $35 million of fixed-to-floating rate
subordinated notes due 2030 (the “Notes”) to qualified
institutional buyers and accredited institutional investors. The
Notes have a maturity date of October 15, 2030 and bear interest,
payable semi-annually, at the rate of 4.375% per annum, until
October 15, 2025. Commencing on that date, the interest rate will
reset quarterly to an interest rate per annum equal to the
then-current three-month secured overnight financing rate (“SOFR”)
plus 426.5 basis points, payable quarterly until maturity.
The Company is entitled to redeem the Notes, in
whole or in part, on any interest payment date on or after October
15, 2025, and in whole at any time upon certain other specified
events. The Company intends to use the net proceeds for general
corporate purposes, organic growth and to support regulatory
capital ratios at Five Star Bank.
In connection with the issuance and sale of the
Notes, the Company entered into a registration rights agreement
with the purchasers of the Notes pursuant to which the Company has
agreed to take certain actions to provide for the exchange of the
Notes for subordinated notes that are registered under the
Securities Act of 1933, as amended, with substantially the same
terms as the Notes.
Net Interest Income and Net Interest
Margin
Net interest income was $35.5 million for the
quarter, an increase of $1.3 million from the second quarter of
2020 and $3.0 million higher than the third quarter of 2019.
- Average
interest-earning assets for the quarter were $4.41 billion, $140.1
million higher than the second quarter of 2020 and $454.9 million
higher than the third quarter of 2019. The increase was primarily
the result of heightened Federal Reserve interest-earning cash,
$29.7 million higher than the second quarter of 2020 and $102.6
million higher than the third quarter of 2019, and growth in loans,
$107.4 million higher than the second quarter of 2020 and $368.2
million higher than the third quarter of 2019. Included in loan
growth are Payroll Protection Program (“PPP”) loans which had an
average balance of $263.0 million in the third quarter of 2020 and
$176.7 million in the second quarter of 2020.
- Net interest
margin was 3.22%, one basis point lower than the second quarter of
2020 and seven basis points lower than the third quarter of 2019.
The impact on interest-earning asset yield of heightened Federal
Reserve interest-earning cash and PPP loans was approximately two
basis points and one basis point, respectively, when compared to
the second quarter of 2020 and approximately six basis points and
five basis points, respectively, when compared to the third quarter
of 2019.
Noninterest Income
Noninterest income was $12.4 million for
the quarter compared to $9.8 million in the second quarter of 2020
and $12.4 million in the third quarter of 2019.
- Service charges
on deposits of $1.3 million was $774 thousand higher than the
second quarter of 2020 and $671 thousand lower than the third
quarter of 2019. In connection with its 2020 COVID-19 relief
initiatives, the Company waived or eliminated fees from March 23rd
through July 9th. In addition, insufficient fund fees for the
remainder of the quarter were lower than historic levels, likely
due to the positive impact of stimulus programs on consumer account
balances. ATM access fees were not re-initiated until September
19th.
- Insurance income
of $1.4 million was $538 thousand higher than the second quarter of
2020 due to the timing of commercial renewals and was $82 thousand
lower than the third quarter of 2019.
- Investment
advisory fees of $2.4 million was $192 thousand higher than the
second quarter of 2020 and $174 thousand higher than the third
quarter of 2019, as a result of the impact of market gains, new
customer accounts and increases in existing accounts on assets
under management.
- Investments in
limited partnerships generated a loss of $105 thousand in the
quarter compared to a loss of $244 thousand in the second quarter
of 2020 and income of $116 thousand in the third 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, consistent with the
second quarter of 2020 and $1.0 million higher than the third
quarter of 2019. Income is based on the number and value of
interest rate swap transactions and reflects growth and maturity of
the Company’s commercial loan business.
- Net gain on sale
of loans held for sale of $1.6 million was $850 thousand higher
than the second quarter of 2020 and $1.1 million higher than the
third quarter of 2019 due to increased residential real estate
loans for sale volume and an increase in margin on these
transactions. The low interest rate environment has resulted in a
significant increase in mortgage refinancing activity.
- A net gain on
investment securities of $554 thousand was recognized in the
quarter compared to a net gain of $674 thousand in the second
quarter of 2020 and a net gain of $1.6 million in the third quarter
of 2019. The net gain in the current quarter is attributable to the
management of premium risk, largely achieved through the sale of
$20.0 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 $28.7 million in
the quarter compared to $26.7 million in the second quarter of 2020
and $25.9 million in the third quarter of 2019.
- Salaries and
employee benefits expense of $15.1 million was relatively unchanged
from the second quarter of 2020 and $674 thousand higher than the
third quarter of 2019. Current quarter expense includes $224
thousand of non-recurring severance costs incurred in connection
with the previously described branch closings and staff reduction
announced in July 2020.
- Professional
services expense of $1.2 million was $338 thousand lower than the
second quarter of 2020 and $286 thousand lower than the third
quarter of 2019 primarily as a result of the timing of fees for
consulting and advisory projects, including the Company’s
improvement initiatives. Expenses related to improvement
initiatives totaled $56 thousand in the third quarter of 2020, $353
thousand in the second quarter of 2020 and $298 thousand in the
third quarter of 2019.
- Computer and
data processing expense of $3.3 million was $551 thousand higher
than the second quarter of 2020 and $603 thousand higher than the
third quarter of 2019 primarily due to costs related to the Bank’s
new online and mobile platform, Five Star Bank Digital Banking,
launched in the second quarter of 2020.
- FDIC assessments
were $594 thousand in the quarter compared to $539 in the second
quarter of 2020 and $7 thousand in the third quarter of 2019. In
2018, the FDIC minimum reserve ratio was exceeded, resulting in
credits used to offset expense in 2019 and the first quarter of
2020.
- Advertising and
promotions expense of $955 thousand was $410 thousand higher than
the second quarter of 2020 and $210 thousand higher than the third
quarter of 2019. Advertising activity was reduced in March 2020
when the COVID-19 pandemic impacted operations in Western New York.
Higher expense in the third quarter of 2020 is attributable to
promotional costs for Five Star Bank Digital Banking. The
advertising campaign started after the last wave of customers was
transitioned to the new platform in mid-June and ended in late
August.
- Third quarter
2020 restructuring charges of $1.4 million represents non-recurring
real estate related charges related to the previously described
branch closings and staff reduction announced in July 2020.
Income Taxes
Income tax expense was $2.9 million for the
quarter compared to $2.4 million for the second quarter of 2020 and
$4.3 million for the third quarter of 2019. As a result of the Tax
Cuts and Jobs Act, the Company estimated tax benefits and recorded
a provisional amount in and for the year ended December 31,
2017. In the third quarter of 2019 an adjustment was made to
the provisional amount resulting in incremental expense of
approximately $600 thousand.
The effective tax rate was 19.3% for the quarter
compared to 18.0% for the second quarter of 2020 and 25.0% for the
third 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. The higher effective tax rate in the
third quarter of 2019 was driven by the incremental expense
described above.
Balance Sheet and Capital
Management
Total assets were $4.96 billion at
September 30, 2020, up $278.3 million from June 30, 2020, and up
$626.5 million from September 30, 2019.
Investment securities were $806.9 million at
September 30, 2020, up $27.6 million from June 30, 2020, and up
$25.2 million from September 30, 2019. The Company’s 2020
investment strategy has been to reinvest cash flow from the
portfolio, coupled with deploying excess liquidity into cash
flowing agency mortgage backed securities.
Total loans were $3.57 billion at September
30, 2020, up $82.7 million, or 2.4%, from June 30, 2020, and up
$412.1 million, or 13.1%, from September 30, 2019. PPP loans
of approximately $2 million and $269 million were funded in the
third and second quarters of 2020, respectively. The loans carry a
1% interest rate and the Company recorded net PPP loan origination
fees of approximately $7.4 million that are amortized over a
24-month period.
- Commercial
business loans totaled $818.1 million, down $556 thousand from June
30, 2020, and up $243.7 million, or 42.4%, from September 30, 2019.
The increase from the third quarter of 2019 was primarily
attributable to PPP loans. At September 30, 2020, the PPP loan
balance was $264.1 million, net of deferred fees.
- Commercial
mortgage loans totaled $1.20 billion, up $61.7 million, or 5.4%,
from June 30, 2020, and up $166.6 million, or 16.1%, from September
30, 2019.
- Residential real
estate loans totaled $596.9 million, up $11.9 million, or 2.0%,
from June 30, 2020, and up $38.2 million, or 6.8%, from
September 30, 2019.
- Consumer
indirect loans totaled $840.6 million, up $12.5 million,
or 1.5%, from June 30, 2020 and down $23.0 million, or 2.7%, from
September 30, 2019.
Total deposits were $4.36 billion at
September 30, 2020, $370.9 million higher than June 30, 2020,
and $778.7 million higher than September 30, 2019. The
increase from June 30, 2020, was primarily the result of a seasonal
increase in public deposits combined with growth in the reciprocal
and brokered deposit portfolios. The Company utilized lower cost
brokered deposit balances to pay off a maturing Federal Home Loan
Bank term advance of $100 million during the quarter. The increase
from September 30, 2019, was primarily due to growth in non-public
demand and the reciprocal and brokered deposits portfolios. Public
deposit balances represented 23% of total deposits at September 30,
2020, compared to 23% of total deposits at June 30, 2020, and 28%
at September 30, 2019.
Short-term borrowings were $5.3 million at
September 30, 2020, a decrease of $100.0 million from June 30, 2020
and a decrease of $206.1 million from September 30, 2019. The lower
level of short-term borrowings at September 30, 2020, is
attributable to growth in brokered deposits, which were utilized as
a cost-effective alternative to Federal Home Loan Bank borrowings.
Short-term borrowings and brokered deposits have historically been
utilized to manage the seasonality of public deposits, which
reached a seasonal high point during the third 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 $456.4 million at
September 30, 2020, compared to $448.0 million at June 30, 2020,
and $432.6 million at September 30, 2019. Common book value
per share was $27.38 at September 30, 2020, an increase of $0.52 or
1.9% from $26.86 at June 30, 2020, and an increase of $1.42 or 5.5%
from $25.96 at September 30, 2019. Tangible common book value per
share(1) was $22.76 at September 30, 2020, an increase of $0.54 or
2.4% from $22.22 at June 30, 2020, and an increase of $1.50 or 7.1%
from $21.26 at September 30, 2019.
During the third quarter of 2020, the Company
declared a common stock dividend of $0.26 per common share. The
dividend returned 35% of third quarter net income to common
shareholders.
The Company’s regulatory capital ratios at
September 30, 2020, compared to the prior quarter and prior
year:
- Leverage Ratio
was 8.42%, compared to 8.49% and 8.86% at June 30, 2020, and
September 30, 2019, respectively.
- Common Equity
Tier 1 Capital Ratio was 10.19%, compared to 10.27% and 10.06% at
June 30, 2020, and September 30, 2019, respectively.
- Tier 1 Capital
Ratio was 10.66%, compared to 10.76% and 10.55% at June 30, 2020,
and September 30, 2019, respectively.
- Total Risk-Based
Capital Ratio was 12.74%, compared to 12.83% and 12.57% at June 30,
2020, and September 30, 2019, respectively.
Credit Quality
Non-performing loans were $10.9 million at
September 30, 2020, compared to $13.2 million at June 30, 2020, and
$9.8 million at September 30, 2019. Net charge-offs were $488
thousand in the quarter, $298 thousand lower than the second
quarter of 2020 and $4.1 million lower than the third quarter of
2019. The decrease from the prior year period is primarily
attributable to the third quarter 2019 $3.0 million partial
charge-off of a $5.6 million loan that had been classified as
non-performing in the second quarter of 2019.
Foreclosed assets at September 30, 2020, were
$3.0 million, an increase of $2.3 million from June 30, 2020, and
an increase of $2.9 million from September 30, 2019. The increase
as compared to both periods is attributable to one commercial
credit that was partially charged off during the first quarter of
2020 and foreclosure occurred in the third quarter.
The ratio of annualized net charge-offs to total
average loans was 0.06% in the current quarter, 0.09% in the second
quarter of 2020 and 0.58% in the third 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 September 30, 2020, the allowance for credit
losses - loans to total loans ratio was 1.38% compared to 1.33% at
June 30, 2020, and 1.00% at September 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 1.49% at September 30, 2020, and 1.44% at June 30,
2020.
The provision for credit losses - loans was $3.6
million in the quarter compared to $3.7 million in the second
quarter of 2020 and $1.8 million in the third quarter of 2019.
Higher provisioning in 2020 reflects 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. Provision for credit losses of $4.0 million in the
third quarter of 2020 also includes a $461 thousand increase in the
allowance for unfunded commitments.
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 0.31% at September 30, 2020, 0.38%
at June 30, 2020, and 0.31% at September 30, 2019. The ratio of
allowance for credit losses - loans to non-performing loans was
453% at September 30, 2020, compared to 351% at June 30, 2020, and
324% at September 30, 2019.
Conference Call
The Company will host an earnings conference
call and audio webcast on October 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 approximately 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 630 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 |
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
September 30, |
|
SELECTED BALANCE SHEET DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
282,070 |
|
|
$ |
119,610 |
|
|
$ |
152,168 |
|
|
$ |
112,947 |
|
|
$ |
136,815 |
|
Investment securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for sale |
|
515,971 |
|
|
|
469,413 |
|
|
|
444,845 |
|
|
|
417,917 |
|
|
|
395,441 |
|
Held-to-maturity, net |
|
290,946 |
|
|
|
309,872 |
|
|
|
346,239 |
|
|
|
359,000 |
|
|
|
386,305 |
|
Total investment securities |
|
806,917 |
|
|
|
779,285 |
|
|
|
791,084 |
|
|
|
776,917 |
|
|
|
781,746 |
|
Loans held for sale |
|
7,076 |
|
|
|
6,654 |
|
|
|
3,822 |
|
|
|
4,224 |
|
|
|
6,398 |
|
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business |
|
818,135 |
|
|
|
818,691 |
|
|
|
588,868 |
|
|
|
572,040 |
|
|
|
574,455 |
|
Commercial mortgage |
|
1,202,046 |
|
|
|
1,140,326 |
|
|
|
1,107,376 |
|
|
|
1,106,283 |
|
|
|
1,035,450 |
|
Residential real estate loans |
|
596,902 |
|
|
|
585,035 |
|
|
|
579,800 |
|
|
|
572,350 |
|
|
|
558,656 |
|
Residential real estate lines |
|
94,017 |
|
|
|
97,427 |
|
|
|
102,113 |
|
|
|
104,118 |
|
|
|
107,615 |
|
Consumer indirect |
|
840,579 |
|
|
|
828,105 |
|
|
|
843,668 |
|
|
|
850,052 |
|
|
|
863,614 |
|
Other consumer |
|
16,860 |
|
|
|
16,237 |
|
|
|
15,402 |
|
|
|
16,144 |
|
|
|
16,630 |
|
Total loans |
|
3,568,539 |
|
|
|
3,485,821 |
|
|
|
3,237,227 |
|
|
|
3,220,987 |
|
|
|
3,156,420 |
|
Allowance for credit losses - loans |
|
49,395 |
|
|
|
46,316 |
|
|
|
43,356 |
|
|
|
30,482 |
|
|
|
31,668 |
|
Total loans, net |
|
3,519,144 |
|
|
|
3,439,505 |
|
|
|
3,193,871 |
|
|
|
3,190,505 |
|
|
|
3,124,752 |
|
Total interest-earning
assets |
|
4,577,057 |
|
|
|
4,314,490 |
|
|
|
4,116,688 |
|
|
|
4,058,107 |
|
|
|
3,979,493 |
|
Goodwill and other intangible
assets, net |
|
74,062 |
|
|
|
74,342 |
|
|
|
74,629 |
|
|
|
74,923 |
|
|
|
75,225 |
|
Total assets |
|
4,959,201 |
|
|
|
4,680,930 |
|
|
|
4,471,768 |
|
|
|
4,384,178 |
|
|
|
4,332,737 |
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing demand |
|
1,013,176 |
|
|
|
1,008,958 |
|
|
|
732,917 |
|
|
|
707,752 |
|
|
|
755,296 |
|
Interest-bearing demand |
|
786,059 |
|
|
|
727,676 |
|
|
|
724,670 |
|
|
|
627,842 |
|
|
|
707,153 |
|
Savings and money market |
|
1,724,463 |
|
|
|
1,368,805 |
|
|
|
1,270,253 |
|
|
|
1,039,892 |
|
|
|
1,011,873 |
|
Time deposits |
|
841,230 |
|
|
|
888,569 |
|
|
|
1,059,345 |
|
|
|
1,180,189 |
|
|
|
1,111,892 |
|
Total deposits |
|
4,364,928 |
|
|
|
3,994,008 |
|
|
|
3,787,185 |
|
|
|
3,555,675 |
|
|
|
3,586,214 |
|
Short-term borrowings |
|
5,300 |
|
|
|
105,300 |
|
|
|
109,500 |
|
|
|
275,500 |
|
|
|
211,400 |
|
Long-term borrowings, net |
|
39,258 |
|
|
|
39,308 |
|
|
|
39,291 |
|
|
|
39,273 |
|
|
|
39,255 |
|
Total interest-bearing
liabilities |
|
3,396,310 |
|
|
|
3,129,658 |
|
|
|
3,203,059 |
|
|
|
3,162,696 |
|
|
|
3,081,573 |
|
Shareholders’ equity |
|
456,361 |
|
|
|
448,045 |
|
|
|
439,393 |
|
|
|
438,947 |
|
|
|
432,617 |
|
Common shareholders’
equity |
|
439,033 |
|
|
|
430,717 |
|
|
|
422,065 |
|
|
|
421,619 |
|
|
|
415,289 |
|
Tangible common equity
(1) |
|
364,971 |
|
|
|
356,375 |
|
|
|
347,436 |
|
|
|
346,696 |
|
|
|
340,064 |
|
Accumulated other
comprehensive loss |
$ |
(209 |
) |
|
$ |
(496 |
) |
|
$ |
(2,082 |
) |
|
$ |
(14,513 |
) |
|
$ |
(11,734 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding |
|
16,038 |
|
|
|
16,038 |
|
|
|
16,020 |
|
|
|
16,003 |
|
|
|
15,997 |
|
Treasury shares |
|
62 |
|
|
|
62 |
|
|
|
80 |
|
|
|
97 |
|
|
|
103 |
|
CAPITAL RATIOS AND PER
SHARE DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leverage ratio |
|
8.42 |
% |
|
|
8.49 |
% |
|
|
8.78 |
% |
|
|
9.00 |
% |
|
|
8.86 |
% |
Common equity Tier 1 capital
ratio |
|
10.19 |
% |
|
|
10.27 |
% |
|
|
10.05 |
% |
|
|
10.31 |
% |
|
|
10.06 |
% |
Tier 1 capital ratio |
|
10.66 |
% |
|
|
10.76 |
% |
|
|
10.53 |
% |
|
|
10.80 |
% |
|
|
10.55 |
% |
Total risk-based capital
ratio |
|
12.74 |
% |
|
|
12.83 |
% |
|
|
12.54 |
% |
|
|
12.77 |
% |
|
|
12.57 |
% |
Common equity to assets |
|
8.85 |
% |
|
|
9.20 |
% |
|
|
9.44 |
% |
|
|
9.62 |
% |
|
|
9.58 |
% |
Tangible common equity to
tangible assets (1) |
|
7.47 |
% |
|
|
7.74 |
% |
|
|
7.90 |
% |
|
|
8.05 |
% |
|
|
7.99 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common book value per
share |
$ |
27.38 |
|
|
$ |
26.86 |
|
|
$ |
26.35 |
|
|
$ |
26.35 |
|
|
$ |
25.96 |
|
Tangible common book value per
share (1) |
$ |
22.76 |
|
|
$ |
22.22 |
|
|
$ |
21.69 |
|
|
$ |
21.66 |
|
|
$ |
21.26 |
|
(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)
|
Nine Months Ended |
|
|
2020 |
|
|
2019 |
|
|
September 30, |
|
|
Third |
|
|
Second |
|
|
First |
|
|
Fourth |
|
|
Third |
|
|
2020 |
|
|
2019 |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
SELECTED INCOME STATEMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
$ |
121,131 |
|
|
$ |
126,621 |
|
|
$ |
39,719 |
|
|
$ |
39,759 |
|
|
$ |
41,653 |
|
|
$ |
42,179 |
|
|
$ |
42,459 |
|
Interest expense |
|
18,327 |
|
|
|
29,882 |
|
|
|
4,220 |
|
|
|
5,578 |
|
|
|
8,529 |
|
|
|
9,006 |
|
|
|
9,976 |
|
Net interest income |
|
102,804 |
|
|
|
96,739 |
|
|
|
35,499 |
|
|
|
34,181 |
|
|
|
33,124 |
|
|
|
33,173 |
|
|
|
32,483 |
|
Provision for credit
losses |
|
21,689 |
|
|
|
5,391 |
|
|
|
4,028 |
|
|
|
3,746 |
|
|
|
13,915 |
|
|
|
2,653 |
|
|
|
1,844 |
|
Net interest income after provision for credit losses |
|
81,115 |
|
|
|
91,348 |
|
|
|
31,471 |
|
|
|
30,435 |
|
|
|
19,209 |
|
|
|
30,520 |
|
|
|
30,639 |
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposits |
|
3,321 |
|
|
|
5,361 |
|
|
|
1,254 |
|
|
|
480 |
|
|
|
1,587 |
|
|
|
1,880 |
|
|
|
1,925 |
|
Insurance income |
|
3,525 |
|
|
|
3,689 |
|
|
|
1,357 |
|
|
|
819 |
|
|
|
1,349 |
|
|
|
881 |
|
|
|
1,439 |
|
ATM and debit card |
|
5,321 |
|
|
|
4,983 |
|
|
|
1,943 |
|
|
|
1,776 |
|
|
|
1,602 |
|
|
|
1,796 |
|
|
|
1,801 |
|
Investment advisory |
|
6,940 |
|
|
|
6,812 |
|
|
|
2,443 |
|
|
|
2,251 |
|
|
|
2,246 |
|
|
|
2,375 |
|
|
|
2,269 |
|
Company owned life insurance |
|
1,397 |
|
|
|
1,293 |
|
|
|
470 |
|
|
|
462 |
|
|
|
465 |
|
|
|
465 |
|
|
|
459 |
|
Investments in limited partnerships |
|
(136 |
) |
|
|
492 |
|
|
|
(105 |
) |
|
|
(244 |
) |
|
|
213 |
|
|
|
(140 |
) |
|
|
116 |
|
Loan servicing |
|
106 |
|
|
|
316 |
|
|
|
49 |
|
|
|
50 |
|
|
|
7 |
|
|
|
116 |
|
|
|
102 |
|
Income from derivative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
instruments, net |
|
4,617 |
|
|
|
1,013 |
|
|
|
1,931 |
|
|
|
1,940 |
|
|
|
746 |
|
|
|
1,261 |
|
|
|
890 |
|
Net gain on sale of loans held for sale |
|
2,616 |
|
|
|
1,028 |
|
|
|
1,581 |
|
|
|
731 |
|
|
|
304 |
|
|
|
324 |
|
|
|
439 |
|
Net gain (loss) on investment securities |
|
1,449 |
|
|
|
1,721 |
|
|
|
554 |
|
|
|
674 |
|
|
|
221 |
|
|
|
(44 |
) |
|
|
1,608 |
|
Net gain (loss) on other assets |
|
8 |
|
|
|
56 |
|
|
|
(55 |
) |
|
|
(1 |
) |
|
|
64 |
|
|
|
(27 |
) |
|
|
(2 |
) |
Net loss on tax credit investments |
|
(120 |
) |
|
|
- |
|
|
|
(40 |
) |
|
|
(40 |
) |
|
|
(40 |
) |
|
|
(528 |
) |
|
|
- |
|
Other |
|
3,151 |
|
|
|
3,950 |
|
|
|
1,019 |
|
|
|
934 |
|
|
|
1,198 |
|
|
|
1,308 |
|
|
|
1,315 |
|
Total noninterest income |
|
32,195 |
|
|
|
30,714 |
|
|
|
12,401 |
|
|
|
9,832 |
|
|
|
9,962 |
|
|
|
9,667 |
|
|
|
12,361 |
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
45,173 |
|
|
|
41,661 |
|
|
|
15,085 |
|
|
|
15,074 |
|
|
|
15,014 |
|
|
|
14,669 |
|
|
|
14,411 |
|
Occupancy and equipment (1) |
|
10,407 |
|
|
|
10,106 |
|
|
|
3,263 |
|
|
|
3,388 |
|
|
|
3,756 |
|
|
|
3,446 |
|
|
|
3,381 |
|
Professional services |
|
4,974 |
|
|
|
3,618 |
|
|
|
1,242 |
|
|
|
1,580 |
|
|
|
2,152 |
|
|
|
1,806 |
|
|
|
1,528 |
|
Computer and data processing (1) |
|
8,622 |
|
|
|
7,407 |
|
|
|
3,250 |
|
|
|
2,699 |
|
|
|
2,673 |
|
|
|
2,576 |
|
|
|
2,647 |
|
Supplies and postage |
|
1,533 |
|
|
|
1,554 |
|
|
|
463 |
|
|
|
517 |
|
|
|
553 |
|
|
|
482 |
|
|
|
522 |
|
FDIC assessments |
|
1,505 |
|
|
|
1,005 |
|
|
|
594 |
|
|
|
539 |
|
|
|
372 |
|
|
|
- |
|
|
|
7 |
|
Advertising and promotions |
|
2,055 |
|
|
|
2,351 |
|
|
|
955 |
|
|
|
545 |
|
|
|
555 |
|
|
|
1,226 |
|
|
|
745 |
|
Amortization of intangibles |
|
861 |
|
|
|
948 |
|
|
|
280 |
|
|
|
287 |
|
|
|
294 |
|
|
|
302 |
|
|
|
309 |
|
Restructuring charges |
|
1,362 |
|
|
|
- |
|
|
|
1,362 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Other |
|
6,583 |
|
|
|
7,410 |
|
|
|
2,165 |
|
|
|
2,065 |
|
|
|
2,353 |
|
|
|
2,261 |
|
|
|
2,336 |
|
Total noninterest expense |
|
83,075 |
|
|
|
76,060 |
|
|
|
28,659 |
|
|
|
26,694 |
|
|
|
27,722 |
|
|
|
26,768 |
|
|
|
25,886 |
|
Income before income taxes |
|
30,235 |
|
|
|
46,002 |
|
|
|
15,213 |
|
|
|
13,573 |
|
|
|
1,449 |
|
|
|
13,419 |
|
|
|
17,114 |
|
Income tax expense |
|
5,703 |
|
|
|
10,247 |
|
|
|
2,940 |
|
|
|
2,441 |
|
|
|
322 |
|
|
|
312 |
|
|
|
4,281 |
|
Net income |
|
24,532 |
|
|
|
35,755 |
|
|
|
12,273 |
|
|
|
11,132 |
|
|
|
1,127 |
|
|
|
13,107 |
|
|
|
12,833 |
|
Preferred stock dividends |
|
1,096 |
|
|
|
1,096 |
|
|
|
365 |
|
|
|
366 |
|
|
|
365 |
|
|
|
365 |
|
|
|
365 |
|
Net income available to
common |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shareholders |
$ |
23,436 |
|
|
$ |
34,659 |
|
|
$ |
11,908 |
|
|
$ |
10,766 |
|
|
$ |
762 |
|
|
$ |
12,742 |
|
|
$ |
12,468 |
|
FINANCIAL
RATIOS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share –
basic |
$ |
1.46 |
|
|
$ |
2.17 |
|
|
$ |
0.74 |
|
|
$ |
0.67 |
|
|
$ |
0.05 |
|
|
$ |
0.80 |
|
|
$ |
0.78 |
|
Earnings per share –
diluted |
$ |
1.46 |
|
|
$ |
2.16 |
|
|
$ |
0.74 |
|
|
$ |
0.67 |
|
|
$ |
0.05 |
|
|
$ |
0.79 |
|
|
$ |
0.78 |
|
Cash dividends declared on
common stock |
$ |
0.78 |
|
|
$ |
0.75 |
|
|
$ |
0.26 |
|
|
$ |
0.26 |
|
|
$ |
0.26 |
|
|
$ |
0.25 |
|
|
$ |
0.25 |
|
Common dividend payout
ratio |
|
53.42 |
% |
|
|
34.56 |
% |
|
|
35.14 |
% |
|
|
38.81 |
% |
|
|
520.00 |
% |
|
|
31.25 |
% |
|
|
32.05 |
% |
Dividend yield
(annualized) |
|
6.77 |
% |
|
|
3.32 |
% |
|
|
6.72 |
% |
|
|
5.60 |
% |
|
|
5.76 |
% |
|
|
3.09 |
% |
|
|
3.29 |
% |
Return on average assets |
|
0.71 |
% |
|
|
1.12 |
% |
|
|
1.02 |
% |
|
|
0.97 |
% |
|
|
0.10 |
% |
|
|
1.21 |
% |
|
|
1.19 |
% |
Return on average equity |
|
7.33 |
% |
|
|
11.51 |
% |
|
|
10.72 |
% |
|
|
10.05 |
% |
|
|
1.03 |
% |
|
|
11.88 |
% |
|
|
11.86 |
% |
Return on average common
equity |
|
7.28 |
% |
|
|
11.64 |
% |
|
|
10.82 |
% |
|
|
10.11 |
% |
|
|
0.72 |
% |
|
|
12.02 |
% |
|
|
12.00 |
% |
Return on average tangible
common |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
equity (2) |
|
8.81 |
% |
|
|
14.38 |
% |
|
|
13.02 |
% |
|
|
12.25 |
% |
|
|
0.88 |
% |
|
|
14.64 |
% |
|
|
14.69 |
% |
Efficiency ratio (3) |
|
61.89 |
% |
|
|
60.09 |
% |
|
|
60.28 |
% |
|
|
61.26 |
% |
|
|
64.31 |
% |
|
|
62.05 |
% |
|
|
59.52 |
% |
Effective tax rate |
|
18.9 |
% |
|
|
22.3 |
% |
|
|
19.3 |
% |
|
|
18.0 |
% |
|
|
22.2 |
% |
|
|
2.3 |
% |
|
|
25.0 |
% |
(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)
|
Nine Months Ended |
|
|
2020 |
|
|
2019 |
|
|
September 30, |
|
|
Third |
|
|
Second |
|
|
First |
|
|
Fourth |
|
|
Third |
|
|
2020 |
|
|
2019 |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
SELECTED AVERAGE BALANCES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal funds sold and
interest-earning deposits |
$ |
91,263 |
|
|
$ |
18,495 |
|
|
$ |
121,929 |
|
|
$ |
92,214 |
|
|
$ |
59,309 |
|
|
$ |
32,494 |
|
|
$ |
19,370 |
|
Investment securities (1) |
|
772,059 |
|
|
|
838,995 |
|
|
|
769,673 |
|
|
|
766,636 |
|
|
|
779,894 |
|
|
|
774,520 |
|
|
|
785,595 |
|
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business |
|
712,703 |
|
|
|
570,596 |
|
|
|
808,582 |
|
|
|
757,588 |
|
|
|
570,886 |
|
|
|
567,998 |
|
|
|
586,293 |
|
Commercial mortgage |
|
1,138,568 |
|
|
|
1,003,593 |
|
|
|
1,180,747 |
|
|
|
1,133,832 |
|
|
|
1,100,660 |
|
|
|
1,073,527 |
|
|
|
1,021,931 |
|
Residential real estate loans |
|
583,540 |
|
|
|
541,185 |
|
|
|
590,483 |
|
|
|
581,651 |
|
|
|
578,407 |
|
|
|
566,256 |
|
|
|
553,382 |
|
Residential real estate lines |
|
99,156 |
|
|
|
108,207 |
|
|
|
95,288 |
|
|
|
99,543 |
|
|
|
102,680 |
|
|
|
106,011 |
|
|
|
107,290 |
|
Consumer indirect |
|
834,810 |
|
|
|
890,560 |
|
|
|
830,647 |
|
|
|
827,030 |
|
|
|
846,800 |
|
|
|
856,823 |
|
|
|
868,927 |
|
Other consumer |
|
15,691 |
|
|
|
16,029 |
|
|
|
16,445 |
|
|
|
15,155 |
|
|
|
15,466 |
|
|
|
16,100 |
|
|
|
16,141 |
|
Total loans |
|
3,384,468 |
|
|
|
3,130,170 |
|
|
|
3,522,192 |
|
|
|
3,414,799 |
|
|
|
3,214,899 |
|
|
|
3,186,715 |
|
|
|
3,153,964 |
|
Total interest-earning
assets |
|
4,247,790 |
|
|
|
3,987,660 |
|
|
|
4,413,794 |
|
|
|
4,273,649 |
|
|
|
4,054,102 |
|
|
|
3,993,729 |
|
|
|
3,958,929 |
|
Goodwill and other intangible
assets, net |
|
74,506 |
|
|
|
75,713 |
|
|
|
74,220 |
|
|
|
74,504 |
|
|
|
74,797 |
|
|
|
75,093 |
|
|
|
75,401 |
|
Total assets |
|
4,592,609 |
|
|
|
4,281,270 |
|
|
|
4,775,333 |
|
|
|
4,624,360 |
|
|
|
4,376,125 |
|
|
|
4,299,342 |
|
|
|
4,260,810 |
|
Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand |
|
694,830 |
|
|
|
653,780 |
|
|
|
704,550 |
|
|
|
712,300 |
|
|
|
667,533 |
|
|
|
660,738 |
|
|
|
632,540 |
|
Savings and money market |
|
1,349,931 |
|
|
|
973,005 |
|
|
|
1,574,068 |
|
|
|
1,329,632 |
|
|
|
1,143,628 |
|
|
|
1,014,434 |
|
|
|
956,410 |
|
Time deposits |
|
989,236 |
|
|
|
1,090,896 |
|
|
|
867,479 |
|
|
|
984,832 |
|
|
|
1,116,736 |
|
|
|
1,120,823 |
|
|
|
1,099,212 |
|
Short-term borrowings |
|
112,451 |
|
|
|
332,922 |
|
|
|
57,856 |
|
|
|
110,272 |
|
|
|
169,827 |
|
|
|
241,557 |
|
|
|
328,952 |
|
Long-term borrowings, net |
|
39,297 |
|
|
|
39,227 |
|
|
|
39,314 |
|
|
|
39,297 |
|
|
|
39,279 |
|
|
|
39,262 |
|
|
|
39,244 |
|
Total interest-bearing liabilities |
|
3,185,745 |
|
|
|
3,089,830 |
|
|
|
3,243,267 |
|
|
|
3,176,333 |
|
|
|
3,137,003 |
|
|
|
3,076,814 |
|
|
|
3,056,358 |
|
Noninterest-bearing demand
deposits |
|
874,456 |
|
|
|
719,630 |
|
|
|
987,908 |
|
|
|
912,238 |
|
|
|
721,975 |
|
|
|
725,590 |
|
|
|
717,473 |
|
Total deposits |
|
3,908,453 |
|
|
|
3,437,311 |
|
|
|
4,134,005 |
|
|
|
3,939,002 |
|
|
|
3,649,872 |
|
|
|
3,521,585 |
|
|
|
3,405,635 |
|
Total liabilities |
|
4,145,270 |
|
|
|
3,865,909 |
|
|
|
4,320,057 |
|
|
|
4,178,921 |
|
|
|
3,934,909 |
|
|
|
3,861,542 |
|
|
|
3,831,409 |
|
Shareholders’ equity |
|
447,339 |
|
|
|
415,361 |
|
|
|
455,276 |
|
|
|
445,439 |
|
|
|
441,216 |
|
|
|
437,800 |
|
|
|
429,401 |
|
Common equity |
|
430,011 |
|
|
|
398,033 |
|
|
|
437,948 |
|
|
|
428,111 |
|
|
|
423,888 |
|
|
|
420,472 |
|
|
|
412,073 |
|
Tangible common equity
(2) |
$ |
355,505 |
|
|
$ |
322,230 |
|
|
$ |
363,728 |
|
|
$ |
353,607 |
|
|
$ |
349,091 |
|
|
$ |
345,379 |
|
|
$ |
336,672 |
|
Common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
16,018 |
|
|
|
15,964 |
|
|
|
16,031 |
|
|
|
16,018 |
|
|
|
16,006 |
|
|
|
15,995 |
|
|
|
15,991 |
|
Diluted |
|
16,058 |
|
|
|
16,017 |
|
|
|
16,058 |
|
|
|
16,047 |
|
|
|
16,069 |
|
|
|
16,072 |
|
|
|
16,056 |
|
SELECTED AVERAGE
YIELDS:(Tax equivalent basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities |
|
2.40 |
% |
|
|
2.38 |
% |
|
|
2.23 |
% |
|
|
2.49 |
% |
|
|
2.48 |
% |
|
|
2.40 |
% |
|
|
2.40 |
% |
Loans |
|
4.25 |
% |
|
|
4.79 |
% |
|
|
4.02 |
% |
|
|
4.14 |
% |
|
|
4.61 |
% |
|
|
4.70 |
% |
|
|
4.77 |
% |
Total interest-earning
assets |
|
3.83 |
% |
|
|
4.27 |
% |
|
|
3.60 |
% |
|
|
3.76 |
% |
|
|
4.15 |
% |
|
|
4.22 |
% |
|
|
4.29 |
% |
Interest-bearing demand |
|
0.16 |
% |
|
|
0.21 |
% |
|
|
0.14 |
% |
|
|
0.14 |
% |
|
|
0.21 |
% |
|
|
0.21 |
% |
|
|
0.22 |
% |
Savings and money market |
|
0.37 |
% |
|
|
0.43 |
% |
|
|
0.28 |
% |
|
|
0.31 |
% |
|
|
0.56 |
% |
|
|
0.48 |
% |
|
|
0.44 |
% |
Time deposits |
|
1.42 |
% |
|
|
2.12 |
% |
|
|
0.92 |
% |
|
|
1.39 |
% |
|
|
1.83 |
% |
|
|
1.94 |
% |
|
|
2.12 |
% |
Short-term borrowings |
|
1.67 |
% |
|
|
2.64 |
% |
|
|
1.60 |
% |
|
|
1.03 |
% |
|
|
2.11 |
% |
|
|
2.21 |
% |
|
|
2.51 |
% |
Long-term borrowings, net |
|
6.30 |
% |
|
|
6.30 |
% |
|
|
6.31 |
% |
|
|
6.29 |
% |
|
|
6.29 |
% |
|
|
6.29 |
% |
|
|
6.30 |
% |
Total interest-bearing
liabilities |
|
0.77 |
% |
|
|
1.29 |
% |
|
|
0.52 |
% |
|
|
0.71 |
% |
|
|
1.09 |
% |
|
|
1.16 |
% |
|
|
1.30 |
% |
Net interest rate spread |
|
3.06 |
% |
|
|
2.98 |
% |
|
|
3.08 |
% |
|
|
3.05 |
% |
|
|
3.06 |
% |
|
|
3.06 |
% |
|
|
2.99 |
% |
Net interest margin |
|
3.25 |
% |
|
|
3.27 |
% |
|
|
3.22 |
% |
|
|
3.23 |
% |
|
|
3.31 |
% |
|
|
3.33 |
% |
|
|
3.29 |
% |
(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)
|
Nine Months Ended |
|
|
2020 |
|
|
2019 |
|
|
September 30, |
|
|
Third |
|
|
Second |
|
|
First |
|
|
Fourth |
|
|
Third |
|
|
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 |
|
|
$ |
46,316 |
|
|
$ |
43,356 |
|
|
$ |
30,482 |
|
|
$ |
31,668 |
|
|
$ |
34,434 |
|
Impact of adopting CECL |
|
9,594 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
9,594 |
|
|
|
- |
|
|
|
- |
|
Beginning balance, after
adoption of CECL |
|
40,076 |
|
|
|
33,914 |
|
|
|
46,316 |
|
|
|
43,356 |
|
|
|
40,076 |
|
|
|
31,668 |
|
|
|
34,434 |
|
Net loan charge-offs
(recoveries): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business |
|
6,637 |
|
|
|
47 |
|
|
|
(88 |
) |
|
|
(1,458 |
) |
|
|
8,183 |
|
|
|
1,942 |
|
|
|
10 |
|
Commercial mortgage |
|
1,675 |
|
|
|
2,980 |
|
|
|
603 |
|
|
|
1,072 |
|
|
|
- |
|
|
|
- |
|
|
|
2,994 |
|
Residential real estate loans |
|
75 |
|
|
|
141 |
|
|
|
(7 |
) |
|
|
(6 |
) |
|
|
88 |
|
|
|
156 |
|
|
|
40 |
|
Residential real estate lines |
|
(3 |
) |
|
|
4 |
|
|
|
- |
|
|
|
- |
|
|
|
(3 |
) |
|
|
3 |
|
|
|
7 |
|
Consumer indirect |
|
2,816 |
|
|
|
3,897 |
|
|
|
(115 |
) |
|
|
1,175 |
|
|
|
1,756 |
|
|
|
1,523 |
|
|
|
1,317 |
|
Other consumer |
|
217 |
|
|
|
568 |
|
|
|
95 |
|
|
|
3 |
|
|
|
119 |
|
|
|
215 |
|
|
|
242 |
|
Total net charge-offs |
|
11,417 |
|
|
|
7,637 |
|
|
|
488 |
|
|
|
786 |
|
|
|
10,143 |
|
|
|
3,839 |
|
|
|
4,610 |
|
Provision for credit losses -
loans |
|
20,736 |
|
|
|
5,391 |
|
|
|
3,567 |
|
|
|
3,746 |
|
|
|
13,423 |
|
|
|
2,653 |
|
|
|
1,844 |
|
Ending balance |
$ |
49,395 |
|
|
$ |
31,668 |
|
|
$ |
49,395 |
|
|
$ |
46,316 |
|
|
$ |
43,356 |
|
|
$ |
30,482 |
|
|
$ |
31,668 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs (recoveries)
to average loans (annualized): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business |
|
1.24 |
% |
|
|
0.01 |
% |
|
|
-0.04 |
% |
|
|
-0.77 |
% |
|
|
5.77 |
% |
|
|
1.36 |
% |
|
|
0.01 |
% |
Commercial mortgage |
|
0.20 |
% |
|
|
0.40 |
% |
|
|
0.20 |
% |
|
|
0.38 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
|
|
1.16 |
% |
Residential real estate loans |
|
0.02 |
% |
|
|
0.03 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
|
|
0.06 |
% |
|
|
0.11 |
% |
|
|
0.03 |
% |
Residential real estate lines |
|
0.00 |
% |
|
|
0.01 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
|
|
-0.01 |
% |
|
|
0.01 |
% |
|
|
0.03 |
% |
Consumer indirect |
|
0.45 |
% |
|
|
0.59 |
% |
|
|
-0.05 |
% |
|
|
0.57 |
% |
|
|
0.83 |
% |
|
|
0.71 |
% |
|
|
0.60 |
% |
Other consumer |
|
1.85 |
% |
|
|
4.74 |
% |
|
|
2.31 |
% |
|
|
0.08 |
% |
|
|
3.09 |
% |
|
|
5.30 |
% |
|
|
5.93 |
% |
Total loans |
|
0.45 |
% |
|
|
0.33 |
% |
|
|
0.06 |
% |
|
|
0.09 |
% |
|
|
1.27 |
% |
|
|
0.48 |
% |
|
|
0.58 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
information (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business |
$ |
2,628 |
|
|
$ |
2,884 |
|
|
$ |
2,628 |
|
|
$ |
4,918 |
|
|
$ |
5,507 |
|
|
$ |
1,177 |
|
|
$ |
2,884 |
|
Commercial mortgage |
|
3,372 |
|
|
|
2,867 |
|
|
|
3,372 |
|
|
|
4,140 |
|
|
|
2,984 |
|
|
|
3,146 |
|
|
|
2,867 |
|
Residential real estate loans |
|
3,305 |
|
|
|
2,526 |
|
|
|
3,305 |
|
|
|
2,992 |
|
|
|
1,971 |
|
|
|
2,484 |
|
|
|
2,526 |
|
Residential real estate lines |
|
207 |
|
|
|
182 |
|
|
|
207 |
|
|
|
177 |
|
|
|
143 |
|
|
|
102 |
|
|
|
182 |
|
Consumer indirect |
|
1,244 |
|
|
|
1,326 |
|
|
|
1,244 |
|
|
|
868 |
|
|
|
1,777 |
|
|
|
1,725 |
|
|
|
1,326 |
|
Other consumer |
|
147 |
|
|
|
3 |
|
|
|
147 |
|
|
|
87 |
|
|
|
2 |
|
|
|
6 |
|
|
|
3 |
|
Total non-performing loans |
|
10,903 |
|
|
|
9,788 |
|
|
|
10,903 |
|
|
|
13,182 |
|
|
|
12,384 |
|
|
|
8,640 |
|
|
|
9,788 |
|
Foreclosed assets |
|
2,999 |
|
|
|
91 |
|
|
|
2,999 |
|
|
|
679 |
|
|
|
749 |
|
|
|
468 |
|
|
|
91 |
|
Total non-performing assets |
$ |
13,902 |
|
|
$ |
9,879 |
|
|
$ |
13,902 |
|
|
$ |
13,861 |
|
|
$ |
13,133 |
|
|
$ |
9,108 |
|
|
$ |
9,879 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-performing loans to
total loans |
|
0.31 |
% |
|
|
0.31 |
% |
|
|
0.31 |
% |
|
|
0.38 |
% |
|
|
0.38 |
% |
|
|
0.27 |
% |
|
|
0.31 |
% |
Total non-performing
assets to total assets |
|
0.28 |
% |
|
|
0.23 |
% |
|
|
0.28 |
% |
|
|
0.30 |
% |
|
|
0.29 |
% |
|
|
0.21 |
% |
|
|
0.23 |
% |
Allowance for credit losses -
loans to total loans |
|
1.38 |
% |
|
|
1.00 |
% |
|
|
1.38 |
% |
|
|
1.33 |
% |
|
|
1.34 |
% |
|
|
0.95 |
% |
|
|
1.00 |
% |
Allowance for credit losses -
loans to non-performing loans |
|
453 |
% |
|
|
324 |
% |
|
|
453 |
% |
|
|
351 |
% |
|
|
350 |
% |
|
|
353 |
% |
|
|
324 |
% |
FINANCIAL INSTITUTIONS,
INC.Appendix A — Reconciliation to Non-GAAP
Financial Measures (Unaudited)(In thousands, except per
share amounts)
|
Nine Months Ended |
|
|
2020 |
|
|
2019 |
|
|
September 30, |
|
|
Third |
|
|
Second |
|
|
First |
|
|
Fourth |
|
|
Third |
|
|
2020 |
|
|
2019 |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
Ending tangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
|
|
|
|
|
|
$ |
4,959,201 |
|
|
$ |
4,680,930 |
|
|
$ |
4,471,768 |
|
|
$ |
4,384,178 |
|
|
$ |
4,332,737 |
|
Less: Goodwill and other
intangible assets, net |
|
|
|
|
|
|
|
|
|
74,062 |
|
|
|
74,342 |
|
|
|
74,629 |
|
|
|
74,923 |
|
|
|
75,225 |
|
Tangible assets |
|
|
|
|
|
|
|
|
$ |
4,885,139 |
|
|
$ |
4,606,588 |
|
|
$ |
4,397,139 |
|
|
$ |
4,309,255 |
|
|
$ |
4,257,512 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending tangible common
equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shareholders’
equity |
|
|
|
|
|
|
|
|
$ |
439,033 |
|
|
$ |
430,717 |
|
|
$ |
422,065 |
|
|
$ |
421,619 |
|
|
$ |
415,289 |
|
Less: Goodwill and other
intangible assets, net |
|
|
|
|
|
|
|
|
|
74,062 |
|
|
|
74,342 |
|
|
|
74,629 |
|
|
|
74,923 |
|
|
|
75,225 |
|
Tangible common equity |
|
|
|
|
|
|
|
|
$ |
364,971 |
|
|
$ |
356,375 |
|
|
$ |
347,436 |
|
|
$ |
346,696 |
|
|
$ |
340,064 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity to
tangible assets (1) |
|
|
|
|
|
|
|
|
|
7.47 |
% |
|
|
7.74 |
% |
|
|
7.90 |
% |
|
|
8.05 |
% |
|
|
7.99 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding |
|
|
|
|
|
|
|
|
|
16,038 |
|
|
|
16,038 |
|
|
|
16,020 |
|
|
|
16,003 |
|
|
|
15,997 |
|
Tangible common book value
per share (2) |
|
|
|
|
|
|
|
|
$ |
22.76 |
|
|
$ |
22.22 |
|
|
$ |
21.69 |
|
|
$ |
21.66 |
|
|
$ |
21.26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average tangible
assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets |
$ |
4,592,609 |
|
|
$ |
4,281,270 |
|
|
$ |
4,775,333 |
|
|
$ |
4,624,360 |
|
|
$ |
4,376,125 |
|
|
$ |
4,299,342 |
|
|
$ |
4,260,810 |
|
Less: Average goodwill and
other intangible assets, net |
|
74,506 |
|
|
|
75,713 |
|
|
|
74,220 |
|
|
|
74,504 |
|
|
|
74,797 |
|
|
|
75,093 |
|
|
|
75,401 |
|
Average tangible assets |
$ |
4,518,103 |
|
|
$ |
4,205,557 |
|
|
$ |
4,701,113 |
|
|
$ |
4,549,856 |
|
|
$ |
4,301,328 |
|
|
$ |
4,224,249 |
|
|
$ |
4,185,409 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average tangible
common equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common equity |
$ |
430,011 |
|
|
$ |
398,033 |
|
|
$ |
437,948 |
|
|
$ |
428,111 |
|
|
$ |
423,888 |
|
|
$ |
420,472 |
|
|
$ |
412,073 |
|
Less: Average goodwill and
other intangible assets, net |
|
74,506 |
|
|
|
75,713 |
|
|
|
74,220 |
|
|
|
74,504 |
|
|
|
74,797 |
|
|
|
75,093 |
|
|
|
75,401 |
|
Average tangible common
equity |
$ |
355,505 |
|
|
$ |
322,320 |
|
|
$ |
363,728 |
|
|
$ |
353,607 |
|
|
$ |
349,091 |
|
|
$ |
345,379 |
|
|
$ |
336,672 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available
to common shareholders |
$ |
23,436 |
|
|
$ |
34,659 |
|
|
$ |
11,908 |
|
|
$ |
10,766 |
|
|
$ |
762 |
|
|
$ |
12,742 |
|
|
$ |
12,468 |
|
Return on average tangible
common equity (3) |
|
8.81 |
% |
|
|
14.38 |
% |
|
|
13.02 |
% |
|
|
12.25 |
% |
|
|
0.88 |
% |
|
|
14.64 |
% |
|
|
14.69 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax pre-provision
income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
24,532 |
|
|
$ |
35,755 |
|
|
$ |
12,273 |
|
|
$ |
11,132 |
|
|
$ |
1,127 |
|
|
$ |
13,107 |
|
|
$ |
12,833 |
|
Add: Income tax expense |
|
5,703 |
|
|
|
10,247 |
|
|
|
2,940 |
|
|
|
2,441 |
|
|
|
322 |
|
|
|
312 |
|
|
|
4,281 |
|
Add: Provision for credit
losses |
|
21,689 |
|
|
|
5,391 |
|
|
|
4,028 |
|
|
|
3,746 |
|
|
|
13,915 |
|
|
|
2,653 |
|
|
|
1,844 |
|
Pre-tax pre-provision
income |
$ |
51,924 |
|
|
$ |
51,393 |
|
|
$ |
19,241 |
|
|
$ |
17,319 |
|
|
$ |
15,364 |
|
|
$ |
16,072 |
|
|
$ |
18,958 |
|
(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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