Financial Institutions, Inc. (NASDAQ: FISI) (the “Company,” “we” or
“us”), parent company of Five Star Bank (the “Bank”), SDN Insurance
Agency, LLC (“SDN”) and Courier Capital, LLC (“Courier Capital”),
today reported financial and operational results for the second
quarter ended June 30, 2023.
Net income was $14.4 million for the second
quarter of 2023, compared to $12.1 million in the first quarter of
2023 and $15.6 million in the second quarter of 2022. After
preferred dividends, net income available to common shareholders
was $14.0 million, or $0.91 per diluted share, in the second
quarter of 2023, compared to $11.7 million, or $0.76 per diluted
share, in the first quarter of 2023, and $15.3 million, or $0.99
per diluted share, in the second quarter of 2022. The Company
recorded a provision for credit losses of $3.2 million in the
current quarter, compared to $4.2 million in the linked quarter and
$563 thousand in the prior year quarter.
Second Quarter 2023
Highlights:
- Total loans were $4.40 billion at June 30, 2023,
reflecting an increase of $154.5 million, or 3.6%, from
March 31, 2023 and $633.8 million, or 16.8%, from
June 30, 2022.
- Total deposits were $5.03 billion at June 30, 2023, down
$106.4 million, or 2.1%, from March 31, 2023, reflective of
seasonal outflows in the public deposit portfolio that occur during
the second quarter, and up $214.3 million, or 4.4%, from one year
prior.
- Net interest income of $42.3 million increased $522 thousand,
or 1.2%, and $740 thousand, or 1.8%, from the linked and year-ago
quarters, respectively, amid the current rising interest rate
environment that has driven higher yields as well as higher funding
costs.
- Noninterest income was $11.5 million, up $542 thousand, or
5.0%, from the first quarter of 2023 and up $106 thousand, or 0.9%,
from the second quarter of 2022.
- The Company completed the merger of its two wholly-owned
SEC-registered investment advisory firm subsidiaries, under which
HNP Capital, LLC merged with and into Courier Capital, LLC, now one
of the largest registered investment advisory firms headquartered
in Western New York with assets under management of $2.75 billion
at June 30, 2023.
- The Company continues to report strong credit quality metrics,
including annualized net charge-offs to average loans for the
current quarter of 0.06%, as well as non-performing loans to total
loans of 0.23% and non-performing assets to total assets of 0.16%
as of June 30, 2023.
- Results for the second quarter of 2023 were positively impacted
by a reduction in income tax expense of approximately $761 thousand
for federal and state tax benefits related to tax credit
investments placed in service in the current and prior quarters.
These tax credit investments also generated a net gain of $489
thousand, recorded in noninterest income, resulting in a net
positive impact in the quarter of $1.3 million.
“Our second quarter performance included
incremental loan growth, which helped to partially offset ongoing
funding cost pressures impacting our industry, as well as the
continuation of solid credit quality metrics that reflect our
long-term commitment to credit disciplined loan growth,” said
President and Chief Executive Officer Martin K. Birmingham. “We
continue to believe that 2023 loan growth will be concentrated in
the first half of the year, with commercial mortgage originations
expected to slow significantly as a result of softer demand given
economic conditions and higher liquidity premiums in our pricing
models. Our consumer and commercial loan portfolios continue to
demonstrate stability and acceptable performance despite the
volatility associated with the higher interest rate environment.
Credit quality remains very strong, as measured by our ratios of
annualized charge-offs to average loans for commercial mortgage
loans standing at zero basis points and our consumer indirect
charge-off ratio improving to 12 basis points for the quarter.
“During the second quarter, we also took steps
to better position our wealth management business for growth by
combining our registered investment advisory firms under the
Courier Capital name. The merger enhances the size and scale of
Courier Capital within our footprint, including in Buffalo,
Rochester and across Upstate New York, thereby expanding the
spectrum of opportunities where we can compete. It also
streamlines our business development efforts with respect to
institutional clients, retirement plan sponsors and high-net-worth
individuals and families. Our wealth business has and will
continue to be an important driver of noninterest income and
overall revenue diversity.”
Chief Financial Officer and Treasurer W. Jack
Plants II added, “Heading into the second half of the year, we are
maintaining a strong focus on deposit generation. We launched
a new marketing campaign this week and are beginning to see some of
our anticipated Banking-as-a-Service, or BaaS, deposits come
on. While we experienced continued margin compression in the
second quarter, it was at a more modest level than during the
linked quarter. We have observed a slowing of prepayments across
all asset classes; however, we continue to expect loan and
investment cash flow of approximately $1 billion over the next
12-months given the pace of loan originations during the first half
of 2023.”
Merger of Courier Capital and HNP
Capital
On May 1, 2023, the Company announced the
completion of the merger of its wholly-owned SEC-registered
investment advisory firms, under which HNP Capital merged with and
into Courier Capital. As one of the largest registered
investment advisory firms in Western New York, with assets under
management of approximately $2.75 billion at June 30, 2023, Courier
Capital provides customized investment management, financial
planning and consulting services to individuals and families,
businesses, institutions, non-profits and retirement plans.
Net Interest Income and Net Interest
Margin
Net interest income was $42.3 million for the
second quarter of 2023, an increase of $522 thousand from the first
quarter of 2023 and an increase of $740 thousand from the second
quarter of 2022.
Average interest-earning assets for the current
quarter were $5.69 billion, an increase of $205.8 million from the
first quarter of 2023 due to a $208.5 million increase in average
loans and a $29.6 million increase in the average balance of
Federal Reserve interest-earning cash, partially offset by a $32.3
million decrease in the average balance of investment securities.
Average interest-earning assets for the current quarter were $445.3
million higher than the second quarter of 2022 due to a $559.6
million increase in average loans and a $32.5 million increase in
the average balance of Federal Reserve interest-earning cash,
partially offset by a $146.9 million decrease in the average
balance of investment securities.
Average interest-bearing liabilities for the
current quarter were $4.43 billion, an increase of $247.5 million
from the first quarter of 2023, primarily due to a $149.4 million
increase in average short-term borrowings and a $124.5 million
increase in average time deposits, partially offset by a $31.5
million decrease in average interest-bearing demand deposits.
Average interest-bearing liabilities for the second quarter of 2023
were $489.5 million higher than the year-ago quarter, primarily due
to a $551.7 million increase in average time deposits and a $200.7
million increase in average short-term borrowings, partially offset
by a $222.9 million decrease in average savings and money market
accounts, and a $90.4 million decrease in average interest-bearing
demand deposits.
Net interest margin was 2.99% in the current
quarter as compared to 3.09% in the first quarter of 2023 and 3.19%
in the second quarter of 2022, primarily as a result of a shift in
the deposit mix from lower cost transactional accounts to higher
cost time deposits, as customers responded to the rising interest
rate environment, as well as seasonality and repricing within the
public deposit portfolio, partially offset by an increase in the
average yield on interest-earnings assets.
Noninterest Income
Noninterest income was $11.5 million for the
second quarter of 2023, an increase of $542 thousand from the first
quarter of 2023 and an increase of $106 thousand from the second
quarter of 2022.
- Service charges on deposits of $1.2 million reflected a $196
thousand increase from the linked first quarter of 2023, due in
part to seasonal consumer spending habits, and a $214 thousand
decrease from the year-ago period, due to a reduction in
nonsufficient funds fees as a result of January 2023 changes in the
Bank’s consumer overdraft program that align with trends in
community banking.
- Insurance income of $1.3 million was $759 thousand lower than
the first quarter of 2023 and $94 thousand higher than the second
quarter of 2022, with the linked quarter change largely due to
timing of contingent revenue earned in the first quarter each
year.
- Investment advisory income of $2.8 million was $104 thousand
lower than the first quarter of 2023 and $87 thousand lower than
the second quarter of 2022, primarily due to lower
transaction-based fees in the most recent period.
- Income from investments in limited partnerships of $469
thousand was $218 thousand higher than the first quarter of 2023
and $227 thousand higher than the second quarter of 2022. 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.
- Net gain on sale of loans held for sale was $122 thousand in
the current quarter compared to $112 thousand in the first quarter
of 2023 and $828 thousand in the second quarter of 2022, when the
Company recorded a $586 thousand gain related to the sale of a
$31.2 million portfolio of indirect loans.
- A net gain on tax credit investments of $489 thousand was
recognized in the current quarter related to tax credit investments
placed in service in the current and prior quarters. This net gain
includes the New York investment tax credits that are refundable,
partially offset by amortization of the tax credit
investments.
Noninterest Expense
Noninterest expense was $33.8 million in the
second quarter of 2023 compared to $33.7 million in the first
quarter of 2023 and $32.9 million in the second quarter of
2022.
- Salaries and employee benefits expense of $17.8 million was
$379 thousand lower than the first quarter of 2023 and $788
thousand higher than the second quarter of 2022. The linked quarter
change was primarily due to lower medical and dental claim
activity, while the year-over-year increase was primarily due to
annual merit increases.
- Occupancy and equipment expenses of $3.5 million were down $192
thousand and $477 thousand from the linked and year-ago periods,
respectively, primarily due to timing of maintenance and
repairs.
- Professional services expenses of $1.3 million were $222
thousand lower than the first quarter of 2023, due to the timing of
audit fees, and were flat with the second quarter of 2022.
- FDIC assessments expense of $1.2 million reflects increases of
$124 thousand and $618 thousand from the linked and year-ago
quarters, respectively, due in part to the impact of an increase in
base deposit insurance assessment rate schedules by two basis
points.
- Other expense of $4.0 million was $587 thousand higher than the
first quarter of 2023 and $1.0 million higher than the second
quarter of 2022. The linked quarter variance was driven in part by
interest charges related to collateral held for derivative
transactions. The year-over-year increase was the result of a
combination of factors including interest charges related to
collateral held for derivative transactions, the timing of deposit
account-related fraud charge-offs, higher insurance costs and the
impact of inflationary pressures.
- As previously disclosed, in the second quarter of 2022 the
Company recognized restructuring charges of $1.3 million in
connection with the write-down of real estate assets to fair market
value based upon then-existing purchase offers and current market
conditions for five locations that were closed in the second half
of 2020. There were no such restructuring charges in the first
quarter of 2023 and modest recoveries of $19 thousand in the second
quarter of 2023.
Income Taxes
Income tax expense was $2.4 million for the
second quarter of 2023 compared to $2.8 million in the first
quarter of 2023 and $3.9 million in the second quarter of 2022. The
Company recognized federal and state tax benefits related to tax
credit investments placed in service and/or amortized during the
second quarter of 2023, first quarter of 2023, and second quarter
of 2022, resulting in income tax expense reductions of $761
thousand, $584 thousand, and $426 thousand, respectively.
The effective tax rate was 14.4% for the second
quarter of 2023, 18.7% for the first quarter of 2023, and 19.8% for
the second quarter of 2022. The effective tax rate fluctuates on a
quarterly basis primarily due to the level of pre-tax earnings and
may 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 $6.14 billion at June 30,
2023, up $174.3 million from March 31, 2023, and up $573.1
million from June 30, 2022.
Investment securities were $1.07 billion at
June 30, 2023, down $53.5 million from March 31, 2023,
and down $189.9 million from June 30, 2022. The decline in the
linked quarter portfolio balance was driven by the use of portfolio
cash flow to fund loan originations. The decrease from
June 30, 2022 was primarily the result of a decrease in the
market value of the portfolio due to rising interest rates combined
with the use of portfolio cash flow to fund loan originations.
Total loans were $4.40 billion at June 30,
2023, up $154.5 million, or 3.6%, from March 31, 2023, and up
$633.8 million, or 16.8%, from June 30, 2022.
- Commercial business loans totaled $720.4 million, up $25.3
million, or 3.6%, from March 31, 2023, and up $109.3 million,
or 17.9%, from June 30, 2022.
- Commercial mortgage loans totaled $1.96 billion, up $119.7
million, or 6.5%, from March 31, 2023, and up $513.1 million,
or 35.4%, from June 30, 2022.
- Residential real estate loans totaled $611.2 million, up $19.4
million, or 3.3%, from March 31, 2023, and up $36.4 million,
or 6.3%, from June 30, 2022.
- Consumer indirect loans totaled $1.00 billion, down $21.2
million, or 2.1%, from March 31, 2023, and down $38.3 million,
or 3.7%, from June 30, 2022.
Total deposits were $5.03 billion at
June 30, 2023, $106.4 million lower than March 31, 2023,
and $214.3 million higher than June 30, 2022. The decrease
from March 31, 2023 was primarily the result of a seasonal
decrease in public deposits. The increase from June 30, 2022
was primarily driven by increases in reciprocal and brokered
deposits. Public deposit balances represented 20% of total deposits
at June 30, 2023, 23% at March 31, 2023 and 21% at
June 30, 2022.
Short-term borrowings were $374.0 million at
June 30, 2023, compared to $116.0 million at March 31,
2023 and $109.0 million at June 30, 2022. Short-term
borrowings and brokered deposits have historically been utilized to
manage the seasonality of public deposits.
Shareholders’ equity was $425.9 million at
June 30, 2023, compared to $422.8 million at March 31,
2023, and $425.8 million at June 30, 2022. Shareholders’
equity has been negatively impacted since 2022 by an increase in
accumulated other comprehensive loss associated with unrealized
losses in the available for sale securities portfolio. Management
believes the unrealized losses are temporary in nature, as they are
associated with the increase in interest rates. The securities
portfolio continues to generate cash flow and given the high
quality of the agency mortgage-backed securities portfolio,
management expects the bonds to ultimately mature at a terminal
value equivalent to par.
Common book value per share was $26.53 at
June 30, 2023, an increase of $0.15, or 0.6%, from $26.38 at
March 31, 2023, and a decrease of $0.11, or 0.4%, from $26.64
at June 30, 2022. Tangible common book value per share(1) was
$21.79 at June 30, 2023, an increase of $0.18, or 0.8%, from
$21.62 at March 31, 2023, and a decrease of $0.03, or 0.1%,
from $21.82 at June 30, 2022. The common equity to assets
ratio was 6.65% at June 30, 2023, compared to 6.80% at
March 31, 2023, and 7.34% at June 30, 2022. Tangible
common equity to tangible assets(1), or the TCE ratio, was 5.53%,
5.64% and 6.09% at June 30, 2023, March 31, 2023, and
June 30, 2022, respectively. The primary driver of variations
in all four measures for the comparable linked and year-ago periods
was the previously described changes in accumulated other
comprehensive loss.
During the second quarter of 2023, the Company
declared a common stock dividend of $0.30 per common share,
consistent with the linked quarter and representing an increase of
3.4% over the prior year quarter. The dividend returned 33.0% of
second quarter net income to common shareholders.
The Company’s regulatory capital ratios at
June 30, 2023 continued to exceed all regulatory capital
requirements to be considered well capitalized.
- Leverage Ratio was 8.08% compared to 8.19% and 8.20% at
March 31, 2023, and June 30, 2022, respectively.
- Common Equity Tier 1 Capital Ratio was 9.10% compared to 9.21%
and 9.91% at March 31, 2023, and June 30, 2022,
respectively.
- Tier 1 Capital Ratio was 9.43% compared to 9.55% and 10.29% at
March 31, 2023, and June 30, 2022, respectively.
- Total Risk-Based Capital Ratio was 11.77% compared to 11.93%
and 12.75% at March 31, 2023, and June 30, 2022,
respectively.
Credit Quality
Non-performing loans were $9.9 million, or 0.23%
of total loans, at June 30, 2023, as compared to $8.8 million,
or 0.21% of total loans, at March 31, 2023, and $6.5 million,
or 0.17% of total loans, at June 30, 2022. Net charge-offs
were $636 thousand, representing 0.06% of average loans on an
annualized basis, for the current quarter, as compared to net
charge-offs of $2.1 million, or an annualized 0.21% of average
loans, in the first quarter of 2023 and net recoveries of $1.0
million, or an annualized 0.11%, in the second quarter of
2022. As previously disclosed, during the second quarter of
2022, the Company recovered $2.0 million in connection with the
pay-off of a commercial loan that was downgraded to non-performing
status with a partial charge-off in the fourth quarter of 2021.
At June 30, 2023, the allowance for credit
losses on loans to total loans ratio was 1.13%, compared to 1.12%
at March 31, 2023, and 1.13% at June 30, 2022.
Provision for credit losses on loans was $2.9
million in the current quarter, compared to $4.2 million in the
first quarter of 2023 and $446 thousand in the second quarter of
2022. The allowance for unfunded commitments, also included in
provision for credit losses as required by the current expected
credit loss standard (“CECL”), increased by $287 thousand in the
second quarter of 2023, $11 thousand in the first quarter of 2023,
and $119 thousand in the second quarter of 2022. Provision
for credit losses for the second quarter of 2023 reflected the
impact of strong loan growth and a modest increase in the national
unemployment forecast, partially offset by low levels of net
charge-offs and a reduction in overall specific reserve
levels. In the second quarter of 2022, the loan loss
provision was impacted by the previously mentioned $2.0 million
commercial loan recovery.
The Company has remained strategically focused
on the importance of credit discipline, allocating what it believes
are the necessary resources to credit and risk management functions
as the loan portfolio has grown. The ratio of allowance for credit
losses on loans to non-performing loans was 503% at June 30,
2023, 540% at March 31, 2023, and 648% at June 30,
2022.
Subsequent Events
The Company is required, under generally
accepted accounting principles, to evaluate subsequent events
through the filing of its consolidated financial statements for the
quarter ended June 30, 2023, on Form 10-Q. As a result, the
Company will continue to evaluate the impact of any subsequent
events on critical accounting assumptions and estimates made as of
June 30, 2023, and will adjust amounts preliminarily reported,
if necessary.
Conference Call
The Company will host an earnings conference
call and audio webcast on July 28, 2023 at 8:30 a.m. Eastern Time.
The call will be hosted by Martin K. Birmingham, President and
Chief Executive Officer, and W. Jack Plants II, Chief Financial
Officer and Treasurer. The live webcast will be available in
listen-only mode on the Company’s website at
www.FISI-investors.com. Within the United States, listeners may
also access the call by dialing 1-833-470-1428 and providing the
access code 588237. The webcast replay will be available on the
Company’s website for at least 30 days.
About Financial Institutions,
Inc.
Financial Institutions, Inc. (NASDAQ: FISI) is
an innovative financial holding company with approximately $6.1
billion in assets offering banking, insurance and wealth management
products and services through a network of subsidiaries. Its Five
Star Bank subsidiary provides consumer and commercial banking and
lending services to individuals, municipalities and businesses
through its Western and Central New York branch network and its
Mid-Atlantic commercial loan production office serving the
Baltimore and Washington, D.C. region. SDN Insurance Agency, LLC
provides a broad range of insurance services to personal and
business clients, while Courier Capital, LLC offers customized
investment management, consulting and retirement plan services to
individuals, businesses, institutions, foundations and retirement
plans. Learn more at five-starbank.com and FISI-investors.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 “believe,”
"continue," “estimate,” “expect,” “forecast,” “intend,” “plan,”
“preliminary,” “should,” or “will.” 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:
changes in interest rates; inflation; changes in deposit flows and
the cost and availability of funds; the Company’s ability to
implement its strategic plan, including by expanding its commercial
lending footprint and integrating its acquisitions; 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; legal and regulatory proceedings and related matters,
including any action described in our reports filed with the SEC,
could adversely affect us and the banking industry in general; 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; and general economic and credit market conditions
nationally and regionally; and the macroeconomic volatility related
to the impact of the COVID-19 pandemic or global political unrest.
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 financial
measure.
For additional information contact:Kate
CroftDirector of Investor and External Relations(716)
817-5159klcroft@five-starbank.com
|
|
FINANCIAL
INSTITUTIONS, INC. Selected Financial Information
(Unaudited) (Amounts in thousands, except per share
amounts) |
|
|
|
|
|
2023 |
|
|
2022 |
|
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
September 30, |
|
|
June 30, |
|
SELECTED BALANCE SHEET
DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
180,248 |
|
|
$ |
139,974 |
|
|
$ |
130,466 |
|
|
$ |
118,581 |
|
|
$ |
109,705 |
|
Investment securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for sale |
|
|
912,122 |
|
|
|
945,442 |
|
|
|
954,371 |
|
|
|
965,531 |
|
|
|
1,057,018 |
|
Held-to-maturity, net |
|
|
159,893 |
|
|
|
180,052 |
|
|
|
188,975 |
|
|
|
197,538 |
|
|
|
204,933 |
|
Total investment securities |
|
|
1,072,015 |
|
|
|
1,125,494 |
|
|
|
1,143,346 |
|
|
|
1,163,069 |
|
|
|
1,261,951 |
|
Loans held for sale |
|
|
805 |
|
|
|
682 |
|
|
|
550 |
|
|
|
2,074 |
|
|
|
4,265 |
|
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business |
|
|
720,372 |
|
|
|
695,110 |
|
|
|
664,249 |
|
|
|
633,894 |
|
|
|
611,102 |
|
Commercial mortgage |
|
|
1,961,220 |
|
|
|
1,841,481 |
|
|
|
1,679,840 |
|
|
|
1,564,545 |
|
|
|
1,448,152 |
|
Residential real estate loans |
|
|
611,199 |
|
|
|
591,846 |
|
|
|
589,960 |
|
|
|
577,821 |
|
|
|
574,784 |
|
Residential real estate lines |
|
|
75,971 |
|
|
|
76,086 |
|
|
|
77,670 |
|
|
|
77,336 |
|
|
|
76,108 |
|
Consumer indirect |
|
|
1,000,982 |
|
|
|
1,022,202 |
|
|
|
1,023,620 |
|
|
|
997,423 |
|
|
|
1,039,251 |
|
Other consumer |
|
|
28,065 |
|
|
|
16,607 |
|
|
|
15,110 |
|
|
|
15,832 |
|
|
|
14,621 |
|
Total loans |
|
|
4,397,809 |
|
|
|
4,243,332 |
|
|
|
4,050,449 |
|
|
|
3,866,851 |
|
|
|
3,764,018 |
|
Allowance for credit losses - loans |
|
|
49,836 |
|
|
|
47,528 |
|
|
|
45,413 |
|
|
|
44,106 |
|
|
|
42,452 |
|
Total loans, net |
|
|
4,347,973 |
|
|
|
4,195,804 |
|
|
|
4,005,036 |
|
|
|
3,822,745 |
|
|
|
3,721,566 |
|
Total interest-earning
assets |
|
|
5,749,015 |
|
|
|
5,600,786 |
|
|
|
5,428,533 |
|
|
|
5,073,983 |
|
|
|
5,206,795 |
|
Goodwill and other intangible
assets, net |
|
|
72,950 |
|
|
|
73,180 |
|
|
|
73,414 |
|
|
|
73,653 |
|
|
|
73,897 |
|
Total assets |
|
|
6,141,298 |
|
|
|
5,966,992 |
|
|
|
5,797,272 |
|
|
|
5,624,482 |
|
|
|
5,568,198 |
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing demand |
|
|
1,022,788 |
|
|
|
1,067,011 |
|
|
|
1,139,214 |
|
|
|
1,135,125 |
|
|
|
1,114,460 |
|
Interest-bearing demand |
|
|
823,983 |
|
|
|
901,251 |
|
|
|
863,822 |
|
|
|
946,431 |
|
|
|
877,661 |
|
Savings and money market |
|
|
1,641,014 |
|
|
|
1,701,663 |
|
|
|
1,643,516 |
|
|
|
1,800,321 |
|
|
|
1,845,186 |
|
Time deposits |
|
|
1,547,076 |
|
|
|
1,471,382 |
|
|
|
1,282,872 |
|
|
|
1,023,277 |
|
|
|
983,209 |
|
Total deposits |
|
|
5,034,861 |
|
|
|
5,141,307 |
|
|
|
4,929,424 |
|
|
|
4,905,154 |
|
|
|
4,820,516 |
|
Short-term borrowings |
|
|
374,000 |
|
|
|
116,000 |
|
|
|
205,000 |
|
|
|
69,000 |
|
|
|
109,000 |
|
Long-term borrowings, net |
|
|
124,377 |
|
|
|
124,299 |
|
|
|
74,222 |
|
|
|
74,144 |
|
|
|
74,067 |
|
Total interest-bearing
liabilities |
|
|
4,510,450 |
|
|
|
4,314,595 |
|
|
|
4,069,432 |
|
|
|
3,913,173 |
|
|
|
3,889,123 |
|
Shareholders’ equity |
|
|
425,873 |
|
|
|
422,823 |
|
|
|
405,605 |
|
|
|
394,048 |
|
|
|
425,801 |
|
Common shareholders’
equity |
|
|
408,581 |
|
|
|
405,531 |
|
|
|
388,313 |
|
|
|
376,756 |
|
|
|
408,509 |
|
Tangible common equity
(1) |
|
|
335,631 |
|
|
|
332,351 |
|
|
|
314,899 |
|
|
|
303,103 |
|
|
|
334,612 |
|
Accumulated other
comprehensive loss |
|
$ |
(134,472 |
) |
|
$ |
(127,372 |
) |
|
$ |
(137,487 |
) |
|
$ |
(141,183 |
) |
|
$ |
(99,724 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding |
|
|
15,402 |
|
|
|
15,375 |
|
|
|
15,340 |
|
|
|
15,334 |
|
|
|
15,334 |
|
Treasury shares |
|
|
698 |
|
|
|
724 |
|
|
|
760 |
|
|
|
765 |
|
|
|
765 |
|
CAPITAL RATIOS AND PER
SHARE DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leverage ratio |
|
|
8.08 |
% |
|
|
8.19 |
% |
|
|
8.33 |
% |
|
|
8.35 |
% |
|
|
8.20 |
% |
Common equity Tier 1 capital
ratio |
|
|
9.10 |
% |
|
|
9.21 |
% |
|
|
9.42 |
% |
|
|
9.75 |
% |
|
|
9.91 |
% |
Tier 1 capital ratio |
|
|
9.43 |
% |
|
|
9.55 |
% |
|
|
9.78 |
% |
|
|
10.12 |
% |
|
|
10.29 |
% |
Total risk-based capital
ratio |
|
|
11.77 |
% |
|
|
11.93 |
% |
|
|
12.13 |
% |
|
|
12.53 |
% |
|
|
12.75 |
% |
Common equity to assets |
|
|
6.65 |
% |
|
|
6.80 |
% |
|
|
6.70 |
% |
|
|
6.70 |
% |
|
|
7.34 |
% |
Tangible common equity to
tangible assets (1) |
|
|
5.53 |
% |
|
|
5.64 |
% |
|
|
5.50 |
% |
|
|
5.46 |
% |
|
|
6.09 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common book value per
share |
|
$ |
26.53 |
|
|
$ |
26.38 |
|
|
$ |
25.31 |
|
|
$ |
24.57 |
|
|
$ |
26.64 |
|
Tangible common book value per
share (1) |
|
$ |
21.79 |
|
|
$ |
21.62 |
|
|
$ |
20.53 |
|
|
$ |
19.77 |
|
|
$ |
21.82 |
|
(1) |
See Appendix A — Reconciliation to Non-GAAP Financial Measures for
the computation of this non-GAAP financial measure. |
|
|
FINANCIAL
INSTITUTIONS, INC. Selected Financial Information
(Unaudited) (Amounts in thousands, except per share
amounts) |
|
|
|
|
|
Six Months Ended |
|
|
2023 |
|
|
2022 |
|
|
|
June 30, |
|
|
Second |
|
|
First |
|
|
Fourth |
|
|
Third |
|
|
Second |
|
|
|
2023 |
|
|
2022 |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
SELECTED INCOME
STATEMENT DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
$ |
134,886 |
|
|
$ |
87,627 |
|
|
$ |
71,115 |
|
|
$ |
63,771 |
|
|
$ |
57,805 |
|
|
$ |
50,675 |
|
|
$ |
45,276 |
|
Interest expense |
|
|
50,734 |
|
|
|
6,472 |
|
|
|
28,778 |
|
|
|
21,956 |
|
|
|
14,656 |
|
|
|
7,607 |
|
|
|
3,679 |
|
Net interest income |
|
|
84,152 |
|
|
|
81,155 |
|
|
|
42,337 |
|
|
|
41,815 |
|
|
|
43,149 |
|
|
|
43,068 |
|
|
|
41,597 |
|
Provision for credit
losses |
|
|
7,444 |
|
|
|
2,882 |
|
|
|
3,230 |
|
|
|
4,214 |
|
|
|
6,115 |
|
|
|
4,314 |
|
|
|
563 |
|
Net interest income after provision for credit losses |
|
|
76,708 |
|
|
|
78,273 |
|
|
|
39,107 |
|
|
|
37,601 |
|
|
|
37,034 |
|
|
|
38,754 |
|
|
|
41,034 |
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposits |
|
|
2,250 |
|
|
|
2,806 |
|
|
|
1,223 |
|
|
|
1,027 |
|
|
|
1,486 |
|
|
|
1,597 |
|
|
|
1,437 |
|
Insurance income |
|
|
3,415 |
|
|
|
3,331 |
|
|
|
1,328 |
|
|
|
2,087 |
|
|
|
1,462 |
|
|
|
1,571 |
|
|
|
1,234 |
|
Card interchange income |
|
|
4,046 |
|
|
|
4,055 |
|
|
|
2,107 |
|
|
|
1,939 |
|
|
|
2,074 |
|
|
|
2,076 |
|
|
|
2,103 |
|
Investment advisory |
|
|
5,742 |
|
|
|
5,947 |
|
|
|
2,819 |
|
|
|
2,923 |
|
|
|
2,824 |
|
|
|
2,722 |
|
|
|
2,906 |
|
Company owned life insurance |
|
|
1,947 |
|
|
|
1,702 |
|
|
|
953 |
|
|
|
994 |
|
|
|
875 |
|
|
|
2,965 |
|
|
|
869 |
|
Investments in limited partnerships |
|
|
720 |
|
|
|
1,037 |
|
|
|
469 |
|
|
|
251 |
|
|
|
191 |
|
|
|
65 |
|
|
|
242 |
|
Loan servicing |
|
|
260 |
|
|
|
244 |
|
|
|
114 |
|
|
|
146 |
|
|
|
124 |
|
|
|
139 |
|
|
|
135 |
|
Income from derivative instruments, net |
|
|
1,199 |
|
|
|
1,164 |
|
|
|
703 |
|
|
|
496 |
|
|
|
656 |
|
|
|
99 |
|
|
|
645 |
|
Net gain on sale of loans held for sale |
|
|
234 |
|
|
|
737 |
|
|
|
122 |
|
|
|
112 |
|
|
|
182 |
|
|
|
308 |
|
|
|
828 |
|
Net loss on investment securities |
|
|
- |
|
|
|
(15 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(15 |
) |
Net gain (loss) on other assets |
|
|
32 |
|
|
|
7 |
|
|
|
(7 |
) |
|
|
39 |
|
|
|
(1 |
) |
|
|
(22 |
) |
|
|
7 |
|
Net gain (loss) on tax credit investments |
|
|
288 |
|
|
|
(319 |
) |
|
|
489 |
|
|
|
(201 |
) |
|
|
(111 |
) |
|
|
(385 |
) |
|
|
(92 |
) |
Other |
|
|
2,257 |
|
|
|
1,986 |
|
|
|
1,146 |
|
|
|
1,111 |
|
|
|
1,175 |
|
|
|
1,517 |
|
|
|
1,061 |
|
Total noninterest income |
|
|
22,390 |
|
|
|
22,682 |
|
|
|
11,466 |
|
|
|
10,924 |
|
|
|
10,937 |
|
|
|
12,652 |
|
|
|
11,360 |
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
35,887 |
|
|
|
33,582 |
|
|
|
17,754 |
|
|
|
18,133 |
|
|
|
18,101 |
|
|
|
17,950 |
|
|
|
16,966 |
|
Occupancy and equipment |
|
|
7,268 |
|
|
|
7,771 |
|
|
|
3,538 |
|
|
|
3,730 |
|
|
|
3,539 |
|
|
|
3,793 |
|
|
|
4,015 |
|
Professional services |
|
|
2,768 |
|
|
|
2,925 |
|
|
|
1,273 |
|
|
|
1,495 |
|
|
|
1,420 |
|
|
|
1,247 |
|
|
|
1,269 |
|
Computer and data processing |
|
|
9,441 |
|
|
|
8,552 |
|
|
|
4,750 |
|
|
|
4,691 |
|
|
|
4,679 |
|
|
|
4,407 |
|
|
|
4,573 |
|
Supplies and postage |
|
|
963 |
|
|
|
1,010 |
|
|
|
473 |
|
|
|
490 |
|
|
|
493 |
|
|
|
440 |
|
|
|
469 |
|
FDIC assessments |
|
|
2,354 |
|
|
|
1,134 |
|
|
|
1,239 |
|
|
|
1,115 |
|
|
|
655 |
|
|
|
651 |
|
|
|
621 |
|
Advertising and promotions |
|
|
812 |
|
|
|
786 |
|
|
|
498 |
|
|
|
314 |
|
|
|
576 |
|
|
|
651 |
|
|
|
406 |
|
Amortization of intangibles |
|
|
464 |
|
|
|
503 |
|
|
|
230 |
|
|
|
234 |
|
|
|
239 |
|
|
|
244 |
|
|
|
249 |
|
Restructuring (recoveries) charges |
|
|
(19 |
) |
|
|
1,269 |
|
|
|
(19 |
) |
|
|
- |
|
|
|
350 |
|
|
|
- |
|
|
|
1,269 |
|
Other |
|
|
7,505 |
|
|
|
5,490 |
|
|
|
4,046 |
|
|
|
3,459 |
|
|
|
3,461 |
|
|
|
3,444 |
|
|
|
3,050 |
|
Total noninterest expense |
|
|
67,443 |
|
|
|
63,022 |
|
|
|
33,782 |
|
|
|
33,661 |
|
|
|
33,513 |
|
|
|
32,827 |
|
|
|
32,887 |
|
Income before income taxes |
|
|
31,655 |
|
|
|
37,933 |
|
|
|
16,791 |
|
|
|
14,864 |
|
|
|
14,458 |
|
|
|
18,579 |
|
|
|
19,507 |
|
Income tax expense |
|
|
5,193 |
|
|
|
7,302 |
|
|
|
2,418 |
|
|
|
2,775 |
|
|
|
2,370 |
|
|
|
4,725 |
|
|
|
3,859 |
|
Net income |
|
|
26,462 |
|
|
|
30,631 |
|
|
|
14,373 |
|
|
|
12,089 |
|
|
|
12,088 |
|
|
|
13,854 |
|
|
|
15,648 |
|
Preferred stock dividends |
|
|
729 |
|
|
|
729 |
|
|
|
364 |
|
|
|
365 |
|
|
|
364 |
|
|
|
365 |
|
|
|
365 |
|
Net income available to common
shareholders |
|
$ |
25,733 |
|
|
$ |
29,902 |
|
|
$ |
14,009 |
|
|
$ |
11,724 |
|
|
$ |
11,724 |
|
|
$ |
13,489 |
|
|
$ |
15,283 |
|
FINANCIAL
RATIOS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share –
basic |
|
$ |
1.68 |
|
|
$ |
1.94 |
|
|
$ |
0.91 |
|
|
$ |
0.76 |
|
|
$ |
0.76 |
|
|
$ |
0.88 |
|
|
$ |
1.00 |
|
Earnings per share –
diluted |
|
$ |
1.67 |
|
|
$ |
1.93 |
|
|
$ |
0.91 |
|
|
$ |
0.76 |
|
|
$ |
0.76 |
|
|
$ |
0.88 |
|
|
$ |
0.99 |
|
Cash dividends declared on
common stock |
|
$ |
0.60 |
|
|
$ |
0.58 |
|
|
$ |
0.30 |
|
|
$ |
0.30 |
|
|
$ |
0.29 |
|
|
$ |
0.29 |
|
|
$ |
0.29 |
|
Common dividend payout
ratio |
|
|
35.71 |
% |
|
|
29.90 |
% |
|
|
32.97 |
% |
|
|
39.47 |
% |
|
|
38.16 |
% |
|
|
32.95 |
% |
|
|
29.00 |
% |
Dividend yield
(annualized) |
|
|
7.69 |
% |
|
|
4.50 |
% |
|
|
7.64 |
% |
|
|
6.31 |
% |
|
|
4.72 |
% |
|
|
4.78 |
% |
|
|
4.47 |
% |
Return on average assets
(annualized) |
|
|
0.90 |
% |
|
|
1.11 |
% |
|
|
0.95 |
% |
|
|
0.84 |
% |
|
|
0.85 |
% |
|
|
0.98 |
% |
|
|
1.12 |
% |
Return on average equity
(annualized) |
|
|
12.60 |
% |
|
|
13.32 |
% |
|
|
13.43 |
% |
|
|
11.73 |
% |
|
|
11.92 |
% |
|
|
12.55 |
% |
|
|
14.40 |
% |
Return on average common
equity (annualized) |
|
|
12.77 |
% |
|
|
13.51 |
% |
|
|
13.64 |
% |
|
|
11.87 |
% |
|
|
12.08 |
% |
|
|
12.72 |
% |
|
|
14.64 |
% |
Return on average tangible
common equity (annualized) (1) |
|
|
15.58 |
% |
|
|
16.20 |
% |
|
|
16.58 |
% |
|
|
14.53 |
% |
|
|
14.94 |
% |
|
|
15.43 |
% |
|
|
17.79 |
% |
Efficiency ratio (2) |
|
|
63.17 |
% |
|
|
60.51 |
% |
|
|
62.66 |
% |
|
|
63.68 |
% |
|
|
61.82 |
% |
|
|
58.78 |
% |
|
|
61.91 |
% |
Effective tax rate |
|
|
16.4 |
% |
|
|
19.2 |
% |
|
|
14.4 |
% |
|
|
18.7 |
% |
|
|
16.4 |
% |
|
|
25.4 |
% |
|
|
19.8 |
% |
(1) |
See Appendix A – Reconciliation to Non-GAAP Financial Measures for
the computation of this non-GAAP financial measure. |
(2) |
The efficiency ratio is calculated by dividing noninterest expense
by net revenue, i.e., the sum of net interest income (fully taxable
equivalent) and noninterest income before net gains on investment
securities. This is a banking industry measure not required by
GAAP. |
|
|
FINANCIAL
INSTITUTIONS, INC. Selected Financial Information
(Unaudited)(Amounts in thousands) |
|
|
|
|
|
Six Months Ended |
|
|
2023 |
|
|
2022 |
|
|
|
June 30, |
|
|
Second |
|
|
First |
|
|
Fourth |
|
|
Third |
|
|
Second |
|
|
|
2023 |
|
|
2022 |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
SELECTED AVERAGE
BALANCES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal funds sold and interest-earning deposits |
|
$ |
78,214 |
|
|
$ |
52,538 |
|
|
$ |
92,954 |
|
|
$ |
63,311 |
|
|
$ |
49,073 |
|
|
$ |
42,183 |
|
|
$ |
60,429 |
|
Investment securities (1) |
|
|
1,285,254 |
|
|
|
1,417,996 |
|
|
|
1,269,181 |
|
|
|
1,301,506 |
|
|
|
1,332,776 |
|
|
|
1,369,166 |
|
|
|
1,416,065 |
|
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business |
|
|
690,360 |
|
|
|
627,241 |
|
|
|
710,145 |
|
|
|
670,354 |
|
|
|
636,470 |
|
|
|
623,916 |
|
|
|
626,574 |
|
Commercial mortgage |
|
|
1,828,807 |
|
|
|
1,430,916 |
|
|
|
1,911,729 |
|
|
|
1,744,963 |
|
|
|
1,633,298 |
|
|
|
1,514,138 |
|
|
|
1,429,910 |
|
Residential real estate loans |
|
|
594,217 |
|
|
|
578,994 |
|
|
|
598,638 |
|
|
|
589,747 |
|
|
|
582,352 |
|
|
|
577,094 |
|
|
|
576,990 |
|
Residential real estate lines |
|
|
76,408 |
|
|
|
77,167 |
|
|
|
76,191 |
|
|
|
76,627 |
|
|
|
77,342 |
|
|
|
76,853 |
|
|
|
76,730 |
|
Consumer indirect |
|
|
1,017,814 |
|
|
|
1,007,791 |
|
|
|
1,011,338 |
|
|
|
1,024,362 |
|
|
|
1,003,728 |
|
|
|
1,012,787 |
|
|
|
1,045,720 |
|
Other consumer |
|
|
18,439 |
|
|
|
14,356 |
|
|
|
21,686 |
|
|
|
15,156 |
|
|
|
15,175 |
|
|
|
14,648 |
|
|
|
14,183 |
|
Total loans |
|
|
4,226,045 |
|
|
|
3,736,465 |
|
|
|
4,329,727 |
|
|
|
4,121,209 |
|
|
|
3,948,365 |
|
|
|
3,819,436 |
|
|
|
3,770,107 |
|
Total interest-earning
assets |
|
|
5,589,513 |
|
|
|
5,206,999 |
|
|
|
5,691,862 |
|
|
|
5,486,026 |
|
|
|
5,330,214 |
|
|
|
5,230,785 |
|
|
|
5,246,601 |
|
Goodwill and other intangible
assets, net |
|
|
73,194 |
|
|
|
74,161 |
|
|
|
73,079 |
|
|
|
73,312 |
|
|
|
73,547 |
|
|
|
73,791 |
|
|
|
74,037 |
|
Total assets |
|
|
5,949,101 |
|
|
|
5,579,371 |
|
|
|
6,053,258 |
|
|
|
5,843,786 |
|
|
|
5,667,331 |
|
|
|
5,599,964 |
|
|
|
5,598,217 |
|
Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand |
|
|
864,235 |
|
|
|
931,253 |
|
|
|
848,552 |
|
|
|
880,093 |
|
|
|
923,374 |
|
|
|
854,015 |
|
|
|
938,995 |
|
Savings and money market |
|
|
1,662,598 |
|
|
|
1,915,344 |
|
|
|
1,660,148 |
|
|
|
1,665,075 |
|
|
|
1,764,230 |
|
|
|
1,817,413 |
|
|
|
1,882,998 |
|
Time deposits |
|
|
1,444,705 |
|
|
|
941,448 |
|
|
|
1,506,592 |
|
|
|
1,382,131 |
|
|
|
1,116,135 |
|
|
|
1,031,162 |
|
|
|
954,862 |
|
Short-term borrowings |
|
|
220,641 |
|
|
|
59,649 |
|
|
|
294,923 |
|
|
|
145,533 |
|
|
|
87,783 |
|
|
|
136,610 |
|
|
|
94,242 |
|
Long-term borrowings, net |
|
|
119,318 |
|
|
|
73,980 |
|
|
|
124,329 |
|
|
|
114,251 |
|
|
|
74,175 |
|
|
|
74,096 |
|
|
|
74,019 |
|
Total interest-bearing liabilities |
|
|
4,311,497 |
|
|
|
3,921,674 |
|
|
|
4,434,544 |
|
|
|
4,187,083 |
|
|
|
3,965,697 |
|
|
|
3,913,296 |
|
|
|
3,945,116 |
|
Noninterest-bearing demand
deposits |
|
|
1,047,121 |
|
|
|
1,090,835 |
|
|
|
1,029,681 |
|
|
|
1,064,754 |
|
|
|
1,123,223 |
|
|
|
1,115,759 |
|
|
|
1,098,084 |
|
Total deposits |
|
|
5,018,659 |
|
|
|
4,878,880 |
|
|
|
5,044,973 |
|
|
|
4,992,053 |
|
|
|
4,926,962 |
|
|
|
4,818,349 |
|
|
|
4,874,939 |
|
Total liabilities |
|
|
5,525,476 |
|
|
|
5,115,637 |
|
|
|
5,624,006 |
|
|
|
5,425,851 |
|
|
|
5,265,134 |
|
|
|
5,162,057 |
|
|
|
5,162,293 |
|
Shareholders’ equity |
|
|
423,625 |
|
|
|
463,734 |
|
|
|
429,252 |
|
|
|
417,935 |
|
|
|
402,197 |
|
|
|
437,907 |
|
|
|
435,924 |
|
Common equity |
|
|
406,333 |
|
|
|
446,442 |
|
|
|
411,960 |
|
|
|
400,643 |
|
|
|
384,905 |
|
|
|
420,615 |
|
|
|
418,632 |
|
Tangible common equity
(2) |
|
$ |
333,139 |
|
|
$ |
372,281 |
|
|
$ |
338,881 |
|
|
$ |
327,331 |
|
|
$ |
311,358 |
|
|
$ |
346,824 |
|
|
$ |
344,595 |
|
Common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
15,356 |
|
|
|
15,440 |
|
|
|
15,372 |
|
|
|
15,348 |
|
|
|
15,330 |
|
|
|
15,329 |
|
|
|
15,306 |
|
Diluted |
|
|
15,427 |
|
|
|
15,532 |
|
|
|
15,413 |
|
|
|
15,435 |
|
|
|
15,413 |
|
|
|
15,393 |
|
|
|
15,385 |
|
SELECTED AVERAGE
YIELDS: (Tax equivalent basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities |
|
|
1.89 |
% |
|
|
1.78 |
% |
|
|
1.89 |
% |
|
|
1.90 |
% |
|
|
1.88 |
% |
|
|
1.81 |
% |
|
|
1.82 |
% |
Loans |
|
|
5.78 |
% |
|
|
4.05 |
% |
|
|
5.93 |
% |
|
|
5.61 |
% |
|
|
5.15 |
% |
|
|
4.62 |
% |
|
|
4.13 |
% |
Total interest-earning
assets |
|
|
4.87 |
% |
|
|
3.40 |
% |
|
|
5.02 |
% |
|
|
4.71 |
% |
|
|
4.32 |
% |
|
|
3.86 |
% |
|
|
3.47 |
% |
Interest-bearing demand |
|
|
0.71 |
% |
|
|
0.12 |
% |
|
|
0.77 |
% |
|
|
0.64 |
% |
|
|
0.52 |
% |
|
|
0.18 |
% |
|
|
0.12 |
% |
Savings and money market |
|
|
1.80 |
% |
|
|
0.20 |
% |
|
|
2.00 |
% |
|
|
1.60 |
% |
|
|
1.20 |
% |
|
|
0.56 |
% |
|
|
0.23 |
% |
Time deposits |
|
|
3.56 |
% |
|
|
0.35 |
% |
|
|
3.76 |
% |
|
|
3.33 |
% |
|
|
2.31 |
% |
|
|
1.12 |
% |
|
|
0.41 |
% |
Short-term borrowings |
|
|
3.99 |
% |
|
|
0.95 |
% |
|
|
4.30 |
% |
|
|
3.35 |
% |
|
|
2.48 |
% |
|
|
1.95 |
% |
|
|
1.07 |
% |
Long-term borrowings, net |
|
|
5.07 |
% |
|
|
5.73 |
% |
|
|
5.04 |
% |
|
|
5.11 |
% |
|
|
5.72 |
% |
|
|
5.72 |
% |
|
|
5.73 |
% |
Total interest-bearing
liabilities |
|
|
2.37 |
% |
|
|
0.33 |
% |
|
|
2.60 |
% |
|
|
2.12 |
% |
|
|
1.47 |
% |
|
|
0.77 |
% |
|
|
0.37 |
% |
Net interest rate spread |
|
|
2.50 |
% |
|
|
3.07 |
% |
|
|
2.42 |
% |
|
|
2.59 |
% |
|
|
2.85 |
% |
|
|
3.09 |
% |
|
|
3.10 |
% |
Net interest margin |
|
|
3.04 |
% |
|
|
3.15 |
% |
|
|
2.99 |
% |
|
|
3.09 |
% |
|
|
3.23 |
% |
|
|
3.28 |
% |
|
|
3.19 |
% |
(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 financial measure. |
|
|
FINANCIAL
INSTITUTIONS, INC. Selected Financial Information
(Unaudited) (Amounts in thousands) |
|
|
|
|
|
Six Months Ended |
|
|
2023 |
|
|
2022 |
|
|
|
June 30, |
|
|
Second |
|
|
First |
|
|
Fourth |
|
|
Third |
|
|
Second |
|
|
|
2023 |
|
|
2022 |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
ASSET QUALITY
DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Credit
Losses - Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
$ |
45,413 |
|
|
$ |
39,676 |
|
|
$ |
47,528 |
|
|
$ |
45,413 |
|
|
$ |
44,106 |
|
|
$ |
42,452 |
|
|
$ |
40,966 |
|
Net loan charge-offs
(recoveries): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business |
|
|
(91 |
) |
|
|
53 |
|
|
|
33 |
|
|
|
(124 |
) |
|
|
(21 |
) |
|
|
(96 |
) |
|
|
90 |
|
Commercial mortgage |
|
|
14 |
|
|
|
(2,019 |
) |
|
|
16 |
|
|
|
(2 |
) |
|
|
1,167 |
|
|
|
(1 |
) |
|
|
(2,018 |
) |
Residential real estate loans |
|
|
71 |
|
|
|
41 |
|
|
|
13 |
|
|
|
58 |
|
|
|
242 |
|
|
|
(4 |
) |
|
|
46 |
|
Residential real estate lines |
|
|
41 |
|
|
|
(17 |
) |
|
|
25 |
|
|
|
16 |
|
|
|
(19 |
) |
|
|
35 |
|
|
|
(12 |
) |
Consumer indirect |
|
|
2,138 |
|
|
|
1,197 |
|
|
|
300 |
|
|
|
1,838 |
|
|
|
1,451 |
|
|
|
1,890 |
|
|
|
647 |
|
Other consumer |
|
|
552 |
|
|
|
492 |
|
|
|
249 |
|
|
|
303 |
|
|
|
518 |
|
|
|
329 |
|
|
|
207 |
|
Total net charge-offs (recoveries) |
|
|
2,725 |
|
|
|
(253 |
) |
|
|
636 |
|
|
|
2,089 |
|
|
|
3,338 |
|
|
|
2,153 |
|
|
|
(1,040 |
) |
Provision for credit losses -
loans |
|
|
7,148 |
|
|
|
2,523 |
|
|
|
2,944 |
|
|
|
4,204 |
|
|
|
4,645 |
|
|
|
3,807 |
|
|
|
446 |
|
Ending balance |
|
$ |
49,836 |
|
|
$ |
42,452 |
|
|
$ |
49,836 |
|
|
$ |
47,528 |
|
|
$ |
45,413 |
|
|
$ |
44,106 |
|
|
$ |
42,452 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs
(recoveries) to average loans (annualized): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business |
|
|
-0.03 |
% |
|
|
0.02 |
% |
|
|
0.02 |
% |
|
|
-0.08 |
% |
|
|
-0.01 |
% |
|
|
-0.06 |
% |
|
|
0.06 |
% |
Commercial mortgage |
|
|
0.00 |
% |
|
|
-0.28 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
|
|
0.28 |
% |
|
|
0.00 |
% |
|
|
-0.57 |
% |
Residential real estate loans |
|
|
0.02 |
% |
|
|
0.01 |
% |
|
|
0.01 |
% |
|
|
0.04 |
% |
|
|
0.16 |
% |
|
|
0.00 |
% |
|
|
0.03 |
% |
Residential real estate lines |
|
|
0.11 |
% |
|
|
-0.04 |
% |
|
|
0.13 |
% |
|
|
0.09 |
% |
|
|
-0.10 |
% |
|
|
0.18 |
% |
|
|
-0.06 |
% |
Consumer indirect |
|
|
0.42 |
% |
|
|
0.24 |
% |
|
|
0.12 |
% |
|
|
0.73 |
% |
|
|
0.57 |
% |
|
|
0.74 |
% |
|
|
0.25 |
% |
Other consumer |
|
|
6.04 |
% |
|
|
6.91 |
% |
|
|
4.62 |
% |
|
|
8.10 |
% |
|
|
13.57 |
% |
|
|
8.90 |
% |
|
|
5.86 |
% |
Total loans |
|
|
0.13 |
% |
|
|
-0.01 |
% |
|
|
0.06 |
% |
|
|
0.21 |
% |
|
|
0.34 |
% |
|
|
0.22 |
% |
|
|
-0.11 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
information (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business |
|
$ |
415 |
|
|
$ |
422 |
|
|
$ |
415 |
|
|
$ |
334 |
|
|
$ |
340 |
|
|
$ |
1,358 |
|
|
$ |
422 |
|
Commercial mortgage |
|
|
2,477 |
|
|
|
836 |
|
|
|
2,477 |
|
|
|
2,550 |
|
|
|
2,564 |
|
|
|
843 |
|
|
|
836 |
|
Residential real estate loans |
|
|
3,820 |
|
|
|
2,738 |
|
|
|
3,820 |
|
|
|
3,267 |
|
|
|
4,071 |
|
|
|
3,550 |
|
|
|
2,738 |
|
Residential real estate lines |
|
|
208 |
|
|
|
160 |
|
|
|
208 |
|
|
|
159 |
|
|
|
142 |
|
|
|
119 |
|
|
|
160 |
|
Consumer indirect |
|
|
2,982 |
|
|
|
2,389 |
|
|
|
2,982 |
|
|
|
2,487 |
|
|
|
3,079 |
|
|
|
2,666 |
|
|
|
2,389 |
|
Other consumer |
|
|
5 |
|
|
|
3 |
|
|
|
5 |
|
|
|
4 |
|
|
|
2 |
|
|
|
- |
|
|
|
3 |
|
Total non-performing loans |
|
|
9,907 |
|
|
|
6,548 |
|
|
|
9,907 |
|
|
|
8,801 |
|
|
|
10,198 |
|
|
|
8,536 |
|
|
|
6,548 |
|
Foreclosed assets |
|
|
163 |
|
|
|
- |
|
|
|
163 |
|
|
|
101 |
|
|
|
19 |
|
|
|
- |
|
|
|
- |
|
Total non-performing assets |
|
$ |
10,070 |
|
|
$ |
6,548 |
|
|
$ |
10,070 |
|
|
$ |
8,902 |
|
|
$ |
10,217 |
|
|
$ |
8,536 |
|
|
$ |
6,548 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-performing
loans to total loans |
|
|
0.23 |
% |
|
|
0.17 |
% |
|
|
0.23 |
% |
|
|
0.21 |
% |
|
|
0.25 |
% |
|
|
0.22 |
% |
|
|
0.17 |
% |
Total non-performing
assets to total assets |
|
|
0.16 |
% |
|
|
0.11 |
% |
|
|
0.16 |
% |
|
|
0.15 |
% |
|
|
0.18 |
% |
|
|
0.15 |
% |
|
|
0.12 |
% |
Allowance for credit losses -
loans to total loans |
|
|
1.13 |
% |
|
|
1.13 |
% |
|
|
1.13 |
% |
|
|
1.12 |
% |
|
|
1.12 |
% |
|
|
1.14 |
% |
|
|
1.13 |
% |
Allowance for credit losses -
loans to non-performing loans |
|
|
503 |
% |
|
|
648 |
% |
|
|
503 |
% |
|
|
540 |
% |
|
|
445 |
% |
|
|
517 |
% |
|
|
648 |
% |
|
|
FINANCIAL INSTITUTIONS, INC. Appendix A — Reconciliation to
Non-GAAP Financial Measures (Unaudited) (In thousands,
except per share amounts) |
|
|
|
|
|
Six Months Ended |
|
|
2023 |
|
|
2022 |
|
|
|
June 30, |
|
|
Second |
|
|
First |
|
|
Fourth |
|
|
Third |
|
|
Second |
|
|
|
2023 |
|
|
2022 |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
Ending tangible
assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
|
|
|
|
|
$ |
6,141,298 |
|
|
$ |
5,966,992 |
|
|
$ |
5,797,272 |
|
|
$ |
5,624,482 |
|
|
$ |
5,568,198 |
|
Less: Goodwill and other
intangible assets, net |
|
|
|
|
|
|
|
|
72,950 |
|
|
|
73,180 |
|
|
|
73,414 |
|
|
|
73,653 |
|
|
|
73,897 |
|
Tangible assets |
|
|
|
|
|
|
|
$ |
6,068,348 |
|
|
$ |
5,893,812 |
|
|
$ |
5,723,858 |
|
|
$ |
5,550,829 |
|
|
$ |
5,494,301 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending tangible common
equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shareholders’
equity |
|
|
|
|
|
|
|
$ |
408,581 |
|
|
$ |
405,531 |
|
|
$ |
388,313 |
|
|
$ |
376,756 |
|
|
$ |
408,509 |
|
Less: Goodwill and other
intangible assets, net |
|
|
|
|
|
|
|
|
72,950 |
|
|
|
73,180 |
|
|
|
73,414 |
|
|
|
73,653 |
|
|
|
73,897 |
|
Tangible common equity |
|
|
|
|
|
|
|
$ |
335,631 |
|
|
$ |
332,351 |
|
|
$ |
314,899 |
|
|
$ |
303,103 |
|
|
$ |
334,612 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity to
tangible assets (1) |
|
|
|
|
|
|
|
|
5.53 |
% |
|
|
5.64 |
% |
|
|
5.50 |
% |
|
|
5.46 |
% |
|
|
6.09 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding |
|
|
|
|
|
|
|
|
15,402 |
|
|
|
15,375 |
|
|
|
15,340 |
|
|
|
15,334 |
|
|
|
15,334 |
|
Tangible common book
value per share (2) |
|
|
|
|
|
|
|
$ |
21.79 |
|
|
$ |
21.62 |
|
|
$ |
20.53 |
|
|
$ |
19.77 |
|
|
$ |
21.82 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average tangible
assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets |
|
$ |
5,949,101 |
|
|
$ |
5,579,371 |
|
|
$ |
6,053,258 |
|
|
$ |
5,843,786 |
|
|
$ |
5,667,331 |
|
|
$ |
5,599,964 |
|
|
$ |
5,598,217 |
|
Less: Average goodwill and
other intangible assets, net |
|
|
73,194 |
|
|
|
74,161 |
|
|
|
73,079 |
|
|
|
73,312 |
|
|
|
73,547 |
|
|
|
73,791 |
|
|
|
74,037 |
|
Average tangible assets |
|
$ |
5,875,907 |
|
|
$ |
5,505,210 |
|
|
$ |
5,980,179 |
|
|
$ |
5,770,474 |
|
|
$ |
5,593,784 |
|
|
$ |
5,526,173 |
|
|
$ |
5,524,180 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average tangible
common equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common equity |
|
$ |
406,333 |
|
|
$ |
446,442 |
|
|
$ |
411,960 |
|
|
$ |
400,643 |
|
|
$ |
384,905 |
|
|
$ |
420,615 |
|
|
$ |
418,632 |
|
Less: Average goodwill and
other intangible assets, net |
|
|
73,194 |
|
|
|
74,161 |
|
|
|
73,079 |
|
|
|
73,312 |
|
|
|
73,547 |
|
|
|
73,791 |
|
|
|
74,037 |
|
Average tangible common
equity |
|
$ |
333,139 |
|
|
$ |
372,281 |
|
|
$ |
338,881 |
|
|
$ |
327,331 |
|
|
$ |
311,358 |
|
|
$ |
346,824 |
|
|
$ |
344,595 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common
shareholders |
|
$ |
25,733 |
|
|
$ |
29,902 |
|
|
$ |
14,009 |
|
|
$ |
11,724 |
|
|
$ |
11,724 |
|
|
$ |
13,489 |
|
|
$ |
15,283 |
|
Return on average tangible
common equity (3) |
|
|
15.58 |
% |
|
|
16.20 |
% |
|
|
16.58 |
% |
|
|
14.53 |
% |
|
|
14.94 |
% |
|
|
15.43 |
% |
|
|
17.79 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax pre-provision
income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
26,462 |
|
|
$ |
30,631 |
|
|
$ |
14,373 |
|
|
$ |
12,089 |
|
|
$ |
12,088 |
|
|
$ |
13,854 |
|
|
$ |
15,648 |
|
Add: Income tax expense |
|
|
5,193 |
|
|
|
7,302 |
|
|
|
2,418 |
|
|
|
2,775 |
|
|
|
2,370 |
|
|
|
4,725 |
|
|
|
3,859 |
|
Add: Provision for credit
losses |
|
|
7,444 |
|
|
|
2,882 |
|
|
|
3,230 |
|
|
|
4,214 |
|
|
|
6,115 |
|
|
|
4,314 |
|
|
|
563 |
|
Pre-tax pre-provision
income |
|
$ |
39,099 |
|
|
$ |
40,815 |
|
|
$ |
20,021 |
|
|
$ |
19,078 |
|
|
$ |
20,573 |
|
|
$ |
22,893 |
|
|
$ |
20,070 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring (recoveries) charges |
|
|
(19 |
) |
|
|
1,269 |
|
|
|
(19 |
) |
|
|
- |
|
|
|
350 |
|
|
|
- |
|
|
|
1,269 |
|
Enhancement from COLI surrender and redeployment |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,997 |
) |
|
|
- |
|
Adjusted pre-tax pre-provision
income |
|
$ |
39,080 |
|
|
$ |
42,084 |
|
|
$ |
20,002 |
|
|
$ |
19,078 |
|
|
$ |
20,923 |
|
|
$ |
20,896 |
|
|
$ |
21,339 |
|
Less: Paycheck Protection
Program "PPP" accretion interest income and fees |
|
|
(16 |
) |
|
|
(1,881 |
) |
|
|
(8 |
) |
|
|
(8 |
) |
|
|
(78 |
) |
|
|
(312 |
) |
|
|
(809 |
) |
Pre-PPP adjusted pre-tax
pre-provision income |
|
$ |
39,064 |
|
|
$ |
40,203 |
|
|
$ |
19,994 |
|
|
$ |
19,070 |
|
|
$ |
20,845 |
|
|
$ |
20,584 |
|
|
$ |
20,530 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans excluding
PPP loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans |
|
|
|
|
|
|
|
$ |
4,397,809 |
|
|
$ |
4,243,332 |
|
|
$ |
4,050,449 |
|
|
$ |
3,866,851 |
|
|
$ |
3,764,018 |
|
Less: Total PPP loans |
|
|
|
|
|
|
|
|
1,032 |
|
|
|
1,094 |
|
|
|
1,161 |
|
|
|
2,783 |
|
|
|
8,910 |
|
Total loans excluding PPP
loans |
|
|
|
|
|
|
|
$ |
4,396,777 |
|
|
$ |
4,242,238 |
|
|
$ |
4,049,288 |
|
|
$ |
3,864,068 |
|
|
$ |
3,755,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses -
loans |
|
|
|
|
|
|
|
$ |
49,836 |
|
|
$ |
47,528 |
|
|
$ |
45,413 |
|
|
$ |
44,106 |
|
|
$ |
42,452 |
|
Allowance for credit losses -
loans to total loans excluding PPP loans (4) |
|
|
|
|
|
|
|
|
1.13 |
% |
|
|
1.12 |
% |
|
|
1.12 |
% |
|
|
1.14 |
% |
|
|
1.13 |
% |
(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. |
(4) |
Allowance for credit losses – loans divided by total loans
excluding PPP loans. |
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