 Delivering
On Our
Promise
NASDAQ: FISI
Sterne Agee
Financial Institutions Investor Conference
February 12-14, 2014
Exhibit 99.1 |
 Forward Looking Statements
2
Statements contained in this presentation which are not historical
facts and which pertain to future operating results of Financial
Institutions, Inc. and its subsidiaries constitute “forward
looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward looking
statements involve significant risks and uncertainties. We refer
you to the documents the Company files from time to time with
the Securities and Exchange Commission, specifically the Company’s last
filed Form 10-K and Form 10-Q. These documents contain and
identify important factors that could cause actual results to
differ materially from those contained in our projections or
forward looking statements. The Company assumes no obligation to
update any information presented herein. |
 Key Investment Considerations
3
Experienced leadership
Attractive footprint in Upstate NY, uniquely positioned to seize
market opportunities
…and Delivering on our Promise to All Stakeholders
Sustainable, scalable business model
Effective enterprise risk management
Solid capital structure
Investments in people and infrastructure
Consistent, strong operating results
and favorable trends
Low cost and streamlined
operating emphasis
Positioned
to
Achieve
Long
Term
Growth… |
 Martin K. Birmingham
President & CEO
Kevin B. Klotzbach
EVP, CFO & Treasurer |
 Who We Are
5
Regional community bank headquartered in
Warsaw, NY with $2.9 billion in assets
10,000 square-mile operating footprint with 50
banking locations in 15 contiguous counties
concentrated in Upstate NY
Top 20 bank of those headquartered in NY based
on asset size
Experienced management team with extensive
market knowledge
Franchise is a diversified mix of consumer and
business customers, products and revenue
sources; generating consistent, strong operating
results
Supplemental to banking business, Five Star
Investment Services, offers products and services
in:
-
Brokerage
-
Investment advisory services
Assets:
Loans:
Deposits:
Revenue:
FTE’s:
Shareholder’s Equity:
Market Capitalization:
Annualized Dividend:
Dividend Yield:
NASDAQ:
# Analyst Coverage:
$2.93 billion
$1.83 billion
$2.32 billion
$116 million
+600
$255 million
$312 million
$0.76
3.37%
FISI
3
Corporate Overview
Key Corporate Statistics
Note: Financials as of December 31, 2013. Market data as of
1/22/2014. |
 Management Team
6
Average Years:
14
27
Name
Title
Years with
FISI
Years in
Banking
Martin K. Birmingham
President & CEO
8
24
Richard J. Harrison
EVP, Chief Operating Officer
10
44
Jeffrey P. Kenefick
EVP, Commercial Banking
7
24
Kevin B. Klotzbach
EVP, Chief Financial Officer
12
30
R. Mitchell McLaughlin
EVP, Chief Information Officer
32
32
Kenneth V. Winn
EVP, Chief Risk Officer
9
31
Paula D. Dolan
SVP, Human Resources
<1
30
Sonia M. Dumbleton
SVP, Controller
29
29
Michael D. Grover
SVP, Chief Accounting Officer
14
14
Charles J. Guarino
SVP, Marketing
18
18 |
 Sound Risk
Management
Our Strategy and Approach
7
Balance between volume
and risk; maintain our
credit discipline
Diversified loan portfolio
through retail and
commercial exposures
Effective risk management
committee structures
Uphold rigorous expense
management practices
Attract, retain and cultivate
top talent
Hire
Evaluate
Reward
Comprehensive incentive
compensation structure
supports
cross-functional
focus Satisfied employees =
satisfied customers
Continue to capitalize on
banking dislocation in our
region; uniquely positioned
to seize market
opportunities and achieve
scale in growth markets
Invest in people, product
development and
infrastructure, especially
potential growth segments
Continue non-interest
income growth
Agreement with Welch
ATM/Rite Aid for Free
ATM access.
Principled, growth oriented
approach guided by our
commitment to enhance:
Shareholder value
Customer experience
Employee experience
Productivity measures per
FTE
Smart Growth
Maintain our
Culture
Focus on Value
Key lending hires in
Buffalo and Rochester, new
e-banking services (mobile
banking, web apps) and
product offerings
Five Star Investment
Services
Promote from within,
create career
opportunities
Focus on the Five Star
Bank Experience;
dictates how we: |
 Our Strategic Initiatives have Driven Growth and
Performance
8
Initiatives
Outcomes
Optimization and consolidation of
branches offices
Investment in asset classes which offer
excellent risk adjusted returns and
duration
Continuous reinvestment in people,
processes and infrastructure
Positioning ourselves for market
expansion through key group hires and
branch purchases
Keen focus on expense control, efficiency
improvements and risk management
Consistent, strong operating results
Meaningful organic loan growth
Increased positive operating leverage
Pristine asset quality
Attractive market position
Record earnings per share
Strong
5
year
total
shareholder
return |
 A Dominant, Established Franchise…
9
Deposit Market Share: Counties of Operation
10,000 square-mile operating
footprint
50 banking offices in 15 contiguous
counties concentrated in Upstate NY
Top 3 market share in 11 counties
Top 5 bank in counties of operation
Significant opportunities exist to
gain market share
Key Highlights
Source:
SNL
Financial.
Deposits
by
County
as
of
June
30,
2013
for
comparative
purposes
Rank
Institution
Branches
2013
Deposits
in
Market
($MM)
Market
Share
(%)
1
Manufacturers and Traders Trust Co.
116
19,562
32.1%
2
First Niagara Bank NA
75
9,726
16.0%
3
KeyBank NA
85
4,362
7.2%
4
RBS Citizens NA
71
2,891
4.7%
5
Five Star Bank
52
2,332
3.8%
6
JPMorgan Chase Bank NA
27
2,026
3.3%
7
Community Bank NA
68
2,000
3.3%
8
Bank of America NA
46
1,791
2.9%
9
Canandaigua
National
Bank
and
Trust
Co.
25
1,696
2.8%
10
Bank of Castile
18
885
1.5%
11
Evans Bank NA
14
698
1.1%
12
Northwest Savings Bank
18
625
1.0%
13
Chemung Canal Trust Co.
10
569
0.9%
14
Lake Shore Savings Bank (MHC)
11
396
0.7%
15
Steuben Trust Co.
13
349
0.6% |
 …Uniquely Positioned For Future Growth
10
Capitalizing on banking dislocation due to larger
institutions divesting in our markets
Acquired 4 former First Niagara Offices on June 22,
2012
$129.6 million in deposits
Entered Orleans County
Strengthened presence in Genesee and Seneca
Counties
Acquired 4 former HSBC Offices on August 17, 2012
$157.2 Million in deposits
Gained Significant Market Share in Chemung
County
Consolidated 4 of the 8 acquired branches into
existing FISI offices
Rochester MSA
Buffalo MSA
Over 50 NY banks (non-MHC) under $1 billion in
assets located in non-NYC Metro area
Market Footprint
Source: SNL Mapping
Erie County
Deposit Market:
$30.5 Bln
Monroe County
Deposit Market:
$11.4 Bln
Chemung County
Deposit Market:
$1.0 Bln
Source: SNL Financial
Opportunity to fuel organic growth exists in attractive
markets where we have less than 2% of collective market
share
At $2.93 billion in assets, we believe we have the
capacity to consolidate smaller banks in our footprint
|
 Balance Sheet Growth
Balance Sheet Growth
11 |
 Loan Growth
12
Loan Portfolio Composition
Lending Strategy
Emphasis on driving quality loan growth by
balancing between volume and risk along with
maintaining a diversified portfolio
Our largest concentration, indirect auto at 35% of
total loans, is an excellent asset class as it offers
low duration (approx. 2.4 years), good credit risk
(average FICO 720) and relatively high risk-
adjusted yields
Balancing organic and acquisition loan growth
initiatives
C&I and HELOC have become key areas of
focus for growth
C&I effort to be targeted at Buffalo and
Rochester
Recently hired local talent away from
competitors to gain traction
HELOC growth strategy positioned as
alternative to mortgages -
most HELOCs are
in first lien position, but are more attractive
from interest rate risk prospective |
 Large and fragmented market
Favorable competitive conditions and risk-
adjusted returns
Natural risk dispersion that comes with retail
loans
Relatively short duration loans
Necessary expertise available
Underwriting Manager
25 years of experience
Credit Administration
35 years of experience
Sales Manager
25 years of experience
Collections Manager
30 years of experience
Underwriting Supervisor
15 years of experience
Loan Processing Supervisor
20 years of experience
Market Dynamics
Our Team
Most key personnel have auto finance experience
from Charter One Auto Finance (originated over $2
Bln /year in 21 states and had a serviced portfolio in
excess of $6.5 Bln)
Indirect Lending as a Core Business
13
Our Portfolio
Indirect Net Charge-Off %
Originating prime loans –
average credit score is
720
Originate through approximately 420 franchised
automobile dealerships
-
No independent used car dealerships
-
All dealers are within Upstate New York and
Pennsylvania |
 Deposit Portfolio
Deposit Strategy
Cost of Total Deposits
Deposit Composition
14
Consistent emphasis on growing core (non-
time) deposits, which equated to 74% of the
total deposit portfolio at 12/31/13
Strong growth in our non-interest bearing
deposits, currently at 23% of our deposit
base or $535 million (growth in excess 85%
since 2007)
Overall cost of deposits at 0.28% as of
December 31, 2013 |
 Revenue Growth
15
Net Interest Income and Noninterest Income
Note: All periods exclude OTTI & Securities Gains
|
 Operating Leverage by Successful Growth Strategies
and Effective Expense Management
16
Growing Net Interest Income
Increasing Fee Income
Improving Efficiency
Noninterest Income
Revenue and Expenses
Revenue grew by 25% since 2009 while
expenses increased by only 11%
Source: SNL Financial
(1)
All periods exclude OTTI & Securities Gains
(2)
2012 excludes acquisition and CEO transition expenses
Note: Peers include all US Banks and Thrifts in the Mid-Atlantic
region from $1 Bln - $5 Bln in assets. Peer data reflects
median values for the component companies within the
group. |
 Asset Quality Overview
17
Nonperforming Assets Trends
Asset quality remains a top priority
Disciplined oversight of risk in lending
portfolio
Asset quality metrics continue to
outperform peer levels
Key Highlights
Source: SNL Financial
Note:
Peers
include
all
US
Banks
and
Thrifts
in
the
Mid-Atlantic
region
from
$1
Bln
-
$5
Bln
in
assets.
Peer data reflects median values for the component companies within the
group |
 Investment Portfolio
18
Low risk security portfolio
High percentage of the portfolio consists
of securities backed by the U.S.
government and agencies
Approximately $850 million in total
securities and the majority are utilized
for various pledging purposes
Data as of December 31,2013
Low Risk Security Portfolio |
 Capital Management
19
Capital Ratios
2011Q3
2011Q4
2012Q1
2012Q2
2012Q3
2012Q4
2013Q1
2013Q2
2013Q3
2013Q4
Tang. Common Equity / Tang. Assets
8.01%
7.93%
7.64%
7.20%
7.05%
6.86%
6.74%
6.49%
6.40%
6.51%
Tier 1 Leverage
8.67%
8.63%
8.80%
8.27%
7.67%
7.71%
7.46%
7.59%
7.68%
7.63%
Tier 1 Risk-Based Capital Ratio
12.23%
12.20%
12.22%
11.39%
10.91%
10.73%
10.84%
10.96%
10.94%
10.82%
Total Risk Based Capital
13.49%
13.45%
13.47%
12.64%
12.16%
11.98%
12.09%
12.21%
12.19%
12.08% |
 Planning and Investing For the Future
20
We are constantly investing and adapting our scalable infrastructure to
strengthen our competitive position
Our infrastructure’s strength is in state of the art technology
and motivated human resources
-
Smart investments in technology have enabled us to be competitive with
even the largest banking institutions. Investments
include: Mobile banking
•
102% increase in Mobile banking users since January 2013
Enhanced Web Presence (online account opening, updated online banking,
emphasis on e-statements) •
200% increase in e-statement penetration since January 2013
-
New product offerings allow us to remain nimble vs. competition
Enhanced Retail Checking Products (debit card rewards)
•
5% increase in debit card transaction since January 2013
Expanded Indirect Lending |
 How Do We Compare?
Price/ MRQ EPS
21
Price/ TTM EPS
Note: Market data as of 1/22/2014. Peer data as of 9/30/13 and reflects
median values for the component companies within each respective
index. Dividend Yield |
 Total Shareholder Return
22
5-Year Total Shareholder Return
Note: Market data as of 1/22/2014. Peer data reflects median values for
the component companies within each respective index
|
 23
Shareholder Composition
Top 20 Institutional Investors
Source: SNL Financial. Market data as of 1/22/2014
Diversified Shareholder Base
#
Holder
Shares
Held
Market Value
($mm)
Shares
Out (%)
1
Wellington Management Co. LLP
1,034,658
23,321,191
7.49
2
BlackRock Fund Advisors
844,868
19,043,325
6.12
3
Bryn Mawr Capital Management Inc
632,825
14,263,876
4.58
4
Canandaigua National Bank and Trust Co.
625,045
14,088,514
4.53
5
Dimensional Fund Advisors LP
612,114
13,797,050
4.43
6
Columbia Management Investment Advisers LLC
524,523
11,822,748
3.80
7
JPMorgan Chase Bank NA
481,540
10,853,912
3.49
8
Putnam Investment Management Inc.
358,390
8,078,111
2.60
9
Vanguard Group Inc.
343,010
7,731,445
2.48
10
Investment Counselors of Maryland LLC
305,300
6,881,462
2.21
11
LSV Asset Management
301,813
6,802,865
2.19
12
Northern Trust Global Investments Ltd.
262,466
5,915,984
1.90
13
SSgA Funds Management Inc.
218,231
4,918,927
1.58
14
AlphaOne Investment Services LLC
206,376
4,651,715
1.49
15
JPMorgan Asset Management
200,729
4,524,432
1.45
16
Kennedy Capital Management Inc.
198,016
4,463,281
1.43
17
Castine Capital Management LLC
117,252
2,642,860
0.85
18
Aberdeen Asset Management Inc.
108,677
2,449,580
0.79
19
Bridgeway Capital Management Inc.
95,900
2,161,586
0.69
20
FSI Group LLC
71,626
1,614,450
0.52 |
 Key Investment Considerations
24
Experienced leadership
Positioned to Achieve
Long-Term Growth…
Attractive footprint in Upstate NY, uniquely positioned to seize
market opportunities
…and Delivering on our Promise to All Stakeholders
Sustainable, scalable business model
Effective enterprise risk management
Solid capital structure
Investments in people and infrastructure
Consistent, strong operating results
and favorable trends
Low cost and streamlined
operating emphasis |
 Delivering
On Our
Promise
NASDAQ: FISI
Sterne Agee
Financial Institutions Investor Conference
February 12-14, 2014 |