8-K

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): July 26, 2010

Financial Institutions, Inc.
__________________________________________
(Exact name of registrant as specified in its charter)

New York	0-26481	16-0816610
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)
220 Liberty Street, Warsaw, New York		14569
_________________________________ (Address of principal executive offices)		___________ (Zip Code)

Registrant’s telephone number, including area code: 585-786-1100

Not Applicable
______________________________________________
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On July 26, 2010, Financial Institutions, Inc. issued a press release to report financial results for the three and six months ended June 30, 2010. The press release is furnished as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit 99.1 Press Release issued July 26, 2010.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Financial Institutions, Inc.
July 26, 2010	By:	Karl F. Krebs
		Name: Karl F. Krebs
		Title: Executive Vice President and Chief Financial Officer

Exhibit Index

Exhibit No.	Description
99.1	Press Release issued July 26, 2010.

EX-99.1

NEWS RELEASE 220 Liberty Street Warsaw, NY 14569

For Additional Information:

Karl F. Krebs

Executive VP & CFO

Phone: 585.786.1125

Email: KFKrebs@fiiwarsaw.com

FINANCIAL INSTITUTIONS, INC. POSTS 88% INCREASE IN FIRST HALF EARNINGS

WARSAW, N.Y., July 26, 2010 — Financial Institutions, Inc. (Nasdaq: FISI) (the “Company”), the parent company of Five Star Bank, today announced financial results for the second quarter ended June 30, 2010. Net income for the Company was $5.2 million or $0.39 per diluted share for the second quarter of 2010, compared with $2.6 million or $0.16 per diluted share for the second quarter of 2009. For the first six months of 2010 net income was $10.5 million or $0.80 per diluted share, compared with $5.6 million or $0.35 per diluted share for the same period last year.

Key points for the second quarter of 2010 were as follows:

• Net interest income increased $2.0 million or 12% compared to the second quarter of 2009

• A $1.6 million reduction in noninterest expense, 10% less than the same quarter last year

• Total loans were up $23.4 million over first quarter 2010

• Non-performing loans increased $4.7 million over first quarter 2010, but our ratio of non-performing loans to total loans of 0.88% remained significantly better than our peers.

• Net loan charge-offs were $866 thousand or an annualized 0.27% of average loans for the second quarter

• Allowance for loan losses increased to 1.69% of loans with $2.1 million provision for loan losses, exceeding net charge-offs by $1.2 million

• Capital remains well above regulatory minimums

“The strong second quarter earnings reflect our ongoing efforts to unlock our full potential. We have sustained the positive earnings momentum of the previous two quarters. We continue to execute on our plan and our performance is indicative of the strength of our franchise and results-focused culture. Our disciplined approach to meeting the financial needs of the communities we serve, through one of the most challenging periods in recent banking history, has rewarded us during the first half of 2010 with solid balance sheet growth, considerable decreases in noninterest expense and net charge-offs, and of course, the resulting 88% increase in earnings compared to the first half of 2009,” said Peter G. Humphrey, President and Chief Executive Officer. “Our communities and shareholders will continue to benefit from our strong capital, liquidity and asset quality.”

Net Interest Income and Net Interest Margin

Net interest income for the second quarter of 2010 was $19.7 million, an increase of $424 thousand or 2% compared with the first quarter of 2010 and up $2.0 million or 12% over the second quarter of 2009. The increase in net interest income from the first quarter of 2010 was primarily due to an increase in average interest-earning assets. The increase from the second quarter of 2009 was primarily due to decreased rates paid on deposits and growth in loans and leases.

Net interest margin for the second quarter of 2010 was 4.09%, compared with 4.12% in the first quarter of 2010 and 4.01% in the second quarter of 2009. The decrease in net interest margin from the first quarter of 2010 was largely related to changes in earning asset mix. The increase in net interest margin from the second quarter of 2009 was primarily due to a lower cost of deposits.

Noninterest Income

Noninterest income was $5.0 million for the second quarter of 2010, up $883 thousand or 22% from the first quarter of 2010 and up $451 thousand or 10% from the second quarter of 2009. Adjusted for securities transactions, noninterest income was $4.9 million for the second quarter of 2010, up $300 thousand or 7% from the first quarter of 2010 and down $192 thousand or 4% from the second quarter of 2009.

Service charges on deposit accounts totaled $2.5 million in each of the 2010 and 2009 second quarters, compared with $2.2 million in the first quarter of 2010.

ATM and debit card income was up $120 thousand or 13% from the first quarter of 2010 and up $146 thousand or 16% from the second quarter of 2009. The increases from both periods were primarily the result of an increase in the number of cardholders and an increase in customer transactions.

Broker-dealer fees and commissions were $359 thousand for the second quarter of 2010, up $125 thousand or 53% from the second quarter of 2009. Broker-dealer fees and commissions fluctuate mainly due to sales volume, which is up significantly in 2010 compared to the prior year.

Loan servicing income was down $140 thousand or 50% from the first quarter of 2010 and down $330 thousand or 70% from the second quarter of 2009. Loan servicing income declined in each of the periods, partly resulting from a decrease in the sold and serviced residential real estate portfolio, coupled with an increase in valuation write-downs on capitalized mortgage servicing assets.

During the second quarter of 2010 the Company recognized net gains from the sale of investment securities of $63 thousand. There were no other-than-temporary impairment (“OTTI”) charges on investment securities during the second quarter of 2010. The Company recognized net gains from the sale of investment securities totaling $6 thousand during the first quarter of 2010 and $1.2 million during the second quarter of 2009. Other-than-temporary impairment charges included in noninterest income amounted to $526 thousand in the first quarter of 2010 and $1.7 million in the second quarter of 2009.

Noninterest Expense

Noninterest expense was $14.9 million for the second quarter of 2010, up $132 thousand or 1% from the first quarter of 2010 and down $1.6 million or 10% from the second quarter of 2009.

Salaries and employee benefits were $8.0 million for the second quarter of 2010, down $203 thousand or 2% from the first quarter of 2010 and down $393 thousand or 5% from the second quarter of 2009. The most significant cause for the decrease in salaries and employee benefits expense from the second quarter of 2009 was lower incentive compensation and pension benefit costs.

FDIC assessments were $634 thousand for the second quarter of 2010, up $32 thousand or 5% from the first quarter of 2010 and down $959 thousand or 60% from the second quarter of 2009. The decrease from the second quarter of 2009 was primarily due to a one-time special assessment of $923 thousand incurred during the second quarter of 2009, a result of changes in FDIC deposit insurance coverage and changes in premiums mandated by the FDIC to replenish deposit insurance reserves.

Balance Sheet

Total loans were $1.292 billion at June 30, 2010, up $23.4 million or 2% from March 31, 2010 and up $27.2 million or 2% from December 31, 2009. Total investment securities were $678.9 million at June 30, 2010, down $4.3 million from March 31, 2010 and up $58.9 million from December 31, 2009.

Deposits were $1.822 billion at June 30, 2010, which was $27.9 million less than the end of the first quarter, but were up $79.0 million compared with the end of 2009. Public deposit balances decreased $79.5 million during the last quarter due largely to the seasonality of municipal cash flows. The Company’s deposit mix remains favorably weighted in lower cost demand, savings and money market accounts, which comprised 60.3% of total deposits at the end of the second quarter.

Shareholders’ equity was $211.7 million at June 30, 2010, compared with $203.6 million at the end of the first quarter. Net income for the quarter increased shareholders’ equity by $5.2 million and was partially offset by common and preferred stock dividends declared of $1.9 million. Accumulated other comprehensive income included in shareholders’ equity increased $4.3 million during the second quarter due primarily to higher net unrealized gains on securities available-for-sale.

The Company’s leverage ratio improved to 8.45% and its total risk-based capital ratio improved to 13.99% at the end of the second quarter, compared to 7.96% and 13.21% at year-end, all of which comfortably exceeded the regulatory thresholds required to be classified as a “well capitalized” institution as established by the Company’s primary banking regulators.

Asset Quality and Provision for Loan Losses

The Company’s loan portfolio continues to benefit from responsible underwriting and lending practices. Non-performing assets were $12.5 million or 0.58% of total assets at June 30, 2010, up from $8.1 million at March 31, 2010, but down from $13.7 million at this time last year. The ratio of non-performing loans to total loans was 0.88% at June 30, 2010 versus 0.53% at March 31, 2010, and 0.78% at June 30, 2009. This continues to compare favorably to the average of our peer group which was 3.67% of total loans at March 31, 2010, the most recent period for which information is available (Source: Federal Financial Institutions Examination Council — Bank Holding Company Performance Report as of March 31, 2010 — Top-tier bank holding companies having consolidated assets between $1 billion and $3 billion). The increase in non-performing loans at June 30, 2010 compared with the last quarter was largely attributable to the addition of a $5.0 million participation interest in one commercial loan. Despite being current with respect to principal and interest at June 30, 2010, the creditor is experiencing significant financial difficulty and may not be able to repay its outstanding debt. A $2.5 million specific reserve has been allocated to this credit in the second quarter of 2010.

The provision for loan losses was $2.1 million for the second quarter, compared to $418 thousand for the first quarter of 2010 and $2.1 million in the second quarter of 2009. The increase from the first quarter of 2010 is primarily due to an increase in non-performing loans, as mentioned above. Net charge-offs were $866 thousand, or 0.27% annualized, of average loans, up from $573 thousand, or 0.18% annualized, of average loans in the first quarter of 2010 and down from $1.1 million, or 0.38% annualized, of average loans in the second quarter of 2009.

The allowance for loan losses was $21.8 million at June 30, 2010, compared with $20.6 million at March 31, 2010 and $20.6 million at June 30, 2009. The ratio of the allowance for loan losses to total loans was 1.69% at June 30, 2010, compared with 1.62% at March 31, 2010 and 1.69% at June 30, 2009. The ratio of allowance for loan losses to non-performing loans was 192% at June 30, 2010, compared with 308% at March 31, 2010 and 217% at June 30, 2009.

Mr. Humphrey added, “The increase in non-performing loans was driven by one larger commercial credit that was placed on nonaccrual during the quarter, while our loan portfolio as a whole continued to perform extremely well. While we recognize that, the longer this period of economic weakness persists, troubled borrowers could find it increasingly difficult to comply with repayment terms, we are confident that our process to identify credit problems early will enable us to keep those problems manageable. All of our loans were originated within our markets and our conservative lending and credit policies are designed to minimize the risk of loss.”

About Financial Institutions, Inc.

With over $2.1 billion in assets, Financial Institutions, Inc. provides diversified financial services through its subsidiaries, Five Star Bank and Five Star Investment Services, Inc. Five Star Bank provides a wide range of consumer and commercial banking services to individuals, municipalities and businesses through a network of over 50 offices and more than 70 ATMs in Western and Central New York State. Five Star Investment Services provides brokerage and insurance products and services within the same New York State markets. The consolidated entity employs over 600 individuals. The Company’s stock is listed on the Nasdaq Global Select Market under the symbol FISI. Additional information is available at the Company’s website: www.fiiwarsaw.com.

Safe Harbor Statement

This press release may contain forward-looking statements as defined by federal securities laws. These statements may address issues that involve significant risks, uncertainties, estimates and assumptions made by management. Actual results could differ materially from current beliefs or projections. There are a number of important factors that could affect the Company’s forward-looking statements which include its ability to implement its strategic plan, its ability to redeploy investment assets into loan assets, the attitudes and preferences of its customers, the competitive environment, fluctuations in the fair value of securities in the investment portfolio, and general economic and credit market conditions nationally and regionally. For more information about these factors please see the Company’s Annual Report on Form 10-K on file with the SEC. All of these factors should be carefully reviewed, and readers should not place undue reliance on these forward-looking statements. The Company undertakes no obligation to revise these statements following the date of this press release.

*****FINANCIAL INSTITUTIONS, INC.
Summary of Quarterly Financial Data (Unaudited)

	2010					2009
	June 30,			March 31,		December 31,		September 30,		June 30,
SELECTED BALANCE SHEET DATA
(Amounts in thousands)
Cash and cash equivalents:
Cash and due from banks	$	43,326			38,081		42,874		48,721		41,405
Federal funds sold and interest-earning deposits		93			33,793		85		11,385		39,910
Total cash and cash equivalents		43,419			71,874		42,959		60,106		81,315
Investment securities:
Available for sale		651,533			648,667		580,501		625,744		498,561
Held-to-maturity		27,404			34,556		39,573		45,056		47,465
Total investment securities		678,937			683,223		620,074		670,800		546,026
Loans:
Commercial		208,618			208,976		206,383		218,793		219,145
Commercial mortgage		334,043			331,870		330,748		317,804		304,508
Residential mortgage		139,112			142,406		144,636		148,479		152,931
Home equity		200,929			200,287		200,684		198,538		194,007
Consumer indirect		381,464			356,873		352,611		345,448		319,735
Other consumer		27,417			27,769		29,365		31,332		31,251
Total loans		1,291,583			1,268,181		1,264,427		1,260,394		1,221,577
Allowance for loan losses		21,825			20,586		20,741		20,782		20,614
Total loans, net		1,269,758			1,247,595		1,243,686		1,239,612		1,200,693
Total interest-earning assets (1) (2)		1,958,411			1,979,875		1,881,887		1,934,786		1,802,489
Goodwill		37,369			37,369		37,369		37,369		37,369
Total assets		2,142,931			2,156,055		2,062,389		2,138,205		1,996,724
Deposits:
Noninterest-bearing demand		328,937			308,822		324,303		298,972		292,825
Interest-bearing demand		370,584			409,094		363,698		383,982		357,443
Savings and money market		399,972			426,330		368,603		402,042		366,373
Certificates of deposit		722,452			705,628		686,351		712,182		683,619
Total deposits		1,821,945			1,849,874		1,742,955		1,797,178		1,700,260
Borrowings		93,654			83,454		106,390		120,113		79,977
Total interest-bearing liabilities		1,586,662			1,624,506		1,525,042		1,618,319		1,487,412
Shareholders’ equity		211,699			203,603		198,294		195,935		192,455
Common shareholders’ equity (3)		158,100			150,095		144,876		142,605		139,213
Tangible common shareholders’ equity (4)		120,731			112,726		107,507		105,176		101,712
Securities available for sale – fair value adjustment
included in shareholders’ equity, net of tax	$	7,481			3,263		1,655		4,778		3,081
Common shares outstanding		10,942			10,920		10,820		10,818		10,821
Treasury shares		406			428		528		530		527
CAPITAL RATIOS
Leverage ratio		8.45	%		8.32		7.96		7.89		7.84
Tier 1 risk-based capital		12.73	%		12.37		11.95		10.73		10.69
Total risk based capital		13.99	%		13.63		13.21		11.98		11.94
Common equity to assets		7.38	%		6.96		7.02		6.67		6.97
Tangible common equity to tangible assets (4)		5.73	%		5.32		5.31		5.01		5.19
Common book value per share	$	14.45			13.74		13.39		13.18		12.86
Tangible common book value per share (4)	$	11.03			10.32		9.94		9.72		9.40

FINANCIAL INSTITUTIONS, INC.
Summary of Quarterly Financial Data (Unaudited)

							Quarterly Trends
	Six months ended						2010								2009
	June 30,						Second		First			Fourth			Third			Second
	2010			2009			Quarter		Quarter			Quarter			Quarter			Quarter
SELECTED INCOME STATEMENT DATA
(Dollar amounts in thousands)
Interest income	$	48,026			46,395			24,202		23,824			24,390			23,697			23,302
Interest expense		9,098			11,423			4,526		4,572			5,175			5,619			5,657
Net interest income		38,928			34,972			19,676		19,252			19,215			18,078			17,645
Provision for loan losses		2,523			3,994			2,105		418			1,088			2,620			2,088
Net interest income after provision
for loan losses		36,405			30,978			17,571		18,834			18,127			15,458			15,557
Noninterest income:
Service charges on deposits		4,732			4,837			2,502		2,230			2,585			2,643			2,517
ATM and debit card		1,988			1,719			1,054		934			971			920			908
Broker-dealer fees and commissions		739			503			359		380			281			238			234
Company owned life insurance		551			535			282		269			290			271			275
Loan servicing		420			727			140		280			277			304			470
Net gain on sale of loans held for sale		177			416			115		62			154			129			246
Net gain on investment securities		69			1,207			63		6			501			1,721			1,153
Impairment charge on investment securities		(526	)		(1,783	)		—		(526	)		(565	)		(2,318	)		(1,733	)
Net gain on sale of other assets		2			158			—		2			3			19			—
Other		897			887			451		446			686			479			445
Total noninterest income		9,049			9,206			4,966		4,083			5,183			4,406			4,515
Noninterest expense:
Salaries and employee benefits		16,291			17,168			8,044		8,247			8,213			8,253			8,437
Occupancy and equipment		5,441			5,559			2,670		2,771			2,773			2,730			2,683
FDIC assessments		1,236			2,273			634		602			625			753			1,593
Computer and data processing		1,186			1,179			615		571			583			578			562
Professional services		1,084			1,440			478		606			552			532			591
Supplies and postage		876			941			431		445			432			473			476
Advertising and promotions		539			423			352		187			299			227			249
Other		2,955			3,535			1,646		1,309			1,640			1,596			1,849
Total noninterest expense		29,608			32,518			14,870		14,738			15,117			15,142			16,440
Income before income taxes		15,846			7,666			7,667		8,179			8,193			4,722			3,632
Income tax expense		5,320			2,071			2,469		2,851			2,756			1,313			1,004
Net income	$	10,526			5,595			5,198		5,328			5,437			3,409			2,628
Preferred stock dividends		1,860			1,843			931		929			927			927			925
Net income applicable to
common shareholders	$	8,666			3,752			4,267		4,399			4,510			2,482			1,703
STOCK AND RELATED PER SHARE DATA
Net income per share – basic	$	0.80			0.35			0.39		0.41			0.42			0.23			0.16
Net income per share – diluted	$	0.80			0.35			0.39		0.40			0.42			0.23			0.16
Cash dividends declared on common stock	$	0.20			0.20			0.10		0.10			0.10			0.10			0.10
Common dividend payout ratio (5)		25.00	%		57.14			25.64		24.39			23.81			43.48			62.50
Dividend yield (annualized)		2.27	%		2.95			2.26		2.77			3.37			3.98			2.94
Stock price (Nasdaq: FISI):
High	$	19.48			15.99			19.48		15.40			12.25			15.00			15.99
Low	$	10.91			3.27			14.07		10.91			9.71			9.90			6.98
Close	$	17.76			13.66			17.76		14.62			11.78			9.97			13.66

FINANCIAL INSTITUTIONS, INC.
Summary of Quarterly Financial Data (Unaudited)

						Quarterly Trends
	Six months ended					2010				2009
	June 30,					Second		First		Fourth		Third		Second
	2010			2009		Quarter		Quarter		Quarter		Quarter		Quarter
SELECTED AVERAGE BALANCES
(Amounts in thousands)
Federal funds sold and interest-earning deposits	$	9,395			46,376		4,479		14,366	16,457		39,945		49,105
Investment securities (1)		675,265			597,449		692,162		658,181	657,299		585,830		593,740
Loans (2):
Commercial		206,626			194,379		208,327		204,905	211,626		216,235		203,286
Commercial mortgage		333,918			294,940		334,253		333,579	326,313		310,476		298,090
Residential mortgage		142,355			173,986		140,946		143,780	146,853		149,815		170,865
Home equity		199,884			190,315		199,865		199,903	199,367		195,601		191,291
Consumer indirect		358,823			284,329		364,801		352,778	349,231		334,123		301,112
Other consumer		27,599			31,261		27,060		28,145	29,903		30,754		30,831
Total loans		1,269,205			1,169,210		1,275,252		1,263,090	1,263,293		1,237,004		1,195,475
Total interest-earning assets		1,953,865			1,813,035		1,971,893		1,935,637	1,937,049		1,862,779		1,838,320
Goodwill		37,369			37,369		37,369		37,369	37,369		37,369		37,369
Total assets		2,135,681			1,988,185		2,158,912		2,112,192	2,117,775		2,040,030		2,012,337
Interest-bearing liabilities:
Interest-bearing demand		389,783			363,745		386,703		392,896	374,787		361,147		366,985
Savings and money market		411,088			382,104		420,774		401,294	400,966		369,562		392,355
Certificates of deposit		702,297			672,153		715,168		689,284	697,292		699,011		676,221
Borrowings		92,268			75,084		89,753		94,811	114,721		94,642		78,763
Total interest-bearing liabilities		1,595,436			1,493,086		1,612,398		1,578,285	1,587,766		1,524,362		1,514,324
Noninterest-bearing demand deposits		319,040			283,935		324,790		313,227	308,491		298,723		286,155
Total deposits		1,822,208			1,701,937		1,847,435		1,796,701	1,781,536		1,728,443		1,721,716
Total liabilities		1,930,566			1,796,266		1,951,241		1,909,662	1,919,352		1,845,010		1,819,891
Shareholders’ equity		205,115			191,919		207,671		202,530	198,423		195,020		192,446
Common equity (3)		151,609			138,769		154,122		149,066	145,055		141,741		139,253
Tangible common equity (4)	$	114,240			101,187		116,753		111,697	107,654		104,269		101,709
Common shares outstanding:
Basic		10,754			10,720		10,761		10,746	10,742		10,738		10,723
Diluted		10,800			10,756		10,846		10,801	10,785		10,779		10,765
SELECTED AVERAGE YIELDS/
RATES AND RATIOS
(Tax equivalent basis)
Federal funds sold and interest-earning deposits		0.20	%		0.23		0.20		0.21		0.22		0.20		0.21
Investment securities		3.45	%		4.35		3.44		3.47		3.55		3.79		4.16
Loans		5.93	%		6.02		5.88		5.97		6.00		6.01		5.99
Total interest-earning assets		5.04	%		5.32		5.01		5.08		5.12		5.19		5.24
Interest-bearing demand		0.19	%		0.23		0.19		0.20		0.20		0.19		0.20
Savings and money market		0.28	%		0.27		0.28		0.28		0.30		0.29		0.27
Certificates of deposit		1.89	%		2.69		1.83		1.95		2.20		2.49		2.63
Borrowings		3.45	%		4.05		3.55		3.34		2.84		3.35		3.91
Total interest-bearing liabilities		1.15	%		1.54		1.13		1.17		1.29		1.46		1.50
Net interest rate spread		3.89	%		3.78		3.88		3.91		3.83		3.73		3.74
Net interest rate margin		4.11	%		4.05		4.09		4.12		4.06		3.99		4.01
Net income (annualized returns on):
Average assets		0.99	%		0.57		0.97		1.02		1.02		0.66		0.52
Average equity		10.35	%		5.88		10.04		10.67		10.87		6.93		5.48
Average common equity (6)		11.53	%		5.45		11.11		11.97		12.33		6.95		4.91
Average tangible common equity (7)		15.30	%		7.48		14.66		15.97		16.62		9.45		6.72
Efficiency ratio (8)		59.73	%		69.60		59.16		60.31		59.93		63.43		69.49

FINANCIAL INSTITUTIONS, INC.
Summary of Quarterly Financial Data (Unaudited)

						Quarterly Trends
	Six months ended					2010						2009
	June 30,					Second		First		Fourth		Third		Second
	2010			2009		Quarter		Quarter		Quarter		Quarter		Quarter
ASSET QUALITY DATA
(Dollar amounts in thousands)
Nonaccrual loans	$	11,304			9,496		11,304		6,685		6,822		5,816		9,496
Accruing loans past due 90 days or more		61			2		61		2		1,859		1		2
Total non-performing loans		11,365			9,498		11,365		6,687		8,681		5,817		9,498
Foreclosed assets		500			1,046		500		771		746		696		1,046
Non-performing investment securities		646			3,175		646		661		1,015		1,431		3,175
Total non-performing assets	$	12,511			13,719		12,511		8,119		10,442		7,944		13,719
Net loan charge-offs	$	1,439			2,129		866		573		1,129		2,452		1,131
Net charge-offs to average loans (annualized)		0.23	%		0.37		0.27		0.18		0.35		0.79		0.38
Total non-performing loans to total loans		0.88	%		0.78		0.88		0.53		0.69		0.46		0.78
Total non-performing assets to total assets		0.58	%		0.69		0.58		0.38		0.51		0.37		0.69
Allowance for loan losses to total loans		1.69	%		1.69		1.69		1.62		1.64		1.65		1.69
Allowance for loan losses to
non-performing loans		192	%		217		192		308		239		357		217

⁽¹⁾ Includes investment securities at adjusted amortized cost and non-performing investment securities.

⁽²⁾ Includes nonaccrual loans.

⁽³⁾ Excludes preferred shareholders’ equity.

⁽⁴⁾ Excludes preferred shareholders’ equity, goodwill and other intangible assets.

⁽⁵⁾ Common dividend payout ratio equals dividends declared during the period divided by earnings per share for the equivalent period.

⁽⁶⁾ Net income available to common shareholders divided by average common equity.

⁽⁷⁾ Net income available to common shareholders divided by average tangible equity.

⁽⁸⁾ Efficiency ratio equals noninterest expense less other real estate expense and amortization of intangible assets as a percentage of net revenue, defined as the sum of tax-equivalent net interest income and noninterest income before net gains and impairment charges on investment securities.