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): | January 30, 2013 |
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) |
Registrants 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 January 30, 2013, Financial Institutions, Inc. issued a press release to report financial results for the fourth quarter and year ended December 31, 2012. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit 99.1 Press Release issued January 30, 2013
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. | ||||
January 30, 2013 | By: |
/s/ Karl F. Krebs
|
||
|
||||
Name: Karl F. Krebs | ||||
Title: Executive Vice President and Chief Financial Officer |
Exhibit Index
Exhibit No. | Description | |
|
|
|
99.1
|
Exhibit 99.1 Press Release issued January 30, 2013 |
NEWS RELEASE |
220 Liberty Street | |||
For Immediate Release |
Warsaw, NY 14569 |
FINANCIAL INSTITUTIONS, INC. REPORTS 7% INCREASE IN EARNINGS PER SHARE
FOR THE YEAR ENDED DECEMBER 31, 2012
WARSAW, N.Y., January 30, 2013 Today Financial Institutions, Inc. (Nasdaq: FISI) (the Company), the parent company of Five Star Bank, reported full year 2012 net income available to common shareholders of $22.0 million, an increase of $2.4 million or 12% from the prior year. Full year 2012 earnings per diluted share was $1.60, up 7% from $1.49 last year. Fourth quarter 2012 net income available to common shareholders was $6.0 million, or $0.43 per diluted share, compared to $3.9 million, or $0.28 per diluted share, for the 2012 third quarter.
Highlights for the year ended December 31, 2012 compared with 2011:
| Non-GAAP net operating income available to common shareholders was $25.6 million, or $1.86 per diluted share, for 2012 compared to $21.5 million or $1.64 per share for 2011 |
| Expanded the footprint of our franchise though the acquisition of 8 branch locations: |
Assumed deposits of $286.8 million and acquired in-market performing loans of $75.6 million at closing
| Year end interest-earning assets of $2.5 billion reach highest level in Company history |
| 11.74% return on average tangible common equity, up from 11.55% |
| $0.25 or 2% increase in tangible book value per common share to $13.46 |
| $6.7 million or 8% increase in net interest income, reflecting: |
3.95% fully tax-taxable equivalent net interest margin
14% increase in average total loans
10% increase in average interest-bearing deposits
| $852 thousand or 4% increase in noninterest income |
Fourth quarter 2012 highlights compared with third quarter 2012:
| $46.7 million or 3% growth in total loans |
| $1.3 million or 13% decrease in non-performing loans |
| Common book value per share increased to $17.15 at December 31, 2012 |
| Declared $0.16 dividend per common share, a 3.4% dividend yield as of December 31, 2012 |
Summary Performance Discussion
It is an understatement to say that this was a significant year for our company, our employees and our shareholders, said Chairman and Interim Chief Executive Officer John E. Benjamin. We executed on significant leadership changes during 2012 to position our company for long-term success, and were energized as we enter 2013. Our performance in 2012 and the confidence we have in our future is reflected in the Companys dividend, which increased over 20% for the year.
Net income for the full year 2012 was $23.4 million, up $650 thousand or 3% from the prior year. The primary drivers of this increase were a $6.7 million or 8% increase in net interest income, an $852 thousand or 4% increase in noninterest income and a $652 thousand or 8% decrease in the provision for loan losses, partially offset by a $7.6 million or 12% increase in noninterest expense. Noninterest expense for 2012 included non-recurring pre-tax expenses of $5.6 million related to the branch acquisitions and retirement of our former CEO. Noninterest expense for 2011 included a non-recurring pre-tax expense of $1.1 million for the early extinguishment of debt. Net income available to common shareholders increased $2.4 million or 12% from the prior year. The prior year net income available to common shareholders included accelerated accretion on redeemed TARP preferred stock of $1.2 million.
Net income in the fourth quarter 2012 was $6.3 million, up $2.1 million or 48% from the third quarter 2012, which resulted from a $4.1 million or 19% decrease in noninterest expense, partially offset by a $1.2 million increase in the provision for income taxes and a $756 thousand or 43% increase in the provision for loan losses. Noninterest expense for the third quarter 2012 included non-recurring pre-tax expenses of $4.5 million related to the branch acquisitions and retirement of our former CEO. Net income available to common shareholders increased $2.1 million or 53% from the third quarter 2012.
We finished 2012 with strong momentum, and our employees remain focused on delivering exceptional customer service with our easy banking philosophy, while simultaneously creating value for our shareholders, continued Mr. Benjamin. We not only accomplished our strategic initiatives, but did so while achieving our highest annual income in ten years and experiencing our fourth consecutive year of increased earnings.
Net Interest Income and Net Interest Margin
Net interest income for the full year 2012 increased $6.7 million or 8% from the prior year, due to an increase in average earning assets resulting from organic loan growth, loans acquired in the branch acquisitions and an increased level of noninterest-bearing deposits, which more than offset lower earning asset yields. The net interest margin was 3.95% for the full year 2012 compared to 4.04% for the full year 2011.
The yield on earning-assets decreased 32 basis points for 2012 compared with last year, a result of cash flows being reinvested in the current low interest rate environment, which includes the impact of investing the cash from the branch acquisitions into lower yielding securities. The cost of interest-bearing liabilities decreased 30 basis points for the year compared to the prior year, primarily a result of the redemption of our 10.20% junior subordinated debentures during 2011 as well as the continued re-pricing of time deposits.
The $217.4 million or 10% increase in average earning assets was driven by the $199.6 million or 14% increase in average total loans. Compared to the prior year, average commercial loans increased $63.4 million or 11% and indirect consumer loans increased $89.1 million or 20% during 2012.
For the full year 2012, average interest-bearing deposits increased $156.2 million or 10%, reflecting a $40.0 million or 10% increase in interest-bearing demand deposits and a $135.3 million or 30% increase in savings and money market deposits. These increases were partially offset by a $19.1 million or 3% decrease in time deposits. Average noninterest-bearing deposits, which represented 20% of total average deposits, increased $62.0 million or 17% during 2012.
Fourth quarter 2012 net interest income was $23.1 million, essentially unchanged from the third quarter 2012. A $21.8 million increase in average interest-earning assets was offset by a 4 basis point decrease in net interest margin to 3.92% for the 2012 fourth quarter. The average interest-earning asset increase primarily reflected an increase of $32.0 million in average indirect auto loans, partially offset by a $18.1 million decrease in average investment securities.
Noninterest Income
Noninterest income for the full year 2012 increased $852 thousand or 4% from the prior year. This included a $541 thousand or 61% increase in gain on sale of loans, a $495 thousand or 17% increase in other income, a $357 thousand or 8% increase in ATM and debit card income, a $327 thousand or 23% increase in company owned life insurance income, and a $275 thousand or 15% increase in broker-dealer fees and commissions. These positive impacts were partially offset by a $448 thousand increase in loss on the disposal of other assets, a $352 thousand or 12% decrease in gain on sales of securities, a $218 thousand or 26% decrease in loan servicing income, a $73 thousand increase in other-than-temporary impairment charges on securities, and a $52 thousand or 1% decrease in service charges on deposits.
Fourth quarter 2012 noninterest income decreased $70 thousand or 1% from the third quarter 2012. This decrease in noninterest income was primarily the result of decreases in broker-dealer fees and commissions, loan servicing income, gain on sales of securities and an increase in the loss on the disposal of other assets, offset by increases in service charges on deposits, ATM and debit card income, and gain on sales of loans.
Noninterest Expense
Noninterest expense for the full year 2012 increased $7.6 million or 12% from the prior year. This included a $4.4 million or 12% increase in salaries and employee benefits, a $1.5 million or 58% increase in professional services, a $1.2 million or 19% increase in other noninterest expense, an $834 thousand or 34% increase in computer and data processing, a $719 thousand or 40% increase in supplies and postage, and a $551 thousand or 5% increase in occupancy and equipment. These increases were partially offset by a $330 thousand or 26% decrease in advertising and promotions, a $213 thousand or 14% decrease in FDIC assessments, and the absence of a $1.1 million loss on extinguishment of debt which resulted from the Companys early redemption of its subordinated debentures during the third quarter of 2011.
The full year 2012 included $3.0 million of noninterest expense related to the branch acquisitions, which closed in June and August, and $2.6 million incurred in association with the retirement of the Companys former CEO in August. Of these expenses, $1.9 million of expense related to the branch acquisitions and all of the $2.6 million related to the CEO retirement were included in noninterest expense for the third quarter of 2012. There were no material expenses related to these transactions during the fourth quarter of 2012.
Fourth quarter 2012 noninterest expense decreased $4.1 million or 19% from the third quarter 2012. This included a $2.9 million or 23% decrease in salaries and benefits, a $562 thousand or 39% decrease in professional fees, a $400 thousand or 17% decrease in other noninterest expense, a $332 thousand or 37% decrease in supplies and postage, and a $167 thousand or 17% decrease in in computer and data processing. These decreases were partially offset by a $169 thousand or 65% increase in advertising and promotions, and a $104 thousand or 4% increase in occupancy and equipment.
Balance Sheet and Capital Management
Total loans were $1.706 billion at December 31, 2012, up $46.7 million or 3% from September 30, 2012 and up $220.9 million or 15% from December 31, 2011. At December 31, 2012, total loans included $64.5 million in loans obtained in the branch acquisitions. Total investment securities were $841.7 million at December 31, 2012, up $73.5 million or 10% from the end of the prior quarter and up $190.9 million or 29% compared with the end of 2011.
Deposits were $2.262 billion at December 31, 2012, a decrease of $69.9 million from the end of the prior quarter and an increase of $330.2 million compared with the end of 2011. The decrease from the prior quarter is mainly due to seasonal outflows of municipal deposits, while the year over year increase is largely attributable to $286.8 million in retail deposits assumed from the branch acquisitions. Public deposit balances were 20% of total deposits at December 31, 2012, compared to 23% at September 30, 2012 and 20% at December 31, 2011, with the fluctuations due largely to the seasonality of municipal cash flows.
Shareholders equity was $253.9 million at December 31, 2012, compared with $251.8 million at September 30, 2012 and $237.2 million at December 31, 2011. Net income for the quarter increased shareholders equity by $6.3 million, which was partially offset by common and preferred stock dividends of $2.6 million. Accumulated other comprehensive income included in shareholders equity decreased $1.9 million during the fourth quarter due primarily to lower net unrealized gains on securities available for sale.
The Companys leverage ratio and total risk-based capital ratios were 7.70% and 11.96%, respectively, at December 31, 2012, compared to 7.67% and 12.16%, respectively, at September 30, 2012, and 8.63% and 13.45%, respectively, at December 31, 2011 all of which exceeded the regulatory thresholds required to be classified as a well capitalized institution as established by the Companys primary banking regulators. Balance sheet growth, primarily related to the branch acquisitions, coupled with goodwill and intangible assets recorded in conjunction with the acquisitions, resulted in the lower capital ratios in 2012. Such goodwill and intangible assets are excluded from regulatory capital under regulatory accounting practices.
Credit Quality
Non-performing loans were $9.1 million or 0.53% of total loans at December 31, 2012, as compared with $10.4 million or 0.63% of total loans at September 30, 2012, and $7.1 million or 0.48% of total loans at December 31, 2011. The Companys ratio of non-performing loans to total loans continues to compare favorably to its peer group average, which was 2.48% of total loans at September 30, 2012, the most recent period for which information is available (Source: Federal Financial Institutions Examination Council Bank Holding Company Performance Report as of September 30, 2012 Top-tier bank holding companies having consolidated assets between $1 billion and $3 billion).
During the fourth quarter 2012, the Company internally downgraded to substandard status from special mention one credit relationship consisting of commercial business and commercial mortgage loans with unpaid principal balances totaling $3.4 million. The downgrade necessitated a provision and increase in our allowance for losses of approximately $400 thousand. These loans were performing in accordance with their contractual terms as of December 31, 2012, however, we continue to monitor this relationship closely.
Net charge-offs increased $688 thousand or 14% when comparing 2012 to the prior year, but represented 0.36% of average loans for both periods. The provision for loan losses for the full year 2012 decreased $652 thousand or 8% from the prior year. The 2012 provision for loan losses exceeded net charge-offs by $1.5 million as the Company continues to maintain the allowance for loan losses consistent with the growth in its loan portfolio and trends in asset quality.
Net charge-offs of $2.1 million in the fourth quarter 2012 represented 0.50% of average loans on an annualized basis compared to $1.6 million or 0.38% in the third quarter 2012. The provision for loan losses was $2.5 million for the fourth quarter 2012, compared to $1.8 million for the third quarter 2012.
The allowance for loan losses was $24.7 million at December 31, 2012, compared with $24.3 million at September 30, 2012 and $23.3 million at December 31, 2011. The ratio of the allowance for loan losses to total loans was 1.45% at December 31, 2012, compared with 1.46% at September 30, 2012 and 1.57% at December 31, 2011. Contributing to this ratio decline in 2012 were the loans obtained in the branch acquisitions, which were recorded at fair market value as of the acquisition date with no allowance carried over, as required by U.S. generally accepted accounting principles. The ratio of allowance for loan losses to non-performing loans was 271% at December 31, 2012, compared with 233% at September 30, 2012 and 329% at December 31, 2011.
About Financial Institutions, Inc.
With over $2.7 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 a quickly expanding ATM network in Western and Central New York State. Five Star Investment Services provides investment advice, brokerage and insurance products and services within the same New York State markets. Financial Institutions, Inc. and its subsidiaries employ over 600 individuals. The Companys stock is listed on the Nasdaq Global Select Market under the symbol FISI. Additional information is available at the Companys website: www.fiiwarsaw.com.
Non-GAAP Financial Information
This news release contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (GAAP). The Company believes that non-GAAP financial measures provide a meaningful comparison of the underlying operational performance of the Company, and facilitate investors assessments of its business and performance trends in comparison to others in the financial services industry. In addition, the Company believes the exclusion of these non-operating items enables management to perform a more effective evaluation and comparison of the Companys results and to assess performance in relation to the companys ongoing operations. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Where non-GAAP disclosures are used in this news release, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in Appendix A to this document.
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 Companys forward-looking statements which include its ability to implement its strategic plan, its ability to redeploy investment assets into loan assets, whether it experiences greater credit losses than expected, the impact of the current management transition, the attitudes and preferences of its customers, its ability to successfully integrate recently acquired bank branches and profitably operate newly opened bank branches, the competitive environment, fluctuations in the fair value of securities in its investment portfolio, changes in the regulatory environment and general economic and credit market conditions nationally and regionally. For more information about these factors and other factors that could affect the Companys forward-looking statements, please see the Companys Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q 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. Except as required by law, the Company undertakes no obligation to revise these statements following the date of this press release.
*****
For additional information contact: |
Karl F. Krebs |
Executive VP & CFO |
Phone: 585.786.1125 |
Email: KFKrebs@fiiwarsaw.com |
or |
Jordan M. Darrow |
Darrow Associates, Inc. |
Phone: 631.367.1866 |
Email: jdarrow@darrowir.com |
FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share amounts)
2012 | 2011 | |||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
SELECTED BALANCE SHEET DATA: |
||||||||||||||||||||
Cash and cash equivalents |
$ | 60,436 | 77,045 | 61,813 | 77,025 | 57,583 | ||||||||||||||
Investment securities: |
||||||||||||||||||||
Available for sale |
823,796 | 748,618 | 765,216 | 699,497 | 627,518 | |||||||||||||||
Held-to-maturity |
17,905 | 19,564 | 22,016 | 24,196 | 23,297 | |||||||||||||||
Total investment securities |
841,701 | 768,182 | 787,232 | 723,693 | 650,815 | |||||||||||||||
Loans held for sale |
1,518 | 1,411 | 1,682 | 2,053 | 2,410 | |||||||||||||||
Loans: |
||||||||||||||||||||
Commercial business |
258,675 | 245,307 | 245,437 | 233,764 | 233,836 | |||||||||||||||
Commercial mortgage |
413,324 | 403,120 | 413,983 | 406,521 | 393,244 | |||||||||||||||
Residential mortgage |
133,520 | 139,984 | 142,900 | 112,148 | 113,911 | |||||||||||||||
Home equity |
286,649 | 279,211 | 264,911 | 237,019 | 231,766 | |||||||||||||||
Consumer indirect |
586,794 | 563,676 | 531,645 | 508,085 | 487,713 | |||||||||||||||
Other consumer |
26,764 | 27,687 | 25,278 | 23,491 | 24,306 | |||||||||||||||
Total loans |
1,705,726 | 1,658,985 | 1,624,154 | 1,521,028 | 1,484,776 | |||||||||||||||
Allowance for loan losses |
24,714 | 24,301 | 24,120 | 23,763 | 23,260 | |||||||||||||||
Total loans, net |
1,681,012 | 1,634,684 | 1,600,034 | 1,497,265 | 1,461,516 | |||||||||||||||
Total interest-earning assets (1) (2) |
2,522,444 | 2,400,225 | 2,389,171 | 2,226,472 | 2,115,622 | |||||||||||||||
Goodwill and other intangible assets, net |
50,820 | 50,924 | 43,858 | 37,369 | 37,369 | |||||||||||||||
Total assets |
2,764,034 | 2,653,319 | 2,622,751 | 2,460,820 | 2,336,353 | |||||||||||||||
Deposits: |
||||||||||||||||||||
Noninterest-bearing demand |
501,514 | 490,706 | 422,165 | 404,186 | 393,421 | |||||||||||||||
Interest-bearing demand |
449,744 | 472,023 | 420,386 | 435,701 | 362,555 | |||||||||||||||
Savings and money market |
655,598 | 673,883 | 584,278 | 530,754 | 474,947 | |||||||||||||||
Certificates of deposit |
654,938 | 695,107 | 708,442 | 695,928 | 700,676 | |||||||||||||||
Total deposits |
2,261,794 | 2,331,719 | 2,135,271 | 2,066,569 | 1,931,599 | |||||||||||||||
Borrowings |
179,806 | 38,282 | 200,824 | 117,347 | 150,698 | |||||||||||||||
Total interest-bearing liabilities |
1,940,086 | 1,879,295 | 1,913,930 | 1,779,730 | 1,688,876 | |||||||||||||||
Shareholders equity |
253,897 | 251,842 | 246,946 | 239,962 | 237,194 | |||||||||||||||
Common shareholders equity (3) |
236,426 | 234,371 | 229,473 | 222,489 | 219,721 | |||||||||||||||
Tangible common equity (4) |
185,606 | 183,447 | 185,615 | 185,120 | 182,352 | |||||||||||||||
Unrealized gain on investment securities, net of tax |
$ | 16,060 | 17,178 | 14,487 | 12,316 | 13,570 | ||||||||||||||
Common shares outstanding |
13,788 | 13,786 | 13,812 | 13,812 | 13,803 | |||||||||||||||
Treasury shares |
374 | 376 | 350 | 350 | 359 | |||||||||||||||
CAPITAL RATIOS AND PER SHARE DATA: |
||||||||||||||||||||
Leverage ratio |
7.70 | % | 7.67 | 8.27 | 8.80 | 8.63 | ||||||||||||||
Tier 1 risk-based capital |
10.70 | % | 10.91 | 11.39 | 12.22 | 12.20 | ||||||||||||||
Total risk-based capital |
11.96 | % | 12.16 | 12.64 | 13.47 | 13.45 | ||||||||||||||
Common equity to assets |
8.55 | % | 8.83 | 8.75 | 9.04 | 9.40 | ||||||||||||||
Tangible common equity to tangible assets (4) |
6.84 | % | 7.05 | 7.20 | 7.64 | 7.93 | ||||||||||||||
Common book value per share |
$ | 17.15 | 17.00 | 16.61 | 16.11 | 15.92 | ||||||||||||||
Tangible common book value per share (4) |
13.46 | 13.31 | 13.44 | 13.40 | 13.21 |
(1) Includes investment securities at adjusted amortized cost and non-performing investment securities. |
(2) Includes nonaccrual loans. |
(3) Excludes preferred shareholders equity. |
(4) See Appendix A Non-GAAP to GAAP Reconciliation for the computation of this Non-GAAP measure. |
FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share amounts)
Quarterly Trends | ||||||||||||||||||||||||||||
Years ended | 2012 | 2011 | ||||||||||||||||||||||||||
December 31, | Fourth | Third | Second | First | Fourth | |||||||||||||||||||||||
2012 | 2011 | Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||||||||||||
SELECTED INCOME STATEMENT DATA: |
||||||||||||||||||||||||||||
Interest income |
$ | 97,567 | 95,118 | 25,087 | 25,299 | 23,731 | 23,450 | 23,875 | ||||||||||||||||||||
Interest expense |
9,051 | 13,255 | 1,999 | 2,200 | 2,343 | 2,509 | 2,721 | |||||||||||||||||||||
Net interest income |
88,516 | 81,863 | 23,088 | 23,099 | 21,388 | 20,941 | 21,154 | |||||||||||||||||||||
Provision for loan losses |
7,128 | 7,780 | 2,520 | 1,764 | 1,459 | 1,385 | 2,162 | |||||||||||||||||||||
Net interest income after provision |
||||||||||||||||||||||||||||
for loan losses |
81,388 | 74,083 | 20,568 | 21,335 | 19,929 | 19,556 | 18,992 | |||||||||||||||||||||
Noninterest income: |
||||||||||||||||||||||||||||
Service charges on deposits |
8,627 | 8,679 | 2,526 | 2,292 | 1,974 | 1,835 | 2,074 | |||||||||||||||||||||
ATM and debit card |
4,716 | 4,359 | 1,348 | 1,219 | 1,072 | 1,077 | 1,103 | |||||||||||||||||||||
Broker-dealer fees and commissions |
2,104 | 1,829 | 474 | 609 | 434 | 587 | 500 | |||||||||||||||||||||
Company owned life insurance |
1,751 | 1,424 | 451 | 433 | 441 | 426 | 457 | |||||||||||||||||||||
Loan servicing |
617 | 835 | (28 | ) | 142 | 409 | 94 | 173 | ||||||||||||||||||||
Net gain on sale of loans held for sale |
1,421 | 880 | 440 | 323 | 325 | 333 | 221 | |||||||||||||||||||||
Net gain on investment securities |
2,651 | 3,003 | 487 | 596 | 1,237 | 331 | 656 | |||||||||||||||||||||
Impairment charge on investment securities |
(91 | ) | (18 | ) | | | | (91 | ) | (18 | ) | |||||||||||||||||
Net (loss) gain on sale of other assets |
(381 | ) | 67 | (302 | ) | (114 | ) | 29 | 6 | 23 | ||||||||||||||||||
Other |
3,362 | 2,867 | 887 | 853 | 769 | 853 | 578 | |||||||||||||||||||||
Total noninterest income |
24,777 | 23,925 | 6,283 | 6,353 | 6,690 | 5,451 | 5,767 | |||||||||||||||||||||
Noninterest expense: |
||||||||||||||||||||||||||||
Salaries and employee benefits |
40,127 | 35,743 | 9,562 | 12,438 | 9,071 | 9,056 | 9,359 | |||||||||||||||||||||
Occupancy and equipment |
11,419 | 10,868 | 3,019 | 2,915 | 2,715 | 2,770 | 2,659 | |||||||||||||||||||||
Professional services |
4,133 | 2,617 | 890 | 1,452 | 1,080 | 711 | 794 | |||||||||||||||||||||
Computer and data processing |
3,271 | 2,437 | 809 | 976 | 886 | 600 | 583 | |||||||||||||||||||||
Supplies and postage |
2,497 | 1,778 | 567 | 899 | 573 | 458 | 441 | |||||||||||||||||||||
FDIC assessments |
1,300 | 1,513 | 343 | 356 | 304 | 297 | 301 | |||||||||||||||||||||
Advertising and promotions |
929 | 1,259 | 430 | 261 | 137 | 101 | 364 | |||||||||||||||||||||
Loss on extinguishment of debt |
| 1,083 | | | | | | |||||||||||||||||||||
Other |
7,721 | 6,496 | 1,921 | 2,321 | 1,815 | 1,664 | 1,778 | |||||||||||||||||||||
Total noninterest expense |
71,397 | 63,794 | 17,541 | 21,618 | 16,581 | 15,657 | 16,279 | |||||||||||||||||||||
Income before income taxes |
34,768 | 34,214 | 9,310 | 6,070 | 10,038 | 9,350 | 8,480 | |||||||||||||||||||||
Income tax expense |
11,319 | 11,415 | 2,978 | 1,805 | 3,382 | 3,154 | 2,718 | |||||||||||||||||||||
Net income |
$ | 23,449 | 22,799 | 6,332 | 4,265 | 6,656 | 6,196 | 5,762 | ||||||||||||||||||||
Preferred stock dividends |
1,474 | 3,182 | 369 | 368 | 368 | 369 | 369 | |||||||||||||||||||||
Net income available to |
||||||||||||||||||||||||||||
common shareholders |
$ | 21,975 | 19,617 | 5,963 | 3,897 | 6,288 | 5,827 | 5,393 | ||||||||||||||||||||
FINANCIAL RATIOS AND STOCK DATA: |
||||||||||||||||||||||||||||
Earnings per share basic |
$ | 1.60 | 1.50 | 0.44 | 0.28 | 0.46 | 0.43 | 0.39 | ||||||||||||||||||||
Earnings per share diluted |
$ | 1.60 | 1.49 | 0.43 | 0.28 | 0.46 | 0.42 | 0.39 | ||||||||||||||||||||
Cash dividends declared on common stock |
$ | 0.57 | 0.47 | 0.16 | 0.14 | 0.14 | 0.13 | 0.13 | ||||||||||||||||||||
Common dividend payout ratio (1) |
35.63 | % | 31.33 | 36.36 | 50.00 | 30.43 | 30.23 | 33.33 | ||||||||||||||||||||
Dividend yield (annualized) |
3.06 | % | 2.91 | 3.42 | 2.99 | 3.34 | 3.23 | 3.20 | ||||||||||||||||||||
Return on average assets |
0.93 | % | 1.00 | 0.95 | 0.65 | 1.08 | 1.06 | 0.98 | ||||||||||||||||||||
Return on average equity |
9.46 | % | 9.82 | 9.85 | 6.77 | 10.94 | 10.36 | 9.44 | ||||||||||||||||||||
Return on average common equity (2) |
9.53 | % | 9.47 | 9.95 | 6.65 | 11.12 | 10.51 | 9.53 | ||||||||||||||||||||
Return on average tangible common equity (3) |
11.74 | % | 11.55 | 12.66 | 8.33 | 13.36 | 12.62 | 11.43 | ||||||||||||||||||||
Efficiency ratio (4) |
62.87 | % | 60.55 | 58.88 | 73.04 | 60.41 | 58.59 | 60.49 | ||||||||||||||||||||
Stock price (Nasdaq: FISI): |
||||||||||||||||||||||||||||
High |
$ | 19.52 | 20.36 | 19.39 | 19.52 | 17.66 | 17.99 | 17.26 | ||||||||||||||||||||
Low |
$ | 15.22 | 12.18 | 17.61 | 16.50 | 15.51 | 15.22 | 12.18 | ||||||||||||||||||||
Close |
$ | 18.63 | 16.14 | 18.63 | 18.64 | 16.88 | 16.17 | 16.14 |
(1) Common dividend payout ratio equals dividends declared during the period divided by earnings per share for the equivalent period. |
(2) Net income available to common shareholders divided by average common equity. |
(3) See Appendix A Non-GAAP to GAAP Reconciliation for the computation of this Non-GAAP measure. |
(4) 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. |
FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands)
Quarterly Trends | ||||||||||||||||||||||||||||||||||||||||||||
Years ended | 2012 | 2011 | ||||||||||||||||||||||||||||||||||||||||||
December 31, | Fourth | Third | Second | First | Fourth | |||||||||||||||||||||||||||||||||||||||
2012 | 2011 | Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||||||||||||||||||||||||||||
SELECTED AVERAGE BALANCES: |
||||||||||||||||||||||||||||||||||||||||||||
Federal funds sold and interest-earning deposits |
$ | 113 | 140 | 94 | 168 | 94 | 94 | 94 | ||||||||||||||||||||||||||||||||||||
Investment securities (1) | 703,643 | 685,769 | 727,735 | 745,796 | 715,431 | 624,883 | 654,260 | |||||||||||||||||||||||||||||||||||||
Loans (2): |
||||||||||||||||||||||||||||||||||||||||||||
Commercial business | 242,100 | 215,598 | 250,384 | 248,060 | 237,936 | 231,865 | 225,274 | |||||||||||||||||||||||||||||||||||||
Commercial mortgage | 407,737 | 370,843 | 407,168 | 409,884 | 411,871 | 402,007 | 392,493 | |||||||||||||||||||||||||||||||||||||
Residential mortgage | 127,363 | 121,742 | 137,586 | 141,808 | 115,621 | 114,166 | 116,320 | |||||||||||||||||||||||||||||||||||||
Home equity | 257,537 | 216,428 | 282,831 | 271,131 | 242,208 | 233,550 | 226,597 | |||||||||||||||||||||||||||||||||||||
Consumer indirect | 533,589 | 444,527 | 576,519 | 544,527 | 517,859 | 494,861 | 477,017 | |||||||||||||||||||||||||||||||||||||
Other consumer | 25,058 | 24,686 | 27,043 | 26,179 | 23,420 | 23,554 | 24,168 | |||||||||||||||||||||||||||||||||||||
Total loans | 1,593,384 | 1,393,824 | 1,681,531 | 1,641,589 | 1,548,915 | 1,500,003 | 1,461,869 | |||||||||||||||||||||||||||||||||||||
Total interest-earning assets | 2,297,140 | 2,079,733 | 2,409,360 | 2,387,553 | 2,264,440 | 2,124,980 | 2,116,223 | |||||||||||||||||||||||||||||||||||||
Goodwill and other intangible assets, net | 43,399 | 37,369 | 50,884 | 47,200 | 38,020 | 37,369 | 37,369 | |||||||||||||||||||||||||||||||||||||
Total assets | 2,519,258 | 2,277,149 | 2,650,504 | 2,607,497 | 2,473,888 | 2,342,730 | 2,322,303 | |||||||||||||||||||||||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing demand | 423,096 | 383,122 | 464,094 | 425,739 | 409,720 | 392,353 | 378,584 | |||||||||||||||||||||||||||||||||||||
Savings and money market | 586,329 | 451,030 | 671,295 | 611,564 | 553,701 | 507,543 | 464,904 | |||||||||||||||||||||||||||||||||||||
Certificates of deposit | 693,353 | 712,411 | 685,318 | 695,682 | 689,103 | 703,372 | 703,571 | |||||||||||||||||||||||||||||||||||||
Borrowings | 121,735 | 115,027 | 69,335 | 157,973 | 162,718 | 97,093 | 127,914 | |||||||||||||||||||||||||||||||||||||
Total interest-bearing liabilities | 1,824,513 | 1,661,590 | 1,890,042 | 1,890,958 | 1,815,242 | 1,700,361 | 1,674,973 | |||||||||||||||||||||||||||||||||||||
Noninterest-bearing demand deposits | 430,240 | 368,268 | 487,434 | 447,204 | 398,353 | 387,153 | 388,670 | |||||||||||||||||||||||||||||||||||||
Total deposits | 2,133,018 | 1,914,831 | 2,308,141 | 2,180,189 | 2,050,877 | 1,990,421 | 1,935,729 | |||||||||||||||||||||||||||||||||||||
Total liabilities | 2,271,259 | 2,044,899 | 2,394,689 | 2,356,787 | 2,229,046 | 2,102,217 | 2,080,177 | |||||||||||||||||||||||||||||||||||||
Shareholders equity | 247,999 | 232,250 | 255,815 | 250,710 | 244,842 | 240,513 | 242,126 | |||||||||||||||||||||||||||||||||||||
Common equity (3) | 230,527 | 207,189 | 238,344 | 233,238 | 227,369 | 223,040 | 224,649 | |||||||||||||||||||||||||||||||||||||
Tangible common equity (4) | $ | 187,128 | 169,820 | 187,460 | 186,038 | 189,349 | 185,671 | 187,280 | ||||||||||||||||||||||||||||||||||||
Common shares outstanding: |
||||||||||||||||||||||||||||||||||||||||||||
Basic | 13,696 | 13,067 | 13,707 | 13,703 | 13,697 | 13,675 | 13,636 | |||||||||||||||||||||||||||||||||||||
Diluted | 13,751 | 13,157 | 13,761 | 13,759 | 13,750 | 13,733 | 13,722 | |||||||||||||||||||||||||||||||||||||
SELECTED AVERAGE YIELDS: |
||||||||||||||||||||||||||||||||||||||||||||
(Tax equivalent basis) |
||||||||||||||||||||||||||||||||||||||||||||
Federal funds sold and interest-earning deposits |
0.29 | % | 0.20 | 0.60 | 0.16 | 0.21 | 0.29 | 0.18 | ||||||||||||||||||||||||||||||||||||
Investment securities |
2.66 | % | 2.93 | 2.56 | 2.60 | 2.68 | 2.83 | 2.79 | ||||||||||||||||||||||||||||||||||||
Loans |
5.09 | % | 5.53 | 4.98 | 5.10 | 5.06 | 5.24 | 5.38 | ||||||||||||||||||||||||||||||||||||
Total interest-earning assets |
4.35 | % | 4.67 | 4.25 | 4.32 | 4.31 | 4.53 | 4.58 | ||||||||||||||||||||||||||||||||||||
Interest-bearing demand |
0.14 | % | 0.16 | 0.13 | 0.14 | 0.14 | 0.15 | 0.15 | ||||||||||||||||||||||||||||||||||||
Savings and money market |
0.17 | % | 0.23 | 0.14 | 0.15 | 0.18 | 0.22 | 0.23 | ||||||||||||||||||||||||||||||||||||
Certificates of deposit |
0.99 | % | 1.37 | 0.86 | 0.94 | 1.03 | 1.13 | 1.22 | ||||||||||||||||||||||||||||||||||||
Borrowings |
0.48 | % | 1.58 | 0.76 | 0.43 | 0.43 | 0.46 | 0.45 | ||||||||||||||||||||||||||||||||||||
Total interest-bearing liabilities |
0.50 | % | 0.80 | 0.42 | 0.46 | 0.52 | 0.59 | 0.64 | ||||||||||||||||||||||||||||||||||||
Net interest rate spread |
3.85 | % | 3.87 | 3.83 | 3.86 | 3.79 | 3.94 | 3.94 | ||||||||||||||||||||||||||||||||||||
Net interest rate margin |
3.95 | % | 4.04 | 3.92 | 3.96 | 3.89 | 4.05 | 4.07 |
(1) Includes investment securities at adjusted amortized cost and non-performing investment securities. |
(2) Includes nonaccrual loans. |
(3) Excludes preferred shareholders equity. |
(4) See Appendix A Non-GAAP to GAAP Reconciliation for the computation of this Non-GAAP measure. |
FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands)
2012 | 2011 | |||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
ASSET QUALITY DATA: |
||||||||||||||||||||
Allowance for Loan Losses |
||||||||||||||||||||
Beginning balance |
$ | 24,301 | 24,120 | 23,763 | 23,260 | 22,977 | ||||||||||||||
Net loan charge-offs (recoveries): |
||||||||||||||||||||
Commercial business |
139 | 287 | (11 | ) | (22 | ) | 880 | |||||||||||||
Commercial mortgage |
277 | (64 | ) | 166 | 105 | 131 | ||||||||||||||
Residential mortgage |
22 | 39 | 99 | 36 | 89 | |||||||||||||||
Home equity |
119 | 65 | 82 | (5 | ) | 39 | ||||||||||||||
Consumer indirect |
1,367 | 1,124 | 661 | 668 | 652 | |||||||||||||||
Other consumer |
183 | 132 | 105 | 100 | 88 | |||||||||||||||
Total net charge-offs |
2,107 | 1,583 | 1,102 | 882 | 1,879 | |||||||||||||||
Provision for loan losses |
2,520 | 1,764 | 1,459 | 1,385 | 2,162 | |||||||||||||||
Ending balance |
$ | 24,714 | 24,301 | 24,120 | 23,763 | 23,260 | ||||||||||||||
Supplemental information |
||||||||||||||||||||
Period end loans: |
||||||||||||||||||||
Originated loans |
$ | 1,641,197 | 1,588,614 | 1,566,025 | 1,521,028 | 1,484,776 | ||||||||||||||
Acquired loans |
64,529 | 70,371 | 58,129 | | | |||||||||||||||
Total loans |
$ | 1,705,726 | 1,658,985 | 1,624,154 | 1,521,028 | 1,484,776 | ||||||||||||||
Allowance for loan losses to total loans |
1.45 | % | 1.46 | 1.49 | 1.56 | 1.57 | ||||||||||||||
Allowance for loan losses for originated |
||||||||||||||||||||
loans to originated loans |
1.51 | % | 1.53 | 1.54 | 1.56 | 1.57 | ||||||||||||||
Net charge-offs (recoveries) to average loans (annualized): |
||||||||||||||||||||
Commercial business |
0.22 | % | 0.46 | -0.02 | -0.04 | 1.55 | ||||||||||||||
Commercial mortgage |
0.27 | % | -0.06 | 0.16 | 0.10 | 0.13 | ||||||||||||||
Residential mortgage |
0.06 | % | 0.11 | 0.34 | 0.13 | 0.30 | ||||||||||||||
Home equity |
0.17 | % | 0.10 | 0.14 | -0.01 | 0.07 | ||||||||||||||
Consumer indirect |
0.94 | % | 0.82 | 0.51 | 0.54 | 0.54 | ||||||||||||||
Other consumer |
2.68 | % | 2.00 | 1.80 | 1.70 | 1.44 | ||||||||||||||
Total loans |
0.50 | % | 0.38 | 0.29 | 0.24 | 0.51 | ||||||||||||||
Non-performing loans: |
||||||||||||||||||||
Commercial business |
$ | 3,413 | 3,621 | 4,150 | 1,863 | 1,259 | ||||||||||||||
Commercial mortgage |
1,799 | 3,388 | 3,598 | 3,040 | 2,928 | |||||||||||||||
Residential mortgage |
2,040 | 1,597 | 1,918 | 1,929 | 1,644 | |||||||||||||||
Home equity |
939 | 929 | 973 | 934 | 682 | |||||||||||||||
Consumer indirect |
891 | 876 | 695 | 444 | 558 | |||||||||||||||
Other consumer |
43 | 23 | 4 | 12 | 5 | |||||||||||||||
Total non-performing loans |
9,125 | 10,434 | 11,338 | 8,222 | 7,076 | |||||||||||||||
Foreclosed assets |
184 | 303 | 270 | 258 | 475 | |||||||||||||||
Non-performing investment securities |
753 | 766 | 1,145 | 1,505 | 1,636 | |||||||||||||||
Total non-performing assets |
$ | 10,062 | 11,503 | 12,753 | 9,985 | 9,187 | ||||||||||||||
Total non-performing loans to total loans |
0.53 | % | 0.63 | 0.70 | 0.54 | 0.48 | ||||||||||||||
Total non-performing loans to originated loans |
0.56 | % | 0.66 | 0.72 | 0.54 | 0.48 | ||||||||||||||
Total non-performing assets to total assets |
0.36 | % | 0.43 | 0.49 | 0.41 | 0.39 | ||||||||||||||
Allowance for loan losses to non-performing loans |
271 | % | 233 | 213 | 289 | 329 |
FINANCIAL INSTITUTIONS, INC.
Appendix A Non-GAAP to GAAP Reconciliation (Unaudited)
(In thousands, except per share amounts)
Years ended | 2012 | 2011 | ||||||||||||||||||||||||||
December 31, | Fourth | Third | Second | First | Fourth | |||||||||||||||||||||||
2012 | 2011 | Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||||||||||||
Ending tangible assets: |
||||||||||||||||||||||||||||
Total assets |
$ | 2,764,034 | 2,653,319 | 2,622,751 | 2,460,820 | 2,336,353 | ||||||||||||||||||||||
Less: Goodwill and other intangible assets, net |
50,820 | 50,924 | 43,858 | 37,369 | 37,369 | |||||||||||||||||||||||
Tangible assets (non-GAAP) |
$ | 2,713,214 | 2,602,395 | 2,578,893 | 2,423,451 | 2,298,984 | ||||||||||||||||||||||
Ending tangible common equity: |
||||||||||||||||||||||||||||
Common shareholders equity |
$ | 236,426 | 234,371 | 229,473 | 222,489 | 219,721 | ||||||||||||||||||||||
Less: Goodwill and other intangible assets, net |
50,820 | 50,924 | 43,858 | 37,369 | 37,369 | |||||||||||||||||||||||
Tangible common equity (non-GAAP) |
$ | 185,606 | 183,447 | 185,615 | 185,120 | 182,352 | ||||||||||||||||||||||
Tangible common equity to tangible assets (non-GAAP) (1) |
6.84 | % | 7.05 | 7.20 | 7.64 | 7.93 | ||||||||||||||||||||||
Common shares outstanding |
13,788 | 13,786 | 13,812 | 13,812 | 13,803 | |||||||||||||||||||||||
Tangible common book value per share (non-GAAP) (2) |
$ | 13.46 | 13.31 | 13.44 | 13.40 | 13.21 | ||||||||||||||||||||||
Average tangible common equity: |
||||||||||||||||||||||||||||
Average common equity |
$ | 230,527 | 207,189 | 238,344 | 233,238 | 227,369 | 223,040 | 224,649 | ||||||||||||||||||||
Average goodwill and other intangible assets, net |
43,399 | 37,369 | 50,884 | 47,200 | 38,020 | 37,369 | 37,369 | |||||||||||||||||||||
Average tangible common equity (non-GAAP) |
$ | 187,128 | 169,820 | 187,460 | 186,038 | 189,349 | 185,671 | 187,280 | ||||||||||||||||||||
Return on average tangible common equity (3) |
11.74 | % | 11.55 | 12.66 | 8.33 | 13.36 | 12.62 | 11.43 | ||||||||||||||||||||
Net operating income: |
||||||||||||||||||||||||||||
Net income |
$ | 23,449 | 22,799 | 6,332 | 4,265 | 6,656 | 6,196 | 5,762 | ||||||||||||||||||||
Branch acquisition expenses, net of tax (4) |
1,966 | | | 1,262 | 646 | 58 | | |||||||||||||||||||||
CEO retirement expenses, net of tax (4) |
1,670 | | | 1,670 | | | | |||||||||||||||||||||
Loss on extinguishment of debt, net of tax (4) |
| 704 | | | | | | |||||||||||||||||||||
Net operating income (non-GAAP) |
$ | 27,085 | 23,503 | 6,332 | 7,197 | 7,302 | 6,254 | 5,762 | ||||||||||||||||||||
Net operating income available to common shareholders: |
||||||||||||||||||||||||||||
Net income available to common shareholders |
$ | 21,975 | 19,617 | 5,963 | 3,897 | 6,288 | 5,827 | 5,393 | ||||||||||||||||||||
Branch acquisition expenses, net of tax (4) |
1,966 | | | 1,262 | 646 | 58 | | |||||||||||||||||||||
CEO retirement expenses, net of tax (4) |
1,670 | | | 1,670 | | | | |||||||||||||||||||||
Loss on extinguishment of debt, net of tax (4) |
| 704 | | | | | | |||||||||||||||||||||
Accelerated accretion on redeemed TARP stock |
| 1,209 | | | | | | |||||||||||||||||||||
Net operating income available to common |
||||||||||||||||||||||||||||
shareholders (non-GAAP) |
$ | 25,611 | 21,530 | 5,963 | 6,829 | 6,934 | 5,885 | 5,393 | ||||||||||||||||||||
Financial ratios computed on an operating basis (Non-GAAP): |
||||||||||||||||||||||||||||
Earnings per share basic |
$ | 1.87 | 1.65 | 0.44 | 0.50 | 0.51 | 0.43 | 0.39 | ||||||||||||||||||||
Earnings per share diluted |
$ | 1.86 | 1.64 | 0.43 | 0.50 | 0.50 | 0.43 | 0.39 | ||||||||||||||||||||
Return on average assets |
1.08 | % | 1.03 | 0.95 | 1.10 | 1.19 | 1.07 | 0.98 | ||||||||||||||||||||
Return on average equity |
10.92 | % | 10.12 | 9.85 | 11.42 | 11.99 | 10.46 | 9.44 | ||||||||||||||||||||
Return on average common equity |
11.11 | % | 10.39 | 9.95 | 11.65 | 12.27 | 10.61 | 9.53 | ||||||||||||||||||||
Return on average tangible common equity |
13.69 | % | 12.68 | 12.66 | 14.60 | 14.73 | 12.75 | 11.43 |
(1) Tangible common equity divided by tangible assets. |
(2) Tangible common equity divided by common shares outstanding. |
(3) Annualized net income divided by average tangible common equity. |
(4) Tax effect is calculated assuming a 35% effective tax rate. |