WARSAW, N.Y., Jan. 26, 2016 (GLOBE NEWSWIRE) -- Financial Institutions, Inc. (Nasdaq:FISI), today reported financial results for the fourth quarter and year ended December 31, 2015. Financial Institutions, Inc. (the “Company”) is the parent company of Five Star Bank, Scott Danahy Naylon Insurance and Courier Capital. The Company’s financial results since August 1, 2014 include the results of operations of Scott Danahy Naylon (“SDN”), an insurance agency the Company acquired in August 2014.
Fourth Quarter and Full Year 2015 Highlights:
- Increased net interest income to a record $24.6 million in the fourth quarter
- Increased noninterest income to $8.6 million in the fourth quarter
- Grew total loans $171.8 million or 9% over the prior year
- Increased total deposits by $280.0 million or 11% from the end of the prior year
- Increased total assets by $291.5 million, to reach $3.38 billion, the Company’s highest level of year-end total assets
- Increased net interest income to $95.3 million in 2015, driven by a 9% increase in average interest-earning assets
- Strong performance resulted in return on average common equity of 9.87% for the year
- Focus on commercial lending resulted in 17% growth in commercial business loans and 19% growth in commercial mortgages
- Total risk-based capital increased to 13.35% from 11.72%, strengthening the Company’s capital position to support future growth
- Opened one and announced plans for a second “Made For You” financial solution center in the Rochester area; unique customer service experience to be offered in one of the Company’s targeted growth markets
- Furthered the diversification of our financial services business lines through the January 2016 acquisition of Courier Capital as a wealth management platform
Net income for the fourth quarter 2015 was $6.6 million, compared to $8.3 million for the third quarter 2015, and $7.9 million for the fourth quarter 2014. After preferred dividends, fourth quarter 2015 net income available to common shareholders was $6.3 million or $0.44 per diluted share, compared with $8.0 million or $0.56 per share for third quarter 2015, and $7.6 million or $0.54 per share for fourth quarter 2014.
For the full year of 2015, the Company earned net income of $28.3 million, compared to $29.4 million for the full year of 2014. Net income available to common shareholders was $26.9 million or $1.90 per diluted share for the full year of 2015. This compares to net income available to common shareholders of $27.9 million or $2.00 per diluted share for the full year of 2014.
The Company’s President and Chief Executive Officer Martin K. Birmingham stated, “In 2015 we maintained the momentum of the last three years. We continued to execute on our growth and diversification strategy. We saw progress in our core banking franchise with robust growth in both loans and deposits. We also continued to integrate the SDN insurance platform into our sales process and, during the fourth quarter, we announced our agreement to purchase Courier Capital as our wealth management platform, which closed at the beginning of 2016.
“Our market presence increased in the City of Rochester with the opening of our first branch office in November. Our CityGate Financial Solution Center has received an outstanding reception. By year-end the office had already exceeded $10 million in deposits.
“We also advanced our leading position as a small business lender. Through the first three months of the current SBA fiscal year, we rank #1 in the number of SBA loans in the Rochester region and #3 in the Buffalo region.* This confirms the success of our business banking initiatives as we become the small business lender of choice in Upstate New York,” continued Mr. Birmingham.
Kevin B. Klotzbach, the Company’s Chief Financial Officer added, “Total deposits increased 11% from 2014 and we ended the year with a record level of loans, increasing 9% from 2014. This growth has allowed us to successfully offset the margin pressure facing the entire industry.”
During the fourth quarter of 2015, the Company recognized a non-cash goodwill impairment charge of $751 thousand and a non-cash fair value adjustment of the contingent consideration liability that resulted in noninterest income of $1.1 million related to the SDN acquisition. The fair value of the consideration was recorded at the time of the SDN acquisition and was included in goodwill as a component of the purchase price.
“While our fourth quarter 2014 results were positively impacted by an investment in $3.0 million of historic tax credits, our fourth quarter 2015 results were adversely impacted by approximately $300 thousand in acquisition expenses, an increase in provision for loan losses associated with a significant volume of loans closed at the end of the quarter and staffing expenses related to new branch expansion. Even with these fourth quarter items, we are pleased with our overall 2015 results, especially considering the investments we have made in compliance, personnel and infrastructure throughout 2015,” continued Mr. Klotzbach.
Net Interest Income and Net Interest Margin
Net interest income was $24.6 million in the fourth quarter 2015 compared to $24.1 million in the third quarter 2015 and $24.1 million in the fourth quarter 2014. The Company’s net interest margin increased by 6 basis points from 3.20% for the third quarter 2015 to 3.26% for the fourth quarter 2015, primarily due to a corresponding increase in the yield on average loans.
Net interest income for the fourth quarter 2015 increased $493 thousand compared to the fourth quarter 2014. The increase was primarily related to an increase in average interest-earning assets of $316.3 million, led by a $172.3 million increase in investment securities and a $144.0 million increase in loans. The increase was partially offset by a lower net interest margin, which decreased 30 basis points from the fourth quarter 2014 to the fourth quarter 2015.
For the year ended December 31, 2015, net interest income rose 2% to $95.3 million from $93.8 million in 2014 as a result of a $241.4 million or 9% increase in average interest-earning assets. These increases were partially offset by a 22 basis point narrowing of the net interest margin to 3.28% in 2015 from 3.50% in 2014.
Noninterest Income
Noninterest income was $8.6 million for the fourth quarter 2015 compared to $7.0 million in the third quarter 2015 and $5.2 million in the fourth quarter 2014. The quarter-over-quarter change was driven primarily by a $1.1 million gain due to the reduction in the Company’s estimate of the fair value of the contingent consideration liability recorded for SDN. Compared to the fourth quarter 2014, noninterest income in the fourth quarter 2015 increased by $3.4 million. The increase was primarily related to the amortization of a historic tax investment in a community-based project totaling $2.3 million that was recorded in the fourth quarter of 2014. These types of investments are amortized in the first year the project is placed in service and the Company recognized the amortization as contra-income, included in noninterest income, with an offsetting tax benefit that reduced income tax expense.
Noninterest income totaled $30.3 million for the full year 2015, an increase of $5.0 million when compared to $25.3 million in the prior year. Insurance income increased by $2.8 million to $5.2 million during the current year as 2015 reflects the benefit of a full year of revenue associated with the 2014 SDN acquisition. 2015 noninterest income reflects the $1.1 million gain due to the reduction in the estimate of the fair value of the contingent consideration liability recorded for SDN as previously mentioned. Also included in noninterest income is the tax credit investment amortization described above of $390 thousand and $2.3 million for the years ended December 31, 2015 and 2014, respectively. Offsetting those increases was a $1.2 million decline in service charges on deposits, due primarily to lower overdraft fees.
Noninterest Expense
Noninterest expense was $21.8 million for the fourth quarter 2015 compared to $19.3 million in the third quarter 2015 and $19.4 million in the fourth quarter 2014. Salaries and employee benefits expense, the largest noninterest expense item, was up $1.1 million from the third quarter 2015, and reflects a combination of additional personnel to support organic growth as part of the Company’s expansion initiatives and year-end medical expense. Noninterest expense also included $751 thousand of goodwill impairment in the fourth quarter of 2015 related to the SDN acquisition, an increase of $540 thousand in professional service fees attributable to the acquisition of Courier Capital, and additional marketing services related to branding and the new branch opening at CityGate.
Noninterest expense for the full year 2015 totaled $79.4 million, a $7.0 million increase compared to $72.4 million in the prior year. Salaries and benefits expense increased $3.8 million year-over-year, reflecting the full year impact of the addition of employees from SDN and increased staffing associated with the Company’s expansion initiatives. Also contributing to the increase were higher occupancy and equipment expense, computer and data processing expense, the previously mentioned goodwill impairment charge and other noninterest expense.
Income Taxes
Income tax expense was $2.2 million in the fourth quarter 2015 compared to $2.8 million in the third quarter 2015, and $84 thousand in the fourth quarter 2014. When comparing the fourth quarter 2015 to the same quarter last year, the difference was driven by the favorable impact of $3.0 million in Federal and New York State historic tax credits realized in the fourth quarter 2014, as discussed above. As a result of the historic tax credits, the effective tax rate for the fourth quarter 2014 was 1.0%, compared with an effective tax rate of 24.5% in the current quarter and 24.8% in the third quarter 2015.
Income tax expense for the year was $10.5 million, representing an effective tax rate of 27.1% compared with an effective tax rate of 24.7% in 2014. The lower effective tax rate in 2014 reflects the historic tax credit benefit described above.
Balance Sheet and Capital Management
Total assets were $3.38 billion at December 31, 2015, up $23.4 million from $3.36 billion at September 30, 2015 and up $291.5 million from $3.09 billion at December 31, 2014. The increases were attributable to loan growth and higher investment security balances.
Total loans were $2.08 billion at December 31, 2015, up $47.5 million from September 30, 2015 and up $171.8 million from December 31, 2014. The increase in loans from the prior year was primarily attributable to organic growth in the commercial portfolio. Total investment securities were $1.03 billion at December 31, 2015, down $38.0 million or 4% from the end of the prior quarter and up $113.2 million or 12% compared with the end of 2014.
Total deposits were $2.73 billion at December 31, 2015, down $23.0 million from $2.75 billion at September 30, 2015 and up $280.0 million from $2.45 billion at December 31, 2014. The decrease during the fourth quarter 2015 was mainly due to seasonal outflows of municipal deposits, while the year-over-year increase is largely attributable to successful business development efforts. Public deposit balances represented 25% of total deposits at December 31, 2015 and 2014, compared to 27% at September 30, 2015.
Short-term borrowings were $293.1 million at December 31, 2015, up $51.7 million from September 30, 2015 and down $41.7 million from December 31, 2014. Short-term borrowings are typically utilized to manage the seasonality of municipal deposits.
Long-term borrowings, net of issuance costs, were $39.0 million at December 31, 2015 and September 30, 2015. There were no long-term borrowings outstanding at December 31, 2014. On April 15, 2015, the Company completed the sale of $40 million in aggregate principal amount of 6.00% fixed to floating rate subordinated notes due 2030 (the “Subordinated Notes”). The Subordinated Notes qualify as Tier 2 capital for regulatory purposes. The net proceeds from this offering were intended for general corporate purposes, including but not limited to, contribution of capital to Five Star Bank to support organic growth as well as opportunistic acquisitions.
Shareholders’ equity was $293.8 million at December 31, 2015, compared with $295.4 million at September 30, 2015 and $279.5 million at December 31, 2014. Common book value per share was $19.49 at December 31, 2015, a decrease of $0.11 from $19.60 at September 30, 2015 and an increase of $0.92 from $18.57 at December 31, 2014. Tangible common book value per share was $14.77 at December 31, 2015, compared to $14.81 at September 30, 2015 and $13.71 at December 31, 2014. When comparing the fourth quarter 2015 to the third quarter 2015, the decreases in shareholders’ equity and the book value per share amounts were primarily due to lower net unrealized gains on securities available for sale, a component of accumulated other comprehensive income.
During the fourth quarter 2015, the Company declared a common stock dividend of $0.20 per common share. The fourth quarter 2015 dividend returned 45% of fourth quarter net income to common shareholders.
The Company’s leverage ratio was 7.41% at December 31, 2015, compared to 7.29% at September 30, 2015 and 7.35% at December 31, 2014. The increases in the leverage ratio were due to higher regulatory capital, which excludes changes in accumulated other comprehensive income. During the second quarter of 2015, the Company contributed $34.0 million of net proceeds from the Subordinated Notes offering to the Bank as additional paid-in capital. The Bank’s leverage ratio and total risk-based capital ratio were 8.09% and 12.66%, respectively, at December 31, 2015.
Credit Quality
Non-performing loans were $8.4 million at December 31, 2015, compared to $8.5 million at September 30, 2015 and $10.2 million at December 31, 2014. The $1.7 million decrease from the prior year end was due to due to improvements in the commercial portfolios, partially offset by increases in non-performing residential real estate, home equity and indirect consumer loans on a larger consolidated base in the 2015 period. The ratio of non-performing loans to total loans was 0.41% at December 31, 2015 compared with 0.42% at September 30, 2015 and 0.53% at December 31, 2014.
The provision for loans losses for the fourth quarter 2015 was $2.6 million, an increase of $1.8 million from the prior quarter and $688 thousand from the fourth quarter 2014. The increase in the provision for loans losses during the fourth quarter 2015 was primarily due to loan growth. Net charge-offs were $2.0 million during the current quarter, a $169 thousand increase compared to the prior quarter and a $451 thousand increase from the fourth quarter 2014. The ratio of annualized net charge-offs to total average loans was 0.38% during the current quarter, compared to 0.35% during the prior quarter and 0.32% during the fourth quarter 2014.
The provision for loans losses for the full year 2015 was $7.4 million, down from $7.8 million in 2014. Net charge-offs were $7.9 million during the current year, a $1.0 million increase compared to the prior year. The ratio of annualized net charge-offs to total average loans was 0.40% during 2015 compared to 0.37% during the prior year.
The allowance for loans losses to total loans ratio was 1.30% at December 31, 2015 and September 30, 2015, compared with 1.45% at December 31, 2014. The allowance to non-performing loans ratio was 321% at December 31, 2015, compared with 311% at September 30, 2015, and 272% at December 31, 2014.
About Financial Institutions, Inc.
Financial Institutions, Inc. provides diversified financial services through its subsidiaries, Five Star Bank, Scott Danahy Naylon and Courier Capital. 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 60 ATMs throughout Western and Central New York State. Scott Danahy Naylon provides a broad range of insurance services to personal and business clients across 44 states. Courier Capital provides customized investment management, investment consulting and retirement plan services to individuals, businesses, institutions, foundations and retirement plans. Financial Institutions, Inc. and its subsidiaries employ approximately 700 individuals. The Company’s stock is listed on the Nasdaq Global Select Market under the symbol FISI and is a member of the NASDAQ OMX ABA Community Bank Index. Additional information is available at the Company’s website: www.fiiwarsaw.com.
Non-GAAP Financial Information
This news release contains financial information, such as tangible common equity, 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 addition, the Company believes the exclusion of these non-operating items enables management to perform a more effective evaluation and comparison of the Company's results and to assess performance in relation to the Company's 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 Section 21E of the Securities Exchange Act of 1934, as amended, that involve significant risks and uncertainties. Statements herein are based on certain assumptions and analyses by the Company and are factors it believes are appropriate in the circumstances. Actual results could differ materially from those contained in or implied by such statements for a variety of reasons including, but not limited to: the Company’s ability to implement its strategic plan, the Company’s ability to redeploy investment assets into loan assets, whether the Company experiences greater credit losses than expected, whether the Company experiences breaches of its, or third party, information systems, the attitudes and preferences of the Company’s customers, the Company’s ability to successfully integrate and profitably operate SDN and Courier Capital, the competitive environment, fluctuations in the fair value of securities in its investment portfolio, changes in the regulatory environment and the Company’s compliance with regulatory requirements, changes in interest rates and general economic and credit market conditions nationally and regionally. Consequently, all forward-looking statements made herein are qualified by these cautionary statements and the cautionary language in the Company’s Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and other documents filed with the SEC. Except as required by law, the Company undertakes no obligation to revise these statements following the date of this press release.
* U.S. Small Business Administration, Buffalo District Office, SBA Bank Reports Newsletter FYE15 (September 30, 2015)
| FINANCIAL INSTITUTIONS, INC. | |||||||||||||
| Selected Financial Information (Unaudited) | |||||||||||||
| (Amounts in thousands, except per share amounts) | |||||||||||||
| 2015 | 2014 | ||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||
| SELECTED BALANCE SHEET DATA: | |||||||||||||
| Cash and cash equivalents | $ | 60,121 | 51,334 | 52,554 | 135,972 | 58,151 | |||||||
| Investment securities: | |||||||||||||
| Available for sale | 544,395 | 577,509 | 772,639 | 639,275 | 622,494 | ||||||||
| Held-to-maturity | 485,717 | 490,638 | 320,820 | 306,255 | 294,438 | ||||||||
| Total investment securities | 1,030,112 | 1,068,147 | 1,093,459 | 945,530 | 916,932 | ||||||||
| Loans held for sale | 1,430 | 1,568 | 448 | 656 | 755 | ||||||||
| Loans: | |||||||||||||
| Commercial business | 313,758 | 297,876 | 292,791 | 277,464 | 267,409 | ||||||||
| Commercial mortgage | 566,101 | 548,529 | 536,590 | 479,226 | 475,092 | ||||||||
| Residential mortgage | 98,309 | 96,279 | 95,162 | 97,717 | 100,101 | ||||||||
| Home equity | 410,112 | 408,634 | 398,854 | 386,961 | 386,615 | ||||||||
| Consumer indirect | 676,940 | 665,714 | 666,550 | 662,213 | 661,673 | ||||||||
| Other consumer | 18,542 | 19,204 | 19,326 | 19,373 | 21,112 | ||||||||
| Total loans | 2,083,762 | 2,036,236 | 2,009,273 | 1,922,954 | 1,912,002 | ||||||||
| Allowance for loan losses | 27,085 | 26,455 | 27,500 | 27,191 | 27,637 | ||||||||
| Total loans, net | 2,056,677 | 2,009,781 | 1,981,773 | 1,895,763 | 1,884,365 | ||||||||
| Total interest-earning assets (1) (2) | 3,114,530 | 3,097,315 | 3,104,631 | 2,860,605 | 2,826,488 | ||||||||
| Goodwill and other intangible assets, net | 66,946 | 67,925 | 68,158 | 68,396 | 68,639 | ||||||||
| Total assets | 3,381,024 | 3,357,608 | 3,359,459 | 3,197,077 | 3,089,521 | ||||||||
| Deposits: | |||||||||||||
| Noninterest-bearing demand | 641,972 | 623,296 | 602,143 | 559,646 | 571,260 | ||||||||
| Interest-bearing demand | 523,366 | 563,731 | 530,861 | 611,104 | 490,190 | ||||||||
| Savings and money market | 928,175 | 942,673 | 910,215 | 922,093 | 795,835 | ||||||||
| Certificates of deposit | 637,018 | 623,800 | 613,019 | 611,852 | 593,242 | ||||||||
| Total deposits | 2,730,531 | 2,753,500 | 2,656,238 | 2,704,695 | 2,450,527 | ||||||||
| Short-term borrowings | 293,100 | 241,400 | 350,600 | 175,573 | 334,804 | ||||||||
| Long-term borrowings, net | 38,990 | 38,972 | 38,955 | - | - | ||||||||
| Total interest-bearing liabilities | 2,420,649 | 2,410,576 | 2,443,650 | 2,320,622 | 2,214,071 | ||||||||
| Shareholders’ equity | 293,844 | 295,434 | 284,435 | 286,689 | 279,532 | ||||||||
| Common shareholders’ equity (3) | 276,504 | 278,094 | 267,095 | 269,349 | 262,192 | ||||||||
| Tangible common equity (4) | 209,558 | 210,169 | 198,937 | 200,953 | 193,553 | ||||||||
| Unrealized gain (loss) on investment securities, net of tax | $ | 443 | 5,270 | (924 | ) | 5,241 | 1,933 | ||||||
| Common shares outstanding | 14,191 | 14,189 | 14,184 | 14,167 | 14,118 | ||||||||
| Treasury shares | 207 | 209 | 214 | 231 | 280 | ||||||||
| CAPITAL RATIOS AND PER SHARE DATA: | |||||||||||||
| Leverage ratio (5) | 7.41 | % | 7.29 | 7.31 | 7.53 | 7.35 | |||||||
| Common equity Tier 1 ratio (5) | 9.77 | % | 9.74 | 9.50 | 9.66 | n/a | |||||||
| Tier 1 risk-based capital (5) | 10.50 | % | 10.49 | 10.25 | 10.45 | 10.47 | |||||||
| Total risk-based capital (5) | 13.35 | % | 13.37 | 13.17 | 11.69 | 11.72 | |||||||
| Common equity to assets | 8.18 | % | 8.28 | 7.95 | 8.42 | 8.49 | |||||||
| Tangible common equity to tangible assets (4) | 6.32 | % | 6.39 | 6.04 | 6.42 | 6.41 | |||||||
| Common book value per share | $ | 19.49 | 19.60 | 18.83 | 19.01 | 18.57 | |||||||
| Tangible common book value per share (4) | 14.77 | 14.81 | 14.03 | 14.18 | 13.71 | ||||||||
________
(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.
(5) 2015 ratios calculated under Basel III rules, which became effective January 1, 2015.
| FINANCIAL INSTITUTIONS, INC. | |||||||||||||||||||||
| Selected Financial Information (Unaudited) | |||||||||||||||||||||
| (Amounts in thousands, except per share amounts) | |||||||||||||||||||||
| Years ended | 2015 | 2014 | |||||||||||||||||||
| December 31, | Fourth | Third | Second | First | Fourth | ||||||||||||||||
| 2015 | 2014 | Quarter | Quarter | Quarter | Quarter | Quarter | |||||||||||||||
| SELECTED INCOME STATEMENT DATA: | |||||||||||||||||||||
| Interest income | $ | 105,450 | 101,055 | 27,487 | 27,007 | 25,959 | 24,997 | 25,984 | |||||||||||||
| Interest expense | 10,137 | 7,281 | 2,856 | 2,876 | 2,555 | 1,850 | 1,846 | ||||||||||||||
| Net interest income | 95,313 | 93,774 | 24,631 | 24,131 | 23,404 | 23,147 | 24,138 | ||||||||||||||
| Provision for loan losses | 7,381 | 7,789 | 2,598 | 754 | 1,288 | 2,741 | 1,910 | ||||||||||||||
| Net interest income after provision | |||||||||||||||||||||
| for loan losses | 87,932 | 85,985 | 22,033 | 23,377 | 22,116 | 20,406 | 22,228 | ||||||||||||||
| Noninterest income: | |||||||||||||||||||||
| Service charges on deposits | 7,742 | 8,954 | 1,862 | 2,037 | 1,964 | 1,879 | 2,186 | ||||||||||||||
| Insurance income | 5,166 | 2,399 | 1,236 | 1,265 | 1,057 | 1,608 | 1,420 | ||||||||||||||
| ATM and debit card | 5,084 | 4,963 | 1,311 | 1,297 | 1,283 | 1,193 | 1,269 | ||||||||||||||
| Investment advisory | 2,193 | 2,138 | 642 | 523 | 541 | 487 | 491 | ||||||||||||||
| Company owned life insurance | 1,962 | 1,753 | 514 | 488 | 493 | 467 | 504 | ||||||||||||||
| Investments in limited partnerships | 895 | 1,103 | 30 | 336 | 55 | 474 | 209 | ||||||||||||||
| Loan servicing | 503 | 568 | 87 | 153 | 96 | 167 | 118 | ||||||||||||||
| Net gain on sale of loans held for sale | 249 | 313 | 88 | 53 | 39 | 69 | 82 | ||||||||||||||
| Net gain on investment securities | 1,988 | 2,041 | 640 | 286 | - | 1,062 | 264 | ||||||||||||||
| Net gain on sale of other assets | 27 | 69 | 7 | - | 16 | 4 | 8 | ||||||||||||||
| Amortization of tax credit investment | (390 | ) | (2,323 | ) | - | (390 | ) | - | - | (2,323 | ) | ||||||||||
| Other | 4,918 | 3,372 | 2,163 | 957 | 911 | 887 | 927 | ||||||||||||||
| Total noninterest income | 30,337 | 25,350 | 8,580 | 7,005 | 6,455 | 8,297 | 5,155 | ||||||||||||||
| Noninterest expense: | |||||||||||||||||||||
| Salaries and employee benefits | 42,439 | 38,595 | 11,332 | 10,278 | 10,606 | 10,223 | 10,551 | ||||||||||||||
| Occupancy and equipment | 13,856 | 12,829 | 3,365 | 3,417 | 3,375 | 3,699 | 3,324 | ||||||||||||||
| Professional services | 4,502 | 4,760 | 1,604 | 1,064 | 866 | 968 | 1,428 | ||||||||||||||
| Computer and data processing | 3,186 | 3,016 | 895 | 779 | 810 | 702 | 791 | ||||||||||||||
| Supplies and postage | 2,155 | 2,053 | 544 | 540 | 508 | 563 | 499 | ||||||||||||||
| FDIC assessments | 1,719 | 1,592 | 442 | 444 | 415 | 418 | 392 | ||||||||||||||
| Advertising and promotions | 1,120 | 805 | 331 | 312 | 238 | 239 | 196 | ||||||||||||||
| Goodwill impairment charge | 751 | - | 751 | - | - | - | - | ||||||||||||||
| Other | 9,665 | 8,705 | 2,564 | 2,484 | 2,418 | 2,199 | 2,198 | ||||||||||||||
| Total noninterest expense | 79,393 | 72,355 | 21,828 | 19,318 | 19,236 | 19,011 | 19,379 | ||||||||||||||
| Income before income taxes | 38,876 | 38,980 | 8,785 | 11,064 | 9,335 | 9,692 | 8,004 | ||||||||||||||
| Income tax expense | 10,539 | 9,625 | 2,150 | 2,748 | 2,750 | 2,891 | 84 | ||||||||||||||
| Net income | 28,337 | 29,355 | 6,635 | 8,316 | 6,585 | 6,801 | 7,920 | ||||||||||||||
| Preferred stock dividends | 1,462 | 1,462 | 365 | 366 | 366 | 365 | 365 | ||||||||||||||
| Net income available to common shareholders | $ | 26,875 | 27,893 | 6,270 | 7,950 | 6,219 | 6,436 | 7,555 | |||||||||||||
| FINANCIAL RATIOS AND STOCK DATA: | |||||||||||||||||||||
| Earnings per share – basic | $ | 1.91 | 2.01 | 0.44 | 0.56 | 0.44 | 0.46 | 0.54 | |||||||||||||
| Earnings per share – diluted | $ | 1.90 | 2.00 | 0.44 | 0.56 | 0.44 | 0.46 | 0.54 | |||||||||||||
| Cash dividends declared on common stock | $ | 0.80 | 0.77 | 0.20 | 0.20 | 0.20 | 0.20 | 0.20 | |||||||||||||
| Common dividend payout ratio (1) | 41.88 | % | 38.31 | 45.45 | 35.71 | 45.45 | 43.48 | 37.04 | |||||||||||||
| Dividend yield (annualized) | 2.86 | % | 3.06 | 2.83 | 3.20 | 3.23 | 3.54 | 3.15 | |||||||||||||
| Return on average assets | 0.87 | % | 0.98 | 0.78 | 0.99 | 0.81 | 0.89 | 1.03 | |||||||||||||
| Return on average equity | 9.78 | % | 10.80 | 8.86 | 11.41 | 9.19 | 9.68 | 11.07 | |||||||||||||
| Return on average common equity (2) | 9.87 | % | 10.96 | 8.89 | 11.60 | 9.24 | 9.75 | 11.25 | |||||||||||||
| Efficiency ratio (3) | 61.58 | % | 58.59 | 64.55 | 59.46 | 62.00 | 60.27 | 59.58 | |||||||||||||
| Stock price (Nasdaq:FISI): | |||||||||||||||||||||
| High | $ | 29.04 | 27.02 | 29.04 | 25.21 | 25.50 | 25.38 | 27.02 | |||||||||||||
| Low | $ | 21.67 | 19.72 | 24.05 | 23.54 | 22.50 | 21.67 | 22.45 | |||||||||||||
| Close | $ | 28.00 | 25.15 | 28.00 | 24.78 | 24.84 | 22.93 | 25.15 | |||||||||||||
________
(1) Common dividend payout ratio equals dividends declared during the period divided by earnings per share for the equivalent period.
(2) Annualized net income available to common shareholders divided by average common equity.
(3) Efficiency ratio equals noninterest expense less other real estate expense and amortization and impairment of goodwill and other intangible assets as a percentage of net revenue, defined as the sum of tax-equivalent net interest income and noninterest income before net gains on investment securities, adjustments to contingent liabilities and amortizations of tax credit investment.
| FINANCIAL INSTITUTIONS, INC. | ||||||||||||||||||
| Selected Financial Information (Unaudited) | ||||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||||
| Years ended | 2015 | 2014 | ||||||||||||||||
| December 31, | Fourth | Third | Second | First | Fourth | |||||||||||||
| 2015 | 2014 | Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||
| SELECTED AVERAGE BALANCES: | ||||||||||||||||||
| Federal funds sold and interest-earning deposits | $ | 37 | 114 | - | - | 26 | 124 | - | ||||||||||
| Investment securities (1) | 1,014,171 | 877,673 | 1,049,217 | 1,067,815 | 1,029,640 | 907,871 | 876,932 | |||||||||||
| Loans (2): | ||||||||||||||||||
| Commercial business | 286,019 | 269,877 | 297,033 | 297,216 | 284,535 | 264,814 | 265,979 | |||||||||||
| Commercial mortgage | 522,328 | 473,372 | 554,327 | 545,875 | 509,317 | 478,705 | 473,694 | |||||||||||
| Residential mortgage | 97,651 | 107,254 | 98,111 | 96,776 | 96,474 | 99,264 | 101,982 | |||||||||||
| Home equity | 396,906 | 359,511 | 408,766 | 402,368 | 390,135 | 386,046 | 384,138 | |||||||||||
| Consumer indirect | 665,454 | 651,279 | 671,888 | 663,884 | 664,222 | 661,727 | 658,337 | |||||||||||
| Other consumer | 18,969 | 21,094 | 18,626 | 18,680 | 18,848 | 19,736 | 20,630 | |||||||||||
| Total loans | 1,987,327 | 1,882,387 | 2,048,751 | 2,024,799 | 1,963,531 | 1,910,292 | 1,904,760 | |||||||||||
| Total interest-earning assets | 3,001,535 | 2,760,174 | 3,097,968 | 3,092,614 | 2,993,197 | 2,818,287 | 2,781,692 | |||||||||||
| Goodwill and other intangible assets, net | 68,138 | 57,039 | 67,692 | 68,050 | 68,294 | 68,527 | 68,771 | |||||||||||
| Total assets | 3,269,890 | 2,994,604 | 3,353,702 | 3,343,802 | 3,263,111 | 3,115,516 | 3,052,499 | |||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||
| Interest-bearing demand | 543,690 | 504,584 | 545,602 | 516,448 | 561,570 | 551,503 | 511,749 | |||||||||||
| Savings and money market | 908,614 | 783,784 | 960,768 | 903,491 | 929,701 | 839,218 | 824,661 | |||||||||||
| Certificates of deposit | 616,747 | 624,299 | 628,944 | 619,459 | 616,145 | 602,115 | 614,654 | |||||||||||
| Short-term borrowings | 262,494 | 247,956 | 241,957 | 329,050 | 226,577 | 251,768 | 232,935 | |||||||||||
| Long-term borrowings, net | 27,886 | - | 38,979 | 38,962 | 33,053 | - | - | |||||||||||
| Total interest-bearing liabilities | 2,359,431 | 2,160,623 | 2,416,250 | 2,407,410 | 2,367,046 | 2,244,604 | 2,183,999 | |||||||||||
| Noninterest-bearing demand deposits | 599,334 | 545,904 | 619,423 | 625,131 | 587,396 | 564,500 | 564,336 | |||||||||||
| Total deposits | 2,668,385 | 2,458,571 | 2,754,737 | 2,664,529 | 2,694,812 | 2,557,336 | 2,515,400 | |||||||||||
| Total liabilities | 2,980,183 | 2,722,730 | 3,056,541 | 3,054,573 | 2,975,762 | 2,830,557 | 2,768,693 | |||||||||||
| Shareholders’ equity | 289,707 | 271,874 | 297,161 | 289,229 | 287,349 | 284,959 | 283,806 | |||||||||||
| Common equity (3) | 272,367 | 254,533 | 279,821 | 271,889 | 270,009 | 267,619 | 266,466 | |||||||||||
| Tangible common equity (4) | $ | 204,229 | 197,494 | 212,129 | 203,839 | 201,715 | 199,092 | 197,695 | ||||||||||
| Common shares outstanding: | ||||||||||||||||||
| Basic | 14,081 | 13,893 | 14,095 | 14,087 | 14,078 | 14,063 | 14,049 | |||||||||||
| Diluted | 14,135 | 13,946 | 14,163 | 14,139 | 14,121 | 14,113 | 14,112 | |||||||||||
| SELECTED AVERAGE YIELDS: | ||||||||||||||||||
| (Tax equivalent basis) | ||||||||||||||||||
| Federal funds sold and interest-earning deposits | 0.40 | % | 0.14 | - | - | 0.39 | 0.19 | - | ||||||||||
| Investment securities | 2.46 | % | 2.44 | 2.47 | 2.46 | 2.44 | 2.47 | 2.48 | ||||||||||
| Loans | 4.21 | % | 4.38 | 4.22 | 4.16 | 4.18 | 4.27 | 4.44 | ||||||||||
| Total interest-earning assets | 3.62 | % | 3.76 | 3.63 | 3.57 | 3.58 | 3.69 | 3.82 | ||||||||||
| Interest-bearing demand | 0.14 | % | 0.12 | 0.15 | 0.15 | 0.14 | 0.11 | 0.11 | ||||||||||
| Savings and money market | 0.13 | % | 0.12 | 0.14 | 0.14 | 0.12 | 0.10 | 0.11 | ||||||||||
| Certificates of deposit | 0.87 | % | 0.78 | 0.88 | 0.89 | 0.87 | 0.84 | 0.82 | ||||||||||
| Short-term borrowings | 0.41 | % | 0.37 | 0.49 | 0.41 | 0.38 | 0.37 | 0.36 | ||||||||||
| Long-term borrowings, net | 6.28 | % | - | 6.34 | 6.34 | 6.23 | - | - | ||||||||||
| Total interest-bearing liabilities | 0.43 | % | 0.34 | 0.47 | 0.47 | 0.43 | 0.33 | 0.34 | ||||||||||
| Net interest rate spread | 3.19 | % | 3.42 | 3.16 | 3.10 | 3.15 | 3.36 | 3.48 | ||||||||||
| Net interest rate margin | 3.28 | % | 3.50 | 3.26 | 3.20 | 3.24 | 3.43 | 3.56 | ||||||||||
________
(1) Includes investment securities at adjusted amortized cost.
(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) | |||||||||||||||
| 2015 | 2014 | ||||||||||||||
| Fourth | Third | Second | First | Fourth | |||||||||||
| Quarter | Quarter | Quarter | Quarter | Quarter | |||||||||||
| ASSET QUALITY DATA: | |||||||||||||||
| Allowance for Loan Losses | |||||||||||||||
| Beginning balance | $ | 26,455 | 27,500 | 27,191 | 27,637 | 27,244 | |||||||||
| Net loan charge-offs (recoveries): | |||||||||||||||
| Commercial business | 133 | 68 | (73 | ) | 1,093 | (15 | ) | ||||||||
| Commercial mortgage | 23 | 12 | 194 | 520 | (57 | ) | |||||||||
| Residential mortgage | 59 | 3 | 9 | 22 | 22 | ||||||||||
| Home equity | 75 | 64 | 145 | 74 | (4 | ) | |||||||||
| Consumer indirect | 1,519 | 1,475 | 645 | 1,317 | 1,420 | ||||||||||
| Other consumer | 159 | 177 | 59 | 161 | 151 | ||||||||||
| Total net charge-offs | 1,968 | 1,799 | 979 | 3,187 | 1,517 | ||||||||||
| Provision for loan losses | 2,598 | 754 | 1,288 | 2,741 | 1,910 | ||||||||||
| Ending balance | $ | 27,085 | 26,455 | 27,500 | 27,191 | 27,637 | |||||||||
| Net charge-offs (recoveries) to average loans (annualized): | |||||||||||||||
| Commercial business | 0.18 | % | 0.09 | -0.10 | 1.67 | -0.02 | |||||||||
| Commercial mortgage | 0.02 | % | 0.01 | 0.15 | 0.44 | -0.05 | |||||||||
| Residential mortgage | 0.24 | % | 0.01 | 0.04 | 0.09 | 0.09 | |||||||||
| Home equity | 0.07 | % | 0.06 | 0.15 | 0.08 | 0.00 | |||||||||
| Consumer indirect | 0.90 | % | 0.88 | 0.39 | 0.81 | 0.86 | |||||||||
| Other consumer | 3.39 | % | 3.76 | 1.26 | 3.31 | 2.90 | |||||||||
| Total loans | 0.38 | % | 0.35 | 0.20 | 0.68 | 0.32 | |||||||||
| Supplemental information (1) | |||||||||||||||
| Non-performing loans: | |||||||||||||||
| Commercial business | $ | 3,922 | 3,064 | 4,643 | 4,587 | 4,288 | |||||||||
| Commercial mortgage | 947 | 1,802 | 3,070 | 3,411 | 3,020 | ||||||||||
| Residential mortgage | 1,325 | 1,523 | 1,628 | 1,361 | 1,194 | ||||||||||
| Home equity | 758 | 792 | 619 | 672 | 463 | ||||||||||
| Consumer indirect | 1,467 | 1,292 | 728 | 994 | 1,169 | ||||||||||
| Other consumer | 21 | 20 | 20 | 47 | 19 | ||||||||||
| Total non-performing loans | 8,440 | 8,493 | 10,708 | 11,072 | 10,153 | ||||||||||
| Foreclosed assets | 163 | 286 | 165 | 139 | 194 | ||||||||||
| Total non-performing assets | $ | 8,603 | 8,779 | 10,873 | 11,211 | 10,347 | |||||||||
| Total non-performing loans to total loans | 0.41 | % | 0.42 | 0.53 | 0.58 | 0.53 | |||||||||
| Total non-performing assets to total assets | 0.25 | % | 0.26 | 0.32 | 0.35 | 0.33 | |||||||||
| Allowance for loan losses to total loans | 1.30 | % | 1.30 | 1.37 | 1.41 | 1.45 | |||||||||
| Allowance for loan losses to non-performing loans | 321 | % | 311 | 257 | 246 | 272 | |||||||||
________
(1) At period end.
| FINANCIAL INSTITUTIONS, INC. | ||||||||||||||||||
| Appendix A - Non-GAAP to GAAP Reconciliation (Unaudited) | ||||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||||
| Years ended | 2015 | 2014 | ||||||||||||||||
| December 31, | Fourth | Third | Second | First | Fourth | |||||||||||||
| 2015 | 2014 | Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||
| Ending tangible assets: | ||||||||||||||||||
| Total assets | $ | 3,381,024 | 3,357,608 | 3,359,459 | 3,197,077 | 3,089,521 | ||||||||||||
| Less: Goodwill and other intangible assets, net | 66,946 | 67,925 | 68,158 | 68,396 | 68,639 | |||||||||||||
| Tangible assets (non-GAAP) | $ | 3,314,078 | 3,289,683 | 3,291,301 | 3,128,681 | 3,020,882 | ||||||||||||
| Ending tangible common equity: | ||||||||||||||||||
| Common shareholders’ equity | $ | 276,504 | 278,094 | 267,095 | 269,349 | 262,192 | ||||||||||||
| Less: Goodwill and other intangible assets, net | 66,946 | 67,925 | 68,158 | 68,396 | 68,639 | |||||||||||||
| Tangible common equity (non-GAAP) | $ | 209,558 | 210,169 | 198,937 | 200,953 | 193,553 | ||||||||||||
| Tangible common equity to tangible assets (non-GAAP) (1) | 6.32 | % | 6.39 | 6.04 | 6.42 | 6.41 | ||||||||||||
| Common shares outstanding | 14,191 | 14,189 | 14,184 | 14,167 | 14,118 | |||||||||||||
| Tangible common book value per share (non-GAAP) (2) | $ | 14.77 | 14.81 | 14.03 | 14.18 | 13.71 | ||||||||||||
| Average tangible common equity: | ||||||||||||||||||
| Average common equity | $ | 272,367 | 254,533 | 279,821 | 271,889 | 270,009 | 267,619 | 266,466 | ||||||||||
| Average goodwill and other intangible assets, net | 68,138 | 57,039 | 67,692 | 68,050 | 68,294 | 68,527 | 68,771 | |||||||||||
| Average tangible common equity (non-GAAP) | $ | 204,229 | 197,494 | 212,129 | 203,839 | 201,715 | 199,092 | 197,695 | ||||||||||
________
(1) Tangible common equity divided by tangible assets.
(2) Tangible common equity divided by common shares outstanding.