EX-99.1 2 fisi-ex991_6.htm EX-99.1 fisi-ex991_6.htm

Exhibit 99.1

Financial Institutions, Inc.

 

 

 

 

 

NEWS RELEASE

 

 

For Immediate Release

 

 

FINANCIAL INSTITUTIONS, INC. ANNOUNCES THIRD QUARTER RESULTS

WARSAW, N.Y., October 29, 2019 – Financial Institutions, Inc. (Nasdaq:FISI) (the “Company”), parent company of Five Star Bank (the “Bank”), SDN Insurance Agency, LLC (“SDN”), Courier Capital, LLC (“Courier Capital”) and HNP Capital, LLC (“HNP Capital”), today reported financial and operational results for the quarter ended September 30, 2019.

Net income for the quarter was $12.8 million compared to $10.6 million for the third quarter of 2018. After preferred dividends, net income available to common shareholders was $12.5 million for the quarter, or $0.78 per diluted share, compared to $10.2 million, or $0.64 per diluted share, for the third quarter of 2018.

Pre-tax pre-provision income(1) for the quarter was $19.0 million compared to $15.2 million for the third quarter of 2018.  

Third Quarter 2019 Highlights (as compared to third quarter 2018 unless otherwise noted):

 

•

Net income was the highest in Company history at $12.8 million ‒ an increase of $2.3 million

 

•

Pre-tax pre-provision income was also highest in Company history at $19.0 million ‒ an increase of $3.8 million

 

•

Net interest income grew 5.1% to $32.5 million

 

•

Net interest margin (“NIM”) expanded to 3.29% from 3.17%

 

•

Return on average assets (“ROA”) increased to 1.19% from 1.00%

 

•

Common equity to assets ratio at quarter-end was 9.58% ‒ an increase of 19 basis points during the quarter and an increase of 78 basis points from September 30, 2018

 

•

Tangible common equity to tangible assets(1), or TCE ratio, was 7.99% at quarter-end ‒ an increase of 22 basis points during the quarter and an increase of 91 basis points from September 30, 2018

 

•

Completed a repositioning of the balance sheet, redeploying investment securities into higher-yielding loans

 

‒

Investment securities comprised 18.0% of total assets at quarter-end, down from 21.6% at September 30, 2018

 

•

Continued strategy to downscale the consumer indirect portfolio

 

‒

Portfolio decreased 5.0% from September 30, 2018

 

‒

Portfolio comprised 27.4% of total loan portfolio compared to 30.4% at September 30, 2018

President and Chief Executive Officer Martin K. Birmingham stated, “Our teammates delivered another strong quarter of earnings and returns for our shareholders, demonstrating broad-based strength of our business model and successful execution of our strategic initiatives. We generated record-breaking earnings and strengthened our capital ratios while expanding the net interest margin in a challenging interest rate environment.

“Our residential loan portfolio grew 2.3% quarter-over-quarter while the commercial portfolio was relatively flat because of increased loan payoff activity. Commercial loan demand remains stable in our markets and we expect portfolio growth in the fourth quarter. As a result of our continued focus on the profitability of new consumer indirect loan originations, this portfolio decreased by 1.4% quarter-over-quarter while the average portfolio yield increased by nine basis points.”  

Chief Financial Officer Justin K. Bigham added, “We once again delivered results in line with our expectations, including continued improvement in our NIM, ROA and TCE ratio. While we did experience an increase in expenses related to strong revenue growth in the quarter, we generated strong earnings per share growth and positive operating leverage.”

 

 

 


Page 1

 

Net Interest Income and Net Interest Margin

Net interest income was $32.5 million for the quarter, flat as compared to the second quarter of 2019 and $1.6 million higher than the third quarter of 2018.

 

•

Average interest-earning assets for the quarter were $3.96 billion, $49.2 million lower than the second quarter of 2019 and $40.4 million higher than the third quarter of 2018. The decrease compared to the second quarter of 2019 was primarily attributable to a reduction in the investment securities and consumer indirect loan portfolios, partially offset by commercial and residential organic loan growth. The increase compared to the third quarter of 2018 was primarily the result of organic loan growth.

 

•

Third quarter of 2019 net interest margin was 3.29%, one basis point higher than the second quarter of 2019 and 12 basis points higher than the third quarter of 2018. Net interest margin was positively impacted by the repositioning of the Company’s balance sheet. We benefitted from a change in interest-earning asset mix as loans became a larger percentage of the overall earning asset portfolio.

Noninterest Income

Noninterest income was $12.4 million for the quarter, compared to $9.2 million in the second quarter of 2019 and $9.8 million in the third quarter of 2018.

 

•

Insurance income was $567 thousand higher than the second quarter of 2019 and $62 thousand lower than the third quarter of 2018 due to the timing of renewals and business development.

 

•

ATM and debit card charges of $1.8 million was $62 thousand higher than the second quarter of 2019 and $244 thousand higher than the third quarter of 2018, primarily due to an increase in consumer debit card activity.

 

•

Income from investments in limited partnerships was $116 thousand in the third quarter of 2019 compared to $144 thousand in the second quarter of 2019 and $328 thousand in the third quarter of 2018. The Company has made several investments in limited partnerships, primarily small business investment companies, and accounts for these investments under the equity method. Income from these investments fluctuates based on the maturity and performance of the underlying investments.

 

•

Income from derivative instruments was $890 thousand in the third quarter of 2019 compared to a loss of $45 thousand in the second quarter of 2019 and income of $336 thousand in the third quarter of 2018. Higher third quarter 2019 income was driven by an increase in the number and value of interest rate swap transactions executed.

 

•

The Company took advantage of a market opportunity and sold $65 million of investment securities during the third quarter of 2019, generating a net gain of $1.6 million as compared to a net gain of $166 thousand in the second quarter of 2019 and a net loss of $95 thousand in the third quarter of 2018. Proceeds of $65 million were reinvested into investment securities with intermediate durations.

Noninterest Expense

Noninterest expense was $25.9 million in the third quarter of 2019, compared to $25.0 million in the second quarter of 2019 and $25.5 million in the third quarter of 2018.

 

•

Salaries and employee benefits expense totaled $14.4 million in the third quarter of 2019, $13.2 million in the second quarter of 2019 and $14.0 million in the third quarter of 2018. The increase compared to the second quarter of 2019 was primarily due to investments in bank personnel, higher commissions and higher healthcare claims. The increase compared to the third quarter of 2018 was primarily the result of higher benefits expense.  

 

•

Professional services expense of $1.5 million was $596 thousand higher than the second quarter of 2019 and $175 thousand higher than the third quarter of 2018. The increase was primarily related to the timing of fees for consulting and advisory projects.

 

•

FDIC assessments were $7 thousand in the quarter as compared to $486 thousand in the second quarter of 2019 and $498 thousand in the third quarter of 2018. In 2018, the FDIC minimum reserve ratio of 1.35% of estimated insured deposits was exceeded, resulting in credits to institutions for assessments that contributed to growth in the reserve ratio. Credits are applicable to regular assessments for quarters in which the reserve ratio is at least 1.38%. In the third quarter of 2019, the Bank received a credit of $482 thousand against its regular assessment. A credit of $510 thousand is available for future periods.

 

•

Advertising and promotions expense of $745 thousand was $341 thousand lower than the second quarter of 2019 and $204 thousand lower than the third quarter of 2018 as a result of the timing of expenses related to the Five Star Bank branding campaign.


Page 2

 

Income Taxes

Income tax expense was $4.3 million for the quarter compared to $2.9 million for the second quarter of 2019 and $2.6 million for the third quarter of 2018. As a result of the Tax Cuts and Jobs Act (the “TCJ Act”) signed into law in December 2017, the Company estimated tax benefits and recorded a provisional amount in the Company’s consolidated statement of income for the year ended December 31, 2017. The Company made an adjustment to the provisional amount included in its consolidated financial statements for the year ended December 31, 2017, resulting in an expense of approximately $600 thousand recorded in the third quarter of 2019.

The effective tax rate was 25.0% for the quarter compared to 20.5% for the second quarter of 2019 and 19.5% for the third quarter of 2018. Effective tax rates are typically impacted by items of income and expense not subject to federal or state taxation. The Company’s effective tax rates differ from statutory rates primarily because of interest income from tax-exempt securities and earnings on company owned life insurance. The higher effective tax rate in the third quarter was driven by the incremental expense described above.

Balance Sheet and Capital Management

Total assets were $4.33 billion at September 30, 2019, up $18.8 million from June 30, 2019, and up $74.4 million from September 30, 2018.

Investment securities were $781.7 million at September 30, 2019, down $23.4 million from June 30, 2019 and down $136.2 million from September 30, 2018. The decreases are primarily the result of the redeployment of assets from investment securities into loans to improve the earning asset mix. The timing of loan growth in the third quarter of 2019 resulted in the temporary deployment of a portion of investment securities proceeds for other purposes.

Total loans were $3.16 billion at September 30, 2019, up $4.7 million, or 0.2%, from June 30, 2019, and up $168.1 million, or 5.6%, from September 30, 2018.

 

•

Commercial business loans totaled $574.5 million, down $20.5 million, or 3.4%, from June 30, 2019, and up $36.5 million, or 6.8%, from September 30, 2018.

 

•

Commercial mortgage loans totaled $1.04 billion, up $25.4 million, or 2.5%, from June 30, 2019, and up $130.4 million, or 14.4%, from September 30, 2018.

 

•

Residential real estate loans totaled $558.7 million, up $12.6 million, or 2.3%, from June 30, 2019, and up $51.1 million, or 10.1%, from September 30, 2018.

 

•

Consumer indirect loans totaled $863.6 million, down $12.5 million, or 1.4%, from June 30, 2019, and down $45.8 million, or 5.0%, from September 30, 2018.

Total deposits were $3.59 billion at September 30, 2019, $114.2 million higher than June 30, 2019, and $100.5 million higher than September 30, 2018. The increase from June 30, 2019, was primarily due to public deposit seasonality. Deposit growth from September 30, 2018, was driven by business development and growth in the brokered deposit portfolio, partially offset by an approximately $50 million decrease in non-public certificates of deposit. Public deposit balances represented 28% of total deposits at September 30, 2019, compared to 26% of total deposits at June 30, 2019, and 28% at September 30, 2018.

Short-term borrowings were $211.4 million at September 30, 2019, a decrease of $97.1 million from June 30, 2019, and a decrease of $96.8 million from September 30, 2018. Short-term borrowings are typically utilized to manage the seasonality of public deposits.

Shareholders’ equity was $432.6 million at September 30, 2019, compared to $422.4 million at June 30, 2019, and $392.2 million at September 30, 2018. Common book value per share was $25.96 at September 30, 2019, an increase of $0.64 or 2.5% from $25.32 at June 30, 2019, and an increase of $2.42 or 10.3% from $23.54 at September 30, 2018. Tangible common book value per share(1) was $21.26 at September 30, 2019, an increase of $0.66 or 3.2% from $20.60 at June 30, 2019, and an increase of $2.67 or 14.4% from $18.59 at September 30, 2018.

During the third quarter of 2019, the Company declared a common stock dividend of $0.25 per common share. The dividend returned 32% of third quarter net income to common shareholders.

The Company’s regulatory capital ratios at September 30, 2019, compared to the prior quarter and prior year:

 

•

Leverage Ratio was 8.86%, compared to 8.55% and 8.18% at June 30, 2019, and September 30, 2018, respectively.

 

•

Common Equity Tier 1 Capital Ratio was 10.06%, compared to 9.95% and 9.81% at June 30, 2019, and September 30, 2018, respectively.

 

•

Tier 1 Capital Ratio was 10.55%, compared to 10.45% and 10.34% at June 30, 2019, and September 30, 2018, respectively.

 

•

Total Risk-Based Capital Ratio was 12.57%, compared to 12.57% and 12.58% at June 30, 2019, and September 30, 2018, respectively.


Page 3

 

Credit Quality

Non-performing loans were $9.8 million at September 30, 2019, compared to $11.5 million at June 30, 2019, and $7.9 million at September 30, 2018.

The third quarter 2019 provision for loan losses was $1.8 million compared to $2.4 million in the second quarter of 2019 and $2.1 million in the third quarter of 2018. Quarterly provision for loan losses varies based primarily on loan growth, charge-offs, collateral values and qualitative factors.

Net charge-offs were $4.6 million in the quarter, $3.4 million higher than the second quarter of 2019 and $2.5 million higher than the third quarter of 2018. The increase was primarily the result of a $3.0 million partial charge-off of a $5.6 million loan classified as non-performing in the second quarter of 2019. The ratio of annualized net charge-offs to total average loans was 0.58% in the quarter, 0.16% in the second quarter of 2019 and 0.28% in the third quarter of 2018.

The Company has remained strategically focused on the importance of credit discipline, allocating what we believe are the necessary resources to credit and risk management functions as the loan portfolio has grown. The total non-performing loans to total loans ratio was 0.31% at September 30, 2019, compared to 0.36% at June 30, 2019 and 0.26% at September 30, 2018. The ratio of allowance for loan losses to non-performing loans was 324% at September 30, 2019, compared to 300% at June 30, 2019, and 433% at September 30, 2018.

Conference Call

The Company will host an earnings conference call and audio webcast on October 30, 2019, at 8:30 a.m. Eastern Time. The call will be hosted by Martin K. Birmingham, President and Chief Executive Officer, and Justin K. Bigham, Chief Financial Officer. The live webcast will be available in listen-only mode on the Company’s website at www.fiiwarsaw.com. Within the United States, listeners may also access the call by dialing 1-888-346-9290 and requesting the Financial Institutions, Inc. call. The webcast replay will be available on the Company’s website for at least 30 days.

About Financial Institutions, Inc.

Financial Institutions, Inc. provides diversified financial services through its subsidiaries Five Star Bank, SDN, Courier Capital and HNP Capital. Five Star Bank provides a wide range of consumer and commercial banking and lending services to individuals, municipalities and businesses through a network of more than 50 offices throughout Western and Central New York State. SDN provides a broad range of insurance services to personal and business clients. Courier Capital and HNP Capital provide 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. Additional information is available at www.fiiwarsaw.com.

Non-GAAP Financial Information

In addition to results presented in accordance with U.S. generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures. A reconciliation of these non-GAAP measures to GAAP measures is included in Appendix A to this document.

 

The Company believes that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, performance trends and financial position. Our management uses these measures for internal planning and forecasting purposes and we believe that our presentation and discussion, together with the accompanying reconciliations, allows investors, security analysts and other interested parties to view our performance and the factors and trends affecting our business in a manner similar to management. These non-GAAP measures should not be considered a substitute for GAAP measures and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure to evaluate the Company. Non-GAAP financial measures have inherent limitations, are not uniformly applied and are not audited. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.


Page 4

 

Safe Harbor Statement

This press release may contain forward-looking statements as defined by Section 21E of the Securities Exchange Act of 1934, as amended, that involve significant risks and uncertainties. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “estimate,” “forecast,” “target,” “preliminary,” or “range.” Statements herein are based on certain assumptions and analyses by the Company and factors it believes are appropriate in the circumstances. Actual results could differ materially from those contained in or implied by such statements for a variety of reasons including, but not limited to: the Company’s ability to implement its strategic plan, 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, Courier Capital, HNP Capital and other acquisitions, 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, 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.

 

 

(1) See Appendix A — Reconciliation to Non-GAAP Financial Measures for the computation of this Non-GAAP measure.

*****

 

For additional information contact:

Shelly J. Doran

Director of Investor and External Relations

585-627-1362

sjdoran@five-starbank.com

 

 

 

 

 

 

 


Page 5

 

FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share amounts)

 

 

 

2019

 

 

2018

 

 

 

September 30,

 

 

June 30,

 

 

March 31,

 

 

December 31,

 

 

September 30,

 

SELECTED BALANCE SHEET DATA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

136,815

 

 

$

108,988

 

 

$

79,786

 

 

$

102,755

 

 

$

117,331

 

Investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for sale

 

 

395,441

 

 

 

406,509

 

 

 

427,545

 

 

 

445,677

 

 

 

458,310

 

Held-to-maturity

 

 

386,305

 

 

 

398,610

 

 

 

438,984

 

 

 

446,581

 

 

 

459,623

 

Total investment securities

 

 

781,746

 

 

 

805,119

 

 

 

866,529

 

 

 

892,258

 

 

 

917,933

 

Loans held for sale

 

 

6,398

 

 

 

2,045

 

 

 

2,069

 

 

 

2,868

 

 

 

3,166

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial business

 

 

574,455

 

 

 

594,923

 

 

 

553,745

 

 

 

557,861

 

 

 

537,942

 

Commercial mortgage

 

 

1,035,450

 

 

 

1,010,071

 

 

 

993,259

 

 

 

958,194

 

 

 

905,011

 

Residential real estate loans

 

 

558,656

 

 

 

546,031

 

 

 

534,691

 

 

 

524,155

 

 

 

507,598

 

Residential real estate lines

 

 

107,615

 

 

 

108,006

 

 

 

108,623

 

 

 

109,718

 

 

 

111,204

 

Consumer indirect

 

 

863,614

 

 

 

876,116

 

 

 

902,762

 

 

 

919,917

 

 

 

909,434

 

Other consumer

 

 

16,630

 

 

 

16,537

 

 

 

16,099

 

 

 

16,753

 

 

 

17,142

 

Total loans

 

 

3,156,420

 

 

 

3,151,684

 

 

 

3,109,179

 

 

 

3,086,598

 

 

 

2,988,331

 

Allowance for loan losses

 

 

31,668

 

 

 

34,434

 

 

 

33,327

 

 

 

33,914

 

 

 

33,955

 

Total loans, net

 

 

3,124,752

 

 

 

3,117,250

 

 

 

3,075,852

 

 

 

3,052,684

 

 

 

2,954,376

 

Total interest-earning assets

 

 

3,979,493

 

 

 

4,007,797

 

 

 

4,009,496

 

 

 

4,031,151

 

 

 

3,927,238

 

Goodwill and other intangible assets, net

 

 

75,225

 

 

 

75,534

 

 

 

75,850

 

 

 

76,173

 

 

 

78,853

 

Total assets

 

 

4,332,737

 

 

 

4,313,945

 

 

 

4,302,541

 

 

 

4,311,698

 

 

 

4,258,385

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

 

755,296

 

 

 

719,150

 

 

 

732,631

 

 

 

755,460

 

 

 

748,167

 

Interest-bearing demand

 

 

707,153

 

 

 

677,846

 

 

 

707,430

 

 

 

622,482

 

 

 

711,321

 

Savings and money market

 

 

1,011,873

 

 

 

966,509

 

 

 

1,016,666

 

 

 

968,897

 

 

 

988,486

 

Time deposits

 

 

1,111,892

 

 

 

1,108,484

 

 

 

1,052,110

 

 

 

1,020,068

 

 

 

1,037,755

 

Total deposits

 

 

3,586,214

 

 

 

3,471,989

 

 

 

3,508,837

 

 

 

3,366,907

 

 

 

3,485,729

 

Short-term borrowings

 

 

211,400

 

 

 

308,500

 

 

 

287,300

 

 

 

469,500

 

 

 

308,200

 

Long-term borrowings, net

 

 

39,255

 

 

 

39,237

 

 

 

39,220

 

 

 

39,202

 

 

 

39,184

 

Total interest-bearing liabilities

 

 

3,081,573

 

 

 

3,100,576

 

 

 

3,102,726

 

 

 

3,120,149

 

 

 

3,084,946

 

Shareholders’ equity

 

 

432,617

 

 

 

422,354

 

 

 

408,253

 

 

 

396,293

 

 

 

392,154

 

Common shareholders’ equity

 

 

415,289

 

 

 

405,026

 

 

 

390,925

 

 

 

378,965

 

 

 

374,825

 

Tangible common equity (1)

 

 

340,064

 

 

 

329,492

 

 

 

315,075

 

 

 

302,792

 

 

 

295,972

 

Accumulated other comprehensive loss

 

$

(11,734

)

 

$

(13,160

)

 

$

(18,554

)

 

$

(21,281

)

 

$

(21,820

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

 

15,997

 

 

 

15,995

 

 

 

15,941

 

 

 

15,929

 

 

 

15,925

 

Treasury shares

 

 

103

 

 

 

105

 

 

 

115

 

 

 

127

 

 

 

131

 

CAPITAL RATIOS AND PER SHARE DATA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leverage ratio

 

 

8.86

%

 

 

8.55

%

 

 

8.36

%

 

 

8.16

%

 

 

8.18

%

Common equity Tier 1 capital ratio

 

 

10.06

%

 

 

9.95

%

 

 

9.87

%

 

 

9.70

%

 

 

9.81

%

Tier 1 capital ratio

 

 

10.55

%

 

 

10.45

%

 

 

10.37

%

 

 

10.21

%

 

 

10.34

%

Total risk-based capital ratio

 

 

12.57

%

 

 

12.57

%

 

 

12.50

%

 

 

12.38

%

 

 

12.58

%

Common equity to assets

 

 

9.58

%

 

 

9.39

%

 

 

9.09

%

 

 

8.79

%

 

 

8.80

%

Tangible common equity to tangible assets (1)

 

 

7.99

%

 

 

7.77

%

 

 

7.45

%

 

 

7.15

%

 

 

7.08

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common book value per share

 

$

25.96

 

 

$

25.32

 

 

$

24.52

 

 

$

23.79

 

 

$

23.54

 

Tangible common book value per share (1)

 

$

21.26

 

 

$

20.60

 

 

$

19.77

 

 

$

19.01

 

 

$

18.59

 

 

                

 

(1) See Appendix A — Reconciliation to Non-GAAP Financial Measures for the computation of this Non-GAAP measure.

 

Page 6

 

FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share amounts)

 

 

 

Nine Months Ended

 

 

2019

 

 

2018

 

 

 

September 30,

 

 

Third

 

 

Second

 

 

First

 

 

Fourth

 

 

Third

 

 

 

2019

 

 

2018

 

 

Quarter

 

 

Quarter

 

 

Quarter

 

 

Quarter

 

 

Quarter

 

SELECTED INCOME STATEMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DATA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

126,621

 

 

$

111,607

 

 

$

42,459

 

 

$

42,648

 

 

$

41,514

 

 

$

41,125

 

 

$

39,117

 

Interest expense

 

 

29,882

 

 

 

20,772

 

 

 

9,976

 

 

 

10,184

 

 

 

9,722

 

 

 

9,096

 

 

 

8,214

 

Net interest income

 

 

96,739

 

 

 

90,835

 

 

 

32,483

 

 

 

32,464

 

 

 

31,792

 

 

 

32,029

 

 

 

30,903

 

Provision for loan losses

 

 

5,391

 

 

 

5,050

 

 

 

1,844

 

 

 

2,354

 

 

 

1,193

 

 

 

3,884

 

 

 

2,061

 

Net interest income after provision

    for loan losses

 

 

91,348

 

 

 

85,785

 

 

 

30,639

 

 

 

30,110

 

 

 

30,599

 

 

 

28,145

 

 

 

28,842

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposits

 

 

5,361

 

 

 

5,254

 

 

 

1,925

 

 

 

1,756

 

 

 

1,680

 

 

 

1,866

 

 

 

1,813

 

Insurance income

 

 

3,689

 

 

 

3,918

 

 

 

1,439

 

 

 

872

 

 

 

1,378

 

 

 

1,012

 

 

 

1,501

 

ATM and debit card

 

 

4,983

 

 

 

4,509

 

 

 

1,801

 

 

 

1,739

 

 

 

1,443

 

 

 

1,643

 

 

 

1,557

 

Investment advisory

 

 

6,812

 

 

 

5,934

 

 

 

2,269

 

 

 

2,327

 

 

 

2,216

 

 

 

2,189

 

 

 

2,245

 

Company owned life insurance

 

 

1,293

 

 

 

1,333

 

 

 

459

 

 

 

424

 

 

 

410

 

 

 

460

 

 

 

440

 

Investments in limited partnerships

 

 

492

 

 

 

1,019

 

 

 

116

 

 

 

144

 

 

 

232

 

 

 

184

 

 

 

328

 

Loan servicing

 

 

316

 

 

 

319

 

 

 

102

 

 

 

104

 

 

 

110

 

 

 

122

 

 

 

96

 

Income (loss) from derivative

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

instruments, net

 

 

1,013

 

 

 

683

 

 

 

890

 

 

 

(45

)

 

 

168

 

 

 

289

 

 

 

336

 

Net gain on sale of loans held for sale

 

 

1,028

 

 

 

530

 

 

 

439

 

 

 

407

 

 

 

182

 

 

 

266

 

 

 

303

 

Net (loss) gain on investment securities

 

 

1,721

 

 

 

(88

)

 

 

1,608

 

 

 

166

 

 

 

(53

)

 

 

(39

)

 

 

(95

)

Net gain (loss) on other assets

 

 

56

 

 

 

49

 

 

 

(2

)

 

 

9

 

 

 

49

 

 

 

1

 

 

 

37

 

Other

 

 

3,950

 

 

 

3,670

 

 

 

1,315

 

 

 

1,330

 

 

 

1,305

 

 

 

1,355

 

 

 

1,255

 

Total noninterest income

 

 

30,714

 

 

 

27,130

 

 

 

12,361

 

 

 

9,233

 

 

 

9,120

 

 

 

9,348

 

 

 

9,816

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

41,661

 

 

 

40,270

 

 

 

14,411

 

 

 

13,249

 

 

 

14,001

 

 

 

14,373

 

 

 

13,970

 

Occupancy and equipment

 

 

13,562

 

 

 

12,911

 

 

 

4,650

 

 

 

4,326

 

 

 

4,586

 

 

 

4,427

 

 

 

4,337

 

Professional services

 

 

3,618

 

 

 

3,132

 

 

 

1,528

 

 

 

932

 

 

 

1,158

 

 

 

780

 

 

 

1,353

 

Computer and data processing

 

 

3,951

 

 

 

3,884

 

 

 

1,378

 

 

 

1,350

 

 

 

1,223

 

 

 

1,238

 

 

 

1,291

 

Supplies and postage

 

 

1,554

 

 

 

1,545

 

 

 

522

 

 

 

498

 

 

 

534

 

 

 

487

 

 

 

485

 

FDIC assessments

 

 

1,005

 

 

 

1,486

 

 

 

7

 

 

 

486

 

 

 

512

 

 

 

489

 

 

 

498

 

Advertising and promotions

 

 

2,351

 

 

 

2,647

 

 

 

745

 

 

 

1,086

 

 

 

520

 

 

 

935

 

 

 

949

 

Amortization of intangibles

 

 

948

 

 

 

927

 

 

 

309

 

 

 

316

 

 

 

323

 

 

 

330

 

 

 

334

 

Goodwill impairment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,350

 

 

 

-

 

Other

 

 

7,410

 

 

 

6,271

 

 

 

2,336

 

 

 

2,760

 

 

 

2,314

 

 

 

2,394

 

 

 

2,304

 

Total noninterest expense

 

 

76,060

 

 

 

73,073

 

 

 

25,886

 

 

 

25,003

 

 

 

25,171

 

 

 

27,803

 

 

 

25,521

 

Income before income taxes

 

 

46,002

 

 

 

39,842

 

 

 

17,114

 

 

 

14,340

 

 

 

14,548

 

 

 

9,690

 

 

 

13,137

 

Income tax expense

 

 

10,247

 

 

 

7,807

 

 

 

4,281

 

 

 

2,939

 

 

 

3,027

 

 

 

2,199

 

 

 

2,560

 

Net income

 

 

35,755

 

 

 

32,035

 

 

 

12,833

 

 

 

11,401

 

 

 

11,521

 

 

 

7,491

 

 

 

10,577

 

Preferred stock dividends

 

 

1,096

 

 

 

1,096

 

 

 

365

 

 

 

366

 

 

 

365

 

 

 

365

 

 

 

365

 

Net income available to common

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

shareholders

 

$

34,659

 

 

$

30,939

 

 

$

12,468

 

 

$

11,035

 

 

$

11,156

 

 

$

7,126

 

 

$

10,212

 

FINANCIAL RATIOS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share – basic

 

$

2.17

 

 

$

1.95

 

 

$

0.78

 

 

$

0.69

 

 

$

0.70

 

 

$

0.45

 

 

$

0.64

 

Earnings per share – diluted

 

$

2.16

 

 

$

1.94

 

 

$

0.78

 

 

$

0.69

 

 

$

0.70

 

 

$

0.45

 

 

$

0.64

 

Cash dividends declared on common stock

 

$

0.75

 

 

$

0.72

 

 

$

0.25

 

 

$

0.25

 

 

$

0.25

 

 

$

0.24

 

 

$

0.24

 

Common dividend payout ratio

 

 

34.56

%

 

 

36.92

%

 

 

32.05

%

 

 

36.23

%

 

 

35.71

%

 

 

53.33

%

 

 

37.50

%

Dividend yield (annualized)

 

 

3.32

%

 

 

3.07

%

 

 

3.29

%

 

 

3.44

%

 

 

3.73

%

 

 

3.70

%

 

 

3.03

%

Return on average assets

 

 

1.12

%

 

 

1.03

%

 

 

1.19

%

 

 

1.06

%

 

 

1.09

%

 

 

0.70

%

 

 

1.00

%

Return on average equity

 

 

11.51

%

 

 

11.11

%

 

 

11.86

%

 

 

11.01

%

 

 

11.65

%

 

 

7.50

%

 

 

10.71

%

Return on average common equity

 

 

11.64

%

 

 

11.23

%

 

 

12.00

%

 

 

11.12

%

 

 

11.79

%

 

 

7.46

%

 

 

10.82

%

Return on average tangible common

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

equity (1)

 

 

14.38

%

 

 

14.18

%

 

 

14.69

%

 

 

13.73

%

 

 

14.71

%

 

 

9.40

%

 

 

13.71

%

Efficiency ratio (2)

 

 

60.09

%

 

 

61.36

%

 

 

59.52

%

 

 

59.79

%

 

 

60.99

%

 

 

66.64

%

 

 

62.04

%

Effective tax rate

 

 

22.3

%

 

 

19.6

%

 

 

25.0

%

 

 

20.5

%

 

 

20.8

%

 

 

22.7

%

 

 

19.5

%

                

 

(1)

See Appendix A – Reconciliation to Non-GAAP Financial Measures for the computation of this Non-GAAP measure.

 

(2)

The efficiency ratio is calculated by dividing noninterest expense by net revenue, i.e., the sum of net interest income (fully taxable equivalent) and noninterest income before net gains on investment securities. This is a banking industry measure not required by GAAP.

Page 7

 

FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)

(Amounts in thousands)

 

 

Nine Months Ended

 

 

2019

 

 

2018

 

 

 

September 30,

 

 

Third

 

 

Second

 

 

First

 

 

Fourth

 

 

Third

 

 

 

2019

 

 

2018

 

 

Quarter

 

 

Quarter

 

 

Quarter

 

 

Quarter

 

 

Quarter

 

SELECTED AVERAGE BALANCES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold and interest-

    earning deposits

 

$

18,495

 

 

$

24,736

 

 

$

19,370

 

 

$

18,145

 

 

$

17,955

 

 

$

25,411

 

 

$

17,955

 

Investment securities (1)

 

 

838,995

 

 

 

1,000,272

 

 

 

785,595

 

 

 

845,624

 

 

 

886,878

 

 

 

937,907

 

 

 

954,027

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial business

 

 

570,596

 

 

 

484,711

 

 

 

586,293

 

 

 

577,884

 

 

 

547,182

 

 

 

539,622

 

 

 

519,114

 

Commercial mortgage

 

 

1,003,593

 

 

 

853,571

 

 

 

1,021,931

 

 

 

1,010,544

 

 

 

977,818

 

 

 

944,476

 

 

 

896,159

 

Residential real estate loans

 

 

541,185

 

 

 

484,288

 

 

 

553,382

 

 

 

540,390

 

 

 

529,522

 

 

 

515,539

 

 

 

498,371

 

Residential real estate lines

 

 

108,207

 

 

 

113,761

 

 

 

107,290

 

 

 

107,826

 

 

 

109,529

 

 

 

110,236

 

 

 

111,762

 

Consumer indirect

 

 

890,560

 

 

 

896,493

 

 

 

868,927

 

 

 

891,967

 

 

 

911,252

 

 

 

914,636

 

 

 

904,480

 

Other consumer

 

 

16,029

 

 

 

16,685

 

 

 

16,141

 

 

 

15,721

 

 

 

16,226

 

 

 

16,671

 

 

 

16,633

 

Total loans

 

 

3,130,170

 

 

 

2,849,509

 

 

 

3,153,964

 

 

 

3,144,332

 

 

 

3,091,529

 

 

 

3,041,180

 

 

 

2,946,519

 

Total interest-earning assets

 

 

3,987,660

 

 

 

3,874,517

 

 

 

3,958,929

 

 

 

4,008,101

 

 

 

3,996,362

 

 

 

4,004,498

 

 

 

3,918,501

 

Goodwill and other intangible

    assets, net

 

 

75,713

 

 

 

76,544

 

 

 

75,401

 

 

 

75,711

 

 

 

76,033

 

 

 

78,314

 

 

 

79,047

 

Total assets

 

 

4,281,270

 

 

 

4,139,338

 

 

 

4,260,810

 

 

 

4,300,254

 

 

 

4,282,991

 

 

 

4,268,809

 

 

 

4,187,538

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand

 

 

653,780

 

 

 

663,827

 

 

 

632,540

 

 

 

660,747

 

 

 

668,448

 

 

 

669,491

 

 

 

642,234

 

Savings and money market

 

 

973,005

 

 

 

1,007,734

 

 

 

956,410

 

 

 

996,878

 

 

 

965,829

 

 

 

1,011,427

 

 

 

978,578

 

Time deposits

 

 

1,090,896

 

 

 

903,645

 

 

 

1,099,212

 

 

 

1,096,544

 

 

 

1,076,687

 

 

 

1,032,632

 

 

 

946,499

 

Short-term borrowings

 

 

332,922

 

 

 

407,903

 

 

 

328,952

 

 

 

323,461

 

 

 

346,546

 

 

 

355,439

 

 

 

430,697

 

Long-term borrowings, net

 

 

39,227

 

 

 

39,156

 

 

 

39,244

 

 

 

39,227

 

 

 

39,209

 

 

 

39,191

 

 

 

39,174

 

Total interest-bearing liabilities

 

 

3,089,830

 

 

 

3,022,265

 

 

 

3,056,358

 

 

 

3,116,857

 

 

 

3,096,719

 

 

 

3,108,180

 

 

 

3,037,182

 

Noninterest-bearing demand deposits

 

 

719,630

 

 

 

706,222

 

 

 

717,473

 

 

 

714,205

 

 

 

727,321

 

 

 

733,717

 

 

 

730,960

 

Total deposits

 

 

3,437,311

 

 

 

3,281,428

 

 

 

3,405,635

 

 

 

3,468,374

 

 

 

3,438,285

 

 

 

3,447,267

 

 

 

3,298,271

 

Total liabilities

 

 

3,865,909

 

 

 

3,753,654

 

 

 

3,831,409

 

 

 

3,884,843

 

 

 

3,882,033

 

 

 

3,872,545

 

 

 

3,795,727

 

Shareholders’ equity

 

 

415,361

 

 

 

385,684

 

 

 

429,401

 

 

 

415,411

 

 

 

400,958

 

 

 

396,264

 

 

 

391,811

 

Common equity

 

 

398,033

 

 

 

368,356

 

 

 

412,073

 

 

 

398,083

 

 

 

383,630

 

 

 

378,936

 

 

 

374,482

 

Tangible common equity (2)

 

$

322,320

 

 

$

291,812

 

 

$

336,672

 

 

$

322,372

 

 

$

307,597

 

 

$

300,622

 

 

$

295,435

 

Common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

15,964

 

 

 

15,906

 

 

 

15,991

 

 

 

15,970

 

 

 

15,930

 

 

 

15,922

 

 

 

15,921

 

Diluted

 

 

16,017

 

 

 

15,951

 

 

 

16,056

 

 

 

16,015

 

 

 

15,978

 

 

 

15,971

 

 

 

15,964

 

SELECTED AVERAGE YIELDS:

(Tax equivalent basis)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities

 

 

2.38

%

 

 

2.33

%

 

 

2.40

%

 

 

2.38

%

 

 

2.37

%

 

 

2.33

%

 

 

2.35

%

Loans

 

 

4.79

%

 

 

4.45

%

 

 

4.77

%

 

 

4.82

%

 

 

4.77

%

 

 

4.68

%

 

 

4.55

%

Total interest-earning assets

 

 

4.27

%

 

 

3.88

%

 

 

4.29

%

 

 

4.29

%

 

 

4.23

%

 

 

4.11

%

 

 

4.00

%

Interest-bearing demand

 

 

0.21

%

 

 

0.15

%

 

 

0.22

%

 

 

0.21

%

 

 

0.20

%

 

 

0.20

%

 

 

0.19

%

Savings and money market

 

 

0.43

%

 

 

0.26

%

 

 

0.44

%

 

 

0.44

%

 

 

0.41

%

 

 

0.38

%

 

 

0.33

%

Time deposits

 

 

2.12

%

 

 

1.51

%

 

 

2.12

%

 

 

2.17

%

 

 

2.06

%

 

 

1.88

%

 

 

1.69

%

Short-term borrowings

 

 

2.64

%

 

 

1.98

%

 

 

2.51

%

 

 

2.71

%

 

 

2.70

%

 

 

2.56

%

 

 

2.24

%

Long-term borrowings, net

 

 

6.30

%

 

 

6.31

%

 

 

6.30

%

 

 

6.30

%

 

 

6.30

%

 

 

6.30

%

 

 

6.31

%

Total interest-bearing liabilities

 

 

1.29

%

 

 

0.92

%

 

 

1.30

%

 

 

1.31

%

 

 

1.27

%

 

 

1.16

%

 

 

1.07

%

Net interest rate spread

 

 

2.98

%

 

 

2.96

%

 

 

2.99

%

 

 

2.98

%

 

 

2.96

%

 

 

2.95

%

 

 

2.93

%

Net interest margin

 

 

3.27

%

 

 

3.17

%

 

 

3.29

%

 

 

3.28

%

 

 

3.24

%

 

 

3.21

%

 

 

3.17

%

                

 

(1)

Includes investment securities at adjusted amortized cost.

 

(2)

See Appendix A – Reconciliation to Non-GAAP Financial Measures for the computation of this Non-GAAP measure.

 

 

Page 8

 

FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands)

 

 

Nine Months Ended

 

 

2019

 

 

2018

 

 

 

September 30,

 

 

Third

 

 

Second

 

 

First

 

 

Fourth

 

 

Third

 

 

 

2019

 

 

2018

 

 

Quarter

 

 

Quarter

 

 

Quarter

 

 

Quarter

 

 

Quarter

 

ASSET QUALITY DATA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for Loan Losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

33,914

 

 

$

34,672

 

 

$

34,434

 

 

$

33,327

 

 

$

33,914

 

 

$

33,955

 

 

$

33,955

 

Net loan charge-offs (recoveries):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial business

 

 

47

 

 

 

675

 

 

 

10

 

 

 

10

 

 

 

27

 

 

 

1,135

 

 

 

431

 

Commercial mortgage

 

 

2,980

 

 

 

106

 

 

 

2,994

 

 

 

3

 

 

 

(17

)

 

 

901

 

 

 

110

 

Residential real estate loans

 

 

141

 

 

 

(87

)

 

 

40

 

 

 

76

 

 

 

25

 

 

 

23

 

 

 

16

 

Residential real estate lines

 

 

4

 

 

 

107

 

 

 

7

 

 

 

(1

)

 

 

(2

)

 

 

15

 

 

 

21

 

Consumer indirect

 

 

3,897

 

 

 

4,227

 

 

 

1,317

 

 

 

1,022

 

 

 

1,558

 

 

 

1,599

 

 

 

1,246

 

Other consumer

 

 

568

 

 

 

739

 

 

 

242

 

 

 

137

 

 

 

189

 

 

 

252

 

 

 

237

 

Total net charge-offs

 

 

7,637

 

 

 

5,767

 

 

 

4,610

 

 

 

1,247

 

 

 

1,780

 

 

 

3,925

 

 

 

2,061

 

Provision for loan losses

 

 

5,391

 

 

 

5,050

 

 

 

1,844

 

 

 

2,354

 

 

 

1,193

 

 

 

3,884

 

 

 

2,061

 

Ending balance

 

$

31,668

 

 

$

33,955

 

 

$

31,668

 

 

$

34,434

 

 

$

33,327

 

 

$

33,914

 

 

$

33,955

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs (recoveries)

     to average loans (annualized):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial business

 

 

0.01

%

 

 

0.19

%

 

 

0.01

%

 

 

0.01

%

 

 

0.02

%

 

 

0.83

%

 

 

0.33

%

Commercial mortgage

 

 

0.40

%

 

 

0.02

%

 

 

1.16

%

 

 

0.00

%

 

 

-0.01

%

 

 

0.38

%

 

 

0.05

%

Residential real estate loans

 

 

0.03

%

 

 

-0.02

%

 

 

0.03

%

 

 

0.06

%

 

 

0.02

%

 

 

0.02

%

 

 

0.01

%

Residential real estate lines

 

 

0.01

%

 

 

0.13

%

 

 

0.03

%

 

 

-0.01

%

 

 

-0.01

%

 

 

0.05

%

 

 

0.08

%

Consumer indirect

 

 

0.59

%

 

 

0.63

%

 

 

0.60

%

 

 

0.46

%

 

 

0.69

%

 

 

0.69

%

 

 

0.55

%

Other consumer

 

 

4.74

%

 

 

5.92

%

 

 

5.93

%

 

 

3.51

%

 

 

4.73

%

 

 

6.00

%

 

 

5.66

%

Total loans

 

 

0.33

%

 

 

0.27

%

 

 

0.58

%

 

 

0.16

%

 

 

0.23

%

 

 

0.51

%

 

 

0.28

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental information (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial business

 

$

2,884

 

 

$

2,203

 

 

$

2,884

 

 

$

638

 

 

$

594

 

 

$

912

 

 

$

2,203

 

Commercial mortgage

 

 

2,867

 

 

 

1,900

 

 

 

2,867

 

 

 

6,836

 

 

 

909

 

 

 

1,586

 

 

 

1,900

 

Residential real estate loans

 

 

2,526

 

 

 

2,057

 

 

 

2,526

 

 

 

2,283

 

 

 

2,225

 

 

 

2,391

 

 

 

2,057

 

Residential real estate lines

 

 

182

 

 

 

297

 

 

 

182

 

 

 

282

 

 

 

252

 

 

 

255

 

 

 

297

 

Consumer indirect

 

 

1,326

 

 

 

1,385

 

 

 

1,326

 

 

 

1,399

 

 

 

1,822

 

 

 

1,989

 

 

 

1,385

 

Other consumer

 

 

3

 

 

 

8

 

 

 

3

 

 

 

25

 

 

 

2

 

 

 

8

 

 

 

8

 

Total non-performing loans

 

 

9,788

 

 

 

7,850

 

 

 

9,788

 

 

 

11,463

 

 

 

5,804

 

 

 

7,141

 

 

 

7,850

 

Foreclosed assets

 

 

91

 

 

 

290

 

 

 

91

 

 

 

37

 

 

 

41

 

 

 

230

 

 

 

290

 

Total non-performing assets

 

$

9,879

 

 

$

8,140

 

 

$

9,879

 

 

$

11,500

 

 

$

5,845

 

 

$

7,371

 

 

$

8,140

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total non-performing loans

     to total loans

 

 

0.31

%

 

 

0.26

%

 

 

0.31

%

 

 

0.36

%

 

 

0.19

%

 

 

0.23

%

 

 

0.26

%

Total non-performing assets

     to total assets

 

 

0.23

%

 

 

0.19

%

 

 

0.23

%

 

 

0.27

%

 

 

0.14

%

 

 

0.17

%

 

 

0.19

%

Allowance for loan losses

     to total loans

 

 

1.00

%

 

 

1.14

%

 

 

1.00

%

 

 

1.09

%

 

 

1.07

%

 

 

1.10

%

 

 

1.14

%

Allowance for loan losses

     to non-performing loans

 

 

324

%

 

 

433

%

 

 

324

%

 

 

300

%

 

 

574

%

 

 

475

%

 

 

433

%

                

 

(1)

At period end.

 

 

Page 9

 

FINANCIAL INSTITUTIONS, INC.
Appendix A — Reconciliation to Non-GAAP Financial Measures (Unaudited)
(In thousands, except per share amounts)

 

 

 

Nine Months Ended

 

 

2019

 

 

2018

 

 

 

September 30,

 

 

Third

 

 

Second

 

 

First

 

 

Fourth

 

 

Third

 

 

 

2019

 

 

2018

 

 

Quarter

 

 

Quarter

 

 

Quarter

 

 

Quarter

 

 

Quarter

 

Ending tangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

 

 

 

 

 

 

 

$

4,332,737

 

 

$

4,313,945

 

 

$

4,302,541

 

 

$

4,311,698

 

 

$

4,258,385

 

Less: Goodwill and other intangible

     assets, net

 

 

 

 

 

 

 

 

 

 

75,225

 

 

 

75,534

 

 

 

75,850

 

 

 

76,173

 

 

 

78,853

 

Tangible assets

 

 

 

 

 

 

 

 

 

$

4,257,512

 

 

$

4,238,411

 

 

$

4,226,691

 

 

$

4,235,525

 

 

$

4,179,532

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending tangible common equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shareholders’ equity

 

 

 

 

 

 

 

 

 

$

415,289

 

 

$

405,026

 

 

$

390,925

 

 

$

378,965

 

 

$

374,825

 

Less: Goodwill and other intangible

     assets, net

 

 

 

 

 

 

 

 

 

 

75,225

 

 

 

75,534

 

 

 

75,850

 

 

 

76,173

 

 

 

78,853

 

Tangible common equity

 

 

 

 

 

 

 

 

 

$

340,064

 

 

$

329,492

 

 

$

315,075

 

 

$

302,792

 

 

$

295,972

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity to tangible

     assets (1)

 

 

 

 

 

 

 

 

 

 

7.99

%

 

 

7.77

%

 

 

7.45

%

 

 

7.15

%

 

 

7.08

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

 

 

 

 

 

 

 

 

 

15,997

 

 

 

15,995

 

 

 

15,941

 

 

 

15,929

 

 

 

15,925

 

Tangible common book value per

     share (2)

 

 

 

 

 

 

 

 

 

$

21.26

 

 

$

20.60

 

 

$

19.77

 

 

$

19.01

 

 

$

18.59

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average tangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average assets

 

$

4,281,270

 

 

$

4,139,338

 

 

$

4,260,810

 

 

$

4,300,254

 

 

$

4,282,991

 

 

$

4,268,809

 

 

$

4,187,538

 

Less: Average goodwill and other

     intangible assets, net

 

 

75,713

 

 

 

76,544

 

 

 

75,401

 

 

 

75,711

 

 

 

76,033

 

 

 

78,314

 

 

 

79,047

 

Average tangible assets

 

$

4,205,557

 

 

$

4,062,794

 

 

$

4,185,409

 

 

$

4,224,543

 

 

$

4,206,958

 

 

$

4,190,495

 

 

$

4,108,491

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average tangible common equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common equity

 

$

398,033

 

 

$

368,356

 

 

$

412,073

 

 

$

398,083

 

 

$

383,630

 

 

$

378,936

 

 

$

374,482

 

Less: Average goodwill and other

     intangible assets, net

 

 

75,713

 

 

 

76,544

 

 

 

75,401

 

 

 

75,711

 

 

 

76,033

 

 

 

78,314

 

 

 

79,047

 

Average tangible common equity

 

$

322,320

 

 

$

291,812

 

 

$

336,672

 

 

$

322,372

 

 

$

307,597

 

 

$

300,622

 

 

$

295,435

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to

     common shareholders

 

$

34,659

 

 

$

30,939

 

 

$

12,468

 

 

$

11,035

 

 

$

11,156

 

 

$

7,126

 

 

$

10,212

 

Return on average tangible common

     equity (3)

 

 

14.38

%

 

 

14.18

%

 

 

14.69

%

 

 

13.73

%

 

 

14.71

%

 

 

9.40

%

 

 

13.71

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax pre-provision income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

35,755

 

 

$

32,035

 

 

$

12,833

 

 

$

11,401

 

 

$

11,521

 

 

$

7,491

 

 

$

10,577

 

Add: Income tax expense

 

 

10,247

 

 

 

7,807

 

 

 

4,281

 

 

 

2,939

 

 

 

3,027

 

 

 

2,199

 

 

 

2,560

 

Add: Provision for loan losses

 

 

5,391

 

 

 

5,050

 

 

 

1,844

 

 

 

2,354

 

 

 

1,193

 

 

 

3,884

 

 

 

2,061

 

Pre-tax pre-provision income

 

$

51,393

 

 

$

44,892

 

 

$

18,958

 

 

$

16,694

 

 

$

15,741

 

 

$

13,574

 

 

$

15,198

 

                

 

(1)

Tangible common equity divided by tangible assets.

 

(2)

Tangible common equity divided by common shares outstanding.

 

(3)

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

 

Page 10