WARSAW, N.Y., April 25, 2017 (GLOBE NEWSWIRE) — Financial Institutions, Inc. (Nasdaq:FISI), today reported financial results for the first quarter ended March 31, 2017. Financial Institutions, Inc. (the “Company”) is the parent company of Five Star Bank (the “Bank”), Scott Danahy Naylon Insurance, LLC (“Scott Danahy Naylon” or “SDN”) and Courier Capital, LLC (“Courier Capital”).
Net income for the quarter was $7.9 million compared to $8.7 million for the fourth quarter of 2016 and $7.6 million for the first quarter of 2016. After preferred dividends, net income available to common shareholders was $7.6 million, or $0.52 per diluted share, compared to $8.3 million, or $0.57 per diluted share, for the fourth quarter of 2016 and $7.3 million, or $0.50 per diluted share, for the first quarter of 2016.
President and Chief Executive Officer Martin K. Birmingham stated, “We are off to a very good start in 2017 with first quarter earnings in-line with our expectations and ongoing execution of our strategic plan.
“In mid-February, we furthered our expansion in Buffalo with the opening of a new financial solution center in a prime downtown location. We look forward to serving the needs of downtown residents, businesses and workers, and we believe this branch opening will serve as an excellent foundation for continued growth in Buffalo and all of Western New York.
“We continued to invest in talent during the quarter with the addition of two Community Development Officers, one based in Buffalo and the other in Rochester. These new Five Star Bank associates are playing critical roles in the execution of our Community Reinvestment Act program to increase access to affordable loan and deposit services for low and moderate income customers. This is just one of our many efforts to support our communities, enhancing the quality of life and future outlook for those in need.”
First Quarter 2017 Highlights:
- Diluted earnings per share (“EPS”) of $0.52 was $0.02 higher than the first quarter of 2016
- Net interest income of $27.0 million increased $2.3 million, or 9.2%, as compared to the first quarter of 2016
- Noninterest income of $7.8 million was $1.4 million, or 15.0%, lower than the first quarter of 2016
- Excluding the net gain on investment securities from both periods and $911 thousand of death benefit proceeds from company owned life insurance in the first quarter of 2016, noninterest income was $7.6 million in the quarter as compared to $7.7 million in the first quarter of 2016
- Return on average common equity was 10.02%
- Return on average tangible common equity was 13.30% (computation of this non-GAAP measure provided in Appendix A)
- Total assets, interest-earning assets, loans and deposits all reached record-high levels at quarter-end:
- Total assets increased $149.5 million during the quarter, to $3.86 billion
- Total interest-earning assets increased $95.1 million during the quarter, to $3.52 billion
- Total loans increased $62.5 million during the quarter, to $2.40 billion
- Total deposits increased $174.4 million during the quarter, to $3.17 billion
- The quarterly cash dividend of $0.21 per common share represented a 2.58% dividend yield as of March 31, 2017, and a return of 40% of first quarter net income to common shareholders
- Total risk-based capital was 12.75% at quarter-end, representing a strong capital position to support future growth
- Credit quality remains strong with total non-performing loans to total loans of 0.33% at quarter-end
Chief Financial Officer Kevin B. Klotzbach added, “We generated solid loan and deposit growth, controlled expenses and maintained a stable net interest margin in the quarter. Our total loan portfolio increased 2.7% from year-end and 13.6% from March 31, 2016. This growth was funded primarily by deposits. Noninterest expense was up 1.1% from the fourth quarter of 2016, primarily due to higher occupancy and equipment expenses related to branch openings, and was down 1.3% from the year earlier period. The net interest margin was 3.23% for the quarter, up one basis point from the previous quarter.
“It is also important to note that results include a lower level of nonrecurring items, reflecting the higher overall quality of first quarter earnings.”
Net Interest Income and Net Interest Margin
- Net interest income was $27.0 million for the first quarter of 2017, $273 thousand higher than the fourth quarter of 2016 and $2.3 million higher than the first quarter of 2016.
- Average interest-earning assets for the quarter were $3.48 billion, $70.7 million higher than the fourth quarter of 2016 and $346.9 million higher than the first quarter of 2016. The primary driver of the increase was loans, which in turn were funded by increased deposits.
- First quarter 2017 net interest margin was 3.23%, one basis point higher than the fourth quarter of 2016 and four basis points lower than the first quarter of 2016. First quarter 2017 net interest margin benefitted from approximately $100 thousand of mortgage-backed security pre-payment fees.
Noninterest Income
Noninterest income was $7.8 million for the first quarter of 2017 as compared to $9.1 million in the fourth quarter of 2016 and $9.2 million in the first quarter of 2016.
- Excluding the net gain on investment securities from all periods, noninterest income was $7.6 million in the first quarter of 2017, $1.2 million lower than $8.8 million in the fourth quarter of 2016, and $1.0 million lower than $8.6 million in the first quarter of 2016.
- The decrease from the fourth quarter of 2016 was primarily the result of a $1.2 million non-cash fair value adjustment of the contingent consideration liability related to the SDN acquisition recognized in the fourth quarter of 2016.
- The decrease from the first quarter of 2016 was primarily the result of $911 thousand of death benefit proceeds from company owned life insurance, a nonrecurring event, received in the first quarter of 2016 and lower insurance income in the first quarter of 2017 due to the loss of legacy SDN accounts, partially offset by higher investment advisory income in the first quarter of 2017 associated with favorable market conditions and successful business development efforts.
Noninterest Expense
Noninterest expense was $20.9 million for the first quarter of 2017 as compared to $20.7 million in the fourth quarter of 2016 and $21.2 million in the first quarter of 2016.
- The increase in noninterest expense as compared to the fourth quarter of 2016 was primarily the result of higher occupancy and equipment expenses from our organic growth initiatives.
- The decrease in noninterest expense as compared to the first quarter of 2016 was primarily the result of lower professional services. Professional services in the first quarter of 2016 included approximately $360 thousand of expense associated with responding to the demands of an activist shareholder.
Income Taxes
Income tax expense was $3.2 million for the first quarter of 2017 as compared to $3.0 million in the fourth quarter of 2016 and $2.7 million in the first quarter of 2016. The effective tax rate was 28.5% for the first quarter of 2017, 25.9% in the fourth quarter of 2016, and 26.4% in the first quarter of 2016. The lower effective tax rate in the fourth quarter of 2016 was a result of the $1.2 million non-cash fair value adjustment of the contingent consideration liability related to the SDN acquisition, a non-taxable item. The lower effective tax rate in the first quarter of 2016 was the result of the $911 thousand of death benefit proceeds from company owned life insurance, also a non-taxable item.
Balance Sheet and Capital Management
Total assets were $3.86 billion at March 31, 2017, up $149.5 million from $3.71 billion at December 31, 2016, and up $343.3 million from $3.52 billion at March 31, 2016. The increases were largely the result of loan growth funded by deposit growth.
Total loans were $2.40 billion at March 31, 2017, up $62.5 million, or 2.7%, from December 31, 2016, and up $287.6 million, or 13.6%, from March 31, 2016.
- Commercial business loans totaled $375.5 million, up $26.0 million, or 7.4%, from December 31, 2016, and up $57.7 million, or 18.2%, from March 31, 2016.
- Commercial mortgage loans totaled $675.0 million, up $4.9 million, or 0.7%, from December 31, 2016, and up $84.7 million, or 14.3%, from March 31, 2016.
- Residential real estate loans totaled $428.2 million, up $234 thousand, or 0.1%, from December 31, 2016, and up $45.7 million, or 11.9%, from March 31, 2016.
- Consumer indirect loans totaled $786.1 million, up $33.7 million, or 4.5%, from December 31, 2016, and up $106.3 million, or 15.6%, from March 31, 2016.
Total deposits were $3.17 billion at March 31, 2017, an increase of $174.4 million from December 31, 2016, and an increase of $209.5 million from March 31, 2016. The increase from December 31, 2016, was primarily due to public deposit seasonality. The increase from March 31, 2016, was primarily the result of successful business development efforts in both municipal and retail banking. Public deposit balances represented 31% of total deposits at March 31, 2017, compared to 27% at December 31, 2016 and 30% at March 31, 2016.
Short-term borrowings were $303.3 million at March 31, 2017, down $28.2 million from December 31, 2016, and up $124.1 million from March 31, 2016. Short-term borrowings are typically utilized to manage the seasonality of public deposits.
Shareholders’ equity was $325.7 million at March 31, 2017, compared to $320.1 million at December 30, 2016, and $314.0 million at March 31, 2016. Common book value per share was $21.21 at March 31, 2017, an increase of $0.39 or 1.9% from $20.82 at December 31, 2016, and an increase of $0.75 or 3.7% from $20.46 at March 31, 2016. The increases in shareholders’ equity and common book value per share are attributable to net income, less dividends paid, with a partial offset from net unrealized losses on securities available for sale, which is a component of accumulated other comprehensive loss.
During the first quarter 2017, the Company declared a common stock dividend of $0.21 per common share. The first quarter 2017 dividend returned 40% of first quarter net income to common shareholders.
Regulatory capital ratios at March 31, 2017, remained steady with slight downward pressure in comparison to the prior year as a result of strong loan growth and higher asset levels:
- Leverage Ratio was 7.30%, compared to 7.36% and 7.46% at December 31, 2016, and March 31, 2016, respectively.
- Common Equity Tier 1 Ratio was 9.46%, compared to 9.59% and 9.83% at December 31, 2016, and March 31, 2016, respectively.
- Tier 1 Risk-Based Capital was 10.11%, compared to 10.26% and 10.56% at December 31, 2016, and March 31, 2016, respectively.
- Total Risk-Based Capital was 12.75%, compared to 12.97% and 13.39% at December 31, 2016, and March 31, 2016, respectively.
Credit Quality
Non-performing loans were $8.0 million at March 31, 2017, compared to $6.3 million at December 31, 2016, and $8.6 million at March 31, 2016. The $1.7 million increase from December 31, 2016, was primarily due to higher commercial and residential real estate non-performing loans, partially offset by improvements in the consumer indirect loan portfolio.
- The ratio of non-performing loans to total loans was 0.33% at March 31, 2017, compared to 0.27% at December 31, 2016, and 0.41% at March 31, 2016.
The provision for loan losses for the first quarter of 2017 was $2.8 million, a decrease of $576 thousand from the fourth quarter of 2016 and an increase of $413 thousand from the first quarter of 2016. During the fourth quarter 2016, the Company internally downgraded to substandard status one commercial business credit relationship with unpaid principal balances totaling $3.5 million. The downgrade necessitated a provision and increase in our allowance for losses of approximately $1.1 million. These loans were current with respect to principal and interest payments as of March 31, 2017; however, we continue to monitor this relationship closely.
- Net charge-offs were $2.6 million during the first quarter of 2017, an $861 thousand increase compared to the prior quarter and a $749 thousand increase from the first quarter of 2016.
- The ratio of annualized net charge-offs to total average loans was 0.45% in the current quarter, compared to 0.30% in the prior quarter and 0.36% in the first quarter of 2016.
- The ratio of allowance for loan losses to total loans was 1.29% at March 31, 2017, 1.32% at December 31, 2016, and 1.30% at March 31, 2016.
- The ratio of allowance for loan losses to non-performing loans was 388% at March 31, 2017, 489% at December 31, 2016, and 322% at March 31, 2016.
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 and lending services to individuals, municipalities and businesses through a network of more than 50 offices and 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 45 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 650 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
This news release contains disclosure regarding tangible common equity, tangible common equity to tangible assets, tangible common book value per share, average tangible common equity and return on average tangible common equity, which are determined by methods other than in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company believes that these non-GAAP measures are useful to our investors as measures of the strength of the Company’s capital and ability to generate earnings on tangible common equity invested by our shareholders. These non-GAAP measures provide supplemental information that may help investors to analyze our capital position without regard to the effects of intangible assets. Non-GAAP financial measures have inherent limitations and are not uniformly applied by issuers. Therefore, these non-GAAP financial measures should not be considered in isolation, or as a substitute for comparable measures prepared in accordance with GAAP. The comparable GAAP financial measures and reconciliation to the comparable GAAP financial measures 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 Scott Danahy Naylon 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, 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.
FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share amounts)
| 2017 | 2016 | ||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| SELECTED BALANCE SHEET DATA: | |||||||||||||||||||
| Cash and cash equivalents | $149,699 | $71,277 | $110,721 | $67,624 | $110,944 | ||||||||||||||
| Investment securities: | |||||||||||||||||||
| Available for sale | 540,406 | 539,926 | 559,495 | 619,719 | 610,013 | ||||||||||||||
| Held-to-maturity | 545,381 | 543,338 | 528,708 | 478,549 | 476,283 | ||||||||||||||
| Total investment securities | 1,085,787 | 1,083,264 | 1,088,203 | 1,098,268 | 1,086,296 | ||||||||||||||
| Loans held for sale | 2,097 | 1,050 | 844 | 209 | 609 | ||||||||||||||
| Loans: | |||||||||||||||||||
| Commercial business | 375,518 | 349,547 | 350,588 | 349,432 | 317,776 | ||||||||||||||
| Commercial mortgage | 675,007 | 670,058 | 636,338 | 614,141 | 590,316 | ||||||||||||||
| Residential real estate loans | 428,171 | 427,937 | 425,882 | 408,367 | 382,504 | ||||||||||||||
| Residential real estate lines | 120,874 | 122,555 | 123,663 | 125,054 | 126,526 | ||||||||||||||
| Consumer indirect | 786,120 | 752,421 | 729,644 | 696,908 | 679,846 | ||||||||||||||
| Other consumer | 16,937 | 17,643 | 17,879 | 17,929 | 18,066 | ||||||||||||||
| Total loans | 2,402,627 | 2,340,161 | 2,283,994 | 2,211,831 | 2,115,034 | ||||||||||||||
| Allowance for loan losses | 31,081 | 30,934 | 29,350 | 28,525 | 27,568 | ||||||||||||||
| Total loans, net | 2,371,546 | 2,309,227 | 2,254,644 | 2,183,306 | 2,087,466 | ||||||||||||||
| Total interest-earning assets | 3,523,613 | 3,428,541 | 3,357,609 | 3,292,528 | 3,189,582 | ||||||||||||||
| Goodwill and other intangible assets, net | 75,343 | 75,640 | 75,943 | 76,252 | 76,567 | ||||||||||||||
| Total assets | 3,859,865 | 3,710,340 | 3,687,365 | 3,585,589 | 3,516,572 | ||||||||||||||
| Deposits: | |||||||||||||||||||
| Noninterest-bearing demand | 666,332 | 677,076 | 657,624 | 626,240 | 617,394 | ||||||||||||||
| Interest-bearing demand | 698,962 | 581,436 | 629,413 | 560,284 | 622,443 | ||||||||||||||
| Savings and money market | 1,069,901 | 1,034,194 | 1,052,224 | 960,325 | 1,042,910 | ||||||||||||||
| Time deposits | 734,464 | 702,516 | 724,096 | 711,156 | 677,430 | ||||||||||||||
| Total deposits | 3,169,659 | 2,995,222 | 3,063,357 | 2,858,005 | 2,960,177 | ||||||||||||||
| Short-term borrowings | 303,300 | 331,500 | 230,200 | 338,300 | 179,200 | ||||||||||||||
| Long-term borrowings, net | 39,078 | 39,061 | 39,043 | 39,025 | 39,008 | ||||||||||||||
| Total interest-bearing liabilities | 2,845,705 | 2,688,707 | 2,674,976 | 2,609,090 | 2,560,991 | ||||||||||||||
| Shareholders’ equity | 325,688 | 320,054 | 326,271 | 322,176 | 313,953 | ||||||||||||||
| Common shareholders’ equity | 308,348 | 302,714 | 308,931 | 304,836 | 296,613 | ||||||||||||||
| Tangible common equity (1) | 233,005 | 227,074 | 232,988 | 228,584 | 220,046 | ||||||||||||||
| Unrealized gain (loss) on investment securities, net of tax | $(1,938) | $(2,530) | $9,444 | $10,886 | $7,555 | ||||||||||||||
| Common shares outstanding | 14,536 | 14,538 | 14,528 | 14,528 | 14,495 | ||||||||||||||
| Treasury shares | 156 | 154 | 164 | 164 | 197 | ||||||||||||||
| CAPITAL RATIOS AND PER SHARE DATA: | |||||||||||||||||||
| Leverage ratio | 7.30% | 7.36% | 7.39% | 7.39% | 7.46% | ||||||||||||||
| Common equity Tier 1 ratio | 9.46% | 9.59% | 9.58% | 9.63% | 9.83% | ||||||||||||||
| Tier 1 risk-based capital | 10.11% | 10.26% | 10.27% | 10.33% | 10.56% | ||||||||||||||
| Total risk-based capital | 12.75% | 12.97% | 12.98% | 13.08% | 13.39% | ||||||||||||||
| Common equity to assets | 7.99% | 8.16% | 8.38% | 8.50% | 8.43% | ||||||||||||||
| Tangible common equity to tangible assets (1) | 6.16% | 6.25% | 6.45% | 6.51% | 6.40% | ||||||||||||||
| Common book value per share | $21.21 | $20.82 | $21.26 | $20.98 | $20.46 | ||||||||||||||
| Tangible common book value per share (1) | $16.03 | $15.62 | $16.04 | $15.73 | $15.18 | ||||||||||||||
| Stock price (Nasdaq: FISI): | |||||||||||||||||||
| High | $35.40 | $34.55 | $27.63 | $29.49 | $29.53 | ||||||||||||||
| Low | $30.50 | $25.98 | $25.16 | $24.56 | $25.38 | ||||||||||||||
| Close | $32.95 | $34.20 | $27.11 | $26.07 | $29.07 | ||||||||||||||
________
(1) See Appendix A – Reconciliation to Non-GAAP Financial Measures for the computation of this Non-GAAP measure.
FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share amounts)
| 2017 | 2016 | ||||||||||||||||||||||||
| First | Year ended | Fourth | Third | Second | First | ||||||||||||||||||||
| Quarter | December 31, | Quarter | Quarter | Quarter | Quarter | ||||||||||||||||||||
| SELECTED INCOME STATEMENT DATA: | |||||||||||||||||||||||||
| Interest income | $30,538 | $115,231 | $29,990 | $29,360 | $28,246 | $27,635 | |||||||||||||||||||
| Interest expense | 3,543 | 12,541 | 3,268 | 3,310 | 3,047 | 2,916 | |||||||||||||||||||
| Net interest income | 26,995 | 102,690 | 26,722 | 26,050 | 25,199 | 24,719 | |||||||||||||||||||
| Provision for loan losses | 2,781 | 9,638 | 3,357 | 1,961 | 1,952 | 2,368 | |||||||||||||||||||
| Net interest income after provision | |||||||||||||||||||||||||
| for loan losses | 24,214 | 93,052 | 23,365 | 24,089 | 23,247 | 22,351 | |||||||||||||||||||
| Noninterest income: | |||||||||||||||||||||||||
| Service charges on deposits | 1,745 | 7,280 | 1,888 | 1,913 | 1,755 | 1,724 | |||||||||||||||||||
| Insurance income | 1,431 | 5,396 | 1,134 | 1,407 | 1,183 | 1,672 | |||||||||||||||||||
| ATM and debit card | 1,329 | 5,687 | 1,500 | 1,441 | 1,421 | 1,325 | |||||||||||||||||||
| Investment advisory | 1,431 | 5,208 | 1,274 | 1,326 | 1,365 | 1,243 | |||||||||||||||||||
| Company owned life insurance | 445 | 2,808 | 468 | 486 | 486 | 1,368 | |||||||||||||||||||
| Investments in limited partnerships | (30) | 300 | 47 | 161 | 36 | 56 | |||||||||||||||||||
| Loan servicing | 120 | 436 | 104 | 104 | 112 | 116 | |||||||||||||||||||
| Net gain on sale of loans held for sale | 48 | 240 | 38 | 46 | 78 | 78 | |||||||||||||||||||
| Net gain on investment securities | 206 | 2,695 | 269 | 426 | 1,387 | 613 | |||||||||||||||||||
| Net (loss) gain on other assets | (2) | 313 | 28 | 199 | 82 | 4 | |||||||||||||||||||
| Contingent consideration liability adjustment | – | 1,170 | 1,170 | – | – | – | |||||||||||||||||||
| Other | 1,113 | 4,227 | 1,168 | 1,030 | 1,011 | 1,018 | |||||||||||||||||||
| Total noninterest income | 7,836 | 35,760 | 9,088 | 8,539 | 8,916 | 9,217 | |||||||||||||||||||
| Noninterest expense: | |||||||||||||||||||||||||
| Salaries and employee benefits | 11,369 | 45,215 | 11,458 | 11,325 | 10,818 | 11,614 | |||||||||||||||||||
| Occupancy and equipment | 3,964 | 14,529 | 3,623 | 3,617 | 3,664 | 3,625 | |||||||||||||||||||
| Professional services | 1,199 | 6,184 | 948 | 956 | 2,833 | 1,447 | |||||||||||||||||||
| Computer and data processing | 1,171 | 4,451 | 1,116 | 1,089 | 1,159 | 1,087 | |||||||||||||||||||
| Supplies and postage | 537 | 2,047 | 499 | 490 | 464 | 594 | |||||||||||||||||||
| FDIC assessments | 457 | 1,735 | 452 | 406 | 441 | 436 | |||||||||||||||||||
| Advertising and promotions | 278 | 1,695 | 436 | 302 | 530 | 427 | |||||||||||||||||||
| Amortization of intangibles | 297 | 1,249 | 303 | 309 | 315 | 322 | |||||||||||||||||||
| Other | 1,670 | 7,566 | 1,880 | 2,124 | 1,896 | 1,666 | |||||||||||||||||||
| Total noninterest expense | 20,942 | 84,671 | 20,715 | 20,618 | 22,120 | 21,218 | |||||||||||||||||||
| Income before income taxes | 11,108 | 44,141 | 11,738 | 12,010 | 10,043 | 10,350 | |||||||||||||||||||
| Income tax expense | 3,165 | 12,210 | 3,045 | 3,541 | 2,892 | 2,732 | |||||||||||||||||||
| Net income | 7,943 | 31,931 | 8,693 | 8,469 | 7,151 | 7,618 | |||||||||||||||||||
| Preferred stock dividends | 365 | 1,462 | 365 | 366 | 366 | 365 | |||||||||||||||||||
| Net income available to common shareholders | $7,578 | $30,469 | $8,328 | $8,103 | $6,785 | $7,253 | |||||||||||||||||||
| FINANCIAL RATIOS: | |||||||||||||||||||||||||
| Earnings per share – basic | $0.52 | $2.11 | $0.58 | $0.56 | $0.47 | $0.50 | |||||||||||||||||||
| Earnings per share – diluted | $0.52 | $2.10 | $0.57 | $0.56 | $0.47 | $0.50 | |||||||||||||||||||
| Cash dividends declared on common stock | $0.21 | $0.81 | $0.21 | $0.20 | $0.20 | $0.20 | |||||||||||||||||||
| Common dividend payout ratio | 40.38% | 38.39% | 36.21% | 35.71% | 42.55% | 40.00% | |||||||||||||||||||
| Dividend yield (annualized) | 2.58% | 2.37% | 2.44% | 2.93% | 3.09% | 2.77% | |||||||||||||||||||
| Return on average assets | 0.86% | 0.90% | 0.94% | 0.94% | 0.82% | 0.90% | |||||||||||||||||||
| Return on average equity | 9.94% | 10.01% | 10.68% | 10.34% | 9.07% | 9.91% | |||||||||||||||||||
| Return on average common equity | 10.02% | 10.10% | 10.81% | 10.45% | 9.10% | 10.00% | |||||||||||||||||||
| Return on average tangible common equity (1) | 13.30% | 13.51% | 14.37% | 13.87% | 12.22% | 13.54% | |||||||||||||||||||
| Efficiency ratio (2) | 59.09% | 60.95% | 56.99% | 58.99% | 66.00% | 62.19% | |||||||||||||||||||
| Effective tax rate | 28.5% | 27.7% | 25.9% | 29.5% | 28.8% | 26.4% | |||||||||||||||||||
________
(1) See Appendix A – Reconciliation to Non-GAAP Financial Measures for the computation of this Non-GAAP measure.
(2) Efficiency ratio equals noninterest expense 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.
FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands)
| 2017 | 2016 | |||||||||||||||||||||||||||
| First | Year ended | Fourth | Third | Second | First | |||||||||||||||||||||||
| Quarter | December 31, | Quarter | Quarter | Quarter | Quarter | |||||||||||||||||||||||
| SELECTED AVERAGE BALANCES: | ||||||||||||||||||||||||||||
| Federal funds sold and interest-earning deposits | $10,078 | $3,116 | $12,011 | $1 | $316 | $70 | ||||||||||||||||||||||
| Investment securities (1) | 1,090,063 | 1,063,221 | 1,080,941 | 1,068,866 | 1,075,220 | 1,027,602 | ||||||||||||||||||||||
| Loans: | ||||||||||||||||||||||||||||
| Commercial business | 363,367 | 336,633 | 347,496 | 352,696 | 329,901 | 316,143 | ||||||||||||||||||||||
| Commercial mortgage | 678,613 | 618,436 | 659,713 | 625,003 | 606,360 | 582,142 | ||||||||||||||||||||||
| Residential real estate loans | 429,746 | 404,456 | 425,687 | 417,854 | 391,826 | 382,077 | ||||||||||||||||||||||
| Residential real estate lines | 121,594 | 124,635 | 122,734 | 123,312 | 125,212 | 127,317 | ||||||||||||||||||||||
| Consumer indirect | 767,887 | 703,975 | 741,598 | 711,948 | 683,722 | 678,133 | ||||||||||||||||||||||
| Other consumer | 16,956 | 17,620 | 17,448 | 17,548 | 17,562 | 17,926 | ||||||||||||||||||||||
| Total loans | 2,378,163 | 2,205,755 | 2,314,676 | 2,248,361 | 2,154,583 | 2,103,738 | ||||||||||||||||||||||
| Total interest-earning assets | 3,478,304 | 3,272,092 | 3,407,628 | 3,317,228 | 3,230,119 | 3,131,410 | ||||||||||||||||||||||
| Goodwill and other intangible assets, net | 75,508 | 76,170 | 75,807 | 76,116 | 76,437 | 76,324 | ||||||||||||||||||||||
| Total assets | 3,754,470 | 3,547,105 | 3,679,569 | 3,593,672 | 3,507,760 | 3,405,451 | ||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||
| Interest-bearing demand | 634,141 | 576,046 | 604,717 | 547,545 | 579,497 | 572,424 | ||||||||||||||||||||||
| Savings and money market | 1,030,363 | 1,010,510 | 1,076,884 | 981,207 | 1,017,911 | 965,629 | ||||||||||||||||||||||
| Time deposits | 721,404 | 697,654 | 711,061 | 722,098 | 698,505 | 658,537 | ||||||||||||||||||||||
| Short-term borrowings | 327,195 | 248,938 | 244,796 | 315,122 | 213,826 | 221,326 | ||||||||||||||||||||||
| Long-term borrowings, net | 39,067 | 39,023 | 39,050 | 39,032 | 39,015 | 38,997 | ||||||||||||||||||||||
| Total interest-bearing liabilities | 2,752,170 | 2,572,171 | 2,676,508 | 2,605,004 | 2,548,754 | 2,456,913 | ||||||||||||||||||||||
| Noninterest-bearing demand deposits | 657,190 | 633,416 | 655,445 | 638,417 | 621,912 | 617,590 | ||||||||||||||||||||||
| Total deposits | 3,043,098 | 2,917,626 | 3,048,107 | 2,889,267 | 2,917,825 | 2,814,180 | ||||||||||||||||||||||
| Total liabilities | 3,430,504 | 3,228,099 | 3,355,894 | 3,267,808 | 3,190,589 | 3,096,263 | ||||||||||||||||||||||
| Shareholders’ equity | 323,966 | 319,006 | 323,675 | 325,864 | 317,171 | 309,188 | ||||||||||||||||||||||
| Common equity | 306,626 | 301,666 | 306,335 | 308,524 | 299,831 | 291,848 | ||||||||||||||||||||||
| Tangible common equity (2) | $231,118 | $225,496 | $230,528 | $232,408 | $223,394 | $215,524 | ||||||||||||||||||||||
| Common shares outstanding: | ||||||||||||||||||||||||||||
| Basic | 14,479 | 14,436 | 14,459 | 14,456 | 14,434 | 14,395 | ||||||||||||||||||||||
| Diluted | 14,528 | 14,491 | 14,511 | 14,500 | 14,489 | 14,465 | ||||||||||||||||||||||
| SELECTED AVERAGE YIELDS: | ||||||||||||||||||||||||||||
| (Tax equivalent basis) | ||||||||||||||||||||||||||||
| Investment securities | 2.46% | 2.45% | 2.41% | 2.44% | 2.48% | 2.48% | ||||||||||||||||||||||
| Loans | 4.19% | 4.18% | 4.17% | 4.18% | 4.17% | 4.21% | ||||||||||||||||||||||
| Total interest-earning assets | 3.64% | 3.62% | 3.60% | 3.62% | 3.61% | 3.64% | ||||||||||||||||||||||
| Interest-bearing demand | 0.14% | 0.14% | 0.14% | 0.15% | 0.14% | 0.14% | ||||||||||||||||||||||
| Savings and money market | 0.13% | 0.13% | 0.13% | 0.14% | 0.13% | 0.13% | ||||||||||||||||||||||
| Time deposits | 0.95% | 0.90% | 0.93% | 0.91% | 0.89% | 0.88% | ||||||||||||||||||||||
| Short-term borrowings | 0.86% | 0.65% | 0.70% | 0.63% | 0.65% | 0.62% | ||||||||||||||||||||||
| Long-term borrowings, net | 6.32% | 6.33% | 6.33% | 6.33% | 6.33% | 6.34% | ||||||||||||||||||||||
| Total interest-bearing liabilities | 0.52% | 0.49% | 0.49% | 0.51% | 0.48% | 0.48% | ||||||||||||||||||||||
| Net interest rate spread | 3.12% | 3.13% | 3.11% | 3.11% | 3.13% | 3.16% | ||||||||||||||||||||||
| Net interest rate margin | 3.23% | 3.24% | 3.22% | 3.23% | 3.23% | 3.27% | ||||||||||||||||||||||
________
(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.
FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands)
| 2017 | 2016 |
||||||||||||||||||||||||
| First | Year ended | Fourth | Third | Second | First | ||||||||||||||||||||
| Quarter | December 31, | Quarter | Quarter | Quarter | Quarter | ||||||||||||||||||||
| ASSET QUALITY DATA: | |||||||||||||||||||||||||
| Allowance for Loan Losses | |||||||||||||||||||||||||
| Beginning balance | $30,934 | $27,085 | $29,350 | $28,525 | $27,568 | $27,085 | |||||||||||||||||||
| Net loan charge-offs (recoveries): | |||||||||||||||||||||||||
| Commercial business | 964 | 496 | 52 | (31) | (27) | 502 | |||||||||||||||||||
| Commercial mortgage | (204) | 340 | 212 | 127 | 2 | (1) | |||||||||||||||||||
| Residential real estate loans | (26) | 115 | (1) | 61 | 34 | 21 | |||||||||||||||||||
| Residential real estate lines | 33 | 89 | 41 | 4 | 44 | – | |||||||||||||||||||
| Consumer indirect | 1,758 | 4,489 | 1,361 | 896 | 904 | 1,328 | |||||||||||||||||||
| Other consumer | 109 | 260 | 108 | 79 | 38 | 35 | |||||||||||||||||||
| Total net charge-offs | 2,634 | 5,789 | 1,773 | 1,136 | 995 | 1,885 | |||||||||||||||||||
| Provision for loan losses | 2,781 | 9,638 | 3,357 | 1,961 | 1,952 | 2,368 | |||||||||||||||||||
| Ending balance | $31,081 | $30,934 | $30,934 | $29,350 | $28,525 | $27,568 | |||||||||||||||||||
| Net charge-offs (recoveries) | |||||||||||||||||||||||||
| to average loans (annualized): | |||||||||||||||||||||||||
| Commercial business | 1.08% | 0.15% | 0.06% | -0.03% | -0.03% | 0.64% | |||||||||||||||||||
| Commercial mortgage | -0.12% | 0.05% | 0.13% | 0.08% | 0.00% | -0.00% | |||||||||||||||||||
| Residential real estate loans | -0.02% | 0.03% | -0.00% | 0.06% | 0.03% | 0.02% | |||||||||||||||||||
| Residential real estate lines | 0.11% | 0.07% | 0.13% | 0.01% | 0.14% | 0.00% | |||||||||||||||||||
| Consumer indirect | 0.93% | 0.64% | 0.73% | 0.50% | 0.53% | 0.79% | |||||||||||||||||||
| Other consumer | 2.61% | 1.48% | 2.46% | 1.79% | 0.87% | 0.79% | |||||||||||||||||||
| Total loans | 0.45% | 0.26% | 0.30% | 0.20% | 0.19% | 0.36% | |||||||||||||||||||
| Supplemental information (1) | |||||||||||||||||||||||||
| Non-performing loans: | |||||||||||||||||||||||||
| Commercial business | $3,753 | $2,151 | $2,151 | $2,157 | $2,312 | $4,056 | |||||||||||||||||||
| Commercial mortgage | 1,267 | 1,025 | 1,025 | 1,345 | 1,547 | 1,781 | |||||||||||||||||||
| Residential real estate loans | 1,601 | 1,236 | 1,236 | 1,239 | 1,485 | 1,601 | |||||||||||||||||||
| Residential real estate lines | 336 | 372 | 372 | 274 | 182 | 165 | |||||||||||||||||||
| Consumer indirect | 1,040 | 1,526 | 1,526 | 1,077 | 1,015 | 943 | |||||||||||||||||||
| Other consumer | 23 | 16 | 16 | 9 | 15 | 21 | |||||||||||||||||||
| Total non-performing loans | 8,020 | 6,326 | 6,326 | 6,101 | 6,556 | 8,567 | |||||||||||||||||||
| Foreclosed assets | 58 | 107 | 107 | 294 | 281 | 187 | |||||||||||||||||||
| Total non-performing assets | $8,078 | $6,433 | $6,433 | $6,395 | $6,837 | $8,754 | |||||||||||||||||||
| Total non-performing loans to total loans | 0.33% | 0.27% | 0.27% | 0.27% | 0.30% | 0.41% | |||||||||||||||||||
| Total non-performing assets to total assets | 0.21% | 0.17% | 0.17% | 0.17% | 0.19% | 0.25% | |||||||||||||||||||
| Allowance for loan losses to total loans | 1.29% | 1.32% | 1.32% | 1.29% | 1.29% | 1.30% | |||||||||||||||||||
| Allowance for loan losses to non-performing loans | 388% | 489% | 489% | 481% | 435% | 322% | |||||||||||||||||||
________
(1) At period end.
FINANCIAL INSTITUTIONS, INC.
Appendix A – Reconciliation to Non-GAAP Financial Measures (Unaudited)
(In thousands, except per share amounts)
| 2017 | 2016 | |||||||||||||||||||||||
| First | Year ended | Fourth | Third | Second | First | |||||||||||||||||||
| Quarter | December 31, | Quarter | Quarter | Quarter | Quarter | |||||||||||||||||||
| Ending tangible assets: | ||||||||||||||||||||||||
| Total assets | $3,859,865 | $3,710,340 | $3,687,365 | $3,585,589 | $3,516,572 | |||||||||||||||||||
| Less: Goodwill and other intangible assets, net | 75,343 | 75,640 | 75,943 | 76,252 | 76,567 | |||||||||||||||||||
| Tangible assets | $3,784,522 | $3,634,700 | $3,611,422 | $3,509,337 | $3,440,005 | |||||||||||||||||||
| Ending tangible common equity: | ||||||||||||||||||||||||
| Common shareholders’ equity | $308,348 | $302,714 | $308,931 | $304,836 | $296,613 | |||||||||||||||||||
| Less: Goodwill and other intangible assets, net | 75,343 | 75,640 | 75,943 | 76,252 | 76,567 | |||||||||||||||||||
| Tangible common equity | $233,005 | $227,074 | $232,988 | $228,584 | $220,046 | |||||||||||||||||||
| Tangible common equity to tangible assets (1) | 6.16% | 6.25% | 6.45% | 6.51% | 6.40% | |||||||||||||||||||
| Common shares outstanding | 14,536 | 14,538 | 14,528 | 14,528 | 14,495 | |||||||||||||||||||
| Tangible common book value per share (2) | $16.03 | $15.62 | $16.04 | $15.73 | $15.18 | |||||||||||||||||||
| Average tangible assets: | ||||||||||||||||||||||||
| Average assets | $3,754,470 | $3,547,105 | $3,679,569 | $3,593,672 | $3,507,760 | $3,405,451 | ||||||||||||||||||
| Less: Average goodwill and other intangible | ||||||||||||||||||||||||
| assets, net | 75,508 | 76,170 | 75,807 | 76,116 | 76,437 | 76,324 | ||||||||||||||||||
| Average tangible assets | $3,678,962 | $3,470,935 | $3,603,762 | $3,517,556 | $3,431,323 | $3,329,127 | ||||||||||||||||||
| Average tangible common equity: | ||||||||||||||||||||||||
| Average common equity | $306,626 | $301,666 | $306,335 | $308,524 | $299,831 | $291,848 | ||||||||||||||||||
| Less: Average goodwill and other intangible | ||||||||||||||||||||||||
| assets, net | 75,508 | 76,170 | 75,807 | 76,116 | 76,437 | 76,324 | ||||||||||||||||||
| Average tangible common equity | $231,118 | $225,496 | $230,528 | $232,408 | $223,394 | $215,524 | ||||||||||||||||||
| Net income available to common shareholders | $7,578 | $30,469 | $8,328 | $8,103 | $6,785 | $7,253 | ||||||||||||||||||
| Return on average tangible common equity (3) | 13.30% | 13.51% | 14.37% | 13.87% | 12.22% | 13.54% | ||||||||||||||||||
________
(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.
CONTACT: For additional information contact: Kevin B. Klotzbach Chief Financial Officer & Treasurer Phone: 585.786.1130 Email: [email protected] Shelly J. Doran Director − Investor & External Relations Phone: 585.627.1362 Email: [email protected]