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8-K - LIVE FILING - FINANCIAL INSTITUTIONS INC | htm_48145.htm |
NEWS RELEASE |
220 Liberty Street | |||
For Immediate Release |
Warsaw, NY 14569 |
FINANCIAL INSTITUTIONS, INC. REPORTS SECOND QUARTER 2013
NET INCOME OF $6.9 MILLION
Earnings Per Share $0.47, Up 12% from First Quarter 2013
WARSAW, N.Y., July 24, 2013 Financial Institutions, Inc. (Nasdaq: FISI) (the Company), the parent company of Five Star Bank, today reported financial results for the second quarter ended June 30, 2013. Net income for the second quarter 2013 was $6.9 million, compared to $6.1 million for the first quarter 2013. After preferred dividends, second quarter 2013 net income available to common shareholders was $6.5 million or $0.47 per diluted share compared with $5.8 million or $0.42 per share for the first quarter of 2013.
Highlights for the second quarter 2013 included:
| Diluted EPS of $0.47 per share, up 12% from first quarter 2013 |
| Return on average assets of 0.99%, return on average common equity of 10.86% and return on average tangible common equity of 13.74% |
| Service charges on deposits increased $427 thousand or 20% compared to the previous quarter |
| Provision for loan losses of $1.2 million, a $1.5 million decrease from the previous quarter |
| Total loans grew $26.1 million during the second quarter |
| Capital ratios remain strong with total risk-based capital of 12.21% |
Martin K. Birmingham, the Companys President and Chief Executive Officer, commented, Loan growth across our diversified lines of business, an increase in fee income, tight control of expenses and solid credit quality contributed to a 12% increase in earnings per share in the second quarter. These results were made possible by the hard work of our dedicated employees, coupled with the strategic actions implemented over the past eighteen months that have positioned us well for the future. In particular, we are executing on our strategy to provide expanded options for customers, such as enhanced retail checking programs, which has enabled us to stabilize fee-based income.
Net income of $6.9 million in the second quarter 2013 was $701 thousand higher than the first quarter 2013 as a $1.5 million decrease in the provision for loan losses and a $122 thousand decrease in noninterest expense was partially offset by a $363 thousand decrease in net interest income and a $177 thousand decrease in noninterest income. The Companys return on average assets and return on average common equity were 0.99% and 10.86%, respectively, during the second quarter 2013, compared to 0.90% and 9.83%, respectively, in the first quarter 2013.
Mr. Birmingham added, We remain committed to enhancing shareholder value by utilizing our earnings to support future growth of the balance sheet and returning a portion of earnings to shareholders as dividends. We believe this represents a prudent and balanced approach to rewarding shareholders for their support while continuing to grow the Company. Our second quarter cash dividend of $0.18 per share returned 38% percent of first quarter net income to shareholders.
Net Interest Income and Net Interest Margin
Net interest income of $22.5 million in the second quarter 2013 was $363 thousand lower than the first quarter 2013. The net interest margin (on a tax-equivalent basis) was 3.63% in the second quarter 2013 compared to 3.73% in first quarter 2013. The Companys yield on interest-earning assets decreased 12 basis points in the second quarter 2013 compared with the first quarter 2013, primarily a result of cash flows being reinvested in the current low interest rate environment.
Noninterest Income
Total noninterest income for the second quarter 2013 was $6.4 million compared to $6.6 million in the first quarter 2013. Noninterest income in the second and first quarters of 2013 included gains totaling $332 thousand and $892 thousand, respectively, from the sale of trust preferred securities. Excluding the net securities gains, noninterest income in the second quarter 2013 was $383 thousand or 7% higher than the first quarter 2013, as a $427 thousand increase in service charges on deposits due to the launch of the Companys new retail checking products was partially offset by a decrease of $86 thousand in mortgage banking revenue (defined as loan servicing income and net gains on the sale of loans held for sale). The retail checking product repositioning involved simplifying the suite of products offered to customers. The fee waiver process was also reevaluated, which resulted in a reduction in the number of fee waivers. The Company expects service charges on deposits to stabilize.
Noninterest Expense
Total noninterest expense of $17.5 million for the second quarter 2013 decreased by $122 thousand from $17.6 million in the first quarter 2013. Salaries and employee benefits expense and occupancy and equipment expense decreased $483 thousand and $134 thousand, respectively, when comparing the second quarter 2013 to the first quarter 2013. The decrease in salaries and employee benefits expense was primarily attributable to lower expenses for medical insurance, employee stock based compensation and payroll taxes. Medical insurance is generally higher in the first and third quarter each year due to the timing of the Companys contributions to employee health savings accounts. The decrease in occupancy and equipment expense was seasonal. These decreases were partially offset by higher professional service fees, computer and data processing expense and other noninterest expense when comparing the second quarter 2013 to the first quarter 2013. Professional service fees increased $156 thousand, due in part to executive management transitions and other corporate governance initiatives. The timing of the annual update of a core software application resulted in a $108 thousand increase in computer and data processing expense. Other noninterest expense increased $261 thousand primarily due to stock based compensation paid to our directors in the second quarter of each year and expenses related to the Companys digital marketing initiatives, including the launch of the Companys new retail checking account products.
Balance Sheet and Capital Management
Total assets were $2.78 billion at June 30, 2013, up $18.4 million from $2.76 billion at December 31, 2012. The increase in total assets is attributable to a $37.7 million increase in total loans, partially offset by a $9.5 million decrease in cash and cash equivalents and a $13.8 million decrease in investment securities.
Total loans were $1.74 billion at June 30, 2013, up $37.7 million or 2% compared to $1.71 billion at December 31, 2012. The increase in loans was attributable to organic growth, primarily in the commercial, home equity and consumer indirect loan categories. The average yield on the loan portfolio was 4.65% in the second quarter 2013, compared to 4.83% in the first quarter 2013.
Total investment securities were $827.9 million at June 30, 2013, down $13.8 million compared to $841.7 million at December 31, 2012. The decrease in investment securities occurred based on the combination of scheduled principal paydowns on amortizing securities and a change in the net unrealized gain/loss on the available-for-sale (AFS) investment securities portfolio. The AFS portfolio had net unrealized losses totaling $1.2 million at June 30, 2013 compared to net unrealized gains of $26.6 million at December 31, 2012. The unrealized loss on the AFS portfolio was predominantly caused by changes in market interest rates. The fair value of most of the investment securities in the AFS portfolio fluctuates as market interest rates change. The average yield on the investment securities portfolio was 2.38% in the second quarter 2013 compared to 2.39% in the first quarter 2013.
Total deposits were $2.32 billion at June 30, 2013, up $62.4 million from $2.26 billion at December 31, 2012. Public deposit balances increased $86.9 million during the first half of 2013 due to the seasonality of municipal cash flows, coupled with successful business development efforts for the Companys newly acquired branches. The average cost of interest-bearing deposits declined to 0.36% in the second quarter 2013 from 0.37% in the first quarter 2013.
Shareholders equity was $244.9 million at June 30, 2013, down $9.0 million compared with $253.9 million at December 31, 2012. Net income for the six months ended June 30, 2013 increased shareholders equity by $13.0 million, which was partially offset by common and preferred stock dividends of $5.7 million. Accumulated other comprehensive loss included in shareholders equity decreased $16.4 million during the first half of 2013 due to the previously mentioned change in unrealized gain/loss on AFS securities. At June 30, 2013, the tangible common equity to tangible assets ratio and leverage ratio were 6.49% and 7.59%, respectively, compared to 6.86% and 7.71%, respectively, at December 31, 2012. The decrease in the Companys equity ratios was attributable to the decrease in shareholders equity combined with a growth in our average assets.
At June 30, 2013, the Companys common book value and tangible common book value was $16.47 per share and $12.84 per share, respectively, compared to $17.15 per share and $13.49 per share, respectively, at December 31, 2012.
Credit Quality
Non-performing loans were $11.3 million or 0.65% of total loans at June 30, 2013, compared with $9.1 million or 0.53% of total loans at December 31, 2012. The increase in non-performing loans during the first half of 2013 was primarily due to the first quarter addition of one credit relationship consisting of commercial business and commercial mortgage loans with unpaid principal balances totaling $3.0 million as of June 30, 2013.
Net loan charge-offs improved to $1.4 million in the second quarter 2013 from $1.6 million in the first quarter 2013. The provision for loan losses was $1.2 million in the second quarter 2013, compared to $2.7 million in the first quarter 2013.
The allowance for loan losses was $25.6 million at June 30, 2013, compared with $24.7 million at December 31, 2012. The ratio of the allowance for loan losses to total loans was 1.47% at June 30, 2013, compared with 1.45% at December 31, 2012. The ratio of allowance for loan losses to non-performing loans was 227% at June 30, 2013, compared with 271% at December 31, 2012.
About Financial Institutions, Inc.
Financial Institutions, Inc. provides diversified financial services through its subsidiaries, Five Star Bank and Five Star Investment Services, Inc. Five Star Bank provides a wide range of consumer and commercial banking services to individuals, municipalities and businesses through a network of over 50 offices and more than 60 ATMs throughout Western and Central New York State. Five Star Investment Services provides investment advice, brokerage and insurance products and services within the same New York State markets. Financial Institutions, Inc. and its subsidiaries employ over 600 individuals. The Companys stock is listed on the Nasdaq Global Select Market under the symbol FISI. Additional information is available at the Companys website: www.fiiwarsaw.com.
Non-GAAP Financial Information
This news release contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (GAAP). The Company believes that non-GAAP financial measures provide a meaningful comparison of the underlying operational performance of the Company, and facilitate investors assessments of its business and performance trends in comparison to others in the financial services industry. In addition, the Company believes the exclusion of these non-operating items enables management to perform a more effective evaluation and comparison of the Companys results and to assess performance in relation to the companys ongoing operations. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Where non-GAAP disclosures are used in this news release, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in Appendix A to this document.
Safe Harbor Statement
This press release may contain forward-looking statements as defined by federal securities laws. These statements may address issues that involve significant risks, uncertainties, estimates and assumptions made by management. Actual results could differ materially from current beliefs or projections. There are a number of important factors that could affect the Companys forward-looking statements, which include its ability to implement its strategic plan, its ability to redeploy investment assets into loan assets, whether it experiences greater credit losses than expected, the impact of the current management transition, the attitudes and preferences of its customers, its ability to successfully integrate recently acquired bank branches and profitably operate newly opened bank branches, the competitive environment, fluctuations in the fair value of securities in its investment portfolio, changes in the regulatory environment and general economic and credit market conditions nationally and regionally. For more information about these factors and other factors that could affect the Companys forward-looking statements, please see the Companys Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q on file with the SEC. All of these factors should be carefully reviewed, and readers should not place undue reliance on these forward-looking statements. Except as required by law, the Company undertakes no obligation to revise these statements following the date of this press release.
*****
For additional information contact: |
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Kevin B. Klotzbach |
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Chief Financial Officer & Treasurer |
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Phone: 585.786.1130 |
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Email: KBKlotzbach@five-starbank.com |
or | |||
Jordan M. Darrow |
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Darrow Associates, Inc. |
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Phone: 631.367.1866 |
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Email: jdarrow@darrowir.com |
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FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share amounts)
2013 | 2012 | |||||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
SELECTED BALANCE SHEET DATA: |
||||||||||||||||||||
Cash and cash equivalents |
$ | 50,927 | 84,791 | 60,436 | 77,045 | 61,813 | ||||||||||||||
Investment securities: |
||||||||||||||||||||
Available for sale |
810,549 | 853,437 | 823,796 | 748,618 | 765,216 | |||||||||||||||
Held-to-maturity |
17,348 | 17,747 | 17,905 | 19,564 | 22,016 | |||||||||||||||
Total investment securities |
827,897 | 871,184 | 841,701 | 768,182 | 787,232 | |||||||||||||||
Loans held for sale |
3,423 | 2,142 | 1,518 | 1,411 | 1,682 | |||||||||||||||
Loans: |
||||||||||||||||||||
Commercial business |
257,732 | 259,062 | 258,675 | 245,307 | 245,437 | |||||||||||||||
Commercial mortgage |
437,515 | 424,635 | 413,324 | 403,120 | 413,983 | |||||||||||||||
Residential mortgage |
118,117 | 126,228 | 133,520 | 139,984 | 142,900 | |||||||||||||||
Home equity |
306,215 | 292,225 | 286,649 | 279,211 | 264,911 | |||||||||||||||
Consumer indirect |
599,586 | 590,440 | 586,794 | 563,676 | 531,645 | |||||||||||||||
Other consumer |
24,249 | 24,700 | 26,764 | 27,687 | 25,278 | |||||||||||||||
Total loans |
1,743,414 | 1,717,290 | 1,705,726 | 1,658,985 | 1,624,154 | |||||||||||||||
Allowance for loan losses |
25,590 | 25,827 | 24,714 | 24,301 | 24,120 | |||||||||||||||
Total loans, net |
1,717,824 | 1,691,463 | 1,681,012 | 1,634,684 | 1,600,034 | |||||||||||||||
Total interest-earning assets (1) (2) |
2,576,028 | 2,567,948 | 2,522,444 | 2,400,225 | 2,389,171 | |||||||||||||||
Goodwill and other intangible assets, net |
50,190 | 50,288 | 50,389 | 50,924 | 43,858 | |||||||||||||||
Total assets |
2,782,303 | 2,827,658 | 2,763,865 | 2,653,319 | 2,622,751 | |||||||||||||||
Deposits: |
||||||||||||||||||||
Noninterest-bearing demand |
511,802 | 494,362 | 501,514 | 490,706 | 422,165 | |||||||||||||||
Interest-bearing demand |
475,448 | 529,115 | 449,744 | 472,023 | 420,386 | |||||||||||||||
Savings and money market |
713,459 | 748,482 | 655,598 | 673,883 | 584,278 | |||||||||||||||
Certificates of deposit |
623,527 | 637,538 | 654,938 | 695,107 | 708,442 | |||||||||||||||
Total deposits |
2,324,236 | 2,409,497 | 2,261,794 | 2,331,719 | 2,135,271 | |||||||||||||||
Borrowings |
193,413 | 139,620 | 179,806 | 38,282 | 200,824 | |||||||||||||||
Total interest-bearing liabilities |
2,005,847 | 2,054,755 | 1,940,086 | 1,879,295 | 1,913,930 | |||||||||||||||
Shareholders equity |
244,888 | 254,930 | 253,897 | 251,842 | 246,946 | |||||||||||||||
Common shareholders equity (3) |
227,494 | 237,511 | 236,426 | 234,371 | 229,473 | |||||||||||||||
Tangible common equity (4) |
177,304 | 187,223 | 186,037 | 183,447 | 185,615 | |||||||||||||||
Unrealized (loss) gain on investment securities,
net of tax |
$ | (725 | ) | 13,745 | 16,060 | 17,178 | 14,487 | |||||||||||||
Common shares outstanding |
13,809 | 13,804 | 13,788 | 13,786 | 13,812 | |||||||||||||||
Treasury shares |
353 | 358 | 374 | 376 | 350 | |||||||||||||||
CAPITAL RATIOS AND PER SHARE DATA: |
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Leverage ratio |
7.59 | % | 7.46 | 7.71 | 7.67 | 8.27 | ||||||||||||||
Tier 1 risk-based capital |
10.96 | % | 10.84 | 10.73 | 10.91 | 11.39 | ||||||||||||||
Total risk-based capital |
12.21 | % | 12.09 | 11.98 | 12.16 | 12.64 | ||||||||||||||
Common equity to assets |
8.18 | % | 8.40 | 8.55 | 8.83 | 8.75 | ||||||||||||||
Tangible common equity to tangible assets (4) |
6.49 | % | 6.74 | 6.86 | 7.05 | 7.20 | ||||||||||||||
Common book value per share |
$ | 16.47 | 17.21 | 17.15 | 17.00 | 16.61 | ||||||||||||||
Tangible common book value per share (4) |
12.84 | 13.56 | 13.49 | 13.31 | 13.44 |
(1) Includes investment securities at adjusted amortized cost and non-performing investment securities. |
(2) Includes nonaccrual loans. |
(3) Excludes preferred shareholders equity. |
(4) See Appendix A Non-GAAP to GAAP Reconciliation for the computation of this Non-GAAP measure. |
FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share amounts)
Quarterly Trends | ||||||||||||||||||||||||||||
Six months ended | 2013 | 2012 | ||||||||||||||||||||||||||
June 30, | Second | First | Fourth | Third | Second | |||||||||||||||||||||||
2013 | 2012 | Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||||||||||||
SELECTED INCOME STATEMENT DATA: |
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Interest income |
$ | 49,090 | 47,181 | 24,342 | 24,748 | 25,087 | 25,299 | 23,731 | ||||||||||||||||||||
Interest expense |
3,679 | 4,852 | 1,818 | 1,861 | 1,999 | 2,200 | 2,343 | |||||||||||||||||||||
Net interest income |
45,411 | 42,329 | 22,524 | 22,887 | 23,088 | 23,099 | 21,388 | |||||||||||||||||||||
Provision for loan losses |
3,902 | 2,844 | 1,193 | 2,709 | 2,520 | 1,764 | 1,459 | |||||||||||||||||||||
Net interest income after provision |
||||||||||||||||||||||||||||
for loan losses |
41,509 | 39,485 | 21,331 | 20,178 | 20,568 | 21,335 | 19,929 | |||||||||||||||||||||
Noninterest income: |
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Service charges on deposits |
4,709 | 3,809 | 2,568 | 2,141 | 2,526 | 2,292 | 1,974 | |||||||||||||||||||||
ATM and debit card |
2,566 | 2,149 | 1,317 | 1,249 | 1,348 | 1,219 | 1,072 | |||||||||||||||||||||
Broker-dealer fees and commissions |
1,349 | 1,021 | 650 | 699 | 474 | 609 | 434 | |||||||||||||||||||||
Company owned life insurance |
853 | 867 | 438 | 415 | 451 | 433 | 441 | |||||||||||||||||||||
Loan servicing |
225 | 503 | 152 | 73 | (28 | ) | 142 | 409 | ||||||||||||||||||||
Net gain on sale of loans held for sale |
235 | 658 | 35 | 200 | 440 | 323 | 325 | |||||||||||||||||||||
Net gain on investment securities |
1,224 | 1,568 | 332 | 892 | 487 | 596 | 1,237 | |||||||||||||||||||||
Impairment charge on investment securities |
| (91 | ) | | | | | | ||||||||||||||||||||
Net gain (loss) on sale of other assets |
39 | 35 | 38 | 1 | (302 | ) | (114 | ) | 29 | |||||||||||||||||||
Other |
1,729 | 1,622 | 846 | 883 | 887 | 853 | 769 | |||||||||||||||||||||
Total noninterest income |
12,929 | 12,141 | 6,376 | 6,553 | 6,283 | 6,353 | 6,690 | |||||||||||||||||||||
Noninterest expense: |
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Salaries and employee benefits |
18,935 | 18,127 | 9,226 | 9,709 | 9,562 | 12,438 | 9,071 | |||||||||||||||||||||
Occupancy and equipment |
6,204 | 5,485 | 3,035 | 3,169 | 3,019 | 2,915 | 2,715 | |||||||||||||||||||||
Professional services |
2,030 | 1,791 | 1,093 | 937 | 890 | 1,452 | 1,080 | |||||||||||||||||||||
Computer and data processing |
1,516 | 1,486 | 812 | 704 | 809 | 976 | 886 | |||||||||||||||||||||
Supplies and postage |
1,288 | 1,031 | 608 | 680 | 567 | 899 | 573 | |||||||||||||||||||||
FDIC assessments |
725 | 601 | 364 | 361 | 343 | 356 | 304 | |||||||||||||||||||||
Advertising and promotions |
467 | 238 | 253 | 214 | 430 | 261 | 137 | |||||||||||||||||||||
Other |
3,881 | 3,479 | 2,071 | 1,810 | 1,921 | 2,321 | 1,815 | |||||||||||||||||||||
Total noninterest expense |
35,046 | 32,238 | 17,462 | 17,584 | 17,541 | 21,618 | 16,581 | |||||||||||||||||||||
Income before income taxes |
19,392 | 19,388 | 10,245 | 9,147 | 9,310 | 6,070 | 10,038 | |||||||||||||||||||||
Income tax expense |
6,393 | 6,536 | 3,395 | 2,998 | 2,978 | 1,805 | 3,382 | |||||||||||||||||||||
Net income |
$ | 12,999 | 12,852 | 6,850 | 6,149 | 6,332 | 4,265 | 6,656 | ||||||||||||||||||||
Preferred stock dividends |
735 | 737 | 367 | 368 | 369 | 368 | 368 | |||||||||||||||||||||
Net income available to common shareholders |
$ | 12,264 | 12,115 | 6,483 | 5,781 | 5,963 | 3,897 | 6,288 | ||||||||||||||||||||
FINANCIAL RATIOS AND STOCK DATA: |
||||||||||||||||||||||||||||
Earnings per share basic |
$ | 0.89 | 0.89 | 0.47 | 0.42 | 0.44 | 0.28 | 0.46 | ||||||||||||||||||||
Earnings per share diluted |
$ | 0.89 | 0.88 | 0.47 | 0.42 | 0.43 | 0.28 | 0.46 | ||||||||||||||||||||
Cash dividends declared on common stock |
$ | 0.36 | 0.27 | 0.18 | 0.18 | 0.16 | 0.14 | 0.14 | ||||||||||||||||||||
Common dividend payout ratio (1) |
40.45 | % | 30.34 | 38.30 | 42.86 | 36.36 | 50.00 | 30.43 | ||||||||||||||||||||
Dividend yield (annualized) |
3.94 | % | 3.22 | 3.92 | 3.66 | 3.42 | 2.99 | 3.34 | ||||||||||||||||||||
Return on average assets |
0.94 | % | 1.07 | 0.99 | 0.90 | 0.95 | 0.65 | 1.08 | ||||||||||||||||||||
Return on average equity |
10.22 | % | 10.65 | 10.70 | 9.75 | 9.85 | 6.77 | 10.94 | ||||||||||||||||||||
Return on average common equity (2) |
10.35 | % | 10.82 | 10.86 | 9.83 | 9.95 | 6.65 | 11.12 | ||||||||||||||||||||
Return on average tangible common equity (3) |
13.11 | % | 12.99 | 13.74 | 12.47 | 12.66 | 8.33 | 13.36 | ||||||||||||||||||||
Efficiency ratio (4) |
59.62 | % | 59.52 | 59.38 | 59.87 | 58.88 | 73.04 | 60.41 | ||||||||||||||||||||
Stock price (Nasdaq: FISI): |
||||||||||||||||||||||||||||
High |
$ | 20.83 | 17.99 | 20.66 | 20.83 | 19.39 | 19.52 | 17.66 | ||||||||||||||||||||
Low |
$ | 17.92 | 15.22 | 17.92 | 18.51 | 17.61 | 16.50 | 15.51 | ||||||||||||||||||||
Close |
$ | 18.41 | 16.88 | 18.41 | 19.96 | 18.63 | 18.64 | 16.88 |
(1) Common dividend payout ratio equals dividends declared during the period divided by earnings per share for the equivalent period. |
(2) Net income available to common shareholders divided by average common equity. |
(3) See Appendix A Non-GAAP to GAAP Reconciliation for the computation of this Non-GAAP measure. |
(4) Efficiency ratio equals noninterest expense less other real estate expense and amortization of intangible assets as a percentage of net revenue, defined as the sum of tax-equivalent net interest income and noninterest income before net gains and impairment charges on investment securities. |
FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands)
Quarterly Trends | ||||||||||||||||||||||||||||||||||||||||||||
Six months ended | 2013 | 2012 | ||||||||||||||||||||||||||||||||||||||||||
June 30, | Second | First | Fourth | Third | Second | |||||||||||||||||||||||||||||||||||||||
2013 | 2012 | Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||||||||||||||||||||||||||||
SELECTED AVERAGE BALANCES: |
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Federal funds sold and interest-earning deposits |
$ | 272 | 94 | 226 | 320 | 94 | 168 | 94 | ||||||||||||||||||||||||||||||||||||
Investment securities (1) | 833,094 | 670,157 | 829,953 | 836,270 | 727,735 | 745,796 | 715,431 | |||||||||||||||||||||||||||||||||||||
Loans (2): |
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Commercial business | 257,638 | 234,901 | 256,332 | 258,958 | 250,384 | 248,060 | 237,936 | |||||||||||||||||||||||||||||||||||||
Commercial mortgage | 425,982 | 406,939 | 433,631 | 418,248 | 407,168 | 409,884 | 411,871 | |||||||||||||||||||||||||||||||||||||
Residential mortgage | 126,824 | 114,893 | 123,263 | 130,425 | 137,586 | 141,808 | 115,621 | |||||||||||||||||||||||||||||||||||||
Home equity | 294,140 | 237,879 | 299,230 | 288,993 | 282,831 | 271,131 | 242,208 | |||||||||||||||||||||||||||||||||||||
Consumer indirect | 591,671 | 506,360 | 595,235 | 588,068 | 576,519 | 544,527 | 517,859 | |||||||||||||||||||||||||||||||||||||
Other consumer | 24,804 | 23,487 | 24,080 | 25,535 | 27,043 | 26,179 | 23,420 | |||||||||||||||||||||||||||||||||||||
Total loans | 1,721,059 | 1,524,459 | 1,731,771 | 1,710,227 | 1,681,531 | 1,641,589 | 1,548,915 | |||||||||||||||||||||||||||||||||||||
Total interest-earning assets | 2,554,425 | 2,194,710 | 2,561,950 | 2,546,817 | 2,409,360 | 2,387,553 | 2,264,440 | |||||||||||||||||||||||||||||||||||||
Goodwill and other intangible assets, net | 50,299 | 37,694 | 50,249 | 50,350 | 50,879 | 47,200 | 38,020 | |||||||||||||||||||||||||||||||||||||
Total assets | 2,784,681 | 2,408,309 | 2,789,104 | 2,780,209 | 2,650,502 | 2,607,497 | 2,473,888 | |||||||||||||||||||||||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing demand | 491,835 | 401,037 | 489,047 | 494,654 | 464,094 | 425,739 | 409,720 | |||||||||||||||||||||||||||||||||||||
Savings and money market | 716,632 | 530,622 | 739,328 | 693,684 | 671,295 | 611,564 | 553,701 | |||||||||||||||||||||||||||||||||||||
Certificates of deposit | 641,534 | 696,237 | 635,583 | 647,551 | 685,318 | 695,682 | 689,103 | |||||||||||||||||||||||||||||||||||||
Borrowings | 172,415 | 129,906 | 153,626 | 191,412 | 69,335 | 157,973 | 162,718 | |||||||||||||||||||||||||||||||||||||
Total interest-bearing liabilities | 2,022,416 | 1,757,802 | 2,017,584 | 2,027,301 | 1,890,042 | 1,890,958 | 1,815,242 | |||||||||||||||||||||||||||||||||||||
Noninterest-bearing demand deposits | 491,685 | 392,753 | 501,354 | 481,909 | 487,434 | 447,204 | 398,353 | |||||||||||||||||||||||||||||||||||||
Total deposits | 2,341,686 | 2,020,649 | 2,365,312 | 2,317,798 | 2,308,141 | 2,180,189 | 2,050,877 | |||||||||||||||||||||||||||||||||||||
Total liabilities | 2,528,309 | 2,165,632 | 2,532,197 | 2,524,377 | 2,394,687 | 2,356,787 | 2,229,046 | |||||||||||||||||||||||||||||||||||||
Shareholders equity | 256,372 | 242,677 | 256,907 | 255,832 | 255,815 | 250,710 | 244,842 | |||||||||||||||||||||||||||||||||||||
Common equity (3) | 238,939 | 225,204 | 239,500 | 238,373 | 238,344 | 233,238 | 227,369 | |||||||||||||||||||||||||||||||||||||
Tangible common equity (4) | $ | 188,640 | 187,510 | 189,251 | 188,023 | 187,465 | 186,038 | 189,349 | ||||||||||||||||||||||||||||||||||||
Common shares outstanding: |
||||||||||||||||||||||||||||||||||||||||||||
Basic | 13,728 | 13,686 | 13,739 | 13,717 | 13,707 | 13,703 | 13,697 | |||||||||||||||||||||||||||||||||||||
Diluted | 13,767 | 13,742 | 13,767 | 13,767 | 13,761 | 13,759 | 13,750 | |||||||||||||||||||||||||||||||||||||
SELECTED AVERAGE YIELDS: |
||||||||||||||||||||||||||||||||||||||||||||
(Tax equivalent basis) |
||||||||||||||||||||||||||||||||||||||||||||
Federal funds sold and interest-earning deposits |
0.20 | % | 0.25 | 0.19 | 0.21 | 0.60 | 0.16 | 0.21 | ||||||||||||||||||||||||||||||||||||
Investment securities |
2.38 | % | 2.75 | 2.38 | 2.39 | 2.56 | 2.60 | 2.68 | ||||||||||||||||||||||||||||||||||||
Loans |
4.74 | % | 5.15 | 4.65 | 4.83 | 4.98 | 5.10 | 5.06 | ||||||||||||||||||||||||||||||||||||
Total interest-earning assets |
3.97 | % | 4.42 | 3.91 | 4.03 | 4.25 | 4.32 | 4.31 | ||||||||||||||||||||||||||||||||||||
Interest-bearing demand |
0.13 | % | 0.15 | 0.14 | 0.11 | 0.13 | 0.14 | 0.14 | ||||||||||||||||||||||||||||||||||||
Savings and money market |
0.13 | % | 0.20 | 0.13 | 0.13 | 0.14 | 0.15 | 0.18 | ||||||||||||||||||||||||||||||||||||
Certificates of deposit |
0.80 | % | 1.08 | 0.79 | 0.82 | 0.86 | 0.94 | 1.03 | ||||||||||||||||||||||||||||||||||||
Borrowings |
0.40 | % | 0.44 | 0.40 | 0.40 | 0.76 | 0.43 | 0.43 | ||||||||||||||||||||||||||||||||||||
Total interest-bearing liabilities |
0.37 | % | 0.56 | 0.36 | 0.37 | 0.42 | 0.46 | 0.52 | ||||||||||||||||||||||||||||||||||||
Net interest rate spread |
3.60 | % | 3.86 | 3.55 | 3.66 | 3.83 | 3.86 | 3.79 | ||||||||||||||||||||||||||||||||||||
Net interest rate margin |
3.68 | % | 3.97 | 3.63 | 3.73 | 3.92 | 3.96 | 3.89 |
(1) Includes investment securities at adjusted amortized cost and non-performing investment securities. |
(2) Includes nonaccrual loans. |
(3) Excludes preferred shareholders equity. |
(4) See Appendix A Non-GAAP to GAAP Reconciliation for the computation of this Non-GAAP measure. |
FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands)
2013 | 2012 | |||||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
ASSET QUALITY DATA: |
||||||||||||||||||||
Allowance for Loan Losses |
||||||||||||||||||||
Beginning balance |
$ | 25,827 | 24,714 | 24,301 | 24,120 | 23,763 | ||||||||||||||
Net loan charge-offs (recoveries): |
||||||||||||||||||||
Commercial business |
87 | 202 | 139 | 287 | (11 | ) | ||||||||||||||
Commercial mortgage |
(37 | ) | (11 | ) | 277 | (64 | ) | 166 | ||||||||||||
Residential mortgage |
72 | 145 | 22 | 39 | 99 | |||||||||||||||
Home equity |
(20 | ) | 232 | 119 | 65 | 82 | ||||||||||||||
Consumer indirect |
1,170 | 913 | 1,367 | 1,124 | 661 | |||||||||||||||
Other consumer |
158 | 115 | 183 | 132 | 105 | |||||||||||||||
Total net charge-offs |
1,430 | 1,596 | 2,107 | 1,583 | 1,102 | |||||||||||||||
Provision for loan losses |
1,193 | 2,709 | 2,520 | 1,764 | 1,459 | |||||||||||||||
Ending balance |
$ | 25,590 | 25,827 | 24,714 | 24,301 | 24,120 | ||||||||||||||
Supplemental information |
||||||||||||||||||||
Period end loans: |
||||||||||||||||||||
Originated loans |
$ | 1,688,392 | 1,657,431 | 1,641,197 | 1,588,614 | 1,566,025 | ||||||||||||||
Acquired loans |
55,022 | 59,859 | 64,529 | 70,371 | 58,129 | |||||||||||||||
Total loans |
$ | 1,743,414 | 1,717,290 | 1,705,726 | 1,658,985 | 1,624,154 | ||||||||||||||
Allowance for loan losses to total loans |
1.47 | % | 1.50 | 1.45 | 1.46 | 1.49 | ||||||||||||||
Allowance for loan losses for originated |
||||||||||||||||||||
loans to originated loans |
1.52 | % | 1.56 | 1.51 | 1.53 | 1.54 | ||||||||||||||
Net charge-offs (recoveries) to average loans (annualized): |
||||||||||||||||||||
Commercial business |
0.14 | % | 0.32 | 0.22 | 0.46 | -0.02 | ||||||||||||||
Commercial mortgage |
-0.03 | % | -0.01 | 0.27 | -0.06 | 0.16 | ||||||||||||||
Residential mortgage |
0.24 | % | 0.45 | 0.06 | 0.11 | 0.34 | ||||||||||||||
Home equity |
-0.03 | % | 0.33 | 0.17 | 0.10 | 0.14 | ||||||||||||||
Consumer indirect |
0.79 | % | 0.63 | 0.94 | 0.82 | 0.51 | ||||||||||||||
Other consumer |
2.63 | % | 1.83 | 2.68 | 2.00 | 1.80 | ||||||||||||||
Total loans |
0.33 | % | 0.38 | 0.50 | 0.38 | 0.29 | ||||||||||||||
Non-performing loans: |
||||||||||||||||||||
Commercial business |
$ | 5,043 | 5,616 | 3,413 | 3,621 | 4,150 | ||||||||||||||
Commercial mortgage |
3,073 | 2,767 | 1,799 | 3,388 | 3,598 | |||||||||||||||
Residential mortgage |
1,423 | 1,759 | 2,040 | 1,597 | 1,918 | |||||||||||||||
Home equity |
699 | 598 | 939 | 929 | 973 | |||||||||||||||
Consumer indirect |
1,035 | 1,007 | 891 | 876 | 695 | |||||||||||||||
Other consumer |
22 | 19 | 43 | 23 | 4 | |||||||||||||||
Total non-performing loans |
11,295 | 11,766 | 9,125 | 10,434 | 11,338 | |||||||||||||||
Foreclosed assets |
415 | 371 | 184 | 303 | 270 | |||||||||||||||
Non-performing investment securities |
207 | 343 | 753 | 766 | 1,145 | |||||||||||||||
Total non-performing assets |
$ | 11,917 | 12,480 | 10,062 | 11,503 | 12,753 | ||||||||||||||
Total non-performing loans to total loans |
0.65 | % | 0.69 | 0.53 | 0.63 | 0.70 | ||||||||||||||
Total non-performing loans to originated loans |
0.67 | % | 0.71 | 0.56 | 0.66 | 0.72 | ||||||||||||||
Total non-performing assets to total assets |
0.43 | % | 0.44 | 0.36 | 0.43 | 0.49 | ||||||||||||||
Allowance for loan losses to non-performing loans |
227 | % | 220 | 271 | 233 | 213 |
FINANCIAL INSTITUTIONS, INC.
Appendix A Non-GAAP to GAAP Reconciliation (Unaudited)
(In thousands, except per share amounts)
Six months ended | 2013 | 2012 | ||||||||||||||||||||||||||
June 30, | Second | First | Fourth | Third | Second | |||||||||||||||||||||||
2013 | 2012 | Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||||||||||||
Ending tangible assets: |
||||||||||||||||||||||||||||
Total assets |
$ | 2,782,303 | 2,827,658 | 2,763,865 | 2,653,319 | 2,622,751 | ||||||||||||||||||||||
Less: Goodwill and other intangible assets, net |
50,190 | 50,288 | 50,389 | 50,924 | 43,858 | |||||||||||||||||||||||
Tangible assets (non-GAAP) |
$ | 2,732,113 | 2,777,370 | 2,713,476 | 2,602,395 | 2,578,893 | ||||||||||||||||||||||
Ending tangible common equity: |
||||||||||||||||||||||||||||
Common shareholders equity |
$ | 227,494 | 237,511 | 236,426 | 234,371 | 229,473 | ||||||||||||||||||||||
Less: Goodwill and other intangible assets, net |
50,190 | 50,288 | 50,389 | 50,924 | 43,858 | |||||||||||||||||||||||
Tangible common equity (non-GAAP) |
$ | 177,304 | 187,223 | 186,037 | 183,447 | 185,615 | ||||||||||||||||||||||
Tangible common equity to tangible assets (non-GAAP) (1) |
6.49 | % | 6.74 | 6.86 | 7.05 | 7.20 | ||||||||||||||||||||||
Common shares outstanding |
13,809 | 13,804 | 13,788 | 13,786 | 13,812 | |||||||||||||||||||||||
Tangible common book value per share (non-GAAP) (2) |
$ | 12.84 | 13.56 | 13.49 | 13.31 | 13.44 | ||||||||||||||||||||||
Average tangible common equity: |
||||||||||||||||||||||||||||
Average common equity |
$ | 238,939 | 225,204 | 239,500 | 238,373 | 238,344 | 233,238 | 227,369 | ||||||||||||||||||||
Average goodwill and other intangible assets, net |
50,299 | 37,694 | 50,249 | 50,350 | 50,879 | 47,200 | 38,020 | |||||||||||||||||||||
Average tangible common equity (non-GAAP) |
$ | 188,640 | 187,510 | 189,251 | 188,023 | 187,465 | 186,038 | 189,349 | ||||||||||||||||||||
Return on average tangible common equity (3) |
13.11 | % | 12.99 | 13.74 | 12.47 | 12.66 | 8.33 | 13.36 | ||||||||||||||||||||
Net operating income: |
||||||||||||||||||||||||||||
Net income |
$ | 12,999 | 12,852 | 6,850 | 6,149 | 6,332 | 4,265 | 6,656 | ||||||||||||||||||||
Branch acquisition expenses, net of tax (4) |
| 704 | | | | 1,262 | 646 | |||||||||||||||||||||
CEO retirement expenses, net of tax (4) |
| | | | | 1,670 | | |||||||||||||||||||||
Net operating income (non-GAAP) |
$ | 12,999 | 13,556 | 6,850 | 6,149 | 6,332 | 7,197 | 7,302 | ||||||||||||||||||||
Net operating income available to common shareholders: |
||||||||||||||||||||||||||||
Net income available to common shareholders |
$ | 12,264 | 12,115 | 6,483 | 5,781 | 5,963 | 3,897 | 6,288 | ||||||||||||||||||||
Branch acquisition expenses, net of tax (4) |
| 704 | | | | 1,262 | 646 | |||||||||||||||||||||
CEO retirement expenses, net of tax (4) |
| | | | | 1,670 | | |||||||||||||||||||||
Net operating income available to common |
||||||||||||||||||||||||||||
shareholders (non-GAAP) |
$ | 12,264 | 12,819 | 6,483 | 5,781 | 5,963 | 6,829 | 6,934 | ||||||||||||||||||||
Financial ratios computed on an operating basis (Non-GAAP): |
||||||||||||||||||||||||||||
Earnings per share basic |
$ | 0.89 | 0.94 | 0.47 | 0.42 | 0.44 | 0.50 | 0.51 | ||||||||||||||||||||
Earnings per share diluted |
$ | 0.89 | 0.93 | 0.47 | 0.42 | 0.43 | 0.50 | 0.50 | ||||||||||||||||||||
Return on average assets |
0.94 | % | 1.13 | 0.99 | 0.90 | 0.95 | 1.10 | 1.19 | ||||||||||||||||||||
Return on average equity |
10.22 | % | 11.23 | 10.70 | 9.75 | 9.85 | 11.42 | 11.99 | ||||||||||||||||||||
Return on average common equity |
10.35 | % | 11.45 | 10.86 | 9.83 | 9.95 | 11.65 | 12.27 | ||||||||||||||||||||
Return on average tangible common equity |
13.11 | % | 13.75 | 13.74 | 12.47 | 12.66 | 14.60 | 14.73 |
(1) Tangible common equity divided by tangible assets. |
(2) Tangible common equity divided by common shares outstanding. |
(3) Annualized net income divided by average tangible common equity. |
(4) Tax effect is calculated assuming a 35% effective tax rate. |