WARSAW, N.Y., July 23, 2009 (GLOBE NEWSWIRE) -- Financial Institutions, Inc. (Nasdaq:FISI) (the "Company"), the parent company of Five Star Bank, today announced financial results for the second quarter ended June 30, 2009. Net income for the Company was $2.6 million or $0.16 per diluted share for the second quarter of 2009, compared with $1.6 million or $0.12 per diluted share for the second quarter of 2008. For the first six months of 2009 net income was $5.6 million or $0.35 per diluted share, compared with $5.4 million or $0.43 per diluted share for the same period last year.
Highlights:
* Net interest income for the second quarter of 2009 was
$17.6 million, an increase of $1.5 million or 9% over second
quarter of 2008. For the first six months of 2009 net interest
income was $35.0 million, an increase of $3.7 million or 12% over
the first six months of 2008. The increase is reflective of growth
in the loan portfolio coupled with higher net interest margin.
* Total loans were $1.219 billion at June 30, 2009, an increase of
$207.8 million or 21% from June 30, 2008.
-- Commercial loans were $523.7 million at June 30, 2009, an
increase of $86.8 million or 20% from one year ago, and an
increase of $40.4 million or 8% since March 31, 2009.
-- Consumer loans were $694.9 million at June 30, 2009, an increase
of $121.0 million or 21% from one year ago, and an increase of
$20.2 million or 3% since March 31, 2009.
* Net interest margin was 4.01% for the second quarter of 2009, an
increase of 7 basis points from the second quarter of 2008. For
the six months ended June 30, 2009 net interest margin was 4.05%,
an increase of 22 basis points from the same period last year.
* "Well capitalized" position maintained with total shareholders'
equity of $192.5 million, a leverage capital ratio of 7.84% and a
total risk-based capital ratio of 11.94%.
* Provision for loan losses for the second quarter of 2009 was
$2.1 million and net charge-offs were $1.1 million. Provision for
loan losses of $4.0 million for the first six months of 2009
exceeded net charge-offs of $2.1 million resulting in a
$1.9 million increase in the allowance for loan losses to
$20.6 million or 1.69% of total loans.
* The second quarter of 2009 includes other-than-temporary impairment
charges of $1.7 million on selected investment securities that were
partially offset by $1.2 million in net gain on investment
securities.
* The second quarter of 2009 includes a $923 thousand FDIC insurance
special assessment charge.
"We continue to build momentum in our core community banking business and have followed-up on our strong start to 2009 with a solid second quarter," said Peter G. Humphrey, President and Chief Executive Officer of the Company. "Our business development success has been outstanding as both commercial and consumer loans are up approximately 20% from a year ago. These results are particularly gratifying in light of the current economic environment. As loans and deposits have increased over the past several quarters, our capital, liquidity and asset quality have remained strong. These factors, along with higher revenues and our discipline in containing the costs that we can control have positively impacted our core operations."
Net Interest Income
Net interest income for the second quarter of 2009 was $17.6 million, an increase of $1.5 million or 9% over the second quarter of 2008. For the first six months of 2009 net interest income was $35.0 million, an increase of $3.7 million or 12% over the first six months of 2008. Net interest margin was 4.01% for the second quarter of 2009, an increase of 7 basis points from the second quarter of 2008. For the six months ended June 30, 2009 net interest margin was 4.05%, an increase of 22 basis points from the same period last year. An improved mix of earning assets, primarily driven by growth in the loan portfolio, coupled with a significant decline in funding costs were the primary factors driving the increase in net interest income and margin.
Noninterest Income
Noninterest income for the second quarter of 2009 was $4.5 million, compared with $932 thousand for the second quarter of 2008. For the first six months of 2009 noninterest income was $9.2 million, an increase of $3.5 million over the first six months of 2008. Other-than-temporary impairment charges included in noninterest income amounted to $1.7 million on privately issued whole loan collateralized mortgage obligations ("CMOs") in the second quarter of 2009 and $3.8 million on privately issued whole loan CMOs and pooled trust preferred securities in the second quarter of 2008. The second quarter of 2009 also reflects a $1.2 million net gain on sale of investment securities, comprised of $2.6 million in gross gains on securities issued by U.S. government sponsored agencies and $1.4 million in gross losses on privately issued whole loan CMOs.
Noninterest Expense
Noninterest expense for the second quarter of 2009 was $16.4 million, an increase of $2.1 million from the second quarter of 2008. For the first six months of 2009 noninterest expense was $32.5 million, an increase of $3.9 million over the first six months of 2008. The most significant cause for the increase was a $2.1 million increase in FDIC insurance expense, including a $923 thousand special assessment incurred during the second quarter of 2009, a result of changes in FDIC deposit insurance coverage and changes in premiums mandated by the FDIC to replenish deposit insurance reserves. Noninterest expense for 2009 also reflects higher incentive compensation and pension benefit costs, increases in occupancy and equipment costs associated with the opening of two new branches in the suburban Rochester area during 2008, and increases in professional services expense.
Balance Sheet
Total assets at June 30, 2009 were $1.997 billion, up $101.3 million from $1.895 billion at June 30, 2008. Total loans were $1.219 billion at June 30, 2009, an increase of $207.8 million from $1.011 billion at June 30, 2008. Total deposits increased $104.5 million to $1.700 billion at June 30, 2009, versus $1.596 billion at June 30, 2008. The majority of the increase in deposits was attributed to an increase in nonpublic certificates of deposit.
Asset Quality and Capital Ratios
Net charge-offs increased by $262 thousand from the second quarter of 2008 to $1.1 million, or 0.38% of average loans and non-performing loans totaled $9.5 million, or 0.78% of total loans. For the six months ended June 30, 2009 net charge-offs increased in comparison to the same period last year by $572 thousand to $2.1 million, or 0.37% of average loans. The provision for loan losses was $2.1 million for the quarter, compared with $1.4 million in the same quarter a year ago. For the six months ended June 30, 2009 the provision for loan losses totaled $4.0 million, compared with $2.1 million in the same period last year. The allowance for loan losses was $20.6 million or 1.69% of total loans at June 30, 2009, compared with $16.0 million or 1.59% of total loans at June 30, 2008. At June 30, 2009 non-performing assets totaled $13.7 million, which included $3.2 million in non-performing investment securities on which interest payments are being deferred.
At June 30, 2009, all of the Company's regulatory capital ratios exceeded the guidelines required to be considered a "well capitalized" institution as established by the Company's primary banking regulators. Well capitalized levels are considered to be at least 5.00% for the leverage ratio and 10.00% for the total risk-based capital ratio. At June 30, 2009, the Company's leverage ratio was 7.84% and the total risk-based capital ratio was 11.94%.
About Financial Institutions, Inc.
With approximately $2.0 billion in assets, Financial Institutions, Inc. provides diversified financial services through its subsidiaries, Five Star Bank and Five Star Investment Services, Inc. Five Star Bank provides a wide range of consumer and commercial banking services to individuals, municipalities and businesses through a network of over 50 offices and more than 70 ATMs in Western and Central New York State. Five Star Investment Services provides brokerage and insurance products and services within the same New York State markets. The consolidated entity employs over 600 individuals. The Company's stock is listed on the Nasdaq Global Select Market under the symbol FISI. Additional information is available at the Company's website: www.fiiwarsaw.com.
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 Company's forward-looking statements which include its ability to implement its strategic plan, its ability to redeploy investment assets into loan assets, the attitudes and preferences of its customers, the competitive environment, fluctuations in the fair value of securities in the investment portfolio, and general economic and credit market conditions nationally and regionally, The Company undertakes no obligation to revise these statements following the date of this press release.
FINANCIAL INSTITUTIONS, INC.
Summary of Quarterly Financial Data (Unaudited)
2009 2008
-------------------- -------------------------------
June 30, March 31, Dec 31, Sept 30, June 30,
--------- --------- --------- --------- ---------
SELECTED BALANCE SHEET DATA
(Amounts in thousands)
Cash and cash
equivalents:
Cash and
due from
banks $ 41,405 48,073 34,528 54,105 60,640
Federal funds
sold and
interest
-bearing
deposits 39,910 74,616 20,659 22,599 2,409
--------- --------- --------- --------- ---------
Total cash
and cash
equivalents 81,315 122,689 55,187 76,704 63,049
Investment
securities:
Available
for sale 498,561 553,710 547,506 607,357 669,752
Held-to
-maturity 47,465 60,675 58,532 64,434 56,508
--------- --------- --------- --------- ---------
Total
investment
securities 546,026 614,385 606,038 671,791 726,260
Loans held
for sale 3,005 2,290 1,013 1,008 926
Loans:
Commercial 198,608 174,505 158,543 156,809 140,745
Commercial
real estate 282,048 266,176 262,234 248,267 250,872
Agriculture 42,997 42,524 44,706 46,490 45,231
Residential
real estate 149,926 170,834 177,683 173,893 172,396
Consumer
indirect 319,735 283,465 255,054 227,971 177,967
Consumer direct
and home
equity 225,258 220,440 222,859 224,693 223,538
--------- --------- --------- --------- ---------
Total loans 1,218,572 1,157,944 1,121,079 1,078,123 1,010,749
Allowance for
loan losses 20,614 19,657 18,749 17,420 16,038
--------- --------- --------- --------- ---------
Total loans,
net 1,197,958 1,138,287 1,102,330 1,060,703 994,711
Total interest
-earning
assets 1,802,489 1,843,522 1,743,141 1,789,499 1,749,808
Goodwill 37,369 37,369 37,369 37,369 37,369
Total assets 1,996,724 2,030,429 1,916,919 1,945,819 1,895,448
Deposits:
Noninterest
-bearing
demand 292,825 279,284 292,586 293,027 288,258
Interest
-bearing
demand 357,443 392,353 344,616 376,098 338,290
Savings and
money market 366,373 396,644 348,594 383,456 372,317
Certificates
of deposit 683,619 668,999 647,467 607,833 596,890
--------- --------- --------- --------- ---------
Total
deposits 1,700,260 1,737,280 1,633,263 1,660,414 1,595,755
Borrowings 79,977 78,761 70,820 114,684 89,465
Total interest
-bearing
liabilities 1,487,412 1,536,757 1,411,497 1,482,071 1,396,962
Shareholders'
equity 192,455 191,676 190,300 152,770 188,998
Common
shareholders'
equity (1) 139,213 138,519 137,226 135,195 171,417
Tangible common
shareholders'
equity (2) 101,712 100,946 99,577 97,468 133,614
Securities
available for
sale - fair
value
adjustment
included in
shareholders'
equity, net
of tax $ 3,081 3,503 3,463 (9,797) (5,803)
Common shares
outstanding 10,821 10,805 10,798 10,806 10,913
Treasury shares 527 543 550 542 435
CAPITAL RATIOS
Leverage ratio 7.84% 7.96 8.05 7.37 9.17
Tier 1
risk-based
capital 10.69% 11.23 11.83 11.10 14.58
Total risk
based capital 11.94% 12.49 13.08 12.35 15.83
Common equity
to assets 6.97% 6.82 7.16 6.95 9.04
Tangible common
equity to
tangible
assets (2) 5.19% 5.07 5.30 5.11 7.19
Common book
value
per share $ 12.86 12.82 12.71 12.51 15.71
Tangible common
book value
per share (2) $ 9.40 9.34 9.22 9.02 12.24
FINANCIAL INSTITUTIONS, INC.
Summary of Quarterly Financial Data (Unaudited)
Quarterly Trends
--------------------------------------
Six months ended 2009 2008
June 30, -------------- ----------------------
-------------- Second First Fourth Third Second
2009 2008 Quarter Quarter Quarter Quarter Quarter
------ ------ ------ ------ ------ ------ ------
SELECTED INCOME STATEMENT DATA
(Dollar amounts in thousands)
Interest
income $46,395 49,808 23,302 23,093 24,582 24,558 24,536
Interest
expense 11,423 18,536 5,657 5,766 7,269 7,812 8,349
------ ------ ------ ------ ------ ------ ------
Net interest
income 34,972 31,272 17,645 17,327 17,313 16,746 16,187
Provision for
loan losses 3,994 2,074 2,088 1,906 2,586 1,891 1,358
------ ------ ------ ------ ------ ------ ------
Net interest
income after
provision
for loan
losses 30,978 29,198 15,557 15,421 14,727 14,855 14,829
------ ------ ------ ------ ------ ------ ------
Noninterest
income
(loss):
Service
charges on
deposits 4,837 5,018 2,517 2,320 2,685 2,794 2,518
ATM and
debit card 1,719 1,608 908 811 853 852 856
Loan
servicing 727 418 470 257 134 112 232
Company owned
life
insurance 535 46 275 260 294 223 27
Broker-dealer
fees and
commissions 503 860 234 269 235 363 401
Net gain on
sale of loans
held for sale 416 256 246 170 35 48 92
Net gain on
investment
securities 1,207 220 1,153 54 56 12 47
Impairment
charge on
investment
securities (1,783) (3,791) (1,733) (50)(29,870)(34,554) (3,791)
Net gain on
sale of other
assets 158 152 -- 158 51 102 115
Other 887 889 445 442 421 700 435
------ ------ ------ ------ ------ ------ ------
Total
noninterest
income
(loss) 9,206 5,676 4,515 4,691 (25,106)(29,348) 932
------ ------ ------ ------ ------ ------ ------
Noninterest
expense:
Salaries and
employee
benefits 17,168 16,605 8,437 8,731 7,811 7,021 8,169
Occupancy and
equipment 5,559 5,147 2,683 2,876 2,713 2,642 2,567
FDIC
assessments 2,273 133 1,593 680 305 236 88
Professional
services 1,440 1,037 591 849 637 467 480
Computer and
data
processing 1,179 1,161 562 617 669 603 580
Supplies and
postage 941 878 476 465 447 475 437
Advertising
and
promotions 423 433 249 174 548 472 283
Other 3,535 3,264 1,849 1,686 2,264 1,493 1,781
------ ------ ------ ------ ------ ------ ------
Total
noninterest
expense 32,518 28,658 16,440 16,078 15,394 13,409 14,385
------ ------ ------ ------ ------ ------ ------
Income (loss)
before
income
taxes 7,666 6,216 3,632 4,034 (25,773)(27,902) 1,376
Income tax
expense
(benefit) 2,071 806 1,004 1,067 (22,631) 524 (255)
------ ------ ------ ------ ------ ------ ------
Net income
(loss) $ 5,595 5,410 2,628 2,967 (3,142)(28,426) 1,631
====== ====== ====== ====== ====== ====== ======
Preferred
stock
dividends 1,843 741 925 918 426 371 370
------ ------ ------ ------ ------ ------ ------
Net income
(loss)
applicable
to common
share
-holders $ 3,752 4,669 1,703 2,049 (3,568)(28,797) 1,261
====== ====== ====== ====== ====== ====== ======
STOCK AND RELATED PER SHARE DATA
Net income
(loss) per
share
- basic $ 0.35 0.43 0.16 0.19 (0.33) (2.68) 0.12
Net income
(loss) per
share
- diluted $ 0.35 0.43 0.16 0.19 (0.33) (2.68) 0.12
Cash dividends
declared on
common stock $ 0.20 0.29 0.10 0.10 0.10 0.15 0.15
Common dividend
payout
ratio (3) 57.14% 67.44 62.50 52.63 NA NA 125.00
Dividend yield
(annualized) 2.95% 3.63 2.94 5.32 2.77 2.98 3.76
Stock price
(Nasdaq:FISI):
High $ 15.99 20.78 15.99 14.95 20.27 22.50 20.00
Low $ 3.27 15.10 6.98 3.27 10.06 14.82 15.25
Close $ 13.66 16.06 13.66 7.62 14.35 20.01 16.06
FINANCIAL INSTITUTIONS, INC.
Summary of Quarterly Financial Data (Unaudited)
Six months ended
June 30,
--------------------
2009 2008
--------- ---------
SELECTED AVERAGE BALANCES
(Amounts in thousands)
Federal funds sold and interest-bearing
deposits $ 46,376 38,270
Investment securities (4) 597,449 749,236
Loans (5):
Commercial 174,761 145,360
Commercial real estate 272,030 244,960
Agriculture 42,528 44,938
Residential real estate 171,462 168,304
Consumer indirect 284,329 147,242
Consumer direct and home equity 221,576 226,470
--------- ---------
Total loans 1,166,686 977,274
Total interest-earning assets 1,813,035 1,765,718
Goodwill 37,369 37,369
Total assets 1,988,185 1,894,194
Interest-bearing liabilities:
Interest-bearing demand 363,745 343,783
Savings and money market 382,104 370,112
Certificates of deposit 672,153 624,774
Borrowings 75,084 71,619
--------- ---------
Total interest-bearing liabilities 1,493,086 1,410,288
Noninterest-bearing demand deposits 283,935 271,446
Total deposits 1,701,937 1,610,115
Total liabilities 1,796,266 1,697,756
Shareholders' equity 191,919 196,438
Common equity (1) 138,769 178,857
Tangible common equity (2) $ 101,187 140,969
Common shares outstanding:
Basic 10,720 10,909
Diluted 10,756 10,951
SELECTED AVERAGE YIELDS/
RATES AND RATIOS
(Tax equivalent basis)
Federal funds sold and
interest-bearing deposits 0.23% 2.65
Investment securities 4.35% 4.98
Loans 6.02% 6.80
Total interest-earning assets 5.32% 5.94
Interest-bearing demand 0.23% 1.10
Savings and money market 0.27% 1.24
Certificates of deposit 2.69% 4.02
Borrowings 4.05% 5.26
Total interest-bearing liabilities 1.54% 2.64
Net interest rate spread 3.78% 3.30
Net interest rate margin 4.05% 3.83
Net income (loss) (annualized returns on):
Average assets 0.57% 0.57
Average equity 5.88% 5.54
Average common equity (6) 5.45% 4.35
Average tangible common equity (7) 7.48% 5.52
Efficiency ratio (8) 69.60% 65.88
Quarterly Trends
-----------------------------------------------------
2009 2008
-------------------- -------------------------------
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
--------- --------- --------- --------- ---------
SELECTED AVERAGE BALANCES
(Amounts in thousands)
Federal funds
sold and
interest
-bearing
deposits $ 49,105 43,618 17,089 12,897 35,733
Investment
securities (4) 593,740 601,199 666,917 721,419 744,648
Loans (5):
Commercial 183,733 165,688 155,814 147,350 146,778
Commercial
real estate 275,275 268,749 255,882 249,769 248,290
Agriculture 42,368 42,690 44,299 45,965 44,504
Residential
real estate 168,300 174,659 175,200 173,175 169,925
Consumer
indirect 301,112 267,360 244,891 200,586 156,728
Consumer
direct and
home equity 222,122 221,024 222,235 222,241 223,906
--------- --------- --------- --------- ---------
Total loans 1,192,910 1,140,170 1,098,321 1,039,086 990,131
Total interest
-earning
assets 1,838,320 1,787,470 1,782,938 1,774,201 1,771,801
Goodwill 37,369 37,369 37,369 37,369 37,369
Total assets 2,012,337 1,963,764 1,924,174 1,908,577 1,897,514
Interest
-bearing
liabilities:
Interest
-bearing
demand 366,985 360,470 360,970 342,188 342,463
Savings and
money market 392,355 371,738 373,034 366,449 378,799
Certificates
of deposit 676,221 668,041 629,111 591,025 615,950
Borrowings 78,763 71,363 105,164 118,023 73,902
--------- --------- --------- --------- ---------
Total
interest
-bearing
liabilities 1,514,324 1,471,612 1,468,279 1,417,685 1,411,114
Noninterest
-bearing
demand
deposits 286,155 281,690 284,643 294,136 275,570
Total deposits 1,721,716 1,681,939 1,647,758 1,593,798 1,612,782
Total
liabilities 1,819,891 1,772,377 1,766,239 1,727,473 1,702,211
Shareholders'
equity 192,446 191,387 157,935 181,104 195,303
Common
equity (1) 139,253 138,281 136,887 163,527 177,722
Tangible common
equity (2) $ 101,709 100,660 99,191 125,754 139,872
Common shares
outstanding:
Basic 10,723 10,716 10,717 10,738 10,879
Diluted 10,765 10,747 10,717 10,738 10,928
SELECTED AVERAGE YIELDS/
RATES AND RATIOS
(Tax equivalent basis)
Federal funds
sold and
interest
-bearing
deposits 0.21% 0.25 1.09 2.10 2.18
Investment
securities 4.16% 4.54 4.72 4.66 4.92
Loans 5.99% 6.04 6.35 6.52 6.65
Total interest
-earning assets 5.24% 5.39 5.69 5.73 5.83
Interest
-bearing demand 0.20% 0.25 0.69 0.86 0.89
Savings and
money market 0.27% 0.27 0.68 0.93 1.02
Certificates
of deposit 2.63% 2.76 3.09 3.33 3.72
Borrowings 3.91% 4.21 4.23 4.30 5.05
Total interest
-bearing
liabilities 1.50% 1.59 1.97 2.19 2.38
Net interest
rate spread 3.74% 3.80 3.72 3.54 3.45
Net interest
rate margin 4.01% 4.09 4.07 3.98 3.94
Net income
(loss)
(annualized
returns on):
Average assets 0.52% 0.61 (0.65) (5.93) 0.35
Average equity 5.48% 6.29 (7.91) (62.44) 3.36
Average common
equity (6) 4.91% 6.01 (10.37) (70.06) 2.85
Average
tangible
common
equity (7) 6.72% 8.25 (14.31) (91.10) 3.63
Efficiency
ratio (8) 69.49% 69.72 66.65 58.10 64.21
FINANCIAL INSTITUTIONS, INC.
Summary of Quarterly Financial Data (Unaudited)
Quarterly Trends
--------------------------------------
Six months ended 2009 2008
June 30, -------------- ----------------------
-------------- Second First Fourth Third Second
2009 2008 Quarter Quarter Quarter Quarter Quarter
------ ------ ------ ------ ------ ------ ------
ASSET QUALITY DATA
(Dollar amounts in thousands)
Nonaccrual
loans $ 9,496 6,254 9,496 8,826 8,189 7,609 6,254
Accruing loans
past due 90
days or more 2 1 2 301 7 32 1
------ ------ ------ ------ ------ ------ ------
Total non
-performing
loans 9,498 6,255 9,498 9,127 8,196 7,641 6,255
Foreclosed
assets 1,046 1,235 1,046 877 1,007 1,009 1,235
Non-performing
investment
securities 3,175 -- 3,175 3,396 49 -- --
------ ------ ------ ------ ------ ------ ------
Total non
-performing
assets $13,719 7,490 13,719 13,400 9,252 8,650 7,490
====== ====== ====== ====== ====== ====== ======
Net loan
charge-offs $ 2,129 1,557 1,131 998 1,257 509 869
Net
charge-offs
to average
loans
(annualized) 0.37% 0.32 0.38 0.35 0.46 0.20 0.35
Total non
-performing
loans to
total loans 0.78% 0.62 0.78 0.79 0.73 0.71 0.62
Total non
-performing
assets to
total assets 0.69% 0.40 0.69 0.66 0.48 0.44 0.40
Allowance for
loan losses
to total
loans 1.69% 1.59 1.69 1.70 1.67 1.62 1.59
Allowance for
loan losses
to non
-performing
loans 217% 256 217 215 229 228 256
(1) Excludes preferred shareholders' equity.
(2) Excludes preferred shareholders' equity, goodwill and other
intangible assets.
(3) Common dividend payout ratio equals dividends declared during
the period divided by earnings per share for the equivalent
period. There is no ratio shown for periods where the Company
both declares a dividend and incurs a loss during the period
because the ratio would result in a negative payout since the
dividend declared (paid out) will always be greater than 100% of
earnings.
(4) Average investment securities shown at adjusted amortized cost.
(5) Includes nonaccrual loans.
(6) Net income available to common shareholders divided by average
common equity.
(7) Net income available to common shareholders divided by average
tangible equity.
(8) 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.
CONTACT: Financial Institutions, Inc.
Ronald A. Miller, Executive VP & CFO
585.786.1102
ramiller@fiiwarsaw.com
