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þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
NEW YORK | 16-0816610 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
220 LIBERTY STREET, WARSAW, NEW YORK | 14569 | |
(Address of principal executive offices) | (ZIP Code) |
Title of each class | Name of exchange on which registered | |
Common stock, par value $.01 per share | NASDAQ Global Select Market |
Large accelerated filero | Accelerated filerþ | Non-accelerated filero | Smaller reporting companyo |
PAGE | ||||||||
PART I | ||||||||
5 | ||||||||
19 | ||||||||
24 | ||||||||
25 | ||||||||
26 | ||||||||
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PART II | ||||||||
27 | ||||||||
29 | ||||||||
32 | ||||||||
57 | ||||||||
59 | ||||||||
104 | ||||||||
104 | ||||||||
104 | ||||||||
PART III | ||||||||
105 | ||||||||
105 | ||||||||
105 | ||||||||
105 | ||||||||
105 | ||||||||
PART IV | ||||||||
106 | ||||||||
108 | ||||||||
Exhibit 12 | ||||||||
Exhibit 21 | ||||||||
Exhibit 23 | ||||||||
Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 32 | ||||||||
Exhibit 99.1 | ||||||||
Exhibit 99.2 |
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• | statements with respect to the beliefs, plans, objectives, goals, guidelines, expectations, anticipations, and future financial condition, results of operations and performance of Financial Institutions, Inc. (“the parent” or “FII”) and its subsidiaries (collectively “the Company,” “we,” “our,” “us”); |
• | statements preceded by, followed by or that include the words “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “projects,” or similar expressions. |
• | the Company’s ability to successfully execute its business plans, manage its risks, and achieve its objectives; |
• | changes in political and economic conditions, including the political and economic effects of the current economic crisis and other major developments, including wars, military actions and terrorist attacks; |
• | changes in financial market conditions, either internationally, nationally or locally in areas in which the Company conducts its operations, including without limitation, reduced rates of business formation and growth, commercial and residential real estate development and real estate prices; |
• | fluctuations in markets for equity, fixed-income, commercial paper and other securities, including availability, market liquidity levels, and pricing; |
• | changes in interest rates, the quality and composition of the loan and securities portfolios, demand for loan products, deposit flows and competition; |
• | acquisitions and integration of acquired businesses; |
• | increases in the levels of losses, customer bankruptcies, claims and assessments; |
• | changes in fiscal, monetary, regulatory, trade and tax policies and laws, including policies of the United States (“U.S.”) Department of Treasury (the “Treasury”) and the Federal Reserve Board (“FRB”); |
• | the Company’s participation or lack of participation in governmental programs implemented under the Emergency Economic Stabilization Act (“EESA”) and the American Recovery and Reinvestment Act (“ARRA”), including without limitation the Troubled Asset Relief Program (“TARP”), the Capital Purchase Program (“CPP”), and the Temporary Liquidity Guarantee Program (“TLGP”) and the impact of such programs and related regulations on the Company and on international, national, and local economic and financial markets and conditions; |
• | the impact of the EESA and the ARRA and related rules and regulations on the business operations and competitiveness of the Company and other participating American financial institutions, including the impact of the executive compensation limits of these acts, which may impact the ability of the Company and other American financial institutions to retain and recruit executives and other personnel necessary for their businesses and competitiveness; |
• | the impact of certain provisions of the EESA and ARRA and related rules and regulations on the attractiveness of governmental programs to mitigate the effects of the current economic crisis, including the risks that certain financial institutions may elect not to participate in such programs, thereby decreasing the effectiveness of such programs; |
• | continuing consolidation in the financial services industry; |
• | new litigation or changes in existing litigation; |
• | success in gaining regulatory approvals, when required; |
• | changes in consumer spending and savings habits; |
• | increased competitive challenges and expanding product and pricing pressures among financial institutions; |
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• | demand for financial services in the Company’s market areas; |
• | inflation and deflation; |
• | technological changes and the Company’s implementation of new technologies; |
• | the Company’s ability to develop and maintain secure and reliable information technology systems; |
• | legislation or regulatory changes which adversely affect the Company’s operations or business; |
• | the Company’s ability to comply with applicable laws and regulations; |
• | changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies; |
• | increased costs of deposit insurance and changes with respect to Federal Deposit Insurance Corporation (“FDIC”) insurance coverage levels; and |
• | further declines in the market value of the Company’s publicly traded stock price or declines in the Company’s ability to generate future cash flows may increase the potential that goodwill recorded on the Company’s consolidated statement of financial position be designated as impaired and that the Company may incur a goodwill write-down in the future. |
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• | To ensure consistent underwriting, all employees must share a common view of the risks inherent in lending activities as well as the standards to be applied in underwriting and managing credit risk; |
• | Pricing of credit products should be risk-based; |
• | The loan portfolio must be diversified to limit the potential impact of negative events; and |
• | Careful, timely exposure monitoring through dynamic use of our risk rating system is required to provide early warning and assure proactive management of potential problems. |
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• | Compete effectively and service the legitimate credit needs of our target market; |
• | Enhance our reputation for superior quality and timely delivery of products and services; |
• | Provide pricing that reflects the entire relationship and is commensurate with the risk profiles of our borrowers; |
• | Retain, develop and acquire profitable, multi-product, value added relationships with high quality borrowers; |
• | Focus on government guaranteed lending and establish a specialization in this area to meet the needs of the small businesses in our communities; and |
• | Comply with the relevant laws and regulations. |
• | Profile the risk and exposure in the loan portfolio and identify developing trends and relative levels of risk; |
• | Identify deteriorating credits; and |
• | Reflect the probability that a given customer may default on its obligations. |
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• | Specific allocations for individually analyzed credits; |
• | Risk assessment process; |
• | Historical net charge-off experience; |
• | Evaluation of the loan portfolio with loan reviews; |
• | Levels and trends in delinquent and non-accruing loans; |
• | Trends in volume and terms; |
• | Effects of changes in lending policy; |
• | Experience, ability and depth of management; |
• | National and local economic trends and conditions; |
• | Concentrations of credit; |
• | Interest rate environment; |
• | Customer leverage; |
• | Information (availability of timely financial information); and |
• | Collateral values. |
1. | Impaired commercial, commercial real estate and agricultural loans, generally in excess of $50 thousand are reviewed individually and assigned a specific loss allowance, if considered necessary, in accordance with U.S. generally accepted accounting principles (“GAAP”). |
2. | The remaining portfolios of commercial, commercial real estate and agricultural loans are segmented by risk rating into the following loan classification categories: uncriticized or pass, special mention and substandard. Uncriticized loans, special mention loans and all substandard loans not assigned a specific loss allowance are assigned allowance allocations based on historical net loan charge-off experience for each of the respective loan categories, supplemented with additional reserve amounts, if considered necessary, based upon qualitative factors. These qualitative factors include the levels and trends in delinquencies and non-accruing loans; trends in volume and terms of loans; effects of changes in lending policy; experience, ability, and depth of management; national and local economic conditions; concentrations of credit, interest rate environment; customer leverage; information (availability of timely financial information); and collateral values, among others. |
3. | The consumer loan portfolio is segmented into six types of loans: residential real estate, home equity loans, home equity lines of credit, consumer direct, consumer indirect, and overdrafts. Allowance allocations for the real estate related loan portfolios (residential and home equity) are based on the average loss experience for the previous eight quarters, supplemented with qualitative factors similar to the elements described above. Allowance allocations for the consumer direct and consumer indirect portfolios are based on vintage analyses performed with loss data collected over the previous 48 months and 36 months, respectively. The allocations on these portfolios are also supplemented with qualitative factors. The allowance allocation for overdrafts is based on an analysis of the aging of overdrafts as of each quarter end with larger loss assumptions assigned by the aging of accounts. |
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• | U.S. treasury securities; |
• | U.S. government agency securities, which are securities issued by official Federal government bodies (e.g. the Government National Mortgage Association (“GNMA”)) and U.S. government-sponsored enterprise (“GSE”) securities, which are securities issued by independent organizations that are in part sponsored by the federal government (e.g. the Federal Home Loan Bank (“FHLB”) system, the Federal National Mortgage Association (“FNMA”), FHLMC, SBA and the Federal Farm Credit Bureau (“FFCB”)); |
• | Mortgage-backed securities (“MBS”) include mortgage-backed pass-through securities (“pass-throughs”) and collateralized mortgage obligations (“CMO”) issued by GNMA, FNMA and FHLMC. See also the section titled “Investing Activities” in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations;” |
• | Investment grade municipal securities, including revenue, tax and bond anticipation notes, statutory installment notes and general obligation bonds; |
• | Certain creditworthy un-rated securities issued by municipalities; |
• | Certificates of deposit; |
• | Equity securities at the holding company level; and |
• | Limited partnership investments in Small Business Investment Companies (“SBIC”). |
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• | Initial notices to customers about their privacy policies, describing the conditions under which they may disclose nonpublic personal information to nonaffiliated third parties and affiliates; |
• | Annual notices of their privacy policies to current customers; and |
• | A reasonable method for customers to “opt out” of disclosures to nonaffiliated third parties. |
• | Identify and assess the risks that may threaten customer information; |
• | Develop a written plan containing policies and procedures to manage and control these risks; |
• | Implement and test the plan; and |
• | Adjust the plan on a continuing basis to account for changes in technology, the sensitivity of customer information and internal or external threats to information security. |
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• | Capital Purchase Program. Pursuant to this program, the Treasury, on behalf of the U.S. government, purchased preferred stock, along with warrants to purchase common stock, from certain financial institutions, including bank holding companies, savings and loan holding companies and banks or savings associations not controlled by a holding company. The investment has a dividend rate of 5% per year, until the fifth anniversary of the Treasury’s investment and a dividend of 9% thereafter. | ||
During the time the Treasury holds securities issued pursuant to this program, participating financial institutions are required to comply with certain provisions regarding executive compensation and corporate governance. Participation in this program also imposes certain restrictions upon an institution’s dividends to common shareholders and stock repurchase activities. As described further herein, we elected to participate in the CPP and received $37.5 million pursuant to the program. | |||
While any senior preferred stock is outstanding, we may pay dividends on our common stock, provided that all accrued and unpaid dividends for all past dividend periods on the senior preferred stock are fully paid. Prior to the third anniversary of the UST’s purchase of the Senior Preferred Stock, unless the senior preferred stock has been redeemed or the UST has transferred all of the senior preferred stock to third parties, the consent of the UST will be required for us to increase our quarterly common stock dividend above $0.10 per share. |
• | Temporary Liquidity Guarantee Program. This program contained both (i) a debt guarantee component (“Debt Guarantee Program”), whereby the FDIC will guarantee until June 30, 2012, the senior unsecured debt issued by eligible financial institutions between October 14, 2008 and October 31, 2009 (although a limited, six-month emergency guarantee facility has been established by the FDIC whereby certain participating entities can apply to the FDIC for permission to issue FDIC-guaranteed debt during the period from October 31, 2009 through April 30, 2010); and (ii) a transaction account guarantee (“TAG”) component (“TAG Program”), whereby the FDIC will insure 100% of noninterest bearing deposit transaction accounts held at eligible financial institutions, such as payment processing accounts, payroll accounts and working capital accounts through December 31, 2009. The Company opted into the TAG Program but not the Debt Guarantee Program, which concluded on October 31, 2009. On August 26, 2009, the FDIC approved the final rule extending the TAG Program for six months until June 30, 2010, and increased the applicable TAG assessment fees during that six month period. The Company did not opt out of the TAG program extension, which is expected to increase future FDIC insurance costs. |
• | Temporary increase in deposit insurance coverage. Pursuant to the EESA, the FDIC temporarily raised the basic limit on federal deposit insurance coverage from $100,000 to $250,000 per depositor. The EESA provides that the basic deposit insurance limit will return to $100,000 after December 31, 2009, but the temporary increase has been extended through December 31, 2013, and is permanent for certain retirement accounts (including IRAs). |
• | Change in Tax Treatment of Fannie Mae and Freddie Mac Preferred Stock. Section 301 of the EESA changes the tax treatment of gains or losses from the sale or exchange of FNMA or FHLMC preferred stock by an “applicable financial institution,” such as FSB, by stating that a gain or loss on Fannie Mae or Freddie Mac preferred stock shall be treated as ordinary gain or loss instead of capital gain or loss, as was previously the case. This change, which was enacted in the 2008 fourth quarter, provides tax relief to banking organizations that have suffered losses on certain direct and indirect investments in Fannie Mae and Freddie Mac preferred stock. As a result, the Company was able to recognize as an ordinary loss the other-than-temporary-impairment (“OTTI”) charge on its investment in auction rate preferred equity securities, which were collateralized by FNMA and FHLMC preferred stock, for the year ended December 31, 2008. |
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Starting | ||||||||||
Name | Age | In | Positions/Offices | |||||||
Peter G. Humphrey | 55 | 1977 | President and Chief Executive Officer of FII and Five Star Bank. | |||||||
Karl F. Krebs | 54 | 2009 | Executive Vice President and Chief Financial Officer of FII and Five Star Bank. Senior Financial Specialist at West Valley Environmental Services, LLC prior to joining FII in 2009. President of Robar General Funding Corp. from 2006 to 2008. Senior Vice President and Line-of-Business Finance Director at Five Star Bank from 2005 to 2006 and Senior Vice President at Wyoming County Bank from 2004 to 2005. | |||||||
Martin K. Birmingham | 43 | 2005 | Executive Vice President and Regional President / Commercial Banking Executive Officer of Five Star Bank. Senior Team Leader and Regional President of the Rochester Market at Bank of America (formally Fleet Boston Financial) from 2000 to 2005. | |||||||
George D. Hagi | 57 | 2006 | Executive Vice President and Chief Risk Officer of FII and Five Star Bank. Senior Vice President and Director of Risk Management at First National Bankshares of Florida and FNB Corp. from 1997 to 2005. | |||||||
Richard J. Harrison | 64 | 2003 | Executive Vice President and Senior Retail Lending Administrator of Five Star Bank. Executive Vice President and Chief Credit Officer at Savings Bank of the Finger Lakes from 2000 to 2003. | |||||||
Kevin B. Klotzbach | 57 | 2001 | Senior Vice President and Treasurer of Five Star Bank. | |||||||
R. Mitchell McLaughlin | 52 | 1981 | Executive Vice President and Chief Information Officer of Five Star Bank. | |||||||
Matthew T. Murtha | 55 | 2000 | Senior Vice President and Director of Sales and Marketing of Five Star Bank. | |||||||
Bruce H. Nagle | 61 | 2006 | Senior Vice President and Director of Human Resources of FII and Five Star Bank. Vice President of Human Resources at University of Pittsburgh Medical Center from 2000 to 2006. | |||||||
John L. Rizzo | 60 | 2010 | Senior Vice President and Corporate Secretary of FII and Five Star Bank. Counsel (in-house) for FII and Five Star Bank from 2007 to 2010. Genesee County (New York) Attorney from 1976 to 2010. | |||||||
John J. Witkowski | 47 | 2005 | Executive Vice President and Regional President / Retail Banking Executive Officer of Five Star Bank. Senior Vice President and Director of Sales for Business Banking / Client Development Group at Bank of America from 1993 to 2005. |
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• | An impairment of securities in our investment portfolio; |
• | A decrease in the demand for loans and other products and services offered by the Company; |
• | A decrease in the value of our loans held for sale or other assets secured by consumer or commercial real estate; |
• | An impairment of certain intangible assets, such as goodwill; |
• | An increase in the number of clients and counterparties who become delinquent, file for protection under bankruptcy laws or default on their loans or other obligations to the Company. An increase in the number of delinquencies, bankruptcies or defaults could result in a higher level of non-performing assets, net charge-offs, provision for loan losses, and valuation adjustments on loans held for sale. |
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• | increase loan delinquencies; |
• | increase problem assets and foreclosures; |
• | increase claims and lawsuits; |
• | decrease the demand for our products and services; and |
• | decrease the value of collateral for loans, especially real estate, in turn reducing customers’ borrowing power, the value of assets associated with non-performing loans and collateral coverage. |
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• | Operating results that vary from the expectations of management, securities analysts and investors; |
• | Developments in the Company’s business or in the financial sector generally; |
• | Regulatory changes affecting the financial services industry generally or the Company’s business and operations; |
• | The operating and securities price performance of companies that investors consider to be comparable to the Company; |
• | Announcements of strategic developments, acquisitions and other material events by the Company or its competitors; |
• | Changes in the credit, mortgage and real estate markets, including the markets for mortgage-related securities; and |
• | Changes in global financial markets and global economies and general market conditions, such as interest or foreign exchange rates, stock, commodity, credit or asset valuations or volatility. |
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Location | Type | Owned or Leased | Lease Expiration | |||
Allegany | Branch | Owned | — | |||
Amherst | Branch | Leased | February 2020 | |||
Attica | Branch | Owned | — | |||
Auburn | Branch | Owned | — | |||
Avoca | Branch | Owned | — | |||
Batavia | Branch | Leased | December 2016 | |||
Batavia (In-Store) | Branch | Leased | July 2014 | |||
Bath | Branch | Owned | — | |||
Bath | Drive-up Branch | Owned | — | |||
Caledonia | Branch | Leased | July 2012 | |||
Canandaigua | Branch | Owned | — | |||
Cuba | Branch | Owned | — | |||
Dansville | Branch | Ground Leased | March 2014 | |||
Dundee | Branch | Owned | — | |||
East Aurora | Branch | Leased | January 2013 | |||
Ellicottville | Branch | Owned | — | |||
Elmira | Branch | Owned | — | |||
Elmira Heights | Branch | Leased | August 2011 | |||
Erwin | Branch | Leased | October 2010 | |||
Geneseo | Branch | Owned | — | |||
Geneva | Branch | Owned | — | |||
Geneva | Drive-up Branch | Owned | — | |||
Geneva (Plaza) | Branch | Ground Leased | January 2016 | |||
Greece | Branch | Leased | June 2023 | |||
Hammondsport | Branch | Owned | — | |||
Henrietta | Branch | Leased | June 2023 | |||
Honeoye Falls | Branch | Leased | September 2017 | |||
Hornell | Branch | Owned | — | |||
Horseheads | Branch | Leased | September 2012 | |||
Lakeville | Branch | Owned | — | |||
Lakewood | Branch | Owned | — | |||
Leroy | Branch | Owned | — | |||
Mount Morris | Branch | Owned | — | |||
Naples | Branch | Owned | — | |||
North Chili | Branch | Owned | — | |||
North Java | Branch | Owned | — | |||
North Warsaw | Branch | Owned | — | |||
Olean | Branch | Owned | — | |||
Olean | Drive-up Branch | Owned | — | |||
Orchard Park | Branch | Ground Leased | January 2019 | |||
Ovid | Branch | Owned | — | |||
Pavilion | Branch | Owned | — | |||
Penn Yan | Branch | Owned | — | |||
Pittsford | Administrative Offices | Leased | April 2017 | |||
Salamanca | Branch | Owned | — | |||
Strykersville | Branch | Owned | — | |||
Victor | Branch | Owned | — | |||
Warsaw (220 Liberty Street) | Headquarters | Owned | — | |||
Warsaw (29 North Main Street) | Administrative Offices | Owned | — | |||
Warsaw (55 North Main Street) | Main Branch | Owned | — | |||
Waterloo | Branch | Owned | — | |||
Wayland | Branch | Owned | — | |||
Wyoming | Branch | Leased | March 2010 | |||
Yorkshire | Branch | Ground Leased | November 2012 |
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ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Number of securities | ||||||||||||
Weighted average | remaining for future | |||||||||||
Number of securities to | exercise price | issuance under equity | ||||||||||
be issued upon exercise | of outstanding | compensation plans | ||||||||||
of outstanding options, | options, warrants | (excluding securities | ||||||||||
Plan Category | warrants and rights | and rights | reflected in column (a)) | |||||||||
Equity compensation plans approved by shareholders | 536,506 | (1) | $ | 20.30 | (1) | 923,646 | (2) | |||||
Equity compensation plans not approved by shareholders | — | $ | — | — |
(1) | Includes 77,772 shares of unvested restricted stock awards outstanding as of December 31, 2009. The weighted average exercise price excludes such awards. | |
(2) | Represents the 940,000 aggregate shares approved for issuance under the Company’s two active equity compensation plans, reduced by 16,354 shares, which is the 9,972 restricted stock awards issued under these plans to date plus an adjustment of 6,382 shares. Pursuant to the terms of the plans, for purposes of calculating the number of shares available for issuance, each share of common stock granted pursuant to a restricted stock award shall count as 1.64 shares of common stock. |
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Period Ending | ||||||||||||||||||||||||
Index | 12/31/04 | 12/31/05 | 12/31/06 | 12/31/07 | 12/31/08 | 12/31/09 | ||||||||||||||||||
Financial Institutions, Inc. | 100.00 | 86.17 | 102.86 | 81.43 | 67.72 | 58.08 | ||||||||||||||||||
NASDAQ Composite | 100.00 | 101.37 | 111.03 | 121.92 | 72.49 | 104.31 | ||||||||||||||||||
SNL Bank $1B-$5B Index | 100.00 | 98.29 | 113.74 | 82.85 | 68.72 | 49.26 |
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At or for the year ended December 31, | ||||||||||||||||||||
(Dollars in thousands, except per share data) | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||
Selected financial condition data: | ||||||||||||||||||||
Total assets | $ | 2,062,389 | $ | 1,916,919 | $ | 1,857,876 | $ | 1,907,552 | $ | 2,022,392 | ||||||||||
Loans, net | 1,243,265 | 1,102,330 | 948,652 | 909,434 | 972,090 | |||||||||||||||
Investment securities | 620,074 | 606,038 | 754,720 | 775,536 | 833,448 | |||||||||||||||
Deposits | 1,742,955 | 1,633,263 | 1,575,971 | 1,617,695 | 1,717,261 | |||||||||||||||
Borrowings | 106,390 | 70,820 | 68,210 | 87,199 | 115,199 | |||||||||||||||
Shareholders’ equity | 198,294 | 190,300 | 195,322 | 182,388 | 171,757 | |||||||||||||||
Common shareholders’ equity(1) | 144,876 | 137,226 | 177,741 | 164,765 | 154,123 | |||||||||||||||
Tangible common shareholders’ equity(2) | 107,507 | 99,577 | 139,786 | 126,502 | 115,440 | |||||||||||||||
Selected operations data: | ||||||||||||||||||||
Interest income | $ | 94,482 | $ | 98,948 | $ | 105,212 | $ | 103,070 | $ | 103,887 | ||||||||||
Interest expense | 22,217 | 33,617 | 47,139 | 43,604 | 36,395 | |||||||||||||||
Net interest income | 72,265 | 65,331 | 58,073 | 59,466 | 67,492 | |||||||||||||||
Provision (credit) for loan losses | 7,702 | 6,551 | 116 | (1,842 | ) | 28,532 | ||||||||||||||
Net interest income after provision (credit) for loan losses | 64,563 | 58,780 | 57,957 | 61,308 | 38,960 | |||||||||||||||
Noninterest income (loss)(3) | 18,795 | (48,778 | ) | 20,680 | 21,911 | 29,384 | ||||||||||||||
Noninterest expense | 62,777 | 57,461 | 57,428 | 59,612 | 65,492 | |||||||||||||||
Income (loss) from continuing operations before income taxes | 20,581 | (47,459 | ) | 21,209 | 23,607 | 2,852 | ||||||||||||||
Income tax expense (benefit) from continuing operations | 6,140 | (21,301 | ) | 4,800 | 6,245 | (1,766 | ) | |||||||||||||
Income (loss) from continuing operations | 14,441 | (26,158 | ) | 16,409 | 17,362 | 4,618 | ||||||||||||||
Loss on discontinued operations, net of tax | — | — | — | — | 2,452 | |||||||||||||||
Net income (loss) | $ | 14,441 | $ | (26,158 | ) | $ | 16,409 | $ | 17,362 | $ | 2,166 | |||||||||
Preferred stock dividends and accretion | �� | 3,697 | 1,538 | 1,483 | 1,486 | 1,488 | ||||||||||||||
Net income (loss) applicable to common shareholders | $ | 10,744 | $ | (27,696 | ) | $ | 14,926 | $ | 15,876 | $ | 678 | |||||||||
Stock and related per share data: | ||||||||||||||||||||
Earnings (loss) from continuing operations per common share: | ||||||||||||||||||||
Basic | $ | 0.99 | $ | (2.54 | ) | $ | 1.34 | $ | 1.40 | $ | 0.28 | |||||||||
Diluted | 0.99 | (2.54 | ) | 1.33 | 1.40 | 0.28 | ||||||||||||||
Earnings (loss) per common share: | ||||||||||||||||||||
Basic | 0.99 | (2.54 | ) | 1.34 | 1.40 | 0.06 | ||||||||||||||
Diluted | 0.99 | (2.54 | ) | 1.33 | 1.40 | 0.06 | ||||||||||||||
Cash dividends declared on common stock | 0.40 | 0.54 | 0.46 | 0.34 | 0.40 | |||||||||||||||
Common book value per share(1) | 13.39 | 12.71 | 16.14 | 14.53 | 13.60 | |||||||||||||||
Tangible common book value per share(2) | 9.94 | 9.22 | 12.69 | 11.15 | 10.19 | |||||||||||||||
Market price (NASDAQ: FISI): | ||||||||||||||||||||
High | 15.99 | 22.50 | 23.71 | 25.38 | 24.93 | |||||||||||||||
Low | 3.27 | 10.06 | 16.18 | 17.43 | 15.52 | |||||||||||||||
Close | 11.78 | 14.35 | 17.82 | 23.05 | 19.62 |
(1) | Excludes preferred shareholders’ equity. | |
(2) | Excludes preferred shareholders’ equity, goodwill and other intangible assets. | |
(3) | The 2009 and 2008 figures include OTTI charges of $4.7 million and $68.2 million, respectively. There were no OTTI charges in the other years presented. |
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At or for the year ended December 31, | ||||||||||||||||||||
(Dollars in thousands, except per share data) | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||
Selected financial ratios and other data: | ||||||||||||||||||||
Performance ratios: | ||||||||||||||||||||
Net income (loss) (returns on): | ||||||||||||||||||||
Average assets | 0.71 | % | -1.37 | % | 0.86 | % | 0.90 | % | 0.10 | % | ||||||||||
Average equity | 7.43 | -14.30 | 8.84 | 9.86 | 1.22 | |||||||||||||||
Average common equity(1) | 7.61 | -16.84 | 8.89 | 10.02 | 0.43 | |||||||||||||||
Average tangible common equity(2) | 10.37 | -21.87 | 11.50 | 13.23 | 0.56 | |||||||||||||||
Common dividend payout ratio(3) | 40.40 | NA | 34.33 | 24.29 | 666.67 | |||||||||||||||
Net interest margin (fully tax-equivalent) | 4.04 | 3.93 | 3.53 | 3.55 | 3.65 | |||||||||||||||
Efficiency ratio(4) | 65.52 | % | 64.07 | % | 68.77 | % | 69.78 | % | 70.18 | % | ||||||||||
Capital ratios: | ||||||||||||||||||||
Leverage ratio | 7.96 | % | 8.05 | % | 9.35 | % | 8.91 | % | 7.60 | % | ||||||||||
Tier 1 risk-based capital | 11.95 | 11.83 | 15.74 | 15.85 | 13.75 | |||||||||||||||
Total risk-based capital | 13.21 | 13.08 | 16.99 | 17.10 | 15.01 | |||||||||||||||
Equity to assets(5) | 9.55 | 9.60 | 9.73 | 9.08 | 8.37 | |||||||||||||||
Common equity to assets(1) (5) | 6.94 | 8.63 | 8.81 | 8.17 | 7.54 | |||||||||||||||
Tangible common equity to tangible assets(2)(5) | 5.19 | % | 6.78 | % | 6.95 | % | 6.32 | % | 5.80 | % | ||||||||||
Asset quality (6): | ||||||||||||||||||||
Non-performing loans | $ | 8,681 | $ | 8,196 | $ | 8,077 | $ | 15,840 | $ | 18,037 | ||||||||||
Non-performing assets | 10,442 | 9,252 | 9,498 | 17,043 | 19,713 | |||||||||||||||
Allowance for loan losses | 20,741 | 18,749 | 15,521 | 17,048 | 20,231 | |||||||||||||||
Net loan charge-offs | $ | 5,710 | $ | 3,323 | $ | 1,643 | $ | 1,341 | $ | 47,487 | ||||||||||
Total non-performing loans to total loans | 0.69 | % | 0.73 | % | 0.84 | % | 1.71 | % | 1.82 | % | ||||||||||
Total non-performing assets to total assets | 0.51 | 0.48 | 0.51 | 0.89 | 0.97 | |||||||||||||||
Net charge-offs to average loans | 0.47 | 0.32 | 0.18 | 0.14 | 4.27 | |||||||||||||||
Allowance for loan losses to total loans | 1.64 | 1.67 | 1.61 | 1.84 | 2.04 | |||||||||||||||
Allowance for loan losses to non-performing loans | 239 | % | 229 | % | 192 | % | 108 | % | 112 | % | ||||||||||
Other data: | ||||||||||||||||||||
Number of branches | 51 | 52 | 50 | 50 | 50 | |||||||||||||||
Full time equivalent employees | 572 | 600 | 621 | 640 | 700 |
(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 year divided by earnings per share for the year. There is no ratio shown for years where the Company both declared a dividend and incurred a loss because the ratio would result in a negative payout since the dividend declared (paid out) will always be greater than 100% of earnings. | |
(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, proceeds from company owned life insurance included in income, and net gains from the sales of commercial-related loans held for sale and trust relationships (all from continuing operations). | |
(5) | Ratios calculated using average balances for the periods shown. | |
(6) | Ratios exclude non-accruing commercial-related loans held for sale ($577 thousand for 2005 and zero for all other years presented) from non-performing loans and exclude loans held for sale from total loans. |
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2009 | ||||||||||||||||
Fourth | Third | Second | First | |||||||||||||
(Dollars in thousands, except per share data) | Quarter | Quarter | Quarter | Quarter | ||||||||||||
Interest income | $ | 24,390 | $ | 23,697 | $ | 23,302 | $ | 23,093 | ||||||||
Interest expense | 5,175 | 5,619 | 5,657 | 5,766 | ||||||||||||
Net interest income | 19,215 | 18,078 | 17,645 | 17,327 | ||||||||||||
Provision for loan losses | 1,088 | 2,620 | 2,088 | 1,906 | ||||||||||||
Net interest income, after provision for loan losses | 18,127 | 15,458 | 15,557 | 15,421 | ||||||||||||
Noninterest income | 5,183 | 4,406 | 4,515 | 4,691 | ||||||||||||
Noninterest expense | 15,117 | 15,142 | 16,440 | 16,078 | ||||||||||||
Income before income taxes | 8,193 | 4,722 | 3,632 | 4,034 | ||||||||||||
Income tax expense | 2,756 | 1,313 | 1,004 | 1,067 | ||||||||||||
Net income | $ | 5,437 | $ | 3,409 | $ | 2,628 | $ | 2,967 | ||||||||
Preferred stock dividends | 927 | 927 | 925 | 918 | ||||||||||||
Net income applicable to common shareholders | $ | 4,510 | $ | 2,482 | $ | 1,703 | $ | 2,049 | ||||||||
Earnings per common share(1): | ||||||||||||||||
Basic | $ | 0.42 | $ | 0.23 | $ | 0.16 | $ | 0.19 | ||||||||
Diluted | 0.42 | 0.23 | 0.16 | 0.19 | ||||||||||||
Market price (NASDAQ: FISI): | ||||||||||||||||
High | $ | 12.25 | $ | 15.00 | $ | 15.99 | $ | 14.95 | ||||||||
Low | 9.71 | 9.90 | 6.98 | 3.27 | ||||||||||||
Close | 11.78 | 9.97 | 13.66 | 7.62 | ||||||||||||
Dividends declared | $ | 0.10 | $ | 0.10 | $ | 0.10 | $ | 0.10 |
2008 | ||||||||||||||||
Fourth | Third | Second | First | |||||||||||||
(Dollars in thousands, except per share data) | Quarter | Quarter | Quarter | Quarter | ||||||||||||
Interest income | $ | 24,582 | $ | 24,558 | $ | 24,536 | $ | 25,272 | ||||||||
Interest expense | 7,269 | 7,812 | 8,349 | 10,187 | ||||||||||||
Net interest income | 17,313 | 16,746 | 16,187 | 15,085 | ||||||||||||
Provision for loan losses | 2,586 | 1,891 | 1,358 | 716 | ||||||||||||
Net interest income, after provision for loan losses | 14,727 | 14,855 | 14,829 | 14,369 | ||||||||||||
Noninterest (loss) income | (25,106 | ) | (29,348 | ) | 932 | 4,744 | ||||||||||
Noninterest expense | 15,394 | 13,409 | 14,385 | 14,273 | ||||||||||||
(Loss) income before income taxes | (25,773 | ) | (27,902 | ) | 1,376 | 4,840 | ||||||||||
Income tax (benefit) expense | (22,631 | ) | 524 | (255 | ) | 1,061 | ||||||||||
Net (loss) income | $ | (3,142 | ) | $ | (28,426 | ) | $ | 1,631 | $ | 3,779 | ||||||
Preferred stock dividends | 426 | 371 | 370 | 371 | ||||||||||||
Net (loss) income applicable to common shareholders | $ | (3,568 | ) | $ | (28,797 | ) | $ | 1,261 | $ | 3,408 | ||||||
(Loss) earnings per common share(1): | ||||||||||||||||
Basic | $ | (0.33 | ) | $ | (2.68 | ) | $ | 0.12 | $ | 0.31 | ||||||
Diluted | (0.33 | ) | (2.68 | ) | 0.12 | 0.31 | ||||||||||
Market price (NASDAQ: FISI): | ||||||||||||||||
High | $ | 20.27 | $ | 22.50 | $ | 20.00 | $ | 20.78 | ||||||||
Low | 10.06 | 14.82 | 15.25 | 15.10 | ||||||||||||
Close | 14.35 | 20.01 | 16.06 | 18.95 | ||||||||||||
Dividends declared | $ | 0.10 | $ | 0.15 | $ | 0.15 | $ | 0.14 |
(1) | Earnings (loss) per share data is computed independently for each of the quarters presented. Therefore, the sum of the quarterly earnings or loss per common share amounts may not equal the total for the year. |
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ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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• | The recent market conditions have been marked with general economic and industry declines with an impact on consumer confidence, business and personal financial performance, and commercial and residential real estate markets, resulting in an increase in nonperforming loans, net charge offs, and provision for loan losses. Nonperforming loans were $8.7 million at December 31, 2009, compared to $8.2 million at December 31, 2008. Net charge offs were $5.7 million in 2009 (or 0.47% of average loans) compared to $3.3 million in 2008 (or 0.32% of average loans). The provision for loan losses was $7.7 million and $6.6 million, respectively, for 2009 and 2008. At year-end 2009, the allowance for loan losses represented 1.64% of total loans (covering 239% of non-performing loans), compared to 1.67% (covering 229% of nonperforming loans) at year-end 2008. See also sections, “Allowance for Loan Losses” and “Non-performing and Potential Problem Loans” for additional information on net charge-offs and non-performing loans. |
• | At December 31, 2009, total loans were $1.264 billion, up 13% from year-end 2008, primarily in commercial based and indirect auto loans. Total deposits at December 31, 2009, were $1.743 billion, up 7% from year-end 2008, primarily attributable to higher noninterest-bearing demand and certificates of deposits. |
• | Taxable equivalent net interest income was $75.0 million for 2009 or 8% higher than $69.6 million in 2008. Taxable equivalent interest income decreased $6.1 million, while interest expense decreased by $11.4 million. The increase in taxable equivalent net interest income was a function of both favorable volume variances (increasing taxable equivalent net interest income by $2.6 million) and rate variances (increasing taxable equivalent net interest income by $2.7 million). See also section, “Net Interest Income” for additional information on taxable equivalent net interest income and net interest margin. |
• | The net interest margin for 2009 was 4.04%, 11 basis points higher than 3.93% in 2008. The increase in net interest margin was attributable to a 30 basis point increase in interest rate spread (the net of a 90 basis point decrease in the cost of interest-bearing liabilities and a 60 basis decrease in the yield on earning assets), partially offset by a 19 basis point lower contribution from net free funds (primarily attributable to lower rates on interest-bearing liabilities reducing the value of noninterest-bearing deposits and other net free funds). |
• | Noninterest income was $18.8 million for 2009. Core fee-based revenues (defined as service charges on deposit accounts, ATM and debit fees, and broker-dealer fees and commissions) totaled $14.7 million for 2009, down $571 thousand or 4% from $15.3 million for 2008. Net mortgage banking income was $2.0 million for 2009, compared to $1.0 million in 2008, an increase of $1.0 million from 2008, primarily attributable to higher secondary mortgage production experienced during 2009 due to the low interest rate environment and the favorable impact on refinance activity. For additional discussion concerning noninterest income see section, “Noninterest Income.” |
• | Net investment securities losses (defined as net gain on disposal of investment securities and impairment charges on investment securities) were $1.2 million and for 2009, compared to net investment securities losses of $67.9 million for 2008, primarily attributable to other-than-temporary write-downs on investment securities. |
• | Noninterest expense for 2009 was $62.8 million, an increase of $5.3 million or 9% over 2008. FDIC assessments increased $3.0 million, salaries and employee benefits increased $2.2 million, and collectively all remaining noninterest expense categories were up $142 thousand compared to 2008. The efficiency ratio (as defined under Part II, Item 6, “Selected Financial Data”) was 65.52% for 2009 and 64.07% for 2008. For additional discussion regarding noninterest expense see section, “Noninterest Expense.” |
• | Income tax expense for 2009 was $6.1 million, compared to income tax benefit of $21.3 million for 2008. The change in income tax was primarily due to the increase to pretax income from a pretax loss between the years. For additional discussion concerning income tax see section, “Income Taxes.” |
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Investment Securities Portfolio Composition | ||||||||||||||||||||||||
At December 31, | ||||||||||||||||||||||||
2009 | 2008 | 2007 | ||||||||||||||||||||||
Amortized | Fair | Amortized | Fair | Amortized | Fair | |||||||||||||||||||
Cost | Value | Cost | Value | Cost | Value | |||||||||||||||||||
Securities available for sale: | ||||||||||||||||||||||||
U.S. Government agency and government-sponsored enterprise securities | $ | 134,564 | $ | 134,105 | $ | 67,871 | $ | 68,173 | $ | 158,920 | $ | 158,940 | ||||||||||||
State and political subdivisions | 80,812 | 83,659 | 129,572 | 131,711 | 171,294 | 172,601 | ||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||
Agency mortgage-backed securities | 356,044 | 356,355 | 297,278 | 303,105 | 239,427 | 238,101 | ||||||||||||||||||
Non-Agency mortgage-backed securities | 5,087 | 5,160 | 42,296 | 39,447 | 58,371 | 57,771 | ||||||||||||||||||
Asset-backed securities | 1,295 | 1,222 | 3,918 | 3,918 | 34,115 | 33,198 | ||||||||||||||||||
Equity securities | — | — | 923 | 1,152 | 33,930 | 34,630 | ||||||||||||||||||
Total available for sale securities | 577,802 | 580,501 | 541,858 | 547,506 | 696,057 | 695,241 | ||||||||||||||||||
Securities held to maturity: | ||||||||||||||||||||||||
State and political subdivisions | 39,573 | 40,629 | 58,532 | 59,147 | 59,479 | 59,902 | ||||||||||||||||||
Total investment securities | $ | 617,375 | $ | 621,130 | $ | 600,390 | $ | 606,653 | $ | 755,536 | $ | 755,143 | ||||||||||||
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Unrealized Losses on Investment Securities | ||||||||||||||||||||||||
At December 31, | ||||||||||||||||||||||||
2009 | 2008 | 2007 | ||||||||||||||||||||||
Unrealized | % of | Unrealized | % of | Unrealized | % of | |||||||||||||||||||
Losses | Total | Losses | Total | Losses | Total | |||||||||||||||||||
Securities available for sale: | ||||||||||||||||||||||||
U.S. Government agency and government-sponsored enterprise securities | $ | 545 | 19.8 | % | $ | 307 | 7.3 | % | $ | 324 | 7.5 | % | ||||||||||||
State and political subdivisions | 3 | 0.1 | 42 | 1.0 | 261 | 6.0 | ||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||
Agency mortgage-backed securities | 1,638 | 59.3 | 981 | 23.1 | 1,868 | 43.2 | ||||||||||||||||||
Non-Agency mortgage-backed securities | 330 | 12.0 | 2,854 | 67.3 | 890 | 20.6 | ||||||||||||||||||
Asset-backed securities | 244 | 8.8 | — | — | 972 | 22.5 | ||||||||||||||||||
Equity securities | — | — | 52 | 1.2 | — | — | ||||||||||||||||||
Total available for sale securities | 2,760 | 100.0 | 4,236 | 99.9 | 4,315 | 99.8 | ||||||||||||||||||
Securities held to maturity: | ||||||||||||||||||||||||
State and political subdivisions | — | — | 4 | 0.1 | 8 | 0.2 | ||||||||||||||||||
Total investment securities | $ | 2,760 | 100.0 | % | $ | 4,240 | 100.0 | % | $ | 4,323 | 100.0 | % | ||||||||||||
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As of December 31, 2009 | OTTI losses recognized in earnings | |||||||||||||||||||||||||||||||
Number | Unrealized | For the year ended | ||||||||||||||||||||||||||||||
Current | of | Par | Amortized | Fair | Gains | December 31, | Total | |||||||||||||||||||||||||
Rating(1) | Cusips | Value | Cost | Value | (Losses) | 2008 | 2009 | to Date | ||||||||||||||||||||||||
Securities with unrealized gains: | ||||||||||||||||||||||||||||||||
Non-Agency MBS: | ||||||||||||||||||||||||||||||||
Ba1/CCC | 1 | $ | 1,404 | $ | 609 | $ | 646 | $ | 37 | $ | 626 | $ | 166 | $ | 792 | |||||||||||||||||
CC/B(2) | 1 | 2,411 | 672 | 672 | — | 1,240 | 494 | 1,734 | ||||||||||||||||||||||||
CC(3) | 1 | 3,814 | 492 | 859 | 367 | 3,513 | — | 3,513 | ||||||||||||||||||||||||
3 | 7,629 | 1,773 | 2,177 | 404 | 5,379 | 660 | 6,039 | |||||||||||||||||||||||||
Asset-backed securities: | ||||||||||||||||||||||||||||||||
Baa3/CC(4) | 1 | 661 | 68 | 206 | 138 | 545 | 50 | 595 | ||||||||||||||||||||||||
Caa2/CCC(5) | 1 | 1,996 | 36 | 36 | — | 1,615 | 313 | 1,928 | ||||||||||||||||||||||||
Caa3/CC(6) | 1 | 3,000 | 59 | 70 | 11 | 2,860 | — | 2,860 | ||||||||||||||||||||||||
Ca/CCC(5) | 1 | 2,977 | 37 | 56 | 19 | 2,435 | 476 | 2,911 | ||||||||||||||||||||||||
Ca/CC(6) | 2 | 9,050 | 573 | 576 | 3 | 7,773 | 495 | 8,268 | ||||||||||||||||||||||||
6 | 17,684 | 773 | 944 | 171 | 15,228 | 1,334 | 16,562 | |||||||||||||||||||||||||
Total securities with unrealized gains | 9 | 25,313 | 2,546 | 3,121 | 575 | 20,607 | 1,994 | 22,601 | ||||||||||||||||||||||||
Securities with unrealized losses: | ||||||||||||||||||||||||||||||||
Asset-backed securities: | ||||||||||||||||||||||||||||||||
Ca/CC(6) | 4 | 6,392 | 337 | 166 | (171 | ) | 5,481 | 437 | 5,918 | |||||||||||||||||||||||
Ca/C | 2 | 3,144 | 45 | 28 | (17 | ) | 2,826 | 147 | 2,973 | |||||||||||||||||||||||
C/CC(6) | 2 | 5,029 | 80 | 65 | (15 | ) | 4,570 | 388 | 4,958 | |||||||||||||||||||||||
Ca/D | 1 | 2,000 | 60 | 18 | (42 | ) | 1,868 | 8 | 1,876 | |||||||||||||||||||||||
Total securities with unrealized losses | 9 | 16,565 | 522 | 277 | (245 | ) | 14,745 | 980 | 15,725 | |||||||||||||||||||||||
18 | $ | 41,878 | $ | 3,068 | $ | 3,398 | $ | 330 | $ | 35,352 | $ | 2,974 | $ | 38,326 | ||||||||||||||||||
(1) | Ratings presented are Moody’s/Fitch except as noted. | |
(2) | Ratings presented are Fitch /S&P. | |
(3) | Rating presented is S&P. | |
(4) | Ratings presented are Moody’s/S&P. | |
(5) | Securities were further downgraded by Fitch to a rating of CC during February 2010. | |
(6) | Securities were further downgraded by Fitch to a rating of C during February 2010. |
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Loan Portfolio Composition | ||||||||||||||||||||||||||||||||||||||||
At December 31, | ||||||||||||||||||||||||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||||||||||||||||||||
Amount | Percent | Amount | Percent | Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||||||||||||||||
Commercial | $ | 186,386 | 14.8 | % | $ | 158,543 | 14.1 | % | $ | 136,780 | 14.2 | % | $ | 105,806 | 11.4 | % | $ | 116,444 | 11.7 | % | ||||||||||||||||||||
Commercial real estate | 308,873 | 24.4 | 262,234 | 23.4 | 245,797 | 25.5 | 243,966 | 26.4 | 264,727 | 26.7 | ||||||||||||||||||||||||||||||
Agricultural | 41,872 | 3.3 | 44,706 | 4.0 | 47,367 | 4.9 | 56,808 | 6.1 | 75,018 | 7.5 | ||||||||||||||||||||||||||||||
Residential real estate | 144,215 | 11.4 | 177,683 | 15.8 | 166,863 | 17.3 | 163,243 | 17.6 | 168,498 | 17.0 | ||||||||||||||||||||||||||||||
Consumer indirect | 352,611 | 27.9 | 255,054 | 22.8 | 134,977 | 14.0 | 106,443 | 11.5 | 85,237 | 8.6 | ||||||||||||||||||||||||||||||
Consumer direct and home equity | 230,049 | 18.2 | 222,859 | 19.9 | 232,389 | 24.1 | 250,216 | 27.0 | 282,397 | 28.5 | ||||||||||||||||||||||||||||||
Total loans | 1,264,006 | 100.0 | % | 1,121,079 | 100.0 | % | 964,173 | 100.0 | % | 926,482 | 100.0 | % | 992,321 | 100.0 | % | |||||||||||||||||||||||||
Allowance for loan losses | 20,741 | 18,749 | 15,521 | 17,048 | 20,231 | |||||||||||||||||||||||||||||||||||
Total loans, net | $ | 1,243,265 | $ | 1,102,330 | $ | 948,652 | $ | 909,434 | $ | 972,090 | ||||||||||||||||||||||||||||||
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Loan Loss Analysis | ||||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Allowance for loan losses, beginning of year | $ | 18,749 | $ | 15,521 | $ | 17,048 | $ | 20,231 | $ | 39,186 | ||||||||||
Charge-offs(1): | ||||||||||||||||||||
Commercial | 2,317 | 675 | 562 | 1,195 | 12,980 | |||||||||||||||
Commercial real estate | 355 | 1,190 | 439 | 501 | 15,397 | |||||||||||||||
Agricultural | 43 | 47 | 56 | 379 | 18,543 | |||||||||||||||
Residential real estate | 225 | 320 | 319 | 278 | 56 | |||||||||||||||
Consumer indirect | 3,637 | 2,011 | 988 | 532 | 775 | |||||||||||||||
Consumer direct and home equity | 1,253 | 1,216 | 1,531 | 1,314 | 1,535 | |||||||||||||||
Total charge-offs | 7,830 | 5,459 | 3,895 | 4,199 | 49,286 | |||||||||||||||
Recoveries: | ||||||||||||||||||||
Commercial | 407 | 664 | 972 | 1,417 | 864 | |||||||||||||||
Commercial real estate | 130 | 280 | 216 | 132 | 280 | |||||||||||||||
Agricultural | 41 | 55 | 168 | 389 | 57 | |||||||||||||||
Residential real estate | 12 | 26 | 50 | 71 | 5 | |||||||||||||||
Consumer indirect | 1,030 | 548 | 235 | 224 | 261 | |||||||||||||||
Consumer direct and home equity | 500 | 563 | 611 | 625 | 332 | |||||||||||||||
Total recoveries | 2,120 | 2,136 | 2,252 | 2,858 | 1,799 | |||||||||||||||
Net charge-offs | 5,710 | 3,323 | 1,643 | 1,341 | 47,487 | |||||||||||||||
Provision (credit) for loan losses | 7,702 | 6,551 | 116 | (1,842 | ) | 28,532 | ||||||||||||||
Allowance for loan losses, end of year | $ | 20,741 | $ | 18,749 | $ | 15,521 | $ | 17,048 | $ | 20,231 | ||||||||||
Net charge-offs to average loans | 0.47 | % | 0.32 | % | 0.18 | % | 0.14 | % | 4.27 | % | ||||||||||
Allowance to end of period loans | 1.64 | % | 1.67 | % | 1.61 | % | 1.84 | % | 2.04 | % | ||||||||||
Allowance to end of period non-performing loans | 239 | % | 229 | % | 192 | % | 108 | % | 112 | % |
(1) | During 2005 the Company transferred $169.0 million in commercial-related loans to held for sale, at an estimated fair value less costs to sell of $132.3 million, resulting in $36.7 million in commercial-related charge-offs. In the second half of 2005, the Company realized a net gain of $9.4 million on the ultimate sale or settlement of commercial-related loans held for sale. |
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Allowance for Loan Losses by Loan Category | ||||||||||||||||||||||||||||||||||||||||
At December 31, | ||||||||||||||||||||||||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||||||||||||||||||||
Percentage | Percentage | Percentage | Percentage | Percentage | ||||||||||||||||||||||||||||||||||||
Loan | of loans by | Loan | of loans by | Loan | of loans by | Loan | of loans by | Loan | of loans by | |||||||||||||||||||||||||||||||
Loss | category to | Loss | category to | Loss | category to | Loss | category to | Loss | category to | |||||||||||||||||||||||||||||||
Allowance | total loans | Allowance | total loans | Allowance | total loans | Allowance | total loans | Allowance | total loans | |||||||||||||||||||||||||||||||
Commercial | $ | 4,060 | 14.8 | % | $ | 2,871 | 14.1 | % | $ | 1,878 | 14.2 | % | $ | 2,443 | 11.4 | % | $ | 4,098 | 11.7 | % | ||||||||||||||||||||
Commercial real estate | 5,991 | 24.4 | 4,052 | 23.4 | 3,751 | 25.5 | 4,458 | 26.4 | 6,564 | 26.7 | ||||||||||||||||||||||||||||||
Agricultural | 994 | 3.3 | 1,012 | 4.0 | 1,516 | 4.9 | 1,887 | 6.1 | 2,187 | 7.5 | ||||||||||||||||||||||||||||||
Residential real estate | 1,251 | 11.4 | 2,516 | 15.8 | 1,763 | 17.3 | 1,748 | 17.6 | 1,252 | 17.0 | ||||||||||||||||||||||||||||||
Consumer indirect | 6,837 | 27.9 | 5,152 | 22.8 | 2,284 | 14.0 | 1,749 | 11.5 | 1,032 | 8.6 | ||||||||||||||||||||||||||||||
Consumer direct and home equity | 1,608 | 18.2 | 3,146 | 19.9 | 2,667 | 24.1 | 2,833 | 27.0 | 2,504 | 28.5 | ||||||||||||||||||||||||||||||
Unallocated(1) | — | — | — | — | 1,662 | — | 1,930 | — | 2,594 | — | ||||||||||||||||||||||||||||||
Total | $ | 20,741 | 100.0 | % | $ | 18,749 | 100.0 | % | $ | 15,521 | 100.0 | % | $ | 17,048 | 100.0 | % | $ | 20,231 | 100.0 | % | ||||||||||||||||||||
(1) | During 2008 management revised estimation techniques related to allocation of the allowance to specific loan segments. The result was the elimination of the unallocated portion of the allowance for loan losses and allocation of the entire balance to specific loan segments. |
Delinquent and Non-performing Assets | ||||||||||||||||||||
At December 31, | ||||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Non-accruing loans: | ||||||||||||||||||||
Commercial | $ | 650 | $ | 510 | $ | 827 | $ | 2,205 | $ | 4,389 | ||||||||||
Commercial real estate | 1,872 | 2,360 | 2,825 | 4,661 | 6,985 | |||||||||||||||
Agricultural | 416 | 310 | 481 | 4,836 | 2,786 | |||||||||||||||
Residential real estate | 2,376 | 3,365 | 2,987 | 3,127 | 2,615 | |||||||||||||||
Consumer indirect | 621 | 445 | 278 | 166 | 63 | |||||||||||||||
Consumer direct and home equity | 887 | 1,199 | 677 | 842 | 923 | |||||||||||||||
Total non-accruing loans | 6,822 | 8,189 | 8,075 | 15,837 | 17,761 | |||||||||||||||
Restructured loans | — | — | — | — | — | |||||||||||||||
Accruing loans contractually past due over 90 days | 1,859 | 7 | 2 | 3 | 276 | |||||||||||||||
Total non-performing loans | 8,681 | 8,196 | 8,077 | 15,840 | 18,037 | |||||||||||||||
Foreclosed assets | 746 | 1,007 | 1,421 | 1,203 | 1,099 | |||||||||||||||
Non-accruing commercial-related loans held for sale | — | — | — | — | 577 | |||||||||||||||
Non-performing investment securities | 1,015 | 49 | — | — | — | |||||||||||||||
Total non-performing assets | $ | 10,442 | $ | 9,252 | $ | 9,498 | $ | 17,043 | $ | 19,713 | ||||||||||
Non-performing loans to total loans | 0.69 | % | 0.73 | % | 0.84 | % | 1.71 | % | 1.82 | % | ||||||||||
Non-performing assets to total assets | 0.51 | % | 0.48 | % | 0.51 | % | 0.89 | % | 0.97 | % |
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At December 31, | ||||||||||||||||||||||||
2009 | 2008 | 2007 | ||||||||||||||||||||||
Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||||
Noninterest-bearing demand | $ | 324,303 | 18.6 | % | $ | 292,586 | 17.9 | % | $ | 286,362 | 18.2 | % | ||||||||||||
Interest-bearing demand | 363,698 | 20.9 | 344,616 | 21.1 | 335,314 | 21.3 | ||||||||||||||||||
Savings and money market | 368,603 | 21.1 | 348,594 | 21.3 | 346,639 | 22.0 | ||||||||||||||||||
Certificates of deposit < $100,000 | 512,969 | 29.5 | 482,863 | 29.6 | 453,140 | 28.7 | ||||||||||||||||||
Certificates of deposit of $100,000 or more | 173,382 | 9.9 | 164,604 | 10.1 | 154,516 | 9.8 | ||||||||||||||||||
$ | 1,742,955 | 100.0 | % | $ | 1,633,263 | 100.0 | % | $ | 1,575,971 | 100.0 | % | |||||||||||||
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At or for the Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Year-end balance | $ | 59,543 | $ | 23,465 | $ | 25,643 | ||||||
Year-end weighted average interest rate | 0.59 | % | 0.48 | % | 2.71 | % | ||||||
Maximum outstanding at any month-end | $ | 85,912 | $ | 56,861 | $ | 44,944 | ||||||
Average balance during the year | $ | 43,092 | $ | 38,028 | $ | 29,048 | ||||||
Average interest rate for the year | 0.63 | % | 1.90 | % | 2.97 | % |
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DECEMBER 31, 2009 AND DECEMBER 31, 2008
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Years ended December 31, | ||||||||||||||||||||||||||||||||||||
2009 | 2008 | 2007 | ||||||||||||||||||||||||||||||||||
Average | Average | Average | Average | Average | Average | |||||||||||||||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||||||||||||
Federal funds sold and other interest-earning deposits | $ | 37,214 | $ | 82 | 0.22 | % | $ | 26,568 | $ | 619 | 2.33 | % | $ | 31,756 | $ | 1,662 | 5.23 | % | ||||||||||||||||||
Investment securities: | ||||||||||||||||||||||||||||||||||||
Taxable | 454,552 | 16,466 | 3.62 | 487,687 | 21,882 | 4.49 | 557,035 | 25,414 | 4.56 | |||||||||||||||||||||||||||
Tax-exempt | 155,054 | 7,920 | 5.11 | 233,864 | 13,065 | 5.59 | 254,083 | 14,343 | 5.65 | |||||||||||||||||||||||||||
Total investment securities | 609,606 | 24,386 | 4.00 | 721,551 | 34,947 | 4.84 | 811,118 | 39,757 | 4.90 | |||||||||||||||||||||||||||
Loans held for sale | 1,899 | 95 | 5.00 | 821 | 51 | 6.23 | 770 | 54 | 6.99 | |||||||||||||||||||||||||||
Loans: | ||||||||||||||||||||||||||||||||||||
Commercial | 184,269 | 8,667 | 4.70 | 147,015 | 9,141 | 6.22 | 117,784 | 9,728 | 8.26 | |||||||||||||||||||||||||||
Commercial real estate | 284,603 | 17,882 | 6.28 | 250,387 | 17,086 | 6.82 | 246,396 | 18,230 | 7.40 | |||||||||||||||||||||||||||
Agricultural | 42,126 | 2,373 | 5.63 | 45,035 | 3,126 | 6.94 | 53,356 | 4,351 | 8.16 | |||||||||||||||||||||||||||
Residential real estate | 159,156 | 9,605 | 6.04 | 171,262 | 10,710 | 6.25 | 165,226 | 10,815 | 6.55 | |||||||||||||||||||||||||||
Consumer indirect | 313,239 | 21,838 | 6.97 | 185,197 | 13,098 | 7.07 | 118,152 | 8,067 | 6.83 | |||||||||||||||||||||||||||
Consumer direct and home equity | 224,720 | 12,246 | 5.45 | 224,343 | 14,462 | 6.45 | 236,910 | 17,315 | 7.31 | |||||||||||||||||||||||||||
Total loans | 1,208,113 | 72,611 | 6.01 | 1,023,239 | 67,623 | 6.61 | 937,824 | 68,506 | 7.30 | |||||||||||||||||||||||||||
Total interest-earning assets | 1,856,832 | 97,174 | 5.23 | 1,772,179 | 103,240 | 5.83 | 1,781,468 | 109,979 | 6.17 | |||||||||||||||||||||||||||
Less: Allowance for loan losses | 20,355 | 16,287 | 16,587 | |||||||||||||||||||||||||||||||||
Other noninterest-earning assets | 197,439 | 149,453 | 142,156 | |||||||||||||||||||||||||||||||||
Total assets | $ | 2,033,916 | $ | 1,905,345 | $ | 1,907,037 | ||||||||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||||||||||||||
Interest-bearing demand | $ | 365,873 | 772 | 0.21 | $ | 347,702 | 3,246 | 0.93 | $ | 338,326 | 5,760 | 1.70 | ||||||||||||||||||||||||
Savings and money market | 383,697 | 1,090 | 0.28 | 369,926 | 3,773 | 1.02 | 346,131 | 5,863 | 1.69 | |||||||||||||||||||||||||||
Certificates of deposit | 685,259 | 17,228 | 2.51 | 617,381 | 22,330 | 3.62 | 672,239 | 31,091 | 4.63 | |||||||||||||||||||||||||||
Total interest-bearing deposits | 1,434,829 | 19,090 | 1.33 | 1,335,009 | 29,349 | 2.20 | 1,356,696 | 42,714 | 3.15 | |||||||||||||||||||||||||||
Short-term borrowings | 43,092 | 270 | 0.63 | 38,028 | 721 | 1.90 | 29,048 | 864 | 2.97 | |||||||||||||||||||||||||||
Long-term borrowings | 46,913 | 2,857 | 6.09 | 53,687 | 3,547 | 6.61 | 51,561 | 3,561 | 6.91 | |||||||||||||||||||||||||||
Total interest-bearing liabilities | 1,524,834 | 22,217 | 1.46 | 1,426,724 | 33,617 | 2.36 | 1,437,305 | 47,139 | 3.28 | |||||||||||||||||||||||||||
Noninterest-bearing deposits | 293,852 | 280,467 | 266,239 | |||||||||||||||||||||||||||||||||
Other liabilities | 20,890 | 15,249 | 17,966 | |||||||||||||||||||||||||||||||||
Shareholders’ equity | 194,340 | 182,905 | 185,527 | |||||||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,033,916 | $ | 1,905,345 | $ | 1,907,037 | ||||||||||||||||||||||||||||||
Net interest income (tax-equivalent) | $ | 74,957 | $ | 69,623 | $ | 62,840 | ||||||||||||||||||||||||||||||
Interest rate spread | 3.77 | % | 3.47 | % | 2.89 | % | ||||||||||||||||||||||||||||||
Net earning assets | $ | 331,998 | $ | 345,455 | $ | 344,163 | ||||||||||||||||||||||||||||||
Net interest margin (tax-equivalent) | 4.04 | % | 3.93 | % | 3.53 | % | ||||||||||||||||||||||||||||||
Ratio of average interest-earning assets to average interest-bearing liabilities | 121.77 | % | 124.21 | % | 123.95 | % | ||||||||||||||||||||||||||||||
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December 31, 2009 vs. 2008 | December 31, 2008 vs. 2007 | |||||||||||||||||||||||
Increase/(Decrease) | Increase/(Decrease) | |||||||||||||||||||||||
Due to Change in | Total Net | Due to Change in | Total Net | |||||||||||||||||||||
Average | Average | Increase | Average | Average | Increase | |||||||||||||||||||
Volume | Rate | (Decrease) | Volume | Rate | (Decrease) | |||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
Federal funds sold and other interest-earning deposits | $ | 179 | $ | (716 | ) | $ | (537 | ) | $ | (238 | ) | $ | (805 | ) | $ | (1,043 | ) | |||||||
Investment securities: | ||||||||||||||||||||||||
Taxable | (1,412 | ) | (4,004 | ) | (5,416 | ) | (3,118 | ) | (414 | ) | (3,532 | ) | ||||||||||||
Tax-exempt | (4,102 | ) | (1,043 | ) | (5,145 | ) | (1,131 | ) | (147 | ) | (1,278 | ) | ||||||||||||
Total investment securities | (4,977 | ) | (5,584 | ) | (10,561 | ) | (4,343 | ) | (467 | ) | (4,810 | ) | ||||||||||||
Loans held for sale | 56 | (12 | ) | 44 | 4 | (7 | ) | (3 | ) | |||||||||||||||
Loans: | ||||||||||||||||||||||||
Commercial | 2,028 | (2,502 | ) | (474 | ) | 2,115 | (2,702 | ) | (587 | ) | ||||||||||||||
Commercial real estate | 2,218 | (1,422 | ) | 796 | 291 | (1,435 | ) | (1,144 | ) | |||||||||||||||
Agricultural | (192 | ) | (561 | ) | (753 | ) | (627 | ) | (598 | ) | (1,225 | ) | ||||||||||||
Residential real estate | (740 | ) | (365 | ) | (1,105 | ) | 387 | (492 | ) | (105 | ) | |||||||||||||
Consumer indirect | 8,930 | (190 | ) | 8,740 | 4,732 | 299 | 5,031 | |||||||||||||||||
Consumer direct and home equity | 24 | (2,240 | ) | (2,216 | ) | (885 | ) | (1,968 | ) | (2,853 | ) | |||||||||||||
Total loans | 11,481 | (6,493 | ) | 4,988 | 5,949 | (6,832 | ) | (883 | ) | |||||||||||||||
Total interest-earning assets | 4,772 | (10,838 | ) | (6,066 | ) | (570 | ) | (6,169 | ) | (6,739 | ) | |||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||
Interest-bearing demand | 162 | (2,636 | ) | (2,474 | ) | 156 | (2,670 | ) | (2,514 | ) | ||||||||||||||
Savings and money market | 135 | (2,818 | ) | (2,683 | ) | 379 | (2,469 | ) | (2,090 | ) | ||||||||||||||
Certificates of deposit | 2,257 | (7,359 | ) | (5,102 | ) | (2,386 | ) | (6,375 | ) | (8,761 | ) | |||||||||||||
Total interest-bearing deposits | 2,056 | (12,315 | ) | (10,259 | ) | (673 | ) | (12,692 | ) | (13,365 | ) | |||||||||||||
Short-term borrowings | 85 | (536 | ) | (451 | ) | 222 | (365 | ) | (143 | ) | ||||||||||||||
Long-term borrowings | (426 | ) | (264 | ) | (690 | ) | 144 | (158 | ) | (14 | ) | |||||||||||||
Total interest-bearing liabilities | 2,177 | (13,577 | ) | (11,400 | ) | (345 | ) | (13,177 | ) | (13,522 | ) | |||||||||||||
Change in net interest income | $ | 2,595 | $ | 2,739 | $ | 5,334 | $ | (225 | ) | $ | 7,008 | $ | 6,783 | |||||||||||
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2009 | 2008 | 2007 | ||||||||||
Service charges on deposits | $ | 10,065 | $ | 10,497 | $ | 10,932 | ||||||
ATM and debit card | 3,610 | 3,313 | 2,883 | |||||||||
Loan servicing | 1,308 | 664 | 928 | |||||||||
Company owned life insurance | 1,096 | 563 | 1,255 | |||||||||
Broker-dealer fees and commissions | 1,022 | 1,458 | 1,396 | |||||||||
Net gain on sale of loans held for sale | 699 | 339 | 779 | |||||||||
Net gain on disposal of investment securities | 3,429 | 288 | 207 | |||||||||
Impairment charges on investment securities | (4,666 | ) | (68,215 | ) | — | |||||||
Net gain on sale of other assets | 180 | 305 | 102 | |||||||||
Other | 2,052 | 2,010 | 2,198 | |||||||||
Total noninterest income (loss) | $ | 18,795 | $ | (48,778 | ) | $ | 20,680 | |||||
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2009 | 2008 | 2007 | ||||||||||
Salaries and employee benefits | $ | 33,634 | $ | 31,437 | $ | 33,175 | ||||||
Occupancy and equipment | 11,062 | 10,502 | 9,903 | |||||||||
FDIC assessments | 3,651 | 674 | 289 | |||||||||
Professional services | 2,524 | 2,141 | 2,080 | |||||||||
Computer and data processing | 2,340 | 2,433 | 2,126 | |||||||||
Supplies and postage | 1,846 | 1,800 | 1,662 | |||||||||
Advertising and promotions | 949 | 1,453 | 1,402 | |||||||||
Other | 6,771 | 7,021 | 6,791 | |||||||||
Total noninterest expense | $ | 62,777 | $ | 57,461 | $ | 57,428 | ||||||
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DECEMBER 31, 2008 AND DECEMBER 31, 2007
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At December 31, 2009 | ||||||||||||||||||||
Within 1 | Over 1 to 3 | Over 3 to 5 | Over 5 | |||||||||||||||||
year | years | Years | years | Total | ||||||||||||||||
Certificates of deposit (1) | $ | 526,549 | $ | 140,489 | $ | 18,968 | $ | 345 | $ | 686,351 | ||||||||||
Long-term borrowings | 20,080 | 10,065 | — | 16,702 | 46,847 | |||||||||||||||
Operating leases | 1,135 | 2,098 | 1,757 | 4,386 | 9,376 | |||||||||||||||
Supplemental executive retirement plans | 92 | 282 | 282 | 754 | 1,410 | |||||||||||||||
Limited partnership investments(2) | 772 | 1,543 | 772 | — | 3,087 | |||||||||||||||
Commitments to extend credit(3) | 316,688 | — | — | — | 316,688 | |||||||||||||||
Standby letters of credit(3) | 6,887 | — | — | — | 6,887 |
(1) | Includes the maturity of certificates of deposit amounting to $100 thousand or more as follows: $75.3 million in three months or less; $29.5 million between three months and six months; $51.1 million between six months and one year; and $17.5 million over one year. | |
(2) | The Company has committed to capital investments in several limited partnerships of up to $5.6 million. As of December 31, 2009, the Company has contributed $2.5 million to the partnerships, including $383 thousand during 2009. | |
(3) | The Company does not expect all of the commitments to extend credit and standby letters of credit to be funded. Thus, the total commitment amounts do not necessarily represent the Company’s future cash requirements. |
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Due after five | ||||||||||||||||||||||||||||||||||||||||
Due in one year | Due from one to | years through | Due after ten | |||||||||||||||||||||||||||||||||||||
or less | five years | ten years | years | Total | ||||||||||||||||||||||||||||||||||||
Cost | Yield | Cost | Yield | Cost | Yield | Cost | Yield | Cost | Yield | |||||||||||||||||||||||||||||||
Available for sale debt securities: | ||||||||||||||||||||||||||||||||||||||||
U.S. Government agencies and government-sponsored enterprises | $ | — | — | % | $ | 84,017 | 2.02 | % | $ | 30,935 | 1.62 | % | $ | 19,612 | 0.85 | % | $ | 134,564 | 1.76 | % | ||||||||||||||||||||
State and political subdivisions | 23,537 | 3.51 | 49,856 | 3.61 | 7,419 | 3.36 | — | — | 80,812 | 3.56 | ||||||||||||||||||||||||||||||
Mortgage-backed securities | 29,004 | 3.79 | 36,060 | 4.11 | 13,799 | 3.79 | 282,268 | 3.67 | 361,131 | 3.73 | ||||||||||||||||||||||||||||||
Asset-backed securities | — | — | — | — | — | — | 1,295 | 1.86 | 1,295 | 1.86 | ||||||||||||||||||||||||||||||
52,541 | 3.66 | 169,933 | 2.93 | 52,153 | 2.44 | 303,175 | 3.66 | 577,802 | 3.33 | |||||||||||||||||||||||||||||||
Held to maturity debt securities: | ||||||||||||||||||||||||||||||||||||||||
State and political subdivisions | 30,238 | 2.56 | 7,361 | 4.09 | 1,542 | 4.85 | 432 | 5.42 | 39,573 | 2.97 | ||||||||||||||||||||||||||||||
$ | 82,779 | 3.26 | % | $ | 177,294 | 2.98 | % | $ | 53,695 | 2.51 | % | $ | 303,607 | 3.66 | % | $ | 617,375 | 3.31 | % | |||||||||||||||||||||
Due in less | Due from one | Due after five | ||||||||||||||
than one year | to five years | years | Total | |||||||||||||
Commercial | $ | 135,251 | $ | 48,741 | $ | 2,394 | $ | 186,386 | ||||||||
Commercial real estate | 82,474 | 150,377 | 76,022 | 308,873 | ||||||||||||
Agricultural | 21,002 | 15,826 | 5,044 | 41,872 | ||||||||||||
Residential real estate | 32,201 | 68,027 | 43,987 | 144,215 | ||||||||||||
Consumer indirect | 123,829 | 220,453 | 8,329 | 352,611 | ||||||||||||
Consumer direct and home equity | 63,931 | 119,031 | 47,087 | 230,049 | ||||||||||||
Total loans | $ | 458,688 | $ | 622,455 | $ | 182,863 | $ | 1,264,006 | ||||||||
Loans maturing after one year: | ||||||||||||||||
With a predetermined interest rate | $ | 399,133 | $ | 70,498 | $ | 469,631 | ||||||||||
With a floating or adjustable rate | 223,322 | 112,365 | 335,687 | |||||||||||||
Total loans maturing after one year | $ | 622,455 | $ | 182,863 | $ | 805,318 | ||||||||||
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2009 | 2008 | |||||||
Total shareholders’ equity | $ | 198,294 | $ | 190,300 | ||||
Less: Unrealized gain (loss) on securities available for sale, net of tax | 1,655 | 3,463 | ||||||
Unrecognized net periodic pension & postretirement benefits (costs), net of tax | (5,357 | ) | (7,476 | ) | ||||
Disallowed goodwill and other intangible assets | 37,369 | 37,650 | ||||||
Disallowed deferred tax assets | 17,214 | 22,437 | ||||||
Plus: Qualifying trust preferred securities | 16,200 | 16,200 | ||||||
Tier 1 capital | $ | 163,613 | $ | 150,426 | ||||
Adjusted average total assets (for leverage capital purposes) | $ | 2,054,699 | $ | 1,869,111 | ||||
Tier 1 leverage ratio (Tier 1 capital to adjusted average total assets) | 7.96 | % | 8.05 | % | ||||
Total Tier 1 capital | $ | 163,613 | $ | 150,426 | ||||
Plus: Qualifying allowance for loan losses | 17,153 | 15,936 | ||||||
Total risk-based capital | $ | 180,766 | $ | 166,362 | ||||
Net risk-weighted assets | $ | 1,368,653 | $ | 1,272,028 | ||||
Tier 1 capital ratio (Tier 1 capital to net risk-weighted assets) | 11.95 | % | 11.83 | % | ||||
Total risk-based capital ratio (Total risk-based capital to net risk-weighted assets) | 13.21 | % | 13.08 | % |
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Net Interest Income | Economic Value of Equity | |||||||||||||||||||||||
Changes ininterest rate | Amount | Change | Amount | Change | ||||||||||||||||||||
+ 300 basis points | $ | 77,667 | $ | 1,887 | 2.49 | % | $ | 382,072 | $ | (17,550 | ) | (4.39 | )% | |||||||||||
+ 200 basis points | 77,038 | 1,258 | 1.66 | 389,616 | (10,006 | ) | (2.50 | ) | ||||||||||||||||
+ 100 basis points | 76,405 | 624 | 0.82 | 397,666 | (1,956 | ) | (0.49 | ) | ||||||||||||||||
- 100 basis points | 72,533 | (3,248 | ) | (4.29 | ) | 390,784 | (8,838 | ) | (2.21 | ) |
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At December 31, 2009 | ||||||||||||||||||||
Over Three | Over | |||||||||||||||||||
Three | Months | One Year | ||||||||||||||||||
Months | Through | Through | Over | |||||||||||||||||
or Less | One Year | Five Years | Five Years | Total | ||||||||||||||||
INTEREST-EARNING ASSETS: | ||||||||||||||||||||
Federal funds sold and interest-earning deposits in other banks | $ | 85 | $ | — | $ | — | $ | — | $ | 85 | ||||||||||
Investment securities | 114,564 | 153,068 | 241,123 | 108,620 | 617,375 | |||||||||||||||
Loans | 425,288 | 220,328 | 533,766 | 85,045 | 1,264,427 | |||||||||||||||
Total interest-earning assets | $ | 539,937 | $ | 373,396 | $ | 774,889 | $ | 193,665 | 1,881,887 | |||||||||||
Cash and due from banks | 42,874 | |||||||||||||||||||
Other assets(1) | 137,628 | |||||||||||||||||||
Total assets | $ | 2,062,389 | ||||||||||||||||||
INTEREST-BEARING LIABILITIES: | ||||||||||||||||||||
Interest-bearing demand, savings and money market | $ | 732,301 | $ | — | $ | — | $ | — | $ | 732,301 | ||||||||||
Certificates of deposit | 192,100 | 334,449 | 159,457 | 345 | 686,351 | |||||||||||||||
Borrowings | 59,543 | 20,080 | 10,065 | 16,702 | 106,390 | |||||||||||||||
Total interest-bearing liabilities | $ | 983,944 | $ | 354,529 | $ | 169,522 | $ | 17,047 | 1,525,042 | |||||||||||
Noninterest-bearing deposits | 324,303 | |||||||||||||||||||
Other liabilities | 14,750 | |||||||||||||||||||
Total liabilities | 1,864,095 | |||||||||||||||||||
Shareholders’ equity | 198,294 | |||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,062,389 | ||||||||||||||||||
Interest sensitivity gap | $ | (444,007 | ) | $ | 18,867 | $ | 605,367 | $ | 176,618 | $ | 356,845 | |||||||||
Cumulative gap | $ | (444,007 | ) | $ | (425,140 | ) | $ | 180,227 | $ | 356,845 | ||||||||||
Cumulative gap ratio(2) | 54.9 | % | 68.2 | % | 112.0 | % | 123.4 | % | ||||||||||||
Cumulative gap as a percentage of total assets | (21.5 | )% | (20.6 | )% | 8.7 | % | 17.3 | % |
(1) | Includes net unrealized gain on securities available for sale and allowance for loan losses. | |
(2) | Cumulative total interest-earning assets divided by cumulative total interest-bearing liabilities. |
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Index to Consolidated Financial Statements
Page | ||||
60 | ||||
61 | ||||
62 | ||||
63 | ||||
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/s/ Peter G. Humphrey | /s/ Karl F. Krebs | |||||
March 12, 2010 | March 12, 2010 |
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Financial Institutions, Inc.:
March 12, 2010
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Financial Institutions, Inc.:
March 12, 2010
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December 31, | ||||||||
(Dollars in thousands, except share and per share data) | 2009 | 2008 | ||||||
ASSETS | ||||||||
Cash and cash equivalents: | ||||||||
Cash and due from banks | $ | 42,874 | $ | 34,528 | ||||
Federal funds sold and interest-bearing deposits in other banks | 85 | 20,659 | ||||||
Total cash and cash equivalents | 42,959 | 55,187 | ||||||
Securities available for sale, at fair value | 580,501 | 547,506 | ||||||
Securities held to maturity, at amortized cost (fair value of $40,629 and $59,147, respectively) | 39,573 | 58,532 | ||||||
Loans held for sale | 421 | 1,013 | ||||||
Loans | 1,264,006 | 1,121,079 | ||||||
Less: Allowance for loan losses | 20,741 | 18,749 | ||||||
Loans, net | 1,243,265 | 1,102,330 | ||||||
Company owned life insurance | 24,867 | 23,692 | ||||||
Premises and equipment, net | 34,783 | 36,712 | ||||||
Goodwill | 37,369 | 37,369 | ||||||
Other assets | 58,651 | 54,578 | ||||||
Total assets | $ | 2,062,389 | $ | 1,916,919 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Deposits: | ||||||||
Noninterest-bearing demand | $ | 324,303 | $ | 292,586 | ||||
Interest-bearing demand | 363,698 | 344,616 | ||||||
Savings and money market | 368,603 | 348,594 | ||||||
Certificates of deposit | 686,351 | 647,467 | ||||||
Total deposits | 1,742,955 | 1,633,263 | ||||||
Short-term borrowings | 59,543 | 23,465 | ||||||
Long-term borrowings | 46,847 | 47,355 | ||||||
Other liabilities | 14,750 | 22,536 | ||||||
Total liabilities | 1,864,095 | 1,726,619 | ||||||
Commitments and contingencies (Note 9) | ||||||||
Shareholders’ equity: | ||||||||
Series A 3% Preferred Stock, $100 par value; 1,533 shares authorized and issued | 153 | 153 | ||||||
Series A Preferred Stock, $100 par value; 7,503 shares authorized and issued; aggregate liquidation preference $37,515; net of $1,672 and $2,016 discount, respectively | 35,843 | 35,499 | ||||||
Series B-1 8.48% Preferred Stock, $100 par value, 200,000 shares authorized, 174,223 shares issued | 17,422 | 17,422 | ||||||
Total preferred equity | 53,418 | 53,074 | ||||||
Common stock, $0.01 par value, 50,000,000 shares authorized, 11,348,122 shares issued | 113 | 113 | ||||||
Additional paid-in capital | 26,940 | 26,397 | ||||||
Retained earnings | 131,371 | 124,952 | ||||||
Accumulated other comprehensive loss | (3,702 | ) | (4,013 | ) | ||||
Treasury stock, at cost — 527,854 and 550,103 shares, respectively | (9,846 | ) | (10,223 | ) | ||||
Total shareholders’ equity | 198,294 | 190,300 | ||||||
Total liabilities and shareholders’ equity | $ | 2,062,389 | $ | 1,916,919 | ||||
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Years ended December 31, | ||||||||||||
(Dollars in thousands, except per share amounts) | 2009 | 2008 | 2007 | |||||||||
Interest income: | ||||||||||||
Interest and fees on loans | $ | 72,706 | $ | 67,674 | $ | 68,560 | ||||||
Interest and dividends on investment securities | 21,694 | 30,655 | 34,990 | |||||||||
Other interest income | 82 | 619 | 1,662 | |||||||||
Total interest income | 94,482 | 98,948 | 105,212 | |||||||||
Interest expense: | ||||||||||||
Deposits | 19,090 | 29,349 | 42,714 | |||||||||
Short-term borrowings | 270 | 721 | 864 | |||||||||
Long-term borrowings | 2,857 | 3,547 | 3,561 | |||||||||
Total interest expense | 22,217 | 33,617 | 47,139 | |||||||||
Net interest income | 72,265 | 65,331 | 58,073 | |||||||||
Provision for loan losses | 7,702 | 6,551 | 116 | |||||||||
Net interest income after provision for loan losses | 64,563 | 58,780 | 57,957 | |||||||||
Noninterest income (loss): | ||||||||||||
Service charges on deposits | 10,065 | 10,497 | 10,932 | |||||||||
ATM and debit card | 3,610 | 3,313 | 2,883 | |||||||||
Loan servicing | 1,308 | 664 | 928 | |||||||||
Company owned life insurance | 1,096 | 563 | 1,255 | |||||||||
Broker-dealer fees and commissions | 1,022 | 1,458 | 1,396 | |||||||||
Net gain on sale of loans held for sale | 699 | 339 | 779 | |||||||||
Net gain on disposal of investment securities | 3,429 | 288 | 207 | |||||||||
Impairment charges on investment securities | (4,666 | ) | (68,215 | ) | — | |||||||
Net gain on sale and disposal of other assets | 180 | 305 | 102 | |||||||||
Other | 2,052 | 2,010 | 2,198 | |||||||||
Total noninterest income (loss) | 18,795 | (48,778 | ) | 20,680 | ||||||||
Noninterest expense: | ||||||||||||
Salaries and employee benefits | 33,634 | 31,437 | 33,175 | |||||||||
Occupancy and equipment | 11,062 | 10,502 | 9,903 | |||||||||
FDIC assessments | 3,651 | 674 | 289 | |||||||||
Professional services | 2,524 | 2,141 | 2,080 | |||||||||
Computer and data processing | 2,340 | 2,433 | 2,126 | |||||||||
Supplies and postage | 1,846 | 1,800 | 1,662 | |||||||||
Advertising and promotions | 949 | 1,453 | 1,402 | |||||||||
Other | 6,771 | 7,021 | 6,791 | |||||||||
Total noninterest expense | 62,777 | 57,461 | 57,428 | |||||||||
Income (loss) before income taxes | 20,581 | (47,459 | ) | 21,209 | ||||||||
Income tax expense (benefit) | 6,140 | (21,301 | ) | 4,800 | ||||||||
Net income (loss) | $ | 14,441 | $ | (26,158 | ) | $ | 16,409 | |||||
Preferred stock dividends, net of accretion | 3,697 | 1,538 | 1,483 | |||||||||
Net income (loss) allocated to common shareholders | $ | 10,744 | $ | (27,696 | ) | $ | 14,926 | |||||
Earnings (loss) per common share (Note 15): | ||||||||||||
Basic | $ | 0.99 | $ | (2.54 | ) | $ | 1.34 | |||||
Diluted | $ | 0.99 | $ | (2.54 | ) | $ | 1.33 |
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Accumulated | ||||||||||||||||||||||||||||
Additional | Other | Total | ||||||||||||||||||||||||||
(Dollars in thousands, | Preferred | Common | Paid-in | Retained | Comprehensive | Treasury | Shareholders’ | |||||||||||||||||||||
except per share data) | Equity | Stock | Capital | Earnings | Income (Loss) | Stock | Equity | |||||||||||||||||||||
Balance at January 1, 2007 | $ | 17,623 | $ | 113 | $ | 24,222 | $ | 148,947 | $ | (8,404 | ) | $ | (113 | ) | $ | 182,388 | ||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||
Net income | — | — | — | 16,409 | — | — | 16,409 | |||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | 9,071 | — | 9,071 | |||||||||||||||||||||
Total comprehensive income | 25,480 | |||||||||||||||||||||||||||
Repurchase of common shares | — | — | — | — | — | (7,203 | ) | (7,203 | ) | |||||||||||||||||||
Repurchase of Series B-1 8.48% Preferred Stock | (42 | ) | — | — | — | — | — | (42 | ) | |||||||||||||||||||
Share-based compensation plans: | ||||||||||||||||||||||||||||
Share-based compensation | — | — | 955 | — | — | — | 955 | |||||||||||||||||||||
Stock options exercised | — | — | (53 | ) | — | — | 304 | 251 | ||||||||||||||||||||
Restricted stock awards issued | — | — | (344 | ) | — | — | 344 | — | ||||||||||||||||||||
Directors’ retainer | — | — | (2 | ) | — | — | 107 | 105 | ||||||||||||||||||||
Cash dividends declared: | ||||||||||||||||||||||||||||
Series A 3% Preferred-$3.00 per share | — | — | — | (5 | ) | — | — | (5 | ) | |||||||||||||||||||
Series B-1 8.48% Preferred-$8.48 per share | — | — | — | (1,478 | ) | — | — | (1,478 | ) | |||||||||||||||||||
Common-$0.46 per share | — | — | — | (5,129 | ) | — | — | (5,129 | ) | |||||||||||||||||||
Balance at December 31, 2007 | $ | 17,581 | $ | 113 | $ | 24,778 | $ | 158,744 | $ | 667 | $ | (6,561 | ) | $ | 195,322 | |||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||
Net loss | — | — | — | (26,158 | ) | — | — | (26,158 | ) | |||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | (4,680 | ) | — | (4,680 | ) | |||||||||||||||||||
Total comprehensive loss | (30,838 | ) | ||||||||||||||||||||||||||
Cumulative effect of adoption of new accounting pronouncements | — | — | — | (241 | ) | — | — | (241 | ) | |||||||||||||||||||
Repurchase of common shares | — | — | — | — | — | (4,818 | ) | (4,818 | ) | |||||||||||||||||||
Repurchase of Series A 3% preferred stock | (6 | ) | — | 3 | — | — | — | (3 | ) | |||||||||||||||||||
Warrant issued in connection with Series A Preferred Stock | — | — | 2,025 | — | — | — | 2,025 | |||||||||||||||||||||
Issue shares of Series A Preferred Stock | 37,515 | — | — | — | — | — | 37,515 | |||||||||||||||||||||
Discount on Series A Preferred Stock | (2,025 | ) | — | — | — | — | — | (2,025 | ) | |||||||||||||||||||
Share-based compensation plans: | ||||||||||||||||||||||||||||
Share-based compensation | — | — | 603 | 30 | — | — | 633 | |||||||||||||||||||||
Stock options exercised | — | — | (12 | ) | — | — | 44 | 32 | ||||||||||||||||||||
Restricted stock awards issued | — | — | (998 | ) | — | — | 998 | — | ||||||||||||||||||||
Directors’ retainer | — | — | (2 | ) | — | — | 114 | 112 | ||||||||||||||||||||
Accrued undeclared cumulative dividend on Series A Preferred Stock, net of amortization | 9 | — | — | (56 | ) | — | — | (47 | ) | |||||||||||||||||||
Cash dividends declared: | ||||||||||||||||||||||||||||
Series A 3% Preferred-$3.00 per share | — | — | — | (5 | ) | — | — | (5 | ) | |||||||||||||||||||
Series B-1 8.48% Preferred-$8.48 per share | — | — | — | (1,477 | ) | — | — | (1,477 | ) | |||||||||||||||||||
Common-$0.54 per share | — | — | — | (5,885 | ) | — | — | (5,885 | ) | |||||||||||||||||||
Balance at December 31, 2008 | $ | 53,074 | $ | 113 | $ | 26,397 | $ | 124,952 | $ | (4,013 | ) | $ | (10,223 | ) | $ | 190,300 | ||||||||||||
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Consolidated Statements of Changes in Shareholders’ Equity (Continued)
Years ended December 31, 2009, 2008 and 2007
Accumulated | ||||||||||||||||||||||||||||
Additional | Other | Total | ||||||||||||||||||||||||||
(Dollars in thousands, | Preferred | Common | Paid-in | Retained | Comprehensive | Treasury | Shareholders’ | |||||||||||||||||||||
except per share data) | Equity | Stock | Capital | Earnings | Income (Loss) | Stock | Equity | |||||||||||||||||||||
Balance at December 31, 2008 | $ | 53,074 | $ | 113 | $ | 26,397 | $ | 124,952 | $ | (4,013 | ) | $ | (10,223 | ) | $ | 190,300 | ||||||||||||
Balance carried forward | ||||||||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||
Net income | — | — | — | 14,441 | — | — | 14,441 | |||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | 311 | — | 311 | |||||||||||||||||||||
Total comprehensive income | 14,752 | |||||||||||||||||||||||||||
Issuance costs of Series A Preferred Stock | — | — | (68 | ) | — | — | — | (68 | ) | |||||||||||||||||||
Share-based compensation plans: | ||||||||||||||||||||||||||||
Share-based compensation | — | — | 852 | 2 | — | — | 854 | |||||||||||||||||||||
Stock options exercised | — | — | (4 | ) | — | — | 19 | 15 | ||||||||||||||||||||
Restricted stock awards issued, net | — | — | (207 | ) | — | — | 207 | — | ||||||||||||||||||||
Directors’ retainer | (30 | ) | 151 | 121 | ||||||||||||||||||||||||
Accrued undeclared cumulative dividend on Series A Preferred Stock, net of amortization | 344 | — | — | (537 | ) | — | — | (193 | ) | |||||||||||||||||||
Cash dividends declared: | ||||||||||||||||||||||||||||
Series A 3% Preferred-$3.00 per share | — | — | — | (5 | ) | — | — | (5 | ) | |||||||||||||||||||
Series A Preferred-$223.61 per share | — | — | — | (1,678 | ) | — | — | (1,678 | ) | |||||||||||||||||||
Series B-1 8.48% Preferred-$8.48 per share | — | — | — | (1,477 | ) | — | — | (1,477 | ) | |||||||||||||||||||
Common-$0.40 per share | — | — | — | (4,327 | ) | — | — | (4,327 | ) | |||||||||||||||||||
Balance at December 31, 2009 | $ | 53,418 | $ | 113 | $ | 26,940 | $ | 131,371 | $ | (3,702 | ) | $ | (9,846 | ) | $ | 198,294 | ||||||||||||
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Years ended December 31, | ||||||||||||
(Dollars in thousands) | 2009 | 2008 | 2007 | |||||||||
Cash flows from operating activities: | ||||||||||||
Net income (loss) | $ | 14,441 | $ | (26,158 | ) | $ | 16,409 | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 4,067 | 3,959 | 3,991 | |||||||||
Net amortization (accretion) of premiums and discounts on securities | 2,587 | 390 | (185 | ) | ||||||||
Provision for loan losses | 7,702 | 6,551 | 116 | |||||||||
Share-based compensation | 854 | 633 | 955 | |||||||||
Deferred income tax expense (benefit) | 7,470 | (23,848 | ) | 715 | ||||||||
Proceeds from sale of loans held for sale | 90,290 | 28,685 | 48,048 | |||||||||
Originations of loans held for sale | (88,999 | ) | (28,453 | ) | (47,183 | ) | ||||||
Increase in company owned life insurance | (1,096 | ) | (563 | ) | (111 | ) | ||||||
Net gain on sale of loans held for sale | (699 | ) | (339 | ) | (779 | ) | ||||||
Net gain on disposal of investment securities | (3,429 | ) | (288 | ) | (207 | ) | ||||||
Impairment charge on investment securities | 4,666 | 68,215 | — | |||||||||
Net gain on sale and disposal of other assets | (180 | ) | (305 | ) | (102 | ) | ||||||
(Increase) decrease in other assets | (8,773 | ) | (1,322 | ) | 3,510 | |||||||
Decrease in other liabilities | (6,633 | ) | (5,866 | ) | (2,406 | ) | ||||||
Net cash provided by operating activities | 22,268 | 21,291 | 22,771 | |||||||||
Cash flows from investing activities: | ||||||||||||
Purchases of investment securities: | ||||||||||||
Available for sale | (602,259 | ) | (310,191 | ) | (307,049 | ) | ||||||
Held to maturity | (29,280 | ) | (54,925 | ) | (54,926 | ) | ||||||
Proceeds from principal payments, maturities and calls on investment securities: | ||||||||||||
Available for sale | 353,545 | 337,704 | 308,323 | |||||||||
Held to maturity | 46,891 | 57,325 | 36,169 | |||||||||
Proceeds from sale of securities available for sale | 224,928 | 58,368 | 49,350 | |||||||||
Net loan originations | (165,716 | ) | (161,414 | ) | (41,778 | ) | ||||||
Purchases of company owned life insurance | (79 | ) | (20,112 | ) | (58 | ) | ||||||
Proceeds from sales of other assets | 1,709 | 1,783 | 1,307 | |||||||||
Purchases of premises and equipment | (1,959 | ) | (6,333 | ) | (3,407 | ) | ||||||
Net cash used in investing activities | (172,220 | ) | (97,795 | ) | (12,069 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Net increase (decrease) in deposits | 109,692 | 57,292 | (41,724 | ) | ||||||||
Net increase (decrease) in short-term borrowings | 36,078 | (2,178 | ) | (6,668 | ) | |||||||
Proceeds from long-term borrowings | — | 30,000 | — | |||||||||
Repayments of long-term borrowings | (508 | ) | (25,212 | ) | (12,321 | ) | ||||||
Purchases of preferred and common shares | — | (4,821 | ) | (7,245 | ) | |||||||
Proceeds from issuance of preferred and common shares, net of issuance costs | (68 | ) | 35,602 | 105 | ||||||||
Proceeds from issuance of common stock warrant | — | 2,025 | — | |||||||||
Proceeds from stock options exercised | 15 | 32 | 251 | |||||||||
Cash dividends paid to preferred shareholders | (3,160 | ) | (1,482 | ) | (1,483 | ) | ||||||
Cash dividends paid to common shareholders | (4,325 | ) | (6,240 | ) | (4,716 | ) | ||||||
Net cash provided by (used in) financing activities | 137,724 | 85,018 | (73,801 | ) | ||||||||
Net (decrease) increase in cash and cash equivalents | (12,228 | ) | 8,514 | (63,099 | ) | |||||||
Cash and cash equivalents, beginning of period | 55,187 | 46,673 | 109,772 | |||||||||
Cash and cash equivalents, end of period | $ | 42,959 | $ | 55,187 | $ | 46,673 | ||||||
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2009 | 2008 | 2007 | ||||||||||
Cash paid during the year for: | ||||||||||||
Interest expense | $ | 21,682 | $ | 37,160 | $ | 49,687 | ||||||
Income taxes, net of income tax refunds | (1,312 | ) | 3,797 | 4,031 | ||||||||
Non-cash activity: | ||||||||||||
Real estate and other assets acquired in settlement of loans | $ | 1,096 | $ | 1,185 | $ | 2,443 | ||||||
Dividends declared and unpaid | 1,692 | 1,497 | 1,805 | |||||||||
(Decrease) increase in net unsettled security purchases | (1,348 | ) | 1,453 | 336 | ||||||||
Loans securitized and sold | 15,983 | — | — |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
December 31, 2009 | ||||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
Securities available for sale: | ||||||||||||||||
U.S. Government agencies and government sponsored enterprises | $ | 134,564 | $ | 86 | $ | 545 | $ | 134,105 | ||||||||
State and political subdivisions | 80,812 | 2,850 | 3 | 83,659 | ||||||||||||
Mortgage-backed securities: | ||||||||||||||||
Federal National Mortgage Association | 75,108 | 629 | 259 | 75,478 | ||||||||||||
Federal Home Loan Mortgage Corporation | 37,321 | 413 | 56 | 37,678 | ||||||||||||
Government National Mortgage Association | 110,576 | 97 | 342 | 110,331 | ||||||||||||
Collateralized mortgage obligations: | ||||||||||||||||
Federal National Mortgage Association | 16,274 | 250 | 94 | 16,430 | ||||||||||||
Federal Home Loan Mortgage Corporation | 20,879 | 504 | 14 | 21,369 | ||||||||||||
Government National Mortgage Association | 95,886 | 56 | 873 | 95,069 | ||||||||||||
Privately issued | 5,087 | 403 | 330 | 5,160 | ||||||||||||
Total collateralized mortgage obligations | 138,126 | 1,213 | 1,311 | 138,028 | ||||||||||||
Total mortgage-backed securities | 361,131 | 2,352 | 1,968 | 361,515 | ||||||||||||
Asset-backed securities | 1,295 | 171 | 244 | 1,222 | ||||||||||||
Total available for sale securities | $ | 577,802 | $ | 5,459 | $ | 2,760 | $ | 580,501 | ||||||||
Securities held to maturity: | ||||||||||||||||
State and political subdivisions | $ | 39,573 | $ | 1,056 | $ | — | $ | 40,629 | ||||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
December 31, 2008 | ||||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
Securities available for sale: | ||||||||||||||||
U.S. Government agencies and government sponsored enterprises | $ | 67,871 | $ | 609 | $ | 307 | $ | 68,173 | ||||||||
State and political subdivisions | 129,572 | 2,181 | 42 | 131,711 | ||||||||||||
Mortgage-backed securities: | ||||||||||||||||
Federal National Mortgage Association | 136,348 | 3,725 | 86 | 139,987 | ||||||||||||
Federal Home Loan Mortgage Corporation | 94,960 | 2,649 | 14 | 97,595 | ||||||||||||
Government National Mortgage Association | 1,926 | 17 | 25 | 1,918 | ||||||||||||
Collateralized mortgage obligations: | ||||||||||||||||
Federal National Mortgage Association | 17,856 | 74 | 642 | 17,288 | ||||||||||||
Federal Home Loan Mortgage Corporation | 44,838 | 334 | 214 | 44,958 | ||||||||||||
Government National Mortgage Association | 1,350 | 9 | — | 1,359 | ||||||||||||
Privately issued | 42,296 | 5 | 2,854 | 39,447 | ||||||||||||
Total collateralized mortgage obligations | 106,340 | 422 | 3,710 | 103,052 | ||||||||||||
Total mortgage-backed securities | 339,574 | 6,813 | 3,835 | 342,552 | ||||||||||||
Asset-backed securities | 3,918 | — | — | 3,918 | ||||||||||||
Equity securities | 923 | 281 | 52 | 1,152 | ||||||||||||
Total available for sale securities | $ | 541,858 | $ | 9,884 | $ | 4,236 | $ | 547,506 | ||||||||
Securities held to maturity: | ||||||||||||||||
State and political subdivisions | $ | 58,532 | $ | 619 | $ | 4 | $ | 59,147 | ||||||||
2009 | 2008 | 2007 | ||||||||||
Taxable interest | $ | 16,466 | $ | 21,882 | $ | 25,414 | ||||||
Tax-exempt interest | 5,228 | 8,773 | 9,576 | |||||||||
Total interest and dividends on securities | $ | 21,694 | $ | 30,655 | $ | 34,990 | ||||||
2009 | 2008 | 2007 | ||||||||||
Proceeds from sales | $ | 224,928 | $ | 58,368 | $ | 49,350 | ||||||
Gross realized gains | 6,826 | 291 | 209 | |||||||||
Gross realized losses | 3,397 | 3 | 2 |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
Amortized | Fair | |||||||
Cost | Value | |||||||
Debt securities available for sale: | ||||||||
Due in one year or less | $ | 52,541 | $ | 53,081 | ||||
Due from one to five years | 169,933 | 172,584 | ||||||
Due after five years through ten years | 52,153 | 52,685 | ||||||
Due after ten years | 303,175 | 302,151 | ||||||
$ | 577,802 | $ | 580,501 | |||||
Debt securities held to maturity: | ||||||||
Due in one year or less | $ | 30,238 | $ | 30,474 | ||||
Due from one to five years | 7,361 | 7,877 | ||||||
Due after five years through ten years | 1,542 | 1,763 | ||||||
Due after ten years | 432 | 515 | ||||||
$ | 39,573 | $ | 40,629 | |||||
December 31, 2009 | ||||||||||||||||||||||||
Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Losses | Value | Losses | Value | Losses | |||||||||||||||||||
Securities available for sale: | ||||||||||||||||||||||||
U.S. Government agencies and government sponsored enterprises | $ | 83,480 | $ | 360 | $ | 10,003 | $ | 185 | $ | 93,483 | $ | 545 | ||||||||||||
State and political subdivisions | — | — | 150 | 3 | 150 | 3 | ||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||
Federal National Mortgage Association | 24,964 | 258 | 643 | 1 | 25,607 | 259 | ||||||||||||||||||
Federal Home Loan Mortgage Corporation | 5,627 | 56 | — | — | 5,627 | 56 | ||||||||||||||||||
Government National Mortgage Association | 55,304 | 342 | — | — | 55,304 | 342 | ||||||||||||||||||
Collateralized mortgage obligations: | ||||||||||||||||||||||||
Federal National Mortgage Association | 353 | 2 | 5,384 | 92 | 5,737 | 94 | ||||||||||||||||||
Federal Home Loan Mortgage Corporation | 490 | 1 | 814 | 13 | 1,304 | 14 | ||||||||||||||||||
Government National Mortgage Association | 79,645 | 873 | — | — | 79,645 | 873 | ||||||||||||||||||
Privately issued | — | — | 2,985 | 330 | 2,985 | 330 | ||||||||||||||||||
Total collateralized mortgage obligations | 80,488 | 876 | 9,183 | 435 | 89,671 | 1,311 | ||||||||||||||||||
Total mortgage-backed securities | 166,383 | 1,532 | 9,826 | 436 | 176,209 | 1,968 | ||||||||||||||||||
Asset-backed securities | 278 | 244 | — | — | 278 | 244 | ||||||||||||||||||
Total temporarily impaired securities | $ | 250,141 | $ | 2,136 | $ | 19,979 | $ | 624 | $ | 270,120 | $ | 2,760 | ||||||||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
December 31, 2008 | ||||||||||||||||||||||||
Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Losses | Value | Losses | Value | Losses | |||||||||||||||||||
Securities available for sale: | ||||||||||||||||||||||||
U.S. Government agencies and government sponsored enterprises | $ | 50 | $ | 1 | $ | 11,704 | $ | 306 | $ | 11,754 | $ | 307 | ||||||||||||
State and political subdivisions | 6,191 | 41 | 84 | 1 | 6,275 | 42 | ||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||
Federal National Mortgage Association | 10,432 | 65 | 484 | 21 | 10,916 | 86 | ||||||||||||||||||
Federal Home Loan Mortgage Corporation | 5,533 | 14 | — | — | 5,533 | 14 | ||||||||||||||||||
Government National Mortgage Association | 227 | 3 | 1,059 | 22 | 1,286 | 25 | ||||||||||||||||||
Collateralized mortgage obligations: | ||||||||||||||||||||||||
Federal National Mortgage Association | 828 | 1 | 7,181 | 641 | 8,009 | 642 | ||||||||||||||||||
Federal Home Loan Mortgage Corporation | — | — | 7,224 | 214 | 7,224 | 214 | ||||||||||||||||||
Privately issued | 24,425 | 2,045 | 10,975 | 809 | 35,400 | 2,854 | ||||||||||||||||||
Total collateralized mortgage obligations | 25,253 | 2,046 | 25,380 | 1,664 | 50,633 | 3,710 | ||||||||||||||||||
Total mortgage-backed securities | 41,445 | 2,128 | 26,923 | 1,707 | 68,368 | 3,835 | ||||||||||||||||||
Equity securities | 310 | 52 | — | — | 310 | 52 | ||||||||||||||||||
Total available for sale securities | 47,996 | 2,222 | 38,711 | 2,014 | 86,707 | 4,236 | ||||||||||||||||||
Securities held to maturity: | ||||||||||||||||||||||||
State and political subdivisions | 554 | 4 | — | — | 554 | 4 | ||||||||||||||||||
Total temporarily impaired securities | $ | 48,550 | $ | 2,226 | $ | 38,711 | $ | 2,014 | $ | 87,261 | $ | 4,240 | ||||||||||||
2009 | 2008 | |||||||
Mortgage-backed securities — Privately issued whole loan CMOs | $ | 2,353 | $ | 5,918 | ||||
Asset-backed securities — Trust preferred securities | 2,313 | 29,974 | ||||||
Equity securities — Auction rate securities | — | 32,323 | ||||||
$ | 4,666 | $ | 68,215 | |||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
2009 | 2008 | 2007 | ||||||||||
Mortgage servicing assets, beginning of year | $ | 925 | $ | 1,000 | $ | 1,165 | ||||||
Originations | 952 | 230 | 307 | |||||||||
Amortization | (343 | ) | (305 | ) | (472 | ) | ||||||
Mortgage servicing assets, end of year | 1,534 | 925 | 1,000 | |||||||||
Valuation allowance | (185 | ) | (362 | ) | (19 | ) | ||||||
Mortgage servicing assets, net, end of year | $ | 1,349 | $ | 563 | $ | 981 | ||||||
2009 | 2008 | |||||||
Commercial | $ | 186,386 | $ | 158,543 | ||||
Commercial real estate | 308,873 | 262,234 | ||||||
Agricultural | 41,872 | 44,706 | ||||||
Residential real estate | 144,215 | 177,683 | ||||||
Consumer indirect | 352,611 | 255,054 | ||||||
Consumer direct and home equity | 230,049 | 222,859 | ||||||
Total loans | 1,264,006 | 1,121,079 | ||||||
Less: Allowance for loan losses | 20,741 | 18,749 | ||||||
Total loans, net | $ | 1,243,265 | $ | 1,102,330 | ||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
2009 | 2008 | 2007 | ||||||||||
Non-accruing loans | $ | 6,822 | $ | 8,189 | $ | 8,075 | ||||||
Interest income that would have been recorded if loans had been performing in accordance with original terms | 388 | 546 | 713 | |||||||||
Accruing loans 90 days or more delinquent | 1,859 | 7 | 2 | |||||||||
Balance of impaired loans, end of period | 2,938 | 3,180 | 4,132 | |||||||||
Balance of impaired loans requiring a specific allowance, end of period | 1,932 | 599 | 1,572 | |||||||||
Allowance relating to impaired loans included in allowance for loan losses | 854 | 142 | 454 | |||||||||
Average balance of impaired loans | 3,785 | 3,088 | 6,446 | |||||||||
Interest income recognized on impaired loans | 69 | — | — |
2009 | 2008 | 2007 | ||||||||||
Allowance for loan losses, beginning of year | $ | 18,749 | $ | 15,521 | $ | 17,048 | ||||||
Charge-offs | 7,830 | 5,459 | 3,895 | |||||||||
Recoveries | 2,120 | 2,136 | 2,252 | |||||||||
Net charge-offs | 5,710 | 3,323 | 1,643 | |||||||||
Provision for loan losses | 7,702 | 6,551 | 116 | |||||||||
Allowance for loan losses, end of year | $ | 20,741 | $ | 18,749 | $ | 15,521 | ||||||
2009 | 2008 | |||||||
Land and land improvements | $ | 4,334 | $ | 4,334 | ||||
Buildings and leasehold improvements | 39,553 | 39,298 | ||||||
Furniture, fixtures, equipment and vehicles | 23,771 | 24,480 | ||||||
Premises and equipment | 67,658 | 68,112 | ||||||
Accumulated depreciation and amortization | (32,875 | ) | (31,400 | ) | ||||
Premises and equipment, net | $ | 34,783 | $ | 36,712 | ||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
2009 | 2008 | |||||||
Other intangible assets | $ | 11,263 | $ | 11,263 | ||||
Accumulated amortization | (11,263 | ) | (10,983 | ) | ||||
Other intangible assets, net | $ | — | $ | 280 | ||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
2009 | 2008 | |||||||
Noninterest-bearing demand | $ | 324,303 | $ | 292,586 | ||||
Interest-bearing demand | 363,698 | 344,616 | ||||||
Savings and money market | 368,603 | 348,594 | ||||||
Certificates of deposit, due: | ||||||||
Within one year | 526,549 | 546,266 | ||||||
One to two years | 132,289 | 78,963 | ||||||
Two to three years | 8,200 | 7,625 | ||||||
Three to five years | 18,968 | 14,102 | ||||||
Thereafter | 345 | 511 | ||||||
Total certificates of deposits | 686,351 | 647,467 | ||||||
Total deposits | $ | 1,742,955 | $ | 1,633,263 | ||||
2009 | 2008 | 2007 | ||||||||||
Interest-bearing demand | $ | 772 | $ | 3,246 | $ | 5,760 | ||||||
Savings and money market | 1,090 | 3,773 | 5,863 | |||||||||
Certificates of deposit | 17,228 | 22,330 | 31,091 | |||||||||
Total interest expense on deposits | $ | 19,090 | $ | 29,349 | $ | 42,714 | ||||||
2009 | 2008 | |||||||
Short-term borrowings: | ||||||||
Federal funds purchased | $ | 9,419 | $ | — | ||||
Repurchase agreements | 35,124 | 23,465 | ||||||
Other short-term borrowings | 15,000 | — | ||||||
Total short-term borrowings | 59,543 | 23,465 | ||||||
Long-term borrowings: | ||||||||
FHLB advances and repurchase agreements | 30,145 | 30,653 | ||||||
Junior subordinated debentures | 16,702 | 16,702 | ||||||
Total long-term borrowings | 46,847 | 47,355 | ||||||
Total borrowings | $ | 106,390 | $ | 70,820 | ||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
2010 | $ | 20,080 | ||
2011 | 10,065 | |||
$ | 30,145 | |||
2009 | 2008 | 2007 | ||||||||||
Short-term borrowings | $ | 270 | $ | 721 | $ | 864 | ||||||
Long-term borrowings | 2,857 | 3,547 | 3,561 | |||||||||
Total interest expense on borrowings | $ | 3,127 | $ | 4,268 | $ | 4,425 | ||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
2009 | 2008 | |||||||
Commitments to extend credit | $ | 316,688 | $ | 339,454 | ||||
Standby letters of credit | 6,887 | 7,902 |
2010 | $ | 1,135 | ||
2011 | 1,065 | |||
2012 | 1,033 | |||
2013 | 894 | |||
2014 | 863 | |||
Thereafter | 4,386 | |||
$ | 9,376 | |||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
For Capital | ||||||||||||||||||||||||
Actual | Adequacy Purposes | Well Capitalized | ||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||
December 31, 2009: | ||||||||||||||||||||||||
Tier 1 leverage: | ||||||||||||||||||||||||
Company | $ | 163,613 | 7.96 | % | $ | 82,188 | 4.00 | % | $ | 102,735 | 5.00 | % | ||||||||||||
Bank (FSB) | 154,316 | 7.53 | 82,018 | 4.00 | 102,522 | 5.00 | ||||||||||||||||||
Tier 1 capital (to risk-weighted assets): | ||||||||||||||||||||||||
Company | 163,613 | 11.95 | 54,746 | 4.00 | 82,119 | 6.00 | ||||||||||||||||||
Bank (FSB) | 154,316 | 11.33 | 54,475 | 4.00 | 81,712 | 6.00 | ||||||||||||||||||
Total risk-based capital (to risk-weighted assets): | ||||||||||||||||||||||||
Company | 180,766 | 13.21 | 109,492 | 8.00 | 136,865 | 10.00 | ||||||||||||||||||
Bank (FSB) | 171,385 | 12.58 | 108,949 | 8.00 | 136,186 | 10.00 | ||||||||||||||||||
December 31, 2008: | ||||||||||||||||||||||||
Tier 1 leverage: | ||||||||||||||||||||||||
Company | $ | 150,426 | 8.05 | % | $ | 74,764 | 4.00 | % | $ | 93,456 | 5.00 | % | ||||||||||||
Bank (FSB) | 120,484 | 6.46 | 74,586 | 4.00 | 93,232 | 5.00 | ||||||||||||||||||
Tier 1 capital (to risk-weighted assets): | ||||||||||||||||||||||||
Company | 150,426 | 11.83 | 50,881 | 4.00 | 76,322 | 6.00 | ||||||||||||||||||
Bank (FSB) | 120,484 | 9.52 | 50,624 | 4.00 | 75,936 | 6.00 | ||||||||||||||||||
Total risk-based capital (to risk-weighted assets): | ||||||||||||||||||||||||
Company | 166,362 | 13.08 | 101,762 | 8.00 | 127,203 | 10.00 | ||||||||||||||||||
Bank (FSB) | 136,340 | 10.77 | 101,248 | 8.00 | 126,560 | 10.00 |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
2009 | 2008 | |||||||
Shares outstanding at beginning of period | 10,798,019 | 11,011,151 | ||||||
Restricted stock awards issued | 13,172 | 51,500 | ||||||
Stock options exercised | 1,010 | 2,317 | ||||||
Directors’ retainer | 8,067 | 5,912 | ||||||
Treasury stock purchases | — | (272,861 | ) | |||||
Shares outstanding at end of period | 10,820,268 | 10,798,019 | ||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
Pre-tax Amount | Tax Expense (Benefit) | Net-of-tax Amount | ||||||||||
2009 | ||||||||||||
Securities available for sale: | ||||||||||||
Change in net unrealized gain/loss during the period | $ | (4,186 | ) | $ | (1,619 | ) | $ | (2,567 | ) | |||
Reclassification adjustment for gains included in income | (3,429 | ) | (1,327 | ) | (2,102 | ) | ||||||
Reclassification adjustment for impairment charges included in income | 4,666 | 1,805 | 2,861 | |||||||||
(2,949 | ) | (1,141 | ) | (1,808 | ) | |||||||
Change in net actuarial gain/loss and prior service benefit (cost) on defined benefit pension and post-retirement plans | 3,457 | 1,338 | 2,119 | |||||||||
Other comprehensive income | $ | 508 | $ | 197 | 311 | |||||||
Net income | 14,441 | |||||||||||
Comprehensive income | $ | 14,752 | ||||||||||
2008 | ||||||||||||
Securities available for sale: | ||||||||||||
Change in net unrealized gain/loss during the period | $ | (61,464 | ) | $ | (23,778 | ) | $ | (37,686 | ) | |||
Reclassification adjustment for gains included in income | (288 | ) | (111 | ) | (177 | ) | ||||||
Reclassification adjustment for impairment charges included in income | 68,215 | 26,389 | 41,826 | |||||||||
6,463 | 2,500 | 3,963 | ||||||||||
Change in net actuarial gain/loss and prior service benefit (cost) on defined benefit pension and post-retirement plans | (14,098 | ) | (5,455 | ) | (8,643 | ) | ||||||
Other comprehensive loss | $ | (7,635 | ) | $ | (2,955 | ) | (4,680 | ) | ||||
Net loss | (26,158 | ) | ||||||||||
Comprehensive loss | $ | (30,838 | ) | |||||||||
2007 | ||||||||||||
Securities available for sale: | ||||||||||||
Change in net unrealized gain/loss during the period | $ | 10,530 | $ | 4,103 | $ | 6,427 | ||||||
Reclassification adjustment for gains included in income | (207 | ) | (80 | ) | (127 | ) | ||||||
10,323 | 4,023 | 6,300 | ||||||||||
Change in net actuarial gain/loss and prior service benefit (cost) on defined benefit pension and post-retirement plans | 4,531 | 1,760 | 2,771 | |||||||||
Other comprehensive income | $ | 14,854 | $ | 5,783 | 9,071 | |||||||
Net income | 16,409 | |||||||||||
Comprehensive income | $ | 25,480 | ||||||||||
2009 | 2008 | |||||||
Net actuarial loss and prior service cost on defined benefit pension and post-retirement plans | $ | (5,357 | ) | $ | (7,476 | ) | ||
Net unrealized gain on securities available for sale | 1,655 | 3,463 | ||||||
$ | (3,702 | ) | $ | (4,013 | ) | |||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
2009 | 2008 | 2007 | ||||||||||
Stock options: | ||||||||||||
Management Stock Incentive Plan | $ | 222 | $ | 378 | $ | 571 | ||||||
Director Stock Incentive Plan | 46 | 40 | 220 | |||||||||
Total stock option expense | 268 | 418 | 791 | |||||||||
Restricted stock awards: | ||||||||||||
Management Stock Incentive Plan | 488 | 215 | 164 | |||||||||
Director Stock Incentive Plan | 98 | — | — | |||||||||
Total restricted stock award expense | 586 | 215 | 164 | |||||||||
Total share-based compensation | $ | 854 | $ | 633 | $ | 955 | ||||||
Weighted | ||||||||||||||||
Weighted | Average | |||||||||||||||
Average | Remaining | Aggregate | ||||||||||||||
Number of | Exercise | Contractual | Intrinsic | |||||||||||||
Options | Price | Term | Value | |||||||||||||
Outstanding at beginning of year | 582,885 | $ | 19.14 | |||||||||||||
Granted | — | — | ||||||||||||||
Exercised | (1,010 | ) | 14.00 | |||||||||||||
Forfeited | (8,500 | ) | 18.48 | |||||||||||||
Expired | (114,641 | ) | 14.61 | |||||||||||||
Outstanding at end of year | 458,734 | 20.30 | 5.25 years | $ | — | |||||||||||
Exercisable at end of year | 369,004 | 20.76 | 4.64 years | $ | — |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
2008 | 2007 | |||||||
Options granted | 61,100 | 90,700 | ||||||
Grant date weighted average fair value per share | $ | 5.09 | $ | 7.09 | ||||
Grant date weighted average share price | $ | 16.98 | $ | 19.49 | ||||
Risk-free interest rate | 3.40 | % | 4.76 | % | ||||
Expected dividend yield | 3.48 | % | 2.21 | % | ||||
Expected stock price volatility | 38.60 | % | 39.36 | % | ||||
Expected life (in years) | 6.19 | 5.94 |
Weighted | ||||||||
Average | ||||||||
Market | ||||||||
Number of | Price at | |||||||
Shares | Grant Date | |||||||
Outstanding at beginning of year | 81,800 | $ | 19.35 | |||||
Granted | 58,472 | 13.33 | ||||||
Vested | (17,200 | ) | 18.61 | |||||
Forfeited | (45,300 | ) | 19.23 | |||||
Outstanding at end of year | 77,772 | $ | 15.05 | |||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
2009 | 2008 | 2007 | ||||||||||
Income tax expense (benefit) | $ | 6,140 | $ | (21,301 | ) | $ | 4,800 | |||||
Shareholder’s equity | 197 | (2,955 | ) | 5,783 |
2009 | 2008 | 2007 | ||||||||||
Current tax (benefit) expense: | ||||||||||||
Federal | $ | (1,355 | ) | $ | 2,043 | $ | 3,572 | |||||
State | 25 | 504 | 513 | |||||||||
Total current tax (benefit) expense | (1,330 | ) | 2,547 | 4,085 | ||||||||
Deferred tax expense (benefit): | ||||||||||||
Federal | 6,189 | (19,640 | ) | 126 | ||||||||
State | 1,281 | (4,208 | ) | 589 | ||||||||
Total deferred tax expense (benefit) | 7,470 | (23,848 | ) | 715 | ||||||||
Total income tax expense (benefit): | $ | 6,140 | $ | (21,301 | ) | $ | 4,800 | |||||
2009 | 2008 | 2007 | ||||||||||
Statutory federal tax rate | 34.0 | % | (34.0 | )% | 34.0 | % | ||||||
Increase (decrease) resulting from: | ||||||||||||
Tax exempt interest income | (8.6 | ) | (5.2 | ) | (13.6 | ) | ||||||
Non-taxable earnings on company owned life insurance | (1.8 | ) | (0.4 | ) | (2.0 | ) | ||||||
Dividend received deduction | (0.1 | ) | (0.8 | ) | (1.5 | ) | ||||||
State taxes, net of federal tax benefit | 4.2 | (5.2 | ) | 3.4 | ||||||||
Nondeductible expenses | 1.0 | 0.2 | 0.4 | |||||||||
Disallowed interest expense | 0.5 | 0.5 | 1.8 | |||||||||
Other, net | 0.6 | — | 0.1 | |||||||||
Effective tax rate | 29.8 | % | (44.9 | )% | 22.6 | % | ||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
(14.) | INCOME TAXES (Continued) |
2009 | 2008 | |||||||
Deferred tax assets: | ||||||||
Other than temporary impairment of investment securities | $ | 14,827 | $ | 26,389 | ||||
Allowance for loan losses | 7,418 | 6,619 | ||||||
Tax attribute carryforward benefits | 5,559 | 2,689 | ||||||
Share-based compensation | 1,033 | 794 | ||||||
Interest on non-accruing loans | 788 | 595 | ||||||
Core deposit intangible | 258 | 332 | ||||||
Accrued pension costs | 92 | 2,494 | ||||||
Other | 580 | 374 | ||||||
Gross deferred tax assets | 30,555 | 40,286 | ||||||
Deferred tax liabilities: | ||||||||
Deferred loan origination costs | 3,290 | 4,458 | ||||||
Net unrealized gain on securities available for sale | 1,044 | 2,185 | ||||||
Depreciation and amortization | 1,283 | 1,342 | ||||||
Loan servicing assets | 522 | 218 | ||||||
Other | 1 | 2 | ||||||
Gross deferred tax liabilities | 6,140 | 8,205 | ||||||
Net deferred tax asset | $ | 24,415 | $ | 32,081 | ||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
2009 | 2008 | 2007 | ||||||||||
Net income (loss) allocated to common shareholders | $ | 10,744 | $ | (27,696 | ) | $ | 14,926 | |||||
Less: Earnings (loss) allocated to participating securities | 87 | (230 | ) | — | ||||||||
Earnings (loss) allocated to common shares outstanding | $ | 10,657 | $ | (27,466 | ) | $ | 14,926 | |||||
Weighted average common shares used to calculate basic EPS | 10,730 | 10,818 | 11,154 | |||||||||
Add: Effect of common stock equivalents | 39 | — | 30 | |||||||||
Weighted average common shares used to calculate diluted EPS | 10,769 | 10,818 | 11,184 | |||||||||
Earnings (loss) per common share: | ||||||||||||
Basic | $ | 0.99 | $ | (2.54 | ) | $ | 1.34 | |||||
Diluted | $ | 0.99 | $ | (2.54 | ) | $ | 1.33 | |||||
Shares subject to the following securities, outstanding as of December 31 of the respective year, were excluded from the computation of diluted EPS because the effect would be antidilutive: | ||||||||||||
Stock options | 459 | 583 | 381 | |||||||||
Restricted stock awards | — | 82 | 30 | |||||||||
Warrant | 378 | 378 | — | |||||||||
837 | 1,043 | 411 | ||||||||||
December 31, | December 31, | |||||||
2009 | 2008(a) | |||||||
Change in projected benefit obligation: | ||||||||
Projected benefit obligation at beginning of period | $ | (30,878 | ) | $ | (25,102 | ) | ||
Service cost | (1,689 | ) | (1,820 | ) | ||||
Interest cost | (1,826 | ) | (1,953 | ) | ||||
Actuarial loss | (489 | ) | (3,767 | ) | ||||
Benefits paid and plan expenses | 1,441 | 1,764 | ||||||
Projected benefit obligation at end of period | (33,441 | ) | (30,878 | ) | ||||
Change in plan assets: | ||||||||
Fair value of plan assets at beginning of period | 24,431 | 28,431 | ||||||
Actual return (loss) on plan assets | 5,132 | (7,436 | ) | |||||
Employer contributions | 5,081 | 5,200 | ||||||
Benefits paid and plan expenses | (1,441 | ) | (1,764 | ) | ||||
Fair value of plan assets as of end of period | 33,203 | 24,431 | ||||||
Unfunded status at end of period | $ | (238 | ) | $ | (6,447 | ) | ||
(a) | Beginning in 2008, the plan’s measurement date was changed from September 30 to December 31. As a result, the 2008 period includes the 15 months of activity from September 30, 2007 through December 31, 2008. |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
2010 | $ | 1,264 | ||
2011 | 1,357 | |||
2012 | 1,465 | |||
2013 | 1,538 | |||
2014 | 1,657 | |||
2015 – 2019 | 10,886 |
2009 | 2008 | 2007 | ||||||||||
Service cost | $ | 1,689 | $ | 1,456 | $ | 1,498 | ||||||
Interest cost on projected benefit obligation | 1,826 | 1,562 | 1,473 | |||||||||
Expected return on plan assets | (1,848 | ) | (2,094 | ) | (1,907 | ) | ||||||
Amortization of unrecognized loss | 728 | — | 31 | |||||||||
Amortization of unrecognized prior service cost | 11 | 11 | 11 | |||||||||
Net periodic pension cost | $ | 2,406 | $ | 935 | $ | 1,106 | ||||||
2009 | 2008 | 2007 | ||||||||||
Weighted average discount rate | 6.03 | % | 6.35 | % | 5.82 | % | ||||||
Rate of compensation increase | 3.50 | % | 3.50 | % | 3.50 | % | ||||||
Expected long-term rate of return | 7.50 | % | 7.50 | % | 7.50 | % | ||||||
The actuarial assumptions used to determine the projected benefit obligation were as follows: | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Weighted average discount rate | 5.89 | % | 6.03 | % | 6.35 | % | ||||||
Rate of compensation increase | 3.50 | % | 3.50 | % | 3.50 | % |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
Equity securities | Dividend discount model, the smoothed earnings yield model and the equity risk premium model | |
Fixed income securities | Current yield-to-maturity and forecasts of future yields | |
Other financial instruments | Comparison of the specific investment’s risk to that of fixed income and equity instruments and using judgment |
Equity securities | Securities in emerging market countries as defined by the Morgan Stanley Emerging Markets Index, Short sales, Unregistered securities and Margin purchases | |
Fixed income securities | Securities of BBB quality or less, CMOs that have an inverse floating rate and whose payments don’t include principal or which aren’t certified and guaranteed by the U.S. Government, ABSs that aren’t issued or guaranteed by the U.S., or its agencies or its instrumentalities, Non-agency residential subprime or ALT-A MBSs and Structured Notes | |
Other financial instruments | Unhedged currency exposure in countries not defined as “high income economies” by the World Bank |
Weighted | ||||||||||||||||
Average | ||||||||||||||||
Target | Percentage of Plan Assets | Expected | ||||||||||||||
Allocation | at December 31, | Long-term | ||||||||||||||
2010 | 2009 | 2008 | Rate of Return | |||||||||||||
Asset category: | ||||||||||||||||
Cash equivalents | 0 – 20 | % | 13.6 | % | 10.0 | % | — | |||||||||
Equity securities | 40 – 60 | 45.9 | 48.0 | 4.60 | % | |||||||||||
Fixed income securities | 40 – 60 | 40.5 | 41.4 | 2.10 | ||||||||||||
Other financial instruments | 0 – 5 | — | 0.6 | — |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Inputs | Inputs | Inputs | Fair Value | |||||||||||||
Cash equivalents: | ||||||||||||||||
Short term investment funds | $ | — | $ | 4,197 | $ | — | $ | 4,197 | ||||||||
Equity securities: | ||||||||||||||||
Common stock | 15,016 | — | — | 15,016 | ||||||||||||
Depository receipts | 210 | — | — | 210 | ||||||||||||
Other equities | 166 | — | — | 166 | ||||||||||||
Total equities | 15,392 | — | — | 15,392 | ||||||||||||
Fixed income securities: | ||||||||||||||||
Corporate bonds | — | 3,200 | — | 3,200 | ||||||||||||
Government issues | — | 5,590 | — | 5,590 | ||||||||||||
Collateralized mortgage obligations | — | 813 | — | 813 | ||||||||||||
FHLMC | — | 1,359 | — | 1,359 | ||||||||||||
FNMA | — | 2,094 | — | 2,094 | ||||||||||||
GNMA I | — | 369 | — | 369 | ||||||||||||
Other fixed income securities | — | 189 | — | 189 | ||||||||||||
Total fixed income securities | — | 13,614 | — | 13,614 | ||||||||||||
Total Plan investments | $ | 15,392 | $ | 17,811 | $ | — | $ | 33,203 | ||||||||
Balance at beginning of year | $ | 132 | ||
Change in unrealized appreciation (depreciation) | 54 | |||
Realized loss | (58 | ) | ||
Sale proceeds | (128 | ) | ||
Balance at end of year | $ | — | ||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
2009 | 2008 | |||||||
Defined benefit plan: | ||||||||
Net actuarial loss | $ | (9,056 | ) | $ | (12,579 | ) | ||
Prior service cost | (143 | ) | (155 | ) | ||||
(9,199 | ) | (12,734 | ) | |||||
Postretirement benefit plan: | ||||||||
Net actuarial loss | (248 | ) | (238 | ) | ||||
Prior service credit | 710 | 778 | ||||||
462 | 540 | |||||||
Total recognized in accumulated other comprehensive loss | $ | (8,737 | ) | $ | (12,194 | ) | ||
2009 | 2008 | |||||||
Defined benefit plan: | ||||||||
Net actuarial gain (loss) | $ | 2,795 | $ | (14,097 | ) | |||
Amortization of net loss | 728 | — | ||||||
Amortization of prior service cost | 12 | 14 | ||||||
3,535 | (14,083 | ) | ||||||
Postretirement benefit plan: | ||||||||
Net actuarial gain (loss) | (10 | ) | 70 | |||||
Amortization of prior service credit | (68 | ) | (85 | ) | ||||
(78 | ) | (15 | ) | |||||
Total recognized in other comprehensive income (loss) | $ | 3,457 | $ | (14,098 | ) | |||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
• | Level 1— Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. |
• | Level 2— Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means. |
• | Level 3— Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities. |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Inputs | Inputs | Inputs | Fair Value | |||||||||||||
December 31, 2009: | ||||||||||||||||
Securities available for sale: | ||||||||||||||||
U.S. Government agencies and government sponsored enterprises | $ | — | $ | 134,105 | $ | — | $ | 134,105 | ||||||||
State and political subdivisions | — | 83,659 | — | 83,659 | ||||||||||||
Mortgage-backed securities | — | 361,515 | — | 361,515 | ||||||||||||
Asset-backed securities: | ||||||||||||||||
Trust preferred securities | — | — | 1,015 | 1,015 | ||||||||||||
Other | — | 207 | — | 207 | ||||||||||||
$ | — | $ | 579,486 | $ | 1,015 | $ | 580,501 | |||||||||
December 31, 2008: | ||||||||||||||||
Securities available for sale: | ||||||||||||||||
U.S. Government agencies and government sponsored enterprises | $ | — | $ | 68,173 | $ | — | $ | 68,173 | ||||||||
State and political subdivisions | — | 131,711 | — | 131,711 | ||||||||||||
Mortgage-backed securities | — | 342,552 | — | 342,552 | ||||||||||||
Asset-backed securities: | ||||||||||||||||
Trust preferred securities | — | — | 3,772 | 3,772 | ||||||||||||
Other | — | 146 | — | 146 | ||||||||||||
Equity securities | 624 | 528 | — | 1,152 | ||||||||||||
$ | 624 | $ | 543,110 | $ | 3,772 | $ | 547,506 | |||||||||
2009 | 2008 | |||||||
Securities available for sale (Level 3), beginning of year | $ | 3,772 | $ | — | ||||
Transfers into Level 3 | — | 33,307 | ||||||
Capitalized interest | 296 | — | ||||||
Principal paydowns and amortization of premiums | (9 | ) | (106 | ) | ||||
Coupon payments applied to principal | (273 | ) | — | |||||
Total losses (realized/unrealized): | ||||||||
Included in earnings | (2,263 | ) | (29,429 | ) | ||||
Included in other comprehensive income | (508 | ) | — | |||||
Securities available for sale (Level 3), end of year | $ | 1,015 | $ | 3,772 | ||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
December 31, 2009 | December 31, 2008 | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Amount | Value | Amount | Value | |||||||||||||
Financial assets: | ||||||||||||||||
Cash and cash equivalents | $ | 42,959 | $ | 42,959 | $ | 55,187 | $ | 55,187 | ||||||||
Securities available for sale | 580,501 | 580,501 | 547,506 | 547,506 | ||||||||||||
Securities held to maturity | 39,573 | 40,629 | 58,532 | 59,147 | ||||||||||||
Loans held for sale | 421 | 421 | 1,013 | 1,032 | ||||||||||||
Loans | 1,243,265 | 1,290,136 | 1,102,330 | 1,169,660 | ||||||||||||
Company owned life insurance | 24,867 | 24,867 | 23,692 | 23,692 | ||||||||||||
Accrued interest receivable | 7,386 | 7,386 | 7,556 | 7,556 | ||||||||||||
FHLB and FRB stock | 7,185 | 7,185 | 6,035 | 6,035 | ||||||||||||
Financial liabilities: | ||||||||||||||||
Demand, savings and money market deposits | 1,056,604 | 1,056,604 | 985,796 | 985,796 | ||||||||||||
Certificate of deposit | 686,351 | 692,429 | 647,467 | 654,334 | ||||||||||||
Short-term borrowings | 59,543 | 59,543 | 23,465 | 23,465 | ||||||||||||
Long-term borrowings (excluding junior subordinated debentures) | 30,145 | 30,886 | 30,653 | 32,005 | ||||||||||||
Junior subordinated debentures | 16,702 | 10,741 | 16,702 | 12,232 | ||||||||||||
Accrued interest payable | 7,576 | 7,576 | 7,041 | 7,041 |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
Condensed Statements of Condition | 2009 | 2008 | ||||||
Assets: | ||||||||
Cash and due from subsidiaries | $ | 7,727 | $ | 27,163 | ||||
Securities available for sale, at fair value | — | 624 | ||||||
Investment in and receivables due from subsidiaries | 203,986 | 176,780 | ||||||
Other assets | 5,698 | 4,885 | ||||||
Total assets | $ | 217,411 | $ | 209,452 | ||||
Liabilities and shareholders’ equity: | ||||||||
Junior subordinated debentures | $ | 16,702 | $ | 16,702 | ||||
Other liabilities | 2,415 | 2,450 | ||||||
Shareholders’ equity | 198,294 | 190,300 | ||||||
Total liabilities and shareholders’ equity | $ | 217,411 | $ | 209,452 | ||||
Condensed Statements of Operations | 2009 | 2008 | 2007 | |||||||||
Dividends from subsidiaries and associated companies | $ | 5,051 | $ | 11,251 | $ | 14,151 | ||||||
Management and service fees from subsidiaries | 603 | 418 | 631 | |||||||||
Other income | 182 | 74 | 94 | |||||||||
Total income | 5,836 | 11,743 | 14,876 | |||||||||
Operating expenses | 4,436 | 4,363 | 4,684 | |||||||||
Income before income tax benefit and equity in undistributed earnings (distributions in excess of earnings) of subsidiaries | 1,400 | 7,380 | 10,192 | |||||||||
Income tax benefit | 1,286 | 1,499 | 1,491 | |||||||||
Income before equity in undistributed earnings (distributions in excess of earnings) of subsidiaries | 2,686 | 8,879 | 11,683 | |||||||||
Equity in undistributed earnings (distributions in excess of earnings) of subsidiaries | 11,755 | (35,037 | ) | 4,726 | ||||||||
Net income (loss) | $ | 14,441 | $ | (26,158 | ) | $ | 16,409 | |||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007
(18.) | PARENT COMPANY FINANCIAL INFORMATION (Continued) |
Condensed Statements of Cash Flows | 2009 | 2008 | 2007 | |||||||||
Cash flows from operating activities: | ||||||||||||
Net income (loss) | $ | 14,441 | $ | (26,158 | ) | $ | 16,409 | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
(Equity in undistributed earnings) distributions in excess of earnings of subsidiaries | (11,755 | ) | 35,037 | (4,726 | ) | |||||||
Depreciation and amortization | 318 | 427 | 521 | |||||||||
Share-based compensation | 854 | 633 | 955 | |||||||||
Decrease (increase) in other assets | 797 | (763 | ) | (242 | ) | |||||||
(Decrease) increase in other liabilities | (230 | ) | (258 | ) | (2,421 | ) | ||||||
Net cash provided by operating activities | 4,425 | 8,918 | 10,496 | |||||||||
Cash flows from investing activities: | ||||||||||||
Purchase of investment assets, net of disposals | (1,323 | ) | (99 | ) | 189 | |||||||
Capital investment in subsidiary bank | (15,000 | ) | (20,000 | ) | — | |||||||
Net cash (used in) provided by investing activities | (16,323 | ) | (20,099 | ) | 189 | |||||||
Cash flows from financing activities: | ||||||||||||
Purchase of preferred and common shares | — | (4,821 | ) | (7,245 | ) | |||||||
Proceeds from issuance of preferred and common shares, net of issuance costs | (68 | ) | 35,602 | 105 | ||||||||
Proceeds from issuance of common stock warrant | — | 2,025 | — | |||||||||
Proceeds from stock options exercised | 15 | 32 | 251 | |||||||||
Dividends paid | (7,485 | ) | (7,722 | ) | (6,199 | ) | ||||||
Net cash (used in) provided by financing activities | (7,538 | ) | 25,116 | (13,088 | ) | |||||||
Net (decrease) increase in cash and cash equivalents | (19,436 | ) | 13,935 | (2,403 | ) | |||||||
Cash and cash equivalents as of beginning of year | 27,163 | 13,228 | 15,631 | |||||||||
Cash and cash equivalents as of end of the year | $ | 7,727 | $ | 27,163 | $ | 13,228 | ||||||
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ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
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ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
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(a) | FINANCIAL STATEMENTS |
(b) | EXHIBITS |
Exhibit | ||||||
Number | Description | Location | ||||
3.1 | Amended and Restated Certificate of Incorporation of the Company | Incorporated by reference to Exhibit 3.1 of the Form 10-K for the year ended December 31, 2008, dated March 12, 2009 | ||||
3.2 | Amended and Restated Bylaws of the Company | Incorporated by reference to Exhibit 3.4 of the Form 10-K for the year ended December 31, 2008, dated March 12, 2009 | ||||
4.1 | Warrant to Purchase Common Stock, dated December 23, 2008 issued by the Registrant to the United States Department of the Treasury | Incorporated by reference to Exhibit 4.2 of the Form 8-K, dated December 19, 2008 | ||||
10.1 | 1999 Management Stock Incentive Plan | Incorporated by reference to Exhibit 10.1 of the S-1 Registration Statement | ||||
10.2 | Amendment Number One to the FII 1999 Management Stock Incentive Plan | Incorporated by reference to Exhibit 10.1 of the Form 8-K, dated July 28, 2006 | ||||
10.3 | Form of Non-Qualified Stock Option Agreement Pursuant to the FII 1999 Management Stock Incentive Plan | Incorporated by reference to Exhibit 10.2 of the Form 8-K, dated July 28, 2006 | ||||
10.4 | Form of Restricted Stock Award Agreement Pursuant to the FII 1999 Management Stock Incentive Plan | Incorporated by reference to Exhibit 10.3 of the Form 8-K, dated July 28, 2006 | ||||
10.5 | Form of Restricted Stock Award Agreement Pursuant to the FII 1999 Management Stock Incentive Plan | Incorporated by reference to Exhibit 10.1 of the Form 8-K, dated January 23, 2008 | ||||
10.6 | 1999 Directors Stock Incentive Plan | Incorporated by reference to Exhibit 10.2 of the S-1 Registration Statement | ||||
10.7 | Amendment to the 1999 Director Stock Incentive Plan | Incorporated by reference to Exhibit 10.7 of the Form 10-K for the year ended December 31, 2008, dated March 12, 2009 | ||||
10.8 | 2009 Management Stock Incentive Plan | Incorporated by reference to Exhibit 10.8 of the Form 10-Q for the quarterly period ended June 30, 2009, dated August 5, 2009 | ||||
10.9 | 2009 Directors’ Stock Incentive Plan | Incorporated by reference to Exhibit 10.9 of the Form 10-Q for the quarterly period ended June 30, 2009, dated August 5, 2009 | ||||
10.10 | Form of Restricted Stock Award Agreement Pursuant to the FII 2009 Management Stock Incentive Plan | Incorporated by reference to Exhibit 10.1 of the Form 8-K, dated January 19, 2010 | ||||
10.11 | Form of Restricted Stock Award Agreement Pursuant to the FII 2009 Management Stock Incentive Plan | Incorporated by reference to Exhibit 10.1 of the Form 8-K, dated March 1, 2010 | ||||
10.12 | Form of Restricted Stock Award Agreement Pursuant to the FII 2009 Management Stock Incentive Plan | Incorporated by reference to Exhibit 10.2 of the Form 8-K, dated March 1, 2010 | ||||
10.13 | Amended Stock Ownership Requirements, dated December 14, 2005 | Incorporated by reference to Exhibit 10.19 of the Form 10-K for the year ended December 31, 2005, dated March 15, 2006 |
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Exhibit | ||||||
Number | Description | Location | ||||
10.14 | Executive Agreement with Peter G. Humphrey | Incorporated by reference to Exhibit 10.1 of the Form 8-K, dated June 30, 2005 | ||||
10.15 | Executive Agreement with James T. Rudgers | Incorporated by reference to Exhibit 10.2 of the Form 8-K, dated June 30, 2005 | ||||
10.16 | Executive Agreement with Ronald A. Miller | Incorporated by reference to Exhibit 10.3 of the Form 8-K, dated June 30, 2005 | ||||
10.17 | Executive Agreement with Martin K. Birmingham | Incorporated by reference to Exhibit 10.4 of the Form 8-K, dated June 30, 2005 | ||||
10.18 | Agreement with Peter G. Humphrey | Incorporated by reference to Exhibit 10.6 of the Form 8-K, dated June 30, 2005 | ||||
10.19 | Executive Agreement with John J. Witkowski | Incorporated by reference to Exhibit 10.7 of the Form 8-K, dated September 14, 2005 | ||||
10.20 | Executive Agreement with George D. Hagi | Incorporated by reference to Exhibit 10.7 of the Form 8-K, dated February 2, 2006 | ||||
10.21 | Voluntary Retirement Agreement with James T. Rudgers | Incorporated by reference to Exhibit 10.1 of the Form 8-K, dated September 24, 2008 | ||||
10.22 | Amendment to Voluntary Retirement Agreement with James T. Rudgers | Incorporated by reference to Exhibit 10.1 of the Form 8-K, dated July 1, 2009 | ||||
10.23 | Voluntary Retirement Agreement with Ronald A. Miller | Incorporated by reference to Exhibit 10.2 of the Form 8-K, dated September 24, 2008 | ||||
10.24 | Amendment to Voluntary Retirement Agreement with Ronald A. Miller | Incorporated by reference to Exhibit 10.1 of the Form 8-K, dated March 3, 2010 | ||||
10.25 | Letter Agreement, dated December 23, 2008, including the Securities Purchase Agreement-Standard Terms attached thereto, by and between the Company and the United States Department of the Treasury | Incorporated by reference to Exhibit 10.1 of the Form 8-K, dated December 19, 2008 | ||||
11.1 | Statement of Computation of Per Share Earnings | Incorporated by reference to Note 15 of the Registrant’s audited consolidated financial statements under Item 8 filed herewith. | ||||
12 | Ratio of Earnings to Fixed Charges and Preferred Dividends | Filed Herewith | ||||
21 | Subsidiaries of Financial Institutions, Inc. | Filed Herewith | ||||
23 | Consent of Independent Registered Public Accounting Firm | Filed Herewith | ||||
31.1 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 — Principal Executive Officer | Filed Herewith | ||||
31.2 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 — Principal Financial Officer | Filed Herewith | ||||
32 | Certification pursuant to18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Filed Herewith | ||||
99.1 | Certification of Chief Executive Officer pursuant to Section 111(b)(4) of the Emergency Economic Stabilization Act | Filed Herewith | ||||
99.2 | Certification of Chief Financial Officer pursuant to Section 111(b)(4) of the Emergency Economic Stabilization Act | Filed Herewith |
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FINANCIAL INSTITUTIONS, INC. | ||||
March 12, 2010 | /s/ Peter G. Humphrey | |||
Peter G. Humphrey | ||||
President & Chief Executive Officer |
Signatures | Title | Date | ||
/s/ Peter G. Humphrey | Director, President and Chief Executive Officer (Principal Executive Officer) | March 12, 2010 | ||
/s/ Karl F. Krebs | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) | March 12, 2010 | ||
/s/ Karl V. Anderson, Jr. | Director | March 12, 2010 | ||
/s/ John E. Benjamin | Director | March 12, 2010 | ||
/s/ Thomas P. Connolly | Director | March 12, 2010 | ||
/s/ Barton P. Dambra | Director | March 12, 2010 | ||
/s/ Samuel M. Gullo | Director | March 12, 2010 | ||
/s/ Susan R. Holliday | Director | March 12, 2010 | ||
/s/ Erland E. Kailbourne | Director, Chairman | March 12, 2010 | ||
/s/ Robert N. Latella | Director | March 12, 2010 | ||
/s/ James L. Robinson | Director | March 12, 2010 | ||
/s/ James H. Wyckoff | Director | March 12, 2010 |
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