Financial Institutions, Inc. Reports Quarterly Net Income Increase of 16% to $6.7 Million
WARSAW, N.Y., July 25, 2012 — Financial Institutions, Inc. (Nasdaq: FISI) (the “Company”), the parent company of Five Star Bank, today announced financial results for the second quarter ended June 30, 2012. Net income was $6.7 million for the second quarter of 2012, a 16% increase compared with $5.7 million for the second quarter of 2011, bringing the Company’s net income for the first half of 2012 to $12.9 million compared to $11.5 million in 2011. After preferred dividends, second quarter earnings per diluted share was $0.46 compared with $0.39 per share for the second quarter of 2011. On a year to date basis, diluted earnings per share increased $0.16 or 22% to $0.88 per share as compared to $0.72 per share for the same period last year.
Highlights for the second quarter of 2012 were as follows:
•
Increased quarterly dividend on common stock by 8% from $0.13 to $0.14 per share
•
First Niagara branch acquisition closed and fully converted on June 22, 2012
- Assumed deposits of $129.3 million and acquired in-market performing loans of $58.6 million at closing
•
Net interest income increased $1.1 million or 6% compared to the second quarter of 2011
•
Realized pre-tax gains of $1.2 million from the sales of investment securities
•
Continued strong quarterly performance
- Return on average assets of 1.08%
- Return on average common equity of 11.12%
- Return on average tangible common equity of 13.36%
•
Excluding loans acquired from First Niagara, total loans grew $45.0 million during the second quarter
•
Capital ratios remain well above regulatory minimums
- Tangible common equity to tangible assets of 7.20%
- Leverage ratio of 8.27%
- Total risk-based capital of 12.64%
•
Common and tangible book value per share increased to $16.61 and $13.44, respectively, at June 30, 2012
“Our consistent, relationship-focused approach to community banking is making a positive difference for our customers and the company, as evidenced by our outstanding operating performance in the second quarter,” said Peter G. Humphrey, President and Chief Executive Officer. “Along with the recent acquisition of four retail branch locations, commercial and indirect loan volumes have helped strengthen our presence in a very competitive environment.”
On June 22, Five Star Bank completed its acquisition of four First Niagara Bank, N.A. retail branch locations in the Upstate New York communities of Batavia, Brockport, Medina, and Seneca Falls. Accounts were promptly converted to Five Star Bank’s systems with minimal disruption to customers and operations. Five Star Bank is also slated to close on the acquisition of four HSBC Bank USA, N.A. retail branch locations in the communities of Albion, Elmira, Elmira Heights, and Horseheads in mid-August, subject to regulatory approval.
“The success of our recent conversion is a testament to the scalability of our entire Five Star Bank team and we look forward to repeating that success with our HSBC branch conversion next month,” said Humphrey. “We believe our ability to complete these transitions quickly, coupled with Five Star Bank’s strong community banking brand recognition, provide us many benefits and an immediate opportunity to strengthen our competitive advantage in the Western and Central New York market areas.”
“Our second quarter results include $1.0 million of pre-tax expense or $0.04 per diluted share after taxes related to the recent acquisition of the four First Niagara branches,” said Karl Krebs, Executive Vice President and Chief Financial Officer.
Net Interest Income and Net Interest Margin
Net interest income totaled $21.4 million for the three months ended June 30, 2012, an increase of $1.1 million or 6% compared with the second quarter of 2011. Average earning assets increased $184.1 million or 9% in the second quarter of 2012 compared with the second quarter last year, due to growth in the loan portfolio. Average total loans were up $183.2 million or 13% during the second quarter of 2012 compared to the second quarter of 2011, including a double digit increase in the commercial, home equity and consumer indirect portfolios.
The net interest margin on a tax-equivalent basis was 3.89% in the second quarter of 2012, compared with 4.00% in the second quarter of 2011. The Company’s yield on earning-assets decreased 38 basis points in the second quarter of 2012 compared with the same quarter last year, a result of cash flows being reinvested in the current low interest rate environment, which includes the impact of investing the excess cash from our branch acquisition into low yielding securities. The cost of interest-bearing liabilities decreased 34 basis points compared with the second quarter of 2011, primarily a result of the redemption of the Company’s 10.20% junior subordinated debentures during the third quarter of 2011 as well as the continued re-pricing of the Company’s certificates of deposit.
Noninterest Income
Noninterest income totaled $6.7 million in the second quarter of 2012, compared with $5.0 million in the second quarter of 2011. Reflected in those amounts were net pre-tax gains on investment securities of $1.2 million in the second quarter of 2012 and $4 thousand in the second quarter of 2011. The Company recognized gains from the sale of two pooled trust-preferred securities that had been written down in prior periods and included in non-performing assets.
Excluding gains from investment securities in both periods, noninterest income in the second quarter of 2012 totaled $5.5 million, compared with $5.0 million in the same quarter last year. The improvement in noninterest income as compared with the earlier quarter resulted predominantly from increases in company owned life insurance, loan servicing income and net gains from the sale of loans held for sale, partially offset by a decline in service charges on deposit accounts. An additional $18.0 million investment in company owned life insurance during the third quarter of 2011 was largely responsible for the $162 thousand increase in company owned life insurance income. A decrease in the valuation allowance for capitalized mortgage servicing assets resulted in the $160 thousand increase in loan servicing income. Gains from the sale of residential mortgage loans held for sale were $208 thousand higher than in the second quarter of 2011 due to increased origination volume. Service charges on deposit accounts were down $269 thousand in the second quarter primarily due to lower overdraft fee income.
Noninterest Expense
Noninterest expense in the second quarter of 2012 totaled $16.6 million, compared with $15.2 million in the second quarter of 2011. Included in the 2012 amount are branch acquisition-related expenses considered to be non-operating in nature. Exclusive of those expenses, noninterest operating expense was $15.6 million in the second quarter of 2012, an increase of $435 thousand from the same period last year. When comparing the second quarter of 2012 to the same quarter in 2011, the higher level of operating expense was due, in large part, to an increase in other noninterest expense, which included $249 thousand of severance expense associated with the retirement of one of our executive officers during the second quarter of 2012.
Balance Sheet and Capital Management
Total loans were $1.624 billion at June 30, 2012, up $103.1 million or 7% from March 31, 2012 and up $139.4 million or 9% from December 31, 2011. At June 30, 2012, total loans included $58.1 million in loans obtained in the First Niagara branch acquisition. Total investment securities were $787.2 million at June 30, 2012, up $63.5 million from March 31, 2012 and up $136.4 million from December 31, 2011.
Deposits were $2.135 billion at June 30, 2012, an increase of $68.7 million from the end of the first quarter and up $203.7 million compared with the end of 2011, largely due to $129.3 million in retail deposits assumed from the First Niagara branch acquisition. Public deposit balances decreased to 23% of total deposits at June 30, 2012, compared to 26% and 20% of total deposits at March 31, 2012 and December 31, 2011, respectively, due largely to the seasonality of municipal cash flows and the impact of the branch acquisition. The Company’s deposit mix remains favorably weighted in lower cost demand, savings and money market accounts, which comprised 67% of total deposits at the end of the second quarter.
Shareholders’ equity was $246.9 million at June 30, 2012, compared with $240.0 million at March 31, 2012 and $237.2 million at December 31, 2011. Net income for the quarter increased shareholders’ equity by $6.7 million, which was partially offset by common and preferred stock dividends of $2.3 million. Accumulated other comprehensive income included in shareholders’ equity increased $2.4 million during the second quarter due primarily to higher net unrealized gains on securities available for sale.The Company’s leverage ratio and total risk-based capital ratio decreased to 8.27% and 12.64%, respectively, at June 30, 2012, compared to 8.80% and 13.47%, respectively, at March 31, 2012, all of which exceeded the regulatory thresholds required to be classified as a “well capitalized” institution as established by the Company’s primary banking regulators. Balance sheet growth, primarily related to the completed and upcoming branch acquisitions, resulted in the lower capital ratios.
In the second quarter 2012, U.S. banking regulators issued proposed rules for the U.S. adoption of the Basel III regulatory capital framework. The proposals narrow the definition of capital, increase the minimum levels of required capital, introduce capital buffers and increase the risk weights for various asset classes. On a fully-phased-in pro forma basis, the Company is currently estimated to exceed the proposed capital levels.
In his concluding remarks, Mr. Humphrey added, “We are committed to enhancing shareholder value by utilizing our earnings to support future growth of the balance sheet and returning a portion of earnings to shareholders as future cash dividends. Our Board of Directors believes this represents a prudent and balanced approach to rewarding shareholders for their support while continuing to grow the Company. This is evidenced by our recent acquisition as well as an 8% increase in our quarterly dividend to 14 cents per share.”
Credit Quality
Non-performing loans increased to $11.3 million or 0.70% of total loans at June 30, 2012, compared to $8.2 million or 0.54% of total loans at March 31, 2012 and $7.1 million or 0.48% of total loans at December 31, 2011. The increase in non-performing loans is primarily attributable to two commercial relationships. Our ratio of non-performing loans to total loans continues to compare favorably to the average of our peer group, which was 3.05% of total loans at March 31, 2012, the most recent period for which information is available (Source: Federal Financial Institutions Examination Council — Bank Holding Company Performance Report as of March 31, 2012 — Top-tier bank holding companies having consolidated assets between $1 billion and $3 billion).
Net charge-offs of $1.1 million represented 0.29% of average loans on an annualized basis compared to $882 thousand or 0.24% in the first quarter of 2012. The provision for loan losses was $1.5 million for the second quarter of 2012, compared to $1.4 million for the first quarter of 2012. For the first six months of 2012, the provision for loan losses exceeded net charge-offs by $860 thousand as we continue to maintain the allowance for loan losses consistent with the growth in our loan portfolio and trends in asset quality.
The allowance for loan losses was $24.1 million at June 30, 2012, compared with $23.8 million at March 31, 2012 and $23.3 million at December 31, 2011. The ratio of the allowance for loan losses to total loans was 1.49% at June 30, 2012, compared with 1.56% at March 31, 2012 and 1.57% at December 31, 2011. Contributing to this ratio decline were the loans obtained in the First Niagara branch acquisition, which were recorded at fair market value as of the acquisition date with no allowance carried over. The ratio of allowance for loan losses to non-performing loans was 213% at June 30, 2012, compared with 289% at March 31, 2012 and 329% at December 31, 2011.
About Financial Institutions, Inc.
With over $2.6 billion in assets, Financial Institutions, Inc. provides diversified financial services through its subsidiaries, Five Star Bank and Five Star Investment Services, Inc. Five Star Bank provides a wide range of consumer and commercial banking services to individuals, municipalities and businesses through a network of over 50 offices and more than 70 ATMs in Western and Central New York State. Five Star Investment Services provides investment advice, brokerage and insurance products and services within the same New York State markets. Financial Institutions, Inc. and its subsidiaries employ over 600 individuals. The Company’s stock is listed on the Nasdaq Global Select Market under the symbol FISI. Additional information is available at the Company’s website:www.fiiwarsaw.com.
Non-GAAP Financial Information
This news release contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (“GAAP”). We believe that non-GAAP financial measures provide a meaningful comparison of the underlying operational performance of the Company, and facilitate investors’ assessments of business and performance trends in comparison to others in the financial services industry. In addition, we believe the exclusion of these non-operating items enables management to perform a more effective evaluation and comparison of the Company’s results and to assess performance in relation to the company’s ongoing operations. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Where non-GAAP disclosures are used in this news release, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this document.
Safe Harbor Statement
This press release may contain forward-looking statements as defined by federal securities laws. These statements may address issues that involve significant risks, uncertainties, estimates and assumptions made by management. Actual results could differ materially from current beliefs or projections. There are a number of important factors that could affect the Company’s forward-looking statements which include its ability to implement its strategic plan, its ability to redeploy investment assets into loan assets, whether it experiences greater credit losses than expected, the attitudes and preferences of its customers, its ability to successfully integrate recently acquired bank branches and profitably operate newly opened bank branches, the competitive environment, fluctuations in the fair value of securities in its investment portfolio, changes in the regulatory environment and general economic and credit market conditions nationally and regionally. For more information about these factors and other factors that could affect the Company’s forward-looking statements, please see the Company’s Annual Report onForm 10-K and its Quarterly Reports onForm 10-Q on file with the SEC. All of these factors should be carefully reviewed, and readers should not place undue reliance on these forward-looking statements. Except as required by law, the Company undertakes no obligation to revise these statements following the date of this press release.
*****
FINANCIAL INSTITUTIONS, INC. Selected Financial Information (Unaudited)
(Amounts in thousands, except per share amounts)
2012
2011
June 30,
March 31,
December 31,
September 30,
June 30,
SELECTED BALANCE SHEET DATA:
Cash and cash equivalents
$
61,813
77,025
57,583
67,601
46,084
Investment securities:
Available for sale
765,216
699,497
627,518
679,487
706,958
Held-to-maturity
22,016
24,196
23,297
23,127
24,091
Total investment securities
787,232
723,693
650,815
702,614
731,049
Loans held for sale
1,682
2,053
2,410
2,403
14,511
Loans:
Commercial business
245,437
233,764
233,836
223,796
217,430
Commercial mortgage
413,983
406,521
393,244
381,541
357,463
Residential mortgage
142,900
112,148
113,911
116,432
120,789
Home equity
264,911
237,019
231,766
222,640
215,637
Consumer indirect
531,645
508,085
487,713
465,910
431,611
Other consumer
25,278
23,491
24,306
24,808
25,122
Total loans
1,624,154
1,521,028
1,484,776
1,435,127
1,368,052
Allowance for loan losses
24,120
23,763
23,260
22,977
20,632
Total loans, net
1,600,034
1,497,265
1,461,516
1,412,150
1,347,420
Total interest-earning assets (2) (3)
2,389,171
2,226,472
2,115,622
2,115,822
2,094,684
Goodwill and other intangible assets, net
43,858
37,369
37,369
37,369
37,369
Total assets
2,622,751
2,460,820
2,336,353
2,358,811
2,282,944
Deposits:
Noninterest-bearing demand
422,165
404,186
393,421
395,267
358,574
Interest-bearing demand
420,386
435,701
362,555
404,925
376,306
Savings and money market
584,278
530,754
474,947
476,122
438,173
Certificates of deposit
708,442
695,928
700,676
707,357
699,186
Total deposits
2,135,271
2,066,569
1,931,599
1,983,671
1,872,239
Borrowings
200,824
117,347
150,698
103,075
159,097
Total interest-bearing liabilities
1,913,930
1,779,730
1,688,876
1,691,479
1,672,762
Shareholders’ equity
246,946
239,962
237,194
240,855
233,733
Common shareholders’ equity (4)
229,473
222,489
219,721
223,376
216,254
Tangible common shareholders’ equity (1)
185,615
185,120
182,352
186,007
178,885
Unrealized gain on investment securities, net of tax
$
14,487
12,316
13,570
14,743
11,486
Common shares outstanding
13,812
13,812
13,803
13,806
13,806
Treasury shares
350
350
359
356
356
CAPITAL RATIOS AND PER SHARE DATA:
Leverage ratio
8.27
%
8.80
8.63
8.67
9.30
Tier 1 risk-based capital
11.39
%
12.22
12.20
12.23
13.71
Total risk-based capital
12.64
%
13.47
13.45
13.49
14.96
Common equity to assets
8.75
%
9.04
9.40
9.47
9.47
Tangible common equity to tangible assets (1)
7.20
%
7.64
7.93
8.01
7.97
Common book value per share
$
16.61
16.11
15.92
16.18
15.66
Tangible common book value per share (1)
13.44
13.40
13.21
13.47
12.96
(1) See Appendix A – Non-GAAP Reconciliation for the computation of this Non-GAAP measure.
(2) Includes investment securities at adjusted amortized cost and non-performing investment securities.
(3) Includes nonaccrual loans.
(4) Excludes preferred shareholders’ equity.
FINANCIAL INSTITUTIONS, INC. Selected Financial Information (Unaudited) (Amounts in thousands, except per share amounts)
Quarterly Trends
Six months ended
2012
2011
June 30,
Second
First
Fourth
Third
Second
2012
2011
Quarter
Quarter
Quarter
Quarter
Quarter
SELECTED INCOME STATEMENT DATA:
Interest income
$
47,181
47,469
23,731
23,450
23,875
23,774
23,830
Interest expense
4,852
7,378
2,343
2,509
2,721
3,156
3,577
Net interest income
42,329
40,091
21,388
20,941
21,154
20,618
20,253
Provision for loan losses
2,844
2,138
1,459
1,385
2,162
3,480
1,328
Net interest income after provision
for loan losses
39,485
37,953
19,929
19,556
18,992
17,138
18,925
Noninterest income:
Service charges on deposits
3,809
4,348
1,974
1,835
2,074
2,257
2,243
ATM and debit card
2,149
2,139
1,072
1,077
1,103
1,117
1,123
Broker-dealer fees and commissions
1,021
788
434
587
500
541
402
Loan servicing
503
598
409
94
173
64
249
Company owned life insurance
867
545
441
426
457
422
279
Net gain on sale of loans held for sale
658
341
325
333
221
318
117
Net gain on investment securities
1,568
7
1,237
331
656
2,340
4
Impairment charge on investment securities
(91
)
—
—
(91
)
(18
)
—
—
Net gain (loss) on sale of other assets
35
37
29
6
23
7
(8
)
Other
1,622
1,319
769
853
578
970
565
Total noninterest income
12,141
10,122
6,690
5,451
5,767
8,036
4,974
Noninterest expense:
Salaries and employee benefits
17,753
17,255
8,822
8,931
9,080
9,104
8,854
Occupancy and equipment
5,485
5,487
2,715
2,770
2,659
2,722
2,644
Professional services
1,791
1,253
1,080
711
794
570
571
Computer and data processing
1,486
1,251
886
600
583
603
648
Supplies and postage
1,031
876
573
458
441
461
424
FDIC assessments
601
775
304
297
301
437
168
Advertising and promotions
238
418
137
101
364
477
253
Loss on extinguishment of debt
—
—
—
—
—
1,083
—
Other
3,853
3,188
2,064
1,789
2,057
1,555
1,591
Total noninterest expense
32,238
30,503
16,581
15,657
16,279
17,012
15,153
Income before income taxes
19,388
17,572
10,038
9,350
8,480
8,162
8,746
Income tax expense
6,536
6,033
3,382
3,154
2,718
2,664
3,027
Net income
$
12,852
11,539
6,656
6,196
5,762
5,498
5,719
Preferred stock dividends
737
2,445
368
369
369
368
370
Net income available to
common shareholders
$
12,115
9,094
6,288
5,827
5,393
5,130
5,349
FINANCIAL RATIOS AND STOCK DATA:
Earnings per share – basic
$
0.89
0.73
0.46
0.43
0.39
0.38
0.39
Earnings per share – diluted
$
0.88
0.72
0.46
0.42
0.39
0.37
0.39
Cash dividends declared on common stock
$
0.27
0.22
0.14
0.13
0.13
0.12
0.12
Common dividend payout ratio (2)
30.34
%
30.14
30.43
30.23
33.33
31.58
30.77
Dividend yield (annualized)
3.22
%
2.70
3.34
3.23
3.20
3.34
2.93
Return on average assets
1.07
%
1.04
1.08
1.06
0.98
0.95
1.01
Return on average equity
10.65
%
10.43
10.94
10.36
9.44
9.07
10.03
Return on average common equity (3)
10.82
%
9.64
11.12
10.51
9.53
9.13
10.17
Return on average tangible common equity (1)
12.99
%
11.99
13.36
12.62
11.43
10.97
12.35
Efficiency ratio (1)
59.52
%
59.32
60.41
58.59
60.49
62.97
58.68
Stock price (Nasdaq: FISI):
High
$
17.99
20.36
17.66
17.99
17.26
17.98
17.93
Low
$
15.22
15.20
15.51
15.22
12.18
13.63
15.20
Close
$
16.88
16.42
16.88
16.17
16.14
14.26
16.42
(1) See Appendix A – Non-GAAP Reconciliation for the computation of this Non-GAAP measure.
(2) Common dividend payout ratio equals dividends declared during the period divided by earnings per share for the equivalent period.
(3) Net income available to common shareholders divided by average common equity.
FINANCIAL INSTITUTIONS, INC. Selected Financial Information (Unaudited)
(Amounts in thousands)
Quarterly Trends
Six months ended
2012
2011
June 30,
Second
First
Fourth
Third
Second
2012
2011
Quarter
Quarter
Quarter
Quarter
Quarter
SELECTED AVERAGE BALANCES:
Federal funds sold and interest-earning deposits
$
94
186
94
94
94
93
116
Investment securities (2)
670,157
698,138
715,431
624,883
654,260
692,944
714,490
Loans (3):
Commercial business
234,901
209,977
237,936
231,865
225,274
216,980
212,260
Commercial mortgage
406,939
361,247
411,871
402,007
392,493
368,071
361,265
Residential mortgage
114,893
125,915
115,621
114,166
116,320
118,952
123,294
Home equity
237,879
210,558
242,208
233,550
226,597
217,808
212,439
Consumer indirect
506,360
424,818
517,859
494,861
477,017
450,813
431,728
Other consumer
23,487
24,971
23,420
23,554
24,168
24,644
24,717
Total loans
1,524,459
1,357,486
1,548,915
1,500,003
1,461,869
1,397,268
1,365,702
Total interest-earning assets
2,194,710
2,055,810
2,264,440
2,124,980
2,116,223
2,090,305
2,080,308
Goodwill and other intangible assets, net
37,694
37,369
38,020
37,369
37,369
37,369
37,369
Total assets
2,408,309
2,245,197
2,473,888
2,342,730
2,322,303
2,294,856
2,268,359
Interest-bearing liabilities:
Interest-bearing demand
401,037
393,842
409,720
392,353
378,584
366,567
391,899
Savings and money market
530,622
451,447
553,701
507,543
464,904
436,336
468,130
Certificates of deposit
696,237
719,943
689,103
703,372
703,571
706,435
707,608
Borrowings
129,906
87,888
162,718
97,093
127,914
155,534
97,794
Total interest-bearing liabilities
1,757,802
1,653,120
1,815,242
1,700,361
1,674,973
1,664,872
1,665,431
Noninterest-bearing demand deposits
392,753
354,213
398,353
387,153
388,670
375,518
358,349
Total deposits
2,020,649
1,919,445
2,050,877
1,990,421
1,935,729
1,884,856
1,925,986
Total liabilities
2,165,632
2,022,098
2,229,046
2,102,217
2,080,177
2,054,477
2,039,750
Shareholders’ equity
242,677
223,099
244,842
240,513
242,126
240,379
228,609
Common equity (4)
225,204
190,328
227,369
223,040
224,649
222,900
211,051
Tangible common equity (1)
$
187,510
152,959
189,349
185,671
187,280
185,531
173,682
Common shares outstanding:
Basic
13,686
12,489
13,697
13,675
13,636
13,635
13,631
Diluted
13,742
12,593
13,750
13,733
13,722
13,704
13,707
SELECTED AVERAGE YIELDS:
(Tax equivalent basis)
Federal funds sold and interest-earning deposits
0.25
%
0.22
0.21
0.29
0.18
0.18
0.22
Investment securities
2.75
%
2.98
2.68
2.83
2.79
2.95
2.96
Loans
5.15
%
5.66
5.06
5.24
5.38
5.45
5.60
Total interest-earning assets
4.42
%
4.75
4.31
4.53
4.58
4.62
4.69
Interest-bearing demand
0.15
%
0.17
0.14
0.15
0.15
0.16
0.16
Savings and money market
0.20
%
0.24
0.18
0.22
0.23
0.23
0.24
Certificates of deposit
1.08
%
1.48
1.03
1.13
1.22
1.31
1.42
Borrowings
0.44
%
2.85
0.43
0.46
0.45
1.10
2.63
Total interest-bearing liabilities
0.56
%
0.90
0.52
0.59
0.64
0.75
0.86
Net interest rate spread
3.86
%
3.85
3.79
3.94
3.94
3.87
3.83
Net interest rate margin
3.97
%
4.02
3.89
4.05
4.07
4.02
4.00
(1) See Appendix A – Non-GAAP Reconciliation for the computation of this Non-GAAP measure.
(2) Includes investment securities at adjusted amortized cost and non-performing investment securities.
(3) Includes nonaccrual loans.
(4) Excludes preferred shareholders’ equity.
FINANCIAL INSTITUTIONS, INC. Selected Financial Information (Unaudited) (Amounts in thousands)
2012
2011
June 30,
March 31,
December 31,
September 30,
June 30,
ASSET QUALITY DATA:
Allowance for Loan Losses
Beginning balance
$
23,763
23,260
22,977
20,632
20,119
Net loan charge-offs (recoveries):
Commercial business
(11
)
(22
)
880
14
115
Commercial mortgage
166
105
131
36
11
Residential mortgage
99
36
89
(9
)
7
Home equity
82
(5
)
39
121
148
Consumer indirect
661
668
652
855
402
Other consumer
105
100
88
118
132
Total net charge-offs
1,102
882
1,879
1,135
815
Provision for loan losses
1,459
1,385
2,162
3,480
1,328
Ending balance
$
24,120
23,763
23,260
22,977
20,632
Supplemental information
Period end loans:
Originated loans
$
1,566,025
1,521,028
1,484,776
1,435,127
1,368,052
Acquired loans
58,129
—
—
—
—
Total loans
$
1,624,154
1,521,028
1,484,776
1,435,127
1,368,052
Allowance for loan losses to total loans
1.49
%
1.56
1.57
1.60
1.51
Allowance for loan losses for originated
loans to originated loans
1.54
%
1.56
1.57
1.60
1.51
Net charge-offs (recoveries) to average loans (annualized):
Commercial business
-0.02
%
-0.04
1.55
0.03
0.22
Commercial mortgage
0.16
%
0.10
0.13
0.04
0.01
Residential mortgage
0.34
%
0.13
0.30
-0.03
0.02
Home equity
0.14
%
-0.01
0.07
0.22
0.28
Consumer indirect
0.51
%
0.54
0.54
0.75
0.37
Other consumer
1.80
%
1.70
1.44
1.90
2.14
Total loans
0.29
%
0.24
0.51
0.32
0.24
Non-performing loans:
Commercial business
4,150
1,863
1,259
2,380
712
Commercial mortgage
3,598
3,040
2,928
2,330
2,862
Residential mortgage
1,918
1,929
1,644
1,996
2,262
Home equity
973
934
682
501
472
Consumer indirect
695
444
558
586
667
Other consumer
4
12
5
4
4
Total non-performing loans
11,338
8,222
7,076
7,797
6,979
Foreclosed assets
270
258
475
582
599
Non-performing investment securities
1,145
1,505
1,636
5,341
6,963
Total non-performing assets
$
12,753
9,985
9,187
13,720
14,541
Total non-performing loans to total loans
0.70
%
0.54
0.48
0.54
0.51
Total non-performing loans to originated loans
0.72
%
0.54
0.48
0.54
0.51
Total non-performing assets to total assets
0.49
%
0.41
0.39
0.58
0.64
Allowance for loan losses to non-performing loans
213
%
289
329
295
296
1
FINANCIAL INSTITUTIONS, INC. Appendix A — Non-GAAP Reconciliation (Unaudited) (In thousands, except per share amounts)
Six months ended
2012
2011
June 30,
Second
First
Fourth
Third
Second
2012
2011
Quarter
Quarter
Quarter
Quarter
Quarter
Computation of efficiency ratio:
Noninterest expense
$
32,238
30,503
16,581
15,657
16,279
17,012
15,153
Other real estate owned expense
(59
)
(98
)
(22
)
(37
)
(75
)
(120
)
(39
)
Adjusted noninterest expense (non-GAAP)
$
32,179
30,405
16,559
15,620
16,204
16,892
15,114
Net interest income on a tax equivalent basis
$
43,404
41,139
21,956
21,448
21,657
21,129
20,787
Noninterest income
12,141
10,122
6,690
5,451
5,767
8,036
4,974
Net gain on disposal of investment securities
(1,568
)
(7
)
(1,237
)
(331
)
(656
)
(2,340
)
(4
)
Impairment charges on investment securities
91
—
—
91
18
—
—
Adjusted total revenue (non-GAAP)
$
54,068
51,254
27,409
26,659
26,786
26,825
25,757
Efficiency ratio (non-GAAP) (1)
59.52
%
59.32
60.41
58.59
60.49
62.97
58.68
Average tangible common equity:
Average total shareholders’ equity
$
242,677
223,099
244,842
240,513
242,126
240,379
228,609
Average goodwill and other intangible assets, net
(37,694
)
(37,369
)
(38,020
)
(37,369
)
(37,369
)
(37,369
)
(37,369
)
Average Preferred equity
(17,473
)
(32,771
)
(17,473
)
(17,473
)
(17,477
)
(17,479
)
(17,558
)
Average tangible common equity (non-GAAP)
$
187,510
152,959
189,349
185,671
187,280
185,531
173,682
Return on average tangible common equity (2)
12.99
%
11.99
13.36
12.62
11.43
10.97
12.35
Net operating income:
Net income
$
12,852
11,539
6,656
6,196
5,762
5,498
5,719
Branch acquisition expenses, net of tax
704
—
646
58
—
—
—
Net operating income (non-GAAP)
$
13,556
11,539
7,302
6,254
5,762
5,498
5,719
Net operating income available to common shareholders:
Net income available to common shareholders
$
12,115
9,094
6,288
5,827
5,393
5,130
5,349
Branch acquisition expenses, net of tax
704
—
646
58
—
—
—
Net operating income available to common
shareholders (non-GAAP)
$
12,819
9,094
6,934
5,885
5,393
5,130
5,349
Financial ratios computed on an operating basis:
Earnings per share – basic
$
0.94
0.73
0.51
0.43
0.39
0.38
0.39
Earnings per share – diluted
$
0.93
0.72
0.50
0.43
0.39
0.37
0.39
Weighted average shares outstanding – basic
13,686
12,489
13,697
13,675
13,636
13,635
13,631
Weighted average shares outstanding – diluted
13,742
12,593
13,750
13,733
13,722
13,704
13,707
Efficiency ratio
57.51
%
59.32
56.79
58.26
60.49
62.97
58.68
Return on average assets
1.13
%
1.04
1.19
1.07
0.98
0.95
1.01
Return on average equity
11.23
%
10.43
11.99
10.46
9.44
9.07
10.03
Return on average common equity
11.45
%
9.64
12.27
10.61
9.53
9.13
10.17
Return on average tangible common equity
13.75
%
11.99
14.73
12.75
11.43
10.97
12.35
(1) Efficiency ratio equals noninterest expense less other real estate expense as a percentage of adjusted total revenue, defined as the sum of tax-equivalent net interest income and noninterest income before net gains and impairment charges on investment securities.
(2) Annualized net income divided by average tangible common equity.
FINANCIAL INSTITUTIONS, INC. Appendix A — Non-GAAP Reconciliation (Unaudited) (In thousands, except per share amounts)
2012
2011
June 30,
March 31,
December 31,
September 30,
June 30,
Ending tangible assets:
Total assets
$
2,622,751
2,460,820
2,336,353
2,358,811
2,282,944
Less: Goodwill and other intangible assets, net
43,858
37,369
37,369
37,369
37,369
Tangible assets (non-GAAP)
$
2,578,893
2,423,451
2,298,984
2,321,442
2,245,575
Ending tangible common equity:
Total shareholders’ equity
246,946
239,962
237,194
240,855
233,733
Less: Goodwill and other intangible assets, net
43,858
37,369
37,369
37,369
37,369
Less: Preferred equity
17,473
17,473
17,473
17,479
17,479
Tangible common equity (non-GAAP)
$
185,615
185,120
182,352
186,007
178,885
Tangible common equity to tangible assets (1)
7.20
%
7.64
7.93
8.01
7.97
Common shares outstanding
13,812
13,812
13,803
13,806
13,806
Tangible common book value per share (2)
$
13.44
13.40
13.21
13.47
12.96
(1) Tangible common equity divided by tangible assets.
(2) Tangible common equity divided by common shares outstanding.
2
We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.
