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