Exhibit 99.1
Financial Institutions, Inc. Reports 2003 Earnings
WARSAW, N.Y., Jan. 22 /PRNewswire-FirstCall/ -- Financial Institutions,
Inc. (Nasdaq: FISI) today reported net income of $14,247,000 for the year
ended December 31, 2003 compared to $26,456,000 in 2002. Diluted earnings per
share for the year 2003 were $1.13, down from $2.23 per share in 2002. Fourth
quarter 2003 net income was $2,246,000 compared to $6,271,000 for the
comparable period in 2002. Diluted earnings per share were $0.17 for the
fourth quarter of 2003 compared to $0.53 for the same period in 2002. Return
on average common equity was 7.65% for the twelve months of 2003 compared to
17.01% last year. The most significant impact on fourth quarter and full year
2003 financial results was the provision for loan losses, which totaled
$8,327,000 for the fourth quarter 2003, an increase of $5,848,000 over the
$2,479,000 provision for loan losses for the fourth quarter of 2002. For the
twelve months of 2003 the provision for loan losses totaled $22,526,000, an
increase of $16,407,000 over the $6,119,000 provision for loan losses for the
2002 period.
Peter G. Humphrey, President and CEO of Financial Institutions, Inc. (FII)
stated: "Credit quality issues made 2003 a challenging year for the Company.
High levels of nonperforming loans with associated charge-offs and increases
to the allowance for loan losses significantly impacted our financial results.
In addition, increased regulatory oversight is in place in the form of written
agreements at our two national banks. We have committed substantial resources
to strengthening the credit administration and underwriting functions. The
year also saw market interest rates reaching historically low levels and in
that challenging environment our net interest income was stable at $75
million. Noninterest income increased $4 million to $26 million led by a $1.8
million increase in mortgage banking income. We are pleased with the results
of our de novo branching with recently opened offices making significant
contributions to a 6% or $110 million increase in our total deposits."
Nonperforming assets increased $0.2 million during the fourth quarter of
2003 to $52.1 million at December 31, 2003 compared to $51.9 million at
September 30, 2003 and increased $13.7 million from $38.4 million at December
31, 2002. Net loan charge-offs for the fourth quarter of 2003 were $8.3
million, or 2.44% of average loans, compared to $1.3 million, or 0.40% of
average loans, in the fourth quarter of 2002 and were $15.1 million, or 1.11%
of average loans, for full year 2003 compared to $3.7 million, or 0.30% of
average loans, in 2002. Nonperforming agricultural credits, principally dairy
farms, increased $4.4 million in the fourth quarter of 2003 and have increased
$10.3 million since December 31, 2002. Total nonperforming agricultural loans
were $22.1 million at December 31, 2003 or 9.40% of total agricultural loans.
Borrower cash flows in the dairy industry have recently improved due to some
stabilization and upward movement in milk prices. Commercial and commercial
mortgage loans represented $6.0 million of fourth quarter 2003 net charge-offs
and $11.3 million for full year 2003.
The ratio of the allowance for loan losses to nonperforming loans was 56%
at December 31, 2003 compared to 58% at December 31, 2002 and 57% at September
30, 2003. The ratio of the allowance for loan losses to total loans increased
to 2.16% at December 31, 2003 compared to 1.64% at year end 2002 and 2.12% at
September 30, 2002. The provisions for loan losses were $8.3 million for the
fourth quarter of 2003 and $22.5 million for the twelve months ending December
31, 2003.
For the fourth quarter of 2003, net interest income decreased 2% to
$18,927,000, compared to $19,258,000 for the fourth quarter of 2002. Net
interest income in 2003 was $75.5 million compared to $75.9 million in 2002.
Net interest margin was 3.95% for the year ended December 31, 2003, a drop of
42 basis points from the 4.37% level for the same period last year. Growth in
average earning assets of $183 million, or 10%, served to partially offset the
fall in net interest margin. The growth in average earning assets reflects an
average increase of $123 million in the Company's loan portfolio. The
principal funding source for the average earning asset growth was deposits,
with the average for the year ended December 31, 2003 increasing $194 million
or 12% over the average for the same period in 2002. Net interest margin
declined in 2003, as general market interest rates declined to historically
low levels. As overall interest rates have fallen the Company's yield on
earning assets have declined more rapidly than the cost of funds. Lost
interest on the higher levels of nonaccrual loans have also contributed to the
decline in net interest margin. For the fourth quarter of 2003 net interest
margin was 3.96% compared to 4.21% in the same quarter last year.
Noninterest income increased 5% in the fourth quarter of 2003 to
$6,751,000 from $6,408,000 for the fourth quarter of 2002. For the twelve
months ending December 31, 2003 noninterest income was $26,072,000 compared to
$22,189,000 for the same period last year. The increase in noninterest income
in 2003 compared to 2002 is primarily attributed to an increase in mortgage
banking activities of $1.8 million, growth in deposits and the related service
fees of $0.9 million, and an increase in net security gains of $0.8 million.
The increase in mortgage banking revenues corresponds with the increase in
residential mortgage refinancing activity resulting from the historically low
interest rate environment. The Company sells most fixed rate newly originated
and refinanced mortgage loans in the secondary market and retains the
servicing rights. The Company's loan servicing income portfolio was $385
million at December 31, 2003 compared to $356 million at December 31, 2002.
Noninterest expense for the fourth quarter of 2003 totaled $15,404,000
compared with $14,438,000 for the fourth quarter of 2002. For the twelve
months ending December 31, 2003, noninterest expense was $60,823,000 compared
to $53,049,000 for the same period last year. The increased level of
noninterest expense is attributed to higher credit collection costs, costs of
opening new branch offices and costs for additional lending and credit
administration staff. The additional noninterest expenses, coupled with a
slowing of revenue growth, are the principal factors in an increase in the
Company's efficiency ratio to 55.73% for the twelve months ended December 31,
2003, compared to 50.62% for the same period a year ago.
At December 31, 2003 the Company's total shareholders' equity was $183
million compared to $178 million a year earlier. During the fourth quarter of
2003 the Company completed a debt-financing plan that raised $25 million. A
portion of the proceeds of that financing were contributed as capital to the
Company's National Bank of Geneva and Bath National Bank subsidiaries allowing
those banks to meet higher capital ratios that were required to be met by
March 31, 2004 in agreements imposed by their regulator.
At December 31, 2003 the Company had total assets of $2.174 billion, an
increase of 3% from $2.105 billion at December 31, 2002. Total deposits were
$1.819 billion at year-end 2003, compared with $1.709 billion a year earlier.
Book value per common share at December 31, 2003 was $14.81, an increase of 2%
from $14.46 at December 31, 2002. Total common dividends of $0.64 per share
were declared in 2003, an increase of $0.06 or 10% over the $0.58 per share
declared in 2002.
FII is the bank holding company parent of Wyoming County Bank, The
National Bank of Geneva, Bath National Bank, and First Tier Bank and Trust.
The four banks provide a wide range of consumer and commercial banking
services to individuals, municipalities, and businesses through a network of
48 offices and 69 ATMs in Western and Central New York State. FII's Financial
Services Group also provides diversified financial services to its customers
and clients, including brokerage, trust, insurance and employee benefits and
compensation consulting. More information on FII and its subsidiaries is
available through the Company web site at www.fiiwarsaw.com.
This press release contains 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. Please refer to the Company's filings with the Securities and
Exchange Commission for a summary of important factors that could affect the
Company's forward-looking statements. The Company undertakes no obligation to
revise these statements following the date of this press release.
FINANCIAL INSTITUTIONS, INC. AND SUBSIDIARIES
Consolidated Statement of Income
(Dollars in thousands, except per share amounts)
For the three months ended
December 31,
2003 2002 $ %
Change Change
Interest income $26,849 $29,609 $(2,760) (9)%
Interest expense 7,922 10,351 (2,429) (23)%
Net interest income 18,927 19,258 (331) (2)%
Provision for loan
losses 8,327 2,479 5,848 236%
Net interest income
after provision for
loan losses 10,600 16,779 (6,179) (37)%
Noninterest income:
Service charges on
deposits 3,062 2,866 196 7%
Financial services
group fees and
commissions 1,582 1,546 36 2%
Mortgage banking
activities 1,187 623 564 91%
Gain (loss) on sale
and call of securities 18 246 (228) (93)%
Other 902 1,127 (225) (20)%
Total noninterest
income 6,751 6,408 343 5%
Noninterest expense:
Salaries and employee
benefits 8,417 8,264 153 2%
Other 6,987 6,174 813 13%
Total noninterest
expense 15,404 14,438 966 7%
Income before income
taxes 1,947 8,749 (6,802) (78)%
Income taxes (299) 2,478 (2,777) (112)%
Net income 2,246 6,271 (4,025) (64)%
Preferred stock dividends 373 374 (1) - %
Net income available to
common shareholders $ 1,873 $ 5,897 $(4,024) (68)%
Taxable-equivalent net
interest income $20,032 $20,401 $(369) (2)%
Per common share data:
Net income - basic $0.17 $0.53 $(0.36) (68)%
Net income - diluted $0.17 $0.53 $(0.36) (68)%
Cash dividends
declared $0.16 $0.16 $0.00 - %
Book value $14.81 $14.46 $0.35 2 %
Common shares outstanding:
Weighted average shares
- actual 11,165,806 11,099,450
Weighted average
shares - dilute 11,249,122 11,212,079
Period end actual 11,168,310 11,103,814
Performance ratios,
annualized:
Return on average
assets 0.41% 1.21%
Return on average common
equity 4.44% 14.74%
Common dividend payout
ratio 94.12% 30.19%
Net interest margin
(tax-equivalent) 3.96% 4.21%
Efficiency ratio 55.33% 53.16%
Asset quality data:
Loans past due over
90 days and still
accruing $ 1,709 $ 1,091
Restructured loans 3,069 4,129
Nonaccrual loans 46,672 31,886
Other real estate owned 653 1,251
Total nonperforming
assets $ 52,103 $ 38,357
Net loan charge-offs $ 8,316 $ 1,294
Asset quality ratios:
Nonperforming loans
to total loans 3.82% 2.81%
Nonperforming assets to
total loans and ORE 3.87% 2.90%
Allowance for loan losses
to total loans 2.16% 1.64%
Allowance for loan losses
to nonperforming loans 56% 58%
Net loan charge-offs to
average loans
(annualized) 2.44% 0.40%
Capital ratios:
Average common equity to
average total assets 7.78% 7.70%
Leverage ratio 7.04% 6.96%
Tier 1 risk-based capital
ratio 10.20% 9.82%
Risk-based capital
ratio 11.44% 11.08%
FINANCIAL INSTITUTIONS, INC. AND SUBSIDIARIES
Consolidated Statement of Income
(Dollars in thousands, except per share amounts)
For the year ended
December 31,
2003 2002 $ %
Change Change
Interest income $ 111,450 $ 118,439 $ (6,989) (6)%
Interest expense 35,949 42,585 (6,636) (16)%
Net interest income 75,501 75,854 (353) - %
Provision for loan
losses 22,526 6,119 16,407 268%
Net interest income
after provision for
loan losses 52,975 69,735 (16,760) (24)%
Noninterest income:
Service charges on
deposits 11,461 10,603 858 8%
Financial services
group fees and
commissions 5,692 5,629 63 1%
Mortgage banking
activities 4,036 2,279 1,757 77%
Gain (loss) on sale
and call of
securities 1,041 285 756 265%
Other 3,842 3,393 449 13%
Total noninterest
income 26,072 22,189 3,883 17%
Noninterest expense:
Salaries and employee
benefits 33,825 30,093 3,732 12%
Other 26,998 22,956 4,042 18%
Total noninterest
expense 60,823 53,049 7,774 15%
Income before income
taxes 18,224 38,875 (20,651) (53)%
Income taxes 3,977 12,419 (8,442) (68)%
Net income 14,247 26,456 (12,209) (46)%
Preferred stock
dividends 1,495 1,496 (1) - %
Net income available
to common
shareholders $12,752 $24,960 $ (12,208) (49)%
Taxable-equivalent
net interest income $79,979 $80,442 $(463) (1)%
Per common share data:
Net income - basic $1.14 $2.26 $(1.12) (50)%
Net income - diluted $1.13 $2.23 $(1.10) (49)%
Cash dividends
declared $0.64 $0.58 $0.06 10%
Common shares outstanding:
Weighted average
shares - actual 11,148,042 11,068,247
Weighted average
shares - diluted 11,245,939 11,217,630
Period end actual 11,168,310 11,103,814
Performance ratios,
annualized:
Return on average
assets 0.66% 1.35%
Return on average
common equity 7.65% 17.01%
Common dividend
payout ratio 56.14% 25.66%
Net interest margin
(tax-equivalent) 3.95% 4.37%
Efficiency ratio 55.73% 50.62%
Asset quality data and ratio:
Net loan
charge-offs $ 15,121 $3,707
Net loan charge-offs
to average loans 1.11% 0.30%
FINANCIAL INSTITUTIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
(Dollars in thousands)
December 31
2003 2002 $ %
Change Change
ASSETS
Cash, due from banks
and interest-bearing
deposits $45,635 $48,429 $(2,794) (6)%
Federal funds sold 40,006 -- 40,006 100%
Investment securities 652,597 643,987 8,610 1%
Loans 1,345,317 1,321,892 23,425 2%
Allowance for loan
losses (29,064) (21,660) (7,404) 34%
Loans, net 1,316,253 1,300,232 16,021 1%
Goodwill 40,621 40,593 28 -%
Other assets 78,620 71,793 6,827 10%
Total assets $2,173,732 $2,105,034 $68,698 3%
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits:
Demand $ 264,990 $240,755 24,235 10%
Savings, money
market, and
int-bearing
checking 784,219 779,772 4,447 1%
Certificates of
deposit 769,682 687,996 81,686 12%
Total deposits 1,818,891 1,708,523 110,368 6%
Short-term borrowings 50,025 87,189 (37,164) (43)%
Long-term borrowings 87,520 92,090 (4,570) (5)%
Junior subordinated
debentures 16,702 16,200 502 3%
Other liabilities 17,491 22,738 (5,247) (23)%
Total liabilities 1,990,629 1,926,740 63,889 3%
Shareholders' equity:
Preferred equity 17,735 17,742 (7) -%
Common equity 165,368 160,552 4,816 3%
Total shareholders'
equity (1) 183,103 178,294 4,809 3%
Total liabilities
and shareholders'
equity $2,173,732 $2,105,034 $68,698 3%
(1) Includes the after-tax impact of net unrealized gains on investment
securities classified as available for sale of $8,197 and $10,368 at
December 31, 2003 and 2002, respectively.
FINANCIAL INSTITUTIONS, INC. AND SUBSIDIARIES
Consolidated Average Statements of Financial Condition
(Dollars in thousands)
For the three months ended
December 31,
2003 2002 $ %
Change Change
ASSETS
Cash, due from banks
and interest-bearing
deposits $47,924 $42,516 $ 5,408 13%
Federal funds sold 41,617 29,991 11,626 39%
Investment securities 611,429 608,812 2,617 -%
Loans 1,361,932 1,295,104 66,828 5%
Allowance for loan
losses (28,300) (20,610) (7,690) 37%
Loans, net 1,333,632 1,274,494 59,138 5%
Goodwill 40,621 37,918 2,703 7%
Other assets 78,085 66,664 11,421 17%
Total assets $2,153,308 $2,060,395 $92,913 5%
LIABILITIES AND SHAREHOLDERS'
EQUITY
Deposits:
Demand 263,060 231,692 31,368 14%
Savings, money
market, and
int-bearing
checking 811,031 783,370 27,661 4%
Certificates of
deposit 730,950 675,660 55,290 8%
Total deposits 1,805,041 1,690,722 114,319 7%
Short-term borrowings 57,399 48,031 9,368 20%
Long-term borrowings 71,813 106,831 (35,018) (33)%
Junior subordinated
debentures 16,200 16,200 -- -%
Other liabilities 17,601 22,117 (4,516) (20)%
Total liabilities 1,968,054 1,883,901 84,153 4%
Shareholders' equity:
Preferred equity 17,735 17,743 (8) -%
Common equity 167,519 158,751 8,768 6%
Total shareholders'
equity (1) 185,254 176,494 8,760 5%
Total liabilities
and shareholders'
equity $2,153,308 $2,060,395 $92,913 5%
FINANCIAL INSTITUTIONS, INC. AND SUBSIDIARIES
Consolidated Average Statements of Financial Condition
(Dollars in thousands)
For the year ended
December 31,
2003 2002 $ %
Change Change
ASSETS
Cash, due from banks and
interest-bearing
deposits $44,249 $41,051 $3,198 8%
Federal funds sold 45,286 28,681 16,605 58%
Investment securities 619,328 575,714 43,614 8%
Loans 1,357,629 1,234,804 122,825 10%
Allowance for loan
losses (25,135) (20,030) (5,105) 25%
Loans, net 1,332,494 1,214,774 117,720 10%
Goodwill 40,616 37,205 3,411 9%
Other assets 73,764 67,591 6,173 9%
Total assets $2,155,737 $1,965,016 $190,721 10%
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits:
Demand 245,234 219,028 26,206 12%
Savings, money market,
and int-bearing
checking 800,854 721,395 79,459 11%
Certificates of
deposit 744,022 655,737 88,285 13%
Total deposits 1,790,110 1,596,160 193,950 12%
Short-term borrowings 61,954 77,883 (15,929) (20)%
Long-term borrowings 81,795 90,000 (8,205) (9)%
Junior subordinated
debentures 16,200 16,200 -- -%
Other liabilities 21,165 20,306 859 4%
Total liabilities 1,971,224 1,800,549 170,675 9%
Shareholders' equity:
Preferred equity 17,738 17,750 (12) -%
Common equity 166,775 146,717 20,058 14%
Total shareholders'
equity (1) 184,513 164,467 20,046 12%
Total liabilities and
shareholders'
equity $2,155,737 $1,965,016 $190,721 10%
SOURCE Financial Institutions, Inc.
-0- 01/22/2004
/CONTACT: Ronald A. Miller, Senior Vice President and Chief Financial
Officer of Financial Institutions, Inc., +1-585-786-1102/
/Photo: http://www.newscom.com/cgi-bin/prnh/20030114/FISILOGO /
/Web site: http://www.fiiwarsaw.com/
(FISI)
CO: Financial Institutions, Inc.
ST: New York
IN: FIN
SU: ERN