UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
May 1, 2001
Date of Report (Date of earliest event reported)
FINANCIAL INSTITUTIONS, INC.
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(Exact name of registrant as specified in its charter)
New York 0-26481 16-0816610
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(State of other (Commission (IRS Employer
jurisdiction of File No.) Identification No.)
incorporation or
organization)
220 Liberty Street, Warsaw, New York 14569
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(Address of principal executive offices and zip code)
(716) 786-1100
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(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets
On November 2, 2000, Bath National Corporation ("Bath") and Financial
Institutions, Inc. ("FII"), entered into an Agreement and Plan of Merger (the
"Merger Agreement") dated November 2, 2000, between Bath, FII and FII's recently
formed merger subsidiary, FI Subsidiary I, Inc. ("FISI").
On May 1, 2001, Financial Institutions, Inc. acquired Bath National
Corporation in accordance with the Agreement and Plan of Merger and Bath
National Bank became a wholly owned subsidiary of FII (the "Merger").
The consideration for this transaction was $48.00 per issued and
outstanding share of Bath for a total aggregate consideration of $62,600,000.
The sources of the consideration were general corporate funds, approximately
$15,000,000 in proceeds from FII's issuance of guaranteed preferred beneficial
interests in corporation's junior subordinated debentures and approximately
$6,000,000 from a third-party lender. The Merger was accounted for as a purchase
transaction.
On May 11, 2001, FII filed a Form 8-K disclosing the completion of the
Merger. Form 8-K/A filed herewith includes the financial statements required by
Item 7 of Form 8-K.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial statements of the company acquired.
(i) The audited consolidated financial statements of Bath National
Corporation for the year ended December 31, 2000 contained in its
Form 10-K filed with the SEC on April 2, 2001 are incorporated by
reference thereto.
(ii) The unaudited consolidated financial statements of Bath National
Corporation for the quarters ended March 31, 2001 and March 31, 2000
are included on pages 3 and 4.
(b) Proforma Financial Information.
Proforma financial information for the year ended December 31, 2000 and the
three month period ended March 31, 2001 begins on page 5.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FINANCIAL INSTITUTIONS, INC.
Dated: July 16, 2001 By: /s/ Peter Humphrey
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Name: Peter Humphrey
Title: President and Chief Executive
Officer
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BATH NATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Statement of Condition
(unaudited)
(in thousands)
March 31, December 31,
2001 2000
-------------------------
Assets
Cash and due from banks $ 14,176 13,210
Federal funds sold 14,295 2,895
Securities available-for-sale 71,998 71,201
Loans, net 187,686 188,111
Premises and equipment, net 4,562 4,681
Accrued interest receivable 2,335 2,076
Other assets 2,967 5,929
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Total assets $ 298,019 288,103
=========================
Liabilities and Shareholders' Equity
Deposits:
Demand $ 37,583 37,382
Savings 39,580 40,302
NOW accounts 35,954 36,322
Money market accounts 10,039 10,494
Time deposits ($100,000 or more) 32,252 17,535
Other time accounts 77,156 76,260
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Total deposits 232,564 218,295
Securities sold under agreements to repurchase 9,877 14,925
Federal Home Loan Bank borrowings 25,000 25,000
Other liabilities 2,454 2,348
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Total liabilities 269,895 260,568
Shareholders' equity:
Preferred stock, $10 par value, 300,000 shares authorized;
none issued
Common stock; $5 par value, 1,500,000 shares authorized;
1,365,801 issued 6,829 6,829
Additional paid-in capital 1,495 1,495
Retained earnings 22,011 21,631
Accumulated other comprehensive income 338 129
Treasury stock (62,044 shares in 2001 and 2000) (2,549) (2,549)
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Total shareholders' equity 28,124 27,535
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Total liabilities and shareholders' equity $ 298,019 288,103
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Bath National Corporation and Subsidiaries
Consolidated Statements of Income
(unaudited)
(in thousands, except per share amounts)
Three Three
Months Months
Ended Ended
March 31, March 31,
2001 2000
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Interest income:
Loans $ 4,077 4,036
Securities:
US Government and agency obligations 497 540
State and municipal obligations 576 608
Federal funds sold 157 41
Deposits in other banks 0 72
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Total interest income 5,307 5,297
Interest expense:
Deposits 1,970 1,712
Borrowings 482 571
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Total interest expense 2,452 2,283
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Net interest income 2,855 3,014
Provision for loan losses 303 322
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Net interest income after provision for loan losses 2,552 2,692
Noninterest income:
Service charges 287 268
Other 205 277
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Total noninterest income 492 545
Noninterest expense:
Salaries and employee benefits 1,040 1,304
Occupancy 337 373
Other 631 568
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Total noninterest expense 2,008 2,245
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Income before income taxes 1,036 992
Income taxes 258 128
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Net income $ 778 864
========================
Net income per common share basic and diluted $ .60 .65
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UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL INFORMATION
The following unaudited proforma condensed consolidated statement of condition
as of March 31, 2001 is based on the unaudited historical consolidated
statements of condition of the Company and Bath as of that date assuming that
the Merger consummated on May 1, 2001 had occurred on March 31, 2001.
The following unaudited proforma condensed consolidated statements of income for
the three months ended March 31, 2001 and the year ended December 31, 2000
reflect the combination of the Company and Bath as if the purchase had occurred
at the beginning of the two respective periods. The unaudited condensed
consolidated statements of income give effect to the purchase accounting
adjustments including goodwill recognized in the transaction.
These proforma financial statements should be read in conjunction with the
historical consolidated financial statements and related notes in the Company's
March 31, 2001 Form 10-Q and December 31, 2000 Form 10-K; and in Bath's December
31, 2000 Form 10-K.
Goodwill and other intangibles recognized with respect to the merger were
approximately $37.2 million. Goodwill and other intangibles will be amortized
from the acquisition date using a blended 15-year amortization period. In
accordance with pending standards expected to be issued shortly by the Financial
Accounting Standards Board, the Company will cease goodwill amortization on
January 1, 2002 and evaluate the goodwill for impairment thereafter.
Amortization of other intangibles will continue. In the opinion of the Company's
management, the estimates used in the preparation of these financial statements
are reasonable under the circumstances.
The combined company expects to achieve benefits from the Merger including
operating cost savings and revenue enhancements. These proforma financial
statements do not reflect any potential cost savings and revenue enhancements
that are expected to result from the combination of operations of the Company
and Bath and, accordingly, may not be indicative of the results of future
operations which will also be affected by the pending changes in goodwill
accounting standards described above. No assurance can be given with respect to
the ultimate level of cost savings and revenue enhancements to be realized. As a
result, these proforma financial statements are not necessarily indicative of
either the results of operations or financial condition that would have been
achieved had the Merger in fact occurred on the dates indicated, nor do they
purport to be indicative of results of operations or financial condition that
may be achieved in the future by the combined company.
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FINANCIAL INSTITUTIONS, INC. AND SUBSIDIARIES
Proforma Condensed Consolidated Statement of Condition
(unaudited)
(in thousands)
As of March 31, 2001
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Historical Historical
Financial Bath
Institutions National Proforma Proforma
Inc. Corp. Adjustments Combined
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Assets
Cash, due from banks and interest bearing deposits $ 30,537 14,176 0 44,713
Federal funds sold 31,225 14,295 (31,225)(1) 14,295
Securities 341,576 71,998 (146)(2) 413,428
Loans, net 882,730 187,686 360 (3) 1,070,776
Goodwill and other intangibles 2,205 215 37,188 (4) 39,608
Other assets 49,308 9,649 (282)(5) 58,675
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Total assets $1,337,581 298,019 5,895 1,641,495
===================================================================
Liabilities and Shareholders' Equity
Deposits $1,129,970 232,564 581 (6) 1,363,115
Borrowings 35,260 34,877 33,438 (1)&(7) 103,575
Guaranteed preferred beneficial interests
in Corp. junior subordinated debentures 16,200 0 0 16,200
Other liabilities 18,879 2,454 0 21,333
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Total liabilities 1,200,309 269,895 34,019 1,504,223
Shareholders' equity 137,272 28,124 (28,124)(8) 137,272
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Total liabilities and shareholders' equity $1,337,581 298,019 5,895 1,641,495
===================================================================
See accompanying notes to the proforma condensed consolidated statement of
condition.
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NOTES TO PROFORMA
CONDENSED CONSOLIDATED STATEMENT OF CONDITION
(UNAUDITED)
Adjustments made in the preparation of the unaudited proforma condensed
consolidated statement of condition are as follows:
1. Adjustment to record the payment of the purchase price of $62.6 million,
net of proceeds received from a reduction in federal funds sold and
additional borrowings.
2. Adjustment to record acquired securities at estimated fair value.
3. Adjustment to record acquired loans at estimated fair value.
4. Adjustment to record goodwill and other intangibles.
5. Adjustment to record acquired other assets at estimated fair value.
6. Adjustment to record time deposits at estimated fair value.
7. Adjustment to record borrowings at estimated fair value.
8. Adjustment to eliminate shareholders' equity of Bath National Corporation.
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FINANCIAL INSTITUTIONS, INC. AND SUBSIDIARIES
Proforma Condensed Consolidated Statements of Income
(unaudited)
(in thousands, except per share amounts)
For the Three Months Ended March 31, 2001
-----------------------------------------
Historical Historical
Financial Bath
Institutions National Proforma Proforma
Inc. Corp. Adjustments Combined
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Net interest income $13,589 2,855 (684)(1) 15,760
Provision for loan losses 811 303 0 1,114
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Net interest income after provision for loan losses 12,778 2,552 (684) 14,646
Noninterest income 2,785 492 0 3,277
Noninterest expense 8,244 2,008 604 (2) 10,856
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Income before income taxes 7,319 1,036 (1,288) 7,067
Income taxes 2,514 258 (271)(3) 2,501
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Net income $ 4,805 778 (1,017) 4,566
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Earnings per common share:
Basic and diluted $ 0.40 .38
For the Year Ended December 31, 2000
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Historical Historical
Financial Bath
Institutions National Proforma Proforma
Inc. Corp. Adjustments Combined
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Net interest income $53,176 11,987 (3,066)(1) 62,097
Provision for loan losses 4,211 5,253 0 9,464
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Net interest income after provision for loan losses 48,965 6,734 (3,066) 52,633
Noninterest income 9,095 2,108 0 11,203
Noninterest expense 30,156 9,381 2,416 (2) 41,953
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Income before income taxes 27,904 (539) (5,482) 21,883
Income taxes 9,804 (669) (1,219)(3) 7,916
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Net income $18,100 130 (4,263) 13,967
==============================================================
Earnings per common share:
Basic and diluted $ 1.51 1.13
See accompanying notes to the proforma condensed consolidated statements of
income.
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NOTES TO PROFORMA
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Adjustments made in the preparation of the unaudited proforma condensed
consolidated statements of income are as follows:
1. Adjustment to reflect (i) the decrease in interest income on federal funds
sold and the increase in interest expense on new borrowings used to fund the
acquisition and (ii) the amortization of purchase accounting adjustments.
2. Adjustment to reflect the amortization of goodwill and other intangibles
recognized in the acquisition.
3. Net income tax benefit on proforma adjustments at 40.5% (net of nondeductible
amortization).