FINANCIAL INSTITUTIONS, INC. FINANCIAL INSTITUTIONS, INC. ANNOUNCES FOURTH QUARTER AND FULL YEAR 2021 RESULTS
WARSAW, N.Y., January 31, 2022 - Financial Institutions, Inc. (NASDAQ:FISI)(the "Company" "we" or "us"), parent company of Five Star Bank (the "Bank"), SDN Insurance Agency, LLC ("SDN"), Courier Capital, LLC ("Courier Capital") and HNP Capital, LLC ("HNP Capital"), today reported financial and operational results for the fourth quarter and year ended December 31, 2021.
Results for the Fourth Quarter
Results for the Year
"We ended 2021 with another strong quarter, reporting the highest net interest income and second highest pre-tax pre-provision income in our history" said President and Chief Executive Officer Martin K. Birmingham. "Continued improvement in the economy and a reduction in specific loan reserves resulted in our fourth consecutive quarter with a benefit for credit losses. Commercial loan pipelines remain healthy and, excluding the impact of Paycheck Protection Program ("PPP") loans, we grew the total loan portfolio by 2.5% from September 30th.
"We earned record net income of $78 million in 2021, with every business line providing positive contributions. Loan and deposit growth were strong at 8% (excluding PPP loans) and 13%, respectively, versus the year-ago period. Our insurance and wealth management businesses performed well, evidencing growth and increased profitability.
"Our investment in an integrated customer relationship management solution will give all lines of business a single shared view of the customer. This will create a unified approach to customer engagement and help us better educate and interact with our customers and community partners, expanding these critical relationships. We also continue execution on opportunities to deliver BaaS solutions and other digital transformation solutions. We believe these investments position us well to capitalize on industry changes and deliver
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positive outcomes supporting long-term shareholder value. I thank my teammates for their hard work on behalf of our customers, communities and shareholders."
Chief Financial Officer and Treasurer W. Jack Plants II added, "While quarterly operating expense did increase, we generated positive operating leverage for the year while making short-term investments to support strategic initiatives and future operating metrics. We also continued to execute on our share repurchase program, buying back approximately 102,000 shares during the quarter at an average price of $31.45 per share."
Net Interest Income and Net Interest Margin
Net interest income was $40.9 million for the quarter, an increase of $2.6 million from the third quarter of 2021 and an increase of $4.7 million from the fourth quarter of 2020.
Net interest margin was 3.15% as compared to 3.07% in the third quarter of 2021 and 3.13% in the fourth quarter of 2020. Excluding the impact of PPP loans and PPP loan origination fees accreted over the term of the loan or upon loan forgiveness, net interest margin was 2.98% in the fourth quarter of 2021, 3.05% in the third quarter of 2021 and 3.14% in the fourth quarter of 2020.
Net interest income was $154.7 million for the year, $15.7 million higher than 2020, primarily as a result of an increase in average interest-earning assets and the impact of PPP revenue. Net interest margin was 3.14% for the year, a decrease of eight basis points from 2020. Excluding the impact of PPP loans and PPP loan origination fees accreted over the term of the loan or upon loan forgiveness, net interest margin was 3.05% for the year, down 19 basis points from 3.24% in 2020.
Noninterest Income
Noninterest income was $11.7 million for the quarter, a decrease of $409 thousand from the third quarter of 2021 and an increase of $338 thousand from the fourth quarter of 2020.
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Noninterest income was $46.9 million for the year, $3.7 million higher than 2020.
Noninterest Expense
Noninterest expense was $29.9 million in the quarter compared to $29.2 million in the third quarter of 2021 and $26.5 million in the fourth quarter of 2020.
Noninterest expense was $112.8 million for the year, $3.5 million higher than 2020.
Income Taxes
Income tax expense was $4.2 million for the quarter compared to $4.6 million in the third quarter of 2021 and $1.7 million in the fourth quarter of 2020. The Company recognized federal and state tax benefits related to tax credit investments placed in service and/or amortized during the fourth quarter of 2021, third quarter of 2021, and fourth quarter of 2020, resulting in income tax expense reductions of approximately $1.7 million, $535 thousand, and $915 thousand, respectively.
The effective tax rate was 17.7% for the quarter compared to 21.0% for the third quarter of 2021 and 10.9% for the fourth quarter of 2020. The effective tax rate for the year was 20.1%, up from 16.2% in 2020. The year-over-year increase in effective tax rates is the result of higher pre-tax earnings in comparison to the prior year. The Company's effective tax rates differ from statutory rates because of interest income from tax-exempt securities, earnings on company owned life insurance and the impact of tax credit investments.
Balance Sheet and Capital Management
Total assets were $5.52 billion at December 31, 2021, down $102.4 million from September 30, 2021, and up $608.5 million from December 31, 2020.
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Investment securities were $1.38 billion at December 31, 2021, up $68.0 million from September 30, 2021, and up $484.1 million from December 31, 2020. The Company's primary investment strategy for 2020 was to reinvest cash flow from the securities portfolio; however, the focus was redirected during the second half of the year to deploy excess liquidity into cash flowing agency mortgage backed securities, given our elevated cash position. The strategy continued throughout 2021 due to the continued excess liquidity position and the ability to reallocate excess Federal Reserve cash balances into securities that demonstrated higher yields, on a relative basis.
Total loans were $3.68 billion at December 31, 2021, up $25.5 million, or 0.7%, from September 30, 2021, and up $84.3 million, or 2.3%, from December 31, 2020.
Total loans, excluding PPP loans net of deferred fees, were $3.62 billion at December 31, 2021, up $86.8 million, or 2.5%, from September 30, 2021, and up $276.9 million, or 8.3%, from December 31, 2020.
Total deposits were $4.83 billion at December 31, 2021, $147.9 million lower than September 30, 2021, and $548.7 million higher than December 31, 2020. The decrease from September 30, 2021, was primarily the result of a seasonal decrease in public deposits, which occurred during the last few weeks of the fourth quarter, and lower non-public and reciprocal deposits. The increase from December 31, 2020, was the result of growth in all deposit categories -public, non-public and reciprocal. Public deposit balances represented 23% of total deposits at December 31, 2021, compared to 24% at September 30, 2021, and 20% at December 31, 2020.
Short-term borrowings were $30.0 million at December 31, 2021, as compared to $0 at September 30, 2021 and $5.3 million at December 31, 2020. Short-term borrowings and brokered deposits have historically been utilized to manage the seasonality of public deposits.
Shareholders' equity was $505.1 million at December 31, 2021, compared to $494.0 million at September 30, 2021, and $468.4 million at December 31, 2020. Common book value per share was $30.98 at December 31, 2021, an increase of $0.89 or 3.0% from $30.09 at September 30, 2021, and an increase of $2.86 or 10.2% from $28.12 at December 31, 2020. Tangible common book value per share(1) was $26.26 at December 31, 2021, an increase of $0.88 or 3.5% from $25.38 at September 30, 2021, and an increase of $2.74 or 11.6% from $23.52 at December 31, 2020.
On November 4, 2020, the Company announced a stock repurchase program for up to 801,879 shares of common stock, or approximately 5% of the Company's outstanding common shares. Shares may be repurchased in open market transactions and pursuant to any trading plan adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934. No shares were repurchased in 2020. During the first and fourth quarters of 2021, the Company repurchased a total of 340,688 shares for an average repurchase price of $26.44 per share, inclusive of transaction costs.
The common equity to assets ratio was 8.84% at December 31, 2021, compared to 8.48% at September 30, 2021, and 9.18% at December 31, 2020. Tangible common equity to tangible assets(1), or the TCE ratio, was 7.59%, 7.25% and 7.80% at December 31, 2021, September 30, 2021, and December 31, 2020, respectively. The primary driver of declines in both ratios as compared to the prior year was a significant increase in total assets. The ratios were impacted to a lesser degree by a decrease in accumulated other comprehensive income (loss) associated with unrealized losses in the available for sale securities portfolio and the impact of 2021 share repurchases, partially offset by the positive impact of earnings.
During the fourth quarter of 2021, the Company declared a common stock dividend of $0.27 per common share. The dividend returned 22% of fourth quarter net income to common shareholders.
The Company's regulatory capital ratios at December 31, 2021, compared to the prior quarter and prior year:
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Credit Quality
Non-performing loans were $12.2 million at December 31, 2021, as compared to $6.7 million at September 30, 2021, and $9.5 million at December 31, 2020. Net charge-offs were $4.7 million in the quarter as compared $587 thousand in the third quarter of 2021 and $2.4 million in the fourth quarter of 2020. The ratio of annualized net charge-offs to average loans was 0.51% in the current quarter, 0.06% in the third quarter of 2021 and 0.27% in the fourth quarter of 2020. One commercial mortgage loan was downgraded to non-performing status with a $3.8 million partial charge-off in the fourth quarter of 2021, contributing to the increase in non-performing loans and fourth quarter charge-offs.
Foreclosed assets were $0 at December 31, 2021, and September 30, 2021, down from $3.0 million at December 31, 2020. The decrease from the prior year period was primarily the result of the sale of an asset on which foreclosure occurred in the third quarter of 2020.
At December 31, 2021, the allowance for credit losses - loans to total loans ratio was 1.08% compared to 1.24% at September 30, 2021, and 1.46% at December 31, 2020. PPP loans are fully guaranteed by the Small Business Administration. Excluding PPP loans, the December 31, 2021, allowance for credit losses - loans to total loans ratio(1) was 1.09%, a decrease of 19 basis points from 1.28% at September 30, 2021, and a decrease of 48 basis points from 1.57% at December 31, 2020.
Provision (benefit) for credit losses - loans was a $1.1 million benefit in the quarter compared to a benefit of $334 thousand in the third quarter of 2021 and a provision of $5.4 million in the fourth quarter of 2020. Changes in the allowance for unfunded commitments, also included in provision (benefit) for credit losses, were a $104 thousand decrease in the fourth quarter of 2021, a $206 thousand decrease in the third quarter of 2021, and a $72 thousand increase in the fourth quarter of 2020.
Provision throughout 2020 was driven by the adoption of the current expected credit loss standard ("CECL") and the impact of the COVID-19 pandemic on the economic environment. The designated loss driver for the Company's CECL model is the national unemployment forecast, which spiked in early 2020 at the onset of the pandemic, resulting in a 2020 provision of $27.2 million. Provision was a benefit in each quarter of 2021 as a result of continued improvement in the national unemployment forecast and positive trends in qualitative factors, resulting in the release of credit loss reserves.
The Company has remained strategically focused on the importance of credit discipline, allocating what we believe are the necessary resources to credit and risk management functions as the loan portfolio has grown. The total non-performing loans to total loans ratio was 0.33% at December 31, 2021, 0.18% at September 30, 2021, and 0.26% at December 31, 2020. The ratio of allowance for credit losses - loans to non-performing loans was 326% at December 31, 2021, 681% at September 30, 2021, and 551% at December 31, 2020.
Subsequent Events
The Company is required, under generally accepted accounting principles, to evaluate subsequent events through the filing of its consolidated financial statements for the year ended December 31, 2021, on Form 10-K. As a result, the Company will continue to evaluate the impact of any subsequent events on critical accounting assumptions and estimates made as of December 31, 2021, and will adjust amounts preliminarily reported, if necessary.
Conference Call
The Company will host an earnings conference call and audio webcast on February 1, 2022, at 8:30 a.m. Eastern Time. The call will be hosted by Martin K. Birmingham, President and Chief Executive Officer, and W. Jack Plants II, Chief Financial Officer and Treasurer. The live webcast will be available in listen-only mode on the Company's website at www.fiiwarsaw.com. Within the United States, listeners may also access the call by dialing 1 (844) 200 6205 and providing the access code 642486. The webcast replay will be available on the Company's website for at least 30 days.
About Financial Institutions, Inc.
Financial Institutions, Inc. provides diversified financial services through its subsidiaries Five Star Bank, SDN, Courier Capital and HNP Capital. Five Star Bank provides a wide range of consumer and commercial banking and lending services to individuals, municipalities and businesses through a network of more than 45 offices throughout Western and Central New York State. SDN provides a broad range of insurance services to personal and business clients. Courier Capital and HNP Capital provide customized investment management, investment consulting and retirement plan services to individuals, businesses, institutions, foundations and retirement plans. Financial Institutions, Inc. and its subsidiaries employ approximately 600 individuals. The Company's stock is listed on the Nasdaq Global Select Market under the symbol FISI. Additional information is available at www.fiiwarsaw.com.
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Non-GAAP Financial Information
In addition to results presented in accordance with U.S. generally accepted accounting principles ("GAAP"), this press release contains certain non-GAAP financial measures. A reconciliation of these non-GAAP measures to GAAP measures is included in Appendix A to this document.
The Company believes that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, performance trends and financial position. Our management uses these measures for internal planning and forecasting purposes and we believe that our presentation and discussion, together with the accompanying reconciliations, allows investors, security analysts and other interested parties to view our performance and the factors and trends affecting our business in a manner similar to management. These non-GAAP measures should not be considered a substitute for GAAP measures and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure to evaluate the Company. Non-GAAP financial measures have inherent limitations, are not uniformly applied and are not audited. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.
Safe Harbor Statement
This press release may contain forward-looking statements as defined by Section 21E of the Securities Exchange Act of 1934, as amended, that involve significant risks and uncertainties. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "see," "will," "would," "estimate," "forecast," "target," "preliminary," or "range." Statements herein are based on certain assumptions and analyses by the Company and factors it believes are appropriate in the circumstances. Actual results could differ materially from those contained in or implied by such statements for a variety of reasons including, but not limited to: the impact of the COVID-19 pandemic on the Company's customers, business, and results of operations as well as the economy in Western New York and the United States; the Company's ability to implement its strategic plan; whether the Company experiences greater credit losses than expected; whether the Company experiences breaches of its, or third party, information systems; the attitudes and preferences of the Company's customers; legal and regulatory proceedings and related matters, such as the action described in our reports filed with the SEC, could adversely affect us and the banking industry in general; the Company's ability to successfully integrate and profitably operate Landmark Group, North Woods and other acquisitions; the competitive environment; fluctuations in the fair value of securities in its investment portfolio; changes in the regulatory environment and the Company's compliance with regulatory requirements; changes in interest rates; and general economic and credit market conditions nationally and regionally. Consequently, all forward-looking statements made herein are qualified by these cautionary statements and the cautionary language in the Company's Annual Report on Form 10-K, its Quarterly Reports onForm 10-Qand other documents filed with the SEC. Except as required by law, the Company undertakes no obligation to revise these statements following the date of this press release.
(1) See Appendix A - Reconciliation to Non-GAAP Financial Measures for the computation of this Non-GAAP measure.
*****
For additional information contact:
Shelly J. Doran
Director of Investor and External Relations
585-627-1362
sjdoran@five-starbank.com
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FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share amounts)
2021 | 2020 | |||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||
SELECTED BALANCE SHEET DATA: | ||||||||||||||
Cash and cash equivalents | $ | 79,112 | $ | 288,426 | $ | 206,387 | $ | 344,790 | $ | 93,878 | ||||
Investment securities: | ||||||||||||||
Available for sale | 1,178,515 | 1,097,950 | 902,845 | 753,489 | 628,059 | |||||||||
Held-to-maturity, net | 205,581 | 218,135 | 218,858 | 256,127 | 271,966 | |||||||||
Total investment securities | 1,384,096 | 1,316,085 | 1,121,703 | 1,009,616 | 900,025 | |||||||||
Loans held for sale | 6,202 | 5,916 | 3,929 | 5,685 | 4,305 | |||||||||
Loans: | ||||||||||||||
Commercial business | 638,293 | 686,191 | 731,208 | 816,936 | 794,148 | |||||||||
Commercial mortgage | 1,412,788 | 1,348,550 | 1,315,404 | 1,276,841 | 1,253,901 | |||||||||
Residential real estate loans | 577,299 | 584,091 | 590,303 | 601,609 | 599,800 | |||||||||
Residential real estate lines | 78,531 | 79,196 | 80,781 | 85,362 | 89,805 | |||||||||
Consumer indirect | 958,048 | 940,537 | 899,018 | 857,804 | 840,421 | |||||||||
Other consumer | 14,477 | 15,334 | 15,454 | 15,834 | 17,063 | |||||||||
Total loans | 3,679,436 | 3,653,899 | 3,632,168 | 3,654,386 | 3,595,138 | |||||||||
Allowance for credit losses - loans | 39,676 | 45,444 | 46,365 | 49,828 | 52,420 | |||||||||
Total loans, net | 3,639,760 | 3,608,455 | 3,585,803 | 3,604,558 | 3,542,718 | |||||||||
Total interest-earning assets | 5,105,608 | 5,189,075 | 4,906,087 | 4,963,264 | 4,520,416 | |||||||||
Goodwill and other intangible assets, net | 74,400 | 74,659 | 74,262 | 74,528 | 73,789 | |||||||||
Total assets | 5,520,779 | 5,623,193 | 5,295,102 | 5,329,056 | 4,912,306 | |||||||||
Deposits: | ||||||||||||||
Noninterest-bearing demand | 1,107,561 | 1,144,852 | 1,121,827 | 1,099,608 | 1,018,549 | |||||||||
Interest-bearing demand | 864,528 | 893,976 | 799,299 | 873,390 | 731,885 | |||||||||
Savings and money market | 1,933,047 | 2,015,855 | 1,796,813 | 1,826,621 | 1,642,340 | |||||||||
Time deposits | 921,954 | 920,280 | 941,282 | 916,395 | 885,593 | |||||||||
Total deposits | 4,827,090 | 4,974,963 | 4,659,221 | 4,716,014 | 4,278,367 | |||||||||
Short-term borrowings | 30,000 | - | - | - | 5,300 | |||||||||
Long-term borrowings, net | 73,911 | 73,834 | 73,756 | 73,679 | 73,623 | |||||||||
Total interest-bearing liabilities | 3,823,440 | 3,903,945 | 3,611,150 | 3,690,085 | 3,338,741 | |||||||||
Shareholders' equity | 505,142 | 494,013 | 487,126 | 466,284 | 468,363 | |||||||||
Common shareholders' equity | 487,850 | 476,721 | 469,834 | 448,962 | 451,035 | |||||||||
Tangible common equity (1) | 413,450 | 402,062 | 395,572 | 374,434 | 377,246 | |||||||||
Accumulated other comprehensive (loss) income | $ | (13,207 | ) | $ | (12,116 | ) | $ | (5,934 | ) | $ | (10,572 | ) | $ | 2,128 |
Common shares outstanding | 15,746 | 15,842 | 15,842 | 15,829 | 16,042 | |||||||||
Treasury shares | 354 | 258 | 258 | 271 | 58 | |||||||||
CAPITAL RATIOS AND PER SHARE DATA: | ||||||||||||||
Leverage ratio | 8.23 | % | 8.36 | % | 8.16 | % | 8.35 | % | 8.25 | % | ||||
Common equity Tier 1 capital ratio | 10.28 | % | 10.24 | % | 10.38 | % | 10.22 | % | 10.14 | % | ||||
Tier 1 capital ratio | 10.68 | % | 10.66 | % | 10.81 | % | 10.66 | % | 10.59 | % | ||||
Total risk-based capital ratio | 13.12 | % | 13.25 | % | 13.54 | % | 13.53 | % | 13.56 | % | ||||
Common equity to assets | 8.84 | % | 8.48 | % | 8.87 | % | 8.42 | % | 9.18 | % | ||||
Tangible common equity to tangible assets (1) | 7.59 | % | 7.25 | % | 7.58 | % | 7.13 | % | 7.80 | % | ||||
Common book value per share | $ | 30.98 | $ | 30.09 | $ | 29.66 | $ | 28.36 | $ | 28.12 | ||||
Tangible common book value per share (1) | $ | 26.26 | $ | 25.38 | $ | 24.97 | $ | 23.66 | $ | 23.52 |
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FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share amounts)
Year Ended | 2021 | 2020 | ||||||||||||
December 31, | Fourth | Third | Second | First | Fourth | |||||||||
2021 | 2020 | Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||
SELECTED INCOME STATEMENT | ||||||||||||||
DATA: | ||||||||||||||
Interest income | $ | 167,205 | $ | 161,299 | $ | 43,753 | $ | 41,227 | $ | 40,952 | $ | 41,273 | $ | 40,168 |
Interest expense | 12,475 | 22,314 | 2,885 | 2,954 | 3,220 | 3,416 | 3,987 | |||||||
Net interest income | 154,730 | 138,985 | 40,868 | 38,273 | 37,732 | 37,857 | 36,181 | |||||||
(Benefit) provision for credit losses | (8,336 | ) | 27,184 | (1,192 | ) | (541 | ) | (4,622 | ) | (1,981 | ) | 5,495 | ||
Net interest income after provision | 163,066 | 111,801 | 42,060 | 38,814 | 42,354 | 39,838 | 30,686 | |||||||
Noninterest income: | ||||||||||||||
Service charges on deposits | 5,571 | 4,810 | 1,490 | 1,502 | 1,287 | 1,292 | 1,489 | |||||||
Insurance income | 5,750 | 4,403 | 1,343 | 1,864 | 1,147 | 1,396 | 878 | |||||||
Card interchange income | 8,498 | 7,281 | 2,228 | 2,118 | 2,194 | 1,958 | 1,960 | |||||||
Investment advisory | 11,672 | 9,535 | 3,045 | 2,969 | 2,886 | 2,772 | 2,595 | |||||||
Company owned life insurance | 2,947 | 1,902 | 821 | 776 | 693 | 657 | 505 | |||||||
Investments in limited partnerships | 2,081 | 104 | 294 | 694 | 238 | 855 | 240 | |||||||
Loan servicing | 415 | 249 | 122 | 105 | 91 | 97 | 143 | |||||||
Income (loss) from derivative | ||||||||||||||
instruments, net | 2,695 | 5,521 | 1,035 | 377 | (592 | ) | 1,875 | 904 | ||||||
Net gain on sale of loans held for sale | 2,950 | 3,858 | 482 | 600 | 790 | 1,078 | 1,597 | |||||||
Net gain (loss) on investment securities | 71 | 1,599 | - | - | (3 | ) | 74 | 150 | ||||||
Net gain (loss) on other assets | 441 | (61 | ) | 155 | 138 | 153 | (5 | ) | (69 | ) | ||||
Net (loss) gain on tax credit investments | (431 | ) | (275 | ) | (493 | ) | (129 | ) | 276 | (85 | ) | (155 | ) | |
Other | 4,246 | 4,250 | 1,152 | 1,069 | 1,030 | 995 | 1,099 | |||||||
Total noninterest income | 46,906 | 43,176 | 11,674 | 12,083 | 10,190 | 12,959 | 11,336 | |||||||
Noninterest expense: | ||||||||||||||
Salaries and employee benefits | 60,893 | 59,336 | 16,111 | 15,798 | 14,519 | 14,465 | 14,163 | |||||||
Occupancy and equipment | 14,371 | 13,655 | 3,869 | 3,834 | 3,286 | 3,382 | 3,248 | |||||||
Professional services | 6,535 | 6,326 | 1,437 | 1,600 | 1,603 | 1,895 | 1,352 | |||||||
Computer and data processing | 14,112 | 11,645 | 3,952 | 3,579 | 3,460 | 3,121 | 3,023 | |||||||
Supplies and postage | 1,769 | 1,975 | 408 | 447 | 430 | 484 | 442 | |||||||
FDIC assessments | 2,624 | 2,242 | 682 | 697 | 480 | 765 | 737 | |||||||
Advertising and promotions | 1,704 | 2,609 | 470 | 474 | 436 | 324 | 554 | |||||||
Amortization of intangibles | 1,060 | 1,134 | 259 | 264 | 266 | 271 | 273 | |||||||
Restructuring charges | 111 | 1,492 | 111 | - | - | - | 130 | |||||||
Other | 9,571 | 8,840 | 2,598 | 2,476 | 2,464 | 2,033 | 2,612 | |||||||
Total noninterest expense | 112,750 | 109,254 | 29,897 | 29,169 | 26,944 | 26,740 | 26,534 | |||||||
Income before income taxes | 97,222 | 45,723 | 23,837 | 21,728 | 25,600 | 26,057 | 15,488 | |||||||
Income tax expense | 19,525 | 7,391 | 4,225 | 4,553 | 5,400 | 5,347 | 1,688 | |||||||
Net income | 77,697 | 38,332 | 19,612 | 17,175 | 20,200 | 20,710 | 13,800 | |||||||
Preferred stock dividends | 1,460 | 1,461 | 365 | 364 | 366 | 365 | 365 | |||||||
Net income available to common | ||||||||||||||
shareholders | $ | 76,237 | $ | 36,871 | $ | 19,247 | $ | 16,811 | $ | 19,834 | $ | 20,345 | $ | 13,435 |
FINANCIAL RATIOS: | ||||||||||||||
Earnings per share - basic | $ | 4.81 | $ | 2.30 | $ | 1.22 | $ | 1.06 | $ | 1.25 | $ | 1.28 | $ | 0.84 |
Earnings per share - diluted | $ | 4.78 | $ | 2.30 | $ | 1.21 | $ | 1.05 | $ | 1.25 | $ | 1.27 | $ | 0.84 |
Cash dividends declared on common stock | $ | 1.08 | $ | 1.04 | $ | 0.27 | $ | 0.27 | $ | 0.27 | $ | 0.27 | $ | 0.26 |
Common dividend payout ratio | 22.45 | % | 45.22 | % | 22.13 | % | 25.47 | % | 21.60 | % | 21.09 | % | 30.95 | % |
Dividend yield (annualized) | 3.40 | % | 4.62 | % | 3.37 | % | 3.49 | % | 3.61 | % | 3.62 | % | 4.60 | % |
Return on average assets | 1.46 | % | 0.82 | % | 1.39 | % | 1.27 | % | 1.52 | % | 1.66 | % | 1.10 | % |
Return on average equity | 16.01 | % | 8.49 | % | 15.55 | % | 13.74 | % | 17.01 | % | 17.92 | % | 11.86 | % |
Return on average common equity | 16.29 | % | 8.50 | % | 15.81 | % | 13.94 | % | 17.34 | % | 18.28 | % | 12.00 | % |
Return on average tangible common | ||||||||||||||
equity (1) | 19.37 | % | 10.25 | % | 18.69 | % | 16.50 | % | 20.69 | % | 21.88 | % | 14.38 | % |
Efficiency ratio (2) | 55.76 | % | 60.22 | % | 56.76 | % | 57.76 | % | 56.02 | % | 52.51 | % | 55.79 | % |
Effective tax rate | 20.1 | % | 16.2 | % | 17.7 | % | 21.0 | % | 21.1 | % | 20.5 | % | 10.9 | % |
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FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands)
Year Ended | 2021 | 2020 | ||||||||||||
December 31, | Fourth | Third | Second | First | Fourth | |||||||||
2021 | 2020 | Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||
SELECTED AVERAGE BALANCES: | ||||||||||||||
Federal funds sold and interest- | $ | 169,504 | $ | 112,802 | $ | 148,293 | $ | 157,229 | $ | 249,312 | $ | 123,042 | $ | 176,950 |
Investment securities (1) | 1,129,012 | 794,908 | 1,361,898 | 1,177,237 | 1,056,898 | 914,569 | 862,956 | |||||||
Loans: | ||||||||||||||
Commercial business | 734,748 | 735,535 | 649,926 | 700,797 | 791,412 | 798,866 | 803,536 | |||||||
Commercial mortgage | 1,327,772 | 1,164,827 | 1,392,375 | 1,331,063 | 1,302,136 | 1,284,290 | 1,243,035 | |||||||
Residential real estate loans | 593,375 | 587,620 | 586,358 | 588,585 | 595,925 | 602,866 | 599,773 | |||||||
Residential real estate lines | 82,210 | 97,321 | 78,594 | 79,766 | 82,926 | 87,681 | 91,856 | |||||||
Consumer indirect | 896,769 | 836,168 | 946,551 | 917,402 | 878,884 | 842,873 | 840,210 | |||||||
Other consumer | 15,305 | 16,007 | 14,997 | 14,718 | 15,356 | 16,167 | 16,948 | |||||||
Total loans | 3,650,179 | 3,437,478 | 3,668,801 | 3,632,331 | 3,666,639 | 3,632,743 | 3,595,358 | |||||||
Total interest-earning assets | 4,948,695 | 4,345,188 | 5,178,992 | 4,966,797 | 4,972,849 | 4,670,354 | 4,635,264 | |||||||
Goodwill and other intangible | 74,411 | 74,364 | 74,544 | 74,470 | 74,412 | 74,214 | 73,942 | |||||||
Total assets | 5,335,808 | 4,693,225 | 5,582,987 | 5,368,054 | 5,340,745 | 5,045,180 | 4,992,886 | |||||||
Interest-bearing liabilities: | ||||||||||||||
Interest-bearing demand | 827,891 | 714,904 | 880,723 | 796,371 | 842,832 | 790,996 | 774,688 | |||||||
Savings and money market | 1,864,567 | 1,443,692 | 1,997,508 | 1,876,394 | 1,856,659 | 1,724,577 | 1,722,938 | |||||||
Time deposits | 907,973 | 959,541 | 923,080 | 908,351 | 935,885 | 863,924 | 871,103 | |||||||
Short-term borrowings | 538 | 86,495 | 982 | - | - | 1,178 | 9,188 | |||||||
Long-term borrowings, net | 73,749 | 47,387 | 73,864 | 73,786 | 73,709 | 73,636 | 71,481 | |||||||
Total interest-bearing liabilities | 3,674,718 | 3,252,019 | 3,876,157 | 3,654,902 | 3,709,085 | 3,454,311 | 3,449,398 | |||||||
Noninterest-bearing demand deposits | 1,105,227 | 905,412 | 1,134,100 | 1,149,120 | 1,091,490 | 1,044,733 | 997,607 | |||||||
Total deposits | 4,705,658 | 4,023,549 | 4,935,411 | 4,730,236 | 4,726,866 | 4,424,230 | 4,366,336 | |||||||
Total liabilities | 4,850,417 | 4,241,989 | 5,082,583 | 4,872,180 | 4,864,559 | 4,576,545 | 4,530,043 | |||||||
Shareholders' equity | 485,391 | 451,236 | 500,404 | 495,874 | 476,186 | 468,635 | 462,843 | |||||||
Common equity | 468,085 | 433,908 | 483,112 | 478,582 | 458,868 | 451,311 | 445,515 | |||||||
Tangible common equity (2) | $ | 393,674 | $ | 359,544 | $ | 408,568 | $ | 404,112 | $ | 384,456 | $ | 377,097 | $ | 371,573 |
Common shares outstanding: | ||||||||||||||
Basic | 15,841 | 16,022 | 15,815 | 15,837 | 15,825 | 15,889 | 16,032 | |||||||
Diluted | 15,937 | 16,063 | 15,928 | 15,936 | 15,913 | 15,972 | 16,078 | |||||||
SELECTED AVERAGE YIELDS: | ||||||||||||||
Investment securities | 1.75 | % | 2.31 | % | 1.65 | % | 1.72 | % | 1.77 | % | 1.91 | % | 2.06 | % |
Loans | 4.05 | % | 4.18 | % | 4.14 | % | 3.96 | % | 3.98 | % | 4.13 | % | 3.97 | % |
Total interest-earning assets | 3.39 | % | 3.73 | % | 3.37 | % | 3.31 | % | 3.31 | % | 3.59 | % | 3.46 | % |
Interest-bearing demand | 0.14 | % | 0.15 | % | 0.14 | % | 0.15 | % | 0.14 | % | 0.13 | % | 0.13 | % |
Savings and money market | 0.18 | % | 0.33 | % | 0.16 | % | 0.17 | % | 0.19 | % | 0.21 | % | 0.25 | % |
Time deposits | 0.40 | % | 1.24 | % | 0.30 | % | 0.35 | % | 0.43 | % | 0.51 | % | 0.66 | % |
Short-term borrowings | 22.33 | % | 1.85 | % | 0.35 | % | 0.00 | % | 0.00 | % | 41.07 | % | 8.49 | % |
Long-term borrowings, net | 5.75 | % | 6.09 | % | 5.74 | % | 5.75 | % | 5.73 | % | 5.77 | % | 5.76 | % |
Total interest-bearing liabilities | 0.34 | % | 0.69 | % | 0.30 | % | 0.32 | % | 0.35 | % | 0.40 | % | 0.46 | % |
Net interest rate spread | 3.05 | % | 3.04 | % | 3.07 | % | 2.99 | % | 2.96 | % | 3.19 | % | 3.00 | % |
Net interest margin | 3.14 | % | 3.22 | % | 3.15 | % | 3.07 | % | 3.06 | % | 3.29 | % | 3.13 | % |
Page 9
FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands)
Year Ended | 2021 | 2020 | ||||||||||||
December 31, | Fourth | Third | Second | First | Fourth | |||||||||
2021 | 2020 | Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||
ASSET QUALITY DATA: | ||||||||||||||
Allowance for Credit Losses - Loans | ||||||||||||||
Beginning balance, prior to | ||||||||||||||
adoption of CECL | $ | 52,420 | $ | 30,482 | $ | 45,444 | $ | 46,365 | $ | 49,828 | $ | 52,420 | $ | 49,395 |
Impact of adopting CECL | - | 9,594 | - | - | - | - | - | |||||||
Beginning balance, after | ||||||||||||||
adoption of CECL | 52,420 | 40,076 | 45,444 | 46,365 | 49,828 | 52,420 | 49,395 | |||||||
Net loan charge-offs (recoveries): | ||||||||||||||
Commercial business | (212 | ) | 7,384 | 177 | 50 | (287 | ) | (152 | ) | 747 | ||||
Commercial mortgage | 3,814 | 1,755 | 3,618 | - | (7 | ) | 203 | 80 | ||||||
Residential real estate loans | 56 | 72 | 32 | 21 | (3 | ) | 6 | (3 | ) | |||||
Residential real estate lines | 141 | (3 | ) | 11 | 60 | - | 70 | - | ||||||
Consumer indirect | 1,256 | 4,278 | 674 | 265 | (426 | ) | 743 | 1,462 | ||||||
Other consumer | 705 | 329 | 168 | 191 | 329 | 17 | 112 | |||||||
Total net charge-offs | ||||||||||||||
(recoveries) | 5,760 | 13,815 | 4,680 | 587 | (394 | ) | 887 | 2,398 | ||||||
Provision (benefit) for credit losses - loans | (6,984 | ) | 26,159 | (1,088 | ) | (334 | ) | (3,857 | ) | (1,705 | ) | 5,423 | ||
Ending balance | $ | 39,676 | $ | 52,420 | $ | 39,676 | $ | 45,444 | $ | 46,365 | $ | 49,828 | $ | 52,420 |
Net charge-offs (recoveries) | ||||||||||||||
Commercial business | -0.03 | % | 1.00 | % | 0.11 | % | 0.03 | % | -0.15 | % | -0.08 | % | 0.37 | % |
Commercial mortgage | 0.29 | % | 0.15 | % | 1.03 | % | 0.00 | % | 0.00 | % | 0.06 | % | 0.03 | % |
Residential real estate loans | 0.01 | % | 0.01 | % | 0.02 | % | 0.01 | % | 0.00 | % | 0.00 | % | 0.00 | % |
Residential real estate lines | 0.17 | % | 0.00 | % | 0.05 | % | 0.30 | % | 0.00 | % | 0.32 | % | 0.00 | % |
Consumer indirect | 0.14 | % | 0.51 | % | 0.28 | % | 0.11 | % | -0.19 | % | 0.36 | % | 0.69 | % |
Other consumer | 4.61 | % | 2.06 | % | 4.43 | % | 5.15 | % | 8.58 | % | 0.44 | % | 2.64 | % |
Total loans | 0.16 | % | 0.40 | % | 0.51 | % | 0.06 | % | -0.04 | % | 0.10 | % | 0.27 | % |
Supplemental information (1) | ||||||||||||||
Non-performing loans: | ||||||||||||||
Commercial business | $ | 1,399 | $ | 1,975 | $ | 1,399 | $ | 1,046 | $ | 1,555 | $ | 1,742 | $ | 1,975 |
Commercial mortgage | 6,414 | 2,906 | 6,414 | 874 | 885 | 3,402 | 2,906 | |||||||
Residential real estate loans | 2,373 | 2,587 | 2,373 | 2,457 | 2,615 | 2,519 | 2,587 | |||||||
Residential real estate lines | 200 | 323 | 200 | 192 | 280 | 256 | 323 | |||||||
Consumer indirect | 1,780 | 1,495 | 1,780 | 2,104 | 1,250 | 1,482 | 1,495 | |||||||
Other consumer | - | 231 | - | 3 | 50 | 287 | 231 | |||||||
Total non-performing loans | 12,166 | 9,517 | 12,166 | 6,676 | 6,635 | 9,688 | 9,517 | |||||||
Foreclosed assets | - | 2,966 | - | - | 646 | 2,966 | 2,966 | |||||||
Total non-performing assets | $ | 12,166 | $ | 12,483 | $ | 12,166 | $ | 6,676 | $ | 7,281 | $ | 12,654 | $ | 12,483 |
Total non-performing loans | 0.33 | % | 0.26 | % | 0.33 | % | 0.18 | % | 0.18 | % | 0.27 | % | 0.26 | % |
Total non-performing assets | 0.22 | % | 0.25 | % | 0.22 | % | 0.12 | % | 0.14 | % | 0.24 | % | 0.25 | % |
Allowance for credit losses - loans | 1.08 | % | 1.46 | % | 1.08 | % | 1.24 | % | 1.28 | % | 1.36 | % | 1.46 | % |
Allowance for credit losses - loans | 326 | % | 551 | % | 326 | % | 681 | % | 699 | % | 514 | % | 551 | % |
Page 10
FINANCIAL INSTITUTIONS, INC.
Appendix A - Reconciliation to Non-GAAP Financial Measures (Unaudited)
(In thousands, except per share amounts)
Year Ended | 2021 | 2020 | ||||||||||||
December 31, | Fourth | Third | Second | First | Fourth | |||||||||
2021 | 2020 | Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||
Ending tangible assets: | ||||||||||||||
Total assets | $ | 5,520,779 | $ | 5,623,193 | $ | 5,295,102 | $ | 5,329,056 | $ | 4,912,306 | ||||
Less: Goodwill and other intangible | 74,400 | 74,659 | 74,262 | 74,528 | 73,789 | |||||||||
Tangible assets | $ | 5,446,379 | $ | 5,548,534 | $ | 5,220,840 | $ | 5,254,528 | $ | 4,838,517 | ||||
Ending tangible common equity: | ||||||||||||||
Common shareholders' equity | $ | 487,850 | $ | 476,721 | $ | 469,834 | $ | 448,962 | $ | 451,035 | ||||
Less: Goodwill and other intangible | 74,400 | 74,659 | 74,262 | 74,528 | 73,789 | |||||||||
Tangible common equity | $ | 413,450 | $ | 402,062 | $ | 395,572 | $ | 374,434 | $ | 377,246 | ||||
Tangible common equity to tangible | 7.59 | % | 7.25 | % | 7.58 | % | 7.13 | % | 7.80 | % | ||||
Common shares outstanding | 15,747 | 15,842 | 15,842 | 15,829 | 16,042 | |||||||||
Tangible common book value per | $ | 26.26 | $ | 25.38 | $ | 24.97 | $ | 23.66 | $ | 23.52 | ||||
Average tangible assets: | ||||||||||||||
Average assets | $ | 5,335,808 | $ | 4,693,225 | $ | 5,582,987 | $ | 5,368,054 | $ | 5,340,745 | $ | 5,045,180 | $ | 4,992,886 |
Less: Average goodwill and other | 74,411 | 74,364 | 74,544 | 74,470 | 74,412 | 74,214 | 73,942 | |||||||
Average tangible assets | $ | 5,261,397 | $ | 4,618,861 | $ | 5,508,443 | $ | 5,293,584 | $ | 5,266,333 | $ | 4,970,966 | $ | 4,918,944 |
Average tangible common equity: | ||||||||||||||
Average common equity | $ | 468,085 | $ | 433,908 | $ | 483,112 | $ | 478,582 | $ | 458,868 | $ | 451,311 | $ | 445,515 |
Less: Average goodwill and other | 74,411 | 74,364 | 74,544 | 74,470 | 74,412 | 74,214 | 73,942 | |||||||
Average tangible common equity | $ | 393,674 | $ | 359,544 | $ | 408,568 | $ | 404,112 | $ | 384,456 | $ | 377,097 | $ | 371,573 |
Net income available to | $ | 76,237 | $ | 36,871 | $ | 19,247 | $ | 16,811 | $ | 19,834 | $ | 20,345 | $ | 13,435 |
Return on average tangible common | 19.37 | % | 10.25 | % | 18.69 | % | 16.50 | % | 20.69 | % | 21.88 | % | 14.38 | % |
Pre-tax pre-provision income: | ||||||||||||||
Net income | $ | 77,697 | $ | 38,332 | $ | 19,612 | $ | 17,175 | $ | 20,200 | $ | 20,710 | $ | 13,800 |
Add: Income tax expense | 19,525 | 7,391 | 4,225 | 4,553 | 5,400 | 5,347 | 1,688 | |||||||
Add: Provision (benefit) for credit losses | (8,336 | ) | 27,184 | (1,192 | ) | (541 | ) | (4,622 | ) | (1,981 | ) | 5,495 | ||
Pre-tax pre-provision income | $ | 88,886 | $ | 72,907 | $ | 22,645 | $ | 21,187 | $ | 20,978 | $ | 24,076 | $ | 20,983 |
Total loans excluding PPP loans: | ||||||||||||||
Total loans | $ | 3,679,436 | $ | 3,595,138 | $ | 3,679,436 | $ | 3,653,899 | $ | 3,632,168 | $ | 3,654,386 | $ | 3,595,138 |
Less: Total PPP loans | 55,344 | 247,951 | 55,344 | 116,653 | 171,942 | 255,595 | 247,951 | |||||||
Total loans excluding PPP loans | $ | 3,624,092 | $ | 3,347,187 | $ | 3,624,092 | $ | 3,537,246 | $ | 3,460,226 | $ | 3,398,791 | $ | 3,347,187 |
Allowance for credit losses - loans | $ | 39,676 | $ | 52,420 | $ | 39,676 | $ | 45,444 | $ | 46,365 | $ | 49,828 | $ | 52,420 |
Allowance for credit losses - loans to | 1.09 | % | 1.57 | % | 1.09 | % | 1.28 | % | 1.34 | % | 1.47 | % | 1.57 | % |
Page 11
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Financial Institutions Inc. published this content on 31 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 January 2022 21:24:41 UTC.
