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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2023
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File Number: 000-26481
Financial Institutions, Inc.
(Exact name of registrant as specified in its charter)
|
|
|
New York |
|
16-0816610 |
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
|
|
220 LIBERTY STREET, WARSAW, New York |
|
14569 |
(Address of principal executive offices) |
|
(Zip Code) |
(585) 786-1100
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
|
|
|
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Common stock, par value $0.01 per share |
FISI |
Nasdaq Global Select Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
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|
|
Large accelerated filer |
☐ |
Accelerated filer |
☑ |
|
|
|
|
Non-accelerated filer |
☐ |
Smaller reporting company |
☐ |
|
|
|
|
|
|
Emerging growth company |
☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
The registrant had 15,401,800 shares of Common Stock, $0.01 par value, outstanding as of August 1, 2023.
Table of Contents
FINANCIAL INSTITUTIONS, INC.
Form 10-Q
For the Quarterly Period Ended June 30, 2023
TABLE OF CONTENTS
2
Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
FINANCIAL INSTITUTIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Condition (Unaudited)
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|
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|
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|
|
(Dollars in thousands, except share and per share data) |
|
June 30, 2023 |
|
|
December 31, 2022 |
|
ASSETS |
|
|
|
|
|
|
Cash and due from banks |
|
$ |
180,248 |
|
|
$ |
130,466 |
|
Securities available for sale, at fair value (amortized cost of $1,082,174 and $1,127,057, respectively) |
|
|
912,122 |
|
|
|
954,371 |
|
Securities held to maturity, at amortized cost (net of allowance for credit losses of $4 and $5, respectively) (fair value of $146,026 and $174,188, respectively) |
|
|
159,893 |
|
|
|
188,975 |
|
Loans held for sale |
|
|
805 |
|
|
|
550 |
|
Loans (net of allowance for credit losses of $49,836 and $45,413, respectively) |
|
|
4,347,973 |
|
|
|
4,005,036 |
|
Company owned life insurance |
|
|
141,442 |
|
|
|
139,482 |
|
Premises and equipment, net |
|
|
40,681 |
|
|
|
41,986 |
|
Goodwill and other intangible assets, net |
|
|
72,950 |
|
|
|
73,414 |
|
Other assets |
|
|
285,184 |
|
|
|
262,992 |
|
Total assets |
|
$ |
6,141,298 |
|
|
$ |
5,797,272 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
Noninterest-bearing demand |
|
$ |
1,022,788 |
|
|
$ |
1,139,214 |
|
Interest-bearing demand |
|
|
823,983 |
|
|
|
863,822 |
|
Savings and money market |
|
|
1,641,014 |
|
|
|
1,643,516 |
|
Time deposits |
|
|
1,547,076 |
|
|
|
1,282,872 |
|
Total deposits |
|
|
5,034,861 |
|
|
|
4,929,424 |
|
Short-term borrowings |
|
|
374,000 |
|
|
|
205,000 |
|
Long-term borrowings, net of issuance costs of $623 and $778, respectively |
|
|
124,377 |
|
|
|
74,222 |
|
Other liabilities |
|
|
182,187 |
|
|
|
183,021 |
|
Total liabilities |
|
|
5,715,425 |
|
|
|
5,391,667 |
|
Shareholders’ equity: |
|
|
|
|
|
|
Series A 3% preferred stock, $100 par value; 1,533 shares authorized; 1,435 shares issued |
|
|
143 |
|
|
|
143 |
|
Series B-1 8.48% preferred stock, $100 par value; 200,000 shares authorized; 171,486 shares issued |
|
|
17,149 |
|
|
|
17,149 |
|
Total preferred equity |
|
|
17,292 |
|
|
|
17,292 |
|
Common stock, $0.01 par value; 50,000,000 shares authorized; 16,099,556 shares issued |
|
|
161 |
|
|
|
161 |
|
Additional paid-in capital |
|
|
125,457 |
|
|
|
126,636 |
|
Retained earnings |
|
|
437,851 |
|
|
|
421,340 |
|
Accumulated other comprehensive loss |
|
|
(134,472 |
) |
|
|
(137,487 |
) |
Treasury stock, at cost – 697,756 and 759,555 shares, respectively |
|
|
(20,416 |
) |
|
|
(22,337 |
) |
Total shareholders’ equity |
|
|
425,873 |
|
|
|
405,605 |
|
Total liabilities and shareholders’ equity |
|
$ |
6,141,298 |
|
|
$ |
5,797,272 |
|
See accompanying notes to the consolidated financial statements.
3
Table of Contents
FINANCIAL INSTITUTIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands, except per share amounts) |
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest and fees on loans |
|
$ |
64,052 |
|
|
$ |
38,872 |
|
|
$ |
121,150 |
|
|
$ |
75,170 |
|
Interest and dividends on investment securities |
|
|
5,877 |
|
|
|
6,294 |
|
|
|
11,934 |
|
|
|
12,330 |
|
Other interest income |
|
|
1,186 |
|
|
|
110 |
|
|
|
1,802 |
|
|
|
127 |
|
Total interest income |
|
|
71,115 |
|
|
|
45,276 |
|
|
|
134,886 |
|
|
|
87,627 |
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
24,054 |
|
|
|
2,366 |
|
|
|
43,348 |
|
|
|
4,071 |
|
Short-term borrowings |
|
|
3,159 |
|
|
|
252 |
|
|
|
4,361 |
|
|
|
280 |
|
Long-term borrowings |
|
|
1,565 |
|
|
|
1,061 |
|
|
|
3,025 |
|
|
|
2,121 |
|
Total interest expense |
|
|
28,778 |
|
|
|
3,679 |
|
|
|
50,734 |
|
|
|
6,472 |
|
Net interest income |
|
|
42,337 |
|
|
|
41,597 |
|
|
|
84,152 |
|
|
|
81,155 |
|
Provision for credit losses |
|
|
3,230 |
|
|
|
563 |
|
|
|
7,444 |
|
|
|
2,882 |
|
Net interest income after provision for credit losses |
|
|
39,107 |
|
|
|
41,034 |
|
|
|
76,708 |
|
|
|
78,273 |
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposits |
|
|
1,223 |
|
|
|
1,437 |
|
|
|
2,250 |
|
|
|
2,806 |
|
Insurance income |
|
|
1,328 |
|
|
|
1,234 |
|
|
|
3,415 |
|
|
|
3,331 |
|
Card interchange income |
|
|
2,107 |
|
|
|
2,103 |
|
|
|
4,046 |
|
|
|
4,055 |
|
Investment advisory |
|
|
2,819 |
|
|
|
2,906 |
|
|
|
5,742 |
|
|
|
5,947 |
|
Company owned life insurance |
|
|
953 |
|
|
|
869 |
|
|
|
1,947 |
|
|
|
1,702 |
|
Investments in limited partnerships |
|
|
469 |
|
|
|
242 |
|
|
|
720 |
|
|
|
1,037 |
|
Loan servicing |
|
|
114 |
|
|
|
135 |
|
|
|
260 |
|
|
|
244 |
|
Income from derivative instruments, net |
|
|
703 |
|
|
|
645 |
|
|
|
1,199 |
|
|
|
1,164 |
|
Net gain on sale of loans held for sale |
|
|
122 |
|
|
|
828 |
|
|
|
234 |
|
|
|
737 |
|
Net loss on investment securities |
|
|
— |
|
|
|
(15 |
) |
|
|
— |
|
|
|
(15 |
) |
Net (loss) gain on other assets |
|
|
(7 |
) |
|
|
7 |
|
|
|
32 |
|
|
|
7 |
|
Net gain (loss) on tax credit investments |
|
|
489 |
|
|
|
(92 |
) |
|
|
288 |
|
|
|
(319 |
) |
Other |
|
|
1,146 |
|
|
|
1,061 |
|
|
|
2,257 |
|
|
|
1,986 |
|
Total noninterest income |
|
|
11,466 |
|
|
|
11,360 |
|
|
|
22,390 |
|
|
|
22,682 |
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
17,754 |
|
|
|
16,966 |
|
|
|
35,887 |
|
|
|
33,582 |
|
Occupancy and equipment |
|
|
3,538 |
|
|
|
4,015 |
|
|
|
7,268 |
|
|
|
7,771 |
|
Professional services |
|
|
1,273 |
|
|
|
1,269 |
|
|
|
2,768 |
|
|
|
2,925 |
|
Computer and data processing |
|
|
4,750 |
|
|
|
4,573 |
|
|
|
9,441 |
|
|
|
8,552 |
|
Supplies and postage |
|
|
473 |
|
|
|
469 |
|
|
|
963 |
|
|
|
1,010 |
|
FDIC assessments |
|
|
1,239 |
|
|
|
621 |
|
|
|
2,354 |
|
|
|
1,134 |
|
Advertising and promotions |
|
|
498 |
|
|
|
406 |
|
|
|
812 |
|
|
|
786 |
|
Amortization of intangibles |
|
|
230 |
|
|
|
249 |
|
|
|
464 |
|
|
|
503 |
|
Restructuring (recoveries) charges |
|
|
(19 |
) |
|
|
1,269 |
|
|
|
(19 |
) |
|
|
1,269 |
|
Other |
|
|
4,046 |
|
|
|
3,050 |
|
|
|
7,505 |
|
|
|
5,490 |
|
Total noninterest expense |
|
|
33,782 |
|
|
|
32,887 |
|
|
|
67,443 |
|
|
|
63,022 |
|
Income before income taxes |
|
|
16,791 |
|
|
|
19,507 |
|
|
|
31,655 |
|
|
|
37,933 |
|
Income tax expense |
|
|
2,418 |
|
|
|
3,859 |
|
|
|
5,193 |
|
|
|
7,302 |
|
Net income |
|
$ |
14,373 |
|
|
$ |
15,648 |
|
|
$ |
26,462 |
|
|
$ |
30,631 |
|
Preferred stock dividends |
|
|
364 |
|
|
|
365 |
|
|
|
729 |
|
|
|
729 |
|
Net income available to common shareholders |
|
$ |
|