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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 March 31, 2024

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.

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 15,446,949 shares of Common Stock, $0.01 par value, outstanding as of April 30, 2024.

 


FINANCIAL INSTITUTIONS, INC.

Form 10-Q

For the Quarterly Period Ended March 31, 2024

TABLE OF CONTENTS

 

 

PAGE

PART I.

 

FINANCIAL INFORMATION

 

 

 

 

 

 

 

ITEM 1.

 

Financial Statements

 

 

 

 

 

 

 

 

 

Consolidated Statements of Financial Condition (Unaudited) – at March 31, 2024 and December 31, 2023

 

3

 

 

 

 

 

 

 

Consolidated Statements of Income (Unaudited) – Three months ended March 31, 2024 and 2023

 

4

 

 

 

 

 

 

 

Consolidated Statements of Comprehensive (Loss) Income (Unaudited) – Three months ended March 31, 2024 and 2023

 

5

 

 

 

 

 

 

 

Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) – Three months ended March 31, 2024 and 2023

 

6

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows (Unaudited) – Three months ended March 31, 2024 and 2023

 

7

 

 

 

 

 

 

 

Notes to Consolidated Financial Statements (Unaudited)

 

8

 

 

 

 

 

ITEM 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

39

 

 

 

 

 

ITEM 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

59

 

 

 

 

 

ITEM 4.

 

Controls and Procedures

 

60

 

 

 

 

 

PART II.

 

OTHER INFORMATION

 

 

 

 

 

 

 

ITEM 1.

 

Legal Proceedings

 

61

ITEM 1A.

 

Risk Factors

 

61

 

 

 

 

 

ITEM 2.

 

Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

 

62

 

 

 

 

 

ITEM 5.

 

Other Information

 

62

 

 

 

 

 

ITEM 6.

 

Exhibits

 

63

 

 

 

 

 

 

 

Signatures

 

64

 

 

 

 

 

 

 

2


PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

FINANCIAL INSTITUTIONS, INC. AND SUBSIDIARIES

Consolidated Statements of Financial Condition (Unaudited)

 

(Dollars in thousands, except share and per share data)

 

March 31,
2024

 

 

December 31,
2023

 

ASSETS

 

 

 

 

 

 

Cash and due from banks

 

$

237,038

 

 

$

124,442

 

Securities available for sale, at fair value (amortized cost of $1,083,669 and $1,037,990, respectively)

 

 

923,761

 

 

 

887,730

 

Securities held to maturity, at amortized cost (net of allowance for credit losses of $3 and $4, respectively) (fair value of $131,269 and $137,030, respectively)

 

 

143,714

 

 

 

148,156

 

Loans held for sale

 

 

504

 

 

 

1,370

 

Loans (net of allowance for credit losses of $43,075 and $51,082, respectively)

 

 

4,398,971

 

 

 

4,411,057

 

Company owned life insurance

 

 

162,685

 

 

 

161,363

 

Premises and equipment, net

 

 

39,798

 

 

 

39,902

 

Goodwill and other intangible assets, net

 

 

72,287

 

 

 

72,504

 

Other assets

 

 

319,840

 

 

 

314,357

 

Total assets

 

$

6,298,598

 

 

$

6,160,881

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Noninterest-bearing demand

 

$

972,801

 

 

$

1,010,614

 

Interest-bearing demand

 

 

798,831

 

 

 

713,158

 

Savings and money market

 

 

2,064,539

 

 

 

2,084,444

 

Time deposits

 

 

1,560,586

 

 

 

1,404,696

 

Total deposits

 

 

5,396,757

 

 

 

5,212,912

 

Short-term borrowings

 

 

133,000

 

 

 

185,000

 

Long-term borrowings, net of issuance costs of $390 and $468, respectively

 

 

124,610

 

 

 

124,532

 

Other liabilities

 

 

198,497

 

 

 

183,641

 

Total liabilities

 

 

5,852,864

 

 

 

5,706,085

 

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

 

 

124,627

 

 

 

125,841

 

Retained earnings

 

 

448,772

 

 

 

451,687

 

Accumulated other comprehensive loss

 

 

(126,264

)

 

 

(119,941

)

Treasury stock, at cost – 652,607 and 692,150 shares, respectively

 

 

(18,854

)

 

 

(20,244

)

Total shareholders’ equity

 

 

445,734

 

 

 

454,796

 

Total liabilities and shareholders’ equity

 

$

6,298,598

 

 

$

6,160,881

 

 

See accompanying notes to the consolidated financial statements.

3


FINANCIAL INSTITUTIONS, INC. AND SUBSIDIARIES

Consolidated Statements of Income (Unaudited)

 

(In thousands, except per share amounts)

 

Three months ended
March 31,

 

 

 

2024

 

 

2023

 

Interest income:

 

 

 

 

 

 

Interest and fees on loans

 

$

70,333

 

 

$

57,098

 

Interest and dividends on investment securities

 

 

6,095

 

 

 

6,057

 

Other interest income

 

 

1,985

 

 

 

616

 

Total interest income

 

 

78,413

 

 

 

63,771

 

Interest expense:

 

 

 

 

 

 

Deposits

 

 

35,238

 

 

 

19,294

 

Short-term borrowings

 

 

1,529

 

 

 

1,202

 

Long-term borrowings

 

 

1,564

 

 

 

1,460

 

Total interest expense

 

 

38,331

 

 

 

21,956

 

Net interest income

 

 

40,082

 

 

 

41,815

 

(Benefit) provision for credit losses

 

 

(5,456

)

 

 

4,214

 

Net interest income after (benefit) provision for credit losses

 

 

45,538

 

 

 

37,601

 

Noninterest income:

 

 

 

 

 

 

Service charges on deposits

 

 

1,077

 

 

 

1,027

 

Insurance income

 

 

2,134

 

 

 

2,087

 

Card interchange income

 

 

1,902

 

 

 

1,939

 

Investment advisory

 

 

2,582

 

 

 

2,923

 

Company owned life insurance

 

 

1,298

 

 

 

994

 

Investments in limited partnerships

 

 

342

 

 

 

251

 

Loan servicing

 

 

175

 

 

 

146

 

Income from derivative instruments, net

 

 

174

 

 

 

496

 

Net gain on sale of loans held for sale

 

 

88

 

 

 

112

 

Net (loss) gain on other assets

 

 

(13

)

 

 

39

 

Net loss on tax credit investments

 

 

(375

)

 

 

(201

)

Other

 

 

1,517

 

 

 

1,111

 

Total noninterest income

 

 

10,901

 

 

 

10,924

 

Noninterest expense:

 

 

 

 

 

 

Salaries and employee benefits

 

 

17,340

 

 

 

18,133

 

Occupancy and equipment

 

 

3,752

 

 

 

3,730

 

Professional services

 

 

2,372

 

 

 

1,495

 

Computer and data processing

 

 

5,386

 

 

 

4,691

 

Supplies and postage

 

 

475

 

 

 

490

 

FDIC assessments

 

 

1,295

 

 

 

1,115

 

Advertising and promotions

 

 

297

 

 

 

314

 

Amortization of intangibles

 

 

217

 

 

 

234

 

Deposit-related charged-off items

 

 

19,179

 

 

 

323

 

Other

 

 

3,700

 

 

 

3,136

 

Total noninterest expense

 

 

54,013

 

 

 

33,661

 

Income before income taxes

 

 

2,426

 

 

 

14,864

 

Income tax expense

 

 

356

 

 

 

2,775

 

Net income

 

$

2,070

 

 

$

12,089

 

Preferred stock dividends

 

 

365

 

 

 

365

 

Net income available to common shareholders

 

$

1,705

 

 

$

11,724

 

Earnings per common share (Note 2):

 

 

 

 

 

 

Basic

 

$

0.11

 

 

$

0.76

 

Diluted

 

$

0.11

 

 

$

0.76

 

Cash dividends declared per common share

 

$

0.30

 

 

$

0.30

 

 

See accompanying notes to the consolidated financial statements.

4


FINANCIAL INSTITUTIONS, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive (Loss) Income (Unaudited)

 

(Dollars in thousands)

 

Three months ended
March 31,

 

 

 

2024

 

 

2023

 

Net income

 

$

2,070

 

 

$

12,089

 

Other comprehensive (loss) income, net of tax:

 

 

 

 

 

 

Securities available for sale and transferred securities

 

 

(7,164

)

 

 

10,634

 

Hedging derivative instruments

 

 

675

 

 

 

(663

)

Pension and post-retirement obligations

 

 

166

 

 

 

144

 

Total other comprehensive (loss) income, net of tax

 

 

(6,323

)

 

 

10,115

 

Comprehensive (loss) income

 

$

(4,253

)

 

$

22,204

 

 

See accompanying notes to the consolidated financial statements.

5


FINANCIAL INSTITUTIONS, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)

Three months ended March 31, 2024 and 2023

 

(Dollars in thousands, except per share data)

 

Preferred
Equity

 

 

Common
Stock

 

 

Additional
Paid-in
Capital

 

 

Retained
Earnings

 

 

Accumulated
Other
Comprehensive
Loss

 

 

Treasury
Stock

 

 

Total
Shareholders’
Equity

 

Balance at December 31, 2023

 

$

17,292

 

 

$

161

 

 

$

125,841

 

 

$

451,687

 

 

$

(119,941

)

 

$

(20,244

)

 

$

454,796

 

Comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

2,070

 

 

 

 

 

 

 

 

 

2,070

 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,323

)

 

 

 

 

 

(6,323

)

Purchases of common stock for treasury

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(393

)

 

 

(393

)

Share-based compensation plans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

 

 

 

 

 

 

569

 

 

 

 

 

 

 

 

 

 

 

 

569

 

Restricted stock units released

 

 

 

 

 

 

 

 

(1,783

)

 

 

 

 

 

 

 

 

1,783

 

 

 

 

Cash dividends declared:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series A 3% Preferred–$0.75 per share

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

(1

)

Series B-1 8.48% Preferred–$2.12 per
   share

 

 

 

 

 

 

 

 

 

 

 

(364

)

 

 

 

 

 

 

 

 

(364

)

Common–$0.30 per share

 

 

 

 

 

 

 

 

 

 

 

(4,620

)

 

 

 

 

 

 

 

 

(4,620

)

Balance at March 31, 2024

 

$

17,292

 

 

$

161

 

 

$

124,627

 

 

$

448,772

 

 

$

(126,264

)

 

$

(18,854

)

 

$

445,734

 

 

 

(Dollars in thousands, except per share data)

 

Preferred
Equity

 

 

Common
Stock

 

 

Additional
Paid-in
Capital

 

 

Retained
Earnings

 

 

Accumulated
Other
Comprehensive
Loss

 

 

Treasury
Stock

 

 

Total
Shareholders’
Equity

 

Balance at December 31, 2022

 

$

17,292

 

 

$

161

 

 

$

126,636

 

 

$

421,340

 

 

$

(137,487

)

 

$

(22,337

)

 

$

405,605

 

Comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

12,089

 

 

 

 

 

 

 

 

 

12,089

 

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,115

 

 

 

 

 

 

10,115

 

Purchases of common stock for treasury

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(561

)

 

 

(561

)

Share-based compensation plans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

 

 

 

 

 

 

551

 

 

 

 

 

 

 

 

 

 

 

 

551

 

Restricted stock units released

 

 

 

 

 

 

 

 

(1,711

)

 

 

 

 

 

 

 

 

1,711

 

 

 

 

Cash dividends declared:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series A 3% Preferred–$0.75 per share

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

(1

)

Series B-1 8.48% Preferred–$2.12 per
   share

 

 

 

 

 

 

 

 

 

 

 

(364

)

 

 

 

 

 

 

 

 

(364

)

Common–$0.30 per share

 

 

 

 

 

 

 

 

 

 

 

(4,611

)

 

 

 

 

 

 

 

 

(4,611

)

Balance at March 31, 2023

 

$

17,292

 

 

$

161

 

 

$

125,476

 

 

$

428,453

 

 

$

(127,372

)

 

$

(21,187

)

 

$

422,823

 

 

See accompanying notes to the consolidated financial statements.

6


FINANCIAL INSTITUTIONS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)

 

(Dollars in thousands)

 

Three months ended
March 31,

 

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

2,070

 

 

$

12,089

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

2,027

 

 

 

2,068

 

Net amortization of premiums on securities

 

 

718

 

 

 

882

 

(Benefit) provision for credit losses

 

 

(5,456

)

 

 

4,214

 

Share-based compensation

 

 

569

 

 

 

551

 

Deferred income tax benefit

 

 

3,761

 

 

 

417

 

Proceeds from sale of loans held for sale

 

 

5,853

 

 

 

3,416

 

Originations of loans held for sale

 

 

(4,899

)

 

 

(3,436

)

Income on company owned life insurance

 

 

(1,298

)

 

 

(994

)

Net gain on sale of loans held for sale

 

 

(88

)

 

 

(112

)

Net loss (gain) on other assets

 

 

13

 

 

 

(39

)

(Increase) decrease in other assets

 

 

(6,240

)

 

 

8,319

 

Increase (decrease) in other liabilities

 

 

15,260

 

 

 

(20,813

)

Net cash provided by operating activities

 

 

12,290

 

 

 

6,562

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of investment securities:

 

 

 

 

 

 

Available for sale

 

 

(64,613

)

 

 

 

Held to maturity

 

 

(406

)

 

 

(898

)

Proceeds from principal payments, maturities and calls on investment securities:

 

 

 

 

 

 

Available for sale securities

 

 

18,298

 

 

 

22,461

 

Held to maturity

 

 

4,783

 

 

 

9,704

 

Net loan proceeds (originations)

 

 

16,972

 

 

 

(194,972

)

Net payments for company owned life insurance

 

 

(24

)

 

 

(12

)

Purchases of premises and equipment

 

 

(1,174

)

 

 

(848

)

Net cash used in investing activities

 

 

(26,164

)

 

 

(164,565

)

Cash flows from financing activities:

 

 

 

 

 

 

Net increase in deposits

 

 

183,845

 

 

 

211,883

 

Net decrease in short-term borrowings

 

 

(52,000

)

 

 

(89,000

)

Proceeds from long-term borrowings

 

 

 

 

 

50,000

 

Purchases of common stock for treasury

 

 

(393

)

 

 

(561

)

Cash dividends paid to common and preferred shareholders

 

 

(4,982

)

 

 

(4,811

)

Net cash provided by financing activities

 

 

126,470

 

 

 

167,511

 

Net increase in cash and cash equivalents

 

 

112,596

 

 

 

9,508

 

Cash and cash equivalents, beginning of period

 

 

124,442

 

 

 

130,466

 

Cash and cash equivalents, end of period

 

$

237,038

 

 

$

139,974

 

 

See accompanying notes to the consolidated financial statements.

7


Table of Contents

FINANCIAL INSTITUTIONS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

 

(1.) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Financial Institutions, Inc. (the “Company”) is a financial holding company organized in 1931 under the laws of New York State (“New York”). The Company provides diversified financial services through its subsidiaries, Five Star Bank (the “Bank”) and Courier Capital, LLC (“Courier Capital”). The Company offers a broad array of deposit, lending and other financial services to individuals, municipalities and businesses in Western and Central New York through its wholly owned New York chartered banking subsidiary, the Bank. The Bank also has commercial loan production offices in Ellicott City (Baltimore), Maryland and Syracuse, New York, and indirect lending network relationships with franchised automobile dealers in the Capital District of New York. Effective January 1, 2024, the Company exited the Pennsylvania automobile market to align our focus more fully around its core Upstate New York market. The Company’s Banking-as-a-Service (“BaaS”) business offers banking capabilities to non-bank financial service providers and other financial technology firms (“FinTechs”), allowing them to provide banking services to their end users. These BaaS partnerships allow the Bank to offer banking services and products beyond our traditional footprint.

As of March 31, 2024, the Company’s fee-based subsidiaries included SDN Insurance Agency, LLC (“SDN”), which provided a broad range of insurance services to personal and business clients, and Courier Capital, which provides customized investment management, investment consulting and retirement plan services to individuals, businesses, institutions, foundations and retirement plans. On April 1, 2024, the Company announced and closed the sale of the assets of SDN to NFP Property & Casualty Services, Inc., a subsidiary of NFP Corp.

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The accounting and reporting policies conform to U.S. generally accepted accounting principles (“GAAP”). Certain information and footnote disclosures normally included in financial statements prepared in conformity with GAAP have been condensed or omitted pursuant to such rules and regulations. However, in the opinion of management, the accompanying consolidated financial statements reflect all adjustments of a normal and recurring nature necessary for a fair presentation of the consolidated statements of financial condition, income, comprehensive income, changes in shareholders’ equity and cash flows for the periods indicated and contain adequate disclosures to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The results of operations for any interim periods are not necessarily indicative of the results which may be expected for the entire year or any other period.

Reclassifications

Certain reclassifications of previously reported amounts have been made to conform to the current year’s presentation. Such reclassifications did not impact net income or shareholders’ equity as previously reported.

Use of Estimates

The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Material estimates relate to the determination of the allowance for credit losses, the carrying value of goodwill and deferred tax assets, and assumptions used in the defined benefit pension plan accounting.

Cash Flow Reporting

Supplemental cash flow information is summarized as follows for the three months ended March 31, 2024 and 2023 (in thousands):

 

 

 

2024

 

 

2023

 

Supplemental information:

 

 

 

 

 

 

Cash paid for interest

 

$

46,143

 

 

$

28,666

 

Cash paid for income taxes

 

 

 

 

 

1,134

 

Noncash investing and financing activities:

 

 

 

 

 

 

Real estate and other assets acquired in settlement of loans

 

 

142

 

 

 

101

 

Accrued and declared unpaid dividends

 

 

4,985

 

 

 

4,976

 

 

8


Table of Contents

FINANCIAL INSTITUTIONS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

 

(1.) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Fraudulent Activity

In early March 2024, the Company discovered fraudulent activity associated with deposit transactions conducted over the course of several business days by an in-market business customer of the Bank, which resulted in an $18.4 million pre-tax loss. The Bank is working with the appropriate law enforcement authorities in connection with this matter and is pursuing all legal recourse available to recover additional funds and minimize the loss. However, there can be no assurance that the Company will be able to recover any further offset to the deposit loss. The ultimate financial impact could be lower and will depend, in part, on the Bank’s success in its efforts to recover the funds.

The fraud exposure arose from non-contractual, external fraud, and was treated as an operational loss, recorded in deposit-related charged-off items, in noninterest expense for the first quarter of 2024.

Recent Accounting Pronouncements

In March 2023, the FASB issued ASU No. 2023-02, Investments — Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. The ASU allows for entities to consistently account for tax credit equity investments utilizing the proportional amortization method across all types of tax credits when certain requirements are met. The election of proportional amortization method must be made on a programmatic basis rather than an individual investment basis. For previously held tax credit investments, the amendments will be applied either on a modified retrospective basis or a retrospective basis. The amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

Standards Not Yet Effective

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments expand the disclosure requirements of segment expenses, as well as adding disclosure of the title and position of the chief operation decision maker “CODM” and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources is also required. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The adoption of this guidance may require additional disclosure in the Company’s financial statement related to segments.

In December 2023, the FASB issued ASU 2023-09, Income Tax (Topic 740): Improvements to Income Tax Disclosures. The amendments expand the disclosure requirements of income taxes, primarily related to the income tax rate reconciliation and income taxes paid. The guidance also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred income tax liabilities. The amendments are effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

9


Table of Contents

FINANCIAL INSTITUTIONS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

 

(2.) EARNINGS PER COMMON SHARE (“EPS”)

The following table presents a reconciliation of the earnings and shares used in calculating basic and diluted EPS (in thousands, except per share amounts).

 

 

 

Three months ended
March 31,

 

 

 

2024

 

 

2023

 

Net income available to common shareholders

 

$

1,705

 

 

$

11,724