WARSAW, N.Y., April 17 /PRNewswire-FirstCall/ --
Financial Institutions, Inc. (Nasdaq: FISI) today reported that first quarter
2003 net income was $4,296,000 compared to $6,657,000 for the first three
months of 2002. Diluted earnings per share were $0.35 for the first quarter
of 2003 compared to $0.56 for the 2002 period. Included in first quarter 2003
results was a provision for loan losses of $3,298,000, which represents an
increase of $2,291,000 over the $1,007,000 provision for loan losses for the
first quarter of 2002. The three month period ending March 31, 2003 also
included an impairment charge of $489,000 for a partnership investment carried
by the Company's National Bank of Geneva (NBG) subsidiary and expenses of
$232,000 for professional services related to organizational governance and
credit administration issues at NBG. The first quarter of 2003 also included
a charge of $674,000 relating to incurred separation costs of former
management.
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Peter G. Humphrey, President and CEO of Financial Institutions, Inc.
(FII), said: "First quarter 2003 results were adversely affected by further
declines in credit quality principally at NBG. As previously indicated, the
Company has committed additional resources toward management of the Company's
nonperforming assets and strengthening the credit administration function.
Actions toward resolving outstanding credit issues are well underway and we
are expecting timely, efficient resolution. Absent the credit issues at NBG
the Company's core earnings remain strong. We remain focused on the execution
of our strategic plan and the Company's long term growth strategy."
Nonperforming assets at March 31, 2003 were $40.4 million compared to
$38.4 million at December 31, 2002 and $11.6 million at March 31, 2002. The
increase in nonperforming assets was principally in commercial loans at NBG.
Humphrey stated, "The economy remains soft which has affected the cash flows
of some of our borrowers. In addition, the dairy industry has experienced an
extended period of low milk prices. Milk prices have stabilized, however we
have restructured loans to a few borrowers who are experiencing the most
difficulty. We have identified our problem assets and have resources in place
to manage those assets. We expect improvement in the existing problem loans
over the next several quarters."
Net loan charge-offs were $1,524,000 for the first quarter of 2003 or
0.46% of average loans compared to $598,000 or 0.20% of average loans in the
same period last year. The increase in loan charge-offs relates primarily to
NBG where $1,159,000 of commercial and commercial mortgages were charged-off
during the first quarter of 2003. The ratio of nonperforming assets to total
loans and other real estate was 3.01% at March 31, 2003 compared to 2.90% at
December 31, 2002 and 0.99% a year ago. The ratio of the allowance for loan
losses to nonperforming loans was 60% at March 31, 2003, compared to 58% at
December 31, 2002 and 186% the previous year. The ratio of the allowance for
loan losses to total loans increased to 1.75% at March 31, 2003 compared to
1.64% at year end 2002 and 1.65% a year ago.
In the first quarter of 2003, net interest income increased 4.0% to
$18,841,000 compared to $18,077,000 in the first quarter of 2002. Net
interest margin was 4.01% for the first quarter of 2003 a drop of 52 basis
points from the 4.53% level for the same period last year. Growth in average
earning assets of $296 million, or 17%, offset the fall in net interest margin
and produced the increased revenue. The growth in average earning assets
reflects average increases of $132 million in the Company's investment
portfolio and $158 million in loans. The decline in net interest margin
reflects the effects of the increase in nonaccrual loans combined with overall
spread compression associated with yields generated on incremental asset
growth relative to related funding costs in a period of historically low
market interest rates.
Noninterest income increased 24% in the first quarter of 2003 to
$6,102,000 from $4,937,000 for the first quarter of 2002. Security gains in
the first quarter of 2003 were $291,000 compared to a loss of $196,000 in the
first quarter of 2002. Growth in deposits and related activity resulted in
service charges on deposits increasing $328,000 to $2,655,000 for the three
months ending March 31, 2003 compare to $2,327,000 for the same period a year
ago.
Noninterest expense for the first quarter of 2003 totaled $15,576,000
compared with $12,100,000 for the first quarter of 2002. As previously
discussed $1,395,000 of the increase related to three specific matters:
$232,000 of the increase was from professional fees related to NBG
organizational governance and credit administration issues, $489,000 from an
impairment charge, and $674,000 from separation costs. The remaining increase
is from compensation cost from additional staffing of the credit
administration function and costs associated with the Company's expansion and
growth of its products and delivery channels. These additional costs are the
principal factor in an increase in the Company's efficiency ratio to 58.95%,
compared to 48.69% for the same period a year ago. Humphrey said, "Our
strategic plan has identified opportunities for expansion into markets where
we believe our brand of banking will allow us to achieve significant market
share. During 2002 we opened offices in six new locations and expect to open
in three more locations in 2003. As we invest in the future the costs
associated with that expansion and related support structure have contributed
to an increase in our efficiency ratio. I am confident that our efficiency
ratio will improve as these new offices come on line and our credit costs
decline as we work through our problem loans."
At March 31, 2003 the Company had total assets of $2.203 billion, an
increase of 17% from $1.884 billion at March 31, 2002. Total loans at quarter
end were $1.339 billion, an increase of $161 million, or 14%, over the same
period last year. Total deposits were $1.821 billion at the recent quarter-
end, compared with $1.521 billion a year earlier. Total shareholders' equity
increased 19% to $182 million at March 31, 2003 from $153 million a year
earlier. Book value per common share at March 31, 2003 was $14.75, an
increase of 20% from $12.26 at March 31, 2002.
FII is the financial 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
46 offices and 65 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 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
March 31,
2003 2002 $ Change % Change
Interest income $ 28,527$ 28,560 $ (33) -%
Interest expense 9,686 10,483 (797) (8)%
Net interest income 18,841 18,077 764 4%
Provision for loan losses 3,298 1,007 2,291 228%
Net interest income
after provision
for loan losses 15,543 17,070 (1,527) (9)%
Noninterest income:
Service charges on deposits 2,655 2,327 328 14%
Financial services group
fees and commissions 1,374 1,305 69 5%
Mortgage banking activities 785 943 (158) (17)%
Gain (loss) on sale
and call of securities 291 (196) 487 248%
Other 997 558 439 79%
Total noninterest income 6,102 4,937 1,165 24%
Noninterest expense:
Salaries and employee benefits 8,881 6,921 1,960 28%
Other 6,695 5,179 1,516 29%
Total noninterest expense 15,576 12,100 3,476 29%
Income before income taxes 6,069 9,907 (3,838) (39)%
Income taxes 1,773 3,250 (1,477) (45)%
Net income 4,296 6,657 (2,361) (35)%
Preferred stock dividends 374 374 - - %
Net income available
to common shareholders $ 3,922$ 6,283 $(2,361) (38)%
Taxable-equivalent
net interest income $ 19,978$ 19,229$ 749 4%
Per common share data:
Net income - basic $ 0.35$ 0.57 $ (0.22) (39)%
Net income - diluted $ 0.35$ 0.56 $ (0.21) (38)%
Cash dividends declared $ 0.16$ 0.13$ 0.03 23%
Book value $14.75$12.26$2.49 20%
Common shares outstanding:
Weighted average
shares - actual 11,107,014 11,013,548
Weighted average
shares - diluted 11,212,507 11,217,430
Period end actual 11,109,664 11,009,761
Performance ratios, annualized
Return on average assets 0.82% 1.47%
Return on average common equity 9.72% 18.83%
Net interest margin
(tax-equivalent) 4.01% 4.53%
Efficiency ratio 58.95% 48.69%
Asset quality data:
Loans past due over 90 days $ 1,308$ 742
Restructured loans 2,940 -
Nonaccrual loans 34,798 9,758
Other real estate owned 1,316 1,125
Total nonperforming assets $40,362$11,625
Asset quality ratios:
Nonperforming loans
to total loans 2.92% 0.89%
Nonperforming assets
to total loans and ORE 3.01% 0.99%
Net loan charge-offs
to average loans (annualized) 0.46% 0.21%
Allowance for loan losses
to total loans 1.75% 1.65%
Allowance for loan losses
to nonperforming loans 60% 186%
Capital ratios:
Average common equity
to average total assets 7.67% 7.39%
Leverage ratio 6.83% 7.10%
Tier 1 risk-based capital ratio 9.72% 10.02%
Risk-based capital ratio 10.98% 11.45%
FINANCIAL INSTITUTIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
(Dollars in thousands)
March 31,
2003 2002 $ Change % Change
ASSETS
Cash, due from banks
and interest-bearing
deposits $ 48,828$ 46,316$ 2,512 5%
Federal funds sold 59,693 23,404 36,289 155%
Investment securities 665,022 547,545 117,477 21%
Loans 1,339,122 1,178,334 160,788 14%
Allowance for loan losses (23,434) (19,483) (3,951) 20%
Loans, net 1,315,688 1,158,851 156,837 14%
Goodwill 40,621 36,709 3,912 11%
Other assets 73,646 71,401 2,245 3%
Total assets $ 2,203,498$ 1,884,226$ 319,272 17%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand 233,170 204,539 28,631 14%
Savings, money market,
and int-bearing checking 826,776 687,678 139,098 20%
Certificates of deposit 760,662 628,982 131,680 21%
Total deposits 1,820,608 1,521,199 299,409 20%
Short-term borrowings 63,230 95,903 (32,673) (34)%
Long-term borrowings 94,991 75,380 19,611 26%
Guaranteed preferred
beneficial interests in
Corporation's junior
subordinated debentures 16,200 16,200 - -%
Other liabilities 26,898 22,800 4,098 18%
Total liabilities 2,021,927 1,731,482 290,445 17%
Shareholders' equity:
Preferred equity 17,742 17,752 (10) -%
Common equity 163,829 134,992 28,837 21%
Total shareholders'
equity 181,571 152,744 28,827 19%
Total liabilities
and shareholders'
equity $ 2,203,498$ 1,884,226$ 319,272 17%
FINANCIAL INSTITUTIONS, INC. AND SUBSIDIARIES
Consolidated Average Statements of Financial Condition
(Dollars in thousands)
March 31,
2003 2002 $ Change % Change
ASSETS
Cash, due from banks
and interest-bearing
deposits $ 42,967$ 40,271$ 2,696 7%
Federal funds sold 33,051 27,430 5,621 20%
Investment securities 640,174 508,404 131,770 26%
Loans 1,329,989 1,171,649 158,340 14%
Allowance for loan
losses (21,963) (19,286) (2,677) 14%
Loans, net 1,308,026 1,152,363 155,663 14%
Goodwill 40,602 36,713 3,889 11%
Other assets 70,045 66,416 3,629 5%
Total assets $ 2,134,865$ 1,831,597$ 303,268 17%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand 228,493 208,533 19,960 10%
Savings, money market,
and int-bearing
checking 799,110 642,108 157,002 24%
Certificates of deposit 724,365 623,702 100,663 16%
Total deposits 1,751,968 1,474,343 277,625 19%
Short-term borrowings 60,512 89,600 (29,088) (32)%
Long-term borrowings 102,239 76,668 25,571 33%
Guaranteed preferred
beneficial interests in
Corporation's junior
subordinated debentures 16,200 16,200 -- --%
Other liabilities 22,489 21,703 786 4%
Total liabilities 1,953,408 1,678,514 274,894 16%
Shareholders' equity:
Preferred equity 17,742 17,752 (10) --%
Common equity 163,715 135,331 28,384 21%
Total shareholders'
equity 181,457 153,083 28,374 19%
Total liabilities
and shareholders'
equity $ 2,134,865$ 1,831,597$ 303,268 17%
SOURCE Financial Institutions, Inc.
-0- 04/17/2003
/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
TS
-- NYTH069 --
6117 04/17/200310:37 EDThttp://www.prnewswire.com