WARSAW, N.Y., Oct. 19 /PRNewswire-FirstCall/ -- Financial Institutions,
Inc. (Nasdaq: FISI) today reported diluted earnings per share for the third
quarter of 2004 were $0.42, an increase of 27% over $0.33 per share for the
same period last year. Third quarter 2004 net income was $5.1 million, an
increase of $1.0 million, or 26%, over third quarter 2003 net income of $4.1
million. Third quarter earnings were positively impacted by a $3.4 million
decrease in the provision for loan losses. Third quarter 2004 return on
average assets and return on equity improved to 0.94% and 11.36%,
respectively, compared with 0.75% and 8.70%, respectively, in the same period
last year.
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For the first nine months of 2004, net income was $13.3 million, or $1.08
per diluted share, up 11% compared with $12.0 million, or $0.97 per diluted
share, for the same period in 2003. Return on average assets and return on
average equity improved to 0.81% and 9.79%, respectively, for the nine-month
period in 2004 compared with 0.74% and 8.73%, respectively for the same period
in 2003. The growth in net income was primarily the result of a $4.7 million
decrease in the provision for loan losses.
Asset Quality and Provision for Loan Losses
Nonperforming assets at September 30, 2004 declined to $49.7 million,
compared with $52.1 million at December 31, 2003, and $51.9 million at
September 30, 2003. The ratio of the allowance for loan losses to
nonperforming loans improved to 65% at September 30, 2004, compared with 56%
at December 31, 2003 and 57% at September 30, 2003. Net loan charge-offs for
the third quarter of 2004 were $1.9 million, or 0.60% of average loans,
compared with $3.1 million, or 0.89% of average loans in the same period last
year.
The provision for loan losses for the third quarter of 2004 was $2.1
million compared with $5.6 million in the third quarter of last year. For the
first nine-month period of 2004, the provision for loan losses was $9.5
million, down $4.7 million from $14.2 million in the first nine months of
2003.
Peter G. Humphrey, President and CEO of Financial Institutions, Inc. (FII)
stated, "The third quarter results reflect our strong focus on improving
credit quality with a resulting decline in our provision for loan losses. We
continue to work at reducing our level of nonperforming assets in the most
cost effective manner. We have also made investments in people and processes
to provide for a stronger credit and sales culture within the organization.
This investment in time and human resources was reflected in a higher cost
structure."
Net Interest Income
In the third quarter of 2004, net interest income increased 4% to $19.2
million compared with $18.5 million in the third quarter of 2003. Net
interest margin expanded to 3.98% for the third quarter of 2004, an increase
of 12 basis points from 3.86% for the same period last year and 16 basis
points from 3.82% for the second quarter of 2004. The increase in net
interest income and net interest margin was partially attributed to the recent
increase in market interest rates, which has had a favorable impact on earning
asset yields while minimally affecting funding costs. This improvement helped
to offset the decline in average earning assets.
Noninterest Income
Noninterest income decreased 10% in the third quarter of 2004 to $6.4
million compared with $7.1 million for the same period last year, primarily
due to a decrease in mortgage banking income of $0.7 million from $1.1 million
in the third quarter of 2003 to $417,000 in the current quarter. This decline
was partially attributed to the lower volume of residential mortgage loans
sold in the current quarter relative to the historically high levels of
refinancing activity in 2003. Higher income from service fees reflects FII's
expanding portfolio of products provided to its customers throughout its four-
bank service territory. This increase in income from service fees plus
financial services fees and commissions and other income mostly offset lower
income from the gain on securities compared with last year's third quarter.
Noninterest expense
Noninterest expense for the third quarter of 2004 totaled $16.4 million,
up 10% compared with $14.9 million for the third quarter of 2003. The
increase in noninterest expense was mostly attributable to higher compliance
costs, credit collection expenses and costs for additional lending and credit
administration staff. The additional noninterest expenses, coupled with a
slowing of revenue growth, were the principal factors in the rise in the
Company's efficiency ratio to 60.82% for the three months ended September 30,
2004, compared with 55.30% for the same period a year ago.
Balance Sheet Trends
FII depends in part on its strong core deposit base to fund its interest
income activities. Average deposits grew a modest 2% for the quarter ended
September 30, 2004 to $1.83 billion compared with $1.80 billion at the end of
the third quarter last year. For the nine-month periods, the average balance
of deposits increased 3% to $1.85 billion in 2004 from $1.79 billion in 2003.
Loans are the primary earning asset for the Company. Total loans declined
in the third quarter to $1.27 billion as of September 30, 2004, down $77.9
million from December 31, 2003 and down $106.1 million from one year ago. As
FII has been actively working to reduce credit risk in the loan portfolio and
implement more stringent underwriting requirements, its loan origination
process has slowed. The expansion of the loan origination staff and
additional training on the new credit processes combined with expanded sales
training activities should help the growth of the loan portfolio.
Mr. Humphrey noted, "As a result of our focused efforts on implementing a
stronger credit process and reworking our loan portfolio, energy and resources
were diverted from growing our customer base and loan origination. We are now
adding resources to the front end of our business and are reinforcing our
strong sales and service culture with training and support."
At September 30, 2004 the Company had total assets of $2.21 billion, a 1%
increase from $2.19 billion at September 30, 2003. Total shareholders' equity
at September 30, 2004 was $188.0 million compared with $182.7 million a year
earlier, while book value per common share at September 30, 2004 was $15.21,
an increase of 3% from $14.78 at September 30, 2003.
About Financial Institutions, Inc.
FII is the bank holding company parent of Wyoming County Bank, The
National Bank of Geneva, Bath National Bank, and First Tier Bank and Trust
with $2.2 billion in assets. Its four banks provide a wide range of consumer
and commercial banking services to individuals, municipalities, and businesses
through a network of 49 offices and 71 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
http://www.fiiwarsaw.com.
Safe Harbor Statement
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 beliefs or
projections. There are a number of important factors that could affect the
Company's forward-looking statements which include the quality of collateral
associated with nonperforming loans, the speed or cost of resolving bad loans,
the ability to hire sales personnel, the likelihood of increasing the customer
base and the loan portfolio, the economic conditions in the area the Company
operates, customer preferences, the competition and other factors discussed in
the Company's filings with the Securities and Exchange Commission. 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
(Unaudited)
For the three months ended
September 30,
(Dollars in thousands, ( $ %
except per share amounts) 2004 2003 Change Change
Interest income $26,630 $27,310 $(680) (2)%
Interest expense 7,403 8,770 (1,367) (16)%
Net interest income 19,227 18,540 687 4%
Provision for loan losses 2,147 5,590 (3,443) (62)%
Net interest income after
provision for loan losses 17,080 12,950 4,130 32%
Noninterest income:
Service charges on deposits 3,108 2,973 135 5%
Financial services group
fees and commissions 1,423 1,408 15 1%
Mortgage banking activities 417 1,113 (696) (63)%
Gain on sale and call of
securities 14 581 (567) (98)%
Other 1,398 984 414 42%
Total noninterest income 6,360 7,059 (699) (10)%
Noninterest mxpense:
Salaries and employee
benefits 9,220 8,491 729 9%
Other 7,139 6,405 734 11%
Total noninterest expense 16,359 14,896 1,463 10%
Income before income taxes 7,081 5,113 1,968 38%
Income taxes 1,964 1,058 906 86%
Net income 5,117 4,055 1,062 26%
Preferred stock dividends 374 374 -- -- %
Net income available to
common shareholders $ 4,743 $ 3,681 $ 1,062 29%
Memo: Taxable-equivalent
net interest income $ 20,334 $ 19,636 $ 698 4%
FINANCIAL INSTITUTIONS, INC. AND SUBSIDIARIES
Ratios and Other Data
(Unaudited)
For the three months ended
September 30,
(Dollars in thousands, $ %
except per share amounts) 2004 2003 Change Change
Per common share data:
Net income - basic $0.42 $0.33 $0.09 27%
Net income - diluted $0.42 $0.33 $0.09 27%
Cash dividends declared $0.16 $0.16 $ -- --%
Book value $15.21 $14.78 $0.43 3%
Common shares outstanding:
Weighted average shares -
actual 11,196,646 11,159,433
Weighted average shares -
diluted 11,253,282 11,265,904
Period end actual 11,197,075 11,162,209
Performance ratios,
annualized:
Return on average assets 0.94% 0.75%
Return on average common
equity 11.36% 8.70%
Common dividend payout
ratio 38.10% 48.48%
Net interest margin
(tax-equivalent) 3.98% 3.86%
Efficiency ratio 60.82% 55.30%
Asset quality data and
ratios:
Loans past due over 90 days
and still accruing $1,179 $1,723
Restructured loans -- 3,098
Nonaccrual loans 46,471 46,352
Other real estate owned 2,089 756
Total nonperforming assets $49,739 $51,929
Net loan charge-offs $1,940 $3,054
Nonperforming loans to
total loans 3.76% 3.73%
Nonperforming assets to
total loans and ORE 3.92% 3.78%
Allowance for loan losses
to total loans 2.46% 2.12%
Allowance for loan losses
to nonperforming loans 65% 57%
Net loan charge-offs to
average loans (annualized) 0.60% 0.89%
Capital ratios:
Average common equity to
average total assets 7.64% 7.78%
Leverage ratio 7.30% 7.00%
Tier 1 risk-based capital
ratio 11.21% 9.99%
Risk-based capital ratio 12.47% 11.25%
FINANCIAL INSTITUTIONS, INC. AND SUBSIDIARIES
Consolidated Statement of Income
(Unaudited)
For the nine months ended
(Dollars in thousands, September 30,
except per share amounts) $ %
2004 2003 Change Change
Interest income $79,361 $84,601 $(5,240) (6)%
Interest expense 22,981 28,027 (5,046) (18)%
Net interest income 56,380 56,574 (194) -- %
Provision for loan losses 9,459 14,199 (4,740) (33)%
Net interest income after
provision for loan losses 46,921 42,375 4,546 11%
Noninterest income:
Service charges on deposits 8,973 8,399 574 7%
Financial services group
fees and commissions 4,388 4,110 278 7%
Mortgage banking activities 1,541 2,849 (1,308) (46)%
Gain on sale and call of
securities 88 1,023 (935) (91)%
Gain on sale of credit card
portfolio 1,177 -- 1,177 N/A
Other 3,310 2,940 370 13%
Total noninterest income 19,477 19,321 156 1%
Noninterest expense:
Salaries and employee
benefits 27,440 25,408 2,032 8%
Other 20,491 20,011 480 2%
Total noninterest expense 47,931 45,419 2,512 6%
Income before income taxes 18,467 16,277 2,190 13%
Income taxes 5,143 4,276 867 20%
Net income 13,324 12,001 1,323 11%
Preferred stock dividends 1,122 1,122 -- -- %
Net income available to
common shareholders $ 12,202 $ 10,879 $ 1,323 12%
Memo: Taxable-equivalent
net interest income $ 59,745 $ 59,946 $ (201) -- %
FINANCIAL INSTITUTIONS, INC. AND SUBSIDIARIES
Ratios and Other Data
(Unaudited)
For the nine months ended
September 30,
(Dollars in thousands,
except per share amounts) $ %
2004 2003 Change Change
Per common share data:
Net income - basic $1.09 $0.98 $0.11 11%
Net income - diluted $1.08 $0.97 $0.11 11%
Cash dividends declared $0.48 $0.48 $ -- --%
Common shares outstanding:
Weighted average shares -
actual 11,183,651 11,142,055
Weighted average shares -
diluted 11,248,307 11,244,866
Period end actual 11,197,075 11,162,209
Performance ratios,
annualized:
Return on average assets 0.81% 0.74%
Return on average common
equity 9.79% 8.73%
Common dividend payout
ratio 44.04% 48.98%
Net interest margin
(tax-equivalent) 3.88% 3.95%
Efficiency ratio 60.49% 55.87%
Asset quality data and ratio:
Net loan charge-offs $7,355 $6,806
Net loan charge-offs to
average loans (annualized) 0.75% 0.67%
FINANCIAL INSTITUTIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
(Unaudited)
September 30
(Dollars in thousands) $ %
2004 2003 Change Change
ASSETS
Cash, due from banks and
interest-bearing deposits $58,460 $66,653 $(8,193) (12)%
Federal funds sold 29,857 53,228 (23,371) (44)%
Investment securities 761,984 603,795 158,189 26%
Loans 1,267,396 1,373,455 (106,059) (8)%
Allowance for loan losses (31,168) (29,052) (2,116) 7%
Loans, net 1,236,228 1,344,403 (108,175) (8)%
Goodwill 40,946 40,621 325 1%
Other assets 80,545 77,650 2,895 4%
Total assets $2,208,020 $2,186,350 $21,670 1%
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits:
Demand $ 272,115 $263,433 $8,682 3%
Savings, money market,
and int-bearing checking 852,770 826,114 26,656 3%
Certificates of deposit 737,445 738,379 (934) --%
Total deposits 1,862,330 1,827,926 34,404 2%
Short-term borrowings 38,861 70,392 (31,531) (45)%
Long-term borrowings 81,416 68,606 12,810 19%
Junior subordinated
debentures 16,702 -- 16,702 N/A
Trust preferred securities -- 16,200 (16,200) (100)%
Other liabilities 20,682 20,489 193 1%
Total liabilities 2,019,991 2,003,613 16,378 1%
Shareholders' equity:
Preferred equity 17,733 17,735 (2) -- %
Common equity 170,296 165,002 5,294 3%
Total shareholders'
equity (1) 188,029 182,737 5,292 3%
Total liabilities and
shareholders' equity $2,208,020 $2,186,350 $21,670 1%
(1) Includes the after-tax impact of net unrealized gains on investment
securities classified as available for sale of $5,686 and $8,098 at
September 30, 2004 and 2003, respectively.
FINANCIAL INSTITUTIONS, INC. AND SUBSIDIARIES
Consolidated Average Statements of Financial Condition
(Unaudited)
For the three months ended
September 30,
$ %
(Dollars in thousands) 2004 2003 Change Change
ASSETS
Cash, due from banks and
interest-bearing deposits $44,789 $45,077 $ (288) (1)%
Federal funds sold 14,245 65,648 (51,403) (78)%
Investment securities 741,971 579,085 162,886 28%
Loans 1,284,746 1,378,713 (93,967) (7)%
Allowance for loan losses (31,290) (26,375) (4,915) 19%
Loans, net 1,253,456 1,352,338 (98,882) (7)%
Goodwill 40,946 40,621 325 1%
Other assets 80,501 74,639 5,862 8%
Total assets $2,175,908 $2,157,408 $18,500 1%
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits:
Demand $ 277,192 $ 254,528 $22,664 9%
Savings, money market,
and int-bearing checking 807,102 789,078 18,024 2%
Certificates of deposit 748,916 753,866 (4,950) (1)%
Total deposits 1,833,210 1,797,472 35,738 2%
Short-term borrowings 43,182 65,336 (22,154) (34)%
Long-term borrowings 81,970 71,151 10,819 15%
Junior subordinated
debentures 16,702 -- 16,702 N/A
Trust preferred securities -- 16,200 (16,200) (100)%
Other liabilities 16,971 21,677 (4,706) (22)%
Total liabilities 1,992,035 1,971,836 20,199 1%
Shareholders' equity:
Preferred equity 17,734 17,735 (1) -- %
Common equity 166,139 167,837 (1,698) (1)%
Total shareholders'
equity 183,873 185,572 (1,699) (1)%
Total liabilities and
shareholders' equity $2,175,908 $2,157,408 $18,500 1%
FINANCIAL INSTITUTIONS, INC. AND SUBSIDIARIES
Consolidated Average Statements of Financial Condition
(Unaudited)
(Dollars in thousands) For the nine months ended
September 30,
$ %
2004 2003 Change Change
ASSETS
Cash, due from banks and
interest-bearing deposits $44,294 $43,627 $667 2%
Federal funds sold 34,518 46,523 (12,005) (26)%
Investment securities 711,170 621,990 89,180 14%
Loans 1,307,497 1,356,183 (48,686) (4)%
Allowance for loan losses (30,292) (24,068) (6,224) 26%
Loans, net 1,277,205 1,332,115 (54,910) (4)%
Goodwill 40,771 40,615 156 -- %
Other assets 79,937 72,307 7,630 11%
Total assets $2,187,895 $2,157,177 $30,718 1%
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits:
Demand $ 263,736 $ 239,843 $23,893 10%
Savings, money market,
and int-bearing checking 814,851 797,424 17,427 2%
Certificates of deposit 766,999 748,428 18,571 2%
Total deposits 1,845,586 1,785,695 59,891 3%
Short-term borrowings 41,528 63,490 (21,962) (35)%
Long-term borrowings 84,469 85,164 (695) (1)%
Junior subordinated
debentures 16,702 -- 16,702 N/A
Trust preferred securities -- 16,200 (16,200) (100)%
Other liabilities 15,355 22,365 (7,010) (31)%
Total liabilities 2,003,640 1,972,914 30,726 2%
Shareholders' equity:
Preferred equity 17,734 17,738 (4) -- %
Common equity 166,521 166,525 (4) -- %
Total shareholders'
equity 184,255 184,263 (8) -- %
Total liabilities and
shareholders' equity $2,187,895 $2,157,177 $30,718 1%
SOURCE Financial Institutions, Inc.
-0- 10/19/2004
/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
AA
-- NYTU093 --
7728 10/19/200412:32 EDThttp://www.prnewswire.com