Financial Institutions, Inc. · NASDAQ:FISI
Financial Institutions — Q1 2024 Earnings Presentation
35 slides from Financial Institutions's earnings presentation, Apr 26, 2024
Slide 1: Investor Presentation First Quarter 2024 Earnings Presentation
Investor Presentation Financial Institutions, Inc. (NASDAQ: FISI) First Quarter 2024 Earnings Presentation April 25, 2024
Slide 2: Important Information
Important Information Safe Harbor Statement Statements contained in this presentation which are not historical facts and which pertain to future operating results of Financial Institutions, Inc. (the “Company”) and its subsidiaries constitute “forward-looking statements” within the meaning of the Pr
Slide 3: Overview of Financial Institutions, Inc.
Company Overview Overview of Financial Institutions, Inc. $291M Market cap NASDAQ: FISI • Innovative financial holding company headquartered in Western New York offering banking and wealth management $6.30B Total assets services through its subsidiaries, Five Star Bank and Courier Capital, LLC • Pos
Slide 4: Why FISI
Company Overview Why FISI Strategic focus designed to deliver long-term value • Results-driven community bank with strong retail and commercial franchises 4.7% ◦ Serving financially stable Upstate New York markets and well-positioned for growth in metros of Buffalo and Rochester Total loan growth ◦
Slide 5: Banking-as-a-Service (BaaS)
Company Overview With BaaS, we are leveraging our digital and infrastructure investments to deliver value to select fintechs serving SMBs, affinity groups and niche markets • Enabling fintechs to offer banking products and services to their end users, leading primarily to deposit growth as well as c
Slide 6: FISI sees BaaS as complementary to the existing franchise
Company Overview FISI sees BaaS as complementary Primarily focused on five key to the existing franchise BaaS client types where we see Fee-based line of business with potential to generate strong opportunity lower-cost deposits Business-to-Business Help B2B fintechs innovate solutions for enduring
Slide 7: First Quarter 2024 Key Results
Financial Highlights • Total deposits were $5.40B, up $183.8M, or 3.5%, from December 31, 2023, and up $255.5M, or 5.0%, from one year prior. • Total loans were $4.44B, reflecting a decrease of $20.1M, or 0.5%, from December 31, 2023 and an increase of $198.7M, or 4.7%, from March 31, 2023. • Net in
Slide 8: Insurance Subsidiary Transaction Supports Earnings and Capital Positions
Financial Highlights Insurance Subsidiary Transaction Supports Earnings and Capital Positions Compelling price of $27.0M takes advantage of strong valuations for insurance brokerage businesses • As previously disclosed, on April 1, 2024, the Company announced and closed the sale of the assets of its
Slide 9: 2024 Guidance Update
Financial Highlights 2024 Guidance Update Focused on executing strategic initiatives that will improve profitability and operating leverage over time 285-295 bps 1-3% full year loan growth 1-3% full year deposit growth Full-year NIM of 2.85-2.95% Noninterest income of driven by commercial loans driv
Slide 10: Recent Earnings Performance
Financial Highlights Recent Earnings Performance Last five quarters Earnings Summary(1) 1Q ’23 2Q ’23 3Q ’23 4Q ’23 1Q ’24 Average interest-earning assets $5,486.0 $5,691.9 $5,704.1 $5,726.6 $5,804.9 Net interest margin (tax equivalent basis) 3.09% 2.99% 2.91% 2.78% 2.78% Net interest income 41.8 42
Slide 11: Organic Loan Growth
High Quality Lending Total loans increased $198.7M, or 4.7%, from March 31, 2023, driven by commercial loan growth Total Loans $5.00 6.3% CAGR Billions Organic Loan $4.50 $4.05 $4.46 $4.44 $0.73 $0.72 Growth $4.00 $3.50 $3.60 $3.68 $0.67 $0.69 $0.66 $0.95 $0.92 $4.44B of total loans at $3.00 $1.02 M
Slide 12: Commercial Lending
High Quality Lending Total Commercial Loans Commercial Lending $2.74 $2.75 Billions 8.7% CAGR Outstanding balance of $2.75B at March 31, 2024 $2.5 $2.34 $0.73 $0.71 $2.05 $2.05 • Commercial loans increased $11.6M, or 0.4%, during the first quarter of 2024 and $0.66 >$0.01 $2.0 >$0.01 $216.0M, or 8.5
Slide 13: Commercial Lending Exposure Mix
High Quality Lending Overall Commercial Portfolio Exposure Mix Commercial Lending Committed credit exposure of $3.56B at 2%1% 2%2% 2% March 31, 2024 4% • The vast majority of the commercial loan portfolio is within the Bank's 4% footprint, which includes the Mid-Atlantic region following the Company
Slide 14: Strong Mid-Atlantic Performance & Opportunity
High Quality Lending Strong Mid-Atlantic Performance & Opportunity Leveraging technology to seamlessly collaborate with Mid-Atlantic team and onboard new customers despite geographic divide • Commercial loan production office opened in Baltimore suburb of Ellicott City in 1Q ’22 serving the Mid-Atla
Slide 15: Commercial Real Estate (CRE)
High Quality Lending Commercial Real Estate (CRE) Outstanding balances of $1.82B and committed credit exposure of $2.15B as of March 31, 2024 70% of FISI’s office exposure, or 12% of CRE exposure, relates to • Well diversified, with ~750 loan facilities consolidated into ~270 42% Class B or Medical
Slide 16: Residential Lending Portfolio
High Quality Lending Residential Lending Portfolio Residential Real Estate 1.5% CAGR $723.8M portfolio at March 31, 2024 $727.2 $723.8 Millions $700 $689.6 $655.8 $667.6 $77.4 $75.7 $89.8 $77.7 • Residential portfolio was down a modest $3.4M, or 0.5%, from year-end 2023 $600 $78.5 and up $55.9M, or
Slide 17: Consumer Indirect Portfolio
High Quality Lending Consumer Indirect Portfolio Indirect Auto Remains Core Competency 2.8% CAGR $920.4M portfolio at March 31, 2024 Millions $1,023.6 $1,000 $958.0 $948.8 $920.4 • Effective January 1, 2024, the Company exited the Pennsylvania auto market as $840.4 it focuses on its core Upstate New
Slide 18: Solid Asset Quality
High Quality Lending Solid Asset Quality Disciplined credit culture supports consistently strong asset quality metrics • Thorough credit review exercise undertaken at the outset of COVID-19 pandemic reinforced confidence in health of loan portfolio ◦ During 2Q ’22, COVID-19 at-risk pool was eliminat
Slide 19: Allowance for Credit Losses
High Quality Lending • 1Q ’24 benefit for credit losses of $5.5M was primarily driven by ~$8M reserve release along with a $0.6M credit to the allowance for unfunded commitments, partially offset by $3.2M of net charge-offs during the period • Reserve release driven primarily by positive trends in q
Slide 20: Securities Portfolio
Securities and Deposits 5.1% CAGR $1,384 Millions $1,400 $206 $1,143 Securities Portfolio $1,200 $1,000 $900 $189 $1,036 $148 $1,067 $144 $1.07B at March 31, 2024 $800 $272 $600 $1,178 $954 $888 $924 $400 $628 • Primarily comprised of agency wrapped mortgage-backed securities with $200 intermediate
Slide 21: Deposit Growth
Securities and Deposits Deposit Growth $5.40B at March 31, 2024 323 3.29% municipal 1Q ‘24 cost of customers as of average interest- • Total deposits were $5.40B, up $183.8M, or 3.5%, from December 31, 2023, and MRQ-end bearing deposits up $255.5M, or 5.0%, from one year prior. ◦ The linked quarter
Slide 22: Liquidity
Securities and Deposits Liquidity Diverse deposit gathering capabilities and eligible ~14.2% ~82% collateral support a robust liquidity position of total deposits are Loan to deposit uninsured nonpublic ratio • 1Q ’24 available committed liquidity remains strong, as supported through deposits unencu
Slide 23: Net Interest Income & Margin
Revenue Net Interest Income & Margin 1Q ’24 net interest income of $40.1M and net interest margin of 2.78% • Net interest income (NII) of $40.1M increased $0.2M, or 0.5%, from the linked fourth quarter and decreased $1.7M, or $180 7.00% Millions $167 $166 $164 4.1%, from the year-ago quarter $160 $1
Slide 24: Balance Sheet Providing Ample Cash Flow
Revenue Ample cash flow allows for redeployment of funds in higher interest earning assets, supporting incremental margin expansion Balance Sheet Average 1Q ‘24 Providing Ample Roll Balance NTM Monthly Select Interest 2023 1Q ‘24 Off at Cash Cash Flow Earning Assets Yield Yield Yield 3/31/2024 Flow1
Slide 25: Noninterest Income
Revenue Noninterest Income Noninterest income was $10.9M in 1Q ‘24 22.7% $2.99B of TTM net in assets managed revenue from non- by Courier Capital • Noninterest income was $10.9M, down $4.5, or 29.1%, from 4Q ’23 and flat with interest income at quarter-end the year-ago quarter. ◦ The linked quarter
Slide 26: Wealth Management Business Positioned for Growth
Revenue Wealth Management Business Positioned for Growth Providing customized investment management, retirement planning, and consulting services for mass affluent and high-net-worth individuals and families, businesses, institutions, and foundations • Since entering the investment advisory space in
Slide 27: Expense Management & Operating Leverage
Expense Management & Operating Leverage $70 Millions $60 Quarterly Noninterest Expense $54.0 Noninterest Expense $50 $40 $35.0 $19.0 $33.7 $33.8 $34.7 1Q ’24 expense of $54.0M included ~$19M of noninterest $30 expense related to previously disclosed fraud event $20 $35.0 • 1Q ’24 expense of $54.0M i
Slide 28: Well-Capitalized
Capital Management & Investment Considerations Well-Capitalized Exceeding well-capitalized regulatory thresholds and well-positioned to support future growth 16% 14% 13.61% 13.12% 12.13% 12.13% 12.04% 12% 10.68% 10.63% 10.18% 10.28% 9.78% 9.76% 9.76% 10% 9.42% 9.43% 9.43% 8.25% 8.23% 8.33% 8.18% 8.0
Slide 29: AOCI Impact on TCE & TCBV
Capital Management & Investment Considerations Change in TCE AOCI Impact on TCE & TCBV1 Unrealized losses believed to be temporary in nature • AOCI losses are believed to be temporary in nature, as they are associated with the increase in interest rates which has resulted in an increase in the unrea
Slide 30: FISI Presents a Compelling Valuation
Capital Management & Investment Considerations Results-driven community bank with FISI Presents a Compelling Valuation strong retail and commercial franchises Longstanding commitment to rewarding shareholders through meaningful dividend yield and 29-year cash dividend history Investment Profile As o
Slide 31: Appendix: Thank you for your interest
Thank you for your interest in Financial Institutions, Inc. NASDAQ: FISI Investor Relations Contacts Kate Croft Director of Investor and External Relations Jack Plants Appendix Chief Financial Officer & Corporate Treasurer FISI-Investors@five-starbank.com Learn more at www.FISI-Investors.com 31
Slide 32: Strong Executive Leadership Team Positioned to Drive Growth
Appendix Strong Executive Leadership Team Positioned to Drive Growth and Operational Excellence Martin K. Birmingham Samuel J. Burruano Jr. W. Jack Plants II Laurie R. Collins President & Chief Executive Officer EVP, Chief Legal Officer & Corporate EVP, CFO & Treasurer SVP, Chief Human Resources Off
Slide 33: Strategy Map
Appendix Strategy Map FISI’s vision is to be an independent, high-performing community bank offering best-in-class financial services to all of the communities we serve Attractive long-term Meaningful Engaged & Positive Effective engagement returns for customer experiences motivated contributions to
Slide 34: Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations In addition to results presented in accordance with U.S. generally accepted accounting principles (“GAAP”), this presentation contains certain non-GAAP financial measures. The Company believes that providing certain non-GAAP financial measures provides investors wit
Slide 35: Non-GAAP Reconciliations Continued
Appendix Non-GAAP Reconciliations Continued Amounts in thousands, except per share data and percentages As of and for the quarter ended March 31, 2024 Income before Provision for Preferred stock Adjusted Net Income and Adjusted Earnings Per Share (EPS): Net income Diluted EPS income taxes income tax
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