Financial Institutions, Inc. · NASDAQ:FISI
Financial Institutions — Q1 2023 Earnings Presentation
30 slides from Financial Institutions's earnings presentation, Apr 27, 2023
Slide 1: Investor Presentation: First Quarter 2023 Earnings
Investor Presentation Financial Institutions, Inc. (NASDAQ: FISI) First Quarter 2023 Earnings Presentation April 26, 2023
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. $296M Market cap NASDAQ: FISI • Innovative financial holding company headquartered in Western New York offering banking, insurance and wealth $6.0B Total assets management services through a network of subsidiaries ◦ Five Star Bank ◦ SDN Insu
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 ◦ Serving financially stable Upstate New York markets and well-positioned for growth in Buffalo and Rochester 3.4% ◦ Launched commercial lending pl
Slide 5: Our Digital Evolution
Company Overview Our Digital Evolution Leveraging our digital and infrastructure investments to deliver value to customers, communities and fintech partners • Five Star Bank Digital Banking launched in 2020, enhancing user experience through sophisticated online and mobile platforms • Our fintech pa
Slide 6: Banking-as-a-Service (BaaS)
Company Overview • BaaS enables fintechs and non-bank financials1 to offer banking products and services to their end customers ◦ Levers FISI’s legacy and digital investments and infrastructure • Value-driven, disciplined approach to partnerships by building a robust pipeline of opportunities that a
Slide 7: First Quarter 2023 Highlights
Financial Highlights • Net income was $12.1 million compared to $12.1 million in the linked quarter and $15.0 million in the year-ago quarter. After preferred dividends, net income available to common shareholders was $11.7 million, or $0.76 per diluted share, in both the current quarter and the fou
Slide 8: Recent Earnings Performance
Financial Highlights Recent Earnings Performance Last five quarters EARNINGS SUMMARY(1) 1Q ’22 2Q ’22 3Q ’22 4Q ’22 1Q ’23 Average interest-earning assets $5,167 $5,247 $5,231 $5,330 $5,486 Net interest margin 3.11% 3.19% 3.28% 3.23% 3.09% Net interest income 39.6 41.6 43.1 43.1 41.8 Noninterest inc
Slide 9: Organic Loan Growth
High Quality Lending Total loans have increased $192.9M, or 4.8%, from year-end 2022 Total Loans $4.50 8.0% CAGR $4.24 Billions Organic Loan $4.00 $3.60 $3.68 $4.05 $0.67 $0.67 Growth $3.50 $3.22 $0.69 $0.66 $3.00 $1.02 $4.2B of total loans at $0.68 $1.02 March 31, 2023 and $2.50 $0.84 $0.96 $0.02 $
Slide 10: Commercial Lending
High Quality Lending Total Commercial Loans Commercial Lending 11.9% CAGR Billions $2.54 Balances of $2.54B at March 31, 2023 $2.5 $2.34 $0.69 • Commercial loans totaled $2.54B at March 31, 2023, an increase of $192.5M, or $2.05 $2.05 $2.0 $0.66 8.2%, from December 31, 2022 and an increase of $476.7
Slide 11: Commercial Lending: Portfolio Exposure Mix
High Quality Lending Overall Commercial Portfolio Exposure Mix Commercial Lending Committed credit exposure of $3.42B at March 31, 2023 2% 2%1% 2% 3% 3% • The vast majority of the commercial loan portfolio is within the Bank's footprint, 4% which now includes an office in Baltimore, MD, following th
Slide 12: Strong Mid-Atlantic Performance & Opportunity
High Quality Lending Strong Mid-Atlantic Performance & Opportunity Launched commercial lending platform serving Mid-Atlantic Region of Baltimore/D.C. in 1Q’22 • Loan production office opened in Baltimore suburb of Ellicott City ~$197M ◦ Consolidation in the market allowed us to add a four-person tea
Slide 13: Commercial Real Estate
High Quality Lending Commercial Real Estate Outstanding balances of $1.63B and committed credit exposure of $2.07B as of March 31, 2023 39% • Well diversified, with more than 700 loan facilities consolidated into approximately 300 separate lending relationships ◦ Average loans size of $2.8M 8% 1% ◦
Slide 14: Residential Lending Portfolio
High Quality Lending Residential Lending Portfolio Residential Real Estate -0.4% CAGR $667.9M portfolio at March 31, 2023 Millions $700 $676 $690 $656 $668 $668 $90 • Residential portfolio was flat compared to the previous quarter and up $16.2M, or $104 $79 $78 $76 $600 2.5%, year-over-year • High q
Slide 15: Consumer Indirect Portfolio
High Quality Lending Consumer Indirect Portfolio Indirect Auto Remains Core Competency 5.5% CAGR 3.00% Millions $1,024 $1,022 $1.02B portfolio at March 31, 2023 $1,000 $958 2.50% • Consumer indirect portfolio was relatively flat with the linked quarter and up $850 $840 $14.8M, or 1.4%, or from March
Slide 16: Solid Asset Quality
High Quality Lending • 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 eliminated, and all credits now monitored as part of standard loan monitoring process. • Consumer indirect
Slide 17: Securities Portfolio
Securities and Deposits 10.8% CAGR $1,384 Millions $1,400 $206 $1,143 $1,125 Securities Portfolio $1,200 $1,000 $900 $189 $180 $777 $1.13B at March 31, 2023 $800 $272 $600 $359 $1,179 $954 $945 $400 • Primarily comprised of agency wrapped mortgage-backed securities with $628 $200 $418 intermediate d
Slide 18: Deposit Growth
Securities and Deposits Deposit Growth Low-cost deposits from rural markets fund higher 319 1.84% growth in metro markets municipal YTD cost of customers as of deposits MRQ-end • Granularity of community banking franchise benefits deposit portfolio. ◦ Average deposit balances per branch of ~$79M, ex
Slide 19: Liquidity
Securities and Deposits Liquidity Diverse deposit gathering capabilities and eligible 4.2% 82.5% collateral support a robust liquidity position year-over-year Loan to deposit increase in non- ratio • 1Q’23 available committed liquidity remains strong, as supported through public deposits unencumbere
Slide 20: Net Interest Income & Margin
Revenue Net Interest Income & Margin $180 $170 7.00% • Net interest income of $41.8M decreased $167 Millions $160 $155 $1.3M, or 3.1%, from the previous quarter 6.00% $139 and increased $2.3M, or 5.7%, from the $140 $130 year-ago quarter 5.00% $120 • Net interest margin of 3.09% for the 4.00% curren
Slide 21: Growing Noninterest Income
Revenue Growing Noninterest Income • Insurance services provided through SDN Insurance Agency, LLC 21% 6 of TTM revenue financial services ◦ Acquired initial business in 2014 and further enhanced capabilities and reach from non-interest acquisitions since through two bolt-on acquisitions in 2021 inc
Slide 22: Strategic Investments Expected to Drive Operating Leverage
Expense Management & Operating Leverage Strategic Investments Expected to Total Noninterest Expenses Drive Operating Leverage $140 $132.9 Millions $129.4 $120 $112.8 $109.3 $102.8 • Noninterest expense increased $3.5M, or 11.7%, from 1Q’22 and $0.1M, or 0.4%, $100 from 4Q’22 ◦ The YoY increase was p
Slide 23: Well-Capitalized
Capital Management & Investment Considerations Longstanding commitment to rewarding shareholders through meaningful dividend yield 29-year history of cash dividend, with annual increases in each of last 13 years Capital Ratios 16% 13.61% 14% 13.12% 12.77% 12.13% 11.93% 12% 10.80% 10.63% 10.68% Well-
Slide 24: 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 25: FISI Presents a Compelling Valuation
Capital Management & Investment Considerations Results-driven community bank with FISI Presents a Compelling Valuation strong retail and commercial franchises Well-positioned for growth in 2023 Investment Profile As of March 31, 2023 Closing Price $19.28 Disciplined credit 52-week High $30.67 cultur
Slide 26: Thank you for your interest in Financial Institutions, Inc.
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 Management Team 28 FISI-Investors@five-starbank.com Strategy Map 29 Non-GAAP
Slide 27: Management Team
Appendix Management Team Experienced management team with extensive market knowledge and industry experience Optimized leadership & organizational structure Martin K. Birmingham Samuel J. Burruano Jr. Core functional areas of Justin K. Bigham W. Jack Plants II President & Chief EVP, Chief Community
Slide 28: 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 29: Non-GAAP Reconciliation
Appendix Non-GAAP Reconciliation 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 with
Slide 30: Non-GAAP Reconciliation Continued
Appendix Non-GAAP Reconciliation Continued Quarter ended $ in thousands 3/31/2022 6/30/2022 9/30/2022 12/31/2022 3/31/2023 Pre-tax pre-provision income: Net income $14,983 $15,648 $13,854 $12,088 $12,089 Add: Income tax expense 3,443 3,859 4,725 2,370 2,775 Add: Provision (benefit) for credit losses
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