Financial Institutions, Inc. · NASDAQ:FISI
Financial Institutions — Q2 2020 Earnings Presentation
23 slides from Financial Institutions's earnings presentation, Jul 29, 2020
Slide 1: Second Quarter 2020 Earnings Presentation
FINANCIAL INSTITUTIONS, INC. (Nasdaq: FISI) Second Quarter 2020 Earnings Presentation July 29, 2020
Slide 2: Safe Harbor Statement
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 Private Securities Liti
Slide 3: Overview of Financial Institutions, Inc.
Overview of Financial Institutions, Inc. Corporate Overview Key Statistics as of June 30, 2020 ▪ Diversified financial services holding company Assets: $4.7 billion headquartered in Western New York Loans: $3.5 billion ▪ Subsidiaries include: – Five Star Bank (regional community bank) Deposits: $4.0
Slide 4: Second Quarter Key Statistics
Second Quarter Key Statistics(1) ▪ Diluted earnings per share was $0.67 as compared to $0.69 in 2019 ▪ Pre-tax pre-provision income(2) was $17.3 million as compared to $16.7 million in 2019 ▪ Net interest income of $34.2 million was $1.7 million, or 5.3%, higher than the second quarter of 2019 ▪ Wor
Slide 5: Second Quarter 2020
Second Quarter 2020 Results Summary Commentary 2Q’19 1Q’20 2Q’20 ▪ Net interest income increased $1.7MM from 2Q’19 and Net interest income $32.5 $33.1 $34.2 $1.1MM from 1Q’20 as a result of loan growth, largely Noninterest income 9.2 10.0 9.8 driven by PPP loans (average balance of $177MM). ▪ Nonint
Slide 6: Key Earnings Highlights
Key Earnings Highlights Quarterly Earnings Highlights (2Q’19 – 2Q’20) ($ in millions, except per share amounts) Earnings Summary 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 Average interest-earning assets $4,008 $3,959 $3,994 $4,054 $4,274 Net interest margin 3.28% 3.29% 3.33% 3.31% 3.23% Net interest income 32.5
Slide 7: Securities Portfolio
Securities Portfolio ▪ The Company launched an initiative in 2018 to convert a portion of low-yield, low-risk weighted investment securities into higher-yielding loans. This initiative was completed in the third quarter of 2019. ($ in millions) $1,200 CAGR -9.0% $1,083 $1,041 $1,000 $892 $779 $800 $
Slide 8: Total Loans
Total Loans ▪ 2019 and 2020 growth reflects lower consumer indirect production as we maintain focus on growing relationship-based categories (commercial and residential) and scaling back consumer indirect lending, especially outside footprint ▪ 2020 Commercial Loan growth reflects second quarter ori
Slide 9: Commercial Banking
Commercial Banking ▪ Growth in 2Q’20 reflects origination of $268.5 million of PPP loans ▪ Commercial lines of credit increased from late March into April and paid down in May and June, resulting in $27 million decrease in 2Q’20 ▪ Growth was muted in 1Q’20 − Commercial mortgage experienced higher pa
Slide 10: Residential Real Estate Loans and Lines
Residential Real Estate Loans and Lines ▪ In-market originations through mortgage loan originators and Five Star Bank branch network ▪ Full product menu featuring competitive portfolio and saleable products including government loan programs ▪ Continuing the build-out of residential mortgage product
Slide 11: Consumer Indirect Lending
Consumer Indirect Lending ▪ $828 Million Portfolio at June 30, 2020 − Portfolio represents 23.8% of total loans, down from 29.8% at 12/31/18 and peak of 35% at 12/31/13 − ‘19 and ‘20 decline reflects lower consumer indirect production as we maintain focus on growing relationship- based categories (c
Slide 12: Deposit Growth
Deposit Growth Deposits (by account type) Commentary ($ in millions) $4,500 ▪ Opportunities for growth CAGR 8.6% $3,994 $4,000 − Combined Rochester and Buffalo markets $3,556 represent attractive deposit market of $65 $3,500 $3,367 $889 billion $3,210 $2,995 − Current FSB market share is less than 3
Slide 13: Key Liquidity Metrics
Key Liquidity Metrics Deposit Mix (1) Available Committed Liquidity ($ in millions) ($ in millions) 947 4,500 887 900 99 3,827 814 60 4,000 3,602 800 127 3,472 52 417 143 3,500 60 395 700 433 31 81 3,000 70 899 600 890 1,036 2,500 500 2,000 400 671 640 1,500 300 614 2,510 1,000 2,150 2,171 200 500 1
Slide 14: Asset Quality
Asset Quality Non-Performing Assets Net Charge-Offs ($ in millions) ($ in millions) $11.0 $14.0 $13.9 $10.5 $10.1 $13.1 $10.0 $9.5 $12.0 $11.5 $9.0 $8.5 $8.0 $9.9 $10.0 $7.5 $9.1 $7.0 $6.5 $8.0 $6.0 $5.5 1.27% $5.0 $4.6 $6.0 $4.5 $4.0 $3.8 0.29% 0.30% 0.27% $3.5 $4.0 0.23% $3.0 0.21% $2.5 0.58% 0.48
Slide 15: Capital Ratios
Capital Ratios Leverage Ratio (1) Common Equity Tier 1 Capital Ratio (1) Minimum 5.00% Minimum 7.00% 9.50% 10.50% 10.31% 10.27% 8.86% 9.00% 10.06% 10.05% 9.00% 8.78% 9.95% 8.55% 8.49% 10.00% 8.50% 9.50% 8.00% 7.50% 9.00% 7.00% 8.50% 6.50% 8.00% 6.00% 5.50% 7.50% 5.00% 7.00% 2Q'19 3Q'19 4Q'19 1Q'20 2
Slide 16: COVID-19 Response
COVID-19 Response: Helping our customers, associates and communities. Today. Tomorrow. Always. Associates Consumers Businesses • 65% of non-retail associates working from • Nearly 90% of our branches remain open1; • Thoughtfully extending credit to small home or remotely since March 16—as we with tw
Slide 17: Commercial Loan Portfolio Detail
Commercial Loan Portfolio Detail Commercial Real Estate Ttl Exposure1 ($1.1Bn2) Commercial & Industrial Ttl Exposure ($950MM2) As of June 30, 2020 As of June 30, 2020 Manufacturing 26.27% Real Estate and Rental / Leasing 80.98% Construction 10.23% Real Estate and Rental / Leasing 10.06% Accommodatio
Slide 18: Consumer & Residential Loan Portfolio Detail
Consumer & Residential Loan Portfolio Detail Consumer Lending Portfolio Consumer Lending Portfolio Metrics As of June 30, 2020 As of June 30, 2020 1,000 % of Ttl. Loan Wt. Avg FICO Millions Portfolio Score Avg. Loan 828 ($3.5Bn) # of Loans (at origination) Balance 800 Consumer Indirect 23.8% 46,742
Slide 19: COVID-19 Loan Relief Programs
COVID-19 Loan Relief Programs Measuring Impact of Relief vs Total Portfolios Consumer Mortgage Forbearance vs Ttl Resi Portfolio Commercial (C&I, CRE) Relief vs Ttl Large Commercial Portfolio1 As of June 30, 2020 As of June 30, 2020 Apr-20 639MM 40MM Apr-20 1.25Bn 336MM May-20 647MM 33MM May-20 1.21
Slide 20: Exposure to Industries Most Impacted by COVID-19
Exposure to Industries Most Impacted by COVID-19 • Portfolio segment limits are maintained for C&I and CRE which encompasses the industries described • To date, the C&I and CRE exposures are within policy limits • Analysis of commercial portfolio ongoing; segmented “at-risk” commercial loan portfoli
Slide 21: SBA Payroll Protection Program (PPP) Loans
SBA Payroll Protection Program (“PPP”) Loans • 1,710 total approved PPP loans for a total of $270.4MM as of July 20, 2020 • Median loan amount is $155,593. ~91% of loans are for less than $350K Approved PPP Loan Volumes (No. Units by SBA Loan Size) Approved PPP Loans ($ by Loan Size) As of July 20,
Slide 22: Appendix
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Slide 23: Non-GAAP Reconciliation
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 informat
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