Financial Institutions, Inc. · NASDAQ:FISI
Financial Institutions — Q3 2020 Earnings Presentation
22 slides from Financial Institutions's earnings presentation, Oct 29, 2020
Slide 1: Third Quarter 2020 Earnings Presentation
FINANCIAL INSTITUTIONS, INC. (Nasdaq: FISI) Third Quarter 2020 Earnings Presentation October 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 September 30, 2020 ▪ Diversified financial services holding company Assets: $5.0 billion headquartered in Western New York Loans: $3.6 billion ▪ Subsidiaries include: – Five Star Bank (regional community bank) Deposits:
Slide 4: Third Quarter Key Statistics
Third Quarter Key Statistics(1) ▪ Diluted earnings per share was $0.74 as compared to $0.78 in 2019 ➢ Expenses include $1.6 million of non-recurring restructuring charges in connection with the closing of six branches and staffing reductions announced in July 2020 ▪ Pre-tax pre-provision income(2) w
Slide 5: Third Quarter 2020
Third Quarter 2020 Results Summary Commentary 3Q’19 2Q’20 3Q’20 ▪ Net interest income increased $3.0MM from 3Q’19 and $1.3MM from 2Q’20 as a result of loan growth, largely Net interest income $32.5 $34.2 $35.5 driven by PPP loans (average balance of $263MM). Noninterest income 12.3 9.8 12.4 ▪ Nonint
Slide 6: Key Earnings Highlights
Key Earnings Highlights Quarterly Earnings Highlights (3Q’19 – 3Q’20) ($ in millions, except per share amounts) Earnings Summary 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20 Average interest-earning assets $3,959 $3,994 $4,054 $4,274 $4,414 Net interest margin 3.29% 3.33% 3.31% 3.23% 3.22% Net interest income 32.5
Slide 7: Securities Portfolio
Securities Portfolio ▪ The Company launched an initiative in 2018 to convert a portion of low-yield, low-risk weighted investment securities into higher-yielding loans. This initiative was completed in the third quarter of 2019. ($ in millions) $1,200 CAGR -7.6% $1,083 $1,041 $1,000 $892 $807 $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 includes $264.1 million of
Slide 9: Commercial Banking
Commercial Banking ▪ Growth in 3Q’20 reflects soft C&I origination environment ▪ 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 wa
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 ▪ $841 Million Portfolio at September 30, 2020 − Portfolio represents 23.6% of total loans, down from 29.8% at 12/31/18 and peak of 35% at 12/31/13 − ‘19 and ‘20 decline reflects lower consumer indirect production as we maintain focus on growing relationship- based categori
Slide 12: Deposit Growth
Deposit Growth Deposits (by account type) Commentary ($ in millions) $4,500 $4,365 ▪ 2020 increase driven by growth in non-public CAGR 10.6% demand and the reciprocal and brokered deposits $4,000 $841 portfolios $3,556 − $100 million of lower cost brokered deposits $3,500 $3,367 $3,210 used to pay o
Slide 13: Key Liquidity Metrics
Key Liquidity Metrics Deposit Mix (1) Available Committed Liquidity ($ in millions) ($ in millions) 4,500 1,100 1,051 4,070 4,000 3,827 1,000 3,571 887 213 581 900 417 809 60 3,500 426 800 37 41 143 3,000 899 989 700 219 81 987 70 2,500 600 80 500 2,000 400 1,500 300 650 614 2,510 2,500 539 1,000 2,
Slide 14: Asset Quality
Asset Quality Non-Performing Assets Net Charge-Offs ($ in millions) ($ in millions) $13.9 $11.0 $14.0 $13.9 $10.5 $10.1 $13.1 $10.0 $9.5 $12.0 $9.0 $8.5 $8.0 $10.0 $9.9 $7.5 $9.1 $7.0 $6.5 $8.0 $6.0 $5.5 $5.0 1.27% $4.6 $6.0 $4.5 $4.0 $3.8 0.29% 0.30% 0.28% $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% 9.00% 11.00% 8.86% 8.78% 9.00% 8.49% 10.50% 10.31% 10.27% 8.42% 10.06% 10.19% 8.50% 10.05% 10.00% 8.00% 7.50% 9.50% 7.00% 9.00% 6.50% 8.50% 6.00% 5.50% 8.00% 5.00% 7.50% 3Q'19 4Q'19 1Q'20 2Q'20
Slide 16: Modification Trend Improving
Modification Trend Improving Deferrals Down 86% at 10/23/20 Compared to 6/30/20 $525 16% of Total $383 Loans (2) - 86% - 83% $92 - 97% $31 - 81% $76 $64 $19 - 81% 2% of Total $4 $6 Loans (2) $3 Total Deferrals Active Deferrals (1) Commercial (2) 6/30/20 10/23/20 (CRE & C&I) Small Business (2) Reside
Slide 17: Commercial Loan Portfolio Detail
Commercial Loan Portfolio Detail Commercial Real Estate Ttl Exposure1 ($1.2Bn2) Commercial & Industrial Ttl Exposure1 ($979MM2) As of September 30, 2020 As of September 30, 2020 Construction All Other Industries 0.99% Accomodation 8.73% and Food Services 8.52% All Other Industries Manufacturing 22.4
Slide 18: Consumer & Residential Loan Portfolio Detail
Consumer & Residential Loan Portfolio Detail Consumer Lending Portfolio Consumer Lending Portfolio Metrics As of September 30, 2020 As of September 30, 2020 1,000 % of Ttl. Loan Wt. Avg FICO Millions Portfolio Score Avg. Loan 841 ($3.6Bn) # of Loans (at origination) Balance 800 Consumer Indirect 23.
Slide 19: Exposure to Industries Most Impacted by COVID-19
Exposure to Industries Most Impacted by COVID-19 ▪ Portfolio segment limits are maintained for C&I and CRE which encompasses the industries described ▪ To date, C&I and CRE exposures are within policy limits ▪ Analysis of commercial portfolio ongoing; segmented “at-risk” commercial loan portfolio ▪
Slide 20: SBA Payroll Protection Program ("PPP") Loans
SBA Payroll Protection Program (“PPP”) Loans Funded PPP Loan Volumes (No. Units by SBA Loan Size) Funded PPP Loans ($ by Loan Size) As of September 30, 2020 As of September 30, 2020 0 - 350k 99MM 0 - 350k 92% 350k - 2MM 75MM 350k - 2MM 7% 2MM - 10MM 97MM 2MM - 10MM 1% ▪ 1,736 funded PPP loans for a
Slide 21: Appendix
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Slide 22: 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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