Financial Institutions, Inc., is a financial holding company organized in 1931
under the laws of New York State (“New York” or “NYS”).
The principal office of the Company is located at 220 Liberty Street, Warsaw,
New York 14569 and its telephone number is (585) 786-1100. The Company was incorporated
on September 15, 1931, but the continuity of its banking business is traced
to the organization of the National Bank of Geneva on March 28, 1817. Except
as the context otherwise requires, the Company and its direct and indirect subsidiaries
are collectively referred to in this report as the “Company.” Five
Star Bank is referred to as Five Star Bank, “FSB” or “the
Bank,” and Scott Danahy Naylon, LLC is referred to as “SDN.”
The consolidated financial statements include the accounts of the Company, the
Bank and SDN. The Company’s common stock is traded on the NASDAQ Global
Select Market under the ticker symbol “FISI.”
The Company’s primary business is the operation of its subsidiaries.
It does not engage in any other substantial business activities. The Company
had two direct wholly-owned subsidiaries: (1) the Bank, which provides a full
range of banking services to consumer, commercial and municipal customers in
Western and Central New York; and (2) SDN, which sells various premium-based
insurance policies on a commission basis to commercial and consumer customers.
Our business strategy has been to maintain a community bank philosophy, which
consists of focusing on and understanding the individualized banking and other
financial services needs of individuals, municipalities and businesses of the
local communities surrounding our primary service area. We believe this focus
allows us to be more responsive to our customers’ needs and provide a
high level of personal service that differentiates us from larger competitors,
resulting in long-standing and broad-based banking relationships. Our core customers
are primarily small- to medium-sized businesses, individuals and community organizations
who prefer to build banking, insurance and wealth management relationships with
a community bank that offers and combines high quality, competitively-priced
products and services with personalized service. Because of our identity and
origin as a locally operated bank, we believe that our level of personal service
provides a competitive advantage over larger banks, which tend to consolidate
decision-making authority outside local communities.
A key aspect of our current business strategy is to foster a community-oriented
culture where our customers and employees establish long-standing and mutually
beneficial relationships. We believe that we are well-positioned to be a strong
competitor within our market area because of our focus on community banking
needs and customer service, our comprehensive suite of deposit, loan, insurance
and wealth management products typically found at larger banks, our highly experienced
management team and our strategically located banking centers. We believe that
the foregoing factors all help to grow our core deposits, which supports a central
element of our business strategy - the growth of a diversified and high-quality
loan portfolio.
We offer a broad range of loans including commercial business and revolving
lines of credit, commercial mortgages, equipment loans, residential mortgage
loans and home equity loans and lines of credit, home improvement loans, automobile
loans and personal loans. Newly originated and refinanced fixed rate residential
mortgage loans are either retained in our portfolio or sold to the secondary
market with servicing rights retained.
We continually evaluate and update our lending policy. The key elements of our
lending philosophy include the following:
To ensure consistent underwriting, employees must share a common view of the
risks inherent in lending activities as well as the standards to be applied
in underwriting and managing credit risk;
Pricing of credit products should be risk-based;
The loan portfolio must be diversified to limit the potential impact of negative
events; and
Careful, timely exposure monitoring through dynamic use of our risk rating system
is required to provide early warning and assure proactive management of potential
problems.
We originate indirect consumer loans for a mix of new and used vehicles through
franchised new car dealers. The consumer indirect loan portfolio is primarily
comprised of loans with terms that typically range from 36 to 84 months. We
have developed relationships with franchised new car dealers in Western, Central
and the Capital District of New York, and Northern and Central Pennsylvania.
We originate commercial business loans in our primary market areas and underwrite
them based on the borrower’s ability to service the loan from operating
income. We offer a broad range of commercial lending products, including term
loans and lines of credit. Short and medium-term commercial loans, primarily
collateralized, are made available to businesses for working capital (including
inventory and receivables), business expansion (including acquisition of real
estate, expansion and improvements) and the purchase of equipment. We offer
commercial business loans to customers in the agricultural industry for short-term
crop production, farm equipment and livestock financing
3.41%