WARSAW, N.Y. — Financial Institutions, Inc. (NASDAQ: FISI), parent company of Five Star Bank, announced that it has recently completed a private placement of $80 million in aggregate principal amount of fixed-to-floating rate subordinated notes (maturing in 10 years) to qualified institutional buyers and accredited institutional investors. The notes have a maturity date of Dec. […]
WARSAW, N.Y. — Financial Institutions, Inc. (NASDAQ: FISI), parent company of Five Star Bank, announced that it has recently completed a private placement of $80 million in aggregate principal amount of fixed-to-floating rate subordinated notes (maturing in 10 years) to qualified institutional buyers and accredited institutional investors.
The notes have a maturity date of Dec. 15, 2035 and bear interest, payable semi-annually, at the rate of 6.5 percent per year, until Dec. 15, 2030, the banking company said in its announcement. Starting on that date, the interest rate will reset quarterly to an interest rate per annum equal to the then-current, three-month Secured Overnight Financing Rate (SOFR) plus 312 basis points, payable quarterly until maturity.
Financial Institutions is entitled to prepay the notes in whole or in part at any time on or after Dec. 15, 2030, and to prepay the notes at any time upon certain other specified events. The notes received a BBB- rating from Kroll Bond Rating Agency, which recently revised the banking company’s long-term outlook to Stable, reflecting sustained improvement in its profitability and enhanced capital position.
Financial Institutions said it intends to use the net proceeds to redeem the $65 million in outstanding-debt issuances from 2015 and 2020, as well as for general corporate purposes. The $65 million in outstanding debt includes $35 million that began repricing quarterly on Oct. 15, 2025, and which currently bears interest of 8.17 percent, in addition to $30 million that began repricing quarterly on April 15, 2025, and which currently bears interest of 8.11 percent.
“We are pleased with the successful completion of this subordinated debt offering, which allows us to refinance existing issuances at more attractive rates, while providing additional capital for thoughtful deployment as we remain focused on creating long-term value for our shareholders,” Martin K. Birmingham, president and CEO of Financial Institutions, said in the company’s Dec. 11 announcement. “Given the additional $80.0 million of capital that will be on our balance sheet at year-end and our intent to call the outstanding $65.0 million in the first quarter, we do expect the Company’s Total Risk-Based Capital ratio to be temporarily elevated by approximately 150 basis points at year-end.”
Piper Sandler & Co. — headquartered in Minneapolis, Minnesota — served as sole placement agent for the subordinated debt offering. Washington, D.C.–based Luse Gorman, PC was legal counsel to Financial Institutions, and Hogan Lovells US LLP — whose U.S. headquarters is in Washington, D.C. — served as legal counsel to Piper Sandler & Co.
Financial Institutions is a financial holding company, based in Warsaw in New York’s Wyoming County, with about $6.3 billion in assets, offering banking and wealth-management products and services. Its Five Star Bank subsidiary provides consumer and commercial banking and lending services to individuals, municipalities, and businesses through banking locations spanning Western and Central New York and a commercial-loan production office serving the Mid-Atlantic region. Five Star Bank’s Central New York offices include a commercial-loan production office in Syracuse and retail branches in Auburn, Waterloo, and Geneva.
