WARSAW, N.Y. - Financial Institutions, Inc. (NASDAQ: FISI), parent company of Five Star Bank and Courier Capital, LLC, has completed the sale of its subsidiary SDN Insurance Agency, LLC to NFP Property & Casualty Services, Inc., a leading insurance broker and consultant.
The all-cash deal, valued at approximately $27.0 million, is expected to bolster Financial Institutions' earnings and capital position, allowing for reinvestment in its core banking operations.
The transaction, which closed today, is reported to be around 4.0 times SDN's 2023 insurance income and will eliminate $11.3 million of goodwill and other intangible assets from Financial Institutions' balance sheet. It is also anticipated to have a positive impact on the company's year-end 2023 common equity tier 1 capital ratio by 43 basis points.
SDN Insurance Agency has been a part of Financial Institutions' portfolio for nearly a decade, during which time it has expanded through acquisitions and grown into a leading insurance agency with national reach. Martin K. Birmingham, President and CEO of Financial Institutions, expressed confidence in NFP's ability to further SDN's growth, benefiting both employees and customers.
William E. Gallagher, President of SDN, echoed the sentiment, looking forward to the partnership with NFP and its global network. He also acknowledged the continued partnership with Five Star Bank, which has been supportive over their shared history.
NFP operates in the US, Canada, UK, and Ireland and offers a range of services including property and casualty insurance, benefits, and more. SDN specializes in business and personal insurance, including property and casualty coverage, surety bonding, and employee benefits.
Piper Sandler & Co. served as the financial advisor, while Luse Gorman, PC provided legal counsel to Financial Institutions, Inc. in the deal. NFP Corp. was represented by Davis+Gilbert LLP.
Further details on the transaction can be found in the Form 8-K filed with the Securities and Exchange Commission and an investor presentation available on Financial Institutions' investor relations website.
This news is based on a press release statement from Financial Institutions, Inc.
InvestingPro Insights
As Financial Institutions, Inc. (NASDAQ: FISI) embarks on a strategic move with the sale of SDN Insurance Agency, it's important to look at the company's financial health and market position.
An analysis of real-time data from InvestingPro reveals that FISI has a market capitalization of $289.99 million and is trading at an attractive earnings multiple, with a P/E ratio (adjusted for the last twelve months as of Q4 2023) of 5.93. This indicates that the company's shares might be undervalued compared to its earnings, which could be of interest to value investors.
InvestingPro Tips also highlight that FISI has raised its dividend for 13 consecutive years and has maintained dividend payments for 26 consecutive years, signaling a robust commitment to returning value to shareholders. With a dividend yield as of the latest data standing at 6.38%, FISI stands out as a significant dividend payer. Additionally, analysts predict that FISI will be profitable this year, which is supported by the company being profitable over the last twelve months.
For investors looking for deeper insights, there are additional InvestingPro Tips available for FISI, which could provide further guidance on the company's performance and outlook. To explore these tips and gain a more comprehensive understanding of Financial Institutions, Inc., interested readers can visit InvestingPro. Remember, using coupon code PRONEWS24 will get you an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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