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Former CEO wants Financial Institutions to consider sale

A second major shareholder—this time the company’s former chief executive and longtime director— is calling on Financial Institutions Inc. to consider a sale to a larger bank.

Dallas-based firm Clover Partners L.P. sent a letter to the board of Financial Institutions, which is the parent company to Five Star Bank, asking it to consider a sale to a larger bank. The Dallas firm called into question the acquisition of insurance agency Scott Danahy Naylon Inc. and the upcoming acquisition of investment managing and consulting firm Courier Capital.

In a letter released Thursday, the former president and CEO of Financial Institutions, Peter Humphrey, called on the board to review strategic alternatives, “including a possible sale, with a view to maximizing shareholder value.”

“FISI has a superb franchise and is a valuable organization,” he wrote. “As a result, I am an advocate for FISI to explore creating additional value for its shareholders through a strategic combination with a larger banking organization at an attractive price reflecting the value that FISI can bring to the combined organization.”

Clover Partners owns 5.2 percent of Financial Institutions’ outstanding stock, a filing with the Securities and Exchange Commission states.

Humphrey and his wife own 272,742 common shares, and he is trustee of a trust that holds approximately 225,000 common shares, over which he has sole power to vote. In total, Humphrey has power over 3.5 percent of outstanding common shares, he wrote.

“I respectfully request the FISI Board to immediately commence a review of FISI’s strategic alternatives, including a possible sale, with a view to maximizing shareholder value,” he wrote.

Humphrey served as president and CEO of Financial Institutions from 1994 to 2012 and as a director of from 1983 until 2014.

“As is well known to many, in 1931, my grandfather formed FISI as the holding company for some of the predecessors of Five Star Bank and his other descendants outside of my immediate family continue to own a significant amount of FISI stock. I encourage all FISI shareholders, including these descendants, to inform the FISI Board of their views regarding the proposal by Clover Partners,” he added.

A spokesman for Five Star Bank said officials are aware of the letter and open to all suggestions from shareholders, but did not say anything on specific plans.

"We are open to dialogue with all of our shareholders and routinely consider their thoughts on business and strategy as we pursue our common goal of increasing shareholder value,” said Martin Birmingham, president and CEO of Financial Institutions. “Our board of directors regularly evaluates our business in light of our current strategy and is committed to delivering value to shareholders as evidenced by our stock’s strong performance in recent years."

(c) 2016 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail rbj@rbj.net.

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