Financial Institutions Inc. of Warsaw, N.Y., said it would halve its second-quarter dividend, to 8 cents a share.
The $2.2 billion-asset, multibank holding company said Thursday that the cut was intended to maintain high capital levels while it addresses problems in its loan portfolio.
Financial Institutions reported a 53% drop in net income last year, to $12.5 million, because of increases in its loan-loss provision. It said Thursday that it has retained Keefe, Bruyette & Woods Inc. to manage the sale of about $118 million of problem loans.
The company's four subsidiary banks have historically operated mostly autonomously. But with two of them - the National Bank of Geneva and Bath National Bank - operating under enforcement orders from the Office of the Comptroller of the Currency, Financial Institutions has consolidated its commercial credit and lending administration, it said Thursday.
It is also considering centralizing its consumer lending, marketing, advertising, and security departments.
Under the enforcement orders, signed in 2003, the banks agreed to create compliance committees, ensure competent management, and reduce credit risk.
Investors seemed to take the dividend-cut news in stride. In late trading Thursday, Financial Institutions shares were up 0.51%, to $17.87.
