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Financial Institutions sells trust unit

Financial Institutions, the Warsaw-based parent of Five Star Bank, said Friday that it has agreed to sell its trust operations to Canandaigua National Corp. as the company refocuses on its community banking business.

Financial Institutions has $64 million in assets under management for clients, but that's not enough to achieve the critical mass and scale to be effective in the fiduciary business. So the company decided to abandon it instead, company President and CEO Peter G. Humphrey said in a press release announcing the sale. "Because of our strategic focus, we chose to redirect our resources into growing our core banking franchise," he said.

By contrast, the smaller Canandaigua National Bank & Trust, founded in 1887, has been engaged in the trust business since 1919 and has a staff of 34 managing $870 million for clients. The bank has 20 offices and 50 ATMs serving the Finger Lakes and Greater Rochester regions.

Financial terms of the deal were not disclosed. The transaction must be approved by regulators and the New York Supreme Court because it involves fiduciary trusts under state law.

Financial Institutions has been reorganizing and consolidating operations in a bid to recover from bad loan problems that plagued the company for several years after a period of rapid growth. The company sold $175 million in bad loans last year, brought in some experienced new managers and lenders, centralized some administrative functions and tightened procedures.

In December, the company merged its subsidiary banks, including the former Wyoming County Bank, into a single subsidiary under the Five Star name. It also sold its Burke Group employee benefits firm to First Niagara Financial Group in September.


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