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Five Star parent ‘open to dialogue’ with shareholders on possible sale

The board of Five Star Bank’s parent company remains “open to dialogue” with its shareholders, after two of them raised the idea of the bank putting itself up for sale, a top executive said.

“Our board does routinely consider their thoughts on our business strategy, really in the context of continually evaluating what’s in the best interest of all shareholders, in terms of driving long-term value,” said Martin K. Birmingham, president and CEO of Warsaw-based Financial Institutions.

The bank has made two notable acquisitions since the summer 2014: Scott Danahy Naylon, an Amherst-based insurance agency, and Courier Capital Corp., an investment advisory and wealth management firm with offices in Buffalo and Jamestown.

A Texas-based shareholder, Clover Partners LP, criticized those deals, urging the bank’s board to stop making acquisitions and put itself up for sale. A former CEO of the bank, Peter G. Humphrey, also called for the bank to consider a sale.

Birmingham declined to say whether the board has had discussions with those particular shareholders. “We talk to shareholders all the time, and we don’t report on the results of those meetings,” he said, as the bank released its fourth-quarter results Tuesday.

Financial Institutions reported a 16.5 percent drop in its quarterly profits, to $6.6 million, due in part by $300,0000 in costs related to acquiring Courier. The deal closed in January, after the quarter ended.

“The wonderful part about the four principals at Courier is that all four of them have previous banking experience,” said Kevin B. Klotzbach, chief financial officer and treasurer. “They’ve really integrated their operation, and the ideas of cross-selling commercial loans for us and receiving some of our customers has gone over very, very well.”

Financial Institutions said its fourth-quarter results were also affected by staffing expenses for a new branch in Rochester. Plus, the bank increased its provision for loan losses, stemming from a significant volume of loans closed at the end of the quarter.

Birmingham said the bank wasn’t able to fully reap the benefits of those factors, such as the new branch and the surge in loans, because of their timing during the quarter. And a year ago, he said, the bank benefited from a tax credit deal that wasn’t repeated in the fourth quarter of 2015.

The bank reported diluted earnings per share of 44 cents, down from 54 cents a year ago.

Financial Institutions’ full-year net income fell by 3.7 percent from 2014, to $28.3 million.