Settlement Reached in Auto Lending Case by Financial Institutions
Settlement Announced by Financial Institutions, Inc.
Financial Institutions, Inc. (NASDAQ: FISI) has disclosed a significant development in its legal proceedings concerning the auto loan notification process employed by its subsidiary, Five Star Bank. The company, based in Warsaw, New York, has reached a settlement regarding civil litigation that has been ongoing since 2017 in Pennsylvania state court.
Details of the Litigation
The lawsuit focused on the language used in repossession notifications sent to borrowers who defaulted on their auto loans between 2011 and 2021. The settlement agreement was executed on March 7, 2025, and is currently awaiting court approval. This decision has prompted the company to allocate a litigation accrual of $23.0 million to its financial statements for the fourth quarter of 2024. After accounting for taxes, the net impact would amount to approximately $17.1 million.
Financial Implications
The company has ensured transparency concerning the financial ramifications of this litigation accrual on both the fourth quarter and the complete fiscal year of 2024. It has been outlined that no further amounts are expected to be accrued for this issue in forthcoming periods, and the previously established guidance for 2025 remains unchanged.
Investor Conference Call Scheduled
To discuss this settlement and other pivotal updates, management has scheduled an investor conference call for March 10, 2025, at 4:45 p.m. Eastern Time. Investors can participate in this call toll-free by dialing 1-833-470-1428 and using the access code 310636. A recorded version of this call will be available for at least seven days, accessible toll-free at 1-866-813-9403 with the access code 538758.
About Financial Institutions, Inc.
The parent organization, Financial Institutions, Inc. (NASDAQ: FISI), operates as a financial holding company with a robust asset base of approximately $6.1 billion as of the end of 2024. The Five Star Bank, its primary subsidiary, offers comprehensive banking and wealth management services targeting consumers, businesses, and municipalities across various locations in Western and Central New York, along with a commercial loan office in the Mid-Atlantic region.
Wealth Management Services
Additionally, Courier Capital, LLC, a subsidiary of Financial Institutions, provides tailored investment management, financial planning, and consulting services. Their client base encompasses individuals, families, institutions, non-profits, and retirement plans, thus reinforcing the company’s diversified service offerings.
Frequently Asked Questions
What litigation did Financial Institutions, Inc. settle?
The company settled a civil litigation related to the auto loan notification process, particularly regarding repossession notices sent to defaulting borrowers.
What is the financial impact of the settlement?
The settlement led to a litigation accrual of $23.0 million, which will affect the fourth quarter of 2024 financial results, resulting in a net impact of $17.1 million after tax.
When is the investor conference call scheduled?
The investor conference call is scheduled for March 10, 2025, at 4:45 p.m. Eastern Time.
What services does Five Star Bank provide?
Five Star Bank provides consumer and commercial banking services, alongside wealth management products aimed at individuals and businesses.
What is the asset size of Financial Institutions, Inc.?
As of December 31, 2024, Financial Institutions, Inc. reported assets totaling approximately $6.1 billion.
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