Financial Institutions, Inc. Reports Third-Quarter Results with Net Income of $13.5 Million

Financial Institutions, Inc. reported its third-quarter results for the period ending September 30, 2024, revealing a net income of $13.5 million, a decrease of $556,000 from $14.0 million in the same quarter of 2023. Net income available to common shareholders was $13.1 million, or $0.84 per diluted share, compared to $13.7 million, or $0.88 per diluted share, in the prior year. The company's return on average common equity fell to 11.18% from 13.15% year-over-year.

Total interest income for the third quarter increased to $77.9 million from $74.7 million in the previous year, driven by higher average yields on interest-earning assets, which rose to 5.53%. However, net interest income decreased to $40.7 million from $41.7 million, reflecting a decline in average interest-earning assets. The net interest margin slightly decreased to 2.89% from 2.91%.

The provision for credit losses rose significantly to $3.1 million from $1.0 million in the same quarter last year, while net charge-offs increased to $1.7 million, up from $1.6 million. The allowance for credit losses on loans decreased to $44.7 million from $49.6 million a year earlier, representing 1.01% of total loans.

Noninterest income for the third quarter was $9.4 million, down from $10.5 million, primarily due to a decrease in insurance income following the sale of the insurance subsidiary's assets in April 2024. Total noninterest expense decreased to $32.5 million from $34.7 million, attributed to reductions in salaries and employee benefits, occupancy expenses, and other costs.

The company’s total assets as of September 30, 2024, were $6.16 billion, slightly down from $6.16 billion at the end of 2023. Total deposits increased to $5.31 billion, up from $5.21 billion, with non-public deposits rising to $3.23 billion. The company’s capital ratios remain strong, with a Tier 1 Capital ratio of 10.62% and a Total Risk-Based Capital ratio of 12.95%.

Strategically, Financial Institutions, Inc. exited the Pennsylvania automobile market effective January 1, 2024, to focus on Upstate New York. The company also sold its SDN Insurance Agency subsidiary for $27 million, resulting in a pre-tax gain of $13.7 million recognized in the second quarter of 2024. The company is actively pursuing legal recourse to recover funds related to fraudulent deposit transactions that resulted in an $18.2 million pre-tax loss.

Overall, while the company experienced a decline in net income and noninterest income, it maintained a solid capital position and continued to focus on strategic growth opportunities in its core markets.