On July 25, 2024, Financial Institutions Inc (FISI, Financial) released its 8-K filing announcing its financial results for the second quarter ended June 30, 2024. Financial Institutions Inc operates as a financial holding company, providing a wide range of consumer and commercial banking services to individuals, municipalities, and businesses in Western and Central New York through its subsidiary, Five Star Bank.
Quarterly Financial Highlights
Financial Institutions Inc (FISI, Financial) reported net income of $25.6 million for Q2 2024, a significant increase from $2.1 million in Q1 2024 and $14.4 million in Q2 2023. After preferred dividends, net income available to common shareholders was $25.3 million, or $1.62 per diluted share, compared to $1.7 million, or $0.11 per diluted share, in Q1 2024, and $14.0 million, or $0.91 per diluted share, in Q2 2023. This performance was bolstered by a $13.5 million pre-tax gain from the sale of SDN Insurance Agency, LLC assets on April 1, 2024.
Key Metrics and Financial Achievements
Net interest margin improved to 2.87% in Q2 2024, up from 2.78% in Q1 2024, while net interest income increased by $1.1 million to $41.2 million. Total loans grew to $4.46 billion, reflecting a 0.4% increase from Q1 2024 and a 1.4% increase from Q2 2023. However, total deposits decreased by 5.0% from Q1 2024 to $5.13 billion, primarily due to the seasonality of public deposits and a reduction in brokered CDs.
Income Statement and Balance Sheet Overview
Noninterest income surged to $24.0 million in Q2 2024, driven by the asset sale of SDN Insurance Agency, LLC. Noninterest expense decreased significantly to $33.0 million, down 38.9% from Q1 2024, reflecting the impact of the fraud event in the previous quarter and the insurance subsidiary sale.
| Metric | Q2 2024 | Q1 2024 | Q2 2023 |
|---|---|---|---|
| Net Income | $25.6 million | $2.1 million | $14.4 million |
| Net Income per Diluted Share | $1.62 | $0.11 | $0.91 |
| Net Interest Margin | 2.87% | 2.78% | 2.99% |
| Total Loans | $4.46 billion | $4.44 billion | $4.40 billion |
| Total Deposits | $5.13 billion | $5.40 billion | $5.03 billion |
Commentary and Analysis
"Our continued focus on liquidity, capital, and earnings led to strong second quarter 2024 outcomes. Our results benefited from not only the successful sale of the assets of our insurance subsidiary on April 1, which achieved strong value for shareholders by generating a significant pre-tax gain of $13.5 million, but also reflect solid performance from our core businesses," said President and Chief Executive Officer Martin K. Birmingham.
Chief Financial Officer and Treasurer W. Jack Plants II added, "We are pleased with our ability to build on the margin stability achieved in the first quarter to drive solid expansion on a linked quarter basis. As of June 30, 2024, we have $1.3 billion in available liquidity and more than $1.0 billion in cash flow anticipated in the next 12 months."
Challenges and Strategic Focus
Despite the positive results, Financial Institutions Inc (FISI, Financial) faced challenges, including a decrease in total deposits and the impact of a previously disclosed fraud event. The company recorded a provision for credit losses of $2.0 million in Q2 2024, compared to a benefit for credit losses of $5.5 million in Q1 2024 and a provision of $3.2 million in Q2 2023.
Overall, Financial Institutions Inc (FISI, Financial) demonstrated resilience and strategic growth in Q2 2024, driven by the successful sale of its insurance subsidiary and strong performance from its core banking operations. The company's focus on liquidity, capital, and earnings positions it well for future growth and stability.
Explore the complete 8-K earnings release (here) from Financial Institutions Inc for further details.
