Financial Institutions (FISI) Q3 2024 earnings summary

Executive summary

• Net income for Q3 2024 was $13.5M, down from $25.6M in Q2 2024 (which included a $13.5M pre-tax gain from an insurance asset sale), and slightly below $14.0M in Q3 2023; EPS was $0.84, compared to $0.88 last year.

• Net income available to common shareholders was $13.1M ($0.84/diluted share), compared to $25.3M ($1.62/share) in Q2 2024 and $13.7M ($0.88/share) in Q3 2023; adjusted net income was $12.9M ($0.82) in Q3 2024, excluding one-time items.

• Deposit growth was strong, with total deposits at $5.31B, up 3.4% from Q2 2024, driven by public and non-public deposit increases.

• Announced wind down of Banking-as-a-Service (BaaS) offerings, targeting completion in 2025, to focus on core community banking.

• Maintained solid credit quality and capital ratios, with annualized net charge-offs to average loans at 0.15% for Q3 2024.

Financial highlights

• Net interest income was $40.7M in Q3 2024, down 1.2% sequentially and 2.4% year-over-year, mainly due to higher funding costs.

• Net interest margin was 2.89% in Q3 2024, up 2 bps from Q2 2024, but down from 2.91% in Q3 2023.

• Noninterest income was $9.4M, down from $24.0M in Q2 2024 (which included the insurance asset sale gain) and $10.4M in Q3 2023.

• Noninterest expense was $32.5M, down 1.7% from Q2 2024 and 6.5% from Q3 2023, reflecting lower salaries and occupancy costs.

• Provision for credit losses increased to $3.1M from $2.0M in Q2 2024 and $1.0M in Q3 2023.

Outlook and guidance

• Full-year 2024 NIM guidance narrowed to 2.85%-2.9%; loan and deposit growth expected at the low end of 1–3%.

• Full-year net charge-offs now expected at 20–30 bps of average loans, improved from prior 30–40 bps guidance.

• Noninterest expense guidance for 2024 is $135M–$136M (excluding fraud event); noninterest income expected at $36.5M–$38M.

• BaaS wind down expected to complete in 2025; as of September 30, 2024, BaaS-related deposits and loans were $103M and $29M, respectively.

• Management continues to focus on core Upstate New York markets, digital channel expansion, and sustainable growth in retail, commercial banking, and wealth management.