Financial Institutions (FISI) Q4 2023 earnings summary

Executive summary

• Q4’23 net income available to common shareholders was $9.4M, or $0.61 diluted EPS, versus $14.0M and $0.88 in Q3; FY’23 net income was $50.3M, with higher funding costs pressuring earnings.

• Loans grew 10.2% YoY to $4.46B and deposits rose 5.8% to $5.21B; commercial lending led loan growth.

• Q4 COLI income supported revenue as margin compression and higher credit provision weighed on earnings; credit quality remained sound overall, though nonperforming loans increased.

Financial highlights

• Q4’23 net interest income was $39.9M, down 4.3% QoQ and 7.6% YoY; FY’23 net interest income was $165.7M, down 1.0% YoY.

• Q4 noninterest income was $15.4M, up 46.6% QoQ, including $9.1M of COLI income; FY noninterest income was $48.2M, up 4.3%.

• Q4 provision for credit losses was $5.3M versus $966K in Q3 and $6.1M in Q4’22; FY provision was $13.7M versus $13.3M.

• Q4 noninterest expense was $35.0M, up 0.9% QoQ and 4.6% YoY; FY expense was $137.2M, up 6.1%.

• Q4 total revenue was $55.3M, versus $52.2M in Q3’23 and $54.1M in Q4’22.

Outlook and guidance

• FY’24 guidance calls for 1–3% loan growth, driven by commercial loans, and 1–3% deposit growth, driven by nonpublic deposits.

• FY’24 NIM guidance is 2.85–2.95% using a year-end spot-rate forecast; effective tax rate guidance is 14–16%, including tax-credit investment amortization.

• Noninterest expense and adjusted noninterest income are expected to be relatively flat YoY; income guidance excludes specified items, including Q4’23 COLI strategy income.

• Expected FY’24 annual net charge-offs are 30–40 bps of average assets; ~$1.1B of securities and loan cash flow is expected to support redeployment into higher-yielding assets.

• More than $1.3B in available liquidity and ~$1.1B in cash flow are expected over the next 12 months, with proceeds to be deployed into higher-yielding earning assets.