Financial Institutions (FISI) Q4 2024 earnings summary

Executive summary

• Reported a Q4 2024 net loss of $66.1 million, primarily due to a $100.2 million pre-tax loss from a major securities portfolio restructuring and a deposit-related fraud event.

• Completed an oversubscribed equity offering in December 2024, raising $108.5 million to fund restructuring losses and strengthen capital.

• Commercial loan growth was robust, with a 3.8% sequential and 4.5% year-over-year increase, while consumer indirect lending was intentionally reduced.

• Capital ratios, including CET1 and tangible common equity, improved significantly, positioning the company for stronger earnings and efficiency in 2025.

• Asset quality remained solid, but non-performing loans increased due to two commercial relationships.

Financial highlights

• Net interest margin (NIM) expanded to 2.91% in Q4 2024, with full-year NIM at 2.86%.

• Net interest income for Q4 2024 was $41.6 million, up 2.3% sequentially and 4.4% year-over-year.

• Total deposits ended 2024 at $5.1 billion, down from Q3 due to seasonal public account reductions and lower brokered deposits.

• Allowance for credit losses increased to 1.07% of total loans at year-end 2024.

• Noninterest expense rose to $36.4 million in Q4 2024, mainly due to nonrecurring items including a pension settlement and deposit fraud event.

Outlook and guidance

• 2025 guidance includes NIM of 3.45%-3.55%, loan growth of 1-3%, flat deposit balances, and noninterest income of $9.5–$10 million per quarter.

• Efficiency ratio projected below 60% for 2025; return on average assets ≥1.10% and return on average equity ≥11.25%.

• Net charge-offs expected at 25–35 basis points of average loans; effective tax rate of 17–19%.

• Management expects restructuring to drive margin expansion, improved efficiency, and stronger earnings.

• Loan growth will focus on commercial lending, with consumer indirect balances managed for runoff.