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Sep 30, 2023
Financial Institutions Q3 2023 Earnings Report
Financial results for the third quarter of 2023 were announced.
Key Takeaways
Financial Institutions, Inc. reported a net income of $14.0 million for Q3 2023, slightly up from $13.9 million in Q3 2022. Total deposits increased to $5.32 billion, and total loans reached $4.43 billion. The company's credit quality metrics remained strong, with annualized net charge-offs to average loans at 0.14%.
Total deposits increased by 5.6% from the previous quarter, reaching $5.32 billion.
Total loans increased by 0.8% from the previous quarter, reaching $4.43 billion.
Net interest income decreased by 1.6% from the previous quarter to $41.7 million.
Noninterest income decreased by 8.5% from the previous quarter to $10.5 million.
Financial Institutions
Financial Institutions
Financial Institutions Revenue by Segment
Revenue by Segment
Service charges on deposits Revenue
CapyFin.comInsurance income Revenue
CapyFin.comCard interchange income Revenue
CapyFin.comInvestment advisory Revenue
CapyFin.comCompany owned life insurance Revenue
CapyFin.comInvestments in limited partnerships Revenue
CapyFin.comLoan servicing Revenue
CapyFin.comNet loss on tax credit investments Revenue
CapyFin.comOther Revenue
CapyFin.com Forward Guidance
Financial Institutions, Inc. anticipates margin stability moving forward, supported by successful deposit gathering and the capacity to reduce short-term borrowings. They are well-positioned heading into the fourth quarter with over $1.2 billion in available liquidity and approximately $1 billion in cash flow anticipated over the next twelve months.
Positive Outlook
- Continued focus on deposit gathering resulted in strong growth during the third quarter of 5.6%.
- Retail, commercial, and Banking-as-a-Service lines of business all contributed to nonpublic deposit growth.
- BaaS deposits totaled approximately $77 million as the company continues to gain momentum with fintech clients.
- Hundreds of new customers were welcomed to Five Star Bank as a result of a new marketing campaign.
- The company reduced short term borrowings by $304 million during the quarter, supporting margin stability moving forward.
Challenges Ahead
- Loan growth was softer in the third quarter, with commercial mortgage demand slowing due to economic conditions and higher pricing hurdles.
- Funding costs continued to pressure net interest margin in the third quarter.
- Noninterest income was down $980 thousand, or 8.5%, from the second quarter of 2023.
- The pace of compression continues to moderate.
- Shareholders’ equity has been negatively impacted since 2022 by an increase in accumulated other comprehensive loss associated with unrealized losses in the available for sale securities portfolio.