Financial Institutions(US:FISI)2025-05-05 20:05Revenue and Income - Commercial business revenue increased to $17 million in Q1 2025 from $4 million in Q1 2024[228] - Total interest income rose by $2.6 million, or 2.6%, driven by a $7.4 million increase in rates despite a $1.1 million decrease in volume[230] - Total noninterest income decreased to $10.4 million in Q1 2025 from $10.9 million in Q1 2024, primarily due to the sale of the insurance subsidiary[234] - Investment advisory income increased by $155 thousand, or 6%, to $2.7 million in Q1 2025 compared to Q1 2024[235] - Income tax expense for Q1 2025 was $3.7 million, up from $356 thousand in Q1 2024, reflecting higher pre-tax income[243] Expenses and Efficiency - Total noninterest expense decreased significantly to $33.7 million in Q1 2025 from $54 million in Q1 2024, largely due to lower salaries and professional services expenses[239] - The efficiency ratio improved to 58.79% in Q1 2025 from 105.77% in Q1 2024, indicating better resource allocation[242] Credit Losses and Loan Portfolio - Provision for credit losses was $2.9 million in Q1 2025, compared to a benefit of $5.5 million in Q1 2024, reflecting loan growth and increased specific reserves[232] - The allowance for credit losses on loans was $48.964 million as of March 31, 2025, compared to $48.041 million at December 31, 2024[258] - The allowance for credit losses on loans increased to $49.0 million at March 31, 2025, up from $43.1 million at March 31, 2024, primarily due to increased loan balances and qualitative factors[264] - Non-performing loans decreased by $1.4 million to $40.0 million at March 31, 2025, compared to $41.4 million at March 31, 2024, representing 0.88% of total loans[271] - The ratio of allowance for credit losses to total loans was 1.08% at March 31, 2025, compared to 0.60% at March 31, 2024[264] - Total loans amounted to $4.55 billion, reflecting an increase of $74.1 million from $4.48 billion at December 31, 2024[258] - The composition of the loan portfolio included commercial business loans of $709.1 million (15.6% of total loans), up $43.8 million (7%) from December 31, 2024[258] - Total commercial mortgage loans reached $2.23 billion, representing 49% of total loans, with an increase of $28.7 million (1.3%) from $2.20 billion as of December 31, 2024[258] - The total consumer loans were $1.62 billion, or 35% of total loans, with a slight increase of $1.6 million from December 31, 2024[259] Deposits and Borrowings - Total deposits increased by $268.2 million, or 5%, to $5.37 billion as of March 31, 2025, compared to $5.10 billion at December 31, 2024[281] - Non-public deposits totaled $3.15 billion, representing 59% of total deposits as of March 31, 2025, down from 63% at December 31, 2024[282] - Public deposits increased to $1.22 billion, representing 23% of total deposits as of March 31, 2025, compared to 21% at December 31, 2024[283] - Reciprocal deposits rose to $796.6 million, accounting for 15% of total deposits as of March 31, 2025, up from $746.7 million at December 31, 2024[284] - Brokered deposits increased significantly to $204.3 million, representing 4% of total deposits as of March 31, 2025, compared to 2% at December 31, 2024[285] - Short-term borrowings decreased to $55 million as of March 31, 2025, down from $99 million at December 31, 2024[287] - Long-term borrowings remained stable at $124.9 million as of March 31, 2025, compared to $124.8 million at December 31, 2024[286] Capital and Liquidity - Total regulatory capital was $701.6 million as of March 31, 2025, with a total risk-based capital ratio of 13.09%[308] - Common Equity Tier 1 (CET1) capital was $556.7 million, representing a CET1 ratio of 10.38% as of March 31, 2025[308] - Shareholders' equity increased to $589.9 million at March 31, 2025, up $20.9 million from $569.0 million at December 31, 2024[304] - The company is classified as "well-capitalized" under the Basel III Capital Rules as of March 31, 2025[310] - The company actively manages liquidity to meet financial obligations, with structural liquidity ratios compliant with regulatory requirements[295] Investment Securities - The total investment securities portfolio was $1.1 billion as of March 31, 2025, with an increase in available-for-sale securities[245] - The available-for-sale investment securities portfolio had a net unrealized loss of $46.6 million at March 31, 2025, down from $61.6 million at December 31, 2024[246] - The Agency MBS portfolio as of March 31, 2025, had an aggregate fair value of $313.7 million with unrealized losses totaling $50.9 million[251] - 37 of the AFS securities were in an unrealized loss position for 12 months or longer, with unrealized losses of $48.9 million[251] - The fair value of non-Agency MBS was $359 thousand as of March 31, 2025, with no unrealized loss position[253] - The company does not consider any of the unrealized losses on Agency MBS as credit-related as of March 31, 2025[252] Economic Value and Interest Rate Sensitivity - Economic value of equity (EVE) at March 31, 2025 is $867,977, a decrease of $14,453 (-1.67%) from the pre-shock scenario compared to December 31, 2024[323] - Under the -200 basis points scenario, EVE changes by -0.33% to $865,086 at March 31, 2025, while it increases by 0.57% to $908,905 at December 31, 2024[323] - The sensitivity in the down rate shock scenarios to EVE becomes more negative at March 31, 2025, due to increased borrowings and a shift in deposit mix[323] - The overall value increase of the loan portfolio at March 31, 2025 is offset by deposits, leading to a decrease in EVE compared to December 31, 2024[323] - The estimated changes to net interest income over the 12-month period ending March 31, 2026, show a decrease of $17,486 (5.62%) under -300 bp scenario and an increase of $2,046 (1.02%) under +100 bp scenario[318] - The estimated changes to net interest income do not consider balance sheet growth or changes in the balance sheet mix[318]