Financial Institutions(US:FISI)2025-11-03 21:06Financial Performance - Net interest income for the three months ended September 30, 2025, was $11.1 million, a decrease of $4.6 million compared to the same period in 2024[238]. - Total noninterest income for the three months ended September 30, 2025, was $12.1 million, an increase of $2.6 million from $9.4 million in the same period in 2024[242]. - Total noninterest expense for the three months ended September 30, 2025, was $35.9 million, an increase of $3.4 million from $32.5 million in the same period in 2024[248]. - Income from company-owned life insurance increased by $1.4 million to $2.8 million for the third quarter of 2025, compared to $1.4 million in the same period in 2024[243]. - The efficiency ratio for Q3 2025 was 56.78%, down from 64.70% in Q3 2024, primarily due to increased interest income from investment securities[253]. - Income tax expense for Q3 2025 was $4.8 million, compared to $1.1 million for Q3 2024, reflecting a higher pre-tax income[257]. - The effective tax rate for Q3 2025 was 18.9%, compared to 7.4% for Q3 2024[258]. Loan and Credit Quality - Provision for credit losses for loans was $2.1 million for the third quarter of 2025, compared to $2.4 million for the same period in 2024[239]. - Total loans increased to $4.59 billion as of September 30, 2025, up $111.2 million from $4.48 billion at December 31, 2024[272]. - Total commercial loans reached $2.99 billion, representing 65% of total loans, compared to $2.86 billion or 64% as of December 31, 2024[274]. - Total consumer loans decreased to $1.60 billion, accounting for 35% of total loans, down $13.6 million from December 31, 2024[275]. - Net charge-offs for the third quarter of 2025 were $2.1 million, representing 0.18% of average loans, compared to $1.7 million or 0.15% for the same period in 2024[281]. - The allowance for credit losses on loans was $47.3 million at September 30, 2025, compared to $44.7 million at the same date in 2024[281]. - Non-performing loans decreased by $7.5 million to $34.0 million at September 30, 2025, from $41.4 million at the same date in 2024[281]. - Non-performing loans represented 0.74% of total loans as of September 30, 2025, compared to 0.92% at December 31, 2024[288]. - The company identified $27.3 million in loans classified as substandard as of September 30, 2025, down from $33.7 million at December 31, 2024[291]. Investment Securities - Total investment securities interest income for the nine months ended September 30, 2025, was $16.1 million, an increase from $1.9 million in the same period in 2024[238]. - The available for sale investment securities portfolio increased by $12.5 million from December 31, 2024, to September 30, 2025[260]. - As of September 30, 2025, the total investment securities amounted to $1,050.1 million, compared to $1,088.7 million as of December 31, 2024[259]. - The AFS portfolio had a net unrealized loss of $38.9 million at September 30, 2025, down from $61.6 million at December 31, 2024[260]. - The company sold $22.3 million of mortgage-backed securities in September 2025, reinvesting the proceeds into investment grade corporate bonds[266]. Deposits and Borrowings - Total deposits increased by $253.1 million, or 5%, to $5.36 billion as of September 30, 2025, compared to $5.10 billion at December 31, 2024[299]. - Non-public deposits decreased to $3.15 billion, representing 59% of total deposits as of September 30, 2025, down from 63% at December 31, 2024[300]. - Public deposits rose to $1.23 billion, accounting for 23% of total deposits as of September 30, 2025, compared to 21% at December 31, 2024[301]. - Total borrowings decreased to $170.0 million as of September 30, 2025, down from $223.8 million at December 31, 2024[304]. - Cash and cash equivalents increased to $185.9 million as of September 30, 2025, up from $87.3 million at December 31, 2024[318]. Capital and Shareholder Equity - Shareholders' equity increased to $621.7 million as of September 30, 2025, up by $52.7 million from $569.0 million at December 31, 2024, primarily due to net income and a decrease in accumulated other comprehensive loss[323]. - Common Equity Tier 1 (CET1) Capital was $583.5 million, representing an increase from $548.3 million at December 31, 2024, with a CET1 ratio of 11.15% compared to 10.54%[326]. - Total regulatory capital reached $711.7 million as of September 30, 2025, up from $689.7 million at December 31, 2024, with a total risk-based capital ratio of 13.60%[330]. - The Company maintained a Tier 1 leverage ratio of 9.77% as of September 30, 2025, compared to 9.15% at December 31, 2024[330]. Economic Value of Equity - Estimated Economic Value of Equity (EVE) for September 30, 2025 is $851,144,000, a decrease from $903,789,000 on December 31, 2024[340]. - Under a -300 basis points rate shock scenario, EVE increases to $915,882,000, reflecting a change of $64,738,000 or 7.61%[340]. - The decrease in EVE from December 31, 2024 to September 30, 2025 is attributed to increased borrowings and a shift in deposit mix[340]. - Sensitivity to EVE in down rate shock scenarios becomes more positive at September 30, 2025 compared to December 31, 2024[340]. - Continued increases in commercial loan valuation contribute to the positive sensitivity in EVE[340]. Regulatory and Compliance - The Company is characterized as "well-capitalized" under Basel III Capital Rules, meeting all minimum capital ratios required[328]. - Dividend payments are subject to regulatory approval if they would cause the Bank's regulatory capital to fall below specified minimum levels[331]. - The regulatory capital impact of the Current Expected Credit Losses (CECL) accounting standard is being phased in at 25% per year since January 1, 2022[327].