Financial Institutions(US:FISI)2021-11-07 16:00Financial Performance - Net income for Q3 2021 increased by $4.9 million to $17.2 million compared to $12.3 million in Q3 2020, with earnings per diluted share rising to $1.05 from $0.74[216] - Noninterest income for Q3 2021 was $12.1 million, slightly down from $12.2 million in Q3 2020, primarily due to lower income from derivative instruments and loan sales[220] - Noninterest expense increased to $29.2 million in Q3 2021 from $28.5 million in Q3 2020, mainly due to higher salaries and employee benefits, and technology investments[222] - Net interest income for the three months ended September 30, 2021, was $38.4 million, an increase of approximately $2.7 million compared to $35.7 million in the same period of 2020[235] - Net interest income for the nine months ended September 30, 2021, was $114.4 million, an increase of $10.9 million from $103.5 million in the same period last year[243] Interest Income and Assets - Net interest income totaled $38.3 million in Q3 2021, up from $35.5 million in Q3 2020, driven by an increase in interest-earning assets and a decrease in interest expense[218] - Average interest-earning assets increased by $553.0 million, or 13%, to $4.97 billion for the third quarter of 2021 compared to $4.41 billion in the third quarter of 2020[238] - The yield on average interest-earning assets decreased by 29 basis points to 3.31% in the third quarter of 2021 from 3.60% in the same period of 2020[237] - The net interest margin for the third quarter of 2021 was 3.07%, a decrease of 15 basis points from 3.22% in the same period of 2020[236] - The cost of average interest-bearing liabilities decreased by 20 basis points to 0.32% in the third quarter of 2021 compared to 0.52% in the same period of 2020[239] Loans and Credit Quality - Average loans increased by $110.1 million in Q3 2021 compared to the same quarter in 2020, contributing to the growth in net interest income[218] - Net charge-offs as a percentage of average loans outstanding remained stable at 0.06% for both Q3 2021 and Q3 2020[219] - The provision for credit losses was a benefit of $334 thousand in Q3 2021 compared to a provision of $3.6 million in Q3 2020, reflecting improved credit conditions[219] - Total charge-offs for the nine months ended September 30, 2021 were $6.6 million, compared to $17.9 million for the same period in 2020[302] - Non-performing loans were $6.7 million or 0.12% of total loans at September 30, 2021, compared to $9.5 million or 0.26% at December 31, 2020[304] Deposits and Funding - Total deposits increased by $696.6 million to $4.97 billion as of September 30, 2021, compared to $4.28 billion at December 31, 2020, representing a growth of approximately 16.3%[309] - Nonpublic deposits, the largest component of funding sources, totaled $2.73 billion, accounting for 55% of total deposits as of September 30, 2021, up from $2.55 billion and 60% at December 31, 2020[309] - Public deposits rose to $1.19 billion, representing 24% of total deposits as of September 30, 2021, compared to $834.9 million and 20% at December 31, 2020, largely due to seasonality[309] - Cash and cash equivalents were $288.4 million as of September 30, 2021, an increase of $194.5 million from $93.9 million at December 31, 2020[319] Capital and Regulatory Ratios - The regulatory Common Equity Tier 1 Ratio was 10.24% and the Total Risk-Based Capital Ratio was 13.25% as of September 30, 2021[223] - Common Equity Tier 1 (CET1) Capital increased to $426,790 thousand as of September 30, 2021, from $389,733 thousand as of December 31, 2020, reflecting a growth of 9.4%[322] - Total regulatory capital rose to $552,257 thousand as of September 30, 2021, compared to $521,193 thousand as of December 31, 2020, marking an increase of 5.96%[322] - The Tier 1 leverage ratio improved to 8.36% as of September 30, 2021, up from 8.25% as of December 31, 2020[327] Economic Value and Interest Rate Sensitivity - As of September 30, 2021, the estimated Economic Value of Equity (EVE) was $717,562,000, an increase from $583,156,000 on December 31, 2020[340] - The economic value of equity is sensitive to interest rate changes, with fixed-rate financial assets becoming more valuable in declining rate scenarios[338] - The analysis of interest rate sensitivity is based on assumptions regarding the pricing of loans and deposits in response to interest rate changes[335] - In a +300 basis points scenario, the estimated change in net interest income is projected to be an increase of $7,063 thousand, indicating a 4.81% change[333]