Financial Institutions(US:FISI)2025-04-29 17:07Financial Data and Key Metrics Changes - Net interest income increased by over 12% from the fourth quarter and 17% year over year, with net interest margin expanding by 44 and 57 basis points respectively [4][5] - Non-interest income was $10,400,000, supported by enhancements to the company-owned life insurance portfolio and increased investment advisory income [5] - Net income for the quarter was $16,900,000, with diluted EPS at $0.81, and return on average common equity at 11.92% [16][24] Business Line Data and Key Metrics Changes - Total loans increased by 1.7% during the quarter, driven by commercial and industrial (C&I) and commercial real estate (CRE) lending [7] - Commercial business loans rose by 6.6% during the quarter, while commercial mortgage loans increased by 1.3% [9] - Consumer indirect balances were up nearly 1% from December 31, but down 7% year over year [11] Market Data and Key Metrics Changes - Deposits increased by 5.3% from year-end 2024, driven by higher public deposit balances and an increase in brokered deposits [13] - Nonperforming loans declined to $40,000,000, primarily related to two commercial relationships [10] Company Strategy and Development Direction - The company is focused on maintaining momentum from its capital raise and investment securities restructuring to deliver strong results throughout 2025 [5][24] - A new executive has joined the team to enhance customer growth and service excellence across the retail network [25][26] Management Comments on Operating Environment and Future Outlook - Management expressed caution regarding the uncertain economic landscape, particularly concerning tariffs, inflation, and interest rates [8][9] - The company maintains a conservative outlook for loan growth, expecting it to be concentrated in the first half of the year due to economic uncertainties [9][33] Other Important Information - The company expects non-interest income to be between $10,000,000 to $10,500,000 per quarter for 2025, reflecting an upward revision [19] - The provision for credit losses was $2,900,000, down from $6,500,000 in the linked quarter, with a net charge-off ratio of 21 basis points [21][23] Q&A Session Summary Question: Loan growth outlook for the year - Management is comfortable with their guidance, noting that uncertainty has led customers to pause investments [32][33] Question: NIM guidance and levers for improvement - Key levers include cash flow from the portfolio and deposit repricing, with CDs maturing at an average cost of about 4.5% [35][39] Question: COLI expected income over the next quarters - COLI income is expected to be elevated in the second quarter and then normalize, but at a higher level than previous quarters [42][44] Question: Provision outlook for credit - The guided ACL to average loans ratio is expected to hover around 107 to 108 basis points for the rest of the year [46]