The parent of Wyoming County Bank said Tuesday that profits for the third quarter rose 26 percent, largely because the multi-bank holding company set aside less money to cover bad loans.
Warsaw-based Financial Institutions, which owns four banks, reported net income of $5.1 million, or 42 cents per share, up from $4.1 million, or 33 cents per share, a year earlier.
The company put aside $2.1 million for losses on its loans, a 62 percent drop from its reserve in the third quarter of 2003. Bad loans and other assets fell to $49.7 million from $51.9 million a year ago and $52.1 million at the end of 2003. Financial Institutions wrote off $1.9 million as uncollectible, down from $3.1 million in the third quarter last year.
"The third-quarter results reflect our strong focus on improving credit quality with a resulting decline in our provision for loan losses," said president and CEO Peter G. Humphrey. "We continue to work at reducing our level of nonperforming assets in the most cost-effective manner."
Wyoming County Bank operates 17 branches in five counties, including three in Erie County. It's received regulatory approval to open a fourth Erie branch, in Williamsville Plaza in Amherst, and plans one to two more in the county over the next couple of years. Financial Institutions, which also owns National Bank of Geneva, Bath National Bank and First Tier Bank and Trust, has been battling a high level of loan losses for the past few quarters, after its rapid growth got the better of its management. Most of the problems stemmed from commercial loans at its Geneva and Bath banks, especially to dairy and other agricultural borrowers.
Federal bank regulators imposed restrictions on the company in September 2003, ordering it to raise more capital and strengthen its management, underwriting and procedures. The bank created a chief risk officer and centralized its loan operations unit to maintain files.
Net interest income from taking deposits and making loans rose 4 percent to $19.2 million, as the profit margin expanded slightly because of higher interest rates that offset a drop in loans.
Total loans fell 8 percent to $1.3 billion, as the company's banks made fewer loans because they were focused on reducing credit risk and strengthening underwriting requirements. Deposits rose 2 percent to $1.86 billion.