Financial Institutions' first-quarter profits rose by 9 percent as the Warsaw-based banking company brought in more deposits and made more loans.
Financial Institutions, which runs Five Star Bank, said its profits rose to $5.8 million, or 33 cents per share, from $5.3 million, or 40 cents per share, a year ago, before the company sold additional shares of its stock last month.
Excluding a $1.2 million, or 11 cent per share, earnings hit from extra dividends stemming from the bank's repayment last month of the last of the $37.5 million it received through the Troubled Asset Relief Program, Financial Institutions earned 44 cents per share -- better than the 37 cents that Wall Street analysts were expecting.
"We maintained our solid asset quality," said Peter G. Humphrey, Financial Institutions' president and CEO. "We believe that, as the economy continues to gain traction, our strong capital levels and liquidity will enable us to operate from a position of strength."
Financial Institution's basic banking business continued to grow modestly.
The company's net interest income -- the difference between the interest the bank pays on deposits and collects from its loans -- grew by 3 percent to $20 million, mainly from lower interest rates paid on deposit accounts and certificates of deposit.
Still, Financial Institutions increased its deposit base, which grew by 6 percent to $2 billion, with lower cost demand, savings and money market accounts accounting for 63 percent of all deposits.
The bank's loan portfolio also grew by 7 percent over the last year to $1.35 billion, fueled by an 18 percent jump in consumer indirect loans, and a 9 percent increase in commercial mortgage loans.
Financial Institutions' loan portfolio also had relatively few problems. The bank wrote off $1.2 million in loans during the quarter, almost double the amount of a year ago, but those charge-offs still amounted to just 0.35 percent of its outstanding loans. Its loan loss provision also doubled during the quarter to $810,000, but that, too, was just a small percentage of its overall portfolio and far below the industry average.
The loans classified as non-performing dipped by 4 percent to $8.5 million, or 0.37 percent of Financial Institution's total loan portfolio.
Fee income jumped by 26 percent to $5.1 million from a year ago, when the bank wrote down the value of some of its investment securities by $526,000. Excluding that write-down, fee income grew by 12 percent.