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Five Star’s net income growth bolstered by SDN acquisition

The parent company of Five Star Bank enjoyed a strong third quarter, bolstered by its deal to acquire Scott Danahy Naylon, an Amherst-based insurance agency.

Warsaw-based Financial Institutions recorded a 17 percent increase in its net income, to $7.2 million from $6.2 million a year ago.

A driving factor was the bank’s noninterest income, which rose 18 percent from a year ago to $7.3 million. And $670,000 of its insurance income, which is counted as noninterest income, was generated by SDN.

Financial Institutions completed its acquisition of SDN during the third quarter. “It’s performing as we’ve expected,” said Martin K. Birmingham, Financial Institutions’ president and chief executive officer. “It’s early, but the influence it’s having is positive.”

Since the deal didn’t close until August, SDN’s contribution was for only two of the three months of the quarter. “From hewre, the numbers should get even more robust,” Birmingham said.

The SDN deal represented a stronger push by the bank into the Buffalo and Rochester markets, and reflected its strategy to diversify its revenues.

Total loans by Financial Institutions as of Sept. 30 were $1.91 billion, up from $1.78 billion a year earlier. The bank said the increase was fueled by growth in commercial, home equity and consumer indirect loans.

“The company is operating at a very high level of performance compared to our historic performance,” Birmingham said.