Five Star Bank’s parent company reported net income of $7 million for the second quarter, up slightly from $6.9 million a year ago, as the bank pressed forward on its expansion efforts.
Warsaw-based Financial Institutions Inc. reported earnings per diluted share of 48 cents, up from 47 cents a year ago, and beating analysts’ estimate of 46 cents.
“We delivered solid earnings in the second quarter of 2014,” said Martin K. Birmingham, the president and chief executive officer, in a statement. “We grew loans, credit quality continued to improve, operating expenses were well managed and capital levels strengthened.”
Birmingham said the bank made progress in the second quarter on increasing its penetration of the Buffalo and Rochester markets, and diversifying its revenue base through expanding fee-based services. In late May, Financial Institutions announced it was acquiring Scott Danahy Naylon Co., an Amherst-based insurance agency, with offices in Amherst, Cassadaga and South Dayton. The deal is expected to close in the current quarter.
The bank’s net interest income from making loans and taking deposits increased 3 percent from a year ago, to $23.1 million. Kevin B. Klotzbach, executive vice president and chief executive officer, said the results were driven by factors including loan and deposit growth. Loans increased by $145 million from a year earlier.
The bank’s non-interest income from sources such as fees increased 3 percent, to $6.6 million. Its non-interest expenses rose slightly to $17.8 million, due to professional services connected to the pending acquisition of the insurance agency, and hiring additional loan officers and related personnel as part of Financial Institutions’ expansion efforts.
Only three of Five Star’s branches are in Erie County. But bank officials say they see opportunities to grow in the Buffalo Niagara market through various avenues. The latest available figures from the Federal Deposit Insurance Corp., from June 2013, showed Financial Institutions’ deposit market share was just 0.4 percent, which ranked No. 11.