Financial Institutions, Inc. (FISI): Business Model Canvas [11-2024 Updated]

Understanding the business model of Financial Institutions, Inc. (FISI) provides valuable insights into how this financial entity operates and thrives in a competitive market. With a focus on key partnerships, diverse services, and customer-centric approaches, FISI effectively caters to various customer segments, including individuals, businesses, and municipalities. Explore the intricate components of their Business Model Canvas to uncover how FISI crafts value and builds lasting relationships in the financial landscape.

Financial Institutions, Inc. (FISI) - Business Model: Key Partnerships

Collaborations with Other Financial Institutions

As of September 30, 2024, Financial Institutions, Inc. (FISI) reported total deposits of $5.31 billion, with approximately 61% attributed to non-public deposits. The institution collaborates with various financial entities to enhance its deposit base and expand service offerings. Notably, FISI participates in reciprocal deposit programs, which totaled $816.1 million at the end of Q3 2024.

Relationships with Commercial Banks for Funding

FISI maintains strategic partnerships with commercial banks to secure funding. As of September 30, 2024, short-term borrowings from the Federal Home Loan Bank (FHLB) amounted to $55 million, down from $107 million the previous year. This reflects a strategic reduction in reliance on short-term funding while managing liquidity needs.

Partnerships with Insurance Agencies and Investment Firms

FISI has established relationships with insurance agencies and investment firms to diversify income streams. In Q3 2024, noninterest income totaled $9.4 million, with investment advisory income contributing $2.8 million. The company also recognized a pre-tax gain of $13.7 million from the sale of its insurance subsidiary's assets.

Partnership Type	Details	Financial Impact (Q3 2024)
Reciprocal Deposit Programs	Collaborations for FDIC insurance coverage	$816.1 million
Commercial Banks	Short-term borrowings from FHLB	$55 million
Insurance Agencies	Sale of subsidiary assets	$13.7 million gain
Investment Firms	Investment advisory income	$2.8 million

Ties with Government-Sponsored Enterprises for Securities

FISI has strong ties with government-sponsored enterprises (GSEs) for its securities portfolio. As of September 30, 2024, FISI's investment securities included $24.5 million in U.S. government agency and GSE securities, which provide a stable return and enhance liquidity.

Financial Institutions, Inc. (FISI) - Business Model: Key Activities

Providing diverse financial services and products

Financial Institutions, Inc. (FISI) offers a comprehensive range of financial services, including traditional banking products, investment advisory, and insurance services. As of September 30, 2024, total assets amounted to $6.16 billion, with total loans reported at $4.40 billion. The company’s net interest income for the third quarter of 2024 was $40.7 million, a decrease from $41.7 million in the same quarter of 2023.

Managing loans and deposits efficiently

FISI manages a diverse loan portfolio, which includes commercial and residential real estate loans, totaling approximately 62.7% of the loan composition. As of September 30, 2024, the composition of loans was as follows:

Loan Type	Amount ($000)	% of Total Loans
Commercial Business	654,519	14.9%
Commercial Mortgage - Construction	533,506	12.1%
Commercial Mortgage - Multifamily	467,527	10.6%
Commercial Mortgage - Non-owner Occupied	814,392	18.5%
Residential Real Estate Loans	648,241	14.7%
Total Loans	4,402,989	100.0%

Additionally, FISI's total deposits reached $5.31 billion, with significant contributions from savings and money market accounts, which totaled $2.03 billion.

Conducting risk assessments and credit evaluations

FISI's provision for credit losses in the third quarter of 2024 was $3.1 million, an increase from $1.0 million in the same quarter of 2023. The company’s non-performing loans were valued at $40.7 million, representing 0.93% of total loans, up from 0.60% at the end of 2023. This increase was largely attributed to a commercial mortgage - construction loan placed on nonaccrual status during the third quarter.

Investment advisory and wealth management services

FISI reported noninterest income of $9.4 million for the third quarter of 2024, down from $10.5 million in the same period of 2023. This decline was influenced by the sale of the assets of its insurance subsidiary, resulting in a decrease in insurance income. The company generated $2.8 million in investment advisory income in the third quarter of 2024, reflecting a strategic focus on wealth management services.

Financial Institutions, Inc. (FISI) - Business Model: Key Resources

Strong capital base and core customer deposits

Total deposits at Financial Institutions, Inc. (FISI) as of September 30, 2024, amounted to $5.31 billion, reflecting an increase of $93.7 million, or 2%, from December 31, 2023. Non-public deposits, the largest component of funding sources, totaled $3.23 billion as of September 30, 2024, representing 61% of total deposits. Public deposits accounted for $1.18 billion, or 22% of total deposits, while brokered deposits were $79.4 million, or 2% of total deposits.

Technology infrastructure for banking operations

The technology infrastructure of FISI supports a range of banking operations, including online banking and digital transactions. The company invests significantly in computer and data processing, with expenses totaling $16.1 million for the nine months ended September 30, 2024. As of September 30, 2024, FISI had $270.8 million in other assets, which include investments in technology and software that enhance operational efficiency.

Skilled workforce in finance and customer service

FISI employs a skilled workforce, essential for maintaining high-quality customer service and financial management. Salaries and employee benefits amounted to $48.97 million for the nine months ended September 30, 2024. The workforce includes financial analysts, customer service representatives, and technology specialists, all contributing to the bank's operational success.

Extensive network of branches and online presence

As of September 30, 2024, FISI operated an extensive network of branches complemented by a robust online presence. The bank's physical branches are strategically located, supporting customer accessibility and service delivery. The combination of branch banking and digital banking allows FISI to cater to a diverse clientele, enhancing customer engagement and retention.

Key Resource	Details
Capital Base	Total Deposits: $5.31 billion as of September 30, 2024
Core Customer Deposits	Non-public Deposits: $3.23 billion (61% of total deposits)
Public Deposits	$1.18 billion (22% of total deposits)
Brokered Deposits	$79.4 million (2% of total deposits)
Technology Investment	Computer and Data Processing Expenses: $16.1 million for the nine months ended September 30, 2024
Other Assets	$270.8 million as of September 30, 2024
Workforce	Salaries and Employee Benefits: $48.97 million for the nine months ended September 30, 2024
Branch Network	Extensive physical presence with strong online banking capabilities

Financial Institutions, Inc. (FISI) - Business Model: Value Propositions

Comprehensive financial services tailored to customer needs

Financial Institutions, Inc. (FISI) offers a diverse range of financial products and services designed to meet the specific needs of various customer segments, including individuals, municipalities, and businesses. As of September 30, 2024, FISI reported total assets of $6.16 billion and total deposits of $5.31 billion, reflecting a 2% increase from the previous year.

Competitive interest rates on loans and deposits

FISI maintains competitive interest rates on both loans and deposits. As of the third quarter of 2024, the net interest margin was 2.89%, slightly down from 2.91% in the same period in 2023. The company aims to attract customers by offering favorable rates, which contributed to an increase in average savings and money market account deposits by $189.7 million.

Type	Average Balance (in millions)	Interest Rate	Interest Income (in millions)
Loans	4,358	varied	71.2
Deposits	5,307	varied	34.8
Short-term borrowings	55.0	3.84%	0.9
Long-term borrowings	124.8	4.70%	1.6

Personalized investment advice and wealth management

FISI provides tailored investment advice and comprehensive wealth management services through its subsidiary, Courier Capital, LLC. The investment advisory income for the third quarter of 2024 was $2.8 million, marking a 10% increase from $2.5 million in the same quarter of the previous year. This growth is attributed to market-driven increases in assets under management and proactive business development efforts.

Reliable customer service and support

FISI prioritizes customer service by fostering long-term relationships with clients through personalized interactions. The company’s community bank philosophy emphasizes understanding the individual needs of customers, which has resulted in a strong reputation for reliable support. As of September 30, 2024, FISI's return on average assets was 0.89%, and return on average common equity was 11.18%, showcasing effective management and customer satisfaction.

Financial Institutions, Inc. (FISI) - Business Model: Customer Relationships

Building long-term relationships with clients

As of September 30, 2024, Financial Institutions, Inc. reported total deposits of $5.31 billion, reflecting an increase of $93.7 million, or 2%, from December 31, 2023. Non-public deposits, which are a crucial component of their funding sources, totaled $3.23 billion, representing 61% of total deposits.

Offering personalized banking experiences

Financial Institutions, Inc. focuses on providing a range of deposit products tailored to their customers. Time deposits accounted for approximately 28% of total deposits as of September 30, 2024, up from 27% at the end of 2023.

Regular communication through various channels

The company has emphasized regular communication with its clients, which is reflected in their noninterest income. For the third quarter of 2024, noninterest income totaled $9.44 million, with service charges on deposits contributing $1.1 million. Additionally, card interchange income was reported at $1.9 million, indicating robust transactional engagement with customers.

Loyalty programs for frequent customers

Financial Institutions, Inc. has implemented loyalty programs aimed at retaining frequent customers. The company reported an increase in income from company-owned life insurance, which rose 37% to $1.4 million for the third quarter of 2024 compared to the prior year, indicating successful cross-selling strategies.

Deposit Type	Amount (in billions)	% of Total Deposits
Non-interest bearing demand	$0.98	18.4%
Interest-bearing demand	$0.79	15%
Savings and money market	$2.03	38%
Time deposits	$1.51	28%
Total Deposits	$5.31	100%

As of September 30, 2024, the estimated uninsured deposits were approximately $2.09 billion, or 39% of total deposits.

Financial Institutions, Inc. (FISI) - Business Model: Channels

Physical branches across New York and Mid-Atlantic

Financial Institutions, Inc. (FISI) operates a network of physical branches strategically located across New York and the Mid-Atlantic region. As of September 30, 2024, the company reported total assets of $6.16 billion. The bank emphasizes personal service and community engagement through these branches, which are crucial for building long-term relationships with customers.

Online banking platform for customer convenience

The online banking platform of FISI provides customers with the ability to manage their accounts, make transactions, and access services remotely. As of September 30, 2024, non-public deposits, which include those made through online channels, totaled $3.23 billion, representing 61% of total deposits. This digital channel is essential for attracting tech-savvy customers and enhancing overall customer satisfaction.

Mobile application for easy access to services

FISI offers a mobile application designed to facilitate easy access to banking services. This application complements the online banking platform, providing features such as mobile check deposits and account management. The bank's focus on mobile technology aligns with industry trends, where mobile banking is becoming increasingly important. A significant portion of customer transactions is conducted through mobile devices, driven by the growing preference for convenience.

Direct marketing and community engagement initiatives

FISI engages in direct marketing and community outreach to promote its services and enhance brand visibility. The bank invests in local events and sponsorships, which have proven effective in establishing a strong community presence. As of September 30, 2024, the noninterest income from service charges on deposits and various fees amounted to $9.44 million. This strategy not only drives customer acquisition but also fosters loyalty among existing clients.

Channel Type	Description	Total Deposits (as of September 30, 2024)	Noninterest Income (Q3 2024)
Physical Branches	Strategically located across New York and Mid-Atlantic	$5.31 billion	N/A
Online Banking	Remote account management and transactions	$3.23 billion (61% of total deposits)	N/A
Mobile Application	Access to banking services via mobile devices	N/A	N/A
Direct Marketing	Community engagement and promotional initiatives	N/A	$9.44 million

Financial Institutions, Inc. (FISI) - Business Model: Customer Segments

Individuals seeking personal banking solutions

Financial Institutions, Inc. (FISI) caters to individual customers by offering a range of personal banking products. As of September 30, 2024, the total loans for consumer indirect loans amounted to $874.7 million, representing 19.9% of total loans. The retail banking segment is enhanced by services such as checking accounts, savings accounts, and personal loans, designed to meet the needs of various demographics, including millennials and retirees.

Small to medium-sized businesses for commercial banking

FISI's commercial banking services target small to medium-sized enterprises (SMEs), providing them with essential banking products. The total commercial loans reached $2.76 billion, which includes commercial business loans totaling $654.5 million as of September 30, 2024. This segment represents approximately 62.7% of total loans. FISI offers tailored services such as business checking accounts, lines of credit, and commercial mortgages to support the growth of these businesses.

Municipalities requiring public financing services

FISI serves municipalities by providing public financing services, which include loans for infrastructure and community development projects. The company maintains a strong relationship with local governments, evidenced by its significant portfolio of municipal bonds. As of September 30, 2024, the total amount of loans to municipalities was approximately $121.3 million, reflecting a commitment to supporting public sector initiatives. These services are crucial for municipalities seeking to finance various public projects.

Wealthy individuals needing investment management

FISI also targets high-net-worth individuals through its investment management services. The company reported total assets under management of approximately $1.2 billion as of September 30, 2024. This segment includes wealth management services, retirement planning, and investment advisory tailored to meet the financial goals of affluent clients. The company aims to provide personalized investment strategies and financial planning services to enhance the wealth of its clients.

Customer Segment	Key Financial Metrics	Products/Services Offered	Percentage of Total Loans
Individuals	$874.7 million (consumer indirect loans)	Checking accounts, savings accounts, personal loans	19.9%
Small to Medium-sized Businesses	$2.76 billion (total commercial loans)	Business checking, lines of credit, commercial mortgages	62.7%
Municipalities	$121.3 million (municipal loans)	Public financing, infrastructure loans	N/A
Wealthy Individuals	$1.2 billion (assets under management)	Investment management, financial planning	N/A

Financial Institutions, Inc. (FISI) - Business Model: Cost Structure

Operational costs associated with branches and staff

For the third quarter of 2024, salaries and employee benefits amounted to $15.9 million, a decrease of 13% from $18.2 million in the same quarter of 2023. For the first nine months of 2024, these expenses totaled $49.0 million, down from $54.0 million in 2023, reflecting a 9% decline.

The occupancy and equipment costs for the third quarter of 2024 were $3.37 million, compared to $3.79 million in the third quarter of 2023. For the nine months ended September 30, 2024, these costs were $10.57 million versus $11.06 million in the previous year.

Technology and infrastructure maintenance expenses

Computer and data processing expenses were $5.35 million for the third quarter of 2024, which reflects an increase of 5% from $5.1 million in the third quarter of 2023. For the first nine months of 2024, these expenses rose to $16.08 million, up from $14.55 million in the same period of the previous year.

Marketing and customer acquisition costs

Advertising and promotions expenses decreased significantly by 50% to $371,000 in the third quarter of 2024, compared to $744,000 in the third quarter of 2023. For the first nine months of 2024, these costs were $1.1 million, down from $1.6 million in the previous year.

Regulatory compliance and risk management expenses

Professional services expenses, which include legal and compliance costs, increased significantly by 83% to $1.965 million in the third quarter of 2024, compared to $1.076 million in the same quarter of 2023. For the first nine months of 2024, these expenses totaled $6.13 million, up from $3.84 million in 2023.

Moreover, the provision for credit losses was $3.104 million for the third quarter of 2024, an increase from $966,000 in the same quarter of 2023.

Cost Category	Q3 2024 ($ thousands)	Q3 2023 ($ thousands)	9M 2024 ($ thousands)	9M 2023 ($ thousands)
Salaries and Employee Benefits	15,879	18,160	48,967	54,047
Occupancy and Equipment	3,370	3,791	10,570	11,059
Professional Services	1,965	1,076	6,131	3,844
Computer and Data Processing	5,353	5,107	16,081	14,548
Advertising and Promotions	371	744	1,108	1,556
Deposit-related Charged-off Items	410	188	19,987	978
Total Noninterest Expense	32,469	34,735	119,502	102,178

Financial Institutions, Inc. (FISI) - Business Model: Revenue Streams

Interest income from loans and securities

For the nine months ended September 30, 2024, Financial Institutions, Inc. reported net interest income on a taxable equivalent basis of $122.2 million, a decrease from $126.2 million in the same period of 2023. The net interest margin was 2.85% in 2024, down from 2.99% in 2023. The average yield on loans increased to 6.39% for the nine months ended September 30, 2024, compared to 5.90% for the same period in 2023. Average interest-earning assets were $5.73 billion for the nine months ended September 30, 2024, an increase of $98.9 million from the prior year.

Noninterest income from fees and advisory services

Noninterest income for the three months ended September 30, 2024, totaled $9.44 million, compared to $10.49 million for the same period in 2023. Major components of noninterest income include:

Category	Q3 2024	Q3 2023	YTD 2024	YTD 2023
Service charges on deposits	$1,103,000	$1,207,000	$3,159,000	$3,457,000
Insurance income	$3,000	$1,678,000	$2,141,000	$5,093,000
Card interchange income	$1,900,000	$2,094,000	$5,810,000	$6,140,000
Investment advisory	$2,797,000	$2,544,000	$8,158,000	$8,286,000
Company owned life insurance	$1,404,000	$1,027,000	$4,062,000	$2,974,000
Other income	$1,345,000	$1,410,000	$4,370,000	$3,667,000

The pre-tax gain from the sale of assets from the insurance subsidiary was $13.7 million for the first nine months of 2024, contributing to the overall noninterest income performance.

Income from insurance and investment products

Income from insurance products and investment products has shown variability, particularly after the sale of the insurance subsidiary. For the nine months ended September 30, 2024, insurance income decreased to $2.14 million from $5.09 million in 2023 due to the sale of the subsidiary. Investment advisory income remained relatively stable, with $8.15 million year-to-date in 2024 compared to $8.29 million in 2023.

Gains from asset sales and securities transactions

Net gains from asset sales for the nine months ended September 30, 2024, included a significant gain of $13.6 million from the sale of the insurance subsidiary's assets. Other net gains or losses from securities transactions included a net gain of $138,000 for the third quarter of 2024 compared to a loss of $1,000 in the same quarter of 2023. The overall noninterest income for the nine months of 2024 reached $44.36 million, significantly up from $32.88 million in the same period of 2023, largely influenced by the aforementioned sale and recovery efforts from the fraud event disclosed earlier in 2024.

Updated on 16 Nov 2024

Resources:

1. Financial Institutions, Inc. (FISI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Financial Institutions, Inc. (FISI)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Financial Institutions, Inc. (FISI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.