Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission File Number: 000-26481 Financial Institutions, Inc. (Exact name of registrant as specified in its charter) N ...

Financial Institutions (FISI) Q1 2025 Earnings Call April 29, 2025 01:07 PM ET Speaker0 Hello, everyone, and thank you for joining the Financial Institutions, Inc. First Quarter twenty twenty five Earnings Call. My name is Lucy, and I will be coordinating your call today. I will now hand over to your host, Kate Croft, Director of Investor Relations, to begin. Please go ahead. Speaker1 Thank you for joining us for today's call. Providing prepared comments will be President and CEO, Marty Birmingham and CFO, ...

Investor Presentation Nasdaq: FISI First Quarter 2025 April 28, 2025 Important Information Safe Harbor Statement & Other Information Statements contained in this presentation which are not historical facts and which pertain to future operating results of Financial Institutions, Inc. (the "Company") and its subsidiaries constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Similarly, statements that describe the objectives, plans or goals of the C ...

Core Viewpoint - Financial Institutions (FISI) reported quarterly earnings of $0.81 per share, exceeding the Zacks Consensus Estimate of $0.74 per share, and showing significant growth from $0.11 per share a year ago, indicating a strong earnings surprise of 9.46% [1] Group 1: Earnings Performance - The company has surpassed consensus EPS estimates only once in the last four quarters [2] - Financial Institutions posted revenues of $57.24 million for the quarter ended March 2025, slightly missing the Zacks Consensus Estimate by 0.23%, compared to $50.98 million in the same quarter last year [2] - The current consensus EPS estimate for the upcoming quarter is $0.79, with expected revenues of $58.74 million, and for the current fiscal year, the EPS estimate is $3.24 on revenues of $238.18 million [7] Group 2: Stock Performance and Outlook - Financial Institutions shares have declined approximately 12.6% since the beginning of the year, while the S&P 500 has decreased by 6.1% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future [6] - The outlook for the industry, specifically the Banks - Northeast sector, is relatively strong, ranking in the top 23% of over 250 Zacks industries, suggesting potential for better performance compared to lower-ranked industries [8]

The Company reported net income of $16.9 million in the first quarter of 2025, compared to a net loss of $82.8 million in the fourth quarter of 2024 and net income of $2.1 million in the first quarter of 2024. After preferred dividends, net income available to common shareholders was $16.5 million, or $0.81 per diluted share, in the first quarter of 2025, compared to net loss of $83.2 million, or $(5.07) per diluted share, in the fourth quarter of 2024, and net income of $1.7 million, or $0.11 per diluted s ...

WARSAW, N.Y., April 28, 2025 (GLOBE NEWSWIRE) -- Financial Institutions, Inc. (NASDAQ: FISI) (the "Company," "we" or "us"), parent company of Five Star Bank (the "Bank") and Courier Capital, LLC ("Courier Capital"), today reported financial and operational results for the first quarter ended March 31, 2025. The Company reported net income of $16.9 million in the first quarter of 2025, compared to a net loss of $82.8 million in the fourth quarter of 2024 and net income of $2.1 million in the first quarter of ...

Financial Institutions, Inc. (NASDAQ: FISI) is a financial holding company with approximately $6.1 billion in assets as of December 31, 2024, offering banking and wealth management products and services. Its Five Star Bank subsidiary provides consumer and commercial banking and lending services to individuals, municipalities and businesses through banking locations spanning Western and Central New York and a commercial loan production office serving the Mid-Atlantic region. Courier Capital, LLC offers custo ...

Financial Position - As of December 31, 2024, the Company had consolidated total assets of $6.12 billion, deposits of $5.10 billion, and shareholders' equity of $569.0 million[21]. - The Bank reported total assets of $6.08 billion, net loans of $4.43 billion, and deposits of $5.15 billion as of December 31, 2024[23]. - Courier Capital managed $3.09 billion in assets and generated total revenue of $10.3 million for the year ended December 31, 2024[24]. - As of December 31, 2024, the bank's portfolio of commercial business and commercial mortgage loans totaled $1.25 billion, representing 28% of total loans[145]. - Non-performing assets were $41.5 million, or 0.68% of total assets, as of December 31, 2024[146]. - At December 31, 2024, the bank had $3.56 billion in deposit liabilities with no fixed term, accounting for 70% of total deposits[151]. - Municipal deposits amounted to $1.07 billion, or 21% of total deposits, as of December 31, 2024[153]. - The company has $58.1 million in goodwill and $2.6 million in other intangible assets as of December 31, 2024[181]. Revenue and Income - The Company aims to increase market share within existing markets while exploring growth opportunities in non-interest income through acquisitions[31]. - The Company is committed to maintaining a diversified revenue stream and exploring strategic partnerships that align with its core competencies[32]. - The company declared dividends of $21.0 million in 2024 and $14.0 million in 2023[101]. - The company generates a significant portion of its revenue from dividends from its Bank subsidiary, which are subject to regulatory limitations[190]. - Investment advisory revenue may decrease due to poor investment performance, impacting overall revenues and net income[175]. - The company’s investment advisory business relies heavily on assets under management, which are influenced by market conditions and competition[176]. Loan Portfolio - The commercial business loan portfolio totaled $665.3 million, representing 15% of the total loan portfolio, with 21% at fixed interest rates and 79% at variable interest rates as of December 31, 2024[53]. - The commercial mortgage loan portfolio amounted to $2.20 billion, accounting for 49.1% of the total loan portfolio, with 34% at fixed interest rates and 66% at variable interest rates as of December 31, 2024[54]. - The residential real estate loan portfolio reached $650.2 million, or 15% of the total loan portfolio, with 74% at fixed interest rates as of December 31, 2024[58]. - The consumer indirect loan portfolio totaled $845.8 million, representing 19% of the total loan portfolio, primarily concentrated in indirect automobile loans as of December 31, 2024[60]. - The company exited the Pennsylvania automobile market effective January 1, 2024, to focus on its core Upstate New York market[61]. Regulatory Environment - The company is subject to extensive regulation under federal and state laws, primarily for the protection of depositors and the banking system[80]. - The company must comply with capital adequacy standards established by the Federal Reserve, based on Basel III[87]. - The company is required to maintain a leverage ratio of at least 4.0%[93]. - The company must notify the FRB prior to declaring and paying cash dividends if net earnings are insufficient to fund the dividend[100]. - The FDIC issued a special assessment in 2023 for banks with uninsured deposits exceeding $5 billion[106]. - The company did not opt into using the Community Bank Leverage Ratio and determined to comply with the Basel III Rules instead[92]. - The company is subject to a minimum capital conservation buffer of 2.5%[89]. - The most recent CRA evaluation resulted in an overall rating of "Satisfactory" for the company[109]. Risk Management - The Company is subject to various risks, including credit losses, regulatory changes, and market volatility, which could impact financial performance[19]. - The allowance for credit losses is established through charges to earnings, reflecting management's estimate of probable credit losses in the portfolio[68]. - The company has identified nine portfolio segments of loans for estimating the allowance for credit losses, including Commercial Loans/Lines and Residential Real Estate Loans[69]. - The company faces risks related to interest rate fluctuations, which can impact net interest income, loan demand, and defaults[192]. - The Federal Reserve's monetary policies have led to increased interest rates, affecting the company's financial conditions and operations[193]. - The company’s risk management framework must effectively identify and mitigate risks to avoid unexpected losses[191]. Employee and Workplace Culture - The Company prioritizes talent attraction and retention by fostering an inclusive and healthy workplace[34]. - The company was certified by Great Place To Work® for the second time in 2024, indicating a strong employee satisfaction culture[42]. - As of December 31, 2024, the company had 598 employees, a decrease of 26 employees or 4% from the previous year, primarily due to the sale of its insurance subsidiary[35]. Strategic Initiatives - The Company plans to leverage digital channels to enhance customer engagement and expand its reach into new geographies[29]. - The company aims to expand its branch network and invest in digital banking, but failure to implement these growth strategies could negatively affect loan portfolio quality and profitability[183]. - The company plans to pursue a growth strategy by expanding its branch network and considering acquisitions of various financial services firms, although competition for suitable targets may increase costs and limit options[186]. - The company has implemented a program to provide financial products and services to legal cannabis-related businesses, although exposure is expected to be tempered by the exit from the BaaS line of business[115]. Cybersecurity and Technology - The company relies heavily on information technology and internet services to process a large volume of daily transactions, increasing vulnerability to cyber-attacks and system failures[205]. - The company may need to allocate significant additional resources to enhance systems and address vulnerabilities due to evolving cyber threats[206]. - Compliance with evolving cybersecurity regulations is critical, as failure to do so could result in regulatory sanctions and reputational damage[207]. - Emerging technologies, including AI and cloud computing, present both opportunities and risks for the company, particularly regarding data security and operational efficiency[201][202]. Legal and Compliance Issues - Legal and regulatory proceedings could result in substantial costs and adversely affect the bank's financial condition and operating results[158]. - Non-compliance with the USA PATRIOT Act and Bank Secrecy Act could lead to fines and sanctions, affecting business operations[165]. - The company has adopted policies to comply with the requirements of the AMLA and related regulations, ensuring effective risk assessment processes[120]. - Regulatory authorities have increased scrutiny of the Bank Secrecy Act (BSA) and anti-money laundering programs, with potential legal and reputational consequences for non-compliance[119]. Capital and Funding - The company completed a public offering of 4,600,000 shares of common stock at $25.00 per share, resulting in net proceeds of $108.6 million[77]. - The company may need to raise additional capital in the future, which could be challenging if market conditions are unfavorable[200]. - Future capital resources may be increased through debt or equity securities, which could dilute current shareholders and affect common stock value[209]. - Provisions in the company's certificate of incorporation and bylaws may create anti-takeover effects, making acquisitions more difficult[210].

Core Viewpoint - Financial Institutions, Inc. has settled civil litigation related to its auto loan notification process, which had been ongoing since 2017, and will record a litigation accrual of $23.0 million in its fourth quarter 2024 financial statements [2]. Group 1: Legal Settlement - The legal action was related to language in repossession notices issued to defaulting borrowers between 2011 and 2021 [2]. - The settlement agreement was executed on March 7, 2025, and is subject to court approval [2]. - The company does not expect to accrue additional amounts for this matter in 2025 or future periods and anticipates no changes to its previously published 2025 guidance [2]. Group 2: Financial Impact - The litigation accrual of $23.0 million will result in an after-tax impact of $17.1 million [2]. - Details regarding the financial impact of the litigation accrual on fourth quarter and full-year 2024 results were included in Current Reports on Form 8-K filed with the SEC [2]. Group 3: Company Overview - Financial Institutions, Inc. is a financial holding company with approximately $6.1 billion in assets as of December 31, 2024 [4]. - The company offers banking and wealth management products and services through its subsidiary, Five Star Bank, which serves individuals, municipalities, and businesses in New York [4]. - Courier Capital, LLC, a subsidiary, provides customized investment management and financial planning services [4].

Core Viewpoint - Financial Institutions, Inc. has appointed Eric W. Marks as Senior Vice President and Chief Consumer Banking Officer of Five Star Bank, bringing nearly 20 years of banking experience to the role [1][2]. Company Overview - Financial Institutions, Inc. is a financial holding company with approximately $6.1 billion in assets as of December 31, 2024, offering banking and wealth management products and services [5]. - Five Star Bank, a subsidiary of Financial Institutions, Inc., provides consumer and commercial banking and lending services across Western and Central New York [5]. Leadership Appointment - Eric W. Marks will oversee the Bank's consumer lines of business, including Retail Banking, Residential Mortgage, and Small Business Banking, as well as the Customer Contact Center and Collections departments [2]. - Marks has a strong background in consumer banking leadership, financial oversight, and strategic planning, which will aid in driving sustainable customer growth and service excellence [2][3]. - He previously served as Retail Segment Chief Financial Officer at M&T Bank, where he held various roles over a 19-year tenure [3]. Strategic Focus - The appointment of Marks is expected to support the continued evolution and growth of Five Star Bank's consumer banking offerings, enhancing customer experience and community engagement [3]. - Marks expressed enthusiasm for joining a community bank with a rich history in Upstate New York and aims to deliver a simple, connected, and trusted banking experience [3][4].