WARSAW, N.Y., Oct. 01, 2025 (GLOBE NEWSWIRE) -- Financial Institutions, Inc. (NASDAQ: FISI) (the “Company”), the parent company of Five Star Bank and Courier Capital, LLC, will release results for the third quarter ending September 30, 2025 after the market closes on October 23, 2025. Management will host an earnings conference call and audio webcast on October 24, 2025 at 8:30 a.m. Eastern Time. The call will be hosted by Martin K. Birmingham, President and Chief Executive Officer, and W. Jack Plants II, C ...

Bank holding company Financial Institutions (NASDAQ:FISI) announced on Monday a share repurchase program for up to 1,006,379 shares of common stock. The maximum shares to be repurchased represent ~5% of the company's outstanding stock. Effective September 18, the new buyback authorization ...

WARSAW, N.Y., Sept. 22, 2025 (GLOBE NEWSWIRE) -- Financial Institutions, Inc. (NASDAQ: FISI) (the “Company”), the parent company of Five Star Bank and Courier Capital, LLC, today announced that its Board of Directors (the “Board”) has approved a new share repurchase program for up to 1,006,379 shares of its common stock, or approximately 5% of the Company’s outstanding common shares. Effective September 18, 2025, the new share repurchase program replaces and terminates the prior share repurchase program aut ...

PART I. FINANCIAL INFORMATION [ITEM 1. Financial Statements](index=3&type=section&id=ITEM%201.%20Financial%20Statements) Unaudited consolidated financial statements and notes for Financial Institutions, Inc. for Q2 2025 and FY2024 [Consolidated Statements of Financial Condition (Unaudited)](index=3&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition%20(Unaudited)) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change (vs. Dec 31, 2024) | | :-------------------- | :------------ | :---------------- | :------------------------ | | Total assets | $6,143,766 | $6,117,085 | +$26,681 | | Total liabilities | $5,542,098 | $5,548,101 | -$6,003 | | Total shareholders' equity | $601,668 | $568,984 | +$32,684 | [Consolidated Statements of Operations (Unaudited)](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20(Unaudited)) | Metric (in thousands, except per share) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total interest income | $82,867 | $78,788 | $163,918 | $157,201 | | Total interest expense | $33,745 | $37,595 | $67,932 | $75,926 | | Net interest income | $49,122 | $41,193 | $95,986 | $81,275 | | Provision (benefit) for credit losses | $2,562 | $2,041 | $5,490 | $(3,415) | | Total noninterest income | $10,617 | $24,014 | $20,990 | $34,915 | | Total noninterest expense | $35,682 | $33,020 | $69,367 | $87,033 | | Net income | $17,532 | $25,629 | $34,410 | $27,699 | | Net income available to common shareholders | $17,168 | $25,265 | $33,681 | $26,970 | | Basic EPS | $0.85 | $1.64 | $1.68 | $1.75 | | Diluted EPS | $0.85 | $1.62 | $1.66 | $1.73 | | Cash dividends declared per common share | $0.31 | $0.30 | $0.62 | $0.60 | [Consolidated Statements of Comprehensive Income (Unaudited)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Unaudited)) | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $17,532 | $25,629 | $34,410 | $27,699 | | Other comprehensive (loss) income, net of tax: | | | | | | Securities available for sale and transferred securities | $87 | $529 | $11,232 | $(6,635) | | Hedging derivative instruments | $(409) | $(205) | $(1,049) | $470 | | Pension and post-retirement obligations | $103 | $166 | $207 | $332 | | Total other comprehensive (loss) income, net of tax | $(219) | $490 | $10,390 | $(5,833) | | Comprehensive income | $17,313 | $26,119 | $44,800 | $21,866 | [Consolidated Statements of Changes in Shareholders' Equity (Unaudited)](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity%20(Unaudited)) Shareholders' equity increased by $32.7 million, driven by net income and other comprehensive income, partially offset by dividends - Total shareholders' equity increased by **$32.7 million** from $568.984 million at December 31, 2024, to $601.668 million at June 30, 2025, primarily due to net income and other comprehensive income, partially offset by cash dividends declared[19](index=19&type=chunk)[22](index=22&type=chunk) [Consolidated Statements of Cash Flows (Unaudited)](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) | Cash Flow Activity (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $4,280 | $47,964 | | Net cash (used in) provided by investing activities | $(28,399) | $46,895 | | Net cash provided by (used in) financing activities | $29,832 | $(72,954) | | Net increase in cash and cash equivalents | $5,713 | $21,905 | | Cash and cash equivalents, end of period | $93,034 | $146,347 | [Notes to Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) This section provides detailed notes to the unaudited consolidated financial statements [Basis of Presentation and Summary of Significant Accounting Policies](index=9&type=section&id=(1.)%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) The Company provides diversified financial services, exited the Pennsylvania auto market, wound down BaaS, and sold SDN Insurance Agency assets for a $13.7 million gain - The Company exited the Pennsylvania automobile market and is winding down its BaaS offerings, with approximately **$7 million of BaaS-related deposits** remaining at June 30, 2025[27](index=27&type=chunk) - On April 1, 2024, the Company sold the assets of SDN Insurance Agency, LLC, generating **$27 million in proceeds** and a pre-tax gain of **$13.7 million**[28](index=28&type=chunk) | Supplemental Cash Flow Information (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------------------------- | :----------------------------- | :----------------------------- | | Cash paid for interest | $65,762 | $83,951 | | Cash paid for income taxes | $0 | $3,107 | [Earnings Per Common Share (EPS)](index=11&type=section&id=(2.)%20EARNINGS%20PER%20COMMON%20SHARE%20(%22EPS%22)) This note reconciles earnings and shares for basic and diluted EPS, noting a public offering of 4.6 million common shares | EPS Metric (per share) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $0.85 | $1.64 | $1.68 | $1.75 | | Diluted EPS | $0.85 | $1.62 | $1.66 | $1.73 | - On December 13, 2024, the Company completed an underwritten public offering of **4,600,000 common shares** at $25.00 per share[40](index=40&type=chunk) [Investment Securities](index=12&type=section&id=(3.)%20INVESTMENT%20SECURITIES) The investment portfolio consists of AFS and HTM securities, with unrealized losses on AFS primarily due to market interest rates | Investment Securities (in thousands) | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :--------------------------------- | :----------------------- | :--------------------------- | | Securities available for sale | $916,149 | $911,105 | | Securities held to maturity | $81,555 | $104,556 | - The Company sold **$653.5 million of available-for-sale securities** in December 2024, incurring a pre-tax loss of **$100.2 million**, and reinvested proceeds into higher-yielding agency-wrapped investments[48](index=48&type=chunk) - At June 30, 2025, AFS securities had a net unrealized loss of **$46.5 million**, predominantly due to changes in market interest rates, with no allowance for credit losses recognized[56](index=56&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk) [Loans](index=17&type=section&id=(4.)%2

Financial Data and Key Metrics Changes - The company reported a 4% increase in net income available to common shareholders to $17.2 million and a 5% increase in diluted earnings per share compared to the linked quarter [4] - Net interest margin expanded by 14 and 62 basis points from the linked and year-ago quarters, respectively, with net interest income growth of approximately 519% [4] - The annualized return on average assets was 113 basis points, up three basis points from the first quarter, and the efficiency ratio was just below 60% [5] Business Line Data and Key Metrics Changes - Total loans at period end were $4.54 billion, consistent with March 31, while average loans increased by $47.9 million or 1% from the first quarter [5] - Total commercial loans were flat at $2.94 billion compared to March 31, but up 5% from June 30, 2024 [6] - Non-performing commercial loans declined by $7 million from March 31 to June 30, with $2.5 million of commercial net charge-offs reported in the quarter [7] Market Data and Key Metrics Changes - Loan growth has tapered in the Mid Atlantic region due to high competition and increased refinance activity for construction loans [9] - Residential lending was up modestly from the end of the linked quarter and flat year-over-year, with home equity lending up 44% year-to-date from the comparable period in 2024 [10] - Consumer indirect balances were down 2.3% year-over-year to $833.5 million at June 30, reflecting reduced consumer demand [10] Company Strategy and Development Direction - The company remains focused on community banking fundamentals, with strong retail and commercial banking franchises complemented by a growing wealth management business [25] - The company anticipates stronger lending opportunities in early 2026, stimulated by a recently passed tax bill and pent-up demand [9] - The company is actively managing its investment portfolio to balance duration, yield, and risk, with a focus on reinvesting expected loan cash flows into higher-yielding loans [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year loan growth of between 13%, supported by commercial lending in Upstate New York [8] - The effective tax rate is expected to fall between 17% to 19% for the year, including the impact of tax credit investments [21] - The company is focused on expense management to support positive operating leverage in 2025, with a full-year expense guidance of approximately $140 million [20] Other Important Information - Total deposits were down about 4% from March 31, 2025, reflecting typical seasonality and continued outflow of banking as a service deposits [12] - The company recorded a provision for credit losses of $2.6 million in the current quarter, down from $2.9 million in the linked quarter [21] - The common equity Tier one ratio increased by 46 basis points from March 31, indicating a strong capital position [23] Q&A Session Summary Question: Outlook for loan growth and regional opportunities - Management noted that Upstate New York markets are providing more robust opportunities compared to the Mid Atlantic area, with prepayment of construction loans impacting overall growth [29][31] Question: Provisioning levels and net charge-offs - The CFO indicated that the coverage ratio is expected to remain in the 104 to 108 basis points range for the rest of the year, despite higher charge-offs in the second quarter [32] Question: Expense management and guidance - Management confirmed that the full-year guidance of $140 million remains intact, with expectations of normalization in medical expenses due to stop-loss insurance [33]

Financial Performance & Guidance - The company reported net income available to common shareholders of $17.2 million for the second quarter of 2025[13] - Diluted earnings per common share increased by 4.9% from $0.81 in 1Q25 to $0.85 in 2Q25[13] - The company affirms full year 2025 NIM guidance of 3.45% to 3.55% and expects noninterest income of $40 million to $42 million[9] - Full year 2025 noninterest expense is projected to be approximately $140 million, with an efficiency ratio below 60%[9] Balance Sheet & Loan Portfolio - Total deposits were $5.16 billion, a decrease of $216.9 million, or 4.0%, from the previous quarter, but up $22.7 million, or 0.4%, year-over-year[13, 15] - Total loans amounted to $4.54 billion, showing a slight decrease from $4.55 billion in the first quarter of 2025[13] - Commercial loans totaled $2.94 billion with committed credit exposure of $3.90 billion at the end of the second quarter[28] - The consumer indirect auto loan portfolio was $833.5 million at the end of the second quarter[40] Asset Quality & Capital - Non-performing loans (NPLs) to total loans decreased to 0.72% at the end of the second quarter[13] - The allowance for credit losses on loans to total loans was 1.04% at the end of the second quarter[74] - The CET1 capital ratio was 10.84% at the end of the second quarter, up 81 bps from one year prior[79]

Executive Summary & Highlights [Second Quarter 2025 Financial Results](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Results) Q2 2025 net income increased from Q1, with diluted EPS of **$0.85** and a **$2.6 million provision for credit losses** Key Financial Results (Q2 2025 vs. Prior Periods) | Metric | Q2 2025 ($M) | Q1 2025 ($M) | Q2 2024 ($M) | | :-------------------------------------- | :----------- | :----------- | :----------- | | Net Income | 17.5 | 16.9 | 25.6 | | Net Income Available to Common S/H | 17.2 | 16.5 | 25.3 | | Diluted EPS | 0.85 | 0.81 | 1.62 | | Provision for Credit Losses | 2.6 | 2.9 | 2.0 | [Management Commentary](index=1&type=section&id=Management%20Commentary) Management highlighted **4% QoQ growth in net income available to common shareholders** and an efficiency ratio **below 60%**, driven by margin expansion - Net income available to common shareholders grew **4%** from the linked first quarter, driven by margin expansion, increased net interest income, and durable noninterest revenues[4](index=4&type=chunk) - The company maintained an efficiency ratio **below 60%** and reported annualized return on average assets of **1.13%** and return on average equity of **11.78%** for Q2 2025[4](index=4&type=chunk) - Total loans were **relatively flat QoQ**, as commercial business lending growth was offset by a reduction in consumer indirect balances, with expectations for **low single-digit full-year loan growth**[5](index=5&type=chunk) - Deposit balances reflect **typical seasonality** and the **wind-down of the Banking-as-a-Service (BaaS) offering**, with management focusing on prudent balance sheet stewardship and expense management[5](index=5&type=chunk) Financial Performance Analysis [Net Interest Income and Net Interest Margin](index=1&type=section&id=Net%20Interest%20Income%20and%20Net%20Interest%20Margin) Net interest income reached **$49.1 million** in Q2 2025, with net interest margin expanding to **3.49%** due to higher asset yields and lower liability costs Net Interest Income and Net Interest Margin Trends | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :------------------ | :----------- | :----------- | :----------- | | Net Interest Income | $49.1 million | $46.864 million | $41.193 million | | QoQ Change | +$2.3 million (+4.8%) | - | - | | YoY Change | +$7.9 million (+19.2%) | - | - | | Net Interest Margin | 3.49% | 3.35% | 2.87% | | QoQ Basis Point Change | +14 bps | - | - | | YoY Basis Point Change | +62 bps | - | - | - Average interest-earning assets were **flat QoQ** at **$5.65 billion**, with increased average loans offset by decreases in Federal Reserve cash and investment securities, and a YoY decrease of **$114.5 million**[8](index=8&type=chunk) - Average interest-bearing liabilities **increased $11.6 million QoQ** to **$4.52 billion**, primarily due to a rise in average time deposits, with a YoY decrease mainly due to the **wind-down of BaaS-related deposits**[9](index=9&type=chunk) [Noninterest Income](index=1&type=section&id=Noninterest%20Income) Noninterest income reached **$10.6 million** in Q2 2025, slightly up QoQ but lower YoY due to the prior year's insurance business sale Noninterest Income Trends | Metric | Q2 2025 ($M) | Q1 2025 ($M) | Q2 2024 ($M) | | :------------------ | :----------- | :----------- | :----------- | | Total Noninterest Income | 10.6 | 10.4 | 24.0 | | Investment Advisory Income | 2.9 | 2.7 | 2.8 | | COLI Income | 3.0 | 2.8 | 1.4 | | Net Gain on Sale of Insurance Business | - | - | 13.5 | - COLI income **increased by $1.6 million YoY** due to the restructuring of a portion of the COLI portfolio into higher-yielding separate account policies in January 2025[13](index=13&type=chunk) - Income from investments in limited partnerships **decreased by $108 thousand QoQ** and **$496 thousand YoY**, reflecting fluctuations based on underlying investment performance[13](index=13&type=chunk) [Noninterest Expense](index=3&type=section&id=Noninterest%20Expense) Noninterest expense rose to **$35.7 million** in Q2 2025, driven by higher salaries, occupancy costs from an ATM conversion, and technology initiatives Noninterest Expense Trends | Metric | Q2 2025 ($M) | Q1 2025 ($M) | Q2 2024 ($M) | | :------------------------ | :----------- | :----------- | :----------- | | Total Noninterest Expense | 35.7 | 33.7 | 33.0 | | Salaries & Employee Benefits | 18.1 | 16.9 | 15.8 | | Occupancy & Equipment | 4.0 | 3.6 | 3.4 | | Computer & Data Processing | 5.9 | 5.5 | 5.3 | - Salaries and employee benefits **increased by $1.2 million QoQ** due to higher health insurance benefits and **$2.3 million YoY** primarily due to annual merit increases[13](index=13&type=chunk) - Professional services expenses **decreased QoQ** due to timing of audit-related expenses and **YoY** due to legal expenses incurred in Q2 2024 related to a deposit-related fraud event[13](index=13&type=chunk)[14](index=14&type=chunk) [Income Taxes](index=4&type=section&id=Income%20Taxes) Income tax expense was **$4.0 million** in Q2 2025, with an effective tax rate of **18.4%**, influenced by pre-tax earnings and tax credit investments Income Tax Expense and Effective Tax Rate | Metric | Q2 2025 ($M) | Q1 2025 ($M) | Q2 2024 ($M) | | :------------------ | :----------- | :----------- | :----------- | | Income Tax Expense | 4.0 | 3.7 | 4.5 |\n| Effective Tax Rate | 18.4% | 18.2% | 15.0% | - The company recognized federal and state tax benefits of **$1.1 million** in Q2 2025 from tax credit investments, consistent with Q1 2025[15](index=15&type=chunk) Balance Sheet and Capital Management [Balance Sheet Overview](index=4&type=section&id=Balance%20Sheet%20Overview) Total assets at June 30, 2025, were **$6.14 billion**, decreasing QoQ but flat YoY, with investment securities also slightly down QoQ Total Assets and Investment Securities | Metric | June 30, 2025 ($B) | March 31, 2025 ($B) | June 30, 2024 ($B) | | :---------------------- | :----------------- | :------------------ | :----------------- | | Total Assets | 6.14 | 6.34 | 6.13 | | Investment Securities | 1.01 | 1.04 | 1.00 | [Loans and Deposits](index=1&type=section&id=Loans%20and%20Deposits) Total loans decreased slightly QoQ to **$4.54 billion** but increased YoY, while total deposits fell QoQ to **$5.16 billion** due to seasonal outflows and BaaS wind-down Loans and Deposits Trends | Metric | June 30, 2025 ($B) | March 31, 2025 ($B) | June 30, 2024 ($B) | | :-------------- | :----------------- | :------------------ | :----------------- | | Total Loans | 4.54 | 4.55 | 4.46 | | QoQ Change | -0.4% | - | - | | YoY Change | +1.7% | - | - | | Total Deposits | 5.16 | 5.37 | 5.13 | | QoQ Change | -4.0% | - | - | | YoY Change | +0.4% | - | - | - The decrease in deposits from Q1 2025 was primarily due to **seasonally lower public deposit balances** and the **outflow of BaaS-related deposits**, which **reduced from $55 million to $7 million QoQ**[18](index=18&type=chunk) Loan Portfolio Composition (June 30, 2025) | Loan Type | Amount ($M) | | :------------------------ | :---------- | | Commercial business | 726.2 | | Commercial mortgage | 2,220.0 | | Residential real estate | 647.2 | | Consumer indirect | 833.5 | [Shareholders' Equity and Capital Ratios](index=4&type=section&id=Shareholders%27%20Equity%20and%20Capital%20Ratios) Shareholders' equity rose to **$601.7 million** at June 30, 2025, with increased book values per share and all regulatory capital ratios exceeding requirements Shareholders' Equity and Per Share Data | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :---------------------------- | :------------ | :------------- | :------------ | | Shareholders' Equity ($M) | 601.7 | 589.9 | 467.7 | | Common Book Value Per Share | $29.03 | $28.48 | $29.11 | | Tangible Common Book Value Per Share | $26.02 | $25.46 | $25.17 | Capital Ratios | Ratio | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :---------------------------- | :------------ | :------------- | :------------ | | Common Equity to Assets | 9.51% | 9.03% | 7.34% | | Tangible Common Equity to Tangible Assets | 8.61% | 8.15% | 6.41% | | Leverage Ratio | 9.45% | 9.24% | 8.61% | | Common Equity Tier 1 Capital Ratio | 10.84% | 10.38% | 10.03% | | Tier 1 Capital Ratio | 11.17% | 10.71% | 10.36% | | Total Risk-Based Capital Ratio | 13.27% | 13.09% | 12.65% | - The company declared a common stock dividend of **$0.31 per share**, consistent with the linked quarter and representing **over 36%** of Q2 net income to common shareholders[24](index=24&type=chunk) [Subordinated Debt](index=6&type=section&id=Subordinated%20Debt) The company called **$10.0 million** of its **$40.0 million** fixed-to-floating subordinated debt in April 2025, with remaining notes to be retained and evaluated - The company called **$10.0 million** of its **$40.0 million** fixed-to-floating subordinated debt in April 2025[25](index=25&type=chunk) - The remaining **$30.0 million** of April 2015 notes and **$35.0 million** of October 2020 notes are expected to be retained, with repricing scheduled for October 2025 for the latter[25](index=25&type=chunk) Credit Quality [Non-Performing Loans and Assets](index=6&type=section&id=Non-Performing%20Loans%20and%20Assets) Non-performing loans decreased QoQ to **$32.4 million** (0.72% of total loans) at June 30, 2025, due to reductions from a foreclosed loan and partial charge-off Non-Performing Loans and Assets Trends | Metric | June 30, 2025 ($M) | March 31, 2025 ($M) | June 30, 2024 ($M) | | :------------------------------ | :----------------- | :------------------ | :----------------- | | Non-Performing Loans | 32.4 | 40.0 | 25.2 | | Non-Performing Loans to Total Loans | 0.72% | 0.88% | 0.57% | | Non-Performing Assets to Total Assets | 0.53% | 0.63% | 0.41% | - The QoQ decrease in non-performing loans reflects a **$3.7 million reduction** from a foreclosed participated loan and a **$1.9 million partial charge-off** of a credit facility, both related to a previously disclosed commercial business relationship[26](index=26&type=chunk) [Allowance for Credit Losses and Provision](index=1&type=section&id=Allowance%20for%20Credit%20Losses%20and%20Provision) The allowance for credit losses on loans to total loans was **1.04%** at June 30, 2025, with a **$2.6 million provision** in Q2, influenced by improved loss rates Allowance for Credit Losses and Provision Trends | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :-------------------------------------- | :------------ | :------------- | :------------ | | Allowance for Credit Losses on Loans to Total Loans | 1.04% | 1.08% | 0.99% | | Provision for Credit Losses ($M) | 2.6 | 2.9 | 2.0 | | Allowance for Credit Losses on Loans to Non-Performing Loans | 146% | 122% | 174% | - The provision for credit losses on loans was **$2.4 million** in Q2 2025, while the allowance for unfunded commitments totaled **$179 thousand**[28](index=28&type=chunk) - The ratio of allowance for credit losses on loans to non-performing loans **improved to 146%** at June 30, 2025, from 122% at March 31, 2025, reflecting the decrease in non-performing loans[29](index=29&type=chunk) [Net Charge-offs](index=6&type=section&id=Net%20Charge-offs) Net charge-offs increased to **$4.1 million**, or an annualized **0.36% of average loans**, in Q2 2025, rising from prior quarters Net Charge-offs Trends | Metric | Q2 2025 ($M) | Q1 2025 ($M) | Q2 2024 ($M) | | :-------------------------------------- | :----------- | :----------- | :----------- | | Net Charge-offs | 4.1 | 2.4 | 1.1 | | Net Charge-offs to Average Loans (annualized) | 0.36% | 0.21% | 0.10% | Corporate Information [Subsequent Events](index=8&type=section&id=Subsequent%20Events) The company will evaluate subsequent events through its Q2 2025 Form **10-Q** filing, adjusting financial statements as required by **GAAP** - The company will evaluate subsequent events through the **10-Q filing** and adjust financial statements as required by **GAAP**[30](index=30&type=chunk)[31](index=31&type=chunk) [Conference Call Details](index=8&type=section&id=Conference%20Call%20Details) An earnings conference call and audio webcast is scheduled for **July 25, 2025, at 8:30 a.m. ET**, featuring the President, CEO, and CFO - An earnings conference call and audio webcast is scheduled for **July 25, 2025, at 8:30 a.m. ET**, accessible via the company's website or a dial-in number[32](index=32&type=chunk) [About Financial Institutions, Inc.](index=8&type=section&id=About%20Financial%20Institutions%2C%20Inc.) Financial Institutions, Inc. is a financial holding company with approximately **$6.1 billion in assets**, providing banking and wealth management services - Financial Institutions, Inc. (NASDAQ: FISI) is a financial holding company with approximately **$6.1 billion in assets**[33](index=33&type=chunk) - The company operates through **Five Star Bank** (consumer and commercial banking) and **Courier Capital, LLC** (investment management, consulting, and retirement plan services)[33](index=33&type=chunk) [Non-GAAP Financial Information](index=8&type=section&id=Non-GAAP%20Financial%20Information) Non-GAAP financial measures are included and reconciled in **Appendix A** to provide additional insights, but should not replace **GAAP** measures - The press release contains **non-GAAP financial measures**, reconciled in **Appendix A**, to provide investors with useful information for understanding financial performance and trends[34](index=34&type=chunk)[35](index=35&type=chunk) - Non-GAAP measures are used for internal planning and forecasting but should **not be considered a substitute for GAAP measures** due to inherent limitations and lack of standardization[35](index=35&type=chunk) [Safe Harbor Statement](index=9&type=section&id=Safe%20Harbor%20Statement) This document contains forward-looking statements subject to significant risks and uncertainties, with actual results potentially differing materially - The press release includes forward-looking statements that involve **significant risks and uncertainties**, such as changes in interest rates, inflation, deposit flows, credit losses, and regulatory environment[36](index=36&type=chunk) - Actual results could **differ materially from expectations**, and all forward-looking statements are qualified by cautionary statements and risk factors detailed in SEC filings[36](index=36&type=chunk) Selected Financial Information (Unaudited) [Selected Balance Sheet Data](index=10&type=section&id=Selected%20Balance%20Sheet%20Data) This section presents a detailed, multi-quarter breakdown of key balance sheet items, including cash, investment securities, loans, deposits, and equity Selected Balance Sheet Data (Amounts in thousands) | SELECTED BALANCE SHEET DATA: | June 30, 2025 | March 31, 2025 | Dec 31, 2024 | June 30, 2024 | | :--------------------------- | :------------ | :------------- | :----------- | :------------ | | Cash and cash equivalents | $93,034 | $167,352 | $249,569 | $146,347 | | Total investment securities | 1,008,270 | 1,040,097 | 1,008,095 | 999,906 | | Total loans | 4,536,002 | 4,553,278 | 4,402,989 | 4,461,468 | | Total assets | 6,143,766 | 6,340,492 | 6,156,317 | 6,131,772 | | Total deposits | 5,156,014 | 5,372,910 | 5,306,601 | 5,133,321 | | Shareholders' equity | 601,668 | 589,928 | 500,342 | 467,667 | | Common book value per share | $29.03 | $28.48 | $31.22 | $29.11 | [Selected Statement of Operations Data](index=11&type=section&id=Selected%20Statement%20of%20Operations%20Data) This section details income statement data, including interest income/expense, net interest income, provision for credit losses, noninterest items, and key financial ratios Selected Statement of Operations Data (Amounts in thousands) | SELECTED STATEMENT OF OPERATIONS DATA: | Q2 2025 ($M) | Q1 2025 ($M) | Q2 2024 ($M) | | :------------------------------------- | :----------- | :----------- | :----------- | | Interest income | $82,867 | $81,051 | $78,788 | | Interest expense | 33,745 | 34,187 | 37,595 | | Net interest income | 49,122 | 46,864 | 41,193 | | Provision (benefit) for credit losses | 2,562 | 2,928 | 2,041 | | Total noninterest income (loss) | 10,617 | 10,373 | 24,014 | | Total noninterest expense | 35,682 | 33,685 | 33,020 | | Net income | 17,532 | 16,878 | 25,629 | | Diluted EPS | $0.85 | $0.81 | $1.62 | | Return on average assets (annualized) | 1.13% | 1.10% | 1.68% | | Efficiency ratio | 59.68% | 58.79% | 50.58% | - The **efficiency ratio** is calculated by dividing noninterest expense by net revenue (sum of net interest income and noninterest income before net gains on investment securities)[41](index=41&type=chunk) [Selected Average Balances and Yields](index=12&type=section&id=Selected%20Average%20Balances%20and%20Yields) This table presents average balances for interest-earning assets, loans, deposits, and liabilities, along with their yields and rates Selected Average Balances and Yields (Amounts in thousands) | SELECTED AVERAGE BALANCES: | Q2 2025 ($M) | Q1 2025 ($M) | Q2 2024 ($M) | | :------------------------- | :----------- | :----------- | :----------- | | Total interest-earning assets | $5,651,374 | $5,651,241 | $5,765,867 | | Total loans | 4,540,719 | 4,493,825 | 4,436,936 | | Total deposits | 5,239,207 | 5,213,376 | 5,234,262 | | Total interest-bearing liabilities | 4,518,370 | 4,506,774 | 4,548,193 | | SELECTED AVERAGE YIELDS: | | | | | Investment securities | 4.34% | 4.25% | 2.17% | | Loans | 6.26% | 6.20% | 6.40% | | Total interest-earning assets | 5.88% | 5.80% | 5.50% | | Total interest-bearing liabilities | 3.00% | 3.07% | 3.32% | | Net interest margin | 3.49% | 3.35% | 2.87% | - Interest on tax-exempt securities is calculated on a **tax-equivalent basis** assuming a Federal income tax rate of **21%**[43](index=43&type=chunk) [Asset Quality Data](index=13&type=section&id=Asset%20Quality%20Data) This section details asset quality metrics, including allowance for credit losses, net loan charge-offs, non-performing loans, and key ratios Asset Quality Data (Amounts in thousands) | ASSET QUALITY DATA: | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--------------------------------------- | :------------ | :------------- | :------------ | | Allowance for Credit Losses – Loans (Ending balance) | $47,291 | $48,964 | $43,952 | | Total net charge-offs (recoveries) | 4,050 | 2,369 | 1,122 | | Provision (benefit) for credit losses – loans | 2,377 | 3,292 | 1,999 | | Total non-performing loans | 32,436 | 40,018 | 25,209 | | Total non-performing assets | $32,578 | $40,214 | $25,272 | | Allowance for credit losses – loans to total loans | 1.04% | 1.08% | 0.99% | | Total non-performing loans to total loans | 0.72% | 0.88% | 0.57% | | Allowance for credit losses – loans to non-performing loans | 146% | 122% | 174% | Appendix A — Reconciliation to Non-GAAP Financial Measures This appendix reconciles non-GAAP financial measures, including tangible assets, tangible common equity, and related ratios, to comparable GAAP measures Reconciliation to Non-GAAP Financial Measures (Amounts in thousands) | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :-------------------------------------- | :------------ | :------------- | :------------ | | Total assets | $6,143,766 | $6,340,492 | $6,131,772 | | Less: Goodwill and other intangible assets, net | 60,564 | 60,651 | 60,979 | | Tangible assets | $6,083,202 | $6,279,841 | $6,070,793 | | Common shareholders' equity | $584,383 | $572,643 | $450,375 | | Tangible common equity | $523,819 | $511,992 | $389,396 | | Tangible common equity to tangible assets | 8.61% | 8.15% | 6.41% | | Tangible common book value per share | $26.02 | $25.46 | $25.17 | | Return on average tangible common equity | 13.31% | 13.36% | 27.51% | - **Tangible common equity to tangible assets** is calculated by dividing tangible common equity by tangible assets[45](index=45&type=chunk) - **Return on average tangible common equity** is calculated by annualizing net income available to common shareholders and dividing it by average tangible common equity[46](index=46&type=chunk)

Core Viewpoint - Financial Institutions, Inc. reported a net income of $17.5 million for Q2 2025, reflecting a 4% increase from Q1 2025 but a decrease from Q2 2024, driven by margin expansion and increased net interest income [2][4]. Financial Performance - Net income for Q2 2025 was $17.5 million, compared to $16.9 million in Q1 2025 and $25.6 million in Q2 2024 [2]. - Net income available to common shareholders was $17.2 million, or $0.85 per diluted share, up from $16.5 million, or $0.81 per diluted share in Q1 2025, but down from $25.3 million, or $1.62 per diluted share in Q2 2024 [2]. - The company recorded a provision for credit losses of $2.6 million in Q2 2025, down from $2.9 million in Q1 2025 and up from $2.0 million in Q2 2024 [2][27]. Revenue and Margin - Net interest income increased to $49.1 million in Q2 2025, up $2.3 million from Q1 2025 and $7.9 million from Q2 2024 [6][8]. - The net interest margin was 3.49% in Q2 2025, an increase of 14 basis points from Q1 2025 and 62 basis points from Q2 2024 [8][10]. Loan and Deposit Trends - Total loans were $4.54 billion at June 30, 2025, a decrease of $17.3 million, or 0.4%, from March 31, 2025, but an increase of $74.5 million, or 1.7%, from June 30, 2024 [8][17]. - Total deposits were $5.16 billion at June 30, 2025, down $216.9 million, or 4.0%, from March 31, 2025, primarily due to seasonal public deposit outflows [8][18]. Expense Management - Noninterest expense was $35.7 million in Q2 2025, compared to $33.7 million in Q1 2025 and $33.0 million in Q2 2024 [12]. - The company aims to maintain an efficiency ratio below 60% and is focused on expense management to support positive operating leverage in 2025 [4][5]. Credit Quality - Non-performing loans were $32.4 million, or 0.72% of total loans, at June 30, 2025, down from $40.0 million, or 0.88% at March 31, 2025 [25]. - The allowance for credit losses on loans to total loans ratio was 1.04% at June 30, 2025, compared to 1.08% at March 31, 2025 [26]. Capital Management - Total assets were $6.14 billion at June 30, 2025, down $196.7 million from March 31, 2025 [17]. - Shareholders' equity was $601.7 million at June 30, 2025, an increase from $589.9 million at March 31, 2025 [20]. Dividend and Shareholder Returns - The company declared a common stock dividend of $0.31 per share, consistent with the linked quarter and reflecting a 3.3% increase over the year-ago quarter [23].

Core Viewpoint - Financial Institutions, Inc. is set to release its second quarter results for 2025 on July 24, 2025, after market close, indicating ongoing financial performance tracking [1]. Group 1: Earnings Release Information - The earnings conference call will take place on July 25, 2025, at 8:30 a.m. Eastern Time, hosted by the President and CEO, Martin K. Birmingham, and CFO, W. Jack Plants II [2]. - Participants in the U.S. can join the call by dialing 1-833-470-1428 with access code 652423, and a live webcast will be available on the company's website [2]. Group 2: Company Overview - Financial Institutions, Inc. is a financial holding company with approximately $6.3 billion in assets as of March 31, 2025, providing banking and wealth management services [3]. - The company's subsidiary, Five Star Bank, offers consumer and commercial banking services across Western and Central New York, along with a commercial loan production office in the Mid-Atlantic region [3]. - Courier Capital, LLC, another subsidiary, provides customized investment management and financial planning services to a diverse clientele, including individuals, businesses, and non-profits [3].

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