Core Viewpoint - Financial Institutions, Inc. is set to release its third-quarter financial results on October 23, 2025, after market close, indicating ongoing transparency and communication with investors [1]. Group 1: Earnings Release Information - The earnings conference call will take place on October 24, 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 and using access code 807362, with a live webcast available on the company's website [2]. Group 2: Company Overview - Financial Institutions, Inc. is a financial holding company with approximately $6.1 billion in assets as of June 30, 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, as well as 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].

Core Viewpoint - Financial Institutions announced a share repurchase program for up to 1,006,379 shares of common stock, representing approximately 5% of the company's outstanding stock [1] Summary by Relevant Sections - **Share Repurchase Program** - The company plans to repurchase up to 1,006,379 shares of common stock [1] - This amount represents around 5% of the total outstanding shares [1] - The buyback authorization is effective from September 18 [1]

Core Viewpoint - Financial Institutions, Inc. has announced a new share repurchase program for up to 1,006,379 shares, representing approximately 5% of its outstanding common shares, reflecting the Board's confidence in the company's financial performance and strategic priorities [1][2]. Summary by Sections Share Repurchase Program - The new share repurchase program replaces the previous one authorized in June 2022 and is effective from September 18, 2025 [1]. - The program allows for repurchases in open market transactions or private transactions, with no expiration date [2]. Management's Perspective - The CEO emphasized that the decision to authorize a larger repurchase program demonstrates confidence in the company's ability to deliver consistent financial results and long-term value to shareholders [2]. - The program is designed to provide flexibility in returning capital to investors while continuing to invest in growth across various business lines [2]. Repurchase Conditions - Repurchases will be made at management's discretion based on factors such as stock price, market conditions, and the company's financial performance [3][4]. - The program does not obligate the company to repurchase any shares and can be modified or discontinued by the Board at any time [4]. Company Overview - Financial Institutions, Inc. is a financial holding company with approximately $6.1 billion in assets as of June 30, 2025, offering banking and wealth management services [5]. - Its subsidiary, Five Star Bank, provides consumer and commercial banking services across Western and Central New York, while Courier Capital, LLC offers investment management and financial planning services [5].

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].

Group 1 - The firm Crude Value Insights, previously viewed positively, has been downgraded due to changing market conditions [1] - Crude Value Insights focuses on cash flow and the potential for value and growth in the oil and natural gas sector [1] - The service offers subscribers access to a model account with over 50 stocks, detailed cash flow analyses of exploration and production firms, and live discussions about the sector [2] Group 2 - A two-week free trial is available for new subscribers to explore the offerings related to oil and gas investments [3]