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]

Revenue and Income - Commercial business revenue increased to $17 million in Q1 2025 from $4 million in Q1 2024[228] - Total interest income rose by $2.6 million, or 2.6%, driven by a $7.4 million increase in rates despite a $1.1 million decrease in volume[230] - Total noninterest income decreased to $10.4 million in Q1 2025 from $10.9 million in Q1 2024, primarily due to the sale of the insurance subsidiary[234] - Investment advisory income increased by $155 thousand, or 6%, to $2.7 million in Q1 2025 compared to Q1 2024[235] - Income tax expense for Q1 2025 was $3.7 million, up from $356 thousand in Q1 2024, reflecting higher pre-tax income[243] Expenses and Efficiency - Total noninterest expense decreased significantly to $33.7 million in Q1 2025 from $54 million in Q1 2024, largely due to lower salaries and professional services expenses[239] - The efficiency ratio improved to 58.79% in Q1 2025 from 105.77% in Q1 2024, indicating better resource allocation[242] Credit Losses and Loan Portfolio - Provision for credit losses was $2.9 million in Q1 2025, compared to a benefit of $5.5 million in Q1 2024, reflecting loan growth and increased specific reserves[232] - The allowance for credit losses on loans was $48.964 million as of March 31, 2025, compared to $48.041 million at December 31, 2024[258] - The allowance for credit losses on loans increased to $49.0 million at March 31, 2025, up from $43.1 million at March 31, 2024, primarily due to increased loan balances and qualitative factors[264] - Non-performing loans decreased by $1.4 million to $40.0 million at March 31, 2025, compared to $41.4 million at March 31, 2024, representing 0.88% of total loans[271] - The ratio of allowance for credit losses to total loans was 1.08% at March 31, 2025, compared to 0.60% at March 31, 2024[264] - Total loans amounted to $4.55 billion, reflecting an increase of $74.1 million from $4.48 billion at December 31, 2024[258] - The composition of the loan portfolio included commercial business loans of $709.1 million (15.6% of total loans), up $43.8 million (7%) from December 31, 2024[258] - Total commercial mortgage loans reached $2.23 billion, representing 49% of total loans, with an increase of $28.7 million (1.3%) from $2.20 billion as of December 31, 2024[258] - The total consumer loans were $1.62 billion, or 35% of total loans, with a slight increase of $1.6 million from December 31, 2024[259] Deposits and Borrowings - Total deposits increased by $268.2 million, or 5%, to $5.37 billion as of March 31, 2025, compared to $5.10 billion at December 31, 2024[281] - Non-public deposits totaled $3.15 billion, representing 59% of total deposits as of March 31, 2025, down from 63% at December 31, 2024[282] - Public deposits increased to $1.22 billion, representing 23% of total deposits as of March 31, 2025, compared to 21% at December 31, 2024[283] - Reciprocal deposits rose to $796.6 million, accounting for 15% of total deposits as of March 31, 2025, up from $746.7 million at December 31, 2024[284] - Brokered deposits increased significantly to $204.3 million, representing 4% of total deposits as of March 31, 2025, compared to 2% at December 31, 2024[285] - Short-term borrowings decreased to $55 million as of March 31, 2025, down from $99 million at December 31, 2024[287] - Long-term borrowings remained stable at $124.9 million as of March 31, 2025, compared to $124.8 million at December 31, 2024[286] Capital and Liquidity - Total regulatory capital was $701.6 million as of March 31, 2025, with a total risk-based capital ratio of 13.09%[308] - Common Equity Tier 1 (CET1) capital was $556.7 million, representing a CET1 ratio of 10.38% as of March 31, 2025[308] - Shareholders' equity increased to $589.9 million at March 31, 2025, up $20.9 million from $569.0 million at December 31, 2024[304] - The company is classified as "well-capitalized" under the Basel III Capital Rules as of March 31, 2025[310] - The company actively manages liquidity to meet financial obligations, with structural liquidity ratios compliant with regulatory requirements[295] Investment Securities - The total investment securities portfolio was $1.1 billion as of March 31, 2025, with an increase in available-for-sale securities[245] - The available-for-sale investment securities portfolio had a net unrealized loss of $46.6 million at March 31, 2025, down from $61.6 million at December 31, 2024[246] - The Agency MBS portfolio as of March 31, 2025, had an aggregate fair value of $313.7 million with unrealized losses totaling $50.9 million[251] - 37 of the AFS securities were in an unrealized loss position for 12 months or longer, with unrealized losses of $48.9 million[251] - The fair value of non-Agency MBS was $359 thousand as of March 31, 2025, with no unrealized loss position[253] - The company does not consider any of the unrealized losses on Agency MBS as credit-related as of March 31, 2025[252] Economic Value and Interest Rate Sensitivity - Economic value of equity (EVE) at March 31, 2025 is $867,977, a decrease of $14,453 (-1.67%) from the pre-shock scenario compared to December 31, 2024[323] - Under the -200 basis points scenario, EVE changes by -0.33% to $865,086 at March 31, 2025, while it increases by 0.57% to $908,905 at December 31, 2024[323] - The sensitivity in the down rate shock scenarios to EVE becomes more negative at March 31, 2025, due to increased borrowings and a shift in deposit mix[323] - The overall value increase of the loan portfolio at March 31, 2025 is offset by deposits, leading to a decrease in EVE compared to December 31, 2024[323] - The estimated changes to net interest income over the 12-month period ending March 31, 2026, show a decrease of $17,486 (5.62%) under -300 bp scenario and an increase of $2,046 (1.02%) under +100 bp scenario[318] - The estimated changes to net interest income do not consider balance sheet growth or changes in the balance sheet mix[318]

Financial Data and Key Metrics Changes - Net interest income increased by over 12% from the fourth quarter and 17% year over year, with net interest margin expanding by 44 and 57 basis points respectively [4][5] - Non-interest income was $10,400,000, supported by enhancements to the company-owned life insurance portfolio and increased investment advisory income [5] - Net income for the quarter was $16,900,000, with diluted EPS at $0.81, and return on average common equity at 11.92% [16][24] Business Line Data and Key Metrics Changes - Total loans increased by 1.7% during the quarter, driven by commercial and industrial (C&I) and commercial real estate (CRE) lending [7] - Commercial business loans rose by 6.6% during the quarter, while commercial mortgage loans increased by 1.3% [9] - Consumer indirect balances were up nearly 1% from December 31, but down 7% year over year [11] Market Data and Key Metrics Changes - Deposits increased by 5.3% from year-end 2024, driven by higher public deposit balances and an increase in brokered deposits [13] - Nonperforming loans declined to $40,000,000, primarily related to two commercial relationships [10] Company Strategy and Development Direction - The company is focused on maintaining momentum from its capital raise and investment securities restructuring to deliver strong results throughout 2025 [5][24] - A new executive has joined the team to enhance customer growth and service excellence across the retail network [25][26] Management Comments on Operating Environment and Future Outlook - Management expressed caution regarding the uncertain economic landscape, particularly concerning tariffs, inflation, and interest rates [8][9] - The company maintains a conservative outlook for loan growth, expecting it to be concentrated in the first half of the year due to economic uncertainties [9][33] Other Important Information - The company expects non-interest income to be between $10,000,000 to $10,500,000 per quarter for 2025, reflecting an upward revision [19] - The provision for credit losses was $2,900,000, down from $6,500,000 in the linked quarter, with a net charge-off ratio of 21 basis points [21][23] Q&A Session Summary Question: Loan growth outlook for the year - Management is comfortable with their guidance, noting that uncertainty has led customers to pause investments [32][33] Question: NIM guidance and levers for improvement - Key levers include cash flow from the portfolio and deposit repricing, with CDs maturing at an average cost of about 4.5% [35][39] Question: COLI expected income over the next quarters - COLI income is expected to be elevated in the second quarter and then normalize, but at a higher level than previous quarters [42][44] Question: Provision outlook for credit - The guided ACL to average loans ratio is expected to hover around 107 to 108 basis points for the rest of the year [46]

Financial Data and Key Metrics Changes - Net interest income increased by more than 12% from the fourth quarter and 17% year over year, with net interest margin expanding by 44 and 57 basis points respectively [4] - Non-interest income was $10,400,000, supported by enhancements to the company-owned life insurance portfolio and increased investment advisory income [5] - Net income for the first quarter was $16,900,000, with diluted EPS at $0.81, driven by improved net interest income and effective non-interest expense management [16] - The efficiency ratio was 59%, consistent with the full-year target of below 60% [5] Business Line Data and Key Metrics Changes - Total loans increased by 1.7% during the quarter, driven by both commercial and industrial (C&I) and commercial real estate (CRE) lending [7] - Commercial business loans rose by 6.6% during the quarter, while commercial mortgage loans increased by 1.3% [8] - Consumer indirect balances were up just shy of 1% from December 31, but down 7% year over year [10] - Residential lending decreased by 1% from both the linked and year-ago quarters due to high competition and tight housing inventory [12] Market Data and Key Metrics Changes - Deposits increased by 5.3% from year-end 2024, driven by seasonally higher public deposit balances and an increase in brokered deposits [12] - Cash-related deposits totaled approximately $55,000,000 as of March 31, 2025, with expectations for a portion to remain on the balance sheet into the third quarter [13] Company Strategy and Development Direction - The company is focused on driving internal efficiency, controlling credit extension, and maintaining a disciplined approach to management [6] - The strategic focus includes sustainable customer growth and service excellence across its retail network and banking locations [25] - The company plans to continue evaluating options for subordinated debt facilities moving forward [14] Management's Comments on Operating Environment and Future Outlook - Management expressed a cautious outlook for the industry due to uncertainties in the political and macroeconomic environments [6] - The company remains committed to a low single-digit growth guidance for 2025, reflecting a conservative approach amid economic volatility [8] - Management reiterated confidence in maintaining profitability and credit discipline despite the uncertain economic landscape [24] Other Important Information - The company welcomed a new executive with extensive experience in consumer banking, expected to contribute to strategic objectives [25] - The company filed its 2025 proxy statement, with new directors nominated to enhance corporate governance [26] Q&A Session Summary Question: Loan growth outlook for the year - Management is comfortable with their guidance, noting that uncertainty has led customers to pause anticipated investments [30][31] Question: NIM guidance and levers for improvement - Key levers include cash flow from the portfolio and deposit repricing, with about $500,000,000 of CDs maturing in the next nine months [33][34] Question: Expected COLI income over the next quarters - COLI income is expected to be elevated in the second quarter before normalizing, with a significant increase in yield due to restructuring [41][42] Question: Provision outlook for credit - The guided ACL to average loans ratio is expected to hover around 107 to 108 basis points for the rest of the year [45]

Financial Data and Key Metrics Changes - Net interest income increased by more than 12% from the fourth quarter and 17% year over year, with net interest margin expanding by 44 and 57 basis points respectively [4] - Non-interest income was $10,400,000, supported by enhancements to the company-owned life insurance portfolio and increased investment advisory income [5] - Net income for the first quarter was $16,900,000, with diluted EPS at $0.81, reflecting improved net interest income and effective non-interest expense management [15] - The efficiency ratio was 59%, consistent with the full-year target of below 60% [5] - Annualized return on average assets was 110 basis points, while return on average equity was 11.82% [5] Business Line Data and Key Metrics Changes - Total loans increased by 1.7% during the quarter, driven by both commercial and industrial (C&I) and commercial real estate (CRE) lending [6] - Commercial business loans rose by 6.6% during the quarter, while commercial mortgage loans increased by 1.3% [8] - Consumer indirect lending balances were up just shy of 1% from December 31, but down 7% year over year [10] - Residential lending decreased by 1% from both the linked and year-ago quarters due to high competition and tight housing inventory [12] Market Data and Key Metrics Changes - Deposits increased by 5.3% from year-end 2024, driven by seasonally higher public deposit balances and an increase in brokered deposits [12] - Cash-related deposits totaled approximately $55,000,000 as of March 31, 2025, with expectations for a portion to remain on the balance sheet into the third quarter [13] Company Strategy and Development Direction - The company is focused on maintaining momentum from its capital raise and investment securities restructuring to deliver strong results and profitability throughout 2025 [5] - A new executive was welcomed to the team to enhance customer growth and service excellence across the retail network [25] - The company intends to remain disciplined in credit extension and management amid a challenging economic environment [6] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding loan growth, indicating that uncertainty in the economic landscape may lead to a pause in anticipated investments by customers [30] - The company maintains a low single-digit growth guidance for 2025, reflecting a conservative approach given inflationary pressures and economic uncertainty [8] - Management reiterated a commitment to effective expense management while investing in people, processes, and technology for future growth [20] Other Important Information - The company expects non-interest income to be between $10,000,000 to $10,500,000 per quarter for 2025, an increase from previous guidance [18] - The provision for credit losses was $2,900,000 in the current quarter, down from $6,500,000 in the linked quarter [21] Q&A Session Summary Question: Loan growth outlook and conservativeness - Management is comfortable with their guidance, noting that uncertainty has led customers to pause investments [30] Question: NIM guidance and levers for improvement - Key levers include cash flow from the portfolio and deposit repricing, with about $500,000,000 of CDs maturing in the next nine months [33][34] Question: COLI expected income over the next quarters - COLI income is expected to be elevated in Q2 and then normalize, but at a higher level than previous quarters [40][42] Question: Provision outlook for credit - The guided ACL to average loans ratio is expected to hover around 107 to 108 basis points for the rest of the year [43]

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]

Financial Performance - The Company reported net income of $16.9 million for Q1 2025, a significant recovery from a net loss of $82.8 million in Q4 2024 and an increase from net income of $2.1 million in Q1 2024[2] - Noninterest income for Q1 2025 was $10.4 million, a recovery from a noninterest loss of $91.0 million in Q4 2024[11] - Net income available to common shareholders in Q1 2025 was $16,513,000, compared to a loss of $83,176,000 in Q4 2024[39] - Earnings per share (diluted) for Q1 2025 was $0.81, recovering from a loss of $5.07 in Q4 2024[39] - Return on average assets (annualized) for Q1 2025 was 1.10%, a recovery from -5.38% in Q4 2024[39] - The efficiency ratio improved to 58.79% in Q1 2025 from 117.13% in Q4 2024, indicating better cost management[39] Interest Income and Margin - Net interest income increased to $46.9 million in Q1 2025, up $5.2 million (12.6%) from Q4 2024 and up $6.8 million (16.9%) from Q1 2024[5] - The net interest margin expanded to 3.35% in Q1 2025, an increase of 44 basis points from Q4 2024 and 57 basis points from Q1 2024[5] - Interest income for Q1 2025 was $81,051,000, an increase from $78,413,000 in Q1 2024, representing a growth of 2.1%[39] - Net interest income after provision for credit losses in Q1 2025 was $43,936,000, compared to $45,538,000 in Q1 2024, a decrease of 3.5%[39] Loans and Deposits - Total loans reached $4.55 billion at March 31, 2025, reflecting a quarterly increase of $74.1 million (1.7%) and a year-over-year increase of $111.2 million (2.5%)[5] - Total deposits were $5.37 billion at March 31, 2025, up $268.2 million (5.3%) from December 31, 2024, but down $23.8 million (0.4%) from March 31, 2024[5] - Total loans for Q1 2025 reached $4,493,825, an increase from $4,434,365 in Q4 2024, representing a growth of 1.3%[41] - Total deposits for Q1 2025 were $5,213,376, slightly down from $5,241,779 in Q4 2024, a decrease of 0.5%[41] Credit Quality - Non-performing loans were $40.0 million, or 0.88% of total loans, at March 31, 2025, down from $41.4 million or 0.92% at December 31, 2024[25] - The allowance for credit losses on loans to total loans ratio was 1.08% at March 31, 2025, compared to 1.07% at December 31, 2024[26] - Provision for credit losses was $2.9 million in the current quarter, compared to $6.5 million in the linked quarter[28] - The ratio of allowance for credit losses on loans to non-performing loans was 122% at March 31, 2025, down from 161% at March 31, 2024[29] - The provision for credit losses in Q1 2025 was $2,928,000, down from $6,461,000 in Q4 2024, indicating improved credit quality[39] - Net charge-offs for Q1 2025 totaled $2,369, a decrease from $2,778 in Q4 2024, reflecting a decline of 14.7%[43] Capital and Equity - Shareholders' equity increased to $589.9 million at March 31, 2025, up from $569.0 million at December 31, 2024, and $445.7 million at March 31, 2024[21] - Common book value per share increased to $28.48 at March 31, 2025, up $1.00 or 3.6% from $27.48 at December 31, 2024[22] - Common Equity Tier 1 Capital Ratio was 10.38% at March 31, 2025, down from 10.54% at December 31, 2024[27] - The leverage ratio was 9.24% at March 31, 2025, compared to 9.15% at December 31, 2024[27] - Tangible common equity increased to $511,992 thousand, up from $490,941 thousand at December 31, 2024, marking a growth of 4.28%[38] - The common equity increased to $561,921 in Q1 2025 from $499,910 in Q4 2024, representing a growth of 12.4%[41] Dividends - The Company approved a 3.3% increase in its quarterly cash dividend to $0.31 per common share, reflecting confidence in its long-term growth strategy[5] - The Company declared a common stock dividend of $0.31 per share, an increase of $0.01 or 3.3% over the linked and year-ago quarters, returning more than 37% of first quarter net income to common shareholders[23] - The company declared cash dividends of $0.31 per share in Q1 2025, slightly up from $0.30 in Q4 2024[39] Assets - Total assets increased to $6,340,492 thousand as of March 31, 2025, up from $6,117,085 thousand at December 31, 2024, representing a growth of 3.66%[38] - Total interest-earning assets increased to $5,733,743 thousand, up from $5,602,570 thousand at December 31, 2024, reflecting a growth of 2.34%[38] - Total assets as of Q1 2025 were $6,220,187, up from $6,121,449 in Q4 2024, marking an increase of 1.6%[41] - Average assets for Q1 2025 were $6,220,187 thousand, compared to $6,225,760 thousand in Q1 2024, showing a marginal decrease of 0.09%[44] Conference Call - The Company will host an earnings conference call on April 29, 2025, at 8:30 a.m. Eastern Time[31]