Delivering on a brighter tomorrow. FINANCIAL INSTITUTIONS, INC. (Nasdaq: FISI) Third Quarter 2020 Earnings Presentation October 29, 2020 Safe Harbor Statement 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 objectiv ...

Delivering on a brighter tomorrow. FINANCIAL INSTITUTIONS, INC. (Nasdaq: FISI) Investor Presentation September 2020 Safe Harbor Statement 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 ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission File Number: 000-26481 Financial Institutions, Inc. (Exact name of registrant as specified in its charter) NE ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission File Number: 000-26481 (Exact name of registrant as specified in its charter) NEW YORK 16-0816610 (State or ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) Form 10-K [ X ]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 000-26481 FINANCIAL INSTITUTIONS, INC. (Exact name of registrant as specified in its charter) NEW YORK 16-0816610 ...

PART I. FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=ITEM%201.%20Financial%20Statements) The company presents its unaudited consolidated financial statements for the periods ended September 30, 2019 [Consolidated Statements of Financial Condition](index=3&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) Total assets grew to $4.33 billion, driven by loan growth funded by increased deposits and reduced borrowings Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Total Assets** | **$4,332,737** | **$4,311,698** | | Loans, net | $3,124,752 | $3,052,684 | | Total Securities | $781,746 | $892,258 | | **Total Liabilities** | **$3,900,120** | **$3,915,405** | | Total Deposits | $3,586,214 | $3,366,907 | | Short-term borrowings | $211,400 | $469,500 | | **Total Shareholders' Equity** | **$432,617** | **$396,293** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Q3 2019 net income rose 21.3% year-over-year to $12.8 million, driven by higher interest and noninterest income Key Income Statement Data (in thousands, except per share data) | Metric | Q3 2019 | Q3 2018 | Nine Months 2019 | Nine Months 2018 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $32,483 | $30,903 | $96,739 | $90,835 | | Provision for loan losses | $1,844 | $2,061 | $5,391 | $5,050 | | Noninterest Income | $12,361 | $9,816 | $30,714 | $27,130 | | Noninterest Expense | $25,886 | $25,521 | $76,060 | $73,073 | | **Net Income** | **$12,833** | **$10,577** | **$35,755** | **$32,035** | | **Diluted EPS** | **$0.78** | **$0.64** | **$2.16** | **$1.94** | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income increased to $14.3 million in Q3 2019, boosted by higher net income and unrealized securities gains Comprehensive Income (in thousands) | Metric | Q3 2019 | Q3 2018 | Nine Months 2019 | Nine Months 2018 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $12,833 | $10,577 | $35,755 | $32,035 | | Other comprehensive income (loss) | $1,426 | $(1,524) | $12,330 | $(9,904) | | **Comprehensive Income** | **$14,259** | **$9,053** | **$48,085** | **$22,131** | [Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity) Shareholders' equity grew to $432.6 million, driven by net income and other comprehensive income gains - Shareholders' equity increased by **$36.3 million** during the first nine months of 2019, primarily due to **retained earnings** and a decrease in accumulated other comprehensive loss[22](index=22&type=chunk)[23](index=23&type=chunk) [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash increased by $34.1 million in the first nine months of 2019, led by operating and investing activities Cash Flow Summary - Nine Months Ended Sep 30 (in thousands) | Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $41,162 | $50,809 | | Net cash provided by (used in) investing activities | $44,808 | $(158,213) | | Net cash (used in) provided by financing activities | $(51,910) | $125,540 | | **Net increase in cash and cash equivalents** | **$34,060** | **$18,136** | [Notes to Consolidated Financial Statements (Unaudited)](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) This section details accounting policies, business combinations, credit quality, and the adoption of new lease standards - The Company adopted ASU 2016-02 (Leases) on January 1, 2019, which resulted in the recognition of right-of-use assets of approximately **$22.7 million** and lease liabilities of approximately **$23.4 million**[43](index=43&type=chunk) - The Company is preparing for the implementation of ASU 2016-13 (CECL) effective January 1, 2020, which is expected to impact the statements of income and financial condition[43](index=43&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=42&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and results, highlighting a 21% Q3 net income increase from loan and noninterest income growth [Executive Overview](index=44&type=section&id=Executive%20Overview) Q3 2019 net income increased 21% year-over-year to $12.8 million, driven by strong loan and noninterest income growth Q3 2019 Performance Highlights | Metric | Q3 2019 | Q3 2018 | | :--- | :--- | :--- | | Net Income | $12.8 million | $10.6 million | | Diluted EPS | $0.78 | $0.64 | | Return on Average Assets | 1.19% | 1.00% | | Return on Average Common Equity | 12.00% | 10.82% | [Results of Operations](index=44&type=section&id=Results%20of%20Operations) Operations improved with a 12 basis point net interest margin expansion and a surge in noninterest income - Net interest margin for Q3 2019 was **3.29%**, up 12 basis points from 3.17% in Q3 2018, driven by a better earning asset mix and higher contribution from net free funds[169](index=169&type=chunk) - Q3 2019 noninterest income increased to **$12.4 million** from $9.8 million YoY, largely due to a **$1.6 million** net gain on the sale of investment securities and a **$0.9 million** income from derivative instruments[164](index=164&type=chunk)[187](index=187&type=chunk) - The efficiency ratio improved to **59.52%** in Q3 2019 from 62.04% in Q3 2018, reflecting better operating leverage[190](index=190&type=chunk) [Analysis of Financial Condition](index=52&type=section&id=Analysis%20of%20Financial%20Condition) Financial condition remained strong with total loans growing to $3.16 billion, though asset quality slightly deteriorated - Total loans increased by **$69.8 million (2.3%)** in the first nine months of 2019, led by a **$93.9 million** increase in commercial loans[203](index=203&type=chunk) - The allowance for loan losses to total loans ratio decreased to **1.00%** at September 30, 2019, from 1.10% at December 31, 2018[208](index=208&type=chunk) - Non-performing loans increased to **$9.8 million (0.31% of total loans)** from $7.1 million (0.23% of total loans) at year-end 2018[212](index=212&type=chunk) [Liquidity and Capital Management](index=58&type=section&id=Liquidity%20and%20Capital%20Management) The company maintained strong liquidity and capital, with all regulatory ratios exceeding 'well-capitalized' thresholds Regulatory Capital Ratios | Ratio | September 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Tier 1 Leverage | 8.86% | 8.16% | | CET1 Capital | 10.06% | 9.70% | | Tier 1 Capital | 10.55% | 10.21% | | Total Risk-Based Capital | 12.57% | 12.38% | - The company and the Bank remained characterized as **'well-capitalized'** under the fully phased-in Basel III capital rules[225](index=225&type=chunk)[229](index=229&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages interest rate risk, with models showing potential NII decreases in various rate scenarios Net Interest Income at Risk (12-Month Estimate) | Rate Shock Scenario | Estimated Change in NII | % Change | | :--- | :--- | :--- | | -100 bp | $(2,811) thousand | (2.05)% | | +100 bp | $(1,178) thousand | (0.86)% | Economic Value of Equity (EVE) at Risk | Rate Shock Scenario | Change in EVE | % Change | | :--- | :--- | :--- | | -100 bp | $38,649 thousand | 6.19% | | +100 bp | $(21,990) thousand | (3.52)% | [Controls and Procedures](index=63&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes in internal controls - Management concluded that the Company's disclosure controls and procedures were **effective** as of the end of the reporting period[238](index=238&type=chunk) - **No changes** in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[239](index=239&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=64&type=section&id=ITEM%201.%20Legal%20Proceedings) No material developments in legal proceedings have occurred since the 2018 Annual Report on Form 10-K - There have been **no material developments** in legal proceedings since the company's 2018 Annual Report on Form 10-K[242](index=242&type=chunk) [Exhibits](index=64&type=section&id=ITEM%206.%20Exhibits) This section lists filed exhibits, including Sarbanes-Oxley certifications and XBRL interactive data files - Exhibits filed with this report include **Sarbanes-Oxley Act certifications** (Sections 302 and 906) and XBRL data files[243](index=243&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission File Number: 000-26481 (Exact name of registrant as specified in its charter) NEW YORK 16-0816610 (State or o ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) Form 10-K [ X ]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 000-26481 | --- | --- | |----------------------------------------------------------------------------------------- ...