FINANCIAL INSTITUTIONS, INC. (Nasdaq: FISI) Second Quarter 2022 Earnings Presentation July 28, 2022 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 the Company are ...

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, 2022 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) | ...

FINANCIAL INSTITUTIONS, INC. (Nasdaq: FISI) First Quarter 2022 Earnings Presentation April 27, 2022 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 the Company are ...

PART I [Business](index=4&type=section&id=Item%201.%20Business) Financial Institutions, Inc, a New York-based holding company, provides banking, insurance, and wealth management services with a community-focused strategy Company Overview at Year-End 2021 | Metric | Value (USD) | | :--- | :--- | | **Consolidated Total Assets** | $5.52 billion | | **Deposits** | $4.83 billion | | **Shareholders' Equity** | $505.1 million | - The company operates through five direct wholly-owned subsidiaries: Five Star Bank (FSB), SDN Insurance Agency (SDN), Courier Capital, HNP Capital, and Corn Hill Innovation Labs (CHIL), with the Bank representing **99.3% of consolidated assets**[10](index=10&type=chunk) - The business strategy is centered on a community bank philosophy, focusing on the individualized needs of customers in its local service area to differentiate from larger competitors[17](index=17&type=chunk)[18](index=18&type=chunk) - The acquisition strategy focuses on increasing market share within existing markets and expanding insurance and wealth management lines of business through targeted acquisitions[19](index=19&type=chunk) - The company's lending activities are diverse, including commercial business loans, commercial mortgages, residential mortgages, and consumer loans, with a significant portion in indirect auto loans[37](index=37&type=chunk) - The company and its subsidiaries are subject to extensive regulation by the Federal Reserve Board (FRB), the Federal Deposit Insurance Corporation (FDIC), and the New York State Department of Financial Services (NY DFS)[54](index=54&type=chunk)[56](index=56&type=chunk)[60](index=60&type=chunk) [Risk Factors](index=19&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from the COVID-19 pandemic, credit concentration in New York, legal proceedings, technology, and interest rate fluctuations - The COVID-19 pandemic has introduced significant economic volatility, affecting credit quality, revenue, and asset values, with key exposures in **retail (14% of commercial loans)** and **hotel/lodging (4%)**[68](index=68&type=chunk)[70](index=70&type=chunk) - A substantial portion of operations are concentrated in Western and Central New York, making the company's results highly dependent on the regional economy[77](index=77&type=chunk) - Commercial business and mortgage loans, totaling **$2.05 billion or 56% of total loans**, expose the company to greater credit risk compared to residential or consumer loans[78](index=78&type=chunk) - The company is a defendant in a class-action lawsuit alleging non-compliance with the Uniform Commercial Code, where an unfavorable outcome could materially affect business[87](index=87&type=chunk) - As of December 31, 2021, the company had **$67.1 million of goodwill**, which is subject to impairment risk from adverse changes in the business climate or stock price declines[98](index=98&type=chunk) - The company relies on third-party vendors for key business infrastructure, which exposes it to operational risks from these vendors[110](index=110&type=chunk) [Unresolved Staff Comments](index=31&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reported no unresolved staff comments from the SEC - None[128](index=128&type=chunk) [Properties](index=32&type=section&id=Item%202.%20Properties) The company owns its headquarters and operates through 48 branch offices, of which 31 are owned and 17 are leased, across New York - The company operates **48 branch offices**, with 31 owned and 17 leased[130](index=130&type=chunk) - A new 28,500 square foot administrative office is scheduled to commence its lease in Amherst, New York in July 2022, which will consolidate other leased facilities[130](index=130&type=chunk) [Legal Proceedings](index=33&type=section&id=Item%203.%20Legal%20Proceedings) The company is defending a class-action lawsuit concerning vehicle repossession notices, with an uncertain outcome and no accrued liability - The company is party to a class-action lawsuit filed in 2017 regarding vehicle repossession notices[132](index=132&type=chunk) - On September 30, 2021, the court certified four classes of consumers, comprising approximately **5,200 members in New York** and **300 in Pennsylvania**[132](index=132&type=chunk) - The company has not accrued a contingent liability for this matter, stating it is unable to conclude if a liability is probable or reasonably estimate a potential loss[132](index=132&type=chunk) [Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[133](index=133&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=34&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock (FISI) trades on Nasdaq, with an active share repurchase program and a history of underperforming key market indices - The company's common stock is traded on the Nasdaq Global Select Market under the ticker symbol "FISI"[135](index=135&type=chunk) Q4 2021 Share Repurchases | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Oct 2021 | 7,356 | $31.31 | | Nov 2021 | 19,400 | $31.00 | | Dec 2021 | 77,164 | $31.58 | | **Total Q4** | **103,920** | **$31.45** | - As of December 31, 2021, **461,191 shares remained available for repurchase** under the 2020 Repurchase Program[135](index=135&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses strong 2021 net income growth driven by a credit loss provision reversal, alongside analysis of loan portfolios and capital adequacy [Executive Overview](index=36&type=section&id=Executive%20Overview) Net income more than doubled in 2021 to $77.7 million, driven by a significant benefit for credit losses amid an improved economic forecast 2021 vs. 2020 Financial Performance | Metric | 2021 | 2020 | | :--- | :--- | :--- | | **Net Income** | $77.7 million | $38.3 million | | **Diluted EPS** | $4.78 | $2.30 | | **Return on Average Assets** | 1.46% | 0.82% | | **Return on Average Equity** | 16.01% | 8.49% | | **(Benefit) Provision for Credit Losses** | ($8.3 million) | $27.2 million | - Total loans increased by $84.3 million (2%) to **$3.68 billion**, driven by a 14% increase in consumer indirect loans and a 13% increase in commercial mortgage loans[144](index=144&type=chunk) - Total deposits grew by $548.7 million (13%) to **$4.83 billion**, with growth across all deposit categories[144](index=144&type=chunk) [Results of Operations](index=41&type=section&id=Results%20of%20Operations) Net interest income grew on higher earning assets, noninterest income rose from advisory and insurance fees, and expenses increased due to technology investments - Net interest income on a taxable equivalent basis **increased 11% to $155.4 million** in 2021, while the net interest margin declined slightly to 3.14%[141](index=141&type=chunk)[159](index=159&type=chunk) - The provision for credit losses was a **benefit of $8.3 million** in 2021, compared to a provision of $27.2 million in 2020, reflecting improved economic forecasts[169](index=169&type=chunk) - Noninterest income **increased by $3.7 million (9%) to $46.9 million**, driven by growth in investment advisory income, income from limited partnerships, and insurance income[141](index=141&type=chunk)[172](index=172&type=chunk) - Noninterest expense **increased by $3.5 million (3%) to $112.8 million**, mainly due to higher costs from technology investments and a rise in salaries and benefits[144](index=144&type=chunk)[175](index=175&type=chunk) [Analysis of Financial Condition](index=47&type=section&id=Analysis%20of%20Financial%20Condition) Total assets grew 12% to $5.52 billion, fueled by securities portfolio growth and a 13% increase in deposits, while credit quality improved Loan Portfolio Composition (December 31, 2021) | Loan Category | Amount (USD) | % of Total | | :--- | :--- | :--- | | Commercial Mortgage | $1.41 billion | 38.4% | | Consumer Indirect | $958.0 million | 26.0% | | Commercial Business | $638.3 million | 17.3% | | Residential Real Estate | $577.3 million | 15.7% | | Other | $93.0 million | 2.6% | | **Total Loans** | **$3.68 billion** | **100.0%** | - The allowance for credit losses on loans **decreased to $39.7 million** at year-end 2021, with the ratio of allowance to total loans falling to 1.08% from 1.46% a year prior[196](index=196&type=chunk) - Non-performing loans increased to **$12.2 million (0.33% of total loans)** from $9.5 million (0.26% of total loans) at year-end 2020[202](index=202&type=chunk) - Total deposits **increased by $548.7 million (13%) to $4.83 billion**, with growth in non-public, public, and reciprocal deposits[206](index=206&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, with simulation models showing a slightly asset-sensitive balance sheet Net Interest Income (NII) Sensitivity Analysis (as of Dec 31, 2021) | Rate Shock Scenario | Estimated Change in NII (USD) | % Change | | :--- | :--- | :--- | | -100 bp | ($3,875,000) | (2.63)% | | +100 bp | $548,000 | 0.37% | | +200 bp | $1,346,000 | 0.91% | | +300 bp | $2,035,000 | 1.38% | Economic Value of Equity (EVE) Sensitivity Analysis (as of Dec 31, 2021) | Rate Shock Scenario | EVE (USD) | Change from Pre-Shock (USD) | % Change | | :--- | :--- | :--- | :--- | | Pre-Shock | $775,697,000 | - | - | | -100 bp | $746,770,000 | ($28,927,000) | (3.73)% | | +100 bp | $782,438,000 | $6,741,000 | 0.87% | | +200 bp | $786,362,000 | $10,665,000 | 1.37% | [Financial Statements and Supplementary Data](index=65&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the consolidated financial statements, which received an unqualified opinion from the independent auditor, RSM US LLP - The independent registered public accounting firm, RSM US LLP, issued an **unqualified opinion** on the consolidated financial statements[268](index=268&type=chunk) - RSM US LLP also issued an **unqualified opinion** on the effectiveness of the company's internal control over financial reporting as of December 31, 2021[277](index=277&type=chunk) - The auditor identified the **Allowance for Credit Losses for pooled loans as a Critical Audit Matter**, highlighting the significant judgment required by management[271](index=271&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=137&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no changes in or disagreements with its accountants on accounting and financial disclosure - None[565](index=565&type=chunk) [Controls and Procedures](index=137&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls, procedures, and internal controls over financial reporting were effective as of year-end 2021 - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were **effective** as of the end of the period[566](index=566&type=chunk) - Management concluded that the company maintained **effective internal control** over financial reporting as of December 31, 2021[567](index=567&type=chunk) - **No material changes** to internal control over financial reporting occurred during the fourth quarter of 2021[568](index=568&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=138&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information is incorporated by reference from the company's 2022 Annual Meeting of Shareholders Proxy Statement - This section incorporates information by reference from the registrant's definitive proxy statement for the 2022 Annual Meeting of Shareholders[571](index=571&type=chunk) [Executive Compensation](index=138&type=section&id=Item%2011.%20Executive%20Compensation) Details on executive and director compensation are incorporated by reference from the company's 2022 Proxy Statement - This section incorporates information by reference from the registrant's definitive proxy statement for the 2022 Annual Meeting of Shareholders[572](index=572&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=138&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership and equity compensation plans is incorporated by reference from the 2022 Proxy Statement Equity Compensation Plan Information (as of Dec 31, 2021) | Plan Category | Securities to be Issued Upon Exercise | Weighted-Average Exercise Price | Securities Remaining for Future Issuance | | :--- | :--- | :--- | :--- | | **Approved by Shareholders** | 191,310 | N/A | 815,769 | [Certain Relationships and Related Transactions, and Director Independence](index=138&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the 2022 Proxy Statement - This section incorporates information by reference from the registrant's definitive proxy statement for the 2022 Annual Meeting of Shareholders[575](index=575&type=chunk) [Principal Accounting Fees and Services](index=138&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on fees paid to the principal accountant is incorporated by reference from the 2022 Proxy Statement - This section incorporates information by reference from the registrant's definitive proxy statement for the 2022 Annual Meeting of Shareholders[575](index=575&type=chunk)[576](index=576&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=140&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements and exhibits filed with or incorporated by reference into the Annual Report - This section provides an index of all exhibits filed as part of the 10-K report, including governance documents, debt indentures, and executive agreements[579](index=579&type=chunk) [Form 10-K Summary](index=141&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company indicates that no Form 10-K summary is provided - None[581](index=581&type=chunk)

Financial Institutions, Inc. (NASDAQ:FISI) Q4 2021 Earnings Conference Call February 1, 2022 8:30 AM ET Company Participants Shelly Doran - Director, Investor and External Communications Marty Birmingham - President & CEO Jack Plants - CFO Conference Call Participants Alex Twerdahl - Piper Sandler Bryce Rowe - Hovde Group Damon DelMonte - KBW Disclaimer*: This transcript is designed to be used alongside the freely available audio recording on this page. Timestamps within the transcript are designed to help ...

Rising to meet the challenge. FINANCIAL INSTITUTIONS, INC. (Nasdaq: FISI) Fourth Quarter and Year-End 2021 Earnings Presentation January 31, 2022 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 ...

Rising to meet the challenge. FINANCIAL INSTITUTIONS, INC. (Nasdaq: FISI) Third Quarter 2021 Earnings Presentation October 28, 2021 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, p ...

Financial Performance - Net income for Q3 2021 increased by $4.9 million to $17.2 million compared to $12.3 million in Q3 2020, with earnings per diluted share rising to $1.05 from $0.74[216] - Noninterest income for Q3 2021 was $12.1 million, slightly down from $12.2 million in Q3 2020, primarily due to lower income from derivative instruments and loan sales[220] - Noninterest expense increased to $29.2 million in Q3 2021 from $28.5 million in Q3 2020, mainly due to higher salaries and employee benefits, and technology investments[222] - Net interest income for the three months ended September 30, 2021, was $38.4 million, an increase of approximately $2.7 million compared to $35.7 million in the same period of 2020[235] - Net interest income for the nine months ended September 30, 2021, was $114.4 million, an increase of $10.9 million from $103.5 million in the same period last year[243] Interest Income and Assets - Net interest income totaled $38.3 million in Q3 2021, up from $35.5 million in Q3 2020, driven by an increase in interest-earning assets and a decrease in interest expense[218] - Average interest-earning assets increased by $553.0 million, or 13%, to $4.97 billion for the third quarter of 2021 compared to $4.41 billion in the third quarter of 2020[238] - The yield on average interest-earning assets decreased by 29 basis points to 3.31% in the third quarter of 2021 from 3.60% in the same period of 2020[237] - The net interest margin for the third quarter of 2021 was 3.07%, a decrease of 15 basis points from 3.22% in the same period of 2020[236] - The cost of average interest-bearing liabilities decreased by 20 basis points to 0.32% in the third quarter of 2021 compared to 0.52% in the same period of 2020[239] Loans and Credit Quality - Average loans increased by $110.1 million in Q3 2021 compared to the same quarter in 2020, contributing to the growth in net interest income[218] - Net charge-offs as a percentage of average loans outstanding remained stable at 0.06% for both Q3 2021 and Q3 2020[219] - The provision for credit losses was a benefit of $334 thousand in Q3 2021 compared to a provision of $3.6 million in Q3 2020, reflecting improved credit conditions[219] - Total charge-offs for the nine months ended September 30, 2021 were $6.6 million, compared to $17.9 million for the same period in 2020[302] - Non-performing loans were $6.7 million or 0.12% of total loans at September 30, 2021, compared to $9.5 million or 0.26% at December 31, 2020[304] Deposits and Funding - Total deposits increased by $696.6 million to $4.97 billion as of September 30, 2021, compared to $4.28 billion at December 31, 2020, representing a growth of approximately 16.3%[309] - Nonpublic deposits, the largest component of funding sources, totaled $2.73 billion, accounting for 55% of total deposits as of September 30, 2021, up from $2.55 billion and 60% at December 31, 2020[309] - Public deposits rose to $1.19 billion, representing 24% of total deposits as of September 30, 2021, compared to $834.9 million and 20% at December 31, 2020, largely due to seasonality[309] - Cash and cash equivalents were $288.4 million as of September 30, 2021, an increase of $194.5 million from $93.9 million at December 31, 2020[319] Capital and Regulatory Ratios - The regulatory Common Equity Tier 1 Ratio was 10.24% and the Total Risk-Based Capital Ratio was 13.25% as of September 30, 2021[223] - Common Equity Tier 1 (CET1) Capital increased to $426,790 thousand as of September 30, 2021, from $389,733 thousand as of December 31, 2020, reflecting a growth of 9.4%[322] - Total regulatory capital rose to $552,257 thousand as of September 30, 2021, compared to $521,193 thousand as of December 31, 2020, marking an increase of 5.96%[322] - The Tier 1 leverage ratio improved to 8.36% as of September 30, 2021, up from 8.25% as of December 31, 2020[327] Economic Value and Interest Rate Sensitivity - As of September 30, 2021, the estimated Economic Value of Equity (EVE) was $717,562,000, an increase from $583,156,000 on December 31, 2020[340] - The economic value of equity is sensitive to interest rate changes, with fixed-rate financial assets becoming more valuable in declining rate scenarios[338] - The analysis of interest rate sensitivity is based on assumptions regarding the pricing of loans and deposits in response to interest rate changes[335] - In a +300 basis points scenario, the estimated change in net interest income is projected to be an increase of $7,063 thousand, indicating a 4.81% change[333]

Financial Data and Key Metrics Changes - The company reported net income of $17.2 million or $1.50 per diluted share, down from $20.2 million or $1.25 per share in the second quarter, but significantly higher than $12.3 million or $0.74 per share in the third quarter of 2020 [6] - Pre-tax pre-provision income for the quarter was $21.2 million, an increase of $209,000 from the second quarter of 2021 and $1.9 million from the third quarter of 2020 [7] - Net interest income for the quarter was $38.3 million, an increase of $541,000 from the linked quarter due to one basis point of margin expansion [11] Business Line Data and Key Metrics Changes - Non-interest income was $12.1 million, up $1.9 million from the second quarter of 2021, driven by insurance business, swap fees, and limited partnership investments [22] - The insurance income increased by $717,000 due to the timing of commercial renewals and the impact of the acquisition of Northwoods Capital Benefits [23] - Total loans increased by $22 million or 0.6% from June 30, with commercial business loans decreasing by 6.2% and residential real estate loans down by 1.1% [28] Market Data and Key Metrics Changes - Total deposits at quarter end were $316 million higher than at June 30, driven by the seasonality of public deposits returning at quarter end [30] - The company experienced a decline in its TCE ratio from 7.58% to 7.25%, negatively impacted by growth in total assets due to seasonal inflow of public deposits [32] Company Strategy and Development Direction - The company is focusing on enhancing its digital banking platform and has implemented a customer relationship management solution to improve customer engagement [46][48] - The company is pursuing Banking-as-a-Service (BaaS) opportunities and has established a pipeline of potential Fintech partnerships [48] - The strategic plan emphasizes community banking services while embracing innovation and technology [52] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the normalization of credit performance indicators and the potential for reserve releases in the coming quarters [60] - The company anticipates mid-single digit growth in its total loan portfolio, excluding the impact of PPP loans [34] - The effective tax rate for 2021 is expected to be within the range of 20% to 21% [43] Other Important Information - The company completed the relocation of its Five Star Bank branch in Almira, which is part of a downtown revitalization initiative [8] - The company is investing in technology and personnel to support strategic initiatives, including digital banking and enhanced customer experience [25] Q&A Session Summary Question: Outlook for loan growth and commercial pipelines - Management indicated strong and healthy commercial loan pipelines, with some challenges due to M&A activity and supply chain constraints [56][58] Question: Credit reserves and potential releases - Management does not expect to release specific reserves until borrowers return to normal paying status, but positive trends could lead to reserve releases in the future [60] Question: Banking-as-a-Service capabilities - The company has been modernizing its foundation and is well-positioned to integrate with Fintech partners [66][68] Question: M&A activity and criteria for potential partners - The company remains open to M&A opportunities that are geographically and economically accretive [71][72] Question: Hotel portfolio performance - The hotel portfolio is performing well, with borrowers demonstrating a return to normalcy [78][79] Question: Margin dynamics and yield expectations - Management noted that credit spreads have held up well, but bond pricing has put pressure on margins [81] Question: Expense growth expectations for 2022 - Management is currently working on the 2022 budget and expects to provide an update during the next earnings call [83]

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, 2021 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 ...