Financial Institutions(FISI) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements Unaudited consolidated financial statements and notes for Financial Institutions, Inc. for Q2 2025 and FY2024 Consolidated Statements of Financial Condition (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) | 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) | 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) 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][22] Consolidated Statements of Cash Flows (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) This section provides detailed notes to the unaudited consolidated financial statements Basis of Presentation and Summary of Significant Accounting Policies 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] - 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] | 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) 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] Investment Securities 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] - 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][266][267] [Loans](index=17&type=section&id=(4.)%2