Financial Institutions, Inc. Reports Net Income Available to Common Shareholders of $20.8 million, or $1.04 per Diluted Share, for the Second Quarter of 2026

WARSAW, N.Y., July 23, 2026 (GLOBE NEWSWIRE) -- Financial Institutions, Inc. (NASDAQ: FISI) (the "Company," "we" or "us") today reported financial and operational results for the second quarter ended June 30, 2026, reflecting strong performance by subsidiaries Five Star Bank (the "Bank") and Courier Capital, LLC ("Courier Capital"), including healthy loan growth, all-time-high assets under management ("AUM") and sustained profitability.

KEY FINANCIAL METRICS      Quarter-over-Quarter
("QoQ") Year-over-Year
("YoY") Dollars in thousands, except per share data
Return metrics annualizedQ2 2026 Q1 2026 Q2 2025 Variance% Variance% Net income$21,184 $20,985 $17,532 $199   0.9%$3,652   20.8%Net income available to common shareholders 20,819  20,621  17,168  198   1.0% 3,651   21.3%Diluted earnings per common share$1.04 $1.04 $0.85 $-   0.0%$0.19   22.4%Return on average assets 1.35% 1.37% 1.13% (2)bps   22 bps  Return on average equity 13.31% 13.43% 11.78% (12)bps   153 bps  Return on average tangible common equity (1) 14.88% 15.04% 13.27% (16)bps   161 bps  Efficiency ratio 55.33% 57.06% 59.68% (173)bps   (435)bps  Total loans (end of period)$4,752,965 $4,627,587 $4,536,002 $125,378   2.7%$216,963   4.8%Total deposits (end of period)$5,299,465 $5,337,881 $5,156,014 $(38,416)  -0.7%$143,451   2.8%

Second Quarter 2026 Highlights and Key Developments

• Total loans of $4.75 billion at June 30, 2026 grew 2.7% from March 31, 2026, driven by robust commercial lending, while deposits of $5.30 billion were down modestly quarter-over-quarter, reflecting public deposit seasonality.
• Net interest income reached a new quarterly high of $53.4 million and net interest margin of 3.70% reflected expansion of 3 and 21 basis points from the linked and year-ago quarters, respectively.
• Noninterest income of $11.0 million was up 2.6% and 3.2% from the linked and year-ago quarters, respectively, supported by increased investment advisory fees as Courier Capital's AUM surpassed $4.0 billion.
• The efficiency ratio improved to 55%, reflecting both strong revenue generation and disciplined expense management, as noninterest expense of $35.6 million held flat with the linked quarter.
• Net charge-offs were 0.11% of average loans in the second quarter of 2026, while the ratio of allowance for credit losses on loans to total loans increased to 1.00% at June 30, 2026.
  
  

PreviousOverall, our results continue to reflect disciplined execution by each of our business lines and our commitment to sustainable profitability...

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"We delivered another quarter of strong and profitable results, highlighted by annualized loan growth of more than 10%, healthy revenue generation and prudent expense management," said President and Chief Executive Officer Martin K. Birmingham. "Commercial loan growth was robust, driven by our core Western and Central New York markets, and our pipelines are healthy heading into the second half of the year. In our wealth business, assets under management grew to more than $4.0 billion as of June 30, 2026, as new business activity complemented market performance. Overall, our results continue to reflect disciplined execution by each of our business lines and our commitment to sustainable profitability and long-term value creation."

Chief Financial Officer and Treasurer W. Jack Plants II added, "Our disciplined approach to managing funding costs supported further net interest margin expansion to 3.70% for the second quarter. Given current rate dynamics, we are beginning to see deposit costs level off and remain focused on preserving margin stability amid a competitive environment. Heading into the third quarter, we remain focused on deposit retention and acquisition, credit disciplined loan growth and effective expense management. Capital strength remains a key pillar of our financial performance, with a tangible common equity ratio(1) of 9.02%, a common equity Tier 1 ratio of 11.44%, and a return on average tangible common equity(1) of 14.88%."

Net Interest Income and Net Interest Margin

NET INTEREST INCOME      QoQ YoY Dollars in thousandsQ2 2026 Q1 2026 Q2 2025 Variance% Variance% Interest income$83,076 $81,563 $82,867 $1,513   1.9%$209   0.3%Interest expense 29,715  29,570  33,745  145   0.5% (4,030)  -11.9%Net interest income 53,361  51,993  49,122  1,368   2.6% 4,239   8.6%Net interest margin (tax-equivalent basis) (2) 3.70% 3.67% 3.49% 3 bps   21 bps  Average interest-earning assets$5,785,900 $5,724,534 $5,651,374 $61,366   1.1%$134,526   2.4%Average interest-bearing liabilities 4,559,420  4,513,440  4,518,370  45,980   1.0% 41,050   0.9%

Net interest income was $53.4 million, up $1.4 million from the linked quarter and up $4.2 million from the second quarter of 2025. Net interest margin of 3.70% reflected expansion of 3 and 21 basis points from the linked and year-ago quarters, respectively, driven by lower interest-bearing liability costs.

• Average interest earning assets of $5.79 billion were up $61.4 million from the first quarter of 2026 and up $134.5 million from the second quarter of 2025. The linked quarter variance reflected increases in both average loans and investment securities, partially offset by a small decrease in the average balance of Federal Reserve interest-earning cash. The year-over-year variance reflected a $139.2 million increase in average balance of loans, partially offset by a $10.7 million decrease in the average balance of Federal Reserve interest-earning cash, as average balances of investment securities remained relatively consistent. The yield on interest-earning assets was 5.76% in both the first and second quarters of 2026, compared to 5.88% in the second quarter of 2025.
• Average interest-bearing liabilities of $4.56 billion were up $46.0 million from the first quarter of 2026 and up $41.1 million from the second quarter of 2025. The linked quarter variance was due to increases in the average balances of savings and money market deposits and short-term borrowings, partially offset by decreases in long-term borrowings, average interest-bearing demand deposits and time deposits. The year-over-year variance reflected increases in the average balances of time deposits, short-term borrowings and savings and money market deposits, partially offset by decreases in average long-term borrowings and average interest-bearing demand deposits. The cost of interest-bearing liabilities was 2.61%, reflecting decreases of 4 and 39 basis points from the linked and year-ago quarters, respectively.
  
  

Noninterest Income

SELECT NONINTEREST INCOME CATEGORIES      QoQ Change YoY Change Dollars in thousandsQ2 2026 Q1 2026 Q2 2025 $ % $ % Investment advisory$3,287 $3,061 $2,885 $226  7.4%$402  13.9%Investments in limited partnerships (140) 224  307  (364) -162.5% (447) -145.6%Income from derivative instruments, net 518  239  339  279  116.7% 179  52.8%Net gain (loss) on other assets 27  (481) -  508  -105.6% 27 N/A Other 1,200  1,770  1,284  (570) -32.2% (84) -6.5%Total noninterest income 10,954  10,673  10,617  281  2.6% 337  3.2%

Noninterest income was $11.0 million in the second quarter of 2026, versus $10.7 million in the first quarter of 2026 and $10.6 million in the second quarter of 2025. The linked quarter and year-over-year variances were driven by a variety of factors, including increased investment advisory income, reflecting both new business and market performance, and increased income from derivative instruments, net, which is based on the number and value of interest rate swap transactions executed during the quarter. Detail on other select categories with notable variances follows:

• A loss on investments in limited partnerships, which are primarily small business investment companies, of $140 thousand was recognized in the second quarter of 2026, compared to gains of $224 thousand and $307 thousand in the linked and year-ago quarters, respectively. Income from these investments, which we account for under the equity method, fluctuates based on the maturity and performance of the underlying investments.
• A net gain on other assets of $27 thousand was recognized in the second quarter of 2026, compared to a net loss of $481 thousand in the first quarter of 2026 related to the write-down of two branch locations that were held for sale as of March 31, 2026. No gain or loss was recorded in the second quarter of 2025.
• Other noninterest income of $1.2 million was down from both the linked and year-ago quarters. The linked quarter variance was driven by a variety of factors, including insurance recoveries recorded in the first quarter of 2026 related to a previously disclosed deposit-related charge-off.
  
  

Noninterest Expense and Income Taxes

SELECT NONINTEREST EXPENSE CATEGORIES      QoQ Change YoY Change Dollars in thousandsQ2 2026 Q1 2026 Q2 2025 $ % $ % Salaries and employee benefits$19,165 $18,601 $18,070 $564  3.0%$1,095  6.1%Computer and data processing 5,512  6,211  5,879  (699) -11.3% (367) -6.2%Total noninterest expense 35,605  35,595  35,682  10  0.0% (77) -0.2%

Noninterest expense was $35.6 million in both the first and second quarters of 2026 and $35.7 million in the second quarter of 2025. Detail on select categories with notable variances follows:

• Salaries and employee benefits expense was $564 thousand higher than the first quarter of 2026, primarily driven by the timing of annual merit increases as well as the impact of an additional business day in the recent quarter, and $1.1 million higher than the second quarter of 2025, reflecting a combination of factors, including annual merit increases, incentive compensation and investments in personnel.
• Computer and data processing expense was $699 thousand and $367 thousand lower than the linked and year-ago quarters, respectively, due in part to the termination of a vendor relationship in the first quarter of 2026.
  
  

INCOME TAXES      QoQ YoY Dollars in thousandsQ2 2026 Q1 2026 Q2 2025 Variance % Variance % Income tax expense$4,418 $3,847 $3,963 $571  14.8%$455  11.5%Tax credit on investments placed in service/amortized 1,045  1,045  1,103  -  0.0% (58) -5.3%Effective tax rate 17.3% 15.5% 18.4% 1.8%   -1.2%  

Income tax expense was $4.4 million for the second quarter of 2026, compared to $3.8 million in the first quarter of 2026 and $4.0 million in the second quarter of 2025. Income tax expense reflects federal and state tax benefits that the Company recognized related to tax credit investments placed in service and/or amortized during each period, as outlined above.

• The effective tax rate, which was 17.3% for the second quarter of 2026, fluctuates on a quarterly basis primarily due to the level of pre-tax earnings or loss and may differ from statutory rates due to interest income from tax-exempt securities, earnings on COLI and the impact of repositionings, the tax impact of restricted stock award vesting, and the impact of tax credit investments.
  
  

Balance Sheet Composition and Liquidity

SELECT BALANCE SHEET DATA      QoQ Change YoY Change Dollars in thousands, end of periodQ2 2026 Q1 2026 Q2 2025 $ % $ % Total assets$6,334,952 $6,294,783 $6,143,766 $40,169  0.6%$191,186  3.1%Total investment securities 989,764  1,085,771  1,008,268  (96,007) -8.8% (18,504) -1.8%Commercial business and commercial mortgage 3,210,384  3,078,180  2,941,371  132,204  4.3% 269,013  9.1%Residential real estate 738,681  727,640  722,880  11,041  1.5% 15,801  2.2%Consumer indirect and other consumer 803,900  821,767  871,751  (17,867) -2.2% (67,851) -7.8%Total loans 4,752,965  4,627,587  4,536,002  125,378  2.7% 216,963  4.8%Total deposits 5,299,465  5,337,881  5,156,014  (38,416) -0.7% 143,451  2.8%Short-term borrowings 182,000  114,000  101,000  68,000  59.6% 81,000  80.2%Long-term borrowings, net 78,694  78,621  114,960  73  0.1% (36,266) -31.5%

Total loans of $4.75 billion at June 30, 2026 were up $125.4 million from the end of the linked quarter and up $217.0 million from June 30, 2025.

• Strong commercial lending activity in the Bank's Western and Central New York markets drove both the linked quarter and year-over-year growth.
  
  

Total deposits were $5.30 billion at June 30, 2026, down $38.4 million from March 31, 2026, and up $143.5 million from June 30, 2025.

• The linked quarter variance was primarily due to seasonally lower public deposit balances, while the year-over-year increase reflected increases in public, nonpublic and reciprocal deposit balances, partially offset by a decrease in brokered deposits. Public deposits represented 22% of total deposits at June 30, 2026, 23% at March 31, 2026, and 21% at June 30, 2025.
  
  

LIQUIDITY SOURCES      QoQ Change YoY Change Dollars in thousands, end of periodQ2 2026 Q1 2026 Q2 2025 $ % $ % Unencumbered securities$29,876 $42,049 $132,898 $(12,173) -28.9%$(103,022) -77.5%FHLBNY borrowing availability 182,426  280,164  240,211  (97,738) -34.9% (57,785) -24.1%FRB excess cash 39,564  28,943  18,098  10,621  36.7% 21,466  118.6%FRB discount window 900,825  919,931  856,993  (19,106) -2.1% 43,832  5.1%Total on-balance sheet liquidity 1,152,691  1,271,087  1,248,200  (118,396) -9.3% (95,509) -7.7%

The Company maintains liquidity, both on and off-balance sheet, to meet customer demand. As outlined in the table above, at June 30, 2026, the Company had approximately $1.15 billion in available liquidity, excluding brokered deposit capacity, in addition to cash and cash equivalents of $99.2 million and available unsecured lines of credit totaling $155.0 million.

Capital Strength and Shareholder Returns

REGULATORY CAPITAL RATIOSQ2 2026 Q1 2026 Q2 2025 QoQ ChangeYoY ChangeLeverage Ratio 10.06% 9.89% 9.45% 17 bps 61 bpsCommon Equity Tier 1 Ratio 11.44% 11.37% 10.84% 7 bps 60 bpsTier 1 Capital Ratio 11.76% 11.70% 11.17% 6 bps 59 bpsTotal Risk Based Capital Ratio 14.20% 14.16% 13.27% 4 bps 93 bps

The Company's regulatory capital ratios at June 30, 2026 continued to exceed all regulatory capital requirements to be considered well capitalized.

SELECT SHAREHOLDERS' EQUITY AND PER SHARE DATA QoQ YoY Dollars in thousands, except per share dataQ2 2026 Q1 2026 Q2 2025 Variance% Variance% Shareholders' equity$643,441 $631,670 $601,668 $11,771   1.9%$41,773   6.9%Common shareholders' equity 626,156  614,385  584,383  11,771   1.9% 41,773   7.1%Tangible common equity (1) 566,007  554,140  523,837  11,867   2.1% 42,170   8.1%Common book value per share$31.77 $31.21 $29.03 $0.56   1.8%$2.74   9.4%Tangible common book value per share (1)$28.72 $28.15 $26.03 $0.57   2.0%$2.69   10.3%Common equity to assets ratio 9.88% 9.76% 9.51% 12 bps   37 bps  Tangible common equity to tangible assets ratio (1) 9.02% 8.89% 8.61% 13 bps   41 bps  

Shareholders' equity grew to $643.4 million at June 30, 2026, compared to $631.7 million at March 31, 2026, and $601.7 million at June 30, 2025, primarily due to net income, net of dividends, retained.

• The increase in shareholders' equity supported significant year-over-year expansion of both the common equity to assets ratio, which was 9.88% at June 30, 2026, and the tangible common equity to tangible assets ratio(1), or the TCE ratio, which was 9.02% at June 30, 2026.
  
  

The Company declared a common stock dividend of $0.32 per common share in the second quarter of 2026, consistent with the linked quarter and reflecting an increase of $0.01, or 3.2%, over the year-ago quarter, returning 30% of second quarter net income to common shareholders.

As of June 30, 2026, 503,313 shares, or approximately half of the amount authorized by the Board of Directors, remained available under the repurchase program that was approved in September 2025. The Company did not repurchase shares of its common stock under the share repurchase program in the second quarter of 2026.

Credit Quality

SELECT CREDIT QUALITY METRICS      QoQ YoY Dollars in thousandsQ2 2026 Q1 2026 Q2 2025 Variance% Variance% Non-performing loans$39,007 $38,475 $32,436 $532   1.4%$6,571   20.3%Total non-performing loans to total loans 0.82% 0.83% 0.72% (1)bps   11 bps  Allowance for credit losses "ACL" – loans 47,497  44,661  47,291  2,836   6.4% 206   0.4%ACL – loans to total loans ratio 1.00% 0.97% 1.04% 3 bps   (4)bps  Provision for credit losses – loans$4,133 $2,355 $2,377 $1,778   75.5%$1,756   73.9%Provision for credit losses 3,108  2,239  2,562  869   38.8%$546   21.3%Net charge-offs/average loans (annualized) 0.11% 0.44% 0.36% (33)bps   (25)bps  

The Company has remained strategically focused on the importance of credit discipline, allocating resources to credit and risk management functions as the loan portfolio has grown.

• Non-performing loans were $39.0 million, or 0.82% of total loans, at June 30, 2026. The increase from one year prior primarily reflects one well-collateralized commercial business loan that moved to nonaccrual status in the first quarter of 2026, offset in part by the partial charge-off of a previously disclosed nonaccrual commercial business relationship for which a specific reserve was in place.
• Provision for credit losses was $3.1 million in the second quarter of 2026 and was driven by a combination of factors, including loan growth and fluctuation in the balance of unfunded commitments. The provision for credit losses on unfunded commitments, which is included in the provision for credit losses as required by the current expected credit loss standard ("CECL"), totaled a credit of $1.0 million in the second quarter of 2026, compared to a credit of $116 thousand in the first quarter of 2026 and a provision of $185 thousand in the second quarter of 2025.
  
  

Subsequent Events

The Company is required, under U.S. generally accepted accounting principles ("GAAP"), to evaluate subsequent events through the filing of its consolidated financial statements for the quarter ended June 30, 2026 on Form 10-Q. As a result, the Company will continue to evaluate the impact of any subsequent events on critical accounting assumptions and estimates made as of June 30, 2026, and will adjust amounts preliminarily reported, if necessary, in its Form 10-Q as filed with the Securities and Exchange Commission (the "SEC").

Conference Call

The Company will host an earnings conference call and audio webcast on July 24, 2026, at 8:30 a.m. Eastern Time. The call will be hosted by Martin K. Birmingham, President and Chief Executive Officer, and W. Jack Plants II, Chief Financial Officer and Treasurer. Within the United States, participants may access the call by dialing 1-877-425-9470 and requesting the “Financial Institutions, Inc. Second Quarter 2026 Earnings Conference Call.” A live webcast will also be available at https://viavid.webcasts.com/starthere.jsp?ei=1767913&tp_key=12f3894d15 in listen-only mode. A replay of the webcast will be available on the Company’s IR website, www.FISI-Investors.com, for at least 30 days.

About Financial Institutions, Inc.

Financial Institutions, Inc. (NASDAQ: FISI) is a financial holding company with approximately $6.3 billion in assets offering banking and wealth management products and services. Its Five Star Bank subsidiary provides consumer and commercial banking and lending services to individuals, municipalities and businesses through banking locations spanning Western and Central New York and a commercial loan production office serving the Mid-Atlantic region. Its Courier Capital, LLC subsidiary offers customized investment management, consulting and retirement plan services to individuals, businesses, institutions, foundations and retirement plans. Learn more at FISI-Investors.com.

Non-GAAP Financial Information

In addition to results presented in accordance with GAAP, this press release contains certain non-GAAP financial measures. A reconciliation of these non-GAAP measures to GAAP measures is included in Appendix A to this document.

The Company believes that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, performance trends and financial position. Our management uses these measures for internal planning and forecasting purposes and we believe that our presentation and discussion, together with the accompanying reconciliations, allows investors, security analysts and other interested parties to view our performance and the factors and trends affecting our business in a manner similar to management. These non-GAAP measures should not be considered a substitute for GAAP measures, and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure to evaluate the Company. Non-GAAP financial measures have inherent limitations, are not uniformly applied and are not audited. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.

Safe Harbor Statement

This press release may contain forward-looking statements as defined by Section 21E of the Securities Exchange Act of 1934, as amended, that involve significant risks and uncertainties. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as "anticipate," "believe," "continue," "estimate," "expect," "focus," "forecast," "intend," "may," "plan," "preliminary," "should," "target" or "will." Statements herein are based on certain assumptions and analyses by the Company and factors it believes are appropriate in the circumstances. Actual results could differ materially from those contained in or implied by such statements for a variety of reasons including, but not limited to: changes in interest rates; inflation; tariffs; changes in deposit flows and the cost and availability of funds; fraudulent deposit activity; the Company’s ability to implement its strategic plan, including by expanding its commercial lending footprint and integrating its acquisitions; whether the Company experiences greater credit losses than expected; whether the Company experiences breaches of its, or third party, information systems; the attitudes and preferences of the Company's customers; legal and regulatory proceedings and related matters, including any action described in our reports filed with the SEC, could adversely affect us and the banking industry in general; the competitive environment; fluctuations in the fair value of securities in its investment portfolio; changes in the regulatory environment and the Company's compliance with regulatory requirements; general economic and credit market conditions nationally and regionally; and macroeconomic volatility related to global political unrest. Consequently, all forward-looking statements made herein are qualified by these cautionary statements and the cautionary language and risk factors included in the Company's Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and other documents filed with the SEC. Except as required by law, the Company undertakes no obligation to revise these statements following the date of this press release.

(1) See Appendix A — Reconciliation to Non-GAAP Financial Measures for the computation of this non-GAAP financial measure.
(2) Calculated on a tax-equivalent basis assuming a Federal income tax rate of 21%.

FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share amounts)

  2026  2025 SELECT BALANCE SHEET DATA: June 30,  March 31,  December 31,  September 30,  June 30, Cash and cash equivalents $99,174  $85,451  $108,751  $185,945  $93,034 Investment securities:               Available for sale  910,466   1,003,697   922,472   923,592   916,149 Held-to-maturity, net  79,298   82,074   84,708   87,625   92,119 Total investment securities  989,764   1,085,771   1,007,180   1,011,217   1,008,268 Loans held for sale  2,502   1,034   3,365   2,252   2,356 Loans:               Commercial business  768,549   746,425   738,307   740,603   726,218 Commercial mortgage – construction  558,036   513,615   488,558   441,034   536,552 Commercial mortgage – multifamily  565,027   578,731   588,732   592,634   496,223 Commercial mortgage – non-owner occupied  970,966   922,628   942,219   893,884   873,207 Commercial mortgage – owner occupied  347,806   316,781   322,776   321,555   309,171 Residential real estate loans  662,582   652,861   657,001   648,397   647,205 Residential real estate lines  76,099   74,779   75,121   76,109   75,675 Consumer indirect  771,126   787,888   807,310   838,671   833,452 Other consumer  32,774   33,879   37,842   37,536   38,299 Total loans  4,752,965   4,627,587   4,657,866   4,590,423   4,536,002 Allowance for credit losses – loans  47,497   44,661   47,386   47,292   47,291 Total loans, net  4,705,468   4,582,926   4,610,480   4,543,131   4,488,711 Total interest-earning assets  5,834,020   5,787,556   5,755,696   5,739,699   5,614,008 Goodwill and other intangible assets, net  60,149   60,245   60,343   60,443   60,546 Total assets  6,334,952   6,294,783   6,274,140   6,288,052   6,143,766 Deposits:               Noninterest-bearing demand  950,510   953,397   962,724   959,404   940,341 Interest-bearing demand  712,124   744,690   672,323   776,445   704,871 Savings and money market  1,964,402   1,984,048   1,884,801   1,955,832   1,898,302 Time deposits  1,672,429   1,655,746   1,686,500   1,666,128   1,612,500 Total deposits  5,299,465   5,337,881   5,206,348   5,357,809   5,156,014 Short-term borrowings  182,000   114,000   109,000   55,000   101,000 Long-term borrowings, net  78,694   78,621   193,653   115,000   114,960 Total interest-bearing liabilities  4,609,649   4,577,105   4,546,277   4,568,405   4,431,633 Shareholders’ equity  643,441   631,670   628,854   621,720   601,668 Common shareholders’ equity  626,156   614,385   611,569   604,435   584,383 Tangible common equity (1)  566,007   554,140   551,226   543,992   523,837 Accumulated other comprehensive loss  (43,349)  (39,327) $(33,030) $(36,758) $(42,214)                Common shares outstanding  19,706   19,686   19,797   20,130   20,128 Treasury shares  993   1,013   902   570   572 CAPITAL RATIOS AND PER SHARE DATA:               Leverage ratio  10.06%  9.89%  9.69%  9.77%  9.45%Common equity Tier 1 capital ratio  11.44%  11.37%  11.11%  11.15%  10.84%Tier 1 capital ratio  11.76%  11.70%  11.43%  11.48%  11.17%Total risk-based capital ratio  14.20%  14.16%  14.90%  13.60%  13.27%Common equity to assets  9.88%  9.76%  9.75%  9.61%  9.51%Tangible common equity to tangible assets (1)  9.02%  8.89%  8.87%  8.74%  8.61%                Common book value per share $31.77  $31.21  $30.89  $30.03  $29.03 Tangible common book value per share (1) $28.72  $28.15  $27.84  $27.02  $26.03 

(1) See Appendix A — Reconciliation to Non-GAAP Financial Measures for the computation of this non-GAAP financial measure.

FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share amounts)

  Six Months Ended  2026  2025 SELECT STATEMENT OF OPERATIONS June 30,  Second  First  Fourth  Third  Second DATA: 2026  2025  Quarter  Quarter  Quarter  Quarter  Quarter Interest income $164,639  $163,918  $83,076  $81,563  $84,649  $84,422  $82,867 Interest expense  59,285   67,932   29,715   29,570   32,438   32,633   33,745 Net interest income  105,354   95,986   53,361   51,993   52,211   51,789   49,122 Provision for credit losses  5,347   5,490   3,108   2,239   3,404   2,732   2,562 Net interest income after provision for credit losses  100,007   90,496   50,253   49,754   48,807   49,057   46,560 Noninterest income:                     Service charges on deposits  2,127   2,141   1,083   1,044   1,082   1,137   1,089 Card interchange income  3,955   3,777   2,063   1,892   2,011   2,006   1,937 Investment advisory  6,348   5,622   3,287   3,061   3,074   3,023   2,885 Company owned life insurance  5,656   5,742   2,884   2,772   2,788   2,849   2,965 Investments in limited partnerships  84   722   (140)  224   457   223   307 Loan servicing  352   303   201   151   208   181   180 Income from derivative instruments, net  757   589   518   239   1,110   847   339 Net gain on sale of loans held for sale  306   257   181   125   195   285   140 Net gain on investment securities  328   3   -   328   225   703   3 Net (loss) gain on other assets  (454)  -   27   (481)  (225)  (281)  - Net loss on tax credit investments  (802)  (1,026)  (350)  (452)  (446)  (513)  (512)Other  2,970   2,860   1,200   1,770   1,430   1,596   1,284 Total noninterest income  21,627   20,990   10,954   10,673   11,909   12,056   10,617 Noninterest expense:                     Salaries and employee benefits  37,766   34,968   19,165   18,601   19,323   18,522   18,070 Occupancy and equipment  7,806   7,572   3,941   3,865   4,104   3,814   3,982 Professional services  2,613   3,142   1,263   1,350   1,686   1,688   1,451 Computer and data processing  11,723   11,366   5,512   6,211   5,934   5,789   5,879 FDIC assessments  1,973   2,859   987   986   984   1,227   1,392 Advertising and promotions  1,116   837   592   524   482   491   495 Amortization of intangibles  194   212   96   98   100   103   105 Deposit-related charged-off items expense (recoveries)  235   (61)  126   109   77   144   233 Other  7,774   8,472   3,923   3,851   4,029   4,097   4,075 Total noninterest expense  71,200   69,367   35,605   35,595   36,719   35,875   35,682 Income before income taxes  50,434   42,119   25,602   24,832   23,997   25,238   21,495 Income tax expense  8,265   7,709   4,418   3,847   4,017   4,761   3,963 Net income  42,169   34,410   21,184   20,985   19,980   20,477   17,532 Preferred stock dividends  729   729   365   364   364   365   364 Net income available to common shareholders $41,440  $33,681  $20,819  $20,621  $19,616  $20,112  $17,168 FINANCIAL RATIOS:                     Earnings per share – basic $2.11  $1.68  $1.06  $1.05  $0.98  $1.00  $0.85 Earnings per share – diluted $2.08  $1.66  $1.04  $1.04  $0.96  $0.99  $0.85 Cash dividends declared on common stock $0.64  $0.62  $0.32  $0.32  $0.31  $0.31  $0.31 Common dividend payout ratio  30.33%  36.90%  30.19%  30.48%  31.63%  31.00%  36.47%Dividend yield (annualized)  3.31%  4.87%  3.29%  4.09%  3.95%  4.52%  4.84%Return on average assets (annualized)  1.36%  1.12%  1.35%  1.37%  1.27%  1.32%  1.13%Return on average equity (annualized)  13.37%  11.80%  13.31%  13.43%  12.53%  13.31%  11.78%Return on average common equity (annualized)  13.50%  11.90%  13.44%  13.57%  12.64%  13.45%  11.88%Return on average tangible common equity (annualized) (1)  14.96%  13.31%  14.88%  15.04%  14.02%  14.98%  13.27%Efficiency ratio (2)  56.18%  59.24%  55.33%  57.06%  57.43%  56.78%  59.68%Effective tax rate  16.4%  18.3%  17.3%  15.5%  16.7%  18.9%  18.4%

(1) See Appendix A – Reconciliation to Non-GAAP Financial Measures for the computation of this non-GAAP financial measure.
(2) The efficiency ratio is calculated by dividing noninterest expense by net revenue, i.e., the sum of net interest income (tax-equivalent basis assuming a Federal income tax rate of 21%) and noninterest income before net gains on investment securities. This is a banking industry measure not required by GAAP.

FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands)

  Six Months Ended  2026  2025   June 30,  Second  First  Fourth  Third  Second SELECT AVERAGE BALANCES: 2026  2025  Quarter  Quarter  Quarter  Quarter  Quarter Federal funds sold and interest-earning deposits $29,301  $55,306  $28,347  $30,266  $48,418  $31,461  $39,027 Investment securities (1)  1,066,571   1,078,600   1,077,633   1,055,385   1,066,829   1,059,244   1,071,628 Loans:                     Commercial business  741,484   699,141   745,977   736,942   731,314   726,315   720,347 Commercial mortgage  2,367,615   2,212,786   2,392,003   2,342,957   2,313,465   2,239,666   2,221,576 Residential real estate loans  654,822   646,001   655,028   654,614   650,190   648,642   645,007 Residential real estate lines  74,523   74,860   74,853   74,189   75,288   75,774   75,010 Consumer indirect  787,178   843,763   779,336   795,107   823,521   838,026   839,294 Other consumer  33,892   40,850   32,723   35,074   36,917   37,741   39,485 Total loans  4,659,514   4,517,401   4,679,920   4,638,883   4,630,695   4,566,164   4,540,719 Total interest-earning assets  5,755,386   5,651,307   5,785,900   5,724,534   5,745,942   5,656,869   5,651,374 Goodwill and other intangible assets, net  60,256   60,663   60,207   60,305   60,404   60,505   60,610 Total assets  6,249,798   6,218,412   6,271,961   6,227,388   6,261,856   6,159,886   6,216,657 Interest-bearing liabilities:                     Interest-bearing demand  709,029   738,055   701,768   716,370   713,033   687,978   730,979 Savings and money market  1,941,869   1,964,884   1,976,903   1,906,445   1,924,952   1,881,445   1,953,412 Time deposits  1,679,954   1,598,381   1,676,759   1,683,185   1,692,138   1,643,342   1,631,407 Short-term borrowings  116,782   90,636   125,331   108,138   79,913   110,011   86,099 Long-term borrowings, net  88,923   120,648   78,659   99,302   133,242   114,976   116,473 Total interest-bearing liabilities  4,536,557   4,512,604   4,559,420   4,513,440   4,543,278   4,437,752   4,518,370 Noninterest-bearing demand deposits  947,322   925,043   944,037   950,644   955,880   960,089   923,409 Total deposits  5,278,174   5,226,363   5,299,467   5,256,644   5,286,003   5,172,854   5,239,207 Total liabilities  5,613,678   5,630,349   5,633,343   5,593,794   5,629,101   5,549,575   5,619,834 Shareholders’ equity  636,120   588,063   638,618   633,594   632,755   610,311   596,823 Common equity  618,835   570,778   621,333   616,309   615,470   593,026   579,538 Tangible common equity (2)  558,579   510,115   561,126   556,004   555,066   532,521   518,928 Common shares outstanding:                     Basic  19,665   20,290   19,687   19,642   20,093   20,122   20,107 Diluted  19,931   20,291   19,941   19,922   20,347   20,336   20,294 SELECTED AVERAGE YIELDS:
(Tax equivalent basis)                     Investment securities (3)  4.47%  4.30%  4.46%  4.48%  4.48%  4.45%  4.34%Loans  6.07%  6.23%  6.07%  6.07%  6.20%  6.29%  6.26%Total interest-earning assets  5.76%  5.84%  5.76%  5.76%  5.86%  5.93%  5.88%Interest-bearing demand  1.06%  1.18%  1.08%  1.04%  1.20%  1.09%  1.21%Savings and money market  2.31%  2.71%  2.33%  2.29%  2.46%  2.62%  2.67%Time deposits  3.45%  4.19%  3.38%  3.53%  3.73%  3.88%  4.08%Short-term borrowings  2.52%  1.95%  2.62%  2.40%  1.77%  2.41%  1.80%Long-term borrowings, net  6.91%  5.17%  6.99%  6.84%  6.31%  5.53%  5.35%Total interest-bearing liabilities  2.63%  3.03%  2.61%  2.65%  2.83%  2.92%  3.00%Net interest rate spread  3.13%  2.81%  3.15%  3.11%  3.03%  3.01%  2.88%Net interest margin  3.68%  3.42%  3.70%  3.67%  3.62%  3.65%  3.49%

(1) Includes investment securities at adjusted amortized cost.
(2) See Appendix A – Reconciliation to Non-GAAP Financial Measures for the computation of this non-GAAP financial measure.
(3) The interest on tax-exempt securities is calculated on a tax-equivalent basis assuming a Federal income tax rate of 21%.

FINANCIAL INSTITUTIONS, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands)

  Six Months Ended  2026  2025   June 30,  Second  First  Fourth  Third  Second ASSET QUALITY DATA: 2026  2025  Quarter  Quarter  Quarter  Quarter  Quarter Allowance for Credit Losses – Loans                     Beginning balance $47,386  $48,041  $44,661  $47,386  $47,292  $47,291  $48,964 Net loan charge-offs (recoveries):                     Commercial business  2,967   1,960   (23)  2,990   46   123   1,903 Commercial mortgage – construction  -   -   -   -   (10)  (357)  - Commercial mortgage – multifamily  -   -   -   -   -   -   - Commercial mortgage – non-owner occupied  (2)  595   (1)  (1)  -   (1)  596 Commercial mortgage – owner occupied  (1)  (2)  -   (1)  -   (1)  (1)Residential real estate loans  19   133   -   19   (4)  (25)  92 Residential real estate lines  27   27   30   (3)  -   -   27 Consumer indirect  2,990   3,091   1,140   1,850   2,239   1,926   942 Other consumer  377   615   151   226   140   396   491 Total net charge-offs (recoveries)  6,377   6,419   1,297   5,080   2,411   2,061   4,050 Provision for credit losses – loans  6,488   5,669   4,133   2,355   2,505   2,062   2,377 Ending balance $47,497  $47,291  $47,497  $44,661  $47,386  $47,292  $47,291                       Net charge-offs (recoveries) to average loans (annualized):                     Commercial business  0.81%  0.57%  -0.01%  1.65%  0.02%  0.07%  1.06%Commercial mortgage – construction  0.00%  0.00%  0.00%  0.00%  -0.01%  -0.31%  0.00%Commercial mortgage – multifamily  0.00%  0.00%  0.00%  0.00%  0.00%  0.00%  0.00%Commercial mortgage – non-owner occupied  0.00%  0.00%  0.00%  0.00%  0.00%  0.00%  0.00%Commercial mortgage – owner occupied  0.00%  0.00%  0.00%  0.00%  0.00%  0.00%  0.00%Residential real estate loans  0.01%  0.04%  0.00%  0.01%  0.00%  -0.02%  0.06%Residential real estate lines  0.07%  0.07%  0.16%  -0.03%  0.00%  0.00%  0.14%Consumer indirect  0.77%  0.74%  0.59%  0.94%  1.08%  0.91%  0.45%Other consumer  2.24%  3.04%  1.85%  2.61%  1.50%  4.16%  4.99%Total loans  0.28%  0.29%  0.11%  0.44%  0.21%  0.18%  0.36%                      Supplemental information (1)                     Non-performing loans:                     Commercial business $7,677  $3,671  $7,677  $6,698  $4,709  $3,799  $3,671 Commercial mortgage – construction  20,520   19,621   20,520   20,520   20,321   19,794   19,621 Commercial mortgage – multifamily  540   -   540   540   540   540   - Commercial mortgage – non-owner occupied  -   164   -   -   -   -   164 Commercial mortgage – owner occupied  981   -   981   983   1,095   1,102   - Residential real estate loans  6,974   5,885   6,974   7,434   6,443   5,877   5,885 Residential real estate lines  412   299   412   431   374   212   299 Consumer indirect  1,772   2,571   1,772   1,767   2,155   2,482   2,571 Other consumer  131   225   131   102   118   145   225 Total non-performing loans  39,007   32,436   39,007   38,475   35,755   33,951   32,436 Foreclosed assets  552   142   552   552   94   142   142 Total non-performing assets $39,559  $32,578  $39,559  $39,027  $35,849  $34,093  $32,578                       Total non-performing loans to total loans  0.82%  0.72%  0.82%  0.83%  0.77%  0.74%  0.72%Total non-performing assets to total assets  0.62%  0.53%  0.62%  0.62%  0.57%  0.54%  0.53%Allowance for credit losses – loans to total loans  1.00%  1.04%  1.00%  0.97%  1.02%  1.03%  1.04%Allowance for credit losses – loans to non-performing loans  122%  146%  122%  116%  133%  139%  146%

(1) At period end.

FINANCIAL INSTITUTIONS, INC.
Appendix A — Reconciliation to Non-GAAP Financial Measures (Unaudited)
(In thousands, except per share amounts)

  Six Months Ended  2026  2025   June 30,  Second  First  Fourth  Third  Second   2026  2025  Quarter  Quarter  Quarter  Quarter  Quarter Ending tangible assets:                     Total assets       $6,334,952  $6,294,783  $6,274,140  $6,288,052  $6,143,766 Less: Goodwill and other intangible assets, net        60,149   60,245   60,343   60,443   60,546 Tangible assets       $6,274,803  $6,234,538  $6,213,797  $6,227,609  $6,083,220                       Ending tangible common equity:                     Common shareholders’ equity       $626,156  $614,385  $611,569  $604,435  $584,383 Less: Goodwill and other intangible assets, net        60,149   60,245   60,343   60,443   60,546 Tangible common equity       $566,007  $554,140  $551,226  $543,992  $523,837                       Tangible common equity to tangible assets (1)        9.02%  8.89%  8.87%  8.74%  8.61%                      Common shares outstanding        19,706   19,686   19,797   20,130   20,128 Tangible common book value per share (2)       $28.72  $28.15  $27.84  $27.02  $26.03                       Average tangible assets:                     Average assets $6,249,798  $6,218,412  $6,271,961  $6,227,388  $6,261,856  $6,159,886  $6,216,657 Less: Average goodwill and other intangible assets, net  60,256   60,663   60,207   60,305   60,404   60,505   60,610 Average tangible assets $6,189,542  $6,157,749  $6,211,754  $6,167,083  $6,201,452  $6,099,381  $6,156,047                       Average tangible common equity:                     Average common equity $618,835  $570,778  $621,333  $616,309  $615,470  $593,026  $579,538 Less: Average goodwill and other intangible assets, net  60,256   60,663   60,207   60,305   60,404   60,505   60,610 Average tangible common equity $558,579  $510,115  $561,126  $556,004  $555,066  $532,521  $518,928                       Net income available to common shareholders $41,440  $33,681  $20,819  $20,621  $19,616  $20,112  $17,168 Return on average tangible common equity (3)  14.96%  13.31%  14.88%  15.04%  14.02%  14.98%  13.27%

(1) Tangible common equity divided by tangible assets.
(2) Tangible common equity divided by common shares outstanding.
(3) Net income available to common shareholders (annualized) divided by average tangible common equity.