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

The Company's community bank subsidiary delivered strong loan growth of 2.7% during the quarter and its wealth manager's assets under management surpassed a new milestone of $4.0 billion

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 annualized	Q2 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.

"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 thousands	Q2 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 thousands	Q2 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 thousands	Q2 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 thousands	Q2 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 period	Q2 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 period	Q2 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 RATIOS	Q2 2026			Q1 2026			Q2 2025			QoQ Change			YoY Change
Leverage Ratio		10.06	%		9.89	%		9.45	%		17	bps		61	bps
Common Equity Tier 1 Ratio		11.44	%		11.37	%		10.84	%		7	bps		60	bps
Tier 1 Capital Ratio		11.76	%		11.70	%		11.17	%		6	bps		59	bps
Total 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 data	Q2 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 thousands	Q2 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.

For additional information contact:
Kate Croft
Director of Investor Relations and Corporate Communications
(716) 817-5159
klcroft@five-starbank.com

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