Slide 1: Third Quarter 2024 Earnings Presentation
Investor Presentation Financial Institutions, Inc. (NASDAQ: FISI) Third Quarter 2024 Earnings Presentation October 24, 2024
Slide 2: Important Information
Important Information 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 Pr
Slide 3: Overview of Financial Institutions, Inc.
Company Overview Overview of Financial Institutions, Inc. $394M Market cap NASDAQ: FISI • Innovative financial holding company headquartered in $6.16B Total assets Western New York offering banking and wealth management services through its subsidiaries, Five Star Bank and Courier Capital, LLC • Fin
Slide 4: Why FISI
Company Overview Why FISI Strategic focus designed to deliver long-term value • Results-driven community bank with strong retail and commercial franchises 15 bps ◦ Serving financially stable Upstate New York markets and well-positioned for growth in metros of Buffalo and annualized Q3 ’24 Rochester
Slide 5: Third Quarter 2024 Key Results
Financial Highlights • Net income available to common shareholders was $13.1M, or $0.84 per diluted share, compared to $25.3M, or $1.62 per diluted share, in 2Q ’24 and $13.7M, or $0.88 per diluted share, in 3Q ’23. ◦ 3Q ’24 and 2Q ’24 results were positively impacted by the previously disclosed ins
Slide 6: Winding Down BaaS Offering
Financial Highlights • On September 16, 2024, the Company announced its intent to begin an orderly wind down of its BaaS offerings, following a careful review by the Company’s executive management and the Board of Directors undertaken in conjunction with its annual strategic planning process. Windin
Slide 7: 2024 Guidance Update
Financial Highlights 2024 Guidance Update Focused on executing strategic initiatives that will improve profitability and operating leverage over time; outside of NIM and NCOs to average assets expectations, guidance unchanged from July 2024 update 285-290 bps 1-3% full year loan growth 1-3% full yea
Slide 8: Recent Earnings Performance
Financial Highlights Recent Earnings Performance Last five quarters Earnings Summary(1) 3Q ’23 4Q ’23 1Q ’24 2Q ’24 3Q ’24 Average interest-earning assets $5,704.1 $5,726.6 $5,804.9 $5,765.9 $5,611.7 Net interest margin (tax equivalent basis) 2.91% 2.78% 2.78% 2.87% 2.89% Net interest income 41.7 39
Slide 9: Organic Loan Growth
High Quality Lending Average yield of 6.42% in the third quarter of 2024 Total Loans 5.3% CAGR $5.00 Organic Loan Billions $4.46 $4.40 $4.50 $4.05 Growth $4.00 $3.50 $3.60 $3.68 $0.67 $0.73 $0.72 $0.66 $4.40B of total loans at $0.69 $0.95 $0.87 $3.00 September 30, 2024 $1.02 $0.05 $0.04 $2.50 $0.84
Slide 10: Commercial Lending
High Quality Lending Total Commercial Loans Commercial Lending 7.6% CAGR $2.74 $2.76 Outstanding balance of $2.76B at September 30, 2024 Billions $2.5 • Commercial loans decreased $39.7M, or 1.4%, during the third quarter of 2024 $2.34 $0.65 $0.73 and increased $63.3M, or 2.3%, year-over-year $2.05
Slide 11: Commercial Lending: Portfolio Exposure Mix
High Quality Lending Overall Commercial Portfolio Exposure Mix Commercial Lending 2% 2%2% Committed credit exposure of $3.63B 3% 4% at September 30, 2024 4% • Commercial banking business operates across the Bank’s core Upstate New York markets and in the Mid-Atlantic region, following its successful
Slide 12: Strong Mid-Atlantic Performance & Opportunity
High Quality Lending Strong Mid-Atlantic Performance & Opportunity Leveraging technology to seamlessly collaborate with Mid-Atlantic team and onboard new customers despite geographic divide • Commercial loan production office opened in Baltimore suburb of Ellicott City in 1Q ’22 serving the Mid-Atla
Slide 13: Commercial Real Estate (CRE)
High Quality Lending Commercial Real Estate (CRE) Outstanding balances of $1.82B and committed credit exposure of $2.18B as of September 30, 2024 42% • Well diversified, with ~700 loan facilities consolidated into ~260 separate lending relationships, with ~$2.6M average loan size ◦ 75% of CRE client
Slide 14: Office and Multifamily CRE
High Quality Lending Office and Multifamily CRE Office and multifamily CRE outstanding balances of $360M and $748M, respectively, as of September 30, 2024 70% of FISI’s office exposure, or • Office CRE committed credit exposure of $383M at September 30, 2024 12% of CRE exposure, relates to ◦ <$50M o
Slide 15: Residential Real Estate
High Quality Lending Residential Lending Held Portfolio Residential Real Estate 1.3% CAGR $724.4M held portfolio and $276.8M serviced for others $727.2 $724.4 Millions $689.6 portfolio at September 30, 2024 $700 $655.8 $667.6 $77.4 $76.2 $89.8 $78.5 $77.7 $600 • Residential held portfolio was relati
Slide 16: Indirect Auto Remains Core Competency
High Quality Lending Indirect Auto Remains Core Consumer Indirect Portfolio Competency Millions 1.1% CAGR $1,023.6 $874.7M portfolio at September 30, 2024 $1,000 $958.0 $948.8 $874.7 • Effective January 1, 2024, the Company exited the Pennsylvania auto market as $840.4 it focuses on its core Upstate
Slide 17: Solid Asset Quality
High Quality Lending Solid Asset Quality Disciplined credit culture supports consistently strong asset quality metrics • Thorough credit review exercise undertaken at the outset of COVID-19 pandemic reinforced confidence in health of loan portfolio ◦ During 2Q ’22, COVID-19 at-risk pool was eliminat
Slide 18: Allowance for Credit Losses
High Quality Lending • Allowance increased two basis points compared to the linked period • 3Q ’24 provision for credit losses of $3.1M, compared to $2.0M in 2Q ’24 ◦ Provision for credit losses for 3Q ’24 driven by a combination of factors, including a slight increase in the national unemployment f
Slide 19: Securities Portfolio
Securities and Deposits 3.0% CAGR $1,384 Millions $1,400 $206 $1,143 $1,200 Securities Portfolio $1,000 $900 $189 $1,036 $148 $1,008 $121 $800 $1.01B at September 30, 2024 $272 $600 $1,178 $954 $888 $887 $400 $628 • Primarily comprised of agency wrapped mortgage-backed securities with $200 $0 interm
Slide 20: Deposit Growth
Securities and Deposits Deposit Growth $5.31B at September 30, 2024 321 3.34% municipal 3Q ’24 cost of customers as of average interest- • Total deposits were $5.31B, up $173.3M, or 3.4%, from June 30, 2024, and down MRQ-end bearing deposits $9.4M, or 0.2%, from one year prior ◦ Linked quarter incre
Slide 21: Liquidity
Securities and Deposits Liquidity Diverse deposit gathering capabilities and eligible ~18% ~83% collateral support a robust liquidity position of total deposits Loan to deposit are uninsured ratio • 3Q ’24 available committed liquidity remains strong, as supported through nonpublic deposits unencumb
Slide 22: Net Interest Income & Margin
Revenue Net Interest Income & Margin 3Q ’24 net interest income of $40.7M and net interest margin of 2.89% • Net interest income of $40.7M decreased $0.5M, or 1.2%, from the linked quarter $180 7.00% and decreased $1.0M, or 2.4%, from the Millions $167 $166 $162 $155 year-ago quarter $160 6.00% • Ne
Slide 23: Balance Sheet Providing Ample Cash Flow
Revenue Ample cash flow allows for redeployment of funds in higher interest earning assets, supporting incremental margin expansion Balance Sheet 3Q ‘24 Avg. NTM Providing Ample Select Interest Earning 2023 3Q ‘24 Roll Off Balance at 9/30/2024 Monthly Cash Flow1 Assets Yield Yield Yield ($000s) ($00
Slide 24: Noninterest Income
Revenue Noninterest Income Noninterest income was $9.4M in 3Q ’24 27.0% $3.17B of TTM net in assets managed revenue from non- by Courier Capital • Noninterest income was $9.4M, down $14.6, or 60.7%, from 2Q ’24 and down interest income at quarter-end $1.1M, or 10.0%, from the year-ago quarter. ◦ The
Slide 25: Wealth Management Business Positioned for Growth
Revenue Wealth Management Business Positioned for Growth Providing customized investment management, retirement planning, and consulting services for mass affluent and high-net-worth individuals and families, businesses, institutions, and foundations • Since entering the investment advisory space in
Slide 26: Noninterest Expense
Expense Management & Operating Leverage Quarterly Noninterest Expense $60 $54.0 Millions Noninterest Expense $50 $19.0 3Q ’24 expense of $32.5M $40 $34.7 $35.0 $33.0 $32.5 $30 $0.2 $0.4 $20 $35.0 $32.8 • 3Q ’24 expense of $32.5M was down $0.6M, or 1.7%, from the linked quarter $32.1 $10 and down $2.
Slide 27: Well-Capitalized
Capital Management & Investment Considerations Well-Capitalized Exceeding well-capitalized regulatory thresholds and well-positioned to support future growth 16% 13.61% 14% 13.12% 12.95% 12.13% 12.13% 12% 10.63% 10.68% 10.28% 10.62% 10.18% 9.78% 10.28% 9.42% 9.43% 9.76% 10% 8.98% 8.25% 8.23% 8.33% 8
Slide 28: AOCI Impact on TCE & TCBV
Capital Management & Investment Considerations Change in TCE 9% 8% 7 % % AOCI Impact on TCE & TCBV1 7% 6% 0 % % % 0 % Unrealized losses believed to be temporary in nature 5% 0 0% 4% 3% 2% • AOCI losses are believed to be temporary in nature, as they are associated with 1% the increase in interest ra
Slide 29: FISI Presents a Compelling Valuation
Capital Management & Investment Considerations FISI Presents a Compelling Valuation Results-driven community bank Longstanding commitment to rewarding shareholders through meaningful with strong retail dividend yield and 29-year cash dividend history and commercial franchises Investment Profile As o
Slide 30: Appendix: Investor Relations Contacts
Thank you for your interest in Financial Institutions, Inc. NASDAQ: FISI Investor Relations Contacts Kate Croft Director of Investor and External Relations Jack Plants Appendix Chief Financial Officer & Corporate Treasurer FISI-Investors@five-starbank.com Learn more at www.FISI-Investors.com 30
Slide 31: Strong Executive Leadership Team
Appendix Strong Executive Leadership Team Positioned to Drive Growth and Operational Excellence Martin K. Birmingham Samuel J. Burruano Jr. W. Jack Plants II President & Chief Executive Officer EVP, Chief Legal Officer & Corporate EVP, CFO & Treasurer Secretary overseeing financial planning and anal
Slide 32: Strategy Map
Appendix Strategy Map FISI’s vision is to be an independent, high-performing community bank offering best-in-class financial services to all of the communities we serve Attractive long-term Meaningful Engaged & Positive Effective engagement returns for customer experiences motivated contributions to
Slide 33: Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations In addition to results presented in accordance with U.S. generally accepted accounting principles (“ AAP”), this presentation contains certain non-GAAP financial measures. The Company believes that providing certain non-GAAP financial measures provides investors wit
Slide 34: Non-GAAP Reconciliations Continued
Appendix Non-GAAP Reconciliations Continued Net Income Adjusted Net Income and Adjusted Earnings Per Share (EPS): Income before Provision for Preferred stock Available to Net income Diluted EPS Amounts in thousands, except per share data and percentages income taxes income taxes dividends Common Sha
Slide 35: Non-GAAP Reconciliations Continued
Appendix Non-GAAP Reconciliations Continued Please refer to slide 34 for additional detail on adjustments Amounts in thousands, As of and for the three months ended As of and for the three months ended As of and for the nine months ended except June 30, 2024 September 30, 2024 September 30, 2024 per
Slide 36: Non-GAAP Reconciliations Continued
Appendix Non-GAAP Reconciliations Continued Please refer to slide 34 for additional detail on adjustments As of and for the As of and for the three months ended nine months ended Amounts in thousands June 30, 2024 September 30, 2024 September 30, 2024 Recurring Noninterest Income Noninterest income