Exhibit 99.1

FINANCIAL INSTITUTIONS, INC. ANNOUNCES FIRST QUARTER RESULTS

WARSAW, N.Y., April 28, 2021 – Financial Institutions, Inc. (NASDAQ:FISI) (the “Company” “we” or “us”), parent company of Five Star Bank (the “Bank”), SDN Insurance Agency, LLC (“SDN”), Courier Capital, LLC (“Courier Capital”) and HNP Capital, LLC (“HNP Capital”), today reported financial and operational results for the first quarter ended March 31, 2021.

Net income for the quarter was $20.7 million compared to $1.1 million in the first quarter of 2020. After preferred dividends, net income available to common shareholders was $20.3 million, or $1.27 per diluted share, compared to $762 thousand, or $0.05 per diluted share, in the first quarter of 2020.

Net income for both periods was significantly impacted by provision for credit losses. In the first quarter of 2020, provision of $13.9 million was driven by the adoption of the current expected credit loss standard (“CECL”) and the impact of the COVID-19 pandemic on the economic environment. The designated loss driver for the Company’s CECL model is the national unemployment forecast, which spiked in early 2020 at the onset of the pandemic. In the first quarter of 2021, provision was a benefit of $2.0 million due to continued improvement in the national unemployment forecast and positive trends in qualitative factors, resulting in a release of credit loss reserves.

Pre-tax pre-provision income⁽¹⁾ for the quarter was the highest in Company history at $24.1 million, an increase of $8.7 million from the first quarter of 2020.

“We are very pleased to report another solid quarter for our Company, reflecting strong underlying performance across our businesses,” said President and Chief Executive Officer Martin K. Birmingham. “In addition to the positive provision impact, we reported continued growth in net interest income and noninterest income. We are also benefitting from cost savings as an outcome of the enterprise standardization program. These positive factors contributed to an efficiency ratio below 53% and record pre-tax pre-provision income for the quarter.

“The pace of activity has not slowed in 2021. We continue to assist new and existing customers with the Paycheck Protection Program (“PPP”), helping them obtain approximately $96 million of new loans and completing the forgiveness process for approximately $87 million of loans in the first quarter. We completed the acquisition of Landmark Group, significantly increasing awareness of our insurance offerings in the Rochester market and supporting our strategy of diversifying revenue. We also repurchased more than 230 thousand shares of common stock under our stock repurchase program at favorable pricing.

“As infection rates decline in our markets and vaccination rates rise, we are seeing signs of an expanded re-opening of the economy. I remain cautiously optimistic about the strength and timing of the economic recovery. We believe that our strong balance sheet, diversified business model and talented associates position us to perform well in this environment. The continued health, safety and financial well-being of our customers, associates and communities remains a key focus of the Company.”

Chief Financial Officer and Treasurer W. Jack Plants II added, “Net interest margin was 3.29% for the quarter. Net interest income and net interest margin (“NIM”) benefited from the positive impact of PPP loan forgiveness and recognition of approximately $2.9 million of deferred fees in the quarter. Excluding all impacts of PPP loans, NIM was 3.15% for the first quarter of 2021 compared to 3.14% for the fourth quarter of 2020. NIM continues to be pressured by the interest rate environment and the lower respective yield of our excess liquidity position, driven by the increase in total deposits, up $929 million from the year earlier period.”

Stock Repurchase Program

On November 4, 2020, the Company announced a stock repurchase program for up to 801,879 shares of common stock, or approximately 5% of the Company’s outstanding common shares. Shares may be repurchased in open market transactions and pursuant to any trading plan adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934. The timing and number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions, and other corporate liquidity requirements and priorities. The repurchase program does not obligate the Company to purchase any shares and it may be extended, modified or discontinued at any time.

No shares were repurchased in 2020 under this program. Year-to-date, the Company has repurchased 238,439 shares for an average repurchase price of $24.30 per share, inclusive of transaction costs.

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Insurance Subsidiary Acquisition

On February 1, 2021, the Company’s insurance subsidiary SDN completed the acquisition of assets of Landmark Group (“Landmark”). A staple of the Rochester community since 1984, Landmark was an independent insurance brokerage firm delivering insurance, surety and risk management solutions across many business sectors including construction, manufacturing, real estate and technology, as well as individual personal insurance. Landmark Founder and Chairman Kelly M. Shea and President Christopher K. Shea remain with SDN to lead Rochester operations and continue their long-term relationship with clients.

Net Interest Income and Net Interest Margin

Net interest income was $37.9 million for the quarter, an increase of $1.7 million from the fourth quarter of 2020 and $4.7 million higher than the first quarter of 2020.

Net interest margin was 3.29% as compared to 3.13% in the fourth quarter of 2020 and 3.31% in the first quarter of 2020. Excluding the impact of lower-yielding PPP loans and related loan origination fees amortized over the term of the loan or upon loan forgiveness, net interest margin was 3.15% in the first quarter of 2021 and 3.14% in the fourth quarter of 2020.

Noninterest Income

Noninterest income was $13.0 million for the quarter, an increase of $1.6 million from the fourth quarter of 2020 and an increase of $3.0 million from the first quarter of 2020.

Noninterest Expense

Noninterest expense was $26.7 million in the quarter compared to $26.5 million in the fourth quarter of 2020 and $27.7 million in the first quarter of 2020.

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Income Taxes

Income tax expense was $5.3 million for the quarter compared to $1.7 million in the fourth quarter of 2020 and $322 thousand in the first quarter of 2020. The Company recognized federal and state tax benefits related to tax credit investments placed in service and/or amortized during the first quarter of 2021, fourth quarter of 2020, and first quarter of 2020, resulting in income tax expense reductions of approximately $244 thousand, $915 thousand and $197 thousand, respectively.

The effective tax rate was 20.5% for the quarter compared to 10.9% for the fourth quarter of 2020 and 22.2% for the first quarter of 2020. The Company’s effective tax rates differ from statutory rates because of interest income from tax-exempt securities, earnings on company owned life insurance and the impact of tax credit investments.

Balance Sheet and Capital Management

Total assets were $5.33 billion at March 31, 2021, up $416.8 million from December 31, 2020, and up $857.3 million from March 31, 2020.

Investment securities were $1.01 billion at March 31, 2021, up $109.6 million from December 31, 2020, and up $218.5 million from March 31, 2020. The Company’s initial 2020 investment strategy was to reinvest cash flow from the portfolio; however, the focus was redirected to deploying excess liquidity into cash flowing agency mortgage backed securities given the elevated cash position experienced across the banking system. Increased purchase activity in the first quarter of 2021 resulted from the continued execution of the strategy to reallocate excess Federal Reserve cash balances into collateral eligible agency mortgage backed securities that demonstrated higher yields, on a relative basis.

Total loans were $3.65 billion at March 31, 2020, up $59.2 million, or 1.6%, from December 31, and up $417.2 million, or 12.9%, from March 31, 2020.

Total deposits were $4.72 billion at March 31, 2021, $437.6 million higher than December 31, 2020, and $928.8 million higher than March 31, 2020. The increase from December 31, 2020, was the result of a seasonal increase in public deposits combined with growth in the non-public and reciprocal deposit portfolios. The increase from March 31, 2020, was due to growth in non-public, reciprocal and public deposits. Public deposit balances represented 24% of total deposits at March 31, 2021, compared to 20% of total deposits at December 31, 2020, and 27% at March 31, 2020.

There were no short-term borrowings outstanding at March 31, 2021, a decrease of $5.3 million and $109.5 million from December 31, 2020, and March 31, 2020, respectively. The decline is the result of the Company’s decision to utilize brokered deposits as a cost-effective alternative to Federal Home Loan Bank borrowings. Short-term borrowings and brokered deposits have historically been utilized to manage the seasonality of public deposits. In February 2020, the Company entered a long-term brokered sweep arrangement as a stable alternative borrowing source to diversify the wholesale funding base.

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Shareholders’ equity was $466.3 million at March 31, 2021, compared to $468.4 million at December 31, 2020, and $439.4 million at March 31, 2020. Common book value per share was $28.36 at March 31, 2021, an increase of $0.24 or 0.9% from $28.12 at December 31, 2020, and an increase of $2.01 or 7.6% from $26.35 at March 31, 2020. Tangible common book value per share⁽¹⁾ was $23.66 at March 31, 2021, an increase of $0.14 or 0.6% from $23.52 at December 31, 2020, and an increase of $1.97 or 9.1% from $21.69 at March 31, 2020.

The common equity to assets ratio was 8.42% at March 31, 2021, compared to 9.18% at December 31, 2020, and 9.44% at March 31, 2020. Tangible common equity to tangible assets⁽¹⁾, or the TCE ratio, was 7.13%, 7.80% and 7.90% at March 31, 2021, December 31, 2020, and March 31, 2020, respectively. The primary driver of declines in both ratios compared to prior periods was the significant increase in total assets, specifically the increase in liquidity. The ratios were impacted to a lesser degree by a decrease in accumulated other comprehensive income (loss) associated with unrealized losses in the available for sale securities portfolio and the impact of share repurchases during the first quarter of 2021, partially offset by the positive impact of earnings.

During the first quarter of 2021, the Company declared a common stock dividend of $0.27 per common share, an increase of 3.8% over the previous dividend. The dividend returned 21% of first quarter net income to common shareholders.

The Company’s regulatory capital ratios at March 31, 2021, compared to the prior quarter and prior year:

Credit Quality

Non-performing loans were $9.7 million at March 31, 2021, compared to $9.5 million at December 31, 2020, and $12.4 million at March 31, 2020. Net charge-offs were $887 thousand in the quarter, $1.5 million lower than the fourth quarter of 2020 and $9.3 million lower than the first quarter of 2020. Higher first quarter 2020 non-performing loans and charge-offs were the result of one commercial credit that was downgraded and partially charged-off. The borrower’s business was related to the hospitality industry and the downgrade and charge-off were precipitated by the impact of COVID-19. The ratio of annualized net charge-offs to total average loans was 0.10% in the current quarter, 0.27% in the fourth quarter of 2020 and 1.27% in the first quarter of 2020.

Foreclosed assets at March 31, 2021, were $3.0 million, unchanged from December 31, 2020, and an increase of $2.2 million from March 31, 2020. The increase from March 31, 2020, is attributable to the commercial credit previously described; the loan was partially charged off during the first quarter of 2020 and foreclosure occurred in the third quarter.

At March 31, 2021, the allowance for credit losses - loans to total loans ratio was 1.36% compared to 1.46% at December 31, 2020, and 1.34% at March 31, 2020. PPP loans are fully guaranteed by the Small Business Administration. Excluding PPP loans, the March 31, 2020, allowance for credit losses - loans to total loans ratio⁽¹⁾ was 1.47%, a decrease of ten basis points from 1.57% at December 31, 2020.

Provision (benefit) for credit losses - loans was a $1.7 million benefit in the quarter compared to provisions of $5.4 million in the fourth quarter of 2020 and $13.4 million in the first quarter of 2020. Changes in the allowance for unfunded commitments, also included in provision (benefit) for credit losses, were a $276 thousand decrease in the first quarter of 2021 and increases of $73 thousand and $493 thousand in the fourth and first quarters of 2020, respectively.

The Company has remained strategically focused on the importance of credit discipline, allocating what we believe are the necessary resources to credit and risk management functions as the loan portfolio has grown. The total non-performing loans to total loans ratio was 0.27% at March 31, 2021, 0.26% at December 31, 2020, and 0.38% at March 31, 2020. The ratio of allowance for credit losses - loans to non-performing loans was 514% at March 31, 2021, compared to 551% at December 31, 2020, and 350% at March 31, 2020.

Subsequent Events

The Company is required, under generally accepted accounting principles, to evaluate subsequent events through the filing of its consolidated financial statements for the quarter ended March 31, 2021, 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 March 31, 2021, and will adjust amounts preliminarily reported, if necessary.

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Conference Call

The Company will host an earnings conference call and audio webcast on April 29, 2021, 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. The live webcast will be available in listen-only mode on the Company’s website at www.fiiwarsaw.com. Within the United States, listeners may also access the call by dialing 1-888-346-9290 and requesting the Financial Institutions, Inc. call. The webcast replay will be available on the Company’s website for at least 30 days.

About Financial Institutions, Inc.

Financial Institutions, Inc. provides diversified financial services through its subsidiaries Five Star Bank, SDN, Courier Capital and HNP Capital. Five Star Bank provides a wide range of consumer and commercial banking and lending services to individuals, municipalities and businesses through a network of more than 45 offices throughout Western and Central New York State. SDN provides a broad range of insurance services to personal and business clients. Courier Capital and HNP Capital provide customized investment management, investment consulting and retirement plan services to individuals, businesses, institutions, foundations and retirement plans. Financial Institutions, Inc. and its subsidiaries employ approximately 600 individuals. The Company’s stock is listed on the Nasdaq Global Select Market under the symbol FISI. Additional information is available at www.fiiwarsaw.com.

Non-GAAP Financial Information

In addition to results presented in accordance with U.S. generally accepted accounting principles (“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 “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “estimate,” “forecast,” “target,” “preliminary,” or “range.” 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: the impact of the COVID-19 pandemic on the Company’s customers, business, and results of operations as well as the economy in Western New York and the United States, the Company’s ability to implement its strategic plan, 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, the Company’s ability to successfully integrate and profitably operate Landmark Group and other acquisitions, 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, changes in interest rates, and general economic and credit market conditions nationally and regionally. Consequently, all forward-looking statements made herein are qualified by these cautionary statements and the cautionary language 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 measure.

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For additional information contact:

Shelly J. Doran

Director of Investor and External Relations

585-627-1362

sjdoran@five-starbank.com

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

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

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FINANCIAL INSTITUTIONS, INC.
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(Amounts in thousands, except per share amounts)

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FINANCIAL INSTITUTIONS, INC.
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FINANCIAL INSTITUTIONS, INC.
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