Financial Institutions (NASDAQ:FISI) released first-quarter financial results and hosted an earnings call on Friday. Read the complete transcript below.
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View the webcast at https://events.q4inc.com/attendee/208517337
Summary
Financial Institutions Inc reported a net income of $20.6 million, or $1.04 per diluted share, showing improvement from previous quarters.
The company completed the refinancing of $65 million in legacy sub debt and repurchased over 163,000 shares, with a total of 500,000 shares repurchased since December.
A 3.2% increase in the quarterly cash dividend to $0.32 per share was approved, reflecting confidence in long-term strategy.
Total loans decreased slightly from the previous quarter but increased by 1.6% year over year, with plans for loan growth in the second half of the year.
The company reported a net interest margin (NIM) expansion and has adjusted full-year NIM guidance to the upper 360s.
Non-interest income was slightly down due to reduced swap fee activity, while wealth management and insurance revenues remained stable.
The efficiency ratio improved, and the company expects a full-year ratio approaching 57% due to disciplined expense management.
Deposit growth was impacted by the wind-down of the banking as a service segment, but core deposits remain a focus.
Management expressed confidence in achieving a full-year loan growth target of 5%, driven by commercial loan demand in New York markets.
Full Transcript
Josh (Moderator)
Hello and welcome to the Financial Institutions Incorporated first quarter 2026 earnings call. My name is Josh and I will be the moderator for today’s call. All lines will be muted during the presentation portions of the call with an opportunity for questions and answers at the end. If you would like to ask a question please press STAR followed by one on your telephone keypad and to remove that question please press STAR followed by two. At this time I’d like to introduce your host Marty Birmingham may proceed.
Kate
Marty Birmingham, thank you for joining us. For today’s call, providing prepared comments will be President and CEO Marty Birmingham and CFO Jack Plant. You will be joined by additional members of the Company’s leadership team during the question and answer session. Today’s prepared comments and Q and A will include forward looking statements. Actual results may differ materially from forward looking statements due to a variety of risks, uncertainties and other factors. We refer you to the previous day’s earnings release and investor presentation as well as historical SEC filings which are available on our investor relations website for our safe harbor description and a detailed discussion of the risk factors relating to forward looking statements. We will also discuss certain non GAAP financial measures intended to supplement and not substitute for comparable GAAP measures. Non GAAP to GAAP reconciliations can be found in the earnings release filed with an exhibit to form 8K or in our latest investor presentation available on our IR website www.fisi-investors.com. please note this call includes information that may only be accurate as of today’s date April 24, 2026. I will now turn the call over to President and CEO Marty Birmingham.
Marty Birmingham (President and CEO)
Thank you Kate Good morning, everyone and thank you for joining us today. Our first quarter results underscore the strength of our community banking franchise, reflecting disciplined execution by our team and a continued focus on sustainable profitability. We delivered net income available to common shareholders of 20.6 million or $1.04 per diluted share, representing improvement from both the linked and year ago quarters. The first quarter operating results also supported meaningful improvement on key measures of profitability over both the length and year ago quarters including return on average assets of 1.37%, return on average tangible common equity exceeding 15% and an efficiency ratio of 57%. Our management team and board took strategic actions during the quarter that reflect our commitment to prudent capital deployment and long term shareholder value creation. In January we completed the refinancing of 65 million of legacy sub debt issuances. In addition, we repurchased a little over 163,000 shares bringing the total repurchase since December to approximately 500,000 shares, or half the 5% authorization approved under the current buyback program. In February, our Board also approved a 3.2% increase in our quarterly cash dividend to $0.32 per common share. Tangible book value per share increased 1.1% to $28.15 this quarter, and strong earnings more than offset the impact of our share repurchase activity and some downward pressure in AOCI driven by interest rate volatility. Our capital actions underscore our Board’s confidence in our strategy and long term outlook while reaffirming our commitment to disciplined capital management and long term shareholder value. From a balance sheet perspective, total loans were down modestly on a linked quarter basis and up 1.6% year over year. Commercial loans are relatively flat on a late quarter basis with business loans up 1% and mortgage down modestly. Compared to the first quarter 2025, both categories were up about 5%. On our January call we indicated that our expectation for first quarter commercial growth would be modest given the magnitude of loans that were closed in late 2025 and higher payoffs we anticipated to take place in the first quarter. Given geopolitical and economic uncertainty in the first quarter, we did see some of our commercial customers taking a cautious approach by tightening their balance sheets and paying down debt with cash reserves, which impacted both sides of our balance sheet in the form of lower loans and deposits. Asset Line activity in the fourth quarter 2025, we originated approximately $270 million in commercial loans with roughly 135 million rolling off in the first quarter 2026 originations were 147 million with 158 million in payoffs and paid out. Based on the size and health of the pipelines we have today, we expect to see loan growth rebound through the second half of the year and continue to expect full year loan growth of 5% driven by commercial in our upstate New York markets, we are seeing demand pick up on the C and I side, particularly in Rochester and Buffalo. In Syracuse, excitement on the ground is palpable following the Micron groundbreaking earlier this year. With a seasoned local lender joining our team recently, we believe we are well positioned to support the growth that will take place in central New York. In our Mid Atlantic portfolio where we have a small team of CRE lenders, we have experienced higher refinancing activity for construction loans, which is a testament to the high quality of sponsors and the liquidity of this portfolio. Turning to consumer loans on balance sheet, residential grew modestly up about 1% from the end of the link in year ago, quarters sold and service residential mortgages of 298 million were up 1.5% during the quarter and more than 6% year over year. As we shift more production to our off balance sheet service portfolio supporting fee income in the upstate New York metros of Rochester and Buffalo, the housing market remains hotter with home values projected to climb another 4% or more in 2026. Both mortgage and home equity applications are up 10% year over year and we are enthused about our opportunity as we enter the busier spring and summer home buying season. Consumer indirect loans were down 2.4% from the end of the fourth quarter and around 8% from the first quarter of 2025 to 788 million. As we have shared previously, we have been comfortable allowing runoff to outpace originations given our focus on profitable spreads and favorable credit mix. Originations in the first two months of the quarter were lighter than we planned, but March was very solid. With April pacing well, we feel well positioned …
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