Financial Institutions Inc 2024年度报告

TABLE OF CONTENTS Letter to Shareholders..........................................................Pages 2-7Leadership........................................................................................Page 8Form 10-K...............................................................Begins after page 8Non-GAAP Reconciliations..............................................Appendix AInvestor Information...............................................Inside back cover Aiminghigher. In 2024, Financial Institutions, Inc. took important steps on our journey to transform intoa higher-performing institution. We overcame challenges and sharpened our focuson our core community banking franchise. We continued to strengthen our talent andrefine our organizational structure. And, we coupled a successful and oversubscribedpublic equity offering with a transformational investment securities restructuring thatis expected to support improved profitability in 2025 and for years to come. Today,we are more united, more focused, and more confident than ever, as we aim higher,guided by our strategic plan and vision that are designed to deliver long-term valueto all of our stakeholders. 1817 publicly tradedon Nasdaqsince 1999 serving ourcommunities forover 200 years To Our Shareholders,Customers, Associates& Partners, In 2024, our Company took important steps on our journeyto transform into a higher-performing institution. Wesharpened our focus on our core community bankingfranchise, stepping away from insurance and Banking-as-a-Service, allowing for more focused attention, greaterinvestment and stronger execution in our retail banking,commercial banking and wealth management businesslines. We continued to strengthen our talent and refineour organizational structure, enhancing our technology,operations, and risk functions in 2024. And, we completed asuccessful public equity offering that bolstered capital andallowed us to execute an investment securities restructuringthat is expected to support improved profitability in 2025 andfor years to come. Our Board, executive management and entire team pulledtogether to accomplish these strategic actions, while alsoresponding to the deposit-related fraud event experiencedin the first quarter of 2024. Today, we are more united, morefocused, and more confident than ever, as we aim higher,guided by our strategic plan and vision that are designed todeliver long-term value to all of our stakeholders. Sharpened Focus on Our Core Franchise Through the course of last year, we took strategic actionsto simplify our business and allow us to better prioritize ourcore community banking franchise, including intentionallyreducing the size of our consumer indirect portfolio, divestingour insurance subsidiary and beginning the wind-down ofour Banking-as-a-Service, or BaaS, platform. At the start of 2024, we exited the Pennsylvania indirect autobusiness to focus on our core Upstate New York market.Indirect balances were $845.8 million at December 31, 2024,a decrease of $103.1 million, or 10.9%, year-over-year andmake up just under 19% of total loans. This business lineremains a core competency for us, and we continue to valuethe liquidity and healthy spreads the portfolio affords. Thatsaid, while we do expect to generally maintain the size of thisportfolio in 2025, we expect it to come down in concentrationover time as other categories, including commercial loans,are anticipated to grow. Investment Considerations • Positioned well for profitable, organic growth• Results-driven community bank with strong retail and commercial franchises• Wealth management business diversifies revenue and complements core banking franchise• Disciplined credit culture with strong credit quality• Experienced management team committed to rewarding shareholders, including throughmeaningful dividend yield and long-standing dividend history In early April, we closed the sale of our former insurancebrokerage to a privately-held, global property andcasualty broker and benefits consultant. The sale achievedstrong value for shareholders by generating a significantpre-tax gain of $13.7 million, inclusive of selling costsand elimination of goodwill and intangible assets. It hasalso meaningfully strengthened our capital position andsupported our continued focus on driving earnings in ourcore banking business. In September, we announced our intent to wind-downour BaaS platform, following a careful internal reviewthat considered many factors, including the contributionof BaaS to our core financial results, evolving regulatoryexpectations, and future investments in talent andtechnology necessary to achieve scale. We continueto expect the financial impact of the wind-down to beimmaterial and that it will be largely complete in mid-2025. Each of these decisions allowed us to sharpen our focuson our retail banking, commercial banking and wealthmanagement business lines, where we see significantopportunity and growth potential wit