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Financial Institutions Inc (FISI)
NASDAQ:FISI
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Financial Institutions (FISI) AI Stock Analysis

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FISI

Financial Institutions

(NASDAQ:FISI)

Rating:60Neutral
Price Target:
$29.00
▲(5.65% Upside)
Financial Institutions, Inc. faces significant financial challenges with declining revenue and profitability, which heavily impacts its overall score. However, positive technical indicators and a favorable earnings call sentiment provide some optimism. The attractive dividend yield and recent corporate events further support the stock's appeal to income-focused investors. Addressing operational inefficiencies and improving profitability remain crucial for enhancing financial health.

Financial Institutions (FISI) vs. SPDR S&P 500 ETF (SPY)

Financial Institutions Business Overview & Revenue Model

Company DescriptionFinancial Institutions, Inc. operates as a holding company for the Five Star Bank, a chartered bank that provides banking and financial services to individuals, municipalities, and businesses in New York. The company offers checking and savings account programs, including money market accounts, certificates of deposit, sweep investments, and individual retirement and other qualified plan accounts. Its loan products include term loans and lines of credit; short and medium-term commercial loans for working capital, business expansion, and purchase of equipment; commercial business loans to the agricultural industry; commercial mortgage loans; one-to-four family residential mortgage loans, home improvement loans, closed-end home equity loans, and home equity lines of credit; and consumer loans, such as automobile, secured installment, and personal loans. The company also provides personal insurance products, including automobile, homeowners, boat, recreational vehicle, landlord, and umbrella coverage; commercial insurance comprising property, liability, automobile, inland marine, workers compensation, bonds, crop, and umbrella insurance products; and financial services comprising life and disability insurance, medicare supplements, long-term care, annuities, mutual funds, and retirement programs. In addition, it offers customized investment advisory, wealth management, investment consulting, and retirement plan services, as well as operates a real estate investment trust that holds residential mortgages and commercial real estate loans. The company operates a network of 48 banking offices in Allegany, Cattaraugus, Cayuga, Chautauqua, Chemung, Erie, Genesee, Livingston, Monroe, Ontario, Orleans, Seneca, Schuyler, Steuben, Wayne, Wyoming, and Yates counties, New York. Financial Institutions, Inc. was founded in 1817 and is headquartered in Warsaw, New York.
How the Company Makes MoneyFISI generates revenue through multiple streams, including interest income from loans and mortgages, fees from banking services such as account maintenance and transaction fees, and commissions from investment services. The company also earns premiums from its insurance products and may receive investment income from its asset management activities. Strategic partnerships with fintech companies and other financial institutions enhance FISI's service offerings, allowing for cross-selling opportunities and expanding its customer base, which contributes significantly to its overall earnings.

Financial Institutions Earnings Call Summary

Earnings Call Date:Jul 24, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Oct 23, 2025
Earnings Call Sentiment Positive
The earnings call highlighted positive trends in net income growth, net interest margin expansion, commercial loan portfolio strength, and improvements in credit metrics. Despite these positive aspects, challenges were noted in deposit declines, consumer indirect balance reductions, and increased noninterest expenses. Overall, the positive highlights were more significant, indicating a generally positive outlook.
Q2-2025 Updates
Positive Updates
Increase in Net Income and Earnings Per Share
The company reported a 4% increase in net income available to common shareholders, amounting to $17.2 million, and a 5% increase in diluted earnings per share compared to the previous quarter.
Net Interest Margin Expansion
The net interest margin expanded by 14 basis points from the linked quarter and 62 basis points from the same quarter last year, supported by an increase in net interest income by approximately 5% and 19%.
Strong Commercial Loan Portfolio
Nonperforming commercial loans declined by $7 million from March 31 to June 30, and the company reported a 2.4% increase in commercial business loans during the quarter.
Home Equity Lending Growth
Year-to-date closed home equity loans and lines of credit increased by 44% from the comparable period in 2024, with application volume up 19%.
Improvement in Credit Metrics
Consumer indirect net charge-off ratio decreased to 45 basis points from 103 basis points in the first quarter, and net charge-offs were 36 basis points of average loans in the second quarter.
Strong Capital Position
The company's common equity Tier 1 ratio increased by 46 basis points from March 31 and by 81 basis points from June 30, 2024.
Negative Updates
Decline in Total Deposits
Period-end total deposits were down about 4% from March 31, 2025, due to typical seasonality and the continued outflow of Banking-as-a-Service deposits.
Consumer Indirect Balances Decline
Consumer indirect balances decreased by 2.3% from March 31 and 7% year-over-year to $833.5 million as of June 30.
Higher Noninterest Expenses
Noninterest expense increased to $35.7 million in the second quarter compared to $33.7 million in the previous quarter, due to timing, higher costs expected to be nonrecurring, and elevated medical claims.
Company Guidance
The guidance provided in the Financial Institutions, Inc. Second Quarter 2025 Earnings Call affirmed the company's full year targets, highlighting several key metrics. The company reported a 4% increase in net income available to common shareholders to $17.2 million, alongside a 5% increase in diluted earnings per share compared to the previous quarter. Net interest margin expanded by 14 basis points from the linked quarter and 62 basis points year-over-year, with net interest income growing by approximately 5% and 19% respectively. Noninterest income rose to $10.6 million, up 2.4% from the previous quarter. The company maintained a strong annualized return on average assets at 113 basis points, and an efficiency ratio just below 60%. Total loans at the period's end were $4.54 billion, showing consistency with March 31, while average loans increased by 1% from the first quarter. The company reiterated its expectation for full-year loan growth between 1% and 3%, supported by commercial lending in upstate New York. Nonperforming commercial loans declined by $7 million, although commercial net charge-offs were $2.5 million during the quarter. The guidance also highlighted a net interest margin expectation of between 345 and 355 basis points for the full year, with further incremental margin expansion anticipated. Total deposits decreased by 4% from March 31, 2025, due to seasonality and the continued outflow of Banking-as-a-Service deposits. Noninterest expense was reported at $35.7 million, and the company maintained its full-year noninterest expense guidance at approximately $140 million. The effective tax rate was projected to range between 17% and 19% for the year.

Financial Institutions Financial Statement Overview

Summary
Financial Institutions is facing challenges with declining revenue and profitability, as evidenced by negative profit margins and a diminishing return on equity. Although leverage appears manageable, the low equity ratio could pose risks. Cash flow generation remains a relative strength, showcasing operational efficiency, but the inability to convert this into positive net income points to underlying operational issues that need addressing.
Income Statement
45
Neutral
The income statement reflects declining revenue and profitability. The TTM revenue growth rate is marginal at 0.68%, indicating stagnant growth. Gross profit margin has fallen to 39.58% from previous highs, while net profit margin is negative at -10.09%, underscoring substantial losses. Additionally, negative EBIT and EBITDA margins highlight ongoing operational inefficiencies.
Balance Sheet
55
Neutral
The balance sheet shows moderate stability with a debt-to-equity ratio of 0.36, suggesting manageable leverage. However, the return on equity has turned negative due to losses. The equity ratio is 9.30%, indicating a low proportion of equity relative to assets, which could present risks if market conditions worsen.
Cash Flow
60
Neutral
The cash flow statement shows resilience with positive operating cash flow in the TTM period, though free cash flow has slightly decreased. The operating cash flow to net income ratio is strong at 2.79, suggesting efficient cash generation from operations despite net losses. However, the free cash flow to net income ratio is negative, reflecting challenges in converting income into free cash.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue257.13M264.17M332.59M241.09M212.03M204.37M
Gross Profit99.98M88.03M197.29M198.25M207.89M154.87M
EBITDA-50.99M-60.47M71.14M79.08M105.27M53.62M
Net Income-34.94M-41.65M50.26M56.57M77.70M38.33M
Balance Sheet
Total Assets5.65B6.12B6.16B5.80B5.52B4.91B
Cash, Cash Equivalents and Short-Term Investments1.08B87.33M1.01B1.08B1.26B721.94M
Total Debt90.64M256.61M343.32M312.45M103.91M78.92M
Total Liabilities4.51B5.55B5.71B5.39B5.02B4.44B
Stockholders Equity1.14B568.98M454.80M405.61M505.14M468.36M
Cash Flow
Free Cash Flow28.18M72.15M7.90M125.20M63.56M39.19M
Operating Cash Flow33.44M77.13M10.89M133.57M72.96M43.45M
Investing Cash Flow-83.53M-8.23M-310.09M-325.16M-633.42M-531.07M
Financing Cash Flow-3.23M-106.02M293.17M242.94M545.69M468.55M

Financial Institutions Technical Analysis

Technical Analysis Sentiment
Positive
Last Price27.45
Price Trends
50DMA
26.49
Positive
100DMA
25.76
Positive
200DMA
25.92
Positive
Market Momentum
MACD
0.44
Negative
RSI
60.10
Neutral
STOCH
68.94
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FISI, the sentiment is Positive. The current price of 27.45 is above the 20-day moving average (MA) of 26.63, above the 50-day MA of 26.49, and above the 200-day MA of 25.92, indicating a bullish trend. The MACD of 0.44 indicates Negative momentum. The RSI at 60.10 is Neutral, neither overbought nor oversold. The STOCH value of 68.94 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FISI.

Financial Institutions Risk Analysis

Financial Institutions disclosed 47 risk factors in its most recent earnings report. Financial Institutions reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Financial Institutions Peers Comparison

Overall Rating
UnderperformOutperform
Sector (68)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
75
Outperform
$775.49M11.079.27%2.76%7.40%2.01%
75
Outperform
$512.69M15.955.31%0.69%7.35%-2.65%
75
Outperform
$577.44M13.0113.36%1.23%22.14%12.06%
73
Outperform
$575.99M11.4112.08%4.52%6.15%-1.27%
70
Outperform
$633.68M
0.27%
68
Neutral
$18.06B11.9710.24%3.74%9.75%1.30%
60
Neutral
$558.80M8.52-6.53%4.39%-29.94%-178.36%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
FISI
Financial Institutions
27.45
3.58
15.00%
CCNE
Cnb Financial
26.05
3.60
16.04%
FMNB
Farmers National Banc Oh
15.05
0.83
5.84%
PGC
Peapack-Gladstone Financial
28.90
2.64
10.05%
CBNK
Capital Bancorp
34.08
9.85
40.65%
NPB
Northpointe Bancshares, Inc.
18.65
4.11
28.27%

Financial Institutions Corporate Events

Dividends
Financial Institutions Declares Quarterly Dividend Announcement
Positive
Aug 25, 2025

On August 25, 2025, Financial Institutions, Inc. announced the declaration of a quarterly cash dividend of $0.31 per common share, along with dividends of $0.75 per share on Series A 3% Preferred Stock and $2.12 per share on Series B-1 8.48% Preferred Stock. These dividends are payable on October 2, 2025, to shareholders of record as of September 15, 2025. This announcement reflects the company’s ongoing commitment to providing returns to its shareholders and may influence its market positioning by enhancing investor confidence.

Business Operations and StrategyFinancial Disclosures
Financial Institutions Reports Q2 2025 Financial Results
Neutral
Jul 24, 2025

Financial Institutions, Inc. reported its second quarter 2025 results, showing a net income of $17.5 million, an increase from the previous quarter but a decrease from the same period last year. The company experienced growth in net interest income and margin, despite a reduction in total loans and deposits, partly due to the wind-down of its Banking-as-a-Service offering. The results reflect the company’s focus on profitability and efficient balance sheet management, with expectations for continued growth in loan production and disciplined credit practices.

Executive/Board ChangesShareholder Meetings
Financial Institutions Shareholders Approve Key Decisions at Annual Meeting
Neutral
May 29, 2025

On May 28, 2025, Financial Institutions, Inc. held its Annual Meeting of Shareholders where several key decisions were made. Shareholders approved the Second Amended and Restated 2015 Long-Term Incentive Plan, which increases the shares available for issuance by 400,000, extends the plan’s term until 2035, and adjusts compensation limits for directors. Additionally, the election of directors, approval of executive compensation, and ratification of the appointment of RSM US LLP as the independent registered public accounting firm for 2025 were confirmed.

Dividends
Financial Institutions Declares Quarterly Cash Dividend
Positive
May 28, 2025

On May 28, 2025, Financial Institutions, Inc. announced the declaration of a quarterly cash dividend of $0.31 per common share, along with dividends of $0.75 per share on Series A 3% Preferred Stock and $2.12 per share on Series B-1 8.48% Preferred Stock. These dividends are set to be paid on July 2, 2025, to shareholders recorded by June 13, 2025. This announcement reflects the company’s ongoing commitment to providing shareholder value and may influence investor perceptions and market positioning.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 26, 2025