Business Description

The Parent is a financial holding company organized in 1931 under the laws of New York State (“New York” or “NYS”). The principal office of the Parent is located at 220 Liberty Street, Warsaw, New York 14569 and its telephone number is (585) 786-1100. The Parent was incorporated on September 15, 1931, but the continuity of the Company’s banking business is traced to the organization of the National Bank of Geneva on March 28, 1817. Except as the context otherwise requires, the Parent and its direct and indirect subsidiaries are collectively referred to in this report as the “Company.” The Parent’s common stock is traded on the Nasdaq Global Select Market under the ticker symbol “FISI.” The Parent’s primary business is the operation of its subsidiaries. It does not engage in any other substantial business activities. The Parent’s direct wholly-owned subsidiaries are: Five Star Bank, referred to as “FSB” or “the Bank,” which provides a full range of banking services to consumer, commercial and municipal customers in Western and Central New York, and commercial loans in the Mid-Atlantic region, through a loan production office in Ellicott City, Maryland (a suburb of Baltimore, Maryland), and the Central New York region, through an office in Syracuse, New York; and Courier Capital LLC, referred to as “Courier Capital,” which provides customized investment management, investment consulting and retirement plan services to individuals, businesses, institutions, foundations and retirement plans. As of December 31, 2025, the consolidated financial statements include the accounts of the Parent, the Bank, and Courier Capital. At December 31, 2025, the Company had consolidated total assets of $6.27 billion, deposits of $5.21 billion and shareholders’ equity of $628.9 million and the Bank represented 99%, and Courier Capital represented less than 1% of the consolidated assets of the Company. Five Star Bank The Bank is a New York-chartered bank that has its headquarters at 55 North Main Street, Warsaw, NY, a total of 48 full-service banking offices in the New York State counties of Allegany, Cattaraugus, Cayuga, Chemung, Erie, Genesee, Livingston, Monroe, Ontario, Orleans, Seneca, Steuben, Wyoming, and Yates, and commercial loan production offices in Baltimore, Maryland and Syracuse, New York serving the Mid-Atlantic and Central New York regions, respectively. At December 31, 2025, the Bank had total assets of $6.24 billion, investment securities of $1.01 billion, net loans of $4.61 billion, deposits of $5.29 billion and shareholders’ equity of $662.3 million. The Bank offers deposit products, which include checking and NOW accounts, savings accounts, and certificates of deposit, as its principal source of funding. The Bank’s deposits are insured up to the maximum permitted by the Deposit Insurance Fund (the “DIF”) of the Federal Deposit Insurance Corporation (“FDIC”). The Bank offers a variety of loan products to its customers, including commercial and consumer loans. Courier Capital, LLC Courier Capital is an SEC-registered investment advisory and wealth management firm founded in 1967 and headquartered in Western New York, with offices in Buffalo, Rochester and Jamestown, New York, and Pittsburgh, Pennsylvania. We also added an office in Sarasota, Florida in September 2025. With $3.60 billion in assets under management as of December 31, 2025, Courier Capital offers customized investment advice, wealth management, investment consulting and retirement plan services to individuals, businesses and institutions. For the year ended December 31, 2025, Courier Capital had total revenue of $11.6 million. Five Star REIT, Inc. Five Star REIT, Inc. (“Five Star REIT”), a wholly-owned subsidiary of the Bank, operates as a real estate investment trust that primarily holds residential mortgages and commercial real estate loans. Five Star REIT provides additional flexibility and planning opportunities for the business of the Bank. Business Strategy Our business strategy has been to maintain a community bank philosophy, which consists of focusing on and understanding the individualized banking and other financial services needs of individuals, municipalities and businesses of the communities surrounding our primary service area.…