EX-99.1

WARSAW, N.Y., July 23, 2009 — Financial Institutions, Inc. (Nasdaq: FISI) (the “Company”), the parent company of Five Star Bank, today announced financial results for the second quarter ended June 30, 2009. Net income for the Company was $2.6 million or $0.16 per diluted share for the second quarter of 2009, compared with $1.6 million or $0.12 per diluted share for the second quarter of 2008. For the first six months of 2009 net income was $5.6 million or $0.35 per diluted share, compared with $5.4 million or $0.43 per diluted share for the same period last year.

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Net interest income for the second quarter of 2009 was $17.6 million, an increase of $1.5 million or 9% over second quarter of 2008. For the first six months of 2009 net interest income was $35.0 million, an increase of $3.7 million or 12% over the first six months of 2008. The increase is reflective of growth in the loan portfolio coupled with higher net interest margin.

•

Total loans were $1.219 billion at June 30, 2009, an increase of $207.8 million or 21% from June 30, 2008.

•

Commercial loans were $523.7 million at June 30, 2009, an increase of $86.8 million or 20% from one year ago, and an increase of $40.4 million or 8% since March 31, 2009.

•

Consumer loans were $694.9 million at June 30, 2009, an increase of $121.0 million or 21% from one year ago, and an increase of $20.2 million or 3% since March 31, 2009.

•

Net interest margin was 4.01% for the second quarter of 2009, an increase of 7 basis points from the second quarter of 2008. For the six months ended June 30, 2009 net interest margin was 4.05%, an increase of 22 basis points from the same period last year.

•

“Well capitalized” position maintained with total shareholders’ equity of $192.5 million, a leverage capital ratio of 7.84% and a total risk-based capital ratio of 11.94%.

•

Provision for loan losses for the second quarter of 2009 was $2.1 million and net charge-offs were $1.1 million. Provision for loan losses of $4.0 million for the first six months of 2009 exceeded net charge-offs of $2.1 million resulting in a $1.9 million increase in the allowance for loan losses to $20.6 million or 1.69% of total loans.

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The second quarter of 2009 includes other-than-temporary impairment charges of $1.7 million on selected investment securities that were partially offset by $1.2 million in net gain on investment securities.

•

The second quarter of 2009 includes a $923 thousand FDIC insurance special assessment charge.

“We continue to build momentum in our core community banking business and have followed-up on our strong start to 2009 with a solid second quarter,” said Peter G. Humphrey, President and Chief Executive Officer of the Company. “Our business development success has been outstanding as both commercial and consumer loans are up approximately 20% from a year ago. These results are particularly gratifying in light of the current economic environment. As loans and deposits have increased over the past several quarters, our capital, liquidity and asset quality have remained strong. These factors, along with higher revenues and our discipline in containing the costs that we can control have positively impacted our core operations.”

Net interest income for the second quarter of 2009 was $17.6 million, an increase of $1.5 million or 9% over the second quarter of 2008. For the first six months of 2009 net interest income was $35.0 million, an increase of $3.7 million or 12% over the first six months of 2008. Net interest margin was 4.01% for the second quarter of 2009, an increase of 7 basis points from the second quarter of 2008. For the six months ended June 30, 2009 net interest margin was 4.05%, an increase of 22 basis points from the same period last year. An improved mix of earning assets, primarily driven by growth in the loan portfolio, coupled with a significant decline in funding costs were the primary factors driving the increase in net interest income and margin.

Noninterest income for the second quarter of 2009 was $4.5 million, compared with $932 thousand for the second quarter of 2008. For the first six months of 2009 noninterest income was $9.2 million, an increase of $3.5 million over the first six months of 2008. Other-than-temporary impairment charges included in noninterest income amounted to $1.7 million on privately issued whole loan collateralized mortgage obligations (“CMOs”) in the second quarter of 2009 and $3.8 million on privately issued whole loan CMOs and pooled trust preferred securities in the second quarter of 2008. The second quarter of 2009 also reflects a $1.2 million net gain on sale of investment securities, comprised of $2.6 million in gross gains on securities issued by U.S. government sponsored agencies and $1.4 million in gross losses on privately issued whole loan CMOs.

Noninterest expense for the second quarter of 2009 was $16.4 million, an increase of $2.1 million from the second quarter of 2008. For the first six months of 2009 noninterest expense was $32.5 million, an increase of $3.9 million over the first six months of 2008. The most significant cause for the increase was a $2.1 million increase in FDIC insurance expense, including a $923 thousand special assessment incurred during the second quarter of 2009, a result of changes in FDIC deposit insurance coverage and changes in premiums mandated by the FDIC to replenish deposit insurance reserves. Noninterest expense for 2009 also reflects higher incentive compensation and pension benefit costs, increases in occupancy and equipment costs associated with the opening of two new branches in the suburban Rochester area during 2008, and increases in professional services expense.

Total assets at June 30, 2009 were $1.997 billion, up $101.3 million from $1.895 billion at June 30, 2008. Total loans were $1.219 billion at June 30, 2009, an increase of $207.8 million from $1.011 billion at June 30, 2008. Total deposits increased $104.5 million to $1.700 billion at June 30, 2009, versus $1.596 billion at June 30, 2008. The majority of the increase in deposits was attributed to an increase in nonpublic certificates of deposit.

Net charge-offs increased by $262 thousand from the second quarter of 2008 to $1.1 million, or 0.38% of average loans and non-performing loans totaled $9.5 million, or 0.78% of total loans. For the six months ended June 30, 2009 net charge-offs increased in comparison to the same period last year by $572 thousand to $2.1 million, or 0.37% of average loans. The provision for loan losses was $2.1 million for the quarter, compared with $1.4 million in the same quarter a year ago. For the six months ended June 30, 2009 the provision for loan losses totaled $4.0 million, compared with $2.1 million in the same period last year. The allowance for loan losses was $20.6 million or 1.69% of total loans at June 30, 2009, compared with $16.0 million or 1.59% of total loans at June 30, 2008. At June 30, 2009 non-performing assets totaled $13.7 million, which included $3.2 million in non-performing investment securities on which interest payments are being deferred.

At June 30, 2009, all of the Company’s regulatory capital ratios exceeded the guidelines required to be considered a “well capitalized” institution as established by the Company’s primary banking regulators. Well capitalized levels are considered to be at least 5.00% for the leverage ratio and 10.00% for the total risk-based capital ratio. At June 30, 2009, the Company’s leverage ratio was 7.84% and the total risk-based capital ratio was 11.94%.

With approximately $2.0 billion in assets, Financial Institutions, Inc. provides diversified financial services through its subsidiaries, Five Star Bank and Five Star Investment Services, Inc. Five Star Bank provides a wide range of consumer and commercial banking services to individuals, municipalities and businesses through a network of over 50 offices and more than 70 ATMs in Western and Central New York State. Five Star Investment Services provides brokerage and insurance products and services within the same New York State markets. The consolidated entity employs over 600 individuals. The Company’s stock is listed on the Nasdaq Global Select Market under the symbol FISI. Additional information is available at the Company’s website: www.fiiwarsaw.com.

This press release may contain forward-looking statements as defined by federal securities laws. These statements may address issues that involve significant risks, uncertainties, estimates and assumptions made by management. Actual results could differ materially from current beliefs or projections. There are a number of important factors that could affect the Company’s forward-looking statements which include its ability to implement its strategic plan, its ability to redeploy investment assets into loan assets, the attitudes and preferences of its customers, the competitive environment, fluctuations in the fair value of securities in the investment portfolio, and general economic and credit market conditions nationally and regionally, The Company undertakes no obligation to revise these statements following the date of this press release.

FINANCIAL INSTITUTIONS, INC.
Summary of Quarterly Financial Data (Unaudited)


	2009					2008
	June 30,			March 31,		December 31,		September 30,			June 30,
SELECTED BALANCE SHEET DATA
*(Amounts in thousands)*
Cash and cash equivalents:
Cash and due from banks	$	41,405			48,073		34,528		54,105			60,640
Federal funds sold and interest-bearing deposits		39,910			74,616		20,659		22,599			2,409

Total cash and cash equivalents		81,315			122,689		55,187		76,704			63,049
Investment securities:
Available for sale		498,561			553,710		547,506		607,357			669,752
Held-to-maturity		47,465			60,675		58,532		64,434			56,508

Total investment securities		546,026			614,385		606,038		671,791			726,260
Loans held for sale		3,005			2,290		1,013		1,008			926
Loans:
Commercial		198,608			174,505		158,543		156,809			140,745
Commercial real estate		282,048			266,176		262,234		248,267			250,872
Agriculture		42,997			42,524		44,706		46,490			45,231
Residential real estate		149,926			170,834		177,683		173,893			172,396
Consumer indirect		319,735			283,465		255,054		227,971			177,967
Consumer direct and home equity		225,258			220,440		222,859		224,693			223,538

Total loans		1,218,572			1,157,944		1,121,079		1,078,123			1,010,749
Allowance for loan losses		20,614			19,657		18,749		17,420			16,038

Total loans, net		1,197,958			1,138,287		1,102,330		1,060,703			994,711
Total interest-earning assets		1,802,489			1,843,522		1,743,141		1,789,499			1,749,808
Goodwill		37,369			37,369		37,369		37,369			37,369
Total assets		1,996,724			2,030,429		1,916,919		1,945,819			1,895,448
Deposits:
Noninterest-bearing demand		292,825			279,284		292,586		293,027			288,258
Interest-bearing demand		357,443			392,353		344,616		376,098			338,290
Savings and money market		366,373			396,644		348,594		383,456			372,317
Certificates of deposit		683,619			668,999		647,467		607,833			596,890

Total deposits		1,700,260			1,737,280		1,633,263		1,660,414			1,595,755
Borrowings		79,977			78,761		70,820		114,684			89,465
Total interest-bearing liabilities		1,487,412			1,536,757		1,411,497		1,482,071			1,396,962
Shareholders’ equity		192,455			191,676		190,300		152,770			188,998
Common shareholders’ equity ⁽¹⁾		139,213			138,519		137,226		135,195			171,417
Tangible common shareholders’ equity ⁽²⁾		101,712			100,946		99,577		97,468			133,614
Securities available for sale – fair value adjustment
included in shareholders’ equity, net of tax	$	3,081			3,503		3,463		(9,797	)		(5,803	)
Common shares outstanding		10,821			10,805		10,798		10,806			10,913
Treasury shares		527			543		550		542			435
CAPITAL RATIOS
Leverage ratio		7.84	%		7.96		8.05		7.37			9.17
Tier 1 risk-based capital		10.69	%		11.23		11.83		11.10			14.58
Total risk based capital		11.94	%		12.49		13.08		12.35			15.83
Common equity to assets		6.97	%		6.82		7.16		6.95			9.04
Tangible common equity to tangible assets ⁽²⁾		5.19	%		5.07		5.30		5.11			7.19
Common book value per share	$	12.86			12.82		12.71		12.51			15.71
Tangible common book value per share ⁽²⁾	$	9.40			9.34		9.22		9.02			12.24

FINANCIAL INSTITUTIONS, INC.
Summary of Quarterly Financial Data (Unaudited)


							Quarterly Trends
	Six months ended						2009						2008
	June 30,						Second			First			Fourth			Third			Second
	2009			2008			Quarter			Quarter			Quarter			Quarter			Quarter
SELECTED INCOME STATEMENT DATA
*(Dollar amounts in thousands)*
Interest income	$	46,395			49,808			23,302			23,093			24,582			24,558			24,536
Interest expense		11,423			18,536			5,657			5,766			7,269			7,812			8,349

Net interest income		34,972			31,272			17,645			17,327			17,313			16,746			16,187
Provision for loan losses		3,994			2,074			2,088			1,906			2,586			1,891			1,358

Net interest income after provision
for loan losses		30,978			29,198			15,557			15,421			14,727			14,855			14,829

Noninterest income (loss):
Service charges on deposits		4,837			5,018			2,517			2,320			2,685			2,794			2,518
ATM and debit card		1,719			1,608			908			811			853			852			856
Loan servicing		727			418			470			257			134			112			232
Company owned life insurance		535			46			275			260			294			223			27
Broker-dealer fees and commissions		503			860			234			269			235			363			401
Net gain on sale of loans held for sale		416			256			246			170			35			48			92
Net gain on investment securities		1,207			220			1,153			54			56			12			47
Impairment charge on investment securities		(1,783	)		(3,791	)		(1,733	)		(50	)		(29,870	)		(34,554	)		(3,791	)
Net gain on sale of other assets		158			152			—			158			51			102			115
Other		887			889			445			442			421			700			435

Total noninterest income (loss)		9,206			5,676			4,515			4,691			(25,106	)		(29,348	)		932

Noninterest expense:
Salaries and employee benefits		17,168			16,605			8,437			8,731			7,811			7,021			8,169
Occupancy and equipment		5,559			5,147			2,683			2,876			2,713			2,642			2,567
FDIC assessments		2,273			133			1,593			680			305			236			88
Professional services		1,440			1,037			591			849			637			467			480
Computer and data processing		1,179			1,161			562			617			669			603			580
Supplies and postage		941			878			476			465			447			475			437
Advertising and promotions		423			433			249			174			548			472			283
Other		3,535			3,264			1,849			1,686			2,264			1,493			1,781

Total noninterest expense		32,518			28,658			16,440			16,078			15,394			13,409			14,385

Income (loss) before income taxes		7,666			6,216			3,632			4,034			(25,773	)		(27,902	)		1,376
Income tax expense (benefit)		2,071			806			1,004			1,067			(22,631	)		524			(255	)

Net income (loss)	$	5,595			5,410			2,628			2,967			(3,142	)		(28,426	)		1,631

Preferred stock dividends		1,843			741			925			918			426			371			370
Net income (loss) applicable to
common shareholders	$	3,752			4,669			1,703			2,049			(3,568	)		(28,797	)		1,261

STOCK AND RELATED PER SHARE DATA
Net income (loss) per share – basic	$	0.35			0.43			0.16			0.19			(0.33	)		(2.68	)		0.12
Net income (loss) per share – diluted	$	0.35			0.43			0.16			0.19			(0.33	)		(2.68	)		0.12
Cash dividends declared on common stock	$	0.20			0.29			0.10			0.10			0.10			0.15			0.15
Common dividend payout ratio ⁽³⁾		57.14	%		67.44			62.50			52.63		NA			NA				125.00
Dividend yield (annualized)		2.95	%		3.63			2.94			5.32			2.77			2.98			3.76
Stock price (Nasdaq: FISI):
High	$	15.99			20.78			15.99			14.95			20.27			22.50			20.00
Low	$	3.27			15.10			6.98			3.27			10.06			14.82			15.25
Close	$	13.66			16.06			13.66			7.62			14.35			20.01			16.06

FINANCIAL INSTITUTIONS, INC.
Summary of Quarterly Financial Data (Unaudited)


						Quarterly Trends
	Six months ended					2009							2008
	June 30,					Second		First		Fourth			Third			Second
	2009			2008		Quarter		Quarter		Quarter			Quarter			Quarter
SELECTED AVERAGE BALANCES
*(Amounts in thousands)*
Federal funds sold and interest-bearing deposits	$	46,376			38,270		49,105		43,618		17,089			12,897			35,733
Investment securities ⁽⁴⁾		597,449			749,236		593,740		601,199		666,917			721,419			744,648
Loans ⁽⁵⁾:
Commercial		174,761			145,360		183,733		165,688		155,814			147,350			146,778
Commercial real estate		272,030			244,960		275,275		268,749		255,882			249,769			248,290
Agriculture		42,528			44,938		42,368		42,690		44,299			45,965			44,504
Residential real estate		171,462			168,304		168,300		174,659		175,200			173,175			169,925
Consumer indirect		284,329			147,242		301,112		267,360		244,891			200,586			156,728
Consumer direct and home equity		221,576			226,470		222,122		221,024		222,235			222,241			223,906

Total loans		1,166,686			977,274		1,192,910		1,140,170		1,098,321			1,039,086			990,131
Total interest-earning assets		1,813,035			1,765,718		1,838,320		1,787,470		1,782,938			1,774,201			1,771,801
Goodwill		37,369			37,369		37,369		37,369		37,369			37,369			37,369
Total assets		1,988,185			1,894,194		2,012,337		1,963,764		1,924,174			1,908,577			1,897,514
Interest-bearing liabilities:
Interest-bearing demand		363,745			343,783		366,985		360,470		360,970			342,188			342,463
Savings and money market		382,104			370,112		392,355		371,738		373,034			366,449			378,799
Certificates of deposit		672,153			624,774		676,221		668,041		629,111			591,025			615,950
Borrowings		75,084			71,619		78,763		71,363		105,164			118,023			73,902

Total interest-bearing liabilities		1,493,086			1,410,288		1,514,324		1,471,612		1,468,279			1,417,685			1,411,114
Noninterest-bearing demand deposits		283,935			271,446		286,155		281,690		284,643			294,136			275,570
Total deposits		1,701,937			1,610,115		1,721,716		1,681,939		1,647,758			1,593,798			1,612,782
Total liabilities		1,796,266			1,697,756		1,819,891		1,772,377		1,766,239			1,727,473			1,702,211
Shareholders’ equity		191,919			196,438		192,446		191,387		157,935			181,104			195,303
Common equity ⁽¹⁾		138,769			178,857		139,253		138,281		136,887			163,527			177,722
Tangible common equity⁽²⁾	$	101,187			140,969		101,709		100,660		99,191			125,754			139,872
Common shares outstanding:
Basic		10,720			10,909		10,723		10,716		10,717			10,738			10,879
Diluted		10,756			10,951		10,765		10,747		10,717			10,738			10,928
SELECTED AVERAGE YIELDS/
RATES AND RATIOS
*(Tax equivalent basis)*
Federal funds sold and interest-bearing deposits		0.23	%		2.65		0.21		0.25		1.09			2.10			2.18
Investment securities		4.35	%		4.98		4.16		4.54		4.72			4.66			4.92
Loans		6.02	%		6.80		5.99		6.04		6.35			6.52			6.65
Total interest-earning assets		5.32	%		5.94		5.24		5.39		5.69			5.73			5.83
Interest-bearing demand		0.23	%		1.10		0.20		0.25		0.69			0.86			0.89
Savings and money market		0.27	%		1.24		0.27		0.27		0.68			0.93			1.02
Certificates of deposit		2.69	%		4.02		2.63		2.76		3.09			3.33			3.72
Borrowings		4.05	%		5.26		3.91		4.21		4.23			4.30			5.05
Total interest-bearing liabilities		1.54	%		2.64		1.50		1.59		1.97			2.19			2.38
Net interest rate spread		3.78	%		3.30		3.74		3.80		3.72			3.54			3.45
Net interest rate margin		4.05	%		3.83		4.01		4.09		4.07			3.98			3.94
Net income (loss) (annualized returns on):
Average assets		0.57	%		0.57		0.52		0.61		(0.65	)		(5.93	)		0.35
Average equity		5.88	%		5.54		5.48		6.29		(7.91	)		(62.44	)		3.36
Average common equity ⁽⁶⁾		5.45	%		4.35		4.91		6.01		(10.37	)		(70.06	)		2.85
Average tangible common equity ⁽⁷⁾		7.48	%		5.52		6.72		8.25		(14.31	)		(91.10	)		3.63
Efficiency ratio ⁽⁸⁾		69.60	%		65.88		69.49		69.72		66.65			58.10			64.21

FINANCIAL INSTITUTIONS, INC.
Summary of Quarterly Financial Data (Unaudited)


						Quarterly Trends
	Six months ended					2009				2008
	June 30,					Second		First		Fourth		Third		Second
	2009			2008		Quarter		Quarter		Quarter		Quarter		Quarter
ASSET QUALITY DATA
*(Dollar amounts in thousands)*
Nonaccrual loans	$	9,496			6,254		9,496		8,826		8,189		7,609		6,254
Accruing loans past due 90 days or more		2			1		2		301		7		32		1

Total non-performing loans		9,498			6,255		9,498		9,127		8,196		7,641		6,255
Foreclosed assets		1,046			1,235		1,046		877		1,007		1,009		1,235
Non-performing investment securities		3,175			—		3,175		3,396		49		—		—

Total non-performing assets	$	13,719			7,490		13,719		13,400		9,252		8,650		7,490

Net loan charge-offs	$	2,129			1,557		1,131		998		1,257		509		869
Net charge-offs to average loans (annualized)		0.37	%		0.32		0.38		0.35		0.46		0.20		0.35
Total non-performing loans to total loans		0.78	%		0.62		0.78		0.79		0.73		0.71		0.62
Total non-performing assets to total assets		0.69	%		0.40		0.69		0.66		0.48		0.44		0.40
Allowance for loan losses to total loans		1.69	%		1.59		1.69		1.70		1.67		1.62		1.59
Allowance for loan losses to
non-performing loans		217	%		256		217		215		229		228		256

⁽¹⁾ Excludes preferred shareholders’ equity.
⁽²⁾ Excludes preferred shareholders’ equity, goodwill and other intangible assets.

⁽³⁾ Common dividend payout ratio equals dividends declared during the period divided by earnings per share for the equivalent period. There is no ratio shown for periods where the Company both declares a dividend and incurs a loss during the period because the ratio would result in a negative payout since the dividend declared (paid out) will always be greater than 100% of earnings.

⁽⁶⁾ Net income available to common shareholders divided by average common equity.

⁽⁷⁾ Net income available to common shareholders divided by average tangible equity.

⁽⁸⁾ Efficiency ratio equals noninterest expense less other real estate expense and amortization of intangible assets as a percentage of net revenue, defined as the sum of tax-equivalent net interest income and noninterest income before net gains and impairment charges on investment securities.