EX-99.1

FINANCIAL INSTITUTIONS, INC. ANNOUNCES 80% EARNINGS GROWTH
FOR THE FIRST QUARTER OF 2010

WARSAW, N.Y., April 29, 2010 — Financial Institutions, Inc. (Nasdaq: FISI) (the “Company”), the parent company of Five Star Bank, today reported net income for the quarter ended March 31, 2010 of $5.328 million or $0.40 per diluted share, an increase of 80% compared to net income of $2.967 million or $0.19 per diluted share, for the same period a year ago.

•

Net interest margin increased to 4.12% in the first quarter, an increase of 6 basis points from the fourth quarter of 2009 and 3 basis points from the similar quarter in 2009.

•

Net interest income increased $1.9 million or 11% compared to the first quarter of 2009.

•

A $1.3 million reduction in noninterest expense, 8% less than the same quarter last year.

•

Solid earnings contribute to leverage capital ratio of 8.32% and total risk-based capital ratio of 13.63% at March 31, 2010, far exceeding regulatory minimums.

•

Net charge-offs of $573 thousand were down 49% and 43% compared with the fourth and first quarters of 2009, respectively.

“The significantly improved results for the first quarter reflect our ongoing efforts to unlock our full potential. Our disciplined approach to meeting the financial needs of the communities we serve, through one of the most challenging periods in recent banking history, has been rewarded with solid balance sheet growth, an increase of over 10% in net interest income from the first quarter of last year, substantial decreases in noninterest expense and net charge-offs, lower non-performing assets, and of course, the resulting 80% earnings growth from the first quarter of 2009,” said Peter G. Humphrey, President and Chief Executive Officer. “Our communities and shareholders will continue to benefit from our strong capital, liquidity and asset quality.”

Net interest income for the first quarter of 2010 totaled $19.3 million, an increase of $1.9 million or 11%, compared to the same quarter in 2009. Similarly, the Company’s net interest margin increased during the first quarter of 2010 to 4.12%, compared to 4.09% during the same quarter of 2009. Yields on earning assets declined to 5.08% in the first quarter of 2010 compared to 5.39% during the first quarter of 2009. This decline was more than offset by savings in the Company’s cost of funds, which declined 34 basis points from 1.30% during the first quarter of 2009 to 0.96% during the first quarter of 2010.

Noninterest income for the quarter ended March 31, 2010 was $4.1 million, a decrease of $608 thousand from the same period last year. Other-than-temporary impairment charges (“OTTI”) on investment securities included in noninterest income amounted to $526 thousand during the first quarter of 2010 compared to $50 thousand during the first quarter of 2009. Absent the OTTI charges and net gains from securities sales, noninterest income increased 2% when comparing the first quarter of 2010 to that of 2009.

Due in part to the Company’s cost control measures, noninterest expenses have decreased $1.3 million or 8% during the current quarter compared to the first quarter of 2009. Decreases totaling $1.1 million in salaries and employee benefits, professional services and other noninterest expense accounted for the majority of the savings. Salaries and employee benefits expense was favorably impacted by lower incentive compensation and pension benefit costs, while the decrease in professional services resulted from lower expense associated with loan workouts and consulting services. The decrease in other noninterest expense reflects general cost reductions in other operating expenses.

Total assets at March 31, 2010 were $2.156 billion, up $93.7 million from $2.062 billion at December 31, 2009. Total loans were $1.268 billion and represented 59% of total assets at March 31, 2010, compared to $1.264 billion and 61% of total assets at December 31, 2009. Total deposits increased $106.9 million to $1.850 billion at March 31, 2010, versus $1.743 billion at December 31, 2009. The majority of deposit growth in the first quarter occurred as a result of higher deposit balances being maintained by existing municipal clients. Total investment securities were $683.2 million at March 31, 2010, up $63.1 million from $620.1 million at December 31, 2009.

The Company’s leverage ratio was 8.32% and its total risk-based capital ratio was 13.63% at the end of the first quarter, both of which comfortably exceeded the regulatory thresholds required to be classified as a “well capitalized” institution as established by the Company’s primary banking regulators.

The Company’s loan portfolio continues to benefit from responsible underwriting and lending practices. Non-performing assets were $8.1 million or 0.38% of total assets at March 31, 2010, and $10.4 million or 0.51% of total assets at December 31, 2009. During the first quarter of 2010 the Company collected substantially all of the $1.9 million commercial relationship included in accruing loans past due 90 days or more at December 31, 2009. The ratio of non-performing loans to total loans was 0.53% at March 31, 2010 versus 0.69% at December 31, 2009 and 0.79% at March 31, 2009. A $354 thousand decrease in non-performing investment securities to $661 thousand at March 31, 2010 also contributed to the overall reduction in non-performing assets.

The allowance for loan losses totaled $20.6 million at March 31, 2010 compared to $20.7 million at December 31, 2009. The ratio of allowance for loan losses to non-performing loans improved to 308% at March 31, 2010, up from 239% at December 31, 2009.

The provision for loan losses was $418 thousand in the first quarter, a decrease of $1.5 million compared with the first quarter of 2009 and a decrease of $670 thousand compared with the fourth quarter of 2009. The decrease in the provision for loan losses is largely due to a 43% decline in net charge-offs compared with the first quarter of 2009, and a decline of 49% compared with the fourth quarter of 2009. Net charge-offs were $573 thousand in the first quarter, compared with $1.0 million in the same quarter last year and $1.1 million in the fourth quarter of 2009. Net charge-offs for the first quarter of 2010 include a $354 thousand recovery on one commercial real estate relationship which was charged off during 2008 and 2009.

With approximately $2.2 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)


	2010			2009
	March 31,			December 31,		September 30,		June 30,		March 31,
SELECTED BALANCE SHEET DATA
*(Amounts in thousands)*
Cash and cash equivalents:
Cash and due from banks	$	38,081			42,874		48,721		41,405		48,073
Federal funds sold and interest-earning deposits		33,793			85		11,385		39,910		74,616

Total cash and cash equivalents		71,874			42,959		60,106		81,315		122,689
Investment securities:
Available for sale		648,667			580,501		625,744		498,561		553,710
Held-to-maturity		34,556			39,573		45,056		47,465		60,675

Total investment securities		683,223			620,074		670,800		546,026		614,385
Loans:
Commercial		208,976			206,383		218,793		219,145		193,862
Commercial mortgage		331,870			330,748		317,804		304,508		289,343
Residential mortgage		142,406			144,636		148,479		152,931		173,124
Home equity		200,287			200,684		198,538		194,007		189,250
Consumer indirect		356,873			352,611		345,448		319,735		283,465
Other consumer		27,769			29,365		31,332		31,251		31,190

Total loans		1,268,181			1,264,427		1,260,394		1,221,577		1,160,234
Allowance for loan losses		20,586			20,741		20,782		20,614		19,657

Total loans, net		1,247,595			1,243,686		1,239,612		1,200,693		1,140,577
Total interest-earning assets ^{(1) (2)}		1,979,875			1,881,887		1,934,786		1,802,489		1,843,522
Goodwill		37,369			37,369		37,369		37,369		37,369
Total assets		2,156,055			2,062,389		2,138,205		1,996,724		2,030,429
Deposits:
Noninterest-bearing demand		308,822			324,303		298,972		292,825		279,284
Interest-bearing demand		409,094			363,698		383,982		357,443		392,353
Savings and money market		426,330			368,603		402,042		366,373		396,644
Certificates of deposit		705,628			686,351		712,182		683,619		668,999

Total deposits		1,849,874			1,742,955		1,797,178		1,700,260		1,737,280
Borrowings		83,454			106,390		120,113		79,977		78,761
Total interest-bearing liabilities		1,624,506			1,525,042		1,618,319		1,487,412		1,536,757
Shareholders’ equity		203,603			198,294		195,935		192,455		191,676
Common shareholders’ equity ⁽³⁾		150,095			144,876		142,605		139,213		138,519
Tangible common shareholders’ equity ⁽⁴⁾		112,726			107,507		105,176		101,712		100,946
Securities available for sale – fair value adjustment
included in shareholders’ equity, net of tax	$	3,263			1,655		4,778		3,081		3,503
Common shares outstanding		10,920			10,820		10,818		10,821		10,805
Treasury shares		428			528		530		527		543
CAPITAL RATIOS
Leverage ratio		8.32	%		7.96		7.89		7.84		7.96
Tier 1 risk-based capital		12.37	%		11.95		10.73		10.69		11.23
Total risk based capital		13.63	%		13.21		11.98		11.94		12.49
Common equity to assets		6.96	%		7.02		6.67		6.97		6.82
Tangible common equity to tangible assets ⁽⁴⁾		5.32	%		5.31		5.01		5.19		5.07
Common book value per share	$	13.74			13.39		13.18		12.86		12.82
Tangible common book value per share ⁽⁴⁾	$	10.32			9.94		9.72		9.40		9.34

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


	2010			2009
	First			Year ended			Fourth Third					Second			First
	Quarter			December 31,			Quarter Quarter					Quarter			Quarter
SELECTED INCOME STATEMENT DATA
*(Dollar amounts in thousands)*
Interest income	$	23,824			94,482			24,390		23,697			23,302			23,093
Interest expense		4,572			22,217			5,175		5,619			5,657			5,766

Net interest income		19,252			72,265			19,215		18,078			17,645			17,327
Provision for loan losses		418			7,702			1,088		2,620			2,088			1,906

Net interest income after provision
for loan losses		18,834			64,563			18,127		15,458			15,557			15,421

Noninterest income:
Service charges on deposits		2,230			10,065			2,585		2,643			2,517			2,320
ATM and debit card		934			3,610			971		920			908			811
Loan servicing		280			1,308			277		304			470			257
Company owned life insurance		269			1,096			290		271			275			260
Broker-dealer fees and commissions		380			1,022			281		238			234			269
Net gain on sale of loans held for sale		62			699			154		129			246			170
Net gain on investment securities		6			3,429			501		1,721			1,153			54
Impairment charge on investment securities		(526	)		(4,666	)		(565	)	(2,318	)		(1,733	)		(50	)
Net gain on sale of other assets		2			180			3		19			—			158
Other		446			2,052			686		479			445			442

Total noninterest income		4,083			18,795			5,183		4,406			4,515			4,691

Noninterest expense:
Salaries and employee benefits		8,247			33,634			8,213		8,253			8,437			8,731
Occupancy and equipment		2,771			11,062			2,773		2,730			2,683			2,876
Professional services		606			2,524			552		532			591			849
FDIC assessments		602			3,651			625		753			1,593			680
Computer and data processing		571			2,340			583		578			562			617
Supplies and postage		445			1,846			432		473			476			465
Advertising and promotions		187			949			299		227			249			174
Other		1,309			6,771			1,640		1,596			1,849			1,686

Total noninterest expense		14,738			62,777			15,117		15,142			16,440			16,078

Income before income taxes		8,179			20,581			8,193		4,722			3,632			4,034
Income tax expense		2,851			6,140			2,756		1,313			1,004			1,067

Net income	$	5,328			14,441			5,437		3,409			2,628			2,967

Preferred stock dividends		929			3,697			927		927			925			918
Net income applicable to
common shareholders	$	4,399			10,744			4,510		2,482			1,703			2,049

STOCK AND RELATED PER SHARE DATA
Net income per share – basic	$	0.41			0.99			0.42		0.23			0.16			0.19
Net income per share – diluted	$	0.40			0.99			0.42		0.23			0.16			0.19
Cash dividends declared on common stock	$	0.10			0.40			0.10		0.10			0.10			0.10
Common dividend payout ratio ⁽⁵⁾		24.39	%		40.40			23.81		43.48			62.50			52.63
Dividend yield (annualized)		2.77	%		3.40			3.37		3.98			2.94			5.32
Stock price (Nasdaq: FISI):
High	$	15.40			15.99			12.25		15.00			15.99			14.95
Low	$	10.91			3.27			9.71		9.90			6.98			3.27
Close	$	14.62			11.78			11.78		9.97			13.66			7.62

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


	2010			2009
	First			Year ended		Fourth Third			Second		First
	Quarter			December 31,		Quarter Quarter			Quarter		Quarter
SELECTED AVERAGE BALANCES
*(Amounts in thousands)*
Federal funds sold and interest-earning deposits	$	14,366			37,214		16,457	39,945		49,105		43,618
Investment securities ⁽¹⁾		658,181			609,606		657,299	585,830		593,740		601,199
Loans ⁽²⁾:
Commercial		204,905			204,235		211,626	216,235		203,286		185,372
Commercial mortgage		333,579			306,763		326,313	310,476		298,090		291,755
Residential mortgage		143,780			161,055		146,853	149,815		170,865		177,142
Home equity		199,903			193,929		199,367	195,601		191,291		189,328
Consumer indirect		352,778			313,239		349,231	334,123		301,112		267,360
Other consumer		28,145			30,791		29,903	30,754		30,831		31,696

Total loans		1,263,090			1,210,012		1,263,293	1,237,004		1,195,475		1,142,653
Total interest-earning assets		1,935,637			1,856,832		1,937,049	1,862,779		1,838,320		1,787,470
Goodwill		37,369			37,369		37,369	37,369		37,369		37,369
Total assets		2,112,192			2,033,916		2,117,775	2,040,030		2,012,337		1,963,764
Interest-bearing liabilities:
Interest-bearing demand		392,896			365,873		374,787	361,147		366,985		360,470
Savings and money market		401,294			383,697		400,966	369,562		392,355		371,738
Certificates of deposit		689,284			685,259		697,292	699,011		676,221		668,041
Borrowings		94,811			90,005		114,721	94,642		78,763		71,363

Total interest-bearing liabilities		1,578,285			1,524,834		1,587,766	1,524,362		1,514,324		1,471,612
Noninterest-bearing demand deposits		313,227			293,852		308,491	298,723		286,155		281,690
Total deposits		1,796,701			1,728,681		1,781,536	1,728,443		1,721,716		1,681,939
Total liabilities		1,909,662			1,839,576		1,919,352	1,845,010		1,819,891		1,772,377
Shareholders’ equity		202,530			194,340		198,423	195,020		192,446		191,387
Common equity ⁽³⁾		149,066			141,102		145,055	141,741		139,253		138,281
Tangible common equity⁽⁴⁾	$	111,697			103,593		107,654	104,269		101,709		100,660
Common shares outstanding:
Basic		10,746			10,730		10,742	10,738		10,723		10,716
Diluted		10,801			10,769		10,785	10,779		10,765		10,747
SELECTED AVERAGE YIELDS/
RATES AND RATIOS
*(Tax equivalent basis)*
Federal funds sold and interest-earning deposits		0.21	%		0.22		0.22	0.20		0.21		0.25
Investment securities		3.47	%		4.00		3.55	3.79		4.16		4.54
Loans		5.97	%		6.01		6.00	6.01		5.99		6.04
Total interest-earning assets		5.08	%		5.23		5.12	5.19		5.24		5.39
Interest-bearing demand		0.20	%		0.21		0.20	0.19		0.20		0.25
Savings and money market		0.28	%		0.28		0.30	0.29		0.27		0.27
Certificates of deposit		1.95	%		2.51		2.20	2.49		2.63		2.76
Borrowings		3.34	%		3.47		2.84	3.35		3.91		4.21
Total interest-bearing liabilities		1.17	%		1.46		1.29	1.46		1.50		1.59
Net interest rate spread		3.91	%		3.77		3.83	3.73		3.74		3.80
Net interest rate margin		4.12	%		4.04		4.06	3.99		4.01		4.09
Net income (annualized returns on):
Average assets		1.02	%		0.71		1.02	0.66		0.52		0.61
Average equity		10.67	%		7.43		10.87	6.93		5.48		6.29
Average common equity ⁽⁶⁾		11.97	%		7.61		12.33	6.95		4.91		6.01
Average tangible common equity ⁽⁷⁾		15.97	%		10.37		16.62	9.45		6.72		8.25
Efficiency ratio ⁽⁸⁾		60.31	%		65.52		59.93	63.43		69.49		69.72

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


	2010			2009
	First			Year ended		Fourth Third			Second		First
	Quarter			December 31,		Quarter Quarter			Quarter		Quarter
ASSET QUALITY DATA
*(Dollar amounts in thousands)*
Nonaccrual loans	$	6,685			6,822		6,822	5,816		9,496		8,826
Accruing loans past due 90 days or more		2			1,859		1,859	1		2		301

Total non-performing loans		6,687			8,681		8,681	5,817		9,498		9,127
Foreclosed assets		771			746		746	696		1,046		877
Non-performing investment securities		661			1,015		1,015	1,431		3,175		3,396

Total non-performing assets	$	8,119			10,442		10,442	7,944		13,719		13,400

Net loan charge-offs	$	573			5,710		1,129	2,452		1,131		998
Net charge-offs to average loans (annualized)		0.18	%		0.47		0.35	0.79		0.38		0.35
Total non-performing loans to total loans		0.53	%		0.69		0.69	0.46		0.78		0.79
Total non-performing assets to total assets		0.38	%		0.51		0.51	0.37		0.69		0.66
Allowance for loan losses to total loans		1.62	%		1.64		1.64	1.65		1.69		1.70
Allowance for loan losses to
non-performing loans		308	%		239		239	357		217		215

⁽¹⁾ Includes investment securities at adjusted amortized cost and non-performing investment securities.

⁽³⁾ Excludes preferred shareholders’ equity.
⁽⁴⁾ Excludes preferred shareholders’ equity, goodwill and other intangible assets.

⁽⁵⁾ 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.


NEWS RELEASE				220 Liberty Street Warsaw, NY 14569