Financial Institutions, Inc. Announces Third Quarter Results; Reports Net Loss of $28.4 Million After a Non-Cash OTTI Charge; Retains 'Well-Capitalized' Position




 Highlights for the third quarter of 2008 include:

 * Core business operations absent the OTTI charge continued to
   improve, driven by net interest income of $16.7 million for the
   third quarter, which increased $559 thousand from the second
   quarter and $1.9 million from the third quarter of last year.  The
   increase reflects improved net interest margin and growth of the
   loan portfolio.

 * Retained a "well-capitalized" equity position with total equity
   capital of $153 million, a leverage capital ratio of 7.37% and a
   total risk-based capital ratio of 12.35% at September 30, 2008.

 * Incurred a non-cash charge of $34.6 million for
   other-than-temporary impairment ("OTTI") on certain investment
   securities.

 * Net interest margin increased 4 basis points, to 3.98%, compared
   with 3.94% for the second quarter of 2008 and has increased 35
   basis points from 3.63% for the third quarter of 2007.  The
   improved net interest margin resulted principally from lower
   funding costs and the benefits associated with a higher percentage
   of earning assets being deployed in higher yielding loan assets.

 * Loans increased $67 million to $1.078 billion at September 30, 2008
   compared with $1.011 billion at June 30, 2008.  Consumer indirect
   auto loans account for $50 million and commercial-related loans
   account for $15 million of the third quarter increase in loans.

 * The provision for loan losses was $1.9 million, or $1.4 million
   more than third quarter net charge offs of $509 thousand, which
   represented 0.20% of average loans.  The allowance for loan losses
   at September 30, 2008 was $17.4 million or 1.62% of total loans.

 * Actively considering participation in the U.S. Treasury
   Department's Capital Purchase Program as an attractive source of
   capital.

 * Opened a new branch in Henrietta (metro-Rochester area) with a very
   strong start; second new branch opening in Greece (also
   metro-Rochester area) is expected to open in the fourth quarter of
   2008.

WARSAW, N.Y., Oct. 29, 2008 (GLOBE NEWSWIRE) -- Financial Institutions, Inc. (Nasdaq:FISI), the parent company of Five Star Bank, today reported a net loss of $28.4 million (or $2.68 diluted loss per share) for the quarter ended September 30, 2008, compared to net income of $5.3 million (or $0.44 diluted earnings per share) for the 2007 third quarter. For the nine months ended September 30, 2008, the Company's net loss totaled $23.0 million (or $2.22 diluted loss per share), compared to net income of $12.3 million (or $1.00 diluted earnings per share) for the comparable 2007 period.

Peter G. Humphrey, President and CEO of FII, commented, "Our third quarter results are reflective of the challenges presented by disruption in the financial and capital markets. The other-than-temporary impairment charge of certain securities in our portfolio reflects our recognition of specific exposures in our investment portfolio and is consistent with the exposures highlighted in our September 10, 2008 press release. We are disappointed in our third quarter results, but remain confident in the strength of our community banking franchise and our opportunities that lie ahead. Our core operations continue to perform well, driven by an expanding net interest margin, solid loan portfolio quality and effective cost controls. We are well positioned to weather this difficult period due to our core banking franchise and core earnings capacity that is built on a foundation of diversified and prudent lending, stable core deposits, and a strong capital position. The Company remains "well capitalized," and we are actively considering participation in the U.S. Treasury Department's Capital Purchase Program as an attractive source of capital to support our marketplace opportunities."

Included in the third quarter 2008 results is an other-than-temporary impairment ("OTTI") non-cash charge on certain investment securities of $34.6 million pre-tax and $33.2 million after-tax (or $3.09 per diluted share) related to auction rate preferred equity securities collateralized by preferred stock of Fannie Mae and Freddie Mac and pooled trust preferred securities issued principally by financial institutions. For the first nine months of 2008, OTTI charges were $38.3 million pre-tax and $35.5 million after-tax (or $3.27 per diluted share). The tax benefit recognized on the OTTI charge was based on the treatment of a substantial portion of the OTTI charge incurred in the third quarter being classified as a capital loss for tax purposes, which significantly limited the tax benefit. Subsequently, on October 3, 2008, the Emergency Economic Stabilization Act (the "Act") was enacted, which included a provision permitting banks, under certain circumstances, to recognize losses relating to Fannie Mae and Freddie Mac preferred stock as an ordinary loss, potentially increasing the tax benefit to the Company in the fourth quarter. Contingent upon the U.S. Treasury Department favorably interpreting and implementing certain provisions of the Act, the Company anticipates that it will recognize an additional tax benefit of $12.0 million (or $1.12 per diluted share) in the fourth quarter of 2008. Prior to this OTTI charge, impairment was considered temporary and was recorded as an unrealized loss on securities available-for-sale, which resulted in an equity reduction recognized in other comprehensive income (loss).

Net Interest Income

Net interest income was $16.7 million for the third quarter of 2008, up $559 thousand from the second quarter of 2008 and $1.9 million compared with the third quarter of 2007. Net interest margin improved to 3.98% in the third quarter of 2008 compared with 3.94% in the second quarter of 2008 and 3.63% in the third quarter of 2007. For the first nine months of 2008 net interest income was $48.0 million compared with $42.9 million for the same period in 2007. Net interest margin improved to 3.88% versus 3.45% on a year to date comparative basis. The improved net interest income and net interest margin resulted principally from lower funding costs and the benefits associated with a higher percentage of earning assets being deployed in higher yielding loan assets.

Noninterest Income (Loss)

Noninterest income (loss) for the third quarter of 2008 was $(29.3) million, compared with $932 thousand and $6.3 million in the second quarter of 2008 and the third quarter of 2007, respectively. For the nine months ended September 30, 2008 noninterest income (loss) was $(23.7) million compared with $15.7 million for the same period in 2007. The 2008 periods reflect OTTI charges on investment securities totaling $34.6 million and $3.8 million in the third and second quarters, respectively. Absent the OTTI charges in 2008, noninterest income would have been $5.2 million in the third quarter versus $4.7 million in the second quarter. The increase, exclusive of OTTI charges, is primarily the result of higher income from company owned life insurance due to a $20.0 million investment in bank owned life insurance made during the third quarter of 2008, coupled with an increase in service charges on deposits. The higher level of noninterest income in the third quarter of 2007 included $1.1 million in proceeds from company owned life insurance.

Noninterest Expense

Noninterest expense for the third quarter of 2008 was $13.4 million, compared with $14.4 million and $14.6 million in the second quarter of 2008 and the third quarter of 2007, respectively. The third quarter of 2008 includes a $1.0 million reversal of accrued compensation expense that recognized financial results for 2008 will not meet certain annual incentive targets. Absent this reversal, noninterest expense for the third quarter would have been $14.4 million, basically flat in comparison with the second quarter of 2008 and down slightly from the same quarter last year. For the nine months ended September 30, 2008, noninterest expense was $42.1 million compared with $42.9 million for the same period in 2007. The decreases in both the three and nine-month periods of 2008 compared to those in 2007 are primarily due to lower salaries and benefits expense as previously discussed, partially offset by an increase in occupancy and equipment costs.

Balance Sheet

Total assets at September 30, 2008 were $1.946 billion, up $87.9 million from $1.858 billion at December 31, 2007. Total loans were $1.078 billion at September 30, 2008, an increase of $114.0 million from $964.2 million at December 31, 2007, principally from a $93.0 million increase in indirect auto loans. Total deposits increased $84.4 million to $1.660 billion at September 30, 2008 versus $1.576 billion at December 31, 2007. Total borrowings, including junior subordinated debentures, increased $46.5 million to $114.7 million at September 30, 2008, up from $68.2 million at December 31, 2007. Total shareholders' equity at September 30, 2008 was $152.8 million compared with $195.3 million at December 31, 2007. The Company's leverage ratio was 7.37% and total risk-based capital ratio was 12.35% at September 30, 2008 which is within the regulatory standard to be deemed a well-capitalized institution.

Asset Quality

The Company recorded a provision for loan losses of $1.9 million for the third quarter of 2008 compared with a credit for loan losses of $82 thousand in the third quarter of 2007. The increase in the provision for loan losses is primarily due to growth and the changing mix of the loan portfolio, partially offset by reduced nonperforming loans from the year ago period. Net charge-offs of $509 thousand for the third quarter of 2008 represented 20 basis points (annualized) of average loans. For the first nine months of 2008 net charge-offs were $2.1 million, or 28 basis points (annualized) of average loans, compared with $1.2 million, or 17 basis points (annualized) of average loans, for the first nine months of 2007. The increase in net charge-offs in 2008 related principally to the commercial mortgage and consumer indirect loan portfolios.

The allowance for loan losses was $17.4 million at September 30, 2008 compared with $15.5 million December 31, 2007. Nonperforming loans were $7.6 million at September 30, 2008 compared with $6.3 million and $8.1 million at June 30, 2008 and December 31, 2007, respectively. The ratio of allowance for loans losses to nonperforming loans improved to 228% at September 30, 2008 versus 192% at December 31, 2007.

About Financial Institutions, Inc.

With $1.9 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 51 offices and 71 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 includes approximately 670 employees. 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.

Safe Harbor Statement

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, general economic and credit market conditions nationally and regionally, availability of capital under the U.S. Treasury Department's Capital Purchase Program, final determination of the tax treatment of losses relating to Fannie Mae and Freddie Mac preferred stock and other factors discussed in the Company's filings with the Securities and Exchange Commission. 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)

                                                     Nine months ended
                                                       September 30,
                                                    ------------------
                                                      2008      2007
                                                    --------  --------
 =====================================================================
 SELECTED INCOME STATEMENT DATA
 (Dollar amounts in thousands)
 =====================================================================
 Interest income                                    $ 74,366    78,816
 Interest expense                                     26,348    35,947
                                                    --------  --------
   Net interest income                                48,018    42,869
 Provision (credit) for loan losses                    3,965      (235)
                                                    --------  --------
   Net interest income after provision (credit) for
    loan losses                                       44,053    43,104
                                                    --------  --------

 Noninterest income (loss):
  Service charges on deposits                          7,812     8,114
  ATM and debit card                                   2,460     2,079
  Broker-dealer fees and commissions                   1,223     1,053
  Loan servicing                                         530       707
  Company owned life insurance                           269     1,139
  Net gain on sale of loans held for sale                304       589
  Net gain (loss) on sale of other assets                254       160
  Net gain on investment securities                      232       118
  Impairment charge on investment securities         (38,345)       --
  Other                                                1,589     1,719
                                                    --------  --------
   Total noninterest income (loss)                   (23,672)   15,678
                                                    --------  --------

 Noninterest expense:
  Salaries and employee benefits                      23,626    24,935
  Occupancy and equipment                              7,789     7,321
  Computer and data processing                         1,764     1,593
  Professional services                                1,504     1,548
  Supplies and postage                                 1,353     1,283
  Advertising and promotions                             905     1,006
  Other                                                5,126     5,200
                                                    --------  --------
   Total noninterest expense                          42,067    42,886
                                                    --------  --------
   (Loss) income before income taxes                 (21,686)   15,896
 Income tax expense (benefit)                          1,330     3,585
                                                    --------  --------
   Net (loss) income                                $(23,016)   12,311
                                                    ========  ========
    Less: Preferred stock dividends                    1,112     1,113
   Net (loss) income available to common
    shareholders                                    $(24,128)   11,198

 =====================================================================
 STOCK AND RELATED PER SHARE DATA
 =====================================================================

 Net (loss) income per share - basic                $  (2.22)     1.00
 Net (loss) income per share - diluted              $  (2.22)     1.00
 Cash dividends declared                            $   0.44      0.33

 Common dividend payout ratio(7)                          NA%    33.00
 Dividend yield (annualized)                            2.94%     2.46

 Stock price (Nasdaq:FISI):
  High                                              $  22.50     23.71
  Low                                               $  14.82     16.18
  Close                                             $  20.01     17.94

                                       Quarterly Trends
                      ------------------------------------------------
                                  2008                     2007
                      ----------------------------  ------------------
                        Third    Second     First    Fourth     Third
                       Quarter   Quarter   Quarter   Quarter   Quarter
                      --------  --------  --------  --------  --------
 =====================================================================
 SELECTED INCOME
  STATEMENT DATA
 (Dollar amounts in
  thousands)
 =====================================================================
 Interest income      $ 24,558    24,536    25,272    26,397    26,553
 Interest expense        7,812     8,349    10,187    11,192    11,692
                      --------  --------  --------  --------  --------
   Net interest income  16,746    16,187    15,085    15,205    14,861
 Provision (credit)
  for loan losses        1,891     1,358       716       351       (82)
                      --------  --------  --------  --------  --------
   Net interest income
    after provision
    (credit) for loan
    losses              14,855    14,829    14,369    14,854    14,943
                      --------  --------  --------  --------  --------
 Noninterest income
  (loss):
  Service charges on
   deposits              2,794     2,518     2,500     2,818     2,778
  ATM and debit card       852       856       752       805       735
  Broker-dealer fees
   and commissions         363       401       459       343       323
  Loan servicing           112       232       186       221       259
  Company owned life
   insurance               223        27        19       116     1,090
  Net gain on sale of
   loans held for sale      48        92       164       190       313
  Net gain (loss) on
   sale of other
   assets                  102       115        37       (58)       59
  Net gain on
   investment
   securities               12        47       173        88        67
  Impairment charge on
   investment
   securities          (34,554)   (3,791)       --        --        --
  Other                    700       435       454       479       710
                      --------  --------  --------  --------  --------
   Total noninterest
    income (loss)      (29,348)      932     4,744     5,002     6,334
                      --------  --------  --------  --------  --------

 Noninterest expense:
  Salaries and
   employee benefits     7,021     8,169     8,436     8,240     8,574
  Occupancy and
   equipment             2,642     2,567     2,580     2,582     2,422
  Computer and data
   processing              603       580       581       533       547
  Professional
   services                467       480       557       533       476
  Supplies and postage     475       437       441       379       443
  Advertising and
   promotions              472       283       150       396       322
  Other                  1,729     1,869     1,528     1,880     1,825
                      --------  --------  --------  --------  --------
   Total noninterest
    expense             13,409    14,385    14,273    14,543    14,609
                      --------  --------  --------  --------  --------
   (Loss) income
    before income
    taxes              (27,902)    1,376     4,840     5,313     6,668
 Income tax expense
  (benefit)                524      (255)    1,061     1,215     1,414
                      --------  --------  --------  --------  --------
   Net (loss) income  $(28,426)    1,631     3,779     4,098     5,254
                      ========  ========  ========  ========  ========
    Less: Preferred
     stock dividends       371       370       371       370       371
   Net (loss) income
    available to
    common
    shareholders      $(28,797)    1,261     3,408     3,728     4,883

 =====================================================================
 STOCK AND RELATED
  PER SHARE DATA
 =====================================================================
 Net (loss) income
  per share - basic   $  (2.68)     0.12      0.31      0.34      0.44
 Net (loss) income
  per share -
  diluted             $  (2.68)     0.12      0.31      0.34      0.44
 Cash dividends
  declared            $   0.15     0.15       0.14      0.13      0.12

Common dividend
 payout ratio(7)            NA%   125.00     45.16     38.24     27.27
Dividend yield
 (annualized)             2.98%     3.76      2.97      2.89      2.65

Stock price
 (Nasdaq:FISI):
 High                 $  22.50     20.00     20.78     19.80     20.46
 Low                  $  14.82     15.25     15.10     16.42     16.18
 Close                $  20.01     16.06     18.95     17.82     17.94


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

                                                   Nine months ended
                                                     September 30,
                                                ----------------------
                                                   2008        2007
                                                ----------  ----------
 =====================================================================
 SELECTED AVERAGE BALANCES
 (Amounts in thousands)
 =====================================================================

 Investment securities(1)                       $  739,896     819,467
 Loans(2):
  Commercial                                       147,044     116,582
  Commercial real estate                           245,560     245,038
  Agriculture                                       45,283      54,336
  Residential real estate                          169,939     164,443
  Consumer indirect                                165,153     113,360
  Consumer direct and home equity                  225,050     238,488
                                                ----------  ----------
   Total loans                                     998,029     932,247
 Total interest-earning assets                   1,768,567   1,789,995
 Total assets                                    1,899,023   1,914,561

 Interest-bearing liabilities:
  Interest-bearing demand                          343,247     338,713
  Savings and money market                         368,882     342,064
  Certificates of deposit                          613,443     684,510
  Borrowings                                        87,200      83,817
                                                ----------  ----------
   Total interest-bearing liabilities            1,412,772   1,449,104

 Noninterest-bearing demand deposits               279,064     262,769
 Total deposits                                  1,604,636   1,628,056
 Total liabilities                               1,707,733   1,730,682
 Net earning assets                                355,795     340,891
 Shareholders' equity                              191,290     183,879
 Common equity(3)                                  173,710     166,284
 Tangible common equity(4)                      $  135,861     128,129
 Common shares outstanding:
  Basic                                             10,852      11,198
  Diluted                                           10,852      11,231

 =====================================================================
 SELECTED AVERAGE YIELDS/RATES AND RATIOS
 (Tax equivalent basis)
 =====================================================================

 Investment securities                                4.87%       4.83
 Loans                                                6.71%       7.32
 Total interest-earning assets                        5.87%       6.14
 Interest-bearing demand                              1.02%       1.73
 Savings and money market                             1.13%       1.69
 Certificates of deposit                              3.80%       4.65
 Borrowings                                           4.83%       5.45
 Total interest-bearing liabilities                   2.49%       3.32
 Net interest rate spread                             3.38%       2.82
 Net interest rate margin                             3.88%       3.45

 Net (loss) income (annualized returns on):
  Average assets                                     -1.62%       0.86
  Average equity                                    -16.07%       8.95
  Average common equity(5)                          -18.55%       9.00
  Average tangible common equity(6)                 -23.72%      11.69
 Efficiency ratio(8)                                 63.17%      69.41

 Equity to assets                                    10.07%       9.60
 Common equity to assets(5)                           9.15%       8.69
 Tangible common equity to tangible assets(6)         7.30%       6.83

                                     Quarterly Trends
                    --------------------------------------------------
                                  2008                    2007
                    ------------------------------ -------------------
                      Third     Second     First    Fourth     Third
                     Quarter    Quarter   Quarter   Quarter   Quarter
                    ---------- --------- --------- --------- ---------
 =====================================================================
 SELECTED AVERAGE
  BALANCES
 (Amounts in
  thousands)
 =====================================================================
 Investment
  securities(1)     $  721,419   744,648   753,823   786,343   810,792
 Loans(2):
  Commercial           150,373   150,380   140,340   129,438   121,258
  Commercial real
   estate              246,746   244,688   245,232   242,336   243,230
  Agriculture           45,965    44,504    45,373    50,448    54,017
  Residential real
   estate              173,175   169,925   166,682   167,551   166,589
  Consumer indirect    200,586   156,728   137,756   132,372   122,095
  Consumer direct
   and home equity     222,241   223,906   229,035   232,228   235,205
                    ---------- --------- --------- --------- ---------
   Total loans       1,039,086   990,131   964,418   954,373   942,394
 Total interest-
  earning assets     1,774,201 1,771,801 1,759,635 1,756,169 1,766,511
 Total assets        1,908,577 1,897,514 1,890,874 1,884,712 1,890,669

 Interest-bearing
  liabilities:
  Interest-bearing
   demand              342,188   342,463   345,102   337,179   325,675
  Savings and money
   market              366,449   378,799   361,425   358,198   333,895
  Certificates of
   deposit             591,025   615,950   633,599   635,825   663,845
  Borrowings           118,023    73,902    69,335    71,092    90,312
                    ---------- --------- --------- --------- ---------
   Total interest-
    bearing
    liabilities      1,417,685 1,411,114 1,409,461 1,402,294 1,413,727

 Noninterest-
  bearing demand
  deposits             294,136   275,570   267,322   276,535   275,228
 Total deposits      1,593,798 1,612,782 1,607,448 1,607,737 1,598,643
 Total liabilities   1,727,473 1,702,211 1,693,300 1,694,297 1,706,111
 Net earning assets    356,516   360,687   350,174   353,875   352,784
 Shareholders'
  equity               181,104   195,303   197,574   190,415   184,558
 Common equity(3)      163,527   177,722   179,993   172,834   166,977
 Tangible common
  equity(4)         $  125,754   139,872   142,067   134,832   128,899
 Common shares
  outstanding:
  Basic                 10,738    10,879    10,938    11,022    11,091
  Diluted               10,738    10,928    10,975    11,043    11,114

 =====================================================================
 SELECTED AVERAGE
  YIELDS/RATES AND
  RATIOS
  (Tax equivalent
   basis)
 =====================================================================

 Investment
  securities              4.66%     4.92      5.05      5.13      4.93
 Loans                    6.52%     6.65      6.97      7.25      7.40
 Total interest-
  earning assets          5.73%     5.83      6.05      6.28      6.25
 Interest-bearing
  demand                  0.86%     0.89      1.30      1.61      1.63
 Savings and money
  market                  0.93%     1.02      1.47      1.70      1.60
 Certificates of
  deposit                 3.33%     3.72      4.31      4.54      4.63
 Borrowings               4.30%     5.05      5.51      5.63      5.57
 Total interest-
  bearing
  liabilities             2.19%     2.38      2.91      3.17      3.28
 Net interest rate
  spread                  3.54%     3.45      3.14      3.11      2.97
 Net interest rate
  margin                  3.98%     3.94      3.73      3.75      3.63

 Net (loss) income
  (annualized
  returns on):
  Average assets         -5.93%     0.35      0.80      0.86      1.10
  Average equity        -62.44%     3.36      7.69      8.54     11.29
  Average common
   equity(5)            -70.06%     2.85      7.62      8.56     11.60
  Average tangible
   common equity(6)     -91.10%     3.63      9.65     10.97     15.03
 Efficiency
  ratio(8)               58.10%    64.21     67.64     66.84     67.07

 Equity to assets         9.49%    10.29     10.45     10.10      9.76
 Common equity to
  assets(5)               8.57%     9.37      9.52      9.17      8.83
 Tangible common
  equity to
  tangible assets(6)      6.72%     7.52      7.67      7.30      6.96


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

                                  2008                    2007
                    ------------------------------ -------------------
                     Sept. 30,  June 30, March 31,  Dec. 31, Sept. 30,
 =====================================================================
 SELECTED BALANCE
  SHEET DATA
 (Amounts in
  thousands)
 =====================================================================

 Cash and cash
  equivalents       $   76,704    63,049   102,999    46,673    58,421

 Investment
  securities:
  Available for sale   607,357   669,752   688,504   695,241   742,716
  Held-to-maturity      64,434    56,508    57,631    59,479    56,885
                    ---------- --------- --------- --------- ---------
   Total investment
    securities         671,791   726,260   746,135   754,720   799,601

 Loans held for
  sale                   1,008       926     1,099       906       107

 Loans:
  Commercial           156,809   140,745   144,976   136,780   123,226
  Commercial real
   estate              248,267   250,872   245,148   245,797   241,981
  Agriculture           46,490    45,231    44,162    47,367    53,877
  Residential real
   estate              173,893   172,396   168,738   166,863   167,771
  Consumer indirect    227,971   177,967   142,565   134,977   128,016
  Consumer direct
   and home equity     224,693   223,538   226,855   232,389   234,800
                    ---------- --------- --------- --------- ---------
   Total loans       1,078,123 1,010,749   972,444   964,173   949,671
  Allowance for loan
   losses               17,420    16,038    15,549    15,521    15,611
                    ---------- --------- --------- --------- ---------
   Total loans, net  1,060,703   994,711   956,895   948,652   934,060

 Total assets        1,945,819 1,895,448 1,912,652 1,857,876 1,902,985
 Total interest-
  earning assets     1,789,499 1,749,808 1,771,676 1,722,122 1,757,904

 Deposits:
  Noninterest-
   bearing demand      293,027   288,258   268,419   286,362   284,252
  Interest-bearing
   demand              376,098   338,290   356,758   335,314   346,652
  Savings and money
   market              383,456   372,317   380,167   346,639   346,338
  Certificates of
   deposit             607,833   596,890   622,628   607,656   639,020
                    ---------- --------- --------- --------- ---------
   Total deposits    1,660,414 1,595,755 1,627,972 1,575,971 1,616,262

 Borrowings            114,684    89,465    70,336    68,210    79,221
 Total interest-
  bearing
  liabilities        1,482,071 1,396,962 1,429,889 1,357,819 1,411,231
 Net interest-
  earning assets       307,428   352,846   341,787   364,303   346,673
 Shareholders'
  equity               152,770   188,998   197,364   195,322   188,324
 Common
  shareholders'
  equity(3)            135,195   171,417   179,783   177,741   170,743
 Tangible common
  shareholders'
  equity(4)             97,468   133,614   141,903   139,786   132,711
 Securities
  available for sale
  - fair value
  adjustment
  included in
  shareholders'
  equity            $   (9,797)   (5,803)      944      (500)   (3,581)

 Common shares
  outstanding           10,806    10,913    10,992    11,011    11,082
 Treasury shares           542       435       356       337       266


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

                                  2008                     2007
                      ----------------------------  ------------------
                      Sept. 30, June 30,  March 31, Dec. 31,  Sept. 30,
                      --------  --------  --------  --------  --------
 =====================================================================
 CAPITAL RATIOS
 =====================================================================

 Leverage ratio           7.37%     9.17      9.38      9.35      9.23
 Tier 1 risk-based
  capital                11.10%    14.58     15.34     15.74     15.71
 Total risk based
  capital                12.35%    15.83     16.59     16.99     16.96
 Common equity to
  assets                  6.95%     9.04      9.40      9.57      8.97
 Tangible common
  equity to tangible
  assets(4)               5.11%     7.19      7.57      7.68      7.12

 Common book value per
  share               $  12.51     15.71     16.36     16.14     15.41
 Tangible common book
  value per share(4)  $   9.02     12.24     12.91     12.69     11.98

 =====================================================================
 ASSET QUALITY DATA
 (Dollar amounts in
  thousands)
 =====================================================================

 Nonaccrual loans     $  7,609     6,254     7,353     8,075     8,295
 Accruing loans past
  due 90 days or more       32         1         2         2        --
                      --------  --------  --------  --------  --------
  Total non-performing
   loans                 7,641     6,255     7,355     8,077     8,295
 Foreclosed assets       1,009     1,235     1,257     1,421     1,625
                      --------  --------  --------  --------  --------
  Total non-performing
   assets             $  8,650     7,490     8,612     9,498     9,920
                      ========  ========  ========  ========  ========

 Net loan charge-offs $    509       869       687       441       829
 Net charge-offs to
  average loans
  (annualized)            0.20%     0.35      0.29      0.18      0.35
 Total non-performing
  loans to total loans    0.71%     0.62      0.76      0.84      0.87
 Total non-performing
  assets to total
  assets                  0.44%     0.40      0.45      0.51      0.52
 Allowance for loan
  losses to total
  loans                   1.62%     1.59      1.60      1.61      1.64
 Allowance for loan
  losses to
  non-performing loans     228%      256       211       192       188

 ------
 (1) Average investment securities shown at amortized cost.
 (2) Includes nonaccrual loans.
 (3) Excludes preferred shareholders' equity.
 (4) Excludes preferred shareholders' equity, goodwill and other
     intangible assets.
 (5) Net income available to common shareholders divided by average
     common equity.
 (6) Net income available to common shareholders divided by average
     tangible equity.
 (7) 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.
 (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, proceeds from
     company owned life insurance included in income and net gain on
     sale of trust relationships.


            

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