FINANCIAL INSTITUTIONS DECLARES CASH DIVIDEND
and Completes Redemption of Subordinated Debt

WARSAW, N.Y., August 24, 2011 — Financial Institutions, Inc. (Nasdaq: FISI) (the “Company”) announced today that its Board of Directors has declared a quarterly cash dividend of $0.12 per share of outstanding common stock.  The Company also announced 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.  All dividends are payable on October 3, 2011 to shareholders of record on September 16, 2011.

The Company also completed the previously announced redemption of its $16.7 million, 10.20% coupon junior subordinated debentures on August 22, 2011.  As a result of the redemption, the Company will recognize a pre-tax charge of $1.1 million during the third quarter of 2011 that includes both a call premium and unamortized issuance expenses.  A portion of the proceeds from the common stock offering completed earlier this year were used to fund the redemption.  The redemption of the junior subordinated debentures will reduce interest expense by approximately $600 thousand (pre-tax) for the remainder of 2011 and $1.7 million (pre-tax) annually thereafter.

About Financial Institutions, Inc.

With over $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. Financial Institutions, Inc. was named to the 2010 Sandler O’Neill Sm-All Stars list of the top performing publicly-traded small-cap banks and thrifts in the nation and was included in the top 100 best performing community banks in the United States according to a ranking released in April 2011 by SNL Financial. 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, changes in the regulatory environment and general economic and credit market conditions nationally and regionally. For more information about these factors please see the Company’s Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q on file with the SEC. All of these factors should be carefully reviewed, and readers should not place undue reliance on these forward-looking statements. Except as required by law, the Company undertakes no obligation to revise these statements following the date of this press release.

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